Capital One 2011 Annual Report Download - page 47

employees, errors or delays in systems implementation, the disruption of our ongoing businesses or
inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain
relationships with clients, customers, depositors and employees or to achieve the anticipated benefits of any
merger, acquisition or strategic partnership. Integration efforts also may divert management attention and
resources. These integration matters may have an adverse effect on us during any transition period.
In addition, we may face the following risks in connection with any merger, acquisition or strategic partnership,
including the ING Direct acquisition and the pending acquisition of HSBC’s U.S. credit card businesses:
•New Businesses and Geographic or Other Markets. Our merger, acquisition or strategic partnership activity
may involve our entry into new businesses and new geographic areas or other markets which present risks
resulting from our relative inexperience in these new businesses or markets. These new businesses or
markets may change the overall character of our consolidated portfolio of businesses and could react
differently to economic and other external factors. We face the risk that we will not be successful in these
new businesses or in these new markets.
•Identification and Assessment of Merger and Acquisition Targets and Deployment of Acquired Assets. We
cannot assure you that we will identify or acquire suitable financial assets or institutions to supplement our
organic growth through acquisitions or strategic partnerships. In addition, we may incorrectly assess the
asset quality and value of the particular assets or institutions we acquire. Further, our ability to achieve the
anticipated benefits of any merger, acquisition or strategic partnership will depend on our ability to assess
the asset quality and value of the particular assets or institutions we partner with, merge with or acquire. We
may be unable to profitably deploy any assets we acquire.
•Regulatory Approval. Any future and pending merger or acquisition may be subject to regulatory or
governmental approvals, which will require, among other things, review of our resulting financial condition,
our ability to manage our resulting size, competitive considerations and our service to the community. We
cannot assure you that we will receive any regulatory or governmental approvals. If such regulatory
approvals of a merger or acquisition are not granted or are granted with conditions that become applicable to
the parties, delayed or failed implementation of our strategic objectives could result, including failure to
realize the anticipated benefits of the proposed merger or acquisition. In addition, governmental authorities
from which approvals are typically required frequently have broad discretion in administering governing
regulations. These governmental authorities may impose requirements, limitations or costs, or require
divestitures or place restrictions on the conduct of our or another party’s business after the completion of
merger or acquisition transaction.
•Dilutive Issuances. We may issue common stock, other equity securities or debt in connection with future
mergers and acquisitions, including in public offerings to fund such mergers and acquisitions or to provide
adequate capital for the additional assets acquired. Issuances of our common stock, other equity securities or
debt, whether as consideration for such mergers or acquisitions or to raise necessary funds or capital, may
have a dilutive effect on earnings per share and our common stockholders’ equity.
•Accuracy of Assumptions. In connection with any merger, acquisition or strategic partnership, we may make
certain assumptions relating to the proposed merger or acquisition that may be, or may prove to be,
inaccurate, including as the result of the failure to realize the expected benefits of any merger, acquisition or
strategic partnership. The inaccuracy of any assumptions we may make could result in unanticipated
consequences that could have a material adverse effect on our results of operations or financial condition.
Assumptions we might make when considering a proposed merger, acquisition or strategic partnership may
relate to numerous matters, including:
— projections of a target or partner company’s future net income and our earnings per share;
— our ability to issue equity and debt to complete any merger or acquisition;
— our expected capital structure and capital ratios after any merger, acquisition or strategic partnership;
— projections as to the amount of future loan losses in any target or partner company’s portfolio;
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