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UNITED STATES
 SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

_____________________________________________
  
FORM 8-K

_____________________________________________
  
CURRENT REPORT 
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
 
July 21, 2016
Date of Report (Date of earliest event reported)

_____________________________________________
 
CAPITAL ONE FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)

_____________________________________________

Commission File No. 1-13300
Delaware
 
54-1719854
(State or Other Jurisdiction
of Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
1680 Capital One Drive McLean, Virginia
 
22102
(Address of Principal Executive Offices)
 
(Zip Code)
 
Registrant’s telephone number, including area code: (703) 720-1000
 
(Former name or former address, if changed since last report)
 _____________________________________________
    
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
 
 
 




Item 2.02.    Results of Operations and Financial Condition.

On July 21, 2016, Capital One Financial Corporation (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2016. Copies of the Company’s press release and financial supplement are attached and furnished herewith as Exhibits 99.1 and 99.2 to this Form 8-K and are incorporated herein by reference.

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




Item 9.01.    Financial Statements and Exhibits.
 
(d)
Exhibits.

Exhibit No.
 
Description of Exhibit
99.1
 
Press Release, dated July 21, 2016 – Second Quarter 2016
99.2
 
Financial Supplement – Second Quarter 2016
 
Earnings Conference Call Webcast Information.

The Company will hold an earnings conference call on July 21, 2016 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. A replay of the webcast will be archived on the Company’s website through August 4, 2016 at 5:00 PM Eastern Time.




SIGNATURE

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

 
CAPITAL ONE FINANCIAL CORPORATION
 
 
Dated: July 21, 2016
By:
 /s/ R. SCOTT BLACKLEY
 
 
R. Scott Blackley
 
 
Chief Financial Officer


Exhibit


Exhibit 99.1
News Release
    
Contacts:
 
 
 
Investor Relations
Media Relations
Jeff Norris
Danielle Dietz
Sie Soheili
Tatiana Stead
703.720.2455
703.720.2455
703.720.3929
703.720.2352
                        
FOR IMMEDIATE RELEASE: July 21, 2016
Capital One Reports Second Quarter 2016 Net Income of $942 million,
or $1.69 per share
Excluding Adjusting items, Second Quarter 2016 Net Income of $979 million or $1.76 per share

McLean, Va. (July 21, 2016) – Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2016 of $942 million, or $1.69 per diluted common share, compared to the first quarter of 2016 with net income of $1.0 billion, or $1.84 per diluted common share, and the second quarter of 2015 with net income of $863 million, or $1.50 per diluted common share. Excluding Adjusting items, net income for the second quarter of 2016 was $979 million or $1.76 per share.
“In the second quarter, Capital One sustained top-line growth, delivered successful 2016 CCAR results, and affirmed our guidance for domestic card credit and total company efficiency ratio,” said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. “We remain well positioned to deliver growth and returns at the higher end of banks and distribute significant capital to shareholders, subject to regulatory approval.”
All comparisons below are for the second quarter of 2016 compared with the first quarter of 2016 unless otherwise noted.
Second Quarter 2016 Income Statement Summary:
•
Total net revenue increased 1 percent to $6.3 billion.
•
Total non-interest expense increased 2 percent to $3.3 billion.
•
3 percent decrease in marketing.
•
3 percent increase in operating expenses.
•
Pre-provision earnings decreased 1 percent to $3.0 billion.
•
Provision for credit losses increased 4 percent to $1.6 billion.
•
Net charge-offs of $1.2 billion.

 
 
Capital One Second Quarter 2016 Earnings
Page 2


•
$465 million allowance build.
•
Net interest margin of 6.73 percent, down 2 basis points.
•
Efficiency ratio of 52.69 percent.
◦
Efficiency ratio net of adjustments of 52.32 percent.
Second Quarter 2016 Balance Sheet Summary:
•
Common equity Tier 1 capital ratio under Basel III Standardized Approach of 10.9 percent at June 30, 2016.
•
Period-end loans held for investment in the quarter increased $7.0 billion, or 3 percent, to $234.6 billion.
•
Domestic Card period-end loans increased $4.0 billion, or 5 percent, to $88.6 billion.
•
Consumer Banking period-end loans increased $824 million, or 1 percent, to $71.4 billion.
•
Auto period-end loans increased $1.8 billion, or 4 percent, to $44.5 billion.
•
Home loans period-end loans decreased $985 million, or 4 percent, to $23.4 billion, driven by planned run-off of acquired portfolios.
•
Commercial Banking period-end loans increased $2.0 billion, or 3 percent, to $66.2 billion.
•
Average loans held for investment in the quarter increased $3.6 billion, or 2 percent, to $230.4 billion.
•
Domestic Card average loans increased $833 million, or 1 percent, to $86.0 billion.
•
Consumer Banking average loans increased $692 million, or 1 percent, to $71.0 billion:
•
Auto average loans increased $1.6 billion, or 4 percent, to $43.6 billion.
•
Home loans average loans decreased $946 million, or 4 percent, to $23.8 billion, driven by planned run-off of acquired portfolios.
•
Commercial Banking average loans increased $1.6 billion, or 2 percent, to $64.9 billion.

•
Period-end total deposits decreased $720 million, or less than 1 percent, to $221.1 billion, while average deposits increased $2.0 billion, or 1 percent, to $221.1 billion.
•
Interest-bearing deposits rate paid increased by 2 basis points to 0.60 percent.


Capital One Second Quarter 2016 Earnings
Page 3


Earnings Conference Call Webcast Information
The company will hold an earnings conference call on July 21, 2016 at 5:00 PM Eastern Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company’s home page (www.capitalone.com). Choose “About Us,” then choose “Investors” to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation of non-GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company’s website through August 4, 2016 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, 2015.
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 $221.1 billion in deposits and $339.1 billion in total assets as of June 30, 2016. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.
###


Exhibit


Exhibit 99.2

Capital One Financial Corporation
Financial Supplement
Second Quarter 2016(1) 
Table of Contents

Capital One Financial Corporation Consolidated Results
Page
 
Table 1:
Financial Summary—Consolidated
 
Table 2:
Selected Metrics—Consolidated
 
Table 3:
Consolidated Statements of Income
 
Table 4:
Consolidated Balance Sheets
 
Table 5:
Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)
 
Table 6:
Average Balances, Net Interest Income and Net Interest Margin
 
Table 7:
Loan Information and Performance Statistics
 
Table 8:
Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity
Business Segment Results
 
 
Table 9:
Financial Summary—Business Segment Results
 
Table 10:
Financial & Statistical Summary—Credit Card Business
 
Table 11:
Financial & Statistical Summary—Consumer Banking Business
 
Table 12:
Financial & Statistical Summary—Commercial Banking Business
 
Table 13:
Financial & Statistical Summary—Other and Total
 
Table 14:
Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)
Other
 
 
Table 15:
Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures
__________
(1)
The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Quarterly Report on Form 10-Q for the period ended June 30, 2016 once it is filed with the Securities and Exchange Commission.


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 1: Financial Summary—Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
(Dollars in millions, except per share data and as noted) (unaudited)
 
2016
 
2016
 
2015
 
2015
 
2015
 
2016
 
2015
 

 

 
2016 vs.
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Income Statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
5,093

 
$
5,056

 
$
4,961

 
$
4,760

 
$
4,537

 
1%

 
12%

 
$
10,149

 
$
9,113

 
11%

Non-interest income
 
1,161

 
1,164

 
1,233

 
1,140

 
1,135

 
—

 
2

 
2,325

 
2,206

 
5

Total net revenue(1)
 
6,254

 
6,220

 
6,194

 
5,900

 
5,672

 
1

 
10

 
12,474

 
11,319

 
10

Provision for credit losses
 
1,592

 
1,527

 
1,380

 
1,092

 
1,129

 
4

 
41

 
3,119

 
2,064

 
51

Non-interest expense:
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 

Marketing
 
415

 
428

 
564

 
418

 
387

 
(3
)
 
7

 
843

 
762

 
11

Amortization of intangibles
 
95

 
101

 
103

 
106

 
111

 
(6
)
 
(14
)
 
196

 
221

 
(11
)
Operating expenses
 
2,785

 
2,694

 
2,813

 
2,636

 
2,809

 
3

 
(1
)
 
5,479

 
5,373

 
2

Total non-interest expense
 
3,295

 
3,223

 
3,480

 
3,160

 
3,307

 
2

 
—

 
6,518

 
6,356

 
3

Income from continuing operations before income taxes
 
1,367

 
1,470

 
1,334

 
1,648

 
1,236

 
(7
)
 
11

 
2,837

 
2,899

 
(2
)
Income tax provision
 
424

 
452

 
426

 
530

 
384

 
(6
)
 
10

 
876

 
913

 
(4
)
Income from continuing operations, net of tax
 
943

 
1,018

 
908

 
1,118

 
852

 
(7
)
 
11

 
1,961

 
1,986

 
(1
)
Income (loss) from discontinued operations, net of tax(2)
 
(1
)
 
(5
)
 
12

 
(4
)
 
11

 
(80
)
 
**

 
(6
)
 
30

 
**

Net income
 
942

 
1,013

 
920

 
1,114

 
863

 
(7
)
 
9

 
1,955

 
2,016

 
(3
)
Dividends and undistributed earnings allocated to participating securities(3)
 
(6
)
 
(6
)
 
(4
)
 
(6
)
 
(4
)
 
—

 
50

 
(12
)
 
(10
)
 
20

Preferred stock dividends
 
(65
)
 
(37
)
 
(68
)
 
(29
)
 
(29
)
 
76

 
124

 
(102
)
 
(61
)
 
67

Net income available to common stockholders
 
$
871

 
$
970

 
$
848

 
$
1,079

 
$
830

 
(10
)
 
5

 
$
1,841

 
$
1,945

 
(5
)
Common Share Statistics
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 

Basic earnings per common share:(3)
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 

Net income from continuing operations
 
$
1.70

 
$
1.86

 
$
1.58

 
$
2.01

 
$
1.50

 
(9)%

 
13%

 
$
3.57

 
$
3.49

 
2%

Income (loss) from discontinued operations
 
—

 
(0.01
)
 
0.02

 
(0.01
)
 
0.02

 
**

 
**

 
(0.01
)
 
0.06

 
**

Net income per basic common share
 
$
1.70

 
$
1.85

 
$
1.60

 
$
2.00

 
$
1.52

 
(8
)
 
12

 
$
3.56

 
$
3.55

 
—

Diluted earnings per common share:(3)
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 

Net income from continuing operations
 
$
1.69

 
$
1.85

 
$
1.56

 
$
1.99

 
$
1.48

 
(9
)
 
14

 
$
3.53

 
$
3.45

 
2

Income (loss) from discontinued operations
 
—

 
(0.01
)
 
0.02

 
(0.01
)
 
0.02

 
**

 
**

 
(0.01
)
 
0.06

 
**

Net income per diluted common share(4)
 
$
1.69

 
$
1.84

 
$
1.58

 
$
1.98

 
$
1.50

 
(8
)
 
