COF
$95.98
Capital One Financial
$.07
.07%
Earnings Details
1st Quarter March 2018
Tuesday, April 24, 2018 4:05:00 PM
Tweet Share Watch
Summary

Capital One Financial Beats

Capital One Financial (COF) reported 1st Quarter March 2018 earnings of $2.65 per share on revenue of $7.8 billion. The consensus earnings estimate was $2.34 per share on revenue of $7.0 billion. The Earnings Whisper number was $2.34 per share. Revenue grew 19.8% 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
$2.65
Earnings Whisper
$2.34
Consensus Estimate
$2.34
Reported Revenue
$7.83 Bil
Revenue Estimate
$6.95 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Capital One Reports First Quarter 2018 Net Income of $1.3 billion, or $2.62 per share

MCLEAN, Va., April 24, 2018 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the first quarter of 2018 of $1.3 billion, or $2.62 per diluted common share, compared with a net loss of $971 million, or $2.17 per diluted common share in the fourth quarter of 2017, and with net income of $810 million, or $1.54 per diluted common share in the first quarter of 2017. During the quarter, we recorded $19 million of restructuring charges. Excluding this adjusting item, net income for the first quarter of 2018 was $2.65 per diluted common share(1).

Capital One

"In the first quarter, Capital One delivered year-over-year growth in loans, deposits, revenues and pre-provision earnings," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "We continue to build an enduringly great franchise with the scale, brand, capabilities and infrastructure to succeed as the digital revolution transforms banking."

All comparisons below are for the first quarter of 2018 compared with the fourth quarter of 2017 unless otherwise noted. 

First Quarter 2018 Income Statement Summary:

  • Total net revenue decreased 1 percent to $6.9 billion.
  • Total non-interest expense decreased 5 percent to $3.6 billion:
    • 5 percent decrease in operating expenses.
    • 10 percent decrease in marketing.
  • Pre-provision earnings increased 3 percent to $3.3 billion(2)
  • Provision for credit losses decreased 13 percent to $1.7 billion:
    • Net charge-offs of $1.6 billion.
    • $56 million reserve build.
  • Net interest margin of 6.93 percent, down 10 basis points.
  • Efficiency ratio of 51.72 percent.
    • Efficiency ratio excluding adjusting items was 51.45 percent(1).

First Quarter 2018 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 10.5 percent at March 31, 2018.
  • Period-end loans held for investment in the quarter decreased $6.2 billion, or 2 percent, to $248.3 billion.
    • Credit Card period-end loans decreased $7.2 billion, or 6 percent, to $107.6 billion.
      • Domestic Card period-end loans decreased $6.8 billion, or 6 percent, to $98.5 billion.
    • Consumer Banking period-end loans decreased $404 million, or 1 percent, to $74.7 billion:
      • Auto period-end loans increased $820 million, or 2 percent, to $54.8 billion.
      • Home loans period-end loans decreased $1.0 billion, or 6 percent, to $16.6 billion, primarily driven by run-off of acquired portfolios. 
    • Commercial Banking period-end loans increased $1.4 billion, or 2 percent, to $66.0 billion.
  • Average loans held for investment in the quarter decreased $2.8 billion, or 1 percent, to $249.7 billion.
    • Credit Card average loans decreased $527 million, or less than 1 percent, to $109.5 billion.
      • Domestic Card average loans decreased $637 million, or 1 percent, to $100.5 billion.
    • Consumer Banking average loans decreased $292 million, or less than 1 percent, to $75.0 billion:
      • Auto average loans increased $597 million, or 1 percent, to $54.3 billion.
      • Home loans average loans decreased $885 million, or 5 percent, to $17.2 billion, primarily driven by run-off of acquired portfolios.
    • Commercial Banking average loans decreased $2.0 billion, or 3 percent, to $65.2 billion.
  • Period-end total deposits increased $7.1 billion, or 3 percent, to $250.8 billion, while average deposits increased $3.7 billion, or 2 percent, to $245.3 billion.
  • Interest-bearing deposits rate paid increased 13 basis points to 0.98 percent.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on April 24, 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 May 8, 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, 2017.

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 $250.8 billion in deposits and $362.9 billion in total assets as of March 31, 2018. 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)

First Quarter 2018

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

9


Table 7:

Loan Information and Performance Statistics

10


Table 8:

Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity

12

Business Segment Results



Table 9:

Financial Summary—Business Segment Results

13


Table 10:

Financial & Statistical Summary—Credit Card Business

14


Table 11:

Financial & Statistical Summary—Consumer Banking Business

16


Table 12:

Financial & Statistical Summary—Commercial Banking Business

17


Table 13:

Financial & Statistical Summary—Other and Total

18


Table 14:

Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)

19

Other



Table 15:

Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP 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 March 31, 2018 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














2018 Q1 vs.

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


2018


2017


2017


2017


2017


2017


2017


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Income Statement















Net interest income


$

5,718



$

5,813



$

5,700



$

5,473



$

5,474



(2)

%


4

%

Non-interest income


1,191



1,200



1,285



1,231



1,061



(1)



12


Total net revenue(1)


6,909



7,013



6,985



6,704



6,535



(1)



6


Provision for credit losses


1,674



1,926



1,833



1,800



1,992



(13)



(16)


Non-interest expense:















Marketing


414



460



379



435



396



(10)



5


Operating expenses


3,159



3,319



3,188



2,979



3,038



(5)



4


Total non-interest expense


3,573



3,779



3,567



3,414



3,434



(5)



4


Income from continuing operations before income taxes


1,662



1,308



1,585



1,490



1,109



27



50


Income tax provision


319



2,170



448



443



314



(85)



2


Income (loss) from continuing operations, net of tax


1,343



(862)



1,137



1,047



795



**


69


Income (loss) from discontinued operations, net of tax


3



(109)



(30)



(11)



15



**


(80)


Net income (loss)


1,346



(971)



1,107



1,036



810



**


66


Dividends and undistributed earnings allocated to participating securities(2)


(10)



(1)



(8)



(8)



(5)



**


100


Preferred stock dividends


(52)



(80)



(52)



(80)



(53)



(35)



(2)


