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Capital One Reports Second Quarter 2017 Net Income of $1.0 billion, or $1.94 per share
Excluding adjusting items, Second Quarter 2017 Net Income of $1.96 per share(1)

MCLEAN, Va., July 20, 2017 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2017 of $1.0 billion, or $1.94 per diluted common share, compared with net income of $810 million, or $1.54 per diluted common share in the first quarter of 2017, and with net income of $942 million, or $1.69 per diluted common share in the second quarter of 2016. During the quarter, we incurred $12 million of costs related to our anticipated close of the Cabela's acquisition, which is subject to regulatory approval. Excluding this adjusting item, net income for the second quarter of 2017 was $1.96 per diluted common share(1).

Capital One

"We delivered another quarter of resilient growth across our businesses," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "We're investing to grow and transform our company as banking goes digital, we're driving improving efficiency, and we are building an enduring customer franchise. We continue to be in a strong position to deliver attractive growth and returns, as well as significant capital distribution, subject to regulatory approval."

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

Second Quarter 2017 Income Statement Summary:

  • Total net revenue increased 3 percent to $6.7 billion.
  • Total non-interest expense decreased 1 percent to $3.4 billion:
    • 2 percent decrease in operating expenses.
    • 10 percent increase in marketing.
  • Pre-provision earnings increased 6 percent to $3.3 billion(2).
  • Provision for credit losses decreased 10 percent to $1.8 billion:
    • Net charge-offs of $1.6 billion.
    • $182 million reserve build.
  • Net interest margin flat at 6.88 percent.
  • Efficiency ratio of 50.92 percent:
    • Efficiency ratio excluding adjusting items was 50.75 percent(1).

Second Quarter 2017 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 10.7 percent at June 30, 2017.
  • Period-end loans held for investment in the quarter increased $3.7 billion, or 2 percent, to $244.3 billion.
    • Domestic Card period-end loans increased $1.8 billion, or 2 percent, to $92.9 billion.
    • Consumer Banking period-end loans increased $991 million, or 1 percent, to $75.0 billion:
      • Auto period-end loans increased $2.0 billion, or 4 percent, to $51.8 billion.
      • Home loans period-end loans decreased $1.0 billion, or 5 percent, to $19.7 billion, driven by run-off of acquired portfolios.
    • Commercial Banking period-end loans increased $352 million, or 1 percent, to $67.7 billion.
  • Average loans held for investment in the quarter increased $736 million, or less than 1 percent, to $242.2 billion.
    • Domestic Card average loans decreased $1.3 billion, or 1 percent, to $91.8 billion.
    • Consumer Banking average loans increased $1.1 billion, or 2 percent, to $74.5 billion:
      • Auto average loans increased $2.1 billion, or 4 percent, to $50.8 billion.
      • Home loans average loans decreased $946 million, or 4 percent, to $20.2 billion, driven by run-off of acquired portfolios.
    • Commercial Banking average loans increased $731 million, or 1 percent, to $67.7 billion.
  • Period-end total deposits decreased $1.4 billion, or less than 1 percent, to $239.8 billion, while average deposits increased $2.0 billion, or less than 1 percent, to $240.6 billion.
  • Interest-bearing deposits rate paid increased 5 basis points to 0.71 percent.  

(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.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on July 20, 2017 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 August 3, 2017 at 5:00 PM Eastern Time.

Forward-Looking Statements

Certain statements in this release may constitute forward-looking statements, which involve a number of risks and uncertainties. Capital One cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information due to a number of factors, including those listed from time to time in reports that Capital One files with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2016.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $239.8 billion in deposits and $350.6 billion in total assets as of June 30, 2017. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

 

 


Exhibit 99.2

Capital One Financial Corporation
Financial Supplement(1)(2)
Second Quarter 2017
Table of Contents




Capital One Financial Corporation Consolidated Results

Page


Table 1:

Financial Summary—Consolidated

1


Table 2:

Selected Metrics—Consolidated

3


Table 3:

Consolidated Statements of Income

4


Table 4:

Consolidated Balance Sheets

6


Table 5:

Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)

8


Table 6:

Average Balances, Net Interest Income and Net Interest Margin

10


Table 7:

Loan Information and Performance Statistics

11


Table 8:

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

13

Business Segment Results



Table 9:

Financial Summary—Business Segment Results

14


Table 10:

Financial & Statistical Summary—Credit Card Business

15


Table 11:

Financial & Statistical Summary—Consumer Banking Business

17


Table 12:

Financial & Statistical Summary—Commercial Banking Business

18


Table 13:

Financial & Statistical Summary—Other and Total

19


Table 14:

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

20

Other



Table 15:

Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures

21









(1)

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Quarterly Report on Form 10-Q for the period ended June 30, 2017 once it is filed with the Securities and Exchange Commission.

