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

October 16, 2014 at 4:05 PM EDT

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