2014

Capital One Reports Third Quarter 2013 Net Income of $1.1 billion, or $1.86 per share

MCLEAN, Va., Oct. 17, 2013 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2013 of $1.1 billion, or $1.86 per diluted common share, flat to the second quarter of 2013 with net income of $1.1 billion, or $1.87 per diluted common share, and down from the third quarter of 2012 with net income of $1.2 billion, or $2.01 per diluted common.

"Our businesses continue to deliver attractive, sustainable, and resilient returns and generate capital on a strong trajectory," said Richard D. Fairbank, Chairman and CEO.  "We remain focused on important levers that will sustain and improve our profitability and our ability to distribute capital."

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

Third Quarter 2013 Income Highlights:

  • Total net revenue increased less than 1 percent to $5.7 billion
  • Total non-interest expense increased 3 percent to $3.1 billion
  • Pre-provision earnings decreased 3 percent to $2.5 billion
  • Provision for credit losses increased 11 percent to $849 million
  • Non-interest expense includes $101 million for litigation reserves

Third Quarter 2013 Balance Sheet Highlights:

  • Tier 1 common ratio of 12.7 percent, up 60 basis points
  • Net interest margin of 6.89 percent, up 6 basis points
  • Period-end loans held for investment increased $302 million, or less than 1 percent, to $191.8 billion
    • Domestic Card period-end loans decreased $554 million, or less than 1 percent, to $69.9 billion
    • Commercial Banking period-end loans increased $1.6 billion, or 4 percent, to $42.4 billion
    • Consumer Banking:
      • Auto Finance period-end loans increased $1.4 billion, or 5 percent, to $30.8 billion
      • Home loans period-end loans decreased $2.3 billion, or 6 percent, to $36.8 billion, driven by run-off of acquired portfolios
  • Average loans held for investment in the quarter increased $573 million, or less than 1 percent, to $191.1 billion
    • Domestic Card average loans declined $19 million, or less than 1 percent, to $69.9 billion
    • Commercial Banking average loans increased $2.1 billion, or 5 percent, to $41.6 billion
    • Consumer Banking:
      • Auto Finance average loans increased $1.5 billion, or 5 percent, to $30.2 billion
      • Home loans decreased by $2.7 billion, or 7 percent, to $37.9 billion, driven by run-off of acquired portfolios
  • Period-end total deposits decreased $3.0 billion, or 1 percent, to $206.8 billion, while average deposits declined $2.3 billion, or 1 percent, to $208.3 billion
  • Deposit interest rates declined 2 basis points to 0.79 percent

Detailed segment information will be available in the company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.

Earnings Conference Call Webcast Information 

The company will hold an earnings conference call on October 17, 2013, at 5:00 PM, Eastern Daylight 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 November 7, 2013 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 $206.9 billion in deposits and    $289.9 billion in total assets as of September 30, 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

Third 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 Quarterly Report on Form 10-Q for the period ended September 30, 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)


Q3


Q2


Q3

Earnings







Net interest income


$

4,560



$

4,553



$

4,646


Non-interest income(2)


1,091



1,085



1,136


Total net revenue(3)


5,651



5,638



5,782


Provision for credit losses


849



762



1,014


Non-interest expense:







Marketing


299



330



316


    Amortization of intangibles(4)


161



167



199


    Acquisition-related(5)


37



50



48


Operating expenses


2,650



2,512



2,482


Total non-interest expense


3,147



3,059



3,045


Income from continuing operations before income taxes


1,655



1,817



1,723


Income tax provision


525



581



535


Income from continuing operations, net of tax


1,130



1,236



1,188


Loss from discontinued operations, net of tax(2)


(13)



(119)



(10)


Net income


1,117



1,117



1,178


Dividends and undistributed earnings allocated to participating securities(6)


(5)



(4)



(5)


Preferred stock dividends


(13)



(13)




Net income available to common stockholders


$

1,099



$

1,100



$

1,173


Common Share Statistics







Basic EPS:(6)







Income from continuing operations, net of tax


$

1.91



$

2.09



$

2.05


Loss from discontinued operations, net of tax


(0.02)



(0.20)



(0.02)


