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Capital One Reports Third Quarter 2015 Net Income of $1.1 billion, or $1.98 per share

October 22, 2015 at 4:19 PM EDT

MCLEAN, Va., Oct. 22, 2015 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2015 of $1.1 billion, or $1.98 per diluted common share, compared to the second quarter of 2015 with net income of $863 million, or $1.50 per diluted common share, and the third quarter of 2014 with net income of $1.1 billion, or $1.86 per diluted common share. Net income for the third quarter of 2015, adjusted for the impact of a build in the U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve") of $69 million, was $1.2 billion or $2.10 per diluted common share.

"Capital One posted solid results in the third quarter, highlighted once again by strong growth in our Domestic Card business," said Richard D. Fairbank, Chair and Chief Executive Officer. "Capital One continues to deliver attractive risk-adjusted returns today while investing to sustain growth and returns over the long-term."

All comparisons below are for the third quarter of 2015 compared with the second quarter of 2015 unless otherwise noted.

Third Quarter 2015 Income Statement Summary:

  • Total net revenue increased 4 percent to $5.9 billion, including ($49) million of contra-revenue from a build in the U.K. PPI Reserve, compared to ($37) million contra-revenue in the second quarter of 2015.
  • Total non-interest expense decreased 4 percent to $3.2 billion:
    • 8 percent increase in marketing.
    • 6 percent decrease in operating expense, including $20 million build in the U.K. PPI Reserve, compared to $147 million in restructuring charges and a build of $41 million in the U.K. PPI Reserve in the second quarter of 2015.
  • Pre-provision earnings increased 16 percent to $2.7 billion.
  • Provision for credit losses decreased 3 percent to $1.1 billion.
  • Efficiency ratio of 53.56 percent; Efficiency ratio excluding build in the U.K. PPI Reserve of 52.78 percent.

Third Quarter 2015 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.1 percent at September 30, 2015.
  • Net interest margin of 6.73 percent, up 17 basis points; Net interest margin excluding the contra-revenue impact of the build in the U.K. PPI Reserve of 6.75 percent.
  • Period-end loans held for investment in the quarter increased $3.6 billion, or 2 percent, to $213.3 billion.
    • Domestic Card period-end loans increased $3.2 billion, or 4 percent, to $82.2 billion.
    • Consumer Banking period-end loans decreased $186 million, or less than 1 percent, to $71.0 billion:
      • Auto period-end loans increased $1.1 billion, or 3 percent, to $41.1 billion.
      • Home loans period-end loans decreased $1.3 billion, or 5 percent, to $26.3 billion, driven by run-off of acquired portfolios.
    • Commercial Banking period-end loans increased $881 million, or 2 percent, to $52.1 billion.
  • Average loans held for investment in the quarter increased $4.9 billion, or 2 percent, to $211.2 billion.
    • Domestic Card average loans increased $4.5 billion, or 6 percent, to $80.4 billion.
    • Consumer Banking average loans decreased $270 million, or less than 1 percent, to $71.1 billion:
      • Auto average loans increased $1.0 billion, or 3 percent, to $40.6 billion.
      • Home loans average loans decreased by $1.3 billion, or 5 percent, to $26.9 billion, driven by run-off of acquired portfolios.
    • Commercial Banking average loans increased $616 million, or 1 percent, to $51.6 billion.
  • Period-end total deposits increased $4.1 billion, or 2 percent, to $212.9 billion, while average deposits increased $1.8 billion to $211.0 billion.
  • Interest-bearing deposit rate decreased by 1 basis point to 0.58 percent.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on October 22, 2015 at 5:00 PM Eastern Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company's home page (www.capitalone.com). Choose "About Us", then choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation of non-GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through November 2, 2015 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 $212.9 billion in deposits and $313.7 billion in total assets as of September 30, 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.

 

Exhibit 99.2


Capital One Financial Corporation

Financial Supplement

Third 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 Quarterly Report on Form 10-Q for the period ended September 30, 2015 once it is filed with the Securities and Exchange Commission.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated(1) 




















































2015 Q3 vs.


Nine Months Ended September 30,

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


2015


2015


2015


2014


2014


2015


2014






2015 vs.