(2)

This Financial Supplement includes non-GAAP measures. We believe these non-GAAP measures are useful to investors and users of our financial information as they provide an alternate measurement of our performance and assist in assessing our capital adequacy and the level of return generated. These non-GAAP measures should not be viewed as a substitute for reported results determined in accordance with generally accepted accounting principles in the U.S. ("GAAP"), nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 1: Financial Summary—Consolidated










































2017 Q2 vs.


 

Six Months Ended June 30,


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


2017


2017


2016


2016


2016


2017


2016






2017 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2017


2016


2016

Income Statement





















Net interest income


$

5,473



$

5,474



$

5,447



$

5,277



$

5,093





7

%


$

10,947



$

10,149



8

%

Non-interest income


1,231



1,061



1,119



1,184



1,161



16

%


6



2,292



2,325



(1)


Total net revenue(1)


6,704



6,535



6,566



6,461



6,254



3



7



13,239



12,474



6


Provision for credit losses


1,800



1,992



1,752



1,588



1,592



(10)



13



3,792



3,119



22


Non-interest expense:





















Marketing


435



396



575



393



415



10



5



831



843



(1)


Amortization of intangibles


61



62



101



89



95



(2)



(36)



123



196



(37)


Operating expenses


2,918



2,976



3,003



2,879



2,785



(2)



5



5,894



5,479



8


Total non-interest expense


3,414



3,434



3,679



3,361



3,295



(1)



4



6,848



6,518



5


Income from continuing operations before income taxes


1,490



1,109



1,135



1,512



1,367



34



9



2,599



2,837



(8)


Income tax provision


443



314



342



496



424



41



4



757



876



(14)


Income from continuing operations, net of tax


1,047



795



793



1,016



943



32



11



1,842



1,961



(6)


Income (loss) from discontinued operations, net of tax(2)


(11)



15



(2)



(11)



(1)



**



**



4



(6)



**


Net income


1,036



810



791



1,005



942



28



10



1,846



1,955



(6)


Dividends and undistributed earnings allocated to participating securities(3)


(8)



(5)



(6)



(6)



(6)



60



33



(13)



(12)



8


Preferred stock dividends


(80)



(53)



(75)



(37)



(65)



51



23



(133)



(102)



30


Net income available to common stockholders


$

948



$

752



$

710



$

962



$

871



26



9



$

1,700



$

1,841



(8)


Common Share Statistics





















Basic earnings per common share:(3)





















Net income from continuing operations


$

1.98



$

1.53



$

1.47



$

1.94



$

1.70



29

%


16

%


$

3.51



$

3.57



(2)%


Income (loss) from discontinued operations


(0.02)



0.03





(0.02)





**



**



0.01



(0.01)



**


Net income per basic common share


$

1.96



$

1.56



$

1.47



$

1.92



$

1.70



26



15



$

3.52



$

3.56



(1)


Diluted earnings per common share:(3)





















Net income from continuing operations


$

1.96



$

1.51



$

1.45



$

1.92



$

1.69



30



16



$

3.48



$

3.53



(1)


Income (loss) from discontinued operations


(0.02)



0.03





(0.02)





**



**



0.01



(0.01)



**


Net income per diluted common share


$

1.94



$

1.54



$

1.45



$

1.90



$

1.69



26



15



$

3.49



$

3.52



(1)


Weighted-average common shares outstanding (in millions):





















Basic


484.0



482.3



483.5



501.1



511.7





(5)



483.1



517.6



(7)


Diluted


488.1



487.9



489.2



505.9



516.5





(5)



487.7



522.3



(7)


Common shares outstanding (period-end, in millions)


483.7



482.8



480.2



489.2



505.9





(4)



483.7



505.9



(4)


Dividends 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)


60.94



58.66



57.76



59.00



57.84



4



5



60.94



57.84



5





























2017 Q2 vs.


Six Months Ended June 30,

(Dollars in millions)


2017


2017


2016


2016


2016


2017


2016






2017 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2017


2016


2016

Balance Sheet (Period-End)





















Loans held for investment(5)


$

244,302



$

240,588



$

245,586



$

238,019



$

234,603



2

%


4

%


$

244,302



$

234,603



4

%

Interest-earning assets


319,286



316,712



321,807



313,431



307,163



1



4



319,286



307,163



4


Total assets


350,593



348,549



357,033



345,061



339,117



1



3



350,593



339,117



3


Interest-bearing deposits


213,810



214,818



211,266



200,416



195,635





9



213,810



195,635



9


Total deposits


239,763



241,182



236,768



225,981



221,059



(1)



