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

Excluding adjusting items, Fourth Quarter 2017 Net Income of $1.62 per share(1)

MCLEAN, Va., Jan. 23, 2018  /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net loss for the fourth quarter of 2017 of $971 million, or $2.17 per diluted common share, compared with net income of $1.1 billion, or $2.14 per diluted common share in the third quarter of 2017, and with net income of $791 million, or $1.45 per diluted common share in the fourth quarter of 2016. Excluding adjusting items, net income for the fourth quarter of 2017 was $1.62 per diluted common share(1).

Capital One

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


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

Pre-Tax

Diluted EPS

(Dollars in millions, except per share data)

Impact

Impact

Impacts of the Tax Act(2)

$

(1,769)

$

(3.61)

Restructuring charges

(76)

(0.10)

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

(31)

(0.07)

Notable items in the fourth quarter of 2017 included: 

Pre-Tax

Diluted EPS

(Dollars in millions, except per share data)

Impact

Impact

Mortgage representation and warranty settlement (included in discontinued operations)

$

(169)

$

(0.22)

Charges related to our Commercial Taxi Medallion Lending portfolio

(113)

(0.15)

 

(1)

Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

(2) 

Tax Act refers to the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on the budget for fiscal year 2018 enacted on December 22, 2017. This amount is a reasonable estimate as of December 31, 2017, which may be adjusted during the measurement period ending no later than December 2018.

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

Fourth Quarter 2017 Income Statement Summary: 

  • Total net revenue remained substantially flat at $7.0 billion.
  • Total non-interest expense increased 6 percent to $3.8 billion:
    • 4 percent increase in operating expenses.
    • 21 percent increase in marketing.
  • Pre-provision earnings decreased 5 percent to $3.2 billion(2).
  • Provision for credit losses increased 5 percent to $1.9 billion:
    • Net charge-offs of $1.8 billion.
    • $98 million reserve build.
  • Net interest margin of 7.03 percent, down 5 basis points.
  • Efficiency ratio of 53.89 percent.
    • Efficiency ratio excluding adjusting items was 52.50 percent(1).

Fourth Quarter 2017 Balance Sheet Summary: 

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 10.3 percent at December 31, 2017.
  • Period-end loans held for investment in the quarter increased $2.1 billion, or 1 percent, to $254.5 billion.
    • Domestic Card period-end loans increased $5.3 billion, or 5 percent, to $105.3 billion.
    • Consumer Banking period-end loans decreased $486 million, or 1 percent, to $75.1 billion:
      • Auto period-end loans increased $701 million, or 1 percent, to $54.0 billion.
      • Home loans period-end loans decreased $1.2 billion, or 6 percent, to $17.6 billion, primarily driven by run-off of acquired portfolios. 
    • Commercial Banking period-end loans decreased $3.1 billion, or 5 percent, to $64.6 billion.
  • Average loans held for investment in the quarter increased $6.7 billion, or 3 percent, to $252.6 billion.
    • Domestic Card average loans increased $7.4 billion, or 8 percent, to $101.1 billion.
    • Consumer Banking average loans decreased $74 million, or less than 1 percent, to $75.3 billion:
      • Auto average loans increased $1.1 billion, or 2 percent, to $53.7 billion.
      • Home loans average loans decreased $1.2 billion, or 6 percent, to $18.1 billion, primarily driven by run-off of acquired portfolios.
    • Commercial Banking average loans decreased $659 million, or 1 percent, to $67.2 billion.

(1)

Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

 

(2) 

Pre-provision earnings is calculated based on the sum of net interest income and non-interest income, less non-interest expense for the period.

 

 

 

  • Period-end total deposits increased $4.6 billion, or 2 percent, to $243.7 billion, while average deposits increased $2.7 billion, or 1 percent, to $241.6 billion.
  • Interest-bearing deposits rate paid increased 8 basis points to 0.85 percent.

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

2017 Full Year Income Statement Summary:

               

  • Total net revenue increased 7 percent to $27.2 billion.
  • Total non-interest expense increased 5 percent to $14.2 billion:
    • 8 percent decrease in marketing.
    • 7 percent increase in operating expenses.      
  • Pre-provision earnings increased 9 percent to $13.0 billion(2).  
  • Provision for credit losses increased 17 percent to $7.6 billion. 
  • Efficiency ratio of 52.11 percent.   
    • Efficiency ratio excluding adjusting items was 51.02 percent(1).

 

Earnings Conference Call Webcast Information

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

 

Forward-Looking Statements

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

 

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $243.7 billion in deposits and $365.7 billion in total assets as of December 31, 2017. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

 

(1)

Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

 

(2) 

Pre-provision earnings is calculated based on the sum of net interest income and non-interest income, less non-interest expense for the period.

 

 

 

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement(1)(2)

Fourth Quarter 2017

Table of Contents

Capital One Financial Corporation Consolidated Results

Page

Table 1:

Financial Summary—Consolidated

1

Table 2:

Selected Metrics—Consolidated

3

Table 3:

Consolidated Statements of Income

4

Table 4:

Consolidated Balance Sheets

6

Table 5:

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

8

Table 6:

Average Balances, Net Interest Income and Net Interest Margin

10

Table 7:

Loan Information and Performance Statistics

11

Table 8:

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

13

Business Segment Results

Table 9:

Financial Summary—Business Segment Results

14

Table 10:

Financial & Statistical Summary—Credit Card Business

15

Table 11:

Financial & Statistical Summary—Consumer Banking Business

17

Table 12:

Financial & Statistical Summary—Commercial Banking Business

18

Table 13:

Financial & Statistical Summary—Other and Total

19

Table 14:

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

20

Other

Table 15:

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

21

__________

(1)

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Annual Report on Form 10-K for the period ended December 31, 2017 once it is filed with the Securities and Exchange Commission.

(2)

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

 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated













2017 Q4 vs.

Year Ended December 31,

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

2017

2017

2017

2017

2016

2017

2016




2017 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Income Statement



















Net interest income

$

5,813

$

5,700

$

5,473

$

5,474

$

5,447

2

%

7

%

$

22,460

$

20,873

8

%

Non-interest income

1,200

1,285

1,231

1,061

1,119

(7)

7

4,777

4,628

3

Total net revenue(1)

7,013

6,985

6,704

6,535

6,566

—

7

27,237

25,501

7

Provision for credit losses

1,926

1,833

1,800

1,992

1,752

5

10

7,551

6,459

17

Non-interest expense:



















Marketing

460

379

435

396

575

21

(20)

1,670

1,811

(8)

Operating expenses

3,319

3,188

2,979

3,038

3,104

4

7

12,524

11,747

7

Total non-interest expense

3,779

3,567

3,414

3,434

3,679

6

3

14,194

13,558

5

Income from continuing operations before income taxes

1,308

1,585

1,490

1,109

1,135

(17)

15

5,492

5,484

—

Income tax provision

2,170

448

443

314

342

**

**

3,375

1,714

97

Income (loss) from continuing operations, net of tax

(862)

1,137

1,047

795

793

**

**

2,117

3,770

(44)

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

(109)

(30)

(11)

15

(2)

**

**

(135)

(19)

**

Net income (loss)

(971)

1,107

1,036

810

791

**

**

1,982

3,751

(47)

Dividends and undistributed earnings allocated to participating securities(3)

(1)

(8)

(8)

(5)

(6)

(88)

(83)

(13)

(24)

(46)

Preferred stock dividends

(80)

(52)

(80)

(53)

(75)

54

7

(265)

(214)

24

Net income (loss) available to common stockholders

$

(1,052)

$

1,047

$

948

$

752

$

710

**

**

$

1,704

$

3,513

(51)

Common Share Statistics



















Basic earnings per common share:(3)



















Net income (loss) from continuing operations

$

(1.95)

$

2.22

$

1.98

$

1.53

$

1.47

**

**

$

3.80

$

7.00

(46)

%

Income (loss) from discontinued operations

(0.22)

(0.06)

(0.02)

0.03

—

**

**

(0.28)

(0.04)

**

Net income (loss) per basic common share

$

(2.17)

$

2.16

$

1.96

$

1.56

$

1.47

**

**

$

3.52

$

6.96

(49)

Diluted earnings per common share:(3)



















Net income (loss) from continuing operations

$

(1.95)

$

2.20

$

1.96

$

1.51

$

1.45

**

**

$

3.76

$

6.93

(46)

Income (loss) from discontinued operations

(0.22)

(0.06)

(0.02)

0.03

—

**

**

(0.27)

(0.04)

**

Net income (loss) per diluted common share

$

(2.17)

$

2.14

$

1.94

$

1.54

$

1.45

**

**

$

3.49

$

6.89

(49)

Weighted-average common shares outstanding (in millions):



















Basic

485.7

484.9

484.0

482.3

483.5

—

—

484.2

504.9

(4)

