Capital One Reports First Quarter 2018 Net Income of $1.3 billion, or $2.62 per share

Excluding adjusting items, First Quarter 2018 Net Income of $2.65 per share(1)

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Apr 24, 2018, 04:05 ET

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

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

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

First Quarter 2018 Income Statement Summary:

Total net revenue decreased 1 percent to $6.9 billion.
Total non-interest expense decreased 5 percent to $3.6 billion:

5 percent decrease in operating expenses.
10 percent decrease in marketing.

Pre-provision earnings increased 3 percent to $3.3 billion⁽²⁾.
Provision for credit losses decreased 13 percent to $1.7 billion:

Net charge-offs of $1.6 billion.
$56 million reserve build.

Net interest margin of 6.93 percent, down 10 basis points.
Efficiency ratio of 51.72 percent.

Efficiency ratio excluding adjusting items was 51.45 percent⁽¹⁾.

First Quarter 2018 Balance Sheet Summary:

Common equity Tier 1 capital ratio under Basel III Standardized Approach of 10.5 percent at March 31, 2018.
Period-end loans held for investment in the quarter decreased $6.2 billion, or 2 percent, to $248.3 billion.

Credit Card period-end loans decreased $7.2 billion, or 6 percent, to $107.6 billion.

Domestic Card period-end loans decreased $6.8 billion, or 6 percent, to $98.5 billion.

Consumer Banking period-end loans decreased $404 million, or 1 percent, to $74.7 billion:

Auto period-end loans increased $820 million, or 2 percent, to $54.8 billion.
Home loans period-end loans decreased $1.0 billion, or 6 percent, to $16.6 billion, primarily driven by run-off of acquired portfolios.

Commercial Banking period-end loans increased $1.4 billion, or 2 percent, to $66.0 billion.

Average loans held for investment in the quarter decreased $2.8 billion, or 1 percent, to $249.7 billion.

Credit Card average loans decreased $527 million, or less than 1 percent, to $109.5 billion.

Domestic Card average loans decreased $637 million, or 1 percent, to $100.5 billion.

Consumer Banking average loans decreased $292 million, or less than 1 percent, to $75.0 billion:

Auto average loans increased $597 million, or 1 percent, to $54.3 billion.
Home loans average loans decreased $885 million, or 5 percent, to $17.2 billion, primarily driven by run-off of acquired portfolios.

Commercial Banking average loans decreased $2.0 billion, or 3 percent, to $65.2 billion.

Period-end total deposits increased $7.1 billion, or 3 percent, to $250.8 billion, while average deposits increased $3.7 billion, or 2 percent, to $245.3 billion.
Interest-bearing deposits rate paid increased 13 basis points to 0.98 percent.

Earnings Conference Call Webcast Information

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

Forward-Looking Statements

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

About Capital One

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

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

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

Exhibit 99.2

Capital One Financial Corporation
Financial Supplement⁽¹⁾⁽²⁾
First Quarter 2018
Table of Contents

Capital One Financial Corporation Consolidated Results			Page
	Table 1:	Financial Summary—Consolidated	1
	Table 2:	Selected Metrics—Consolidated	3
	Table 3:	Consolidated Statements of Income	4
	Table 4:	Consolidated Balance Sheets	6
	Table 5:	Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)	8
	Table 6:	Average Balances, Net Interest Income and Net Interest Margin	9
	Table 7:	Loan Information and Performance Statistics	10
	Table 8:	Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity	12
Business Segment Results
	Table 9:	Financial Summary—Business Segment Results	13
	Table 10:	Financial & Statistical Summary—Credit Card Business	14
	Table 11:	Financial & Statistical Summary—Consumer Banking Business	16
	Table 12:	Financial & Statistical Summary—Commercial Banking Business	17
	Table 13:	Financial & Statistical Summary—Other and Total	18
	Table 14:	Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)	19
Other
	Table 15:	Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures	20
___________
⁽¹⁾	The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Quarterly Report on Form 10-Q for the period ended March 31, 2018 once it is filed with the Securities and Exchange Commission.
⁽²⁾	This Financial Supplement includes non-GAAP measures. We believe these non-GAAP measures are useful to investors and users of our financial information as they provide an alternate measurement of our performance and assist in assessing our capital adequacy and the level of return generated. These non-GAAP measures should not be viewed as a substitute for reported results determined in accordance with generally accepted accounting principles in the U.S. ("GAAP"), nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.

