News Release

Printer Friendly Version View printer-friendly version
<< Back
Capital One Reports Second Quarter 2014 Net Income of $1.2 billion, or $2.04 per share

MCLEAN, Va., July 17, 2014 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2014 of $1.2 billion, or $2.04 per diluted common share, compared to the first quarter of 2014 with net income of $1.2 billion, or $1.96 per diluted common share, and the second quarter of 2013 with net income of $1.1 billion, or $1.85 per diluted common share. 

"Capital One posted another quarter of solid growth and profitability, including the return of year-over-year growth in our Domestic Card business, and we continued to return capital to our shareholders as we began to execute our announced $2.5 billion share repurchase program," said Richard D. Fairbank, Chairman and Chief Executive Officer.  "We remain focused on sustaining high returns as we invest to drive future growth and be a leader in digital banking."

All comparisons below are for the second quarter of 2014 compared with the first quarter of 2014 unless otherwise noted.  

Second Quarter 2014 Income Highlights:

  • Total net revenue increased 2 percent to $5.5 billion.
  • Total non-interest expense increased 2 percent to $3.0 billion.
  • Pre-provision earnings increased 2 percent to $2.5 billion.
  • Provision for credit losses decreased 4 percent to $704 million.

Second Quarter 2014 Balance Sheet Highlights:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.7 percent at June 30, 2014.
  • Net interest margin of 6.55 percent, down 7 basis points.
  • Period-end loans held for investment in the quarter increased $5.6 billion, or 3 percent, to $198.5 billion.
    • Domestic Card period-end loans increased $2.9 billion, or 4 percent, to $71.2 billion.
    • Commercial Banking period-end loans increased $2.1 billion, or 5 percent, to $48.3 billion.
    • Consumer Banking:
      • Auto period-end loans increased $1.7 billion, or 5 percent, to $34.8 billion.
      • Home loans period-end loans decreased $1.4 billion, or 4 percent, to $32.6 billion, driven by run-off of acquired portfolios.

 

  • Average loans held for investment in the quarter increased $1.3 billion, or less than 1 percent, to $195.0 billion.
    • Domestic Card average loans decreased $434 million, or 1 percent, to $69.4 billion.
    • Commercial Banking average loans increased $1.6 billion, or 3 percent, to $47.0 billion.
    • Consumer Banking:
      • Auto average loans increased $1.6 billion, or 5 percent, to $34.0 billion.
      • Home loans average loans decreased by $1.3 billion, or 4 percent, to $33.3 billion, driven by run-off of acquired portfolios.

 

  • Period-end total deposits decreased $2.4 billion, or 1 percent, to $205.9 billion, while average deposits increased $473 million, or less than 1 percent, to $206.3 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 July 17, 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 July 31, 2014 at 5:00 PM.

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 $205.9 billion in deposits and $298.3 billion in total assets as of June 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

Second Quarter 2014(1)(2)(3)

Table of Contents





















Page


Capital One Financial Corporation Consolidated Results








     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



8





     Table 9:


Financial & Statistical Summary—Credit Card Business



9





     Table 10:


Financial & Statistical Summary—Consumer Banking Business



10





     Table 11:


Financial & Statistical Summary—Commercial Banking Business



11





     Table 12:


Financial & Statistical Summary—Other and Total



12





     Table 13:


Notes to Loan and Business Segments Disclosures (Tables 7 — 12)



13



Other





     Table 14:


Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures



14













(1)

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 Quarterly Report on Form 10-Q for the period ended June 30, 2014 once it is filed with the Securities and Exchange Commission.

(2)

References to ING Direct refers to business and assets acquired and liabilities assumed in the February 17, 2012 acquisition. References to the 2012 U.S. card acquisition refer to 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.

(3)

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 Q2 vs.




2014



2014



2013



2013



2013



2014



2013


(Dollars in millions, except per share data and as noted) (unaudited)


Q2



Q1



Q4



Q3



Q2



Q1



Q2


Earnings





























Net interest income


$

4,315



$

4,350



$

4,423



$

4,560



$

4,553




(1)%




(5)%


Non-interest income(2)



1,153




1,020




1,121




1,091




1,085




13




6































Total net revenue(3)



5,468




5,370




5,544




5,651




5,638




2




(3)































Provision for credit losses



704




735




957




849




762




(4)




(8)


Non-interest expense:





























     Marketing



335




325




427




299




330




3




2


     Amortization of intangibles



136




143




166




161




167




(5)




(19)


     Acquisition-related(4)



18




23




60




37




50




(22)




(64)


     Operating expenses



2,490




2,441




2,582




2,612




2,471




2




1































Total non-interest expense



2,979




2,932




3,235




3,109




3,018




2




(1)