Net income per common share


$

1.89



$

1.89



$

2.03


Diluted EPS:(6)







Income from continuing operations, net of tax


$

1.88



$

2.07



$

2.03


Loss from discontinued operations, net of tax


(0.02)



(0.20)



(0.02)


Net income per common share


$

1.86



$

1.87



$

2.01


Weighted average common shares outstanding (in millions) for:







Basic EPS


582.3



581.5



578.3


Diluted EPS


591.1



588.8



584.1


Common shares outstanding (period end, in millions)


582.0



584.9



581.3


Dividends per common share


$

0.30



$

0.30



$

0.05


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


43.19



41.57



38.70


Balance Sheet (Period End)







Loans held for investment(8)


$

191,814



$

191,512



$

203,132


Interest-earning assets


259,152



265,693



270,661


Total assets


289,888



296,542



301,989


Interest-bearing deposits


184,553



187,768



192,488


Total deposits


206,834



209,865



213,255


Borrowings


31,845



36,231



38,377


Common equity


40,897



40,188



38,819


Total stockholders' equity


41,750



41,041



39,672


Balance Sheet (Quarterly Average Balances)







Loans held for investment(8)


$

191,135



$

190,562



$

202,856


Interest-earning assets


264,796



266,544



266,803


Total assets


294,939



297,766



297,154


Interest-bearing deposits


186,752



189,311



193,700


Total deposits


208,340



210,650



213,323


Borrowings


36,355



36,915



36,451


Common equity


40,431



40,726



38,079


Total stockholders' equity


41,284



41,579



38,535


 

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)


Q3


Q2


Q3


Performance Metrics








Net interest income growth (quarter over quarter)



%


%

16


%

Non-interest income growth (quarter over quarter)


1



11



8



Total net revenue growth (quarter over quarter)




2



14



Total net revenue margin(9)


8.54



8.46



8.67



Net interest margin(10)


6.89



6.83



6.97



Return on average assets(11)


1.53



1.66



1.60



Return on average tangible assets(12)


1.62



1.75



1.69



Return on average common equity(13)


11.00



11.97



12.43



Return on average tangible common equity(14)


18.08



19.70



21.84



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


6.59



6.42



6.00



Efficiency ratio(16)


55.69



54.26



52.66



Effective income tax rate for continuing operations


31.7



32.0



31.1



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


39.6



39.6



37.6



Credit Quality Metrics(8)








Allowance for loan and lease losses


$

4,333



$

4,407



$

5,154



Allowance as a % of loans held for investment


2.26


%

2.30


%

2.54


%

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


2.66



2.74



3.11



Net charge-offs


$

917



$

969



$

887



Net charge-off rate(17)


1.92


%

2.03


%

1.75


%

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


2.29



2.46



2.18



30+ day performing delinquency rate


2.54



2.35



2.54



30+ day performing delinquency rate (excluding acquired loans)


3.01



2.83



3.15



30+ day delinquency rate(18)


**


2.71



2.92



30+ day delinquency rate (excluding acquired loans)(18)


**


3.26



3.62



Capital Ratios (19)








Tier 1 common ratio


12.7


%

12.1


%

10.7


%

Tier 1 risk-based capital ratio


13.1



12.4



12.7



Total risk-based capital ratio


15.3



14.7



15.0



Tangible common equity ("TCE") ratio


9.2



8.7



7.9



 


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income(1)




Three Months Ended


Nine Months Ended



September 30,


June 30,


September 30,


September 30,


September 30,

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


2013


2013


2012


2013


2012

Interest income:











Loans, including loans held for sale


$

4,579



$

4,596



$

4,903



$

13,824



$

12,817


Investment securities


396



391



335



1,161



968


Other


23



23



16



74



64


Total interest income


4,998



5,010



5,254



15,059



13,849


Interest expense:











Deposits


309



318



371



953



1,055


Securitized debt obligations


42



45



64



143



213


Senior and subordinated notes


76



82



85



240



260


Other borrowings


11



12



88



40



260


Total interest expense


438



457



608



1,376



1,788


Net interest income


4,560



4,553



4,646



13,683



12,061


Provision for credit losses


849



762



1,014



2,496



3,264


Net interest income after provision for credit losses


3,711



3,791



3,632



11,187



8,797


Non-interest income(2):