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

											2018 Q1 vs.
(Dollars in millions, except per share data and as noted)	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions, except per share data and as noted)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Income Statement
Net interest income	$	5,718	$	5,813	$	5,700	$	5,473	$	5,474	(2)	%	4	%
Non-interest income	1,191		1,200		1,285		1,231		1,061		(1)		12
Total net revenue⁽¹⁾	6,909		7,013		6,985		6,704		6,535		(1)		6
Provision for credit losses	1,674		1,926		1,833		1,800		1,992		(13)		(16)
Non-interest expense:
Marketing	414		460		379		435		396		(10)		5
Operating expenses	3,159		3,319		3,188		2,979		3,038		(5)		4
Total non-interest expense	3,573		3,779		3,567		3,414		3,434		(5)		4
Income from continuing operations before income taxes	1,662		1,308		1,585		1,490		1,109		27		50
Income tax provision	319		2,170		448		443		314		(85)		2
Income (loss) from continuing operations, net of tax	1,343		(862)		1,137		1,047		795		**		69
Income (loss) from discontinued operations, net of tax	3		(109)		(30)		(11)		15		**		(80)
Net income (loss)	1,346		(971)		1,107		1,036		810		**		66
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(10)		(1)		(8)		(8)		(5)		**		100
Preferred stock dividends	(52)		(80)		(52)		(80)		(53)		(35)		(2)
Net income (loss) available to common stockholders	$	1,284	$	(1,052)	$	1,047	$	948	$	752	**		71
Common Share Statistics
Basic earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.63	$	(1.95)	$	2.22	$	1.98	$	1.53	**		72	%
Income (loss) from discontinued operations	0.01		(0.22)		(0.06)		(0.02)		0.03		**		(67)
Net income (loss) per basic common share	$	2.64	$	(2.17)	$	2.16	$	1.96	$	1.56	**		69
Diluted earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.61	$	(1.95)	$	2.20	$	1.96	$	1.51	**		73
Income (loss) from discontinued operations	0.01		(0.22)		(0.06)		(0.02)		0.03		**		(67)
Net income (loss) per diluted common share	$	2.62	$	(2.17)	$	2.14	$	1.94	$	1.54	**		70
Weighted-average common shares outstanding (in millions):
Basic	486.9		485.7		484.9		484.0		482.3		—		1
Diluted	490.8		485.7		489.0		488.1		487.9		1	%	1
Common shares outstanding (period-end, in millions)	485.9		485.5		484.4		483.7		482.8		—		1
Dividends declared and paid per common share	$	0.40	$	0.40	$	0.40	$	0.40	$	0.40	—		—
Tangible book value per common share (period-end)⁽³⁾	61.29		60.28		63.06		60.94		58.66		2		4


											2018 Q1 vs.
(Dollars in millions)	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Balance Sheet (Period-End)
Loans held for investment⁽⁴⁾	$	248,256	$	254,473	$	252,422	$	244,302	$	240,588	(2)	%	3	%
Interest-earning assets	332,251		334,124		329,002		319,286		316,712		(1)		5
Total assets	362,857		365,693		361,402		350,593		348,549		(1)		4
Interest-bearing deposits	224,671		217,298		212,956		213,810		214,818		3		5
Total deposits	250,847		243,702		239,062		239,763		241,182		3		4
Borrowings	50,693		60,281		59,458		49,954		48,439		(16)		5
Common equity	44,842		44,370		45,794		44,777		43,680		1		3
Total stockholders' equity	49,203		48,730		50,154		49,137		48,040		1		2
Balance Sheet (Average Balances)
Loans held for investment⁽⁴⁾	$	249,726	$	252,566	$	245,822	$	242,241	$	241,505	(1)	%	3	%
Interest-earning assets	330,183		330,742		322,015		318,078		318,358		—		4
Total assets	362,049		363,045		355,191		349,891		351,641		—		3
Interest-bearing deposits	219,670		215,258		213,137		214,412		212,973		2		3
Total deposits	245,270		241,562		238,843		240,550		238,550		2		3
Borrowings	54,588		58,109		54,271		48,838		53,357		(6)		2
Common equity	44,670		46,350		45,816		44,645		43,833		(4)		2
Total stockholders' equity	49,031		50,710		50,176		49,005		48,193		(3)		2

