MCLEAN, Va., Jan. 16, 2014 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2013 of $859 million, or $1.45 per diluted common share, compared to the third quarter of 2013 with net income of $1.1 billion, or $1.86 per diluted common share, and up from the fourth quarter of 2012 with net income of $843 million, or $1.41 per diluted common share. Net income for the full year 2013 was $4.2 billion, or $6.96 per diluted common share, compared with net income of $3.5 billion, or $6.16 per diluted common share, for 2012.

"Capital One delivered strong financial performance in 2013," said Richard D. Fairbank, Chairman and CEO.  "We remain focused on resilient growth, disciplined cost management, and returning capital to shareholders in 2014."

All comparisons below are for the fourth quarter of 2013 compared with the third quarter of 2013 unless otherwise noted.  

Fourth Quarter 2013 Income Highlights:

• Total net revenue decreased 2 percent to $5.5 billion.
• Total non-interest expense increased 4 percent to $3.3 billion.
• Pre-provision earnings decreased 10 percent to $2.3 billion.
• Provision for credit losses increased 13 percent to $957 million.

Fourth Quarter 2013 Balance Sheet Highlights:

• Tier 1 common ratio of 12.2 percent, down 50 basis points
• Net interest margin of 6.73 percent, down 16 basis points
• Domestic Card period-end loans increased $3.3 billion, or 5 percent, to $73.3 billion.
• Commercial Banking period-end loans increased $2.6 billion, or 6 percent, to $45.0 billion.
• Consumer Banking:
  • Automobile period-end loans increased $1.1 billion, or 3 percent, to $31.9 billion.
  • Home loans period-end loans decreased $1.5 billion, or 4 percent, to $35.3 billion, driven by expected run-off of acquired portfolios.
• Average loans held for investment in the quarter increased $1.7 billion, or less than 1 percent, to $192.8 billion.
  • Domestic Card average loans increased $421 million, or less than 1 percent, to $70.4 billion.
  • Commercial Banking average loans increased $1.8 billion, or 4 percent, to $43.4 billion.
  • Consumer Banking:
    • Automobile average loans increased $1.3 billion, or 4 percent, to $31.4 billion.
    • Home loans average loans decreased by $1.9 billion, or 5 percent, to $36.0 billion, driven by expected run-off of acquired portfolios.
• Period-end total deposits decreased $2.3 billion, or 1 percent, to $204.5 billion, while average deposits declined $2.6 billion, or 1 percent, to $205.7 billion.
• Deposit interest rates declined 3 basis points to 0.63 percent.

Detailed segment information will be available in the company's Annual Report on Form 10-K for the year ended December 31, 2013.

Earnings Conference Call Webcast Information
The company will hold an earnings conference call on January 16, 2014, at 5:00 PM, Eastern Standard 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 January 30, 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, 2012.

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 $204.5 billion in deposits and $297 billion in total assets as of December 31, 2013. 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 more than 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
Fourth Quarter 2013⁽¹⁾⁽²⁾
Table of Contents

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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, and investors should refer to our Annual Report on Form 10-K for the period ended December 31, 2013 once it is filed with the Securities and Exchange Commission.

⁽²⁾  References to ING Direct refer to the 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.

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 1:  Financial Summary—Consolidated⁽¹⁾

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 2:  Selected Metrics—Consolidated⁽¹⁾

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 3: Consolidated Statements of Income⁽¹⁾

 

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 4:  Consolidated Balance Sheets⁽¹⁾

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 5: Notes to Financial & Selected Metrics and Consolidated Financial Statements (Tables 1 - 4)

⁽¹⁾  Certain prior period amounts have been reclassified to conform to the current period presentation.

⁽²⁾  We recorded a provision for mortgage representation and warranty losses of $33 million in Q4 2013. We recorded a benefit for mortgage representation and warranty losses of $4 million in Q3 2013. We did not record a provision for mortgage representation and warranty losses in Q4 2012. The majority of the provision for representation and warranty losses is generally 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 $1.2 billion as of both December 31, 2013 and September 30, 2013, and $899 million as of December 31, 2012.

⁽³⁾  Total net revenue was reduced by $185 million in Q4 2013, $154 million in Q3 2013 and $318 million in Q4 2012 for the estimated uncollectible amount of billed finance charges and fees.

⁽⁴⁾  Includes purchased credit card relationship ("PCCR") intangible amortization of $102 million in Q4 2013, $106 million in Q3 2013 and $127 million in Q4 2012, the substantial majority of which is attributable to the 2012 U.S. card acquisition. Includes core deposit intangible amortization of $38 million in Q4 2013, $40 million in Q3 2013 and $47 million in Q4 2012.

⁽⁵⁾  Acquisition-related costs include transaction costs, legal and other professional or consulting fees, restructuring costs, and integration expense.

⁽⁶⁾  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.

⁽⁷⁾  Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I" for additional information.

