Capital One Reports First Quarter 2018 Net Income of $1.3 billion, or $2.62 per share

Excluding adjusting items, First Quarter 2018 Net Income of $2.65 per share(1)

MCLEAN, Va., April 24, 2018 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the first quarter of 2018 of $1.3 billion, or $2.62 per diluted common share, compared with a net loss of $971 million, or $2.17 per diluted common share in the fourth quarter of 2017, and with net income of $810 million, or $1.54 per diluted common share in the first quarter of 2017. During the quarter, we recorded $19 million of restructuring charges. Excluding this adjusting item, net income for the first quarter of 2018 was $2.65 per diluted common share(1).

Capital One

"In the first quarter, Capital One delivered year-over-year growth in loans, deposits, revenues and pre-provision earnings," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "We continue to build an enduringly great franchise with the scale, brand, capabilities and infrastructure to succeed as the digital revolution transforms banking."

All comparisons below are for the first quarter of 2018 compared with the fourth quarter of 2017 unless otherwise noted. 

First Quarter 2018 Income Statement Summary:

  • Total net revenue decreased 1 percent to $6.9 billion.
  • Total non-interest expense decreased 5 percent to $3.6 billion:
    • 5 percent decrease in operating expenses.
    • 10 percent decrease in marketing.
  • Pre-provision earnings increased 3 percent to $3.3 billion(2). 
  • Provision for credit losses decreased 13 percent to $1.7 billion:
    • Net charge-offs of $1.6 billion.
    • $56 million reserve build.
  • Net interest margin of 6.93 percent, down 10 basis points.
  • Efficiency ratio of 51.72 percent.
    • Efficiency ratio excluding adjusting items was 51.45 percent(1).

First Quarter 2018 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 10.5 percent at March 31, 2018.
  • Period-end loans held for investment in the quarter decreased $6.2 billion, or 2 percent, to $248.3 billion.
    • Credit Card period-end loans decreased $7.2 billion, or 6 percent, to $107.6 billion.
      • Domestic Card period-end loans decreased $6.8 billion, or 6 percent, to $98.5 billion.
    • Consumer Banking period-end loans decreased $404 million, or 1 percent, to $74.7 billion:
      • Auto period-end loans increased $820 million, or 2 percent, to $54.8 billion.
      • Home loans period-end loans decreased $1.0 billion, or 6 percent, to $16.6 billion, primarily driven by run-off of acquired portfolios. 
    • Commercial Banking period-end loans increased $1.4 billion, or 2 percent, to $66.0 billion.
  • Average loans held for investment in the quarter decreased $2.8 billion, or 1 percent, to $249.7 billion.
    • Credit Card average loans decreased $527 million, or less than 1 percent, to $109.5 billion.
      • Domestic Card average loans decreased $637 million, or 1 percent, to $100.5 billion.
    • Consumer Banking average loans decreased $292 million, or less than 1 percent, to $75.0 billion:
      • Auto average loans increased $597 million, or 1 percent, to $54.3 billion.
      • Home loans average loans decreased $885 million, or 5 percent, to $17.2 billion, primarily driven by run-off of acquired portfolios.
    • Commercial Banking average loans decreased $2.0 billion, or 3 percent, to $65.2 billion.
  • Period-end total deposits increased $7.1 billion, or 3 percent, to $250.8 billion, while average deposits increased $3.7 billion, or 2 percent, to $245.3 billion.
  • Interest-bearing deposits rate paid increased 13 basis points to 0.98 percent.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on April 24, 2018 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 May 8, 2018 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, 2017.

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 $250.8 billion in deposits and $362.9 billion in total assets as of March 31, 2018. 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.

(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. 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.

 

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement(1)(2)

First Quarter 2018

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

Table 14:

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

19

Other

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, 2018 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













2018 Q1 vs.

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

2018

2017

2017

2017

2017

2017

2017

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Income Statement













Net interest income

$

5,718

$

5,813

$

5,700

$

5,473

$

5,474

(2)

%

4

%

Non-interest income

1,191

1,200

1,285

1,231

1,061

(1)

12

Total net revenue(1)

6,909

7,013

6,985

6,704

6,535

(1)

6

Provision for credit losses

1,674

1,926

1,833

1,800

1,992

(13)

(16)

Non-interest expense:













Marketing

414

460

379

435

396

(10)

5

Operating expenses

3,159

3,319

3,188

2,979

3,038

(5)

4

Total non-interest expense

3,573

3,779

3,567

3,414

3,434

(5)

4

Income from continuing operations before income taxes

1,662

1,308

1,585

1,490

1,109

27

50

Income tax provision

319

2,170

448

443

314

(85)

2

Income (loss) from continuing operations, net of tax

1,343

(862)

1,137

1,047

795

**

69

Income (loss) from discontinued operations, net of tax

3

(109)

(30)

(11)

15

**

(80)

Net income (loss)

1,346

(971)

1,107

1,036

810

**

66

Dividends and undistributed earnings allocated to participating securities(2)

(10)

(1)

(8)

(8)

(5)

**

100

Preferred stock dividends

(52)

(80)

(52)

(80)

(53)

(35)

(2)

Net income (loss) available to common stockholders

$

1,284

$

(1,052)

$

1,047

$

948

$

752

**

71

Common Share Statistics













Basic earnings per common share:(2)













Net income (loss) from continuing operations

$

2.63

$

(1.95)

$

2.22

$

1.98

$

1.53

**

72

%

Income (loss) from discontinued operations

0.01

(0.22)

(0.06)

(0.02)

0.03

**

(67)

Net income (loss) per basic common share

$

2.64

$

(2.17)

$

2.16

$

1.96

$

1.56

**

69

Diluted earnings per common share:(2)













Net income (loss) from continuing operations

$

2.61

$

(1.95)

$

2.20

$

1.96

$

1.51

**

73

Income (loss) from discontinued operations

0.01

(0.22)

(0.06)

(0.02)

0.03

**

(67)

Net income (loss) per diluted common share

$

2.62

$

(2.17)

$

2.14

$

1.94

$

1.54

**

70

Weighted-average common shares outstanding (in millions):













Basic

486.9

485.7

484.9

484.0

482.3

—

1

Diluted

490.8

485.7

489.0

488.1

487.9

1

%

1

Common shares outstanding (period-end, in millions)

485.9

485.5

484.4

483.7

482.8

—

1

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)

61.29

60.28

63.06

60.94

58.66

2

4
























































2018 Q1 vs.

(Dollars in millions)

