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Capital One Reports First Quarter 2018 Net Income of $1.3 billion, or $2.62 per share
Excluding adjusting items, First Quarter 2018 Net Income of $2.65 per share(1)

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

Capital One

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

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

First Quarter 2018 Income Statement Summary:

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

First Quarter 2018 Balance Sheet Summary:

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

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on April 24, 2018 at 5:00 PM Eastern Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company's home page (www.capitalone.com). Choose "About Us," then choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation of non-GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through May 8, 2018 at 5:00 PM Eastern Time.

Forward-Looking Statements

Certain statements in this release may constitute forward-looking statements, which involve a number of risks and uncertainties. Capital One cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information due to a number of factors, including those listed from time to time in reports that Capital One files with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2017.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $250.8 billion in deposits and $362.9 billion in total assets as of March 31, 2018. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

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

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

 

Exhibit 99.2


Capital One Financial Corporation

Financial Supplement(1)(2)

First Quarter 2018

Table of Contents


Capital One Financial Corporation Consolidated Results

Page


Table 1:

Financial Summary—Consolidated

1


Table 2:

Selected Metrics—Consolidated

3


Table 3:

Consolidated Statements of Income

4


Table 4:

Consolidated Balance Sheets

6


Table 5:

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

8


Table 6:

Average Balances, Net Interest Income and Net Interest Margin

9


Table 7:

Loan Information and Performance Statistics

10


Table 8:

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

12

Business Segment Results



Table 9:

Financial Summary—Business Segment Results

13


Table 10:

Financial & Statistical Summary—Credit Card Business

14


Table 11:

Financial & Statistical Summary—Consumer Banking Business

16


Table 12:

Financial & Statistical Summary—Commercial Banking Business

17


Table 13:

Financial & Statistical Summary—Other and Total

18


Table 14:

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

19

Other



Table 15:

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

20

___________



(1)

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Quarterly Report on Form 10-Q for the period ended March 31, 2018 once it is filed with the Securities and Exchange Commission.

(2)

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

 

            

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated














2018 Q1 vs.

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


2018


2017


2017


2017


2017


2017


2017


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Income Statement















Net interest income


$

5,718



$

5,813



$

5,700



$

5,473



$

5,474



(2)

%


4

%

Non-interest income


1,191



1,200



1,285



1,231



1,061



(1)



12


Total net revenue(1)


6,909



7,013



6,985



6,704



6,535



(1)



6


Provision for credit losses


1,674



1,926



1,833



1,800



1,992



(13)



(16)


Non-interest expense:















Marketing


414



460



379



435



396



(10)



5


Operating expenses


3,159



3,319



3,188



2,979



3,038



(5)



4


Total non-interest expense


3,573



3,779



3,567



3,414



3,434



(5)



4


Income from continuing operations before income taxes


1,662



1,308



1,585



1,490



1,109



27



50


Income tax provision


319



2,170



448



443



314



(85)



2


Income (loss) from continuing operations, net of tax


1,343



(862)



1,137



1,047



795



**


69


Income (loss) from discontinued operations, net of tax


3



(109)



(30)



(11)



15



**


(80)


Net income (loss)


1,346



(971)



1,107



1,036



810



**


66


Dividends and undistributed earnings allocated to participating securities(2)


(10)



(1)



(8)



(8)



(5)



**


100


Preferred stock dividends


(52)



(80)



(52)



(80)



(53)



(35)



(2)


Net income (loss) available to common stockholders


$

1,284



$

(1,052)



$

1,047



$

948



$

752



**


71


Common Share Statistics















Basic earnings per common share:(2)















Net income (loss) from continuing operations


$

2.63



$

(1.95)



$

2.22



$

1.98



$

1.53



**


72

%

Income (loss) from discontinued operations


0.01



(0.22)



(0.06)



(0.02)



0.03



**


(67)


Net income (loss) per basic common share


$

2.64



$

(2.17)



$

2.16



$

1.96



$

1.56



**


69


Diluted earnings per common share:(2)















Net income (loss) from continuing operations


$

2.61



$

(1.95)



