CAPITAL ONE FINANCIAL CORPORATION 
By MCLEAN, Va., Jan. 19, 2012 /PRNewswire/ --
-- Fourth quarter loan balances up 4.6 percent from third quarter and up
7.9 percent from prior year's fourth quarter
-- Revenue down modestly in fourth quarter due to absence of Q3 finance
charge and fee reserve release and Q4 impact of UK reserve, revenue up
modestly excluding these items
-- Non-interest expense up, driven by increased marketing and operating
expenses
-- Continued balance sheet strength; Tier 1 Common Equity Ratio near 10
percent
Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2011 of $407 million, or $0.88 per diluted common share, compared with net income of $813 million, or $1.77 per diluted common share, for the third quarter of 2011, and net income of $697 million, or $1.52 per diluted common share, for the fourth quarter of 2010. For full year 2011, net income was $3.1 billion, or $6.80 per diluted common share, compared with net income of $2.7 billion, or $6.01 per diluted common share, for 2010.
"In 2011, we made significant investments to restart growth across our lending businesses after a long period of cyclical declines in loan volumes, and we're seeing these investments gain traction," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "The strong underlying performance of our businesses and the compelling financial and strategic value of our planned acquisitions put us in a position to deliver and sustain shareholder value through growth potential, strong returns, and strong capital generation."
The company expects to close the acquisition of ING Direct in the first quarter and the acquisition of the HSBC US Card business in the second quarter, and expects that the acquisitions will have significant impact on reported results, especially in 2012, from the purchase accounting effects, integration expenses and partial year impacts of these acquisitions.
All comparisons in the following paragraphs are for fourth quarter 2011 compared to third quarter 2011 unless otherwise noted.
Total Company Results
Loan and Deposit Balances
Period-end loan balances increased $5.9 billion to $135.9 billion driven by growth in Domestic Card, Commercial Banking, and Auto Finance. Average loans were up by $2.5 billion, with much of the quarterly balance growth concentrated in the last few weeks of the year.
Period-end total deposits remained flat in the fourth quarter at $128.2 billion. The company expects to close the ING Direct acquisition in the first quarter of 2012 and add approximately $80 billion in deposits. The deposit volume trends in the fourth quarter of 2011 reflect the evolution in the company's deposit strategy in anticipation of the ING Direct acquisition.
Revenues
Total revenue in the fourth quarter of 2011 was $4.1 billion, down $104 million, or 2.5 percent. Revenue in the quarter was negatively impacted by the absence of the third quarter 2011 finance charge and fee reserve (FCFR) release and higher expected expense related to prior sales of payment protection insurance in the UK. In addition, non-interest income was negatively impacted by a representation and warranty expense of $38 million. Excluding the impact of these items, revenue increased about 2.5 percent in the fourth quarter, in line with average loan growth.
Margins
Net interest margin declined 17 basis points in the quarter to 7.22 percent. The margin benefited from a shift from cash to loans and a reduction in funding costs attributed to lower deposit rates. These benefits were more than offset by a decline in loan yields driven largely by one-time effects such as the absence of the FCFR release which benefited third quarter 2011 interest income.
Non-Interest Expense
Non-interest expense for the fourth quarter increased $321 million primarily due to a seasonal ramp in marketing expenses and an increase in operating expenses. The increase in operating expenses includes approximately $90 million in litigation expenses and approximately $40 million in asset write downs and other costs as the company rationalized some facilities and equipment, principally related to acquired bank businesses. Additionally, the company accelerated its build-out of 'top bank' infrastructure, especially in the second half of 2011, to ensure our readiness to execute on attractive acquisition opportunities.
Pre-Provision Income (before tax)
Pre-provision earnings decreased in the quarter as a result of the increase in non-interest expense and the reported decline in revenue.
Provision Expense
Provision expense increased $239 million in the quarter as continued improvement in the outlook for credit performance was more than offset by growth in loan balances and seasonal effects. The charge-off rate increased 17 basis points to 2.69 percent, while the coverage ratio of allowance to loans fell by 16 basis points to 3.13 percent.
Net Income
Net income in the quarter decreased $406 million reflecting the impact of increases in non-interest and provision expense.
Capital Ratios
The company's estimated Tier 1 common equity ratio decreased 30 basis points from September 30, 2011, to 9.7 percent as of December 31, 2011, driven by strong loan growth at the end of the fourth quarter. The Tier 1 common equity ratio increased 90 basis points from last year's rate of 8.8 percent at December 31, 2010. Using known Basel III definitions, our Tier 1 common equity ratio would have been approximately 10 basis points higher at December 31, 2011, or 9.8 percent.
"Significant credit improvement in 2011 led to a sizeable increase in profitability from continuing operations for 2011," said Gary L. Perlin, Capital One's Chief Financial Officer. "Over the course of the year, we generated substantial amounts of capital and expect to generate healthy amounts of capital going forward."
Tier 1 common equity ratio, as used throughout this release, is a non-GAAP financial measure. For additional information, see Table 12 in the Financial Supplement.
Business Segment Results
Credit Card Highlights
Domestic Card reported net income in the fourth quarter of 2011 of $395 million. Total revenue grew 4.7 percent in the fourth quarter of 2011 from the fourth quarter of 2010, driven by growth in loans, strong purchase volumes, and stable margins. The business posted $2.3 billion in net income in 2011, driven by significant credit improvement, the return of modest loan growth, and stable margins.
Domestic Card net charge-off rate increased 15 basis points in the quarter to 4.07 percent, consistent with expected seasonal patterns. Compared with the fourth quarter of 2010, the charge-off rate improved by 321 basis points, resulting from the significant credit improvements experienced in 2011.
Domestic Card loan balances grew $2.8 billion, or 5 percent, in the fourth quarter driven by seasonal spending and balance building on a growing account base. Growth for the year resulted largely from the addition of the Kohl's private label partnership, as well as a return to growth in the company's general purpose card business in the second half of the year. Excluding the expected installment loan run-off, Domestic Card loans grew by $4.7 billion, or 9 percent for the full year.
Purchase volume increased 9.3 percent in the quarter, reflecting continued strong growth in purchase volume across the company's Domestic Card business. Purchase volume grew 17.8 percent from the fourth quarter of 2010, excluding the impact of the Kohl's portfolio.
Commercial Banking Highlights
The Commercial Banking business delivered another quarter of solid profitability and steady loan growth, as deposits and commercial customer relationships continued to grow in the quarter, as well.
