COF
$99.53
Capital One Financial
$.86
.87%
Earnings Details
4th Quarter December 2017
Tuesday, January 23, 2018 4:19:00 PM
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Summary

Capital One Financial Misses

Capital One Financial (COF) reported 4th Quarter December 2017 earnings of $1.66 per share on revenue of $7.8 billion. The consensus earnings estimate was $1.89 per share on revenue of $7.1 billion. The Earnings Whisper number was $1.91 per share. Revenue grew 9.5% on a year-over-year basis.

Capital One Financial Corp is a financial services holding company. The Company with its banking and non-banking subsidiaries markets financial products and services.

Results
Reported Earnings
$1.66
Earnings Whisper
$1.91
Consensus Estimate
$1.89
Reported Revenue
$7.80 Bil
Revenue Estimate
$7.11 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Capital One Reports Fourth Quarter 2017 Net Loss of $971 million, or $2.17 per share

Capital One Financial Corporation (COF) today announced net loss for the fourth quarter of 2017 of $971 million, or $2.17 per diluted common share, compared with net income of $1.1 billion, or $2.14 per diluted common share in the third quarter of 2017, and with net income of $791 million, or $1.45 per diluted common share in the fourth quarter of 2016. Excluding adjusting items, net income for the fourth quarter of 2017 was $1.62 per diluted common share(1).

https://mma.prnewswire.com/media/147514/capital_one_logo.jpg

"In 2017, we continued to grow loans and revenue. We improved our efficiency. Our digital and technology transformation continued to gain momentum. And, we delivered 7.4% EPS growth, net of adjustments," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "Our 2017 results put us in a strong position to continue to deliver attractive growth and returns over the long-term."

Adjusting items in the fourth quarter of 2017, which are excluded from diluted EPS and the efficiency ratio (see Table 15 in our Financial Supplement for additional information):

Pre-Tax
Diluted EPS
(Dollars in millions, except per share data)
Impact
Impact
Impacts of the Tax Act(2)
$
(1,769)
$
(3.61)
Restructuring charges
(76)
(0.10)
Build in the U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve") (31)
(0.07)

Notable items in the fourth quarter of 2017 included:

Pre-Tax
Diluted EPS
(Dollars in millions, except per share data)
Impact
Impact
Mortgage representation and warranty settlement (included in discontinued operations) $
(169)
$
(0.22)
Charges related to our Commercial Taxi Medallion Lending portfolio
(113)
(0.15)
(1) Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.
(2) Tax Act refers to the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 enacted on December 22, 2017. This amount is a reasonable estimate as of December 31, 2017, which may be adjusted during the measurement period ending no later than December 2018.

All comparisons below are for the fourth quarter of 2017 compared with the third quarter of 2017 unless otherwise noted.

Fourth Quarter 2017 Income Statement Summary:

-- Total net revenue remained substantially flat at $7.0 billion.

-- Total non-interest expense increased 6 percent to $3.8 billion:

-- 4 percent increase in operating expenses.

-- 21 percent increase in marketing.

-- Pre-provision earnings decreased 5 percent to $3.2 billion(2).

-- Provision for credit losses increased 5 percent to $1.9 billion:

-- Net charge-offs of $1.8 billion.

-- $98 million reserve build.

-- Net interest margin of 7.03 percent, down 5 basis points.

-- Efficiency ratio of 53.89 percent.

-- Efficiency ratio excluding adjusting items was 52.50 percent(1).

Fourth Quarter 2017 Balance Sheet Summary:

Common equity Tier 1 capital ratio under Basel III Standardized Approach of 10.3 percent at December 31, 2017.

Period-end loans held for investment in the quarter increased $2.1 billion, or 1 percent, to $254.5 billion.

-- Domestic Card period-end loans increased $5.3 billion, or 5 percent, to $105.3 billion.

Consumer Banking period-end loans decreased $486 million, or 1 percent, to $75.1 billion:

-- Auto period-end loans increased $701 million, or 1 percent, to $54.0 billion.

Home loans period-end loans decreased $1.2 billion, or 6 percent, to $17.6 billion, primarily driven by run-off of acquired portfolios.

Commercial Banking period-end loans decreased $3.1 billion, or 5 percent, to $64.6 billion.

Average loans held for investment in the quarter increased $6.7 billion, or 3 percent, to $252.6 billion.

-- Domestic Card average loans increased $7.4 billion, or 8 percent, to $101.1 billion.

Consumer Banking average loans decreased $74 million, or less than 1 percent, to $75.3 billion:

-- Auto average loans increased $1.1 billion, or 2 percent, to $53.7 billion.

Home loans average loans decreased $1.2 billion, or 6 percent, to $18.1 billion, primarily driven by run-off of acquired portfolios.

-- Commercial Banking average loans decreased $659 million, or 1 percent, to $67.2 billion.

(1) Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.
(2) Pre-provision earnings is calculated based on the sum of net interest income and non-interest income, less non-interest expense for the period.

Period-end total deposits increased $4.6 billion, or 2 percent, to $243.7 billion, while average deposits increased $2.7 billion, or 1 percent, to $241.6 billion.

-- Interest-bearing deposits rate paid increased 8 basis points to 0.85 percent.

All comparisons below are for the full year of 2017 compared with the full year of 2016 unless otherwise noted.

2017 Full Year Income Statement Summary:

-- Total net revenue increased 7 percent to $27.2 billion.

-- Total non-interest expense increased 5 percent to $14.2 billion:

-- 8 percent decrease in marketing.

-- 7 percent increase in operating expenses.

-- Pre-provision earnings increased 9 percent to $13.0 billion(2).

-- Provision for credit losses increased 17 percent to $7.6 billion.

-- Efficiency ratio of 52.11 percent.

-- Efficiency ratio excluding adjusting items was 51.02 percent(1).

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on January 23, 2018 at 5:00 PM Eastern Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company’s home page (www.capitalone.com). Choose "About Us," then choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation of non-GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company’s website through February 6, 2018 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, 2016.

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 $243.7 billion in deposits and $365.7 billion in total assets as of December 31, 2017. 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, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

