Annual Report Annual Report 2012

Stock Code:2812 2012 Annual Report Annual Report 2012

We Do Our Best For You 總行臺中市西區民權路87號電話：04-22236021 Date of publication:March 2013 Website:http://www.tcbbank.com.tw M.O.P.S:http://newmops.tse.com.tw No.87, Min-Chuan Road, Taichung, Taiwan, R.O.C. Printed on recycled paper. Index Taichung Commercial Bank Company Limited 1 A MESSAGE TO THE SHAREHOLDERS ...... 1 No. 87, Min Chuan Road, Taichung, Taiwan, R.O.C. Tel.:(04)2223-6021 2 A PROFILE OF TAICHUNG BANK ...... 7 Website:http://www.tcbbank.com.tw 3 CORPORATE GOVERNANCE REPORT ...... 8 I. ORGANIZATION ...... 8 Company Spokesman II. PROFILES OF DIRECTORS, SUPERVISORS, PRESIDENT, EXECUTIVE VICE PRESIDENTS, ASST. VP, AND Name:Chi-Chuang Fang SUPERVISORS OF THE VARIOUSTaichung DEPARTMENTS AND BRANCHESCommercial ...... Bank 11 Job title:Executive Vice President III. STATUS OF CORPORATE GOVERNANCE ...... 46 Tel.:(04)2223-6021 Email:[email protected] IV. DISCLOSURE OF THE ACCOUNTANT’S FEE ...... 85 V. CHANGES OF ACCOUNTANTS ...... 85 Acting Spokesman VI. DISCLOSE THE NAMES AND JOB TITLE OF THE CHAIRMAN, PRESIDENT, FINANCIAL AND ACCOUNTING Name:Hsueh-Hsien Liao MANAGER OF THE BANK WHO HAS WORKED WITH THE CPA FIRM WHO CONDUCTS THE AUDIT OF THE Job title:Executive Vice President BANK OR THE AFFILIATES TO SUCH FIRMS IN THE MOST RECENT ONE YEAR, AND THE DURATION OF Tel.:(04)2223-6021 THEIR EMPLOYMENT IN THE CPA FIRM AND ITS AFFILIATE ...... 85 Email:[email protected] VII. IN THE MOST RECENT YEAR TO THE DATE THIS REPORT WAS PRINTED, THE ASSIGNMENT OF EQUITY Shares Registrar SHARES AND PLEDGE THE EQUITY SHARES UNDER LIEN BY DIRECTORS, SUPERVISORS, MANAGERS, Name:by internal function AND PARTICULAR PERSON OR PARTICULAR RELATED PARTY HOLDING THE SHARES OF PARTICULAR

Address:11F., No. 50, Sec. 1, XinSheng South Road, ZhongZheng District, Taipei, BANK WITH VOTING RIGHTS TO CERTAIN PROPORTION THAT REQUIRED DECLARATION PURSUANT TO Taiwan, R.O.C. ARTICLE 11 OF THE MANAGEMENT REGULATION ...... 85 Website:http://www.tcbbank.com.tw Tel.:(02)2395-7388 VIII. THE TOP 10 SHAREHOLDERS BY PROPORTION OF SHAREHOLDING AND INFORMATION ON THEIR AFFILIATIONS ...... 92 Credit Rating Agency IX. QUANTITY OF SHAREHOLDINGSChairman OF THE SAME INVESTEE : BYJin-Fong THE BANK AND DIRECTORSSoo , Name:Fitch Ratings Limited, Taiwan Branch SUPERVISORS, PRESIDENTS, EXECUTIVE VICE PRESIDENTS, ASST. EXECUTIVE VICE PRESIDENTS, Address:Suite 1306, 13F., No. 205, Tun Hwa N. Road, Taipei, Tawian, R.O.C. SUPERVISORS OF THE VARIOUS DEPARTMENTS AND BRANCHES, AND DIRECT OR INDIRECT Tel.:(02)8175-7600 SUBSIDIARIES IN PROPORTION TO THE COMBINED HOLDINGS OF ALL ...... 94 External Auditors in the Most Recent Year 4 STATUS OF CAPITAL PLANNING ...... 96 Name of CPA firm:Deloitte & Touche I SHARES AND DIVIDENDS ...... 95 Name of CPA:Wen-Ya Hsu & Tze-Chun Wang, II ISSUANCE OF FINANCIAL BONDS ...... 101 Address:12F., No. 156, MinSheng East Road, Sec. 3, Song Shan District, Taipei, III ISSUANCE OF PREFERRED STOCKS ...... 113 Taiwan, R.O.C. IV ISSUANCE OF OVERSEAS DEPOSITORY RECEIPTS ...... 113 Website:http://www.deloitte.com.tw V EMPLOYEE STOCK OPTIONS ...... 113 Tel.:(02)2545-9988 VI ACQUISITION OR ASSIGNMENT OF OTHER FINANCIAL INSTITUTIONS ...... 113 Name of any exchanges where the Company's securities are traded overseas, and the VII IMPLEMENTATION OF FUND UTILIZATION PLAN ...... 113 method by which to access information on said offshore securities : None 5 OPERATION PROFILE ...... 116 I BUSINESS CONTENTS ...... 116 Index

1 A MESSAGE TO THE SHAREHOLDERS ...... 1 2 A PROFILE OF TAICHUNG BANK ...... 7 3 CORPORATE GOVERNANCE REPORT ...... 8 I. ORGANIZATION ...... 8 II. PROFILES OF DIRECTORS, SUPERVISORS, PRESIDENT, EXECUTIVE VICE PRESIDENTS, ASST. VP, AND SUPERVISORS OF THE VARIOUS DEPARTMENTS AND BRANCHES ...... 11 III. STATUS OF CORPORATE GOVERNANCE ...... 46 IV. DISCLOSURE OF THE ACCOUNTANT’S FEE ...... 85 V. CHANGES OF ACCOUNTANTS ...... 85 VI. DISCLOSE THE NAMES AND JOB TITLE OF THE CHAIRMAN, PRESIDENT, FINANCIAL AND ACCOUNTING MANAGER OF THE BANK WHO HAS WORKED WITH THE CPA FIRM WHO CONDUCTS THE AUDIT OF THE BANK OR THE AFFILIATES TO SUCH FIRMS IN THE MOST RECENT ONE YEAR, AND THE DURATION OF THEIR EMPLOYMENT IN THE CPA FIRM AND ITS AFFILIATE ...... 85 VII. IN THE MOST RECENT YEAR TO THE DATE THIS REPORT WAS PRINTED, THE ASSIGNMENT OF EQUITY SHARES AND PLEDGE THE EQUITY SHARES UNDER LIEN BY DIRECTORS, SUPERVISORS, MANAGERS,

AND PARTICULAR PERSON OR PARTICULAR RELATED PARTY HOLDING THE SHARES OF PARTICULAR

BANK WITH VOTING RIGHTS TO CERTAIN PROPORTION THAT REQUIRED DECLARATION PURSUANT TO

ARTICLE 11 OF THE MANAGEMENT REGULATION ...... 85 VIII. THE TOP 10 SHAREHOLDERS BY PROPORTION OF SHAREHOLDING AND INFORMATION ON THEIR AFFILIATIONS ...... 92 IX. QUANTITY OF SHAREHOLDINGS OF THE SAME INVESTEE BY THE BANK AND DIRECTORS, SUPERVISORS, PRESIDENTS, EXECUTIVE VICE PRESIDENTS, ASST. EXECUTIVE VICE PRESIDENTS, SUPERVISORS OF THE VARIOUS DEPARTMENTS AND BRANCHES, AND DIRECT OR INDIRECT SUBSIDIARIES IN PROPORTION TO THE COMBINED HOLDINGS OF ALL ...... 94 4 STATUS OF CAPITAL PLANNING ...... 96 I SHARES AND DIVIDENDS ...... 95 II ISSUANCE OF FINANCIAL BONDS ...... 101 III ISSUANCE OF PREFERRED STOCKS ...... 113 IV ISSUANCE OF OVERSEAS DEPOSITORY RECEIPTS ...... 113 V EMPLOYEE STOCK OPTIONS ...... 113 VI ACQUISITION OR ASSIGNMENT OF OTHER FINANCIAL INSTITUTIONS ...... 113 VII IMPLEMENTATION OF FUND UTILIZATION PLAN ...... 113 5 OPERATION PROFILE ...... 116 I BUSINESS CONTENTS ...... 116 II EMPLOYEES ...... 131 1 A Message to the Shareholders III ENTERPRISE RESPONSIBILITIES AND ETHICAL BEHAVIOR ...... 136 I. Business result in 2012 IV IT EQUIPMENT ...... 136 (I) Domestic and foreign financial environment V LABOR-MANAGEMENT RELATIONS ...... 138 Global economic recovery was frail in 2012, which also affect the speed of economic VI MAJOR AGREEMENTS ...... 139 growth in USA and in China and in turn the sluggish economic growth in Taiwan. VII SECURITIZED PRODUCTS AND RELATED INFORMATION ...... 140 Fortunately, the Euro debt crisis did not get worse. With the launch of the currency 6 FINANCIAL STATUS ...... 140 easing policy by USA, Europe, and Japan, the economic signal in December 2012 I BRIEF BALANCE SHEET AND INCOME STATEMENT FROM THE PAST FIVE YEARS ...... 140 turned yellow-blue. According to the forecast of the Directorate-General of Budget, II FINANCIAL ANALYSIS FOR THE MOST RECENT FIVE YEARS ...... 145 Accounting, and Statistics (DGBAS), economic growth in 2013 will be at 3.59%. III SUPERVISORS’ REVIEW REPORT ON THE FINANCIAL STATEMENT OF 2012 ...... 151 (II) Changes in organization IV FINANCIAL STATEMENTS 2012 ...... 152 1. The “Treasury Marketing Unit” was established as a functional unit of the “Treasury Department” to provide consultation service for the customers in V CONSOLIDATED FINANCIAL STATEMENTS 2012 ...... 152 hedging and investment tools. With this new function, the Bank will make VI IN THE CASE OF ANY INSOLVENCY OF THE BANK AND ITS AFFILIATES, SPECIFY ITS EFFECT ON THE further effort to secure more business and strengthen its competitive power FINANCIAL STATUS OF THE BANK ...... 152 in the domestic banking market. 7 REVIEW AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS; RISK 2. Make effort in the development of corporate banking business and enlarge MANAGEMENT MATTERS ...... 152 the scale of financing to small and medium enterprises. Establish the I FINANCIAL STATUS ...... 152 “Corporate Banking Direct Marketing Team”, and continue its advantage in II FINANCIAL PERFORMANCE ...... 154 providing banking services for the small and medium enterprises with its III CASH FLOWS ...... 155 good experience. IV THE MATERIAL EFFECT ON FINANCIAL STRUCTURE FROM SUBSTANTIAL CAPITAL EXPENDITURE IN 3. Diversify the development of trust business and custodian service, and upgrade the competitive power in the innovation of core business. For this THE LAST FEW YEARS ...... 155 end, the Bank established the “Trust Dept., Taipei Office” in Taipei. V DIRECT INVESTMENT POLICY, THE MAIN REASONS FOR PROFIT OR LOSS, AND CORRECTIVE 4. Relocated the OBU to Taipei and upgrade the competitive advantage of ACTION PLAN IN THE MOST RECENT YEAR, AND INVESTMENT PLAN IN THE NEXT YEAR ...... 157 offshore banking. VI RISK MANAGEMENT ...... 157 (III) Operating result of business plans and strategies VII CRISIS MANAGEMENT MECHANISM ...... 170 1. The earnings before taxation in 2012 amounted to NTD3,304 million with VIII THE FOLLOWING METHODS AND HYPOTHESES FOR THE VALUATION OF FAIR VALUE OF FINANCIAL EPS of NTD1.43 before taxation. ROA before taxation was 0.80% while INSTRUMENTS ARE APPLIED ...... 170 ROE before taxation was 12.34%. The profitability indicators indicated IX OTHER IMPORTANT NOTES ...... 172 growth in 2012 as compared with 2011, which was also the best 8 SPECIAL NOTES ...... 173 performance in the last 5 years. 2. Despite the influence of the surging prices of oil and electricity supply and I SPECIAL NOTES ...... 173 the declaring of capital gains taxation in 2012, domestic economic growth in II CONDITIONS THAT WILL MATERIALLY AFFECT SHAREHOLDERS’ EQUITY OR PRICE OF SECURITIES 179 Taiwan was increased by 1.26%. The Bank had growth in deposit and loan 9 BRANCHES OF TAICHUNG COMMERCIAL BANK AT A GLANCE ...... 180 at 15%, and in import, export and remittance at 22%. This is the manifestation of the perpetual value of the Bank in endeavor of “local banking”. 3. The Financial Supervisory Commission applauded the Bank in its effort of cultivating long-term partnership with the small and medium enterprises and

1 A Message to the Shareholders I. Business result in 2012 (I) Domestic and foreign financial environment Global economic recovery was frail in 2012, which also affect the speed of economic growth in USA and in China and in turn the sluggish economic growth in Taiwan. Fortunately, the Euro debt crisis did not get worse. With the launch of the currency easing policy by USA, Europe, and Japan, the economic signal in December 2012 turned yellow-blue. According to the forecast of the Directorate-General of Budget, Accounting, and Statistics (DGBAS), economic growth in 2013 will be at 3.59%. (II) Changes in organization 1. The “Treasury Marketing Unit” was established as a functional unit of the “Treasury Department” to provide consultation service for the customers in hedging and investment tools. With this new function, the Bank will make further effort to secure more business and strengthen its competitive power in the domestic banking market. 2. Make effort in the development of corporate banking business and enlarge the scale of financing to small and medium enterprises. Establish the “Corporate Banking Direct Marketing Team”, and continue its advantage in providing banking services for the small and medium enterprises with its good experience. 3. Diversify the development of trust business and custodian service, and upgrade the competitive power in the innovation of core business. For this end, the Bank established the “Trust Dept., Taipei Office” in Taipei. 4. Relocated the OBU to Taipei and upgrade the competitive advantage of offshore banking. (III) Operating result of business plans and strategies 1. The earnings before taxation in 2012 amounted to NTD3,304 million with EPS of NTD1.43 before taxation. ROA before taxation was 0.80% while ROE before taxation was 12.34%. The profitability indicators indicated growth in 2012 as compared with 2011, which was also the best performance in the last 5 years. 2. Despite the influence of the surging prices of oil and electricity supply and the declaring of capital gains taxation in 2012, domestic economic growth in Taiwan was increased by 1.26%. The Bank had growth in deposit and loan at 15%, and in import, export and remittance at 22%. This is the manifestation of the perpetual value of the Bank in endeavor of “local banking”. 3. The Financial Supervisory Commission applauded the Bank in its effort of cultivating long-term partnership with the small and medium enterprises and

1 1 assisting these enterprises to access to working capital. In the 7th “Program (V) Financial income and expenditure, and profitability analysis to Encourage Lending By Domestic Banks to Small and Medium 1. The earnings before taxation in 2012 amounted to NTD3,304 million, which Enterprises”, and was cited as Class A Bank. This is the advantage of the was an increase of 72.62% from the same period of 2011. Corporate Bank in its effort of “banking service for the small and medium enterprises”. earnings in the same period amounted to NTD2,778 million, which was an 4. The Bank has successfully issued NT3 billion worth of subordinate increase of 91.06% from the same period of 2011. debentures in 2012 for fortifying its financial structure and upgrading its 2. KPI: Key Performance Indicator capital adequacy ratio for broadening its business horizon. After the Indicators 2012 issuance of the instrument, the Bank has strengthened its financial position Capital adequacy ratio (BIS) 10.54% and significantly increased its capital reserve. As of December 31 2012, the (Before taxation) BIS ratio of the Bank was 10.54%, with the BIS ratio of Tier I at 8.57%. Return on Assets (ROA) 0.80% The two ratios are conformity to the standards set forth by Basel III Accord. (Before taxation) 5. Set up a full-range structure of banking network with the economy of scale Return on Equity (ROE) 12.34% in establishing the Taichung Commercial Bank Lease Enterprise through (Before taxation) direct investment. This company makes its gravity of business in Earnings Per Share (EPS) “deployment in Mainland China” and the “development of niche market of NTD1.43 the small and medium enterprises” to satisfy the capital needs of the NPL ratio 0.37% enterprises, and move towards the goal of corporate value in development of Coverage ratio 275.39% “diversified banking”. 3. Information about the most recent credit rating 6. For vitalizing the function of the branches in banking service, 53 branches Date of Credit rating of the Bank have been incrementally approved by the Central Bank as Rating agency rating Long-term Short-term Outlook “designated foreign exchange bank” and provide the services of “outward Fitch Ratings Limited Taiwan and inward remittances” and “foreign currency deposits”. With the 101.10.9 A-(twn) F2(twn) Stable Branch performance of such functions, the Bank has the opportunity to run CNY (VI) R&D operation and cross-border banking. 1. Reinforcement of the IT security management by introducing the ISO 27001 7. The Financial Supervisory Commission has approved the securities Information Security Management System (ISMS) and has been accredited headquarters of the Bank, the securities branches at Yuanlin, Taipei, and the ISO 27001:2005 standard by BSI (British Standards Institution) in Taichung to run the futures IB operation. This helps to provide a wider array information security management since August 2012. Additional effort has of financial products and services to the customers. The Bank will make been made to ensure security of customer information and the rights of the further effort in the development of “customer-oriented” financial products, customers on information. and broaden the business scope between the Bank and the customers. 2. Develop and install the “Data Warehouse and Customer Relation

Management System” for systematic cultivation and maintenance of (IV) Budget execution in 2012 customer relation through supporting marketing tools and marketing events. 1. The average deposit balance (including foreign currency) amounted to Upgrade the asset value and satisfaction of the customers by the corporate NTD381,938 million or at the budget attainment rate of 102.17%. banking and wealth management professional team. 2. The average loan balance (including foreign currency) amounted to 3. Establish the model for the evaluation of credit risk and default relevant NTD320,892 million or at the budget attainment rate of 101.91%. with the requirement of the bank to upgrade the asset quality of loan in 3. The remittances undertaken by the Bank amounted to NTD10,502 million or compliance with the requirement of the competent authority on financial at the budget attainment rate of 109.19%. institutions, and complete the “SMEs Application Scorecard System” model 4. The average balance of trust assets (AUM) amounted to NTD37,942 million, for facilitating the control of loan asset and make credit information and which was an increase of 5.84% from the same period of 2011. loan review more efficient and standardized. 2 3 2 (V) Financial income and expenditure, and profitability analysis 1. The earnings before taxation in 2012 amounted to NTD3,304 million, which was an increase of 72.62% from the same period of 2011. Corporate earnings in the same period amounted to NTD2,778 million, which was an increase of 91.06% from the same period of 2011. 2. KPI: Key Performance Indicator Indicators 2012 Capital adequacy ratio (BIS) 10.54% (Before taxation) Return on Assets (ROA) 0.80% (Before taxation) Return on Equity (ROE) 12.34% (Before taxation) Earnings Per Share (EPS) NTD1.43 NPL ratio 0.37% Coverage ratio 275.39% 3. Information about the most recent credit rating Date of Credit rating Rating agency rating Long-term Short-term Outlook Fitch Ratings Limited Taiwan 101.10.9 A-(twn) F2(twn) Stable Branch (VI) R&D 1. Reinforcement of the IT security management by introducing the ISO 27001 Information Security Management System (ISMS) and has been accredited the ISO 27001:2005 standard by BSI (British Standards Institution) in information security management since August 2012. Additional effort has been made to ensure security of customer information and the rights of the customers on information. 2. Develop and install the “Data Warehouse and Customer Relation Management System” for systematic cultivation and maintenance of customer relation through supporting marketing tools and marketing events. Upgrade the asset value and satisfaction of the customers by the corporate banking and wealth management professional team. 3. Establish the model for the evaluation of credit risk and default relevant with the requirement of the bank to upgrade the asset quality of loan in compliance with the requirement of the competent authority on financial institutions, and complete the “SMEs Application Scorecard System” model for facilitating the control of loan asset and make credit information and loan review more efficient and standardized. 3 3 II. Effect of external competitive environment, laws & regulations and entire business The road of global economic development is still risky and is so unpredictable. As such, environment the Bank should take caution in properly control the risks it bound to face and optimize (I) External competitive environment its assets and liabilities with the efficient use of capital. This is the way to tackle with Maintain the low profit margin standard in the financial market. In an environment the challenges of the overall operation environment. where competition in the domestic financial market is keen, many banks tend to III. Future development strategies focus on small and medium enterprise as their business targets. The Bank provide In responding to the changes in the external operation environment in order to “tackle with good quality service to augment its established clientele base of small and medium the challenges and take cautious step in moving forward” as its core business strategy and enterprises with its viable financial plans, convenient e-ecommerce platform, and sketch out its blueprint for development. Under this strategy, the Bank will further its cash management through a diverse portfolio of financial products. In addition, the overseas deployment in banking as an extension of its business development, enlarge the Bank also take proactive action to explore the needs of the customers through which market size and enhance profitability. the Bank can achieve overall business result. (I) In responding to the changes and opportunities from the market and economic (II) Laws & regulations situation, the Bank seeks to enlarge the scale of its core business. 1. In supporting the Basel III Accord, Financial Supervisory Commission (II) The Bank will adjust and optimize its profit structure in order to achieve the goal of amended and promulgated the “Regulation for Banks in the Management of stable business volume with increasing profit. Capital Adequacy” on November 26 2012 thereby move the BIS ratio, ratio (III) The Bank will augment its channeling strategy for better result, and develop the of Tier 1 capital and the equity ratio of common stock to the required level domestic market in further depth and the market of Greater China. incrementally every year. As of December 31 2012, The Bank has met the (IV) The Bank will make use of the advantage given by its organization, and will increase aforementioned requirements. The Bank will continue to strengthen its its stakes in other direct investments and product marketing for synergy. management in capital allocation to enhance its risk tolerance capacity in (V) The Bank will vitalize the quality of its assets, materialize the early warning system different areas. in risk management, and enhance its capital utilization efficiency. 2. The Bank supports the introduction of the International Financial Reporting (VI) Make hearty effort to demonstrate its advantage in service and perform its corporate Standards or known as the IFRSs effective 2013, and has already set up a social responsibility. task force and retained certified public accounts to assist the introduction of IV. Summary of business plan 2013 the system to the Bank. The progress and the tasks for the implementation Adjust its structure of return and increase the proportion of non-interest incomes. Materialize of the system were carried out as planned. The accounting policy at the time its full-range service to the small and medium enterprises to upgrade its competitive power. of book opening and subsequent bookkeeping has been mapped out in Enhance the integrated marketing among the banking-end, securities, leasing, and insurance compliance with the “Regulations Governing the Preparation of Financial agent operations, upgrade the quality of service as the three main business directions. The Reports by Public Banks” and IFRSs. The accounting of the Bank has business plan in 2013: already adopted the IFRSs and will make corresponding adjustment in line (I) Continue the momentum of growth of return in 2012, seek stable growth in the with the amendments of applicable legal rules of the competent authority volume of deposits and loans, enhance return on capital investment, develop wealth and IFRSs. management business, and reduce the dependence of interest income from lending. 3. After the establishment of the clearing and settlement mechanism between (II) Make effort to enter the international financial centers and increase the banking NTD and CNY, the competent authority will officially apply the “Foreign locations in counties and cities that have the potential for further development, and Exchange Control Act” to CNY and will amend some of the provisions in adjust existing banking locations to enhance the business efficiency of the branches. the “Regulation Governing Foreign Exchange Business of Banks” As the (III) Make addition effort to absorb more business in current account deposits to improve business interaction between Taiwan and Mainland China intensified, we the ratio of current account deposits and to effectively reduce the cost of capital in should learn from the experience and the practice of Hong Kong in handling operation for making the spread thicker. CNY business and upgrade the competitive power of the Bank in (IV) Make use of the opportunity of the deregulation of CNY business and tremendous international banking. effort to absorb more business in CNY and develop lending business at the OBU for (III) Entire business environment fulfilling the demand of cross-border financial business.

4 5 4 The road of global economic development is still risky and is so unpredictable. As such, the Bank should take caution in properly control the risks it bound to face and optimize its assets and liabilities with the efficient use of capital. This is the way to tackle with the challenges of the overall operation environment. III. Future development strategies In responding to the changes in the external operation environment in order to “tackle with the challenges and take cautious step in moving forward” as its core business strategy and sketch out its blueprint for development. Under this strategy, the Bank will further its overseas deployment in banking as an extension of its business development, enlarge the market size and enhance profitability. (I) In responding to the changes and opportunities from the market and economic situation, the Bank seeks to enlarge the scale of its core business. (II) The Bank will adjust and optimize its profit structure in order to achieve the goal of stable business volume with increasing profit. (III) The Bank will augment its channeling strategy for better result, and develop the domestic market in further depth and the market of Greater China. (IV) The Bank will make use of the advantage given by its organization, and will increase its stakes in other direct investments and product marketing for synergy. (V) The Bank will vitalize the quality of its assets, materialize the early warning system in risk management, and enhance its capital utilization efficiency. (VI) Make hearty effort to demonstrate its advantage in service and perform its corporate social responsibility. IV. Summary of business plan 2013 Adjust its structure of return and increase the proportion of non-interest incomes. Materialize its full-range service to the small and medium enterprises to upgrade its competitive power. Enhance the integrated marketing among the banking-end, securities, leasing, and insurance agent operations, upgrade the quality of service as the three main business directions. The business plan in 2013: (I) Continue the momentum of growth of return in 2012, seek stable growth in the volume of deposits and loans, enhance return on capital investment, develop wealth management business, and reduce the dependence of interest income from lending. (II) Make effort to enter the international financial centers and increase the banking locations in counties and cities that have the potential for further development, and adjust existing banking locations to enhance the business efficiency of the branches. (III) Make addition effort to absorb more business in current account deposits to improve the ratio of current account deposits and to effectively reduce the cost of capital in operation for making the spread thicker. (IV) Make use of the opportunity of the deregulation of CNY business and tremendous effort to absorb more business in CNY and develop lending business at the OBU for fulfilling the demand of cross-border financial business.

5 5 (V) By way of the profit sharing framework of “quasi financial holding”, the 2 A profile of Taichung Bank: banking-end and direct investments together provides one-stop integrated marketing Formerly a cooperative savings company in Taichung established in April 1953, the service. predecessor of Taichung Bank started its operation in savings and loans in August 1st of the (VI) Construct the new generation cash flow service platform and provide full-range and same year. The scope of business then covered Taichung City, Taichung County, Chang Hwa convenient electronic transaction channels to support group accounts in their County and Nantou County. The Bank has reorganized as “Taichung Small and Medium operation, global fund allocations and cross-border account overview services for the Business Bank” in 1978 in responding to the promulgation of the Banking Act and business satisfaction of corporate and individual needs of the customers in full-range. development needs. On May 15, 1984, the Bank went public and expanded its scale of (VII) Continue to enlarge the asset size of the Bank and take caution in putting the early operations, and has successfully been listed on the centralized market. warning system of risk management and control in place. Maintain the quality of In September 1995, the Taipei Branch was established with business covering different assets at a level senior to the industry level of domestic banks, and fortify the districts, which set a new milestone of the operation of the Bank. The Bank continued to capacity of the Bank in profitability. relocate its branches, which were previously located in central Taiwan, to northern and (VIII) Expected business objectives southern Taiwan. After this process of expansion, the Bank has banking locations across Scope of business Objective by the end of 2013 Taiwan. With the effort of all, the Bank prospered in business, and has officially reorganized Deposits (including Average balance amounted to as “Taichung Business Bank” on December 9 1998. Since then, the Bank has emerged as a foreign currencies) NTD421,087 million national commercial bank. In 2010, the Bank has been recognized as a financial institution Lending (including Average balance amounted to in good standing by Financial Supervisory Commission, and has been approved to establish foreign currencies) NTD356,674 million. its Tucheng Branch in May of 2011. Now the Bank has 80 branches and 1 OBU across Foreign Exchanges Taiwan. On December 27 2012, the OBU relocated to Taipei, the economic hub of Taiwan, to Annual amount USD11,433 million Operations continue its operation. This allows the Bank to get closer to the center of the financial market The average balance of trust assets and upgrade its value of its channel in operation. Trust Operations amounted to NTD41,800 million With 6 decades of whole-hearted operation and development, the capital of the Bank The Bank has its 60th anniversary in 2013. In the future, the Bank will continue its corporate spirit has increased from NTD500,000 at its initial stage of operation to NTD23,187 million as of of “whole-heartedness” in order to demonstrate its brand value of “Heritages for Six Decades Heritage December 31 2012. The Bank also expanded to 80 branches and 1 OBU from 5 branches at and Whole-heartedness forever” to provide the public a wide array of financial products and good the time of its establishment. The scope and volume of business of the Bank multiplied over quality professional service. The Bank is dedicated to perpetual corporate development and is the years. The variety and size of the operation far exceeded that at the time of its conceived with the mission of creating value for the shareholders. In addition, the Bank will make full establishment as a cooperative saving company. The achievement was the feedback of the effort to develop into a regional bank in Greater China, and ask for the continued support from the whole-hearted operation of the Bank. The growth and the excellence in operation of Taichung shareholders. Commercial Bank have been witnessed by the public. Best regards,

To All Shareholders May I wish you all good health and good luck. * Massive transactions or changes in equity shares by Directors, Supervisors, or shareholders holding more than 1% of the total outstanding shares in the most recent year: None. * Changes in the management in the most recent year: None. * Major events affecting the rights and privileges of the investors and the effect on the Bank: None. President Chairman * Reinvested affiliate: Taichung Commercial Bank Insurance Broker Co., Ltd., Reliance Securities Investment Trust Co., Ltd. and Taichung Commercial Bank Lease Enterprise

6 7 6 2 A profile of Taichung Bank: Formerly a cooperative savings company in Taichung established in April 1953, the predecessor of Taichung Bank started its operation in savings and loans in August 1st of the same year. The scope of business then covered Taichung City, Taichung County, Chang Hwa County and Nantou County. The Bank has reorganized as “Taichung Small and Medium Business Bank” in 1978 in responding to the promulgation of the Banking Act and business development needs. On May 15, 1984, the Bank went public and expanded its scale of operations, and has successfully been listed on the centralized market. In September 1995, the Taipei Branch was established with business covering different districts, which set a new milestone of the operation of the Bank. The Bank continued to relocate its branches, which were previously located in central Taiwan, to northern and southern Taiwan. After this process of expansion, the Bank has banking locations across Taiwan. With the effort of all, the Bank prospered in business, and has officially reorganized as “Taichung Business Bank” on December 9 1998. Since then, the Bank has emerged as a national commercial bank. In 2010, the Bank has been recognized as a financial institution in good standing by Financial Supervisory Commission, and has been approved to establish its Tucheng Branch in May of 2011. Now the Bank has 80 branches and 1 OBU across Taiwan. On December 27 2012, the OBU relocated to Taipei, the economic hub of Taiwan, to continue its operation. This allows the Bank to get closer to the center of the financial market and upgrade its value of its channel in operation. With 6 decades of whole-hearted operation and development, the capital of the Bank has increased from NTD500,000 at its initial stage of operation to NTD23,187 million as of December 31 2012. The Bank also expanded to 80 branches and 1 OBU from 5 branches at the time of its establishment. The scope and volume of business of the Bank multiplied over the years. The variety and size of the operation far exceeded that at the time of its establishment as a cooperative saving company. The achievement was the feedback of the whole-hearted operation of the Bank. The growth and the excellence in operation of Taichung Commercial Bank have been witnessed by the public.

* Massive transactions or changes in equity shares by Directors, Supervisors, or shareholders holding more than 1% of the total outstanding shares in the most recent year: None. * Changes in the management in the most recent year: None. * Major events affecting the rights and privileges of the investors and the effect on the Bank: None. * Reinvested affiliate: Taichung Commercial Bank Insurance Broker Co., Ltd., Reliance Securities Investment Trust Co., Ltd. and Taichung Commercial Bank Lease Enterprise

7 7 3 Corporate Governance Report (II) Operations & Functions I. Organization 1. Auditing Office of Board: Administer the general auditing of the (I) Organizational Structure Bank, including operation audit, computer information audit, internal self-audit, internal audit, corrective actions as per the requests of competent authority, and related reporting. Office of the Board of Directors 2. Office of the Board of Directors: Call for sessions and elections of the Standing Committee of the Board, the Board of Directors and Supervisors, General Meeting of the Shareholders, shares Auditing Office of the Board registration and related matters, public relations, press release.

Chief Auditor 3. Business Development Dept.: Administer the planning and

Business Development Dept. development of deposits and remittances, e-banking and credit card operations.

International Business Dept. 4. International Banking Dept.: Administer the planning, promotion, management and operation of foreign exchanges.

Trust Dept. 5. Trust Dept.: Administer the planning, management and operation of trust business. Committee Committee Information Dept. 6. Information Dept.: Administer the planning, configuration and Investment Committee Committee Investment

Committee Management NPL operation of IT system and banking information package software. Loan Supervision Committee Committee Supervision Loan Asset and Liability Management Management Liability and Asset Committee Evaluation Personnel Committee Assessment Asset Trust Risk Management Dept. 7. Risk Management Dept.: Administer the decision-making of the Financial Products Review Committee Committee Review Products Financial

risk management policies for the whole bank, supervise the

Treasury Dept. departments to establish the risk control mechanism, control of the

overall exposures of the Bank and other risk related management.

General Affairs Dept. 8. Treasury Dept.: Administer the appropriation of funds and President Directors Chairman

Assistant VP investments of the whole bank and other financial matters. Vice Chairman Vice Board of Directors of Board Board of Managing of Board

Shareholders’ meeting Shareholders’ Human Resources Dept. 9. General Affairs Dept.: Administer the articles of incorporation, Executive Vice President organization, important documents and corporate seals, cashier

Accounting Dept. service, general purchase, custody of assets, procurement and lease

Business units (include Business Dept.), OBU Business Dept.), Business units (include of real properties, improvement and repair of properties, and labor Securities Dept. safety & health issues, property insurance, and any matters other than those administered by the other departments/offices. Corporate Finance Dept. 10. Human Resources Dept.: Administer human resources management Remuneration Committee Remuneration

Risk Management Committee Management Risk and review, and employee welfare, and also administer employee Wealth Management Dept.

continuing education and training, library management, and publication and printing of journals. Loan Administration Dept. 11. Accounting Dept.: Administer accounting affairs, management District Center accounting, annual budget settlement, and inter-branch Supervisor’ meeting Supervisors Resident Supervisors Dept. of Debt Collection and transactions. Asset Recovery 12. Securities Dept.: Administer planning, execution and management

of the securities business, and process any other securities

approved by the competent authority.

8 9 8 (II) Operations & Functions 1. Auditing Office of Board: Administer the general auditing of the Bank, including operation audit, computer information audit, internal self-audit, internal audit, corrective actions as per the requests of competent authority, and related reporting. 2. Office of the Board of Directors: Call for sessions and elections of the Standing Committee of the Board, the Board of Directors and Supervisors, General Meeting of the Shareholders, shares registration and related matters, public relations, press release. 3. Business Development Dept.: Administer the planning and development of deposits and remittances, e-banking and credit card operations. 4. International Banking Dept.: Administer the planning, promotion, management and operation of foreign exchanges. 5. Trust Dept.: Administer the planning, management and operation of trust business. 6. Information Dept.: Administer the planning, configuration and operation of IT system and banking information package software. 7. Risk Management Dept.: Administer the decision-making of the risk management policies for the whole bank, supervise the departments to establish the risk control mechanism, control of the overall exposures of the Bank and other risk related management. 8. Treasury Dept.: Administer the appropriation of funds and investments of the whole bank and other financial matters. 9. General Affairs Dept.: Administer the articles of incorporation, organization, important documents and corporate seals, cashier service, general purchase, custody of assets, procurement and lease of real properties, improvement and repair of properties, and labor safety & health issues, property insurance, and any matters other than those administered by the other departments/offices. 10. Human Resources Dept.: Administer human resources management and review, and employee welfare, and also administer employee continuing education and training, library management, and publication and printing of journals. 11. Accounting Dept.: Administer accounting affairs, management accounting, annual budget settlement, and inter-branch transactions. 12. Securities Dept.: Administer planning, execution and management of the securities business, and process any other securities approved by the competent authority.

9 9 13. Corporate Finance Department: administer the planning, formulation, supervision and assessment of the all forms of corporate financing, account receivables, syndicated loans, and financing of Taiwan enterprises in overseas investment. 14. Wealth Management Dept.: Administer the planning and execution of the financial planning businesses throughout the nation, management of financial planning staff, preparation and revision of the wealth management policy and operating procedure, and promotion, supervision and management of wealth management customers’ investment in the financial planning business. 15. Loan Administration Dept.: Administer the planning, review, management, research, analysis and consultation service of the various credit extensions, investigations and consumer banking. 16. Dept. of Debt Collection and Asset Recovery: Administer the precautionary and review after granting loan, and planning, promotion, supervision and statistic analysis of the collection of delinquent accounts, performance appraisal of the collection, review of writing off non-performing loans, examination and management of Collaterals Assumed, participation and cooperation in the process of resolving legal issues, retaining of external attorneys-at-law, and drafting, promotion, supervision and performance appraisal of the compliance system. 17. Business Dept.: Administer the operation of different types of deposits, loans, foreign exchange settlements and banking matters. 18. District Center: administer the lending (except consumer loans, cash card, and credit card), review and approval of foreign exchange financing, banking supervision, and collection of overdue accounts in the districts under their respective jurisdictions. 19. Overseas Banking Branch: Administer the planning, promotion, management and operation of international banking.

10 10 II. Profiles of Directors, Supervisors, President, Executive Vice Presidents, Asst. VP, and supervisors of the various departments and branches (I) Directors and supervisors 1. Directors and Supervisors Information: Feb. 28, 2013 Other Chief, Supervisors or Current Shares Held by Shareholding under the Shares at Election Current shareholding Directors with a Election Spouse & Dependents title of a third party Major (academic Current Bank Inauguration Spousal or Other Title Name (Appointment) Duration degree) & Other date Immediate Relative Date Ratio of Ratio of Ratio of Ratio of experience positions Quantity Shareholding Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % % Pan Asia Institutional Chemical 2011/6/22 3 years 2002/5/17 115,740,767 6.68 147,154,866 6.35 0 0 0 0 - - - - - Director Corporation I Joung Institutional Investment Co., 2011/6/22 3 years 2008/6/13 15,308,183 0.88 16,366,590 0.71 0 0 0 0 - - - - - Director Ltd. Ho Yang Institutional Management 11 2011/6/22 3 years 2011/6/22 1,101,000 0.06 1,399,830 0.06 0 0 0 0 - - - - - Director Consultant Co., Ltd. Institutional Chou Chang 2011/6/22 3 years 2011/6/22 8,227,568 0.48 8,796,422 0.38 0 0 0 0 - - - - - Director Co., Ltd. Chairman of Pan Asia Taiwan Business Chemical Bank; MBA of Chairman Corporation 2011/6/22 3 years 2002/5/17 0 0 0 0 0 0 0 0 None None None None New York Representative: Institute of Jin-Fong Soo Technology

12 Chou Chang Co., Ltd.; Chairman, Deh Hsing Pan Asia Securities Investment P, Corporate Chemical Trust Co., Ltd.; Financing Dept., Director, CPC Vice Corporation 2011/6/22 3 years 2002/5/17 203,667 0.01 258,945 0.01 0 0 0 0 BNP Paribas Corporation; None None None Chairman Representative: Hong Kong; Chairman, Pan Feng Kuei-Fong MBA of NYU Investment Co., Ltd; Wang Executive Director and President, China Man-Made Fiber Corporation; Director, Chung Chien Investment Co., Ltd.; Chairman, Hsu Tian Investment Co., Ltd.; Director, Pan Asia Investment Co., Ltd.; Director, Melasse; Director, Chairman, Rui Yan Investment Co., Ltd.; Tai Yi Investment Co., Ltd.; Director, Ta Fa Investment Co., Ltd.;Chairman, Pan Hsu Investment Co., Ltd. 12

13 Director, Taigene Chairman of Electric Lehigh I Joung Machinery Co., Technology; Ltd.; Director, Yu Investment Co., Managing Master of Science Ta Trading Co., Ltd. 2011/6/22 3 years 2008/6/13 9,257,387 0.53 9,897,442 0.43 0 0 0 0 None None None Director of Government Ltd.; Chairman, Representative: Apparatus, Deh Hsing Yi-Der Chen Lehigh Securities University Investment Trust Co.,Ltd.; Director, Hu Wang Investment Co., Ltd.; Chairman, Model Construction Development Co., Ltd.; Director, Yu-Feng Industrial Co., Ltd.; Supervisor, Heng Wang Investment Co., Ltd.; Director, Harborview Cable TV.

Other Chief, Supervisors or Current Shares Held by Shareholding under the Shares at Election Current shareholding Directors with a Election Spouse & Dependents title of a third party Major (academic Current Bank Inauguration Spousal or Other Title Name (Appointment) Duration degree) & Other date Immediate Relative Date Ratio of Ratio of Ratio of Ratio of experience positions Quantity Shareholding Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % % Supervisor, Huang Hsiang Chairman of Pan Asia Taiwan Financial Construction Chemical Holdings; Dept of Corporation; Managing Corporation 2011/6/22 3 years 2002/5/17 0 0 0 0 0 0 0 0 International Director, None None None Director Representative: Trade, National Taichung Jer-Shyong Tsai Chengchi Commercial University Bank Lease Enterprise Representative of TC Bank, Taipei Representative Managing Office; National Director Hsi-Rong 2011/6/22 3 years 2008/6/13 0 0 0 0 0 0 0 0 Chung Hsing None None None None 14 (Independent Huang University, director) Department of Agricultural Economics Vice General Manager of Cooperative Bank; Chairman of Cooperative Bank Insurance Independent Chen-Le Liu 2011/6/22 3 years 2010/6/15 0 0 0 0 0 0 0 0 Agency Co., Ltd.; None None None None director Department of Transportation and Communication Management Science, NCKU

15 Securities Corp; Industrial Co., Chemical VP, GTSM; Ltd.; Vice Director Corporation 2012/10/1 3 years 91/5/17 0 0 0 0 0 0 0 0 None None None Graduate from Chairman, Representative: St.Thomas Super Dragon Kang-Chi Chou University, USA Technology Co., Ltd. Vice President, Taiwan Business Bank; Independent Pan Asia Director of President, Chemical Taichung Taichung Director Corporation 2011/6/22 3 years 2002/5/17 190,500 0.01 480,944 0.02 18,102 0 0 0 None None None Commercial Commercial Representative: Bank; MBA, Bank Chun-Sheng Lee National Taiwan University College of Management

16 President, Chang Chairman of Chou Chang Hwa Bank, Taichung Co., Ltd. Director 2012/6/8 3 years 2011/6/22 0 0 0 0 0 0 0 0 Graduate from Commercial None None None Representative: Tamkang Bank Lease Wei-Liang Lin University Enterprise Reliance Securities Investment Trust Pan Asia Co., Ltd., Chemical Chairman, Graduate from Corporation Chun Fu Director 2012/10/1 3 years 2002/5/17 0 0 0 0 589,951 0.03 0 0 Deh Ming None None None Representative: Development Commercial Meng-Liang Co., Ltd. School, Special Chang Assistant, China Man-Made Fiber Corporation. V.P., Taichung I Joung Business Bank; Investment Co., Kainan High Ltd. Director 2011/6/22 3 years 2008/6/13 66,542 0.00 65,918 0 0 0 0 0 School of None None None None Representative: Commerce and Ching-Hsin Industry, Senior Chang Class, Business

Other Chief, Supervisors or Current Shares Held by Shareholding under the Shares at Election Current shareholding Directors with a Election Spouse & Dependents title of a third party Major (academic Current Bank Inauguration Spousal or Other Title Name (Appointment) Duration degree) & Other date Immediate Relative Date Ratio of Ratio of Ratio of Ratio of experience positions Quantity Shareholding Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % % Chairman of Ho Yang Ho Fa Management Master of Construction Consultant Co., Science, Co., Ltd.; Director 2011/6/22 3 years 2011/6/22 0 0 0 0 0 0 0 0 None None None Ltd. University of Chairman of Representative: Southampton, UK Sakura Chia-Hung Lin Construction Co., Ltd. Xin Rui Institute Investment Co., 2011/6/22 3 years 2011/6/22 4,800,000 0.28 7,711,704 0.33 0 0 0 0 - - - - - Supervisor Ltd. Tai Jiunn Institute Enterprise Co., 2011/6/22 3 years 2008/6/13 737,449 0.04 788,435 0.03 0 0 0 0 - - - - - Supervisor Ltd. Manager of Chiao Xin Rui 17 Tung Bank; Investment Co., Resident Department of Ltd. 2011/6/22 3 years 2011/6/22 0 0 0 0 0 0 0 0 None None None None Supervisor Accounting, Representative: National Chung Jiann-Ell Huang Hsing University Manager of Xin Rui Taiwan Investment Co., Cooperative Supervisor Ltd. 2011/6/22 3 years 2011/6/22 0 0 0 0 0 0 0 0 Bank; Yu Da None None None None Representative: High School of Shu-Li Huang Commerce and Home Economics Xin Rui Manager of Investment Co., Pacific Ltd. Supervisor 2011/6/22 3 years 2011/6/22 0 0 0 0 0 0 0 0 Computers; None None None None Representative: Fuxing Senior Chien-Hwa Lee High School Fu Xin Rui Vice Chief Investment Co., Auditor, Taiwan Ltd. Supervisor 2011/6/22 3 years 2011/6/22 0 0 0 0 0 0 0 0 Business Bank; None None None None Representative: Wen Shan Senior Ching-Huang High School Tsai

2. Major Shareholders of Corporate Shareholders: Feb. 28, 2013 Corporate shareholder Major shareholder of corporate shareholder and shareholding Ratio of Other Chief, Chief, Other Supervisors or Supervisors Directors with a Spousal or Other Other or Spousal Name Shareholding thereof Immediate Relative Relative Immediate Title Relation Name China Man-Made Fiber Co., Ltd. (42.89%); Sheng Jen Knitted Textiles Co., Ltd. (5.99%); CMFC Investment (4.95%); Deh Hsing

None None None None None Pan Asia Chemical Securities Investment Trust Co., Ltd. (4.53%); Yu Huei Co., Ltd. & Other positions positions

Current Bank Bank Current Corporation (3.26%); Tai Yi Investment Co., Ltd. (2.28%); Ke Yi Bao Investment Co., Ltd (0.73%);Ya-Ying Jhu (0.72%); Pan Asia Investment Co., Ltd. (0.61%); Pan Asia Employee Welfare Committee (0.60%).

degree) degree) Chou Chin Industrial Co., Ltd. (48.24%), Pan Asia Investment Co., experience

Major (academic (academic Major Ltd. (36.39%), Deh Hsing Securities Investment Trust Co., Ltd. VP of Changhua of Changhua VP Bank; of Department Economics, Taiwan National University

0 (14.78%), Chou Huei Investment Co., Ltd. (0.25%), Ge Ling Co., Ltd. Chou Chang Co., Ltd. (0.19%), Tai Yi Investment Co., Ltd. (0.05%), Hsiun-Ching Hsu %

Ratio of Ratio (0.05%), Chung-Yi Chen (0.02%), Chung-Tien Hsu (0.01%), Shareholding Shareholding Yun-Ling Chen (0.01%) Yi-Jen Chen (33.17%), Yi-Der Chen (27.77%), Yee-Fan Chen

title of a third party party third of a title I Joung Investment Co., Shareholding under the under Shareholding Quantity (12.37%), Ching-Shuan Chen Ting (6.47%), Hsiun-Fan Lo (5.51%), Ltd. 0 0 Yee-Chen Chen (4.7%), Min-Yuan Yeh (0.56%)

% Ho Yang Management Shu-Cyong Zen (81%), Chen-Hai Lin (19%) Ratio of Ratio Consultant Co., Ltd. Shareholding Shareholding Xin Rui Investment Co., You-Ciang Yang (34.8%), Ying-Huei Liou (32.4%), Mei-Jyuan Syong Ltd. (26.8%) Spouse & Dependents & Spouse Current Shares Held by by Held Shares Current Quantity Quantity Tai Jiunn Enterprise Co., Yi-Jen Chen (46.13%), GIUM CO., LTD (42.84%), Ming-Yuan Yeh 0 0 Ltd. (0.69%), Ching-Shuan Chen Ting (0.21%) % 18 Ratio of Ratio

Shareholding Shareholding 3. Major Shareholders of Major Corporate Shareholder: 0 Feb. 28, 2013 Corporate shareholder Major shareholder of corporate shareholder and shareholding Ratio of Quantity Quantity

0 Name Shareholding thereof Pan Asia Chemical Corporation (14.97%); Sheng Jen Knitted Texiles % (4.21%); Formosa Imperial Wineseller Corp (3.52%); Pan Asia Ratio of Ratio

Shareholding Shareholding Investment Co., Ltd. (3.00%); Chung Chien Investment Co., Ltd. 0 (2.51%); Netherlands Pension Robert Bacal Investment Account at China Man-Made Fiber Shares at Election Election at Shares shareholding Current Citibank (1.14%); Deh Hsing Securities Investment Trust Co., Ltd. Quantity Co., Ltd. (0.67%); Chou Chang Co., Ltd. (0.63%); Central Bank of Norway Investment Account at JP Morgan Chase Taipei (0.61%); 1st

date Discretionary Investment of President Securities Investment Trust at

Inauguration Inauguration the appointment of National Annuity Fund (0.59%). Pan Asia Investment Co., Ltd. (41.80%), Ta Fa Investment Co., Ltd. Tai Yi Investment Co., (38.17%), Tsung Hao Enterprise Co., Ltd. (9.93%), Chao-Jia Lee Duration Ltd. (6.31%), Sian-Jhang Syu (2.53%), Guei-Lian Jheng (1.26%). Ta Fa Investment Co., Ltd. (28.08%); Pan Asia Investment Co., Ltd.

Date (17.67%); Chin-Yuan Huang (14.72%); Tung Hao Enterprises Corp. Election 2011/6/22 2011/6/22 3 years 2008/6/13

(Appointment) (Appointment) Chung Chien Investment (14.30%); Hsuan Deh Consultants Co., Ltd. (10.16%); Chun Foo Co., Ltd. Development Co., Ltd. (7.95%); Kuei-Hsien Wang (1.70%); Hsu Tian Investment Co., Ltd. (1.62%), Kuei-Fong Wang (1.55%); Yu Huei Co., Ltd. (1.47%).

Tai Jiunn Tai Co., Enterprise Ltd. Representative: Chao-Nan Hsieh Tai Yi Investment Co., Ltd. (47.42%), Ta Fa Investment Co., Ltd. Pan Asia Investment Co., (42.63%), Tsung Hao Enterprise Co., Ltd. (9.95%), Kuei-Hsien Wang Ltd.

Title Name Name Title (0.51%)

Supervisor Supervisor 19 18 2. Major Shareholders of Corporate Shareholders: Feb. 28, 2013 Corporate shareholder Major shareholder of corporate shareholder and shareholding Ratio of Name Shareholding thereof China Man-Made Fiber Co., Ltd. (42.89%); Sheng Jen Knitted Textiles Co., Ltd. (5.99%); CMFC Investment (4.95%); Deh Hsing Pan Asia Chemical Securities Investment Trust Co., Ltd. (4.53%); Yu Huei Co., Ltd. Corporation (3.26%); Tai Yi Investment Co., Ltd. (2.28%); Ke Yi Bao Investment Co., Ltd (0.73%);Ya-Ying Jhu (0.72%); Pan Asia Investment Co., Ltd. (0.61%); Pan Asia Employee Welfare Committee (0.60%). Chou Chin Industrial Co., Ltd. (48.24%), Pan Asia Investment Co., Ltd. (36.39%), Deh Hsing Securities Investment Trust Co., Ltd. (14.78%), Chou Huei Investment Co., Ltd. (0.25%), Ge Ling Co., Ltd. Chou Chang Co., Ltd. (0.19%), Tai Yi Investment Co., Ltd. (0.05%), Hsiun-Ching Hsu (0.05%), Chung-Yi Chen (0.02%), Chung-Tien Hsu (0.01%), Yun-Ling Chen (0.01%) Yi-Jen Chen (33.17%), Yi-Der Chen (27.77%), Yee-Fan Chen I Joung Investment Co., (12.37%), Ching-Shuan Chen Ting (6.47%), Hsiun-Fan Lo (5.51%), Ltd. Yee-Chen Chen (4.7%), Min-Yuan Yeh (0.56%) Ho Yang Management Shu-Cyong Zen (81%), Chen-Hai Lin (19%) Consultant Co., Ltd. Xin Rui Investment Co., You-Ciang Yang (34.8%), Ying-Huei Liou (32.4%), Mei-Jyuan Syong Ltd. (26.8%) Tai Jiunn Enterprise Co., Yi-Jen Chen (46.13%), GIUM CO., LTD (42.84%), Ming-Yuan Yeh Ltd. (0.69%), Ching-Shuan Chen Ting (0.21%)

3. Major Shareholders of Major Corporate Shareholder: Feb. 28, 2013 Corporate shareholder Major shareholder of corporate shareholder and shareholding Ratio of Name Shareholding thereof Pan Asia Chemical Corporation (14.97%); Sheng Jen Knitted Texiles (4.21%); Formosa Imperial Wineseller Corp (3.52%); Pan Asia Investment Co., Ltd. (3.00%); Chung Chien Investment Co., Ltd. (2.51%); Netherlands Pension Robert Bacal Investment Account at China Man-Made Fiber Citibank (1.14%); Deh Hsing Securities Investment Trust Co., Ltd. Co., Ltd. (0.67%); Chou Chang Co., Ltd. (0.63%); Central Bank of Norway Investment Account at JP Morgan Chase Taipei (0.61%); 1st Discretionary Investment of President Securities Investment Trust at the appointment of National Annuity Fund (0.59%). Pan Asia Investment Co., Ltd. (41.80%), Ta Fa Investment Co., Ltd. Tai Yi Investment Co., (38.17%), Tsung Hao Enterprise Co., Ltd. (9.93%), Chao-Jia Lee Ltd. (6.31%), Sian-Jhang Syu (2.53%), Guei-Lian Jheng (1.26%). Ta Fa Investment Co., Ltd. (28.08%); Pan Asia Investment Co., Ltd. (17.67%); Chin-Yuan Huang (14.72%); Tung Hao Enterprises Corp. Chung Chien Investment (14.30%); Hsuan Deh Consultants Co., Ltd. (10.16%); Chun Foo Co., Ltd. Development Co., Ltd. (7.95%); Kuei-Hsien Wang (1.70%); Hsu Tian Investment Co., Ltd. (1.62%), Kuei-Fong Wang (1.55%); Yu Huei Co., Ltd. (1.47%). Tai Yi Investment Co., Ltd. (47.42%), Ta Fa Investment Co., Ltd. Pan Asia Investment Co., (42.63%), Tsung Hao Enterprise Co., Ltd. (9.95%), Kuei-Hsien Wang Ltd. (0.51%)

19 19 Corporate shareholder Major shareholder of corporate shareholder and shareholding Ratio of Name Shareholding thereof 4. Information on Directors and Supervisors in professionalism and Yu Hui Limited Kuei-Hsien Wang (100%). impartiality Ke Yi Bao Investment Have more than 5 years of experience Yun-Jyun Deng (99.99%). Conditions Co., Ltd. and the following professional Status of independence (note) CMFC Investment Co., Ltd. (93.87%）, Chao-Chang Wang（5.57%） qualifications Sheng Jen Knitted , Wang Kuei-Hsien（0.25%）, Shang-Jr Chiang（0.15%）, Shi-Yi Chiang Lecturer or Passed the Required Textiles Co., Ltd. （0.10%）, Chao-Ching Wang（0.05%）. above in qualification Work commerce, examination experience Deh Hsing Securities law, with proper in Investment Trust Co., China Man-Made Fiber Corporation (100%). finance, licensing by commerce, Ltd. accounting the national law, Number of Pan Asia Chemical or subjects Government finance, public Corporation Employee Not applicable. companies required by Apparatus as accounting Welfare Committee where the the court judge, or others China Man-Made Fiber Co., Ltd. (45.81%); Da Fa Investment Co., person holds business of prosecutor, required by Ltd. (32.35%), Kuan Ching-Chun(7.4%), Kuei-Hsien Wang (6.00%), 1 2 3 4 5 6 7 8 9 10 the title as the Bank Deh Hsing Securities Investment Trust Co., Ltd. (2.45%), Reliance the bank in lawyers, independent pubic or certified Chou Chin Corporation Securities (1.44%), Special adjustment account (1.04%), Nurske director County Investment Account at HSBC Taipei Branch (0.64%), Chou private public Chin Enterprise Co. Ltd. treasury stock (0.64%), Chung-Yi Chen colleges or accountant or universities other (0.40%) Li-Kai Chuang (21.36%), Hsin-Yi Chuang (13.49%), Chien-Huei professional Chou Heui Investment Chuang (13.43%), Man-Yen Chuang Chen (12.14%), Teng-Hsin designations Co., Ltd. Chuang (8.17%), Lai-Zi Kuo (5.01%) required by the business Chou Chin Corporation. (89.78%), Chou Chang Co., Ltd. (5.74%), Name Ching-Long Tu (1.72%), Tsui-Chueh Chan (0.20%), Chiung-Er Wang of the Bank           Ge Ling Co., Ltd. (0.17%), Shu-Chin Kuo (0.17%), Shu-Yun Hsu Chu (0.12%), Jin-Fong Soo 0 Kuei-Fong Chi-Chien Chan (0.08%), Rong-Li Chen (0.08%), Mei-Keui Lin        0 (0.07%) Wang Jer-Shyong GIUM CO., LTD GIUM CO., LTD (100%).          0 Tsai

Yi-Der Chen          0

Hsi-Rong            0 Huang Chen-Le Liu            0 Jin-Yi Lee            0 Kang-Chi          0 Chou Chun-Sheng           0 Lee Meng-Liang         0 Chang Hsin-Ching          0 Chang Ming-Shan         0 Chuang Wei-Liang          0 Lin Ching-Hsin           0 Chang Chia-Hung          0 Lin

20 21 20

4. Information on Directors and Supervisors in professionalism and impartiality

Conditions Have more than 5 years of experience and the following professional Status of independence (note) qualifications Lecturer or Passed the Required above in qualification Work commerce, examination experience law, with proper in finance, licensing by commerce,

accounting the national law, Number of or subjects Government finance, public companies required by Apparatus as accounting where the the court judge, or others person holds business of prosecutor, required by 1 2 3 4 5 6 7 8 9 10 the title as the bank in lawyers, the Bank independent pubic or certified director private public colleges or accountant or universities other

professional designations required by the business Name of the Bank Jin-Fong Soo           0 Kuei-Fong        0 Wang Jer-Shyong          0 Tsai Yi-Der Chen          0 Hsi-Rong            0 Huang Chen-Le Liu            0 Jin-Yi Lee            0 Kang-Chi          0 Chou Chun-Sheng           0 Lee Meng-Liang         0 Chang Hsin-Ching          0 Chang Ming-Shan         0 Chuang Wei-Liang          0 Lin Ching-Hsin           0 Chang Chia-Hung          0 Lin

21 21 Jiann-Ell           0 Huang Shu-Li           0 Huang Chien-Hwa           0 Lee Fu Ching-           0 Huang Tsai Chao-Nan           0 Hsieh Note: Respective director and supervisor who meet the following qualifications 2 years before assumption of office and at the time of assumption office shall put a “” in the appropriate space. (1) Not an employee of the Bank or its affiliates. (2) Not a director or supervisor of the Bank or its affiliates (excluding the capacity of independent director of the Bank or its parents, or a subsidiary directly or indirectly held by the Bank with more than 50% of the stakes). (3) Not a natural person, spouse, underage children, or under the title of a third party who holds more than 1% of the outstanding shares issued by the Bank or among the top 10 natural person shareholders. (4) Not a spouse, kin at the second pillar under the Civil Code, or the lineal blood relatives within the fifth pillar under the Civil Code as specified in (1) through (3). (5) Not a director, supervisor or employee of an institutional shareholder who holds more than 5% of the outstanding shares issued by the Bank, or a director, supervisor or employee of an institutional shareholder who is among the top 5 shareholders. (6) Not a director, supervisor, manager or shareholder holding more than 5% of the outstanding shares of specific company or institution in business or financial relation with the Bank. (7) Not a professional, owner, partner, director, supervisor, manager of proprietorship, partnership, company or institution that provide business, legal, financial and accounting services to the Bank or a spouse to the aforementioned persons. Except the members of the Remuneration Committee in exercising their authority within the scope of empowerment pursuant to Article 7 of the Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter. (8) Not a spouse to or kin at the second pillar under the Civil Code to any other director. (9) Not under any of the categories stated in Article 30 of the Company Act. (10) No Government Apparatus agency, juristic person or its representative is elected under Article 27 of the Company Act.

22 22 (II) President, Executive Vice Presidents, Assistant Executive Vice Presidents and managers of the departments and branches Feb. 28, 2013 Spouse or kin within the Shares Held by Spouse Shareholding under the Status of shareholding second pillar under the Civil & Dependents title of a third party Positions Code and who is a manager Title Name Election Date Major experience with other Ratio of Ratio of Ratio of companies Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % Director, Taichung Commercial Vice President of Taiwan Business Bank; Chun-Sheng Bank; President 2010/10/13 480,944 0.021 18,102 0.001 0 0 Commerce Master of National Taiwan University None None None Lee Manager, College of Management Taichung Commercial Bank. Regional Center Director of Land Bank of Executive Rong-Hua 2010/5/5 77,203 0.003 0 0 0 0 Taiwan; Department of Business Administration, None None None None Vice President Kao Tamkang University Supervisor, Taichung Bank

23 Insurance Broker Co., Ltd.; Director, Taichung Bank Executive Chief Secretary, Office of the Board; Department Kai-Yu Lin 2010/7/30 1,254 0.000 0 0 0 0 Leasing co., None None None Vice President of Law, National Chengchi University Ltd.; Director, Hsiang Feng Development Co., ; Director, Eureka Investment Co., Ltd. Director of Reliance Manager, Business Development Dept.; Finance Executive Hsueh-Hsien Securities 2010/8/4 422,742 0.018 33,195 0.001 0 0 Master, National Chung Hsing University College None None None Vice President Liao Investment of Management Trust Co., Ltd. Executive Chih-Chuan Manager, HR Dept.; Department of Accounting; 2009/8/27 317,819 0.014 0 0 0 0 None None None None Vice President Fang Fu Jen Catholic University

Manager, Deputy Manager, Business Department; Chun-Sheng Information 2013/1/25 193,852 0.008 28,271 0.001 0 0 Department of Information Science, Fengchia None None None None Lin Dept. University Manager, Deputy Manager, International Business Dept.; International Cheng-Yu Lai 2006/5/4 18,767 0.001 0 0 0 0 None None None None Department of Accounting, Feng Chia University Banking Dept. Director of Reliance Deputy Manager, Loan Administration Dept.; Manager, Securities Yu-Chung Lin 2010/8/4 112,065 0.005 0 0 0 0 Graduate Institute of Information Management, None None None Trust Dept. Investment National Sun Yat-Sen University Trust Co., Ltd. Manager, Dept of Debt Deputy Manager, Dept of Debt Collection and Collection and Mei-Li Wu 2010/4/29 24,180 0.001 0 0 0 0 Asset Recovery; Department of Law, Soochow None None None None 25 Asset University Recovery Manager, Manager, IT Department; Department of Statistics, Corporate Deh-Wei Chia 2013/1/25 187,632 0.008 304 0.000 0 0 None None None None National Cheng Kung University Finance Dept. Director of Sheng-Yong International Manager, Enterprise Feng-Lang Deputy Manager of Securities Dept.; Accounting Securities 2011/6/16 0 0.000 0 0 0 0 Co., Ltd.; None None None Chen and Statistics, Shih Chien University Dept. Director of Quin-Sheng Investment Co., Ltd. Manager, Risk Deputy Manager, Risk Management Department; Management Jhen-Ying Wu 2012/6/27 78,578 0.003 0 0 0 0 Department of Finance and Banking, National None None None None Dept. Taiwan University Deputy Manager, Treasury Department; Manager, Guang Jhong 2013/6/27 171,233 0.007 1,655 0.000 0 0 Department of International Business, National None None None None Treasury Dept. Siao Taiwan University. Director of Manager, Deputy Manager, Loan Administration Dept.; Reliance Wealth Yu-Chung Lin 2013/1/25 112,065 0.005 0 0 0 0 Graduate Institute of Information Management, Securities None None None Management National Sun Yat-Sen University Investment Dept. Trust Co., 25

26 Branch Business Administration Manager, Manager, Dadu Branch; Department of Business Rai-Cheng Jhongzhen 2008/9/22 271,089 0.012 0 0 0 0 Administration, Mingshin University of Science None None None None Yang Branch and Technology Manager, Shejioujia Branch; Banking and Manager, Han-Ching 2009/8/28 73,036 0.003 70,894 0.003 0 0 Insurance, Taichung Institute of Technology None None None None Hsitun Branch Tsai (Open Education Program) Manager, Kwei-Ching Manager, Peitou Branch; School of Humanity 2013/1/25 209,003 0.009 0 0 0 0 None None None None Nantun Branch Ho Studies, National Sun Yat-Sun University Manager, Manager, Nantun Branch; Department of Applied Neihsin Yu-Ing Chen 2010/5/4 24,947 0.001 0 0 0 0 Commerce, Taichung Institute of Technology None None None None Branch (Open Education Program) Manager, Ching-Kun Manager, Taichungkang Branch; International 2011/3/2 323,375 0.014 0 0 0 0 None None None None Dadu Branch Lin Trade, Overseas Chinese College of Commerce Deputy Manager, W. Taichung Branch; Manager, N. Chung-Rong Department of Applied Commerce, Taichung Taiping 2013/1/25 1,108 0.000 1,403 0.000 0 0 None None None None Lin Institute of Technology (Open Education Branch Program) Manager, Deputy Manager, Taichung Regional Center; Taichungkang Hsin-Ru Kao 2013/1/25 202,328 0.009 0 0 0 0 Business Administration, Taichung Commercial None None None None Branch School Manager, Chung-Teng Manager, Trust Dept.; Department of Cooperative Szumin 2009/12/31 184,761 0.008 0 0 0 0 None None None None Hung Economics, Feng Chia University Branch

Spouse or kin within the Shares Held by Spouse Shareholding under the Status of shareholding second pillar under the Civil & Dependents title of a third party Positions Code and who is a manager Title Name Election Date Major experience with other Ratio of Ratio of Ratio of companies Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % Manager, Shareholder, Manager, Daching Branch; Institute of Business Chungkang Hwei-Chin Lu 2009/2/27 2,084 0.000 0 0 0 0 Huan Lin None None None and Management, Feng Chia University Branch Co., Ltd. Manager, S. Deputy Manager, S. Taichung Branch; Huan-Chang Taichung 2011/7/7 116,848 0.005 0 0 0 0 Department of Taxation and Public Finance, Feng None None None None Tseng Branch Chia University Manager, N. Deputy Manager,Dachia Branch; Department of Min-Hsuan Taichung 2013/1/25 0 0.000 0 0 0 0 International Trade, Overseas Chinese College of None None None None Chiang . Branch Commerce Manager, Chung-Hsien Manager, Neihsin Branch; Commerce, Shin Min Taiping 2010/5/4 352,758 0.015 0 0 0 0 None None None None Lee Commercial & Industrial Vocational High School Branch Manager, Chingsui Branch; Department of Manager, Pi-Hwa Chang 2009/12/31 4,001 0.000 2,860 0.000 0 0 Applied Commerce, Taichung Institute of None None None None Houli Branch Technology (Open Education Program) Manager, Manager, N. Taiping Branch; Institute of Business Chia-Wei Tsai 2009/8/28 118,665 0.005 0 0 0 0 None None None None Daya Branch and Management, Asia University, Taiwan 27 Manager, Tan Yu-Chen Deputy Manager, Fong Yuan Branch; 2008/8/7 42,073 0.002 6,054 0.000 0 0 None None None None Tzu Branch Yang International Trade, Ling Tung College Deputy Manager, Nanyang Branch; Dept of Manager, Sheg Yi-Cheng 2013/1/25 10,380 0.000 3,101 0.000 0 0 Banking and Finance, Chaoyang University of None None None None Kang Branch Liao Technology Manager, Pao-Yuan Manager,Shihu Branch; Department of Statistics, Fongyuan 2013/1/25 213,452 0.009 0 0 0 0 None None None None Chen Tung Hai University Branch Manager, Manager, Datu Branch; International Trade, Ling Tung-Po Yang 2011/3/2 464,960 0.020 51,732 0.002 0 0 None None None None Dachia Branch Tung College Manager, Manager, Chunan Branch; Department of Chingsui Ming-Ren Hsu 2013/1/25 135,156 0.006 0 0 0 0 Insurance Management, Chao Yang University of None None None None Branch Technology Manager, Shu-Chen Manager, Accounting Dept.; Department of 2009/11/9 341,678 0.015 0 0 0 0 None None None None Shalu Branch Chen Accounting, National Cheng Kung University Manager, Chao-Chi Deputy Manager, Lukang Branch; MBA, Institute Wufong 2013/1/25 738 0.000 119 0.000 0 0 None None None None Tseng of Health and Management Branch Manager, Manager, Lungjing Branch; Department of Chang-Chi Dongshih 2013/1/25 219,840 0.009 586 0.000 0 0 Cooperative Economics, National Chung Hsing None None None None Liu Branch University Manager, E. Chien-Hao Manager, Shihu Branch; Institute of Business and Fongyuan 2009/8/28 871 0.000 0 0 0 0 None None None None Chen Management, Feng Chia University Branch 27

Spouse or kin within the Shares Held by Spouse Shareholding under the Status of shareholding second pillar under the Civil & Dependents title of a third party Positions Code and who is a manager Title Name Election Date Major experience with other Ratio of Ratio of Ratio of companies Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % Director of Zhi Sen Manager, Manager, Shui Li Branch; Department of Business Chien-ting Lin 2013/1/25 670 0.000 618 0.000 0 0 Compound None None None Wutze Branch Administration, Ling Tung College Materials Co., Ltd. Manager, S. Deputy Manager, Hsinchu Branch; Graduate Fongyuan Chi-Hung Wu 2009/2/27 20,196 0.001 0 0 0 0 None None None None School of Statistics, National Taipei University Branch Manager, Manager, Shangkong Branch; Finance, Taichung Chun-Chun Nanyang 2009/8/28 10,000 0.000 0 0 0 0 Institute of Technology (Open Education None None None None You Branch Program) Manager, Deputy Manager, Erlin Branch; Department of Tsung-Yi Liu 2010/5/4 80,966 0.003 0 0 0 0 None None None None Nantou Branch Law, National Taiwan University Manager, Deputy Manger, Puli Branch; Department of Shin-Hsiung Chushan 2013/1/25 51,900 0.002 0 0 0 0 International Trade, University of Chinese None None None None Huang Branch Culture. Manager, Changhua Branch; Accounting and 28 Manager, Ya-Ching 2013/1/25 195,144 0.008 0 0 0 0 Statistics, Taichung Husbandry and Commerce None None None None Shuili Branch Peng Vocational School Manager, Min Hsiung Branch; Business Manager, Puli Ming-Yu Chiu 2012/4/30 30,683 0.001 0 0 0 0 Administration, Taichung Commercial School on None None None None Branch Open education program Manager, Yung-Chang Manager, Siangshang Branch; Department of Tsaotun 2008/9/22 7,119 0.000 1,049 0.000 0 0 None None None None Lai Accounting, Feng Chia University Branch Manager, Deputy Manager, Nantou Branch; Dept of Yung-Sung Changhua 2013/1/25 432 0.000 1,038 0.000 0 0 Business Administration, Chaoyang University of None None None None Chien Branch Technology Manager, Manager, Siushui Branch; Department of Business Chung-Cheng Lukang 2010/8/4 184,372 0.008 0 0 0 0 Administration, Tamsui Institute of Business None None None None Wu Branch Administration Manager, Hung-Ping Manager, Nantun Branch; Department of Business 2013/1/25 13,357 0.001 0 0 0 0 None None None None Shihu Branch Chen Administration, Ming Dao University Manager, Erlin Cheng-Hsien Manager, Puhsin Branch; Department of Business Cheng- 2011/11/24 327 0.000 0 0 0 0 None Manager Brothers Branch Ni Administration, Feng Chia University Wen Ni Manager, Dachu Branch; Enterprise Information Manager, Ming-Cheng Management, Chung Chou Institute of 2009/2/27 85,658 0.004 0 0 0 0 None None None None Peitou Branch Wu Technology, Affiliated College of Continuing Education Manager, Manager, Huatan Branch; Business, Holy Savior Hsin-Hsin Lee 2009/8/28 158,050 0.007 64,469 0.003 0 0 None None None None Teinchung High School 28

Spouse or kin within the Shares Held by Spouse Shareholding under the Status of shareholding second pillar under the Civil & Dependents title of a third party Positions Code and who is a manager Title Name Election Date Major experience with other Ratio of Ratio of Ratio of companies Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % Branch Manager, Deputy Manager, Shen kang Branch; Department Ching-Yuan Yuanlin 2009/8/28 7,923 0.000 0 0 0 0 of Business Administration, Chung Hua None None None None Lin Branch University Cheng- Manager, Cheng-Wen Manager, Risk Management Dept.; Department of 2011/7/12 70,804 0.003 0 0 0 0 None Manager Hsien Brothers Homei Branch Ni Business Administration, Ling Tung College Ni Manager, Tsung-Chang Manager, Yungchiung Branch; Department of 2010/8/4 618 0.000 0 0 0 0 None None None None Shetou Branch Tseng Cooperative Economics, Feng Chia University Manager, Kee-Hsien Manager,Zhongzhen Branch; Graduate Institute of 2009/8/28 528,361 0.023 14,140 0.001 0 0 None None None None Huatan Branch Lee Finance, National Chung Hsing University Manager, Deputy Manager, Shalu Branch; Graduate Institute Yungchiung Chi-Hua Yao 2010/5/10 239,740 0.010 0 0 0 0 of Agricultural Economics, National Chung Hsing None None None None Branch University Manager, Wei-Huang Manager, Fongyuan Branch; Department of Siushui 2013/1/25 77,850 0.003 0 0 0 0 None None None None You Accounting, National Chung Hsing University 29 Branch Manager, Wen-Tung Manager, Yuanlin Branch; Department of Shangkong 2009/8/28 223,063 0.010 0 0 0 0 None None None None You Business Administration, Feng Chia University Branch Manager, N. Yuanlin Branch; Graduate Institute of Manager, Shun-Deh 2009/2/27 153,227 0.007 0 0 0 0 Finance, National Yunlin University of None None None None Dachu Branch Tsai Technology and Science Manager, N. Deputy Manager, Huatan Branch; Department of Chun-Min Yuanlin 2013/1/25 1,131 0.000 0 0 0 0 Business Administration, National Chung Hsing None None None None Huang Branch University Manager, Shih-Huei Manager, Wutze Branch; Tourism Department, 2013/1/25 46,071 0.002 0 0 0 0 None None None None Peitou Branch Wang Tamsui Institute of Business Administration Manager, Manager, S. Taichung Branch; Department of Yi-Ping Lin 2009/12/31 88,899 0.004 0 0 0 0 None None None None Peitun Branch Law, Fu Jen Catholic University Deputy Manager, Chunan Branch; Applied Manager, Jhih-Hao 2011/11/24 33,035 0.001 0 0 0 0 Foreign Language, Taichung Commercial School None None None None Puhsin Branch Liang on Continuing Education Manager, Rong-Kuo Manager, Sung shan Branch; Graduate Institute of 2009/9/2 134,349 0.006 0 0 0 0 None None None None Taipei Branch Cheng Law, Soochow University Manager, Manager, Wufeng Branch; Business Lungjing Kuo-Chin Chi 2013/1/25 184,786 0.008 5,009 0.000 0 0 None None None None Administration, Ling Tung College Branch Manager, Yongho Branch of Citibank (Taiwan); Department Sung shan Tien-Hou Tsai 2009/10/1 105,168 0.005 0 0 0 0 None None None None of banking, National Chengchi University Branch 29

Spouse or kin within the Shares Held by Spouse Shareholding under the Status of shareholding second pillar under the Civil & Dependents title of a third party Positions Code and who is a manager Title Name Election Date Major experience with other Ratio of Ratio of Ratio of companies Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % Manager, Manager, Cosmos Bank, Chien Cheng Branch; Ruei-Chang Sanchong 2009/3/9 31,140 0.001 0 0 0 0 Business Administration, National Taipei Junior None None None None Lee Branch College of Business on Air education program Corporate banking manager, Cosmos Bank, Hsin Manager, Chiang-Kai Hsing Branch; Graduate Institute of Financial Kaohsiung 2009/3/11 80,288 0.003 0 0 0 0 None None None None Liu Operations, National Kaohsiung First University Branch of Science and Technology Manager, Deputy Manager, Tucheng Branch; Department of Yin-Ta Tsai 2013/1/25 1,520 0.000 0 0 0 0 None None None None Linko Branch International Trade, Tamkang University Deputy Manager, Er Lin Branch; Bank Manager, Chen-Hsiang 2008/8/7 103,800 0.004 0 0 0 0 Management, Tamsui Institute of Business None None None None Huwei Branch Chuang Administration Manager, Kuang-Chi Manager, Peitun Branch; Business Administration, 2009/12/31 102,670 0.004 0 0 0 0 None None None None Yuanli Branch Chen Taitung Institute of Technology Manager, Cheng-Huan Manager, Jhongli Branch; Department of Chunan 2013/1/25 140,003 0.006 13,459 0.001 0 0 None None None None Huang Economics, Tung Hai University Branch 30 Manager, Deputy Manager, Homei Branch; Department of Dounan Shun-Chi Ke 2009/2/27 129,164 0.006 121 0.000 0 0 None None None None Commerce, National Open University Branch Manager, Wutze Branch; Department of Manager, Chiu-Wen 2010/8/4 2,081 0.000 0 0 0 0 International Trade, Chienkou Technology None None None None Neihu Branch Chang University Manager, Ban Tsai-Tuan Deputy Manager, Sung Shan Branch; Department 2010/4/30 131,738 0.006 0 0 0 0 None None None None Chiao Branch Chen of Business Administration, Tung Hai University Assistant Manager, CitiBank (Taiwan); Graduate Manager, Feng Institute of Financial Operations, National Wen-Kai Tsai 2008/4/25 21,565 0.001 0 0 0 0 None None None None Shan Branch Kaohsiung First University of Science and Technology Manager, Chun-wen Manager, Tayuan Branch; Department of Banking, Xinzhuang 2013/1/25 83,968 0.004 0 0 0 0 None None None None Chen National Chengchi University Branch Manager, Deputy Manager, Sungshan Branch; Department Chien-Min Pingjhen 2013/1/25 0 0.000 0 0 0 0 of Industrial Management, National Taiwan None None None None Feng Branch University of Science and Technology Manager, Min Ching-Tang Deputy Manager, Lukang Branch; International 2012/4/30 0 0.000 0 0 0 0 None None None None Hsiung Branch Tsai Trade, Aletheia University. Manager, Shih-Fan Manager, Nankan Branch; Dept. of Business Taoyuan 2013/1/25 157,020 0.007 0 0 0 0 None None None None Weng Administration, Vanung University Branch Manager, Chung-Hsien 2010/6/1 60,204 0.003 0 0 0 0 Manager, Citibank Fu Cheng Branch; None None None None 30

Spouse or kin within the Shares Held by Spouse Shareholding under the Status of shareholding second pillar under the Civil & Dependents title of a third party Positions Code and who is a manager Title Name Election Date Major experience with other Ratio of Ratio of Ratio of companies Quantity Shareholding Quantity Shareholding Quantity Shareholding Title Name Relation % % % Yung Kung Lee Comprehensive Commerce Depertment, National Branch Tainan Commercial Vocational Senior High School Manager, Standard Chartered Bank, Chu Pei Manager, Chu Chien-Hung 2008/6/2 146,020 0.006 0 0 0 0 Branch; Department of Taxation and Public None None None None Pei Branch Lin Finance, National Cung Hsing University Manager, Xinzhuang Branch; Graduate Institute of Manager, Nan Hsin-Fa Wang 2013/1/25 507 0.000 0 0 0 0 Management Science, National Chiao Tung None None None None Kang Branch University Manger, North Taiwan Regional Center; Graduate Manager, Nei Pei-Miao Jan 2013/1/25 120,417 0.005 0 0 0 0 Institute of Finance and Banking, National Central None None None None Li Branch University Manager, Manager, Standard Chartered Bank, Management Cheng-Hua Hsinchu 2008/9/1 124,000 0.005 0 0 0 0 Dept.; Department of Banking Insurance, Feng None None None None Lee Branch Chia University Manager, Chen-Hung Manager, Pingjhen Branch; University of Gueishan 2010/4/30 92,101 0.004 0 0 0 0 None None None None 31 Cheng Tennessee School of Business Administration Branch Manager, Neili Branch; Department of Applied Manager, Jr-Hsin Lee 2013/1/25 236,789 0.010 0 0 0 0 Business, Taipei Institute of Commerce and None None None None Jhongli Branch Technology Manager, Chang-Sheng Deputy Manager, Chu Pei Branch; Department of Hsinfong 2009/6/16 116,659 0.005 32,074 0.001 0 0 None None None None Liu Business Administration, Soochow University Branch Manager, Cosmos Bank, Corporate Banking Manager, Ta Yu-Heui 2009/5/25 0 0.000 0 0 0 0 Center of Taoyung District; Graduate School of None None None None Yuan Branch Tseng Management, Yuan Ze University Manager, Ting-Kuang Manager, Pingjhen Branch; Department of Yangmei 2009/6/16 198,448 0.009 0 0 0 0 None None None None Huang Cooperative Economics, Feng Chia University Branch Manager, Manager, Cosmos Bank, Corporate Banking Su-Lang Tucheng 2011/3/7 4,152 0.000 0 0 0 0 Center of North 1st District; Graduate School of None None None None Huang Branch Management, Yuan Ze University Manager, Yuanlin Assistant Manager of Taiwan International Hong-Lun Branch 2011/7/25 0 0.000 3,207 0.000 0 0 Securities Corporation; Graduate Institute of None None None None Chang Securities Business; Administration, Da-Yeh University Brokerage Manager, Kuang-Chiang Asst VP, Jih Sun Securities, Dept of Business Taipei Branch 2012/12/3 0 0.000 0 0 0 0 None None None None Lee Administration, American International University Securities 31

(III) Remuneration to Directors, Supervisors, President and Executive Vice Presidents, and allocation of bonus to employees: 1. Remuneration to Directors (including independent directors) Unit: NTD thousand; %

Remuneration to Directors Remuneration in the capacity as employees The sum of A, B, The sum of A, B, C, Quantity of shares Retained Shares C and D in Salaries, bonus Number of new D, E, F and G in Remuneration entitled under Director fees (A) Pension (B) Distribution (C) For services (D) proportion to and special Pension (F) Employee bonus from earnings (G) (Note 1) restricted employee proportion to paid to employee stock (Note 1) Earnings (%) subsidies (E) shares acquired Earnings (%) directions from option (H) an invested Title Name All All All All All All All All companies mentioned All All All The Bank company other companies companies companies companies companies companies companies in the financial statements companies companies companies than the The mentioned The mentioned The mentioned The mentioned The mentioned The mentioned The mentioned The mentioned The mentioned The mentioned company’s Bank in the Bank in the Bank in the Bank in the Bank in the Bank in the Bank in the Cash Free-Gratis Cash Free-Gratis Bank in the Bank in the Bank in the subsidiary financial financial financial financial financial financial financial Dividends Dividends Dividends Dividends financial financial financial statements statements statements statements statements statements statements statements statements statements

Chairman Jin-Fong Soo

Kuei-Fong

Wang,

Jer-Shyong Tsai Managing

33 Hsi-Rong Director Huang

(independent

director)

Independent Chen-Le Liu,

director Jin-Yi Lee

Kuei-Hsien 20,390 22,149 0 0 59 59 1,858 2,064 0.80 0.87 3,945 3,945 0 0 2 0 2 0 0 0 0 0 0.95 1.02 54 Wang,

Hsin-Ching

Chang

Ming-Shan

Chuang, Director Chun-Sheng Lee

Ming-Hsiung

Huang,

Chia-Hung Lin

Meng-Liang

Chang 33

Kang-Chi Chou

Pan Asia Chemical Corporation

Ho Yang Management

Consultant Co., Ltd.

Managing Director Yi-Der 1,200 1,320 0 0 0 0 145 180 0.05 0.05 0 0 0 0 0 0 0 0 0 0 0 0 0.05 0.05 0 Chen (Note 2)

Director Ching-Hsin Chang 840 840 0 0 0 0 50 50 0.03 0.03 0 0 0 0 0 0 0 0 0 0 0 0 0.03 0.03 0 (Note 2)

Director Jer-Nan Wang 0 0 0 0 0 0 5 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (Note 2)

Director Wei-Liang Lin 0 475 0 0 0 0 30 55 0 0.02 0 0 0 0 0 0 0 0 0 0 0 0 0 0.02 0 (Note 2)

I Joung Investment Co., Ltd. 0 0 0 0 13 13 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 (Note 2)

34 Chou Chang Co., Ltd. 840 840 0 0 6 6 0 0 0.03 0.03 0 0 0 0 0 0 0 0 0 0 0 0 0.03 0.03 0 (Note 2) Note 1: The employee bonus and remuneration to directors/supervisors are allocated according to the earnings allocation motion in the most recent year. The proportion of allocation this year is imputed based on the proportion of allocation in the most recent year. Note 2: The pledge ratio of I Joung Investment Co., Ltd. and Chou Chang Co., Ltd. is more than 50%.

Classification of remuneration Name of Directors

Total (A+B+C+D) Total (A+B+C+D+E+F+G) Classification of remuneration paid to directors All companies mentioned All companies mentioned in The Bank The Bank in the financial statements the financial statements I J Yi-Der Chen, Chen-Le Yi-Der Chen, Chen-Le Liu, Yi-Der Chen, Chen-Le Liu, Yi-Der Chen, Chen-Le Liu, Jin-Yi Lee, Jin-Yi Lee, Kuei-Hsien Jin-Yi Lee, Kuei-Hsien Liu, Jin-Yi Lee, Kuei-Hsien Wang, Wang, Kang-Chi Chou, Wang, Kang-Chi Chou, Kuei-Hsien Wang, Kang-Chi Chou, Hsin-Ching Chang, Hsin-Ching Chang, Kang-Chi Chou, Hsin-Ching Chang, Ming-Shan Chuang, Ming-Shan Chuang, Hsin-Ching Chang, Ming-Shan Chuang, Chun-Sheng Lee, Ming-Hsiung Huang, Ming-Shan Chuang, Chun-Sheng Lee, Ming-Hsiung Huang, Chia-Hung Lin, Jer-Nan Ming-Hsiung Huang, Ming-Hsiung Huang, Chia-Hung Lin, Jer-Nan Wang, Ching-Hsin Chang, Chia-Hung Lin, Jer-Nan Less than 2,000,000 Chia-Hung Lin, Jer-Nan Wang, Ching-Hsin Chang, Meng-Liang Chang, Wang, Ching-Hsin Chang, Wang, Ching-Hsin Chang, Meng-Liang Chang, Wei-Liang Lin, I Jong Meng-Liang Chang, 35 Meng-Liang Chang, Wei-Liang Lin, I Jong Investment Co., Ltd., Ho Wei-Liang Lin, I Jong Wei-Liang Lin, I Jong Investment Co., Ltd., Ho Yang Management Investment Co., Ltd., Ho Investment Co., Ltd., Ho Yang Management Consultant Co., Ltd., Chou Yang Management Yang Management Consultant Co., Ltd., Chou Chang Co., Ltd.. Consultant Co., Ltd., Chou Consultant Co., Ltd., Chou Chang Co., Ltd.. Chang Co., Ltd.. Chang Co., Ltd.. Jin-Fong Soo, Jer-Shyong Jin-Fong Soo, Jer-Shyong Jin-Fong Soo, Jer-Shyong Jin-Fong Soo, Jer-Shyong Tsai, Hsi-Rong Huang, Tsai, Hsi-Rong Huang, Tsai, Hsi-Rong Huang, Tsai, Hsi-Rong Huang, 2,000,000(inclusive)~5,000,000 (exclusive) Kuei-Fong Wang, Pan Kuei-Fong Wang, Kuei-Fong Wang, Kuei-Fong Wang, Pan Asia Asia Chemical Chun-Sheng Lee, Pan Asia Chun-Sheng Lee, Pan Asia Chemical Corporation Corporation Chemical Corporation Chemical Corporation 5,000,000 (inclusive)~10,000,000 (exclusive) None None None None 10,000,000 (inclusive)~15,000,000 (exclusive) None None None None 15,000,000 (inclusive)~30,000,000 (exclusive) None None None None 30,000,000 (inclusive)~50,000,000 (exclusive) None None None None 50,000,000 (inclusive)~100,000,000 (exclusive) None None None None 100,000,000 above None None None None Total 22 persons 22 persons 22 persons 22 persons

2. Remuneration to Supervisors Unit: NTD thousand; % Remuneration to Supervisors The sum of A, B, C Retained Shares Remuneration and D in proportion to Director fees (A) Pension (B) Distribution (C) For services (D) paid to Earnings (%) (Notes) directions from All All All All All an invested Title Name companies companies companies companies companies company other mentioned mentioned The mentioned mentioned mentioned than the The Bank The Bank The Bank The Bank in the in the Bank in the in the in the company’s financial financial financial financial financial subsidiary statements statements statements statements statements Resident Jiann-Ell Supervisor Huang Ching-Huang Tsai, Shu-Li Huang 36 Supervisor Chao-Nan Hsieh, 4,560 4,560 0 0 31 31 455 455 0.18 0.18 0 Chien-Hwa Lee Fu Xin Rui Investment Co., Ltd. Tai Jiunn Enterprise Co., Ltd. Note: The employee bonus and remuneration to directors/supervisors are allocated according to the earnings allocation motion in the most recent year. The proportion of allocation this year is imputed based on the proportion of allocation in the most recent year.

Classification of remuneration Name of Supervisors Classification of remuneration paid to supervisors Total (A+B+C+D) The Bank All companies mentioned in the financial statements E Jiann-Ell Huang,Ching-Huang Cai, Shu-Li Jiann-Ell Huang,Ching-Huang Cai, Shu-Li Huang, Less than 2,000,000 Huang, Chian-Hwa Lee Fu, Chao-Nan Hsieh, Chian-Hwa Lee Fu, Chao-Nan Hsieh, and Tai and Tai Jiunn Enterprise Co., Ltd. Jiunn Enterprise Co., Ltd. 2,000,000 (inclusive)~5,000,000 (exclusive) Xin Rui Investment Co., Ltd. Xin Rui Investment Co., Ltd. 5,000,000 (inclusive)~10,000,000 (exclusive) None None 10,000,000 (inclusive)~15,000,000 (exclusive) None None 15,000,000 (inclusive)~30,000,000 (exclusive) None None 30,000,000 (inclusive)~50,000,000 (exclusive) None None 50,000,000 (inclusive)~100,000,000 (exclusive) None None 100,000,000 above None None Total 7 persons 7 persons

3. Remuneration to President and Executive Vice Presidents: Unit: NTD thousand; % The sum of A, B, C Employee share Number of new Bonus and special Remuneration Salary (A) Pension (B) Employee bonus of earning distribution(D) (Note ) and D in proportion subscription restricted employee Disbursement (C) paid to to Earnings (%) warrants shares acquired directions All All All All companies mentioned All All All from an The Bank Title Name companies companies companies in the financial statements companies companies companies invested The mentioned The mentioned The mentioned The mentioned The mentioned The mentioned company Bank in the Bank in the Bank in the Cash Free-Gratis Cash Free-Gratis Bank in the Bank in the Bank in the other than the company’s financial financial financial Dividends Dividends Dividends Dividends financial financial financial subsidiary statements statements statements statements statements statements Chun-Sheng President Lee Executive Kung-Hua Vice Kao President Executive Chi-Chuan Vice Fang President 14,434 14,944 0 0 3,953 3,953 8 0 8 0 0.66 0.68 0 0 0 0 36 Executive

38 Vice Kai-Yu Lin President Executive Hsueh-Hsien Vice Liao President Chief Min-Chin Auditor Shen Note: The employee bonus and remuneration to directors/supervisors are allocated according to the earnings allocation motion in the most recent year. The proportion of allocation this year is imputed based on the proportion of allocation in the most recent year.

