CAPITAL ONE FINANCIAL CORPORATION MCLEAN, Va., October 16, 2014 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2014 of $1.1 billion, or $1.86 per diluted common share, compared to the second quarter of 2014 with net income of $1.2 billion, or $2.04 per diluted common share, and the third quarter of 2013 with net income of $1.1 billion, or $1.84 per diluted common share.
"Capital One delivered another quarter of solid results for the company and across our businesses, and we continued to return capital to our shareholders as we execute our announced $2.5 billion share repurchase program," said Richard D. Fairbank, Chair and Chief Executive Officer. "We have the financial strength to deliver very attractive risk-adjusted returns while we invest to drive future growth and be a leader in digital banking."
All comparisons below are for the third quarter of 2014 compared with the second quarter of 2014 unless otherwise noted.
Third Quarter 2014 Income Summary:
-- Total net revenue increased 3 percent to $5.6 billion.
-- Total non-interest expense remained flat at $3.0 billion.
-- Pre-provision earnings increased 7 percent to $2.7 billion.
-- Provision for credit losses increased 41 percent to $993 million.
-- Mortgage representation & warranty provision of $70 million ($44 million
net of tax) in discontinued operations
Third Quarter 2014 Balance Sheet Summary:
-- Common equity Tier 1 capital ratio under Basel III Standardized Approach
of 12.7 percent at September 30, 2014.
-- Net interest margin of 6.69 percent, up 14 basis points.
-- Period-end loans held for investment in the quarter increased $3.1
billion, or 2 percent, to $201.6 billion.
-- Domestic Card period-end loans increased $2.0 billion, or 3 percent,
to $73.1 billion.
-- Commercial Banking period-end loans increased $1.5 billion, or 3
percent, to $49.8 billion.
-- Consumer Banking:
-- Auto period-end loans increased $1.5 billion, or 4 percent, to
$36.3 billion.
-- Home loans period-end loans decreased $1.4 billion, or 4
percent, to $31.2 billion, driven by run-off of acquired
portfolios.
-- Average loans held for investment in the quarter increased $4.4 billion,
or 2 percent, to $199.4 billion.
-- Domestic Card average loans increased $2.4 billion, or 3 percent, to
$71.8 billion.
-- Commercial Banking average loans increased $1.8 billion, or 4
percent, to $48.8 billion.
-- Consumer Banking:
-- Auto average loans increased $1.6 billion, or 5 percent, to
$35.6 billion.
-- Home loans average loans decreased by $1.4 billion, or 4
percent, to $31.9 billion, driven by run-off of acquired
portfolios.
-- Period-end total deposits decreased $1.6 billion, or less than 1
percent, to $204.3 billion, while average deposits decreased $1.1
billion, or less than 1 percent, to $205.2 billion.
-- Interest-bearing deposit rate remained flat at 0.60 percent.
Earnings Conference Call Webcast Information
The company will hold an earnings conference call on October 16, 2014, at 5:00 PM, Eastern Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company's home page (www.capitalone.com). Choose "About Us", then choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation of non-GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through October 31, 2014 at 5:00 PM, Eastern Time.
Forward Looking Statements
Certain statements in this release are forward-looking statements, which involve a number of risks and uncertainties. Capital One cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information due to a number of factors, including those listed from time to time in reports that Capital One files with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2013.
About Capital One
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N. A., had $204.3 billion in deposits and $300.2 billion in total assets as of September 30, 2014. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has approximately 900 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.
Exhibit 99.2
Capital One Financial Corporation
Financial Supplement
Third Quarter 2014(1)(2)
Table of Contents
Capital One Financial Corporation Consolidated Results Page
----
Table 1: Financial Summary-Consolidated 1
Table 2: Selected Metrics-Consolidated 2
Table 3: Consolidated Statements of Income 3
Table 4: Consolidated Balance Sheets 4
Table 5: Notes to Financial & Selected Metrics and Consolidated Financial Statements (Tables 1-4) 5
Table 6: Average Balances, Net Interest Income and Net Interest Margin 6
Table 7: Loan Information and Performance Statistics 7
Business Segments Detail
Table 8: Financial Summary-Business Segments 9
Table 9: Financial & Statistical Summary-Credit Card Business 10
Table 10: Financial & Statistical Summary-Consumer Banking Business 12
Table 11: Financial & Statistical Summary-Commercial Banking Business 13
Table 12: Financial & Statistical Summary-Other and Total 14
Table 13: Notes to Loan and Business Segments Disclosures (Tables 7-12) 15
Other
Table 14: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures 16
___________
(1) The information contained in this
Financial Supplement is
preliminary and based on data
available at the time of the
earnings presentation. Investors
should refer to our Quarterly
Report on Form 10-Q for the period
ended September 30, 2014 once it
is filed with the Securities and
Exchange Commission.
(2) We adopted ASU 2014-01
"Accounting for Investments in
Qualified Affordable Housing
Projects" as of January 1,
2014. Prior period results and
related metrics have been
recast to conform to this
presentation.
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 1: Financial Summary-Consolidated(1)
2014 Q3 vs.
-----------
2014 2014 2014 2013 2013 2014 2013
(Dollars in millions, except per share data and as noted) (unaudited) Q3 Q2 Q1 Q4 Q3 Q2 Q3
--- --- --- --- --- --- ---
Earnings
--------
Net interest income $4,497 $4,315 $4,350 $4,423 $4,560 4% (1)%
Non-interest income(2) 1,142 1,153 1,020 1,121 1,091 (1) 5
----- ----- -----
Total net revenue(3) 5,639 5,468 5,370 5,544 5,651 3 -
----- ----- ----- ----- -----
Provision for credit losses 993 704 735 957 849 41 17
Non-interest expense:
Marketing 392 335 325 427 299 17 31
Amortization of intangibles 130 136 143 166 161 (4) (19)
Acquisition-related(4) 13 18 23 60 37 (28) (65)
Operating expenses 2,450 2,490 2,441 2,582 2,612 (2) (6)
----- -----
Total non-interest expense 2,985 2,979 2,932 3,235 3,109 - (4)
----- ----- ----- ----- -----
Income from continuing operations before income taxes 1,661 1,785 1,703 1,352 1,693 (7) (2)
Income tax provision 536 581 579 477 575 (8) (7)
--- --- --- --- ---
Income from continuing operations, net of tax 1,125 1,204 1,124 875 1,118 (7) 1
Income (loss) from discontinued operations, net of tax(2) (44) (10) 30 (23) (13) 340 238
--- --- --- --- ---
Net income 1,081 1,194 1,154 852 1,105 (9) (2)
Dividends and undistributed earnings allocated to participating securities(5) (5) (4) (5) (4) (5) 25 -
Preferred stock dividends(5) (20) (13) (13) (13) (13) 54 54
Net income available to common stockholders $1,056 $1,177 $1,136 $835 $1,087 (10) (3)
====== ====== ====== ==== ======
Common Share Statistics
-----------------------
Basic earnings per common share:(5)
Net income from continuing operations $1.97 $2.09 $1.94 $1.50 $1.89 (6) 4
Income (loss) from discontinued operations (0.08) (0.02) 0.05 (0.04) (0.02) 300 300
Net income per basic common share $1.89 $2.07 $1.99 $1.46 $1.87 (9) 1
===== ===== ===== ===== =====
Diluted earnings per common share:(5)
Net income from continuing operations $1.94 $2.06 $1.91 $1.46 $1.86 (6) 4
Income (loss) from discontinued operations (0.08) (0.02) 0.05 (0.03) (0.02) 300 300
Net income per diluted common share $1.86 $2.04 $1.96 $1.43 $1.84 (9) 1
===== ===== ===== ===== =====
Weighted average common shares outstanding (in millions) for:
Basic common shares 559.9 567.5 571.0 573.4 582.3 (1) (4)
Diluted common shares 567.9 577.6 580.3 582.6 591.1 (2) (4)
Common shares outstanding (period end, in millions) 558.5 561.8 572.9 572.7 582.0 (1) (4)
Dividends per common share $0.30 $0.30 $0.30 $0.30 $0.30 - -
Tangible book value per common share (period end)(6) 48.72 47.90 45.88 43.64 43.01 2 13
---------------------------------------------------
Balance Sheet (Period End)
-------------------------
Loans held for investment(7) $201,592 $198,528 $192,941 $197,199 $191,814 2 5
Interest-earning assets 270,001 266,720 259,422 265,170 259,152 1 4
Total assets 300,202 298,317 290,500 296,933 289,866 1 4
Interest-bearing deposits 178,876 180,970 184,214 181,880 184,553 (1) (3)
Total deposits 204,264 205,890 208,324 204,523 206,834 (1) (1)
Borrowings 42,243 39,114 30,118 40,654 31,845 8 33
Common equity 42,682 42,477 41,948 40,779 40,792 - 5
Total stockholders' equity 44,018 43,815 42,801 41,632 41,645 - 6
Balance Sheet (Quarterly Average Balances)
-----------------------------------------
Loans held for investment(7) $199,422 $194,996 $193,722 $192,813 $191,135 2 4
Interest-earning assets 268,890 263,570 262,659 262,957 264,796 2 2
Total assets 299,523 294,744 294,275 294,040 294,919 2 2
Interest-bearing deposits 179,928 182,053 184,183 184,206 186,752 (1) (4)
Total deposits 205,199 206,315 205,842 205,706 208,340 (1) (2)
Borrowings 40,314 35,658 35,978 36,463 36,355 13 11
Common equity 43,489 42,797 42,006 41,502 40,332 2 8
Total stockholders' equity 44,827 43,767 42,859 42,355 41,185 2 9
1
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 2: Selected Metrics-Consolidated(1)
