Capital One 2012 Annual Report Download - page 108

Pursuant to the forward sale agreements, we issued 40 million shares of our common stock at settlement. After
underwriter’s discounts and commissions, the net proceeds to us were at a forward sale price per share of
$48.17 for a total of approximately $1.9 billion.
On February 17, 2012, we issued 54,028,086 shares of Capital One common stock with a fair value of
$2.6 billion as partial consideration for the equity interests and assets and liabilities associated with the ING
Direct acquisition.
On March 20, 2012, we closed a public offering of 24,442,706 shares of our common stock which we sold to the
underwriters at a per share price of $51.14 for net proceeds of approximately $1.25 billion. In addition, we issued
$1.25 billion of our senior notes due 2015 in a public offering which closed on March 23, 2012. We used the net
proceeds of these offerings, along with cash sourced from current liquidity, to fund the net consideration payable
of $31.1 billion in connection with the 2012 U.S. card acquisition that closed on May 1, 2012.
On August 20, 2012, we issued and sold 35,000,000 depositary shares (“Depositary Shares”), each representing a
1/40th interest in a share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series B, $0.01 par value,
with a liquidation preference of $25 per Depositary Share (equivalent to $1,000 per share of Series B Preferred
Stock) (the “Series B Preferred Stock”). Dividends will accrue on the Series B Preferred Stock at a rate of 6% per
annum, payable quarterly in arrears. The net proceeds of the offering of the 35,000,000 Depositary Shares were
approximately $853 million, after deducting underwriting commissions and offering expenses. Pursuant to the
terms of the Series B Preferred Stock, while the Series B Preferred Stock is outstanding, if full dividends for the
preceding dividend period on all outstanding shares of Series B Preferred Stock have not been declared and paid,
we will be prohibited from declaring or paying dividends on our common stock and any series of securities then
outstanding that rank equally with the Series B Preferred Stock, subject to certain limited exceptions, including
for dividends payable solely in shares of our common stock. In addition, while the Series B Preferred Stock is
outstanding, if full dividends for the preceding dividend period on all outstanding shares of Series B Preferred
Stock have not been declared and paid, we will be prohibited from repurchasing, redeeming or otherwise
acquiring shares of our common stock or shares of any series of securities then outstanding that rank equally with
the Series B Preferred Stock, subject to certain limited exceptions.
On September 10, 2012, one of the ING Sellers sold 54,028,086 shares of our common stock in an underwritten
public offering, representing all of the shares of common stock we issued to the ING Sellers in connection with
the ING Direct acquisition. We did not receive any proceeds from the offering.
On November 6, 2012, we closed a public offering of two different series of our senior notes for total proceeds of
approximately $1.0 billion. The offering of senior notes included $250 million aggregate principal amount of our
Floating Rate Senior Notes due 2015 and $750 million aggregate principal amount of our 1.000% Senior Notes
due 2015 resulting in aggregate net proceeds of approximately $994 million.
RISK MANAGEMENT
Overview
Risk management is a critical part of our business model, as all financial institutions are exposed to a variety of
risks that can significantly affect their financial performance. Our business activities expose us to eight major
categories of risk: credit risk, liquidity risk, market risk, compliance risk, operational risk, legal risk, reputational
risk and strategic risk.
•Credit Risk: Credit risk is the risk of financial loss arising from a borrower’s or a counterparty’s inability to
meet its financial or contractual obligations.
•Liquidity Risk: Liquidity risk is the risk that we will not be able to meet our future financial obligations as
they come due or invest in future asset growth because of an inability to obtain funds at a reasonable price
within a reasonable time period.
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