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Capital One Reports First Quarter 2016 Net Income of $1.0 billion, or $1.84 per share

April 26, 2016 at 4:07 PM EDT

MCLEAN, Va., April 26, 2016 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the first quarter of 2016 of $1.0 billion, or $1.84 per diluted common share, compared to the fourth quarter of 2015 with net income of $920 million, or $1.58 per diluted common share, and the first quarter of 2015 with net income of $1.2 billion, or $2.00 per diluted common share.

"First quarter 2016 was another quarter of strong growth in our Domestic Card business, both in loan balances and purchase volumes, which drove strong growth in revenue," said Richard D. Fairbank, Chair and Chief Executive Officer. "We continue to be in a strong position to deliver attractive shareholder returns, driven by growth and sustainable returns at the higher end of banks, as well as significant capital distribution, subject to regulatory approval."

All comparisons below are for the first quarter of 2016 compared with the fourth quarter of 2015 unless otherwise noted.

First Quarter 2016 Income Statement Summary:

  • Total net revenue remained flat at $6.2 billion.
  • Total non-interest expense decreased 7 percent to $3.2 billion.
    • 24 percent decrease in marketing.
    • 4 percent decrease in operating expenses.
  • Pre-provision earnings increased 10 percent to $3.0 billion.
  • Provision for credit losses increased 11 percent to $1.5 billion
    • Net charge-offs of $1.2 billion.
    • $286 million allowance build.
  • Net interest margin of 6.75 percent, down 4 basis points.
  • Efficiency ratio of 51.82 percent.

First Quarter 2016 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 11.1 percent at March 31, 2016.
  • Period-end loans held for investment in the quarter decreased $2.2 billion, or 1 percent, to $227.6 billion.
    • Domestic Card period-end loans decreased $3.4 billion, or 4 percent, to $84.6 billion.
    • Consumer Banking period-end loans increased $219 million, or less than 1 percent, to $70.6 billion.
      • Auto period-end loans increased $1.2 billion, or 3 percent, to $42.7 billion.
      • Home loans period-end loans decreased $884 million, or 4 percent, to $24.3 billion, driven by run-off of acquired portfolios.
    • Commercial Banking period-end loans increased $975 million, or 2 percent, to $64.2 billion.
  • Average loans held for investment in the quarter increased $6.7 billion, or 3 percent, to $226.7 billion.
    • Domestic Card average loans increased $1.4 billion, or 2 percent, to $85.1 billion.
    • Consumer Banking average loans decreased $408 million, or 1 percent, to $70.3 billion:
      • Auto average loans increased $629 million, or 2 percent, to $42.0 billion.
      • Home loans average loans decreased $995 million, or 4 percent, to $24.8 billion, driven by planned run-off of acquired portfolios.
    • Commercial Banking average loans increased $6.0 billion, or 10 percent, to $63.4 billion, including the acquired HFS loans.
  • Period-end total deposits increased $4.1 billion, or 2 percent, to $221.8 billion, while average deposits increased $3.3 billion, or 2 percent, to $219.2 billion.
  • Interest-bearing deposits rate paid remained flat at 0.58 percent.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on April 26, 2016 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 10, 2016 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, 2015.

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 $221.8 billion in deposits and $330.3 billion in total assets as of March 31, 2016. 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 2016(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 Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)

8


Table 6:

Average Balances, Net Interest Income and Net Interest Margin

10


Table 7:

Loan Information and Performance Statistics

11

Business Segment Results



Table 8:

Financial Summary—Business Segment Results

13


Table 9:

Financial & Statistical Summary—Credit Card Business

14


Table 10:

Financial & Statistical Summary—Consumer Banking Business

16


Table 11:

Financial & Statistical Summary—Commercial Banking Business

17


Table 12:

Financial & Statistical Summary—Other and Total

18


Table 13:

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

19

Other



Table 14:

Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital 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, 2016 once it is filed with the Securities and Exchange Commission.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)













Table 1: Financial Summary—Consolidated

























2016 Q1 vs,

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


2016


2015


2015


2015


2015


2015


2015


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Income Statement















Net interest income


$

5,056



$

4,961



$

4,760



$

4,537



$

4,576



2%



10%


Non-interest income


1,164



1,233



1,140



1,135



1,071



(6)



9


Total net revenue(1)


6,220



6,194



5,900



5,672



5,647





10


Provision for credit losses


1,527



1,380



1,092



1,129



935



11



63


Non-interest expense:















Marketing


428



564



418



387



375



(24)



14


Amortization of intangibles


101



103



106



111



110



(2)



(8)


Operating expenses


2,694



2,813



2,636



2,809



2,564



(4)



5


Total non-interest expense


3,223



3,480



3,160



3,307



3,049



(7)



