Capital One 2012 Annual Report Download - page 238

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
National banks also are subject to prompt corrective action capital regulations. Under prompt corrective action
regulations, a bank is considered to be well capitalized if it maintains a Tier 1 risk-based capital ratio of at least
6% (200 basis points higher than the above minimum capital standard), a total risk-based capital ratio of at least
10% (200 basis points higher than the above minimum capital standard), a Tier 1 leverage capital ratio of at least
5% and is not 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 these 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 also disclose a Tier 1 common ratio for our bank holding company. There is currently no mandated minimum
or “well capitalized” standard for Tier 1 common; instead the risk-based capital rules state that voting common
stockholders’ equity should be the dominant element within Tier 1 common capital. While this regulatory capital
measure is widely used by investors, analysts and bank regulatory agencies to assess the capital position of
financial services companies, it may not be comparable to similarly titled measures reported by other companies.
We are also subject to minimum cash reserve requirements by the Federal Reserve totaling approximately $1.4
billion as of December 31, 2012.
The Federal Reserve, OCC and FDIC released in June 2012 proposed rules that would increase the general risk-
based capital ratio minimum requirements, modify the definition of regulatory capital, establish a minimum Tier
1 common ratio requirement, introduce a new capital conservation buffer requirement, and update the prompt
corrective action framework to reflect the new regulatory capital minimums.
The table below provides a comparison of our capital ratios under the Federal Reserve’s capital adequacy
standards and the capital ratios of the Banks under the OCC’s capital adequacy standards as of December 31,
2012 and 2011. As of December 31, 2012 and 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 standards for bank holding companies. As of December 31, 2012, 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,
2012(1) 2011(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(3) ........................ 11.0% N/A N/A 9.7% N/A N/A
Tier 1 risk-based capital(4) ................ 11.3 4.0% 6.0% 12.0 4.0% 6.0%
Total risk-based capital(5) ................. 13.6 8.0 10.0 14.9 8.0 10.0
Tier 1 leverage(6) ........................ 8.7 4.0 N/A 10.1 4.0 N/A
Capital One Bank (USA) N.A. (“COBNA”)
Tier 1 risk-based capital(4) ................ 11.3% 4.0% 6.0% 11.2% 4.0% 6.0%
Total risk-based capital(5) ................. 14.7 8.0 10.0 15.0 8.0 10.0
Tier 1 leverage(6) ........................ 10.4 4.0 5.0 10.2 4.0 5.0
Capital One, N.A. (“CONA”)
Tier 1 risk-based capital(4) ................ 13.6% 4.0% 6.0% 11.0% 4.0% 6.0%
Total risk-based capital(5) ................. 14.9 8.0 10.0 12.2 8.0 10.0
Tier 1 leverage(6) ........................ 9.1 4.0 5.0 8.7 4.0 5.0
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