2011 Annual Report - taishinbank.com.twº†解台新... · 4 In 2011, Taishin Bank launched “oral instruction” service, which is available for deposits, fund withdrawal, and

2011 Annual Report

Taishin International Bank C

o., Ltd. 2011 Annual R

eport

Stock Code : L5848Publication date : June 2012

Company website : http://www.taishinbank.com.twMarket Observation Post System website : http://newmops.tse.com.tw

Ⅰ . Names, titles, phone numbers, and e-mail addresses of spokesman and acting spokesman Spokesman: Spike Wu Title: Chief Executive Officer, Retail Banking Group Tel.: 886-2-5576-3701 E-mail address: [email protected]

Acting Spokesman: Wilson Chou Title: Senior Vice President Tel.: 886-2-5576-2568 E-mail address: [email protected]

Ⅱ . Addresses and phone number of headquarter and branches Headquarter: 1st fl., and 1st basement, No. 44, Zhongshan N. Rd., Sec. 2, Zhongshan District, Taipei City Tel.: 886-2-2568-3988 Addresses and telephones of branches: see the “domestic and overseas business points” section of the

annual report.

Ⅲ . Name, address, website, and phone number of the institution for handling stock register Name: Stock Affairs Agency Department of Taishin International Commercial Bank Address: B1,No.96,Sec1,Jianguo N. Rd.,Zhonghsan Dist.,Taipei city. Website: http://www.taishinbank.com.tw Tel.: 886-2-2504-8125

Ⅳ . Names, addresses, and phone numbers of credit rating institutions Name: Fitch Ratings Address: Room1306, 13th fl.,No.205, Dunhua N. Rd., Songshan Dist., Taipei City Tel.: 886-2-8175-7600

Name: Taiwan Ratings Address: 49th fl. Taipei 101 Tower, No. 7, Xinyi Rd., Sec. 5, Taipei City Tel: 886-2-8722-5800

Ⅴ . Name, address, website, and phone number of certified public accountant and accounting firm for the financial statement in the recent year

CPAs: Yang Qinzhen , Peter Tsai Name of accounting firm: Deloitte & Touche Tax Consulting Co., Ltd. Address: 12th fl., No. 156, Minsheng E. Rd., Sec. 3, Taipei City Website: http://www.deloitte.com.tw Tel.: 886-2-2545-9988

Ⅵ . Name of exchange for trading in overseas listed securities and information inquiry for the securities: Nil

Ⅶ . Company website: http: //www.taishinbank.com.tw

2011 Annual Report

Rating Agency

Date of latest rating

Ratings results

Fitch Ratings 2011/12/09

Issuer L-TermIssuer S-TermOutlook Individual SupportNational L-Term National S-Term

BBB+F2StableC3AA- (twn)F1+ (twn)

Taiwan Ratings 2011/12/08

Issuer L-TermIssuer S-TermOutlook National L-Term National S-Term

BBBA-2 StabletwA+twA-1

I. Message to Shareholders 2

II. Brief Introduction to The Bank 5

III. Corporate Governance Report 7

IV. Fund Raising Activities 58

V. Business Status 70

VI. Financial Status 91

VII. Review and Analysis of Financial Status and Business Performance and Risk-Management Evaluation 98

VIII. Special Notes 113

IX. DirectoryofHeadOffice&Branches 123

X. Notes to Financial Statements 129

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After experiencing a brief robust rebound in the wake of the global financial tsunami, the global economic growth rate slackened to 3.7% in 2011. Major reasons include downturn of the global economy, Japan’s strong earthquake, and the Thai flood, which impacted the operation of the global industrial chain. The U.S. sovereign credit rating was downgraded and the European-debt crisis spread, weakening demand in the U.S. and European markets which dampened export growth of Asian countries. In addition, to counter inflation, mainland China embraced tightening policy, putting a damper on business expansion. Due to these factors, most stock markets dropped by 10-25% in 2011, except Dow Jones Industrial Average which rose 5%.

Taiwan’s economy had a relatively stable performance. It scored over 5% in the first half but slid in the second half, due to global economic downturn, racking up 3.45% in the third quarter and 1.89% in the fourth quarter. The growth rate for the whole year is estimated at 4.04%. Foreign trade advanced 12.2% to US$589.9 billion, a record high, but the expansion began to slacken, along with global economic downturn. The Cabinet-level Council for Economic Planning and Development flashed a blue light, signifying sluggish economy, for four consecutive months from November 2011 to February 2012 for Taiwan’s economy. The Directorate General of Budget, Accounting, and Statistics (DGBAS) predicted that the economy would bottom out in the first quarter of 2012. Due to the effect, Taiex index dropped to 7,072 as of the end of 2011, down 21% from a year earlier.

Under global economic slowdown and financial turmoil triggered by European-debt crisis, it is a good timing for Taiwan’s financial industry to carry out financial reform, should it be able to take advantage of related niches. As of the end of 2011, the domestic banks racked up non-performing loan rate of 0.43%, bad-debt coverage rate of 252%, and BIS (Bank of International Settlement) ratio 12.08%, underscoring a financial strength which is the best in the past 10 years. The quality status constitutes a strong backup for domestic banks to expand their business, enabling them to tap overseas markets. In addition, Taiwan has signed cross-Taiwan Strait Economic Cooperation Framework Agreement, paving the way for domestic financial institutions to foray into mainland Chinese and emerging markets.

For mainland the mainland Chinese market, the government opened up various business items in 2011, including the establishment of finance leading firms and venture capital firms by companies with risk-management mechanism; undertaking of renminbi-related businesses by overseas branches and offshore banking units (OBU), which are conducive for domestic banks to tap renminbi-related business opportunities. In addition, the government is pushing financial businesses with cross-Strait characteristics, including cross-Strait currency clearance mechanism, renminbi wealth-management business, and online payment platform, which will further boost the flexibility for the development of financial business and expand the scope of customer service.

In business performance, the bank raked in after-tax profit of NT$7.739 billion in 2011, equivalent to NT$1.61 of earnings per share (EPS). BIS ratio reached 12.76% and first-category capital ratio 8.8%, underscoring excellent performance in both profits and capital structure. In their credit-rating report in December 2011, Fitch Rating and Taiwan Rating both maintained the credit rating of Taishin Bank unchanged.

Performances of the bank’s two major business units, retail banking group and wholesale banking group, follow:

I. MessagetoShareholders

1

3

Wholesale Banking Group

Following the launch of renminbi business by the Hong Kong branch in 2010, offshore banking unit (OBU) also rolled out renminbi business in November 2011, not only providing offshore enterprises individuals deposit/loan service but also enabling them to engage in flexible renminbi-fund maneuvering and fund-flow management, which cuts cost and risk for trade-related remittances. In addition, thanks to relaxation of regulations by the regulator, overseas branches and OBU are able to invest in securities in mainland China, boosting the business niches of the bank.

Under the simultaneous care of risk management and business development, the bank extended NT$190.7 billion of outstanding corporate loans, up 20% than a year earlier. In addition, in line with the government’s policy of financing small and medium enterprises, the bank extended NT$54.6 billion of outstanding loans to small and medium enterprises as of the end of 2011, up 19% over a year earlier, compared with 11% growth of other domestic banks.

The bank undertook NT$297.1 billion of factoring business in 2011, ranking third place in the market, and outstanding amount of US$34.6 billion for derivative contracts, ranking fourth place. It undertook stock-affair service for 182 listed firms, ranking fourth place.

For corporate information service, Taishin Bank obtained 2011 IDC corporate innovation award with its unified facility and risk management system (UFRMS), following its winning of the award with its image process management in 2010. UFRMS aims to achieve “automated risk management for credit-extension risk,” “upgraded credit-extension operating flow,” and “integrated management of customer information.” The purpose is to automate various corporate-banking businesses, including reception of loan applications, quota management, and risk warning. In addition to rapid duplication of quota-control operating flow, it can instantly and effectively control various product risks, so as to enhance overall service standard of the bank and its market competitiveness.

Retail Banking Group

As of the end of 2011, outstanding amount of retail housing procures (including book-value loans) reached NT$266.1 billion, for market share of 4.6%; outstanding auto loans amounting to NT$15.7 billion, for market share of 22.4%, ranking first place in the market. The number of credit cards in circulation reached 2.96 million cards, for market share of 9%, ranking third place, and annual credit-card spending value reached 147.6 billion, for market share of 8.8%, ranking fourth place. The number of merchants hit 46,000 stores, for market share of 16.8%, ranking third place.

In November 2011, Taishin Bank and Ever Rich Duty Free Shop jointly issue co-branded credit card, which offers the benefits of free parking at international airport and free usage of VIP rooms at international airports in Greater China. Services for infinite cards are further upgraded, such as cooperation with China Airlines for unlimited upgrading of flight seats for card holders. In 2011, the bank rolled out “business-class ticket upgrading for high-speed” rail for holders of Taishin’s infinite cards.

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In 2011, Taishin Bank launched “oral instruction” service, which is available for deposits, fund withdrawal, and fund transfer at counters. According to the oral instructions of customers, banking staffers would produce trading certificates for confirmation by customers to complete the transactions. In 2011, Taishin Bank received the awards of “Taiwan’s best retail bank” and the “best direct marketing in Asia,” granted by Asian Banking & Finance, as well as the 2011 “excellent service award,” granted by Global View Monthly.

2012 is the bank’s 20th anniversary. Faced with the challenge in the new era, the bank is carrying out corporate restructuring, ascertaining the three functions of customer management, channel management, and product R&D, as well as the concentration of operations and risk management, in the hope of upgrading service quality and employee productivity, so as to strengthen financial competitiveness. Meanwhile, every employee of the bank will adhere to the spirit of dedication and the bank will aspire to become the most “dedicated bank.”

For the purpose, the bank invited this year Dong Yangzi, a master calligrapher in Taiwan, to write down the two Chinese characters “Renzhen (dedication)” at the headquarters building of Taishin Financial Holding, to remind all employees of the spirits of “innovation” and “dedication,” and of the corporate core values of “integrity, commitment, innovation, and cooperation” (ICIC). We also encourage employees to fulfill the 3S (simple, sincere, and superior) professional services, so as to win the acknowledgement of customers and create profits for shareholders.

Thomas T.L. Wu

Chairman

Taishin International Bank

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II. BriefIntroductiontoTheBank

2

A. Introduction

Date of establishment: Feb. 25, 1992

Date of inauguration: March 23, 1992

Registered capital: NT$49,157,525,710

Paid-in capital: NT$49,157,525,710

Headquarter address: 1st, fl ., and 1st basement, No. 44, Zhongshan N. Rd., Sec. 2, Taipei City

Tel.: 886-2-2568-3988

Business units: 101 units, including 97 domestic and overseas branches (including Hong Kong branch), trust department, overseas department, offshore banking units (OBU), and representative’s office in Ho Chi Minh City of Vietnam.

B. History

1. The bank was founded by Mr. Thomas T.L. Wu, his friends, and some noted entrepreneurs in 1990. It was formally inaugurated on March 23, 1992, after obtaining the approval of the Ministry of Finance for its establishment in Aug. 1991. According to the resolution of its provisional shareholders’ meeting on Dec. 7,2001, the bank merged with Dah An Bank via share swap for the establishment of Taishin Financial Holding Co., Ltd. on Feb. 18, 2002, which further completed the acquisition of the Hsinchu Tenth Credit Cooperative on Oct. 18, 2004, according to the resolution of shareholders’ meeting on July 26, 2004. To integrate the resources and funds of the financial holding company and achieve higher efficacy, the bank acquires Taishin Bills Finance on Jan. 22, 2011. Since both companies are subsidiaries of Taishin Financial Holding, with similar management concept and corporate culture, it is believed that both companies can quickly integrate their resources and systems, to lower operating costs and boost operating efficiency.

2. Since its establishment, the bank has been constantly expanding business items and operating network, actively exercising the intermediary role for the supply and demand of funds in the society, so as to support economic prosperity.

3. The board of the director of the bank oversees the auditing division and secretariat. The headquarters oversees human resources division, finance division, corporate planning division, legal division, compliance division, information technology services division, administrative & services division, risk management division, performance management division, and process and service division. Meanwhile under the auspices of wholesale banking group and retail banking group, there are 16 first-tier business and management units.

Regarding business network, the bank has set up branches in major cities in Taiwan and has been actively establishing overseas units, in compliance with the trend of financial internationalization, including offshore

6

banking unit, Hong Kong branch, which was inaugurated on June 25, 2003 after obtaining the license in Feb. 2003; With the approval of the Ministry of Finance on September 21, 2004, the bank applied with Vietnamese regulator for the setup of representative’s office in Ho Chi Minh city on Dec. 13, 2004. The office was approved for establishment in Jan. 2005, marking a major step forward for the bank’s overseas business. The bank boasts 101 domestic and overseas branches, testifying to extensiveness of its service network.

4. The bank’s major business items include deposit reception, loan extension, export/import foreign exchange, foreign-currency deposits, discount of negotiable instruments, currency conversion, guarantee, surrogate collection/payment, custody, trust, credit card, trading in derivatives, brokerage of short-term commercial paper, brokerage of short-term bills, securities dealer, certification and underwriting, factoring, securities investment and underwriting, offshore banking, and the issuance of financial bonds.

5. The bank’s affiliates include PayEasy.com, Taishin Insurance Agency Co.,Ltd, Taishin Insurance Brokers Co.,Ltd, Taishin Dah An Leasing Co.,Ltd, Taishin Real Estate Management Co.,Ltd, and PayEasy Travel Service Co.,Ltd, Contact Digital Integration Co.,Ltd.

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III.CorporateGovernanceReport

A. Organization System

a. Organizational Chart Base date: April.1, 2012

3

Shareholder's Meeting

President

Supervisor

Retail Banking Group Wholesale Banking Group

Retail BankingCredit Division

Financial MarketDivision

Payment ServiceDivision

Global TradeFinance Division

Retail BankingNon PerformingAsset Recovery

Division

Corporate BankingDivision

ConsumerFinance Division

Overseas BusinessDivision

Strategic PlanningDivision of RetailBanking Business

Service IndustryDivision

Retail&WealthManagement

Channel Division

Wholesale CreditAdministration

Division

SegmentationDivision

Wholesale BankingAdministration

Division

Financial ProductsDivision

Wholesale BankingProduct Division

SecretariatDivision

AuditDivision

Board of Directors

(Chairman)

Non Performing Asset Recovery Committee

Credit Approval Committee

Process&ServiceDivision

RiskManagement

Division

PerformanceManagement

Division

ComplianceDivision

LegalDivision

FinanceDivision

Human Resources

Division

Administration&Services

Division

InformationTechnology

Services Division

CorporatePlanningDivision

Staff Conduct Review and Staff Performance Appraisal Committee

Trust Asset Evaluation Committee

LaborSafety&HealthCommittee

8

I I I .Corporate Governance Repor t

b. Responsibilities of the bank’s major units

1. Corporate Planning Division

(1) In charge of strategic planning, execution and evaluation of major strategic projects. (2) In charge of capital planning of the bank, analysis and management of BIS ratio and each financial

and business data. (3) Long-term investment business planning and analysis evaluation.(4) Negotiation and communication with regulator.(5) Communications and coordination for operation- and management-related affairs among various

managerial units.(6) Organizational planning, establishment, execution and management.

2. Administration & Services Division

(1) Drafting, formulation, and execution of common administrative and general-affairs regulations and system.

(2) Acceptance and sending of external official documents. (3) Evaluation and implementation of operations related to major general affairs, construction and

improvement, procurement, properties and offices.(4) Labor security and hygienic, as well as the supervision and implementation of guard and security

system of the bank.

3. Information Technology Services Group

(1) Management and maintenance of the bank’s computer systems, central equipment office, and equipment.

(2) The formulation and execution of information security system. (3) The pushing of information programs. (4) Evaluation of need, planning and analysis, and evaluation, change, and maintenance of programs

for the information systems of consumer banking and corporate banking.

4. Performance Management Division

(1) Planning, execution and management of the bank’s budget.(2) Planning and management of performance management information system.(3) Planning and management of accounting and taxation affairs.(4) Compilation and analysis of financial information.

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5. Legal Division

(1) Drafting, formulation, and execution of legal affairs-related regulations and policy.(2) In charge of whole bank legal consulting. (3) Inspection and supervision of various contracts and other legal documents.

6. Compliance Division

(1) Drafting, formulation, and execution of regulations and policy for compliance with law and regulation.

(2) Study, transmission, inquiry, coordination, and communications for compliance with laws and regulations by the bank.

(3) Execution, supervision, and evaluation for compliance with laws and regulations.

7. Human Resources Division

(1) Drafting, formulation, and execution of human resourced-related regulations and policy. (2) Personal recruitment, appointment, management, ranking and performance evaluation. (3) Formulation and execution of employment conditions and welfare, and the establishment, pushing,

and management of communications channels with employees. (4) Research, development, planning, revision, compilation and execution of employee-training

courses and material, the establishment of teacher database, and evaluation and appointment of teachers.

8. Risk Management Division

(1) Measurement and monitoring of credit risk, market risk, operation risk and the liquidity risk.(2) The evaluation of positions, report/table compilation, and risk disclosure.

9. Finance Division

(1) Planning and management of the bank’s liquidity risk and bankbook interest risk. (2) In charge of planning and management of asset/liabilities management, fund allocation.(3) Planning and management of inter-branch interest calculation. (4) Planning, execution, and management of securitized assets business. (5) Execution of credit rating operation. (6) Planning, execution, and management of non-strategic long-term investment, and the execution

and management of strategic long-term investment.

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10. Processing & Service Division

(1) Drafting, formulation, and execution of operation- and service-related regulations and policy. (2) Planning of operational workflow and establishment, execution and management of centralized

operation system.(3) Launch workflow reformed project and execution, evaluation and review the result.

11. Wholesale Banking Product Division

In charge of corporate-banking cash management, trade financing, planning and pushing of syndicated loans and structured funding.

12. Corporate Banking Division

(1) Formulate short-, medium-, and long-term business objects and strategic planning for the financial businesses of medium- and large-scale manufacturing customer groups.

(2) Coordinate the marketing, promotion, and the maintenance and management of account relations for medium- and large-scale manufacturing customer groups.

13. Service Industry Division

(1) Formulate short-, medium-, and long-term business objects and strategic planning for the financial businesses of medium- and large-scale service customer groups.

(2) Coordinate the marketing, promotion, and the maintenance and management of account relations for medium- and large-scale service customer groups.

14. Wholesale Banking Administration Division

(1) The Planning, execution and management of corporate-banking business goal and strategy plan.(2) Cross-unit integration and coordination.(3) Integration and perform management of budget goals of corporate banking.(4) Formulation and management of credit-extension flow.(5) The execution and management of international banking business.(6) Delivery and clearance of financial products.(7) The planning and management of corporate-banking service system.(8) Credit risk control.(9) Formulation of related business regulations and operating flow.

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15. Financial Market Division

(1) The design, operation, business plan and marketing promotion of financial products transaction including foreign exchanges, interest rates, credit, equity, commodities and derivatives.

(2) Economic and industrial research, short-term Taiwan stock investment. (3) Bills transaction, underwriting and trading.

16. Global Trade Finance Division

In charge of trade financing of unlisted small and medium enterprises, marketing and pushing of common credit extension, the maintenance and management of account relations.

17. Overseas Business Division

(1) Study, planning, execution, and management of the establishment, move, dismantling, and change of overseas branches.

(2) Strategic planning, pushing, and management of the business of overseas business. (3) Oversee the operation, performance, and general-affairs management of overseas branches. (4) Informing of local laws/regulations, study, planning, and execution of countermeasures for

overseas branches.

18. Wholesale Credit Administration Division

(1) Credit-extension policy and risk analysis and disclosure for corporate banking. (2) Inspection and review of corporate-banking credit-extension cases, and the management of the

asset quality of corporate-banking credit extension, overdue loan and collection.

19. Retail and Wealth Management Channel Division

(1) In charge of planning and management of the business and channel of branches.(2) Deployment and management of branches. (3) Enforcement, pushing, and management for the operation and service quality of branches. (4) Operational management and sales promotion of consumer banking.

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20. Financial Products Division

(1) Operation, management, maintenance, development, and adjustment of consumer-banking insurance products.

(2) Development and management of consumer-banking wealth-management products and maintenance of the competitive edge of the bank’s wealth-management products.

(3) Management of various property trust business and afflicted business. (4) The development of new trust products and service.(5) Planning and management of short-term securities and mutual-fund investments by subsidiaries. (6) Integrate market trend and product feature, and offer analytical report and consulting for

investments in domestic and foreign securities.

21. Consumer Finance Division

(1) Development, design, management, and promotion of consumer-banking products. (2) Sales promotion of commercial banking-related products. (3) The development, operating management, sales promotion, credit investigation, auditing, and

customer maintenance for auto loans and products with repo condition.

22. Payment Service Division

(1) In charge of development, business management, pushing, credit-investigation, credit-extension management, and customer maintenance of credit cards and products related to the cash flow of business clients.

(2) In charge of the bank’s marketing and communications resources.

23. Retail Banking Credit Division

(1) In charge of the formulation of the credit policy to retail banking products. (2) Establishment and utilization of forecast model. (3) Risk management, estimate and management of bad debts and provisions. (4) Credit investigation and credit-extension management for credit cards and consumer banking.

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24. Retail Banking NonPerforming Asset Recovery Division

The management of NPL(non-performing loan) collection, protection of non-performing assets, write-off of bad debts, and outsourcing of debt collection.

25. Segmentation Division

(1) In charge of the analysis of customer-group information. (2) The development, planning and trial execution of event marketing.(3) Development, management, and expansion of virtual channels.

26. Strategic Planning Division of Retail Banking Business

(1) Handling of first- and second tier customer complaints. (2) Upgrade service quality and push overhaul of operating flow, so as to establish a continuously

improving quality culture. (3) In charge of back-office and planning affairs for chief executive officer of consumer banking. (4) Strategic planning and enforcement management for retail banking.

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B. Information on board directors, supervisors, president, vice presidents, assistant vice presidents, and chiefs of units and branches

a. Board directors and supervisors

1. Information on board directors and supervisors Base date:March.31, 2012

Title Name Date of getting elected

Term

Date of first getting elected

Shareholding upon election

Current shareholding (including common and

preferred shares)

Stake of spouse and offspring before age of majority (including

common and preferred shares)

Shareholding in the name of others (including common

and preferred shares) Education and working experience

Current jobs with the bank and other

companies

Spouse or relatives within second-degree kinship who serve managerial posts or seats of

board directors/ supervisors of the bank

Amount of shares

Share of

stake

Amount of shares

Share of

stake

Amountof

shares

Share of stake

Amount of

shares

Shareof

stakeTitle Name Relationship

Chairman Taishin Financial Holding Co., Ltd.Representative: Thomas T.L. Wu 2010.06.18 T h r e e

years2002.01.282002.01.28 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Director, First Bank, Supervisor, Hua Nan Bank

MBA, University of California, LA Note 1 DirectorSupervisor

Jui-Sung, KuoLong-Su, Lin

Brother-in-law Brother-in-law

Director Taishin Financial Holding Co., Ltd.Representative: Jui-Sung Kuo 2010.06.18 T h r e e

years2002.01.282008.06.13 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0%

Director, International Bank of Taipei. Professor, department of information science, Business School, Soochow UniversityPh.D. in Physics, New Hampshire University

Note 2 ChairmanSupervisor

Thomas T.L. WuLong-Su, Lin


Director Taishin Financial Holding Co., Ltd.Representative: Teh-Nan Hsu 2010.06.18 T h r e e

years2002.01.282008.08.14 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Chairman, Taiwan Cooperative Bank, Bank of Taiwan

Banking department, National Chengchi University Note 3 Nil Nil Nil

Director Taishin Financial Holding Co., Ltd.Representative: Richard R.C. Liu 2010.06.18 T h r e e

years2002.01.282011.07.01 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0%

Independent director, First Bank. Chief secretary of the Ministry of Finance.Master, public administration, National Chengchi University.Master of Economics, San Francisco University.

Note 4 Nil Nil Nil

Director Taishin Financial Holding Co., Ltd.Representative:Chu-Chan Wang 2010.06.18 T h r e e

years2002.01.282002.01.28 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Standing Supervisor, Taishin Financial Holdings, Taishin Bank

Pharmaceutical department, Kaohsiung Medical college Note 5 Nil Nil Nil

Director Taishin Financial Holding Co., Ltd. Representative: Shang-Pin Wu 2010.06.18 T h r e e

years2002.01.282002.01.28 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Supervisor, Taishin Bank. Chairman, NSEnergy

PhD in Applied Chemistry, Keio University (Japan) Note 6 Nil Nil Nil

Independent director

Taishin Financial Holding Co., Ltd.Representative: Chih-Kang Wang 2010.06.18 T h r e e

years2002.01.282007.06.15 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Minister of Ministry of Economic Affairs. Chairman of TRITRA

PhD in Marketing, Texas A&M University Note 7 Nil Nil Nil


Taishin Financial Holding Co., Ltd.Representative: Neng-Pai Lin 2010.06.18 T h r e e

years2002.01.282007.06.15 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0%

Chairman, Taiwan Power Co. Dean, College of Management at National Taiwan University PhD in Business, Ohio State University

Note 8 Nil Nil Nil

Standing Supervisor

Taishin Financial Holding Co., Ltd.Representative: Yang-Tzong Tsay 2010.06.18 T h r e e

years2002.01.282010.06.18 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0%

Standing director, Bank of TaiwanDirector, graduate school of accounting, National Taiwan University. Doctor of business management and commerce, U. of Maryland

Note 9 Nil Nil Nil

Supervisor Taishin Financial Holding Co., Ltd.Representative: Long-Su Lin 2010.06.18 T h r e e

years2002.01.282002.01.28 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Director, Taishin Financial Holdings, Taishin Bank.

Ph.D. in Chemistry, Virginia State University, Note 10 ChairmanDirector

Thomas T.L. WuJui-Sung, Kuo


Supervisor Taishin Financial Holding Co., Ltd.Representative:Toney Chen 2010.06.18 T h r e e

years2002.01.282006.08.24 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Standing Supervisor, Taishin Financial Holding, Director, Chang Hwa Bank

Department of accounting, National cheng Chi University Note 11 Nil Nil Nil

Note 1: Representative Thomas Wu, is concurrently acting as Chairman of Taishin Financial Holdings, Chairman of Taishin Charity Foundation,Director of Taishin Real Estate Management, Director of AN-SIN Real Estate Management, Director of Shin Kong Mitsukoshi Department Store, Director of Shin Kong Lohas, Director of Shin Kong Construction and Development, Director of Wangtien Woolen Textile, Director of The Great Taipei Gas, Director of Taiwan Shin Kong Security, Director of Hsien-Shun Enterprise, Director of Shin-Yun Enterprise, Director of Jui-Siang Investment, Director of Kuei-Yuan Investment, Supervisor of Bo-Rui, Supervisor of Yung-Kuang, Supervisor of Shin Kong Agriculture & Animal husbandry, Supervisor of Shin Kong Hae-Yang, Supervisor of Shin Kong Chao Feng ,Supervisor of Shin-Shi Enterprise, Supervisor of Chin-Shan Investment, Supervisor of Beitou Hotel.

Note 2: Representative Jui-Sung Kuo, is concurrently acting as Chairman of Jui-Fang Co.,, Chairman of Hsinan Investment, Director of Taishin Financial Holdings, Director of An-Long Enterprise, Director of TECO Image Systems, Director of Cheng Xin Development, Director of Shi-Ho Digital Technology, Director of Century Development, Supervisor of Taiwan Shin Kong Security, Supervisor of SerComm, Supervisor of Chun-Hsiang Enterprise Consultants.

Note 3: Representative Hsu, The-Nan, no other job at the bank and other companies.Note 4: Representative Richard R.C. Liu, no other job at the bank and other companies.Note 5: Representative Chu-Chan Wang, is concurrently acting as Chairman of Pan City Co., Chairman of Hsien-Shun Enterprise, Director of Santo Arden Co., Director of Taishin Financial

Holdings, Supervisor of The Great Taipei Gas, Supervisor of Tai-Wa Co.Note 6: Representative Shang-Pin Wu, is concurrently acting as Chairman of NSEnergy, Director of TASCO Chemical, Director of EXCEL Chemical, Director of Ming-Xing Chemical,

Director of Taiwan Fieldrich Co., Director of Da-Chan Investment Co., Director of Tai-Ho Technology, Director of Tai-Ho Investment, Director of Ho-Shin Co., Director of Tuntex Petrochemical Inc., Director of SAFEWAY GAS Co., Director of Grand Cathay Venture Capita, Director of Ho-Cheng Co., Director of Global Securities Finance, Director of Chang-Fong Transportation, Director of TNS Logistics International.

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Base date:March.31, 2012

Title Name Date of getting elected

Term

Date of first getting elected

Shareholding upon election

Current shareholding (including common and

preferred shares)

Stake of spouse and offspring before age of majority (including

common and preferred shares)

Shareholding in the name of others (including common

and preferred shares) Education and working experience

Current jobs with the bank and other

companies

Spouse or relatives within second-degree kinship who serve managerial posts or seats of

board directors/ supervisors of the bank

Amount of shares

Share of

stake

Amount of shares

Share of

stake

Amountof

shares

Share of stake

Amount of

shares

Shareof

stakeTitle Name Relationship

Chairman Taishin Financial Holding Co., Ltd.Representative: Thomas T.L. Wu 2010.06.18 T h r e e

years2002.01.282002.01.28 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Director, First Bank, Supervisor, Hua Nan Bank

MBA, University of California, LA Note 1 DirectorSupervisor

Jui-Sung, KuoLong-Su, Lin


Director Taishin Financial Holding Co., Ltd.Representative: Jui-Sung Kuo 2010.06.18 T h r e e

years2002.01.282008.06.13 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0%

Director, International Bank of Taipei. Professor, department of information science, Business School, Soochow UniversityPh.D. in Physics, New Hampshire University

Note 2 ChairmanSupervisor

Thomas T.L. WuLong-Su, Lin


Director Taishin Financial Holding Co., Ltd.Representative: Teh-Nan Hsu 2010.06.18 T h r e e

years2002.01.282008.08.14 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Chairman, Taiwan Cooperative Bank, Bank of Taiwan

Banking department, National Chengchi University Note 3 Nil Nil Nil

Director Taishin Financial Holding Co., Ltd.Representative: Richard R.C. Liu 2010.06.18 T h r e e

years2002.01.282011.07.01 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0%

Independent director, First Bank. Chief secretary of the Ministry of Finance.Master, public administration, National Chengchi University.Master of Economics, San Francisco University.

Note 4 Nil Nil Nil

Director Taishin Financial Holding Co., Ltd.Representative:Chu-Chan Wang 2010.06.18 T h r e e

years2002.01.282002.01.28 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Standing Supervisor, Taishin Financial Holdings, Taishin Bank

Pharmaceutical department, Kaohsiung Medical college Note 5 Nil Nil Nil

Director Taishin Financial Holding Co., Ltd. Representative: Shang-Pin Wu 2010.06.18 T h r e e

years2002.01.282002.01.28 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Supervisor, Taishin Bank. Chairman, NSEnergy

PhD in Applied Chemistry, Keio University (Japan) Note 6 Nil Nil Nil


Taishin Financial Holding Co., Ltd.Representative: Chih-Kang Wang 2010.06.18 T h r e e

years2002.01.282007.06.15 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Minister of Ministry of Economic Affairs. Chairman of TRITRA

PhD in Marketing, Texas A&M University Note 7 Nil Nil Nil


Taishin Financial Holding Co., Ltd.Representative: Neng-Pai Lin 2010.06.18 T h r e e

years2002.01.282007.06.15 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0%

Chairman, Taiwan Power Co. Dean, College of Management at National Taiwan University PhD in Business, Ohio State University

Note 8 Nil Nil Nil

Standing Supervisor

Taishin Financial Holding Co., Ltd.Representative: Yang-Tzong Tsay 2010.06.18 T h r e e

years2002.01.282010.06.18 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0%

Standing director, Bank of TaiwanDirector, graduate school of accounting, National Taiwan University. Doctor of business management and commerce, U. of Maryland

Note 9 Nil Nil Nil

Supervisor Taishin Financial Holding Co., Ltd.Representative: Long-Su Lin 2010.06.18 T h r e e

years2002.01.282002.01.28 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Director, Taishin Financial Holdings, Taishin Bank.

Ph.D. in Chemistry, Virginia State University, Note 10 ChairmanDirector

Thomas T.L. WuJui-Sung, Kuo


Supervisor Taishin Financial Holding Co., Ltd.Representative:Toney Chen 2010.06.18 T h r e e

years2002.01.282006.08.24 4,915,752,571 100% 4,915,752,571 100% 0 0% 0 0% Standing Supervisor, Taishin Financial Holding, Director, Chang Hwa Bank

Department of accounting, National cheng Chi University Note 11 Nil Nil Nil

Note 7: Representative Chih-Kang Wang, is concurrently acting as Chairman of Taiwan External Trade Development Council, Chairman of Taipei Word Trade Center, Chairman of The Shiner Education Foundation, Independent director of Taishin Financial Holdings, Independent director of Nan Ya Plastics, Independent director of Formosa Sumco Technology, Director of Straits Exchange Foundation, Executive commissioner of General Association of Chinese Culture.

Note 8: Neng-Pai Lin, is concurrently acting as Independent director of Taishin Financial Holdings, Independent director of Darfon Electronics, Independent director RDC Semiconductor,、Director of TECO Image Systems

Note 9: Representative Tsay, Yang-Tzon, also an independent director of Hua Nan Property Insurance, and E-Ton solar tech Standing Supervisor of Taishin Financial Holdings Co., and supervisor of Kingpak Technology, Speed Tech, and SZS and Supervisor of Coremax Corp.

Note 10: Representative Long-Su Lin, is concurrently acting as Chairman of Ennead Inc., Chairman of Ennead Leasing, Chairman of Ennead Investment, Chairman of Shi-Hong Enterprise, Chairman of MiTAC Construction and Development, Chairman of Chun-Ying Interior Design, Director of Shin Kong Chao Feng, Director of Cheng Xin Development, Director of Shi-Hong Investment, Director of Nica-Orient Development, Director of Virgin Enterprise, Director of Gyu-Kaku, Director of Toms World Amusement, Director of International Advanced Music , Director of music dake, Director of Ennead Agriculture & Animal husbandry, Supervisor of Taishin Financial Holdings, Supervisor of Konig Foods, Supervisor of Tai-Li-Ya Development.

Note 11: Representative Toney Chen is currently acting as Chairman of Taishin Leasing and Financing Co.,Ltd

16


2. Major shareholders of institutional shareholders Base date:April.24, 2012

Names of Institutional shareholders Major shareholders of institutional shareholders (including common shares and preferred shares)

Taishin Financial Holding Co., Ltd

TPG NEWBRIDGE TAISHIN HOLDINGSＩ , LTD. 4.93%Cathay Life Insurance Co.,Ltd. 3.69%Taishin Leasing & Financing Co.,Ltd 2.65%Ching-Wei Co.,Ltd. 2.33%Taiwan Life Insurance Co.,Ltd 1.78%TAISHIN CO-INVESTOR HOLDINGS Ｉ , LTD. 1.62%Pan City Co., Ltd 1.34%Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International Equity Index Funds. 1.24%Farglory Life Insurance Co., Ltd 1.21%TASCO Chemical Corporation 1.20%

3. Major shareholders of major institutional shareholders Base date:April.24, 2012

Names of Institutional Shareholders Major Shareholders of Institutional Shareholders

TPG NEWBRIDGE TAISHIN HOLDINGSＩ , LTD TPG NEWBRIDGE TAISHIN Ｉ , L.P. 100%

Cathay Life Insurance Co.,Ltd Cathay Financial Holdings. 100%

Taishin Leasing & Financing Co.,Ltd

Pan Asia Polymer 30.00%, Yun-De 24.50%, Jui-Sin Enterprise 19.00%, Jui-Siang Investment 5.50%, Jia-Jia Investment 4.93%, Jia-Jia Investment 4.20%, Tong-Rong Investment 4.20%, Chang-Sheng Investment 4.20%, Yuan-Sheng Investment 3.47%

Ching-Wei Co.,Ltd. Thomas T.L. Wu 96.58% , Peng, Hsueh-Fen 3.42%

Taiwan Life Insurance Co.,Ltd

Long Bon International 26.15%, Bank of Taiwan 18.94%, Bao-Sheng Investment 11.34%, BankTaiwan Life Insurance 2.66%,Discretionary account for Labor Pension Fundn 1.8%, Kangchao Co., Ltd. 0.92%, Taiwan Fire and Marine Insurance 0.37%, Discretionary account for HSBC (Taiwan Bank) 0.28%,Sun Wen-Xiong 0.22%, JPMorgan Chase Bank N.A. Taipei Branch in custody for Norges Bank 0.21%,

TAISHIN CO-INVESTOR HOLDINGS Ｉ , LTD TAISHIN CO-INVESTOR A, L.P. 100%

Pan City Co., Ltd Minyuan Enterprise, 49.2%, Fengpu Investment 47.4%. Wang Wei-ren, 1.7%. Wang Wei-hao, 1.7%

Vanguard Emerging Markets Stock Index Fund, A Series of Vanguard International Equity Index Funds Not applicable

Farglory Life Insurance Co., Ltd

Far Eastern Construction, 13.76%, Xinyu Investment 13.02%, Yuanjian Investment, 9.82%, Ruiqi International Investment 7.56%, Harvard International Investment 7.4%, Farglory International Investment 7.09%, Chao Tung-hsiung, 7.05%, Yeh Chun-yao, 6.57%, Chao Yu-nu, 6.36%, Tungyuan Construction, 6.21%.

TASCO Chemical Corporation

Taiho Investment, 58.07%, Hocheng Investment, 19.55%, Fengho Development 9.11%, Tachan Investment, 1.61%, Hofeng Investment 1.03%, Fengho Investment 0.99%, Wu Cheng-ching, 0.99%, Wu Shang-pin, 0.99%, Wu Pei-chuan 0.95%, Wu Pei-jung, 0.93%.

17

4. Information on board directors and supervisors Base date:March.31, 2012

Qualifications

Name

Possession of over five-year working experience and the following professional

qualifications

Compliance with independence ( Note)

Number of other

companies of public offering where

the board director or supervisor serves as

independent director

Instructor or higher teaching positions at college

departments of commerce, legal affairs,

finance, accounting,

or others related to the company’s operation

Judge, prosecutor,

lawyers, public certified

accountant, or other

professionals or technicians with national

licenses related to the company’s operation

Working experience in commerce, legal affairs,

finance, accounting,

or other fields related to the company’s operation

1 2 3 4 5 6 7 8 9 10

Thomas T.L. Wu V V V 0

Jui-Sung Kuo V V V V V 0

Teh-Nan Hsu V V V V V V V V 0

Richard R.C.Liu V V V V V V V V V V V 0

Chu-Chan Wang V V V V V V V 0

Shang-Pin Wu V V V V V V V V 0

Chih-Kang Wang V V V V V V V V V V V V 3

Neng-Pai Lin V V V V V V V V V V V V 3

Tasy,Yang-Tzong V V V V V V V V V 2

Long-Su Lin V V V V V 0

Toney Chen V V V V V V V V V 0

Note : Mark with a check (v) under the code number for conformance to the following conditions:(1) Not an employee of another bank or its affiliates. (2) Not a director or supervisor of another bank or its affiliates.(3) Not owning, along with his/her spouse and offspring before the age of majority or in others’ names, over 1% stake in another bank including stake in others’

names, or one of the 10 largest individual shareholders in the bank.(4) Not a spouse, relative within second-degree kinship, or relative within fifth-degree kinship of direct lineage of the persons specified in the three items above.(5) Not a director, supervisor, or employee of an institutional shareholder with over 5% stake in another bank or being one of the five largest institutional

shareholders in the bank.(6) Not a director, supervisor, manager, or shareholder with over 5% stake of a company or institution which has financial or business exchange with another

bank.(7) Not a professional, or owner, partner, director, supervisor, manager, or spouse of one with such position of companies or institutions offering business, legal,

financial, accounting, or consulting services to another bank or its affiliates.(8) Not a spouse or a relative within second-degree kinship of one of other directors.(9) Not an offender of items stipulated in article 30 of the Company Law.(10) Not a representative of government or corporate body elected via method specified in article 27 of Company Law.

18


b. Information on president, vice presidents, assistant vice presidents, and chief of units and branches

Base date:March.31 , 2012

Title NameDate of election (appointment)

Shareholding

Stake of spouse and offspring before age of

majority

Shareholding in the name of

others Major education (experience)

Current jobs with other companies

Spouse or relatives within second-degree kinship who

serve managerial posts

Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of

StakeTitle Name Relationship

President and Chief Executive

Officer, Wholesale Banking Group

Larry Chung 2012/3/21 0 0 0 0 0 0

Chief Executive Officer of Taishin Bank Graduate School of Economics, National Taiwan University

Chairman of Dah An Leasing Director of Taishin Venture Capital Investment, Taishin Financial Leasing(China) Co.,Ltd, Dah Chung Bills Finance Co and TAMCO

Nil

Chief Executive

Officer, Retail

Banking Group

Spike, C.W. Wu 2011/1/21 0 0 0 0 0 0

Vice President of First TrustDepartment of Economics, National Taiwan University

Director of Taishin Holdings Insurance Brokers Co., Ltd, Taishin Insurance Brokers Co.,Ltd, Taishin Securities, Taishin Insurance Agency, Lienan Service, and Easy Card Corp.

Chief Auditor

Y.H. Wang 2010/7/21 0 0 0 0 0 0

Vice President of Taishin BankDepartment of Electronic Engineering , National Taiwan University

Senior Vice

President

Ann Cheng 2010/8/13 0 0 0 0 0 0

Vice President of Royal Bank of ScotlandMBA, University of New Haven

Chief Accounting Officer of Taishin Financial Holding Co, Supervisor of Taishin Marketing Consultant and Taishin Securities.

Senior Vice

President

Melody Chien 2009/7/1 0 0 0 0 0 0

Chief Financial Officer & Senior Vice President of KBC. MBA, National Chengchi University

Senior Vice President of Taishin Financial Holdings.

Senior Vice

President

Johnny Liu 2009/7/14 0 0 0 0 0 0

Vice President of China Development Industrial Bank.MBA, Massachusetts Institute of Technology

Senior Vice

PresidentSam Lin 2008/12/11 0 0 0 0 0 0

Senior Vice President of ChinaTrust Bank Master of Accounting, Claremont McKenna

Director of Taishin Investment Trust, Yungsheng Trade, and Chinjui International Financial Consulting

Senior Vice

President

Amy Hsia 2012/1/1 0 0 0 0 0 0

Senior Vice President of Taishin Bank Department of Law, Chinese Culture University

Chairman of Taishin Marketing Consultant.Director of PayEasy travel service Co.,Ltd

19


Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Senior Vice

PresidentJack Su 2011/1/1 0 0 0 0 0 0

President of Taishin Insurance AgencyDepartment of BA, Soochow University

Chairman of Taishin Insurance Agency and Taishin Insurance BrokersDirector of Taishin Holdings Insurance Brokers and Taishin Marketing Consultant.

Nil

Senior Vice

President

William Yao 2006/12/17 0 0 0 0 0 0

Senior Vice President of Bank of America Engineering, Shanghai Machinery College

Senior Vice

President

Wilson Chou 2011/12/22 0 0 0 0 0 0

Vice President of Cosmos BankMBA, University of Dallas

Senior Vice President of Taishin Financial Holdings Director of Taishin Securities Investment Advisory

Vice President

Min-HsingLiu 2011/3/1 0 0 0 0 0 0

Vice President of ABN AMROMBA, University Of Illinois at Urbana Champaign

Vice President Jey chen 2011/6/3 0 0 0 0 0 0

Vice President of KGI The University Of Texas At Austin, Doctor of Philosophy

Chief Risk Officer of Taishin Financial Holdings

Vice President

Shawn C.L Teng 2011/3/1 0 0 0 0 0 0

Vice President of Taishin BankDepartment of Economics, National Chung Hsing University

Director of Taishin Venture Capital Invertment and Taishin Insurance Agency and Dah An Leasing and Taishin Investment Trust and Taishin Holdings Insurance Brokers.Supervisor of Taishin Asset Management

Vice President

Chao-Min Lin 2011/4/1 0 0 0 0 0 0

Vice President of Taishin BankDepartment of Law, Soochow University

Vice President of Taishin Financial Holdings

Vice President

Jai, Lu-June 2011/9/23 0 0 0 0 0 0

Vice President of Taishin BankDepartment of Law, National Taiwan University


Vice President

Patrick Ling 2012/3/1 0 0 0 0 0 0

Vice President of Taishin Financial HoldingsDepartment of BA, Fu Jen Catholic University


20



Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Vice President

Chris Chang 2009/11/18 0 0 0 0 0 0

Assistant Vice President of Citi BankMBA, University of California, Los Angeles,


Nil

Vice President

Josephine Yang 2009/2/1 0 0 0 0 0 0

Vice President of Taishin BankDepartment of History, National Taiwan University

Vice President

David Chang 2009/11/18 0 0 0 0 0 0

Vice President of Taishin Financial HoldingsMBA, National Chung Hsing University

Supervisor of Hsiang Chao Investment, Weifeng Investment, Chiahao Investment, Yiheng Investment, Chingwei Co.,Ltd.

Vice President

Sam Chiang 2012/1/1 0 0 0 0 0 0

Vice President of Taishin BankDepartment of Statistics, National Cheng Kung University

Chairman of Taishin Financial Leasing (China) Co.,Ltd,

Vice President Helen Liu 2008/7/28 0 0 0 0 0 0

Vice President of Bermuda Investment MBA, University Of Wisconsin-Madison,

Vice President

Jerry Yang 2008/12/11 0 0 0 0 0 0

Vice President of Taishin BankDepartment of International Trade,Tamkang University

Vice President

Chen, Li-Tzu 2011/3/1 0 0 0 0 0 0

Vice President of Taishin BankUniversity of Texas at Dallas, Master of Science in Management and Administration Sciences

Supervisor of Taishin Investment Trust

Vice President

Phyllis Wang 2011/6/3 0 0 0 0 0 0

Vice President of Taishin BankMBA, Kansas State University

Vice President

Christy Shyy 2012/3/16 0 0 0 0 0 0

Manager of United Overseas Bank Western Michigan University, Master of Science in Accounting

Vice President

Robin Shieh 2012/1/1 0 0 0 0 0 0

Vice President of Taishin BankDepartment of Accounting, National ChengChi University

21


Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Vice President

Tsai, Shang-Ming

2012/1/1 0 0 0 0 0 0

Vice President of Taishin Bank University of Texas, El Paso, U.S.A., Master of Business Administration

Nil

Vice President

John Chiu 2012/2/17 0 0 0 0 0 0

Senior Manager, Royal Bank of Canada, Taipei Branch.MAB, University of Dallas, U.S.A.

Vice President

Wu,Ching-Yi 2011/6/23 0 0 0 0 0 0

Vice President of Taishin BankGraduate school of Marketing, Meiji University

Assistant Vice

President

Chen, Chun-Hsiu

2011/2/1 0 0 0 0 0 0

Assistant Vice President of Taishin BankDepartment of BA ,MingChuan University

Assistant Vice

President

Chen Yun-Nien 2008/7/11 0 0 0 0 0 0

Assistant Vice President of Taishin Bank Department of BA, National Taiwan University

Branch Manager

Lin,Chia Chen 2012/2/24 0 0 0 0 0 0

Manager of Taishin BankDepartment of Banking insurance, Lingtung Business College

Branch Manager

Liu, Hung-Shin

2012/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of industrial engineering management, United Industrial College

Branch Manager

Chou, Shih-Hung

2012/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, National Chung Hsin University

Branch Manager

Chang, Chih-Chieh

2012/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Finance, National ChengChi University

Branch Manager

Kuo, Wen-

Hsiang2012/1/1 0 0 0 0 0 0

Manager of HSBCDepartment of BA, Soochow University

22



Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Fan, Chi-Cheng 2012/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment ofMachinery engineering,Minhsin Industrial College

Nil

Branch Manager

Chen,Yu-Ching 2012/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Financial, Southern Taiwan University of Science and Technology

Branch Manager

Lu, Chun-Hung

2012/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Economics, Chinese Culture University

Branch Manager

Cheng, Chien-Liang

2012/1/1 0 0 0 0 0 0

Manager of China Leasing Department of BA, National ChungHsin University

Branch Manager

Su, Pei-Shi 2012/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Economics, Soochow University

Branch Manager

Hsiang, Chao-Chia

2012/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of International Trade, National Taiwan University

Branch Manager

Chen, Shu-Hua 2011/12/9 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, Aletheia University

Branch Manager

Lu,Yuh-Pei 2011/9/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Banking insurance, Taipei Business College

Branch Manager

Wang, Yuan-Hao

2011/9/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Financial Management, National Central University

Branch Manager

Huang, Po-Yu 2011/8/26 0 0 0 0 0 0

Manager of Taishin Bank Department of Law, Soochow University

23


Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Chiu,Hsiao-Chuan

2011/8/26 0 0 0 0 0 0

Manager of Taishin BankDepartment of Accounting, Southern Taiwan University of Science and Technology

Nil

Branch Manager

Tuan, Chi-Sun 2011/8/5 0 0 0 0 0 0

Manager of EnTie BankDepartment of Cooperation Economics, FengChia University

Branch Manager

Yeh ,Hsin- Hung

2011/7/1 0 0 0 0 0 0

Manger of Taishin BankDepartment of International trade, Lunghua Business College

Branch Manager

Lin Tien-Hao 2011/7/1 0 0 0 0 0 0

Manager of Taishin BankKeelung Senior High

Branch Manager

Kuo, Shu-Hui 2011/7/1 0 0 0 0 0 0

Manager of Chinatrust.Department of BA, Fu Jen Catholic University

Branch Manager

Chang, Yung-Chieh

2011/7/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, FengChia University

Branch Manager

Lee, Pai-Shih 2011/7/1 0 0 0 0 0 0

Manager of Taishin BankMBA, Chinese Culture University

Branch Manager

Chien Shih Yang

2011/7/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Finance, Tamkang University

Branch Manager

Weng, Shou-Te 2011/7/1 0 0 0 0 0 0

Manager of ChinatrustDepartment of Finance, Tamkang University

Branch Manager

Peng, Ching-Ching

2011/7/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, Chungyou TechnologyCollege

Branch Manager

Chen, Fang-Tzu

2011/7/1 0 0 0 0 0 0

Assistant Vice President, Taishin BankDepartment of BA, National Open University

24



Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Teng,Hui-

Ching2011/7/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of international trade, Fuhsing Industrial and Commercial College

Nil

Branch Manager

Hsu, Ming-Chu

2011/6/28 0 0 0 0 0 0

Manger of Taishin BankChemical Department of engineering, Shude College

Branch Manager Li, I Shan 2011/6/10 0 0 0 0 0 0

Manager of Taishin Bank Department of finance and risk management, Shude Technology University

Branch Manager

Cho, Yu-Lin 2011/6/10 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, Taichung Business College

Branch Manager

Chang, Yu-

Chang2011/6/10 0 0 0 0 0 0

Manager of Taishin Bank Department of Mathematics, Soochow University

Branch Manager

Liu, Yuan -Liang 2011/6/10 0 0 0 0 0 0

Manger of JihSun Bank Department of BA, Tamkang University

Branch Manager

Fai-Yean Yu 2011/4/18 0 0 0 0 0 0

Manager of Taishin BankDepartment of Accounting and Statistics, Ming Chuan college

Branch Manager

Hung, Jui-Pei 2011/4/18 0 0 0 0 0 0

Manager of Taishin BankDepartment of Finance, Shih Chien University

Branch Manager

Chang, Chih-

Chiang2011/4/1 0 0 0 0 0 0

Manager of Taishin BankChemical Department of engineering, Eastern College

Branch Manager

Wang, Yi Fang 2011/4/1 0 0 0 0 0 0

Manager of Taishin Bank Department of Fu Jen Catholic University

25


Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Gina Shen 2011/4/1 0 0 0 0 0 0

Manager of Taishin BankEaster Michigan University, Master of Business Administration

Nil

Branch Manager

Yeh, Chu-Chun

2011/4/1 0 0 0 0 0 0

Assistant Vice President of Far Eastern Investment Trust, Deutsche Bank MBA, YuanZe University

Branch Manager

Cho, Yu-Fen 2011/4/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Economics, Chinese Culture University

Branch Manager

Chou,Shu-Fang

2011/4/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Industrial management, Tamsui College

Branch Manager

Lai,Chi-Hsiang 2011/4/1 0 0 0 0 0 0

Manager of Taishin BankMBA, FengChia University

Branch Manager

Tai, Feng-Ching

2011/4/1 0 0 0 0 0 0

Assistant Vice President, ChinaTrust Department of BA, National Open University

Branch Manager

Lin, Yu-Wen 2011/4/1 0 0 0 0 0 0

Manager of ChinaTrustDepartment of foreign trade, Chiaokuang Business College

Branch Manager

Liu, Chao-Peng

2011/1/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, Chinese Culture University

Branch Manager

Vodak Hsu 2011/1/1 0 0 0 0 0 0

Manager of Taishin BankGeneral Commerce Division, YuDah High School of Commerce

Branch Manager

Chang,Chin-Tang

2011/1/1 0 0 0 0 0 0

Manager of Taishin BankGraduate School of International Economics, National Chung Cheng University

26



Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Tsao, Hung-Jung

2010/11/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Tourism , Chinese Culture University

Nil

Branch Manager

Chou, Ming-Hwa

2010/10/1 0 0 0 0 0 0

Manager of Taishin Bank Department of Agricultural Economy, National Taiwan University

Branch Manager

Chen,Mei-Ju 2010/9/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Statistics, Tamkang University

Branch Manager

Li, Li-Hua 2010/9/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Accounting and Statistics, Hsing Wu Institute of Technology

Branch Manager

Tseng, Yu-Nhng 2010/9/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, Soochow University

Branch Manager

Sandy Wang 2010/8/30 0 0 0 0 0 0

Manager of TaChong Bank Department of Accounting and Statistics, MingChuan University

Branch Manager

Tung, Ling-Ling 2010/8/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Economics, National Taiwan University

Branch Manager

Lee, Chen-Yuan

2010/5/17 0 0 0 0 0 0

Manager of ABN AMRODepartment of Cooperation Economics, Tamkang University

Branch Manager

Chen,Yu-Ni 2010/4/16 0 0 0 0 0 0

Manager of Taishin BankGeneral Commerce Division, National ChuTung Senior High School

Branch Manager

Chang, Wei-Jye 2010/4/16 0 0 0 0 0 0

Manager of Taishin BankDepartment of International Trade, Ta Hwa Institute of Technology

27


Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Chen,Ling-Yin 2010/3/19 0 0 0 0 0 0

Assistant Vice President of Taishin BankSouthern Ontario College, Ministry of Education

Nil

Branch Manager

Chang, Chin-Mei 2010/3/5 0 0 0 0 0 0

Manager of Taishin BankDepartment of Industrial management department, Kaohsiung Business College

Branch Manager

Wang, Kuan-Ta 2010/2/1 0 0 0 0 0 0

Assistant Vice President of TaiNan SecuritiesDepartment of Bank Insurance, FengChia University

Director of Yuya Co.