6


Income from continuing operations before income taxes


1,470



1,334



1,648



1,236



1,663



10



(12)


Income tax provision


452



426



530



384



529



6



(15)


Income from continuing operations, net of tax


1,018



908



1,118



852



1,134



12



(10)


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


(5)



12



(4)



11



19



**



**


Net income


1,013



920



1,114



863



1,153



10



(12)


Dividends and undistributed earnings allocated to participating securities(3)


(6)



(4)



(6)



(4)



(6)



50




Preferred stock dividends(3)


(37)



(68)



(29)



(29)



(32)



(46)



16


Net income available to common stockholders


$

970



$

848



$

1,079



$

830



$

1,115



14



(13)


Common Share Statistics















Basic earnings per common share:(3)















Net income from continuing operations


$

1.86



$

1.58



$

2.01



$

1.50



$

2.00



18%



(7)%


Income (loss) from discontinued operations


(0.01)



0.02



(0.01)



0.02



0.03



**



**


Net income per basic common share


$

1.85



$

1.60



$

2.00



$

1.52



$

2.03



16



(9)


Diluted earnings per common share:(3)















Net income from continuing operations


$

1.85



$

1.56



$

1.99



$

1.48



$

1.97



19



(6)


Income (loss) from discontinued operations


(0.01)



0.02



(0.01)



0.02



0.03



**



**


Net income per diluted common share(4)


$

1.84



$

1.58



$

1.98



$

1.50



$

2.00



16



(8)


Weighted-average common shares outstanding (in millions):















Basic


523.5



530.8



540.6



545.6



550.2



(1)



(5)


Diluted


528.0



536.3



546.3



552.0



557.2



(2)



(5)


Common shares outstanding (period end, in millions)


514.5



527.3



534.9



542.5



548.0



(2)



(6)


Dividends paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.30





33


Tangible book value per common share (period end)(5)


55.94



53.65



54.66



52.74



52.19



4



7




































2016 Q1 vs.

(Dollars in millions) (unaudited)


2016


2015


2015


2015


2015


2015


2015


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Balance Sheet (Period End)















Loans held for investment(6)


$

227,613



$

229,851



$

213,329



$

209,705



$

203,978



(1)%



12%


Interest-earning assets


298,348



302,007



283,073



280,137



275,837



(1)



8


Total assets


330,346



334,048



313,700



310,510



306,224



(1)



8


Interest-bearing deposits


196,597



191,874



187,848



183,657



185,208



2



6


Total deposits


221,779



217,721



212,903



208,780



210,440



2



5


Borrowings


50,497



59,115



42,778



45,766



41,029



(15)



23


Common equity


44,411



43,990



44,391



43,849



43,908



1



1


Total stockholders' equity


47,707



47,284



47,685



46,659



45,730



1



4


Balance Sheet (Average Balances)















Loans held for investment(6)


$

226,736



$

220,052



$

211,227



$

206,337



$

205,194



3%



10%


Interest-earning assets


299,456



292,054



283,082



276,585



278,427



3



8


Total assets


331,919



323,354



313,822



307,206



309,401



3



7


Interest-bearing deposits


194,125



189,885



185,800



183,946



182,998



2



6


Total deposits


219,180



215,899



210,974



209,143



207,851



2



5


Borrowings


53,761



48,850



45,070



41,650



46,082



10



17


Common equity


45,782



45,418



45,407



44,878



44,575



1



3


Total stockholders' equity


49,078



48,712



48,456



47,255



46,397



1



6


 

               


CAPITAL ONE FINANCIAL CORPORATION (COF)











Table 2: Selected Metrics—Consolidated























2016 Q1 vs.

(Dollars in millions except as noted) (unaudited)


2016


2015


2015


2015


2015


2015


2015


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Performance Metrics















Net interest income growth (period over period)


2%



4%



5%



(1)%



(2)%



**



**


Non-interest income growth (period over period)


(6)



8





6



(7)



**



**


Total net revenue growth (period over period)




5



4





(3)



**



**


Total net revenue margin(7)


8.31



8.48



8.34



8.20



8.11



(17) bps


20 bps

Net interest margin(8)


6.75



6.79



6.73



6.56



6.57



(4)



18


Return on average assets


1.23



1.12



1.43



1.11



1.47



11



(24)


Return on average tangible assets(9)


1.29



1.18



1.50



1.17



1.54



11



(25)


Return on average common equity(10)


8.52



7.36



9.54



7.30



9.84



116



(132)


Return on average tangible common equity(11)


12.94



11.11



14.33



11.06



15.00



183



(206)


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


5.69



6.33



5.98



6.41



5.94



(64)



(25)


Efficiency ratio(12)


51.82



56.18



53.56



58.30



53.99



(436)



