Capital One 2013 Annual Report Download - page 108

III Standardized capital ratios. In November 2013, the Federal Reserve issued supervisory economic stress
scenarios for the 2014 CCAR cycle. We submitted our 2014 capital plan to the Federal Reserve on January 6,
2014. Any proposed capital actions for the second quarter of 2014 through the first quarter of 2015 must be
approved as part of the 2014 CCAR cycle.
We consider various factors in the management of capital, including the impact of stress on our capital position,
as determined by both our internal modeling and Federal Reserve modeling of our capital position in CCAR. In
the 2013 stress test cycle, including CCAR, there was a large difference between our estimates of our capital
levels under stress and the Federal Reserve’s estimates of our capital levels under stress. In the 2014 stress test
cycle, including CCAR, the difference could be larger because, in addition to using its own assumptions in
modeling credit losses and pre-provision net revenue, the Federal Reserve will use its own assumptions in
modeling balance sheet size and composition. This modeling creates additional differences between our internal
models and those of the Federal Reserve in the estimation of both credit losses and pre-provision net revenue.
Therefore, although our estimated capital levels under stress suggest that we have substantial capacity to return
capital to shareholders and remain well capitalized under stress, it is possible that the Federal Reserve’s modeling
may result in a materially lower capacity to return capital to shareholders than our estimates.
Dividend Policy and Stock Purchases
We paid common stock dividends of $0.05 per share in the first quarter, and $0.30 per share in the second, third
and fourth quarter in 2013. We paid preferred stock dividends of $15.00 per share on the outstanding shares of
our 6.00% fixed rate non-cumulative perpetual preferred stock, Series B (the “Series B Preferred Stock”) in each
of the four quarters in 2013. On January 29, 2014, our Board of Directors declared a quarterly dividend of $0.30
per share, payable February 21, 2014 to stockholders of record as of February 10, 2014, and a quarterly dividend
of $15.00 per share of Series B Preferred Stock. Each outstanding share of the Series B Preferred Stock is
represented by depositary shares, each representing a 1/40th interest in a share of Series B Preferred Stock. The
dividend of $15.00 per share (equivalent to $0.375 per outstanding depository share) will be paid on March 3,
2014 to stockholders of record at the close of business on February 14, 2014.
The declaration and payment of dividends to our stockholders, as well as the amount thereof, are subject to the
discretion of our Board of Directors and depend upon our results of operations, financial condition, capital levels,
cash requirements, future prospects and other factors deemed relevant by the Board of Directors. As a bank
holding company, our ability to pay dividends is largely dependent upon the receipt of dividends or other
payments from our subsidiaries. Regulatory restrictions exist that limit the ability of the Banks to transfer funds
to our bank holding company. Funds available for dividend payments from COBNA and CONA were $2.3
billion and $127 million, respectively, as of December 31, 2013.
There can be no assurance that we will declare and pay any dividends. For additional information on dividends,
see “Part I—Item 1. Business—Supervision and Regulation—Dividends, Stock Purchases and Transfer of
Funds”.
In the third quarter, we began executing the 2013 Stock Repurchase Program and we completed the 2013 Stock
Repurchase Program in the fourth quarter.
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