2018

2017

2017

2017

2017

2017

2017

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Balance Sheet (Period-End)













Loans held for investment(4)

$

248,256

$

254,473

$

252,422

$

244,302

$

240,588

(2)

%

3

%

Interest-earning assets

332,251

334,124

329,002

319,286

316,712

(1)

5

Total assets

362,857

365,693

361,402

350,593

348,549

(1)

4

Interest-bearing deposits

224,671

217,298

212,956

213,810

214,818

3

5

Total deposits

250,847

243,702

239,062

239,763

241,182

3

4

Borrowings

50,693

60,281

59,458

49,954

48,439

(16)

5

Common equity

44,842

44,370

45,794

44,777

43,680

1

3

Total stockholders' equity

49,203

48,730

50,154

49,137

48,040

1

2

Balance Sheet (Average Balances)













Loans held for investment(4)

$

249,726

$

252,566

$

245,822

$

242,241

$

241,505

(1)

%

3

%

Interest-earning assets

330,183

330,742

322,015

318,078

318,358

—

4

Total assets

362,049

363,045

355,191

349,891

351,641

—

3

Interest-bearing deposits

219,670

215,258

213,137

214,412

212,973

2

3

Total deposits

245,270

241,562

238,843

240,550

238,550

2

3

Borrowings

54,588

58,109

54,271

48,838

53,357

(6)

2

Common equity

44,670

46,350

45,816

44,645

43,833

(4)

2

Total stockholders' equity

49,031

50,710

50,176

49,005

48,193

(3)

2

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated













2018 Q1 vs.

(Dollars in millions, except as noted)

2018

2017

2017

2017

2017

2017

2017

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Performance Metrics













Net interest income growth (period over period)

(2)

%

2

%

4

%

—

—

**

**

Non-interest income growth (period over period)

(1)

(7)

4

16

%

(5)

%

**

**

Total net revenue growth (period over period)

(1)

—

4

3

—

**

**

Total net revenue margin(5)

8.37

8.48

8.68

8.43

8.21

(11)

bps

16

bps

Net interest margin(6)

6.93

7.03

7.08

6.88

6.88

(10)

5

Return on average assets

1.48

(0.95)

1.28

1.20

0.90

243

58

Return on average tangible assets(7)

1.55

(0.99)

1.34

1.25

0.95

254

60

Return on average common equity(8)

11.47

(8.14)

9.40

8.59

6.73

**

474

Return on average tangible common equity(9)

17.32

(12.12)

14.11

13.09

10.37

**

695

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

5.72

5.98

5.80

5.64

5.69

(26)

3

Efficiency ratio(10)

51.72

53.89

51.07

50.92

52.55

(217)

(83)

Effective income tax rate for continuing operations

19.2

165.9

28.3

29.7

28.3

**

**

Employees (in thousands), period-end

47.9

49.3

50.4

49.9

48.4

(3)

%

(1)

%

Credit Quality Metrics













Allowance for loan and lease losses

$

7,567

$

7,502

$

7,418

$

7,170

$

6,984

1

%

8

%

Allowance as a percentage of loans held for investment

3.05

%

2.95

%

2.94

%

2.93

%

2.90

%

10

bps

15

bps

Net charge-offs

$

1,618

$

1,828

$

1,606

$

1,618

$

1,510

(11)

%

7

%

Net charge-off rate(11)

2.59

%

2.89

%

2.61

%

2.67

%

2.50

%

(30)

bps

9

bps

30+ day performing delinquency rate

2.72

3.23

2.93

2.69

2.61

(51)

11

30+ day delinquency rate

2.91

3.48

3.24

2.99

2.92

(57)

(1)

Capital Ratios(12)













Common equity Tier 1 capital

10.5

%

10.3

%

10.7

%

10.7

%

10.4

%

20

bps

10

bps

Tier 1 capital

12.0

11.8

12.2

12.2

12.0

20

—

Total capital

14.5

14.4

14.8

14.9

14.7

10

(20)

Tier 1 leverage

10.1

9.9

10.5

10.3

9.9

20

20

Tangible common equity ("TCE")(13)

8.6

8.3

8.8

8.8

8.5

30

10

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income













2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(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

$

6,134

$

6,133

$

5,960

$

5,669

$

5,626

—

9

%

Investment securities

452

431

431

433

416

5

%

9

Other

51

40

29

26

28

28

82

Total interest income

6,637

6,604

6,420

6,128

6,070

—

9

Interest expense:













Deposits

539

457

410

382

353

18

53

Securitized debt obligations

107

91

85

82

69

18

55

Senior and subordinated notes

251

209

194

179

149

20

68

Other borrowings

22

34

31

12

25

(35)

(12)

Total interest expense

919

791

720

655

596

16

54

Net interest income

5,718

5,813

5,700

5,473

5,474

(2)

4

Provision for credit losses

1,674

1,926

1,833

1,800

1,992

(13)

(16)

Net interest income after provision for credit losses

4,044

3,887

3,867

3,673

3,482

4

16

Non-interest income:













Interchange fees, net

643

665

662

676

570

(3)

13

Service charges and other customer-related fees

432

394

414

418

371

10

16

Net securities gains (losses)

8

1

68

(4)

—

**

**

Other

108

140

141

141

120

(23)

(10)

Total non-interest income

1,191

1,200

1,285

1,231

1,061

(1)

12

Non-interest expense:













Salaries and associate benefits

1,520

1,521

1,524

1,383

1,471

—

3

Occupancy and equipment

490

523

471

474

471

(6)

4

Marketing

414

460

379

435

396

(10)

5

Professional services

210

274

297

279

247

(23)

(15)

Communications and data processing

306

306

294

289

288

—

6

Amortization of intangibles

44

61

61

61

62

(28)

(29)

Other

589

634

541

493

499

(7)

18

Total non-interest expense

3,573

3,779

3,567

3,414

3,434

(5)

4

Income from continuing operations before income taxes

1,662

1,308

1,585

1,490

1,109

27

50

Income tax provision

319

2,170

448

443

314

(85)

2

Income (loss) from continuing operations, net of tax

1,343

(862)

1,137

1,047

795

**

69

Income (loss) from discontinued operations, net of tax

3

(109)

(30)

(11)

15

**

(80)

Net income (loss)

1,346

(971)

1,107

1,036

810

**

66

Dividends and undistributed earnings allocated to participating securities(2)

(10)

(1)

(8)

(8)

(5)

**

100

Preferred stock dividends

(52)

(80)

(52)