2014 Q3 vs.
-----------
(Dollars in millions) (unaudited) 2014 2014 2014 2013 2013 2014 2013
Q3 Q2 Q1 Q4 Q3 Q2 Q3
--- --- --- --- --- --- ---
Performance Metrics
-------------------
Net interest income growth (quarter over quarter) 4% (1)% (2)% (3)% 0% ** **
Non-interest income growth (quarter over quarter) (1) 13 (9) 3 1 ** **
Total net revenue growth (quarter over quarter) 3 2 (3) (2) 0 ** **
Total net revenue margin(8) 8.39 8.30 8.18 8.43 8.54 9 bps (15) bps
Net interest margin(9) 6.69 6.55 6.62 6.73 6.89 14 (20)
Return on average assets 1.50 1.63 1.53 1.19 1.52 (13) (2)
Return on average tangible assets(10) 1.58 1.73 1.61 1.26 1.60 (15) (2)
Return on average common equity(11) 10.12 11.09 10.53 8.27 10.91 (97) (79)
Return on average tangible common equity(12) 15.73 17.47 16.83 13.38 17.96 (174) (223)
Non-interest expense as a % of average loans held for investment 5.99 6.11 6.05 6.71 6.51 (12) (52)
Efficiency ratio(13) 52.93 54.48 54.60 58.35 55.02 (155) (209)
Effective income tax rate for continuing operations 32.3 32.5 34.0 35.3 34.0 (20) (170)
Employees (in thousands), period end(14) 44.9 44.6 44.9 45.4 43.5 1% 3%
Credit Quality Metrics(7)
------------------------
Allowance for loan and lease losses $4,212 $3,998 $4,098 $4,315 $4,333 5 (3)
Allowance as a % of loans held for investment 2.09% 2.01% 2.12% 2.19% 2.26% 8 bps (17) bps
Allowance as a % of loans held for investment (excluding acquired loans) 2.37 2.30 2.45 2.54 2.66 7 (29)
Net charge-offs $756 $812 $931 $969 $917 (7)% (18)%
Net charge-off rate(15) 1.52% 1.67% 1.92% 2.01% 1.92% (15) bps (40) bps
Net charge-off rate (excluding acquired loans)(15) 1.73 1.93 2.24 2.37 2.29 (20) (56)
30+ day performing delinquency rate 2.46 2.24 2.22 2.63 2.54 22 (8)
30+ day performing delinquency rate (excluding acquired loans) 2.81 2.58 2.59 3.08 3.01 23 (20)
30+ day delinquency rate 2.76 2.53 2.51 2.96 2.88 23 (12)
30+ day delinquency rate (excluding acquired loans) 3.14 2.91 2.93 3.46 3.41 23 (27)
Capital Ratios(16)
-----------------
Common equity Tier 1 capital ratio 12.7% 12.7% 13.0% n/a n/a - n/a
Tier 1 common ratio n/a n/a n/a 12.2% 12.7% n/a n/a
Tier 1 risk-based capital ratio 13.3% 13.3% 13.4% 12.6 13.1 - 20 bps
Total risk-based capital ratio 15.2 15.4 15.4 14.7 15.2 (20) -
Tier 1 leverage ratio 10.6 10.7 10.4 10.1 10.0 (10) 60
Tangible common equity ("TCE") ratio(17) 9.6 9.5 9.6 8.9 9.1 10 50
2
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 3: Consolidated Statements of Income(1)
Three Months Ended Nine Months Ended 2014
Q3 2014 vs.
-----------
2014 2014 2013 2014 2013 2014 2013 vs.
