Capital One Reports Fourth Quarter 2013 Net Income of $859 million, or $1.45 per share

16 Jan, 2014, 16:05 ET from Capital One Financial Corporation

MCLEAN, Va., Jan. 16, 2014 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2013 of $859 million, or $1.45 per diluted common share, compared to the third quarter of 2013 with net income of $1.1 billion, or $1.86 per diluted common share, and up from the fourth quarter of 2012 with net income of $843 million, or $1.41 per diluted common share. Net income for the full year 2013 was $4.2 billion, or $6.96 per diluted common share, compared with net income of $3.5 billion, or $6.16 per diluted common share, for 2012.

"Capital One delivered strong financial performance in 2013," said Richard D. Fairbank, Chairman and CEO.  "We remain focused on resilient growth, disciplined cost management, and returning capital to shareholders in 2014."

All comparisons below are for the fourth quarter of 2013 compared with the third quarter of 2013 unless otherwise noted.  

Fourth Quarter 2013 Income Highlights:

  • Total net revenue decreased 2 percent to $5.5 billion.
  • Total non-interest expense increased 4 percent to $3.3 billion.
  • Pre-provision earnings decreased 10 percent to $2.3 billion.
  • Provision for credit losses increased 13 percent to $957 million.

Fourth Quarter 2013 Balance Sheet Highlights:

  • Tier 1 common ratio of 12.2 percent, down 50 basis points
  • Net interest margin of 6.73 percent, down 16 basis points
  • Domestic Card period-end loans increased $3.3 billion, or 5 percent, to $73.3 billion.
  • Commercial Banking period-end loans increased $2.6 billion, or 6 percent, to $45.0 billion.
  • Consumer Banking:
    • Automobile period-end loans increased $1.1 billion, or 3 percent, to $31.9 billion.
    • Home loans period-end loans decreased $1.5 billion, or 4 percent, to $35.3 billion, driven by expected run-off of acquired portfolios.
  • Average loans held for investment in the quarter increased $1.7 billion, or less than 1 percent, to $192.8 billion.
    • Domestic Card average loans increased $421 million, or less than 1 percent, to $70.4 billion.
    • Commercial Banking average loans increased $1.8 billion, or 4 percent, to $43.4 billion.
    • Consumer Banking:
      • Automobile average loans increased $1.3 billion, or 4 percent, to $31.4 billion.
      • Home loans average loans decreased by $1.9 billion, or 5 percent, to $36.0 billion, driven by expected run-off of acquired portfolios.
  • Period-end total deposits decreased $2.3 billion, or 1 percent, to $204.5 billion, while average deposits declined $2.6 billion, or 1 percent, to $205.7 billion.
  • Deposit interest rates declined 3 basis points to 0.63 percent.

Detailed segment information will be available in the company's Annual Report on Form 10-K for the year ended December 31, 2013.

Earnings Conference Call Webcast Information The company will hold an earnings conference call on January 16, 2014, at 5:00 PM, Eastern Standard 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 January 30, 2014 at 5:00 PM.

Forward Looking Statements Certain statements in this release are 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, 2012.

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 $204.5 billion in deposits and $297 billion in total assets as of December 31, 2013. 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 more than 900 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia 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 Fourth Quarter 2013(1)(2) Table of Contents

Capital One Financial Corporation Consolidated

Page

Table 1:

Financial Summary—Consolidated

1

Table 2:

Selected Metrics—Consolidated

2

Table 3:

Consolidated Statements of Income

3

Table 4:

Consolidated Balance Sheets

4

Table 5:

Notes to Financial & Selected Metrics and Consolidated Financial Statements (Tables 1 - 4)

5

Table 6:

Average Balances, Net Interest Income and Net Interest Margin

6

Table 7:

Loan Information and Performance Statistics

7

Business Segment Detail

Table 8:

Financial & Statistical Summary—Credit Card Business

8

Table 9:

Financial & Statistical Summary—Consumer Banking Business

9

Table 10:

Financial & Statistical Summary—Commercial Banking Business

10

Table 11:

Financial & Statistical Summary—Other and Total

11

Table 12:

Notes to Loan and Business Segment Disclosures (Tables 7 - 11)

12

Other

Table 13:

Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I

13

___________ 

(1)  The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our Annual Report on Form 10-K for the period ended December 31, 2013 once it is filed with the Securities and Exchange Commission.

(2)  References to ING Direct refer to the business and assets acquired and liabilities assumed in the February 17, 2012 acquisition. References to the 2012 U.S. card acquisition refer to the May 1, 2012 transaction in which we acquired substantially all of HSBC's credit card and private-label credit card business in the United States.

