Capital One Reports Fourth Quarter 2012 Net Income of $843 million, or $1.41 per share
Earnings for full year 2012 were $3.5 billion, or $6.16 per share
MCLEAN, Va., Jan. 17, 2013 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the full year 2012 of $3.5 billion, or $6.16 per diluted common share, compared with net income of $3.1 billion, or $6.80 per diluted common share, for 2011. Results for 2012 reflect the impacts of acquisition-related accounting and an increase in the number of shares outstanding. Net income for the fourth quarter of 2012 was $843 million, or $1.41 per diluted common share, compared with net income of $1.2 billion, or $2.01 per diluted common share, for the third quarter of 2012, and net income of $407 million, or $0.88 per diluted common share, for the fourth quarter of 2011.
"Seasonal expense and margin trends led to a reduction in fourth quarter earnings compared to the previous quarter," said Gary L. Perlin, Capital One's Chief Financial Officer. "With a few exceptions largely related to these seasonal patterns, fourth quarter 2012 results give us a good picture of what to expect in terms of pre-provision earnings in 2013, assuming little change in the external environment."
The company expects average quarterly revenue levels in 2013 to be consistent with the fourth quarter of 2012, as a modest decline in earning assets will be offset by a steady to slightly higher net interest margin. Overall, the company expects non-interest expense to be, on average, just over $3.1 billion per quarter, reflecting a modest decline in quarterly expenses relative to seasonally elevated operating and marketing costs in the fourth quarter of 2012.
"Capital One remains well positioned to deliver sustained shareholder value through sure-footed execution, substantial capital generation, and disciplined capital allocation for the benefit of our shareholders," said Richard D. Fairbank, Chairman and Chief Executive Officer. "As a first step, we expect to return to a meaningful dividend in 2013, following the completion of the current CCAR process."
Total Company Results
All comparisons in the following paragraphs are for the fourth quarter of 2012 compared with the third quarter of 2012 unless otherwise noted.
Loans and Deposits
Period-end loans held for investment increased $2.8 billion to $205.9 billion. Commercial Banking's period-end loans increased $1.6 billion, or 4 percent, to $38.8 billion, and period-end loans in Auto Finance grew $689 million, or 3 percent, to $27.1 billion due to strong growth in both businesses. Domestic Card period-end loans increased $2.5 billion as seasonal growth at the end of the fourth quarter was partially offset by expected run-off in acquired credit card loans and the continued run-off of installment loans. Period-end loans in Home Loans decreased $2.2 billion, or 5 percent, to $44.1 billion, driven by the continued run-off of acquired portfolios.
Average loans in the quarter were essentially flat at $202.9 billion. Average loans in Commercial Banking grew $831 million and Auto Finance average loans grew $958 million. Average Domestic Card loan growth of $216 million was modest compared with the growth in period-end loans reflecting the magnitude of the increase in period-end loans driven by our partnerships portfolio. Average Home Loans decreased by $2.0 billion, driven largely by the continued run-off of acquired portfolios.
Period-end total deposits decreased $770 million to $212.5 billion, driven by a reduction in deposits in legacy banking segments. Average deposits in the quarter were essentially flat and deposit interest rates declined 5 basis points to 0.72 percent.
Revenues
Total net revenue for the fourth quarter of 2012 was $5.6 billion, a decline of $158 million, or 3 percent, almost entirely driven by higher levels of estimated uncollectible finance charges and fees in the company's Domestic Card business. This was due to seasonally higher levels of finance charge and fee reversal and a higher portion of the uncollectible finance charges and fees being recognized as a reduction of net revenue instead of being offset against the SOP 03-3 credit mark on acquired delinquent non-revolving credit card loans.
The higher levels of estimated uncollectible finance charges and fees coupled with a substantial increase in the proportion of lower-yielding cash and investment securities in anticipation of the call of high coupon trust securities resulted in a decrease in net interest margin of 45 basis points to 6.52 percent. Cost of funds in the fourth quarter declined 7 basis points to 0.99 percent.
Non-Interest Expense
Operating expenses were $2.9 billion in the fourth quarter, an increase of $133 million, or 5 percent, driven by higher year-end expense patterns and somewhat higher integration expenses. Marketing expense increased $77 million in the quarter to $393 million.
Provision for Credit Losses
Provision for credit losses was $1.2 billion in the quarter, up $137 million from the previous quarter, largely caused by an increasingly lower proportion of charge-offs related to acquired delinquent non-revolving credit card loans being absorbed by the SOP 03-3 credit mark than was absorbed in the third quarter and an expected seasonal increase to the underlying Domestic Card portfolio.
The net charge-off rate was 2.26 percent in the fourth quarter of 2012, an increase of 51 basis points from 1.75 percent in the third quarter, largely because of the diminishing impact of the credit mark discussed above. The net charge-off rate for Domestic Card increased to 4.35 percent from 3.04 percent, also driven by seasonality and the diminishing impact of the credit mark described above. The net charge-off rate for Auto Finance increased 45 basis points, while the rate for Commercial Banking increased 10 basis points.
Net Income
Net income decreased 28 percent in the fourth quarter driven by lower revenue and higher non-interest and credit expenses.
Capital Ratios
The company's estimated Tier 1 common ratio was approximately 11.0 percent as of December 31, 2012, up from 10.7 percent as of September 30, 2012.
Detailed segment information will be available in the company's Annual Report on Form 10-K for the year ended December 31, 2012.
Earnings Conference Call Webcast Information
The company will hold an earnings conference call on January 17, 2013 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 "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation to GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through January 31, 2013 at 10:00 PM.
Forward-looking Statements
The company cautions that its current expectations in this release dated January 17, 2013 and the company's plans, objectives, expectations and intentions, are forward-looking statements which speak only as of the date hereof. The company does not undertake any obligation to update or revise any of the information contained herein whether as a result of new information, future events or otherwise.
Certain statements in this release are forward-looking statements, including those that discuss, among other things: strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns, expenses, capital measures, accruals for claims in litigation and for other claims against the company, earnings per share or other financial measures for the company; future financial and operating results; the company's plans, objectives, expectations and intentions; the projected impact and benefits of the acquisition of ING Direct and HSBC's U.S. Card business (the "Transactions"); and the assumptions that underlie these matters. To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities Litigation Reform Act of 1995. Numerous factors could cause the company's actual results to differ materially from those described in such forward-looking statements, including, among other things: general economic and business conditions in the U.S., the U.K., Canada or the company's local markets, including conditions affecting employment levels, interest rates, consumer income and confidence, spending and savings that may affect consumer bankruptcies, defaults, charge-offs and deposit activity; an increase or decrease in credit losses (including increases due to a worsening of general economic conditions in the credit environment); financial, legal, regulatory, tax or accounting changes or actions, including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder and regulations governing bank capital and liquidity standards, including Basel-related initiatives; the possibility that the company may not fully realize the projected cost savings and other projected benefits of the Transactions; difficulties and delays in integrating the assets and businesses acquired in the Transactions; business disruption following the Transactions; diversion of management time on issues related to the Transactions, including integration of the assets and businesses acquired; reputational risks and the reaction of customers and counterparties to the Transactions; disruptions relating to the Transactions negatively impacting the company's ability to maintain relationships with customers, employees and suppliers; changes in asset quality and credit risk as a result of the Transactions; the accuracy of estimates and assumptions the company uses to determine the fair value of assets acquired and liabilities assumed in the Transactions; developments, changes or actions relating to any litigation matter involving the company; the inability to sustain revenue and earnings growth; increases or decreases in interest rates; the company's ability to access the capital markets at attractive rates and terms to capitalize and fund its operations and future growth; the success of the company's marketing efforts in attracting and retaining customers; increases or decreases in the company's aggregate loan balances or the number of customers and the growth rate and composition thereof, including increases or decreases resulting from factors such as shifting product mix, amount of actual marketing expenses the company incurs and attrition of loan balances; the level of future repurchase or indemnification requests the company may receive, the actual future performance of mortgage loans relating to such requests, the success rates of claimants against the company, any developments in litigation and the actual recoveries the company may make on any collateral relating to claims against the company; the amount and rate of deposit growth; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products or financial condition; any significant disruption in the company's operations or technology platform; the company's ability to maintain a compliance infrastructure suitable for the nature of our business; the company's ability to control costs; the amount of, and rate of growth in, the company's expenses as its business develops or changes or as it expands into new market areas; the company's ability to execute on its strategic and operational plans; any significant disruption of, or loss of public confidence in, the United States Mail service affecting the company's response rates and consumer payments; the company's ability to recruit and retain experienced personnel to assist in the management and operations of new products and services; changes in the labor and employment markets; fraud or misconduct by the company's customers, employees or business partners; competition from providers of products and services that compete with the company's businesses; and other risk factors set forth from time to time in reports that the company 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, 2011.
