Breadcrumb

Home Page > About Capital One > Investor Relations > Capital One Reports Fourth Quarter 2015 Net Income of $920 million, or $1.58 per share

Release Details

Capital One Reports Fourth Quarter 2015 Net Income of $920 million, or $1.58 per share

January 26, 2016 at 4:07 PM EST

Presentation

Financial Supplement

Press Release

MCLEAN, Va., Jan. 26, 2016 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2015 of $920 million, or $1.58 per diluted common share, compared to the third quarter of 2015 with net income of $1.1 billion, or $1.98 per diluted common share, and the fourth quarter of 2014 with net income of $999 million, or $1.73 per diluted common share.

Net income, excluding adjustments(1) for the fourth quarter of 2015 was $966 million or $1.67 per diluted common share. Adjustments are comprised of charges totaling $72 million associated with (i) closing the GE Healthcare 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.

"The headline for 2015 was industry-leading growth in Domestic Card loans and purchase volumes," said Richard D. Fairbank, Chairman and Chief Executive Officer.  "Our 2015 results and the choices that drove them have put us 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 full year of 2015 compared to the full year of 2014 unless otherwise noted.

2015 Full Year Income Statement Summary:

  • Total net revenue increased 5 percent to $23.4 billion, including ($86) million of contra-revenue from a build in the U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve").
  • Total non-interest expense increased 7 percent to $13.0 billion:
    • 12 percent increase in marketing.
    • 7 percent increase in operating expenses, including $150 million in restructuring and related site closure charges, $61 million build in the U.K. PPI Reserve, and $20 million of charges associated with closing the GE Healthcare acquisition.
  • Pre-provision earnings increased 3 percent to $10.4 billion
  • Provision for credit losses increased 28 percent to $4.5 billion.
  • Efficiency ratio of 55.51 percent; Efficiency ratio excluding restructuring and site closure charges, the build in the U.K. PPI Reserve and charges associated with the closing of the GE Healthcare acquisition was 54.32 percent.

All comparisons below are for the fourth quarter of 2015 compared to the third quarter of 2015 unless otherwise noted.

Fourth Quarter 2015 Income Statement Summary:

  • Total net revenue increased 5 percent to $6.2 billion.
  • Total non-interest expense increased 10 percent to $3.5 billion:
    • 35 percent increase in marketing.
    • 7 percent increase in operating expenses.
  • Pre-provision earnings decreased 1 percent to $2.7 billion
  • Provision for credit losses increased 26 percent to $1.4 billion.
  • Net interest margin of 6.79 percent, up 6 basis points.

All comparisons below are as of December 31, 2015 as compared to December 31, 2014 unless otherwise noted.

Fourth Quarter 2015 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 11.1 percent at December 31, 2015.
  • Period-end loans held for investment in the quarter increased $16.5 billion, or 8 percent, to $229.9 billion.
    • Domestic Card period-end loans increased $5.8 billion, or 7 percent, to $87.9 billion.
    • Consumer Banking period-end loans decreased $618 million, or less than 1 percent, to $70.4 billion:
      • Auto period-end loans increased $497 million, or 1 percent, to $41.5 billion.
      • Home loans period-end loans decreased $1.1 billion, or 4 percent, to $25.2 billion, driven by run-off of acquired portfolios.
    • Commercial Banking period-end loans increased $11.2 billion, or 21 percent, to $63.3 billion, including the acquired GE Healthcare loans.
  • Average loans held for investment in the quarter increased $8.8 billion, or 4 percent, to $220.1 billion.
    • Domestic Card average loans increased $3.4 billion, or 4 percent, to $83.8 billion.
    • Consumer Banking average loans decreased $393 million, or less than 1 percent, to $70.7 billion:
      • Auto average loans increased $773 million, or 2 percent, to $41.3 billion
      • Home loans average loans decreased by $1.2 billion, or 4 percent, to $25.8 billion, driven by run-off of acquired portfolios.
    • Commercial Banking average loans increased $5.8 billion, or 11 percent, to $57.4 billion, including the acquired GE Healthcare loans.
  • Period-end total deposits increased $4.8 billion, or 2 percent, to $217.7 billion, while average deposits increased $4.9 billion, or 2 percent to $215.9 billion.
  • Interest-bearing deposit rate remained flat at 0.58 percent.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on January 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 February 9, 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, 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 $217.7 billion in deposits and $334.0 billion in total assets as of December 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.

