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
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(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% ==== ====
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(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