13

 
$
3.52

 
$
3.51

 
—

Weighted-average common shares outstanding (in millions):
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 

Basic
 
511.7

 
523.5

 
530.8

 
540.6

 
545.6

 
(2
)
 
(6
)
 
517.6

 
548.0

 
(6
)
Diluted
 
516.5

 
528.0

 
536.3

 
546.3

 
552.0

 
(2
)
 
(6
)
 
522.3

 
554.7

 
(6
)
Common shares outstanding (period end, in millions)
 
505.9

 
514.5

 
527.3

 
534.9

 
542.5

 
(2
)
 
(7
)
 
505.9

 
542.5

 
(7
)
Dividends paid per common share
 
$
0.40

 
$
0.40

 
$
0.40

 
$
0.40

 
$
0.40

 
—

 
—

 
$
0.80

 
$
0.70

 
14

Tangible book value per common share (period end)(5)
 
57.84

 
55.94

 
53.65

 
54.66

 
52.74

 
3

 
10

 
57.84

 
52.74

 
10


1

 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
(Dollars in millions) (unaudited)
 
2016
 
2016
 
2015
 
2015
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Balance Sheet (Period End)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans held for investment(6)
 
$
234,603

 
$
227,613

 
$
229,851

 
$
213,329

 
$
209,705

 
3%

 
12%
 
$
234,603

 
$
209,705

 
12%
Interest-earning assets
 
307,163

 
298,348

 
302,007

 
283,073

 
280,137

 
3

 
10
 
307,163

 
280,137

 
10
Total assets
 
339,117

 
330,346

 
334,048

 
313,700

 
310,510

 
3

 
9
 
339,117

 
310,510

 
9
Interest-bearing deposits
 
195,635

 
196,597

 
191,874

 
187,848

 
183,657

 
—

 
7
 
195,635

 
183,657

 
7
Total deposits
 
221,059

 
221,779

 
217,721

 
212,903

 
208,780

 
—

 
6
 
221,059

 
208,780

 
6
Borrowings
 
59,181

 
50,497

 
59,115

 
42,778

 
45,766

 
17

 
29
 
59,181

 
45,766

 
29
Common equity
 
44,813

 
44,411

 
43,990

 
44,391

 
43,849

 
1

 
2
 
44,813

 
43,849

 
2
Total stockholders’ equity
 
48,108

 
47,707

 
47,284

 
47,685

 
46,659

 
1

 
3
 
48,108

 
46,659

 
3
Balance Sheet (Average Balances)
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 

Loans held for investment(6)
 
$
230,379

 
$
226,736

 
$
220,052

 
$
211,227

 
$
206,337

 
2%

 
12%
 
$
228,557

 
$
205,768

 
11%
Interest-earning assets
 
302,764

 
299,456

 
292,054

 
283,082

 
276,585

 
1

 
9
 
301,106

 
277,501

 
9
Total assets
 
334,479

 
331,919

 
323,354

 
313,822

 
307,206

 
1

 
9
 
333,197

 
308,295

 
8
Interest-bearing deposits
 
195,641

 
194,125

 
189,885

 
185,800

 
183,946

 
1

 
6
 
194,883

 
183,475

 
6
Total deposits
 
221,146

 
219,180

 
215,899

 
210,974

 
209,143

 
1

 
6
 
220,163

 
208,501

 
6
Borrowings
 
54,359

 
53,761

 
48,850

 
45,070

 
41,650

 
1

 
31
 
54,060

 
43,854

 
23
Common equity
 
45,640

 
45,782

 
45,418

 
45,407

 
44,878

 
—

 
2
 
45,711

 
44,727

 
2
Total stockholders’ equity
 
48,934

 
49,078

 
48,712

 
48,456

 
47,255

 
—

 
4
 
49,007

 
46,828

 
5
    

2


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 2: Selected Metrics—Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
(Dollars in millions except as noted) (unaudited)
 
2016
 
2016
 
2015
 
2015
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Performance Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income growth (period over period)
 
1%

 
2%

 
4%

 
5%

 
(1)%

 
**


**

 
11%

 
5%

 
**

Non-interest income growth (period over period)
 
—

 
(6
)
 
8

 
—

 
6

 
**

 
**

 
5

 
2

 
**

Total net revenue growth (period over period)
 
1

 
—

 
5

 
4

 
—

 
**

 
**

 
10

 
4

 
**

Total net revenue margin(7)
 
8.26

 
8.31

 
8.48

 
8.34

 
8.20

 
(5
)bps
 
6
bps
 
8.29

 
8.16

 
13
bps
Net interest margin(8)
 
6.73

 
6.75

 
6.79

 
6.73

 
6.56

 
(2
)
 
17

 
6.74

 
6.57

 
17

Return on average assets
 
1.13

 
1.23

 
1.12

 
1.43

 
1.11

 
(10
)
 
2

 
1.18

 
1.29

 
(11
)
Return on average tangible assets(9)
 
1.18

 
1.29

 
1.18

 
1.50

 
1.17

 
(11
)
 
1

 
1.24

 
1.36

 
(12
)
Return on average common equity(10)
 
7.64

 
8.52

 
7.36

 
9.54

 
7.30

 
(88
)
 
34

 
8.08

 
8.56

 
(48
)
Return on average tangible common equity(11)
 
11.61

 
12.94

 
11.11

 
14.33

 
11.06

 
(133
)
 
55

 
12.28

 
13.01

 
(73
)
Non-interest expense as a percentage of average loans held for investment
 
5.72

 
5.69

 
6.33

 
5.98

 
6.41

 
3

 
(69
)
 
5.70

 
6.18

 
(48
)
Efficiency ratio(12)
 
52.69

 
51.82

 
56.18

 
53.56

 
58.30

 
87

 
(561
)
 
52.25

 
56.15

 
(390
)
Effective income tax rate for continuing operations
 
31.0

 
30.7

 
31.9

 
32.2

 
31.1

 
30

 
(10
)
 
30.9

 
31.5

 
(60
)
Employees (in thousands), period end
 
46.1

 
45.8

 
45.4

 
46.9

 
47.5

 
1%


(3)%

 
46.1

 
47.5

 
(3)%

Credit Quality Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allowance for loan and lease losses
 
$
5,881

 
$
5,416

 
$
5,130

 
$
4,847

 
$
4,676

 
9%


26%

 
$
5,881

 
$
4,676

 
26%

Allowance as a percentage of loans held for investment
 
2.51%

 
2.38%

 
2.23%

 
2.27%

 
2.23%

 
13
bps

28
bps
 
2.51%

 
2.23%

 
28
bps
Net charge-offs
 
$
1,155

 
$
1,178

 
$
1,078

 
$
890

 
$
846

 
(2)%


37%

 
$
2,333

 
$
1,727

 
35%

Net charge-off rate(13)
 
2.01%

 
2.08%

 
1.96%

 
1.69%

 
1.64%

 
(7
)bps

37
bps
 
2.04%

 
1.68%

 
36
bps
30+ day performing delinquency rate
 
2.47

 
2.33

 
2.69

 
2.63

 
2.33

 
14

 
14

 
2.47

 
2.33

 
14

30+ day delinquency rate
 
2.79

 
2.64

 
3.00

 
2.95

 
2.65

 
15

 
14

 
2.79

 
2.65

 
14

Capital Ratios(14)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common equity Tier 1 capital 
 
10.9
 %
 
11.1%

 
11.1%

 
12.1%

 
12.1%

 
(20
)bps

(120
)bps
 
10.9
%
 
12.1%

 
(120
)bps
Tier 1 capital
 
12.2

 
12.4

 
12.4

 
13.4

 
13.3

 
(20
)
 
(110
)
 
12.2

 
13.3

 
(110
)
Total capital
 
14.4

 
14.6

 
14.6

 
15.1

 
15.1

 
(20
)
 
(70
)
 
14.4

 
15.1

 
(70
)
Tier 1 leverage
 
10.2

 
10.2

 
10.6

 
11.1

 
11.1

 
—

 
(90
)
 
10.2

 
11.1

 
(90
)
Tangible common equity (“TCE”)(15)
 
9.0

 
9.1

 
8.9

 
9.8

 
9.7

 
(10
)
 
(70
)
 
9.0

 
9.7

 
(70
)
 

3


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 3: Consolidated Statements of Income
 
 
Three Months Ended
 
2016 Q2 vs.
 
Six Months Ended June 30,
 
 
2016
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
(Dollars in millions, except per share data and as noted) (unaudited)
 
Q2
 
Q1
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held for sale
 
$
5,148

 
$
5,085

 
$
4,531

 
1%

 
14%

 
$
10,233

 
$
9,071

 
13%

Investment securities
 
405

 
415

 
382

 
(2
)
 
6

 
820

 
788

 
4

Other
 
18

 
17

 
24

 
6

 
(25
)
 
35

 
52

 
(33
)
Total interest income
 
5,571

 
5,517

 
4,937

 
1

 
13

 
11,088

 
9,911

 
12

Interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits
 
292

 
283

 
272

 
3

 
7

 
575

 
543

 
6

Securitized debt obligations
 
47

 
48

 
36

 
(2
)
 
31

 
95

 
69

 
38

Senior and subordinated notes
 
111

 
106

 
80

 
5

 
39

 
217

 
159

 
36

Other borrowings
 
28

 
24

 
12

 
17

 
133

 
52

 
27

 
93

Total interest expense
 
478

 
461

 
400

 
4

 
20

 
939

 
798

 
18

Net interest income
 
5,093

 
5,056

 
4,537

 
1

 
12

 
10,149

 
9,113

 
11

Provision for credit losses
 
1,592

 
1,527

 
1,129

 
4

 
41

 
3,119

 
2,064

 
51

Net interest income after provision for credit losses
 
3,501

 
3,529

 
3,408

 
(1
)
 
3

 
7,030

 
7,049

 
—

Non-interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges and other customer-related fees
 
371

 
404

 
429

 
(8
)
 
(14
)
 
775

 
866

 
(11
)
Interchange fees, net
 
616

 
596

 
567

 
3

 
9

 
1,212

 
1,063

 
14

Net other-than-temporary impairment recognized in earnings
 
(2
)
 
(8
)
 
(7
)
 
(75
)
 
(71
)
 
(10
)
 
(22
)
 
(55
)
Other
 
176

 
172

 
146

 
2

 
21

 
348

 
299

 
16

Total non-interest income
 
1,161

 
1,164

 
1,135

 
—

 
2

 
2,325

 
2,206

 
5

Non-interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and associate benefits
 
1,279

 
1,270

 
1,360

 
1

 
(6
)
 
2,549

 
2,571

 
(1
)
Occupancy and equipment
 
465

 
458

 
439

 
2

 
6

 
923

 
874

 
6

Marketing
 
415

 
428

 
387

 
(3
)
 
7

 
843

 
762

 
11

Professional services
 
304

 
278

 
334

 
9

 
(9
)
 
582

 
630

 
(8
)
Communications and data processing
 
262

 
243

 
208

 
8

 
26

 
505

 
410

 
23

Amortization of intangibles
 
95

 
101

 
111

 
(6
)
 
