Capital One Reports Third Quarter 2014 Net Income of $1.1 billion, or $1.86 per share

MCLEAN, Va., October 16, 2014 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2014 of $1.1 billion, or $1.86 per diluted common share, compared to the second quarter of 2014 with net income of $1.2 billion, or $2.04 per diluted common share, and the third quarter of 2013 with net income of $1.1 billion, or $1.84 per diluted common share. 

"Capital One delivered another quarter of solid results for the company and across our businesses, and we continued to return capital to our shareholders as we execute our announced $2.5 billion share repurchase program," said Richard D. Fairbank, Chair and Chief Executive Officer.  "We have the financial strength to deliver very attractive risk-adjusted returns while we invest to drive future growth and be a leader in digital banking."

All comparisons below are for the third quarter of 2014 compared with the second quarter of 2014 unless otherwise noted.  

Third Quarter 2014 Income Summary:

  • Total net revenue increased 3 percent to $5.6 billion.
  • Total non-interest expense remained flat at $3.0 billion.
  • Pre-provision earnings increased 7 percent to $2.7 billion.
  • Provision for credit losses increased 41 percent to $993 million.
  • Mortgage representation & warranty provision of $70 million ($44 million net of tax) in discontinued operations

Third Quarter 2014 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.7 percent at September 30, 2014.
  • Net interest margin of 6.69 percent, up 14 basis points.
  • Period-end loans held for investment in the quarter increased $3.1 billion, or 2 percent, to $201.6 billion.
    • Domestic Card period-end loans increased $2.0 billion, or 3 percent, to $73.1 billion.
    • Commercial Banking period-end loans increased $1.5 billion, or 3 percent, to $49.8 billion.
    • Consumer Banking:
      • Auto period-end loans increased $1.5 billion, or 4 percent, to $36.3 billion.
      • Home loans period-end loans decreased $1.4 billion, or 4 percent, to $31.2 billion, driven by run-off of acquired portfolios.
  • Average loans held for investment in the quarter increased $4.4 billion, or 2 percent, to $199.4 billion.
    • Domestic Card average loans increased $2.4 billion, or 3 percent, to $71.8 billion.
    • Commercial Banking average loans increased $1.8 billion, or 4 percent, to $48.8 billion.
    • Consumer Banking:
      • Auto average loans increased $1.6 billion, or 5 percent, to $35.6 billion.
      • Home loans average loans decreased by $1.4 billion, or 4 percent, to $31.9 billion, driven by run-off of acquired portfolios.
  • Period-end total deposits decreased $1.6 billion, or less than 1 percent, to $204.3 billion, while average deposits decreased $1.1 billion, or less than 1 percent, to $205.2 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 October 16, 2014, 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 October 31, 2014 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 $204.3 billion in deposits and $300.2 billion in total assets as of September 30, 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 approximately 900 branch locations 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

Third Quarter 2014(1)(2)

Table of Contents

Capital One Financial Corporation Consolidated Results

Page

Table 1:

Financial Summary—Consolidated

1

Table 2:

Selected Metrics—Consolidated

2

Table 3:

Consolidated Statements of Income

3

Table 4:

Consolidated Balance Sheets

4

Table 5:

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

5

Table 6:

Average Balances, Net Interest Income and Net Interest Margin

6

Table 7:

Loan Information and Performance Statistics

7

Business Segments Detail

Table 8:

Financial Summary—Business Segments

9

Table 9:

Financial & Statistical Summary—Credit Card Business

10

Table 10:

Financial & Statistical Summary—Consumer Banking Business

12

Table 11:

Financial & Statistical Summary—Commercial Banking Business

13

Table 12:

Financial & Statistical Summary—Other and Total

14

Table 13:

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

15

Other

Table 14:

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

16

___________



(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 September 30, 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 Q3 vs.


2014

2014

2014

2013

2013

2014

2013

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

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Earnings













Net interest income

$

4,497

$

4,315

$

4,350

$

4,423

$

4,560

4%

(1)%

Non-interest income(2)

1,142

1,153

1,020

1,121

1,091

(1)

5

Total net revenue(3)

5,639

5,468

5,370

5,544

5,651

3

—

Provision for credit losses

993

704

735

957

849

41

17

Non-interest expense:













Marketing

392

335

325

427

299

17

31

Amortization of intangibles

130

136

143

166

161

(4)

(19)

Acquisition-related(4)

13

18

23

60

37

(28)

(65)

Operating expenses

2,450

2,490

2,441

2,582

2,612

(2)

(6)

Total non-interest expense

2,985

2,979

2,932

3,235

3,109

—

(4)

Income from continuing operations before income taxes

1,661

1,785

1,703

1,352

1,693

(7)

(2)

Income tax provision

536

581

579

477

575

(8)

(7)

Income from continuing operations, net of tax

1,125

1,204

1,124

875

1,118

(7)

1

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

(44)

(10)

30

(23)

(13)

340

238

Net income

1,081

1,194

1,154

852

1,105

(9)

(2)

Dividends and undistributed earnings allocated to participating securities(5)

(5)

(4)

(5)

(4)

(5)

25

—

Preferred stock dividends(5)

(20)

(13)

(13)

(13)

(13)

54

54

Net income available to common stockholders

$

1,056

$

1,177

$

1,136

$

835

$

1,087

(10)

(3)

Common Share Statistics













Basic earnings per common share:(5)













Net income from continuing operations

$

1.97

$

2.09

$

1.94

$

1.50

$

1.89

(6)

4

Income (loss) from discontinued operations

(0.08)

(0.02)

0.05

(0.04)

(0.02)

300

300

Net income per basic common share

$

1.89

$

2.07

$

1.99

$

1.46

$

1.87

(9)

1

Diluted earnings per common share:(5)













Net income from continuing operations

$

1.94

$

2.06

$

1.91

$

1.46

$

1.86

(6)

4

Income (loss) from discontinued operations

(0.08)

(0.02)

0.05

(0.03)

(0.02)

300

300

Net income per diluted common share

$

1.86

$

2.04

$

1.96

$

1.43

$

1.84

(9)

1

Weighted average common shares outstanding (in millions) for:













Basic common shares

559.9

567.5

571.0

573.4

582.3

(1)

(4)

Diluted common shares

567.9

577.6

580.3

582.6

591.1

(2)

(4)

Common shares outstanding (period end, in millions)

558.5

561.8

572.9

572.7

582.0

(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)

48.72

47.90

45.88

43.64

43.01

2

13

Balance Sheet (Period End)













Loans held for investment(7)

$

201,592

$

198,528

$

192,941

$

197,199

$

191,814

2

5

Interest-earning assets

270,001

266,720

259,422

265,170

259,152

1

4

Total assets

300,202

298,317

290,500

296,933

289,866

1

4

Interest-bearing deposits

178,876

180,970

184,214

181,880

184,553

(1)

