News Release

Printer Friendly Version View printer-friendly version
<< Back
Capital One Reports First Quarter 2019 Net Income of $1.4 billion, or $2.86 per share
Excluding adjusting items, First Quarter 2019 Net Income of $2.90 per share(1)

MCLEAN, Va., April 25, 2019 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the first quarter of 2019 of $1.4 billion, or $2.86 per diluted common share, compared with net income of $1.3 billion, or $2.48 per diluted common share in the fourth quarter of 2018, and with net income of $1.3 billion, or $2.62 per diluted common share in the first quarter of 2018. During the quarter, we recorded $25 million of Walmart launch and related integration expenses. Excluding this adjusting item, net income for the first quarter of 2019 was $2.90 per diluted common share(1).

"In the first quarter, revenue, pre-provision earnings, and earnings per share all increased compared to the first quarter of 2018," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "As our digital transformation accelerates, we are well positioned to succeed in a rapidly changing marketplace and create long-term shareholder value."

Capital One

All comparisons below are for the first quarter of 2019 compared with the fourth quarter of 2018 unless otherwise noted.

First Quarter 2019 Income Statement Summary:

  • Total net revenue increased 1 percent to $7.1 billion.
  • Total non-interest expense decreased 11 percent to $3.7 billion:
    • 38 percent decrease in marketing.
    • 4 percent decrease in operating expenses.
  • Pre-provision earnings increased 18 percent to $3.4 billion(2).
  • Provision for credit losses increased 3 percent to $1.7 billion:
    • Net charge-offs of $1.6 billion.
    • $94 million reserve build.

(1) Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance, both in the current period and across periods. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

(2) Pre-provision earnings is calculated based on the sum of net interest income and non-interest income, less non-interest expense for the period.

  • Net interest margin of 6.86 percent, decreased 10 basis points.
  • Efficiency ratio of 51.83 percent.
    • Efficiency ratio excluding adjusting items of 51.48 percent(1).
  • Operating efficiency ratio of 44.53 percent.
    • Operating efficiency ratio excluding adjusting items of 44.18 percent(1).

First Quarter 2019 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 11.9 percent at March 31, 2019.
  • Period-end loans held for investment in the quarter decreased $5.6 billion, or 2 percent, to $240.3 billion.
    • Credit Card period-end loans decreased $6.5 billion, or 6 percent, to $109.8 billion.
      • Domestic Card period-end loans decreased $6.3 billion, or 6 percent, to $101.1 billion.
    • Consumer Banking period-end loans remained flat at $59.2 billion.
      • Auto period-end loans increased $103 million, or less than 1 percent, to $56.4 billion.
    • Commercial Banking period-end loans increased $856 million, or 1 percent, to $71.2 billion.
  • Average loans held for investment in the quarter increased $588 million, or less than 1 percent, to $242.0 billion.
    • Credit Card average loans decreased $893 million, or 1 percent, to $111.5 billion.
      • Domestic Card average loans decreased $724 million, or 1 percent, to $102.7 billion.
    • Consumer Banking average loans decreased $277 million, or less than 1 percent, to $59.1 billion.
      • Auto average loans decreased $235 million, or less than 1 percent, to $56.2 billion.
    • Commercial Banking average loans increased $1.8 billion, or 3 percent, to $71.4 billion.
  • Period-end total deposits increased $5.3 billion, or 2 percent, to $255.1 billion, while average deposits increased $3.7 billion, or 2 percent, to $251.4 billion.
  • Interest-bearing deposits rate paid increased 8 basis points to 1.44 percent.

(1) Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance, both in the current period and across periods. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on April 25, 2019 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). Under "About," 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 May 9, 2019 at 5:00 PM Eastern Time.

Forward-Looking Statements

Certain statements in this release may constitute 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, 2018.

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 $255.1 billion in deposits and $373.2 billion in total assets as of  March 31, 2019. 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 branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey 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(1)(2)

First Quarter 2019

Table of Contents


Capital One Financial Corporation Consolidated Results

Page


Table 1:

Financial Summary—Consolidated

1


Table 2:

Selected Metrics—Consolidated

3


Table 3:

Consolidated Statements of Income

4


Table 4:

Consolidated Balance Sheets

6


Table 5:

Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)

8


Table 6:

Average Balances, Net Interest Income and Net Interest Margin

9


Table 7:

Loan Information and Performance Statistics

10


Table 8:

Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity

12

Business Segment Results



Table 9:

Financial Summary—Business Segment Results

13


Table 10:

Financial & Statistical Summary—Credit Card Business

14


Table 11:

Financial & Statistical Summary—Consumer Banking Business

16


Table 12:

Financial & Statistical Summary—Commercial Banking Business

17


Table 13:

Financial & Statistical Summary—Other and Total

18

Other



Table 14:

Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)

19


Table 15:

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

20

__________



(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 March 31, 2019 once it is filed with the Securities and Exchange Commission.