The combination of improving credit and growth in loan and deposit volumes drove 2011 net income of $532 million in the Commercial Banking business.
Ending loans were up 5.9 percent from the prior quarter and up 14.3 percent from the fourth quarter of 2010. Growth in loan commitments, an early indicator of future loan growth, was even stronger.
Commercial Banking credit metrics have stabilized and improved over the last six quarters. The charge-off rate for Commercial Banking was 0.63 percent, down 80 basis points from the same quarter last year. Excluding the run-off Small Ticket CRE portfolio, the charge-off rate in the company's core Commercial Lending businesses was 0.47 percent in the quarter, an improvement of 53 basis points from the prior year. Commercial Lending charge-offs were up 19 basis points from the third quarter, driven by a small number of impaired CRE loans related to a single troubled relationship, which the company had reserved for in prior quarters. The slower flow rate into NPL and stable property values are driving lower charge-offs.
Consumer Banking Highlights
The Consumer Banking business delivered net income of $117 million in the fourth quarter of 2011 and $809 million for full year, driven by the strong performance of the Auto Finance business and growth in deposits with improving interest expense rates.
Loan balances were up modestly as strong growth in auto loans was partially offset by expected runoff of the Home Loan portfolio. Auto Finance originations were $3.6 billion, up 5.2 percent from the third quarter and 61.8 percent from the fourth quarter of 2010.
In the Auto Finance business, net charge-off and delinquency rates increased in the quarter, consistent with expected seasonal patterns. However, charge-offs and delinquencies for the year improved 58 basis points and 70 basis points, respectively.
In the Home Loan business, the charge-off rate increased 37 basis points in the quarter but was relatively unchanged compared with the same quarter in 2010, while the delinquency rate increased modestly.
Consumer Banking deposits remained flat in the quarter but grew 6.7 percent in 2011 as the Consumer Banking segment continued to grow retail banking customer relationships.
For more lending information and statistics on the segment results, please refer to the Financial Supplement.
Forward-looking statements
The company cautions that its current expectations in this release dated January 19, 2012 and the company's plans, objectives, expectations and intentions, are forward-looking statements which speak only as of the date hereof. The company does not undertake any obligation to update or revise any of the information contained herein whether as a result of new information, future events or otherwise.
Certain statements in this release are forward-looking statements, including those that discuss, among other things, strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns, expenses, capital measures, accruals for claims in litigation and for other claims against the company, earnings per share or other financial measures for the company; future financial and operating results; the company's plans, objectives, expectations and intentions; the projected impact and benefits of the pending transactions involving the company, HSBC and ING Direct (the "transactions"); and the assumptions that underlie these matters. To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities Litigation Reform Act of 1995. Numerous factors could cause the company's actual results to differ materially from those described in such forward-looking statements, including, among other things: general economic and business conditions in the U.S., the U.K., Canada or the company's local markets, including conditions affecting employment levels, interest rates, consumer income and confidence, spending and savings that may affect consumer bankruptcies, defaults, charge-offs and deposit activity; an increase or decrease in credit losses (including increases due to a worsening of general economic conditions in the credit environment); the possibility that regulatory and other approvals and conditions to either of the transactions are not obtained or satisfied on a timely basis or at all; the possibility that modifications to the terms of either of the transactions may be required in order to obtain or satisfy such approvals or conditions; the possibility that the company will not receive third-party consents necessary to fully realize the anticipated benefits of the transactions; the possibility that the company may not fully realize the projected cost savings and other projected benefits of the transactions; changes in the anticipated timing for closing either of the transactions; difficulties and delays in integrating the assets and businesses acquired in the transactions; business disruption during the pendency of or following the transactions; the inability to sustain revenue and earnings growth; diversion of management time on issues related to the transactions; reputational risks and the reaction of customers and counterparties to the transactions; disruptions relating to the transactions negatively impacting the company's ability to maintain relationships with customers, employees and suppliers; changes in asset quality and credit risk as a result of the transactions; financial, legal, regulatory, tax or accounting changes or actions, including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder; developments, changes or actions relating to any litigation matter involving the company; increases or decreases in interest rates; the company's ability to access the capital markets at attractive rates and terms to capitalize and fund its operations and future growth; the success of the company's marketing efforts in attracting and retaining customers; increases or decreases in the company's aggregate loan balances or the number of customers and the growth rate and composition thereof, including increases or decreases resulting from factors such as shifting product mix, amount of actual marketing expenses the company incurs and attrition of loan balances; the level of future repurchase or indemnification requests the company may receive, the actual future performance of mortgage loans relating to such requests, the success rates of claimants against the company, any developments in litigation and the actual recoveries the company may make on any collateral relating to claims against the company; the amount and rate of deposit growth; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products or financial condition; any significant disruption in the company's operations or technology platform; the company's ability to maintain a compliance infrastructure suitable for its size and complexity; the company's ability to control costs; the amount of, and rate of growth in, the company's expenses as its business develops or changes or as it expands into new market areas; the company's ability to execute on its strategic and operational plans; any significant disruption of, or loss of public confidence in, the United States Mail service affecting the company's response rates and consumer payments; the company's ability to recruit and retain experienced personnel to assist in the management and operations of new products and services; changes in the labor and employment markets; fraud or misconduct by the company's customers, employees or business partners; competition from providers of products and services that compete with the company's businesses; and other risk factors set forth from time to time in reports that the company 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, 2010, and Exhibit 99.5 to the Current Report on Form 8-K filed on July 13, 2011.
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 $128.2 billion in deposits and $206.0 billion in total assets outstanding as of December 31, 2011. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. has approximately 1,000 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
Fourth Quarter 2011 (1)
Table of Contents
Page
----
Capital One Financial Consolidated
Table 1: Financial & Statistical Summary - Consolidated 1
Table 2: Notes to Consolidated Financial & Statistical Summary (Table 1) 2
Table 3: Consolidated Statements of Income 3
Table 4: Consolidated Balance Sheets 4
Table 5: Average Balances, Net Interest Income and Net Interest Margin 5
Table 6: Loan Information and Performance Statistics 6
Business Segment Detail
Table 7: Financial & Statistical Summary - Credit Card Business 7
Table 8: Financial & Statistical Summary - Consumer Banking Business 8
Table 9: Financial & Statistical Summary - Commercial Banking Business 9
Table 10: Financial & Statistical Summary - Other and Total 10
Table 11: Notes to Loan and Business Segment Disclosures (Tables 6 - 10) 11
Other
Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures 12
The information contained in this Financial Supplement is preliminary and based on data available at
the time of the earnings presentation, and investors should refer to our 2011 Annual Report on Form
(1) 10-K once it is filed with the Securities and Exchange Commission.
