SEC Filing | Capital One Financial Corp.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________

FORM 8-K

____________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

July 21, 2020

Date of Report (Date of earliest event reported)

____________________________________

CAPITAL ONE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________



Delaware		001-13300	54-1719854
(State or other jurisdiction of incorporation)		(Commission File Number)	(IRS Employer Identification No.)
1680 Capital One Drive,
McLean,	Virginia		22102
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (703) 720-1000

(Not applicable)

(Former name or former address, if changed since last report)

____________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)


☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))


☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:



Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock (par value $.01 per share)	COF	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series F	COF PRF	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series G	COF PRG	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series H	COF PRH	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series I	COF PRI	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series J	COF PRJ	New York Stock Exchange
0.800% Senior Notes Due 2024	COF24	New York Stock Exchange
1.650% Senior Notes Due 2029	COF29	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


Item 2.02	Results of Operations and Financial Condition.

On July 21, 2020, Capital One Financial Corporation (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2020. Copies of the Company’s press release and financial supplement are attached and furnished herewith as Exhibits 99.1 and 99.2 to this Form 8-K and are incorporated herein by reference.

Note: Information in this report (including Exhibits 99.1 and 99.2) furnished pursuant to Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.



Exhibit No.		Description
99.1		Press Release, dated July 21, 2020 - Second Quarter 2020
99.2		Financial Supplement - Second Quarter 2020
104		The cover page from this Current Report on Form 8-K, formatted in Inline XBRL

Earnings Conference Call Webcast Information.

The Company will hold an earnings conference call on July 21, 2020 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). Under “About,” 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. A replay of the webcast will be archived on the Company’s website through August 4, 2020 at 5:00 PM Eastern Time.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.



	CAPITAL ONE FINANCIAL CORPORATION

Date: July 21, 2020	By:	/s/ TIMOTHY P. GOLDEN
		Timothy P. Golden
		Controller and Principal Accounting Officer

Exhibit

Capital One Second Quarter 2020 Earnings

Page 1

Exhibit 99.1

News Release

https://cdn.kscope.io/c883babd7151fa766d0976c141d7c2d6-earningsslidesvfinal1b58.jpg



Contacts:
Investor Relations		Media Relations
Jeff Norris	Danielle Dietz	Sie Soheili	Tatiana Stead
jeff.norris@capitalone.com	danielle.dietz@capitalone.com	sie.soheili@capitalone.com	tatiana.stead@capitalone.com

FOR IMMEDIATE RELEASE: July 21, 2020

Capital One Reports Second Quarter 2020 Net Loss of $918 million,
or $2.21 per share

Excluding adjusting items, Second Quarter 2020 Net Loss of $1.61 per share⁽¹⁾

McLean, Va. (July 21, 2020) – Capital One Financial Corporation (NYSE: COF) today announced net loss for the second quarter of 2020 of $918 million, or $2.21 per diluted common share, compared with net loss of $1.3 billion, or $3.10 per diluted common share in the first quarter of 2020, and with net income of $1.6 billion, or $3.24 per diluted common share in the second quarter of 2019. Excluding adjusting items, net loss for the second quarter of 2020 was $1.61 per diluted common share⁽¹⁾.

“Our investments to transform our technology and how we work, and our efforts to drive the company to digital are powering our response to the pandemic,” said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. “We remain well positioned to weather the downturn, emerge with strength, and deliver shareholder value over the long-term.”

Adjusting items in the second quarter of 2020, which are excluded from diluted earnings per share (EPS), efficiency ratio and operating efficiency ratio metrics (see Table 15 in our Financial Supplement for additional information):

All comparisons below are for the second quarter of 2020 compared with the first quarter of 2020 unless otherwise noted.

Second Quarter 2020 Income Statement Summary:


•	Total net revenue decreased 10 percent to $6.6 billion.


•	Total non-interest expense increased 1 percent to $3.8 billion:


◦	44 percent decrease in marketing.


◦	8 percent increase in operating expenses.

⁽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, both in the current period and across periods. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

Capital One Second Quarter 2020 Earnings

Page 2


•	Pre-provision earnings decreased 21 percent to $2.8 billion⁽²⁾.


•	Provision for credit losses decreased 22 percent to $4.2 billion:


◦	Net charge-offs of $1.5 billion.


◦	$2.7 billion reserve build.


•	Net interest margin of 5.78 percent, decreased 100 basis points.


•	Efficiency ratio of 57.50 percent.

◦Efficiency ratio excluding adjusting items of 53.29 percent⁽¹⁾.


•	Operating efficiency ratio of 53.34 percent.

◦Operating efficiency ratio excluding adjusting items of 49.13 percent⁽¹⁾.

Second Quarter 2020 Balance Sheet Summary:


•	Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.4 percent at June 30, 2020.


•	Period-end loans held for investment in the quarter decreased $11.5 billion, or 4 percent, to $251.5 billion.


◦	Credit Card period-end loans decreased $10.5 billion, or 9 percent, to $107.3 billion.


•	Domestic Card period-end loans decreased $10.2 billion, or 9 percent, to $99.4 billion.


◦	Consumer Banking period-end loans increased $2.7 billion, or 4 percent, to $66.7 billion.


•	Auto period-end loans increased $2.0 billion, or 3 percent, to $63.3 billion.


◦	Commercial Banking period-end loans decreased $3.7 billion, or 5 percent, to $77.5 billion.


•	Average loans held for investment in the quarter decreased $9.5 billion, or 4 percent, to $253.4 billion.


◦	Credit Card average loans decreased $14.0 billion, or 11 percent, to $108.7 billion.


•	Domestic Card average loans decreased $12.7 billion, or 11 percent, to $101.0 billion.


◦	Consumer Banking average loans increased $1.2 billion, or 2 percent, to $64.9 billion.

•Auto average loans increased $793 million, or 1 percent, to $61.8 billion.

◦Commercial Banking average loans increased $3.3 billion, or 4 percent, to $79.8 billion.


•	Period-end total deposits increased $34.5 billion, or 13 percent, to $304.2 billion, while average deposits increased $23.7 billion, or 9 percent, to $288.3 billion.


•	Interest-bearing deposits rate paid decreased 27 basis points to 0.94 percent.

⁽¹⁾


⁽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.

Capital One Second Quarter 2020 Earnings

Page 3

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on July 21, 2020 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). Under “About,” 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 August 4, 2020 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, 2019.

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 $304.2 billion in deposits and $421.3 billion in total assets as of June 30, 2020. 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.

###

Exhibit

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement⁽¹⁾⁽²⁾

Second Quarter2020

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 Credit Losses and Reserve for Unfunded Lending Commitments Activity	12
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
Other
	Table 14:	Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)	20
	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 Quarterly Report on Form 10-Q for the period ended June 30, 2020 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



																2020 Q2 vs.				Six Months Ended June 30,
(Dollars in millions, except per share data and as noted)	2020			2020			2019			2019			2019			2020		2019								2020 vs.
(Dollars in millions, except per share data and as noted)	Q2			Q1			Q4			Q3			Q2			Q1		Q2		2020			2019			2019
Income Statement
Net interest income	$	5,460		$	6,025		$	6,066		$	5,737		$	5,746		(9	)%	(5	)%	$	11,485		$	11,537		—
Non-interest income	1,096			1,224			1,361			1,222			1,378			(10	)	(20	)	2,320			2,670			(13	)%
Total net revenue⁽¹⁾	6,556			7,249			7,427			6,959			7,124			(10	)	(8	)	13,805			14,207			(3	)
Provision for credit losses	4,246			5,423			1,818			1,383			1,342			(22	)	**		9,669			3,035			**
Non-interest expense:
Marketing	273			491			710			501			546			(44	)	(50	)	764			1,063			(28	)
Operating expense	3,497			3,238			3,451			3,371			3,233			8		8		6,735			6,387			5
Total non-interest expense	3,770			3,729			4,161			3,872			3,779			1		—		7,499			7,450			1
Income (loss) from continuing operations before income taxes	(1,460		)	(1,903		)	1,448			1,704			2,003			(23	)	**		(3,363		)	3,722			**
Income tax provision (benefit)	(543		)	(563		)	270			375			387			(4	)	**		(1,106		)	696			**
Income (loss) from continuing operations, net of tax	(917		)	(1,340		)	1,178			1,329			1,616			(32	)	**		(2,257		)	3,026			**
Income (loss) from discontinued operations, net of tax	(1		)	—			(2		)	4			9			**		**		(1		)	11			**
Net income (loss)	(918		)	(1,340		)	1,176			1,333			1,625			(31	)	**		(2,258		)	3,037			**
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(1		)	(3		)	(7		)	(10		)	(12		)	(67	)	(92	)	(4		)	(24		)	(83	)
Preferred stock dividends	(90		)	(55		)	(97		)	(53		)	(80		)	64		13		(145		)	(132		)	10
Issuance cost for redeemed preferred stock⁽³⁾	—			(22		)	(31		)	—			—			**		—		(22		)	—			**
Net income (loss) available to common stockholders	$	(1,009	)	$	(1,420	)	$	1,041		$	1,270		$	1,533		(29	)	**		$	(2,429	)	$	2,881		**
Common Share Statistics
Basic earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	(2.21	)	$	(3.10	)	$	2.26		$	2.70		$	3.24		(29	)%	**		$	(5.31	)	$	6.11		**
Income from discontinued operations	—			—			—			0.01			0.02			—		**		—			0.02			**
Net income (loss) per basic common share	$	(2.21	)	$	(3.10	)	$	2.26		$	2.71		$	3.26		(29	)	**		$	(5.31	)	$	6.13		**
Diluted earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	(2.21	)	$	(3.10	)	$	2.25		$	2.68		$	3.22		(29	)	**		$	(5.31	)	$	6.08		**
Income from discontinued operations	—			—			—			0.01			0.02			—		**		—			0.02			**
Net income (loss) per diluted common share	$	(2.21	)	$	(3.10	)	$	2.25		$	2.69		$	3.24		(29	)	**		$	(5.31	)	$	6.10		**
Weighted-average common shares outstanding (in millions):
Basic	456.7			457.6			460.9			469.5			470.8			—		(3	)%	457.1			470.1			(3	)%
Diluted	456.7			457.6			463.4			471.8			473.0			—		(3	)	457.1			472.3			(3	)
Common shares outstanding (period-end, in millions)	456.3			455.3			456.6			465.7			470.3			—		(3	)	456.3			470.3			(3	)
Dividends declared and paid per common share	$	0.40		$	0.40		$	0.40		$	0.40		$	0.40		—		—		$	0.80		$	0.80		—
Tangible book value per common share (period-end)⁽⁴⁾	78.82			80.68			83.72			80.46			77.65			(2	)	2		78.82			77.65			2



