Market Overview

Capital One Reports Second Quarter 2018 Net Income of $1.9 billion, or $3.71 per share

Share:

Capital One Reports Second Quarter 2018 Net Income of $1.9 billion, or $3.71 per share

Excluding adjusting items, Second Quarter 2018 Net Income of $3.22 per share(1)

PR Newswire

MCLEAN, Va., July 19, 2018 /PRNewswire/ -- Capital One Financial Corporation (NYSE:COF) today announced net income for the second quarter of 2018 of $1.9 billion, or $3.71 per diluted common share, compared with net income of $1.3 billion, or $2.62 per diluted common share, in the first quarter of 2018, and with net income of $1.0 billion, or $1.94 per diluted common share, in the second quarter of 2017. Excluding adjusting items, net income for the second quarter of 2018 was $3.22 per diluted common share(1).

Capital One

"Capital One delivered another quarter of strong financial performance as we continued to invest to grow and drive our digital transformation," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "We saw credit improvement across our businesses, and growth math is now helping overall domestic credit card trends."

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

Second Quarter 2018 Income Statement Summary:

  • Total net revenue increased 4 percent to $7.2 billion.
  • Recognized $400 million net gain on the sale of the substantial majority of our consumer home loan portfolio.
  • Total non-interest expense decreased 4 percent to $3.4 billion:
    • 5 percent decrease in operating expenses.
    • 3 percent increase in marketing.
  • Pre-provision earnings increased 13 percent to $3.8 billion(2)

(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.

  • Provision for credit losses decreased 24 percent to $1.3 billion:
    • Net charge-offs of $1.5 billion.
    • $183 million reserve release.
  • Net interest margin of 6.66 percent, down 27 basis points.
  • Efficiency ratio of 47.61 percent.
    • Efficiency ratio excluding adjusting items was 49.28 percent(1).
  • Operating efficiency ratio of 41.70 percent.
    • Operating efficiency ratio excluding adjusting items was 43.08 percent(1).

Second Quarter 2018 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 11.1 percent at June 30, 2018.
  • Period-end loans held for investment in the quarter decreased $12.1 billion, or 5 percent, to $236.1 billion.
    • Credit Card period-end loans increased $2.2 billion, or 2 percent, to $109.8 billion.
      • Domestic Card period-end loans increased $2.2 billion, or 2 percent, to $100.7 billion.
    • Consumer Banking period-end loans decreased $15.9 billion, or 21 percent, to $58.7 billion:
      • Auto period-end loans increased $970 million, or 2 percent, to $55.8 billion.
      • Home loans period-end loans decreased $16.6 billion, driven by the sale of the substantial majority of our consumer home loan portfolio and the transfer of remaining portfolio to loans held for sale. 
    • Commercial Banking period-end loans increased $1.7 billion, or 3 percent, to $67.6 billion.
  • Average loans held for investment in the quarter decreased $9.0 billion, or 4 percent, to $240.8 billion.
    • Credit Card average loans decreased $1.6 billion, or 1 percent, to $107.9 billion.
      • Domestic Card average loans decreased $1.6 billion, or 2 percent, to $98.9 billion.
    • Consumer Banking average loans decreased $8.5 billion, or 11 percent, to $66.5 billion:
      • Auto average loans increased $954 million, or 2 percent, to $55.3 billion.
      • Home loans average loans decreased $9.1 billion, or 53 percent, to $8.1 billion, driven by the sale of the substantial majority of our consumer home loan portfolio and the transfer of remaining portfolio to loans held for sale.
    • Commercial Banking average loans increased $1.2 billion, or 2 percent, to $66.4 billion.
  • Period-end total deposits decreased $2.6 billion, or 1 percent, to $248.2 billion, while average deposits increased $3.5 billion, or 1 percent, to $248.8 billion.
  • Interest-bearing deposits rate paid increased 14 basis points to 1.12 percent.

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

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on July 19, 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 August 2, 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 $248.2 billion in deposits and $364.0 billion in total assets as of June 30, 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.

