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Capital One Reports Fourth Quarter 2014 Net Income of $999 million, or $1.73 per share

January 22, 2015 at 4:06 PM EST

MCLEAN, Va., Jan. 22, 2015  /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2014 of $999 million, or $1.73 per diluted common share, compared to the third quarter of 2014 with net income of $1.1 billion, or $1.86 per diluted common share, and the fourth quarter of 2013 with net income of $852 million, or $1.43 per diluted common share.

"2014 was a strong year for Capital One. We returned to growth in our Domestic Card business, delivered $10.1 billion in pre-provision earnings, and returned significant capital to our shareholders. We're poised to build on the momentum in 2015," said Richard D. Fairbank, Chairman and Chief Executive Officer. "Our strategic priorities for 2015 have not changed, and we remain focused on the levers to create value and sustain strong performance for our shareholders."

All comparisons below are for the full year of 2013 compared to the full year of 2014 unless otherwise noted.

2014 Full Year Income Summary:

  • Total net revenue remained flat at $22.3 billion.
  • Total non-interest expense decreased 1 percent to $12.2 billion.
  • Pre-provision earnings increased 1 percent to $10.1 billion.
  • Provision for credit losses increased 3 percent to $3.5 billion.

All comparisons below are for the fourth quarter of 2014 compared to the third quarter of 2014 unless otherwise noted.

Fourth Quarter 2014 Income Summary:

  • Total net revenue increased 3 percent to $5.8 billion.
  • Total non-interest expense increased 10 percent to $3.3 billion:
    • 30 percent increase in marketing
    • 8 percent increase in operating expense
  • Pre-provision earnings decreased 5 percent to $2.5 billion.
  • Provision for credit losses increased 12 percent to $1.1 billion.
  • Mortgage representation & warranty benefit of $41 million ($26 million net of tax) in discontinued operations.

Fourth Quarter 2014 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.4 percent at December 31, 2014.
  • Net interest margin of 6.81 percent, up 12 basis points.
  • Period-end loans held for investment in the quarter increased $6.7 billion, or 3 percent, to $208.3 billion.
    • Domestic Card period-end loans increased $4.6 billion, or 6 percent, to $77.7 billion.
    • Commercial Banking period-end loans increased $1.1 billion, or 2 percent, to $50.9 billion.
    • Consumer Banking period-end loans increased $378 million, or 1 percent, to $71.4 billion:
      • Auto period-end loans increased $1.6 billion, or 4 percent, to $37.8 billion.
      • Home loans period-end loans decreased $1.2 billion, or 4 percent, to $30.0 billion, driven by run-off of acquired portfolios.
  • Average loans held for investment in the quarter increased $4.0 billion, or 2 percent, to $203.4 billion.
    • Domestic Card average loans increased $2.2 billion, or 3 percent, to $74.0 billion.
    • Commercial Banking average loans increased $1.6 billion, or 3 percent, to $50.3 billion.
    • Consumer Banking average loans increased $206 million, or less than 1 percent, to $71.3 billion:
      • Auto average loans increased $1.5 billion, or 4 percent, to $37.1 billion.
      • Home loans average loans decreased by $1.3 billion, or 4 percent, to $30.6 billion, driven by run-off of acquired portfolios.
  • Period-end total deposits increased $1.3 billion, or less than 1 percent, to $205.5 billion, while average deposits increased $156 million to $205.4 billion.
  • Interest-bearing deposit rate remained flat at 0.60 percent.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on January 22, 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 January 31, 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, 2013.

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 $205.5 billion in deposits and $308.9 billion in total assets as of December 31, 2014. 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

Fourth Quarter 2014(1)(2)

Table of Contents







Capital One Financial Corporation Consolidated Results



Table 1:

Financial Summary—Consolidated



Table 2:

Selected Metrics—Consolidated



Table 3:

Consolidated Statements of Income



Table 4:

Consolidated Balance Sheets



Table 5:

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



Table 6:

Average Balances, Net Interest Income and Net Interest Margin



Table 7:

Loan Information and Performance Statistics


Business Segments Detail



Table 8:

Financial Summary—Business Segments



Table 9:

Financial & Statistical Summary—Credit Card Business



Table 10:

Financial & Statistical Summary—Consumer Banking Business



Table 11:

Financial & Statistical Summary—Commercial Banking Business



Table 12:

Financial & Statistical Summary—Other and Total



Table 13:

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


Other



Table 14:

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











(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 Annual Report on Form 10-K for the period ended December 31, 2014 once it is filed with the Securities and Exchange Commission.