(2)

This Financial Supplement includes non-GAAP measures. We believe these non-GAAP measures are useful to investors and users of our financial information as they provide an alternate measurement of our performance and assist in assessing our capital adequacy and the level of return generated. These non-GAAP measures should not be viewed as a substitute for reported results determined in accordance with generally accepted accounting principles in the U.S. ("GAAP"), nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.

 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated














2019 Q1 vs.

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


2019


2018


2018


2018


2018


2018


2018


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Income Statement















Net interest income


$

5,791



$

5,820



$

5,786



$

5,551



$

5,718





1

%

Non-interest income


1,292



1,193



1,176



1,641



1,191



8

%


8


Total net revenue(1)


7,083



7,013



6,962



7,192



6,909



1



3


Provision for credit losses


1,693



1,638



1,268



1,276



1,674



3



1


Non-interest expense:















Marketing


517



831



504



425



414



(38)



25


Operating expenses


3,154



3,301



3,269



2,999



3,159



(4)




Total non-interest expense


3,671



4,132



3,773



3,424



3,573



(11)



3


Income from continuing operations before income taxes


1,719



1,243



1,921



2,492



1,662



38



3


Income tax provision (benefit)


309



(21)



420



575



319



**



(3)


Income from continuing operations, net of tax


1,410



1,264



1,501



1,917



1,343



12



5


Income (loss) from discontinued operations, net of tax


2



(3)



1



(11)



3



**



(33)


Net income


1,412



1,261



1,502



1,906



1,346



12



5


Dividends and undistributed earnings allocated to participating securities(2)


(12)



(9)



(9)



(12)



(10)



33



20


Preferred stock dividends


(52)



(80)



(53)



(80)



(52)



(35)




Net income available to common stockholders


$

1,348



$

1,172



$

1,440



$

1,814



$

1,284



15



5


Common Share Statistics















Basic earnings per common share:(2)















Net income from continuing operations


$

2.87



$

2.50



$

3.01



$

3.76



$

2.63



15

%


9

%

Income (loss) from discontinued operations




(0.01)





(0.02)



0.01



**



**


Net income per basic common share


$

2.87



$

2.49



$

3.01



$

3.74



$

2.64



15



9


Diluted earnings per common share:(2)















Net income from continuing operations


$

2.86



$

2.49



$

2.99



$

3.73



$

2.61



15



10


Income (loss) from discontinued operations




(0.01)





(0.02)



0.01



**



**


Net income per diluted common share


$

2.86



$

2.48



$

2.99



$

3.71



$

2.62



15



9


Weighted-average common shares outstanding (in millions):















Basic


469.4



470.0



477.8



485.1



486.9





(4)


Diluted


471.6



472.7



480.9



488.3



490.8





(4)


Common shares outstanding (period-end, in millions)


469.6



467.7



473.7



478.4



485.9





(3)


Dividends declared and paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.40






Tangible book value per common share (period-end)(3)


72.86



69.20



66.15



63.86



61.29



5



19




































2019 Q1 vs.

(Dollars in millions)


2019


2018


2018


2018


2018


2018


2018


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Balance Sheet (Period-End)















Loans held for investment


$

240,273



$

245,899



$

238,761



$

236,124



$

248,256



(2)

%


(3)

%

Interest-earning assets


340,071



341,293



331,293



332,167



332,251





2


Total assets


373,191



372,538



362,909



363,989



362,857





3


Interest-bearing deposits


230,199



226,281



222,356



222,605



224,671



2



2


Total deposits


255,107



249,764



247,195



248,225



250,847



2



2


Borrowings


50,358



58,905



52,205



53,310



50,693



(15)



(1)


Common equity


49,120



47,307



46,277



45,566



44,842



4



10


Total stockholders' equity


53,481



51,668



50,638



49,926



49,203



4



9


Balance Sheet (Average Balances)















Loans held for investment


$

241,959



$

241,371



$

236,766



$

240,758



$

249,726





(3)

%

Interest-earning assets


337,793



334,714



330,272



333,495



330,183



1

%


2


Total assets


370,394



365,243



360,937



363,929



362,049



1



2


Interest-bearing deposits


227,572



222,827



221,431



223,079



219,670



2



4


Total deposits


251,410



247,663



246,720



248,790



245,270



2



3


Borrowings


53,055



53,994



51,684



52,333



54,588



(2)



(3)