(1) Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.
(2) Pre-provision earnings is calculated based on the sum of net interest income and non-interest income, less non-interest expense for the period.
Exhibit 99.2
Capital One Financial Corporation
Financial Supplement(1)(2)
Fourth Quarter 2017
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
Table 8:
Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity
13
Business Segment Results
Table 9:
Financial Summary--Business Segment Results
14
Table 10:
Financial & Statistical Summary--Credit Card Business
15
Table 11:
Financial & Statistical Summary--Consumer Banking Business
17
Table 12:
Financial & Statistical Summary--Commercial Banking Business
18
Table 13:
Financial & Statistical Summary--Other and Total
19
Table 14:
Notes to Loan, Allowance and Business Segment Disclosures (Tables 7--13)
20
Other
Table 15:
Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures
21
__________
(1)
The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Annual Report on Form 10-K for the period ended December 31, 2017 once it is filed with the Securities and Exchange Commission.
(2)
This Financial Supplement includes non-GAAP measures. We believe these non-GAAP measures are useful to investors and users of our financial information as they provide an alternate measurement of our performance and assist in assessing our capital adequacy and the level of return generated. These non-GAAP measures should not be viewed as a substitute for reported results determined in accordance with generally accepted accounting principles in the U.S. ("GAAP"), nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 1: Financial Summary--Consolidated
2017 Q4 vs.
Year Ended December 31,
(Dollars in millions, except per share data and as noted)
2017
2017
2017
2017
2016
2017
2016
2017 vs.
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Income Statement
Net interest income
$
5,813
$
5,700
$
5,473
$
5,474
$
5,447
2
%
7
%
$
22,460
$
20,873
8
%
Non-interest income
1,200
1,285
1,231
1,061
1,119
(7)
7
4,777
4,628
3
Total net revenue(1)
7,013
6,985
6,704
6,535
6,566
--
7
27,237
25,501
7
Provision for credit losses
1,926
1,833
1,800
1,992
1,752
5
10
7,551
6,459
17
Non-interest expense:
Marketing
460
379
435
396
575
21
(20)
1,670
1,811
(8)
Operating expenses
3,319
3,188
2,979
3,038
3,104
4
7
12,524
11,747
7
Total non-interest expense
3,779
3,567
3,414
3,434
3,679
6
3
14,194
13,558
5
Income from continuing operations before income taxes
1,308
1,585
1,490
1,109
1,135
(17)
15
5,492
5,484
--
Income tax provision
2,170
448
443
314
342
**
**
3,375
1,714
97
Income (loss) from continuing operations, net of tax
(862)
1,137
1,047
795
793
**
**
2,117
3,770
(44)
Income (loss) from discontinued operations, net of tax(2)
(109)
(30)
(11)
15
(2)
**
**
(135)
(19)
**
Net income (loss)
(971)
1,107
1,036
810
791
**
**
1,982
3,751
(47)
Dividends and undistributed earnings allocated to participating securities(3)
(1)
(8)
(8)
(5)
(6)
(88)
(83)
(13)
(24)
(46)
Preferred stock dividends
(80)
(52)
(80)
(53)
(75)
54
7
(265)
(214)
24
Net income (loss) available to common stockholders
$
(1,052)
$
1,047
$
948
$
752
$
710
**
**
$
1,704
$
3,513
(51)
Common Share Statistics
Basic earnings per common share:(3)
Net income (loss) from continuing operations
$
(1.95)
$
2.22
$
1.98
$
1.53
$
1.47
**
**
$
3.80
$
7.00
(46) %
Income (loss) from discontinued operations
(0.22)
(0.06)
(0.02)
0.03
--
**
**
(0.28)
(0.04)
**
Net income (loss) per basic common share
$
(2.17)
$
2.16
$
1.96
$
1.56
$
1.47
**
**
$
3.52
$
6.96
(49)
Diluted earnings per common share:(3)
Net income (loss) from continuing operations
$
(1.95)
$
2.20
$
1.96
$
1.51
$
1.45
**
**
$
3.76
$
6.93
(46)
Income (loss) from discontinued operations
(0.22)
(0.06)
(0.02)
0.03
--
**
**
(0.27)
(0.04)
**
Net income (loss) per diluted common share
$
(2.17)
$
2.14
$
1.94
$
1.54
$
1.45
**
**
$
3.49
$
6.89
(49)
Weighted-average common shares outstanding (in millions):
Basic
485.7
484.9
484.0
482.3
483.5
--
--
484.2
504.9
(4)
Diluted
485.7
489.0
488.1
487.9
489.2
(1)
%
(1)
%
488.6
509.8
(4)
Common shares outstanding (period-end, in millions)
485.5
484.4
483.7
482.8
480.2
--
1
485.5
480.2
1
Dividends paid per common share
$
0.40
$
0.40
$
0.40
$
0.40
$
0.40
--
--
$
1.60
$
1.60
--
Tangible book value per common share (period-end)(4)
60.28
63.06
60.94
58.66
57.76
(4)
4
60.28
57.76
4
2017 Q4 vs.
Year Ended December 31,
(Dollars in millions)
2017
2017
2017
2017
2016
2017
2016
2017 vs.
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Balance Sheet (Period-End)
Loans held for investment(5)
$
254,473
$
252,422
$
244,302
$
240,588
$
245,586
1
%
4
%
$
254,473
$
245,586
4
%
Interest-earning assets
334,124
329,002
319,286
316,712
321,807
2
4
334,124
321,807
4
Total assets
365,693
361,402
350,593
348,549
357,033
1
2
365,693
357,033
2
Interest-bearing deposits
217,298
212,956
213,810
214,818
211,266
2
3
217,298
211,266
3
Total deposits
243,702
239,062
239,763
241,182
236,768
2
3
243,702
236,768
3
Borrowings
60,281
59,458
49,954
48,439
60,460
1
--
60,281
60,460
--
Common equity
44,370
45,794
44,777
43,680
43,154
(3)
3
44,370
43,154
3
Total stockholders’ equity
48,730
50,154
49,137
48,040
47,514
(3)
3
48,730
47,514
3
Balance Sheet (Average Balances)
Loans held for investment(5)
$
252,566
$
245,822
$
242,241
$
241,505
$
240,027
3
%
5
%
$
245,565
$
233,272
5
%
Interest-earning assets
330,742
322,015
318,078
318,358
317,853
3
4
322,330
307,796
5
Total assets
363,045
355,191
349,891
351,641
350,225
2
4
354,924
339,974
4
Interest-bearing deposits
215,258
213,137
214,412
212,973
206,464
1
4
213,949
198,304
8
Total deposits
241,562
238,843
240,550
238,550
232,204
1
4
239,882
223,714
7
Borrowings
58,109
54,271
48,838
53,357
58,624
7
(1)
53,659
56,878
(6)
Common equity
46,350
45,816
44,645
43,833
43,921
1
6
45,170
45,162
--
Total stockholders’ equity
50,710
50,176
49,005
48,193
47,972
1
6
49,530
48,753
2
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 2: Selected Metrics--Consolidated
2017 Q4 vs.
Year Ended December 31,
(Dollars in millions, except as noted)
2017
2017
2017
2017
2016
2017
2016
2017 vs.
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Performance Metrics
Net interest income growth (period over period)
2
%
4
%
--
--
3
%
**
**
8
%
11
%
**
Non-interest income growth (period over period)
(7)
4
16
%
(5)
%
(5)
**
**
3
1
**
Total net revenue growth (period over period)
--
4
3
--
2
**
**
7
9
**
Total net revenue margin(6)
8.48
8.68
8.43
8.21
8.26
(20)
bps
22
bps
8.45
8.29
16
bps
Net interest margin(7)
7.03
7.08
6.88
6.88
6.85
(5)
18
6.97
6.78
19
Return on average assets
(0.95)
1.28
1.20
0.90
0.91
(223)
(186)
0.60
1.11
(51)
Return on average tangible assets(8)
(0.99)
1.34
1.25
0.95
0.95
(233)
(194)
0.62
1.16
(54)
Return on average common equity(9)
(8.14)
9.40
8.59
6.73
6.48
(18)
%
(15)
%
4.07
7.82
(4)
%
Return on average tangible common equity(10)
(12.12)
14.11
13.09
10.37
10.00
(26)
(22)
6.16
11.93
(6)
Non-interest expense as a percentage of average loans held for investment
5.98
5.80
5.64
5.69
6.13
18
bps
(15)
bps
5.78
5.81
(3)
bps
Efficiency ratio(11)
53.89
51.07
50.92
52.55
56.03
282
(214)
52.11
53.17
(106)
Effective income tax rate for continuing operations
165.9
28.3
29.7
28.3
30.1
138
%
136
%
61.5
31.3
30
%
Employees (in thousands), period-end
49.3
50.4
49.9
48.4
47.3
(2)
4
49.3
47.3
4
Credit Quality Metrics
Allowance for loan and lease losses
$
7,502
$
7,418
$
7,170
$
6,984
$
6,503
1
%
15
%
$
7,502
$
6,503
15
%
Allowance as a percentage of loans held for investment
2.95
%
2.94
%
2.93
%
2.90
%
2.65
%
1
bps
30
bps
2.95
%
2.65
%
30
bps
Net charge-offs
$
1,828
$
1,606
$
1,618
$
1,510
$
1,489
14
%
23
%
$
6,562
$
5,062
30
%
Net charge-off rate(12)
2.89
%
2.61
%
2.67
%
2.50
%
2.48
%
28
bps
41
bps
2.67
%
2.17
%
50
bps
30+ day performing delinquency rate(13)