  
(1) Net income excluding adjustments is a non-GAAP measure, which we believe is helpful for investors to understand the effect of the excluded items on our reported results. See Table 5 in Exhibit 99.2 for a reconciliation to the reported results on a GAAP basis.

 

 

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement

Fourth 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 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 Annual Report on Form 10-K for the period ended December 31, 2015 once it is filed with the Securities and Exchange Commission.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated(1) 




















































2015 Q4 vs.


Year Ended


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


2015


2015


2015


2015


2014


2015


2014






2015 vs.



Q4


Q3


Q2


Q1


Q4


Q3


Q4


2015


2014


2014


Income Statement





















Net interest income


$

4,961



$

4,760



$

4,537



$

4,576



$

4,656



4%



7%



$

18,834



$

17,818



6%


Non-interest income


1,233



1,140



1,135



1,071



1,157



8



7



4,579



4,472



2


Total net revenue(2)


6,194



5,900



5,672



5,647



5,813



5



7



23,413



22,290



5


Provision for credit losses


1,380



1,092



1,129



935



1,109



26



24



4,536



3,541



28


Non-interest expense:





















Marketing


564



418



387



375



509



35



11



1,744



1,561



12


Amortization of intangibles


103



106



111



110



123



(3)



(16)



430



532



(19)


Operating expenses


2,813



2,636



2,809



2,564



2,652



7



6



10,822



10,087



7


Total non-interest expense


3,480



3,160



3,307



3,049



3,284



10



6



12,996



12,180



7


Income from continuing operations before income taxes


1,334



1,648



1,236



1,663



1,420



(19)



(6)



5,881



6,569



(10)


Income tax provision


426



530



384



529



450



(20)



(5)



1,869



2,146



(13)


Income from continuing operations, net of tax


908



1,118



852



1,134



970



(19)



(6)



4,012



4,423



(9)


Income (loss) from discontinued operations, net of tax(3)


12



(4)



11



19



29



**



(59)



38



5



**


Net income


920



1,114



863



1,153



999



(17)



(8)



4,050



4,428



(9)


Dividends and undistributed earnings allocated to participating securities(4)


(4)



(6)



(4)



(6)



(4)



(33)





(20)



(18)



11


Preferred stock dividends(4)


(68)



(29)



(29)



(32)



(21)



134



224



(158)



(67)



136


Net income available to common stockholders


$

848



$

1,079



$

830



$

1,115



$

974



(21)



(13)



$

3,872



$

4,343



(11)


Common Share Statistics





















Basic earnings per common share:(4)





















Net income from continuing operations


$

1.58



$

2.01



$

1.50



$

2.00



$

1.71



(21)%



(8)%



$

7.08



$

7.70



(8)%


Income (loss) from discontinued operations


0.02



(0.01)



0.02



0.03



0.05



**



(60)



0.07



0.01



**


Net income per basic common share


$

1.60



$

2.00



$

1.52



$

2.03



$

1.76



(20)



(9)



$

7.15



$

7.71



(7)


Diluted earnings per common share:(4)





















Net income from continuing operations


$

1.56



$

1.99



$

1.48



$

1.97



$

1.68



(22)



(7)



$

7.00



$

7.58



(8)


Income (loss) from discontinued operations


0.02



(0.01)



0.02



0.03



0.05



**



(60)



0.07



0.01



**


Net income per diluted common share(5)


$

1.58



$

1.98



$

1.50



$

2.00



$

1.73



(20)



(9)



$

7.07



$

7.59



(7)


Weighted-average common shares outstanding (in millions):





















Basic


530.8



540.6



545.6



550.2



554.3



(2)



(4)



541.8



563.1



(4)


Diluted


536.3



546.3



552.0



557.2



561.8



(2)



(5)



548.0



571.9



(4)


Common shares outstanding (period end, in millions)


527.3



534.9



542.5



548.0



553.4



(1)



(5)



527.3



553.4



(5)


Dividends paid per common share


$

0.40



$

0.40



$

0.40



$

0.30



$

0.30





33



$

1.50



$

1.20



25


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


53.65



54.66



52.74



52.19



50.32



(2)



7



53.65



50.32



7





















































2015 Q4 vs.



Year Ended

(Dollars in millions) (unaudited)


2015


2015


2015


2015


2014


2015


2014







2015 vs.