Classification of remuneration Name of Presidents and Executive Vice Presidents Classification of Remuneration paid to presidents All companies mentioned in the financial and Executive Vice Presidents The Bank statements E Less than 2,000,000 None None Chun-Sheng Lee, Jung-Hua Kao, Chih-Chuan Fang Chun-Sheng Lee, Jung-Hua Kao, Chih-Chuan Fang 2,000,000 (inclusive) ~ 5,000,000 (exclusive) Kai-Yu Lin, Hsueh-Hsien Liao, Kai-Yu Lin, Hsueh-Hsien Liao, Min-Chin Shen Min-Chin Shen 5,000,000 (inclusive) ~10,000,000 (exclusive) None None 10,000,000 (inclusive) ~15,000,000 (exclusive) None None 15,000,000 (inclusive) ~30,000,000 (exclusive) None None 30,000,000 (inclusive) ~50,000,000 (exclusive) None None 50,000,000 (inclusive) ~100,000,000 (exclusive) None None

39 100,000,000 above None None Total 6 persons 6 persons Note 1: Vehicles and monthly rent provided to the Chairman and President in 2012 Unit: NTD thousand Remuneration paid to driver in Title Name Monthly rent Remarks 2012 The driver is the Bank’s Chairman Jin-Fong Soo employee. 0 1,180 The driver is retained President Chun-Sheng Lee externally.

Note 2: Imputed house rent provided to Chairman, President and Executive Vice Presidents in 2012 Unit: NTD thousand Title Name House and the land value Imputed monthly rent Remarks Chairman Jin-Fong Soo The dormitory as provided was 15,127 77 owned by the Bank itself. The Vice Chairman Kuei-Fong Wang house cost was based on the

4. Members of management team receiving employee bonus and bonus distribution: Dec. 31, 2012 Unit: NTD thousand; % Free-Gratis Cash Dividends Title Name Total Total/after-tax profit (%) Dividends (Note) President Chun-Sheng Lee Executive Vice Hsueh-Hsien Liao President Executive information of the land cost information and the price of acquisition less allowance for depreciation of thereon buildings the (exclusive of the accessory additions and equipment, renovation of the buildings) of the catalogue in specified of end the at property 2012. December Vice Rong-Hua Kao President Executive Vice Kai-Yu Lin President Executive Vice Chi-Chuan Fang President Chief Min-Chin Shen Auditor Manager Ching-hu Hsieh Manager Chun-Ying Wang Manager Kuo-Chun Liu Manager Yi-Ying Chung Manager Deh-Wei Chia 0 69 69 0 Manager Mei-Li Wu

Manager Jhen-Ying Wu 40 Manager Guang-Jhong Siao

Manager Cheng-Yu Lai

Manager Chih-Hung Lu Manager Yu-Chung Lin Manager Feng-Lang Chen Manager Chien-Min Chou Manager Ruei-Fen Tsai Manager Chi-Long Huang Manager Dong-Hsu Liu Manager Rai-Cheng Yang Manager Han-Ching Tsai Manager Hung-Ping Chen Manager Yu-Ing Chen Manager Ching-Kun Lin Manager Zai-Hong Yang Jung-Hua Kao Ming-Chin Shen Shen Ming-Chin Chun-Sheng Lee Chih-Chuan Fang Manager Tzer-Hsiu Lin Manager Chiung-Teng Hung Manager Hwei-Chin Lu

Manager Huan-Chang Tseng

Manager Wen-Chu Lee Manager Chung-Hsien Lee Manager Pi-Hwa Chang Manager Chia-Wei Tsai Manager Yu-Chen Yang President President President Manager He-Chin Chang Chief Auditor Auditor Chief Executive Vice Executive Vice Manager Wei-Huang You

41 40 4. Members of management team receiving employee bonus and bonus distribution: Dec. 31, 2012 Unit: NTD thousand; % Free-Gratis Cash Dividends Title Name Total Total/after-tax profit (%) Dividends (Note) President Chun-Sheng Lee Executive Vice Hsueh-Hsien Liao President Executive Vice Rong-Hua Kao President Executive Vice Kai-Yu Lin President Executive Vice Chi-Chuan Fang President Chief Min-Chin Shen Auditor Manager Ching-hu Hsieh Manager Chun-Ying Wang Manager Kuo-Chun Liu Manager Yi-Ying Chung Manager Deh-Wei Chia 0 69 69 0

Manager Mei-Li Wu

Manager Jhen-Ying Wu

Manager Guang-Jhong Siao

Manager Cheng-Yu Lai

Manager Chih-Hung Lu Manager Yu-Chung Lin Manager Feng-Lang Chen Manager Chien-Min Chou Manager Ruei-Fen Tsai Manager Chi-Long Huang Manager Dong-Hsu Liu Manager Rai-Cheng Yang Manager Han-Ching Tsai Manager Hung-Ping Chen Manager Yu-Ing Chen Manager Ching-Kun Lin Manager Zai-Hong Yang Manager Tzer-Hsiu Lin Manager Chiung-Teng Hung Manager Hwei-Chin Lu

Manager Huan-Chang Tseng

Manager Wen-Chu Lee Manager Chung-Hsien Lee Manager Pi-Hwa Chang Manager Chia-Wei Tsai Manager Yu-Chen Yang Manager He-Chin Chang Manager Wei-Huang You

41 41 Free-Gratis Cash Dividends Free-Gratis Cash Dividends Title Name Total Total/after-tax profit (%) Title Name Total Total/after-tax profit (%) Dividends (Note) Dividends (Note) Manager Tung-Po Yang Manager Jr-Hsin Lee Manager Yao-Pin Chen Manager Cheng-Hua Lee Manager Shu-Chen Chen Manager Chen-Hung Cheng Manager Kuo-Chin Chi Manager Cheng-Huan Huang Manager Pi-Wei Wang Manager Chang-Sheng Liu Manager Chien-Hao Chen Manager Yu-Heui Tseng (Continued (Continued from (Continued (Continued from Manager Shih-Huei Wang Manager Ting-Kuang Huang from previous previous page) from previous page) Manager Chi-Hung Wu Manager Su-Lan Huang page) previous Manager Chun-Chun You Manager Hong-Lun Chang page) Manager Tsung-Yi Liu Manager Kuang-Chiang Lee Manager Chang-Yung Huang Manager Wun-Jheng Lee

Manager Chien-ting Lin Manager Yi-Yuan Tung

Manager Ming-Yu Chiu Manager Kuo-Chi Lin

Manager Yung-Chang Lai Manager Pei-Miao Jan

Manager Ya-Ching Peng Note: Proposed employee bonus for 2012 is NTD 219,097. Based on the ratio of actual Manager Chung-Cheng Wu (Continued (Continued from (Continued (Continued from distributed amount for managerial staff last year, the proposed employee benefits for

Manager Pao-Yuan Chen from previous previous page) from previous page) managerial staff is NTD 68,577. [(125,710/401,746)*219,097] Manager Cheng-Hsien Ni page) previous Manager Ming-Cheng Wu (IV) Individually explain and compare the analysis of the total compensation page) paid out to Directors, Supervisors, General Manager, and Vice General Manager Hsin-Hsin Lee Manager Ching-Yuan Lin Manager in the past two years as a percentage of net profit after tax for each Manager Cheng-Wen Ni financial statement at our bank and all companies referred to in the Manager Tsung-Chang Tseng consolidated financial statements. In addition, explain the compensation Manager Kee-Hsien Lee policy, standard, combination of compensation items, and codify the Manager Chi-Hua Yao procedures of compensation determination and the linkage between Manager Yu-Nien Kang compensation and operating performance as well as future risks. Manager Wen-Tung You 1. Analysis on Proportion to Earnings Manager Shun-Deh Tsai Unit: NTD thousand Manager Yi-Ren Teng 2012 2011 (Note 2)

Manager Kwei-Ching Ho The Bank Consolidation The Bank Consolidation Manager Yi-Pin Lin Directors (Note 1) 25,437 28,056 23,385 24,905 Manager Jhih-Hao Liang Manager Rong-Kuo Cheng Supervisor 5,046 5,046 4,410 4,410 President/Executive Manager Chang-Chi Liu 18,395 18,905 18,108 18,278 Manager Tien-Hou Tsai Vice Presidents Manager Ruei-Chang Lee Total 48,878 52,007 45,903 47,593

Manager Chiang-Kai Liu Total/after-tax profit 1.76% 1.87% 3.16% 3.27%

Manager Wen-Che Chen Note 1: The remuneration to directors less the salary received by President for assuming

Chen-Hsiang Manager employees concurrently. Chuang Note 2: The NTD 15 thousand of employee bonus accrued in 2011 for the main managerial level Manager Kuang-Chi Chen has been further disclosed based on the amount actually paid out in December 2012. Manager Ming-Ren Hsu 2. Compensation policy, standards, and combinations: Manager Shun-Chi Ke Our bank’s compensation and standard combination for Directors, Manager Chiu-Wen Chang Supervisors, General Manger, and Vice General Manger is based Manager Tsai-Tuan Chen Manager Wen-Kai Tsai on our company’s Articles of Incorporation and the resolution of the compensation committee. Relevant articles are as follows: Manager Hsin-Fa Wang (1) Article 27-1: The compensation for the Chairman of the Manager Wen-Chuan Zhuang Manager Ching-Tang Tsai Board is based on the total compensation for the General Manager Chiu-wen Chen Manger and calculated as 1.25 times that amount. The Manager Chung-Hsien Lee compensation for the Vice Chairman of the Board, Manager Chien-Hung Lin Executive Director, and Independent Directors is at the Manager Shih-Fan Weng discretion of the board, taking into consideration 42 43 42 Free-Gratis Cash Dividends Title Name Total Total/after-tax profit (%) Dividends (Note) Manager Jr-Hsin Lee Manager Cheng-Hua Lee Manager Chen-Hung Cheng Manager Cheng-Huan Huang Manager Chang-Sheng Liu Manager Yu-Heui Tseng (Continued (Continued from (Continued (Continued from Manager Ting-Kuang Huang from previous previous page) from previous page) Manager Su-Lan Huang page) previous Manager Hong-Lun Chang page) Manager Kuang-Chiang Lee Manager Wun-Jheng Lee Manager Yi-Yuan Tung Manager Kuo-Chi Lin Manager Pei-Miao Jan Note: Proposed employee bonus for 2012 is NTD 219,097. Based on the ratio of actual distributed amount for managerial staff last year, the proposed employee benefits for managerial staff is NTD 68,577. [(125,710/401,746)*219,097] (IV) Individually explain and compare the analysis of the total compensation paid out to Directors, Supervisors, General Manager, and Vice General Manager in the past two years as a percentage of net profit after tax for each financial statement at our bank and all companies referred to in the consolidated financial statements. In addition, explain the compensation policy, standard, combination of compensation items, and codify the procedures of compensation determination and the linkage between compensation and operating performance as well as future risks. 1. Analysis on Proportion to Earnings Unit: NTD thousand 2012 2011 (Note 2) The Bank Consolidation The Bank Consolidation Directors (Note 1) 25,437 28,056 23,385 24,905 Supervisor 5,046 5,046 4,410 4,410 President/Executive 18,395 18,905 18,108 18,278 Vice Presidents Total 48,878 52,007 45,903 47,593 Total/after-tax profit 1.76% 1.87% 3.16% 3.27% Note 1: The remuneration to directors less the salary received by President for assuming employees concurrently. Note 2: The NTD 15 thousand of employee bonus accrued in 2011 for the main managerial level has been further disclosed based on the amount actually paid out in December 2012. 2. Compensation policy, standards, and combinations: Our bank’s compensation and standard combination for Directors, Supervisors, General Manger, and Vice General Manger is based on our company’s Articles of Incorporation and the resolution of the compensation committee. Relevant articles are as follows: (1) Article 27-1: The compensation for the Chairman of the Board is based on the total compensation for the General Manger and calculated as 1.25 times that amount. The compensation for the Vice Chairman of the Board, Executive Director, and Independent Directors is at the discretion of the board, taking into consideration 43 43 compensation at the industry level. Said compensation is from earnings. The remuneration to President/Executive based on the total compensation of the General Manager Vice Presidents includes salary, bonus and special but may not exceed 1.1 times that amount. Independent subsidies, and employee bonus allocated from earnings. Directors are not eligible for our bank’s earnings distribution. Our bank may pay for liability insurance policies that cover the liabilities for damages as defined by statutes or court ruling within the scope of the business of Directors and Supervisors. (2) Article 29-1: The compensation for Executive Supervisor is at the discretion of the board, taking into consideration compensation at the industry level. Said compensation is based on the total compensation of the General Manager but may not exceed 1.1 times that amount. (3) Article 35: If, after closing our book for the year, our bank has net profit left, aside from paying corporate income tax as required by the law, our bank should first use it to cover the retained losses from previous years, then recognize 30% of the remainder as legal reserve, and finally recognize the special reserve as required by law. If there is still profit left after the above, dividends to shareholders should be declared and paid. The remainder after the dividend is distributed in the following order: A. 1%-5% for employee bonus. B. Remuneration to directors/supervisors granted based on 50% of the allocated employee bonus. C. Shareholder bonus. The aforementioned earnings distribution should be proposed by the board, taking into consideration factors such as the business environment, operation and investment needs, and required capital preservation, and resolved at the shareholders’ meeting: A. The cash dividends shall be no less than 10% of the Dividends and bonus allocated to shareholders. B. Notwithstanding, if the Dividends are allocated at less than or equal to NTD0.3 per share, the earnings may be allocated in the form of stock Dividends in full. If the capital adequacy ratio fails to reach the legal ratio, the earnings shall be allocated in accordance with the Banking Act and the competent authority’s requirements. 3. Codify the procedures of compensation and the linkage between compensation and operating performance as well as future risks: (1) The bonus for the General Manager and the Vice General Manager is based on our company’s regulations on bonus pay as ratified by the Board or the Executive Board, using factors such as profit and operational result evaluation in various business lines for the calculation of bonus and adjusted for the company’s operational outcome. (2) The remuneration to directors/supervisors includes the attendance fee, remuneration, and compensation allocated

44 45 44 from earnings. The remuneration to President/Executive Vice Presidents includes salary, bonus and special subsidies, and employee bonus allocated from earnings.

45 45 III. Status of Corporate Governance Attendance Attend Attendance (I) The function of the Board Title Name (attend as through rate (%) Remarks The Board called 10 meetings in 2012. The attendance of observer) proxy (note) directors/supervisors is specified as follows: Investment Co., Ltd.) （101.1.1~101.12.31） Discharged on June Jer-Nan Wang Attendance Attend Attendance 8, 2012, the number Director (Representative of Chou 1 3 25 Title Name (attend as through rate (%) Remarks of attendance to the Chang Co., Ltd.) observer) proxy (note) Board session is 4. Jin-Fong Soo Chun-Sheng Lee Chairman (Representative of Pan Asia 10 0 100 Director (Representative of Pan Asia 10 0 100 Chemical Corporation) Chemical Corporation) Kuei-Fong Wang Vice 2012.10.1 (Representative of Pan Asia 10 0 100 Chairman Institutional Chemical Corporation) Meng-Liang Chang shareholders Yi-Der Chen Managing Director (Representative of Pan Asia 3 0 100 reappointed their (Representative of I Joung 8 1 80 Director Chemical Corporation) representatives, three Investment Co., Ltd.) meetings should be Jer-Shyong Tsai Managing attended. (Representative of Pan Asia 8 1 80 Director 2012.10.1 Chemical Corporation) Institutional Managing Kang-Chi Chou shareholders Director Hsi-Rong Huang 10 0 100 Director (Representative of Pan Asia 2 1 66.66 reappointed their (Independent Chemical Corporation) representatives, three Director) meetings should be Independent Chen-Le Liu 9 1 90 attended. director Other notes: Independent Jin-Yi Lee 8 2 80 1. The content of the particulars inscribed in Article14-III of the Securities and Exchange Act, and of director the adverse opinions or qualified opinions of the independent directors with record or declaration Discharged on in writing shall be stated with the date of the Board meeting, the session, the content of the Kuei-Hsien Wang October 1, 2012, the motions, the opinions of all independent directors, and the response to such opinions: none. Director (Representative of Pan Asia 3 4 42.85 number of attendance 2. The avoidance of the conflict of interest by the Directors on related motions, specify the names of Chemical Corporation) to the Board session the Directors, the content of the motions, the principle of the avoidance of the conflict of interest, is 7. and the participation in casting the ballots: Hsin-Ching Chang (1) 2012.4.18- in the 4th session of the 21st Board of Directors, on the discussion of the Director (Representative of Pan Asia 10 0 100 motion of “application for leasing the surplus space at Min Chuan Building (at No. 87, Chemical Corporation) Min Chuan Road, West District, Taichung) for the use of Taichung Commercial Bank Ming-Shan Chuang Lease Enterprise”, only Executive Director Tsai Jer-Shyong and Director Chang Director (Representative of Pan Asia 10 0 100 Hsin-Ching were excused before the discussion. All other Directors present in the Chemical Corporation) meeting acted in favor of the motion. Chia-Hung Lin (2) 2012.6.27- In the 9th special session of the 21st Board of Directors, the discussion on the (Representative of Ho Yang motion of “the investment in Mainland China for the establishment of financing leasing Director 10 0 100 Management Consultant company by subsidiaries of the Bank”, only Executive Director Tsai Jer-Shyong and Co., Ltd.) Director Chang Hsin-Ching were excused before the discussion. All other Directors 2012.6.8 Institutional present in the meeting acted in favor of the motion. shareholders (3) 2012.8.8- In the 5th session of the 21st Board of Directors, the discussion on the motion Wei-Liang Lin reappointed their of “The Bank intends to subscribe the new shares issued by Taichung Commercial Bank Director (Representative of Chou 6 0 100 representatives, six Insurance Broker Co., Ltd. for raising capital with the pledge of real properties”, only Chang Co., Ltd.) meetings should be Vice Chairman Kuei-Fong Wang, Executive Director Chen Yi-Der were excused before attended. the discussion. All other Directors present in the meeting acted in favor of the motion. Discharged on (4) 2012.8.8- In the 5th session of the 21st Board of Directors, the discussion on the motion Ming-Hsiung Huang October 1, 2012, the of “Lin Chen-Hai of Taoyuan Branch application for consent of cancellation”, only Director (Representative of Pan Asia 6 0 85.71 number of attendance Director Lin Chia-Hung was excused before the discussion. All other Directors present Chemical Corporation) to the Board session in the meeting acted in favor of the motion. is 7. (5) 2012.9.5- In the 6th session of the 21st Board of Directors, the discussion on the motion Ching-Hsin Chang of “The use of the office space in 2F of No. 45, Min Tzu Road (Min Tzu Building) in Director 10 0 100 (Representative of I Joung Central District, Taichung”, only Executive Director Tsai Jer-Shyong and Director 46 47 46 Attendance Attend Attendance Title Name (attend as through rate (%) Remarks observer) proxy (note) Investment Co., Ltd.)

Discharged on June Jer-Nan Wang 8, 2012, the number Director (Representative of Chou 1 3 25 of attendance to the Chang Co., Ltd.) Board session is 4. Chun-Sheng Lee Director (Representative of Pan Asia 10 0 100 Chemical Corporation) 2012.10.1 Institutional Meng-Liang Chang shareholders Director (Representative of Pan Asia 3 0 100 reappointed their Chemical Corporation) representatives, three meetings should be attended. 2012.10.1 Institutional Kang-Chi Chou shareholders Director (Representative of Pan Asia 2 1 66.66 reappointed their Chemical Corporation) representatives, three meetings should be attended. Other notes: 1. The content of the particulars inscribed in Article14-III of the Securities and Exchange Act, and of the adverse opinions or qualified opinions of the independent directors with record or declaration in writing shall be stated with the date of the Board meeting, the session, the content of the motions, the opinions of all independent directors, and the response to such opinions: none. 2. The avoidance of the conflict of interest by the Directors on related motions, specify the names of the Directors, the content of the motions, the principle of the avoidance of the conflict of interest, and the participation in casting the ballots: (1) 2012.4.18- in the 4th session of the 21st Board of Directors, on the discussion of the motion of “application for leasing the surplus space at Min Chuan Building (at No. 87, Min Chuan Road, West District, Taichung) for the use of Taichung Commercial Bank Lease Enterprise”, only Executive Director Tsai Jer-Shyong and Director Chang Hsin-Ching were excused before the discussion. All other Directors present in the meeting acted in favor of the motion. (2) 2012.6.27- In the 9th special session of the 21st Board of Directors, the discussion on the motion of “the investment in Mainland China for the establishment of financing leasing company by subsidiaries of the Bank”, only Executive Director Tsai Jer-Shyong and Director Chang Hsin-Ching were excused before the discussion. All other Directors present in the meeting acted in favor of the motion. (3) 2012.8.8- In the 5th session of the 21st Board of Directors, the discussion on the motion of “The Bank intends to subscribe the new shares issued by Taichung Commercial Bank Insurance Broker Co., Ltd. for raising capital with the pledge of real properties”, only Vice Chairman Kuei-Fong Wang, Executive Director Chen Yi-Der were excused before the discussion. All other Directors present in the meeting acted in favor of the motion. (4) 2012.8.8- In the 5th session of the 21st Board of Directors, the discussion on the motion of “Lin Chen-Hai of Taoyuan Branch application for consent of cancellation”, only Director Lin Chia-Hung was excused before the discussion. All other Directors present in the meeting acted in favor of the motion. (5) 2012.9.5- In the 6th session of the 21st Board of Directors, the discussion on the motion of “The use of the office space in 2F of No. 45, Min Tzu Road (Min Tzu Building) in Central District, Taichung”, only Executive Director Tsai Jer-Shyong and Director 47 47 Attendance Attend Attendance Actual Actual Title Name (attend as through rate (%) Remarks number of attendance Title Name Remarks observer) proxy (note) attendance ratio (%) (B/A) Chang Hsin-Ching were excused before the discussion. All other Directors present in (B) (Note 1) the meeting acted in favor of the motion. Enterprise Co., Ltd.) (6) 2012.9.5- In the 6th session of the 21st Board of Directors, the discussion on the motion of “The Bank intends to subscribe the new shares issued by Taichung Commercial Bank Insurance Broker Co., Ltd. for raising capital with the pledge of real properties, and the Other notes: terms and conditions for subscription” only Vice Chairman Kuei-Fong Wang, Executive 1. The organization of supervisors and their duties: Director Chen Yi-Der were excused before the discussion. All other Directors present in (1) The organization of supervisors and their duties: Communications between the the meeting acted in favor of the motion. Supervisors and the employees and shareholders: The communication may be made via (7) 2012-10.17- In the 7th session of the 21st Board of Directors, the discussion on the the hotline and e-mail. motion of “the Bank intends to increase its holding of shares in Reliance Securities (2) Communication between supervisors and internal audit officers and CPA: The Investment Trust Co., Ltd”, only Vice Chairman Kuei-Fong Wang was excused before supervisors shall call the supervisors’ meeting periodically, in which the President and the discussion. All other Directors present in the meeting acted in favor of the motion. Executive Vice Presidents shall be present, and the internal audit unit (chief auditor) shall (8) 201212.12- In the 8th session of the 21st Board of Directors, the discussion on the motion propose the various business inspection reports and have the relevant department of “The amount for distribution of fees for Directors and Supervisors in 2011”, 3 supervisors report the business development. If necessary, the supervisors may ask independent directors who did not get remunerations acted in favor of the motion. CPAs to attend the supervisors’ meeting called by them to provide explanation. 3. The objective of fortifying the functions of the Board in current year and the most recent year 2. If any supervisor attends the directors’ meeting to state their opinion, it is necessary to specify the (e.g., the establishment of the Auditing Committee, and enhancement of the transparency of date, session, motions and resolution of the directors’ meeting, and the Bank’s response to the information) and the assessment of the result of execution: opinion stated by the supervisor: Supervisors attended directors’ meeting frequently to provide their In the 3rd special session of the 21st Board of Directors dated 2011.8.13, the Board resolved to positive opinion, but no record showing opinion for dissent is retained. establish the Remuneration Committee for the routine review of the policies, systems, standards, Note 1: (1) Where a specific supervisor may be relieved from duties before the end of the fiscal year, and structures of the evaluation of the performance of the Directors, Supervisors, and mangers, specify their date of discharge in the “Remarks” Section. Their attendance (%) to the and their remunerations. Board session shall be calculated on the basis of the actual number of sessions they Note : (1) Where a specific director or supervisor may be relieved from duties before the end of the fiscal attended. year, specify their date of discharge. Their attendance (%) to Board session shall be calculated on (2) Where an election may be held for filling the vacancies of supervisor before the end of the basis of the actual number of sessions held and the number of sessions they attended. the fiscal year, list out both the new and the discharged supervisors, and specify if they (2) Where an election may be held for filling the vacancies of director or supervisor before the end of are the former supervisor, or newly elected, re-elected and the date of the election. the fiscal year, list out both the new and the discharged directors and supervisors, and specify if they are the former director or supervisor, or newly elected, re-elected and the date of the election. Their attendance (%) to Board session shall be calculated on the basis of the actual Their attendance (%) at the Board session shall be calculated on the basis of the actual number of number of sessions they attended during the term of office. sessions held and the number of sessions they attended. Note 2 The Bank has not yet installed the Audit Committee. (III) Items to be disclosed according to the Corporate Governance (II) The function of Audit Committee or Supervisors’ Participation in the Best-Practice Principles for the Banking Industry Function of Board of Directors Please refer to the Bank’s website (www.tcbbank.com.tw) About Taichung The Board called 10 meetings in 2012 (A). The attendance of Bank → Disclosure of Information → Information to be Disclosed directors/supervisors is specified as following: under Laws Actual Actual (IV) Status of Corporate Governance as required for banks, and any number of attendance nonconformity to the Corporate Governance Best-Practice Principles for Title Name Remarks attendance ratio (%) (B/A) Banking Industry and reasons thereof (B) (Note 1) Deviation from the Jiann-Ell Huang Corporate Governance Resident (Representative of Xin Rui 10 100 Item Implementation Status Best-Practice Principles Supervisor Investment Co., Ltd.) for the Banking Industry Chien-Hwa Lee Fu and reasons Supervisor (Representative of Xin Rui 8 80 Investment Co., Ltd.) Ching-Huang Tsai Supervisor (Representative of Xin Rui 10 100 Investment Co., Ltd.) Shu-Li Huang Supervisor (Representative of Xin Rui 10 100 Investment Co., Ltd.) Chao-Nan Hsieh Supervisor 9 90 (Representative of Tai Jiunn 48 49 48 Actual Actual number of attendance Title Name Remarks attendance ratio (%) (B/A) (B) (Note 1) Enterprise Co., Ltd.)

Other notes: 1. The organization of supervisors and their duties: (1) The organization of supervisors and their duties: Communications between the Supervisors and the employees and shareholders: The communication may be made via the hotline and e-mail. (2) Communication between supervisors and internal audit officers and CPA: The supervisors shall call the supervisors’ meeting periodically, in which the President and Executive Vice Presidents shall be present, and the internal audit unit (chief auditor) shall propose the various business inspection reports and have the relevant department supervisors report the business development. If necessary, the supervisors may ask CPAs to attend the supervisors’ meeting called by them to provide explanation. 2. If any supervisor attends the directors’ meeting to state their opinion, it is necessary to specify the date, session, motions and resolution of the directors’ meeting, and the Bank’s response to the opinion stated by the supervisor: Supervisors attended directors’ meeting frequently to provide their positive opinion, but no record showing opinion for dissent is retained. Note 1: (1) Where a specific supervisor may be relieved from duties before the end of the fiscal year, specify their date of discharge in the “Remarks” Section. Their attendance (%) to the Board session shall be calculated on the basis of the actual number of sessions they attended. (2) Where an election may be held for filling the vacancies of supervisor before the end of the fiscal year, list out both the new and the discharged supervisors, and specify if they are the former supervisor, or newly elected, re-elected and the date of the election. Their attendance (%) to Board session shall be calculated on the basis of the actual number of sessions they attended during the term of office. Note 2 The Bank has not yet installed the Audit Committee. (III) Items to be disclosed according to the Corporate Governance Best-Practice Principles for the Banking Industry Please refer to the Bank’s website (www.tcbbank.com.tw) About Taichung Bank → Disclosure of Information → Information to be Disclosed under Laws (IV) Status of Corporate Governance as required for banks, and any nonconformity to the Corporate Governance Best-Practice Principles for Banking Industry and reasons thereof

49 49 Deviation from the Deviation from the Corporate Governance Corporate Governance Item Implementation Status Best-Practice Principles Item Implementation Status Best-Practice Principles for the Banking Industry for the Banking Industry and reasons and reasons I. Equity structure and rules. As such, it shareholders’ equity (I) The Bank has is not necessary (I) Handling built the hotline to monitor, suggestions from and email control and shareholders and dedicated to handle. There are disputes handling the also the criteria suggestions from for the shareholders and monitoring and (II) Control of the disputes, and handling of name list of published them in subsidiaries in Principle the Bank’s place. shareholders and official website. the dominant (II) The Bank pays parties behind attention to the such shareholders increase/ decrease in or mortgage/ II. The organization of the pledge of the Board and their duties (I) Three equity of Conformity to the (I) The position of independent (III) The shareholders “Corporate Governance independent directors were establishment of holding more Best-Practice Principles directors installed in the risk control than 5% of the for the Banking Industry” office according mechanism and total outstanding (II) Regular review to the Bank’s firewall between shares or and assessment Articles of the Bank and shareholders on the Incorporation. impartiality and (II) The Bank has not affiliated assuming Conformity to the independence of retained the same companies directors/ “Corporate Governance the external external auditor supervisors, and Best-Practice Principles auditor to conduct disclose such for the Banking Industry” information on financial audit for the MOPS site as many years required. consecutively. (III) The transactions The Bank's between the Bank assessment report and the on the subsidiaries have impartiality and been conducted in independence of accordance with the external applicable legal auditor also

50 51 50 Deviation from the Corporate Governance Item Implementation Status Best-Practice Principles for the Banking Industry and reasons rules. As such, it is not necessary to monitor, control and handle. There are also the criteria for the monitoring and handling of subsidiaries in place.

II. The organization of the Board and their duties (I) Three (I) The position of independent independent directors were directors installed in the office according (II) Regular review to the Bank’s and assessment Articles of on the Incorporation. impartiality and (II) The Bank has not Conformity to the independence of retained the same “Corporate Governance the external external auditor Best-Practice Principles auditor to conduct for the Banking Industry” financial audit for many years consecutively. The Bank's assessment report on the impartiality and independence of the external auditor also

51 51 Deviation from the Deviation from the Corporate Governance Corporate Governance Item Implementation Status Best-Practice Principles Item Implementation Status Best-Practice Principles for the Banking Industry for the Banking Industry and reasons and reasons passed 21st term transfer. The Board in its 3rd communication Board Session on channel is March 8, 2012. considered uninterrupted. (II) The Bank not only disclosed the message on the MOPS site as III. Communication channels (I) The Bank has required but also with stakeholders. already disclose it published it on on the Bank’s the Bank’s intranet pursuant official website to to the Banking help investors’ act and the search. competent IV. Disclosures authority’s (I) The company has (I) The company has requirements established a established a website for the about limitation website for the disclosure of its disclosure of its on the credit Financial Status Financial Status extended to and status of and status of stakeholders, and corporate corporate Conformity to the governance. also held the governance. “Corporate Governance (II) The company (II) The Bank has one seminars for laws Best-Practice Principles also adopts other spokesman and and regulations means for one deputy for the Banking Industry” spokesman. The irregularly to disclosure Conformity to the spokesman is enable the (establish a “Corporate Governance assumed by the website in the Best-Practice Principles persons-in-charge Executive Vice English language, for the Banking Industry” to comply with with specific President. The and know the personnel to spokesman makes laws and gather and a speech upon the supervisor’s order regulations, and disclose relevant information, and also request properly supervises the completion of the implement the press release, stakeholder system of media communication information list spokesman, and meetings with and other public immediately upon institutional relations handled the stakeholder’s investors for by the competent units. Where 52 53 52 Deviation from the Corporate Governance Item Implementation Status Best-Practice Principles for the Banking Industry and reasons transfer. The communication channel is considered uninterrupted. (II) The Bank not only disclosed the message on the MOPS site as required but also published it on the Bank’s official website to help investors’ search. IV. Disclosures (I) The company has (I) The company has established a established a website for the website for the disclosure of its disclosure of its Financial Status Financial Status and status of and status of corporate corporate governance. governance. (II) The company (II) The Bank has one also adopts other spokesman and means for one deputy spokesman. The disclosure Conformity to the spokesman is (establish a “Corporate Governance assumed by the website in the Best-Practice Principles Executive Vice English language, for the Banking Industry” with specific President. The personnel to spokesman makes gather and a speech upon the disclose relevant supervisor’s order information, and also properly supervises the implement the press release, system of media spokesman, and communication meetings with and other public institutional relations handled investors for by the competent units. Where 53 53 Deviation from the Deviation from the Corporate Governance Corporate Governance Item Implementation Status Best-Practice Principles Item Implementation Status Best-Practice Principles for the Banking Industry for the Banking Industry and reasons and reasons offering will also the spokesman is challenges to Remuneration Committee and the Trend of be posted on the unable to perform International Remuneration Governance” seminar held by Taiwan company his/her duty, the Corporate Governance Association for 3 hours. website). deputy (5) 2012.3.15- Supervisor Lee-Fu Chien-Hua, Supervisor Shu-Li spokesman will Huang, Supervisor Chin-Huang Tsai attended the “Important act on behalf of Notice of the new amendment to the Company Act and the Board him/her. of Directors and General Meeting of Shareholders” seminar held st V. The operation of the The 21 Board of Directors by Chinese National Association of Industry and Commerce, rd Taiwan (CNAIC), for 3 hours. functional committees resolved in its 3 special session on 2011.8.18 to establish the Conformity to the (6) 2012.4.27- Director Jer-Nan Wang (discharged) attended the “The established by the Bank Remuneration Committee. The “Corporate Governance issue of dual-track – short-swing trade and insider trade” seminar Committee has convened on Best-Practice Principles held by Taiwan Corporate Governance Association for 3 hours. December 1 2011, June 27 2012, for the Banking Industry” (7) 2012.5.11- Executive Independent Director Huang Shi-Rong, and November 14 2012 for three Independent Director Chen-Le Liu attended the “Description of instances. the Functions of Independent Directors of Listed Companies VI. Please specify the status of the Bank’s corporate governance, and any deviation from the Seminar” held by Securities & Futures Institute (SFI) for 3 hours. (8) 2012.6.19- Director Ming-Hsiung Huang and Director Jer-Nan "Corporate Governance Principles for the Banking Industry" and reasons thereof: Wang (discharged) attended the “New challenges to The practice of corporate governance by the Bank is in compliance with the “Corporate Remuneration Committee and the Trend of International Governance Best-Practice Principles for Banks” Remuneration Governance” seminar held by Taiwan Corporate VII. Other vital information that can help to understand the status of corporate governance by the Governance Association for 3 hours. Bank (examples are, the continuing education of the directors and the supervisors, the (9) 2012.7.20- Director Chun-Sheng Lee attended the “2012 Seminar participation of the directors and the presence of the supervisors in the meetings of the of Insiders of Listed Companies in Compliance with Applicable Laws in Equity Transactions” held by Securities & Futures Board, the enforcement of risk management policy and risk assessment standards, the Institute (SFI) for 3 hours. protection of consumers and the pursuit of the customer policy, the status of the avoidance of (10) 2012.8.7- Director Wei-Liang Lin attended the “2012 Seminar of the conflict of interest by the directors, the taking of liability insurance by the Bank for the Insiders of Listed Companies in Compliance with Applicable protection of the directors and the supervisors, the donation to political parties, stakeholders, Laws in Equity Transactions” held by Securities & Futures and social charity groups): Institute (SFI) for 3 hours. (I) Continuing education and training programs related to corporate governance (11) 2012.8.16- Vice Chairman Kuei-Fong Wang attended the attended by directors/supervisors and managers “Financial Risks and Case Study” seminar held by Chinese 1. Continuing education for the Directors and Supervisors: National Association of Industry and Commerce, Taiwan (CNAIC) for 3 hours. (1) 2012.1.10- Independent Director Lee Chin-Yi attended the “The influence of the taxation principles on the enterprises and case (12) 2012.8.17- Chairman Jin-Fong Soo attended the “Directors and study” program held by Accounting Research and Development Supervisors vs. Insider Trade – Judicial Investigation and Case Foundation for 3 hours. Study on Trial” held by Taiwan Corporate Governance Association for 3 hours. (2) 2012.1.10- Independent Director Lee Chin-Yi attended the “Common practice of the enterprises in cost saving, and the (13) 2012.9.7- Director Lin Chia-Hung attended the “The Risk influence on financial position and the assessment of the result” Management Committee of the Board of Directors” held by Taiwan Corporate Governance Association for 3 hours. seminar held by Accounting Research and Development th foundation for 3 hours. (14) 2012.10.25- Director Chun-Sheng Lee attended the “8 Taipei Forum of Corporate Governance” held by Financial Supervisory (3) 2012.3.9- Supervisor Hsieh Chao-Nan, Executive Director Chen Yi-Der, and Director Chang Ching-Hsin, attended the “Conflict in Commission for 6 hours. the procedure of general meeting of shareholders and the practice (15) 2012.11.2- Director Kang-Chi Chou attended the “Advanced for prevention” seminar held by Taiwan Corporate Governance Seminar of the Practice of (Independent) Directors and Association for 3 hours. Supervisors [Business Secrets and Avoidance of the Conflict of Interest of Directors and supervisor]” held by Securities & Futures (4) 2012.3.13- Indepdent Director Chen-Le Liu attended the “New 54 55 54 Deviation from the Corporate Governance Item Implementation Status Best-Practice Principles for the Banking Industry and reasons challenges to Remuneration Committee and the Trend of International Remuneration Governance” seminar held by Taiwan Corporate Governance Association for 3 hours. (5) 2012.3.15- Supervisor Lee-Fu Chien-Hua, Supervisor Shu-Li Huang, Supervisor Chin-Huang Tsai attended the “Important Notice of the new amendment to the Company Act and the Board of Directors and General Meeting of Shareholders” seminar held by Chinese National Association of Industry and Commerce, Taiwan (CNAIC), for 3 hours. (6) 2012.4.27- Director Jer-Nan Wang (discharged) attended the “The issue of dual-track – short-swing trade and insider trade” seminar held by Taiwan Corporate Governance Association for 3 hours. (7) 2012.5.11- Executive Independent Director Huang Shi-Rong, Independent Director Chen-Le Liu attended the “Description of the Functions of Independent Directors of Listed Companies Seminar” held by Securities & Futures Institute (SFI) for 3 hours. (8) 2012.6.19- Director Ming-Hsiung Huang and Director Jer-Nan Wang (discharged) attended the “New challenges to Remuneration Committee and the Trend of International Remuneration Governance” seminar held by Taiwan Corporate Governance Association for 3 hours. (9) 2012.7.20- Director Chun-Sheng Lee attended the “2012 Seminar of Insiders of Listed Companies in Compliance with Applicable Laws in Equity Transactions” held by Securities & Futures Institute (SFI) for 3 hours. (10) 2012.8.7- Director Wei-Liang Lin attended the “2012 Seminar of Insiders of Listed Companies in Compliance with Applicable Laws in Equity Transactions” held by Securities & Futures Institute (SFI) for 3 hours. (11) 2012.8.16- Vice Chairman Kuei-Fong Wang attended the “Financial Risks and Case Study” seminar held by Chinese National Association of Industry and Commerce, Taiwan (CNAIC) for 3 hours. (12) 2012.8.17- Chairman Jin-Fong Soo attended the “Directors and Supervisors vs. Insider Trade – Judicial Investigation and Case Study on Trial” held by Taiwan Corporate Governance Association for 3 hours. (13) 2012.9.7- Director Lin Chia-Hung attended the “The Risk Management Committee of the Board of Directors” held by Taiwan Corporate Governance Association for 3 hours. (14) 2012.10.25- Director Chun-Sheng Lee attended the “8th Taipei Forum of Corporate Governance” held by Financial Supervisory Commission for 6 hours. (15) 2012.11.2- Director Kang-Chi Chou attended the “Advanced Seminar of the Practice of (Independent) Directors and Supervisors [Business Secrets and Avoidance of the Conflict of Interest of Directors and supervisor]” held by Securities & Futures

55 55 Deviation from the Deviation from the Corporate Governance Corporate Governance Item Implementation Status Best-Practice Principles Item Implementation Status Best-Practice Principles for the Banking Industry for the Banking Industry and reasons and reasons Institute (SFI) for 3 hours. “Seminar of Continuing Education for Trust Supervisor” held by 2. Continuing education for managers: Trust Association of the ROC for 6 hours. (1) 2012.2.2- International Department Manager Cheng-Yu Lai (14) 2012.5.6-Manager Ching-Hu Hsieh of General Affairs attended the “Seminar of Regional Banking Statistics Quarterly Department attended the “Seminar of Continuing Education for Report” held by the Department of Information Management of Trust Supervisor” held by Trust Association of the ROC for 6 the Central Bank of the ROC (Taiwan) for 2.5 hours. hours. (2) 2012.2.10- Treasury Department Manager Kuang-Chung Hsiao (15) 2012.5.6- Vice President Hsueh-Hsien Liao attended the “Seminar attended the “Seminar of Banking in Taiwan and Mainland of Continuing Education for Trust Supervisor” held by Trust China” held by Executive Yuan Financial Supervisory Association of the ROC for 6 hours. Commission for 1 hour. (16) 2012.5.6- Vice President Kai-Yu Lin attended the “Seminar of (3) 2012.2.21- Vice Manager Mu-Ken Chang of Wealth Management Continuing Education for Trust Supervisor” held by Trust Department attended the “Seminar of Financial Consumers Association of the ROC for 6 hours. Protection Act and related bylaws” held by Trust Association of (17) 2012.5.8~15- Manager Chen-Ying Wu of Risk Management the ROC for 6 hours. Department attended the the “System for the training of key (4) 2012.2.21- Manger Mei-Li Wu of Loan Administration banking personnel – program in liquidity risk management” held Department attended the “Seminar of Financial Consumers by Taiwan Academy of Banking and Finance (TABF) for 12 Protection Act and related bylaws” held by Trust Association of hours. the ROC for 6 hours. (18) 2012.5.11- Manager Yi-Ying Chung of Accounting Department (5) 2012.3.7- Vice President Hsueh-Hsien Liao attended the “2012 attended the “Seminar of the practice of preparing consolidated On-Job Training Seminar of Senior Sales Managers of Securities financial statements” held by Accounting Research and Firms” held by Taiwan Securities Association for 8 hours. Development Foundation for 6 hours. (6) 2012.3.7~21- Manger Mei-Li Wu of Loan Administration (19) 2012.5.14- Manager Yi-Ying Chung of Accounting Department Department attended the “System for the training of key banking attended the “Seminar of the practice of preparing statements of personnel – program in compliance” held by Taiwan Academy of cash flows” held by Accounting Research and Development Banking and Finance (TABF) for 16 hours. Foundation for 4 hours. (7) 2012.4.17- Manager Wen-Cheng Lee of TCB Securities Chungli (20) 2012.5.30~2012.6.13- Manger Mei-Li Wu of Debt Management Branch attended the “Seminar of Sharing the Experience and Department attended the “System for the training of key banking Assessment of Shortcomings Detected in Audits” held by Taiwan personnel – program in laws applicable to wealth management Stock Exchange Corporation for 2.5 hours. operation” held by Taiwan Academy of Banking and Finance (8) 2012.4.17- Manager Chien-Yu Lin of TCB Securities Taipei (TABF) for 18 hours. Branch attended the “Seminar of Sharing the Experience and (21) 2012.6.4~25- Manger Mei-Li Wu of Debt Management Assessment of Shortcomings Detected in Audits” held by Taiwan Department attended the “System for the training of key banking Stock Exchange Corporation for 2.5 hours. personnel – intermediate training program for collection (9) 2012.4.24- Manger Wen-Cheng Lee of TCB Securities Chungli personnel” held by Taiwan Academy of Banking and Finance Branch attended the “On-Job Training for Labor Health and (TABF) for 28 hours. Safety Mangers and Management Personnel” held by Industrial (22) 2012.6.5- Chief Auditor Ming-Chin Shen attended the “Seminar Safety and Health Association(ISHA) of the ROC for 7 hours. of Business Policy and Management of Proposer Institutions (10) 2012.5.6- Manager Chen-Ying Wu of Risk Management -2012 Supervision and Risk Management of the Financial Sector” Department attended the “Basic Training for Spss Modler held by Central Deposit Insurance Corporation for 7 hours. Application Tools” held by AsiaMiner Inc. for 6.5 hours. (23) 2012.6.9- Vice President Chih-Chuan Fang attended the “Seminar (11) 2012.5.6- Manager Cheng-Yu Lai of International Department of Continuing Education for Trust Supervisor” held by Trust attended the “Seminar of Continuing Education for Trust Association of the ROC for 6 hours. Supervisor” held by Trust Association of the ROC for 6 hours. (24) 2012.6.9- Chief Auditor Ming-Chin Shen attended the “Seminar (12) 2012.5.6- Manager Yi-Ying Chung of Accounting Department of Continuing Education for Trust Supervisor” held by Trust attended the “Seminar of Continuing Education for Trust Association of the ROC for 6 hours. Supervisor” held by Trust Association of the ROC for 6 hours. (25) 2012.6.12- Manager Hung-Lun Chang of TCB Securities Yuanlin (13) 2012.5.6-Manager Te-Wei Chia of IT Department attended the Branch attended the “Seminar of Sharing the Experience and

56 57 56 Deviation from the Corporate Governance Item Implementation Status Best-Practice Principles for the Banking Industry and reasons “Seminar of Continuing Education for Trust Supervisor” held by Trust Association of the ROC for 6 hours. (14) 2012.5.6-Manager Ching-Hu Hsieh of General Affairs Department attended the “Seminar of Continuing Education for Trust Supervisor” held by Trust Association of the ROC for 6 hours. (15) 2012.5.6- Vice President Hsueh-Hsien Liao attended the “Seminar of Continuing Education for Trust Supervisor” held by Trust Association of the ROC for 6 hours. (16) 2012.5.6- Vice President Kai-Yu Lin attended the “Seminar of Continuing Education for Trust Supervisor” held by Trust Association of the ROC for 6 hours. (17) 2012.5.8~15- Manager Chen-Ying Wu of Risk Management Department attended the the “System for the training of key banking personnel – program in liquidity risk management” held by Taiwan Academy of Banking and Finance (TABF) for 12 hours. (18) 2012.5.11- Manager Yi-Ying Chung of Accounting Department attended the “Seminar of the practice of preparing consolidated financial statements” held by Accounting Research and Development Foundation for 6 hours. (19) 2012.5.14- Manager Yi-Ying Chung of Accounting Department attended the “Seminar of the practice of preparing statements of cash flows” held by Accounting Research and Development Foundation for 4 hours. (20) 2012.5.30~2012.6.13- Manger Mei-Li Wu of Debt Management Department attended the “System for the training of key banking personnel – program in laws applicable to wealth management operation” held by Taiwan Academy of Banking and Finance (TABF) for 18 hours. (21) 2012.6.4~25- Manger Mei-Li Wu of Debt Management Department attended the “System for the training of key banking personnel – intermediate training program for collection personnel” held by Taiwan Academy of Banking and Finance (TABF) for 28 hours. (22) 2012.6.5- Chief Auditor Ming-Chin Shen attended the “Seminar of Business Policy and Management of Proposer Institutions -2012 Supervision and Risk Management of the Financial Sector” held by Central Deposit Insurance Corporation for 7 hours. (23) 2012.6.9- Vice President Chih-Chuan Fang attended the “Seminar of Continuing Education for Trust Supervisor” held by Trust Association of the ROC for 6 hours. (24) 2012.6.9- Chief Auditor Ming-Chin Shen attended the “Seminar of Continuing Education for Trust Supervisor” held by Trust Association of the ROC for 6 hours. (25) 2012.6.12- Manager Hung-Lun Chang of TCB Securities Yuanlin Branch attended the “Seminar of Sharing the Experience and

57 57 Deviation from the Deviation from the Corporate Governance Corporate Governance Item Implementation Status Best-Practice Principles Item Implementation Status Best-Practice Principles for the Banking Industry for the Banking Industry and reasons and reasons Assessment of Shortcomings Detected in Audits” held by Taiwan attended the “KPMG Seminar of Financial Development in Stock Exchange Corporation for 2.5 hours. Taiwan and Mainland China” held by KPMG Taiwan for 3 hours. (26) 2012.6.12- Manager Jui-Fen Tsai of TCB Securities Co., Ltd. (37) 2012.8.15- Manager Chun-Ying Wang of Sales Department attended the “Seminar of Sharing the Experience and Assessment attended the “KPMG Seminar of Financial Development in of Shortcomings Detected in Audits” held by Taiwan Stock Taiwan and Mainland China” held by KPMG Taiwan for 3 hours. Exchange Corporation for 2.5 hours. (38) 2012.8.16~17- Manger Mei-Li Wu of Debt Management (27) 2012.6.12-Manager Chen Fen-Lan of Securities Department Department attended the “Banking and Financial Courses on attended the “Seminar of Sharing the Experience and Assessment Taiwan and Mainland China-seminar on the practice of banking in of Shortcomings Detected in Audits” held by Taiwan Stock Mainland China by Taiwanese Banks-Chapter of Collection of Exchange Corporation for 2.5 hours. overdue accounts” held by Taiwan Academy of Banking and (28) 2012.6.12- Chief Auditor Ming-Chin Shen attended the “Seminar Finance (TABF) at the appointment of the Bankers Association of of Sharing the Experience and Assessment of Shortcomings the ROC for 12 hours. Detected in Audits” held by Taiwan Stock Exchange Corporation (39) 2012.8.17- Chief Auditor Ming-Chin Shen attended the “Seminar for 2.5 hours. of the Financial Consumers Protection Act-Compliance of (29) 2012.6.25~2012.12.14- Manager Te-Wei Chia of IT Department Financial People and Introduction to the function of Ombudsman” attended the “Leading Executive Apex Program (LEAP)” held by held by Financial Ombudsman Institution for 2.5 hours. the Bankers Association of the ROC for 121 hours. (40) 2012.8.23~24- Manager Chen-Ying Wu of Risk Management (30) 2012.6.26- Manager Yi-Ying Chung of Accounting Department Department attended the “Banking and Financial Courses on attended the “Promulgation of the [Enforcement Rules for the Taiwan and Mainland China-seminar on the practice of banking in Personal Information Protection Act ] by the competent authority- Mainland China by Taiwanese Banks-Chapter of Risk the legal responsibilities of the enterprises and the responses of the Management and Internal Audits” held by Taiwan Academy of senior management” program held by Accounting Research and Banking and Finance (TABF) at the appointment of the Bankers Development Foundation for 3 hours. Association of the ROC for 12 hours. (31) 2012.7.6-27- Manager Yi-Ying Chung of Accounting Department (41) 2012.8.29- Vice President Jung-Hua Kao attended the “|Seminar attended the “System for the training of key banking personnel – of Banking and Finance in Taiwan and Mainland China – intermediate training program for accounting Business Opportunity in Financing Small and Medium Enterprises personnel-accounting laws and knowledge in the banking in Mainland China and Risk Management” held by Taiwan industry” held by Taiwan Academy of Banking and Finance Academy of Banking and Finance (TABF) at the appointment of (TABF) for 30 hours. the Bankers Association of the ROC for 7.5 hours. (32) 2012.7.10- Acting Vice Manager Chung-Ping Yang of Human (42) 2012.8.29- Manager Yu-Chung Lin of Trust Department attended Resources Department attended the “The Training of People in the the “Seminar of new trusts products of Mitsubishi UFJ Trust and Financial Sector of Taiwan and Related Problems” held by Banking of Japan and Experience Sharing” held by held by Taiwan Academy of Banking and Finance (TABF) for 2.5 hours. Taiwan Academy of Banking and Finance (TABF) at the (33) 2012.7.14~15- Manager Huei-Chin Lu of Junkung Branch appointment of the Bankers Association of the ROC for 3 hours. attended the “Orientation for Personnel Engaged in Trust (43) 2012.8.30~31- Manager Yi-Ying Chung of Accounting Business” held by Trust Association of the ROC for 12 hours. Department attended the “Banking and Financial Courses on (34) 2012.7.20- President Chun-Sheng Lee attended the “2012 Seminar Taiwan and Mainland China-seminar on the practice of banking in of Insiders of Listed Companies in Compliance with Applicable Mainland China by Taiwanese Banks-Chapter of Accounting and Laws in Equity Transactions” held by Securities & Futures Taxation” held by Taiwan Academy of Banking and Finance Institute (SFI) for 3 hours. (TABF) at the appointment of the Bankers Association of the (35) 2012.8.9- Vice President Jung-Hua Kao attended the “Banking ROC for 12 hours. and Financial Courses on Taiwan and Mainland China-seminar on (44) 2012.9.4- Manager Yi-Ying Chung of Accounting Department the practice of banking in Mainland China by Taiwanese attended the “Legal Rules Governing the Investment of Taiwanese Banks-Chapter of Corporate Banking” held by Taiwan Academy Enterprises in Mainland China and the Responses” held by of Banking and Finance (TABF) at the appointment of the Accounting Research and Development Foundation for 3 hours. Bankers Association of the ROC for 12 hours. (45) 2012.9.8~15-Former Manager Chi-Hung Wu of South Fengyuan (36) 2012.8.15- Manager Cheng-Yu Lai of International Department Branch attended the “On-Job Seminar of Trust Management

58 59 58 Deviation from the Corporate Governance Item Implementation Status Best-Practice Principles for the Banking Industry and reasons attended the “KPMG Seminar of Financial Development in Taiwan and Mainland China” held by KPMG Taiwan for 3 hours. (37) 2012.8.15- Manager Chun-Ying Wang of Sales Department attended the “KPMG Seminar of Financial Development in Taiwan and Mainland China” held by KPMG Taiwan for 3 hours. (38) 2012.8.16~17- Manger Mei-Li Wu of Debt Management Department attended the “Banking and Financial Courses on Taiwan and Mainland China-seminar on the practice of banking in Mainland China by Taiwanese Banks-Chapter of Collection of overdue accounts” held by Taiwan Academy of Banking and Finance (TABF) at the appointment of the Bankers Association of the ROC for 12 hours. (39) 2012.8.17- Chief Auditor Ming-Chin Shen attended the “Seminar of the Financial Consumers Protection Act-Compliance of Financial People and Introduction to the function of Ombudsman” held by Financial Ombudsman Institution for 2.5 hours. (40) 2012.8.23~24- Manager Chen-Ying Wu of Risk Management Department attended the “Banking and Financial Courses on Taiwan and Mainland China-seminar on the practice of banking in Mainland China by Taiwanese Banks-Chapter of Risk Management and Internal Audits” held by Taiwan Academy of Banking and Finance (TABF) at the appointment of the Bankers Association of the ROC for 12 hours. (41) 2012.8.29- Vice President Jung-Hua Kao attended the “|Seminar of Banking and Finance in Taiwan and Mainland China – Business Opportunity in Financing Small and Medium Enterprises in Mainland China and Risk Management” held by Taiwan Academy of Banking and Finance (TABF) at the appointment of the Bankers Association of the ROC for 7.5 hours. (42) 2012.8.29- Manager Yu-Chung Lin of Trust Department attended the “Seminar of new trusts products of Mitsubishi UFJ Trust and Banking of Japan and Experience Sharing” held by held by Taiwan Academy of Banking and Finance (TABF) at the appointment of the Bankers Association of the ROC for 3 hours. (43) 2012.8.30~31- Manager Yi-Ying Chung of Accounting Department attended the “Banking and Financial Courses on Taiwan and Mainland China-seminar on the practice of banking in Mainland China by Taiwanese Banks-Chapter of Accounting and Taxation” held by Taiwan Academy of Banking and Finance (TABF) at the appointment of the Bankers Association of the ROC for 12 hours. (44) 2012.9.4- Manager Yi-Ying Chung of Accounting Department attended the “Legal Rules Governing the Investment of Taiwanese Enterprises in Mainland China and the Responses” held by Accounting Research and Development Foundation for 3 hours. (45) 2012.9.8~15-Former Manager Chi-Hung Wu of South Fengyuan Branch attended the “On-Job Seminar of Trust Management

59 59 Deviation from the Deviation from the Corporate Governance Corporate Governance Item Implementation Status Best-Practice Principles Item Implementation Status Best-Practice Principles for the Banking Industry for the Banking Industry and reasons and reasons Personnel” held by Taiwan Academy of Banking and Finance by Taiwan Academy of Banking and Finance (TABF) for 10 (TABF) for 12 hours. hours. (46) 2012.9.14- Acting Vice Manger Mu-Ken Chang of Wealth (58) 2012.11.27~28- Chief Auditor Ming-Chin Shen attended the Management Department attended the “Seminar of the Wealth “Seminar of Lead Auditors” held by Taiwan Academy of Banking Management Market in Mainland China and CNY Products” held and Finance (TABF) for 13 hours. by Taiwan Academy of Banking and Finance (TABF) for 3.5 (59) 2012.11.29~30- Acting Vice Manager Chung-Ping Yang of hours. Human Resources Department attended the “Colloquium of (47) 2012.9.15~22- Manger Jih-Hsin Lee of Neili Branch attended the Senior Human Resources Managers” held by Taiwan Academy of “On-Job Seminar of Trust Management Personnel” held by Banking and Finance (TABF) for 7.5 hours. Taiwan Academy of Banking and Finance (TABF) for 12 hours. (60) 2012.12.8~15- Manager Chi-Lung Huang of Taiching Branch (48) 2012.9.15~22- Manager Rung-Kuo Cheng of Taipei Branch attended the “On-Job Seminar of Trust Management Personnel” attended the “On-Job Seminar of Trust Management Personnel” held by Taiwan Academy of Banking and Finance (TABF) for 12 held by Taiwan Academy of Banking and Finance (TABF) for 12 hours. hours. (II) Attendance of directors and supervisors to the Board sessions: All of them attended (49) 2012.9.21~22- Manager Chen Fen-Lan of Securities Department the Bank’s Board sessions as scheduled. attended the “On-Job Training for People of Futures Business (III) The implementation of risk management policies and the standards for risk –Senior Manger Class” held by Chinese National Futures assessment: Association for 13.5 hours. 1. To deal with the risk management requirements and upgrade the Bank’s (50) 2012.9.21~22- Manager Chien-Yu Lin of TCB Securities Taipei risk control ability under the New Basel Capital Accord, the Bank Branch attended the “On-Job Training for Securities Personnel” continues planning the risk management structure and information held by Taiwan Securities Association for 5 hours. platform for credit, market and operational risks, and further enhance the (51) 2012.9.27- Manager Mei-Li Wu of Debt Management Department control and management of various risks to ensure the effective promotion attended the “Seminar of Risk Management of Selling Financial of various risk management policies, evaluate the related operational risk, Products in the Financial Service Sector of Hong Kong” held define the risk limits bearable by the various businesses and urge the jointly by Trust Association of the ROC and the Bankers management unit to take the necessary actions to enhance the risk Association of the ROC for 6 hours. management sensitivity effectively. (52) 2012.9.27- Manager Chen-Hung Cheng of Kueishan Branch 2. The risk management policy has been subject to change on due time to attended the “Seminar of Risk Management of Selling Financial ensure its effectiveness. The Risk Management Committee convenes Products in the Financial Service Sector of Hong Kong” held regularly to confirm the effect of risk control and make appropriate jointly by Trust Association of the ROC and the Bankers adjustment of the risk control measures. Association of the ROC for 6 hours. 3. The status of the Bank’s execution of the various risk assessments: (53) 2012.10.4- Manager Chen-Hung Cheng of Kueishan Branch (1) Credit risk: The Bank’s current assessment on the credit risk attended the “Forum on International Financial Trend – the factors of the Bank’s businesses covers all transactions on-balance practice of offshore CNY bonds operation in Hong Kong” held by sheet and off-balance sheet, and the Bank will proceed with the Taiwan Academy of Banking and Finance (TABF) for 7 hours. multi-departmental planning and discussion before releasing any (54) 2012.10.11- Acting Vice Manger Mu-Ken Chang of Wealth new product and business, and then have the relevant business Management Department attended the “The challenges to the departments to conduct the appropriate risk control pursuant to the financial market under uncertainty of economic growth” held by requirements and rules. The Bank manages its credit risks for Taiwan Financial Services Roundtable for 3 hours. individual loans and loan portfolios through limit control, (55) 2012.10.25-President Chun-Sheng Lee attended the “8th Term post-approval management, collateral management, and asset Taipei Corporate Governance Forum” held by Financial quality management. In addition, the mechanism for monitoring Supervisory Commission for 6 hours. credit risk is in place with regular reports on the aforementioned (56) 2012.11.6- Manager Kuang-Chung Hsiao of Treasury Department result of risk monitoring for the reference of the Risk Management attended the “Seminar of Economic Trend in 2013” held by Committee and the Board for decision-making. Taiwan Institute of Economic Research for 3.5 hours. (2) Operational risk: The Bank also made record of various (57) 2012.11.13~14- Manager Mei-Li Wu attended the “Seminar on exposures. By introducing the Operational risk identification, Exchange of Compliance in the Financial Sector of Taiwan” held assessment, control and report management mechanism, the Bank

60 61 60 Deviation from the Corporate Governance Item Implementation Status Best-Practice Principles for the Banking Industry and reasons by Taiwan Academy of Banking and Finance (TABF) for 10 hours. (58) 2012.11.27~28- Chief Auditor Ming-Chin Shen attended the “Seminar of Lead Auditors” held by Taiwan Academy of Banking and Finance (TABF) for 13 hours. (59) 2012.11.29~30- Acting Vice Manager Chung-Ping Yang of Human Resources Department attended the “Colloquium of Senior Human Resources Managers” held by Taiwan Academy of Banking and Finance (TABF) for 7.5 hours. (60) 2012.12.8~15- Manager Chi-Lung Huang of Taiching Branch attended the “On-Job Seminar of Trust Management Personnel” held by Taiwan Academy of Banking and Finance (TABF) for 12 hours. (II) Attendance of directors and supervisors to the Board sessions: All of them attended the Bank’s Board sessions as scheduled. (III) The implementation of risk management policies and the standards for risk assessment: 1. To deal with the risk management requirements and upgrade the Bank’s risk control ability under the New Basel Capital Accord, the Bank continues planning the risk management structure and information platform for credit, market and operational risks, and further enhance the control and management of various risks to ensure the effective promotion of various risk management policies, evaluate the related operational risk, define the risk limits bearable by the various businesses and urge the management unit to take the necessary actions to enhance the risk management sensitivity effectively. 2. The risk management policy has been subject to change on due time to ensure its effectiveness. The Risk Management Committee convenes regularly to confirm the effect of risk control and make appropriate adjustment of the risk control measures. 3. The status of the Bank’s execution of the various risk assessments: (1) Credit risk: The Bank’s current assessment on the credit risk factors of the Bank’s businesses covers all transactions on-balance sheet and off-balance sheet, and the Bank will proceed with the multi-departmental planning and discussion before releasing any new product and business, and then have the relevant business departments to conduct the appropriate risk control pursuant to the requirements and rules. The Bank manages its credit risks for individual loans and loan portfolios through limit control, post-approval management, collateral management, and asset quality management. In addition, the mechanism for monitoring credit risk is in place with regular reports on the aforementioned result of risk monitoring for the reference of the Risk Management Committee and the Board for decision-making. (2) Operational risk: The Bank also made record of various exposures. By introducing the Operational risk identification, assessment, control and report management mechanism, the Bank

61 61 Deviation from the Deviation from the Corporate Governance Corporate Governance Item Implementation Status Best-Practice Principles Item Implementation Status Best-Practice Principles for the Banking Industry for the Banking Industry and reasons and reasons establishes and centrally manages the database for the Bank’s Temple of Ta Chia. Operational risk losses and summarizes the Operational risk 5. Sponsorship to Little Giant Chinese Chamber Orchestra to help promotion information and implementation status, and submit the report and of traditional Chinese musical arts. suggestions to Risk Management Committee and reporting them 6. Sponsorship for professional golfer Hsien-Wen Huang and triathlon athlete to the Board for approval. Further, in order to enhance the Yi-Wen Wang in order to promote sportsmanship in Taiwan as a mean of monitoring of operational risks, the Bank also establishes Key performing corporate social responsibility. Risk Indicators and Risk Control Self Assessments according to 7. Donation of graduation scholarship to Ta Deh Senior High School of the four dimensions of operational risk, i.e. internal procedure, Commerce and Industry and Wen Hsing Senior High School in Changhwa people, systems and external events. In order to reduce the Country. operational risk loss effectively, the Bank can transfer or write off 8. Sponsor the “Commendation Awarded to National Model Labors in 2012” the loss and impact of incidents caused by operational risk through organized by Chinese Federation of Labor. insurance and outsourcing, in part or in whole. 9. Sponsorship of the concert presented by Little Giants Chinese Chamber (3) Market risk: The trading information related to the market risk to Orchestra in the 2012 Hakka Tung Blossom Festival in supporting the the business supervisory unit and Risk Management Dept. Risk cultural innovation industry and the development of local tourism. Management Dept. shall consolidate and summarize the 10. Support the “2012 National Taiwan University of Arts and DaGuan information and present the report to Risk Management Guzheng Music Retrospective Exhibition” for assistance to the Committee and the Board. The contents of said report cover all development of cultural innovation industry and traditional Chinese music. market risk positions and ensure that the various transactions are 11. Sponsor the “19th Term Care Cup 3rd-Level Baseball Game” organized by conducted under authorization and the specific limitation. The Taiwan Aboriginal Baseball Development Association to care the information system currently used by the Bank mainly deals with aboriginal groups and boost baseball games in the development. limit control. Transactions entail market risk are subject to control VIII. If there is any internal self-audit on corporate governance or audit conducted by external by limits of different instruments of investments. Limits are also professional auditors, specify the result (or evaluation by external professional auditors), the set to regulate counterparty risks by their respective credit rating major shortcomings (or recommendations) given, and the status of corrective action: None. and financial positions to avoid excessive concentration of capital. (V) Establishment, functions and operations of Remuneration committee The dealing units of the Bank make appropriate adjustment of the investment position in line with the changes in the market environment within the authorized limits. Where necessary, the 1. Information on the members of the Remuneration Committee Conditions Have more than 5 years of experience Number of Remarks Bank may engage in derivative trade for hedging and proceed to By identity Status of independence and the following professional public (Note 3) stop loss. Said relevant requirements shall be reviewed and (Note 1) (note 2) qualifications companies revised subject to the operation plan, business development and changes in the entire financial environment. (IV) Customers’ or consumers’ complaints or disputes shall be handled pursuant to the complaining procedure defined by the Bank, and followed up thereafter. (V) The Bank’s directors would avoid any motions in which they had conflict of interest pursuant to Banking Act and Company Act, and would never participate in the voting. (VI) Donation to political parties, stakeholders, and social charity groups: 1. To help the “Dajiama Society Welfare Foundation Taichung City Private Zhen Lan Children Home” to raise invoices, and set up the invoice box at the lobby of the Bank’s Central Taiwan Branch. 2. The Bank has allocated a fraction of the amount consumed via the Ma Tsu Safety Card as contribution to Ta Chia Zhen Lan Temple for worshiping the Ma Tsu to help religious development and for social charity. 3. Sponsor the “2012 Ming Dao International University Basketball Game” organized by Ming Dao University. 4. Sponsorship of the 2012 Ta Chia Mazu Cultural Season events, “Bike for Touring Taichung”, and “Ta Chia Marathon” organized by Zhen Lan

62 63 62 Deviation from the Corporate Governance Item Implementation Status Best-Practice Principles for the Banking Industry and reasons Temple of Ta Chia. 5. Sponsorship to Little Giant Chinese Chamber Orchestra to help promotion of traditional Chinese musical arts. 6. Sponsorship for professional golfer Hsien-Wen Huang and triathlon athlete Yi-Wen Wang in order to promote sportsmanship in Taiwan as a mean of performing corporate social responsibility. 7. Donation of graduation scholarship to Ta Deh Senior High School of Commerce and Industry and Wen Hsing Senior High School in Changhwa Country. 8. Sponsor the “Commendation Awarded to National Model Labors in 2012” organized by Chinese Federation of Labor. 9. Sponsorship of the concert presented by Little Giants Chinese Chamber Orchestra in the 2012 Hakka Tung Blossom Festival in supporting the cultural innovation industry and the development of local tourism. 10. Support the “2012 National Taiwan University of Arts and DaGuan Guzheng Music Retrospective Exhibition” for assistance to the development of cultural innovation industry and traditional Chinese music. 11. Sponsor the “19th Term Care Cup 3rd-Level Baseball Game” organized by Taiwan Aboriginal Baseball Development Association to care the aboriginal groups and boost baseball games in the development. VIII. If there is any internal self-audit on corporate governance or audit conducted by external professional auditors, specify the result (or evaluation by external professional auditors), the major shortcomings (or recommendations) given, and the status of corrective action: None. (V) Establishment, functions and operations of Remuneration committee

1. Information on the members of the Remuneration Committee Conditions Have more than 5 years of experience Number of Remarks By identity Status of independence and the following professional public (Note 3) (Note 1) (note 2) qualifications companies

63 63 Lecturer or Passed the Required where the qualifications of the members and their attendance to the meetings are shown below: above in qualification Work members of Attendance rate commerce, examination experience Actual number of Attend through Remarks the Title Name (%) law, with proper in Remuneration attendance (B) proxy finance, licensing by commerce, Committee are (B/A) (Note) accounting the national law, also the Hsi-Rong Convener 3 0 100% or subjects Government finance, members of Huang required by Apparatus as accounting the the court judge, or others remuneration Chen-Le Committee 3 0 100% business of prosecutor, required by committees of Liu the bank in lawyers, the Bank these Kuei-Fong pubic or certified 1 2 3 4 5 6 7 8 companies Committee 3 0 100% private public Wang colleges or accountant Other notes: universities or other I Where the Board may not take or revise the advice of the Remuneration Committee, specify professional the date and the session of the Board, the content of the motion, the resolution of the Board, designations required by and the response to the opinions of the banks towards the advice of the Remuneration the business Committee (If the resolution of the Board suggested better position of remuneration than the of the Bank advice of the Remuneration Committee, specify the reasons and the variations): None. II Where members of the Remuneration Committee may have adverse opinions or qualified opinions in their resolutions on record or in written declaration, specify the date and session Name of the committee, the content of the motion, the opinions of all other members, and the Independent Hsi-Rong Managing          0 Yes responses to the adverse opinions: None. Huang Director Note: (1) If specific member of the Remuneration Committee resigned before the expiration of the term of office in the committee, specify the date of resignation in the field of “Remarks”. The actual Independent Chen-Le Liu          0 Yes director attendance rate to committee meetings (%) shall be calculated on the basis of the total number of meetings and the actual number of meetings attended by the member during his/her term of Kuei-Fong Director         0 Yes employment. Wang (2) Before the end of the fiscal year, new members were elected to the Remuneration Committee to fill Note 1. Fill in the title of Director, Independent Director, or others. the vacancies left behind by the members with tenure expired. Specify both the details of the new Note 2. If any of the following conditions is applicable to the members within 2 years before office and during and former members of the committee in the field of “Remarks” as original term, new term, or the term of office, please put the “” sign in the appropriate box below. renewed term, and the date of the election. The actual attendance rate (%)shall be calculated on (1) Not an employee of the Bank or its affiliates. the basis of the total number of meetings and the actual number of meetings attended by the (2) Not a director or supervisor of the Bank or its affiliates. Excluding the capacity of member during his/her term of employment. independent director of the Bank or its parents, or a subsidiary directly or indirectly held by the Bank with more than 50% of the stakes. (3) Not a natural person, spouse, underage children, or under the title of a third party who holds more than 1% of the outstanding shares issued by the Bank or among the top 10 natural person shareholders. (4) Not a spouse, kin at the second pillar under the Civil Code, or the lineal blood relatives within the third pillar under the Civil Code as specified in (1) through (3). (5) Not a director, supervisor or employee of an institutional shareholder who holds more than 5% of the outstanding shares issued by the Bank, or a director, supervisor or employee of an institutional shareholder who is among the top 5 shareholders. (6) Not a director, supervisor, manager or shareholder holding more than 5% of the outstanding shares of specific company or institution in business or financial relation with the Bank. (7) Not a professional, owner, partner, director, supervisor, manager of proprietorship, partnership, company or institution that provide business, legal, financial and accounting services to the Bank or a spouse to the aforementioned persons. (8) Not under any of the categories stated in Article 30 of the Company Act. Note 3. If the members are Directors, specify if Article 6-5 of the “Regulations Governing the Appointment and Exercise of Powers by the Remuneration Committee of a Company Whose Stock is Listed on the Stock Exchange or Traded Over the Counter” is duly complied. 2. The operation of the Remuneration Committee (1) The Remuneration Committee of the Bank is consisted of 3 members. (2) Term of office of current committee members: August 18 2011 to June 21 2014. The Remuneration Committee has convened for 3 times in the most recent year (A). The

64 65 64 qualifications of the members and their attendance to the meetings are shown below: Attendance rate Actual number of Attend through Remarks Title Name (%) attendance (B) proxy (B/A) (Note) Hsi-Rong Convener 3 0 100% Huang Chen-Le Committee 3 0 100% Liu Kuei-Fong Committee 3 0 100% Wang Other notes: I Where the Board may not take or revise the advice of the Remuneration Committee, specify the date and the session of the Board, the content of the motion, the resolution of the Board, and the response to the opinions of the banks towards the advice of the Remuneration Committee (If the resolution of the Board suggested better position of remuneration than the advice of the Remuneration Committee, specify the reasons and the variations): None. II Where members of the Remuneration Committee may have adverse opinions or qualified opinions in their resolutions on record or in written declaration, specify the date and session of the committee, the content of the motion, the opinions of all other members, and the responses to the adverse opinions: None. Note: (1) If specific member of the Remuneration Committee resigned before the expiration of the term of office in the committee, specify the date of resignation in the field of “Remarks”. The actual attendance rate to committee meetings (%) shall be calculated on the basis of the total number of meetings and the actual number of meetings attended by the member during his/her term of employment. (2) Before the end of the fiscal year, new members were elected to the Remuneration Committee to fill the vacancies left behind by the members with tenure expired. Specify both the details of the new and former members of the committee in the field of “Remarks” as original term, new term, or renewed term, and the date of the election. The actual attendance rate (%)shall be calculated on the basis of the total number of meetings and the actual number of meetings attended by the member during his/her term of employment.

65 65

(VI) Corporate Social Responsibility Deviations from “Corporate Social Responsibility Best Item Implementation Status Practice Principles for TWSE/GTSM Listed Companies” and reasons 1. Exercising Corporate Governance (1) The company declares its (1) The Bank has established the corporate social “Corporate Social responsibility policy and Responsibility Best examines the results of Practice”. According to the implementation. Article 6 of the Code, the Board of Directors shall urge the Bank to fulfill the corporate social responsibility with due diligence and shall examine

66 the results of the implementation and (2) The company establishes continue making Compliance with the “Corporate Social Responsibility exclusively (or improvement, to ensure Best Practice Principles for TSEC/GTSM Listed concurrently) dedicated fulfillment of the corporate Companies”. units to be in charge of social responsibility proposing and enforcing policies. the corporate social (2) The “Office of the Board” responsibility policies. shall be the concurrent unit (3) The company organizes dedicated to promoting the regular training on corporate social business ethics and responsibility. promotion of matters (3) The Bank organizes regular prescribed in the training on business ethics preceding Article for and promotion of matters directors, supervisors and prescribed for directors, employees, and should supervisors and employees, incorporate the foregoing and incorporates the 66

Deviations from “Corporate Social Responsibility Best Item Implementation Status Practice Principles for TWSE/GTSM Listed Companies” and reasons into its employee foregoing into its employee performance appraisal performance appraisal system to establish a system to establish a clear clear and effective and effective reward and reward and discipline discipline system. system. 2. Fostering a Sustainable Environment (1) The company endeavors  Proceed with the improvement on to utilize all resources SOP, reduce the paper for vouchers more efficiently and uses and general paper, and continue renewable materials simplifying the SOP.

67 which have a low impact  Work with Gold FM to organize the on the environment. Moon Festival-related energy (2) The company establishes saving activity “Lightened by proper environmental Moon”. management systems  The clerks shall bring their own Compliance with the “Corporate Social Responsibility based on the cups and be provided with Best Practice Principles for TSEC/GTSM Listed characteristics of their environmental tableware to avoid Companies”. industries. utilization of disposable tableware. (3) The company establishes  General Affairs Dept. shall be the dedicated units or assigns unit dedicated to the environment dedicated personnel for protection. environment  Article 18 of Corporate Social management to maintain Responsibility Best Practice, it is the environment. necessary to pay attention to the (4) The company monitors impact of climate change on its the impact of climate operations and establish the Bank’s change on its operations strategies for energy conservation and should establish and carbon and greenhouse gas 67

Deviations from “Corporate Social Responsibility Best Item Implementation Status Practice Principles for TWSE/GTSM Listed Companies” and reasons company strategies for reduction, in order to reduce the energy conservation and impact to be brought by the Bank’s carbon and greenhouse operation to the natural gas reduction. environment.

3. Preserving Public Welfare (1) The Bank has complied (1) The Bank has established 68 with applicable laws related internal regulations governing labor force and for the protection of the respected the legitimate rights and fundamental principle of privileges of the employees, human right for the and has confirmed that the employees, and employment policy is safeguards the lawful non-discriminatory against Compliance with the “Corporate Social Responsibility rights of the employees gender, race, and age. The Best Practice Principles for TSEC/GTSM Listed and adopts the Bank has also designed Companies”. non-discriminatory appropriate management policy thereby methods and procedures to established appropriate materialize the equality in methods for the conditions for management, procedures employments, with proper enforcement. remuneration, training, and (2) The bank provides safe promotion. and healthy work (2) The Bank has defined the 68

Deviations from “Corporate Social Responsibility Best Item Implementation Status Practice Principles for TWSE/GTSM Listed Companies” and reasons environments for its work-rule of safe and employees, and organizes healthy, and arrange for training on safety and employees’ health health for its employees inspection and training on a on a regular basis. regular basis. (3) The Bank set up the (3) The Bank calls for mechanism for routine labor-management communication with the meetings regularly for employees, and have two-way communications notified the employees of and hearing to opinions, any change in the and announced to the operation that may employees on all business

69 significantly affect the activities and decisions in employees. the internet. A mailbox has been set up for communication with and suggestions of the employees so that the employees are accessible to (4) The bank establishes and information and have the discloses policies on rights of expression. This consumer rights and help to buttress a win-win interests and provides a situation. clear and effective (4) The Bank has defined the procedure for accepting relevant procedures and consumer complaints. operating rules to maintain (5) The bank cooperates with consumers’ interests and its suppliers to jointly rights, and provides the upgrade of corporate procedure for accepting

Deviations from “Corporate Social Responsibility Best Item Implementation Status Practice Principles for TWSE/GTSM Listed Companies” and reasons social responsibility. consumer complaints for (6) The bank, through follow-up. commercial activities, (5) As in P. 42, VI, other non-cash property information critical to the endowments, volunteer understanding of our bank’s service or other free corporate social professional services, responsibility and how it is participates in put into practice. community development (6) As in P. 42, VI, other and charities events. information critical to the understanding of our bank’s corporate social

70 responsibility and how it is put into practice.

4. Enhancing Information Disclosure (1) The measures of (1) The Bank has established a disclosing relevant and website for the disclosure reliable information of its corporate social relating to their corporate responsibility. social responsibility. (2) The Bank produces Compliance with the “Corporate Social Responsibility (2) The bank produces corporate social Best Practice Principles for TSEC/GTSM Listed corporate social responsibility reports Companies”. responsibility reports disclosing the status of their disclosing the status of implementation of the their implementation of corporate social the corporate social responsibility policy. responsibility policy. 70

5. If the bank has established corporate social responsibility principles based on “Corporate Social Responsibility Best Practice Principles for TWSE/GTSM Listed Companies”, please describe any discrepancy between the principles and their implementation: The Bank has defined its “Corporate Social Responsibility Best Practice”, and implements its corporate social responsibility according to the Practice. Therefore, there is no discrepancy between the principles and their implementation. 6. Other important information to facilitate better understanding of the Company’s corporate social responsibility practices (e.g., systems and measures that the company has adopted with respect to environmental protection, community participation, contribution to society, service to society, social and public interests, consumer rights and interests, human rights, safety and health, other corporate social responsibilities and activities, and the status of implementation.): (1) The Bank is always dedicated to taking part in social welfare activities, and sponsoring the following activities: 1. Work with “Eden Social Welfare Foundation” in the charity petty cash donation activity and install petty cash donation boxes at the business locations of the Bank’s branches. 2. Assist the donation campaign held by “Eden Social Welfare Foundation” by printing the donation form at the back of the credit card statement. 3. Broadcast the welfare commercial for “Quit Smoking Promoted by the John Tung Foundation” in the multi-media channels at the Bank’s branches.

71 4. Broadcast the film for “Anti-Fraud – Kidnapping” in the multi-media channels at the Bank’s business locations. 5. To work with the Child Welfare League Foundation in the fund-raising event entitled “Heart United Makes Home Reunion”, the Bank helps find missing children and juvenile, and establishes the link from the Bank’s site to the official site of the Child Welfare League Foundation. 6. To help the “Dajiama Society Welfare Foundation Taichung City Private Zhen Lan Children Home” to raise invoices, and set up the invoice box at the lobby of the Bank’s Central Taiwan Branch. 7. The Bank has allocated a fraction of the amount consumed via the Ma Tsu Safety Card as contribution to Dajia Zhen Lan Temple for worshiping the Ma Tsu to help religious development and for social charity. 8. Assist the donation promoted by: “Child Welfare League Foundation” and run the list of donations on the back side of the Bank’s credit card debit notes. 9. Apply recycled paper to print the Bank’s annual report. 10. Sponsor the “2012 Ming Dao International University Basketball Game” organized by Ming Dao University. 11. Sponsorship of the 2012 Dajia Ma Tzu Cultural Season events, “Bike for Touring Taichung”, and “Ta Chia Marathon” organized by Zhen Lan Temple of Dajia. 12. Sponsorship to Little Giant Chinese Chamber Orchestra to help promotion of traditional Chinese musical arts. 13. Organize the visit tour of students from Department of Finance of National Chung Hsing University, Taiwan to provide the students with the chance to learn and observe, and to train excellent talents in banking business. 14. Engaged in a cooperative education program with Feng Chia University by giving opportunities for students majored in 71

banking and finance for visiting the facilities of the Bank. 15. Sponsorship for professional golfer Hsien-Wen Huang and triathlon athlete Yi-Wen Wang in order to promote sportsmanship in Taiwan as a mean of performing corporate social responsibility. 16. Donation of graduation scholarship to Ta Deh Senior High School of Commerce and Industry and Wen Hsing Senior High School in Changhwa Country. 17. Sponsor the “Commendation Awarded to National Model Labors in 2012” organized by Chinese Federation of Labor. 18. Sponsorship of the concert presented by Little Giants Chinese Chamber Orchestra in the 101 Hakka Tung Blossom Festival in supporting the cultural innovation industry and the development of local tourism. 19. Support the “2012 National Taiwan University of Arts and DaGuan Guzheng Music Retrospective Exhibition” for assistance to the development of cultural innovation industry and traditional Chinese music 20. Organized the “Blood donation in whole-heartedness by Taichung Commercial Bank” campaign jointly with the Taipei Blood Center and Taichung Blood Center of Taiwan Blood Services Foundation to rally for social support in blood donation. 21. Organized the “Lightened by Moon” event for the celebration of Mid-Autumn Festival jointly with the City FM in supporting the energy saving and safe the earth campaign.

72 22. Sponsor the “19th Term Care Cup 3rd-Level Baseball Game” organized by Taiwan Aboriginal Baseball Development Association to care the aboriginal groups and boost baseball games in the development. (2) The Bank has employed 21 persons who are physically or mentally disordered until the end of February 2013. 7. If the products or corporate social responsibility reports have received assurance from external institutions, they should state so below: None (VII) The best-practice of business integrity and the policies Difference with other companies listed in Item Implementation Status TWSE/GTSM in best-practice principles of business integrity 1. The policy and plan of business The official website of the Bank has shown integrity the declaration of internal control system of (I) The Bank has explicitly the Bank signed by the Chairman, President, In compliance with the best-practice principles of expressed its policy of Chief Auditor, and the Chief Compliance integrity for TWSE/GTSM-listed companies business integrity in its Officer of the Bank. The declaration states internal code and external that the Bank duly compliance with the 72

Difference with other companies listed in Item Implementation Status TWSE/GTSM in best-practice principles of business integrity documents, and the Regulation Governing the implementation of positive effort of the Board internal control system by financial holding and the Management in companies and banks, and has announced their commitment to realize the areas of internal control system that business integrity. required additional efforts and corrective (II) The Bank has established action plans. The Bank has also set the stop regulation for the loss limits or the limit of risk concentration in prevention of the breach of all transactions, investments, and loans by the integrity, and related nature of the operation, and reviews such

73 operation procedure, code limits regularly with relevant adjustment with of conduct and training in reference to related economic indicators and practice. the status of business development of the (III) In the formulation of plans Bank. for the prevention of the The Bank has instituted the system of breach of integrity, the compliance officer and related training to Bank has taken measures educate the people in banking and finance in in governing business with compliance with the principle of integrity and higher risk of the breach of applicable laws. The Bank has instituted the integrity within the scope criteria for external donations in compliance of operation, like the with applicable laws thereby regulate the prevention of giving and recipients and amount of donations. taking bribes, provides illegal political donations. 2. The Materialization of Business The Bank shall duly comply with applicable In compliance with the best-practice principles of 73

Difference with other companies listed in Item Implementation Status TWSE/GTSM in best-practice principles of business integrity Integrity legal rules in conducting transactions and integrity for TWSE/GTSM-listed companies (I) The Bank avoids business making purchases thereby avoids business transactions with parties transactions with parties that have a record of the breach of integrity. The Auditing Office of that have a record of the Bank conducts the audits in accordance breach of integrity, and has with the Regulation Governing the explicitly stated the clause Implementation of Internal Control System of business integrity in the and Internal Audit System by Financial Holding Companies and Banks, and business agreements of the dispatches related auditors to conduct audit in Bank. accordance with the annual audit plan. (II) The operation of the 74 designated full-time (part-time) body for administering business integrity and the supervision of the Board. (III) The policy of the avoidance of the conflict of interest made by the Bank and the availability of appropriate channels for operation. (IV) The operation of the effective accounting system and internal control 74

Difference with other companies listed in Item Implementation Status TWSE/GTSM in best-practice principles of business integrity system established by the Bank for the materialization of business integrity, and the audits conducted by the internal auditors. 3. The Bank has established the The channels for external complaints are channels for reporting and the monitored by the supervisors with 24-hour system for the punishment of the customer service hotline. The Bank has In compliance with the best-practice principles of breach of business integrity, and the Human Resources Evaluation Committee and integrity for TWSE/GTSM-listed companies

75 operation of the complaint system. the punishment and complaint system in place. 4. Enhancing Information Disclosure (I) The Bank has established an official website for the disclosure of information on business integrity in business operation. (II) Other means adopted by The Bank has disclosed the details required the Bank in disclosures In compliance with the best-practice principles of for disclosure as a part of public information (the establishment of an integrity for TWSE/GTSM-listed companies at the official website. English language website, appointment of designated personnel to gather relevant information on the Bank and load for disclosure to the official website). 75

(X) Status of Internal Control 1. Statement of Declaration of Internal Control System

ment Best ment Statement of Declaration of Internal Control System of , and invites and , Taichung Commercial Bank ple, the corporate corporate ished by the ctice principles of The Undersigned hereby duly declares on behalf of Taichung Commercial Bank that Taichung Commercial Bank has complied with the Regulations for the

business integrity integrity business Implementation of Internal Control and Internal Audit Systems by Banks to establish its internal control system and exercise risk management. An independent and impartial the Bank of business integrity business of Bank the

ttp://newmops.tse.com.tw/ Audit Department of the Bank has conducted an audit covering the period from January Difference with other companies listed in listed companies with other Difference TWSE/GTSM in best-pra TWSE/GTSM es of business integrity establ integrity business of es 1 to Dec. 31, 2012, in accordance with applicable legal rules, and has reported to the

pancy between the principles and their pancy between Board and the Supervisors on a regular basis. The audit of securities dealing

principle of business integrity (for exam operations has been conducted in accordance with the Standards for Service Industries Securities and Futures Markets in the Establishment of Internal Control System ations: Please refer to h to refer Please ations: ate Management Best Practice Principles for TWSE/GTSM-Listed for TWSE/GTSM-Listed Principles Best Practice ate Management promulgated by the Securities and Futures Bureau of the Financial Supervisory best practice principles based on “Ethical Corporate Manage

://newmops.tse.com.tw/important information information ://newmops.tse.com.tw/important Commission to identify the effectiveness of the internal control system, and determines that have business relation with relation business have that

76 for the revision of principl if the design and enforcement of internal control are effective. Caution has been taken in the assessment of audits. Other than the circumstances referred to in the attached

Implementation Status Implementation schedules, all functional units of the Bank have effectively enforced the internal control system of the Bank and acted in compliance with applicable legal rules. This Companies”, please describe any discre Companies”, statement constitutes the summary content of Taichung Commercial Bank annual

understand the status of operation under Report of current year and the Offering Prospectus, and shall be disclosed to the public. Any misrepresentation or concealment of the aforementioned disclosures shall be liable to violation of Articles 20, 32, 171 and 174 of the Securities and Exchanges Act and the legal consequences thereof. Corporate Governance Practices and the relevant regul relevant the and Practices Governance Corporate Other important information: Please refer to http to refer Please information: important Other governance To:

Item Item Financial Supervisory Commission

(VIII) (IX)

these enterprises to participate in the training and the review review the and training the in participate to enterprises these Practice Principles for TWSE/GTSM-Listed implementation: and policy of the Bank to educate enterprises determination Bank): None. The Bank runs its operation in accordance with the “Ethical Corpor The Bank runs its operation in accordance Companies”. Companies”. Declarant:

Chairman: Jin-Fong Soo 5. of good-faith management If the bank has established performance 6. that helps to Other vital information

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(X) Status of Internal Control 1. Statement of Declaration of Internal Control System

Statement of Declaration of Internal Control System of Taichung Commercial Bank

The Undersigned hereby duly declares on behalf of Taichung Commercial Bank that Taichung Commercial Bank has complied with the Regulations for the Implementation of Internal Control and Internal Audit Systems by Banks to establish its internal control system and exercise risk management. An independent and impartial Audit Department of the Bank has conducted an audit covering the period from January 1 to Dec. 31, 2012, in accordance with applicable legal rules, and has reported to the Board and the Supervisors on a regular basis. The audit of securities dealing operations has been conducted in accordance with the Standards for Service Industries Securities and Futures Markets in the Establishment of Internal Control System promulgated by the Securities and Futures Bureau of the Financial Supervisory Commission to identify the effectiveness of the internal control system, and determines if the design and enforcement of internal control are effective. Caution has been taken in the assessment of audits. Other than the circumstances referred to in the attached schedules, all functional units of the Bank have effectively enforced the internal control system of the Bank and acted in compliance with applicable legal rules. This statement constitutes the summary content of Taichung Commercial Bank annual Report of current year and the Offering Prospectus, and shall be disclosed to the public. Any misrepresentation or concealment of the aforementioned disclosures shall be liable to violation of Articles 20, 32, 171 and 174 of the Securities and Exchanges Act and the legal consequences thereof. To: Financial Supervisory Commission

Declarant:

Chairman: Jin-Fong Soo

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Scheduled to Complete President: Chun-Sheng Lee Improvement Corrective Action Corrective Action on matters by complying with related Chief Auditor: Ming-Chin Shen procedures thereby registration is required for each instance of the release of document and stocktaking is required on a daily basis. The unused printed matters shall be stored Chief Compliance Officer: Chi-Chuang Fang in the vault after office hours. 3. 2012.1.21- The Bank has released an internal circular to all banking units that the keeping of passbooks, signed/sealed withdrawal slips of the customers by Date: March 13, 2013 banking staff is strictly prohibited for preventing corruption. Those who violate this principle shall be subject to disciplinary action and the manager, vice manager, asst Improvement and Corrective Action of Internal Control System of Taichung vice manger of the unit shall also be subject to strict punishment. All of the Bank shall Commercial Bank duly comply with the requirements of the (Record Date: December 31, 2012) Bank in this operation, and shall never Scheduled to engage in any investment of high risk and Complete beyond the financial capacity of the Bank. Improvement Corrective Action Corrective Action 4. 2013.1.22- The Bank has released an on internal circular to alert the banking units to Asst vice manager OO Corrective Action: Corrective action intensify control over the following: (1) All Yen of OO Branch 1. For intensifying the review of correction in has been taken in processing staff shall keep the teller made use of his job the transactions conducted by the banking February 2013. accounts, personal seal and all important position to embezzle units, the supervisor approval account stamps and seals of the Bank properly, and the deposits of the statement will be generated on the day after shall log off the teller accounts and put the customers. Three the transactions if the transactions were personal seal and all other important stamps banking units, conducted by using the supervisor accounts. and seals in a safe place when leaving the including oo Branch, Updated transaction statement will also be desk to avoid possible unauthorized use, or failed to exercise printed out for verification. Further, the avail the teller account for the use of a third internal control when transactions “replacement of deposit party. (2) The daily DPS displayed the processing transactions certificate” and the “automatic renewed “Supervisor Account Transaction in withdrawal and deposit certificate” could also be applied Statement”, “Statement of Changes in deposits. Internal with the delivery of account statement in the Transaction Content” of the previous control and internal next month. If the transactions are business day. The manger of the banking management have not conducted by secret accounts that do not unit shall appoint a supervisor to been properly enforced. require the “delivery of account statement”, double-check the content of the two the information on such accounts will be fed statements (the double-checking and release to the “Account Statement without shall be performed by different persons). (3) Delivery” to relevant banking units for Banking units shall comply with the confirmation with the customers by regulation governing “Post-Approval telephone, personal visits, or any other Management of Opening New Accounts” feasible means and specify the means of thereby check the details as shown in the confirmation and the result in the statement. “Customer Information Sheet On Accounts 2. 2012.1.18- The Bank has released an Opened on the Previous Day” item by item internal circular to all banking units for and coordinate with relevant units on the reiterating the control of blank printed day after the processing of the new

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Scheduled to Complete Improvement Corrective Action Corrective Action on matters by complying with related procedures thereby registration is required for each instance of the release of document and stocktaking is required on a daily basis. The unused printed matters shall be stored in the vault after office hours. 3. 2012.1.21- The Bank has released an internal circular to all banking units that the keeping of passbooks, signed/sealed withdrawal slips of the customers by banking staff is strictly prohibited for preventing corruption. Those who violate this principle shall be subject to disciplinary action and the manager, vice manager, asst vice manger of the unit shall also be subject to strict punishment. All of the Bank shall duly comply with the requirements of the Bank in this operation, and shall never engage in any investment of high risk and beyond the financial capacity of the Bank. 4. 2013.1.22- The Bank has released an internal circular to alert the banking units to intensify control over the following: (1) All processing staff shall keep the teller accounts, personal seal and all important stamps and seals of the Bank properly, and shall log off the teller accounts and put the personal seal and all other important stamps and seals in a safe place when leaving the desk to avoid possible unauthorized use, or avail the teller account for the use of a third party. (2) The daily DPS displayed the “Supervisor Account Transaction Statement”, “Statement of Changes in Transaction Content” of the previous business day. The manger of the banking unit shall appoint a supervisor to double-check the content of the two statements (the double-checking and release shall be performed by different persons). (3) Banking units shall comply with the regulation governing “Post-Approval Management of Opening New Accounts” thereby check the details as shown in the “Customer Information Sheet On Accounts Opened on the Previous Day” item by item and coordinate with relevant units on the day after the processing of the new

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Scheduled to Scheduled to Complete Complete Improvement Corrective Action Improvement Corrective Action Corrective Action Corrective Action on on accounts. through internal audit and compliance 5. 2013.1.28- The Bank has released an education, so as to prevent any illegal internal circular to all functional units to activities from time to time, and also fulfill severely reiterate compliance with the the units’ self-inspection and enhance operation procedures of the Bank in: (1) employees’ concept about laws, lest Supervisors are strictly prohibited in lawbreaking should arise again. operating teller-terminal and shall request the teller to do the operation if inquiry and the printout of related information are necessary. (2) The tellers of all banking units shall properly check the seals applied to the transaction vouchers and documents before proceeding to related operation. (3) In accepting the application of the customers for certificate of deposits, 2. Disclose the audit report by independent external auditors with a passbook, stop payment and reporting for special audit on internal control system: None lost of seal, replacement of seal and change in account title, ask the customers to fill in (XI) Violations punishable under laws and major deficiencies of the past two the “Application for certificate of years, and status of improvement: deposit/passbook/stop payment and Item Case Status of corrective action reporting lost of seal/replacement of seal Processing officer or Clerk ○○ Liu took advantage of his The Bank has discussed the relevant and change in account title”. In processing staff charged by duty to withdrew the cash with the operating requirements and taken the the request of the customers in making public prosecutors blank slip affixed with the seal and various corrective actions against the change in contact information, ask the on professional the passbook in his custody on behalf internal control, and also continue customers to fill in the “Agreement on misconducts of the client and misappropriated the urging the various units that they change in the transactions of deposits”. client’s deposit. The investigation on shall fulfill the internal contract Authenticate the identity of the customers the case was concluded by Taichung strictly, enhance the internal properly before processing the District Prosecutors Office in March management, complete the aforementioned requests, and keep 2012, and the indictment was compliance training program, and photocopies of related identification brought against the suspect for the enhance the appraisal on the clerks’ documents and supporting documents for offense of exercising forged private compliance of law and ethics. record. (4) The keeper of vital printed instruments under the Criminal matters (e.g.: blank certificate of deposit, Code. passbook, and checks) shall properly keep Fined by Financial Clerk ○○ Liu withdrew the cash with The Bank has discussed the relevant such items during banking hours, and shall Supervisory the blank slip affixed with the seal operating requirements and taken the not release the items to any party not Commission for and the passbook in his custody on various corrective actions against the requested for use in due procedure. After the violation of laws behalf of the client and internal control, and also continue accounts were settled for the day, check the and regulations misappropriated the client’s deposit. urging the various units that they quantity of the said printed matters on As a result, the Bank was fined by shall fulfill the internal contract inventory and lock them into the vault. FSC NTD2 million for violating strictly, enhance the internal 6. Audit Office has listed said corrective Article 45-1 of the Banking Act. management, complete the actions as the highlights of audit, and will compliance training program, and continue enhancing the special audit and enhance the appraisal on the clerks’ internal audit on cash inventory. compliance of law and ethics. 7. The Bank will continue enhancing various Defects to be None None business training programs, and also train corrected upon the intrabank clerks to keep their risk request of Financial awareness and fulfill the internal control Supervisor

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Scheduled to Complete Improvement Corrective Action Corrective Action on through internal audit and compliance education, so as to prevent any illegal activities from time to time, and also fulfill the units’ self-inspection and enhance employees’ concept about laws, lest lawbreaking should arise again.