Net income (loss) available to common stockholders


$

1,284



$

(1,052)



$

1,047



$

948



$

752



**


71


Common Share Statistics















Basic earnings per common share:(2)















Net income (loss) from continuing operations


$

2.63



$

(1.95)



$

2.22



$

1.98



$

1.53



**


72

%

Income (loss) from discontinued operations


0.01



(0.22)



(0.06)



(0.02)



0.03



**


(67)


Net income (loss) per basic common share


$

2.64



$

(2.17)



$

2.16



$

1.96



$

1.56



**


69


Diluted earnings per common share:(2)















Net income (loss) from continuing operations


$

2.61



$

(1.95)



$

2.20



$

1.96



$

1.51



**


73


Income (loss) from discontinued operations


0.01



(0.22)



(0.06)



(0.02)



0.03



**


(67)


Net income (loss) per diluted common share


$

2.62



$

(2.17)



$

2.14



$

1.94



$

1.54



**


70


Weighted-average common shares outstanding (in millions):















Basic


486.9



485.7



484.9



484.0



482.3





1


Diluted


490.8



485.7



489.0



488.1



487.9



1

%


1


Common shares outstanding (period-end, in millions)


485.9



485.5



484.4



483.7



482.8





1


Dividends declared and paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.40






Tangible book value per common share (period-end)(3)


61.29



60.28



63.06



60.94



58.66



2



4


























































2018 Q1 vs.

(Dollars in millions)


2018


2017


2017


2017


2017


2017


2017


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Balance Sheet (Period-End)















Loans held for investment(4)


$

248,256



$

254,473



$

252,422



$

244,302



$

240,588



(2)

%


3

%

Interest-earning assets


332,251



334,124



329,002



319,286



316,712



(1)



5


Total assets


362,857



365,693



361,402



350,593



348,549



(1)



4


Interest-bearing deposits


224,671



217,298



212,956



213,810



214,818



3



5


Total deposits


250,847



243,702



239,062



239,763



241,182



3



4


Borrowings


50,693



60,281



59,458



49,954



48,439



(16)



5


Common equity


44,842



44,370



45,794



44,777



43,680



1



3


Total stockholders' equity


49,203



48,730



50,154



49,137



48,040



1



2


Balance Sheet (Average Balances)















Loans held for investment(4)


$

249,726



$

252,566



$

245,822



$

242,241



$

241,505



(1)

%


3

%

Interest-earning assets


330,183



330,742



322,015



318,078



318,358





4


Total assets


362,049



363,045



355,191



349,891



351,641





3


Interest-bearing deposits


219,670



215,258



213,137



214,412



212,973



2



3


Total deposits


245,270



241,562



238,843



240,550



238,550



2



3


Borrowings


54,588



58,109



54,271



48,838



53,357



(6)



2


Common equity


44,670



46,350



45,816



44,645



43,833



(4)



2


Total stockholders' equity


49,031



50,710



50,176



49,005



48,193



(3)



2


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated














2018 Q1 vs.

(Dollars in millions, except as noted)


2018


2017


2017


2017


2017


2017


2017


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Performance Metrics















Net interest income growth (period over period)


(2)

%


2

%


4

%






**


**

Non-interest income growth (period over period)


(1)



(7)



4



16

%


(5)

%


**


**

Total net revenue growth (period over period)


(1)





4



3





**


**

Total net revenue margin(5)


8.37



8.48



8.68



8.43



8.21



(11)

bps


16

bps

Net interest margin(6)


6.93



7.03



7.08



6.88



6.88



(10)



5


Return on average assets


1.48



(0.95)



1.28



1.20



0.90



243



58


Return on average tangible assets(7)


1.55



(0.99)



1.34



1.25



0.95



254



60


Return on average common equity(8)


11.47



(8.14)



9.40



8.59



6.73



**


474


Return on average tangible common equity(9)


17.32



(12.12)



14.11



13.09



10.37



**


695


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


5.72



5.98



5.80



5.64



5.69



(26)



3


Efficiency ratio(10)


51.72



53.89



51.07



50.92



52.55



(217)



(83)


Effective income tax rate for continuing operations


19.2



165.9



28.3



29.7



28.3



**


**

Employees (in thousands), period-end


47.9



49.3



50.4



49.9



48.4



(3)

%


(1)

%

Credit Quality Metrics















Allowance for loan and lease losses


$

7,567



$

7,502



$

7,418



$

7,170



$

6,984



1

%


8

%

Allowance as a percentage of loans held for investment


3.05

%


2.95

%


2.94

%


2.93

%


2.90

%


10

bps


15

bps

Net charge-offs


$

1,618



$

1,828



$

1,606



$

1,618



$

1,510



(11)

%


7

%

Net charge-off rate(11)


2.59

%


2.89

%


2.61

%


2.67

%


2.50

%


(30)

bps


9

bps

30+ day performing delinquency rate


2.72



3.23



2.93



2.69



2.61



(51)



11


30+ day delinquency rate


2.91



3.48



3.24



2.99



2.92



(57)



(1)


Capital Ratios(12)















Common equity Tier 1 capital


10.5

%


10.3

%


10.7

%


10.7

%


10.4

%


20

bps


10

bps

Tier 1 capital


12.0



11.8



12.2



12.2



12.0



20




Total capital


14.5



14.4



14.8



14.9



14.7



10



(20)


Tier 1 leverage


10.1



9.9



10.5



10.3



9.9



20



20


Tangible common equity ("TCE")(13)


8.6



8.3



8.8



8.8



8.5



30



10



 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income














2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

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


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Interest income:















Loans, including loans held for sale


$

6,134



$

6,133



$

5,960



$

5,669



$

5,626





9

%

Investment securities


452



431



431



433



416



5

%


9


Other


51



40



29



26



28



28



82


Total interest income


6,637



6,604



6,420



6,128



6,070





9


Interest expense:















Deposits


539



457



410



382



353



18



53


Securitized debt obligations


107



91



85



82



69



18



55


Senior and subordinated notes


251



209



194



179



149



20



68


Other borrowings


22



34



31



12



25



(35)



(12)