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 1: Financial & Statistical Summary-Consolidated (1)
2011 2011 2011
(Dollars in millions, except per share data and as noted)
(unaudited) Q4 Q3 Q2
--- --- ---
Earnings
--------
Net interest income $3,182 $3,283 $3,136
Non-interest income (2) (3) 868 871 857
--- --- ---
Total revenue (4) $4,050 $4,154 $3,993
Provision for loan and lease losses 861 622 343
Marketing expenses 420 312 329
Operating expenses (5) 2,198 1,985 1,926
----- ----- -----
Income from continuing operations before income taxes $571 $1,235 $1,395
Income tax provision 160 370 450
--- --- ---
Income from continuing operations, net of tax 411 865 945
Loss from discontinued operations, net of tax (3) (4) (52) (34)
--- --- ---
Net income $407 $813 $911
==== ==== ====
Common Share Statistics
-----------------------
Basic EPS:
Income from continuing operations, net of tax $0.89 $1.89 $2.07
Loss from discontinued operations, net of tax (0.01) (0.11) (0.07)
----- ----- -----
Net income per common share $0.88 $1.78 $2.00
===== ===== =====
Diluted EPS:
Income from continuing operations, net of tax $0.89 $1.88 $2.04
Loss from discontinued operations, net of tax (0.01) (0.11) (0.07)
----- ----- -----
Net income per common share $0.88 $1.77 $1.97
===== ===== =====
Weighted average common shares outstanding (in millions):
Basic EPS 456.2 456.0 455.6
Diluted EPS 458.5 460.4 462.2
Common shares outstanding (period end) 456.4 456.1 455.8
Dividends per common share $0.05 $0.05 $0.05
Tangible book value per common share (period end) (6) 34.26 33.82 32.20
Stock price per common share (period end) 42.29 39.63 51.67
Total market capitalization (period end) 19,301 18,075 23,551
Balance Sheet (Period End)
--------------------------
Loans held for investment(7) $135,892 $129,952 $128,965
Interest-earning assets 179,817 174,308 174,302
Total assets 206,019 200,148 199,753
Tangible assets (8) 191,806 185,891 185,715
Interest-bearing deposits 109,945 110,777 109,278
Total deposits 128,226 128,318 126,117
Borrowings 39,561 34,315 37,735
Stockholders' equity 29,666 29,378 28,681
Tangible common equity (TCE) (9) 15,758 15,425 14,675
Balance Sheet (Quarterly Average Balances)
------------------------------------------
Average loans held for investment (7) $131,581 $129,043 $127,916
Average interest-earning assets 176,267 177,710 174,143
Average total assets 200,106 201,611 199,229
Average interest-bearing deposits 109,914 110,750 109,251
Average total deposits 128,450 128,268 125,834
Average borrowings 34,812 37,366 39,451
Average stockholders' equity 29,698 29,316 28,255
Performance Metrics
-------------------
Net interest income growth (quarter over quarter) (3)% 5% - %
Non-interest income growth(quarter over quarter) - 2 (9)
Revenue growth(quarter over quarter) (3) 4 (2)
Revenue margin (10) 9.19 9.35 9.17
Net interest margin (11) 7.22 7.39 7.20
Return on average assets (12) 0.82 1.72 1.90
Return on average equity (13) 5.54 11.80 13.38
Return on average tangible common equity (14) 10.43 22.58 26.57
Non-interest expense as a % of average loans held for
investment (15) 7.96 7.12 7.05
Efficiency ratio (16) 64.64 55.30 56.47
Effective income tax rate 28.0 30.0 32.3
Full-time equivalent employees (in thousands) 30.5 29.5 28.2
Credit Quality Metrics (17)
---------------------------
Allowance for loan and lease losses $4,250 $4,280 $4,488
Allowance as a % of loans held for investment 3.13% 3.29% 3.48%
Net charge-offs $884 $812 $931
Net charge-off rate (18) (19) 2.69% 2.52% 2.91%
30+ day performing delinquency rate 3.35 3.13 2.90
30+ day total delinquency rate (20) - 3.81 3.57
Capital Ratios
--------------
Tier 1 risk-based capital ratio (21) 12.0% 12.4% 11.8%
Tier 1 common equity ratio (22) 9.7 10.0 9.4
Total risk-based capital ratio (23) 14.9 15.4 15.0
Tangible common equity (TCE) ratio (24) 8.2 8.3 7.9
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 2: Notes to Consolidated Financial & Statistical Summary
(Table 1)
(1) Certain prior period amounts have been reclassified to conform to the current period presentation.
Includes the impact from the change in fair value of retained interests, including interest-only
(2) strips, which totaled $11 million in Q4 2011, $12 million in Q3 2011, and $16 million in Q2 2011.
The mortgage representation and warranty reserve increased to $943 million as of December 31, 2011,
from $892 million as of September 30, 2011. We recorded a provision for repurchase losses of $59
million in Q4 2011, $72 million in Q3 2011, and $37 million in Q2 2011. The majority of the provision
for repurchase losses is generally included in discontinued operations, with the remaining portion
(3) included in non-interest income.
The estimated uncollectible amount of billed finance charges and fees excluded from revenue totaled
$130 million in Q4 2011, $24 million in Q3 2011, and $112 million in Q2 2011. As further discussed in
our September 30, 2011 Form 10-Q, in the third quarter of 2011 we revised the manner in which we
estimate expected recoveries of finance charge and fee amounts previously considered to be
uncollectible. The result of this revision was a reduction of the uncollectible finance charge and fee
reserves by approximately $83 million as of September 30, 2011, which resulted in a corresponding
(4) increase in revenues of $83 million in Q3 2011.
Includes core deposit intangible amortization expense of $40 million in Q4 2011, $42 million in Q3
2011, and $44 million in Q2 2011. Also includes integration costs of $17 million in Q4 2011, $1
(5) million in Q3 2011, and $0 million in Q2 2011.
Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity
divided by common shares outstanding. See "Table 12: Reconciliation of Non-GAAP Measures and
(6) Calculation of Regulatory Capital Measures" for the calculation of tangible common equity.
Results reflect the impact of the April 1, 2011 acquisition of the existing private-label credit card
loan portfolio of Kohl's Department Stores ("Kohl's"), which had an outstanding principal and interest
(7) balance of approximately $3.7 billion at acquisition.
