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Dear Shareholders of Commonwealth Business Bank

 

It is my greatest pleasure to have all of you at our 2008 Annual Shareholders Meeting and I sincerely welcome everyone.

 

I regret that I must first address the current difficulties of the economy and the banking industry. The meltdown of the subprime market ignited many subsequent troubles which include the real estate market corrections, credit crunch, and rise of unemployment rate.  The list of casualty goes on and on. All these problems have wreaked havoc on the banking industry.

 

The first casualty was from the mortgage laden large institutions. We witnessed several national banks like Countrywide and Bear Stearns to be rescued from collapsing. However, the worst came with the closing of IndyMac Bank in California and bankruptcy of Lehman Brothers.

 

Unfortunately but inevitably, the trouble has trickled down to smaller banks, and our community was not an exception. Many banks turned unprofitable and were led to restructure and change in management.

 

There are various forecasts as to how deep and long this financial and economic trouble will extend to. However, despite the different opinions everyone should agree that it will be much longer and painful than most people want it to be. There are several reasons for this.

 

First, the degree of the risk exposure in the residential mortgage industry is unprecedented. It is not only the largest in America since World War II, but the largest among other parts of the world. It is inconceivable to expect this scale of trouble to end soon.

 

Second, the interrelation of the residential real estate industry extends to almost all segments of the economy. It would be unreasonable to wish that the overall economy might be immune from the trouble.

 

Third, most major countries are tangled with the U.S. mortgage trouble, making it impossible for U.S. to get help from other financially healthy countries.

 

There are indefinite reasons to believe that the financial and economic trouble will continue to be deeper and longer.   The bottom line is that we better not anticipate a quick fix for the trouble.  It will take time and much effort until the economy resumes its sailing again. Our current situation is harsh and shows signs of more trouble ahead.

 

The current condition calls for stronger leadership and precise judgment in order to formulate and execute solid strategies. We do not have much room to accommodate errors. This environment will exercise its most formidable power, natural selection and survival of the fittest.

 

So far, our performance results show that our strategy was better prepared for the troubles. For the past years we have seen steady and planned growth in our net interest margin and stable asset quality. It is premature to tell whether the performance is a trend, but at least the data indicates so.

 

At this point, however, the biggest challenge to the Bank is not how to survive but how to build a strong ground for the future. It is common to become conservative in hard times. But, hard times bring great opportunities. It is even more so for a relatively young institution like us.

 

We need to face the challenge of psychological and strategic depression. We will use this correction period as a stepping stone to build a foundation for further growth.

 

Commonwealth Business Bank is only in an infant stage. A child is growing with hardship and adversity. We will take this financial turmoil and any subsequent recession as a training course.  And, we have confidence that we are well prepared and ready to overcome this hardship.

 

Dear Fellow Shareholders,

 

I am grateful for your trust, and I promise that your trust will be rewarded by creating a respectful and great institution. We are heading to a planned success. Our coherent team of the board and management harnessed through the first three and half years.  This foundation is by far the most precious asset of our Bank that you can count on.

 

I would like to conclude with an Asian proverb; "Prosperity produces many good managers; adversity a few great leaders." You will witness the process of more leaders being groomed in our organization through this difficult time.

 

Thank you again for attending today's meeting, and I hope to see you next year with more promising reports.

 

 

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