Despite concerns about how U.S.-China trade turbulence will affect Pasadena, Calif.-based East West Bancorp Inc., which has 10 branches in China, the bank has thus far experienced little disruption related to the trade war, President and CEO Dominic Ng said on the company's third-quarter earnings call.
Thus far, any deterioration in East West's loan portfolio has been confined to the energy sector, and the bank has not taken any charge-offs related to tariffs, Ng said.
Over the last few years, the bank has exited more than $250 million in commercial and industrial loans with businesses that could be affected by tariffs, Ng said.
"So from that standpoint, I think, so far, so good," Ng said.
Looking ahead, East West increased its estimated provision for credit losses to $100 million for full year 2019, up from its previous $80 million to $90 million estimate. For the third quarter, the bank recorded a $38.3 million provision, up from $19.2 million in the second quarter.
Bank management highlighted three credits on the call, two of which were in the energy sector. The third credit was in what CFO Irene Oh called the bank's life sciences category. Oh said the company's energy portfolio totals $1.2 billion, with 3% of that classified.
The bank reported a Tier 1 risk-based capital ratio of 12.8% for the third quarter, far above the required minimum ratio. Management said the bank is holding additional capital rather than buying back stock in case the economy worsens.