(14
)
 
196

 
221

 
(11
)
Other
 
475

 
445

 
468

 
7

 
1

 
920

 
888

 
4

Total non-interest expense
 
3,295

 
3,223

 
3,307

 
2

 
—

 
6,518

 
6,356

 
3

Income from continuing operations before income taxes
 
1,367

 
1,470

 
1,236

 
(7
)
 
11

 
2,837

 
2,899

 
(2
)
Income tax provision
 
424

 
452

 
384

 
(6
)
 
10

 
876

 
913

 
(4
)
Income from continuing operations, net of tax
 
943

 
1,018

 
852

 
(7
)
 
11

 
1,961

 
1,986

 
(1
)
Income (loss) from discontinued operations, net of tax(2)
 
(1
)
 
(5
)
 
11

 
(80
)
 
**

 
(6
)
 
30

 
**

Net income
 
942

 
1,013

 
863

 
(7
)
 
9

 
1,955

 
2,016

 
(3
)
Dividends and undistributed earnings allocated to participating securities(3)
 
(6
)
 
(6
)
 
(4
)
 
—

 
50

 
(12
)
 
(10
)
 
20

Preferred stock dividends
 
(65
)
 
(37
)
 
(29
)
 
76

 
124

 
(102
)
 
(61
)
 
67

Net income available to common stockholders
 
$
871

 
$
970

 
$
830

 
(10
)
 
5

 
$
1,841

 
$
1,945

 
(5
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4


 
 
Three Months Ended
 
2016 Q2 vs.
 
Six Months Ended June 30,
 
 
2016
 
2016
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
(Dollars in millions, except per share data and as noted) (unaudited)
 
Q2
 
Q1
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Basic earnings per common share:(3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income from continuing operations
 
$
1.70

 
$
1.86

 
$
1.50

 
(9)%

 
13%

 
$
3.57

 
$
3.49

 
2%

Income (loss) from discontinued operations
 
—

 
(0.01
)
 
0.02

 
**

 
**

 
(0.01
)
 
0.06

 
**

Net income per basic common share(4)
 
$
1.70

 
$
1.85

 
$
1.52

 
(8
)
 
12

 
$
3.56

 
$
3.55

 
—

Diluted earnings per common share:(3)
 
 
 
 
 
 
 


 


 
 
 
 
 
 
Net income from continuing operations
 
$
1.69

 
$
1.85

 
$
1.48

 
(9
)
 
14

 
$
3.53

 
$
3.45

 
2

Income (loss) from discontinued operations
 
—

 
(0.01
)
 
0.02

 
**

 
**

 
(0.01
)
 
0.06

 
**

Net income per diluted common share(4)
 
$
1.69

 
$
1.84

 
$
1.50

 
(8
)
 
13

 
$
3.52

 
$
3.51

 
—

Weighted-average common shares outstanding (in millions):
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Basic common shares
 
511.7

 
523.5

 
545.6

 
(2
)
 
(6
)
 
517.6

 
548.0

 
(6
)
Diluted common shares
 
516.5

 
528.0

 
552.0

 
(2
)
 
(6
)
 
522.3

 
554.7

 
(6
)
Dividends paid per common share
 
$
0.40

 
$
0.40

 
$
0.40

 
—

 
—

 
$
0.80

 
$
0.70

 
14


5


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 4: Consolidated Balance Sheets
 
 
 
 
 
 
 
 
June 30, 2016 vs.
(Dollars in millions) (unaudited)
 
June 30,
2016
 
December 31, 2015
 
June 30,
2015
 
December 31, 2015
 
June 30,
2015
Assets:
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents:
 
 
 
 
 
 
 
 
 
 
Cash and due from banks
 
$
3,253

 
$
3,407

 
$
2,879

 
(5)%

 
13%

Interest-bearing deposits with banks
 
3,840

 
4,577

 
4,275

 
(16
)
 
(10
)
Federal funds sold and securities purchased under agreements to resell
 
56

 
39

 
2

 
44

 
**

Total cash and cash equivalents
 
7,149

 
8,023

 
7,156

 
(11
)
 
—

Restricted cash for securitization investors
 
265

 
1,017

 
253

 
(74
)
 
5

Securities available for sale, at fair value
 
39,960

 
39,061

 
39,136

 
2

 
2

Securities held to maturity, at carrying value
 
25,120

 
24,619

 
23,668

 
2

 
6

Loans held for investment:(6)
 
 
 
 
 
 
 

 

Unsecuritized loans held for investment
 
202,778

 
196,068

 
175,407

 
3

 
16

Loans held in consolidated trusts
 
31,825

 
33,783

 
34,298

 
(6
)
 
(7
)
Total loans held for investment
 
234,603

 
229,851

 
209,705

 
2

 
12

Allowance for loan and lease losses
 
(5,881
)
 
(5,130
)
 
(4,676
)
 
15

 
26

Net loans held for investment
 
228,722

 
224,721

 
205,029

 
2

 
12

Loans held for sale, at lower of cost or fair value
 
1,220

 
904

 
1,066

 
35

 
14

Premises and equipment, net
 
3,556

 
3,584

 
3,602

 
(1
)
 
(1
)
Interest receivable
 
1,236

 
1,189

 
1,056

 
4

 
17

Goodwill
 
14,495

 
14,480

 
13,984

 
—

 
4

Other assets
 
17,394

 
16,450

 
15,560

 
6

 
12

Total assets
 
$
339,117

 
$
334,048

 
$
310,510

 
2

 
9

 
 
 
 
 
 
 
 
 
 
 

6


 
 
 
 
 
 
 
 
June 30, 2016 vs.
(Dollars in millions) (unaudited)
 
June 30,
2016
 
December 31, 2015
 
June 30,
2015
 
December 31, 2015
 
June 30,
2015
Liabilities:
 
 
 
 
 
 
 
 
 
 
Interest payable
 
$
301

 
$
299

 
$
262

 
1%

 
15%

Deposits:
 
 
 
 
 
 
 
 
 
 
Non-interest-bearing deposits
 
25,424

 
25,847

 
25,123

 
(2
)
 
1

Interest-bearing deposits
 
195,635

 
191,874

 
183,657

 
2

 
7

Total deposits
 
221,059

 
217,721

 
208,780

 
2

 
6

Securitized debt obligations
 
16,130

 
16,166

 
13,785

 
—

 
17

Other debt:
 
 
 
 
 
 
 
 
 
 
Federal funds purchased and securities loaned or sold under agreements to repurchase
 
999

 
981

 
1,888

 
2

 
(47
)
Senior and subordinated notes
 
21,872

 
21,837

 
19,987

 
—

 
9

Other borrowings
 
20,180

 
20,131

 
10,106

 
—

 
100

Total other debt
 
43,051

 
42,949

 
31,981

 
—

 
35

Other liabilities
 
10,468

 
9,629

 
9,043

 
9

 
16

Total liabilities
 
291,009

 
286,764

 
263,851

 
1

 
10

 
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity:
 
 
 
 
 
 
 
 
 
 
Preferred stock
 
0

 
0

 
0

 
—

 
—

Common stock
 
7

 
6

 
6

 
17

 
17

Additional paid-in capital, net
 
29,786

 
29,655

 
29,063

 
—

 
2

Retained earnings
 
28,479

 
27,045

 
25,540

 
5

 
12

Accumulated other comprehensive income (loss)
 
241

 
(616
)
 
(397
)
 
**

 
**

Treasury stock, at cost
 
(10,405
)
 
(8,806
)
 
(7,553
)
 
18

 
38

Total stockholders’ equity
 
48,108

 
47,284

 
46,659

 
2

 
3

Total liabilities and stockholders’ equity
 
$
339,117

 
$
334,048

 
$
310,510

 
2

 
9


7


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 5: Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)

**  
Not meaningful.
(1) 
Total net revenue was reduced by $244 million in Q2 2016, $228 million in Q1 2016, $222 million in Q4 2015, $195 million in Q3 2015 and $168 million in Q2 2015 for the estimated uncollectible amount of billed finance charges and fees and related losses.
(2) 
Historically, the majority of the provision (benefit) for representation and warranty losses has been included, net of tax, in discontinued operations. The provision (benefit) for mortgage representation and warranty losses included the following activity:
 
 
2016
 
2016
 
2015
 
2015
 
2015
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
Provision (benefit) for mortgage representation and warranty losses before income taxes:
 
 
 
 
 
 
 
 
 
 
Recorded in continuing operations
 
$
(1
)
 
$
(1
)
 
$
(1
)
 
$
(7
)
 
$
(9
)
Recorded in discontinued operations
 
2

 
3

 
(21
)
 
3

 
(27
)
Total provision (benefit) for mortgage representation and warranty losses before income taxes
 
$
1

 
$
2

 
$
(22
)
 
$
(4
)
 
$
(36
)
The mortgage representation and warranty reserve was $614 million as of June 30, 2016, $610 million as of December 31, 2015 and $636 million as of June 30, 2015.
(3) 
Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarter may not agree to the year-to-date total.
(4) 
In Q2 2016, we recorded charges totaling $30 million associated with (i) a build of $54 million in the U.K. Payment Protection Insurance customer refund reserve (“U.K. PPI Reserve”); offset by (ii) a gain of $24 million 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. In Q4 2015, we recorded charges totaling $72 million associated with (i) closing the GE Healthcare Financial Services (“HFS”) acquisition and establishing an initial allowance and reserve related to the loans acquired; (ii) certain planned site closures; and (iii) revisions to the restructuring charges recorded in Q2 2015 to reflect updated information. In Q3 2015, we recorded a build in the U.K. PPI Reserve of $69 million. In Q2 2015, we recorded charges totaling $225 million associated with (i) a restructuring charge of $147 million for severance and related benefits pursuant to our ongoing benefit programs as a result of the realignment of our workforce; and (ii) a build in the U.K. PPI Reserve of $78 million. We report the following non-GAAP financial measures that we believe are helpful for investors and users of our financial information to understand the effect of these items on our reported results. The table below presents a reconciliation of our reported results to these non-GAAP financial measures. Period not presented had no adjustments.
 
 
2016 Q2
 
2015 Q4
 
2015 Q3
 
2015 Q2
(Dollars in millions, except per share data) (unaudited)
 
Pre-Tax Income
 
Net Income
 
Diluted EPS
 
Pre-Tax Income
 
Net Income
 
Diluted EPS
 
Pre-Tax Income
 
Net Income
 
Diluted EPS
 
Pre-Tax Income
 
Net Income
 
Diluted EPS
Reported results
 
$
1,367

 
$
942

 
$
1.69

 
$
1,334

 
$
920

 
$
1.58

 
$
1,648

 
$
1,114

 
$
1.98

 
$
1,236

 
$
863

 
$
1.50

Adjustments
 
30

 
37

 
0.07

 
72

 
46

 
0.09

 
69

 
69

 
0.12

 
225

 
155

 
0.28

Results excluding adjustments
 
$
1,397

 
$
979

 
$
1.76

 
$
1,406

 
$
966

 
$
1.67

 
$
1,717

 
$
1,183

 
$
2.10

 
$
1,461

 
$
1,018

 
$
1.78

(5) 
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: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on non-GAAP measures.
(6) 
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:
 
 
2016
 
2016
 
2015
 
2015
 
2015
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
PCI loans:
 
 
 
 
 
 
 
 
 
 
Period-end unpaid principal balance
 
$
18,256

 
$
19,492

 
$
20,434

 
$
20,585

 
$
21,841

Period-end loans held for investment
 
17,358

 
18,568

 
19,518

 
19,743

 
20,970

Average loans held for investment
 
17,783

 
18,894

 
19,319

 
20,116

 
21,440

(7) 
Calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.