											2020 Q2 vs.				Six Months Ended June 30,
(Dollars in millions)	2020		2020		2019		2019		2019		2020		2019						2020 vs.
(Dollars in millions)	Q2		Q1		Q4		Q3		Q2		Q1		Q2		2020		2019		2019
Balance Sheet (Period-End)
Loans held for investment	$	251,512	$	262,990	$	265,809	$	249,355	$	244,460	(4	)%	3	%	$	251,512	$	244,460	3	%
Interest-earning assets	389,829		364,472		355,202		344,643		339,160		7		15		389,829		339,160		15
Total assets	421,296		396,878		390,365		378,810		373,619		6		13		421,296		373,619		13
Interest-bearing deposits	275,183		245,142		239,209		234,084		231,161		12		19		275,183		231,161		19
Total deposits	304,238		269,689		262,697		257,148		254,535		13		20		304,238		254,535		20
Borrowings	44,900		55,681		55,697		50,149		49,233		(19	)	(9	)	44,900		49,233		(9	)
Common equity	50,835		51,620		53,157		52,412		51,406		(2	)	(1	)	50,835		51,406		(1	)
Total stockholders’ equity	56,045		56,830		58,011		58,235		55,767		(1	)	—		56,045		55,767		—
Balance Sheet (Average Balances)
Loans held for investment	$	253,358	$	262,889	$	258,870	$	246,147	$	242,653	(4	)%	4	%	$	258,124	$	242,307	7	%
Interest-earning assets	378,145		355,347		349,150		340,949		338,026		6		12		366,746		337,913		9
Total assets	411,075		390,380		383,162		374,905		371,095		5		11		400,845		370,746		8
Interest-bearing deposits	261,256		241,115		236,250		232,063		230,452		8		13		251,185		229,020		10
Total deposits	288,344		264,653		260,040		255,082		253,634		9		14		276,498		252,528		9
Borrowings	49,827		51,795		51,442		49,413		49,982		(4	)	—		50,810		51,510		(1	)
Common equity	52,413		53,186		52,641		52,566		50,209		(1	)	4		52,799		49,289		7
Total stockholders’ equity	57,623		58,568		58,148		57,245		54,570		(2	)	6		58,096		53,650		8

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated



																2020 Q2 vs.				Six Months Ended June 30,
(Dollars in millions, except as noted)	2020			2020			2019			2019			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q2			Q1			Q4			Q3			Q2			Q1		Q2		2020			2019			2019
Performance Metrics
Net interest income growth (period over period)	(9		)%	(1		)%	6		%	—			(1		)%	**		**		—			2		%	**
Non-interest income growth (period over period)	(10		)	(10		)	11			(11		)%	7			**		**		(13		)%	(6		)	**
Total net revenue growth (period over period)	(10		)	(2		)	7			(2		)	1			**		**		(3		)	1			**
Total net revenue margin⁽⁵⁾	6.93			8.16			8.51			8.16			8.43			(123	)bps	(150	)bps	7.53			8.41			(88	)bps
Net interest margin⁽⁶⁾	5.78			6.78			6.95			6.73			6.80			(100	)	(102	)	6.26			6.83			(57	)
Return on average assets	(0.89		)	(1.37		)	1.23			1.42			1.74			48		**		(1.13		)	1.63			**
Return on average tangible assets⁽⁷⁾	(0.93		)	(1.43		)	1.28			1.48			1.82			50		**		(1.17		)	1.70			**
Return on average common equity⁽⁸⁾	(7.69		)	(10.68		)	7.93			9.63			12.14			299		**		(9.20		)	11.65			**
Return on average tangible common equity⁽⁹⁾	(10.74		)	(14.85		)	11.07			13.45			17.26			4	%	**		(12.81		)	16.70			**
Non-interest expense as a percentage of average loans held for investment	5.95			5.67			6.43			6.29			6.23			28	bps	(28	)	5.81			6.15			(34	)
Efficiency ratio⁽¹⁰⁾	57.50			51.44			56.03			55.64			53.05			6	%	4	%	54.32			52.44			2	%
Operating efficiency ratio⁽¹¹⁾	53.34			44.67			46.47			48.44			45.38			9		8		48.79			44.96			4
Effective income tax rate for continuing operations	37.2			29.6			18.6			22.0			19.3			8		18		32.9			18.7			14
Employees (period-end, in thousands)	53.1			52.1			51.9			52.1			50.7			2		5		53.1			50.7			5
Credit Quality Metrics
Allowance for credit losses	$	16,832		$	14,073		$	7,208		$	7,037		$	7,133		20	%	136	%	$	16,832		$	7,133		136	%
Allowance coverage ratio	6.69		%	5.35		%	2.71		%	2.82		%	2.92		%	134	bps	377	bps	6.69		%	2.92		%	377	bps
Net charge-offs	$	1,505		$	1,791		$	1,683		$	1,462		$	1,508		(16	)%	—		$	3,296		$	3,107		6	%
Net charge-off rate⁽¹²⁾	2.38		%	2.72		%	2.60		%	2.38		%	2.48		%	(34	)bps	(10	)bps	2.55		%	2.56		%	(1	)bps
30+ day performing delinquency rate⁽¹³⁾	2.09			2.95			3.51			3.28			3.15			(86	)	(106	)	2.09			3.15			(106	)
30+ day delinquency rate⁽¹³⁾	2.30			3.16			3.74			3.51			3.35			(86	)	(105	)	2.30			3.35			(105	)
Capital Ratios⁽¹⁴⁾
Common equity Tier 1 capital	12.4		%	12.0		%	12.2		%	12.5		%	12.3		%	40	bps	10	bps	12.4		%	12.3		%	10	bps
Tier 1 capital	14.2			13.7			13.7			14.4			13.8			50		40		14.2			13.8			40
Total capital	16.7			16.1			16.1			16.8			16.2			60		50		16.7			16.2			50
Tier 1 leverage	10.3			11.0			11.7			11.9			11.4			(70	)	(110	)	10.3			11.4			(110	)
Tangible common equity (“TCE”)⁽¹⁵⁾	8.8			9.6			10.2			10.3			10.2			(80	)	(140	)	8.8			10.2			(140	)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income



