Capital One Financial Corp. said Monday it has cut its quarterly dividend 87%, to 5 cents a share, to save $500 million a year.

As the McLean, Va., company faces "unprecedented economic and market conditions," its highest priority is "managing our balance sheet to maintain its considerable strength and resilience," said Richard D. Fairbank, its chairman and chief executive. Investors have indicated "they value strong capital positions over dividend streams at this point in the cycle."

Gary L. Perlison, Capital One's chief financial officer, said its capital "remains stable and strong relative to the risks we face," while "our increasingly liquid and lower-risk balance sheet provides us with many choices we can make to manage our capital."

Last year Capital One sold $3.55 billion of preferred stock and warrants to the Treasury Department to raise capital. Though the broader economic outlook "is somewhat weaker than expected, and subject to a greater level of uncertainty," credit trends within Capital One's portfolio "have been roughly in line with expectations through February," Fairbank said.

His company reported in January it wrote off an additional $1 billion of bad loans in the fourth quarter, and posted a worse-than-expected loss as a result of rising defaults.

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