8


(8) 
Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.
(9) 
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: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on non-GAAP measures.
(10) 
Calculated based on the annualized sum of (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.
(11) 
Return on average tangible common equity (“ROTCE”) is a non-GAAP measure calculated based on the annualized sum of (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: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on non-GAAP measures.
(12) 
Calculated based on total non-interest expense for the period divided by total net revenue for the period. The efficiency ratio, excluding the adjustments discussed above in Footnote 4, was 52.32% for Q2 2016, 55.82% for Q4 2015, 52.78% for Q3 2015 and 54.63% for Q2 2015. The adjusted efficiency ratios are non-GAAP measures that we believe would provide useful information to investors and users of our financial information.
(13) 
Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.
(14) 
Ratios as of the end of Q2 2016 are preliminary and therefore subject to change. See “Table 15: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital 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: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on non-GAAP measures.

9


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 6: Average Balances, Net Interest Income and Net Interest Margin
 
 
2016 Q2
 
2016 Q1
 
2015 Q2
 
 
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) (unaudited)
 
 
 
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held for sale
 
$
231,496

 
$
5,148

 
8.90%
 
$
227,573

 
$
5,085

 
8.94%
 
$
207,335

 
$
4,531

 
8.74%
Investment securities
 
65,754

 
405

 
2.46
 
65,156

 
415

 
2.55
 
63,771

 
382

 
2.40
Cash equivalents and other
 
5,514

 
18

 
1.31
 
6,727

 
17

 
1.01
 
5,479

 
24

 
1.75
Total interest-earning assets
 
$
302,764

 
$
5,571

 
7.36
 
$
299,456

 
$
5,517

 
7.37
 
$
276,585

 
$
4,937

 
7.14
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Interest-bearing deposits
 
$
195,641

 
$
292

 
0.60
 
$
194,125

 
$
283

 
0.58
 
$
183,946

 
$
272

 
0.59
Securitized debt obligations
 
15,226

 
47

 
1.23
 
15,361

 
48

 
1.25
 
13,219

 
36

 
1.09
Senior and subordinated notes
 
21,717

 
111

 
2.04
 
21,993

 
106

 
1.93
 
20,336

 
80

 
1.57
Other borrowings and liabilities
 
18,255

 
28

 
0.61
 
17,176

 
24

 
0.56
 
8,857

 
12

 
0.54
Total interest-bearing liabilities
 
$
250,839

 
$
478

 
0.76
 
$
248,655

 
$
461

 
0.74
 
$
226,358

 
$
400

 
0.71
Net interest income/spread
 
 
 
$
5,093

 
6.60
 
 
 
$
5,056

 
6.63
 
 
 
$
4,537

 
6.43
Impact of non-interest-bearing funding
 
 
 
 
 
0.13
 
 
 
 
 
0.12
 
 
 
 
 
0.13
Net interest margin
 
 
 
 
 
6.73%
 
 
 
 
 
6.75%
 
 
 
 
 
6.56%
 
 
Six Months Ended June 30,
 
 
2016
 
2015
 
 
Average Balance
 
Interest Income/Expense(1)
 
Yield/Rate(1)
 
Average Balance
 
Interest Income/Expense(1)
 
Yield/Rate(1)
(Dollars in millions) (unaudited)
 
 
 
 
 
 
Interest-earning assets:
 
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held for sale
 
$
229,534

 
$
10,233

 
8.92%
 
$
206,598

 
$
9,071

 
8.78%
Investment securities
 
65,455

 
820

 
2.51
 
63,477

 
788

 
2.48
Cash equivalents and other
 
6,117

 
35

 
1.14
 
7,426

 
52

 
1.40
Total interest-earning assets
 
$
301,106

 
$
11,088

 
7.36
 
$
277,501

 
$
9,911

 
7.14
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities:
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing deposits
 
$
194,883

 
$
575

 
0.59
 
$
183,475

 
$
543

 
0.59
Securitized debt obligations
 
15,293

 
95

 
1.24
 
12,396

 
69

 
1.11
Senior and subordinated notes
 
21,855

 
217

 
1.99
 
20,465

 
159

 
1.55
Other borrowings and liabilities
 
17,716

 
52

 
0.59
 
11,771

 
27

 
0.46
Total interest-bearing liabilities
 
$
249,747

 
$
939

 
0.75
 
$
228,107

 
$
798

 
0.70
Net interest income/spread
 
 
 
$
10,149

 
6.61
 
 
 
$
9,113

 
6.44
Impact of non-interest-bearing funding
 
 
 
 
 
0.13
 
 
 
 
 
0.13
Net interest margin
 
 
 
 
 
6.74%
 
 
 
 
 
6.57%
__________
(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.

10


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 7: Loan Information and Performance Statistics
 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
(Dollars in millions) (unaudited)
 
2016
Q2
 
2016
Q1
 
2015
Q4
 
2015
Q3
 
2015
Q2
 
2016
Q1
 
2015
Q2
 
2016
 
2015
 
2016 vs.
2015
Loans Held For Investment (Period End)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Domestic credit card
 
$
88,581

 
$
84,561

 
$
87,939

 
$
82,178

 
$
78,984

 
5%

 
12%

 
$
88,581

 
$
78,984

 
12%

   International credit card
 
8,323

 
8,138

 
8,186

 
7,957

 
8,219

 
2

 
1

 
8,323

 
8,219

 
1

Total credit card
 
96,904

 
92,699

 
96,125

 
90,135

 
87,203

 
5

 
11

 
96,904

 
87,203

 
11

Consumer banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


   Auto
 
44,502

 
42,714

 
41,549

 
41,052

 
39,991

 
4

 
11

 
44,502

 
39,991

 
11

   Home loan
 
23,358

 
24,343

 
25,227

 
26,340

 
27,595

 
(4
)
 
(15
)
 
23,358

 
27,595

 
(15
)
   Retail banking
 
3,555

 
3,534

 
3,596

 
3,598

 
3,590

 
1

 
(1
)
 
3,555

 
3,590

 
(1
)
Total consumer banking
 
71,415

 
70,591

 
70,372

 
70,990

 
71,176

 
1

 
—

 
71,415

 
71,176

 
—

Commercial banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


   Commercial and multifamily real estate
 
26,341

 
25,559

 
25,518

 
23,585

 
22,886

 
3

 
15

 
26,341

 
22,886

 
15

   Commercial and industrial
 
39,313

 
38,102

 
37,135

 
27,873

 
27,660

 
3

 
42

 
39,313

 
27,660

 
42

Total commercial lending
 
65,654

 
63,661

 
62,653

 
51,458

 
50,546

 
3

 
30

 
65,654

 
50,546

 
30

   Small-ticket commercial real estate
 
548

 
580

 
613

 
654

 
685

 
(6
)
 
(20
)
 
548

 
685

 
(20
)
Total commercial banking
 
66,202

 
64,241

 
63,266

 
52,112

 
51,231

 
3

 
29

 
66,202

 
51,231

 
29

Other loans
 
82

 
82

 
88

 
92

 
95

 
—

 
(14
)
 
82

 
95

 
(14
)
Total loans held for investment
 
$
234,603

 
$
227,613

 
$
229,851

 
$
213,329

 
$
209,705

 
3

 
12

 
$
234,603

 
$
209,705

 
12

Loans Held For Investment (Average)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Credit card:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


   Domestic credit card
 
$
85,981

 
$
85,148

 
$
83,760

 
$
80,402

 
$
75,924

 
1%

 
13%

 
$
85,564

 
$
75,349

 
14%

   International credit card
 
8,401

 
7,839

 
8,127

 
8,048

 
7,977

 
7

 
5

 
8,120

 
7,895

 
3

Total credit card
 
94,382

 
92,987

 
91,887

 
88,450

 
83,901

 
2

 
12

 
93,684

 
83,244

 
13

Consumer banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


   Auto
 
43,605

 
41,962

 
41,333

 
40,560

 
39,546

 
4

 
10

 
42,784

 
38,970

 
10

   Home loan
 
23,835

 
24,781

 
25,776

 
26,934

 
28,251

 
(4
)
 
(16
)
 
24,308

 
28,869

 
(16
)
   Retail banking
 
3,548

 
3,553

 
3,595

 
3,603

 
3,570

 
—

 
(1
)
 
3,550

 
3,565

 
—

Total consumer banking
 
70,988

 
70,296

 
70,704

 
71,097

 
71,367

 
1

 
(1
)
 
70,642

 
71,404

 
(1
)
Commercial banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


   Commercial and multifamily real estate
 
25,661

 
25,015

 
25,613

 
23,305

 
22,853

 
3

 
12

 
25,338

 
22,985

 
10

   Commercial and industrial
 
38,713

 
37,762

 
31,132

 
27,620

 
27,414

 
3

 
41

 
38,237

 
27,303

 
40

Total commercial lending
 
64,374

 
62,777

 
56,745

 
50,925

 
50,267

 
3

 
28

 
63,575

 
50,288

 
26

   Small-ticket commercial real estate
 
564

 
598

 
634

 
667

 
709

 
(6
)
 
(20
)
 
581

 
735

 
(21
)
Total commercial banking
 
64,938

 
63,375

 
57,379

 
51,592

 
50,976

 
2

 
27

 
64,156

 
51,023

 
26

Other loans
 
71

 
78

 
82

 
88

 
93

 
(9
)
 
(24
)
 
75

 
97

 
(23
)
Total average loans held for investment
 
$
230,379

 
$
226,736

 
$
220,052

 
$
211,227

 
$
206,337

 
2

 
12

 
$
228,557

 
$
205,768

 
11

Net Charge-Off (Recovery) Rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Domestic credit card
 
4.07%

 
4.16%

 
3.75%

 
3.08%

 
3.42%

 
(9
)bps
 
65
bps
 
4.12%

 
3.49%

 
63
bps
   International credit card
 
3.54

 
3.24

 
2.76

 
1.80

 
2.65

 
30

 
89

 
3.39

 
2.73

 
66

Total credit card
 
4.02

 
4.09

 
3.66

 
2.96

 
3.35

 
(7
)
 
67

 
4.05

 
3.42

 
63


11


 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
(Dollars in millions) (unaudited)
 
