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http://www.businessweek.com/news/2013-03-14/bb-and-t-s-capital-plan-rejected-by-fed-over-qualitative-assessment

Bloomberg News

BB&T Shares Fall as Fed Rejects Bank’s Capital Plan

March 14, 2013

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.

To contact the reporters on this story: Laura Marcinek in New York at lmarcinek3@bloomberg.net; Elizabeth Bunn in New York at ebunn1@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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