																2020 Q2 vs.				Six Months Ended June 30,
	2020			2020			2019			2019			2019			2020		2019								2020 vs.
(Dollars in millions, except per share data and as noted)	Q2			Q1			Q4			Q3			Q2			Q1		Q2		2020			2019			2019
Interest income:
Loans, including loans held for sale	$	5,820		$	6,542		$	6,682		$	6,429		$	6,383		(11	)%	(9	)%	$	12,362		$	12,751		(3	)%
Investment securities	482			530			544			583			629			(9	)	(23	)	1,012			1,284			(21	)
Other	16			37			44			63			64			(57	)	(75	)	53			133			(60	)
Total interest income	6,318			7,109			7,270			7,075			7,076			(11	)	(11	)	13,427			14,168			(5	)
Interest expense:
Deposits	611			731			832			901			870			(16	)	(30	)	1,342			1,687			(20	)
Securitized debt obligations	56			99			118			123			139			(43	)	(60	)	155			282			(45	)
Senior and subordinated notes	180			239			236			299			310			(25	)	(42	)	419			624			(33	)
Other borrowings	11			15			18			15			11			(27	)	—		26			38			(32	)
Total interest expense	858			1,084			1,204			1,338			1,330			(21	)	(35	)	1,942			2,631			(26	)
Net interest income	5,460			6,025			6,066			5,737			5,746			(9	)	(5	)	11,485			11,537			—
Provision for credit losses	4,246			5,423			1,818			1,383			1,342			(22	)	**		9,669			3,035			**
Net interest income after provision for credit losses	1,214			602			4,248			4,354			4,404			102		(72	)	1,816			8,502			(79	)
Non-interest income:
Interchange fees, net	672			752			811			790			820			(11	)	(18	)	1,424			1,578			(10	)
Service charges and other customer-related fees	258			327			342			283			352			(21	)	(27	)	585			705			(17	)
Net securities gains (losses)	—			—			(18		)	5			15			—		**		—			39			**
Other	166			145			226			144			191			14		(13	)	311			348			(11	)
Total non-interest income	1,096			1,224			1,361			1,222			1,378			(10	)	(20	)	2,320			2,670			(13	)
Non-interest expense:
Salaries and associate benefits	1,704			1,627			1,652			1,605			1,558			5		9		3,331			3,131			6
Occupancy and equipment	523			517			565			519			521			1		—		1,040			1,014			3
Marketing	273			491			710			501			546			(44	)	(50	)	764			1,063			(28	)
Professional services	304			287			318			314			314			6		(3	)	591			605			(2	)
Communications and data processing	308			302			346			312			329			2		(6	)	610			632			(3	)
Amortization of intangibles	16			22			28			25			29			(27	)	(45	)	38			59			(36	)
Other⁽¹⁶⁾	642			483			542			596			482			33		33		1,125			946			19
Total non-interest expense	3,770			3,729			4,161			3,872			3,779			1		—		7,499			7,450			1
Income (loss) from continuing operations before income taxes	(1,460		)	(1,903		)	1,448			1,704			2,003			(23	)	**		(3,363		)	3,722			**
Income tax provision (benefit)	(543		)	(563		)	270			375			387			(4	)	**		(1,106		)	696			**
Income (loss) from continuing operations, net of tax	(917		)	(1,340		)	1,178			1,329			1,616			(32	)	**		(2,257		)	3,026			**
Income (loss) from discontinued operations, net of tax	(1		)	—			(2		)	4			9			**		**		(1		)	11			**
Net income (loss)	(918		)	(1,340		)	1,176			1,333			1,625			(31	)	**		(2,258		)	3,037			**
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(1		)	(3		)	(7		)	(10		)	(12		)	(67	)	(92	)	(4		)	(24		)	(83	)
Preferred stock dividends	(90		)	(55		)	(97		)	(53		)	(80		)	64		13		(145		)	(132		)	10
Issuance cost for redeemed preferred stock⁽³⁾	—			(22		)	(31		)	—			—			**		—		(22		)	—			**
Net income (loss) available to common stockholders	$	(1,009	)	$	(1,420	)	$	1,041		$	1,270		$	1,533		(29	)	**		$	(2,429	)	$	2,881		**



													2020 Q2 vs.				Six Months Ended June 30,
	2020			2020			2019		2019		2019		2020		2019							2020 vs.
(Dollars in millions, except per share data and as noted)	Q2			Q1			Q4		Q3		Q2		Q1		Q2		2020			2019		2019
Basic earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	(2.21	)	$	(3.10	)	$	2.26	$	2.70	$	3.24	(29	)%	**		$	(5.31	)	$	6.11	**
Income from discontinued operations	—			—			—		0.01		0.02		—		**		—			0.02		**
Net income (loss) per basic common share	$	(2.21	)	$	(3.10	)	$	2.26	$	2.71	$	3.26	(29	)	**		$	(5.31	)	$	6.13	**
Diluted earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	(2.21	)	$	(3.10	)	$	2.25	$	2.68	$	3.22	(29	)	**		$	(5.31	)	$	6.08	**
Income from discontinued operations	—			—			—		0.01		0.02		—		**		—			0.02		**
Net income (loss) per diluted common share	$	(2.21	)	$	(3.10	)	$	2.25	$	2.69	$	3.24	(29	)	**		$	(5.31	)	$	6.10	**
Weighted-average common shares outstanding (in millions):
Basic common shares	456.7			457.6			460.9		469.5		470.8		—		(3	)%	457.1			470.1		(3	)%
Diluted common shares	456.7			457.6			463.4		471.8		473.0		—		(3	)	457.1			472.3		(3	)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets



																2020 Q2 vs.
	2020			2020			2019			2019			2019			2020		2019
(Dollars in millions)	Q2			Q1			Q4			Q3			Q2			Q1		Q2
Assets:
Cash and cash equivalents:
Cash and due from banks	$	4,583		$	4,545		$	4,129		$	4,452		$	5,184		1	%	(12	)%
Interest-bearing deposits and other short-term investments	51,235			20,391			9,278			12,668			9,927			151		416
Total cash and cash equivalents	55,818			24,936			13,407			17,120			15,111			124		269
Restricted cash for securitization investors	740			364			342			417			710			103		4
Investment securities:
Securities available for sale	87,859			81,423			79,213			46,168			45,658			8		92
Securities held to maturity	—			—			—			33,894			35,475			—		**
Total investment securities	87,859			81,423			79,213			80,062			81,133			8		8
Loans held for investment:
Unsecuritized loans held for investment	222,310			231,318			231,992			215,892			211,556			(4	)	5
Loans held in consolidated trusts	29,202			31,672			33,817			33,463			32,904			(8	)	(11	)
Total loans held for investment	251,512			262,990			265,809			249,355			244,460			(4	)	3
Allowance for credit losses	(16,832		)	(14,073		)	(7,208		)	(7,037		)	(7,133		)	20		136
Net loans held for investment	234,680			248,917			258,601			242,318			237,327			(6	)	(1	)
Loans held for sale	711			1,056			400			1,245			1,829			(33	)	(61	)
Premises and equipment, net	4,324			4,336			4,378			4,311			4,243			—		2
Interest receivable	1,574			1,687			1,758			1,627			1,544			(7	)	2
Goodwill	14,645			14,645			14,653			14,624			14,545			—		1
Other assets	20,945			19,514			17,613			17,086			17,177			7		22
Total assets	$	421,296		$	396,878		$	390,365		$	378,810		$	373,619		6		13



																2020 Q2 vs.
	2020			2020			2019			2019			2019			2020		2019
(Dollars in millions)	Q2			Q1			Q4			Q3			Q2			Q1		Q2
Liabilities:
Interest payable	$	380		$	359		$	439		$	370		$	437		6	%	(13	)%
Deposits:
Non-interest-bearing deposits	29,055			24,547			23,488			23,064			23,374			18		24
Interest-bearing deposits	275,183			245,142			239,209			234,084			231,161			12		19
Total deposits	304,238			269,689			262,697			257,148			254,535			13		20
Securitized debt obligations	15,761			17,141			17,808			18,910			16,959			(8	)	(7	)
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase	573			399			314			464			359			44		60
Senior and subordinated notes	28,481			32,049			30,472			30,682			31,822			(11	)	(10	)
Other borrowings	85			6,092			7,103			93			93			(99	)	(9	)
Total other debt	29,139			38,540			37,889			31,239			32,274			(24	)	(10	)
Other liabilities	15,733			14,319			13,521			12,908			13,647			10		15
Total liabilities	365,251			340,048			332,354			320,575			317,852			7		15

Stockholders’ equity:
Preferred stock	0			0			0			0			0			—		—
Common stock	7			7			7			7			7			—		—
Additional paid-in capital, net	33,556			33,450			32,980			33,826			32,262			—		4
Retained earnings	35,361			36,552			40,340			39,476			38,386			(3	)	(8	)
Accumulated other comprehensive income	3,981			3,679			1,156			453			170			8		**
Treasury stock, at cost	(16,860		)	(16,858		)	(16,472		)	(15,527		)	(15,058		)	—		12
Total stockholders’ equity	56,045			56,830			58,011			58,235			55,767			(1	)	—
Total liabilities and stockholders’ equity	$	421,296		$	396,878		$	390,365		$	378,810		$	373,619		6		13

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 $318 million in Q2 2020 and $389 million in Q1 2020 for credit card finance charges and fees charged-off as uncollectible, and by $365 million in Q4 2019, $330 million in Q3 2019 and $318 million in Q2 2019 for the estimated uncollectible amount of credit card 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⁾

On March 2, 2020, we redeemed all outstanding shares of our fixed rate 6.00% non-cumulative perpetual preferred stock Series B. The redemption increased our net loss available to common shareholders by $22 million in Q1 2020. On December 2, 2019, we redeemed all outstanding shares of our fixed rate 6.25% non-cumulative perpetual preferred stock Series C and fixed rate 6.70% non-cumulative perpetual preferred stock Series D. The redemption reduced our net income available to common shareholders by $31 million in Q4 2019.