2016
Q2
 
2016
Q1
 
2015
Q4
 
2015
Q3
 
2015
Q2
 
2016
Q1
 
2015
Q2
 
2016
 
2015
 
2016 vs.
2015
Consumer banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Auto
 
1.20%

 
1.60%

 
2.10%

 
1.85%

 
1.22%

 
(40
)bps
 
(2
)bps
 
1.39%

 
1.38%

 
1
bps
   Home loan
 
0.09

 
0.05

 
0.05

 
0.01

 
0.04

 
4

 
5

 
0.07

 
0.03

 
4

   Retail banking
 
1.26

 
1.36

 
1.43

 
1.53

 
1.39

 
(10
)
 
(13
)
 
1.31

 
1.18

 
13

Total consumer banking
 
0.83

 
1.04

 
1.32

 
1.14

 
0.76

 
(21
)
 
7

 
0.93

 
0.83

 
10

Commercial banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Commercial and multifamily real estate
 
(0.02
)
 
(0.01
)
 
(0.03
)
 
(0.15
)
 
(0.04
)
 
(1
)
 
2

 
(0.02
)
 
(0.03
)
 
1

   Commercial and industrial
 
0.62

 
0.49

 
0.07

 
0.61

 
0.13

 
13

 
49

 
0.56

 
0.09

 
47

Total commercial lending
 
0.37

 
0.29

 
0.02

 
0.26

 
0.05

 
8

 
32

 
0.33

 
0.03

 
30

   Small-ticket commercial real estate
 
0.33

 
0.13

 
0.34

 
0.50

 
0.15

 
20

 
18

 
0.23

 
0.32

 
(9
)
Total commercial banking
 
0.37

 
0.29

 
0.03

 
0.26

 
0.05

 
8

 
32

 
0.33

 
0.04

 
29

Total net charge-offs
 
2.01

 
2.08

 
1.96

 
1.69

 
1.64

 
(7
)
 
37

 
2.04

 
1.68

 
36

30+ Day Performing Delinquency Rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Domestic credit card
 
3.14%

 
3.09%

 
3.39%

 
3.28%

 
2.84%

 
5
bps
 
30
bps
 
3.14%

 
2.84%

 
30
bps
   International credit card
 
3.24

 
3.32

 
2.98

 
2.81

 
2.65

 
(8
)
 
59

 
3.24

 
2.65

 
59

Total credit card
 
3.15

 
3.11

 
3.36

 
3.24

 
2.82

 
4

 
33

 
3.15

 
2.82

 
33

Consumer banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Auto
 
5.59

 
5.14

 
6.69

 
6.10

 
5.58

 
45

 
1

 
5.59

 
5.58

 
1

   Home loan
 
0.14

 
0.14

 
0.16

 
0.18

 
0.17

 
—

 
(3
)
 
0.14

 
0.17

 
(3
)
   Retail banking
 
0.62

 
0.61

 
0.76

 
0.62

 
0.66

 
1

 
(4
)
 
0.62

 
0.66

 
(4
)
Total consumer banking
 
3.56

 
3.19

 
4.05

 
3.62

 
3.24

 
37

 
32

 
3.56

 
3.24

 
32

Nonperforming Loans and Nonperforming Assets Rates(1)(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit card:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   International credit card
 
0.53%

 
0.59%

 
0.65%

 
0.77%

 
0.83%

 
(6
)bps
 
(30
)bps
 
0.53%

 
0.83%

 
(30
)bps
Total credit card
 
0.05

 
0.05

 
0.06

 
0.07

 
0.08

 
—

 
(3
)
 
0.05

 
0.08

 
(3
)
Consumer banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Auto
 
0.38

 
0.31

 
0.53

 
0.49

 
0.40

 
7

 
(2
)
 
0.38

 
0.40

 
(2
)
   Home loan
 
1.24

 
1.26

 
1.23

 
1.18

 
1.13

 
(2
)
 
11

 
1.24

 
1.13

 
11

   Retail banking
 
0.89

 
0.83

 
0.77

 
0.74

 
0.79

 
6

 
10

 
0.89

 
0.79

 
10

Total consumer banking
 
0.69

 
0.66

 
0.79

 
0.76

 
0.70

 
3

 
(1
)
 
0.69

 
0.70

 
(1
)
Commercial banking:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Commercial and multifamily real estate
 
0.10

 
0.12

 
0.03

 
0.03

 
0.12

 
(2
)
 
(2
)
 
0.10

 
0.12

 
(2
)
   Commercial and industrial
 
2.58

 
2.66

 
1.45

 
1.58

 
1.56

 
(8
)
 
102

 
2.58

 
1.56

 
102

Total commercial lending
 
1.59

 
1.64

 
0.87

 
0.87

 
0.91

 
(5
)
 
68

 
1.59

 
0.91

 
68

   Small-ticket commercial real estate
 
1.59

 
1.11

 
0.83

 
0.65

 
0.47

 
48

 
112

 
1.59

 
0.47

 
112

Total commercial banking
 
1.59

 
1.63

 
0.87

 
0.87

 
0.90

 
(4
)
 
69

 
1.59

 
0.90

 
69

Total nonperforming loans
 
0.68

 
0.69

 
0.51

 
0.50

 
0.50

 
(1
)
 
18

 
0.68

 
0.50

 
18

Total nonperforming assets
 
0.80

 
0.83

 
0.65

 
0.64

 
0.64

 
(3
)
 
16

 
0.80

 
0.64

 
16


12


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 8: Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity

 
 
Three Months Ended June 30, 2016
 
 
Credit Card
 
Consumer Banking
 
 
 
 
 
 
(Dollars in millions) (unaudited)

Domestic Card

International Card

Total Credit Card
 
Auto
 
Home
Loan
 
Retail
Banking
 
Total
Consumer
Banking
 
Commercial Banking
 
Other
 
Total
Allowance for loan and lease losses:







 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of March 31, 2016

$
3,440


$
345


$
3,785

 
$
772

 
$
64

 
$
78

 
$
914

 
$
714

 
$
3

 
$
5,416

Provision (benefit) for loan and lease losses

1,164


97


1,261

 
191

 
(1
)
 
14

 
204

 
185

 
(1
)
 
1,649

Charge-offs

(1,102
)

(113
)

(1,215
)
 
(227
)
 
(7
)
 
(14
)
 
(248
)
 
(64
)
 
(1
)
 
(1,528
)
Recoveries

228


38


266

 
97

 
2

 
3

 
102

 
4

 
1

 
373

Net charge-offs

(874
)

(75
)

(949
)
 
(130
)
 
(5
)
 
(11
)
 
(146
)
 
(60
)
 
—

 
(1,155
)
Other changes(3)

—


(11
)

(11
)
 
—

 
—

 
—

 
—

 
(18
)
 
—

 
(29
)
Balance as of June 30, 2016

3,730


356


4,086

 
833

 
58

 
81

 
972

 
821

 
2

 
5,881

Reserve for unfunded lending commitments:







 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of March 31, 2016

—


—


—

 
—

 
—

 
8

 
8

 
218

 
—

 
226

Provision (benefit) for losses on unfunded lending commitments

—


—


—

 
—

 
—

 
—

 
—

 
(57
)
 
—

 
(57
)
Balance as of June 30, 2016

—


—


—

 
—

 
—

 
8

 
8

 
161

 
—

 
169

Combined allowance and reserve as of June 30, 2016

$
3,730


$
356


$
4,086

 
$
833

 
$
58

 
$
89

 
$
980

 
$
982

 
$
2

 
$
6,050

 
 
Six Months Ended June 30, 2016
 
 
Credit Card
 
Consumer Banking
 
 
 
 
 
 
(Dollars in millions) (unaudited)
 
Domestic Card
 
International Card
 
Total Credit Card
 
Auto
 
Home
Loan
 
Retail
Banking
 
Total
Consumer
Banking
 
Commercial Banking
 
Other
 
Total
Allowance for loan and lease losses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2015
 
$
3,355

 
$
299

 
$
3,654

 
$
726

 
$
70

 
$
72

 
$
868

 
$
604

 
$
4

 
$
5,130

Provision (benefit) for loan and lease losses
 
2,136

 
196

 
2,332

 
405

 
(4
)
 
32

 
433

 
356

 
(3
)
 
3,118

Charge-offs
 
(2,225
)
 
(212
)
 
(2,437
)
 
(496
)
 
(12
)
 
(31
)
 
(539
)
 
(112
)
 
(2
)
 
(3,090
)
Recoveries
 
464

 
74

 
538

 
198

 
4

 
8

 
210

 
6

 
3

 
757

Net charge-offs
 
(1,761
)
 
(138
)
 
(1,899
)
 
(298
)
 
(8
)
 
(23
)
 
(329
)
 
(106
)
 
1

 
(2,333
)
Other changes(3)
 
—

 
(1
)
 
(1
)
 
—

 
—

 
—

 
—

 
(33
)
 
—

 
(34
)
Balance as of June 30, 2016
 
3,730

 
356

 
4,086

 
833

 
58

 
81

 
972

 
821

 
2

 
5,881

Reserve for unfunded lending commitments:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance as of December 31, 2015
 
—

 
—

 
—

 
—

 
—

 
7

 
7

 
161

 
—

 
168

Provision (benefit) for losses on unfunded lending commitments
 
—

 
—

 
—

 
—

 
—

 
1

 
1

 
—

 
—

 
1

Balance as of June 30, 2016
 
—

 
—

 
—

 
—

 
—

 
8

 
8

 
161

 
—

 
169

Combined allowance and reserve as of June 30, 2016
 
$
3,730

 
$
356

 
$
4,086

 
$
833

 
$
58

 
$
89

 
$
980

 
$
982

 
$
2

 
$
6,050

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

13


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 9: Financial Summary—Business Segment Results
 
 
Three Months Ended June 30, 2016
 
Six Months Ended June 30, 2016
(Dollars in millions) (unaudited)
 
Total
 
Credit Card
 
Consumer Banking
 
Commercial Banking
 
Other
 
Total
 
Credit Card
 
Consumer Banking
 
Commercial Banking
 
Other
Net interest income (expense)
 
$
5,093

 
$
3,045

 
$
1,439

 
$
559

 
$
50

 
$
10,149

 
$
6,078

 
$
2,859

 
$
1,096

 
$
116

Non-interest income
 
1,161

 
859

 
175

 
129

 
(2
)
 
2,325

 
1,706

 
366

 
247

 
6

Total net revenue (loss)(4)
 
6,254

 
3,904

 
1,614

 
688

 
48

 
12,474

 
7,784

 
3,225

 
1,343

 
122

Provision (benefit) for credit losses
 
1,592

 
1,261

 
204

 
128

 
(1
)
 
3,119

 
2,332

 
434

 
356

 
(3
)
Non-interest expense
 
3,295

 
1,883

 
1,006

 
343

 
63

 
6,518

 
3,746

 
1,996

 
665

 
111

Income (loss) from continuing operations before income taxes
 
1,367

 
760

 
404

 
217

 
(14
)
 
2,837

 
1,706

 
795

 
322

 
14

Income tax provision (benefit)
 