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 $212.5 billion in deposits and $312.9 billion in total assets outstanding as of December 31, 2012. 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. ING DIRECT, a division of Capital One, N.A., offers direct banking products and services to customers nationwide. 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 |
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Capital One Financial Corporation |
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Financial Supplement |
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Fourth Quarter 2012 (1) (2) |
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Table of Contents |
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Page |
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Capital One Financial Corporation Consolidated |
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Table 1: |
Financial & Statistical Summary―Consolidated |
1 |
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Table 2: |
Consolidated Statements of Income |
2 |
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Table 3: |
Consolidated Balance Sheets |
3 |
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Table 4: |
Notes to Consolidated Financial Statements & Statistical Summary (Tables 1-3) |
4 |
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Table 5: |
Average Balances, Net Interest Income and Net Interest Margin |
5 |
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Table 6: |
Loan Information and Performance Statistics |
6 |
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Table 7: |
Loan Information and Performance Statistics (Excluding Acquired Loans) (3) |
7 |
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Business Segment Detail |
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Table 8: |
Financial & Statistical Summary―Credit Card Business |
8 |
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Table 9: |
Financial & Statistical Summary―Consumer Banking Business |
9 |
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Table 10: |
Financial & Statistical Summary―Commercial Banking Business |
10 |
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Table 11: |
Financial & Statistical Summary―Other and Total |
11 |
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Table 12: |
Notes to Loan and Business Segment Disclosures (Tables 6 —11) |
12 |
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Other |
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Table 13: |
Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures |
13 |
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(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 December 31, 2012 Annual Report on Form 10-K once it is filed with the Securities and Exchange Commission. |
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(2) |
References to ING Direct refer to the business and assets acquired and liabilities assumed in the February 17, 2012 acquisition. References to HSBC 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 ("HSBC U.S. card"). |
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(3) |
We use the term "acquired loans" to refer to a limited portion of the credit card loans acquired in the HSBC 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"). Because SOP 03-3 takes into consideration future credit losses expected to be incurred over the life of the loans, there are no charge-offs or an allowance associated with these loans unless the estimated cash flows expected to be collected decrease subsequent to acquisition. In addition, these loans are not classified as delinquent or nonperforming even though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans. The accounting and classification of these loans may significantly alter some of our reported credit quality metrics. We therefore supplement certain reported credit quality metrics with metrics adjusted to exclude the impact of these acquired loans. |
CAPITAL ONE FINANCIAL CORPORATION (COF) |
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Table 1: Financial & Statistical Summary—Consolidated (1)(2)(3) |
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(Dollars in millions, except per share data and as noted) (unaudited) |
2012 Q4 |
2012 Q3 |
2011 |
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Earnings |
|||||||
Net interest income |
$ 4,528 |
$ 4,646 |
$ 3,182 |
||||
Non-interest income(4) (5) |
1,096 |
1,136 |
868 |
||||
Total net revenue(6) |
5,624 |
5,782 |
4,050 |
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Provision for credit losses |
1,151 |
1,014 |
861 |
||||
Marketing expenses |
393 |
316 |
420 |
||||
Operating expenses(7) |
2,862 |
2,729 |
2,198 |
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Income from continuing operations before income taxes |
1,218 |
1,723 |
571 |
||||
Income tax provision |
370 |
535 |
160 |
||||
Income from continuing operations, net of tax |
848 |
1,188 |
411 |
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Loss from discontinued operations, net of tax(4) |
(5) |
(10) |
(4) |
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Net income |
843 |
1,178 |
407 |
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Dividends and undistributed earnings allocated to participating securities (8) |
(3) |
(5) |
(26) |
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Preferred stock dividends |
(15) |
— |
— |
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Net income available to common stockholders |
$ 825 |
$ 1,173 |
$ 381 |
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Common Share Statistics |
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Basic EPS:(8) |
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Income from continuing operations, net of tax |
$ 1.43 |
$ 2.05 |
$ 0.89 |
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Loss from discontinued operations, net of tax |
(0.01) |
(0.02) |
(0.01) |
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Net income per common share |
$ 1.42 |
$ 2.03 |
$ 0.88 |
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Diluted EPS:(8) |
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Income from continuing operations, net of tax |
$ 1.42 |
$ 2.03 |
$ 0.89 |
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Loss from discontinued operations, net of tax |
(0.01) |
(0.02) |
(0.01) |
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Net income per common share |
$ 1.41 |
$ 2.01 |
$ 0.88 |
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Weighted average common shares outstanding (in millions): |
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Basic EPS |
579.2 |
578.3 |
456.2 |
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Diluted EPS |
585.6 |
584.1 |
458.5 |
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Common shares outstanding (period end, in millions) |
582.2 |
581.3 |
459.9 |
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Dividends per common share |
$ 0.05 |
$ 0.05 |
$ 0.05 |
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Tangible book value per common share (period end)(9) (26) |
40.23 |
38.70 |
34.26 |
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Balance Sheet (Period End) |
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Loans held for investment(10) |
$ 205,889 |
$ 203,132 |
$ 135,892 |
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Interest-earning assets |
280,096 |
270,661 |
179,878 |
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Total assets |
312,918 |
301,989 |
206,019 |
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Interest-bearing deposits |
190,018 |
192,488 |
109,945 |