Branch Manager

Lin, Hsiu-Chuan 2010/2/1 0 0 0 0 0 0

Manager of Taishin BankMBA, YuanZe University

Branch Manager

Chang, Chun-Min

2010/2/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, Chungyou Business College

Branch Manager

Nelson Kuo 2010/2/1 0 0 0 0 0 0

Manger of Taishin BankDepartment of International Trade ,Providence University

Branch Manager

Tseng, Jui-

Chueh2009/10/1 0 0 0 0 0 0

Manager, Hsinchu 10th Credit Cooperative, Accounting section, Hsinchu Kuangfu Senior High

Branch Manager

Hsieh, Hsin-Hua 2009/9/1 0 0 0 0 0 0

Manager of Taishin Bank Department of Financial management, National Kaohsiung First University of Science and Technology

Branch Manager

Steven, Lin 2009/9/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Law, Fu Jen Catholic University

28



Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Yu, Chen-Jui 2009/8/1 0 0 0 0 0 0

Manager of Taishin BankAccounting and statistics section,Lingtung Business College

Nil

Branch Manager

Tsou, Chun-Hsien

2009/8/1 0 0 0 0 0 0

Manager of Taishin Bank Department of Electronic Computing, Tamkang University

Branch Manager

Wu, Hsin-Chan

2009/6/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, MingChuan University

Branch Manager

Shihta, Shu 2009/6/1 0 0 0 0 0 0

Manager of Taishin BankGeorgia State University, Master of Business Administration

Branch Manager

Lin,Yi-Ting 2009/3/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of Applied science department, correspondence school, Taichung Technological College

Branch Manager

Chen, Li-Hua 2008/12/5 0 0 0 0 0 0

Manager of Taishin BankDepartment of educational information science, Tamkang University

Branch Manager

Kang, Chih-Yuan

2008/12/5 0 0 0 0 0 0

Manager of Taishin BankDepartment of management, Chiayi University

Branch Manager

Hung, Hua-Nung

2008/12/5 0 0 0 0 0 0

Manager of Standard Chartered BankDepartment of BA, MingChuan University

Branch Manager

Hsu,Yu-Hui 2008/12/5 0 0 0 0 0 0

Manager of Taishin BankDepartment of Accounting, Tamkang University

29


Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

He, Gung-Hsiang

2008/11/14 0 0 0 0 0 0

Manager of Taishin BankFinancial department,National Kaohsiung First University of Science and Technology

Nil

Branch Manager

Cheng, Mei-O 2008/9/1 0 0 0 0 0 0

Manager of Taishin BankSection of foreign trade, Taiwan Business College

Branch Manager

Yu,Ya-Fang 2008/6/1 0 0 0 0 0 0

Manager of Taishin BankDepartment of foreign trade, Takming Business College

Branch Manager

Lee, Pei-Ming 2008/4/25 0 0 0 0 0 0

Manager of Taishin BankDepartment of Law,Soochow University

Branch Manager

Liu, Li-Hung 2008/4/25 0 0 0 0 0 0

Manager of Taishin BankDepartment of Financial, advanced study school, Kaohsiung University of Applied Science and Technology

Branch Manager

Wang, Fu-Chu 2008/4/25 0 0 0 0 0 0

Manager of Taishin Bank Department of Finance, Aletheia University

Branch Manager

Shine Pan 2008/4/25 0 0 0 0 0 0

Manager of Taishin BankDivision of Finance, National Taipei College of Business

Branch Manager

Chuang,Pei-Jan 2008/4/25 0 0 0 0 0 0

Senior deputy manager, Hualien Business Bank, Department of electrical engineering department, Fuhsing Business College

Branch Manager

Huang,Yu-Fang 2008/4/25 0 0 0 0 0 0

Manager of Taishin BankDepartment of Cooperation Economics, Tamkang University

30



Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Melody Wei 2008/2/22 0 0 0 0 0 0

Manager of Taishin BankDepartment of Finance, Tamkang University

Nil

Branch Manager

Su, Yih-Chen 2008/2/22 0 0 0 0 0 0

Manager of Dah An Bank Department of English, Fu Jen Catholic University

Branch Manager

Vigena Yang 2008/2/22 0 0 0 0 0 0

Manager of Taishin Bank Business section, Nanshan Business School

Branch Manager

Chen, Ping-

Chang2008/2/22 0 0 0 0 0 0

Manager of Taishin BankDepartment of Economics, Tamkang University

Branch Manager

Hsieh, Hai-Feng 2008/2/22 0 0 0 0 0 0

Manager of United National Bank Department of BA, National ChungHsing University

Branch Manager

Lin, Mei-Chao 2008/2/22 0 0 0 0 0 0

Assistant Vice President of Taishin BankGraduate School of Economics, National ChengChi University

Branch Manager

Kao, Hua-Lung

2007/12/28 0 0 0 0 0 0

Manager of Taishin BankDepartment of Accounting, National ChungHsing University

Branch Manager

Li,Kuo-Jen 2007/12/28 0 0 0 0 0 0

Vice President of UBS The Bernard M. Baruch College, U.S.A., Master of Science

Branch Manager

Liu, Su-Hung 2007/12/28 0 0 0 0 0 0

Manager of Taishin BankDepartment of Financial Tax, MeiHo colleague

Branch Manager

Grace Chen 2007/11/2 0 0 0 0 0 0

Manager of Taishin BankBusiness section, Nanying Business School

31


Shareholding


majority






Amount of

shares

Share of

Stake

Amount of

shares

Share of

Stake

Amount of

shares

Share of


Branch Manager

Tsai, Mei-I 2007/11/2 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, Far Eastern Technology College

Nil

Branch Manager

Chang,, Wen - Cheng

2007/11/2 0 0 0 0 0 0

Manager of Taishin BankDepartment of BA, Tamkang University

Branch Manager

Huang, Bao-Huey

2007/10/12 0 0 0 0 0 0

Assistant Vice PresidentAccounting and statistics section, correspondence school, National Chengkung University

Branch Manager

Chen, Chung-

Min2009/7/1 0 0 0 0 0 0

Assistant Vice President of Taishin BankDepartment of Economics, Fu Jen Catholic University

Branch Manager

Tsao, Shu-Ling 2011/3/4 0 0 0 0 0 0

Manager of Taishin BankDepartment of Bank,National ChengChi University

32


c. Compensations for board directors, supervisors, president, and vice presidents

1. Compensations for board director (including independent directors)

Base date: Dec.31, 2011;Unit:NT$1,000

Title Name

Compensations for directors Share of combination of A, B, C, and D in after-

tax net profit

Compensations for other jobs with the company Share of combination of A, B, C, D, E, F and G in after-tax net profit

Investedbusiness

Compensation (A)

Job-leaving and retirement payment (B)

Compensations from distribution of earnings

(C)

Expense for business execution (D)

Salary, bonus, and special allowance (E)

Job-leaving and retirement payment (F) Employee dividend-sharing (G) Amount of shares for

employee warrants (H)

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company All companies in the consolidated

financial statement The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

Cash dividend

Stock dividend

Cash dividend

Stock dividend

Chairman Thomas T.L. Wu

22,422 22,605 0 0 0 0 5,909 6,026 0.37% 0.37% 0 0 0 0 0 0 0 0 0 0 0.37% 0.37% 81

Director Chu-Chan Wang

Director Shang-Pin Wu

DirectorSherman Lee (2011/7/1 relief of duty)

Director

Lin,Keh-hsiao(2011/2/1 new appointment2011/8/11 relief of duty)

Director Teh-Nan Hsu

Director Jui-Sung Kuo

DirectorRichard R.C. Liu(2011/7/1 new appointment)

Independent Director Chih-Kang Wang

Independent Director Neng-Pai Lin

Note 1: Compensation for chauffeurs reaches NT$889,000Note 2: No actual collection of job-leaving or retirement payment

33

c. Compensations for board directors, supervisors, president, and vice presidents

1. Compensations for board director (including independent directors)

Base date: Dec.31, 2011;Unit:NT$1,000

Title Name

Compensations for directors Share of combination of A, B, C, and D in after-

tax net profit

Compensations for other jobs with the company Share of combination of A, B, C, D, E, F and G in after-tax net profit

Investedbusiness

Compensation (A)

Job-leaving and retirement payment (B)

Compensations from distribution of earnings

(C)


Salary, bonus, and special allowance (E)

Job-leaving and retirement payment (F) Employee dividend-sharing (G) Amount of shares for

employee warrants (H)

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement



All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

Cash dividend

Stock dividend

Cash dividend

Stock dividend

Chairman Thomas T.L. Wu

22,422 22,605 0 0 0 0 5,909 6,026 0.37% 0.37% 0 0 0 0 0 0 0 0 0 0 0.37% 0.37% 81

Director Chu-Chan Wang

Director Shang-Pin Wu

DirectorSherman Lee (2011/7/1 relief of duty)

Director

Lin,Keh-hsiao(2011/2/1 new appointment2011/8/11 relief of duty)

Director Teh-Nan Hsu

Director Jui-Sung Kuo

DirectorRichard R.C. Liu(2011/7/1 new appointment)

Independent Director Chih-Kang Wang

Independent Director Neng-Pai Lin

Note 1: Compensation for chauffeurs reaches NT$889,000Note 2: No actual collection of job-leaving or retirement payment

34


Compensation brackets Base date: Dec.31, 2011

Compensation brackets of board directors

Names of directors

The combined compensation of (A+B+C+D) The combined compensation of (A+B+C+D+E+F+G)



All companies in the consolidated

financial statement

Under NT$2 M.

Chu-Chan Wang/Chih-Kang Wang / Shang-Pin Wu / Sherman Lee/Neng-Pai Lin / Jui-Sung Kuo/ Richard R.C. Liu/ Lin, Keh-Hsiao




NT$2 M. (inclusive)-NT$5 M. (exclusive) Teh-Nan Hsu Teh-Nan Hsu Teh-Nan Hsu Teh-Nan Hsu

NT$5 M. (inclusive)-NT$10 M. (exclusive)


NT$15 M. (inclusive)-NT$30 M. (exclusive) Thomas T.L. Wu Thomas T.L. Wu Thomas T.L. Wu Thomas T.L. Wu



Over NT$100 M.

Total 10 10 10 10

Note 1: Compensations in the table are different from incomes for income tax law. Therefore, figures in the table are mainly for information disclosure and cannot be used as the basis for taxation.

2.Compensations for supervisorsBase date: Dec.31, 2011;Unit:NT$1,000

Title Name

Compensations for supervisors Share of

combination of A, B, C and D in after-tax

net profit Compensations from invested

companies other than subsidiaries

Compensation (A)Job-leaving or

retirement payment (B)

Compensations from distribution of

earnings (C)


The company

All companies

in the consolidated

financial statement

The company

All companies

in the consolidated

financial statement

The company

All companies in the

consolidated financial

statement

The company


financial statement

The company

All companies

in the consolidated

financial statement

Standing Supervisor

Yang-Tzong Tsay

108,000 108,000 0 0 0 0 1,070 1,070 0.15% 0.15% NilSupervisor Long-Su Lin

Supervisor Toney Chen

Note 1: Compensations in the table are different from incomes for income tax law and the figures are mainly for information disclosure and cannot be used as the basis for taxation.

35

Compensation bracketsBase date: Dec.31, 2011

Compensation brackets for the company’s supervisors

Names of supervisors

Combined amount of (A+B+C+ D)

The company All companies in the consolidated financial statement

Under NT$2 M. Long-Su Lin Long-Su Lin

NT$2 M.(inclusive)-NT$5 M. (exclusive) Toney Chen Toney Chen

NT$5 M. (inclusive)-NT$10 M. (exclusive) Yang-Tzong Tsay Yang-Tzong Tsay





Over NT$100 M.

Total 3 3

Note 1: Compensations in the table are different from incomes for income tax law and the figures are mainly for information disclosure and cannot be used as the basis for taxation.

36


3. Compensation for president and vice presidentsBase date: Dec.31, 2011;Unit: NT$1,000

Title Name

Salary (A) Job-leaving or retirement payment (B)

Salary, bonus and special allowance (C) Employee dividend-sharing (D)

Share of the combined value of A, B, C, and D (%) in after-tax

net profit Amount of employee warrants

Invested businessThe

company



statement

The company



statement

The company



statement

The company All companies in the

consolidated financial statement

The company


financial statement

The company


financial statement Cash

dividendStock

dividend Cash dividend Stock dividend

President Justin Tsai (2011/12/1 relief of duty)

96,041 100,281 1,419 1,419 109,085 109,919 0 0 0 0 2.67% 2.75% 0 0 562

Chief Executive Officer, Retail Banking Group Spike Wu

Chief Auditor YH Wang

Senior Vice President Loofei Huang (2011/6/3 relief of duty)

Vice President Jey Chen (2011/6/3 new appointment)

Senior Vice President Ann Cheng

Vice President Shawn C.L Teng

Senior Vice President Welch Lin(2011/3/1 new appointment,2011/12/22 relief of duty)

Senior Vice President Wilson Chou(2011/12/22 new appointment)

Vice President Chao-Min Lin

Vice President Jai, Lu-June (2011/3/1 new appointment)

Vice President Patrick Ling

Vice President Chris Chang

Senior Vice President Ena Swei (2011/6/3 relief of duty)

Vice President Jospehine Yang

Vice President David Chang

Senior Vice President Melody Chien

Senior Vice President Larry Chung

Vice President Sam Chiang

Vice President Monling Lee(2011/3/1 relief of duty)

Vice President Min-Hsing Liu

Vice President Helen Liu

Senior Vice President Johnny Liu

Vice President Charles Shieh

Senior Vice President Sam Lin

Vice President Jerry Yang

Vice President Peter Tseng (2011/3/1 relief of duty)

Vice President Ada Chen

Senior Vice President Amy Hsia

Senior Vice President Jack Su

Senior Vice President Minna Chou (2011/9/27 relief of duty)

Vice President Brenda Huang

Vice President Phyllis Wang

Vice President Christy Shyy (2011/9/16 new appointment)

Vice President Alex Chang (2011/7/15 relief of duty)

Senior Vice President William Yao

Note 1: Compensation for chauffeurs reaches NT$5,424,000Note 2: No actual collection of job-leaving or retirement payment; the appropriation or provisions for job-leaving or retirement funds reached NT$1,419,000

37

3. Compensation for president and vice presidentsBase date: Dec.31, 2011;Unit: NT$1,000

Title Name

Salary (A) Job-leaving or retirement payment (B)

Salary, bonus and special allowance (C) Employee dividend-sharing (D)

Share of the combined value of A, B, C, and D (%) in after-tax

net profit Amount of employee warrants

Invested businessThe

company



statement

The company



statement

The company



statement

The company All companies in the

consolidated financial statement

The company


financial statement

The company


financial statement Cash

dividendStock

dividend Cash dividend Stock dividend

President Justin Tsai (2011/12/1 relief of duty)

96,041 100,281 1,419 1,419 109,085 109,919 0 0 0 0 2.67% 2.75% 0 0 562

Chief Executive Officer, Retail Banking Group Spike Wu

Chief Auditor YH Wang

Senior Vice President Loofei Huang (2011/6/3 relief of duty)

Vice President Jey Chen (2011/6/3 new appointment)

Senior Vice President Ann Cheng

Vice President Shawn C.L Teng

Senior Vice President Welch Lin(2011/3/1 new appointment,2011/12/22 relief of duty)

Senior Vice President Wilson Chou(2011/12/22 new appointment)

Vice President Chao-Min Lin

Vice President Jai, Lu-June (2011/3/1 new appointment)

Vice President Patrick Ling

Vice President Chris Chang

Senior Vice President Ena Swei (2011/6/3 relief of duty)

Vice President Jospehine Yang

Vice President David Chang

Senior Vice President Melody Chien

Senior Vice President Larry Chung

Vice President Sam Chiang

Vice President Monling Lee(2011/3/1 relief of duty)

Vice President Min-Hsing Liu

Vice President Helen Liu

Senior Vice President Johnny Liu

Vice President Charles Shieh

Senior Vice President Sam Lin

Vice President Jerry Yang

Vice President Peter Tseng (2011/3/1 relief of duty)

Vice President Ada Chen

Senior Vice President Amy Hsia

Senior Vice President Jack Su

Senior Vice President Minna Chou (2011/9/27 relief of duty)

Vice President Brenda Huang

Vice President Phyllis Wang

Vice President Christy Shyy (2011/9/16 new appointment)

Vice President Alex Chang (2011/7/15 relief of duty)

Senior Vice President William Yao

Note 1: Compensation for chauffeurs reaches NT$5,424,000Note 2: No actual collection of job-leaving or retirement payment; the appropriation or provisions for job-leaving or retirement funds reached NT$1,419,000

38


Compensation bracketsBase date: Dec.31,2011

Compensations brackets for presidents and vice presidents

Names of president and vice president

The company All companies in the consolidated financial statement

Under NT$2 M. Loofei Huang/ Ann Cheng/ Welch Lin/ Patrick Ling/ Monling Lee/ Peter Tseng/ Wilson Chou

Loofei Huang/ Ann Cheng/ Welch Lin/ Patrick Ling/ Monling Lee/ Peter Tseng/ Wilson Chou

NT$2 M.(inclusive)-NT$5 M. (exclusive)YH Wang/ Jey Chen/ Chao-Min,Lin/ Jai, Lu-June / Ena Swei/ Min-Hsing Liu/Helen Liu/ Ada Chen/ Minna Chou/ Phyllis Wang/ Christy Shyy

YH Wang/ Jey Chen/ Chao-Min,Lin/ Jai, Lu-June / Ena Swei/ Min-Hsing Liu/Helen Liu/ Ada Chen/ Minna Chou/ Phyllis Wang/ Christy Shyy


Justin Tsai/ Shawn C.L Teng/ Chris Chang/ Josephine Yang/ David Chang/ Sam Chiang/ Charles Shieh/ Jerry Yang/ Amy Hsia/ Jack Su/ Brenda Huang/ Alex Chang

Justin Tsai/ Shawn C.L Teng/ Chris Chang/ Josephine Yang/ David Chang/ Sam Chiang/ Charles Shieh/ Jerry Yang/ Amy Hsia/ Jack Su/ Brenda Huang/ Alex Chang

NT$10 M. (inclusive)-NT$15 M. (exclusive) Spike Wu/ Melody Chien/Larry Chung/ Johnny Liu/ Sam Lin

Spike Wu/ Melody Chien/Larry Chung/ Johnny Liu/ Sam Lin

NT$15 M. (inclusive)-NT$30 M. (exclusive) William Yao William Yao



Over NT$100 M.

Total 36 36

Note 1: Compensations disclosed in the table different from income for income tax law and therefore cannot be used as the basis for taxation.

4. Manager’s name and the distribution of employee bonus payout: Nil

d. Analytical comparisons of the shares of company’s compensations for board directors, supervisors, president, and vice presidents in the after-tax net profits in the recent two years, as listed in the company’s financial statement and the consolidated financial statement, and explanation of the compensation policy, standards, and makeup, the procedure for setting compensations, and their association with business performance and risk of future follow: 1. In 2011, total compensations for directors, supervisors, president, and vice presidents accounted for

3.19% of the after-tax net profit and the share listed in the consolidated financial statement was 3.27%. In 2010, total compensations for directors, supervisors, president, and vice presidents accounted for 3.24% of the after-tax net profit and the share listed in the consolidated financial statement was 3.22%.

2. The company’s compensation policy(1) Compensations for managerial staffers are determined according to the company’s overall profit

performance, the status of business divisions in achieving their goals, and personal performance evaluation.

(2) Actual compensations for directors are determined according to the compensations for managerial staffers,pay adjustments, and the extents of their participation in the company’s business and contributions, the level of risk responsibility, and change in the company’s business status and performance. In considering major changes in the company’s business status or business performance, the salary and compensation committee will make proposal for approval by the board of directors.

39

C. Status of Corporate Governance

a. Information on the operation of the board of directors

In the recent fiscal year, the board of directors convened 50 times and status of attendance by directors and supervisors follows:

Title Name Actual numberof attendance

Number of attendance by proxy

Actual rate of attendance (%) Note

Chairman Taishin Financial HoldingRepresentative: Thomas T.L. Wu 40 10 80.00%

Director Taishin Financial HoldingRepresentative: Jui-Sung Kuo 44 6 88.00%

Director Taishin Financial HoldingRepresentative: Teh-Nan Hsu 49 1 98.00%

Director(already left the post)

Taishin Financial HoldingRepresentative: Sherman Lee 16 8 66.67% Succeeded by Richard R.C.

Liu on July 1, 2011.

Director Taishin Financial HoldingRepresentative: Richard R.C. Liu 26 0 100.00% Appointment on July.1, 2011

Director Taishin Financial HoldingRepresentative: Chu-Chan Wang 45 5 90.00%

Director Taishin Financial HoldingRepresentative: Shang-Pin Wu 44 6 88.00%

Director (already left the post)

Taishin Financial HoldingRepresentative: Lin, Keh-Hsiao 24 2 92.31%

Appointment on February.1,2011; Dismissal on August.12, 2011

Independent director Taishin Financial HoldingRepresentative: Chih-Kang Wang 34 15 68.00%

Independent director Taishin Financial HoldingRepresentative: Neng-Pai Lin 46 3 92.00%

Standing Supervisor Taishin Financial HoldingRepresentative: Tsay, Yang-Tzong 45 0 90.00%

Supervisor Taishin Financial HoldingRepresentative: Long-Su Lin 13 0 26.00%

Supervisor Taishin Financial HoldingRepresentative: Toney Chen 49 0 98.00%

Note: The attendance rate(%) of a directors/ supervisor is calculated by his/her actual number of attendance and the number of meetings of the board of directors during his/her team

Other items of mandatory registration: 1. For items listed in Article 14-3, Securities Transaction Law and resolutions passed by the board of directors for which independent directors have

opposing or reserved opinions on record or in written form, specify the date and number of the meeting of the board of directors, the contents of the case, and opinions of independent directors, and response of the board of directors: Nil.

2. For avoidance by directors for cases involving the interests of them, specify the name of the board director, contents of the case, reason for avoidance, and the status of their participation in voting: The bank implements avoidance of interest for related cases according to related laws/regulations.

3. Targets for strengthening the function of the board of directors in current year and the recent year (such as the setup of auditing committee and enhancement of information transparency) and the evaluation of their execution: In order to strengthen the governance of the board of directors, the company already formulated rules of order to the meeting of the board of directors, instituted independent directors since 2007, and took out liabilities insurance for board directors and key executives in the end of 2007. Due to the existence of supervisors, the company decides not to establish auditing committee for the time being.

40


b. Operation of the auditing committee or the participation of supervisors in the operation of board of directors

1. Information on the operation of auditing committee: Not established yet.

2. Status of communication of independent director with in-house chief auditing and CPA (such as communication items, method, and results for the bank’s finance and business status).

Status of communication between independent director and in-house chief auditing:

(1) The bank’s independent directors regularly hold communications meetings with the chief auditor and meeting minutes are submitted to the board of directors.

(2) Independent directors and chief auditor of the bank attend the meetings of the board of directors and communicate with independent directors and chief auditor during and before the meetings over various affairs of the bank.

(3) The bank’s auditing division regularly submits “auditing report” in the meeting of the board of directors every month, with the contents of the report including the conducting of auditing operation and major audited items, both internal and external ones. Attending independent director, therefore, can also understand the contents of the report.

(4) The auditing reports for the bank and its subsidiaries of the bank’s auditing division are submitted to independent director for inspection.

(5) Investigation reports on major incidents of the bank (such as irregularities, natural disaster, and major losses) are all submitted to independent directors.

(6) Independent directors can communicate and discuss with chief auditor over the aforementioned affairs or other affairs anytime.

Status of communication between independent director and CPA:

The bank’s independent director can discuss with CPAs over the company’s finance, business status, and auditing findings of CPAs.

41

3. Participation of supervisors in the operation of the board of directors.

In the recent fiscal year the board of directors convened 50 times and status of attendance:

Title Name Actual number of attendance Attendance rate (%) Note

Standingsupervisor

Taishin Financial Holding Representative: Tsay, Yang-Tzong 45 90.00%

Supervisor Taishin Financial Holding Representative: Long-Su Lin 13 26.00%

Supervisor Taishin Financial Holding Representative: Toney Chen 49 98.00%

Note: The attendance rate(%) of a directors/ supervisor is calculated by his/her actual number of attendance and the number of meetings of the board of directors during his/her team.

Other items which should be recorded:1. The makeup and responsibilities of supervisors:

(1) Communication between supervisors and employees/shareholders (such as communications channel and method) Supervisors can communicate with employees anytime in the exercise of their duties and employee can reflect and express their

opinions to the human resources division via the company’s internal website.(2) Status of the communication of supervisors with in-house auditing chief and CPA (such as communication items, method, and

results for the bank’s finance and business status).a. Status of the communication between supervisors and in-house auditing chief

(a) The bank’s supervisors regularly hold communications meetings with the general auditor and minutes of the meeting are submitted to the board of directors.

(b) Supervisors and chief auditor of the bank attend the meetings of the board of directors and communicate with directors during and before the meetings over various affairs of the bank.

(c) The bank’s auditing division regularly submits “auditing report” in the meeting of the board of directors every month, with the contents of the report including the conducting of auditing operation and major audited items, both internal and external ones. Attending supervisors, therefore, can also understand the contents of the report.

(d) The auditing reports for the bank and its subsidiaries of the bank’s auditing division are submitted to supervisors for inspection.

(e) Investigation reports on major incidents of the bank (such as irregularities, natural disaster, and major losses) are all submitted to supervisors.

(f) Supervisors can communicate and discuss with chief auditor over the aforementioned affairs or other affairs anytime.b. Status of the communications between supervisors and CPAs The bank’s supervisors can discuss with CPAs over the company’s finance, business status, and auditing findings of CPAs.

2. Opinions expressed by supervisors in the meetings of the board of directors which should be put on record, including the date and number of the meeting, contents of the case, resolutions of the meeting, and response of the board to the opinions: Nil

c. Determine disclosure items according to the guidelines for the practical corporate governance of the banking industry. However, for those already disclosedonthebank’swebsite,itwassufficienttoindicatetheavailabilityofthe related information on the website at: http://www.taishinbank.com.tw

42


d. Status of the bank’s corporate governance and its deviation from the guidelines for the practical corporate governance of the banking industry and reasons

Items Operating statusDeviation from the guidelines of the practical corporate governance of the banking industry and reasons

1. Makeup of the bank’s shareholdings and shareholders’ interest(1) The way the bank handles

suggestions or disputes of shareholders.

(2) Grasp by the bank of the list of the bank’s major shareholders and the ultimate controllers of major shareholders.

(3) Risk management mechanism and firewall vis-a-vis affiliates.

(1) The bank has only one shareholder, Taishin Financial Holding, whose stock-affairs unit handles shareholders’ suggestion or disputes and makes necessary disclosures on its website as a channel of communications with shareholders.

(2) The bank has only one shareholder, Taishin Financial Holding, which owns 100% stake in the bank.

(3) The bank’s Risk Management Division is in charge of establishing the bank’s risk-management policy and mechanism, as well as the implementation of the risk-management and firewall mechanism according to the regulations of the Banking Law.

(1) No deviation (2) No deviation (3) No deviation

2. Makeup and responsibilities of the board of directors (1) The institution of independent board

directors by the bank. (2) Periodic evaluation of the

independence of certified public accountants.

(1) The bank instituted two seats of independent board directors in 2007.

(2) The bank will evaluate the independence of certified public accountants before signing the letter of entrustment with them every year.

(1) No deviation (2) No deviation

3. The establishment of communications channel with related parties

(1) The bank’s parent company has instituted the “measures for the management of related parties and transactions” and its enforcement rules, specifying the regulations for the transactions between the bank and related parties.

(2) The bank’s parent company has established an “integrated system for related parties,” for the use by the bank and its other subsidiaries as a communications channel with related parties.

(3) The bank’s related business staffers can apply for authorization according to their needs and conduct cross inquisitives according the regulations of the Financial Holding Company Law and the Banking Law, to assure the legality of transactions with related parties.

No deviation

4. Information publication (1) The bank has installed corporate

website for the disclosure of the company’s finance and corporate governance.

(2) The bank has also embraced other information-disclosure methods (such as the installation of English-language websites, the designation of staffers to handle information collection and disclosure, the implementation of spokesman’s system, and the posting of the videotaped process of investor conference on the website.

(1) The bank has disclosed finance and business information on its website and undertaken the disclosure of major information and the application for online information publication.

(2) The bank conducts major information disclosure and application for online information publication and implements spokesman’s system, according to the regulations of the Securities Transaction Law.

(1) No deviation (2) No deviation

5. The institution and operation of nomination or compensate committee

(1) Taishin Financial Holding established salary and compensations committee on Sept. 22, 2011, according to related measures.

(2) According to the organizational charter of the salary and compensations committee of Taishin Financial Holding, the committee is in charge of screening the compensations policy of its subsidiary Taishin Bank. The committee will screen the policy, system, standards, and structure of salaries and compensations of the directors, supervisors, and managerial staffers of Taishin Bank.

No deviation The existing “guidelines for the corporate governance of the banking industry” doesn’t mandate the institution of the committee and the bank will evaluate the feasibility of its institution at proper time.

6. Describe the bank’s corporate governance and its deviation from the “guidelines for the corporate governance of the banking industry” and reasons:

The bank installed two seats of independent board directors in 2007 but yet to establish auditing committee, and has complied with the regulations of the “guidelines for the corporate governance of the banking industry” in all other aspects.

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Items Operating statusDeviation from the guidelines of the practical corporate governance of the banking industry and reasons

7. Other major information conducive to the understanding of the Bank's corporate governance (such as employee rights ,caring of employees ,investors relationship, stakeholder right ,the advanced study of directors and supervisors, attendance of the meetings of the board of directors by directors and supervisors , the execution of risk management policy and risk evaluation criteria, the execution of consumer protection and customer policy , and the avoidance of cases by board directors with related interest, and the taking out of liability insurance for directors and supervisors):(1) The bank has entrusted Taiwan Corporate Government Association to hold classes at home and directors and supervisors have

undertaken sufficient hours of courses. Status of the study has been posted at the website of Taiwan Stock Exchange according to the requirement.

(2) The bank’s board directors and supervisors have avoided cases with related interests according to regulations. (3) The bank has instituted an independent risk-management unit and invested considerable resources in the establishment of risk-

management mechanism, in order to implement risk-management policy and manage the bank’s overall credit, market, and operating risks according to a set method and set extent.

(4) The bank properly handles customer complaints to uphold consumer interests. (5) The bank has taken out liability insurance for board directors and supervisors.

8. Description of results and major deficiencies (or suggestions), as well as their improvement, included in the corporate-governance evaluation reports compiled by the bank itself or professional institutions under commission of the bank:

The bank handles the operation related to corporate governance itself according to regulations, without taking part in the evaluation of corporate governance by professional institutions.

e. The information of duty and component on the operation of salary committee: Nil

f. Fulfillmentofsocialresponsibilities:Systemsandmeasuresembracedbythe

bank related to social responsibilities, including environmental protection,

community participation, social service, social welfare, consumer interest,

human right, security, and hygienic, and their environment.

Items Operating StatusDeviation from the guidelines for the social responsibilities and reason

1. Implementation of corporate governance(1) Banks formulate corporate social-

responsibility policy or system, and review the status of its implementation effect.

(2) Status of banks pushing social responsibility via specialized or part-time units.

(3) Banks regularly hold education, trading, and promotion of corporate ethics for directors, supervisors, and employees, incorporate the events into the performance evaluation system for employees, and set up clear and effective rewarding and punitive system.

(1) The bank doesn’t establish set up a specialized unit for pushing social-responsibility policy or system but various units of the bank have been fulfilling corporate social responsibility, as description in the following table.

(2) The bank has entrusted Taiwan Corporate Governance Association to organize classes and directors and supervisors have complied with the requirement for sufficient amount of class attendance. The bank has posted the situation on the website of Taiwan Stock Exchange.

Not applicable

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2. Development of sustainable environment(1) Banks dedicate to enhancing the

utilization efficiency for various resources and utilized recycled products to lower the impact on the environment.

(2) Banks establish environmental management system suited to their industrial features.

(3) Set up specialized environmental management unit or personnel for the upholding of environment.

(4) Banks notice the effect of climate change on operation and formulate the strategy for carbon abatement and reduction of greenhouse gases.

(1) In its formal organizational structure, the bank has set up labor security and sanitation section, which adheres to the concept of “the premise for safety of environmental design and priority of precautionary measures,” in order to create a sanitary, safe, and healthy environment for Taishin Bank. The labor security and sanitation section is in charge of various tasks, including pushing of tobacco-hazard prevention law and maintenance of the quality of working environment via semiannual inspection of operating environment.

(2) For environmental protection and anti-global warming, Taishin Bank has dedicated to the environmental protection and energy conservation. During summertime, it pushes “Cool Biz” event, asking employees to shed garment during office time and set air-conditioning temperature at 26 Celsius degrees. In line with the measures of Taiwan power, terminate the function of air conditioning irregularly and regularly check the contract power capacity of various office buildings. During off hours, control the use of elevators t one side at various buildings, to cut power consumption. Install T5 energy-saving lighting fixtures for office lighting and regional power circuit, to reduce power consumption and achieve the goal of environmental protection. Meanwhile, push e-office and paperless office; install stationery collection boxes to achieve more efficient utilization of resources. Promote “using love as energy” event, urging employees to ride bicycles, take mass transportation vehicles, and embrace car pooling, so as to reduce carbon emission, enhance health, and fulfill the commitment to environmental protection. Demonstrate the respect of and care for the nature and actively rally employees, their families, and clients to “use love as energy and love the earth together.”

Not applicable

3. Uphold public benefits(1) Banks comply with related labor

laws/regulations, protect employee’s legal rights, and establish proper management method and procedure.

(2) Banks provide employees a secure and healthy workplace and conduct regular security and health education for employees.

(3) Banks formulate and publicize consumer right policy and provide transparent and effective consumer complaint procedure for its products and services.

(4) Banks cooperate with suppliers in fulfilling corporate social responsibilities.

(5) Banks take part in events related to community development and charity/public benefit groups via commercial activities, physical donation, corporate volunteer service, and other free professional services.

(1) The bank’s working rules have been approved by the regulator and publicized. The personnel rules are formulated according to the regulations of labor laws/decrees, for the purpose of protecting the labor rights of employees. Install employee-relationship mail box and dedicated lines for employee care, so as provide internal channel for employees to file their complaints and protect the privacy of employees.

(2) The bank provide employees a safe and healthy working environment, and carries out regular safety and health education.

(3) The bank has disclosed related inquiry and service phone numbers at its corporate website, enabling consumers to reflect any problem concerning the bank’s products or services. Related inquiry and service phone numbers: (a) Dedicated around-the-clock customer service line:

(02)2655-3355(b) Dedicated customer complaint line: (02)2700-3166

(4) For the selection of suppliers and public bidding for various procurements, the bank follows the “measures governing procurement and supplier management,” so as to assure products have stable quality and meet the requirements. Suppliers meeting the conditions can undertake evaluation and register as the bank’s qualified suppliers to provide services or products to the bank.

(5) For information on sponsored events and public-service and charity services, please refer to item 6 of the table: Other important information conducive to the understanding of the operation of corporate social responsibilities.

Not applicable

4. Intensified information disclosure (1) Method of the bank for disclosing

information related to relevant and reliable corporate social responsibility.

(2) Bank compiles the book of corporate social responsibility to disclose the satus of corporate social responsibility.

(1) The bank is a company with public share offering (stock code No. L5848), discloses its latest information on the Market Observation Post System of Taiwan Stock Exchange, and regularly files report on related financial figures.

(2) The bank also regularly updates information on its website according to legal requirement, so that customers can learn of the bank’s business performance via online inquiry.

The bank’s website is at http://www.taishinbank.com.tw/

45


5. Description of deviation of the self-made guidelines for corporate social responsibilities from the “guidelines for corporate social responsibilities of listed firms”: Not applicable

6. Other key information conducive to the understanding of the operation of corporate social responsibility (such as banks’ system, measures, and execution concerning the issues of environmental protection, communal engagement, social contribution, social services, public benefits, consumer right, human right, security and hygiene, and other social-responsibility event). (1) Labor security Under the recommendation and assistance of Daan-district health center of Taipei city, the headquarters building of the bank and Taishin

Financial Holding obtained the certificates of healthy workplace and no-smoking workplace of the Taipei City government, as well as smoking-hazard prevention mark of the city government.

(2) Environmental protection For environmental protection and anti-global warming, Taishin Bank , in line with the planning of Taishin Financial Holding, has dedicated

to the environmental protection and energy conservation. During summertime, it pushes “Cool Biz” event, asking employees to shed garment during office time and set air-conditioning temperature at 26 Celsius degrees. In line with the measures of Taipower, terminate the function of air conditioning irregularly and regularly check the contract power capacity of various office buildings. During off hours, control the use of elevators at one side at various buildings, to cut power consumption. Install T5 energy-saving lighting fixtures for office lighting and regional power circuit, to reduce power consumption and achieve the goal of environmental protection . Meanwhile, push e-office and paperless office; install stationery collection boxes to achieve more efficient utilization of resources. Promote “using love as energy” event, urging employees to ride bicycles, take mass transportation vehicles, and embrace car pooling, so as to reduce carbon emission, enhance health, and fulfill the commitment to environmental protection. Demonstrate the respect of and care for the nature and actively rally employees, their families, and clients to “use love as energy and love the earth together.”

(3) Public benefits and charity – Taishin Charity Foundation In 2010, Taishin Bank set up “Taishin Bank Public Service and Charity Foundation,” mainly for engagement in public-service and charity

events, including assistance for underprivileged groups to enhance their skills for livelihood and improve life, and sponsorship for the events of other public-service groups and seminars for society-related issues, and other social welfare-related charity events, with the goal of helping underprivileged groups achieve “independence in economy and daily life.”

After its establishment, the foundation rolled out “your ballot decides the strength of love” event, the first online public-service event in Taiwan. Under the event, small and medium social-welfare institutions were invited to put forth proposals online for voting by online social groups, in deciding the recipients of donations. The first such event attracted the participation of 204 social-welfare groups, which jumped to 307 for the second event.

A number of other public-service partners, such as Franz Collection, Advantech Foundation, and Chunghwa Telecom Foundation, also joined the event and the scope of donation recipients were expanded to culture and education, and digital learning.

In addition, Taishin executives, colleagues, Yani Tseng, the world’s female golf champion, and other local people also donated to the foundation, boosting its scale from NT$4.3 million to over NT$10 million, with the number of recipient groups expanded from 31 to 64. Besides, Taishin Bank Public Service and Charity Foundation held the first exhibition for its achievements in 2011 and produced three-minute documentary for introducing each of the first recipient groups, so as help them face the public and solicit even more support from the latter.

(4) Art and culture Taishin Bank donated to establish “Taishin Bank Culture and Art Foundation” in 2011, with the theme of “promoting cultural life quality

and strengthening artistic-development environment.” It supports arts as a nonprofit institution, intensifies exchanges between artistic innovation and private industry, and realizes the corporate social responsibility of payback to the society. The foundation initiated “Taishin Artistic Award,” giving highest glory and encourage to award winners in the two fields of visual and performing arts. 2011 marked the ninth edition of the award. Meanwhile, Taishin Financial Holding also arranges multi-functional performing and exhibition space at its headquarters building to invite artists and musicians to hold artistic exhibitions and noontime musical concerts.

(5) Sports sponsorship In 2011, Taishin sponsored Yani Tseng, the world’s female golfing champion, the first Taiwanese financial institution to do so. It also

invited Yani Tseng to become the endorser of Taishin Charity Foundation, to help with promoting the “your ballot decides the strength of love” event, so as to augment Taishin’s social influence.

7. Description of banking products or corporate social responsibility report which have been certified by international certification bodies: Nil

Note: Unlisted banks need not fill the the column “deviation from the guidelines for corporate social responsibilities of listed companies and reason.”

g.StatusofthecompanyinfulfillingmanagementofintegrityandmeasuresSince its establishment, the company has been dedicating to the commitment of continuous innovation, in order to achieve the financial success of consumers and shareholders and make Taishin the cash cow for customers.

1. The company materializes the management policy of integrity and adheres to the core values of “integrity, commitment, innovation, and cooperation.” It formulates “criteria for employee behaviors,” to prevent dishonest behaviors of employees and manifests their duty and obligation for informing. The criteria of employee behaviors include:

46


(1) Norm for work ethic: Formulate guidelines for employees in exercising their duties, for compliance by employees.

(2) Maintenance of employee relationship: Maintain the privacy of employees, healthy working environment, and equal working environment.

(3) Bank on side job and avoidance of interest: Forbid employees to take side jobs and engage in behaviors involving conflict of interest with their jobs.

(4) Norm on gift and treatment: Employees should not receive finance or improper benefits with no or improper rewards.

(5) Maintenance of client privacy: Employees should abide by operating procedure in exercising their duties and properly keep and maintain customers’ information.

(6) Business information and maintenance of business secret: Employees should uphold the business secret, trademark, copyright, patent, and other intellectual properties.

(7) Fair trade: Employees should not solicit clients with improper marketing method. (8) Anti-money laundering: Disclose regulations related to the prevention of money laundering and

actively report related incidents. (9) Informing duty and obligation: Provide employees informing channel and protect informants.

2. The company periodically provides directors, supervisors, managerial staffers, employees, and actual controllers training courses on corporate governance, trend of financial market, legal norm, and countermeasures for corporate risks, so as to materialize the management policy of integrity. Meanwhile, to integrate the management policy of integrity and management strategy for human resources, the company incorporates the indictors of legal compliance in management, information of major abnormal incidents, business auditing, and financial status into the contents for performance evaluation.

3. Setup of legal compliance division

According to the internal control auditing system of the financial holding company and the bank, the company has established the system of chief for legal compliance and set up the division of legal compliance, which is in charge of the planning, management, and execution for the system of chief for legal compliance. The chief should report affairs concerning legal compliance to the board of directors and supervisors at least once semiannually. In addition, the company designates chiefs for legal compliance at various units and branches for engaging in the promotion of financial laws/regulations and criteria for behaviors related to the management of integrity. The arrangement will facilitates the conducting of financial transactions in a fair and transparent manner and assure managerial staffers can abide by laws/regulations in the execution of their duties.

4. Establish an effective accounting and internal-control system

(1) Accounting system The company’s accounting system follows “commercial accounting law,” “guidelines for the

compilation of financial statement of securities issuers,” “guidelines for the compilation of banks with public share offering,” and common accounting criteria, as well as “sample for banking

47

industry’s accounting system” issued by Bankers Association. It features faithful and complete chronicling of the company’s various operations, effectively manifests the function of international subversion, and mirror the company’s financial status and management results, so that it can serve as a reference for decision making.

(2) Internal control system The company’s internal control system follows article 45-1 of the Bank Law and article 6 of the

measures governing internal control and auditing system of financial holding company and banking industry. The system covers the company’s business activities, formulation and proper revision of the corporate charter, and organizational charter and various business norms and handling manuals.

For major irregularities resulting from violation of the regulations of the system or coverage auditing results due to inadequate internal management, related persons should bear the responsibility or be penalized, in serious cases, according to proper procedure.

h. Banks with corporate-governance guidelines and related regulations must disclose their methods for inquiry

Please refer to the explanation of item d “ status” of corporate governance and its deviation with the practical guidelines for the corporate governance of the banking industry and reasons.”

i. Other important information conducive to the understanding of the corporate governance of the bank

Please refer to the explanation of item d “ status” of corporate governance and its deviation with the practical guidelines for the corporate governance of the banking industry and reasons.”

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j. Status of the execution of internal control

1. Statement of internal control

Statement for the Internal-Control System of Taishin International BankWe hereby declare, on behalf of Taishin International Bank, that the bank did set up internal control system, carry out risk management, and have an independent auditing department undertake auditing works with the results being reported to the board of directors and supervisors regularly, in compliance with “enforcement measures for internal control and auditing systems of banks,” during the period from January 1, 2011 to December 31, 2011. For sideline securities business, the bank also judged effectiveness in the design and execution of the international control system, according to items for judgment of effectivenessof internal control system included in the “guidelines for establishment of internal control system by service establishments in the securities and futures market,” promulgated by the Securities and Futures Bureau, the Financial Supervisory Commission. Except items listed on the attached tables, careful review and evaluation confirms effective execution by various business units of the bank in internal control and compliance with laws and regulations. The statement will become a major component of the company’s publicized annual report and proxy statement. Any falsehood, concealment, or other irregularities for the aforementioned statement will be liable to legal responsibilities stipulated in article 20, article 32, article 171, and article 174 of the Securities Transaction Law.

To:Financial Supervisory Commission:

Chairman

President

Chief Auditor

Executive Responsible for Legal Compliance

March.15,2012

49

Items needing improvement in the internal control system of Taishin Bank and improvement plan Base date: Dec. 31, 2011

Items needing improvement Improvement measures Schedule for completing the improvement

1. Management of compliance with law/regulation on marketing of insurance products.

Revised related business management norm and organize training courses, to strengthen legal compliance by employees. Improvement completed.

2. Operating flow and security control for surrogate fund collection at counters.

Revised operating flow and security control mechanism for surrogate fund collection at counters. Improvement completed.

3. Management of outsourcing work for document destruction.

Revised operat ing mode and execution procedure for outsourcing the destruction of documents. Improvement completed.

2. Auditing report of certified public accountant.

InspectionReportofCertifiedPublicAccountantTo Taishin International Bank Co., Ltd. Article 28 of the Enforcement Measures for Internal Control and Auditing System of the Financial Supervisory Commission, the Executive Yuan, stipulate that “When certified public accountant audits and certifies the annual financial statement of bank, the bank should entrust the CPA to inspect its internal-control system and express opinions on the accuracy of the information contained in the report/table submitted to the regulator, the execution of the internal control system and the system for the executive responsible for legal compliance, and the propriety of the policy for bad-debt provision.

Under the entrustment of Taishin International Bank Co.Ltd., the certified public accountant undertakes the aforementioned inspection work and checks the bank’s internal auditing report. The CPA submits the inspection scope, basis, inspection procedure, and inspection result, as attached, according to article 31 of Enforcement Measures for Internal Control and Auditing System.

The inspection report is meant only for reference to Taishin International Bank Co., Ltd. and the regulator in carrying out its supervision duty, and cannot be used for other purposes or distributed to other persons.

Certified Public Accountant Deloitte & Touche Taiwan

March 8, 2012

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k. Penalties for violation of law, major defects, and improvement

Disclosure items Cases and values Status of improvement

1. Indictment of executives or staffers by prosecutors for job-related crimes

When serving at Taiwan Securities Co., Ltd., former staffer Leng was indicted by the prosecutors of Taiwan Shilin district court on June 16, 2011 for violating Securities Transaction Law in underwriting the stocks of a hi-tech company,.

Leng already left the job from Taishin Bank on Sept. 1, 2010. On Jan. 20, 2012, the Financial Supervisory Commission order the bank to dismiss Leng for violation of securities law. The bank already reported its handling of the case to the Securities and Futures Bureau, FSC on Feb. 7, 2012.

2. Fines inflicted by Financial Supervisory Commission (FSC) for violation of laws/regulations

(1) The FSC inflicted a fine of NT$500,000 on the bank for providing data on the deposits and loans of customers without their agreement to the financial holding companies and subsidiaries for the purpose of joint marketing (FSC, No. 09900053443, July 6, 2010).

Already reviewed and adjusted the management mechanism for the use of customer information for joint marketing.

(2) The FSC inflicted fine of NT$2 million on the company for engaging in transactions other than credit extension with parties specified in item 1, article 45, Financial Holding Company Law without obtaining the approval of the board of directors in advance (FSC, No. 09960004101, Aug. 11, 2010).

Already formulated management mechanism and operating flow for related transactions requiring the submission of such transactions to the board of directors for approval in advance.

(3) The FSC inflicted NT$500,000 of fine on the company for requiring co-issuer of promissory notes for auto loans already secured sufficient chattel as collateral (FSC, No. 09900177531, Aug. 17, 2010).

No need of related debtor with associated liabilities for loans already secured by sufficient chattel as collateral.

(4) The FSC inflicted a fine of NT$6 million on the company and suspended some businesses of the company as the following for improper management of its subsidiary Taishin Insurance Agency (FSC, No. 09800575551, Aug. 27, 2010):(a) Suspend application for investments specified in article 74,

Banking Law, for one year, excluding ongoing investments already approved by the FSC.

(b) Forbid mutual utilization of customer information with Taishin Insurance Agency and Taiwan Insurance Brokers, according to article 10, “measures governing joint marketing among subsidiaries of financial holding company.”

(c) Stop signing new cooperative promotional contract or continued contract with Taishin Insurance Agency and Taishin Insurance Brokers according to “regulations on cooperation between banks, securities firms, and insurance firms for pushing products of other lines or providing related services.”

(d) The restrictions of (2) and (3) can be removed only after the bank has owned 100% shares Taishin Insurance Agency and obtained the acknowledge of the FSC for rectifying related defects.

Already revised the bank’s measures governing the management of subsidiaries and required the subsidiary to revise its corporate charter and measures governing authorization of expenses and outlays, so as to maintain the operation of an effective and proper internal control system.

3. Defects severely rectified by FSC

Nil

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Disclosure items Cases and values Status of improvement

4. Penalties inflicted by FSC for violating item 1, article 61, Banking Law

(1) Dismiss legal specialist Chen for embezzling provisions of guaranteed fund for court provisional seizure under the order of the FSC (FSC, No. 09900086771, April 6, 2010).

(1) Collection of the guaranteed fund for court provisional seizure can be conducted only in the form of registered negotiable instruments payable to Taishin International bank or remittance, rather than cash.

(2) regular rotation of persons in charge and cases undertaken, avoid monopoly of cases by the same person over a long term, to avoid irregularities.

(3) regular check with the court in charge or custodian of provisions for long-term uncollected guaranteed fund, to ascertain the status the guaranteed fund for court provisional seizure and the progress of the case.

(2) The FSC rectified the bank for incident, in which the deposit of the bank’s customer was withdrawn by a staffer of a securities firm with fake chop under the order of the FSC (FSC, No. 09900235471, August 9, 2010).

(1) Add an text-message function for transaction with accumulated value exceeding NT$10 million (inclusive).

(2) Add a phone-confirming function for transactions of deposit withdrawal or transfer exceeding NT$10 million (inclusive) in accumulated value in one week.

(3) Inflicted NT$6 million and suspended some businesses for inadequate management of subsidiary Taishin Insurance Agency (similar to B-4).

Similar to B-4.

(4) Bank officials contact offshore insurance agents in private for arranging seminars, a move which was rectified by the Financial Supervisory Commission (FSC, No. 10000032740, May 9, 2011).

Already revised related business regulation and held educational training program to strengthen employee to follow the law compliance.

(5) Clerk Yieh embezzled funds of surrogated collection, which was rectified by the FSC with an order for the dismissal of Yieh’s job (FSC, No. 10000331690, Nov 1, 2011).

Already rectified the operating flow and security control mechanism for surrogate fund collection at counters.

(6) The FSC rectified the mistake for outsourcing the destruction of documents (FSC, No. 10000371210, Dec. 9, 2011).

Already revised the operat ing mode and execution procedure for outsourcing work for the destruction of documents.

5. Irregularities causing over NT$50 million of loss in one year or several years whose loss or nature should be disclosed, including malpractices of staffers, major occasional incidents (fraud, stealth, embezzlement or stealth of assets, forged trading, fake certificates and securities, collection of kickbacks, natural disaster, loss inflicted by external forces, attack and stealth of information by hackers, and leakage of business secrets and client information), or security incidents caused by failure to comply with guidelines for the security maintenance of financial institutions

Nil

6. Other items designated by FSC for mandatory disclosure

Nil

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l. Major resolutions of the shareholder’s meeting and the board of directors in the recent year and as of the date of the publication of the annual report. 2011.01.13 Approval of setting Jan. 22, 2011 as the base date for the merger of the bank and Taishin

Bills Finance.2011.02.24 Passage for the establishment of first-tier management unit Compliance Division and

revision of organizational chart.2011.03.24 Passage of the move of Minzu branch to 1-4 fl., No. 91, Wenxin Road, Section 2, Taichung

City, which was renamed “City Hall Branch”.2011.03.31 Passage of the move of Donggang branch to 1-2 fl., No. 23,25, Baoqiang Road, Xindian

district, New Taipei city, which was renamed “North Xindian branch”.2011.03.31 Passage of Lin, Chao-Min as compliance officer.2011.05.05 Passage of the application for the setup of Singapore branch and Jesse Han as the

assistant vice general manager and chief for the preparation office of the branch.2011.06.02 Passage of employment of Jey Chen as the chief of the company’s risk management

division.2011.06.16 Passage of the acknowledgement of the company’s 2010 business report, earnings

allocation, financial statement, and consolidated financial statement.2011.06.16 Passage of assigning June 30, 2011 as the effective date for allocating 2010 earnings.2011.07.07 Passage of participation in subscribing to the first unsecured convertible corporate bonds

floated by Taiwan Hon Chuan Enterprise. 2011.07.14 Passage of the appointment of Spike Wu, as chief executive officer and chief of customer

relationship division.2011.07.21 Passage of the change of the address of Zhubei branch as 1fl.-4 fl, No. 331, Zhongzheng E.

Road, Zhubei City, Hsinchu County. 2011.08.04 Passage of the appointment of Tai Kuo-ming, vice president, as the chief of capital market

division. 2011.08.11 Passage of the change of the address of Wufu branch as basement 1, 1-2 fl., No. 116, Wufu

Second Road, Xinxing District, Kaohsiung City.2011.08.11 Passage of revision of article 6-3, article 17, article 32, article 44 of corporate charter, and

addition of article 37-1.2011.08.25 Passage of initiating “foreign-currency portfolio products, including option linking foreign-

currency time deposit with foreign-currency interest rate, swap of foreign-currency interest rate, option for foreign-currency interest swap, and option for foreign-currency exchange rate”.

2011.09.01 Passage of continuing employment of Oliver Wyman Pte. Ltd. as consultant to strategic retail-banking project for three years.

2011.09.08 Passage of moving “county hall branch” to B1-2, No. 168, 1fl., No 166, Daxing West Road, Sec. 1, Taoyuan City, which was renamed “north Taoyuan branch”.

2011.09.08 Passage of applying for the initiation of “gold account business”.

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2011.09.29 Passage of Spike Wu as chief executive officer and chief retail and wealth management channel division.

2011.10.06 Passage of apply for initiating “combination products of NT-dollar time deposits linking foreign commodity price/index option”.

2011.10.13 Passage of purchasing 200,000 common shares of Dah An Leasing, thereby making Dah An the company’s 100%-owned subsidiary.

2011.11.17 Passage of appointing Larry Chung, chief executive officer, as acting president (Justin Tsai resigned the pose from Dec. 1, 2011).

2011.12.22 Passage of changing first-tier (division level) management units and revising organizational charter, effective Jan. 1, 2012.

2011.12.22 Passage of appointing Amy Hsia, senior vice president, as chief of payment service division, and Jack Su, senior vice president, as chief of consumer finance division.

2011.12.22 Passage of appointing Wilson Chou as chief of corporate planning division. 2012.01.05 Passage upgrading representative’s office in Ho Chi Minh City, Vietnam, to a branch. 2012.02.16 Passage of appointing Wilson Chou, senior vice president, as the company’s spokesman,

replacing Shawn Teng, vice president.2012.03.29 Passage of moving Dongmen branch to fl. 1, No. 9-1, Dehui Street, Zhonghsan District,

Taipei City, which was renamed “Zhongshan branch”.

m.Different opinions of directors or supervisors on record or in written statement on major resolutions passed by the board of directors in the recent year and as of the date of the publication of the annual report: Nil

n. Statement (including chairman, president, accounting chief, and internal chief auditing ) in the recent year and as of the date of the publication of the annual report:

Summary table of the resignation of dismissal of persons related to financial statement Base date: April.15.2012

Title Name Date of assuming office Date of the relief of post Reason for resignation or dismissal

President Justin Tsai 2011.1.1 2011.12.01 Resign

Note: Persons related to financial statement refer to chairman, president, accounting chief, and internal auditing chief

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D. Information on CPA fee

a. Mandatory disclosure of the auditing and non-auditing fees and the contents ofnon-auditingserviceofCPAs,theiraccountingfirms,andaffiliateswhosenon-auditing fee exceeds one fourth of the auditing fee

Name of accounting

firm

Name of CPA

Auditing fee

Non-auditing fee Whether the auditing covers the entire fiscal

year or not(note 1)

NoteSystem design

Business registration

Human resources

Others(note 2) Sub-total

Delo i t te & Touche

Yang Qinzhen

8,320,235 250,000 11,817,357 12,067,357 2011.01.01~2011.12.31

NT$3.5 million for first-stage introduction of IFRS NT$3.11 million for the installation of information security management system and individual-capital consulting service NT$1.3 million for tracking and follow up auditing of internal-control defectsNT$600,000 for surrogate paymentNT$560,000 for BIS reauditing fee NT$550,000 for checking the security level of electronic certificate NT$530,000 for merger with Taihsin Bills Finance NT$440,000 for administrative relief for business income taxNT$300,000 for auditing impairment of assets NT$250,000 for the expense of checking major bad-debt accountsNT$150,000 for auditing the adjustment table for the calculation of business taxNT$530,000 for other service expenses

PeterTsai

Note 1: Should there be replacement of certified public account or accounting firm, list respective auditing periods and explain the replacement reason, in addition to disclosing the information on the payment of auditing and non-auditing fee.