(80)

(53)

(35)

(2)

Net income (loss) available to common stockholders

$

1,284

$

(1,052)

$

1,047

$

948

$

752

**

71



























2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(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 (loss) from continuing operations

$

2.63

$

(1.95)

$

2.22

$

1.98

$

1.53

**

72

%

Income (loss) from discontinued operations

0.01

(0.22)

(0.06)

(0.02)

0.03

**

(67)

Net income (loss) per basic common share

$

2.64

$

(2.17)

$

2.16

$

1.96

$

1.56

**

69

Diluted earnings per common share:(2)













Net income (loss) from continuing operations

$

2.61

$

(1.95)

$

2.20

$

1.96

$

1.51

**

73

Income (loss) from discontinued operations

0.01

(0.22)

(0.06)

(0.02)

0.03

**

(67)

Net income (loss) per diluted common share

$

2.62

$

(2.17)

$

2.14

$

1.94

$

1.54

**

70

Weighted-average common shares outstanding (in millions):













Basic common shares

486.9

485.7

484.9

484.0

482.3

—

1

%

Diluted common shares

490.8

485.7

489.0

488.1

487.9

1

%

1

Dividends declared and paid per common share

$

0.40

$

0.40

$

0.40

$

0.40

$

0.40

—

—

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets













2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(Dollars in millions)

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Assets:













Cash and cash equivalents:













Cash and due from banks

$

4,220

$

4,458

$

4,154

$

3,352

$

3,489

(5)

%

21

%

Interest-bearing deposits and other short-term investments

9,788

9,582

4,330

3,363

5,826

2

68

Total cash and cash equivalents

14,008

14,040

8,484

6,715

9,315

—

50

Restricted cash for securitization investors

309

312

304

300

486

(1)

(36)

Investment securities:













Securities available for sale, at fair value

47,155

37,655

39,742

41,120

41,260

25

14

Securities held to maturity, at carrying value

23,075

28,984

28,650

27,720

26,170

(20)

(12)

Total investment securities

70,230

66,639

68,392

68,840

67,430

5

4

Loans held for investment:(4)













Unsecuritized loans held for investment

213,313

218,806

217,659

214,864

211,038

(3)

1

Loans held in consolidated trusts

34,943

35,667

34,763

29,438

29,550

(2)

18

Total loans held for investment

248,256

254,473

252,422

244,302

240,588

(2)

3

Allowance for loan and lease losses

(7,567)

(7,502)

(7,418)

(7,170)

(6,984)

1

8

Net loans held for investment

240,689

246,971

245,004

237,132

233,604

(3)

3

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

1,498

971

1,566

777

735

54

104

Premises and equipment, net

4,055

4,033

3,955

3,825

3,727

1

9

Interest receivable

1,496

1,536

1,426

1,346

1,368

(3)

9

Goodwill

14,536

14,533

14,532

14,524

14,521

—

—

Other assets

16,036

16,658

17,739

17,134

17,363

(4)

(8)

Total assets

$

362,857

$

365,693

$

361,402

$

350,593

$

348,549

(1)

4



























2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(Dollars in millions)

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Liabilities:













Interest payable

$

353

$

413

$

301

$

376

$

260

(15)

%

36

%

Deposits:













Non-interest-bearing deposits

26,176

26,404

26,106

25,953

26,364

(1)

(1)

Interest-bearing deposits

224,671

217,298

212,956

213,810

214,818

3

5

Total deposits

250,847

243,702

239,062

239,763

241,182

3

4

Securitized debt obligations

18,665

20,010

17,087

18,358

18,528

(7)

1

Other debt:













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

656

576

767

958

1,046

14

(37)

Senior and subordinated notes

31,051

30,755

28,420

28,478

26,405

1

18

Other borrowings

321

8,940

13,184

2,160

2,460

(96)

(87)

Total other debt

32,028

40,271

42,371

31,596

29,911

(20)

7

Other liabilities

11,761

12,567

12,427

11,363

10,628

(6)

11

Total liabilities

313,654

316,963

311,248

301,456

300,509

(1)

4















Stockholders' equity:













Preferred stock

0

0

0

0

0

—

—

Common stock

7

7

7

7

7

—

—

Additional paid-in capital, net

31,779

31,656

31,526

31,413

31,326

—

1

Retained earnings

31,996

30,700

31,946

31,086

30,326

4

6

Accumulated other comprehensive loss

(1,599)

(926)

(622)

(683)

(934)

73

71

Treasury stock, at cost

(12,980)

(12,707)

(12,703)

(12,686)

(12,685)

2

2

Total stockholders' equity

49,203

48,730

50,154

49,137

48,040

1

2

Total liabilities and stockholders' equity

$

362,857

$

365,693

$

361,402

$

350,593

$

348,549

(1)

4

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 5: Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)

(1)

Total net revenue was reduced by $335 million in Q1 2018, $377 million in Q4 2017, $356 million in Q3 2017, $313 million in Q2 2017 and $321 million in Q1 2017 for the estimated uncollectible amount of billed finance charges and fees and related losses.

(2)

Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total. We also provide adjusted diluted earnings per share, which is a non-GAAP measure. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on our non-GAAP measures.

(3)

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.

(4)

Included in loans held for investment are purchased credit-impaired loans ("PCI loans") 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," or Accounting Standards Codification 310-30). These include certain of our consumer and commercial loans that were acquired through business combinations. The table below presents amounts related to PCI loans:





2018

2017

2017

2017

2017

(Dollars in millions)

Q1

Q4

Q3

Q2

Q1

PCI loans:










Period-end unpaid principal balance

$

10,542

$

11,399

$

12,658

$

13,599

$

14,838

Period-end loans held for investment

9,935

10,775

11,985

12,895

14,102

Average loans held for investment

10,286

11,060

12,270

13,305

14,433


(5)

Total net revenue margin is calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.

(6)

Net interest margin is calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

(7)

Return on average tangible assets is a non-GAAP measure calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible assets for the period. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.

(8)

Return on average common equity is calculated based on annualized (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.

(9)

Return on average tangible common equity ("ROTCE") is a non-GAAP measure calculated based on annualized (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 ROTCE may not be comparable to similarly-titled measures reported by other companies. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.

(10)

Efficiency ratio is calculated based on total non-interest expense for the period divided by total net revenue for the period. We also provide an adjusted efficiency ratio, which is a non-GAAP measure. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on our non-GAAP measures.

(11)

Net charge-off rate is calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.