(3)

Total deposits

204,264

205,890

208,324

204,523

206,834

(1)

(1)

Borrowings

42,243

39,114

30,118

40,654

31,845

8

33

Common equity

42,682

42,477

41,948

40,779

40,792

—

5

Total stockholders' equity

44,018

43,815

42,801

41,632

41,645

—

6

Balance Sheet (Quarterly Average Balances)













Loans held for investment(7)

$

199,422

$

194,996

$

193,722

$

192,813

$

191,135

2

4

Interest-earning assets

268,890

263,570

262,659

262,957

264,796

2

2

Total assets

299,523

294,744

294,275

294,040

294,919

2

2

Interest-bearing deposits

179,928

182,053

184,183

184,206

186,752

(1)

(4)

Total deposits

205,199

206,315

205,842

205,706

208,340

(1)

(2)

Borrowings

40,314

35,658

35,978

36,463

36,355

13

11

Common equity

43,489

42,797

42,006

41,502

40,332

2

8

Total stockholders' equity

44,827

43,767

42,859

42,355

41,185

2

9
























1
















 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated(1)








































2014 Q3 vs.

(Dollars in millions) (unaudited)

2014

2014

2014

2013

2013

2014

2013

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Performance Metrics














Net interest income growth (quarter over quarter)

4

%

(1)

%

(2)

%

(3)

%

0

%

**   



**   


Non-interest income growth (quarter over quarter)

(1)

13

(9)

3

1

**   



**   


Total net revenue growth (quarter over quarter)

3

2

(3)

(2)

0

**   



**   


Total net revenue margin(8)

8.39

8.30

8.18

8.43

8.54

9

 bps

(15)

bps

Net interest margin(9)

6.69

6.55

6.62

6.73

6.89

14

(20)

Return on average assets

1.50

1.63

1.53

1.19

1.52

(13)

(2)

Return on average tangible assets(10)

1.58

1.73

1.61

1.26

1.60

(15)

(2)

Return on average common equity(11)

10.12

11.09

10.53

8.27

10.91

(97)

(79)

Return on average tangible common equity(12)

15.73

17.47

16.83

13.38

17.96

(174)

(223)

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

5.99

6.11

6.05

6.71

6.51

(12)

(52)

Efficiency ratio(13)

52.93

54.48

54.60

58.35

55.02

(155)

(209)

Effective income tax rate for continuing operations


32.3

32.5

34.0

35.3

34.0

(20)

(170)

Employees (in thousands), period end(14)

44.9

44.6

44.9

45.4

43.5

1

%

3

%

Credit Quality Metrics(7)



















Allowance for loan and lease losses

$

4,212

$

3,998

$

4,098

$

4,315

$

4,333

5

(3)

Allowance as a % of loans held for investment

2.09

%

2.01

%

2.12

%

2.19

%

2.26

%

8

 bps

(17)

bps

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

2.37

2.30

2.45

2.54

2.66

7

(29)

Net charge-offs

$

756

$

812

$

931

$

969

$

917

(7)

%

(18)

%

Net charge-off rate(15)

1.52

%

1.67

%

1.92

%

2.01

%

1.92

%

(15)

bps

(40)

bps

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

1.73

1.93

2.24

2.37

2.29

(20)

(56)

30+ day performing delinquency rate

2.46

2.24

2.22

2.63

2.54

22

(8)

30+ day performing delinquency rate (excluding acquired loans)

2.81

2.58

2.59

3.08

3.01

23

(20)

30+ day delinquency rate

2.76

2.53

2.51

2.96

2.88

23

(12)

30+ day delinquency rate (excluding acquired loans)

3.14

2.91

2.93

3.46

3.41

23

(27)

Capital Ratios(16)



















Common equity Tier 1 capital ratio 

12.7

%

12.7

%

13.0

%

n/a



n/a 



—

n/a

Tier 1 common ratio

n/a   



n/a 



n/a 



12.2

%

12.7

%

n/a 

n/a

Tier 1 risk-based capital ratio

13.3

%

13.3

%

13.4

%

12.6

13.1

—

20

bps

Total risk-based capital ratio

15.2

15.4

15.4

14.7

15.2

(20)

—

Tier 1 leverage ratio

10.6

10.7

10.4

10.1

10.0

(10)

60

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

9.6

9.5

9.6

8.9

9.1

10

50


























2

















 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income(1)

































Three Months Ended

 

Q3 2014 vs.

Nine Months Ended

2014


2014

2014

2013

2014

2013

2014

2013

vs.

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

Q3

Q2

Q3

Q2

Q3

Q3

Q3

2013

Interest income:















Loans, including loans held for sale

$

4,463

$

4,279

$

4,579

4%

(3)%

$

13,049

$

13,824

(6)%

Investment securities

398

409

396

(3)

1

1,223

1,161

5

Other

26

24

23

8

13

80

74

8

Total interest income

4,887

4,712

4,998

4

(2)

14,352

15,059

(5)

Interest expense:















Deposits

271

272

309

—

(12)

819

953

(14)

Securitized debt obligations

32

39

42

(18)

(24)

109

143

(24)

Senior and subordinated notes

71

78

76

(9)

(7)

226

240

(6)

Other borrowings

16

8

11

100

45

36

40

(10)

Total interest expense

390

397

438

(2)

(11)

1,190

1,376

(14)

Net interest income

4,497

4,315

4,560

4

(1)

13,162

13,683

(4)

Provision for credit losses

993

704

849

41

17

2,432

2,496

(3)

Net interest income after provision for credit losses

3,504

3,611

3,711

(3)

(6)

10,730

11,187

(4)

Non-interest income:(2)















Service charges and other customer-related fees

471

460

530

2

(11)

1,405

1,614

(13)

Interchange fees, net

523

535

476

(2)

10

1,498

1,407

6

Net other-than-temporary impairment recognized in earnings

(9)

(1)

(11)

800

(18)

(15)

(40)

(63)

Other

157

159

96

(1)

64

427

176

143

Total non-interest income

1,142

1,153

1,091

(1)

5

3,315

3,157

5

Non-interest expense:















Salaries and associate benefits

1,128

1,125

1,152

—

(2)

3,414

3,365

1

Occupancy and equipment

419

447

376

(6)

11

1,271

1,104

15

Marketing

392

335

299

17

31

1,052

946

11

Professional services

304

296

328

3

(7)

887

990

(10)

Communications and data processing

196

203

225

(3)

(13)

595

677

(12)

Amortization of intangibles

130

136

161

(4)

(19)

409

505

(19)

Other

416

437

568

(5)

(27)

1,268

1,531

(17)

Total non-interest expense

2,985

2,979

3,109

—

(4)