3.23
2.93
2.69
2.61
2.93
30
30
3.23
2.93
30
30+ day delinquency rate
3.48
3.24
2.99
2.92
3.27
24
21
3.48
3.27
21
Capital Ratios(14)
Common equity Tier 1 capital
10.3
%
10.7
%
10.7
%
10.4
%
10.1
%
(40)
bps
20
bps
10.3
%
10.1
%
20
bps
Tier 1 capital
11.8
12.2
12.2
12.0
11.6
(40)
20
11.8
11.6
20
Total capital
14.4
14.8
14.9
14.7
14.3
(40)
10
14.4
14.3
10
Tier 1 leverage
9.9
10.5
10.3
9.9
9.9
(60)
--
9.9
9.9
--
Tangible common equity ("TCE")(15)
8.3
8.8
8.8
8.5
8.1
(50)
20
8.3
8.1
20
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 3: Consolidated Statements of Income
2017 Q4 vs.
Year Ended December 31,
2017
2017
2017
2017
2016
2017
2016
2017 vs.
(Dollars in millions, except per share data and as noted)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Interest income:
Loans, including loans held for sale
$
6,133
$
5,960
$
5,669
$
5,626
$
5,587
3
%
10
%
$
23,388
$
21,203
10
%
Investment securities
431
431
433
416
393
--
10
1,711
1,599
7
Other
40
29
26
28
29
38
38
123
89
38
Total interest income
6,604
6,420
6,128
6,070
6,009
3
10
25,222
22,891
10
Interest expense:
Deposits
457
410
382
353
332
11
38
1,602
1,213
32
Securitized debt obligations
91
85
82
69
65
7
40
327
216
51
Senior and subordinated notes
209
194
179
149
138
8
51
731
476
54
Other borrowings
34
31
12
25
27
10
26
102
113
(10)
Total interest expense
791
720
655
596
562
10
41
2,762
2,018
37
Net interest income
5,813
5,700
5,473
5,474
5,447
2
7
22,460
20,873
8
Provision for credit losses
1,926
1,833
1,800
1,992
1,752
5
10
7,551
6,459
17
Net interest income after provision for credit losses
3,887
3,867
3,673
3,482
3,695
1
5
14,909
14,414
3
Non-interest income:
Interchange fees, net
665
662
676
570
624
--
7
2,573
2,452
5
Service charges and other customer-related fees
394
414
418
371
412
(5)
(4)
1,597
1,646
(3)
Net securities gains (losses)
1
68
(4)
--
(4)
(99)
**
65
(11)
**
Other
140
141
141
120
87
(1)
61
542
541
--
Total non-interest income
1,200
1,285
1,231
1,061
1,119
(7)
7
4,777
4,628
3
Non-interest expense:
Salaries and associate benefits
1,521
1,524
1,383
1,471
1,336
--
14
5,899
5,202
13
Occupancy and equipment
523
471
474
471
522
11
--
1,939
1,944
--
Marketing
460
379
435
396
575
21
(20)
1,670
1,811
(8)
Professional services
274
297
279
247
312
(8)
(12)
1,097
1,075
2
Communications and data processing
306
294
289
288
297
4
3
1,177
1,169
1
Amortization of intangibles
61
61
61
62
101
--
(40)
245
386
(37)
Other
634
541
493
499
536
17
18
2,167
1,971
10
Total non-interest expense
3,779
3,567
3,414
3,434
3,679
6
3
14,194
13,558
5
Income from continuing operations before income taxes
1,308
1,585
1,490
1,109
1,135
(17)
15
5,492
5,484
--
Income tax provision
2,170
448
443
314
342
**
**
3,375
1,714
97
Income (loss) from continuing operations, net of tax
(862)
1,137
1,047
795
793
**
**
2,117
3,770
(44)
Income (loss) from discontinued operations, net of tax(2)
(109)
(30)
(11)
15
(2)
**
**
(135)
(19)
**
Net income (loss)
(971)
1,107
1,036
810
791
**
**
1,982
3,751
(47)
Dividends and undistributed earnings allocated to participating securities(3)
(1)
(8)
(8)
(5)
(6)
(88)
(83)
(13)
(24)
(46)
Preferred stock dividends
(80)
(52)
(80)
(53)
(75)
54
7
(265)
(214)
24
Net income (loss) available to common stockholders
$
(1,052)
$
1,047
$
948
$
752
$
710
**
**
$
1,704
$
3,513
(51)
2017 Q4 vs.
Year Ended December 31,
2017
2017
2017
2017
2016
2017
2016
2017 vs.
(Dollars in millions, except per share data and as noted)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Basic earnings per common share:(3)
Net income (loss) from continuing operations
$
(1.95)
$
2.22
$
1.98
$
1.53
$
1.47
**
**
$
3.80
$
7.00
(46) %
Income (loss) from discontinued operations
(0.22)
(0.06)
(0.02)
0.03
--
**
**
(0.28)
(0.04)
**
Net income (loss) per basic common share
$
(2.17)
$
2.16
$
1.96
$
1.56
$
1.47
**
**
$
3.52
$
6.96
(49)
Diluted earnings per common share:(3)
Net income (loss) from continuing operations
$
(1.95)
$
2.20
$
1.96
$
1.51
$
1.45
**
**
$
3.76
$
6.93
(46)
Income (loss) from discontinued operations
(0.22)
(0.06)
(0.02)
0.03
--
**
**
(0.27)
(0.04)
**
Net income (loss) per diluted common share
$
(2.17)
$
2.14
$
1.94
$
1.54
$
1.45
**
**
$
3.49
$
6.89
(49)
Weighted-average common shares outstanding (in millions):
Basic common shares
485.7
484.9
484.0
482.3
483.5
--
--
484.2
504.9
(4)
Diluted common shares
485.7
489.0
488.1
487.9
489.2
(1)
%
(1)
%
488.6
509.8
(4)
Dividends paid per common share
$
0.40
$
0.40
$
0.40
$
0.40
$
0.40
--
--
$
1.60
$
1.60
--
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 4: Consolidated Balance Sheets
2017 Q4 vs.
2017
2017
2017
2017
2016
2017
2016
(Dollars in millions)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
Assets:
Cash and cash equivalents:
Cash and due from banks
$
4,458
$
4,154
$
3,352
$
3,489
$
4,185
7
%
7
%
Interest-bearing deposits and other short-term investments
9,582
4,330
3,363
5,826
5,791
121
65
Total cash and cash equivalents
14,040
8,484
6,715
9,315
9,976
65
41
Restricted cash for securitization investors
312
304
300
486
2,517
3
(88)
Securities available for sale, at fair value
37,655
39,742
41,120
41,260
40,737
(5)
(8)
Securities held to maturity, at carrying value
28,984
28,650
27,720
26,170
25,712
1
13
Loans held for investment:(5)
Unsecuritized loans held for investment
218,806
217,659
214,864
211,038
213,824
1
2
Loans held in consolidated trusts
35,667
34,763
29,438
29,550
31,762
3
12
Total loans held for investment
254,473
252,422
244,302
240,588
245,586
1
4
Allowance for loan and lease losses
(7,502)
(7,418)
(7,170)
(6,984)
(6,503)
1
15
Net loans held for investment
246,971
245,004
237,132
233,604
239,083
1
3
Loans held for sale, at lower of cost or fair value
971
1,566
777
735
1,043
(38)
(7)
Premises and equipment, net
4,033
3,955
3,825
3,727
3,675
2
10
Interest receivable
1,536
1,426
1,346
1,368
1,351
8
14
Goodwill
14,533
14,532
14,524
14,521
14,519
--
--
Other assets
16,658
17,739
17,134
17,363
18,420
(6)
(10)
Total assets
$
365,693
$
361,402
$
350,593
$
348,549
$
357,033
1
2
2017 Q4 vs.
2017
2017
2017
2017
2016
2017
2016
(Dollars in millions)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
Liabilities:
Interest payable
$
413
$
301
$
376
$
260
$
327
37
%
26
%
Deposits:
Non-interest-bearing deposits
26,404
26,106
25,953
26,364
25,502
1
4
Interest-bearing deposits
217,298
212,956
213,810
214,818
211,266
2
3
Total deposits
243,702
239,062
239,763
241,182
236,768
2
3
Securitized debt obligations
20,010
17,087
18,358
18,528
18,826
17
6
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase
576
767
958
1,046
992
(25)
(42)
Senior and subordinated notes
30,755
28,420
28,478
26,405
23,431
8
31
Other borrowings
8,940
13,184
2,160
2,460
17,211
(32)
(48)
Total other debt
40,271
42,371
31,596
29,911
41,634
(5)
(3)
Other liabilities
12,567
12,427
11,363
10,628
11,964
1
5
Total liabilities
316,963
311,248
301,456
300,509
309,519
2
2
Stockholders’ equity:
Preferred stock
0
0
0
0
0
--
--
Common stock
7
7
7
7
7
--
--
Additional paid-in capital, net
31,656
31,526
31,413
31,326
31,157
--
2
Retained earnings
30,700
31,946
31,086
30,326
29,766
(4)
3
Accumulated other comprehensive loss
(926)
(622)
(683)
(934)
(949)
49
(2)
Treasury stock, at cost
(12,707)
(12,703)
(12,686)
(12,685)
(12,467)
--
2
Total stockholders’ equity
48,730
50,154
49,137
48,040
47,514
(3)
3
Total liabilities and stockholders’ equity
$
365,693
$
361,402
$
350,593
$
348,549
$
357,033
1
2
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 5: Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1--4)
(1)
Total net revenue was reduced by $377 million in Q4 2017, $356 million in Q3 2017, $313 million in Q2 2017 and $321 million in both Q1 2017 and Q4 2016 for the estimated uncollectible amount of billed finance charges and fees and related losses.
(2)