Tangible assets is a non-GAAP measure consisting of total assets less assets from discontinued
operations and intangible assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation
(8) of Regulatory Capital Measures" for the calculation of this measure.
Tangible common equity is a non-GAAP measure consisting of total stockholders' equity less intangible
assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital
(9) Measures" for the calculation of this measure.
Calculated based on annualized total revenue for the period divided by average interest-earning assets
(10) for the period.
Calculated based on annualized net interest income for the period divided by average interest-earning
(11) assets for the period.
Calculated based on annualized income from continuing operations, net of tax, for the period divided by
(12) average total assets for the period.
Calculated based on annualized income from continuing operations, net of tax, for the period divided by
(13) average stockholders' equity for the period.
Calculated based on annualized income from continuing operations, net of tax, for the period divided by
(14) average tangible common equity for the period.
Calculated based on annualized non-interest expense for the period divided by average loans held for
(15) investment for the period.
(16) Calculated based on non-interest expense for the period divided by total revenue for the period.
Purchased credit impaired ("PCI") loans acquired as part of the Chevy Chase Bank ("CCB") acquisition
are included in the denominator used in calculating the credit quality metrics presented in Table 1.
These metrics excluding the impact of loans acquired from CCB from the denominator are presented
(17) below:
2011 2011 2011
(Dollars in millions) (unaudited) Q4 Q3 Q2
--------------------------------- --- --- ---
CCB period-end acquired loan portfolio $4,689 $4,873 $5,181
CCB average acquired loan portfolio 4,781 4,998 5,112
Allowance as a % of loans held for investment, excluding CCB loans 3.22% 3.40% 3.62%
Net charge-off rate, excluding CCB loans 2.79 2.62 3.03
30+ day performing delinquency rate, excluding CCB loans 3.47 3.25 3.02
In accordance with our loss-sharing agreement with Kohl's, charge-offs for the portfolio are reported
net of any reimbursement of credit losses from Kohl's, which has the impact of lowering the overall
(18) charge-off rate.
Calculated based on annualized net charge-offs for the period divided by average loans held for
(19) investment for the period.
The 30+ day total delinquency rate as of the end of Q4 2011 will be provided in the 2011 Annual Report
(20) on Form 10-K.
Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital
divided by risk-weighted assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation
(21) of Regulatory Capital Measures" for the calculation of this ratio.
Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity divided by
risk-weighted assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation of
(22) Regulatory Capital Measures" for the calculation of this ratio and non-GAAP reconciliation.
.
Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based
capital divided by risk-weighted assets. See "Table 12: Reconciliation of Non-GAAP Measures and
(23) Calculation of Regulatory Capital Measures" for the calculation of this ratio.
Tangible common equity ratio ("TCE ratio") is a non-GAAP measure calculated based on tangible common
equity divided by tangible assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation
(24) of Regulatory Capital Measures" for the calculation of this ratio and non-GAAP reconciliation.
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 3: Consolidated Statements of Income
Year Ended
----------
December
2011 2011 2010 31, December 31,
Q4 Q3 Q4 2011 2010
--- --- --- ---- ----
(Dollars in
millions, except
per share data)
(unaudited)
---------------------
Interest income:
Loans held for
investment,
including past-
due fees $3,440 $3,550 $3,352 $13,774 $13,934
Investment
securities 244 264 305 1,137 1,342
Cash equivalents
and other 17 21 17 76 77
--- --- --- --- ---
Total interest
income 3,701 3,835 3,674 14,987 15,353
Interest expense:
Deposits 264 294 340 1,187 1,465
Securitized debt
obligations 80 89 165 422 809
Senior and
subordinated notes 89 84 65 300 276
Other borrowings 86 85 81 337 346
--- --- --- --- ---
Total interest
expense 519 552 651 2,246 2,896
Net interest income 3,182 3,283 3,023 12,741 12,457
Provision for loan
and lease losses 861 622 838 2,360 3,907
--- --- --- ----- -----
Net interest income
after provision
for loan and lease
losses 2,321 2,661 2,185 10,381 8,550
----- ----- ----- ------ -----
Non-interest
income:
Servicing and
securitizations 9 12 10 44 7
Service charges and
other customer-
related fees 452 542 496 1,979 2,073
Interchange fees,
net 346 321 349 1,318 1,340
Net other-than-
temporary
impairment losses
recognized in
earnings (6) (6) (3) (21) (65)
Other 67 2 87 218 359
--- --- --- --- ---
Total non-
interest income 868 871 939 3,538 3,714
Non-interest
expense:
Salaries and
associate benefits 817 750 657 3,023 2,594
Marketing 420 312 308 1,337 958
Communications and
data processing 177 178 181 681 693
Supplies and
equipment 137 143 139 539 520
Occupancy 131 122 115 490 486
Other 936 792 691 3,262 2,683
--- --- --- ----- -----
Total non-
interest expense 2,618 2,297 2,091 9,332 7,934
Income from
continuing
operations before
income taxes 571 1,235 1,033 4,587 4,330
Income tax
provision 160 370 332 1,334 1,280
--- --- --- ----- -----
Income from
continuing
operations, net of
tax 411 865 701 3,253 3,050
Loss from
discontinued
operations, net of
tax (4) (52) (4) (106) (307)
--- --- --- ---- ----
Net income $407 $813 $697 $3,147 $2,743
==== ==== ==== ====== ======