$

2.20



$

1.96



$

1.51



**


73


Income (loss) from discontinued operations


0.01



(0.22)



(0.06)



(0.02)



0.03



**


(67)


Net income (loss) per diluted common share


$

2.62



$

(2.17)



$

2.14



$

1.94



$

1.54



**


70


Weighted-average common shares outstanding (in millions):















Basic


486.9



485.7



484.9



484.0



482.3





1


Diluted


490.8



485.7



489.0



488.1



487.9



1

%


1


Common shares outstanding (period-end, in millions)


485.9



485.5



484.4



483.7



482.8





1


Dividends declared and paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.40






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


61.29



60.28



63.06



60.94



58.66



2



4


























































2018 Q1 vs.

(Dollars in millions)


2018


2017


2017


2017


2017


2017


2017


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Balance Sheet (Period-End)















Loans held for investment(4)


$

248,256



$

254,473



$

252,422



$

244,302



$

240,588



(2)

%


3

%

Interest-earning assets


332,251



334,124



329,002



319,286



316,712



(1)



5


Total assets


362,857



365,693



361,402



350,593



348,549



(1)



4


Interest-bearing deposits


224,671



217,298



212,956



213,810



214,818



3



5


Total deposits


250,847



243,702



239,062



239,763



241,182



3



4


Borrowings


50,693



60,281



59,458



49,954



48,439



(16)



5


Common equity


44,842



44,370



45,794



44,777



43,680



1



3


Total stockholders' equity


49,203



48,730



50,154



49,137



48,040



1



2


Balance Sheet (Average Balances)















Loans held for investment(4)


$

249,726



$

252,566



$

245,822



$

242,241



$

241,505



(1)

%


3

%

Interest-earning assets


330,183



330,742



322,015



318,078



318,358





4


Total assets


362,049



363,045



355,191



349,891



351,641





3


Interest-bearing deposits


219,670



215,258



213,137



214,412



212,973



2



3


Total deposits


245,270



241,562



238,843



240,550



238,550



2



3


Borrowings


54,588



58,109



54,271



48,838



53,357



(6)



2


Common equity


44,670



46,350



45,816



44,645



43,833



(4)



2


Total stockholders' equity


49,031



50,710



50,176



49,005



48,193



(3)



2


 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated














2018 Q1 vs.

(Dollars in millions, except as noted)


2018


2017


2017


2017


2017


2017


2017


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Performance Metrics















Net interest income growth (period over period)


(2)

%


2

%


4

%






**


**

Non-interest income growth (period over period)


(1)



(7)



4



16

%


(5)

%


**


**

Total net revenue growth (period over period)


(1)





4



3





**


**

Total net revenue margin(5)


8.37



8.48



8.68



8.43



8.21



(11)

bps


16

bps

Net interest margin(6)


6.93



7.03



7.08



6.88



6.88



(10)



5


Return on average assets


1.48



(0.95)



1.28



1.20



0.90



243



58


Return on average tangible assets(7)


1.55



(0.99)



1.34



1.25



0.95



254



60


Return on average common equity(8)


11.47



(8.14)



9.40



8.59



6.73



**


474


Return on average tangible common equity(9)


17.32



(12.12)



14.11



13.09



10.37



**


695


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


5.72



5.98



5.80



5.64



5.69



(26)



3


Efficiency ratio(10)


51.72



53.89



51.07



50.92



52.55



(217)



(83)


Effective income tax rate for continuing operations


19.2



165.9



28.3



29.7



28.3



**


**

Employees (in thousands), period-end


47.9



49.3



50.4



49.9



48.4



(3)

%


(1)

%

Credit Quality Metrics















Allowance for loan and lease losses


$

7,567



$

7,502



$

7,418



$

7,170



$

6,984



1

%


8

%

Allowance as a percentage of loans held for investment


3.05

%


2.95

%


2.94

%


2.93

%


2.90

%


10

bps


15

bps

Net charge-offs


$

1,618



$

1,828



$

1,606



$

1,618



$

1,510



(11)