(2)

We adopted ASU 2014-01 "Accounting for Investments in Qualified Affordable Housing Projects" as of January 1, 2014. Prior period results and related metrics have been recast to conform to this presentation.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated(1)



















































2014 Q4 vs.


Year Ended


2014

(Dollars in millions, except per share data and

as noted) (unaudited)


2014


2014


2014


2014


2013


2014


2013


2014


2013


vs.


Q4


Q3


Q2


Q1


Q4


Q3


Q4




2013

Earnings





















Net interest income


$

4,656



$

4,497



$

4,315



$

4,350



$

4,423



4

%


5

%


$

17,818



$

18,106



(2)

%

Non-interest income(2)


1,157



1,142



1,153



1,020



1,121



1



3



4,472



4,278



5


Total net revenue(3)


5,813



5,639



5,468



5,370



5,544



3



5



22,290



22,384




Provision for credit losses


1,109



993



704



735



957



12



16



3,541



3,453



3


Non-interest expense:





















Marketing


509



392



335



325



427



30



19



1,561



1,373



14


Amortization of intangibles


123



130



136



143



166



(5)



(26)



532



671



(21)


Acquisition-related(4)


10



13



18



23



60



(23)



(83)



64



193



(67)


Operating expenses


2,642



2,450



2,490



2,441



2,582



8



2



10,023



10,116



(1)


Total non-interest expense


3,284



2,985



2,979



2,932



3,235



10



2



12,180



12,353



(1)


Income from continuing operations before income taxes


1,420



1,661



1,785



1,703



1,352



(15)



5



6,569



6,578




Income tax provision


450



536



581



579



477



(16)



(6)



2,146



2,224



(4)


Income from continuing operations, net of tax


970



1,125



1,204



1,124



875



(14)



11



4,423



4,354



2


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


29



(44)



(10)



30



(23)



**



**



5



(233)



**


Net income


999



1,081



1,194



1,154



852



(8)



17



4,428



4,121



7


Dividends and undistributed earnings allocated to participating securities(5)


(4)



(5)



(4)



(5)



(4)



(20)





(18)



(17)



6


Preferred stock dividends(5)


(21)



(20)



(13)



(13)



(13)



5



62



(67)



(53)



26


Net income available to common stockholders


$

974



$

1,056



$

1,177



$

1,136



$

835



(8)



17



$

4,343



$

4,051



7


Common Share Statistics





















Basic earnings per common share:(5)





















Net income from continuing operations


$

1.71



$

1.97



$

2.09



$

1.94



$

1.50



(13)

%


14

%


$

7.70



$

7.39



4

%

Income (loss) from discontinued operations


0.05



(0.08)



(0.02)



0.05



(0.04)



**



**



0.01



(0.40)



**


Net income per basic common share


$

1.76



$

1.89



$

2.07



$

1.99



$

1.46



(7)



21



$

7.71



$

6.99



10


Diluted earnings per common share:(5)





















Net income from continuing operations


$

1.68



$

1.94



$

2.06



$

1.91



$

1.46



(13)



15



$

7.58



$

7.28



4


Income (loss) from discontinued operations


0.05



(0.08)



(0.02)



0.05



(0.03)



**



**



0.01



(0.39)



**


Net income per diluted common share


$

1.73



$

1.86



$

2.04



$

1.96



$

1.43



(7)



21



$

7.59



$

6.89



10


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





















Basic common shares


554.3



559.9



567.5



571.0



573.4



(1)



(3)



563.1



579.7



(3)


Diluted common shares


561.8



567.9



577.6



580.3



582.6



(1)



(4)



571.9



587.6



(3)


Common shares outstanding (period end, in millions)


553.4



558.5



561.8



572.9



572.7



(1)



(3)



553.4



572.7



(3)


Dividends per common share


$

0.30



$

0.30



$

0.30



$

0.30



$

0.30







$

1.20



$

0.95



26


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


50.32



48.72



47.90



45.88



43.64



3



15



50.32



43.64



15


Balance Sheet (Period End)





















Loans held for investment(7)


$

208,316



$

201,592



$

198,528



$

192,941



$

197,199



3

%


6

%


$

208,316



$

197,199



6

%

Interest-earning assets


277,849



270,001



266,720



259,422



265,170



3



5



277,849



265,170



5


Total assets


308,854



300,202



298,317



290,500



296,933



3



4



308,854



296,933



4


Interest-bearing deposits


180,467



178,876



180,970



184,214



181,880



1



(1)



