Upgrade to SI Premium - Free Trial

Capital One Reports Third Quarter 2018 Net Income of $1.5 billion, or $2.99 per share

October 23, 2018 4:06 PM

MCLEAN, Va., Oct. 23, 2018 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2018 of $1.5 billion, or $2.99 per diluted common share, compared with net income of $1.9 billion, or $3.71 per diluted common share, in the second quarter of 2018, and with net income of $1.1 billion, or $2.14 per diluted common share, in the third quarter of 2017. Excluding adjusting items, net income for the third quarter of 2018 was $3.12 per diluted common share(1).

Capital One

"Our digital and technology transformation is accelerating, and is powering our ability to grow new customer relationships and deepen engagement with new and existing customers," 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 our industry and our society."

Adjusting items in the third quarter of 2018, which are excluded from diluted EPS and efficiency ratio metrics (see Table 15 in our Financial Supplement for additional information):

Pre-Tax

Diluted EPS

(Dollars in millions, except per share data)

Impact

Impact

Net gains on the sales of exited businesses

$

141

$

0.22

Legal reserve build

(170)

(0.35)

Notable item in the third quarter of 2018 included:

Pre-Tax

Diluted EPS

(Dollars in millions, except per share data)

Impact

Impact

Investment portfolio impairment charges

$

(200)

$

(0.32)

(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.

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

Third Quarter 2018 Income Statement Summary:

  • Total net revenue decreased 3 percent to $7.0 billion.
  • Recognized net gains of $141 million on the sales of exited businesses.
  • Total non-interest expense increased 10 percent to $3.8 billion:
    • 9 percent increase in operating expenses.
    • 19 percent increase in marketing.
  • Pre-provision earnings decreased 15 percent to $3.2 billion(2).
  • Provision for credit losses decreased 1 percent to $1.3 billion:
    • Net charge-offs of $1.4 billion.
    • $157 million reserve release.
  • Net interest margin of 7.01 percent, up 35 basis points.
  • Efficiency ratio of 54.19 percent.
    • Efficiency ratio excluding adjusting items was 52.70 percent(1).
  • Operating efficiency ratio of 46.95 percent.
    • Operating efficiency ratio excluding adjusting items was 45.29 percent(1).

Third Quarter 2018 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 11.2 percent at September 30, 2018.
  • Period-end loans held for investment in the quarter increased $2.6 billion, or 1 percent, to $238.8 billion.
    • Credit Card period-end loans increased $908 million, or 1 percent, to $110.7 billion.
      • Domestic Card period-end loans increased $850 million, or 1 percent, to $101.6 billion.
    • Consumer Banking period-end loans increased $602 million, or 1 percent, to $59.3 billion:
      • Auto period-end loans increased $641 million, or 1 percent, to $56.4 billion.
    • Commercial Banking period-end loans increased $1.1 billion, or 2 percent, to $68.7 billion.
  • Average loans held for investment in the quarter decreased $4.0 billion, or 2 percent, to $236.8 billion.
    • Credit Card average loans increased $1.6 billion, or 1 percent, to $109.5 billion.
      • Domestic Card average loans increased $1.7 billion, or 2 percent, to $100.6 billion.
    • Consumer Banking average loans decreased $7.3 billion, or 11 percent, to $59.2 billion:
      • Auto average loans increased $999 million, or 2 percent, to $56.3 billion.
      • Home loans average loans decreased $8.1 billion, or 100 percent, driven by the timing of the sale of substantially all of our consumer home loan portfolio.
    • Commercial Banking average loans increased $1.7 billion, or 3 percent, to $68.0 billion.
  • Period-end total deposits decreased $1.0 billion, or less than 1 percent, to $247.2 billion, while average deposits decreased $2.1 billion, or 1 percent, to $246.7 billion.
  • Interest-bearing deposits rate paid increased 11 basis points to 1.23 percent.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on October 23, 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 November 6, 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 $247.2 billion in deposits and $362.9 billion in total assets as of September 30, 2018. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

(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)

Third 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

Other

Table 14:

Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)

19

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 September 30, 2018 once it is filed with the Securities and Exchange Commission.

(2)

This Financial Supplement includes non-GAAP measures. We believe these non-GAAP measures are useful to investors and users of our financial information as they provide an alternate measurement of our performance and assist in assessing our capital adequacy and the level of return generated. These non-GAAP measures should not be viewed as a substitute for reported results determined in accordance with generally accepted accounting principles in the U.S. ("GAAP"), nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated

2018 Q3 vs.

Nine Months Ended September 30,

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

2018

2018

2018

2017

2017

2018

2017

2018 vs.