Diluted

485.7

489.0

488.1

487.9

489.2

(1)

%

(1)

%

488.6

509.8

(4)

Common shares outstanding (period-end, in millions)

485.5

484.4

483.7

482.8

480.2

—

1

485.5

480.2

1

Dividends paid per common share

$

0.40

$

0.40

$

0.40

$

0.40

$

0.40

—

—

$

1.60

$

1.60

—

Tangible book value per common share (period-end)(4)

60.28

63.06

60.94

58.66

57.76

(4)

4

60.28

57.76

4











































2017 Q4 vs.

Year Ended December 31,

(Dollars in millions)

2017

2017

2017

2017

2016

2017

2016




2017 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Balance Sheet (Period-End)



















Loans held for investment(5)

$

254,473

$

252,422

$

244,302

$

240,588

$

245,586

1

%

4

%

$

254,473

$

245,586

4

%

Interest-earning assets

334,124

329,002

319,286

316,712

321,807

2

4

334,124

321,807

4

Total assets

365,693

361,402

350,593

348,549

357,033

1

2

365,693

357,033

2

Interest-bearing deposits

217,298

212,956

213,810

214,818

211,266

2

3

217,298

211,266

3

Total deposits

243,702

239,062

239,763

241,182

236,768

2

3

243,702

236,768

3

Borrowings

60,281

59,458

49,954

48,439

60,460

1

—

60,281

60,460

—

Common equity

44,370

45,794

44,777

43,680

43,154

(3)

3

44,370

43,154

3

Total stockholders' equity

48,730

50,154

49,137

48,040

47,514

(3)

3

48,730

47,514

3

Balance Sheet (Average Balances)



















Loans held for investment(5)

$

252,566

$

245,822

$

242,241

$

241,505

$

240,027

3

%

5

%

$

245,565

$

233,272

5

%

Interest-earning assets

330,742

322,015

318,078

318,358

317,853

3

4

322,330

307,796

5

Total assets

363,045

355,191

349,891

351,641

350,225

2

4

354,924

339,974

4

Interest-bearing deposits

215,258

213,137

214,412

212,973

206,464

1

4

213,949

198,304

8

Total deposits

241,562

238,843

240,550

238,550

232,204

1

4

239,882

223,714

7

Borrowings

58,109

54,271

48,838

53,357

58,624

7

(1)

53,659

56,878

(6)

Common equity

46,350

45,816

44,645

43,833

43,921

1

6

45,170

45,162

—

Total stockholders' equity

50,710

50,176

49,005

48,193

47,972

1

6

49,530

48,753

2

 

 

               


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated













2017 Q4 vs.

Year Ended December 31,

(Dollars in millions, except as noted)

2017

2017

2017

2017

2016

2017

2016




2017 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Performance Metrics



















Net interest income growth (period over period)

2

%

4

%

—

—

3

%

**

**

8

%

11

%

**

Non-interest income growth (period over period)

(7)

4

16

%

(5)

%

(5)

**

**

3

1

**

Total net revenue growth (period over period)

—

4

3

—

2

**

**

7

9

**

Total net revenue margin(6)

8.48

8.68

8.43

8.21

8.26

(20)

bps

22

bps

8.45

8.29

16

bps

Net interest margin(7)

7.03

7.08

6.88

6.88

6.85

(5)

18

6.97

6.78

19

Return on average assets

(0.95)

1.28

1.20

0.90

0.91

(223)

(186)

0.60

1.11

(51)

Return on average tangible assets(8)

(0.99)

1.34

1.25

0.95

0.95

(233)

(194)

0.62

1.16

(54)

Return on average common equity(9)

(8.14)

9.40

8.59

6.73

6.48

(18)

%

(15)

%

4.07

7.82

(4)

%

Return on average tangible common equity(10)

(12.12)

14.11

13.09

10.37

10.00

(26)

(22)

6.16

11.93

(6)

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

5.98

5.80

5.64

5.69

6.13

18

bps

(15)

bps

5.78

5.81

(3)

bps

Efficiency ratio(11)

53.89

51.07

50.92

52.55

56.03

282

(214)

52.11

53.17

(106)

Effective income tax rate for continuing operations

165.9

28.3

29.7

28.3

30.1

138

%

136

%

61.5

31.3

30

%

Employees (in thousands), period-end

49.3

50.4

49.9

48.4

47.3

(2)

4

49.3

47.3

4

Credit Quality Metrics



















Allowance for loan and lease losses

$

7,502

$

7,418

$

7,170

$

6,984

$

6,503

1

%

15

%

$

7,502

$

6,503

15

%

Allowance as a percentage of loans held for investment

2.95

%

2.94

%

2.93

%

2.90

%

2.65

%

1

bps

30

bps

2.95

%

2.65

%

30

bps

Net charge-offs

$

1,828

$

1,606

$

1,618

$

1,510

$

1,489

14

%

23

%

$

6,562

$

5,062

30

%

Net charge-off rate(12)

2.89

%

2.61

%

2.67

%

2.50

%

2.48

%

28

bps

41

bps

2.67

%

2.17

%

50

bps

30+ day performing delinquency rate(13)

3.23

2.93

2.69

2.61

2.93

30

30

3.23

2.93

30

30+ day delinquency rate

3.48

3.24

2.99

2.92

3.27

24

21

3.48

3.27

21

Capital Ratios(14)



















Common equity Tier 1 capital

10.3

%

10.7

%

10.7

%

10.4

%

10.1

%

(40)

bps

20

bps

10.3

%

10.1

%

20

bps

Tier 1 capital

11.8

12.2

12.2

12.0

11.6

(40)

20

11.8

11.6

20

Total capital

14.4

14.8

14.9

14.7

14.3

(40)

10

14.4

14.3

10

Tier 1 leverage

9.9

10.5

10.3

9.9

9.9

(60)

—

9.9

9.9

—

Tangible common equity ("TCE")(15)

8.3

8.8

8.8

8.5

8.1

(50)

20

8.3

8.1

20

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income













2017 Q4 vs.

Year Ended December 31,


2017

2017

2017

2017

2016

2017

2016




2017 vs.

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

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Interest income:



















Loans, including loans held for sale

$

6,133

$

5,960

$

5,669

$

5,626

$

5,587

3

%

10

%

$

23,388

$

21,203

10

%

Investment securities

431

431

433

416

393

—

10

1,711

1,599

7

Other

40

29

26

28

29

38

38

123

89

38

Total interest income

6,604

6,420

6,128

6,070

6,009

3

10

25,222

22,891

10

Interest expense:



















Deposits

457

410

382

353

332

11

38

1,602

1,213

32

Securitized debt obligations

91

85

82

69

65

7

40

327

216

51

Senior and subordinated notes

209

194

179

149

138

8

51

731

476

54

Other borrowings

34

31

12

25

27

10

26

102

113

(10)

Total interest expense

791

720

655

596

562

10

41

2,762

2,018

37

Net interest income

5,813

5,700

5,473

5,474

5,447

2

7

22,460

20,873

8

Provision for credit losses

1,926

1,833

1,800

1,992

1,752

5

10

7,551

6,459

17

Net interest income after provision for credit losses

3,887

3,867

3,673

3,482

3,695

1

5

14,909

14,414

3

Non-interest income:



















Interchange fees, net

665

662

676

570

624

—

7

2,573

2,452

5

Service charges and other customer-related fees

394

414

418

371

412

(5)

(4)

1,597

1,646

(3)

Net securities gains (losses)

1

68

(4)

—

(4)

(99)

**

65

(11)

**

Other

140

141

141

120

87

(1)

61

542

541

—

Total non-interest income

1,200

1,285

1,231

1,061

1,119

(7)

7

4,777

4,628

3

Non-interest expense:



















Salaries and associate benefits

1,521

1,524

1,383

1,471

1,336

—

14

5,899

5,202

13

Occupancy and equipment

523

471

474

471

522

11

—

1,939

1,944

—

Marketing

460

379

435

396

575

21

(20)

1,670

1,811

(8)

Professional services

274

297

279

247

312

(8)

(12)

1,097

1,075

2

Communications and data processing

306

294

289

288

297

4

3

1,177

1,169

1

Amortization of intangibles

61

61

61

62

101

—

(40)

245

386

(37)

Other

634

541

493

499

536

17

18

2,167

1,971

10

Total non-interest expense

3,779

3,567

3,414

3,434

3,679

6

3

14,194

13,558

5

Income from continuing operations before income taxes

1,308

1,585

1,490

1,109

1,135

(17)

15

5,492

5,484

—

Income tax provision

2,170

448

443

314

342

**

**

3,375

1,714

97

Income (loss) from continuing operations, net of tax

(862)

1,137

1,047

795

793

**

**

2,117

3,770

(44)

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

(109)

(30)

(11)

15

(2)

**

**

(135)

(19)

**

Net income (loss)

(971)

1,107

1,036

810

791

**

**

1,982

3,751

(47)

Dividends and undistributed earnings allocated to participating securities(3)

(1)

(8)

(8)

(5)

(6)

(88)

(83)

(13)

(24)

(46)

Preferred stock dividends

(80)

(52)

(80)

(53)

(75)

54

7

(265)

(214)

24

Net income (loss) available to common stockholders

$

(1,052)

$

1,047

$

948

$

752

$

710

**

**

$

1,704

$

3,513

(51)

































2017 Q4 vs.

Year Ended December 31,


2017

2017

2017

2017

2016

2017

2016




2017 vs.