180,467



181,880



(1)


Total deposits


205,548



204,264



205,890



208,324



204,523



1



1



205,548



204,523



1


Borrowings


48,457



42,243



39,114



30,118



40,654



15



19



48,457



40,654



19


Common equity


43,231



42,682



42,477



41,948



40,779



1



6



43,231



40,779



6


Total stockholders' equity


45,053



44,018



43,815



42,801



41,632



2



8



45,053



41,632



8


Balance Sheet (Average Balances)





















Loans held for investment(7)


$

203,436



$

199,422



$

194,996



$

193,722



$

192,813



2

%


6

%


$

197,925



$

192,614



3

%

Interest-earning assets


273,436



268,890



263,570



262,659



262,957



2



4



267,174



266,423




Total assets


304,711



299,523



294,744



294,275



294,040



2



4



298,300



297,264




Interest-bearing deposits


179,401



179,928



182,053



184,183



184,206





(3)



181,036



187,700



(4)


Total deposits


205,355



205,199



206,315



205,842



205,706







205,675



209,045



(2)


Borrowings


43,479



40,314



35,658



35,978



36,463



8



19



38,882



37,807



3


Common equity


43,895



43,489



42,797



42,006



41,502



1



6



43,055



40,629



6


Total stockholders' equity


45,576



44,827



43,767



42,859



42,355



2



8



44,268



41,482



7



































CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated(1)



















































2014 Q4 vs.


Year Ended


2014

(Dollars in millions) (unaudited)


2014


2014


2014


2014


2013


2014


2013


2014


2013


vs.


Q4


Q3


Q2


Q1


Q4


Q3


Q4




2013

Performance Metrics





















Net interest income growth (quarter over quarter/ year over year)


4

%


4

%


(1)

%


(2)

%


(3)

%


**



**



(2)

%


9

%


**


Non-interest income growth (quarter over quarter/ year over year)


1



(1)



13



(9)



3



**



**



5



(11)



**


Total net revenue growth (quarter over quarter/ year over year)


3



3



2



(3)



(2)



**



**



0



5



**


Total net revenue margin(8)


8.50



8.39



8.30



8.18



8.43



11

bps


7

bps


8.34



8.40



(6)

bps

Net interest margin(9)


6.81



6.69



6.55



6.62



6.73



12



8



6.67



6.80



(13)


Return on average assets


1.27



1.50



1.63



1.53



1.19



(23)



8



1.48



1.46



2


Return on average tangible assets(10)


1.34



1.58



1.73



1.61



1.26



(24)



8



1.56



1.55



1


Return on average common equity(11)


8.61



10.12



11.09



10.53



8.27



(151)



34



10.08



10.54



(46)


Return on average tangible common equity(12)


13.28



15.73



17.47



16.83



13.38



(245)



(10)



15.79



17.35



(156)


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


6.46



5.99



6.11



6.05



6.71



47



(25)



6.15



6.41



(26)


Efficiency ratio(13)


56.49



52.93



54.48



54.60



58.35



356



(186)



54.64



55.19



(55)


Effective income tax rate for continuing operations


31.7



32.3



32.5



34.0



35.3



(60)



(360)



32.7



33.8



(110)


Employees (in thousands), period end(14)


46.0



44.9



44.6



44.9



45.4



2

%


1

%


46.0



45.4



1

%

Credit Quality Metrics(7)





















Allowance for loan and lease losses


$

4,383



$

4,212



$

3,998



$

4,098



$

4,315



4

%


2

%


$

4,383



$

4,315



2

%

Allowance as a % of loans held for investment


2.10

%


2.09

%


2.01

%


2.12

%


2.19

%


1

bps


(9)

bps


2.10

%


2.19

%


(9)

bps

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


2.36



2.37



2.30



2.45



2.54



(1)



(18)



2.36



2.54



(18)


Net charge-offs


$

915



$

756



$

812



$

931



$

969



21

%


(6)

%


$

3,414



$

3,934



(13)

%

Net charge-off rate(15)


1.80

%


1.52

%


1.67

%


1.92

%


2.01

%


28

bps


(21)

bps


1.72

%


2.04

%


(32)

bps

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


2.04



1.73



1.93



2.24



2.37



31



(33)



1.98



2.45



(47)


30+ day performing delinquency rate


2.62



2.46



2.24



2.22



2.63



16



(1)



2.62



2.63



(1)


30+ day performing delinquency rate (excluding acquired loans)