Note 2: List non-auditing fee according to service items and explain the contents of “other” service which accounts for 25% or more of non-auditing fee.

b.Replacementofaccountingfirmandtheauditingfeeforthereplacementyeardecreases from the previous year which requires mandatory disclosure of the auditing fees of the two years and provision of reasons: Not applicable.

c. Auditing fee decrease over 15% from the previous year which requires mandatory disclosure of the reduction amount, percentage, and reason: Not applicable.

55

E. Replacement of CPA:

a. Concerning former CPA

Replacement date April 28, 2011

Reason for replacement and explanation

In line with the job rotation of Deloitte Accounting Firm, the CPAs for the bank’s financial statement were changed from Yang Qingzhen and Weng Rongsui to Yang Qingzhen and Peter Tsai

Explain consigner or termination or refusal of consignment by CPA

Status of related parties CPA Consigner

Active terminate consignment Not applicable Not applicable

Refusal to accept (continue) consignment Not applicable Not applicable

Certification auditing report other than report without reserved opinions in the recent two years and reason

Not applicable

Existence of different opinions with the bank

Yes

Not applicable Accounting principle or practical affairs

Not applicable Disclosure of financial report

Not applicable Auditing scope or procedure

Not applicable Others

Not applicable

No Not applicable

Explanation

Other disclosed items (Items which should be disclosed according to item 5-1-4, article 10 of the criteria

Not applicable

b. Concerning succeeding CPA: Not applicable

c. Reply of former CPA to item 5-1 and item 5-2-3, article 10 of the criteria: Not applicable

F. Chairman,presidents,andfinancialoraccountantmanagerswhoservedattheaccountingfirmoftheCPAsoritsaffiliateswithintherecent year: Nil

G. Changes in shareholding transfer or shareholding pledge by directors, supervisors, or managers who are required to report their shareholdings according to item 3, article 25, Banking Law, in the recent year and as of the date of the publication of the annual report:

56


a. Changes in shareholdings

Title Name

2011 As of March.31 , 2012

Changes in shareholding

Changes in pledged

shareholding

Changes in shareholding

Changes in pledged

shareholding

Director/ Supervisor(Major shareholder)

Taishin Financial Holding Co., Ltd 0 0 0 0

b. Information of shareholding transfer : Nil

c. Information of shareholding pledge: Nil

H. Information on the relationship of the 10 largest shareholders who are related parties according to Financial Accounting Criteria No.6

Information on the relationship between the 10 largest shareholders Base Date: March.31, 2012

Name

Own shareholding

Shareholding of spouse and

offspring before the age of majority

Total shareholding in the names of

others

Names and relationship of the 10 largest

shareholderswho are related parties according to Financial

Accounting Criteria No.6 or who are spouses

or relatives with second-

degree or closer kinship

Note

Number of shares

Share of stake

Number of

shares

Share of stake

Number of

shares

Share of stake Name Relationship

Taishin Financial Holding Co., LtdRepresentative:Thomas T.L. Wu 4,915,752,571 100% 0 0% 0 0% Nil Nil

I. The amount of shares and total share of stake in the same invested company owned by the company directly or indirectly controlled by the bank and the bank’s directors, supervisors, presidents, vice presidents, assistant vice presidents, and branch chiefs.

57

Base date: Dec.31, 2011 ;Unit:share,%

Equity investment

Investment by the bank

Investment by the companydirectly or indirectly controlled

by the bank and the bank’s directors, supervisors, presidents,

vice presidents,assistant vice presidents, and branch chiefs

General investment

Amount of shares

Share of stake

Amount of shares Share of stake Amount of

shares Share of

stake

Taishin Dah An Leasing (Original is Dah An Leasing) 20,000,000 100.00% 0 0.00% 20,000,000 100.00%

Taishin Insurance Agency 262,204 87.40% 0 0.00% 262,204 87.40%

Payeasy Digital Integration 28,400,001 65.36% 8,354 0.02% 28,408,355 65.38%

Chang Hwa Bank 17,985,000 0.27% 1,526,006,350 22.55% 1,543,991,350 22.81%

Taishin Real Estate Management Co., Ltd 12,000,000 60.00% 0 0.00% 12,000,000 60.00%

An-Sin Real Estate Management 3,600,000 30.00% 0 0.00% 3,600,000 30.00%

Sunlight Asset Management 1,092,317 18.21% 0 0.00% 1,092,317 18.21%

Dah Chung Bills Finance 79,182,224 18.29% 159,764 0.04% 79,341,988 18.33%

Pacific Securities 11,537,469 2.77% 926,368 0.22% 12,463,837 2.99%

Taiwan Future Exchange Company 2,615,997 0.96% 0 0.00% 2,615,997 0.96%

Taipei Foreign Exchange Company 160,000 0.81% 0 0.00% 160,000 0.81%

Financial Information Service 10,237,500 2.28% 0 0.00% 10,237,500 2.28%

Taiwan Asset Management 10,000,000 0.57% 0 0.00% 10,000,000 0.57%

Taiwan Financial Asset Service Corp. 5,000,000 2.94% 0 0.00% 5,000,000 2.94%

Apex Venture Capital 2,009,346 4.67% 0 0.00% 2,009,346 4.67%

Li Yu Venture Capital 314,991 1.49% 0 0.00% 314,991 1.49%

Harbinger Venture Capital 4,522,500 3.35% 0 0.00% 4,522,500 3.35%

United Venture Capital 1,440,000 4.52% 0 0.00% 1,440,000 4.52%

Chinese New Venture 1,564,080 5.00% 0 0.00% 1,564,080 5.00%

Han Chinese Venture Capital 2,324,000 4.73% 0 0.00% 2,324,000 4.73%

Kun Chi Venture Capital 3,333,333 3.33% 0 0.00% 3,333,333 3.33%

Asia Pacific Telecom 15,000,000 0.46% 0 0.00% 15,000,000 0.46%

Easy Card Investment Holding 1,872,000 2.40% 0 0.00% 1,872,000 2.40%

Kaohsiung Rapid Transit Co.Ltd 5,000,000 0.50% 0 0.00% 5,000,000 0.50%

Da Chiang International 8,620,690 4.31% 0 0.00% 8,620,690 4.31%

Lien An Service 125,000 5.00% 0 0.00% 125,000 5.00%

MasterCard Incorporated( note 2) 10,316 0.01% 0 0.00% 10,316 0.01%

Visa Incorporated(note 2) 584,124 0.07% 0 0.00% 584,124 0.07%

Taiwan High-Speed Rail Corp.(note 1) 30,000,000 0.28% 0 0.00% 30,000,000 0.28%

Note 1: The bank holds preferred shares of Taiwan High-Speed Rail Corp.Note 2: Endowed assets

58

A. Shares and dividends

a. Sources of capital Base date: March.31, 2012; Unit: share/NT$

Month year

Issuing price

Registered capital Paid-in capital Source of

capital NoteAmount of shares Value Amount of

shares Value

2009.12 13.5 4,915,752,571 49,157,525,710 4,915,752,571 49,157,525,710 Cash capital increment

MOEA No. 09901005390 Jan.12,2010 (note)

Note : Cash capital increment by issuing 740,740,740 new common shares via private placement at issuing price of NT$13.5 per share for face value of NT$10

Kinds of sharesRegistered capital

NoteShares in circulation Share not issued Total

Common shares 4,727,517,277shares 0shares 4,727,517,277shares Not listed

C-type preferred shares 188,235,294shares 0shares 188,235,294shares Not listed

Total 4,915,752,571shares 0shares 4,915,752,571shares

Information related to general application system: Not applicable

b. Makeup of shareholders (Common shares) Base date: March.31, 2012

Makeup of shareholders

Amount

Government agencies Financial institutions Other

institutions Individuals

Foreign institutions

and foreigners

Total

Number 0 1 0 0 0 1

Amount of shares 0 4,727,517,277 0 0 0 4,727,517,277

Share of stake 0% 100% 0% 0% 0% 100%

Makeup of shareholders (C-type preferred shares) Base date: March.31, 2012

Makeup of shareholders

Amount

Government agencies

Financial institutions Other institutions Individuals

Foreign institutions and

foreigners Total

Number 0 1 0 0 0 1

Amount of shares 0 188,235,294 0 0 0 188,235,294

Share of stake 0% 100% 0% 0% 0% 100%

IV.FundRaisingActivities

4

59

c.DiversificationofshareholdingDiversification of shareholding (common shares)

Base date:March.31, 2012;Face value per share: NT$10

Grades of shareholding Number of shareholders Amount of shares owned Share of stake

1 to 999 0 0 0%

1,000 to 5,000 0 0 0%

5,001 to 10,000 0 0 0%

10,001 to 15,000 0 0 0%

15,001 to 20,000 0 0 0%

20,001 to 30,000 0 0 0%

30,001 to 50,000 0 0 0%

50,001 to 100,000 0 0 0%

100,001 to 200,000 0 0 0%

200,001 to 400,000 0 0 0%

400,001 to 600,000 0 0 0%

600,001 to 800,000 0 0 0%

800,001 to 1,000,000 0 0 0%

Own grading for 1,000,001 and more shares 1 4,727,517,277 100%

Total 1 4,727,517,277 100%

Diversification of shareholding (C-type preferred shares)Base date:March.31, 2012;Face value per share: NT$10

Grades of shareholding Number of shareholders Amount of shares owned Share of stake

Own grading for 1,000,001and more shares 1 188,235,294 100%

Total 1 188,235,294 100%

d. List of major shareholders Base date:March.31, 2012

Shares

Names of major shareholders

Amount of shares owned (including common and preferred shares) Share of stake

Taishin Financial Holding Co., Ltd. 4,915,752,571 100%

Note: Taishin bank is 100% owned subsidiary of Taishin Financial Holding Co., Ltd.

60

I V. Fund Raising Activities

e. Information on share prices, book value, earnings, and dividend in the recent two years

Unit: NT$

Year

Item2011 2010 March 31, 2012

Market price per share (note 1)

Highest Note 1 Note 1 Note 1

lowest Note 1 Note 1 Note 1

Average Note 1 Note 1 Note 1

Book value per share (note 2)

Before dividend payout (NT$ ) 12.62 12.14 13.16

After dividend payout (NT$ ) Note 4 11.00 N/A

Earnings per share

Weighted average amount ofshares (1,000 shares) 4,727,517 4,727,517 4,727,517

Earning per share (NT$ ) 1.61 1.70 0.51

Dividend per share

Cash dividend Note 4 1.14 N/A

Stock dividend from retained earnings Note 4 0 N/A

Stock dividend from legal reserves Note 4 0 N/A

Accumulated retained dividend (NT$1,000 ) (note 3) 120,000 - 149,836

Analysis of investmentreturns

P/E ratio (note 5) Note 1 Note 1 Note 1

Price/earnings ratio (note 6) Note 1 Note 1 Note 1

Yield rate of cash dividend(note 7) Note 1 Note 1 Note 1

Note 1: Not applicable due to absence of market price for reference since the company is not listed on the centralized or over-the-counter market Note 2: On the basis of book value per share of common shares Note 3: Accumulated retained dividends for preferred sharesNote 4: The board of directors has yet to approve, on behalf of shareholder’s meeting, the proposal for profit sharing for 2011

f. Dividend policy and the status of execution

1. Dividend policy

According to the company’s corporate charter, earnings in the final accounts, should it exist, should be used to pay tax and duties, with the remainder being used to cover loss of previous year first. If there is still surplus, appropriate legal reserves and special legal reserves. For the balance, pay out stock dividend and bonus to preferred shares. Should there till be surplus, appropriate 0.01% of the amount as employee bonus. The remaining surplus should be combined with retained earnings at the beginning of the period, for payout of stock dividend and bonus for common shareholders in part or in entirety. For stock bonus, the objects of payout can include employees of affiliates.

61

As a subsidiary of Taishin Financial Holding, the bank should support the need of the operating fund of the parent company. Under the principle of maintaining the bank’s capital adequacy ratio at the reasonable level, except the payout of dividend and bonus of preferred shares, the dividend and bonus payout for common shareholders should be made in the form of cash dividend in principle.The company should also the policy of stable stock dividend and cash payout.

When the bank’s capital adequacy rate may fail to reach reasonable level, except the payout of stock dividend and bonus for preferred shares, payout of stock dividend and bonus for common shares should be made in the form of 50% cash dividend and 50% stock dividend in principle. The ratio, however, can be adjusted according to the status of profits, corporate funds, capital accumulation, and dilution effect of stock dividend. The dilution effect of stock-dividend payout should not exceed 20% for estimated after-tax earnings per share after the issuance of new shares.

2. Status of execution

The board of directors will resolve to issue NT$120,000,000 of cash dividend for preferred shares, NT$5,310,475,000 of cash dividend for common shares, and NT$531,000 of employee bonus for 2011.

3. Adjustment of stock-dividend policy

Earnings in the final accounts, should it exist, should be used to pay tax and duties, with the remainder being used to cover loss of previous year first. If there is still surplus, appropriate legal reserves and special legal reserves. For the balance, pay out stock dividend and bonus to preferred shares. Should there till be surplus, appropriate 0.01% of the amount as employee bonus. The remaining surplus should be combined with retained earnings at the beginning of the period, for payout of stock dividend and bonus for common shareholders in part or in entirety. For stock bonus, the objects of payout can include employees of affiliates.

g. Effect of resolution of the shareholders’ meeting to issue stock dividend on the bank’s business performance and earnings per share: Nil

h. Employee bonus and compensations for directors and supervisors

1. Percentages and scope of employee bonus and compensations for directors and supervisors:

According to the company’s corporate charter, earnings in the final accounts, should it exist, should be used to pay tax and duties, with the remainder being used to cover loss of previous year first. If there is still surplus, 30% of the amount should be appropriated for legal reserves and special legal reserves according to law regulation. The balance should be used in priority for dividend and bonus payout for preferred shares according to actual issuing prices. 0.01% of the remainder should be used for bonus payout for employees before being appropriated for retained earnings. The balance then should be

62


combined with the retained earnings at the beginning of the said period for dividend and bonus payout for shareholders of common shares.

For stock bonus, the objects of payout can include employees of affiliates.

Percentages and scope for compensations for directors and supervisors:

After Taishin Bank becomes 100%-owned subsidiary of Taishin Financial Holding, its directors and supervisors are appointed by the parent company. The 57th meeting of 5th board of directors on April 3, 2003 approved the revision of article 44 of the corporate charter, removing payout of compensations for directors and supervisors. The revision was approved by the Ministry of Economic Affairs (MOEA, No. 09201117920, April 20, 2003).

2. Accounting treatment for the difference between accrual and actual payment for employee bonus and compensations for directors and supervisors.

There is no difference between the estimated employee bonus and the actual amount of payout for the current period.

3. Information on proposal of the board of directors to issue employee bonus

(1) Payout of cash bonus for employees, stock dividend, and compensations for board directors and supervisors. If there is a difference between accrual and actual payment, please explain the reason:

There is no difference between the estimated employee bonus and the actual amount of payout for the current period.

(2) Share of proposed stock bonus payout for employees in capital increment from retained earnings: N/A

(3) Earnings per share after the proposed payout of employee bonus and compensations for board directors and and supervisors: NT$1.61 per share.

4. Use of the earnings of the previous year for payout of employee bonus and compensations for board directors and supervisors:

There is no difference between the estimated employee bonus and the actual amount of payout for the previous year.

i. Buyback of the bank’s shares: Nil

63

B. Issuanceoffinancialbonds

Types of financial bonds(note 1)

First issuance of subordinated financial bonds in 2005

Second issuance of subordinated financial bonds in 2005

Date and number of the approval document of the central regulator FSC, No. 0930031635, Nov. 9, 2004 FSC No. 0930031635, Nov. 9, 2004

Issuing date March 4, 2005 April 28, 2005

Face value NT$500,000, NT$1 M., NT$10 M. NT$10 M.

Issuing and trading place (note 2) ROC ROC

Denomination currency New Taiwan dollar New Taiwan dollar

Issuing price Same as face value Same as face value

Total amount NT$1.508 B. NT$3.3 B.

Coupon

Bond A: The bank’s posted floating rate of one-year time savings deposit+0.30% for the first five years. The bank’s posted floating rate of one-year time savings deposit+0.50% from the sixth year. Bond B:Fixed 2.25% for the first five years. The bank’s posted floating rate of one-year time savings deposit+0.75% from the sixth year.

Yea 1-7: fixed rate of 2.70%.Year 8-12: Should bond holders waive right to execute put option in the year;the bank will give them an interest markup of 0.8% on its posted fixed rate of one-year time savings deposit. Should the bank waive its right to execute redemption option in the year, the bank will pay an interest markup of 0.95% on its posted fixed rate of one-year time savings deposit, which should be reset per annum.

Maturity 10 years from the issue date. Maturity on March 4, 2015

12 years from the issue date. Maturity on April 28, 2017

Status Subordinated Subordinated

Guarantee institution Nil Nil

Trustee Nil Nil

Underwriter Nil Nil

Certifying lawyer - -

Certifying CPA (note 3) Peter Tsai Peter Tsai

Certifying financial institution Taishin Bills Finance Taishin Bills Finance

Repayment method Appropriation of budget from business revenue or issuance of new bonds

Appropriation of budget from business revenue or issuance of new bonds

Unpaid balance NT$1.508 B. NT$3.3 B.

Paid-in capital in the previous year NT$31,753,524,000 NT$31,753,524,000

Post-final accounts book value in the previous year NT$59,657,278,000 NT$59,657,278,000

Status of contract performance Normal Normal

64



First issuance of subordinated financial bonds in 2005

Second issuance of subordinated financial bonds in 2005

Stipulations for redemption or early liquidation

The bank can redeem the entirety or part of the bond by repaying the principal, and interest since five years from the issue date on March 4, 2010 and the information will be posted on the bank’s website or in major daily newspapers in the place of the bank’s headquarters one month ago.

1. Upon the maturity of the bonds, carrying terms of seven, eight, nine, ten or eleven years, should bond holders execute put option or the bank executes call option according to the term sheet of “Put Option and Call Option”, the bank will repay the principals and interests to bond holders.

2. Conditions for the exercise of put and call option: The interest rate is based on the fixed rate for one-year time savings deposit posted by the bank on the website of the Central Bank of China on 10:30 a.m. of March 10 of 2012, 2013, 2014, 2015, and 2016 (if it’s a non-business day, it will be postponed to the next business day). Should the interest rate stand at 1.85% or less, the bond holder may exercise put option and should the interest rate higher than 1.85%, the bank may exercise call option.

3. Put option by bond holders: Should bond holders intend to exercise put option, they should inform the bank their intension with “notice for the exercise of put option” within 10 days following the fulfillment of the conditions for the exercise of put option and the bank should make a public announcement about the call option notice in major daily newspapers in the site of its headquarters 30 days before the date for current interest payment.

4. Call option by the bank: Should the bank intend to exercise its call option, it should make a public announcement in major daily newspapers in the place of its headquarters 30 days before the interest payment date.

5. Even if only some bond holders exercise the above put option, the bond will be defined as matured entirely and de-listed in OTC

Conditions for conversion or exchange - -

Restrictive stipulation (note 4) - -

Fund utilization plan To support the actual need of medium- and long-term loan

To support the actual need of medium- and long-term loan

The total amount of the issuance and outstanding bonds in the percentage of the book value of previous year (%)

52.31 57.84

Eligible capital and type Yes, Tier II Yes, Tier II

Name of rating agency, issue date, and the rating (note 5) - -

Note 1: The number of columns is adjusted according to the actual number of issuance. Note 2: Fill in overseas corporate bonds (including those issued by offshore banking units).Note 3: Refer to certified public accounts for the issuance of the financial bond.Note 4: Such as second-lien bonds, restriction to the payout of cash dividend, overseas investment, and maintenance of adequate assets ratio. Note 5: If nothing, no need to fill in. Note 6: Mark up private placement in conspicuous manner. Note 7: List the outstanding amount of unpaid financial bonds according to the same official document of the regulator.

65


Third issuance of subordinated financial bonds in 2005

Fourth issuance of subordinated financial bonds in 2005

Date and number of the approval document of the central regulator FSC No. 0930031635 Nov. 9, 2004 FSC No.0930031635 Nov. 9, 2004

Issuing date May 18, 2005 June 6, 2005

Face value NT$100 M. NT$100 M., NT$10 M., NT$1 M.

Issuing and trading place (Note 2) ROC ROC

Denomination currency New Taiwan dollar New Taiwan dollar

Issuing price Same as face value Same as face value

Total amount NT$5 B. NT$5.192 bn

Coupon

Year 1-7: The bank’s posted fixed rate for one-year time savings deposit+0.80%Year 8-12: The bank’s posted fixed rate for one-year time savings deposit+1.10%The face interest rate is re-set every year.

Bond A,B:Fixed rate 2.70% for the first seven years and fixed rate 3.20% for the eighth through the 12thyearBond C:The bank’s posted floating rate for one-year time savings deposit + 0.65%. The face interest rate is re-set every year.

Maturity 12 years, maturity date: May 18, 2017 12 years, maturity date: June 6, 2017

Status Subordinated Subordinated

Guarantee institution Nil Nil

Trustee Nil Nil

Underwriter Nil Nil

Certifying lawyer - -

Certifying CPA (Note 3) Peter Tsai Peter Tsai

Certifying financial institution Taishin Bills Finance Taishin Bills Finance


Appropriation of budget from business revenue or issuance of new bonds

Unpaid balance NT$5 B. NT$5.192 B.

Paid-in capital in the previous year NT$31,753,524,000 NT$31,753,524,000

Post-final accounts book value in the previous year NT$59,657,278,000 NT$59,657,278,000

Status of contract performance Normal Normal

Stipulations for redemption or early liquidation

The bank can redeem the entirety of part of the bond by repaying the principal, plus interest, seven years after the issuance of the bond (on May 18, 2012) or on every interest payment date afterwards with a written notice issued seven business days before the date, on any other day with a written notice issued two months before the date.

The bank can redeem the entirety of part of the bond by repaying the principal, plus interest, seven years after the issuance of the bond (on June 6, 2012) or on every interest payment date afterwards with a written notice issued seven business days before the date, on any other day with a written notice issued two months before the date.

Conditions for conversion or exchange - -

Restrictive stipulation (note 4) - -

Fund utilization plan To support the actual need of medium- and long-term loan

To support the actual need of medium- and long-term loan


66.22 74.93

Eligible capital and type Yes, Tier II Yes, Tier II

Name of rating agency, issue date, and the rating (note 5) - -


66


Types of financial bonds (note 1) First issuance of subordinated financial bonds in 2010

Date and number of the approval document of the central regulator FSC No. 09900101150, Mar.23,2010

Issuing date April.12, 2010

Face value NT$ 50M

Issuing and trading place (note 2) ROC

Denomination currency New Taiwan dollar

Issuing price Same as face value

Total amount NT$10 bn

Coupon

Bond A:Fixed interest rate at 2.65% per annumBond B:Interest rate is set at “the floating interest rate for one-year time savings deposit of Chunghwa Post Co., Ltd.” plus 1.5%. The paper rate will adjusted annually according to the following standard. “The floating rate for time savings deposit of Chunghwa Post Co., Ltd.” is based on the rate posted at the website of the Central Bank of China at 10:30 a.m., two days before the date for starting the calculation of interest.

Maturity 7 years from the issue date. Maturity on April.12, 2017

Status Subordinated

Guarantee institution Nil

Trustee Nil

Underwriter Nil

Certifying lawyer -

Certifying CPA (note 3) Yang, Qinzhen

Certifying financial institution Not applicable


Unpaid balance NT$10 bn

Paid-in capital in the previous year NT$49,157,525,000

Post-final accounts book value in the previous year NT$53,433,376,000

Status of contract performance Normal

Stipulations for redemption or early liquidation Nil

Conditions for conversion or exchange -

Restrictive stipulation (note 4) -

Fund utilization plan Improve financial structure and raise capital adequacy rate.


46.79

Eligible capital and type Yes, Tier II

Name of rating agency, issue date, and the rating (note 5) “twA” set by Taiwan Ratings on April 6, 2010.


67

C. Issuance of preferred shares

Issuing (undertaking) date (note 2)Item

March 30, 2007 Preferred share C via private placement (note 3)

Face value NT$10

Issuing price NT$17 per share

Amount of shares 188,235,294 shares

Total value NT$3,199,999,998

Right and obligation

Dividend and bonus payout 3.75% per annum (non-cumulative)

Allocation of remaining property Preference over common shares

Exercise of voting right No voting or election right at shareholders’ meeting but having the right of being elected and the voting right at the preferred C shareholders’ meeting.

Others Entitled to subscription right for new shares at cash capital increment, same to common shares

Outstanding Preferred shares

The amount of redemption or conversion

0

The amount of non-redemption or non-conversion

NT$3,199,999,998

Redemption or conversion stipulation

Preferred share C may be converted to common share at 1:1 since March 22, 2009. Preferred share C is a perpetual security and the bank may redeem by earnings or issuing new shares since year 10 if and only if the bank’s capital adequacy ratio after redemption is above the regulator’s requirement and the bank receives an approval from the regulator

Market priceper share

2009

Highest -

Lowest -

Average -

2010

Highest -

Lowest -

Average -

2011

Highest -

Lowest -

Average -

Current year as of April.30, 2012 (note 4)

Highest -

Lowest -

Average -

Other rights

The amount of conversion or subscription as of annual report printed.

Nil

Terms of conversion right or subscription Refer to the company’s corporate charter

The impact on Preferred C shareholders, possibility on dilution and the impact on current shareholders Nil

The impact on capital adequacy ratio after redemption Reduced by 0.79% approximately

Note 1: Preferred shares being handled include those to be issued via public or private placement. Public-placement preferred shares being handled referred to those approved by the commission, while private-placement preferred shares being handled referred to those approved by the board of directors.

Note 2: The number of columns can be adjusted according to the number of cases. Note 3: Mark cases of private placement conspicuously. Note 4: Should fill in data of the current year until the date for the publication of the yearbook. Note 5: Preferred shares with share-subscription option should be filled in the following table.

68


D. Issuanceofoverseasdepositorycertificates:Nil

E. Issuance of stock options for employees: Nil

Names of managerial staffers with 10 largest stock options valued over NT$30 million: Nil.

F. Acquisitionoforselltootherfinancialinstitutions

1. Mandatory disclosure of the opinions of certified public accountant on the propriety of share-swap ratio for the acquisition of or sell to other financial institutions in the recent one year: Nil

2. Mandatory disclosure of the acquisition of or sell to other financial institutions by a bank listed on the centralized or over-the-counter market in the recent five years and of the opinions of underwriting securities firms for the cases conducted via the issuance of new shares: Not applicable

3. Mandatory disclosure of the execution of the acquisition of or sell to other financial institutions via issuance of new shares by a bank not listed on the centralized or over-the-counter market and its effect on the interest of shareholders: Nil

4. Mandatory disclosure of the execution of the resolution passed by the board of directors for acquiring or selling to other financial institutions via the issuance of new sharers and the basic information on the financial institutions in the recent year and as of the date of the publication of the annual report.

Name of financial institution Taishin Bills Finance

Address 9th-10th fl., No. 118, Ren-ai Road, Sec. 4, Daan District, Taipei City

Chief Executive Helena Kuo

Paid in capital 5,140,000

Major business items

Certification, underwriting, agency, dealership, guarantee, and endorsement of short-term bills, agent for call loans between financial institutions, agent and dealer for government bonds, financial bonds, and corporate bonds, and handling of derivatives approved by the regulator.

Financial data for Jan.21, 2011

Total assets 17,685,349

Total liabilities 11,789,937

Total equity 5,895,412

Interest income 7,788

Net income 51,215

Business expense 14,106

After-tax net profit 18,721

Earnings per share $ 0.036

For undergoing merger and the acceptance of new shares floated by other financial institutions, disclose their execution and the effect on the interest of shareholders: Not applicable.

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G. Status of the execution of fund-utilization plan

As of the end of the quarter preceding the date of the publication of the annual report, the bank had completed the execution of the fund utilization plan for the issuance of securities or financial bonds via public or private placement and there is no fund utilization plan in the recent three years whose execution has been completed but has yet to manifest its benefits or which fails to achieve the goal in execution schedule or benefits.

a. Contents of plan1. Previous issuance of securities via public or private placement and issuance of financial bonds which

has yet to be completed: Nil2. Plan completed in recent three years which has yet to manifest its benefits: Nil3. Changes in the contents of plan: Nil4. Source and utilization of fund: Nil5. Reasons for the changes: Nil6. Benefits before and after the changes and date for the submission of the change to shareholders’

meeting: Nil7. Posting of the information on the change on the designated website: Nil

b. Status of execution

Fund utilization plan for the issuance of securities or financial bonds via public or private placement and issuance of financial bonds which had yet to be completed at the end of the quarter preceding the date of the publication of the annual report or fund utilization plan in the recent three years whose execution has been completed but has yet to manifest its benefits or which fails to achieve the goal in execution schedule or benefits: Nil

1. Effect on shareholders’ interest and improvement plan: Nil2. Comparison and explanation for the items of fixed assets and net income for plan whose contents

involve the acquisition of or sell to other companies or expansion or establishment of fixed assets:Nil3. Explanation of the effect of plan involving equity investment in other companies on the company’s

business performance or investment gain/loss: Nil4. Comparison and explanation for changes in financial ratio, capital adequacy ratio, net income/loss,

working capital, and earnings per share for plan involving the expansion of working capital and improvement of financial structure: Nil

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A. Business contents

a. Growth and change in various business items

1. Wealth Management

Our wealth management business is mainly focused with total assets exceeding NT$1 million or customers with contracted loans exceeding NT$8 million. For wealth management, the bank provides tailor-made financial consulting service to wealth management customers. Via strong Financial advisory system, we evaluate each client’s needs and preferences according to their lifecycle, financial needs and risk tolerance to develop the custom recommendations.

The bank’s wealth management operation covers sound financial planning, investment portfolio management, asset allocation recommendations and a broad range of financial products, like local and foreign currency deposits, derivatives, insurances and loans.The bank’s wealth-management operation provides various preferential treatments to customers according to the different levels of entrusted assets. For customers with entrusted assets exceeding NT$10 million, the bank will provide dedicated treatment and events for payback to customers. In addition, provide dedicated physical examination to customers, so that they can take care of their health.

2. Consumer banking

The bank’s consumer-banking operation covers consumption loans (housing loan, auto loan, unsecured loan, and subordinated housing loan), credit card, micro corporate loans, e-cash flow and online payment service for small and medium enterprises. It provides various financial products developed according to market differentiation and the needs of various client groups, as well as various loaning programs to meet the financial needs of clients.

3. Corporate banking

The bank’s wholesale banking operation provides an array of financial products and services to various institutional clients, including corporations, government-owned companies and financial institutions. The business scope includes the businesses of commercial and investment bank, such as deposits, short-and long-term financing, guarantee, trade finance, syndicated loans, bond transaction, short-term paper, factoring, cash management, e-banking for corporate financial network, foreign exchange and interest-rate derivatives, financial advisory, asset securitization, and discretionary assets management, etc.

4. e- financial business

e-finance business includes ATM, the bank’s official website, online banking/online ATM, mobile banking, and payment platform. It can assist various business units to introduce products and e-service, and is in charge of evaluating the feasibility of applying domestic and overseas new technologies into financial service.

V.BusinessStatus

5

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In order to further strengthen the brand image of Taishin Bank, the bank organized various artistic, cultural, and financial events, as well as a number of lively and innovative marketing activities. Meanwhile, it continued to push “around-the-clock convenient financial service,” encouraging customers to join online banking/mobile banking, so that members can enjoy plural, convenient, and innovative financial payment service. It also continuously organize various customer-group marketing events, to boost the trading adherence of existing members and attract more non-customers to interact with the bank via recommendation marketing, so as to make Taishin a leading financial brand.

2011 was an important year for the development of Taishin mobile banking. Many important functions can be accessed online, including inquiry of details of foreign exchange accounts, transfer of general NT dollar deposits to time deposit, non-designated fund transfer, and payment platform. The membership has exceeded 100,000 persons and trading volume has risen month by month. Certification service for mobile device in 2011 enabled Taishin mobile banking to carry out non-designated fund transfer. The function will also be available for fund trading and foreign-currency trading in 2012, making trading safer and more convenient.

5. Trust (Financial Products Division)

In addition to continuing the promotion of “planned money trust” and assisting customers in dealing with the tax saving and share borrowing of “securities trust. For planned trust business, the bank continued to push “money trust” and assist customers to undertake tax saving and lend stock holding via “securities trust.” In addition, to meet the diversified trust need of corporate customers, the bank will launch “employee shareholding trust” in the first half of 2012 and “employee savings trust” in the second half of 2012. to help enterprises achieve the goal of retaining talents via adequate compensation and incentives, as well as facilitate the effort to solicit the business related to selection of investment targets by laborers for their pension funds.

For collective management, the bank pioneered the rollout of “So Easy targeted wealth-management plan,” which covers targeted date-type collective management accounts (with the series consisting of Taishin 2015/2020/2030/2040/2050 collective management accounts) and global (right-payout type) collective management account featuring fixed yield, to as to provide customers complete life-target wealth management plan.

For custodian business, in response to the business opportunities related to share listing of overseas enterprises on the local bourse and permission for mainland Chinese employees to obtain stocks of listed parent firms via custodian bank, the bank launched “collective investment account for foreign and overseas Chinese employees” custodian business in March 2011.

Regarding the mutual-fund business, Taishin bank will continue to expand the product lineup of domestic and offshore funds, modify self-developed products and plan tailor-made products, thereby meeting the various requirements of our clients.

The bank offers quality overseas corporate bonds and financial bonds, for customers favoring fixed yields in their assets allocation. The bank began to accept the entrustment of professional investors to invest in offshore structured notes, so as to provide high-assets professional investors more investment options.

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V. Business Status

Shares of the bank’s major net income sources and their growth/ changes:

Net income share (%) 2011 2010

Retail banking 67% 67%

Wealth management 24% 21%

Consumption financing 24% 24%

Credit card 16% 17%

Cash card 3% 5%

Corporate banking 33% 33%

Total 100% 100%

b. Business plan for the current year


(1) Strengthen brand image, becoming the best wealth-management bank in the minds of customers.(2) Upgrade potential customer groups to wealth-management customer groups, deeply cultivate

wealth-management customer groups, so as to increase the number of wealth-management customers and boost product penetration rate for customers.

(3) Integrate customer-group analysis, provide member services from the angle of customers, consolidate various resources and products of Taishin Financial Holding, so as to provide customers one-stop-shopping service.

(4) Adhere to the core concept of “sincerity is the best service,” take care of customers’ assets from the angle of customers, and utilize the bank’s smart financial system to provide tailor-made assets deployment suggestion.

(5) Provide unique Taishin products to strengthen the completeness of product lineup. (6) Enhance the growth rate of wealth-management and insurance businesses, expand the scale of

deposits, enhance employee quality and customer satisfaction, and strengthen risk-management and crisis-handling capability.

(7) Further develop non-branch sales channels and utilize Internet media to develop online banking customers.

(8) Based on the concept of sustainable management and the goal of all-round assets management, continue introducing plural and new product business, so as to bring investors steady returns and assets growth in both bullish and bearish markets.

2. Consumer Banking

(1) Continue production innovation to strengthen core competitiveness and strengthen high-yield product management, so as to boost market share and effectively segregate market.

(2) Manage niche-group business and deeply cultivate customer relationship, to satisfy various needs of customers and enhance their contribution.

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(3) Strengthen the management of branch channel, materialize one-stop shopping service for clients, and enhance the extent of product penetration.

(4) Utilize analytical model and channel platform of the financial holding firm, to aggressively cultivate potential customers and expand market scale.

(5) Augment dynamic risk-management capability and strengthen assets quality.(6) Further improve workflow, enhance service efficiency, and cut operating cost.

3. Corporate banking

(1) Integrate plural financial products of financial holding firm, carry out deep cultivation of different customer groups, and develop quality clients.

(2) Expand trade-type financing and deepen cash management, so as to grasp fund flow of customers and alleviate the influence of fund cost.

(3) Cautiously cope with murky international financial situation, improve credit-extension flow, and strengthen risk management, so as to maintain good assets quality.

(4) Aggressively make overseas deployment, utilize leasing business platform in mainland China, accelerate the upgrading of representative’s office in Vietnam to branch, and prepare the establishment of Brisbane.

(5) Materialize the cooperative mechanism between retail and corporate banking, meet the plural needs of customers, and manifest the management synergy of the financial holding company.

(6) Continue upgrading and improvement of operating flow and system, so as to provide customers quality services.

4. e-financial business

In the year, except continuing adjustment of ATMs at convenience store, the bank will focus on deployment of online ATM deployment, and except continuing contact with small and medium enterprises, the bank will endeavor to forge third-party payment. It adds Smart Pay trading method to enhance the convenience of financial payment and pioneers the provision of international remittance service “Visa Money Transfer,” so as to complete fund transfer not only via online banking but also ATM. To materialize global financial service and provide even more convenient and smooth operation to customers, the bank has planned to overhaul banking website, online banking and ATM touch-screen operation, which will be completed in 2013.

Online security is a key issue for e-trading by customers. In the year, the bank will initiate encryption measure for e-bills, providing safer billing service. Except innovative service for various channels, the bank will formulate brand new “e-trading loyalty project,” enabling effective management and utilization of all e-trading record and conducting marketing activities via the platform, so as to induce customer trading.

To push its development, Taishin mobile banking will capitalize on the advantage of undertaking multi-currency and fund trading to roll out currency-swap and mutual-fund trading function. Along with the increasing enrichment of the functions of mobile banking, instant wealth-management will be an easy task. Meanwhile, to service the increasing tablet-PC users, Taishin mobile banking has launched iPad app in 2012.

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V. Business Status

5. Trust (Financial Products Division)

(1) Enhance “So Easy target wealth-management project,” to boost the scale of installment products and push installment payment products, so satisfy customer needs.

(2) Push yield-type securities, actively engage in securities lending market, and develop potential customer groups for securities-delivery deposits, so as to create securities lending income for clients.

(3) Develop “employee welfare trust” business, so as to satisfy enterprises need for talent retention and strengthen the relationship with corporate customers.

(4) Push the custodian business of “Collective Investment Account for Mainland China or Overseas Foreign National Employees,” so as to tap the tremendous business potential connected with share listing of overseas enterprises on the local bourse and the growing internationalization of domestic listed companies.

(5) Provide differentiated fund products to different customer groups, so as to meet the needs of various customers.

(6) Provide tailor-made services to different kinds of customer groups. (7) Establish fund wealth-management network, to provide one-stop online wealth-management

service. (8) Modify the product lineup of domestic and offshore funds, so as to satisfy the client’s needs about

asset allocation planning.(9) Offer multi-theme overseas ETF (exchange traded fund) and satisfy customers’ need for investable

targets under any market condition. (10) Offer quality corporate and overseas financial bonds.(11) Except two successful investments in offshore structured notes which can be invested by non-

professional investors via the intermediation of banks, continue to accept entrustment by professional investors to invest in offshore structured notes limited to professional investors, so as to meet the need of professional investors with high assets.

c. Market analysis


(1) Status of market demand and supply and growth potential: █ In 2010, the number of rich persons in Taiwan jumped 42.3% and the total value of their wealth leapt 49.6% to US$264 billion, with both growth rates ranking third place in the Asia-Pacific region, trailing Hong Kong and India.

█ Taiwan was hurt the least in Asia by the global financial tsunami. █ The stable cross-Taiwan Strait relationship and the signing of cross-Strait Economic Cooperation Framework Agreement (ECFA) creates a good domestic political and economic climate and prompts Taiwanese financial institutions to accelerate their cooperation with mainland Chinese counterparts.

█With the stabilization of domestic and foreign financial and stock markets, enterprises continuously render good business performance, which will lead to even more prosperous development of wealth-management business.

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(2) The bank’s competitive niche: █Under the customer-centered principle, continue to listen to the opinions of customers so as to provide them optimal services, thereby consolidating customer relationship.

█Continuous innovation of products and operating flow, good capability for self-made products, rapid adjustment to changes in market environment and customer needs.

█ The core concept of “sincerity is the best service” into a built-in principle have won the bank acknowledgement from various domestic and foreign institutions in 2011.

█ The bank provides plural products, pioneers the use of scientific financial analysis, and offers tailor-made wealth-management objectives and assets-deployment suggestion. For sophisticated management of customers, the bank develops 3M management structure based on customer needs, including seqment management (SM), product management (PM), and channel management (CM).

█ Take advantage of the existence of numerous branches and automated channel, integrate the resources of the financial holding company, and manifest the synergy of integrated marketing via cross selling.

█ Professional team, coupled with the capability of systematic risk assessment and monitoring, responds to market changes rapidly and provides customers solutions.

█Cut resources waste via continuous inspection and improvement of operating flow. █ Provide customers optimal products via database marketing, by analyzing the types of existing customers and understanding deeply the needs of different customers.

(3) Favorable factors for development outlook: █ Thanks to stable cross-Taiwan Strait relationship, the signing of cross-Strait Economic Cooperation Framework Agreement, and the reduction of inheritance and gift tax, outflow funds begin to return to Taiwan.

█ Leeway for the development of wealth-management business in Taiwan is very large. █ The government oversees the merger among financial institutions will further highlight the competitiveness of the bank.

█ Business opportunities related to new pension system for private-school employees and self-selection investment targets for new labor pension system.

(4) Unfavorable factors for development outlook: █ The rigorous regulation and management of the regulator over structured notes and trust-type investment products runs counter to market opening.

█ Large-scale increase in the need for domestic and foreign financial talents will accelerate the turnover of talents.

█ Foreign firms acquire domestic banks to expand their business scale and introduce their operational mode into the nation, thereby augmenting overall banking competitiveness.

(5) The bank’s countermeasures: █ Provide optimal service in more efficient manner via continuous inspection and improvement of operating flow.

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V. Business Status

█Construct complete career plan and educational/training program for employees. █ Via continuing review and improvement of flow, provide optimal service in a more efficient manner.

█ Integrate resources of financial holding company, manifest the synergy of cross selling, and increase the number of products held by customers, so as to become the major corresponding bank of customers.

█Change product-oriented strategy to customer-oriented strategy and integrate customer-group analysis, so as to understand customer needs and provide them proper products.

2. Consumer Banking

(1) Status of market demand and supply and growth potential: As the global economy continued to pick up in the first half of 2011, consumer confidence

strengthened along with the upturn of the financial market and consumption outlays of retailing, dining, and autos spiked. In the second half of 2011, however, the deterioration of the debt problem in the U.S. and Europe impacted the global financial market, dampening stock trading and private consumption. The Directorate General of Budget, Accounting, and Statistics (DGBAS) publicized that the economic growth rate reached 4.04% in 2011 when outstanding amount of consumer loans inched up 1.2% and credit-card spending value rose 8.5%.

In 2012, European-debt will also overshadow global economic recovery. Global Insight predicts that the global economy will grow 2.7% in the year. Due to the effect of global economic slowdown on global trade, the DGBAS predicts that Taiwan’s economy will grow 3.85% this year. However, along with improvement on the job market, gradual upturn of the domestic economy, and large-scale growth of mainland Chinese tourists, private consumption and momentum may improve, boosting the growth of consumer banking market.

(2) The bank’s competitive niche: █Offer plural financial services for different customer groups, to meet the needs of customers in different aspects.

█ Branches with competitiveness and automated channel, and e-banking service platform with complete function.

█ Excellent risk management capability which takes care of business growth and assets quality simultaneously.

█ Further improve workflow, enhance service efficiency, and cut operating cost. █Marketing synergy via cross-selling overseen by the financial Holding company, stressing the provision of one-stop-shopping services.

(3) Favorable factors for development outlook: █ Stable development of cross-Taiwan Strait relationship and gradually liberalization of the financial policy.

█ Further expansion of high-tier wealth-management market. █ Along with gradual upturn of the economy, financial market and private consumption momentum may expand simultaneously.

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(4) Unfavorable factors for development outlook: █ European and U.S.-debt problem will still be major variables for global economic recovery. █ Price hike and inflationary pressure will constrain some consumption momentum. █ Acute price competition in consumer banking market will impact profit margin.

(5) The bank’s countermeasures: █ Further enhance product innovation capability and expand the management of niche products. █ Provide proper financial products and service for different customer groups and customers with different risk features, so as to deeply cultivate customer relationship.

█Utilize scientific analytical technique and mode to further expand customer-group basis and establish new product service and sales mode.

█ In line with market and industrial changes, further strengthen the management mechanism for integrating risk and marketing strategy.

█Utilize new technology and creative marketing, to cultivate new clients and develop new channels.

█Continue improvement of flow and provide rapid and convenient all-round financial services.

3. Corporate Banking

(1) Status of market demand and supply and growth potential: The uncertainty of the global financial climate resulting from the European-debt crisis dampens the

strength of global economic recovery. In the domestic market, constrained by business overlapping and homogeneity, the environment of low interest spread will not improve in the short term, squeezing the profit margin of banks. Therefore, in addition to deep cultivation of existing clients, the bank will provide plural financial products and maintain long-term relationship via integrated marketing. In line with the government’s policy of assisting small and medium enterprises, it will also enhance interest spread and expand customer foundation.

In line with the gradual liberation of cross-Strait financing, accelerate establishment of branches and leading firms by domestic financial institutions in mainland China, so as to expand customer groups and improve the overbanking problem at the domestic front.

(2) The bank’s competitive niche: █ Take advantage of the plural products of the financial holding company and integrate the abundant professional talent of corporate and retail banking and product line, to provide customers one-stop-shopping financial service.

█Gradually deployment cash-management infrastructural engineering, extending B2B business mode to B2C business.

█Maintain good assets quality via excellent risk-management mechanism, to pursue steady profit growth.

█Dedicate the innovation of financial products and services, so as to meet customers’ diversified financial needs.

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V. Business Status

(3) Favorable factors for development outlook: █ Via differentiated management measures, the Financial Supervisory Commission gradually induces financial institutions to raise their loan coverage rate to over 1%, contributing to the healthy business development of financial institutions and improve excessive price competition for domestic credit extension.

█ Along with the liberalization of cross-Taiwan Strait financial policy, enhance financial services and business opportunities for Taiwanese-invested firms.

█ Fast-growing demand for offshore banking in the wake of rapid development of Chinese and emerging Asian economics.

█ Possess plural product resources and development capability of the financial holding firm to provide one-stop-shopping financial services to customers.

(4) Unfavorable factors for development outlook: █Over-banking status:homogeneous traditional financial products are difficult to create high profits.

█With domestic economy overshadowed by European-debt crisis, the Central Bank of China becomes conservative in interest-rate policy and the low-interest climate affects profits.

█ Since measures for cross-Strait financial exchanges fail to relax the OCED condition for investments by domestic banks in mainland China, the process for domestic banks to establish branches in mainland China has been postponed.

█Overseas income is limited, since there is only one overseas business base.

(5) The bank’s countermeasures: █ Provide differentiated services and products to different client segments, so as to create service value.

█Deeply cultivate relationship with clients via single customer view approach. █ Take advantage of the leasing platform being established by the financial holding firm in mainland China, expand customer groups and consolidate existing customer relationship.

█Deploy in the Asia-Pacific market by accelerating the upgrading of representative’s office to Vietnam to branch and the preparation for the setup of Brisbane and Singapore branches.

d.R&Doffinancialproductsandbusinessdevelopmentstatus

1. Major financial products and new business units of retail and consumer banking in recent two years

Item 2010 2011

Mortgage Loan NT$252.6n NT$266.1bn

Auto Loan NT$13.73n NT$15.74bn

Other consumer loan NT$15.83bn NT$21.63bn

Credit card 3,003,000 cards 2,961,000 cards

(1) As of the end of 2011, outstanding mortgages reached NT$266.1 billion, with market share of 4.6%; outstanding auto loans amounted to NT$15.74 billion, with market share of 22.4%, ranking first

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place in the market; and outstanding amount of other consumer loans hit NT$21.63 billion, with market share of 2.9%.Outstadning amount of overall consumer loans grew 7.5% in the year.

(2) As of the end of 2011, the bank’s credit cards in circulation numbered 2.961million cards, with market share of 9%, ranking third place in the market/ the number of effective cards amounted to 1.905million cards, with 9.2% market share, ranking fourth place; in the year, total credit-card spending value topped NT$147.6 billion, for market share of 16.8%, ranking third place.

(3) 1n 2011, set up marketing alliance department under consumer-banking marketing division to develop auto-loan business via strategic alliance. As of the end of December 2011, outstanding loans reached NT$510 million.

2. Major financial products of corporate banking in recent two years:

(1) Outstanding loans extended by domestic branches to state and private enterprises With equal emphasis on risk management and business development, the bank’s outstanding

loans for state and private enterprises reached NT$190.7 billion at the end of 2011, up 20% over a year earlier, ranking 14th place among 37 domestic financial institutions, similar to the ranking a year earlier.

(2) Outstanding loans for small and medium businesses In line with the government’s policy of providing the assistance of loaning to small and medium

businesses and the purpose of expanding the bank’s customer group, the bank extended NT$54.6 billion of outstanding loans to small and medium businesses as of the end of 2011, up 19% over a year earlier, compared with the industry average of 11%.

(3) L/C and export negotiation To grasp the fund flow of customers and strengthen trade financing business, issuance of L/Cs and

undertaking of export negotiations topped US$984 million and US$1.322 billion, respectively, in 2011, up 4% and 9%.

(4) Factoring business The bank was a market leader for factoring business in 2011 and undertook NT$297.1 billion

of such business in 2011, declined 21%, with equal emphasis on the maintenance of customer relationship, pricing and risk.

3. Trust (Financial Products Division) Unit: NT$ 1 million

Year 2010 AUM 2011 AUM

So Easy target wealth-management plan 6,614 6,167

Planned money trust 4,874 5,541

Securities trust 35,141 29,258

Structured notes 30,767 26,061

ETF offshore 1,964 2,083

Overseas bonds 1,346 1,184

Domestic and overseas funds 102,922 106,783

Taishin money-market mutual trust fund 1,076 1,018

Designated collective management account 1,105 435

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V. Business Status

4. R&D achievements in recent two years

(1) Launch Fish co-branded Easy Card, giving 0.2% automated refund for common card spending.(2) Launch titanium card, enhancing the benefit of concentrated consumption, step up the development

of credit-card medium- and high-end consumer groups, and provide different payback to target customer groups, thereby augmenting profits.

(3) Family Mart-Easy co-branded card hit the market, to tap the small-amount payment market.(4) Free choice card hit the market—The first card in the market allowing customers to freely choose

card appearance, benefits, and payback program, as well as change related items according to life style, capable meeting all the needs of customers.

(5) Ever Rich co-branded card hit the market—Issue co-branded card with Ever Rich Duty Free Shop, meeting the consumption needs of frequent overseas travelers.

(6) Provide highly flexible mortgages, granting customers new options for repayment of mortgages, so as to meet the different needs of consumers.

(7) Provide secondary-lien mortgages, with collaterals located at primary areas. (8) Launch of payment platform, enabling customers to make online payments with credit cards or

financial cards for various bills, including telecom, utilities, cable TV, tuition, and credit-card debts.

5. Future R&D plan

(1) Retail and consumer banking █ Via constant testing and improvement, establish effective marketing mode to create profits and competitive advantage.

█Capitalize on the popularity of cloud technology and mobile equipment to develop “mobile payment” business, offering consumers more options for payment.

█Maintain cooperative relationship with strategic joint marketing:develop new channels to solicit new customers.

█ Further improve workflow , carrying out image platform and paperless process, enhanceservice efficiency, and cut operating cost.

(2) Corporate banking █ Strengthen development and price quoting capability for various derivative with linkage to credit, merchandise, energy and equity.

█ Expand pluralized treasury product lineup via combination of interest rate, exchange rate, bond, bulk commodities, and equity.

█ Integrate existing credit-line risk-management system and operating platform, so as to upgrade service efficiency and quality and lower credit-extension and operating risk.

█ Plan financial trading system to accommodate the rollout of new diversified products in the future and integrate credit-line management for derivatives, and improve trading flow and enhance trading capability.

█ Push renminbi-related business via the Hong Kong platform. █ Expand the services of offshore banking units and overseas bases and strengthen the function of e-network trading platform, so as to satisfy customers’ need for cross-border fund maneuvering.

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e. Short-and long-term business development plans

1. Wealth management

(1) Short-term business development plan █Manage customers via localization manner: Materialize the core concept of “utmost service” to enhance customer satisfaction and deep-cultivate the businesses of residents, stores, small and medium business owners, and salary-transfer companies in the neighborhood of branches.

█Continue enhance the sales ration of self-developed products to enhance the overall profit margin.

█Continue strengthening risk controlling mechanism and risk management and avoid improper sale, and provide clients professional planning of asset allocation.

█ Strengthen the wealth management team, enhance employee’s expertise. █ Improve customer analytical ability, to provide proper products.

(2) Long-term business development plan █ Strengthen brand image and become the best wealth-management bank in the minds of customers, thereby becoming a leading financial institution in Taiwan.

█ Via segmented customer group management, enhance the performance of the bank and enhance customer satisfaction.

█ Achieve breakthrough in private banking business among domestic banks. █ Actively develop overseas markets.

2. Consumer banking

(1) Short-term business development plan █ Expand the management of high-yield products. █Maintain leading status for various products in the consumer-banking market. █ Strengthen unsecured business and loans for small and medium businesses and micro enterprises. █Cultivate different potential customers via the strategies of mobile banking, online recommendation marketing, and community transmission.

█Continue strengthen brand image, boost brand visibility and favorable image. █Continue enhancing the expertise and product knowledge of staffers.

(2) Long-term business development plan █On the basis of customer needs, innovate new product functions and services, so as to establish differentiated market value.

█Continue customer group management and deepen customer relationship, so as to become the major corresponding bank of customers.

█Manifest synergy of the financial holding firm and provide convenient and plural financial services.

█Continue materializing the bank’s core value, cultivate all-round financial elites, and consolidate the foundation for future development.

█ Expand overseas and cross-border retail business scope to China to increase bank’s competition.

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V. Business Status

3. Corporate Banking

(1) Short-term business development plan █Materialize segmented customer group management and integrate marketing of plural products of the financial holding firm, so as to boost customer relationship.

█ Segment groups and industries, to effectively control group/industry risks and resources allocation.

█ Emphasize transactional banking products to grasp client’s cash flows and integrated business opportunities from customer side.

█Duplicate business mode of small and medium enterprises and cooperate with corporate/retail banking channels to expand potential customer groups among small and medium enterprises and business scale.

█ Actively deploy overseas markets, accelerate the establishment of Singapore and Brisbane branches, and apply for the upgrading of the representative’s office in Vietnam to a branch.

█ To accelerate internal talented people cultivation and retain a post to respond business growth.

(2) Long-term business development plan █ Strengthen and expand core business, continue deep-cultivation service for customer groups, establish long-term relationship with customers, and enhance the contribution of customers.

█Grasp the fund flow of customers and provide integrated marketing opportunities via utilization of the financial holding firm’s resources.

█ Plan to set up branches in the Asia-Pacific region to expand overseas business and partner with local banks in areas without business bases.

█Continue recruitment and cultivation of overseas talents to support the medium- and long-term development of overseas business.

4. Trust Investment (Financial Products Division)

(1) Short-term business development plan █ Expand the assets of “So Easy” target wealth-management plan by pushing salary-transfer accounts and the sales of dollar-averaging mutual fund.

█ Plan online marketing for “So Easy” target wealth-management plan, so as to develop massive online customer groups.

█ Actively strive for money and securities trust of corporate banking and the business of “ Collective Investment Account for Mainland China or Overseas Foreign Employees ,” so as to expand the channel for corporate banking.

█ Provide planning-type trust customers with systematized transaction and electronic service to satisfy customer’s need.

█Develop “employee welfare trust” business and provide corporate-banking customers diversified trust products, so as to develop personal wealth-management business for employees.

█ Provide more convenient e-trading service function.

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█ Provide more diversified online wealth-management information. █ Expand the sales volume of financial products and the scale of assets under management on the basis of asset allocation , so as to increase the fee income.

█ Exploit new platform of overseas ETF by share placement, and offer multi-theme underlying to meet client’s needs arising from market change.

█Continue to provide quality overseas financial bonds and corporate bonds denominated in various foreign currencies, to help with the assets allocation of customers with preference for fixed yields.

█Continue join forces with various general agents to push offshore structured notes suited to common investors, so as to enhance customer service and provide more attractive investment products.