(217)


Effective income tax rate for continuing operations


30.7



31.9



32.2



31.1



31.8



(120)



(110)


Employees (in thousands), period end


45.8



45.4



46.9



47.5



47.0



1%



(3)%


Credit Quality Metrics(6)















Allowance for loan and lease losses


$

5,416



$

5,130



$

4,847



$

4,676



$

4,405



6%



23%


Allowance as a percentage of loans held for investment


2.38%



2.23%



2.27%



2.23%



2.16%



15 bps


22 bps

Net charge-offs


$

1,178



$

1,078



$

890



$

846



$

881



9%



34%


Net charge-off rate(13)


2.08%



1.96%



1.69%



1.64%



1.72%



12 bps


36 bps

30+ day performing delinquency rate


2.33



2.69



2.63



2.33



2.32



(36)



1


30+ day delinquency rate


2.64



3.00



2.95



2.65



2.58



(36)



6


Capital Ratios(14)















Common equity Tier 1 capital ratio


11.1%



11.1%



12.1%



12.1%



12.5%





(140) bps

Tier 1 capital ratio


12.4



12.4



13.4



13.3



13.2





(80)


Total capital ratio


14.6



14.6



15.1



15.1



15.1





(50)


Tier 1 leverage ratio


10.2



10.6



11.1



11.1



10.7



(40) bps


(50)


Tangible common equity ("TCE") ratio(15)


9.1



8.9



9.8



9.7



9.8



20



(70)


 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income




Three Months Ended


2016 Q1 vs.



2016


2015


2015


2015


2015

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


Q1


Q4


Q1


Q4


Q1

Interest income:











Loans, including loans held for sale


$

5,085



$

4,961



$

4,540



2%



12%


Investment securities


415



401



406



3



2


Other


17



22



28



(23)



(39)


Total interest income


5,517



5,384



4,974



2



11


Interest expense:











Deposits


283



277



271



2



4


Securitized debt obligations


48



43



33



12



45


Senior and subordinated notes


106



89



79



19



34


Other borrowings


24



14



15



71



60


Total interest expense


461



423



398



9



16


Net interest income


5,056



4,961



4,576



2



10


Provision for credit losses


1,527



1,380



935



11



63


Net interest income after provision for credit losses


3,529



3,581



3,641



(1)



(3)


Non-interest income:











Service charges and other customer-related fees


404



426



437



(5)



(8)


Interchange fees, net


596



617



496



(3)



20


Net other-than-temporary impairment recognized in earnings


(8)



(3)



(15)



167



(47)


Other


172



193



153



(11)



12


Total non-interest income


1,164



1,233



1,071



(6)



9


Non-interest expense:











Salaries and associate benefits


1,270



1,215



1,211



5



5


Occupancy and equipment


458



511



435



(10)



5


Marketing


428



564



375



(24)



14


Professional services


278



349



296



(20)



(6)


Communications and data processing


243



247



202



(2)



20


Amortization of intangibles


101



103



110



(2)



(8)


Other


445



491



420



(9)



6


Total non-interest expense


3,223



3,480



3,049



(7)



6


Income from continuing operations before income taxes


1,470



1,334



1,663



10



(12)


Income tax provision


452



426



529



6



(15)


Income from continuing operations, net of tax


1,018



908



1,134



12



(10)


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


(5)



12



19



**



**


Net income


1,013



920



1,153



10



(12)


Dividends and undistributed earnings allocated to participating securities(3)


(6)



(4)



(6)



50




Preferred stock dividends(3)


(37)



(68)



(32)



(46)



16


Net income available to common stockholders


$

970



$

848



$

1,115



14



(13)















Three Months Ended


2016 Q1 vs.



2016


2015


2015


2015


2015

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


Q1


Q4


Q1


Q4


Q1

Basic earnings per common share:(3)











Net income from continuing operations


$

1.86



$

1.58



$

2.00



18%



(7)%


Income (loss) from discontinued operations


(0.01)



0.02



0.03



**



**


Net income per basic common share


$

1.85



$

1.60



$

2.03



16



(9)


Diluted earnings per common share:(3)











Net income from continuing operations


$

1.85



$

1.56



$

1.97



19



(6)


Income (loss) from discontinued operations


(0.01)



0.02



0.03



**



**


Net income per diluted common share(4)


$

1.84



$

1.58



$

2.00



16



(8)


Weighted-average common shares outstanding (in millions):











Basic common shares


523.5



530.8



550.2



(1)



(5)


Diluted common shares


528.0



536.3



557.2



(2)



(5)


Dividends paid per common share


$

0.40



$

0.40



$

0.30





33


 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets









March 31, 2016 vs.