(Dollars in millions, except per share data and as noted) (unaudited) Q3 Q2 Q3 Q2 Q3 Q3 Q3 2013
-------------------------------------------------------------------- --- --- --- --- --- --- --- ----
Interest income:
Loans, including loans held for sale $4,463 $4,279 $4,579 4% (3)% $13,049 $13,824 (6)%
Investment securities 398 409 396 (3) 1 1,223 1,161 5
Other 26 24 23 8 13 80 74 8
Total interest income 4,887 4,712 4,998 4 (2) 14,352 15,059 (5)
----- ----- ----- ------ ------
Interest expense:
Deposits 271 272 309 - (12) 819 953 (14)
Securitized debt obligations 32 39 42 (18) (24) 109 143 (24)
Senior and subordinated notes 71 78 76 (9) (7) 226 240 (6)
Other borrowings 16 8 11 100 45 36 40 (10)
Total interest expense 390 397 438 (2) (11) 1,190 1,376 (14)
--- --- --- ----- -----
Net interest income 4,497 4,315 4,560 4 (1) 13,162 13,683 (4)
Provision for credit losses 993 704 849 41 17 2,432 2,496 (3)
Net interest income after provision for credit losses 3,504 3,611 3,711 (3) (6) 10,730 11,187 (4)
----- ----- ----- ------ ------
Non-interest income:(2)
Service charges and other customer-related fees 471 460 530 2 (11) 1,405 1,614 (13)
Interchange fees, net 523 535 476 (2) 10 1,498 1,407 6
Net other-than-temporary impairment recognized in earnings (9) (1) (11) 800 (18) (15) (40) (63)
Other 157 159 96 (1) 64 427 176 143
Total non-interest income 1,142 1,153 1,091 (1) 5 3,315 3,157 5
----- ----- ----- ----- -----
Non-interest expense:
Salaries and associate benefits 1,128 1,125 1,152 - (2) 3,414 3,365 1
Occupancy and equipment 419 447 376 (6) 11 1,271 1,104 15
Marketing 392 335 299 17 31 1,052 946 11
Professional services 304 296 328 3 (7) 887 990 (10)
Communications and data processing 196 203 225 (3) (13) 595 677 (12)
Amortization of intangibles 130 136 161 (4) (19) 409 505 (19)
Other 416 437 568 (5) (27) 1,268 1,531 (17)
Total non-interest expense 2,985 2,979 3,109 - (4) 8,896 9,118 (2)
----- ----- ----- ----- -----
Income from continuing operations before income taxes 1,661 1,785 1,693 (7) (2) 5,149 5,226 (1)
Income tax provision 536 581 575 (8) (7) 1,696 1,747 (3)
--- --- --- ----- -----
Income from continuing operations, net of tax 1,125 1,204 1,118 (7) 1 3,453 3,479 (1)
Loss from discontinued operations, net of tax(2) (44) (10) (13) 340 238 (24) (210) (89)
--- --- --- --- ----
Net income 1,081 1,194 1,105 (9) (2) 3,429 3,269 5
Dividends and undistributed earnings allocated to participating securities(5) (5) (4) (5) 25 - (14) (14) -
Preferred stock dividends(5) (20) (13) (13) 54 54 (46) (39) 18
Net income available to common stockholders $1,056 $1,177 $1,087 (10) (3) $3,369 $3,216 5
====== ====== ====== ====== ======
Basic earnings per common share:(5)
Net income from continuing operations $1.97 $2.09 $1.89 (6) 4 $5.99 $5.89 2
Loss from discontinued operations (0.08) (0.02) (0.02) 300 300 (0.04) (0.36) (89)
Net income per basic common share $1.89 $2.07 $1.87 (9) 1 $5.95 $5.53 8
===== ===== ===== ===== =====
Diluted earnings per common share:(5)
Net income from continuing operations $1.94 $2.06 $1.86 (6) 4 $5.90 $5.82 1
Loss from discontinued operations (0.08) (0.02) (0.02) 300 300 (0.04) (0.36) (89)
Net income per diluted common share $1.86 $2.04 $1.84 (9) 1 $5.86 $5.46 7
===== ===== ===== ===== =====
Weighted average common shares outstanding (in millions):
Basic common shares 559.9 567.5 582.3 (1) (4) 566.1 581.4 (3)
Diluted common shares 567.9 577.6 591.1 (2) (4) 575.2 589.0 (2)
Dividends paid per common share $0.30 $0.30 $0.30 - - $0.90 $0.65 38
3
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 4: Consolidated Balance Sheets(1)
September 30, 2014 vs.
----------------------
September 30, December 31, September 30, December 31, September 30,
(Dollars in millions) (unaudited) 2014 2013 2013 2013 2013
-------------------------------- ---- ---- ---- ---- ----
Assets:
Cash and cash equivalents:
Cash and due from banks $2,652 $2,821 $2,855 (6)% (7)%
Interest-bearing deposits with banks 3,212 3,131 2,481 3 29
Federal funds sold and securities purchased under agreements to resell 284 339 382 (16) (26)
--- --- ---
Total cash and cash equivalents 6,148 6,291 5,718 (2) 8
Restricted cash for securitization investors 405 874 390 (54) 4
Securities available for sale, at fair value 39,665 41,800 43,132 (5) (8)
Securities held to maturity, at carrying value 22,182 19,132 18,276 16 21
Loans held for investment:
Unsecuritized loans held for investment 165,021 157,651 152,332 5 8
Restricted loans for securitization investors 36,571 39,548 39,482 (8) (7)
------ ------ ------
Total loans held for investment 201,592 197,199 191,814 2 5
Allowance for loan and lease losses (4,212) (4,315) (4,333) (2) (3)
------ ------ ------
Net loans held for investment 197,380 192,884 187,481 2 5
Loans held for sale, at lower of cost or fair value 427 218 180 96 137
Premises and equipment, net 3,752 3,839 3,792 (2) (1)
Interest receivable 1,268 1,418 1,304 (11) (3)
Goodwill 13,970 13,978 13,906 - -
Other assets 15,005 16,499 15,687 (9) (4)
------ ------ ------
Total assets $300,202 $296,933 $289,866 1 4
======== ======== ========
Liabilities:
Interest payable $249 $307 $276 (19) (10)
Deposits:
Non-interest bearing deposits 25,388 22,643 22,281 12 14
Interest-bearing deposits 178,876 181,880 184,553 (2) (3)
------- ------- -------
Total Deposits 204,264 204,523 206,834 - (1)
Securitized debt obligations 10,508 10,289 9,544 2 10
Other debt:
Federal funds purchased and securities loaned or sold under agreements to 2,330 915 1,686 155 38
repurchase
Senior and subordinated notes 18,534 13,134 12,395 41 50
Other borrowings 10,871 16,316 8,220 (33) 32
------ ------ -----
Total other debt 31,735 30,365 22,301 5 42
Other liabilities 9,428 9,817 9,266 (4) 2
----- ----- -----
Total liabilities 256,184 255,301 248,221 - 3
------- ------- -------
Stockholders' equity:
Preferred stock 0 0 0 - -
Common stock 6 6 6 - -
Additional paid-in capital, net 27,272 26,526 26,426 3 3
Retained earnings 23,162 20,292 19,626 14 18
Accumulated other comprehensive income ("AOCI") (559) (872) (839) (36) (33)
Treasury stock, at cost (5,863) (4,320) (3,574) 36 64
------ ------ ------
Total stockholders' equity 44,018 41,632 41,645 6 6
------ ------ ------
Total liabilities and stockholders' equity $300,202 $296,933 $289,866 1 4
======== ======== ========
4
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 5: Notes to Financial & Selected Metrics and Consolidated Financial Statements (Tables 1 - 4)
** Not meaningful.
(1) Certain prior period amounts
have been recast to conform to
the current period
presentation.
(2) We recorded the following related
to the mortgage representation and
warranty reserve: a provision of
$70 million in Q3 2014 (the entire
amount represents a provision of
$70 million before taxes in
discontinued operations), a
benefit of $18 million in Q2 2014
(which includes a benefit of $29
million before taxes in continuing
operations and a provision of $11
million before taxes in
discontinued operations), a
benefit of $33 million in Q1 2014
(which includes a provision of $14
million before taxes in continuing
operations and a benefit of $47
million before taxes in
discontinued operations), a
provision of $33 million in Q4
2013 (which includes provisions of
$3 million before taxes in
continued operations and $30
million before taxes in
discontinued operations) and a
benefit of $4 million in Q3 2013
(which includes a benefit of $13
million before taxes in continuing
operations and a provision of $9
million before taxes in
discontinued operations).
Historically, the majority of the
provision for representation and
warranty losses is included net of
tax in discontinued operations,
with the remaining amount included
pre-tax in non-interest income.
The mortgage representation and
warranty reserve was $1.1 billion
as of September 30, 2014, $1.2
billion as of December 31, 2013
and $1.1 billion as of September
30, 2013.
(3) Total net revenue was reduced
by $164 million in Q3 2014,
$153 million in Q2 2014, $163
million in Q1 2014, $185
million in Q4 2013 and $154
million in Q3 2013 for the
estimated uncollectible amount
of billed finance charges and
fees.
(4) Acquisition-related costs
include transaction costs,
legal and other professional or
consulting fees, restructuring
costs, and integration expense.
(5) Dividends and undistributed
earnings allocated to
participating securities,
earnings per share, and preferred
stock dividends are computed
independently for each period.