(2) Long-term business development plan █Develop various “securities trust” to satisfy the multiple needs of customers for tax savings and revenue creation, so as to increase market share and gain leadership in the market.

█ Set up the “So Easy target wealth management plan” to cash in on the business of the new labor-pension system which will let labors choose their own investments. Actively engage in the promotion of the retirement issues and build complete system platform, as to gain leadership in the market.

█ Establish system platform for self selection of investment targets for employee welfare trust, so as to tap the business opportunities related to self selection of investment targets by laborers for pension funds.

█Continue concerning about change in regulations, so as to develop new trust business. █Continue to expand the sales volume of regular savings plan and the overall scale of assets under management, so as to increase the stability of the future fee Income.

█Continue concerning about change in related regulations, so as to develop new trust business. █Continue track and develop risk-management indices, so as to grasp product performance and risk for customers.

█Continue introducing pluralized new products and business based on the concept of sustainable management and the objective of all-round wealth management, in order to bring steady returns to investors in both bullish and bearish markets.

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V. Business Status

B. Employee

a. Employee information in the recent two years and as of the date of the publication of the annual report.

Base date: March 31,2012

Year 2010 2011 Current year as of March.31, 2012

Total 6,290 6,279 6,075

Average age 34.4 35 35.4

Average service years 6.5 6.9 7.2

Shares of education degrees

Doctor 0.05% 0.08% 0.08%

Master 14.66% 15.00% 15.36%

College 79.92% 79.77% 79.26%

Senior high 5.29% 5.06% 5.17%

Under Senior high 0.08% 0.08% 0.13%

Kinds of professional certificates owned by employees and their

numbers

Test for trust business 2,857 2,852 2,781

Basic test fro internal control 3,408 3,333 3,251

Qualification test for property insurance staffers 2,946 3,096 2,990

Investment-type insurance policy staffers. 1,532 1,583 1,531

Life insurance staffers 3,502 3,389 3,294

Future business staffers 510 475 472

Securities investment analysis 20 20 17

Senior securities staffers 434 424 418

Investment trust and consulting staffers 352 340 336

B-type laws and regulations for investment trust and consulting (including professional ethical code)

1,365 1,444 1,402

b. Employee training and development

To support continuous business growth, personal training and development has been the consistent insistence of Taishin Financial Holding. In 2011, the total number of trainees reached more than 150,000 people/attendances and the average annual training hours per person hit 48 hours. Measures for personnel training and development meant to enhance colleague’s overall competitive edge follow:

1. Taishin University

Utilize the integration of Taishin University and CTMS training management system, so that every staffer can take advantage of systematic and structured course design and system function to carry out plural learning. The platform features “transparent learning information,” “diversified learning channel,” “and integrated learning resources.” In addition, gradually carry out credit-point system, certification system, and the design associated with career development of staffers.

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2. Talented Accumulation Program

Choosing and recruiting different levels of colleagues by the 360 evaluation mechanism and the committee, and developing MA, AMA, and TSP three-stratum talented accumulation program. Planning training for different levels of talents to reach the destination by the core value and strategy. From 2010, cooperate with National Taiwan University to incorporate EMBA courses into cultivation plan for talent bank. Via study and lecture on cases, integrate the practical management experience of talent-bank members and theories, to further enhance management capability.

3. Individual Development Program

Confirm the personal ability gap with unified MBO and the ultimate position by training, rotating, senior counselor’s assisting, attending meetings and participation in development projects. Being with superior is the most suitable way to advance the development. Meanwhile, establish training deposit book system, under which the company appropriates 10,000 points of training resources annually for every staffer, as subsidy for staffers to obtain professional certificates, cultivate second expertise, and enhance foreign-language and computer skill, so as to integrate personal development and corporate objective, thereby boosting the overall competiveness of the organization.

C. Corporate responsibility and ethical code

In addition to the management of core financial business, Taishin Financial Holding also emphasizes the social responsibility of an enterprise. It integrates the resources of subsidiaries for long-term dedication to public services, charity, arts and humanity, sports sponsorship, and promotion of financial academics. Via substantial payback to the society, community, and underprivileged groups, it exercises the corporate power to contribute to the betterment of the nation and society.

Public service and charity

1. “Care for Taiwan” series

From 2002, Taishin Financial Holding has joined hands with its affiliate PayEasy.com to carry out “Care for Taiwan” series events, helping disaster victims in Hsinyi village, Chungliao village, Yuchih village, and Kuohsing village to develop local economy. Based on the concept of “giving fishing pole and teaching fishing,” it rallies people to sponsor agricultural products, pushes credit-card donation, and pushes characteristic products and travels at backward areas, successfully helping with the reconstruction of disaster-stricken areas and posing as a paradigm for corporate participation in public services.

From 2005, “Care for Taiwan” series has targeted “Kuohsing-village karate teenager team,” helping those teenagers raise training fund via the establishment of theme website and the utilization of media reporting. In 2011, Taishin Financial Holding sponsored the team to attend Singapore International Karate Tournament, World Youth Karate Tournament, and Asia Youth Karate Tournament, with excellent achievements. In the year, the team won 124 medals in domestic and overseas tournaments (including 43 gold medals, 36 silver medals, and 45 copper medals).

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V. Business Status

In 2008, “Care for Taiwan” series extended its reach to rice plantation in Taiwan. In order to sustain Taiwan’s price plantation and enable people to each pure Taiwanese rice, Taishin Financial Holding and PayEasy.com established brand new platform for production and marketing of Taiwanese rice, pushing corporate sponsorship of “one-acre rice paddy” and family sponsorship of “one-acre rice paddy of my family” programs, so that Taiwan’s good rice can penetrate local families. In addition to benefiting the health of local people and boosting the income of farmers, the program has created more working opportunities in Taiwan villages. In total, Taishin Financial Holding has sponsored rice procurement for over 83 units, equivalent to 41.5 hectares of rice paddies. It has given 40,000 rice gift boxes to over 10,000 Taishin customers and staffers, which have eaten over 140,000 kilos of quality Taiwanese rice. In addition to benefiting rice farmers, it has also carried out excellent marketing for good Taiwanese rice.

2. Taishin Charity Foundation

In 2010, Taishin Bank set up “Taishin Charity Foundation,” mainly for engagement in public-service and charity events, including assistance for underprivileged groups to enhance their skills for livelihood and improve life, and sponsorship for the events of other public-service groups and seminars for society-related issues, and other social welfare-related charity events, with the goal of helping underprivileged groups achieve “independence in economy and daily life.”

After its establishment, the foundation rolled out “your ballot decides the strength of love” event, the first online public-service event in Taiwan. Under the event, small and medium social-welfare institutions were invited to put forth proposals online for voting by online social groups, in deciding the recipients of donations. The first such event attracted the participation of 204 social-welfare groups, which jumped to 307 for the second event. A number of other public-service partners, such as Franz Collection, Advantech Foundation, and Chunghwa Telecom Foundation, also joined the event and the scope of donation recipients were expanded to culture and education, and digital learning.

In addition, Taishin executives, colleagues, Yani Tseng, the world’s female golf champion, and other local people also donated to the foundation, boosting its scale from NT$4.3 million to over NT$10 million, with the number of recipient groups expanded from 31 to 64. Besides, Taishin Bank Public Service and Charity Foundation held the first exhibition for its achievements in 2011 and produced three-minute documentary for introducing each of the first recipient groups, so as help them face the public and solicit even more support from the latter.

Academics and Art and Culture

1. Academic promotion

Taishin Financial Holding also continuously takes part in important academic seminars, in the hope of helping with the healthy development of Taiwan’s financial industry and the overall financial market, via exchanges and discussion among elites from the fields of industries, government, and academics. In 2011, Taishin took part in various academic seminars, including summer national assembly of AIESEC, international seminar on corporate restructuring, 19th Asia-Pacific seminar on finance, economy, accounting, and management, NTU international seminar on economy, finance, and accounting, and international summit on corporate governance.

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2. Art and culture

Taishin Bank donated to establish “Taishin Bank Culture and Art Foundation” in 2011, with the theme of “promoting cultural life quality and strengthening artistic-development environment.” It supports arts as a nonprofit institution, intensifies exchanges between artistic innovation and private industry, and realizes the corporate social responsibility of payback to the society. The foundation initiated “Taishin Artistic Award,” giving highest glory and encourage to award winners in the two fields of visual and performing arts. 2011 marked the ninth edition of the award. Meanwhile, Taishin Financial Holding also arranges multi-functional performing and exhibition space at its headquarters building to invite artists and musicians to hold artistic exhibitions and noontime musical concerts.

Sports sponsorship

In 2011, Taishin sponsored Yani Tseng, the world’s female golfing champion, the first Taiwanese financial institution to do so. It also invited Yani Tseng to become the endorser of Taishin Charity Foundation, to help with promoting the “your ballot decides the strength of love” event, so as to augment Taishin’s social influence.

Environmental Protection

For environmental protection and anti-global warming, Taishin Financial Holding has dedicated to the environmental protection and energy conservation. During summertime, it pushes “Cool Biz” event, asking employees to shed garment during office time and set air-conditioning temperature at 26 Celsius degrees. Meanwhile, it has pushed paperless office for a long time. In 2010, it responded to the “turn off light for one hour to reduce carbon emission” event organized by the Society of Wilderness, to educate the public the importance of energy conservation and carbon abatement.

D. Information equipment

a. Major information systems

Items Names of systems Hardware Software Business contents

1 NT-dollar core system(B@NCS) ■ HP Superdome ■ HP-UX

■ ORACLE ■ B@NCS NT-dollar application system ■ B@NCS NT-dollar reporting system

2 Forex system (FITAS) ■ IBM AS/400 ■ IBM OS400 ■ FITAS

■ Import/Export forex deposit/loan ■ SWIFT global banking financial system

3 ATM front-end system(FEP) ■ IBM RS/6000

■ IBM AIX ■ IBM MQ ■ ORACLE

■ ATM front-end handling system ■ Financial clearance system

4Financial trading system(SUNGARD)

■ IBM X86 Server ■ MS Windows ■ SunGard ■ MS SQL

■ Treasury financial and treasury trading ■ Trading risk management system

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V. Business Status

Items Names of systems Hardware Software Business contents

5 Integrated data system (DAI) ■ HP Superdome ■ HP-UX

■ ORACLE ■ Operating database system(ODS) ■ Informaion warehousing(DW/DM)

6Automated sales application system(SFA)

■ HP Superdome ■ HP-UX ■ ORACLE

■ Instant customer browsing system(SCV) ■ Automated sales operation system(SFA)

7 Consumer Internet banking ■ SUN E6900

■ SUN Solaris ■ Weblogic ■ ORACLE

■ Transation services for NT-dollar, foreign exchange, funds and trusts, credit cards, insurance and stocks

8 B2Bank ■ IBM RS/6000 ■ IBM AIX ■ IBM Websphere ■ ORACLE

■ Corporate Internet banking systemfor NT-dollar, foreign exchange, e-collection and e-payment.

9Trust Investment product system(TIPS)

■ IBM X86 Server ■ MS Windows ■ MS SQL

■ Trading system of funds, trust loans, US bonds and ADR

10Credit card acquire frond-end system (CPS)

■ SUN M5000 ■ SUN Solaris ■ Weblogic ■ ORACLE

■ Credit card transaction switch

11

New corporate banking system (WBS)

■ IBM RS/6000 ■ IBM AIX ■ Weblogic ■ Oracle

■ Inquiry for NT dollar/foreign currency trading, credit-line management, and the management of guarantors and collateral.

12Image process management system (IPMS)

■ HP Unix ■ Weblogic ■ Oracle SOA ■ Oracle

■ Image process management system

13Factoring management system (OAEFB)

■ IBM RS/6000 ■ IBM AIX ■ Web logic ■ Oracle

■ Accounts receivable system

14Corporate-banking credit review system (OAECR)

■ IBM X86 Server ■ MS Windows ■ MS SQL ■ Corporate banking credit review system

b. Future development or installation plan 1. Expand the application of virtual server and cloud computing technology and flexibly utilize information

equipment to enhance service quality.2. Establish new computer central office according to the standard of international central office Tier III, to

assure the stability and safety of computer system. 3. Utilize VDI service to provide employees link-up operation without the restriction of locations, so as to

enhance the safety protection of data. 4. Prepare information system for overseas branches, including Brisbane and Singapore branches. 5. Strengthen the functional design of corporate-banking network, so as to enhance the utilization rate

of global trade and small and medium enterprises, in addition to expanding the scope of the domestic market.

89

6. Continue undertaking corporate-banking core system, expand its application in overseas branches, and improve foreign-currency loaning and deposit operation and forex-product system.

7. Expand the development and application of mobile banking and further expand link-up application services for mobile devices, such as iPhone and iPad.

8. Establish integrated system for front-, medium-, and rear-end operations for financial-product trading, so as to enhance the market competitiveness for financial trading.

9. Establish customer credit-risk calculation system, so as to effective the default risk of customers.

c. Emergent backup and security protection system1. In response to the execution of personal information law, the bank introduced personal information

management standard and establish personal information management system. 2. Test environment-introduced information shield and conversion system, so as to strengthen information

protection mechanism and enhance safety management. 3. Replace wireless network station and strengthen wireless encryption mechanism for mobile devices,

so as to enhance the safety of wireless transmission. 4. Conduct application system business impact analysis (BIA) and address the contingency plan, so as to

establish a backup system capable of meeting business need.5. Recruit consultancy to analyze current security and privacy posture, as well as to provide recommendations

for improvement. Indentify the merits and weakness of current security practices and provide a repeatable methodology to conduct periodic security assessments.

6. Protect data and enable business innovation with advanced solutions for data security, access and compliance.

E. Labor-management relationship

a. Various employee welfare measures, retirement system and its execution, labor-management agreements, and various employee interest protection measures are listed in the following:

1. Employee Insurance

(1) Labor Insurance: The company bears 70% of the insurance premium; employee bears 20%.(2) Health Insurance: The company bears 60% of insurance premium; employees bears 30%.(3) Group Insurance: Employees are entitled to the coverage of association life insurance, accident

insurance , medical insurance, surgery and injury medical service insurance, anti-cancer healthy insurance, and vocational disaster insurance, whose premiums are born by the company.

(4) Travel safety insurance: Employees traveling abroad for company affairs are covered by travel safety insurance, whose premiums are borne by the company.

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V. Business Status

2. Employee Welfares

The company has instituted “ employee welfare measures” and “ employee welfare committee” to facilitate the promotion of employee welfares. Employees are entitled to marriage subsidy, birth subsidy, funeral subsidy, hospitalization subsidy, festival subsidy, birthday subsidy, travel subsidy, club subsidy, and educational subsidy for offspring.

In addition to various subsidies provided to employee welfare committee, the company also provides employees physical examination, subsidies for participating in wedding and funeral, long-service incentive, subsidy for self development (including subsidy for studying foreign language and computer and subsidy for professional certificates), and subsidy for on-the-job training.

For employee assistance, the company cooperates with Teacher Chang Foundation in providing “employee daily-life service program” and establishes “care-for-employee mailbox” and “care-for-employee line” for use by employees.

3. Employee Retirement System

The company has instituted “employee retirement measures” according to which pensions for retirees are paid according to the labor pension system and related laws/regulations.

4. Annual Leaves

Employees are entitled to 7 days of annual leave when he/she serves one full year and more.

5. There is no other important agreement.

b. Specify loss resulting from labor-management disputes in the recent year and as of date of the publication of the annual report and disclose the value of current and possible future loss and countermeasures, as well as reasons for inability to estimate loss.

Thanks to the harmonious labor-management relationship, there has no loss resulting from labor-management dispute in recent years.

F. Important contract: Nil

G. Approval of applications for securitized products according to the statuteforthesecuritizationoffinancialassetsorthestatuteforrealty securitization in the recent year and related information: For details, refer to the description of the bank’s assets securitization business in point six, chapter seven.

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A.Briefbalancesheetandincomestatementinrecentfiveyears

Balance Sheet Unit: NT$1,000

Year

Items

Financial information in recent five years Current year as of March.31,

2012 2011 2010

(new compilation)2009 2008 2007

Cash and cash equivalent, due from the Central Bank and call loans to other banks 40,645,345 50,522,320 136,515,846 140,063,783 144,640,436 39,215,055

Financial assets from changes at fair value through profit or loss 40,781,549 36,979,776 24,907,554 45,859,862 26,103,651 38,029,310

Bonds and securities purchased under resell agreements 1,058,738 2,992,554 2,420,000 0 0 177,578

Receivables, net 88,122,428 97,304,516 84,838,866 79,128,739 78,814,545 73,760,848

Loans, net 600,808,129 531,674,018 495,583,668 514,045,040 558,713,701 625,445,256

Available-for-sale financial assets 191,190,849 177,358,294 36,484,764 25,124,530 23,610,956 213,157,298

Held-to-maturity financial assets 2,421,241 3,312,094 6,214,140 8,102,021 15,658,652 2,089,847 Investments accounted for by the equity method, net 1,939,912 1,861,285 1,281,667 1,440,756 2,227,146 1,936,423

Other financial assets, net 2,893,816 2,941,610 2,873,039 3,083,144 2,399,698 2,878,589

Property and equipment, net 17,424,442 17,747,428 17,898,096 16,226,923 16,752,240 17,423,351

Intangible assets 1,921,980 2,079,117 1,605,915 0 0 1,865,739

Other assets, net 6,745,987 8,783,300 22,134,089 24,251,038 24,623,965 6,370,604

Total assets 995,954,416 933,556,312 832,757,644 857,325,836 893,544,990 1,022,349,898

Due to banks and Central bank 62,532,398 57,252,391 54,181,462 72,725,981 73,610,040 68,824,475 Financial liabilities at fair value through profit or loss 8,353,108 16,202,864 16,990,037 37,848,640 16,000,476 7,958,013

Bonds and securities sold under repurchase agreements. 43,486,925 32,611,770 7,239,422 11,780,535 19,244,688 50,689,176

Payables 22,379,981 27,040,897 18,956,708 22,271,480 27,335,247 19,349,831

Deposits 756,502,655 699,985,966 654,664,982 633,654,632 667,548,327 770,264,836

Bank debentures 25,000,000 25,000,000 25,000,000 36,100,000 40,100,000 25,000,000

Other financial liabilities 13,340,332 13,184,858 151,200 167,285 178,476 13,381,869

Other liabilities 1,377,985 1,584,681 2,140,457 911,917 1,345,616 1,311,487

Total liabilitiesPre-payout 932,973,384 872,863,427 779,324,268 815,460,470 845,362,870 956,779,687

Post-payout Note 2 878,376,915 779,985,137 Note 1 847,184,166 Note 2

Capital stock 49,157,526 49,157,526 49,157,526 41,750,118 41,750,118 49,157,526

Capital surplus 3,197,017 3,169,946 3,193,573 3,806,630 3,806,630 3,215,341

Retained earningsPre-payout 10,593,956 8,159,642 944,099 ( 3,210,060 ) 2,709,441 13,057,289

Post-payout Note 2 2,646,154 283,230 Note 1 888,145 Note 2Unrealized revaluation increments on property 6,093 0 0 0 0 4,388

Unrealized gain(loss) on available for sale financial assets 27,334 206,290 138,235 ( 481,283 ) ( 75,313 ) 136,363

Cumulative translation adjustments ( 539 ) ( 519 ) ( 57 ) ( 39 ) ( 8,717 ) ( 696 )

Unrealized loss from price drop for long-term investment ( 355 ) 0 0 0 ( 39 ) 0

Total stockholder’s equity

Pre-payout 62,981,032 60,692,885 53,433,376 41,865,366 48,182,120 65,570,211

Post-payout Note 2 55,179,397 52,772,507 Note 1 46,360,824 Note 2

Certifying CPA Yang Qinzhen Weng Rongsui Weng Rongsui Weng Rongsui Weng Rongsui Yang Qinzhen

Certifying CPA Peter Tsai Yang Qinzhen Yang Qinzhen Yang Qinzhen Yang Qinzhen Peter Tsai

Type of CPA’s auditing report Revision without

reservation

Standard without

reservation

Standard without

reservation

Standard without

reservation

Standard without

reservation

Standard without

reservation

Note 1: Proposal for the coverage of the company’s loss in 2008 was approved by the board of directors, on behalf of shareholder’s meeting, on June.18, 2009, along with the resolustion not to issue dividend.

Note 2: Proposal for the dividend payout from earnings in 2011 has yet to be approved by the board of directors.

VI.FinancialStatus

6

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VI. Financial Status

Brief Income Statement Unit: NT$1,000

Year

Items

Financial information in recent five yearsCurrent year as of March.31, 2012

2011 2010(new compilation)

2009 2008 2007

Net Interest Income 12,518,154 11,850,525 10,002,148 14,138,465 16,586,530 3,406,919

Net income and gains (losses) other than interest income 12,042,587 12,895,822 9,202,859 9,446,541 11,460,311 2,482,912

Provision for Loan Losses ( 1,985,975 ) ( 1,211,169 ) ( 4,265,429 ) ( 15,584,932 ) ( 11,496,635 ) 214,966

Operating expenses ( 13,362,370 ) ( 12,391,889 ) ( 11,476,422 ) ( 13,922,650 ) ( 13,844,276 ) ( 3,259,604 )

Income (Loss) Before Income Tax 9,212,396 11,143,289 3,463,156 ( 5,922,576 ) 2,705,930 2,845,193

Income (Loss) after Income Tax 7,739,100 8,172,742 821,279 ( 4,098,205 ) 2,719,653 2,463,333

Extraordinary Gain ( after tax) 0 0 122,820 0 0 0

Accumulated effect from change in accounting principle (after tax) 0 0 0 0 0 0

Net Income ( Loss) 7,739,100 8,172,742 944,099 ( 4,098,205 ) 2,719,653 2,463,333

Basic Earnings ( Loss ) per share ( New Taiwan dollars ) 1.61 1.70 0.21 ( 1.03 ) 0.68 0.51

93

B.Financialanalysisforrecentfiveyears

Financial Analysis Unit:NT$1,000

Year

Items

Financial information in recent five years Current year as of March

31, 2012 2011 2010 2009 2008 2007

Managem

ent ability

Deposit/loan ratio(%) 80.47 76.88 76.81 82.73 84.63 82.25

NPL ratio (%) 0.16 0.33 0.58 1.38 1.99 0.27

Interest income/average outstanding deposit ratio (%) 0.95 0.73 1.18 2.61 2.44 0.26

Interest income/average outstanding loans ratio (%) 3.39 3.23 3.43 5.71 5.89 0.87

Turnover rate of total assets ( times ) 2.47 2.65 2.31 2.75 3.14 0.58

Revenue per employee (NT$1,000) 3,912 3,934 3,281 3,890 3,990 970

Profit per employee (NT$1,000) 1,233 1,299 161 ( 676 ) 387 405

Profit-m

aking Capability

Returns on first-tier capital (%) 15.87 20.83 7.59 ( 13.80 ) 6.97 4.79

Returns on assets (%) 0.80 0.91 0.11 ( 0.47 ) 0.32 0.24

Returns on shareholder’s equity (%) 12.52 14.32 1.98 ( 9.10 ) 6.55 3.83

Net Profit rate (%) 31.51 33.03 4.92 ( 17.38 ) 9.70 41.82

Earnings per share(NT$1) 1.61 1.70 0.21 ( 1.03 ) 0.68 0.51

Financial structure %

Liabilities/assets ratio 93.68 93.50 93.58 95.12 94.61 93.59

Fixed assets/shareholder’s equity ratio 27.67 29.24 33.50 38.76 34.77 26.57

Grow

th rate

Assets growth 6.68 12.10 ( 2.87 ) ( 4.05 ) 8.58 Annual analysis

data, not applicable to

quarterly report

Profit growth ( 17.33 ) 221.77 158.47 ( 318.87 ) 110.22 Annual analysis

data, not applicable to

quarterly report

Cash flow

Cash flow ratio (%) 8.24 15.32 ( 0.10 ) 5.91 33.05 12.21

Propriety of cash flow ratio (%) 404.20 1,434.57 1,115.21 553.53 504.69 275.13

Cash-flow satisfaction ratio (%) ( 14.05 ) ( 24.46 ) ( 9.57 ) 21.16 ( 40.61 ) ( 37.99 )

Liquid reserve ratio 25.02 26.04 22.75 20.25 18.98 26.39

Secured loans for related parties (NT$1,000) 3,961,203 3,748,978 5,183,344 16,677,172 21,427,905 5,693,980

Share of outstanding secured loans for related parties in total outstanding loans. 0.59 0.61 0.91 2.83 3.40 0.83

Business scale

Market share of assets 2.64% 2.59% 2.49% 2.64% 2.95% 2.73%

Market share of book value 2.72% 2.77% 2.61% 2.18% 2.56% 2.71%

Market share of deposit 2.65% 2.62% 2.53% 2.61% 2.96% 2.68%

Market share of loans 2.67% 2.58% 2.58% 2.67% 2.98% 2.75%

Reasons for changes in various financial ratios in recent two years:1. Profit-making and growth rate: After maintain assets quality, the bank racked up increase in the profits, as well as ratios related to profit-making capability, in the year than 2011.2. Cash flow: Please refer to explanation for liquidity analysis for recent two years.

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Calculation formula:

1. Management capability

(1) Deposit/loan ratio=total deposits/total loans(2) NPL ratio=Total NPL ratio/total loans(3) Ratio of interest outlay in average outstanding deposits=total interest outlay/annual average of outstanding

deposits(4) Ratio of interest income in annual average of outstanding loans/Total interest income/annual average of

outstanding loans(5) Turnover rate of assets=Net revenue/total assets value. (6) Revenue per employee (note 7) =net revenue/total number of employees(7) Profit per employee=After-tax net profit/total number of employees

2. Profit-making capability

(1) Returns on first-category capital=pre-tax income/average value of first-category capital(2) Returns on assets=after-tax income/average value of assets(3) Returns on shareholders’ equity=after-tax income/average value of net shareholders’ equity(4) Net profit rate=after-tax income/net revenue(5) Earnings per share= (after-tax net profit-dividend for preferred shares/weighted average of issued shares

3. Financial structure

(1) Ratio of liabilities in assets=total liabilities/total assets(2) Ratio of fixed assets in book value=net value of fixed assets/net shareholders’ equity

4. Growth rate

(1) Assets growth rate= (total assets in current year-total assets in previous year)/total assets in previous year(2) Profit growth= (Pre-tax income in current year-pre-tax income in previous year)/pre-tax income in previous

year

5. Cash flow

(1) Cash flow ratio=net cash flow for business activities/(call loans and overdraft of bank and peers + promissory notes payable +financial liabilities from change in fair value + liabilities of repot bills and bonds + accounts payable due in one year)

(2) Propriety ratio of net cash flow=net cash flow for business activities in recent five years/ (capital outlay + cash dividend) in recent five years

(3) Satisfactory rate for cash flow=net cash flow for business activities/net cash flow for investments

6. Liquid reserves ratio=liquid assets required by the Central Bank of China/required liquid reserves for various liabilities

7. Analysis of business scale

(1) Market share of assets=total assets/total assets of financial institutions capable of undertaking deposit/loan business

(2) Market share of book value=book value/total book value of financial institutions capable of undertaking deposit/loan business

(3) Market share of deposits=total deposits/total deposits of financial institutions capable of undertaking deposit/loan business

(4) Market share of loans=total loans/total loans of financial institutions capable of undertaking deposit/loan business

95

BIS Ratio (Capital Adequacy Ratio) Unit:NT$ 1 Million

Year (note 1)

Analytical Items

BIS ratio in recent five years(note 2) BIS ratio in current year as of March.31, 2012(note5)2011 2010 2009 2008 2007

Eligible C

apital

Tier I capital

Common shares 47,275 47,275 47,275 39,868 39,868

Need not disclose

Perpetual non-accumulated preferred shares 1,882 1,882 1,882 1,882 1,882Perpetual Non-accumulated subordinated debtsCapital collected in advanceCapital surplus (except surplus deriving from value increment of fixed assets) 3,197 3,214 3,194 3,807 3,807

Legal reserves 2,646 283 813Special reserves 190 75Accumulated profit/loss 7,758 7,876 944 ( 2,049 ) 2,709Minority shareholding right Other items of shareholders’ equity ( 273 ) ( 157 ) ( 118 ) ( 797 ) ( 148 )Minus: good will 1,152 1,152 1,152 1,152 1,152Minus: unamortized loss from the sale of NPL Minus: items for capital reduction 2,101 2,525 1,712 1,490 2,069Total tier I capital 59,422 56,696 50,313 40,957 44,897

Tier II capital

Perpetual accumulated preferred shares Perpetual non-accumulated subordinated debtsCapital surplus from value increment of fixed assets 6

45% of unrealized gain from available for sale 135 144 116 142 29Convertible bondsGeneral provisions 7,604 6,367 4,963 1,611 533Long-term subordinated debts 21,097 22,058 19,939 20,478 22,448Non-perpetual preferred shoesCombination of perpetual non-accumulated preferred shares and subordinated debts which exceeds 15% of tier I capital Minus: items for capital reduction 2,101 2,525 1,712 3,539 2,069Total tier II capital 26,741 26,044 23,306 18,692 20,941

Tier III capital

Short-term subordinated debtsNon-perpetual preferred shares Total Tier III capital

Eligible Capital 86,163 82,740 73,619 59,649 65,837W

eighted risk assets

Credit risk

Standard approach 607,211 551,857 508,984 535,984 565,157Internal evaluation approach Securitized assets 1,158 1,514 620 806 641

Operating risk

Basic indicator approach

Standard approach /selective standard approach 36,815 34,888 38,272 45,552 59,291

Advanced measurement approach Market

risk Standard approach 30,258 20,863 20,417 24,316 36,537Internal model approach

Total risk assets 675,442 609,122 568,293 606,658 661,626BIS ratio 12.76% 13.58% 12.95% 9.83% 9.95%Ratio of tier I capital in risk weighted assets 8.80% 9.31% 8.85% 6.75% 6.79%Ratio of tier II capital in risk weighted assets 3.96% 4.27% 4.10% 3.08% 3.16%Ratio of tier III capital in risk weighted assets 0.00% 0.00% 0.00% 0.00% 0.00%Ratio of common shares in total assets 4.75% 5.19% 5.68% 4.65% 4.46%Explain reasons for changes in BIS ration in recent two phases (no need of analysis for change under 20%)No need of analysis, change in recent two phases is less than 20%.

* Should there be consolidated financial statement, consolidated capital adequacy rate should be disclosed.

96


Note 1: Specify year without re-auditing by CPA. Note 2: Fill in own capital and weighted risk-based assets according to “measures governing banking capital adequacy” and “explanation and table for the calculation method of

banking own capital and risk-based assets.”Note 3: For banks calculating credit risk according to the regulations for transitional period, please file in risk-based assets calculated according to credit-risk standards. Note 4: Calculation formula:

1. Eligible capital= tier I capital + tier II capital + tier III capital2. Total weighted risk assets=weighted credit-risk assets + capital provisions for (operating risk market risk) x 12.53. BIS ratio=Eligible capital/total weighted risk assets4. Ratio of tier I capital in risk assets= tier I capital/total weighted risk assets5. Ratio of tier II capital in risk assets= tier II capital/total weighted risk assets6. Ratio of tier III capital in risk assets=tier III capital/total weighted risk assets7. Ratio of common-share equity capital in total assets=common-share equity capital/total assets

Note 5: For listed companies or companies with stocks already traded at securities companies, include information until the previous quarter before the publication date of the yearbook. Specify whether financial information has been certified or perused by certified public accountants.

Note 6: For year with the implementation of Basel I, the table should be filled as the following: 1.List 50% of the reduction item for Basel I capital and the first-category reduction items and the remaining 50% and the second-category reduction item. 2.List the need for Basel I credit risk capital as the capital need based on credit-risk standards.

BIS Ratio ( Combination )Unit:NT$1 Million

Year (note 1)

Analytical Items

BIS ratio in recent five years(note 2) BIS ratio in Current

year as of March.31,

2012(note5)2011 2010 2009 2008 2007

Eligible C

apital

Tier 1 capital

Common shares 47,275 47,275 47,275 39,868 39,868

Need not disclose

Perpetual non-accumulated preferred shares 1,882 1,882 1,882 1,882 1,882Perpetual Non-accumulated subordinated debtsCapital collected in advanceCapital surplus (except surplus deriving from value increment of fixed assets) 3,197 3,214 3,194 3,807 3,807

Legal reserves 2,646 283 813Special reserves 190 75Accumulated profit/loss 7,758 7,876 944 ( 2,049 ) 2,709Minority shareholding right 367 414 344 543 1,157Other items of shareholders’ equity ( 273 ) ( 157 ) ( 118 ) ( 797 ) ( 148 )Minus: good will 1,152 1,152 1,152 1,152 1,152Minus: unamortized loss from the sale of NPL Minus: items for capital reduction 1,528 1,886 1,347 1,391 2,069Total tier 1 capital 60,362 57,749 51,022 41,599 46,054

Tier II capitalPerpetual accumulated preferred shares Perpetual non-accumulated subordinated debtsCapital surplus from value increment of fixed assets 6

45% of unrealized gain from available for sale 135 144 116 142 29Convertible bondsGeneral provisions 7,604 6,367 4,963 1,611 532Long-term subordinated debts 21,097 22,058 19,939 20,799 22,448Non-perpetual preferred shoesCombination of perpetual non-accumulated preferred shares and subordinated debts which exceeds 15% of tier I capital Minus: items for capital reduction 1,528 1,886 1,347 3,440 2,069Total tier II capital 27,314 26,683 23,671 19,112 20,940

Tier III capital

Short-term subordinated debtsNon-perpetual preferred shares Total Tier III capital

Eligible Capital 87,676 84,432 74,693 60,711 66,994

Weighted risk assets

Credit risk

Standard approach 607,931 553,501 510,883 535,050 564,926Internal evaluation approach Securitized assets 1,158 1,514 620 806 641

Operating risk

Basic indicator approach Standard approach /selective standard approach 36,815 34,888 38,272 45,552 59,291Advanced measurement approach

Market risk

Standard approach 30,280 20,881 20,452 24,415 36,537Internal model approach

Total risk assets 676,184 610,784 570,227 605,823 661,395BIS ratio 12.97% 13.82% 13.10% 10.02% 10.13%Ratio of tier I capital in risk weighted assets 8.93% 9.45% 8.95% 6.87% 6.96%Ratio of tier II capital in risk weighted assets 4.04% 4.37% 4.15% 3.15% 3.17%Ratio of tier III capital in risk weighted assets 0.00% 0.00% 0.00% 0.00% 0.00%Ratio of common shares in total assets 4.75% 5.19% 5.67% 4.65% 4.46%Explain reasons for changes in BIS ration in recent two phases (no need of analysis for change under 20%)No need of analysis, s change in recent two phases is less than 20%.

97

C. Inspectionreportonthefinancialstatementofthelatestyearbysupervisors

Inspection report of supervisor Taishin International Bank Co., Ltd

Attached please find 2011 business report, financial statement, and proposal for profit sharing, of which the financial statement has been audited and certified by CPAs Yang Qinchen and Peter Tsai of Deloitte Taiwan , as showing in the auditing report.

The supervisor has viewed the aforementioned documents and found no major inadequacies, thereby delivering this report to shareholder’s meeting, according to article 228 and 219, Company Law.

To Shareholder’s Meeting of Taishin International Bank:

Standing supervisor Tsay, Yang-Tzong

Supervisor Long-Su Lin


May.10, 2012

D.Financial statement of the latest year: Refer to appendix 1.

E.Consolidatedfinancialstatementofparentcompanyandsubsidiaryfortherecentyearcertifiedbycertifiedpublicaccountant:Refertoindex 2.

F.Shouldthereoccurfinancialinsolvencyofthebankanditsaffiliatesin the recent year and as of the date of the publication of the annual report,specifyitseffectonthebank’sfinance:Nil.

98

7

A. Financial status:

Main reasons for major changes in assets, liabilities, shareholders’ equity in recent years and effect Unit: NT$1,000

Year

Item2011 2010

(New Compilation)

Change

Value %

Asset

Cash and cash equivalent, due from the Central Bank and call loans to other banks 40,645,345 50,522,320 ( 9,876,975 ) -19.55%

Financial assets at fair value through profit or loss 40,781,549 36,979,776 3,801,773 10.28%

Bonds and securities purchased under resell agreements 1,058,738 2,992,554 ( 1,933,816 ) -64.62%

Available-for-sale financial assets 191,190,849 177,358,294 13,832,555 7.80%

Loan, net 600,808,129 531,674,018 69,134,111 13.00%

Receivable , net 88,122,428 97,304,516 ( 9,182,088 ) -9.44%

Hold-to-maturity financial assets 2,421,241 3,312,094 ( 890,853 ) -26.90%

Investments accounted for by the equity method, net 1,939,912 1,861,285 78,627 4.22%

Property and equipment, net 17,424,442 17,747,428 ( 322,986 ) -1.82%

Other financial assets 2,893,816 2,941,610 ( 47,794 ) -1.62%

Goodwill and intangible assets 1,921,980 2,079,117 ( 157,137 ) -7.56%

Other assets, net 6,745,987 8,783,300 ( 2,037,313 ) -23.20%

Total assets 995,954,416 933,556,312 62,398,104 6.68%

Liabilities

Due to banks and Central Bank 62,532,398 57,252,391 5,280,007 9.22%

Deposit 756,502,655 699,985,966 56,516,689 8.07%

Financial liabilities at fair value through profit or loss 8,353,108 16,202,864 ( 7,849,756 ) -48.45%

Bonds and securities sold under repurchase agreements 43,486,925 32,611,770 10,875,155 33.35%

Payables 22,379,981 27,040,897 ( 4,660,916 ) -17.24%

Bonds debentures 25,000,000 25,000,000 0 0.00%

Other financial liabilities 13,340,332 13,184,858 155,474 1.18%

Other liabilities 1,377,985 1,584,681 ( 206,696 ) -13.04%

Total liabilities 932,973,384 872,863,427 60,109,957 6.89%

Capital stock 49,157,526 49,157,526 0 0.00%

Capital surplus 3,197,017 3,169,946 27,071 0.85%

Retained earnings 10,593,956 8,159,642 2,434,314 29.83%

Unrealized revaluation increments on property 6,093 0 6,093 -

Unrealized gain (loss) on available for sale financial assets 27,334 206,290 ( 178,956 ) -86.75%

Cumulative translation adjustments ( 539 ) ( 519 ) ( 20 ) 3.85%

Other adjustment items in shareholders’ equity ( 355 ) 0 ( 355 ) 0.00%

Total shareholders’ equity 62,981,032 60,692,885 2,288,147 3.77%

1. Cash, cash equivalent, deposits with the Central Bank of China, and inter-bank call loans decreased, due to reduced deposits with the Central Bank of China.

2. Available-for-sale financial assets increase due to increased holding of corporate bonds and government bonds3. Discount and loan increase, mainly due to increase of long-term loans 4. Reduction of accounts receivable, mainly due to reduction of negotiable instrument and debt5. Increase of deposit and remittance, mainly due to increase in time deposits and savings deposit6. Increase in retained earnings, mainly due to increase in legal reserves

VII.ReviewandAnalysisofFinancialStatusandBusinessPerformanceandRisk-ManagementEvaluation

99

B. Management outcome:

Main reasons for major changes in revenue, net business profit, and pre-tax net profit in recent years, business goal and basis, their possible effect on the bank’s future finance, and countermeasures:

Unit: NT$1,000

Year

Item2011 2010

(New Compilation)

Change

Value %

Net interest income 12,518,154 11,850,525 667,629 5.63%

Interest income 19,404,839 16,777,250 2,627,589 15.66%

Interest expense ( 6,886,685 ) ( 4,926,725 ) ( 1,959,960 ) 39.78%

Net Income and Gains (Losses) other than interest income 12,042,587 12,895,822 ( 853,235 ) -6.62%

Fee income, net 6,117,143 6,670,825 ( 553,682 ) -8.30%

Gain on financial assets and liabilities at fair value from profit or loss 291,413 1,301,972 ( 1,010,559 ) -77.62%

Realized gain (loss) on available-for-sale financial assets ( 48,257 ) 133,133 ( 181,390 ) -136.25%

Investment income recognized under the equity method 103,373 453,641 ( 350,268 ) -77.21%

Exchange gain, net 838,041 339,810 498,231 146.62%

Collection of bad debt and overdue account 3,793,311 3,120,438 672,873 21.56%

Other miscellaneous net income 947,563 876,003 71,560 8.17%

Provisions for loan losses ( 1,985,975 ) ( 1,211,169 ) ( 774,806 ) 63.97%

Operating expense ( 13,362,370 ) ( 12,391,889 ) ( 970,481 ) 7.83%

Income (Loss) before income tax 9,212,396 11,143,289 ( 1,930,893 ) -17.33%

Income tax (expenses) benefit ( 1,473,296 ) ( 2,970,547 ) 1,497,251 -50.40%

Income (Loss) before extraordinary gain 7,739,100 8,172,742 ( 433,642 ) -5.31%

Accumulated effect from change in accounting principle (after tax) 0 0 0 0.00%

Extraordinary gain (after tax) 0 0 0 0.00%

Net income (loss) 7,739,100 8,172,742 ( 433,642) -5.31%

1. Interest income increases than last year, mainly due to increased interest income from loans2. Interest fees increases than last year, mainly due to increased income from deposit interests3. Financial assets and benefits from liabilities, listed in gains/loss from change in fair value, decreases, due to reduced evaluation of bonds

100

VII. Review and Analysis of Financial Status and Business Performance and Risk-Management Evaluation

C.Cashflow:Unit: %

YearItem 2011 2010

(New Compilation) Change

Cash flow ratio(%) 8.24 15.32 -46.21%

Propriety ratio for cash flow (%) 404.20 1,434.57 -71.82%

Satisfaction ratio for cash flow (%) (14.05) (24.46) -42.56%

1. Cash flow ratio decreased , mainly due to decrease of cash flow for current business activities 2. Propriety ratio for cash flow declined ,mainly due to decrease of cash influx caused by current operating activities than past year 3. Satisfaction ratio for cash flow rose, mainly due to decrease of cash influx caused by current investment activities.

Cash Flow Analysis for the Coming One Year Unit: NT$ 1 Million

Cash balance at the start of the period A

Forecast net cash flow from business activities

for the entire year B

Anticipated cash influx for the entire year C

Value of anticipated cash surplus (shortfall)

A+B+C

Remedies for anticipated cash shortfall

Investment plan Funding plan

11,126 5,038 1,464 17,628 - -

The company expects that increased deposits partly resulting from the rollout of new deposit products and cash inflow deriving from steady profit growth in the coming one year will be sufficient to fund new loans and investment for new equipment. . Therefore, there will be no cash shortfall.

101

D.Theeffectofmajorcapitaloutlaysintherecentyearonfinance

Major Capital Outlays and Funding Sources Unit: NT$1,000

Plan items Actual or

planned funding sources

Actual or planned

completion dates

Total funds needed

Actual or anticipated fund utilization

2007 2008 2009 2010 2011 2012

Land Own fund 2009 1,228,418 1,228,418

Buildings Own fund

2009 572,211 572,211

2010 22,742 22,742

2011 19,169 19,169

Machinery equipment Own fund

2007 60,242 60,242

2008 209,771 209,771

2009 73,466 73,466

2010 225,642 225,642

2011 208,092 208,092

2012 432,444 432,444

Transportation equipment & miscellaneous equipment

Own fund

2007 6,879 6,879

2008 13,827 13,827

2009 5,988 5,988

2010 24,158 24,158

2011 17,291 17,291

2012 13,357 13,357

Leased assets Own fund2010 61,066 61,066

2011 55,591 55,591

Expected benefits Increased capital outlay in 2012 is mainly for procurement of machinery and equipment, including computer and information equipment, which can improve the environment for information operation and meet the expansion of various businesses, so as to enhance service quality.

E. Long-term investment policy in the recent year , main reasons for theirprofitorloss,improvementplan,andfinanceforinvestmentplans in the coming one year.

Long-term investment policy and plan of Taishin Bank is being managed by the parent company Taishin Financial Holding, in line with the stipulation of article 36, Financial Holdings Company Law, Taishin Bank is a subsidiary of Taishin Financial Holding. Article 36 of Financial Holding Company Law stipulates that “Without approval, financial holding companies and affiliates under their direct or indirect control cannot carry out applied investments, except in various financial businesses according to related laws.” Consequently, the bank follows article 74 of the Banking Law in its equity-investment policy and plan.

102


F. Analysis and evaluation of risk management

a. A series of qualitative and quantitative requirements for risk management:

1. Credit risk management system and accrued capital

2011 Credit risk management system

Items Contents

1. Credit risk management strategy, goal, policy and process

Credit Risk Management aims at protecting the interests of shareholders by maximizing profits at reasonable risk level. As the basis for adjustments in credit policy and collection policy, changes in net cash flow are regularly monitored to catch up with the trend in asset qualities.Under the premise of complying with risk-management strategy and adhering to the existing business strategy, adopt the following strategy to control credit risk: 1. In evaluating credit-extension cases, emphasize cash flow as major repayment source and obtain proper

risk reward. 2. Via the establishment of various system tools and tables/reports, strengthen the evaluation, monitoring, and

management of credit risk. 3. Based on consideration of general economic outlook and change in global financial market, actively review,

adjust credit-extension monitoring and/or ceiling for credit-extension position.

2. Credit risk management organization and structure

In addition to the credit management units for 2 Banking Groups there is an independent credit risk management unit in charge of the credit portfolio management for the whole bank.

Retail Banking Group. Retail business units evaluate and review cases based on the credit policy. Retail Asset Management Division is responsible for collection and management of delinquent cases.

Corporate Credit Management Division is the credit risk management unit for Corporate Banking Group. It consists of credit management, screening, global trade, and asset management departments. Credit extension management department is in charge of the planning of internal credit evaluation system, the monitoring of credit-extension position, the diversification of credit-extension risk, the planning and formulation of management measures, the appraisal of the value of mortgaged properties, and the review and credit examination after the extension of loans. Various auditing departments are in charge of the review of credit-extension cases, the property management department is in charge of the statistics of credit-extension assets for corporate banking, the evaluation of the provisions for bad debts, and collection of overdue loans, non-performing loans, and bad debts.

3. Scope and features of credit risk report and evaluation system

For Retail Banking Group, set appropriate credit policy based on business goals, by utilizing Application Scoring System/Behavior Scoring System/Collection/Recovery Scoring System and Credit Bureau Scoring System/and embrace multi-dimension risk grading for customers. Along with product profit models, customers are divided into test and champion groups according to various credit criteria so as to strike optimal balance between risk and profits. Asset qualities and the characteristics of defaults are analyzed regularly to adjust risk management indicators and achieve the business goals.

For Corporate Banking Group, internal rating systemic used for measurement and management of credit risk. All cases should be rated upon application, and tracked and reviewed afterwards. The internal rating system has two dimensions, Obligor Risk Rating (ORR) and Facility Risk Rating (FRR). ORR embraces statistical model and scorecards. FRR analyzes collaterals, claim priority and product types for limit settings. Internal rating system is re-assessed every year to test its stability. Migration analysis and scenario analysis are also conducted under a stress testing framework.

4. Policies for hedging and /or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigations.

Taking collaterals in the main credit risk mitigation technique. Collaterals include real estate, chattels, and securities. Each of them has its own appraisal method and period.

The continuing effectiveness of hedges/mitigations is monitored by applying the internal credit rating system, credit portfolio management and review, coupled with credit exposures diversification and credit limit setting. Strategies and processes for hedging and /or mitigating risk are reviewed and adjusted according to changes in factors such as marco economy or financial regime.

5. Regulatory capital requirement methodology

Standardized approach

103

Credit risk exposure value and capital requirement after mitigation on standardized method Dec. 31, 2011/unit: NT$1,000

Type of Risk Exposure Risk Exposure after Mitigation Capital Requirement Sovereigns 192,065,693 193,663Non-central government public sector entities 1,288,983 20,624Banks (including multilateral development bank) 29,492,651 976,737Corporate (including securities and insurance company) 322,491,334 25,263,342

Retails 137,414,600 8,559,007Residential properties 196,626,896 7,078,973Equities 2,690,731 694,154Other Assets 143,756,905 5,790,342Total 1,025,827,793 48,576,842

2. Risk management system for securitized assets, risk exposure, and capital requirement

2011 Risk management system for securitized assets

Items Contents

1. Risk management strategy and process for securitized assets

1. Risk management strategy The bank’s assets securitization business aims to achieve optimal deployment of the bank’s

assets and liabilities, as well as diversify assets and risks.2. Risk management process The bank’s financial management division first analyzes the deployment status of the bank’s

assets and liabilities, before putting forth proposal for the securitization business according to the guidance of the bank’s management strategy (including execution costs and benefits) set by the board of directors. (note) Securitized assets of non-originating bank are managed according to market risk management policy. In the enforcement of management flow, various business units should obtain approval and quota before trading, while independent management units evaluate the income of existing positions daily for regularly reporting the income and exposure status of the positions to executives.

2. Risk management organization and structure for securitized assets

Board of directors

President

Finance Division

Planning, financial evaluation, and the issuance process coordination.

Provision of historical data for the targets of securitized assets and information needed by consigned institutions.

Information TechnologyServices Group

Provision of workflow information for the targets of securitized assets and its accounting treatment. Risk management strategy and mechanism for the targets of securitized assets

Retail Banking Group

3. Scope and features of report on risk of securitized assets and evaluation system

Contents of regular risk management report include:1. Detailed information on kind, value, credit rating, and evaluation of investment beneficiary

certificates and assets-backed securities2. Trust report and report of custodian institution(should it exist)3. Performance of securitized assets

4. Policies for hedging and/or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/mitigations.

Consider industrial concentration, economic-cycle risk, and effective capital utilization of risk assets in undertaking assets securitization business and carry out random review of cost-effectiveness, so as to determine proper timing for continuing the securitization business.

5. Regulatory capital requirement methodology Standardized approach

104


Status of Securitized Assets Business: Nil (A) Risk exposure for securitized assets and capital requirement

Base date: Dec. 31, 2011/unit: NT$1,000

Kinds of risk exposure

Non-originating bank Originating bank

Risk exposure value for

securitized products bought or

held by the bank

Capital requirement

Risk exposure value

Capital requirement

before securitization

Non assets-backed commercial paperAssets-backed

commercial paper

Traditional type Combination type

Retained position

No retained position

Retained position

No retained position

Bank Type

Housing loan 5,792,506 92,680

Enterprise type

Total 5,792,506 92,680

(B) Information on securitized products (1) Summarized information on investment in securitized products

Base date: Dec. 31, 2011/unit: NT$1,000

Items Listed accounting items Original cost A

Evaluated accumulated

income B

Accumulated reduction

C

Value on bookD=A+(B+C)

1 Financial assets ready for sale-beneficiary certificates 5,766,504 19,641 5,786,145

Total 5,766,504 19,641 5,786,145

Note 1: This table contains domestic and foreign securitized products , which are registered according to the following categories and listed accounting items:(1) Mortgage-backed securities (MBS): including beneficiary certificate for securitized claims on housing-mortgaged loans or Assets-backed

securities ( RMBS), beneficiary certificates for securitized claims on commercial property-mortgaged loans or Assets-backed securitized (CMBS), collateralized mortgage obligation (CMO), and other realty-mortgage securities

(2) Beneficiary certificates or assets-backed securities (ABS): including beneficiary certificates for corporate-loan claims or assets-backed securitized (collateralized loan, obligation, or CLO) beneficiary certificates for securitized bond assets or assets-backed securities (collateralized bond obligation , or CBO) beneficiary certificates for securitized claims on credit-card debts or assets-backed securities, beneficiary certificates by securitized claims on auto loans or assets-backed securities, beneficiary certificates for securitized claims on consumption loans/cash-card debts or assets-backed securities, beneficiary certificates for securitized leasing claims or assets-backed securities, and other securitized beneficiary certificates or assets-backed securities

(3) (ABCP) Short-term beneficiary certificates or short-term assets-backed securities (assets-backed commercial paper)(4) Collateralized debt obligation(CDO)(5) Realty securitization: It refers to real estate asset trust (REAT)(6) Bills and bonds issued as structured investment vehicles(SIV)(7) Other securitized products

Note 2: The table includes beneficiary certificates of asset-backed securities held by the bank with the bank serving as an originating institution.

105

(2) Mandatory information disclosure for investment in securitized products with original cost exceeding NT$300 M. (excluding those held for credit enhancement with the bank serving as an originator)

Unit: NT$1,000

Names of securities (note 2)

Listed accounting

item

Denomination currency

Issuer and its location

Purchase date

Maturity date

Couponrate

Credit rating

(note 3)

Payment method for principal

and interest

Original cost

Unrealized profit & Loss

Accumulated impairment

Book value

Attachment point

(note 4)

Contents of assets

pool (note 5)

GNR 2010-25 AH

Available–for-salefinancialassets

USDGNMA MBS POOL

2010/2/1 2025/2/1 Fixed 3% S&P AA+ Monthly 311,363 3,048 314,411 -

Ginnie Mae Secured mortgage loan, Original cost=USD 10,279,404.85 deals:10pools

FREDDIE MAC DUE 15 AUG 2040


USDFREDDIE MAC

2010/10/29 2040/8/15 Fixed 2.5%Moody's Aaa

Monthly 388,730 1,282 390,012 -

Freddie Mac Secured mortgage loan, Original cost=USD 12,828,917.88,deals:35pools

GNR DUE 16 MAR 2034


USDGNMA MBS POOL

2011/11/30 2034/3/161 * USD.1M.LIBOR + 0.3%

Moody's Aaa

Monthly 410,541 879 411,420 -

Ginnie Mae Secured mortgage loan, Original cost= USD 13,553,681.95,deals:12pools

GNR DUE 20 APR 2040


USDGNMA MBS POOL

2010/4/30 2040/4/201 * USD.1M.LIBOR + 0.65%

Moody's Aaa

Monthly 711,376 3,148 714,524 -

Ginnie Mae Secured mortgage loan, Original cost= USD 23,485,514.1,deals:2pools

GNR DUE 16 OCT 2040


USDGNMA MBS POOL

2011/11/15 2040/10/161 * USD.1M.LIBOR + 0.43%

Moody's Aaa

Monthly 415,772 5,289 421,061 -

Ginnie Mae Secured mortgage loan, Original cost=USD 13,726,248.06,deals:17pools

Note 1: The table includes domestic and foreign products Note 2: Full names should be provided for same securities product in difference issuance Note 3: Provide result of the latest credit rating Note 4: Attachment point refers to share of sub-issuance value with compensation priority lower than that for securities held by the bank in the Local issuance value of the securitized product.

Assuming, for example, a bank purchase A security of a certain CDO (collateralized debt obligation) , the security has sub-security BBB and sub-equity security with compensation priority lower than A security. The total issuance value of BBB and Sub-equity security amounts to 12% of the total value of the CDO. Then the attachment point for A security is 12%

Note 5: Assets pool refers to assets portfolio handed by originating institution to trustee or other company with a special purpose. Specify kind of assets In the portfolio (denote primary lien or subordinated status), detail, value on book in original currency and number.

106


(3) Mandatory information disclosure for position of securitized products held by the bank for credit enhancement with the bank serving as an originator : Nil

(4) Mandatory information disclosure for the bank serving as buyer or position-squaring buyer of securitized assets with impaired credit: Nil

(5) Mandatory information disclosure for the bank serving as guarantor for securitized products or liquid credit line provided by the bank: Nil

3. Operational risk management system

2011 Operational risk management system

Items Contents

1. Operational risk management strategy and process

Taishin Bank got the approval of FSC for the Standardized Approach in 2007. However, we are planning to adopt the Advanced Measurement Approach in the future. So far, we have developed systems and processes to comprehensively identify, monitor, measure, mitigate, manage and report operational risks.

2. Operational risk management organization and structure

The bank has set up independent operating-risk management unit; in charge of integrating the management structure for the bank’s operating risks, so that staffers at various levels can follow consistent standards in identifying, evaluating, managing, monitoring and reporting various operating risks when carrying out their duties.

3. Scope and features of operational risk report and evaluation system

The scope of operating risk is defined as “ risk triggered by improprieties or mistakes of internal flow, staffers, systems, or external incidents, including legal risk but excluding strategic risk and reputation risk.” The bank has established operating risk management system, including loss database, self evaluation of risk, and critical risk index, to analyze, evaluate, and assess the chance and exposure value of operating risk and put forth action plan on the basis of the analytical results, in order to cut the rate for the occurrence of similar operating risk in the future.