Service charges and other customer-related fees


530



534



557



1,614



1,511


Interchange fees, net


476



486



452



1,407



1,188


Net other-than-temporary impairment losses recognized in earnings


(11)



(4)



(13)



(40)



(40)


Bargain purchase gain(20)










594


Other


96



69



140



176



458


Total non-interest income


1,091



1,085



1,136



3,157



3,711


Non-interest expense:











Salaries and associate benefits


1,145



1,104



1,002



3,329



2,837


Occupancy and equipment


369



356



354



1,075



947


Marketing


299



330



316



946



971


Professional services


320



329



310



956



916


Communications and data processing


224



233



198



667



573


Amortization of intangibles(4)


161



167



199



505



418


Acquisition-related(5)


37



50



48



133



267


Other


592



490



618



1,623



1,762


Total non-interest expense


3,147



3,059



3,045



9,234



8,691


Income from continuing operations before income taxes


1,655



1,817



1,723



5,110



3,817


Income tax provision


525



581



535



1,600



931


Income from continuing operations, net of tax


1,130



1,236



1,188



3,510



2,886


Loss from discontinued operations, net of tax(2)


(13)



(119)



(10)



(210)



(212)


Net income


1,117



1,117



1,178



3,300



2,674


Dividends and undistributed earnings allocated to participating securities(6)


(5)



(4)



(5)



(14)



(12)


Preferred stock dividends


(13)



(13)





(39)




Net income available to common stockholders


$

1,099



$

1,100



$

1,173



$

3,247



$

2,662













Basic earnings per common share:(6)











Income from continuing operations


$

1.91



$

2.09



$

2.05



$

5.94



$

5.18


Loss from discontinued operations


(0.02)



(0.20)



(0.02)



(0.36)



(0.38)


Net income per basic common share


$

1.89



$

1.89



$

2.03



$

5.58



$

4.80













Diluted earnings per common share:(6)











Income from continuing operations


$

1.88



$

2.07



$

2.03



$

5.87



$

5.13


Loss from discontinued operations


(0.02)



(0.20)



(0.02)



(0.36)



(0.38)


Net income per diluted common share


$

1.86



$

1.87



$

2.01



$

5.51



$

4.75













Weighted average common shares outstanding (in millions) for:











Basic EPS


582.3



581.5



578.3



581.4



555.0


Diluted EPS


591.1



588.8



584.1



589.0



560.1


Dividends paid per common share


$

0.30



$

0.30



$

0.05



$

0.65



$

0.15


 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets(1)




September 30,


December 31,


September 30,


(Dollars in millions)(unaudited)


2013


2012


2012


Assets:








Cash and cash equivalents:








Cash and due from banks


$

2,855



$

3,440



$

1,855


Interest-bearing deposits with banks


2,481



7,617



3,860


Federal funds sold and securities purchased under agreements to resell


382



1



254


Total cash and cash equivalents


5,718



11,058



5,969


Restricted cash for securitization investors


390



428



760


Securities available for sale, at fair value


43,132



63,979



61,464


Securities held to maturity, at amortized cost


18,276



9




Loans held for investment:








Unsecuritized loans held for investment


152,332



162,059



159,219


Restricted loans for securitization investors


39,482



43,830



43,913


Total loans held for investment


191,814



205,889



203,132


Less: Allowance for loan and lease losses


(4,333)



(5,156)



(5,154)


Net loans held for investment


187,481



200,733



197,978


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


180



201



187


Premises and equipment, net


3,792



3,587



3,519


Interest receivable


1,304



1,694



1,614


Goodwill


13,906



13,904



13,901


Other


15,709



17,325



16,597


Total assets


$

289,888



$

312,918



$

301,989










Liabilities:








Interest payable


$

276



$

450



$

368


Customer deposits:








Non-interest bearing deposits


22,281



22,467



20,767


Interest-bearing deposits


184,553



190,018



192,488


Total customer deposits


206,834



212,485



213,255


Securitized debt obligations


9,544



11,398



12,686


Other debt:








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


1,686



1,248



967


Senior and subordinated notes


12,395



12,686



11,756


Other borrowings


8,220



24,578



12,968


Total other debt


22,301



38,512



25,691


Other liabilities


9,183



9,574



10,317


Total liabilities


248,138



272,419



262,317










Stockholders' equity:








Preferred stock






853


Common stock


6



6



6


Additional paid-in capital, net


26,426



26,188



25,265


Retained earnings


19,731



16,853



16,054


Accumulated other comprehensive income ("AOCI")


(839)



739



781


Treasury stock, at cost


(3,574)



(3,287)



(3,287)


Total stockholders' equity


41,750



40,499



39,672


Total liabilities and stockholders' equity


$

289,888



$

312,918



$

301,989
















 

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 benefit for mortgage representation and warranty losses of $4 million in Q3 2013, and a provision for mortgage representation and warranty losses of $183 million in Q2 2013. We did not record a provision for mortgage representation and warranty losses in Q3 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 September 30, 2013, $899 million as of December 31, 2012, and $919 million as of September 30, 2012.

(3)

Total net revenue was reduced by $154 million in Q3 2013, $192 million in Q2 2013, and $185 million in Q3 2012 for the estimated uncollectible amount of billed finance charges and fees.

(4)

Includes purchased credit card relationship ("PCCR") intangible amortization of $106 million in Q32013, $110 million in Q2 2013, and $131 million in Q3 2012, the substantial majority which is attributable to the 2012 U.S. card acquisition. See "Table 8: Financial & Statistical Summary Credit Card Business". Includes core deposit intangible amortization of $40 million in Q3 2013, $43 million in Q2 2013, and $49 million in Q3 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 and EPS 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 ("CCB") 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 by 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. Our calculation of return on average common equity may not be comparable to similarly titled measures reported by other companies.

(14)

Calculated as 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. 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, excluding goodwill impairment charges, 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)

The 30+ day delinquency rate as of the end of Q3 2013 will be provided in the Quarterly Report on Form 10-Q for the period ended September 30, 2013.

(19)

Capital ratios are calculated under Basel I. Ratios as of the end of Q3 2013 are preliminary and therefore subject to change. TCE ratio is a non-GAAP capital ratio. 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.

(20)

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 Q3



2013 Q2




2012 Q3





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


$

195,839



$

4,579



9.35

%


$

196,874



$

4,596



9.34


%


$

203,463



$

4,903



9.64


%

Investment securities(3)


63,317



396



2.50



63,907



391



2.45




57,928



335



2.31



Cash equivalents and other


5,640



23



1.63



5,763



23



1.60




5,412



16



1.18



Total interest-earning assets


$

264,796



$

4,998



7.55

%


$

266,544



$

5,010



7.52


%


$

266,803



$

5,254



7.88


%























Interest-bearing liabilities:






















Interest-bearing deposits


$

186,752



$

309



0.66

%


$

189,311



$

318



0.67


%


$

193,700



$

371



0.77


%

Securitized debt obligations


10,243



42



1.64



10,942



45



1.65




13,331



64



1.92



Senior and subordinated notes


12,314



76



2.47



12,692



82



2.58




11,035



85



3.08



Other borrowings


13,798



11



0.32



13,281



12



0.36




12,085



88



2.91



Total interest-bearing liabilities


$

223,107



$

438



0.79

%


$

226,226



$

457



0.81


%


$

230,151



$

608



1.06


%

Net interest income/spread




$

4,560



6.76

%




$

4,553



6.71


%




$

4,646



6.82


%

Impact of non-interest bearing funding






0.13







0.12








0.15



Net interest margin






6.89

%






6.83


%






6.97


%
































Nine Months Ended September 30,












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









$

197,701



$

13,824



9.32

%


$

183,542



$

12,817



9.31


%

Investment securities(3)









63,725



1,161



2.43



55,158



968



2.34



Cash equivalents and other









6,164



74



1.60



8,762



64



0.97



Total interest-earning assets









$

267,590



$

15,059



7.50

%


$

247,462



$

13,849



7.46


%























Interest-bearing liabilities:






