Accordingly, the sum of each
quarter may not agree to the
year-to-date total.
(6) Tangible book value per common
share is a non-GAAP measure
calculated based on tangible
common equity divided by common
shares outstanding. See "Table
14: Reconciliation of Non-GAAP
Measures and Calculation of
Regulatory Capital Measures" for
additional information on
tangible common equity.
(7) Loans held for investment includes
acquired loans. We use the term "acquired
loans" to refer to a certain portion of
the loans acquired in the following
transactions: (i) May 1, 2012 transaction
in which we acquired substantially all of
HSBC's credit card and private-label
credit card business in the United
States; (ii) the February 17, 2012
transaction where we acquired the assets
and assumed the liabilities of
substantially all of ING Direct; and
(iii) the February 29, 2009 Chevy Chase
Bank acquisition. These loans were
recorded at fair value at acquisition and
subsequently accounted for based on
estimated cash flows expected to be
collected over the life of the loans
(under the accounting standard formerly
known as "SOP 03-3"). The table below
presents amounts related to acquired
loans accounted for under SOP 03-3:
2014 2014 2013 2013 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3
-------------------------------- --- --- --- --- ---
Acquired loans accounted for under SOP 03-3:
Period-end unpaid principal balance $25,726 $27,117 $28,549 $29,761 $31,377
Period-end loans held for investment 24,685 26,019 27,390 28,550 30,080
Average loans held for investment 25,104 26,491 27,760 29,055 30,713
(8) Calculated based on
annualized total net
revenue for the period
divided by average
interest-earning assets
for the period.
(9) Calculated based on
annualized net interest
income for the period
divided by average
interest-earning assets
for the period.
(10) Calculated based on annualized
income from continuing
operations, net of tax, for the
period divided by average
tangible assets for the period.
Return on average tangible assets
is a non-GAAP measure and See
"Table 14: Reconciliation of Non-
GAAP Measures and Calculation of
Regulatory Capital Measures" for
additional information.
(11) Calculated based on the
annualized sum of (i) income
from continuing operations, net
of tax; (ii) less dividends and
undistributed earnings
allocated to participating
securities; (iii) less
preferred stock dividends, for
the period, divided by average
common equity for the period.
Our calculation of return on
average common equity may not
be comparable to similarly
titled measures reported by
other companies.
(12) Calculated based on the annualized
sum of (i) income from continuing
operations, net of tax; (ii) less
dividends and undistributed
earnings allocated to
participating securities; (iii)
less preferred stock dividends,
for the period, divided by
average tangible common equity
for the period. Return on average
tangible common equity is a non-
GAAP measure and our calculation
may not be comparable to
similarly titled measures
reported by other companies. See
"Table 14: Reconciliation of Non-
GAAP Measures and Calculation of
Regulatory Capital Measures" for
additional information.
Calculated based on non-
interest expense for the
period divided by total
net revenue for the
(13) period.
(14) Effective Q2 2014, we changed our
presentation from total full-
time equivalent employees to
total employees. All prior
periods have been recast to
conform to the current
presentation. During this
change, we determined that we had
previously understated the total
number of full-time equivalent
employees by approximately 7%.
(15) Calculated based on
annualized net charge-offs
for the period divided by
average loans held for
investment for the period.
(16) Beginning on January 1, 2014, we
calculate our regulatory capital
under Basel III Standardized
Approach subject to transition
provisions. We calculated
regulatory capital measures for
periods prior to the first
quarter of 2014 under Basel I.
Ratios as of the end of Q3 2014
are preliminary and therefore
subject to change. See "Table 14:
Reconciliation of non-GAAP
Measures and Calculation of
Regulatory Capital Measures" for
information on the calculation of
each of these ratios.
(17) TCE ratio is a non-GAAP measure
calculated based on TCE divided
by tangible assets. See "Table
14: Reconciliation of Non-GAAP
Measures and Calculation of
Regulatory Capital Measures" for
additional information.
5
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 6: Average Balances, Net Interest Income and Net Interest Margin
2014 Q3 2014 Q2 2013 Q3
------- ------- -------
Average Balance Interest Yield/ Average Balance Interest Yield/ Average Balance Interest Yield/
Rate(1) Rate(1) Rate(1)
Income/Expense(1) Income/Expense(1) Income/Expense(1)
----------------- ----------------- -----------------
(Dollars in millions) (unaudited)
---------------------------------
Interest-earning assets:
Loans, including loans held for sale $200,066 $4,463 8.92% $195,322 $4,279 8.76% $195,839 $4,579 9.35%
Investment securities 62,582 398 2.54 62,518 409 2.62 63,317 396 2.50
Cash equivalents and other 6,242 26 1.67 5,730 24 1.68 5,640 23 1.63
Total interest-earning assets $268,890 $4,887 7.27 $263,570 $4,712 7.15 $264,796 $4,998 7.55
-------- ------ -------- ------ -------- ------
Interest-bearing liabilities:
Interest-bearing deposits $179,928 $271 0.60 $182,053 $272 0.60 $186,752 $309 0.66
Securitized debt obligations 10,110 32 1.27 10,731 39 1.45 10,243 42 1.64
Senior and subordinated notes 17,267 71 1.64 16,004 78 1.95 12,314 76 2.47
Other borrowings 12,937 16 0.49 8,923 8 0.36 13,798 11 0.32
------
Total interest-bearing liabilities $220,242 $390 0.71 $217,711 $397 0.73 $223,107 $438 0.79
-------- ---- -------- ---- -------- ----
Net interest income/spread $4,497 6.56 $4,315 6.42 $4,560 6.76
====== ====== ======
Impact of non-interest bearing funding 0.13 0.13 0.13
Net interest margin 6.69% 6.55% 6.89%
==== ==== ====
Nine Months Ended September 30,
-------------------------------
2014 2013
---- ----
Average Balance Interest Income/ Yield/ Average Balance Interest Income/ Yield/
Expense(1) Rate(1) Expense(1) Rate(1)
--------------- ---------------- ------- --------------- ---------------- -------
(Dollars in millions) (unaudited)
--------------------------------
Interest-earning assets:
Loans, including loans held for sale $196,492 $13,049 8.85% $197,701 $13,824 9.32%
Investment securities 62,411 1,223 2.61 63,725 1,161 2.43
Cash equivalents and other 6,162 80 1.73 6,164 74 1.60
Total interest-earning assets $265,065 $14,352 7.22 $267,590 $15,059 7.50
-------- ------- -------- -------
Interest-bearing liabilities:
Interest-bearing deposits $181,587 $819 0.60 $188,877 $953 0.67
Securitized debt obligations 10,419 109 1.39 10,975 143 1.74
Senior and subordinated notes 15,822 226 1.90 12,331 240 2.60
Other borrowings 11,091 36 0.43 14,955 40 0.36
Total interest-bearing liabilities $218,919 $1,190 0.72 $227,138 $1,376 0.81
-------- ------ ---- -------- ----
Net interest income/spread $13,162 6.50 $13,683 6.69
======= =======
Impact of non-interest bearing funding 0.12 0.13
Net interest margin 6.62% 6.82%
==== ====
___________
(1) Interest income and interest
expense and the calculation
of average yields on
interest-earning assets and
average rates on interest-
bearing liabilities include
the impact of hedge
accounting.