8,896

9,118

(2)

Income from continuing operations before income taxes

1,661

1,785

1,693

(7)

(2)

5,149

5,226

(1)

Income tax provision

536

581

575

(8)

(7)

1,696

1,747

(3)

Income from continuing operations, net of tax

1,125

1,204

1,118

(7)

1

3,453

3,479

(1)

Loss from discontinued operations, net of tax(2)

(44)

(10)

(13)

340

238

(24)

(210)

(89)

Net income

1,081

1,194

1,105

(9)

(2)

3,429

3,269

5

Dividends and undistributed earnings allocated to participating securities(5)

(5)

(4)

(5)

25

—

(14)

(14)

—

Preferred stock dividends(5)

(20)

(13)

(13)

54

54

(46)

(39)

18

Net income available to common stockholders

$

1,056

$

1,177

$

1,087

(10)

(3)

$

3,369

$

3,216

5

















Basic earnings per common share:(5)















Net income from continuing operations

$

1.97

$

2.09

$

1.89

(6)

4

$

5.99

$

5.89

2

Loss from discontinued operations

(0.08)

(0.02)

(0.02)

300

300

(0.04)

(0.36)

(89)

Net income per basic common share

$

1.89

$

2.07

$

1.87

(9)

1

$

5.95

$

5.53

8

















Diluted earnings per common share:(5)















Net income from continuing operations

$

1.94

$

2.06

$

1.86

(6)

4

$

5.90

$

5.82

1

Loss from discontinued operations

(0.08)

(0.02)

(0.02)

300

300

(0.04)

(0.36)

(89)

Net income per diluted common share

$

1.86

$

2.04

$

1.84

(9)

1

$

5.86

$

5.46

7

















Weighted average common shares outstanding (in millions):















Basic common shares

559.9

567.5

582.3

(1)

(4)

566.1

581.4

(3)

Diluted common shares

567.9

577.6

591.1

(2)

(4)

575.2

589.0

(2)

Dividends paid per common share

$

0.30

$

0.30

$

0.30

—

—

$

0.90

$

0.65

38




































3






















 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets(1)









September 30, 2014 vs.


September 30,

December 31,

September 30,

December 31,

September 30,

(Dollars in millions) (unaudited)

2014

2013

2013

2013

2013

Assets:









Cash and cash equivalents:









Cash and due from banks

$

2,652

$

2,821

$

2,855

(6)%

(7)%

Interest-bearing deposits with banks

3,212

3,131

2,481

3

29

Federal funds sold and securities purchased under agreements to resell

284

339

382

(16)

(26)

Total cash and cash equivalents

6,148

6,291

5,718

(2)

8

Restricted cash for securitization investors

405

874

390

(54)

4

Securities available for sale, at fair value

39,665

41,800

43,132

(5)

(8)

Securities held to maturity, at carrying value

22,182

19,132

18,276

16

21

Loans held for investment:









Unsecuritized loans held for investment

165,021

157,651

152,332

5

8

Restricted loans for securitization investors

36,571

39,548

39,482

(8)

(7)

Total loans held for investment

201,592

197,199

191,814

2

5

Allowance for loan and lease losses

(4,212)

(4,315)

(4,333)

(2)

(3)

Net loans held for investment

197,380

192,884

187,481

2

5

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

427

218

180

96

137

Premises and equipment, net

3,752

3,839

3,792

(2)

(1)

Interest receivable

1,268

1,418

1,304

(11)

(3)

Goodwill

13,970

13,978

13,906

—

—

Other assets

15,005

16,499

15,687

(9)

(4)

Total assets

$

300,202

$

296,933

$

289,866

1

4











Liabilities:









Interest payable

$

249

$

307

$

276

(19)

(10)

Deposits:









Non-interest bearing deposits

25,388

22,643

22,281

12

14

Interest-bearing deposits

178,876

181,880

184,553

(2)

(3)

Total Deposits

204,264

204,523

206,834

—

(1)

Securitized debt obligations

10,508

10,289

9,544

2

10

Other debt:









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

2,330

915

1,686

155

38

Senior and subordinated notes

18,534

13,134

12,395

41

50

Other borrowings

10,871

16,316

8,220

(33)

32

Total other debt

31,735

30,365

22,301

5

42

Other liabilities

9,428

9,817

9,266

(4)

2

Total liabilities

256,184

255,301

248,221

—

3











Stockholders' equity:









Preferred stock

0

0

0

—

—

Common stock

6

6

6

—

—

Additional paid-in capital, net

27,272

26,526

26,426

3

3

Retained earnings

23,162

20,292

19,626

14

18

Accumulated other comprehensive income ("AOCI")

(559)

(872)

(839)

(36)

(33)

Treasury stock, at cost

(5,863)

(4,320)

(3,574)

36

64

Total stockholders' equity

44,018

41,632

41,645

6

6

Total liabilities and stockholders' equity

$

300,202

$

296,933

$

289,866

1

4











4





 



CAPITAL ONE FINANCIAL CORPORATION (COF)

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


**  Not meaningful.


(1)

Certain prior period amounts have been recast to conform to the current period presentation.


(2)

We recorded the following related to the mortgage representation and warranty reserve: a provision of $70 million in Q3 2014 (the entire amount represents a provision of $70 million before taxes in discontinued operations), a benefit of $18 million in Q2 2014 (which includes a benefit of $29 million before taxes in continuing operations and a provision of $11 million before taxes in discontinued operations), a benefit of $33 million in Q1 2014 (which includes a provision of $14 million before taxes in continuing operations and a benefit of $47 million before taxes in discontinued operations), a provision of $33 million in Q4 2013 (which includes provisions of $3 million before taxes in continued operations and $30 million before taxes in discontinued operations) and a benefit of $4 million in Q3 2013 (which includes a benefit of $13 million before taxes in continuing operations and a provision of $9 million before taxes in discontinued operations). Historically, the majority of the provision for representation and warranty losses is included net of tax in discontinued operations, with the remaining amount included pre-tax in non-interest income. The mortgage representation and warranty reserve was $1.1 billion as of September 30, 2014, $1.2 billion as of December 31, 2013 and $1.1 billion as of September 30, 2013.


(3)

Total net revenue was reduced by $164 million in Q3 2014, $153 million in Q2 2014, $163 million in Q1 2014, $185 million in Q4 2013 and $154 million in Q3 2013 for the estimated uncollectible amount of billed finance charges and fees.


(4)

Acquisition-related costs include transaction costs, legal and other professional or consulting fees, restructuring costs, and integration expense.


(5)

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.


(6)

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 14: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information on tangible common equity.