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

																2018 Q1 vs.
(Dollars in millions, except as noted)	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Performance Metrics
Net interest income growth (period over period)	(2)		%	2		%	4		%	—			—			**		**
Non-interest income growth (period over period)	(1)			(7)			4			16		%	(5)		%	**		**
Total net revenue growth (period over period)	(1)			—			4			3			—			**		**
Total net revenue margin⁽⁵⁾	8.37			8.48			8.68			8.43			8.21			(11)	bps	16	bps
Net interest margin⁽⁶⁾	6.93			7.03			7.08			6.88			6.88			(10)		5
Return on average assets	1.48			(0.95)			1.28			1.20			0.90			243		58
Return on average tangible assets⁽⁷⁾	1.55			(0.99)			1.34			1.25			0.95			254		60
Return on average common equity⁽⁸⁾	11.47			(8.14)			9.40			8.59			6.73			**		474
Return on average tangible common equity⁽⁹⁾	17.32			(12.12)			14.11			13.09			10.37			**		695
Non-interest expense as a percentage of average loans held for investment	5.72			5.98			5.80			5.64			5.69			(26)		3
Efficiency ratio⁽¹⁰⁾	51.72			53.89			51.07			50.92			52.55			(217)		(83)
Effective income tax rate for continuing operations	19.2			165.9			28.3			29.7			28.3			**		**
Employees (in thousands), period-end	47.9			49.3			50.4			49.9			48.4			(3)	%	(1)	%
Credit Quality Metrics
Allowance for loan and lease losses	$	7,567		$	7,502		$	7,418		$	7,170		$	6,984		1	%	8	%
Allowance as a percentage of loans held for investment	3.05		%	2.95		%	2.94		%	2.93		%	2.90		%	10	bps	15	bps
Net charge-offs	$	1,618		$	1,828		$	1,606		$	1,618		$	1,510		(11)	%	7	%
Net charge-off rate⁽¹¹⁾	2.59		%	2.89		%	2.61		%	2.67		%	2.50		%	(30)	bps	9	bps
30+ day performing delinquency rate	2.72			3.23			2.93			2.69			2.61			(51)		11
30+ day delinquency rate	2.91			3.48			3.24			2.99			2.92			(57)		(1)
Capital Ratios⁽¹²⁾
Common equity Tier 1 capital	10.5		%	10.3		%	10.7		%	10.7		%	10.4		%	20	bps	10	bps
Tier 1 capital	12.0			11.8			12.2			12.2			12.0			20		—
Total capital	14.5			14.4			14.8			14.9			14.7			10		(20)
Tier 1 leverage	10.1			9.9			10.5			10.3			9.9			20		20
Tangible common equity ("TCE")⁽¹³⁾	8.6			8.3			8.8			8.8			8.5			30		10

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

											2018 Q1 vs.
	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions, except per share data and as noted)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Interest income:
Loans, including loans held for sale	$	6,134	$	6,133	$	5,960	$	5,669	$	5,626	—		9	%
Investment securities	452		431		431		433		416		5	%	9
Other	51		40		29		26		28		28		82
Total interest income	6,637		6,604		6,420		6,128		6,070		—		9
Interest expense:
Deposits	539		457		410		382		353		18		53
Securitized debt obligations	107		91		85		82		69		18		55
Senior and subordinated notes	251		209		194		179		149		20		68
Other borrowings	22		34		31		12		25		(35)		(12)
Total interest expense	919		791		720		655		596		16		54
Net interest income	5,718		5,813		5,700		5,473		5,474		(2)		4
Provision for credit losses	1,674		1,926		1,833		1,800		1,992		(13)		(16)
Net interest income after provision for credit losses	4,044		3,887		3,867		3,673		3,482		4		16
Non-interest income:
Interchange fees, net	643		665		662		676		570		(3)		13
Service charges and other customer-related fees	432		394		414		418		371		10		16
Net securities gains (losses)	8		1		68		(4)		—		**		**
Other	108		140		141		141		120		(23)		(10)
Total non-interest income	1,191		1,200		1,285		1,231		1,061		(1)		12
Non-interest expense:
Salaries and associate benefits	1,520		1,521		1,524		1,383		1,471		—		3
Occupancy and equipment	490		523		471		474		471		(6)		4
Marketing	414		460		379		435		396		(10)		5
Professional services	210		274		297		279		247		(23)		(15)
Communications and data processing	306		306		294		289		288		—		6
Amortization of intangibles	44		61		61		61		62		(28)		(29)
Other	589		634		541		493		499		(7)		18
Total non-interest expense	3,573		3,779		3,567		3,414		3,434		(5)		4
Income from continuing operations before income taxes	1,662		1,308		1,585		1,490		1,109		27		50
Income tax provision	319		2,170		448		443		314		(85)		2
Income (loss) from continuing operations, net of tax	1,343		(862)		1,137		1,047		795		**		69
Income (loss) from discontinued operations, net of tax	3		(109)		(30)		(11)		15		**		(80)
Net income (loss)	1,346		(971)		1,107		1,036		810		**		66
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(10)		(1)		(8)		(8)		(5)		**		100
Preferred stock dividends	(52)		(80)		(52)		(80)		(53)		(35)		(2)
Net income (loss) available to common stockholders	$	1,284	$	(1,052)	$	1,047	$	948	$	752	**		71

											2018 Q1 vs.
	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions, except per share data and as noted)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Basic earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.63	$	(1.95)	$	2.22	$	1.98	$	1.53	**		72	%
Income (loss) from discontinued operations	0.01		(0.22)		(0.06)		(0.02)		0.03		**		(67)
Net income (loss) per basic common share	$	2.64	$	(2.17)	$	2.16	$	1.96	$	1.56	**		69
Diluted earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.61	$	(1.95)	$	2.20	$	1.96	$	1.51	**		73
Income (loss) from discontinued operations	0.01		(0.22)		(0.06)		(0.02)		0.03		**		(67)
Net income (loss) per diluted common share	$	2.62	$	(2.17)	$	2.14	$	1.94	$	1.54	**		70
Weighted-average common shares outstanding (in millions):
Basic common shares	486.9		485.7		484.9		484.0		482.3		—		1	%
Diluted common shares	490.8		485.7		489.0		488.1		487.9		1	%	1
Dividends declared and paid per common share	$	0.40	$	0.40	$	0.40	$	0.40	$	0.40	—		—