 

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

2013

2013

2012

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

Q4

Q3

Q4

Earnings

Net interest income

$

4,423

$

4,560

$

4,528

Non-interest income(2)

1,121

1,091

1,096

Total net revenue(3)

5,544

5,651

5,624

Provision for credit losses

957

849

1,151

Non-interest expense:

Marketing

427

299

393

Amortization of intangibles(4)

166

161

191

Acquisition-related(5)

60

37

69

Operating expenses

2,627

2,650

2,602

Total non-interest expense

3,280

3,147

3,255

Income from continuing operations before income taxes

1,307

1,655

1,218

Income tax provision

425

525

370

Income from continuing operations, net of tax

882

1,130

848

Loss from discontinued operations, net of tax(2)

(23)

(13)

(5)

Net income

859

1,117

843

Dividends and undistributed earnings allocated to participating securities(6)

(4)

(5)

(3)

Preferred stock dividends(6)

(13)

(13)

(15)

Net income available to common stockholders

$

842

$

1,099

$

825

Common Share Statistics

Basic EPS:(6)

Net income from continuing operations, net of tax

$

1.51

$

1.91

$

1.43

Loss from discontinued operations, net of tax

(0.04)

(0.02)

(0.01)

Net income available to common stockholders per common share

$

1.47

$

1.89

$

1.42

Diluted EPS:(6)

Net income from continuing operations, net of tax

$

1.48

$

1.88

$

1.42

Loss from discontinued operations, net of tax

(0.03)

(0.02)

(0.01)

Net income available to common stockholders per common share

$

1.45

$

1.86

$

1.41

Weighted average common shares outstanding (in millions) for:

Basic EPS

573.4

582.3

579.2

Diluted EPS

582.6

591.1

585.6

Common shares outstanding (period end, in millions)

572.7

582.0

582.2

Dividends per common share

$

0.30

$

0.30

$

0.05

Tangible book value per common share (period end)(7)

42.47

43.19

40.23

Balance Sheet (Period End)

Loans held for investment(8)

$

197,199

$

191,814

$

205,889

Interest-earning assets

265,170

259,152

280,096

Total assets

297,048

289,888

312,918

Interest-bearing deposits

181,880

184,553

190,018

Total deposits

204,523

206,834

212,485

Borrowings

40,654

31,845

49,910

Common equity

40,891

40,897

39,646

Total stockholders' equity

41,744

41,750

40,499

Balance Sheet (Quarterly Average Balances)

Loans held for investment(8)

$

192,813

$

191,135

$

202,944

Interest-earning assets

262,957

264,796

277,886

Total assets

294,108

294,939

308,096

Interest-bearing deposits

184,206

186,752

192,122

Total deposits

205,706

208,340

213,494

Borrowings

36,463

36,355

44,189

Common equity

41,610

40,431

39,359

Total stockholders' equity

42,463

41,284

40,212

 

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 2:  Selected Metrics—Consolidated(1)

 

2013

2013

2012

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

Q4

Q3

Q4

Performance Metrics

Net interest income growth (quarter over quarter)

(3)

%

%

(3)

%

Non-interest income growth (quarter over quarter)

3

1

(4)

Total net revenue growth (quarter over quarter)

(2)

(3)

Total net revenue margin(9)

8.43

8.54

8.10

Net interest margin(10)

6.73

6.89

6.52

Return on average assets(11)

1.20

1.53

1.10

Return on average tangible assets(12)

1.27

1.62

1.16

Return on average common equity(13)

8.32

11.00

8.44

Return on average tangible common equity(14)

13.81

18.08

14.42

Non-interest expense as a % of average loans held for investment(15)

6.80

6.59

6.42

Efficiency ratio(16)

59.16

55.69

57.88

Effective income tax rate for continuing operations

32.5

31.7

30.4

Full-time equivalent employees (in thousands), period end

42.0

39.6

39.6

Credit Quality Metrics(8)

Allowance for loan and lease losses

$

4,315

$

4,333

$

5,156

Allowance as a % of loans held for investment

2.19

%

2.26

%

2.50

%

Allowance as a % of loans held for investment (excluding acquired loans)

2.54

2.66

3.02

Net charge-offs

$

969

$

917

$

1,150

Net charge-off rate(17)

2.01

%

1.92

%

2.26

%

Net charge-off rate (excluding acquired  loans)(17)

2.37

2.29

2.78

30+ day performing delinquency rate

2.63

2.54

2.70

30+ day performing delinquency rate (excluding acquired loans)

3.08

3.01

3.29

30+ day delinquency rate

2.96

2.88

3.09

30+ day delinquency rate (excluding acquired loans)

3.46

3.41

3.77

Capital Ratios (18)

Tier 1 common ratio

12.2

%

12.7

%

11.0

%

Tier 1 risk-based capital ratio

12.6

13.1

11.3

Total risk-based capital ratio

14.7

15.3

13.6

Tangible common equity ("TCE") ratio

8.7

9.2

7.9

 

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 3: Consolidated Statements of Income(1)

 

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

December 31,

(Dollars in millions, except per share data) (unaudited)

2013

2013

2012

2013

2012

Interest income:

Loans, including loans held for sale

$

4,398

$

4,579

$

4,727

$

18,222

$

17,544

Investment securities

414

396

361

1,575

1,329

Other

27

23

27

101

91

Total interest income

4,839

4,998

5,115

19,898

18,964

Interest expense:

Deposits

288

309

348

1,241

1,403

Securitized debt obligations

40

42

58

183

271

Senior and subordinated notes

75

76

85

315

345

Other borrowings

13

11

96

53

356

Total interest expense

416

438

587

1,792

2,375

Net interest income

4,423

4,560

4,528

18,106

16,589

Provision for credit losses

957

849

1,151

3,453

4,415

Net interest income after provision for credit losses

3,466

3,711

3,377

14,653

12,174

Non-interest income:(2)

Service charges and other customer-related fees

504

530

595

2,118

2,106

Interchange fees, net

489

476

459

1,896

1,647

Net other-than-temporary impairment losses recognized in earnings

(1)

(11)

(12)

(41)

(52)

Bargain purchase gain(19)

594

Other

129

96

54

305

512

Total non-interest income

1,121

1,091

1,096

4,278

4,807

Non-interest expense:

Salaries and associate benefits

1,103

1,145

1,039

4,432

3,876

Occupancy and equipment

429

369

380

1,504

1,327

Marketing

427

299

393

1,373

1,364

Professional services

347

320

354

1,303

1,270

Communications and data processing

218

224

205

885

778

Amortization of intangibles(4)

166

161

191

671

609

Acquisition-related(5)

60

37

69

193

336

Other

530

592

624

2,153

2,386

Total non-interest expense

3,280

3,147

3,255

12,514

11,946

Income from continuing operations before income taxes

1,307

1,655

1,218

6,417

5,035

Income tax provision

425

525

370

2,025

1,301

Income from continuing operations, net of tax

882

1,130

848

4,392

3,734

Loss from discontinued operations, net of tax(2)

(23)

(13)

(5)

(233)

(217)

Net income

859

1,117

843

4,159

3,517

Dividends and undistributed earnings allocated to participating securities(6)

(4)

(5)

(3)

(17)

(15)

Preferred stock dividends(6)

(13)

(13)

(15)

(53)

(15)

Net income available to common stockholders

$

842

$

1,099

$

825

$

4,089

$

3,487

Basic earnings per common share:(6)

Net income from continuing operations

$

1.51

$

1.91

$

1.43

$

7.45

$

6.60

Loss from discontinued operations

(0.04)

(0.02)

(0.01)

(0.40)

(0.39)

Net income per basic common share

$

1.47

$

1.89

$

1.42

$

7.05

$

6.21

Diluted earnings per common share:(6)

Net income from continuing operations

$

1.48

$

1.88

$

1.42

$

7.35

$

6.54

Loss from discontinued operations

(0.03)

(0.02)

(0.01)

(0.39)

(0.38)

Net income per diluted common share

$

1.45

$

1.86

$

1.41

$

6.96

$

6.16

Weighted average common shares outstanding (in millions) for:

Basic EPS

573.4

582.3

579.2

579.7

561.1

Diluted EPS

582.6

591.1

585.6

587.6

566.5

Dividends paid per common share

$

0.30

$

0.30

$

0.05

$

0.95

$

0.20

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 4:  Consolidated Balance Sheets(1)

 

December 31,

September 30,

December 31,

(Dollars in millions)(unaudited)

2013

2013

2012

Assets:

Cash and cash equivalents:

Cash and due from banks

$

2,821

$

2,855

$

3,440

Interest-bearing deposits with banks

3,131

2,481

7,617

Federal funds sold and securities purchased under agreements to resell

339

382

1

Total cash and cash equivalents

6,291

5,718

11,058

Restricted cash for securitization investors

874

390

428

Securities available for sale, at fair value

41,800

43,132

63,979

Securities held to maturity, at carrying value

19,132

18,276

9

Loans held for investment:

Unsecuritized loans held for investment

157,651

152,332

162,059

Restricted loans for securitization investors

39,548

39,482

43,830

Total loans held for investment

197,199

191,814

205,889

Less: Allowance for loan and lease losses

(4,315)

(4,333)

(5,156)

Net loans held for investment

192,884

187,481

200,733

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

218

180

201

Premises and equipment, net

3,839

3,792

3,587

Interest receivable

1,418

1,304

1,694

Goodwill

13,978

13,906

13,904

Other

16,614

15,709

17,325

Total assets

$

297,048

$

289,888

$

312,918

Liabilities:

Interest payable

$

307

$

276

$

450

Customer deposits:

Non-interest bearing deposits

22,643

22,281

22,467

Interest-bearing deposits

181,880

184,553

190,018

Total customer deposits

204,523

206,834

212,485

Securitized debt obligations

10,289

9,544

11,398

Other debt:

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

915

1,686

1,248

Senior and subordinated notes

13,134

12,395

12,686

Other borrowings

16,316

8,220

24,578

Total other debt

30,365

22,301

38,512

Other liabilities

9,820

9,183

9,574

Total liabilities

255,304

248,138

272,419

Stockholders' equity:

Preferred stock

Common stock

6

6

6

Additional paid-in capital, net

26,526

26,426

26,188

Retained earnings

20,404

19,731

16,853

Accumulated other comprehensive income ("AOCI")

(872)

(839)

739

Treasury stock, at cost

(4,320)

(3,574)

(3,287)

Total stockholders' equity

41,744

41,750

40,499

Total liabilities and stockholders' equity

$

297,048

$

289,888

$

312,918

 

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

(1)  Certain prior period amounts have been reclassified to conform to the current period presentation.