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

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Basic earnings per common share:(3)



















Net income (loss) from continuing operations

$

(1.95)

$

2.22

$

1.98

$

1.53

$

1.47

**

**

$

3.80

$

7.00

(46)

%

Income (loss) from discontinued operations

(0.22)

(0.06)

(0.02)

0.03

—

**

**

(0.28)

(0.04)

**

Net income (loss) per basic common share

$

(2.17)

$

2.16

$

1.96

$

1.56

$

1.47

**

**

$

3.52

$

6.96

(49)

Diluted earnings per common share:(3)



















Net income (loss) from continuing operations

$

(1.95)

$

2.20

$

1.96

$

1.51

$

1.45

**

**

$

3.76

$

6.93

(46)

Income (loss) from discontinued operations

(0.22)

(0.06)

(0.02)

0.03

—

**

**

(0.27)

(0.04)

**

Net income (loss) per diluted common share

$

(2.17)

$

2.14

$

1.94

$

1.54

$

1.45

**

**

$

3.49

$

6.89

(49)

Weighted-average common shares outstanding (in millions):



















Basic common shares

485.7

484.9

484.0

482.3

483.5

—

—

484.2

504.9

(4)

Diluted common shares

485.7

489.0

488.1

487.9

489.2

(1)

%

(1)

%

488.6

509.8

(4)

Dividends paid per common share

$

0.40

$

0.40

$

0.40

$

0.40

$

0.40

—

—

$

1.60

$

1.60

—

 


 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets














2017 Q4 vs.


2017

2017

2017

2017

2016

2017

2016

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

Assets:













Cash and cash equivalents:













Cash and due from banks

$

4,458

$

4,154

$

3,352

$

3,489

$

4,185

7

%

7

%

Interest-bearing deposits and other short-term investments

9,582

4,330

3,363

5,826

5,791

121

65

Total cash and cash equivalents

14,040

8,484

6,715

9,315

9,976

65

41

Restricted cash for securitization investors

312

304

300

486

2,517

3

(88)

Securities available for sale, at fair value

37,655

39,742

41,120

41,260

40,737

(5)

(8)

Securities held to maturity, at carrying value

28,984

28,650

27,720

26,170

25,712

1

13

Loans held for investment:(5)













Unsecuritized loans held for investment

218,806

217,659

214,864

211,038

213,824

1

2

Loans held in consolidated trusts

35,667

34,763

29,438

29,550

31,762

3

12

Total loans held for investment

254,473

252,422

244,302

240,588

245,586

1

4

Allowance for loan and lease losses

(7,502)

(7,418)

(7,170)

(6,984)

(6,503)

1

15

Net loans held for investment

246,971

245,004

237,132

233,604

239,083

1

3

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

971

1,566

777

735

1,043

(38)

(7)

Premises and equipment, net

4,033

3,955

3,825

3,727

3,675

2

10

Interest receivable

1,536

1,426

1,346

1,368

1,351

8

14

Goodwill

14,533

14,532

14,524

14,521

14,519

—

—

Other assets

16,658

17,739

17,134

17,363

18,420

(6)

(10)

Total assets

$

365,693

$

361,402

$

350,593

$

348,549

$

357,033

1

2



























2017 Q4 vs.


2017

2017

2017

2017

2016

2017

2016

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

Liabilities:













Interest payable

$

413

$

301

$

376

$

260

$

327

37

%

26

%

Deposits:













Non-interest-bearing deposits

26,404

26,106

25,953

26,364

25,502

1

4

Interest-bearing deposits

217,298

212,956

213,810

214,818

211,266

2

3

Total deposits

243,702

239,062

239,763

241,182

236,768

2

3

Securitized debt obligations

20,010

17,087

18,358

18,528

18,826

17

6

Other debt:













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

576

767

958

1,046

992

(25)

(42)

Senior and subordinated notes

30,755

28,420

28,478

26,405

23,431

8

31

Other borrowings

8,940

13,184

2,160

2,460

17,211

(32)

(48)

Total other debt

40,271

42,371

31,596

29,911

41,634

(5)

(3)

Other liabilities

12,567

12,427

11,363

10,628

11,964

1

5

Total liabilities

316,963

311,248

301,456

300,509

309,519

2

2















Stockholders' equity:













Preferred stock

0

0

0

0

0

—

—

Common stock

7

7

7

7

7

—

—

Additional paid-in capital, net

31,656

31,526

31,413

31,326

31,157

—

2

Retained earnings

30,700

31,946

31,086

30,326

29,766

(4)

3

Accumulated other comprehensive loss

(926)

(622)

(683)

(934)

(949)

49

(2)

Treasury stock, at cost

(12,707)

(12,703)

(12,686)

(12,685)

(12,467)

—

2

Total stockholders' equity

48,730

50,154

49,137

48,040

47,514

(3)

3

Total liabilities and stockholders' equity

$

365,693

$

361,402

$

350,593

$

348,549

$

357,033

1

2

 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 5: Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)



(1)

Total net revenue was reduced by $377 million in Q4 2017, $356 million in Q3 2017, $313 million in Q2 2017 and $321 million in both Q1 2017 and Q4 2016 for the estimated uncollectible amount of billed finance charges and fees and related losses.

(2)

The provision (benefit) for mortgage representation and warranty losses included the following activity:





2017

2017

2017

2017

2016


(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Provision (benefit) for mortgage representation and warranty losses before income taxes:










  Recorded in continuing operations

—

$

(1)

—

$

(25)

—

  Recorded in discontinued operations

$

169

13

$

6

(67)

$

(2)

Total provision (benefit) for mortgage representation and warranty losses before income taxes

$

169

$

12

$

6

$

(92)

$

(2)


(3)

Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total. We also provide adjusted diluted earnings per share, which is a non-GAAP measure. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on our non-GAAP measures.

(4)

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.

(5)

Included in loans held for investment are purchased credit-impaired loans ("PCI loans") recorded at fair value at acquisition and subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard formerly known as "SOP 03-3," or Accounting Standards Codification 310-30). These include certain of our consumer and commercial loans that were acquired through business combinations. The table below presents amounts related to PCI loans:





2017

2017

2017

2017

2016


(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

PCI loans:










  Period-end unpaid principal balance

$

11,399

$

12,658

$

13,599

$

14,838

$

15,896

  Period-end loans held for investment

10,775

11,985

12,895

14,102

15,071

  Average loans held for investment

11,060

12,270

13,305

14,433

15,443


(6)

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

(7)

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

(8)

Return on average tangible assets is a non-GAAP measure calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible assets for the period. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.

(9)

Return on average common equity is calculated based on annualized (i) income from continuing operations, net of tax; (ii) less dividends and undistributed earnings allocated to participating securities; (iii) less preferred stock dividends, for the period, divided by average common equity for the period. Our calculation of return on average common equity may not be comparable to similarly-titled measures reported by other companies.

(10)

Return on average tangible common equity ("ROTCE") is a non-GAAP measure calculated based on annualized (i) income from continuing operations, net of tax; (ii) less dividends and undistributed earnings allocated to participating securities; (iii) less preferred stock dividends, for the period, divided by average tangible common equity for the period. Our calculation of ROTCE may not be comparable to similarly-titled measures reported by other companies. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.

(11)

Efficiency ratio is calculated based on total non-interest expense for the period divided by total net revenue for the period. We also provide an adjusted efficiency ratio, which is a non-GAAP measure. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on our non-GAAP measures.

(12)

Net charge-off rate is calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.

(13)

On September 25, 2017, we completed the acquisition from Synovus Bank of the credit card assets and related liabilities of Cabela's wholly-owned subsidiary, World's Foremost Bank, which added approximately $5.7 billion to our loans held for investment portfolio as of the acquisition date ("Cabela's acquisition"). The credit quality metrics as of December 31, 2017 include the impact of this acquisition. Excluding this impact, the 30+ day performing delinquency rate as of December 31, 2017 would have been 3.28%.

(14)

Capital ratios as of the end of Q4 2017 are preliminary and therefore subject to change. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for information on the calculation of each of these ratios.

(15)

TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on non-GAAP measures.

**

Not meaningful.