2.95



2.81



2.58



2.59



3.08



14



(13)



2.95



3.08



(13)


30+ day delinquency rate


2.91



2.76



2.53



2.51



2.96



15



(5)



2.91



2.96



(5)


30+ day delinquency rate (excluding acquired loans)


3.28



3.14



2.91



2.93



3.46



14



(18)



3.28



3.46



(18)


Capital Ratios(16)





















Common equity Tier 1 capital ratio


12.4

%


12.7

%


12.7

%


13.0

%


N/A



(30)

bps


N/A



12.4

%


N/A



N/A


Tier 1 common ratio


N/A



N/A



N/A



N/A



12.2

%


N/A



N/A



N/A



12.2

%


N/A


Tier 1 risk-based capital ratio


13.2

%


13.3

%


13.3

%


13.4

%


12.6



(10)

bps


60

bps


13.2

%


12.6



60

bps

Total risk-based capital ratio


15.1



15.2



15.4



15.4



14.7



(10)



40



15.1



14.7



40


Tier 1 leverage ratio


10.8



10.6



10.7



10.4



10.1



20



70



10.8



10.1



70


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


9.5



9.6



9.5



9.6



8.9



(10)



60



9.5



8.9



60


































CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income(1)

































Three Months Ended


2014 Q4 vs.


Year Ended


2014



2014


2014


2013


2014


2013


2014


2013


vs.

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


Q4


Q3


Q4


Q3


Q4




2013

Interest income:

















Loans, including loans held for sale


$

4,613



$

4,463



$

4,398



3

%


5

%


$

17,662



$

18,222



(3)

%

Investment securities


405



398



414



2



(2)



1,628



1,575



3


Other


27



26



27



4





107



101



6


Total interest income


5,045



4,887



4,839



3



4



19,397



19,898



(3)


Interest expense:

















Deposits


269



271



288



(1)



(7)



1,088



1,241



(12)


Securitized debt obligations


36



32



40



13



(10)



145



183



(21)


Senior and subordinated notes


73



71



75



3



(3)



299



315



(5)


Other borrowings


11



16



13



(31)



(15)



47



53



(11)


Total interest expense


389



390



416





(6)



1,579



1,792



(12)


Net interest income


4,656



4,497



4,423



4



5



17,818



18,106



(2)


Provision for credit losses


1,109



993



957



12



16



3,541



3,453



3


Net interest income after provision for credit losses


3,547



3,504



3,466



1



2



14,277



14,653



(3)


Non-interest income:(2)

















Service charges and other customer-related fees


462



471



504



(2)



(8)



1,867



2,118



(12)


Interchange fees, net


523



523



489





7



2,021



1,896



7


Net other-than-temporary impairment recognized in earnings


(9)



(9)



(1)





**


(24)



(41)



(41)


Other


181



157



129



15



40



608



305



99


Total non-interest income


1,157



1,142



1,121



1



3



4,472



4,278



5


Non-interest expense:

















Salaries and associate benefits


1,179



1,128



1,115



5



6



4,593



4,480



3


Occupancy and equipment


474



419



437



13



8



1,745



1,541



13


Marketing


509



392



427



30



19



1,561



1,373



14


Professional services


329



304



357



8



(8)



1,216



1,347



(10)


Communications and data processing


203



196



220



4



(8)



798



897



(11)


Amortization of intangibles


123



130



166



(5)



(26)



532



671



(21)


Other


467



416



513



12



(9)



1,735



2,044



(15)


Total non-interest expense


3,284



2,985



3,235



10



2



12,180



12,353



(1)


Income from continuing operations before income taxes


1,420



1,661



1,352



(15)



5



6,569



6,578




Income tax provision


450



536



477



(16)



(6)



2,146



2,224



(4)


Income from continuing operations, net of tax


970



1,125



875



(14)



11



4,423



4,354



2


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


29



(44)



(23)



**


**


5



(233)



**

Net income


999



1,081



852



(8)



17



4,428



4,121



7


Dividends and undistributed earnings allocated to participating securities(5)


(4)



(5)



(4)



(20)





(18)



(17)



6


Preferred stock dividends(5)


(21)



(20)



(13)



5



62



(67)



(53)



26


Net income available to common stockholders


$

974



$

1,056



$

835



(8)



17



$

4,343



$

4,051



7


Basic earnings per common share:(5)

















Net income from continuing operations


$

1.71



$

1.97



$

1.50



(13)

%


14

%


$

7.70



$

7.39



4