(2)  We recorded a provision for mortgage representation and warranty losses of $33 million in Q4 2013. We recorded a benefit for mortgage representation and warranty losses of $4 million in Q3 2013. We did not record a provision for mortgage representation and warranty losses in Q4 2012. The majority of the provision for representation and warranty losses is generally included net of tax in discontinued operations, with the remaining amount included pre-tax in non-interest income. The mortgage representation and warranty reserve was $1.2 billion as of both December 31, 2013 and September 30, 2013, and $899 million as of December 31, 2012.

(3)  Total net revenue was reduced by $185 million in Q4 2013, $154 million in Q3 2013 and $318 million in Q4 2012 for the estimated uncollectible amount of billed finance charges and fees.

(4)  Includes purchased credit card relationship ("PCCR") intangible amortization of $102 million in Q4 2013, $106 million in Q3 2013 and $127 million in Q4 2012, the substantial majority of which is attributable to the 2012 U.S. card acquisition. Includes core deposit intangible amortization of $38 million in Q4 2013, $40 million in Q3 2013 and $47 million in Q4 2012.

(5)  Acquisition-related costs include transaction costs, legal and other professional or consulting fees, restructuring costs, and integration expense.

(6)  Dividends and undistributed earnings allocated to participating securities, earnings per share, and preferred stock dividends are computed independently for each period. Accordingly, the sum of each quarter may not agree to the year-to-date total.

(7)  Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I" for additional information.

(8)  Loans held for investment includes acquired loans accounted for based on cash flows expected to be collected. We use the term "acquired loans" to refer to a limited portion of the credit card loans acquired in the 2012 U.S. card acquisition and the substantial majority of loans acquired in the ING Direct and Chevy Chase Bank acquisitions, which were 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"). See "Table 12: Notes to Loan and Business Segment Disclosures (Tables 7 — 11)" for information on the amount of acquired loans for each of the periods presented.

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

(10)  Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

(11)  Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period.

(12)  Calculated based on annualized income from continuing operations, net of tax, for the period divided average tangible assets for the period. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I" for additional information.

(13)  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.

(14)  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 return on average tangible common equity may not be comparable to similarly titled measures reported by other companies. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I" for additional information.

(15)  Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period.

(16)  Calculated based on non-interest expense for the period divided by total net revenue for the period.

(17)  Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.

(18)  Capital ratios are calculated under Basel I. Ratios as of the end of Q4 2013 are preliminary and therefore subject to change. TCE ratio is a non-GAAP measure. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I" for information on the calculation of each of these ratios.

(19)  A bargain purchase gain of $594 million was recognized in earnings in Q1 2012 attributable to the February 17, 2012 acquisition of ING Direct. The bargain purchase gain represents the excess of the fair value of the net assets acquired in the ING Direct acquisition as of the acquisition date over the consideration transferred.

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 6:  Average Balances, Net Interest Income and Net Interest Margin(1)

 

2013 Q4

2013 Q3

2012 Q4

Average

Balance

Interest

Income/

Expense(2)

 

Yield/

Rate(2)

Average Balance

Interest

Income/

Expense(2)

Yield/

Rate(2)

Average

Balance

Interest

Income/

Expense(2)

Yield/

Rate(2)

(Dollars in millions)(unaudited)

Interest-earning assets:

Loans, including loans held for sale

$

193,368

$

4,398

9.10

%

$

195,839

$

4,579

9.35

%

$

203,132

$

4,727

9.31

%

Investment securities(3)

62,919

414

2.63

63,317

396

2.50

64,174

361

2.25

Cash equivalents and other

6,670

27

1.62

5,640

23

1.63

10,580

27

1.02

Total interest-earning assets

$

262,957

$

4,839

7.36

%

$

264,796

$

4,998

7.55

%

$

277,886

$

5,115

7.36

%

Interest-bearing liabilities:

Interest-bearing deposits

 

$

184,206

$

288

0.63

%

$

186,752

$

309

0.66

%

$

192,122

$

348

0.72

%

Securitized debt obligations

9,873

40

1.62

10,243

42

1.64

12,119

58

1.91

Senior and subordinated notes

12,765

75

2.35

12,314

76

2.47

11,528

85

2.95

Other borrowings

13,825

13

0.38

13,798

11

0.32

20,542

96

1.87

Total interest-bearing liabilities

$

220,669

$

416

0.75

%

$

223,107

$

438

0.79

%

$

236,311

$

587

0.99

%

Net interest income/spread

$

4,423

6.61

%

$

4,560

6.76

%

$

4,528

6.37

%

Impact of non-interest bearing funding

0.12

0.13

0.15

Net interest margin

6.73

%

6.89

%

6.52

%

  

                    Year Ended December 31,

2013

2012

Average Balance

Interest Income/ Expense(2)