The provision (benefit) for mortgage representation and warranty losses included the following activity:
2017
2017
2017
2017
2016
(Dollars in millions)
Q4
Q3
Q2
Q1
Q4
Provision (benefit) for mortgage representation and warranty losses before income taxes:
Recorded in continuing operations
--
$
(1)
--
$
(25)
--
Recorded in discontinued operations
$
169
13
$
6
(67)
$
(2)
Total provision (benefit) for mortgage representation and warranty losses before income taxes
$
169
$
12
$
6
$
(92)
$
(2)
(3)
Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total. We also provide adjusted diluted earnings per share, which is a non-GAAP measure. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on our non-GAAP measures.
(4)
Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.
(5)
Included in loans held for investment are purchased credit-impaired loans ("PCI loans") 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," or Accounting Standards Codification 310-30). These include certain of our consumer and commercial loans that were acquired through business combinations. The table below presents amounts related to PCI loans:
2017
2017
2017
2017
2016
(Dollars in millions)
Q4
Q3
Q2
Q1
Q4
PCI loans:
Period-end unpaid principal balance
$
11,399
$
12,658
$
13,599
$
14,838
$
15,896
Period-end loans held for investment
10,775
11,985
12,895
14,102
15,071
Average loans held for investment
11,060
12,270
13,305
14,433
15,443
(6)
Total net revenue margin is calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.
(7)
Net interest margin is calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.
(8)
Return on average tangible assets is a non-GAAP measure calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible assets for the period. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.
(9)
Return on average common equity is calculated based on annualized (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.
(10)
Return on average tangible common equity ("ROTCE") is a non-GAAP measure calculated based on annualized (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. Our calculation of ROTCE may not be comparable to similarly-titled measures reported by other companies. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.
(11)
Efficiency ratio is calculated based on total non-interest expense for the period divided by total net revenue for the period. We also provide an adjusted efficiency ratio, which is a non-GAAP measure. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on our non-GAAP measures.
(12)
Net charge-off rate is calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.
(13)
On September 25, 2017, we completed the acquisition from Synovus Bank of the credit card assets and related liabilities of Cabela’s wholly-owned subsidiary, World’s Foremost Bank, which added approximately $5.7 billion to our loans held for investment portfolio as of the acquisition date ("Cabela’s acquisition"). The credit quality metrics as of December 31, 2017 include the impact of this acquisition. Excluding this impact, the 30+ day performing delinquency rate as of December 31, 2017 would have been 3.28%.
(14)
Capital ratios as of the end of Q4 2017 are preliminary and therefore subject to change. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for information on the calculation of each of these ratios.
(15)
TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.
**
Not meaningful.
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 6: Average Balances, Net Interest Income and Net Interest Margin
2017 Q4
2017 Q3
2016 Q4
Average
Interest
Yield/
Average
Interest
Yield/
Average
Interest
Yield/
Balance
Income/
Rate(1)
Balance
Income/
Rate(1)
Balance
Income/
Rate(1)
Expense(1)
Expense(1)
Expense(1)
(Dollars in millions, except as noted)
Interest-earning assets:
Loans, including loans held for sale
$
254,080
$
6,133
9.66 %
$
247,022
$
5,960
9.65 %
$
241,110
$
5,587
9.27 %
Investment securities
68,992
431
2.50
69,302
431
2.49
67,827
393
2.32
Cash equivalents and other
7,670
40
2.09
5,691
29
2.04
8,916
29
1.30
Total interest-earning assets
$
330,742
$
6,604
7.99
$
322,015
$
6,420
7.97
$
317,853
$
6,009
7.56
Interest-bearing liabilities:
Interest-bearing deposits
$
215,258
$
457
0.85
$
213,137
$
410
0.77
$
206,464
$
332
0.64
Securitized debt obligations
19,751
91
1.84
17,598
85
1.93
18,300
65
1.42
Senior and subordinated notes
30,020
209
2.78
28,753
194
2.70
23,605
138
2.34
Other borrowings and liabilities
10,355
34
1.31
9,320
31
1.33
17,654
27
0.61
Total interest-bearing liabilities
$
275,384
$
791
1.15
$
268,808
$
720
1.07
$
266,023
$
562
0.85
Net interest income/spread
$
5,813
6.84
$
5,700
6.90
$
5,447
6.71
Impact of non-interest-bearing funding
0.19
0.18
0.14
Net interest margin
7.03 %
7.08 %
6.85 %
Year Ended December 31,
2017
2016
Average
Interest
Yield/
Average
Interest
Yield/
Balance
Income/
Rate(1)
Balance
Income/
Rate(1)
Expense(1)
Expense(1)
(Dollars in millions, except as noted)
Interest-earning assets:
Loans, including loans held for sale
$
246,613
$
23,388
9.48 %
$
234,338
$
21,203
9.05 %
Investment securities
68,896
1,711
2.48
66,260
1,599
2.41
Cash equivalents and other
6,821
123
1.80
7,198
89
1.24
Total interest-earning assets
$
322,330
$
25,222
7.82
$
307,796
$
22,891
7.44
Interest-bearing liabilities:
Interest-bearing deposits
$
213,949
$
1,602
0.75
$
198,304
$
1,213
0.61
Securitized debt obligations
18,237
327
1.79
16,576
216
1.30
Senior and subordinated notes
27,866
731
2.62
22,417
476
2.12
Other borrowings and liabilities
8,917
102
1.14
18,736
113
0.60
Total interest-bearing liabilities
$
268,969
$
2,762
1.03
$
256,033
$
2,018
0.79
Net interest income/spread
$
22,460
6.79
$
20,873
6.65
Impact of non-interest-bearing funding
0.18
0.13
Net interest margin
6.97 %
6.78 %
__________
(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.
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 7: Loan Information and Performance Statistics
2017 Q4 vs.
Year Ended December 31,
(Dollars in millions, except as noted)
2017
2017
2017
2017
2016
2017
2016
2017
2016
2017 vs.
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2016
Loans Held For Investment (Period-End)
Credit card:
Domestic credit card
$
105,293
$
99,981
$
92,866
$
91,092
$
97,120
5
%
8
%
$
105,293
$
97,120
8
%
International card businesses
9,469
9,149
8,724
8,121
8,432
3
12
9,469
8,432
12
Total credit card
114,762
109,130
101,590
99,213
105,552
5
9
114,762
105,552
9
Consumer banking:
Auto
53,991
53,290
51,765
49,771
47,916
1
13
53,991
47,916
13
Home loan
17,633
18,820
19,724
20,738
21,584
(6)
(18)
17,633
21,584
(18)
Retail banking
3,454
3,454
3,484
3,473
3,554
--
(3)
3,454
3,554
(3)
Total consumer banking
75,078
75,564
74,973
73,982
73,054
(1)
3
75,078
73,054
3
Commercial banking:
Commercial and multifamily real estate
26,150
27,944
27,428
27,218
26,609
(6)
(2)
26,150
26,609
(2)
Commercial and industrial
38,025
39,306
39,801
39,638
39,824
(3)
(5)
38,025
39,824
(5)
Total commercial lending
64,175
67,250
67,229
66,856
66,433
(5)
(3)
64,175
66,433
(3)
Small-ticket commercial real estate
400
420
443
464
483
(5)
(17)
400
483
(17)
Total commercial banking
64,575
67,670
67,672
67,320
66,916
(5)
(3)
64,575
66,916
(3)
Other loans
58
58
67
73
64
--
(9)
58
64
(9)
Total loans held for investment
$
254,473
$
252,422
$
244,302
$
240,588
$
245,586
1
4
$
254,473
$
245,586
4
Loans Held For Investment (Average)
Credit card:
Domestic credit card
$
101,087
$
93,729
$
91,769
$
93,034
$
92,623
8
%
9
%
$
94,923
$
88,394
7
%
International card businesses
8,942
8,816
8,274
8,135
8,168
1
9
8,545
8,166
5
Total credit card
110,029
102,545
100,043
101,169
100,791
7
9
103,468
96,560
7
Consumer banking:
Auto
53,747
52,615
50,803
48,673
47,126
2
14
51,477
44,521
16
Home loan
18,109
19,302
20,203
21,149
21,984
(6)
(18)
19,681
23,358
(16)
Retail banking
3,433
3,446