8



239,763



221,059



8


Borrowings


49,954



48,439



60,460



59,820



59,181



3



(16)



49,954



59,181



(16)


Common equity


44,777



43,680



43,154



44,336



44,813



3





44,777



44,813




Total stockholders' equity


49,137



48,040



47,514



48,213



48,108



2



2



49,137



48,108



2


Balance Sheet (Average Balances)





















Loans held for investment(5)


$

242,241



$

241,505



$

240,027



$

235,843



$

230,379





5

%


$

241,875



$

228,557



6

%

Interest-earning assets


318,078



318,358



317,853



310,987



302,764





5



318,215



301,106



6


Total assets


349,891



351,641



350,225



343,153



334,479





5



350,761



333,197



5


Interest-bearing deposits


214,412



212,973



206,464



196,913



195,641



1

%


10



213,696



194,883



10


Total deposits


240,550



238,550



232,204



222,251



221,146



1



9



239,555



220,163



9


Borrowings


48,838



53,357



58,624



60,708



54,359



(8)



(10)



51,085



54,060



(6)


Common equity


44,645



43,833



43,921



45,314



45,640



2



(2)



44,241



45,711



(3)


Total stockholders' equity


49,005



48,193



47,972



49,033



48,934



2





48,602



49,007



(1)



 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 2: Selected Metrics—Consolidated










































2017 Q2 vs.


Six Months Ended June 30,

(Dollars in millions, except as noted)


2017


2017


2016


2016


2016


2017


2016






2017 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2017


2016


2016

Performance Metrics





















Net interest income growth (period over period)






3

%


4

%


1

%


**



**



8

%


11

%


**


Non-interest income growth (period over period)


16

%


(5)

%


(5)



2





**



**



(1)



5



**


Total net revenue growth (period over period)


3





2



3



1



**



**



6



10



**


Total net revenue margin(6)


8.43



8.21



8.26



8.31



8.26



22

bps


17

bps


8.32



8.29



3

bps

Net interest margin(7)


6.88



6.88



6.85



6.79



6.73





15



6.88



6.74



14


Return on average assets


1.20



0.90



0.91



1.18



1.13



30



7



1.05



1.18



(13)


Return on average tangible assets(8)


1.25



0.95



0.95



1.24



1.18



30



7



1.10



1.24



(14)


Return on average common equity(9)


8.59



6.73



6.48



8.59



7.64



186



95



7.67



8.08



(41)


Return on average tangible common equity(10)


13.09



10.37



10.00



13.06



11.61



272



148



11.75



12.28



(53)


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


5.64



5.69



6.13



5.70



5.72



(5)



(8)



5.66



5.70



(4)


Efficiency ratio(11)


50.92



52.55



56.03



52.02



52.69



(163)



(177)



51.73



52.25



(52)


Effective income tax rate for continuing operations


29.7



28.3



30.1



32.8



31.0



140



(130)



29.1



30.9



(180)


Employees (in thousands), period-end


49.9



48.4



47.3



46.5



46.1



3

%


8

%


49.9



46.1



8

%

Credit Quality Metrics





















Allowance for loan and lease losses


$

7,170



$

6,984



$

6,503



$

6,258



$

5,881



3

%


22

%


$

7,170



$

5,881



22

%

Allowance as a percentage of loans held for investment


2.93

%


2.90

%


2.65

%


2.63

%


2.51

%


3

bps


42

bps


2.93

%


2.51

%


42

bps

Net charge-offs


$

1,618



$

1,510



$

1,489



$

1,240



$

1,155



7

%


40

%


$

3,128



$

2,333



34

%

Net charge-off rate(12)


2.67

%


2.50

%


2.48

%


2.10

%


2.01

%


17

bps


66

bps


2.59

%


2.04

%


55

bps

30+ day performing delinquency rate


2.69



2.61



2.93



2.71



2.47



8



22



2.69



2.47



22


30+ day delinquency rate


2.99



2.92



3.27



3.04



2.79



7



20



2.99



2.79



20


Capital Ratios(13)





















Common equity Tier 1 capital


10.7

%


10.4

%


10.1

%


10.6

%


10.9

%


30

bps


(20)

bps


10.7

%


10.9

%


(20)

bps

Tier 1 capital


12.2



12.0



11.6



12.0



12.2



20





12.2



12.2




Total capital


14.9



14.7



14.3



14.7



14.4



20



50



14.9



14.4



50


Tier 1 leverage


10.3



9.9



9.9



10.1



10.2



40



10



10.3



10.2



10


Tangible common equity ("TCE")(14)


8.8



8.5



8.1



8.8



9.0



30



(20)



8.8



9.0



(20)



 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 3: Consolidated Statements of Income










































2017 Q2 vs.


Six Months Ended June 30,



2017


2017


2016


2016


2016


2017


2016






2017 vs.