 

 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

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




2017 Q4

2017 Q3

2016 Q4


Average
Balance

Interest
Income/
Expense(1)

Yield/
Rate(1)

Average
Balance

Interest
Income/
Expense(1)

Yield/
Rate(1)

Average
Balance

Interest
Income/
Expense(1)

Yield/

Rate(1)

(Dollars in millions, except as noted)








Interest-earning assets:

















Loans, including loans held for sale

$

254,080

$

6,133

9.66

%

$

247,022

$

5,960

9.65

%

$

241,110

$

5,587

9.27

%

Investment securities

68,992

431

2.50

69,302

431

2.49

67,827

393

2.32

Cash equivalents and other

7,670

40

2.09

5,691

29

2.04

8,916

29

1.30

Total interest-earning assets

$

330,742

$

6,604

7.99

$

322,015

$

6,420

7.97

$

317,853

$

6,009

7.56

Interest-bearing liabilities:

















Interest-bearing deposits

$

215,258

$

457

0.85

$

213,137

$

410

0.77

$

206,464

$

332

0.64

Securitized debt obligations

19,751

91

1.84

17,598

85

1.93

18,300

65

1.42

Senior and subordinated notes

30,020

209

2.78

28,753

194

2.70

23,605

138

2.34

Other borrowings and liabilities

10,355

34

1.31

9,320

31

1.33

17,654

27

0.61

Total interest-bearing liabilities

$

275,384

$

791

1.15

$

268,808

$

720

1.07

$

266,023

$

562

0.85

Net interest income/spread


$

5,813

6.84



$

5,700

6.90



$

5,447

6.71

Impact of non-interest-bearing funding




0.19





0.18





0.14

Net interest margin




7.03

%




7.08

%




6.85

%



Year Ended December 31,


2017

2016


Average
Balance

Interest
Income/
Expense(1)

Yield/
Rate(1)

Average
Balance

Interest
Income/
Expense(1)

Yield/
Rate(1)

(Dollars in millions, except as noted)





Interest-earning assets:











Loans, including loans held for sale

$

246,613

$

23,388

9.48

%

$

234,338

$

21,203

9.05

%

Investment securities

68,896

1,711

2.48

66,260

1,599

2.41

Cash equivalents and other

6,821

123

1.80

7,198

89

1.24

Total interest-earning assets

$

322,330

$

25,222

7.82

$

307,796

$

22,891

7.44

Interest-bearing liabilities:











Interest-bearing deposits

$

213,949

$

1,602

0.75

$

198,304

$

1,213

0.61

Securitized debt obligations

18,237

327

1.79

16,576

216

1.30

Senior and subordinated notes

27,866

731

2.62

22,417

476

2.12

Other borrowings and liabilities

8,917

102

1.14

18,736

113

0.60

Total interest-bearing liabilities

$

268,969

$

2,762

1.03

$

256,033

$

2,018

0.79

Net interest income/spread


$

22,460

6.79



$

20,873

6.65

Impact of non-interest-bearing funding




0.18





0.13

Net interest margin




6.97

%




6.78

%

__________

(1)

Interest income and interest expense and the calculation of average yields on interest-earning assets and average rates on interest-bearing liabilities include the impact of hedge accounting.

 


 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics














2017 Q4 vs.

Year Ended December 31,

(Dollars in millions, except as noted)

2017
Q4

2017
Q3

2017
Q2

2017
Q1

2016
Q4

2017
Q3

2016
Q4

2017

2016

2017 vs.
2016

Loans Held For Investment (Period-End)



















Credit card:



















   Domestic credit card

$

105,293

$

99,981

$

92,866

$

91,092

$

97,120

5

%

8

%

$

105,293

$

97,120

8

%

   International card businesses

9,469

9,149

8,724

8,121

8,432

3

12

9,469

8,432

12

Total credit card

114,762

109,130

101,590

99,213

105,552

5

9

114,762

105,552

9

Consumer banking:



















   Auto

53,991

53,290

51,765

49,771

47,916

1

13

53,991

47,916

13

   Home loan

17,633

18,820

19,724

20,738

21,584

(6)

(18)

17,633

21,584

(18)

   Retail banking

3,454

3,454

3,484

3,473

3,554

—

(3)

3,454

3,554

(3)

Total consumer banking

75,078

75,564

74,973

73,982

73,054

(1)

3

75,078

73,054

3

Commercial banking:



















   Commercial and multifamily real estate

26,150

27,944

27,428

27,218

26,609

(6)

(2)

26,150

26,609

(2)

   Commercial and industrial

38,025

39,306

39,801

39,638

39,824

(3)

(5)

38,025

39,824

(5)

     Total commercial lending

64,175

67,250

67,229

66,856

66,433

(5)

(3)

64,175

66,433

(3)

   Small-ticket commercial real estate

400

420

443

464

483

(5)

(17)

400

483

(17)

Total commercial banking

64,575

67,670

67,672

67,320

66,916

(5)

(3)

64,575

66,916

(3)

Other loans

58

58

67

73

64

—

(9)

58

64

(9)

Total loans held for investment

$

254,473

$

252,422

$

244,302

$

240,588

$

245,586

1

4

$

254,473

$

245,586

4

Loans Held For Investment (Average)



















Credit card:



















   Domestic credit card

$

101,087

$

93,729

$

91,769

$

93,034

$

92,623

8

%

9

%

$

94,923

$

88,394

7

%

   International card businesses

8,942

8,816

8,274

8,135

8,168

1

9

8,545

8,166

5

Total credit card

110,029

102,545

100,043

101,169

100,791

7

9

103,468

96,560

7

Consumer banking:



















   Auto

53,747

52,615

50,803

48,673

47,126

2

14

51,477

44,521

16

   Home loan

18,109

19,302

20,203

21,149

21,984

(6)

(18)

19,681

23,358

(16)

   Retail banking

3,433

3,446

3,463

3,509

3,549

—

(3)

3,463

3,543

(2)

Total consumer banking

75,289

75,363

74,469

73,331

72,659

—

4

74,621

71,422

4

Commercial banking:



















   Commercial and multifamily real estate

27,770

27,703

27,401

26,587

26,445

—

5

27,370

25,821

6

   Commercial and industrial

39,020

39,723

39,815

39,877

39,573

(2)

(1)

39,606

38,852

2

     Total commercial lending

66,790

67,426

67,216

66,464

66,018

(1)

1

66,976

64,673

4

   Small-ticket commercial real estate

410

433

453

474

497

(5)

(18)

442

548

(19)

Total commercial banking

67,200

67,859

67,669

66,938

66,515

(1)

1

67,418

65,221

3

Other loans

48

55

60

67

62

(13)

(23)

58

69

(16)

Total average loans held for investment

$

252,566

$

245,822

$

242,241

$

241,505

$

240,027

3

5

$

245,565

$

233,272

5





























































































2017 Q4 vs.

Year Ended December 31,


2017

2017

2017

2017

2016

2017

2016




2017 vs.


Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Net Charge-Off (Recovery) Rates

























Credit card:

























   Domestic credit card(1)

5.08

%

4.64

%

5.11

%

5.14

%

4.66

%

44

bps

42

bps

4.99

%

4.16

%

83

bps

   International card businesses

3.92


3.08


4.08


3.69


3.35

84

57


3.69

3.33

36

Total credit card(1)

4.99


4.51


5.02


5.02


4.56

48

43


4.88

4.09

79

Consumer banking:

























   Auto

2.12


1.96


1.70


1.64


2.07

16

5


1.86

1.69

17

   Home loan

0.23


0.02


0.04


0.03


0.08

21

15


0.08

0.06

2

   Retail banking

1.94


2.10


1.71


1.92


1.73

(16)

21


1.92

1.53

39

Total consumer banking

1.66


1.47


1.25


1.19


1.45

19

21


1.39

1.15

24

Commercial banking:

























   Commercial and multifamily real estate

(0.01)


(0.01)


0.03


—


(0.02)

—

1


—

(0.01)

1

   Commercial and industrial

1.47


1.64


1.34


0.22


0.80

(17)

67


1.17

0.75

42

     Total commercial lending

0.86


0.97


0.81


0.13


0.47

(11)

39


0.69

0.45

24

   Small-ticket commercial real estate

(0.05)


0.12


(0.22)


1.05


(0.02)

(17)

(3)


0.24

0.30

(6)

Total commercial banking

0.85


0.96


0.80


0.14


0.47

(11)

38


0.69

0.45

24

Total net charge-offs

2.89


2.61


2.67


2.50


2.48

28

41


2.67

2.17

50

30+ Day Performing Delinquency Rates

























Credit card:

























   Domestic credit card(1)

4.01

%

3.94

%

3.63

%

3.71

%

3.95

%

7

bps

6

bps

4.01

%

3.95

%

6

bps

   International card businesses

3.64


3.54


3.28


3.39


3.36

10

28


3.64

3.36

28

Total credit card(1)