3,463
3,509
3,549
--
(3)
3,463
3,543
(2)
Total consumer banking
75,289
75,363
74,469
73,331
72,659
--
4
74,621
71,422
4
Commercial banking:
Commercial and multifamily real estate
27,770
27,703
27,401
26,587
26,445
--
5
27,370
25,821
6
Commercial and industrial
39,020
39,723
39,815
39,877
39,573
(2)
(1)
39,606
38,852
2
Total commercial lending
66,790
67,426
67,216
66,464
66,018
(1)
1
66,976
64,673
4
Small-ticket commercial real estate
410
433
453
474
497
(5)
(18)
442
548
(19)
Total commercial banking
67,200
67,859
67,669
66,938
66,515
(1)
1
67,418
65,221
3
Other loans
48
55
60
67
62
(13)
(23)
58
69
(16)
Total average loans held for investment
$
252,566
$
245,822
$
242,241
$
241,505
$
240,027
3
5
$
245,565
$
233,272
5
2017 Q4 vs.
Year Ended December 31,
2017
2017
2017
2017
2016
2017
2016
2017 vs.
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Net Charge-Off (Recovery) Rates
Credit card:
Domestic credit card(1)
5.08
%
4.64
%
5.11
%
5.14
%
4.66
%
44
bps
42
bps
4.99
%
4.16
%
83
bps
International card businesses
3.92
3.08
4.08
3.69
3.35
84
57
3.69
3.33
36
Total credit card(1)
4.99
4.51
5.02
5.02
4.56
48
43
4.88
4.09
79
Consumer banking:
Auto
2.12
1.96
1.70
1.64
2.07
16
5
1.86
1.69
17
Home loan
0.23
0.02
0.04
0.03
0.08
21
15
0.08
0.06
2
Retail banking
1.94
2.10
1.71
1.92
1.73
(16)
21
1.92
1.53
39
Total consumer banking
1.66
1.47
1.25
1.19
1.45
19
21
1.39
1.15
24
Commercial banking:
Commercial and multifamily real estate
(0.01)
(0.01)
0.03
--
(0.02)
--
1
--
(0.01)
1
Commercial and industrial
1.47
1.64
1.34
0.22
0.80
(17)
67
1.17
0.75
42
Total commercial lending
0.86
0.97
0.81
0.13
0.47
(11)
39
0.69
0.45
24
Small-ticket commercial real estate
(0.05)
0.12
(0.22)
1.05
(0.02)
(17)
(3)
0.24
0.30
(6)
Total commercial banking
0.85
0.96
0.80
0.14
0.47
(11)
38
0.69
0.45
24
Total net charge-offs
2.89
2.61
2.67
2.50
2.48
28
41
2.67
2.17
50
30+ Day Performing Delinquency Rates
Credit card:
Domestic credit card(1)
4.01
%
3.94
%
3.63
%
3.71
%
3.95
%
7
bps
6
bps
4.01
%
3.95
%
6
bps
International card businesses
3.64
3.54
3.28
3.39
3.36
10
28
3.64
3.36
28
Total credit card(1)
3.98
3.91
3.60
3.68
3.91
7
7
3.98
3.91
7
Consumer banking:
Auto
6.51
5.71
5.40
5.03
6.12
80
39
6.51
6.12
39
Home loan
0.20
0.17
0.14
0.15
0.20
3
--
0.20
0.20
--
Retail banking
0.76
0.73
0.54
0.59
0.70
3
6
0.76
0.70
6
Total consumer banking
4.76
4.10
3.79
3.45
4.10
66
66
4.76
4.10
66
Nonperforming Loans and Nonperforming Assets Rates(2)(3)
Credit card:
International card businesses
0.25
%
0.28
%
0.37
%
0.47
%
0.50
%
(3)
bps
(25)
bps
0.25
%
0.50
%
(25)
bps
Total credit card
0.02
0.02
0.03
0.04
0.04
--
(2)
0.02
0.04
(2)
Consumer banking:
Auto
0.70
0.65
0.53
0.36
0.47
5
23
0.70
0.47
23
Home loan
1.00
0.84
1.31
1.27
1.26
16
(26)
1.00
1.26
(26)
Retail banking
1.00
0.97
0.96
0.82
0.86
3
14
1.00
0.86
14
Total consumer banking
0.78
0.71
0.75
0.64
0.72
7
6
0.78
0.72
6
Commercial banking:
Commercial and multifamily real estate
0.15
0.23
0.13
0.13
0.11
(8)
4
0.15
0.11
4
Commercial and industrial
0.63
1.82
1.62
2.02
2.48
(119)
(185)
0.63
2.48
(185)
Total commercial lending
0.43
1.16
1.01
1.25
1.53
(73)
(110)
0.43
1.53
(110)
Small-ticket commercial real estate
1.65
1.59
1.89
1.65
0.85
6
80
1.65
0.85
80
Total commercial banking
0.44
1.16
1.01
1.25
1.53
(72)
(109)
0.44
1.53
(109)
Total nonperforming loans
0.35
0.54
0.53
0.57
0.65
(19)
(30)
0.35
0.65
(30)
Total nonperforming assets
0.41
0.60
0.60
0.66
0.76
(19)
(35)
0.41
0.76
(35)
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 8: Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity
Three Months Ended December 31, 2017
Credit Card
Consumer Banking
(Dollars in millions)
Domestic
International
Total
Auto
Home
Retail
Total
Commercial
Other(4)
Total
Card
Card
Credit
Loan
Banking Consumer
Banking
Businesses
Card
Banking
Allowance for loan and lease losses:
Balance as of September 30, 2017
$
5,155
$
379
$
5,534
$
1,083
$
59
$
71
$
1,213
$
669
$
2
$
7,418
Charge-offs
(1,555)
(122)
(1,677)
(454)
(13)
(21)
(488)
(147)
2
(2,310)
Recoveries
271
34
305
168
3
5
176
4
(3)
482
Net charge-offs
(1,284)
(88)
(1,372)
(286)
(10)
(16)
(312)
(143)
(1)
(1,828)
Provision for loan and lease losses
1,402
84
1,486
322
9
10
341
103
--
1,930
Allowance build (release) for loan and lease losses
118
(4)
114
36
(1)
(6)
29
(40)
(1)
102
Other changes(5)
--
--
--
--
--
--
--
(18)
--
(18)
Balance as of December 31, 2017
5,273
375
5,648
1,119
58
65
1,242
611
1
7,502
Reserve for unfunded lending commitments:
Balance as of September 30, 2017
--
--
--
--
--
8
8
120
--
128
Benefit for losses on unfunded lending commitments
--
--
--
--
--
(1)
(1)
(3)
--
(4)
Balance as of December 31, 2017
--
--
--
--
--
7
7
117
--
124
Combined allowance and reserve as of December 31, 2017
$
5,273
$
375
$
5,648
$
1,119
$
58
$
72
$
1,249
$
728
$
1
$
7,626
Year Ended December 31, 2017
Credit Card
Consumer Banking
(Dollars in millions)
Domestic
International
Total
Auto
Home
Retail
Total
Commercial
Other(4)
Total
Card
Card
Credit
Loan
Banking Consumer
Banking
Businesses
Card
Banking
Allowance for loan and lease losses:
Balance as of December 31, 2016
$
4,229
$
377
$
4,606
$
957
$
65
$
80
$
1,102
$
793
$
2
$
6,503
Charge-offs
(5,844)
(477)
(6,321)
(1,573)
(22)
(82)
(1,677)
(481)
(34)
(8,513)
Recoveries
1,105
162
1,267
616
7
16
639
16
29
1,951
Net charge-offs
(4,739)
(315)
(5,054)
(957)
(15)
(66)
(1,038)
(465)
(5)
(6,562)
Provision for loan and lease losses
5,783
283
6,066
1,119
10
51
1,180
313
4
7,563
Allowance build (release) for loan and lease losses
1,044
(32)
1,012
162
(5)
(15)
142
(152)
(1)
1,001
Other changes(5)
--
30
30
--
(2)
--
(2)
(30)
--
(2)
Balance as of December 31, 2017
5,273
375
5,648
1,119
58
65
1,242
611
1
7,502
Reserve for unfunded lending commitments:
Balance as of December 31, 2016
--
--
--
--
--
7
7
129
--
136
Benefit for losses on unfunded lending commitments
--
--
--
--
--
--
--
(12)
--
(12)
Balance as of December 31, 2017
--
--
--
--
--
7
7
117
--
124
Combined allowance and reserve as of December 31, 2017
$
5,273
$
375
$
5,648
$
1,119
$
58
$
72
$
1,249
$
728
$
1
$
7,626
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 9: Financial Summary--Business Segment Results
Three Months Ended December 31, 2017
Year Ended December 31, 2017
(Dollars in millions)
Credit
Consumer
Commercial
Other(6)
Total
Credit
Consumer
Commercial
Other(6)
Total
Card
Banking
Banking
Card
Banking
Banking
Net interest income
$
3,568
$
1,636
$
566
$
43
$
5,813
$
13,648
$
6,380
$
2,261
$
171
$
22,460
Non-interest income
847
179
188
(14)
1,200
3,325
749
708
(5)
4,777
Total net revenue(7)
4,415
1,815
754
29
7,013
16,973
7,129
2,969
166
27,237
Provision for credit losses
1,486
340
100
--
1,926
6,066
1,180
301
4
7,551
Non-interest expense
2,108
1,081
437
153
3,779
7,916
4,233
1,603
442
14,194
Income (loss) from continuing operations before income taxes
821
394
217
(124)
1,308
2,991
1,716
1,065
(280)
5,492
Income tax provision
297
144
79
1,650
2,170
1,071
626
389
1,289
3,375
Income (loss) from continuing operations, net of tax
$
524
$
250
$
138
$
(1,774)
$
(862)
$
1,920
$
1,090
$
676
$
(1,569)
$
2,117
Three Months Ended September 30, 2017
(Dollars in millions)
Credit
Consumer
Commercial
Other
Total
Card
Banking
Banking
Net interest income
$
3,440
$
1,649
$
560
$
51
$
5,700
Non-interest income
865
192
179
49
1,285
Total net revenue(7)
4,305
1,841
739
100
6,985
Provision for credit losses
1,466
293
63
11
1,833
Non-interest expense
1,961
1,051
394
161
3,567
Income (loss) from continuing operations before income taxes
878
497
282
(72)
1,585
Income tax provision (benefit)
306
181
103
(142)
448
Income from continuing operations, net of tax
$
572
$
316
$
179
$
70
$
1,137
Three Months Ended December 31, 2016
Year Ended December 31, 2016
(Dollars in millions)
Credit
Consumer
Commercial
Other
Total
Credit
Consumer
Commercial
Other
Total