(12)

Capital ratios as of the end of Q1 2018 are preliminary and therefore subject to change. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for information on the calculation of each of these ratios.

(13)

TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.

**

Not meaningful.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 6: Average Balances, Net Interest Income and Net Interest Margin



2018 Q1

2017 Q4

2017 Q1


Average
Balance

Interest
Income/
Expense(1)

Yield/Rate(1)

Average
Balance

Interest
Income/
Expense(1)

Yield/Rate(1)

Average
Balance

Interest
Income/
Expense(1)

Yield/Rate(1)

(Dollars in millions, except as noted)








Interest-earning assets:

















Loans, including loans held for sale

$

250,906

$

6,134

9.78

%

$

254,080

$

6,133

9.66

%

$

242,249

$

5,626

9.29

%

Investment securities

69,576

452

2.60

68,992

431

2.50

68,418

416

2.43

Cash equivalents and other

9,701

51

2.10

7,670

40

2.09

7,691

28

1.46

Total interest-earning assets

$

330,183

$

6,637

8.04

$

330,742

$

6,604

7.99

$

318,358

$

6,070

7.63

Interest-bearing liabilities:

















Interest-bearing deposits

$

219,670

$

539

0.98

$

215,258

$

457

0.85

$

212,973

$

353

0.66

Securitized debt obligations

19,698

107

2.17

19,751

91

1.84

17,176

69

1.61

Senior and subordinated notes

30,430

251

3.30

30,020

209

2.78

24,804

149

2.40

Other borrowings and liabilities

6,849

22

1.28

10,355

34

1.31

12,356

25

0.81

Total interest-bearing liabilities

$

276,647

$

919

1.33

$

275,384

$

791

1.15

$

267,309

$

596

0.89

Net interest income/spread


$

5,718

6.71



$

5,813

6.84



$

5,474

6.74

Impact of non-interest-bearing funding




0.22





0.19





0.14

Net interest margin




6.93

%




7.03

%




6.88

%

__________

(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. In the first quarter of 2018, we adopted Accounting Standard Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. As a result, interest income and interest expense amounts shown above for Q1 2018 include $1 million and $30 million, respectively, related to hedge ineffectiveness that was previously included in other non-interest income.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics














2018 Q1 vs.

(Dollars in millions, except as noted)

2018
Q1

2017
Q4

2017
Q3

2017
Q2

2017
Q1

2017
Q4

2017
Q1

Loans Held for Investment (Period-End)













Credit card:













   Domestic credit card

$

98,535

$

105,293

$

99,981

$

92,866

$

91,092

(6)

%

8

%

   International card businesses

9,041

9,469

9,149

8,724

8,121

(5)

11

Total credit card

107,576

114,762

109,130

101,590

99,213

(6)

8

Consumer banking:













   Auto

54,811

53,991

53,290

51,765

49,771

2

10

   Home loan

16,630

17,633

18,820

19,724

20,738

(6)

(20)

   Retail banking

3,233

3,454

3,454

3,484

3,473

(6)

(7)

Total consumer banking

74,674

75,078

75,564

74,973

73,982

(1)

1

Commercial banking:













   Commercial and multifamily real estate

27,360

26,150

27,944

27,428

27,218

5

1

   Commercial and industrial

38,208

38,025

39,306

39,801

39,638

—

(4)

     Total commercial lending

65,568

64,175

67,250

67,229

66,856

2

(2)

   Small-ticket commercial real estate

385

400

420

443

464

(4)

(17)

Total commercial banking

65,953

64,575

67,670

67,672

67,320

2

(2)

Other loans

53

58

58

67

73

(9)

(27)

Total loans held for investment

$

248,256

$

254,473

$

252,422

$

244,302

$

240,588

(2)

3

Loans Held for Investment (Average)













Credit card:













   Domestic credit card

$

100,450

$

101,087

$

93,729

$

91,769

$

93,034

(1)

%

8

%

   International card businesses

9,052

8,942

8,816

8,274

8,135

1

11

Total credit card

109,502

110,029

102,545

100,043

101,169

—

8

Consumer banking:













   Auto

54,344

53,747

52,615

50,803

48,673

1

12

   Home loan

17,224

18,109

19,302

20,203

21,149

(5)

(19)

   Retail banking

3,429

3,433

3,446

3,463

3,509

—

(2)

Total consumer banking

74,997

75,289

75,363

74,469

73,331

—

2

Commercial banking:













   Commercial and multifamily real estate

26,542

27,770

27,703

27,401

26,587

(4)

—

   Commercial and industrial

38,246

39,020

39,723

39,815

39,877

(2)

(4)

     Total commercial lending

64,788

66,790

67,426

67,216

66,464

(3)

(3)

   Small-ticket commercial real estate

393

410

433

453

474

(4)

(17)

Total commercial banking

65,181

67,200

67,859

67,669

66,938

(3)

(3)

Other loans

46

48

55

60

67

(4)

(31)

Total average loans held for investment

$

249,726

$

252,566

$

245,822

$

242,241

$

241,505

(1)

3

















































2018 Q1 vs.


2018
Q1

2017
Q4

2017
Q3

2017
Q2

2017
Q1

2017
Q4

2017
Q1

Net Charge-Off (Recovery) Rates


















Credit card:


















   Domestic credit card

5.26

%

5.08

%

4.64

%

5.11

%

5.14

%

18

bps

12

bps

   International card businesses

2.49


3.92


3.08


4.08


3.69

(143)

(120)

Total credit card

5.03


4.99


4.51


5.02


5.02

4

1

Consumer banking:


















   Auto

1.53


2.12


1.96


1.70


1.64

(59)

(11)

   Home loan

(0.03)


0.23


0.02


0.04


0.03

(26)

(6)

   Retail banking

1.89


1.94


2.10


1.71


1.92

(5)

(3)

Total consumer banking

1.19


1.66


1.47


1.25


1.19

(47)

—

Commercial banking:


















   Commercial and multifamily real estate

—


(0.01)


(0.01)


0.03


—

1

—

   Commercial and industrial

0.20


1.47


1.64


1.34


0.22

(127)

(2)

     Total commercial lending

0.12


0.86


0.97


0.81


0.13

(74)

(1)

   Small-ticket commercial real estate

(0.18)


(0.05)


0.12


(0.22)


1.05

(13)

(123)

Total commercial banking

0.11


0.85


0.96


0.80


0.14

(74)

(3)

Total net charge-offs

2.59


2.89


2.61


2.67


2.50

(30)

