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Capital One Reports First Quarter 2015 Net Income of $1.2 billion, or $2.00 per share

April 23, 2015 at 4:07 PM EDT
Press Release

Financial Supplement

Presentation

MCLEAN, Va., April 23, 2015 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the first quarter of 2015 of $1.2 billion, or $2.00 per diluted common share, compared to the fourth quarter of 2014 with net income of $999 million, or $1.73 per diluted common share, and the first quarter of 2014 with net income of $1.2 billion, or $1.96 per diluted common share. 

"In the first quarter, we continued to post strong results across our businesses," said Richard D. Fairbank, Chair and Chief Executive Officer. "As always, we're focused on sustaining strong performance and shareholder value. We are pursuing growth and resilience, managing costs tightly while we invest to grow, and actively working to return capital to shareholders."

All comparisons below are for the first quarter of 2015 compared with the fourth quarter of 2014 unless otherwise noted.

First Quarter 2015 Income Summary:

  • Total net revenue decreased 3 percent to $5.6 billion.
  • Total non-interest expense decreased 7 percent to $3.0 billion:
    • 26 percent decrease in marketing.
    • 3 percent decrease in operating expense.
  • Pre-provision earnings increased 3 percent to $2.6 billion.
  • Provision for credit losses decreased 16 percent to $935 million.
  • Mortgage representation & warranty benefit of $19 million ($12 million net of tax) in discontinued operations.

First Quarter 2015 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.5 percent at March 31, 2015.
  • Net interest margin of 6.57 percent, down 24 basis points.
  • Period-end loans held for investment in the quarter decreased $4.3 billion, or 2 percent, to $204.0 billion.
    • Domestic Card period-end loans decreased $3.6 billion, or 5 percent, to $74.1 billion.
    • Consumer Banking period-end loans decreased $60 million, or less than 1 percent, to $71.4 billion:
      • Auto period-end loans increased $1.1 billion, or 3 percent, to $38.9 billion.
      • Home loans period-end loans decreased $1.1 billion, or 4 percent, to $28.9 billion, driven by run-off of acquired portfolios.
  • Commercial Banking period-end loans decreased $149 million, or less than 1 percent, to $50.7 billion.

 

  • Average loans held for investment in the quarter increased $1.8 billion, or less than 1 percent, to $205.2 billion.
    • Domestic Card average loans increased $744 million, or 1 percent, to $74.8 billion.
    • Consumer Banking average loans increased $187 million, or less than 1 percent, to $71.4 billion:
      • Auto average loans increased $1.3 billion, or 4 percent, to $38.4 billion.
      • Home loans average loans decreased by $1.1 billion, or 4 percent, to $29.5 billion, driven by run-off of acquired portfolios.
  • Commercial Banking average loans increased $731 million, or 1 percent, to $51.1 billion.

 

  • Period-end total deposits increased $4.9 billion, or  2 percent, to $210.4 billion, while average deposits increased $2.5 billion to $207.9 billion.
  • Interest-bearing deposit rate remained relatively flat at 0.59 percent.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on April 23, 2015 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 5, 2015 at 5:00 PM Eastern Time.

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, 2014.

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 $210.4 billion in deposits and $306.2 billion in total assets as of March 31, 2015. 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, 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

First Quarter 2015(1) 

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 & 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

Business Segments Detail



Table 8:

Financial Summary—Business Segments

12


Table 9:

Financial & Statistical Summary—Credit Card Business

13


Table 10:

Financial & Statistical Summary—Consumer Banking Business

15


Table 11:

Financial & Statistical Summary—Commercial Banking Business

16


Table 12:

Financial & Statistical Summary—Other and Total

17


Table 13:

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

18

Other



Table 14:

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

19

__________

(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, 2015 once it is filed with the Securities and Exchange Commission.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated(1) 









































2015 Q1 vs.

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


2015

Q1


2014

Q4


2014

Q3


2014

Q2


2014

Q1


2014

Q4


2014

Q1








Earnings















Net interest income


$

4,576



$

4,656



$

4,497



$

4,315



$

4,350



(2)%



5%


Non-interest income(2)


1,071



1,157



1,142



1,153



1,020



(7)



5


Total net revenue(3)


$

5,647



$

5,813



$

5,639



$

5,468



$

5,370



(3)



5


Provision for credit losses


935



1,109



993



704



735



(16)



27


Non-interest expense:















Marketing


375



509



392



335



325



(26)



15


Amortization of intangibles


110



123



130



136



143



(11)



(23)


Acquisition-related(4)


7



10



13



18



23



(30)



(70)


