BB&T Corp. (BBT:US), North Carolina’s second-biggest bank, fell in extended trading as the Federal Reserve objected to the company’s capital plan.
The lender slid 3 percent to $30.79 at 6:19 p.m. yesterday in New York after the Winston-Salem-based bank said in a statement that its quarterly dividend (BBT:US) will remain at 23 cents a share. The firm said it plans to resubmit its plan “as soon as feasible” and that the Fed didn’t object to the continued payment of dividends on preferred stock.
“BB&T’s capital plan was objected to based on a qualitative assessment,” the Fed said yesterday in a report detailing the results of its annual stress tests on the 18 biggest U.S. banks. BB&T can’t implement its requested capital plan and must resubmit the proposals after the “deficiencies” are fixed, the Fed said.
BB&T, led by Chief Executive Officer Kelly King, 64, said March 4 it had re-evaluated how to calculate risk-weighted assets and determined changes were needed to meet regulatory guidance, the Fed said yesterday in a report. The adjustments led to an increase in such assets and a decline in BB&T’s risk- based capital ratios, according to the Fed’s report.
Under its proposed capital plan, BB&T would have a Tier 1 common ratio of 7.76 percent in a stressed scenario, the central bank said. That number doesn’t reflect the increase in risk- weighted assets or the decrease in BB&T’s risk-based capital ratios, according to the report.
Qualitative failures could include faulty corporate governance or risk-management processes, inadequate underlying assumptions about the capital plan, an unsafe capital distribution or unresolved supervisory issues, the Fed said in the report.
BB&T had climbed 9 percent this year through the close of regular trading yesterday, trailing the 12 percent advance for the KBW Bank Index (BKX) of 24 U.S. lenders.
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