Q3


Q2


Q1


Q4


Q3


Q2


Q3


2015


2014


2014

Income Statement





















Net interest income


$

4,760



$

4,537



$

4,576



$

4,656



$

4,497



5%



6%



$

13,873



$

13,162



5%


Non-interest income


1,140



1,135



1,071



1,157



1,142







3,346



3,315



1


Total net revenue(2)


5,900



5,672



5,647



5,813



5,639



4



5



17,219



16,477



5


Provision for credit losses


1,092



1,129



935



1,109



993



(3)



10



3,156



2,432



30


Non-interest expense:





















Marketing


418



387



375



509



392



8



7



1,180



1,052



12


Amortization of intangibles


106



111



110



123



130



(5)



(18)



327



409



(20)


Operating expenses


2,636



2,809



2,564



2,652



2,463



(6)



7



8,009



7,435



8


Total non-interest expense


3,160



3,307



3,049



3,284



2,985



(4)



6



9,516



8,896



7


Income from continuing operations before income taxes


1,648



1,236



1,663



1,420



1,661



33



(1)



4,547



5,149



(12)


Income tax provision


530



384



529



450



536



38



(1)



1,443



1,696



(15)


Income from continuing operations, net of tax


1,118



852



1,134



970



1,125



31



(1)



3,104



3,453



(10)


(Loss) income from discontinued operations, net of tax(3)


(4)



11



19



29



(44)



**



(91)



26



(24)



**


Net income


1,114



863



1,153



999



1,081



29



3



3,130



3,429



(9)


Dividends and undistributed earnings allocated to participating securities(4)


(6)



(4)



(6)



(4)



(5)



50



20



(16)



(14)



14


Preferred stock dividends(4)


(29)



(29)



(32)



(21)



(20)





45



(90)



(46)



96


Net income available to common stockholders


$

1,079



$

830



$

1,115



$

974



$

1,056



30



2



$

3,024



$

3,369



(10)


Common Share Statistics





















Basic earnings per common share:(4)





















Net income from continuing operations


$

2.01



$

1.50



$

2.00



$

1.71



$

1.97



34%



2%



$

5.49



$

5.99



(8)%


(Loss) income from discontinued operations


(0.01)



0.02



0.03



0.05



(0.08)



**



(88)



0.05



(0.04)



**


Net income per basic common share


$

2.00



$

1.52



$

2.03



$

1.76



$

1.89



32



6



$

5.54



$

5.95



(7)


Diluted earnings per common share:(4)





















Net income from continuing operations


$

1.99



$

1.48



$

1.97



$

1.68



$

1.94



34



3



$

5.43



$

5.90



(8)


(Loss) income from discontinued operations


(0.01)



0.02



0.03



0.05



(0.08)



**



(88)



0.05



(0.04)



**


Net income per diluted common share(5)


$

1.98



$

1.50



$

2.00



$

1.73



$

1.86



32



6



$

5.48



$

5.86



(6)


Weighted-average common shares outstanding (in millions):





















Basic


540.6



545.6



550.2



554.3



559.9



(1)



(3)



545.5



566.1



(4)


Diluted


546.3



552.0



557.2



561.8



567.9



(1)



(4)



551.9



575.2



(4)


Common shares outstanding (period end, in millions)


534.9



542.5



548.0



553.4



558.5



(1)



(4)



534.9



558.5



(4)


Dividends paid per common share


$

0.40



$

0.40



$

0.30



$

0.30



$

0.30





33



$

1.10



$

0.90



22


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


54.66



52.74



52.19



50.32



48.72



4



12



54.66



48.72



12


 

 


















































2015 Q3 vs.


Nine Months Ended September 30,

(Dollars in millions) (unaudited)


2015


2015


2015


2014


2014


2015


2014






2015 vs.


Q3


Q2


Q1


Q4


Q3


Q2


Q3


2015


2014


2014

Balance Sheet (Period End)





















Loans held for investment(7)


$

213,329



$

209,705



$

203,978



$

208,316



$

201,592



2%



6%


$

213,329



$

201,592



6%

Interest-earning assets


283,073



280,137



275,837



277,849



270,001



1



5


283,073



270,001



5

Total assets


313,700



310,510



306,224



308,167



299,640



1



5


313,700



299,640



5

Interest-bearing deposits


187,848



183,657



185,208



180,467



178,876



2



5


187,848



178,876



5

Total deposits


212,903



208,780



210,440



205,548



204,264



2



4


212,903



204,264



4

Borrowings


42,778



45,766



41,029



48,457



42,243



(7)