Q4


Q3


Q2


Q1


Q4


Q3


Q4



2015


2014


2014

Balance Sheet (Period End)






















Loans held for investment(7)


$

229,851



$

213,329



$

209,705



$

203,978



$

208,316



8%



10%



$

229,851



$

208,316



10%

Interest-earning assets


302,007



283,073



280,137



275,837



277,849



7



9



302,007



277,849



9

Total assets


334,048



313,700



310,510



306,224



308,167



6



8



334,048



308,167



8

Interest-bearing deposits


191,874



187,848



183,657



185,208



180,467



2



6



191,874



180,467



6

Total deposits


217,721



212,903



208,780



210,440



205,548



2



6



217,721



205,548



6

Borrowings


59,115



42,778



45,766



41,029



48,457



38



22



59,115



48,457



22

Common equity


43,990



44,391



43,849



43,908



43,231



(1)



2



43,990



43,231



2

Total stockholders' equity


47,284



47,685



46,659



45,730



45,053



(1)



5



47,284



45,053



5

Balance Sheet (Average Balances)






















Loans held for investment(7)


$

220,052



$

211,227



$

206,337



$

205,194



$

203,436



4%



8%



$

210,745



$

197,925



6%

Interest-earning assets


292,054



283,082



276,585



278,427



273,436



3



7



282,581



267,174



6

Total assets


323,354



313,822



307,206



309,401



304,153



3



6



313,474



297,659



5

Interest-bearing deposits


189,885



185,800



183,946



182,998



179,401



2



6



185,677



181,036



3

Total deposits


215,899



210,974



209,143



207,851



205,355



2



5



210,989



205,675



3

Borrowings


48,850



45,070



41,650



46,082



43,479



8



12



45,420



38,882



17

Common equity


45,418



45,407



44,878



44,575



43,895





3



45,072



43,055



5

Total stockholders' equity


48,712



48,456



47,255



46,397



45,576



1



7



47,713



44,268



8

 

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated(1)




















































2015 Q4 vs.


Year Ended

(Dollars in millions except as noted) (unaudited)


2015


2015


2015


2015


2014


2015


2014






2015 vs.


Q4


Q3


Q2


Q1


Q4


Q3


Q4


2015


2014


2014

Performance Metrics





















Net interest income growth (period over period)


4%



5%



(1)%



(2)%



4%



**



**



6%



(2)%



**


Non-interest income growth (period over period)


8





6



(7)



1



**



**



2



5



**


Total net revenue growth (period over period)


5



4





(3)



3



**



**



5





**


Total net revenue margin(8)


8.48



8.34



8.20



8.11



8.50



14

bps


(2)

bps


8.29



8.34



(5)

bps

Net interest margin(9)


6.79



6.73



6.56



6.57



6.81



6



(2)



6.66



6.67



(1)


Return on average assets


1.12



1.43



1.11



1.47



1.28



(31)



(16)



1.28



1.49



(21)


Return on average tangible assets(10)


1.18



1.50



1.17



1.54



1.34



(32)



(16)



1.35



1.57



(22)


Return on average common equity(11)


7.36



9.54



7.30



9.84



8.61



(218)



(125)



8.51



10.08



(157)


Return on average tangible common equity(12)


11.11



14.33



11.06



15.00



13.28



(322)



(217)



12.87



15.79



(292)


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


6.33



5.98



6.41



5.94



6.46



35



(13)



6.17



6.15



2


Efficiency ratio(13)


56.18



53.56



58.30



53.99



56.49



262



(31)



55.51



54.64



87


Effective income tax rate for continuing operations


31.9



32.2



31.1



31.8



31.7



(30)



20



31.8



32.7



(90)