3.98


3.91


3.60


3.68


3.91

7

7


3.98

3.91

7

Consumer banking:

























   Auto

6.51


5.71


5.40


5.03


6.12

80

39


6.51

6.12

39

   Home loan

0.20


0.17


0.14


0.15


0.20

3

—


0.20

0.20

—

   Retail banking

0.76


0.73


0.54


0.59


0.70

3

6


0.76

0.70

6

Total consumer banking

4.76


4.10


3.79


3.45


4.10

66

66


4.76

4.10

66

Nonperforming Loans and Nonperforming Assets Rates(2)(3)

























Credit card:

























   International card businesses

0.25

%

0.28

%

0.37

%

0.47

%

0.50

%

(3)

bps

(25)

bps

0.25

%

0.50

%

(25)

bps

Total credit card

0.02


0.02


0.03


0.04


0.04

—

(2)


0.02

0.04

(2)

Consumer banking:

























   Auto

0.70


0.65


0.53


0.36


0.47

5

23


0.70

0.47

23

   Home loan

1.00


0.84


1.31


1.27


1.26

16

(26)


1.00

1.26

(26)

   Retail banking

1.00


0.97


0.96


0.82


0.86

3

14


1.00

0.86

14

Total consumer banking

0.78


0.71


0.75


0.64


0.72

7

6


0.78

0.72

6

Commercial banking:

























   Commercial and multifamily real estate

0.15


0.23


0.13


0.13


0.11

(8)

4


0.15

0.11

4

   Commercial and industrial

0.63


1.82


1.62


2.02


2.48

(119)

(185)


0.63

2.48

(185)

     Total commercial lending

0.43


1.16


1.01


1.25


1.53

(73)

(110)


0.43

1.53

(110)

   Small-ticket commercial real estate

1.65


1.59


1.89


1.65


0.85

6

80


1.65

0.85

80

Total commercial banking

0.44


1.16


1.01


1.25


1.53

(72)

(109)


0.44

1.53

(109)

Total nonperforming loans

0.35


0.54


0.53


0.57


0.65

(19)

(30)


0.35

0.65

(30)

Total nonperforming assets

0.41


0.60


0.60


0.66


0.76

(19)

(35)


0.41

0.76

(35)

 



 


CAPITAL ONE FINANCIAL CORPORATION (COF)

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




Three Months Ended December 31, 2017


Credit Card

Consumer Banking





(Dollars in millions)

Domestic
Card

International
Card
Businesses

Total
Credit
Card

Auto

Home
Loan

Retail
Banking

Total
Consumer
Banking

Commercial
Banking

Other(4)

Total

Allowance for loan and lease losses:



















Balance as of September 30, 2017

$

5,155

$

379

$

5,534

$

1,083

$

59

$

71

$

1,213

$

669

$

2

$

7,418

Charge-offs

(1,555)

(122)

(1,677)

(454)

(13)

(21)

(488)

(147)

2

(2,310)

Recoveries

271

34

305

168

3

5

176

4

(3)

482

Net charge-offs

(1,284)

(88)

(1,372)

(286)

(10)

(16)

(312)

(143)

(1)

(1,828)

Provision for loan and lease losses

1,402

84

1,486

322

9

10

341

103

—

1,930

Allowance build (release) for loan and lease losses

118

(4)

114

36

(1)

(6)

29

(40)

(1)

102

Other changes(5)

—

—

—

—

—

—

—

(18)

—

(18)

Balance as of December 31, 2017

5,273

375

5,648

1,119

58

65

1,242

611

1

7,502

Reserve for unfunded lending commitments:



















Balance as of September 30, 2017

—

—

—

—

—

8

8

120

—

128

Benefit for losses on unfunded lending commitments

—

—

—

—

—

(1)

(1)

(3)

—

(4)

Balance as of December 31, 2017

—

—

—

—

—

7

7

117

—

124

Combined allowance and reserve as of December 31, 2017

$

5,273

$

375

$

5,648

$

1,119

$

58

$

72

$

1,249

$

728

$

1

$

7,626



Year Ended December 31, 2017


Credit Card

Consumer Banking





(Dollars in millions)

Domestic
Card

International
Card
Businesses

Total
Credit
Card

Auto

Home
Loan

Retail
Banking

Total
Consumer
Banking

Commercial
Banking

Other(4)

Total

Allowance for loan and lease losses:



















Balance as of December 31, 2016

$

4,229

$

377

$

4,606

$

957

$

65

$

80

$

1,102

$

793

$

2

$

6,503

Charge-offs

(5,844)

(477)

(6,321)

(1,573)

(22)

(82)

(1,677)

(481)

(34)

(8,513)

Recoveries

1,105

162

1,267

616

7

16

639

16

29

1,951

Net charge-offs

(4,739)

(315)

(5,054)

(957)

(15)

(66)

(1,038)

(465)

(5)

(6,562)

Provision for loan and lease losses

5,783

283

6,066

1,119

10

51

1,180

313

4

7,563

Allowance build (release) for loan and lease losses

1,044

(32)

1,012

162

(5)

(15)

142

(152)

(1)

1,001

Other changes(5)

—

30

30

—

(2)

—

(2)

(30)

—

(2)

Balance as of December 31, 2017

5,273

375

5,648

1,119

58

65

1,242

611

1

7,502

Reserve for unfunded lending commitments:



















Balance as of December 31, 2016

—

—

—

—

—

7

7

129

—

136

Benefit for losses on unfunded lending commitments

—

—

—

—

—

—

—

(12)

—

(12)

Balance as of December 31, 2017

—

—

—

—

—

7

7

117

—

124

Combined allowance and reserve as of December 31, 2017

$

5,273

$

375

$

5,648

$

1,119

$

58

$

72

$

1,249

$

728

$

1

$

7,626

 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results




Three Months Ended December 31, 2017

Year Ended December 31, 2017

(Dollars in millions)

Credit
Card

Consumer
Banking

Commercial
Banking

Other(6)

Total

Credit
Card

Consumer
Banking

Commercial
Banking

Other(6)

Total

Net interest income

$

3,568

$

1,636

$

566

$

43

$

5,813

$

13,648

$

6,380

$

2,261

$

171

$

22,460

Non-interest income

847

179

188

(14)

1,200

3,325

749

708

(5)

4,777

Total net revenue(7)

4,415

1,815

754

29

7,013

16,973

7,129

2,969

166

27,237

Provision for credit losses

1,486

340

100

—

1,926

6,066

1,180

301

4

7,551

Non-interest expense

2,108

1,081

437

153

3,779

7,916

4,233

1,603

442

14,194

Income (loss) from continuing operations before income taxes

821

394

217

(124)

1,308

2,991

1,716

1,065

(280)

5,492

Income tax provision

297

144

79

1,650

2,170

1,071

626

389

1,289

3,375

Income (loss) from continuing operations, net of tax

$

524

$

250

$

138

$

(1,774)

$

(862)

$

1,920

$

1,090

$

676

$

(1,569)

$

2,117























Three Months Ended September 30, 2017









(Dollars in millions)

Credit
Card

Consumer
Banking

Commercial
Banking

Other

Total









Net interest income

$

3,440

$

1,649

$

560

$

51

$

5,700










Non-interest income

865

192

179

49

1,285










Total net revenue(7)

4,305

1,841

739

100

6,985










Provision for credit losses

1,466

293

63

11

1,833










Non-interest expense

1,961

1,051

394

161

3,567










Income (loss) from continuing operations before income taxes

878

497

282

(72)

1,585










Income tax provision (benefit)

306

181

103

(142)

448










Income from continuing operations, net of tax

$

572

$

316

$

179

$

70

$

1,137

































Three Months Ended December 31, 2016

Year Ended December 31, 2016

(Dollars in millions)

Credit
Card

Consumer
Banking

Commercial
Banking

Other

Total

Credit
Card

Consumer
Banking

Commercial
Banking

Other

Total

Net interest income

$

3,353

$

1,498

$

565

$

31

$

5,447

$

12,635

$

5,829

$

2,216

$

193

$

20,873

Non-interest income

849

166

175

(71)

1,119

3,380

733

578

(63)

4,628

Total net revenue (loss)(7)

4,202

1,664

740

(40)

6,566

16,015

6,562

2,794

130

25,501

Provision (benefit) for credit losses

1,322

365

66

(1)

1,752

4,926

1,055

483

(5)

6,459

Non-interest expense

2,073

1,109

393

104

3,679

7,703

4,139

1,407

309

13,558

Income (loss) from continuing operations before income taxes

807

190

281

(143)

1,135

3,386

1,368

904

(174)

5,484

Income tax provision (benefit)

295

70

102

(125)

342

1,226

498

329

(339)

1,714

Income (loss) from continuing operations, net of tax

$

512

$

120

$

179

$

(18)

$

793

$

2,160

$

870

$

575

$

165

$

3,770





















 


 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business













2017 Q4 vs.

Year Ended December 31,


2017

2017

2017

2017

2016

2017

2016




2017 vs.