Card
Banking
Banking
Card
Banking
Banking
Net interest income
$
3,353
$
1,498
$
565
$
31
$
5,447
$
12,635
$
5,829
$
2,216
$
193
$
20,873
Non-interest income
849
166
175
(71)
1,119
3,380
733
578
(63)
4,628
Total net revenue (loss)(7)
4,202
1,664
740
(40)
6,566
16,015
6,562
2,794
130
25,501
Provision (benefit) for credit losses
1,322
365
66
(1)
1,752
4,926
1,055
483
(5)
6,459
Non-interest expense
2,073
1,109
393
104
3,679
7,703
4,139
1,407
309
13,558
Income (loss) from continuing operations before income taxes
807
190
281
(143)
1,135
3,386
1,368
904
(174)
5,484
Income tax provision (benefit)
295
70
102
(125)
342
1,226
498
329
(339)
1,714
Income (loss) from continuing operations, net of tax
$
512
$
120
$
179
$
(18)
$
793
$
2,160
$
870
$
575
$
165
$
3,770
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 10: Financial & Statistical Summary--Credit Card Business
2017 Q4 vs.
Year Ended December 31,
2017
2017
2017
2017
2016
2017
2016
2017 vs.
(Dollars in millions, except as noted)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Credit Card
Earnings:
Net interest income
$
3,568
$
3,440
$
3,294
$
3,346
$
3,353
4
%
6
%
$
13,648
$
12,635
8
%
Non-interest income
847
865
875
738
849
(2)
--
3,325
3,380
(2)
Total net revenue
4,415
4,305
4,169
4,084
4,202
3
5
16,973
16,015
6
Provision for credit losses
1,486
1,466
1,397
1,717
1,322
1
12
6,066
4,926
23
Non-interest expense
2,108
1,961
1,918
1,929
2,073
7
2
7,916
7,703
3
Income from continuing operations before income taxes
821
878
854
438
807
(6)
2
2,991
3,386
(12)
Income tax provision
297
306
301
167
295
(3)
1
1,071
1,226
(13)
Income from continuing operations, net of tax
$
524
$
572
$
553
$
271
$
512
(8)
2
$
1,920
$
2,160
(11)
Selected performance metrics:
Period-end loans held for investment
$
114,762
$
109,130
$
101,590
$
99,213
$
105,552
5
9
$
114,762
$
105,552
9
Average loans held for investment
110,029
102,545
100,043
101,169
100,791
7
9
103,468
96,560
7
Average yield on loans held for investment(8)
15.13
%
15.58
%
15.14
%
14.99
%
14.93
%
(45) bps
20
bps
15.21
%
14.68
%
53
bps
Total net revenue margin(9)
16.05
16.79
16.67
16.14
16.68
(74)
(63)
16.40
16.59
(19)
Net charge-off rate(1)
4.99
4.51
5.02
5.02
4.56
48
43
4.88
4.09
79
30+ day performing delinquency rate(1)
3.98
3.91
3.60
3.68
3.91
7
7
3.98
3.91
7
30+ day delinquency rate
3.99
3.92
3.62
3.71
3.94
7
5
3.99
3.94
5
Nonperforming loan rate(2)
0.02
0.02
0.03
0.04
0.04
--
(2)
0.02
0.04
(2)
Purchase volume(10)
$
95,659
$
84,505
$
83,079
$
73,197
$
82,824
13
%
15
%
$
336,440
$
307,138
10
%
2017 Q4 vs.
Year Ended December 31,
2017
2017
2017
2017
2016
2017
2016
2017 vs.
(Dollars in millions, except as noted)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Domestic Card
Earnings:
Net interest income
$
3,268
$
3,132
$
3,011
$
3,093
$
3,090
4
%
6
%
$
12,504
$
11,571
8
%
Non-interest income
781
787
802
699
791
(1)
(1)
3,069
3,116
(2)
Total net revenue
4,049
3,919
3,813
3,792
3,881
3
4
15,573
14,687
6
Provision for credit losses
1,402
1,417
1,327
1,637
1,229
(1)
14
5,783
4,555
27
Non-interest expense
1,880
1,754
1,727
1,717
1,859
7
1
7,078
6,895
3
Income from continuing operations before income taxes
767
748
759
438
793
3
(3)
2,712
3,237
(16)
Income tax provision
280
273
277
160
288
3
(3)
990
1,178
(16)
Income from continuing operations, net of tax
$
487
$
475
$
482
$
278
$
505
3
(4)
$
1,722
$
2,059
(16)
Selected performance metrics:
Period-end loans held for investment
$
105,293
$
99,981
$
92,866
$
91,092
$
97,120
5
8
$
105,293
$
97,120
8
Average loans held for investment
101,087
93,729
91,769
93,034
92,623
8
9
94,923
88,394
7
Average yield on loans held for investment(8)
15.08
%
15.51
%
15.07
%
15.01
%
14.91
%
(43) bps
17
bps
15.16
%
14.62
%
54
bps
Total net revenue margin(9)
16.03
16.72
16.62
16.30
16.76
(69)
(73)
16.41
16.62
(21)
Net charge-off rate(1)
5.08
4.64
5.11
5.14
4.66
44
42
4.99
4.16
83
30+ day delinquency rate
4.01
3.94
3.63
3.71
3.95
7
6
4.01
3.95
6
Purchase volume(10)
$
87,287
$
76,806
$
75,781
$
66,950
$
75,639
14
%
15
%
$
306,824
$
280,637
9
%
Refreshed FICO scores:(11)
Greater than 660
66
%
65
%
64
%
63
%
64
%
1
2
66
%
64
%
2
660 or below
34
35
36
37
36
(1)
(2)
34
36
(2)
Total
100
%
100
%
100
%
100
%
100
%
100
%
100
%
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 11: Financial & Statistical Summary--Consumer Banking Business
2017 Q4 vs.
Year Ended December 31,
2017
2017
2017
2017
2016
2017
2016
2017 vs.
(Dollars in millions, except as noted)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Consumer Banking
Earnings:
Net interest income
$
1,636
$
1,649
$
1,578
$
1,517
$
1,498
(1)
%
9
%
$
6,380
$
5,829
9
%
Non-interest income
179
192
183
195
166
(7)
8
749
733
2
Total net revenue
1,815
1,841
1,761
1,712
1,664
(1)
9
7,129
6,562
9
Provision for credit losses
340
293
268
279
365
16
(7)
1,180
1,055
12
Non-interest expense
1,081
1,051
1,059
1,042
1,109
3
(3)
4,233
4,139
2
Income from continuing operations before income taxes
394
497
434
391
190
(21)
107
1,716
1,368
25
Income tax provision
144
181
158
143
70
(20)
106
626
498
26
Income from continuing operations, net of tax
$
250
$
316
$
276
$
248
$
120
(21)
108
$
1,090
$
870
25
Selected performance metrics:
Period-end loans held for investment
$
75,078
$
75,564
$
74,973
$
73,982
$
73,054
(1)
3
$
75,078
$
73,054
3
Average loans held for investment
75,289
75,363
74,469
73,331
72,659
--
4
74,621
71,422
4
Average yield on loans held for investment(8)
6.84
%
6.79
%
6.56
%
6.48
%
6.50
%
5
bps
34
bps
6.67
%
6.34
%
33
bps
Auto loan originations
$
6,215
$
7,043
$
7,453
$
7,025
$
6,542
(12) %
(5)
%
$
27,737
$
25,719
8
%
Period-end deposits
185,842
184,719
186,607
188,216
181,917
1
2
185,842
181,917
2
Average deposits
184,799
185,072
186,989
183,936
180,019
--
3
185,201
177,129
5
Average deposits interest rate
0.69
%
0.62
%
0.59
%
0.57
%
0.57
%
7
bps
12
bps
0.62
%
0.56
%
6
bps
Net charge-off rate
1.66
1.47
1.25
1.19
1.45
19
21
1.39
1.15
24
30+ day performing delinquency rate
4.76
4.10
3.79
3.45
4.10
66
66
4.76
4.10
66
30+ day delinquency rate
5.34
4.61
4.33
3.93
4.67
73
67
5.34
4.67
67
Nonperforming loan rate(2)
0.78
0.71
0.75
0.64
0.72
7
6
0.78
0.72
6
Nonperforming asset rate(3)
0.91
0.88
0.96
0.92
1.09
3
(18)
0.91
1.09
(18)
Auto--At origination FICO scores:(12)
Greater than 660
51
%
51
%
51
%
51
%
52
%
--
(1)
%
51
%
52
%
(1)
%
621 - 660
18
18
18
18
17
--
1
18
17
1
620 or below
31
31
31
31
31
--
--
31
31
--
Total
100
%
100
%
100
%
100
%
100
%
100
%
100
%
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 12: Financial & Statistical Summary--Commercial Banking Business
2017 Q4 vs.
Year Ended December 31,
2017
2017
2017
2017
2016
2017
2016
2017 vs.
(Dollars in millions, except as noted)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Commercial Banking
Earnings:
Net interest income
$
566
$
560
$
569
$
566
$
565
1
%
--
$
2,261
$
2,216
2
%
Non-interest income
188
179
183
158
175
5
7
%
708
578
22
Total net revenue(7)
754
739
752
724
740
2
2
2,969
2,794
6
Provision (benefit) for credit losses
100
63
140
(2)
66
59
52
301
483
(38)
Non-interest expense
437
394
381
391
393
11
11
1,603
1,407
14
Income from continuing operations before income taxes
217
282
231
335
281
(23)
(23)
1,065
904
18
Income tax provision
79
103
85
122
102
(23)
(23)
389
329
18
Income from continuing operations, net of tax
$
138
$
179
$
146
$
213
$
179
(23)
(23)
$
676
$
575
18
Selected performance metrics:
Period-end loans held for investment
$
64,575
$
67,670
$
67,672
$
67,320
$
66,916
(5)
(3)
$
64,575
$
66,916
(3)
Average loans held for investment
67,200
67,859
67,669
66,938
66,515
(1)
1
67,418
65,221
3
Average yield on loans held for investment(7)(8)
4.03
%
3.98
%
3.81
%
3.65
%
3.55
%
5
bps
48
bps
3.87
%
3.47
%
40
bps
Period-end deposits
$
33,938
$
32,783
$
33,153
$
33,735
$
33,866
4
%
--
$
33,938
$
33,866
--
Average deposits
