Capital One Will Reduce Quarterly Dividend From $0.375 to $0.05
Balance sheet remains strong and resilient to a range of stress scenarios, even before today's dividend action
Dividend move preserves more than$500 million in capital annually Portfolio credit trends through February are consistent with expectations
MCLEAN, Va.,
"We're moving today to reduce future dividends because in today's
unprecedented economic and market conditions, our highest priority is managing
our balance sheet to maintain its considerable strength and resilience," said
Fairbank continued, "This move is consistent with our long-standing philosophy of 'preemptive conservatism,' and is not the result of any request or guidance from outside of Capital One. Carefully managing our capital, including the dividend, is an important part of the broad set of actions we're taking to aggressively manage the company through the downturn for the benefit of shareholders. As always, we work to anticipate and mitigate risks, and to prepare for a range of possible downside scenarios. Since the downturn intensified in 2008, we've taken additional steps to reduce the risk of our balance sheet, growing liquidity and low-risk investments and dramatically raising our allowance coverage ratios.
Given recent economic data, the broader economic outlook is somewhat weaker than expected, and subject to a greater level of uncertainty. Within our own portfolio, however, overall credit trends have been roughly in-line with expectations through February."
Perlin continued, "Our capital remains stable and strong relative to the risks we face, the actions we've taken, the levels held by our peers, and regulatory capital standards. Moreover, our increasingly liquid and lower-risk balance sheet provides us with many choices we can make to manage our capital. Along with the dividend reduction we're announcing today, we expect to manage our balance sheet to build capital over time, and our goal is to demonstrate that we can begin to build capital as we continue to navigate the downturn. Even before counting the benefits of today's announced dividend action, our capital, liquidity, and overall business are resilient to a range of significant stress scenarios."
Fairbank added, "Today, we're in the midst of one of the most challenging recessions in decades. But as a result of our preparation and decisive actions, we're in a strong position to weather the storm and deliver value over the cycle."
Forward Looking Statements
The company cautions that its current expectations in this release
regarding the company's capital levels and balance sheet management; continued
degradation in the economy; and the company's plans, objectives, expectations,
and intentions are forward-looking statements. Actual results could differ
materially from current expectations due to a number of factors, including:
general economic conditions in the U.S., the UK, or the company's local
markets, including conditions affecting consumer income and confidence,
spending and savings, which may affect consumer bankruptcies, defaults,
charge-offs, deposit activity and interest rates; changes in the labor and
employment market; changes in the credit environment; the company's ability to
execute on its strategic and operational plans; competition from providers of
products and services that compete with the company's businesses; increases or
decreases in the company's aggregate accounts and balances, or the growth rate
and/or composition thereof; changes in the reputation of or expectations
regarding the financial services industry or the company with respect to
practices, products or financial condition; financial, legal, regulatory,
legislative, tax or accounting changes or actions, including with respect to
any litigation matter involving the company; and the success of the company's
marketing efforts in attracting or retaining customers. A discussion of these
and other factors can be found in the company's annual report on Form 10-K for
the fiscal year ended
About Capital One
SOURCECapital One Financial Corporation -0-03/09/2009 /CONTACT: Investor Relations:Jeff Norris , +1-703-720-2455, orDanielle Dietz , +1-703-720-2455; Media Relations:Tatiana Stead , +1-703-720-2352, orJulie Rakes , +1-804-284-5800, all forCapital One Financial Corporation / /Web Site: http://www.capitalone.com/ / (COF) CO:Capital One Financial Corporation ST:Virginia IN: FIN SU: DIV PR -- NE80535 -- 563503/09/2009 07:15 EDT http://www.prnewswire.com