6
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 7: Loan Information and Performance Statistics(1)
2014 Q3 vs.
-----------
2014 2014 2014 2013 2013 2014 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3 Q2 Q3
-------------------------------- --- --- --- --- --- --- ---
Period-end Loans Held For Investment
------------------------------------
Credit card:
Domestic credit card $73,143 $71,165 $68,275 $73,255 $69,936 3% 5%
International credit card 7,488 7,853 7,575 8,050 8,031 (5) (7)
----- ----- ----- ----- -----
Total credit card 80,631 79,018 75,850 81,305 77,967 2 3
------ ------ ------ ------ ------
Consumer banking:
Auto 36,254 34,792 33,080 31,857 30,803 4 18
Home loan 31,203 32,644 34,035 35,282 36,817 (4) (15)
Retail banking 3,604 3,626 3,612 3,623 3,665 (1) (2)
----- ----- ----- ----- -----
Total consumer banking 71,061 71,062 70,727 70,762 71,285 - -
------ ------ ------ ------ ------
Commercial banking:
Commercial and multifamily real estate 22,895 22,040 21,256 20,750 19,523 4 17
Commercial and industrial 26,071 25,402 24,064 23,309 21,848 3 19
------ ------ ------ ------ ------
Total commercial lending 48,966 47,442 45,320 44,059 41,371 3 18
Small-ticket commercial real estate 822 879 910 952 1,028 (6) (20)
--- --- --- --- -----
Total commercial banking 49,788 48,321 46,230 45,011 42,399 3 17
------ ------ ------ ------ ------
Other loans 112 127 134 121 163 (12) (31)
Total loans held for investment $201,592 $198,528 $192,941 $197,199 $191,814 2 5
======== ======== ======== ======== ========
Average Loans Held For Investment
---------------------------------
Credit card:
Domestic credit card $71,784 $69,376 $69,810 $70,368 $69,947 3 3
International credit card 7,710 7,621 7,692 7,899 7,782 1 (1)
----- ----- ----- ----- -----
Total credit card 79,494 76,997 77,502 78,267 77,729 3 2
------ ------ ------ ------ ------
Consumer banking:
Auto 35,584 33,972 32,387 31,424 30,157 5 18
Home loan 31,859 33,299 34,646 35,974 37,852 (4) (16)
Retail banking 3,605 3,613 3,630 3,635 3,655 - (1)
----- ----- ----- ----- -----
Total consumer banking 71,048 70,884 70,663 71,033 71,664 - (1)
------ ------ ------ ------ ------
Commercial banking:
Commercial and multifamily real estate 22,409 21,484 20,962 19,928 19,047 4 18
Commercial and industrial 25,512 24,611 23,541 22,445 21,491 4 19
------ ------ ------ ------ ------
Total commercial lending 47,921 46,095 44,503 42,373 40,538 4 18
Small-ticket commercial real estate 845 896 932 986 1,038 (6) (19)
--- --- --- --- -----
Total commercial banking 48,766 46,991 45,435 43,359 41,576 4 17
------ ------ ------ ------ ------
Other loans 114 124 122 154 166 (8) (31)
Total average loans held for investment $199,422 $194,996 $193,722 $192,813 $191,135 2 4
--------------------------------------- ======== ======== ======== ======== ========
Net Charge-off Rates
--------------------
Credit card:
Domestic credit card 2.83% 3.52% 4.01% 3.89% 3.67% (69) bps (84) bps
International credit card 3.32 3.93 4.17 4.74 4.71 (61) (139)
Total credit card 2.88 3.56 4.02 3.98 3.78 (68) (90)
Consumer banking:
Auto 1.98 1.31 1.66 2.30 2.01 67 (3)
Home loan 0.02 0.05 0.06 0.03 0.06 (3) (4)
Retail banking 1.36 0.70 0.95 1.09 1.38 66 (2)
Total consumer banking 1.07 0.69 0.84 1.09 0.95 38 12
Commercial banking:
Commercial and multifamily real estate (0.10) - 0.01 (0.11) (0.11) (10) 1
Commercial and industrial (0.01) 0.04 0.03 0.04 0.18 (5) (19)
Total commercial lending (0.05) 0.02 0.02 (0.03) 0.04 (7) (9)
Small-ticket commercial real estate (0.01) 0.61 0.67 (0.81) 1.26 (62) (127)
Total commercial banking (0.05) 0.03 0.04 (0.05) 0.07 (8) (12)
Other loans (0.61) 2.18 (0.68) 4.68 12.17 (279) (1,278)
Total net charge-offs 1.52 1.67 1.92 2.01 1.92 (15) (40)
7
2014 Q3 vs.
-----------
2014 2014 2014 2013 2013 2014 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3 Q2 Q3
-------------------------------- --- --- --- --- --- --- ---
30+ Day Performing Delinquency Rates
------------------------------------
Credit card:
Domestic credit card 3.21% 2.83% 3.02% 3.43% 3.46% 38 bps (25) bps
International credit card 3.34 3.40 3.59 3.71 3.86 (6) (52)
Total credit card 3.22 2.89 3.08 3.46 3.51 33 (29)
Consumer banking:
Auto 6.14 5.77 5.29 6.85 6.29 37 (15)
Home loan 0.14 0.13 0.12 0.16 0.14 1 -
Retail banking 0.53 0.48 0.74 0.69 0.68 5 (15)
Total consumer banking 3.22 2.91 2.57 3.20 2.82 31 40
----------------------
Nonperforming Assets Rates(2)
----------------------------
Credit card:
International credit card 0.98 1.03 1.07 1.10 1.16 (5) (18)
Total credit card 0.09 0.10 0.11 0.11 0.12 (1) (3)
Consumer banking:
Auto(3) 0.94 0.88 0.81 1.11 0.92 6 2
Home loan 1.13 1.16 1.17 1.14 1.08 (3) 5
Retail banking 0.54 0.79 1.15 1.13 1.10 (25) (56)
Total consumer banking 1.01 1.01 1.00 1.12 1.01 - -
Commercial banking:
Commercial and multifamily real estate 0.29 0.32 0.31 0.29 0.40 (3) (11)
Commercial and industrial 0.40 0.45 0.40 0.44 0.65 (5) (25)
Total commercial lending 0.35 0.39 0.35 0.37 0.53 (4) (18)
Small-ticket commercial real estate 0.42 1.40 0.73 0.43 1.49 (98) (107)
Total commercial banking 0.35 0.41 0.36 0.37 0.56 (6) (21)
Total nonperforming assets 0.53 0.55 0.54 0.58 0.60 (2) (7)
8
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 8: Financial Summary-Business Segments(1)
Three Months Ended September 30, 2014
-------------------------------------
(Dollars in millions) (unaudited) Total Credit Card Consumer Banking Commercial
Banking Other
--------------------------------- ----- ----------- ---------------- ----------- -----
Earnings:
Net interest income $4,497 $2,627 $1,425 $439 $6
Non-interest income 1,142 846 179 122 (5)
----- --- --- --- ---
Total net revenue(4)(5) 5,639 3,473 1,604 561 1
Provision (benefit) for credit losses 993 787 198 9 (1)
Non-interest expense 2,985 1,730 956 268 31
----- ----- --- --- ---
Income (loss) from continuing operations before taxes 1,661 956 450 284 (29)
Income tax provision (benefit) 536 332 161 102 (59)
Income from continuing operations, net of tax $1,125 $624 $289 $182 $30
====== ==== ==== ==== ===
Three Months Ended June 30, 2014
--------------------------------
(Dollars in millions) (unaudited) Total Credit Card Consumer Banking Commercial
Banking Other
--------------------------------- ----- ----------- ---------------- ----------- -----
Earnings:
Net interest income (expense) $4,315 $2,461 $1,431 $436 $(13)
Non-interest income 1,153 839 170 109 35
----- --- --- --- ---
Total net revenue(4)(5) 5,468 3,300 1,601 545 22
Provision for credit losses 704 549 143 12 -
Non-interest expense 2,979 1,719 938 267 55
----- ----- --- --- ---
Income (loss) from continuing operations before taxes 1,785 1,032 520 266 (33)
Income tax provision (benefit) 581 364 186 95 (64)
Income from continuing operations, net of tax $1,204 $668 $334 $171 $31
====== ==== ==== ==== ===
Three Months Ended September 30, 2013
-------------------------------------
(Dollars in millions) (unaudited) Total Credit Card Consumer Banking Commercial
Banking Other
--------------------------------- ----- ----------- ---------------- ----------- -----
Earnings:
Net interest income (expense) $4,560 $2,757 $1,481 $424 $(102)
Non-interest income 1,091 834 184 87 (14)
----- --- --- --- ---
Total net revenue (loss)(4)(5) 5,651 3,591 1,665 511 (116)
Provision (benefit) for credit losses 849 617 202 31 (1)
Non-interest expense 3,109 1,904 927 228 50
----- ----- --- --- ---
Income (loss) from continuing operations before taxes 1,693 1,070 536 252 (165)
Income tax provision (benefit) 575 376 191 90 (82)
Income (loss) from continuing operations, net of tax $1,118 $694 $345 $162 $(83)
====== ==== ==== ==== ====
9
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 9: Financial & Statistical Summary-Credit Card Business(1)