34,117
33,197
34,263
34,219
34,029
3
--
33,947
33,841
--
Average deposits interest rate
0.46
%
0.42
%
0.36
%
0.31
%
0.30
%
4
bps
16
bps
0.39
%
0.28
%
11
bps
Net charge-off rate
0.85
0.96
0.80
0.14
0.47
(11)
38
0.69
0.45
24
Nonperforming loan rate(2)
0.44
1.16
1.01
1.25
1.53
(72)
(109)
0.44
1.53
(109)
Nonperforming asset rate(3)
0.52
1.22
1.04
1.27
1.54
(70)
(102)
0.52
1.54
(102)
Risk category:(13)
Noncriticized
$
61,162
$
63,501
$
63,802
$
63,390
$
62,828
(4)
%
(3)
%
$
61,162
$
62,828
(3)
%
Criticized performing
2,649
2,878
2,660
2,492
2,453
(8)
8
2,649
2,453
8
Criticized nonperforming
284
788
686
844
1,022
(64)
(72)
284
1,022
(72)
PCI loans
480
503
524
594
613
(5)
(22)
480
613
(22)
Total commercial loans
$
64,575
$
67,670
$
67,672
$
67,320
$
66,916
(5)
(3)
$
64,575
$
66,916
(3)
Risk category as a percentage of period-end loans held for investment:(13)
Noncriticized
94.7
%
93.8
%
94.3
%
94.2
%
93.9
%
90
bps
80
bps
94.7
%
93.9
%
80
bps
Criticized performing
4.1
4.3
3.9
3.7
3.7
(20)
40
4.1
3.7
40
Criticized nonperforming
0.4
1.2
1.0
1.2
1.5
(80)
(110)
0.4
1.5
(110)
PCI loans
0.8
0.7
0.8
0.9
0.9
10
(10)
0.8
0.9
(10)
Total commercial loans
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
100.0
%
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 13: Financial & Statistical Summary--Other and Total
2017 Q4 vs.
Year Ended December 31,
2017
2017
2017
2017
2016
2017
2016
2017 vs.
(Dollars in millions)
Q4
Q3
Q2
Q1
Q4
Q3
Q4
2017
2016
2016
Other(6)
Earnings:
Net interest income
$
43
$
51
$
32
$
45
$
31
(16) %
39
%
$
171
$
193
(11) %
Non-interest income
(14)
49
(10)
(30)
(71)
**
(80)
(5)
(63)
(92)
Total net revenue (loss)(7)
29
100
22
15
(40)
(71)
**
166
130
28
Provision (benefit) for credit losses
--
11
(5)
(2)
(1)
**
**
4
(5)
**
Non-interest expense(14)
153
161
56
72
104
(5)
47
442
309
43
Loss from continuing operations before income taxes
(124)
(72)
(29)
(55)
(143)
72
(13)
(280)
(174)
61
Income tax provision (benefit)
1,650
(142)
(101)
(118)
(125)
**
**
1,289
(339)
**
Income (loss) from continuing operations, net of tax
$
(1,774)
$
70
$
72
$
63
$
(18)
**
**
$
(1,569)
$
165
**
Selected performance metrics:
Period-end loans held for investment
$
58
$
58
$
67
$
73
$
64
--
(9)
$
58
$
64
(9)
Average loans held for investment
48
55
60
67
62
(13)
(23)
58
69
(16)
Period-end deposits
23,922
21,560
20,003
19,231
20,985
11
14
23,922
20,985
14
Average deposits
22,646
20,574
19,298
20,395
18,156
10
25
20,734
12,744
63
Total
Earnings:
Net interest income
$
5,813
$
5,700
$
5,473
$
5,474
$
5,447
2
%
7
%
$
22,460
$
20,873
8
%
Non-interest income
1,200
1,285
1,231
1,061
1,119
(7)
7
4,777
4,628
3
Total net revenue
7,013
6,985
6,704
6,535
6,566
--
7
27,237
25,501
7
Provision for credit losses
1,926
1,833
1,800
1,992
1,752
5
10
7,551
6,459
17
Non-interest expense
3,779
3,567
3,414
3,434
3,679
6
3
14,194
13,558
5
Income from continuing operations before income taxes
1,308
1,585
1,490
1,109
1,135
(17)
15
5,492
5,484
--
Income tax provision
2,170
448
443
314
342
**
**
3,375
1,714
97
Income (loss) from continuing operations, net of tax
$
(862)
$
1,137
$
1,047
$
795
$
793
**
**
$
2,117
$
3,770
(44)
Selected performance metrics:
Period-end loans held for investment
$
254,473
$
252,422
$
244,302
$
240,588
$
245,586
1
4
$
254,473
$
245,586
4
Average loans held for investment
252,566
245,822
242,241
241,505
240,027
3
5
245,565
233,272
5
Period-end deposits
243,702
239,062
239,763
241,182
236,768
2
3
243,702
236,768
3
Average deposits
241,562
238,843
240,550
238,550
232,204
1
4
239,882
223,714
7
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 14: Notes to Loan, Allowance and Business Segment Disclosures (Tables 7--13)
(1)
On September 25, 2017, we completed the Cabela’s acquisition. The total credit card and domestic credit card metrics as of and for the three months and year ended December 31, 2017 include the impact of this acquisition. Excluding this impact (i) the total credit card and domestic credit card net charge-off rates for the three months ended December 31, 2017 would have been 5.24% and 5.36%, respectively; (ii) the total credit card and domestic credit card net charge-off rates for the year ended December 31, 2017 would have been 4.95% and 5.07%, respectively; and (iii) the total credit card and domestic credit card 30+ day performing delinquency rates as of December 31, 2017 would have been 4.14% and 4.18%, respectively.
(2)
Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.
(3)
Nonperforming assets consist of nonperforming loans, real estate owned ("REO") and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment, REO and other foreclosed assets.
(4)
Primarily consists of the legacy loan portfolio of our discontinued GreenPoint mortgage operations.
(5)
Represents foreign currency translation adjustments and the net impact of loan transfers and sales.
(6)
Charges for the impacts of the Tax Act of $1.77 billion are reflected in the Other category of our business segment results for Q4 2017 and the year ended December 31, 2017. This amount is a reasonable estimate as of December 31, 2017, which may be adjusted during the measurement period ending no later than December 2018. The Tax Act refers to the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on budget for fiscal year 2018 enacted on December 22, 2017.
(7)
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 (35% for all periods presented) with offsetting reclassifications to the Other category.
(8)
Average yield on loans held for investment is calculated based on annualized interest income for the period divided by average loans held for investment during the period for the respective loan category. Annualized interest income is computed based on the effective yield of the respective loan category and does not include any allocations, such as funds transfer pricing.
(9)
Total net revenue margin is calculated based on annualized total net revenue for the period divided by average loans held for investment during the period for the respective loan category.
(10)
Purchase volume consists of purchase transactions, net of returns, for the period for loans both classified as held for investment and held for sale, and excludes cash advance and balance transfer transactions.
(11)
Percentages represent period-end loans held for investment in each credit score category. Domestic card credit scores generally represent FICO scores. These scores are obtained from one of the major credit bureaus at origination and are refreshed monthly thereafter. We approximate non-FICO credit scores to comparable FICO scores for consistency purposes. Balances for which no credit score is available or the credit score is invalid are included in the 660 or below category.
(12)
Percentages represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.
(13)
Criticized exposures correspond to the "Special Mention," "Substandard" and "Doubtful" asset categories defined by bank regulatory authorities.
(14)
Includes charges incurred as a result of restructuring activities.
**
Not meaningful.
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures(1)
Basel III Standardized Approach
(Dollars in millions, except as noted)
December 31,
September 30,
June 30,
March 31,
December 31,
2017
2017
2017
2017
2016
Regulatory Capital Metrics
Common equity excluding AOCI
$
45,296
$
46,415
$
45,459
$
44,614
$
44,103
Adjustments:
AOCI(2)(3)
(808)
(538)
(593)
(807)
(674)
Goodwill, net of related deferred tax liabilities
(14,380)
(14,300)
(14,299)
(14,302)
(14,307)
Intangible assets, net of related deferred tax liabilities(3)
(330)
(372)
(419)
(465)
(384)
Other
258
93
78
121
65
Common equity Tier 1 capital
$
30,036
$
31,298
$
30,226
$
29,161
$
28,803
Tier 1 capital
$
34,396
$
35,657
$
34,585
$
33,519
$
33,162
Total capital(4)
41,963
43,272
42,101
40,979
