Regulatory and Capital Adequacy

12 Months Ended

Dec. 31, 2017

Banking and Thrift [Abstract]

Regulatory and Capital Adequacy

NOTE 12—REGULATORY AND CAPITAL ADEQUACY

Regulation and Capital Adequacy

Bank holding companies (“BHCs”) and national banks are subject to capital adequacy standards adopted by the Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation (collectively, the “Federal Banking Agencies”), including the Basel III Capital Rule. Moreover, the Banks, as insured depository institutions, are subject to prompt corrective action (“PCA”) capital regulations, which require the Federal Banking Agencies to take prompt corrective action for banks that do not meet PCA capital requirements. We entered parallel run under Advanced Approaches on January 1, 2015, during which we calculate capital ratios under both the Basel III Standardized Approach and the Basel III Advanced Approaches, though we continue to use the Standardized Approach for purposes of meeting regulatory capital requirements.

Under the Basel III Capital Rule, the regulatory minimum risk-based and leverage capital requirements for Advanced Approaches banking organizations include a common equity Tier 1 capital ratio of at least 4.5%, a Tier 1 capital ratio of at least 6.0%, a total capital ratio of at least 8.0% and a Tier 1 leverage capital ratio of at least 4.0%. The Basel III Capital Rule introduced a supplementary leverage ratio for all Advanced Approaches banking organizations, which compares Tier 1 capital to total leverage exposure, which includes all on-balance sheet assets and certain off-balance sheet exposures, including derivatives and unused commitments. Given that we are in our Basel III Advanced Approaches parallel run, we calculate the ratio based on Tier 1 capital under the Standardized Approach. The supplementary leverage ratio minimum requirement of 3.0% became effective on January 1, 2018. As an Advanced Approaches banking organization, however, we were required to calculate and publicly disclose our supplementary leverage ratio beginning in the first quarter of 2015.

For additional information about the capital adequacy guidelines we are subject to, see “Part 1—Item 1.Business—Supervision and Regulation.”

The following tableprovides a comparison of our regulatory capital amounts and ratios under the Basel III Standardized Approach subject to the applicable transition provisions, the regulatory minimum capital adequacy ratios and the PCA well-capitalized level for each ratio,where applicable, as of December 31, 2017 and 2016.

Table 12.1: Capital Ratios Under Basel III⁽¹⁾

	December 31, 2017					December 31, 2016
(Dollars in millions)	Capital Amount		Capital Ratio	Minimum Capital Adequacy	Well- Capitalized	Capital Amount		Capital Ratio	Minimum Capital Adequacy	Well- Capitalized
Capital One Financial Corp:
Common equity Tier 1 capital(2)	$	30,036	10.3	4.5	N/A	$	28,803	10.1	4.5	N/A
Tier 1 capital(3)	34,396		11.8	6.0	6.0	33,162		11.6	6.0	6.0
Total capital(4)	41,962		14.4	8.0	10.0	40,817		14.3	8.0	10.0
Tier 1 leverage(5)	34,396		9.9	4.0	N/A	33,162		9.9	4.0	N/A
Supplementary leverage(6)	34,396		8.4	N/A	N/A	33,162		8.6	N/A	N/A
COBNA:
Common equity Tier 1 capital(2)	14,791		14.3	4.5	6.5	11,568		12.0	4.5	6.5
Tier 1 capital(3)	14,791		14.3	6.0	8.0	11,568		12.0	6.0	8.0
Total capital(4)	17,521		16.9	8.0	10.0	14,230		14.8	8.0	10.0
Tier 1 leverage(5)	14,791		12.7	4.0	5.0	11,568		10.8	4.0	5.0
Supplementary leverage(6)	14,791		10.4	N/A	N/A	11,568		8.9	N/A	N/A
CONA:
Common equity Tier 1 capital(2)	23,771		12.2	4.5	6.5	20,670		10.6	4.5	6.5
Tier 1 capital(3)	23,771		12.2	6.0	8.0	20,670		10.6	6.0	8.0
Total capital(4)	26,214		13.4	8.0	10.0	23,117		11.8	8.0	10.0
Tier 1 leverage(5)	23,771		8.6	4.0	5.0	20,670		7.7	4.0	5.0
Supplementary leverage(6)	23,771		7.7	N/A	N/A	20,670		6.9	N/A	N/A

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⁽¹⁾  Capital ratios are calculated based on the Basel III Standardized Approach framework, subject to applicable transition provisions, such as the inclusion of the unrealized gains and losses on securities available for sale included in AOCI and adjustments related to intangible assets other than goodwill. The inclusion of AOCI and the adjustments related to intangible assets are phased-in at 60% for 2016, 80% for 2017 and 100% for 2018. Capital ratios that are not applicable are denoted by “N/A.”

⁽²⁾   Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on common equity Tier 1 capital divided by risk-weighted assets.

⁽³⁾   Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.

⁽⁴⁾   Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets.

⁽⁵⁾   Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets.

⁽⁶⁾  Supplementary leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by total leverage exposure.

We exceeded the minimum capital requirements and each of the Banks exceeded the minimum regulatory requirements and were well-capitalized under PCA requirements as of both December 31, 2017 and 2016.

Regulatory restrictions exist that limit the ability of the Banks to transfer funds to our BHC. As of December 31, 2017, funds available for dividend payments from COBNA and CONA were $4.0 billion and $1.6 billion, respectively. Applicable provisions that may be contained in our borrowing agreements or the borrowing agreements of our subsidiaries may limit our subsidiaries’ ability to pay dividends to us or our ability to pay dividends to our stockholders.