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Capital One Reports Second Quarter 2019 Net Income of $1.6 billion, or $3.24 per share
Excluding adjusting items, Second Quarter 2019 Net Income of $3.37 per share(1)

MCLEAN, Va., July 18, 2019 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2019 of $1.6 billion, or $3.24 per diluted common share, compared with net income of $1.4 billion, or $2.86 per diluted common share in the first quarter of 2019, and with net income of $1.9 billion, or $3.71 per diluted common share in the second quarter of 2018. Excluding adjusting items, net income for the second quarter of 2019 was $3.37 per diluted common share(1).

"In the second quarter, Capital One continued to post solid results as we invest to grow and to drive our digital transformation," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "As the benefits from our digital transformation continue and increase, we are well positioned to succeed in a rapidly changing marketplace and create long-term shareholder value."

Adjusting items in the second quarter of 2019, which are excluded from diluted earning per sharing (EPS), efficiency ratio and operating efficiency ratio metrics (see Table 15 in our Financial Supplement for additional information):


Pre-Tax

Diluted EPS

(Dollars in millions, except per share data)

Impact

Impact

Walmart launch and related integration expenses

$

(54)


$

(0.09)


Restructuring charges

(28)


(0.04)



The quarter included one notable item:



Pre-Tax

Diluted EPS

(Dollars in millions, except per share data)

Impact

Impact

Sale of partnership receivables

$     128

$      0.21

(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.

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

Second Quarter 2019 Income Statement Summary:

  • Total net revenue increased 1 percent to $7.1 billion.
  • Total non-interest expense increased 3 percent to $3.8 billion:
    • 6 percent increase in marketing.
    • 3 percent increase in operating expenses.
  • Pre-provision earnings decreased 2 percent to $3.3 billion(2).
  • Provision for credit losses decreased 21 percent to $1.3 billion:
    • Net charge-offs of $1.5 billion.
    • $166 million reserve release.
  • Net interest margin of 6.80 percent, decreased 6 basis points.
  • Efficiency ratio of 53.05 percent.
    • Efficiency ratio excluding adjusting items of 51.90 percent(1).
  • Operating efficiency ratio of 45.38 percent.
    • Operating efficiency ratio excluding adjusting items of 44.24 percent(1).

Second Quarter 2019 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.3 percent at June 30, 2019.
  • Period-end loans held for investment in the quarter increased $4.2 billion, or 2 percent, to $244.5 billion.
    • Credit Card period-end loans increased $2.3 billion, or 2 percent, to $112.1 billion.
      • Domestic Card period-end loans increased $1.9 billion, or 2 percent, to $103.0 billion.
    • Consumer Banking period-end loans increased $1.1 billion, or 2 percent, to $60.3 billion.
      • Auto period-end loans increased $1.1 billion, or 2 percent, to $57.6 billion.
    • Commercial Banking period-end loans increased $803 million, or 1 percent, to $72.0 billion.
  • Average loans held for investment in the quarter increased $694 million, or less than 1 percent, to $242.7 billion.
    • Credit Card average loans decreased $658 million, or 1 percent, to $110.8 billion.
      • Domestic Card average loans decreased $737 million, or 1 percent, to $101.9 billion.
    • Consumer Banking average loans increased $793 million, or 1 percent, to $59.9 billion.
      • Auto average loans increased $836 million, or 1 percent, to $57.1 billion.
    • Commercial Banking average loans increased $559 million, or 1 percent, to $72.0 billion.
  • Period-end total deposits decreased $572 million, or less than 1 percent, to $254.5 billion, while average deposits increased $2.2 billion, or 1 percent, to $253.6 billion.
  • Interest-bearing deposits rate paid increased 7 basis points to 1.51 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.

(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.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on July 18, 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 August 1, 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 $254.5 billion in deposits and $373.6 billion in total assets as of June 30, 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)

Second Quarter 2019

Table of Contents


Capital One Financial Corporation Consolidated Results

Page


Table 1:

Financial Summary—Consolidated

1


Table 2:

Selected Metrics—Consolidated

4


Table 3:

Consolidated Statements of Income

5


Table 4:

Consolidated Balance Sheets

7


Table 5:

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

9


Table 6:

Average Balances, Net Interest Income and Net Interest Margin

10


Table 7:

Loan Information and Performance Statistics

11


Table 8:

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

13

Business Segment Results



Table 9:

Financial Summary—Business Segment Results

14


Table 10:

Financial & Statistical Summary—Credit Card Business

15


Table 11:

Financial & Statistical Summary—Consumer Banking Business

17


Table 12:

Financial & Statistical Summary—Commercial Banking Business

18


Table 13:

Financial & Statistical Summary—Other and Total

19

Other



Table 14:

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

20


Table 15:

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

21

__________



(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 June 30, 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 Q2 vs.