9

30+ Day Performing Delinquency Rates


















Credit card:


















   Domestic credit card

3.57

%

4.01

%

3.94

%

3.63

%

3.71

%

(44)

bps

(14)

bps

   International card businesses

3.62


3.64


3.54


3.28


3.39

(2)

23

Total credit card

3.58


3.98


3.91


3.60


3.68

(40)

(10)

Consumer banking:


















   Auto

5.15


6.51


5.71


5.40


5.03

(136)

12

   Home loan

0.20


0.20


0.17


0.14


0.15

—

5

   Retail banking

0.75


0.76


0.73


0.54


0.59

(1)

16

Total consumer banking

3.86


4.76


4.10


3.79


3.45

(90)

41

Nonperforming Loans and Nonperforming Assets Rates(1)(2)


















Credit card:


















   International card businesses

0.25

%

0.25

%

0.28

%

0.37

%

0.47

%

—

(22)

bps

Total credit card

0.02


0.02


0.02


0.03


0.04

—

(2)

Consumer banking:


















   Auto

0.50


0.70


0.65


0.53


0.36

(20)

bps

14

   Home loan

0.86


1.00


0.84


1.31


1.27

(14)

(41)

   Retail banking

1.04


1.00


0.97


0.96


0.82

4

22

Total consumer banking

0.61


0.78


0.71


0.75


0.64

(17)

(3)

Commercial banking:


















   Commercial and multifamily real estate

0.01


0.15


0.23


0.13


0.13

(14)

(12)

   Commercial and industrial

0.78


0.63


1.82


1.62


2.02

15

(124)

     Total commercial lending

0.46


0.43


1.16


1.01


1.25

3

(79)

   Small-ticket commercial real estate

1.46


1.65


1.59


1.89


1.65

(19)

(19)

Total commercial banking

0.47


0.44


1.16


1.01


1.25

3

(78)

Total nonperforming loans

0.32


0.35


0.54


0.53


0.57

(3)

(25)

Total nonperforming assets

0.35


0.41


0.60


0.60


0.66

(6)

(31)

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 8: Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity




Three Months Ended March 31, 2018


Credit Card

Consumer Banking





(Dollars in millions)

Domestic
Card

International
Card
Businesses

Total Credit
Card

Auto

Home
Loan

Retail
Banking

Total
Consumer
Banking

Commercial
Banking

Other(3)

Total

Allowance for loan and lease losses:



















Balance as of December 31, 2017

$

5,273

$

375

$

5,648

$

1,119

$

58

$

65

$

1,242

$

611

$

1

$

7,502

Charge-offs

(1,697)

(128)

(1,825)

(410)

—

(21)

(431)

(21)

1

(2,276)

Recoveries

376

72

448

202

1

5

208

2

—

658

Net charge-offs

(1,321)

(56)

(1,377)

(208)

1

(16)

(223)

(19)

1

(1,618)

Provision (benefit) for loan and lease losses

1,380

76

1,456

226

(6)

14

234

(5)

(1)

1,684

Allowance build (release) for loan and lease losses

59

20

79

18

(5)

(2)

11

(24)

—

66

Other changes(4)

—

(1)

(1)

—

—

—

—

—

—

(1)

Balance as of March 31, 2018

5,332

394

5,726

1,137

53

63

1,253

587

1

7,567

Reserve for unfunded lending commitments:



















Balance as of December 31, 2017

—

—

—

—

—

7

7

117

—

124

Benefit for losses on unfunded lending commitments

—

—

—

—

—

(1)

(1)

(9)

—

(10)

Balance as of March 31, 2018

—

—

—

—

—

6

6

108

—

114

Combined allowance and reserve as of March 31, 2018

$

5,332

$

394

$

5,726

$

1,137

$

53

$

69

$

1,259

$

695

$

1

$

7,681

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results




Three Months Ended March 31, 2018

(Dollars in millions)

Credit Card

Consumer
Banking

Commercial
Banking(6)(7)

Other(6)(7)

Total

Net interest income

$

3,558

$

1,615

$

536

$

9

$

5,718

Non-interest income

857

174

187

(27)

1,191

Total net revenue (loss)

4,415

1,789

723

(18)

6,909

Provision (benefit) for credit losses

1,456

233

(14)

(1)

1,674

Non-interest expense

2,039

1,000

403

131

3,573

Income (loss) from continuing operations before income taxes

920

556

334

(148)

1,662

Income tax provision (benefit)

213

130

78

(102)

319

Income (loss) from continuing operations, net of tax

$

707

$

426

$

256

$

(46)

$

1,343













Three Months Ended December 31, 2017

(Dollars in millions)

Credit Card

Consumer
Banking

Commercial
Banking(6)

Other(5)(6)

Total

Net interest income

$

3,568

$

1,636

$

566

$

43

$

5,813

Non-interest income

847

179

188

(14)

1,200

Total net revenue

4,415

1,815

754

29

7,013

Provision for credit losses

1,486

340

100

—

1,926

Non-interest expense

2,108

1,081

437

153

3,779

Income (loss) from continuing operations before income taxes

821

394

217

(124)

1,308

Income tax provision

297

144

79

1,650

2,170

Income (loss) from continuing operations, net of tax

$

524

$

250

$

138

$

(1,774)

$

(862)













Three Months Ended March 31, 2017

(Dollars in millions)

Credit Card

Consumer
Banking

Commercial
Banking(6)

Other(6)

Total

Net interest income

$

3,346

$

1,517

$

566

$

45

$

5,474

Non-interest income

738

195

158

(30)

1,061

Total net revenue

4,084

1,712

724

15

6,535

Provision (benefit) for credit losses

1,717

279

(2)

(2)

1,992

Non-interest expense

1,929

1,042

391

72

3,434

Income (loss) from continuing operations before income taxes

438

391

335

(55)

1,109

Income tax provision (benefit)

167

143

122

(118)

314

Income from continuing operations, net of tax

$

271

$

248

$

213

$

63

$

795











 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business













2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(Dollars in millions, except as noted)

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Credit Card













Earnings:













Net interest income

$

3,558

$

3,568

$

3,440

$

3,294

$

3,346

—

6

%

Non-interest income

857

847

865

875

738

1

%

16

Total net revenue

4,415

4,415

4,305

4,169

4,084

—

8

Provision for credit losses

1,456

1,486

1,466

1,397

1,717

(2)

(15)

Non-interest expense

2,039

2,108

1,961

1,918

1,929

(3)