Total interest expense


919



791



720



655



596



16



54


Net interest income


5,718



5,813



5,700



5,473



5,474



(2)



4


Provision for credit losses


1,674



1,926



1,833



1,800



1,992



(13)



(16)


Net interest income after provision for credit losses


4,044



3,887



3,867



3,673



3,482



4



16


Non-interest income:















Interchange fees, net


643



665



662



676



570



(3)



13


Service charges and other customer-related fees


432



394



414



418



371



10



16


Net securities gains (losses)


8



1



68



(4)





**


**

Other


108



140



141



141



120



(23)



(10)


Total non-interest income


1,191



1,200



1,285



1,231



1,061



(1)



12


Non-interest expense:















Salaries and associate benefits


1,520



1,521



1,524



1,383



1,471





3


Occupancy and equipment


490



523



471



474



471



(6)



4


Marketing


414



460



379



435



396



(10)



5


Professional services


210



274



297



279



247



(23)



(15)


Communications and data processing


306



306



294



289



288





6


Amortization of intangibles


44



61



61



61



62



(28)



(29)


Other


589



634



541



493



499



(7)



18


Total non-interest expense


3,573



3,779



3,567



3,414



3,434



(5)



4


Income from continuing operations before income taxes


1,662



1,308



1,585



1,490



1,109



27



50


Income tax provision


319



2,170



448



443



314



(85)



2


Income (loss) from continuing operations, net of tax


1,343



(862)



1,137



1,047



795



**


69


Income (loss) from discontinued operations, net of tax


3



(109)



(30)



(11)



15



**


(80)


Net income (loss)


1,346



(971)



1,107



1,036



810



**


66


Dividends and undistributed earnings allocated to participating securities(2)


(10)



(1)



(8)



(8)



(5)



**


100


Preferred stock dividends


(52)



(80)



(52)



(80)



(53)



(35)



(2)


Net income (loss) available to common stockholders


$

1,284



$

(1,052)



$

1,047



$

948



$

752



**


71





























2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

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


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Basic earnings per common share:(2)















Net income (loss) from continuing operations


$

2.63



$

(1.95)



$

2.22



$

1.98



$

1.53



**


72

%

Income (loss) from discontinued operations


0.01



(0.22)



(0.06)



(0.02)



0.03



**


(67)


Net income (loss) per basic common share


$

2.64



$

(2.17)



$

2.16



$

1.96



$

1.56



**


69


Diluted earnings per common share:(2)















Net income (loss) from continuing operations


$

2.61



$

(1.95)



$

2.20



$

1.96



$

1.51



**


73


Income (loss) from discontinued operations


0.01



(0.22)



(0.06)



(0.02)



0.03



**


(67)


Net income (loss) per diluted common share


$

2.62



$

(2.17)



$

2.14



$

1.94



$

1.54



**


70


Weighted-average common shares outstanding (in millions):















Basic common shares


486.9



485.7



484.9



484.0



482.3





1

%

Diluted common shares


490.8



485.7



489.0



488.1



487.9



1

%


1


Dividends declared and paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.40






 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets














2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Assets:















Cash and cash equivalents:















Cash and due from banks


$

4,220



$

4,458



$

4,154



$

3,352



$

3,489



(5)

%


21

%

Interest-bearing deposits and other short-term investments


9,788



9,582



4,330



3,363



5,826



2



68


Total cash and cash equivalents


14,008



14,040



8,484



6,715



9,315





50


Restricted cash for securitization investors


309



312



304



300



486



(1)



(36)


Investment securities:















Securities available for sale, at fair value


47,155



37,655



39,742



41,120



41,260



25



14


Securities held to maturity, at carrying value


23,075



28,984



28,650



27,720



26,170



(20)



(12)


Total investment securities


70,230



66,639



68,392



68,840



67,430



5



4


Loans held for investment:(4)















Unsecuritized loans held for investment


213,313



218,806



217,659



214,864



211,038



(3)



1


Loans held in consolidated trusts


34,943



35,667



34,763



29,438



29,550



(2)



18


Total loans held for investment


248,256



254,473



252,422



244,302



240,588



(2)



3


Allowance for loan and lease losses


(7,567)



(7,502)



(7,418)



(7,170)



(6,984)



1



8


Net loans held for investment


240,689



246,971



245,004



237,132



233,604



(3)



3


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


1,498



971



1,566



777



735



54



104


Premises and equipment, net


4,055



4,033



3,955



3,825



3,727



1



9


Interest receivable


1,496



1,536



1,426



1,346



1,368



(3)



9


Goodwill


14,536



14,533



14,532



14,524



14,521






Other assets


16,036



16,658



17,739



17,134



17,363



(4)



(8)


Total assets


$

362,857



$

365,693



$

361,402



$

350,593



$

348,549



(1)



4





























2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Liabilities:















Interest payable


$

353



$

413



$

301



$

376



$

260



(15)

%


36

%

Deposits:















Non-interest-bearing deposits


26,176



26,404



26,106



25,953



26,364



(1)



(1)


Interest-bearing deposits


224,671



217,298



212,956



213,810



214,818



3



5


Total deposits


250,847



243,702



239,062



239,763



241,182



3



4


Securitized debt obligations


18,665



20,010



17,087



18,358



18,528



(7)



1


Other debt:















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


656



576



767



958



1,046



14



(37)


Senior and subordinated notes


31,051



30,755



28,420



28,478



26,405



1



18


Other borrowings


321



8,940



13,184



2,160



2,460



(96)



(87)


Total other debt


32,028



40,271



42,371



31,596



29,911



(20)



7


Other liabilities


11,761



12,567



12,427



11,363



10,628



(6)



11


Total liabilities


313,654



316,963



311,248



301,456



300,509



(1)



4

















Stockholders' equity:















Preferred stock


0



0



0



0



0






Common stock


7



7



7



7



7






Additional paid-in capital, net


31,779



31,656



31,526



31,413



31,326





1


Retained earnings


31,996



30,700



31,946



31,086



30,326



4



6


Accumulated other comprehensive loss


(1,599)



(926)



(622)



(683)



(934)



73



71


Treasury stock, at cost


(12,980)



(12,707)



(12,703)



(12,686)



(12,685)



2



2


Total stockholders' equity


49,203



48,730



50,154



49,137



48,040



1



2


Total liabilities and stockholders' equity


$

362,857



$

365,693



$

361,402



$

350,593



$

348,549



(1)



4


 

 

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 $335 million in Q1 2018, $377 million in Q4 2017, $356 million in Q3 2017, $313 million in Q2 2017 and $321 million in Q1 2017 for the estimated uncollectible amount of billed finance charges and fees and related losses.