%


7

%

Net charge-off rate(11)


2.59

%


2.89

%


2.61

%


2.67

%


2.50

%


(30)

bps


9

bps

30+ day performing delinquency rate


2.72



3.23



2.93



2.69



2.61



(51)



11


30+ day delinquency rate


2.91



3.48



3.24



2.99



2.92



(57)



(1)


Capital Ratios(12)















Common equity Tier 1 capital


10.5

%


10.3

%


10.7

%


10.7

%


10.4

%


20

bps


10

bps

Tier 1 capital


12.0



11.8



12.2



12.2



12.0



20




Total capital


14.5



14.4



14.8



14.9



14.7



10



(20)


Tier 1 leverage


10.1



9.9



10.5



10.3



9.9



20



20


Tangible common equity ("TCE")(13)


8.6



8.3



8.8



8.8



8.5



30



10



 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income














2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

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


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Interest income:















Loans, including loans held for sale


$

6,134



$

6,133



$

5,960



$

5,669



$

5,626





9

%

Investment securities


452



431



431



433



416



5

%


9


Other


51



40



29



26



28



28



82


Total interest income


6,637



6,604



6,420



6,128



6,070





9


Interest expense:















Deposits


539



457



410



382



353



18



53


Securitized debt obligations


107



91



85



82



69



18



55


Senior and subordinated notes


251



209



194



179



149



20



68


Other borrowings


22



34



31



12



25



(35)



(12)


Total interest expense


919



791



720



655



596



16



54


Net interest income


5,718



5,813



5,700



5,473



5,474



(2)



4


Provision for credit losses


1,674



1,926



1,833



1,800



1,992



(13)



(16)


Net interest income after provision for credit losses


4,044



3,887



3,867



3,673



3,482



4



16


Non-interest income:















Interchange fees, net


643



665



662



676



570



(3)



13


Service charges and other customer-related fees


432



394



414



418



371



10



16


Net securities gains (losses)


8



1



68



(4)





**


**

Other


108



140



141



141



120



(23)



(10)


Total non-interest income


1,191



1,200



1,285



1,231



1,061



(1)



12


Non-interest expense:















Salaries and associate benefits


1,520



1,521



1,524



1,383



1,471





3


Occupancy and equipment


490



523



471



474



471



(6)



4


Marketing


414



460



379



435



396



(10)



5


Professional services


210



274



297



279



247



(23)



(15)


Communications and data processing


306



306



294



289



288





6


Amortization of intangibles


44



61



61



61



62



(28)



(29)


Other


589



634



541



493



499



(7)



18


Total non-interest expense


3,573



3,779



3,567



3,414



3,434



(5)



4


Income from continuing operations before income taxes


1,662



1,308



1,585



1,490



1,109



27



50


Income tax provision


319



2,170



448



443



314



(85)



2


Income (loss) from continuing operations, net of tax


1,343



(862)



1,137



1,047



795



**


69


Income (loss) from discontinued operations, net of tax


3



(109)



(30)



(11)



15



**


(80)


Net income (loss)


1,346



(971)



1,107



1,036



810



**


66


Dividends and undistributed earnings allocated to participating securities(2)


(10)



(1)



(8)



(8)



(5)



**


100


Preferred stock dividends


(52)



(80)



(52)



(80)



(53)



(35)



(2)


Net income (loss) available to common stockholders


$

1,284



$

(1,052)



$

1,047



$

948



$

752



**


71





























2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

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


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Basic earnings per common share:(2)















Net income (loss) from continuing operations


$

2.63



$

(1.95)



$

2.22



$

1.98



$

1.53



**


72

%

Income (loss) from discontinued operations


0.01



(0.22)



(0.06)



(0.02)



0.03



**


(67)


Net income (loss) per basic common share


$

2.64



$

(2.17)



$

2.16



$

1.96



$

1.56



**


69


Diluted earnings per common share:(2)















Net income (loss) from continuing operations


$

2.61



$

(1.95)



$

2.20



$

1.96



$

1.51



**


73


Income (loss) from discontinued operations


0.01



(0.22)