Basic earnings per
common share:
Income from
continuing
operations $0.89 $1.89 $1.55 $7.08 $6.74
Loss from
discontinued
operations (0.01) (0.11) (0.01) (0.23) (0.67)
----- ----- ----- ----- -----
Net income per
basic common share $0.88 $1.78 $1.54 $6.85 $6.07
===== ===== ===== ===== =====
Diluted earnings
per common share:
Income from
continuing
operations $0.89 $1.88 $1.53 $7.03 $6.68
Loss from
discontinued
operations (0.01) (0.11) (0.01) (0.23) (0.67)
----- ----- ----- ----- -----
Net income per
diluted common
share $0.88 $1.77 $1.52 $6.80 $6.01
===== ===== ===== ===== =====
Weighted average
common shares
outstanding (in
millions):
Basic EPS 456.2 456.0 452.7 455.5 452.1
Diluted EPS 458.5 460.4 457.2 459.1 456.4
Dividends paid per
common share $0.05 $0.05 $0.05 $0.20 $0.20
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 4: Consolidated Balance Sheets
December 31, September 30, December 31,
(Dollars in millions)(unaudited) 2011 2011 2010
-------------------------------- ---- ---- ----
Assets:
Cash and due from banks $2,097 $1,794 $2,067
Interest-bearing deposits with banks 3,399 3,238 2,776
Federal funds sold and securities purchased under
agreements to resell 342 1,326 406
--- ----- ---
Cash and cash equivalents 5,838 6,358 5,249
Restricted cash for securitization investors 791 984 1,602
Securities available for sale, at fair value 38,759 38,400 41,537
Loans held for investment:
Unsecuritized loans held for investment, at amortized cost 88,242 83,010 71,921
Restricted loans for securitization investors 47,650 46,942 54,026
Total loans held for investment 135,892 129,952 125,947
Less: Allowance for loan and lease losses (4,250) (4,280) (5,628)
Net loans held for investment 131,642 125,672 120,319
Loans held for sale, at lower-of-cost-or-fair-value 201 312 228
Accounts receivable from securitizations 94 101 118
Premises and equipment, net 2,748 2,785 2,749
Interest receivable 1,029 958 1,070
Goodwill 13,592 13,593 13,591
Other 11,325 10,985 11,040
------ ------ ------
Total assets $206,019 $200,148 $197,503
Liabilities:
Interest payable $466 $401 $488
Customer deposits:
Non-interest bearing deposits 18,281 17,541 15,048
Interest-bearing deposits 109,945 110,777 107,162
Total customer deposits 128,226 128,318 122,210
Securitized debt obligations 16,527 17,120 26,915
Other debt:
Federal funds purchased and securities loaned or sold under
agreements to repurchase 1,464 1,441 1,517
Senior and subordinated notes 11,034 11,051 8,650
Other borrowings 10,536 4,703 4,714
Total other debt 23,034 17,195 14,881
Other liabilities 8,100 7,736 6,468
----- ----- -----
Total liabilities 176,353 170,770 170,962
Stockholders' equity:
Common stock 5 5 5
Paid-in capital, net 19,274 19,234 19,084
Retained earnings and accumulated other comprehensive
income 13,631 13,382 10,654
Less: Treasury stock, at cost (3,244) (3,243) (3,202)
------ ------ ------
Total stockholders' equity 29,666 29,378 26,541
Total liabilities and stockholders' equity $206,019 $200,148 $197,503
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 5: Average Balances, Net Interest Income and Net Interest Margin
2011 Q4 2011 Q3 2010 Q4
------- ------- -------
Interest Interest Interest
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(Dollars in millions)(unaudited) Balance Expense Rate Balance Expense Rate Balance Expense Rate
-------------------------------- ------- ------- ---- ------- ------- ---- ------- ------- ----
Interest-earning assets:
Loans held for investment $131,581 $3,440 10.46% $129,043 $3,550 11.00% $125,441 $3,352 10.69%
Investment securities 39,005 244 2.50 37,189 264 2.84 41,004 305 2.98
Cash equivalents and other 5,681 17 1.20 11,478 21 0.73 7,547 17 0.90
----- --- ---- ------ --- ---- ----- --- ----
Total interest-earning assets $176,267 $3,701 8.40% $177,710 $3,835 8.63% $173,992 $3,674 8.45%
-------- ------ ---- -------- ------ ---- -------- ------ ----
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $13,700 $12 0.35% $12,602 $9 0.29% $12,918 $8 0.25%
Money market deposit accounts 47,167 87 0.74 47,483 100 0.84 43,822 110 1.00
Savings accounts 31,422 47 0.60 30,944 56 0.72 25,121 54 0.86
Other consumer time deposits 12,264 77 2.51 13,530 84 2.48 16,941 112 2.64
Public fund CD's of $100,000 or more 84 1 4.76 92 1 4.35 204 1 1.96
CD's of $100,000 or more 4,748 39 3.29 5,407 43 3.18 6,696 54 3.23
Foreign time deposits 529 1 0.76 692 1 0.58 895 1 0.45
--- --- ---- --- --- ---- --- --- ----
Total interest-bearing deposits $109,914 $264 0.96% $110,750 $294 1.06% $106,597 $340 1.28%
Securitized debt obligations 16,780 80 1.91 18,478 89 1.93 27,708 165 2.38
Senior and subordinated notes 10,237 89 3.48 10,519 84 3.19 8,096 65 3.21
Other borrowings 7,794 86 4.41 8,369 85 4.06 6,624 81 4.89
----- --- ---- ----- --- ---- ----- --- ----
Total interest-bearing liabilities $144,725 $519 1.43% $148,116 $552 1.49% $149,025 $651 1.75%
-------- ---- ---- -------- ---- ---- -------- ---- ----
Net interest income/spread $3,182 6.97% $3,283 7.14% $3,023 6.70%
====== ====== ======
Impact of non-interest bearing
funding 0.25% 0.25% 0.25%
Net interest margin 7.22% 7.39% 6.95%
==== ==== ====
CAPITAL ONE FINANCIAL CORPORATION
(COF)
Table 6: Loan Information and
Performance Statistics (1)
2011 2011 2011
(Dollars in millions)(unaudited) Q4 Q3 Q2
-------------------------------- --- --- ---
Period-end loans held for investment
------------------------------------
Credit card:
Domestic credit card (2) $56,609 $53,820 $53,994
International credit card 8,466 8,210 8,711
Total credit card 65,075 62,030 62,705
------ ------ ------
Consumer banking:
Automobile 21,779 20,422 19,223
Home loan 10,433 10,916 11,323
Retail banking 4,103 4,014 4,046
Total consumer banking 36,315 35,352 34,592
------ ------ ------
Commercial banking:
