UCBH Holdings Inc. is forecasting a provision for loan losses of $300 million to $350 million for the second quarter, up roughly tenfold from a year earlier.
Though still working on a revision of its first-quarter and yearend results, UCBH last week offered insight into its deteriorating credit quality.
The $12.8 billion-asset San Francisco company said in a press release that chargeoffs are expected to be $275 million to $300 million, compared with $12.3 million a year earlier.
The company also sold $101 million of nonperforming assets during the quarter.
But overall nonperformers still rose. UCBH estimated nonperforming assets would be $835 million to $875 million. A year earlier they totaled $200 million.
The company said that some work remains on finalizing its first-quarter and 2008 results. It has hired three firms to assess credit risk ratings, and their loan review is 63% complete.
UCBH also said that it intends to adopt "a multistep strategy" to increase its tangible common equity ratio, which was 3.84% at the end of the first quarter. (Analysts become wary when this ratio falls below 5%.)
"During the second half of the year, we are positioning the company to execute on a capital plan in conjunction with our restatement efforts," Thomas S. Wu, UCBH's chairman, president and chief executive officer, said in the press release. "We intend to reduce our nonperforming assets aggressively and continue the momentum in our core banking business, which is a very strong franchise."