 


Exhibit 99.2  



Capital One Financial Corporation  

Financial Supplement(1)(2)  

Second 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 June 30, 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 Q2 vs.


Six Months Ended June 30,

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


2018


2018


2017


2017


2017


2018


2017






2018 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2018


2017


2017

Income Statement





















Net interest income


$

5,551



$

5,718



$

5,813



$

5,700



$

5,473



(3)

%


1

%


$

11,269



$

10,947



3

%

Non-interest income


1,641



1,191



1,200



1,285



1,231



38



33



2,832



2,292



24


Total net revenue(1)


7,192



6,909



7,013



6,985



6,704



4



7



14,101



13,239



7


Provision for credit losses


1,276



1,674



1,926



1,833



1,800



(24)



(29)



2,950



3,792



(22)


Non-interest expense:





















Marketing


425



414



460



379



435



3



(2)



839



831



1


Operating expenses


2,999



3,159



3,319



3,188



2,979



(5)



1



6,158



6,017



2


Total non-interest expense


3,424



3,573



3,779



3,567



3,414



(4)





6,997



6,848



2


Income from continuing operations before income taxes


2,492



1,662



1,308



1,585



1,490



50



67



4,154



2,599



60


Income tax provision


575



319



2,170



448



443



80



30



894



757



18


Income (loss) from continuing operations, net of tax


1,917



1,343



(862)



1,137



1,047



43



83



3,260



1,842



77


Income (loss) from discontinued operations, net of tax


(11)



3



(109)



(30)



(11)



**




(8)



4



**

Net income (loss)


1,906



1,346



(971)



1,107



1,036



42



84



3,252



1,846



76


Dividends and undistributed earnings allocated to participating securities(2)


(12)



(10)



(1)



(8)



(8)



20



50



(23)



(13)



77


Preferred stock dividends


(80)



(52)



(80)



(52)



(80)



54





(132)



(133)



(1)


Net income (loss) available to common stockholders


$

1,814



$

1,284



$

(1,052)



$

1,047



$

948



41



91



$

3,097



$

1,700



82


Common Share Statistics





















Basic earnings per common share:(2)





















Net income (loss) from continuing operations


$

3.76



$

2.63



$

(1.95)



$

2.22



$

1.98



43

%


90

%


$

6.39



$

3.51



82

%

Income (loss) from discontinued operations


(0.02)



0.01



(0.22)



(0.06)



(0.02)



**




(0.02)



0.01



**

Net income (loss) per basic common share


$

3.74



$

2.64



$

(2.17)



$

2.16



$

1.96



42



91



$

6.37



$

3.52



81


Diluted earnings per common share:(2)





















Net income (loss) from continuing operations


$

3.73



$

2.61



$

(1.95)



$

2.20



$

1.96



43



90



$

6.35



$

3.48



82


Income (loss) from discontinued operations


(0.02)



0.01



(0.22)



(0.06)



(0.02)



**




(0.02)



0.01



**

Net income (loss) per diluted common share


$

3.71



$

2.62



$

(2.17)



$

2.14



$

1.94



42



91



$

6.33



$

3.49



81


Weighted-average common shares outstanding (in millions):





















Basic


485.1



486.9



485.7



484.9



484.0







485.9



483.1



1


Diluted


488.3



490.8



485.7



489.0



488.1



(1)





489.6



487.7




Common shares outstanding (period-end, in millions)


478.4



485.9



485.5



484.4



483.7



(2)



(1)



478.4



483.7



(1)


Dividends declared and paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.40







$

0.80



$

0.80




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


63.86



61.29



60.28



63.06



60.94



4



5



63.86



60.94



5












































2018 Q2 vs.


Six Months Ended June 30,

(Dollars in millions)


2018


2018


2017


2017


2017


2018


2017






2018 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2018


2017


2017

Balance Sheet (Period-End)





















Loans held for investment


$

236,124



$

248,256



$

254,473



$

252,422



$

244,302



(5)

%


(3)

%


$

236,124



$

244,302



(3)

