Capital One 2015 Annual Report Download - page 44

25 Capital One Financial Corporation (COF)
partners, 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:
• 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.
• Accuracy of Assumptions: In connection with any merger, acquisition or strategic partnership, we may make certain
assumptions relating to the proposed merger, acquisition or strategic partnership that may be, or may prove to be, inaccurate,
including as a 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.
• Target-specific Risk: Assets and companies that we acquire, or companies that we enter into strategic partnerships with,
will have their own risks that are specific to a particular asset or company. These risks include, but are not limited to,
particular or specific regulatory, accounting, operational, reputational and industry risks, any of which could have a
material adverse effect on our results of operations or financial condition. Indemnification rights, if any, may be insufficient
to compensate us for any losses or damages resulting from such risks. In addition to regulatory approvals discussed above,
certain of our merger, acquisition or partnership activity may require third-party consents in order for us to fully realize
the anticipated benefits of any such transaction.
Reputational Risk And Social Factors May Impact Our Results And Damage Our Brand.
Our ability to originate and maintain accounts is highly dependent upon the perceptions of consumer and commercial borrowers
and deposit holders and other external perceptions of our business and compliance practices or our financial health. In addition,
our brand has historically been, and we expect it to continue to be, very important to us. Maintaining and enhancing our brand
will depend largely on our ability to continue to provide high-quality products and services. Adverse perceptions regarding our
reputation in the consumer, commercial and funding markets could lead to difficulties in generating and maintaining accounts as
well as in financing them. In particular, negative public perceptions regarding our reputation could lead to decreases in the levels
of deposits that consumer and commercial customers and potential customers choose to maintain with us. In addition, negative
perceptions regarding certain industries or clients could also prompt us to cease business activities associated with those industries
or clients.
Negative public opinion or damage to our brand could also result from actual or alleged conduct in any number of activities or
circumstances, including lending practices, regulatory compliance, security breaches (including the use and protection of customer
information), corporate governance, and sales and marketing, and from actions taken by regulators or other persons in response
to such conduct. Such conduct could fall short of our customers’ and the public’s heightened expectations of companies of our
size with rigorous data, privacy and compliance practices, and could further harm our reputation. In addition, third parties with
whom we have important relationships may take actions over which we have limited control that could negatively impact perceptions
about us. The proliferation of social media may increase the likelihood that negative public opinion from any of the events discussed
above will impact our reputation and business.
In addition, a variety of social factors may cause changes in borrowing activity, including credit card use, payment patterns and
the rate of defaults by accountholders and borrowers domestically and internationally. These social factors include changes in
consumer confidence levels, the public’s perception regarding consumer debt, including credit card use, and changing attitudes
about the stigma of bankruptcy. If consumers develop or maintain negative attitudes about incurring debt, or if consumption trends