 Yield/ Rate(2)

Average Balance

Interest Income/ Expense(2)

 Yield/ Rate(2)

(Dollars in millions)(unaudited)

Interest-earning assets:

Loans, including loans held for sale

$

196,609

$

18,222

9.27

%

$

188,466

$

17,544

9.31

%

Investment securities(3)

63,522

1,575

2.48

57,424

1,329

2.31

Cash equivalents and other

6,292

101

1.61

9,189

91

0.99

Total interest-earning assets

$

266,423

$

19,898

7.47

%

$

255,079

$

18,964

7.43

%

Interest-bearing liabilities:

Interest-bearing deposits

$

187,700

$

1,241

0.66

%

$

183,314

$

1,403

0.77

%

Securitized debt obligations

10,697

183

1.71

14,138

271

1.92

Senior and subordinated notes

12,440

315

2.53

11,012

345

3.13

Other borrowings

14,670

53

0.36

12,875

356

2.77

Total interest-bearing liabilities

$

225,507

$

1,792

0.79

%

$

221,339

$

2,375

1.07

%

Net interest income/spread

$

18,106

6.68

%

$

16,589

6.36

%

Impact of non-interest bearing funding

0.12

0.14

Net interest margin

6.80

%

6.50

%

___________ 

(1)  Certain prior period amounts have been reclassified to conform to the current period presentation.

(2)  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.

(3)  Prior to Q2 2013, average balances for investment securities were calculated based on fair value amounts. Effective Q2 2013, average balances are calculated based on the amortized cost of investment securities. The impact of this change on prior period yields is not material.

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 7: Loan Information and Performance Statistics(1)(2)

 

2013

2013

2012

(Dollars in millions)(unaudited)

Q4

Q3

Q4

Period-end Loans Held For Investment

Credit card:

Domestic credit card

$

73,255

$

69,936

$

83,141

International credit card

8,050

8,031

8,614

Total credit card

81,305

77,967

91,755

Consumer banking:

Automobile

31,857

30,803

27,123

Home loan

35,282

36,817

44,100

Retail banking

3,623

3,665

3,904

Total consumer banking

70,762

71,285

75,127

Commercial banking:

Commercial and multifamily real estate

20,750

19,523

17,732

Commercial and industrial

23,309

21,848

19,892

Total commercial lending

44,059

41,371

37,624

Small-ticket commercial real estate

952

1,028

1,196

Total commercial banking

45,011

42,399

38,820

Other loans

121

163

187

Total

$

197,199

$

191,814

$

205,889

Average Loans Held For Investment

Credit card:

Domestic credit card

$

70,368

$

69,947

$

80,718

International credit card

7,899

7,782

8,372

Total credit card

78,267

77,729

89,090

Consumer banking:

Automobile

31,424

30,157

26,881

Home loan

35,974

37,852

45,250

Retail banking

3,635

3,655

3,967

Total consumer banking

71,033

71,664

76,098

Commercial banking:

Commercial and multifamily real estate

19,928

19,047

17,005

Commercial and industrial

22,445

21,491

19,344

Total commercial lending

42,373

40,538

36,349

Small-ticket commercial real estate

986

1,038

1,249

Total commercial banking

43,359

41,576

37,598

Other loans

154

166

158

Total

$

192,813

$

191,135

$

202,944

Net Charge-off Rates

Credit card:

Domestic credit card

3.89

%

3.67

%

4.35

%

International credit card

4.74

4.71

3.99

Total credit card

3.98

3.78

4.32

Consumer banking:

Automobile

2.30

2.01

2.24

Home loan

0.03

0.06

(0.06)

Retail banking

1.09

1.38

2.45

Total consumer banking

1.09

0.95

0.88

Commercial banking:

Commercial and multifamily real estate

(0.11)

(0.11)

(0.08)

Commercial and industrial

0.04

0.18

0.13

Total commercial lending

(0.03)

0.04

0.03

Small-ticket commercial real estate

(0.81)

1.26

2.02

Total commercial banking

(0.05)

0.07

0.10

Other loans

4.68

12.17

24.23

Total

2.01

%

1.92

%

2.26

%

30+ Day Performing Delinquency Rates

Credit card:

Domestic credit card

3.43

%

3.46

%

3.61

%

International credit card

3.71

3.86

3.58

Total credit card

3.46

%

3.51

%

3.61

%

Consumer banking:

Automobile

6.85

%

6.29

%

7.00

%

Home loan

0.16

0.14

0.13

Retail banking

0.69

0.68

0.76

Total consumer banking

3.20

%

2.82

%

2.65

%

Nonperforming Asset Rates(3)

Credit card:

International credit card

1.10

%

1.16

%

1.16

%

Total credit card

0.11

%

0.12

%

0.11

%

Consumer banking:

Automobile(10)

1.11

%

0.92

%

0.95

%

Home loan

1.14

1.08

1.00

Retail banking

1.13

1.10

1.85

Total consumer banking

1.12

%

1.01

%

1.02

%

Commercial banking:

Commercial and multifamily real estate

0.29

%

0.40

%

0.82

%

Commercial and industrial

0.44

0.65

0.72

Total commercial lending

0.37

%

0.53

%

0.77

%

Small-ticket commercial real estate

0.43

1.49

0.97

Total commercial banking

0.37

%

0.56

%

0.77

%

 

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 8: Financial & Statistical Summary—Credit Card Business(1)(2)

 

2013

2013

2012

(Dollars in millions) (unaudited)

Q4

Q3

Q4

Credit Card

Earnings:

Net interest income

$

2,576

$

2,757

$

2,849

Non-interest income

833

834

883

Total net revenue

3,409

3,591

3,732

Provision for credit losses

751

617

1,000

Non-interest expense

1,868

1,904

1,933

Income from continuing operations before taxes

790

1,070

799

Income tax provision

274

376

279

Income from continuing operations, net of tax

$

516

$

694

$

520

Selected performance metrics:

Period-end loans held for investment

$

81,305

$

77,967

$

91,755

Average loans held for investment

78,267

77,729

89,090

Average yield on loans held for investment(4)

14.64

%

15.72

%

14.33

%

Total net revenue margin(5)

17.43

18.48

16.76

Net charge-off rate

3.98

3.78

4.32

30+ day performing delinquency rate

3.46

3.51

3.61

30+ day delinquency rate

3.54

3.60

%

3.69

Nonperforming loan rate(3)

0.11

0.12

0.11

Card loan premium amortization and other intangible accretion(6)

$

39

$

45

$

65

PCCR intangible amortization

102

106

127

Purchase volume(7)

54,245

50,943

52,853

Domestic Card

Earnings:

Net interest income

$

2,303

$

2,492

$

2,583

Non-interest income

747

749

798

Total net revenue

3,050

3,241

3,381

Provision for credit losses

679

529

911

Non-interest expense

1,664

1,713

1,727

Income from continuing operations before taxes

707

999

743

Income tax provision

252

355

263

Income from continuing operations, net of tax

$

455

$

644

$

480

Selected performance metrics:

Period-end loans held for investment

$

73,255

$

69,936

$

83,141

Average loans held for investment

70,368

69,947

80,718

Average yield on loans held for investment(4)

14.44

%

15.65

%

14.20

%

Total net revenue margin(5)

17.34

18.53

16.75

Net charge-off rate

3.89

3.67

4.35

30+ day performing delinquency rate

3.43

3.46

3.61

30+ day delinquency rate

3.43

3.46

%

3.61

Purchase volume(7)

$

50,377

$

47,420

$

48,918

International Card

Earnings:

Net interest income

$

273

$

265

$

266

Non-interest income

86

85

85

Total net revenue

359

350

351

Provision for credit losses

72

88

89

Non-interest expense

204

191

206

Income from continuing operations before taxes

83

71

56

Income tax provision

22

21

16

Income from continuing operations, net of tax

$

61

$

50

$

40

Selected performance metrics:

Period-end loans held for investment

$

8,050

$

8,031

$

8,614

Average loans held for investment

7,899

7,782

8,372

Average yield on loans held for investment

16.48

%

16.35

%

15.59

%

Total net revenue margin

18.20

17.99

16.77

Net charge-off rate

4.74

4.71

3.99

30+ day performing delinquency rate

3.71

3.86

3.58

30+ day delinquency rate

4.56

4.78

4.49

Nonperforming loan rate(3)

1.10

1.16

1.16

Purchase volume(7)

$

3,868

$

3,523

$

3,935

 

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 9: Financial & Statistical Summary—Consumer Banking Business(1)(2)

 

2013

2013

2012

(Dollars in millions) (unaudited)

Q4

Q3

Q4

Consumer Banking

Earnings:

Net interest income

$

1,468

$

1,481

$

1,503

Non-interest income

195

184

161

Total net revenue

1,663

1,665

1,664

Provision for credit losses

212

202

169

Non-interest expense

1,018

927

992

Income from continuing operations before taxes

433

536

503

Income tax provision

154

191

178

Income from continuing operations, net of tax

$

279

$

345

$

325

Selected performance metrics:

Period-end loans held for investment

$

70,762

$

71,285

$

75,127

Average loans held for investment

71,033

71,664

76,098

Average yield on loans held for investment

6.30

%

6.21

%

5.94

%

Auto loan originations

$

4,322

$

4,752

$

3,479

Period-end deposits

167,652

168,437

172,396

Average deposits

167,870

169,082

172,654

Deposit interest expense rate

0.60

%

0.63

%

0.68

%

Core deposit intangible amortization

$

32

$

34

$

39

Net charge-off rate

1.09

%

0.95

%

0.88

%

30+ day performing delinquency rate

3.20

2.82

2.65

30+ day delinquency rate

3.89

3.46

3.34

Nonperforming loan rate(3)

0.86

0.79

0.85

Nonperforming asset rate(3)(10)

1.12

1.01

1.02

Period-end loans serviced for others

$

7,665

$

14,043

$

15,333

 