424

 
276

 
147

 
79

 
(78
)
 
876

 
613

 
289

 
117

 
(143
)
Income (loss) from continuing operations, net of tax
 
$
943

 
$
484

 
$
257

 
$
138

 
$
64

 
$
1,961

 
$
1,093

 
$
506

 
$
205

 
$
157

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
 
 
(Dollars in millions) (unaudited)
 
Total
 
Credit Card
 
Consumer Banking
 
Commercial Banking
 
Other
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
 
$
5,056

 
$
3,033

 
$
1,420

 
$
537

 
$
66

 
 
 
 
 
 
 
 
 
 
Non-interest income
 
1,164

 
847

 
191

 
118

 
8

 
 
 
 
 
 
 
 
 
 
Total net revenue (loss)(4)
 
6,220

 
3,880

 
1,611

 
655

 
74

 
 
 
 
 
 
 
 
 
 
Provision (benefit) for credit losses
 
1,527

 
1,071

 
230

 
228

 
(2
)
 
 
 
 
 
 
 
 
 
 
Non-interest expense
 
3,223

 
1,863

 
990

 
322

 
48

 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations before income taxes
 
1,470

 
946

 
391

 
105

 
28

 
 
 
 
 
 
 
 
 
 
Income tax provision (benefit)
 
452

 
337

 
142

 
38

 
(65
)
 
 
 
 
 
 
 
 
 
 
Income (loss) from continuing operations, net of tax
 
$
1,018

 
$
609

 
$
249

 
$
67

 
$
93

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended June 30, 2015
 
Six Months Ended June 30, 2015
(Dollars in millions) (unaudited)
 
Total
 
Credit Card
 
Consumer Banking
 
Commercial Banking
 
Other
 
Total
 
Credit Card
 
Consumer Banking
 
Commercial Banking
 
Other
Net interest income (expense)
 
$
4,537

 
$
2,633

 
$
1,444

 
$
466

 
$
(6
)
 
$
9,113

 
$
5,299

 
$
2,878

 
$
927

 
$
9

Non-interest income
 
1,135

 
845

 
196

 
123

 
(29
)
 
2,206

 
1,661

 
354

 
237

 
(46
)
Total net revenue (loss)(4)
 
5,672

 
3,478

 
1,640

 
589

 
(35
)
 
11,319

 
6,960

 
3,232

 
1,164

 
(37
)
Provision (benefit) for credit losses
 
1,129

 
895

 
185

 
49

 
—

 
2,064

 
1,564

 
391

 
109

 
—

Non-interest expense
 
3,307

 
1,857

 
998

 
270

 
182

 
6,356

 
3,633

 
1,968

 
542

 
213

Income (loss) from continuing operations before income taxes
 
1,236

 
726

 
457

 
270

 
(217
)
 
2,899

 
1,763

 
873

 
513

 
(250
)
Income tax provision (benefit)
 
384

 
263

 
166

 
98

 
(143
)
 
913

 
632

 
316

 
186

 
(221
)
Income (loss) from continuing operations, net of tax
 
$
852

 
$
463

 
$
291

 
$
172

 
$
(74
)
 
$
1,986

 
$
1,131

 
$
557

 
$
327

 
$
(29
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


14


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 10: Financial & Statistical Summary—Credit Card Business
 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
 
 
2016
 
2016
 
2015
 
2015
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Credit Card(5)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
3,045

 
$
3,033

 
$
2,996

 
$
2,866

 
$
2,633

 
—


16%

 
$
6,078

 
$
5,299

 
15%

Non-interest income
 
859

 
847

 
902

 
858

 
845

 
1%

 
2

 
1,706

 
1,661

 
3

Total net revenue (loss)
 
3,904

 
3,880

 
3,898

 
3,724

 
3,478

 
1

 
12

 
7,784

 
6,960

 
12

Provision (benefit) for credit losses
 
1,261

 
1,071

 
1,022

 
831

 
895

 
18

 
41

 
2,332

 
1,564

 
49

Non-interest expense
 
1,883

 
1,863

 
2,021

 
1,848

 
1,857

 
1

 
1

 
3,746

 
3,633

 
3

Income (loss) from continuing operations before income taxes
 
760

 
946

 
855

 
1,045

 
726

 
(20
)
 
5

 
1,706

 
1,763

 
(3
)
Income tax provision (benefit)
 
276

 
337

 
302

 
375

 
263

 
(18
)
 
5

 
613

 
632

 
(3
)
Income (loss) from continuing operations, net of tax
 
$
484

 
$
609

 
$
553

 
$
670

 
$
463

 
(21
)

5

 
$
1,093

 
$
1,131

 
(3
)
Selected performance metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period-end loans held for investment
 
$
96,904

 
$
92,699

 
$
96,125

 
$
90,135

 
$
87,203

 
5%

 
11%

 
$
96,904

 
$
87,203

 
11%

Average loans held for investment
 
94,382

 
92,987

 
91,887

 
88,450

 
83,901

 
2

 
12

 
93,684

 
83,244

 
13

Average yield on loans held for investment(6)
 
14.49%


14.60%

 
14.45%

 
14.39%

 
13.98%


(11
)bps

51
bps
 
14.55%

 
14.14%

 
41
bps
Total net revenue margin(7)
 
16.55

 
16.69

 
16.97

 
16.84

 
16.58

 
(14
)
 
(3
)
 
16.62

 
16.72

 
(10
)
Net charge-off rate
 
4.02

 
4.09

 
3.66

 
2.96

 
3.35

 
(7
)
 
67

 
4.05

 
3.42

 
63

30+ day performing delinquency rate
 
3.15

 
3.11

 
3.36

 
3.24

 
2.82

 
4

 
33

 
3.15

 
2.82

 
33

30+ day delinquency rate
 
3.18

 
3.15

 
3.40

 
3.29

 
2.88

 
3

 
30

 
3.18

 
2.88

 
30

Nonperforming loan rate(1)
 
0.05

 
0.05

 
0.06

 
0.07

 
0.08

 
—

 
(3
)
 
0.05

 
0.08

 
(3
)
PCCR intangible amortization
 
$
67

 
$
70

 
$
74

 
$
78

 
$
80

 
(4)%

 
(16)%

 
$
137

 
$
164

 
(16)%

Purchase volume(8)
 
78,019

 
68,189

 
75,350

 
69,875

 
68,559

 
14

 
14

 
146,208

 
125,942

 
16

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

15


 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
 
 
2016
 
2016
 
2015
 
2015
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Domestic Card
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Net interest income
 
$
2,769

 
$
2,756

 
$
2,718

 
$
2,613

 
$
2,395

 
—


16%

 
$
5,525

 
$
4,816

 
15%

Non-interest income
 
792

 
774

 
830

 
814

 
796

 
2%

 
(1
)
 
1,566

 
1,539

 
2

Total net revenue (loss)
 
3,561

 
3,530

 
3,548

 
3,427

 
3,191

 
1

 
12

 
7,091

 
6,355

 
12

Provision (benefit) for credit losses
 
1,164

 
972

 
945

 
796

 
853

 
20

 
36

 
2,136

 
1,463

 
46

Non-interest expense
 
1,669

 
1,671

 
1,796

 
1,630

 
1,621

 
—

 
3

 
3,340

 
3,201

 
4

Income (loss) from continuing operations before income taxes
 
728

 
887

 
807

 
1,001

 
717

 
(18
)
 
2

 
1,615

 
1,691

 
(4
)
Income tax provision (benefit)
 
265

 
323

 
293

 
362

 
259

 
(18
)
 
2

 
588

 
612

 
(4
)
Income (loss) from continuing operations, net of tax
 
$
463

 
$
564

 
$
514

 
$
639

 
$
458

 
(18
)
 
1

 
$
1,027

 
$
1,079

 
(5
)
Selected performance metrics:
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Period-end loans held for investment
 
$
88,581

 
$
84,561

 
$
87,939

 
$
82,178

 
$
78,984

 
5%


12%

 
$
88,581

 
$
78,984

 
12%

Average loans held for investment
 
85,981

 
85,148

 
83,760

 
80,402

 
75,924

 
1

 
13

 
85,564

 
75,349

 
14

Average yield on loans held for investment(6)
 
14.40%


14.43%

 
14.31%

 
14.35%

 
13.95%


(3
)bps

45
bps
 
14.41%

 
14.09%

 
32
bps
Total net revenue margin(7)
 
16.57

 
16.58

 
16.95

 
17.05

 
16.81

 
(1
)
 
(24
)
 
16.58

 
16.87

 
(29
)
Net charge-off rate
 
4.07

 
4.16

 
3.75

 
3.08

 
3.42

 
(9
)
 
65

 
4.12

 
3.49

 
63

30+ day delinquency rate
 
3.14

 
3.09

 
3.39

 
3.28

 
2.84

 
5

 
30

 
3.14

 
2.84

 
30

Purchase volume(8)
 
$
71,050

 
$
62,617

 
$
68,740

 
$
63,777

 
$
62,198

 
13%


14%

 
$
133,667

 
$
114,223

 
17%

International Card(5)
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Net interest income
 
$
276

 
$
277

 
$
278

 
$
253

 
$
238

 
—

 
16%

 
$
553

 
$
483

 
14%

Non-interest income
 
67

 
73

 
72

 
44

 
49

 
(8)%

 
37

 
140

 
122

 
15

Total net revenue (loss)
 
343

 
350

 
350

 
297

 
287

 
(2
)
 
20

 
693

 
605

 
15

Provision (benefit) for credit losses
 
97

 
99

 
77

 
35

 
42

 
(2
)
 
131

 
196

 
101

 
94

Non-interest expense
 
214

 
192

 
225

 
218

 
236

 
11

 
(9
)
 
406

 
432

 
(6
)
Income (loss) from continuing operations before income taxes
 
32

 
59

 
48

 
44

 
9

 
(46
)
 
**
 
91

 
72

 
26

Income tax provision (benefit)
 
11

 
14

 
9

 
13

 
4

 
(21
)
 
175

 
25

 
20

 
25

Income (loss) from continuing operations, net of tax
 
$
21

 
$
45

 
$
39

 
$
31

 
$
5

 
(53
)
 
**
 
$
66

 
$
52

 
27

Selected performance metrics:
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Period-end loans held for investment
 
$
8,323

 
$
8,138

 
$
8,186

 
$
7,957

 
$
8,219

 
2%

 
1%

 
$
8,323

 
$
8,219

 
1%

Average loans held for investment
 
8,401

 
7,839

 
8,127

 
8,048

 
7,977

 
7

 
5

 
8,120

 
7,895

 
3

Average yield on loans held for investment(6)
 
15.45%

 
16.47
%
 
15.96%

 
14.88%

 
14.29%


(102
)bps
 
116
bps
 
15.94%

 
14.60%

 
134
bps
Total net revenue margin(7)
 
16.32

 
17.85

 
17.21

 
14.77

 
14.36

 
(153
)
 