Employees (in thousands), period end


45.4



46.9



47.5



47.0



46.0



(3)%



(1)%



45.4



46.0



(1)%


Credit Quality Metrics(7)





















Allowance for loan and lease losses


$

5,130



$

4,847



$

4,676



$

4,405



$

4,383



6%



17%



$

5,130



$

4,383



17%


Allowance as a percentage of loans held for investment


2.23%



2.27%



2.23%



2.16%



2.10%



(4)

bps


13

bps


2.23%



2.10%



13

bps

Net charge-offs


$

1,078



$

890



$

846



$

881



$

915



21%



18%



$

3,695



$

3,414



8%


Net charge-off rate(14)


1.96%



1.69%



1.64%



1.72%



1.80%



27

bps


16

bps


1.75%



1.72%



3

bps

30+ day performing delinquency rate


2.69



2.63



2.33



2.32



2.62



6



7



2.69



2.62



7


30+ day delinquency rate


3.00



2.95



2.65



2.58



2.91



5



9



3.00



2.91



9


Capital Ratios(15)





















Common equity Tier 1 capital ratio 


11.1%



12.1%



12.1%



12.5%



12.5%



(100)

bps


(140)

bps


11.1%



12.5%



(140)

bps

Tier 1 capital ratio


12.3



13.4



13.3



13.2



13.2



(110)



(90)



12.3



13.2



(90)


Total capital ratio


14.6



15.1



15.1



15.1



15.1



(50)



(50)



14.6



15.1



(50)


Tier 1 leverage ratio


10.6



11.1



11.1



10.7



10.8



(50)



(20)



10.6



10.8



(20)


Tangible common equity ("TCE") ratio(16)


8.9



9.8



9.7



9.8



9.5



(90)



(60)



8.9



9.5



(60)


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income


































Three Months Ended


2015 Q4 vs.


Year Ended



2015


2015


2014


2015


2014






2015 vs.

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


Q4


Q3


Q4


Q3


Q4


2015


2014


2014

Interest income:

















Loans, including loans held for sale


$

4,961



$

4,753



$

4,613



4%



8%



$

18,785



$

17,662



6%


Investment securities


401



386



405



4



(1)



1,575



1,628



(3)


Other


22



25



27



(12)



(19)



99



107



(7)


Total interest income


5,384



5,164



5,045



4



7



20,459



19,397



5


Interest expense:

















Deposits


277



271



269



2



3



1,091



1,088




Securitized debt obligations


43



39



36



10



19



151



145



4


Senior and subordinated notes


89



82



73



9



22



330



299



10


Other borrowings


14



12



11



17



27



53



47



13


Total interest expense


423



404



389



5



9



1,625



1,579



3


Net interest income


4,961



4,760



4,656



4



7



18,834



17,818



6


Provision for credit losses


1,380



1,092



1,109



26



24



4,536



3,541



28


Net interest income after provision for credit losses


3,581



3,668



3,547



(2)



1



14,298



14,277




Non-interest income:

















Service charges and other customer-related fees


426



423



462



1



(8)



1,715



1,867



(8)


Interchange fees, net


617



555



523



11



18



2,235



2,021



11


Net other-than-temporary impairment recognized in earnings


(3)



(5)



(9)



(40)



(67)



(30)



(24)



25


Other


193



167



181



16



7



659



608



8


Total non-interest income


1,233



1,140



1,157



8



7



4,579



4,472



2


Non-interest expense:

















Salaries and associate benefits


1,215



1,189



1,179



2



3



4,975



4,593



8


Occupancy and equipment


511



444



474



15



8



1,829



1,745



5


Marketing


564



418



509



35



11



1,744



1,561



12


Professional services


349



313



329



12



6



1,292



1,216



6


Communications and data processing


247



226



203



9



22



883



798



11


Amortization of intangibles


103



106



123



(3)



(16)



430



532



(19)


Other


491



464



467



6



5



1,843



1,735



6


Total non-interest expense


3,480



3,160



3,284



10



6



12,996



12,180



7


Income from continuing operations before income taxes


1,334



1,648



1,420



(19)



(6)



5,881



6,569



(10)


Income tax provision


426



530



450



(20)