%

Interest-earning assets


332,167



332,251



334,124



329,002



319,286





4



332,167



319,286



4


Total assets


363,989



362,857



365,693



361,402



350,593





4



363,989



350,593



4


Interest-bearing deposits


222,605



224,671



217,298



212,956



213,810



(1)



4



222,605



213,810



4


Total deposits


248,225



250,847



243,702



239,062



239,763



(1)



4



248,225



239,763



4


Borrowings


53,310



50,693



60,281



59,458



49,954



5



7



53,310



49,954



7


Common equity


45,566



44,842



44,370



45,794



44,777



2



2



45,566



44,777



2


Total stockholders' equity


49,926



49,203



48,730



50,154



49,137



1



2



49,926



49,137



2


Balance Sheet (Average Balances)





















Loans held for investment


$

240,758



$

249,726



$

252,566



$

245,822



$

242,241



(4)

%


(1)

%


$

245,218



$

241,875



1

%

Interest-earning assets


333,495



330,183



330,742



322,015



318,078



1



5



331,850



318,215



4


Total assets


363,929



362,049



363,045



355,191



349,891



1



4



362,988



350,761



3


Interest-bearing deposits


223,079



219,670



215,258



213,137



214,412



2



4



221,384



213,696



4


Total deposits


248,790



245,270



241,562



238,843



240,550



1



3



247,040



239,555



3


Borrowings


52,333



54,588



58,109



54,271



48,838



(4)



7



53,454



51,085



5


Common equity


45,466



44,670



46,350



45,816



44,645



2



2



45,070



44,241



2


Total stockholders' equity


49,827



49,031



50,710



50,176



49,005



2



2



49,431



48,602



2


 


 

CAPITAL ONE FINANCIAL CORPORATION (COF) 

Table 2: Selected Metrics—Consolidated   













2018 Q2 vs.


Six Months Ended June 30,

(Dollars in millions, except as noted)


2018


2018


2017


2017


2017


2018


2017






2018 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2018


2017


2017

Performance Metrics





















Net interest income growth (period over period)


(3)

%


(2)

%


2

%


4

%




**


**


3

%


8

%


**

Non-interest income growth (period over period)


38



(1)



(7)



4



16

%


**


**


24



(1)



**

Total net revenue growth (period over period)


4



(1)





4



3



**


**


7



6



**

Total net revenue margin(4)


8.63



8.37



8.48



8.68



8.43



26

bps


20

bps


8.50



8.32



18

bps

Net interest margin(5)


6.66



6.93



7.03



7.08



6.88



(27)



(22)



6.79



6.88



(9)


Return on average assets


2.11



1.48



(0.95)



1.28



1.20



63



91



1.80



1.05



75


Return on average tangible assets(6)


2.20



1.55



(0.99)



1.34



1.25



65



95



1.87



1.10



77


Return on average common equity(7)


16.06



11.47



(8.14)



9.40



8.59



5

%


7

%


13.78



7.67



6

%

Return on average tangible common equity(8)


23.99



17.32



(12.12)



14.11



13.09



7



11



20.70



11.75



9


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


5.69



5.72



5.98



5.80



5.64



(3)

bps


5

bps


5.71



5.66



5

bps

Efficiency ratio(9)


47.61



51.72



53.89



51.07



50.92



(4)

%


(3)

%


49.62



51.73



(2)

%

Operating efficiency ratio(10)


41.70



45.72



47.33



45.64



44.44



(4)



(3)



43.67



45.45



(2)


Effective income tax rate for continuing operations


23.1



19.2



165.9



28.3



29.7



4



(7)



21.5



29.1



(8)


Employees (in thousands), period-end


47.8



47.9



49.3



50.4



49.9





(4)



47.8



49.9



(4)


Credit Quality Metrics





















Allowance for loan and lease losses


$

7,368



$

7,567



$

7,502



$

7,418



$

7,170



(3)