2. Disclose the audit report by independent external auditors with a special audit on internal control system: None (XI) Violations punishable under laws and major deficiencies of the past two years, and status of improvement: Item Case Status of corrective action Processing officer or Clerk ○○ Liu took advantage of his The Bank has discussed the relevant staff charged by duty to withdrew the cash with the operating requirements and taken the public prosecutors blank slip affixed with the seal and various corrective actions against the on professional the passbook in his custody on behalf internal control, and also continue misconducts of the client and misappropriated the urging the various units that they client’s deposit. The investigation on shall fulfill the internal contract the case was concluded by Taichung strictly, enhance the internal District Prosecutors Office in March management, complete the 2012, and the indictment was compliance training program, and brought against the suspect for the enhance the appraisal on the clerks’ offense of exercising forged private compliance of law and ethics. instruments under the Criminal Code. Fined by Financial Clerk ○○ Liu withdrew the cash with The Bank has discussed the relevant Supervisory the blank slip affixed with the seal operating requirements and taken the Commission for and the passbook in his custody on various corrective actions against the violation of laws behalf of the client and internal control, and also continue and regulations misappropriated the client’s deposit. urging the various units that they As a result, the Bank was fined by shall fulfill the internal contract FSC NTD2 million for violating strictly, enhance the internal Article 45-1 of the Banking Act. management, complete the compliance training program, and enhance the appraisal on the clerks’ compliance of law and ethics. Defects to be None None corrected upon request of Financial Supervisor

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Commission A. Ratify the motion for applying for addition of Disciplined by FSC The Bank was ordered to The Bank has terminated the “Business Contributed to Futures Transactions” under Article 61-1 terminate the employment of employment with the clerk on May into the business lines of the Taipei Branch and of the Banking Act Clerk ○○ Liu who 25, 2011. Zhongli Branch. misappropriated the client’s B. Ratify the motion for application for capital increase by recapitalization of earnings in 2011. deposits. C. Ratify the date, location and cause of the general Casualty or accident None None shareholders’ meeting 2012. due to corruption, D. Resolution has been made in favor of the motion major incident or of “OBU foreign currency special money trust for failure to comply the investment of offshore securities”. with the safety E. Resolution has been made in favor of the motion measures, which of a joint venture between the Bank and the Bank caused damage of Taiwan in passbook saving of gold. exceeding NTD50 (3) 4th Board session of 21st term of the Board on April 18, million in a 2012 particular incident or A. Resolution has been made in favor of the motion in particular fiscal of the split up of the Securities Department and year the direct investment in “Taichung Commercial Other matters None None Bank Securities Co., Ltd.”. requiring disclosure B. Resolution has been made in favor of the motion commanded by FSC of running securities business and the application for running “proprietary securities trade”. (4) 8th special Board session of 21st term of the Board on May 16, 2012 (XII) Important resolutions of shareholders’ meetings and Board sessions: A. Resolution has been made in favor of the motion 1. Important resolutions of general shareholders’ meeting 2012 (June of running passbook saving in gold. 6 2012) B. Resolution has been made in favor of the motion (1) Recognize the business report and financial statement of direct investment in “Taichung Commercial 2011. Bank Consolidated Securities Co., Ltd.”. (2) Pass the earnings allocation plan 2011. (5) 9th special Board session of 21st term of the Board on (3) Ratify the motion for capital increase by recapitalization June 27, 2012 of earnings in 2011. Resolution has been made in favor of the motion of the (4) The amendment to part of the provisions contained in establishment of financing leasing company in Mainland the Procedure for the Acquisitions and Dispositions of China through the subsidiaries of the Bank. Assets has been passed. (6) 5th Board session of 21st term of the Board on August 8, (5) Resolution has been made in favor of the motion of the 2012 split up of the Securities Department of the Bank for the A. Confirmation of the capitalization of retained establishment of a securities firm under the title of earnings and the ex-right and ex-dividend date, “Taichung Commercial Bank Securities Co., Ltd.” for the period for the suspension of the transactions broadening the scope of operation and synergy. The of shares and the dividend day for the release of paid-in capital for the new business entity amounted to cash dividends for fiscal year 2011. NTD1,500 million. Taichung Commercial Bank Securities B. Resolution has been made in favor of the motion Co., Ltd. issued the shares to the Bank and has established of the adjustment of the conversion price for the its Articles of Incorporation. 1st issue of unsecured convertible financial 2. Important resolutions of the Board sessions (from January 1, 2012 debentures in 2011. to February 28, 2013) C. Resolution has been made in favor of the (1) 7th special Board session of 21st term of the Board on subscription of the new shares issued by January 11, 2012. “Taichung Commercial Bank Insurance Broker Resolution has been made in favor of the motion of the Co., Ltd.” for raising capital with the pledge of establishment of “Taipei Office”. real properties. (2) 3rd Board session of 21th term of the Board on March 8, (7) 6th special Board session of 21st term of the Board on 2012

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A. Ratify the motion for applying for addition of “Business Contributed to Futures Transactions” into the business lines of the Taipei Branch and Zhongli Branch. B. Ratify the motion for application for capital increase by recapitalization of earnings in 2011. C. Ratify the date, location and cause of the general shareholders’ meeting 2012. D. Resolution has been made in favor of the motion of “OBU foreign currency special money trust for the investment of offshore securities”. E. Resolution has been made in favor of the motion of a joint venture between the Bank and the Bank of Taiwan in passbook saving of gold. (3) 4th Board session of 21st term of the Board on April 18, 2012 A. Resolution has been made in favor of the motion of the split up of the Securities Department and the direct investment in “Taichung Commercial Bank Securities Co., Ltd.”. B. Resolution has been made in favor of the motion of running securities business and the application for running “proprietary securities trade”. (4) 8th special Board session of 21st term of the Board on May 16, 2012 A. Resolution has been made in favor of the motion of running passbook saving in gold. B. Resolution has been made in favor of the motion of direct investment in “Taichung Commercial Bank Consolidated Securities Co., Ltd.”. (5) 9th special Board session of 21st term of the Board on June 27, 2012 Resolution has been made in favor of the motion of the establishment of financing leasing company in Mainland China through the subsidiaries of the Bank. (6) 5th Board session of 21st term of the Board on August 8, 2012 A. Confirmation of the capitalization of retained earnings and the ex-right and ex-dividend date, the period for the suspension of the transactions of shares and the dividend day for the release of cash dividends for fiscal year 2011. B. Resolution has been made in favor of the motion of the adjustment of the conversion price for the 1st issue of unsecured convertible financial debentures in 2011. C. Resolution has been made in favor of the subscription of the new shares issued by “Taichung Commercial Bank Insurance Broker Co., Ltd.” for raising capital with the pledge of real properties. (7) 6th special Board session of 21st term of the Board on

8383

September 5, 2012 A. Resolution has been made in favor of the motion of the application with Financial Supervisory Commission for the issuance of subordinate bonds amounting to NTD3 billion. B. Resolution has been made in favor of the motion of the terms and conditions for the subscription of the new shares issued by “Taichung Commercial Bank Insurance Broker Co., Ltd.” for raising capital with the pledge of real properties. (8) 7th Board session of 21st term of the Board on October 17, 2012 Resolution has been made in favor of the motion of additional investment in “Reliance Securities Co., Ltd.” for increasing the proportion of shareholding. (9) 10th special Board session of 21st term of the Board on November 14, 2012 Resolution has been made in favor of the motion of running “Dual-Currency Investment Business”. (10) 8th Board session of 21st term of the Board on December 12, 2012 Resolution has been made in favor of the motion of acting as an acquirer bank of the Union Pay Card system. (11) 9th Board session of 21st term of the Board on January 23, 2013 A. Resolution has been made in favor of the motion of making May 2 2013 as the official split up date of the Securities Department of the Bank. B. Resolution has been made in favor of the motion of running the “Structured products of time deposit in foreign currencies linked to forwards options (including dual-currency investment)”.

(XIII) Adverse opinion from directors or supervisor over important resolution of the Board in the most recent year until the day the Annual Report was printed with records and written declaration, and the contents of such opinion: None. (XIV) In the most recent year to the date this report was printed, the information on the resignation and discharge of parties related to the Bank and parties related to financial reporting (including the Directors, Supervisors, Chairman, President, chief financial officer, chief accountant, chief internal auditor, and chief of R&D): Feb. 28, 2013 Election Termination Cause of Resignation or Title Name Date Date Termination Institutional shareholder Jou Director Jer-Nan Wang 100/6/22 101/6/8 Chang Co., Ltd. appointed new representatives Kuei-Hsien Institutional shareholder Pan Director 100/6/22 101/10/1 Wang Asia Chemical Corporation Ming-Hsiung Institutional shareholder Pan Director 100/6/22 101/10/1 Huang Asia Chemical Corporation

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IV. Disclosure of the accountant’s fee: Duration of Firm Name CPA Name Remarks Audit Tzu-Chun Deloitte & Touche Wen-Ya Hsu Wang 2012 Note: If the CPA or CPA office is replaced in the then year, please specify the duration of audit separately, and the cause of replacement in the “Remarks” Section. Unit: NTD thousand Fee items Auditing Non-Auditing Total Fee levels fee fee 1 Less than 2,000 thousand 2 2,000(inclusive) thousand~4,000 thousand ˇ 3 4,000 thousand(inclusive)~6,000 thousand 4 6,000 thousand(inclusive)~8,000 thousand ˇ 5 8,000 thousand(inclusive)~10,000 thousand 6 10,000 thousand above ˇ (I) When non-audit fee paid to the auditing CPA, the CPA’s firm, and its related business entity exceeds one fourth of the audit fee, the amount of audit and non-audit fees and the content of the non-audit service should be disclosed. Audit fee is defined as the fee for financial statement audit, review, compilation, financial statement forecast, and corporate tax filing: Unit: NTD thousand Non-Auditing fee Firm Auditing The duration CPA Name System Corporate Human Others Remarks Name fee Subtotal of the audit Design Registration Resources (Notes) Deloitte Wen-Ya Tzu-Chun & 3,750 - 60 - 6,372 6,432 2012 - Hsu Wang Touche Note: The content of the non-audit service include: Consulting service for establishing and introducing information security regulations, at a fee of NTD 3,465 thousand; the rest of the service include reviewing our bank’s retained earnings to increase paid-in capital, IFRS adoption, and other opinions, with fees totaling NTD 2,907 thousand. (II) Change of Accounting firm and the auditing fee of the year changing the Accounting firm less than that of the previous year, and the amount of audit fees before and after the change, and reasons of the change: None. (III) Auditing fee were 15% less than that of the previous year: None. V. Changes of Accountants: None. VI. Disclose the names and job title of the chairman, president, financial and accounting manager of the Bank who has worked with the CPA firm who conducts the audit of the Bank or the affiliates to such firms in the most recent one year, and the duration of their employment in the CPA firm and its affiliate: None VII. In the most recent year to the date this report was printed, the assignment of equity shares and pledge the equity shares under lien by directors, supervisors, managers, and particular person or particular related party holding the shares of particular bank with voting rights to certain proportion that required declaration pursuant to Article 11 of the management regulation. (I) Changes in shareholdings Jan. 1, 2013 ~ Feb. 28, Title Name 2012 2013

8585

Increase Increase Jan. 1, 2013 ~ Feb. 28, Increase Increase 2012 (decrease) in (decrease) 2013 (decrease) in (decrease) No. of in No. of Increase Increase No. of in No. of Increase Increase Pledged Pledged Title Name (decrease) in (decrease) Shares Shares (decrease) in (decrease) Shares Shares No. of in No. of No. of in No. of Pan Asia Chemical Pledged Pledged Managing Director 5,387,172 0 0 0 Shares Shares Corporation Shares Shares I Joung Investment Co., Manager, Trust Managing Director 599,162 0 0 0 Yu-Chung Lin (13,898) 0 0 0 Ltd. Dept. Independent Manager, Dept of Hsi-Rong Huang 0 0 0 0 Managing Director Debt Collection and Mei-Li Wu (15,820) 0 (70,000) 0 Ho Yang Management Asset Recovery Director 51,246 0 0 0 Manager, Corporate Consultant Co., Ltd. Te-Wei Chia (124,837) 0 0 0 Finance Dept. Director Chou Chang Co., Ltd. 322,027 (8,227,000) 0 0 Manager, Securities Fen-Lan Chen 0 0 0 0 Independent Dept. Chen-Le Liu 0 0 0 0 Manager, Risk director Chen-Ying Wu 2,876 0 0 0 Independent Management Dept. Jin-Yi Lee 0 0 0 0 Manager, Treasury director Kuang-Chung Hsiao 6,268 0 0 0 Xin Rui Investment Co., Dept. Supervisor 282,316 0 0 0 Manager, Wealth Ltd. Yu-Chung Lin (13,898) 0 0 0 Tai Jiunn Enterprise Co., Management Dept. Supervisor 28,863 0 0 0 Overseas Banking Ltd. Chih-Hung Lu (127,000) 0 0 0 Branch President Chun-Sheng Lee 17,606 0 0 0 Manager, Business Chien-Min Chou 8,348 0 0 0 Executive Vice Dept. Jung-Hua Kao (13,879) 0 (70,000) 0 President Manager, Securities Jui-Fen Tsai (41,000) 0 0 0 Executive Vice Brokerage Kai-Yu Lin (103,746) 0 0 0 President Manager, Daqing Chi-Long Huang (73,558) 0 0 0 Executive Vice Branch Hsueh-Hsien Liao (19,206) 0 0 0 President Manager, W. Tung-Hsu Liu (59,912) 0 0 0 Executive Vice Taichung Branch Chih-Chuan Fang 11,635 0 0 0 President Manager, Zhong Jui-Cheng Yang 9,924 0 0 0 Zheng Branch Chief Auditor Ming-Chin Shen 7,522 0 0 0 Manager, Xitun Han-Ching Tsai (33,327) 0 0 0 Office of the Board Branch Kai-Yu Lin (concurrent of Directors (103,746) 0 0 0 Manager, Nantun post) Kwei-Ching Ho 8,310 0 (18,000) 0 Chief Secretary Branch Manager, General Manager, Neixin Ching-hu Hsieh 5,823 0 0 0 Yu-Ying Chen (40,792) 0 (45,000) 0 Affairs Dept. Branch Manager, Business Manager, Dadu Chun-Ying Wang 13,359 0 0 0 Ching-Kun Lin 11,838 0 0 0 development Dept. Branch Manager, N. Manager, Loan Chung-Rong Lin (57,763) 0 0 0 Administration Yi-Yuan Tung (87,591) 0 (135,000) 0 Taiping Branch Dept. Manager, Chung-Ping Yang Taichungkang Hsin-Ru Kao 7,407 0 0 0 Manager, HR Dept. (Deputy manager on 0 0 0 0 Branch Manager, Simin behalf of manager) Chiung-Teng Hung 8,411 0 (45,000) 0 Manager, Branch Yi-Ying Chung (49,212) 0 0 0 Manager, Junkong Accounting Dept. Hui-Chin Lu 76 0 0 0 Manager, Branch Chun-Sheng Lin (105,511) 0 (70,000) 0 Manager, S. Information Dept. Huan-Chang Tseng 4,277 0 0 0 Manager, Taichung Branch Manager, N. International Cheng-Yu Lai (49,030) 0 (63,000) 0 Min-Hsuan Chiang . (56,054) 0 0 0 Banking Dept. Taichung Branch

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Jan. 1, 2013 ~ Feb. 28, 2012 2013 Increase Increase Increase Increase Title Name (decrease) in (decrease) (decrease) in (decrease) No. of in No. of No. of in No. of Pledged Pledged Shares Shares Shares Shares Manager, Trust Yu-Chung Lin (13,898) 0 0 0 Dept. Manager, Dept of Debt Collection and Mei-Li Wu (15,820) 0 (70,000) 0 Asset Recovery Manager, Corporate Te-Wei Chia (124,837) 0 0 0 Finance Dept. Manager, Securities Fen-Lan Chen 0 0 0 0 Dept. Manager, Risk Chen-Ying Wu 2,876 0 0 0 Management Dept. Manager, Treasury Kuang-Chung Hsiao 6,268 0 0 0 Dept. Manager, Wealth Yu-Chung Lin (13,898) 0 0 0 Management Dept. Overseas Banking Chih-Hung Lu (127,000) 0 0 0 Branch Manager, Business Chien-Min Chou 8,348 0 0 0 Dept. Manager, Securities Jui-Fen Tsai (41,000) 0 0 0 Brokerage Manager, Daqing Chi-Long Huang (73,558) 0 0 0 Branch Manager, W. Tung-Hsu Liu (59,912) 0 0 0 Taichung Branch Manager, Zhong Jui-Cheng Yang 9,924 0 0 0 Zheng Branch Manager, Xitun Han-Ching Tsai (33,327) 0 0 0 Branch Manager, Nantun Kwei-Ching Ho 8,310 0 (18,000) 0 Branch Manager, Neixin Yu-Ying Chen (40,792) 0 (45,000) 0 Branch Manager, Dadu Ching-Kun Lin 11,838 0 0 0 Branch Manager, N. Chung-Rong Lin (57,763) 0 0 0 Taiping Branch Manager, Taichungkang Hsin-Ru Kao 7,407 0 0 0 Branch Manager, Simin Chiung-Teng Hung 8,411 0 (45,000) 0 Branch Manager, Junkong Hui-Chin Lu 76 0 0 0 Branch Manager, S. Huan-Chang Tseng 4,277 0 0 0 Taichung Branch Manager, N. Min-Hsuan Chiang . (56,054) 0 0 0 Taichung Branch

87 87

Jan. 1, 2013 ~ Feb. 28, Jan. 1, 2013 ~ Feb. 28, 2012 2012 2013 2013 Increase Increase Increase Increase Increase Increase Increase Increase Title Name (decrease) in (decrease) Title Name (decrease) in (decrease) (decrease) in (decrease) (decrease) in (decrease) No. of in No. of No. of in No. of No. of in No. of No. of in No. of Pledged Pledged Pledged Pledged Shares Shares Shares Shares Shares Shares Shares Shares Manager, Taiping Manager, Peitou Tsung-Hsien Lee 12,914 0 0 0 Ming-Cheng Wu (129,668) 0 0 0 Branch Branch Manager, Houli Manager, Pi-Hua Chang (76,925) 0 0 0 Hsin-Hsin Lee 5,786 0 0 0 Branch Tianzhong Branch Manager, Daya Manager, Yuanlin Chia-Wei Tsai (30,338) 0 0 0 Ching-Yuan Lin (69,100) 0 0 0 Branch Branch Manager, Tanzi Manager, Homei Yu-Chen Yang (75,177) 0 (36,000) 0 Cheng-Wen Ni (75,114) 0 (18,000) 0 Branch Branch Manager, Shengang Manager, Shetou Yi-Cheng Liao (84,244) 0 0 0 Tsung-Chang Tseng (19,978) 0 0 0 Branch Branch Manager, Fongyuan Manager, Huatan Pao-Yuan Chen 7,814 0 0 0 Chi-Hsien Lee 19,342 0 0 0 Branch Branch Manager, Dajia Manager, Yongjing Tung-Po Yang 17,021 0 0 0 Chih-Hua Yao 8,776 0 0 0 Branch Branch Manager,Qingshui Manager, Xiushui Ming-Ren Hsu 4,947 0 0 0 Wei-Huang You 2,850 0 0 0 Branch Branch Manager, Shalu Manager, Shenkang Shu-Chen Chen 12,508 0 0 0 Wen-Tung Yu 8,166 0 0 0 Branch Branch Manager, Wufong Manager, Dazhu Chao-Chi Tseng (77,983) 0 (34,000) 0 Shun-Te Tsai (32,890) 0 (1,000) 0 Branch Branch Manager, Dongshi Manager, N. Chang-Chi Liu 8,048 0 0 0 Chun-Min Huang 3,128 0 (57,000) 0 Branch Yuanlin Branch Manager, E. Manager, Peitou Chien-Hao Chen (82,969) 0 0 0 Shih-Huei Wang (15,655) 0 (9,000) 0 Fongyuan Branch Branch Manager, Wuri Manager, Peitun Chien-ting Lin (33,903) 0 (2,000) 0 Yi-Pin Lin 3,254 0 0 0 Branch Branch Manager, S. Manager, Puxin Chih-Hung Wu (25,273) 0 (10,000) 0 Chih-Hao Liang (24,803) 0 0 0 Fongyuan Branch Branch Manager, Nanyang Manager, Taipei Chun-Chun Yu (74,323) 0 0 0 Rung-Kuo Cheng 4,918 0 0 0 Branch Branch Manager, Nantou Manager, Lungjing Tsung-Yi Liu (5,707) 0 0 0 Kuo-Chin Chi (37,577) 0 0 0 Branch Branch Manager, Zhushan Manager, Songshan Shin-Hsiung Huang (4,100) 0 0 0 Tien-Hou Tsai 5,168 0 (36,000) 0 Branch Branch Manager, Shuili Manager, Sanzhong Ya-Ching Peng 7,144 0 0 0 Jui-Chang Lee 1,140 0 0 0 Branch Branch Manager, Puli Manager, Ming-Yu Chiu (50,900) 0 0 0 Chiang-Kai Liu 2,939 0 0 0 Branch Kaohsiung Branch Manager, Caotun Manager, Linko Yung-Chang Lai (70,422) 0 0 0 Yin-Ta Tsai (38,480) 0 0 0 Branch Branch Manager, Changhua Manager, Huwei Yung-Sung Chien (57,985) 0 0 0 Chen-Hsiang Chuang (39,200) 0 0 0 Branch Branch Manager, Lukang Manager, Yuanli Chung-Cheng Wu 6,749 0 0 0 Kuang-Chih Chen (3,924) 0 (27,000) 0 Branch Branch Manager, Xihu Manager, Zhunan Hung-Ping Chen (40,511) 0 0 0 Cheng-Huan Huang 5,125 0 0 0 Branch Branch Manager, Erlin Manager, Dounan Cheng-Hsien Ni (26,988) 0 0 0 Shun-Chi Ke 4,728 0 0 0 Branch Branch

88 88 89

Jan. 1, 2013 ~ Feb. 28, 2012 2013 Increase Increase Increase Increase Title Name (decrease) in (decrease) (decrease) in (decrease) No. of in No. of No. of in No. of Pledged Pledged Shares Shares Shares Shares Manager, Peitou Ming-Cheng Wu (129,668) 0 0 0 Branch Manager, Hsin-Hsin Lee 5,786 0 0 0 Tianzhong Branch Manager, Yuanlin Ching-Yuan Lin (69,100) 0 0 0 Branch Manager, Homei Cheng-Wen Ni (75,114) 0 (18,000) 0 Branch Manager, Shetou Tsung-Chang Tseng (19,978) 0 0 0 Branch Manager, Huatan Chi-Hsien Lee 19,342 0 0 0 Branch Manager, Yongjing Chih-Hua Yao 8,776 0 0 0 Branch Manager, Xiushui Wei-Huang You 2,850 0 0 0 Branch Manager, Shenkang Wen-Tung Yu 8,166 0 0 0 Branch Manager, Dazhu Shun-Te Tsai (32,890) 0 (1,000) 0 Branch Manager, N. Chun-Min Huang 3,128 0 (57,000) 0 Yuanlin Branch Manager, Peitou Shih-Huei Wang (15,655) 0 (9,000) 0 Branch Manager, Peitun Yi-Pin Lin 3,254 0 0 0 Branch Manager, Puxin Chih-Hao Liang (24,803) 0 0 0 Branch Manager, Taipei Rung-Kuo Cheng 4,918 0 0 0 Branch Manager, Lungjing Kuo-Chin Chi (37,577) 0 0 0 Branch Manager, Songshan Tien-Hou Tsai 5,168 0 (36,000) 0 Branch Manager, Sanzhong Jui-Chang Lee 1,140 0 0 0 Branch Manager, Chiang-Kai Liu 2,939 0 0 0 Kaohsiung Branch Manager, Linko Yin-Ta Tsai (38,480) 0 0 0 Branch Manager, Huwei Chen-Hsiang Chuang (39,200) 0 0 0 Branch Manager, Yuanli Kuang-Chih Chen (3,924) 0 (27,000) 0 Branch Manager, Zhunan Cheng-Huan Huang 5,125 0 0 0 Branch Manager, Dounan Shun-Chi Ke 4,728 0 0 0 Branch

89 89

Jan. 1, 2013 ~ Feb. 28, Jan. 1, 2013 ~ Feb. 28, 2012 2012 2013 2013 Increase Increase Increase Increase Increase Increase Increase Increase Title Name (decrease) in (decrease) Title Name (decrease) in (decrease) (decrease) in (decrease) (decrease) in (decrease) No. of in No. of No. of in No. of No. of in No. of No. of in No. of Pledged Pledged Pledged Pledged Shares Shares Shares Shares Shares Shares Shares Shares Manager, Neihu Northern Regional Chiung-Wen Chang (77,984) 0 0 0 Branch Center Ho Kuo-Liang (96,984) 0 0 0 Manager, Ban Manager Tsai-Tuan Chen 4,822 0 0 0 Chiao Branch China Man-Made Fiber Major Shareholder 19,484,916 0 0 19,000,000 Manager, Feng Corporation Wen-Chieh Tsai (57,014) 0 0 0 Shan Branch Principle Manager, Chen-Hai Lin 24,215,823 0 0 0 Chun-wen Chen 3,074 0 0 0 shareholder Xinzhuang Branch Principle Lin Yuan Investment Manager, Pizgzhen 3,171,972 0 0 0 Chien-Min Feng 0 0 0 0 shareholder Corporation Branch Principle Wan Bau Development Manager, Min 1,505,687 0 0 0 Ching-Tang Tsai (58,000) 0 0 0 shareholder Co., Ltd. Hsiung Branch Manager, Taoyuan Principle Far Glory Life Insurance Shih-Fan Weng 5,345 0 11,000 0 5,743,985 0 0 0 Branch shareholder Corporation Ltd. Manager, Yung Principle Taiwan Fire & Marine Tsung-Hsien Lee 2,204 0 0 0 1,250,994 0 0 0 Kung Branch shareholder Insurance Co., Ltd. Manager, Chu Pei Netherlands Pension Chien-Hung Lin 5,345 0 0 0 Principle Robert Bacal Investment Branch 7,205,313 0 0 0 Manager, Nan shareholder Account at Citibank Hsin-Fa Wang (67,982) 0 0 0 Kang Branch (Taiwan) Manager, Nei Li (II) Information of shares ownership transfer: Not applicable, because the Pei-Miao Jan (3,933) 0 (9,000) 0 Branch counterparts of said shares ownership transfer are not stakeholders. Manager, Hsinchu (III) Information of shares ownership pledge: Not applicable, because the Cheng-Hua Lee 5,046 0 0 0 Branch counterparts of said shares ownership pledge are not stakeholders. Manager, Kueishan Chen-Hung Cheng 4,030 0 (18,000) 0 Branch Manager, Jhongli Jr-Hsin Lee 8,668 0 0 0 Branch Manager, Hsin Chang-Sheng Liu 4,270 0 0 0 Feng Branch Manager, Ta Yuan Yu-Hui Tseng (66,000) 0 0 0 Branch Manager, Yangmei Ting-Kuang Huang (2,649) 0 (49,000) 0 Branch Manager, Tucheng Shu-Lan Huang (152,848) 0 0 0 Branch Yuanlin Securities Branch Hung-Lun Chang (60,000) 0 0 0 Manager Taipei Securities Branch Kuang-Chiang Lee 0 0 0 0 Manager Jhongli Securities Branch Wen-Cheng Lee 0 0 0 0 Manager Manager, Taichung Zai-Hong Yang 4,408 0 0 0 Regional Center Manager, Changhua Kuo-Chi Lin 11,438 0 0 0 Regional Center

90 90 91

Jan. 1, 2013 ~ Feb. 28, 2012 2013 Increase Increase Increase Increase Title Name (decrease) in (decrease) (decrease) in (decrease) No. of in No. of No. of in No. of Pledged Pledged Shares Shares Shares Shares Northern Regional Center Ho Kuo-Liang (96,984) 0 0 0 Manager China Man-Made Fiber Major Shareholder 19,484,916 0 0 19,000,000 Corporation Principle Chen-Hai Lin 24,215,823 0 0 0 shareholder Principle Lin Yuan Investment 3,171,972 0 0 0 shareholder Corporation Principle Wan Bau Development 1,505,687 0 0 0 shareholder Co., Ltd. Principle Far Glory Life Insurance 5,743,985 0 0 0 shareholder Corporation Ltd. Principle Taiwan Fire & Marine 1,250,994 0 0 0 shareholder Insurance Co., Ltd. Netherlands Pension Principle Robert Bacal Investment 7,205,313 0 0 0 shareholder Account at Citibank (Taiwan) (II) Information of shares ownership transfer: Not applicable, because the counterparts of said shares ownership transfer are not stakeholders. (III) Information of shares ownership pledge: Not applicable, because the counterparts of said shares ownership pledge are not stakeholders.

91 91

VIII. The top 10 shareholders by proportion of shareholding and information on their affiliations. Feb. 28, 2013 If there are related parties, spouses, kindred within the 2nd tier under the Self Shares Held by Spouse Shareholdings under the Civil Code among the top 10 Status of shareholding & Dependents title of a third party shareholders, give the names and Name Remarks affiliations of such shareholders. Shareholding Ratio of Ratio of Quantity Proportion Quantity Quantity Name Relation Shareholding Shareholding (%) Brother of the China Man-Made Pan Asia Chemical 532,245,888 22.95 0 0 0 0 Chairman Fiber Co., Ltd. Corporation of Board of its parents China Man-Made Pan Asia Chemical Fiber Co., Ltd. Corporation Responsible 0 0 0 0 0 0 Brothers 92 Responsible person: person: Kuei-Fong Wang Kuei-Fong Wang Chen-Hai Lin 203,345,912 8.77 0 0 0 0 None None Brother of the Pan Asia China Man-Made Chairman Chemical 147,154,866 6.35 0 0 0 0 Fiber Co., Ltd. of Board of Corporation its subsidiary Pan Asia Chemical China Man-Made Corporation Fiber Co., Ltd. 258,945 0.01 0 0 0 0 Brothers Responsible Responsible person: person: Kuei-Fong Wang Kuei-Hsien Wang Far Glory Life Insurance 114,179,615 4.92 0 0 0 0 None None Corporation Ltd.

If there are related parties, spouses, kindred within the 2nd tier under the Self Shares Held by Spouse Shareholdings under the Civil Code among the top 10 Status of shareholding & Dependents title of a third party shareholders, give the names and Name Remarks affiliations of such shareholders. Shareholding Ratio of Ratio of Quantity Proportion Quantity Quantity Name Relation Shareholding Shareholding (%) Far Glory Life Insurance 0 0 0 0 0 0 None None Corporation Ltd. Chung-Sheng Tu Lin Yuan Wan Bau The same Investment Co., 86,644,944 3.74 0 0 0 0 Development Co., as chairman Ltd. Ltd. Lin Yuan Investment Co., Ltd. 93 0 0 0 0 0 0 None None Responsible person: Ong-Chuan Lin Wan Bau Lin Yuan Investment The same Development Co., 41,129,050 1.77 0 0 0 0 Co., Ltd. as chairman Ltd. Wan Bau Development Co., Ltd. 0 0 0 0 0 0 None None Responsible person: Ong-Chuan Lin Taiwan Fire & Marine Insurance 34,171,900 1.47 0 0 0 0 None None Co., Ltd. Taiwan Fire & Marine Insurance 3,114,000 0.13 0 0 0 0 None None Co., Ltd. Responsible

If there are related parties, spouses, kindred within the 2nd tier under the Self Shares Held by Spouse Shareholdings under the Civil Code among the top 10 Status of shareholding & Dependents title of a third party shareholders, give the names and Name Remarks affiliations of such shareholders. Shareholding Ratio of Ratio of Quantity Proportion Quantity Quantity Name Relation Shareholding Shareholding (%) person: Tai-Hung Lee Netherlands Pension Robert Bacal Investment 24,237,654 1.05 0 0 0 0 None None Account at Citibank (Taiwan) I Joung Investment Co., 16,366,590 0.71 0 0 0 0 None None Ltd. 94 I Joung Investment Co., Ltd. 9,897,442 0.43 0 0 0 0 None None Responsible person: Yi-Der Chen Wise Target Investment Co., 16,056,260 0.69 0 0 0 0 None None Ltd. Wise Target Investment Co., Ltd. 7,675,557 0.33 0 0 0 0 None None Responsible person: Yu-Fang Tsai

IX. Quantity of shareholdings of the same investee by the Bank and directors, supervisors, presidents, Executive Vice Presidents, Asst. Executive Vice Presidents, supervisors of the various departments and branches, and direct or indirect subsidiaries in proportion to the combined holdings of all

Proportion of overall shareholding Unit: share; % Investment made by directors, supervisors, presidents, executive Investment made by the Bank vice presidents, assistant VPs, Combined investment Investee supervisors of branches, and direct or indirect subsidiaries Ratio of Ratio of Ratio of Quantity Quantity Quantity Shareholding Shareholding Shareholding Taichung Commercial Bank 8,236,000 100.00% - - 8,236,000 100.00% Insurance Agency Co., Ltd. Reliance Securities 12,000,000 38.46% 1,958,562 6.28% 13,958,562 44.74% Investment Trust Co., Ltd. Taichung Commercial Bank 100,000,000 100.00% - - 100,000,000 100.00% Lease Enterprise

4 Status of Capital Planning I Shares and Dividends (I) Sources of shares and dividends

Authorized shares capital Paid-in shares capital Remarks Year and Issuing price month Quantity of Quantity of Stock Sources of shares Amount (NTD) Amount (NTD) Others Stock (Shares) (Shares) and dividends

2006 1,538,014,400 15,380,144,000 1,538,014,400 15,380,144,000 - None

Issuance of March 11.5 2,000,000,000 20,000,000,000 1,304,088,000 13,040,880,000 common stock for None 2007 (NTD/share) cash

November 10 Recapitalization of 2,000,000,000 20,000,000,000 1,371,900,576 13,719,005,760 None 2008 (NTD/share) earnings

Issuance of December 10 2,000,000,000 20,000,000,000 1,731,900,576 17,319,005,760 common stock for None 2010 (NTD/share) cash Recapitalization of September 10 2,000,000,000 20,000,000,000 1,783,857,594 17,838,575,940 earnings and None 2011 (NTD/share) capital surpus Issuance of November 10 4,320,000,000 43,200,000,000 2,233,857,594 22,338,575,940 common stock for None 2011 (NTD/share) cash

September 10 Recapitalization of 4,320,000,000 43,200,000,000 2,318,744,183 23,187,441,830 None 2012 (NTD/share) earnings Note: The Company’s special shareholders’ meeting resolved on December 7, 2006 to reduce the shares and dividends of the Bank to NTD7,339,264,000 with the elimination of 733,926,400 outstanding shares. At the same time the meeting also resolved to increase capital by issuing new shares of common stock amounting to 500 million shares at NTD10 per share. The resolutions have been reported to FSC on January 22, 2007 under Jin-Guan-Zheng-Yi-Zi No. 0950158669 confirmation letter. As of 2006, the Company has successfully raised NTD5.75 billion (including the issue at premium) and the investments have been fully collected by the end of March 2007. The Company’s shareholders’ meeting resolved on June 13, 2008 to recapitalize the earnings amounting to NTD678,125,760 by issuing new shares of common stock amounting to 67,812,576 shares at NTD10 per share. The resolution has been reported to FSC on August 21, 2008 under Jin-Guan-Zheng-Yi-Zi No. 0970041379 confirmation letter. The Company’s special board session resolved on October 6, 2010 to increase the capital by issuing new shares of common stock totaling 360 million shares at NTD10 per share. The resolution has been reported to FSC on November 2, 2010 under Jin-Guan-Zheng-Fa-Zi No. 0990058141 confirmation letter. The investments have been fully collected on December 10, 2010. The Company’s shareholders’ meeting resolved on June 22, 2011 to recapitalize the earnings amounting to NTD519,570,180 by issuing new shares of common stock amounting to 51,957,018 shares at NTD10 per share. The resolution has been reported to FSC on July 20, 2011 under Jin-Guan-Zheng-Fa-Zi No. 1000032577 confirmation letter. The Company’s special board session resolved on July 7, 2011 to increase the capital by issuing new shares of common stock totaling 450,000,000 shares at NTD10 per share. The resolution has been reported to FSC on August 9, 2011 under Jin-Guan-Zheng-Fa-Zi No. 1000035963confirmation letter. The investments have been fully collected on November 8, 2011. The Company’s shareholders’ meeting resolved on June 6, 2012 to recapitalize the earnings amounting to NTD848,865,890 by issuing new shares of common stock amounting to 84,886,589 shares at NTD10 per share. The resolution has been reported to FSC on July 6, 2012 under Jin-Guan-Zheng-Fa-Zi No. 1010032195 confirmation letter.

9696

Authorized shares capital Stock Type Remarks Outstanding shares Unissued Shares Total Registered common 2,318,744,183 2,001,255,817 4,320,000,000 Listed shares (II) Composition of Shareholders Feb. 28, 2013 Composition of Foreign Government Financial Shareholders Other Juridical Individual Institution and Total Apparatus Institution Foreigner Amount

No. of Person 4 3 170 74,759 113 75,049

Shares 2,384 157,873,089 934,430,972 1,111,634,050 114,803,688 2,318,744,183

Ratio of 0.00% 6.81% 40.30% 47.94% 4.95% 100% Shareholding (III) Diversification of Shareholdings Unit: share; person: % Feb. 28, 2013 Ratio of Range of Shares No. of Shareholders Shares Shareholding 1 to 999 27,998 8,423,436 0.36% 1,000 to 5,000 23,816 53,623,202 2.31% 5,001 to 10,000 9,341 61,061,434 2.63% 10,001 to 15,000 4,887 56,409,439 2.43% 15,001 to 20,000 1,586 27,153,601 1.17% 20,001 to 30,000 2,436 56,763,297 2.45% 30,001 to 50,000 1,923 72,599,910 3.13% 50,001 to 100,000 1,558 103,814,094 4.48% 100,001 to 200,000 835 110,328,544 4.76% 200,001 to 400,000 372 99,249,135 4.28% 400,001 to 600,000 104 50,739,348 2.19% 600,001 to 800,000 48 33,144,219 1.43% 800,001 to 1,000,000 12 10,621,675 0.46% 1,000,001 to 1,200,000 22 24,083,689 1.04% 1,200,001 to 1,400,000 11 14,306,412 0.62% 1,400,001 to 1,600,000 11 16,539,180 0.71% 1,600,001 to 1,800,000 7 11,967,021 0.52%

9797

Ratio of Year Range of Shares No. of Shareholders Shares 2011 2012 Until Feb. 28, 2013 Shareholding Item Capital Reserve 1,800,001 to 2,000,000 6 11,522,418 0.50% Shares - - - 2,000,001 and above 76 1,496,394,129 64.53% Distribution Total 75,049 2,318,744,183 100.00% Retained Dividends - - - P/E ratio (before the (IV) Name of Principle shareholder 14.24 7.88 - Feb. 28, 2013 distribution) Return on Stock Ratio of P/E ratio (after the distribution) 14.80 - - Name of Principle shareholder Shares Shareholding investment Analysis Dividend Yield 225 - - China Man-Made Fiber Co., Ltd. 532,245,888 22.95% Cash Dividend Yields 0.44 - - Chen-Hai Lin 203,345,912 8.77% Pan Asia Chemical Corporation 147,154,866 6.35% (VI) Dividend Policy and the Status of Implementation 1. Dividend policy in the Bank’s Articles of Incorporation: Far Glory Life Insurance Corporation Ltd. 114,179,615 4.92% Article 7: The Bank’s Dividends shall be allocated subject to resolution of the shareholders’ meeting upon the Lin Yuan Investment Co., Ltd. 86,644,944 3.74% proposal made by the Board of Directors, provided that Wan Bau Development Co., Ltd. 41,129,050 1.77% no capital may be provided as Dividends where the Bank has retained no earnings. Taiwan Fire & Marine Insurance Co., Ltd. 34,171,900 1.47% Article 35: Any profit from settlement of the year shall be subject to applicable taxes as the top Seniority, followed by the Netherlands Pension Robert Bacal Investment Account at Citibank (Taiwan) 24,237,654 1.05% offsetting of losses carried forward from previous years and thirty percent of the remainder of such profit shall I Joung Investment Co., Ltd. 16,366,590 0.71% be allocated as legal reserve, and special reserve shall Wise Target Investment Co., Ltd. 16,056,260 0.69% be provided pursuant to laws. The balance, if any, plus the unallocated accumulated retained earnings for (V) Information on market price, net value, earnings and dividends per share in the previous years shall be allocated as the the most recent 2 years shareholders’ Dividends, and the remainder thereof, if Unit: NTD; % any, shall be allocated in the following order: Year 2011 2012 Until Feb. 28, 2013 (1) 1%-5% for employee bonus. Item (2) Remuneration to directors/supervisors granted 14.45 10.35 11.10 Market The Highest based on 50% of the allocated employee Price Per The Lowest 7.92 8.26 10.05 bonus. Share (3) Shareholder bonus. Average 12.11 9.66 10.60 The Board shall retain the required fund subject to the Net Value Before Distribution 11.40 12.11 12.46 change of operating environment, operation and investment needs before proposing the proportion Per Share After Distribution 10.98 - - between cash and stock Dividends for the approval of Weighted average shares 1,850,433 2,318,744 2,318,744 the shareholders’ meeting: Earnings 0.79 1.20 0.20 (1) The cash dividends shall be no less than 10% Per Share EPS (before adjustment) of the Dividends and bonus allocated to EPS (after adjustment) 0.76 - - shareholders. Cash Dividends 0.05 - - Dividend (2) Notwithstanding, if the Dividends are Free-Gratis Retained Shares allocated at less than or equal to NTD0.3 per Per Share 0.38 - - Dividends Distribution share, the earnings may be allocated in the form of stock Dividends in full. If the capital adequacy ratio fails to reach the legal

98 98 99

Year 2011 2012 Until Feb. 28, 2013 Item Capital Reserve Shares - - - Distribution Retained Dividends - - - P/E ratio (before the 14.24 7.88 - distribution) Return on P/E ratio (after the distribution) 14.80 - - investment Analysis Dividend Yield 225 - - Cash Dividend Yields 0.44 - -

(VI) Dividend Policy and the Status of Implementation 1. Dividend policy in the Bank’s Articles of Incorporation: Article 7: The Bank’s Dividends shall be allocated subject to resolution of the shareholders’ meeting upon the proposal made by the Board of Directors, provided that no capital may be provided as Dividends where the Bank has retained no earnings. Article 35: Any profit from settlement of the year shall be subject to applicable taxes as the top Seniority, followed by the offsetting of losses carried forward from previous years and thirty percent of the remainder of such profit shall be allocated as legal reserve, and special reserve shall be provided pursuant to laws. The balance, if any, plus the unallocated accumulated retained earnings for the previous years shall be allocated as the shareholders’ Dividends, and the remainder thereof, if any, shall be allocated in the following order: (1) 1%-5% for employee bonus. (2) Remuneration to directors/supervisors granted based on 50% of the allocated employee bonus. (3) Shareholder bonus. The Board shall retain the required fund subject to the change of operating environment, operation and investment needs before proposing the proportion between cash and stock Dividends for the approval of the shareholders’ meeting: (1) The cash dividends shall be no less than 10% of the Dividends and bonus allocated to shareholders. (2) Notwithstanding, if the Dividends are allocated at less than or equal to NTD0.3 per share, the earnings may be allocated in the form of stock Dividends in full. If the capital adequacy ratio fails to reach the legal

99 99

ratio, the earnings shall be allocated in accordance with benefit and board compensation at NTD 1,278 thousand the Banking Act and the competent authority’s and NTD 639 thousand respectively. These amounts will requirements. be paid in cash. 2. The Dividends distribution proposed at the shareholders’ meeting: (2) In the case of material change in the allocation resolved by Not yet resolved before the Board session on February 28, 2013 the Board session at the end of the fiscal year, the (VII) Effect of Dividends distribution proposed at the shareholders’ meeting on difference shall be adjusted by the expense of the original the operation performance of the Bank and the Earnings Per Share: Not yet fiscal year. resolved before the Board session on February 28, 2013. (3) If the shareholders’ meeting resolves the actual allocated amount different from the estimate, it shall be handled as (VIII) Employee bonus and remuneration paid to directors and supervisors: the “change in accounting estimates” in the year of the 1. Ratio of Shareholding or scope of employee bonus and resolution made by the shareholders’ meeting. Remuneration to Directors and supervisors as stated in the Bank’s 3. Information about any proposed allocation of employee bonus Articles of Incorporation: resolved by the Board session: Not yet resolved before the Board Any profit from settlement of the year shall be subject to applicable session on February 28, 2013. taxes as the top Seniority, followed by the offsetting of losses 4. Actual employee bonus and remuneration to directors and carried forward from previous years and thirty percent of the supervisors for the preceding year: remainder of such profit shall be allocated as legal reserve, and (1) Employee bonus in cash: NTD401,746. special reserve shall be provided pursuant to laws. The balance, (2) Remuneration to directors/supervisors: NTD200,873. if any, plus the unallocated accumulated retained earnings for the (3) Comparison with the distribution plan proposed by the previous years shall be allocated as the shareholders’ Dividends, Board: no difference. and the remainder thereof, if any, shall be allocated in the following order: (IX) Repurchase of the Bank Shares: None. (1) 1%-5% for employee bonus. II Issuance of Financial Bonds (2) Remuneration to directors/supervisors granted based on Type 1st term of 2007 Subordinated Financial Bonds 50% of the allocated employee bonus. Ching-Kuan-Yin (4) Tze No. 09600481190 dated (3) Shareholder bonus. Date & Approval No. The Board shall retain the required fund subject to the change of November 14, 2007 operating environment, operation and investment needs before Issue Date December 21, 2007 proposing the proportion between cash and stock Dividends for the Face Value NTD10,000,000 approval of the shareholders’ meeting: Place of Issue and Trading Taiwan R.O.C. (1) The cash dividends shall be no less than 10% of the Dividends and bonus allocated to shareholders. Currency NTD (2) Notwithstanding, if the Dividends are allocated at less Issuing price At Par Value than or equal to NTD0.3 per share, the earnings may be Total amount NTD2.4 billion allocated in the form of stock Dividends in full. Annual interest rate is index interest rate plus 1.02%. If the capital adequacy ratio fails to reach the legal ratio, the Interest rate Index interest rate is the displayed floating rates for earnings shall be allocated in accordance with the Banking Act and the competent authority’s requirements. one-year term deposits of Chunghwa Post Co., Ltd. 2. The difference between estimated and actual employee bonus and Maturity 5.5 years, matured on June 21, 2013 remuneration to directors and supervisors as well as stock Prevail over the shareholders’ right to allocate residual dividends distributed shall be handled by accountants as follows: Seniority property, and follow the Bank’s depositors and other (1) Accrued employee benefit and board compensation creditors payable this year is the amount estimated according to the company’s Articles of Incorporation and other regulations. Guarantee Institution None In 2012, after recognizing legal reserve at 30% of net Trustee None profit after tax, recognizing the legally required special Consignee None reserve, adding in the undistributed earnings from Certified Lawyer None previous years, and deducting dividends from net profit after tax, the remainder is the basis for accrued employee Certified CPA None

100 100 101

benefit and board compensation at NTD 1,278 thousand and NTD 639 thousand respectively. These amounts will be paid in cash. (2) In the case of material change in the allocation resolved by the Board session at the end of the fiscal year, the difference shall be adjusted by the expense of the original fiscal year. (3) If the shareholders’ meeting resolves the actual allocated amount different from the estimate, it shall be handled as the “change in accounting estimates” in the year of the resolution made by the shareholders’ meeting. 3. Information about any proposed allocation of employee bonus resolved by the Board session: Not yet resolved before the Board session on February 28, 2013. 4. Actual employee bonus and remuneration to directors and supervisors for the preceding year: (1) Employee bonus in cash: NTD401,746. (2) Remuneration to directors/supervisors: NTD200,873. (3) Comparison with the distribution plan proposed by the Board: no difference. (IX) Repurchase of the Bank Shares: None. II Issuance of Financial Bonds Type 1st term of 2007 Subordinated Financial Bonds Ching-Kuan-Yin (4) Tze No. 09600481190 dated Date & Approval No. November 14, 2007 Issue Date December 21, 2007 Face Value NTD10,000,000 Place of Issue and Trading Taiwan R.O.C. Currency NTD Issuing price At Par Value Total amount NTD2.4 billion Annual interest rate is index interest rate plus 1.02%. Interest rate Index interest rate is the displayed floating rates for one-year term deposits of Chunghwa Post Co., Ltd. Maturity 5.5 years, matured on June 21, 2013 Prevail over the shareholders’ right to allocate residual Seniority property, and follow the Bank’s depositors and other creditors Guarantee Institution None Trustee None Consignee None Certified Lawyer None Certified CPA None

101101

Certified financial institution None creditors Repayment Methods Repayment in lump sum upon maturity Guarantee Institution None Unredeemed balance NTD2.4 billion Paid-in shares capital in last Fiscal Trustee None NTD 15,380,144 thousand Year Consignee None After-tax Net Worth in last Fiscal Certified Lawyer None NTD 8,324,959 thousand Year Certified CPA None Performance Normal Certified financial institution None Redemption or earlier redemption None Repayment Methods Repayment in lump sum upon maturity Conversion and exchange Unredeemed balance NTD4.2 billion None Paid-in shares capital in last Fiscal conditions NTD 13,719,006 thousand Year Limitation Article Subordinated bond After-tax Net Worth in last Fiscal Fund utilization plan Mid-term and long-term loans NTD 15,504,958 thousand Year Balance of Bonds as a Ratio of Performance Normal Shareholding of After-tax net 28.83% worth (%) Redemption or earlier redemption None Whether it is accounted for equity Conversion and exchange Tier II Capital None capital and type conditions Name: Fitch Ratings Limited Taiwan Branch (Fitch) Limitation Article Subordinated bond Strengthen financial structure, upgrade capital adequacy Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National Fund utilization plan ratio and expand business scale of rating and ratings short-term at F2 (twn), with stable outlook Balance of Bonds as a Ratio of Date of rating: 2012/10/09 Shareholding of After-tax net 27.09% worth (%) Whether it is accounted for equity Type 1st term of 2009 Subordinated Financial Bonds Tier II Capital capital and type Ching-Kuan-Yin (4) Tze No. 09800104050 dated March Date & Approval No. Name: Fitch Ratings Limited Taiwan Branch (Fitch) 20, 2009 Issue Date June 26, 2009 Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National of rating and ratings Face Value NTD100,000 short-term at F2 (twn), with stable outlook Place of Issue and Trading Taiwan R.O.C. Date of rating: 2012/10/09

Currency NTD Type 2nd term of 2009 Subordinated Financial Bonds Issuing price At Par Value Ching-Kuan-Yin (4) Tze No. 09800104050 dated March Date & Approval No. Total amount NTD1.8 billion 20, 2009 Annual interest rate is index interest rate plus 1.40%. Issue Date December 10, 2009 Interest rate Index interest rate is the displayed floating rates for Face Value NTD500,000 one-year term deposits of Chunghwa Post Co., Ltd. Maturity 7 years, matured on June 26, 2016 Place of Issue and Trading Taiwan R.O.C. Prevail over the shareholders’ right to allocate residual Currency NTD Seniority property, and follow the Bank’s depositors and other Issuing price At Par Value

102102 103

creditors

Guarantee Institution None Trustee None Consignee None Certified Lawyer None Certified CPA None Certified financial institution None Repayment Methods Repayment in lump sum upon maturity Unredeemed balance NTD4.2 billion Paid-in shares capital in last Fiscal NTD 13,719,006 thousand Year After-tax Net Worth in last Fiscal NTD 15,504,958 thousand Year Performance Normal

Redemption or earlier redemption None Conversion and exchange None conditions Limitation Article Subordinated bond Strengthen financial structure, upgrade capital adequacy Fund utilization plan ratio and expand business scale Balance of Bonds as a Ratio of Shareholding of After-tax net 27.09% worth (%) Whether it is accounted for equity Tier II Capital capital and type Name: Fitch Ratings Limited Taiwan Branch (Fitch)

Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National of rating and ratings short-term at F2 (twn), with stable outlook Date of rating: 2012/10/09

Type 2nd term of 2009 Subordinated Financial Bonds Ching-Kuan-Yin (4) Tze No. 09800104050 dated March Date & Approval No. 20, 2009 Issue Date December 10, 2009 Face Value NTD500,000 Place of Issue and Trading Taiwan R.O.C. Currency NTD Issuing price At Par Value

103103

Type 2nd term of 2009 Subordinated Financial Bonds Type 3rd term of 2009 Subordinated Financial Bonds Total amount NTD0.1 billion 20, 2009 Interest rate Coupon rate at 2.75% fixed rate Issue Date December 18, 2009 Maturity 7 years, matured on December 10, 2016 Face Value NTD500,000 Prevail over the shareholders’ right to allocate residual Place of Issue and Trading Taiwan R.O.C. Seniority property, and follow the Bank’s depositors and other Currency NTD creditors Issuing price At Par Value Guarantee Institution None Total amount NTD1.2 billion Trustee None Annual interest rate is index interest rate plus 1.50%. Consignee None Interest rate Index interest rate is the displayed floating rates for Certified Lawyer None one-year term deposits of Chunghwa Post Co., Ltd. Certified CPA None Maturity 7 years, matured on December 18, 2016 Certified financial institution None Prevail over the shareholders’ right to allocate residual Seniority property, and follow the Bank’s depositors and other Repayment Methods Repayment in lump sum upon maturity creditors Unredeemed balance NTD4.3 billion Guarantee Institution None Paid-in shares capital in last Fiscal NTD 13,719,006 thousand Trustee None Year Consignee None After-tax Net Worth in last Fiscal NTD 15,504,958 thousand Year Certified Lawyer None Performance Normal Certified CPA None Redemption or earlier redemption Certified financial institution None None Limitation Article Repayment Methods Repayment in lump sum upon maturity Conversion and exchange None Unredeemed balance NTD5.5 billion conditions Paid-in shares capital in last Fiscal NTD 13,719,006 thousand Limitation Article Subordinated bond Year Strengthen financial structure, upgrade capital adequacy After-tax Net Worth in last Fiscal Fund utilization plan NTD 15,504,958 thousand ratio and expand business scale Year Balance of Bonds as a Ratio of Performance Normal Shareholding of After-tax net 27.73% Redemption or earlier redemption None worth (%) Conversion and exchange Whether it is accounted for equity None Tier II Capital conditions capital and type Limitation Article Subordinated bond Name: Fitch Ratings Limited Taiwan Branch (Fitch) Strengthen financial structure, upgrade capital adequacy Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National Fund utilization plan ratio and expand business scale of rating and ratings short-term at F2 (twn), with stable outlook Date of rating: 2012/10/09 Balance of Bonds as a Ratio of Shareholding of After-tax net 35.47%

worth (%) Type 3rd term of 2009 Subordinated Financial Bonds Whether it is accounted for equity Tier II Capital Date & Approval No. Ching-Kuan-Yin (4) Tze No. 09800104050 dated March capital and type

104104 105

Type 3rd term of 2009 Subordinated Financial Bonds 20, 2009 Issue Date December 18, 2009 Face Value NTD500,000 Place of Issue and Trading Taiwan R.O.C. Currency NTD Issuing price At Par Value Total amount NTD1.2 billion Annual interest rate is index interest rate plus 1.50%. Interest rate Index interest rate is the displayed floating rates for one-year term deposits of Chunghwa Post Co., Ltd. Maturity 7 years, matured on December 18, 2016 Prevail over the shareholders’ right to allocate residual Seniority property, and follow the Bank’s depositors and other creditors Guarantee Institution None Trustee None Consignee None Certified Lawyer None Certified CPA None Certified financial institution None Repayment Methods Repayment in lump sum upon maturity Unredeemed balance NTD5.5 billion Paid-in shares capital in last Fiscal NTD 13,719,006 thousand Year After-tax Net Worth in last Fiscal NTD 15,504,958 thousand Year Performance Normal

105105

Type 3rd term of 2009 Subordinated Financial Bonds Type 4th term of 2009 Subordinated Financial Bonds Name: Fitch Ratings Limited Taiwan Branch (Fitch) ratio and expand business scale Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National Balance of Bonds as a Ratio of of rating and ratings short-term at F2 (twn), with stable outlook Shareholding of After-tax net 42.57% Date of rating: 2012/10/09 worth (%) Whether it is accounted for equity Tier II Capital Type 4th term of 2009 Subordinated Financial Bonds capital and type Name: Fitch Ratings Limited Taiwan Branch (Fitch) Ching-Kuan-Yin (4) Tze No. 09800104050 dated March Date & Approval No. 20, 2009 Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National of rating and ratings short-term at F2 (twn), with stable outlook Issue Date December 30, 2009 Date of rating: 2012/10/09 Face Value NTD500,000 Place of Issue and Trading Taiwan R.O.C. Type 1st term of 2010 Subordinated Financial Bonds Currency NTD Ching-Kuan-Yin (4) Tze No. 09800104050 dated March Issuing price Date & Approval No. At Par Value 20, 2009 Total amount NTD1.1 billion Issue Date January 28, 2010 Annual interest rate is index interest rate plus 1.48%. Index Face Value NTD500,000 Interest rate interest rate is the displayed floating rates for one-year term deposits of Chunghwa Post Co., Ltd. Place of Issue and Trading Taiwan R.O.C. Maturity 6.5 years, matured on June 30, 2016 Currency NTD Prevail over the shareholders’ right to allocate residual Issuing price At Par Value Seniority property, and follow the Bank’s depositors and other Total amount NTD0.6 billion creditors Annual interest rate is index interest rate plus 1.50%. Guarantee Institution None Interest rate Index interest rate is the displayed floating rates for Trustee None one-year term deposits of Chunghwa Post Co., Ltd. Consignee None Maturity 7 years, matured on January 28, 2017 Certified Lawyer None Prevail over the shareholders’ right to allocate residual Seniority property, and follow the Bank’s depositors and other Certified CPA None creditors Certified financial institution None Guarantee Institution None Repayment Methods Repayment in lump sum upon maturity Trustee None Unredeemed balance NTD6.6 billion Consignee None Paid-in shares capital in last Fiscal NTD 13,719,006 thousand Certified Lawyer None Year After-tax Net Worth in last Fiscal Certified CPA None NTD 15,504,958 thousand Year Certified financial institution None Performance Normal Repayment Methods Repayment in lump sum upon maturity Redemption or earlier redemption None Unredeemed balance NTD7.2 billion Conversion and exchange Paid-in shares capital in last Fiscal None NTD 13,719,006 thousand conditions Year After-tax Net Worth in last Fiscal Limitation Article Subordinated bond NTD 15,361,003 thousand Year Fund utilization plan Strengthen financial structure, upgrade capital adequacy

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Type 4th term of 2009 Subordinated Financial Bonds ratio and expand business scale Balance of Bonds as a Ratio of Shareholding of After-tax net 42.57% worth (%) Whether it is accounted for equity Tier II Capital capital and type Name: Fitch Ratings Limited Taiwan Branch (Fitch) Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National of rating and ratings short-term at F2 (twn), with stable outlook Date of rating: 2012/10/09

Type 1st term of 2010 Subordinated Financial Bonds Ching-Kuan-Yin (4) Tze No. 09800104050 dated March Date & Approval No. 20, 2009 Issue Date January 28, 2010 Face Value NTD500,000 Place of Issue and Trading Taiwan R.O.C. Currency NTD Issuing price At Par Value Total amount NTD0.6 billion Annual interest rate is index interest rate plus 1.50%. Interest rate Index interest rate is the displayed floating rates for one-year term deposits of Chunghwa Post Co., Ltd. Maturity 7 years, matured on January 28, 2017 Prevail over the shareholders’ right to allocate residual Seniority property, and follow the Bank’s depositors and other creditors Guarantee Institution None Trustee None Consignee None Certified Lawyer None Certified CPA None Certified financial institution None Repayment Methods Repayment in lump sum upon maturity Unredeemed balance NTD7.2 billion Paid-in shares capital in last Fiscal NTD 13,719,006 thousand Year After-tax Net Worth in last Fiscal NTD 15,361,003 thousand Year

107107

Type 1st term of 2010 Subordinated Financial Bonds Type 2nd term of 2010 Subordinated Financial Bonds Performance Normal Repayment Methods Repayment in lump sum upon maturity

Redemption or earlier redemption None Unredeemed balance NTD7.4 billion Paid-in shares capital in last Fiscal Conversion and exchange NTD 13,719,006 thousand None Year conditions After-tax Net Worth in last Fiscal NTD 15,361,003 thousand Limitation Article Subordinated bond Year Strengthen financial structure, upgrade capital adequacy Fund utilization plan Performance Normal ratio and expand business scale Balance of Bonds as a Ratio of Redemption or earlier redemption None Shareholding of After-tax net 46.87% Conversion and exchange None worth (%) conditions Whether it is accounted for equity Tier II Capital Limitation Article Subordinated bond capital and type Strengthen financial structure, upgrade capital adequacy Name: Fitch Ratings Limited Taiwan Branch (Fitch) Fund utilization plan ratio and expand business scale Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National Balance of Bonds as a Ratio of of rating and ratings short-term at F2 (twn), with stable outlook Shareholding of After-tax net 48.17% Date of rating: 2012/10/09 worth (%) Whether it is accounted for equity Tier II Capital capital and type Type 2nd term of 2010 Subordinated Financial Bonds Name: Fitch Ratings Limited Taiwan Branch (Fitch) Ching-Kuan-Yin (4) Tze No. 09800104050 dated March Date & Approval No. Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National 20, 2009 of rating and ratings short-term at F2 (twn), with stable outlook Issue Date February 9, 2010 Date of rating: 2012/10/09 Face Value NTD10,000,000

Place of Issue and Trading Taiwan R.O.C. Type 3rd term of 2010 Subordinated Financial Bonds Currency NTD Ching-Kuan-Yin (4) Tze No. 09900204230 dated June 4, Date & Approval No. Issuing price At Par Value 2010 Total amount NTD0.2 billion Issue Date June 25, 2010 Annual interest rate is index interest rate plus 1.50%. Face Value NTD10,000,000 Interest rate Index interest rate is the displayed floating rates for Place of Issue and Trading Taiwan R.O.C. one-year term deposits of Chunghwa Post Co., Ltd. Currency NTD Maturity 6 years, matured on February 9, 2016 Issuing price At Par Value Prevail over the shareholders’ right to allocate residual Seniority property, and follow the Bank’s depositors and other Total amount NTD0.9 billion creditors Annual interest rate is index interest rate plus 1.75%. Guarantee Institution None Interest rate Index interest rate is the displayed floating rates for one-year term deposits of Chunghwa Post Co., Ltd. Trustee None Maturity 7 years, matured on June 25, 2017 Consignee None Prevail over the shareholders’ right to allocate residual Certified Lawyer None Seniority property, and follow the Bank’s depositors and other Certified CPA None creditors Certified financial institution None Guarantee Institution None

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Type 2nd term of 2010 Subordinated Financial Bonds Repayment Methods Repayment in lump sum upon maturity Unredeemed balance NTD7.4 billion Paid-in shares capital in last Fiscal NTD 13,719,006 thousand Year After-tax Net Worth in last Fiscal NTD 15,361,003 thousand Year Performance Normal

Redemption or earlier redemption None Conversion and exchange None conditions Limitation Article Subordinated bond Strengthen financial structure, upgrade capital adequacy Fund utilization plan ratio and expand business scale Balance of Bonds as a Ratio of Shareholding of After-tax net 48.17% worth (%) Whether it is accounted for equity Tier II Capital capital and type Name: Fitch Ratings Limited Taiwan Branch (Fitch) Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National of rating and ratings short-term at F2 (twn), with stable outlook Date of rating: 2012/10/09

Type 3rd term of 2010 Subordinated Financial Bonds Ching-Kuan-Yin (4) Tze No. 09900204230 dated June 4, Date & Approval No. 2010 Issue Date June 25, 2010 Face Value NTD10,000,000 Place of Issue and Trading Taiwan R.O.C. Currency NTD Issuing price At Par Value Total amount NTD0.9 billion Annual interest rate is index interest rate plus 1.75%. Interest rate Index interest rate is the displayed floating rates for one-year term deposits of Chunghwa Post Co., Ltd. Maturity 7 years, matured on June 25, 2017 Prevail over the shareholders’ right to allocate residual Seniority property, and follow the Bank’s depositors and other creditors Guarantee Institution None

109109

Type 3rd term of 2010 Subordinated Financial Bonds 1st term of 2011 unsecured convertible Financial Bonds Type Trustee None issued domestically Guarantee Institution None Consignee None Trustee Chinatrust Commercial Bank Certified Lawyer None Consignee KGI Securities Co., Ltd. Certified CPA None Certified Lawyer None Certified financial institution None Certified CPA None Certified financial institution None Repayment Methods Repayment in lump sum upon maturity Repayment in lump sum upon maturity, other than those Repayment Methods Unredeemed balance NTD8.3 billion converted or redeemed pursuant to the conversion rules Paid-in shares capital in last Fiscal NTD 13,719,006 thousand Unredeemed balance NTD2.3 billion Year Paid-in shares capital in last Fiscal After-tax Net Worth in last Fiscal NTD 17,319,006 thousand NTD 15,361,003 thousand Year Year After-tax Net Worth in last Fiscal Performance Normal NTD 19,415,020 thousand Year Redemption or earlier redemption None Performance None In the event of any of the following circumstances from Conversion and exchange None December 16,2011 (the day following maturity of six conditions months after issuance) until May 6, 2014 (40 days prior to Limitation Article Subordinated bond maturity), the Bank may send the “Notice of Call” to be Strengthen financial structure, upgrade capital adequacy matured in one month (Note 1) to the Financial Bonds Fund utilization plan holder (Note 2) via registered mail within the agreed time ratio and expand business scale limit, and notify the GTSM in writing and call the Balance of Bonds as a Ratio of outstanding Financial Bonds at the face value upon Shareholding of After-tax net 54.03% expiration of said-noted period: worth (%) (1) If the closing price of the Bank’s common shares Redemption or earlier redemption Whether it is accounted for equity exceeds the current conversion price by more than Tier II Capital capital and type 30% for 30 consecutive business days, the Bank may send the “Notice of Call” to be matured in Name: Fitch Ratings Limited Taiwan Branch (Fitch) one month to the Financial Bonds holder via Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National registered mail within 30 business days. of rating and ratings short-term at F2 (twn), with stable outlook (2) If the balance of the outstanding Financial Bonds Date of rating: 2012/10/09 is less than 10% of the initial total issue price, the Bank may send the “Notice of Call” to be matured in one month to the Financial Bonds holder via registered mail at any time. 1st term of 2011 unsecured convertible Financial Bonds Type Conversion and exchange conditions None issued domestically Limitation Article None Ching-Kuan-Cheng-Fa Tze No. 1000018296 dated May 16, Date & Approval No. Strengthen financial structure, upgrade capital adequacy 2011 Fund utilization plan ratio and expand business scale Issue Date June 15, 2011 Balance of Bonds as a Ratio of Face Value NTD100,000 Shareholding of After-tax net worth 54.60％ Place of Issue and Trading Taiwan R.O.C. (%) Whether it is accounted for equity Currency NTD Not included Issuing price At Par Value capital and type Total amount NTD2.3 billion Name: Fitch Ratings Limited Taiwan Branch (Fitch) Interest rate 0％ Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National Maturity 3 years, matured on June 15, 2014 of rating and ratings short-term at F2 (twn), with stable outlook Seniority 1st Seniority Date of rating: 2012/10/09

110110 111

1st term of 2011 unsecured convertible Financial Bonds Type issued domestically Guarantee Institution None Trustee Chinatrust Commercial Bank Consignee KGI Securities Co., Ltd. Certified Lawyer None Certified CPA None Certified financial institution None Repayment in lump sum upon maturity, other than those Repayment Methods converted or redeemed pursuant to the conversion rules Unredeemed balance NTD2.3 billion Paid-in shares capital in last Fiscal NTD 17,319,006 thousand Year After-tax Net Worth in last Fiscal NTD 19,415,020 thousand Year Performance None In the event of any of the following circumstances from December 16,2011 (the day following maturity of six months after issuance) until May 6, 2014 (40 days prior to maturity), the Bank may send the “Notice of Call” to be matured in one month (Note 1) to the Financial Bonds holder (Note 2) via registered mail within the agreed time limit, and notify the GTSM in writing and call the outstanding Financial Bonds at the face value upon expiration of said-noted period: (1) If the closing price of the Bank’s common shares Redemption or earlier redemption exceeds the current conversion price by more than 30% for 30 consecutive business days, the Bank may send the “Notice of Call” to be matured in one month to the Financial Bonds holder via registered mail within 30 business days. (2) If the balance of the outstanding Financial Bonds is less than 10% of the initial total issue price, the Bank may send the “Notice of Call” to be matured in one month to the Financial Bonds holder via registered mail at any time. Conversion and exchange conditions None Limitation Article None Strengthen financial structure, upgrade capital adequacy Fund utilization plan ratio and expand business scale Balance of Bonds as a Ratio of Shareholding of After-tax net worth 54.60％ (%) Whether it is accounted for equity Not included capital and type Name: Fitch Ratings Limited Taiwan Branch (Fitch) Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National of rating and ratings short-term at F2 (twn), with stable outlook Date of rating: 2012/10/09

111

Note 1: Said-noted period was counted from the date when the Bank issued the letter and the record date of the call was the expiry date of the period. Meanwhile, the conversion suspension period referred to in Article 9 of the Type 1st term of 2012 Subordinated Financial Bonds Bank’s Rules for Issuing and Conversion of 1st term of 2011 unsecured converbible Financial Bonds issued domestically should not fall in said-noted period. Balance of Bonds as a Ratio of Note 2: Financial Bonds holder: To be identified based on the name list of Financial Bonds holders prevailing within Shareholding of After-tax net 53.41% five business days prior to mailing of the Notice of Call, provided that the investor who holds the Financial worth (%) Bonds due to transaction or other causes subsequently should be published by public notice. Whether it is accounted for equity Type 1st term of 2012 Subordinated Financial Bonds Tier II Capital capital and type Ching-Kuan-Yin-Piao Tze No. 10100305900 dated Date & Approval No. Name: Fitch Ratings Limited Taiwan Branch (Fitch) September 24, 2012 Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National Issue Date November 13, 2012 of rating and ratings short-term at F2 (twn), with stable outlook Face Value NTD1,000,000 Date of rating: 2012/10/23

Place of Issue and Trading Taiwan R.O.C. Currency NTD III Issuance of Preferred Stocks: None. IV Issuance of Overseas Depository Receipts: None. Issuing price At Par Value V Employee Stock Options: None. Total amount NTD3.0 billion VI Acquisition or Assignment of Other Financial Institutions: None. VII Implementation of Fund utilization plan Interest rate Coupon rate at 2.10% fixed rate (I) Contents of the plan: 1. In order to strengthen the structure of capital and upgrade the Maturity 7 years, matured on November 13, 2019 capital adequacy ratio, the Bank applied with FSC for issuing the Prevail over the shareholders’ right to allocate residual Subordinated Financial Bonds in 2006, 2009, 2010 and 2012 Seniority property, and follow the Bank’s depositors and other respectively: creditors (1) The FSC approved the Bank’s application in 2006 for Guarantee Institution None issuance of Subordinated Financial Bonds in the amount of NTD2.4 billion via its Letter under Ching-Kuan-Yin (4) Trustee None Tze No. 09600481190 dated November 14, 2007. The Consignee None Bank issued the “1st term of 2007 Subordinated Financial Bonds of Taichung Commercial Bank” (Bond No. G13001) Certified Lawyer None on December 21, 2007. The total issued amount was Certified CPA None NTD2.4 billion with the duration of 5.5 years. The Subordinated Financial Bonds were traded on GreTai Certified financial institution None markets on Dec. 24, 2007. Repayment Methods Repayment in lump sum upon maturity (2) The FSC approved the Bank’s application in 2008 for issuance of Subordinated Financial Bonds in the amount Unredeemed balance NTD13.6 billion of NTD5 billion via its Letter under Ching-Kuan-Yin (4) Paid-in shares capital in last Fiscal Tze No. 09800104050 on March 20, 2009. NTD 22,338,576 thousand Year Term 1st term 2nd term 3rd term 4th term 1st term 2nd term After-tax Net Worth in last Fiscal & 2009 2009 2009 2009 2010 2010 NTD 25,461,054 thousand Year Financial Performance Normal Bonds

Redemption or earlier redemption None Item Conversion and exchange Bond No.G13002 G13003 G13004 G13005 G13006 G13007 None Jun. 6, Dec.10, Dec.18, Dec. 30, Jan. 28 Feb. 9, conditions Issue Date Limitation Article Subordinated bond 2009 2009 2009 2009 2010 2010 Total NTD1.8 NTD0.1 NTD1.2 NTD1.1 NTD0.6 NTD0.2 Strengthen financial structure, upgrade capital adequacy Fund utilization plan Issued billion billion billion billion billion billion ratio and expand business scale Duration 7 years 7 years 7 years 6.5 years 7 years 6 years Listing Jun. 6, Dec.10, Dec.18, Dec. 30, Jan. 28 Feb. 9, Date 2009 2009 2009 2009 2010 2010

112112 113

Type 1st term of 2012 Subordinated Financial Bonds Balance of Bonds as a Ratio of Shareholding of After-tax net 53.41% worth (%) Whether it is accounted for equity Tier II Capital capital and type Name: Fitch Ratings Limited Taiwan Branch (Fitch) Name of credit rating agency, date Rating: National Long-term at BBB+ (twn); National of rating and ratings short-term at F2 (twn), with stable outlook Date of rating: 2012/10/23

III Issuance of Preferred Stocks: None. IV Issuance of Overseas Depository Receipts: None. V Employee Stock Options: None. VI Acquisition or Assignment of Other Financial Institutions: None. VII Implementation of Fund utilization plan (I) Contents of the plan: 1. In order to strengthen the structure of capital and upgrade the capital adequacy ratio, the Bank applied with FSC for issuing the Subordinated Financial Bonds in 2006, 2009, 2010 and 2012 respectively: (1) The FSC approved the Bank’s application in 2006 for issuance of Subordinated Financial Bonds in the amount of NTD2.4 billion via its Letter under Ching-Kuan-Yin (4) Tze No. 09600481190 dated November 14, 2007. The Bank issued the “1st term of 2007 Subordinated Financial Bonds of Taichung Commercial Bank” (Bond No. G13001) on December 21, 2007. The total issued amount was NTD2.4 billion with the duration of 5.5 years. The Subordinated Financial Bonds were traded on GreTai markets on Dec. 24, 2007. (2) The FSC approved the Bank’s application in 2008 for issuance of Subordinated Financial Bonds in the amount of NTD5 billion via its Letter under Ching-Kuan-Yin (4) Tze No. 09800104050 on March 20, 2009. Term 1st term 2nd term 3rd term 4th term 1st term 2nd term & 2009 2009 2009 2009 2010 2010 Financial Bonds

Item Bond No.G13002 G13003 G13004 G13005 G13006 G13007 Jun. 6, Dec.10, Dec.18, Dec. 30, Jan. 28 Feb. 9, Issue Date 2009 2009 2009 2009 2010 2010 Total NTD1.8 NTD0.1 NTD1.2 NTD1.1 NTD0.6 NTD0.2 Issued billion billion billion billion billion billion Duration 7 years 7 years 7 years 6.5 years 7 years 6 years Listing Jun. 6, Dec.10, Dec.18, Dec. 30, Jan. 28 Feb. 9, Date 2009 2009 2009 2009 2010 2010

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(3) The FSC approved the Bank’s application in 2010 for the Bank applied with Securities and Futures Bureau of FSC for issuance of Subordinated Financial Bonds in the amount capital increase by recapitalization of earnings and capital surplus of NTD0.9 billion via its Letter under by NTD519,570,180 on July 4, 2011 and the capital increase has Ching-Kuan-Yin-Piao Tze No. 0900204230 on June 4, been reported to FSC and approved on July 20, 2011 under 2010. The Bank issued the “3rd term of 2010 Ching-Kuan-Zheng-Fa-Tze No. 1000032577 confirmation letter. Subordinated Financial Bonds of Taichung Commercial The capital increase was registered on September 22, 2011, and the Bank” (Bond No. G13008) on June 25, 2010. The total Bank’s paid-in capital became NTD17,838,575,940, and the gross issued amount was NTD0.9 billion with the duration of 7 capital NTD20,000,000,000. years. The bond was traded on GreTai markets on the 5. Recapitalization through issuing common share in amount of same date. NTD4.5 billion in 2011: (4) The FSC approved the Bank’s application in 2012 for In order to strengthen the Bank’s financial structure, upgrade the issuance of Subordinated Financial Bonds in the amount Bank’s capital adequacy ratio and expand the Bank’s business scale, of NTD3.0 billion via its Letter under the Bank applied with Securities and Futures Bureau of FSC for Ching-Kuan-Yin-Piao Tze No. 10100305900 on recapitalization through issuing common share in amount of September 24, 2012. The Bank issued the “1st term of NTD4.5 billion on July 22, 2011 and the case approved on August 2012 Subordinated Financial Bonds of Taichung 9, 2011 under Ching-Kuan-Zheng-Fa-Tze No. 1000035963 Commercial Bank” (Bond No. G13009) on November 13, confirmation letter. The stock payment in the amount of NTD4.5 2012. The total issued amount was NTD3.0 billion with billion has been fully collected on November 8, 2011, and the new the duration of 7 years. The bond was traded on GreTai shares were listed on November 11, 2011. markets on the same date. 6. In 2011, capitalization of retained earnings into news shares 2. Recapitalization through issuing common share in amount of amounting to NTD848,865,890: NTD3.6 billion in 2010: In order to strengthen the Bank’s financial structure, upgrade the For reinforcing the financial structure of and upgrading the BIS Bank's capital adequacy ratio and expand the Bank’s business scale, ratio of the Bank and the extension of business operation, the Bank the Bank applied with Securities and Futures Bureau of FSC for applied with the Securities and Futures Bureau of Financial capital increase by recapitalization of earnings by NTD848,865,890 Supervisory Commission on October 14 2010 for raising capital of on July 10, 2012 and the capital increase has been reported to FSC NTD3,600 million by issuing new shares. The application has been and approved on July 26, 2012 under Jin-Guan-Zheng No. caused into effect under Letter Ching-Kuan-Zheng-Fa-Tze No. 1010032195 confirmation letter. The capital increase was 0990058141 dated November 2 2010. The Bank has raised registered on September 25, 2012, and the Bank’s paid-in capital capital amounting to NTD3,600 million by issuing new shares in became NTD23,187,441,830, and the gross capital 2010. Investment has been paid in full as of December 9, 2010 and NTD43,200,000,000. the shares have been listed in TWSE for offering on December 15, (II) Status of implementation: 2010. The Bank issued the Subordinated Financial Bonds in 2007, 2009, 2010, 3. 1st term of 2011 unsecured convertible Financial Bonds issued and 2012 increased capital by recapitalization of earnings and capital domestically in amount of NTD2.3 billion: surplus in 2010, increased capital through issuing common share and issued For reinforcing the financial structure of and upgrading the BIS the domestic 1st unsecured convertible Financial Bonds and recapitalize the ratio of the Bank, the Bank offered the 1st issue of unsecured earnings in 2011, in order to strengthen the Bank’s financial structure, financial debentures amounting to NTD2,800 million at the upgrade the Bank's capital adequacy ratio and expand the Bank’s business approval of Financial Supervisory Commission under Letter scale. The said plan had positive contribution to the Bank’s financial Ching-Kuan-Zheng-Fa-Tze No. 1000018296 dated May 16 2011. structure and financial ratios. The Bank’s important financial ratios for 2010, The 20th Board of Directors resolved to adjust the total amount of 2011 and 2012 are summarized as follows: the debt instruments to NTD2,300 million in the 15th session. Each Year Comparison Comparison lot of the said instrument shall amount to NTD100,000 and a total 2012 2011 between 2012 2010 between 2011 of 2,300 lots shall be issued. The conversion price was set at Financial ratio and 2011 and 2010 NTD11.89, with the duration of 3 years (from June 15, 2011 until ROA (%) 0.67 0.40 0.27 0.13 0.27 June 15, 2014), at the time of issuance. The total of NTD2,300 million has been paid in full as of June 13 2011. The instrument is ROE (%) 10.38 6.48 3.90 2.37 4.11 listed in GTSM on June 15 2011 for trading. Capital adequacy 10.54 11.63 (1.09) 11.10 0.53 4. Capital increase by recapitalization of earnings and capital surplus ratio (%) in amount of NTD519,570,180 in 2010: Net income In order to strengthen the Bank’s financial structure, upgrade the 2,777,958 1,454,000 1,323,958 411,956 1,042,044 (Thousand NTD) Bank's capital adequacy ratio and expand the Bank’s business scale,

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the Bank applied with Securities and Futures Bureau of FSC for capital increase by recapitalization of earnings and capital surplus by NTD519,570,180 on July 4, 2011 and the capital increase has been reported to FSC and approved on July 20, 2011 under Ching-Kuan-Zheng-Fa-Tze No. 1000032577 confirmation letter. The capital increase was registered on September 22, 2011, and the Bank’s paid-in capital became NTD17,838,575,940, and the gross capital NTD20,000,000,000. 5. Recapitalization through issuing common share in amount of NTD4.5 billion in 2011: In order to strengthen the Bank’s financial structure, upgrade the Bank’s capital adequacy ratio and expand the Bank’s business scale, the Bank applied with Securities and Futures Bureau of FSC for recapitalization through issuing common share in amount of NTD4.5 billion on July 22, 2011 and the case approved on August 9, 2011 under Ching-Kuan-Zheng-Fa-Tze No. 1000035963 confirmation letter. The stock payment in the amount of NTD4.5 billion has been fully collected on November 8, 2011, and the new shares were listed on November 11, 2011. 6. In 2011, capitalization of retained earnings into news shares amounting to NTD848,865,890: In order to strengthen the Bank’s financial structure, upgrade the Bank's capital adequacy ratio and expand the Bank’s business scale, the Bank applied with Securities and Futures Bureau of FSC for capital increase by recapitalization of earnings by NTD848,865,890 on July 10, 2012 and the capital increase has been reported to FSC and approved on July 26, 2012 under Jin-Guan-Zheng No. 1010032195 confirmation letter. The capital increase was registered on September 25, 2012, and the Bank’s paid-in capital became NTD23,187,441,830, and the gross capital NTD43,200,000,000. (II) Status of implementation: The Bank issued the Subordinated Financial Bonds in 2007, 2009, 2010, and 2012 increased capital by recapitalization of earnings and capital surplus in 2010, increased capital through issuing common share and issued the domestic 1st unsecured convertible Financial Bonds and recapitalize the earnings in 2011, in order to strengthen the Bank’s financial structure, upgrade the Bank's capital adequacy ratio and expand the Bank’s business scale. The said plan had positive contribution to the Bank’s financial structure and financial ratios. The Bank’s important financial ratios for 2010, 2011 and 2012 are summarized as follows: Year Comparison Comparison 2012 2011 between 2012 2010 between 2011 Financial ratio and 2011 and 2010 ROA (%) 0.67 0.40 0.27 0.13 0.27 ROE (%) 10.38 6.48 3.90 2.37 4.11 Capital adequacy 10.54 11.63 (1.09) 11.10 0.53 ratio (%) Net income 2,777,958 1,454,000 1,323,958 411,956 1,042,044 (Thousand NTD)

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Earnings Per Share Deposit 1.20 0.76 0.44 0.29 0.47 Current deposits 77,831,422 20.07 66,620,964 19.84 11,210,458 16.83 (NTD) Balance Current saving 88,448,284 22.81 81,231,495 24.19 7,216,789 8.88 deposits

5 Operation Profile Subtotal 173,941,979 44.85 154,865,219 46.12 19,076,760 12.32 I Business Contents (I) Principal business of the Bank by business type, assets under respective Time deposits 85,985,510 22.17 60,654,582 18.06 25,330,928 41.76 Time business units and/or their proportion to total assets and/or revenue, and the Time saving Deposit 125,933,000 32.47 118,312,830 35.23 7,620,170 6.44 deposits status of growth. Balance 1. Principal business of the Bank by business type: Subtotal 211,918,510 54.64 178,967,412 53.29 32,951,098 18.41 (1) Deposits Operations: passbooks, check deposits, Accounts certificates of deposit, negotiable certificates of deposit. transfer and Others 1,963,595 0.51 1,986,115 0.59 （22,520）（1.13） (2) Loan Operations: personal loans, corporate loans, deposits via post syndicate loans, discounts of instruments, issuance of office local L/C and local guarantee making. (3) Foreign Exchanges Operations: import, export, foreign Total 387,824,084 100.00 335,818,746 100.00 52,005,338 15.49 exchange settlements, deposits, and loans of foreign Note 1: Current deposits and Current deposits include deposits in foreign currencies and currency. treasury deposits. (4) Wealth Management Operations: Administer the planning Note 2: Accounts transfer and deposits via post office include the national development fund and execution of the financial planning businesses tied in with accounts transfer and deposits. throughout the nation, management of financial planning staff, preparation and revision of the wealth management (2) Loan Operations: policy and operating procedure, and promotion, Unit: NTD thousand; % Year Comparison between 2012 supervision and management of wealth management 2012 2011 customers’ investment in the financial planning business. and 2011 Increase (5) Corporate Finance Operations: Administer corporate Increase (decrease) banking business related to corporate banking, corporate Amount Proportion Amount Proportion (decrease) in in syndicate loans and factoring, et al. amount Item proportion (6) E-banking Operations: Network banking, e-ATM, ATM Balance of and Phone banking. Short-term secured 60,624,756 18.08 48,851,378 17.10 11,773,378 24.10 (7) Trust Operations: Investment in domestic and overseas loans marketable securities through special monetary trustee Balance of accounts, Certified auditors of marketable securities, real Short-term credit 42,538,465 12.68 33,924,033 11.87 8,614,431 25.39 estate trust and specific independent money management loans and utilization trust. Subtotal 103,163,221 30.76 82,775,411 28.98 20,387,809 24.63 (8) Investment Operations: Dispatch of funds in NTD and Balance of Mid-term foreign currency, foreign exchange, marketable securities 87,237,740 26.01 82,832,302 29.00 4,405,438 5.32 secured loans trading and long-term equity investment. Balance of Mid-term 32,254,212 9.62 26,781,468 9.37 5,472,744 20.43 (9) Securities operation: securities trade, margin trade and credit loans short sales of securities, and futures Introducing Broker 2. Assets under respective business units and/or their proportion to Subtotal 119,491,952 35.63 109,613,770 38.37 9,878,182 9.01 total assets and/or revenue, and the status of growth: Balance of (1) Deposit Operations: Long-term secured 100,303,767 29.91 85,425,962 29.90 14,877,805 17.42 Unit: NTD thousand; % loans Balance of Year Comparison between 2012 2012 2011 Long-term credit 2,553,682 0.76 1,592,791 0.56 960,891 60.33 and 2011 loans Increase Increase (decrease) Subtotal 102,857,449 30.67 87,018,753 30.46 15,838,696 18.20 Amount Proportion Amount Proportion (decrease) in in amount Others 9,889,349 2.95 6,268,477 2.19 3,620,873 57.76 Item proportion Demand Check deposits 7,662,273 1.97 7,012,760 2.09 649,513 9.26 Subtotal 9,889,349 2.95 6,268,477 2.19 3,620,873 57.76

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Deposit Current deposits 77,831,422 20.07 66,620,964 19.84 11,210,458 16.83 Balance Current saving 88,448,284 22.81 81,231,495 24.19 7,216,789 8.88 deposits Subtotal 173,941,979 44.85 154,865,219 46.12 19,076,760 12.32

Time deposits 85,985,510 22.17 60,654,582 18.06 25,330,928 41.76 Time Time saving Deposit 125,933,000 32.47 118,312,830 35.23 7,620,170 6.44 deposits Balance Subtotal 211,918,510 54.64 178,967,412 53.29 32,951,098 18.41 Accounts transfer and Others 1,963,595 0.51 1,986,115 0.59 （22,520）（1.13） deposits via post office Total 387,824,084 100.00 335,818,746 100.00 52,005,338 15.49 Note 1: Current deposits and Current deposits include deposits in foreign currencies and treasury deposits. Note 2: Accounts transfer and deposits via post office include the national development fund tied in with accounts transfer and deposits.