(7)

Loans held for investment includes acquired loans. We use the term "acquired loans" to refer to a certain portion of the loans acquired in the following transactions: (i) May 1, 2012 transaction in which we acquired substantially all of HSBC's credit card and private-label credit card business in the United States; (ii) the February 17, 2012 transaction where we acquired the assets and assumed the liabilities of substantially all of ING Direct; and (iii) the February 29, 2009 Chevy Chase Bank acquisition. These loans were recorded at fair value at acquisition and subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard formerly known as "SOP 03-3"). The table below presents amounts related to acquired loans accounted for under SOP 03-3:
























2014

2014

2013

2013

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Acquired loans accounted for under SOP 03-3:









Period-end unpaid principal balance

$

25,726

$

27,117

$

28,549

$

29,761

$

31,377

Period-end loans held for investment

24,685

26,019

27,390

28,550

30,080

Average loans held for investment

25,104

26,491

27,760

29,055

30,713


(8)

Calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.


(9)

Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.


(10)

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible assets for the period. Return on average tangible assets is a non-GAAP measure and See "Table 14: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.


(11)

Calculated based on the annualized sum of (i) income from continuing operations, net of tax; (ii) less dividends and undistributed earnings allocated to participating securities; (iii) less preferred stock dividends, for the period, divided by average common equity for the period. Our calculation of return on average common equity may not be comparable to similarly titled measures reported by other companies.


(12)

Calculated based on the annualized sum of (i) income from continuing operations, net of tax; (ii) less dividends and undistributed earnings allocated to participating securities; (iii) less preferred stock dividends, for the period, divided by average tangible common equity for the period. Return on average tangible common equity is a non-GAAP measure and our calculation may not be comparable to similarly titled measures reported by other companies. See "Table 14: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.


(13)

Calculated based on non-interest expense for the period divided by total net revenue for the period.


(14)

Effective Q2 2014, we changed our presentation from total full-time equivalent employees to total employees.  All prior periods have been recast to conform to the current presentation.  During this change, we determined that we had previously understated the total number of full-time equivalent employees by approximately 7%.


(15)

Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.


(16)

Beginning on January 1, 2014, we calculate our regulatory capital under Basel III Standardized Approach subject to transition provisions. We calculated regulatory capital measures for periods prior to the first quarter of 2014 under Basel I. Ratios as of the end of Q3 2014 are preliminary and therefore subject to change. See "Table 14: Reconciliation of non-GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of each of these ratios.


(17)

TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See "Table 14: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

5

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

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




































2014 Q3

2014 Q2

2013 Q3


Average Balance

Interest
Income/Expense(1)

Yield/Rate(1)

Average Balance

Interest
Income/Expense(1)

Yield/Rate(1)

Average Balance

Interest
Income/Expense(1)

Yield/Rate(1)

(Dollars in millions) (unaudited)








Interest-earning assets:

















Loans, including loans held for sale

$

200,066

$

4,463

8.92

%

$

195,322

$

4,279

8.76

%

$

195,839

$

4,579

9.35

%

Investment securities

62,582

398

2.54

62,518

409

2.62

63,317

396

2.50

Cash equivalents and other

6,242

26

1.67

5,730

24

1.68

5,640

23

1.63

Total interest-earning assets

$

268,890

$

4,887

7.27

$

263,570

$

4,712

7.15

$

264,796

$

4,998

7.55



















Interest-bearing liabilities:

















Interest-bearing deposits

$

179,928

$

271

0.60

$

182,053

$

272

0.60

$

186,752

$

309

0.66

Securitized debt obligations

10,110

32

1.27

10,731

39

1.45

10,243

42

1.64

Senior and subordinated notes

17,267

71

1.64

16,004

78

1.95

12,314

76

2.47

Other borrowings

12,937

16

0.49

8,923

8

0.36

13,798

11

0.32

Total interest-bearing liabilities

$

220,242

$

390

0.71

$

217,711

$

397

0.73

$

223,107

$

438

0.79

Net interest income/spread


$

4,497

6.56



$

4,315

6.42



$

4,560

6.76

Impact of non-interest bearing funding




0.13





0.13





0.13

Net interest margin




6.69

%




6.55

%




6.89

%


























Nine Months Ended September 30,


2014

2013


Average Balance

Interest Income/Expense(1)

Yield/Rate(1)

Average Balance

Interest Income/Expense(1)

Yield/Rate(1)

(Dollars in millions) (unaudited)





Interest-earning assets:











Loans, including loans held for sale

$

196,492

$

13,049

8.85

%

$

197,701

$

13,824

9.32

%

Investment securities

62,411

1,223

2.61

63,725

1,161

2.43

Cash equivalents and other

6,162

80

1.73

6,164

74

1.60

Total interest-earning assets

$

265,065

$

14,352

7.22

$

267,590

$

15,059

7.50













Interest-bearing liabilities:











Interest-bearing deposits

$

181,587

$

819

0.60

$

188,877

$

953

0.67

Securitized debt obligations

10,419

109

1.39

10,975

143

1.74

Senior and subordinated notes

15,822

226

1.90

12,331

240

2.60

Other borrowings

11,091

36

0.43

14,955

40

0.36

Total interest-bearing liabilities

$

218,919

$

1,190

0.72

$

227,138

$

1,376

0.81

Net interest income/spread


$

13,162

6.50



$

13,683

6.69

Impact of non-interest bearing funding




0.12





0.13

Net interest margin




6.62

%




6.82

%

___________  

(1)

Interest income and interest expense and the calculation of average yields on interest-earning assets and average rates on interest-bearing liabilities include the impact of hedge accounting.

6

    

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics(1)













2014 Q3 vs.


2014

2014

2014

2013

2013

2014

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Period-end Loans Held For Investment













Credit card:













   Domestic credit card

$

73,143

$

71,165

$

68,275

$

73,255

$

69,936

3

%

5

%

   International credit card

7,488

7,853

7,575

8,050

8,031

(5)

(7)

Total credit card

80,631

79,018

75,850

81,305

77,967

2

3

Consumer banking:













   Auto

36,254

34,792

33,080

31,857

30,803

4

18

   Home loan

31,203

32,644

34,035

35,282

36,817

(4)

(15)

   Retail banking

3,604

3,626

3,612

3,623

3,665

(1)

(2)

Total consumer banking

71,061

71,062

70,727

70,762

71,285

—

—

Commercial banking:













   Commercial and multifamily real estate

22,895

22,040

21,256

20,750

19,523

4

17

   Commercial and industrial

26,071

25,402

24,064

23,309

21,848

3

19

Total commercial lending

48,966

47,442

45,320

44,059

41,371

3

18

   Small-ticket commercial real estate

822

879

910

952

1,028

(6)

(20)

Total commercial banking

49,788

48,321

46,230

45,011

42,399

3

17

Other loans

112

127

134

121

163

(12)

(31)