%


3

%


$

7,368



$

7,170



3

%

Allowance as a percentage of loans held for investment


3.12

%


3.05

%


2.95

%


2.94

%


2.93

%


7

bps


19

bps


3.12

%


2.93

%


19

bps

Net charge-offs


$

1,459



$

1,618



$

1,828



$

1,606



$

1,618



(10)

%


(10)

%


$

3,077



$

3,128



(2)

%

Net charge-off rate(11)


2.42

%


2.59

%


2.89

%


2.61

%


2.67

%


(17)

bps


(25)

bps


2.51

%


2.59

%


(8)

bps

30+ day performing delinquency rate


2.88



2.72



3.23



2.93



2.69



16



19



2.88



2.69



19


30+ day delinquency rate


3.05



2.91



3.48



3.24



2.99



14



6



3.05



2.99



6


Capital Ratios(12)





















Common equity Tier 1 capital


11.1

%


10.5

%


10.3

%


10.7

%


10.7

%


60

bps


40

bps


11.1

%


10.7

%


40

bps

Tier 1 capital


12.6



12.0



11.8



12.2



12.2



60



40



12.6



12.2



40


Total capital


15.1



14.5



14.4



14.8



14.9



60



20



15.1



14.9



20


Tier 1 leverage


10.3



10.1



9.9



10.5



10.3



20





10.3



10.3




Tangible common equity ("TCE")(13)


8.8



8.6



8.3



8.8



8.8



20





8.8



8.8




 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income  














2018 Q2 vs.


Six Months Ended June 30,



2018


2018


2017


2017


2017


2018


2017






2018 vs.

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


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2018


2017


2017

Interest income:





















Loans, including loans held for sale


$

5,989



$

6,134



$

6,133



$

5,960



$

5,669



(2)

%


6

%


$

12,123



$

11,295



7

%

Investment securities


539



452



431



431



433



19



24



991



849



17


Other


68



51



40



29



26



33



162



119



54



120


Total interest income


6,596



6,637



6,604



6,420



6,128



(1)



8



13,233



12,198



8


Interest expense:





















Deposits


622



539



457



410



382



15



63



1,161



735



58


Securitized debt obligations


124



107



91



85



82



16



51



231



151



53


Senior and subordinated notes


289



251



209



194



179



15



61



540



328



65


Other borrowings


10



22



34



31



12



(55)



(17)



32



37



(14)


Total interest expense


1,045



919



791



720



655



14



60



1,964



1,251



57


Net interest income


5,551



5,718



5,813



5,700



5,473



(3)



1



11,269



10,947



3


Provision for credit losses


1,276



1,674



1,926



1,833



1,800



(24)



(29)



2,950



3,792



(22)


Net interest income after provision for credit losses


4,275



4,044



3,887



3,867



3,673



6



16



8,319



7,155



16


Non-interest income:





















Interchange fees, net


723



643



665



662



676



12



7



1,366



1,246



10


Service charges and other customer-related fees


391



432



394



414



418



(9)



(6)



823



789



4


Net securities gains (losses)


(1)



8



1



68



(4)



**


(75)



7



(4)



**

Other(14)


528



108



140



141



141



**


**


636



261



144


Total non-interest income


1,641



1,191



1,200



1,285



1,231



38



33



2,832



2,292



24


Non-interest expense:





















Salaries and associate benefits


1,430



1,520



1,521



1,524



1,383



(6)



3



2,950



2,854



3


Occupancy and equipment


503



490



523



471



474



3



6



993



945



5


Marketing


425



414



460



379



435



3



(2)



839



831



1


Professional services


234



210



274



297



279



11



(16)



444



526



(16)


Communications and data processing


317



306



306



294



289



4



10



623



577



8


Amortization of intangibles


43



44



61



61



61



(2)



(30)



87



123



(29)


Other


472



589



634



541



493



(20)



(4)



1,061



992



7


Total non-interest expense


3,424



3,573



3,779



3,567



3,414



(4)