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Total deposits |
212,485 |
213,255 |
128,226 |
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Borrowings |
49,910 |
38,377 |
39,561 |
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Stockholders' equity |
40,499 |
39,672 |
29,666 |
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Balance Sheet (Quarterly Average Balances) |
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Average loans held for investment(10) |
$ 202,944 |
$ 202,856 |
$ 131,581 |
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Average interest-earning assets |
277,886 |
266,803 |
176,271 |
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Average total assets |
308,096 |
297,154 |
200,106 |
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Average interest-bearing deposits |
192,122 |
193,700 |
109,914 |
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Average total deposits |
213,494 |
213,323 |
128,450 |
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Average borrowings |
44,189 |
36,451 |
34,811 |
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Average stockholders' equity |
40,212 |
38,535 |
29,698 |
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Performance Metrics |
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Net interest income growth (quarter over quarter) |
(3) |
% |
16 |
% |
(3) |
% |
|
Non-interest income growth(quarter over quarter) |
(4) |
8 |
— |
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Total net revenue growth(quarter over quarter) |
(3) |
14 |
(3) |
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Total net revenue margin(11) |
8.10 |
8.67 |
9.19 |
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Net interest margin(12) |
6.52 |
6.97 |
7.22 |
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Return on average assets(13) |
1.10 |
1.60 |
0.82 |
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Return on average total stockholders' equity(14) |
8.44 |
12.33 |
5.54 |
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Return on average tangible common equity(15) (26) |
14.74 |
21.93 |
10.43 |
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Non-interest expense as a % of average loans held for investment(16) |
6.42 |
6.00 |
7.96 |
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Efficiency ratio(17) |
57.88 |
52.66 |
64.64 |
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Effective income tax rate |
30.4 |
31.1 |
28.0 |
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Full-time equivalent employees (in thousands), period end |
39.6 |
37.6 |
30.5 |
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Credit Quality Metrics(10) (18) |
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Allowance for loan and lease losses |
$ 5,156 |
$ 5,154 |
$ 4,250 |
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Allowance as a % of loans held for investment |
2.50 |
% |
2.54 |
% |
3.13 |
% |
|
Allowance as a % of loans held for investment (excluding acquired loans) |
3.02 |
3.11 |
3.22 |
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Net charge-offs |
$ 1,150 |
$ 887 |
$ 884 |
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Net charge-off rate(19) |
2.26 |
% |
1.75 |
% |
2.69 |
% |
|
Net charge-off rate (excluding acquired loans)(19) |
2.78 |
2.18 |
2.79 |
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30+ day performing delinquency rate |
2.70 |
2.54 |
3.35 |
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30+ day performing delinquency rate (excluding acquired loans) |
3.29 |
3.15 |
3.47 |
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30+ day delinquency rate(20) |
** |
2.92 |
3.95 |
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30+ day delinquency rate (excluding acquired loans)(20) |
** |
3.62 |
4.09 |
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Capital Ratios (21) |
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Tier 1 common ratio(22) |
11.0 |
% |
10.7 |
% |
9.7 |
% |
|
Tier 1 risk-based capital ratio(23) |
11.4 |
12.7 |
12.0 |
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Total risk-based capital ratio(24) |
13.6 |
15.0 |
14.9 |
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Tangible common equity ("TCE") ratio(25) (26) |
7.9 |
7.9 |
8.2 |
CAPITAL ONE FINANCIAL CORPORATION (COF) |
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Table 2: Consolidated Statements of Income (1)(2)(3) |
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Three Months Ended |
Year Ended |
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December 31, |
September 30, |
December 31, |
December 31, |
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(Dollars in millions, except per share data) (unaudited) |
2012 |
2012 |
2011 |
2012 |
2011 |
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Interest income: |
||||||||||||
Loans held for investment |
$ 4,726 |
$ 4,901 |
$ 3,440 |
$ 17,537 |
$ 13,774 |
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Investment securities |
361 |
335 |
244 |
1,329 |
1,137 |
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Other |
28 |
18 |
17 |
98 |
76 |
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Total interest income |
5,115 |
5,254 |
3,701 |
18,964 |
14,987 |
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Interest expense: |
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Deposits |
348 |
371 |
264 |
1,403 |
1,187 |
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Securitized debt obligations |
58 |
64 |
80 |
271 |
422 |
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Senior and subordinated notes |
85 |
85 |
89 |
345 |
300 |
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Other borrowings |
96 |
88 |
86 |
356 |
337 |
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Total interest expense |
587 |
608 |
519 |
2,375 |
2,246 |
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Net interest income |
4,528 |
4,646 |
3,182 |
16,589 |
12,741 |
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Provision for credit losses |
1,151 |
1,014 |
861 |
4,415 |
2,360 |
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Net interest income after provision for credit losses |
3,377 |
3,632 |
2,321 |
12,174 |
10,381 |
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Non-interest income: |
||||||||||||
Service charges and other customer-related fees |
595 |
557 |
452 |
2,106 |
1,979 |
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Interchange fees, net |
459 |
452 |
346 |
1,647 |
1,318 |
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Net other-than-temporary impairment losses recognized in earnings |
(12) |
(13) |
(6) |
(52) |
(21) |
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Bargain purchase gain (5) |
— |
— |
— |
594 |
— |
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Other (4) |
54 |
140 |
76 |
512 |
262 |
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Total non-interest income |
1,096 |
1,136 |
868 |
4,807 |
3,538 |
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Non-interest expense: |
||||||||||||
Salaries and associate benefits |
1,039 |
1,002 |
817 |
3,876 |
3,023 |
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Occupancy and equipment |
384 |
354 |
268 |
1,331 |
1,029 |
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Marketing |
393 |
316 |
420 |
1,364 |
1,337 |
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Professional services |
362 |
307 |
366 |
1,270 |
1,198 |
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Communications and data processing |
205 |
198 |
177 |
778 |
681 |
|||||||
Amortization of intangibles (7) |
190 |
197 |
51 |
604 |
216 |
|||||||
Merger-related expense (7) |
69 |
48 |
27 |