2014 Q3 vs.
-----------
2014 2014 2014 2013 2013 2014 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3 Q2 Q3
-------------------------------- --- --- --- --- --- --- ---
Credit Card
-----------
Earnings:
Net interest income $2,627 $2,461 $2,525 $2,576 $2,757 7% (5)%
Non-interest income 846 839 785 833 834 1 1
--- --- --- --- ---
Total net revenue 3,473 3,300 3,310 3,409 3,591 5 (3)
Provision for credit losses 787 549 558 751 617 43 28
Non-interest expense 1,730 1,719 1,726 1,868 1,904 1 (9)
----- ----- ----- ----- -----
Income from continuing operations before taxes 956 1,032 1,026 790 1,070 (7) (11)
Income tax provision 332 364 358 274 376 (9) (12)
Income from continuing operations, net of tax $624 $668 $668 $516 $694 (7) (10)
==== ==== ==== ==== ====
Selected performance metrics:
Period-end loans held for investment $80,631 $79,018 $75,850 $81,305 $77,967 2 3
Average loans held for investment 79,494 76,997 77,502 78,267 77,729 3 2
Average yield on loans held for investment(6)(7) 14.65% 14.22% 14.43% 14.64% 15.72% 43 bps (107) bps
Total net revenue margin(8) 17.48 17.14 17.08 17.43 18.48 34 (100)
Net charge-off rate 2.88 3.56 4.02 3.98 3.78 (68) (90)
30+ day performing delinquency rate 3.22 2.89 3.08 3.46 3.51 33 (29)
30+ day delinquency rate 3.29 2.97 3.16 3.54 3.60 32 (31)
Nonperforming loan rate 0.09 0.10 0.11 0.11 0.12 (1) (3)
Card loan premium amortization and other intangible accretion(9) $18 $31 $37 $39 $45 (42)% (60)%
PCCR intangible amortization 90 94 98 102 106 (4) (15)
Purchase volume(10) 57,474 56,358 47,434 54,245 50,943 2 13
Domestic Card
-------------
Earnings:
Net interest income $2,361 $2,193 $2,255 $2,303 $2,492 8 (5)
Non-interest income 763 768 702 747 749 (1) 2
--- --- --- --- ---
Total net revenue 3,124 2,961 2,957 3,050 3,241 6 (4)
Provision for credit losses 738 504 486 679 529 46 40
Non-interest expense 1,530 1,513 1,545 1,664 1,713 1 (11)
----- ----- ----- ----- -----
Income from continuing operations before taxes 856 944 926 707 999 (9) (14)
Income tax provision 306 337 331 252 355 (9) (14)
Income from continuing operations, net of tax $550 $607 $595 $455 $644 (9) (15)
==== ==== ==== ==== ====
Selected performance metrics:
Period-end loans held for investment $73,143 $71,165 $68,275 $73,255 $69,936 3 5
Average loans held for investment 71,784 69,376 69,810 70,368 69,947 3 3
Average yield on loans held for investment(6)(7) 14.46% 13.95% 14.19% 14.44% 15.65% 51 bps (119) bps
Total net revenue margin(8) 17.41 17.07 16.94 17.34 18.53 34 (112)
Net charge-off rate 2.83 3.52 4.01 3.89 3.67 (69) (84)
30+ day performing delinquency rate 3.21 2.83 3.02 3.43 3.46 38 (25)
30+ day delinquency rate 3.21 2.83 3.02 3.43 3.46 38 (25)
Purchase volume(10) $53,690 $52,653 $44,139 $50,377 $47,420 2% 13%
International Card
------------------
Earnings:
Net interest income $266 $268 $270 $273 $265 (1) -
Non-interest income 83 71 83 86 85 17 (2)
--- --- --- --- ---
Total net revenue 349 339 353 359 350 3 -
Provision for credit losses 49 45 72 72 88 9 (44)
Non-interest expense 200 206 181 204 191 (3) 5
--- --- --- --- ---
Income from continuing operations before taxes 100 88 100 83 71 14 41
Income tax provision 26 27 27 22 21 (4) 24
--- --- ---
Income from continuing operations, net of tax $74 $61 $73 $61 $50 21 48
=== === === === ===
10
2014 Q3 vs.
-----------
2014 2014 2014 2013 2013 2014 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3 Q2 Q3
-------------------------------- --- --- --- --- --- --- ---
Selected performance metrics:
Period-end loans held for investment $7,488 $7,853 $7,575 $8,050 $8,031 (5)% (7)%
Average loans held for investment 7,710 7,621 7,692 7,899 7,782 1 (1)
Average yield on loans held for investment(7) 16.42% 16.74% 16.64% 16.48% 16.35% (32) bps 7 bps
Total net revenue margin 18.13 17.76 18.38 18.20 17.99 37 14
Net charge-off rate 3.32 3.93 4.17 4.74 4.71 (61) (139)
30+ day performing delinquency rate 3.34 3.40 3.59 3.71 3.86 (6) (52)
30+ day delinquency rate 4.08 4.20 4.41 4.56 4.78 (12) (70)
Nonperforming loan rate 0.98 1.03 1.07 1.10 1.16 (5) (18)
Purchase volume(10) $3,784 $3,705 $3,295 $3,868 $3,523 2% 7%
11
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 10: Financial & Statistical Summary-Consumer Banking Business(1)