6,997



6,848



2


Income from continuing operations before income taxes


2,492



1,662



1,308



1,585



1,490



50



67



4,154



2,599



60


Income tax provision


575



319



2,170



448



443



80



30



894



757



18


Income (loss) from continuing operations, net of tax


1,917



1,343



(862)



1,137



1,047



43



83



3,260



1,842



77


Income (loss) from discontinued operations, net of tax


(11)



3



(109)



(30)



(11)



**




(8)



4



**

Net income (loss)


1,906



1,346



(971)



1,107



1,036



42



84



3,252



1,846



76


Dividends and undistributed earnings allocated to participating securities(2)


(12)



(10)



(1)



(8)



(8)



20



50



(23)



(13)



77


Preferred stock dividends


(80)



(52)



(80)



(52)



(80)



54





(132)



(133)



(1)


Net income (loss) available to common stockholders


$

1,814



$

1,284



$

(1,052)



$

1,047



$

948



41



91



$

3,097



$

1,700



82



































2018 Q2 vs.


Six Months Ended June 30,



2018


2018


2017


2017


2017


2018


2017






2018 vs.

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


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2018


2017


2017

Basic earnings per common share:(2)





















Net income (loss) from continuing operations


$

3.76



$

2.63



$

(1.95)



$

2.22



$

1.98



43

%


90

%


$

6.39



$

3.51



82

%

Income (loss) from discontinued operations


(0.02)



0.01



(0.22)



(0.06)



(0.02)



**




(0.02)



0.01



**

Net income (loss) per basic common share


$

3.74



$

2.64



$

(2.17)



$

2.16



$

1.96



42



91



$

6.37



$

3.52



81


Diluted earnings per common share:(2)





















Net income (loss) from continuing operations


$

3.73



$

2.61



$

(1.95)



$

2.20



$

1.96



43



90



$

6.35



$

3.48



82


Income (loss) from discontinued operations


(0.02)



0.01



(0.22)



(0.06)



(0.02)



**




(0.02)



0.01



**

Net income (loss) per diluted common share


$

3.71



$

2.62



$

(2.17)



$

2.14



$

1.94



42



91



$

6.33



$

3.49



81


Weighted-average common shares outstanding (in millions):





















Basic common shares


485.1



486.9



485.7



484.9



484.0







485.9



483.1



1


Diluted common shares


488.3



490.8



485.7



489.0



488.1



(1)





489.6



487.7




Dividends declared and paid per common share


$

0.40



$

0.40



$

0.40



$

0.40



$

0.40







$

0.80



$

0.80




 


CAPITAL ONE FINANCIAL CORPORATION (COF) 

Table 4: Consolidated Balance Sheets  














2018 Q2 vs.



2018


2018


2017


2017


2017


2018


2017

(Dollars in millions)


Q2


Q1


Q4


Q3


Q2


Q1


Q2

Assets:















Cash and cash equivalents:















Cash and due from banks


$

4,499



$

4,220



$

4,458



$

4,154



$

3,352



7

%


34

%

Interest-bearing deposits and other short-term investments


7,774



9,788



9,582



4,330



3,363



(21)



131


Total cash and cash equivalents


12,273



14,008



14,040



8,484



6,715



(12)



83


Restricted cash for securitization investors


1,023



309



312



304



300



**


**

Investment securities:















Securities available for sale, at fair value


50,691



47,155



37,655



39,742



41,120



7



23


Securities held to maturity, at carrying value


33,464



23,075



28,984



28,650



27,720



45



21


Total investment securities


84,155



70,230



66,639



68,392



68,840



20



22


Loans held for investment:















Unsecuritized loans held for investment


201,222



213,313



218,806



217,659



214,864



(6)



(6)


Loans held in consolidated trusts


34,902



34,943



35,667



34,763



29,438





19


Total loans held for investment


236,124



248,256



254,473



252,422



244,302



(5)



(3)


Allowance for loan and lease losses


(7,368)



(7,567)



(7,502)



(7,418)



(7,170)



(3)



3


Net loans held for investment


228,756



240,689



246,971



245,004



237,132



(5)



(4)


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


1,480



1,498



971



1,566



777



(1)