336 |
45 |
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Other |
613 |
623 |
492 |
2,387 |
1,803 |
|||||||
Total non-interest expense |
3,255 |
3,045 |
2,618 |
11,946 |
9,332 |
|||||||
Income from continuing operations before income taxes |
1,218 |
1,723 |
571 |
5,035 |
4,587 |
|||||||
Income tax provision |
370 |
535 |
160 |
1,301 |
1,334 |
|||||||
Income from continuing operations, net of tax |
848 |
1,188 |
411 |
3,734 |
3,253 |
|||||||
Loss from discontinued operations, net of tax (4) |
(5) |
(10) |
(4) |
(217) |
(106) |
|||||||
Net income |
843 |
1,178 |
407 |
3,517 |
3,147 |
|||||||
Dividends and undistributed earnings allocated to participating securities (8) |
(3) |
(5) |
(26) |
(15) |
(26) |
|||||||
Preferred stock dividends |
(15) |
— |
— |
(15) |
— |
|||||||
Net income available to common stockholders |
$ 825 |
$ 1,173 |
$ 381 |
$ 3,487 |
$ 3,121 |
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Basic earnings per common share: (8) |
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Income from continuing operations |
$ 1.43 |
$ 2.05 |
$ 0.89 |
$ 6.60 |
$ 7.08 |
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Loss from discontinued operations |
(0.01) |
(0.02) |
(0.01) |
(0.39) |
(0.23) |
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Net income per basic common share |
$ 1.42 |
$ 2.03 |
$ 0.88 |
$ 6.21 |
$ 6.85 |
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Diluted earnings per common share: (8) |
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Income from continuing operations |
$ 1.42 |
$ 2.03 |
$ 0.89 |
$ 6.54 |
$ 7.03 |
|||||||
Loss from discontinued operations |
(0.01) |
(0.02) |
(0.01) |
(0.38) |
(0.23) |
|||||||
Net income per diluted common share |
$ 1.41 |
$ 2.01 |
$ 0.88 |
$ 6.16 |
$ 6.80 |
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Weighted average common shares outstanding (in millions): |
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Basic EPS |
579.2 |
578.3 |
456.2 |
561.1 |
455.5 |
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Diluted EPS |
585.6 |
584.1 |
458.5 |
566.5 |
459.1 |
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Dividends paid per common share |
$ 0.05 |
$ 0.05 |
$ 0.05 |
$ 0.20 |
$ 0.20 |
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CAPITAL ONE FINANCIAL CORPORATION (COF) |
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Table 3: Consolidated Balance Sheets |
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December 31, |
September 30, |
December 31, |
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(Dollars in millions)(unaudited) |
2012 |
2012 |
2011 |
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Assets: |
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Cash and due from banks |
$ 3,440 |
$ 1,855 |
$ 2,097 |
||||
Interest-bearing deposits with banks |
7,617 |
3,860 |
3,399 |
||||
Federal funds sold and securities purchased under agreements to resell |
1 |
254 |
342 |
||||
Cash and cash equivalents |
11,058 |
5,969 |
5,838 |
||||
Restricted cash for securitization investors |
428 |
760 |
791 |
||||
Securities available for sale, at fair value |
63,979 |
61,464 |
38,759 |
||||
Loans held for investment: |
|||||||
Unsecuritized loans held for investment |
163,341 |
159,219 |
88,242 |
||||
Restricted loans for securitization investors |
42,548 |
43,913 |
47,650 |
||||
Total loans held for investment |
205,889 |
203,132 |
135,892 |
||||
Less: Allowance for loan and lease losses |
(5,156) |
(5,154) |
(4,250) |
||||
Net loans held for investment |
200,733 |
197,978 |
131,642 |
||||
Loans held for sale, at lower-of-cost-or-fair-value |
201 |
187 |
201 |
||||
Premises and equipment, net |
3,587 |
3,519 |
2,748 |
||||
Interest receivable |
1,694 |
1,614 |
1,029 |
||||
Goodwill |
13,904 |
13,901 |
13,592 |
||||
Other |
17,334 |
16,597 |
11,419 |
||||
Total assets |
$ 312,918 |
$ 301,989 |
$ 206,019 |
||||
Liabilities: |
|||||||
Interest payable |
$ 450 |
$ 368 |
$ 466 |
||||
Customer deposits: |
|||||||
Non-interest bearing deposits |
22,467 |
20,767 |
18,281 |
||||
Interest-bearing deposits |
190,018 |
192,488 |
109,945 |
||||
Total customer deposits |
212,485 |
213,255 |
128,226 |
||||
Securitized debt obligations |
11,398 |
12,686 |
16,527 |
||||
Other debt: |
|||||||
Federal funds purchased and securities loaned or sold under agreements to repurchase |
1,248 |
967 |
1,464 |
||||
Senior and subordinated notes |
12,686 |
11,756 |
11,034 |
||||
Other borrowings |
24,578 |
12,968 |
10,536 |
||||
Total other debt |
38,512 |
25,691 |
23,034 |
||||
Other liabilities |
9,574 |
10,317 |
8,100 |
||||
Total liabilities |
272,419 |
262,317 |
176,353 |
||||
Stockholders' equity: |
|||||||
Preferred stock |
853 |
853 |
— |
||||
Common stock |
6 |
6 |
5 |
||||
Paid-in capital, net |
25,335 |
25,265 |
19,274 |
||||
Retained earnings and accumulated other comprehensive income |
17,592 |
16,835 |
13,631 |
||||
Treasury stock, at cost |
(3,287) |
(3,287) |
(3,244) |
||||
Total stockholders' equity |
40,499 |
39,672 |
29,666 |
||||
Total liabilities and stockholders' equity |
$ 312,918 |
$ 301,989 |
$ 206,019 |
||||
CAPITAL ONE FINANCIAL CORPORATION (COF) |
||||||||||||||
Table 4: Notes to Consolidated Financial Statements & Statistical Summary (Tables 1-3) |
||||||||||||||
(1) |
Certain prior period amounts have been reclassified to conform to the current period presentation. |
|||||||||||||
(2) |
Results for Q2 2012 and thereafter include the impact of the May 1, 2012 closing of the HSBC transaction, which resulted in the addition of approximately $28.2 billion in credit card receivables at closing. |
|||||||||||||
(3) |
Results for Q1 2012 and thereafter include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans of $40.4 billion, other assets of $53.9 billion and deposits of $84.4 billion at acquisition. |
|||||||||||||
(4) |
We did not record a provision for mortgage representation and warranty losses in Q4 or Q3 2012. We recorded a provision for mortgage representation and warranty losses of $59 million in Q4 2011. 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 decreased to $899 million as of December 31, 2012, from $919 million as of September 30, 2012, due to the settlement of claims in Q4 2012 totaling $20 million. |
|||||||||||||
(5) |
Includes a bargain purchase gain of $594 million recognized in earnings in Q1 2012 attributable to the February 17, 2012 acquisition of ING Direct. Represents the excess of the fair value of the net assets acquired in the ING Direct acquisition as of the acquisition date of February 17, 2012 over the consideration transferred. |
|||||||||||||
(6) |
Total net revenue was reduced by $318 million in Q4 2012, $185 million in Q3 2012 and $130 million in Q4 2011, for the estimated uncollectible amount of billed finance charges and fees. Premium amortization related to the ING Direct and HSBC U.S. card acquisitions reduced revenue by $124 million in Q4 2012 and $133 million in Q3 2012. |
|||||||||||||
(7) |
Includes merger-related expenses, including transaction costs, attributable to acquisitions of $69 million in Q4 2012, $48 million in Q3 2012, and $27 million in Q4 2011. Also includes intangible amortization expense related to purchased credit card relationships ("PCCR") from the HSBC U.S. card acquisition of $122 million in Q4 2012 and $127 million in Q3 2012. Other asset and intangible amortization expense related to the ING Direct and HSBC U.S. Card acquisitions totaled $48 million in Q4 2012 and $42 million in Q3 2012. |
|||||||||||||
(8) |
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. |
|||||||||||||
(9) |
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" for additional information. |
|||||||||||||
(10) |