⁽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⁾	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 (loss) 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 net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average common equity. 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 net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average tangible common equity (“TCE”). Our calculation of return on average TCE 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⁾	Operating efficiency ratio is calculated based on operating expense for the period divided by total net revenue for the period. We also provide an adjusted operating 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⁾	Metrics for Q2 2020 and Q1 2020 include the impact of COVID-19 customer assistance programs where applicable.


⁽¹⁴⁾	Capital ratios as of the end of Q2 2020 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.


⁽¹⁶⁾	Includes net Cybersecurity Incident expenses of $11 million in Q2 2020, $4 million in Q1 2020, $16 million in Q4 2019 and $22 million in Q3 2019, respectively.


**	Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	2020 Q2						2020 Q1						2019 Q2
	Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
(Dollars in millions, except as noted)	Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
Interest-earning assets:
Loans, including loans held for sale	$	254,402	$	5,820	9.15	%	$	263,631	$	6,542	9.93	%	$	243,831	$	6,383	10.47	%
Investment securities	81,095		482		2.38		78,212		530		2.71		82,383		629		3.05
Cash equivalents and other	42,648		16		0.15		13,504		37		1.10		11,812		64		2.16
Total interest-earning assets	$	378,145	$	6,318	6.68		$	355,347	$	7,109	8.00		$	338,026	$	7,076	8.37
Interest-bearing liabilities:
Interest-bearing deposits	$	261,256	$	611	0.94		$	241,115	$	731	1.21		$	230,452	$	870	1.51
Securitized debt obligations	16,432		56		1.37		18,054		99		2.20		18,262		139		3.04
Senior and subordinated notes	31,294		180		2.30		31,342		239		3.04		30,630		310		4.05
Other borrowings and liabilities	3,554		11		1.21		3,779		15		1.62		2,322		11		1.91
Total interest-bearing liabilities	$	312,536	$	858	1.10		$	294,290	$	1,084	1.47		$	281,666	$	1,330	1.89
Net interest income/spread			$	5,460	5.58				$	6,025	6.53				$	5,746	6.48
Impact of non-interest-bearing funding					0.20						0.25						0.32
Net interest margin					5.78	%					6.78	%					6.80	%



	Six Months Ended June 30,
	2020						2019
	Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
(Dollars in millions, except as noted)	Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
Interest-earning assets:
Loans, including loans held for sale	$	259,017	$	12,362	9.55	%	$	243,383	$	12,751	10.48	%
Investment securities	79,654		1,012		2.54		83,027		1,284		3.09
Cash equivalents and other	28,075		53		0.38		11,503		133		2.31
Total interest-earning assets	$	366,746	$	13,427	7.32		$	337,913	$	14,168	8.39
Interest-bearing liabilities:
Interest-bearing deposits	$	251,185	$	1,342	1.07		$	229,020	$	1,687	1.47
Securitized debt obligations	17,243		155		1.80		18,503		282		3.05
Senior and subordinated notes	31,318		419		2.67		30,732		624		4.06
Other borrowings and liabilities	3,667		26		1.42		3,497		38		2.20
Total interest-bearing liabilities	$	303,413	$	1,942	1.28		$	281,752	$	2,631	1.87
Net interest income/spread			$	11,485	6.04				$	11,537	6.52
Impact of non-interest-bearing funding					0.22						0.31
Net interest margin					6.26	%					6.83	%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics



											2020 Q2 vs.				Six Months Ended June 30,
	2020		2020		2019		2019		2019		2020		2019		2020		2019		2020 vs. 2019
(Dollars in millions, except as noted)	Q2		Q1		Q4		Q3		Q2		Q1		Q2		2020		2019		2020 vs. 2019
Loans Held for Investment (Period-End)
Credit card:
Domestic credit card	$	99,390	$	109,549	$	118,606	$	104,664	$	102,959	(9	)%	(3	)%	$	99,390	$	102,959	(3	)%
International card businesses	7,920		8,248		9,630		9,017		9,182		(4	)	(14	)	7,920		9,182		(14	)
Total credit card⁽¹⁾	107,310		117,797		128,236		113,681		112,141		(9	)	(4	)	107,310		112,141		(4	)
Consumer banking:
Auto	63,319		61,364		60,362		59,278		57,556		3		10		63,319		57,556		10
Retail banking	3,393		2,669		2,703		2,737		2,771		27		22		3,393		2,771		22
Total consumer banking	66,712		64,033		63,065		62,015		60,327		4		11		66,712		60,327		11
Commercial banking:
Commercial and multifamily real estate	30,953		32,373		30,245		30,009		29,861		(4	)	4		30,953		29,861		4
Commercial and industrial	46,537		48,787		44,263		43,650		42,125		(5	)	10		46,537		42,125		10
Total commercial lending	77,490		81,160		74,508		73,659		71,986		(5	)	8		77,490		71,986		8
Small-ticket commercial real estate	—		—		—		—		6		**		**		—		6		**
Total commercial banking	77,490		81,160		74,508		73,659		71,992		(5	)	8		77,490		71,992		8
Total loans held for investment	$	251,512	$	262,990	$	265,809	$	249,355	$	244,460	(4	)	3		$	251,512	$	244,460	3
Loans Held for Investment (Average)
Credit card:
Domestic credit card	$	100,996	$	113,711	$	112,965	$	103,426	$	101,930	(11	)%	(1	)%	$	107,354	$	102,296	5	%
International card businesses	7,752		9,065		9,120		8,945		8,868		(14	)	(13	)	8,408		8,829		(5	)
Total credit card⁽¹⁾	108,748		122,776		122,085		112,371		110,798		(11	)	(2	)	115,762		111,125		4
Consumer banking:
Auto	61,798		61,005		59,884		58,517		57,070		1		8		61,401		56,654		8
Retail banking	3,053		2,666		2,712		2,752		2,788		15		10		2,860		2,809		2
Total consumer banking	64,851		63,671		62,596		61,269		59,858		2		8		64,261		59,463		8
Commercial banking:
Commercial and multifamily real estate	31,723		31,081		30,173		29,698		29,514		2		7		31,402		29,276		7
Commercial and industrial	48,036		45,361		44,016		42,807		42,476		6		13		46,699		42,304		10
Total commercial lending	79,759		76,442		74,189		72,505		71,990		4		11		78,101		71,580		9
Small-ticket commercial real estate	—		—		—		2		7		**		**		—		139		**
Total commercial banking	79,759		76,442		74,189		72,507		71,997		4		11		78,101		71,719		9
Total average loans held for investment	$	253,358	$	262,889	$	258,870	$	246,147	$	242,653	(4	)	4		$	258,124	$	242,307	7



											2020 Q2 vs.				Six Months Ended June 30,
	2020		2020		2019		2019		2019		2020		2019		2020		2019		2020 vs. 2019
	Q2		Q1		Q4		Q3		Q2		Q1		Q2		2020		2019		2020 vs. 2019
Net Charge-Off Rates
Credit card:
Domestic credit card	4.53	%	4.68	%	4.32	%	4.12	%	4.86	%	(15	)bps	(33	)bps	4.61	%	4.95	%	(34	)bps
International card businesses	3.47		4.65		4.22		3.78		3.63		(118	)	(16	)	4.11		3.41		70
Total credit card	4.46		4.68		4.31		4.09		4.76		(22	)	(30	)	4.57		4.83		(26	)
Consumer banking:
Auto	1.16		1.51		1.90		1.60		1.09		(35	)	7		1.33		1.26		7
Retail banking	1.78		2.37		2.77		2.55		2.42		(59	)	(64	)	2.05		2.49		(44	)
Total consumer banking	1.19		1.54		1.93		1.64		1.15		(35	)	4		1.36		1.32		4
Commercial banking:
Commercial and multifamily real estate	0.09		—		—		0.02		—		9		9		0.04		—		4
Commercial and industrial	0.78		0.96		0.60		0.55		0.15		(18	)	63		0.87		0.14		73
Total commercial banking	0.51		0.57		0.35		0.33		0.09		(6	)	42		0.54		0.08		46
Total net charge-offs	2.38		2.72		2.60		2.38		2.48		(34	)	(10	)	2.55		2.56		(1	)
30+ Day Performing Delinquency Rates⁽²⁾
Credit card:
Domestic credit card	2.74	%	3.69	%	3.93	%	3.71	%	3.40	%	(95	)bps	(66	)bps	2.74	%	3.40	%	(66	)bps
International card businesses	2.71		3.66		3.47		3.52		3.40		(95	)	(69	)	2.71		3.40		(69	)
Total credit card	2.74		3.69		3.89		3.69		3.40		(95	)	(66	)	2.74		3.40		(66	)
Consumer banking:
Auto	3.28		5.29		6.88		6.47		6.10		(201	)	(282	)	3.28		6.10		(282	)
Retail banking	0.89		1.27		1.02		1.01		0.93		(38	)	(4	)	0.89		0.93		(4	)
Total consumer banking	3.16		5.12		6.63		6.23		5.87		(196	)	(271	)	3.16		5.87		(271	)
Nonperforming Loans and Nonperforming Assets Rates⁽³⁾⁽⁴⁾
Credit card:
International card businesses	0.29	%	0.29	%	0.26	%	0.25	%	0.25	%	—		4	bps	0.29	%	0.25	%	4	bps
Total credit card	0.02		0.02		0.02		0.02		0.02		—		—		0.02		0.02		—
Consumer banking:
Auto	0.41		0.62		0.81		0.73		0.64		(21	)bps	(23	)	0.41		0.64		(23	)
Retail banking	0.70		0.88		0.87		0.91		1.02		(18	)	(32	)	0.70		1.02		(32	)
Total consumer banking	0.43		0.63		0.81		0.74		0.66		(20	)	(23	)	0.43		0.66		(23	)
Commercial banking:
Commercial and multifamily real estate	0.54		0.22		0.12		0.12		0.14		32		40		0.54		0.14		40
Commercial and industrial	1.06		0.87		0.93		0.95		0.74		19		32		1.06		0.74		32
Total commercial banking	0.85		0.61		0.60		0.61		0.50		24		35		0.85		0.50		35
Total nonperforming loans	0.38		0.35		0.37		0.37		0.32		3		6		0.38		0.32		6
Total nonperforming assets	0.39		0.37		0.39		0.40		0.34		2		5		0.39		0.34		5