Total loans held for investment

$

201,592

$

198,528

$

192,941

$

197,199

$

191,814

2

5

Average Loans Held For Investment













Credit card:













   Domestic credit card

$

71,784

$

69,376

$

69,810

$

70,368

$

69,947

3

3

   International credit card

7,710

7,621

7,692

7,899

7,782

1

(1)

Total credit card

79,494

76,997

77,502

78,267

77,729

3

2

Consumer banking:















   Auto

35,584

33,972

32,387

31,424

30,157

5

18

   Home loan

31,859

33,299

34,646

35,974

37,852

(4)

(16)

   Retail banking

3,605

3,613

3,630

3,635

3,655

—

(1)

Total consumer banking

71,048

70,884

70,663

71,033

71,664

—

(1)

Commercial banking:















   Commercial and multifamily real estate

22,409

21,484

20,962

19,928

19,047

4

18

   Commercial and industrial

25,512

24,611

23,541

22,445

21,491

4

19

Total commercial lending

47,921

46,095

44,503

42,373

40,538

4

18

   Small-ticket commercial real estate

845

896

932

986

1,038

(6)

(19)

Total commercial banking

48,766

46,991

45,435

43,359

41,576

4

17

Other loans

114

124

122

154

166

(8)

(31)

Total average loans held for investment

$

199,422

$

194,996

$

193,722

$

192,813

$

191,135

2

4

Net Charge-off Rates













Credit card:













   Domestic credit card

2.83

%

3.52

%

4.01

%

3.89

%

3.67

%

(69)

bps

(84)

bps

   International credit card

3.32

3.93

4.17

4.74

4.71

(61)

(139)

Total credit card

2.88

3.56

4.02

3.98

3.78

(68)

(90)

Consumer banking:















   Auto

1.98

1.31

1.66

2.30

2.01

67

(3)

   Home loan

0.02

0.05

0.06

0.03

0.06

(3)

(4)

   Retail banking

1.36

0.70

0.95

1.09

1.38

66

(2)

Total consumer banking

1.07

0.69

0.84

1.09

0.95

38

12

Commercial banking:















   Commercial and multifamily real estate

(0.10)

—

0.01

(0.11)

(0.11)

(10)

1

   Commercial and industrial

(0.01)

0.04

0.03

0.04

0.18

(5)

(19)

Total commercial lending

(0.05)

0.02

0.02

(0.03)

0.04

(7)

(9)

   Small-ticket commercial real estate

(0.01)

0.61

0.67

(0.81)

1.26

(62)

(127)

Total commercial banking

(0.05)

0.03

0.04

(0.05)

0.07

(8)

(12)

Other loans

(0.61)

2.18

(0.68)

4.68

12.17

(279)

(1,278)

Total net charge-offs

1.52

1.67

1.92

2.01

1.92

(15)

(40)





















7







 


 







































2014 Q3 vs.


2014

2014

2014

2013

2013

2014

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

30+ Day Performing Delinquency Rates













Credit card:













   Domestic credit card

3.21

%

2.83

%

3.02

%

3.43

%

3.46

%

38

 bps

(25)

bps

   International credit card

3.34

3.40

3.59

3.71

3.86

(6)

(52)

Total credit card

3.22

2.89

3.08

3.46

3.51

33

(29)

Consumer banking:













   Auto

6.14

5.77

5.29

6.85

6.29

37

(15)

   Home loan

0.14

0.13

0.12

0.16

0.14

1

—

   Retail banking

0.53

0.48

0.74

0.69

0.68

5

(15)

Total consumer banking

3.22

2.91

2.57

3.20

2.82

31

40

Nonperforming Assets Rates(2)













Credit card:













   International credit card

0.98

1.03

1.07

1.10

1.16

(5)

(18)

Total credit card

0.09

0.10

0.11

0.11

0.12

(1)

(3)

Consumer banking:













   Auto(3)

0.94

0.88

0.81

1.11

0.92

6

2

   Home loan

1.13

1.16

1.17

1.14

1.08

(3)

5

   Retail banking

0.54

0.79

1.15

1.13

1.10

(25)

(56)

Total consumer banking

1.01

1.01

1.00

1.12

1.01

—

—

Commercial banking:













   Commercial and multifamily real estate

0.29

0.32

0.31

0.29

0.40

(3)

(11)

   Commercial and industrial

0.40

0.45

0.40

0.44

0.65

(5)

(25)

Total commercial lending

0.35

0.39

0.35

0.37

0.53

(4)

(18)

   Small-ticket commercial real estate

0.42

1.40

0.73

0.43

1.49

(98)

(107)

Total commercial banking

0.35

0.41

0.36

0.37

0.56

(6)

(21)

Total nonperforming assets

0.53

0.55

0.54

0.58

0.60

(2)

(7)






























8












 


CAPITAL ONE FINANCIAL CORPORATION (COF)

 Table 8: Financial Summary—Business Segments(1)























Three Months Ended September 30, 2014

(Dollars in millions) (unaudited)

Total

Credit Card

Consumer Banking

Commercial Banking

Other

Earnings:









Net interest income

$

4,497

$

2,627

$

1,425

$

439

$

6

Non-interest income

1,142

846

179

122

(5)

Total net revenue(4)(5)

5,639

3,473

1,604

561

1

Provision (benefit) for credit losses

993

787

198

9

(1)

Non-interest expense

2,985

1,730

956

268

31

Income (loss) from continuing operations before taxes

1,661

956

450

284

(29)

Income tax provision (benefit)

536

332

161

102

(59)

Income from continuing operations, net of tax

$

1,125

$

624

$

289

$

182

$

30













Three Months Ended June 30, 2014

(Dollars in millions) (unaudited)

Total

Credit Card

Consumer Banking

Commercial Banking

Other

Earnings:









Net interest income (expense)

$

4,315

$

2,461

$

1,431

$

436

$

(13)

Non-interest income

1,153

839

170

109

35

Total net revenue(4)(5)

5,468

3,300

1,601

545

22

Provision for credit losses

704

549

143

12

—

Non-interest expense

2,979

1,719

938

267

55

Income (loss) from continuing operations before taxes

1,785

1,032

520

266

(33)

Income tax provision (benefit)

581

364

186

95

(64)

Income from continuing operations, net of tax

$

1,204

$

668

$

334

$

171

$

31













Three Months Ended September 30, 2013

(Dollars in millions) (unaudited)

Total

Credit Card

Consumer Banking

Commercial Banking

Other

Earnings:









Net interest income (expense)

$

4,560

$

2,757

$

1,481

$

424

$

(102)

Non-interest income

1,091

834

184

87

(14)

Total net revenue (loss)(4)(5)

5,651

3,591

1,665

511

(116)

Provision (benefit) for credit losses

849

617

202

31

(1)