See "Table 12: Notes to Loan and Business Segment Disclosures (Tables 6 -11)" for information on acquired loans accounted for based on estimated cash flows expected to be collected. |
|||||||||||||
(11) |
Calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period. |
|||||||||||||
(12) |
Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period. |
|||||||||||||
(13) |
Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period. |
|||||||||||||
(14) |
Calculated based on annualized income from continuing operations, net of tax, for the period divided by average stockholders' equity for the period. |
|||||||||||||
(15) |
Calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible common equity for the period. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
|||||||||||||
(16) |
Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period. |
|||||||||||||
(17) |
Calculated based on non-interest expense, excluding goodwill impairment charges, for the period divided by total net revenue for the period. |
|||||||||||||
(18) |
Loans acquired as part of the CCB, ING Direct and HSBC U.S. card acquisitions classified as held for investment are included in the denominator used in calculating our reported credit quality metrics. We supplement certain reported credit quality metrics with metrics adjusted to exclude from the denominator acquired loans accounted for based on estimated expected cash flows to be collected (formerly SOP 03-3). See "Table 7: Loan Information and Performance Statistics (Excluding Acquired Loans)" for additional information. |
|||||||||||||
(19) |
Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. |
|||||||||||||
(20) |
The 30+ day total delinquency rate as of the end of Q4 2012 will be provided in the Annual Report on Form 10-K for the year ended December 31, 2012 . |
|||||||||||||
(21) |
Regulatory capital ratios as of the end of Q4 2012 are preliminary and therefore subject to change. |
|||||||||||||
(22) |
Tier 1 common ratio is a regulatory capital measure calculated based on Tier 1 common capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
|||||||||||||
(23) |
Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
|||||||||||||
(24) |
Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
|||||||||||||
(25) |
TCE ratio is a non-GAAP measure calculated based on tangible common equity divided by tangible assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
|||||||||||||
(26) |
The previously reported TCE as of the end of Q3 2012 has been revised to exclude noncumulative perpetual preferred stock. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information. |
CAPITAL ONE FINANCIAL CORPORATION (COF) |
|||||||||||||||||||||||
Table 5: Average Balances, Net Interest Income and Net Interest Margin |
|||||||||||||||||||||||
2012 Q4 |
2012 Q3 |
2011 Q4 |
|||||||||||||||||||||
Average |
Interest Income/ |
Yield/ |
Average |
Interest Income/ |
Yield/ |
Average |
Interest Income/ |
Yield/ |
|||||||||||||||
(Dollars in millions)(unaudited) |
Balance |
Expense |
Rate |
Balance |
Expense |
Rate |
Balance |
Expense |
Rate |
||||||||||||||
Interest-earning assets: |
|||||||||||||||||||||||
Cash equivalents and other |
$ 10,768 |
$ 28 |
1.04 |
% |
$ 6,019 |
$ 18 |
1.20 |
% |
$ 5,685 |
$ 17 |
1.20 |
% |
|||||||||||
Securities available for sale |
64,174 |
361 |
2.25 |
57,928 |
335 |
2.31 |
39,005 |
244 |
2.50 |
||||||||||||||
Loans held for investment |
202,944 |
4,726 |
9.31 |
202,856 |
4,901 |
9.66 |
131,581 |
3,440 |
10.46 |
||||||||||||||
Total interest-earning assets |
$ 277,886 |
$ 5,115 |
7.36 |
% |
$ 266,803 |
$ 5,254 |
7.88 |
% |
$ 176,271 |
$ 3,701 |
8.40 |
% |
|||||||||||
Interest-bearing liabilities: |
|||||||||||||||||||||||
Interest-bearing deposits |
$ 192,122 |
$ 348 |
0.72 |
% |
$ 193,700 |
$ 371 |
0.77 |
% |
$ 109,914 |
$ 264 |
0.96 |
% |
|||||||||||
Securitized debt obligations |
12,119 |
58 |
1.91 |
13,331 |
64 |
1.92 |
16,780 |
80 |
1.91 |
||||||||||||||
Senior and subordinated notes |
11,528 |
85 |
2.95 |
11,035 |
85 |
3.08 |
10,237 |
89 |
3.48 |
||||||||||||||
Other borrowings |
20,542 |
96 |
1.87 |
12,085 |
88 |
2.91 |
7,794 |
86 |
4.41 |
||||||||||||||
Total interest-bearing liabilities |
$ 236,311 |
$ 587 |
0.99 |
% |
$ 230,151 |
$ 608 |
1.06 |
% |
$ 144,725 |
$ 519 |
1.43 |
% |
|||||||||||
Net interest income/spread |
$ 4,528 |
6.37 |
% |
$ 4,646 |
6.82 |
% |
$ 3,182 |
6.97 |
% |
||||||||||||||
Impact of non-interest bearing funding |
0.15 |
0.15 |
0.25 |
||||||||||||||||||||
Net interest margin |
6.52 |
% |
6.97 |
% |
7.22 |
% |
|||||||||||||||||
Year Ended December 31, |
|||||||||||||||
2012 |
2011 |
||||||||||||||
Average |
Interest Income/ |
Yield/ |
Average |
Interest Income/ |
Yield/ |
||||||||||
(Dollars in millions)(unaudited) |
Balance |
Expense |
Rate |
Balance |
Expense |
Rate |
|||||||||
Interest-earning assets: |
|||||||||||||||
Cash equivalents and other |
$ 9,740 |
$ 98 |
1.01 |
% |
$ 7,328 |
$ 76 |
1.04 |
% |
|||||||
Investment securities |
57,424 |
1,329 |
2.31 |
39,513 |
1,137 |
2.88 |
|||||||||
Loans held for investment |
187,915 |
17,537 |
9.33 |
128,424 |
13,774 |
10.73 |
|||||||||
Total interest-earning assets |
$ 255,079 |
$18,964 |
7.43 |
% |
$ 175,265 |
$14,987 |
8.55 |
% |
|||||||
Interest-bearing liabilities: |
|||||||||||||||
Interest-bearing deposits |
$ 183,314 |
$ 1,403 |
0.77 |
% |
$ 109,644 |
$ 1,187 |
1.08 |
% |
|||||||
Securitized debt obligations |
14,138 |
271 |
1.92 |
20,715 |
422 |
2.04 |
|||||||||
Senior and subordinated notes |
11,012 |
345 |
3.13 |
9,244 |
300 |
3.25 |
|||||||||
Other borrowings |
12,875 |
356 |
2.77 |
8,063 |
337 |
4.18 |
|||||||||
Total interest-bearing liabilities |
$ 221,339 |
$ 2,375 |
1.07 |
% |
$ 147,666 |
$ 2,246 |
1.52 |
% |
|||||||
Net interest income/spread |
$16,589 |
6.36 |
% |
$12,741 |
7.03 |
% |
|||||||||
Impact of non-interest bearing funding |
0.14 |
0.24 |
|||||||||||||
Net interest margin |
6.50 |
% |
7.27 |
% |
|||||||||||
CAPITAL ONE FINANCIAL CORPORATION (COF) |
|||||||
Table 6: Loan Information and Performance Statistics(1)(2)(3) |
|||||||
2012 |
2012 |
2011 |
|||||
(Dollars in millions)(unaudited) |
Q4 |
Q3 |
Q4 |
||||
Period-end Loans Held For Investment |
|||||||
Credit card: |
|||||||
Domestic credit card |
$ 83,141 |
$ 80,621 |
$ 56,609 |
||||
International credit card |
8,614 |
8,412 |
8,466 |
||||
Total credit card |
91,755 |
89,033 |
65,075 |
||||
Consumer banking: |
|||||||
Automobile |
27,123 |
26,434 |
21,779 |
||||
Home loan |
44,100 |
46,275 |
10,433 |
||||
Retail banking |
3,904 |
4,029 |
4,103 |
||||
Total consumer banking |
75,127 |
76,738 |
36,315 |
||||
Commercial banking:(4) |
|||||||
Commercial and multifamily real estate |
17,732 |
16,963 |
15,736 |
||||
Commercial and industrial |
19,892 |
18,965 |
17,088 |
||||
Total commercial lending |
37,624 |
35,928 |
32,824 |
||||
Small-ticket commercial real estate |
1,196 |
1,281 |
1,503 |
||||
Total commercial banking |
38,820 |
37,209 |
34,327 |
||||
Other loans |
187 |
152 |
175 |
||||
Total |
$ 205,889 |
$ 203,132 |
$ 135,892 |
||||
Average Loans Held For Investment |
|||||||
Credit card: |
|||||||
Domestic credit card |
$ 80,718 |
$ 80,502 |
$ 54,403 |
||||
International credit card |
8,372 |
8,154 |
8,361 |
||||
Total credit card |
89,090 |
88,656 |
62,764 |
||||
Consumer banking: |
|||||||
Automobile |
26,881 |
25,923 |
21,101 |
||||
Home loan |
45,250 |
47,262 |
10,683 |
||||
Retail banking |
3,967 |
4,086 |
4,007 |
||||
Total consumer banking |
76,098 |
77,271 |
35,791 |
||||
Commercial banking:(4) |
|||||||
Commercial and multifamily real estate |
17,005 |
16,654 |
14,920 |
||||
Commercial and industrial |
19,344 |
18,817 |
16,376 |
||||
Total commercial lending |
36,349 |
35,471 |
31,296 |
||||
Small-ticket commercial real estate |