40,817
Risk-weighted assets
292,256
292,041
283,231
279,302
285,756
Adjusted average assets(5)
348,424
340,579
335,248
336,990
335,835
Capital Ratios
Common equity Tier 1 capital(6)
10.3
%
10.7
%
10.7
%
10.4
%
10.1
%
Tier 1 capital(7)
11.8
12.2
12.2
12.0
11.6
Total capital(8)
14.4
14.8
14.9
14.7
14.3
Tier 1 leverage(5)
9.9
10.5
10.3
9.9
9.9
Tangible common equity ("TCE")(9)
8.3
8.8
8.8
8.5
8.1
Reconciliation of Non-GAAP Measures
The following non-GAAP measures consist of our adjusted results that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.
Three Months Ended
Nine Months Ended
Year Ended
December 31, 2017
September 30, 2017
December 31, 2017
(Dollars in millions, except per share data and as noted)
Reported
Adj.(10)
Adjusted
Reported
Adj.(10)
Adjusted
Reported
Adj.(10)
Adjusted
Results
Results
Results
Results
Results
Results
Selected income statement data:
Net interest income
$
5,813
$
11
$
5,824
$
16,647
$
33
$
16,680
$
22,460
$
44
$
22,504
Non-interest income
1,200
9
1,209
3,577
37
3,614
4,777
46
4,823
Total net revenue
7,013
20
7,033
20,224
70
20,294
27,237
90
27,327
Provision for credit losses
1,926
--
1,926
5,625
(88)
5,537
7,551
(88)
7,463
Non-interest expense
3,779
(87)
3,692
10,415
(166)
10,249
14,194
(253)
13,941
Income from continuing operations before income taxes
1,308
107
1,415
4,184
324
4,508
5,492
431
5,923
Income tax provision (benefit)
2,170
(1,742)
428
1,205
82
1,287
3,375
(1,660)
1,715
Income (loss) from continuing operations, net of tax
(862)
1,849
987
2,979
242
3,221
2,117
2,091
4,208
Income (loss) from discontinued operations, net of tax
(109)
--
(109)
(26)
--
(26)
(135)
--
(135)
Net income (loss)
(971)
1,849
878
2,953
242
3,195
1,982
2,091
4,073
Dividends and undistributed earnings allocated to participating securities(12)
(1)
(5)
(6)
(21)
--
(21)
(13)
(15)
(28)
Preferred stock dividends
(80)
--
(80)
(185)
--
(185)
(265)
--
(265)
Net income (loss) available to common stockholders
$
(1,052)
$
1,844
$
792
$
2,747
$
242
$
2,989
$
1,704
$
2,076
$
3,780
Selected performance metrics:
Diluted EPS(12)
$
(2.17)
$
3.79
$
1.62
$
5.63
$
0.49
$
6.12
$
3.49
$
4.25
$
7.74
Efficiency ratio
53.89
%
(139)
bps
52.50
%
51.50
%
(100)
bps
50.50
%
52.11
%
(109)
bps
51.02
%
Three Months Ended
Nine Months Ended
Year Ended
December 31, 2016
September 30, 2016
December 31, 2016
(Dollars in millions, except per share data and as noted)
Reported
Adj.(11)
Adjusted
Reported
Adj.(11)
Adjusted
Reported
Adj.(11)
Adjusted
Results
Results
Results
Results
Results
Results
Selected income statement data:
Net interest income
$
5,447
$
13
$
5,460
$
15,426
$
41
$
15,467
$
20,873
$
54
$
20,927
Non-interest income
1,119
14
1,133
3,509
21
3,530
4,628
35
4,663
Total net revenue
6,566
27
6,593
18,935
62
18,997
25,501
89
25,590
Provision for credit losses
1,752
--
1,752
4,707
--
4,707
6,459
--
6,459
Non-interest expense
3,679
(45)
3,634
9,879
(31)
9,848
13,558
(76)
13,482
Income from continuing operations before income taxes
1,135
72
1,207
4,349
93
4,442
5,484
165
5,649
Income tax provision (benefit)
342
10
352
1,372
(7)
1,365
1,714
3
1,717
Income from continuing operations, net of tax
793
62
855
2,977
100
3,077
3,770
162
3,932
Income (loss) from discontinued operations, net of tax
(2)
--
(2)
(17)
--
(17)
(19)
--
(19)
Net income
791
62
853
2,960
100
3,060
3,751
162
3,913
Dividends and undistributed earnings allocated to participating securities(12)
(6)
--
(6)
(18)
--
(18)
(24)
--
(24)
Preferred stock dividends
(75)
--
(75)
(139)
--
(139)
(214)
--
(214)
Net income available to common stockholders
$
710
$
62
$
772
$
2,803
$
100
$
2,903
$
3,513
$
162
$
3,675
Selected performance metrics:
Diluted EPS(12)
$
1.45
$
0.13
$
1.58
$
5.42
$
0.20
$
5.62
$
6.89
$
0.32
$
7.21
Efficiency ratio
56.03
%
(91)
bps
55.12
%
52.17
%
(33)
bps
51.84
%
53.17
%
(49)
bps
52.68
%
Reconciliation of Non-GAAP Measures
The following non-GAAP measures consist of tangible common equity ("TCE"), tangible assets and metrics computed using these amounts, which include tangible book value per common share, return on average tangible assets, return on average TCE and TCE ratio. We consider these metrics to be key financial performance measures that management uses in assessing capital adequacy and the level of returns generated. While our non-GAAP 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. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.
2017
2017
2017
2017
2016
(Dollars in millions)
Q4
Q3
Q2
Q1
Q4
Tangible Common Equity (Period-End)
Stockholders’ equity
$
48,730
$
50,154
$
49,137
$
48,040
$
47,514
Goodwill and intangible assets(13)
(15,106)
(15,249)
(15,301)
(15,360)
(15,420)
Noncumulative perpetual preferred stock
(4,360)
(4,360)
(4,360)
(4,360)
(4,360)
Tangible common equity
$
29,264
$
30,545
$
29,476
$
28,320
$
27,734
Tangible Common Equity (Average)
Stockholders’ equity
$
50,710
$
50,176
$
49,005
$
48,193
$
47,972
Goodwill and intangible assets(13)
(15,223)
(15,277)
(15,336)
(15,395)
(15,455)
Noncumulative perpetual preferred stock
(4,360)
(4,360)
(4,360)
(4,360)
(4,051)
Tangible common equity
$
31,127
$
30,539
$
29,309
$
28,438
$
28,466
Tangible Assets (Period-End)
Total assets
$
365,693
$
361,402
$
350,593
$
348,549
$
357,033
Goodwill and intangible assets(13)
(15,106)
(15,249)
(15,301)
(15,360)
(15,420)
Tangible assets
$
350,587
$
346,153
$
335,292
$
333,189
$
341,613
Tangible Assets (Average)
Total assets
$
363,045
$
355,191
$
349,891
$
351,641
$
350,225
Goodwill and intangible assets(13)
(15,223)
(15,277)
(15,336)
(15,395)
(15,455)
Tangible assets
$
347,822
$
339,914
$
334,555
$
336,246
$
334,770
__________
(1)
Regulatory capital metrics and capital ratios as of December 31, 2017 are preliminary and therefore subject to change.
(2)
Amounts presented are net of tax.
(3)
Amounts based on transition provisions for regulatory capital deductions and adjustments of 60% for 2016 and 80% for 2017.
(4)
Total capital equals the sum of Tier 1 capital and Tier 2 capital.
(5)
Adjusted average assets for the purpose of calculating our Tier 1 leverage ratio represents total average assets adjusted for amounts that are deducted from Tier 1 capital, predominately goodwill and intangible assets. Tier 1
leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets.
(6)
Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on common equity Tier 1 capital divided by risk-weighted assets.
(7)
Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.
(8)
Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets.
(9)
TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets.
(10)
The adjustments in 2017 consist of:
Three Months Ended
Nine Months Ended
Year Ended
(Dollars in millions)
December 31, 2017
September 30, 2017
December 31, 2017
Impacts of the Tax Act
$
1,769
--
$
1,769
Restructuring charges
76
$
108
184
U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve")
31
99
130
Charges related to the Cabela’s acquisition
--
117
117
Total
1,876
324
2,200
Income tax provision (benefit)
27
82
109
Net income (loss)
$
1,849
$
242
$
2,091
(11)
The adjustments in 2016 consist of:
Three Months Ended
Nine Months Ended
Year Ended
(Dollars in millions)
December 31, 2016
September 30, 2016
December 31, 2016
U.K. PPI Reserve
$
44
$
117
$
161
Impairment associated with certain acquired intangible and software assets
28
--
28
Gain related to the exchange of our ownership interest in Visa Europe with Visa Inc. as a result of Visa Inc’s acquisition of Visa Europe
--
(24)
(24)
Total
72
93
165
Income tax provision (benefit)
10
(7)
3
Net income (loss)
$
62
$
100
$
162
(12)
Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total.
(13)
Includes impact of related deferred taxes.

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SOURCE Capital One Financial Corporation

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