Non-interest expense

3,109

1,904

927

228

50

Income (loss) from continuing operations before taxes

1,693

1,070

536

252

(165)

Income tax provision (benefit)

575

376

191

90

(82)

Income (loss) from continuing operations, net of tax

$

1,118

$

694

$

345

$

162

$

(83)

9

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial & Statistical Summary—Credit Card Business(1)













2014 Q3 vs.


2014

2014

2014

2013

2013

2014

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Credit Card













Earnings:













Net interest income

$

2,627

$

2,461

$

2,525

$

2,576

$

2,757

7

%

(5)%

Non-interest income

846

839

785

833

834

1

1

Total net revenue

3,473

3,300

3,310

3,409

3,591

5

(3)

Provision for credit losses

787

549

558

751

617

43

28

Non-interest expense

1,730

1,719

1,726

1,868

1,904

1

(9)

Income from continuing operations before taxes

956

1,032

1,026

790

1,070

(7)

(11)

Income tax provision


332

364

358

274

376

(9)

(12)

Income from continuing operations, net of tax

$

624

$

668

$

668

$

516

$

694

(7)

(10)

Selected performance metrics:













Period-end loans held for investment

$

80,631

$

79,018

$

75,850

$

81,305

$

77,967

2

3

Average loans held for investment

79,494

76,997

77,502

78,267

77,729

3

2

Average yield on loans held for investment(6)(7)

14.65

%

14.22

%

14.43

%

14.64

%

15.72

%

43

 bps

(107)

bps

Total net revenue margin(8)

17.48

17.14

17.08

17.43

18.48

34

(100)

Net charge-off rate

2.88

3.56

4.02

3.98

3.78

(68)

(90)

30+ day performing delinquency rate

3.22

2.89

3.08

3.46

3.51

33

(29)

30+ day delinquency rate

3.29

2.97

3.16

3.54

3.60

32

(31)

Nonperforming loan rate

0.09

0.10

0.11

0.11

0.12

(1)

(3)

Card loan premium amortization and other intangible accretion(9)

$

18

$

31

$

37

$

39

$

45

(42)%

(60)%

PCCR intangible amortization

90

94

98

102

106

(4)

(15)

Purchase volume(10)

57,474

56,358

47,434

54,245

50,943

2

13

Domestic Card













Earnings:













Net interest income

$

2,361

$

2,193

$

2,255

$

2,303

$

2,492

8

(5)

Non-interest income

763

768

702

747

749

(1)

2

Total net revenue

3,124

2,961

2,957

3,050

3,241

6

(4)

Provision for credit losses

738

504

486

679

529

46

40

Non-interest expense

1,530

1,513

1,545

1,664

1,713

1

(11)

Income from continuing operations before taxes

856

944

926

707

999

(9)

(14)

Income tax provision


306

337

331

252

355

(9)

(14)

Income from continuing operations, net of tax

$

550

$

607

$

595

$

455

$

644

(9)

(15)

Selected performance metrics:













Period-end loans held for investment

$

73,143

$

71,165

$

68,275

$

73,255

$

69,936

3

5

Average loans held for investment

71,784

69,376

69,810

70,368

69,947

3

3

Average yield on loans held for investment(6)(7)

14.46

%

13.95

%

14.19

%

14.44

%

15.65

%

51

 bps

(119)

bps

Total net revenue margin(8)

17.41

17.07

16.94

17.34

18.53

34

(112)

Net charge-off rate

2.83

3.52

4.01

3.89

3.67

(69)

(84)

30+ day performing delinquency rate

3.21

2.83

3.02

3.43

3.46

38

(25)

30+ day delinquency rate

3.21

2.83

3.02

3.43

3.46

38

(25)

Purchase volume(10)

$

53,690

$

52,653

$

44,139

$

50,377

$

47,420

2

%

13

%

International Card













Earnings:













Net interest income

$

266

$

268

$

270

$

273

$

265

(1)

—

Non-interest income

83

71

83

86

85

17

(2)

Total net revenue

349

339

353

359

350

3

—

Provision for credit losses

49

45

72

72

88

9

(44)

Non-interest expense

200

206

181

204

191

(3)

5

Income from continuing operations before taxes

100

88

100

83

71

14

41

Income tax provision


26

27

27

22

21

(4)

24

Income from continuing operations, net of tax

$

74

$

61

$

73

$

61

$

50

21

48



















10











 












2014 Q3 vs.


2014

2014

2014

2013

2013

2014

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Selected performance metrics:













Period-end loans held for investment

$

7,488

$

7,853

$

7,575

$

8,050

$

8,031

(5)%

(7)%

Average loans held for investment

7,710

7,621

7,692

7,899

7,782

1

(1)

Average yield on loans held for investment(7)

16.42

%

16.74

%

16.64

%

16.48

%

16.35

%

(32)

bps

7

 bps

Total net revenue margin

18.13

17.76

18.38

18.20

17.99

37

14

Net charge-off rate

3.32

3.93

4.17

4.74

4.71

(61)

(139)

30+ day performing delinquency rate

3.34

3.40

3.59

3.71

3.86

(6)

(52)

30+ day delinquency rate

4.08

4.20

4.41

4.56

4.78

(12)

(70)

Nonperforming loan rate

0.98

1.03

1.07

1.10

1.16

(5)

(18)

Purchase volume(10)

$

3,784

$

3,705

$

3,295

$

3,868

$

3,523

2

%

7

%

11

 



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Consumer Banking Business(1)







































2014 Q3 vs.


2014

2014

2014

2013

2013

2014

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Consumer Banking













Earnings:













Net interest income

$

1,425

$

1,431

$

1,433

$

1,468

$

1,481

—

%

(4)%

Non-interest income

179

170

150

195

184

5

(3)

Total net revenue

1,604

1,601

1,583

1,663

1,665

—

(4)

Provision for credit losses

198

143

140

212

202

38

(2)

Non-interest expense

956

938

930

1,018

927

2

3

Income from continuing operations before taxes

450

520

513

433

536

(13)

(16)

Income tax provision

161

186

183

154

191

(13)

(16)

Income from continuing operations, net of tax

$

289

$

334

$

330

$

279

$

345

(13)

(16)















Selected performance metrics:













Period-end loans held for investment

$

71,061

$

71,062

$

70,727

$

70,762

$

71,285

—

—

Average loans held for investment

71,048

70,884

70,663

71,033

71,664

—

(1)

Average yield on loans held for investment(7)

6.18

%

6.22

%

6.18

%

6.30

%

6.21

%

(4)

bps

(3)

bps

Auto loan originations

$

5,410

$

5,376

$

4,727

$

4,322

$

4,752

1

%

14

%

Period-end deposits

167,624

169,153

171,529

167,652

168,437

(1)

—

Average deposits

168,407

169,694

168,676

167,870

169,082

(1)