1,249 |
1,296 |
1,547 |
||||
Total commercial banking |
37,598 |
36,767 |
32,843 |
||||
Other loans |
158 |
162 |
183 |
||||
Total |
$ 202,944 |
$ 202,856 |
$ 131,581 |
||||
Net Charge-off Rates(5) |
|||||||
Credit card: |
|||||||
Domestic credit card |
4.35 |
% |
3.04 |
% |
4.07 |
% |
|
International credit card(8) |
3.99 |
4.95 |
5.77 |
||||
Total credit card |
4.32 |
3.22 |
4.30 |
||||
Consumer Banking: |
|||||||
Automobile |
2.24 |
1.79 |
2.07 |
||||
Home loan |
(0.06) |
0.28 |
0.90 |
||||
Retail banking |
2.45 |
1.20 |
1.44 |
||||
Total consumer banking |
0.88 |
0.83 |
1.65 |
||||
Commercial banking:(4) |
|||||||
Commercial and multifamily real estate |
(0.08) |
(0.05) |
0.75 |
||||
Commercial and industrial |
0.13 |
- |
0.21 |
||||
Total commercial lending |
0.03 |
(0.03) |
0.47 |
||||
Small-ticket commercial real estate |
2.02 |
0.79 |
3.73 |
||||
Total commercial banking |
0.10 |
- |
0.62 |
||||
Other loans |
24.23 |
30.11 |
24.08 |
||||
Total |
2.26 |
% |
1.75 |
% |
2.69 |
% |
|
30+ Day Performing Delinquency Rates(5) |
|||||||
Credit card:(7) |
|||||||
Domestic credit card |
3.61 |
% |
3.52 |
% |
3.66 |
% |
|
International credit card |
3.58 |
4.92 |
5.18 |
||||
Total credit card |
3.61 |
% |
3.65 |
% |
3.86 |
% |
|
Consumer Banking: |
|||||||
Automobile |
7.00 |
% |
6.12 |
% |
6.88 |
% |
|
Home loan |
0.13 |
0.15 |
0.89 |
||||
Retail banking |
0.76 |
0.73 |
0.83 |
||||
Total consumer banking |
2.65 |
% |
2.23 |
% |
4.47 |
% |
|
Nonperforming Asset Rates(5)(6) |
|||||||
Credit card:(7) |
|||||||
International credit card |
1.16 |
% |
— |
% |
— |
% |
|
Total credit card |
0.11 |
% |
— |
% |
— |
% |
|
Consumer banking: |
|||||||
Automobile |
0.63 |
% |
0.52 |
% |
0.58 |
% |
|
Home loan |
1.00 |
0.98 |
4.58 |
||||
Retail banking |
1.85 |
2.25 |
2.50 |
||||
Total consumer banking |
0.91 |
% |
0.89 |
% |
1.94 |
% |
|
Commercial banking:(4) |
|||||||
Commercial and multifamily real estate |
0.82 |
% |
1.04 |
% |
1.40 |
% |
|
Commercial and industrial |
0.72 |
0.68 |
0.80 |
||||
Total commercial lending |
0.77 |
% |
0.85 |
% |
1.09 |
% |
|
Small-ticket commercial real estate |
0.97 |
1.49 |
2.86 |
||||
Total commercial banking |
0.77 |
% |
0.87 |
% |
1.17 |
% |
|
CAPITAL ONE FINANCIAL CORPORATION (COF) |
|||||||
Table 7: Loan Information and Performance Statistics (Excluding Acquired Loans)(1)(2)(3)(5) |
|||||||
2012 |
2012 |
2011 |
|||||
(Dollars in millions)(unaudited) |
Q4 |
Q3 |
Q4 |
||||
Period-end Loans Held For Investment (Excluding Acquired Loans) |
|||||||
Credit card: |
|||||||
Domestic credit card |
$ 82,853 |
$ 80,250 |
$ 56,609 |
||||
International credit card |
8,614 |
8,412 |
8,466 |
||||
Total credit card |
91,467 |
88,662 |
65,075 |
||||
Consumer banking: |
|||||||
Automobile |
27,106 |
26,411 |
21,732 |
||||
Home loan |
7,697 |
7,719 |
6,321 |
||||
Retail banking |
3,870 |
3,990 |
4,058 |
||||
Total consumer banking |
38,673 |
38,120 |
32,111 |
||||
Commercial banking:(4) |
|||||||
Commercial and multifamily real estate |
17,605 |
16,800 |
15,573 |
||||
Commercial and industrial |
19,660 |
18,729 |
16,770 |
||||
Total commercial lending |
37,265 |
35,529 |
32,343 |
||||
Small-ticket commercial real estate |
1,196 |
1,281 |
1,503 |
||||
Total commercial banking |
38,461 |
36,810 |
33,846 |
||||
Other loans |
154 |
152 |
175 |
||||
Total |
$ 168,755 |
$ 163,744 |
$ 131,207 |
||||
Average Loans Held For Investment (Excluding Acquired Loans) |
|||||||
Credit card: |
|||||||
Domestic credit card |
$ 80,407 |
$ 80,079 |
$ 54,403 |
||||
International credit card |
8,372 |
8,154 |
8,361 |
||||
Total credit card |
88,779 |
88,233 |
62,764 |
||||
Consumer banking: |
|||||||
Automobile |
26,861 |
25,897 |
21,049 |
||||
Home loan |
8,092 |
7,996 |
6,483 |
||||
Retail banking |
3,931 |
4,046 |
3,962 |
||||
Total consumer banking |
38,884 |
37,939 |
31,494 |
||||
Commercial banking:(4) |
|||||||
Commercial and multifamily real estate |
16,871 |
16,489 |
14,757 |
||||
Commercial and industrial |
19,115 |
18,579 |
16,055 |
||||
Total commercial lending |
35,986 |
35,068 |
30,812 |
||||
Small-ticket commercial real estate |
1,249 |
1,296 |
1,547 |
||||
Total commercial banking |
37,235 |
36,364 |
32,359 |
||||
Other loans |
147 |
162 |
183 |
||||
Total |
$ 165,045 |
$ 162,698 |
$ 126,800 |
||||
Net Charge-off Rates (Excluding Acquired Loans) |
|||||||
Credit card: |
|||||||
Domestic credit card |
4.37 |
% |
3.06 |
% |
4.07 |
% |
|
International credit card(8) |
3.99 |
4.95 |
5.77 |
||||
Total credit card |
4.33 |
3.23 |
4.30 |
||||
Consumer Banking: |
|||||||
Automobile |
2.24 |
1.79 |
2.07 |
||||
Home loan |
(0.33) |
1.65 |
1.48 |
||||
Retail banking |
2.48 |
1.22 |
1.46 |
||||
Total consumer banking |
1.73 |
1.70 |
1.87 |
||||
Commercial banking:(4) |
|||||||
Commercial and multifamily real estate |
(0.08) |
(0.05) |
0.76 |
||||
Commercial and industrial |
0.13 |
- |
0.22 |
||||
Total commercial lending |
0.03 |
(0.03) |
0.48 |
||||
Small-ticket commercial real estate |
2.02 |
0.79 |
3.73 |
||||
Total commercial banking |
0.10 |
- |
0.63 |
||||
Other loans |
26.05 |
30.11 |
24.08 |
||||
Total |
2.78 |
% |
2.18 |
% |
2.79 |
% |
|
30+ Day Performing Delinquency Rates (Excluding Acquired Loans) |
|||||||
Credit card:(7) |
|||||||
Domestic credit card |
3.62 |
% |
3.53 |
% |
3.66 |
% |
|
International credit card |
3.58 |
4.92 |
5.18 |
||||
Total credit card |
3.62 |
% |
3.67 |
% |
3.86 |
% |
|
Consumer Banking: |
|||||||
Automobile |
7.01 |
% |
6.12 |
% |
6.90 |
% |
|
Home loan |
0.77 |
0.89 |
1.47 |
||||
Retail banking |
0.77 |
0.74 |
0.84 |
||||
Total consumer banking |
5.14 |
% |
4.50 |
% |
5.06 |
% |
|
Nonperforming Asset Rates (Excluding Acquired Loans)(5)(6) |
|||||||
Credit card:(7) |
|||||||
International credit card |
1.16 |
% |
— |
% |
— |
% |
|
Total credit card |
0.11 |
% |
— |
% |
— |
% |
|
Consumer banking: |
|||||||
Automobile |
0.63 |
% |
0.52 |
% |
0.58 |
% |
|
Home loan |
5.69 |
5.85 |
7.55 |
||||
Retail banking |
1.86 |
2.27 |
2.52 |
||||
Total consumer banking |
1.76 |
% |
1.78 |
% |
2.20 |
% |
|
Commercial banking:(4) |
|||||||
Commercial and multifamily real estate |
0.83 |
% |
1.05 |
% |
1.42 |
% |
|
Commercial and industrial |
0.72 |
0.69 |
0.81 |
||||
Total commercial lending |
0.77 |
0.86 |
1.10 |
||||
Small-ticket commercial real estate |
0.97 |
1.49 |
2.86 |
||||
Total commercial banking |
0.78 |
% |
0.88 |
% |
1.18 |
% |
|
CAPITAL ONE FINANCIAL CORPORATION (COF) |
|||||||
Table 8: Financial & Statistical Summary—Credit Card Business(2) |
|||||||
2012 |
2012 |
2011 |
|||||
(Dollars in millions) (unaudited) |
Q4 |
Q3 |
Q4 |
||||
Credit Card |
|||||||
Earnings: |
|||||||
Net interest income |
$ 2,849 |
$ 2,991 |
$ 1,949 |
||||
Non-interest income |
883 |
826 |
638 |
||||
Total net revenue |
3,732 |
3,817 |
2,587 |
||||
Provision for credit losses |
1,000 |
892 |
600 |
||||
Non-interest expense |
1,933 |
1,790 |
1,431 |
||||
Income (loss) from continuing operations before taxes |
799 |
1,135 |
556 |
||||
Income tax provision (benefit) |
279 |
394 |
203 |
||||
Income (loss) from continuing operations, net of tax |
$ 520 |
$ 741 |
$ 353 |
||||
Selected performance metrics: |
|||||||
Period-end loans held for investment |
$ 91,755 |
$ 89,033 |
$ 65,075 |
||||
Average loans held for investment |
89,090 |
88,656 |
62,764 |
||||
Average yield on loans held for investment |
14.33 |
% |
15.03 |
% |
14.12 |
% |
|
Total net revenue margin |
16.76 |
17.22 |
16.49 |
||||
Net charge-off rate(5)(8) |
4.32 |
3.22 |
4.30 |
||||
30+ day delinquency rate(5) |
3.61 |
3.65 |
3.86 |
||||
Nonperforming loan rate(5)(7) |
0.11 |
— |
— |
||||
Purchase volume(9) |
$ 52,853 |
$ 48,020 |
$ 38,179 |
||||
Domestic Card |
|||||||
Earnings: |
|||||||
Net interest income |
$ 2,583 |
$ 2,715 |
$ 1,706 |
||||