1


42,778



42,243



1

Common equity


44,391



43,849



43,908



43,231



42,682



1



4


44,391



42,682



4

Total stockholders' equity


47,685



46,659



45,730



45,053



44,018



2



8


47,685



44,018



8

Balance Sheet (Average Balances)





















Loans held for investment(7)


$

211,227



$

206,337



$

205,194



$

203,436



$

199,422



2%



6%


$

207,608



$

196,068



6%

Interest-earning assets


283,082



276,585



278,427



273,436



268,890



2



5


279,388



265,065



5

Total assets


313,822



307,206



309,401



304,153



298,913



2



5


310,146



295,506



5

Interest-bearing deposits


185,800



183,946



182,998



179,401



179,928



1



3


184,258



181,587



1

Total deposits


210,974



209,143



207,851



205,355



205,199



1



3


209,334



205,783



2

Borrowings


45,070



41,650



46,082



43,479



40,314



8



12


44,264



37,332



19

Common equity


45,407



44,878



44,575



43,895



43,489



1



4


44,956



42,772



5

Total stockholders' equity


48,456



47,255



46,397



45,576



44,827



3



8


47,376



43,828



8

 

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated(1)




















































2015 Q3 vs.


Nine Months Ended September 30,

(Dollars in millions except as noted) (unaudited)


2015


2015


2015


2014


2014


2015


2014






2015 vs.


Q3


Q2


Q1


Q4


Q3


Q2


Q3


2015


2014


2014

Performance Metrics





















Net interest income growth (quarter over quarter)


5%



(1)%



(2)%



4%



4%



**



**



5%



(4)%



**


Non-interest income growth (quarter over quarter)




6



(7)



1



(1)



**



**



1



5



**


Total net revenue growth (quarter over quarter)


4





(3)



3



3



**



**



5



(2)



**


Total net revenue margin(8)


8.34



8.20



8.11



8.50



8.39



14

bps


(5)

bps


8.22



8.29



(7)

bps

Net interest margin(9)


6.73



6.56



6.57



6.81



6.69



17



4



6.62



6.62




Return on average assets


1.43



1.11



1.47



1.28



1.51



32



(8)



1.33



1.56



(23)


Return on average tangible assets(10)


1.50



1.17



1.54



1.34



1.59



33



(9)



1.40



1.64



(24)


Return on average common equity(11)


9.54



7.30



9.84



8.61



10.12



224



(58)



8.89



10.58



(169)


Return on average tangible common equity(12)


14.33



11.06



15.00



13.28



15.73



327



(140)



13.46



16.66



(320)


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


5.98



6.41



5.94



6.46



5.99



(43)



(1)



6.11



6.05



6


Efficiency ratio(13)


53.56



58.30



53.99



56.49



52.93



(474)



63



55.26



53.99



127


Effective income tax rate for continuing operations


32.2



31.1



31.8



31.7



32.3



110



(10)



31.7



32.9



(120)


Employees (in thousands), period end


46.9



47.5



47.0



46.0



44.9



(1)%



4%



46.9



44.9



4%


Credit Quality Metrics(7)





















Allowance for loan and lease losses


$

4,847



$

4,676



$

4,405



$

4,383



$

4,212



4%



15%



$

4,847



$

4,212



15%


Allowance as a percentage of loans held for investment


2.27%



2.23%



2.16%



2.10%



2.09%



4

bps


18

bps


2.27%



2.09%



18

bps

Allowance as a percentage of loans held for investment (excluding Acquired Loans)


2.49



2.46



2.41



2.36



2.37



3



12



2.49



2.37



12


Net charge-offs


$

890



$

846



$

881



$

915



$

756



5%



18%



$

2,617



$

2,499



5%


Net charge-off rate(14)


1.69%



1.64%



1.72%



1.80%



1.52%



5

bps


17

bps


1.68%



1.70%



(2)

bps

Net charge-off rate (excluding Acquired Loans)(14)


1.86



1.83



1.93



2.04



1.73



3



13



1.87



1.96



(9)


30+ day performing delinquency rate


2.63



2.33



2.32



2.62



2.46



30



17



2.63



2.46



17


30+ day performing delinquency rate (excluding Acquired Loans)


2.90



2.59



2.61



2.95



2.81



31



9



2.90



2.81



9


30+ day delinquency rate


2.95



2.65



2.58



2.91



2.76



30



19



2.95



2.76



19


30+ day delinquency rate (excluding Acquired Loans)