⁽⁸⁾  Loans held for investment includes acquired loans accounted for based on cash flows expected to be collected. We use the term "acquired loans" to refer to a limited portion of the credit card loans acquired in the 2012 U.S. card acquisition and the substantial majority of loans acquired in the ING Direct and Chevy Chase Bank acquisitions, which 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"). See "Table 12: Notes to Loan and Business Segment Disclosures (Tables 7 — 11)" for information on the amount of acquired loans for each of the periods presented.

⁽⁹⁾  Calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.

⁽¹⁰⁾  Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

⁽¹¹⁾  Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period.

⁽¹²⁾  Calculated based on annualized income from continuing operations, net of tax, for the period divided average tangible assets for the period. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I" for additional information.

⁽¹³⁾  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.

⁽¹⁴⁾  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. Our calculation of return on average tangible common equity may not be comparable to similarly titled measures reported by other companies. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I" for additional information.

⁽¹⁵⁾  Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period.

⁽¹⁶⁾  Calculated based on non-interest expense for the period divided by total net revenue for the period.

⁽¹⁷⁾  Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.

⁽¹⁸⁾  Capital ratios are calculated under Basel I. Ratios as of the end of Q4 2013 are preliminary and therefore subject to change. TCE ratio is a non-GAAP measure. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I" for information on the calculation of each of these ratios.

⁽¹⁹⁾  A bargain purchase gain of $594 million was recognized in earnings in Q1 2012 attributable to the February 17, 2012 acquisition of ING Direct. The bargain purchase gain represents the excess of the fair value of the net assets acquired in the ING Direct acquisition as of the acquisition date over the consideration transferred.

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 6:  Average Balances, Net Interest Income and Net Interest Margin⁽¹⁾

 

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⁽¹⁾  Certain prior period amounts have been reclassified to conform to the current period presentation.

⁽²⁾  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.

⁽³⁾  Prior to Q2 2013, average balances for investment securities were calculated based on fair value amounts. Effective Q2 2013, average balances are calculated based on the amortized cost of investment securities. The impact of this change on prior period yields is not material.

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 7: Loan Information and Performance Statistics⁽¹⁾⁽²⁾

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 8: Financial & Statistical Summary—Credit Card Business⁽¹⁾⁽²⁾

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 9: Financial & Statistical Summary—Consumer Banking Business⁽¹⁾⁽²⁾

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 10:  Financial & Statistical Summary—Commercial Banking Business⁽¹⁾⁽²⁾

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 11: Financial & Statistical Summary—Other and Total⁽¹⁾⁽²⁾

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 12:  Notes to Loan and Business Segment Disclosures (Tables 7 - 11)

⁽¹⁾  Certain prior period amounts have been reclassified to conform to the current period presentation.

⁽²⁾  Loans acquired as part of the ING Direct, Chevy Chase Bank and 2012 U.S. card acquisitions are included in the denominator used in calculating our reported credit quality metrics. We therefore present certain reported credit quality metrics, adjusted to exclude from the denominator acquired loans accounted for based on estimated cash flows expected to be collected over the life of the loans (formerly "SOP 03-3").  The table below presents amounts related to acquired loans accounted for under SOP 03-3.

 

 

⁽³⁾  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. The nonperforming loan ratios are calculated based on nonperforming loans for each category divided by period-end loans held for investment for each respective category.

⁽⁴⁾  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.

⁽⁵⁾  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.

⁽⁶⁾  Represents the net reduction in interest income attributable to non-SOP 03-3 card loan premium amortization and other intangible accretion associated with the 2012 U.S. card acquisition.

⁽⁷⁾  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.

⁽⁸⁾  Because some of our tax-related commercial investments generate tax-exempt income or tax credits, 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%.

⁽⁹⁾  Criticized exposures correspond to the "Special Mention," "Substandard" and "Doubtful" asset categories defined by bank regulatory authorities.

⁽¹⁰⁾ As reported in the third quarter 2013 Form 10-Q, we have begun including the net realizable value of auto loans that have been charged down as a result of a bankruptcy filing in addition to repossessed assets obtained in satisfaction of auto loans. Prior period amounts have been adjusted to conform to current period presentation.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I

In addition to disclosing regulatory capital measures under Basel I, we also report certain non-GAAP measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible assets, average tangible common equity, tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of our Basel I regulatory capital and non-GAAP measures. While our non-GAAP 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.

 

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⁽¹⁾  Includes impact from related deferred taxes.

⁽²⁾  Noncumulative perpetual preferred stock qualifies for Tier 1 capital; however, it is excluded from Tier 1 common capital.

⁽³⁾  TCE ratio is a non-GAAP measure calculated based on tangible common equity divided by tangible assets.

⁽⁴⁾  Regulatory capital ratios as of the end of Q4 2013 are preliminary and therefore subject to change.

⁽⁵⁾  Amounts presented are net of tax.

⁽⁶⁾  Consists primarily of trust preferred securities.

⁽⁷⁾  Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.

⁽⁸⁾  Calculated based on prescribed regulatory guidelines.

⁽⁹⁾  Tier 1 common ratio is a regulatory capital measure calculated based on Tier 1 common capital divided by risk-weighted assets.

⁽¹⁰⁾  Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.

⁽¹¹⁾  Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighted assets.

 

 

SOURCE Capital One Financial Corporation