(2)

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.

(3)

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.

(4)

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:






2018


2017


2017


2017


2017


(Dollars in millions)


Q1


Q4


Q3


Q2


Q1


PCI loans:












Period-end unpaid principal balance


$

10,542



$

11,399



$

12,658



$

13,599



$

14,838



Period-end loans held for investment


9,935



10,775



11,985



12,895



14,102



Average loans held for investment


10,286



11,060



12,270



13,305



14,433




(5)

Total net revenue margin is calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.

(6)

Net interest margin is calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

(7)

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.

(8)

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.

(9)

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.

(10)

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.

(11)

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.

(12)

Capital ratios as of the end of Q1 2018 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.

(13)

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




2018 Q1


2017 Q4


2017 Q1



Average
Balance


Interest
Income/
Expense(1)


Yield/Rate(1)


Average
Balance


Interest
Income/
Expense(1)


Yield/Rate(1)


Average
Balance


Interest
Income/
Expense(1)


Yield/Rate(1)

(Dollars in millions, except as noted)










Interest-earning assets:



















Loans, including loans held for sale


$

250,906



$

6,134



9.78

%


$

254,080



$

6,133



9.66

%


$

242,249



$

5,626



9.29

%

Investment securities


69,576



452



2.60



68,992



431



2.50



68,418



416



2.43


Cash equivalents and other


9,701



51



2.10



7,670



40



2.09



7,691



28



1.46


Total interest-earning assets


$

330,183



$

6,637



8.04



$

330,742



$

6,604



7.99



$

318,358



$

6,070



7.63


Interest-bearing liabilities:



















Interest-bearing deposits


$

219,670



$

539



0.98



$

215,258



$

457



0.85



$

212,973



$

353



0.66


Securitized debt obligations


19,698



107



2.17



19,751



91



1.84



17,176



69



1.61


Senior and subordinated notes


30,430



251



3.30



30,020



209



2.78



24,804



149



2.40


Other borrowings and liabilities


6,849



22



1.28



10,355



34



1.31



12,356



25



0.81


Total interest-bearing liabilities


$

276,647



$

919



1.33



$

275,384



$

791



1.15



$

267,309



$

596



0.89


Net interest income/spread




$

5,718



6.71





$

5,813



6.84





$

5,474



6.74


Impact of non-interest-bearing funding






0.22







0.19







0.14


Net interest margin






6.93

%






7.03

%






6.88

%

__________

(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. In the first quarter of 2018, we adopted Accounting Standard Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. As a result, interest income and interest expense amounts shown above for Q1 2018 include $1 million and $30 million, respectively, related to hedge ineffectiveness that was previously included in other non-interest income.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics














2018 Q1 vs.

(Dollars in millions, except as noted)


2018
Q1


2017
Q4


2017
Q3


2017
Q2


2017
Q1


2017
Q4


2017
Q1

Loans Held for Investment (Period-End)















Credit card:















   Domestic credit card


$

98,535



$

105,293



$

99,981



$

92,866



$

91,092



(6)

%


8

%

   International card businesses


9,041



9,469



9,149



8,724



8,121



(5)



11


Total credit card


107,576



114,762



109,130



101,590



99,213



(6)



8


Consumer banking:















   Auto


54,811



53,991



53,290



51,765



49,771



2



10


   Home loan


16,630



17,633



18,820



19,724



20,738



(6)



(20)


   Retail banking


3,233



3,454



3,454



3,484



3,473



(6)



(7)


Total consumer banking


74,674



75,078



75,564



74,973



73,982



(1)



1


Commercial banking:















   Commercial and multifamily real estate


27,360



26,150



27,944



27,428



27,218



5



1


   Commercial and industrial


38,208



38,025



39,306



39,801



39,638





(4)


     Total commercial lending


65,568



64,175



67,250



67,229



66,856



2



(2)


   Small-ticket commercial real estate


385



400



420



443



464



(4)



(17)


Total commercial banking


65,953



64,575



67,670



67,672



67,320



2



(2)


Other loans


53



58



58



67



73



(9)



(27)


Total loans held for investment


$

248,256



$

254,473



$

252,422



$

244,302



$

240,588



(2)



3


Loans Held for Investment (Average)















Credit card:















   Domestic credit card


$

100,450



$

101,087



$

93,729



$

91,769



$

93,034



(1)

%


8

%

   International card businesses


9,052



8,942



8,816



8,274



8,135



1



11


Total credit card


109,502



110,029



102,545



100,043



101,169





8


Consumer banking:















   Auto


54,344



53,747



52,615



50,803



48,673



1



12


   Home loan


17,224



18,109



19,302



20,203



21,149



(5)



(19)


   Retail banking


3,429



3,433



3,446



3,463



3,509





(2)


Total consumer banking


74,997



75,289



75,363



74,469



73,331





2


Commercial banking:















   Commercial and multifamily real estate


26,542



27,770



27,703



27,401



26,587



(4)




   Commercial and industrial


38,246



39,020



39,723



39,815



39,877



(2)



(4)


     Total commercial lending


64,788



66,790



67,426



67,216



66,464



(3)



(3)


   Small-ticket commercial real estate


393



410



433



453



474



(4)



(17)


Total commercial banking


65,181



67,200



67,859



67,669



66,938



(3)



(3)


Other loans


46



48



55



60



67



(4)



(31)


Total average loans held for investment


$

249,726



$

252,566



$

245,822



$

242,241



$

241,505



(1)



3



















































2018 Q1 vs.



2018
Q1


2017
Q4


2017
Q3


2017
Q2


2017
Q1


2017
Q4


2017
Q1

Net Charge-Off (Recovery) Rates




















Credit card:




