196

 
17.06

 
15.33

 
173

Net charge-off rate
 
3.54

 
3.24

 
2.76

 
1.80

 
2.65

 
30

 
89

 
3.39

 
2.73

 
66

30+ day performing delinquency rate
 
3.24

 
3.32

 
2.98

 
2.81

 
2.65

 
(8
)
 
59

 
3.24

 
2.65

 
59

30+ day delinquency rate
 
3.65

 
3.76

 
3.46

 
3.39

 
3.29

 
(11
)
 
36

 
3.65

 
3.29

 
36

Nonperforming loan rate(1)
 
0.53

 
0.59

 
0.65

 
0.77

 
0.83

 
(6
)
 
(30
)
 
0.53

 
0.83

 
(30
)
Purchase volume(8)
 
$
6,969

 
$
5,572

 
$
6,610

 
$
6,098

 
$
6,361

 
25%

 
10%

 
$
12,541

 
$
11,719

 
7%


16


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 11: Financial & Statistical Summary—Consumer Banking Business
 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
 
 
2016
 
2016
 
2015
 
2015
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Consumer Banking
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
1,439

 
$
1,420

 
$
1,434

 
$
1,443

 
$
1,444

 
1%

 
—

 
$
2,859

 
$
2,878

 
(1)%

Non-interest income
 
175

 
191

 
182

 
174

 
196

 
(8
)
 
(11)%

 
366

 
354

 
3

Total net revenue (loss)
 
1,614

 
1,611

 
1,616

 
1,617

 
1,640

 
—

 
(2
)
 
3,225

 
3,232

 
—

Provision (benefit) for credit losses
 
204

 
230

 
240

 
188

 
185

 
(11
)
 
10

 
434

 
391

 
11

Non-interest expense
 
1,006

 
990

 
1,057

 
1,001

 
998

 
2

 
1

 
1,996

 
1,968

 
1

Income (loss) from continuing operations before income taxes
 
404

 
391

 
319

 
428

 
457

 
3

 
(12
)
 
795

 
873

 
(9
)
Income tax provision (benefit)
 
147

 
142

 
115

 
155

 
166

 
4

 
(11
)
 
289

 
316

 
(9
)
Income (loss) from continuing operations, net of tax
 
$
257

 
$
249

 
$
204

 
$
273

 
$
291

 
3

 
(12
)
 
$
506

 
$
557

 
(9
)
Selected performance metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period-end loans held for investment
 
$
71,415

 
$
70,591

 
$
70,372

 
$
70,990

 
$
71,176

 
1%

 
—

 
$
71,415

 
$
71,176

 
—

Average loans held for investment
 
70,988

 
70,296

 
70,704

 
71,097

 
71,367

 
1

 
(1)%

 
70,642

 
71,404

 
(1)%

Average yield on loans held for investment(6)
 
6.28%


6.18%

 
6.25%

 
6.25%

 
6.27%


10
bps
 
1
bps
 
6.23%

 
6.27%

 
(4
)bps
Auto loan originations
 
$
6,529

 
$
5,844

 
$
4,977

 
$
5,590

 
$
5,433

 
12%

 
20%

 
$
12,373

 
$
10,618

 
17%

Period-end deposits
 
176,340

 
177,803

 
172,702

 
170,866

 
170,321

 
(1
)
 
4

 
176,340

 
170,321

 
4

Average deposits
 
176,808

 
174,254

 
171,521

 
170,816

 
171,076

 
1

 
3

 
175,531

 
170,339

 
3

Average deposit interest rate
 
0.55%


0.54%

 
0.54%

 
0.56%

 
0.57%


1
bps
 
(2
)bps
 
0.54%

 
0.57%

 
(3
)bps
Net charge-off rate
 
0.83


1.04

 
1.32

 
1.14

 
0.76


(21
)
 
7

 
0.93

 
0.83

 
10

30+ day performing delinquency rate
 
3.56

 
3.19

 
4.05

 
3.62

 
3.24

 
37

 
32

 
3.56

 
3.24

 
32

30+ day delinquency rate
 
4.07

 
3.67

 
4.67

 
4.22

 
3.80

 
40

 
27

 
4.07

 
3.80

 
27

Nonperforming loan rate(1)
 
0.69

 
0.66

 
0.79

 
0.76

 
0.70

 
3

 
(1
)
 
0.69

 
0.70

 
(1
)
Nonperforming asset rate(2)
 
0.96

 
0.95

 
1.10

 
1.05

 
0.98

 
1

 
(2
)
 
0.96

 
0.98

 
(2
)


17


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 12: Financial & Statistical Summary—Commercial Banking Business
 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
 
 
2016
 
2016
 
2015
 
2015
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Commercial Banking
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
$
559

 
$
537

 
$
484

 
$
454

 
$
466

 
4%


20%

 
$
1,096

 
$
927

 
18%

Non-interest income
 
129

 
118

 
142

 
108

 
123

 
9

 
5

 
247

 
237

 
4

Total net revenue (loss)(4)
 
688

 
655

 
626

 
562

 
589

 
5

 
17

 
1,343

 
1,164

 
15

Provision (benefit) for credit losses
 
128

 
228

 
118

 
75

 
49

 
(44
)
 
161

 
356

 
109

 
**

Non-interest expense
 
343

 
322

 
342

 
272

 
270

 
7

 
27

 
665

 
542

 
23

Income (loss) from continuing operations before income taxes
 
217

 
105

 
166

 
215

 
270

 
107

 
(20
)
 
322

 
513

 
(37
)
Income tax provision (benefit)
 
79

 
38

 
60

 
78

 
98

 
108

 
(19
)
 
117

 
186

 
(37
)
Income (loss) from continuing operations, net of tax
 
$
138

 
$
67

 
$
106

 
$
137

 
$
172

 
106


(20
)
 
$
205

 
$
327

 
(37
)
Selected performance metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period-end loans held for investment
 
$
66,202

 
$
64,241

 
$
63,266

 
$
52,112

 
$
51,231

 
3%


29%

 
$
66,202

 
$
51,231

 
29%

Average loans held for investment
 
64,938

 
63,375

 
57,379

 
51,592

 
50,976

 
2

 
27

 
64,156

 
51,023

 
26

Average yield on loans held for investment(4)(6)
 
3.45%


3.38%

 
3.18%

 
3.21%

 
3.26%


7
bps

19
bps
 
3.42%

 
3.24%

 
18
bps
Period-end deposits
 
$
34,281

 
$
33,383

 
$
34,257

 
$
32,751

 
$
32,909

 
3%


4%

 
$
34,281

 
$
32,909

 
4%

Average deposits
 
33,764

 
34,076

 
33,797

 
32,806

 
32,778

 
(1
)
 
3

 
33,920

 
32,811

 
3

Average deposit interest rate
 
0.27%


0.27%

 
0.26%

 
0.25%

 
0.25%


—


2
bps
 
0.27%

 
0.24%

 
3
bps
Net charge-off rate
 
0.37


0.29

 
0.03

 
0.26

 
0.05


8
bps

32

 
0.33

 
0.04

 
29

Nonperforming loan rate(1)(9)
 
1.59

 
1.63

 
0.87

 
0.87

 
0.90

 
(4
)
 
69

 
1.59

 
0.90

 
69

Nonperforming asset rate(2)(9)
 
1.60

 
1.64

 
0.87

 
0.87

 
0.91

 
(4
)
 
69

 
1.60

 
0.91

 
69

Risk category:(9)(10)
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Noncriticized
 
$
61,926

 
$
59,663

 
$
59,743

 
$
49,803

 
$
48,847

 
4%


27%

 
$
61,926

 
$
48,847

 
27%

Criticized performing
 
2,456

 
2,595

 
2,015

 
1,725

 
1,767

 
(5
)
 
39

 
2,456

 
1,767

 
39

Criticized nonperforming
 
1,050

 
1,050

 
550

 
453

 
463

 
—

 
127

 
1,050

 
463

 
127

PCI loans(9)
 
770

 
933

 
958

 
131

 
154

 
(17
)
 
**

 
770

 
154

 
**

Total commercial loans
 
$
66,202

 
$
64,241

 
$
63,266

 
$
52,112

 
$
51,231

 
3


29

 
$
66,202

 
$
51,231

 
29

Risk category as a percentage of period-end loans held for investment:(9)(10)
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Noncriticized
 
93.5%


92.9%

 
94.4%

 
95.6%

 
95.4%


60
bps

(190
)bps
 
93.5%

 
95.4%

 
(190
)bps
Criticized performing
 
3.7

 
4.0

 
3.2

 
3.3

 
3.4

 
(30
)
 
30

 
3.7

 
3.4

 
30

Criticized nonperforming
 
1.6

 
1.6

 
0.9

 
0.9

 
0.9

 
—

 
70

 
1.6

 
0.9

 
70

PCI loans(9)
 
1.2

 
1.5

 
1.5

 
0.2

 
0.3

 
(30
)
 
90

 
1.2

 
0.3

 
90

Total commercial loans
 
100.0
%

100.0
%
 
100.0
%
 
100.0
%
 
100.0
%




 
100.0
%
 
100.0
%
 


18


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 13: Financial & Statistical Summary—Other and Total
 
 
 
 
 
 
 
 
 
 
 
 
2016 Q2 vs.
 
Six Months Ended June 30,
 
 
2016
 
2016
 
2015
 
2015
 
2015
 
2016
 
2015
 
 
 
 
 
2016 vs.
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
 
Q1
 
Q2
 
2016
 
2015
 
2015
Other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income (expense)
 
$
50

 
$
66

 
$
47

 
$
(3
)
 
$
(6
)
 
(24)%


**

 
$
116

 
$
9

 
**

Non-interest income
 
(2
)
 
8

 
7

 
—

 
(29
)
 
**

 
(93)%

 
6

 
(46
)
 
**

Total net revenue (loss)(4)
 
48

 
74

 
54

 
(3
)
 
(35
)
 
(35
)
 
**

 
122

 
(37
)
 
**

Provision (benefit) for credit losses
 
(1
)
 
(2
)
 
—

 
(2
)
 
—

 
(50
)
 
**

 
(3
)
 
—

 
**

Non-interest expense(11)
 
63

 
48

 
60

 
39

 
182

 
31

 
(65
)
 
111

 
213

 
(48)%

Income (loss) from continuing operations before income taxes
 
(14
)
 
28

 
(6
)
 
(40
)
 
(217
)
 
**

 
(94
)
 
14

 
(250
)
 
**

Income tax provision (benefit)
 
(78
)
 
(65
)
 
(51
)
 
(78
)
 
(143
)
 
20

 
(45
)
 
(143
)
 
(221
)
 
(35
)
Income (loss) from continuing operations, net of tax
 
$
64

 
$
93

 
$
45

 
$
38

 
$
(74
)
 
(31
)

**

 
$
157

 
$
(29
)
 
**

Selected performance metrics:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Period-end loans held for investment
 
$
82

 
$
82

 
$
88

 
$
92

 
$
95

 
—


(14)%

 
$
82

 
$
95

 
(14)%

Average loans held for investment
 
71

 
78

 
82

 
88

 
93

 
(9)%

 
(24
)
 