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	Three Months Ended June 30, 2020
	Credit Card									Consumer Banking
(Dollars in millions)	Domestic Card			International Card Businesses			Total Credit Card			Auto			Retail Banking			Total Consumer Banking			Commercial Banking			Total
Allowance for credit losses:
Balance as of March 31, 2020	$	9,806		$	540		$	10,346		$	2,058		$	96		$	2,154		$	1,573		$	14,073
Charge-offs	(1,493		)	(119		)	(1,612		)	(399		)	(17		)	(416		)	(103		)	(2,131		)
Recoveries	350			51			401			220			4			224			1			626
Net charge-offs	(1,143		)	(68		)	(1,211		)	(179		)	(13		)	(192		)	(102		)	(1,505		)
Provision for credit losses	2,906			38			2,944			847			29			876			432			4,252
Allowance build (release) for credit losses	1,763			(30		)	1,733			668			16			684			330			2,747
Other changes⁽⁵⁾	—			12			12			—			—			—			—			12
Balance as of June 30, 2020	11,569			522			12,091			2,726			112			2,838			1,903			16,832
Reserve for unfunded lending commitments:
Balance as of March 31, 2020	—			—			—			—			—			—			223			223
Benefit for losses on unfunded lending commitments	—			—			—			—			—			—			(5		)	(5		)
Balance as of June 30, 2020	—			—			—			—			—			—			218			218
Combined allowance and reserve as of June 30, 2020	$	11,569		$	522		$	12,091		$	2,726		$	112		$	2,838		$	2,121		$	17,050



	Six Months Ended June 30, 2020
	Credit Card									Consumer Banking
(Dollars in millions)	Domestic Card			International Card Businesses			Total Credit Card			Auto			Retail Banking			Total Consumer Banking			Commercial Banking			Total
Allowance for credit losses:
Balance as of December 31, 2019	$	4,997		$	398		$	5,395		$	984		$	54		$	1,038		$	775		$	7,208
Cumulative effects from adoption of the current expected credit loss (“CECL”) standard	2,237			4			2,241			477			25			502			102			2,845
Finance charge and fee reserve reclassification⁽¹⁾	439			23			462			—			—			—			—			462
Balance as of January 1, 2020	7,673			425			8,098			1,461			79			1,540			877			10,515
Charge-offs	(3,208		)	(253		)	(3,461		)	(875		)	(37		)	(912		)	(215		)	(4,588		)
Recoveries	734			80			814			466			8			474			4			1,292
Net charge-offs	(2,474		)	(173		)	(2,647		)	(409		)	(29		)	(438		)	(211		)	(3,296		)
Provision for credit losses	6,370			276			6,646			1,674			62			1,736			1,237			9,619
Allowance build for credit losses	3,896			103			3,999			1,265			33			1,298			1,026			6,323
Other changes⁽⁵⁾	—			(6		)	(6		)	—			—			—			—			(6		)
Balance as of June 30, 2020	11,569			522			12,091			2,726			112			2,838			1,903			16,832
Reserve for unfunded lending commitments:
Balance as of December 31, 2019	—			—			—			—			5			5			130			135
Cumulative effects from adoption of the CECL standard	—			—			—			—			(5		)	(5		)	42			37
Balance as of January 1, 2020	—			—			—			—			—			—			172			172
Provision for losses on unfunded lending commitments	—			—			—			—			—			—			46			46
Balance as of June 30, 2020	—			—			—			—			—			—			218			218
Combined allowance and reserve as of June 30, 2020	$	11,569		$	522		$	12,091		$	2,726		$	112		$	2,838		$	2,121		$	17,050

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results



	Three Months Ended June 30, 2020															Six Months Ended June 30, 2020
(Dollars in millions)	Credit Card			Consumer Banking			Commercial Banking⁽⁶⁾			Other⁽⁶⁾			Total			Credit Card			Consumer Banking			Commercial Banking⁽⁶⁾			Other⁽⁶⁾			Total
Net interest income (loss)	$	3,369		$	1,665		$	518		$	(92	)	$	5,460		$	7,071		$	3,322		$	1,009		$	83		$	11,485
Non-interest income (loss)	845			97			180			(26		)	1,096			1,756			223			418			(77		)	2,320
Total net revenue (loss)	4,214			1,762			698			(118		)	6,556			8,827			3,545			1,427			6			13,805
Provision (benefit) for credit losses	2,944			876			427			(1		)	4,246			6,646			1,736			1,283			4			9,669
Non-interest expense	1,969			1,036			425			340			3,770			4,177			2,027			837			458			7,499
Loss from continuing operations before income taxes	(699		)	(150		)	(154		)	(457		)	(1,460		)	(1,996		)	(218		)	(693		)	(456		)	(3,363		)
Income tax benefit	(166		)	(36		)	(36		)	(305		)	(543		)	(472		)	(52		)	(164		)	(418		)	(1,106		)
Loss from continuing operations, net of tax	$	(533	)	$	(114	)	$	(118	)	$	(152	)	$	(917	)	$	(1,524	)	$	(166	)	$	(529	)	$	(38	)	$	(2,257	)

	Three Months Ended March 31, 2020
(Dollars in millions)	Credit Card			Consumer Banking			Commercial Banking⁽⁶⁾			Other⁽⁶⁾			Total
Net interest income	$	3,702		$	1,657		$	491		$	175		$	6,025
Non-interest income (loss)	911			126			238			(51		)	1,224
Total net revenue	4,613			1,783			729			124			7,249
Provision for credit losses	3,702			860			856			5			5,423
Non-interest expense	2,208			991			412			118			3,729
Income (loss) from continuing operations before income taxes	(1,297		)	(68		)	(539		)	1			(1,903		)
Income tax benefit	(306		)	(16		)	(128		)	(113		)	(563		)
Income (loss) from continuing operations, net of tax	$	(991	)	$	(52	)	$	(411	)	$	114		$	(1,340	)

	Three Months Ended June 30, 2019															Six Months Ended June 30, 2019
(Dollars in millions)	Credit Card			Consumer Banking			Commercial Banking⁽⁶⁾			Other⁽⁶⁾			Total			Credit Card			Consumer Banking			Commercial Banking⁽⁶⁾			Other⁽⁶⁾			Total
Net interest income (loss)	$	3,531		$	1,709		$	514		$	(8	)	$	5,746		$	7,121		$	3,388		$	1,003		$	25		$	11,537
Non-interest income (loss)	1,038			166			200			(26		)	1,378			1,988			326			387			(31		)	2,670
Total net revenue (loss)	4,569			1,875			714			(34		)	7,124			9,109			3,714			1,390			(6		)	14,207
Provision for credit losses	1,095			165			82			—			1,342			2,484			400			151			—			3,035
Non-interest expense	2,253			1,002			427			97			3,779			4,424			1,996			844			186			7,450
Income (loss) from continuing operations before income taxes	1,221			708			205			(131		)	2,003			2,201			1,318			395			(192		)	3,722
Income tax provision (benefit)	283			165			48			(109		)	387			512			307			92			(215		)	696
Income (loss) from continuing operations, net of tax	$	938		$	543		$	157		$	(22	)	$	1,616		$	1,689		$	1,011		$	303		$	23		$	3,026