Six Months Ended June 30,

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


2019


2019


2018


2018


2018


2019


2018






2019 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2019


2018


2018

Income Statement





















Net interest income


$

5,746



$

5,791



$

5,820



$

5,786



$

5,551



(1)

%


4

%


$

11,537



$

11,269



2

%

Non-interest income


1,378



1,292



1,193



1,176



1,641



7



(16)



2,670



2,832



(6)


Total net revenue(1)


7,124



7,083



7,013



6,962



7,192



1



(1)



14,207



14,101



1


Provision for credit losses


1,342



1,693



1,638



1,268



1,276



(21)



5



3,035



2,950



3


Non-interest expense:





















Marketing


546



517



831



504



425



6



28



1,063



839



27


Operating expense


3,233



3,154



3,301



3,269



2,999



3



8



6,387



6,158



4


Total non-interest expense


3,779



3,671



4,132



3,773



3,424



3



10



7,450



6,997



6


Income from continuing operations before income taxes


2,003



1,719



1,243



1,921



2,492



17



(20)



3,722



4,154



(10)


Income tax provision (benefit)


387



309



(21)



420



575



25



(33)



696



894



(22)


Income from continuing operations, net of tax


1,616



1,410



1,264



1,501



1,917



15



(16)



3,026



3,260



(7)


Income (loss) from discontinued operations, net of tax


9



2



(3)



1



(11)



**



**



11



(8)



**


Net income


1,625



1,412



1,261



1,502



1,906



15



(15)



3,037



3,252



(7)


Dividends and undistributed earnings allocated to participating securities(2)


(12)



(12)



(9)



(9)



(12)







(24)



(23)



4


Preferred stock dividends


(80)



(52)



(80)



(53)



(80)



54





(132)



(132)




Net income available to common stockholders


$

1,533



$

1,348



$

1,172



$

1,440



$

1,814



14



(15)



$

2,881



$

3,097



(7)


Common Share Statistics





















Basic earnings per common share:(2)





















Net income from continuing operations


$

3.24



$

2.87



$

2.50



$

3.01



$

3.76



13

%


(14)

%


$

6.11



$

6.39



(4)

%

Income (loss) from discontinued operations


0.02





(0.01)





(0.02)



**



**



0.02



(0.02)



**


Net income per basic common share


$

3.26



$

2.87



$

2.49



$

3.01



$

3.74



14



(13)



$

6.13



$

6.37



(4)


Diluted earnings per common share:(2)





















Net income from continuing operations


$

3.22



$

2.86



$

2.49



$

2.99



$

3.73



13



(14)



$

6.08



$

6.35



(4)


Income (loss) from discontinued operations


0.02





(0.01)





(0.02)



**


**


0.02



(0.02)



**


Net income per diluted common share


$

3.24



$

2.86



$

2.48



$

2.99



$

3.71



13



(13)



$

6.10



$

6.33



(4)


Weighted-average common shares outstanding (in millions):





















Basic


470.8



469.4



470.0



477.8



485.1





(3)



470.1



485.9



(3)


Diluted


473.0



471.6



472.7



480.9



488.3





(3)



472.3



489.6



(4)


Common shares outstanding (period-end, in millions)


470.3



469.6



467.7



473.7



478.4





(2)



470.3



478.4



(2)


Dividends declared and paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.40







$

0.80



$

0.80




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


77.65



72.86



69.20



66.15



63.86



7



22



77.65



63.86



22













































2019 Q2 vs.


Six Months Ended June 30,

(Dollars in millions)


2019


2019


2018


2018


2018


2019


2018






2019 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2019


2018


2018

Balance Sheet (Period-End)





