6

Income from continuing operations before income taxes

920

821

878

854

438

12

110

Income tax provision

213

297

306

301

167

(28)

28

Income from continuing operations, net of tax

$

707

$

524

$

572

$

553

$

271

35

161

Selected performance metrics:













Period-end loans held for investment

$

107,576

$

114,762

$

109,130

$

101,590

$

99,213

(6)

8

Average loans held for investment

109,502

110,029

102,545

100,043

101,169

—

8

Average yield on loans held for investment(8)

15.24

%

15.13

%

15.58

%

15.14

%

14.99

%

11

bps

25

bps

Total net revenue margin(9)

16.13

16.05

16.79

16.67

16.14

8

(1)

Net charge-off rate

5.03

4.99

4.51

5.02

5.02

4

1

30+ day performing delinquency rate

3.58

3.98

3.91

3.60

3.68

(40)

(10)

30+ day delinquency rate

3.59

3.99

3.92

3.62

3.71

(40)

(12)

Nonperforming loan rate(1)

0.02

0.02

0.02

0.03

0.04

—

(2)

Purchase volume(10)

$

86,545

$

95,659

$

84,505

$

83,079

$

73,197

(10)

%

18

%



























2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(Dollars in millions, except as noted)

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Domestic Card













Earnings:













Net interest income

$

3,229

$

3,268

$

3,132

$

3,011

$

3,093

(1)

%

4

%

Non-interest income

774

781

787

802

699

(1)

11

Total net revenue

4,003

4,049

3,919

3,813

3,792

(1)

6

Provision for credit losses

1,380

1,402

1,417

1,327

1,637

(2)

(16)

Non-interest expense

1,832

1,880

1,754

1,727

1,717

(3)

7

Income from continuing operations before income taxes

791

767

748

759

438

3

81

Income tax provision

184

280

273

277

160

(34)

15

Income from continuing operations, net of tax

$

607

$

487

$

475

$

482

$

278

25

118

Selected performance metrics:













Period-end loans held for investment

$

98,535

$

105,293

$

99,981

$

92,866

$

91,092

(6)

8

Average loans held for investment

100,450

101,087

93,729

91,769

93,034

(1)

8

Average yield on loans held for investment(8)

15.10

%

15.08

%

15.51

%

15.07

%

15.01

%

2

bps

9

bps

Total net revenue margin(9)

15.94

16.03

16.72

16.62

16.30

(9)

(36)

Net charge-off rate

5.26

5.08

4.64

5.11

5.14

18

12

30+ day delinquency rate

3.57

4.01

3.94

3.63

3.71

(44)

(14)

Purchase volume(10)

$

79,194

$

87,287

$

76,806

$

75,781

$

66,950

(9)

%

18

%

Refreshed FICO scores:(11)













Greater than 660

66

%

66

%

65

%

64

%

63

%

—

3

660 or below

34

34

35

36

37

—

(3)

Total

100

%

100

%

100

%

100

%

100

%



 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business














2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(Dollars in millions, except as noted)

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Consumer Banking













Earnings:













Net interest income

$

1,615

$

1,636

$

1,649

$

1,578

$

1,517

(1)

%

6

%

Non-interest income

174

179

192

183

195

(3)

(11)

Total net revenue

1,789

1,815

1,841

1,761

1,712

(1)

4

Provision for credit losses

233

340

293

268

279

(31)

(16)

Non-interest expense

1,000

1,081

1,051

1,059

1,042

(7)

(4)

Income from continuing operations before income taxes

556

394

497

434

391

41

42

Income tax provision

130

144

181

158

143

(10)

(9)

Income from continuing operations, net of tax

$

426

$

250

$

316

$

276

$

248

70

72

Selected performance metrics:













Period-end loans held for investment

$

74,674

$

75,078

$

75,564

$

74,973

$

73,982

(1)

1

Average loans held for investment

74,997

75,289

75,363

74,469

73,331

—

2

Average yield on loans held for investment(8)

6.86

%

6.84

%

6.79

%

6.56

%

6.48

%

2

bps

38

bps

Auto loan originations

$

6,707

$

6,215

$

7,043

$

7,453

$

7,025

8

%

(5)

%

Period-end deposits

193,073

185,842

184,719

186,607

188,216

4

3

Average deposits

187,785

184,799

185,072

186,989

183,936

2

2

Average deposits interest rate

0.80

%

0.69

%

0.62

%

0.59

%

0.57

%

11

bps

23

bps

Net charge-off rate

1.19

1.66

1.47

1.25

1.19

(47)

—

30+ day performing delinquency rate

3.86

4.76

4.10

3.79

3.45

(90)

41

30+ day delinquency rate

4.27

5.34

4.61

4.33

3.93

(107)

34

Nonperforming loan rate(1)

0.61

0.78

0.71

0.75

0.64

(17)

(3)

Nonperforming asset rate(2)

0.70

0.91

0.88

0.96

0.92

(21)

(22)

Auto—At origination FICO scores:(12)













Greater than 660

51

%

51

%

51

%

51

%

51

%

—

—

621-660

18

18

18

18

18

—

—

620 or below

31

31

31

31

31

—

—

Total

100

%

100

%

100

%

100

%

100

%




 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business













2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(Dollars in millions, except as noted)

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Commercial Banking













Earnings:













Net interest income

$

536

$

566

$

560

$

569

$

566

(5)

%

(5)

%

Non-interest income

187

188

179

183

158

(1)

18

Total net revenue(6)(7)

723

754

739

752

724

(4)

—

Provision (benefit) for credit losses

(14)

100

63

140

(2)

**

**

Non-interest expense

403

437

394

381

391

(8)

3

Income from continuing operations before income taxes

334

217

282

231

335

54

—

Income tax provision

78

79

103

85

122

(1)

(36)

Income from continuing operations, net of tax

$

256

$

138

$

179

$

146

$

213

86

20

Selected performance metrics:













Period-end loans held for investment

$

65,953

$

64,575

$

67,670

$

67,672

$

67,320

2

(2)

Average loans held for investment

65,181

67,200

67,859

67,669

66,938

(3)

(3)

Average yield on loans held for investment(6)(8)

4.16

%

4.03

%

3.98

%

3.81

%

3.65

%

13

bps

51

bps

Period-end deposits

$

34,449

$

33,938

$

32,783

$

33,153

$

33,735

2

%

2

%

Average deposits

34,057

34,117

33,197

34,263

34,219

—

—

Average deposits interest rate

0.52

%

0.46

%

0.42

%

0.36

%

0.31

%

6

bps

21

bps

Net charge-off rate

0.11

0.85

0.96

0.80

0.14

(74)