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business



																2020 Q2 vs.				Six Months Ended June 30,
	2020			2020			2019			2019			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q2			Q1			Q4			Q3			Q2			Q1		Q2		2020			2019			2019
Credit Card
Earnings:
Net interest income	$	3,369		$	3,702		$	3,794		$	3,546		$	3,531		(9	)%	(5	)%	$	7,071		$	7,121		(1	)%
Non-interest income	845			911			1,030			870			1,038			(7	)	(19	)	1,756			1,988			(12	)
Total net revenue	4,214			4,613			4,824			4,416			4,569			(9	)	(8	)	8,827			9,109			(3	)
Provision for credit losses	2,944			3,702			1,421			1,087			1,095			(20	)	169		6,646			2,484			168
Non-interest expense	1,969			2,208			2,487			2,360			2,253			(11	)	(13	)	4,177			4,424			(6	)
Income (loss) from continuing operations before income taxes	(699		)	(1,297		)	916			969			1,221			(46	)	**		(1,996		)	2,201			**
Income tax provision (benefit)	(166		)	(306		)	212			235			283			(46	)	**		(472		)	512			**
Income (loss) from continuing operations, net of tax	$	(533	)	$	(991	)	$	704		$	734		$	938		(46	)	**		$	(1,524	)	$	1,689		**
Selected performance metrics:
Period-end loans held for investment⁽¹⁾	$	107,310		$	117,797		$	128,236		$	113,681		$	112,141		(9	)	(4	)	$	107,310		$	112,141		(4	)
Average loans held for investment⁽¹⁾	108,748			122,776			122,085			112,371			110,798			(11	)	(2	)	115,762			111,125			4
Average yield on loans held for investment⁽⁷⁾	13.72		%	14.46		%	15.02		%	15.55		%	15.66		%	(74	)bps	(194	)bps	14.11		%	15.72		%	(161	)bps
Total net revenue margin⁽⁸⁾	15.50			15.03			15.80			15.72			16.50			47		(100	)	15.25			16.39			(114	)
Net charge-off rate	4.46			4.68			4.31			4.09			4.76			(22	)	(30	)	4.57			4.83			(26	)
30+ day performing delinquency rate	2.74			3.69			3.89			3.69			3.40			(95	)	(66	)	2.74			3.40			(66	)
30+ day delinquency rate	2.75			3.70			3.91			3.71			3.42			(95	)	(67	)	2.75			3.42			(67	)
Nonperforming loan rate⁽³⁾	0.02			0.02			0.02			0.02			0.02			—		—		0.02			0.02			—
Purchase volume⁽⁹⁾	$	90,149		$	99,920		$	116,631		$	108,034		$	106,903		(10	)%	(16	)%	$	190,069		$	200,100		(5	)%



																2020 Q2 vs.				Six Months Ended June 30,
	2020			2020			2019			2019			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q2			Q1			Q4			Q3			Q2			Q1		Q2		2020			2019			2019
Domestic Card
Earnings:
Net interest income	$	3,094		$	3,381		$	3,473		$	3,299		$	3,220		(8	)%	(4	)%	$	6,475		$	6,493		—
Non-interest income	795			842			962			878			971			(6	)	(18	)	1,637			1,844			(11	)%
Total net revenue	3,889			4,223			4,435			4,177			4,191			(8	)	(7	)	8,112			8,337			(3	)
Provision for credit losses	2,906			3,464			1,346			1,010			1,024			(16	)	184		6,370			2,315			175
Non-interest expense	1,776			1,984			2,249			2,076			2,034			(10	)	(13	)	3,760			3,983			(6	)
Income (loss) from continuing operations before income taxes	(793		)	(1,225		)	840			1,091			1,133			(35	)	**		(2,018		)	2,039			**
Income tax provision (benefit)	(188		)	(290		)	196			254			264			(35	)	**		(478		)	475			**
Income (loss) from continuing operations, net of tax	$	(605	)	$	(935	)	$	644		$	837		$	869		(35	)	**		$	(1,540	)	$	1,564		**
Selected performance metrics:
Period-end loans held for investment⁽¹⁾	$	99,390		$	109,549		$	118,606		$	104,664		$	102,959		(9	)	(3	)	$	99,390		$	102,959		(3	)
Average loans held for investment⁽¹⁾	100,996			113,711			112,965			103,426			101,930			(11	)	(1	)	107,354			102,296			5
Average yield on loans held for investment⁽⁷⁾	13.52		%	14.30		%	14.91		%	15.74		%	15.60		%	(78	)bps	(208	)bps	13.93		%	15.65		%	(172	)bps
Total net revenue margin⁽⁸⁾	15.40			14.86			15.70			16.15			16.45			54		(105	)	15.11			16.30			(119	)
Net charge-off rate	4.53			4.68			4.32			4.12			4.86			(15	)	(33	)	4.61			4.95			(34	)
30+ day performing delinquency rate	2.74			3.69			3.93			3.71			3.40			(95	)	(66	)	2.74			3.40			(66	)
Purchase volume⁽⁹⁾	$	82,860		$	92,248		$	107,154		$	99,087		$	98,052		(10	)%	(15	)%	$	175,108		$	183,790		(5	)%
Refreshed FICO scores:⁽¹⁰⁾
Greater than 660	67		%	65		%	67		%	68		%	68		%	2		(1	)	67		%	68		%	(1	)
660 or below	33			35			33			32			32			(2	)	1		33			32			1
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business



																2020 Q2 vs.				Six Months Ended June 30,
	2020			2020			2019			2019			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q2			Q1			Q4			Q3			Q2			Q1		Q2		2020			2019			2019
Consumer Banking
Earnings:
Net interest income	$	1,665		$	1,657		$	1,662		$	1,682		$	1,709		—		(3	)%	$	3,322		$	3,388		(2	)%
Non-interest income	97			126			152			165			166			(23	)%	(42	)	223			326			(32	)
Total net revenue	1,762			1,783			1,814			1,847			1,875			(1	)	(6	)	3,545			3,714			(5	)
Provision for credit losses	876			860			335			203			165			2		**		1,736			400			**
Non-interest expense	1,036			991			1,110			985			1,002			5		3		2,027			1,996			2
Income (loss) from continuing operations before income taxes	(150		)	(68		)	369			659			708			121		**		(218		)	1,318			**
Income tax provision (benefit)	(36		)	(16		)	86			154			165			125		**		(52		)	307			**
Income (loss) from continuing operations, net of tax	$	(114	)	$	(52	)	$	283		$	505		$	543		119		**		$	(166	)	$	1,011		**
Selected performance metrics:
Period-end loans held for investment	$	66,712		$	64,033		$	63,065		$	62,015		$	60,327		4		11		$	66,712		$	60,327		11
Average loans held for investment	64,851			63,671			62,596			61,269			59,858			2		8		64,261			59,463			8
Average yield on loans held for investment⁽⁷⁾	8.41		%	8.46		%	8.51		%	8.47		%	8.36		%	(5	)bps	5	bps	8.44		%	8.25		%	19	bps
Auto loan originations	$	8,292		$	7,640		$	7,527		$	8,175		$	7,327		9	%	13	%	$	15,931		$	13,549		18	%
Period-end deposits	246,804			217,607			213,099			206,423			205,220			13		20		246,804			205,220			20
Average deposits	232,293			215,071			209,783			204,933			204,164			8		14		223,682			202,627			10
Average deposits interest rate	0.89		%	1.06		%	1.20		%	1.31		%	1.26		%	(17	)bps	(37	)bps	0.97		%	1.22		%	(25	)bps
Net charge-off rate	1.19			1.54			1.93			1.64			1.15			(35	)	4		1.36			1.32			4
30+ day performing delinquency rate	3.16			5.12			6.63			6.23			5.87			(196	)	(271	)	3.16			5.87			(271	)
30+ day delinquency rate	3.48			5.65			7.34			6.86			6.41			(217	)	(293	)	3.48			6.41			(293	)
Nonperforming loan rate⁽³⁾	0.43			0.63			0.81			0.74			0.66			(20	)	(23	)	0.43			0.66			(23	)
Nonperforming asset rate⁽⁴⁾	0.46			0.71			0.91			0.83			0.75			(25	)	(29	)	0.46			0.75			(29	)
Auto—At origination FICO scores:⁽¹¹⁾
Greater than 660	46		%	47		%	48		%	48		%	49		%	(1	)%	(3	)%	46		%	49		%	(3	)%
621 - 660	20			20			20			20			19			—		1		20			19			1
620 or below	34			33			32			32			32			1		2		34			32			2
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business



