It's really not as dire as it sounded in some news reports, but the Federal Reserve Board rejected BB&T Corp.'s capital plan.
The Fed reviewed the capital plans of 18 major banks to determine, among other things, what would happen in a scenario of "severe economic and financial market stress."
Winston-Salem, N.C.-based BB&T, which has 14 branches in the Jacksonville market, was one of only two banks (along with Ally Financial Inc.) to be rejected by the Fed. So you may have seen headlines reading "BB&T fails stress test."
The Fed didn't say BB&T failed anything, only that it "objected" to the bank's capital plan based on a "qualitative assessment."
The reasons for the objection are confidential, so neither the Fed nor the company gave details.
BB&T said in a news release that "based on the quantitative results of the stress test, BB&T does not believe these objections are related to the company's capital strength, earnings power or financial condition."
Standard & Poor's Ratings Services said in a news release that "rejections based on qualitative grounds generally reflect deficiencies in an institution's capital planning process. One recent development may have hurt BB&T's submission. BB&T disclosed that it had re-evaluated its process related to calculating risk-weighted assets."
S&P said the bank has a strong capital position and it expects the company to make the necessary adjustments to satisfy the Fed's concerns. Still, the ratings agency downgraded its outlook on BB&T from "stable" to "negative" because of the Fed report.
"The negative outlook reflects our view of weakness in BB&T's risk-management infrastructure," S&P analyst Sunsierre Newsome said in the release.
"If additional deficiencies in risk management or regulatory reporting materialize, we could lower the rating. Conversely, we could revise the outlook to stable if additional deficiencies do not arise and if the company implements appropriate improvements to its risk-management processes," Newsome said.
Sandler O'Neill analyst Kevin Fitzsimmons downgraded his rating on BB&T's stock from "buy" to "hold" after the Fed's objection.
"The obvious negative news is that this delays BB&T's ability to return excess capital to investors, in effect 'trapping' excess capital at the company, at least for some time," Fitzsimmons said in his research note.
BB&T said the Fed is allowing the company to continue paying its 23-cent-per-share quarterly dividend, and Fitzsimmons said he wasn't expecting BB&T to increase its dividend further anyway.
However, he thinks the Fed's objection will prevent the company from using excess cash to buy back shares.
"We also think this creates lingering uncertainty related to the reason behind the objection, as unfortunately the company is not permitted to disclose it," he said.
BB&T said it will "address the factors which led to the Fed's objections" and resubmit its capital plan as soon as possible.
"However, we suspect we won't hear a result from this until late summer. It is also not lost on us that this result comes to a company with a stellar reputation and held in very high regard by investors and regulators alike. It seems that the announcement seems to dent — at least temporarily — that stellar reputation," Fitzsimmons said.
Jacksonville Bancorp details stock ownership
Speaking of capital plans, Jacksonville Bancorp Inc.'s capital structure changed drastically after a major capital infusion at the end of 2012.
The parent company of The Jacksonville Bank finally revealed in a proxy statement filed last week the details of who owns what shares.
After the complex capital transaction, Jacksonville Bancorp now has 53.5 million shares of voting common stock outstanding plus another 52.4 million shares of non-voting common stock.
CapGen Capital Group IV continues as the company's largest shareholder with 49.85 percent of the voting stock, and it also owns almost 69 percent of the non-voting stock.
Three other investment firms control nearly 10 percent each of the voting stock: Sandler O'Neill Asset Management, Sutherland Asset I LLC and Wellington Management Co.
Wellington also is the other large investor in non-voting stock with 17.7 percent of those shares.
Jacksonville Bancorp's officers and directors own about 4.6 percent of the voting stock, so the major shareholders combined control nearly 85 percent of the stock.
Deutsche Bank lowers 2012 profit
It seems like every time we hear positive news about Deutsche Bank's Jacksonville operations, the company also is reporting negative news at its headquarters in Germany.