(Dollars in millions, except as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Credit Card



















Earnings:



















Net interest income

$

3,568

$

3,440

$

3,294

$

3,346

$

3,353

4

%

6

%

$

13,648

$

12,635

8

%

Non-interest income

847

865

875

738

849

(2)

—

3,325

3,380

(2)

Total net revenue

4,415

4,305

4,169

4,084

4,202

3

5

16,973

16,015

6

Provision for credit losses

1,486

1,466

1,397

1,717

1,322

1

12

6,066

4,926

23

Non-interest expense

2,108

1,961

1,918

1,929

2,073

7

2

7,916

7,703

3

Income from continuing operations before income taxes

821

878

854

438

807

(6)

2

2,991

3,386

(12)

Income tax provision

297

306

301

167

295

(3)

1

1,071

1,226

(13)

Income from continuing operations, net of tax

$

524

$

572

$

553

$

271

$

512

(8)

2

$

1,920

$

2,160

(11)

Selected performance metrics:



















Period-end loans held for investment

$

114,762

$

109,130

$

101,590

$

99,213

$

105,552

5

9

$

114,762

$

105,552

9

Average loans held for investment

110,029

102,545

100,043

101,169

100,791

7

9

103,468

96,560

7

Average yield on loans held for investment(8)

15.13

%

15.58

%

15.14

%

14.99

%

14.93

%

(45)

bps

20

bps

15.21

%

14.68

%

53

bps

Total net revenue margin(9)

16.05

16.79

16.67

16.14

16.68

(74)

(63)

16.40

16.59

(19)

Net charge-off rate(1)

4.99

4.51

5.02

5.02

4.56

48

43

4.88

4.09

79

30+ day performing delinquency rate(1)

3.98

3.91

3.60

3.68

3.91

7

7

3.98

3.91

7

30+ day delinquency rate

3.99

3.92

3.62

3.71

3.94

7

5

3.99

3.94

5

Nonperforming loan rate(2)

0.02

0.02

0.03

0.04

0.04

—

(2)

0.02

0.04

(2)

Purchase volume(10)

$

95,659

$

84,505

$

83,079

$

73,197

$

82,824

13

%

15

%

$

336,440

$

307,138

10

%

































2017 Q4 vs.

Year Ended December 31,


2017

2017

2017

2017

2016

2017

2016




2017 vs.

(Dollars in millions, except as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Domestic Card



















Earnings:



















Net interest income

$

3,268

$

3,132

$

3,011

$

3,093

$

3,090

4

%

6

%

$

12,504

$

11,571

8

%

Non-interest income

781

787

802

699

791

(1)

(1)

3,069

3,116

(2)

Total net revenue

4,049

3,919

3,813

3,792

3,881

3

4

15,573

14,687

6

Provision for credit losses

1,402

1,417

1,327

1,637

1,229

(1)

14

5,783

4,555

27

Non-interest expense

1,880

1,754

1,727

1,717

1,859

7

1

7,078

6,895

3

Income from continuing operations before income taxes

767

748

759

438

793

3

(3)

2,712

3,237

(16)

Income tax provision

280

273

277

160

288

3

(3)

990

1,178

(16)

Income from continuing operations, net of tax

$

487

$

475

$

482

$

278

$

505

3

(4)

$

1,722

$

2,059

(16)

Selected performance metrics:



















Period-end loans held for investment

$

105,293

$

99,981

$

92,866

$

91,092

$

97,120

5

8

$

105,293

$

97,120

8

Average loans held for investment

101,087

93,729

91,769

93,034

92,623

8

9

94,923

88,394

7

Average yield on loans held for investment(8)

15.08

%

15.51

%

15.07

%

15.01

%

14.91

%

(43)

bps

17

bps

15.16

%

14.62

%

54

bps

Total net revenue margin(9)

16.03

16.72

16.62

16.30

16.76

(69)

(73)

16.41

16.62

(21)

Net charge-off rate(1)

5.08

4.64

5.11

5.14

4.66

44

42

4.99

4.16

83

30+ day delinquency rate

4.01

3.94

3.63

3.71

3.95

7

6

4.01

3.95

6

Purchase volume(10)

$

87,287

$

76,806

$

75,781

$

66,950

$

75,639

14

%

15

%

$

306,824

$

280,637

9

%

Refreshed FICO scores:(11)



















Greater than 660

66

%

65

%

64

%

63

%

64

%

1

2

66

%

64

%

2

660 or below

34

35

36

37

36

(1)

(2)

34

36

(2)

Total

100

%

100

%

100

%

100

%

100

%




100

%

100

%

 


 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business














2017 Q4 vs.

Year Ended December 31,


2017

2017

2017

2017

2016

2017

2016




2017 vs.

(Dollars in millions, except as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Consumer Banking



















Earnings:



















Net interest income

$

1,636

$

1,649

$

1,578

$

1,517

$

1,498

(1)

%

9

%

$

6,380

$

5,829

9

%

Non-interest income

179

192

183

195

166

(7)

8

749

733

2

Total net revenue

1,815

1,841

1,761

1,712

1,664

(1)

9

7,129

6,562

9

Provision for credit losses

340

293

268

279

365

16

(7)

1,180

1,055

12

Non-interest expense

1,081

1,051

1,059

1,042

1,109

3

(3)

4,233

4,139

2

Income from continuing operations before income taxes

394

497

434

391

190

(21)

107

1,716

1,368

25

Income tax provision

144

181

158

143

70

(20)

106

626

498

26

Income from continuing operations, net of tax

$

250

$

316

$

276

$

248

$

120

(21)

108

$

1,090

$

870

25

Selected performance metrics:



















Period-end loans held for investment

$

75,078

$

75,564

$

74,973

$

73,982

$

73,054

(1)

3

$

75,078

$

73,054

3

Average loans held for investment

75,289

75,363

74,469

73,331

72,659

—

4

74,621

71,422

4

Average yield on loans held for investment(8)

6.84

%

6.79

%

6.56

%

6.48

%

6.50

%

5

bps

34

bps

6.67

%

6.34

%

33

bps

Auto loan originations

$

6,215

$

7,043

$

7,453

$

7,025

$

6,542

(12)

%

(5)

%

$

27,737

$

25,719

8

%

Period-end deposits

185,842

184,719

186,607

188,216

181,917

1

2

185,842

181,917

2

Average deposits

184,799

185,072

186,989

183,936

180,019

—

3

185,201

177,129

5

Average deposits interest rate

0.69

%

0.62

%

0.59

%

0.57

%

0.57

%

7

bps

12

bps

0.62

%

0.56

%

6

bps

Net charge-off rate

1.66

1.47

1.25

1.19

1.45

19

21

1.39

1.15

24

30+ day performing delinquency rate

4.76

4.10

3.79

3.45

4.10

66

66

4.76

4.10

66

30+ day delinquency rate

5.34

4.61

4.33

3.93

4.67

73

67

5.34

4.67

67

Nonperforming loan rate(2)

0.78

0.71

0.75

0.64

0.72

7

6

0.78

0.72

6

Nonperforming asset rate(3)

0.91

0.88

0.96

0.92

1.09

3

(18)

0.91

1.09

(18)

Auto—At origination FICO scores:(12)



















Greater than 660

51

%

51

%

51

%

51

%

52

%

—

(1)

%

51

%

52

%

(1)

%

621 - 660

18

18

18

18

17

—

1

18

17

1

620 or below

31

31

31

31

31

—

—

31

31

—

Total

100

%

100

%

100

%

100

%

100

%




100

%

100

%


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business













2017 Q4 vs.

Year Ended December 31,


2017

2017

2017

2017

2016

2017

2016




2017 vs.