90


Premises and equipment, net


4,095



4,055



4,033



3,955



3,825



1



7


Interest receivable


1,493



1,496



1,536



1,426



1,346





11


Goodwill


14,531



14,536



14,533



14,532



14,524






Other assets


16,183



16,036



16,658



17,739



17,134



1



(6)


Total assets


$

363,989



$

362,857



$

365,693



$

361,402



$

350,593





4





























2018 Q2 vs.



2018


2018


2017


2017


2017


2018


2017

(Dollars in millions)


Q2


Q1


Q4


Q3


Q2


Q1


Q2

Liabilities:















Interest payable


$

450



$

353



$

413



$

301



$

376



27

%


20

%

Deposits:















Non-interest-bearing deposits


25,620



26,176



26,404



26,106



25,953



(2)



(1)


Interest-bearing deposits


222,605



224,671



217,298



212,956



213,810



(1)



4


Total deposits


248,225



250,847



243,702



239,062



239,763



(1)



4


Securitized debt obligations


19,649



18,665



20,010



17,087



18,358



5



7


Other debt:















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


553



656



576



767



958



(16)



(42)


Senior and subordinated notes


32,920



31,051



30,755



28,420



28,478



6



16


Other borrowings


188



321



8,940



13,184



2,160



(41)



(91)


Total other debt


33,661



32,028



40,271



42,371



31,596



5



7


Other liabilities


12,078



11,761



12,567



12,427



11,363



3



6


Total liabilities


314,063



313,654



316,963



311,248



301,456





4

















Stockholders' equity:















Preferred stock


0



0



0



0



0






Common stock


7



7



7



7



7






Additional paid-in capital, net


31,868



31,779



31,656



31,526



31,413





1


Retained earnings


33,626



31,996



30,700



31,946



31,086



5



8


Accumulated other comprehensive loss


(1,793)



(1,599)



(926)



(622)



(683)



12



163


Treasury stock, at cost


(13,782)



(12,980)



(12,707)



(12,703)



(12,686)



6



9


Total stockholders' equity


49,926



49,203



48,730



50,154



49,137



1



2


Total liabilities and stockholders' equity


$

363,989



$

362,857



$

365,693



$

361,402



$

350,593





4


 


CAPITAL ONE FINANCIAL CORPORATION (COF)  

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


(1)        

Total net revenue was reduced by $309 million in Q2 2018, $335 million in Q1 2018, $377 million in Q4 2017, $356 million in Q3 2017 and $313 million in Q2 2017 for the estimated uncollectible amount of billed finance charges and fees and related losses.

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

(9)

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

(10)

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

(11)

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

(12)

Capital ratios as of the end of Q2 2018 are preliminary and therefore subject to change. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for information on the calculation of each of these ratios.

(13)

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

(14)

In the second quarter of 2018, we sold the substantial majority of our consumer home loan portfolio and the related servicing. We also transferred the remaining consumer home loan portfolio of $398 million to loans held for sale as of June 30, 2018. These actions resulted in a net gain of approximately $400 million, including a benefit for credit losses of $46 million, which is reflected in the Other category.

**   

Not meaningful.

 


CAPITAL ONE FINANCIAL CORPORATION (COF) 

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




2018 Q2


2018 Q1


2017 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, except as noted)










Interest-earning assets:



















Loans, including loans held for sale


$

242,043



$

5,989



9.90

%


$

250,906



$

6,134



9.78

%


$

242,967



$

5,669



9.33

%

Investment securities


79,829



539



2.70



69,576



452



2.60



68,857



433



2.52


Cash equivalents and other


11,623



68



2.34



9,701



51



2.10



6,254



26



1.66


Total interest-earning assets


$

333,495



$

6,596



7.91



$

330,183



$

6,637



8.04



$

318,078



$

6,128



7.71


Interest-bearing liabilities:



