(3)

Nonperforming loan rate(1)

0.47

0.44

1.16

1.01

1.25

3

(78)

Nonperforming asset rate(2)

0.49

0.52

1.22

1.04

1.27

(3)

(78)

Risk category:(13)













Noncriticized

$

62,773

$

61,162

$

63,501

$

63,802

$

63,390

3

%

(1)

%

Criticized performing

2,432

2,649

2,878

2,660

2,492

(8)

(2)

Criticized nonperforming

309

284

788

686

844

9

(63)

PCI loans

439

480

503

524

594

(9)

(26)

Total commercial loans

$

65,953

$

64,575

$

67,670

$

67,672

$

67,320

2

(2)

Risk category as a percentage of period-end loans held for investment:(13)












Noncriticized

95.1

%

94.7

%

93.8

%

94.3

%

94.2

%

40

bps

90

bps

Criticized performing

3.7

4.1

4.3

3.9

3.7

(40)

—

Criticized nonperforming

0.5

0.4

1.2

1.0

1.2

10

(70)

PCI loans

0.7

0.8

0.7

0.8

0.9

(10)

(20)

Total commercial loans

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%




 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Financial & Statistical Summary—Other and Total














2018 Q1 vs.


2018

2017

2017

2017

2017

2017

2017

(Dollars in millions)

Q1

Q4

Q3

Q2

Q1

Q4

Q1

Other(5)













Earnings:













Net interest income

$

9

$

43

$

51

$

32

$

45

(79)

%

(80)

%

Non-interest income

(27)

(14)

49

(10)

(30)

93

(10)

Total net revenue (loss)(6)(7)

(18)

29

100

22

15

     **

     **

Provision (benefit) for credit losses

(1)

—

11

(5)

(2)

     **

(50)

Non-interest expense(14)

131

153

161

56

72

(14)

82

Loss from continuing operations before income taxes

(148)

(124)

(72)

(29)

(55)

19

169

Income tax provision (benefit)

(102)

1,650

(142)

(101)

(118)

     **

(14)

Income (loss) from continuing operations, net of tax

$

(46)

$

(1,774)

$

70

$

72

$

63

(97)

     **

Selected performance metrics:













Period-end loans held for investment

$

53

$

58

$

58

$

67

$

73

(9)

(27)

Average loans held for investment

46

48

55

60

67

(4)

(31)

Period-end deposits

23,325

23,922

21,560

20,003

19,231

(2)

21

Average deposits

23,428

22,646

20,574

19,298

20,395

3

15

Total













Earnings:













Net interest income

$

5,718

$

5,813

$

5,700

$

5,473

$

5,474

(2)

%

4

%

Non-interest income

1,191

1,200

1,285

1,231

1,061

(1)

12

Total net revenue

6,909

7,013

6,985

6,704

6,535

(1)

6

Provision for credit losses

1,674

1,926

1,833

1,800

1,992

(13)

(16)

Non-interest expense

3,573

3,779

3,567

3,414

3,434

(5)

4

Income from continuing operations before income taxes

1,662

1,308

1,585

1,490

1,109

27

50

Income tax provision

319

2,170

448

443

314

(85)

2

Income (loss) from continuing operations, net of tax

$

1,343

$

(862)

$

1,137

$

1,047

$

795

     **

69

Selected performance metrics:













Period-end loans held for investment

$

248,256

$

254,473

$

252,422

$

244,302

$

240,588

(2)

3

Average loans held for investment

249,726

252,566

245,822

242,241

241,505

(1)

3

Period-end deposits

250,847

243,702

239,062

239,763

241,182

3

4

Average deposits

245,270

241,562

238,843

240,550

238,550

2

3

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 14: Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)


(1)

Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.

(2)

Nonperforming assets consist of nonperforming loans, real estate owned ("REO") and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment, REO and other foreclosed assets.

(3)

Primarily consists of the legacy loan portfolio of our discontinued GreenPoint mortgage operations.

(4)

Represents foreign currency translation adjustments and the net impact of loan transfers and sales where applicable.

(5)

Charges for the impacts of the Tax Act of $1.77 billion are reflected in the Other category of our business segment results for Q4 2017. This amount is a reasonable estimate as of December 31, 2017, which may be adjusted during the measurement period ending no later than December 2018. The Tax Act refers to the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on budget for fiscal year 2018 enacted on December 22, 2017.

(6)

Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate (21% for the first quarter of 2018 and 35% for all periods in 2017) and state taxes where applicable, with offsetting reductions to the Other category.

(7)

In the first quarter of 2018, we made a change in how revenue is measured in our Commercial Banking business to include the tax benefits of losses on certain investments. These tax benefits are included in revenue on a taxable-equivalent basis within our Commercial Banking business, with an offsetting reduction to the Other category. In addition, all revenue presented on a taxable-equivalent basis in our Commercial Banking business was impacted by the reduction of the federal tax rate set forth in the Tax Act. The net impact of the measurement change and the reduction of the federal tax rate was a decrease of $28 million in revenue in our Commercial Banking business in the first quarter of 2018, with an offsetting impact to the Other category.

(8)

Average yield on loans held for investment is calculated based on annualized interest income for the period divided by average loans held for investment during the period for the respective loan category. Annualized interest income is computed based on the effective yield of the respective loan category and does not include any allocations, such as funds transfer pricing.

(9)

Total net revenue margin is calculated based on annualized total net revenue for the period divided by average loans held for investment during the period for the respective loan category.

(10)

Purchase volume consists of purchase transactions, net of returns, for the period, and excludes cash advance and balance transfer transactions.

(11)

Percentages represent period-end loans held for investment in each credit score category. Domestic card credit scores generally represent FICO scores. These scores are obtained from one of the major credit bureaus at origination and are refreshed monthly thereafter. We approximate non-FICO credit scores to comparable FICO scores for consistency purposes. Balances for which no credit score is available or the credit score is invalid are included in the 660 or below category.

(12)

Percentages represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.

(13)

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

(14)

Includes charges incurred as a result of restructuring activities.