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

											2018 Q1 vs.
	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Assets:
Cash and cash equivalents:
Cash and due from banks	$	4,220	$	4,458	$	4,154	$	3,352	$	3,489	(5)	%	21	%
Interest-bearing deposits and other short-term investments	9,788		9,582		4,330		3,363		5,826		2		68
Total cash and cash equivalents	14,008		14,040		8,484		6,715		9,315		—		50
Restricted cash for securitization investors	309		312		304		300		486		(1)		(36)
Investment securities:
Securities available for sale, at fair value	47,155		37,655		39,742		41,120		41,260		25		14
Securities held to maturity, at carrying value	23,075		28,984		28,650		27,720		26,170		(20)		(12)
Total investment securities	70,230		66,639		68,392		68,840		67,430		5		4
Loans held for investment:⁽⁴⁾
Unsecuritized loans held for investment	213,313		218,806		217,659		214,864		211,038		(3)		1
Loans held in consolidated trusts	34,943		35,667		34,763		29,438		29,550		(2)		18
Total loans held for investment	248,256		254,473		252,422		244,302		240,588		(2)		3
Allowance for loan and lease losses	(7,567)		(7,502)		(7,418)		(7,170)		(6,984)		1		8
Net loans held for investment	240,689		246,971		245,004		237,132		233,604		(3)		3
Loans held for sale, at lower of cost or fair value	1,498		971		1,566		777		735		54		104
Premises and equipment, net	4,055		4,033		3,955		3,825		3,727		1		9
Interest receivable	1,496		1,536		1,426		1,346		1,368		(3)		9
Goodwill	14,536		14,533		14,532		14,524		14,521		—		—
Other assets	16,036		16,658		17,739		17,134		17,363		(4)		(8)
Total assets	$	362,857	$	365,693	$	361,402	$	350,593	$	348,549	(1)		4

											2018 Q1 vs.
	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Liabilities:
Interest payable	$	353	$	413	$	301	$	376	$	260	(15)	%	36	%
Deposits:
Non-interest-bearing deposits	26,176		26,404		26,106		25,953		26,364		(1)		(1)
Interest-bearing deposits	224,671		217,298		212,956		213,810		214,818		3		5
Total deposits	250,847		243,702		239,062		239,763		241,182		3		4
Securitized debt obligations	18,665		20,010		17,087		18,358		18,528		(7)		1
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase	656		576		767		958		1,046		14		(37)
Senior and subordinated notes	31,051		30,755		28,420		28,478		26,405		1		18
Other borrowings	321		8,940		13,184		2,160		2,460		(96)		(87)
Total other debt	32,028		40,271		42,371		31,596		29,911		(20)		7
Other liabilities	11,761		12,567		12,427		11,363		10,628		(6)		11
Total liabilities	313,654		316,963		311,248		301,456		300,509		(1)		4

Stockholders' equity:
Preferred stock	0		0		0		0		0		—		—
Common stock	7		7		7		7		7		—		—
Additional paid-in capital, net	31,779		31,656		31,526		31,413		31,326		—		1
Retained earnings	31,996		30,700		31,946		31,086		30,326		4		6
Accumulated other comprehensive loss	(1,599)		(926)		(622)		(683)		(934)		73		71
Treasury stock, at cost	(12,980)		(12,707)		(12,703)		(12,686)		(12,685)		2		2
Total stockholders' equity	49,203		48,730		50,154		49,137		48,040		1		2
Total liabilities and stockholders' equity	$	362,857	$	365,693	$	361,402	$	350,593	$	348,549	(1)		4

CAPITAL ONE FINANCIAL CORPORATION (COF)

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

⁽¹⁾

Total net revenue was reduced by $335 million in Q1 2018, $377 million in Q4 2017, $356 million in Q3 2017, $313 million in Q2 2017 and $321 million in Q1 2017 for the estimated uncollectible amount of billed finance charges and fees and related losses.

⁽²⁾

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

⁽³⁾

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

⁽⁴⁾

Included in loans held for investment are purchased credit-impaired loans ("PCI loans") recorded at fair value at acquisition and subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard formerly known as "SOP 03-3," or Accounting Standards Codification 310-30). These include certain of our consumer and commercial loans that were acquired through business combinations. The table below presents amounts related to PCI loans:

2018

2017

(Dollars in millions)

PCI loans:

Period-end unpaid principal balance

10,542

11,399

12,658

13,599

14,838

Period-end loans held for investment

9,935

10,775

11,985

12,895

14,102

Average loans held for investment

10,286

11,060

12,270

13,305

14,433

⁽⁵⁾

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

⁽⁶⁾

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

⁽⁷⁾

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

⁽⁸⁾

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

⁽⁹⁾

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

⁽¹⁰⁾

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

⁽¹¹⁾

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

⁽¹²⁾

Capital ratios as of the end of Q1 2018 are preliminary and therefore subject to change. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for information on the calculation of each of these ratios.