(2) Loan Operations: Unit: NTD thousand; % Year Comparison between 2012 2012 2011 and 2011 Increase Increase (decrease) Amount Proportion Amount Proportion (decrease) in in amount Item proportion Balance of Short-term secured 60,624,756 18.08 48,851,378 17.10 11,773,378 24.10 loans Balance of Short-term credit 42,538,465 12.68 33,924,033 11.87 8,614,431 25.39 loans Subtotal 103,163,221 30.76 82,775,411 28.98 20,387,809 24.63 Balance of Mid-term 87,237,740 26.01 82,832,302 29.00 4,405,438 5.32 secured loans Balance of Mid-term 32,254,212 9.62 26,781,468 9.37 5,472,744 20.43 credit loans Subtotal 119,491,952 35.63 109,613,770 38.37 9,878,182 9.01 Balance of Long-term secured 100,303,767 29.91 85,425,962 29.90 14,877,805 17.42 loans Balance of Long-term credit 2,553,682 0.76 1,592,791 0.56 960,891 60.33 loans Subtotal 102,857,449 30.67 87,018,753 30.46 15,838,696 18.20 Others 9,889,349 2.95 6,268,477 2.19 3,620,873 57.76 Subtotal 9,889,349 2.95 6,268,477 2.19 3,620,873 57.76

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Total 335,401,971 100.00 285,676,411 100.00 49,725,560 17.41 Finance loans in NTD Note: Said table includes foreign currencies, OBU, delinquent accounts, Acceptances receivable and Balance of loans in foreign 20,224 11.42 16,410 11.28 3,814 23.24 receivable security bonds currency (3) Foreign Exchanges Operations: Unit: USD thousand; % Total 177,131 100.00 145,491 100.00 31,640 21.75 Year 2012 2011 Comparison between 2012 and 2011 (6) e-Banking Operations: Increase Increase (decrease) A. Number of new network accounts Amount Proportion Amount Proportion (decrease) in Year Comparison between 2012 Item in amount 2012 2011 proportion and 2011 Import 1,777,446 16.92 1,412,516 15.72 364,930 25.84 Increase (decrease) in Increase Number of Number of Number of Number of Export 626,660 5.97 552,916 6.15 73,744 13.34 number of (decrease) in active accounts new accounts active accounts new accounts Outward 3,956,894 37.68 3,804,229 42.33 152,665 4.01 active proportion % remittance Item accounts Inward 4,140,665 39.43 3,217,223 35.80 923,442 28.70 Number of remittance new network 122,472 23,616 98,713 18,110 23,759 24.07 Total 10,501,665 100.00 8,986,884 100.00 1,514,781 16.86 accounts Balance of deposit B. e-Banking trading ratio in foreign 703,762 490,991 212,771 43.34 Year Comparison between 2012 currencies 2012 2011 Balance of loans in and 2011 715,784 554,393 161,391 29.11 Proportion to foreign currencies Proportion to Proportion to Increase increase Accumulative Total Accumulative Total (4) Wealth Management: (decrease) in (decrease) in transactions Transactions transactions Transactions Unit: NTD thousand; % transactions total % % Year Comparison between Item transactions % 2012 2011 2012 and 2011 e-Banking 5,994,279 48.93 5,707,491 47.76 286,788 5.02 Increase transaction Increase (decrease) Amount Proportion Amount Proportion (decrease) in Note: The transactions exclude those for inquiries. in amount Item proportion (7) Trust Operations: Trust service fee 259,756 40.14 290,861 52.97 （31,105）（10.69） Unit: NTD thousand; % revenue Insurance service Year Comparison between 2012 387,426 59.86 258,291 47.03 129,135 50.00 2012 2011 fee revenue and 2011 Total 647,182 100.00 549,152 100.00 98,030 17.85 Increase Increase Amount Proportion Amount Proportion (decrease) in (decrease) in (5) Corporate Finance: Item amount proportion Unit: NTD million; % Investment in Balance Comparison between 2012 Year 2012 2011 domestic and of trust in and 2011 overseas 6,417,176 15.33 5,692,959 14.73 724,217 12.72 Increase domestic Increase marketable (decrease) funds Amount Proportion Amount Proportion (decrease) in securities in amount through Service Item proportion special 37,079 11.65 32,411 10.57 4,668 14.40 Balance of loans to SMEs 122,395 69.10 95,241 65.46 27,154 28.51 monetary Fee trustee Overseas Balance of loans to 34,512 19.48 33,040 22.71 1,472 4.46 accounts funds large-size enterprises 30,911,769 73.84 30,174,736 78.08 737,033 2.44 Balance of loans to Balance governments and public 0 0.00 800 0.55 (800) (100.00) of trust enterprises Service 221,870 69.69 257,758 84.04 （37,628）（14.60） Balance of corporate 156,907 88.58 129,081 88.72 27,826 21.56 Fee

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Finance loans in NTD Balance of loans in foreign 20,224 11.42 16,410 11.28 3,814 23.24 currency Total 177,131 100.00 145,491 100.00 31,640 21.75

(6) e-Banking Operations: A. Number of new network accounts Year Comparison between 2012 2012 2011 and 2011 Increase (decrease) in Increase Number of Number of Number of Number of number of (decrease) in active accounts new accounts active accounts new accounts active proportion % Item accounts Number of new network 122,472 23,616 98,713 18,110 23,759 24.07 accounts B. e-Banking trading ratio Year Comparison between 2012 2012 2011 and 2011 Proportion to Proportion to Proportion to Increase increase Accumulative Total Accumulative Total (decrease) in (decrease) in transactions Transactions transactions Transactions transactions total % % Item transactions % e-Banking 5,994,279 48.93 5,707,491 47.76 286,788 5.02 transaction Note: The transactions exclude those for inquiries.

(7) Trust Operations: Unit: NTD thousand; % Year Comparison between 2012 2012 2011 and 2011 Increase Increase Amount Proportion Amount Proportion (decrease) in (decrease) in Item amount proportion Investment in Balance domestic and of trust in overseas 6,417,176 15.33 5,692,959 14.73 724,217 12.72 domestic marketable securities funds through Service special 37,079 11.65 32,411 10.57 4,668 14.40 monetary Fee trustee Overseas accounts funds 30,911,769 73.84 30,174,736 78.08 737,033 2.44 Balance of trust Service 221,870 69.69 257,758 84.04 （37,628）（14.60） Fee

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Year Comparison between 2012 Exchange revenue – spot 79,903 8.22 84,903 16.79 (5,000) (5.89) 2012 2011 Total income and 2011 (exclusive of the reserve 972,350 100.00 505,670 100.00 466,680 92.29 Increase Increase fund and own reserves) Amount Proportion Amount Proportion (decrease) in (decrease) in (9) Securities: Units: NTD 1,000; %; lots Item amount proportion Year Comparison between 2012 2012 2011 and 2011 ETF

32,096 0.08 36,844 0.09 （4,748）（12.87） Increase Increase balance Amount Proportion Amount Proportion (decrease) (decrease) in

in amount proportion Service Item 160 0.05 692 0.23 （532）（76.88） Fee Amount of transactions of 52,629,588 - 51,217,173 - 1,412,415 2.76 Balance Securities Brokerage of brokerage 658,871 1.57 663,484 1.72 （4,613）（0.69） Average balance structure of Purchase on 325,276 - 227,095 - 98,181 43.23 margin note Quantity in lots Service of futures IB 159,644 - - - 159,644 ------operation Fee Brokerage fee 53,061 93.31 56,945 97.77 （3,884）（6.82） Custody of Balance of revenue securities securities Incomes from 1,466,085 3.50 -- - - Service Fee in custody futures IB 1,672 2.94 - - 1,671 - operation Service Short Sale 647 0.20 -- - - 1,838 3.23 1,105 1.90 733 66.33 Fee revenue Certified Business Underwriting 2,873,106 - 3,265,939 - （392,833）（12.03） 294 0.52 193 0.33 101 52.33 auditors of volume revenue marketable Service 690 0.22 402 0.13 288 71.64 Total service fee 56,865 100.00 58,243 100.00 （1,379）（2.37） securities Fee Real estate Balance Interest Interest incomes 1,032,082 2.47 690,879 1.79 341,203 49.39 17,418 - 18,610 - （1,192）（6.41） trust of trust revenue from financing Service Note: Brokerage fee revenue less discount of service charges. 25,287 7.94 5,190 1.69 20,097 387.23 Fee (II) Business plan for 2013: Specific 1. Deposit Operations Balance （）（） independent 1,345,363 3.21 1,387,135 3.59 41,772 3.01 (1) Make additional effort in the development of business in money of trust management current account deposit and upgrade the ratio of current Service and utilization 32,650 10.25 10,242 3.34 22,408 218.79 account deposit to reduce the cost of capital. trust Fee (2) Continue improving SOP, simplifying routine operating, Balance of trust assets 41,863,442 100.00 38,646,037 100.00 3,217,405 8.33 reducing operating cost and upgrading the processing efficiency. (8) Investments Operations: (3) Vitalize the function of e-banking service, and proactively Unit: NTD thousand; % promote this service to the customers in order to develop Year Comparison between 2012 cash transactions of the customers to bring in more 2012 2011 and 2011 commission incomes. Increase Increase (4) Develop the number of customers, promote development Amount Proportion Amount Proportion (decrease) in (decrease) in of the source of relevant derivatives, and increase various Item amount proportion operating revenue. Long-term/short-term 165,778 17.05 (157,350) (31.12) 323,128 205.36 2. Loan Operations investment revenue (1) The Bank targets at the small and medium enterprises in Interest income – 726,669 74.73 578,117 114.33 148,552 25.70 financing, and works in conjunction with the Small and NTD/foreign currency

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Exchange revenue – spot 79,903 8.22 84,903 16.79 (5,000) (5.89) Total income (exclusive of the reserve 972,350 100.00 505,670 100.00 466,680 92.29 fund and own reserves) (9) Securities: Units: NTD 1,000; %; lots Year Comparison between 2012 2012 2011 and 2011

Increase Increase

Amount Proportion Amount Proportion (decrease) (decrease) in

in amount proportion Item Amount of transactions of 52,629,588 - 51,217,173 - 1,412,415 2.76 Securities Brokerage brokerage Average balance of Purchase on 325,276 - 227,095 - 98,181 43.23 margin Quantity in lots of futures IB 159,644 - - - 159,644 - operation Brokerage fee 53,061 93.31 56,945 97.77 （3,884）（6.82） revenue Incomes from Service Fee futures IB 1,672 2.94 - - 1,671 - operation Short Sale 1,838 3.23 1,105 1.90 733 66.33 revenue Underwriting 294 0.52 193 0.33 101 52.33 revenue Total service fee 56,865 100.00 58,243 100.00 （1,379）（2.37） Interest Interest incomes 17,418 - 18,610 - （1,192）（6.41） revenue from financing Note: Brokerage fee revenue less discount of service charges. (II) Business plan for 2013: 1. Deposit Operations (1) Make additional effort in the development of business in current account deposit and upgrade the ratio of current account deposit to reduce the cost of capital. (2) Continue improving SOP, simplifying routine operating, reducing operating cost and upgrading the processing efficiency. (3) Vitalize the function of e-banking service, and proactively promote this service to the customers in order to develop cash transactions of the customers to bring in more commission incomes. (4) Develop the number of customers, promote development of the source of relevant derivatives, and increase various operating revenue. 2. Loan Operations (1) The Bank targets at the small and medium enterprises in financing, and works in conjunction with the Small and

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Medium Enterprises Credit Guarantee Fund in order to timely financial information all over the world for the diversify the credit risk of the Bank and intensify the reference of the customers. training in credit guarantee fund to prevent the denial of (6) Enhance the market analysis and investment strategies by subrogation of compensation. providing financial planning specialists and branches with (2) Adjust the interest rate for mortgage loans in line with the the real-time market information, portfolio messages and changes in the market. sale strategies through phone conference, and making (3) Adjust the rates for commission charges to reflect the cost available to business unit managers and financial planning of operation and increase the incomes from commission. specialists the latest market information, global index, (4) Make additional effort to develop home mortgage selected funds, ETF and suggestions via email on a daily insurance to enhance the value added to mortgage loan basis and on a weekly basis, to help them provide and bring in higher incomes for the Bank. customers with professional suggestions. (5) The Bank makes additional effort in the supervision of 5. Corporate Finance lending and continues to provide related education and (1) Strength visits to customers to develop new clientele, training for improving the quality of loans and operation continue providing excellent customers with the pricing efficiency, and to upgrade the professional standing of the policy based on the interest rate in money market, develop banking staff in lending business. new financial derivatives, and include corporate banking (6) The Bank seeks to continue the improvement of its integrated marketing. business process and review related regulations governing (2) The Bank will continue to strengthen its core business of lending procedures to upgrade its service quality. “lending to small and medium enterprises”, and provide 3. Foreign Exchanges Operations the customers full-range financing service with proper (1) Simplify SOP, upgrade service quality, enhance the balance of the size of loan and asset quality to bring in various staff’s expertise and development ability with more incomes. respect to foreign exchanges, upgrade the Bank’s (3) Increase the volume of business in “syndicated loans” and competitiveness. enhance the liaison with other banks a larger share of (2) Actively develop the international banking business and incomes from management fees as the lead bank. cross-strait trade financing transactions to increase (4) Accelerate the promotion of “receivable accounts” to revenue. enhance the trading cash flow business development. (3) Strengthen R&D and transactions of financial derivatives, (5) Establish the service counters for SMEs and upgrade the Bank’s skills in operating finance in order to micro-enterprises according to the national economic satisfy customers’ diversified needs. development policies and actively promote “Program to (4) Actively solicit foreign currency deposits, by promoting Encourage Lending By Domestic Banks to Small and the preferential Program for foreign currency deposit to Medium Enterprises”, continue providing various diversify the funds. preferential funding services to domestic SMEs tied with (5) Upgrading and developing foreign exchange’s e-banking the SME credit guarantee fund to reduce the Bank's credit function. extension risk. 4. Wealth Management (6) Readjust the target groups of borrowers and continue the (1) The Bank will introduce dual-currency investment, focus in financing small and medium enterprises to passbook saving in gold, bonds in secondary market, and augment the niche of the Bank. The Bank shall continue to other new financial products to enrich the product comply with the principle of risk control, and increase the portfolio in investment for the customers. ratio of guaranty and low risk assets, and integrate (2) Provide such new investment methods as efficient effective resources for better service quality. These would investment method to increase the modes of investment by help to enhance customer contribution. customers. (3) The Bank will establish the positions of Financial 6. Trust Operations Advisors and Sales Heads for the effective management of (1) General Trust Operations: wealth management accounts. A. Real estate trust: Plan the overall marketing (4) Wealth Management Dept. will work with various model of land and construction financing and branches to provide the exclusive service for one-by-one credit extension to increase the service fee consultation on investment in fund irregularly. revenue. (5) The Bank will hold conferences and seminars of different B. Purchase fund trust: undertake financing by sizes to improve the professional image of the Bank and account and mortgage loans matched with the fortify the bonding with the customers, and will forward mechanism of trust to ensure security in real

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timely financial information all over the world for the reference of the customers. (6) Enhance the market analysis and investment strategies by providing financial planning specialists and branches with the real-time market information, portfolio messages and sale strategies through phone conference, and making available to business unit managers and financial planning specialists the latest market information, global index, selected funds, ETF and suggestions via email on a daily basis and on a weekly basis, to help them provide customers with professional suggestions. 5. Corporate Finance (1) Strength visits to customers to develop new clientele, continue providing excellent customers with the pricing policy based on the interest rate in money market, develop new financial derivatives, and include corporate banking integrated marketing. (2) The Bank will continue to strengthen its core business of “lending to small and medium enterprises”, and provide the customers full-range financing service with proper balance of the size of loan and asset quality to bring in more incomes. (3) Increase the volume of business in “syndicated loans” and enhance the liaison with other banks a larger share of incomes from management fees as the lead bank. (4) Accelerate the promotion of “receivable accounts” to enhance the trading cash flow business development. (5) Establish the service counters for SMEs and micro-enterprises according to the national economic development policies and actively promote “Program to Encourage Lending By Domestic Banks to Small and Medium Enterprises”, continue providing various preferential funding services to domestic SMEs tied with the SME credit guarantee fund to reduce the Bank's credit extension risk. (6) Readjust the target groups of borrowers and continue the focus in financing small and medium enterprises to augment the niche of the Bank. The Bank shall continue to comply with the principle of risk control, and increase the ratio of guaranty and low risk assets, and integrate effective resources for better service quality. These would help to enhance customer contribution.

6. Trust Operations (1) General Trust Operations: A. Real estate trust: Plan the overall marketing model of land and construction financing and credit extension to increase the service fee revenue. B. Purchase fund trust: undertake financing by account and mortgage loans matched with the mechanism of trust to ensure security in real

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property trade and bring in more incomes from development. As such, global economic recovery in 2013 will still commission. be sluggish. C. Presale Housing Performance Trust: this product 3. Transformation and challenge of market structure is launched in supporting the “presale housing The development of financial globalization helps to speed up contractual performance mechanism” by offering innovation in banking service. This emerged as a vital factor for the trust for real estate development and proceeds for development of the banking industry. Banks must respond to presale housing in order to provide the customers market development, vitalize banking service and functions in the most suitable service and support the order to maintain an edge under keen competition in the operation government in protecting the rights of the public environment. Global economic environment is still so in home buying and for transaction security. unpredictable and challenging. Banks must link to the international D. Insurance trust: this is a joint venture with market with further effort in risk management for protecting the Taichung Commercial Bank Insurance Agency financial security and vitality in operation. Co., Ltd. and Cigna Life whereby the insurance Banking deregulation on Taiwan and Mainland China was kicked trust business under the “Wealth Sharing off in recent years. After the governments of both sides have Insurance Project” was launched to provide entered into the MOU of cooperation and the ECFA, and the customer insurance protection and trust products activation of the clearing and settlement between CNY and NTD, for the development of the insurance and trust banking on both sides of the Taiwan Strait has been engaged in products offered by the Bank. direct link. In the future, the issue will be how to replicate the E. Advance payment trust: Develop trust in gift model of the success in Taiwan to Mainland China. With the vouchers for broadening the scope of regular trust foundation established by investors from Taiwan, the Bank will business of the Bank and bring in more incomes enlarge its scale in the market and go further for economic from commission. cooperation between the two sides. This will be the area of further (2) Mutual fund: investment by both sides. A. Introduction of new products: overseas secondary 4. Competitive niche, favorable and unfavorable factors for bond market and the short sale of professional development in the future, and countermeasures. investors or leverage ETFs products. (1) SWOT analysis on favorable and unfavorable factors B. Provide new investment strategy: Efficient Strength Weakness investment method (feeder fund) and easy fund investment such as deposit of service fee.  The branch channels of the Bank have  Financial innovation ability is inferior (3) Custodian bank: Act as the custodian for securities been developed in proper balance. than that of international large-scale investment trust in keeping fund assets, broaden the scope With the effort in long-term cultivation financial organization. of banking business, and develop stable and long-term of the customers from small and  Business scale is still impossible to incomes from commission. medium enterprises, the Bank has an rival large-size financial organizations. (III) Market Analysis edge in clientele base in operation.  No overseas branch so far, which is a 1. Territories of banking business:  Concentrate in the development of the loss in the opportunity for business The Bank has 80 branches of which 21 are in northern Taiwan, 53 local market in central Taiwan and with the investors from Taiwan. are in central Taiwan, and 6 are in southern Taiwan. There is also 1 expand the clientele base of stable  No experience in international banking OBU established in Taipei to provide private banking, corporate customers. service. International competitive banking, wealth management and other full-range banking services.  Maintain superior level of asset quality power is yet to be enhanced. 2. Supply and Demand of the market and growth in the future and vitalize the financial structure of Global economy has been mired in the debt crisis in Europe and in the Bank. the USA in the first half of 2012, and remained weak. It was  Maintain credit rating on the Bank as echoed with the lack of momentum in economic growth in the USA specific level and go for long-term and China. As such, economic growth in Taiwan was stagnant. In stability. the second half of the 2012, the debt crisis in Europe did not go Opportunity Threat worse. With the positive economic data released by USA and  The incremental deregulation of  Given the global financial China, and the new economic policy pronounced by the new banking on Taiwan and Mainland development, the Bank is facing the government of China, economic recovery tended to take place, China will help to bring in profit and challenge from international groups. which in turn help to stabilize the economic performance of the opportunity for expansion to the  Multi-sectorial competition from Taiwan. international market of the Bank. holding companies which have In 2013, the short-lived economic recovery in the Euro Zone and  The concept of asset management has strength in scale and cost. the fiscal cliff of the USA slowed down global economic been upgraded, which is good for  The industry peers in the banking

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development. As such, global economic recovery in 2013 will still be sluggish. 3. Transformation and challenge of market structure The development of financial globalization helps to speed up innovation in banking service. This emerged as a vital factor for the development of the banking industry. Banks must respond to market development, vitalize banking service and functions in order to maintain an edge under keen competition in the operation environment. Global economic environment is still so unpredictable and challenging. Banks must link to the international market with further effort in risk management for protecting the financial security and vitality in operation. Banking deregulation on Taiwan and Mainland China was kicked off in recent years. After the governments of both sides have entered into the MOU of cooperation and the ECFA, and the activation of the clearing and settlement between CNY and NTD, banking on both sides of the Taiwan Strait has been engaged in direct link. In the future, the issue will be how to replicate the model of the success in Taiwan to Mainland China. With the foundation established by investors from Taiwan, the Bank will enlarge its scale in the market and go further for economic cooperation between the two sides. This will be the area of further investment by both sides. 4. Competitive niche, favorable and unfavorable factors for development in the future, and countermeasures. (1) SWOT analysis on favorable and unfavorable factors Strength Weakness  The branch channels of the Bank have  Financial innovation ability is inferior been developed in proper balance. than that of international large-scale With the effort in long-term cultivation financial organization. of the customers from small and  Business scale is still impossible to medium enterprises, the Bank has an rival large-size financial organizations. edge in clientele base in operation.  No overseas branch so far, which is a  Concentrate in the development of the loss in the opportunity for business local market in central Taiwan and with the investors from Taiwan. expand the clientele base of stable  No experience in international banking customers. service. International competitive  Maintain superior level of asset quality power is yet to be enhanced. and vitalize the financial structure of the Bank.  Maintain credit rating on the Bank as specific level and go for long-term stability. Opportunity Threat  The incremental deregulation of  Given the global financial banking on Taiwan and Mainland development, the Bank is facing the China will help to bring in profit and challenge from international groups. the opportunity for expansion to the  Multi-sectorial competition from international market of the Bank. holding companies which have  The concept of asset management has strength in scale and cost. been upgraded, which is good for  The industry peers in the banking

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Strength Weakness Securities trade 5,235,988 16,435 25,091,784 63,802 4,170,355 (248,768) Securities Brokerage linking to the international market and industry are highly homogenous, Business upgrade of international competitive which narrowed the room for profit. power (e.g., the launch of IFRSs and  Industrial and capital dislocation, Securities brokerage 7,111,267 7,075 52,629,588 55,193 51,217,173 58,243 Basel III). which hampered the financing needs of Futures Introducing the enterprises, and in turn caused Brokers and futures 78,995 735 159,644 1,672 - - direct impact on the banking industry. in lots Volume of financing (2) Countermeasures 309,269 3,160 325,276 17,418 227,095 18,610 (Average balance) A. In responding to the changes and opportunities Note 1: The “operating revenue” from securities trading means the income from disposition and from the market and economic situation, the evaluation of securities trading. Bank seeks to enlarge the scale of its core Note 2: Brokerage fee revenue less discount of service charges. business. Note 3: Corporate banking and private banking (excluding credit card charging amount), in NTD only, B. The Bank will adjust and optimize its profit excluding foreign currencies and OBU amount. structure in order to achieve the goal of stable 2. R&D expenditure and results in the most recent two years, and the business volume with increasing profit. future R&D plans C. The Bank will augment its channeling strategy for better result, and develop the domestic market (1) R&D spending and result in the last 2 years: R&D in further depth and the market of Greater spending amounted to NTD70.68 million. China. Name of D. The Bank will make use of the advantage given R&D Descriptions of R&D Results by its organization, and will increase its stakes in product other direct investments and product marketing Developed the function of installment Attract customers to use credit card to for synergy. Installments by by credit card payment with shops. In pay for consumption through the E. The Bank will vitalize the quality of its assets, credit card 2012, the Bank has entered into installment by credit card payment materialize the early warning system in risk payment agreement with 20 shops in MOMO function, and increase the volume of management, and enhance its capital utilization Fubon online shopping. credit card spending. efficiency. Simplify the procedure for roll-over of Automatic Install the system of fully secured F. Make hearty effort to demonstrate its advantage personal short-term secured loans and roll-over cases for automatic roll-over of loans in service and perform its corporate social enhance the operation efficiency at the system via the computer system. responsibility. branches. (IV) Research and Development of financial products and status of business Keep saving on the papers, printed All electronic statements have been development matters, packing and postage for the e-Statement encrypted and delivered to the 1. Primary financial products and new banking units, their sizes and delivery of bank statements in of account customers of the Bank with income in the most recent two years conformity to the idea of low-carbon advertisements via e-mail. Currency unit: NTD 1,000; lot and energy saving environment. Until Feb. 28, 2013 2012/end 2011/end Installation Enhance the performance of the Item of securities Installation of new transaction Trade Operating Trade Operating Trade Operating transaction system and the alternate site trading mainframe. value/volume revenue value/volume revenue value/volume revenue backup system. Corporate Finance servers Volume of corporate Computer 152,694,884 664,106 156,907,576 4,050,706 129,081,019 3,410,331 software and Installation of the new AP version loans Upgrade the efficiency of e-orders for hardware online ordering HTS “Winner Personal banking securities. contracts System” hardware. Consumer loans 49,902,616 183,995 49,313,961 1,098,298 44,415,697 1,027,690 system Non-Consumer loans 98,932,877 422,789 99,085,960 2,058,480 89,520,272 1,890,980 1. Configure complete on-line HTS order placement system: Credit card loans 737,553 26,628 3,924,159 98,509 2,873,196 110,840 e-Trading Installation of the new AP version including AP, WEB, backup Trust Operations System and online ordering HTS “Winner for traders, enhancing the Balance of trust Platform 40,913,957 65,345 41,863,442 318,383 38,646,037 306,695 System” application software. efficiency of order placement, assets Integration increasing volume of business Program Financial management for e-order.

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Securities trade 5,235,988 16,435 25,091,784 63,802 4,170,355 (248,768) Securities Brokerage

Business Securities brokerage 7,111,267 7,075 52,629,588 55,193 51,217,173 58,243 Futures Introducing Brokers and futures 78,995 735 159,644 1,672 - - in lots Volume of financing 309,269 3,160 325,276 17,418 227,095 18,610 (Average balance) Note 1: The “operating revenue” from securities trading means the income from disposition and evaluation of securities trading. Note 2: Brokerage fee revenue less discount of service charges. Note 3: Corporate banking and private banking (excluding credit card charging amount), in NTD only, excluding foreign currencies and OBU amount. 2. R&D expenditure and results in the most recent two years, and the future R&D plans (1) R&D spending and result in the last 2 years: R&D spending amounted to NTD70.68 million. Name of R&D Descriptions of R&D Results product Developed the function of installment Attract customers to use credit card to Installments by by credit card payment with shops. In pay for consumption through the credit card 2012, the Bank has entered into installment by credit card payment payment agreement with 20 shops in MOMO function, and increase the volume of Fubon online shopping. credit card spending. Simplify the procedure for roll-over of Automatic Install the system of fully secured personal short-term secured loans and roll-over cases for automatic roll-over of loans enhance the operation efficiency at the system via the computer system. branches. Keep saving on the papers, printed All electronic statements have been matters, packing and postage for the e-Statement encrypted and delivered to the delivery of bank statements in of account customers of the Bank with conformity to the idea of low-carbon advertisements via e-mail. and energy saving environment. Installation Enhance the performance of the of securities Installation of new transaction transaction system and the alternate site trading mainframe. backup system. servers Computer software and Installation of the new AP version Upgrade the efficiency of e-orders for hardware online ordering HTS “Winner securities. contracts System” hardware. system 1. Configure complete on-line HTS order placement system: e-Trading Installation of the new AP version including AP, WEB, backup System and online ordering HTS “Winner for traders, enhancing the Platform System” application software. efficiency of order placement, Integration increasing volume of business Program for e-order.

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Name of (2) Development plan for the future: further investment of R&D Descriptions of R&D Results NTD91 million into R&D product Plan in the Scheduled Key factors to success of future R&D 2. Control client’s income and most recent Status to complete contract information in a year in timely manner to upgrade Collected The new December 1. Resolve such problems as old equipment client's satisfaction. note system is in 2013 and complicated operating procedures to 1. Upgrade the competitive operating the process make the operations uniform and upgrade power of the Bank in system of efficiency. conformity to the needs of installation 2. Add such functions as image scanning, information development in withdrawal and access at the branch ends 1. Infrastructure: data mid and long-term. to reduce the risk in loss of notes in the Data warehouse, business 2. Strengthen customer relation process of delivery. warehouse intelligence platform. management, understand the and relations 2. Application management: attributes, contribution, and with customer relation needs of the customers for customers management system, KPI improving the result of management management system, marketing. application marketing management 3. The management staff can system system, multi-dimensional quickly keep the operation analysis platform system. performance status, trend, and change in control and strengthen their own proactive management capacity. 1. Comply with the competent authority’s requirements to continue improving the risk management system and provide credit extensions and SMEs investigations for reference to Application Establish the default risk assessment reduce the Bank’s credit Scorecard model of the Bank. extension risk. System 2. Utilize the project to Project. accumulate the Bank’s skills in developing other credit rating models independently and ability to calibrate and modify the subsequent models.

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(2) Development plan for the future: further investment of NTD91 million into R&D Plan in the Scheduled Key factors to success of future R&D most recent Status to complete year in Collected The new December 1. Resolve such problems as old equipment note system is in 2013 and complicated operating procedures to operating the process make the operations uniform and upgrade system of efficiency. installation 2. Add such functions as image scanning, withdrawal and access at the branch ends to reduce the risk in loss of notes in the process of delivery.

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Plan in the Scheduled Key factors to success of future R&D plan for 2013. most recent Status to complete 2. Long-term business development plan: Please refer to Section Ⅲ year in Future Development Strategies of a Message to Shareholders. The new Under Phase I will generation of construction be launched II Employees e-Bank to service in (I) Employees’ information 1. Mobile Bank: This system allows the June 2013. Year Until Feb. 28, customers to access to the system for 2011 2012 Phase II will Item 2013 inquiry of the NTD accounts, fund be launched investment, or credit card business with More than 50 years old 110 138 145 to service Employee No. mobile devices (smart phone and tablets). in February More than 40 years old 870 907 902 In addition, the customers may also 2014. More than 30 years old 506 498 499 conduct prearranged fund transfer, payment by credit card, fund overview More than 20 years old 485 480 468 and related account transaction (it is Less than 20 years old 4 7 4 expected that the system accomplished in Phase I can provide the functions of Total 1,975 2,030 2,018 account inquiry and Phase II can provide Average age 37.3 37.6 37.8 transaction function). 10.7 2. Corporate banking network: this network Average seniority 10.6 10.8 provides the customers with multiple Master 8.7% 9.7% 9.7% Background languages support, group account service, Education Bachelor 55.9% 57.7% 57.9% global fund allocation service, and overview of cross-border account inquiry College 26.6% 25.2% 25.1% to meet the needs of the enterprises in Senior High School 8.8% 7.4% 7.3% internationalization and the capital needs of Taiwanese investors worldwide. This is Below Senior High School 0% 0% 0% a full-range and integrated financial Securities sales traders 316 324 331 service platform (it is expected that the Professional designation and lic Investment Insurance Products 947 973 979 system will be launched to service in Securities investment Phase II of the plan). 144 149 150 trust/investment advice sales traders 3. Private banking network: this system Initial credit extension personnel’s provides transaction services of fund 819 809 813 professional ability transfer in NTD and foreign currencies, Advanced credit extension online trading of fund units, online 42 39 36 transaction of passbook saving in gold, personnel’s professional ability credit card transaction inquiry and Futures sales traders 116 121 120 employees payment, payment of public utilities bills Life Insurance Agent 1,633 1,665 1,686 and fees (it is expected that the system Bond sales qualified in professional

ensing, and number of such 20 20 21 will be launched to service in Phase II of ability test the plan). Initial foreign exchange personnel’s 429 431 431 professional ability Wealth management and planning 517 511 511 Full-range The system is December Collection of school tuition fees, community personnel payment under 2013 management fee, membership fee or annual fee of Trust Operations Personnel 1,501 1,508 1,504 service planning groups and organizations, and business payment. In Bank’s internal control basic test 934 924 921 platform addition, diverse and convenient channels for payment will also be available to the customers Senior Securities sales traders 190 193 196 with rapid and accurate account settlement and Property Insurance Agent 1,584 1,598 1,612 matching platform. Notes and bills traders 20 23 23 (V) Long-term and short-term business development plans (業務部) 1. Short-term business development plan: Please refer to (Ⅱ) business

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plan for 2013. 2. Long-term business development plan: Please refer to Section Ⅲ Future Development Strategies of a Message to Shareholders.

II Employees (I) Employees’ information Year Until Feb. 28, 2011 2012 Item 2013 More than 50 years old 110 138 145 Employee No. More than 40 years old 870 907 902 More than 30 years old 506 498 499 More than 20 years old 485 480 468 Less than 20 years old 4 7 4 Total 1,975 2,030 2,018 Average age 37.3 37.6 37.8 Average seniority 10.7 10.6 10.8 Master 8.7% 9.7% 9.7% Background Education Bachelor 55.9% 57.7% 57.9% College 26.6% 25.2% 25.1% Senior High School 8.8% 7.4% 7.3% Below Senior High School 0% 0% 0% Securities sales traders 316 324 331

Professional designation and lic Investment Insurance Products 947 973 979 Securities investment 144 149 150 trust/investment advice sales traders Initial credit extension personnel’s 819 809 813 professional ability Advanced credit extension 42 39 36 personnel’s professional ability Futures sales traders 116 121 120 employees Life Insurance Agent 1,633 1,665 1,686 Bond sales qualified in professional

ensing, and number of such 20 20 21 ability test Initial foreign exchange personnel’s 429 431 431 professional ability Wealth management and planning 517 511 511 personnel Trust Operations Personnel 1,501 1,508 1,504 Bank’s internal control basic test 934 924 921 Senior Securities sales traders 190 193 196 Property Insurance Agent 1,584 1,598 1,612 Notes and bills traders 20 23 23

131131

Year Until Feb. 28, License By department Total Total 2011 2012 Item 2013 Other entities 13 Marketable securities, financing and 30 30 30 Treasury Dept. 13 financial instruments sales traders Initial foreign exchange personnel’s Accounting Dept. 3 431 Internal auditor 3 3 3 professional ability Audit Office 10 Stock affairs personnel qualified in 14 17 16 Other entities 405 professional ability test Treasury Dept. 14 Foreign exchange professional ability 7 8 8 Wealth management and planning Accounting Dept. 5 511 Financial personnel’s professional personnel Audit Office 14 ability in appraising collaterals for 7 9 9 Other entities 478 credit extension Treasury Dept. 18 Note: The employees include part-time student workers. Accounting Dept. 12 Trust Operations Personnel 1,504 (II) Personnel involved in the transparency of information licensed by the Audit Office 26 competent authority in designated area February 28 2013. Other entities 1,448 License By department Total Total Treasury Dept. 12 Accounting Dept. 6 Treasury Dept. 4 Bank’s internal control basic test 921 Accounting Dept. 4 Audit Office 17 Securities sales traders 331 Audit Office 8 Other entities 886 Treasury Dept. 13 Other entities 315 Accounting Dept. 4 Treasury Dept. 11 Senior Securities sales traders 196 Audit Office 3 Accounting Dept. 8 Investment Insurance Products 979 Other entities 176 Audit Office 18 Treasury Dept. 15 Other entities 942 Accounting Dept. 12 Property Insurance Agent 1,612 Treasury Dept. 11 Audit Office 32 Securities investment trust/investment Accounting Dept. 3 Other entities 1,553 150 advice sales traders Audit Office 2 Treasury Dept. 10 Accounting Dept. 3 Other entities 134 Notes and bills traders 23 Treasury Dept. 14 Audit Office 1 Initial credit extension personnel’s Accounting Dept. 5 Other entities 9 813 professional ability Audit Office 20 Treasury Dept. 1 Marketable securities, financing and Accounting Dept. 0 Other entities 774 30 financial instruments sales traders Audit Office 3 Treasury Dept. 0 Other entities 26 Advanced credit extension Accounting Dept. 0 36 Treasury Dept. 0 personnel’s professional ability Audit Office 0 Accounting Dept. 2 Internal auditor 3 Other entities 36 Audit Office 0 Treasury Dept. 8 Other entities 1 Accounting Dept. 1 Treasury Dept. 2 Futures sales traders 120 Audit Office 3 Stock affairs personnel qualified in Accounting Dept. 2 16 Other entities 108 professional ability test Audit Office 0 Treasury Dept. 17 Other entities 12 Accounting Dept. 12 Treasury Dept. 3 Life Insurance Agent 1,686 Accounting Dept. 1 Audit Office 30 Foreign exchange professional ability 8 Audit Office 0 Other entities 1,627 Other entities 4 Treasury Dept. 5 Bond sales qualified in professional Financial personnel’s professional Treasury Dept. 0 Accounting Dept. 2 21 ability test ability in appraising collaterals for Accounting Dept. 0 9 Audit Office 1 credit extension Audit Office 0

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License By department Total Total Other entities 13 Treasury Dept. 13 Initial foreign exchange personnel’s Accounting Dept. 3 431 professional ability Audit Office 10 Other entities 405 Treasury Dept. 14 Wealth management and planning Accounting Dept. 5 511 personnel Audit Office 14 Other entities 478 Treasury Dept. 18 Accounting Dept. 12 Trust Operations Personnel 1,504 Audit Office 26 Other entities 1,448 Treasury Dept. 12 Accounting Dept. 6 Bank’s internal control basic test 921 Audit Office 17 Other entities 886 Treasury Dept. 13 Accounting Dept. 4 Senior Securities sales traders 196 Audit Office 3 Other entities 176 Treasury Dept. 15 Accounting Dept. 12 Property Insurance Agent 1,612 Audit Office 32 Other entities 1,553 Treasury Dept. 10 Accounting Dept. 3 Notes and bills traders 23 Audit Office 1 Other entities 9 Treasury Dept. 1 Marketable securities, financing and Accounting Dept. 0 30 financial instruments sales traders Audit Office 3 Other entities 26 Treasury Dept. 0 Accounting Dept. 2 Internal auditor 3 Audit Office 0 Other entities 1 Treasury Dept. 2 Stock affairs personnel qualified in Accounting Dept. 2 16 professional ability test Audit Office 0 Other entities 12 Treasury Dept. 3 Accounting Dept. 1 Foreign exchange professional ability 8 Audit Office 0 Other entities 4 Financial personnel’s professional Treasury Dept. 0 ability in appraising collaterals for Accounting Dept. 0 9 credit extension Audit Office 0

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License By department Total Total perpetual corporate development. Other entities 9 (V) Employees’ code of conduct or ethics: (III) Continuing education and training programs related to corporate governance 1. All employees shall be law abiding and perform their duties with attended by managers: utmost effort. Please see Paragraph 7. Other information essential for the understanding of 2. The principles of honesty, integrity, caution, diligence shall be duly corporate governance on P.33. observed by all and there shall be no arrogance, greed, luxury, (IV) Employees’ advanced studies and training: The Bank firmly holds that the good nature and willingness to learn of the unrestrained, loitering and gambling at the expense of the employees are the corner stone for perpetual corporate development and reputation of the Bank. Be humble and courteous in treating the improvement. For this, the Bank makes tremendous effort in the customers and efficient at work. development of the employees. The Bank designs all education and 3. All employees shall keep the information on the business of the training program pursuant to Chapter X of the Human Resources Bank, the customers and their transactions with the Bank, and any Management Regulation, on “Continuing Education and Training”. These other secretive activities in strict confidence, and shall not disclose programs will be designed and launched by designated department to any third party. This code shall be applicable to employees who responsible for employee training, and will be designed to meet the resigned or discharged from the Bank. professional needs of respective functions of the Bank for upgrading its human capital and create competitive advantage. 4. Employees shall not have transaction with current customers of the 1. Learning and coaching all the times: Bank in lending and borrowing, or shall not act as guarantor or the Heritage and mentorship has always been the core value of our subject of guarantee. corporate culture. The Bank organizes different kinds of training 5. Employees shall not act as guarantor under their occupational title. programs for different banking functions (e.g.: deposit and 6. Employees shall not undertake any part-time work beyond the remittance, lending, and wealth management), and appoint duties of the Bank unless otherwise approved by the Bank. colleagues in professional standing in respective fields to act as the 7. Employees shall not run business homogenous to the operation of tutors in internal training for helping the employees in job design the Bank, and shall not engage in any speculative works privately. and career planning. In 2012, the Bank has organized 126 classes 8. Except in weekend and recognized holidays, employees shall report of trainings with 8,147 participants/participations. The spending on to duties in designated span of time, and shall be punctual and shall education and training amounted to NTD3.775 million in the same not leave their duties before the end of the working day. In addition, period. As of February 28 2013, the Bank has organized 13 no employee may be absent from their duties without the approval classes of training with 720 participants/participations. of the supervisor. 2. You will lose if you do not keep up with learning: The aforementioned regulations shall be posted in the official In attuning to the beats of the changeable market, the Bank requests website of the Bank for announcements for the inquiry and all employees to get familiarized with the latest knowledge in observance of the employees. (VI) Work environment and employees’ personal safety protection measures: banking and finance, product information, applicable laws and Item Contents systems, and market trend in order to provide good qualify 1. Under the precision entrance guard control system all day. professional service to the customers. In practice, the Bank Entrance guard 2. Contract with the security company to maintain the safety of the extensively dispatched its personnel to external training for new safety office premises at nighttime and holidays. knowledge. In 2012, the Bank has sent 1,001 persons/time to 3. Access to the police authority hotline for caution. participate in external training amounting to NTD1.335 million. 1. According to the Building Public Safety Inspection and Declaration Rules, the Bank will commission the profession service provider to As of February 28 2013, the Bank has sent 79 persons/times to conduct the public safety inspection and report per two or four external training. years. Maintenance 3. Enrich with knowledge and be courteous: 2. According to Fire Act, the Bank will outsource the fire inspection and inspection per year. The Bank upholds the philosophy of “whole-heartedness” and of equipment incorporated service courtesy and courteous languages in training. 3. According to the Labor Safety and Health Act, the Bank will conduct maintenance and inspection on high-voltage/low-voltage Through its internal operation procedure and education on the rule electrical and mechanical equipment, lifters, air conditioners, water of law, the Bank allows for the internalization of benevolence into dispensers and fire-protection equipment per month or six months. all employees, which will be manifested in their attitudes and Disaster The Bank has defined the instructions to rescue disasters and reporting behaviors in treating the customers and working. Employees with prevention procedure for occupational accidents, such as “Disaster Urgent Response competence and integrity will be the foundation of the Bank in measures and Action Manual”, “Guidelines for Dealing with Important Contingencies”, response “Instructions to Safety Protection and Organization of Relevant Business

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perpetual corporate development. (V) Employees’ code of conduct or ethics: 1. All employees shall be law abiding and perform their duties with utmost effort. 2. The principles of honesty, integrity, caution, diligence shall be duly observed by all and there shall be no arrogance, greed, luxury, unrestrained, loitering and gambling at the expense of the reputation of the Bank. Be humble and courteous in treating the customers and efficient at work. 3. All employees shall keep the information on the business of the Bank, the customers and their transactions with the Bank, and any other secretive activities in strict confidence, and shall not disclose to any third party. This code shall be applicable to employees who resigned or discharged from the Bank. 4. Employees shall not have transaction with current customers of the Bank in lending and borrowing, or shall not act as guarantor or the subject of guarantee. 5. Employees shall not act as guarantor under their occupational title. 6. Employees shall not undertake any part-time work beyond the duties of the Bank unless otherwise approved by the Bank. 7. Employees shall not run business homogenous to the operation of the Bank, and shall not engage in any speculative works privately. 8. Except in weekend and recognized holidays, employees shall report to duties in designated span of time, and shall be punctual and shall not leave their duties before the end of the working day. In addition, no employee may be absent from their duties without the approval of the supervisor. The aforementioned regulations shall be posted in the official website of the Bank for announcements for the inquiry and observance of the employees. (VI) Work environment and employees’ personal safety protection measures: Item Contents 1. Under the precision entrance guard control system all day. Entrance guard 2. Contract with the security company to maintain the safety of the safety office premises at nighttime and holidays. 3. Access to the police authority hotline for caution. 1. According to the Building Public Safety Inspection and Declaration Rules, the Bank will commission the profession service provider to conduct the public safety inspection and report per two or four years. Maintenance 2. According to Fire Act, the Bank will outsource the fire inspection and inspection per year. of equipment 3. According to the Labor Safety and Health Act, the Bank will conduct maintenance and inspection on high-voltage/low-voltage electrical and mechanical equipment, lifters, air conditioners, water dispensers and fire-protection equipment per month or six months. Disaster The Bank has defined the instructions to rescue disasters and reporting prevention procedure for occupational accidents, such as “Disaster Urgent Response measures and Action Manual”, “Guidelines for Dealing with Important Contingencies”, response “Instructions to Safety Protection and Organization of Relevant Business

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Item Contents the network, the monitoring and control of special accounts, data actions Units”, “Labor Safety and Health Automatic Inspection Plan”, and access, and routine review of log will be intensified. “Instructions to Maintenance of Facility Safety”, expressly defining the job (III) Emergency and safety protection assessments: responsibilities to be taken by the Bank’s staff before and after important 1. Disaster recovery site backup system: mainframe systems for NTD, events, such as force majeure and robbery, and also requiring the various foreign currencies, and trust, will be synchronized at the alternate business units to perform the robbery-proof drills for two times per year. site. The data will be synchronized to the disaster recovery backup 1. Health inspection: The Bank provides the in-service staff with the site at Panchiao. This enhance the capacity of the Bank in health inspection service per two years. responding to severe disasters and compressing the time of Physical/mental 2. No smoking at the business locations pursuant to requirements; recovery, reducing operation risk, and upgrading the customer health defining the complaining requirements and relevant punishment service level. rules against “Sexual Harassment Control”. 2. The data synchronizing storage system (EMC): This system offers 3. Set up the inter-bank forum as the opinion exchange platform. Be enrolled in the labor insurance and health insurance programs pursuant to synchronized storage of data. The synchronized data will be stored laws. In the case of any casualty, it is necessary to designate the dedicated in two different machine rooms and will upgrade the security of the Insurance personnel to safeguard evidence, contact the insurance company, work with data. After the merging with the sever virtualization system and the accidental liability insurance investigation conducted by the employer, related system, this system will also provide backup to different filing of the claims and report to the competent authority. machine rooms in order to reduce the operation risk under III Enterprise Responsibilities and Ethical Behavior disasters. Refer to 3-Corporate Governance Report → Ⅲ The Status of Corporate 3. Continuous Data Protection system (CDP): To provide the frequent Governance → (Ⅳ) The Status of Corporate Governance as required for banks, and data protection ability. 4. The file backup and storage system (NBU): Important files will be any nonconformity to the Corporate Governance Best-Practice Principles for backed up for easy recovery. Banking Industry and reasons thereof. → Ⅶ Other vital information that can help to 5. Virtualization of servers: To upgrade the backup ability of servers understand the status of corporate governance by the Bank, and 3 Corporate and comply with the Green IT energy conservation. Ⅲ Ⅵ Governance Report → The Status of Corporate Governance → ( ) The 6. Double system fire wall: Able to prevent any unlicensed link and Corporate Social Responsibility. access to the system. IV IT Equipment 7. Intrusion prevention system: Update the features of intrusion (I) The Bank has the following major IT systems: prevention system periodically, and send dedicated personnel to 1. NTD Account System: NEC dual mainframe and peripherals. continue analyzing the network attack packets detected by the 2. Foreign Exchange Account System: Sun duo server and intrusion prevention system, and submit the proposals to fix or peripherals. defend the intranet or internet threats, if any. Meanwhile, the Bank 3. Trust System: IBM server and peripherals. also prohibited internal users from using live messengers, P2P file 4. Call Center: Wintel multiple server and peripherals. sharing software and Tunnel software. 5. Network Bank System: Wintel multiple server and peripherals. 8. Filtering of webpages and mails: Filter the contents of webpages 6. e-ATM System: Wintel multiple server and peripherals. and mails to reduce the access of harmful contents (such as 7. Credit Card System: Wintel multiple server and peripherals. malicious software, malicious websites and spam) to the Bank’s 8. Customer relation management (CRM) application system: IBM intranet, and also prohibit users from accessing live messengers, server and peripherals. pornographic websites, illegal software, P2P file sharing, chatroom, (II) Plans for development and procurement in the future: streaming media and malicious websites to save the network 1. Gold passbook: provide a wider array of investment and wealth bandwidth and reduce the computer’s risk of being hacked. management tools and services to our customers. 9. Web Anti-defacement and Code Review: the former can help to 2. Mobile banking and the new generation e-Bank: In response to the prevent intentional attack to the internet bank, online ATM and the popularity of mobile communication and the change in the habits WAN system while the latter can help to eliminate program design of the users, the new generation of e-banking system and mobile error through the detection of the source code. banking system are built in 2013 and 2014. These systems will 10. Configuration of bandwidth management system: Configure the provide our customers good quality e-banking service and will help bandwidth management system at the Internet portal and all to upgrade the competitive power of the Bank and enhance the branches’ portals to make the related business access more operation performance of e-banking. bandwidth to facilitate the operations. 3. Information Security System: The IT Department of the Bank has 11. IP-MAC control: Lock the IP-MAC of computer equipments in all been accredited by BSI as dictated by the promulgation of the of the branches to prevent any access from external computers and Enforcement Rules of the Personal Information Protection Act. For to enhance the information security. the sustained reinforcement of data and asset protection, the Bank 12. Anti-virus software upgrade: Upgrade the anti-virus server will introduce the data event gathering and analysis system operating system and corporate anti-virus software release to whereby the control of the daily audit log of the system, access to

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the network, the monitoring and control of special accounts, data access, and routine review of log will be intensified. (III) Emergency and safety protection assessments: 1. Disaster recovery site backup system: mainframe systems for NTD, foreign currencies, and trust, will be synchronized at the alternate site. The data will be synchronized to the disaster recovery backup site at Panchiao. This enhance the capacity of the Bank in responding to severe disasters and compressing the time of recovery, reducing operation risk, and upgrading the customer service level. 2. The data synchronizing storage system (EMC): This system offers synchronized storage of data. The synchronized data will be stored in two different machine rooms and will upgrade the security of the data. After the merging with the sever virtualization system and related system, this system will also provide backup to different machine rooms in order to reduce the operation risk under disasters. 3. Continuous Data Protection system (CDP): To provide the frequent data protection ability. 4. The file backup and storage system (NBU): Important files will be backed up for easy recovery. 5. Virtualization of servers: To upgrade the backup ability of servers and comply with the Green IT energy conservation. 6. Double system fire wall: Able to prevent any unlicensed link and access to the system. 7. Intrusion prevention system: Update the features of intrusion prevention system periodically, and send dedicated personnel to continue analyzing the network attack packets detected by the intrusion prevention system, and submit the proposals to fix or defend the intranet or internet threats, if any. Meanwhile, the Bank also prohibited internal users from using live messengers, P2P file sharing software and Tunnel software. 8. Filtering of webpages and mails: Filter the contents of webpages and mails to reduce the access of harmful contents (such as malicious software, malicious websites and spam) to the Bank’s intranet, and also prohibit users from accessing live messengers, pornographic websites, illegal software, P2P file sharing, chatroom, streaming media and malicious websites to save the network bandwidth and reduce the computer’s risk of being hacked. 9. Web Anti-defacement and Code Review: the former can help to prevent intentional attack to the internet bank, online ATM and the WAN system while the latter can help to eliminate program design error through the detection of the source code. 10. Configuration of bandwidth management system: Configure the bandwidth management system at the Internet portal and all branches’ portals to make the related business access more bandwidth to facilitate the operations. 11. IP-MAC control: Lock the IP-MAC of computer equipments in all of the branches to prevent any access from external computers and to enhance the information security. 12. Anti-virus software upgrade: Upgrade the anti-virus server operating system and corporate anti-virus software release to

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provide more defensive measures and to reduce the infection of (2) The scope of labor-management meeting agenda: malicious software. development of labors, business plan and overview of 13. Configuration of Microsoft AD directory service and information business, mediation of labor-management relations, center safety audit platform: Configure the lowest-layer promotion of labor-management cooperation, labor terms certification and management platform to enhance the and conditions, labor benefits planning, and enhancement centralization of computer management affairs and other of working efficiency. information safety management. (II) Labor-management dispute 14. According to the Guidelines for Business Continuity Management, Countermeasures and Counterpart Descriptions Status the mainframe system for information at “essential” level (NTD, anticipated loss foreign currencies, trust, internet banking) shall be subject to The case is still in Judicial proceeding exercise drill under different environments at least once every half Claim for disbursement of proceeding, no loss or Lin oo of the 1st instance in year. The mainframe system for information at the levels of pension compensation for the progress “second importance” and “regular” shall be subject to exercise drill time being. and recovery at regular intervals. 1. Incomplete remuneration, The case is still in Judicial proceeding 15. Proceed with information safety propagation and education per including deferred proceeding, no loss or Lin oo of the 1st instance in year. payment. compensation for the progress V Labor-Management Relations 2. pension for pacifying time being. (I) Current important employees’ interest, Labor-Management Agreement and Labor-management the status of execution Labor-management dispute in mediation Claim for disbursement of 1. Staff fringe benefits Wu oo dispute not yet process. No loss or pension (1) Provide labor insurance, national health insurance, and settled compensation for the group accident insurance. time being. (2) Staff bonus and Free-Gratis Dividends. (3) Scholarships for the children of Staffs. VI Major Agreements (4) Gifts for Spring Festival and Mid-Autumn Festival, Nature of Contracting Limitation Term of Agreement Summary Content subsidies for marriage, funeral and other celebrities, funds agreement Parties Article for travels, and staff birthdays. Leebao Labor service June 1 2009 – May 31 2012 Outsourced fund (5) Periodic health inspection. Security Co., None contracts (extended to May 31 2013). delivery services 2. Retirement System Ltd. (1) Pension will be disbursed to employees under the Goyun Labor service Security guard Retirement Regulation of the Bank. Security Co., Sep. 1 2012 – Aug. 30 2014 None contracts on-site services (2) The Bank contributed to the employee pension fund under Ltd. the Statute for Labor Retirement. NEC mainframe Lease NEC Taiwan (3) Traveling expenses, birthday celebration subsidy and gifts Sep. 15 2012 – Sep. 14 2015 system maintenance None agreement Ltd. for employees about to retire. service 3. Other important benefits Remote backup Lease NEC Taiwan (1) At the end of the year, employees may apply for retaining Sep. 1 2012 – Aug. 31 2015 support for foreign None agreement Ltd. the unconsumed special leave until Q3 of next year insofar exchange server as the special leave not consumed by the employees is less Ares SWIFT software Lease than one-thirds of the total days of the special leave in the International Feb. 1 2012 – Jan. 31 2015 professional None agreement current year. Corporation consultation service (2) In 2012, the Bank has elected 76 personnel for a seminar Lease Lease of telephone CHT Nov. 12 2010 – Oct. 31 2018 None tour to Kunming, China in different batches. agreement switching system (3) Rules for Reward & Compensation for the Acquisition Backup ability of of License and Certificate by Staff. Purchase NEC Taiwan open system and July 30 2010 – July 29 2013 None 4. Labor-management agreement: None contracts Ltd. expansion of backup 5. Employees’ interest and right protection assessments capacity (1) Personnel Review Committee’s functions: review of HTS e-Trading in-service staff’s promotion and performance appraisal K Way System and Platform Purchase Feb. 8 2012-Configuration guidelines, review of in-service staff’s promotion and Information Integration Program None contracts Completed performance appraisal cases, and review of employees’ Co., Ltd. software and reward and punishment, and review of applications. hardware

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(2) The scope of labor-management meeting agenda: development of labors, business plan and overview of business, mediation of labor-management relations, promotion of labor-management cooperation, labor terms and conditions, labor benefits planning, and enhancement of working efficiency. (II) Labor-management dispute Countermeasures and Counterpart Descriptions Status anticipated loss The case is still in Judicial proceeding Claim for disbursement of proceeding, no loss or Lin oo of the 1st instance in pension compensation for the progress time being. 1. Incomplete remuneration, The case is still in Judicial proceeding including deferred proceeding, no loss or Lin oo of the 1st instance in payment. compensation for the progress 2. pension for pacifying time being. Labor-management Labor-management dispute in mediation Claim for disbursement of Wu oo dispute not yet process. No loss or pension settled compensation for the time being. VI Major Agreements Nature of Contracting Limitation Term of Agreement Summary Content agreement Parties Article Leebao Labor service June 1 2009 – May 31 2012 Outsourced fund Security Co., None contracts (extended to May 31 2013). delivery services Ltd. Goyun Labor service Security guard Security Co., Sep. 1 2012 – Aug. 30 2014 None contracts on-site services Ltd. NEC mainframe Lease NEC Taiwan Sep. 15 2012 – Sep. 14 2015 system maintenance None agreement Ltd. service Remote backup Lease NEC Taiwan Sep. 1 2012 – Aug. 31 2015 support for foreign None agreement Ltd. exchange server Ares SWIFT software Lease International Feb. 1 2012 – Jan. 31 2015 professional None agreement Corporation consultation service Lease Lease of telephone CHT Nov. 12 2010 – Oct. 31 2018 None agreement switching system Backup ability of Purchase NEC Taiwan open system and July 30 2010 – July 29 2013 None contracts Ltd. expansion of backup capacity HTS e-Trading K Way System and Platform Purchase Feb. 8 2012-Configuration Information Integration Program None contracts Completed Co., Ltd. software and hardware

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Nature of Contracting Limitation Year Financial information from the past five years (note) Term of Agreement Summary Content agreement Parties Article Item 2008 2009 2010 2011 2012 Data warehouse and through profit or loss relations with Available-for-Sale Financial Purchase Dec. 2 2011-Configuration - 678,453 1,099,035 4,211,580 18,519,719 IBM customers None Assets contracts Completed management system Discounts and loans 201,741,645 217,689,020 244,463,233 277,756,366 324,029,419 configuration Accounts receivable 2,625,758 3,540,368 3,389,297 2,888,283 2,553,343 Purchase Dec. 27 2012-Configuration 2nd generation Financial assets held to IBM None 14,770,415 12,696,240 10,382,868 9,439,040 8,782,945 contracts Completed e-Banking system maturity Outsourced works on Stocks- equity method 90,275 291,021 337,561 216,970 1,295,662 Outsourcing Chunghwa mutual funds Assets held for sale - - 150,763 41,639 - May 1 2012-Apr. 30 2013 None Agreement Post Co., Ltd. transactions Fixed assets 3,672,458 3,562,226 3,230,721 3,335,981 3,325,763 statements Other financial assets 181,549 181,549 144,453 850,396 905,934 Statement of Other assets 3,392,549 2,930,173 2,338,643 1,892,043 1,811,777 accounts or notice Total assets 285,744,114 309,503,421 340,464,925 384,346,681 444,372,068 sent periodically or Due to Central Bank of China Outsourcing Yuen Foong irregularly in 3,450,987 6,470,385 2,306,957 3,439,998 5,151,548 Apr.14 2012 – Apr. 13 2013 None and banks Agreement Paper Co., Ltd. accordance with the Customer deposits and 258,881,337 276,577,319 302,849,512 333,832,631 385,862,841 requirements of the remittances competent authority Financial liabilities at fair 654,605 67,348 110,069 51,804 91,591 or the Bank value through profit or loss Processing of Outsourcing Bills and bonds sold under TWNCH Aug. 15 2012 – Aug. 14 2013 non-MICR None - - 1,477,800 - 264,045 Agreement repurchase agreements instruments Funds borrowed from CBC Transnational Delivery service of - 320,300 1,602,150 2,877,550 1,887,600 Outsourcing and other banks Group of Apr. 20 2012 – Apr. 19 2013 financial instruments None Agreement Financial bonds payable 2,400,000 6,600,000 8,300,000 10,512,559 13,548,277 Companies and documents Exclusive check Payables 4,235,256 3,504,465 3,872,015 7,683,501 8,896,768 Well Long Outsourcing books provided to Accruable pension liabilities 118,128 173,748 122,602 136,764 223,704 Information July 1 2012 – Jun. 30 2013 None Agreement customers to Other financial liabilities - - - 22,521 17,208 Co., Ltd. facilitate branches Other liabilities 498,843 428,853 408,800 328,299 347,386 Hardware Before Centralized 270,239,156 294,142,418 321,049,905 358,885,627 416,290,968 equipment New Image June 1 2010-Configuration Distribution operating system for None Total liabilities procurement Co., Ltd. Completed After seizure of deposits 270,383,206 294,142,418 321,049,905 358,997,320 - agreement Distribution Maintenance of Capital stock 13,719,006 13,719,006 17,319,006 22,338,576 23,187,442 Maintenance Harmonation Oct. 1 2012 – Sep. 30 2013 collected note None Capital surplus 750,000 766,813 792,069 675,537 675,537 agreement Inc. scanners, et al. Before 742,399 617,337 1,029,293 2,212,377 4,029,776 Maintenance Harmonation Maintenance of high Retained Distribution Oct. 1 2012 – Sep. 30 2013 None earnings After agreement Inc. speed draft machine 598,349 617,337 734,870 1,251,818 - Distribution VII Securitized products and related information: None Unrealized revaluation 6 Financial Status 293,553 283,744 283,744 283,744 283,744 increment I Brief Balance Sheet and Income Statement from the most recent five years – R.O.C. Unrealized gain/loss from GAAP - (25,897) (9,092) 10,960 91,865 Brief Balance Sheet Unit: NTD thousand financial instruments Adjustment of accumulated Year Financial information from the past five years (note) - - - - 477 conversion Item 2008 2009 2010 2011 2012 - - - (60,140) (187, 741) Cash and cash equivalent Other shareholders’ equity Before Due from Central Bank of 58,731,905 67,439,659 73,281,789 82,617,614 76,602,227 Total 15,504,958 15,361,003 19,415,020 25,461,054 28,081,100 Distribution China and lend to Banks shareholders’ After Financial assets at fair value 537,560 494,712 1,646,562 1,096,769 6,545,279 equity 15,360,908 15,361,003 19,415,020 25,349,361 - Distribution

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Year Financial information from the past five years (note) Item 2008 2009 2010 2011 2012 through profit or loss Available-for-Sale Financial - 678,453 1,099,035 4,211,580 18,519,719 Assets Discounts and loans 201,741,645 217,689,020 244,463,233 277,756,366 324,029,419 Accounts receivable 2,625,758 3,540,368 3,389,297 2,888,283 2,553,343 Financial assets held to 14,770,415 12,696,240 10,382,868 9,439,040 8,782,945 maturity Stocks- equity method 90,275 291,021 337,561 216,970 1,295,662 Assets held for sale - - 150,763 41,639 - Fixed assets 3,672,458 3,562,226 3,230,721 3,335,981 3,325,763 Other financial assets 181,549 181,549 144,453 850,396 905,934 Other assets 3,392,549 2,930,173 2,338,643 1,892,043 1,811,777 Total assets 285,744,114 309,503,421 340,464,925 384,346,681 444,372,068 Due to Central Bank of China 3,450,987 6,470,385 2,306,957 3,439,998 5,151,548 and banks Customer deposits and 258,881,337 276,577,319 302,849,512 333,832,631 385,862,841 remittances Financial liabilities at fair 654,605 67,348 110,069 51,804 91,591 value through profit or loss Bills and bonds sold under - - 1,477,800 - 264,045 repurchase agreements Funds borrowed from CBC - 320,300 1,602,150 2,877,550 1,887,600 and other banks Financial bonds payable 2,400,000 6,600,000 8,300,000 10,512,559 13,548,277 Payables 4,235,256 3,504,465 3,872,015 7,683,501 8,896,768 Accruable pension liabilities 118,128 173,748 122,602 136,764 223,704 Other financial liabilities - - - 22,521 17,208 Other liabilities 498,843 428,853 408,800 328,299 347,386 Before 270,239,156 294,142,418 321,049,905 358,885,627 416,290,968 Distribution Total liabilities After 270,383,206 294,142,418 321,049,905 358,997,320 - Distribution Capital stock 13,719,006 13,719,006 17,319,006 22,338,576 23,187,442 Capital surplus 750,000 766,813 792,069 675,537 675,537 Before 742,399 617,337 1,029,293 2,212,377 4,029,776 Retained Distribution earnings After 598,349 617,337 734,870 1,251,818 - Distribution Unrealized revaluation 293,553 283,744 283,744 283,744 283,744 increment Unrealized gain/loss from - (25,897) (9,092) 10,960 91,865 financial instruments Adjustment of accumulated - - - - 477 conversion Other shareholders’ equity - - - (60,140) (187, 741) Before Total 15,504,958 15,361,003 19,415,020 25,461,054 28,081,100 Distribution shareholders’ After equity 15,360,908 15,361,003 19,415,020 25,349,361 - Distribution

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Note: The financial information for the most recent five years has been audited by accountant. Information from simplified balance sheet and statement of comprehensive income Brief Income Statement Unit: NTD thousand; EPS: NTD Brief Balance Sheet Unit: NTD thousand Year Financial information from the past five years (note) Year Current year Item 2008 2009 2010 2011 2012 financial Net interest information up to 5,430,157 3,629,406 4,383,460 4,943,296 5,459,110 income Item 2013.2.28 (note) Cash and cash equivalent, Due from Net income other 75,742,681 than interest (281,113) (321,356) 154,137 769,561 1,394,607 Central Bank of China and lend to Banks Financial assets at fair value through income 6,952,947 Bad debt expenses (1,788,126) (349,553) (933,359) (664,948) (238,244) profit and loss Operating Available-for-Sale Financial Assets 20,953,253 (3,103,251) (2,668,676) (2,765,417) (3,133,733) (3,311,211) Bonds and securities sold under expenses 4,908,968 Income before repurchase agreements taxation of Receivable, net 4,029,272 257,667 289,821 838,821 1,914,176 3,304,262 continued Current income tax asset 82,934 operations Notes discounted and loans – net 321,062,019 Income after Held-to-maturity financial assets 9,371,617 taxation of Investment by equity method – net 1,305,905 205,535 18,988 411,956 1,454,000 2,777,958 continued Other financial assets – net 1,112,477 operations Property, plant, and equipment – net 3,375,403 Net income 205,535 18,988 411,956 1,454,000 2,777,958 Intangible assets – net 61,522 Earnings Per Deferred tax assets – net 523,765 0.15 0.01 0.29 0.76 1.20 Share Other assets 596,230 Note 1: The financial information for the most recent five years has been audited by accountant. Total assets 450,078,993 Note 2: Per board resolutions dated 2010.11.4 and 2011.7.7, respectively, our bank has decided to increase Due to Central Bank of China and banks 5,513,120 paid-in capital by issuing and selling 360 million and 450 million shares of common stock, Funds borrowed from CBC and other respectively, for cash. Taking into consideration the retained earnings appropriated for capital 1,928,225 increase in 2010 and 2011, and the capital reserve appropriated for capital increase in 2010, the banks weighted average number of shares outstanding and earnings per share from 2008 to 2011 should Financial liabilities at fair value through 90,517 be adjusted retrospectively. profit and loss Bills and bonds sold under repurchase 257,218 agreements Payables 9,537,960 Current tax liabilities 127,412 Customer deposits and remittances 389,521,694 Bonds payable 13,554,035 Other financial liabilities 14,555 Liability reserve 239,143 Deferred tax liabilities 111,021 Other liabilities 293,822 Before Distribution 421,188,722 Total liabilities After Distribution - Equity of the parent company - Capital stock 23,187,442 Capital surplus 675,537 Before Distribution 5,077,074 Retained earnings After Distribution - Other equity (49,782) Treasury stock - Non-controlling interest - Before Distribution 28,890,271 Total equity After Distribution -

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Information from simplified balance sheet and statement of comprehensive income Brief Balance Sheet Unit: NTD thousand Year Current year financial information up to Item 2013.2.28 (note) Cash and cash equivalent, Due from 75,742,681 Central Bank of China and lend to Banks Financial assets at fair value through 6,952,947 profit and loss Available-for-Sale Financial Assets 20,953,253 Bonds and securities sold under 4,908,968 repurchase agreements Receivable, net 4,029,272 Current income tax asset 82,934 Notes discounted and loans – net 321,062,019 Held-to-maturity financial assets 9,371,617 Investment by equity method – net 1,305,905 Other financial assets – net 1,112,477 Property, plant, and equipment – net 3,375,403 Intangible assets – net 61,522 Deferred tax assets – net 523,765 Other assets 596,230 Total assets 450,078,993 Due to Central Bank of China and banks 5,513,120 Funds borrowed from CBC and other 1,928,225 banks Financial liabilities at fair value through 90,517 profit and loss Bills and bonds sold under repurchase 257,218 agreements Payables 9,537,960 Current tax liabilities 127,412 Customer deposits and remittances 389,521,694 Bonds payable 13,554,035 Other financial liabilities 14,555 Liability reserve 239,143 Deferred tax liabilities 111,021 Other liabilities 293,822 Before Distribution 421,188,722 Total liabilities After Distribution - Equity of the parent company - Capital stock 23,187,442 Capital surplus 675,537 Before Distribution 5,077,074 Retained earnings After Distribution - Other equity (49,782) Treasury stock - Non-controlling interest - Before Distribution 28,890,271 Total equity After Distribution -

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Note: Current year financial information up to 2013.2.28 is prepared by us. II Financial Analysis for the most recent five years Brief Income Statement Unit: NTD thousand Financial Analysis Unit: NTD thousand Year Current year Consolidated financial financial Year Financial Analysis for the most recent five years analysis for the most information up to recent two years Analytical items Item 2013.2.28 (note) 2008 2009 2010 2011 2012 2011 2012 Interest revenue 1,539,890 Loans to deposits ratio 79.06 79.65 81.60 84.08 84.82 84.12 84.90 Less: interest expense (579,608) NPL ratio 1.54 1.27 0.60 0.30 0.37 0.30 0.37 Net interest income 960,282 Interest expenses to Net income other than interest income 294,814 annual average deposit 1.57 0.89 0.60 0.78 0.87 0.78 0.88 ratio Net revenue 1,255,096 Interest income to Bad debt expense and guaranty reserve (86,085) Operating annual average loan 4.60 2.77 2.57 2.76 2.77 2.76 2.78 ability Operating expenses (612,295) ratio Total assets turnover Business units in continuing operation 1.81 1.07 1.33 1.49 1.54 1.50 1.58 556,716 (times) Net profit before taxation Average operation 2,585 1,773 2,481 2,893 3,376 2,888 3,354 Income tax (expense) gain 83,758 revenue per employee Average profit per Current year profit of continuing 103 10 225 736 1,368 727 1,323 472,958 employee business units Return on Tier I Capital 1.69 1.94 5.04 8.95 13.03 9.01 12.95 Current year net profit (net loss) 472,958 ROA 0.07 0.01 0.13 0.40 0.67 0.40 0.67 Current year other comprehensive (54) ROE 1.31 0.12 2.37 6.48 10.38 6.48 10.38 income (net, after tax) Profitability Current year other comprehensive Net profit rate 3.99 0.57 9.08 25.45 40.53 25.16 39.46 472,904 Earnings Per Share income. (Gross) (NTD) 0.15 0.01 0.29 0.76 1.20 0.76 1.20 Net profit attributable to parent Liabilities to total assets 472,958 ratio 94.53 95.02 94.28 93.37 93.67 93.37 93.68 company Financial Fixed assets to Net profit attributable to structure - shareholders’ equity 23.69 23.19 16.64 13.10 11.84 13.11 11.93 non-controlling interest ratio Comprehensive income, gross, and net Asset Growth Rate 8.58 8.31 10.00 12.89 15.62 12.93 15.73 472,904 Growth rate profit attributable to parent company Profit Growth Rate (87.75) 12.48 189.43 128.20 72.62 120.70 71.97 Comprehensive income, gross, Cash flow ratio 75.81 - 32.51 58.59 - 57.56 - - Cash flow adequacy attributable to non-controlling interest 921.43 527.99 311.62 744.94 704.58 756.53 648.27 Cash flows ratio Earnings Per Share 0.20 Cash flow for operating Note: Current year financial information up to 2013.2.28 is prepared by us. to cash flow from (15.99) - (7.29) (16.56) - (16.32) - investing ratio The names of CPA conducting financial audits in the most recent five years and their audit Liquidity Reserve Ratio 17.57 19.07 19.03 19.63 19.74 19.63 19.74 opinions Related party secured loans 1,378,697 1,337,906 1,219,243 1,377,605 1,869,324 1,377,605 1,869,324 Related party secured loans to total loan Year 0.66 0.60 0.49 0.48 0.56 0.48 0.56 2008 2009 2010 2011 2012 ratio Audit Asset market 0.71 0.76 0.79 0.84 0.94 0.84 0.94 Deloitte & Wen-Ya Hsu Wen-Ya Hsu Wen-Ya Hsu Wen-Ya Hsu Wen-Ya Hsu share Market share of Touche Hsiun-Lien Lin Hsiun-Lien Lin Tzu-Chun Wang Tzu-Chun Wang Tzu-Chun Wang 0.73 0.66 0.78 0.98 1.00 0.98 1.00 net worth Modified Modified Modified Modified Modified Operating Scale Market share of 0.95 0.96 1.00 1.06 1.18 1.06 1.18 Audit unqualified unqualified unqualified unqualified unqualified deposits opinions opinions opinions opinions opinions opinions Market share of 1.11 1.18 1.25 1.34 1.51 1.34 1.51 (Note 1) (Note 2) (Note 2) (Note 2) (Note 2) loans Note 1: As of January 1, 2008 official letter under Ji-Mi-Zi No. 052 issued by Accounting Research and Development Foundation in Taiwan was applied. Accordingly, the employee bonus and remuneration to directors/supervisors shall be stated as expenses instead of allocation of earnings. Modified unqualified opinions have been issued for the change in the accounting principles. Note 2: The CPA audited the equity investment of Reliance Securities Investment Trust Co., Ltd. and Taichung Commercial Bank Lease Enterprise under equity method in the financial statements 2009, 2010, 2011 and 2012 based on the audit report issued by the other CPA, and the modified unqualified opinions were issued therefore.

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II Financial Analysis for the most recent five years Financial Analysis Unit: NTD thousand Consolidated financial Year Financial Analysis for the most recent five years analysis for the most recent two years Analytical items 2008 2009 2010 2011 2012 2011 2012 Loans to deposits ratio 79.06 79.65 81.60 84.08 84.82 84.12 84.90 NPL ratio 1.54 1.27 0.60 0.30 0.37 0.30 0.37 Interest expenses to annual average deposit 1.57 0.89 0.60 0.78 0.87 0.78 0.88 ratio Interest income to Operating annual average loan 4.60 2.77 2.57 2.76 2.77 2.76 2.78 ability ratio Total assets turnover (times) 1.81 1.07 1.33 1.49 1.54 1.50 1.58 Average operation revenue per employee 2,585 1,773 2,481 2,893 3,376 2,888 3,354 Average profit per employee 103 10 225 736 1,368 727 1,323 Return on Tier I Capital 1.69 1.94 5.04 8.95 13.03 9.01 12.95 ROA 0.07 0.01 0.13 0.40 0.67 0.40 0.67

Profitability ROE 1.31 0.12 2.37 6.48 10.38 6.48 10.38 Net profit rate 3.99 0.57 9.08 25.45 40.53 25.16 39.46 Earnings Per Share (NTD) 0.15 0.01 0.29 0.76 1.20 0.76 1.20 Liabilities to total assets ratio 94.53 95.02 94.28 93.37 93.67 93.37 93.68 Financial Fixed assets to structure shareholders’ equity 23.69 23.19 16.64 13.10 11.84 13.11 11.93 ratio Asset Growth Rate 8.58 8.31 10.00 12.89 15.62 12.93 15.73 Growth rate Profit Growth Rate (87.75) 12.48 189.43 128.20 72.62 120.70 71.97 Cash flow ratio 75.81 - 32.51 58.59 - 57.56 - Cash flow adequacy 921.43 527.99 311.62 744.94 704.58 756.53 648.27 Cash flows ratio Cash flow for operating to cash flow from (15.99) - (7.29) (16.56) - (16.32) - investing ratio Liquidity Reserve Ratio 17.57 19.07 19.03 19.63 19.74 19.63 19.74 Related party secured loans 1,378,697 1,337,906 1,219,243 1,377,605 1,869,324 1,377,605 1,869,324 Related party secured loans to total loan ratio 0.66 0.60 0.49 0.48 0.56 0.48 0.56 Asset market 0.71 0.76 0.79 0.84 0.94 0.84 0.94 share Market share of 0.73 0.66 0.78 0.98 1.00 0.98 1.00 net worth Operating Scale Market share of 0.95 0.96 1.00 1.06 1.18 1.06 1.18 deposits Market share of 1.11 1.18 1.25 1.34 1.51 1.34 1.51 loans

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Explanation for the reason of changes in financial ratios in the past two years (may be omitted if the change is less than 1. Weighted average quantity of shares is on the basis of common stock, not the outstanding shares as of the end of the year. 20%): 2. The quantity of new shares for raising new capital or treasury stock trade shall be included in the I Past-due loan ratio increased because, in April 2012,the NTD 310 million loan to ProMOS Technologies has weighted average quantity of shares during their effective term. been classified as past-due as advised by government authority. 3. Where the shares may be issued through the capitalization of retained earnings or capital surplus, II The increase in interest expenses to average deposit balance ratio is a result of the average deposit balance in make adjustment in proportion to the quantity of shares issued in calculating the semi-annual or 2012 more than that in 2011 by NTD44,107 million, and the increase in average interest rate for time deposit annual EARNINGS PER SHARE of the year. The period for the release of such new shares may be and saving deposit by 0.1%. omitted. III The drastic increase in average profit per employee, return on Tier 1 Capital, ROA, ROE, profit rate and EPS is 4. If the preferred stock is non-convertible cumulative preferred stocks, dividend for the year (issued or not) shall be subtracted from earnings or added to earnings. a result of the income before income tax and income after income tax in 2012 more than those in 2011 (income 5. If the preferred stock is non-cumulative preferred stocks, dividend on the preferred stock shall be before income tax by NTD1,390 million and income after income tax by NTD1,324 million). subtracted from earnings after income tax, if any. If there are no earnings after income tax, no IV The increase in asset growth rate is a result of the increase in total assets by NTD60,025 million in 2012, more adjustment shall be made. than that, NTD43,882 million, in the total assets in 2011. The increase of total assets in 2012 is mostly derived Note 5: Financial institutions that can undertake deposits and withdrawals included domestic banks, branches of foreign from the NTD 46,273 million increase in discount operations and loans, and the NTD 14,308 million increase in banks in Taiwan, Credit Unions, Credit Departments of Farmers and Fishermen Associations, and investment held-for-sale financial assets. The increase of total assets in 2011 is mostly derived from the NTD 33,293 trust firms. Note 6: Return rate refers to the total of incomes from interests and other sources. million increase in discount operations and loans, the NTD 5,655 million increase of deposit at central bank and Note 7: Consider the followings in conducting cash flow analysis: interbank loans, and the NTD 3,113 million increase in held-for-sale financial assets. 1. Net cash flow from operation refers to net cash inflow from operation as stated in the Statement of V The decrease in profit growth rate is a result of the increase in the income before income tax in 2011, NTD1,914 Cash Flow. million, more than that in 2010, NTD839 million, by 128% (due to the low base period in 2010), and the 2. Capital spending refers to the cash outflow to annual capital investments. increase in the income before income tax in 2012, NTD3,304 million, more than that in 2011, NTD1,914 3. Cash Dividends includes the dividends in cash paid to holders of common shares and preferred shares. million, by 73% (due to the high base period in 2011). 4. Gross fixed assets refer to total fixed assets before subtracting by accumulated depreciation. VI The total balance of secured loans to related parties increased due to the NTD 492 million increase in secured loans to related parties. Note 1: The financial information for the most recent five years and the consolidated financial information for the most recent two years have been audited. Note 2: Equations for financial analysis: 1. Operating ability (1) Loans/deposits ratio = Total amount/total deposits. (2) NPL rate = Total non-performing loans/Total amount. (3) Interest expense to average annual deposit balance ratio = total interest expenses/average annual deposit balance (4) Interest income to average annual loan balance ratio = total interest incomes/average annual loan balance (5) Total assets turnover rate = Earnings/Total assets. (6) Employee average return (Note 6) = Earning/Total Employee No. (7) Employee average profit rate = Earnings/Total Employee No. 2. Profitability (1) Return on Tier I Capital = EBT/Average total amount of Tier I capital. (2) ROA = Income after taxation/Average total assets. (3) ROE = Income after taxation/Average net shareholders equity. (4) Profit rate = Income after taxation/income-net. (5) Earnings Per Share = (earnings – dividends from preferred shares)/weighed average quantity of outstanding shares. (Note 4) 3. Financial structure (1) Liabilities to total assets =Total liabilities/total assets. (2) Fixed assets to net worth =net total assets/net shareholders’ equity. 4. Growth rate (1) Asset growth rate = (Total assets of current year – total assets of previous year)/total assets of previous year. (2) Profit growth rate = (EBT of current year – EBT of previous year)/EBT of previous year. 5. Cash flow (Note 7) (1) Cash flow ratio= net cash flow from operation /(Call loans and overdraft from banks + payable CP + financial liabilities which change in fair value is recognized as gain (loss) + R/P and bond liabilities + current portion of payables. (2) Net cash flow adequacy rate= net cash flow from operation in the last 5 years/ (capital spending + Cash Dividends) in the last 5 years. (3) Cash flow satisfied rate = Cash flow from operation/ cash flow from investments. 6. Liquidity Reserve Ratio = Central Bank Required Current Assets/Allowance for liquidity of liabilities. 7. Operating Scale (1) Asset market share rate = Total assets/total assets of all financial institutions available for making deposits and loans) (Note 5). (2) Net worth market share rate = Net worth/total net worth of all financial institutions available for making deposits and loans. (3) Deposit market share rate = total deposits/total deposits of all financial institutions available for making deposits and loans. (4) Loan market share rate = Total amount/Total amount of all financial institutions available for making deposits and loans. Note 3: Total liabilities net of reserve, allowance for loss from bill trade, allowance for default, and allowance for contingency. Note 4: The following shall be considered in assessing the equation for EARNINGS PER SHARE as aforementioned:

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1. Weighted average quantity of shares is on the basis of common stock, not the outstanding shares as of the end of the year. 2. The quantity of new shares for raising new capital or treasury stock trade shall be included in the weighted average quantity of shares during their effective term. 3. Where the shares may be issued through the capitalization of retained earnings or capital surplus, make adjustment in proportion to the quantity of shares issued in calculating the semi-annual or annual EARNINGS PER SHARE of the year. The period for the release of such new shares may be omitted. 4. If the preferred stock is non-convertible cumulative preferred stocks, dividend for the year (issued or not) shall be subtracted from earnings or added to earnings. 5. If the preferred stock is non-cumulative preferred stocks, dividend on the preferred stock shall be subtracted from earnings after income tax, if any. If there are no earnings after income tax, no adjustment shall be made. Note 5: Financial institutions that can undertake deposits and withdrawals included domestic banks, branches of foreign banks in Taiwan, Credit Unions, Credit Departments of Farmers and Fishermen Associations, and investment trust firms. Note 6: Return rate refers to the total of incomes from interests and other sources. Note 7: Consider the followings in conducting cash flow analysis: 1. Net cash flow from operation refers to net cash inflow from operation as stated in the Statement of Cash Flow. 2. Capital spending refers to the cash outflow to annual capital investments. 3. Cash Dividends includes the dividends in cash paid to holders of common shares and preferred shares. 4. Gross fixed assets refer to total fixed assets before subtracting by accumulated depreciation.

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Capital Adequacy Unit: NTD thousand Year (note 1) Consolidated Capital Capital adequacy ratio in the past five years adequacy ratio in the last 2 years Analytical items 2008 2009 2010 2011 2012 2011 2012

Common stock 13,719,006 13,719,006 17,319,006 22,338,576 23,187,442 22,338,576 23,187,442 Perpetual non-cumulative ------preferred shares Non-cumulative subordinated debt ------without maturity date Capital collected in ------advance Capital reserves (except the value appreciation 750,000 766,813 792,069 675,537 675,537 675,537 675,537 Tier I Capital Tier I Capital of fixed assets) Legal reserve 532,993 594,653 600,350 723,937 1,160,137 723,937 1,160,137

Special reserve - - 16,987 32,599 83,647 32,599 83,647 Accumulated profit or 209,406 22,684 411,956 1,455,841 2,785,992 1,455,841 2,785,992 loss Minority equity ------Other shareholders’ - (30,491) (20,903) (65,005) (187,505) (65,005) (187,505) Self-owned Capital Self-owned equity Less: goodwill ------Less: unamortized loss ------from sale of NPL Less: capital deductions 121,012 221,385 670,169 842,498 1,300,377 797,919 715,888

Total Tier I capital 15,090,393 14,851,280 18,449,296 24,318,987 26,404,873 24,363,566 26,989,362 Perpetual cumulative ------preferred shares Cumulative subordinated debt ------without maturity date Fixed asset revaluation increment surplus 293,553 283,744 283,744 283,744 283,744 283,744 283,744 Tier II Capital Tier II Capital (including appreciations) 45% of unrealized gain on available-for-sale - 2,067 5,138 4,492 32,409 4,492 32,409 financial Convertible Bonds ------Operating reserve and 662,655 63,699 - - - - - provisions for bad debts Long-term subordinated 1,920,000 5,640,000 6,860,000 5,500,000 6,840,000 5,500,000 6,840,000 bond Non-perpetual preferred ------stock

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Capital Adequacy Unit: NTD thousand Year (note 1) Consolidated Capital Capital adequacy ratio in the past five years adequacy ratio in the last Year (note 1) Consolidated Capital 2 years Capital adequacy ratio in the past five years adequacy ratio in the last Analytical items 2 years 2008 2009 2010 2011 2012 2011 2012 Analytical items 2008 2009 2010 2011 2012 2011 2012 The sum of Perpetual non-cumulative preferred stocks Common stock 13,719,006 13,719,006 17,319,006 22,338,576 23,187,442 22,338,576 23,187,442 and non-cumulative subordinated ------Perpetual debt without maturity date non-cumulative ------exceeding 15% of total Tier I preferred shares Capital Non-cumulative Less: capital deductions 121,012 221,385 478,293 541,568 1,080,486 496,989 495,997 subordinated debt ------without maturity date Total Tier II capital 2,755,196 5,768,125 6,670,589 5,246,668 6,075,667 5,291,247 6,660,156 Capital collected in Capital III Tier Short-term subordinated ------advance bond Capital reserves (except Non-perpetual preferred ------the value appreciation 750,000 766,813 792,069 675,537 675,537 675,537 675,537 stock Tier I Capital Tier I Capital of fixed assets) Total Tier III capital ------Legal reserve 532,993 594,653 600,350 723,937 1,160,137 723,937 1,160,137 Self-owned Capital 17,845,589 20,619,405 25,119,885 29,565,655 32,480,540 29,654,813 33,649,518 Special reserve - - 16,987 32,599 83,647 32,599 83,647 Standardized 177,949,841 188,394,903 214,191,716 244,298,087 297,177,443 244,284,117 298,765,919 Accumulated profit or Approach 209,406 22,684 411,956 1,455,841 2,785,992 1,455,841 2,785,992 loss Internal Credit Ratings-Based ------Minority equity ------Risk Approach Other shareholders’ - (30,491) (20,903) (65,005) (187,505) (65,005) (187,505) Asset Self-owned Capital Self-owned equity ------Securitization Less: goodwill ------assets risk-weighted Total Basic Indicator 10,929,313 10,546,325 9,921,300 9,243,025 9,572,388 9,340,762 9,686,638 Less: unamortized loss Approach ------from sale of NPL Standard Less: capital deductions 121,012 221,385 670,169 842,498 1,300,377 797,919 715,888 Method Operation /Optional ------Total Tier I capital 15,090,393 14,851,280 18,449,296 24,318,987 26,404,873 24,363,566 26,989,362 Risk Standard Perpetual cumulative Method ------preferred shares Advanced Cumulative Measurement ------subordinated debt ------Approach Standardized without maturity date 2,386,925 930,825 2,180,938 782,175 1,481,200 782,175 1,481,200 Fixed asset revaluation Market Approach increment surplus Risk Internal Models 293,553 283,744 283,744 283,744 283,744 283,744 283,744 ------Tier II Capital Tier II Capital (including Approach appreciations) Total risk-weighted assets 191,266,079 199,872,053 226,293,954 254,323,287 308,231,031 254,407,054 309,933,757 45% of unrealized gain on available-for-sale - 2,067 5,138 4,492 32,409 4,492 32,409 Capital adequacy ratio 9.33% 10.32% 11.10% 11.63% 10.54% 11.66% 10.86% financial Proportion of Tier I capital to Convertible Bonds ------7.89% 7.43% 8.15% 9.56% 8.57% 9.58% 8.71% risk assets Operating reserve and Proportion of Tier II capital to 662,655 63,699 - - - - - 1.44% 2.89% 2.95% 2.07% 1.97% 2.08% 2.15% provisions for bad debts risk assets Long-term subordinated 1,920,000 5,640,000 6,860,000 5,500,000 6,840,000 5,500,000 6,840,000 Proportion of Tier III capital to bond ------risk assets Non-perpetual preferred ------Ratio of common stock to total stock 4.81% 4.43% 5.09% 5.81% 5.22% 5.81% 5.21% assets ★If any consolidated financial statement is prepared, the consolidated capital adequacy ratio shall also be disclosed.

