BB&T Corp., North Carolina’s second-biggest bank, slid as much as 3.3 percent in New York trading after the Federal Reserve objected to the company’s capital plan, blocking any rise in dividends or share buybacks.
The lender fell 2.8 percent to $30.84 at 9:43 a.m. today after the Winston-Salem-based company said in a statement yesterday its quarterly dividend will remain at 23 cents. BB&T will resubmit its plan “as soon as feasible.”
“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. Qualitative failures could include faulty corporate governance or risk management, inadequate assumptions about the capital plan, an unsafe capital distribution or unresolved supervisory issues.
BB&T, led by Chief Executive Officer Kelly King, 64, changed how it calculates risk-weighted assets to meet regulatory guidance, the Fed said. The adjustments increased those assets and triggered a drop in BB&T’s risk-based capital ratios, according to the Fed.
The lender had climbed 9 percent this year through the close of regular trading yesterday, trailing the 12 percent advance for the KBW Bank Index of 24 U.S. lenders.