   Domestic credit card



5.26

%



5.08

%



4.64

%



5.11

%



5.14

%


18

bps


12

bps

   International card businesses



2.49




3.92




3.08




4.08




3.69



(143)



(120)


Total credit card



5.03




4.99




4.51




5.02




5.02



4



1


Consumer banking:




















   Auto



1.53




2.12




1.96




1.70




1.64



(59)



(11)


   Home loan



(0.03)




0.23




0.02




0.04




0.03



(26)



(6)


   Retail banking



1.89




1.94




2.10




1.71




1.92



(5)



(3)


Total consumer banking



1.19




1.66




1.47




1.25




1.19



(47)




Commercial banking:




















   Commercial and multifamily real estate






(0.01)




(0.01)




0.03






1




   Commercial and industrial



0.20




1.47




1.64




1.34




0.22



(127)



(2)


     Total commercial lending



0.12




0.86




0.97




0.81




0.13



(74)



(1)


   Small-ticket commercial real estate



(0.18)




(0.05)




0.12




(0.22)




1.05



(13)



(123)


Total commercial banking



0.11




0.85




0.96




0.80




0.14



(74)



(3)


Total net charge-offs



2.59




2.89




2.61




2.67




2.50



(30)



9


30+ Day Performing Delinquency Rates




















Credit card:




















   Domestic credit card



3.57

%



4.01

%



3.94

%



3.63

%



3.71

%


(44)

bps


(14)

bps

   International card businesses



3.62




3.64




3.54




3.28




3.39



(2)



23


Total credit card



3.58




3.98




3.91




3.60




3.68



(40)



(10)


Consumer banking:




















   Auto



5.15




6.51




5.71




5.40




5.03



(136)



12


   Home loan



0.20




0.20




0.17




0.14




0.15





5


   Retail banking



0.75




0.76




0.73




0.54




0.59



(1)



16


Total consumer banking



3.86




4.76




4.10




3.79




3.45



(90)



41


Nonperforming Loans and Nonperforming Assets Rates(1)(2)




















Credit card:




















   International card businesses



0.25

%



0.25

%



0.28

%



0.37

%



0.47

%




(22)

bps

Total credit card



0.02




0.02




0.02




0.03




0.04





(2)


Consumer banking:




















   Auto



0.50




0.70




0.65




0.53




0.36



(20)

bps


14


   Home loan



0.86




1.00




0.84




1.31




1.27



(14)



(41)


   Retail banking



1.04




1.00




0.97




0.96




0.82



4



22


Total consumer banking



0.61




0.78




0.71




0.75




0.64



(17)



(3)


Commercial banking:




















   Commercial and multifamily real estate



0.01




0.15




0.23




0.13




0.13



(14)



(12)


   Commercial and industrial



0.78




0.63




1.82




1.62




2.02



15



(124)


     Total commercial lending



0.46




0.43




1.16




1.01




1.25



3



(79)


   Small-ticket commercial real estate



1.46




1.65




1.59




1.89




1.65



(19)



(19)


Total commercial banking



0.47




0.44




1.16




1.01




1.25



3



(78)


Total nonperforming loans



0.32




0.35




0.54




0.53




0.57



(3)



(25)


Total nonperforming assets



0.35




0.41




0.60




0.60




0.66



(6)



(31)


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 8: Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity




Three Months Ended March 31, 2018



Credit Card


Consumer Banking







(Dollars in millions)


Domestic
Card


International
Card
Businesses


Total Credit
Card


Auto


Home
Loan


Retail
Banking


Total
Consumer
Banking


Commercial
Banking


Other(3)


Total

Allowance for loan and lease losses:





















Balance as of December 31, 2017


$

5,273



$

375



$

5,648



$

1,119



$

58



$

65



$

1,242



$

611



$

1



$

7,502


Charge-offs


(1,697)



(128)



(1,825)



(410)





(21)



(431)



(21)



1



(2,276)


Recoveries


376



72



448



202



1



5



208



2





658


Net charge-offs


(1,321)



(56)



(1,377)



(208)



1



(16)



(223)



(19)



1



(1,618)


Provision (benefit) for loan and lease losses


1,380



76



1,456



226



(6)



14



234



(5)



(1)



1,684


Allowance build (release) for loan and lease losses


59



20



79



18



(5)



(2)



11



(24)





66


Other changes(4)




(1)



(1)















(1)


Balance as of March 31, 2018


5,332



394



5,726



1,137



53



63



1,253



587



1



7,567


Reserve for unfunded lending commitments:





















Balance as of December 31, 2017












7



7



117





124


Benefit for losses on unfunded lending commitments












(1)



(1)



(9)





(10)


Balance as of March 31, 2018












6



6



108





114


Combined allowance and reserve as of March 31, 2018


$

5,332



$

394



$

5,726



$

1,137



$

53



$

69



$

1,259



$

695



$

1



$

7,681


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results




Three Months Ended March 31, 2018

(Dollars in millions)


Credit Card


Consumer
Banking


Commercial
Banking(6)(7)


Other(6)(7)


Total

Net interest income


$

3,558



$

1,615



$

536



$

9



$

5,718


Non-interest income


857



174



187



(27)



1,191


Total net revenue (loss)


4,415



1,789



723



(18)



6,909


Provision (benefit) for credit losses


1,456



233



(14)



(1)



1,674


Non-interest expense


2,039



1,000



403



131



3,573


Income (loss) from continuing operations before income taxes


920



556



334



(148)



1,662


Income tax provision (benefit)


213



130



78



(102)



319


Income (loss) from continuing operations, net of tax


$

707



$

426



$

256



$

(46)



$

1,343















Three Months Ended December 31, 2017

(Dollars in millions)


Credit Card


Consumer
Banking


Commercial
Banking(6)


Other(5)(6)


Total

Net interest income


$

3,568



$

1,636



$

566



$

43



$

5,813


Non-interest income


847



179



188



(14)



1,200


Total net revenue


4,415



1,815



754



29



7,013


Provision for credit losses


1,486



340



100





1,926


Non-interest expense


2,108



1,081



437



153



3,779


Income (loss) from continuing operations before income taxes


821



394



217



(124)