2014 Q3 vs.
-----------
2014 2014 2014 2013 2013 2014 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3 Q2 Q3
-------------------------------- --- --- --- --- --- --- ---
Consumer Banking
----------------
Earnings:
Net interest income $1,425 $1,431 $1,433 $1,468 $1,481 - % (4)%
Non-interest income 179 170 150 195 184 5 (3)
--- --- --- --- ---
Total net revenue 1,604 1,601 1,583 1,663 1,665 - (4)
Provision for credit losses 198 143 140 212 202 38 (2)
Non-interest expense 956 938 930 1,018 927 2 3
--- --- --- ----- ---
Income from continuing operations before taxes 450 520 513 433 536 (13) (16)
Income tax provision 161 186 183 154 191 (13) (16)
--- --- --- --- ---
Income from continuing operations, net of tax $289 $334 $330 $279 $345 (13) (16)
==== ==== ==== ==== ====
Selected performance metrics:
Period-end loans held for investment $71,061 $71,062 $70,727 $70,762 $71,285 - -
Average loans held for investment 71,048 70,884 70,663 71,033 71,664 - (1)
Average yield on loans held for investment(7) 6.18% 6.22% 6.18% 6.30% 6.21% (4) bps (3) bps
Auto loan originations $5,410 $5,376 $4,727 $4,322 $4,752 1% 14%
Period-end deposits 167,624 169,153 171,529 167,652 168,437 (1) -
Average deposits 168,407 169,694 168,676 167,870 169,082 (1) -
Average deposit interest rate 0.58% 0.57% 0.57% 0.60% 0.63% 1 bps (5) bps
Core deposit intangible amortization $26 $28 $30 $32 $34 (7)% (24)%
Net charge-off rate 1.07% 0.69% 0.84% 1.09% 0.95% 38 bps 12 bps
30+ day performing delinquency rate 3.22 2.91 2.57 3.20 2.82 31 40
30+ day delinquency rate 3.82 3.49 3.14 3.89 3.46 33 36
Nonperforming loan rate 0.73 0.75 0.74 0.86 0.79 (2) (6)
Nonperforming asset rate(2) 1.01 1.01 1.00 1.12 1.01 - -
Period-end loans serviced for others $7,041 $6,944 $6,868 $7,665 $14,043 1% (50)%
12
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 11: Financial & Statistical Summary-Commercial Banking Business(1)
2014 Q3 vs.
-----------
2014 2014 2014 2013 2013 2014 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3 Q2 Q3
-------------------------------- --- --- --- --- --- --- ---
Commercial Banking
------------------
Earnings:
Net interest income $439 $436 $421 $447 $424 1% 4%
Non-interest income 122 109 87 131 87 12 40
--- --- --- --- ---
Total net revenue(4)(5) 561 545 508 578 511 3 10
Provision (benefit) for credit losses 9 12 40 (6) 31 (25) (71)
Non-interest expense 268 267 255 281 228 - 18
--- --- --- --- ---
Income from continuing operations before taxes 284 266 213 303 252 7 13
Income tax provision 102 95 76 108 90 7 13
Income from continuing operations, net of tax $182 $171 $137 $195 $162 6 12
==== ==== ==== ==== ====
Selected performance metrics:
Period-end loans held for investment $49,788 $48,321 $46,230 $45,011 $42,399 3 17
Average loans held for investment 48,766 46,991 45,435 43,359 41,576 4 17
Average yield on loans held for investment(5)(7) 3.39% 3.50% 3.47% 3.92% 3.87% (11) bps (48) bps
Period-end deposits $31,918 $31,440 $31,485 $30,567 $30,592 2% 4%
Average deposits 31,772 31,238 31,627 31,033 30,685 2 4
Average deposit interest rate 0.24% 0.24% 0.25% 0.25% 0.27% - (3) bps
Core deposit intangible amortization $5 $5 $6 $6 $6 - (17)%
Net charge-off rate (0.05)% 0.03% 0.04% (0.05)% 0.07% (8) bps (12) bps
Nonperforming loan rate 0.32 0.38 0.33 0.33 0.47 (6) (15)
Nonperforming asset rate(2) 0.35 0.41 0.36 0.37 0.56 (6) (21)
Risk category:(11)
Noncriticized $48,219 $46,689 $44,904 $43,593 $40,940 3% 18%
Criticized performing 1,198 1,234 952 1,007 968 (3) 24
Criticized nonperforming 161 181 150 149 201 (11) (20)
--- --- --- --- ---
Total risk-rated loans 49,578 48,104 46,006 44,749 42,109 3 18
Acquired commercial loans 210 217 224 262 290 (3) (28)
Total commercial loans $49,788 $48,321 $46,230 $45,011 $42,399 3 17
======= ======= ======= ======= =======
% of period-end commercial loans held for investment:
Noncriticized 96.9% 96.6% 97.1% 96.9% 96.5% 30 bps 40 bps
Criticized performing 2.4 2.6 2.1 2.2 2.3 (20) 10
Criticized nonperforming 0.3 0.4 0.3 0.3 0.5 (10) (20)
--- --- --- --- ---
Total risk-rated loans 99.6 99.6 99.5 99.4 99.3 - 30
Acquired commercial loans 0.4 0.4 0.5 0.6 0.7 - (30)
Total commercial loans 100.0% 100.0% 100.0% 100.0% 100.0% - -
===== ===== ===== ===== =====
13
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 12: Financial & Statistical Summary-Other and Total(1)
2014 Q3 vs.
-----------
2014 2014 2014 2013 2013 2014 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3 Q2 Q3
--- --- --- --- --- --- ---
Other
-----
Earnings:
Net interest income (expense) $6 $(13) $(29) $(68) $(102) ** **
Non-interest income (5) 35 (2) (38) (14) ** (64)%
--- --- --- --- ---
Total net revenue (loss)(4) 1 22 (31) (106) (116) 95% **
Benefit for credit losses (1) - (3) - (1) ** -
Non-interest expense 31 55 21 68 50 (44) (38)
--- --- --- --- ---
Loss from continuing operations before taxes (29) (33) (49) (174) (165) (12) (82)
Income tax benefit (59) (64) (38) (59) (82) (8) (28)
--- --- --- --- ---
Income (loss) from continuing operations, net of tax $30 $31 $(11) $(115) $(83) (3) **
=== === ==== ===== ====
Selected performance metrics:
Period-end loans held for investment $112 $127 $134 $121 $163 (12) (31)
Average loans held for investment 114 124 122 154 166 (8) (31)
Period-end deposits 4,722 5,297 5,310 6,304 7,805 (11) (40)
Average deposits 5,020 5,383 5,539 6,803 8,573 (7) (41)
Total
-----
Earnings:
Net interest income $4,497 $4,315 $4,350 $4,423 $4,560 4 (1)
Non-interest income 1,142 1,153 1,020 1,121 1,091 (1) 5
----- ----- ----- ----- -----
Total net revenue 5,639 5,468 5,370 5,544 5,651 3 -
Provision for credit losses 993 704 735 957 849 41 17
Non-interest expense 2,985 2,979 2,932 3,235 3,109 - (4)
----- ----- ----- ----- -----
Income from continuing operations before taxes 1,661 1,785 1,703 1,352 1,693 (7) (2)
Income tax provision 536 581 579 477 575 (8) (7)
--- --- ---
Income from continuing operations, net of tax $1,125 $1,204 $1,124 $875 $1,118 (7) 1
====== ====== ====== ==== ======
Selected performance metrics:
Period-end loans held for investment $201,592 $198,528 $192,941 $197,199 $191,814 2 5
Average loans held for investment 199,422 194,996 193,722 192,813 191,135 2 4
Period-end deposits 204,264 205,890 208,324 204,523 206,834 (1) (1)
Average deposits 205,199 206,315 205,842 205,706 208,340 (1) (2)
14
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 13: Notes to Loan and Business
Segments Disclosures (Tables 7-12)
** Not meaningful.
(1) Certain prior period amounts
have been recast to conform to
the current period
presentation.
(2) Nonperforming assets consist of
nonperforming loans, real estate
owned ("REO") and other foreclosed
assets. The nonperforming asset
ratios are calculated based on
nonperforming assets for each
category divided by the combined
period-end total of loans held for
investment, REO and other
foreclosed assets for each
respective category. Nonperforming
assets related to acquired loans
are excluded from the calculation
for our home loans and auto
businesses.