Income from continuing operations before income taxes



1,785




1,703




1,352




1,693




1,858




5




(4)


Income tax provision



581




579




477




575




631







(8)































Income from continuing operations, net of tax



1,204




1,124




875




1,118




1,227




7




(2)


Income (loss) from discontinued operations, net of tax(2)



(10)




30




(23)




(13)




(119)




**




92































Net income



1,194




1,154




852




1,105




1,108




3




8


Dividends and undistributed earnings allocated to participating securities(5)



(4)




(5)




(4)




(5)




(4)




(20)





Preferred stock dividends(5)



(13)




(13)




(13)




(13)




(13)





































Net income available to common stockholders


$

1,177



$

1,136



$

835



$

1,087



$

1,091




4




8































Common Share Statistics





























Basic earnings per common share:(5)





























     Net income from continuing operations


$

2.09



$

1.94



$

1.50



$

1.89



$

2.08




8





     Income (loss) from discontinued operations



(0.02)




0.05




(0.04)




(0.02)




(0.20)




**




(90)































     Net income per basic common share


$

2.07



$

1.99



$

1.46



$

1.87



$

1.88




4




10































Diluted earnings per common share:(5)





























     Net income from continuing operations


$

2.06



$

1.91



$

1.46



$

1.86



$

2.05




8





     Income (loss) from discontinued operations



(0.02)




0.05




(0.03)




(0.02)




(0.20)




**




(90)































     Net income per diluted common share


$

2.04



$

1.96



$

1.43



$

1.84



$

1.85




4




10































Weighted average common shares outstanding (in millions) for:





























     Basic common shares



567.5




571.0




573.4




582.3




581.5




(1)




(2)


     Diluted common shares



577.6




580.3




582.6




591.1




588.8







(2)


Common shares outstanding (period end, in millions)



561.8




572.9




572.7




582.0




584.9




(2)




(4)


Dividends per common share


$

0.30



$

0.30



$

0.30



$

0.30



$

0.30








Tangible book value per common share (period end)(6)



47.90




45.88




43.64




43.01




41.41




4




16


Balance Sheet (Period End)





























Loans held for investment(7)


$

198,528



$

192,941



$

197,199



$

191,814



$

191,512




3




4


Interest-earning assets



266,720




259,422




265,170




259,152




265,693




3





Total assets



298,317




290,500




296,933




289,866




296,524




3




1


Interest-bearing deposits



180,970




184,214




181,880




184,553




187,768




(2)




(4)


Total deposits



205,890




208,324




204,523




206,834




209,865




(1)




(2)


Borrowings



39,114




30,118




40,654




31,845




36,231




30




8


Common equity



42,477




41,948




40,779




40,792




40,094




1




6


Total stockholders' equity



43,815




42,801




41,632




41,645




40,947




2




7


Balance Sheet (Quarterly Average Balances)





























Loans held for investment(7)


$

194,996



$

193,722



$

192,813



$

191,135



$

190,562




1




2


Interest-earning assets



263,570




262,659




262,957




264,796




266,544







(1)


Total assets



294,744




294,275




294,040




294,919




297,748







(1)


Interest-bearing deposits



182,053




184,183




184,206




186,752




189,311




(1)




(4)


Total deposits



206,315




205,842




205,706




208,340




210,650







(2)


Borrowings



35,658




35,978




36,463




36,355




36,915




(1)




(3)


Common equity



42,797




42,006




41,502




40,332




40,637




2




5


Total stockholders' equity



43,767




42,859




42,355




41,185




41,490




2




5


































1


























 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated(1)






































































2014 Q2 vs.




2014



2014



2013



2013



2013



2014



2013


(Dollars in millions) (unaudited)


Q2



Q1



Q4



Q3



Q2



Q1



Q2


Performance Metrics





























Net interest income growth (quarter over quarter)



(1)

%



(2)

%



(3)

%



0

%



0

%



**




**


Non-interest income growth (quarter over quarter)



13




(9)




3




1




11




**




**


Total net revenue growth (quarter over quarter)



2




(3)




(2)




0




2




**




**


Total net revenue margin(8)



8.30




8.18




8.43




8.54




8.46




12

 bps 



(16)

bps 

Net interest margin(9)



6.55




6.62




6.73




6.89




6.83




(7)




(28)


Return on average assets



1.63




1.53




1.19




1.52




1.65




10




(2)


Return on average tangible assets(10)



1.73




1.61




1.26




1.60




1.74




12




(1)


Return on average common equity(11)



11.09




10.53




8.27




10.91




11.91




56




(82)