3.25



2.94



2.90



3.28



3.14



31



11



3.25



3.14



11


Capital Ratios(15)





















Common equity Tier 1 capital ratio 


12.1%



12.1%



12.5%



12.5%



12.7%





(60)

bps


12.1%



12.7%



(60)

bps

Tier 1 risk-based capital ratio


13.4



13.3



13.2



13.2



13.3



10

bps


10



13.4



13.3



10


Total risk-based capital ratio


15.1



15.1



15.1



15.1



15.2





(10)



15.1



15.2



(10)


Tier 1 leverage ratio


11.1



11.1



10.7



10.8



10.6





50



11.1



10.6



50


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


9.8



9.7



9.8



9.5



9.6



10



20



9.8



9.6



20


 

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income


































Three Months Ended


2015 Q3 vs.


Nine Months Ended September 30,



2015


2015


2014


2015


2014






2015 vs.

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


Q3


Q2


Q3


Q2


Q3


2015


2014


2014

Interest income:

















Loans, including loans held for sale


$

4,753



$

4,531



$

4,463



5%



6%



$

13,824



$

13,049



6%


Investment securities


386



382



398



1



(3)



1,174



1,223



(4)


Other


25



24



26



4



(4)



77



80



(4)


Total interest income


5,164



4,937



4,887



5



6



15,075



14,352



5


Interest expense:

















Deposits


271



272



271







814



819



(1)


Securitized debt obligations


39



36



32



8



22



108



109



(1)


Senior and subordinated notes


82



80



71



3



15



241



226



7


Other borrowings


12



12



16





(25)



39



36



8


Total interest expense


404



400



390



1



4



1,202



1,190



1


Net interest income


4,760



4,537



4,497



5



6



13,873



13,162



5


Provision for credit losses


1,092



1,129



993



(3)



10



3,156



2,432



30


Net interest income after provision for credit losses


3,668



3,408



3,504



8



5



10,717



10,730




Non-interest income:

















Service charges and other customer-related fees


423



429



471



(1)



(10)



1,289



1,405



(8)


Interchange fees, net


555



567



523



(2)



6



1,618



1,498



8


Net other-than-temporary impairment recognized in earnings


(5)



(7)



(9)



(29)



(44)



(27)



(15)



80


Other


167



146



157



14



6



466



427



9


Total non-interest income


1,140



1,135



1,142







3,346



3,315



1


Non-interest expense:

















Salaries and associate benefits


1,189



1,360



1,128



(13)



5



3,760



3,414



10


Occupancy and equipment


444



439



419



1



6



1,318



1,271



4


Marketing


418



387



392



8



7



1,180



1,052



12


Professional services


313



334



304



(6)



3



943



887



6


Communications and data processing


226



208



196



9



15



636



595



7


Amortization of intangibles


106



111



130



(5)



(18)



327



409



(20)


Other


464



468



416



(1)



12



1,352



1,268



7


Total non-interest expense


3,160



3,307



2,985



(4)



6



9,516



8,896



7


Income from continuing operations before income taxes


1,648



1,236



1,661



33



(1)



4,547



5,149



(12)


Income tax provision


530



384



536



38



(1)



1,443



1,696



(15)


Income from continuing operations, net of tax


1,118



852



1,125



31



(1)



3,104



3,453



(10)


(Loss) income from discontinued operations, net of tax(3)


(4)



11



(44)



**



(91)



26



(24)



**


Net income


1,114



863



1,081



29



3



3,130



3,429



(9)


Dividends and undistributed earnings allocated to participating securities(4)


(6)



(4)



(5)



50



20



(16)



(14)



14


Preferred stock dividends(4)


(29)



(29)



(20)





45



(90)



(46)



96


Net income available to common stockholders


$

1,079



$

830



$

1,056



30



2



$

3,024



$

3,369



(10)



















 


































Three Months Ended


2015 Q3 vs.


Nine Months Ended September 30,



2015


2015


2014


2015


2014






2015 vs.

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


Q3


Q2


Q3


Q2


Q3


2015


2014


2014

Basic earnings per common share:(4)

















Net income from continuing operations


$

2.01



$

1.50



$

1.97



34%



2%



$

5.49



$

5.99



(8)%


(Loss) income from discontinued operations


(0.01)



0.02



(0.08)



**