Non-interest income |
798 |
722 |
613 |
||||
Total net revenue |
3,381 |
3,437 |
2,319 |
||||
Provision for credit losses |
$ 911 |
811 |
519 |
||||
Non-interest expense |
1,727 |
1,584 |
1,183 |
||||
Income (loss) from continuing operations before taxes |
743 |
1,042 |
617 |
||||
Income tax provision (benefit) |
263 |
369 |
222 |
||||
Income (loss) from continuing operations, net of tax |
$ 480 |
$ 673 |
$ 395 |
||||
Selected performance metrics: |
|||||||
Period-end loans held for investment |
$ 83,141 |
$ 80,621 |
$ 56,609 |
||||
Average loans held for investment |
80,718 |
80,502 |
54,403 |
||||
Average yield on loans held for investment |
14.20 |
% |
14.88 |
% |
14.05 |
% |
|
Total net revenue margin |
16.75 |
17.08 |
17.05 |
||||
Net charge-off rate(5) |
4.35 |
3.04 |
4.07 |
||||
30+ day delinquency rate(5) |
3.61 |
3.52 |
3.66 |
||||
Purchase volume(9) |
$ 48,918 |
$ 44,552 |
$ 34,586 |
||||
International Card |
|||||||
Earnings: |
|||||||
Net interest income |
$ 266 |
$ 276 |
$ 243 |
||||
Non-interest income |
85 |
104 |
25 |
||||
Total net revenue |
351 |
380 |
268 |
||||
Provision for credit losses |
89 |
81 |
81 |
||||
Non-interest expense |
206 |
206 |
248 |
||||
Income (loss) from continuing operations before taxes |
56 |
93 |
(61) |
||||
Income tax provision (benefit) |
16 |
25 |
(19) |
||||
Income (loss) from continuing operations, net of tax |
$ 40 |
$ 68 |
$ (42) |
||||
Selected performance metrics: |
|||||||
Period-end loans held for investment |
$ 8,614 |
$ 8,412 |
$ 8,466 |
||||
Average loans held for investment |
8,372 |
8,154 |
8,361 |
||||
Average yield on loans held for investment |
15.59 |
% |
16.47 |
% |
14.57 |
% |
|
Total net revenue margin |
16.77 |
18.64 |
12.82 |
||||
Net charge-off rate(8) |
3.99 |
4.95 |
5.77 |
||||
30+ day delinquency rate |
3.58 |
4.92 |
5.18 |
||||
Nonperforming loan rate(7) |
1.16 |
— |
— |
||||
Purchase volume(9) |
$ 3,935 |
$ 3,468 |
$ 3,593 |
||||
CAPITAL ONE FINANCIAL CORPORATION (COF) |
||||||||
Table 9: Financial & Statistical Summary—Consumer Banking Business(3) |
||||||||
2012 |
2012 |
2011 |
||||||
(Dollars in millions) (unaudited) |
Q4 |
Q3 |
Q4 |
|||||
Consumer Banking |
||||||||
Earnings: |
||||||||
Net interest income |
$ 1,503 |
$ 1,501 |
$ 1,105 |
|||||
Non-interest income |
161 |
260 |
152 |
|||||
Total net revenue |
1,664 |
1,761 |
1,257 |
|||||
Provision for credit losses |
169 |
202 |
180 |
|||||
Non-interest expense |
992 |
977 |
893 |
|||||
Income from continuing operations before taxes |
503 |
582 |
184 |
|||||
Income tax provision |
178 |
206 |
67 |
|||||
Income from continuing operations, net of tax |
$ 325 |
$ 376 |
$ 117 |
|||||
Selected performance metrics: |
||||||||
Period-end loans held for investment |
$ 75,127 |
$ 76,738 |
$ 36,315 |
|||||
Average loans held for investment |
76,098 |
77,271 |
35,791 |
|||||
Average yield on loans held for investment |
5.94 |
% |
6.05 |
% |
9.46 |
% |
||
Auto loan originations |
$ 3,479 |
$ 3,905 |
$ 3,586 |
|||||
Period-end deposits |
172,396 |
173,100 |
88,540 |
|||||
Average deposits |
172,654 |
173,334 |
88,390 |
|||||
Deposit interest expense rate |
0.68 |
% |
0.71 |
% |
0.84 |
% |
||
Core deposit intangible amortization |
$ 39 |
$ 41 |
$ 31 |
|||||
Net charge-off rate(5) |
0.88 |
% |
0.83 |
% |
1.65 |
% |
||
30+ day performing delinquency rate(5) |
2.65 |
2.23 |
4.47 |
|||||
30+ day delinquency rate(5)(10) |
** |
2.91 |
5.99 |
|||||
Nonperforming loan rate(5)(10) |
0.85 |
0.84 |
1.79 |
|||||
Nonperforming asset rate(5)(6) |
0.91 |
0.89 |
1.94 |
|||||
Period-end loans serviced for others |
$ 15,333 |
$ 15,659 |
$ 17,998 |
|||||
CAPITAL ONE FINANCIAL CORPORATION (COF) |
||||||||
Table 10: Financial & Statistical Summary—Commercial Banking Business(3)(4) |
||||||||
2012 |
2012 |
2011 |
||||||
(Dollars in millions) (unaudited) |
Q4 |
Q3 |
Q4 |
|||||
Commercial Banking |
||||||||
Earnings: |
||||||||
Net interest income |
$ 450 |
$ 432 |
$ 425 |
|||||
Non-interest income |
86 |
87 |
87 |
|||||
Total net revenue(11) |
536 |
519 |
512 |
|||||
Provision for credit losses |
(20) |
(87) |
76 |
|||||
Non-interest expense |
294 |
253 |
254 |
|||||
Income from continuing operations before taxes |
262 |
353 |
182 |
|||||
Income tax provision |
93 |
125 |
65 |
|||||
Income from continuing operations, net of tax |
$ 169 |
$ 228 |
$ 117 |
|||||
Selected performance metrics: |
||||||||
Period-end loans held for investment |
$ 38,820 |
$ 37,209 |
$ 34,327 |
|||||
Average loans held for investment |
37,598 |
36,767 |
32,843 |
|||||
Average yield on loans held for investment |
4.15 |
% |
4.14 |
% |
4.70 |
% |
||
Period-end deposits |
$ 29,866 |
$ 28,670 |
$ 26,683 |
|||||
Average deposits |
29,476 |
28,063 |
26,185 |
|||||
Deposit interest expense rate |
0.28 |
% |
0.31 |
% |
0.42 |
% |
||
Core deposit intangible amortization |
$ 8 |
$ 8 |
$ 9 |
|||||
Net charge-off rate(5) |
0.10 |
% |
- |
% |
0.62 |
% |
||
Nonperforming loan rate(5) |
0.73 |
0.82 |
1.08 |
|||||
Nonperforming asset rate (5)(6) |
0.77 |
0.87 |
1.17 |
|||||
Risk category:(12) |
||||||||
Noncriticized |
$ 36,839 |
$ 35,112 |
$ 31,617 |
|||||
Criticized performing |
1,340 |
1,394 |
1,857 |
|||||
Criticized nonperforming |
282 |
305 |
372 |
|||||
Total risk-rated loans |
38,461 |
36,811 |
33,846 |
|||||
Acquired commercial loans |
359 |
398 |
481 |
|||||
Total commercial loans |
$ 38,820 |
$ 37,209 |
$ 34,327 |
|||||
% of period-end held for investment commercial loans: |
||||||||
Noncriticized |
94.9 |
% |
94.4 |
% |
92.1 |
% |
||
Criticized performing |
3.5 |
3.7 |
5.4 |
|||||
Criticized nonperforming |
0.7 |
0.8 |
1.1 |
|||||
Total risk-rated loans |
99.1 |
98.9 |
98.6 |
|||||
Acquired commercial loans |
0.9 |
1.1 |
1.4 |
|||||
Total commercial loans |
100.0 |
% |
100.0 |
% |
100.0 |
% |
||
CAPITAL ONE FINANCIAL CORPORATION (COF) |
|||||||
Table 11: Financial & Statistical Summary—Other and Total(2)(3) |
|||||||
2012 |
2012 |
2011 |
|||||
(Dollars in millions) (unaudited) |
Q4 |
Q3 |
Q4 |
||||
Other (4) |
|||||||
Earnings: |
|||||||
Net interest expense |
$ (274) |
$ (278) |
$ (297) |
||||
Non-interest income |
(34) |
(37) |
(9) |
||||
Total net revenue |
(308) |
(315) |
(306) |
||||
Provision for credit losses |
2 |
7 |
5 |
||||
Non-interest expense |
36 |
25 |
40 |
||||
Income (loss) from continuing operations before taxes |
(346) |
(347) |
(351) |
||||
Income tax benefit |
(180) |
(190) |
(175) |
||||
Income (loss) from continuing operations, net of tax |
$ (166) |
$ (157) |
$ (176) |
||||
Selected performance metrics: |
|||||||
Period-end loans held for investment |
$ 187 |
$ 152 |
$ 175 |
||||
Average loans held for investment |
158 |
162 |
183 |
||||
Period-end deposits |
10,223 |
11,485 |
13,003 |
||||
Average deposits |
11,364 |
11,926 |
13,875 |
||||
Total |
|||||||
Earnings: |
|||||||
Net interest income |
$ 4,528 |
$ 4,646 |
$ 3,182 |
||||
Non-interest income |
1,096 |
1,136 |
868 |
||||
Total net revenue |
5,624 |
5,782 |
4,050 |
||||
Provision for credit losses |
1,151 |
1,014 |
861 |
||||
Non-interest expense |
3,255 |
3,045 |
2,618 |
||||
Income from continuing operations before taxes |
1,218 |
1,723 |
571 |
||||
Income tax provision |
370 |
535 |
160 |
||||
Income from continuing operations, net of tax |
$ 848 |
$ 1,188 |
$ 411 |
||||
Selected performance metrics: |
|||||||
Period-end loans held for investment |
$ 205,889 |
$ 203,132 |
$ 135,892 |
||||
Average loans held for investment |
202,944 |
202,856 |
131,581 |
||||
Period-end deposits |
212,485 |
213,255 |
128,226 |
||||
Average deposits |
213,494 |
213,323 |
128,450 |
||||
CAPITAL ONE FINANCIAL CORPORATION (COF) |
|||||||||||||
Table 12: Notes to Loan and Business Segment Disclosures (Tables 6 - 11) |
|||||||||||||
(1) |