(Dollars in millions, except as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Commercial Banking



















Earnings:



















Net interest income

$

566

$

560

$

569

$

566

$

565

1

%

—

$

2,261

$

2,216

2

%

Non-interest income

188

179

183

158

175

5

7

%

708

578

22

Total net revenue(7)

754

739

752

724

740

2

2

2,969

2,794

6

Provision (benefit) for credit losses

100

63

140

(2)

66

59

52

301

483

(38)

Non-interest expense

437

394

381

391

393

11

11

1,603

1,407

14

Income from continuing operations before income taxes

217

282

231

335

281

(23)

(23)

1,065

904

18

Income tax provision

79

103

85

122

102

(23)

(23)

389

329

18

Income from continuing operations, net of tax

$

138

$

179

$

146

$

213

$

179

(23)

(23)

$

676

$

575

18

Selected performance metrics:



















Period-end loans held for investment

$

64,575

$

67,670

$

67,672

$

67,320

$

66,916

(5)

(3)

$

64,575

$

66,916

(3)

Average loans held for investment

67,200

67,859

67,669

66,938

66,515

(1)

1

67,418

65,221

3

Average yield on loans held for investment(7)(8)

4.03

%

3.98

%

3.81

%

3.65

%

3.55

%

5

bps

48

bps

3.87

%

3.47

%

40

bps

Period-end deposits

$

33,938

$

32,783

$

33,153

$

33,735

$

33,866

4

%

—

$

33,938

$

33,866

—

Average deposits

34,117

33,197

34,263

34,219

34,029

3

—

33,947

33,841

—

Average deposits interest rate

0.46

%

0.42

%

0.36

%

0.31

%

0.30

%

4

bps

16

bps

0.39

%

0.28

%

11

bps

Net charge-off rate

0.85

0.96

0.80

0.14

0.47

(11)

38

0.69

0.45

24

Nonperforming loan rate(2)

0.44

1.16

1.01

1.25

1.53

(72)

(109)

0.44

1.53

(109)

Nonperforming asset rate(3)

0.52

1.22

1.04

1.27

1.54

(70)

(102)

0.52

1.54

(102)

Risk category:(13)



















Noncriticized

$

61,162

$

63,501

$

63,802

$

63,390

$

62,828

(4)

%

(3)

%

$

61,162

$

62,828

(3)

%

Criticized performing

2,649

2,878

2,660

2,492

2,453

(8)

8

2,649

2,453

8

Criticized nonperforming

284

788

686

844

1,022

(64)

(72)

284

1,022

(72)

PCI loans

480

503

524

594

613

(5)

(22)

480

613

(22)

Total commercial loans

$

64,575

$

67,670

$

67,672

$

67,320

$

66,916

(5)

(3)

$

64,575

$

66,916

(3)

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


















Noncriticized

94.7

%

93.8

%

94.3

%

94.2

%

93.9

%

90

bps

80

bps

94.7

%

93.9

%

80

bps

Criticized performing

4.1

4.3

3.9

3.7

3.7

(20)

40

4.1

3.7

40

Criticized nonperforming

0.4

1.2

1.0

1.2

1.5

(80)

(110)

0.4

1.5

(110)

PCI loans

0.8

0.7

0.8

0.9

0.9

10

(10)

0.8

0.9

(10)

Total commercial loans

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%




100.0

%

100.0

%


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Financial & Statistical Summary—Other and Total














2017 Q4 vs.

Year Ended December 31,


2017

2017

2017

2017

2016

2017

2016




2017 vs.

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2017

2016

2016

Other(6)



















Earnings:



















Net interest income

$

43

$

51

$

32

$

45

$

31

(16)

%

39

%

$

171

$

193

(11)

%

Non-interest income

(14)

49

(10)

(30)

(71)

**

(80)

(5)

(63)

(92)

Total net revenue (loss)(7)

29

100

22

15

(40)

(71)

**

166

130

28

Provision (benefit) for credit losses

—

11

(5)

(2)

(1)

**

**

4

(5)

**

Non-interest expense(14)

153

161

56

72

104

(5)

47

442

309

43

Loss from continuing operations before income taxes

(124)

(72)

(29)

(55)

(143)

72

(13)

(280)

(174)

61

Income tax provision (benefit)

1,650

(142)

(101)

(118)

(125)

**

**

1,289

(339)

**

Income (loss) from continuing operations, net of tax

$

(1,774)

$

70

$

72

$

63

$

(18)

**

**

$

(1,569)

$

165

**

Selected performance metrics:



















Period-end loans held for investment

$

58

$

58

$

67

$

73

$

64

—

(9)

$

58

$

64

(9)

Average loans held for investment

48

55

60

67

62

(13)

(23)

58

69

(16)

Period-end deposits

23,922

21,560

20,003

19,231

20,985

11

14

23,922

20,985

14

Average deposits

22,646

20,574

19,298

20,395

18,156

10

25

20,734

12,744

63

Total



















Earnings:



















Net interest income

$

5,813

$

5,700

$

5,473

$

5,474

$

5,447

2

%

7

%

$

22,460

$

20,873

8

%

Non-interest income

1,200

1,285

1,231

1,061

1,119

(7)

7

4,777

4,628

3

Total net revenue

7,013

6,985

6,704

6,535

6,566

—

7

27,237

25,501

7

Provision for credit losses

1,926

1,833

1,800

1,992

1,752

5

10

7,551

6,459

17

Non-interest expense

3,779

3,567

3,414

3,434

3,679

6

3

14,194

13,558

5

Income from continuing operations before income taxes

1,308

1,585

1,490

1,109

1,135

(17)

15

5,492

5,484

—

Income tax provision

2,170

448

443

314

342

**

**

3,375

1,714

97

Income (loss) from continuing operations, net of tax

$

(862)

$

1,137

$

1,047

$

795

$

793

**

**

$

2,117

$

3,770

(44)

Selected performance metrics:



















Period-end loans held for investment

$

254,473

$

252,422

$

244,302

$

240,588

$

245,586

1

4

$

254,473

$

245,586

4

Average loans held for investment

252,566

245,822

242,241

241,505

240,027

3

5

245,565

233,272

5

Period-end deposits

243,702

239,062

239,763

241,182

236,768

2

3

243,702

236,768

3

Average deposits

241,562

238,843

240,550

238,550

232,204

1

4

239,882

223,714

7

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



(1)

On September 25, 2017, we completed the Cabela's acquisition. The total credit card and domestic credit card metrics as of and for the three months and year ended December 31, 2017 include the impact of this acquisition. Excluding this impact (i) the total credit card and domestic credit card net charge-off rates for the three months ended December 31, 2017 would have been 5.24% and 5.36%, respectively; (ii) the total credit card and domestic credit card net charge-off rates for the year ended December 31, 2017 would have been 4.95% and 5.07%, respectively; and (iii) the total credit card and domestic credit card 30+ day performing delinquency rates as of December 31, 2017 would have been 4.14% and 4.18%, respectively.

(2)

Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.

(3)

Nonperforming assets consist of nonperforming loans, real estate owned ("REO") and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment, REO and other foreclosed assets.

(4)

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

(5)

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

(6)

Charges for the impacts of the Tax Act of $1.77 billion are reflected in the Other category of our business segment results for Q4 2017 and the year ended December 31, 2017. This amount is a reasonable estimate as of December 31, 2017, which may be adjusted during the measurement period ending no later than December 2018. The Tax Act refers to the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on budget for fiscal year 2018 enacted on December 22, 2017.

(7)

Some of our tax-related commercial investments generate tax-exempt income or tax credits. Accordingly, we make certain reclassifications within our Commercial Banking business results to present revenues and yields on a taxable-equivalent basis, calculated assuming an effective tax rate approximately equal to our federal statutory tax rate (35% for all periods presented) with offsetting reclassifications to the Other category.

(8)

Average yield on loans held for investment is calculated based on annualized interest income for the period divided by average loans held for investment during the period for the respective loan category. Annualized interest income is computed based on the effective yield of the respective loan category and does not include any allocations, such as funds transfer pricing.

(9)

Total net revenue margin is calculated based on annualized total net revenue for the period divided by average loans held for investment during the period for the respective loan category.

(10)

Purchase volume consists of purchase transactions, net of returns, for the period for loans both classified as held for investment and held for sale, and excludes cash advance and balance transfer transactions.

(11)

Percentages represent period-end loans held for investment in each credit score category. Domestic card credit scores generally represent FICO scores. These scores are obtained from one of the major credit bureaus at origination and are refreshed monthly thereafter. We approximate non-FICO credit scores to comparable FICO scores for consistency purposes. Balances for which no credit score is available or the credit score is invalid are included in the 660 or below category. 

(12)

Percentages represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.

(13)

Criticized exposures correspond to the "Special Mention," "Substandard" and "Doubtful" asset categories defined by bank regulatory authorities.

(14)

Includes charges incurred as a result of restructuring activities.

**

Not meaningful.

 

 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures(1)



Basel III Standardized Approach

(Dollars in millions, except as noted)

December 31,
2017

September 30,
2017

June 30,
2017

March 31,
2017

December 31,
2016

Regulatory Capital Metrics









Common equity excluding AOCI

$

45,296

$

46,415

$

45,459

$

44,614

$

44,103

Adjustments:









AOCI(2)(3)

(808)

(538)

(593)

(807)

(674)

Goodwill, net of related deferred tax liabilities

(14,380)

(14,300)

(14,299)

(14,302)

(14,307)

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

(330)

(372)

(419)

(465)

(384)

Other

258

93

78

121

65

Common equity Tier 1 capital

$

30,036

$

31,298

$

30,226

$

29,161

$

28,803

Tier 1 capital

$

34,396

$

35,657

$

34,585

$

33,519

$

33,162

Total capital(4)

41,963

43,272

42,101

40,979

40,817

Risk-weighted assets

292,256

292,041

283,231

279,302

285,756

Adjusted average assets(5)

348,424

340,579

335,248

336,990

335,835

Capital Ratios









Common equity Tier 1 capital(6)

10.3

%

10.7

%

10.7

%

10.4

%

10.1

%

Tier 1 capital(7)

11.8

12.2

12.2

12.0

11.6

Total capital(8)

14.4

14.8

14.9

14.7

14.3

Tier 1 leverage(5)

9.9

10.5

10.3

9.9

9.9

Tangible common equity ("TCE")(9)

8.3

8.8

8.8

8.5

8.1

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of our adjusted results that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.