Common equity


48,359



46,753



46,407



45,466



44,670



3



8


Total stockholders' equity


52,720



51,114



50,768



49,827



49,031



3



8


 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated














2019 Q1 vs.

(Dollars in millions, except as noted)


2019


2018


2018


2018


2018


2018


2018


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Performance Metrics















Net interest income growth (period over period)




1

%


4

%


(3)

%


(2)

%


**



**


Non-interest income growth (period over period)


8

%


1



(28)



38



(1)



**



**


Total net revenue growth (period over period)


1



1



(3)



4



(1)



**



**


Total net revenue margin(4)


8.39



8.38



8.43



8.63



8.37



1

bps


2

bps

Net interest margin(5)


6.86



6.96



7.01



6.66



6.93



(10)



(7)


Return on average assets


1.52



1.38



1.66



2.11



1.48



14



4


Return on average tangible assets(6)


1.59



1.44



1.74



2.20



1.55



15



4


Return on average common equity(7)


11.13



10.05



12.40



16.06



11.47



108



(34)


Return on average tangible common equity(8)


16.11



14.78



18.32



23.99



17.32



133



(121)


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


6.07



6.85



6.37



5.69



5.72



(78)



35


Efficiency ratio(9)


51.83



58.92



54.19



47.61



51.72



(7)

%



Operating efficiency ratio(10)


44.53



47.07



46.95



41.70



45.72



(3)



(1)

%

Effective income tax rate for continuing operations


18.0



(1.7)



21.9



23.1



19.2



20



(1)


Employees (in thousands), period-end


48.8



47.6



47.6



47.8



47.9



3



2


Credit Quality Metrics















Allowance for loan and lease losses


$

7,313



$

7,220



$

7,219



$

7,368



$

7,567



1

%


(3)

%

Allowance as a percentage of loans held for investment


3.04

%


2.94

%


3.02

%


3.12

%


3.05

%


10

bps


(1)

bps

Net charge-offs


$

1,599



$

1,610



$

1,425



$

1,459



$

1,618



(1)

%


(1)

%

Net charge-off rate(11)


2.64

%


2.67

%


2.41

%


2.42

%


2.59

%


(3)

bps


5

bps

30+ day performing delinquency rate


3.23



3.62



3.28



2.88



2.72



(39)



51


30+ day delinquency rate


3.40



3.84



3.48



3.05



2.91



(44)



49


Capital Ratios(12)















Common equity Tier 1 capital


11.9

%


11.2

%


11.2

%


11.1

%


10.5

%


70

bps


140

bps

Tier 1 capital


13.4



12.7



12.8



12.6



12.0



70



140


Total capital


15.8



15.1



15.2



15.1



14.5



70



130


Tier 1 leverage


11.0



10.7



10.6



10.3



10.1



30



90


Tangible common equity ("TCE")(13)


9.6



9.1



9.0



8.8



8.6



50



100


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income














2019 Q1 vs.



2019


2018


2018


2018


2018


2018


2018

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


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Interest income:















Loans, including loans held for sale


$

6,368



$

6,358



$

6,247



$

5,989



$

6,134





4

%

Investment securities


655



627



593



539



452



4

%


45


Other


69



63



55



68



51



10



35


Total interest income


7,092



7,048



6,895



6,596



6,637



1



7


Interest expense:















Deposits


817



756



681



622



539



8



52


Securitized debt obligations


143



138



127



124



107



4



34


Senior and subordinated notes


314



297



288



289



251



6



25


Other borrowings


27



37



13



10



22



(27)



23


Total interest expense


1,301



1,228



1,109



1,045



919



6



42


Net interest income


5,791



5,820



5,786



5,551



5,718





1


Provision for credit losses


1,693



1,638



1,268



1,276



1,674



3



1


Net interest income after provision for credit losses


4,098



4,182



4,518



4,275



4,044



(2)



1


Non-interest income:















Interchange fees, net


758



743



714



723



643



2



18


Service charges and other customer-related fees


353



352



410



391



432





(18)


Net securities gains (losses)


24



(20)



(196)



(1)



8



**



200


Other


157



118



248



528



108



33



45


Total non-interest income


1,292



1,193



1,176



1,641



1,191



8



8


Non-interest expense:















Salaries and associate benefits


1,573



1,345



1,432



1,430



1,520



17



3


Occupancy and equipment


493



610



515



503



490



(19)



1


Marketing


517



831



504



425



414



(38)



25


Professional services


291



426



275



234



210



(32)



39


Communications and data processing


303



326



311



317



306



(7)



(1)


Amortization of intangibles


30



43



44



43



44



(30)



(32)


Other


464



551



692



472



589



(16)



(21)


Total non-interest expense


3,671



4,132



3,773



3,424



3,573



(11)