75

 
97

 
(23
)
Period-end deposits
 
10,438

 
10,593

 
10,762

 
9,286

 
5,550

 
(1
)
 
88

 
10,438

 
5,550

 
88

Average deposits
 
10,574

 
10,850

 
10,581

 
7,352

 
5,289

 
(3
)
 
100

 
10,712

 
5,351

 
100

Total
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Net interest income
 
$
5,093

 
$
5,056

 
$
4,961

 
$
4,760

 
$
4,537

 
1%


12%

 
$
10,149

 
$
9,113

 
11%

Non-interest income
 
1,161

 
1,164

 
1,233

 
1,140

 
1,135

 
—

 
2

 
2,325

 
2,206

 
5

Total net revenue (loss)
 
6,254

 
6,220

 
6,194

 
5,900

 
5,672

 
1

 
10

 
12,474

 
11,319

 
10

Provision (benefit) for credit losses
 
1,592

 
1,527

 
1,380

 
1,092

 
1,129

 
4

 
41

 
3,119

 
2,064

 
51

Non-interest expense
 
3,295

 
3,223

 
3,480

 
3,160

 
3,307

 
2

 
—

 
6,518

 
6,356

 
3

Income (loss) from continuing operations before income taxes
 
1,367

 
1,470

 
1,334

 
1,648

 
1,236

 
(7
)
 
11

 
2,837

 
2,899

 
(2
)
Income tax provision (benefit)
 
424

 
452

 
426

 
530

 
384

 
(6
)
 
10

 
876

 
913

 
(4
)
Income (loss) from continuing operations, net of tax
 
$
943

 
$
1,018

 
$
908

 
$
1,118

 
$
852

 
(7
)

11

 
$
1,961

 
$
1,986

 
(1
)
Selected performance metrics:
 
 
 
 
 
 
 
 
 
 
 

 

 
 
 
 
 
 
Period-end loans held for investment
 
$
234,603

 
$
227,613

 
$
229,851

 
$
213,329

 
$
209,705

 
3%


12%

 
$
234,603

 
$
209,705

 
12%

Average loans held for investment
 
230,379

 
226,736

 
220,052

 
211,227

 
206,337

 
2

 
12

 
228,557

 
205,768

 
11

Period-end deposits
 
221,059

 
221,779

 
217,721

 
212,903

 
208,780

 
—

 
6

 
221,059

 
208,780

 
6

Average deposits
 
221,146

 
219,180

 
215,899

 
210,974

 
209,143

 
1

 
6

 
220,163

 
208,501

 
6


19


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 14: Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)

(1) 
The nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.
(2) 
Nonperforming assets consist of nonperforming loans, real estate owned (“REO”) and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment, REO and other foreclosed assets. Calculation of nonperforming asset rates for our Consumer Banking and Commercial Banking businesses do not include the impact of acquired REOs.
(3) 
Represents foreign currency translation adjustments and the net impact of loan transfers and sales.
(4) 
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 of 35% with offsetting reclassifications to the Other category.
(5) 
Includes a build in our U.K. PPI Reserve in Q2 2016, Q3 2015 and Q2 2015, which impacted both total net revenue and non-interest expense within our International Card business.
(6) 
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.
(7) 
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.
(8) 
Includes purchase transactions, net of returns, for the period for loans both classified as held for investment and held for sale. Excludes cash advance and balance transfer transactions.
(9) 
The loans held for investment acquired in the HFS acquisition included $667 million, $825 million and $835 million of PCI loans as of June 30, 2016, March 31, 2016 and December 31, 2015, respectively, that are being accounted for under ASC 310-30 (formerly “SOP 03-3”) due to their deterioration in credit quality since origination. From a managed perspective, we evaluate loans based on their actual risk ratings, and accordingly we are also including our nonperforming and criticized ratios measured on that basis. The table below presents our nonperforming loan rate, nonperforming asset rate and risk category information as if these PCI loans were classified based on their risk ratings in each of the periods impacted by the HFS acquisition.
 
 
2016
 
2016
 
2015
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
Selected performance metrics
 
 
 
 
 
 
Nonperforming loan rate
 
1.63%

 
1.69%

 
0.93%

Nonperforming asset rate
 
1.64

 
1.70

 
0.93

Risk category:
 
 
 
 
 
 
Noncriticized
 
$
62,058

 
$
59,729

 
$
59,743

Criticized performing
 
2,961

 
3,321

 
2,814

Criticized nonperforming
 
1,080

 
1,083

 
586

Risk category as a percentage of period-end loans held for investment:
 
 
 
 
 
 
Noncriticized
 
93.7%

 
93.0%

 
94.4%

Criticized performing
 
4.5

 
5.2

 
4.5

Criticized nonperforming
 
1.6

 
1.7

 
0.9

(10) 
Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities.
(11) 
Includes restructuring charges for employee severance and related benefits pursuant to our ongoing benefit programs.
**  
Not meaningful.



20


CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 15: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures(1) 
 
 
Basel III Standardized Approach
(Dollars in millions) (unaudited)
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Regulatory Capital Metrics
 
 
 
 
 
 
 
 
 
 
Common equity Tier 1 capital
 
$
29,486

 
$
29,231

 
$
29,544

 
$
30,109

 
$
29,804

Tier 1 capital
 
32,780

 
32,525

 
32,838

 
33,402

 
32,614

Total capital(2)
 
38,768

 
38,399

 
38,838

 
37,694

 
37,115

Risk-weighted assets
 
269,710

 
262,368

 
265,739

 
249,081

 
246,106

Average assets for the leverage ratio
 
319,969

 
317,403

 
309,037

 
300,010

 
293,291

Capital Ratios
 
 
 
 
 
 
 
 
 
 
Common equity Tier 1 capital(3)
 
10.9
%
 
11.1%

 
11.1%

 
12.1%

 
12.1%

Tier 1 capital(4)
 
12.2

 
12.4

 
12.4

 
13.4

 
13.3

Total capital(5)
 
14.4

 
14.6

 
14.6

 
15.1

 
15.1

Tier 1 leverage(6)
 
10.2

 
10.2

 
10.6

 
11.1

 
11.1

Tangible common equity (“TCE”)(7)
 
9.0

 
9.1

 
8.9

 
9.8

 
9.7

Reconciliation of Non-GAAP Measures
We report certain non-GAAP measures that management uses in assessing its capital adequacy and the level of return generated. These 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. These metrics are considered key financial performance measures for the Company. The tables below provide the details of the calculation of our non-GAAP measures and regulatory capital. 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.
 
 
2016
 
2016
 
2015
 
2015
 
2015
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
Tangible Common Equity (Period End)
 
 
 
 
 
 
 
 
 
 
Stockholders’ equity
 
$
48,108

 
$
47,707

 
$
47,284

 
$
47,685

 
$
46,659

Goodwill and intangible assets(8)
 
(15,553
)
 
(15,629
)
 
(15,701
)
 
(15,153
)
 
(15,240
)
Noncumulative perpetual preferred stock(9)
 
(3,294
)
 
(3,296
)
 
(3,294
)
 
(3,294
)
 
(2,810
)
Tangible common equity
 
$
29,261

 
$
28,782

 
$
28,289

 
$
29,238

 
$
28,609

Tangible Common Equity (Average)
 
 
 
 
 
 
 
 
 
 
Average stockholders’ equity
 
$
48,934

 
$
49,078

 
$
48,712

 
$
48,456

 
$
47,255

Average goodwill and intangible assets(8)
 
(15,585
)
 
(15,654
)
 
(15,316
)
 
(15,183
)
 
(15,256
)
Average noncumulative perpetual preferred stock(9)
 
(3,294
)
 
(3,296
)
 
(3,294
)
 
(3,049
)
 
(2,377
)
Average tangible common equity
 
$
30,055

 
$
30,128

 
$
30,102

 
$
30,224

 
$
29,622

 
 
 
 
 
 
 
 
 
 
 

21


 
 
2016
 
2016
 
2015
 
2015
 
2015
(Dollars in millions) (unaudited)
 
Q2
 
Q1
 
Q4
 
Q3
 
Q2
Tangible Assets (Period End)
 
 
 
 
 
 
 
 
 
 
Total assets
 
$
339,117

 
$
330,346

 
$
334,048

 
$
313,700

 
$
310,510

Goodwill and intangible assets(8)
 
(15,553
)
 
(15,629
)
 
(15,701
)
 
(15,153
)
 
(15,240
)
Tangible assets
 
$
323,564

 
$
314,717

 
$
318,347

 
$
298,547

 
$
295,270

Tangible Assets (Average)
 
 
 
 
 
 
 
 
 
 
Average total assets
 
$
334,479

 
$
331,919

 
$
323,354

 
$
313,822

 
$
307,206

Average goodwill and intangible assets(8)
 
(15,585
)
 
(15,654
)
 
(15,316
)
 
(15,183
)
 
(15,256
)
Average tangible assets
 
$
318,894

 
$
316,265

 
$
308,038

 
$
298,639

 
$
291,950

Common Equity Tier 1 Capital Ratio Under Basel III Standardized Approach
(Dollars in millions) (unaudited)
 
June 30,
2016
 
March 31,
2016
 
December 31,
2015
 
September 30,
2015
 
June 30,
2015
Common equity excluding AOCI
 
$
44,572

 
$
44,452

 
$
44,606

 
$
44,533

 
$
44,246

Adjustments:
 
 
 
 
 


 
 
 
 
AOCI(10)(11)
 
332

 
117

 
(254
)
 
75

 
(128
)
Goodwill(8)
 
(14,296
)
 
(14,301
)
 
(14,296
)
 
(13,805
)
 
(13,809
)
Intangible assets(8)(11)
 
(483
)
 
(532
)
 
(393
)
 
(374
)
 
(413
)
Other
 
(639
)
 
(505
)
 
(119
)
 
(320
)
 
(92
)
Common equity Tier 1 capital
 
$
29,486

 
$
29,231

 
$
29,544

 
$
30,109

 
$
29,804

Risk-weighted assets
 
$
269,710

 
$
262,368

 
$
265,739

 
$
249,081

 
$
246,106

Common equity Tier 1 capital ratio(3)
 
10.9%

 
11.1%

 
11.1%

 
12.1%

 
12.1%

__________
(1)  
Regulatory capital metrics and capital ratios as of June 30, 2016 are preliminary and therefore subject to change.
(2) 
Total capital equals the sum of Tier 1 capital and Tier 2 capital.
(3) 
Common equity Tier 1 capital ratio is a regulatory measure calculated based on Common equity Tier 1 capital divided by risk-weighted assets.
(4) 
Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.
(5) 
Total capital ratio is a regulatory capital measure calculated based on Total capital divided by risk-weighted assets.
(6) 
Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments.
(7) 
TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets.
(8) 
Includes impact of related deferred taxes.
(9) 
Includes related surplus.
(10) 
Amounts presented are net of tax.
(11)  
Amounts based on transition provisions for regulatory capital deductions and adjustments of 40% for 2015 and 60% for 2016.


22