Commercial and multifamily real
estate 15,410 14,389 14,035
Middle market 12,684 11,924 11,404
Specialty lending 4,404 4,221 4,122
----- ----- -----
Total commercial lending 32,498 30,534 29,561
Small-ticket commercial real estate 1,503 1,571 1,642
----- ----- -----
Total commercial banking 34,001 32,105 31,203
------ ------ ------
Other loans(3) 501 465 465
Total $135,892 $129,952 $128,965
======== ======== ========
Average loans held for investment
---------------------------------
Credit card:
Domestic credit card (2) $54,403 $53,668 $53,868
International credit card 8,361 8,703 8,823
Total credit card 62,764 62,371 62,691
------ ------ ------
Consumer banking:
Automobile 21,101 19,757 18,753
Home loan 10,683 11,126 11,534
Retail banking 4,007 3,979 4,154
Total consumer banking 35,791 34,862 34,441
------ ------ ------
Commercial banking:
Commercial and multifamily real
estate 14,628 14,021 13,597
Middle market 12,068 11,572 10,979
Specialty lending 4,308 4,154 4,014
----- ----- -----
Total commercial lending 31,004 29,747 28,590
Small-ticket commercial real estate 1,547 1,598 1,726
----- ----- -----
Total commercial banking 32,551 31,345 30,316
------ ------ ------
Other loans (3) 475 465 468
--- --- ---
Total $131,581 $129,043 $127,916
======== ======== ========
Net charge-off rates
--------------------
Credit card:
Domestic credit card (4) 4.07% 3.92% 4.74%
International credit card 5.77 6.15 7.02
Total credit card 4.30% 4.23% 5.06%
---- ---- ----
Consumer banking:
Automobile 2.07% 1.69% 1.11%
Home loan (5) 0.90 0.53 0.60
Retail banking (5) 1.44 1.67 1.73
Total consumer banking (5) 1.65% 1.32% 1.01%
---- ---- ----
Commercial banking:
Commercial and multifamily real
estate (5) 0.76% 0.12% 0.39%
Middle market (5) 0.20 0.41 0.13
Specialty lending 0.24 0.44 0.47
---- ---- ----
Total commercial lending (5) 0.47% 0.28% 0.30%
Small-ticket commercial real estate 3.73 2.19 3.77
---- ---- ----
Total commercial banking (5) 0.63% 0.37% 0.50%
---- ---- ----
Other loans 9.29% 6.38% 10.57%
---- ---- -----
Total 2.69% 2.52% 2.91%
==== ==== ====
30+ day performing delinquency rates
------------------------------------
Credit card:
Domestic credit card 3.66% 3.65% 3.33%
International credit card 5.18 5.35 5.30
Total credit card 3.86% 3.87% 3.60%
---- ---- ----
Consumer banking:
Automobile 6.88% 6.34% 6.09%
Home loan (5) 0.89 0.78 0.70
Retail banking (5) 0.83 0.89 0.76
Total consumer banking (5) 4.47% 4.01% 3.70%
---- ---- ----
Nonperforming asset rates (6) (7)
---------------------------------
Consumer banking:
Automobile 0.58% 0.53% 0.49%
Home loan (5) 4.58 4.74 4.40
Retail banking (5) 2.50 2.37 2.45
Total consumer banking (5) 1.94% 2.04% 2.00%
---- ---- ----
Commercial banking:
Commercial and multifamily real
estate (5) 1.43% 2.16% 2.35%
Middle market(5) 0.82 1.04 1.19
Specialty lending 0.75 0.87 0.95
---- ---- ----
Total commercial lending (5) 1.10% 1.54% 1.71%
Small-ticket commercial real estate 2.86 1.58 0.75
---- ---- ----
Total commercial banking (5) 1.17% 1.55% 1.66%
---- ---- ----
CAPITAL ONE FINANCIAL
CORPORATION (COF)
Table 7: Financial & Statistical Summary
--Credit Card Business
2011 2011 2011
(Dollars in millions)
(unaudited) Q4 Q3 Q2
--------------------- --- --- ---
Credit Card
-----------
Earnings:
Interest income $2,253 $2,354 $2,209
Interest expense 304 312 319
--- --- ---
Net interest income 1,949 2,042 1,890
Non-interest income 638 678 619
--- --- ---
Total revenue 2,587 2,720 2,509
Provision for loan and
lease losses 600 511 309
Non-interest expense 1,431 1,188 1,238
----- ----- -----
Income from continuing
operations before taxes 556 1,021 962
Income tax provision 203 358 344
--- --- ---
Income from continuing
operations, net of tax $353 $663 $618
==== ==== ====
Selected metrics:
Period-end loans held
for investment $65,075 $62,030 $62,705
Average loans held for
investment 62,764 62,371 62,691
Average yield on loans
held for investment 14.12% 14.84% 13.83%
Revenue margin 16.49 17.44 16.01
Net charge-off rate 4.30 4.23 5.06
30+ day total delinquency
rate (8) 3.86 3.87 3.60
Purchase volume (9) $38,179 $34,918 $34,226
Domestic Card
-------------
Earnings:
Interest income $1,940 $1,992 $1,852
Interest expense 234 239 245
--- --- ---
Net interest income 1,706 1,753 1,607
Non-interest income 613 588 584
--- --- ---
Total revenue 2,319 2,341 2,191
Provision for loan and
lease losses 519 381 187
Non-interest expense 1,183 972 1,008
----- --- -----
Income from continuing
operations before taxes 617 988 996
Income tax provision 222 351 354
--- --- ---
Income from continuing
operations, net of tax $395 $637 $642
==== ==== ====
Selected metrics:
Period-end loans held
for investment $56,609 $53,820 $53,994
Average loans held for
investment 54,403 53,668 53,868
Average yield on loans
held for investment 14.05% 14.62% 13.52%
Revenue margin 17.05 17.45 16.27
Net charge-off rate (4) 4.07 3.92 4.74
30+ day total delinquency
rate (8) 3.66 3.65 3.33
Purchase volume (9) $34,586 $31,686 $31,070
International Card
------------------
Earnings:
Interest income $313 $362 $357
Interest expense 70 73 74
--- --- ---
Net interest income 243 289 283
Non-interest income 25 90 35
--- --- ---
Total revenue 268 379 318
Provision for loan and
lease losses 81 130 122
Non-interest expense 248 216 230
--- --- ---
Income (loss) from
continuing operations
before taxes (61) 33 (34)
Income tax provision
(benefit) (19) 7 (10)
--- --- ---
Income (loss) from
continuing operations,
net of tax $(42) $26 $(24)
==== === ====
Selected metrics:
Period-end loans held
for investment $8,466 $8,210 $8,711
Average loans held for
investment 8,361 8,703 8,823
Average yield on loans
held for investment 14.57% 16.24% 15.77%
Revenue margin 12.82 17.42 14.42
Net charge-off rate 5.77 6.15 7.02
30+ day total delinquency