4. Policies for hedging and/or mitigating risk and strategies processes for monitoring the continuing effectiveness of hedges/mitigations.

The bank has instituted business continuity management (BCM) and/or taken out insurance as the hedging tools


Capital requirement for operational riskDec.31, 2011, Unit: NT$1,000

Year Gross Income Capital Requirement

2009 19,692,558

2010 21,677,718

2011 24,801,302

Total 66,171,578 2,945,193

107

4. Market risk management system and capital requirement

2011 Market risk management system

Items Contents

1. Market risk strategy and process

Taishin market risk policy is meant to manage risk, in order to maximize shareholder’s value. We have established a risk management framework, including an independent risk management department to maintain integrity of the risk control processes, clearly defined market risk management policies and procedures, and a set of risk limits, which are regularly reviewed to ensure that Taishin’s risk taking is consistent with its business strategy, capital structure and current market conditions.

2. Market risk management organization and structure

Our market risk team is responsible for daily management and control of our market risk exposures, ensuring our business activities adhere to our market risk policies. Duties are divided according to function as follows: product control, system setup and maintenance by designated personnel, and quants.

3. Scope and features of market risk report and evaluation system

Risk reporting is performed in a timely fashion and measurements are made at different levels, from products to trading desks. We seek to monitor and control our market risk exposures through a variety of separate but complementary financial/trading management and reporting systems.Qualitative tools: Our major objective is to promote risk transparency and risk awareness. We accomplish this through an independent risk management function, alone with the setup of risk policies and processes, including pricing verifications, benchmarking, model validation and a new product review/ approval mechanism. Quantitative tools: We manage our market risk exposures using a number of quantitative tools, including risk limits, stress tests & scenario analysis, and Value-at-Risk( VaR). Our feature goal is to gain approval from the regulator to use our own internal VaR model in calculating regulatory market risk capital for our general and specific market risks.

4. Policies for hedging and/or mitigating risk and strategies and processes for monitoring the continuing effectiveness of hedges/ mitigations

Market risk is managed by diversifying exposures, controlling position sizes and establishing economic hedges in related securities or derivatives. The ability to actively manage risk is related to its hedge strategy, and identifying adverse changes in the liquidity of an exposure or its related hedge instrument and in the correlation of price movements between the two is essential to effective hedging. We have policies and procedures in place to ensure active and efficient hedges.


Capital requirement for market risk Dec.31, 2011, Unit:NT$1,000

Type of Risk Capital Requirement

Interest rate risk 2,122,289

Equity price risk 55,526

Currency rate risk 242,805

Commodity price risk 0

Total 2,420,620

5. Liquidity risk includes analysis of maturity of assets and liabilities, as well as explanation of management method for assets liquidity and fund-shortfall liquidity.

108


(1) Analytical table for the structure of maturity dates for NT-dollar funds Dec.31, 2011;Unit:NT$1,000

Item TotalValue for remaining period before maturity

1-30 days 31-90 days 91-180 days 181 days-one year Over one year

Main fund inflow upon maturity 869,504,187 205,737,709 165,612,383 44,864,429 73,665,202 379,624,464

Main fund outflow upon maturity 943,601,610 161,594,580 151,883,487 131,739,547 200,611,085 297,772,911

Shortfall before maturity ( 74,097,423 ) 44,143,129 13,728,896 ( 86,875,118 ) ( 126,945,883 ) 81,851,553

Note: The table contains only NT-dollar funds of headquarters and domestic branches (excluding foreign currency)

(2) Analytical table for the structure of maturity dates for US-dollar funds. Dec.31, 2011;Unit:US$1,000

Item TotalValue for remaining period before maturity

1-30 days 31-90 days 91-180 days 181 days-one year Over one year

Asset 9,187,511 3,799,481 3,018,816 960,018 317,567 1,091,629

Liabilities 9,119,390 3,363,069 2,209,685 2,404,303 665,547 476,786

Shortfall 68,121 436,412 809,131 ( 1,444,285 ) ( 347,980 ) 614,843

Accumulated Shortfall 68,121 436,412 1,245,543 ( 198,742 ) ( 546,722 ) 68,121

Note 1: Fill the form with the combined U.S. dollar-denominated value of the headquarters, domestic branches, and offshore banking units, according to the paper amount. There is no need to fill in the amount not listed in the book (such as projected issuance of negotiable certificates of deposits, bonds, or stocks.

Note 2: Supplementary information for disclosure should be provides for overseas assets accounting for over 10% of the bank’s total assets.

(3) Assets liquidity and the management of fund-shortfall liquidity1. Management principle Risk management for fund liquidity is to assure that under any circumstance at present or

in the future, the bank’s liquid fund can meet the fund need resulting from assets growth or fulfilling mature obligations.

Finance division should monitor and manage the following items: █Under normal market change or emergent situation, possess sufficient fund to meet due obligations and fulfill guarantee and commitment for credit extension.

█Carry out fund maneuvering at reasonable market prices. █Meet liquidity need for business growth.

Basic principles for funding liquidity-risk management include: █ Principle of diversification:Finance division must avoid over-concentration in fund maneuvering, in terms of maturity date, maneuvering tools, currency, place, funding source, and trading partners.

█ Principle of stability: Finance division follows the strategy of fund stability to reduce the reliance on unstable funding sources and avoid the effect of market swing on funding sources.

109

█ Principle of maintaining adequate assets liquidity: As the status of market liquidity will indirectly affect funding liquidity, the bank must assure that total assets are sufficient to cover total liabilities and keep a certain share of assets with good liquidity or good for use as collaterals, capable of meeting need of working capital in emergency and short-term liabilities.

█ Principle of matching of assets and liabilities on maturity. █ Pay attention to payment commitment resulting from credit-extension business.

2. Risk assessment of fund liquidity Assessment of liquidity risk mainly includes estimate of shortfall for short-term cash flow and

accumulated shortfall. The calculation of accumulated fund shortfall should include items inside and outside balance sheet.

For utilization of trading-book fund, the financial management division should reach an agreement with management unit of trading-book management unit concerning ceilings for monthly and accumulated fund utilizations. Should there be exceptional cases, notify the financial management division before undertaking trading, so as to lower fluctuation and risk of fund need.

3. Assumption for calculating fund-liquidity risk In order to correctly assess liquidity risk and establish complete monitoring and control

procedure, the financial management division should carry out liquidity-risk management assumption for banking book, scenario emulation, and the evaluation and establishment of customer behavior and pricing assumption, which should be recorded in detail in document. The aforementioned assumptions and verification of models should be carried out by risk management division.

4. Setup of quota for fund liquidity risk Liquidity risk quota is formulated by financial risk division and along with related business

assumption and the logic for trial calculation, is subject to review by risk management division, which will then report to the risk management commission of the financial holding company and the board of directors for approval. The same procedure is followed for adjustment during the year.

b. Effect of changes in major domestic policies and law/regulations on the bank’sfinanceandcountermeasures:

1. Article 12-1 and 12-2 of Banking Law:

The revised articles have affected the legality for the provision of guarantors for the bank’s own-residence loans and consumer loans. The bank has adjusted methods and documents in complying with law/regulation and the requirement of the regulator.

110


2. Individual Information Protection Law:

(1) The bank already adopted measures strengthening the security of computer mainframe and control of user right in 2009 and introduced the management system of ISO 27001 international information security management standards, obtaining the certification in 2010.

(2) Since the new version of Individual Information Protection Law further emphasizes the protection of individual information and increases the penalties for violation, the bank introduced “BS 10012:2009” publicized by British Standard Institute (BSI) in June 2009 as the fundamental framework for individual information protection. In addition, in line with the systematic management method of PDCA (Plan-Do-Check-Act), the bank introduced individual information management system, which is expected to obtain BS10012 certification in the second half of 2012.

(3) The bank adopts the following overall goal and concrete measures for individual information protection: a. Establish individual information protection system, in compliance with domestic laws/regulations and the internal auditing and control system, so as to link up with international practice; b. Enhance organizational competitiveness and strengthen the awareness for individual information protection among colleagues; c. Establish a complete protection mechanism for identifying the bank’s individual information and formulate the life cycle for individual information; d. Establish the norm for the input and retrieval of individual information; e. Deploy proper information security tool and keep the record and track for various input and retrieval activities.

3. Financial Consumer Protection Law:

Since the law increases the duties and obligations of banks, the bank has adjusted related operations and norms accordingly.

4. FATAC Act (The U.S.):

The act requires global financial institutions, including Taiwan, to report United States accounts to the U.S. Internal Revenue Service. Those which fail to do so will be subject to extra 30% tax levy by IRS according to the regulation of FATCA. The bank will notice the contents of the act and adjust related operating procedure and norm according to the decision of the government concerning the enforcement policy.

c.Effectoftechnologicalandindustrialchangesonthefinanceofthefinancialholding company and countermeasures.

To cope with the new needs arising from various businesses, Taishin Bank has established advanced server virtual platform since 2009, with conspicuous results, enabling the bank to cut initial investment cost for information system and focus on business development and service standard. In 2012, the bank began to introduce cloud-end service technology, transforming VIP service in the direction of cloud-end digitalization and increasing the communications and information exchange between VIP clients and the bank. In addition to boosting the satisfaction of VIP clients, the effort has created a new marketing and sales channel, thereby boosting profit-making opportunities.

111

d. Effect of change in the corporate images of the financial holding company and its subsidiaries and countermeasures.

In addition to the painstaking management for the financial business, Taishin Financial Holding, the parent firm, and the bank has dedicated to social care, public service, and environmental protection, due to their deep awareness of the responsibility and mission of enterprises in the society. Via active participation in environmental protection, social public services, and humanistic and artistic events, an enterprise can properly exercise its power and bring change and influence to the society. Via substantial payback to the society, community, and underprivileged groups, an enterprise can play the role of the best social member.

e.Anticipatedbenefitsandpossiblerisksfromacquisitionandcountermeasures.

According to bank’s experience in financial acquisitions, including Tainan First Credit Cooperation and HsinChu Tenth Credit Cooperative and the acquisition of Daan Bank, financial mergers can generate a number of benefits, including expansion of financial scope.

Via deep cultivation of abundant resource, economy of scale, the integration of various business resources, and product and client integration, financial mergers create concrete synergy effect and bring substantial benefits to shareholders.

1. Anticipated benefits

(1) Slash operating cost, via concentrated operation and the standardization of operating quality. (2) Integrate information system and unify operating platform, facilitating the provision of services with

uniform quality in an even more economic and efficient manner. (3) Expand the channel for marketing financial products, bringing concrete contribution to the

development of the bank’s business. (4) Expand business scope, offering pluralized financial products and services to existing clients and

thereby augment revenue directly.

2. Possible risks for acquisition

A number of factors will affect the achievement of acquisition synergy and realization of anticipated benefits, including the blending of corporate cultures, change in management framework, and the development of existing clients and business.

3. Countermeasure

To realize anticipated synergy, the bank will step up communications with staffers and constantly review the implementation of the acquisition plan.

f. Anticipated benefits from the expansion of business offices, possible risk, andcountermeasures:Thereisnoplanfortheexpansionofbusinessofficesin the recent year.

112


g. Risk associated with business concentration

(1) Backup mechanism

In the wake of operational concentration, resources and talent are shared, which will cause profound influence on the bank following the outbreak of emergent incidents. To cope with possible risk, the risk management division of the financial holding firm formulates integrated business sustaining plan, including emergent countering mode for field, system, and personnel, and disaster recovery plan. Operating service division also carries out periodic tests of its business sustaining plan and backup copies of data at different sites are also produced periodically.

(2) Document transmission

In the wake of operating concentration, internal transmission or delivery of original copies of document may result in information leakage of loss of documents, thereby causing serious consequence on the customers and the bank. To prevent the problems, the bank keeps the track for signed reception and formulates complete delivery rules for the delivery of key documents.

h. The effect of the change of management right on the bank, related risk and

countermeasures: Nil

i. Litigation and non-litigation incident: Nil

j. Other major risks and countermeasures: Nil

G. Crisis response mechanism

To assure continuing operation of the company’s key businesses and strengthen the company’s capability in handling emergent incidents, so as to minimize the effect of disaster and resume normal operation quickly, the bank has formulated “business continuing management” policy, which defines emergent incidents, grades risks, designates responsible units, and specifies related handling procedure.

H.Other important affairs: Nil

113

8

A.Informationofaffiliates

a.Consolidatedfinancialstatementwithaffiliates

The bank did not produced consolidated financial statement with affiliates in 2011, since affiliates which should be covered by the consolidated financial statement, according to the “guidelines for the compilation of consolidated proxy statement, financial statement, and affiliation report for affiliates.” are the same companies which should be covered by the consolidated financial statement for parent company and subsidiaries, according to the No.7 financial accounting criteria.

b.Consolidatedproxystatementofaffiliates

1. Organizational chart of affiliates

Taishin International BankOrganizational chart of affiliates

Base date: Dec.31, 2011

VIII.SpecialNotes

65.75%

Contact DigitalIntegration

Co., Ltd

100%

PayEasy TravelService Co., Ltd

100%

Taishin InsuranceBrokers Co., Ltd

100%

Taishin Dah An Leasing Co., Ltd

65.36%

PayEasy Digital Integration

Co., Ltd

87.4%

Taishin InsuranceAgency Co., Ltd

60%

Taishin Real Estate

Management Co., Ltd


114

VIII. Special Notes

2. Business status of affiliates Base date:Dec.31,2011;Unit: NT$1,000

Name of enterprises Capital TotalAssets

Total Liabilities Book Value Operating

revenueOperating

profit

CurrentProfit/loss(after tax)

After-taxProfit/lossPer share

Taishin Dah An Leasing 200,000 207,556 374 207,182 0 2,716 2,358 0.12

PayEasy Digital Integration 434,500 1,008,027 688,107 319,921 2,356,770 ( 208,577 ) ( 209,098 ) ( 4.81 )

PayEasy Travel 13,000 32,930 19,097 13,834 263,948 ( 13 ) 40 0.03

Contact Digital Integration 7,300 119,590 169,076 ( 49,486 ) 321,778 ( 48,441 ) ( 41,100 ) ( 56.30 )

Taishin Insurance Agency 3,000 1,234,467 161,623 1,072,844 1,590,119 286,954 217,776 725.92

Taishin Insurance Brokers 60,000 90,534 4,134 86,400 48,418 14,345 13,056 2.18

Taishin Real Estate Management 200,000 603,736 302,198 301,538 53,309 19,875 16,429 0.82

Note 1: All affiliates, whatever their business scales, must disclose information.Note 2: In case an affiliate is a foreign company, related business figures should be converted to NT dollar to the exchange rate of the date of the report

3. Information on affiliates Base date: Dec.31, 2011;Unit: NT$1,000

Name of enterprise Date of establishment Address Paid-in

Capital Major business or product items

PayEasy Digital Integration Co., Ltd 2000.04.27 13th fl., No.11, Zhongshan

N. Road, Sec.1, Taipei city 434,500

1.Investment consulting 2.Management consulting3.Information software service 4.Data processing 5.E-information provision 6.Common advertisement 7.Other general retail business 8.Department store 9.Brokerage 10. Online certification 11.Wholesale for medical equipment 12.Retailtor Medical equipment 13.Store less retail.

Taishin Insurance Agency 1996.09.19 3th fl., No.44, Zhongshan

N. Road, Sec.2, Taipei city 3,000 Agency for personal insurance

Taishin Insurance Brokers Co., Ltd 2002.07.24 3th fl., No.44, Zhongshan

N. Road, Sec.2, Taipei city 60,000 Brokerage for property insurance

Taishin Dah An Leasing Co.,Ltd 1997.10.13 2th fl., No.9, Dehui Street,

Taipei city 200,000

1.Leasing 2.Wholesale of machinery 3.Retail of machinery and apparatus 4.Wholesale of precision equipment 5.Retail of precision equipment 6.Retail of auto 7.Retail of ship and parts 8. Retail of flying devices and parts 9.Procurement of money debt claim of financial institutions 10.Management consulting 11.Information software service 12.Information processing service 13.Other business services

Taishin Real Estate ManagementCo., Ltd

1995.08.17 2th fl., No.9, Dehui Street, Taipei city 200,000

1.Construction management industry 2.Residence and office building development and leasing 3.Development and leasing of industrial factories 4.Specific professional zone development 5.Investment and construction of public construction projects 6.New town and new community development 7.Agency for area expropriation and urban land rezoning 8.Urban renewal 9.Realty transaction 10.Realty leasing 11.Business credit investigation

PayEasy Travel Service Co., Ltd 2005.06.06 13th fl., No.11, Zhongshan

N. Road, Sec.1, Taipei city 13,000 Travel business

Contact Digital Integration 2008.12.29 12th fl., No.11, Zhongshan

N. Road, Sec.1, Taipei city 7,300

1.Investment consulting 2.Management consulting 3.Information software service 4.Data processing 5. E-information provision 6.Common advertisement service 7.Online certification 8.Department store 9.Store less retail 10.Other general retail business 11.Brokerage.

115

4. Information on directors, supervisors, and presidents of affiliatesBase date: Dec.31, 2011; Unit: share;%

Name of enterprise Title (note 1) Name or representativeShareholding (note 2) (note 3)

Shareholding(share) Stake ( %)

Taishin Dah An Leasing RepresentativeChairman Director Director Supervisor President

Taishin International BankLarry ChungSteve S.F. ShiehShawn C.L. TengWelch LinVincent Shieh

20,000,000 100.00%

PayEasy Digital Integration RepresentativeChairman Director Director Director Supervisor RepresentativeDirector Director RepresentativeDirector President

Taishin International BankDaniel TsaiSteve S.F. ShiehBill Lindismissal Welch LinYungho Co.,Ltd.Jeffrey WuVincent ChenPC Home OnlineHung Tze JanBill Lin

28,400,00153,00052,000320000

3,767,173

85,0005,437,762

320,000

65.36%0.12%0.12%0.74%

8.67%

0.20%12.51%

0.74%

PayEasy Travel Service RepresentativeChairman Director Director Director Supervisor President

PayEasy Digital IntegrationBill Lin Steve S.F. ShiehDaniel TsaiBrenda HuangVincent Chen Guo Weili

1,300,000 100.00%

Contact Digital Integration RepresentativeChairman Director Director Supervisor RepresentativeDirector/President

PayEasy Digital IntegrationBill Lin Lu Jui-luWang Yu-hsiuDaniel Tsai

Li Yi-teng

480,000

127,163

65.75%

17.42%

Taishin Insurance Agency Co.,Ltd RepresentativeChairman Director Director Director SupervisorPresident

Taishin International BankJack SuShawn C.L. TengWelch LinSpike Wu Jeffrey Wu Andy An

262,204 87.40%

Taishin Insurance Brokers Co.,Ltd RepresentativeChairman Director Director Director Supervisor President

Taishin Insurance AgencyJack SuWelch LinSpike WuSteve S.F. ShiehJeffrey WuAndy An

6,000,000 100.00%

Taishin Real Estate Management RepresentativeChairman Director Director SupervisorRepresentativeDirector President

Taishin International Bank Chen Lung-chengThomas T.L.WuTemporarily vacant Welch LinTaishin Asset ManagementJeffrey WuLiaw,Shean Yng

12,000,000

8,000,000

60.00%

40.00%

Note 1: In case the affiliate is a foreign company, list position with corresponding ranking Note 2: In case the invested company is a company limited by share, please fill in the number of shares and sharehoding ratio. For others, please fill in contributed

capital and ratio, with proof. Note 3: In case director or supervisor is a legal entity, disclose information on its representative.

116

VIII. Special Notes

c.Affiliatereport

Statement


Statement on Affiliation Report

The company’s affiliation report for fiscal 2011 ( Jan.1,2011-Dec.31, 2011) was compiled according to “Guidelines for Compilation of Consolidated Business Report, Consolidated Financial Statement, and Affiliation Report of Affiliates”, whose disclosed information has no major differences from related information disclosed in the notes of the financial statement for the same period


Thomas T.L. Wu

Chief Executive Officer

May.4, 2012

117

CPA Inspection Opinion on Affiliation Report

Deloitte No.10104061 May.4, 2012

Recipient: Taishin International Bank Co., Ltd

Theme: Confirmation of the absence of major inadequacies in information contained in the 2011 affiliation report of your company

1. Your company issues a statement, as attached, expressing that your affiliation report for fiscal 2011(Jan.1, 2011-Dec.31, 2011) was compiled according to “Guidelines for the Compilation of Consolidated Business Report, Consolidated Financial Statement, and Affiliation Report of Affiliates,” whose disclosed information has no major differences from related information disclosed in the notes of the financial statement for the same period.

2. After comparison, the CPA find no major differences between your affiliation report for fiscal 2011, compiled according to “Guidelines for the Compilation of Consolidated Business Report, Consolidated Financial Statement, and Affiliation Report of Affiliates,” and the notes of your 2011 financial statement.

CPA Yang Qinzhen

CPA Peter Tsai

Deloitte & Touche Taiwan

118

VIII. Special Notes

d. Relationship between subordinated and controlling company

Base date: Dec.31,2011; Unit: share;%

Controllingcompany

name

Controlling reason

Shareholding and lien obligation of controlling company Director, supervisor, or manager representating controlling company

Shares owned Share of stake Shares with lien Title Name

Taishin Financial Holding Co., Ltd

Own 100% of the shares with voting right issued by the bank

4,915,752,571 100.00% -

Chairman Thomas T.L.Wu

Director Hsu Te-nan

Director Richard R.C, Liu

Director Kuo, Jui-Sung

Director Wu, Shang-pin

Director Wang,Chu-Chang

Independentdirector Wang,Chih-kang

Independentdirector Lin, Neng-bai

Standing Supervisor Tasy, Yang-Tzong


Supervisor Lin, Long-Su

e. Dealing between subordinated and controlling company

1. Dealing for purchase and sale:Nil

2. Property dealing:Nil

3. Fund lending:Nil

4. Asset leading:

119

Unit:NT$1,000

Type of dealing

(Rental out or On lease)

Target

Lease PeriodNature

of Lease(note 1)

Basis for rental

Method of rental

collection(payment)

Comparison with common rental level

Amount of

current rental

Collection of current

rental

Otheragreed

conditions(note 2)

Name Address

Rental out

Financial Holding Building

Fl. 13, No. 118, Renai Road, Sec. 4, Taipei

2007.05.01 2012.04.30Business

leaseSet on reference of market price

Monthly collection

Similar to market price

832 Normal Deposit of 138

Rental outFl. 16, No. 118, Renai Road, Sec. 4, Taipei

2010.11.01 2015.10.31Business


Monthly collection


7,449 Normal Deposit of 1,832

Rental outFl. 15, 17, 19, No. 118, Renai Road Sec. 4, Taipei

2010.03.01 2013.02.28Business


Monthly collection



Rental out Fl., 12, 13, 16, 20, 21,22, 23, No. 118, Renai Road, Sec. 4, Taipei

2011.01.01 2011.08.31Business


Monthly collection



Rental out 2011.09.01 2015.12.31Business


Monthly collection



Rental outFl. 18, No. 118, Renai Road, Sec. 4, Taipei

2011.03.17 2016.03.16Business


Monthly collection


1,326 Normal Deposit of 412

Rental out

Taiwan Securities Building

B1, No. 96, Jianguo N. Road, Sec. 1, Taipei

2010.09.01 2012.08.31Business


Monthly collection



Rental outFl. 12, No. 96, Jianguo N. Road, Sec. 1, Taipei

2010.05.01 2015.04.30Business


Monthly collection



Rental outFl.13, No. 96, Jianguio N. Road, Sec. 1, Taipei

2010.12.01 2015.04.30Business


Monthly collection



Rental out

Chung Shan

Building

Fl. 2, No,. 44, Zhongshan N. Road, Sec. 2, Zhongshan District, Taipei

2009.12.01 2012.11.30Business


Monthly collection





Monthly collection



Rental out Fl. 3, No,. 44, Zhongshan N. Road, Sec. 2, Zhongshan District, Taipei

2009.08.01 2011.09.30Business


Monthly collection





Monthly collection



Rental outBade

Building Fl. 6, No. 111, Bade Road, Sec. 4, Taipei

2011.09.01 2014.08.31Business


Monthly collection



Rental out

Neihu Building

Fl. 6, No. 207, Jiuzhong Road, Sec. 2, Neihu District, Taipei

2011.01.01 2011.08.31Business


Monthly collection



Rental outFl. 5, No. 207, Jiuzhong Road, Sec. 2, Neihu District, Taipei

2011.09.01 2012.12.31Business


Monthly collection




2010.01.01 2012.12.31Business


Monthly collection




2011.06.01 2012.05.31Business


Monthly collection




2011.07.01 2011.12.31Business


Monthly collection



Rental outZhubei Building

Fl., 5, No. 331, Zhongzheng E. Road, Zhubei City, Hsinchu

2008.09.01 2011.10.31Business


Monthly collection



Rental out

Nantun Building

Fl. 3, No. 187, Dongxing Road, Sec. 2, Nantun District, Taichung City

2010.06.01 104.05.31Business


Monthly collection



Rental outFl. 6, No. 187, Dongxing Road, Sec. 2, Nantun District, Taichung City

2010.07.01 2011.11.15Business


Monthly collection



Rental outFl. 2, No. 187, Dongxing Road, Sec. 2, Nantun District, Taichung City

2011.11.15 2015.05.31Business


Monthly collection



Rental out Wufu 3F.Fl., 3, No. 116, Wufu 2nd Road, Xinxing District, Kaohsiung City

2011.08.12 2014.08.11Business


Monthly collection



On lease B.1, fl. 1, No. 150, Nanjing E. Road, Sec. 2, Taipei City

2011.04.16 2016.04.15Business


Monthly collection


9,120 Normalguarantee deposits & margins paid 2,280

On lease 1F fl.1, No. 95, Wenchang Road, Shilin District, Taipei

2010.10.01 2012.09.30Business


Monthly collection


151 Normalguarantee deposits &

margins paid 0

On lease No. 44, Zhongshan N. Road, Sec. 2, Taipei City

2010.11.01 2012.10.31Business


Monthly collection



margins paid 0

On lease Fl. 31, No. 66, Zhongxiao W. Road, Sec. 1, Taipei

2010.10.01 2012.09.30Business


Monthly collection



margins paid 54

On lease Fl., 4-1, 4-2, No. 207, Fuxing Road, Taoyuan City, Taoyuan County

2011.09.01 2013.08.31Business


Monthly collection


1,701 Normalguarantee deposits &

margins paid 446

On lease ATM* 20 Shin Kong Mitsukoshi 2012.01.01 2012.12.31Business


Monthly collection


1,260 Normalguarantee deposits &

margins paid 0

On lease Fl. 14-1, No. 205, Fuxing Road, Taoyuan City, Taoyuan County

2012.03.01 2014.02.28Business


Monthly collection



margins paid 59

Note 1: Explain whether it belongs to capital lease or capital lease Note 2: Make notes for the setup of other rights, such as superfices right.

120

VIII. Special Notes

5. Other important dealings: As of Dec.31, 2011, the bank had NT$301,337,000 of collectible fund for linked taxation under consolidated final account.

f. Mutual endorsement or guarantee between subordinated company and controlling company:Nil

B. Securities issuance via private placement in the recent year and as of the date of the publication of the annual report, which entails mandatory disclosure of information on the date and amount passed by shareholders’ meeting, basis and reasonableness for price setting,methodforselectingspecificsubscribers,andreasonforprivate placement

Information on Private-Placement Securities-1

Items First issuance of private placement 2006(note 1)Issuance date: Dec.27, 2006

First issuance of private placement 2007(note 1)Issuance date: March.30, 2007

Type of security(note 2)

Common share Common share

Date and amount approved by shareholder’s meeting (note 3)

Dec.21, 2006 March.27, 2007

Price rationale Price to Book Value Ratio Price to Book Value Ratio

Method for selection of specific subscriber (note 4)

Parent company which 100% owns the bank Parent company which 100% owns the bank

Reason for private placement

Strengthen financial structure and avoid causing impact on current shareholders, in addition to time efficiency, simplicity and cost efficiency and so on.


Deadline for subscription payment

Dec.27, 2006 March 30, 2007

Information on subscribers

Target(note 5)

Qualifi-cations(note 6)

Amount

Relation-shipwithbank

Partici-pation

inthe

bank

Target(note 5)


Amount


Partici-pation

inthe

bank

Taishin Financial Holding

Item 1-1,article 43,

Securities and

Exchange Act

305,555,555 shares

Parent company

which 100% owns the

bank

Yes Taishin

Financial Holding

Item 1-1,article

43, Securities

and Exchange

Act

500,000,000 shares

Parent company

which 100%

owns the bank

Yes

Actual subscription( or conversion) price (note 7)

NT$ 18 per share NT$ 17 per share

121

Difference between actual subscription (or conversion) price and reference price (note 7)

In the reference price range (NT$15.32-19.91) In the reference price range (NT$14.71-17.96)

Impact on shareholders (such as increase of accumulated loss)

Increase shareholder’s equity by NT$5.5bn Increase shareholder’s equity by NT$8.5bn

Utilization of fund from private placement and the implementation of the plan

Implementation completed in the fourth quarter 2006 Implementation completed in the first quarter 2007

Manifestation of the benefits of private placement

Increase BIS ratio by 1.32% approximately Increase BIS ratio by 2.13% approximately

Note 1: The number of columns can be adjusted according the number of private placements and a private placement undertaken in several issuances should be specified respectively

Note 2: Specify kinds of private-placement securities, including common shares, preferred shares, convertible preferred shares, preferred shares with share right, common financial bonds, subordinated financial bonds, convertible financial bonds, financial bonds with share right, overseas convertible financial bonds, overseas depository certifications, and employee warrants.

Note 3. For private placement financial bonds which don’t need the approval of shareholder’s meeting, fill in the date of approval by the board of directors and the value of the bondsNote 4: For undergoing private-placement cases with determined subscribers, specify the name of subscribers and their relationship with the bank.Note 5: The number of columns can be adjusted according to actual need.Note 6: Fill in the legal basis for the approval of the application for fund raising. Note 7: Actual subscription (or conversion) price refers to the subscription (or conversion) price set upon the issuance of private-placement securities.

Information on Private-Placement Securities-2

Items Second issuance of private placement 2007 (note 1)Issuance date: March.30 , 2007

First issuance of private placement 2009Issuance date: December.30 , 2009

Type of security (note 2) C-type preferred shares Common shares

Date and amount approved by shareholder’s meeting (note 3)

March.27, 2007 November 12, 2009

Price rationale Price to Book Value Ratio Price to Book Value Ratio

Method for selection of specific subscriber (note 4) Parent company which 100% owns the bank Parent company which 100% owns the bank

Reason for private placementStrengthen financial structure and avoid causing impact on current shareholders, in addition to time efficiency, simplicity and cost efficiency and so on.


Deadline for subscription payment March.30 ,2007 December, 30, 2009

Information on subscribers

Target(note 5)


Amount


Partici-pation

inthe

bank

Target(note 5)


Amount


Partici-pation

inthe

bank

Taishin Financial Holding

Item 1-1,article

43, Securities

and Exchange

e Act

188,235,294 shares

Parent company

which 100%

owns the bank

Yes Taishin

Financial Holding

Item 1-1,article

43, Securities

and Exchange

Act

740,740,740 shares

Parent company

which 100%

owns the bank

Yes

122

VIII. Special Notes

Actual subscription( or conversion) price (note 7) NT$17 per share NT$ 13.5 per share

Difference between actual subscription (or conversion) price and reference price (note 7)

In the reference price range (NT$14.71-17.96) Lower the reference price by NT$0.12

Impact on shareholders (such as increase of accumulated loss)

Increase shareholder’s equity by NT$3.2bn Increase shareholder’s equity by NT$10bn

Utilization of fund from private placement and the implementation of the plan

Implementation completed in the first quarter 2007 Implementation completed in the fourth quarter 2009

Manifestation of the benefits of private placement Increase BIS ratio by 0.8% approximately Increase BIS ratio by 1.76% approximately

Note 1: The number of columns can be adjusted according the number of private placements and a private placement undertaken in several issuances should be specified respectively

Note 2: Specify kinds of private-placement securities, including common shares, preferred shares, convertible preferred shares, preferred shares with share right, common financial bonds, subordinated financial bonds, convertible financial bonds, financial bonds with share right, overseas convertible financial bonds, overseas depository certifications, and employee warrants.

Note 3. For private placement financial bonds which don’t need the approval of shareholder’s meeting, fill in the date of approval by the board of directors and the value of the bondsNote 4: For undergoing private-placement cases with determined subscribers, specify the name of subscribers and their relationship with the bank.Note 5: The number of columns can be adjusted according to actual need.Note 6: Fill in the legal basis for the approval of the application for fund raising. Note 7: Actual subscription (or conversion) price refers to the subscription (or conversion) price set upon the issuance of private-placement securities.

C. Holding or dispoal of the bank’s shares by subsidiaries in the recent year and as of the date of the publication of the annual report: Nil

D. Other necessary supplementary explanation: Nil

123

9

Greater Taipei AreaBusiness units Address Telephone

Tienmou Branch 1F.2F No.88, Sec.6 ,Jhongshan N. Rd., Jhongshan District, Taipei City104, Taiwan (R.O.C.) (02) 2836-3988

Yanping Branch No.202, Sec. 2, Yanping N. Rd., Datong District, Taipei City 103, Taiwan (R.O.C.) (02) 2557-9155

Dunnan Branch No.118, Sec. 4, Ren-ai Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02) 2326-8899

Heping Branch No.238, Sec. 1, Heping E. Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02) 2368-5589

Peishih Branch No.347,Sec.2,HepingE.Rd.,Da-anDistrict,TaipeiCity106,Taiwan(R.O.C.) (02) 2705-8588

Jhongsiao Branch 1F., No.282, Sec. 4, Jhongsiao E. Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02) 6636-9999

Daan Branch No.118, Sec. 3, Sinyi Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02) 2700-9388

Sinyi Branch No.89, Leli Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02) 2739-3988

Head Office & BusinessDepartment

No.44, Sec. 2, Jhongshan N. Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02) 2568-3988

Trust Department No.118, Sec. 4, Ren-ai Rd., Da-an District, Taipei City 106, Taiwan (R.O.C.) (02) 2326-8899

Dazhi Branch No.645, Bei-an Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02) 8509-6858

Jianciao Branch 1F, B1., No.150, Sec. 2, Nanjing E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02) 2508-1899

International Department 2F., No.17, Sec. 2, Jianguo N. Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02) 2505-6966

Offshore Banking Unit 2F., No.17, Sec. 2, Jianguo N. Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02) 2505-6966

Jianpei Branch 1F.3F.B1., No.17, Sec. 2, Jianguo N. Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02) 2505-6966

Fusing Branch No.150, Fusing N. Rd., Jhongshan District, Taipei City 104, Taiwan (R.O.C.) (02) 2713-7666

Nanmen Branch No.55, Sec. 1, Nanchang Rd., Jhongjheng District, Taipei City 100, Taiwan (R.O.C.) (02) 2397-2588

IX.DirectoryofHeadOffice&Branches

124

IX. Directory of Head Office & Branches


Simen Branch No.57, Sec. 1, Chongcing S. Rd., Jhongjheng District, Taipei City 100, Taiwan (R.O.C.) (02) 2371-7878

Sinsheng Branch No.62, Sec. 1, Sinsheng S. Rd., Jhongjheng District, Taipei City 100, Taiwan (R.O.C.) (02) 2395-2888

Kuting Branch No.28, Sec. 3, Roosevelt Rd., Jhongjheng District, Taipei City 100, Taiwan (R.O.C.) (02) 2364-6888

Neihu Branch No.358, Sec. 1, Neihu Rd., Neihu District, Taipei City 114, Taiwan (R.O.C.) (02) 2659-9966

Shihpai Branch No.49,51, Sec. 2, Shihpai Rd., Beitou District, Taipei City 112, Taiwan (R.O.C.) (02) 5581-5052

Taipei Branch No.208,210, Sec. 3, Bade Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02) 2579-8989

Dunbei Branch No.133, Sec. 3, Minsheng E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02) 2712-6666

Nantung Branch No.289, Sec. 3, Nanjing E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02) 2546-1068

South Songshan Branch No.92, Sec. 5, Nanjing E. Rd., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02) 2528-6188

Minsheng Branch No.510, Fujin St., Songshan District, Taipei City 105, Taiwan (R.O.C.) (02) 8787-2680

Songde Branch No.493, Songshan Rd., Sinyi District, Taipei City 110, Taiwan (R.O.C.) (02) 2726-1688

Keelung Rd. Branch No.55, Sec. 2, Keelung Rd., Sinyi District, Taipei City 110, Taiwan (R.O.C.) (02) 2735-2567

Sanhe Branch No.183, Sec. 4, Sanhe Rd., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.) (02) 2287-7979

Sanchong Branch No.116, Jhengyi N. Rd., Sanchong Dist., New Taipei City 241, Taiwan (R.O.C.) (02) 2983-6100

Jingping Branch No.634-9, Jingping Rd., Jhonghe Dist., New Taipei City 235, Taiwan (R.O.C.) (02) 2242-8989

Jhonghe Branch No.341, Jhonghe Rd., Yonghe Dist., New Taipei City 234, Taiwan (R.O.C.) (02) 2232-7788

Yonghe Branch No.197, Jhulin Rd., Yonghe Dist., New Taipei City 234, Taiwan (R.O.C.) (02) 8928-0588

125


Sijhih Branch No.135, Jhongsing Rd., Sijhih Dist., New Taipei City 221, Taiwan (R.O.C.) (02) 2694-5133

Banciao Branch No.176, Jhongjheng Rd., Banciao Dist., New Taipei City 220, Taiwan (R.O.C.) (02) 2965-8888

Chiangtsui Branch No.79, Alley 3, Lane 182, Sec. 2, Wunhua Rd., Banciao Dist., New Taipei City 220, (R.O.C.) (02) 8252-9999

Bannan Branch No.41,43, Guancian E. Rd., Banciao Dist., New Taipei City 220, Taiwan (R.O.C.) (02) 2956-6789

Sindian Branch No.114,JianguoRd.,&No.66, Minzu Rd., Sindian Dist., New Taipei City 231, Taiwan (R.O.C.) (02) 2915-7766

North Sindian Branch No.23,25, Baoqiang Rd., Xindian Dist., New Taipei City 231, Taiwan (R.O.C.) (02) 2912-3988

Sinjhuang Branch No.75, Sec. 2, Jhonghua Rd., Sinjhuang Dist., New Taipei City 242, Taiwan (R.O.C.) (02) 2998-0888

South Sinjhuang Branch No.58, Fuguo Rd., Sinjhuang Dist., New Taipei City 242, Taiwan (R.O.C.) (02) 2906-8868

Lujhou Branch No.265, Minzu Rd., Lujhou Dist., New Taipei City 247, Taiwan (R.O.C.) (02) 2848-5858

Danshui Branch No.76, Zhongshan Rd., Danshui Dist., New Taipei City 251, Taiwan (R.O.C.) (02) 2626-8689

Xinban Branch 1F.2F., No.98,102, Sec. 2, Xianmin Blvd., Banqiao Dist., New Taipei City 220, Taiwan (R.O.C.) (02) 2957-1858

East Keelung Branch No.133-1, Sin 1st Rd., Jhongjheng District, Keelung City 202, Taiwan (R.O.C.) (02) 2424-9999

Taoyuan, Hsinchu, Miaoli AreaBusiness units Address Telephone

Nanli Branch No.369, Jhongfong Rd., Jhongli City, Taoyuan County 320, Taiwan (R.O.C.) (03) 427-3377

Jhongli Branch No.366, Yanping Rd., Jhongli City, Taoyuan County 320, Taiwan (R.O.C.) (03) 427-2345

Taoyuan Branch No.205, Fusing Rd., Taoyuan City, Taoyuan County 330, Taiwan (R.O.C.) (03) 339-6000

North Taoyuan Branch No.166, Sec. 1, Daxing W. Rd., Taoyuan City, Taoyuan County 330, Taiwan (R.O.C.) (03) 346-4888

126


Taoyuan, Hsinchu, Miaoli AreaBusiness units Address Telephone

Longtan Branch No.176, Jhongjheng Rd., Longtan Township, Taoyuan County 325, Taiwan (R.O.C.) (03) 499-3800

Bade Branch No.991,993, Sec. 1, Jieshou Rd., Bade City, Taoyuan County 334, Taiwan (R.O.C.) (03) 362-6668

Beida Branch No.457, Beida Rd., Hsinchu City 300, Taiwan (R.O.C.) (03) 521-8181

Guandong Ciao Branch No.271, Sec. 1, Guangfu Rd.,Hsinchu City 300, Taiwan (R.O.C.) (03) 577-9292

Chuke Branch No.289, Sec. 2, Guangfu Rd., Hsinchu City 300, Taiwan (R.O.C.) (03) 516-3123

Hsinchu Branch No.83, Sec. 2, Dongda Rd., Hsinchu City 300, Taiwan (R.O.C.) (03) 535-1546

Nanliao Branch No.543, Sec. 3, Dongda Rd., Hsinchu City 300, Taiwan (R.O.C.) (03) 536-2611

Dongmen Branch No.129, Dongmen St., Hsinchu City 300, Taiwan (R.O.C.) (03) 523-4141

Jhubei Branch No.331, Jhongjheng E. Rd., Jhubei City, Hsinchu County 302, Taiwan (R.O.C.) (03) 551-8383

Toufen Branch No.41, Zihciang Rd., Toufen Township, Miaoli County 351, Taiwan (R.O.C.) (037) 696-188

Greater Taichung AreaBusiness units Address Telephone

Wunsin Branch No.447, Sec. 3, Wunsin Rd., Beitun District, Taichung City 406, Taiwan (R.O.C.) (04) 2294-6888

North Taichung Branch No.55, Sec. 2, Chongde Rd., Beitun District, Taichung City 406, Taiwan (R.O.C.) (04) 2232-6886

Taichung Branch No.308, Sec. 1, Taichung Port Rd., North District, Taichung City 404, Taiwan (R.O.C.) (04) 2328-5577

Mincyuan Branch No.559, Mincyuan Rd., North District, Taichung City 404, Taiwan (R.O.C.) (04) 2205-1888

Fengchia Branch No.258, Sec. 2, Henan Rd., Situn District, Taichung City 407, Taiwan (R.O.C.) (04) 2451-7890

West Taichung Branch No.711, Dadun Rd., Situn District, Taichung City 407, Taiwan (R.O.C.) (04) 2327-4567

ShiFu Branch No.91, Sec. 2, Wenxin Rd., Xitun Dist., Taichung City 407, Taiwan (R.O.C.) (04) 2258-8757

Nantun Branch No.187, Sec. 2, Dongsing Rd., Nantun District, Taichung City 408, Taiwan (R.O.C.) (04) 2472-0788

127

Greater Taichung AreaBusiness units Address Telephone

Dali Branch No.127, Sec. 2, Jhongsing Rd., Dali City, Taichung County 412, Taiwan (R.O.C.) (04) 2483-4088

Daya Branch No.198, Sec. 2, Jhongcing Rd., Daya Township, Taichung County 428, Taiwan (R.O.C.) (04) 2565-2299

Taiping Branch No.511, Yichang Rd., Taiping City, Taichung County 411, Taiwan (R.O.C.) (04) 2273-0588

Shalu Branch No.201-1, Jhongshan Rd., Shalu Township, Taichung County 433, Taiwan (R.O.C.) (04) 2665-6699

Fongyuan Branch No.129, Yuanhuan S. Rd., Fongyuan City, Taichung County 420, Taiwan (R.O.C.) (04) 2525-7999

Yuanlin Branch No.28, Yuying Rd., Yuanlin Township, Changhua County 510, Taiwan (R.O.C.) (04) 839-7899

Changhua Branch No.273, Sec. 1, Jhongjheng Rd., Changhua City, Changhua County 500, Taiwan (R.O.C.) (04) 722-7789

Chiayi-Tainan AreaBusiness units Address Telephone

Fucheng Branch 1F., No.88, Jhongshan Rd., West Central District, Tainan City 700, Taiwan (R.O.C.) (06) 228-4400

Yongfu Branch No.150, Sec. 2, Yongfu Rd., West Central District, Tainan City 700, Taiwan (R.O.C.) (06) 220-4622

Tainan Branch No.389, Sec. 2, Simen Rd., West Central District, Tainan City 700, Taiwan (R.O.C.) (06) 223-3383

Haidian Branch No.130, Sec. 1, Haidian Rd., Annan District, Tainan City 709, Taiwan (R.O.C.) (06) 258-5015

Chongde Branch No.260, Chongde Rd., East District, Tainan City 701, Taiwan (R.O.C.) (06) 290-6901

Houchia Branch No.660, Yunong Rd., East District, Tainan City 701, Taiwan (R.O.C.) (06) 268-7412

Jinhua Branch No.195, Sec. 2, Jinhua Rd., South District, Tainan City 702, Taiwan (R.O.C.) (06) 263-9121

Yongkang Branch No.986, Jhonghua Rd., Yongkang City, Tainan County 710, Taiwan (R.O.C.) (06) 242-5788

Jiali Branch No.288-1, Yanping Rd., Jiali Township, Tainan County 722, Taiwan (R.O.C.) (06) 722-6655

Chiayi Branch No.620, Chueiyang Rd., Chiayi City 600, Taiwan (R.O.C.) (05) 222-2818

128


Kaohsiung-Pingtung AreaBusiness units Address Telephone

Kaohsiung Branch No.98, Jhonghua 3rd Rd., Cianjin District, Kaohsiung City 801, Taiwan (R.O.C.) (07) 282-4300

East Kaohsiung Branch No.309,311, Jiansing Rd., Sanmin District, Kaohsiung City 807, Taiwan (R.O.C.) (07) 380-1500

North Kaohsiung Branch No.360, Bo-ai 2nd Rd., Zuoying District, Kaohsiung City 813, Taiwan (R.O.C.) (07) 550-9900

Linya Branch No.260, Jhongshan 2nd Rd., Cianjhen District, Kaohsiung City 806, Taiwan (R.O.C.) (07) 537-5537

Cisian Branch No.386, Cisian 1st Rd., Sinsing District, Kaohsiung City 800, Taiwan (R.O.C.) (07) 238-8545

Wufu Branch No.116, Wufu 2nd Rd., Sinsing District, Kaohsiung City 800, Taiwan (R.O.C.) (07) 216-8855

Youchang Branch No.750, Houchang Rd., Nanzih District, Kaohsiung City 811, Taiwan (R.O.C.) (07) 365-2200

Gangshan Branch No.95, Weiren Rd., Gangshan Township, Kaohsiung County 820, Taiwan (R.O.C.) (07) 621-9677

Fongshan Branch No.105, Jhongshan W. Rd., Fongshan City, Kaohsiung County 830, Taiwan (R.O.C.) (07) 719-9999

Wujia Branch No.9, Wujia 3rd Rd., Fongshan City, Kaohsiung County 830, Taiwan (R.O.C.) (07) 813-1168

Nanping Branch No.75-2, 75-3, Ren-ai Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.) (08) 733-7575

Pingtung Branch No.103, Guangdong Rd., Pingtung City, Pingtung County 900, Taiwan (R.O.C.) (08) 721-7777

Hualien-Taitung AreaBusiness units Address Telephone

Luodong Branch No.153, Gongjheng Rd., Luodong Township, Yilan County 265, Taiwan (R.O.C.) (03) 953-3366

Hualien Branch No.183, Jhongjheng Rd., Hualien City, Hualien County 970, Taiwan (R.O.C.) (03) 834-5930

OverseasBusinessOffices

Overseas unitsBusiness units Address Telephone

Hong Kong Branch 6/F, Sun Life Tower, The Gateway, 15 Canton Road, Tsimsbatsui, Kowloon, Hong Kong 852-22349009

Ho Chi Minh City R.O. Osic Building 7Fl., No.8 , Nguyen Hue Street, District 1, Ho Chi Minh City Vietnam 84-8-38228375

129

INDEPENDENT AUDITORS’ REPORT

The Board of Directors and Stockholders

Taishin International Bank Co., Ltd.

We have audited the accompanying balance sheets of Taishin International Bank Co., Ltd. (“Taishin Bank,” a subsidiary of Taishin Financial Holding Co., Ltd.) as of December 31, 2011 and 2010, and the related statements of income, changes in stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of Taishin Bank’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the financial position of Taishin International Bank Co., Ltd. as of December 31, 2011 and 2010, and the results of its operations and its cash flows for the years then ended, in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks, requirements of the Business Accounting Law and Guidelines Governing Business Accounting relevant to financial accounting standards, and accounting principles generally accepted in the ROC.

As stated in Notes 1 and 35 to the accompanying financial statements, Taishin Bank had a cash merger with Taishin Bills Finance Co., Ltd. a wholly owned subsidiary of Taishin Financial Holding Co., Ltd., with Taishin Bank as the surviving company. Based on Statement of Financial Accounting Standards (SFAS) Interpretation No. (91) 243 and 244 and No. (95) 081 issued by the Accounting Research and Development Foundation of the Republic of China, the transaction was treated as a reorganization and was recorded at the carrying values of both entities’ assets and liabilities. In addition, based on SFAS Interpretation No. (95) 141, the financial statements of Taishin Bank as of and for the year ended December 31, 2010 were retroactively restated assuming both entities had been merged within the year.

We have also audited Taishin Bank’s separately prepared consolidated financial statements for the years ended December 31, 2011 and 2010, on which we have issued an unqualified opinion in our report dated March 8, 2012.

March 8, 2012

Appendix one

X. Notes To Financial Statements

130


Notice to Readers

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

For the convenience of readers, the auditors’ report and the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the Republic of China. If there is any conflict between the English version and the original Chinese version or any difference in the interpretation of the two versions, the Chinese-language auditors’ report and financial statements shall prevail.

131

TAISHIN INTERNATIONAL BANK CO., LTD.BALANCE SHEETS

DECEMBER 31, 2011 AND 2010(In Thousands of New Taiwan Dollars)

2011 2010 (Restated Note 35)

PercentageIncrease

(Decrease)

ASSETS Amount Amount %

Cash and cash equivalents (Note 4) $ 11,125,892 $ 12,895,603 ( 14 )

Due from the Central Bank and call loans to other banks (Note 5) 29,519,453 37,626,717 ( 22 )

Financial assets at fair value through profit or loss (Notes 2 and 6) 40,781,549 36,979,776 10

Bonds and securities purchased under resell agreements (Note 2) 1,058,738 2,992,554 ( 65 )

Receivables, net (Notes 2, 3, 7 and 8) 88,122,428 97,304,516 ( 9 )

Loans, net (Notes 2, 3, 8 and 32) 600,808,129 531,674,018 13

Available-for-sale financial assets (Notes 2, 9 and 25) 191,190,849 177,358,294 8

Held-to-maturity financial assets (Notes 2 and 10) 2,421,241 3,312,094 ( 27 )Investments accounted for by the equity method, net (Notes 2, 11 and 26) 1,939,912 1,861,285 4

OTHER FINANCIAL ASSETS, NET

Financial assets carried at cost (Notes 2 and 12) 2,377,454 2,428,175 ( 2 )

Other miscellaneous financial assets (Notes 2, 3, 8 and 13) 516,362 513,435 1

Other financial assets, net 2,893,816 2,941,610 ( 2 )

PROPERTY AND EQUIPMENT (Notes 2 and 14)

Cost

Land 10,606,688 10,610,422 -

Buildings 7,791,798 8,602,784 ( 9 )

Machinery equipment 1,385,691 4,049,257 ( 66 )

Transportation equipment 49,515 295,246 ( 83 )

Miscellaneous equipment 123,367 540,508 ( 77 )

Leased assets 162,809 337,185 ( 52 )

20,119,868 24,435,402 ( 18 )

Accumulated depreciation ( 2,708,877 ) ( 6,734,820 ) ( 60 )

17,410,991 17,700,582 ( 2 )

Prepayments for buildings and equipment 13,451 46,846 ( 71 )

Property and equipment, net 17,424,442 17,747,428 ( 2 )

GOODWILL AND INTANGIBLE ASSETS (Notes 2 and 15) 1,921,980 2,079,117 ( 8 )

OTHER ASSETS

Prepayments (Note 27) 456,106 443,580 3

Refundable deposits 779,093 1,904,056 ( 59 )

Deferred income tax assets (Notes 2 and 30) 5,482,805 6,349,464 ( 14 )

Other miscellaneous assets (Notes 2 and 16) 27,983 86,200 ( 68 )

Other assets, net 6,745,987 8,783,300 ( 23 )

TOTAL $ 995,954,416 $ 933,556,312 7

132



PercentageIncrease

(Decrease)

LIABILITIES AND STOCKHOLDERS’ EQUITY Amount Amount %

LIABILITIES

Due to banks and Central Bank (Notes 17 and 32) $ 62,532,398 $ 57,252,391 9

Financial liabilities at fair value through profit or loss

(Notes 2, 6 and 32) 8,353,108 16,202,864 ( 48 ) Bonds and securities sold under repurchase agreements (Notes 2 and 32) 43,486,925 32,611,770 33

Payables (Notes 2 and 18) 22,379,981 27,040,897 ( 17 )

Deposits (Notes 19 and 32) 756,502,655 699,985,966 8

Bank debentures (Note 20) 25,000,000 25,000,000 -

Other financial liabilities (Note 21) 13,340,332 13,184,858 1

Other liabilities (Notes 2 and 22) 1,377,985 1,584,681 ( 13 )

Total liabilities 932,973,384 872,863,427 7

STOCKHOLDERS' EQUITY

Capital stock (Note 23)

Common stock - issued and outstanding 47,275,173 47,275,173 -

Preferred stock - issued and outstanding 1,882,353 1,882,353 -

Capital surplus (Note 24)

Additional paid-in capital 3,089,037 3,145,166 ( 2 )

Other capital surplus (Note 2) 107,980 24,780 336

Retained earnings (Note 25)

Legal reserve 2,646,154 283,230 834

Special reserve 189,981 - -

Unappropriated earnings 7,757,821 7,876,412 ( 2 )

Unrealized revaluation increment 6,093 - -

Cumulative translation adjustments (Note 2) ( 539 ) ( 519 ) 4 Unrealized gains or losses on financial instruments (Notes 2 and 26) 27,334 206,290 ( 87 )

Net loss not recognized as pension cost ( 355 ) - -

Total stockholders' equity 62,981,032 60,692,885 4

TOTAL $ 995,954,416 $ 933,556,312 7

Based on Statement of Financial Accounting Standards (SFAS) Interpretation No. (91) 243 and 244 and No. (95) 081 issued by the Accounting Research and Development Foundation of the Republic of China, the merger of Taishin Bank and Taishin Bills Finance Co., Ltd. (“Taishin Bills Finance”) was treated as a reorganization and was recorded at the carrying value of both entities’ assets and liabilities. Also in accordance with SFAS Interpretation No. (95) 141, the financial statements of Taishin Bank as of and for the year ended December 31, 2010 were retroactively restated assuming the assets and liabilities of Taishin Bills Finance have been included at carrying value.