Three Months Ended

Nine Months Ended

Year Ended


December 31, 2017

September 30, 2017

December 31, 2017

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

Reported
Results

Adj.(10)

Adjusted
Results

Reported
Results

Adj.(10)

Adjusted
Results

Reported
Results

Adj.(10)

Adjusted
Results

Selected income statement data:

















Net interest income

$

5,813

$

11

$

5,824

$

16,647

$

33

$

16,680

$

22,460

$

44

$

22,504

Non-interest income

1,200

9

1,209

3,577

37

3,614

4,777

46

4,823

Total net revenue

7,013

20

7,033

20,224

70

20,294

27,237

90

27,327

Provision for credit losses

1,926

—

1,926

5,625

(88)

5,537

7,551

(88)

7,463

Non-interest expense

3,779

(87)

3,692

10,415

(166)

10,249

14,194

(253)

13,941

Income from continuing operations before income taxes

1,308

107

1,415

4,184

324

4,508

5,492

431

5,923

Income tax provision (benefit)

2,170

(1,742)

428

1,205

82

1,287

3,375

(1,660)

1,715

Income (loss) from continuing operations, net of tax

(862)

1,849

987

2,979

242

3,221

2,117

2,091

4,208

Income (loss) from discontinued operations, net of tax

(109)

—

(109)

(26)

—

(26)

(135)

—

(135)

Net income (loss)

(971)

1,849

878

2,953

242

3,195

1,982

2,091

4,073

Dividends and undistributed earnings allocated to participating securities(12)

(1)

(5)

(6)

(21)

—

(21)

(13)

(15)

(28)

Preferred stock dividends

(80)

—

(80)

(185)

—

(185)

(265)

—

(265)

Net income (loss) available to common stockholders

$

(1,052)

$

1,844

$

792

$

2,747

$

242

$

2,989

$

1,704

$

2,076

$

3,780

Selected performance metrics:

















Diluted EPS(12)

$

(2.17)

$

3.79

$

1.62

$

5.63

$

0.49

$

6.12

$

3.49

$

4.25

$

7.74

Efficiency ratio

53.89

%

(139)

bps

52.50

%

51.50

%

(100)

bps

50.50

%

52.11

%

(109)

bps

51.02

%






























Three Months Ended

Nine Months Ended

Year Ended


December 31, 2016

September 30, 2016

December 31, 2016

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

Reported
Results

Adj.(11)

Adjusted
Results

Reported
Results

Adj.(11)

Adjusted
Results

Reported
Results

Adj.(11)

Adjusted
Results

Selected income statement data:

















Net interest income

$

5,447

$

13

$

5,460

$

15,426

$

41

$

15,467

$

20,873

$

54

$

20,927

Non-interest income

1,119

14

1,133

3,509

21

3,530

4,628

35

4,663

Total net revenue

6,566

27

6,593

18,935

62

18,997

25,501

89

25,590

Provision for credit losses

1,752

—

1,752

4,707

—

4,707

6,459

—

6,459

Non-interest expense

3,679

(45)

3,634

9,879

(31)

9,848

13,558

(76)

13,482

Income from continuing operations before income taxes

1,135

72

1,207

4,349

93

4,442

5,484

165

5,649

Income tax provision (benefit)

342

10

352

1,372

(7)

1,365

1,714

3

1,717

Income from continuing operations, net of tax

793

62

855

2,977

100

3,077

3,770

162

3,932

Income (loss) from discontinued operations, net of tax

(2)

—

(2)

(17)

—

(17)

(19)

—

(19)

Net income

791

62

853

2,960

100

3,060

3,751

162

3,913

Dividends and undistributed earnings allocated to participating securities(12)

(6)

—

(6)

(18)

—

(18)

(24)

—

(24)

Preferred stock dividends

(75)

—

(75)

(139)

—

(139)

(214)

—

(214)

Net income available to common stockholders

$

710

$

62

$

772

$

2,803

$

100

$

2,903

$

3,513

$

162

$

3,675

Selected performance metrics:

















Diluted EPS(12)

$

1.45

$

0.13

$

1.58

$

5.42

$

0.20

$

5.62

$

6.89

$

0.32

$

7.21

Efficiency ratio

56.03

%

(91)

bps

55.12

%

52.17

%

(33)

bps

51.84

%

53.17

%

(49)

bps

52.68

%

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of tangible common equity ("TCE"), tangible assets and metrics computed using these amounts, which include tangible book value per common share, return on average tangible assets, return on average TCE and TCE ratio. We consider these metrics to be key financial performance measures that management uses in assessing capital adequacy and the level of returns generated. While our non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly-titled measures reported by other companies. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.



2017

2017

2017

2017

2016

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Tangible Common Equity (Period-End)









Stockholders' equity

$

48,730

$

50,154

$

49,137

$

48,040

$

47,514

Goodwill and intangible assets(13)

(15,106)

(15,249)

(15,301)

(15,360)

(15,420)

Noncumulative perpetual preferred stock

(4,360)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

29,264

$

30,545

$

29,476

$

28,320

$

27,734

Tangible Common Equity (Average)









Stockholders' equity

$

50,710

$

50,176

$

49,005

$

48,193

$

47,972

Goodwill and intangible assets(13)

(15,223)

(15,277)

(15,336)

(15,395)

(15,455)

Noncumulative perpetual preferred stock

(4,360)

(4,360)

(4,360)

(4,360)

(4,051)

Tangible common equity

$

31,127

$

30,539

$

29,309

$

28,438

$

28,466

Tangible Assets (Period-End)









Total assets

$

365,693

$

361,402

$

350,593

$

348,549

$

357,033

Goodwill and intangible assets(13)

(15,106)

(15,249)

(15,301)

(15,360)

(15,420)

Tangible assets

$

350,587

$

346,153

$

335,292

$

333,189

$

341,613

Tangible Assets (Average)









Total assets

$

363,045

$

355,191

$

349,891

$

351,641

$

350,225

Goodwill and intangible assets(13)

(15,223)

(15,277)

(15,336)

(15,395)

(15,455)

Tangible assets

$

347,822

$

339,914

$

334,555

$

336,246

$

334,770

__________

(1)

Regulatory capital metrics and capital ratios as of December 31, 2017 are preliminary and therefore subject to change.

(2)

Amounts presented are net of tax.

(3)

Amounts based on transition provisions for regulatory capital deductions and adjustments of 60% for 2016 and 80% for 2017.

(4)

Total capital equals the sum of Tier 1 capital and Tier 2 capital.

(5)

Adjusted average assets for the purpose of calculating our Tier 1 leverage ratio represents total average assets adjusted for amounts that are deducted from Tier 1 capital, predominately goodwill and intangible assets. Tier 1
leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets.

(6)

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

(7)

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

(8)

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

(9)

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

(10)

The adjustments in 2017 consist of:




Three Months Ended

Nine Months Ended

Year Ended

(Dollars in millions)

December 31, 2017

September 30, 2017

December 31, 2017

Impacts of the Tax Act

$

1,769

—

$

1,769

Restructuring charges

76

$

108

184

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

31

99

130

Charges related to the Cabela's acquisition

—

117

117

Total

1,876

324

2,200

Income tax provision (benefit)

27

82

109

Net income (loss)

$

1,849

$

242

$

2,091







(11)    The adjustments in 2016 consist of:














Three Months Ended

Nine Months Ended

Year Ended

(Dollars in millions)

December 31, 2016

September 30, 2016

December 31, 2016

U.K. PPI Reserve

$

44

$

117

$

161

Impairment associated with certain acquired intangible and software assets

28

—

28

Gain related to the exchange of our ownership interest in Visa Europe with Visa Inc. as a result of Visa Inc's acquisition of Visa Europe

—

(24)

(24)

Total

72

93

165

Income tax provision (benefit)

10

(7)

3

Net income (loss)

$

62

$

100

$

162

(12)    Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total.

(13)    Includes impact of related deferred taxes.

 

 

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SOURCE Capital One Financial Corporation

Investor Relations: Jeff Norris, 703.720.2455, or Danielle Dietz, 703.720.2455; or Media Relations: Sie Soheili, 703.720.3929, or Tatiana Stead, 703.720.2352