⁽¹³⁾

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

Not meaningful.

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

	2018 Q1						2017 Q4						2017 Q1
	Average Balance		Interest Income/ Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/ Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/ Expense⁽¹⁾		Yield/Rate⁽¹⁾
(Dollars in millions, except as noted)	Average Balance		Interest Income/ Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/ Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/ Expense⁽¹⁾		Yield/Rate⁽¹⁾
Interest-earning assets:
Loans, including loans held for sale	$	250,906	$	6,134	9.78	%	$	254,080	$	6,133	9.66	%	$	242,249	$	5,626	9.29	%
Investment securities	69,576		452		2.60		68,992		431		2.50		68,418		416		2.43
Cash equivalents and other	9,701		51		2.10		7,670		40		2.09		7,691		28		1.46
Total interest-earning assets	$	330,183	$	6,637	8.04		$	330,742	$	6,604	7.99		$	318,358	$	6,070	7.63
Interest-bearing liabilities:
Interest-bearing deposits	$	219,670	$	539	0.98		$	215,258	$	457	0.85		$	212,973	$	353	0.66
Securitized debt obligations	19,698		107		2.17		19,751		91		1.84		17,176		69		1.61
Senior and subordinated notes	30,430		251		3.30		30,020		209		2.78		24,804		149		2.40
Other borrowings and liabilities	6,849		22		1.28		10,355		34		1.31		12,356		25		0.81
Total interest-bearing liabilities	$	276,647	$	919	1.33		$	275,384	$	791	1.15		$	267,309	$	596	0.89
Net interest income/spread			$	5,718	6.71				$	5,813	6.84				$	5,474	6.74
Impact of non-interest-bearing funding					0.22						0.19						0.14
Net interest margin					6.93	%					7.03	%					6.88	%

__________

⁽¹⁾

Interest income and interest expense and the calculation of average yields on interest-earning assets and average rates on interest-bearing liabilities include the impact of hedge accounting. In the first quarter of 2018, we adopted Accounting Standard Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. As a result, interest income and interest expense amounts shown above for Q1 2018 include $1 million and $30 million, respectively, related to hedge ineffectiveness that was previously included in other non-interest income.

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

																2018 Q1 vs.
(Dollars in millions, except as noted)	2018 Q1			2017 Q4			2017 Q3			2017 Q2			2017 Q1			2017 Q4		2017 Q1
Loans Held for Investment (Period-End)
Credit card:
Domestic credit card	$	98,535		$	105,293		$	99,981		$	92,866		$	91,092		(6)	%	8	%
International card businesses	9,041			9,469			9,149			8,724			8,121			(5)		11
Total credit card	107,576			114,762			109,130			101,590			99,213			(6)		8
Consumer banking:
Auto	54,811			53,991			53,290			51,765			49,771			2		10
Home loan	16,630			17,633			18,820			19,724			20,738			(6)		(20)
Retail banking	3,233			3,454			3,454			3,484			3,473			(6)		(7)
Total consumer banking	74,674			75,078			75,564			74,973			73,982			(1)		1
Commercial banking:
Commercial and multifamily real estate	27,360			26,150			27,944			27,428			27,218			5		1
Commercial and industrial	38,208			38,025			39,306			39,801			39,638			—		(4)
Total commercial lending	65,568			64,175			67,250			67,229			66,856			2		(2)
Small-ticket commercial real estate	385			400			420			443			464			(4)		(17)
Total commercial banking	65,953			64,575			67,670			67,672			67,320			2		(2)
Other loans	53			58			58			67			73			(9)		(27)
Total loans held for investment	$	248,256		$	254,473		$	252,422		$	244,302		$	240,588		(2)		3
Loans Held for Investment (Average)
Credit card:
Domestic credit card	$	100,450		$	101,087		$	93,729		$	91,769		$	93,034		(1)	%	8	%
International card businesses	9,052			8,942			8,816			8,274			8,135			1		11
Total credit card	109,502			110,029			102,545			100,043			101,169			—		8
Consumer banking:
Auto	54,344			53,747			52,615			50,803			48,673			1		12
Home loan	17,224			18,109			19,302			20,203			21,149			(5)		(19)
Retail banking	3,429			3,433			3,446			3,463			3,509			—		(2)
Total consumer banking	74,997			75,289			75,363			74,469			73,331			—		2
Commercial banking:
Commercial and multifamily real estate	26,542			27,770			27,703			27,401			26,587			(4)		—
Commercial and industrial	38,246			39,020			39,723			39,815			39,877			(2)		(4)
Total commercial lending	64,788			66,790			67,426			67,216			66,464			(3)		(3)
Small-ticket commercial real estate	393			410			433			453			474			(4)		(17)
Total commercial banking	65,181			67,200			67,859			67,669			66,938			(3)		(3)
Other loans	46			48			55			60			67			(4)		(31)
Total average loans held for investment	$	249,726		$	252,566		$	245,822		$	242,241		$	241,505		(1)		3