Interest-bearing deposits









$

188,877



$

953



0.67

%


$

180,372



$

1,055



0.78


%

Securitized debt obligations









10,975



143



1.74



14,816



213



1.92



Senior and subordinated notes









12,331



240



2.60



10,839



260



3.20



Other borrowings









14,955



40



0.36



10,301



260



3.37



Total interest-bearing liabilities









$

227,138



$

1,376



0.81

%


$

216,328



$

1,788



1.10


%

Net interest income/spread











$

13,683



6.69

%




$

12,061



6.36


%

Impact of non-interest bearing funding













0.13







0.14



Net interest margin













6.82

%






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)


Q3


Q2


Q3


Period-end Loans Held For Investment








Credit card:








Domestic credit card


$

69,936



$

70,490



$

80,621



International credit card


8,031



7,820



8,412



Total credit card


77,967



78,310



89,033



Consumer banking:








Automobile


30,803



29,369



26,434



Home loan


36,817



39,163



46,275



Retail banking


3,665



3,686



4,029



Total consumer banking


71,285



72,218



76,738



Commercial banking:








Commercial and multifamily real estate


19,523



18,570



16,963



Commercial and industrial


21,848



21,170



18,965



Total commercial lending


41,371



39,740



35,928



Small-ticket commercial real estate


1,028



1,065



1,281



Total commercial banking


42,399



40,805



37,209



Other loans


163



179



152



Total


$

191,814



$

191,512



$

203,132



Average Loans Held For Investment








Credit card:








Domestic credit card


$

69,947



$

69,966



$

80,502



International credit card


7,782



7,980



8,154



Total credit card


77,729



77,946



88,656



Consumer banking:








Automobile


30,157



28,677



25,923



Home loan


37,852



40,532



47,262



Retail banking


3,655



3,721



4,086



Total consumer banking


71,664



72,930



77,271



Commercial banking:








Commercial and multifamily real estate


19,047



18,084



16,654



Commercial and industrial


21,491



20,332



18,817



Total commercial lending


40,538



38,416



35,471



Small-ticket commercial real estate


1,038



1,096



1,296



Total commercial banking


41,576



39,512



36,767



Other loans


166



174



162



Total


$

191,135



$

190,562



$

202,856



Net Charge-off Rates








Credit card:








Domestic credit card


3.67


%

4.28


%

3.04


%

International credit card


4.71



5.08



4.95



Total credit card


3.78



4.36



3.22



Consumer banking:








Automobile


2.01



1.28



1.79



Home loan


0.06



0.03



0.28



Retail banking


1.38



1.50



1.20



Total consumer banking


0.95



0.60



0.83



Commercial banking:








Commercial and multifamily real estate


(0.11)



0.04



(0.05)



Commercial and industrial


0.18



0.03





Total commercial lending


0.04



0.03



(0.03)



Small-ticket commercial real estate


1.26



0.45



0.79



Total commercial banking


0.07



0.04





Other loans


12.17



13.10



30.11



Total


1.92


%

2.03


%

1.75


%

30+ Day Performing Delinquency Rates








Credit card:








Domestic credit card


3.46


%

3.05


%

3.52


%

International credit card


3.86



3.84



4.92



Total credit card


3.51


%

3.13


%

3.65


%

Consumer banking:








Automobile


6.29


%

6.03


%

6.12


%

Home loan


0.14



0.12



0.15



Retail banking


0.68



0.68



0.73



Total consumer banking


2.82


%

2.55


%

2.23


%

Nonperforming Asset Rates(3)








Credit card:








International credit card


1.16


%

1.20


%


%

Total credit card


0.12


%

0.12


%


%

Consumer banking:








Automobile


0.58


%

0.50


%

0.52


%

Home loan


1.08



1.08



0.98



Retail banking


1.10



1.11



2.25



Total consumer banking


0.87


%

0.84


%

0.89


%

Commercial banking:








Commercial and multifamily real estate


0.40


%

0.56


%

1.04


%

Commercial and industrial


0.65



0.65



0.68



Total commercial lending


0.53


%

0.61


%

0.85


%

Small-ticket commercial real estate


1.49



1.11



1.49



Total commercial banking


0.56


%

0.62


%

0.87


%

 