rate (8) 5.18 5.35 5.30
Purchase volume (9) $3,593 $3,232 $3,156
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 8: Financial & Statistical
Summary --Consumer Banking Business
2011 2011 2011
(Dollars in millions) (unaudited) Q4 Q3 Q2
--------------------------------- --- --- ---
Consumer Banking
----------------
Earnings:
Interest income $1,521 $1,546 $1,517
Interest expense 416 449 466
--- --- ---
Net interest income 1,105 1,097 1,051
Non-interest income 152 188 194
--- --- ---
Total revenue 1,257 1,285 1,245
Provision for loan and lease losses 180 136 41
Non-interest expense 893 853 758
--- --- ---
Income from continuing operations before
taxes 184 296 446
Income tax provision 67 106 159
--- --- ---
Income from continuing operations, net
of tax $117 $190 $287
==== ==== ====
Selected metrics:
Period-end loans held for investment $36,315 $35,352 $34,592
Average loans held for investment 35,791 34,862 34,441
Average yield on loans held for
investment 9.46% 9.83% 9.51%
Auto loan originations $3,586 $3,409 $2,910
Period-end deposits 88,540 88,589 87,282
Average deposits 88,390 88,266 86,926
Deposit interest expense rate 0.84% 0.95% 1.00%
Core deposit intangible amortization $31 $32 $34
Net charge-off rate (5) 1.65% 1.32% 1.01%
Nonperforming loans as a percentage of
loans held for investment (5) (6) 1.79 1.88 1.83
Nonperforming asset rate (5) (6) 1.94 2.04 2.00
30+ day performing delinquency rate (5)
(6) 4.47 4.01 3.70
Period-end loans serviced for others $17,998 $18,624 $19,226
CAPITAL ONE FINANCIAL CORPORATION
(COF)
Table 9: Financial & Statistical
Summary --Commercial Banking
Business
2011 2011 2011
(Dollars in millions) (unaudited) Q4 Q3 Q2
--- --- ---
Commercial Banking
------------------
Earnings:
Interest income $547 $533 $523
Interest expense 177 180 190
--- --- ---
Net interest income 370 353 333
Non-interest income 75 62 62
--- --- ---
Total revenue 445 415 395
Provision for loan and lease losses 74 (10) (18)
Non-interest expense 220 200 192
--- --- ---
Income from continuing operations
before taxes 151 225 221
Income tax provision 54 80 79
--- --- ---
Income from continuing operations, net
of tax $97 $145 $142
=== ==== ====
Selected metrics:
Period-end loans held for investment $34,001 $32,105 $31,203
Average loans held for investment 32,551 31,345 30,316
Average yield on loans held for
investment 4.68% 4.69% 4.74%
Period-end deposits $26,532 $25,282 $24,304
Average deposits 26,034 25,227 24,282
Deposit interest expense rate 0.42% 0.48% 0.52%
Core deposit intangible amortization $9 $10 $10
Net charge-off rate (5) 0.63% 0.37% 0.50%
Nonperforming loans as a percentage of
loans held for investment (5) 1.09 1.43 1.54
Nonperforming asset rate (5) 1.17 1.55 1.66
Risk category: (10)
Noncriticized $31,306 $29,374 $28,459
Criticized performing 1,843 1,781 1,765
Criticized nonperforming 371 459 481
--- --- ---
Total non-PCI loans 33,520 31,614 30,705
Total PCI loans 481 491 498
Total $34,001 $32,105 $31,203
======= ======= =======
% of period-end held for investment
commercial loans:
Noncriticized 92.07% 91.49% 91.21%
Criticized performing 5.42 5.55 5.66
Criticized nonperforming 1.09 1.43 1.54
---- ---- ----
Total non-PCI loans 98.59 98.47 98.40
Total PCI loans 1.41 1.53 1.60
Total 100.00% 100.00% 100.00%
====== ====== ======
CAPITAL ONE FINANCIAL
CORPORATION (COF)
Table 10: Financial & Statistical Summary
-- Other and Total
2011 2011 2011
(Dollars in millions)
(unaudited) Q4 Q3 Q2
--------------------- --- --- ---
Other
-----
Earnings:
Interest income $(620) $(598) $(550)
Interest expense (378) (389) (412)
---- ---- ----
Net interest expense (242) (209) (138)
Non-interest income
(expense) 3 (57) (18)
--- --- ---
Total revenue (239) (266) (156)
Provision for loan and lease
losses 7 (15) 11
Non-interest expense 74 56 67
--- --- ---
Loss from continuing
operations before taxes (320) (307) (234)
Income tax benefit (164) (174) (132)
---- ---- ----
Income (loss) from
continuing operations, net
of tax $(156) $(133) $(102)
===== ===== =====
Selected metrics:
Period-end loans held for
investment (4) $501 $465 $465
Average loans held for
investment (4) 475 465 468
Period-end deposits 13,154 14,447 14,531
Average deposits 14,026 14,775 14,626
Total
-----
Earnings:
Interest income $3,701 $3,835 $3,699
Interest expense 519 552 563
--- --- ---
Net interest income 3,182 3,283 3,136
Non-interest income 868 871 857
--- --- ---
Total revenue 4,050 4,154 3,993
Provision for loan and lease
losses 861 622 343
Non-interest expense 2,618 2,297 2,255
----- ----- -----
Income from continuing
operations before taxes 571 1,235 1,395
Income tax provision 160 370 450
Income from continuing
operations, net of tax $411 $865 $945
==== ==== ====
Selected metrics:
Period-end loans held for
investment $135,892 $129,952 $128,965
Average loans held for
investment 131,581 129,043 127,916
Period-end deposits 128,226 128,318 126,117
Average deposits 128,450 128,268 125,834
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 11: Notes to Loan and Business Segment Disclosures (Tables 6 - 10)
(1) Certain prior period amounts have been reclassified to conform to the current period presentation.
Results reflect the impact of the April 1, 2011 acquisition of the existing private-label credit card
loan portfolio of Kohl's, which had an outstanding principal and interest balance of approximately $3.7
(2) billion at acquisition.
Other loans held for investment includes unamortized premiums and discounts on loans acquired as part of
(3) the North Fork and Hibernia acquisitions.
In accordance with our loss-sharing agreement with Kohl's, charge-offs for the portfolio are reported
net of any reimbursement of credit losses from Kohl's, which has the impact of lowering the overall
(4) Domestic Card charge-off rate.