Interest-bearing deposits


$

223,079



$

622



1.12



$

219,670



$

539



0.98



$

214,412



$

382



0.71


Securitized debt obligations


19,147



124



2.59



19,698



107



2.17



18,400



82



1.78


Senior and subordinated notes


32,250



289



3.58



30,430



251



3.30



27,821



179



2.57


Other borrowings and liabilities


4,132



10



0.97



6,849



22



1.28



3,656



12



1.31


Total interest-bearing liabilities


$

278,608



$

1,045



1.50



$

276,647



$

919



1.33



$

264,289



$

655



0.99


Net interest income/spread




$

5,551



6.41





$

5,718



6.71





$

5,473



6.72


Impact of non-interest-bearing funding






0.25







0.22







0.16


Net interest margin






6.66

%






6.93

%






6.88

%






Six Months Ended June 30,



2018


2017



Average Balance


Interest Income/Expense(1)


Yield/Rate(1)


Average Balance


Interest Income/Expense(1)


Yield/Rate(1)

(Dollars in millions, except as noted)







Interest-earning assets:













Loans, including loans held for sale


$

246,451



$

12,123



9.84

%


$

242,610



$

11,295



9.31

%

Investment securities


74,731



991



2.65



68,637



849



2.47


Cash equivalents and other


10,668



119



2.23



6,968



54



1.55


Total interest-earning assets


$

331,850



$

13,233



7.98



$

318,215



$

12,198



7.67


Interest-bearing liabilities:













Interest-bearing deposits


$

221,384



$

1,161



1.05



$

213,696



$

735



0.69


Securitized debt obligations


19,421



231



2.38



17,791



151



1.70


Senior and subordinated notes


31,345



540



3.45



26,321



328



2.49


Other borrowings and liabilities


5,483



32



1.17



7,981



37



0.93


Total interest-bearing liabilities


$

277,633



$

1,964



1.41



$

265,789



$

1,251



0.94


Net interest income/spread




$

11,269



6.57





$

10,947



6.73


Impact of non-interest-bearing funding






0.22







0.15


Net interest margin






6.79

%






6.88

%

 

_________

(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. In the first quarter of 2018, we adopted Accounting Standard Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. As a result, interest income and interest expense amounts shown above include $2 million and $16 million for Q2 2018, and $3 million and $46 million for the six months ended June 30, 2018, respectively, related to hedge ineffectiveness that was previously included in other non-interest income.


 

CAPITAL ONE FINANCIAL CORPORATION (COF) 

Table 7: Loan Information and Performance Statistics 














2018 Q2 vs.


Six Months Ended June 30,

(Dollars in millions, except as noted)


2018
Q2


2018
Q1


2017
Q4


2017
Q3


2017
Q2


2018
Q1


2017
Q2


2018


2017


2018 vs.
2017

Loans Held for Investment (Period-End)




















Credit card:




















   Domestic credit card


$

100,714



$

98,535



$

105,293



$

99,981



$

92,866



2

%


8

%


$

100,714



$

92,866


8

%

   International card businesses


9,063



9,041



9,469



9,149



8,724





4



9,063



8,724


4


Total credit card


109,777



107,576



114,762



109,130



101,590



2



8



109,777



101,590


8


Consumer banking:




















   Auto


55,781



54,811



53,991



53,290



51,765



2



8



55,781



51,765


8


   Home loan(1)




16,630



17,633



18,820



19,724



**



**





19,724


**

   Retail banking


2,946



3,233



3,454



3,454



3,484



(9)



(15)



2,946



3,484


(15)


Total consumer banking


58,727



74,674



75,078



75,564



74,973



(21)



(22)



58,727



74,973


(22)


Commercial banking:




















   Commercial and multifamily real estate


28,292



27,360



26,150



27,944



27,428



3



3



28,292



27,428


3


   Commercial and industrial


38,948



38,208



38,025



39,306



39,801



2



(2)



38,948



39,801


(2)


Total commercial lending


67,240



65,568



64,175



67,250



67,229



3





67,240



67,229



   Small-ticket commercial real estate


369



385



400



420



443



(4)



(17)



369



443


(17)


Total commercial banking