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 10:  Financial & Statistical Summary—Commercial Banking Business(1)(2)

2013

2013

2012

(Dollars in millions) (unaudited)

Q4

Q3

Q4

Commercial Banking

Earnings:

Net interest income

$

504

$

480

$

450

Non-interest income

131

87

86

Total net revenue(8)

635

567

536

Provision for credit losses

(6)

31

(20)

Non-interest expense

326

266

294

Income from continuing operations before taxes

315

270

262

Income tax provision

113

96

93

Income from continuing operations, net of tax

$

202

$

174

$

169

Selected performance metrics:

Period-end loans held for investment

$

45,011

$

42,399

$

38,820

Average loans held for investment

43,359

41,576

37,598

Average yield on loans held for investment(8)

3.92

%

3.87

%

4.15

%

Period-end deposits

$

30,567

$

30,592

$

29,866

Average deposits

31,033

30,685

29,476

Deposit interest expense rate

0.25

%

0.27

%

0.28

%

Core deposit intangible amortization

$

6

$

6

$

8

Net charge-off rate

(0.05)

%

0.07

%

0.10

%

Nonperforming loan rate(3)

0.33

0.47

0.73

Nonperforming asset rate(3)

0.37

0.56

0.77

Risk category:(9)

Noncriticized

$

43,593

$

40,940

$

36,839

Criticized performing

1,007

968

1,340

Criticized nonperforming

149

201

282

Total risk-rated loans

44,749

42,109

38,461

Acquired commercial loans

262

290

359

Total commercial loans

$

45,011

$

42,399

$

38,820

% of period-end commercial loans held for investment:

Noncriticized

96.9

%

96.5

%

94.9

%

Criticized performing

2.2

2.3

3.5

Criticized nonperforming

0.3

0.5

0.7

Total risk-rated loans

99.4

99.3

99.1

Acquired commercial loans

0.6

0.7

0.9

Total commercial loans

100.0

%

100.0

%

100.0

%

 

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 11: Financial & Statistical Summary—Other and Total(1)(2)

 

2013

2013

2012

(Dollars in millions) (unaudited)

Q4

Q3

Q4

Other

Earnings:

Net interest expense

$

(125)

$

(158)

$

(274)

Non-interest income

(38)

(14)

(34)

Total net revenue

(163)

(172)

(308)

Provision for credit losses

(1)

2

Non-interest expense

68

50

36

Loss from continuing operations before taxes

(231)

(221)

(346)

Income tax benefit

(116)

(138)

(180)

Loss from continuing operations, net of tax

$

(115)

$

(83)

$

(166)

Selected performance metrics:

Period-end loans held for investment

$

121

$

163

$

187

Average loans held for investment

154

166

158

Period-end deposits

6,304

7,805

10,223

Average deposits

6,803

8,573

11,364

Total

Earnings:

Net interest income

$

4,423

$

4,560

$

4,528

Non-interest income

1,121

1,091

1,096

Total net revenue

5,544

5,651

5,624

Provision for credit losses

957

849

1,151

Non-interest expense

3,280

3,147

3,255

Income from continuing operations before taxes

1,307

1,655

1,218

Income tax provision

425

525

370

Income from continuing operations, net of tax

$

882

$

1,130

$

848

Selected performance metrics:

Period-end loans held for investment

$

197,199

$

191,814

$

205,889

Average loans held for investment

192,813

191,135

202,944

Period-end deposits

204,523

206,834

212,485

Average deposits

205,706

208,340

213,494

 

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 12:  Notes to Loan and Business Segment Disclosures (Tables 7 - 11)

(1)  Certain prior period amounts have been reclassified to conform to the current period presentation.

(2)  Loans acquired as part of the ING Direct, Chevy Chase Bank and 2012 U.S. card acquisitions are included in the denominator used in calculating our reported credit quality metrics. We therefore present certain reported credit quality metrics, adjusted to exclude from the denominator acquired loans accounted for based on estimated cash flows expected to be collected over the life of the loans (formerly "SOP 03-3").  The table below presents amounts related to acquired loans accounted for under SOP 03-3.

 

2013

2013

2012

(Dollars in millions) (unaudited)

Q4

Q3

Q4

Acquired loans accounted for under SOP 03-3:

Period-end unpaid principal balance

$

29,761

$

31,377

$

38,477

Period-end loans held for investment

28,550

30,080

37,134

Average loans held for investment

29,055

30,713

37,899

 

(3)  Nonperforming assets consist of nonperforming loans, real estate owned ("REO") and other foreclosed assets. The nonperforming asset ratios are calculated based on nonperforming assets for each category divided by the combined period-end total of loans held for investment, REO and other foreclosed assets for each respective category. The nonperforming loan ratios are calculated based on nonperforming loans for each category divided by period-end loans held for investment for each respective category.

(4)  The transfer of the Best Buy Stores, L.P. ("Best Buy") portfolio to held for sale resulted in an increase in the average yield for Domestic Card and Total Credit Card of 121 basis points and 110 basis points, respectively, in Q3 2013. The sale of the Best Buy portfolio was completed on September 6, 2013.