																2018 Q1 vs.
	2018 Q1			2017 Q4			2017 Q3			2017 Q2			2017 Q1			2017 Q4		2017 Q1
Net Charge-Off (Recovery) Rates
Credit card:
Domestic credit card		5.26	%		5.08	%		4.64	%		5.11	%		5.14	%	18	bps	12	bps
International card businesses		2.49			3.92			3.08			4.08			3.69		(143)		(120)
Total credit card		5.03			4.99			4.51			5.02			5.02		4		1
Consumer banking:
Auto		1.53			2.12			1.96			1.70			1.64		(59)		(11)
Home loan		(0.03)			0.23			0.02			0.04			0.03		(26)		(6)
Retail banking		1.89			1.94			2.10			1.71			1.92		(5)		(3)
Total consumer banking		1.19			1.66			1.47			1.25			1.19		(47)		—
Commercial banking:
Commercial and multifamily real estate		—			(0.01)			(0.01)			0.03			—		1		—
Commercial and industrial		0.20			1.47			1.64			1.34			0.22		(127)		(2)
Total commercial lending		0.12			0.86			0.97			0.81			0.13		(74)		(1)
Small-ticket commercial real estate		(0.18)			(0.05)			0.12			(0.22)			1.05		(13)		(123)
Total commercial banking		0.11			0.85			0.96			0.80			0.14		(74)		(3)
Total net charge-offs		2.59			2.89			2.61			2.67			2.50		(30)		9
30+ Day Performing Delinquency Rates
Credit card:
Domestic credit card		3.57	%		4.01	%		3.94	%		3.63	%		3.71	%	(44)	bps	(14)	bps
International card businesses		3.62			3.64			3.54			3.28			3.39		(2)		23
Total credit card		3.58			3.98			3.91			3.60			3.68		(40)		(10)
Consumer banking:
Auto		5.15			6.51			5.71			5.40			5.03		(136)		12
Home loan		0.20			0.20			0.17			0.14			0.15		—		5
Retail banking		0.75			0.76			0.73			0.54			0.59		(1)		16
Total consumer banking		3.86			4.76			4.10			3.79			3.45		(90)		41
Nonperforming Loans and Nonperforming Assets Rates⁽¹⁾⁽²⁾
Credit card:
International card businesses		0.25	%		0.25	%		0.28	%		0.37	%		0.47	%	—		(22)	bps
Total credit card		0.02			0.02			0.02			0.03			0.04		—		(2)
Consumer banking:
Auto		0.50			0.70			0.65			0.53			0.36		(20)	bps	14
Home loan		0.86			1.00			0.84			1.31			1.27		(14)		(41)
Retail banking		1.04			1.00			0.97			0.96			0.82		4		22
Total consumer banking		0.61			0.78			0.71			0.75			0.64		(17)		(3)
Commercial banking:
Commercial and multifamily real estate		0.01			0.15			0.23			0.13			0.13		(14)		(12)
Commercial and industrial		0.78			0.63			1.82			1.62			2.02		15		(124)
Total commercial lending		0.46			0.43			1.16			1.01			1.25		3		(79)
Small-ticket commercial real estate		1.46			1.65			1.59			1.89			1.65		(19)		(19)
Total commercial banking		0.47			0.44			1.16			1.01			1.25		3		(78)
Total nonperforming loans		0.32			0.35			0.54			0.53			0.57		(3)		(25)
Total nonperforming assets		0.35			0.41			0.60			0.60			0.66		(6)		(31)

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

	Three Months Ended March 31, 2018
	Credit Card						Consumer Banking
(Dollars in millions)	Domestic Card		International Card Businesses		Total Credit Card		Auto		Home Loan		Retail Banking		Total Consumer Banking		Commercial Banking		Other⁽³⁾		Total
Allowance for loan and lease losses:
Balance as of December 31, 2017	$	5,273	$	375	$	5,648	$	1,119	$	58	$	65	$	1,242	$	611	$	1	$	7,502
Charge-offs	(1,697)		(128)		(1,825)		(410)		—		(21)		(431)		(21)		1		(2,276)
Recoveries	376		72		448		202		1		5		208		2		—		658
Net charge-offs	(1,321)		(56)		(1,377)		(208)		1		(16)		(223)		(19)		1		(1,618)
Provision (benefit) for loan and lease losses	1,380		76		1,456		226		(6)		14		234		(5)		(1)		1,684
Allowance build (release) for loan and lease losses	59		20		79		18		(5)		(2)		11		(24)		—		66
Other changes⁽⁴⁾	—		(1)		(1)		—		—		—		—		—		—		(1)
Balance as of March 31, 2018	5,332		394		5,726		1,137		53		63		1,253		587		1		7,567
Reserve for unfunded lending commitments:
Balance as of December 31, 2017	—		—		—		—		—		7		7		117		—		124
Benefit for losses on unfunded lending commitments	—		—		—		—		—		(1)		(1)		(9)		—		(10)
Balance as of March 31, 2018	—		—		—		—		—		6		6		108		—		114
Combined allowance and reserve as of March 31, 2018	$	5,332	$	394	$	5,726	$	1,137	$	53	$	69	$	1,259	$	695	$	1	$	7,681