—

Average deposit interest rate

0.58

%

0.57

%

0.57

%

0.60

%

0.63

%

1

 bps

(5)

bps

Core deposit intangible amortization

$

26

$

28

$

30

$

32

$

34

(7)%

(24)%

Net charge-off rate

1.07

%

0.69

%

0.84

%

1.09

%

0.95

%

38

 bps

12

bps

30+ day performing delinquency rate

3.22

2.91

2.57

3.20

2.82

31

40

30+ day delinquency rate

3.82

3.49

3.14

3.89

3.46

33

36

Nonperforming loan rate

0.73

0.75

0.74

0.86

0.79

(2)

(6)

Nonperforming asset rate(2)

1.01

1.01

1.00

1.12

1.01

—

—

Period-end loans serviced for others

$

7,041

$

6,944

$

6,868

$

7,665

$

14,043

1

%

(50)%


































12


















 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Commercial Banking Business(1)








































2014 Q3 vs.


2014

2014

2014

2013

2013

2014

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Commercial Banking













Earnings:













Net interest income

$

439

$

436

$

421

$

447

$

424

1

%

4

%

Non-interest income

122

109

87

131

87

12

40

Total net revenue(4)(5)

561

545

508

578

511

3

10

Provision (benefit) for credit losses

9

12

40

(6)

31

(25)

(71)

Non-interest expense

268

267

255

281

228

—

18

Income from continuing operations before taxes

284

266

213

303

252

7

13

Income tax provision

102

95

76

108

90

7

13

Income from continuing operations, net of tax

$

182

$

171

$

137

$

195

$

162

6

12















Selected performance metrics:













Period-end loans held for investment

$

49,788

$

48,321

$

46,230

$

45,011

$

42,399

3

17

Average loans held for investment

48,766

46,991

45,435

43,359

41,576

4

17

Average yield on loans held for investment(5)(7)

3.39

%

3.50

%

3.47

%

3.92

%

3.87

%

(11)

bps

(48)

bps

Period-end deposits

$

31,918

$

31,440

$

31,485

$

30,567

$

30,592

2

%

4

%

Average deposits

31,772

31,238

31,627

31,033

30,685

2

4

Average deposit interest rate

0.24

%

0.24

%

0.25

%

0.25

%

0.27

%

—

(3)

bps

Core deposit intangible amortization

$

5

$

5

$

6

$

6

$

6

—

(17)%

Net charge-off rate

(0.05)%

0.03

%

0.04

%

(0.05)%

0.07

%

(8)

bps

(12)

bps

Nonperforming loan rate

0.32

0.38

0.33

0.33

0.47

(6)

(15)

Nonperforming asset rate(2)

0.35

0.41

0.36

0.37

0.56

(6)

(21)















Risk category:(11)













Noncriticized

$

48,219

$

46,689

$

44,904

$

43,593

$

40,940

3

%

18

%

Criticized performing

1,198

1,234

952

1,007

968

(3)

24

Criticized nonperforming

161

181

150

149

201

(11)

(20)

Total risk-rated loans

49,578

48,104

46,006

44,749

42,109

3

18

Acquired commercial loans

210

217

224

262

290

(3)

(28)

Total commercial loans

$

49,788

$

48,321

$

46,230

$

45,011

$

42,399

3

17















% of period-end commercial loans held for investment:













Noncriticized

96.9

%

96.6

%

97.1

%

96.9

%

96.5

%

30

 bps

40

 bps

Criticized performing

2.4

2.6

2.1

2.2

2.3

(20)

10

Criticized nonperforming

0.3

0.4

0.3

0.3

0.5

(10)

(20)

Total risk-rated loans

99.6

99.6

99.5

99.4

99.3

—

30

Acquired commercial loans

0.4

0.4

0.5

0.6

0.7

—

(30)

Total commercial loans

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

—

—






13




 



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Other and Total(1)







































2014 Q3 vs.


2014

2014

2014

2013

2013

2014

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Other













Earnings:













Net interest income (expense)

$

6

$

(13)

$

(29)

$

(68)

$

(102)

**

**

Non-interest income

(5)

35

(2)

(38)

(14)

**

(64)

%

Total net revenue (loss)(4)

1

22

(31)

(106)

(116)

95

%

**   


Benefit for credit losses

(1)

—

(3)

—

(1)

**   



—

Non-interest expense

31

55

21

68

50

(44)

(38)

Loss from continuing operations before taxes

(29)

(33)

(49)

(174)

(165)

(12)

(82)

Income tax benefit

(59)

(64)

(38)

(59)

(82)

(8)

(28)

Income (loss) from continuing operations, net of tax

$

30

$

31

$

(11)

$

(115)

$

(83)

(3)

**















Selected performance metrics:













Period-end loans held for investment

$

112

$

127

$

134

$

121

$

163

(12)

(31)

Average loans held for investment

114

124

122

154

166

(8)

(31)

Period-end deposits

4,722

5,297

5,310

6,304

7,805

(11)

(40)

Average deposits

5,020

5,383

5,539

6,803

8,573

(7)

(41)

Total













Earnings:













Net interest income

$

4,497

$

4,315

$

4,350

$

4,423

$

4,560

4

(1)

Non-interest income

1,142

1,153

1,020

1,121

1,091

(1)

5

Total net revenue

5,639

5,468

5,370

5,544

5,651

3

—

Provision for credit losses

993

704

735

957

849

41

17

Non-interest expense

2,985

2,979

2,932

3,235

3,109

—

(4)

Income from continuing operations before taxes

1,661

1,785

1,703

1,352

1,693

(7)

(2)

Income tax provision

536

581

579

477

575

(8)

(7)

Income from continuing operations, net of tax

$

1,125

$

1,204

$

1,124

$

875

$

1,118

(7)

1















Selected performance metrics:













Period-end loans held for investment

$

201,592

$

198,528

$

192,941

$

197,199

$

191,814

2

5

Average loans held for investment

199,422

194,996

193,722

192,813

191,135

2

4

Period-end deposits

204,264

205,890

208,324

204,523

206,834

(1)

(1)

Average deposits

205,199

206,315

205,842

205,706

208,340

(1)

(2)




























14














 



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Notes to Loan and Business Segments Disclosures (Tables 7—12)


**  Not meaningful.


(1)

Certain prior period amounts have been recast to conform to the current period presentation.


(2)

Nonperforming assets consist of nonperforming loans, real estate owned ("REO") and other foreclosed assets. The nonperforming asset ratios are calculated based on nonperforming assets for each category divided by the combined period-end total of loans held for investment, REO and other foreclosed assets for each respective category. Nonperforming assets related to acquired loans are excluded from the calculation for our home loans and auto businesses.



