BB&T 2007 Annual Report Download - page 63

of the allowance for credit losses. Tier 1 capital and Tier 2 capital combined are referred to as total regulatory
capital. Tier 1 capital is required to be at least 4% of risk-weighted assets, and total capital must be at least 8% of
risk-weighted assets, with one half of the minimum consisting of Tier 1 capital.
In addition to the risk-based capital measures described above, regulators have also established minimum
leverage capital requirements for banking organizations. The minimum required Tier 1 leverage ratio ranges
from 3% to 5% depending upon Federal bank regulatory agency evaluations of an organization’s overall safety
and soundness. BB&T’s regulatory capital and ratios are set forth in the following table.
Table 24
Capital—Components and Ratios
December 31,
2007 2006
(Dollars in millions)
Tier 1 capital $ 9,085 $ 8,226
Tier 2 capital 5,148 4,790
Total regulatory capital $14,233 $13,016
Risk-based capital ratios:
Tier 1 capital 9.1% 9.0%
Total regulatory capital 14.2 14.3
Tier 1 leverage ratio 7.2 7.2
Tangible equity ratio 5.6 5.7
BB&T has entered into a transaction involving the issuance of capital securities (“Capital Securities”) by a
Delaware statutory trust formed by the Company (the “Trust”). Simultaneously with the closing of this
transaction, BB&T entered into a replacement capital covenant (the “Replacement Capital Covenant”) for the
benefit of persons that buy, hold or sell a specified series of long-term indebtedness of the Company or its largest
depository institution subsidiary (the “Covered Debt”). The Replacement Capital Covenant provides that neither
BB&T nor any of its subsidiaries (including the Trust) will repay, redeem or purchase any of the Capital
Securities and the securities held by the Trust (the “Other Securities”), as applicable, on or before the date
specified in the Replacement Capital Covenant, with certain limited exceptions, except to the extent that, during
the 180 days prior to the date of that repayment, redemption or purchase, the Company has received proceeds
from the sale of qualifying securities that (i) have equity-like characteristics that are the same as, or more equity-
like than, the applicable characteristics of the Capital Securities or Other Securities, as applicable, at the time of
repayment, redemption or purchase, and (ii) the Company has obtained the prior approval of the Federal Reserve
Board, if such approval is then required by the Federal Reserve Board.
The following table identifies the (i) closing date for the transaction, (ii) issuer, (iii) series of Capital
Securities issued, (iv) Other Securities, and (v) applicable Covered Debt.
Closing
Date Issuer Capital Securities Other Securities Covered Debt
6/12/07 BB&T Capital Trust IV
and BB&T Corporation
BB&T Capital Trust
IV’s $600,000,000 Fixed
to Floating Rate Capital
Securities
Company’s $600,010,000
Fixed to Floating Rate
Junior Subordinated
Debentures due 2077
Company’s 6.75% junior
subordinated
debentures due 2036
underlying the 6.75%
capital securities of
BB&T Capital Trust II
Common Stock and Dividends
BB&T’s ability to pay dividends is primarily dependent on earnings from operations, the adequacy of capital
and the availability of liquid assets for distribution. BB&T’s ability to generate liquid assets for distribution is
dependent on the ability of Branch Bank to pay dividends to the Parent Company. The payment of cash dividends
is an integral part of providing a competitive return on shareholders’ investments. The Corporation’s policy is to
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