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 9: Financial Summary—Business Segment Results

	Three Months Ended March 31, 2018
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾⁽⁷⁾		Other⁽⁶⁾⁽⁷⁾		Total
Net interest income	$	3,558	$	1,615	$	536	$	9	$	5,718
Non-interest income	857		174		187		(27)		1,191
Total net revenue (loss)	4,415		1,789		723		(18)		6,909
Provision (benefit) for credit losses	1,456		233		(14)		(1)		1,674
Non-interest expense	2,039		1,000		403		131		3,573
Income (loss) from continuing operations before income taxes	920		556		334		(148)		1,662
Income tax provision (benefit)	213		130		78		(102)		319
Income (loss) from continuing operations, net of tax	$	707	$	426	$	256	$	(46)	$	1,343

	Three Months Ended December 31, 2017
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾		Other⁽⁵⁾⁽⁶⁾		Total
Net interest income	$	3,568	$	1,636	$	566	$	43	$	5,813
Non-interest income	847		179		188		(14)		1,200
Total net revenue	4,415		1,815		754		29		7,013
Provision for credit losses	1,486		340		100		—		1,926
Non-interest expense	2,108		1,081		437		153		3,779
Income (loss) from continuing operations before income taxes	821		394		217		(124)		1,308
Income tax provision	297		144		79		1,650		2,170
Income (loss) from continuing operations, net of tax	$	524	$	250	$	138	$	(1,774)	$	(862)

	Three Months Ended March 31, 2017
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾		Other⁽⁶⁾		Total
Net interest income	$	3,346	$	1,517	$	566	$	45	$	5,474
Non-interest income	738		195		158		(30)		1,061
Total net revenue	4,084		1,712		724		15		6,535
Provision (benefit) for credit losses	1,717		279		(2)		(2)		1,992
Non-interest expense	1,929		1,042		391		72		3,434
Income (loss) from continuing operations before income taxes	438		391		335		(55)		1,109
Income tax provision (benefit)	167		143		122		(118)		314
Income from continuing operations, net of tax	$	271	$	248	$	213	$	63	$	795

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 10: Financial & Statistical Summary—Credit Card Business

																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Credit Card
Earnings:
Net interest income	$	3,558		$	3,568		$	3,440		$	3,294		$	3,346		—		6	%
Non-interest income	857			847			865			875			738			1	%	16
Total net revenue	4,415			4,415			4,305			4,169			4,084			—		8
Provision for credit losses	1,456			1,486			1,466			1,397			1,717			(2)		(15)
Non-interest expense	2,039			2,108			1,961			1,918			1,929			(3)		6
Income from continuing operations before income taxes	920			821			878			854			438			12		110
Income tax provision	213			297			306			301			167			(28)		28
Income from continuing operations, net of tax	$	707		$	524		$	572		$	553		$	271		35		161
Selected performance metrics:
Period-end loans held for investment	$	107,576		$	114,762		$	109,130		$	101,590		$	99,213		(6)		8
Average loans held for investment	109,502			110,029			102,545			100,043			101,169			—		8
Average yield on loans held for investment⁽⁸⁾	15.24		%	15.13		%	15.58		%	15.14		%	14.99		%	11	bps	25	bps
Total net revenue margin⁽⁹⁾	16.13			16.05			16.79			16.67			16.14			8		(1)
Net charge-off rate	5.03			4.99			4.51			5.02			5.02			4		1
30+ day performing delinquency rate	3.58			3.98			3.91			3.60			3.68			(40)		(10)
30+ day delinquency rate	3.59			3.99			3.92			3.62			3.71			(40)		(12)
Nonperforming loan rate⁽¹⁾	0.02			0.02			0.02			0.03			0.04			—		(2)
Purchase volume⁽¹⁰⁾	$	86,545		$	95,659		$	84,505		$	83,079		$	73,197		(10)	%	18	%