The accompanying notes are an integral part of the financial statements.(With Deloitte & Touche audit report dated March 8, 2012)

133

TAISHIN INTERNATIONAL BANK CO., LTD.STATEMENTS OF INCOME

YEARS ENDED DECEMBER 31, 2011 AND 2010(In Thousands of New Taiwan Dollars, Except Earnings Per Share)


PercentageIncrease

(Decrease)

Amount Amount %

INTEREST INCOME (Notes 2 and 32) $ 19,404,839 $ 16,777,250 16

INTEREST EXPENSE ( 6,886,685 ) ( 4,926,725 ) 40

NET INTEREST INCOME 12,518,154 11,850,525 6NET INCOME AND GAINS (LOSSES) OTHER THAN INTEREST INCOME Fee income, net (Notes 2, 28 and 32) 6,117,143 6,670,825 ( 8 )

Gain on financial assets and liabilities at fair value through profit or loss (Notes 2 and 6)

291,413

1,301,972 ( 78 )

Realized gain on available-for-sale financial assets(Note 2) ( 48,257 ) 133,133 ( 136 ) Investment income recognized under the equity method (Notes 2 and 11) 103,373 453,641 ( 77 )

Exchange gain, net (Note 2) 838,041 339,810 147

Other non-interest net income and gains (losses)

Gain on collection of nonperforming loans (Note 2) 3,793,311 3,120,438 22

Other miscellaneous net income (Note 2) 947,563 876,003 8

GROSS INCOME 24,560,741 24,746,347 ( 1 )

PROVISION FOR LOAN LOSSES (Notes 2 and 8) ( 1,985,975 ) ( 1,211,169 ) 64

OPERATING EXPENSES (Notes 29 and 32)

Personnel expenses ( 7,455,755 ) ( 6,590,411 ) 13

Depreciation and amortization ( 952,400 ) ( 1,166,527 ) ( 18 )

Others ( 4,954,215 ) ( 4,634,951 ) 7

Total operating expenses ( 13,362,370 ) ( 12,391,889 ) 8

INCOME BEFORE INCOME TAX $ 9,212,396 $ 11,143,289 ( 17 )

INCOME TAX EXPENSE (Notes 2 and 30) ( 1,473,296 ) ( 2,970,547 ) ( 50 )

NET INCOME $ 7,739,100 $ 8,172,742 ( 5 )


Pretax After-tax Pretax After-tax

BASIC EARNINGS PER SHARE (Note 31) $ 1.92 $ 1.61 $ 2.33 $ 1.70

DILUTED EARNINGS PER SHARE (Note 31) $ 1.87 $ 1.57 $ 2.27 $ 1.66

Note:Based on Statement of Financial Accounting Standards (SFAS) Interpretation No. (91) 243 and 244 and No. (95) 081 issued by the Accounting Research and Development Foundation of the Republic of China, the merger of Taishin Bank and Taishin Bills Finance was treated as a reorganization and was recorded at the carrying value of both entities’ assets and liabilities. In addition, based on Interpretation No. (95) 141, the financial statements of Taishin Bank as of and for the year ended December 31, 2010 were retroactively restated, assuming the carrying values of the income and expense of Taishin Bills Finance were included. Thus, for the years ended December 31, 2011 and 2010, the net income of Taishin Bank included the net income of Taishin Bills Finance of $18,721 and net income $296,330, respectively.

The accompanying notes are an integral part of the financial statements. (With Deloitte & Touche audit report dated March 8, 2012)

(Concluded)

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TAISHIN INTERNATIONAL BANK CO., LTD.STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

YEARS ENDED DECEMBER 31, 2011 AND 2010(In Thousands of New Taiwan Dollars)

Based on Statement of Financial Accounting Standards (SFAS) Interpretation No. (91) 243 and 244 and No. (95) 081 issued by the Accounting Research and Development Foundation of the Republic of China, the merger of Taishin Bank and Taishin Bills Finance Co., Ltd. (“Taishin Bills Finance”) was treated as a reorganization and was recorded at the carrying value of both entities’ assets and liabilities. Also in accordance with SFAS Interpretation No. (95) 141, the financial statements of Taishin Bank as of and for the year ended December 31, 2010 were retroactively restated assuming the assets and liabilities of Taishin Bills Finance have been included at carrying value.

The accompanying notes are an integral part of the financial statements.

(With Deloitte & Touche audit report dated March 8, 2012)

Issued and Outstanding Capital Stock Capital Surplus Retained EarningsUnrealizedRevaluationIncrement

CumulativeTranslation

Adjustments

Unrealized Gainsor Losses on

FinancialInstruments

Net Loss NotRecognized asPension CostCommon Stock Preferred Stock

AdditionalPaid-in Capital

Employee StockOptions

Other CapitalSurplus Legal Reserve Special Reserve

UnappropriatedEarnings Total

BALANCE, JANUARY 1, 2010 $ 47,275,173 $ 1,882,353 $ 3,073,271 $ - $ 4,411 $ - $ - $ 944,099 $ - ( $ 57 ) $ 254,126 $ - $ 53,433,376Retroactive adjustments arising from

a merger (Note) 5,140,000 - - 380 - 377,676 - 296,330 - - 43,616 - 5,858,002

Appropriation of the 2009 earnings

Legal reserve - - - - - 283,230 - ( 283,230 ) - - - - -

Preferred cash dividends - - - - - - - ( 120,000 ) - - - - ( 120,000 )

Cash dividends - - - - - - - ( 540,869 ) - - - - ( 540,869 )

Employee stock-based compensation - - - 20,369 - - - - - - - - 20,369

Cumulative translation adjustments - - - - - - - - - ( 462 ) - - ( 462 )Unrealized gain on available-for-sale

financial assets - - - - - - - - - - ( 47,836 ) - ( 47,836 )

Net income for the year ended December 31, 2010 - - - - - - - 8,172,742 - - - - 8,172,742

Effects of cash merger with Taishin Bills Finance (Note) ( 5,140,000 ) - 71,895 ( 380 ) - ( 377,676 ) - ( 592,660 ) - - ( 43,616 ) - ( 6,082,437 )

BALANCE, DECEMBER 31, 2010 47,275,173 1,882,353 3,145,166 20,369 4,411 283,230 - 7,876,412 - ( 519 ) 206,290 - 60,692,885Retroactive adjustments arising from

a merger (Note) 5,140,000 - - 478 - 377,676 48,568 277,609 - - 51,081 - 5,895,412


Legal reserve - - - - - 2,362,924 - ( 2,362,924 ) - - - - -


Cash dividends - - - - - - - ( 5,393,488 ) - - - - ( 5,393,488 )Reclassification of trading loss reserve

to special reserve - - - - - - 141,413 - - - - - 141,413

Employee stock-based compensation - - - 83,200 - - - - - - - - 83,200Unrealized revaluation increment on

land - - - - - - - - 6,093 - - - 6,093



Net loss not recognized as pension cost - - - - - - - - - - - ( 355 ) ( 355 )


Effects of cash merger with Taishin Bills Finance (Note) ( 5,140,000 ) - ( 56,129 ) ( 478 ) - ( 377,676 ) - ( 258,888 ) - - ( 51,081 ) - ( 5,884,252 )

BALANCE, DECEMBER 31, 2011 $ 47,275,173 $ 1,882,353 $ 3,089,037 $ 103,569 $ 4,411 $ 2,646,154 $ 189,981 $ 7,757,821 $ 6,093 ( $ 539 ) $ 27,334 ( $ 355 ) $ 62,981,032

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Issued and Outstanding Capital Stock Capital Surplus Retained EarningsUnrealizedRevaluationIncrement

CumulativeTranslation

Adjustments

Unrealized Gainsor Losses on

FinancialInstruments

Net Loss NotRecognized asPension CostCommon Stock Preferred Stock

AdditionalPaid-in Capital

Employee StockOptions

Other CapitalSurplus Legal Reserve Special Reserve

UnappropriatedEarnings Total

BALANCE, JANUARY 1, 2010 $ 47,275,173 $ 1,882,353 $ 3,073,271 $ - $ 4,411 $ - $ - $ 944,099 $ - ( $ 57 ) $ 254,126 $ - $ 53,433,376Retroactive adjustments arising from

a merger (Note) 5,140,000 - - 380 - 377,676 - 296,330 - - 43,616 - 5,858,002


Legal reserve - - - - - 283,230 - ( 283,230 ) - - - - -


Cash dividends - - - - - - - ( 540,869 ) - - - - ( 540,869 )

Employee stock-based compensation - - - 20,369 - - - - - - - - 20,369




Effects of cash merger with Taishin Bills Finance (Note) ( 5,140,000 ) - 71,895 ( 380 ) - ( 377,676 ) - ( 592,660 ) - - ( 43,616 ) - ( 6,082,437 )

BALANCE, DECEMBER 31, 2010 47,275,173 1,882,353 3,145,166 20,369 4,411 283,230 - 7,876,412 - ( 519 ) 206,290 - 60,692,885Retroactive adjustments arising from

a merger (Note) 5,140,000 - - 478 - 377,676 48,568 277,609 - - 51,081 - 5,895,412


Legal reserve - - - - - 2,362,924 - ( 2,362,924 ) - - - - -


Cash dividends - - - - - - - ( 5,393,488 ) - - - - ( 5,393,488 )Reclassification of trading loss reserve

to special reserve - - - - - - 141,413 - - - - - 141,413

Employee stock-based compensation - - - 83,200 - - - - - - - - 83,200Unrealized revaluation increment on

land - - - - - - - - 6,093 - - - 6,093



Net loss not recognized as pension cost - - - - - - - - - - - ( 355 ) ( 355 )


Effects of cash merger with Taishin Bills Finance (Note) ( 5,140,000 ) - ( 56,129 ) ( 478 ) - ( 377,676 ) - ( 258,888 ) - - ( 51,081 ) - ( 5,884,252 )

BALANCE, DECEMBER 31, 2011 $ 47,275,173 $ 1,882,353 $ 3,089,037 $ 103,569 $ 4,411 $ 2,646,154 $ 189,981 $ 7,757,821 $ 6,093 ( $ 539 ) $ 27,334 ( $ 355 ) $ 62,981,032

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TAISHIN INTERNATIONAL BANK CO., LTD.STATEMENTS OF CASH FLOWS

YEARS ENDED DECEMBER 31, 2011 AND 2010(In Thousands of New Taiwan Dollars)

20112010

(Restated Note 35)

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 7,739,100 $ 8,172,742

Provision for loan loss 1,989,284 1,193,310

Provision (reversal) for guarantees ( 3,309 ) 17,859

Compensation cost of employee stock options 82,094 19,878

Provision for reserve for trading loss - 18,702

Recovery of loans written off 489,514 199,142

Depreciation 616,890 838,090

Amortization 335,510 328,437

Unrealizedvaluationgainoffinancialassetsandliabilities 1,317,954 264,428

Amortizationofpremiumordiscountoninvestmentinbonds 369,831 163,979

Reversal for impairment loss on assumed collaterals and residuals ( 133,792 ) ( 182 )

(Gain) loss on disposal of investment 84,559 ( 127,930 )

Investment income recognized under the equity method, net ( 103,373 ) ( 453,641 )

Cash dividends received from equity-method investees 32,508 49,077

Deferredincometaxbenefit 1,076,812 2,856,021

Others 10,524 5,381

Netchangesinoperatingassetsandliabilities

Financial assets held for trading ( 5,119,727 ) 7,326,410

Accountsreceivable 9,184,040 ( 7,199,030 )

Otherfinancialassets ( 284,321 ) ( 826,763 )

Other assets - others 981,526 15,522,935

Financialliabilitiesheldfortrading ( 7,849,756 ) ( 1,719,770 )

Accountspayable 324,944 1,446,237

Otherfinancialliabilities 177,884 ( 6,943,435 )

Otherliabilities ( 52,414 ) ( 764,110 )

Netcashprovidedbyoperatingactivities 11,266,282 20,387,767

CASH FLOWS FROM INVESTING ACTIVITIES

DecreaseinduefromtheCentralBankandcallloanstootherbanks $ 8,107,264 $ 90,252,600

(Increase)decreaseinbondsandsecuritiespurchasedunderresell agreements 1,933,816 ( 8,775 )

Increase in loans (including delinquent loans) ( 71,333,466 ) ( 36,869,698 )

Acquisitionofavailable-for-salefinancialassets ( 927,705,805 ) ( 971,309,140 )

(Continned)

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2011 2010(Restated Note 35)

Proceeds from disposal of available-for-sale financial assets 914,002,834 836,454,350 Proceeds from received from maturity of held-to-maturity financial assets 983,226 2,518,601

Acquisition of investments accounted for by the equity method ( 2,070 ) -

Return on liquidation of financial assets carried at cost 46,186 24,520

Acquisition of property and equipment ( 303,748 ) ( 338,880 )

Proceeds from disposal of property and equipment 5,431 771

Net payment for acquiring other company ( 5,895,412 ) ( 4,090,570 )

Net cash used in investing activities ( 80,161,744 ) ( 83,366,221 )

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in due to the Central Bank and other banks 5,280,007 1,120,929

Increase in deposits 56,516,689 65,349,452

Decrease in guarantee deposits received ( 10,202 ) ( 26,095 )

Increase in bonds and securities sold under repurchase agreements 10,875,155 2,152,513

Cash dividends distributed ( 5,513,488 ) ( 824,784 )

Repayment of bank debentures - ( 10,000,000 )

Issue of bank debentures - 10,000,000

Others ( 22,410 ) ( 37,404 )

Net cash provided by financing activities 67,125,751 67,734,611

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ( 1,769,711 ) 4,756,157

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 12,895,603 8,139,446

CASH AND CASH EQUIVALENTS, END OF YEAR $ 11,125,892 $ 12,895,603

SUPPLEMENTAL CASH FLOW INFORMATION

Interest paid $ 6,418,547 $ 4,724,783

Income tax paid $ 691,856 $ 169,540

Taishin Bank acquired the credit card department of Chinfon Bank during the year ended December 31, 2010. The fair values of the assets and liabilities acquired were as follows:

Cash $ 7,430

Receivables 3,615,883

Other financial assets 47,202

Property and equipment 11,111

Intangible assets 672,969

Other assets 59,873

Payables ( 316,468 )

Total cost of acquisition 4,098,000

Less: Balance of cash ( 7,430 )

Net payment for the acquisition $ 4,090,570

Note:Based on Statement of Financial Accounting Standards (SFAS) Interpretation No. (91) 243 and 244 and No. (95) 081 issued by the Accounting Research and Development Foundation of the Republic of China, the merger of Taishin Bank and Taishin Bills Finance was treated as a reorganization and was recorded at the carrying values of both entities’ assets and liabilities. In addition, based on SFAS Interpretation No. (95) 141, the financial statements of Taishin Bank as of and for the year ended December 31, 2010 were retroactively restated, assuming the carrying values of the assets, liabilities, income and expense of Taishin Bank and Taishin Bills Finance were included in these financial statements.

The accompanying notes are an integral part of the financial statements.(With Deloitte & Touche audit report dated March 8, 2012)

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TAISHIN INTERNATIONAL BANK CO., LTD.NOTES TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 2011 AND 2010 (RESTATED Note 35)(In Thousands of New Taiwan Dollars, Unless Stated Otherwise)

1. ORGANIZATION AND OPERATIONS

Taishin International Bank Co., Ltd. (“Taishin Bank”) began preparations for its establishment as a commercial bank on October 4, 1990 and started its business operations on March 23, 1992. Taishin Bank provides customers with (a) general commercial banking services - commercial lending, foreign exchange transactions, installments and term loans, wire transfers, marketable security investments, receivable factoring, offshore banking business, etc.; and (b) various financial instruments - letters of credit, bankers’ acceptances, checking and savings accounts, credit cards, derivative instruments, etc.

As of December 31, 2011 and 2010, Taishin Bank had 6,279 and 6,290 employees, respectively.

Taishin Bank and Dah An Commercial Bank Co., Ltd. (“Dah An Bank”) decided to establish Taishin Financial Holding Co., Ltd. (“Taishin Financial Holding”) through a share swap, effective on February 18, 2002, with Taishin Bank as the survivor company.

For above merger, Taishin Bank issued new shares to acquire the total assets and liabilities of Dah An Bank. Total net assets acquired amounted to $5,682,428 thousand. The fair value of the new shares issued by Taishin Bank was $9,475,018 thousand, exceeding the net assets of Dah An Bank by $3,792,590 thousand. This excess was recognized as goodwill.

The parent company of Taishin Bank is Taishin Financial Holding, which had a 100% equity interest in Taishin Bank as of December 31, 2011 and 2010. In order to integrate corporate resources and enhance operation efficiency, Taishin Financial Holding made a reorganization to merge with Taishin Bills Finance Co., Ltd. (“Taishin Bills Finance”) on January 22, 2011, with Taishin Bank as the survivor company, including the acquisition plan of Taishin Bills Finance by Taishin Bank.

The merger price was based on the audited net equity value of Taishin Bills Finance on the base date of merger with total amount of $5,895,412 thousand. Taishin Bank will pay in cash to Taishin Financial Holding to acquire total assets, liabilities and operation of Taishin Bills Finance.

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2. SIGNIFICANT ACCOUNTING POLICIES

The financial statements have been prepared in conformity with the Regulations Governing the Preparation of Financial Reports by Public Banks, Business Accounting Law, Guidelines Governing Business Accounting, and accounting principles generally accepted in the Republic of China (ROC).

For readers’ convenience, the accompanying financial statements have been translated into English from the original Chinese version prepared and used in the ROC. If inconsistencies arise between the English version and the Chinese version or if differences arise in the interpretation between the two versions, the Chinese version of the financial statements shall prevail.

Significant accounting policies are summarized as follows:

Foreign Currency Transactions

The financial statements of foreign operations are translated into New Taiwan dollars at the following exchange rates:

a. Assets and liabilities - at exchange rates prevailing on the balance sheet date;b. Shareholders’ equity - at historical exchange rates;c. Dividends - at the exchange rate prevailing on the dividend declaration date;d. Income and expenses - at average exchange rates for the year.

Exchange differences arising from the translation of the financial statements of foreign operations are recognized as a separate component of shareholders’ equity. Such exchange differences are recognized in profit or loss in the year in which the foreign operations are disposed of.

Non-derivative foreign-currency transactions are recorded in the respective currencies when the transactions occur. Income and expenses are recorded at average exchange rates. Exchange differences arising from settlement of foreign-currency assets and liabilities are recognized in profit or loss.

At the balance sheet date, foreign-currency nonmonetary assets (such as equity instruments) and liabilities that are measured at fair value are revalued using prevailing exchange rates, with the exchange differences treated as follows:

a. Recognized in shareholders’ equity if the changes in fair value are recognized in shareholders’ equity;

b. Recognized in profit and loss if the changes in fair value is recognized in profit or loss.

Foreign-currency nonmonetary assets and liabilities that are carried at cost continue to be stated at exchange rates at trade dates.

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Accounting Estimates

Under above guidelines, laws and principles, management may make certain estimates and assumptions, which are related to the financial instrument valuation, allowance for bad debts, depreciation of property and equipment, pensions, income tax, bonuses to employees, directors and supervisors, asset impairment loss, reserve for losses or guarantees, etc. Actual results could differ from these estimates due to changes in operating conditions and assumptions.

Current and Noncurrent Assets and Liabilities

Because of bank’s business characteristics, the assets and liabilities of Taishin Bank are classified according to their nature and in the sequence of liquidity rather than as current or noncurrent. The maturity analysis of assets and liabilities is shown in Note 36.

FinancialInstrurmentsatFairValuethroughProfitorLoss

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. Taishin Financial Holding and subsidiaries recognize a financial asset or a financial liability on their balance sheets when Taishin Financial Holding and subsidiaries become a party to the contractual provisions of the financial instrument. A financial asset is derecognized when Taishin Financial Holding and subsidiaries have lost control of their contractual rights over the financial asset. A financial liability is derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired.

Financial instruments at FVTPL are initially measured at fair value. At each balance sheet date subsequent to initial recognition, financial assets or financial liabilities at FVTPL are remeasured at fair value, with changes in fair value recognized directly in profit or loss in the year in which they arise. Cash dividends received subsequently (including those received in the year of investment) are recognized as income for the year. On derecognition of a financial asset or a financial liability, 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. For securities companies, all regular way purchases or sales of financial assets are recognized and derecognized on a trade date basis. For banks and bills companies, all regular way purchases or sales of financial assets are recognized and derecognized on a settlement date basis except for stocks and beneficial certificates which are recognized and derecognized on a trade date basis.

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.

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Fair values of financial assets and financial liabilities at the balance sheet date are determined as follows: Publicly traded stocks - at closing prices; open-end mutual funds - at net asset values; bonds - at prices quoted by the Taiwan GreTai Securities Market and Bloomberg; and financial assets and financial liabilities without quoted prices in an active market - at values determined using valuation techniques.

BondsandSecuritiesPurchased/SoldunderSpecificAgreements

Bonds and securities purchased under resell agreements are recorded at purchase price and accounted as financing transactions. Bonds and securities sold under repurchase agreements are recorded at the selling price. Interest revenue and expenses arose from the transactions mentioned above are recorded on accrual basis.

Delinquent Loans

Overdue loans or other credit items including their accrued interest are reclassified as delinquent loans when approved by the board of directors according to the Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-performing/Non-accrual Loans.

The delinquent loans which are reclassified from loans are reported under loans, while others are reported as other miscellaneous financial assets.

Allowance for Loan Losses and Reserve for Guarantees

Allowance for bad debts and reserve for guarantees is estimated based on the uncollectibility of specific receivables, loans, delinquent loans, other financial assets and guarantees as well as the uncollectibility of overall credit portfolio referred to above.

On January 1, 2011, Taishin Bank adopted the third-time revised Statement of Financial Accounting Standards (SFAS) No. 34, “Financial Instruments: Recognition and Measurement.” One of the main revisions is that impairment of receivables originated by a company should be covered by SFAS No. 34. Loans and accounts receivable are assessed for impairment at the end of each reporting period and considered to be impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the accounts receivable, the estimated future cash flows of the asset have been affected. Objective evidence of impairment could include:

● Significant financial difficulty of the debtor;● Occurrence of past-due loans and receivables;● It is becoming probable that the debtor will enter bankruptcy or financial re-organization.

Loans and accounts receivable that are assessed as not impaired individually are further assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of loans and accounts receivable could include the Company’s past experience in collecting payment and an

142


increase in the number of delayed payments, as well as national or local economic conditions that correlate with defaults on the loans and receivables.

The amount of impairment loss recognized is the difference between the asset carrying amount and the present value of estimated future cash flows, after taking into account the related collateral and guarantees, discounted at the receivable’s original effective interest rate.

The carrying amount of accounts receivable is reduced through the use of an allowance account. When loans and accounts receivable are considered uncollectible, they are written off against the allowance account after the board of directors approve. Recovery of written-off delinquent loans is recognized as recovery of allowance for loan losses and classified into other non-interest net income and loss.

Taishin Bank evaluates the collectibility of credit assets based on the borrowers’/clients’ delinquent status and financial condition in accordance with Regulations Governing the Procedures for Banking Institutions to Evaluate Assets and Deal with Non-Performing/Non-accrual Loans. Based on these regulations, there are four categories of unsound credit assets: Special mention, substandard, doubtful collectibility and uncollectible, and provisions should be made at 2%, 10%, 50%, and 100%, respectively, as the minimum standard of the allowance for bad loans and guarantee. Effective January 1, 2011, normal loans are also provided with allowance at 0.5%, as the minimum standard of allowance for bad loans and guarantees. The minimum provision for allowance for bad loans and guarantees can be made sufficient over three year period beginning in January 1, 2011.

Available-for-sale Financial Assets

Available-for-sale financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition. At each balance sheet date subsequent to initial recognition, available-for-sale financial assets are remeasured at fair value, with changes in fair value recognized in equity until the financial assets are disposed of, at which time, the cumulative gain or loss previously recognized in equity is included in profit or loss for the year. The regular way purchases or sales of financial assets are recognized and derecognized on a settlement date basis except for stocks and beneficial certificates which are recognized and derecognized on a trade date basis.

The recognition, derecognition and the measurement of fair value of available-for-sale financial assets are the same with those of financial assets at FVTPL.

Cash dividends are recognized on the ex-dividend date, except for dividends distributed from the pre-acquisition profit of equity instrument which are treated as a reduction of investment cost. Stock dividends are not recognized as investment income but are recorded as an increase in the number of shares. The total number of shares subsequent to the increase is used for recalculation of cost per share. The difference between the initial cost of a debt instrument and its maturity amount is

143

amortized using the effective interest method (if the difference is immaterial, the straight method is adopted), with the amortized interest recognized in profit or loss.

An impairment loss is recognized when there is objective evidence that the financial asset is impaired. Any subsequent decrease in impairment loss for an equity instrument classified as available-for-sale is recognized directly in equity. If the fair value of a debt instrument classified as available-for-sale subsequently increases as a result of an event which occurred after the impairment loss was recognized, the decrease in impairment loss is reversed to profit.

Held-to-maturity Financial Assets

Held-to-maturity financial assets are carried at amortized cost using the effective interest method. Held-to-maturity financial assets are initially measured at fair value plus transaction costs that are directly attributable to the acquisition. Profit or loss is recognized when the financial assets are derecognized, impaired, or amortized. All regular way purchases or sales of financial assets are accounted for using a settlement date basis.

An impairment loss is recognized when there is objective evidence that the investment is impaired. The impairment loss is reversed if an increase in the investment’s recoverable amount is due to an event which occurred after the impairment loss was recognized; however, the adjusted carrying amount of the investment may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the investment in prior years.

Investments Accounted for by the Equity Method

Investments in which Taishin Bank exercise significant influence over the investees’ operating and financial policy decisions are accounted for by the equity method.

The acquisition cost of investment is allocated to the assets acquisition and liabilities acquisition on the basis of their fair values at the date of acquisition, and the acquisition cost in excess of the fair value of the identifiable net assets of the investee is recognized as goodwill. Goodwill is not amortized. The fair value of the net identifiable assets acquisition in excess of the investment cost is used to reduce the fair value of each of the noncurrent assets acquisition (except for financial assets other than investments accounted for by the equity method, noncurrent assets held for sale, deferred income tax assets, prepaid pension or other postretirement benefit) in proportion to the respective fair values of the noncurrent assets, with any excess recognized as an extraordinary gain.

When the investor subscribes for its investee’s newly issued shares at a percentage different from its percentage of ownership in the investee, the investor records the change in its equity in the investee’s net assets as an adjustment to investments, with a corresponding amount credited or charged to capital surplus. When the adjustment should be debited to capital surplus, but the capital surplus arising from long-term investments is insufficient, the shortage is debited to retained earnings.

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Under Article 36 of the Financial Holding Company Law, Taishin Bank, as a subsidiary of a financial holding company, is allowed to make new investments only if the investments are made through the financial holding company. It provides, however, that Taishin Bank may keep its equity investments made before Taishin Bank became a subsidiary of a financial holding company but is prohibited from increasing these investments.

Other Financial Assets

Financial assets carried at cost are investments in equity instruments with no quoted prices in an active market and with fair values that cannot be reliably measured, such as non-publicly traded stocks and stocks traded in the Emerging Stock Market, are measured at their original cost. The accounting treatment for dividends on financial assets carried at cost is the same with that for dividends on available-for-sale financial assets. An impairment loss is recognized when there is objective evidence that the asset is impaired. A reversal of this impairment loss is disallowed.

Bond investments without active market are bond investments with fixed or determinable payments and with no quoted prices in an active market are carried at amortized cost using the effective interest method. The accounting treatment for such bond investments is similar to that for held-to-maturity financial assets, except for the absence of restriction on the timing of their disposal.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Major additions and improvements to these assets are capitalized, while costs of repairs and maintenance are expensed currently.

Depreciation is calculated using the straight-line method over the assets’ estimated useful lives, and leasehold improvements are amortized over the lease terms. The related costs (including revaluation increment), accumulated depreciation, and any unrealized revaluation increment of an item of property and equipment are derecognized from the balance sheet upon its disposal. Any gain or loss on disposal of the asset is included in other non-interest net income or loss in the year of disposal.

If the recoverable amount of property and equipment is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is charged to earnings unless the asset is carried at a revalued amount, in which case the impairment loss is treated as a deduction to the unrealized revaluation increment.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased accordingly, but the increased carrying amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized as earnings, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as an increase in the unrealized revaluation increment.

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Goodwill

Goodwill arising on acquisition of companies was previously amortized over the estimated life of five to twenty years based on a straight-line basis. Effective January 1, 2006, based on a newly released SFAS No. 25 “Accounting for Business Combination under Purchase Method”, goodwill is no longer amortized and instead is tested for impairment annually. However, the impairment loss of goodwill can not be reversed.

Intangible Assets

Intangible assets acquired are initially recorded at cost and are amortized on a straight-line basis over their estimated useful lives.

If the recoverable amount of an intangible asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased accordingly, but the increased carrying amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years.

Deferred Assets and Other Assets

Deferred assets are amortized on a straight-line basis over 5 years lives.

Assumed collaterals and residuals are recorded at cost.

If the recoverable amount of assumed collaterals and residuals or other miscellaneous assets is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is charged to earnings unless the asset is carried at a revalued amount, in which case the impairment loss is treated as a deduction to the unrealized revaluation increment.

If an impairment loss subsequently reverses, the carrying amount of the asset is increased accordingly, but the increased carrying amount may not exceed the carrying amount that would have been determined had no impairment loss been recognized for the asset in prior years. A reversal of an impairment loss is recognized in earnings, unless the asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as an increase in the unrealized revaluation increment.

Pension Cost

Pension cost under a defined benefit plan is determined by actuarial valuations. Contributions made under a defined contribution plan are recognized as pension cost during the period in which employees render services.

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Curtailment or settlement gains or losses of the defined benefit plan are recognized as part of the net periodic pension cost for the period.

Stock-based Compensation

Employee stock options granted on or after January 1, 2008 are accounted for under SFAS No. 39, “Accounting for Share-based Payment.” Under the statement, the value of the stock options granted, which is equal to the best available estimate of the number of stock options expected to vest multiplied by the grant-date fair value, is expensed on a straight-line basis over the vesting period, with a corresponding adjustment to capital surplus - employee stock options. The estimate is revised if subsequent information indicates that the number of stock options expected to vest differs from previous estimates.

Interest Income and Fee Income Recognition

Interest income is recognized on an accrual basis. When the loans become past due and are considered uncollectible, the principal and interest receivable are transferred to delinquent loan accounts, and the accrual of interest income is ceased. Interest income shall be recognized when the delinquent interest is collected. According to the regulations issued by MOF, if the repayment of loan is extended under an agreement, the related interest should be recognized as deferred revenue and recognized as income when collected.

Fee income is recognized when the earning process has been completed and the economic benefits associated with the transaction have been realized or are realizable.

Income Tax

Taishin Bank applies the intra-year and inter-year allocations method to its income tax, whereby deferred income tax assets and liabilities are recognized for the tax effects of temporary differences, unused loss carryforward and unused tax credits. Valuation allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets will not be realized.

Tax credits for purchases of machinery, equipment and technology, research and development expenditures, and personnel training expenditures are recognized using the flow-through method.

Adjustment of prior years’ income tax payable is recognized as current income tax expense.

According to the Income Tax Law, an additional tax at 10% of unappropriated earnings is provided for as income tax in the year the shareholders approve to retain the earnings.

Taishin Bank, its parent company, Taishin Financial Holding, and other subsidiaries adopt the linked-tax system for tax filing. Differences between current and deferred income tax expenses on consolidated basis and those on nonconsolidated basis are adjusted to Taishin Financial Holding’s income tax expenses. Related reimbursements and appropriations are recognized as receivables or payables.

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Reserve for Trading Losses

Under the Regulations Governing Securities Firms, securities proprietary traders are required to provide 10% of their monthly net dealing gain as reserve for security dealing losses until the reserve reaches $200,000 thousand. Reserve may be used only to offset the dealing losses in excess of dealing gains.

The FSC issued on January 11, 2011 Order No. Financial-Supervisory-Securities-Firms 09900738571 to delete articles 11 and 12 of the amended Regulations Governing Securities Firms. As a result, the accumulated trading loss reserve and default reserve are reclassified to special reserve. The special reserve shall not be used for purposes other than covering the losses of the company or, when the special reserve reaches 50 percent of the amount of paid-in capital, half of it may be used for capitalization.

Reclassifications

Certain accounts in the consolidated financial statements as of and for the year ended December 31, 2010 have been reclassified to conform to the presentation of the consolidated financial statements as of and for the year ended December 31, 2011.

3. EFFECTS OF CHANGES IN ACCOUNTING PRINCIPLES

Financial Instruments

On January 1, 2011, Taishin Financial Holding and subsidiaries adopted the newly revised Statement of Financial Accounting Standards (SFAS) No. 34, “Financial Instruments: Recognition and Measurement.” The main revisions include (1) the original loans and receivables are included in applicable scope of SFAS No. 34; (2) additional guidelines on impairment testing of financial assets carried at amortized cost when a debtor has financial difficulties and the terms of obligations have been modified; and (3) accounting treatment by a debtor for modifications in the terms of obligations.

Operating Segments

On January 1, 2011, Taishin Bank adopted the newly issued SFAS No. 41 - “Operating Segments.” The requirements of the statement are based on the information about the components of Taishin Bank that management uses to make decisions about operating matters. SFAS No. 41 requires identification of operating segments on the basis of internal reports that are regularly reviewed by Taishin Financial Holding and subsidiaries’ chief operating decision maker in order to allocate resources to the segments and assess their performance. This statement supersedes SFAS No. 20, “Segment Reporting.” For this accounting change, Taishin Bank restated the segment information as of and for the year ended December 31, 2010 to conform to the disclosures as of and for the year ended December 31, 2011.

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4. CASH AND CASH EQUIVALENTS

December 31

2011 2010

Cash on hand $ 5,864,434 $ 4,945,991

Checks for clearing 1,701,611 853,430

Due from banks 1,712,160 5,793,372

Others 1,847,687 1,302,810

$ 11,125,892 $ 12,895,603

5. DUE FROM THE CENTRAL BANK AND CALL LOANS TO OTHER BANKS

December 31

2011 2010

Reserve for checking account $ 7,682,795 $ 7,321,168

Reserve for demand account 17,774,148 15,997,400

Reserve for foreign deposit 15,145 45,221

Call loans to banks 3,847,298 13,862,425

Certificate of deposits issued by the Central Bank - 200,000

Others 200,067 200,503

$ 29,519,453 $ 37,626,717

Taishin Bank is required to maintain reserve balances in the Central Bank. These reserves amounted to $25,472,088 thousand and $23,363,789 thousand as of December 31, 2011 and 2010, respectively.

6. FINANCIAL INSTRUMENTS AT FVTPL

December 31

2011 2010

Financial assets at FVTPL

Investment in Bills $ 20,752,480 $ 12,057,018

Quoted stocks and mutual funds 48,423 1,042,450

Government bonds 2,977,651 1,394,437

Corporate bonds, financial debentures and other bonds 8,332,770 8,337,080

Futures 32,108 193,753

Forward exchange contracts 382,144 1,582,560

Currency swaps 1,683,493 2,107,760

Interest rate swaps 4,009,205 7,027,122

Cross-currency swaps 1,062,038 2,048,818

Equity-linked swaps 200,720 26,897

Currency options 949,930 693,627

Interest rate options 1,386 19,260

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December 31

2011 2010

Equity-linked options 241,062 370,826

Credit default swaps 18,022 15,837

Future options - 189

Commodity swaps 20,220 1,942

Commodity options 26,625 2,819

Fixed-rate commercial paper 22,978 17,052

Asset-based commercial paper 20,294 40,329

$ 40,781,549 $ 36,979,776

Financial liabilities at FVTPL

Stock borrowings $ 54,469 $ 44,690

Bond borrowings - 52,486

Forward exchange contracts 505,101 1,292,555

Currency swaps 1,394,062 3,730,813



Equity-linked swaps 200,720 26,890

Credit default swaps 18,022 16,340


Currency options 776,522 473,222

Interest rate options 5,760 30,596

Equity-linked options 111,671 550,461


Futures - 1,342

Put options - 232,789

Asset-based commercial paper 17,254 30,068

$ 8,353,108 $ 16,202,864

a. Taishin Bank uses various derivative instruments to fulfill customers’ needs as well as to manage Taishin Bank’s asset and liability positions and risk.

b. Investment in bills, place as reserves for clearing at the Central Bank was $1,001,936 thousand as of December 31, 2010. Please refer to Note 33, for relevant information regarding bonds pledged as collaterals.

c. The aggregate par values of bond investments classified as financial assets at FVTPL and used for transactions under repurchase agreements were $16,086,300 and $10,741,500 thousand as of December 31, 2011 and 2010, respectively.

d. Gain or loss of financial assets and liabilities for trading purpose as of December 31, 2011 and 2010 were as follows:

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Years Ended December 31

2011 2010

Financial Assets Financial Liabilities Financial Assets Financial Liabilities

Gain (loss) on valuation $ 7,504,423 ($ 8,822,377 ) $ 11,420,296 ( $ 11,684,724 )

Gain on disposal 1,565,895 3,242 1,415,967 123,913

Dividend revenue 40,230 - 26,520 -

$ 9,110,548 ( $ 8,819,135 ) $ 12,862,783 ( $ 11,560,811 )

The nominal principal amounts of outstanding derivative contracts as of December 31, 2011 and 2010 were as follows:

2011 2010

Hold for trading

Forward exchange contracts $ 96,832,219 $ 120,320,200

Currency swaps 321,081,584 201,643,129



Futures - 904,156

Future options - 340,340

Currency options 163,910,601 80,280,201

Interest rate options 4,330,000 12,481,000

Equity-linked options 9,400,191 5,060,912


Credit default swaps 1,164,772 2,607,197

Equity-linked swaps 4,081,581 2,230,893


Floating-rate commercial paper - 950,000

Fixed-rate commercial paper 3,030,000 630,000

Asset-basedcommercialpaper 3,391,500 4,170,500

7. RECEIVABLES, NET

December31

2011 2010

Notesandaccountsreceivable $ 77,554,622 $ 86,178,107

Revenuereceivable 85,072 60,926

Interestreceivable 1,877,812 1,384,735

Acceptancereceivable 1,601,907 2,094,535

Taxrefundreceivable 60,887 172,787

Installmentpaymentreceivable 6,314,123 6,441,427

Otherreceivables 755,861 714,175

Asset-basedcommercialpaper 699,449 1,410,120

Less:Allowanceforreceivables ( 827,305 ) ( 1,152,296 )

$ 88,122,428 $ 97,304,516

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8. LOANS, NET

a. The details of loans are as follows:December31

2011 2010

Negotiated $ 3,793,118 $ 869,768

Overdraft 4,542,054 2,865,088

Short-term loans 132,244,276 123,477,799

Medium-term loans 187,778,122 139,799,381

Long-term loans 278,391,606 268,180,174

Delinquent loans 1,528,252 2,295,625

Adjustments for discount or premium ( 250,681 ) -

608,026,747 537,487,835

Less: Allowance for loan losses ( 7,218,618 ) ( 5,813,817 )

$ 600,808,129 $ 531,674,018

b. Allowances for receivables and loan losses were as follows:YearEndedDecember31,2011

Receivables Loans Other Financial Assets Total

Balance, January 1, 2011 $ 1,152,296 $ 5,813,817 $ 320,077 $ 7,286,190

Provision for loan losses ( 5,322 ) 1,744,981 249,625 1,989,284

Loans written off ( 323,039 ) ( 794,554 ) ( 358,821 ) ( 1,476,414 )

Recovery of loans written off 3,370 454,374 31,770 489,514

Balance,December31,2011 $ 827,305 $ 7,218,618 $ 242,651 $ 8,288,574

YearEndedDecember31,2010

Receivables Loans Other Financial Assets Total

Balance, January 1, 2010 $ 2,271,916 $ 6,903,207 $ 482,574 $ 9,657,697

IncreasebyacquiringChinfoncredit carddepartment - 540,576 - 540,576

Provision for loan losses 133,689 361,394 698,227 1,193,310

Loans written off ( 1,240,477 ) ( 2,122,699 ) ( 941,359 ) ( 4,304,535 )

Recovery of loans written off 3,680 114,827 80,635 199,142

Reclassification ( 16,512 ) 16,512 - -

Balance,December31,2010 $ 1,152,296 $ 5,813,817 $ 320,077 $ 7,286,190

c. The details of bad debt expenses for 2011 and 2010 are as follows:December31

2011 2010

Provisionforreceivableandloanlosses $ 1,989,284 $ 1,193,310

Provision for guarantees ( 3,309 ) 17,859

$ 1,985,975 $ 1,211,169

d. Details for receivables and allowance for loan accounts for the as of December 31, 2011 were as follows:

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Receivables (including delinquent loans reclassified from other items (excluding loans))

ItemTotal Receivable Total Allowance

December 31, 2011 December 31, 2011

ObjectiveevidenceofimpairmentIndividual assessment of impairment $ 1,006,555 $ 458,523

Combinedassessmentofimpairment 3,288,894 396,848

Noobjectiveevidenceofimpairment Combinedassessmentofimpairment 82,201,465 214,585

Total $ 86,496,914 $ 1,069,956

Loans

ItemTotal Loans Total Allowance


ObjectiveevidenceofimpairmentIndividual assessment of impairment $ 10,199,582 $ 2,945,780

Combinedassessmentofimpairment 8,284,387 1,486,145

Noobjectiveevidenceofimpairment Combinedassessmentofimpairment 589,793,459 2,786,693

Total $ 608,277,428 $ 7,218,618

9. AVAILABLE-FOR-SALE FINANCIAL ASSETS

December31

2011 2010

Investmentinbills $ 140,430,090 $ 138,910,330

Domestic quoted stock 2,127,296 795,614

Mutual funds 1,341,453 1,033,151

Governmentbonds 20,744,511 14,651,861

Corporatebonds 10,898,381 5,636,283

Financialdebentures 9,862,973 8,904,725

Asset-basedsecurities 5,786,145 7,426,330

$ 191,190,849 $ 177,358,294

a. Investment in bills placed as reserves for clearing at the Central Bank was $7,000,000 thousand as of December 31, 2011 and 2010.

b. Bonds pledged as collaterals to court as of December 31, 2011 and 2010 amounted to $599,570 thousand and $978,258 thousand, respectively. Please refer to Note 33 for relevant information regarding bonds pledged as collaterals.

c. The aggregate par values of the bonds classified as available-for-sale financial assets and used in transactions under repurchase agreements were $27,860,119 thousand and $20,510,044 thousand as of December 31, 2011 and 2010, respectively.

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10. HELD-TO-MATURITY FINANCIAL ASSETS

December31

2011 2010

Investmentinbills $ 272,903 $ 273,462

Governmentbonds - 643,954

Financialbonds 2,148,338 2,377,087

Asset-basedsecurities - 17,591

$ 2,421,241 $ 3,312,094

The aggregate par values of bonds classified as held-to maturity financial assets and used in transactions under repurchase agreements were $1,060,150 thousand and $1,297,264 thousand as of December 31, 2011 and 2010, respectively.

11. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD

December31

2011 2010

CarryingValue

OwnershipInterest (%)

CarryingValue

OwnershipInterest (%)

Quoted stocks

Chang Hwa Commercial Bank Co., Ltd. (“Chang Hwa Bank”) $ 345,220 0.27 $ 321,358 0.27

Unquoted stocks

PayEasy Digital Integration Co., Ltd. (“PayEasy Digital”) 209,108 65.36 348,309 65.36

Taishin Real-Estate Management Co., Ltd. (“Taishin Real-Estate”) 180,923 60.00 182,466 60.00

Taishin Insurance Agency Co., Ltd. (“Taishin Insurance Agency”) 937,680 87.40 747,036 87.40

Taishin Dah An Leasing Co., Ltd. (Dah An Leasing Co., Ltd. changedtheCompanynameatDecember30,2011,“TaishinDah An Leasing”)

207,181 100.00 202,776 99.00

An Hsin Real-Estate Management Co., Ltd. (“An Hsin Real-Estate”) 59,800 30.00 59,340 30.00

$ 1,939,912 $ 1,861,285

Fair values of the quoted stocks in which the investments were accounted for by the equity-method and which were calculated at their closing prices as of December 31, 2011 and 2010 were as follows:

2011 2010

Chang Hwa Bank $ 295,853 $ 427,350

Movements of the difference between the cost of investment and Taishin Bank’s share in investees’

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net assets allocated to depreciable and non-depreciable assets for the years ended December 31, 2011 and 2010 were as follows:

DepreciableAssets Non-depreciableAssets

2011

Balance,beginningofyear $ - $ 15,543

Movements - -

Balance, end of year $ - $ 15,543

2010

Balance,beginningofyear ($ 10 ) $ 15,545

Movements 10 ( 2 )

Balance, end of year $ - $ 15,543

Goodwill amounted to $75,438 thousand as of December 31, 2011 and 2010.

a.Investment incomes (loss) recognized under the equity method was as follows:2011 2010

Individual Net Income Investment Income

Recognized Individual Net Income Investment Income

Recognized

PayEasy Digital ( $ 209,098 ) ( $ 136,671 ) $ 5,325 $ 3,480

Taishin Real-Estate 16,429 9,857 20,524 12,315

Taishin Insurance Agency 217,776 190,340 453,321 396,208

An Hsin Real-Estate 46,062 13,818 60,592 18,178

Taishin Dah An Leasing 2,358 2,336 2,430 2,407

Chang Hwa Bank 9,042,355 23,693 7,940,600 21,053

$ 103,373 $ 453,641

b. In the fourth quarter of 2005, Taishin Financial Holding paid $36,568,000 thousand to acquire 1,400,000 thousand shares of Preferred B Stock privately placed by Chang Hwa Bank (CHB). As a result, Taishin Financial Holding acquired 22.55% of CHB’s shares with voting rights and over half of the seats of CHB’s board of directors. Since this acquisition enabled Taishin Financial Holding to exercise significant influence on CHB, Taishin Bank reclassified its investment in CHB from bills and securities purchased into investment under the equity method. Taishin Bank recognized a realized loss of NT$31,439 thousand for the decline in market value of CHB’s shares.

Based on Statements of Financial Accounting Standards (SFAS) No. 5 - “Long-Term Investments under the Equity Method” and No. 25 - “Business Combinations”, the difference (goodwill) of $76,393 thousand between the reclassified investment cost of $276,375 thousand and fair value of $199,982 thousand of CHB’s net assets acquired by Taishin Bank will be amortized within 20 years by the straight-line method and tested for impairment. The amortization for 2005 amounted to $955 thousand, and the unamortized amount as of December 31, 2005 was $75,438 thousand.

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Effective January 1, 2006, under the revised SFAS No. 5, Taishin Bank will no longer amortize goodwill arising from mergers and will instead test goodwill for impairment every year. In this test, CHB was taken as one cash-generating unit (CGU) on the basis of consolidated financial statements. Thus, CHB’s operating assets, including Taishin Financial Holding’s goodwill from the merger, the investments accounted for by the equity method and other non-operating assets are evaluated using estimated recoverable amounts determined as the higher of the value in use and fair value less costs to sell. The major assumptions in estimating the value in use are based on the historical profit performance and ability to generate cash flows in the future under normal operations. Under a going concern assumption, the estimated cash flows in the future are discounted at the rate of weighted average cost of capital to calculate the value in use. Based on the test, there was no material impairment as of December 31, 2011.

12. FINANCIAL ASSETS CARRIED AT COST

December31

2011 2010

Domestic unlisted common stocks $ 1,590,076 $ 1,640,797

Overseas unlisted common stocks - US$25,756 thousand as of December31,2011and2010

787,378

787,378

$ 2,377,454 $ 2,428,175

The above equity investments, which had no quoted prices in an active market and had fair values that could not be reliably measured, were carried at cost.

13. OTHER MISCELLANEOUS FINANCIAL ASSETS

December31

2011 2010

Delinquent loansreclassifiedfromother items(excludingloans) $ 459,013 $ 533,352

Less:Allowanceforbaddebts ( 242,651 ) ( 320,077 )

Bond investment without active market 300,000 300,000

Others - 160

$ 516,362 $ 513,435

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14. PROPERTY AND EQUIPMENT

December31

2011 2010

CostAccumulated

DepreciationCarrying

ValueCarrying

Value

Land $ 10,606,688 $ - $ 10,606,688 $ 10,610,422

Buildings 7,791,798 ( 1,719,113 ) 6,072,685 6,301,921

Machinery equipment 1,385,691 ( 812,443 ) 573,248 633,378

Transportation equipment 49,515 ( 35,624 ) 13,891 20,069

Miscellaneous equipment 123,367 ( 81,401 ) 41,966 54,607

Leasehold improvement 162,809 ( 60,296 ) 102,513 80,185

Prepaymentsforbuildingandequipment 13,451 - 13,451 46,846

$ 20,133,319 ( $ 2,708,877 ) $ 17,424,442 $ 17,747,428

15. GOODWILL AND INTANGIBLE ASSETS

December31

2011 2010

Goodwill (Note 1) $ 1,152,274 $ 1,152,274

Intangibleassets-customervalue 426,214 560,807

Intangibleassets-computersoftware 343,492 366,036

$ 1,921,980 $ 2,079,117

To increase the number of customers, credit card usage, revolving balance, and increase profits by enhancing the operation efficiency, Taishin Bank acquired the net assets of Chinfon Bank’s credit card business amounted to $3,425,031 thousand and the related customer value amounted to $672,969 thousand as of the base date, March 6, 2010 for the price of $4,098,000 thousand. The Customer value recognized as intangible asset was amortized; the amount of amortization was $11,216 thousand every month and was classified under the account of depreciation and amortization expense.

16. OTHER MISCELLANEOUS ASSETS

December31

2011 2010

Assumed collaterals and residuals, net $ 6,546 $ 67,856

Others 21,437 18,344

$ 27,983 $ 86,200

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17. DUE TO THE CENTRAL BANK AND OTHER BANKS

December31

2011 2010

Duetootherbanks $ 36,485,717 $ 42,939,635

Callloansfromotherbanks 25,336,986 13,901,684

Bank overdraft 709,695 411,072

$ 62,532,398 $ 57,252,391

18. PAYABLES

December31

2011 2010

Notesandaccountspayable $ 12,733,355 $ 12,399,012

Accrued expenses 3,026,803 2,741,516

Interestpayable 1,959,002 1,492,032

Acceptancepayable 1,601,907 2,094,535

Exchangenotepayable 1,688,621 826,862

Taxpayable 604,952 795,881

Receiptsundercustodypayable 302,021 300,475

Payableoncashmerger(Note1) - 5,850,002

Otherpayables 463,320 540,582

$ 22,379,981 $ 27,040,897

19. DEPOSITS

December31

2011 2010

Checking deposits $ 4,892,117 $ 3,414,158

Demand deposits 127,158,916 129,606,272

Time deposits 260,538,369 227,652,297

Negotiablecertificatesofdeposit 9,025,100 6,543,000

Savings deposits 354,260,057 331,878,745

Remittances and drafts issued 628,096 891,494

$ 756,502,655 $ 699,985,966

20. FINANCIAL DEBENTURES

Taishin Bank issued financial debentures to enhance its capital ratio and raise medium- to long-term operating funds. Details of the financial debentures were as follows:

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December31

2011 2010

Subordinatedfinancialdebentures-2005(I) $ 1,508,000 $ 1,508,000

Subordinatedfinancialdebentures-2005(II) 3,300,000 3,300,000

Subordinatedfinancialdebentures-2005(III) 5,000,000 5,000,000

Subordinatedfinancialdebentures-2005(IV) 5,192,000 5,192,000

Subordinatedfinancialdebentures-2010.04.12 10,000,000 10,000,000

$ 25,000,000 $ 25,000,000

a. Under the approval of the Financial Supervisory Commission, Executive Yuan in 2004, Taishin Bank was authorized to issue $20 billion financial debentures, as follows:

Taishin Bank made a first issue of financial debentures amounting to $5 billion in 2004, as follows:Financial

Debenture Issue Date Maturity Date Term Issue

Amount Interest Rate Face Value Redemption Method and Interest Payment

2004,firstissue 2004.12.15 2014.12.15 10 years $5billion

TaishinBank’sfloatinginterestratefor one-year time deposit plus 0.85% fromthefirsttothefifthyearandTaishinBank’sfloatinginterestratefor one-year time deposit plus 1.85% sincethesixthyear.ThefloatingrateisprovidedbytheCentralBankon the reset day at 10:30 a.m.

$100 million

Interestisaccruableat a simple rate and payableannuallyfrom the issue date. Additional interest isnotaccruableifprincipal and interest are withdrawn after the interest date. Debenturesareredeemableatparvalue in cash on the maturity date.

Redemption policy: Taishin Bank can redeem all or part of the debentures on each interest payment date at the principal value plus interest after the fifth anniversary (December 15, 2009) by notifying the holders in written form seven days before redemption. Taishin Bank can also redeem all or part of the debentures on the noninterest date at the principal value plus the interest after the fifth anniversary by notifying the holders in writing two months before redemption. Taishin Bank redeemed these financial debentures on March 10, 2010.

b. Taishin Bank made a first issue of financial debentures amounting to $1,508 million in 2005, as follows:

Financial Debentures Issue Date Maturity

Date Term Issue Amount Interest Rate Face ValueRedemption Method and

Interest Payment

A 2005.03.04 2015.03.04

10 years

$1,287.5 million

TaishinBank’sfloatinginterestratefor one-year time deposit plus 0.30% fromthefirsttothefifthyearandTaishinBank’sfloatinginterestratefor one-year time deposit plus 0.50% since the sixth year.

$500 thousand, $10 million, and $1 million, respectively

Debenturesareredeemableatpar value in cash on the maturity date. Interest is accruableandpayableannuallyfrom the issue date.

B 2005.03.04 2015.03.04 $220.5 million

2.25%fixedinterestratefromthefirsttothefifthyearandTaishinBank’sfloatinginterestrateforone-year time deposit plus 0.75% since the sixth year.

Redemption policy: Taishin Bank can redeem all of the debentures on each interest payment date at the principal value plus interest after the fifth anniversary (March 4, 2010) and notify the holders of redemption by posting it on Taishin Bank’s website or main newspapers one month before redemption.

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c. Taishin Bank made a second issue of financial debentures amounting to $3,300 million in 2005, as follows:

Financial Debentures Issue Date Maturity Date Term Issue Amount Interest Rate Face Value Redemption Method and

Interest Payment

2005, second issue

2005.04.28 2017.04.28 12 years $3,300 million

2.70%fixedinterestratefromthefirsttotheseventhyear.From the eighth to twelfth year, if the holder does not exercise the put option, the ratewillbeTaishinBank’sinterest rate for one-year time deposit plus 0.80%; if Taishin Bank does not exercise the redemption right, the rate will beTaishinBank’sinterestrate for one-year time deposit plus 0.95%. The interest rate is recalculated annually.

$10 million

Interest is accrued at a simple rate and paid annually from the issue date. Additional interest is not accrued if principal and interest are withdrawn after the interest date. Debenturesareredeemableat par value in cash on the maturity date, unless the redemption or put option is exercised.

1) Put option and redemption policies: Upon the seventh, eighth, ninth, tenth and eleventh anniversaries of the note issue, if terms

of exercising put option or redemption rights are satisfied, and if the noteholders exercise the put option or Taishin Bank exercises the redemption rights, the debentures will be expired on current interest payment date. Taishin Bank will repay the noteholders at the principal value plus accrued interests.

2) Terms of exercising put option or redemption rights: The rate is provided by the Central Bank on March 10, 2012, 2013, 2014, 2015, and 2016 at

10:30 a.m. If the rate is less than or equal to 1.85%, the holders can exercise the put option; if the rate is greater than 1.85%, Taishin Bank can exercise the redemption right.

3) Exercise of put option by the debenture holders: If terms of exercising put option are satisfied and the debenture holders plan to exercise the

put option, holders should notify Taishin Bank in written form within ten days after the terms are satisfied.

4) Exercise of redemption right by Taishin Bank: If terms of exercising redemption right are satisfied and Taishin Bank plans to exercise the right,

Taishin Bank should post it on major local newspapers within thirty days before current interest payment date.

d. Taishin Bank made a third issue of financial debentures amounting to $5 billion in 2005, as follows:Financial Debentures Issue Date Maturity Date Term Issue Amount Interest Rate Face Value Redemption Method and Interest

Payment

2005, third issue 2005.05.18 2017.05.18 12 years $5billion

TaishinBank’sfixedinterest rate for one-year time deposit plus 0.80% fromthefirsttotheseventh year and Taishin Bank’sfixedinterestratefor one-year time deposit plus 1.10% from the eighth year. The interest rate is recalculated annually.

$100 million

Interest is accrued at a simple rate and paid annually from the issue date. Additional interest is not accrued if principal and interest are withdrawn after the interestdate.Debenturesareredeemableatparvalueincashon the maturity date, unless the redemption is exercised.

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Redemption policy: Taishin Bank can redeem all or part of the debentures on each interest payment date at the principal value plus interest after the seventh anniversary (May 18, 2012) by notifying the holders in written form seven days before redemption. Taishin Bank can also redeem all or part of the debentures on the noninterest payment date at the principal value plus interest after the seventh anniversary by notifying the holders in written form two months before redemption.

e. Taishin Bank made a fourth issue of financial debentures amounting to $5,192 million in 2005, as follows:


Date Term Issue Amount Interest Rate Face Value Redemption Method and Interest Payment

A 2005.06.06 2017.06.06

12 years

$2,950 million 2.70% fixed interest rate from the first to the seventh year and 3.20% fixed interest rate from the eighth to the twelfth year. $100 million,

$10 million, and $1 million, respectively

Interest is accrued at a simple rate and paid annually from the issue date. Additional interest is not accrued if principal and interest are withdrawn after the interest date. Debentures are redeemable at par value in cash on the maturity date, unless the redemption or put option is exercised.