																2020 Q2 vs.				Six Months Ended June 30,
	2020			2020			2019			2019			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q2			Q1			Q4			Q3			Q2			Q1		Q2		2020			2019			2019
Commercial Banking
Earnings:
Net interest income	$	518		$	491		$	494		$	486		$	514		5	%	1	%	$	1,009		$	1,003		1	%
Non-interest income	180			238			223			221			200			(24	)	(10	)	418			387			8
Total net revenue⁽⁶⁾	698			729			717			707			714			(4	)	(2	)	1,427			1,390			3
Provision for credit losses	427			856			62			93			82			(50	)	**		1,283			151			**
Non-interest expense	425			412			441			414			427			3		—		837			844			(1	)
Income (loss) from continuing operations before income taxes	(154		)	(539		)	214			200			205			(71	)	**		(693		)	395			**
Income tax provision (benefit)	(36		)	(128		)	50			46			48			(72	)	**		(164		)	92			**
Income (loss) from continuing operations, net of tax	$	(118	)	$	(411	)	$	164		$	154		$	157		(71	)	**		$	(529	)	$	303		**
Selected performance metrics:
Period-end loans held for investment	$	77,490		$	81,160		$	74,508		$	73,659		$	71,992		(5	)	8		$	77,490		$	71,992		8
Average loans held for investment	79,759			76,442			74,189			72,507			71,997			4		11		78,101			71,719			9
Average yield on loans held for investment⁽⁶⁾⁽⁷⁾	3.00		%	3.88		%	4.22		%	4.45		%	4.75		%	(88	)bps	(175	)bps	3.43		%	4.68		%	(125	)bps
Period-end deposits	$	35,669		$	32,822		$	32,134		$	30,923		$	30,761		9	%	16	%	$	35,669		$	30,761		16	%
Average deposits	34,635			32,238			32,034			30,693			31,364			7		10		33,437			31,092			8
Average deposits interest rate	0.30		%	0.89		%	1.10		%	1.25		%	1.28		%	(59	)bps	(98	)bps	0.58		%	1.19		%	(61	)bps
Net charge-off rate	0.51			0.57			0.35			0.33			0.09			(6	)	42		0.54			0.08			46
Nonperforming loan rate⁽³⁾	0.85			0.61			0.60			0.61			0.50			24		35		0.85			0.50			35
Nonperforming asset rate⁽⁴⁾	0.85			0.61			0.60			0.61			0.50			24		35		0.85			0.50			35
Risk category:⁽¹²⁾
Noncriticized	$	70,881		$	77,714		$	71,848		$	71,144		$	69,390		(9	)%	2	%	$	70,881		$	69,390		2	%
Criticized performing	5,949			2,952			2,181			2,035			2,211			102		169		5,949			2,211			169
Criticized nonperforming	660			494			448			449			360			34		83		660			360			83
PCI loans	—			—			31			31			31			—		**		—			31			**
Total commercial banking loans	$	77,490		$	81,160		$	74,508		$	73,659		$	71,992		(5	)	8		$	77,490		$	71,992		8
Risk category as a percentage of period-end loans held for investment:⁽¹²⁾
Noncriticized	91.4		%	95.8		%	96.5		%	96.6		%	96.4		%	(4	)	(5	)	91.4		%	96.4		%	(5	)
Criticized performing	7.7			3.6			2.9			2.8			3.1			4		5		7.7			3.1			5
Criticized nonperforming	0.9			0.6			0.6			0.6			0.5			30	bps	40	bps	0.9			0.5			40	bps
Total commercial banking 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



																2020 Q2 vs.				Six Months Ended June 30,
	2020			2020			2019			2019			2019			2020		2019								2020 vs.
(Dollars in millions)	Q2			Q1			Q4			Q3			Q2			Q1		Q2		2020			2019			2019
Other
Earnings:
Net interest income (loss)	$	(92	)	$	175		$	116		$	23		$	(8	)	**		**		$	83		$	25		**
Non-interest loss	(26		)	(51		)	(44		)	(34		)	(26		)	(49	)%	—		(77		)	(31		)	148	%
Total net revenue (loss)⁽⁶⁾	(118		)	124			72			(11		)	(34		)	**		**		6			(6		)	**
Provision (benefit) for credit losses	(1		)	5			—			—			—			**		**		4			—			**
Non-interest expense^(13)(14)	340			118			123			113			97			188		**		458			186			146
Income (loss) from continuing operations before income taxes	(457		)	1			(51		)	(124		)	(131		)	**		**		(456		)	(192		)	138
Income tax benefit	(305		)	(113		)	(78		)	(60		)	(109		)	170		180	%	(418		)	(215		)	94
Income (loss) from continuing operations, net of tax	$	(152	)	$	114		$	27		$	(64	)	$	(22	)	**		**		$	(38	)	$	23		**
Selected performance metrics:
Period-end deposits	$	21,765		$	19,260		$	17,464		$	19,802		$	18,554		13		17		$	21,765		$	18,554		17
Average deposits	21,416			17,344			18,223			19,456			18,106			23		18		19,379			18,809			3
Total
Earnings:
Net interest income	$	5,460		$	6,025		$	6,066		$	5,737		$	5,746		(9	)%	(5	)%	$	11,485		$	11,537		—
Non-interest income	1,096			1,224			1,361			1,222			1,378			(10	)	(20	)	2,320			2,670			(13	)%
Total net revenue	6,556			7,249			7,427			6,959			7,124			(10	)	(8	)	13,805			14,207			(3	)
Provision for credit losses	4,246			5,423			1,818			1,383			1,342			(22	)	**		9,669			3,035			**
Non-interest expense	3,770			3,729			4,161			3,872			3,779			1		—		7,499			7,450			1
Income (loss) from continuing operations before income taxes	(1,460		)	(1,903		)	1,448			1,704			2,003			(23	)	**		(3,363		)	3,722			**
Income tax provision (benefit)	(543		)	(563		)	270			375			387			(4	)	**		(1,106		)	696			**
Income (loss) from continuing operations, net of tax	$	(917	)	$	(1,340	)	$	1,178		$	1,329		$	1,616		(32	)	**		$	(2,257	)	$	3,026		**
Selected performance metrics:
Period-end loans held for investment	$	251,512		$	262,990		$	265,809		$	249,355		$	244,460		(4	)	3		$	251,512		$	244,460		3
Average loans held for investment	253,358			262,889			258,870			246,147			242,653			(4	)	4		258,124			242,307			7
Period-end deposits	304,238			269,689			262,697			257,148			254,535			13		20		304,238			254,535			20
Average deposits	288,344			264,653			260,040			255,082			253,634			9		14		276,498			252,528			9

CAPITAL ONE FINANCIAL CORPORATION (COF)

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


⁽¹⁾	Concurrent with our adoption of the CECL standard in the first quarter of 2020, we reclassified our finance charge and fee reserve to our allowance for credit losses, with a corresponding increase to credit card loans held for investment.


⁽²⁾	Metrics for Q2 2020 and Q1 2020 include the impact of COVID-19 customer assistance programs where applicable.


⁽³⁾	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.


⁽⁴⁾	Nonperforming assets consist of nonperforming loans, repossessed assets 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, repossessed assets and other foreclosed assets.


⁽⁵⁾	Represents foreign currency translation adjustments.


⁽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 of 21% and state taxes where applicable, with offsetting reductions to the Other category.


⁽⁷⁾	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.


⁽⁸⁾	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.


⁽⁹⁾	Purchase volume consists of purchase transactions, net of returns, for the period, and excludes cash advance and balance transfer transactions.

⁽¹⁰⁾

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.


⁽¹¹⁾	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.


⁽¹²⁾	Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities.


⁽¹³⁾	Includes charges incurred as a result of restructuring activities.


⁽¹⁴⁾	Includes net Cybersecurity Incident expenses of $11 million in Q2 2020, $4 million in Q1 2020, $16 million in Q4 2019 and $22 million in Q3 2019, respectively.


**	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)	June 30, 2020			March 31, 2020			December 31, 2019			September 30, 2019			June 30, 2019
Regulatory Capital Metrics
Common equity excluding AOCI	$	50,614		$	51,018		$	52,001		$	51,959		$	51,236
Adjustments:
AOCI, net of tax⁽²⁾	(145		)	(170		)	1,156			453			170
Goodwill, net of related deferred tax liabilities	(14,449		)	(14,453		)	(14,465		)	(14,439		)	(14,365		)
Intangible assets, net of related deferred tax liabilities	(135		)	(151		)	(170		)	(180		)	(194		)
Other⁽²⁾	—			—			(360		)	(588		)	(401		)
Common equity Tier 1 capital	$	35,885		$	36,244		$	38,162		$	37,205		$	36,446
Tier 1 capital	$	41,094		$	41,453		$	43,015		$	43,028		$	40,806
Total capital⁽³⁾	48,506			48,775			50,350			50,174			47,919
Risk-weighted assets	290,062			302,871			313,155			298,130			295,255
Adjusted average assets⁽⁴⁾	398,062			377,360			368,511			360,266			356,518
Capital Ratios
Common equity Tier 1 capital⁽⁵⁾	12.4		%	12.0		%	12.2		%	12.5		%	12.3		%
Tier 1 capital⁽⁶⁾	14.2			13.7			13.7			14.4			13.8
Total capital⁽⁷⁾	16.7			16.1			16.1			16.8			16.2
Tier 1 leverage⁽⁴⁾	10.3			11.0			11.7			11.9			11.4
Tangible common equity (“TCE”)⁽⁸⁾	8.8			9.6			10.2			10.3			10.2

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. These adjusted results provide alternate measurements of our operating performance, both for the current period and trends across multiple periods. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.