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Note 1: The year(s) which is not audited shall be specified expressly. Note 2: The Shares and dividends and the amount of weighed average risk assets shall be filled in as required in “Regulation for Banks in the Management of Capital Adequacy”, and “Explanation and Forms for the Calculation of Shares and dividends and Risk Assets by Banks”. Note 3: Where banks may calculate credit risk in transitional periods, fill in the amount of risk-based assets under the Credit Risk Standardized Approach. Note 4: The following equation shall be identified at the end of the annual report: 1. Total Self-owned Capital = Tier I Capital + Tier II Capital + Tier III Capital. 2. Total amount of risk-weighed-assets = Credit risk-weighed assets + Capital charge of (operational risk + market risk) x 12.5. 3. Capital Adequacy ratio = Total self-owned capital / Total amount risk-weighed assets. 4. Proportion of Tier I capital to risk assets = Tier I Capital / Total risk-weighted asset. 5. Proportion of Tier II capital to risk assets = Tier II Capital / Total risk-weighted asset. 6. Proportion of Tier III capital to risk assets = Tier III Capital / Total risk-weighted asset. 7. Ratio of common stock to total assets = Common stock/ Total assets. Note 5: List the listed companies, or companies trading at the securities firms’ business places in the quarter prior to the date of publication of the Annual Report. Also specify whether the financial information is certified or audited, or uncertified or unaudited, by CPA. Note 6: If Basel I was implemented in the year, the Form shall be specified in the following manner. 1. To be in line with the Basel II format, the capital deduction items were distributed 50% to Tier I capital and the other 50% to Tier II capital. 2. Basel II credit risk capital requirement shall be stated as capital requirements of credit risk “Standardized Approach”. Capital adequacy ratio Unit: NTD thousand Year (note 1) Capital adequacy ratio, current year up to Feb. 28, 2013 Analytical items (Note 4) Self-owned Capital Common stock equity 26,908,342 Other Tier 1 capital other than common stock - equity Tier II Capital 5,964,580

Self-owned Capital 32,872,922

Credit Risk Standardized Approach 297,867,331

Internal Ratings-Based Approach - Total risk-weighted assets Asset Securitization -

Operation Basic Indicator Approach 11,590,725 Risk Standard Method/Optional Standard Method -

Advanced Measurement Approach - Market

Risk Standardized Approach 3,742,618

Internal Models Approach -

Total risk-weighted assets 313,200,674

Capital adequacy ratio 10.50%

Proportion of Tier I capital to risk assets 8.59%

Common stock equity as a percentage of risk assets 8.59%

150150

Note 1: The year(s) which is not audited shall be specified expressly. Year (note 1) Note 2: The Shares and dividends and the amount of weighed average risk assets shall be filled in as required in Capital adequacy ratio, current year up to “Regulation for Banks in the Management of Capital Adequacy”, and “Explanation and Forms for the Calculation Feb. 28, 2013 of Shares and dividends and Risk Assets by Banks”. Analytical items (Note 4) Note 3: Where banks may calculate credit risk in transitional periods, fill in the amount of risk-based assets under the Credit Risk Standardized Approach. Leverage ratio 4.62% Note 4: The following equation shall be identified at the end of the annual report: 1. Total Self-owned Capital = Tier I Capital + Tier II Capital + Tier III Capital. Note: 1 The year(s) which is not audited shall be specified expressly. The capital adequacy ratio up to current year, 2. Total amount of risk-weighed-assets = Credit risk-weighed assets + Capital charge of (operational risk Feb 28, 2013 is calculated by us. + market risk) x 12.5. 2. The self-owned capital, risk assets, and total exposure in this table should be calculated according to the 3. Capital Adequacy ratio = Total self-owned capital / Total amount risk-weighed assets. regulations in “Regulation on Bank Capital Adequacy and Capital Tiers” and “Clarification on Bank Equity 4. Proportion of Tier I capital to risk assets = Tier I Capital / Total risk-weighted asset. Capital and Risk Capital Calculation Methods and Forms.” 5. Proportion of Tier II capital to risk assets = Tier II Capital / Total risk-weighted asset. 3. This table should demonstrate the following formula: 6. Proportion of Tier III capital to risk assets = Tier III Capital / Total risk-weighted asset. (1) Total self-owned capital = Common stock equity + Tier I capital other than common stock + Tier 7. Ratio of common stock to total assets = Common stock/ Total assets. II Capital. Note 5: List the listed companies, or companies trading at the securities firms’ business places in the quarter prior to the (2) Total amount of risk-weighed-assets = Credit risk-weighed assets + Capital charge of (operational date of publication of the Annual Report. Also specify whether the financial information is certified or audited, risk + market risk) x 12.5. or uncertified or unaudited, by CPA. Note 6: If Basel I was implemented in the year, the Form shall be specified in the following manner. (3) Capital Adequacy ratio = Total self-owned capital / Total amount risk-weighed assets. 1. To be in line with the Basel II format, the capital deduction items were distributed 50% to Tier I capital (4) The ratio of Tier I capital to Risk Weighted Assets = (Common stock equity + Tier 1 capital other and the other 50% to Tier II capital. than common stock)/Total risk weighted assets. 2. Basel II credit risk capital requirement shall be stated as capital requirements of credit risk (5) Ratio of common stock equity to risk assets = common stock equity / Total risk weighted assets. “Standardized Approach”. (6) Leverage ratio = Net Tier I capital / Total exposure. Capital adequacy ratio 4. List the listed companies, or companies trading at the securities firms’ business places in the quarter prior to Unit: NTD thousand the date of publication of the Annual Report. Also specify whether the financial information is certified or audited, or uncertified or unaudited, by CPA. Year (note 1) Capital adequacy ratio, current year up to Feb. 28, 2013 Analytical items (Note 4)

Self-owned Capital III Supervisors’ Review Report on the Financial Statement of 2012 Common stock equity 26,908,342 Supervisors’ Audit Report Other Tier 1 capital other than common stock - equity The board drafted the business report, proposal for earnings distribution, and Tier II Capital 5,964,580 financial statements (including balance sheet, income statement, change of Self-owned Capital 32,872,922 shareholders’ equity, and the statement of cash flows) for year 2012. Of these, the Credit Risk Standardized Approach 297,867,331 financial statements (including financial statements consolidated with subsidiaries) have Internal Ratings-Based Approach -

Total risk-weighted assets been ratified by the board. The board believes that they represent fairly the financial Asset Securitization - condition of the company as of Dec. 31, 2012 and the results of operation and cash Operation Basic Indicator Approach 11,590,725 Risk Standard Method/Optional Standard Method - flows in 2012. The Supervisors have reviewed the above-mentioned statement in

Advanced Measurement Approach - accordance with Article 219 of the Company Act and Article 36 of the Securities and Market

Risk Standardized Approach 3,742,618 Exchanges Act and hereby provide such audit report. Please review the information.

Internal Models Approach - To: 2013 Shareholders’ meeting, Taichung Commercial Bank Co. Ltd. Total risk-weighted assets 313,200,674 Capital adequacy ratio 10.50% Resident Supervisor: Institutional Representative to Xin Rui Investment Co., Ltd. Jiann-Ell Huang Proportion of Tier I capital to risk assets 8.59% Supervisor: Institutional Representative to Xin Rui Investment Co., Ltd. Common stock equity as a percentage of risk assets 8.59% Ching-Huang Tsai

150 151151

Supervisor: Institutional Representative to Xin Rui Investment Co., Ltd. Shu-Li Huang Supervisor: Institutional Representative to Xin Rui Investment Co., Ltd. Chien-Hwa Lee Fu Supervisor: Institutional Representative to Tai Jiunn Enterprise Co., Ltd. Chao-Nan Hsieh

March 13, 2013

IV Financial statements 2012: See Appendix 1. V Consolidated financial statements 2012: See Appendix 2. VI In the case of any insolvency of the Bank and its affiliates, specify its effect on the Financial Status of the Bank: N/A. 7 Review and analysis of financial condition and results, and Risk management matters I Financial Status Unit: NTD thousand Year Variation 2012 2011 Item Amount % Cash and cash equivalent, Due from Central Bank of China and lend to 76,602,227 82,617,614 (6,015,387) (7) Banks Financial assets at fair value through 6,545,279 1,096,769 5,448,510 497 profit or loss Available-for-Sale Financial Assets 18,519,719 4,211,580 14,308,139 340 Notes discounted and loans – net 324,029,419 277,756,366 46,273,053 17 Receivable – net 2,553,343 2,888,283 (334,940) (12) Held to maturity investments – net 8,782,945 9,439,040 (656,095) (7) Stocks- equity method 1,295,662 216,970 1,078,692 497 Assets held for sale - 41,639 (41,639) (100) Fixed assets, net 3,325,763 3,335,981 (10,218) - Other financial assets 905,934 850,396 55,538 7 Other assets 1,811,777 1,892,043 (80,266) (4) Total assets 444,372,068 384,346,681 60,025,387 16 Due to Central Bank of China and 5,151,548 3,439,998 1,711,550 50 banks Deposits and remittances 385,862,841 333,832,631 52,030,210 16

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Year Variation 2012 2011 Item Amount % Financial liabilities at fair value through 91,591 51,804 39,787 77 profit or loss Bills and bonds sold under repurchase 264,045 0 264,045 - agreements Funds borrowed from CBC and other 1,887,600 2,877,550 (989,950) (34) banks Financial bonds payable 13,548,277 10,512,559 3,035,718 29 Payables 8,896,768 7,683,501 1,213,267 16 Accruable pension liabilities 223,704 136,764 86,940 64 Other financial liabilities 17,208 22,521 (5,313) (24) Other liabilities 347,386 328,299 19,087 6 Total liabilities 416,290,968 358,885,627 57,405,341 16 Capital stock 23,187,442 22,338,576 848,866 4 Capital surplus 675,537 675,537 - - Retained earnings 4,029,776 2,212,377 1,817,399 82 Unrealized revaluation increment 283,744 283,744 - - Adjustment of accumulated conversion 477 - 477 - Unrealized gain/loss from financial 91,865 10,960 80,905 738 instruments Other shareholders’ equity (187,741) (60,140) (127,601) 212 Total shareholders’ equity 28,081,100 25,461,054 2,620,046 10

Analysis of variance: (I) At the end of 2012, the increase of financial assets at fair value through income statement is due to the increase in short duration bills and commercial papers of NTD 5,187 million, compared to year-end 2011. (II) The increase in available-for-sale financial assets is a result of the increase in the income from fixed income instruments and thereby causes the increase in investment in domestic bonds by NTD14,270 million from the end of 2012 to the end of 2011. (III) Equity method investment increased due to our company’s new investment of NTD 1,000,000 thousand dollars and 100,000 thousand shares, in 100% of Taichung Commercial Bank Lease Enterprise. (IV) Assets to be sold decreased due to the closing in year 2012 of Chung-de branch office listed for sale. (V) At the end of 2012, Deposit at Central Bank and Interbank Deposit increased due to the increase of NTD 1,711 million in interbank loans compared to year-end 2011. (VI) At the end of 2012, the increase of Financial liabilities at fair value through profit or loss is due to the increase of foreign exchange SWAP by NTD 43 million compared to year-end 2011. (VII) Loans from the Central Bank and Interbank Loans decreased due to fund management and the reduced cost of foreign exchange swaps. As a result, at the end of 2012, Interbank Loans decreased by NTD 990 million from 2011 levels. (VIII) Financial Bonds Payable increased because the bank issued NTD 3,000 million of Second Priority financial bond in 2012. (IX) The change in Accrued pension Liabilities: Based on the actuary report, minimum pension liabilities should be added to Accrued Pension Liabilities. (X) Other Financial Liabilities decreased because the deposit from National Development Fund decreased by NTD 5 million at year end 2012 compared to year end 2011. (XI) Retained Earnings increased because NTD 2,778 million of after tax net profit from 2012 has been allocated to Undistributed Earnings. Additionally, the distribution of 2011 earnings consists of

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NTD 0.38 per share of stock dividend and NTD 0.05 per share of cash dividend. As a result, undistributed earnings decreased by NTD 961 million. (XII) Unrealized Loss or Gain on Financial Assets increased because the following have been reclassified from Unrealized Loss or Gain in Held-for-sale Financial Assets to an Adjustment in Shareholders’ Equity: NTD 42 million increase in Domestic Corporate Bond, NTD 24 million increase in Foreign Bond, and NTD 14 million increase in stocks. (XIII) Chief among other items in Shareholders’ Equity is the net loss of pension cost not yet recognized, based on the actuary report drafted by an actuary. Its balance increased by NTD 128 million compared to last year. II Financial performance Unit: NTD thousand Item 2012 2011 Variation Variation Ratio % Net interest income 5,459,110 4,943,296 515,814 10 Net income other than 1,394,607 769,561 625,046 81 interest income Bad debt expenses (238,244) (664,948) (426,704) (64) Operating expenses (3,311,211) (3,133,733) (177,478) 6 Income before taxation of 3,304,262 1,914,176 1,390,706 73 continued operations Income after taxation of 2,777,958 1,454,000 1,323,958 91 continued operations Net income 2,777,958 1,454,000 1,323,958 91 Earnings Per Share 1.20 0.76 0.44 58 (NTD) Difference Analysis: (I) The increase in net interest income is a result of the increase in interest revenue in 2012 more than that in 2011 by NTD38,408 million (a result of the increase in the average balance of notes discounted and loans by NTD1,191 million and the increase in the average interest rate by 0.01%), and the increase in interest expenses by NTD676 million (a result of the increase in the average balance of time deposits and saving deposits by NTD31,065 million and the increase in the average interest rate by 0.1%). (II) The increase in net revenue other than interest is due to the following: 1. The net revenue from service charges in 2012 was NTD 1,142 million, showing an increase of NTD 252 million from 2011 levels. The main contributors to the increase are the NTD 137 million increase in jointly promoted insurance policies and the NTD 93 million increase in loan application fees. 2. In 2012, net gain or loss on financial assets and liabilities at fair value through income statement has increased by NTD 768 million from 2011 levels. The main contributors of the increase are as follows: Gain on the disposal and valuation of domestic publicly traded and OTC stocks increased by NTD 311 million, and the gain on the disposal and valuation of financial derivatives increased by NTD 455 million. In addition, NTD 136 million of foreign exchange loss was recognized in 2012, which is a decrease of NTD 459 million from the exchange gain of NTD 323 million recognized in 2011. Additionally, most of the derivative contracts that our bank entered into were foreign exchange swaps. Once we combine the gain on the disposal and valuation of financial derivatives and foreign exchange (loss) gain, the derivative (loss) gain was NTD 64 million, which is a decrease of only NTD 5 million from the NTD 69 million in 2011. 3. Other Non-interest Net Loss or Gain amounted to NTD 86 million, which is an increase of NTD 45 million from the NTD 41 million in 2011. The main reason for the increase is the NTD 78 million apportioned recovery from the loan to Kuang San. (III) In 2012 the bank recognized NTD 238 million of delinquent loans expense. Compared to the NTD 665 million recognized in 2011, the reduction is NTD 427 million. The chief reason is that, in 2011, the bank increased allowance for delinquent loans based on the assessment on asset quality. The increase in allowance was mostly attributed to loans made to ProMOS

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Technologies and Powerchip. There has been no significant impairment in 2012, and the impairments as valued by applicable statements of financial accounting standards have been fully recognized. Hence the decrease in delinquent loan expense. (IV) The increase in net income and EPS is a result of the increase in net interest income by NTD516 million, the increase in net income other than interest income by NTD613 million, decrease in bad debt expenses by NTD427 million and the increase in operating expenses by NTD177 million.

III Cash flows (I) Analysis on liquidity in the most recent two years Unit: % Year Increase/Decrease 2012 2011 Item Ratio Cash flow ratio (%) - 58.59 - Cash flow adequacy 704.58 744.94 (40.36) ratio (%) Cash flow for operating to cash flow from - (16.56) - investing ratio (%) Analysis of variance in increase/decrease: 1. Because cash flow from operating activities is negative, the calculation of cash flow ratio and cash flow satisfied ratio is ignored. 2. The decline in cash flow adequacy ratio is attributed to the increase in the purchase of financial assets for trading purposes – short term bills. (II) Cash flows: Most recent year cash flow fluctuation analysis, improvement plan for lack of liquidity, and future cash flow analysis Unit: NTD thousand Expected net Remediation measures cash flow of against expected cash Beginning Expected net Cash surplus investing and flow deficit of year operating cash (deficit) financing cash flow for the amount++ activities for Wealth balance  whole year   Investment the whole year management  9,848,878 8,155,969 (8,991,495) 9,013,352 - - Analysis of variance in cash flows: 1. Operating activities: Expecting that the economic growth rate will recover in Taiwan in 2013, the Bank will work hard to develop its business and upgrade the fund utilization effect. It is expected that earnings will be generated in the year to contribute to the net cash inflow from operating activities. 2. Investing activities: It is expected that the increase in discounts and loans, due from Central Bank of China and banks will contribute to the net cash outflow from investing activities. 3. Financing activities: The issuance of subordinated debt and increase in estimated deposits and remittances will contribute to the net cash inflow from financing activities. The net cash flow from investing activities and financing activities will be cash outflow in the year. (III) Corrective action against insufficient liquidity: N/A. IV The material effect on financial structure from substantial capital expenditure in the last few years:

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(I) Major capital expenditure and funding sources Unit: NTD thousand Actual and Actual and Actual and expected capital utilization Total expected expected Plans capital funding Completion 2011 2012 2013 2014 required source Date Update of Self-owned main server 2012.03 163,600 81,800 81,800 - - Capital NX7700i 2015.12 (Has to coordinate Windows this task with Self-owned Directory the timing of 32,500 12,500 12,500 7,500 - Capital Service (AD) hardware upgrading at each business unit) Data warehouse and relations with Self-owned customers 2013.03 45,000 6,750 27,000 11,250 - Capital management application system The new Self-owned generation of 2014.03 75,000 - 11,250 45,000 18,750 Capital e-Bank System

(II) Projected potential benefits 1. Update of main server NX7700i: The original server has been used for many years. In order to provide more real-time and stable information system to deal with the Bank’s business development and information system expansion, the main server was updated. 2. Windows Directory Service (Active Directory): Windows Directory service is the foundation of information security. With the revision of Personal Information Protection Act, this task is urgent. Initially the headquarters is the domain of installation. Subsequently branches would be the domain of installation. After the installation, we can provide centralized account authentication and authorization and enhance our internet information security management mechanisms. We can also provide Single Sign-On (SSO) in the application system and achieve centralized data access control. This installation will affect the majority of future installations of information security systems. 3. Data warehousing and customer relationship management application system: Enhance our bank’s competitiveness in the industry and match the needs of medium- and long-term IT development. Improve customer relationship management. Fully understand the attributes, contribution, and needs of our clients. Increase the effectiveness of marketing efforts. This can also allow management personnel at all levels of our bank to quickly grasp

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our bank’s operation outcome, trends and changes, and increase the ability of active management. 4. Next generation internet banking system: with current internet banking functions as the foundation, we will construct and add the following functions: multi-level authorization, multilingual, group account management, trans-system multi-browser financial XML, installation of RA/CA, global internet banking embedded interface, cloud enterprise service platform, online customer service / wealth management specialist. These functions would be connected to personalized internet banking and form a multi-layer security certification mechanism. V Direct investment policy, the main reasons for profit or loss, and corrective action plan in the most recent year, and investment plan in the next year (I) Direct investment policy in the most recent year: The Bank engaged in the internal direct investment to meet the business development demand for the purpose of establishing the complete financial product transaction platform and ensuring the Bank’s sustainable operation and development. The external direct investment made by the Bank complied with the Government’s financial and economic policies, and assessed the ideal investment objects to upgrade the service quality in the entire financial market. (II) Root cause of investment gains or loss in the most recent year: The Bank is used to adhering to the stable management philosophy. The performance of businesses invested by the Bank appears to be fair in risk control, business development and cooperative promotion of business. The entire performance of the investment by the Bank appears to continue earning profit for the time being. (III) Corrective action plan: In addition to continuing enhancing the risk control and cooperative promotion of business in the invested companies, the Bank will carefully review the performance and business expansion of the invested companies. (IV) Investment plan in the year ahead: Taichung Commercial Bank Lease Enterprise, a direct investment of the Bank, opened to service in 2012 for meeting the needs of business development and for the construction of a platform for the marketing of a complete portfolio of financial products and wide array of banking services to the customers. The split up of the Securities Department of the Bank and the establishment of the Taichung Commercial Bank Securities Co., Ltd. has also been approved by Financial Supervisory Commission under Letter Jin-Guan-Zheng-Quan-Zi No. 1010059030 dated 2013.3.1

VI Risk Management (I) Qualitative and quantitative information about the various risks

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1. Credit risk management system and capital requirement: Credit risk management system 2012 Item Contents 1. Credit risk 1. Credit risk strategies and objectives: strategies, (1) Comply with The New Basel Capital Accord and objectives, upgrade the Bank’s risk management ability. policies and (2) Develop well-founded risk management mechanisms processes and execute them strictly. (3) Strengthen the loan asset portfolio quality, risk management information integration, analysis, control and precautionary effect, and play the role of risk management. 2. Credit risk policies: (1) Establish the business strategies and organizational culture valuing credit risk management and provide the qualitative and quantitative management method as the reference for enactment of business strategies. (2) Establish the entire credit risk management system to be executed by the Bank’s Board, the management and employees jointly, and control the various business risks to the tolerable extent through identification, assessment, control and report of risks in the qualitative and quantitative management manner, so as to achieve the Bank’s credit risk objectives. (3) Establish the effective method and control procedure to control the adequacy of the deposits/withdrawals to ensure the shareholders’ equity as the first priority. 3. Credit risk management process: Risk identification, risk assessment, risk control and risk report include: (1) Define the credit risk management related regulations. (2) Establish the credit risk rating model. (3) Establish the control mechanism and define the limit for the various large-sum exposures. (4) Upgrade the entire asset quality and establish the proper management mechanism step by step. (5) Continue developing and executing the stress tests for credit risks that comply with the competent authority’s requirements. (6) Review and report periodically. 2. Credit risk The Risk Management Organization of the Bank is consisted of the management Board, Risk Management Committee, Loan Review Committee, and the organization and regional credit review committees, the NPL Management Committee, the structure Risk Management Committee, all functional units at the Head Office, all banking units (including the regional centers), and the Auditing Office under the Board. The functions under credit risk management are

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Item Contents specified as following: 1. Board of Directors: The Board is the supreme decision-making entity in credit risk management of the bank, and takes the ultimate responsibility for the Bank's credit risk management. 2. Risk Management Committee: Risk Management Committee takes charge of the Bank’s credit risk management mechanism, review of the credit risk regulations and the multi-departmental communication and coordination of credit risk management, and continuous supervision of the performance, according to the risk management policy authorized by the Board. 3. Loan Review Committee and credit review Committee of the regional centers: Review the credit extension applications in accordance with the credit extension policies, credit extension authorization rules and the relevant requirements. 4. Delinquent Accounts Review Committee: The Committee processes the delinquent accounts, receivables on demand and bad debt in accordance with the Rules for Establishment of Delinquent Accounts Review Committee, Rules for Allowance for Loss of Asset Evaluation and Collection of Delinquent Account, Receivable on Demand and Bad Debt, and the relevant requirements. 5. Risk Management Dept.: (1) Credit Risk Management Department is the Bank’s unit dedicated to the risk management, responsible for planning, establishing and integrating the Bank’s credit risk management operation and executing the Bank’s entire credit risk management control. (2) Be responsible for the study, design, or recommendation for revising the credit risk management policy and related regulations of the Bank, and report to relevant level of management or the Board for final approval. (3) Summarize the Bank’s credit risk information periodically and report it to the Risk Management Committee and Board. (4) Establish the Bank’s entire framework of assess, control and qualitative and quantitative management method. 6. Business management units of Head Office: Fully understand the credit risk of the businesses handled by them according to the Bank’s risk management policies and regulations, so as to fulfill the various requirements defined in the process of risk management, and supervise the execution of the various business units’ risk management in a timely manner and work with Risk Management Department to complete the control over the Bank’s risks. 7. The Bank’s business units (including regional centers): (1) Responsible for identifying, evaluating and assessing risks, and taking the proper response against the risks. (2) Comply with the Bank’s rules for credit investigation,

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Item Contents credit extension and credit risk management, fulfill the routine jobs and risk management, and report the risk to the various business supervisory departments. (3) Routine work integrated with the risk control, and identify the accuracy and integrity of the operation information. 8. Audit Office of the Board: Audit Office of the Board will periodically audit the execution of the Bank’s credit risk management system impartially and independently, and provide the suggestions about corrective actions. 3. Scope and 1. Scope and characteristics of credit risk report: characteristics of (1) The Board’s report (Comprehensive risk report) credit risk report (2) Risk Management Committee report (Comprehensive and measurement risk report) system (3) Asset quality report (4) Report for the individual limit in the various countries (5) Risk Management Control (to disclose the information about credit risk) (6) Stress test scenario analysis report 2. Credit risk assessment system includes: (1) Capital requirement calculation platform information system (2) Credit investigation and extension system (3) Debt collection management system (4) Credit review and precaution management system (5) SMEs Application Scorecard System 4. Credit risk 1. Credit risk hedging or reduction policies: hedging or (1) Review the business with concentration of risk or higher mitigation risk, and conduct the credit risk hedging. policies, and (2) Comply with The New Basel Capital Accord and effective upgrade the Bank’s risk management ability strategies and 2. Effective strategies and procedures for controlling risk hedging process for and reduction tools: controlling risk (1) Establish the risk control mechanism to control the hedging and credit risk of individual credit extension and credit mitigation tools extension portfolio; the control mechanism includes the limit management, post-loaning management, collateral management and asset quality management. (2) Enhance the credit account guarantee by demanding collaterals, guarantors or transfer of SME credit guarantee fund. (3) Respond to the domestic and international economic situations and industry outlook to control industry risk on due time and adjust the limit and ratio of lending to specific industry for sorting out customers in good standing for financing. 5. Approach for regulatory Capital Standardized Approach Charge Exposure and capital requirement under the credit risk standardized approach after risk

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Item Contents mitigation credit extension and credit risk management, fulfill the December 31, 2012 Unit: NTD thousand routine jobs and risk management, and report the risk to Exposure after risk the various business supervisory departments. Type of exposure Capital requirement (3) Routine work integrated with the risk control, and mitigation identify the accuracy and integrity of the operation Sovereigns 2,689,590 0 information. Non-central government 3,618,666 144,747 8. Audit Office of the Board: public sector entities (PSEs) Audit Office of the Board will periodically audit the execution of Banks (including multilateral 9,843,806 360,728 the Bank’s credit risk management system impartially and development banks-MDBs) independently, and provide the suggestions about corrective Corporates (including actions. securities and Insurance 146,566,255 11,133,929 3. Scope and 1. Scope and characteristics of credit risk report: companies) characteristics of (1) The Board’s report (Comprehensive risk report) Retail 156,670,469 10,026,639 credit risk report (2) Risk Management Committee report (Comprehensive and measurement risk report) Residential mortgage 38,101,106 1,567,614 system (3) Asset quality report Equity securities investments 29,000 9,280 (4) Report for the individual limit in the various countries Other assets 81,935,845 531,258 (5) Risk Management Control (to disclose the information about credit risk) Total 439,454,737 23,774,195 (6) Stress test scenario analysis report 2. Credit risk assessment system includes: 2. Risk management system, exposure and capital requirement of (1) Capital requirement calculation platform information securitization system Risk management system of securitization (2) Credit investigation and extension system (3) Debt collection management system 2012 (4) Credit review and precaution management system Item Contents (5) SMEs Application Scorecard System 1. Securitization management strategy and process Not applicable 4. Credit risk 1. Credit risk hedging or reduction policies: hedging or (1) Review the business with concentration of risk or higher 2. Securitization management organization and structure Not applicable mitigation risk, and conduct the credit risk hedging. 3. Scope and characteristics of securitization report and measurement Not applicable policies, and (2) Comply with The New Basel Capital Accord and system effective upgrade the Bank’s risk management ability 4. Securitization risk hedging or mitigation policies, and effective Not applicable strategies and 2. Effective strategies and procedures for controlling risk hedging strategies and process for controlling risk hedging and mitigation tools process for and reduction tools: controlling risk (1) Establish the risk control mechanism to control the 5. Approach for regulatory Capital Charge Not applicable hedging and credit risk of individual credit extension and credit 6. Overall qualitative requirements for disclosure, including: mitigation tools extension portfolio; the control mechanism includes the (1) The purpose of engagement in securitization and the types of limit management, post-loaning management, collateral risks to be taken and reserved by the Bank after management and asset quality management. re-securitization. (2) Enhance the credit account guarantee by demanding (2) Other risks inherent to securitized assets (e.g., liquidity risk). collaterals, guarantors or transfer of SME credit (3) The different roles played by the Bank in the process of guarantee fund. securitization, and the degree of participation by the Bank in Not applicable (3) Respond to the domestic and international economic each process. situations and industry outlook to control industry risk (4) Elaborate the monitoring and control procedure for dealing on due time and adjust the limit and ratio of lending to with the changes in credit and market risk involved in the specific industry for sorting out customers in good exposure under securitization. standing for financing. (5) Where the Bank may reserves specific risk after 5. Approach for de-securitization or re-securitization, the policy for the regulatory Capital Standardized Approach management of offsetting credit risk. Charge 7. Specify the accounting policy of the Bank in securitization Not applicable Exposure and capital requirement under the credit risk standardized approach after risk

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Item Contents 8. The external credit rating agencies (ECAI) in the Banking Book, and Not applicable the exposure of the securitization of each category of assets 9. Explain major changes in the quantitative data after the release of the last report (e.g., the transfer of assets in the banking book and the Not applicable trading book)

3. Operational risk management system and capital requirement Operational risk management system 2012 Item Contents 1. Operational 1. Operational risk management strategies: By establishing and risk executing the sound operational risk management mechanism, the management Bank manages the operational risk actively, generally evaluates the strategies and frequency and effect of the various potential risks in routines and processes management and takes the appropriate counter-assessments to avoid, transfer or write off, control and bear the risk to reduce the substantial loss and frequencies. 2. Operational risk management process: (1) Risk identification The risk identification approaches include Loss Data Collection (LDC), Key Risk Indicators (KRIs), Risk and Control Self Assessment (RCSA), audit report and external loss event. (2) Risk assessment Assess such factors as possibility and effect of the risks as identified. (3) Risk measurement Gather information on the cases of loss in accordance with the 7 major categories of loss and 8 major categories of business under the New Basel Accord and referred to quantitative analysis by intensities of high (red signal), moderate (yellow signal), and low (green signal). (4) Risk control Control the operational risk events, KRIs and risk control exposure, quality of risk write-off and control actions, and the effect of other cases. (5) Risk report Report the information about operational risk exposure to Risk Management Committee and the Board periodically. 2. Operational The operational risk management organization includes the Board, Risk risk Management Committee, Risk Management Dept., the business management management units, units of the Bank, all staff and Audit Office of the Board. The organization authorities and responsibilities of the organizations are specified below. and structure 1. Board of Directors The Board is the supreme decision-making entity in operational risk management of the bank, and takes the ultimate responsibility for the Bank’s operational risk management.

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Item Contents Item Contents 8. The external credit rating agencies (ECAI) in the Banking Book, and 2. Risk Management Committee Not applicable the exposure of the securitization of each category of assets Administer risk management mechanism, review the operation risk 9. Explain major changes in the quantitative data after the release of the of all products, activities, processes and systems of the Bank, and all last report (e.g., the transfer of assets in the banking book and the Not applicable risk management affairs of all functional units at the Head Office, trading book) and continue the monitoring of the performance result as per the operation risk management policy approved by the Board. 3. Risk Management Dept. Responsible for researching and drafting the Bank’s operational risk management policies and procedures, establishing and centrally 3. Operational risk management system and capital requirement managing the Bank’s operational risk loss database, collecting, Operational risk management system summarizing and analyzing the information about loss, and reporting it to Risk Management Committee and the Board 2012 periodically. Item Contents 4. Business management units 1. Operational 1. Operational risk management strategies: By establishing and They respectively fully understanding the risk which is encountered, risk executing the sound operational risk management mechanism, the and supervising the various units to execute the necessary risk management Bank manages the operational risk actively, generally evaluates the management tasks in a timely manner, and assist Risk Management strategies and frequency and effect of the various potential risks in routines and Dept. to complete the various risk controls. processes management and takes the appropriate counter-assessments to 5. Units of the Bank avoid, transfer or write off, control and bear the risk to reduce the Comply with and implement the operational risk management rules, substantial loss and frequencies. and report the risk events pursuant to the requirements. 2. Operational risk management process: 6. Whole staff (1) Risk identification The whole staff shall be responsible for dealing with the operational The risk identification approaches include Loss Data risk jointly, and shall implement the operational risk management Collection (LDC), Key Risk Indicators (KRIs), Risk and tasks strictly within their functions. Control Self Assessment (RCSA), audit report and external 7. Audit Office of the Board loss event. Audit Office of the Board shall conduct the audit independently, (2) Risk assessment assess and audit the effectiveness of the Bank’s operational risk Assess such factors as possibility and effect of the risks as management structure and processes, and provide the suggestions identified. for corrective action in a timely manner. (3) Risk measurement 3. Scope and When measuring the Operational risk, each unit of the Bank shall analyze the Gather information on the cases of loss in accordance with characteristics cause, consequence, frequency and effect thereof and conclude the degree of the 7 major categories of loss and 8 major categories of of operational individual risk to verify the exposure of the Bank’s Operational risk. The risk report and business under the New Basel Accord and referred to Bank also made record of various exposures. By introducing the Operational measurement quantitative analysis by intensities of high (red signal), risk identification, assessment, control and report management mechanism, moderate (yellow signal), and low (green signal). system the Bank establishes and centrally manages the database for the Bank’s (4) Risk control Control the operational risk events, KRIs and risk control Operational risk losses and summarizes the Operational risk information and exposure, quality of risk write-off and control actions, and implementation status, and submit the report and suggestions to Risk the effect of other cases. Management Committee and reporting them to the Board for approval. (5) Risk report 4. Operational For intensifying the monitoring and control of operational risk, the Bank Report the information about operational risk exposure to risk hedging or established Key Risk Indicators and Risk Control Self Assessments Risk Management Committee and the Board periodically. mitigation according to the four dimensions of operational risk, i.e. internal procedure, 2. Operational The operational risk management organization includes the Board, Risk policies, and people, systems, and external events. In addition, the Bank will observe the risk Management Committee, Risk Management Dept., the business management effective changes in the said indicators, and can transfer or write off the loss and management units, units of the Bank, all staff and Audit Office of the Board. The strategies and impact of incidents caused by operational risk through insurance and organization authorities and responsibilities of the organizations are specified below. process for outsourcing in part or in whole for the effective reduction of loss deriving and structure 1. Board of Directors controlling risk from operation risk. The Board is the supreme decision-making entity in operational risk hedging and management of the bank, and takes the ultimate responsibility for mitigation the Bank’s operational risk management. tools

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Item Contents 5. Approach for regulatory Basic Indicator Approach Capital Charge

Capital requirement for operational risk December 31, 2012 Unit: NTD thousand Gross profit Capital requirement 2009 4,576,975 2010 5,020,931 2011 5,717,907 Total 15,315,813 765,791

4. Market risk management system and capital requirement Market risk management system

2012 Item Contents 1. Market risk 1. The Bank’s market risk management strategy is to develop the sound management and effective market risk management mechanism. The mechanism strategies and shall correspond to the Bank’s business scale, nature and complexity to processes ensure the proper management of the market risk to be borne by the Bank and seek the balance between the tolerable risk level and expect return level. 2. The Bank’s market risk management process covers the risk identification, evaluation, assessment, control and report. The contents thereof cover the market risk related to the Bank’s major traded products, trading activities, process and system. (1) Risk identification: The Bank’s relevant units identified the source of market risk by means of business analysis or product analysis to define the market risk factors of the various financial products (the market risk factors were categorized as interest rate risk, foreign, equity securities price risk and commodity price risk) and the relevant requirements. (2) Risk evaluation and assessment: Establish the effective valuation mechanism to evaluate the income of position precisely, and conduct the independent market price evaluation procedure with respect to the short-term investment position for which the reference market price is available. Establish the quantitative model step by step to assess the market risk in such manners as sensitivity analysis, VaR calculation, scenario drill and stress testing, and integrated with the routine risk management. (3) Risk control: Define the relevant rules governing excess of limit, stop-loss mechanism and operating procedure for excess of limit in order to control the market risk effectively. (4) Risk report:

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Item Contents Item Contents 5. Approach for Report to the Risk Management Committee and the Board on regulatory Basic Indicator Approach the status of overall market risk management of the Bank at Capital Charge regular intervals. In case of significant change in the market, related functional units shall report immediately to reduce Capital requirement for operational risk market risk. Disclose the Bank’s market risk information to December 31, 2012 Unit: NTD thousand the public periodically pursuant to the competent authority’s Gross profit Capital requirement requirements. 2. Market risk The Bank’s market risk management organization and structure includes the 2009 4,576,975 management Board, Risk Management Committee, Risk Management Dept., business organization and supervisory units, business trading units and Audit Office of the Board. The 2010 5,020,931 structure authorities and responsibilities of the organizations are specified below: 2011 5,717,907 1. Board of Directors: The Board is the supreme decision-making unit in market risk Total 15,315,813 765,791 management of the bank, and takes the ultimate responsibility for the Bank's market risk management. 4. Market risk management system and capital requirement 2. Risk Management Committee: Market risk management system Control the risk management mechanism according to the market risk management policies approved by the Board. 2012 3. Risk Management Dept.: Item Contents Risk Management Dept. is the unit dedicated to the Bank’s market risk 1. Market risk 1. The Bank’s market risk management strategy is to develop the sound management, responsible for consolidating and executing the Bank’s management and effective market risk management mechanism. The mechanism entire market risk management. strategies and shall correspond to the Bank’s business scale, nature and complexity to 4. Business supervisory departments of head office: processes ensure the proper management of the market risk to be borne by the Business supervisory departments of head office are responsible for Bank and seek the balance between the tolerable risk level and expect managing and supervising the necessary risk management tasks to be return level. executed by business trading units and working with Risk Management 2. The Bank’s market risk management process covers the risk Department to complete the control of the Bank’s risks. Meanwhile, identification, evaluation, assessment, control and report. The they are also responsible for defining the proper limit control, stop-loss contents thereof cover the market risk related to the Bank’s major mechanism and operating procedure for excess of limit with respect to traded products, trading activities, process and system. the products and process of transaction. (1) Risk identification: 5. Business trading units: The Bank’s relevant units identified the source of market risk Business trading units are responsible for executing the risk by means of business analysis or product analysis to define the identification, assessment and measurement, and taking appropriate market risk factors of the various financial products (the countermeasures in accordance with the Bank’s market risk market risk factors were categorized as interest rate risk, management rules. Take positive action in monitoring the foreign, equity securities price risk and commodity price risk) enforcement of different limits, and report to the supervisors or notify and the relevant requirements. Risk Management Department as required. (2) Risk evaluation and assessment: 6. Audit Office of the Board: Establish the effective valuation mechanism to evaluate the Audit Office of the Board executes the market risk management income of position precisely, and conduct the independent auditing business independently and provides the suggestions for market price evaluation procedure with respect to the corrective action. short-term investment position for which the reference market 3. Scope and The Bank’s existing IT system is primarily engaged in the limit management. price is available. Establish the quantitative model step by step characteristics of The trading information related to the market risk to the business supervisory to assess the market risk in such manners as sensitivity market risk report unit and Risk Management Dept. Risk Management Dept. shall consolidate and analysis, VaR calculation, scenario drill and stress testing, and and measurement summarize the information and present the report to Risk Management integrated with the routine risk management. system Committee and the Board. The contents of report cover all market risk positions (3) Risk control: and ensure that the various transactions are conducted under authorization and Define the relevant rules governing excess of limit, stop-loss the specific limitation. mechanism and operating procedure for excess of limit in order 4. Market risk The Bank’s transactions subject to market risk have defined the limits of the to control the market risk effectively. hedging or various investment objects in the relevant rules. The specific limit is also set (4) Risk report: mitigation against the trading counterpart based on its credit rating and financial status to

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Item Contents policies, prevent the operation of fund from being highly concentrated. Each business and trading unit shall adjust the operational position according to the change in the effective relevant market environments under the authority granted to it, and adopt any strategies available derivative product to hedge risk in a timely manner and execute the and relevant stop-loss mechanism whenever necessary. Said relevant processes requirements shall be reviewed and revised subject to the operation plan, for business development and changes in the entire financial environment. controlling risk hedging and mitigation tools 5. Approach for regulatory Standardized Approach Capital Charge

Capital requirements for market risk Dec. 31, 2012 Unit: NTD thousand Type of risk Capital requirement Interest rate risk 31,280 Equity securities risk 70,378 Foreign Exchange risk 16,838 Commodity risk 0 Total 118,496 5. Liquidity risk includes the analysis of maturity of assets and liabilities, and also explains the management method for asset liquidity and capital gap liquidity. For the appropriate management of liquidity risk and prompt for health operation, the Bank has instituted the “Assets and Liabilities Management Policy”, “Liquidity Risk Management Policy”, and “Guidelines for the Implementation of Liquidity Management”, and has established the Assets and Liabilities Management Committee. The committee will report to the Board on necessary monitoring and control measures in liquidity risk management at regular intervals. In addition, the Bank will prepare the monthly Maturity Analysis Sheet and USD Maturity Analysis Sheet with the establishment of indicators for quantitative analysis for the control of liquidity risk.

Analysis of maturity structure of NTD December 31, 2012 Unit: NTD thousand Total Remaining balance to maturity

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181 days to 1 More than 1 0 to 10 days 11 to 30 days 31 to 90 days 91 to 180 days year year Main capital inflow 420,818,471 43,271,453 44,671,458 27,937,317 37,720,849 61,345,405 205,871,989 upon maturity Main capital outflow 501,906,144 25,413,675 29,354,823 63,285,690 101,500,710 115,498,201 166,853,045 upon maturity

Gap (81,087,673) 17,857,778 15,316,635 (35,348,373) (63,779,861) (54,152,796) 39,018,944

Analysis of maturity structure of USD December 31, 2012 Unit: US thousand Remaining balance to maturity Total 0 to 30 days 31 to 90 days 91 to 180 days 181 days to 1 year More than 1 year Main capital inflow 1,096,567 189,831 231,917 195,528 42,447 436,844 upon maturity Main capital outflow 945,971 238,965 181,303 393,739 131,964 - upon maturity

Gap 150,596 (49,134) 50,614 (198,211) (89,517) 436,844

Note 1: Refers to the amount in USD of the whole Bank. Note 2: Where offshore assets account for more than 10% of the Bank’s total assets, it is necessary to provide supplementary disclosure.

(II) The influence of domestic and foreign major policies and law amendment exerting on the bank’s financial structure and responding measures: 1. Install the following additional systems to deal with the promulgation and enforcement of Computer-Processed Personal Data Protection Law Enforcement Rules: (1) The Bank has been accredited by BSI in August 2012 in ISO-27001 system in ISMS. (2) The installation of the NTD mainframe and the open server for log collection and analysis system is expected to complete by the end of 2013. (3) File encryption management system configuration 2. Financial Supervisory Commission amended and promulgated the “Regulation for Banks in the Management of Capital Adequacy” in response to the requirement of Basel III. There are 18 articles in the regulation after the amendment. With the exception of Article IV on the lowest leverage ratio, which will come into effect on January

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1 2018, the remainder of the regulation shall be effective on January 1 2013. The said regulation requires banks to move the BIS ratio upward annually and incrementally. By 2019, the lowest BIS ratio, tier 1 capital ratio, and equity ratio of common stocks shall be 10.5%, 8.5%, and 7%. As of December 31 2012, the BIS ratio, tier 1 capital ratio, and equity ratio of common stocks of the Bank have already met the standards set forth to be accomplished in 2019. In the future, the Bank will continue to fortify its equity capital as the goal in order to tackle with different forms of risks and mitigate possible impact on the Bank. 3. In order to prepare for the adoption of IFRSs from 2012 onwards, our bank has organized a task force and enlisted the help of CPAs for said adoption. The timing and tasks of the adoption have been on schedule. Each quarter the execution of the adoption plan has been briefed to the Board. Initial adoption and subsequent accounting policies have been proposed and submitted to the Board for ratification, taking into consideration “Regulations Governing the Preparation of Financial Reports by Public Banks” and IFRSs. As of now, we have finalized the adjustment amounts between the two accounting principles for all accounts on IFRS adoption day. Subsequently we will abide by the regulations from government agencies and the revision of IFRS and adjust accordingly and in a timely manner. (III) The effect of technological and industrial changes on the Financial Status and operation of the Bank and countermeasures: The information technology has been improved drastically. The bank’s equipment and operation becomes rapid due to the change in the social life and custom. Such e-banking services as e-ATM, network bank and voice bank have been well received by the public. As a result, the operating cost may be reduced and the operating efficiency may be upgraded relatively. The Bank will continue providing more diversified on-line transaction services and providing customers with more complete, convenient and safe choices. (IV) The effect of the change in the corporate image of the Bank and countermeasures: 1. As of 2009 until now, the Bank has promoted the “branch demonstration and learning system”. In addition to establishing the various standardized service requirements and upgrading the customer service quality, the Bank also introduced the “CIS” (Corporate Identity System) to strengthen the Bank’s corporate identity by integrated planning and communication of idea discrimination, vision discrimination and activity discrimination. 2. The Bank has launched series of TV advertisement in the New Year to let the public know the corporate image of “Whole-heartedness” of the Bank. This TV commercial presented the spirit of the Bank in serving the local community with positive attitude. In the future, the Bank is determined and motivated to know the best of the needs and dynamics of the customers in order to provide a wide array of financial products, upgrading the satisfaction of the customers, and also enhance its competitive power in market. (V) Expected result and possible risks of mergers and acquisitions and Counter

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assessments: None. (VI) Expected result for establishing more business locations, possible risk and countermeasures: A complete network of market channels is the foundation for market expansion. This is also a vital platform for the liaison with and service for the customers. By expanding business locations, the Bank may not only upgrade its operating performance but also receive positive effect in personnel training and dispersion of risk. The industry peers in the banking industry are highly homogeneous, and the competition among the peers is keen with high cost of operation. As such, a broad clientele base and well-developed business opportunities shall be necessary. In establishing new banking locations, the Bank has taken into consideration the regulations of the competent authority and conducted caution assessment and evaluation in order to reduce risk and reinforce the niche in operation. (VII) The risk confronting the over concentration of business, and countermeasures: The Bank has maintained a proper balance of banking services and there is no over concentration to the extent that dispersion of risk is impossible. (VIII) The effect of change in the management produced to the Bank, possible risk and countermeasures: None. (IX) The massive transfer of equity shares by directors, supervisors, or dominant shareholders holding more than 1% of the outstanding shares of the Bank, the risk and countermeasure: None. (X) Contentious matters and non-contentious matters: 1. The Kuang San Group’s illegal and excessive borrowing and the improper investment and default in the delivery of stocks issued by Shun Ta Yu were uncovered in November 1998. In the aforementioned lawsuit, the Prosecutors’ Office of Taichung District Court and Taichung District Court have seized the amount of NTD2,560 million. After being appealed and remanded for retrials for several instances, the Bank considered that the Criminal judgment of Ruling 99 Jin-Shang-Chong-Geng (3) Zi No. 24 was wrongfully determined, and petitioned with the Prosecutor for appeal with the Supreme Court. At this moment, the amount to be returned by the court is not yet finally determined. 2. The Bank has laid charges against the core members and important members, and the Bank’s employees, directors and supervisors in the illegal loans, improper investment and default stock delivery of the Kuang San Group Case to claim damages. The claim for damages amounting to NTD11,200 million for joint and several liabilities filed against the chief suspect and accomplice O-Jen Tseng, is now still pending in the court. Part of the judgment is final now, and part of the case is still pending in the Taichung District Court. 3. O-Yi Chang and Tseng O-Jen are accomplices in the case of Kuang San Group’s illegal financing and default in settlement of securities. In 1999, O-Yi Chang was the Chairman of Shun Ta Yu Co., Ltd. As such, the Bank petitioned with the court to claim for the damages under joint and several liabilities against Chang claiming the amount of NTD650 million. Favorable decision was made by Taichung Branch of the High Court of Taiwan under Court Ruling 99 Jin-Shang-Geng (2) Zi No. 5. In addition, the Supreme Court of

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Taiwan also overruled the appeals filed by Chang and others by Ruling 101 Tai-Shang-Zi No. 167. As such, the aforesaid court judgment in favor of the Bank is final. (XI) Other major risks and counter-assessments: None. VII Crisis management mechanism For the rapid settlement of unusual withdrawal and deposits, massive draining of capital, severe damage to the good will of the Bank and other crisis in operation, or the handicap of solvency and ability to repay debts, due to unanticipated factors, the Bank has established the “Emergency Response Handbook” as guideline. For fortifying the security measures and functions of all banking units and for the upgrading of security protection, the Bank has established the “Regulation for Security Management”. In addition, the “Emergency Response Team” and the “Security Supervision Team” have also been set up to deal with emergency and take appropriate actions. For the preservation of the information system in an emergency, the Bank has established the “Guideline for Response and Backup of the Information System in Emergency” so that the personnel of the Bank can maintain normal operation of the information system in case of emergency. VIII The following methods and hypotheses for the valuation of fair value of financial instruments are applied (I) Financial Instruments at Fair Value through Profit or Loss: Financial instruments classified as financial assets or financial liabilities at fair value through profit or loss (“FVTPL”) include financial assets or financial liabilities held for trading and those designated as at FVTPL on initial recognition. The Bank recognizes a financial asset or a financial liability on its balance sheet when the Bank becomes a party to the contractual provisions of the financial instrument. A financial asset is derecognized when the Bank has lost control of its contractual rights over the financial asset. A financial liability is derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired. FVTPL is initially measured at fair value plus transaction costs, and at each balance sheet date subsequent to issue of initial recognition, it is measured at fair value, with changes in fair value recognized directly in profit or loss in the period in which it arises. On de-recognition of a financial instrument, the difference between its carrying amount and the sum of the consideration received and receivable or consideration paid and payable is recognized in profit or loss. The purchase or disposal of financial assets in customary transactions shall be subject to accounting on the date of transaction. A derivative that does not meet the criteria for hedge accounting is classified as a financial asset or a financial liability held for trading. If the fair value of the derivative is positive, the derivative is recognized as a financial asset; otherwise, the derivative is recognized as a financial liability. Basis of fair value: The fair value of stocks traded on the TSEC (GreTai) market and depository receipt is based on the closing price on the balance sheet. The fair value of open-ended funds is based on the net asset value on the balance sheet date. The fair value of bonds is based on the reference price on the balance sheet date in the GreTai Securities Market. The fair value of financial products for which no market price is available shall be evaluated based on the evaluation method. FVTPL which are mixed instruments, or for the reason of elimination or material reduction of the difference in accounting practices, can be

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designated as financial instruments at fair value through profit or loss at the initial recognition. Financial instruments portfolios, based on the Bank’s risk-management or investment policy, may also be designated as financial instruments at fair value through profit or loss. (II) Available-for-Sale Financial Assets: Assets at fair value through income statement and the changes in value are recognized under the title of adjustment of shareholders’ equity. The stocks and beneficiary securities of the Bank will be entered into book on a daily basis for accounting purpose. At the time of initial recognition, the financial products shall be evaluated at fair value with the addition of the cost of acquisition or transaction cost at the time of issuance. Where there is evidence showing impairment, it shall be stated as the loss of impairment. In case of impairment in the duration of holding, the impairment of financial products available for sales shall be recognized as adjustments of shareholders’ equity. If the amount of impairment of financial assets available for sales is obviously related to specific event occurred after the recognition for impairment, such amount shall be reversed and recognized as income in current period. (III) Held-to-maturity financial assets: The interest rate in effect shall be used to calculate the amortization cost and other interest incomes. All debt securities of the Bank are entered in book on a daily basis for accounting purpose. At the time of initial recognition, evaluation will be made on the basis of fair value of the financial instruments plus the cost of acquisition or the transaction cost at the time of issuance. Where there is evidence showing impairment, it shall be stated as the loss of impairment. In case of impairment in the duration of holding, the impairment shall be recognized as adjustments of shareholders’ equity. If the amount of impairment is obviously related to specific event occurred after the recognition for impairment, such amount shall be reversed and recognized as income in current period. However, the reversal shall not cause the book value in excess of the amortization cost before the recognition of impairment. (IV) Stocks- equity method: The equity investment under equity method refers to the equity of unlisted (non-OTC) companies and no open market price thereof is available. Besides, it is impossible to evaluate the possibility of various estimates in the variance interval and it is impossible to measure the fair value. Therefore, the fair value of such investment shall be the book value thereof. The valuation by equity method shall be applicable to investees where the Bank and subsidiaries included in the consolidated financial statement jointly hold 20% or more of their equity shares or less than 20% but are influential in the investees. For the disposal of equity investment recognized under the equity method, the difference between the sale price and the book value as of the day of disposal shall be recognized as gain or loss from disposition of equity. In case of a balance of capital surplus in book deriving from long-term equity investment, recognize for income in current period in proportion the sold equity. (V) Investment in financial assets at cost: The financial assets at cost which are the stocks other than those traded on the TSEC (GreTai) market will have no public market price available, and the fair value thereof can be sought only at the price exceeding the

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reasonable cost. Therefore, it is impossible to measure the fair value of such investment. For investment in equity products that cannot be assessed on the basis of reliable fair value, evaluate on the basis of the cost initially recognized. If there is objective evidence implicating impairment, recognize for impairment loss and such amount shall not be reversed. IX Other important notes  Settlement of disputes Subsequent negotiations for Lehman Brothers structured notes dispute: In order to settle the dispute over Lehman Brothers structured notes effectively, the Bank has complied with the competent authorities’ instruction to settle the dispute with customers. Until February 28, 2012, the Bank has filed a total of 727 cases over the dispute with the “Banking Dispute Review Board”, and settled 710 cases amicably, the settlement ratio of 97.66%, after 62 review meetings for the Lehman Brothers case were called.

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8 Special Notes I Special Notes (I) Information regarding the bank’s subsidiaries 1. Consolidated Report on business operations: (1) Chart showing the bank’s subsidiaries: A. The controlling Company and subsidiary companies

Taichung Commercial Bank Co., Ltd.

100% 100%

Taichung Taichung Commercial Commercial Bank Bank Lease Enterprise Insurance Broker Co., Ltd. 100%

TCCBL Co., Ltd.

100%

Taichung Commercial Bank Leasing (Suzhou) Ltd.

B. Cross-investment: None. C. Subsidiaries and subsidiaries: None. (2) Profiles of the bank’s subsidiaries: Name of enterprise Date of Address Paid-in shares Major operations establishment Captial Controlling company: Taichung Commercial 1953.8.26 No. 87, Min Chuan Road, West 23,187,442 Banking business Bank Co., Ltd. District, Taichung as permitted under the Banking Act.

Subsidiary companies: Taichung Commercial 2007.9.26 8F, No. 87, Min Chuan Road, 82,360 Insurance Bank Insurance Broker West District, Taichung brokerage. Co., Ltd. Taichung Commercial 2012.1.13 7F.-7, No.50, Sec. 1, Xinsheng 1,000,000 Leasing Bank Lease Enterprise S. Rd., Zhongzheng Dist., Operation. Taipei City

TCCBL Co., Ltd. 2012.6.13 P.O. Box 957,Offshore 395,159 Incorporations Centre, Road Leasing and Town, Tortola, British Virgin investments. Islands.

Taichung Commercial 2012.12.11 Room 402, Property Business 395,159 Leasing. Bank Leasing (Suzhou) Plaza, No.158, Wangdun Road, Ltd. Industrial Park of Suzhou, Jiangsu Unit: NTD thousand

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(3) Entities presumed in control-subsidiary relations and information on identical: None. (4) A. The industries housed in the same business location of the whole business group: (a) Commercial bank: Banking business as permitted under the Banking Act. (b) Insurance broker: Please refer to Paragraph (2), Profiles of the bank’s subsidiaries. (c) Lease operation: Same as the information listed in the business knowledge of affiliated businesses section, disclosed in previous pages. B. The division of labor of the business group: The business group started with banking through Taichung Commercial Bank. Taichung Commercial Bank Insurance Broker acted as brokerage for personal and property insurance business and developed the business through employees of Taichung Commercial Bank. Taichung Commercial Bank Lease Enterprise operates a full range of leasing business, offering diverse services and financial products, including leasing, installment management, accounts receivable factoring, and financing loans to our clients. TCCBL Co., Ltd is a foreign holding subsidiary 100% owned by Taichung Commercial Bank Lease Enterprise. Its main business purpose is acting as an investor in Taichung Commercial Bank Leasing (Suzhou) Ltd.; additionally, it also runs leasing operations. The business purpose of Taichung Commercial Bank Leasing (Suzhou) Ltd. is providing Taiwanese businesses in China leasing and other related services. Through joint marketing efforts between the bank, leasing, and insurance brokerage companies, we can implement well-rounded service to small and medium enterprises, increase the ratio of non-interest revenue, boost our competitiveness, and strengthen our service quality. (5) Information on endorsements and/or guarantees, loaning of funds, and derivatives transactions A. Endorsements/guarantees to others: Unit: NTD thousand The party receiving the The highest Total The The limit of The endorsement and/or balance of The ending endorsements and The upper company endorsements endorsements guarantee endorsements balance of guarantees as a limit of an providing the and/or and/or No. and/or endorsements percentage of endorsement endorsement guarantees to a guarantees Company guarantees in and/or equity in the most and/or and/or Relation single business secured with name the current guarantees recent financial guarantee. guarantee entity property period statement Taichung 100% and Commercial TCCBL Co., directly 1 5,920,632 500,000 500,000 - 50.67％ 9,867,720 Bank Lease Ltd. owned Enterprise subsidiary B. Loans to others: None. C. Transactions of derivative products: None. (6) Profiles of Directors, Supervisors and Presidents of the bank’s subsidiaries Unit: Thousand shares Name of enterprise Title Company name or representative Status of shareholding

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Ratio of Quantity Shareholding (%) Controlling company: Taichung CommercialChairman Pan Asia Chemical Corporation 147,155 6.35 Bank Co., Ltd. Corporation: Jin-Fong Soo - - Vice Chairman Pan Asia Chemical Corporation 147,155 6.35 Representative: Kuei-Hsien Wang 259 0.01 Managing Pan Asia Chemical Corporation 147,155 6.35 Director Representative: Jer-Shyong Tsai - - Managing I Joung Investment Co., Ltd. 16,367 0.71 Director Representative: Yi-Jen Chen 9,897 0.43 Managing Hsi-Rong Huang - - Director (Independent director) Director Pan Asia Chemical Corporation 147,155 6.35 Representative: Chun-Sheng Lee 481 0.02 Kang-Chi Chou - - Ming-Shan Chuang - - Hsin-Ching Chang - - Meng-Liang Chang - - Director I Joung Investment Co., Ltd. 16,367 0.71 Representative: Ching-Hsin Chang 66 - Director Ho Yang Management Consultant Co., Ltd. 1,400 0.06 Representative: Chia-Hung Lin - - Director Chou Chang Co., Ltd. 8,796 0.38 Representative: Wei-Liang Lin - - Independent Chen-Le Liu - - director Independent Jin-Yi Lee - - director Resident Xin Rui Investment Co., Ltd. 7,712 0.33 Supervisor Representative: Jiann-Ell Huang - - Supervisor Xin Rui Investment Co., Ltd. 7,712 0.33 Representative: Chien-Hwa Lee Fu - - Ching-Huang Tsai - - Shu-Li Huang - - Supervisor Tai Jiunn Enterprise Co., Ltd. 788 0.03 Representative: Chao-Nan Hsieh - - General Chun-Sheng Lee 481 0.02 Manager Subsidiary companies: Taichung CommercialChairman Taichung Commercial Bank Co., Ltd. 8,236 100.00 Bank Insurance Representative: Kuei-Hsien Wang - - Broker Co., Ltd. Director Taichung Commercial Bank Co., Ltd. 8,236 100.00 Representative: Huan-Te Wang - - Yi-Der Chen - - Supervisor Taichung Commercial Bank Co., Ltd. 8,236 100.00 Representative: Kai-Yu Lin - - Taichung CommercialChairman Taichung Commercial Bank Co., Ltd. 100,000 100.00 Bank Lease Representative: Wei-Liang Lin - - Enterprise Director Taichung Commercial Bank Co., Ltd. 100,000 100.00 Representative: Jer-Shyong Tsai - - Kai-Yu Lin - - Kuo-Chun Liu - - Yao-Hsiang Shih - - Supervisor Taichung Commercial Bank Co., Ltd. 100,000 100.00 Representative: Hsin-Ching Chang - - TCCBL Co., Ltd. Chairman Taichung Commercial Bank Lease Enterprise 13,500 100.00 Representative: Hsin-Ching Chang - -

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Taichung CommercialChairman Taichung Commercial Bank Lease Enterprise - 100.00 Bank Leasing Representative: Hsin-Ching Chang - - (Suzhou) Ltd. Director Taichung Commercial Bank Lease Enterprise - 100.00 Representative: Kai-Yu Lin - - Kuo-Ming Lo - - Supervisor Taichung Commercial Bank Lease Enterprise - 100.00 Representative: Yao-Hsiang Shih - -

(7) Operation overview of the bank’s subsidiaries Unit: in NTD thousand unless otherwise specified Earnings Per Income Net Income Share (ioss) Total (loss) Name of enterprise Capital Total assets Equity Income (loss) before (NTD) liabilities after (loss) taxation (After income taxation tax) Controlling company Taichung 23,187,442 444,372,068 416,290,968 28,081,100 6,853,717 3,304,262 2,777,958 1.20 Commercial Bank Co., Ltd.

Subsidiary companies: Taichung 82,360 303,731 121,524 182,207 235,164 114,272 93,847 11.39 Commercial Bank Insurance Broker Co., Ltd. Taichung 1,000,000 1,445,784 459,012 986,772 30,427 (13,705) (13,705) (0.14) Commercial Bank Lease Enterprise TCCBL Co., Ltd. 395,159 496,284 101,743 394,541 113 (1,094) (1,094) (0.08) Taichung 395,159 397,644 2,710 394,934 96 (702) (702) - Commercial Bank Leasing (Suzhou) Ltd.

2. Consolidated financial statement of subsidiaries The Bank is required to prepare consolidated financial statements with its subsidiaries under the “Standards for the Preparation of Consolidated Report on Operation, Consolidated Financial Statements, and Report on Affiliations between Parent and Subsidiaries”. Subsidiaries of the Bank under the aforementioned legal rule are identical with the subsidiaries defined under Financial Accounting Standard No. 7 on “Consolidated Financial Statements”. Information on Financial Status and operation performance of such subsidiaries has been included in the disclosure of the aforementioned consolidated financial statement between parent and subsidiaries and therefore will not be prepared separately. For further information, please refer to the aforementioned consolidated statement between parent and subsidiaries.

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Taichung CommercialChairman Taichung Commercial Bank Lease Enterprise - 100.00 Bank Leasing Representative: Hsin-Ching Chang - - (Suzhou) Ltd. Director Taichung Commercial Bank Lease Enterprise - 100.00 Representative: Kai-Yu Lin - - Statement of Declaration Kuo-Ming Lo - - Supervisor Taichung Commercial Bank Lease Enterprise - 100.00 Representative: Yao-Hsiang Shih - - The Bank Affiliation Report 2012 (from January 1, 2012 to December 31, 2012) was prepared in

(7) Operation overview of the bank’s subsidiaries accordance with the “Criteria Governing Preparation of Report on Affiliations, Consolidated Business Unit: in NTD thousand unless otherwise specified Reports and Consolidated Financial Statements of Affiliated Enterprises”, and the information Earnings Per Income Net Income Share (ioss) Total (loss) disclosed herein is materially consistent with that disclosed in the notes to the financial statement for Name of enterprise Capital Total assets Equity Income (loss) before (NTD) liabilities after (loss) taxation (After income the previous period. taxation tax) Controlling company Taichung 23,187,442 444,372,068 416,290,968 28,081,100 6,853,717 3,304,262 2,777,958 1.20 Commercial Bank Co., Ltd.

Subsidiary companies: Taichung 82,360 303,731 121,524 182,207 235,164 114,272 93,847 11.39 Commercial Bank Insurance Broker Co., Ltd. Taichung 1,000,000 1,445,784 459,012 986,772 30,427 (13,705) (13,705) (0.14) Commercial Bank Lease Enterprise Company name: Taichung Commercial Bank Co., Ltd. TCCBL Co., Ltd. 395,159 496,284 101,743 394,541 113 (1,094) (1,094) (0.08) Taichung 395,159 397,644 2,710 394,934 96 (702) (702) - Commercial Bank Leasing Responsible Person: Jin-Fong Soo (Suzhou) Ltd.

2. Consolidated financial statement of subsidiaries The Bank is required to prepare consolidated financial statements with its subsidiaries under the “Standards for the Preparation of Consolidated Report March 13, 2013 on Operation, Consolidated Financial Statements, and Report on Affiliations between Parent and Subsidiaries”. Subsidiaries of the Bank under the aforementioned legal rule are identical with the subsidiaries defined under Financial Accounting Standard No. 7 on “Consolidated Financial Statements”. Information on Financial Status and operation performance of such subsidiaries has been included in the disclosure of the aforementioned consolidated financial statement between parent and subsidiaries and therefore will not be prepared separately. For further information, please refer to the aforementioned consolidated statement between parent and subsidiaries.

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CPA’s Review Comments

To: Taichung Commercial Bank Co., Ltd.

We conducted the audit on the financial statements of Taichung Commercial Bank Company Limited for 2012 in accordance with the “Standards on the Audit of Financial Statements” and the audit principle generally accepted in the Republic of China, and we have issued modified unqualified opinions dated March 13, 2013. The purpose of the audit is to give an opinion on the fair presentation of the said financial statements. The Affiliation Report for 2012 prepared by Taichung Commercial Bank was attached. Such report was prepared in accordance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises”. An audit review requires us to proceed with the necessary procedures, including the acquisition of customers’ declaration and the confirmation on related information. The review has been successfully accomplished. In our opinion, the Affiliation Report for 2012 prepared by Taichung Commercial Bank is in compliance with the “Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” and the contents of financial information are identical with those presented in the financial statements. No material amendments to the information shall be required.

Deloitte & Touche Wen-Ya Hsu, CPA Tzu-Chun Wang, CPA

Securities and Futures Bureau Securities and Futures Bureau Approval Document No. Approval Document No. Tai-Cai-Jheng (6) No. 0920123784 Tai-Cai-Jheng (6) No. 0920123784

March 13, 2013

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3. Affiliation Report: A. Relations between parent and subsidiaries Unit: share; % Status of shareholding and lien of stock by Directors, Supervisors or managers Name of holding company appointed by holding company holding Reason of holding Ratio of Shares company Shares Title Name Shareholding under lien Pan Asia Win a majority of 147,154,866 6.35% - Chairman Jin-Fong Soo Chemical director seats of the Shares Vice Chairman Kuei-Fong Wang Corporation Bank Managing Jer-Shyong Tsai Director Director Chun-Sheng Lee Director Kang-Chi Chou Director Ming-Shan Chuang Director Hsin-Ching Chang Director Meng-Liang Chang China Indirectly control 532,245,888 22.95% 139,000,000 - - Man-Made over the HR, finance Shares Shares Fiber Co., Ltd. or operation of the Bank

Chung Chien Indirectly control - - - - - Investment over the HR, finance Co., Ltd. or operation of the Bank B. Transactions between subsidiaries and Parent Name of enterprise: None C. Guarantees/endorsements between subsidiaries and Parent Name of enterprise: None. (II) Private placement of securities and Bank debentures: None. (III) In the most recent year to the date this report was printed, the holding or disposition of the shares of the Bank held by the subsidiaries: none. (IV) Other Supplementary Disclosure: None. II Conditions that will materially affect shareholders’ equity or price of securities:

Date Conditions The Board has ratified the letter of intent for property transaction, which is an 2012.1.11 agreement the bank entered into with the owner of the property in Neihu District, Taipei City. Notice: Our bank will cancel the private placement of securities resolved at the 2012.3.8 Shareholders’ Meeting in 2011. Taichung Bank will spin off its securities division as Taichung Commercial Bank 2012.4.18 Consolidated Securities Co. Ltd. Notice: The Board of our company has resolved to participate in the increase of 2012.8.8 capital of Taichung Bank Insurance Agency Co. Ltd. and would use real estate as consideration. Notice: The Board of our company has resolved to increase our investment in 2012.10.17 Reliance Securities Investment Trust Co. Ltd. Record date: 2013.2.28

179179

9 Branches of Taichung Commercial Bank at a Glance Name Tel. No. Fax No. Postal Address code Head Office No. 87, Min Chuan Road, West District, Min Chuan Building 04-22236021 04-22240748 40341 Taichung No. 45, Min Tsu Rd., Central Dist., Min Zu Building 04-22236023 04-22278584 40041 Taichung 8F, No. 87, Min Chuan Road, West District, Trust Dept. 04-22236021 04-22202327 40341 Taichung International 2F, No. 87, Min Chuan Road, West District, 04-22212933 04-22202046 40341 Business Dept. Taichung Securities 1F, No. 45, Min Tsu Rd., Central Dist., 04-22268588 04-22267708 40041 Brokerage Taichung Taipei City Taipei Branch 02-23211819 02-23212659 10049 No. 85, Jhongsiao E. Rd., Sec. 1, Taipei No. 176, Keelung Rd., Sec. 1, Xin Yi Dist., Songshan Branch 02-27658666 02-27658368 11072 Taipei No. 306, Ruei Guang Rd., Neihu Dist., Neihu Branch 02-26579899 02-26578887 11492 Taipei Overseas Banking 8F.-4, No.85, Jhongsiao E. Rd., Sec. 1, 02-23219858 02-23216358 10049 Branch Taipei Taipei Securities 4F.-1, No.85, Jhongsiao E. Rd., Sec. 1, 02-23216266 02-23215020 10049 Branch Taipei New Taipei City No. 28-2, Min Sheng Rd., Sec. 1, Banchiao Banchiao Branch 02-29563456 02-29581616 22067 Dist., New Taipei No. 2, Jhongzhen Rd., Sanzhong Dist., New Sanzhong Branch 02-29877878 02-29872411 24141 Taipei No. 651, Zhong Zheng Rd., Xinzhuang Xinzhuang Branch 02-29017888 02-29013040 24257 Dist., New Taipei Linkou Branch 02-26021888 02-26014522 24443 No. 8, Chu Lin Rd., Linko Dist., New Taipei No. 56, Ming-De Rd., Tucheng Dist., New Tucheng Branch 02-82603158 02-82601658 23659 Taipei Taoyuan County No. 24, Zhong Xiao Rd., Jhongli City, Neili Branch 03-4610566 03-4620277 32067 Taoyuan No. 326, Yanping Rd., Jhongli City, Jhongli Branch 03-4228828 03-4228826 32085 Taoyuan No. 18, Jhongfong Rd., Pingzhen City, Pizgzhen Branch 03-4915688 03-4912789 32441 Taoyuan 1&2F, No. 324, Zhong Shan Rd., Taoyuan Taoyuan Branch 03-3333389 03-3331599 33058 City, Taoyuan No. 337-1, Xin Nong Street, Yangmei Yangmei Branch 03-4855288 03-4855859 32645 Township, Taoyuan No. 288, Nan Kang Rd., Sec. 1, Lu Zhu Nankang Branch 03-3216611 03-2223311 33859 Hsiang, Taoyuan No. 1185, Wan Shou Rd., Sec. 2, Gueishan Kueishan Branch 03-3590005 03-3591266 33342 Hsiang, Taoyuan No. 47, Da Guan Rd., Tayuan Hsiang, Tayuan Branch 03-3857001 03-3859033 33753 Taoyuan Jhongli Securities 2F, No. 18, Zhong Mei Rd., Jhongli City, 03-4251366 03-4251172 32085 Branch Taoyuan Hsinchu City Hsinchu Branch 03-5257288 03-5233566 30046 No. 128, Si Wei Rd., Hsinchu

180180

Name Tel. No. Fax No. Postal Address 9 Branches of Taichung Commercial Bank at a Glance code Name Tel. No. Fax No. Postal Address Hsinchu County code No. 276, Kuang Ming 6th Rd., East Sec. 1, Zhupei Branch 03-6675188 03-6675168 30264 Head Office Zhu Pei, Hsinchu No. 87, Min Chuan Road, West District, No. 155-12, Chien Hsing Rd., Sec. 1, Min Chuan Building 04-22236021 04-22240748 40341 Hsinfeng Branch 03-5590929 03-5590788 30442 Taichung Hsinfong, Hsinchu No. 45, Min Tsu Rd., Central Dist., Min Zu Building 04-22236023 04-22278584 40041 Miaoli County Taichung No. 66, Ho Ping Street, Zhu Nan Township, 8F, No. 87, Min Chuan Road, West District, Zhunan Branch 037-481148 037-480465 35041 Trust Dept. 04-22236021 04-22202327 40341 Miaoli Taichung No. 79, Xin Yi Rd., Yuan Nan Li, Yuan Li International 2F, No. 87, Min Chuan Road, West District, Yuanli Branch 037-866366 037-866316 35844 04-22212933 04-22202046 40341 Township, Miaoli Business Dept. Taichung Taichung City Securities 1F, No. 45, Min Tsu Rd., Central Dist., 04-22268588 04-22267708 40041 No. 189, Zhong-Zheng Rd., Central Dist., Brokerage Taichung Zhongzheng Branch 04-22245181 04-22251969 40044 Taichung Taipei City N. Taiping Branch 04-22121298 04-22120800 40147 No. 66, Wu Dong Rd., East Dist., Taichung Taipei Branch 02-23211819 02-23212659 10049 No. 85, Jhongsiao E. Rd., Sec. 1, Taipei No. 355, Fu Xin Rd., Sec. 3, South Dist., No. 176, Keelung Rd., Sec. 1, Xin Yi Dist., S. Taichung Branch 04-22244187 04-22253055 40247 Songshan Branch 02-27658666 02-27658368 11072 Taichung Taipei No. 295, Fu Xin Rd., Sec. 1, South Dist., No. 306, Ruei Guang Rd., Neihu Dist., Daqing Branch 04-22634838 04-22634846 40256 Neihu Branch 02-26579899 02-26578887 11492 Taichung Taipei 1F, No. 87, Min-Chuan Rd., West Dist., Overseas Banking 8F.-4, No.85, Jhongsiao E. Rd., Sec. 1, Business Dept. 04-22274567 04-22232926 40341 02-23219858 02-23216358 10049 Taichung Branch Taipei W. Taichung Taipei Securities 4F.-1, No.85, Jhongsiao E. Rd., Sec. 1, 04-23212501 04-23211847 40356 No. 369, Gong Yi Rd., West Dist., Taichung 02-23216266 02-23215020 10049 Branch Branch Taipei N. Taichung Branch 04-22920832 04-22957526 40462 No. 624, Da Ya Rd., North Dist., Taichung New Taipei City No. 80, Ching Hua N. Rd., Peitun Dist., No. 28-2, Min Sheng Rd., Sec. 1, Banchiao Peitun Branch 04-22316266 04-22316168 40646 Banchiao Branch 02-29563456 02-29581616 22067 Taichung Dist., New Taipei No. 222, Tung Shan Rd, Sec. 1, Pei Tun No. 2, Jhongzhen Rd., Sanzhong Dist., New Junkong Branch 04-24371151 04-24367374 40663 Sanzhong Branch 02-29877878 02-29872411 24141 Dist., Taichung Taipei No. 199, Chong De Rd., Sec. 3, Pei Tun No. 651, Zhong Zheng Rd., Xinzhuang Simin Branch 04-24226165 04-24226567 40673 Xinzhuang Branch 02-29017888 02-29013040 24257 Dist., Taichung Dist., New Taipei No. 436, Sec. 2, Ho-Nan Rd., Xitun Dist., Xitun Branch 04-27060696 04-27010309 40744 Linkou Branch 02-26021888 02-26014522 24443 No. 8, Chu Lin Rd., Linko Dist., New Taipei Taichung No. 56, Ming-De Rd., Tucheng Dist., New 1F & 2F No. 663, Wu Chuan W. Rd., Sec.2, Tucheng Branch 02-82603158 02-82601658 23659 Nantun Branch 04-23824358 04-23828070 40869 Taipei Nan Tun Dist., Taichung Taoyuan County No. 115, Zhong Xing Rd, Tai Ping Dist., No. 24, Zhong Xiao Rd., Jhongli City, Taiping Branch 04-22700756 04-22708629 41142 Neili Branch 03-4610566 03-4620277 32067 Taichung Taoyuan No. 339, Zhong Xing Rd., Sec. 2, Da Li No. 326, Yanping Rd., Jhongli City, Neixin Branch 04-24830345 04-24838958 41254 Jhongli Branch 03-4228828 03-4228826 32085 Dist., Taichung Taoyuan No. 829, Zhong-Zheng Rd., Wufong Dist., No. 18, Jhongfong Rd., Pingzhen City, Wufeng Branch 04-23391165 04-23326083 41341 Pizgzhen Branch 03-4915688 03-4912789 32441 Taichung Taoyuan No. 107, San Min St., Wu Ri Hsiang, 1&2F, No. 324, Zhong Shan Rd., Taoyuan Wuri Branch 04-23373176 04-23373180 41442 Taoyuan Branch 03-3333389 03-3331599 33058 Taichung City, Taoyuan No. 232, Zhong Shan Rd., Fong Yuan Dist., No. 337-1, Xin Nong Street, Yangmei S. Fongyuan Branch 04-25261195 04-25284637 42050 Yangmei Branch 03-4855288 03-4855859 32645 Taichung Township, Taoyuan No. 338, Yuan Wan E. Rd, Fong Yuan Dist., No. 288, Nan Kang Rd., Sec. 1, Lu Zhu Nanyang Branch 04-25244426 04-25284638 42051 Nankang Branch 03-3216611 03-2223311 33859 Taichung Hsiang, Taoyuan No. 302-1, Zhong Shan Rd., Fong Yuan No. 1185, Wan Shou Rd., Sec. 2, Gueishan Fongyuan Branch 04-25244171 04-25244178 42056 Kueishan Branch 03-3590005 03-3591266 33342 Dist., Taichung Hsiang, Taoyuan No. 203, Zhong Shan Rd., Fong Yuan Dist., No. 47, Da Guan Rd., Tayuan Hsiang, E. Fongyuan Branch 04-25260175 04-25279944 42060 Tayuan Branch 03-3857001 03-3859033 33753 Taichung Taoyuan No. 95, Min Sheng Rd., Hou Li District, Jhongli Securities 2F, No. 18, Zhong Mei Rd., Jhongli City, Houli Branch 04-25571180 04-25573081 42151 03-4251366 03-4251172 32085 Taichung City Branch Taoyuan No. 61, Zhong Shan Rd., Dongshi Dist., Dongshi Branch 04-25872185 04-25875203 42343 Hsinchu City Taichung Hsinchu Branch 03-5257288 03-5233566 30046 No. 128, Si Wei Rd., Hsinchu

180 181

Name Tel. No. Fax No. Postal Address code No. 76, Tan Xing Rd., Sec. 3, Tan Zi Dist., Tanzi Branch 04-25323121 04-25338460 42751 Taichung 1&2F, No. 39, Zhong Qing S. Rd., Daya Daya Branch 04-25668161 04-25671143 42843 Dist., Taichung No. 40, Mintzu Rd., Shengang Dist., Shengang Branch 04-25621501 04-25627404 42944 Taichung No. 778, Sha Tian Rd., Sec. 2, Dadu Dist., Dadu Branch 04-26991166 04-26991170 43242 Taichung 1&2F, No. 298, Zhong Shan Rd., Sha Lu Shalu Branch 04-26621101 04-26622467 43350 Dist., Taichung No. 77, You Yuan S. Rd., Lung Jing Dist., Lungjing Branch 04-26326788 04-26323566 43448 Taichung Taichungkang 04-26571191 04-26571517 43542 No. 36, Ba De Rd., Wu Qin Dist., Taichung Branch No. 104, Zhong Shan Rd., Qingshui Dist., Qingshui Branch 04-26226106 04-26227587 43653 Taichung Dajia Branch 04-26862151 04-26875838 43746 No. 42, CKS Route, Dajia Dist., Taichung Changhwa County Changhua Branch 04-7224641 04-7221431 50061 No. 126, Guang-Fu Rd., Changhua Dazhu Branch 04-7387648 04-7386907 50078 No. 364, Jang Nan Rd., Sec. 1, Changhwa No. 446, Zhong Shan Rd., Sec. 1, Hua Tan Huatan Branch 04-7868775 04-7869067 50343 Hsiang, Changhwa 1&2F, No. 597, Jang Shui Rd., Sec. 2, Xiu Xiushui Branch 04-7693525 04-7698148 50448 Shui Hsiang, Changhwa No. 266, Zhong Shan Rd., Lu Kang Lukang Branch 04-7780545 04-7762275 50563 Township, Changhwa No. 393, Lu Ho Rd., Sec. 6, Ho Mei Homei Branch 04-7562171 04-7562175 50846 Township, Changhwa No. 111, Zhong Shan E. Rd., Shen Kang Shenkang Branch 04-7983171 04-7988403 50941 Hsiang, Changhwa No. 27, Zhong Shan S. Rd., Yuan Lin Yuanlin Branch 04-8326141 04-8332927 51046 Township, Changhwa No. 116, Da Tung Rd., Sec. 2, Yuan Lin N. Yuanlin Branch 04-8322141 04-8354844 51050 Township, Changhwa County No. 311, Yuan Jing Rd., Sec. 2, She Tou Shetou Branch 04-8731466 04-8720427 51141 Township, Changhwa No. 71, Xi Men Rd., Yong Jing Hsiang, Yongjing Branch 04-8232363 04-8232549 51247 Changhwa No. 217, Zhong Zheng Rd., Sec. 1, Pu Xin Puxin Branch 04-8281437 04-8281442 51347 Hsiang, Changhwa No. 290, Jang Shui Rd., Sec. 3, Xi Hu Xihu Branch 04-8853311 04-8814498 51452 Township, Changhwa No. 197, Zhong Zhou Rd., Sec. 1, Tian Tianzhong Branch 04-8742206 04-8741514 52042 Zhong Township, Changhwa No. 180, Tou Yuan Rd., Sec. 1, Pei Tou Peitou Branch 04-8884146 04-8885331 52146 Township, Changhwa No. 163, Tou Yuan W. Rd., Pei Tou Hsiang, Pitou Branch 04-8924606 04-8924335 52341 Changhwa No. 496, Jen Ai Rd., Pei Ping Li, Er Lin Erlin Branch 04-8962125 04-8962677 52662 Township, Changhwa Yuanlin Securities 3F, No. 462, Zhong Zheng S. Rd., Yuan Lin 04-8329000 04-8311283 51041 Branch Township, Changhwa Nantou County

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Name Tel. No. Fax No. Postal Address Name Tel. No. Fax No. Postal Address code code No. 76, Tan Xing Rd., Sec. 3, Tan Zi Dist., Nantou Branch 049-2222146 049-2222481 54058 No. 52, Min Sheng St., Nantou City, Nantou Tanzi Branch 04-25323121 04-25338460 42751 Taichung No. 141, Pi Shan Rd., Cao Tun Township, Caotun Branch 049-2334146 049-2303149 54263 1&2F, No. 39, Zhong Qing S. Rd., Daya Nantou Daya Branch 04-25668161 04-25671143 42843 Dist., Taichung No. 62, Xi Kang Rd., Pu Li Township, Puli Branch 049-2984001 049-2901265 54555 No. 40, Mintzu Rd., Shengang Dist., Nantou Shengang Branch 04-25621501 04-25627404 42944 Taichung No. 270, Min Chuan Rd., Shui Li Hsiang, Shui Li Branch 049-2772177 049-2770046 55343 No. 778, Sha Tian Rd., Sec. 2, Dadu Dist., Nantou Dadu Branch 04-26991166 04-26991170 43242 Taichung No. 148, Zhu Shan Rd., Zhu Shan Zhushan Branch 049-2643181 049-2653081 55747 1&2F, No. 298, Zhong Shan Rd., Sha Lu Township, Nantou Shalu Branch 04-26621101 04-26622467 43350 Dist., Taichung Yunlin County No. 77, You Yuan S. Rd., Lung Jing Dist., No. 151-9, Zhong Shan S. Rd., Tou Nan Lungjing Branch 04-26326788 04-26323566 43448 Dounan Branch 05-5954879 05-5954891 63041 Taichung Township, Yunlin Taichungkang No. 57-2, Lin Sen Rd., Sec. 2, Hu Wei 04-26571191 04-26571517 43542 No. 36, Ba De Rd., Wu Qin Dist., Taichung Huwei Branch 05-6313788 05-6310599 63246 Branch Township, Yunlin No. 104, Zhong Shan Rd., Qingshui Dist., Chiayi County Qingshui Branch 04-26226106 04-26227587 43653 Taichung No. 78, Jien Kuo Rd., Sec. 2, Ming Hsiung Minghsiung Branch 05-2208833 05-2205533 62159 Dajia Branch 04-26862151 04-26875838 43746 No. 42, CKS Route, Dajia Dist., Taichung Hsiang, Chiayi Changhwa County Tainan City Changhua Branch 04-7224641 04-7221431 50061 No. 126, Guang-Fu Rd., Changhua No. 760, Zhong Hua Rd., Yong Kang Dist., Yongkang Branch 06-3026678 06-3035659 71049 Dazhu Branch 04-7387648 04-7386907 50078 No. 364, Jang Nan Rd., Sec. 1, Changhwa Tainan No. 446, Zhong Shan Rd., Sec. 1, Hua Tan Kaohsiung City Huatan Branch 04-7868775 04-7869067 50343 Hsiang, Changhwa 1&2F, No. 11, Min Chuan 1st Rd., Ling Ya Kaohsiung Branch 07-3355275 07-3346981 80251 1&2F, No. 597, Jang Shui Rd., Sec. 2, Xiu Dist., Kaohsiung Xiushui Branch 04-7693525 04-7698148 50448 Shui Hsiang, Changhwa 1&2F, No. 172, Wu Qing 2nd Rd., Fong Fongshan Branch 07-7216719 07-7211423 83081 No. 266, Zhong Shan Rd., Lu Kang Shan Dist., Kaohsiung Lukang Branch 04-7780545 04-7762275 50563 Township, Changhwa No. 393, Lu Ho Rd., Sec. 6, Ho Mei Homei Branch 04-7562171 04-7562175 50846 Township, Changhwa No. 111, Zhong Shan E. Rd., Shen Kang Shenkang Branch 04-7983171 04-7988403 50941 Hsiang, Changhwa No. 27, Zhong Shan S. Rd., Yuan Lin Yuanlin Branch 04-8326141 04-8332927 51046 Township, Changhwa No. 116, Da Tung Rd., Sec. 2, Yuan Lin N. Yuanlin Branch 04-8322141 04-8354844 51050 Township, Changhwa County No. 311, Yuan Jing Rd., Sec. 2, She Tou Shetou Branch 04-8731466 04-8720427 51141 Township, Changhwa No. 71, Xi Men Rd., Yong Jing Hsiang, Yongjing Branch 04-8232363 04-8232549 51247 Changhwa No. 217, Zhong Zheng Rd., Sec. 1, Pu Xin Puxin Branch 04-8281437 04-8281442 51347 Hsiang, Changhwa No. 290, Jang Shui Rd., Sec. 3, Xi Hu Xihu Branch 04-8853311 04-8814498 51452 Township, Changhwa No. 197, Zhong Zhou Rd., Sec. 1, Tian Tianzhong Branch 04-8742206 04-8741514 52042 Zhong Township, Changhwa No. 180, Tou Yuan Rd., Sec. 1, Pei Tou Peitou Branch 04-8884146 04-8885331 52146 Township, Changhwa No. 163, Tou Yuan W. Rd., Pei Tou Hsiang, Pitou Branch 04-8924606 04-8924335 52341 Changhwa No. 496, Jen Ai Rd., Pei Ping Li, Er Lin Erlin Branch 04-8962125 04-8962677 52662 Township, Changhwa Yuanlin Securities 3F, No. 462, Zhong Zheng S. Rd., Yuan Lin 04-8329000 04-8311283 51041 Branch Township, Changhwa Nantou County

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Auditor’s Report

To: Taichung Commercial Bank Co., Ltd.

Securities Investment Trust Co., Ltd., and Taichung Commercial Bank Lease Enterprise, Annual Report investees of the Company recognized under the equity method of evaluation, as stated in the 2012 (Audit Report Attached) aforementioned financial statements. The opinions of these statements were presented by third party auditors. The opinions and the financial figures on the financial statements of the

aforementioned investees so presented are based on the audit opinions of the third party auditors.

As per the audit report presented by the third party opinions on the investees recognized under

the equity method, the Company held equity shares of the investees amounted to NTD1,113,455

thousand and NTD127,811 thousand as of December 31 2012 and 2011, which accounted for

0.25% and 0.03% of the total assets of the Company, respectively. The net loss from investment

of the Company recognized under the equity method amounted to NTD14,833 thousand and

NTD10,262 thousand in the period of January 1 to December 31, 2012 and 2011, respectively,

which accounted for (0.45%) and (0.54%) of the earnings before taxation of the Company in the

same period, respectively.

We conducted our audit in accordance with the “Regulations Governing Auditing and

Attestation of Financial Statements by Certified Public Accountants”, and generally accepted

auditing standards in the Republic of China. Those standards require that we plan and perform

the audit to obtain reasonable assurance as to whether the financial statement is free of material Address: No. 87, Min Chuan Road, West District, Taichung City, TEL.: (04) 22236021 misstatement. An audit includes examining, through random sampling, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the other auditors' report may provide a reasonable basis for our opinion.

184‐ 184 - ‐ 185 -

Auditor’s Report

To: Taichung Commercial Bank Co., Ltd.

We have audited the accompanying balance sheet of Taichung Commercial Bank Co., Ltd. as of December 31, 2012 and 2011, and the related income statement, changes in shareholders’ equity and cash flows for the years then ended. Said financial statement is the responsibility of the management. Our responsibility is to express an opinion on the consolidated financial statement based on our audits. We did not audit the financial statements prepared by Reliance Securities Investment Trust Co., Ltd., and Taichung Commercial Bank Lease Enterprise, investees of the Company recognized under the equity method of evaluation, as stated in the aforementioned financial statements. The opinions of these statements were presented by third party auditors. The opinions and the financial figures on the financial statements of the aforementioned investees so presented are based on the audit opinions of the third party auditors. As per the audit report presented by the third party opinions on the investees recognized under the equity method, the Company held equity shares of the investees amounted to NTD1,113,455 thousand and NTD127,811 thousand as of December 31 2012 and 2011, which accounted for 0.25% and 0.03% of the total assets of the Company, respectively. The net loss from investment of the Company recognized under the equity method amounted to NTD14,833 thousand and NTD10,262 thousand in the period of January 1 to December 31, 2012 and 2011, respectively, which accounted for (0.45%) and (0.54%) of the earnings before taxation of the Company in the same period, respectively. We conducted our audit in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants”, and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the financial statement is free of material misstatement. An audit includes examining, through random sampling, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit and the other auditors' report may provide a reasonable basis for our opinion.

‐ 185185 -

In our opinion, based on our audit result and the other auditors’ report, the financial statements referred to in the first paragraph present fairly, in all material respects, the Financial Status of the Bank as of December 31, 2012 and 2011, and its operation results and cash flows for years then ended in conformity with the “Rules Governing the Preparation of Financial Statements of Public Issued Banks”, “Rules Governing the Preparation of Financial Statements of Securities Firms”, “Business Entity Accounting Act”, the provisions related to financial accounting standards referred to in the “Regulation on Business Entity Accounting Handling”, and generally accepted accounting principles in the Republic of China. As described in Note 3 to the financial statements, Taichung Commercial Bank Co., Ltd., since January 1, 2011, has adopted revised SFAS No. 34 “Accounting for Financial Instruments” and newly issued SFAS No. 41 “Disclosure of Operating Segments” and adopted early the provision concerning the grant date for capital increase by cash retained for subscription by employees stated in Letter (2012) Ji-Mi-Jin No. 038 issued by Accounting Research and Development Foundation. We have also audited the consolidated financial statements of the Bank for 2012 and 2011, and have expressed modified unqualified opinions on such financial statements. The statement of important accounting titles of the financial statement for 2012 was provided to supplement the analysis only, and has been audited by us in accordance with the procedure referred to in Paragraph 2 herein. In our opinion, the statement of such titles is consistent with the relevant information provided in the financial statement referred to in Paragraph 1 herein in all material respects.