Operating expenses


2,557



2,642



2,450



2,490



2,441



(3)



5


Total non-interest expense


3,049



3,284



2,985



2,979



2,932



(7)



4


Income from continuing operations before income taxes


1,663



1,420



1,661



1,785



1,703



17



(2)


Income tax provision


529



450



536



581



579



18



(9)


Income from continuing operations, net of tax


1,134



970



1,125



1,204



1,124



17



1


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


19



29



(44)



(10)



30



(34)



(37)


Net income


1,153



999



1,081



1,194



1,154



15




Dividends and undistributed earnings allocated to participating securities(5)


(6)



(4)



(5)



(4)



(5)



50



20


Preferred stock dividends(5)


(32)



(21)



(20)



(13)



(13)



52



146


Net income available to common stockholders


$

1,115



$

974



$

1,056



$

1,177



$

1,136



14



(2)


Common Share Statistics















Basic earnings per common share:(5)















Net income from continuing operations


$

2.00



$

1.71



$

1.97



$

2.09



$

1.94



17%



3%


Income (loss) from discontinued operations


0.03



0.05



(0.08)



(0.02)



0.05



(40)



(40)


Net income per basic common share


$

2.03



$

1.76



$

1.89



$

2.07



$

1.99



15



2


Diluted earnings per common share:(5)















Net income from continuing operations


$

1.97



$

1.68



$

1.94



$

2.06



$

1.91



17



3


Income (loss) from discontinued operations


0.03



0.05



(0.08)



(0.02)



0.05



(40)



(40)


Net income per diluted common share


$

2.00



$

1.73



$

1.86



$

2.04



$

1.96



16



2


Weighted-average common shares outstanding (in millions) for:















Basic common shares


550.2



554.3



559.9



567.5



571.0



(1)



(4)


Diluted common shares


557.2



561.8



567.9



577.6



580.3



(1)



(4)


Common shares outstanding (period end, in millions)


548.0



553.4



558.5



561.8



572.9



(1)



(4)


Dividends per common share


$

0.30



$

0.30



$

0.30



$

0.30



$

0.30






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


52.19



50.32



48.72



47.90



45.88



4



14










































2015 Q1 vs.

(Dollars in millions) (unaudited)


2015


2014


2014


2014


2014


2014


2014


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Balance Sheet (Period End)















Loans held for investment(7)


$

203,978



$

208,316



$

201,592



$

198,528



$

192,941



(2)%



6%


Interest-earning assets


275,837



277,849



270,001



266,720



259,422



(1)



6


Total assets


306,224



308,167



299,640



297,434



289,814



(1)



6


Interest-bearing deposits


185,208



180,467



178,876



180,970



184,214



3



1


Total deposits


210,440



205,548



204,264



205,890



208,324



2



1


Borrowings


41,029



48,457



42,243



39,114



30,118



(15)



36


Common equity


43,908



43,231



42,682



42,477



41,948



2



5


Total stockholders' equity


45,730



45,053



44,018



43,815



42,801



2



7


Balance Sheet (Average Balances)















Loans held for investment(7)


$

205,194



$

203,436



$

199,422



$

194,996



$

193,722



1%



6%


Interest-earning assets


278,427



273,436



268,890



263,570



262,659



2



6


Total assets


309,401



304,153



298,913



294,089



293,551



2



5


Interest-bearing deposits


182,998



179,401



179,928



182,053



184,183



2



(1)


Total deposits


207,851



205,355



205,199



206,315



205,842



1



1


Borrowings


46,082



43,479



40,314



35,658



35,978



6



28


Common equity


44,575



43,895



43,489



42,797



42,006



2



6


Total stockholders' equity


46,397



45,576



44,827



43,767



42,859



2



8


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated(1) 









































2015 Q1 vs.

(Dollars in millions) (unaudited)


2015


2014


2014


2014


2014


2014


2014


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Performance Metrics















Net interest income growth (quarter over quarter)


(2)%



4%



4%



(1)%



(2)%



**



**


Non-interest income growth (quarter over quarter)


(7)



1



(1)



13



(9)



**



**


Total net revenue growth (quarter over quarter)


(3)



3



3



2



(3)



**



**


Total net revenue margin(8)


8.11



8.50



8.39



8.30



8.18



(39)

bps


(7)

bps

Net interest margin(9)


6.57



6.81



6.69



6.55



6.62



(24)



(5)


Return on average assets


1.47



1.28



1.51



1.64



1.53



19



(6)


Return on average tangible assets(10)


1.54



1.34



1.59



1.73



1.62



20



(8)


Return on average common equity(11)


9.84



8.61



10.12



11.09



10.53



123



(69)


