The bank’s 2013 CCAR was objected to based on a qualitative assessment (the robustness of the institution’s capital adequacy process) conducted by the Federal Reserve. It would seem BB&T has sufficient capital since it was not rejected on a quantitative basis. Based on figures provided to the Fed on or before February 6 by BB&T, the bank had one of the higher Tier 1 common ratios of 7.76%, after planned capital actions in an adverse economic scenario, compared to a 6.56% average for the group of 18 participating banks. What was provided may be the crux of the matter. After further evaluation BB&T disclosed on March 6, risk-weighted assets stemming from unfunded lending commitments were understated by $4.6 billion. A higher level
of assets would decrease capital ratios and were not reflected in CCAR. In its 4Q12 earnings release, BB&T reported riskweighted assets of $126.5 billion, while a month later in the 10-K RWA equaled $131.1 billion. The amount of risk-based capital was unchanged causing the Tier 1 common equity ratio to drop from 9.7% to 9.3% as of December 31, 2012. To add even more confusion, BB&T had total assets of $181.9 billion at year end. Regulatory accounting requires weighting of on/off balance sheet items according to their level of risk as determined by regulators and is laid out in pages of compliance manuals. The greater the perceived risk the higher the weighting and the more capital a bank needs to protect against possible losses. BB&T plans to resubmit its capital plan to the Federal Reserve and anticipates the plan will address the factors which led to the Fed’s objection. Timing of BB&T’s resubmission and the timeliness of a regulatory
response is unknown.