PCI loans acquired as part of the CCB acquisition are included in the denominator used in calculating the
credit quality ratios presented in Tables 6-10. These metrics excluding the impact of loans acquired from
(5) CCB from the denominator are presented below:
2011 2011 2011
(Dollars in millions) (unaudited) Q4 Q3 Q2
--------------------------------- --- --- ---
CCB period end acquired loan portfolio $4,689 $4,873 $5,181
CCB average acquired loan portfolio 4,781 4,998 5,112
Net charge-off rates:
Consumer banking:
Home loan 1.48% 0.87% 0.98%
Retail banking 1.46 1.69 1.76
---- ---- ----
Total consumer banking 1.87% 1.51% 1.17%
---- ---- ----
Commercial banking:
Commercial and multifamily real estate 0.77% 0.12% 0.40%
Middle market 0.21 0.42 0.13
---- ---- ----
Total commercial lending 0.48 0.28 0.31
---- ---- ----
Total commercial banking 0.64% 0.38% 0.51%
---- ---- ----
30+ day performing delinquency rates:
Consumer banking:
Home loan 1.47% 1.28% 1.18%
Retail banking 0.84 0.90 0.77
---- ---- ----
Total consumer banking 5.06% 4.57% 4.29%
---- ---- ----
Nonperforming asset rates:
Consumer banking:
Home loan 7.55% 7.80% 7.38%
Retail banking 2.52 2.40 2.48
---- ---- ----
Total consumer banking 2.20% 2.33% 2.32%
---- ---- ----
Commercial banking:
Commercial and multifamily real estate 1.44% 2.18% 2.39%
Middle market 0.84 1.07 1.22
---- ----
Total commercial lending 1.11 1.57 1.73
---- ---- ----
Total commercial banking 1.19% 1.57% 1.68%
---- ---- ----
Nonperforming loans as a percentage of period-end loans held for
investment:
Consumer banking 2.03% 2.15% 2.12%
Commercial banking 1.11 1.45 1.56
Nonperforming assets consist of nonperforming loans and real estate owned ("REO") and 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 foreclosed assets for each
(6) respective category.
As permitted by regulatory guidance, our policy is generally to exempt delinquent credit card loans from
being classified as nonperforming. We continue to accrue finance charges and fees on credit card loans
until the loan is charged off, typically when the account becomes 180 days past due. Billed finance
(7) charges and fees considered uncollectible are not recognized in income.
In the third quarter of 2011, we revised the manner in which we estimate expected recoveries of finance
charge and fee amounts previously considered to be uncollectible. This revision resulted in an increase
of 11 basis points in the 30+ day delinquency rate for Domestic Card. For International Card, the change
(8) did not have a significant impact on the 30+ day delinquency rate.
(9) Includes credit card purchase transactions net of returns. Excludes cash advance transactions.
Criticized exposures correspond to the "Special Mention," "Substandard" and "Doubtful" asset categories
(10) defined by bank regulatory authorities.
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures
In addition to disclosing required regulatory capital measures, we also report certain non-GAAP
capital measures that management uses in assessing its capital adequacy. These non-GAAP measures
include average tangible common equity, tangible common equity ("TCE"), TCE ratio, Tier 1 common
equity and Tier 1 common equity ratio. The table below provides the details of the calculation of
each of these measures. While these 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.
2011 2011 2011
(Dollars in millions)(unaudited) Q4 Q3 Q2
-------------------------------- --- --- ---
Average Equity to Non-GAAP Average Tangible
Common Equity
-------------------------------------------
Average total stockholders' equity $29,698 $29,316 $28,255
Less: Average intangible assets(1) (13,935) (13,990) (14,025)
Average tangible common equity $15,763 $15,326 $14,230
======= ======= =======
Stockholders' Equity to Non-GAAP Tangible Common
Equity
------------------------------------------------
Total stockholders' equity $29,666 $29,378 $28,681
Less: Intangible assets (1) (13,908) (13,953) (14,006)
Tangible common equity $15,758 $15,425 $14,675
======= ======= =======
Total Assets to Tangible Assets
-------------------------------
Total assets $206,019 $200,148 $199,753
Less: Assets from discontinued operations (305) (304) (32)
---- ---- ---
Total assets from continuing operations 205,714 199,844 199,721
Less: Intangible assets (1) (13,908) (13,953) (14,006)
Tangible assets $191,806 $185,891 $185,715
======== ======== ========
Non-GAAP TCE Ratio
------------------
Tangible common equity $15,758 $15,425 $14,675
Tangible assets 191,806 185,891 185,715
------- ------- -------
TCE ratio (2) 8.2% 8.3% 7.9%
--- --- ---
Non-GAAP Tier 1 Common Equity and Regulatory
Capital Ratios (3)
--------------------------------------------
Total stockholders' equity $29,666 $29,378 $28,681
Less: Net unrealized (gains) losses on AFS
securities recorded in AOCI (4) (289) (401) (482)
Net (gains) losses on cash flow hedges recorded in
AOCI (4) 71 55 71
Disallowed goodwill and other intangible assets (13,855) (13,899) (13,954)
Disallowed deferred tax assets (534) (227) (647)
Other (2) (2) (2)
Tier 1 common equity $15,057 $14,904 $13,667
Plus: Tier 1 restricted core capital items (5) 3,635 3,636 3,636
----- ----- -----
Tier 1 capital $18,692 $18,540 $17,303
------- ------- -------
Plus: Long-term debt qualifying as Tier 2 capital 2,437 2,438 2,727
Qualifying allowance for loan and lease losses 1,977 1,896 1,864
Other Tier 2 components 23 24 28
Tier 2 capital $4,437 $4,358 $4,619
------ ------ ------
Total risk-based capital (6) $23,129 $22,898 $21,922
======= ======= =======
Risk-weighted assets (7) $155,472 $149,028 $146,201
======== ======== ========
Tier 1 common equity ratio (8) 9.7% 10.0% 9.4%
Tier 1 risk-based capital ratio (9) 12.0 12.4 11.8
Total risk-based capital ratio (10) 14.9 15.4 15.0
(1) Includes impact from related deferred taxes.
(2) Calculated based on tangible common equity divided by tangible assets
(3) Capital ratios as of the end of Q4 2011 are preliminary and therefore subject to change once
the calculations have been finalized.
(4) Amounts presented are net of tax.
(5) Consists primarily of trust preferred securities.
(6) Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital
(7) Calculated based on prescribed regulatory guidelines.
(8) Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity
divided by risk-weighted assets.
(9) Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1
capital divided by risk-weighted assets.
(10) Total risk-based capital ratio is a regulatory capital measure calculated based on total
risk-based capital divided by risk-weighted assets.
SOURCE Capital One Financial Corporation