Certain prior period amounts have been reclassified to conform to the current period presentation. |
||||||||||||
(2) |
Results for Q2 2012 and thereafter include the impact of the May 1, 2012 closing of the HSBC transaction, which resulted in the addition of approximately $28.2 billion in credit card receivables at closing. |
||||||||||||
(3) |
Results for Q1 2012 and thereafter include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans of $40.4 billion, other assets of $53.9 billion and deposits of $84.4 billion at acquisition. |
||||||||||||
(4) |
In Q1 2012, we re-aligned the products within our Commercial Banking segment to reflect the business operations by product rather than by customer type. As a result of this re-alignment, we now report three product categories: commercial and multifamily real estate, commercial and industrial loans and small-ticket commercial real estate. Middle market and specialty lending related products are included in commercial and industrial loans. All tax-related affordable housing investments, some of which were previously included in the "Other" segment, are now included in the commercial and multifamily real estate category of our Commercial Banking segment. Prior period amounts have been recast to conform to the current period presentation. |
||||||||||||
(5) |
Loans acquired as part of the CCB, ING Direct and HSBC U.S. card acquisitions are included in the denominator used in calculating the credit quality metrics presented in Tables 6, 8, 9, and 10. These 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), are presented in Table 7. The table below presents amounts related to these acquired loans. |
||||||||||||
2012 |
2012 |
2011 |
|||||||||||
(Dollars in millions) (unaudited) |
Q4 |
Q3 |
Q4 |
||||||||||
Acquired loans accounted for under SOP 03-3: |
|||||||||||||
Period-end unpaid principal balance |
$ 38,477 |
$ 40,749 |
$ 5,751 |
||||||||||
Period-end loans held for investment |
37,134 |
39,388 |
4,685 |
||||||||||
Average loans held for investment |
37,899 |
40,158 |
4,781 |
||||||||||
(6) |
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. |
||||||||||||
(7) |
As permitted by regulatory guidance, our policy is generally to exempt delinquent credit card loans from being classified as nonperforming. We continue to accrue finance charges and fees on the substantial majority of our credit card loans until the loan is charged off, typically when the account becomes 180 days past due. Effective November 2012, we began classifying UK loans as nonperforming when the account becomes 120 days past due. |
||||||||||||
(8) |
The charge-off rate for UK card was impacted by two events in the quarter: i. In November 2012 we began charging off delinquent UK loans for which revolving privileges have been revoked as part of a loan workout when the account becomes 120 past due. We previously charged off such loans in the period the account became 180 days past due. Our revised charge-off policy for these loans is consistent with our charge-off practice for installment loans. As a result of this change, we recorded a cumulative charge-off adjustment which resulted in elevated International Card charge-offs for the month. ii. December 2012 included the impact of excess recoveries due to a high-volume of debt sales. |
||||||||||||
(9) |
Includes credit card purchase transactions net of returns. Excludes cash advance transactions. |
||||||||||||
(10) |
The 30+ day total delinquency rate as of the end of Q4 2012 will be provided in our Annual Report on Form 10-K for the year ended December 31, 2012. |
||||||||||||
(11) |
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%. |
||||||||||||
(12) |
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 |
|||||||||||||
In addition to disclosing required regulatory capital measures, we also report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible common equity, tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of our 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. |
|||||||||||||
2012 |
2012 |
2011 |
|||||||||||
(Dollars in millions)(unaudited) |
Q4 |
Q3 |
Q4 |
||||||||||
Average Equity to Non-GAAP Average Tangible Common Equity |
|||||||||||||
Average total stockholders' equity |
$ 40,212 |
$ 38,535 |
$ 29,698 |
||||||||||
Less: Average intangible assets(1) |
(16,340) |
(16,408) |
(13,935) |
||||||||||
Noncumulative perpetual preferred stock(2) |
(853) |
(456) |
— |
||||||||||
Average tangible common equity(3) |
$ 23,019 |
$ 21,671 |
$ 15,763 |
||||||||||
Stockholders' Equity to Non-GAAP Tangible Common Equity |
|||||||||||||
Total stockholders' equity |
$ 40,499 |
$ 39,672 |
$ 29,666 |
||||||||||
Less: Intangible assets(1) |
(16,224) |
(16,323) |
(13,908) |
||||||||||
Noncumulative perpetual preferred stock(2) |
(853) |
(853) |
— |
||||||||||
Tangible common equity(3) |
$ 23,422 |
$ 22,496 |
$ 15,758 |
||||||||||
Total Assets to Tangible Assets |
|||||||||||||
Total assets |
$ 312,918 |
$ 301,989 |
$ 206,019 |
||||||||||
Less: Assets from discontinued operations |
(309) |
(309) |
(305) |
||||||||||
Total assets from continuing operations |
312,609 |
301,680 |
205,714 |
||||||||||
Less: Intangible assets(1) |
(16,224) |
(16,323) |
(13,908) |
||||||||||
Tangible assets |
$ 296,385 |
$ 285,357 |
$ 191,806 |
||||||||||
Non-GAAP TCE Ratio |
|||||||||||||
Tangible common equity(3) |
$ 23,422 |
$ 22,496 |
$ 15,758 |
||||||||||
Tangible assets |
296,385 |
285,357 |
191,806 |
||||||||||
TCE ratio(3) |
7.9 |
% |
7.9 |
% |
8.2 |
% |
|||||||
Regulatory Capital Ratios(4) |
|||||||||||||
Total stockholders' equity |
$ 40,499 |
$ 39,672 |
$ 29,666 |
||||||||||
Less: Net unrealized (gains) losses on AFS securities recorded in AOCI(5) |
(712) |
(752) |
(289) |
||||||||||
Net (gains) losses on cash flow hedges recorded in AOCI(5) |
2 |
(6) |
71 |
||||||||||
Disallowed goodwill and other intangible assets |
(14,428) |
(14,497) |
(13,855) |
||||||||||
Disallowed deferred tax assets |
— |
(221) |
(534) |
||||||||||
Noncumulative perpetual preferred stock(2) |
(853) |
(853) |
— |
||||||||||
Other |
(12) |
(12) |
(2) |
||||||||||
Tier 1 common capital |
24,496 |
23,331 |
15,057 |
||||||||||
Plus: Noncumulative perpetual preferred stock(2) |
853 |
853 |
— |
||||||||||
Tier 1 restricted core capital items(6) |
2 |
3,636 |
3,635 |
||||||||||
Tier 1 capital |
25,351 |
27,820 |
18,692 |
||||||||||
Plus: Long-term debt qualifying as Tier 2 capital |
2,119 |
2,119 |
2,438 |
||||||||||
Qualifying allowance for loan and lease losses |
2,819 |
2,767 |
1,979 |
||||||||||
Other Tier 2 components |
13 |
17 |
23 |
||||||||||
Tier 2 capital |
4,951 |
4,903 |
4,440 |
||||||||||
Total risk-based capital(7) |
$ 30,302 |
$ 32,723 |
$ 23,132 |
||||||||||
Risk-weighted assets(8) |
$ 222,546 |
$ 218,390 |
$ 155,657 |
||||||||||
Tier 1 common ratio(9) |
11.0 |
% |
10.7 |
% |
9.7 |
% |
|||||||
Tier 1 risk-based capital ratio(10) |
11.4 |
12.7 |
12.0 |
||||||||||
Total risk-based capital ratio(11) |
13.6 |
15.0 |
14.9 |
||||||||||
___________________ |
|||||||||||||
(1) |
Includes impact from related deferred taxes. |
||||||||||||
(2) |
Noncumulative perpetual preferred stock qualifies for Tier 1 capital; however, it is not includable in Tier 1 common capital. |
||||||||||||
(3) |
TCE ratio calculated based on tangible common equity divided by tangible assets. The previously reported TCE as of the end of Q3 2012 has been revised to exclude noncumulative perpetual preferred stock. |
||||||||||||
(4) |
Regulatory capital ratios as of the end of Q4 2012 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-weighed assets. |
||||||||||||
(11) |
Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighed assets. |
SOURCE Capital One Financial Corporation
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