3


Income from continuing operations before income taxes


1,719



1,243



1,921



2,492



1,662



38



3


Income tax provision (benefit)


309



(21)



420



575



319



**



(3)


Income from continuing operations, net of tax


1,410



1,264



1,501



1,917



1,343



12



5


Income (loss) from discontinued operations, net of tax


2



(3)



1



(11)



3



**



(33)


Net income


1,412



1,261



1,502



1,906



1,346



12



5


Dividends and undistributed earnings allocated to participating securities(2)


(12)



(9)



(9)



(12)



(10)



33



20


Preferred stock dividends


(52)



(80)



(53)



(80)



(52)



(35)




Net income available to common stockholders


$

1,348



$

1,172



$

1,440



$

1,814



$

1,284



15



5





























2019 Q1 vs.



2019


2018


2018


2018


2018


2018


2018

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


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Basic earnings per common share:(2)















Net income from continuing operations


$

2.87



$

2.50



$

3.01



$

3.76



$

2.63



15

%


9

%

Income (loss) from discontinued operations




(0.01)





(0.02)



0.01



**



**


Net income per basic common share


$

2.87



$

2.49



$

3.01



$

3.74



$

2.64



15



9


Diluted earnings per common share:(2)















Net income from continuing operations


$

2.86



$

2.49



$

2.99



$

3.73



$

2.61



15



10


Income (loss) from discontinued operations




(0.01)





(0.02)



0.01



**



**


Net income per diluted common share


$

2.86



$

2.48



$

2.99



$

3.71



$

2.62



15



9


Weighted-average common shares outstanding (in millions):















Basic common shares


469.4



470.0



477.8



485.1



486.9





(4)


Diluted common shares


471.6



472.7



480.9



488.3



490.8





(4)


 


 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets














2019 Q1 vs.



2019


2018


2018


2018


2018


2018


2018

(Dollars in millions)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Assets:















Cash and cash equivalents:















Cash and due from banks


$

4,572



$

4,768



$

4,547



$

4,499



$

4,220



(4)

%


8

%

Interest-bearing deposits and other short-term investments


12,897



8,418



6,335



7,774



9,788



53



32


Total cash and cash equivalents


17,469



13,186



10,882



12,273



14,008



32



25


Restricted cash for securitization investors


1,969



303



746



1,023



309



**



**


Investment securities:















Securities available for sale


45,888



46,150



47,384



50,691



47,155



(1)



(3)


Securities held to maturity


36,503



36,771



34,631



33,464



23,075



(1)



58


Total investment securities


82,391



82,921



82,015



84,155



70,230



(1)



17


Loans held for investment:















Unsecuritized loans held for investment


208,591



211,702



204,796



201,222



213,313



(1)



(2)


Loans held in consolidated trusts


31,682



34,197



33,965



34,902



34,943



(7)



(9)


Total loans held for investment


240,273



245,899



238,761



236,124



248,256



(2)



(3)


Allowance for loan and lease losses


(7,313)



(7,220)



(7,219)



(7,368)



(7,567)



1



(3)


Net loans held for investment


232,960



238,679



231,542



228,756



240,689



(2)



(3)


Loans held for sale, at lower of cost or fair value


905



1,192



1,402



1,480



1,498



(24)



(40)


Premises and equipment, net


4,205



4,191



4,149



4,095



4,055





4


Interest receivable


1,615



1,614



1,518



1,493



1,496





8


Goodwill


14,546



14,544



14,513



14,531



14,536






Other assets


17,131



15,908



16,142



16,183



16,036



8



7


Total assets


$

373,191



$

372,538



$

362,909



$

363,989



$

362,857





3





























2019 Q1 vs.



2019


2018


2018


2018


2018


2018


2018

(Dollars in millions)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Liabilities:















Interest payable


$

382



$

458



$

391



$

450



$

353



(17)

%


8

%

Deposits:















Non-interest-bearing deposits


24,908



23,483



24,839



25,620



26,176



6



(5)


Interest-bearing deposits


230,199



226,281



222,356



222,605



224,671



2



2


Total deposits


255,107



249,764



247,195



248,225



250,847



2



2


Securitized debt obligations


19,273



18,307



18,649



19,649



18,665



5



3


Other debt:















Federal funds purchased and securities loaned or sold under agreements to repurchase


335



352



384



553



656



(5)



(49)


Senior and subordinated notes


30,645



30,826



31,291



32,920



31,051



(1)



(1)


Other borrowings


105



9,420



1,881



188



321



(99)



(67)


Total other debt


31,085



40,598



33,556



33,661



32,028



(23)



(3)


Other liabilities


13,863



11,743



12,480



12,078



11,761



18



18


Total liabilities