Return on average tangible common equity(12)


15.00



13.28



15.73



17.47



16.83



172



(183)


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


5.94



6.46



5.99



6.11



6.05



(52)



(11)


Efficiency ratio(13)


53.99



56.49



52.93



54.48



54.60



(250)



(61)


Effective income tax rate for continuing operations


31.8



31.7



32.3



32.5



34.0



10



(220)


Employees (in thousands), period end(14)


47.0



46.0



44.9



44.6



44.9



2%



5%


Credit Quality Metrics(7)















Allowance for loan and lease losses


$

4,405



$

4,383



$

4,212



$

3,998



$

4,098



1%



7%


Allowance as a percentage of loans held for investment


2.16%



2.10%



2.09%



2.01%



2.12%



6

bps


4

bps

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


2.41



2.36



2.37



2.30



2.45



5



(4)


Net charge-offs


$

881



$

915



$

756



$

812



$

931



(4)%



(5)%


Net charge-off rate(15)


1.72%



1.80%



1.52%



1.67%



1.92%



(8)

bps


(20)

bps

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


1.93



2.04



1.73



1.93



2.24



(11)



(31)


30+ day performing delinquency rate


2.32



2.62



2.46



2.24



2.22



(30)



10


30+ day performing delinquency rate (excluding acquired loans)


2.61



2.95



2.81



2.58



2.59



(34)



2


30+ day delinquency rate


2.58



2.91



2.76



2.53



2.51



(33)



7


30+ day delinquency rate (excluding acquired loans)


2.90



3.28



3.14



2.91



2.93



(38)



(3)


Capital Ratios(16)















Common equity Tier 1 capital ratio 


12.5%



12.5%



12.7%



12.7%



13.0%



bps


(50)

bps

Tier 1 risk-based capital ratio


13.2



13.2



13.3



13.3



13.4





(20)


Total risk-based capital ratio


15.1



15.1



15.2



15.4



15.4





(30)


Tier 1 leverage ratio


10.7



10.8



10.6



10.7



10.4



(10)



30


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


9.8



9.5



9.6



9.5



9.6



30



20


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income























Three Months Ended


2015 Q1 vs.



2015


2014


2014


2014


2014

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


Q1


Q4


Q1


Q4


Q1

Interest income:











Loans, including loans held for sale


$

4,540



$

4,613



$

4,307



(2)%



5%


Investment securities


406



405



416





(2)


Other


28



27



30



4



(7)


Total interest income


4,974



5,045



4,753



(1)



5


Interest expense:











Deposits


271



269



276



1



(2)


Securitized debt obligations


33



36



38



(8)



(13)


Senior and subordinated notes


79



73



77



8



3


Other borrowings


15



11



12



36



25


Total interest expense


398



389



403



2



(1)


Net interest income


4,576



4,656



4,350



(2)



5


Provision for credit losses


935



1,109



735



(16)



27


Net interest income after provision for credit losses


3,641



3,547



3,615



3



1


Non-interest income:(2)











Service charges and other customer-related fees


437



462



474



(5)



(8)


Interchange fees, net


496



523



440



(5)



13


Net other-than-temporary impairment recognized in earnings


(15)



(9)



(5)



67



200


Other


153



181



111



(15)



38


Total non-interest income


1,071



1,157



1,020



(7)



5


Non-interest expense:











Salaries and associate benefits


1,211



1,179



1,161



3



4


Occupancy and equipment


435



474



405



(8)



7


Marketing


375



509



325



(26)



15


Professional services


296



329



287



(10)



3


Communications and data processing


202



203



196





3


Amortization of intangibles


110



123



143



(11)



(23)


Other


420



467



415



(10)



1


Total non-interest expense


3,049



3,284



2,932



(7)



4


Income from continuing operations before income taxes


1,663



1,420



1,703



17



(2)


Income tax provision


529



450



579



18



(9)


Income from continuing operations, net of tax


1,134



970



1,124



17



1


Income from discontinued operations, net of tax(2)


19



29



30



(34)



(37)


Net income


1,153



999



1,154



15




Dividends and undistributed earnings allocated to participating securities(5)


(6)



(4)



(5)



50



20


Preferred stock dividends(5)


(32)



(21)



(13)



52



146


Net income available to common stockholders


$

1,115



$

974



$

1,136



14



(2)



































Three Months Ended


2015 Q1 vs.



2015


2014


2014


2014


2014

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


Q1


Q4


Q1


Q4


Q1

Basic earnings per common share:(5)











Net income from continuing operations


$

2.00



$

1.71



$

1.94



17%



3%


Income from discontinued operations


0.03



0.05



0.05



(40)