1,308


Income tax provision


297



144



79



1,650



2,170


Income (loss) from continuing operations, net of tax


$

524



$

250



$

138



$

(1,774)



$

(862)















Three Months Ended March 31, 2017

(Dollars in millions)


Credit Card


Consumer
Banking


Commercial
Banking(6)


Other(6)


Total

Net interest income


$

3,346



$

1,517



$

566



$

45



$

5,474


Non-interest income


738



195



158



(30)



1,061


Total net revenue


4,084



1,712



724



15



6,535


Provision (benefit) for credit losses


1,717



279



(2)



(2)



1,992


Non-interest expense


1,929



1,042



391



72



3,434


Income (loss) from continuing operations before income taxes


438



391



335



(55)



1,109


Income tax provision (benefit)


167



143



122



(118)



314


Income from continuing operations, net of tax


$

271



$

248



$

213



$

63



$

795













 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business














2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions, except as noted)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Credit Card















Earnings:















Net interest income


$

3,558



$

3,568



$

3,440



$

3,294



$

3,346





6

%

Non-interest income


857



847



865



875



738



1

%


16


Total net revenue


4,415



4,415



4,305



4,169



4,084





8


Provision for credit losses


1,456



1,486



1,466



1,397



1,717



(2)



(15)


Non-interest expense


2,039



2,108



1,961



1,918



1,929



(3)



6


Income from continuing operations before income taxes


920



821



878



854



438



12



110


Income tax provision


213



297



306



301



167



(28)



28


Income from continuing operations, net of tax


$

707



$

524



$

572



$

553



$

271



35



161


Selected performance metrics:















Period-end loans held for investment


$

107,576



$

114,762



$

109,130



$

101,590



$

99,213



(6)



8


Average loans held for investment


109,502



110,029



102,545



100,043



101,169





8


Average yield on loans held for investment(8)


15.24

%


15.13

%


15.58

%


15.14

%


14.99

%


11

bps


25

bps

Total net revenue margin(9)


16.13



16.05



16.79



16.67



16.14



8



(1)


Net charge-off rate


5.03



4.99



4.51



5.02



5.02



4



1


30+ day performing delinquency rate


3.58



3.98



3.91



3.60



3.68



(40)



(10)


30+ day delinquency rate


3.59



3.99



3.92



3.62



3.71



(40)



(12)


Nonperforming loan rate(1)


0.02



0.02



0.02



0.03



0.04





(2)


Purchase volume(10)


$

86,545



$

95,659



$

84,505



$

83,079



$

73,197



(10)

%


18

%




























2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions, except as noted)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Domestic Card















Earnings:















Net interest income


$

3,229



$

3,268



$

3,132



$

3,011



$

3,093



(1)

%


4

%

Non-interest income


774



781



787



802



699



(1)



11


Total net revenue


4,003



4,049



3,919



3,813



3,792



(1)



6


Provision for credit losses


1,380



1,402



1,417



1,327



1,637



(2)



(16)


Non-interest expense


1,832



1,880



1,754



1,727



1,717



(3)



7


Income from continuing operations before income taxes


791



767



748



759



438



3



81


Income tax provision


184



280



273



277



160



(34)



15


Income from continuing operations, net of tax


$

607



$

487



$

475



$

482



$

278



25



118


Selected performance metrics:















Period-end loans held for investment


$

98,535



$

105,293



$

99,981



$

92,866



$

91,092



(6)



8


Average loans held for investment


100,450



101,087



93,729



91,769



93,034



(1)



8


Average yield on loans held for investment(8)


15.10

%


15.08

%


15.51

%


15.07

%


15.01

%


2

bps


9

bps

Total net revenue margin(9)


15.94



16.03



16.72



16.62



16.30



(9)



(36)


Net charge-off rate


5.26



5.08



4.64



5.11



5.14



18



12


30+ day delinquency rate


3.57



4.01



3.94



3.63



3.71



(44)



(14)


Purchase volume(10)


$

79,194



$

87,287



$

76,806



$

75,781



$

66,950



(9)

%


18

%

Refreshed FICO scores:(11)















Greater than 660


66

%


66

%


65

%


64

%


63

%




3


660 or below


34



34



35



36



37





(3)


Total


100

%


100

%


100

%


100

%


100

%





 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business














2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions, except as noted)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Consumer Banking















Earnings:















Net interest income


$

1,615



$

1,636



$

1,649



$

1,578



$

1,517



(1)

%


6

%

Non-interest income


174



179



192



183



195



(3)



(11)


Total net revenue


1,789



1,815



1,841



1,761



1,712



(1)



4


Provision for credit losses


233



340



293



268



279



(31)



(16)


Non-interest expense


1,000



1,081



1,051



1,059



1,042



(7)



(4)


Income from continuing operations before income taxes


556



394



497



434



391



41



42


Income tax provision


130



144



181



158



143



(10)



(9)


Income from continuing operations, net of tax


$

426



$

250



$

316



$

276



$

248



70



72


Selected performance metrics:















Period-end loans held for investment


$

74,674



$

75,078



$

75,564



$

74,973



$

73,982



(1)



1


Average loans held for investment


74,997



75,289



75,363



74,469



73,331





2


Average yield on loans held for investment(8)


6.86

%


6.84

%


6.79

%


6.56

%


6.48

%


2

bps


38

bps

Auto loan originations


$

6,707



$

6,215



$

7,043



$

7,453



$

7,025



8

%


(5)

%

Period-end deposits


193,073



185,842



184,719



186,607



188,216



4



3


Average deposits


187,785



184,799



185,072



186,989



183,936



2



2


Average deposits interest rate


0.80

%


0.69

%


0.62

%


0.59

%


0.57

%


11

bps


23

bps

Net charge-off rate


1.19



1.66



1.47



1.25



1.19



(47)




30+ day performing delinquency rate


3.86



4.76



4.10



3.79



3.45



(90)



41


30+ day delinquency rate


4.27



5.34



4.61



4.33



3.93



(107)



34


Nonperforming loan rate(1)


0.61



0.78



0.71



0.75



0.64



(17)