CAPITAL ONE FINANCIAL CORPORATION (COF)


Table 8: Financial & Statistical Summary—Credit Card Business(1)(2)






2013


2013


2012


(Dollars in millions) (unaudited)


Q3


Q2


Q3


Credit Card








Earnings:








Net interest income


$

2,757



$

2,804



$

2,991



Non-interest income


834



832



826



Total net revenue


3,591



3,636



3,817



Provision for credit losses


617



713



892



Non-interest expense


1,904



1,819



1,790



Income (loss) from continuing operations before taxes


1,070



1,104



1,135



Income tax provision (benefit)


376



385



394



Income (loss) from continuing operations, net of tax


$

694



$

719



$

741



Selected performance metrics:








Period-end loans held for investment


$

77,967



$

78,310



$

89,033



Average loans held for investment


77,729



77,946



88,656



Average yield on loans held for investment(4)


15.72


%

15.94


%

15.03


%

Total net revenue margin(5)


18.48



18.66



17.22



Net charge-off rate


3.78



4.36



3.22



30+ day performing delinquency rate


3.51



3.13



3.65



30+ day delinquency rate(6)


**


3.22



3.65



Nonperforming loan rate(3)


0.12



0.12





Card loan premium amortization and other intangible accretion(7)


$

45



$

57



$

82



PCCR intangible amortization


106



110



131



Purchase volume(8)


50,943



50,788



48,020



Domestic Card








Earnings:








Net interest income


$

2,492



$

2,536



$

2,715



Non-interest income


749



737



722



Total net revenue


3,241



3,273



3,437



Provision for credit losses


529



647



811



Non-interest expense


1,713



1,635



1,584



Income (loss) from continuing operations before taxes


999



991



1,042



Income tax provision (benefit)


355



353



369



Income (loss) from continuing operations, net of tax


$

644



$

638



$

673



Selected performance metrics:








Period-end loans held for investment


$

69,936



$

70,490



$

80,621



Average loans held for investment


69,947



69,966



80,502



Average yield on loans held for investment(4)


15.65


%

15.91


%

14.88


%

Total net revenue margin(5)


18.53



18.71



17.08



Net charge-off rate


3.67



4.28



3.04



30+ day performing delinquency rate


3.46



3.05



3.52



30+ day delinquency rate(6)


**


3.05



3.52



Purchase volume(8)


$

47,420



$

47,273



$

44,552



International Card








Earnings:








Net interest income


$

265



$

268



$

276



Non-interest income


85



95



104



Total net revenue


350



363



380



Provision for credit losses


88



66



81



Non-interest expense


191



184



206



Income (loss) from continuing operations before taxes


71



113



93



Income tax provision (benefit)


21



32



25



Income (loss) from continuing operations, net of tax


$

50



$

81



$

68



Selected performance metrics:








Period-end loans held for investment


$

8,031



$

7,820



$

8,412



Average loans held for investment


7,782



7,980



8,154



Average yield on loans held for investment


16.35


%

16.19


%

16.47


%

Total net revenue margin


17.99



18.20



18.64



Net charge-off rate


4.71



5.08



4.95



30+ day performing delinquency rate


3.86



3.84



4.92



30+ day delinquency rate(6)


**


4.79



4.92



Nonperforming loan rate(3)


1.16



1.20





Purchase volume(8)


$

3,523



$

3,515



$

3,468



 


CAPITAL ONE FINANCIAL CORPORATION (COF)


Table 9: Financial & Statistical Summary—Consumer Banking Business(1)(2)






2013


2013


2012


(Dollars in millions) (unaudited)


Q3


Q2


Q3


Consumer Banking








Earnings:








Net interest income


$

1,481



$

1,478



$

1,501



Non-interest income


184



189



260



Total net revenue


1,665



1,667



1,761



Provision for credit losses


202



67



202



Non-interest expense


927



910



977



Income from continuing operations before taxes


536



690



582



Income tax provision


191



246



206



Income from continuing operations, net of tax


$

345



$

444



$

376











Selected performance metrics:








Period-end loans held for investment


$

71,285



$

72,218



$

76,738



Average loans held for investment


71,664



72,930



77,271



Average yield on loans held for investment


6.21


%

5.99


%

6.05


%

Auto loan originations


$

4,752



$

4,525



$

3,905



Period-end deposits


168,437



169,789



173,100



Average deposits


169,082



170,733



173,334



Deposit interest expense rate


0.63


%

0.64


%

0.71


%

Core deposit intangible amortization


$

34



$

35



$

41



Net charge-off rate


0.95


%

0.60


%

0.83


%

30+ day performing delinquency rate


2.82



2.55



2.23



30+ day delinquency rate(6)


**


3.15



2.91



Nonperforming loan rate


0.79



0.78



0.84



Nonperforming asset rate(3)


0.87



0.84



0.89



Period-end loans serviced for others


$

14,043



$

14,313



$

15,659



 

CAPITAL ONE FINANCIAL CORPORATION (COF)


Table 10: Financial & Statistical Summary—Commercial Banking Business(1)(2)






2013


2013


2012


(Dollars in millions) (unaudited)


Q3


Q2


Q3


Commercial Banking








Earnings:








Net interest income


$

480



$

457



$

432



Non-interest income


87



93



87



Total net revenue(9)


567



550



519



Provision for credit losses


31



(14)



(87)



Non-interest expense


266



269



253



Income from continuing operations before taxes


270



295



353



Income tax provision


96



105



125



Income from continuing operations, net of tax


$

174



$

190



$

228











Selected performance metrics:








Period-end loans held for investment


$

42,399



$

40,805



$

37,209



Average loans held for investment


41,576



39,512



36,767



Average yield on loans held for investment


3.87


%

3.84


%

4.14


%

Period-end deposits


$

30,592



$

30,869



$

28,670



Average deposits


30,685



30,746



28,063



Deposit interest expense rate


0.27


%

0.26


%

0.31


%

Core deposit intangible amortization


$

6



$

8



$

8



Net charge-off rate


0.07


%

0.04


%


%

Nonperforming loan rate


0.47



0.60



0.82



Nonperforming asset rate(3)


0.56



0.62



0.87











Risk category:(10)








Noncriticized


$

40,940



$

39,168



$

35,112



Criticized performing


968



1,087



1,394



Criticized nonperforming


201



244



305



     Total risk-rated loans


42,109



40,499



36,811



Acquired commercial loans


290



306



398



     Total commercial loans


$

42,399



$

40,805



$

37,209











% of period-end commercial loans held for investment:








Noncriticized


96.5


%

96.0


%

94.4


%

Criticized performing


2.3



2.7



3.7



Criticized nonperforming


0.5



0.6



0.8



     Total risk-rated loans


99.3



99.3



98.9



Acquired commercial loans


0.7



0.7



1.1



     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)


Q3


Q2


Q3


Other








Earnings:








Net interest expense


$

(158)



$

(186)



$

(278)



Non-interest income


(14)



(29)



(37)



Total net revenue


(172)



(215)



(315)



Provision for credit losses


(1)



(4)



7



Non-interest expense


50



61



25



Income (loss) from continuing operations before taxes


(221)



(272)



(347)



Income tax benefit


(138)



(155)



(190)



Income (loss) from continuing operations, net of tax


$

(83)



$

(117)



$

(157)











Selected performance metrics:








Period-end loans held for investment


$

163



$

179



$

152



Average loans held for investment


166



174



162



Period-end deposits


7,805



9,207



11,485



Average deposits


8,573



9,171



11,926



Total








Earnings:








Net interest income


$

4,560



$

4,553



$

4,646



Non-interest income


1,091



1,085



1,136



Total net revenue


5,651



5,638



5,782



Provision for credit losses


849



762



1,014



Non-interest expense


3,147



3,059



3,045



Income from continuing operations before taxes


1,655



1,817



1,723



Income tax provision


525



581



535



Income from continuing operations, net of tax


$

1,130



$

1,236



$

1,188











Selected performance metrics:








Period-end loans held for investment


$

191,814



$

191,512



$

203,132



Average loans held for investment


191,135



190,562



202,856



Period-end deposits


206,834



209,865



213,255



Average deposits


208,340



210,650



213,323



 

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, CCB, and the 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)


