Recently, Federal Reserve (Fed) has approved
) revised 2013 capital plan. Earlier this year, the Fed had
rejected the capital plan due to certain unspecified qualitative
BB&T CORP (BBT): Free Stock Analysis
BANKUNITED INC (BKU): Free Stock Analysis
GOLDMAN SACHS (GS): Free Stock Analysis
JPMORGAN CHASE (JPM): Free Stock Analysis
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According to management, the rejection was not on grounds of
weakness in the company's capital strength, earnings power or
financial condition. In fact, the company's Tier 1 common ratio
of 9.4% was well above the regulatory minimum of 5%. However,
BB&T's 2012 annual report stated that it had to revaluate its
risk-weighted assets (RAWs) to incorporate unfunded lending
commitments. This increased the company's RAWs and consequently
prompted the Fed to turn down the 2013 capital plan.
The new capital plan includes amendments which take into
consideration possible future capital requirements and an
unpredictable economic scenario. However, the particular
improvisations in the plan are not known as the company is not
allowed to reveal its former capital plan.
Further, the current capital plan does not declare any imminent
dividend hike. In January, BBT last raised its dividend by 15% to
23 cents per share.
As BB&T is one of the most well capitalized U.S. banks, the
earlier rejection of its capital plan had come as a surprise.
Nevertheless, approval of its revised capital plan reinforces the
capital strength of the company.
Moreover, BB&T reported its strongest quarterly performance
in second-quarter 2013. The quarterly earnings of 77 cents per
share beat the Zacks Consensus Estimate of 74 cents and compared
favorably with 72 cents earned in the year-ago quarter.
With the sanction of BB&T's capital plan, Ally Financial Inc.
remains as the sole bank whose capital plan awaits the approval
of the Fed. Notably, to improve the capital base, Ally Financial
intends to sell its shares in the near future.
Moreover, though banking giants such as
The Goldman Sachs Group, Inc.
JPMorgan Chase & Co.
) received the Fed's approval for their proposed capital plans,
they will need to resubmit their plans by the end of
third-quarter 2013. These two banks have been asked to resubmit
the capital plans due to certain weaknesses recognized in the
capital planning processes.
Currently, BB&T carries a Zacks Rank 3 (Hold).
) is a better performing bank with a Zacks Rank #1 (Strong