BB&T 2008 Annual Report Download - page 72

Table 26
Capital—Components and Ratios
December 31,
2008 2007
(Dollars in millions)
Tier 1 capital $13,446 $ 9,085
Tier 2 capital 5,663 5,148
Total regulatory capital $19,109 $14,233
Risk-based capital ratios:
Tier 1 capital 12.3% 9.1%
Total regulatory capital 17.4 14.2
Tier 1 leverage ratio 9.9 7.2
Tangible common equity ratio 5.3 5.7
As further described below and reflected in the table, 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
accomplish this while retaining sufficient capital to support future growth and to meet regulatory requirements.
BB&T’s common dividend payout ratio, computed by dividing dividends paid per common share by basic earnings
per common share, was 68.13% in 2008 as compared to 55.52% in 2007. BB&T’s payout ratio was higher in 2008 due
to lower earnings during the economic recession. BB&T’s annual cash dividends paid per common share increased
5.7% during 2008 to $1.86 per common share for the year, as compared to $1.76 per common share in 2007. This
increase marked the 37th consecutive year that the Corporation’s annual cash dividend paid to shareholders has
been increased. A discussion of dividend restrictions is included in Note 16 “Regulatory Requirements and Other
Restrictions” in the “Notes to Consolidated Financial Statements” and in the “Regulatory Considerations” section.
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