Board of Directors of Capital One Financial Corporation expects to reduce the company’s quarterly dividend from $0.375 per share to $0.05 per share, beginning in the second quarter of 2009.
The next dividend is expected to be declared in April and paid in May. The dividend reduction will preserve more than $500 million in capital annually, which is equivalent to approximately 25 basis points of the company’s Tangible Common Equity to Tangible Managed Assets, or TCE, ratio.
“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,” says Richard D. Fairbank, chairman and chief executive officer, Capital One.
“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.”
“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.”
“We do not need to reduce our dividend in order to meet any minimum capital requirements. Our balance sheet remains a source of considerable strength today,” says Gary L. Perlin, chief financial officer, Capital One.
L.D.