Deloitte & Touche Wen-Ya Hsu, CPA Tzu-Chun Wang, CPA

Securities and Futures Bureau Approval Securities and Futures Bureau Approval Document No. Document No. Tai-Cai-Jheng-Zi (6) No. 0920123784 Tai-Cai-Jheng-Zi (6) No. 0920123784

March 13, 2013

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Taichung Commercial Bank Co., Ltd. Balance Sheet December 31, 2012 and 2011 Unit: NTD thousand Percentage Percentage

December 31, 2012 December 31, 2011 of Variation December 31, 2012 December 31, 2011 of Variation Code Assets Amount Amount (%) Code Liabilities and Shareholders’ Equity Amount Amount (%) 11000 Cash and cash equivalents (Note 4) $ 9,848,878 $ 8,349,890 18 21000 Deposits of CBC and other banks (Note 16) $ 5,151,548 $ 3,439,998 50

11500 Funds borrowed from CBC and other banks (Notes 17 Due from CBC and lend to banks (Note 5) 66,753,349 74,267,724 ( 10 ) 21500 and 31) 1,887,600 2,877,550 ( 34 )

12000 Financial assets at fair value through profit or Financial liabilities at fair value through profit or loss loss (Notes 2 & 6) 22000 (Note 2 and Note 6) 6,545,279 1,096,769 497 91,591 51,804 77

13000 Bills and bonds sold under repurchase agreements (Notes Receivables – net (Notes 2, 7, 9, 28 & 30) 22500 2 & 18) 264,045 - - 2,553,343 2,888,283 ( 12 ) 23000 Payables (Note 19) 8,896,768 7,683,501 16 13400 Assets held for sale (Notes 2 & 8) - 41,639 ( 100 ) 23500 Deposits and remittances (Notes 20 and 30) 385,862,841 333,832,631 16 13500 Discounts and loans – net (Notes 2, 9 & 30) 324,029,419 277,756,366 17 24000 Financial bonds payable (Note 2 & 21) 13,548,277 10,512,559 29 14000 Available-for-sale financial assets (Notes 2, 10 and 31) 18,519,719 4,211,580 340 25000 Accruable pension liabilities (Notes 2 and 22) 223,704 136,764 64 14500 Held-to-maturity financial assets - net (Notes 2, 11 & 31) 8,782,945 9,439,040 ( 7 ) 25500 Other financial liabilities (Note 23) 17,208 22,521 ( 24 ) 15000 Equity investment under equity method (Notes 2 & 12) 1,295,662 216,970 497 29500 Other liabilities (Notes 2, 24 and 30) 347,386 328,299 6

15500 Other financial assets, net (Notes 2, 9 & 13) 905,934 850,396 7 20000 Total liabilities 416,290,968 358,885,627 16

187 Fixed assets, net (Notes 2 & 14) Shareholders' equity (Note 25) Cost Capital stock 18501 Land 1,588,248 1,619,138 ( 2 ) 31001 Common stock capital 23,187,442 22,338,576 4 18521 Buildings and structures 1,840,555 1,849,721 - Capital surplus 18541 Transportation and communication equipment 38,820 34,821 11 31501 Stock premiums 569,058 569,058 - 18551 Miscellaneous equipment 1,047,727 1,071,640 ( 2 ) 31599 Other capital surplus 106,479 106,479 - Total cost 4,515,350 4,575,320 ( 1 ) Retained earnings Revaluation increment 605,170 605,170 - 32001 Legal reserve 1,160,137 723,937 60 Less: accumulated depreciation ( 1,729,844 ) ( 1,856,059 ) ( 7 ) 32003 Special reserve 83,647 32,599 157 Less: accumulated impairment ( 77,000 ) ( 77,000 ) - 32011 Accumulated earnings 2,785,992 1,455,841 91 18575 Prepayments for equipment 12,087 88,550 ( 86 ) 32501 Unrealized revaluation increment (Note 2) 283,744 283,744 - 18500 Net 3,325,763 3,335,981 - 32521 Adjustment of accumulated conversion 477 - - Unrealized gain on available-for-sale financial assets

32523 (Note 2) 19500 Other assets (Notes 2, 15 & 28) 1,811,777 1,892,043 ( 4 ) 91,865 10,960 738 32544 Net loss not recognized as pension cost (Note 22) ( 187,741 ) ( 60,140 ) 212 30000 Total shareholders’ equity 28,081,100 25,461,054 10

10000 Total assets $ 444,372,068 $ 384,346,681 16 Total Liabilities and Shareholders’ Equity $ 444,372,068 $ 384,346,681 16

The notes attached shall constitute an integral part of this financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013) Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

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Taichung Commercial Bank Co., Ltd. Income Statement Years Ended December 31, 2012 and 2011 Unit: NTD thousands, except Earnings Per Share (NTD)

Percentage 2012 2011 of Variation Code Amount Amount (%) 41000 Interest revenues (Notes 2 and 30) $ 8,607,239 $ 7,415,723 16

51000 Interest expenses (Notes 2 and 30) ( 3,148,129 ) ( 2,472,427 ) 27

Net interest income 5,459,110 4,943,296 10

Net income (loss) other than interest income 49100 Net income from service fees (Notes 2, 26 and 30) 1,142,043 889,894 28 49200 Net (loss) gain on financial assets and liabilities at fair value through profit or loss (Notes 2 and 6) 265,023 ( 503,030 ) 153 49300 Realized net gain on available-for-sale financial assets (Note 2) 14,540 - - 49500 Net gain on equity investment under equity method (Notes 2 & 12) 79,014 66,897 18 49600 Net gain (loss) on foreign exchange (Note 2) ( 136,482 ) 323,494 ( 142 ) 48063 Net loss on disposal of Fixed assets (Note 2) ( 38,370 ) ( 33,264 ) 15 49700 Gain (loss) on reversal of asset impairment (Notes 2, 8, 10, 11, 13 and 15) ( 1,837 ) 10,741 ( 117 ) 49805 Net gain from financial assets carried at cost 19,157 24,861 ( 23 ) 58023 Net loss on disposal of collateral accepted ( 24,200 ) ( 45,657 ) ( 47 ) 58089 Other provision (Note 32) ( 10,400 ) ( 5,050 ) 106 48099 Other non-interest income (Note 2) 86,119 40,675 112

Net revenue 6,853,717 5,712,857 20

51500 Bad debts expense (Notes 2 and 9) ( 238,244 ) ( 664,948 ) ( 64 )

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(Continued from previous page)

Percentage 2012 2011 of Variation Code Amount Amount (%) Operating expenses (Note 27) 58500 Employee expenses ( $ 2,105,332 ) ( $ 1,913,089 ) 10 59000 Depreciation and amortization expenses ( 162,818 ) ( 140,914 ) 16 59500 Business and administrative expenses ( 1,043,061 ) ( 1,079,730 ) ( 3 ) Total operating expenses ( 3,311,211 ) ( 3,133,733 ) 6

61001 Income before taxation 3,304,262 1,914,176 73

61003 Income tax expenses (Notes 2 & 28) ( 526,304 ) ( 460,176 ) 14

69000 Net income of current period $ 2,777,958 $ 1,454,000 91

Code Before After Before After taxation taxation taxation taxation EPS (Note 29) 69500 Basic earnings per share $ 1.43 $ 1.20 $ 1.00 $ 0.76 69700 Diluted earnings per share $ 1.32 $ 1.11 $ 0.95 $ 0.72

The notes attached shall constitute an integral part of this financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013)

Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

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Taichung Commercial Bank Co., Ltd. Statements of Changes in Shareholders’ Equity Years Ended December 31, 2012 and 2011 Unit: NTD thousand

Other shareholders’ equity Capital stock Capital surplus Retained earnings Unrealized Adjustment of Unrealized gain Net loss not Total Common stock Other capital Accumulated revaluation accumulated (loss) on financial recognized as shareholders’ capital Stock premiums surplus Legal reserve Special reserve earnings increment conversion instruments pension cost equity Balance as of January 1, 2011 $ 17,319,006 $ 775,256 $ 16,813 $ 600,350 $ 16,987 $ 411,956 $ 283,744 $ - ( $ 9,092 ) $ - $ 19,415,020

Allocation of earnings 2010 Legal reserve - - - 123,587 - ( 123,587 ) - - - - - Special reserve - - - - 9,092 ( 9,092 ) - - - - - Reversal of special reserve - - - - ( 16,987 ) 16,987 - - - - - Stock dividends 294,423 - - - - ( 294,423 ) - - - - -

Issuance of common stock for cash 4,500,000 ------4,500,000

Capital surplus transferred to capital 225,147 ( 225,147 ) ------

Equity component of convertible financial bonds - - 83,039 ------83,039

Recognition of employee stock option compensation cost - 18,949 6,627 ------25,576

Available-for-sale financial asset price difference adjustment ------20,052 - 20,052

Default loss reserve transferred as special 190 reserve (Note 24) - - - - 23,507 - - - - - 23,507

Net loss not recognized as pension cost ------( 60,140 ) ( 60,140 )

Net income 2011 - - - - - 1,454,000 - - - - 1,454,000

Balance as of December 31, 2011 22,338,576 569,058 106,479 723,937 32,599 1,455,841 283,744 - 10,960 ( 60,140 ) 25,461,054

Distribution of incomes in 2011 Legal reserve - - - 436,200 - ( 436,200 ) - - - - - Special reserve - - - - 60,140 ( 60,140 ) - - - - - Reversal of special reserve - - - - ( 9,092 ) 9,092 - - - - - Cash Dividends - - - - - ( 111,693 ) - - - - ( 111,693 ) Stock dividends 848,866 - - - - ( 848,866 ) - - - - -

Adjustment of shareholders’ equity of the investees recognized under the equity method ------477 - - 477

Available-for-sale financial asset price difference adjustment ------80,905 - 80,905

Net loss not recognized as pension cost ------( 127,601 ) ( 127,601 )

Net income 2012 - - - - - 2,777,958 - - - - 2,777,958

Balance as of December 31, 2012 $ 23,187,442 $ 569,058 $ 106,479 $ 1,160,137 $ 83,647 $ 2,785,992 $ 283,744 $ 477 $ 91,865 ( $ 187,741 ) $ 28,081,100

The notes attached shall constitute an integral part of this financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013)

Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

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Taichung Commercial Bank Co., Ltd. Statements of Cash Flow Years Ended December 31, 2012 and 2011 Unit: NTD thousand 2012 2011 Cash flow from operating activities Net income of current period $ 2,777,958 $ 1,454,000 Provision of allowance for bad debts 238,244 664,948 Recovery of bad debts 244,606 230,394 Write-off of non-performing loans ( 83,387 ) ( 553,966 ) Income of investment under the equity method ( 79,014 ) ( 66,897 ) Cash dividends under equity method 799 187,488 Available-for-sale financial asset premium amortization 7,308 2,599 Capital gains from the disposition of financial assets available for sale. ( 14,540 ) - Gain from disposal of financial assets carried at cost - ( 12,327 ) Amortization of premium on held-to-maturity financial assets 33,748 64,910 Amortization of discount on convertible financial bonds 35,718 19,518 Depreciation and amortization (depreciation of assets not for business operation included) 163,031 141,111 Net loss on disposal of Fixed assets, available-for-sale assets and collateral accepted 62,570 78,921 Asset impairment loss (reversal gain) 1,837 ( 10,741 ) Deferred income tax expenses 190,511 455,369 Defined benefit pension fund 11,274 5,284 Employee stock option compensation cost - 25,576 Unrealized exchange (gain) loss 264,925 ( 257,127 ) Increase (decrease) in operating assets Financial assets-Trading ( 5,448,510 ) 549,793 Accounts receivable 335,631 247,001 Other assets ( 24,201 ) 15,807 Increase (decrease) in operating liabilities Financial assets-Trading 39,787 ( 82,185 ) Payables 1,213,267 3,811,486 Other liabilities ( 5,160 ) ( 19,188 ) Net cash inflow (outflow) from operating activities ( 33,598 ) 6,951,774

Cash flow from investing activities Decrease (Increase) in Due From CBC and lend to Banks 7,514,375 ( 5,655,264 ) Increase in discounts and loans ( 46,648,872 ) ( 33,567,843 ) Proceeds from disposal of financial assets carried at cost - 12,420 (Continued on next page)

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(Continued from previous page) 2012 2011 Taichung Commercial Bank Co., Ltd. Proceeds from the disposition of financial assets available for sales and redemption at maturity $ 8,325,936 $ - Notes to financial statements Proceeds from acquisition of available-for-sale 2012 and 2011 financial assets ( 22,594,500 ) ( 3,119,816 ) Redemption of held-to-maturity financial assets 763,848 550,000 (In Thousands of New Taiwan Dollars, unless otherwise specified) Proceeds from acquisition of held-to-maturity financial assets ( 504,586 ) - 1. Organization and operations Proceeds of the acquisition of investment under the equity method ( 1,000,000 ) - Taichung Commercial Bank Co., Ltd. (hereinafter referred to as the “Bank”) was Increase in other financial assets ( 115,104 ) ( 116,795 ) incorporated as a cooperative savings company in Taichung per the order of the Taiwan Proceeds from disposal of Fixed assets, Provincial Government Apparatus on Sept. 27, 1952 and the incorporation was available-for-sale assets and collateral accepted 89,847 166,604 approved in April 1953. The Bank started business as of August in the same year. Purchase of Fixed assets and deferred expenses ( 186,709 ) ( 209,211 ) Upon promulgation and enforcement of the amended Banking Act in July 1975, the Increase in refundable deposits ( 20,545 ) ( 29,783 ) Bank was approved to be reformed as “Taichung Small and Medium Business Bank Net cash outflow from investing activities ( 54,376,310 ) ( 41,969,688 ) Company Limited” in Jan. 1, 1978, and to list its stock on May 15, 1984. In order to cope with national financial policy, provide the pubic with financial Cash flow from financing activities services and support economic construction and develop industrial and commercial Issuance of common stock for cash - 4,500,000 business, the Bank was renamed Taichung Commercial Bank Co., Ltd. in Dec. 1998. Cash dividend released ( 111,693 ) - As of Dec. 31, 2012, it had established a Business Department, Trust Department, Increase in Deposits of CBC and other banks 1,711,550 1,160,371 International Banking Department and 79 local branches, an International Banking Increase (decrease) in Funds borrowed from CBC Branch and Securities Brokerages. It is engaged mainly in financial operations regulated and other banks ( 989,950 ) 1,275,400 by Banking Law, trust business, offshore banking business and others approved by the Increase (decrease) in Bills & Bonds Sold under competent authority. Repurchase Agreements 264,045 ( 1,477,800 ) Increase in deposits and remittances 52,030,210 30,983,119 The Bank’s capital was NTD500 thousand when the Bank was incorporated. In Issuance of financial bonds 3,000,000 2,300,000 order to found its capital structure and comply with the Government Apparatus's order Decrease in other financial liabilities ( 5,313 ) ( 4,809 ) and decree, the Bank has increased/reduced its capital over the past years. As of Dec. 31, Increase (decrease) in deposits received 10,047 ( 37,806 ) 2012, its paid-in capital was NTD23,187,442 thousand. Until December 31, 2012 and Net cash inflow from financing activities 55,908,896 38,698,475 2011, the number of employees of the Bank amounted to 2,030 persons and 1,975 persons, respectively. Net increase in cash and cash equivalents 1,498,988 3,680,561 2. Summary of significant accounting policies

Balance of cash and cash equivalents, beginning of The accompanying financial statements have been prepared in conformity with the period 8,349,890 4,669,329 “Regulations Governing the Preparation of Financial Reports by Public Issued Banks”, “Regulations Governing the Preparation of Financial Reports by Securities Firms”, Balance of cash and cash equivalent, end of period $ 9,848,878 $ 8,349,890 “Business Entity Accounting Act”, “Regulation on Business Entity Accounting Handling”, and accounting principles generally accepted. The Bank’s significant Supplementary disclosures of cash flow accounting policies are summarized as follows: Interest payment $ 3,028,499 $ 2,420,413 (1) Principles for preparation of financial statements Income tax payment $ 72,592 $ 56,513

The accompanying financial statements include the accounts of the Head Office, Non-cash investing and financing cash flow OBU and all branches. The accounts of inter-branch and intra-branch transactions Undistributed earnings and capital surplus among Head Office, branches and international banking business branches have been transferred to capital increase $ 848,866 $ 519,570 written off in the process of preparing the financial statements. (2) Accounting estimates The notes attached shall constitute an integral part of this financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013) It is necessary to apply reasonable estimates to provide financial asset valuation, allowance for bad debt, depreciation and amortization, deferred income tax assets Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung valuation, pension fund, reserve for guarantee liability, loss for pending legal action, employee bonus, and remuneration to directors/supervisors when preparing the

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Taichung Commercial Bank Co., Ltd. Notes to financial statements 2012 and 2011 (In Thousands of New Taiwan Dollars, unless otherwise specified)

1. Organization and operations Taichung Commercial Bank Co., Ltd. (hereinafter referred to as the “Bank”) was incorporated as a cooperative savings company in Taichung per the order of the Taiwan Provincial Government Apparatus on Sept. 27, 1952 and the incorporation was approved in April 1953. The Bank started business as of August in the same year. Upon promulgation and enforcement of the amended Banking Act in July 1975, the Bank was approved to be reformed as “Taichung Small and Medium Business Bank Company Limited” in Jan. 1, 1978, and to list its stock on May 15, 1984. In order to cope with national financial policy, provide the pubic with financial services and support economic construction and develop industrial and commercial business, the Bank was renamed Taichung Commercial Bank Co., Ltd. in Dec. 1998. As of Dec. 31, 2012, it had established a Business Department, Trust Department, International Banking Department and 79 local branches, an International Banking Branch and Securities Brokerages. It is engaged mainly in financial operations regulated by Banking Law, trust business, offshore banking business and others approved by the competent authority. The Bank’s capital was NTD500 thousand when the Bank was incorporated. In order to found its capital structure and comply with the Government Apparatus's order and decree, the Bank has increased/reduced its capital over the past years. As of Dec. 31, 2012, its paid-in capital was NTD23,187,442 thousand. Until December 31, 2012 and 2011, the number of employees of the Bank amounted to 2,030 persons and 1,975 persons, respectively. 2. Summary of significant accounting policies The accompanying financial statements have been prepared in conformity with the “Regulations Governing the Preparation of Financial Reports by Public Issued Banks”, “Regulations Governing the Preparation of Financial Reports by Securities Firms”, “Business Entity Accounting Act”, “Regulation on Business Entity Accounting Handling”, and accounting principles generally accepted. The Bank’s significant accounting policies are summarized as follows: (1) Principles for preparation of financial statements The accompanying financial statements include the accounts of the Head Office, OBU and all branches. The accounts of inter-branch and intra-branch transactions among Head Office, branches and international banking business branches have been written off in the process of preparing the financial statements. (2) Accounting estimates It is necessary to apply reasonable estimates to provide financial asset valuation, allowance for bad debt, depreciation and amortization, deferred income tax assets valuation, pension fund, reserve for guarantee liability, loss for pending legal action, employee bonus, and remuneration to directors/supervisors when preparing the

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financial statements in accordance with said guidelines, rules and principles. Since A derivative that does not meet the criteria for hedge accounting is classified as the estimates are subject to individual judgment, the actual result may vary. a financial asset or a financial liability held for trading. If the fair value of the Because it was difficult to ascertain the business cycle due to the operational derivative is positive, the derivative is recognized as a financial asset; otherwise, the derivative is recognized as a financial liability. characteristics of a bank, it was not necessary for the Bank to categorize assets and liabilities into current or non-current items according to the Statement of Financial The foundation of fair value: the value of stocks and depository receipts listed in Accounting Standards No. 28 on Disclosure of Bank’s Financial Statement. However, TWSE/GTSM is based on the closing price of the date of the balance sheet was the assets and liabilities have been categorized by nature and in the order subject to prepared. The value of open-end funds is based on the net worth of the Company as the equivalent liquidity. The analysis on maturity of assets and liabilities are also of the date the balance sheet was prepared. The value of bonds is based on the disclosed in Note 34. benchmark price of GTSM as of the date the balance sheet was prepared or other methods of valuation. The value of financial assets without active market shall be (3) Foreign Currency Transactions based on the pricing method for assessing the fair value. Assets, liabilities, revenues or expenses denominated in foreign currencies as a FVTPL which are mixed instruments, or for the reason of elimination or result of foreign-currency transactions of non-derivative financial instruments are material reduction of the difference in accounting practices, can be designated as recorded in New Taiwan dollars at the exchange rates prevailing on the dates of transactions. Any exchange difference caused by different foreign exchange rates financial instruments at fair value through profit or loss at the initial recognition. applied when assets or liabilities denominated in foreign currencies are settled are Financial instruments portfolios, based on the Bank’s risk-management or credited to or charged against income. investment policy, may also be designated as financial instruments at fair value through profit or loss. Assets or liabilities denominated in foreign currencies are translated at the

exchange rates prevailing on the balance sheet date, and the resulting exchange (5) Bonds Purchased under Resell/Notes Issued under Repurchase Agreements differences are included in profit or loss for the current year. When a bond is purchased under a resell agreement, its purchase price is listed At the balance sheet date, non-monetary assets and liabilities denominated in as “bonds purchased under resell agreements,” an asset account. For a note issued foreign currency (e.g. equity instruments) that are measured at fair value are reported under the repurchase agreement, the selling price is listed as “notes issued under at the rate that was in effect when the fair values were determined. Subsequent repurchase agreements,” a liability account. It is considered a financing transaction adjustments to carrying values of such non-monetary assets and liabilities, including and the relevant interest revenue or expense shall be recognized on an accrual basis. the effects of changes in exchange rates are reported in profit or loss for the period, (6) Accounts receivable except that if movement in fair value of a non-monetary item is recognized directly Credit card receivables are recorded when merchants report the amount and the in equity, any foreign exchange component of that adjustment is also recognized related interest revenue is recognized on an accrual basis. directly in equity. Those evaluated based on cost shall be measured based on the historical exchange rate on the date of transaction. If the principal or interest for credit card debt still has not yet been collected upon expiration of the specific time limit, the provision of income revenue shall be

(4) Financial Instruments at Fair Value through Profit or Loss suspended and the principal or interest shall be stated under delinquent loans. Financial instruments classified as financial assets or financial liabilities at fair The interest revenue and service fee revenue generated from factoring and value through profit or loss (“FVTPL”) include financial assets or financial liabilities management have been recognized when it is realized or becomes realizable and the held for trading and those designated as at FVTPL on initial recognition. The Bank allowance for bad debt shall be provided based on the collectability of the revenue recognizes a financial asset or a financial liability on its balance sheet when the Bank evaluated based on the balance of factoring at the end of the period. The factoring becomes a party to the contractual provisions of the financial instrument. A payment due to the seller shall be stated under accounts payable. financial asset is derecognized when the Bank has lost control of its contractual rights over the financial asset. A financial liability is derecognized when the (7) Assets held for sale obligation specified in the relevant contract is discharged, cancelled or expired. The Fixed assets and other assets, of which the book value is primarily collected FVTPL is initially measured at fair value plus transaction costs, and at each by virtue of sale instead of reuse, and which are available for immediate sale by the balance sheet date subsequent to issue of initial recognition, it is measured at fair enterprise in accordance with generally applicable terms and commercial practices, value, with changes in fair value recognized directly in profit or loss in the period in and for which completion of sale is highly probable shall be re-stated as non-current which it arises. On de-recognition of a financial instrument, the difference between assets held for sale at the book value, and no depreciation, depletion or amortization its carrying amount and the sum of the consideration received and receivable or may be provided thereof. They shall be measured at the lower of book value and net consideration paid and payable is recognized in profit or loss. The purchase or fair value at the end of year. If the net fair value is less than the book value, the price disposal of financial assets in customary transactions shall be subject to accounting difference shall be stated as impairment loss. The net fair value revaluation, if any, on the date of transaction. shall be stated as reversal of gain, provided that the reversal shall be no more than recognized accumulated impairment.

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A derivative that does not meet the criteria for hedge accounting is classified as a financial asset or a financial liability held for trading. If the fair value of the derivative is positive, the derivative is recognized as a financial asset; otherwise, the derivative is recognized as a financial liability. The foundation of fair value: the value of stocks and depository receipts listed in TWSE/GTSM is based on the closing price of the date of the balance sheet was prepared. The value of open-end funds is based on the net worth of the Company as of the date the balance sheet was prepared. The value of bonds is based on the benchmark price of GTSM as of the date the balance sheet was prepared or other methods of valuation. The value of financial assets without active market shall be based on the pricing method for assessing the fair value. FVTPL which are mixed instruments, or for the reason of elimination or material reduction of the difference in accounting practices, can be designated as financial instruments at fair value through profit or loss at the initial recognition. Financial instruments portfolios, based on the Bank’s risk-management or investment policy, may also be designated as financial instruments at fair value through profit or loss. (5) Bonds Purchased under Resell/Notes Issued under Repurchase Agreements When a bond is purchased under a resell agreement, its purchase price is listed as “bonds purchased under resell agreements,” an asset account. For a note issued under the repurchase agreement, the selling price is listed as “notes issued under repurchase agreements,” a liability account. It is considered a financing transaction and the relevant interest revenue or expense shall be recognized on an accrual basis. (6) Accounts receivable Credit card receivables are recorded when merchants report the amount and the related interest revenue is recognized on an accrual basis. If the principal or interest for credit card debt still has not yet been collected upon expiration of the specific time limit, the provision of income revenue shall be suspended and the principal or interest shall be stated under delinquent loans. The interest revenue and service fee revenue generated from factoring and management have been recognized when it is realized or becomes realizable and the allowance for bad debt shall be provided based on the collectability of the revenue evaluated based on the balance of factoring at the end of the period. The factoring payment due to the seller shall be stated under accounts payable. (7) Assets held for sale The Fixed assets and other assets, of which the book value is primarily collected by virtue of sale instead of reuse, and which are available for immediate sale by the enterprise in accordance with generally applicable terms and commercial practices, and for which completion of sale is highly probable shall be re-stated as non-current assets held for sale at the book value, and no depreciation, depletion or amortization may be provided thereof. They shall be measured at the lower of book value and net fair value at the end of year. If the net fair value is less than the book value, the price difference shall be stated as impairment loss. The net fair value revaluation, if any, shall be stated as reversal of gain, provided that the reversal shall be no more than recognized accumulated impairment.

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The liabilities directly related to assets held for sale and recognized as the accordance with the Financial Supervisory Commission Letter Jin-Guan-Yin-Fa-Zi adjustment item of shareholders’ equity shall be identified on the balance sheet No. 10010006830. The provisions for bad debts accounted for more than 1% of the separately. The assets and liabilities shall not be offset against each other. The total loans. interest and other expenses related to liabilities shall still be stated. Impairment loss to be recognized is the difference between the carrying value of (8) Delinquent loans the asset and the estimated future cash flow (has reflected the effect of collateral or According to “Regulations Governing the Procedures for Banking Institutions to guarantee) discounted at the original effective interest rate of loans, discounts, Evaluate Assets and Deal with Non-performing/Non-accrual Loans”, loans and other inward remittance and accounts receivable. The carrying value of loans, discounts, credit payment items which are not repaid upon maturity of the repayment shall be inward remittance and accounts receivable is reduced through a valuation allowance stated as Delinquent loans together with the interest receivable as recognized. item. When any loan, discount, inward remittance and receivable account is considered uncollectible, the valuation allowance item is written off. Subsequent Delinquent loans transferred from loans shall be stated under discounts and recovery of any account written off is credited to the valuation allowance item. A loans. The delinquent loans, other than those transferred from loans (e.g. transferred change in the carrying value of the valuation allowance item is recognized as bad from guarantee, acceptance, factoring and credit card loans), shall be stated in other debt loss. financial assets. Uncollectible credit as identified shall be reported by the Board of Directors to (9) Allowance for bad debt and reserve for guarantee liability the Board of Managing Directors and written off upon approval of the Board of The Bank started to adopt the third revised provision of SFAS No. 34 Managing Directors. If the bad debt that has been written off is collected, it shall be “Accounting for Financial Instruments” on January 1, 2011, which includes loans, stated as the reversal of allowance for bad debt according to the Statement of discounts, inward remittance and accounts receivable. Therefore, the Bank evaluates Financial Accounting Standards No. 28 on Disclosure of Bank’s Financial Statement. whether there is any sign for impairment for loans, discounts and inward remittance, (10) Available-for-Sale Financial Assets accounts receivable on each balance sheet date. If there is objective evidence When recognizing available-for-sale financial assets initially, such assets shall showing that estimated cash flows in the future for original loans, discounts, inward be evaluated based on fair value, plus the acquisition or issue price. The following remittance and accounts receivable are affected due to a single or several event(s) evaluation shall be based on fair value and the changes in value shall be stated into occurring after recognition of original loans, discounts, inward remittance and the adjustment items of shareholders’ equity. Cumulative gain or loss shall be stated accounts receivable, the original loans, discounts, inward remittance and accounts as income for the current period when financial assets are de-recognized. The receivable are considered impaired. Objective evidence for impairment may include: purchase or sale of financial assets in customary transactions shall be subject to 1. The debtor encounters significant financial difficulties; or accounting on the date of transaction. 2. Original loans, discounts, inward remittance and accounts receivable are The times to recognition or removal and basis for fair value of financial assets overdue; or in available-for-sale are similar to those of financial instruments at fair value through 3. High probability of debtor declaring bankruptcy or undertaking of other profit or loss. financial restructuring. Cash Dividends from securities products are stated as income on the After certain loans, discounts, inward remittance and accounts receivables are ex-dividend date or the date of resolution set by the shareholders’ meeting, provided individually evaluated and indicate no sign of impairment, the entire credit portfolio that the cash dividends announced based on the income before investment shall be is evaluated for impairment. Objective evidence of impairment for the portfolio of deducted from the investment cost. Free-Gratis Dividends are not stated as income loans, discounts, inward remittance and accounts receivable may include the investment, provided that the increase in shares is noted and the cost per share is historical collection experience of the Bank, increase of delayed payment of the recalculated according to the total shares after the increase. The difference between portfolio, and changes in observable national or regional economic situations relating the amount of liability products recognized initially and due amount shall be to default on loans, discounts, inward remittance and accounts receivable. amortized under the interest method and stated as the income for the current period.

Furthermore, from January 1, 2011, according to the Regulations Governing the Where there is evidence showing impairment, it shall be stated as the loss of Procedures for Banking Institutions to Evaluate Assets and Deal with impairment. The decrease in impairment of equity products in available-for-sale is Non-performing/Non-accrual Loans, the Bank evaluates the collectability of loaned stated as the adjustment item of shareholders’ equity. Where the decrease in assets according to the borrower’s financial condition and the repayment of principal impairment of liability products in available-for-sale is obviously related to the and interest and also based on the evaluated value of the collateral provided for events subsequent to recognition of impairment, it shall be reversed and stated as specific credit. As mentioned, non-performing assets are classified as “Loss”, income for the current period. “Doubtful”, “Substandard”, “Special Mention” and “Normal” by the status of surety (11) Held-to-maturity financial assets and the duration of delinquency, and are at least allocated to respective categories of Held-to-maturity financial assets shall be stated at cost upon amortization. provisions for non-performing loans in the proportions of 100%, 50%, 10%, 2%, and When recognizing the held-to-maturity financial assets initially, such assets shall be 0.5%, respectively. The aforementioned provisions of bad debts were recognized in

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accordance with the Financial Supervisory Commission Letter Jin-Guan-Yin-Fa-Zi No. 10010006830. The provisions for bad debts accounted for more than 1% of the total loans. Impairment loss to be recognized is the difference between the carrying value of the asset and the estimated future cash flow (has reflected the effect of collateral or guarantee) discounted at the original effective interest rate of loans, discounts, inward remittance and accounts receivable. The carrying value of loans, discounts, inward remittance and accounts receivable is reduced through a valuation allowance item. When any loan, discount, inward remittance and receivable account is considered uncollectible, the valuation allowance item is written off. Subsequent recovery of any account written off is credited to the valuation allowance item. A change in the carrying value of the valuation allowance item is recognized as bad debt loss. Uncollectible credit as identified shall be reported by the Board of Directors to the Board of Managing Directors and written off upon approval of the Board of Managing Directors. If the bad debt that has been written off is collected, it shall be stated as the reversal of allowance for bad debt according to the Statement of Financial Accounting Standards No. 28 on Disclosure of Bank’s Financial Statement. (10) Available-for-Sale Financial Assets When recognizing available-for-sale financial assets initially, such assets shall be evaluated based on fair value, plus the acquisition or issue price. The following evaluation shall be based on fair value and the changes in value shall be stated into the adjustment items of shareholders’ equity. Cumulative gain or loss shall be stated as income for the current period when financial assets are de-recognized. The purchase or sale of financial assets in customary transactions shall be subject to accounting on the date of transaction. The times to recognition or removal and basis for fair value of financial assets in available-for-sale are similar to those of financial instruments at fair value through profit or loss. Cash Dividends from securities products are stated as income on the ex-dividend date or the date of resolution set by the shareholders’ meeting, provided that the cash dividends announced based on the income before investment shall be deducted from the investment cost. Free-Gratis Dividends are not stated as income investment, provided that the increase in shares is noted and the cost per share is recalculated according to the total shares after the increase. The difference between the amount of liability products recognized initially and due amount shall be amortized under the interest method and stated as the income for the current period. Where there is evidence showing impairment, it shall be stated as the loss of impairment. The decrease in impairment of equity products in available-for-sale is stated as the adjustment item of shareholders’ equity. Where the decrease in impairment of liability products in available-for-sale is obviously related to the events subsequent to recognition of impairment, it shall be reversed and stated as income for the current period. (11) Held-to-maturity financial assets Held-to-maturity financial assets shall be stated at cost upon amortization. When recognizing the held-to-maturity financial assets initially, such assets shall be

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evaluated based on fair value, plus the acquisition or issue price. The purchase or average method and in accordance with the useful life provided in the “Table of sale of financial assets in customary transactions shall be subject to accounting on the Service Life of Fixed assets” promulgated by the Executive Yuan. date of transaction. Leased assets shall be stated at the lower of the total of each rent installment Where there is evidence showing impairment, it shall be stated as the loss of (less the performance cost to be borne by lesser) and preferential acquisition cost or impairment. Where the decrease in impairment is obviously related to the events residual value guaranteed by lessee upon expiration of the lease, or fair value of the subsequent to recognition of impairment, it shall be reversed and stated as income for assets on the commencing date of lease, and receivable rent liability shall be the current period, provided that the book value upon reverse shall be no more than recognized at the same time. The imputed interest of each installment rent is stated as the cost after amortization if the impairment is not recognized. the interest expenses for the current period. (12) Stocks- equity method Upon the scrapping or sale of properties, the related cost (including The stocks- equity method shall be stated at the original cost of acquisition. appreciations), cumulative depreciation, cumulative depreciation, and unrealized Equity investment holding more than 20% of equity shall be valued under the equity appreciations shall be written off, and any related income is charged to non-operating method. Equity investment holding less than 20% of equity but able to materially income or non-operating loss accounts for the year and any related gains or losses are influence the investee shall still be valued under equity method. charged to other non-interest Investment income for the year.

Where Free-Gratis Dividends are received from the investee, only the increase Where the Fixed assets are not available for business operation, related cost and in shares is noted. No adjustment will be made to the book value of the investments cumulative depreciation shall be transferred to other assets-assets not available for and no investment income shall be recognized. business operation. (15) Deferred expenses When equity is obtained or the equity method is initially applied, the investment cost shall be analyzed first in accordance with the Statement of Financial Accounting Deferred charges are stated at cost and amortized on a straight-line basis over Standards No. 5 on Accounting Principles for Long-term Equity Investment under five years. the Equity Method. The excess of investment costs in the fair value of the (16) Collateral accepted investee’s identifiable net assets, if any, shall be recognized as goodwill, which will not be amortized, provided that the impairment test shall be conducted per year. Collateral accepted (stated as other assets) shall be stated at the cost of pledge. Meanwhile, where any specific events or environmental changes show the potential Its fair value shall be evaluated at the end of the year. The difference resulting from impairment of goodwill, it is also necessary to conduct the impairment test. Where the cost more than net fair value shall be recognized as the impairment loss. As the fair value of the investee’s identifiable net assets exceeds the investment cost, the required by the Executive Yuan Financial Supervisory Commission, Collateral difference thereof will be decreased relatively subject to the fair value of the various accepted which has not yet been disposed upon expiration of the statutory time limit non-current assets (excluding the financial assets not valued under the equity method, shall also be recognized as the impairment loss in the full amount. assets held for sale, deferred income tax assets and prepaid pension or other pension (17) Impairment of Assets benefits).The balance, if any, shall be stated as extraordinary income. Notwithstanding, where equity is acquired from an affiliate, the capital surplus shall According to the Statement of Financial Accounting Standards No. 35 on be adjusted based on the difference between the investment cost and net value of the Accounting Principles on Asset Impairment, it is necessary to evaluate the balance investee’s equity. Where the adjustment reflects write-off of capital surplus while sheet date for whether there is any sign showing that assets (including individual the capital surplus generated from the equity investment under the equity method is assets or cash generation units) might suffer material impairment. If there is, it is insufficient, the retained earnings shall be written off. necessary to evaluate the collectable amount of the assets. If their book value exceeds the collectable amount, a loss on asset impairment shall be recognized. (13) Other financial assets Where a loss on asset impairment does not exist, or is decreased, the gain reversed Financial assets at cost mean investment in equity products that cannot be from asset impairment shall be recognized insofar as it does not exceed the originally evaluated based on fair value, including unlisted (non-OTC) stock and emerging recognized impairment loss, provided that the book value upon reversal shall not stock, which shall be evaluated at the original acquisition cost. The accounting of exceed the book value of the assets less depreciation or amortization to be Free-Gratis Dividends thereof is similar to that of available-for-sale financial assets. provisioned when no impairment losses of the assets are recognized. Goodwill Where there is evidence showing impairment, it shall be stated as the loss of impairment loss cannot be reversed. impairment, and cannot be reversed. Where asset appreciation has been made pursuant to laws, the impairment shall (14) Fixed assets / Non-Operating Assets deduct the unrealized appreciation included in the shareholders’ equity and the deficit, if any, shall be recognized as loss. The gain shall be recognized firstly Fixed assets are stated at acquisition or at construction costs plus appreciation within the scope of originally recognized loss, and the balance, if any, shall be and less cumulative depreciation and impairment. Major updates and improvements reversed to unrealized appreciation. In order to proceed with the impairment test, were treated as capital spending. Routine repair and maintenance expenditures were the good will acquired upon merger of enterprises shall be amortized to cash expensed during the year of incursion. Depreciation thereof is provided using the generation entities. The excess in Book Value of the cash generation entity

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average method and in accordance with the useful life provided in the “Table of Service Life of Fixed assets” promulgated by the Executive Yuan. Leased assets shall be stated at the lower of the total of each rent installment (less the performance cost to be borne by lesser) and preferential acquisition cost or residual value guaranteed by lessee upon expiration of the lease, or fair value of the assets on the commencing date of lease, and receivable rent liability shall be recognized at the same time. The imputed interest of each installment rent is stated as the interest expenses for the current period. Upon the scrapping or sale of properties, the related cost (including appreciations), cumulative depreciation, cumulative depreciation, and unrealized appreciations shall be written off, and any related income is charged to non-operating income or non-operating loss accounts for the year and any related gains or losses are charged to other non-interest Investment income for the year. Where the Fixed assets are not available for business operation, related cost and cumulative depreciation shall be transferred to other assets-assets not available for business operation. (15) Deferred expenses Deferred charges are stated at cost and amortized on a straight-line basis over five years. (16) Collateral accepted Collateral accepted (stated as other assets) shall be stated at the cost of pledge. Its fair value shall be evaluated at the end of the year. The difference resulting from the cost more than net fair value shall be recognized as the impairment loss. As required by the Executive Yuan Financial Supervisory Commission, Collateral accepted which has not yet been disposed upon expiration of the statutory time limit shall also be recognized as the impairment loss in the full amount. (17) Impairment of Assets According to the Statement of Financial Accounting Standards No. 35 on Accounting Principles on Asset Impairment, it is necessary to evaluate the balance sheet date for whether there is any sign showing that assets (including individual assets or cash generation units) might suffer material impairment. If there is, it is necessary to evaluate the collectable amount of the assets. If their book value exceeds the collectable amount, a loss on asset impairment shall be recognized. Where a loss on asset impairment does not exist, or is decreased, the gain reversed from asset impairment shall be recognized insofar as it does not exceed the originally recognized impairment loss, provided that the book value upon reversal shall not exceed the book value of the assets less depreciation or amortization to be provisioned when no impairment losses of the assets are recognized. Goodwill impairment loss cannot be reversed. Where asset appreciation has been made pursuant to laws, the impairment shall deduct the unrealized appreciation included in the shareholders’ equity and the deficit, if any, shall be recognized as loss. The gain shall be recognized firstly within the scope of originally recognized loss, and the balance, if any, shall be reversed to unrealized appreciation. In order to proceed with the impairment test, the good will acquired upon merger of enterprises shall be amortized to cash generation entities. The excess in Book Value of the cash generation entity

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(including the Book Value of goodwill) against collectable amount shall be actuarial method pursuant to the Statement of Financial Accounting Standards No. recognized as impairment loss. When recognizing impairment loss, it is necessary 18 on Pension Fund Accounting Principles. to deduct the Book Value of goodwill already amortized to the cash generation entity. The pension fund of employees who apply the defined contribution rules to be If there is a deficit, the other impairment loss shall be amortized to the various assets contributed to the exclusive personal account shall be recognized as pension costs on a proportional basis according to the Book Value of the assets in the cash during the employees’ service years. generation entity (including corporate assets). (21) Reserve (18) Convertible financial bonds Securities firms engaging in brokerage trading of marketable securities are For convertible financial bonds issued after January 1, 2006, the total issuance required to provide 0.0028% of the monthly transaction volume as the default loss price minus the amount of the liability component individually measured is allocated provision until the balance of this provision reaches NTD200,000 thousand. In to the equity component (capital surplus – stock options). Liability components accordance with Jin-Guan-Yin-Fa-Zi Directive No. 10010000440 and which are not embedded derivatives are measured at amortized cost under interest Jin-Guan-Zheng-Quan-Zi Directive No. 09900738571, effective January 1, 2011, method, while liability components which are embedded non-equity derivatives are provisions of “Reserve for transaction loss” and “Reserve for default loss” should be measured at fair value. When financial bonds are converted, the carrying amount of transferred to special reserve. After the transfer, the reserve should be used to offset a liability components and equity components is used as a basis to record the common deficit. When the reserve reaches 50% of the Bank’s paid-in capital, it can only be shares issued. transferred to capital stock as legal reserve. (19) Share-based payment With secured collateral, the allowance for guarantee liability shall be no more Employees’ stock options granted after January 1, 2008 (including January 1, than 1% of the guaranteed limit. Without secured collateral, the allowance for 2008) shall be processed in accordance with the Statement of Financial Accounting guarantee liability shall be no more than 3% of the guaranteed limit, provided that Standards No. 39 on “Accounting Principles for Benefits Based on Shares”. The the allowance provided by the added balance of the receivable guarantee payment in stock option amount is calculated based on the optimally estimated quantity of the year shall be no more than the total service charges for the guarantee business in expected vested stock option and the fair value on the grant date, and recognized as the same year. expenses in the current period based on Straight-line method in the vested period, (22) Recognition of Interest Revenues and Service Fees and the additional paid-in capital – employees’ stock option is adjusted at the same time. If the subsequent information shows that the expected vested stock option The interest accruing on loans shall be stated on an accrual basis, provided that quantity is different from that estimated originally, the quantity originally estimated the calculation of the interest transferred to receivable on demand due to may be amended. non-performance upon expiration shall be ceased as of the date of transfer, and the income thereof shall be recognized after the cash is received. (20) Pension Plan According to the Ministry of Finance, the interest revenue approved to be stated The Bank has provided defined benefit rules for formal employees in into account due to financing and agreement of extension shall be stated as deferred accordance with the “Labor Standard Act”. According to the rules, employees whose income (stated as other liabilities) as of the date of bookkeeping and recognized as seniority is less than 15 years are awarded with 2 points per year and 1 point per year revenue after the cash is received. for seniority beyond the 15 year. One point represents the average monthly salary of the employee for the six months prior to his/her retirement, provided that the Service fee revenue has mostly been recognized in the process of realized or cumulative points shall be no more than 45. Employees who resign upon expiration realizable gains. of specific seniority will be paid the pension according to their cumulative points. As (23) Corporate Income Tax of July 1, 2005 when the “Labor Pension Act” was promulgated by the Government Apparatus, the Bank also provided the defined contribution rules. 6% of the salary of The Bank adopted the Statement of Financial Accounting Standards No. 22, employees who choose to apply the rules will be contributed to the exclusive Accounting Principles for Income Taxes. Deferred income tax assets and liabilities personal account at the Bureau of Labor Insurance on a monthly basis during their are computed annually for differences between the financial statement and tax bases service year. The seniority accruing before promulgation of the Act shall be reserved. of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences A specific proportion of the salary of the general staff who choose the defined are expected to affect taxable income. Valuation Provisions for reserve accounts are benefit rules will be contributed to the exclusive pension fund account at Bank of provided to reduce deferred tax assets that are not certain to be realized. Taiwan on a monthly basis. A specific proportion of the salary of managers (above) will be contributed to the exclusive pension fund account at the Workers' Pension According to SFAS No. 12, “Accounting for Income Tax Credits,” the Bank Fund Management Commission. recognizes tax benefit from research and development and personnel training expenses in the year the tax credit was earned. For the pension of employees who apply the defined benefit rules, it is necessary to recognize and disclose the related assets and liabilities under the Adjustment of prior years’ income tax is added to or deducted from the current income tax expense (benefit) in the year the adjustment is made.

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actuarial method pursuant to the Statement of Financial Accounting Standards No. 18 on Pension Fund Accounting Principles. The pension fund of employees who apply the defined contribution rules to be contributed to the exclusive personal account shall be recognized as pension costs during the employees’ service years. (21) Reserve Securities firms engaging in brokerage trading of marketable securities are required to provide 0.0028% of the monthly transaction volume as the default loss provision until the balance of this provision reaches NTD200,000 thousand. In accordance with Jin-Guan-Yin-Fa-Zi Directive No. 10010000440 and Jin-Guan-Zheng-Quan-Zi Directive No. 09900738571, effective January 1, 2011, provisions of “Reserve for transaction loss” and “Reserve for default loss” should be transferred to special reserve. After the transfer, the reserve should be used to offset a deficit. When the reserve reaches 50% of the Bank’s paid-in capital, it can only be transferred to capital stock as legal reserve. With secured collateral, the allowance for guarantee liability shall be no more than 1% of the guaranteed limit. Without secured collateral, the allowance for guarantee liability shall be no more than 3% of the guaranteed limit, provided that the allowance provided by the added balance of the receivable guarantee payment in the year shall be no more than the total service charges for the guarantee business in the same year. (22) Recognition of Interest Revenues and Service Fees The interest accruing on loans shall be stated on an accrual basis, provided that the calculation of the interest transferred to receivable on demand due to non-performance upon expiration shall be ceased as of the date of transfer, and the income thereof shall be recognized after the cash is received. According to the Ministry of Finance, the interest revenue approved to be stated into account due to financing and agreement of extension shall be stated as deferred income (stated as other liabilities) as of the date of bookkeeping and recognized as revenue after the cash is received. Service fee revenue has mostly been recognized in the process of realized or realizable gains. (23) Corporate Income Tax The Bank adopted the Statement of Financial Accounting Standards No. 22, Accounting Principles for Income Taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and tax bases of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation Provisions for reserve accounts are provided to reduce deferred tax assets that are not certain to be realized. According to SFAS No. 12, “Accounting for Income Tax Credits,” the Bank recognizes tax benefit from research and development and personnel training expenses in the year the tax credit was earned. Adjustment of prior years’ income tax is added to or deducted from the current income tax expense (benefit) in the year the adjustment is made.

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The 10% additional income tax levied on Accumulated earnings calculated and the number of shares for subscription. This accounting change resulted in an according to the Income Tax Law is stated as income tax expenses in the year of the increase of NTD55,822 thousand in continuing operating income before tax, an resolution made by the shareholders’ meeting. increase of NTD46,332 thousand in net income and a decrease of NTD0.03 in (24) Significant undertaking or contingent liabilities after-tax basic EPS for the year ended December 31, 2011.

If assets are very likely to have already impaired or generated liabilities on the 4. Cash and cash equivalents balance sheet date and it is possible to estimate the reasonable loss, it shall be December 31, 2012 December 31, 2011 recognized as a loss for the current period. If the loss is very likely to have already Cash on hand $ 3,020,965 $ 2,674,443 been caused but it is impossible to estimate the loss, it shall be disclosed in the notes Notes and checks for clearing 6,221,983 5,165,311 to the financial statement. Deposits of CBC and other banks 605,930 510,136 $ 9,848,878 $ 8,349,890 (25) Reclassification of accounting titles In order to cope with the expression of the financial statements 2012, some accounting titles in the financial statement 2011 have been reclassified. 5. Due from Central Bank of the Republic of China (Taiwan) and lend to Banks 3. Reasons and effects of changes in accounting principles December 31, 2012 December 31, 2011 (1) Accounting for financial instruments Reserve for deposits Reserve for deposits –checking $ 7,964,503 $ 7,420,167 Effective January 1, 2011, the Bank adopted revised SFAS No. 34 “Accounting account for Financial Instruments”. Main revisions include: (1) the application of SFAS No. Reserve for deposits –demand 11,150,532 9,520,465 34 to original loans and receivables; (2) a new regulation concerning impairment of account financial assets measured at amortized cost when related terms are revised at Financial Information Service 473,706 444,482 financial difficulties; and (3) the debtor’s accounting treatment when debt terms are Co., Ltd. – liquidated account revised. This accounting change resulted in a decrease of NTD40,807 thousand in Reserve for deposits in foreign 20,909 18,780 continuing operating income before tax, a decrease of NTD33,870 thousand in net currency income and a decrease of NTD0.02 in after-tax basic EPS for the year ended Certificate of deposit of the Central 47,000,000 56,800,000 December 31, 2011. Bank (2) Disclosure of operating segments Call loans to banks 143,699 63,830 $ 66,753,349 $ 74,267,724 The Bank has adopted the newly issued SFAS No. 41 “Disclosure of Operating Segments” since January 1, 2011. Provisions in the statement are based on certain information relating to corporate formation which is used when the management The deposit reserves in the CBC are calculated by multiplying the average monthly makes operating decisions. Identification of operating segments is based on the balances of all deposit accounts by the legally required ratio. The demand account internal report which is regularly reviewed by main decision makers to allocate reserve can be used only for the monthly adjustment of the deposit reserve. resources to each segment and evaluate performance. The Company adopted SFAS

No. 20 “Disclosure of Financial Information by Segments” thereby applied only the The guarantee amounts for allocation and liquidation of funds in interbanks under reporting by segment of the Company. the certificate of deposit of the Central Bank pursuant to laws on December 31, 2012 and 2011 were both NTD1,500,000 thousand. (3) Accounting for share-based payment 6. Financial Instruments at Fair Value through Profit or Loss Effective January 1, 2011, the Bank adopted early the provision stated in (2012) Ji-Mi-Zi Interpretation Letter No. 038 issued by the Accounting Research and December 31, 2012 December 31, 2011 Development Foundation to determine the grant date for capital increase by cash Financial assets-Trading retained for subscription by employees. The interpretation letter mainly describes Commercial papers $ 5,196,688 $ 9,968 that if the practice of corporate capital increase by cash retained for subscription by Listed stocks - domestic 1,131,755 982,393 employees includes a procedure of further advising employees of or confirming with Foreign exchange contracts 29,479 85,395 employees the number of share subscription after the resolution of the Board of Beneficiary certificate 19,688 17,728 Directors, the date when the corporation advises employees of or confirms with Forward contracts 16,118 1,285 employees the number of share subscription may be the grant date, not subject to the provision concerning the grant date for capital increase by cash retained for (Continued on next page) subscription by employees described in (2009) Ji-Mi-Zi Interpretation Letter No. 111, which refers to the date when the Board of Directors resolves and approves the price

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and the number of shares for subscription. This accounting change resulted in an increase of NTD55,822 thousand in continuing operating income before tax, an increase of NTD46,332 thousand in net income and a decrease of NTD0.03 in after-tax basic EPS for the year ended December 31, 2011. 4. Cash and cash equivalents December 31, 2012 December 31, 2011 Cash on hand $ 3,020,965 $ 2,674,443 Notes and checks for clearing 6,221,983 5,165,311 Deposits of CBC and other banks 605,930 510,136 $ 9,848,878 $ 8,349,890

5. Due from Central Bank of the Republic of China (Taiwan) and lend to Banks December 31, 2012 December 31, 2011 Reserve for deposits Reserve for deposits –checking $ 7,964,503 $ 7,420,167 account Reserve for deposits –demand 11,150,532 9,520,465 account Financial Information Service 473,706 444,482 Co., Ltd. – liquidated account Reserve for deposits in foreign 20,909 18,780 currency Certificate of deposit of the Central 47,000,000 56,800,000 Bank Call loans to banks 143,699 63,830 $ 66,753,349 $ 74,267,724

The deposit reserves in the CBC are calculated by multiplying the average monthly balances of all deposit accounts by the legally required ratio. The demand account reserve can be used only for the monthly adjustment of the deposit reserve. The guarantee amounts for allocation and liquidation of funds in interbanks under the certificate of deposit of the Central Bank pursuant to laws on December 31, 2012 and 2011 were both NTD1,500,000 thousand. 6. Financial Instruments at Fair Value through Profit or Loss December 31, 2012 December 31, 2011 Financial assets-Trading Commercial papers $ 5,196,688 $ 9,968 Listed stocks - domestic 1,131,755 982,393 Foreign exchange contracts 29,479 85,395 Beneficiary certificate 19,688 17,728 Forward contracts 16,118 1,285

(Continued on next page)

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(Continued from previous page) (3) The forward contracts which have not yet matured before December 31, 2012 and 2011 are specified as following:

Currency Date of maturity Contract amount (NTD1,000) December 31, 2012 December 31, 2011 December 31, 2012 Forward exchange sold USD translated into NTD 2013/01/02~ 2013/05/24 USD 13,545/ NTD 396,041 Negotiable assets swap agreement $ 149,119 $ - Forward exchange sold EUR translated into NTD 2013/02/08~ 2013/02/27 EUR 699/ NTD 25,987 FX options contracts 2,432 - Forward exchange sold JPY translated into NTD 2013/02/27~ 2013/05/29 JPY 37,757/ NTD 13,749 Forward exchange sold DEM translated into NTD 2013/03/01 GBP 110/ NTD 5,086 $ 6,545,279 $ 1,096,769 Forward exchange bought NTD translated into USD 2013/01/08~ 2013/05/24 NTD 312,334/ USD 10,665 Financial assets-Trading Forward exchange bought NTD translated into JPY 2013/02/27~ 2013/06/14 NTD 21,691/ JPY 62,670 Forward exchange bought USD translated into RMB 2013/01/14 USD 200/ CNY 1,245 Put options of convertible Forward exchange bought USD translated into JPY 2013/03/18~ 2013/05/17 USD 420/ JPY 35,633 financial bonds (Note 21) $ 21,850 $ 42,090 December 31, 2011 Foreign exchange contracts 50,902 8,393 Forward exchange sold USD translated into NTD 2012/01/04~ 2012/05/27 USD 4,909/ NTD 148,529 Forward contracts 16,407 1,321 Forward exchange sold EUR translated into NTD 2012/02/10~ 2012/05/01 EUR 316/ NTD 12,380 Forward exchange sold JPY translated into NTD 2012/04/27 JPY 30,270/ NTD 11,846 FX options contracts 2,432 - Forward exchange bought NTD translated into USD 2012/01/13~ 2012/05/23 NTD 95,249/ USD 3,149 $ 91,591 $ 51,804

(4) As of December 31 2012, the Company undertook negotiable assets swap contracts (1) Financial derivative contract related to a foreign exchange rate is a non-trading amounting to NTD148,100 thousand at interest range of 1.3%～1.7%. operation performed for the purpose of providing customers with a hedging tool for the foreign exchange position generated from import/export and foreign exchange (5) As of December 31 2012, the Company undertook FX options contracts amounting and hedging the risk from business and meeting the need for foreign exchange funds. to NTD3,816 thousand (USD131 thousand). (2) The foreign exchange contracts which have not yet matured before December 31, (6) The income from financial instruments at fair value through profit or loss in 2012 2012 and 2011 are specified as follows: and 2011 is summarized as following: December 31, 2012 December 31, 2011 2012 2011 Contract amount Contract amount (NTD1,000) Date of maturity (NTD1,000) Date of maturity Realized net profit (loss) Sold EUR 60,800 2013/01/07~2013/01/31 Sold USD 187,259 2012/01/03~2012/03/28 Free-Gratis Dividends revenue $ 44,032 $ 52,380 USD 161,568 2013/01/04~2013/04/24 EUR 72,000 2012/01/03~2012/02/27 JPY1,026,421 2013/01/11~2013/01/29 JPY 541,515 2012/01/17 Net profit (loss) from domestic SEK 3,272 2013/01/31 stock traded on TSEC (Gretai Bought USD 65,653 2013/01/07~2013/01/31 Bought USD 41,450 2012/01/06~2012/05/18 NZD 7,472 2013/01/18~2013/01/29 CAD 2,803 2012/01/20 Securities Market) 11,147 ( 87,621 ) AUD 2,500 2013/01/10 GBP 3,900 2012/01/03~2012/02/03 Earnings from beneficiary HKD 32,546 2013/01/28 HKD 22,563 2012/01/19 CAD 1,678 2013/01/14 NZD 10,367 2012/01/06~2012/01/17 certificates 5,113 3,404 GBP 1,600 2013/01/17 AUD 2,000 2012/01/05 Net profit (loss) from financial SGD 2,564 2013/01/17 SGD 778 2012/01/06 ZAR 65,109 2013/01/22 ZAR 33,244 2012/01/06 derivatives 278,414 ( 102,777 ) JPY 155,898 2013/01/29 338,706 ( 134,614 ) CNY 29,162 2013/01/17~2013/02/19 Net valuation (loss) profit Net profit (loss) from domestic stock traded on TSEC (Gretai Securities Market) 1,550 ( 211,176 ) Net profit (loss) from beneficiary certificates 1,960 ( 5,786 ) Net loss from financial derivatives ( 77,193 ) ( 151,454 ) ( 73,683 ) ( 368,416 ) $ 265,023 ( $ 503,030 )

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(3) The forward contracts which have not yet matured before December 31, 2012 and 2011 are specified as following: Currency Date of maturity Contract amount (NTD1,000) December 31, 2012 Forward exchange sold USD translated into NTD 2013/01/02~ 2013/05/24 USD 13,545/ NTD 396,041 Forward exchange sold EUR translated into NTD 2013/02/08~ 2013/02/27 EUR 699/ NTD 25,987 Forward exchange sold JPY translated into NTD 2013/02/27~ 2013/05/29 JPY 37,757/ NTD 13,749 Forward exchange sold DEM translated into NTD 2013/03/01 GBP 110/ NTD 5,086 Forward exchange bought NTD translated into USD 2013/01/08~ 2013/05/24 NTD 312,334/ USD 10,665 Forward exchange bought NTD translated into JPY 2013/02/27~ 2013/06/14 NTD 21,691/ JPY 62,670 Forward exchange bought USD translated into RMB 2013/01/14 USD 200/ CNY 1,245 Forward exchange bought USD translated into JPY 2013/03/18~ 2013/05/17 USD 420/ JPY 35,633

December 31, 2011 Forward exchange sold USD translated into NTD 2012/01/04~ 2012/05/27 USD 4,909/ NTD 148,529 Forward exchange sold EUR translated into NTD 2012/02/10~ 2012/05/01 EUR 316/ NTD 12,380 Forward exchange sold JPY translated into NTD 2012/04/27 JPY 30,270/ NTD 11,846 Forward exchange bought NTD translated into USD 2012/01/13~ 2012/05/23 NTD 95,249/ USD 3,149

(4) As of December 31 2012, the Company undertook negotiable assets swap contracts amounting to NTD148,100 thousand at interest range of 1.3%～1.7%. (5) As of December 31 2012, the Company undertook FX options contracts amounting to NTD3,816 thousand (USD131 thousand). (6) The income from financial instruments at fair value through profit or loss in 2012 and 2011 is summarized as following: 2012 2011 Realized net profit (loss) Free-Gratis Dividends revenue $ 44,032 $ 52,380 Net profit (loss) from domestic stock traded on TSEC (Gretai Securities Market) 11,147 ( 87,621 ) Earnings from beneficiary certificates 5,113 3,404 Net profit (loss) from financial derivatives 278,414 ( 102,777 ) 338,706 ( 134,614 ) Net valuation (loss) profit Net profit (loss) from domestic stock traded on TSEC (Gretai Securities Market) 1,550 ( 211,176 ) Net profit (loss) from beneficiary certificates 1,960 ( 5,786 ) Net loss from financial derivatives ( 77,193 ) ( 151,454 ) ( 73,683 ) ( 368,416 ) $ 265,023 ( $ 503,030 )

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7. Receivable, net 8. Assets held for sale December 31, 2012 December 31, 2011 2012 2011 Buildings and Buildings and Receivable spot exchange Land structures Total Land structures Total settlement payment $ 435,894 $ 1,036,724 Cost Balance, beginning $ 43,615 $ 70,463 $ 114,078 $ 166,043 $ 118,305 $ 284,348 Acceptances receivable 741,337 605,123 Increase ------Interests receivable 639,321 569,687 Decrease ( 43,615 ) ( 70,463 ) ( 114,078 ) ( 71,517 ) ( 30,963 ) ( 102,480 ) Reclassified in the Accounts receivable 466,520 408,087 current period - - - ( 50,911 ) ( 16,879 ) ( 67,790 ) Tax refund receivable (Note 28) 56,589 237,088 Balance, ending - - - 43,615 70,463 114,078 Accumulated Receivable out-of-pocket depreciation expenses for attorney fees and Balance, beginning - 25,685 25,685 - 50,653 50,653 Increase ------cost of action 25,102 55,323 Decrease - ( 25,685 ) ( 25,685 ) - ( 14,169 ) ( 14,169 ) Notes receivable 61,119 638 Reclassified in the current period - - - - ( 10,799 ) ( 10,799 ) Receivable proceeds from Balance, ending - - - - 25,685 25,685 interbank clearing 124,662 9,017 Accumulated impairment Other receivables 113,706 78,194 Balance, beginning 19,621 27,133 46,754 50,441 32,491 82,932 2,664,250 2,999,881 Increase ------Decrease ( 19,621 ) ( 27,133 ) ( 46,754 ) ( 30,820 ) ( 5,358 ) ( 36,178 ) Less: allowance for bad debt Reclassified in the (Note 9) ( 110,907 ) ( 111,598 ) current period ------Balance, ending - - - 19,621 27,133 46,754 $ 2,553,343 $ 2,888,283 Net, ending $ - $ - $ - $ 23,994 $ 17,645 $ 41,639

The Bank classifies receivables based on credit risk features of products as follows: The Bank sold the impaired assets held for sale in 2012 and 2011. The cause of Allowance for bad Allowance for bad initial impairment has extinguished, and gains on reversal of impairment were Total receivables Total receivables debt debt Item recognized for NTD46,754 thousand and NTD36,178 thousand, respectively. December 31, December 31, December 31, December 31, 2012 2012 2011 2011 9. Discounts and loans, net Corporate $ 21,429 $ 2,204 $ 3,874 $ 716 Individual banking evaluation of With individual Personal 2,243 114 1,782 173 December 31, 2012 December 31, 2011 impairment objective banking Bills negotiated and discounts $ 562,371 $ 381,296 evidence of Corporate 4,088 1,041 3,971 1,187 Portfolio impairment banking Overdraft 3,167 1,755 evaluation of Personal 32,984 17,657 33,913 15,649 impairment Secured overdraft 15,718 18,572 banking Accounts receivable financing 383,890 283,939 Without Corporate 924,760 15,486 760,604 15,688 individual Portfolio banking Short-term loan 42,154,575 33,640,094 objective evaluation of Personal 634,196 8,712 561,385 9,011 Securities receivable financing 325,878 221,514 evidence of impairment banking impairment Others 70,664,544 57,967 76,789,865 70,533 Short-term secured loans 60,298,878 48,629,864 Total 72,284,244 103,181 78,155,394 112,957 Mid-term loans 32,254,212 26,781,468 Mid-term secured loans 87,237,740 82,832,302 Long-term loans 2,553,682 1,592,791 As of December 31, 2012 and 2011, above-mentioned receivables of the Bank Long-term secured loans 100,303,767 85,425,962 include amount due from Central Bank of the Republic of China (Taiwan) and other Delinquent loans 1,198,605 883,616 banks, accounts receivable, interest receivable, acceptance receivable, Deposits of 327,292,483 280,693,173 Central Bank of the Republic of China (Taiwan) and lend to banks, delinquent loans Add: Adjustment of 55,557 5,995 other than loans transferred from loans and refundable deposits. premium/discount The aforementioned provision for bad debts has been recognized by the nature of Less: allowance for bad debt ( 3,318,621 ) ( 2,942,802 ) the risks and disclosed on a monthly basis in accordance with SFAS No. 34 $ 324,029,419 $ 277,756,366 rd “Accounting for Financial Instruments” amended for the 3 instance. However, the (1) The balances of loans and other loans on which no interest has accrued by the Bank amount of non-lending loan assets as of December 31 2012 fell below the requirement on December 31, 2012 and 2011 were NTD1,188,582 thousand and NTD872,792 of 1% and above in loan coverage ratio as stated in Letter Jin-Guan-Yin-Fa-Zi No. thousand, respectively. The interest receivable on which no interest has accrued 10010006830. As such, the provision for bad debts as of December 31 2012 was internally in 2012 and 2011 were NTD30,434 thousand and NTD34,396 thousand, recognized at NTD110,907 thousand in conformity to the estimated amount required by respectively. Letter Jin-Guan-Yin-Fa-Zi No. 10010006830.

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8. Assets held for sale 2012 2011 Buildings and Buildings and Land structures Total Land structures Total Cost Balance, beginning $ 43,615 $ 70,463 $ 114,078 $ 166,043 $ 118,305 $ 284,348 Increase ------Decrease ( 43,615 ) ( 70,463 ) ( 114,078 ) ( 71,517 ) ( 30,963 ) ( 102,480 ) Reclassified in the current period - - - ( 50,911 ) ( 16,879 ) ( 67,790 ) Balance, ending - - - 43,615 70,463 114,078 Accumulated depreciation Balance, beginning - 25,685 25,685 - 50,653 50,653 Increase ------Decrease - ( 25,685 ) ( 25,685 ) - ( 14,169 ) ( 14,169 ) Reclassified in the current period - - - - ( 10,799 ) ( 10,799 ) Balance, ending - - - - 25,685 25,685 Accumulated impairment Balance, beginning 19,621 27,133 46,754 50,441 32,491 82,932 Increase ------Decrease ( 19,621 ) ( 27,133 ) ( 46,754 ) ( 30,820 ) ( 5,358 ) ( 36,178 ) Reclassified in the current period ------Balance, ending - - - 19,621 27,133 46,754 Net, ending $ - $ - $ - $ 23,994 $ 17,645 $ 41,639

The Bank sold the impaired assets held for sale in 2012 and 2011. The cause of initial impairment has extinguished, and gains on reversal of impairment were recognized for NTD46,754 thousand and NTD36,178 thousand, respectively. 9. Discounts and loans, net December 31, 2012 December 31, 2011 Bills negotiated and discounts $ 562,371 $ 381,296 Overdraft 3,167 1,755 Secured overdraft 15,718 18,572 Accounts receivable financing 383,890 283,939 Short-term loan 42,154,575 33,640,094 Securities receivable financing 325,878 221,514 Short-term secured loans 60,298,878 48,629,864 Mid-term loans 32,254,212 26,781,468 Mid-term secured loans 87,237,740 82,832,302 Long-term loans 2,553,682 1,592,791 Long-term secured loans 100,303,767 85,425,962 Delinquent loans 1,198,605 883,616 327,292,483 280,693,173 Add: Adjustment of 55,557 5,995 premium/discount Less: allowance for bad debt ( 3,318,621 ) ( 2,942,802 ) $ 324,029,419 $ 277,756,366 (1) The balances of loans and other loans on which no interest has accrued by the Bank on December 31, 2012 and 2011 were NTD1,188,582 thousand and NTD872,792 thousand, respectively. The interest receivable on which no interest has accrued internally in 2012 and 2011 were NTD30,434 thousand and NTD34,396 thousand, respectively.

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(2) There was no credit loan written off without pursuit in 2012 and 2011. (3) The Bank classifies discounts and loans based on credit risk features of products as December 31, 2011 follows: Accounts Discounts and Discounts and loans receivable loans Total Balance, beginning $ 42,992 $ 2,668,092 $ 2,711,084 Allowance for bad Allowance for bad Total amount Total amount debt debt Provided in the current Item December 31, December 31, December 31, December 31, period 5,864 659,084 664,948 2012 2012 2011 2011 Corporate $ 2,205,275 $ 917,576 $ 1,491,714 $ 613,435 Write-off of Individual banking With evaluation of non-performing loans ( 14,166 ) ( 539,800 ) ( 553,966 ) Personal 624,265 50,246 386,583 14,839 individual impairment banking Collection of written off objective Corporate 466,886 184,450 401,838 150,785 bad debt 20,904 209,490 230,394 evidence of Portfolio banking impairment evaluation of Exchange effects - 3,299 3,299 Personal 1,197,451 165,834 985,300 186,564 impairment banking Reclassification 57,363 ( 57,363 ) - Without Corporate 175,849,753 1,807,112 144,387,729 1,712,984 Balance, ending $ 112,957 $ 2,942,802 $ 3,055,759 individual Portfolio banking objective evaluation of 146,948,853 180,423 133,040,009 264,195 Personal evidence of impairment Allowance for bad debts for above-mentioned receivables includes allowance banking impairment for bad debts for delinquent loans other than loans transferred from loans. Please 327,292,483 3,305,641 280,693,173 2,942,802 refer to Note 13 for details. 10. Available-for-Sale Financial Assets The aforementioned provision for bad debts has been recognized by the nature December 31, 2012 December 31, 2011 of the risks and disclosed on a monthly basis in accordance with SFAS No. 34 rd Corporate bond $ 17,388,602 $ 3,118,259 “Accounting for Financial Instruments” amended for the 3 instance. However, the Overseas bonds-valued in USD, provision for bad debts as of December 31 2012 fell below the requirement of 1% were USD16,071 thousand and and above (in loan coverage ratio) as stated in Letter Jin-Guan-Yin-Fa-Zi No. USD14,217 thousand on 10010006830. As such, the provision for bad debts as of December 31 2012 was December 31, 2011 and 2011, recognized at NTD3,318,621 thousand in conformity to the estimated amount and those valued in AUD were required by Letter Jin-Guan-Yin-Fa-Zi No. 10010006830. AUD20,355 thousand and (4) Details and changes of allowance for bad debts for receivables and discounts and AUD20,185 thousand on loans for 2012 and 2011 are summarized as follows: December 31, 2012 and 2011. 1,080,823 1,051,320 Listed stocks - overseas 50,294 37,352 December 31, 2012 Debt instruments – denominated in Accounts Discounts and USD, which amounted to USD0 receivable loans Total thousand and USD145 thousand Balance, beginning $ 112,957 $ 2,942,802 $ 3,055,759 as of December 31 2012 and Provided in the current December 31 2011, respectively. - 4,389 period 420 237,824 238,244 Depository receipts – denominated Write-off of in USD, which amounted to non-performing loans ( 11,571 ) ( 71,816 ) ( 83,387 ) USD0 thousand and USD9 Collection of written off thousand as of December 31 bad debt 16,911 227,695 244,606 2012 and December 31 2011, Exchange effects ( 127 ) ( 7,579 ) ( 7,706 ) respectively. - 260 Reclassification ( 3,895 ) ( 10,305 ) ( 14,200 ) $ 18,519,719 $ 4,211,580 Balance, ending $ 114,695 $ 3,318,621 $ 3,433,316 (1) After evaluating overseas bonds, certificates of creditor’s right and depository receipts, the Bank recognized an impairment loss of NTD14,266 thousand and NTD63,833 thousand in total respectively for the year ended December 31, 2012 and 2011. (2) As of December 31, 2012 and 2011, the book value of available-for-sale overseas bonds securing funds borrowed from banks was NTD777,640 thousand (USD6,000

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December 31, 2011 Accounts Discounts and receivable loans Total Balance, beginning $ 42,992 $ 2,668,092 $ 2,711,084 Provided in the current period 5,864 659,084 664,948 Write-off of non-performing loans ( 14,166 ) ( 539,800 ) ( 553,966 ) Collection of written off bad debt 20,904 209,490 230,394 Exchange effects - 3,299 3,299 Reclassification 57,363 ( 57,363 ) - Balance, ending $ 112,957 $ 2,942,802 $ 3,055,759 Allowance for bad debts for above-mentioned receivables includes allowance for bad debts for delinquent loans other than loans transferred from loans. Please refer to Note 13 for details. 10. Available-for-Sale Financial Assets December 31, 2012 December 31, 2011 Corporate bond $ 17,388,602 $ 3,118,259 Overseas bonds-valued in USD, were USD16,071 thousand and USD14,217 thousand on December 31, 2011 and 2011, and those valued in AUD were AUD20,355 thousand and AUD20,185 thousand on December 31, 2012 and 2011. 1,080,823 1,051,320 Listed stocks - overseas 50,294 37,352 Debt instruments – denominated in USD, which amounted to USD0 thousand and USD145 thousand as of December 31 2012 and December 31 2011, respectively. - 4,389 Depository receipts – denominated in USD, which amounted to USD0 thousand and USD9 thousand as of December 31 2012 and December 31 2011, respectively. - 260 $ 18,519,719 $ 4,211,580 (1) After evaluating overseas bonds, certificates of creditor’s right and depository receipts, the Bank recognized an impairment loss of NTD14,266 thousand and NTD63,833 thousand in total respectively for the year ended December 31, 2012 and 2011. (2) As of December 31, 2012 and 2011, the book value of available-for-sale overseas bonds securing funds borrowed from banks was NTD777,640 thousand (USD6,000

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thousand and AUD20,000 thousand) and NTD1,039,060 thousand (USD14,000 (1) The Bank’s investment income (loss) recognized under the equity method in 2012 thousand and AUD20,000 thousand). Please refer to Note 31 for details. and 2011 are summarized as follows:

11. Held to maturity investments, net Investment income (loss) Initial Investment Cost December 31, 2012 December 31, 2011 Investee 2012 2011 2012 2011 Overseas bonds-valued in USD, Taichung were USD189,000 thousand Commercial Bank and USD197,000 thousand on Lease Enterprise ( $ 13,705 ) $ - $ 1,000,000 $ - December 31, 2012 and 2011, Taichung Bank and those valued in EUR was Insurance Brokers EUR84,000 thousand on Co., Ltd. 93,847 77,159 6,000 6,000 December 31, 2012 and 2011. $ 8,720,880 $ 9,259,930 Reliance Securities Government bonds 1,689,890 1,803,652 Investment Trust Financial bonds 100,000 100,000 Co., Ltd. ( 1,128 ) ( 10,262 ) 120,000 120,000 10,510,770 11,163,582 $ 79,014 $ 66,897 $ 1,126,000 $ 126,000 Less: accumulated impairment ( 1,727,825 ) ( 1,724,542 ) (2) The Company has established a wholly-owned subsidiary, Taichung Commercial $ 8,782,945 $ 9,439,040 Bank Lease Enterprise, with capital investment of NTD1, 000,000 thousand in 100,000 thousand shares or at 100% of shareholding. (1) As of December 31, 2012 and 2011, book values of the held-to-maturity overseas (3) The Company has prepared its consolidated financial statements covering all its bonds securing RP were NTD261,360 thousand (USD9,000 thousand) and NTD0 subsidiaries in compliance with the SFAS No. 7 (Consolidated Financial Statements) thousand, respectively. and “Rules Governing the Preparation of Financial Statements of Public Issued Banks” (2) After evaluating the overseas bonds, the Bank recognized asset impairment loss of NTD70,324 thousand and NTD496,299 thousand for 2012 and 2011, respectively. 13. Other financial assets - net Until December 31, 2012, impairment provided for financial bonds held to maturity December 31, 2012 December 31, 2011 and overseas bonds has been NTD100,000 thousand and NTD1,627,825 thousand Financial assets at cost $143,486 $ 143,486 (USD56,055 thousand), respectively. Other financial assets - others 760,074 706,910 (3) As of December 31, 2012 and 2011, the book value of held-to-maturity overseas Other Delinquent loans, net 2,374 - bonds securing the funds borrowed from banks was NTD3,850,800 thousand $905,934 $ 850,396 (USD69,000 thousand and EUR48,000 thousand) and NTD4,213,930 thousand

(USD77,000 thousand and EUR48,000 thousand). Please refer to Note 31 for details. (1) Details of the financial assets carried at cost are summarized as follows: 12. Stocks- equity method December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011 Publicly offering of domestic Shareholding Shareholding common stock $ 2 $ 2 Stated amount % Stated amount % Common stock other than Taichung Commercial publicly offering of domestic Bank Lease Enterprise $ 986,772 100.00 $ - - common stock 143,484 143,484 Taichung Bank Insurance $143,486 $ 143,486 Brokers Co., Ltd. 182,207 100.00 89,159 100.00 Reliance Securities Investment Trust Co., (2) Other financial assets - others Ltd. 126,683 38.46 127,811 38.46 $1,295,662 $ 216,970 December 31, 2012 December 31, 2011 Insurance policy assets issued by PEM Group $ 1,896,281 $ 1,864,258 Less: accumulated impairment ( 1,136,207 ) ( 1,157,348 ) $ 760,074 $ 706,910

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(1) The Bank’s investment income (loss) recognized under the equity method in 2012 and 2011 are summarized as follows: Investment income (loss) Initial Investment Cost Investee 2012 2011 2012 2011 Taichung Commercial Bank Lease Enterprise ( $ 13,705 ) $ - $ 1,000,000 $ - Taichung Bank Insurance Brokers Co., Ltd. 93,847 77,159 6,000 6,000 Reliance Securities Investment Trust Co., Ltd. ( 1,128 ) ( 10,262 ) 120,000 120,000 $ 79,014 $ 66,897 $ 1,126,000 $ 126,000 (2) The Company has established a wholly-owned subsidiary, Taichung Commercial Bank Lease Enterprise, with capital investment of NTD1, 000,000 thousand in 100,000 thousand shares or at 100% of shareholding. (3) The Company has prepared its consolidated financial statements covering all its subsidiaries in compliance with the SFAS No. 7 (Consolidated Financial Statements) and “Rules Governing the Preparation of Financial Statements of Public Issued Banks” 13. Other financial assets - net December 31, 2012 December 31, 2011 Financial assets at cost $143,486 $ 143,486 Other financial assets - others 760,074 706,910 Other Delinquent loans, net 2,374 - $905,934 $ 850,396

(1) Details of the financial assets carried at cost are summarized as follows: December 31, 2012 December 31, 2011 Publicly offering of domestic common stock $ 2 $ 2 Common stock other than publicly offering of domestic common stock 143,484 143,484 $143,486 $ 143,486

(2) Other financial assets - others December 31, 2012 December 31, 2011 Insurance policy assets issued by PEM Group $ 1,896,281 $ 1,864,258 Less: accumulated impairment ( 1,136,207 ) ( 1,157,348 ) $ 760,074 $ 706,910

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The receivables as compensation of structured notes to the Company amounted (Continued from previous page) to NTD534,885 thousand (USD69,527 thousand net of recognized provision for bad 2012 Transportation and debts amounting to USD51,165 thousand, refer to Note 32) as of January 1 2011. In Buildings and communication Miscellaneous Prepayments for 2011, the Company has further received compensation from PEM amounting to Land structures equipment equipment equipment Total Accumulated USD11,900 thousand. The Board of the Company resolved on February 24 2011 to impairment Balance, work in conjunction with the US court ruling on the appointment of an official beginning $ 77,000 $ - $ - $ - $ - $ 77,000 receiver of the PEM case and related schedule thereby assumed the assets in the form Increase ------Decrease ------of insurance policy amounting to USD17,110 thousand (USD57,627 thousand net of Reclassified in the current recognized provision for bad debt amounting to USD40,517 thousand) and period ------Balance, ending 77,000 - - - - 77,000 recognized for reversal of impairments recognized in 2011 amounting to Net, ending $ 1,984,208 $ 1,025,959 $ 15,139 $ 288,370 $ 12,087 $ 3,325,763 NTD321,618 thousand (USD10,648 thousand). The Company has also established an insurance policy asset trust jointly with other creditor institutions and completed the 2011 Transportation and signing of related documents thereby assumed the assets in the form of insurance Buildings and communication Miscellaneous Prepayments for Land structures equipment equipment equipment Total policy from the official receiver and keep on paying the premium to make the policy Cost valid. Balance, beginning $ 1,573,285 $ 1,835,820 $ 40,446 $ 1,067,989 $ - $ 4,517,540 Increase - - 5,381 52,205 88,550 146,136 After evaluating the value of insurance policy assets issued by PEM Group, the Decrease - - ( 11,034 ) ( 48,526 ) - ( 59,560 ) Bank recognized a gain on reversal of impairment loss of NTD26,963 thousand and Reclassified in the current NTD69,939 thousand respectively for the year ended December 31, 2011 and 2012. period 45,853 13,901 28 ( 28 ) - 59,754 Balance, ending 1,619,138 1,849,721 34,821 1,071,640 88,550 4,663,870 Revaluation (3) Details of other delinquent accounts, net are summarized as follows: increment Balance, December 31, 2012 December 31, 2011 beginning 472,960 132,210 - - - 605,170 Increase ------Non-delinquent loans restated Decrease ------$ 6,162 $ 1,359 Reclassified in from loans the current Less: allowance for bad debt period ------Balance, ending 472,960 132,210 - - - 605,170 (Note 7 and 9) ( 3,788 ) ( 1,359 ) Accumulated depreciation $ 2,374 $ - Balance, beginning - 868,721 28,676 917,592 - 1,814,989 Increase - 33,529 3,391 53,962 - 90,882 Decrease - - ( 11,034 ) ( 48,506 ) - ( 59,540 ) 14. Fixed assets Reclassified in the current 2012 period - 9,728 28 ( 28 ) - 9,728 Transportation and Balance, ending - 911,978 21,061 923,020 - 1,856,059 Buildings and communication Miscellaneous Prepayments for Accumulated Land structures equipment equipment equipment Total impairment Cost Balance, Balance, beginning 77,000 - - - - 77,000 beginning $ 1,619,138 $ 1,849,721 $ 34,821 $ 1,071,640 $ 88,550 $ 4,663,870 Increase ------Increase - - 5,132 41,925 123,629 170,686 Decrease ------Decrease - - ( 1,133 ) ( 237,276 ) - ( 238,409 ) Reclassified in Reclassified in the current the current period ------period ( 30,890 ) ( 9,166 ) - 171,438 ( 200,092 ) ( 68,710 ) Balance, ending 77,000 - - - - 77,000 Balance, ending 1,588,248 1,840,555 38,820 1,047,727 12,087 4,527,437 Net, ending $ 2,015,098 $ 1,069,953 $ 13,760 $ 148,620 $ 88,550 $ 3,335,981 Revaluation increment Balance, beginning 472,960 132,210 - - - 605,170 Increase ------The consumption status of the part of the lands and buildings of the Company was Decrease ------listed as non-business use assets. Refer to Note 15 for detail. Reclassified in the current period ------15. Other assets Balance, ending 472,960 132,210 - - - 605,170 Accumulated December 31, 2012 December 31, 2011 depreciation Balance, Refundable deposits $ 1,076,227 $ 966,582 beginning - 911,978 21,061 923,020 - 1,856,059 Increase - 34,822 3,727 72,577 - 111,126 Deferred income tax assets (Note 28) 233,367 423,878 Decrease - - ( 1,107 ) ( 236,240 ) - ( 237,347 ) Deferred pension cost (Note 22) 214,388 266,323 Reclassified in the current Deferred expenses 119,652 131,167 period - 6 - - - 6 Balance, ending - 946,806 23,681 759,357 - 1,729,844 (Continued on next page) (Continued on next page)

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(Continued from previous page) 2012 Transportation and Buildings and communication Miscellaneous Prepayments for Land structures equipment equipment equipment Total Accumulated impairment Balance, beginning $ 77,000 $ - $ - $ - $ - $ 77,000 Increase ------Decrease ------Reclassified in the current period ------Balance, ending 77,000 - - - - 77,000 Net, ending $ 1,984,208 $ 1,025,959 $ 15,139 $ 288,370 $ 12,087 $ 3,325,763

2011 Transportation and Buildings and communication Miscellaneous Prepayments for Land structures equipment equipment equipment Total Cost Balance, beginning $ 1,573,285 $ 1,835,820 $ 40,446 $ 1,067,989 $ - $ 4,517,540 Increase - - 5,381 52,205 88,550 146,136 Decrease - - ( 11,034 ) ( 48,526 ) - ( 59,560 ) Reclassified in the current period 45,853 13,901 28 ( 28 ) - 59,754 Balance, ending 1,619,138 1,849,721 34,821 1,071,640 88,550 4,663,870 Revaluation increment Balance, beginning 472,960 132,210 - - - 605,170 Increase ------Decrease ------Reclassified in the current period ------Balance, ending 472,960 132,210 - - - 605,170 Accumulated depreciation Balance, beginning - 868,721 28,676 917,592 - 1,814,989 Increase - 33,529 3,391 53,962 - 90,882 Decrease - - ( 11,034 ) ( 48,506 ) - ( 59,540 ) Reclassified in the current period - 9,728 28 ( 28 ) - 9,728 Balance, ending - 911,978 21,061 923,020 - 1,856,059 Accumulated impairment Balance, beginning 77,000 - - - - 77,000 Increase ------Decrease ------Reclassified in the current period ------Balance, ending 77,000 - - - - 77,000 Net, ending $ 2,015,098 $ 1,069,953 $ 13,760 $ 148,620 $ 88,550 $ 3,335,981

The consumption status of the part of the lands and buildings of the Company was listed as non-business use assets. Refer to Note 15 for detail. 15. Other assets December 31, 2012 December 31, 2011 Refundable deposits $ 1,076,227 $ 966,582 Deferred income tax assets (Note 28) 233,367 423,878 Deferred pension cost (Note 22) 214,388 266,323 Deferred expenses 119,652 131,167 (Continued on next page)

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(Continued from previous page) (5) Collateral accepted – net:

December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011 Land $ 82,178 $ 120,507 Reserve for trust funds $ 50,000 $ 50,000 Buildings and structures 103,006 127,639 compensation Less: allowance for loss from ( 185,184 ) ( 248,146 ) Prepayments 57,781 34,122 price declination Assets not available for business 59,158 19,309 $- $ - operation, net Others 1,204 662 $ 1,811,777 $ 1,892,043 The Bank sold some assumed collateral which have been impaired in 2012 and 2011. The cause of initial impairment has been extinguished, and gains on reversal of

impairment were recognized for NTD62,962 thousand and NTD143,138 thousand, (1) The Government bonds held to maturity deposited as the security bond for respectively. provisional seizure at court and for business guarantee on December 31, 2012 and 16. Due to Central Bank of the Republic of China (Taiwan) and banks 2011 were NTD949,700 thousand and NTD865,100 thousand, which are stated as refundable deposits. December 31, 2012 December 31, 2011 Due to Chunghwa Post Co., Ltd. $ 1,963,594 $ 1,963,594 (2) Change of deferred expenses is stated as follows: Call loans to banks 3,186,000 1,475,310 2012 2011 Deposits of other banks 1,954 1,094 Balance, beginning $131,167 $ 117,979 $ 5,151,548 $ 3,439,998 Increase 16,023 63,075

Amortization in the current ( 51,692 ) ( 49,887 ) period 17. Funds borrowed from CBC and other banks Reclassified in the current 24,154 - December 31, 2012 December 31, 2011 period Interest rate Amount Interest rate Amount Balance, ending $119,652 $ 131,167 Funds borrowed 0.85%~1.44% $ 1,887,600 0.74%~1.31% $ 2,877,550 from banks (3) The Reserve for trust funds compensation by Government bonds held to maturity on December 31, 2012 and 2011 is stated at the par value of NTD50,000 thousand. 18. As of December 31, 2012 and 2011, the bonds securing RP were NTD264,045 thousand (4) Details of assets not available for business operation leased to others are as follows: and NTD0 thousand, and the redemption price as agreed were NTD264,159 thousand 2012 2011 and NTD0 thousand, respectively. Buildings and Buildings and Land structures Total Land structures Total 19. Payables Cost Balance, $ 10,933 $ 25,634 $ 7,955 $ 17,598 December 31, 2012 December 31, 2011 beginning $ 14,701 $ 9,643 Notes and checks in clearing $ 6,221,983 $ 5,165,311 Increase ------Decrease ------Payable spot exchange settlement Reclassified in 30,891 9,165 40,056 5,058 2,978 8,036 payment 435,786 1,036,226 the current period Acceptances payable 749,315 617,918 Balance, 45,592 20,098 65,690 14,701 10,933 25,634 Accrued expenses 601,401 348,244 ending Accumulated Interest payable 410,262 290,632 depreciation Payable income tax (Note 28) 263,278 - Balance, - 6,325 6,325 - 5,057 5,057 beginning Increase - 213 213 - 197 197 Decrease ------Reclassified in - (6)( 6)- 1,071 1,071 (Continued on next page) the current period Balance, - 6,532 6,532 - 6,325 6,325 ending Net, ending $ 45,592 $ 13,566 $ 59,158 $ 14,701 $ 4,608 $ 19,309

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(5) Collateral accepted – net: December 31, 2012 December 31, 2011 Land $ 82,178 $ 120,507 Buildings and structures 103,006 127,639 Less: allowance for loss from ( 185,184 ) ( 248,146 ) price declination $- $ -

The Bank sold some assumed collateral which have been impaired in 2012 and 2011. The cause of initial impairment has been extinguished, and gains on reversal of impairment were recognized for NTD62,962 thousand and NTD143,138 thousand, respectively. 16. Due to Central Bank of the Republic of China (Taiwan) and banks December 31, 2012 December 31, 2011 Due to Chunghwa Post Co., Ltd. $ 1,963,594 $ 1,963,594 Call loans to banks 3,186,000 1,475,310 Deposits of other banks 1,954 1,094 $ 5,151,548 $ 3,439,998

17. Funds borrowed from CBC and other banks December 31, 2012 December 31, 2011 Interest rate Amount Interest rate Amount Funds borrowed 0.85%~1.44% $ 1,887,600 0.74%~1.31% $ 2,877,550 from banks

18. As of December 31, 2012 and 2011, the bonds securing RP were NTD264,045 thousand and NTD0 thousand, and the redemption price as agreed were NTD264,159 thousand and NTD0 thousand, respectively. 19. Payables December 31, 2012 December 31, 2011 Notes and checks in clearing $ 6,221,983 $ 5,165,311 Payable spot exchange settlement payment 435,786 1,036,226 Acceptances payable 749,315 617,918 Accrued expenses 601,401 348,244 Interest payable 410,262 290,632 Payable income tax (Note 28) 263,278 -

(Continued on next page)

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(Continued from previous page) 2. As approved by FSC’s Letter under Jin-Guan-Yin (4) Zi No. 09800104050 dated March 20, 2009, the Bank issued 1st term to 4th term subordinate financial bonds for 2009 on June 26, December 10, December 18, and December 31, 2012 December 31, 2011 December 30, 2009 and 1st term to 2nd term subordinate financial bonds for Collection payable $ 29,162 $ 21,679 2010 on January 28 and February 9, 2010 upon the following terms and Deposit payable for securities conditions: financing 21,773 6,382 Guarantee deposits received for (1) Approved: NTD5,000,000 thousand. financing instruments 20,043 5,778 (2) Issued: Payable structured note indemnity st A. 1 term 2009: NTD1,800,000 thousand. (Note 32) 7,096 18,291 nd Others 136,669 173,040 B. 2 term 2009: NTD100,000 thousand. $ 8,896,768 $ 7,683,501 C. 3rd term 2009: NTD1,200,000 thousand. D. 4th term 2009: NTD1,100,000 thousand. 20. Customer deposits and remittances E. 1st term 2010: NTD600,000 thousand. December 31, 2012 December 31, 2011 F. 2nd term 2010: NTD200,000 thousand. Check deposits $ 7,662,273 $ 7,012,760 Current deposits 77,831,423 66,620,964 (3) Book value: Current saving deposits 88,448,284 81,231,495 A. 1st term 2009: NTD100 thousand, issued at par value. Time deposits 85,985,510 60,654,582 nd Time saving deposits 125,933,000 118,312,830 B. 2 term 2009: NTD500 thousand, issued at par value. Remittances 2,351 - C. 3rd term 2009: NTD500 thousand, issued at par value. $ 385,862,841 $ 333,832,631 th D. 4 term 2009: NTD500 thousand, issued at par value. E. 1st term 2010: NTD500 thousand, issued at par value. 21. Financial bonds payable F. 2nd term 2010: NTD10,000 thousand, issued at par value. December 31, 2012 December 31, 2011 (4) Duration: Subordinate financial bonds $ 11,300,000 $ 8,300,000 st Convertible financial bonds 2,248,277 2,212,559 A. 1 term 2009: 7 years, matured on June 26, 2016. $ 13,548,277 $ 10,512,559 B. 2nd term 2009: 7 years, matured on December 10, 2016. C. 3rd term 2009: 7 years, matured on December 18, 2016. (1) Subordinate financial bonds D. 4th term 2009: 6.5 years, matured on June 30, 2016. 1. As approved by FSC’s Letter under Jin-Guan-Yin (4) Zi No. 09600481190 E. 1st term 2010: 7 years, matured on January 28, 2017. dated November 14, 2007, the Bank issued 1st term subordinate financial nd bonds on December 21, 2007 upon the following terms and conditions: F. 2 term 2010: 6 years, matured on February 9, 2016. (1) Approved: NTD3,500,000 thousand. (5) Bond interest rate: st (2) Issued: NTD2,400,000 thousand. A. 1 term 2009: the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 1.40%. (3) Denomination: NTD10,000 thousand, issued at par value. B. 2nd term 2009: the fixed annual rate of 2.75%. (4) Duration: 5.5 years, matured on June 21, 2013. C. 3rd term 2009: the displayed floating rates for one-year term deposits (5) Bond interest rate is the displayed floating rates for one-year term of Chunghua Post Co., Ltd. plus 1.50%. deposits of Chunghua Post Co., Ltd. plus 1.02%. D. 4th term 2009: the displayed floating rates for one-year term deposits (6) Repayment Methods: repayment in lump sum upon maturity. of Chunghua Post Co., Ltd. plus 1.48%. (7) Payment of interest: interest paid per six months as of the date of E. 1st term 2010: the displayed floating rates for one-year term deposits issuance. of Chunghua Post Co., Ltd. plus 1.50%.

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2. As approved by FSC’s Letter under Jin-Guan-Yin (4) Zi No. 09800104050 dated March 20, 2009, the Bank issued 1st term to 4th term subordinate financial bonds for 2009 on June 26, December 10, December 18, and December 30, 2009 and 1st term to 2nd term subordinate financial bonds for 2010 on January 28 and February 9, 2010 upon the following terms and conditions: (1) Approved: NTD5,000,000 thousand. (2) Issued: A. 1st term 2009: NTD1,800,000 thousand. B. 2nd term 2009: NTD100,000 thousand. C. 3rd term 2009: NTD1,200,000 thousand. D. 4th term 2009: NTD1,100,000 thousand. E. 1st term 2010: NTD600,000 thousand. F. 2nd term 2010: NTD200,000 thousand. (3) Book value: A. 1st term 2009: NTD100 thousand, issued at par value. B. 2nd term 2009: NTD500 thousand, issued at par value. C. 3rd term 2009: NTD500 thousand, issued at par value. D. 4th term 2009: NTD500 thousand, issued at par value. E. 1st term 2010: NTD500 thousand, issued at par value. F. 2nd term 2010: NTD10,000 thousand, issued at par value. (4) Duration: A. 1st term 2009: 7 years, matured on June 26, 2016. B. 2nd term 2009: 7 years, matured on December 10, 2016. C. 3rd term 2009: 7 years, matured on December 18, 2016. D. 4th term 2009: 6.5 years, matured on June 30, 2016. E. 1st term 2010: 7 years, matured on January 28, 2017. F. 2nd term 2010: 6 years, matured on February 9, 2016. (5) Bond interest rate: A. 1st term 2009: the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 1.40%. B. 2nd term 2009: the fixed annual rate of 2.75%. C. 3rd term 2009: the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 1.50%. D. 4th term 2009: the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 1.48%. E. 1st term 2010: the displayed floating rates for one-year term deposits of Chunghua Post Co., Ltd. plus 1.50%.