(3)


Nonperforming asset rate(2)


0.70



0.91



0.88



0.96



0.92



(21)



(22)


Auto—At origination FICO scores:(12)















Greater than 660


51

%


51

%


51

%


51

%


51

%





621-660


18



18



18



18



18






620 or below


31



31



31



31



31






Total


100

%


100

%


100

%


100

%


100

%






 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business














2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions, except as noted)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Commercial Banking















Earnings:















Net interest income


$

536



$

566



$

560



$

569



$

566



(5)

%


(5)

%

Non-interest income


187



188



179



183



158



(1)



18


Total net revenue(6)(7)


723



754



739



752



724



(4)




Provision (benefit) for credit losses


(14)



100



63



140



(2)



**


**

Non-interest expense


403



437



394



381



391



(8)



3


Income from continuing operations before income taxes


334



217



282



231



335



54




Income tax provision


78



79



103



85



122



(1)



(36)


Income from continuing operations, net of tax


$

256



$

138



$

179



$

146



$

213



86



20


Selected performance metrics:















Period-end loans held for investment


$

65,953



$

64,575



$

67,670



$

67,672



$

67,320



2



(2)


Average loans held for investment


65,181



67,200



67,859



67,669



66,938



(3)



(3)


Average yield on loans held for investment(6)(8)


4.16

%


4.03

%


3.98

%


3.81

%


3.65

%


13

bps


51

bps

Period-end deposits


$

34,449



$

33,938



$

32,783



$

33,153



$

33,735



2

%


2

%

Average deposits


34,057



34,117



33,197



34,263



34,219






Average deposits interest rate


0.52

%


0.46

%


0.42

%


0.36

%


0.31

%


6

bps


21

bps

Net charge-off rate


0.11



0.85



0.96



0.80



0.14



(74)



(3)


Nonperforming loan rate(1)


0.47



0.44



1.16



1.01



1.25



3



(78)


Nonperforming asset rate(2)


0.49



0.52



1.22



1.04



1.27



(3)



(78)


Risk category:(13)















Noncriticized


$

62,773



$

61,162



$

63,501



$

63,802



$

63,390



3

%


(1)

%

Criticized performing


2,432



2,649



2,878



2,660



2,492



(8)



(2)


Criticized nonperforming


309



284



788



686



844



9



(63)


PCI loans


439



480



503



524



594



(9)



(26)


Total commercial loans


$

65,953



$

64,575



$

67,670



$

67,672



$

67,320



2



(2)


Risk category as a percentage of period-end loans held for investment:(13)














Noncriticized


95.1

%


94.7

%


93.8

%


94.3

%


94.2

%


40

bps


90

bps

Criticized performing


3.7



4.1



4.3



3.9



3.7



(40)




Criticized nonperforming


0.5



0.4



1.2



1.0



1.2



10



(70)


PCI loans


0.7



0.8



0.7



0.8



0.9



(10)



(20)


Total commercial loans


100.0

%


100.0

%


100.0

%


100.0

%


100.0

%






 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Financial & Statistical Summary—Other and Total














2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Other(5)















Earnings:















Net interest income


$

9



$

43



$

51



$

32



$

45



(79)

%


(80)

%

Non-interest income


(27)



(14)



49



(10)



(30)



93



(10)


Total net revenue (loss)(6)(7)


(18)



29



100



22



15



     **


     **

Provision (benefit) for credit losses


(1)





11



(5)



(2)



     **


(50)


Non-interest expense(14)


131



153



161



56



72



(14)



82


Loss from continuing operations before income taxes


(148)



(124)



(72)



(29)



(55)



19



169


Income tax provision (benefit)


(102)



1,650



(142)



(101)



(118)



     **


(14)


Income (loss) from continuing operations, net of tax


$

(46)



$

(1,774)



$

70



$

72



$

63



(97)



     **

Selected performance metrics:















Period-end loans held for investment


$

53



$

58



$

58



$

67



$

73



(9)



(27)


Average loans held for investment


46



48



55



60



67



(4)



(31)


Period-end deposits


23,325



23,922



21,560



20,003



19,231



(2)



21


Average deposits


23,428



22,646



20,574



19,298



20,395



3



15


Total















Earnings:















Net interest income


$

5,718



$

5,813



$

5,700



$

5,473



$

5,474



(2)

%


4

%

Non-interest income


1,191



1,200



1,285



1,231



1,061



(1)



12


Total net revenue


6,909



7,013



6,985



6,704



6,535



(1)



6


Provision for credit losses


1,674



1,926



1,833



1,800



1,992



(13)



(16)


Non-interest expense


3,573



3,779



3,567



3,414



3,434



(5)



4


Income from continuing operations before income taxes


1,662



1,308



1,585



1,490



1,109



27



50


Income tax provision


319



2,170



448



443



314



(85)



2


Income (loss) from continuing operations, net of tax


$

1,343



$

(862)



$

1,137



$

1,047



$

795



     **


69


Selected performance metrics:















Period-end loans held for investment


$

248,256



$

254,473



$

252,422



$

244,302



$

240,588



(2)



3


Average loans held for investment


249,726



252,566



245,822



242,241



241,505



(1)



3


Period-end deposits


250,847



243,702



239,062



239,763



241,182



3



4


Average deposits


245,270



241,562



238,843



240,550



238,550



2



3



 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 14: Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)



(1)

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.

(2)

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.

(3)

Primarily consists of the legacy loan portfolio of our discontinued GreenPoint mortgage operations.

(4)

Represents foreign currency translation adjustments and the net impact of loan transfers and sales where applicable.

(5)

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. 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.

(6)

Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate (21% for the first quarter of 2018 and 35% for all periods in 2017) and state taxes where applicable, with offsetting reductions to the Other category.