(5)



1,869



2,146



(13)


Income from continuing operations, net of tax


908



1,118



970



(19)



(6)



4,012



4,423



(9)


Income (loss) from discontinued operations, net of tax(3)


12



(4)



29



**



(59)



38



5



**


Net income


920



1,114



999



(17)



(8)



4,050



4,428



(9)


Dividends and undistributed earnings allocated to participating securities(4)


(4)



(6)



(4)



(33)





(20)



(18)



11


Preferred stock dividends(4)


(68)



(29)



(21)



134



224



(158)



(67)



136


Net income available to common stockholders


$

848



$

1,079



$

974



(21)



(13)



$

3,872



$

4,343



(11)




















































Three Months Ended


2015 Q4 vs.


Year Ended



2015


2015


2014


2015


2014






2015 vs.

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


Q4


Q3


Q4


Q3


Q4


2015


2014


2014

Basic earnings per common share:(4)

















Net income from continuing operations


$

1.58



$

2.01



$

1.71



(21)%



(8)%



$

7.08



$

7.70



(8)%


Income (loss) from discontinued operations


0.02



(0.01)



0.05



**



(60)



0.07



0.01



**


Net income per basic common share


$

1.60



$

2.00



$

1.76



(20)



(9)



$

7.15



$

7.71



(7)


Diluted earnings per common share:(4)

















Net income from continuing operations


$

1.56



$

1.99



$

1.68



(22)



(7)



$

7.00



$

7.58



(8)


Income (loss) from discontinued operations


0.02



(0.01)



0.05



**



(60)



0.07



0.01



**


Net income per diluted common share(5)


$

1.58



$

1.98



$

1.73



(20)



(9)



$

7.07



$

7.59



(7)


Weighted average common shares outstanding (in millions):

















Basic common shares


530.8



540.6



554.3



(2)



(4)



541.8



563.1



(4)


Diluted common shares


536.3



546.3



561.8



(2)



(5)



548.0



571.9



(4)


Dividends paid per common share


$

0.40



$

0.40



$

0.30





33



$

1.50



$

1.20



25


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets(1) 





























December 31, 2015 vs.

(Dollars in millions) (unaudited)


December 31,
2015


September 30,
2015


December 31,
2014


September 30,
2015


December 31,
2014

Assets:











Cash and cash equivalents:











Cash and due from banks


$

3,407



$

2,701



$

3,147



26%



8%


Interest-bearing deposits with banks


4,577



3,952



4,095



16



12


Federal funds sold and securities purchased under agreements to resell


39



184



0



(79)



**


Total cash and cash equivalents


8,023



6,837



7,242



17



11


Restricted cash for securitization investors


1,017



586



234



74



**


Securities available for sale, at fair value


39,061



39,431



39,508



(1)



(1)


Securities held to maturity, at carrying value


24,619



23,711



22,500



4



9


Loans held for investment:(7)











Unsecuritized loans held for investment


196,068



179,748



171,771



9



14


Restricted loans for securitization investors


33,783



33,581



36,545



1



(8)


Total loans held for investment


229,851



213,329



208,316



8



10


Allowance for loan and lease losses


(5,130)



(4,847)



(4,383)



6



17


Net loans held for investment


224,721



208,482



203,933



8



10


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


904



566



626



60



44


Premises and equipment, net


3,584



3,629



3,685



(1)



(3)


Interest receivable


1,189



1,101



1,079



8



10


Goodwill


14,480



13,983



13,978



4



4


Other assets


16,450



15,374



15,382



7



7


Total assets


$

334,048



$

313,700



$

308,167



6



8









































December 31, 2015 vs.

(Dollars in millions) (unaudited)


December 31,
2015


September 30,
2015


December 31,
2014


September 30,
2015


December 31,
2014

Liabilities:











Interest payable


$

299



$

198



$

254



51%



18%


Deposits:











Non-interest bearing deposits


25,847



25,055



25,081



3



3


Interest-bearing deposits


191,874



187,848



180,467



2



6


Total deposits


217,721



212,903



205,548



2



6


Securitized debt obligations


16,166



15,656



11,624



3



39


Other debt:











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


981



1,021