Capital One 2013 Annual Report Download - page 32

We are required to comply with the new requirements of the Enhanced Standards Rule beginning on January 1,
2015. As the Enhanced Standards Rule was recently issued, we continue to conduct an assessment of the
expected impact of the rule.
In addition to the provisions described throughout this section, the Dodd-Frank Act imposes new, more stringent
standards and requirements with respect to bank and nonbank acquisitions and mergers and affiliate transactions.
The Dodd-Frank Act also includes provisions related to corporate governance and executive compensation and
new fees and assessments, among others.
The federal agencies have significant discretion in drafting the implementing rules and regulations of the Dodd-
Frank Act. These rules may result in modifications to our business models and organizational structure, and may
subject us to escalating costs associated with any such changes.
However, the full impact of the Dodd-Frank Act will not be known for many months or, in some cases, years. In
addition, the Dodd-Frank Act requires various studies and reports to be delivered to Congress, which could result
in additional legislative or regulatory action.
Investment in the Company and the Banks
Certain acquisitions of our capital stock may be subject to regulatory approval or notice under federal or state
law. Investors are responsible for ensuring that they do not, directly or indirectly, acquire shares of our capital
stock in excess of the amount that can be acquired without regulatory approval.
Each of the Banks is an “insured depository institution” within the meaning of the Change in Bank Control Act.
Consequently, federal law and regulations prohibit any person or company from acquiring control of us without,
in most cases, prior written approval of the Federal Reserve or the OCC, as applicable. Control is conclusively
presumed if, among other things, a person or company acquires more than 25 percent of any class of our voting
stock. A rebuttable presumption of control arises if a person or company acquires more than 10 percent of any
class of voting stock and is subject to any of a number of specified “control factors” as set forth in the applicable
regulations and policies.
Additionally, COBNA and CONA are “banks” within the meaning of Chapter 13 of Title 6.1 of the Code of
Virginia governing the acquisition of interests in Virginia financial institutions (the “Financial Institution
Holding Company Act”). The Financial Institution Holding Company Act prohibits any person or entity from
acquiring, or making any public offer to acquire, control of a Virginia financial institution or its holding company
without making application to, and receiving prior approval from, the Virginia Bureau of Financial Institutions.
Dividends, Stock Repurchases and Transfers of Funds
In November 2011, the Federal Reserve finalized capital planning rules applicable to large bank holding companies
like us (commonly referred to as Comprehensive Capital Analysis and Review or “CCAR”). Under the rules, a bank
holding company with consolidated assets of $50 billion or more must submit a capital plan to the Federal Reserve
on an annual basis that contains a description of all planned capital actions, including dividends or stock
repurchases, over a nine-quarter planning horizon beginning with the fourth quarter of the calendar year prior to the
submission of the capital plan (“CCAR cycle”). The bank holding company may take the capital actions in its
capital plan if the Federal Reserve provides a nonobjection to the plan. The Federal Reserve’s objection or
nonobjection applies specifically to capital actions during the four quarters beginning with the second quarter of the
second calendar year in the planning horizon. For the CCAR cycle under which capital plan submissions were due
by January 6, 2014 (“2014 CCAR cycle”), the Federal Reserve’s objection or nonobjection will apply to planned
capital actions from the second quarter of 2014 through the first quarter of 2015.
The purpose of the rules is to ensure that large bank holding companies have robust, forward-looking capital
planning processes that account for their unique risks and capital needs to continue operations through times of
economic and financial stress. As part of its evaluation of a capital plan, the Federal Reserve will consider the
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