(40)


Net income per basic common share


$

2.03



$

1.76



$

1.99



15



2


Diluted earnings per common share:(5)











Net income from continuing operations


$

1.97



$

1.68



$

1.91



17



3


Income from discontinued operations


0.03



0.05



0.05



(40)



(40)


Net income per diluted common share


$

2.00



$

1.73



$

1.96



16



2


Weighted average common shares outstanding (in millions):











Basic common shares


550.2



554.3



571.0



(1)



(4)


Diluted common shares


557.2



561.8



580.3



(1)



(4)


Dividends paid per common share


$

0.30



$

0.30



$

0.30






 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets(1) 





























March 31, 2015 vs.

(Dollars in millions) (unaudited)


March 31,
2015


December 31,
2014


March 31,
2014


December 31,
2014


March 31,
2014

Assets:











Cash and cash equivalents:











Cash and due from banks


$

2,853



$

3,147



$

3,373



(9)%



(15)%


Interest-bearing deposits with banks


6,038



4,095



2,641



47



129


Federal funds sold and securities purchased under agreements to resell


0



0



168





**


Total cash and cash equivalents


8,891



7,242



6,182



23



44


Restricted cash for securitization investors


234



234



550





(57)


Securities available for sale, at fair value


39,321



39,508



40,721





(3)


Securities held to maturity, at carrying value


23,241



22,500



20,150



3



15


Loans held for investment:(7)











Unsecuritized loans held for investment


170,040



171,771



156,072



(1)



9


Restricted loans for securitization investors


33,938



36,545



36,869



(7)



(8)


Total loans held for investment


203,978



208,316



192,941



(2)



6


Allowance for loan and lease losses


(4,405)



(4,383)



(4,098)



1



7


Net loans held for investment


199,573



203,933



188,843



(2)



6


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


1,331



626



259



113



414


Premises and equipment, net


3,684



3,685



3,807





(3)


Interest receivable


1,078



1,079



1,045





3


Goodwill


13,978



13,978



13,974






Other assets


14,893



15,382



14,283



(3)



4


Total assets


$

306,224



$

308,167



$

289,814



(1)



6









































March 31, 2015 vs.

(Dollars in millions) (unaudited)


March 31,
2015


December 31,
2014


March 31,
2014


December 31,
2014


March 31,
2014

Liabilities:











Interest payable


$

195



$

254



$

182



(23)%



7%


Deposits:











Non-interest bearing deposits


25,232



25,081



24,110



1



5


Interest-bearing deposits


185,208



180,467



184,214



3



1


Total deposits


210,440



205,548



208,324



2



1


Securitized debt obligations


12,717



11,624



9,783



9



30


Other debt:











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


933



880



1,544



6



(40)


Senior and subordinated notes


20,559



18,684



14,891



10



38


Other borrowings


6,820



17,269



3,900



(61)



75


Total other debt


28,312



36,833



20,335



(23)



39


Other liabilities


8,830



8,855



8,389





5


Total liabilities


260,494



263,114



247,013



(1)



5













Stockholders' equity:











Preferred stock


0



0



0






Common stock


6



6



6






Additional paid-in capital, net


27,939



27,869



26,605





5


Retained earnings


24,925



23,973



21,259



4



17


Accumulated other comprehensive income ("AOCI")


(212)



(430)



(710)



(51)



(70)


Treasury stock, at cost


(6,928)



(6,365)



(4,359)



9



59


Total stockholders' equity


45,730



45,053



42,801



2



7


Total liabilities and stockholders' equity


$

306,224



$

308,167



$

289,814



(1)



6


 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

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



**

Not meaningful.



(1)

As of January 1, 2015, we changed our accounting principle for presenting qualifying derivative assets and liabilities, as well as the related fair value amounts recognized for the right to reclaim cash collateral (a receivable) or the obligation to return cash collateral (a payable), from a gross basis of presentation to a net basis. Prior period results and related metrics have been recast to conform to this presentation. Prior period regulatory ratios have not been recast.



(2)

We recorded the following related to the mortgage representation and warranty reserve:



























2015


2014


2014


2014


2014

(Dollars in millions) (unaudited)


Q1


Q4


Q3


Q2


Q1

Provision (benefit) for mortgage representation and warranty losses before income taxes:











Recorded in continuing operations


$

1



$

(11)



$



$

(29)



$

14


Recorded in discontinued operations


(19)



(41)



70



11



(47)


Total (benefit) provision for mortgage representation and warranty losses before income taxes


$

(18)



$

(52)



$

70



$

(18)



$

(33)


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