(3) Includes the net realizable value
of auto loans that have been
charged down as a result of a
bankruptcy filing and
repossessed assets obtained in
satisfaction of auto loans.
(4) Commercial Banking revenue
related to qualified housing
credits is presented on a
taxable-equivalent basis. As
a result of the adoption of ASU
2014-01 "Accounting for
Investments in Qualified
Affordable Housing Projects" as
of January 1, 2014, losses
related to these investments
are now recognized, along with
the associated tax benefits, as
a component of income taxes
attributable to continuing
operations instead of non-
interest expense. As such,
losses related to these
investments decrease the
overall tax benefits recognized
as a component of income taxes
attributable to continuing
operations and taxable-
equivalent revenue in the
Commercial Banking segment.
This decrease in revenue is
offset by an increase in
revenue in the Other segment.
Prior period amounts have been
recast to conform to this
presentation.
(5) Some of our tax-related commercial
investments generate tax-exempt
income or tax credits. Accordingly, we
make certain reclassifications within
our Commercial Banking business
results to present revenues and yields
on a taxable-equivalent basis,
calculated assuming an effective tax
rate approximately equal to our
federal statutory tax rate of 35%.
(6) The transfer of the Best Buy
Stores, L.P. ("Best Buy")
portfolio to held for sale
resulted in an increase in the
average yield for Domestic Card
and Total Credit Card of 121
basis points and 110 basis
points, respectively, in Q3
2013. The sale of the Best Buy
portfolio was completed on
September 6, 2013.
(7) Calculated by dividing
annualized interest income
for the period by average
loans held for investment
during the period for the
specified loan category.
Annualized interest income
excludes various allocations
including funds transfer
pricing that assigns certain
balance sheet assets,
deposits and other
liabilities and their
related revenue and expenses
attributable to each
business segment.
(8) The transfer of the Best Buy
portfolio to held for sale
resulted in an increase in the
net revenue margin for Domestic
Card and Total Credit Card of
136 basis points and 123 basis
points, respectively, in Q3
2013. The sale of the Best Buy
portfolio was completed on
September 6, 2013.
(9) Represents the net reduction in
interest income attributable
to non-SOP 03-3 card loan
premium amortization and other
intangible accretion
associated with the May 1,
2012 transaction in which we
acquired substantially all of
HSBC's credit card and
private-label credit card
business in the United States.
(10) Includes credit card purchase
transactions, net of returns
for both loans classified as
held for investment and held
for sale. Excludes cash advance
and balance transfer
transactions.
(11) Criticized exposures correspond to
the "Special Mention,"
"Substandard" and "Doubtful" asset
categories defined by bank
regulatory authorities.
15
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 14: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures
Beginning on January 1, 2014, we calculate our regulatory capital under Basel III Standardized Approach subject to transition provisions. Prior to January 1, 2014, we calculated regulatory capital under Basel I as shown below:
Basel III Standardized Basel I
---------------------- -------
2014 2014 2014 2013 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3
-------------------------------- --- --- --- --- ---
Regulatory Capital Metrics(3)
----------------------------
Common equity Tier 1 capital $29,116 $28,774 $28,434 n/a n/a
Tier 1 common capital n/a n/a n/a $27,375 $27,383
Tier 1 capital $30,451 $30,111 $29,257 28,230 28,238
Total risk-based capital(1) 34,862 34,743 33,784 32,987 32,881
Risk-weighted assets(2) 228,971 226,172 219,047 224,556 215,809
Average assets for the leverage ratio 286,070 281,345 280,907 280,574 281,978
Capital Ratios(3)
----------------
Common equity Tier 1 capital ratio(4) 12.7% 12.7% 13.0% n/a n/a
Tier 1 common ratio n/a n/a n/a 12.2% 12.7%
Tier 1 risk-based capital ratio(5) 13.3% 13.3% 13.4% 12.6 13.1
Total risk-based capital ratio(6) 15.2 15.4 15.4 14.7 15.2
Tier 1 leverage ratio(7) 10.6 10.7 10.4 10.1 10.0
Tangible common equity ("TCE") ratio(8) 9.6 9.5 9.6 8.9 9.1
Reconciliation of Non-GAAP Measures
We report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include tangible common equity ("TCE") and tangible assets. The tables below provide the details of the calculation of our non-GAAP capital measures and regulatory capital. While our non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies.
2014 2014 2014 2013 2013
(Dollars in millions) (unaudited) Q3 Q2 Q1 Q4 Q3
--- --- --- --- ---
Tangible Common Equity (Average)
-------------------------------
Average stockholders' equity $44,827 $43,767 $42,859 $42,355 $41,185
Average goodwill and other intangible assets(9) (15,525) (15,615) (15,727) (15,847) (15,829)
Noncumulative perpetual preferred stock(10) (1,338) (970) (853) (853) (853)
Average tangible common equity $27,964 $27,182 $26,279 $25,655 $24,503
======= ======= ======= ======= =======
Tangible Common Equity (Period End)
----------------------------------
Stockholders' equity $44,018 $43,815 $42,801 $41,632 $41,645
Goodwill and other intangible assets(9) (15,472) (15,564) (15,666) (15,784) (15,760)
Noncumulative perpetual preferred stock(10) (1,336) (1,338) (853) (853) (853)
Tangible common equity $27,210 $26,913 $26,282 $24,995 $25,032
======= ======= ======= ======= =======
Tangible Assets (Average)
------------------------
Average total assets $299,523 $294,744 $294,275 $294,040 $294,919
Average goodwill and other intangible assets(9) (15,525) (15,615) (15,727) (15,847) (15,829)
Average tangible assets $283,998 $279,129 $278,548 $278,193 $279,090
======== ======== ======== ======== ========
Tangible Assets (Period End)
---------------------------
Total assets $300,202 $298,317 $290,500 $296,933 $289,866
Goodwill and other intangible assets(9) (15,472) (15,564) (15,666) (15,784) (15,760)
Tangible assets $284,730 $282,753 $274,834 $281,149 $274,106
======== ======== ======== ======== ========
16
Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach(3)
2014 2014 2014
(Dollars in
millions)
(unaudited) Q3 Q2 Q1
------------ --- --- ---
Common equity
excluding AOCI $43,241 $42,848 $42,658
Adjustments:
AOCI(11)(12) (146) 6 (182)
Goodwill(9) (13,801) (13,811) (13,811)
Intangible
assets(9)(12) (266) (289) (314)
Other 88 20 83
Common equity
Tier 1 capital $29,116 $28,774 $28,434
======= ======= =======
Risk-weighted
assets(2) $228,971 $226,172 $219,047
Common equity
Tier 1 capital
ratio(4) 12.7% 12.7% 13.0%
___________
Total risk-based
capital equals the
sum of Tier 1
capital and Tier 2
(1) capital.
(2) Risk-weighted assets
continue to be calculated
based on Basel I in 2014.
Regulatory capital metrics
as of the end of Q3 2014
are preliminary and
therefore subject to
(3) change.
(4) Common equity Tier 1 capital ratio is a regulatory measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets.
(5) Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.
(6) Total risk-based capital ratio is a regulatory capital measure calculated based on Total risk-based capital divided by risk-weighted assets.
(7) Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments.
(8) TCE ratio is a non-GAAP
measure calculated based
on TCE divided by tangible
assets.
(9) Includes impact of
related deferred taxes.
(10) Includes related
surplus.
(11) Amounts presented are net
of tax.
(12) Amounts based on transition
provisions for regulatory
capital deductions and
adjustments of 20% for 2014.
17
SOURCE Capital One Financial Corporation