(3)

Includes the net realizable value of auto loans that have been charged down as a result of a bankruptcy filing and repossessed assets obtained in satisfaction of auto loans.



(4)

Commercial Banking revenue related to qualified housing credits is presented on a taxable-equivalent basis.  As a result of the adoption of ASU 2014-01 "Accounting for Investments in Qualified Affordable Housing Projects" as of January 1, 2014, losses related to these investments are now recognized, along with the associated tax benefits, as a component of income taxes attributable to continuing operations instead of non-interest expense. As such, losses related to these investments decrease the overall tax benefits recognized as a component of income taxes attributable to continuing operations and taxable-equivalent revenue in the Commercial Banking segment. This decrease in revenue is offset by an increase in revenue in the Other segment. Prior period amounts have been recast to conform to this presentation.


(5)

Some of our tax-related commercial investments generate tax-exempt income or tax credits. Accordingly, we make certain reclassifications within our Commercial Banking business results to present revenues and yields on a taxable-equivalent basis, calculated assuming an effective tax rate approximately equal to our federal statutory tax rate of 35%.


(6)

The transfer of the Best Buy Stores, L.P. ("Best Buy") portfolio to held for sale resulted in an increase in the average yield for Domestic Card and Total Credit Card of 121 basis points and 110 basis points, respectively, in Q3 2013. The sale of the Best Buy portfolio was completed on September 6, 2013.


(7)

Calculated by dividing annualized interest income for the period by average loans held for investment during the period for the specified loan category. Annualized interest income excludes various allocations including funds transfer pricing that assigns certain balance sheet assets, deposits and other liabilities and their related revenue and expenses attributable to each business segment.


(8)

The transfer of the Best Buy portfolio to held for sale resulted in an increase in the net revenue margin for Domestic Card and Total Credit Card of 136 basis points and 123 basis points, respectively, in Q3 2013. The sale of the Best Buy portfolio was completed on September 6, 2013.


(9)

Represents the net reduction in interest income attributable to non-SOP 03-3 card loan premium amortization and other intangible accretion associated with the May 1, 2012 transaction in which we acquired substantially all of HSBC's credit card and private-label credit card business in the United States.


(10)

Includes credit card purchase transactions, net of returns for both loans classified as held for investment and held for sale. Excludes cash advance and balance transfer transactions.



(11)

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

15

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 14: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures

Beginning on January 1, 2014, we calculate our regulatory capital under Basel III Standardized Approach subject to transition provisions. Prior to January 1, 2014, we calculated regulatory capital under Basel I as shown below:























Basel III Standardized

Basel I


2014

2014

2014

2013

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Regulatory Capital Metrics(3)









Common equity Tier 1 capital

$

29,116

$

28,774

$

28,434

n/a

n/a

Tier 1 common capital

n/a

n/a

n/a

$

27,375

$

27,383

Tier 1 capital

$

30,451

$

30,111

$

29,257

28,230

28,238

Total risk-based capital(1)

34,862

34,743

33,784

32,987

32,881

Risk-weighted assets(2)

228,971

226,172

219,047

224,556

215,809

Average assets for the leverage ratio

286,070

281,345

280,907

280,574

281,978

Capital Ratios(3)









Common equity Tier 1 capital ratio(4)

12.7

%

12.7

%

13.0

%

n/a

n/a

Tier 1 common ratio

n/a

n/a

n/a

12.2

%

12.7

%

Tier 1 risk-based capital ratio(5)

13.3

%

13.3

%

13.4

%

12.6

13.1

Total risk-based capital ratio(6)

15.2

15.4

15.4

14.7

15.2

Tier 1 leverage ratio(7)

10.6

10.7

10.4

10.1

10.0

Tangible common equity ("TCE") ratio(8)

9.6

9.5

9.6

8.9

9.1

Reconciliation of Non-GAAP Measures

We report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include tangible common equity ("TCE") and tangible assets. The tables below provide the details of the calculation of our non-GAAP capital measures and regulatory capital. While our non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies.























2014

2014

2014

2013

2013

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Q4

Q3

Tangible Common Equity (Average)









Average stockholders' equity

$

44,827

$

43,767

$

42,859

$

42,355

$

41,185

Average goodwill and other intangible assets(9)

(15,525)

(15,615)

(15,727)

(15,847)

(15,829)

Noncumulative perpetual preferred stock(10)

(1,338)

(970)

(853)

(853)

(853)

Average tangible common equity

$

27,964

$

27,182

$

26,279

$

25,655

$

24,503

Tangible Common Equity (Period End)









Stockholders' equity

$

44,018

$

43,815

$

42,801

$

41,632

$

41,645

Goodwill and other intangible assets(9)

(15,472)

(15,564)

(15,666)

(15,784)

(15,760)

Noncumulative perpetual preferred stock(10)

(1,336)

(1,338)

(853)

(853)

(853)

Tangible common equity

$

27,210

$

26,913

$

26,282

$

24,995

$

25,032

Tangible Assets (Average)









Average total assets

$

299,523

$

294,744

$

294,275

$

294,040

$

294,919

Average goodwill and other intangible assets(9)

(15,525)

(15,615)

(15,727)

(15,847)

(15,829)

Average tangible assets

$

283,998

$

279,129

$

278,548

$

278,193

$

279,090

Tangible Assets (Period End)









Total assets

$

300,202

$

298,317

$

290,500

$

296,933

$

289,866

Goodwill and other intangible assets(9)

(15,472)

(15,564)

(15,666)

(15,784)

(15,760)

Tangible assets

$

284,730

$

282,753

$

274,834

$

281,149

$

274,106

16

 

Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach(3)
















2014

2014

2014

(Dollars in millions) (unaudited)

Q3

Q2

Q1

Common equity excluding AOCI

$

43,241

$

42,848

$

42,658

Adjustments:








AOCI(11)(12)

(146)

6

(182)

Goodwill(9)

(13,801)

(13,811)

(13,811)

Intangible assets(9)(12)

(266)

(289)

(314)

Other

88

20

83

Common equity Tier 1 capital

$

29,116

$

28,774

$

28,434

Risk-weighted assets(2)

$

228,971

$

226,172

$

219,047

Common equity Tier 1 capital ratio(4)

12.7

%

12.7

%

13.0

%

___________



(1)

Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.


(2)

Risk-weighted assets continue to be calculated based on Basel I in 2014.


(3)

Regulatory capital metrics as of the end of Q3 2014 are preliminary and therefore subject to change.


(4)

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


(5)

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


(6)

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


(7)

Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments.


(8)

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


(9)

Includes impact of related deferred taxes.


(10)

Includes related surplus.


(11)

Amounts presented are net of tax.


(12)

Amounts based on transition provisions for regulatory capital deductions and adjustments of 20% for 2014.

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SOURCE Capital One Financial Corporation

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