Loans held for investment


$

244,460



$

240,273



$

245,899



$

238,761



$

236,124



2

%


4

%


$

244,460



$

236,124



4

%

Interest-earning assets


339,160



340,071



341,293



331,293



332,167





2



339,160



332,167



2


Total assets


373,619



373,191



372,538



362,909



363,989





3



373,619



363,989



3


Interest-bearing deposits


231,161



230,199



226,281



222,356



222,605





4



231,161



222,605



4


Total deposits


254,535



255,107



249,764



247,195



248,225





3



254,535



248,225



3


Borrowings


49,233



50,358



58,905



52,205



53,310



(2)



(8)



49,233



53,310



(8)


Common equity


51,406



49,120



47,307



46,277



45,566



5



13



51,406



45,566



13


Total stockholders' equity


55,767



53,481



51,668



50,638



49,926



4



12



55,767



49,926



12


Balance Sheet (Average Balances)





















Loans held for investment


$

242,653



$

241,959



$

241,371



$

236,766



$

240,758





1

%


$

242,307



$

245,218



(1)

%

Interest-earning assets


338,026



337,793



334,714



330,272



333,495





1



337,913



331,850



2


Total assets


371,095



370,394



365,243



360,937



363,929





2



370,746



362,988



2


Interest-bearing deposits


230,452



227,572



222,827



221,431



223,079



1

%


3



229,020



221,384



3


Total deposits


253,634



251,410



247,663



246,720



248,790



1



2



252,528



247,040



2


Borrowings


49,982



53,055



53,994



51,684



52,333



(6)



(4)



51,510



53,454



(4)


Common equity


50,209



48,359



46,753



46,407



45,466



4



10



49,289



45,070



9


Total stockholders' equity


54,570



52,720



51,114



50,768



49,827



4



10



53,650



49,431



9


               


 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated














2019 Q2 vs.


Six Months Ended June 30,

(Dollars in millions, except as noted)


2019


2019


2018


2018


2018


2019


2018






2019 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2019


2018


2018

Performance Metrics





















Net interest income growth (period over period)


(1)

%




1

%


4

%


(3)

%


**



**



2

%


3

%


**


Non-interest income growth (period over period)


7



8

%


1



(28)



38



**



**



(6)



24



**


Total net revenue growth (period over period)


1



1



1



(3)



4



**



**



1



7



**


Total net revenue margin(4)


8.43



8.39



8.38



8.43



8.63



4

bps


(20)

bps


8.41



8.50



(9)

bps

Net interest margin(5)


6.80



6.86



6.96



7.01



6.66



(6)



14



6.83



6.79



4


Return on average assets


1.74



1.52



1.38



1.66



2.11



22



(37)



1.63



1.80



(17)


Return on average tangible assets(6)


1.82



1.59



1.44



1.74



2.20



23



(38)



1.70



1.87



(17)


Return on average common equity(7)


12.14



11.13



10.05



12.40



16.06



101



(392)



11.65



13.78



(213)


Return on average tangible common equity(8)


17.26



16.11



14.78



18.32



23.99



115



(673)



16.70



20.70



(400)


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


6.23



6.07



6.85



6.37



5.69



16



54



6.15



5.71



44


Efficiency ratio(9)


53.05



51.83



58.92



54.19



47.61



122



544



52.44



49.62



282


Operating efficiency ratio(10)


45.38



44.53



47.07



46.95



41.70



85



368



44.96



43.67



129


Effective income tax rate for continuing operations


19.3



18.0



(1.7)



21.9



23.1



130



(380)



18.7



21.5



(280)


Employees (in thousands), period-end


50.7



48.8



47.6



47.6



47.8



4

%


6

%


50.7



47.8



6

%

Credit Quality Metrics





















Allowance for loan and lease losses


$

7,133



$

7,313



$

7,220



$

7,219



$

7,368



(2)

%


(3)

%


$

7,133



$

7,368



(3)

%

Allowance as a percentage of loans held for investment


2.92

%


3.04

%


2.94

%


3.02

%


3.12

%


(12)

bps


(20)

bps


2.92

%


3.12

%


(20)

bps

Net charge-offs


$

1,508



$

1,599



$

1,610



$

1,425



$

1,459



(6)

%


3

%


$

3,107



$

3,077



1

%

Net charge-off rate(11)


2.48

%


2.64

%


2.67

%


2.41

%


2.42

%


(16)

bps


6

bps


2.56

%


2.51

%


5

bps

30+ day performing delinquency rate


3.15



3.23



3.62



3.28



2.88



(8)