Return on average tangible common equity(12)



17.47




16.83




13.38




17.96




19.62




64




(215)


Non-interest expense as a % of average loans held for investment



6.11




6.05




6.71




6.51




6.33




6




(22)


Efficiency ratio(13)



54.48




54.60




58.35




55.02




53.53




(12)




95


Effective income tax rate for continuing operations



32.5




34.0




35.3




34.0




34.0




(150)




(150)


Employees (in thousands), period end(14)



44.6




44.9




45.4




43.5




43.3




(1)

%



3

%

Credit Quality Metrics(7)





























Allowance for loan and lease losses


$

3,998



$

4,098



$

4,315



$

4,333



$

4,407




(2)




(9)


Allowance as a % of loans held for investment



2.01

%



2.12

%



2.19

%



2.26

%



2.30

%



(11)

bps 



(29)

bps 

Allowance as a % of loans held for investment (excluding acquired loans)



2.30




2.45




2.54




2.66




2.74




(15)




(44)


Net charge-offs


$

812



$

931



$

969



$

917



$

969




(13)

%



(16)

%

Net charge-off rate(15)



1.67

%



1.92

%



2.01

%



1.92

%



2.03

%



(25)

bps 



(36)

bps 

Net charge-off rate (excluding acquired loans)(15)



1.93




2.24




2.37




2.29




2.46




(31)




(53)


30+ day performing delinquency rate



2.24




2.22




2.63




2.54




2.35




2




(11)


30+ day performing delinquency rate (excluding acquired loans)



2.58




2.59




3.08




3.01




2.83




(1)




(25)


30+ day delinquency rate



2.53




2.51




2.96




2.88




2.71




2




(18)


30+ day delinquency rate (excluding acquired loans)



2.91




2.93




3.46




3.41




3.26




(2)




(35)


Capital Ratios(16)





























Common equity Tier 1 capital ratio



12.7

%



13.0

%



n/a   




n/a   




n/a   




(30)

bps 



n/a   


Tier 1 common ratio



n/a   




n/a   




12.2

%



12.7

%



12.0

%



n/a   




n/a   


Tier 1 risk-based capital ratio



13.3

%



13.4

%



12.6




13.1




12.4




(10)

bps 



90

bps 

Total risk-based capital ratio



15.4




15.4




14.7




15.2




14.6







80


Tier 1 leverage ratio



10.7




10.4




10.1




10.0




9.7




30




100


Tangible common equity ("TCE") ratio(17)



9.5




9.6




8.9




9.1




8.6




(10)




90


































2


























 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income(1)




































































Three Months Ended



Q2 2014 vs.



Six Months
Ended



2014


(Dollars in millions, except per share data and as noted)
(unaudited)


2014



2014



2013



2014



2013



2014



2013



vs.




Q2



Q1



Q2



Q1



Q2



Q2



Q2



2013


Interest income:

































     Loans, including loans held for sale


$

4,279



$

4,307



$

4,596




(1)

%



(7)

%


$

8,586



$

9,245




(7)

%

     Investment securities



409




416




391




(2)




5




825




765




8


     Other



24




30




23




(20)




4




54




51




6



































Total interest income



4,712




4,753




5,010




(1)




(6)




9,465




10,061




(6)



































Interest expense:

































     Deposits



272




276




318




(1)




(14)




548




644




(15)


     Securitized debt obligations



39




38




45




3




(13)




77




101




(24)


     Senior and subordinated notes



78




77




82




1




(5)




155




164




(5)


     Other borrowings



8




12




12




(33)




(33)




20




29




(31)



































Total interest expense



397




403




457




(1)




(13)




800




938




(15)



































Net interest income



4,315




4,350




4,553




(1)




(5)




8,665




9,123




(5)


     Provision for credit losses



704




735




762




(4)




(8)




1,439




1,647




(13)



































Net interest income after provision for credit losses



3,611




3,615




3,791







(5)




7,226




7,476




(3)



































Non-interest income:(2)

































     Service charges and other customer-related fees



460




474




534




(3)




(14)




934




1,084




(14)


     Interchange fees, net



535




440




486




22




10




975




931




5


     Net other-than-temporary impairment recognized in earnings



(1)




(5)




(4)




(80)




(75)




(6)




(29)




(79)


     Other



159




111




69




43




130




270




80




238



































Total non-interest income



1,153




1,020




1,085




13




6




2,173




2,066




5



































Non-interest expense:

































     Salaries and associate benefits



1,125




1,161




1,118




(3)




1




2,286




2,213




3


     Occupancy and equipment



447




405




371




10




20




852




728




17


     Marketing



335




325




330




3




2