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F. 2nd term 2010: the displayed floating rates for one-year term deposits 1. As approved by FSC’s Letter under Jin-Guan-Zheng-Fa-Zi No. 1000018296 of Chunghua Post Co., Ltd. plus 1.50%. dated May 16, 2011, the Bank issued first unsecured convertible financial (6) Repayment Methods: repayment in lump sum upon maturity. bonds of NTD2,300,000 thousand with the coupon rate of 0% on June 15, 2011. In accordance with SFAS No.36, the convertible rights and liabilities were (7) Payment of interest: interest paid per six months as of the date of separately recognized as equity and liabilities. The equity portion amounted to issuance. NTD83,039 thousand and was stated as “capital surplus – stock option”; 3. As approved by FSC’s Letter under Jin-Guan-Yin-Piao-Zi No. 09900204230 liability components were recognized as embedded financial derivatives and dated June 4, 2010, the Bank issued 3rd term subordinate financial bonds on non-derivative liabilities. The evaluated fair value for said embedded financial June 25, 2010 upon the following terms and conditions: derivatives as of December 31, 2012 amounted to NTD21,850 thousand, and non-derivative liabilities measured at amortized cost as of December 31, 2012 (1) Approved: NTD900,000 thousand. amounted to NTD2,248,277 thousand. (2) Issued: NTD900,000 thousand. 2. Issuance terms for the Bank’s first domestic unsecured convertible financial (3) Denomination: NTD10,000 thousand, issued at par value. bonds are summarized as follows: (4) Duration: 7 years, matured on June 25, 2017. (1) Approved: NTD2,800,000 thousand. (5) Bond interest rate is the displayed floating rates for one-year term (2) Issued: NTD2,300,000 thousand. deposits of Chunghua Post Co., Ltd. plus 1.75%. (3) Denomination: NTD100 thousand, issued at par value. (6) Repayment Methods: repayment in lump sum upon maturity. (4) Duration: 3 years, matured on June 15, 2014. (7) Payment of interest: interest paid per six months as of the date of (5) Coupon rate: 0%. issuance. (6) Repayment: A single payment in cash is made for unconverted bonds or 4. As approved by FSC’s Letter under Jin-Guan-Yin-Piao-Zi No. 10100305900 for exercise of put options. dated September 24, 2012, the Bank issued 1st term subordinate financial bonds on November 13, 2012 upon the following terms and conditions: (7) Interest payment: Nil. (1) Approved: NTD3,000,000 thousand. (8) Conversion price: NTD11.89. (2) Issued: NTD3,000,000 thousand. (9) Put options: Bondholders may ask the Bank to redeem the financial bonds at the par value plus a yield rate of 1.5% in cash within forty days (3) Denomination: NTD1,000 thousand, issued at par value. before the date as of which the convertible financial bonds have been (4) Duration: 7 years, matured on November 13, 2019. issued for two years (June 15, 2013). (5) Coupon rate: Fixed annual interest rate 2.1%. (10) Call option: From the date after six months from the issuance date to forty days before the expiration date of the convertible financial bonds, if (6) Repayment Methods: repayment in lump sum upon maturity. the amount of unconverted bonds is lower than 10% of total issuance (7) Payment of interest: interest paid per six months as of the date of amount and the closing prices of common shares of Taichung Bank issuance. exceed 30% of the current conversion price for consecutive thirty business days, the Bank may recall outstanding bonds at the (2) Convertible financial bonds denomination of the bonds in cash. December 31, 2012 December 31, 2011 3. The conversion procedure for the Bank’s first domestic unsecured convertible 1st unsecured convertible financial financial bonds is summarized as follows: bonds Unsecured convertible financial (1) Underlying stock: bonds of NTD2,300,000 Common shares of the Bank. The conversion is made by issuance of thousand were issued on June new shares. 15, 2011 with duration of 3 years and coupon rate of 0% $ 2,300,000 $ 2,300,000 (2) Conversion period: Less: Discount on corporate bond Bondholders may from time to time ask the Bank to convert their discount ( 51,723 ) ( 87,441 ) bonds into common shares from July 16, 2011 (the next date after one $ 2,248,277 $ 2,212,559 month from the issuance date of the bonds) to June 5, 2014 except to stock dividend transfer suspension day, from fifteen business days before

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1. As approved by FSC’s Letter under Jin-Guan-Zheng-Fa-Zi No. 1000018296 dated May 16, 2011, the Bank issued first unsecured convertible financial bonds of NTD2,300,000 thousand with the coupon rate of 0% on June 15, 2011. In accordance with SFAS No.36, the convertible rights and liabilities were separately recognized as equity and liabilities. The equity portion amounted to NTD83,039 thousand and was stated as “capital surplus – stock option”; liability components were recognized as embedded financial derivatives and non-derivative liabilities. The evaluated fair value for said embedded financial derivatives as of December 31, 2012 amounted to NTD21,850 thousand, and non-derivative liabilities measured at amortized cost as of December 31, 2012 amounted to NTD2,248,277 thousand. 2. Issuance terms for the Bank’s first domestic unsecured convertible financial bonds are summarized as follows: (1) Approved: NTD2,800,000 thousand. (2) Issued: NTD2,300,000 thousand. (3) Denomination: NTD100 thousand, issued at par value. (4) Duration: 3 years, matured on June 15, 2014. (5) Coupon rate: 0%. (6) Repayment: A single payment in cash is made for unconverted bonds or for exercise of put options. (7) Interest payment: Nil. (8) Conversion price: NTD11.89. (9) Put options: Bondholders may ask the Bank to redeem the financial bonds at the par value plus a yield rate of 1.5% in cash within forty days before the date as of which the convertible financial bonds have been issued for two years (June 15, 2013). (10) Call option: From the date after six months from the issuance date to forty days before the expiration date of the convertible financial bonds, if the amount of unconverted bonds is lower than 10% of total issuance amount and the closing prices of common shares of Taichung Bank exceed 30% of the current conversion price for consecutive thirty business days, the Bank may recall outstanding bonds at the denomination of the bonds in cash. 3. The conversion procedure for the Bank’s first domestic unsecured convertible financial bonds is summarized as follows: (1) Underlying stock: Common shares of the Bank. The conversion is made by issuance of new shares. (2) Conversion period: Bondholders may from time to time ask the Bank to convert their bonds into common shares from July 16, 2011 (the next date after one month from the issuance date of the bonds) to June 5, 2014 except to stock dividend transfer suspension day, from fifteen business days before

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cash dividend transfer suspension day or suspension day for subscription 22. Pension Plan of common shares for cash capital increase to base day for right (1) The Bank’s pension costs provided under the defined contribution rules in 2012 and distribution, from base day for capital decrease to the day before the 2011 were NTD55,685 thousand and NTD87,253 thousand. The net pension costs share replacement date for capital decrease and other common stock provided under the defined benefit rules were NTD84,827 thousand and NTD80,612 transfer suspension period upon laws and regulations. thousand. (3) Procedures to ask for conversion: 2012 2011 A. Bondholders complete the “Conversion/Redemption/Put Back Service costs $ 20,433 $ 20,262 Application for Convertible Financial Bond Book Entry” (please mark Interest costs 21,441 20,655 “Conversion”) at their original securities company to make the Unrecognized amortization of application through Taiwan Depository & Clearing Corporation transitional net benefit (hereinafter referred to as "TDCC"). TDCC submits the application to obligation 25,765 25,765 the Bank’s stock transfer agent after receiving it. The application

becomes effective upon receipt of application and can not be cancelled. The conversion procedure will be completed within 5 business days 2012 2011 after delivery and stocks will be directly transferred into bondholders’ Expected return of pension central depository accounts. fund assets ( $ 16,749 ) ( $ 15,904 ) Unrecognized unamortized B. When overseas Chinese or foreigners apply to convert the bonds they balance of service costs in hold into shares of the Bank, shares are distributed through book entry previous period 26,170 26,170 by TDCC. Amortization of unrecognized (4) The conversion price at issuance is NTD11.89. After issuance of pension loss 7,767 3,664 financial bonds, the conversion price should be adjusted in accordance Net pension cost $ 84,827 $ 80,612 with the prescribed formula for any increase in issued common shares

except for replacement of common shares due to issuance of various securities with common share convertible rights or stock options. The (2) The contribution of pension fund and stated accrued pension liabilities under the Bank conducted the ex-right and ex-dividend procedure in September defined benefit rules are adjusted as follows: 2012. The conversion price was accordingly adjusted to NTD10.82 in December 31, 2012 December 31, 2011 accordance with the prescribed formula. Benefit obligation: 4. Changes in accounts relevant to convertible financial bonds payable for the Vested benefit obligation ( $ 348,936 ) ( $ 196,337 ) current period are summarized as follows: Non-vested benefit obligation ( 698,852 ) ( 735,452 ) 2012 Cumulative benefit obligation ( 1,047,788 ) ( 931,789 ) Financial liabilities Capital surplus – Effects of increase in salary ( 142,740 ) ( 140,267 ) at fair value stock options of Benefit from through profit or Corporate bonds convertible effects of profit Projected benefit obligation ( 1,190,528 ) ( 1,072,056 ) loss payable corporate bonds and loss accounts Fair value of pension fund assets 824,084 795,025 Balance, beginning $ 42,090 $ 2,212,559 $ 83,039 $ - Discount amortization of - 35,718 - ( 35,718 ) Contribution ( 366,444 ) ( 277,031 ) corporate bonds Unrecognized transitional benefit 7 25,772 Evaluation adjustments, ( 20,240 )- - 20,240 end of year obligation Balance, ending $ 21,850 $ 2,248,277 $ 83,039 ( $ 15,478 ) Unrecognized service costs from 214,381 240,551 previous period 2011 Financial liabilities Capital surplus – Unrecognized pension loss 330,481 200,407 at fair value stock options of Benefit from Minimum accruable pension ( 402,129 ) ( 326,463 ) through profit or Corporate bonds convertible effects of profit loss payable corporate bonds and loss accounts liabilities Balance, beginning $-$-$- $ - Accruable pension liabilities ( $ 223,704 ) ( $ 136,764 ) Issuance of convertible 23,920 2,193,041 83,039 - financial bonds Discount amortization of - 19,518 - ( 19,518 ) corporate bonds Evaluation adjustments, 18,170 - - ( 18,170 ) end of year Balance, ending $ 42,090 $ 2,212,559 $ 83,039 ( $ 37,688 )

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22. Pension Plan (1) The Bank’s pension costs provided under the defined contribution rules in 2012 and 2011 were NTD55,685 thousand and NTD87,253 thousand. The net pension costs provided under the defined benefit rules were NTD84,827 thousand and NTD80,612 thousand. 2012 2011 Service costs $ 20,433 $ 20,262 Interest costs 21,441 20,655 Unrecognized amortization of transitional net benefit obligation 25,765 25,765

2012 2011 Expected return of pension fund assets ( $ 16,749 ) ( $ 15,904 ) Unrecognized unamortized balance of service costs in previous period 26,170 26,170 Amortization of unrecognized pension loss 7,767 3,664 Net pension cost $ 84,827 $ 80,612

(2) The contribution of pension fund and stated accrued pension liabilities under the defined benefit rules are adjusted as follows: December 31, 2012 December 31, 2011 Benefit obligation: Vested benefit obligation ( $ 348,936 ) ( $ 196,337 ) Non-vested benefit obligation ( 698,852 ) ( 735,452 ) Cumulative benefit obligation ( 1,047,788 ) ( 931,789 ) Effects of increase in salary ( 142,740 ) ( 140,267 ) Projected benefit obligation ( 1,190,528 ) ( 1,072,056 ) Fair value of pension fund assets 824,084 795,025 Contribution ( 366,444 ) ( 277,031 ) Unrecognized transitional benefit 7 25,772 obligation Unrecognized service costs from 214,381 240,551 previous period Unrecognized pension loss 330,481 200,407 Minimum accruable pension ( 402,129 ) ( 326,463 ) liabilities Accruable pension liabilities ( $ 223,704 ) ( $ 136,764 )

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(3) The Bank’s actuarial hypothesis of pension benefit obligation under the defined stock in whole. The Company conducted capital increase out of earnings of benefit rules is specified as follows: NTD294,423 thousand and capital surplus of NTD225,147 thousand in September 2011 and also made capital increase in cash in October 2011, which issued 450,000 2012 2011 thousand shares at par value. Therefore, the Bank’s paid-in capital increased to Discounted rate 1.88% 2.00% NTD22,338,576 thousand as of December 31, 2011, which were 2,233,858 thousand Increase rate of future salary 1.50% 1.50% common shares with par value of NTD10. Expected rate of return of 1.88% 2.00% pension fund assets The Company has issued new shares by capitalization of retained earnings amounting to NTD848,866 thousand in September 2012. After the injection of the

new capital, the paid-in capital of the Company amounted to NTD23,187,442 (4) The vested benefit calculated by the Bank under the defined benefit rules until Dec. thousand in 2,318,744 thousand common shares as of December 31 2012 at 31, 2012 and 2011 is specified as follows: NTD10/share. December 31, 2012 December 31, 2011 (2) Capital surplus Vested benefit $416,357 $ 241,218 Under the related regulations, capital surplus shall not be used except to offset a deficit. However, capital surplus arising from issuance of shares in excess of par 23. Other financial liabilities value (including issuance in excess of common stock par value, issuance of shares for combinations and treasury stock transactions, etc.) and donation may be December 31, 2012 December 31, 2011 transferred to common stock on the basis of the Ratio of Shareholding of shares held Allocated to lending fund $ 17,208 $ 22,521 by the stockholders. Such capital surplus transferred to common stock shall be within a certain Ratio of Shareholding prescribed by the related regulations. In accordance with revised articles of the Company Law announced on January 4, 2012, 24. Other liabilities aforementioned capital surplus may be distributed in cash. December 31, 2012 December 31, 2011 Details of capital surplus are as follows: Advances $132,267 $ 137,427 Reserve for land revaluation 111,021 111,021 December 31, 2012 December 31, 2011 increment tax (“LRIT”) Stock Other capital Stock Other capital premiums surplus premiums surplus Deposits received 67,261 57,214 Premium on issuance Reserve 36,837 22,637 of shares $ 550,109 $ - $ 550,109 $ - $347,386 $ 328,299 Employee stock The breakdown and change of the various reserves: option compensation cost 18,949 6,627 18,949 6,627 2012 2011 Reserve for Reserve for Equity component of guarantee Reserve for guarantee Reserve for convertible liability default loss Total liability default loss Total financial bonds Balance, beginning $ 22,637 $ - $ 22,637 $ 22,637 $ 23,507 $ 46,144 Deposit in the ------(Note 21) - 83,039 - 83,039 current period Generated from Write off in the ------long-term current period Reclassified in the 14,200 - 14,200 - ( 23,507 ) ( 23,507 ) investments - 16,813 - 16,813 current period $ 569,058 $ 106,479 $ 569,058 $ 106,479 Balance, ending $ 36,837 $-$ 36,837 $ 22,637 $ - $ 22,637

The deposit of reserve for guarantee liability is stated as bad debt expenses. The deposit of reserve for default loss is stated as other non-interest expenses. In accordance (3) Earnings allocation and dividend policy with Directive Jin-Guan-Yin-Fa-Zi No. 10010000440 and Directive According to the Bank’s Articles of Incorporation, any profit from settlement of Jin-Guan-zheng-Quan-Zi No. 09900738571, effective January 1, 2011, reserve for the year shall be subject to applicable taxes as the top Seniority, followed by the default loss is transferred as special reserve. offsetting of losses carried forward from previous years and thirty percent of the 25. Shareholders’ equity remainder of such profit shall be allocated as legal reserve, and special reserve shall be provided pursuant to laws. The balance, if any, plus the unallocated

(1) Capital stock accumulated retained earnings for the previous years shall be allocated as the The Bank’s paid-in capital was NTD17,319,006 thousand on January 1, 2011, shareholders’ Dividends, and the remainder thereof, if any, shall be allocated in the divided into 1,731,901 thousand shares at NTD10 per share and offered as common following order:

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stock in whole. The Company conducted capital increase out of earnings of NTD294,423 thousand and capital surplus of NTD225,147 thousand in September 2011 and also made capital increase in cash in October 2011, which issued 450,000 thousand shares at par value. Therefore, the Bank’s paid-in capital increased to NTD22,338,576 thousand as of December 31, 2011, which were 2,233,858 thousand common shares with par value of NTD10. The Company has issued new shares by capitalization of retained earnings amounting to NTD848,866 thousand in September 2012. After the injection of the new capital, the paid-in capital of the Company amounted to NTD23,187,442 thousand in 2,318,744 thousand common shares as of December 31 2012 at NTD10/share. (2) Capital surplus Under the related regulations, capital surplus shall not be used except to offset a deficit. However, capital surplus arising from issuance of shares in excess of par value (including issuance in excess of common stock par value, issuance of shares for combinations and treasury stock transactions, etc.) and donation may be transferred to common stock on the basis of the Ratio of Shareholding of shares held by the stockholders. Such capital surplus transferred to common stock shall be within a certain Ratio of Shareholding prescribed by the related regulations. In accordance with revised articles of the Company Law announced on January 4, 2012, aforementioned capital surplus may be distributed in cash. Details of capital surplus are as follows: December 31, 2012 December 31, 2011 Stock Other capital Stock Other capital premiums surplus premiums surplus Premium on issuance of shares $ 550,109 $ - $ 550,109 $ - Employee stock option compensation cost 18,949 6,627 18,949 6,627 Equity component of convertible financial bonds (Note 21) - 83,039 - 83,039 Generated from long-term investments - 16,813 - 16,813 $ 569,058 $ 106,479 $ 569,058 $ 106,479

(3) Earnings allocation and dividend policy According to the Bank’s Articles of Incorporation, any profit from settlement of the year shall be subject to applicable taxes as the top Seniority, followed by the offsetting of losses carried forward from previous years and thirty percent of the remainder of such profit shall be allocated as legal reserve, and special reserve shall be provided pursuant to laws. The balance, if any, plus the unallocated accumulated retained earnings for the previous years shall be allocated as the shareholders’ Dividends, and the remainder thereof, if any, shall be allocated in the following order:

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1. 1%-5% for employee bonus. directors and supervisors of NTD201 thousand. The difference between the resolution and the recognition of NTD1,700 thousand in the annual financial 2. Remuneration to directors/supervisors granted based on 50% of the allocated statements for employee bonus and remuneration to directors and supervisors employee bonus. amounted to NTD850 thousand, mainly due to changes in estimation, which has been 3. Shareholder bonus. adjusted as income of 2012.For the relevant information, please view MOPS of The Board shall retain the required fund subject to the change of operating TSEC. environment, operation and investment needs before proposing the proportion The Board has acted in favor of motion for the distribution of incomes for fiscal between cash and stock Dividends for the approval of the shareholders’ meeting: year 2012 on March 13 2013, including the allocation of NTD833,387 thousand as 1. The cash dividends shall be no less than 10% of the Dividends and bonus statutory reserve, and NTD35,260 thousand as special reserve, stock dividends allocated to shareholders. amounted to NTD1,681,090 thousand and cash dividends amounted to NTD231,874 thousand. The Board also resolved to allocate employee cash bonus amounting to 2. Notwithstanding, if the Dividends are allocated at less than or equal to NTD0.3 NTD219 thousand and remunerations to directors and supervisors amounting to per share, the earnings may be allocated in the form of stock Dividends in full. NTD110 thousand. The difference between the resolution of the Board on employee Free-Gratis Dividends for the approval of the shareholders’ meeting. Before the bonus and remunerations to directors and supervisors and the employee bonus and legal reserve amounts to the total Paid-in capital, the maximum allocation of earnings remunerations to directors and supervisors recognized in the financial statement of in cash shall be no more than 15% of total capital. Where the rates of Shares and the same fiscal year, and amounted to NTD1,278 thousand and NTD639 thousand dividends and risk-based assets fail to meet the standard required by the business is the result of change in estimation. If the shareholders’ meeting resolves the actual competent authority, allocation of earnings in cash or with other property shall be allocated amount different from the estimate, it shall be handled as the “change in restricted or prohibited by the relevant requirements provided by the business accounting estimates” in the year of the resolution made by the shareholders’ competent authority. meeting. For relevant information to the resolution of the Board of Directors, please view MOPS of TSEC. When allocating earnings, the Bank shall provide equivalent special reserve for the difference between loss on sale of NPL and amortized loss, and also provide 26. Service Fee, Net special reserve from Earnings or Accumulated earnings for the previous period with 2012 2011 respect to the amount under the “less” item of shareholders’ equity for the current Service Fee $ 1,229,002 $ 970,478 year and previous years. Where the amount under the “less” item of shareholders’ Service fee expenses ( 86,959 ) ( 80,584 ) equity is collected afterwards, earnings may be allocated from the reversal. $ 1,142,043 $ 889,894 Employees’ bonuses and remuneration to directors/supervisors payable by the Bank were estimated in accordance with the Bank’s Articles of Incorporation. After the Bank provided legal reserve at 30% of the earnings in 2012 and 2011, and 27. Employee Expenses, Depreciation, Depletion And Amortization special reserve required by laws plus the unallocated earnings for the previous years Summarized by functions: and less the shareholders’ Free-Gratis Dividends, employees’ bonus and remuneration to directors/supervisors as provided totaled NTD1,917 thousand and 2012 2011 NTD2,550 thousand, respectively. The change in the allocated amount resolved by Operating expenses Operating expenses board session at the end of FY, if any, shall apply to adjustment of the annual Employee expenses expenses initially provided. If the shareholders’ meeting resolves an actual Salaries and wages $ 1,782,982 $ 1,571,596 allocated amount different from the estimate, it shall be stated as a change in Labor insurance and national 125,941 117,213 accounting valuation in the year of the resolution made by the shareholders’ meeting. health insurance If the shareholders’ meeting resolves to allocate stock as the employee bonus, the Pension expenses 140,512 167,865 quantity of stock shall be determined based on the amount of the employee bonus Other employee expenses 55,897 56,415 divided by fair value of the stock. The fair value of the stock is based on the closing $ 2,105,332 $ 1,913,089 price on the day prior to the day of resolution made by the shareholders' meeting and Depreciation expenses $ 111,126 $ 91,027 takes the effect of ex-right and After Distribution into consideration. Amortization expenses $ 51,692 $ 49,887 Upon the resolution by the Board of Directors, the Bank provided NTD436,200 thousand for legal reserve and NTD60,140 thousand for special reserve and reversed NTD9,092 thousand provided for special reserve in previous years. Then the Bank distributed stock dividends of NTD848,866 thousand by capital increase out of earnings and NTD111,693 thousand by capital increase in cash. The Board also resolved to distribute employee bonus of NTD402 thousand and remuneration to

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directors and supervisors of NTD201 thousand. The difference between the resolution and the recognition of NTD1,700 thousand in the annual financial statements for employee bonus and remuneration to directors and supervisors amounted to NTD850 thousand, mainly due to changes in estimation, which has been adjusted as income of 2012.For the relevant information, please view MOPS of TSEC. The Board has acted in favor of motion for the distribution of incomes for fiscal year 2012 on March 13 2013, including the allocation of NTD833,387 thousand as statutory reserve, and NTD35,260 thousand as special reserve, stock dividends amounted to NTD1,681,090 thousand and cash dividends amounted to NTD231,874 thousand. The Board also resolved to allocate employee cash bonus amounting to NTD219 thousand and remunerations to directors and supervisors amounting to NTD110 thousand. The difference between the resolution of the Board on employee bonus and remunerations to directors and supervisors and the employee bonus and remunerations to directors and supervisors recognized in the financial statement of the same fiscal year, and amounted to NTD1,278 thousand and NTD639 thousand is the result of change in estimation. If the shareholders’ meeting resolves the actual allocated amount different from the estimate, it shall be handled as the “change in accounting estimates” in the year of the resolution made by the shareholders’ meeting. For relevant information to the resolution of the Board of Directors, please view MOPS of TSEC. 26. Service Fee, Net 2012 2011 Service Fee $ 1,229,002 $ 970,478 Service fee expenses ( 86,959 ) ( 80,584 ) $ 1,142,043 $ 889,894

27. Employee Expenses, Depreciation, Depletion And Amortization Summarized by functions: 2012 2011 Operating expenses Operating expenses Employee expenses Salaries and wages $ 1,782,982 $ 1,571,596 Labor insurance and national 125,941 117,213 health insurance Pension expenses 140,512 167,865 Other employee expenses 55,897 56,415 $ 2,105,332 $ 1,913,089 Depreciation expenses $ 111,126 $ 91,027 Amortization expenses $ 51,692 $ 49,887

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28. Corporate Income Tax (3) The Bank’s income tax expenses in the current period are specified as follows:

(1) The Bank’s payable income tax (receivable refundable tax) in the current period is 2012 2011 estimated as follows: Payable income tax for the December 31, 2012 December 31, 2011 current period $ 335,870 $ - Income before taxation $ 3,304,262 $ 1,914,176 Decrease in deferred income Permanent difference ( 198,994 ) 695,675 tax assets 190,511 455,369 Temporary difference 118,051 ( 641,804 ) Adjustment of income tax for 3,223,319 1,968,047 the previous period ( 77 ) 4,807 Less: loss deduction ( 1,213,739 ) ( 1,968,047 ) Income tax expenses $526,304 $ 460,176 Estimated general taxable income 2,009,580 - Payable general tax 341,629 - Add: additional 10% income tax (4) The information regarding shareholders’ deductible tax: levied on unallocated earnings 619 184 December 31, 2012 December 31, 2011 Add: Supplemented minimum tax - - Shareholders’ deductible tax Payable income tax for the current account-Balance $ 565,497 $ 775,625 period 342,248 184 Projected deductible rate of Less: Investment exemption ( 6,378 ) ( 184 ) earnings allocation for the Less: prepaid and withheld tax ( 72,592 ) ( 56,513 ) current year 20.52% 20.50% Payable income tax (receivable refundable tax) in the current period $ 263,278 ( $ 56,513 ) Projected deductible rate of earnings allocation for the current year includes the payable income tax estimated for the current year. According to the Income Tax Receivable refundable Law, no net dividends or earnings may be deducted unless they refer to the dividends tax-beginning $ 237,088 $ 236,918 allocated from a company or cooperative or the profit-making business income tax Add: Receivable refundable tax in paid by an investee or cooperative as included in the total earnings, in the territory of the current period - 56,513 the R.O.C.. Notwithstanding, said shall not apply where additional 10% income tax Add: Adjustment of income tax for shall be levied as no earnings are allocated by the investee or cooperative. the previous period 77 ( 4,807 )

Less: Refunded tax in current (5) As of December 31, 2012, there were no unallocated earnings of the Bank for 1997 period ( 180,576 ) ( 51,536 ) and the previous years. Receivable refundable tax-ending $ 56,589 $ 237,088 (6) The income tax returns of the Bank until 2010 have been authorized by the tax collection authority. (2) The Bank’s net deferred income tax assets consist of the following: 29. Earnings Per Share December 31, 2012 December 31, 2011 The numerator and denominator for calculating Earnings Per Share are disclosed as Deferred income tax assets follows: (liabilities) Number of Unrealized loss from structured $ 210,393 $ 207,713 shares Amount (numerator) (denominator) Earnings Per Share (NTD) note indemnity Before After Unrealized impairment loss 18,627 26,188 Before taxation After taxation (thousand shares) taxation taxation 2012 Excess allowance for bad debt 6,249 22,010 Basic earnings per share Unrealized loss (gain) on Earnings of current period vested in shareholders of financial instruments 3,128 ( 9,995 ) common stock $ 3,304,262 $ 2,777,958 2,318,744 $ 1.43 $ 1.20 Loss deduction - 207,897 Effect of dilutive potential common stock Investment exemption - 6,378 Convertible financial bonds 35,718 29,646 212,570 Unrealized exchange gain ( 5,030 ) ( 29,935 ) Employee bonus - - 122 Less: Allowance for deferred income tax assets - ( 6,378 ) Net deferred income tax assets $ 233,367 $ 423,878 (Continued on next page)

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(3) The Bank’s income tax expenses in the current period are specified as follows: 2012 2011 Payable income tax for the current period $ 335,870 $ - Decrease in deferred income tax assets 190,511 455,369 Adjustment of income tax for the previous period ( 77 ) 4,807 Income tax expenses $526,304 $ 460,176

(4) The information regarding shareholders’ deductible tax: December 31, 2012 December 31, 2011 Shareholders’ deductible tax account-Balance $ 565,497 $ 775,625 Projected deductible rate of earnings allocation for the current year 20.52% 20.50%

Projected deductible rate of earnings allocation for the current year includes the payable income tax estimated for the current year. According to the Income Tax Law, no net dividends or earnings may be deducted unless they refer to the dividends allocated from a company or cooperative or the profit-making business income tax paid by an investee or cooperative as included in the total earnings, in the territory of the R.O.C.. Notwithstanding, said shall not apply where additional 10% income tax shall be levied as no earnings are allocated by the investee or cooperative. (5) As of December 31, 2012, there were no unallocated earnings of the Bank for 1997 and the previous years. (6) The income tax returns of the Bank until 2010 have been authorized by the tax collection authority. 29. Earnings Per Share The numerator and denominator for calculating Earnings Per Share are disclosed as follows: Number of shares Amount (numerator) (denominator) Earnings Per Share (NTD) Before After Before taxation After taxation (thousand shares) taxation taxation 2012 Basic earnings per share Earnings of current period vested in shareholders of common stock $ 3,304,262 $ 2,777,958 2,318,744 $ 1.43 $ 1.20 Effect of dilutive potential common stock Convertible financial bonds 35,718 29,646 212,570 Employee bonus - - 122

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Number of Name Affiliation shares Amount (numerator) (denominator) Earnings Per Share (NTD) Hsi-Rong Huang Managing Director and Independent Director of Before After the Bank Before taxation After taxation (thousand shares) taxation taxation Yi-Der Chen and Jer-Shyong Tsai Legal representative to Managing Director of Diluted earnings per share the Bank Earnings of current period Jiann-Ell Huang (Note 2) Legal representative to Resident Supervisor of vested in shareholders of common stock plus effect of the Bank dilutive potential common Pan Asia Chemical Corporation, I Joung Investment Director of the Bank stock $ 3,339,980 $ 2,807,604 2,531,436 $ 1.32 $ 1.11 Co., Ltd., Chou Chang Co., Ltd. and He Yang Management Consultant Co., Ltd. (Note 2) 2011 Basic earnings per share Ming-Shan Chuang, Hsin-Ching Chang, Jer-Shyong Legal representative to Director of the Bank Earnings of current period Tsai, Kuei-Fong Wang, Ching-Hsin Chang, vested in shareholders of Jer-Nan Wang, Lin Wei-Liang (Note 4), common stock $ 1,914,176 $ 1,454,000 1,920,749 $ 1.00 $ 0.76 Ming-Hsiung Huang, Kuei-Hsien Wang (Note 3), Effect of dilutive potential common stock Meng-Liang Chang, Kang-Chi Chou (Note 5), Convertible financial bonds 19,518 16,200 110,938 Jin-Fong Soo, Chun-Sheng Lee, Yi-Der Chen and Employee bonus - - 195 Chia-Hung Lin (Note 2) Diluted earnings per share Chiung Tung Investment Corporation (Note 2) Ex-Director of the Bank Earnings of current period vested in shareholders of Ching-Hsin Chang (Note 2) Legal representative to ex-Director of the Bank common stock plus effect of Zin Rui Investment Co., Ltd. and Tai Jiunn Enterprise Supervisor of the Bank dilutive potential common Co., Ltd. (Note 2) stock $ 1,933,694 $ 1,470,200 2,031,882 $ 0.95 $ 0.72 Shu-Li Huang, Ching-Huang Cai, Chian-Hwa Lee Fu, Legal representative to Supervisor of the Bank and Chao-Nan Hsieh (Note 2) Chou Chang Corporation (Note 2) Ex-Supervisor of the Bank The General Meeting of the shareholders of the Company resolved to capitalize Jiann-Ell Huang, Shu-Li Huang, Chian-Hwa Lee Fu, Legal representative to ex-Supervisor of the retained earnings amounting to NTD848,866 thousand into new shares on June 6 2012. and Ching-Huang Cai (Note 2) Bank Hsi-Rong Huang, Jin-Yi Lee, and Chen-Le Liu (Note Independent Director of the Bank As such, the basic EPS of the Company after taxation in 2011 has been adjusted 2) retrospectively. Chun-Sheng Lee President of the Bank When calculating diluted EPS, the Bank assumes that employee bonus is made 106 persons including Chih-Chuan Managers (above) of Head Office and managers of the various entities of the Bank through share distribution. Such potential common shares with dilution effect will be 41 persons including the Chairman’s spouse Spouses and kin at the second tier under the added into weighted average outstanding shares to calculate diluted EPS. When diluted Civil Code of directors, supervisors, EPS is calculated, the closing price of such potential common shares on the balance Chairman of the Board and President of the sheet date is used as the judgment basis for number of shares for issuance. When diluted Bank EPS is calculated in the next year before the Board of Directors resolves the number of Taichung Commercial Bank Cultural and Educational Corporations receiving donation amounted to Foundation, Taichung Commercial Bank Workers’ more than one-thirds of the Bank’s Paid-in share distribution for employee bonus, the dilution effect is also considered for such Welfare Commission capital potential common shares. Taichung Bank Insurance Brokers Co., Ltd. Subsidiary of the Bank Taichung Commercial Bank Lease Enterprise Subsidiary of the Bank 30. Important transactions with stakeholders TCCBL Co., Ltd. Subsidiary of the Bank Name Affiliation Taichung Commercial Bank Leasing (Suzhou) Co., Subsidiary of the Bank Jin-Fong Soo (Representative to Pan Asia Chemical New Chairman of the Bank and the legal Ltd. Corporation) (Note 1) representative to the original Resident Reliance Securities Investment Trust Co., Ltd. Investee valued under equity method Supervisor China Man-Made Fiber Co., Ltd. Principle shareholder holding more than 10% of Shiu-Nan Huang (Legal representative to Pan Asia Original Chairman of the Bank the Bank’s shares Chemical Corporation) (Note 1) Chung Chien Investment Co., Ltd. Holding company of China Man-Made Fiber Kuei-Fong Wang (Legal representative to Pan Asia Vice Chairman of the Bank Co., Ltd. Chemical Corporation) (Note 3) Pan Asia Investment Co., Ltd. Director of China Man-Made Fiber Co., Ltd. Pan Asia Chemical Corporation and I Joung Managing Director of the Bank De-sing Securities Investment Trust Co., Ltd. Affiliate Investment Co., Ltd. Moon Stone Investment Ltd. Affiliate Greencol Taiwan Corporation Affiliate

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Name Affiliation Hsi-Rong Huang Managing Director and Independent Director of the Bank Yi-Der Chen and Jer-Shyong Tsai Legal representative to Managing Director of the Bank Jiann-Ell Huang (Note 2) Legal representative to Resident Supervisor of the Bank Pan Asia Chemical Corporation, I Joung Investment Director of the Bank Co., Ltd., Chou Chang Co., Ltd. and He Yang Management Consultant Co., Ltd. (Note 2) Ming-Shan Chuang, Hsin-Ching Chang, Jer-Shyong Legal representative to Director of the Bank Tsai, Kuei-Fong Wang, Ching-Hsin Chang, Jer-Nan Wang, Lin Wei-Liang (Note 4), Ming-Hsiung Huang, Kuei-Hsien Wang (Note 3), Meng-Liang Chang, Kang-Chi Chou (Note 5), Jin-Fong Soo, Chun-Sheng Lee, Yi-Der Chen and Chia-Hung Lin (Note 2) Chiung Tung Investment Corporation (Note 2) Ex-Director of the Bank Ching-Hsin Chang (Note 2) Legal representative to ex-Director of the Bank Zin Rui Investment Co., Ltd. and Tai Jiunn Enterprise Supervisor of the Bank Co., Ltd. (Note 2) Shu-Li Huang, Ching-Huang Cai, Chian-Hwa Lee Fu, Legal representative to Supervisor of the Bank and Chao-Nan Hsieh (Note 2) Chou Chang Corporation (Note 2) Ex-Supervisor of the Bank Jiann-Ell Huang, Shu-Li Huang, Chian-Hwa Lee Fu, Legal representative to ex-Supervisor of the and Ching-Huang Cai (Note 2) Bank Hsi-Rong Huang, Jin-Yi Lee, and Chen-Le Liu (Note Independent Director of the Bank 2) Chun-Sheng Lee President of the Bank 106 persons including Chih-Chuan Managers (above) of Head Office and managers of the various entities of the Bank 41 persons including the Chairman’s spouse Spouses and kin at the second tier under the Civil Code of directors, supervisors, Chairman of the Board and President of the Bank Taichung Commercial Bank Cultural and Educational Corporations receiving donation amounted to Foundation, Taichung Commercial Bank Workers’ more than one-thirds of the Bank’s Paid-in Welfare Commission capital Taichung Bank Insurance Brokers Co., Ltd. Subsidiary of the Bank Taichung Commercial Bank Lease Enterprise Subsidiary of the Bank TCCBL Co., Ltd. Subsidiary of the Bank Taichung Commercial Bank Leasing (Suzhou) Co., Subsidiary of the Bank Ltd. Reliance Securities Investment Trust Co., Ltd. Investee valued under equity method China Man-Made Fiber Co., Ltd. Principle shareholder holding more than 10% of the Bank’s shares Chung Chien Investment Co., Ltd. Holding company of China Man-Made Fiber Co., Ltd. Pan Asia Investment Co., Ltd. Director of China Man-Made Fiber Co., Ltd. De-sing Securities Investment Trust Co., Ltd. Affiliate Moon Stone Investment Ltd. Affiliate Greencol Taiwan Corporation Affiliate

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(Continued from previous page) (2) Loans 2012 Unit: NTD thousand Performance Difference in trading Name Affiliation Number of accounts Maximum conditions and Chou Chin Corporation Affiliate or name of balance – Balance, Non-performing Interest Collateral terms with Type stakeholder current period ending Normal loans loans revenue Contents non-stakeholders Greenworld Food Co., Ltd. Affiliate Consumer loans to 38 $ 18,158 $ 9,873 $ 9,873 $ - $ 288 Credit None employees loans Nan Chung Petrochemical Corp. Affiliate Residential mortgage 25 47,833 36,092 36,092 - 602 Real 〃 Je Mi Fang Corporation Affiliate loans estate Other loans Wen-Tung Yu 5,000 2,500 2,500 - 44 〃〃 Rai Yu Investment Co., Ltd. Affiliate Chen-Ying Wu 4,912 4,700 4,700 - 83 〃〃 Rai Yen Investment Co., Ltd. Affiliate Chih-Hao Liang 3,200 3,112 3,112 - 37 〃〃 Ming-Yu Chiu 2,905 2,777 2,777 - 50 〃〃 Rai Chia Investment Co., Ltd. Affiliate Chen-Hsiang 2,612 2,478 2,478 - 40 〃〃 Hsiang Feng Development Co., Ltd. Affiliate Chuang Wen-Chu Lee 2,000 1,000 1,000 - 18 〃〃 Reliance Consolidated Securities Co., Ltd. Affiliate business Wei-Huang You 1,466 1,263 1,263 - 24 〃〃 Sheng Jen Knitted Textiles Co., Ltd. Affiliate business Tse-Hsiu Lin 1,145 1,041 1,041 - 18 〃〃 Cheng-Hsien Ni 1,039 829 829 - 20 〃〃 Da Fa Investment Co., Ltd. Affiliate business Zai-Hong Yang 978 356 356 - 17 〃〃 Tai Yi Investment Co., Ltd. Affiliate business Tung-Po Yang 898 686 686 - 17 〃〃 Chang-Yung Huang 284 195 195 - 11 〃〃 Formosa Imperial Wineseller Corp. Affiliate business Sin-Fu Liang 4,000 - - - 32 〃〃 Ching-Tang Tsai 2,744 - - - 54 〃〃 Wen-Chuan 1,700 - - - 22 〃〃 Zhuang Hui-Chin Lu 1,490 - - - 7 〃〃 Certificate Note 1: The original Chairman of the Bank, Shiu-Nan Huang resigned on March 31, Chien-ting Lin 400 - - - 9 〃 of deposit 2011 and Jin-Fong Soo took over the position of Chairman and concurrently

resigned as Resident Supervisor of the Bank on April 1, 2011. 2011 Unit: NTD thousand Performance Difference in Note 2: The Bank completed re-election of directors and supervisors on June 22, 2011. trading Number of accounts Maximum conditions and The attachment is provided for reference. or name of balance – Balance, Non-performing Interest Collateral terms with Type stakeholder current period ending Normal loans loans revenue Contents non-stakeholders Consumer loans to 46 $ 25,734 $ 15,757 $ 15,757 $ - $ 310 Credit None Note 3: The original Vice Chairman of the Bank, Kuei-Hsien Wang resigned in employees loans Residential mortgage 22 44,715 40,365 40,365 - 457 Real 〃 November 2011. Director Kuei-Fong Wang was elected as Vice Chairman of loans estate Other loans Ming-Yu Chiu 3,000 2,905 2,905 - 38 〃〃 the Board at the Managing Directors’ meeting on November 17, 2011. Chen-Hsiang 2,745 2,612 2,612 - 40 〃〃 Chuang Note 4: Jer-Nan Wang, former representatives of Institutional Investor Chou Chang Wen-Tung Yu 3,444 2,500 2,500 - 21 〃〃 Hui-Chin Lu 1,490 1,490 1,490 - 5 〃〃 Co., Ltd., were replaced by Wei-Liang Lin on June 6, 2012. Wei-Huang You 1,500 1,466 1,466 - 4 〃〃 Tse-Hsiu Lin 1,247 1,145 1,145 - 18 〃〃 Cheng-Hsien Ni 1,245 1,039 1,039 - 24 〃〃 Note 5: Ming-Hsiung Huang and Kuei-Hsien Wang, former representatives of Wen-Chu Lee 1,000 1,000 1,000 - - 〃〃 Zai-Hong Yang 1,000 978 978 - 3 〃〃 Institutional Investor Pan Asia Chemical Corporation, were replaced by Chang Tung-Po Yang 1,107 898 898 - 21 〃〃 Wen-Chuan 700 700 700 - - 〃〃 Meng-Liang and Chou Kang-Chi on October 1, 2012. Zhuang Tsung-Hsien Lee 2,046 - - - 42 〃〃 Summarization of important transactions between the Bank and stakeholders: Te-Wei Chia 1,546 - - - 31 〃〃 Ching-Hsin Chang 3,900 - - - 32 〃〃 Certificate Chien-ting Lin 400 400 400 - 12 〃 (1) Accounts receivable of deposit December 31, 2012 December 31, 2011 Percentage Percentage of of According to Articles 32 and 33 of the Banking Act, no non-secured credit receivables receivables loans shall be granted to any party interested with the Bank’s staff, unless they are Name Amount (%) Amount (%) consumer loans and loans extended to the Government Apparatus; secured credit Taichung Bank Insurance loans shall be granted under sufficient collateral and the terms of such credit Brokers Co., Ltd. $ 31,895 1 $ 20,178 1 extension shall not be more favorable than those offered to other customers in the same category.

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(2) Loans 2012 Unit: NTD thousand Performance Difference in trading Number of accounts Maximum conditions and or name of balance – Balance, Non-performing Interest Collateral terms with Type stakeholder current period ending Normal loans loans revenue Contents non-stakeholders Consumer loans to 38 $ 18,158 $ 9,873 $ 9,873 $ - $ 288 Credit None employees loans Residential mortgage 25 47,833 36,092 36,092 - 602 Real 〃 loans estate Other loans Wen-Tung Yu 5,000 2,500 2,500 - 44 〃〃 Chen-Ying Wu 4,912 4,700 4,700 - 83 〃〃 Chih-Hao Liang 3,200 3,112 3,112 - 37 〃〃 Ming-Yu Chiu 2,905 2,777 2,777 - 50 〃〃 Chen-Hsiang 2,612 2,478 2,478 - 40 〃〃 Chuang Wen-Chu Lee 2,000 1,000 1,000 - 18 〃〃 Wei-Huang You 1,466 1,263 1,263 - 24 〃〃 Tse-Hsiu Lin 1,145 1,041 1,041 - 18 〃〃 Cheng-Hsien Ni 1,039 829 829 - 20 〃〃 Zai-Hong Yang 978 356 356 - 17 〃〃 Tung-Po Yang 898 686 686 - 17 〃〃 Chang-Yung Huang 284 195 195 - 11 〃〃 Sin-Fu Liang 4,000 - - - 32 〃〃 Ching-Tang Tsai 2,744 - - - 54 〃〃 Wen-Chuan 1,700 - - - 22 〃〃 Zhuang Hui-Chin Lu 1,490 - - - 7 〃〃 Certificate Chien-ting Lin 400 - - - 9 〃 of deposit

2011 Unit: NTD thousand Performance Difference in trading Number of accounts Maximum conditions and or name of balance – Balance, Non-performing Interest Collateral terms with Type stakeholder current period ending Normal loans loans revenue Contents non-stakeholders Consumer loans to 46 $ 25,734 $ 15,757 $ 15,757 $ - $ 310 Credit None employees loans Residential mortgage 22 44,715 40,365 40,365 - 457 Real 〃 loans estate Other loans Ming-Yu Chiu 3,000 2,905 2,905 - 38 〃〃 Chen-Hsiang 2,745 2,612 2,612 - 40 〃〃 Chuang Wen-Tung Yu 3,444 2,500 2,500 - 21 〃〃 Hui-Chin Lu 1,490 1,490 1,490 - 5 〃〃 Wei-Huang You 1,500 1,466 1,466 - 4 〃〃 Tse-Hsiu Lin 1,247 1,145 1,145 - 18 〃〃 Cheng-Hsien Ni 1,245 1,039 1,039 - 24 〃〃 Wen-Chu Lee 1,000 1,000 1,000 - - 〃〃 Zai-Hong Yang 1,000 978 978 - 3 〃〃 Tung-Po Yang 1,107 898 898 - 21 〃〃 Wen-Chuan 700 700 700 - - 〃〃 Zhuang Tsung-Hsien Lee 2,046 - - - 42 〃〃 Te-Wei Chia 1,546 - - - 31 〃〃 Ching-Hsin Chang 3,900 - - - 32 〃〃 Certificate Chien-ting Lin 400 400 400 - 12 〃 of deposit

According to Articles 32 and 33 of the Banking Act, no non-secured credit loans shall be granted to any party interested with the Bank’s staff, unless they are consumer loans and loans extended to the Government Apparatus; secured credit loans shall be granted under sufficient collateral and the terms of such credit extension shall not be more favorable than those offered to other customers in the same category.

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(3) Deposits (4) Deposits received 2012 December 31, 2012 December 31, 2011 Interest rate Interest Amount % Amount % Balance, ending collars % expenditure Taichung Bank Taichung Bank Insurance Insurance Brokers Brokers Co., Ltd. $ 291,365 0.13~1.09 $ 932 Co., Ltd. $ 58 - $ 58 - Reliance Securities Investment Taichung Commercial Trust Co., Ltd. 161,041 0.00～1.35 1,510 Bank Lease Taichung Commercial Bank Enterprise 120 - - - Workers’ Welfare $ 178 - $ 58 - 130,530 0.02～2.38 3,101 Commission Taichung Commercial Bank Lease Enterprise 60,532 0.00～0.66 1,089 (5) Service Fee China Man-Made Fiber 2012 2011 Co., Ltd. 39,280 0.13 44 Amount % Amount % Reliance Consolidated Taichung Bank Insurance 0.13～1.09 Securities Co., Ltd. 15,172 165 Brokers Co., Ltd. $ 368,287 30 $ 231,355 24 Taichung Commercial Bank Reliance Securities Cultural and Educational 5,082 - 4,319 - ～ Investment Trust Co., Ltd. Foundation 8,138 0.02 1.37 110 $ 373,369 30 $ 235,674 24 Greenworld Food Co., Ltd. 990 0.13 1 Pan Asia Chemical Corporation 648 0.02～0.13 1 Chou Chin Corporation 782 0.13 - Said amount refers to the revenue from promotion and sale of insurance Chou Chang Co., Ltd. 424 0.02 - products and channels. The trading price between the Bank and stakeholders is Formosa Imperial Wineseller similar to that between the Bank and non-stakeholders. Corp. 52 0.13 4 (6) Asset trade TCCBL Co., Ltd. 49 0.05～0.50 165

Others 180,451 0.00～0.38 1,708 The Company has sold its fixed assets and other assets to Taichung Commercial $ 889,454 $ 8,830 Bank Lease Enterprise at book value off NTD214 thousand at sale price of NTD231 thousand , which resulted in capital gain of NTD17 thousand. 2011 Interest rate Interest (7) Other business expenses Balance, ending collars % expenses 2012 2011 Taichung Bank Insurance Amount % Amount % Brokers Co., Ltd. $ 140,981 0.06~1.09 $ 628 Greenworld Food Co., Ltd. $ 537 - $ 103 - Taichung Commercial Bank

Workers’ Welfare Commission 130,904 0.06~2.38 3,044 The aforementioned amount is recognized as other business expenses. The Reliance Securities Investment transaction prices between the Company and its related parties are the same as with Trust Co., Ltd. 133,057 0.00~1.35 1,073 unrelated parties. Reliance Consolidated Securities Co., Ltd. 15,269 0.06~1.09 144 Chou Chin Corporation 312 0.06~0.13 - Pan Asia Chemical Corporation 224 0.06~0.13 2 Others 158,928 0.00~2.38 1,504 $ 579,675 $ 6,395 With the exception of the interest rate for bank clerks’ deposits on Dec. 31, 2012 and 2011, both 2.38%, the other interest rates are not materially different from those offered to general customers.

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(4) Deposits received December 31, 2012 December 31, 2011 Amount % Amount % Taichung Bank Insurance Brokers Co., Ltd. $ 58 - $ 58 - Taichung Commercial Bank Lease Enterprise 120 - - - $ 178 - $ 58 -

(5) Service Fee 2012 2011 Amount % Amount % Taichung Bank Insurance Brokers Co., Ltd. $ 368,287 30 $ 231,355 24 Reliance Securities Investment Trust Co., Ltd. 5,082 - 4,319 - $ 373,369 30 $ 235,674 24

Said amount refers to the revenue from promotion and sale of insurance products and channels. The trading price between the Bank and stakeholders is similar to that between the Bank and non-stakeholders. (6) Asset trade The Company has sold its fixed assets and other assets to Taichung Commercial Bank Lease Enterprise at book value off NTD214 thousand at sale price of NTD231 thousand , which resulted in capital gain of NTD17 thousand. (7) Other business expenses 2012 2011 Amount % Amount % Greenworld Food Co., Ltd. $ 537 - $ 103 -

The aforementioned amount is recognized as other business expenses. The transaction prices between the Company and its related parties are the same as with unrelated parties.

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(8) Information about salary and remuneration of directors, supervisors and primary (1) Undertaking: management December 31, 2012 December 31, 2011 2012 2011 Undisbursed credit committee Salaries $ 44,204 $ 41,237 (exclusive of credit cards) $ 102,506,899 $ 88,760,384 Reward 2,450 2,408 Credit card committee 10,231,356 8,005,108 Special subsidies, et al. (Note 1) 2,107 2,042 Guarantee payments 7,365,571 4,378,115 Remuneration and bonus to Trust liabilities 41,863,441 38,646,037 directors (Note 2) 117 216 Balance of application for L/C 4,223,231 2,859,121 Note 1: The special subsidies, et al. include special subsidies and various allowances. Note 2: The information regarding salaries and remuneration for 2011 includes the (2) The Bank engaged in investing in the structured notes issued and secured by Lehman remuneration to directors/supervisors and bonuses to the primary Brothers Holdings Inc. through the special monetary trustee accounts upon investors’ management according to the motion for earnings allocation resolved by the request. However, Lehman Brothers Holdings Inc. petitioned for bankruptcy with shareholders’ meetings in 2012. Further, the remuneration to U.S. courts on September 15, 2008. The quotation and redemption of the structured directors/supervisors and employee bonuses to be appropriated for 2012 notes issued and secured by it were suspended. Afterwards, it petitioned for an have not yet been resolved by the shareholders’ meetings. The relevant extension and submitted a reorganization plan with a U.S. courts for approval in information may be viewed at MOPS of TSEC. December 2008, and further petitioned for an extension and submitted two motions 31. Pledged assets in the duration of debt clearance. The U.S. court approved its petition later. The Bank defined the “Regulations for Settlement of Dispute over Lehman The pledged assets are stated as follows: Brothers Structured Notes” and policy for settlement according to the resolution December 31, 2012 December 31, 2011 made by the temporary directors’ meeting on May 6, 2009, and indemnified Available-for-sale Financial investors at the ratio assessed by the “Banking Dispute Review Board” of the Assets-overseas bond $ 777,640 $ 1,039,060 Bankers Association of the Republic of China. Upon evaluation, the Bank has Held-to-maturity financial provided the loss from indemnity, NTD161,668 thousand, NTD44,199 thousand, assets-government bond 999,700 915,100 NTD5,050 thousand and NTD10,400 thousand in 2009, 2010, 2011 and 2012, Held-to-maturity financial respectively, which were stated as other deposits. As of December 31, 2012, the assets-overseas bond 3,850,800 4,213,930 Bank has paid investors NTD214,221 thousand, and the outstanding indemnity of $ 5,628,140 $ 6,168,090 NTD7,096 thousand was stated as payables. (3) The Bank engaged in investing in the structured notes issued by Private Equity The Overseas bonds were provided to secure funds borrowed from banks. The Management Group (PEM Group), USD70,617 thousand, through the special Government bonds were deposited as security bonds for provisional seizure at court and monetary trustee accounts upon investors’ request. The SEC alleged that PEM for trust business guarantee, which are stated as follows: Group was suspected of fraud on April 27, 2009, and petitioned U.S. courts to freeze PEM Group’s assets and conducted a site investigation. The U.S. court has sent a December 31, 2012 December 31, 2011 dedicated person to assume the execution of PEM Group’s assets temporarily. Security bond for provisional

seizure at court $ 794,700 $ 735,100 The Bank defined the “PEM Group structured note clients’ interests and rights Securities Brokerage business protection policy” upon the resolution made by the temporary directors’ meeting on security bond 155,000 130,000 May 6, 2009. It resolved to repurchase PEM Group structured notes from investors Reserve for trust funds in whole at the initial selling price of USD70,617 thousand less the accumulated compensation 50,000 50,000 dividends of USD1,090 thousand, namely USD69,527 thousand, in the manner that $999,700 $ 915,100 investors undertake the one-year term deposit in USD of the Bank, of which the interest is accrued at the fixed rate, 1.50%. Upon evaluation, the Bank has provided the loss from indemnity, NTD1,155,969 thousand (approx. USD36,090 thousand) 32. Significant undertaking or contingent liabilities and NTD439,135 thousand (approx. USD15,075 thousand) in 2009 and 2010, which were stated as other deposits. As of December 31 2010, the Company has

In addition to the undertaking for financial products specified in Notes 6 and 18, compensated the investors in full amount of USD69,527 thousand (approximately the Bank has had the following undertakings or contingent liabilities until December 31, NTD2,226,621 thousand). In 2011, the Company has incrementally recovered PEM 2012 and 2011: compensation totaled USD11,900 thousand. In February 2011, the Company accepted its assets in the form of insurance policy as compensation at USD17,110

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(1) Undertaking: December 31, 2012 December 31, 2011 Undisbursed credit committee (exclusive of credit cards) $ 102,506,899 $ 88,760,384 Credit card committee 10,231,356 8,005,108 Guarantee payments 7,365,571 4,378,115 Trust liabilities 41,863,441 38,646,037 Balance of application for L/C 4,223,231 2,859,121

(2) The Bank engaged in investing in the structured notes issued and secured by Lehman Brothers Holdings Inc. through the special monetary trustee accounts upon investors’ request. However, Lehman Brothers Holdings Inc. petitioned for bankruptcy with U.S. courts on September 15, 2008. The quotation and redemption of the structured notes issued and secured by it were suspended. Afterwards, it petitioned for an extension and submitted a reorganization plan with a U.S. courts for approval in December 2008, and further petitioned for an extension and submitted two motions in the duration of debt clearance. The U.S. court approved its petition later. The Bank defined the “Regulations for Settlement of Dispute over Lehman Brothers Structured Notes” and policy for settlement according to the resolution made by the temporary directors’ meeting on May 6, 2009, and indemnified investors at the ratio assessed by the “Banking Dispute Review Board” of the Bankers Association of the Republic of China. Upon evaluation, the Bank has provided the loss from indemnity, NTD161,668 thousand, NTD44,199 thousand, NTD5,050 thousand and NTD10,400 thousand in 2009, 2010, 2011 and 2012, respectively, which were stated as other deposits. As of December 31, 2012, the Bank has paid investors NTD214,221 thousand, and the outstanding indemnity of NTD7,096 thousand was stated as payables. (3) The Bank engaged in investing in the structured notes issued by Private Equity Management Group (PEM Group), USD70,617 thousand, through the special monetary trustee accounts upon investors’ request. The SEC alleged that PEM Group was suspected of fraud on April 27, 2009, and petitioned U.S. courts to freeze PEM Group’s assets and conducted a site investigation. The U.S. court has sent a dedicated person to assume the execution of PEM Group’s assets temporarily. The Bank defined the “PEM Group structured note clients’ interests and rights protection policy” upon the resolution made by the temporary directors’ meeting on May 6, 2009. It resolved to repurchase PEM Group structured notes from investors in whole at the initial selling price of USD70,617 thousand less the accumulated dividends of USD1,090 thousand, namely USD69,527 thousand, in the manner that investors undertake the one-year term deposit in USD of the Bank, of which the interest is accrued at the fixed rate, 1.50%. Upon evaluation, the Bank has provided the loss from indemnity, NTD1,155,969 thousand (approx. USD36,090 thousand) and NTD439,135 thousand (approx. USD15,075 thousand) in 2009 and 2010, which were stated as other deposits. As of December 31 2010, the Company has compensated the investors in full amount of USD69,527 thousand (approximately NTD2,226,621 thousand). In 2011, the Company has incrementally recovered PEM compensation totaled USD11,900 thousand. In February 2011, the Company accepted its assets in the form of insurance policy as compensation at USD17,110

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thousand at transfer pricing. The Company has already retained lawyers in related judicial proceeding for remedial actions for protecting its rights and privileges. Income Statement of Trust Accounts (4) The balance sheet and trust property catalogue of the trust account is disclosed 2012 pursuant to Article 17 of the “Enforcement Rules of Trust Enterprise Act” as follows: Balance Sheet of Trust Accounts Amount December 31, 2012 Trust income Interest revenue $ 977,059 Trust assets Amount Trust liabilities Amount Trust expenses Administration expenses ( 317,692 ) Bank deposits $ 1,130,363 Payable securities Taxatio in custody $ 1,466,085 n ( 429 ) Income before taxation 658,938 Fund investment 37,576,041 Trust capital Income tax expenses - Structured product 658,870 Money trust 39,365,274 Income after taxation $ 658,938 investment Real estate Real estate trust 1,032,082 Land 1,019,434 Net income 658,938 Balance Sheet of Trust Accounts Buildings and 12,648 Deferred carry-over ( 658,938) December 31, 2011 structures Securities in custody 1,466,085 Trust assets Amount Trust liabilities Amount Total trust assets $ 41,863,441 Total trust $41,863,441 Bank deposits $ 1,105,335 Trust capital liabilities Fund investment 36,186,339 Money trust $37,955,158 Structured product 663,484 Real estate trust 690,879 Property Catalogue of Trust Accounts investment December 31, 2012 Real estate Net income 656,242 Land 677,871 Deferred carry-over ( 656,242) Investment Amount Buildings and 13,008 structures Bank deposits $ 1,130,363 Total trust assets $ 38,646,037 Total trust $38,646,037 Fund investment 37,476,041 liabilities Structured product 658,870 investment Real estate Property Catalogue of Trust Accounts Land 1,019,434 December 31, 2011 Buildings and 12,648 structures Investment Amount Securities in custody 1,466,085 Bank deposits $ 1,105,335 $ 41,863,441 Fund investment 36,186,339 Structured product 663,484 investment Real estate Land 677,871 Buildings and 13,008 structures $ 38,646,037

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Income Statement of Trust Accounts 2012

Amount Trust income Interest revenue $ 977,059 Trust expenses Administration expenses ( 317,692 ) Taxation ( 429 ) Income before taxation 658,938 Income tax expenses - Income after taxation $ 658,938

Balance Sheet of Trust Accounts December 31, 2011

Trust assets Amount Trust liabilities Amount Bank deposits $ 1,105,335 Trust capital Fund investment 36,186,339 Money trust $37,955,158 Structured product 663,484 Real estate trust 690,879 investment Real estate Net income 656,242 Land 677,871 Deferred carry-over ( 656,242) Buildings and 13,008 structures Total trust assets $ 38,646,037 Total trust $38,646,037 liabilities

Property Catalogue of Trust Accounts December 31, 2011

Investment Amount Bank deposits $ 1,105,335 Fund investment 36,186,339 Structured product 663,484 investment Real estate Land 677,871 Buildings and 13,008 structures $ 38,646,037

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34. Disclosure of information about financial instruments Income Statement of Trust Accounts (1) Information about fair value 2011 December 31, 2012 December 31, 2011 Book Value Fair value Book Value Fair value Financial assets Amount Financial assets at fair value Trust income equivalent to Book Value $ 79,098,981 $ 79,098,981 $ 85,268,809 $ 85,268,809 Financial assets at fair value Interest revenue $ 907,730 through profit or loss 6,545,279 6,545,279 1,096,769 1,090,769 Trust expenses Available-for-Sale Financial Assets 18,519,719 18,519,719 4,211,580 4,211,580 Administration expenses ( 251,163 ) Discounts and loans, net 324,029,419 324,029,419 277,756,366 277,756,366 Taxation ( 325 ) Held to maturity investments, net 8,782,945 8,765,282 9,439,040 9,420,022 Income before taxation 656,242 Stocks- equity method 1,295,662 1,295,662 216,970 216,970 Income tax expenses - Other financial assets - net 905,934 905,934 850,396 850,396

Income after taxation $ 656,242 Financial liabilities Financial liabilities at fair value equivalent to Book Value 15,936,683 15,936,683 14,023,570 14,023,570 Financial liabilities at fair value (5) The Company leased some of its office space from its leasing operation with lease through profit or loss 91,591 91,591 51,804 51,804 Customer deposits and term ranging from 1 to 10 years. Related refundable security deposits amounted to remittances 385,862,841 385,862,841 333,832,631 333,832,631 NTD15,558 thousand. Rent is paid on a monthly basis and the lease agreements will Financial bonds payable 13,548,277 13,514,121 10,512,559 10,575,231 expire in 2013 to 2017. Other financial liabilities 17,208 17,208 22,521 22,521 The payable rent of the Company in 5 years ahead is shown below:

Term: Amount (2) The following methods and hypotheses for the valuation of fair value of financial 1st year (January 1, 2013~December 31, 2013) $ 61,959 instruments are applied: 2nd year (January 1, 2014~December 31, 2014) 42,970 1. The Book Value of short-term financial instruments stated in the balance sheet 3rd year (January 1, 2015~December 31, 2015) 29,064 shall be the fair value of such instruments. The reason is that the maturity 4th year (January 1, 2016~December 31, 2016) 12,800 date of these instruments is close and it would be reasonable to use the Book 5th year (January 1, 2017~December 31, 2017) 9,493 Value in the valuation of fair value. This method is applied to the valuation $ 156,286 of cash and cash equivalents, due from Central Bank of the Republic of China (Taiwan) and lend to banks, receivable accounts (excluding Receivable Refundable Tax), Deposits of Central Bank of the Republic of China (Taiwan) 33. Other important notes and other banks, Bills & Bonds Sold under Repurchase Agreements, payables The General Meeting of shareholders of the Company passed by motion of (excluding income tax payable) and remittances. assigning related business run by the Securities Department (including assets, liabilities, 2. The open market price of financial instruments at fair value through profit or and business value) to Taichung Commercial Bank Consolidated Securities Co., Ltd. loss, available-for sale financial assets, held-to-maturity financial assets and through split up with business value at NTD850,000 thousand while the latter shall financial bonds payable, if any, shall be the fair value of such assets. Where issue 85,000 thousand share at NTD10/share totaled NTD850,000 thousand as the there is no such active market price available, the fair value shall be estimated transaction price. The split up date was originally made on January 2 2013, but was under the evaluation method. The estimation and hypotheses used in the postponed to March 1 2012 when applying with Financial Supervisory Commission evaluation method adopted by the Bank are identical to information about the (FSA) later. FSA approved the application in Letter Jin-Guan-Zheng-Quan-Zi No. estimation and hypotheses applied by the market participants in setting the 1010059030 with the split up date set at May 2 2013. After the split up, Taichung price of the financial instruments, and such information is available to the Bank. Commercial Bank Consolidated Securities Co., Ltd. shall be a wholly-owned subsidiary Where there is no open market price of financial derivatives available for of the Company. reference, the fair value of the various contracts shall be estimated at the cash flow discounting method according to the foreign exchange rate displayed in the Reuters’ quotation system. 3. The equity investment under equity method refers to the equity of unlisted (non-OTC) companies and no open market price thereof is available. Besides, the verifiable fair value thereof may be perceived with the cost exceeding the reasonable cost. Therefore, the fair value of such investment shall be the book value thereof.

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34. Disclosure of information about financial instruments (1) Information about fair value December 31, 2012 December 31, 2011 Book Value Fair value Book Value Fair value Financial assets Financial assets at fair value equivalent to Book Value $ 79,098,981 $ 79,098,981 $ 85,268,809 $ 85,268,809 Financial assets at fair value through profit or loss 6,545,279 6,545,279 1,096,769 1,090,769 Available-for-Sale Financial Assets 18,519,719 18,519,719 4,211,580 4,211,580 Discounts and loans, net 324,029,419 324,029,419 277,756,366 277,756,366 Held to maturity investments, net 8,782,945 8,765,282 9,439,040 9,420,022 Stocks- equity method 1,295,662 1,295,662 216,970 216,970 Other financial assets - net 905,934 905,934 850,396 850,396

Financial liabilities Financial liabilities at fair value equivalent to Book Value 15,936,683 15,936,683 14,023,570 14,023,570 Financial liabilities at fair value through profit or loss 91,591 91,591 51,804 51,804 Customer deposits and remittances 385,862,841 385,862,841 333,832,631 333,832,631 Financial bonds payable 13,548,277 13,514,121 10,512,559 10,575,231 Other financial liabilities 17,208 17,208 22,521 22,521

(2) The following methods and hypotheses for the valuation of fair value of financial instruments are applied: 1. The Book Value of short-term financial instruments stated in the balance sheet shall be the fair value of such instruments. The reason is that the maturity date of these instruments is close and it would be reasonable to use the Book Value in the valuation of fair value. This method is applied to the valuation of cash and cash equivalents, due from Central Bank of the Republic of China (Taiwan) and lend to banks, receivable accounts (excluding Receivable Refundable Tax), Deposits of Central Bank of the Republic of China (Taiwan) and other banks, Bills & Bonds Sold under Repurchase Agreements, payables (excluding income tax payable) and remittances. 2. The open market price of financial instruments at fair value through profit or loss, available-for sale financial assets, held-to-maturity financial assets and financial bonds payable, if any, shall be the fair value of such assets. Where there is no such active market price available, the fair value shall be estimated under the evaluation method. The estimation and hypotheses used in the evaluation method adopted by the Bank are identical to information about the estimation and hypotheses applied by the market participants in setting the price of the financial instruments, and such information is available to the Bank. Where there is no open market price of financial derivatives available for reference, the fair value of the various contracts shall be estimated at the cash flow discounting method according to the foreign exchange rate displayed in the Reuters’ quotation system. 3. The equity investment under equity method refers to the equity of unlisted (non-OTC) companies and no open market price thereof is available. Besides, the verifiable fair value thereof may be perceived with the cost exceeding the reasonable cost. Therefore, the fair value of such investment shall be the book value thereof.

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4. Discounts and loans, funds borrowed from CBC and banks, and deposits, are impairment loss amounted to NTD14,266 thousand and NTD63,833 thousand, all financial instruments with interest accruing thereon. Therefore, their Book respectively. Value is similar to the current fair value. The Book Value of Delinquent (6) Information about financial risk loans refers to the projected collected amount less allowance for bad debt. Therefore, the Book Value is also the fair value. 1. Market Risk 5. The financial assets at cost which are unlisted (non-OTC) stocks without The fair value of the bonds, notes and loans at fixed interest rate, and significant influence will have no public market price available, and the fair similar financial instruments held by the Bank will vary depending on the value thereof can be sought only at the price exceeding the reasonable cost. changes in the market interest rate on the balance sheet date. The analysis Therefore, the fair value thereof shall be the Book Value. regarding sensitivity of fair value of such financial instruments per increase of 0.01% in the market interest rate is specified as follows: (3) The fair value of financial assets and financial liabilities is determined by the open December 31, 2012 market quotation and evaluated under the evaluation method: More than More than More than More than one month three months six months one year and Determined by open market Evaluated under evaluation Less than and less than and less than and less than less than More than quotation method Currency one month three months six months one year seven years seven years Total NTD $ 18,838 $ 223 ( $ 18,750 ) ( $ 3,867 ) $ 4,003 $ 942 $ 1,389 December December December December USD 134 322 ( 488 ) ( 258 ) 549 - 259 31, 2012 31, 2011 31, 2012 31, 2011 Others ( 46 ) ( 6 ) ( 71 ) ( 39 ) 349 - 187 Financial assets Financial assets at fair value through profit The Bank adopted the Standard Method to evaluate the market risk of or loss $6,545,279 $1,096,769 $ - $ - financial products to estimate the potential risk for loss on-balance sheet and Available-for-Sale off-balance sheet due to uncertain changes in the market price value of Financial Assets 18,519,719 4,211,580 - - financial instruments within some periods. The Bank’s market risk evaluation Held-to-maturity covered interest rate risk, equity securities risk and foreign exchange risk. The financial assets 1,672,227 1,784,634 7,093,055 7,635,388 following indicates the risk value subject to the various types of market risk of Stocks- equity method - - 1,295,662 216,970 the Bank’s financial instruments, including the yearly maximum and minimum Financial assets at cost - - 143,486 143,486 means adopted from the means of the total risk values of the year preceding to December 31, 2012 and 2011 respectively. Financial liabilities Market Risk December 31, 2012 December 31, 2011 Financial liabilities at Type Yearly mean Maximum Minimum Yearly mean Maximum Minimum fair value through Interest rate $ 21,245 $ 37,583 $ 3,079 $ 23,129 $ 36,683 $ 9,700 risk profit or loss 91,591 51,804 - - Equity risk 74,489 99,923 48,845 101,493 165,112 33,491 Financial bonds Foreign 13,772 29,440 3,038 7,288 17,544 2,314 exchange payable 13,514,121 10,575,231 - - risk

(4) The financial assets recognized in December 31, 2012 and 2011 based on the 2. Credit Risk changes in fair value estimated under interest rate changes were NTD130,771,493

thousand and NTD117,500,842 thousand, and the financial liabilities The financial instruments held or issued by the Bank might suffer loss due NTD153,379,817 thousand and NTD108,194,680 thousand. The financial assets to the trading counterpart’s or the other party’s failure to perform contractual recognized based on changes in cash flow estimated under interest rate changes were obligations. The Bank will evaluate credit carefully to grant loans, loan NTD287,017,572 thousand and NTD243,034,446 thousand, and the financial commitments and guarantees. The loans secured by collateral accounted for liabilities NTD245,721,592 thousand and NTD235,565,260 thousand. about 75% of the total credit loans on December 31, 2012. The proportion of financing guarantee and collateral held by commercial L/C was approximately (5) The Bank’s total interest revenue of financial assets or financial liabilities other than 12%, because the collateral required by loans, loaning commitments or those at fair value, and those at fair value through profit or loss, in 2012 and 2011 guarantees usually referred to cash, inventory, marketable securities or other were NTD8,596,368 thousand and NTD7,415,600 thousand. The total interest property. In the event of the trading counterpart’s or the other party’s default, expenses thereof were NTD3,148,129 thousand and NTD2,472,427 thousand. the Bank was entitled to perform compulsory execution against the collateral or Unrealized gains (losses) on available-for-sale financial assets stated as adjustment other guarantees to effectively reduce the credit risk, provided that the fair items of shareholders’ equity were NTD66,639 thousand and NTD(43,781) thousand value of collateral would not be taken into consideration when the maximum and deduction from adjustment items of shareholders' equity recognized as credit exposure was disclosed. The Bank evaluated the contract bearing

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impairment loss amounted to NTD14,266 thousand and NTD63,833 thousand, respectively. (6) Information about financial risk 1. Market Risk The fair value of the bonds, notes and loans at fixed interest rate, and similar financial instruments held by the Bank will vary depending on the changes in the market interest rate on the balance sheet date. The analysis regarding sensitivity of fair value of such financial instruments per increase of 0.01% in the market interest rate is specified as follows: December 31, 2012 More than More than More than More than one month three months six months one year and Less than and less than and less than and less than less than More than Currency one month three months six months one year seven years seven years Total NTD $ 18,838 $ 223 ( $ 18,750 ) ( $ 3,867 ) $ 4,003 $ 942 $ 1,389 USD 134 322 ( 488 ) ( 258 ) 549 - 259 Others ( 46 ) ( 6 ) ( 71 ) ( 39 ) 349 - 187

The Bank adopted the Standard Method to evaluate the market risk of financial products to estimate the potential risk for loss on-balance sheet and off-balance sheet due to uncertain changes in the market price value of financial instruments within some periods. The Bank’s market risk evaluation covered interest rate risk, equity securities risk and foreign exchange risk. The following indicates the risk value subject to the various types of market risk of the Bank’s financial instruments, including the yearly maximum and minimum means adopted from the means of the total risk values of the year preceding to December 31, 2012 and 2011 respectively. Market Risk December 31, 2012 December 31, 2011 Type Yearly mean Maximum Minimum Yearly mean Maximum Minimum Interest rate $ 21,245 $ 37,583 $ 3,079 $ 23,129 $ 36,683 $ 9,700 risk Equity risk 74,489 99,923 48,845 101,493 165,112 33,491 Foreign 13,772 29,440 3,038 7,288 17,544 2,314 exchange risk

2. Credit Risk The financial instruments held or issued by the Bank might suffer loss due to the trading counterpart’s or the other party’s failure to perform contractual obligations. The Bank will evaluate credit carefully to grant loans, loan commitments and guarantees. The loans secured by collateral accounted for about 75% of the total credit loans on December 31, 2012. The proportion of financing guarantee and collateral held by commercial L/C was approximately 12%, because the collateral required by loans, loaning commitments or guarantees usually referred to cash, inventory, marketable securities or other property. In the event of the trading counterpart’s or the other party’s default, the Bank was entitled to perform compulsory execution against the collateral or other guarantees to effectively reduce the credit risk, provided that the fair value of collateral would not be taken into consideration when the maximum credit exposure was disclosed. The Bank evaluated the contract bearing

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positive fair value on the balance sheet date as the counterpart. The maximum 3. Liquidity Risk credit exposures on December 31, 2012 and 2011 were NTD297,177,443 thousand and NTD244,298,087 thousand. Further, the maximum exposures of The Bank’s Liquidity Ratios on December 31, 2012 and 2011 were both undertakings and contracts based on credit risk on the off-balance sheet are 20%. The Bank’s capital and working funds are sufficient to perform all specified as following: contractual obligations. Therefore, there is no liquidity risk arising from the failure to raise funds to perform contractual obligations. It is very unlikely December 31, 2012 December 31, 2011 that the financial derivatives held by the Bank could not be sold at a reasonable $ 102,506,899 $ 88,760,384 Credit commitment price on the market. Therefore, there is low liquidity risk for realization. (exclusive of credit cards) The Bank’s basic management policy is to coordinate the maturity date of Credit card committee 10,231,356 8,005,108 assets and liabilities and interest rates and to control gaps. Due to the uncertainty in trading terms and different types, usually it is impossible to coordinate the maturity date of assets and liabilities and interest rates perfectly. Where financial instrument transactions are apparently concentrated on The gaps might generate potential gain or loss. The Bank applied the one person, or most of the multiple trading counterparts of financial appropriate approach to conduct maturity analysis to evaluate the liquidity by instruments are engaged in similar business activities and possess similar nature of assets and liabilities. The maturity analysis is specified as follows: economic characteristics and thereby the effects of economic or other Unit: NTD thousand conditions to their ability to perform the contracts are similar, the concentration December 31, 2012 More than More than More than six More than of credit risk arises accordingly. The characteristics of credit risk Less than one one month three months months and one year and More than Total concentration include the nature of business activities conducted by debtors. month and less than and less than less than one less than seven years three months six months year seven years The Bank did not concentrate any transactions on one single customer or Assets Cash and cash $9,848,878 $ - $ - $ - $ - $ - $ 9,848,878 trading counterpart, other than similar counterparts, industrial type, and regions. equivalents The amount of contract based on concentrated credit risk: Due from CBC and lend to 56,625,658 1,184,690 1,919,501 3,154,139 3,869,361 - 66,753,349 Banks Counterpart December 31, 2012 December 31, 2011 Financial assets at fair value 3,456,540 2,928,348 11,286 1,005 148,100 - 6,545,279 Private enterprise $ 185,813,684 $ 149,856,760 through profit or Natural person 148,770,569 134,411,891 loss Accounts 1,429,547 447,551 545,924 98,819 142,409 - 2,664,250 Others 817,718 1,407,760 receivable Discounts and 17,700,583 24,669,961 36,292,659 51,980,295 97,298,704 99,350,281 327,292,483 $ 335,401,971 $ 285,676,411 loans Held-to-maturity 49,998 - - 500,048 9,960,724 - 10,510,770 financial assets Available-for-Sale 116,335 - - - 18,403,384 - 18,519,719 Financial Assets Industrial type December 31, 2012 December 31, 2011 Long-term equity Private party $ 148,770,569 $ 134,411,891 investment under - - - - - 1,295,662 1,295,662 equity method Other financial Manufacturer 72,980,979 59,069,525 1,791 1,791 - - 2,580 903,560 909,722 assets Commerce 51,852,976 42,290,413 Total assets 89,229,330 29,232,341 38,769,370 55,734,306 129,825,262 101,549,503 444,340,112 Real estate 25,355,573 22,486,309 Liabilities Due to CBC and Warehousing and 8,567,530 7,079,389 2,429,232 1,233,337 167,380 1,321,599 - - 5,151,548 banks information Funds borrowed 8,311,811 6,266,412 from CBC and 871,200 1,016,400 - - - - 1,887,600 Commercial and other banks industrial service Financial liabilities at fair 25,226 33,414 10,096 1,005 21,850 - 91,591 business value through profit or loss Others 19,562,533 14,072,472 Bills and bonds sold under $ 335,401,971 $ 285,676,411 264,045 - - - - - 264,045 repurchase agreements Payables 7,202,711 697,597 764,668 86,027 145,765 - 8,896,768 Region December 31, 2012 December 31, 2011 Customer deposits 36,783,646 40,641,589 74,047,031 107,584,610 126,805,965 - 385,862,841 and remittances Domestic $ 323,648,675 $ 277,567,134 Financial bonds - - 2,400,000 - 11,148,277 - 13,548,277 Territory of America 3,740,586 5,302,656 payable Other financial 17,208 - - - - - 17,208 Territory of Asia 6,545,377 2,476,460 liabilities Total liabilities 47,593,268 43,622,337 77,389,175 108,993,241 138,121,857 - 415,719,878 Other territories 1,467,333 330,161 Net liquidity gap $41,636,062 ($14,389,996) ($38,619,805) ($53,258,935) ($8,296,595) $101,549,503 $28,620,234 $ 335,401,971 $ 285,674,411

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3. Liquidity Risk The Bank’s Liquidity Ratios on December 31, 2012 and 2011 were both 20%. The Bank’s capital and working funds are sufficient to perform all contractual obligations. Therefore, there is no liquidity risk arising from the failure to raise funds to perform contractual obligations. It is very unlikely that the financial derivatives held by the Bank could not be sold at a reasonable price on the market. Therefore, there is low liquidity risk for realization. The Bank’s basic management policy is to coordinate the maturity date of assets and liabilities and interest rates and to control gaps. Due to the uncertainty in trading terms and different types, usually it is impossible to coordinate the maturity date of assets and liabilities and interest rates perfectly. The gaps might generate potential gain or loss. The Bank applied the appropriate approach to conduct maturity analysis to evaluate the liquidity by nature of assets and liabilities. The maturity analysis is specified as follows: Unit: NTD thousand December 31, 2012 More than More than More than six More than Less than one one month three months months and one year and More than Total month and less than and less than less than one less than seven years three months six months year seven years Assets Cash and cash $9,848,878 $ - $ - $ - $ - $ - $ 9,848,878 equivalents Due from CBC and lend to 56,625,658 1,184,690 1,919,501 3,154,139 3,869,361 - 66,753,349 Banks Financial assets at fair value 3,456,540 2,928,348 11,286 1,005 148,100 - 6,545,279 through profit or loss Accounts 1,429,547 447,551 545,924 98,819 142,409 - 2,664,250 receivable Discounts and 17,700,583 24,669,961 36,292,659 51,980,295 97,298,704 99,350,281 327,292,483 loans Held-to-maturity 49,998 - - 500,048 9,960,724 - 10,510,770 financial assets Available-for-Sale 116,335 - - - 18,403,384 - 18,519,719 Financial Assets Long-term equity investment under - - - - - 1,295,662 1,295,662 equity method Other financial 1,791 1,791 - - 2,580 903,560 909,722 assets Total assets 89,229,330 29,232,341 38,769,370 55,734,306 129,825,262 101,549,503 444,340,112

Liabilities Due to CBC and 2,429,232 1,233,337 167,380 1,321,599 - - 5,151,548 banks Funds borrowed from CBC and 871,200 1,016,400 - - - - 1,887,600 other banks Financial liabilities at fair 25,226 33,414 10,096 1,005 21,850 - 91,591 value through profit or loss Bills and bonds sold under 264,045 - - - - - 264,045 repurchase agreements Payables 7,202,711 697,597 764,668 86,027 145,765 - 8,896,768 Customer deposits 36,783,646 40,641,589 74,047,031 107,584,610 126,805,965 - 385,862,841 and remittances Financial bonds - - 2,400,000 - 11,148,277 - 13,548,277 payable Other financial 17,208 - - - - - 17,208 liabilities Total liabilities 47,593,268 43,622,337 77,389,175 108,993,241 138,121,857 - 415,719,878 Net liquidity gap $41,636,062 ($14,389,996) ($38,619,805) ($53,258,935) ($8,296,595) $101,549,503 $28,620,234

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Liabilities Unit: NTD thousand Financial liabilities at fair December 31, 2011 value through profit or loss ( 91,591 ) - ( 91,591 ) - More than More than More than six More than Total $ 24,883,407 $ 24,867,850 $ 105,557 $ - one month three months months and one year and Less than one and less than and less than less than one less than More than month three months six months year seven years seven years Total Assets December 31, 2011 Cash and cash Financial instruments at fair equivalents $ 8,349,890 $ - $ - $ - $ - $ - $ 8,349,890 value through profit or loss Total Level 1 Level 2 Level 3 Due from CBC and lend to Banks 44,598,749 18,585,232 4,790,052 2,823,518 3,470,173 - 74,267,724 Non-financial derivatives Financial assets at Assets fair value through Financial assets at fair value profit or loss 1,038,016 48,490 10,263 - - - 1,096,769 through profit or loss Accounts receivable 1,687,226 442,828 475,203 63,941 330,683 - 2,999,881 Stock investment $ 982,393 $ 982,393 $ - $ - Discounts and loans 12,499,135 21,833,148 30,530,731 48,965,788 83,042,260 83,822,111 280,693,173 Others 27,696 27,696 - - Available-for-Sale Available-for-Sale Financial Financial Assets 37,928 - - 243,169 3,930,483 - 4,211,580 Held-to-maturity Assets financial assets - 451,078 - 49,973 10,662,531 - 11,163,582 Stock investment 37,352 37,352 - - Long-term equity Bond investment 4,169,579 4,169,579 - - investment under Others 4,649 4,649 - - equity method - - - - - 216,970 216,970 Other financial Financial derivatives assets 680 679 - - - 850,396 851,755 Assets Total assets 68,211,624 41,361,455 35,806,249 52,146,389 101,436,130 84,889,477 383,851,324 Financial assets at fair value

Liabilities through profit or loss 86,680 - 86,680 - Due to CBC and Liabilities banks 1,588,587 229,257 29,797 1,592,357 - - 3,439,998 Financial liabilities at fair Funds borrowed value through profit or from CBC and loss ( 51,804 ) - ( 51,804 ) - other banks 454,350 1,665,950 454,350 302,900 - - 2,877,550 Total $ 5,256,545 $ 5,221,669 $ 34,876 $ - Financial liabilities at fair value through profit or loss 3,043 6,029 642 - 42,090 - 51,804 Payables 6,709,333 259,915 340,494 151,222 222,537 - 7,683,501 35. Risk control and hedging strategies Customer deposits and remittances 31,000,300 34,690,648 55,059,784 96,822,028 116,259,871 - 333,832,631 Financial bonds The Bank has defined a risk management policy in writing, covering the entire payable - - - - 10,512,559 - 10,512,559 Other financial operating strategies and risk management philosophy. The overall risk management liabilities - 22,521 - - - - 22,521 plan is to minimize potential harmful effects to the Bank’s business performance. The Total liabilities 39,755,613 36,874,320 55,885,067 98,868,507 127,037,057 - 358,420,564 Net liquidity gap $28,456,011 $4,487,135 ($20,078,818) ($46,722,118) ($25,600,927) $84,889,477 $25,430,760 Board of the Bank has approved the written overall risk management policy and the written policies towards specific risk (e.g. credit risk, market risk, operation risk, liquidity risk, and country risk, etc.). The Board of the Bank is the supreme risk 4. Cash flow risk estimated under interest rate changes management unit, and will review written policies and actual status to ensure that the risk management policies are executed precisely. The future cash flow of assets or liabilities estimated based on floating interest rates held or borne by the Bank might fluctuate and even generate risk The Bank has established a Risk Management Commission and Risk Management due to market interest rate changes. However, upon evaluation, the Bank, in Dept. responsible for granting risk authority and the relevant authorities to the relevant practice, tends to control the net liquidity gap to reduce cash flow risk resulting departments to ensure the successful operation of risk management. An Executive from interest rate changes. Vice President shall be appointed as the Secretary General of the Risk Management Committee by the President under the authorization of the Board. The Committee’s

(7) Information on levels of fair value of financial instruments functions are specified as follows: December 31, 2012 Financial instruments at fair (1) Review of risk management projects. value through profit or loss Total Level 1 Level 2 Level 3 Non-financial derivatives (2) Measure various risk management scopes. Assets Financial assets at fair value (3) Review of motions for institutionalization of risk management. through profit or loss Stock investment $ 1,131,755 $ 1,131,755 $ - $ - Others 5,216,376 5,216,376 - - (4) Periodical report to the Board. Available-for-Sale Financial Assets The commissioners of the Risk Management Committee shall set the various risk Stock investment 50,294 50,294 - - management indicators by nature of business and functions of departments and report Bond investment 18,469,425 18,469,425 - - them to the Risk Management Committee for high-ranking supervisors’ reference in Financial derivatives decision making. Assets Financial assets at fair value through profit or loss 197,148 - 197,148 -

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Liabilities Financial liabilities at fair value through profit or loss ( 91,591 ) - ( 91,591 ) - Total $ 24,883,407 $ 24,867,850 $ 105,557 $ -

December 31, 2011 Financial instruments at fair value through profit or loss Total Level 1 Level 2 Level 3 Non-financial derivatives Assets Financial assets at fair value through profit or loss Stock investment $ 982,393 $ 982,393 $ - $ - Others 27,696 27,696 - - Available-for-Sale Financial Assets Stock investment 37,352 37,352 - - Bond investment 4,169,579 4,169,579 - - Others 4,649 4,649 - -

Financial derivatives Assets Financial assets at fair value through profit or loss 86,680 - 86,680 - Liabilities Financial liabilities at fair value through profit or loss ( 51,804 ) - ( 51,804 ) - Total $ 5,256,545 $ 5,221,669 $ 34,876 $ -

35. Risk control and hedging strategies The Bank has defined a risk management policy in writing, covering the entire operating strategies and risk management philosophy. The overall risk management plan is to minimize potential harmful effects to the Bank’s business performance. The Board of the Bank has approved the written overall risk management policy and the written policies towards specific risk (e.g. credit risk, market risk, operation risk, liquidity risk, and country risk, etc.). The Board of the Bank is the supreme risk management unit, and will review written policies and actual status to ensure that the risk management policies are executed precisely. The Bank has established a Risk Management Commission and Risk Management Dept. responsible for granting risk authority and the relevant authorities to the relevant departments to ensure the successful operation of risk management. An Executive Vice President shall be appointed as the Secretary General of the Risk Management Committee by the President under the authorization of the Board. The Committee’s functions are specified as follows: (1) Review of risk management projects. (2) Measure various risk management scopes. (3) Review of motions for institutionalization of risk management. (4) Periodical report to the Board. The commissioners of the Risk Management Committee shall set the various risk management indicators by nature of business and functions of departments and report them to the Risk Management Committee for high-ranking supervisors’ reference in decision making.