27



3.15



2.88



27


30+ day delinquency rate


3.35



3.40



3.84



3.48



3.05



(5)



30



3.35



3.05



30


Capital Ratios(12)





















Common equity Tier 1 capital


12.3

%


11.9

%


11.2

%


11.2

%


11.1

%


40

bps


120

bps


12.3

%


11.1

%


120

bps

Tier 1 capital


13.8



13.4



12.7



12.8



12.6



40



120



13.8



12.6



120


Total capital


16.2



15.8



15.1



15.2



15.1



40



110



16.2



15.1



110


Tier 1 leverage


11.4



11.0



10.7



10.6



10.3



40



110



11.4



10.3



110


Tangible common equity ("TCE")(13)


10.2



9.6



9.1



9.0



8.8



60



140



10.2



8.8



140



 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income














2019 Q2 vs.


Six Months Ended June 30,



2019


2019


2018


2018


2018


2019


2018






2019 vs.

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


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2019


2018


2018

Interest income:





















Loans, including loans held for sale


$

6,383



$

6,368



$

6,358



$

6,247



$

5,989





7

%


$

12,751



$

12,123



5

%

Investment securities


629



655



627



593



539



(4)

%


17



1,284



991



30


Other


64



69



63



55



68



(7)



(6)



133



119



12


Total interest income


7,076



7,092



7,048



6,895



6,596





7



14,168



13,233



7


Interest expense:





















Deposits


870



817



756



681



622



6



40



1,687



1,161



45


Securitized debt obligations


139



143



138



127



124



(3)



12



282



231



22


Senior and subordinated notes


310



314



297



288



289



(1)



7



624



540



16


Other borrowings


11



27



37



13



10



(59)



10



38



32



19


Total interest expense


1,330



1,301



1,228



1,109



1,045



2



27



2,631



1,964



34


Net interest income


5,746



5,791



5,820



5,786



5,551



(1)



4



11,537



11,269



2


Provision for credit losses


1,342



1,693



1,638



1,268



1,276



(21)



5



3,035



2,950



3


Net interest income after provision for credit losses


4,404



4,098



4,182



4,518



4,275



7



3



8,502



8,319



2


Non-interest income:





















Interchange fees, net


820



758



743



714



723



8



13



1,578



1,366



16


Service charges and other customer-related fees


352



353



352



410



391





(10)



705



823



(14)


Net securities gains (losses)


15



24



(20)



(196)



(1)



(38)



**



39



7



**


Other


191



157



118



248



528



22



(64)



348



636



(45)


Total non-interest income


1,378



1,292



1,193



1,176



1,641



7



(16)



2,670



2,832



(6)


Non-interest expense:





















Salaries and associate benefits


1,558



1,573



1,345



1,432



1,430



(1)



9



3,131



2,950



6


Occupancy and equipment


521



493



610



515



503



6



4



1,014



993



2


Marketing


546



517



831



504



425



6



28



1,063



839



27


Professional services


314



291



426



275



234



8



34



605



444



36


Communications and data processing


329



303



326



311



317



9



4



632



623



1


Amortization of intangibles


29



30



43



44



43



(3)



(33)



59



87



(32)


Other


482



464



551



692



472



4



2



946



1,061



(11)


Total non-interest expense


3,779



3,671



4,132



3,773



3,424



3



10



7,450



6,997



6


Income from continuing operations before income taxes


2,003



1,719



1,243



1,921



2,492



17



(20)



3,722



4,154



(10)


Income tax provision (benefit)


387



309



(21)



420



575



25



(33)



696



894



(22)


Income from continuing operations, net of tax


1,616



1,410



1,264



1,501



1,917



15



(16)



3,026



3,260



(7)


Income (loss) from discontinued operations, net of tax


9



2



(3)



1



(11)



**



**



11



(8)



**


Net income


1,625



1,412



1,261



1,502



1,906



15



(15)



3,037



3,252



(7)


Dividends and undistributed earnings allocated to participating securities(2)


(12)



(12)



(9)



(9)



(12)







(24)



(23)



4


Preferred stock dividends


(80)



(52)



(80)



(53)



(80)



54





(132)



(132)




Net income available to common stockholders


$

1,533



$

1,348



$

1,172



$

1,440



$

1,814



14



(15)



$

2,881



$

3,097



(7)



































2019 Q2 vs.


Six Months Ended June 30,



2019