(7)

In the first quarter of 2018, we made a change in how revenue is measured in our Commercial Banking business to include the tax benefits of losses on certain investments. These tax benefits are included in revenue on a taxable-equivalent basis within our Commercial Banking business, with an offsetting reduction to the Other category. In addition, all revenue presented on a taxable-equivalent basis in our Commercial Banking business was impacted by the reduction of the federal tax rate set forth in the Tax Act. The net impact of the measurement change and the reduction of the federal tax rate was a decrease of $28 million in revenue in our Commercial Banking business in the first quarter of 2018, with an offsetting impact 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, 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)


March 31,
2018


December 31,
2017


September 30,
2017


June 30,
2017


March 31,
2017

Regulatory Capital Metrics











Common equity excluding AOCI


$

46,441



$

45,296



$

46,415



$

45,459



$

44,614


Adjustments:











AOCI(2)(3)


(1,599)



(808)



(538)



(593)



(807)


Goodwill, net of related deferred tax liabilities


(14,379)



(14,380)



(14,300)



(14,299)



(14,302)


Intangible assets, net of related deferred tax liabilities(3)


(371)



(330)



(372)



(419)



(465)


Other


620



258



93



78



121


Common equity Tier 1 capital


$

30,712



$

30,036



$

31,298



$

30,226



$

29,161


Tier 1 capital


$

35,073



$

34,396



$

35,657



$

34,585



$

33,519


Total capital(4)


42,264



41,962



43,272



42,101



40,979


Risk-weighted assets


291,352



292,225



292,041



283,231



279,302


Adjusted average assets(5)


347,287



348,424



340,579



335,248



336,990


Capital Ratios











Common equity Tier 1 capital(6)


10.5

%


10.3

%


10.7

%


10.7

%


10.4

%

Tier 1 capital(7)


12.0



11.8



12.2



12.2



12.0


Total capital(8)


14.5



14.4



14.8



14.9



14.7


Tier 1 leverage(5)


10.1



9.9



10.5



10.3



9.9


Tangible common equity ("TCE")(9)


8.6



8.3



8.8



8.8



8.5


 

 

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.




2018


2017


2017



Q1


Q4


Q1

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


Reported
Results


Adj.(10)


Adjusted
Results


Reported
Results


Adj.(10)


Adjusted
Results


Reported
Results


Adj.(10)


Adjusted
Results

Selected income statement data:



















Net interest income


$

5,718





$

5,718



$

5,813



$

11



$

5,824



$

5,474



$

33



$

5,507


Non-interest income


1,191



$

2



1,193



1,200



9



1,209



1,061



37



1,098


Total net revenue


6,909



2



6,911



7,013



20



7,033



6,535



70



6,605


Provision for credit losses


1,674





1,674



1,926





1,926



1,992





1,992


Non-interest expense


3,573



(17)



3,556



3,779



(87)



3,692



3,434



(29)



3,405


Income from continuing operations before income taxes


1,662



19



1,681



1,308



107



1,415



1,109



99



1,208


Income tax provision (benefit)


319



4



323



2,170



(1,742)



428



314



(1)



313


Income (loss) from continuing operations, net of tax


1,343



15



1,358



(862)



1,849



987



795



100



895


Income (loss) from discontinued operations, net of tax


3





3



(109)





(109)



15





15


Net income (loss)


1,346



15



1,361



(971)



1,849



878



810



100



910


Dividends and undistributed earnings allocated to participating securities(11)


(10)





(10)



(1)



(5)



(6)



(5)





(5)


Preferred stock dividends


(52)





(52)



(80)





(80)



(53)





(53)


Net income (loss) available to common stockholders


$

1,284



$

15



$

1,299



$

(1,052)



$

1,844



$

792



$

752



$

100



$

852


Selected performance metrics:



















Diluted EPS(11)


$

2.62



$

0.03



$

2.65



$

(2.17)



$

3.79



$

1.62



$

1.54



$

0.21



$

1.75


Efficiency ratio


51.72

%


(27)

bps


51.45

%


53.89

%


(139)

bps


52.50

%


52.55

%


(100)

bps


51.55

%

 

 

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 these non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, our measures 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.




2018


2017


2017


2017


2017

(Dollars in millions)


Q1


Q4


Q3


Q2


Q1

Tangible Common Equity (Period-End)











Stockholders' equity


$

49,203



$

48,730



$

50,154



$

49,137



$

48,040


Goodwill and intangible assets(12)


(15,063)



(15,106)



(15,249)



(15,301)



(15,360)


Noncumulative perpetual preferred stock


(4,360)



(4,360)



(4,360)



(4,360)



(4,360)


Tangible common equity


$

29,780



$

29,264



$

30,545



$

29,476



$

28,320


Tangible Common Equity (Average)











Stockholders' equity


$

49,031



$

50,710



$

50,176



$

49,005



$

48,193


Goodwill and intangible assets(12)


(15,092)



(15,223)



(15,277)



(15,336)



(15,395)


Noncumulative perpetual preferred stock


(4,360)



(4,360)



(4,360)



(4,360)



(4,360)


Tangible common equity


$

29,579



$

31,127



$

30,539



$

29,309



$

28,438


Tangible Assets (Period-End)











Total assets


$

362,857



$

365,693



$

361,402



$

350,593



$

348,549


Goodwill and intangible assets(12)


(15,063)



(15,106)



(15,249)



(15,301)



(15,360)


Tangible assets


$

347,794



$

350,587



$

346,153



$

335,292



$

333,189


Tangible Assets (Average)











Total assets


$

362,049



$

363,045



$

355,191



$

349,891



$

351,641


Goodwill and intangible assets(12)


(15,092)



(15,223)



(15,277)



(15,336)



(15,395)


Tangible assets


$

346,957



$

347,822



$

339,914



$

334,555



$

336,246




__________


  (1)       Regulatory capital metrics and capital ratios as of March 31, 2018 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 80% for 2017 and 100% for 2018.

  (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)      Adjustments for the following periods consist of:




2018


2017


2017

(Dollars in millions)


Q1


Q4


Q1

Restructuring charges


$

19



$

76




Impacts of the Tax Act




1,769




U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve")




31



$

99


Total


19



1,876



99


Income tax provision (benefit)


4



27



(1)


Net income


$

15



$

1,849



$

100



(11)     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.

(12)     Includes impact of related deferred taxes.

 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/capital-one-reports-first-quarter-2018-net-income-of-1-3-billion-or-2-62-per-share-300635741.html

SOURCE Capital One Financial Corporation