(5)  The transfer of the Best Buy portfolio to held for sale resulted in an increase in the net revenue margin for Domestic Card and Total Credit Card of 136 basis points and 123 basis points, respectively, in Q3 2013. The sale of the Best Buy portfolio was completed on September 6, 2013.

(6)  Represents the net reduction in interest income attributable to non-SOP 03-3 card loan premium amortization and other intangible accretion associated with the 2012 U.S. card acquisition.

(7)  Includes credit card purchase transactions, net of returns for both loans classified as held for investment and held for sale. Excludes cash advance and balance transfer transactions.

(8)  Because some of our tax-related commercial investments generate tax-exempt income or tax credits, 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%.

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

(10) As reported in the third quarter 2013 Form 10-Q, we have begun including the net realizable value of auto loans that have been charged down as a result of a bankruptcy filing in addition to repossessed assets obtained in satisfaction of auto loans. Prior period amounts have been adjusted to conform to current period presentation.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures Under Basel I

In addition to disclosing regulatory capital measures under Basel I, we also report certain non-GAAP measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible assets, average tangible common equity, tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of our Basel I regulatory capital and non-GAAP measures. 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.

 

2013

2013

2012

(Dollars in millions)(unaudited)

Q4

Q3

Q4

Average Equity to Non-GAAP Average Tangible Common Equity

Average total stockholders' equity

$

42,463

$

41,284

$

40,212

Adjustments:  Average goodwill and other intangible assets (1)

(16,564)

(15,829)

(16,340)

Noncumulative perpetual preferred stock(2)

(853)

(853)

(853)

Average tangible common equity(3)

$

25,046

$

24,602

$

23,019

Stockholders' Equity to Non-GAAP Tangible Common Equity

Total stockholders' equity

$

41,744

$

41,750

$

40,499

Adjustments:  Goodwill and other intangible assets (1)

(16,568)

(15,760)

(16,224)

Noncumulative perpetual preferred stock(2)

(853)

(853)

(853)

Tangible common equity(3)

$

24,323

$

25,137

$

23,422

Total Assets to Tangible Assets

Total assets

$

297,048

$

289,888

$

312,918

Adjustments:  Goodwill and other intangible assets(1)

(16,568)

(15,760)

(16,224)

Tangible assets

$

280,480

$

274,128

$

296,694

Total Average Assets to Average Tangible Assets

Average total assets

$

294,108

$

294,939

$

308,096

Adjustments:  Average goodwill and other intangible assets (1)

(16,564)

(15,829)

(16,340)

Average tangible assets

$

277,544

$

279,110

$

291,756

Non-GAAP TCE Ratio

TCE ratio(3)

8.7

%

9.2

%

7.9

%

Regulatory Capital Ratios(4)

Total stockholders' equity

$

41,744

$

41,750

$

40,499

Adjustments:  Net unrealized (gains) losses on AFS securities recorded in AOCI(5)

791

736

(712)

Net losses on cash flow hedges recorded in AOCI(5)

136

123

2

Disallowed goodwill and other intangible assets

(14,326)

(14,263)

(14,428)

Disallowed deferred tax assets

Noncumulative perpetual preferred stock(2)

(853)

(853)

(853)

Other

(5)

(5)

(12)

Tier 1 common capital

27,847

27,488

24,496

Adjustments:  Noncumulative perpetual preferred stock(2)

853

853

853

Tier 1 restricted core capital items(6)

2

2

2

Tier 1 capital

28,342

28,343

25,351

Adjustments:  Long-term debt qualifying as Tier 2 capital

1,914

1,909

2,119

Qualifying allowance for loan and lease losses

2,841

2,726

2,830

Other Tier 2 components

10

8

13

Tier 2 capital

4,765

4,643

4,962

Total risk-based capital(7)

$

33,107

$

32,986

$

30,313

Risk-weighted assets(8)

$

225,199

$

215,829

$

223,472

Tier 1 common ratio(9)

12.2

%

12.7

%

11.0

%

Tier 1 risk-based capital ratio(10)

12.6

13.1

11.3

Total risk-based capital ratio(11)

14.7

15.3

13.6

___________ 

(1)  Includes impact from related deferred taxes.

(2)  Noncumulative perpetual preferred stock qualifies for Tier 1 capital; however, it is excluded from Tier 1 common capital.

(3)  TCE ratio is a non-GAAP measure calculated based on tangible common equity divided by tangible assets.

(4)  Regulatory capital ratios as of the end of Q4 2013 are preliminary and therefore subject to change.

(5)  Amounts presented are net of tax.

(6)  Consists primarily of trust preferred securities.

(7)  Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.

(8)  Calculated based on prescribed regulatory guidelines.

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

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

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

 

Contacts:

Investor Relations

Media Relations

Jeff Norris

Danielle Dietz

Julie Rakes

Tatiana Stead

703.720.2455

703.720.2455

804.284.5800

703.720.2352

 

SOURCE Capital One Financial Corporation



RELATED LINKS

http://www.capitalone.com/