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36. Capital adequacy ratio 6. Proportion of Tier III capital to risk assets = Tier III Capital / Total Unit: NTD thousand; % risk-weighted asset December 31, 2012 December 31, 2011 7. Ratio of common stock to total assets = Common stock/ Total assets Tier I Capital 26,404,873 24,318,987 8. Leverage ratio=Tier I Capital/Average assets upon adjustment(average assets Self-owned Tier II Capital 6,075,667 5,246,668 less Tier I Capital “Good Will”, “Unamortized Loss from Sale of NPL” and Capital Tier III Capital - - the deduction from Tier I Capital referred to in the “Explanation and Forms Self-owned Capital 32,480,540 29,565,655 for the Calculation of Shares and dividends and Risk Assets by Banks”) Standardized Approach 297,177,443 244,298,087 Credit Internal Ratings-Based - - 37. Mean and average interest rate of assets and liabilities with interest Risk Approach The mean shall be estimated based on the daily average value of the assets and Asset Securitization - - liabilities with interest. Basic Indicator 9,572,388 9,243,025 Approach 2012 Total Standard method/ - - Average interest Operation Mean risk-weighted optional standard risk rate assets method Assets Advanced Measurement - - Deposits of CBC and other banks $ 1,025,042 0.16% Approach Due to the CBC 72,578,472 0.77% Standardized Approach 1,481,200 782,175 Market Call loans to banks 1,104,219 0.85% Internal Models - - Risk Financial assets-Trading 1,334,033 0.88% Approach Bonds and securities sold under Total risk-weighted assets 308,231,031 254,323,287 508,171 0.78% Capital adequacy ratio 10.54 11.63 repurchase agreements Proportion of Tier I capital to risk assets 8.57 9.56 Receivable credit card loans 181,908 13.85% Proportion of Tier II capital to risk assets 1.97 2.07 Discounts and loans 297,783,219 2.56% Available-for-Sale Financial Proportion of Tier III capital to risk assets - - 10,131,121 1.64% Ratio of common stock to total assets 5.22 5.81 Assets Leverage ratio 6.39 6.73 Held-to-maturity financial assets 11,681,705 0.42%

Liabilities Note 1: The Shares and dividends and the amount of weighed average risk assets shall Deposits of other banks 1,964,715 1.37% be filled in as required in “Regulation for Banks in the Management of Capital Call loans to banks 3,570,166 0.65% Funds borrowed from CBC and Adequacy”, and “Explanation and Forms for the Calculation of Shares and 2,341,324 1.16% dividends and Risk Assets by Banks”. other banks Bonds sold under repurchase Note 2: The annual financial statement shall specify the Capital adequacy ratios for the 244,673 0.68% agreements current period and the previous period. The semiannual financial statement shall Current deposits 154,191,337 0.20% also disclose the Capital adequacy ratio at the end of the previous year, in Current deposits and saving addition to those for the current period and previous period. 197,222,705 1.26% deposits Note 3: Equations for financial analysis: Financial bonds payable 10,929,044 2.46% 1. Total Self-owned Capital = Tier I Capital + Tier II Capital + Tier III Capital 2. Total amount of risk-weighed-assets = Credit risk-weighed assets + Capital charge of (operational risk + market risk) x 12.5. 3. Capital Adequacy ratio = Total self-owned capital / Total amount risk-weighed assets. 4. Proportion of Tier I capital to risk assets = Tier I Capital / Total risk-weighted asset 5. Proportion of Tier II capital to risk assets = Tier II Capital / Total risk-weighted asset

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6. Proportion of Tier III capital to risk assets = Tier III Capital / Total risk-weighted asset 7. Ratio of common stock to total assets = Common stock/ Total assets 8. Leverage ratio=Tier I Capital/Average assets upon adjustment(average assets less Tier I Capital “Good Will”, “Unamortized Loss from Sale of NPL” and the deduction from Tier I Capital referred to in the “Explanation and Forms for the Calculation of Shares and dividends and Risk Assets by Banks”) 37. Mean and average interest rate of assets and liabilities with interest The mean shall be estimated based on the daily average value of the assets and liabilities with interest. 2012 Average interest Mean rate Assets Deposits of CBC and other banks $ 1,025,042 0.16% Due to the CBC 72,578,472 0.77% Call loans to banks 1,104,219 0.85% Financial assets-Trading 1,334,033 0.88% Bonds and securities sold under 508,171 0.78% repurchase agreements Receivable credit card loans 181,908 13.85% Discounts and loans 297,783,219 2.56% Available-for-Sale Financial 10,131,121 1.64% Assets Held-to-maturity financial assets 11,681,705 0.42%

Liabilities Deposits of other banks 1,964,715 1.37% Call loans to banks 3,570,166 0.65% Funds borrowed from CBC and 2,341,324 1.16% other banks Bonds sold under repurchase 244,673 0.68% agreements Current deposits 154,191,337 0.20% Current deposits and saving 197,222,705 1.26% deposits Financial bonds payable 10,929,044 2.46%

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Financial bondspayable Current depositsandsaving Current deposits Funds borrowedfrom CBCand Bonds soldunderrepurchase Call loans to banks Deposits ofotherbanks Liabilities Held-to-maturity financial assets Available-for-Sale Financial Discounts andloans Receivable creditcardloans Bonds andsecuritiessoldunder Financial assets-Trading Call loans to banks Due totheCBC Deposits ofCBCandotherbanks Assets 2011 deposits other banks agreements Assets repurchase agreements

2,068,514 0.84% ‐ 248- 248 161733 1.16% 0.54% 166,157,353 727,504 3.29% 0.73% 1,531,405 14,743

3,6 0.05% 838,361 $ 4,4,0 0.18% 141,149,201 2.55% 259,375,403 28848 0.51% 12,858,488 0.76% 68,154,115 ,0,4 2.45% 9,503,346 0.73% 1.31% 2,068,693 1,968,970 Mean 6,5 14.42% 1.98% 166,451 214,802 314 0.93% 13,164 Averageinterest rate

38. Information in a bank’s financial statement to be disclosed by the Bank pursuant to the Statement of Financial Accounting Standards No. 28 (1) Asset quality December 31, 2012 December 31, 2011 Item Allowance for Allowance for NPL NPL rate Allowance for bad debt NPL amount NPL rate Allowance for bad debt amount Total amount Total amount (Note 2) bad debt coverage rate (Note 1) (Note 2) bad debt coverage rate Type (Note 1) (Note 3) (Note 3) Corporate Secured 518,524 106,044,255 0.49% 973,393 187.72% 211,851 88,737,006 0.24% 751,310 354.64% banking Non-secured 365,503 72,477,658 0.50% 1,942,816 531.55% 240,094 57,544,276 0.42% 1,725,895 718.84% Residential mortgage 118,608 47,828,501 0.25% 79.073 66.67% 143,560 42,864,096 0.33% 75,522 52.61% loans (Note 4) Personal Cash card 307 21,835 1.41% 18,187 5,924.10% 307 32,064 0.96% 26,182 8,528.34% banking Small credit loans (Note 8,870 574,003 1.55% 64,939 732.12% 14,485 682,364 2.12% 105,589 728.95% 5) Others Secured 181,443 95,048,642 0.19% 129,554 71.40% 220,334 86,030,910 0.26% 123,598 56.10%

(Note 6) Non-secured 11,816 5,297,589 0.22% 110,659 936.52% 13,750 4,802,457 0.29% 134,706 979.68% Total amount 1,205,071 327,292,483 0.37% 3,318,621 275.39% 844,381 280,693,173 0.30% 2,942,802 348.52%

December 31, 2012 December 31, 2011 Item Balance of Allowance for Balance of Allowance for NPL Allowance for Allowance for receivable NPL rate bad debt NPL amount receivable NPL rate bad debt Type amount bad debt bad debt accounts coverage rate accounts coverage rate Credit card 6,654 470,102 1.42% 27,329 410.72% 2,693 409,446 0.66% 21,989 816.52% Factoring without recourse (Note 7) ------

NPL or non-performing receivable accounts exempted from report December 31, 2012 December 31, 2011 Total non-performing receivable Total NPL exempted from report Total non-performing receivable Total NPL exempted from report accounts exempted from report in 2011 accounts exempted from report Amount exempted from report upon debt negotiation and 59,683 7,424 88,541 9,870 performance (Note 8) Performance of debt clearance program and rehabilitation program 27,874 11,340 37,921 11,177 (Note 9) Total 87,557 18,764 126,462 21,047

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December 31, 2012 December 31, 2011 Item Balance of Allowance for Balance of Allowance for NPL Allowance for Allowance for receivable NPL rate bad debt NPL amount receivable NPL rate bad debt Type amount bad debt bad debt accounts coverage rate accounts coverage rate 249 Credit card 6,654 470,102 1.42% 27,329 410.72% 2,693 409,446 0.66% 21,989 816.52% Factoring without recourse (Note 7) ------

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Note 1: The NPL amount is recognized according to "Regulations Governing the (2) Status of credit risk concentration Procedures for Banking Institutions to Evaluate Assets and Deal with December 31, 2012 Non-performing Non-accrual Loans". The credit card NPL is recognized based on that provided under the Letter Jin-Guan-Yin (4) Zi No. 0944000378 dated July 6, Unit: NTD thousand 2005. Proportion to net Total balance of worth in the Note 2: NPL rate=NPL/Total amount; Credit card NPL rate=NPL/balance of receivable Rank Business type of company or group loan Bank’s financial accounts. (Note 1) (Note 2) (Note 3) statement on Dec. Note 3: Allowance for bad debt coverage rate=allowance for bad debt provided for 31, 2012 (%) loans/NPL amount; allowance for bad debt coverage rate for receivable accounts Group A of credit cards=allowance for bad debt provided for receivable accounts of credit 1 012612 Separable components $ 4,519,813 16.09% cards/NPL amount. manufacturing Group B 2 3,175,330 11.30% Note 4: Borrowers apply for residential mortgage loans for the purpose of purchasing or 015590 Other accommodation service building residences or decorating houses. The loans shall be secured by the Group C 3 2,352,980 8.38% residence purchased (owned) by the borrower himself/herself, or his/her spouse or 012411 Iron and steel Manufacturing minor children in full, and the mortgage shall be pledged to the financial Group D 4 2,219,722 7.90% institution. 010892 Noodle products manufacturing Group E 5 2,050,750 7.30% Note 5: Small credit loans mean those provided in the Letter under Jin-Guan-Yin (4) Zi 012641 LCD and parts manufacturing No. 09440010950 dated December 19, 2005 and those other than small loans by Group F 6 1,998,993 7.12% credit cards/cash cards. 015510 Short-term accommodation service Group G Note 6: “Others” for Personal banking refer to the secured or non-secured consumer loans 7 1,579,578 5.62% other than “residential mortgage loans”, “cash card loans” and “small credit 016811 Real estate lease and sale Group H loans”, exclusive of credit cards loans. 8 1,553,560 5.53% 015101 Civil air transportation Note 7: According to the Letter under Jin-Guan-Yin (5) Zi No. 094000494 dated July 19, Group I 9 1,506,557 5.36% 2005, factoring without recourse shall be recognized as NPL within three months 015610 Restaurant industry after the factoring Consignee or insurance company confirms that no Group J compensation should be granted. 10 014340 Renovation and construction 1,475,454 5.25% contractor Note 8: Total NPL exempted from report upon debt negotiation and performance and the balance of total non-performing receivable accounts exempted from report upon debt negotiation and performance were disclosed pursuant to the Letter under December 31, 2011 Jin-Guan-Yin (1) Zi No. 09510001270 dated April 25, 2006. Unit: NTD thousand Note 9: The balance of total NPL exempted from report upon performance of debt clearance program and rehabilitation program and balance of total non-performing Proportion to net Total balance of worth in the receivable accounts exempted from report upon performance of debt clearance Rank Business type of company or group loan Bank’s financial (Note 1) (Note 2) program and rehabilitation program were disclosed pursuant to the Letter under (Note 3) statement on Dec. Jin-Guan-Yin (1) Zi No. 09700318940 dated September 15, 2008. 31, 2011 (%) Group A 1 012612 Separable components $ 3,278,053 12.87% manufacturing Group E 2 2,623,206 10.30% 012641 LCD and parts manufacturing Group B 3 2,558,358 10.05% 015590 Other accommodation service

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(2) Status of credit risk concentration December 31, 2012 Unit: NTD thousand Proportion to net Total balance of worth in the Rank Business type of company or group loan Bank’s financial (Note 1) (Note 2) (Note 3) statement on Dec. 31, 2012 (%) Group A 1 012612 Separable components $ 4,519,813 16.09% manufacturing Group B 2 3,175,330 11.30% 015590 Other accommodation service Group C 3 2,352,980 8.38% 012411 Iron and steel Manufacturing Group D 4 2,219,722 7.90% 010892 Noodle products manufacturing Group E 5 2,050,750 7.30% 012641 LCD and parts manufacturing Group F 6 1,998,993 7.12% 015510 Short-term accommodation service Group G 7 1,579,578 5.62% 016811 Real estate lease and sale Group H 8 1,553,560 5.53% 015101 Civil air transportation Group I 9 1,506,557 5.36% 015610 Restaurant industry Group J 10 014340 Renovation and construction 1,475,454 5.25% contractor

December 31, 2011 Unit: NTD thousand Proportion to net Total balance of worth in the Rank Business type of company or group loan Bank’s financial (Note 1) (Note 2) (Note 3) statement on Dec. 31, 2011 (%) Group A 1 012612 Separable components $ 3,278,053 12.87% manufacturing Group E 2 2,623,206 10.30% 012641 LCD and parts manufacturing Group B 3 2,558,358 10.05% 015590 Other accommodation service

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(Continued from previous page) (3) Interest rate sensitivity information Interest rate sensitivity assets and liabilities analysis data (NTD) Proportion to net December 31, 2012 Total balance of worth in the Rank Business type of company or group Unit: NTD thousand; % loan Bank’s financial (Note 1) (Note 2) 181 days to 1 (Note 3) statement on Dec. 1 to 90 days 91 to 180 days Item year Over 1 year Total 31, 2011 (%) (inclusive) (inclusive) Group D (inclusive) 4 $ 2,504,646 9.84% Interest rate 010892 Noodle products manufacturing 302,093,450 12,250,828 16,462,024 58,472,047 389,278,349 sensitivity assets Group C Interest rate 5 1,852,228 7.27% 111,117,375 199,719,452 55,135,259 8,702,696 374,674,782 012411 Iron and steel Manufacturing sensitivity liabilities Group F Interest rate 6 1,747,814 6.86% 190,976,075 ( 187,468,624 ) ( 38,673,235 ) 49,769,351 14,603,567 015510 Short-term accommodation service sensitivity gap Group K Net Value 28,081,100 7 1,597,488 6.27% 015101 Civil air transportation Interest rate sensitivity assets and liabilities rate 103.90 Group I Interest rate sensitivity gap and net worth rate 52.00 8 1,508,954 5.93% 015610 Restaurant industry

Group L 9 1,500,000 5.89% 016811 Real estate lease and sale December 31, 2011 Group H 10 1,495,092 5.87% Unit: NTD thousand; % 015101 Civil air transportation 181 days to 1 1 to 90 days 91 to 180 days Item year Over 1 year Total (inclusive) (inclusive) (inclusive) Note 1: The top ten enterprises other than public or state enterprises were identified Interest rate 264,233,551 15,430,434 12,794,718 42,660,268 335,118,971 according to rank of the total balance of loans to these enterprises. If the sensitivity assets account refers to a group, the loan to the group should be identified and Interest rate 108,052,057 167,868,673 43,355,443 5,171,346 324,447,519 summed up, and disclosed in the form of “code” and “business type”. In sensitivity liabilities the case of group, the business type of the group with the maximum Interest rate 156,181,494 ( 152,438,239) ( 30,560,725) 37,488,922 10,671,452 exposure should be disclosed. The business type shall be specified in sensitivity gap Net Value 25,461,054 “detailed item” according to the business classification defined by Interest rate sensitivity assets and liabilities rate 103.29 Directorate General of Budget, Accounting and Statistics (e.g. Company Interest rate sensitivity gap and net worth rate 41.91 (Group) A, LCD and parts manufacturing).

Note 2: The enterprises mean those defined in Article 6 of “Supplementary Rules of TSEC’s Criteria for Reviewing Listing of Marketable Securities”. Note 1: The table specifies the amount in NTD (exclusive of foreign currencies) of Head Office and local branches. Note 3: The balance of total credit extension means the total balance of the various loans (including import negotiation, export negotiation, discount, overdraft, Note 2: Interest rate sensitivity assets and liabilities mean the assets and liabilities short-term loans, short-term secured loans, receivable securities financing, with interest of which the income or cost varies depending on the interest mid-term loans, mid-term secured loans, long-term loans, long-term secured rate. loans, Delinquent loans), inward remittances, factoring without recourse, Note 3: Interest rate sensitivity gap=Interest rate sensitivity assets - Interest rate Acceptances receivable and guarantee payments. sensitivity liabilities. Note 4: Interest rate sensitivity assets and liabilities rate=Interest rate sensitivity assets ÷ interest rate sensitivity liabilities (i.e. interest rate sensitivity assets and interest rate sensitivity liabilities in NTD)

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(3) Interest rate sensitivity information Interest rate sensitivity assets and liabilities analysis data (NTD) December 31, 2012 Unit: NTD thousand; % 181 days to 1 1 to 90 days 91 to 180 days Item year Over 1 year Total (inclusive) (inclusive) (inclusive) Interest rate 302,093,450 12,250,828 16,462,024 58,472,047 389,278,349 sensitivity assets Interest rate 111,117,375 199,719,452 55,135,259 8,702,696 374,674,782 sensitivity liabilities Interest rate 190,976,075 ( 187,468,624 ) ( 38,673,235 ) 49,769,351 14,603,567 sensitivity gap Net Value 28,081,100 Interest rate sensitivity assets and liabilities rate 103.90 Interest rate sensitivity gap and net worth rate 52.00

December 31, 2011 Unit: NTD thousand; % 181 days to 1 1 to 90 days 91 to 180 days Item year Over 1 year Total (inclusive) (inclusive) (inclusive) Interest rate 264,233,551 15,430,434 12,794,718 42,660,268 335,118,971 sensitivity assets Interest rate 108,052,057 167,868,673 43,355,443 5,171,346 324,447,519 sensitivity liabilities Interest rate 156,181,494 ( 152,438,239) ( 30,560,725) 37,488,922 10,671,452 sensitivity gap Net Value 25,461,054 Interest rate sensitivity assets and liabilities rate 103.29 Interest rate sensitivity gap and net worth rate 41.91

Note 1: The table specifies the amount in NTD (exclusive of foreign currencies) of Head Office and local branches. Note 2: Interest rate sensitivity assets and liabilities mean the assets and liabilities with interest of which the income or cost varies depending on the interest rate. Note 3: Interest rate sensitivity gap=Interest rate sensitivity assets - Interest rate sensitivity liabilities. Note 4: Interest rate sensitivity assets and liabilities rate=Interest rate sensitivity assets ÷ interest rate sensitivity liabilities (i.e. interest rate sensitivity assets and interest rate sensitivity liabilities in NTD)

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Interest rate sensitivity assets and liabilities analysis data (USD) (4) Profitability December 31, 2012 Unit: % Unit: USD thousand; % Item December 31, 2012 December 31, 2011 181 days to 1 Before 1 to 90 days 91 to 180 days 0.80 0.53 Item year Over 1 year Total taxation (inclusive) (inclusive) ROA (inclusive) After 0.67 0.40 Interest rate 320,404 182,871 42,412 366,956 912,643 taxation sensitivity assets Before Interest rate 249,587 350,674 131,326 - 731,587 12.34 8.53 taxation sensitivity liabilities ROE Interest rate 70,817 ( 167,803 ) ( 88,914 ) 366,956 181,056 After 10.38 6.48 sensitivity gap taxation Net value 966,980 Net profit rate 40.53 25.45 Interest rate sensitivity assets and liabilities rate 124.75 Interest rate sensitivity gap and net worth rate 18.72 Note: 1. ROA = Income before (after) taxation/Average total assets December 31, 2011 2. ROE=Income before (after) taxation / Average net worth Unit: USD thousand; % 3. Profit rate = Income after taxation/income-net 181 days to 1 1 to 90 days 91 to 180 days Item year Over 1 year Total 4. Income before taxation means the income accumulated from January of (inclusive) (inclusive) (inclusive) the current year until the current quarter Interest rate 253,787 164,116 27,608 310,404 755,915 sensitivity assets (5) Analysis on maturity of assets and liabilities Interest rate 146,352 326,751 81,526 - 554,629 Analysis of maturity structure of NTD sensitivity liabilities Interest rate 107,435 ( 162,635 ) ( 53,918 ) 310,404 201,286 December 31, 2012 sensitivity gap Unit: NTD thousand Net value 840,576 Interest rate sensitivity assets and liabilities rate 136.29 Remaining balance to maturity Total 181 days to 1 More than 1 Interest rate sensitivity gap and net worth rate 23.95 1 to 30 days 31 to 90 days 91 to 180 days year year Main capital inflow upon 420,818,471 87,942,911 27,937,317 37,720,849 61,345,405 205,871,989 Note 1: The table specifies the total amount in USD of Head Office and local maturity Main capital branches, International Banking Branch and offshore branches, exclusive of outflow upon 501,906,144 54,768,498 63,285,690 101,500,710 115,498,201 166,853,045 contingent assets or liabilities. maturity Gap (81,087,673) 33,174,413 (35,348,373) (63,779,861) (54,152,796) 39,018,944 Note 2: Interest rate sensitivity assets and liabilities mean the assets and liabilities

with interest of which the income or cost varies depending on the interest rate. December 31, 2011 Note 3: Interest rate sensitivity gap=Interest rate sensitivity assets - Interest rate Unit: NTD thousand sensitivity liabilities. Remaining balance to maturity Total 181 days to 1 More than 1 1 to 30 days 31 to 90 days 91 to 180 days Note 4: Interest rate sensitivity assets and liabilities rate=Interest rate sensitivity year year assets ÷ interest rate sensitivity liabilities (i.e. interest rate sensitivity assets Main capital 380,570,251 68,295,275 42,934,392 35,470,700 59,250,520 174,619,364 inflow upon and interest rate sensitivity liabilities in USD) maturity Main capital 430,265,099 44,564,497 52,210,394 75,026,018 104,831,100 153,633,090 outflow upon maturity Gap (49,694,848) 23,730,778 ( 9,276,002) (39,555,318) (45,580,580) 20,986,274

Note: The table only specifies the amount in NTD (exclusive of foreign currencies) of Head Office and local branches.

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(4) Profitability Unit: % Item December 31, 2012 December 31, 2011 Before 0.80 0.53 taxation ROA After 0.67 0.40 taxation Before 12.34 8.53 taxation ROE After 10.38 6.48 taxation Net profit rate 40.53 25.45

Note: 1. ROA = Income before (after) taxation/Average total assets 2. ROE=Income before (after) taxation / Average net worth 3. Profit rate = Income after taxation/income-net 4. Income before taxation means the income accumulated from January of the current year until the current quarter (5) Analysis on maturity of assets and liabilities Analysis of maturity structure of NTD December 31, 2012 Unit: NTD thousand Remaining balance to maturity Total 181 days to 1 More than 1 1 to 30 days 31 to 90 days 91 to 180 days year year Main capital inflow upon 420,818,471 87,942,911 27,937,317 37,720,849 61,345,405 205,871,989 maturity Main capital outflow upon 501,906,144 54,768,498 63,285,690 101,500,710 115,498,201 166,853,045 maturity Gap (81,087,673) 33,174,413 (35,348,373) (63,779,861) (54,152,796) 39,018,944

December 31, 2011 Unit: NTD thousand Remaining balance to maturity Total 181 days to 1 More than 1 1 to 30 days 31 to 90 days 91 to 180 days year year Main capital 380,570,251 68,295,275 42,934,392 35,470,700 59,250,520 174,619,364 inflow upon maturity Main capital 430,265,099 44,564,497 52,210,394 75,026,018 104,831,100 153,633,090 outflow upon maturity Gap (49,694,848) 23,730,778 ( 9,276,002) (39,555,318) (45,580,580) 20,986,274

Note: The table only specifies the amount in NTD (exclusive of foreign currencies) of Head Office and local branches.

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Analysis of maturity structure of USD (Continued from previous page) December 31, 2012 Unit: USD thousand December 31, 2012 December 31, 2011 Exchange Exchange

Remaining balance to maturity Foreign currency rate NTD Foreign currency rate NTD Total 181 days to 1 More than 1 Non-Currency 1 to 30 days 31 to 90 days 91 to 180 days year year USD $ 17,897 29.04 $ 519,723 $ 15,667 30.29 $ 474,562 Main capital inflow 1,096,567 189,831 231,917 195,528 42,447 436,844 AUD 20,348 30.17 613,911 20,174 30.75 620,344

upon maturity Financial liabilities Main capital outflow 945,971 238,965 181,303 393,739 131,964 - Currency upon maturity USD 766,388 29.04 22,255,904 580,340 30.29 17,578,488 Gap 150,596 ( 49,134) 50,614 (198,211) ( 89,517) 436,844 EUR 30,028 38.48 1,155,465 21,540 39.20 844,358 JPY 481,425 0.34 161,951 904,445 0.39 353,367 HKD 46,863 3.75 175,549 43,578 3.90 169,868 GBP 2,236 46.81 104,689 4,524 46.75 211,496 December 31, 2011 AUD 25,470 30.17 768,430 24,479 30.75 752,737 Unit: USD thousand CAD 1,960 29.21 57,255 3,417 29.68 101,420 SGD 3,028 23.75 71,919 2,061 23.32 48,072 Remaining balance to maturity CHF 139 31.83 4,411 434 32.20 13,976 Total 181 days to 1 More than 1 ZAR 66,185 3.42 226,211 36,538 3.72 136,031 1 to 30 days 31 to 90 days 91 to 180 days year year SEK 7 4.46 29 6 4.38 28 NZD 8,998 23.86 214,690 11,609 23.40 271,660 Main capital inflow 882,193 143,097 190,798 170,064 27,608 350,626 THB 5 0.95 5 5 0.96 5 upon maturity RMB 54,356 4.66 253,299 - - - Main capital outflow 772,397 203,858 228,592 273,325 66,622 - upon maturity Non-Currency Gap 109,796 ( 60,761) ( 37,794) (103,261) ( 39,014) 350,626 USD 85 29.04 2,455 - - -

Note: 1. The table specifies the total amount in USD of Head Office, local 40. Financial information for operating segments branches and International Banking Branch. Unless otherwise provided, it shall be stated at the Book Value, and it is not necessary to include any Financial information for operating segments is provided for main decision makers accounts that are not stated in the table (e.g. negotiable certificates of to allocate resources and evaluate the performance of each segment. Such information deposit, bonds or stocks scheduled to be issued). focuses on each delivered or offered product or service. In accordance with SFAS No.41 “Disclosure of Operating Segments”, segments that the Bank should report are as 2. Where offshore assets account for more than 10% of the Bank’s total follows: assets, it is necessary to provide supplementary disclosure. First District in Taichung 39. Information on exchange rates of financial assets and liabilities denominated in foreign currencies Second District in Taichung The information regarding financial assets and liabilities dominated by foreign North District currency which might arouse material effect: Changhua Area December 31, 2012 December 31, 2011 Exchange Exchange Head Office and other Foreign currency rate NTD Foreign currency rate NTD Financial assets Currency USD $ 894,030 29.04 $ 25,962,631 $ 744,438 30.29 $ 22,549,041 EUR 91,548 38.48 3,522,773 94,060 39.20 3,687,134 JPY 1,362,021 0.34 458,184 1,466,020 0.39 572,774 HKD 14,357 3.75 53,783 21,212 3.90 82,686 GBP 745 46.81 34,868 647 46.75 30,238 AUD 3,013 30.17 90,891 2,498 30.75 76,824 CAD 282 29.21 8,247 587 29.68 17,426 SGD 476 23.75 11,307 1,364 23.32 31,808 CHF 140 31.83 4,457 415 32.20 13,355 ZAR 825 3.42 2,820 2,810 3.72 10,463 SEK 3,415 4.46 15,239 243 4.38 1,064 NZD 1,494 23.86 35,648 1,277 23.40 29,875 THB 23 0.95 22 23 0.96 23 RMB 32,457 4.66 151,248 5,316 4.81 25,558

(Continued on next page)

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(Continued from previous page)

December 31, 2012 December 31, 2011 Exchange Exchange

Foreign currency rate NTD Foreign currency rate NTD Non-Currency USD $ 17,897 29.04 $ 519,723 $ 15,667 30.29 $ 474,562 AUD 20,348 30.17 613,911 20,174 30.75 620,344

Financial liabilities Currency USD 766,388 29.04 22,255,904 580,340 30.29 17,578,488 EUR 30,028 38.48 1,155,465 21,540 39.20 844,358 JPY 481,425 0.34 161,951 904,445 0.39 353,367 HKD 46,863 3.75 175,549 43,578 3.90 169,868 GBP 2,236 46.81 104,689 4,524 46.75 211,496 AUD 25,470 30.17 768,430 24,479 30.75 752,737 CAD 1,960 29.21 57,255 3,417 29.68 101,420 SGD 3,028 23.75 71,919 2,061 23.32 48,072 CHF 139 31.83 4,411 434 32.20 13,976 ZAR 66,185 3.42 226,211 36,538 3.72 136,031 SEK 7 4.46 29 6 4.38 28 NZD 8,998 23.86 214,690 11,609 23.40 271,660 THB 5 0.95 5 5 0.96 5 RMB 54,356 4.66 253,299 - - -

Non-Currency USD 85 29.04 2,455 - - -

40. Financial information for operating segments Financial information for operating segments is provided for main decision makers to allocate resources and evaluate the performance of each segment. Such information focuses on each delivered or offered product or service. In accordance with SFAS No.41 “Disclosure of Operating Segments”, segments that the Bank should report are as follows: First District in Taichung Second District in Taichung North District Changhua Area Head Office and other

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(1) Revenues and operating results of segments (3) Main revenues from products and service Revenues and operating results of the Bank’s continuing units are analyzed in The Bank’s main business is interest revenue. There is no information by accordance with segments to be reported, which are summarized as follows: products and by service. Second First District District in Changhua Head Office (4) Information by areas in Taichung Taichung North District Area and other Total 2012 The Bank’s business covers the Taiwan area. There is no information by areas. Interest revenue $ 1,615,469 $1,221,408 $2,306,307 $2,233,495 $ 1,230,560 $8,607,239 Interest expenses ( 623,464) ( 439,596) ( 779,742) ( 916,637) ( 388,690 ) ( 3,148,129) (5) Information on key customers Net interest income 992,005 781,812 1,526,565 1,316,858 841,870 5,459,110 Net income (loss) Interest revenue from a single customer of the Bank does not exceed 10% of other than interest total interest revenues. Therefore, there is no information on key customers. income Service Fee, Net 63,415 55,655 80,300 85,112 857,561 1,142,043 Other net profit 41. Notes of disclosure 495,388 400,030 37,736 803,917 ( 1,484,507 ) 252,564 (loss) Bad debt expenses ( 34,036) 23,768 ( 38,107) ( 1,846) ( 188,023 ) ( 238,244) (1) Information about important transactions: Operating expenses ( 453,903) ( 412,325) ( 505,192) ( 736,016) ( 1,203,775 ) ( 3,311,211) Income (loss) before Information to be disclosed pursuant to Article 16 of the “Rules Governing the $ 1,062,869 $ 848,940 $ 1,101,302 $ 1,468,025 ( $ 1,176,874 ) $ 3,304,262 taxation Preparation of Financial Statements of Public Issued Banks”:

2011 Interest revenue $ 1,469,270 $1,087,301 $1,864,959 $2,053,436 $ 940,757 $7,415,723 No. Item Remark Interest expenses ( 513,555) ( 366,636) ( 483,986) ( 783,534) ( 324,716 ) ( 2,472,427) Cumulative amount of the stock of the same investee purchased Attached Net interest income 955,715 720,665 1,380,973 1,269,902 616,041 4,943,296 1 or sold reaching NTD300 million or more than 10% of the Net income (loss) table 1 other than interest Paid-in shares capital. income Acquisition amount of real estate reaching NTD300 million or Service Fee, Net 42,668 34,133 59,633 58,095 695,365 889,894 2 None Other net profit 417,159 345,181 ( 155,589 ) 703,562 ( 1,430,646 ) ( 120,333 ) more than 10% of the Paid-in shares capital. (loss) Amount on disposal of real estate reaching NTD300 million or Bad debt expenses ( 33,368) 16,646 ( 35,024) 11,671 ( 624,873 ) ( 664,948) 3 None Operating expenses ( 453,171) ( 401,517) ( 479,681) ( 727,059) ( 1,072,305 ) ( 3,133,733) more than 10% of the Paid-in shares capital. Income (loss) before $ 929,003 $ 715,108 $ 770,312 $ 1,316,171 ($ 1,816,418) $ 1,914,176 Discount of service charges in transaction with related party taxation 4 None reaching more than NTD5 million. Accounts receivable-related party reaching NTD300 million or 5 None Revenues reported above are generated from transactions with external more than 10% of the Paid-in shares capital. customers. There was no inter-department sale in 2012 and 2011. 6 Information regarding sale of NPL. None The measured figures are provided for main decision makers to allocate 7 Securitization of financial assets or real estate. None Other important transactions sufficient to affect the policy to use resources to segments and evaluate the performance of each segment. 8 None financial statements. (2) Assets and liabilities of segments

Segment assets December 31, 2012 December 30, 2011 First District in Taichung $ 68,036,499 $ 59,178,409 (2) Information regarding investees: Second District in Taichung 57,070,252 46,872,307 No. Item Remark North District 115,467,753 99,708,739 Attached 1 Information regarding investees and total shareholdings. Changhua Area 91,251,274 79,000,514 table 2 Head Office and other 112,546,290 99,586,712 2 Loans to others. None Total segment assets $ 444,372,068 $ 384,346,681 3 Endorsements/guarantees to others. None 4 Marketable securities – end. None Segment liabilities December 31, 2012 December 30, 2011 Cumulative amount of the same marketable securities purchased Attached First District in Taichung $ 90,917,908 $ 82,555,330 5 or sold reaching NTD300 million or more than 10% of the table 1 Second District in Taichung 69,212,643 62,954,829 Paid-in shares capital. North District 93,014,813 68,385,290 Acquisition amount of real estate reaching NTD300 million or 6 None Changhua Area 127,934,582 116,975,287 more than 10% of the Paid-in shares capital. Head Office and other 35,211,022 28,014,891 Total Liabilities of segments $ 416,290,968 $ 358,885,627 (Continued on next page)

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(3) Main revenues from products and service The Bank’s main business is interest revenue. There is no information by products and by service. (4) Information by areas The Bank’s business covers the Taiwan area. There is no information by areas. (5) Information on key customers Interest revenue from a single customer of the Bank does not exceed 10% of total interest revenues. Therefore, there is no information on key customers. 41. Notes of disclosure (1) Information about important transactions: Information to be disclosed pursuant to Article 16 of the “Rules Governing the Preparation of Financial Statements of Public Issued Banks”: No. Item Remark Cumulative amount of the stock of the same investee purchased Attached 1 or sold reaching NTD300 million or more than 10% of the table 1 Paid-in shares capital. Acquisition amount of real estate reaching NTD300 million or 2 None more than 10% of the Paid-in shares capital. Amount on disposal of real estate reaching NTD300 million or 3 None more than 10% of the Paid-in shares capital. Discount of service charges in transaction with related party 4 None reaching more than NTD5 million. Accounts receivable-related party reaching NTD300 million or 5 None more than 10% of the Paid-in shares capital. 6 Information regarding sale of NPL. None 7 Securitization of financial assets or real estate. None Other important transactions sufficient to affect the policy to use 8 None financial statements.

(2) Information regarding investees: No. Item Remark Attached 1 Information regarding investees and total shareholdings. table 2 2 Loans to others. None 3 Endorsements/guarantees to others. None 4 Marketable securities – end. None Cumulative amount of the same marketable securities purchased Attached 5 or sold reaching NTD300 million or more than 10% of the table 1 Paid-in shares capital. Acquisition amount of real estate reaching NTD300 million or 6 None more than 10% of the Paid-in shares capital.

(Continued on next page)

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(Continued from previous page)

No. Item Remark Amount on disposal of real estate reaching NTD300 million or 7 None more than 10% of the Paid-in shares capital. Discount of service charges in transaction with related party 8 None reaching more than NTD5 million. Accounts receivable-related party reaching NTD300 million or 9 None more than 10% of the Paid-in shares capital. 10 Information regarding sale of NPL. None 11 Securitization of financial assets or real estate. None 12 Information regarding transactions of derivative products. None Other important transactions sufficient to affect the policy to use 13 None financial statements. Note: No disclosure of such information is required, if the investee is a financial business, insurance business, and securities business. (3) Information regarding investment in the territory of mainland china No. Item Remark Names of investees in Mainland China, key business, and Attached 1 related information. table 3 Attached 2 Investment limits in Mainland China. table 3 Major transactions in a business entity located at a third 3 country/territory directly or indirectly conducted between the None Company and the investees in Mainland China. Endorsement, guarantee, or pledge of collaterals by the business entity located in a third country/territory directly or indirectly 4 None conducted between the Company and the investees in Mainland China. Financing by a business entity located at a third country/ 5 territory directly or indirectly conducted between the Company None and the investees in Mainland China. Other income or loss or significant transactions that affected the 6 None financial position of the Company.

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Attached table 1: Cumulative amount of the same marketable securities purchased or sold reaching NTD300,000 thousand or more than 10% of the Paid-in shares capital: Unit: NTD thousand/thousand unit At beginning Buy Sell At ending Capital Buyer and Types and names of Account titles in Counterparties Relation gain/loss sellers securities book Quantity Amount Quantity Amount Quantity Sale price Cost in book Quantity Amount from disposition

Taichung Taichung Long-term equity - Subsidiary of - $ - 100,000 $ 986,722 - $ - $ - $ - 100,000 $ 986,722 Commercial Commercial Bank investment under the Bank Bank Lease Enterprise equity method Co., Ltd. Taichung TCCBL Co., Ltd. Long-term equity - Subsidiary of - - 1,350 394,541 -- - - 1,350 394,541 Commercial investment under the Bank Bank Lease equity method Enterprise TCCBL Taichung Long-term equity - Subsidiary of - - 8,490 394,934 -- - - 8,490 394,934 Co., Ltd. Commercial Bank investment under the Bank Leasing (Suzhou) equity method Co., Ltd.

261 Note: Increase/decrease in current period shall include return/loss on investment recognized under the equity method and conversion adjustment beyond the buying/selling amount.

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Attached table 2: Information regarding investees:

Unit: NTD thousand; thousand shares; % Consolidated shareholding of the Bank and affiliated enterprises Investment (note 1) Proportion of profit (loss) Investee Book value of Total Investor Location Principal business shareholding recognized in Scheduled Remarks Name (Note 1) investment Quantity - Ratio of % - end the current quantity current Quantity Shareholding period (Note 2) % Taichung Taichung Bank Taichung City Insurance agent 100.00 $ 182,207 $ 93,847 8,236 - 8,236 100.00 Commercial Bank Insurance Brokers Co., Ltd. Co., Ltd. Taichung Reliance Securities Taipei City Securities investment 38.46 126,683 ( 1,128 ) 14,477 - 14,477 46.40 Commercial Bank Investment Trust and trust Co., Ltd. Co., Ltd. Taichung Taichung Taipei City Leasing Operation 100.00 986,772 ( 13,705 ) 100,000 - 100,000 100.00 Commercial Bank Commercial Bank Co., Ltd. Lease Enterprise Taichung TCCBL Co., Ltd. BVI Financing Leasing and 100.00 394,541 ( 1,094 ) 1,350 - 1,350 100.00 Commercial investments Bank Lease Enterprise

262 TCCBL Co., Ltd. Taichung Suzhou Financing Leasing 100.00 394,934 ( 702 ) 8,490 - 8,490 100.00 Commercial Bank Leasing (Suzhou) Co., Ltd.

Note 1: Any current shares or scheduled shares held by the Bank, directors, supervisors, President, Executive Vice President, and investees that are defined as affiliated enterprises under Company Law shall be included. Note 2: (1) Scheduled shares mean swapped shares under the assumption that the equity securities purchased or derivative product contract as concluded (not yet converted into equity) are converted according to the agreed trading conditions and the bank’s intent to link with the equity of investee for the purpose of the reinvestment referred to in Article 74 of the Banking Act. (2) Said “equity securities” mean the marketable securities, convertible corporate bonds, and stock warrants provided in Paragraph 1 of Article 11 of the Enforcement Rules of Securities and Exchange Act. (3) Said “derivative product contract” means those defined in the Statement of Financial Accounting Standards No. 34, e.g. stock options. Note 3: This table may not be disclosed in the financial statements for Q1 and the previous three quarters.

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Attached table 3: Information on investments in Mainland China:

Unit: NTD thousand Accumulated Amount of investment remitted Ratio of Accumulated amount of or recovered in current period shareholding of Investment loss amount of Book value of ROI remitted to Names of investees in Paid-in shares Mode of investment investment recognized in Principal business investment investment at Taiwan at China Captial investments remitted from Outward directly or current period Recover remitted from ending ending Taiwan at remittance indirectly made (Note 1) Taiwan at ending beginning by the Company Taichung Commercial Financing Leasing $ 395,159 Investment in $-$ 395,159 $ - $ 395,159 100% ( $ 702 ) $ 394,934 $ - Bank Leasing (Suzhou) ( CNY Mainland China ( CNY ( CNY ( CNY ( CNY Co., Ltd. 84,901 thousand) via a company in 84,901 thousand) 84,901 thousand) 151 thousand) 84,750 existence in a thousand) third country/territory

Compliance with the limit of investment in Mainland China set forth by Accumulated investment from Taiwan to Mainland China at ending Amount of investment approved by Investment Commission of MOEA Investment Commission of MOEA (Note 2) $ 395,159 $ 395,159 $ 592,063

263 Note 1: Investment return/loss has been recognized on the basis of the audited financial statements Note 2: It is the limit calculated by the applicant – Taichung Commercial Bank Lease Enterprise in accordance with requirements set forth in “Principle of Review of Investment or Technology Joint Venture in Mainland China” of Investment Commission of MOEA. Note 3: All foreign currencies involved were converted into NTD on the basis of the exchange rate applicable at the end of the period and the average exchange rate applicable in the period as of the financial reporting date (CNY1=NTD$4.66, CNY1=NTD4.66).

‐ 263 - Stock Code: 2812

Taichung Commercial Bank Co., Ltd.

Disclosures by securities dept. 2012

264‐ 264 -

Taichung Commercial Bank Co., Ltd. Balance sheet of securities dept. December 31, 2012 and 2011 Unit: NTD thousand

December 31, 2012 December 31, 2011 December 31, 2012 December 31, 2011 Code Assets Amount ％ Amount ％ Code Liabilities and Shareholders’ Equity Amount ％ Amount ％ Current assets Current liabilities 101010 Cash and cash equivalents (Note 2 & $ 62,952 7 $ 5,446 1 201310 Guarantee deposits received for $ 20,043 2 $ 5,778 1 4) financing instruments (Note 2) 101630 Accounts receivable (Notes 2 & 5) 12,107 1 9,930 1 201320 Deposit payable for securities 21,773 3 6,382 1 financing (Note 2) 101310 Securities receivable financing (Note 325,878 38 221,514 26 201670 Other payables (Note 12) 8,759 1 9,018 1 2) 101330 Refinancing deposit receivable 3,531 - 109 - 201000 Total current liabilities 50,575 6 21,178 3 101000 Total current assets 404,468 46 236,999 28 Other liabilities Fund and investment 203010 Reserve for default loss (Notes 2 & - - - - 13) 102500 Held-to-maturity financial assets 203990 Other liabilities - other 487 - 1 - (Notes 2 & 6) 248,140 29 324,540 39 203000 Total other liabilities 487 - 1 -

Fixed assets (Notes 2 & 7) 211000 Inter-branch transactions (Note 15) 31,318 3 - - 103030 Equipment 33,732 4 22,335 3 265 103XX9 Less: accumulated depreciation ( 11,044) ( 1 ) ( 6,056) (1) 906003 Total liabilities 82,380 9 21,179 3 103000 Fixed assets – net 22,688 3 16,279 2 Shareholders’ equity Other assets 301110 Appropriation working fund (Notes 800,000 92 800,000 95 1 and 2) 105010 Business security bond (Notes 8 & 155,000 18 130,000 16 Retained earnings 16) 105020 Settlement payment fund (Note 9) 12,021 1 26,128 3 304040 (Loss carried forward) Unpaid ( 12,925 ) ( 1) 20,711 2 incomes 105030 Refundable deposits 5,463 1 417 - 906004 Total shareholders’ equity 787,075 91 820,711 97 105040 Deferred charges (Notes 2 & 10) 15,287 2 17,236 2 105990 Other assets - others 5,184 - 890 - 105000 Total other assets 192,955 22 174,671 21

111000 Inter-branch transactions (Note 15) - - 88,738 10

121000 Brokerage trading – net (Notes 2 & 11) 1,204 - 663 -

906001 Total assets $ 869,455 100 $ 841,890 100 906002 Total Liabilities and Shareholders’ $ 869,455 100 $ 841,890 100 Equity

The notes attached shall constitute an integral part of this financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013)

Chairman: Jin-Fong Soo President: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

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Taichung Commercial Bank Co., Ltd. Income Statements of Securities Department Years Ended December 31, 2012 and 2011 Unit: NTD thousand

2012 2011 Code Amount % Amount % Revenue (Note 2) 401000 Brokerage fee revenue $ 56,865 71 $ 58,243 70 421200 Interest revenue 23,762 29 25,115 30 440000 Non-operating revenue and gain 87 - 109 - 400000 Total revenue 80,714 100 83,467 100

Expenses 501000 Brokerage fee expenses 2,791 4 2,924 4 538000 Other service fee expenses 1,723 2 2,035 2 521200 Interest expenditure 45 - 10 - 530000 Operating expenses (Note 14) 82,338 102 46,463 56 540000 Non-operating expenses and loss 6,742 8 7,082 8 500000 Total expenses 93,639 116 58,514 70

902001 Net (loss) profit before taxation ( 12,925 ) ( 16 ) 24,953 30

551000 Income tax expenses (Notes 2) - - ( 4,242 ) ( 5 )

902005 Net (loss) profit of current period ( $ 12,925 ) ( 16 ) $ 20,711 25

The notes attached shall constitute an integral part of this financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013)

Chairman: Jin-Fong Soo President: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

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Taichung Commercial Bank Co., Ltd. Notes to financial statements of securities dept. 2012 and 2011 (In Thousands of New Taiwan Dollars, unless otherwise specified)

1. Organization, Functions and Operations The Bank’s Securities Department obtained the securities brokerage license issued by the competent authority on July 31, 1989 and formally started operation on August 12, 1989. Furthermore, Yuanlin Securities Branch, Taipei Securities Branch, and Zhongli Securities Branch were established in 2011 upon approval of the competent authority. Principal business: Processing orders for the trading of securities in TWSE or GTSM and the margin trade and short sales of securities, futures introducing brokerage, and any other securities business approved by the competent authority. As of Dec. 31, 2012, its appropriation working fund has been NTD800,000 thousand. As of December 31, 2012 and 2011, numbers of employees of the Securities Dept. were 75 persons and 72 persons, respectively. 2. Summary of significant accounting policies The financial statements of Securities Dept. have been prepared in conformity with the “Rules Governing the Preparation of Financial Statements of Securities Firms”, “Business Entity Accounting Act”, “Regulation on Business Entity Accounting Handling”, and accounting principles generally accepted. The Bank’s significant accounting policies are summarized as follows: (1) Accounting estimates It is necessary to apply reasonable estimates to provide financial asset valuation, allowance for bad debt, depreciation and amortization, and employee bonus when preparing financial statements in accordance with said guidelines, rules and principles. Since the estimates are subject to individual judgment, the actual result may vary. (2) Standards in differentiating current and non-current assets and liabilities Current assets include cash and cash equivalents, assets held for trading, and assets estimated to be realized within 12 months as of the balance sheet date. Fixed assets, intangible assets, and any assets other than current assets are included in non-current items. Current liabilities are debts incurred for trading and to be paid off within 12 months as of the balance sheet. Any liabilities other than current liabilities are classified as non-current items. (3) Cash equivalents Cash equivalents are commercial paper cashable and matured upon expiration of three months as of the investment date, bank acceptance, and RP investment at book value similar to fair value. (4) Allowance for bad debt The Company assesses possible impairment of the account receivables on each balance sheet day. If objective indicating the occurrence of isolated or

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series of events after the account receivables have been initially recognized, to the extent that the estimated cash flows of the account receivables in the future will be influenced, such account receivables shall be subject to recognition for impairment. Objective evidence for impairment may include: 1. The debtor encounters significant financial difficulties; or 2. Accounts receivable are overdue; or 3. High probability of debtor declaring bankruptcy or undertaking of other financial restructuring. After certain accounts receivable are individually evaluated and indicate no sign of impairment, the entire credit portfolio is evaluated for impairment. Objective evidence of impairment for the accounts receivable may include the historical collection experience of the Bank, increase of delayed payment of the portfolio, and changes in observable national or regional economic situations relating to default on accounts receivable. Impairment loss to be recognized is the difference between the carrying value of the asset and the estimated future cash flow (has reflected the effect of collateral or guarantee) discounted at the original effective interest rate of accounts receivable. The carrying value of accounts receivable is reduced through a valuation allowance item. When accounts receivable are unrecoverable, the relevant allowance account should be written off. Subsequent recovery of any account written off is credited to the valuation allowance item. A change in the carrying value of the valuation allowance item is recognized as bad debt loss. (5) Securities receivable financing Financing to investors who buy stock and securities shall be stated as securities receivable financing in the transaction of securities financing. Stock bought by investors upon the financing shall be provided as collateral in whole recorded in memorandum entries, and be returned to the investors after the investors’ repayment of the financing. (6) Held-to-maturity financial assets Held-to-maturity financial assets shall be stated at cost upon amortization. When recognizing the held-to-maturity financial assets initially, such assets shall be evaluated based on fair value, plus the acquisition or issue price. The purchase or sale of financial assets in customary transactions shall be subject to accounting on the date of transaction. Where there is evidence showing impairment, it shall be stated as the loss of impairment. Where the decrease in impairment is obviously related to the events subsequent to recognition of impairment, it shall be reversed and stated as income for the current period, provided that the book value upon reverse shall be no more than the cost after amortization if the impairment is not recognized. (7) Fixed assets Fixed assets are stated at acquisition or at construction costs less cumulative depreciation. Major updates and improvements were treated as capital spending. Routine repair and maintenance expenditures were expensed

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during the year of incursion. Depreciation thereof is provided using the average method and in accordance with the useful life provided in the “Table of Service Life of Fixed assets” promulgated by the Executive Yuan. Upon the scrapping or sale of fixed assets, the related cost and cumulative depreciation shall be written off, and any related income is charged to non-operating revenue in the year and any related loss is charged to non-operating expenses in the year. (8) Deferred charges Deferred charges and computer softwares are stated at cost and amortized on a straight-line basis over five years. (9) Impairment of Assets According to the Statement of Financial Accounting Standards No. 35 on Accounting Principles on Asset Impairment, it is necessary to evaluate the balance sheet date for whether there is any sign showing that assets (including individual assets or cash generation units) might suffer material impairment. If there is, it is necessary to evaluate the collectable amount of the assets. If their book value exceeds the collectable amount, a loss on asset impairment shall be recognized. Where a loss on asset impairment does not exist, or is decreased, the gain reversed from asset impairment shall be recognized insofar as it does not exceed the originally recognized impairment loss, provided that the book value upon reversal shall not exceed the book value of the assets less depreciation or amortization to be provisioned when no impairment losses of the assets are recognized. (10) Debit (credit) items for trade brokerage The relevant titles for brokerage trading include debit items for trade brokerage (bank deposits-settlement accounts receivable price of securities purchased for customers, receivable accounts for settlement and margin trading) and credit items for trade brokerage (payable price of securities sold for customers, payable settlement accounts and settlement price). The balance after offsetting debit items against credit items shall be recorded. (11) Guarantee deposits received for financing instruments and deposit payable for securities financing The guarantee received for financing instruments shall be stated as the guarantee deposits received for financing instruments in the transactions of financing instruments of marketable securities. The proceeds collected from sale of financing instruments (less securities exchange tax, brokerage fee and service fee for financing instruments) shall be provided as collateral and stated as deposit payable for securities financing. Stock loaned to customers for financing instruments shall be recorded in memorandum entries. Guarantee deposits received for financing instruments and deposit payable for securities financing shall be returned upon customer’s repayment and settlement of the marketable securities. (12) Reserve for default loss Securities firms engaging in brokerage trading of marketable securities are required to provide 0.0028% of the monthly transaction volume as the default

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loss provision until the balance of this provision reaches NTD200,000 thousand. 6. Held-to-maturity financial assets

In accordance with Directive Jin-Guan-Yin-Fa-Zi No. 10010000440 and December 31, 2012 December 31, 2011 Directive Jin-Guan-Zheng-Quan-Zi No. 09900738571, effective January 1, Government bonds $248,140 $ 324,540 2011, “Reserve for trading loss” and “Reserve for default loss” should be transferred as special reserve. (13) Recognition of revenue 7. Fixed assets 1. Brokerage fee revenue shall be recognized on the trading date of 2012 2011 Transportation Transportation brokerage trading. and and communicatio Miscellaneous communicatio Miscellaneous 2. The interest revenue from financing instrument of marketable securities n equipment equipment Total n equipment equipment Total shall be recognized on an accrual basis in the duration of financing. Cost Balance, (14) Corporate Income Tax beginning $ 1,033 $ 21,302 $ 22,335 $ 238 $ 9,764 $ 10,002 Increase 2 11,524 11,526 795 12,305 13,100 Intra-period tax allocation is made for corporate income tax based on the Decrease - ( 129 ) ( 129 )- ( 767 ) ( 767 ) department’s income. Balance, ending 1,035 32,697 33,732 1,033 21,302 22,335 Accumulated (15) Significant undertaking or contingency depreciation Balance, If assets are very likely to have already impaired or generated liabilities on beginning 185 5,871 6,056 115 4,682 4,797 the balance sheet date and it is possible to estimate the reasonable loss, it shall Increase 171 4,866 5,037 70 1,946 2,016 Decrease - ( 49 ) ( 49 )- ( 757 ) ( 757 ) be recognized as a loss for the current period. If the loss is very likely to have Balance, ending 356 10,688 11,044 185 5,871 6,056 already been caused but it is impossible to estimate the loss, it shall be Net, ending $ 679 $ 22,009 $ 22,688 $ 848 $ 15,431 $ 16,279 disclosed in the notes to the financial statement.

(16) Appropriation working fund 8. Business guarantee The working fund appropriated to Securities Dept. if the Bank assumes December 31, 2012 December 31, 2011 securities brokerage concurrently. Securities Brokerage business 3. Reasons and effects of changes in accounting principles security bond $ 80,000 $ 80,000 Accounting for financial instruments Financing and financing instrument security bond 50,000 50,000

Effective January 1, 2011, the Bank adopted revised SFAS No. 34 The margin of Futures IB “Accounting for Financial Instruments”. Main revisions include: (1) the Operation 25,000 - application of SFAS No. 34 to original loans and receivables; (2) a new regulation $155,000 $ 130,000 concerning impairment of financial assets measured at amortized cost when related terms are revised at financial difficulties; and (3) the debtor’s accounting treatment when debt terms are revised. This accounting change had no significant (1) According to the Regulations Governing Securities Firms, a securities firm, impact on 2011 net income. upon incorporation, shall lodge an operation bond of NTD50,000 thousand for 4. Cash and cash equivalents the headquarters and of NTD10,000 thousand for each branch with the designated bank in cash, government bonds, or bank debentures. December 31, 2012 December 31, 2011 Current deposits $ 62,952 $ 5,446 (2) According to Regulations Governing the Conduct of Securities Trading Margin Purchase and Short Sale Operations by Securities Firms, a securities firm shall 5. Accounts receivable lodge an operation bond NTD50,000 thousand for securities trading margin December 31, 2012 December 31, 2011 purchase and short sale operations. Interests receivable $ 11,043 $ 9,260 (3) According to the “Regulations Governing Futures Introducing Broker Business Other receivables 1,064 670 by Securities Firms”, for securities firms running futures introducing broker 12,107 9,930 business, the head office of the firm shall deposit NTD10,000 thousand while Less: allowance for bad debt - - each branch shall deposit NTD5,000 thousand as margins. As of December 31 $ 12,107 $ 9,930 2012, the Company had 3 branches engaging in futures introducing broker operation.

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6. Held-to-maturity financial assets December 31, 2012 December 31, 2011 Government bonds $248,140 $ 324,540

7. Fixed assets 2012 2011 Transportation Transportation and and communicatio Miscellaneous communicatio Miscellaneous n equipment equipment Total n equipment equipment Total Cost Balance, beginning $ 1,033 $ 21,302 $ 22,335 $ 238 $ 9,764 $ 10,002 Increase 2 11,524 11,526 795 12,305 13,100 Decrease - ( 129 ) ( 129 )- ( 767 ) ( 767 ) Balance, ending 1,035 32,697 33,732 1,033 21,302 22,335 Accumulated depreciation Balance, beginning 185 5,871 6,056 115 4,682 4,797 Increase 171 4,866 5,037 70 1,946 2,016 Decrease - ( 49 ) ( 49 )- ( 757 ) ( 757 ) Balance, ending 356 10,688 11,044 185 5,871 6,056 Net, ending $ 679 $ 22,009 $ 22,688 $ 848 $ 15,431 $ 16,279

8. Business guarantee December 31, 2012 December 31, 2011 Securities Brokerage business security bond $ 80,000 $ 80,000 Financing and financing instrument security bond 50,000 50,000 The margin of Futures IB Operation 25,000 - $155,000 $ 130,000

(1) According to the Regulations Governing Securities Firms, a securities firm, upon incorporation, shall lodge an operation bond of NTD50,000 thousand for the headquarters and of NTD10,000 thousand for each branch with the designated bank in cash, government bonds, or bank debentures. (2) According to Regulations Governing the Conduct of Securities Trading Margin Purchase and Short Sale Operations by Securities Firms, a securities firm shall lodge an operation bond NTD50,000 thousand for securities trading margin purchase and short sale operations. (3) According to the “Regulations Governing Futures Introducing Broker Business by Securities Firms”, for securities firms running futures introducing broker business, the head office of the firm shall deposit NTD10,000 thousand while each branch shall deposit NTD5,000 thousand as margins. As of December 31 2012, the Company had 3 branches engaging in futures introducing broker operation.

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9. Settlement security bond (3) According to the “GTSM Regulations Governing the Electronic Bond Trading December 31, 2012 December 31, 2011 System Bond Payment and Settlement Reserve”, the head office of the securities firm engaged in trading of bonds in Electronic Bond Trading System TSEC settlement payment fund $ 7,892 $ 17,621 (EBTS) shall pay the minimum reserve in full in cash. GreTai Securities Market settlement fund 4,129 8,507 10. Deferred charges $ 12,021 $ 26,128 2012 2011 Balance, beginning $ 17,236 $ 6,497 Increase 3,153 13,393 (1) According to the “Regulations Governing Securities Firms”, securities firms Amortization in the current period ( 5,102 ) ( 2,654 ) shall allocate funds for clearing and settlement specified as follows: Balance, ending $ 15,287 $ 17,236 1. Securities brokerage firms shall, before starting their operation, make an initial deposit amounting to NTD15,000 thousand, and shall deposit at specific percentage of the net payment and net collection from the 11. Debit (credit) items for trade brokerage - net transactions of trade orders in the trading of securities listed in TWSE December 31, 2012 December 31, 2011 after the operation within 10 days after the end of each quarter to the end Debit items for trade brokerage: of the fiscal year. After the first anniversary of operation, securities Receivable price of securities brokerage firms may reduced the initial deposit to NTD3,500 thousand, purchased for customers $ 196,593 $ 120,829 and shall base on the net payment and net collection from the Receivable accounts of sale for transactions of trade orders in the trading of securities listed in TWSE in customers 206,160 108,849 the aforementioned proportions to make additional payment to TWSE if 402,753 229,678 the total is falling short of the initial deposit or get a refund if the total is in excess of the initial deposit from TWSE by the end of January of each year. December 31, 2012 December 31, 2011 2. Whenever adding a domestic branch, the securities firm shall lodge the Credit items for trade brokerage: settlement fund NTD3,000 thousand to TSEC prior to starting business. Payable price of securities sold Notwithstanding, after the year following business start, the amount to be for customers ( $ 205,235 ) ( $ 108,357 ) lodged shall be reduced to NTD500 thousand. Payable accounts of purchase for customers ( 196,314 ) ( 120,658 ) (2) According to the “Regulations Governing Joint-Responsibility Settlement Fund ( 401,549 ) ( 229,015 ) of GTSM”, securities firms shall deposit fund for clearing as follows: Debit items for trade brokerage - 1. Securities firms shall, before starting their operation, make an initial net $ 1,204 $ 663 deposit amounting to NTD6,000 thousand, and shall deposit at specific

percentage of the net payment and net collection from the transactions of trade orders in the trading of securities listed in GTSM after the operation 12. Other payables within 10 days after the end of each quarter to the end of the fiscal year. December 31, 2012 December 31, 2011 The aforementioned proportions shall be set by GTSM at the approval of Payable income tax $ - $ 4,242 the competent authority. After the first anniversary of operation, Accrued expenses 8,118 4,433 securities brokerage firms may reduced the initial deposit to NTD1,500 Others 641 343 thousand, and shall base on the net payment and net collection from the $ 8,759 $ 9,018 transactions of trade orders in the trading of securities listed in GTSM in the aforementioned proportions to make additional payment to GTSM f the total is falling short of the initial deposit or get a refund if the total is 13. Reserve for default loss in excess of the initial deposit from GTSM by the end of January of each year. 2012 2011 Balance, beginning $ - $ 23,507 2. Securities shall, before establishing a new branch location, make an Deposit in the current period - - initial deposit of NTD1,500 thousand in lump sum to GTSM and reduce Write off in the current period - ( 23,507 ) the initial deposit to NTD250 thousand after the first anniversary of the Balance, ending $ - $ - operation at the new branch location.

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(3) According to the “GTSM Regulations Governing the Electronic Bond Trading System Bond Payment and Settlement Reserve”, the head office of the securities firm engaged in trading of bonds in Electronic Bond Trading System (EBTS) shall pay the minimum reserve in full in cash. 10. Deferred charges 2012 2011 Balance, beginning $ 17,236 $ 6,497 Increase 3,153 13,393 Amortization in the current period ( 5,102 ) ( 2,654 ) Balance, ending $ 15,287 $ 17,236

11. Debit (credit) items for trade brokerage - net December 31, 2012 December 31, 2011 Debit items for trade brokerage: Receivable price of securities purchased for customers $ 196,593 $ 120,829 Receivable accounts of sale for customers 206,160 108,849 402,753 229,678

December 31, 2012 December 31, 2011 Credit items for trade brokerage: Payable price of securities sold for customers ( $ 205,235 ) ( $ 108,357 ) Payable accounts of purchase for customers ( 196,314 ) ( 120,658 ) ( 401,549 ) ( 229,015 ) Debit items for trade brokerage - net $ 1,204 $ 663

12. Other payables December 31, 2012 December 31, 2011 Payable income tax $ - $ 4,242 Accrued expenses 8,118 4,433 Others 641 343 $ 8,759 $ 9,018

13. Reserve for default loss 2012 2011 Balance, beginning $ - $ 23,507 Deposit in the current period - - Write off in the current period - ( 23,507 ) Balance, ending $ - $ -

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In accordance with Directive Jin-Guan-Yin-Fa-Zi No. 10010000440 and 21. Disclosure of financial instruments Directive Jin-Guan-zheng-Quan-Zi No. 09900738571, effective January 1, 2011, (1) Information about fair value reserve for default loss is transferred as special reserve. However, the Securities Department is the concurrently operating securities firm of the Bank, therefore, December 31, 2012 December 31, 2011 internal transaction is written off. Book Value Fair value Book Value Fair value Non-financial derivatives 14. Employee expenses, depreciation, depletion, and amortization Assets 2012 2011 Financial assets at fair Employee expenses value equivalent to Salaries and wages $ 42,253 $ 22,979 Book Value $ 572,693 $ 572,693 $ 482,528 $ 482,528 Labor insurance and national Held-to-maturity health insurance 3,663 1,932 financial assets 248,140 248,930 324,540 326,853 Pension expenses 1,970 895 Liabilities Other employee expenses 1,890 868 Financial liabilities at Depreciation expenses 5,037 2,016 fair value Amortization expenses 5,102 2,654 equivalent to Book Value 81,893 81,893 16,936 16,936 15. Important transactions with stakeholders December 31, December 31, (2) Securities Dept. applies the following methods and hypotheses for the Name Title 2012 2011 valuation of fair value of financial instruments: Taichung Commercial Internal transaction ( $ 31,318 ) $ 88,738 1. The Book Value of short-term financial instruments stated in the balance Bank Co., Ltd. debit (credit ) sheet shall be the fair value of such instruments. The reason is that the balance maturity date of these instruments is close and it would be reasonable to use the Book Value in the valuation of fair value. This method is applied to cash and cash equivalents, receivable accounts, securities Brokerage fees generated from brokerage trading between Securities Dept. receivable financing, refinancing deposit receivable, guarantee deposits and Treasury Dept. is the adjustment of inter-branch transactions. The trading received for financing instruments, deposit payable for securities price thereof is not materially different from that offered to the general customers. financing, other payables (exclusive of payable income tax), and debit 16. Pledged assets (credit) items for trade brokerage. The pledged assets of Securities Dept. are stated as follows: 2. The open market price of held-to-maturity financial assets, if any, shall be the fair value of such assets. Where there is no such market price 2012 2011 available, the fair value shall be estimated using the evaluation method. Held-to-maturity financial The estimation and hypotheses used in the evaluation method adopted by assets-government bond $ 155,000 $ 130,000 the Bank’s Securities Dept. are identical to information regarding the estimation and hypotheses applied by market participants in setting the price of the financial instruments, and such information is available to the

Securities Brokerage business security bond Bank’s Securities Dept. 17. Significant undertaking or contingent liabilities: None 3. The book value of operation bond, settlement fund, and inter-branch 18. Significant disaster loss: None transaction shall be the fair value thereof. 19. Information regarding transactions of derivatives: None 20. Significant subsequent events: None

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21. Disclosure of financial instruments (1) Information about fair value December 31, 2012 December 31, 2011 Book Value Fair value Book Value Fair value Non-financial derivatives Assets Financial assets at fair value equivalent to Book Value $ 572,693 $ 572,693 $ 482,528 $ 482,528 Held-to-maturity financial assets 248,140 248,930 324,540 326,853 Liabilities Financial liabilities at fair value equivalent to Book Value 81,893 81,893 16,936 16,936

(2) Securities Dept. applies the following methods and hypotheses for the valuation of fair value of financial instruments: 1. The Book Value of short-term financial instruments stated in the balance sheet shall be the fair value of such instruments. The reason is that the maturity date of these instruments is close and it would be reasonable to use the Book Value in the valuation of fair value. This method is applied to cash and cash equivalents, receivable accounts, securities receivable financing, refinancing deposit receivable, guarantee deposits received for financing instruments, deposit payable for securities financing, other payables (exclusive of payable income tax), and debit (credit) items for trade brokerage. 2. The open market price of held-to-maturity financial assets, if any, shall be the fair value of such assets. Where there is no such market price available, the fair value shall be estimated using the evaluation method. The estimation and hypotheses used in the evaluation method adopted by the Bank’s Securities Dept. are identical to information regarding the estimation and hypotheses applied by market participants in setting the price of the financial instruments, and such information is available to the Bank’s Securities Dept. 3. The book value of operation bond, settlement fund, and inter-branch transaction shall be the fair value thereof.

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(3) The fair value of financial assets and financial liabilities is determined by open regulations defined by the securities competent authority, it also defines its market quotation and evaluated using the evaluation method: own management regulations providing that concentrated transactions shall Determined by open market Evaluated under evaluation exceed the specific ratio or limit. quotation method (8) Futures and options: December December December December 1. Contract amount and credit risk 31, 2012 31, 2011 31, 2012 31, 2011 Financial assets Credit risk as referred to is the risk deriving from the inability of the Held-to-maturity counterparties to perform the contracts under the agreed terms and financial assets $ 248,930 $ 326,853 $ - $ - conditions at maturity. The counterparties of the Company are futures commission merchants and the traders shall deposit a fund for clearing and settlement on the exposure as surety for performance. Credit risk is (4) The financial assets recognized in December 31, 2012 and 2011 based on the not anticipated. changes in fair value estimated under interest rate changes were NTD248,140 2. Market risk thousand and NTD324,540 thousand. Market risk refers to the risks deriving from the fluctuation of the (5) Securities Dept.’s total interest revenues of financial instruments other than prices of stock price index futures and TWSE index warrants in market. those at fair value, and those at fair value through income statement, in 2012 Market risk of interest rate index futures refer to the risk deriving from and 2011 were NTD23,762 thousand and NTD25,115 thousand. The total the fluctuation of interest rate in market. interest expenses thereof were NTD45 thousand and NTD10 thousand. 3. Liquidity risk, solvency risk, and the uncertainty of cash flow needs in (6) Information about financial risk: the future. 1. Market Risk The Company is engaged in the trading of stock price index futures The equity securities and instruments contracts traded by Securities and TWSE index warrants with its working capital. There is no risk Dept. are evaluated based on fair value and increased/decreased subject deriving from financing. to the variation in evaluation parameters, e.g. object market price, market 4. The presentation of derivative trade in the financial statements interest rate and maturity date, and risk exposure reduced by hedging strategies. Unsettled futures contracts: none. 2. Credit Risk 22. Others: The source of credit risk is brokerage trading. Prior to the The General Meeting of shareholders of the Company passed by motion of transaction, Securities Dept. will evaluate the trading counterpart’s credit assigning related business run by the Securities Department (including assets, and invoke the credit rating issued by an external organization. liabilities, and business value) to Taichung Commercial Bank Consolidated Meanwhile, Securities Dept. will set the trading limit with respect to the Securities Co., Ltd. through split up with business value at NTD850,000 thousand trading counterparts or customers of different credit ratings to control the while the latter shall issue 85,000 thousand share at NTD10/share totaled default loss, if any. NTD850,000 thousand as the transaction price. The split up date was originally made on January 2 2013, but was postponed to March 1 2013 when applying with 3. Liquidity Risk Financial Supervisory Commission (FSA) later. FSA approved the application in The transactions conducted by Securities Dept. are of specific Letter Jin-Guan-zheng-Quan-Zi No. 1010059030 with the split up date set at May liquidity in the market and, therefore, the liquidity risk is low. The 2 2013. After the split up, Taichung Commercial Bank Consolidated Securities Bank has set the limit of quantity for the trading objects of marketable Co., Ltd. shall be a wholly-owned subsidiary of the Company. securities. 23. Financial information for operating segments 4. Cash flow risk estimated under interest rate changes The Bank's Securities Dept. primarily engages in brokerage trading. The The bond investment by Securities Dept. is investment at fixed income and identifiable assets account for more than 90% of the consolidated interest rate. Therefore, the fluctuation in market interest rate will not income and assets of Securities Dept. Therefore, it is not necessary to disclose the vary the effective interest rate of bond investment or cause fluctuation in information by operating segments. future cash flow. (7) Information regarding concentrated credit risk Securities Dept. did not concentrate any transactions of marketable securities on any specific object or trading counterpart. In addition to

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regulations defined by the securities competent authority, it also defines its own management regulations providing that concentrated transactions shall exceed the specific ratio or limit. (8) Futures and options: 1. Contract amount and credit risk Credit risk as referred to is the risk deriving from the inability of the counterparties to perform the contracts under the agreed terms and conditions at maturity. The counterparties of the Company are futures commission merchants and the traders shall deposit a fund for clearing and settlement on the exposure as surety for performance. Credit risk is not anticipated. 2. Market risk Market risk refers to the risks deriving from the fluctuation of the prices of stock price index futures and TWSE index warrants in market. Market risk of interest rate index futures refer to the risk deriving from the fluctuation of interest rate in market. 3. Liquidity risk, solvency risk, and the uncertainty of cash flow needs in the future. The Company is engaged in the trading of stock price index futures and TWSE index warrants with its working capital. There is no risk deriving from financing. 4. The presentation of derivative trade in the financial statements Unsettled futures contracts: none. 22. Others: The General Meeting of shareholders of the Company passed by motion of assigning related business run by the Securities Department (including assets, liabilities, and business value) to Taichung Commercial Bank Consolidated Securities Co., Ltd. through split up with business value at NTD850,000 thousand while the latter shall issue 85,000 thousand share at NTD10/share totaled NTD850,000 thousand as the transaction price. The split up date was originally made on January 2 2013, but was postponed to March 1 2013 when applying with Financial Supervisory Commission (FSA) later. FSA approved the application in Letter Jin-Guan-zheng-Quan-Zi No. 1010059030 with the split up date set at May 2 2013. After the split up, Taichung Commercial Bank Consolidated Securities Co., Ltd. shall be a wholly-owned subsidiary of the Company. 23. Financial information for operating segments The Bank's Securities Dept. primarily engages in brokerage trading. The income and identifiable assets account for more than 90% of the consolidated income and assets of Securities Dept. Therefore, it is not necessary to disclose the information by operating segments.

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24. Information about important transactions No. Item Remark 1 Loans to others. None 2 Endorsements/guarantees to others. None Acquisition amount of real estate reaching NTD100,000 3 None thousand or more than 20% of the Paid-in shares capital. Disposition amount of real estate reaching NTD100,000 4 None thousand or more than 20% of the Paid-in shares capital. Total discount of service charges in transaction with 5 None stakeholder reaching more than NTD5,000 thousand. Accounts receivable-related party reaching NTD100,000 6 None thousand or more than 20% of the Paid-in shares capital.

25. Information regarding investees No. Item Remark 1 Information regarding investee’s name and location, et al. None 2 Loans to others by investee None 3 Endorsement/guarantee to others by investee None Acquisition amount of real estate reaching NTD100,000 4 None thousand or more than 20% of the Paid-in shares capital. Disposition amount of real estate reaching NTD100,000 5 None thousand or more than 20% of the Paid-in shares capital. Total discount of service charges in transaction with 6 None stakeholder reaching more than NTD5,000 thousand. Accounts receivable-related party reaching NTD100,000 7 None thousand or more than 20% of the Paid-in shares capital.

26. Information regarding investment in the territory of mainland china:

‐ 278278 -

Taichung Commercial Bank Co., Ltd. and Subsidiaries

Consolidated Financial Statements and External Auditor’s Audit Report 2012 and 2011

Address: No. 87, Min Chuan Road, West District, Taichung City, TEL.: (04) 22236021

279- 213 -

Statement of Declaration Auditor’s Report

The companies to be included by the Bank into the consolidated financial statements of To: Taichung Commercial Bank Co., Ltd. affiliates, in accordance with the “Criteria Governing Preparation of Report on Affiliations,

Consolidated Business Reports and Consolidated Financial Statements of Affiliated Enterprises” We have audited the accompanying consolidated balance sheet of Taichung Commercial in 2012 (from Jan. 1 to Dec. 31, 2012) are identical to those to be included into the consolidated Bank Co., Ltd. and its subsidiaries as of December 31, 2012 and 2011, and the related financial statements of Parent enterprise and subsidiaries prepared under Statement of Financial consolidated statements of income, consolidated statement of changes in shareholders’ equity Accounting Standards No. 7 on “Consolidated Financial Statements”. As well, the information to and consolidated statement of cash flows for the years then ended. Said financial statements are be disclosed in the consolidated financial statements of affiliated enterprises has been disclosed the responsibility of the Bank’s management. Our responsibility is to express an opinion on the in said consolidated financial statements of Parent enterprise and subsidiaries. Therefore, the consolidated financial statement based on our audits. We did not audit the financial statements Bank will not prepare the consolidated financial statements of affiliated enterprises separately. and related disclosures of some of the subsidiaries included in the consolidated financial In witness thereof, the Declaration is hereby presented. statements of the Company. The aforementioned financial statements were audited by third party

auditors. As of December 31 2012, the total assets of the aforementioned subsidiaries amounted

to NTD1, 489,516 thousand, which accounted for 0.33% of the consolidated financial statements.

Total liabilities amounted to NTD563, 464 thousand, which accounted for 0.14% of the total

liabilities. Net profit in 2012 amounted to NTD19, 665 thousand, which accounted for 0.28% of Company name: Taichung Commercial Bank Co., Ltd. the consolidated net profit. Corporate earnings amounted to NTD13, 705 thousand, which

Responsible Person: Jin-Fong Soo amounted to (0.41%) of the total earnings before taxation. We also did not audit the financial

statements of the investees recognized under the equity method. These financial statements were

audited by third party auditors. As such, the amount of long-term equity investments and the

investment return/loss recognized under the equity method as stated in the aforementioned

consolidated financial statements are based on the reports of third part auditors. The long-term

equity investments of the Company recognized under the equity method amounted to NTD126,

683 thousand and NTD 127,811 thousand as of December 31 2012 and December 31 2011, March 13, 2013 respectively, on the basis of the reports prepared by third party auditors. Each accounted for

0.03% of the consolidated total assets. The investment return/loss recognized in the periods of January 1 to December 31, 2012 and 2011 amounted to NTD1, 128 thousand and NTD10, 262 thousand, which accounted for (0.03%) and (0.53%) of the consolidated earnings before taxation of respective periods.

- 214280 - - 215 -

Auditor’s Report

To: Taichung Commercial Bank Co., Ltd.

We have audited the accompanying consolidated balance sheet of Taichung Commercial Bank Co., Ltd. and its subsidiaries as of December 31, 2012 and 2011, and the related consolidated statements of income, consolidated statement of changes in shareholders’ equity and consolidated statement of cash flows for the years then ended. Said financial statements are the responsibility of the Bank’s management. Our responsibility is to express an opinion on the consolidated financial statement based on our audits. We did not audit the financial statements and related disclosures of some of the subsidiaries included in the consolidated financial statements of the Company. The aforementioned financial statements were audited by third party auditors. As of December 31 2012, the total assets of the aforementioned subsidiaries amounted to NTD1, 489,516 thousand, which accounted for 0.33% of the consolidated financial statements. Total liabilities amounted to NTD563, 464 thousand, which accounted for 0.14% of the total liabilities. Net profit in 2012 amounted to NTD19, 665 thousand, which accounted for 0.28% of the consolidated net profit. Corporate earnings amounted to NTD13, 705 thousand, which amounted to (0.41%) of the total earnings before taxation. We also did not audit the financial statements of the investees recognized under the equity method. These financial statements were audited by third party auditors. As such, the amount of long-term equity investments and the investment return/loss recognized under the equity method as stated in the aforementioned consolidated financial statements are based on the reports of third part auditors. The long-term equity investments of the Company recognized under the equity method amounted to NTD126, 683 thousand and NTD 127,811 thousand as of December 31 2012 and December 31 2011, respectively, on the basis of the reports prepared by third party auditors. Each accounted for 0.03% of the consolidated total assets. The investment return/loss recognized in the periods of January 1 to December 31, 2012 and 2011 amounted to NTD1, 128 thousand and NTD10, 262 thousand, which accounted for (0.03%) and (0.53%) of the consolidated earnings before taxation of respective periods.

- 215281 -

We conducted our audit in accordance with the “Regulations Governing Auditing and Attestation of Financial Statements by Certified Public Accountants”, and generally accepted auditing standards in the Republic of China. Those standards require that we plan and perform the audit to obtain reasonable assurance as to whether the consolidated financial statement is free of material misstatement. An audit includes examining, through random sampling, 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 consolidated financial statement presentation. We believe that our audit and the other auditors' report may provide a reasonable basis for our opinion. In our opinions, on the basis of our audit findings and the reports of third party auditors, the consolidated financial statements as stated in the 1st paragraph, in all material aspects, are prepared in conformity to the Regulations Governing the Preparation of Financial Statements by Public Banks, Regulations Governing the Preparation of Financial Statements by Securities Firms, and the accounting principle generally accepted in the Republic of China, which can fairly present the consolidated financial position of Taichung Commercial Bank Co., Ltd. and its subsidiaries, in the end of January 1 to December 31, 2012 and 2011, and the consolidated results of operation and consolidated cash flows in the periods of January 1 to December 31, 2012 and 2011. As described in Note 3 to the financial statements, Taichung Commercial Bank Co., Ltd. and subsidiaries, since January 1, 2011, has adopted revised SFAS No. 34 “Accounting for Financial Instruments” and newly issued SFAS No. 41 “Disclosure of Operating Segments” and adopted early the provision concerning the grant date for capital increase by cash retained for subscription by employees stated in Letter (2012) Ji-Mi-Zi No. 038 issued by Accounting Research and Development Foundation.

Deloitte & Touche Wen-Ya Hsu, CPA Tzu-Chun Wang, CPA

Securities and Futures Bureau Approval Securities and Futures Bureau Approval Document No. Document No. Tai-Cai-Jheng (6) No. 0920123784 Tai-Cai-Jheng (6) No. 0920123784

March 13, 2013

- 216282 -

Taichung Commercial Bank Co., Ltd. and Subsidiaries Consolidated Balance Sheets December 31, 2012 and 2011 Unit: NTD thousand Percentage Percentage December 31, 2012 December 31, 2011 of Variation December 31, 2012 December 31, 2011 of Variation Code Assets Amount Amount (%) Code Liabilities and Shareholders’ Equity Amount Amount (%) 11000 Cash and cash equivalents (Note 4) $ 10,264,038 $ 8,349,905 23 21000 Deposits of Central Bank of China and other banks (Note 16) $ 5,151,548 $ 3,439,998 50

11500 Due from Central Bank of China and lend to Funds borrowed from CBC and other banks (Notes 17 and banks (Note 5) 66,753,349 74,267,724 ( 10 ) 21500 31) 2,414,205 2,877,550 ( 16 )

12000 Financial assets at fair value through profit or loss (Notes 2 & 6) 22000 Financial liabilities at fair value through profit or loss (Note 2 6,545,279 1,096,769 497 and Note 6) 91,591 51,804 77

13000 Bills and bonds sold under repurchase agreements (Notes 2 Receivables – net (Notes 2, 7, 9, 28, 30 & 31) 22500 & 18) 264,045 - - 3,564,983 2,868,589 24 23000 Payables (Note 19) 8,997,553 7,721,427 17 13400 Assets held for sale (Notes 2 & 8) - 41,639 ( 100 ) 23500 Deposits and remittances (Notes 20 and 30) 385,510,895 333,691,650 16 13500 Discounts and loans – net (Notes 2, 9 & 30) 324,029,419 277,756,366 17 24000 Financial bonds payable (Note 2 & 21) 13,548,277 10,512,559 29 14000 Available-for-sale financial assets (Notes 2, 10 and 31) 18,519,719 4,211,580 340 25000 Accruable pension liabilities (Notes 2 and 22) 223,704 136,764 64 14500 Held-to-maturity financial assets - net (Notes 2, 11 & 31) 8,782,945 9,439,040 ( 7 ) 25500 Other financial liabilities (Note 23) 17,208 22,521 ( 24 ) 283 15000 Equity investment under equity method (Notes 2 & 12) 126,683 127,811 ( 1 ) 29500 Other liabilities (Notes 2 and 24) 372,812 328,241 14

15500 Other financial assets, net (Notes 2, 9 & 13) 905,934 850,396 7 20000 Total liabilities 416,591,838 358,782,514 16

Fixed assets, net (Notes 2 & 14) Shareholders' equity of parent (Note 25) Cost 31000 Capital stock 23,187,442 22,338,576 4 18501 Land 1,596,581 1,619,635 ( 1 ) Capital surplus 18521 Buildings and structures 1,854,982 1,852,015 - 31501 Stock premiums 569,058 569,058 - 18541 Transportation and communication equipment 38,820 34,821 11 31599 Other capital surplus 106,479 106,479 - 18551 Miscellaneous equipment 1,054,635 1,074,996 ( 2 ) Retained earnings Total cost 4,545,018 4,581,467 ( 1 ) 32001 Legal reserve 1,160,137 723,937 60 Revaluation increment 605,170 605,170 - 32003 Special reserve 83,647 32,599 157 Less: accumulated depreciation ( 1,735,334 ) ( 1,858,980 ) ( 7 ) 32011 Accumulated earnings 2,785,992 1,455,841 91 Less: accumulated impairment ( 77,000 ) ( 77,000 ) - 32501 Unrealized revaluation increment (Note 2) 283,744 283,744 - 18575 Prepayments for equipment 12,087 88,550 ( 86 ) 32521 Adjustment of accumulated conversion 477 - - 18500 Unrealized gain on available-for-sale financial assets Net 3,349,941 3,339,207 - 32523 (Note 2) 91,865 10,960 738 19500 Other assets (Notes 2, 15, 28 & 31) 1,830,648 1,894,542 ( 3 ) 32544 Net loss not recognized as pension cost (Note 22) ( 187,741 ) ( 60,140 ) 212

30000 Total shareholders’ equity 28,081,100 25,461,054 10

10000 Total assets $ 444,672,938 $ 384,243,568 16 Total Liabilities and Shareholders’ Equity $ 444,672,938 $ 384,243,568 16

The notes attached shall constitute an integral part of this consolidated financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013) Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

- 217 -

Taichung Commercial Bank Co., Ltd. and Subsidiaries Consolidated Statement of Income Years Ended December 31, 2012 and 2011 Unit: NTD thousands, except Earnings Per Share (NTD)

Percentage of Variation 2012 2011 (%) Code Amount Amount 41000 Interest revenues (Notes 2 and 30) $ 8,626,915 $ 7,415,723 16

51000 Interest expenses (Notes 2 and 30) ( 3,146,854 ) ( 2,471,799 ) 27

Net interest income 5,480,061 4,943,924 11

Net income (loss) other than interest income 49100 Net income from service fees (Notes 2, 26 and 30) 1,387,575 1,033,579 34 49200 Net (loss) gain on financial assets and liabilities at fair value through profit or loss (Notes 2 and 6) 265,023 ( 503,030 ) 153 49300 Realized net loss on available-for-sale financial assets (Note 2) 14,540 - - 49500 Net loss from equity investment under equity method (Notes 2 and 12) ( 1,128 ) ( 10,262 ) ( 89 ) 49600 Net gain (loss) on foreign exchange (Note 2) ( 136,487 ) 323,494 ( 142 ) 48063 Net loss on disposal of Fixed assets (Note 2) ( 38,387 ) ( 33,264 ) 15 49700 Gain (loss) on recovery of asset impairment (Notes 2, 8, 10, 11, 13 and 15) ( 1,837 ) 10,741 ( 117 ) 49805 Net gain from financial assets carried at cost 19,157 24,861 ( 23 ) 58023 Net loss on disposal of collateral accepted ( 24,200 ) ( 45,657 ) ( 47 ) 58089 Other provision (Note 32) ( 10,400 ) ( 5,050 ) 106 48099 Other non-interest net income (Note 2) 85,759 40,416 112

Net revenue 7,039,676 5,779,752 22 (Continued on next page)

-284 218 -

(Continued from previous page)

Percentage of Variation 2012 2011 (%) Code Amount Amount 51500 Bad debts expense (Notes 2 and 9) ( $ 248,661 ) ( $ 664,948 ) ( 63 )

Operating expenses (Note 27) 58500 Employee expenses ( 2,191,681 ) ( 1,943,884 ) 13 59000 Depreciation and amortization expenses ( 164,074 ) ( 141,526 ) 16 59500 Business and administrative expenses ( 1,110,573 ) ( 1,096,107 ) 1 Total operating expenses ( 3,466,328 ) ( 3,181,517 ) 9

61001 Income before taxation 3,324,687 1,933,287 72

61003 Income tax expenses (Notes 2 & 28) ( 546,729 ) ( 479,287 ) 14

69000 Net income of current period $ 2,777,958 $ 1,454,000 91

Attributable to: 69901 Shareholders of parent $ 2,777,958 $ 1,454,000 91 69903 Minority equity - - - 69900 $ 2,777,958 $ 1,454,000 91

Code Before After Before After taxation taxation taxation taxation Consolidated EPS (Note 29) 69500 Basic earnings per share $ 1.43 $ 1.20 $ 1.00 $ 0.76 69700 Diluted earnings per share $ 1.32 $ 1.11 $ 0.95 $ 0.72

The notes attached shall constitute an integral part of this consolidated financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013)

Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

-285 219 -

Taichung Commercial Bank Co., Ltd. and Subsidiaries Statements of Changes in Shareholders’ Equity Years Ended December 31, 2012 and 2011 Unit: NTD thousand Other shareholders’ equity Capital stock Capital surplus Retained earnings Unrealized Adjustment of Unrealized gain Net loss not Total Common stock Other capital Accumulated revaluation accumulated (loss) on financial recognized as shareholders’ capital Stock premiums surplus Legal reserve Special reserve earnings increment conversion instruments pension cost equity Balance as of January 1, 2011 $ 17,319,006 $ 775,256 $ 16,813 $ 600,350 $ 16,987 $ 411,956 $ 283,744 $ - ( $ 9,092 ) $ - $ 19,415,020

Issuance of common stock for cash 4,500,000 ------4,500,000

Capital surplus transferred to capital 225,147 ( 225,147 ) ------

Equity component of convertible financial bonds - - 83,039 ------83,039

Recognition of employee stock option compensation cost - 18,949 6,627 ------25,576

Available-for-sale financial asset price difference adjustment ------20,052 - 20,052

286 Default loss reserve transferred as special reserve (Note 24) - - - - 23,507 - - - - - 23,507

Net loss not recognized as pension cost ------( 60,140 ) ( 60,140 )

Consolidated Net income 2011 - - - - - 1,454,000 - - - - 1,454,000

Balance as of December 31, 2011 22,338,576 569,058 106,479 723,937 32,599 1,455,841 283,744 - 10,960 ( 60,140 ) 25,461,054

Adjustment of shareholders’ equity of investees recognized under the equity method ------477 - - 477

Available-for-sale financial asset price difference adjustment ------80,905 - 80,905

Net loss not recognized as pension cost ------( 127,601 ) ( 127,601 )

Consolidated Net income 2012 - - - - - 2,777,958 - - - - 2,777,958

Balance as of December 31, 2012 $ 23,187,442 $ 569,058 $ 106,479 $ 1,160,137 $ 83,647 $ 2,785,992 $ 283,744 $ 477 $ 91,865 ( $ 187,741 ) $ 28,081,100

The notes attached shall constitute an integral part of this consolidated financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013)

Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

- 220 -

Taichung Commercial Bank Co., Ltd. and Subsidiaries Consolidated Statement of Cash Flow Years Ended December 31, 2012 and 2011 Unit: NTD thousand 2012 2011 Cash flow from operating activities Consolidated income-net $ 2,777,958 $ 1,454,000 Provision of allowance for bad debts 248,661 664,948 Recovery of bad debts 244,606 230,394 Write-off of non-performing loans ( 83,387 ) ( 553,966 ) Loss of investment under the equity method 1,128 10,262 Cash dividends under equity method - 6,000 Available-for-sale financial asset premium amortization 7,308 2,599 Capital gains from the disposition of financial assets available for sale. ( 14,540 ) - Gain from disposal of financial assets carried at cost - ( 12,327 ) Amortization of premium on held-to-maturity financial assets 33,748 64,910 Amortization of discount on convertible financial bonds 35,718 19,518 Depreciation and amortization (depreciation of assets not for business operation included) 164,177 141,634 Net loss on disposal of fixed assets, available-for-sale assets and collateral accepted 62,587 78,921 Asset impairment loss (reversal gain) 1,837 ( 10,741 ) Deferred income tax expenses 190,512 455,370 Defined benefit pension fund 11,274 5,284 Recognition of employee stock option compensation cost - 25,576 Unrealized exchange (gain) loss 265,404 ( 257,127 ) Decrease (increase) in operating assets Financial assets-Trading ( 5,448,510 ) 549,793 Accounts receivable ( 706,122 ) 250,908 Other assets ( 54,238 ) 14,275 Increase (decrease) in operating liabilities Financial assets-Trading 39,787 ( 82,185 ) Payables 1,276,126 3,813,008 Other liabilities ( 5,160 ) ( 19,188 ) Net cash inflow (outflow) from operating activities ( 951,126 ) 6,851,866

Cash flow from investing activities Decrease (Increase) in Due From Central Bank of China and lend to Banks 7,514,375 ( 5,655,264 ) Increase in discounts and loans ( 46,648,872 ) ( 33,567,843 ) Proceeds from the disposition of financial assets available for sales and redemption at maturity 8,325,936 - Proceeds from disposal of financial assets carried at cost - 12,420 Proceeds from acquisition of available-for-sale financial assets ( 22,594,500 ) ( 3,119,816 ) Redemption of held-to-maturity financial assets 763,848 550,000 Proceeds from acquisition of held-to-maturity financial assets ( 504,586 ) - (Continued on next page)

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(Continued from previous page)

2012 2011 Increase in other financial assets ( $ 115,104 ) ( $ 116,795 ) Proceeds from disposal of Fixed assets, available-for-sale assets and collateral accepted 89,847 166,604 Purchase of Fixed assets and deferred expenses ( 191,045 ) ( 210,872 ) Increase in refundable deposits ( 24,660 ) ( 31,859 ) Net cash outflow from investing activities ( 53,384,761 ) ( 41,973,425 )

Cash flow from financing activities Issuance of common stock for cash - 4,500,000 Cash dividend released ( 111,693 ) - Increase in Deposits of Central Bank of China and other banks 1,711,550 1,160,371 Increase (decrease) in Funds borrowed from CBC and other banks ( 463,345 ) 1,275,400 Increase (decrease) in Bills & Bonds Sold under Repurchase Agreements 264,045 ( 1,477,800 ) Increase in deposits and remittances 51,819,245 31,086,777 Issuance of financial bonds 3,000,000 2,300,000 Decrease in other financial liabilities ( 5,313 ) ( 4,809 ) Increase (decrease) in deposits received 35,531 ( 37,806 ) Net cash inflow from financing activities 56,250,020 38,802,133

Net increase in cash and cash equivalents 1,914,133 3,680,574

Balance of cash and cash equivalents, beginning of period 8,349,905 4,669,331

Balance of cash and cash equivalent, end of period $ 10,264,038 $ 8,349,905

Supplementary disclosures of cash flow Interest payment $ 3,026,795 $ 2,419,773 Income tax payment $ 82,121 $ 97,512

Non-cash investing and financing cash flow Undistributed earnings and capital surplus transferred to capital increase $ 848,866 $ 519,570

The notes attached shall constitute an integral part of this consolidated financial statement. (Refer to Auditor’s Report presented by Deloitte & Touche dated March 13, 2013)

Chairman: Jin-Fong Soo Manager: Chun-Sheng Lee Chief accountant: Yi-Ying Chung

- 222288 - Taichung Commercial Bank Company Limited No. 87, Min Chuan Road, Taichung, Taiwan, R.O.C. Tel.:(04)2223-6021 Website:http://www.tcbbank.com.tw

Company Spokesman Name:Chi-Chuang Fang Taichung Commercial Bank Job title:Executive Vice President Tel.:(04)2223-6021 Email:[email protected]

Acting Spokesman Name:Hsueh-Hsien Liao Job title:Executive Vice President Tel.:(04)2223-6021 Email:[email protected]

Shares Registrar Name:by internal function Address:11F., No. 50, Sec. 1, XinSheng South Road, ZhongZheng District, Taipei, Taiwan, R.O.C. Website:http://www.tcbbank.com.tw Tel.:(02)2395-7388 Credit Rating Agency Chairman : Jin-Fong Soo Name:Fitch Ratings Limited, Taiwan Branch Address:Suite 1306, 13F., No. 205, Tun Hwa N. Road, Taipei, Tawian, R.O.C. Tel.:(02)8175-7600

External Auditors in the Most Recent Year Name of CPA firm:Deloitte & Touche Name of CPA:Wen-Ya Hsu & Tze-Chun Wang, Address:12F., No. 156, MinSheng East Road, Sec. 3, Song Shan District, Taipei, Taiwan, R.O.C. Website:http://www.deloitte.com.tw Tel.:(02)2545-9988

Name of any exchanges where the Company's securities are traded overseas, and the method by which to access information on said offshore securities : None Stock Code:2812 2012 Annual Report Annual Report 2012