	2020									2020									Six Months Ended
	Q2									Q1									June 30, 2020
(Dollars in millions, except per share data and as noted)	Reported Results			Adj.⁽⁹⁾			Adjusted Results			Reported Results			Adj.⁽⁹⁾			Adjusted Results			Reported Results			Adj.⁽⁹⁾			Adjusted Results
Selected income statement data:
Net interest income	$	5,460		—			$	5,460		$	6,025		—			$	6,025		$	11,485		—			$	11,485
Non-interest income	1,096			—			1,096			1,224			—			1,224			2,320			—			2,320
Total net revenue	6,556			—			6,556			7,249			—			7,249			13,805			—			13,805
Provision for credit losses	4,246			—			4,246			5,423			—			5,423			9,669			—			9,669
Non-interest expense	3,770			$	(276	)	3,494			3,729			$	(49	)	3,680			7,499			$	(325	)	7,174
Income (loss) from continuing operations before income taxes	(1,460		)	276			(1,184		)	(1,903		)	49			(1,854		)	(3,363		)	325			(3,038		)
Income tax provision (benefit)	(543		)	3			(540		)	(563		)	12			(551		)	(1,106		)	15			(1,091		)
Income (loss) from continuing operations, net of tax	(917		)	273			(644		)	(1,340		)	37			(1,303		)	(2,257		)	310			(1,947		)
Income (loss) from discontinued operations, net of tax	(1		)	—			(1		)	—			—			—			(1		)	—			(1		)
Net income (loss)	(918		)	273			(645		)	(1,340		)	37			(1,303		)	(2,258		)	310			(1,948		)
Dividends and undistributed earnings allocated to participating securities⁽¹⁰⁾	(1		)	—			(1		)	(3		)	—			(3		)	(4		)	—			(4		)
Preferred stock dividends	(90		)	—			(90		)	(55		)	—			(55		)	(145		)	—			(145		)
Issuance cost for redeemed preferred stock	—			—			—			(22		)	—			(22		)	(22		)	—			(22		)
Net income (loss) available to common stockholders	$	(1,009	)	$	273		$	(736	)	$	(1,420	)	$	37		$	(1,383	)	$	(2,429	)	$	310		$	(2,119	)
Selected performance metrics:
Diluted EPS⁽¹⁰⁾	$	(2.21	)	$	0.60		$	(1.61	)	$	(3.10	)	$	0.08		$	(3.02	)	$	(5.31	)	$	0.67		$	(4.64	)
Efficiency ratio	57.50		%	(421		)bps	53.29		%	51.44		%	(67		)bps	50.77		%	54.32		%	(235		)bps	51.97		%
Operating efficiency ratio	53.34			(421		)	49.13			44.67			(68		)	43.99			48.79			(236		)	46.43



	2019									2019									Six Months Ended
	Q2									Q1									June 30, 2019
(Dollars in millions, except per share data and as noted)	Reported Results			Adj.⁽⁹⁾			Adjusted Results			Reported Results			Adj.⁽⁹⁾			Adjusted Results			Reported Results			Adj.⁽⁹⁾			Adjusted Results
Selected income statement data:
Net interest income	$	5,746		—			$	5,746		$	5,791		—			$	5,791		$	11,537		—			$	11,537
Non-interest income	1,378			$	1		1,379			1,292			—			1,292			2,670			$	1		2,671
Total net revenue	7,124			1			7,125			7,083			—			7,083			14,207			1			14,208
Provision for credit losses	1,342			—			1,342			1,693			—			1,693			3,035			—			3,035
Non-interest expense	3,779			(81		)	3,698			3,671			$	(25	)	3,646			7,450			(106		)	7,344
Income from continuing operations before income taxes	2,003			82			2,085			1,719			25			1,744			3,722			107			3,829
Income tax provision	387			19			406			309			6			315			696			25			721
Income from continuing operations, net of tax	1,616			63			1,679			1,410			19			1,429			3,026			82			3,108
Income from discontinued operations, net of tax	9			—			9			2			—			2			11			—			11
Net income	1,625			63			1,688			1,412			19			1,431			3,037			82			3,119
Dividends and undistributed earnings allocated to participating securities⁽¹⁰⁾	(12		)	(1		)	(13		)	(12		)	—			(12		)	(24		)	(1		)	(25		)
Preferred stock dividends	(80		)	—			(80		)	(52		)	—			(52		)	(132		)	—			(132		)
Net income available to common stockholders	$	1,533		$	62		$	1,595		$	1,348		$	19		$	1,367		$	2,881		$	81		$	2,962
Selected performance metrics:
Diluted EPS⁽¹⁰⁾	$	3.24		$	0.13		$	3.37		$	2.86		$	0.04		$	2.90		$	6.10		$	0.17		$	6.27
Efficiency ratio	53.05		%	(115		)bps	51.90		%	51.83		%	(35		)bps	51.48		%	52.44		%	(75		)bps	51.69		%
Operating efficiency ratio	45.38			(114		)	44.24			44.53			(35		)	44.18			44.96			(75		)	44.21

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of 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.



	2020			2020			2019			2019			2019
(Dollars in millions)	Q2			Q1			Q4			Q3			Q2
Tangible Common Equity (Period-End)
Stockholders’ equity	$	56,045		$	56,830		$	58,011		$	58,235		$	55,767
Goodwill and intangible assets⁽¹¹⁾	(14,869		)	(14,888		)	(14,932		)	(14,940		)	(14,886		)
Noncumulative perpetual preferred stock	(5,209		)	(5,209		)	(4,853		)	(5,823		)	(4,360		)
Tangible common equity	$	35,967		$	36,733		$	38,226		$	37,472		$	36,521
Tangible Common Equity (Average)
Stockholders’ equity	$	57,623		$	58,568		$	58,148		$	57,245		$	54,570
Goodwill and intangible assets⁽¹¹⁾	(14,880		)	(14,930		)	(14,967		)	(14,908		)	(14,900		)
Noncumulative perpetual preferred stock	(5,209		)	(5,382		)	(5,506		)	(4,678		)	(4,360		)
Tangible common equity	$	37,534		$	38,256		$	37,675		$	37,659		$	35,310
Tangible Assets (Period-End)
Total assets	$	421,296		$	396,878		$	390,365		$	378,810		$	373,619
Goodwill and intangible assets⁽¹¹⁾	(14,869		)	(14,888		)	(14,932		)	(14,940		)	(14,886		)
Tangible assets	$	406,427		$	381,990		$	375,433		$	363,870		$	358,733
Tangible Assets (Average)
Total assets	$	411,075		$	390,380		$	383,162		$	374,905		$	371,095
Goodwill and intangible assets⁽¹¹⁾	(14,880		)	(14,930		)	(14,967		)	(14,908		)	(14,900		)
Tangible assets	$	396,195		$	375,450		$	368,195		$	359,997		$	356,195

__________


⁽¹⁾	Regulatory capital metrics and capital ratios as of June 30, 2020 are preliminary and therefore subject to change.


⁽²⁾	In the first quarter of 2020, we elected to exclude from our regulatory capital ratios certain components of AOCI as permitted under the Tailoring Rules. As such, we revised our presentation herein to only include those components of AOCI that impact our regulatory capital ratios.


⁽³⁾	Total capital equals the sum of Tier 1 capital and Tier 2 capital.


⁽⁴⁾	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.


⁽⁵⁾	Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on common equity Tier 1 capital divided by risk-weighted assets.


⁽⁶⁾	Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.


⁽⁷⁾	Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets.


⁽⁸⁾	TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets.


⁽⁹⁾	The adjustments for the following periods consist of:



	2020		2020		Six Months Ended		2019		2019		Six Months Ended
(Dollars in millions)	Q2		Q1		June 30, 2020		Q2		Q1		June 30, 2019
Legal reserve builds	$	265	$	45	$	310	—		—		—
Cybersecurity Incident expenses, net of insurance	11		4		15		—		—		—
Walmart launch and related integration expenses	—		—		—		$	54	$	25	$	79
Restructuring charges	—		—		—		28		—		28
Total	276		49		325		82		25		107
Income tax provision	3		12		15		19		6		25
Net income	$	273	$	37	$	310	$	63	$	19	$	82


⁽¹⁰⁾	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.


⁽¹¹⁾	Includes impact of related deferred taxes.