**

Not meaningful.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures(1)



Basel III Standardized Approach

(Dollars in millions, except as noted)

March 31,
2018

December 31,
2017

September 30,
2017

June 30,
2017

March 31,
2017

Regulatory Capital Metrics









Common equity excluding AOCI

$

46,441

$

45,296

$

46,415

$

45,459

$

44,614

Adjustments:









AOCI(2)(3)

(1,599)

(808)

(538)

(593)

(807)

Goodwill, net of related deferred tax liabilities

(14,379)

(14,380)

(14,300)

(14,299)

(14,302)

Intangible assets, net of related deferred tax liabilities(3)

(371)

(330)

(372)

(419)

(465)

Other

620

258

93

78

121

Common equity Tier 1 capital

$

30,712

$

30,036

$

31,298

$

30,226

$

29,161

Tier 1 capital

$

35,073

$

34,396

$

35,657

$

34,585

$

33,519

Total capital(4)

42,264

41,962

43,272

42,101

40,979

Risk-weighted assets

291,352

292,225

292,041

283,231

279,302

Adjusted average assets(5)

347,287

348,424

340,579

335,248

336,990

Capital Ratios









Common equity Tier 1 capital(6)

10.5

%

10.3

%

10.7

%

10.7

%

10.4

%

Tier 1 capital(7)

12.0

11.8

12.2

12.2

12.0

Total capital(8)

14.5

14.4

14.8

14.9

14.7

Tier 1 leverage(5)

10.1

9.9

10.5

10.3

9.9

Tangible common equity ("TCE")(9)

8.6

8.3

8.8

8.8

8.5

 

 

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of our adjusted results 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. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.



2018

2017

2017


Q1

Q4

Q1

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

Reported
Results

Adj.(10)

Adjusted
Results

Reported
Results

Adj.(10)

Adjusted
Results

Reported
Results

Adj.(10)

Adjusted
Results

Selected income statement data:

















Net interest income

$

5,718

—

$

5,718

$

5,813

$

11

$

5,824

$

5,474

$

33

$

5,507

Non-interest income

1,191

$

2

1,193

1,200

9

1,209

1,061

37

1,098

Total net revenue

6,909

2

6,911

7,013

20

7,033

6,535

70

6,605

Provision for credit losses

1,674

—

1,674

1,926

—

1,926

1,992

—

1,992

Non-interest expense

3,573

(17)

3,556

3,779

(87)

3,692

3,434

(29)

3,405

Income from continuing operations before income taxes

1,662

19

1,681

1,308

107

1,415

1,109

99

1,208

Income tax provision (benefit)

319

4

323

2,170

(1,742)

428

314

(1)

313

Income (loss) from continuing operations, net of tax

1,343

15

1,358

(862)

1,849

987

795

100

895

Income (loss) from discontinued operations, net of tax

3

—

3

(109)

—

(109)

15

—

15

Net income (loss)

1,346

15

1,361

(971)

1,849

878

810

100

910

Dividends and undistributed earnings allocated to participating securities(11)

(10)

—

(10)

(1)

(5)

(6)

(5)

—

(5)

Preferred stock dividends

(52)

—

(52)

(80)

—

(80)

(53)

—

(53)

Net income (loss) available to common stockholders

$

1,284

$

15

$

1,299

$

(1,052)

$

1,844

$

792

$

752

$

100

$

852

Selected performance metrics:

















Diluted EPS(11)

$

2.62

$

0.03

$

2.65

$

(2.17)

$

3.79

$

1.62

$

1.54

$

0.21

$

1.75

Efficiency ratio

51.72

%

(27)

bps

51.45

%

53.89

%

(139)

bps

52.50

%

52.55

%

(100)

bps

51.55

%

 

 

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of tangible common equity ("TCE"), tangible assets and metrics computed using these amounts, which include tangible book value per common share, return on average tangible assets, return on average TCE and TCE ratio. We consider these metrics to be key financial performance measures that management uses in assessing capital adequacy and the level of returns generated. While these non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, our measures may not be comparable to similarly-titled measures reported by other companies. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.



2018

2017

2017

2017

2017

(Dollars in millions)

Q1

Q4

Q3

Q2

Q1

Tangible Common Equity (Period-End)









Stockholders' equity

$

49,203

$

48,730

$

50,154

$

49,137

$

48,040

Goodwill and intangible assets(12)

(15,063)

(15,106)

(15,249)

(15,301)

(15,360)

Noncumulative perpetual preferred stock

(4,360)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

29,780

$

29,264

$

30,545

$

29,476

$

28,320

Tangible Common Equity (Average)









Stockholders' equity

$

49,031

$

50,710

$

50,176

$

49,005

$

48,193

Goodwill and intangible assets(12)

(15,092)

(15,223)

(15,277)

(15,336)

(15,395)

Noncumulative perpetual preferred stock

(4,360)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

29,579

$

31,127

$

30,539

$

29,309

$

28,438

Tangible Assets (Period-End)









Total assets

$

362,857

$

365,693

$

361,402

$

350,593

$

348,549

Goodwill and intangible assets(12)

(15,063)

(15,106)

(15,249)

(15,301)

(15,360)

Tangible assets

$

347,794

$

350,587

$

346,153

$

335,292

$

333,189

Tangible Assets (Average)









Total assets

$

362,049

$

363,045

$

355,191

$

349,891

$

351,641

Goodwill and intangible assets(12)

(15,092)

(15,223)

(15,277)

(15,336)

(15,395)

Tangible assets

$

346,957

$

347,822

$

339,914

$

334,555

$

336,246


__________

  (1)       Regulatory capital metrics and capital ratios as of March 31, 2018 are preliminary and therefore subject to change.

  (2)      Amounts presented are net of tax.

  (3)      Amounts based on transition provisions for regulatory capital deductions and adjustments of 80% for 2017 and 100% for 2018.

  (4)      Total capital equals the sum of Tier 1 capital and Tier 2 capital.

  (5)      Adjusted average assets for the purpose of calculating our Tier 1 leverage ratio represents total average assets adjusted for amounts that are deducted from Tier 1 capital, predominately goodwill and intangible assets. Tier 1 
           leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets.

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

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

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

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

(10)      Adjustments for the following periods consist of:



2018

2017

2017

(Dollars in millions)

Q1

Q4

Q1

Restructuring charges

$

19

$

76

—

Impacts of the Tax Act

—

1,769

—

U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve")

—

31

$

99

Total

19

1,876

99

Income tax provision (benefit)

4

27

(1)

Net income

$

15

$

1,849

$

100

(11)     Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total.

(12)     Includes impact of related deferred taxes.

 

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SOURCE Capital One Financial Corporation

Investor Relations: Jeff Norris, 703.720.2455, Danielle Dietz, 703.720.2455, Media Relations: Sie Soheili, 703.720.3929, Tatiana Stead, 703.720.2352