(Dollars in millions) (unaudited)


March 31,
2016


December 31,
2015


March 31,
2015


December 31,
2015


March 31,
2015

Assets:











Cash and cash equivalents:











Cash and due from banks


$

3,241



$

3,407



$

2,853



(5)%



14%


Interest-bearing deposits with banks


1,909



4,577



6,038



(58)



(68)


Federal funds sold and securities purchased under agreements to resell


85



39



0



118



**


Total cash and cash equivalents


5,235



8,023



8,891



(35)



(41)


Restricted cash for securitization investors


960



1,017



234



(6)



**


Securities available for sale, at fair value


40,092



39,061



39,321



3



2


Securities held to maturity, at carrying value


25,080



24,619



23,241



2



8


Loans held for investment:(6)











Unsecuritized loans held for investment


195,705



196,068



170,040





15


Loans held in consolidated trusts


31,908



33,783



33,938



(6)



(6)


Total loans held for investment


227,613



229,851



203,978



(1)



12


Allowance for loan and lease losses


(5,416)



(5,130)



(4,405)



6



23


Net loans held for investment


222,197



224,721



199,573



(1)



11


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


1,251



904



1,331



38



(6)


Premises and equipment, net


3,542



3,584



3,684



(1)



(4)


Interest receivable


1,221



1,189



1,078



3



13


Goodwill


14,492



14,480



13,978





4


Other assets


16,276



16,450



14,893



(1)



9


Total assets


$

330,346



$

334,048



$

306,224



(1)



8





















March 31, 2016 vs.

(Dollars in millions) (unaudited)


March 31,
2016


December 31,
2015


March 31,
2015


December 31,
2015


March 31,
2015

Liabilities:











Interest payable


$

217



$

299



$

195



(27)%



11%


Deposits:











Non-interest bearing deposits


25,182



25,847



25,232



(3)




Interest-bearing deposits


196,597



191,874



185,208



2



6


Total deposits


221,779



217,721



210,440



2



5


Securitized debt obligations


14,913



16,166



12,717



(8)



17


Other debt:











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


917



981



933



(7)



(2)


Senior and subordinated notes


21,736



21,837



20,559





6


Other borrowings


12,931



20,131



6,820



(36)



90


Total other debt


35,584



42,949



28,312



(17)



26


Other liabilities


10,146



9,629



8,830



5



15


Total liabilities


282,639



286,764



260,494



(1)



9













Stockholders' equity:











Preferred stock


0



0



0






Common stock


7



6



6



17



17


Additional paid-in capital, net


29,709



29,655



27,939





6


Retained earnings


27,808



27,045



24,925



3



12


Accumulated other comprehensive loss


(41)



(616)



(212)



(93)



(81)


Treasury stock, at cost


(9,776)



(8,806)



(6,928)



11



41


Total stockholders' equity


47,707



47,284



45,730



1



4


Total liabilities and stockholders' equity


$

330,346



$

334,048



$

306,224



(1)



8


 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

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


**     Not meaningful.


(1)     Total net revenue was reduced by $228 million in Q1 2016, $222 million in Q4 2015, $195 million in Q3 2015, $168 million in Q2 2015 and $147 million in Q1 2015 for the estimated uncollectible amount of billed finance charges and fees.


(2)     Historically, the majority of the provision (benefit) for representation and warranty losses is included net of tax in discontinued operations. The provision (benefit) for mortgage representation and warranty losses included the following activity:




















2016


2015


2015


2015


2015

(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)



$

(1)



$

(7)



$

(9)



$

1


Recorded in discontinued operations


















3



(21)



3



(27)



(19)


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


















$

2



$

(22)



$

(4)



$

(36)



$

(18)



         The mortgage representation and warranty reserve was $613 million as of March 31, 2016, $610 million as of December 31, 2015 and $673 million as of March 31, 2015.


(3)     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.


(4)     In Q4 2015, we recorded charges totaling $72 million associated with (i) completing the acquisition of the Healthcare Financial Services business of General Electric Capital Corporation ("HFS acquisition") and establishing an initial allowance and reserve related to the loans acquired; (ii) certain planned site 
         closures; and (iii) revisions to the restructuring charges recorded in Q2 2015 to reflect updated information. We recorded a build in the U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve") of $69 million in Q3 2015 and $78 million in Q2 2015. In Q2 2015, we also recorded 
         restructuring charges of $147 million for severance and related benefits pursuant to our ongoing benefit programs, as a result of the realignment of our workforce. We report the following non-GAAP financial measures that we believe are helpful for investors to understand the effect of these items on our 
         reported results. The table below presents a reconciliation of our reported results to these non-GAAP financial measures. Periods not presented did not have any adjustments.




2015 Q4


2015 Q3


2015 Q2

(Dollars in millions, except per share data) (unaudited)