Fitch: BB&T's Capital Position Not at Issue in CCAR Rejection
CHICAGO -- March 18, 2013
BB&T Corporation (BBT) results under the 2012 Comprehensive Capital Analysis
and Review (CCAR) process were unexpected in Fitch's view. BBT's capital plan
was rejected based on process considerations rather than quantitative factors.
Despite the rejection of BBT's plan, we do not see the action by the Federal
Reserve as indicative of weaknesses in the bank's capital position or credit
The Fed's rejection of BBT's plan follows the bank's 10K filing, in which it
disclosed revisions made to risk-weighted assets (RWA), specifically in its
calculations of unfunded commitments. Following the increase in RWA, BBT's
actual 3Q12 Tier 1 common ratio decreased by 34bps. We view the misreporting
of RWA as uncharacteristic for BBT. It was likely one of the qualitative
weaknesses identified by the regulators in their assessment of BBT's stress
We extrapolate that BBT's stressed Tier 1 common ratio at 4Q14 will remain
very healthy at approximately 7.5%, even adjusting for the RWA change.
Further, it is the third-highest ratio among the nine large regional banks
included in CCAR.
As noted in the Fitch Wire comment "CCAR Results Point to Fed's Focus on
Process, Governance," dated March 15, this year's process highlights the
growing importance of qualitative risk assessment factors in the eyes of the
Fed and other U.S. bank regulators. We believe that process-related factors
will drive future capital plan reviews by the Fed.
BBT performed very well under the Dodd-Frank stress test, the results of which
were released on March 8. In that test, BBT had the highest Tier 1 common
ratio among the large regional banks. We recognize that BBT's internal stress
test results were also very similar to the Dodd-Frank results. Although the
CCAR results were unexpected and disappointing, BBT's overall credit profile
is still underpinned by a conservative risk culture and consistent performance
through the most recent downturn.
The above article originally appeared as a post on the Fitch Wire credit
market commentary page. The original article can be accessed at
www.fitchratings.com. All opinions expressed are those of Fitch Ratings.
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