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Income Statement

Net interest income

$

5,786

$

5,551

$

5,718

$

5,813

$

5,700

4

%

2

%

$

17,055

$

16,647

2

%

Non-interest income

1,176

1,641

1,191

1,200

1,285

(28)

(8)

4,008

3,577

12

Total net revenue(1)

6,962

7,192

6,909

7,013

6,985

(3)

—

21,063

20,224

4

Provision for credit losses

1,268

1,276

1,674

1,926

1,833

(1)

(31)

4,218

5,625

(25)

Non-interest expense:

Marketing

504

425

414

460

379

19

33

1,343

1,210

11

Operating expenses

3,269

2,999

3,159

3,319

3,188

9

3

9,427

9,205

2

Total non-interest expense

3,773

3,424

3,573

3,779

3,567

10

6

10,770

10,415

3

Income from continuing operations before income taxes

1,921

2,492

1,662

1,308

1,585

(23)

21

6,075

4,184

45

Income tax provision

420

575

319

2,170

448

(27)

(6)

1,314

1,205

9

Income (loss) from continuing operations, net of tax

1,501

1,917

1,343

(862)

1,137

(22)

32

4,761

2,979

60

Income (loss) from discontinued operations, net of tax

1

(11)

3

(109)

(30)

**

**

(7)

(26)

(73)

Net income (loss)

1,502

1,906

1,346

(971)

1,107

(21)

36

4,754

2,953

61

Dividends and undistributed earnings allocated to participating securities(2)

(9)

(12)

(10)

(1)

(8)

(25)

13

(32)

(21)

52

Preferred stock dividends

(53)

(80)

(52)

(80)

(52)

(34)

2

(185)

(185)

—

Net income (loss) available to common stockholders

$

1,440

$

1,814

$

1,284

$

(1,052)

$

1,047

(21)

38

$

4,537

$

2,747

65

Common Share Statistics

Basic earnings per common share:(2)

Net income (loss) from continuing operations

$

3.01

$

3.76

$

2.63

$

(1.95)

$

2.22

(20)

%

36

%

$

9.40

$

5.73

64

%

Income (loss) from discontinued operations

—

(0.02)

0.01

(0.22)

(0.06)

**

**

(0.01)

(0.05)

(80)

Net income (loss) per basic common share

$

3.01

$

3.74

$

2.64

$

(2.17)

$

2.16

(20)

39

$

9.39

$

5.68

65

Diluted earnings per common share:(2)

Net income (loss) from continuing operations

$

2.99

$

3.73

$

2.61

$

(1.95)

$

2.20

(20)

36

$

9.33

$

5.68

64

Income (loss) from discontinued operations

—

(0.02)

0.01

(0.22)

(0.06)

**

**

(0.01)

(0.05)

(80)

Net income (loss) per diluted common share

$

2.99

$

3.71

$

2.62

$

(2.17)

$

2.14

(19)

40

$

9.32

$

5.63

66

Weighted-average common shares outstanding (in millions):

Basic

477.8

485.1

486.9

485.7

484.9

(2)

(1)

483.2

483.7

—

Diluted

480.9

488.3

490.8

485.7

489.0

(2)

(2)

486.7

488.1

—

Common shares outstanding (period-end, in millions)

473.7

478.4

485.9

485.5

484.4

(1)

(2)

473.7

484.4

(2)

Dividends declared and paid per common share

$

0.40

$

0.40

$

0.40

$

0.40

$

0.40

—

—

$

1.20

$

1.20

—

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

66.15

63.86

61.29

60.28

63.06

4

5

66.15

63.06

5

2018 Q3 vs.

Nine Months Ended September 30,

(Dollars in millions)

2018

2018

2018

2017

2017

2018

2017

2018 vs.

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Balance Sheet (Period-End)

Loans held for investment

$

238,761

$

236,124

$

248,256

$

254,473

$

252,422

1

%

(5)

%

$

238,761

$

252,422

(5)

%

Interest-earning assets

331,293

332,167

332,251

334,124

329,002

—

1

331,293

329,002

1

Total assets

362,909

363,989

362,857

365,693

361,402

—

—

362,909

361,402

—

Interest-bearing deposits

222,356

222,605

224,671

217,298

212,956

—

4

222,356

212,956

4

Total deposits

247,195

248,225

250,847

243,702

239,062

—

3

247,195

239,062

3

Borrowings

52,205

53,310

50,693

60,281

59,458

(2)

(12)

52,205

59,458

(12)

Common equity

46,277

45,566

44,842

44,370

45,794

2

1

46,277

45,794

1

Total stockholders' equity

50,638

49,926

49,203

48,730

50,154

1

1

50,638

50,154

1

Balance Sheet (Average Balances)

