BB&T announces Federal Reserve response to CCAR capital plan
WINSTON-SALEM, N.C., March 14, 2013
/PRNewswire/ --BB&T today announced that the Board of Governors of the
Federal Reserve System (Fed) did not object to the company's continuation in
future quarters of its first quarter dividend of $.23 per share. The first
quarter dividend reflects a 15% increase compared to the company's quarterly
dividends for each quarter of 2012. The Fed also did not object to BB&T's
continued payment of preferred dividends for its outstanding classes of
WINSTON-SALEM, N.C., March 14, 2013 The Fed informed BB&T that it objects to
certain other elements of its capital plan. However, based on the quantitative
results of the stress test, BB&T does not believe these objections are related
to the company's capital strength, earnings power or financial condition.
"We are pleased to have increased our dividend 15% in the first quarter. This
reflects the strength of our financial position. We remain strongly committed
to our shareholders and are proud to have one of the strongest dividend yields
and highest payout rates in the industry," said Chairman and Chief Executive
Officer Kelly S. King.
On March 7, the Fed disclosed the results of its Dodd-Frank supervisory stress
test which showed BB&T the most well capitalized traditional bank even after
being subjected to the hypothetical supervisory severely adverse scenario. In
addition, the results of the Dodd-Frank stress test released by the Fed show
BB&T to have the strongest capital, lowest total loan losses and second
highest pretax income among traditional banks.
The Fed does not permit bank holding companies to disclose confidential
supervisory information including any reason for an objection to capital plans
submitted in the Comprehensive Capital Analysis and Review (CCAR) process.
However, the Fed has an established process for resubmission of CCAR capital
plans, which are fully described in the Capital Planning rule. BB&T plans to
resubmit its capital plan as soon as feasible, and expects that its
resubmitted plan will address the factors which led to the Fed's objections.
The Fed does not permit bank holding companies to disclose the ongoing status
of any resubmitted capital plan.
BB&T has paid a cash dividend to shareholders every year since 1903. The
company has approximately 700 million shares outstanding.
BB&T's CCAR results under the Fed's hypothetical economic scenario are:
BB&T Corporation - Projected Capital Ratios through Q4 2014 under the
Supervisory Severely Adverse Scenario
Q3 2012 Minimum
Tier 1 Common Ratio 9.5% 7.9%
Tier 1 Capital 10.9% 9.7%
Total Risk-based 14.0% 11.9%
Capital Ratio (%)
Tier 1 Leverage 7.9% 7.2%
Note: The capital ratios presented in the table above have not been adjusted
lower following a reevaluation of BB&T's processes related to regulatory
guidance for calculating risk-weighted assets. The revised actual and stressed
projections would reduce the tier 1 common ratios by .34% and .28%,
respectively; the tier 1 capital ratios by .39% and .35%, respectively; and
the total risk based capital ratios by .46% and .38%, respectively. There were
no changes to the tier 1 leverage ratios.
BB&T's Analysis of Stress Test Results – Capital
The performance of the stress scenario significantly reduced BB&T's net income
and loan balances because the scenario assumes higher levels of unemployment,
a decline in housing prices and other negative economic factors. As presented
in the table above, all BB&T's capital ratios showed a decrease over the
9-quarter period of the stress test. The decreases resulted because the
original planned capital distributions, as assumed in the CCAR stress test,
exceeded the amount of the reduced net income. The lower capital was partially
offset by lower average assets and lower risk-weighted assets in the stress
environment. The decrease in loan balances resulted from greater loan
charge-offs and reduced loan demand in the stressed economic environment.
The decrease in BB&T's capital ratios was reduced by the company's issuance of
$450 million of perpetual preferred stock in the fourth quarter of 2012, which
is reflected in the CCAR stress test results.
Capital levels were reduced by the lower net income, the inclusion of planned
capital actions, and the disallowance of a portion of the company's deferred
tax asset. Also, BB&T's total risk-based capital ratio was driven lower
because the portions of the allowance for loan and lease losses and
subordinated debt that are considered regulatory capital decreased under the
The capital ratios calculated herein use original planned capital actions from
2013 annual capital plans. These projections represent hypothetical estimates
that involve an economic outcome that is more adverse than expected. These
estimates are not forecasts of actual capital ratios.
This news release contains certain forward-looking statements as defined in
the Private Securities Litigation Reform Act of 1995. These statements may
address issues that involve significant risks, uncertainties, estimates and
assumptions made by management. Actual results may differ materially from
current projections. Please refer to BB&T's filings with the Securities and
Exchange Commission for a summary of important factors that may affect BB&T's
forward-looking statements. BB&T undertakes no obligation to revise these
statements following the date of this news release.
The Dodd-Frank Act, signed into law in July 2010, represents a significant
overhaul of many aspects of the regulation of the financial services industry,
addressing, among other things, systemic risk, capital adequacy, deposit
insurance assessments, consumer financial protection, interchange fees,
derivatives, lending limits, and changes among the bank regulatory agencies.
BB&T, under Dodd-Frank, is deemed to be a "systemically important"
institution. During 2012, federal agencies continued implementation of and
rulemaking under the Dodd-Frank Act. Many of these provisions remain subject
to further rulemaking, guidance, and interpretation by the applicable federal
regulators, which will regulate the systemic risk of the financial system
BB&T cannot predict the additional effects that compliance with the
Dodd-Frank Act or any regulations will have on BB&T's businesses or its
ability to pursue future business opportunities. Additional regulations
resulting from the Dodd-Frank Act may materially adversely affect BB&T's
business, financial condition or results of operations.
BB&T Corporation (NYSE: BBT) is one of the largest financial services holding
companies in the U.S. with $183.9 billion in assets, market capitalization of
$20.4 billion and operates 1,832 financial centers in 12 states and
Washington, D.C., as of Dec. 31, 2012. Based in Winston-Salem, N.C., the
company offers a full range of consumer and commercial banking, securities
brokerage, asset management, mortgage and insurance products and services. A
Fortune 500 company, BB&T is consistently recognized for outstanding client
satisfaction by J.D. Power and Associates, the U.S. Small Business
Administration, Greenwich Associates and others. More information about BB&T
and its full line of products and services is available at www.BBT.com.
SOURCE BB&T Corporation
Contact: ANALYSTS, Alan Greer, Executive Vice President, Investor Relations,
+1-336-733-3021, AGreer@BBandT.com; MEDIA, Cynthia Williams, Senior Executive
Vice President, Corporate Communications, +1-336-733-1478,
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