Capital One 2011 Annual Report Download - page 230

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED STATEMENTS—(Continued)
NOTE 13—REGULATORY AND CAPITAL ADEQUACY
Regulation and Capital Adequacy
Bank holding companies and national banks are subject to capital adequacy standards adopted by the Federal
Reserve and the OCC, respectively. The capital adequacy standards set forth minimum risk-based and leverage
capital requirements that are based on quantitative and qualitative measures of their assets and off-balance sheet
items. Under the capital adequacy standards, bank holding companies and banks currently are required to
maintain a total risk-based capital ratio of at least 8%, a Tier 1 risk-based capital ratio of at least 4%, and a Tier 1
leverage capital ratio of at least 4% (3% for banks that meet certain specified criteria, including excellent asset
quality, high liquidity, low interest rate exposure and the highest regulatory rating) in order to be considered
adequately capitalized.
National banks are also subject to prompt corrective action capital regulations. Under prompt corrective action
capital regulations, a bank is considered to be well capitalized if it maintains a total risk-based capital ratio of at
least 10% (200 basis points higher than the above minimum capital standard), a Tier 1 risk-based capital ratio of
at least 6%, a Tier 1 leverage capital ratio of at least 5% and not be subject to any supervisory agreement, order,
or directive to meet and maintain a specific capital level for any capital reserve. A bank is considered to be
adequately capitalized if it meets the above minimum capital ratios and does not otherwise meet the well
capitalized definition. Currently, prompt corrective action capital requirements do not apply to bank holding
companies. We are also subject to minimum cash reserve requirements by the Federal Reserve totaling
approximately $1.2 billion as of December 31, 2011.
The table below provides a comparison of our capital ratios as of December 31, 2011 and 2010. As of
December 31, 2011, we exceeded minimum capital requirements and would meet the “well-capitalized” ratio
levels specified under prompt corrective action for total risk-based capital and Tier 1 risk-based capital under
Federal Reserve capital standards for bank holding companies. As of December 31, 2011, the Banks also
exceeded minimum regulatory requirements under the OCC’s applicable capital adequacy guidelines and were
“well-capitalized” under prompt corrective action requirements.
December 31,
2011(1) 2010(1)
(Dollars in millions)
Capital
Ratio
Minimum
Capital
Adequacy
Well
Capitalized
Capital
Ratio
Minimum
Capital
Adequacy
Well
Capitalized
Capital One Financial Corp:(2)
Tier 1 common equity(3) .................. 9.7% N/A N/A 8.8% N/A N/A
Tier 1 risk-based capital(4) ................ 12.0 4.0% 6.0% 11.6 4.0% 6.0%
Total risk-based capital(5) ................. 14.9 8.0 10.0 16.8 8.0 10.0
Tier 1 leverage(6) ........................ 10.1 4.0 N/A 8.1 4.0 N/A
Capital One Bank (USA) N.A.
Tier 1 risk-based capital .................. 11.2% 4.0% 6.0% 13.5% 4.0% 6.0%
Total risk-based capital ................... 15.0 8.0 10.0 23.6 8.0 10.0
Tier 1 leverage .......................... 10.2 4.0 5.0 8.3 4.0 5.0
Capital One, N.A.
Tier 1 risk-based capital .................. 11.0% 4.0% 6.0% 11.1% 4.0% 6.0%
Total risk-based capital ................... 12.2 8.0 10.0 12.4 8.0 10.0
Tier 1 leverage .......................... 8.7 4.0 5.0 8.1 4.0 5.0
(1) Calculated under capital standards and regulations based on the international capital framework commonly known as
Basel I.
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