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


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2017


2016


2016

Interest income:





















Loans, including loans held for sale


$

5,669



$

5,626



$

5,587



$

5,383



$

5,148



1

%


10

%


$

11,295



$

10,233



10

%

Investment securities


433



416



393



386



405



4



7



849



820



4


Other


26



28



29



25



18



(7)



44



54



35



54


Total interest income


6,128



6,070



6,009



5,794



5,571



1



10



12,198



11,088



10


Interest expense:





















Deposits


382



353



332



306



292



8



31



735



575



28


Securitized debt obligations


82



69



65



56



47



19



74



151



95



59


Senior and subordinated notes


179



149



138



121



111



20



61



328



217



51


Other borrowings


12



25



27



34



28



(52)



(57)



37



52



(29)


Total interest expense


655



596



562



517



478



10



37



1,251



939



33


Net interest income


5,473



5,474



5,447



5,277



5,093





7



10,947



10,149



8


Provision for credit losses


1,800



1,992



1,752



1,588



1,592



(10)



13



3,792



3,119



22


Net interest income after provision for credit losses


3,673



3,482



3,695



3,689



3,501



5



5



7,155



7,030



2


Non-interest income:(15)(16)





















Service charges and other customer-related fees


418



371



412



417



393



13



6



789



816



(3)


Interchange fees, net


676



570



624



603



621



19



9



1,246



1,225



2


Net securities gains (losses)


(4)





(4)



1





**



**



(4)



(8)



(50)


Other


141



120



87



163



147



18



(4)



261



292



(11)


Total non-interest income


1,231



1,061



1,119



1,184



1,161



16



6



2,292



2,325



(1)


Non-interest expense:(15)(16)





















Salaries and associate benefits


1,383



1,471



1,336



1,317



1,279



(6)



8



2,854



2,549



12


Occupancy and equipment


474



471



522



499



465



1



2



945



923



2


Marketing


435



396



575



393



415



10



5



831



843



(1)


Professional services


279



247



312



257



264



13



6



526



505



4


Communications and data processing


289



288



297



291



302





(4)



577



582



(1)


Amortization of intangibles


61



62



101



89



95



(2)



(36)



123



196



(37)


Other


493



499



536



515



475



(1)



4



992



920



8


Total non-interest expense


3,414



3,434



3,679



3,361



3,295



(1)



4



6,848



6,518



5


Income from continuing operations before income taxes


1,490



1,109



1,135



1,512



1,367



34



9



2,599



2,837



(8)


Income tax provision


443



314



342



496



424



41



4



757



876



(14)


Income from continuing operations, net of tax


1,047



795



793



1,016



943



32



11



1,842



1,961



(6)


Income (loss) from discontinued operations, net of tax(2)


(11)



15



(2)



(11)



(1)



**



**



4



(6)



**


Net income


1,036



810



791



1,005



942



28



10



1,846



1,955



(6)


Dividends and undistributed earnings allocated to participating securities(3)


(8)



(5)



(6)



(6)



(6)



60



33



(13)



(12)



8


Preferred stock dividends


(80)



(53)



(75)



(37)



(65)



51



23



(133)



(102)



30


Net income available to common stockholders


$

948



$

752



$

710



$

962



$

871



26



9



$

1,700



$

1,841



(8)



































2017 Q2 vs.


Six Months Ended June 30,



2017


2017


2016


2016


2016


2017


2016






2017 vs.

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


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2017


2016


2016

Basic earnings per common share:(3)





















Net income from continuing operations


$

1.98



$

1.53



$

1.47



$

1.94



$

1.70



29

%


16

%


$

3.51



$

3.57



(2)

%

Income (loss) from discontinued operations


(0.02)



0.03





(0.02)





**



**



0.01



(0.01)



**


Net income per basic common share


$

1.96



$

1.56



$

1.47



$

1.92



$

1.70



26



15



$

3.52



$

3.56



(1)


Diluted earnings per common share:(3)





















Net income from continuing operations


$

1.96



$

1.51



$

1.45



$

1.92



$

1.69



30



16



$

3.48



$

3.53



(1)


Income (loss) from discontinued operations


(0.02)



0.03





(0.02)





**



**



0.01



(0.01)



**


Net income per diluted common share


$

1.94



$

1.54



$

1.45



$

1.90



$

1.69



26



15



$

3.49



$

3.52



(1)


Weighted-average common shares outstanding (in millions):





















Basic common shares


484.0



482.3



483.5



501.1



511.7