Q3


Q2


Q3

Acquired loans accounted for under SOP 03-3:







Period-end unpaid principal balance


$

31,377



$

33,620



$

40,749


Period-end loans held for investment


30,080



32,275



39,388


Average loans held for investment


30,713



33,144



40,158












(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 Card of 121 basis points and 110 basis points, respectively, in Q3 2013 and 168 basis points and 152 basis points, respectively, in Q2 2013. The sale of the Best Buy portfolio to Citi Bank, N.A 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 Card of 136 basis points and 123 basis points, respectively, in Q3 2013 and 188 basis points and 169 basis points, respectively, in Q2 2013. The sale of the Best Buy portfolio to Citi Bank, N.A was completed on September 6, 2013.

(6) The 30+ day delinquency rate as of the end of Q3 2013 will be provided in our Quarterly Report on Form 10-Q for the period ended September 30, 2013.

(7) 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.

(8) Includes credit card purchase transactions, net of returns. Excludes cash advance transactions.

(9) 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 on a taxable-equivalent basis, calculated assuming an effective tax rate approximately equal to our federal statutory tax rate of 35%.

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

 

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 capital 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 capital measures. While our non-GAAP capital 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)


Q3


Q2


Q3


Average Equity to Non-GAAP Average Tangible Common Equity








Average total stockholders' equity


$

41,284



$

41,579



$

38,535



Adjustments:  Average goodwill and other intangible assets (1)


(15,829)



(15,974)



(16,408)



Noncumulative perpetual preferred stock(2)


(853)



(853)



(456)



Average tangible common equity(3)


$

24,602



$

24,752



$

21,671



Stockholders' Equity to Non-GAAP Tangible Common Equity








Total stockholders' equity


$

41,750



$

41,041



$

39,672



Adjustments:  Goodwill and other intangible assets (1)


(15,760)



(15,872)



(16,323)



Noncumulative perpetual preferred stock(2)


(853)



(853)



(853)



Tangible common equity(3)


$

25,137



$

24,316



$

22,496



Total Assets to Tangible Assets








Total assets


$

289,888



$

296,542



$

301,989



Adjustments:  Goodwill and other intangible assets(1)


(15,760)



(15,872)



(16,323)



Tangible assets


$

274,128



$

280,670



$

285,666



Total Average Assets to Average Tangible Assets








Average total assets


$

294,939



$

297,766



$

297,154



Adjustments:  Average goodwill and other intangible assets (1)


(15,829)



(15,974)



(16,408)



Average tangible assets


$

279,110



$

281,792



$

280,746



Non-GAAP TCE Ratio








Tangible common equity(3)


$

25,137



$

24,316



$

22,496



Tangible assets


274,128



280,670



285,666



TCE ratio(3)


9.2


%

8.7


%

7.9


%

Regulatory Capital Ratios(4)








Total stockholders' equity


$

41,750



$

41,041



$

39,672



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


736



503



(752)



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


123



175



(6)



Disallowed goodwill and other intangible assets


(14,263)



(14,309)



(14,497)



Disallowed deferred tax assets






(221)



Noncumulative perpetual preferred stock(2)


(853)



(853)



(853)



Other


(5)



(5)



(12)



Tier 1 common capital


27,488



26,552



23,331



Adjustments:  Noncumulative perpetual preferred stock(2)


853



853



853



Tier 1 restricted core capital items(6)


2



2



3,636



Tier 1 capital


28,343



27,407



27,820



Adjustments:  Long-term debt qualifying as Tier 2 capital


1,909



2,104



2,119



Qualifying allowance for loan and lease losses


2,727



2,781



2,767



Other Tier 2 components


8



12



17



Tier 2 capital


4,644



4,897



4,903



Total risk-based capital(7)


$

32,987



$

32,304



$

32,723











Risk-weighted assets(8)


$

215,901



$

220,166



$

218,390



Tier 1 common ratio(9)


12.7


%

12.1


%

10.7


%

Tier 1 risk-based capital ratio(10)


13.1



12.4



12.7



Total risk-based capital ratio(11)


15.3



14.7



15.0














(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 Q3 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 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.

 

 

SOURCE Capital One Financial Corporation



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