B 2005.06.06 2017.06.06 $1,442 million

C 2005.06.06 2017.06.06 $800 million

Taishin Bank’s floating interest rate for one-year time deposit plus 0.65%. The interest rate is recalculated annually.

Redemption policy: Taishin Bank can redeem all or part of the debentures on each interest payment date at the principal value plus interest after the seventh anniversary (June 6, 2012) by notifying the holders in written form seven days before redemption. Taishin Bank can also redeem all or part of the debentures on the noninterest date at the principal value plus interest after the fifth anniversary by notifying the holders in written form two months before redemption.

f. Taishin Bank made a first issue of financial debentures amounting to $10 billion on April 12, 2010, as follows:


Date Term Issue Amount Interest Rate Face

ValueRedemption Method and

Interest Payment

A 2010.04.12 2017.04.12

7 years

$4,500 million 2.65%fixedinterestrate

$50 million

Interest is accrued at a simple rate and paid annually from the issue date. Additional interest is not accrued if principal and interest are withdrawn after the interest date. Debenturesareredeemableat par value in cash on the maturity date.

B 2010.04.12 2017.04.12 $5,500 million

“Floating rate of one-year time deposit of Chunghwa Post Co., Ltd.” postedonCentralBank’swebsiteat10:30amoftwobusinessdaysprior to the interest calculation period plus 1.5%. The interest rate is recalculatedannually.ThefloatingrateisprovidedbytheCentralBankon the reset day at 10:30 a.m.

21. OTHER FINANCIAL LIABILITIES

December31

2011 2010

Principal of structured products $ 13,254,742 $ 13,071,062

Appropriated loan fund 85,590 113,796

$ 13,340,332 $ 13,184,858

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Under the Financial Supervisory Commission’s guidelines, effective January 1, 2011, Taishin Bank treated the principal of structured products as other financial liabilities instead of deposits. The principal excluded in deposits when calculating every legal rate and limit.

22. OTHER LIABILITIES

December31

2011 2010

Unearned revenues $ 342,895 $ 317,467

Unearned interest revenues 94,947 84,127

Reserveforguaranteeliabilities 219,511 222,266

Reserve for trading losses - 189,338

Guarantee deposits 72,383 83,090

Deferred income 9,675 9,675

Reserve for other losses 392,147 451,583

Others 246,427 227,135

$ 1,377,985 $ 1,584,681

The Bankers’ Association of the Republic of China reviewed certain structured note and other transactions of Taishin Bank. As a result of this review, Taishin Bank has provided a reserve for compensation on consigned structured notes issued by international institutions.

23. CAPITAL STOCK

a. As of December 31, 2011, Taishin Bank’s authorized capital was $49,157,526 thousand (4,915,753 thousand shares); registered capital is $49,157,526 thousand, divided into 4,727,517 thousand common shares and 188,235 thousand preferred shares at NT$10.00 par value.

Details of outstanding capital stock as of December 31, 2011 were as follows:

Common Stock Preferred Stock Total

Initialcapitalcontributionincash $ 10,000,000 $ - $ 10,000,000

Capital infusion with cash 27,280,867 8,882,353 36,163,220

Unappropriated earnings and capital surplus transferred to common stock 9,521,440 - 9,521,440

Redemption of preferred stock A - ( 3,000,000 ) ( 3,000,000 )

Preferred stock B transferred to common stock 4,000,000 ( 4,000,000 ) -

Less: Cancellation of treasury stock ( 985,820 ) - ( 985,820 )

Less: Cancellation of parent company’s stock ( 2,541,314 ) - ( 2,541,314 )

$ 47,275,173 $ 1,882,353 $ 49,157,526

As of December 31, 2011, the outstanding common and preferred shares of Taishin Bank were all held by the parent, Taishin Financial Holding, which was established through a share swap on February 18, 2002. Based on Article 15 of the Financial Holding Company Law, rights of the stockholders are executed by the board of directors. However, a certain company Law provision on stockholders’ meetings does not apply to Taishin Bank.

162


b. On March 27, 2007, Taishin Bank’s board of directors modified its Articles of Incorporation to raise authorized capital. On March 30, 2007, Taishin Bank issued 500,000 thousand common shares and 188,235 thousand preferred shares C totaling $11,700,000 thousand at NT$17.00 per share. The Department of Commerce under the Ministry of Economic Affairs approved this change on April 14, 2007.

c. Taishin Bank issued 188,235 thousand shares of non-cumulative, non-participating preferred stock - C with annual dividend rate at 3.75% on March 30, 2007. These shares have preference over common stock in dividend distribution. The stockholders of preferred stock - C may request to convert the preferred stock - C to common stock at a 1:1 ratio from March 22, 2009. Ten years after the issuance date, Taishin Bank has the right to redeem preferred stock - C at the issue price; otherwise, the dividend rate will increase to 4.75% per annum for the unredeemed part.

d. On November 12, 2009, Taishin Bank’s board of directors modified its Articles of Incorporation to raise authorized capital. On December 30, 2009, Taishin Bank issued 740,741 thousand common shares at NT$13.5 per share, amounting to approximately $10,000,000 thousand. The department of commerce under the Ministry of Economic Affairs approved this change on January 12, 2010.

24. OTHER PAID -IN CAPITAL

Under the Company Law, capital surplus can only be used to offset a deficit. However, the capital surplus from shares issued in excess of par (additional paid-in capital from issuance of common shares, conversion of bonds and treasury stock transactions) and donations may be capitalized, which however is limited to a certain percentage of the Company’s paid-in capital. Under the revised Company Law issued on January 4, 2012, the aforementioned capital surplus also may be distributed in cash.

Taishin Financial Holding’s board of directors resolved the fourth stock options and warrants issue plan based on SFAS No. 39 and ARDF Interpretation 2008-017 on September 2, 2010. According to the plan, subsidiaries shall recognize the grant of equity instruments from Taishin Financial Holding to their employees as equity-settled shared-based payments transaction to measure the services provided by subsidiaries’ employees, the increase in equity as funding from Taishin Financial Holding, and the same amount of increase in equity as current expenses based on the fair value of the equity instrument and the percentage of service provided by Taishin Financial Holding to its subsidiaries over the vesting period, as well as adjust additional paid in capital - stock warrants. The estimate is revised if subsequent information indicates that the number of stock options expected to vest differs from previous estimates.

Compensation cost recognized was $82,094 thousand and $19,878 thousand for the years ended December 31, 2011 and 2010, respectively.

163

25. APPROPRIATION OF EARNINGS AND DIVIDEND POLICY

Taishin Bank’s Articles of Incorporation provide that annual net income, after used to pay for taxes and offset any accumulated deficits should be appropriated in the following orders:

a. 30% as legal reserve, and special reserve if needed;b. Dividends to holders of preferred stock;c. 0.01% as bonuses to employees;d. The remainder, together with the unappropriated retained earnings of previous years as dividends.

Items (c) and (d) above are to be proposed and approved by Taishin Bank’s Board of Directors.

Cash distributions in any given year can not exceed 15% of Taishin Bank’s paid-in capital. But if Taishin Bank’s legal reserve equals to or exceeds paid-in capital, this restriction does not apply. In addition, if the capital adequacy ratio is less than 8%, cash distribution will also be restricted, as required by the MOF.

For the years ended December 31, 2011 and 2010, the bonus to employees was $531 thousand and $539 thousand, respectively. The bonus to employees was based on the percentage described above of the net income (net of the bonus to employees) and based on past experiences. If the actual amounts subsequently resolved by the Board of Directors on behalf of the shareholders differ from the proposed amounts, the differences are recorded as a change in accounting estimate in the year the Board of Directors made the resolution on behalf of the shareholders. If bonus shares are resolved to be distributed to employees, the number of shares is determined by dividing the amount of bonus by the closing price (after considering the effect of cash and stock dividends) of the shares of the day preceding the shareholders’ meeting.

Based on a directive issued by the Securities and Futures Bureau, an amount equal to the net debit balance of certain stockholders’ equity accounts - unrealized loss shall be transferred from unappropriated earnings to a special reserve. Any special reserve appropriated may be reversed to the extent of the decrease in the net debit balance.

Legal reserve shall be appropriated until it has reached Taishin Bank’s paid-in capital. This reserve may be used to offset a deficit. Under the revised Company Law issued on January 4, 2012, when the legal reserve has exceeded 25% of the Company’s paid-in capital, the excess may be transferred to capital or distributed in cash.

The appropriations of earnings for 2010 and 2009 had been approved by the board of directors on behalf of the shareholders on June 16, 2011 and May 27, 2010, respectively. The appropriations and dividend per shares were as follows:

164


Appropriation of Earnings Dividends Per Share (Dollars)

2010 2009 2010 2009

Preferred stock dividends $ 120,000 $ 120,000 $ 0.64 $ 0.64

Common stock dividends 5,393,488 540,869 1.14 0.11

The appropriations of earnings for 2010 and 2009 had been approved by the board of directors on June 16, 2011 and May 27, 2010, and the amount was $539 thousand and $54 thousand, respectively. The differences ($10 thousand) between the approved amounts of the bonus to employees and the remuneration to directors and supervisors and the accrual amounts reflected in the financial statements for the year ended December 31, 2009 were primarily due to changes in estimates had been adjusted in profit and loss for the year ended December 31, 2010.

Information about the earnings appropriation for bonus to employees, directors and supervisors is available on the Market Observation Post System website of the Taiwan Stock Exchange.

26. UNREALIZED GAIN OR LOSS ON FINANCIAL INSTRUMENTS

For the years ended December 31, 2011 and 2010, movements of unrealized gain or loss on financial instruments were as follows:

Available-for-sale Financial Assets Equity-method Investments Total

2011

Balance, January 1, 2011 $ 206,221 $ 69 $ 206,290

Recognized in stockholders’ equity ( 92,624 ) ( 1,773 ) ( 94,397 )

Transferredtoprofitorloss ( 84,559 ) - ( 84,559 )

Balance,December31,2011 $ 29,038 ( $ 1,704 ) $ 27,334

2010

Balance, January 1, 2010 $ 253,656 $ 470 $ 254,126

Recognized in stockholders’ equity 80,495 ( 401 ) 80,094

Transferredtoprofitorloss ( 127,930 ) - ( 127,930 )

Balance,December31,2010 $ 206,221 $ 69 $ 206,290

27. PENSION PLANS

The pension plan under the Labor Pension Act (LPA) is a defined contribution plan. Based on the LPA, Taishin Bank make monthly contributions to employees’ individual pension accounts at 6% of monthly salaries and wages. Such pension costs were $259,513 thousand and $251,840 thousand for the years ended December 31, 2011 and 2010, respectively.

165

Based on the defined benefit plan under the LSL, pension benefits are calculated on the basis of the length of service and average monthly salaries of the six months before retirement. Taishin Bank contributes amounts equal to 2% of total monthly salaries and wages to a pension fund administered by the pension fund monitoring committee. The pension fund is deposited in the Bank of Taiwan in the committee’s name. Taishin Bank recognized pension costs of $21,036 thousand and $79,775 thousand (paid in cash $1,769 thousand) for the years ended December 31, 2011 and 2010, respectively.

Other information on the defined benefit plan is as follows:

a. Components of net pension cost:YearsEndedDecember31

2011 2010

Service cost $ 20,531 $ 23,300

Interest cost 26,955 25,953

Actual return on plan assets ( 16,443 ) ( 22,260 )

Loss on plan assets ( 10,007 ) ( 5,002 )

Amortizationofnettransitionalobligation - 147

Amortization of pension loss (gain) - ( 278 )

Effect of transferor on pension cost - 56,146

Net pension cost $ 21,036 $ 78,006

b. Reconciliation of funded status of the plan and accrued pension cost as of December 31, 2011 and 2010:

2011 2010

Benefitobligation

Vestedbenefitobligation ( $ 109,280 ) ( $ 78,339 )

Non-vestedbenefitobligation ( 791,514 ) ( 786,153 )

Accumulatedbenefitobligation ( 900,794 ) ( 864,492 )

Additionalbenefitbasedonfuturesalaries ( 460,671 ) ( 506,481 )

Projectedbenefitobligation ( 1,361,465 ) ( 1,370,973 )

Fair value of plan assets 1,366,775 1,365,209

Funded status 5,310 ( 5,764 )

Unrecognized net loss 36,754 50,666

Prepaid pension cost $ 42,064 $ 44,902

Vestedbenefit ( $ 132,846 ) ( $ 97,156 )

c. Actuarial assumptions as of December 31, 2011 and 2010:2011 2010

Discount rate used in determining present values 2.00% 2.00%

Future salary increase rate 3.00% 3.00%

Expected rate of return on plan assets 2.00% 2.00%

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2011 2010

d. Contributions to the fund $ - $ 354

e. Payments from the fund $ 10,936 $ 20,345

According to the order of Bei-Shi-Lao-Yi No. 09837119200, No. 09940317000 and No. 10037554900, the allocation of workers’ retirement reserve fund has been suspended from September 1, 2009 to August 31, 2012.

28. FEE INCOME, NET

YearsEndedDecember31

2011 2010

Fee income

Fees from imports and exports $ 155,320 $ 161,765

Interbankservicefees 542,890 509,065

Fees from loans 337,952 610,063

Fees from guarantees 122,510 154,291

Underwriting commission 34,762 79,639

Factoring fees 387,511 394,964

Feesfromthetrusteebusiness 1,497,045 1,781,949

Feesfromthetrusteeassociatebusiness 35,425 31,671

Agency fees 1,973,752 1,380,095

Credit card fees 2,661,627 3,061,015

Others 205,204 265,202

7,953,998 8,429,719

Fee expense

Credit card fees ( 895,987 ) ( 815,033 )

Interbankservicefees ( 93,631 ) ( 80,890 )

Feesfromthetrusteebusiness ( 63,541 ) ( 63,083 )

Fees from outsourcing collection service ( 168,266 ) ( 158,796 )

Agency fees ( 45,352 ) ( 35,019 )

Fees from marketing ( 365,058 ) ( 409,903 )

Others ( 205,020 ) ( 196,170 )

( 1,836,855 ) ( 1,758,894 )

Fee income, net $ 6,117,143 $ 6,670,825

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29. PERSONNEL, DEPRECIATION, DEPLETION AND AMORTIZATION EXPENSES


2011 2010

Personnel expenses

Salary $ 6,466,752 $ 5,648,457

Labor/healthinsurance 444,632 398,507

Pension 280,549 331,615

Others 263,822 211,832

Depreciation 616,890 838,090

Amortization 335,510 328,437

30. INCOME TAX

a. A reconciliation of income tax expense based on income before income tax at the 17% statutory rate and income tax expense was as follows:


2011 2010

Income tax expense at the 17% statutory rate $ 1,566,107 $ 1,894,359

Tax effect of adjusting items:

Permanent differences

Tax-exempt income ( 261,433 ) ( 297,223 )

Others 71,321 59,467

Temporary differences ( 142,967 ) ( 544,847 )

Loss carryforward used ( 897,940 ) ( 994,787 )

Current income tax expense 335,088 116,969

Deferred income tax expense

Temporary differences 178,872 544,847

Loss carryforwards 897,940 994,787

Effect of tax law changes on deferred income tax - 1,316,387

Taxseparatelyleviedoninterestfromshort-termbills - 1,834

Adjustment for prior year’s tax 57,060 ( 4,277 )

Overseas income tax expense 4,336 -

$ 1,473,296 $ 2,970,547

In May 2010, the Legislative Yuan passed the amendment of Article 5 of the Income Tax Law, which reduces a profit-seeking enterprise’s income tax rate from 20% to 17%, effective 2010.

168


b. Details of deferred income tax assets and liabilities were as follows:December31

2011 2010

Assets

Allowanceforbaddebtsinexcessoftaxlimit $ 1,175,114 $ 987,267

Loss carryforwards 4,409,011 5,258,898

Excessofreserveforguaranteeliabilities 10,969 15,719

Unrealizedlossonfinancialinstruments 16,910 168,476

Unrealized loss on assumed collaterals and residuals 9 23,144

Reserve for compensation on consigned structured notes 66,638 76,914

Unrealized exchange loss (gain) - 14,892

Others 41 41

5,678,692 6,545,351

Liabilities

Amortization of goodwill ( 195,887 ) ( 195,887 )

Deferred income tax assets, net $ 5,482,805 $ 6,349,464

The movements of deferred income tax assets (liabilities) were as follows:YearEndedDecember31,2011

Balance, January 1, 2011

Recognized inIncome Statement

Receivables fromTaishin Financial

HoldingBalance, December

31, 2011

Temporary differences

Allowance forbaddebts inexcessof taxlimit $ 987,267 $ 187,847 $ - $ 1,175,114

Loss carryforwards 5,258,898 ( 1,060,040 ) 210,153 4,409,011

Unrealized loss on assumed collaterals and residuals 23,144 ( 23,135 ) - 9

Reserve for compensation on consigned structured notes 76,914 ( 10,276 ) - 66,638

Excessofreserveforguaranteeliabilities 15,719 ( 4,750 ) - 10,969

Unrealized(gain)lossonfinancialinstruments 168,476 ( 151,566 ) - 16,910

Unrealized exchange loss 14,892 ( 14,892 ) - -

Amortization of goodwill ( 195,887 ) - - ( 195,887 )

Others 41 - - 41

$ 6,349,464 ( $ 1,076,812 ) $ 210,153 $ 5,482,805

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YearEndedDecember31,2010

Balance, January 1, 2010

Recognized inIncome Statement

Receivables fromTaishin Financial

HoldingBalance, December

31, 2010

Temporary differences

Allowanceforbaddebtsinexcessoftaxlimit $ 1,800,221 ($ 812,954 ) $ - $ 987,267

Loss carryforwards 6,900,254 ( 2,029,825 ) 388,469 5,258,898

Unrealized loss on assumed collaterals and residuals 27,264 ( 4,120 ) - 23,144

Reserve for compensation on consigned structured notes 228,982 ( 152,068 ) - 76,914

Excessofreserveforguaranteeliabilities 10,908 4,811 - 15,719

Unrealized(gain)lossonfinancialinstruments 73,603 94,873 - 168,476

Unrealized exchange loss 6,198 8,694 - 14,892

Amortization of goodwill ( 230,455 ) 34,568 - ( 195,887 )

Others 41 - - 41

$ 8,817,016 ( $ 2,856,021 ) $ 388,469 $ 6,349,464

Loss carryforwards as of December 31, 2011 comprised of:Unused Amount Expiry Year

2016 $ 3,559,430

2017 430,233

2018 419,348

$ 4,409,011

c. The estimated payables to Taishin Financial Holding due to the adoption of the linked-tax system were as follows:

December31

2011 2010

PayablestoTaishinFinancialHolding $ 301,337 $ 373,517

d. Information on the integrated income tax was as follows:December31

2011 2010

Balance of imputation credits accounts (ICA) $ 27,951 $ 29,495

Unappropriated earnings generated on and after January 1, 1998 $ 7,757,821 $ 7,876,412

The creditable ratio for distribution of earnings of 2011 and 2010 was 0.36% (estimate) and 0.48%, respectively.

For distribution of earnings generated on and after January 1, 1998, the ratio for the imputation credits allocated to stockholders of Taishin Bank is based on the balance of the ICA as of the date of dividend distribution. The expected creditable ratio for the 2010 earnings may be adjusted, depending on the ICA balance on the date of dividend distribution.

170


e. The income tax returns through 2006 had been assessed by the tax authorities.f. In regard to the goodwill amortization of $632,098 thousand, $758,518 thousand, $758,518

thousand, $758,518 thousand and $758,518 thousand from the merger of Dah An Bank reported in the 2002, 2003, 2004, 2005 and 2006 income tax returns of Taishin Bank, the tax authority had disapproved the related expense due to the reason that the goodwill resulted from negotiations of the dealing parties rather than a purchase from open market. Taishin Bank is filing an appeal to a high court.

g. In regard to the goodwill amortization $18,109 thousand, $71,577 thousand and $71,405 thousand from the acquisition of the 10th Credit Cooperative of Hsin-Chu in the 2004, 2005 and 2006 income tax returns of Taishin Bank, the tax authority had disapproved the related expense due to the reason that the goodwill was not assessed by applying professional valuation procedures and the identifiable assets and liabilities were not analyzed by fair value. Taishin Bank is filing an appeal to a high court.

31. EARNINGS PER SHARE (“EPS”)

Year Ended December 31, 2011

Amounts (Numerator)Shares

(Denominator)Earnings Per Share (In

Dollars)

Pretax After-tax (In Thousands) Pretax After-tax

Net income $ 9,212,396 $ 7,739,100

Less: Preferred dividends ( 120,000 ) ( 120,000 )

Net income $ 9,092,396 $ 7,619,100

Basic EPS

Incomefortheyearattributabletocommonstockholders $ 9,092,396 $ 7,619,100 4,727,517 $ 1.92 $ 1.61

Effect of dilutive potential common stock

Convertiblepreferredshares 120,000 120,000 188,235

Bonus to employees - - 41

Diluted EPS

Incomefortheyearattributabletocommonstockholders plus effect of dilutive potential common stock

$ 9,212,396 $ 7,739,100 4,915,793 $ 1.87 $ 1.57

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Amounts (Numerator)Shares

(Denominator)Earnings Per Share (In

Dollars)

Pretax After-tax (In Thousands) Pretax After-tax

Net income $ 11,143,289 $ 8,172,742

Less: Preferred dividends ( 120,000 ) ( 120,000 )

Net income $ 11,023,289 $ 8,052,742

Basic EPS

Income for the year attr ibutable tocommon stockholders $ 11,023,289 $ 8,052,742 4,727,517 $ 2.33 $ 1.70

Effect of dilutive potential common stock

Convertiblepreferredshares 120,000 120,000 188,235

Bonus to employees - - 44

Diluted EPS

Income for the year attr ibutable tocommon stockholders plus effect of dilutive potential common stock

$ 11,143,289 $ 8,172,742 4,915,796 $ 2.27 $ 1.66

32. RELATED-PARTY TRANSACTIONS

Names and Relationships of Related PartiesRelated Party Relationship with Taishin Bank

Taishin Financial Holding Parent company

Taishin Venture Capital Investment Co., Ltd. Whollyownedbythesameparentcompany

Taishin Marketing Consultant Co., Ltd. Sameasabove

Taishin Asset Management Co., Ltd. (“Taishin AMC”) Sameasabove

Taishin Securities B Co., Ltd. (“Taishin Securities B”) Sameasabove

Taishin Securities Investment Trust Co., Ltd. Sameasabove

Taishin Securities Investment Advisory Co. Undercontrolbythesameparentcompany

Chang Hwa Bank Undercontrolbythesameparentcompany

Taishin Dah An Leasing Equity-method investee

Taishin Insurance Agency Sameasabove

Taishin Real-Estate Sameasabove

An Hsin Real-Estate Sameasabove

PayEasy Digital Sameasabove

Shin Kong Recreation Co., Ltd. ItschairmanisarelativewithinthefirstdegreeofTaishinBank’schairman

Shin Kong Life Insurance Co., Ltd. (“Shin Kong Life Insurance”) Its chairman is a relative within the second degree of Taishin Bank’s chairman

ShinKongSyntheticFibersCo.,Ltd.(“ShinKongSyntheticFibers”) Sameasabove

Shin Kong Financial Holding Co., Ltd. (“Shin Kong Financial Holding”) Sameasabove

Shin Kong Engineering Co., Ltd. (“Shin Kong Engineering”) Sameasabove

Jiouru Co., Ltd. (“Jiouru”) Sameasabove

Jiouru Investment Co., Ltd. (“Jiouru Investment”) Sameasabove

Anlon Co., Ltd. (“Anlon”) Sameasabove

(Continued)

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Related Party Relationship with Taishin Bank

ShinJuiAssetsManagementCo.,Ltd.“DissolvedonOctober6,2010) WhollyownedbyTaishinAMC

UBright Optronics Corporation Its chairman is a relative within the second degree of Taishin Bank’s chairman

PayEasy Travel Agency Co., Ltd. WhollyownedbyPayEasyDigital

Contect Digital Integration Co., Ltd. 65.75%ownedbyPayEasyDigital

Taishin Insurance Broker Co., Ltd. WhollyownedbyTaishinInsuranceAgency

CHB Life Insurance Agency Co., Ltd. WhollyownedbyChangHwaBank

CHB Insurance Brokerage Co., Ltd. Sameasabove

Shin Kong Commercial Bank Co., Ltd. (“Shin Kong Bank”) WhollyownedbyShinKongFinancialHolding

Shin Kong Insurance Broker Co., Ltd. Sameasabove

Shin Kong International Venture Capital Co., Ltd. Sameasabove

Shin Kong Investment Trust Co., Ltd. Sameasabove

MasterLink Securities Co., Ltd. ShinKongFinancialHolding’ssubsidiary

Taishin Financial & Leasing (China) Co. WhollyownedbyTaishinVentureCapitalInvestment

Dah Chung Bills Finance Co., Ltd. (“Dah Chung Bills”) Taishin Bank serves as its corporate director

Ming Huang International Property Co., Ltd. (“Ming Huang International Property”) Taishin Financial Holding’s supervisor

Taishin International Investment Development Co., Ltd. Taishin Financial Holding’s supervisor

Peng Cheng Co., Ltd. (“Peng Cheng”) Taishin Financial Holding’s corporate director

CyberSoftDigitalServiceCo.,Ltd.(“CyberSoftDigitalService”) Relatedpartyinsubstance

Miniatures Museum of Taiwan (“Miniatures Museum”) Its chairman is a relative within the second degree of Taishin Financial Holding’sgeneralmanager(becomenon-relatedpartyonAugust2011)

(Concluded)

Material Transactions with Related

a. Loans, deposits and guaranteed loans

Loan to Related Parties Ending BalancePercentage of

Loans (%)Interest Rate

(Per Annum %) Interest Revenue

YearendedDecember31,2011 $ 1,241,692 0.20% 0.0001-12.50 $ 19,381

YearendedDecember31,2010 1,228,386 0.23% 0.08-18.25 20,179


Loans to Related PartiesEnding Balance

Highest Amount Normal Loans

Non-performing Loans Collateral

Consumer loans

54 accounts $ 112,391 $ 136,520 $ 112,391 $ - Land,building,chattels

Self-used residence mortgage loans

68 accounts 369,375 438,975 369,375 - Land,building

Other loans

Ming Huang International Property 220,000 220,000 220,000 - Land,building

Jiouru 60,000 65,000 60,000 - Land,building

Jiouru Investment 50,000 58,500 50,000 - Land,building

Anlon 24,000 24,000 24,000 - Land,building

ShinKongSyntheticFibers 400,000 400,000 400,000 - Land,building

Others 5,926 7,132 5,926 - Land,building

$ 1,241,692 $ 1,241,692

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Loans to Related Parties Ending Balance Highest Amount Normal LoansNon-

performing Loans Collateral

Consumer loans

52 accounts $ 71,651 $ 80,413 $ 71,651 $ - Land,building

Self-used residence mortgage loans

70 accounts 389,235 443,609 389,235 - Land,building

Other loans

Jiouru Investment 58,500 58,500 58,500 - Land,building

Jiouru 65,000 65,000 65,000 - Land,building

Ming Huang International Property 200,000 200,000 200,000 - Land,building

Peng Cheng 86,000 110,000 86,000 - Land,building

Shin Kong Engineering 13,000 43,000 13,000 - Stocks

ShinKongSyntheticFibers 300,000 372,563 300,000 - Land,building

Miniatures Museum 45,000 45,000 45,000 - Land,building

$ 1,228,386 $ 1,228,386


Highest Amount

Interest and Service Charge

Rate (Per Annum %)

Reserve for Guarantee Liabilities

Guarantee for loans of related partiesEnding Balance Collateral

Peng Cheng Co., Ltd. 16,000 95,000 0.50-0.80 - Land,building

Anlon 20,000 20,000 0.60-0.70 - Land,building,stock


Highest Amount

Interest and Service Charge Rate (Per

Annum %)

Reserve for Guarantee Liabilities

Guarantee for loans of related partiesEnding Balance Collateral

ShinKongSyntheticFibers $ 1,189 $ 6,156 0.05 $ - Stock, chattels

PayEasy Digital 4,058 4,613 0.80 - Certificatedeposit


Deposits from related parties Ending Balance Interest Rate (Per Annum %) Interest Expense

Taishin Financial Holding $ 17,759,020 0.12-1.36 ( $ 120,444 )

Dah Chung Bills 421,405 0.00-1.00 ( 3,119 )

Taishin Insurance Agency 1,024,058 0.00-0.17 ( 1,490 )

Taishin AMC 512,671 0.00-0.65 ( 779 )

Others 3,346,499 ( 17,288 )

$ 23,063,653 ( $ 143,120 )

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Deposits from related parties Ending Balance Interest Rate (Per Annum %) Interest Expense

Taishin Financial Holding $ 19,875,925 0.10-0.50 ( $ 80,651 )

Dah Chung Bills 422,862 0.00-0.60 ( 1,595 )

Taishin Insurance Agency 830,931 0.00-0.12 ( 619 )

Others 2,980,614 ( 11,749 )

$ 24,110,332 ( $ 94,614 )

All transactions with related parties are made under arm’s length terms in compliance with normal policies.

b. Call loans to banks and call loans from banksYear Ended December 31, 2011

Related Party Item Balance Highest AmountInterestRate %

Interest Revenue (Expense)

Chang Hwa Bank Callloanstobanks $ - $ 1,604,575 0.20-0.26 $ 42




Dah Chung Bills Callloanstobanks $ - $ 500,000 0.21 $ 14

Shin Kong Bank Callloansfrombanks 150,000 300,000 0.26-0.47 ( 544 )


c. Due from banks and due to banksYear Ended December 31, 2011



Chang Hwa Bank Duefrombanks $ 2,030 $ 2,576 - -




Chang Hwa Bank Duefrombanks $ 497 $ 1,731 - -


d. Trading of securitiesYear Ended December 31, 2011

Repurchase Agreements Resell Agreements

Related Party

Purchase Price (Accumulated

Amount)

Sales Price (Accumulated

Amount) Ending BalanceInterest Rate

(Per Annum %) Ending BalanceInterest Rate

(Per Annum %)

Taishin Financial Holding $ - $ - $ 1,964,264 0.40-0.72 $ - -

Chang Hwa Bank 1,065,584 1,966,081 - - - -

Dah Chung Bills 799,955 1,007,706 - - - -

Shin Kong Life Insurance - - 1,999,466 0.48-0.75 - -

$ 1,865,539 $ 2,973,787 $ 3,963,730 $ -

175

Year Ended December 31, 2010Repurchase Agreements Resell Agreements

Related Party

Purchase Price (Accumulated

Amount)

Sales Price (Accumulated

Amount) Ending BalanceInterest Rate

(Per Annum %) Ending BalanceInterest Rate

(Per Annum %)

Chang Hwa Bank $ 3,137,606 $ 5,741,686 $ - - $ - -

Dah Chung Bills 3,380,475 3,953,508 - - - -

Shin Kong Life Insurance - - 200,000 0.30-0.44 - -

Taishin Financial Holding - - 1,877,201 0.14-0.40 - -

Taishin Securities B - - 176,820 0.30-0.47 - -

$ 6,518,081 $ 9,695,194 $ 2,254,021 $ -


e. Derivative transactionsYear Ended December 31, 2011

Related Party Derivative Contracts Period Nominal Principal

AmountUnrealized Gain

(Loss) Account Balance

Dah Chung Bills Interest rate swaps

2008.04.17-2016.08.22

$ 1,500,000 $ 1,633 Financial liabilitiesatFVTPL

( $ 9,483 )


Related Party Derivative Contracts Period Nominal Principal

AmountUnrealized Gain

(Loss) Account Balance

Shin Kong Life Insurance

Interest rate swaps

2006.12.18-2011.6.18

$ 250,000 ( $ 3,567 ) Financial liabilitiesatFVTPL

( $ 1,942 )

Dah Chung Bills Interest rate swaps

2008.4.17-2015.11.11

600,000 ( 93 ) Financial liabilitiesatFVTPL

( 11,116 )


f. Other material transactionsYears Ended December 31

2011 2010

Item Amount Item Amount

Taishin Insurance Agency Fee income $ 719,697 Fee income $ 868,089

Taishin Holding Insurance Brokers Fee income 741,603 -

CybersoftDigitalService Operating expense 531,950 Operating expense 449,622


Compensation of Directors, Supervisors and Management Personnel:


2011 2010

Salaries $ 233,442 $ 119,919

Pensions 1,419 18,901

Incentives 109,085 154,976

$ 343,946 $ 293,796

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33. MORTGAGED OR PLEDGED ASSETS

December 31

Mortgaged or Pledged Assets Description 2011 2010

Financial assets at FVTPL Certificateofdeposits $ - $ 1,001,936

Availableforsalefinancialassets Certificateofdepositsandbonds 7,599,570 7,978,258

Refundabledeposits Cashandcertificateofdeposits 779,093 1,904,056

34. SIGNIFICANT COMMITMENTS AND CONTINGENCIES

a. In addition to those mentioned in Note 6, Taishin Bank had the following contingent liabilities and commitments as of December 31, 2011 and 2010:

2011 2010

Guarantees $ 15,707,401 $ 20,076,727

Letters of credit 5,080,798 6,487,169

Trustliabilities 221,598,142 222,627,730

Unpaid equipment purchase contracts 290,067 568,451

Unused loan commitments (excluding credit card) 84,137,768 95,911,601

Unused loan commitments (credit card only) 411,994,680 438,621,284

b. Under Article 17 of the implementation rules of the Trust Law, Taishin Bank disclosed its balance sheets and income statements of trust accounts and its asset items, as follows:

Trust Accounts Balance Sheets December 31, 2011 and 2010

Trust assets 2011 2010 Trust liabilities 2011 2010

Deposit $ 11,617,121 $ 4,664,055 Payables $ 39,713 $ 130,408

Financial assets Taxpayable 149 -

Bonds 27,244,798 32,112,327 Self-valuation securities under custody 28,220,801 28,035,267

Common stocks 26,274,145 40,443,832 Otherliabilities 446,325 64,450

Mutual funds 112,762,884 111,355,611 Trust capital 194,700,887 190,909,474

Bonds and securities purchased under resell agreements 658,321 200,462

Reserves and retained earnings

( 1,809,733 ) 3,488,131 Derivatives 3 -

Receivablesandprepaid 21,272 175,597

Real estate 11,096,377 4,926,868

Securities under custody 28,220,801 28,035,267

Others 3,702,420 713,711

$ 221,598,142 $ 222,627,730 $ 221,598,142 $ 222,627,730

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Trust Income StatementsYears Ended December 31 2011 and 2010

2011 2010

Revenues

Interest $ 33,009 $ 16,724

Rent 175,501 181,318

Cash dividends 1,451,195 1,208,047

Funddistribution 53,582 70,735

Gain from property transaction 3,418,093 -

Others 83,525 66,320

5,214,905 1,543,144

Expenses

Administration fees ( 75,406 ) ( 85,104 )

Custodian fees ( 3,278 ) ( 3,952 )

Service fees ( 34,181 ) ( 28,903 )

Repair ( 4,704 ) ( 4,711 )

Interest ( 494 ) ( 378 )

Taxes ( 14,105 ) ( 12,926 )

Insurance ( 2,025 ) ( 2,109 )

Professional service fees - CPA ( 1,191 ) ( 1,035 )

Professional service fees - lawyer ( 1,088 ) -

Others ( 36,406 ) ( 25,080 )

( 172,878 ) ( 164,198 )

Net income $ 5,042,027 $ 1,378,946

Trust Asset SummaryDecember 31, 2011 and 2010

2011 2010

Deposit $ 11,617,121 $ 4,664,055

Financial assets

Bonds 27,244,798 32,112,327

Common stocks 26,274,145 40,443,832

Mutual funds 112,762,884 111,355,611

Bonds and securities purchased under resell agreements 658,321 200,462

Structural notes 3 -

Receivablesandprepayments 21,272 175,597

Real estate 11,096,377 4,926,868

Securities under custody 28,220,801 28,035,267

Others 3,702,420 713,711

$ 221,598,142 $ 222,627,730

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According to the General Agreement, the net assets value denominated in U.S. dollar should be translated into New Taiwan dollar at the settlement rate of New Taiwan dollar against U.S. dollar announced by Taipei Forex Brokerage Co., Ltd. for the day on a net basis. If foreign exchange rates are not available, the last known rate should be used.

c. Taishin Bank enters into operating leases for its domestic branches, and main provisions of the contracts are as follows:1) The lease period ranges from one to five years. Rental payments are made annually.2) As of December 31, 2011, the estimated future lease payments under the building lease

contracts are as follows:Year Amount

2012 $ 351,000

2013 294,464

2014 247,046

2015 189,205

2016 79,875

d. Taishin Financial Holding has already appointed Lee and Li Attorney-at-Law to help Taishin Bank’s customers to declare to Lehman Brother their legal rights on the losses on their investments in Lehman Brother’s securities. The related law service charge will be paid by Taishin Bank. Because this case involves claims from all over the world, Taishin Bank couldn’t reasonably estimate the related litigation fee.

35. RESTATEMENT OF FINANCIAL STATEMENTS

Taishin Bank had a cash merger with Taishin Bills Finance, based on Statement of Financial Accounting Standards (SFAS) Interpretation Nos. (91) 243 and 244 and (95) 081 issued by the Accounting Research and Development Foundation of the ROC, this merger was treated as a reorganization and was recorded at the carrying values of both entities’ assets and liabilities because both Taishin Bank and Taishin Bills Finance were a 100% subsidiaries of Taishin Financial Holding. In addition, based on SFAS Interpretation No. (95) 141, the Bank’s financial statements as of and for the year ended December 31, 2010 were retroactively restated assuming Taishin Bills Finance assets and liabilities had been included in these financial statements at carrying value. Taishin Bank acquired from Taishin Bills Finance the following net assets, amounting to $5,895,412 thousand:

179

Item Amount

DuefromtheCentralBankandcallloanstootherbanks $ 600,000

Financial assets at FVTPL 11,283,533

Receivables,net 667,272

Available-for-salefinancialassets,net 4,635,374

Properties and equipment, net 342,796

Other assets 156,374

DuetobanksandCentralBank ( 4,993,820 )

FinancialliabilitiesatFVTPL ( 355,065 )

Bond and securities sold under repurchase agreements ( 6,205,088 )

Payables ( 69,091 )

Otherliabilities ( 166,873 )

Payment for cash merger $ 5,895,412

The above assets were to be used for operating purposes. Taishin Bank had no plan to dispose of any significant assets. Taishin Bank’s net income for the year ended December 31, 2010 included Taishin Bills Finance’s net income for the same year.

36. FINANCIAL INSTRUMENTS

a. Fair valueDecember31,2011

Carrying Value Fair Value

Financial assets

Cash and cash equivalents $ 11,125,892 $ 11,125,892

DuefromtheCentralBankandcallloanstootherbanks 29,519,453 29,519,453

Financial assets at FVTPL 40,781,549 40,781,549

Bonds and securities purchased under resell agreements 1,058,738 1,058,738

Receivables 88,122,428 88,122,428

Loans 600,808,129 600,808,129

Available-for-salefinancialassets 191,190,849 191,190,849

Held-to-maturityfinancialassets 2,421,241 2,435,078


Otherfinancialassets 216,362 216,362

Financialliabilities

DuetobanksandCentralBank 62,532,398 62,532,398

FinancialliabilitiesatFVTPL 8,353,108 8,353,108

Bonds and securities sold under repurchase agreements 43,486,925 43,486,925

Payables 22,379,981 22,379,981

Deposits 756,502,655 756,502,655

Bankdebentures 25,000,000 25,000,000

Otherfinancialliabilities 13,340,332 13,340,332

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December31,2010

Carrying Value Fair Value

Financial assets

Cash and cash equivalents $ 12,895,603 $ 12,895,603

DuefromtheCentralBankandcallloanstootherbanks 37,626,717 37,626,717

Financial assets at FVTPL 36,979,776 36,979,776

Bonds and securities purchased under resell agreements 2,992,554 2,992,554

Receivables 97,304,516 97,304,516

Loans 531,674,018 531,674,018


Held-to-maturityfinancialassets 3,312,094 3,383,778


Otherfinancialassets 213,435 213,435


DuetobanksandCentralBank 57,252,391 57,252,391

FinancialliabilitiesatFVTPL 16,202,864 16,202,864

Bonds and securities sold under repurchase agreements 32,611,770 32,611,770

Payables 27,040,897 27,040,897

Deposits 699,985,966 699,985,966

Bankdebentures 25,000,000 25,000,000

Otherfinancialliabilities 13,184,858 13,184,858

b. Methods and assumptions used to estimate the fair values of financial instruments were as follows:1) The carrying amounts of the following short-term financial instruments approximate their fair

values because of their short maturities: Cash and cash equivalents, due from the Central Bank and call loans to other banks, bonds and securities purchased under resell agreements, receivables, due to banks and Central Bank, payables, remittances, and bonds and securities sold under repurchase agreements.

2) Fair values of financial instruments at FVTPL and available-for-sale or held-to-maturity financial assets are based on their quoted prices in an active market. For those instruments with no quoted market prices, their fair values are determined using valuation techniques incorporating estimates and assumptions consistent with those generally used by other market participants to price financial instruments.

The fair value of debt investments not actively traded in the market is determined at their

expected future cash flow, the frequency of interest payments, the remaining contract period, the creditworthiness of borrowers and the discount rate, which is determined at the yield rate of the equivalent instruments in the market. The fair value of equity investments is determined at their market values.

The fair values of bond investments without active market are based on their transaction price

or on quoted price made by market makers. For those investments with no transaction prices or quoted prices, their fair values are determined through certain valuation techniques.

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The fair value of derivatives is determined based on their quoted prices in an active market. For those derivatives with no quoted market prices, their fair values are determined using valuation techniques incorporating estimates and assumptions consistent with those generally used by other market participants to price derivatives.

3) Loans and deposits are interest-bearing financial assets and liabilities, and their carrying values approximate their fair values. The carrying amount of delinquent loans is the estimated collectable amount, which is the book value less allowance for bad debts. Thus, the fair value of delinquent loans and receivables is determined at their carrying value.

4) Financial assets carried at cost and investments under equity method, including non-public stocks and stocks traded in the Emerging Stock Market, are equity instruments with fair values that cannot be measured reliably. Fair values of these instruments should be determined at their carrying values. Information of investments by the equity method is shown in Note 10.

5) Financial assets carried at cost are investments of non-public stocks and stocks traded in the Emerging Stock Market. Practically, it costs an amount of money more than reasonable costs to acquire identifiable fair value. Therefore, the fair value of financial assets carried at cost is not disclosed.

c. Fair values of financial assets and liabilities estimated based on quoted market prices or by using valuation techniques were as follows:

December 31, 2011

Quoted Market Prices Valuation Techniques

Financial assets

Financial assets at FVTPL $ 31,148,031 $ 9,633,518


Held-to-maturityfinancialassets - 2,435,078


FinancialliabilitiesatFVTPL 54,469 8,298,639

December 31, 2010

Quoted Market Prices Valuation Techniques

Financial assets

Financial assets at FVTPL $ 22,224,105 $ 14,755,671


Held-to-maturityfinancialassets - 3,383,778


FinancialliabilitiesatFVTPL 6,216 16,196,648

d. Valuation gains (losses) arising from changes in fair value of financial instruments determined using quoted market prices losses $1,125,081 thousand in 2011 and gains $72,519 thousand in 2010. On financial instruments with fair value determined using valuation techniques, there were valuation losses of $192,873 thousand in 2011 and $336,947 thousand in 2010.

182


e. The interest income (expense) associated with financial assets (liabilities) other than those at FVTPL were as follows:


2011 2010

Total interest income $ 19,204,645 $ 16,424,477

Total interest expense 6,886,685 4,926,725

f. Fair value input levels

Fair Value Measurement of Financial InstrumentsDecember 31, 2011

Level 1 Level 2 Level 3 Total

Non-derivativefinancialproducts

Assets


Stocks and mutual funds $ 48,423 $ - $ - $ 48,423

Bond investment 11,300,959 9,462 - 11,310,421

Others - 20,752,480 - 20,752,480

Available-for-salefinancialassets

Stock investment 2,127,296 - - 2,127,296

Bond investment 7,708,342 33,797,523 - 41,505,865

Others 1,341,453 143,570,099 2,646,136 147,557,688

Otherfinancialassets

Bond investment without active market - - 300,000 300,000

Liabilities

FinancialliabilitiesatFVTPL 54,469 - - 54,469

Derivativefinancialproducts

Assets

Financial assets at FVTPL 32,108 6,979,739 1,658,378 8,670,225

Liabilities

FinancialliabilitiesatFVTPL - 7,336,000 962,639 8,298,639

Note1:Thistableaimstounderstandthemethodthatthebankusedtomeasurefinancialassetsandfinancialliabilities.Thistableappliestofinancial

assetsandliabilitiesatfairvaluethroughprofitorloss,available-for-salefinancialassets,financialassetsandfinancialliabilitieswithoutquoted

prices in an active market, and hedging derivative instruments.

Note2:Level1 inputsarequotedprices(unadjusted) inactivemarkets for identicalassetsor liabilities. According toSFASNo.34“Accounting for

FinancialInstruments”inparagraph5,activemarketsmusthavethefollowingattributes:(1)assetsorliabilitiestradedinthemarketareidentical,

(2)easinessoffindingbuyersandsellersintheprincipal(ormostadvantageous)marketfortheassetorliabilitythatarebothableandwillingto

transact,(3)pricinginformationarereadilyavailabletothepublic.

Note3:Level2inputsareinputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,eitherdirectly(e.g.price)or

indirectly (e.g. value derived from price), in the active markets.

1)QuotedpricesofsimilarfinancialinstrumentsinactivemarketaretheCompany’sfairvalueoffinancialinstrumentsifbasedonrecentquoted

price forsimilarfinancial instruments. Similarfinancial instrumentsshouldbedecided inaccordancewithcharacteristicsandtransaction

conditionsoftheseinstruments.Fairvalueoffinancialinstrumentswillvarydependingonfactorsspecifictothesimilarassetorliability.The

factors include:Pricesarenotcurrent,pricequotationsvarysubstantially, transactionpricebetweenrelatedparties,relevancebetweenthe

quotedpriceofsimilarinstrumentsandthequotedpriceoffinancialinstruments.

2)Quotedpricesforidenticalorsimilarassetsorliabilitiesinmarketsthatarenotactive.

183

3)Valuationmodelsareusedtomeasurefairvalue,andtheinputs(e.g.interestrate,yieldcurve,andvolatilities)arebasedonaccessibledate

fromthemarkets(theobservable inputsareinputsthatreflecttheassumptionsmarketparticipantswoulduseinpricingtheassetor liability

developedbasedonmarketdata).

4)Inputsthatarederivedprincipallyfromorcorroboratedbyobservablemarketdatabycorrelationorothermeans(market-corroboratedinputs).

Note4:Level3inputsareinputsthatarenotavailableinthemarket.Unobservableinputsareinputssuchashistoricalvolatilitiesusedinoptionpricing

model since historical volatilities are not representative of the expectation of volatilities of market participants.

Note5:Theclassificationsonthistableshallbeconsistentwiththeclassificationsonthebalancesheet.

Note6:Whenusingvaluationmodeltomeasurefairvalueoffinancialinstruments,theCompanyshalldeterminewhetherinputshavesignificantimpacts

onthefairvaluemeasurementsifinputscompriseobservableandunobservableinputs.Ifunobservableinputshavesignificantimpactsonthe

measurements,theCompanyshallclassifythistypeoffinancialinstrumentsintolowestlevel.

Note7:Ifadoptedvaluationmodelsor theclassified levelhavematerialchanges in thesamefinancial instruments incurrentperiod(e.g.significant

changesbetweenLevel1andLevel2,changes inunobservable inputshavingmaterial impactson fairvaluemeasurements,materialityof

investmentamountofthiscategoryoffinancial instruments,andtheimpactofcurrentfairvaluemeasurementsonnetearnings,corresponding

assetsandliabilities,andstockholders’equity),theCompanyshalldescribethechangesandtheunderlyingreasons.

Changes in Level 3 financial assets were as follows:

Item Beginning Balance

Valuation Gains

(Losses)

Increase DecreaseEnding BalanceBuy or Issue Transfer in Sell or

Disposal Transfer out

Financial assets at FVTPL $ 1,618,593 ($ 350,657 ) $ 762,079 $ - ($ 371,637 ) $ - $ 1,658,378

Available-for-salefinancialassets 3,965,582 ( 997 ) 1,646,558 - ( 2,965,007 ) - 2,646,136

Otherfinancialassets 300,000 - - - - - 300,000

Total $ 5,884,175 ($ 351,654 ) $ 2,408,637 $ - ($ 3,336,644 ) $ - $ 4,604,514

Changes in Level 3 financial liabilities were as follows:

Item Beginning Balance

Valuation Gains

(Losses)

Increase DecreaseEnding BalanceBuy or Issue Transfer in Sell or

Disposal Transfer out

FinancialliabilitiesatFVTPL $ 785,389 ( $ 193,046 ) $ 752,511 $ - ($ 382,215 ) $ - $ 962,639

g. Financial risk1) Market risk Taishin Financial Holding and subsidiaries engage in derivatives mainly to meet customers’

needs, trade for business and manage market risks. While taking into account the CAR ratio, annual budget, and the anticipation on market fluctuations, the board of directors annually reviewed the measurement of risks and returns to determine whether they are appropriate, oversaw the assumed risks to ensure compliance with Taishin Financial Holding’s requirement, approved the authorization limits on market risk, and ensured all trading engaged within authorization limits.

Taishin Financial Holding and subsidiaries use the market risk factor sensitivity as the instrument for market risk controls. The market risk factor sensitivity refers to the change in value resulting from a unit change in a specific market risk factor. Market risk factors include

184


interest rate, exchange rate, price of equity instruments and commodity prices. The market risk factor sensitivity of Taishin Financial Holding and subsidiaries discloses the market risks derived from different risk positions on the trading book.

Foreign exchange rate factor sensitivity, FX Delta, refers to the net risk positions of different currencies on balance sheet date. That is the effect of the change in present value due to 100% change in foreign exchange for each currency. The foreign exchange rate factor sensitivity not only includes those of foreign-currency derivatives, but also integrates the risk sensitivity of spot foreign rate positions for hedging purpose and spot position of different currencies.

Interest rate factor sensitivity refers to the effect (DV01 or PVBP) of change in present value of future cash flows generated from spot rate positions and interest-rate derivative positions incurred by moving upwards the yield curves under evaluation by 0.01% (one b.p.) on the interest rate structure.

Risk sensitivity of equity instruments refers to the effect of price change in the value of derivative positions due to 100% price change in equity instruments and in underlying assets of derivative instruments. Taishin Financial Holding and subsidiaries engage in the trading of equity instruments including stock, convertible bonds, and stock-index options and stock options.

(In Thousands of Original Currencies)

December 31

Market Risk Type Currency 2011 2010

Exchange rate risk value EUR $ 295 $ 10,425

JPY ( 3,075,662 ) ( 2,580,520 )

USD ( 21,806 ) ( 62,425 )

Others (Note) 644,840 1,836,282

Interest rate sensitivity DV01

Interestcurveofbonds TWD ( 10,121 ) ( 6,334 )

USD ( 81 ) ( 136 )

Others (Note) ( 590 ) ( 128 )

Interest curve of IRS TWD 3,713 4,762

USD 28 5

Others (Note) 425 ( 101 )

Equity securities risk value TWD 3,288,104 3,826,919

USD 560 2,079Others USD 41,898 31,322

Note: Presented as NT dollars which is translated from original currencies.

2) Credit risk Credit risks refer to the losses from financial instruments incurred by non-performance of

the contracted obligations by Taishin Bank’s counterparties or others. Taishin Bank provides loans, loan commitments and guarantees services based on prudent credit evaluations. The collaterals that Taishin Bank demands to be pledged on loans, loan commitments or guarantees are normally cash, inventory, marketable securities or other property. The secured loans were

185

68.09% and 69.59% of the total loans as of December 31, 2011 and 2010, respectively. When the counterparties or others default, Taishin Bank has rights to enforce the collaterals or other guarantees and effectively reduce credit risks. In disclosures on the maximum amounts for credit risk exposures, the market values of the collaterals are not considered. Taishin Bank trades various derivatives with its peer financial institutions within trading limits authorized in accordance with world rankings and credit ratings. Taishin Bank anticipates that the probability of default by counterparties is very low.

The maximum credit risk exposures of various financial assets are the same as carrying values, please refer to accompanying financial statements.

The contract amounts of financial assets with off-balance-sheet credit risks held by the Bank as of December 31, 2011 and 2010 were as follows:

Financial Instrument Type 2011 2010

Guarantees $ 15,707,401 $ 20,076,727

Letters of credit 5,080,798 6,487,169

Unused loan commitments (excluding credit card) 84,137,768 95,911,601

Unused loan commitments (credit card only) 411,994,680 438,621,284

Prominent concentration of credit risks occurs when transaction parties for financial instruments prominently concentrate on one party, or on a few that are in similar business lines or exhibit similar economic characteristics. The characteristics for concentration of credit risks include the nature of business activities engaged by debtors. Taishin Bank has not engaged in transactions that involved a prominent concentration of one client or one transaction party, but has transaction parties of similar industry type or from similar region.

The prominent concentration of credit risk was as follows:December 31

2011 2010

Industry Type Carrying Value Percentage of Item Carrying Value Percentage of Item

Manufacturing $ 129,854,589 21.35 $ 99,166,069 18.45

Wholesale and retailing 33,091,780 5.44 20,341,384 3.78

Finance and insurance 51,518,906 8.47 43,560,982 8.10

Real estate and leasing 23,461,021 3.86 19,595,577 3.65

Service 7,333,517 1.21 8,557,943 1.59

Individuals 341,117,005 56.07 326,911,197 60.82

Others 21,900,610 3.60 19,354,683 3.61

$ 608,277,428 $ 537,487,835

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December 31

2011 2010

Geographic Location Carrying Value Percentage of Item Carrying Value Percentage of Item

Asia $ 574,796,514 94.49 $ 510,463,098 94.97

Europe 1,819,307 0.30 2,765,431 0.51

North America 661,662 0.11 472,037 0.09

Others 30,999,945 5.10 23,787,269 4.43

$ 608,277,428 $ 537,487,835

3) Liquidity risk Taishin Bank’s ratios of liquidity reserves were 25.02% and 26.04% as of December 31, 2011

and 2010, respectively. Since the capital and operating funds are deemed sufficient to meet the cash flow arising from the performance of all the contracted obligations. Therefore, liquidity risk is not considered to be significant. The derivative instruments held by Taishin Bank, except for interest rate swaps with leveraging effects, have very little probabilities of failing to be sold with reasonable prices in the market, and thus have very low liquidity risks.