																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Domestic Card
Earnings:
Net interest income	$	3,229		$	3,268		$	3,132		$	3,011		$	3,093		(1)	%	4	%
Non-interest income	774			781			787			802			699			(1)		11
Total net revenue	4,003			4,049			3,919			3,813			3,792			(1)		6
Provision for credit losses	1,380			1,402			1,417			1,327			1,637			(2)		(16)
Non-interest expense	1,832			1,880			1,754			1,727			1,717			(3)		7
Income from continuing operations before income taxes	791			767			748			759			438			3		81
Income tax provision	184			280			273			277			160			(34)		15
Income from continuing operations, net of tax	$	607		$	487		$	475		$	482		$	278		25		118
Selected performance metrics:
Period-end loans held for investment	$	98,535		$	105,293		$	99,981		$	92,866		$	91,092		(6)		8
Average loans held for investment	100,450			101,087			93,729			91,769			93,034			(1)		8
Average yield on loans held for investment⁽⁸⁾	15.10		%	15.08		%	15.51		%	15.07		%	15.01		%	2	bps	9	bps
Total net revenue margin⁽⁹⁾	15.94			16.03			16.72			16.62			16.30			(9)		(36)
Net charge-off rate	5.26			5.08			4.64			5.11			5.14			18		12
30+ day delinquency rate	3.57			4.01			3.94			3.63			3.71			(44)		(14)
Purchase volume⁽¹⁰⁾	$	79,194		$	87,287		$	76,806		$	75,781		$	66,950		(9)	%	18	%
Refreshed FICO scores:⁽¹¹⁾
Greater than 660	66		%	66		%	65		%	64		%	63		%	—		3
660 or below	34			34			35			36			37			—		(3)
Total	100		%	100		%	100		%	100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 11: Financial & Statistical Summary—Consumer Banking Business

																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Consumer Banking
Earnings:
Net interest income	$	1,615		$	1,636		$	1,649		$	1,578		$	1,517		(1)	%	6	%
Non-interest income	174			179			192			183			195			(3)		(11)
Total net revenue	1,789			1,815			1,841			1,761			1,712			(1)		4
Provision for credit losses	233			340			293			268			279			(31)		(16)
Non-interest expense	1,000			1,081			1,051			1,059			1,042			(7)		(4)
Income from continuing operations before income taxes	556			394			497			434			391			41		42
Income tax provision	130			144			181			158			143			(10)		(9)
Income from continuing operations, net of tax	$	426		$	250		$	316		$	276		$	248		70		72
Selected performance metrics:
Period-end loans held for investment	$	74,674		$	75,078		$	75,564		$	74,973		$	73,982		(1)		1
Average loans held for investment	74,997			75,289			75,363			74,469			73,331			—		2
Average yield on loans held for investment⁽⁸⁾	6.86		%	6.84		%	6.79		%	6.56		%	6.48		%	2	bps	38	bps
Auto loan originations	$	6,707		$	6,215		$	7,043		$	7,453		$	7,025		8	%	(5)	%
Period-end deposits	193,073			185,842			184,719			186,607			188,216			4		3
Average deposits	187,785			184,799			185,072			186,989			183,936			2		2
Average deposits interest rate	0.80		%	0.69		%	0.62		%	0.59		%	0.57		%	11	bps	23	bps
Net charge-off rate	1.19			1.66			1.47			1.25			1.19			(47)		—
30+ day performing delinquency rate	3.86			4.76			4.10			3.79			3.45			(90)		41
30+ day delinquency rate	4.27			5.34			4.61			4.33			3.93			(107)		34
Nonperforming loan rate⁽¹⁾	0.61			0.78			0.71			0.75			0.64			(17)		(3)
Nonperforming asset rate⁽²⁾	0.70			0.91			0.88			0.96			0.92			(21)		(22)
Auto—At origination FICO scores:⁽¹²⁾
Greater than 660	51		%	51		%	51		%	51		%	51		%	—		—
621-660	18			18			18			18			18			—		—
620 or below	31			31			31			31			31			—		—
Total	100		%	100		%	100		%	100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 12: Financial & Statistical Summary—Commercial Banking Business

											2018 Q1 vs.
	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions, except as noted)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Commercial Banking
Earnings:
Net interest income	$	536	$	566	$	560	$	569	$	566	(5)	%	(5)	%
Non-interest income	187		188		179		183		158		(1)		18
Total net revenue⁽⁶⁾⁽⁷⁾	723		754		739		752		724		(4)		—
Provision (benefit) for credit losses	(14)		100		63		140		(2)		**		**
Non-interest expense	403		437		394		381		391		(8)		3
Income from continuing operations before income taxes	334		217		282		231		335		54		—
Income tax provision	78		79		103		85		122		(1)		(36)
Income from continuing operations, net of tax	$	256	$	138	$	179	$	146	$	213	86		20
Selected performance metrics:
Period-end loans held for investment	$	65,953	$	64,575	$	67,670	$	67,672	$	67,320	2		(2)
Average loans held for investment	65,181		67,200		67,859		67,669		66,938		(3)

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Capital One Reports First Quarter 2018 Net Income of $1.3 billion, or $2.62 per share