(0.06)



(0.02)



0.03



**


(67)


Net income (loss) per diluted common share


$

2.62



$

(2.17)



$

2.14



$

1.94



$

1.54



**


70


Weighted-average common shares outstanding (in millions):















Basic common shares


486.9



485.7



484.9



484.0



482.3





1

%

Diluted common shares


490.8



485.7



489.0



488.1



487.9



1

%


1


Dividends declared and paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.40






 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets














2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Assets:















Cash and cash equivalents:















Cash and due from banks


$

4,220



$

4,458



$

4,154



$

3,352



$

3,489



(5)

%


21

%

Interest-bearing deposits and other short-term investments


9,788



9,582



4,330



3,363



5,826



2



68


Total cash and cash equivalents


14,008



14,040



8,484



6,715



9,315





50


Restricted cash for securitization investors


309



312



304



300



486



(1)



(36)


Investment securities:















Securities available for sale, at fair value


47,155



37,655



39,742



41,120



41,260



25



14


Securities held to maturity, at carrying value


23,075



28,984



28,650



27,720



26,170



(20)



(12)


Total investment securities


70,230



66,639



68,392



68,840



67,430



5



4


Loans held for investment:(4)















Unsecuritized loans held for investment


213,313



218,806



217,659



214,864



211,038



(3)



1


Loans held in consolidated trusts


34,943



35,667



34,763



29,438



29,550



(2)



18


Total loans held for investment


248,256



254,473



252,422



244,302



240,588



(2)



3


Allowance for loan and lease losses


(7,567)



(7,502)



(7,418)



(7,170)



(6,984)



1



8


Net loans held for investment


240,689



246,971



245,004



237,132



233,604



(3)



3


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


1,498



971



1,566



777



735



54



104


Premises and equipment, net


4,055



4,033



3,955



3,825



3,727



1



9


Interest receivable


1,496



1,536



1,426



1,346



1,368



(3)



9


Goodwill


14,536



14,533



14,532



14,524



14,521






Other assets


16,036



16,658



17,739



17,134



17,363



(4)



(8)


Total assets


$

362,857



$

365,693



$

361,402



$

350,593



$

348,549



(1)



4





























2018 Q1 vs.



2018


2017


2017


2017


2017


2017


2017

(Dollars in millions)


Q1


Q4


Q3


Q2


Q1


Q4


Q1

Liabilities:















Interest payable


$

353



$

413



$

301



$

376



$

260



(15)

%


36

%

Deposits:















Non-interest-bearing deposits


26,176



26,404



26,106



25,953



26,364



(1)



(1)


Interest-bearing deposits


224,671



217,298



212,956



213,810



214,818



3



5


Total deposits


250,847



243,702



239,062



239,763



241,182



3



4


Securitized debt obligations


18,665



20,010



17,087



18,358



18,528



(7)



1


Other debt:















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


656



576



767



958



1,046



14



(37)


Senior and subordinated notes


31,051



30,755



28,420



28,478



26,405



1



18


Other borrowings


321



8,940



13,184



2,160



2,460



(96)



(87)


Total other debt


32,028



40,271



42,371



31,596



29,911



(20)



7


Other liabilities


11,761



12,567



12,427



11,363



10,628



(6)



11


Total liabilities


313,654



316,963



311,248



301,456



300,509



(1)



4

















Stockholders' equity:















Preferred stock


0



0



0



0



0






Common stock


7



7



7



7



7






Additional paid-in capital, net


31,779



31,656



31,526



31,413



31,326





1


Retained earnings


31,996



30,700



31,946



31,086



30,326



4



6


Accumulated other comprehensive loss


(1,599)



(926)



(622)



(683)



(934)



73



71


Treasury stock, at cost


(12,980)



(12,707)



(12,703)



(12,686)



(12,685)



2



2


Total stockholders' equity


49,203



48,730



50,154



49,137



48,040



1



2


Total liabilities and stockholders' equity


$

362,857



$

365,693



$

361,402



$

350,593



$

348,549



(1)