Basic management policies adopted by Taishin Bank for financial instruments are to match maturity and interest rate of financial assets and liabilities and to control unmatched gap. Because of uncertainty of transaction terms and different kinds, maturity and interest rate of financial assets and liabilities always can not match perfectly, and this kind of gap may cause potential gain or loss. Taishin Bank does the maturity analysis of financial assets and liabilities according to their characteristic in order to analyze its liquidity ability. The maturity analysis was as follows:

December 31, 2011

Financial InstrumentLess Than One Month

One Month to Three Months

Over Three Months to Six

Months

Over Six Months to A

Year

Over One Year to Five

YearsOver Five

Years TotalAssets

Cash and cash equivalents $ 11,125,892 $ - $ - $ - $ - $ - $ 11,125,892

Due from the Central Bank and

Callloanstootherbanks 13,950,805 2,645,596 2,568,242 4,971,278 5,383,532 - 29,519,453

Financial assets at FVTPL 32,713,663 1,502,282 902,283 1,795,697 3,486,139 381,485 40,781,549

Bonds and securities purchased

under resell agreements 1,058,738

-

-

-

-

- 1,058,738

Receivables(excludingallowance) 68,427,165 5,057,558 7,022,582 8,090,869 351,559 - 88,949,733

Loans (including delinquent loans)

(excluding allowance) 97,919,672 77,610,893 33,941,115 40,263,009 266,167,394 92,375,345 608,277,428

Available-for-salefinancialassets 69,583,843 57,795,507 11,912,437 10,660,881 35,911,927 5,326,254 191,190,849

Held-to-maturityfinancialassets - 272,903 - 138,020 2,010,318 - 2,421,241

Investments under equity method - - - - - 1,939,912 1,939,912

Financial assets carried at cost - - - - - 2,377,454 2,377,454

Othermiscellaneousfinancialassets

(excluding allowance) - - - - 300,000 459,013 759,013

Total assets 294,779,778 144,884,739 56,346,659 65,919,754 313,610,869 102,859,463 978,401,262

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December 31, 2011




Months


Year


YearsOver Five

Years Total

Liabilities

Due to the Central Bank and other

banks

28,945,847

6,886,607

8,373,755

18,309,191

16,998

-

62,532,398

FinancialliabilitiesatFVTPL 811,407 1,416,237 1,243,406 1,599,052 3,222,304 60,702 8,353,108

Bonds and securities sold under

repurchase agreements

39,362,090

4,017,948

106,887

-

-

-

43,486,925

Payables 20,570,159 404,530 711,190 659,044 35,058 - 22,379,981

Deposits 113,349,266 174,033,282 105,875,341 177,966,468 185,278,298 - 756,502,655

Bankdebentures - - - - 1,508,000 23,492,000 25,000,000

Otherfinancialliabilities 3,041,941 2,809,414 986,821 2,473,723 1,115,272 2,913,161 13,340,332

Totalliabilities 206,080,710 189,568,018 117,297,400 201,007,478 191,175,930 26,465,863 931,595,399

Net current gap $ 88,699,068 ($ 44,683,279 ) ($ 60,950,741 ) ($ 135,087,724 ) $ 122,434,939 $ 76,393,600 $ 46,805,863

December 31, 2010



Over Three Months to

Six Months


Year


YearsOver Five

Years Other Total

Assets

Cash and cash equivalents $ 12,952,576 $ - $ - $ - $ - $ - ($ 56,973 ) $ 12,895,603

Due from the Central Bank and Call

loanstootherbanks 24,000,844 2,304,823 2,416,744 4,027,105 5,220,721 - ( 343,520 ) 37,626,717

Financial assets at FVTPL 10,637,928 6,410,896 2,438,050 4,090,274 12,917,183 ( 137,817 ) 623,262 36,979,776

Bonds and securities purchased under

resell agreements 2,992,554 - - - - - -

2,992,554

Receivables(excludingallowance) 75,354,915 5,464,785 7,749,425 8,115,339 3,817,366 - ( 2,045,018 ) 98,456,812

Loans (including delinquent loans)

(excluding allowance) 86,404,290 58,106,045 13,585,802 14,635,808 85,619,051 281,197,982 ( 2,061,143 ) 537,487,835

Available-for-salefinancialassets 115,490,672 21,573,408 5,248,372 2,622,172 25,784,894 7,406,484 ( 767,708 ) 177,358,294

Held-to-maturityfinancialassets - 151,976 130,764 976,480 2,172,293 - ( 119,419 ) 3,312,094

Investments under equity method - - - - - 1,861,285 - 1,861,285

Financial assets carried at cost - - - - - 2,428,175 - 2,428,175

Other miscellaneous financial assets

(excluding allowance) 167 - - - 300,000 533,352 ( 7 ) 833,512

Total assets 327,833,946 94,011,933 31,569,157 34,467,178 135,831,508 293,289,461 ( 4,770,526 ) 912,232,657

Liabilities

Due to the Central Bank and other

banks 17,201,291 6,890,180 11,384,940 22,187,381 - - ( 411,401 ) 57,252,391

FinancialliabilitiesatFVTPL 1,270,736 2,307,258 1,595,214 1,858,152 7,157,094 179,747 1,834,663 16,202,864

Bonds and securities sold under

repurchase agreements 32,012,988 920,564 77,077 - - - ( 398,859 ) 32,611,770

Payables 25,038,240 728,887 930,396 880,138 46,765 - ( 583,529 ) 27,040,897

Deposits 104,179,997 174,006,220 89,716,661 141,715,951 158,807,517 36,394,219 ( 4,834,599 ) 699,985,966

Bankdebentures - - - - 1,508,000 23,492,000 - 25,000,000

Otherfinancialliabilities 2,827,553 993,397 971,113 2,869,440 3,672,442 2,163,625 ( 312,712 ) 13,184,858

Totalliabilities 182,530,805 185,846,506 104,675,401 169,511,062 171,191,818 62,229,591 ( 4,706,437 ) 871,278,746

Net current gap $ 145,303,141 ($ 91,834,573 ) ($ 73,106,244 ) ($ 135,043,884 ) ($ 35,360,310 ) $ 231,059,870 ($ 64,089 ) $ 40,953,911

188


4) Cash flow risk and fair value from change in interest rates Taishin Bank’s cash flow risks as a result of change in interest rates refer to cash flow

fluctuations in the future from its assets with floating rates and liabilities with floating rates. Taishin Bank evaluates interest rates risks in trends of interest rate and engages in trading of interest rates swaps in accordance with risk levels and operational needs to reduce cash flow risks as a result of change in interest rates.a) Expected revaluation date and expected settlement date As of December 31, 2011 and 2010, expected revaluation date and expected settlement date

are not affected by settlement date designed in the contract. Interest risks are presented with the carrying amounts of financial assets and liabilities according to its earliness of revaluation date and settlement date in the following table.

December 31, 2011




Months


Year


YearsOver Five

Years Total

Assets


callloanstootherbanks$ 7,959,100 $ 2,649,176 $ 2,571,718 $ 4,978,007 $ 5,390,819 $ - $ 23,548,820

Financial assets at FVTPL 33,024,177 1,502,282 902,283 1,795,697 3,486,139 381,485 41,092,063

Available-for-salefinancial

assets 68,315,388 57,795,507 11,912,437 10,660,881 35,911,927 5,326,254 189,922,394

Held-to-maturityfinancialassets - 272,903 - 138,020 2,010,318 - 2,421,241

Loans 97,933,628 90,251,545 33,941,113 40,263,009 266,157,173 78,202,714 606,749,182

Others - - - - - 61,134,420 61,134,420

Total assets 207,232,293 152,471,413 49,327,551 57,835,614 312,956,376 145,044,873 924,868,120

Liabilities

Deposits 107,829,052 181,257,647 98,650,976 177,966,468 185,278,298 - 750,982,441

Borrowings (including deposits from

postoffice) 68,206,201 10,875,530 8,329,827 17,106,083 1,525,000 23,577,590 129,620,231

Others 1,029,312 2,124,692 1,308,313 1,924,949 3,222,304 60,702 9,670,272

Totalliabilities 177,064,565 194,257,869 108,289,116 196,997,500 190,025,602 23,638,292 890,272,944

Interest sensitivity gap $ 30,167,728 ($ 41,786,455 ) ($ 58,961,565 ) ($ 139,161,886 ) $ 122,930,773 $ 121,406,581 $ 34,595,176

189

December 31, 2010



Over Three Months to

Six Months


Year


YearsOver Five

Years Other Total

Assets


callloanstootherbanks$ 22,541,187 $ 2,304,823 $ 2,416,744 $ 4,027,105 $ 5,220,721 $ - ($ 394,980 ) $ 36,115,600

Financial assets at FVTPL 10,860,421 6,410,896 2,438,050 4,090,274 12,917,186 411,178 628,156 37,756,161

Available-for-salefinancialassets 114,539,472 21,573,408 5,248,372 2,622,172 25,784,896 7,406,484 ( 733,381 ) 176,441,423

Held-to-maturityfinancialassets - 151,976 130,764 976,480 2,172,293 - ( 119,419 ) 3,312,094

Loans 323,179,090 70,382,044 11,666,055 9,643,243 76,019,803 46,344,694 ( 2,042,719 ) 535,192,210

Others 241,515 600,000 - - - 73,201,744 - 74,043,259

Total assets 471,361,685 101,423,147 21,899,985 21,359,274 122,114,899 127,364,100 ( 2,662,343 ) 862,860,747

Liabilities

Deposits 100,354,005 177,428,628 86,294,253 141,715,951 158,807,517 36,394,219 ( 5,104,649 ) 695,889,924

Borrowings (including deposits from

postoffice) 33,448,224 8,473,872 22,592,737 21,108,681 3,300,000 9,005,796 ( 810,261 ) 97,119,049

Others 12,018,655 2,037,620 23,329,106 17,867,266 21,676,189 1,906,171 1,834,663 80,669,670

Totalliabilities 145,820,884 187,940,120 132,216,096 180,691,898 183,783,706 47,306,186 ( 4,080,247 ) 873,678,643

Interest sensitivity gap $ 325,540,801 ($ 86,516,973 ) ($ 110,316,111 ) ($ 159,332,624 ) ($ 61,668,807 ) $ 80,057,914 $ 1,417,904 ($ 10,817,896 )

b) Effective interest rate (excluding financial assets at FVTPL) As of December 31, 2011 and 2010, the effective interest rate of financial instruments held or

issued by the Bank grouping based on main currencies are as follows:Effective Interest Rate (%)

2011 2010

NTD USD NTD USD

Bonds and securities sold under repurchase agreements 0.87-0.89 - 0.20-0.55 -

Available-for-salefinancialassets 0.72-5.13 0.00-8.75 0.32-4.62 0.37-6.00

Held-to-maturityfinancialassets - 3.75-7.38 - 0.53-7.38

Loans 0.0001-20.00 0.10-6.30 0.08-20.00 0.65-6.20

Bonds and securities sold under repurchase agreements 0.58-0.89 0.28-0.87 0.22-0.55 -

Deposits 0.00-4.00 0.01-2.38 0.00-4.00 0.01-4.20

Bankdebentures 1.70-2.76 - 0.65-4.45 -

190


37. OTHER DISCLOSURES REQUIRED FOR OF FINANCIAL INSTITUTIONS

a. Asset quality

Item

Business Type


Non-performing

Loans (Note a)

LoansNon-

performing Loans Ratio

(Note b)

Allowance for Loan Losses

Coverage Ratio

(Note c)

Non-performing

Loans (Note a)

LoansNon-

performing Loans Ratio

(Note b)

Allowance for Loan Losses

Coverage Ratio

(Note c)

Corporate finance

Secured 457,798 119,038,390 0.38% 2,672,076 583.68% 492,591 100,610,328 0.49% 1,217,497 247.16%

Unsecured 6,306 160,303,167 - 1,309,832 20,771.91% 484,347 128,152,874 0.38% 1,588,312 327.93%

Consumer finance

Mortgage loans (Note d) 179,343 206,149,360 0.09% 1,102,819 614.92% 269,382 203,730,649 0.13% 709,909 263.53%

Cash cards 78,474 8,189,094 0.96% 671,787 856.06% 138,243 10,870,988 1.27% 975,749 705.82%

Credit loans (Note e) 150,513 23,447,039 0.64% 806,301 535.70% 236,009 21,637,759 1.09% 1,062,488 450.19%

Others (Note f)

Secured 48,035 88,834,441 0.05% 424,571 883.88% 78,645 70,833,163 0.11% 71,107 90.42%

Unsecured 48,222 2,315,937 2.08% 231,232 479.51% 82,334 3,713,217 2.22% 200,498 243.52%

Subtotal 968,691 608,277,428 0.16% 7,218,618 745.19% 1,781,551 539,548,978 0.33% 5,825,560 326.99%

Others (Note h) - - - - - - ( 2,061,143 ) - ( 11,743 ) -

Total 968,691 608,277,428 0.16% 7,218,618 745.19% 1,781,551 537,487,835 0.33% 5,813,817 326.99%

Credit card 94,686 33,613,235 0.28% 488,089 515.48% 142,169 34,118,130 0.42% 662,455 465.96%

Accounts receivable factoring with no recourse (Note g) - 49,576,406 - 105,891 - - 59,809,857 - - -

Notea:NonperformingloansareinaccordancewiththeRegulationsoftheProceduresforBankingInstitutionstoEvaluateAssetsandDealwithPastDue/Non-performing

LoansandBadDebtsissuedbyMOF.Non-performingloansofcreditcardsaredefinedintheLetterissuedbytheBankingBureauonJuly6,2005(Ref.No.Jin-

Guan-Yin (4)0944000378).

Noteb:Nonperformingloansratio=Nonperformingloan÷Loans

Nonperformingloansofcreditcardratio=Nonperformingloansofcreditcards÷Accountsreceivable

Notec:Coverageratioofallowancesforloanlosses=Allowancesforloanlosses÷Nonperformingloans

Coverageratioofallowanceforloanlossesofcreditcard=Allowanceforloanlossesofcreditcard÷Nonperformingloansofcreditcards

Noted:Mortgageloansareforborrowerstobuildorrepairbuildings,providingtheborrowers,spouseorminorchildrentofullycollaterizetheirbuildingsandinstalltheright

onmortgagetofinancialinstitutions.

Notee:CreditloansaretofitintheLetterissuedbytheBankingBureauonDecember19,2005(Ref.No.Jin-Guan-Yi(4)09440010950),excludingcreditloansofcredit

cards and cash cards.

Notef: Theothersofconsumerfinancialbusinessaredefinedassecuredorunsecuredconsumerfinancialbusiness,excludingmortgageloans,cashcards,creditloansand

credit cards.

Noteg:Inaccordancewith theLetter issuedby theBankingBureauonJuly19,2005(Ref.No.Jin-Guan-Yin(5)094000494)accountsreceivable factoringwithno

recoursearedefinedasnon-performingloanswithinthreemonthsfromthedatethatfactorsorinsurancecompaniesascertainnottocompensatetheloss.

Noteh:InaccordancewiththeLetterissuedonFebruary18,2011(Ref.No.Ji-Mi46),thespotexchangerateonthebalancesheetdateshouldbeusedforforeigncurrency

translation.ThetotalloanamountandallowanceforbaddebtinU.S.dollarsistranslatedbyusingtheCentralBank’sclosingspotexchangerateofNT$29.152to

US$1.00at15:30onDecember31,2011.

191

Item

Business Type


Exempted from Report as Non-

performing Loans


performing Receivables


performing Loans


performing Receivables

Negotiated amount performed in accordance with the agreement (Note a) $ 5,279,584 $ 1,667,299 $ 6,944,337 $ 2,218,997

Loansexecutedinaccordancewithdebtclearingandrenewalregulations(Noteb) 2,079,662 1,367,876 2,262,556 1,356,840

Total 7,359,246 3,035,175 9,206,893 3,575,837

Notea:DisclosedinaccordancewiththeLetterissuedbyBankingBureauonApril25,2006(Ref.No.Jin-Guan-Yin(1)09510001270).

Noteb:DisclosedinaccordancewiththeletterissuedbytheBankingBureauonSeptember15,2008(Ref.No.Jin-Guan-Yin(1)09700318940).

b. Concentration of credit risk

Year December 31, 2011 December 31, 2010

Rank (Note a)

Transaction Party(Note b)

Loans(Note c)

As Proportion of Net Equity (%)

Transaction Party(Note b)

Loans(Note c)

As Proportion of Net Equity

(%)

1 A Group (012641 liquid crystal panel and components manufacturing industry) 15,444,056 24.52%

A Group (012641 liquid crystal panel and components manufacturing industry)

8,306,003 13.69%

2 B Group (012641 liquid crystal panel and components manufacturing industry) 7,734,083 12.28%

K Group (014641 whole-sale of computers and computer peripheral equipment and software)

7,195,589 11.86%

3 C Group (016499 o the r f i nanc ia l intermediationnotelsewhereclassified) 7,565,729 12.01%

B Group (012641 liquid crystal panel and components manufacturing industry)

6,928,369 11.42%

4 D Group (011850 syn the t i c f i be rmanufacturing industry) 6,553,605 10.41% J Group (012712 moni tors and

terminals manufacturing industry) 5,524,651 9.10%

5 E Group (016499 o the r f i nanc ia l intermediationnotelsewhereclassified) 6,279,800 9.97% H G r o u p ( 0 1 2 7 11 c o m p u t e r

manufacturing industry) 4,196,167 6.91%

6 F G r o u p ( 0 1 5 2 3 2 o c e a n f r e i g h t transportation forwarding services) 5,908,179 9.38%

L Group (012641 liquid crystal panel and components manufacturing industry)

4,127,730 6.80%

7 G Group (012711 computer manufacturing industry) 5,611,510 8.91% F Group (015232 ocean freight

transportation forwarding services) 3,902,886 6.43%

8 H Group (012711 computer manufacturing industry) 5,415,622 8.60%

E Group (016499 other financial intermediat ion not elsewhere classified)

3,610,172 5.95%

9 ICompany(012630printedcircuitboardmanufacturing industry) 5,172,356 8.21% M Co., Ltd. (012613 semi-conductors

packing and testing industry) 3,583,027 5.90%

10 J Group (012712 monitors and terminals manufacturing industry) 4,868,214 7.73% DGroup (011850man-made fibers

manufacturing industry) 3,253,107 5.36%

Notea:Sortedby thebalanceof loansonDecember31,2011and2010,excludinggovernmentorstate-ownedbusiness. If theborrowerbelongsto thesame

businessgroup,theaggregatedcreditamountofthebusinessgroupisdisclosed,andcodeandindustryadditionallydisclosed.Iftheborrowerisabusiness

group, the industrywiththe largestriskexposures inthebusinessgroupisdisclosed. TheindustrydisclosureshouldfollowtheguidelinesofDirectorate-

General of Budget, Accounting and Statistics.

Noteb:Transactionparty is inaccordancewith thearticle6of theSupplementaryProvisions to theTaiwanStockExchangeCorporationCriteria forReviewof

Securities Listings.

Notec:Loans include importandexportbillnegotiations,billsdiscounted,overdraft,short-termloan,short-termsecured loan,receivablefinancing,medium-term

loan, medium-term secured loan, long-term loan, long-term secured loan, delinquent loans, inward remittances, factoring without recourse, acceptance, and

guarantee.

192


c. Interest-earning assets and interest-bearing liabilities

The average interest-earning assets, interest-bearing liabilities and average interest rates for the years ended December 31, 2011 and 2010 were as follows:

2011

Average Value Average Interest Rate %

Assets

Duefrombanksandcallloanstobanks $ 28,054,773 0.62

Financial assets at FVTPL 26,531,008 0.75

Bonds and securities purchased under resell agreements 1,940,882 0.71

Receivables 47,753,379 4.89

Loans 577,811,944 2.51

Available-for-salefinancialassets 187,696,707 1.09

Held-to-maturityfinancialassets 3,056,223 3.15

Liabilities

Duetobanksandcallloansfrombanks 55,419,826 1.13

Bonds and securities sold under repurchase agreements 34,711,459 0.60

Demand deposits 299,036,422 0.24

Time deposits 427,750,415 1.05

Bankdebentures 25,000,000 2.46

Otherfinancialliabilities 14,142,116 1.60

2010

Average Value Average Interest Rate %

Assets

Duefrombanksandcallloanstobanks $ 37,605,391 0.51

Financial assets at FVTPL 40,452,659 0.51

Bonds and securities purchased under resell agreements 1,239,965 0.38

Receivables 46,155,089 4.67

Loans 515,760,698 2.41

Available-for-salefinancialassets 150,371,232 0.97

Held-to-maturityfinancialassets 4,303,545 2.96

Liabilities

Duetobanksandcallloansfrombanks 58,318,335 0.91

Bonds and securities sold under repurchase agreements 42,246,813 0.34

Demand deposits 264,890,364 0.17

Time deposits 384,930,487 0.77

Bankdebentures 23,712,329 2.41

Otherfinancialliabilities 16,916,403 1.42

193

d. Interest rate sensitivity

ItemDecember 31, 2011

1-90 Days 91-180 Days 181 Days-1 Year More Than 1 Year Total

Interest-sensitive assets $ 589,515,405 $ 27,157,814 $ 43,703,479 $ 139,341,998 $ 799,718,696

Interest-sensitiveliabilities 362,787,867 81,070,674 134,901,875 211,499,947 790,260,363

Interest sensitivity gap 226,727,538 ( 53,912,860 ) ( 91,198,396 ) ( 72,157,949 ) 9,458,333

Net equity 62,990,673

Ratioofinterest-sensitiveassetstoliabilities 101.20%

Ratio of interest sensitivity gap to net equity 15.02%



Interest-sensitive assets $ 526,221,728 $ 19,385,551 $ 16,365,261 $ 135,625,292 $ 697,597,832

Interest-sensitiveliabilities 279,296,907 95,096,096 121,258,346 198,384,858 694,036,207

Interest sensitivity gap 246,924,821 ( 75,710,545 ) ( 104,893,085 ) ( 62,759,566 ) 3,561,625

Net equity 60,618,990


Ratio of interest sensitivity gap to net equity 5.88%

Notea:TheamountslistedaboveincludeamountsinN.T.dollarsonly(i.e.,excludingforeigncurrency)forbothheadofficeanddomesticbranches.

Noteb:Interest-sensitiveassetsand liabilitiesare interest-earningassetsand interest-bearing liabilitieswith incomeorcostaffectedby interest rate

fluctuations.

Notec:Interestsensitivitygap=Interest-sensitiveassets-Interest-sensitiveliabilities

Noted:Ratioofinterest-sensitiveassetstointerest-sensitiveliabilities=Interest-sensitiveassets÷Interest-sensitiveliabilities(N.T.dollarsonly)

(In Thousands of U.S. Dollars)



Interest-sensitive assets $ 3,626,583 $ 927,104 $ 351,495 $ 1,293,411 $ 6,198,593

Interest-sensitiveliabilities 3,667,774 2,315,523 705,397 334,021 7,022,715

Interest sensitivity gap ( 41,191 ) ( 1,388,419 ) ( 353,902 ) 959,390 ( 824,122 )

Net equity 34,217


Ratio of interest sensitivity gap to net equity ( 2,408.52% )




Interest-sensitive assets $ 2,344,727 $ 631,153 $ 482,195 $ 1,585,462 $ 5,043,537

Interest-sensitiveliabilities 2,669,341 2,684,371 248,514 544,467 6,146,693

Interest sensitivity gap ( 324,614 ) ( 2,053,218 ) 233,681 1,040,995 ( 1,103,156 )

Net equity 13,712


Ratio of interest sensitivity gap to net equity ( 8,045.19% )

Notea:TheamountslistedaboveincludeamountsinU.S.dollarsonlyfordomesticbranches,OBU,andoverseasbranches,excludingcontingentassets

andcontingentliabilities.

Noteb:Interest-sensitiveassetsand liabilitiesare interest-earningassetsand interest-bearing liabilitieswith incomeorcostaffectedby interest rate

fluctuations.

Notec:Interestsensitivitygap=Interest-sensitiveassets-Interest-sensitiveliabilities

Noted:Ratioofinterest-sensitiveassetstointerest-sensitiveliabilities=Interest-sensitiveassets÷Interest-sensitiveliabilities(U.S.dollarsonly)

194


e. Profitability

ItemDecember 31

2011 2010

Return on total assetsPretax 0.95 1.24

After tax 0.80 0.91

Return on net equityPretax 14.90 19.53

After tax 12.52 14.32

Profitmargin 31.51 33.03

Notea:Returnontotalassets=Incomebefore(after)tax÷Averageassets

Noteb:Returnonnetequity=Incomebefore(after)tax÷Averagenetequity

Notec:Profitmargin=Incomeaftertax÷Netrevenue

Noted:ProfitabilitypresentedaboveiscumulativefromJanuary1toDecember31of2011and2010,respectively.

f. Maturity analysis of assets and liabilities

Item Total

December 31, 2011

Period Remaining until Due Date and Amount Due

1-30 Days 31-90 Days 91-180 Days 181 Days-1 Year More Than 1 Year

Major maturity cash inflows 869,504,187 $ 205,737,709 $ 165,612,383 $ 44,864,429 $ 73,665,202 $ 379,624,464

Major maturity cash outflows 943,601,610 161,594,580 151,883,487 131,739,547 200,611,085 297,772,911

Gap ( 74,097,423 ) 44,143,129 13,728,896 ( 86,875,118 ) ( 126,945,883 ) 81,851,553

Item Total

December 31, 2010



Major maturity cash inflows $ 770,074,334 $ 237,483,195 $ 89,050,617 $ 26,826,242 $ 25,910,246 $ 390,804,034

Major maturity cash outflows 865,518,809 116,563,606 123,150,966 162,037,638 176,984,707 286,781,892

Gap ( 95,444,475 ) 120,919,589 ( 34,100,349 ) ( 135,211,396 ) ( 151,074,461 ) 104,022,142

Note:TheamountslistedaboveincludeaccountsinN.T.dollarsonly(i.e.,excludingforeigncurrency)forbothheadofficeanddomesticbranches.


Item Total

December 31, 2011



Major maturity cash inflows $ 9,187,511 $ 3,799,481 $ 3,018,816 $ 960,018 $ 317,567 $ 1,091,629

Major maturity cash outflows 9,119,390 3,363,069 2,209,685 2,404,303 665,547 476,786

Gap 68,121 436,412 809,131 ( 1,444,285 ) ( 347,980 ) 614,843

195


Item Total

December 31, 2010



Major maturity cash inflows $ 9,599,997 $ 4,346,156 $ 1,569,387 $ 907,250 $ 796,198 $ 1,981,006

Major maturity cash outflows 9,596,624 3,046,733 1,060,168 2,891,581 551,292 2,046,850

Gap 3,373 1,299,423 509,219 ( 1,984,331 ) 244,906 ( 65,844 )

Note:TheamountslistedaboveincludeaccountsinU.S.dollarsforheadoffice,domesticbranches,andOBU.

g. Capital adequacyYear

Item

Consolidated Taishin Bank

December 31, 2011

December 31, 2011

December 31, 2010

Self-owned capital

Tier I capital 60,362,134 59,422,148 56,696,260

Tier II capital 27,314,206 26,740,812 26,043,686

Tier III capital - - -

Self-owned capital 87,676,340 86,162,960 82,739,946

Risk-weighted assets

Credit risk

Standardized approach 607,930,747 607,210,536 551,856,662

IRB - - -

Securitization 1,158,501 1,158,501 1,514,031

Operation risk

Basic indicator approach - - -

Standardized approach/optional standard 36,814,913 36,814,913 34,888,200

Advanced internal-rating based approach - - -

Market price risk

Standardized approach 30,280,313 30,257,750 20,863,325

Internal model approach - - -

Total 676,184,474 675,441,700 609,122,218

Capital Adequacy ratio 12.97% 12.76% 13.58%

Tier I capital to risk-weighted assets ratio 8.93% 8.80% 9.31%

Tier II capital to risk-weighted assets ratio 4.04% 3.96% 4.27%

Tier III capital to risk-weighted assets ratio - - -

Common stock equity to total assets ratio 4.75% 4.75% 5.19%

Leverage ratio 6.35% 6.25% 6.53%

Note1:Theratiosarecalculated inaccordancewith theLetters issuedby theMOFonJune30,2009andJanuary4,2007(Ref.No.Jin-Guan-Yin

0981003110 and 09610000025).

Note 2: Formula:

a.Self-ownedcapital=TierIcapital+TierIIcapital+TierIIIcapital

b.Risk-weightedassets=Creditrisk-weightedassets+(Operationriskcapital+Marketpriceriskcapital)x12.5

c.CapitalAdequacy=Self-ownedcapital/Risk-weightedassets

d.TierIcapitaltorisk-weightedassetsratio=TierIcapital/Risk-weightedassets

e.TierIIcapitaltorisk-weightedassetsratio=TierIIcapital/Risk-weightedassets

f.TierIIIcapitaltorisk-weightedassetsratio=TierIIIcapital/Risk-weightedassets

g.Commonstockequitytototalassetsratio=Commonstockequity/Totalassets

h.Leverageratio=TierIcapital/Adjustedaverageassets

196


h. Trust accounts Under Article 3 of the Trust Law, Taishin Bank can offer trust services. The items and amounts of

trust accounts as of December 31, 2011 and 2010 are as follows:2011 2010

Special purpose trust accounts - foreign and domestic investments $ 135,857,618 $ 137,737,804Special purpose monetary fund - master 6,016,971 7,013,808Special purpose monetary fund - stand-alone 109,139 153,508Special purpose cover fund - stand-alone 9,355,248 12,975,945Specific monetary fund - stand-alone 8,079,614 2,584,508Specific cover fund - stand-alone 14,738,474 27,467,453Real estate securitization 8,645,712 4,749,333Real estate trust 9,552,878 1,160,044Monetary mutual trust fund 1,021,687 750,060Securities under custody 28,220,801 28,035,267

$ 221,598,142 $ 222,627,730

i. Significant foreign-currency denominated financial assets and liabilities are summarized as follows:(InForeignCurrency/InThousandsofNewTaiwanDollars)

December 31

2011 2010

Foreign CurrenciesExchange

Rate New Taiwan Dollars Foreign CurrenciesExchange

Rate New Taiwan Dollars

Financial assets

Monetary items

AUD $ 90,903 30.75 $ 2,795,583 $ 39,025 30.94 $ 1,207,519

RMB 677,030 4.77 3,232,541 121,886 4.61 561,606

EUR 33,611 39.20 1,317,495 262,762 40.58 10,662,265

GBP 895 46.75 41,845 81,466 47.05 3,833,014

HKD 802,507 3.90 3,128,678 696,186 3.91 2,719,723

JPY 23,503,001 0.39 9,175,830 15,962,397 0.37 5,959,497

USD 4,014,490 30.29 121,598,910 3,695,818 29.15 107,740,479

Nonmonetary items

AUD 261,523 30.75 8,042,721 250,847 30.94 7,761,702

RMB 240,874 4.77 1,150,075 - - -

EUR 101,776 39.20 3,989,428 204,690 40.58 8,305,842

HKD 433,964 3.90 1,691,865 395,523 3.91 1,545,151

JPY 44,432,933 0.39 17,347,106 10,856,170 0.37 4,053,107

NZD 28,594 23.41 669,414 47,802 23.51 1,123,862

USD 2,297,592 30.29 69,594,059 1,916,467 29.15 55,868,837

ZAR 1,333,218 3.73 4,971,890 634,923 4.58 2,905,283

197

December 31

2011 2010

Foreign CurrenciesExchange

Rate New Taiwan Dollars Foreign CurrenciesExchange

Rate New Taiwan Dollars


Monetary items

AUD $ 349,493 30.75 $ 10,748,108 $ 173,622 30.94 $ 5,372,215

RMB 684,157 4.77 3,266,570 60,699 4.61 279,678

EUR 118,156 39.20 4,631,524 291,814 40.58 11,841,166

GBP 12,418 46.75 580,503 23,618 47.05 1,111,248

HKD 933,160 3.90 3,638,044 1,122,053 3.91 4,383,419

JPY 8,498,102 0.39 3,317,753 4,995,046 0.37 1,864,880

NZD 29,526 23.41 691,238 48,500 23.51 1,140,277

USD 5,126,610 30.29 155,285,014 5,051,007 29.15 147,246,964

ZAR 1,328,264 3.73 4,953,416 633,806 4.58 2,900,171

Nonmonetary items

AUD 1,540 30.75 47,369 121,738 30.94 3,766,820

EUR 7,703 39.20 301,927 164,983 40.58 6,694,619

GBP 3 46.75 127 58,764 47.05 2,764,884

HKD 434,501 3.90 1,693,957 - - -

JPY 62,619,872 0.39 24,447,487 24,376,551 0.37 9,100,888

USD 1,147,286 30.29 34,751,306 518,712 29.15 15,121,502

38. DISCLOSURES UNDER STATUTORY REQUIREMENTS

a. Under Article 16 of the Regulations Governing the Preparation of Financial Reports by Public Banks, material transactions are summarized as follows:

No. Item Explanation

1 Marketable securities acquired or disposed of at costs or prices at least NT$300 million or 10% of the paid-in capital None

2 Acquisition of real estate at cost of at least NT$300 million or 10% of the paid-in capital None

3 Disposal of real estate at cost of at least NT$300 million or 10% of the paid-in capital None

4 Discount on service fee for related parties of at least NT$5 million None

5 Receivables from related parties amounting to at least NT$300 million or 10% of the paid-in capital None

6 Sale of NPL None

7 Securitized instruments and related assets which are in accordance with the Statute for Financial Assets Securitization and the Statute for Real Estate Securitization None

8 Other transactions which may have significant impact on the decisions made by the financial statement users None

198


b. Information on Taishin Bank’s InvesteesNo. Item Explanation

1 Names, locations, and related information of investees Table 1

2 Financings provided Table 2

3 Endorsements/guarantees provided None

4 Marketable securities held as of December 31, 2010 Table 3 (Note)

5 Derivative transactions of investees None

6 Marketable securities acquired or disposed of at costs or prices at least NT$300 million or 10% of the paid-in capital by subsidiaries Table 4

7 Acquisition of real estate at cost at least NT$300 million or 10% of the paid-in capital None

8 Disposal of real estate at cost at least NT$300 million or 10% of the paid-in capital None

9 Discount on service fee for related parties at least NT$5 million None

10 Receivables from related parties at least NT$300 million or 10% of the paid-in capital None

11 Sale of NPL by subsidiaries None

12 Securitized instruments and related assets which are in accordance with the Statute for Financial Assets Securitization and the Statute for Real Estate Securitization None

13 Other transactions which may have significant impact on the decisions made by the financial statement users None

Note:It’snotrequiredtodiscloseiftheinvesteeisabank,insuranceorsecuritycompany.

c. Information on the investment in Mainland China: None.

199

39. SEGMENT INFORMATION

Segment information is disclosed for the management to make operating decisions in order to allocate resources to the segments and access their performances. Under the guidelines of the newly issued SFAS No. 41 “Operating Segments”, Taishin Bank’s reporting segments are separated into individual finance industry and corporation finance industry based on its market. The main business of the former includes deposit receipts, commercial lending, bankers acceptances, and finance management service while the latter includes, corporation lending, receivable factoring and offshore banking business.

Taishin Bank had provided combined financial statements, in which information of operating segments had been disclosed. Therefore, Taishin Bank’s individual financial statement will not disclose information related to operating segments.

200


TAISHIN INTERNATIONAL BANK CO., LTD.INFORMATION OF INVESTEES’ NAMES, LOCATIONS, ETC.

YEAR ENDED DECEMBER 31, 2011(In Thousands, Except for Percentages and Shares)

Investees’ Names Unified Business No. Investees’ Location Principal Business Activities

Ownership Interest (%)

at Ending Balance

Investment Book Value

Recognized Investment

Income (Loss) of Current Period

Sum of Ownership

NoteCurrent Shares Imputed Shares

(Note)

Total

Shares OwnershipInterest (%)

Financial business

Investments under equity method

Taishin Dah An Leasing 16094812 2F1.-2, No. 9, Dehuei St., Taipei, Taiwan Leasing and retailing of machinery, mobile, aircraft, marine and components 100.00% $ 207,181 $ 2,336 20,000,000 - 20,000,000 100.00%

Taishin Insurance Agency 97125786 3F1., No. 236 and No. 238, Jianguo N. Rd., Sec. 2, Taipei, Taiwan Life insurance agency 87.40% 937,680 190,340 262,204 - 262,204 87.40%

PayEasy Digital 70553216 13Fl., No. 11, Jungshan N. Rd., Sec. 1, Taipei, Taiwan

Investment and enterprise operating consultant, information software and data processing, advertising, international trade, agency and network services

65.36% 209,108 ( 136,671 ) 28,400,001 - 28,400,355 65.38%

Chang Hwa Bank 51811609 No. 38, Tsu Yu Rd., Sec. 2, Taichung, Taiwan Commercial bank business, trust, and offshore banking 0.27% 345,220 23,693 17,985,000 - 1,543,985,000 22.81%

Nonfinancial business

Taishin Real-Estate 89597170 2Fl., No. 9 Dehuei St., Sec. 2, Taipei, Taiwan Audit and consulting of construction plan, contract witness 60.00% 180,923 9,857 12,000,000 - 20,000,000 100.00%

An Hsin Real-Estate 89458276 9F1., No. 100, Sinyi Rd., Sec. 5, Taipei, Taiwan Construction consultation, real estate appraisement 30.00% 59,800 13,818 3,600,000 - 3,600,000 30.00%

Financial business

Dah Chung Bills 89391748 11F1., No. 116, Nanjing E. Rd., Sec. 2, Taipei, Taiwan Bills and finance 18.29% 913,641 - 79,182,224 - 81,501,617 18.83%

Financial assets carried at cost

Pacific Security Co., Ltd. 22957533 13Fl., No. 200, Chung Shiao E. Rd., Sec. 4, Taipei, Taiwan Security and futures 2.77% 112,030 - 11,537,469 - 12,463,837 2.99%

Taipei Foreign Exchange Co., Ltd. 84703601 8Fl., No. 400, Bade Rd., Sec. 2, Taipei, Taiwan Exchange trading, DEPOS, and swap 0.81% 1,600 - 160,000 - 860,000 4.34%

Taiwan Financial Asset Service Co., Ltd. 70820924 6Fl., No. 99, Ren Ai Rd., Sec. 2, Taipei,

Taiwan Auction assets of the recognition of an impartial third party 2.94% 50,000 - 5,000,000 - 10,000,000 5.88%

Taiwan Asset Management Co., Ltd. 70808864 11Fl. and 12Fl., No. 85 and No. 87, Nanjing

E. Rd., Sec. 2, Taipei, TaiwanAcquisition of delinquent loans, evaluation, auction, and management 0.57% 100,000 - 10,000,000 - 210,000,000 11.92%

Taiwan Futures Exchange 16092130 13Fl., No. 102, and 14Fl., No. 100, Luossu Fu. Rd., Sec. 2, Taipei, Taiwan Futures exchange and clearing mechanism 0.96% 19,250 - 2,615,997 - 5,741,603 2.11%

Financial Information Service Co., Ltd. 16744111 No. 81, Kang Ning Rd., Sec. 3, Taipei,

Taiwan Type II telecommunications business 2.28% 91,000 - 10,237,500 - 15,450,750 3.43%

Sunlight Asset Management Co., Ltd. 28008025 11Fl., No. 85 and No. 87, Nanjing E. Rd.,

Sec. 2, Taipei, TaiwanAcquisition of delinquent loans, evaluation, auction, and management 18.21% 10,923 - 1,092,317 - 1,134,085 18.90%

MasterCard Incorporated 0.01% 10,345 - 10,316 - 13,517 0.01%

VISA Inc. 0.07% 777,033 - 584,124 - 609,144 0.07%

(Continued)

201

TAISHIN INTERNATIONAL BANK CO., LTD.INFORMATION OF INVESTEES’ NAMES, LOCATIONS, ETC.

YEAR ENDED DECEMBER 31, 2011(In Thousands, Except for Percentages and Shares)



at Ending Balance




Sum of Ownership


(Note)

Total


Financial business

Investments under equity method

Taishin Dah An Leasing 16094812 2F1.-2, No. 9, Dehuei St., Taipei, Taiwan Leasing and retailing of machinery, mobile, aircraft, marine and components 100.00% $ 207,181 $ 2,336 20,000,000 - 20,000,000 100.00%

Taishin Insurance Agency 97125786 3F1., No. 236 and No. 238, Jianguo N. Rd., Sec. 2, Taipei, Taiwan Life insurance agency 87.40% 937,680 190,340 262,204 - 262,204 87.40%

PayEasy Digital 70553216 13Fl., No. 11, Jungshan N. Rd., Sec. 1, Taipei, Taiwan

Investment and enterprise operating consultant, information software and data processing, advertising, international trade, agency and network services

65.36% 209,108 ( 136,671 ) 28,400,001 - 28,400,355 65.38%

Chang Hwa Bank 51811609 No. 38, Tsu Yu Rd., Sec. 2, Taichung, Taiwan Commercial bank business, trust, and offshore banking 0.27% 345,220 23,693 17,985,000 - 1,543,985,000 22.81%


Taishin Real-Estate 89597170 2Fl., No. 9 Dehuei St., Sec. 2, Taipei, Taiwan Audit and consulting of construction plan, contract witness 60.00% 180,923 9,857 12,000,000 - 20,000,000 100.00%

An Hsin Real-Estate 89458276 9F1., No. 100, Sinyi Rd., Sec. 5, Taipei, Taiwan Construction consultation, real estate appraisement 30.00% 59,800 13,818 3,600,000 - 3,600,000 30.00%

Financial business

Dah Chung Bills 89391748 11F1., No. 116, Nanjing E. Rd., Sec. 2, Taipei, Taiwan Bills and finance 18.29% 913,641 - 79,182,224 - 81,501,617 18.83%


Pacific Security Co., Ltd. 22957533 13Fl., No. 200, Chung Shiao E. Rd., Sec. 4, Taipei, Taiwan Security and futures 2.77% 112,030 - 11,537,469 - 12,463,837 2.99%

Taipei Foreign Exchange Co., Ltd. 84703601 8Fl., No. 400, Bade Rd., Sec. 2, Taipei, Taiwan Exchange trading, DEPOS, and swap 0.81% 1,600 - 160,000 - 860,000 4.34%

Taiwan Financial Asset Service Co., Ltd. 70820924 6Fl., No. 99, Ren Ai Rd., Sec. 2, Taipei,

Taiwan Auction assets of the recognition of an impartial third party 2.94% 50,000 - 5,000,000 - 10,000,000 5.88%

Taiwan Asset Management Co., Ltd. 70808864 11Fl. and 12Fl., No. 85 and No. 87, Nanjing

E. Rd., Sec. 2, Taipei, TaiwanAcquisition of delinquent loans, evaluation, auction, and management 0.57% 100,000 - 10,000,000 - 210,000,000 11.92%

Taiwan Futures Exchange 16092130 13Fl., No. 102, and 14Fl., No. 100, Luossu Fu. Rd., Sec. 2, Taipei, Taiwan Futures exchange and clearing mechanism 0.96% 19,250 - 2,615,997 - 5,741,603 2.11%

Financial Information Service Co., Ltd. 16744111 No. 81, Kang Ning Rd., Sec. 3, Taipei,

Taiwan Type II telecommunications business 2.28% 91,000 - 10,237,500 - 15,450,750 3.43%

Sunlight Asset Management Co., Ltd. 28008025 11Fl., No. 85 and No. 87, Nanjing E. Rd.,

Sec. 2, Taipei, TaiwanAcquisition of delinquent loans, evaluation, auction, and management 18.21% 10,923 - 1,092,317 - 1,134,085 18.90%

MasterCard Incorporated 0.01% 10,345 - 10,316 - 13,517 0.01%

VISA Inc. 0.07% 777,033 - 584,124 - 609,144 0.07%

(Continued)

202




at Ending Balance




Sum of Ownership


(Note)

Total



Universal Venture Fund Co., Ltd. 16446106 8Fl., No. 70, Nanjing E. Rd., Sec. 3, Taipei, Taiwan Investment start-up 1.49% $ 3,150 $ - 314,991 $ - 314,991 1.49%


Da Chiang International Co., Ltd. 97430717 15Fl., No. 109, Ren Ai Rd., Sec. 4, Taipei, Taiwan Import and export trading 4.31% 70,625 - 8,620,690 - 8,620,690 4.31%

EasyCard Investment Holdings Co., Ltd. 28988941 6Fl., No. 236 Tun-Hua N. Rd., Taipei, Taiwan IC card development & advance advertising service 2.40% 16,000 - 1,872,000 - 1,872,000 2.40%

Asia Pacific Telecom Co., Ltd. 70771579 16Fl., No. 277 Sung Ren Rd., Taipei, Taiwan Type I & II telecommunications business 0.46% 15,000 - 15,000,000 - 30,000,000 0.91%

T.K Venture Capital Co., Ltd. 70789542 10Fl., No. 76, Tun Hua S. Rd., Sec. 2, Taipei, Taiwan Investment start-up 3.33% 33,333 - 3,333,333 - 5,000,000 3.33%

Kaohsiung Rapid Transit Corp. 70798839 No. 1, Chung An. Rd., Kaohsiung, Taiwan Mass rapid transit operating 0.50% 50,000 - 5,000,000 - 5,000,000 0.50%

Apex Venture Capital Co., Ltd. 97176200 5Fl., No. 143 Min Sheng E. Rd., Sec. 2, Taipei, Taiwan Investment start-up 4.67% 3,768 - 2,009,346 - 2,009,346 4.67%

Concord VII Venture Capital Co., Ltd. 70767435 11Fl., No. 132, Min Sheng E. Rd., Sec. 3, Taipei, Taiwan Investment start-up 4.73% 3,240 - 2,324,000 - 2,324,000 4.73%

Concord IV Venture Capital Co., Ltd. 16442880 11Fl., No. 132, Min Sheng E. Rd., Sec. 3, Taipei, Taiwan Investment start-up 5.00% 15,641 - 1,564,080 - 1,955,100 6.25%

United Venture Capital Co., Ltd. 70780113 4Fl., No. 9, Dehuei. St., Sec. 2, Taipei, Taiwan Investment start-up 4.52% 14,400 - 1,440,000 - 1,440,000 4.52%

Lien An Co., Ltd. 97290477 5F1., No. 126, Jianguo N. Rd., Sec. 1, Taipei, Taiwan Industrial and commercial services 5.00% 1,250 - 125,000 - 250,000 10.00%

Harbinger Venture Capital Investment Co., Ltd. 70777004 7F1., No. 187, Ti Titing Ta. Rd., Sec. 2,

Taipei, Taiwan Investment start-up 3.35% 45,225 - 4,522,500 - 4,522,500 3.35%

Note: Imputed shares are considered if equity securities such as convertible bond, warrant, etc., or derivative contract such as stock options, are converted to shares.

203



at Ending Balance




Sum of Ownership


(Note)

Total



Universal Venture Fund Co., Ltd. 16446106 8Fl., No. 70, Nanjing E. Rd., Sec. 3, Taipei, Taiwan Investment start-up 1.49% $ 3,150 $ - 314,991 $ - 314,991 1.49%


Da Chiang International Co., Ltd. 97430717 15Fl., No. 109, Ren Ai Rd., Sec. 4, Taipei, Taiwan Import and export trading 4.31% 70,625 - 8,620,690 - 8,620,690 4.31%

EasyCard Investment Holdings Co., Ltd. 28988941 6Fl., No. 236 Tun-Hua N. Rd., Taipei, Taiwan IC card development & advance advertising service 2.40% 16,000 - 1,872,000 - 1,872,000 2.40%

Asia Pacific Telecom Co., Ltd. 70771579 16Fl., No. 277 Sung Ren Rd., Taipei, Taiwan Type I & II telecommunications business 0.46% 15,000 - 15,000,000 - 30,000,000 0.91%

T.K Venture Capital Co., Ltd. 70789542 10Fl., No. 76, Tun Hua S. Rd., Sec. 2, Taipei, Taiwan Investment start-up 3.33% 33,333 - 3,333,333 - 5,000,000 3.33%

Kaohsiung Rapid Transit Corp. 70798839 No. 1, Chung An. Rd., Kaohsiung, Taiwan Mass rapid transit operating 0.50% 50,000 - 5,000,000 - 5,000,000 0.50%

Apex Venture Capital Co., Ltd. 97176200 5Fl., No. 143 Min Sheng E. Rd., Sec. 2, Taipei, Taiwan Investment start-up 4.67% 3,768 - 2,009,346 - 2,009,346 4.67%

Concord VII Venture Capital Co., Ltd. 70767435 11Fl., No. 132, Min Sheng E. Rd., Sec. 3, Taipei, Taiwan Investment start-up 4.73% 3,240 - 2,324,000 - 2,324,000 4.73%

Concord IV Venture Capital Co., Ltd. 16442880 11Fl., No. 132, Min Sheng E. Rd., Sec. 3, Taipei, Taiwan Investment start-up 5.00% 15,641 - 1,564,080 - 1,955,100 6.25%

United Venture Capital Co., Ltd. 70780113 4Fl., No. 9, Dehuei. St., Sec. 2, Taipei, Taiwan Investment start-up 4.52% 14,400 - 1,440,000 - 1,440,000 4.52%

Lien An Co., Ltd. 97290477 5F1., No. 126, Jianguo N. Rd., Sec. 1, Taipei, Taiwan Industrial and commercial services 5.00% 1,250 - 125,000 - 250,000 10.00%

Harbinger Venture Capital Investment Co., Ltd. 70777004 7F1., No. 187, Ti Titing Ta. Rd., Sec. 2,

Taipei, Taiwan Investment start-up 3.35% 45,225 - 4,522,500 - 4,522,500 3.35%

Note: Imputed shares are considered if equity securities such as convertible bond, warrant, etc., or derivative contract such as stock options, are converted to shares.

204


TAISHIN INTERNATIONAL BANK CO., LTD. FINANCINGS PROVIDEDYEAR ENDED DECEMBER 31, 2011(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

No. Financing Company Counter-partyFinancial

Statement Account

Maximum Balance for the Year Ending Balance Interest Rate Type of

FinancingTransaction

Amount

Reason for Short-term Financing

Allowance forBad Debt

Collateral Financing Limit for Each Borrowing Company

Financing Company’s Financing Amount LimitItem Value

1 PayEasy Digital Integration Co., Ltd.

Contect Digital Integration Co., Ltd. Other receivable $ 50,000 $ 50,000 3.2%~3.3% 2 N/A Operating

turnover $ - None None $ 31,992 $ 127,968

Note1:Financingprovidedisnumberedasfollow:

(1) Transactions: 1

(2) Short-termfinancing:2

Note2:Thetotalamountforlendingtoacompanyforashort-termperiodshallnotexceedtenpercent(10%)ofthenetworthoffinancingcompany.Inaddition,

thetotalamountlendabletoanyborrowershallbenomorethanfortypercent(40%)oftheborrower’snetworth.

Note3:ThetotalamountavailableforlendingpurposeshallbecalculatedbasedonthelatestfinancialstatementauditedbytheCPA.

Note4:Themaximumbalanceavailableforexpenditureisthesameastheactualamountspent.

205

TAISHIN INTERNATIONAL BANK CO., LTD. FINANCINGS PROVIDEDYEAR ENDED DECEMBER 31, 2011(In Thousands of New Taiwan Dollars, Unless Specified Otherwise)

No. Financing Company Counter-partyFinancial

Statement Account

Maximum Balance for the Year Ending Balance Interest Rate Type of

FinancingTransaction

Amount

Reason for Short-term Financing

Allowance forBad Debt

Collateral Financing Limit for Each Borrowing Company

Financing Company’s Financing Amount LimitItem Value

1 PayEasy Digital Integration Co., Ltd.

Contect Digital Integration Co., Ltd. Other receivable $ 50,000 $ 50,000 3.2%~3.3% 2 N/A Operating

turnover $ - None None $ 31,992 $ 127,968

Note1:Financingprovidedisnumberedasfollow:

(1) Transactions: 1

(2) Short-termfinancing:2

Note2:Thetotalamountforlendingtoacompanyforashort-termperiodshallnotexceedtenpercent(10%)ofthenetworthoffinancingcompany.Inaddition,

thetotalamountlendabletoanyborrowershallbenomorethanfortypercent(40%)oftheborrower’snetworth.

Note3:ThetotalamountavailableforlendingpurposeshallbecalculatedbasedonthelatestfinancialstatementauditedbytheCPA.

Note4:Themaximumbalanceavailableforexpenditureisthesameastheactualamountspent.

206


TAISHIN INTERNATIONAL BANK CO., LTD.MARKETABLE SECURITIES HELD BY SUBSIDIARIESDECEMBER 31, 2011(In Thousands, Except for Percentage and Shares)

Owner Type and Issuer/Name of Marketable Security

Issuer’s Relationship tothe Owner Accounts Recorded

December 31, 2011Note

Shares (Units) Carrying Value Ownership Interest (%) Market Value

Taishin Insurance Agency Stock

Taishin Insurance Brokers Parent and subsidiary Investment under equity method 6,000,000.00 $ 86,400 100.00 $ 86,400

Chi-Long Technology Co., Ltd. None Financial assets carried at cost 950,000.00 4,275 4.13 4,275

PayEasy Digital Stock

PayEasy Travel Agency Co., Ltd. Parent and subsidiary Investment under equity method 1,300,000.00 13,834 100.00 13,834

Contect Digital Integration Co., Ltd. ″ ″ 480,000.00 ( 49,486 ) 65.75 ( 49,486 )

Taishin Dah An Leasing Stock

Pacific Security Co., Ltd. None Financial assets carried at cost 926,368.00 6,374 0.22 6,374

Yuan Tai Foreign Exchange Co., Ltd. ″ Other liabilities 600,000.00 6,000 5.00 6,000

Bon-Li International Technology Co., Ltd. ″ ″ 125,000.00 - 1.50 -

Funds

Shin Kong Chi-Shin Fund None Financial assets at FVTPL 1,114,173.02 16,628 - 16,658

Taishin Real-Estate Stock

Metro Consulting Service The supervisors of the Corporation Financial assets carried at cost 300,000.00 3,000 6.00 3,000

Funds

Taishin 1699 Money Market Fund Issued by Taishin Investment Trust

Financial assets at FVTPL 768,869.99 10,019 - 10,019

Taishin Ta-Chong equity fund ″ ″ 731,759.10 10,018 - 10,018

FSITC Taiwan Money Market Fund None ″ 170,970.53 2,520 - 2,520

207

TAISHIN INTERNATIONAL BANK CO., LTD.MARKETABLE SECURITIES HELD BY SUBSIDIARIESDECEMBER 31, 2011(In Thousands, Except for Percentage and Shares)

Owner Type and Issuer/Name of Marketable Security

Issuer’s Relationship tothe Owner Accounts Recorded

December 31, 2011Note

Shares (Units) Carrying Value Ownership Interest (%) Market Value

Taishin Insurance Agency Stock

Taishin Insurance Brokers Parent and subsidiary Investment under equity method 6,000,000.00 $ 86,400 100.00 $ 86,400

Chi-Long Technology Co., Ltd. None Financial assets carried at cost 950,000.00 4,275 4.13 4,275

PayEasy Digital Stock

PayEasy Travel Agency Co., Ltd. Parent and subsidiary Investment under equity method 1,300,000.00 13,834 100.00 13,834

Contect Digital Integration Co., Ltd. ″ ″ 480,000.00 ( 49,486 ) 65.75 ( 49,486 )

Taishin Dah An Leasing Stock

Pacific Security Co., Ltd. None Financial assets carried at cost 926,368.00 6,374 0.22 6,374

Yuan Tai Foreign Exchange Co., Ltd. ″ Other liabilities 600,000.00 6,000 5.00 6,000

Bon-Li International Technology Co., Ltd. ″ ″ 125,000.00 - 1.50 -

Funds

Shin Kong Chi-Shin Fund None Financial assets at FVTPL 1,114,173.02 16,628 - 16,658

Taishin Real-Estate Stock

Metro Consulting Service The supervisors of the Corporation Financial assets carried at cost 300,000.00 3,000 6.00 3,000

Funds

Taishin 1699 Money Market Fund Issued by Taishin Investment Trust

Financial assets at FVTPL 768,869.99 10,019 - 10,019

Taishin Ta-Chong equity fund ″ ″ 731,759.10 10,018 - 10,018

FSITC Taiwan Money Market Fund None ″ 170,970.53 2,520 - 2,520

208


TAISHIN INTERNATIONAL BANK CO., LTD.ACCUMULATED PURCHASES AND SALES OF SPECIFIC MARKETABLE SECURITIES OVER NT$300 MILLION OR 10% OF OUTSTANDING CAPITAL

YEAR ENDED DECEMBER 31, 2011(In Thousands Except for Percentages and Shares)

Buyer or Seller

Type and Name of

Marketable Security

AccountRecorded

TransactionParty

Issuer’sRelationshipto the Buyer

orSeller

Beginning of the Period Purchases Sales End of the Period

Shares(Units)

AmountShares(Units)

AmountShares(Units)

SellingPrice

CarryingValue

DisposalGain

(Loss)

Shares(Units)

Amount

Taishin Insurance Agency

FundFSITC Taiwan Bond Fund

Available-for-sale financial assets - noncurrent

- - 4,992,660.80 $ 50,000 - $ - 4,992,660.80 $ 50,231 $ 50,000 $ 231 - $ -

Taishin Real-Estate

Taishin 1699 Bond Fund


Taishin Securities Investment Trust

Wholly owned by Taishin Financial Holding

389,292.89 5,000 1,539,975.14 20,000 1,160,398.04 15,051 15,000 51 768,869.99 10,000

44 Chung-Shan North Road, Section 2, Taipei Taiwan R.O.C.Te l : 886-2-2568-3988 Fax : 886-2-2511-1987http://www.taishinbank.com.tw

Documents

2011 Annual Report - taishinbank.com.twº†解台新... · 4 In 2011, Taishin Bank launched “oral instruction” service, which is available for deposits, fund withdrawal, and