Last week as the company applied for incentives to add 300 more jobs in Jacksonville, Deutsche Bank announced that it is lowering its previously reported 2012 profit because of additional legal costs.
Deutsche Bank said in a news release that the costs concern "U.S. mortgage-related litigation in some of the bank's legacy businesses."
The costs lowered the company's 2012 net income from the previously reported 665 million Euros to 291 million Euros.
No revenue again for ParkerVision
ParkerVision Inc. passed another year without any revenue, as it reported a final 2012 net loss of $20.3 million, or 27 cents a share.
Jacksonville-based ParkerVision, which has been developing wireless technology, has staked a large part of its business plan on a patent infringement lawsuit against Qualcomm Inc.
The suit alleges that "Qualcomm has knowingly and without our permission built their products based upon our patented technology," CEO Jeff Parker said last week in the company's quarterly conference call.
The 2-year-old lawsuit is scheduled to go to trial in October.
In response to an analyst's question, Parker did not want to make any predictions on when the company might have any deals to sell its technology to manufacturers.
Parker also was asked in the conference call last Monday if the company would need to raise any additional capital. He said the company was looking into some possibilities but "nothing that we're ready to talk about right now."
Then on Thursday, ParkerVision announced it is selling 4.1 million additional shares of common stock for $3.25 each.
International Baler reports lower earnings
International Baler Corp. recorded earnings of $116,235, or 2 cents a share, for the first quarter ended Jan. 31, down from $355,823, or 7 cents a share, the previous year, according to a report filed with the Securities and Exchange Commission.
Sales for the Jacksonville-based maker of baling equipment fell 9 percent to $3.9 million.
International Baler said in the filing that the lower sales and earnings resulted in a slowdown in demand for balers used for recycling.
Tax Collector settles Hostess payments
As a U.S. Bankruptcy Court judge in New York last week approved the sales of Hostess Brands Inc.'s bread and cake businesses, the Duval County Tax Collector's office reached an agreement to settle its claims for the payment of property taxes owed by Hostess.
The Tax Collector had filed an objection to the bankruptcy court sales to make sure the taxes were paid. After the Tax Collector and the company reached an agreement on paying them, the judge's orders approving the sales last week included specific provisions to pay the taxes.
Hostess will pay a total of about $350,000 from the proceeds of its asset sales to Duval County to settle back taxes and place an additional $13,383 into an escrow account, pending a final confirmation of the total owed by Hostess.
Hostess also will pay additional money into an escrow account to cover its 2013 taxes.
The court approved the sale of most of Hostess' bread brands and 20 bread bakeries, including one in Jacksonville, to Flowers Foods Inc.
Thomasville, Ga.-based Flowers, which already owns one bread bakery in Jacksonville, has not said what it plans to do with a second bakery acquired in the Hostess deal.
In a news release last week, CEO George Deese said Flowers won't be revealing its plans any time soon.
"We anticipate completing the transaction in the second half of the year. Because the transaction is not finalized and for competitive reasons, we will not share any specific plans regarding the pending acquisition," he said.
FIS names new chief financial officer
Fidelity National Information Services Inc. last week promoted James "Woody" Woodall to chief financial officer. He succeeds Michael Hayford, who announced his retirement in December.
Woodall had been senior vice president, chief accounting officer and controller for Jacksonville-based FIS since 2008.
Interline names interim CFO
Interline Brands Inc. last week appointed David Serrano as interim chief financial officer until a permanent replacement is named.
Previous CFO John Ebner told the company in December he would be resigning in March to pursue opportunities closer to his family.
Serrano has worked at Jacksonville-based Interline since 1988 and most recently was chief accounting officer and corporate controller.
Crist leaving St. Joe board
The St. Joe Co. said in an SEC filing last week that former Florida Gov. Charlie Crist has decided not to seek re-election to the board of directors at the company's annual meeting in May.
The filing did not give a reason but Crist is reportedly considering another run for governor in 2014, a position that would preclude him from serving on the board.
Crist will serve out the rest of his term as a director, which expires in May.
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