Loans held for investment

$

236,766

$

240,758

$

249,726

$

252,566

$

245,822

(2)

%

(4)

%

$

242,369

$

243,205

—

Interest-earning assets

330,272

333,495

330,183

330,742

322,015

(1)

3

331,318

319,497

4

%

Total assets

360,937

363,929

362,049

363,045

355,191

(1)

2

362,293

352,216

3

Interest-bearing deposits

221,431

223,079

219,670

215,258

213,137

(1)

4

221,400

213,508

4

Total deposits

246,720

248,790

245,270

241,562

238,843

(1)

3

246,932

239,316

3

Borrowings

51,684

52,333

54,588

58,109

54,271

(1)

(5)

52,858

52,159

1

Common equity

46,407

45,466

44,670

46,350

45,816

2

1

45,521

44,772

2

Total stockholders' equity

50,768

49,827

49,031

50,710

50,176

2

1

49,882

49,132

2

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated

2018 Q3 vs.

Nine Months Ended September 30,

(Dollars in millions, except as noted)

2018

2018

2018

2017

2017

2018

2017

2018 vs.

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Performance Metrics

Net interest income growth (period over period)

4

%

(3)

%

(2)

%

2

%

4

%

**

**

2

%

8

%

**

Non-interest income growth (period over period)

(28)

38

(1)

(7)

4

**

**

12

2

**

Total net revenue growth (period over period)

(3)

4

(1)

—

4

**

**

4

7

**

Total net revenue margin(4)

8.43

8.63

8.37

8.48

8.68

(20)

bps

(25)

bps

8.48

8.44

4

bps

Net interest margin(5)

7.01

6.66

6.93

7.03

7.08

35

(7)

6.86

6.95

(9)

Return on average assets

1.66

2.11

1.48

(0.95)

1.28

(45)

38

1.75

1.13

62

Return on average tangible assets(6)

1.74

2.20

1.55

(0.99)

1.34

(46)

40

1.83

1.18

65

Return on average common equity(7)

12.40

16.06

11.47

(8.14)

9.40

(4)

%

3

%

13.31

8.26

5

%

Return on average tangible common equity(8)

18.32

23.99

17.32

(12.12)

14.11

(6)

4

19.88

12.56

7

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

6.37

5.69

5.72

5.98

5.80

68

bps

57

bps

5.92

5.71

21

bps

Efficiency ratio(9)

54.19

47.61

51.72

53.89

51.07

7

%

3

%

51.13

51.50

—

Operating efficiency ratio(10)

46.95

41.70

45.72

47.33

45.64

5

1

44.76

45.52

(1)

%

Effective income tax rate for continuing operations

21.9

23.1

19.2

165.9

28.3

(1)

(6)

21.6

28.8

(7)

Employees (in thousands), period-end

47.6

47.8

47.9

49.3

50.4

—

(6)

47.6

50.4

(6)

Credit Quality Metrics

Allowance for loan and lease losses

$

7,219

$

7,368

$

7,567

$

7,502

$

7,418

(2)

%

(3)

%

$

7,219

$

7,418

(3)

%

Allowance as a percentage of loans held for investment

3.02

%

3.12

%

3.05

%

2.95

%

2.94

%

(10)

bps

8

bps

3.02

%

2.94

%

8

bps

Net charge-offs

$

1,425

$

1,459

$

1,618

$

1,828

$

1,606

(2)

%

(11)

%

$

4,502

$

4,734

(5)

%

Net charge-off rate(11)

2.41

%

2.42

%

2.59

%

2.89

%

2.61

%

(1)

bps

(20)

bps

2.48

%

2.60

%

(12)

bps

30+ day performing delinquency rate

3.28

2.88

2.72

3.23

2.93

40

35

3.28

2.93

35

30+ day delinquency rate

3.48

3.05

2.91

3.48

3.24

43

24

3.48

3.24

24

Capital Ratios(12)

Common equity Tier 1 capital

11.2

%

11.1

%

10.5

%

10.3

%

10.7

%

10

bps

50

bps

11.2

%

10.7

%

50

bps

Tier 1 capital

12.8

12.6

12.0

11.8

12.2

20

60

12.8

12.2

60

Total capital

15.2

15.1

14.5

14.4

14.8

10

40

15.2

14.8

40

Tier 1 leverage

10.6

10.3

10.1

9.9

10.5

30

10

10.6

10.5

10

Tangible common equity ("TCE")(13)

9.0

8.8

8.6

8.3

8.8

20

20

9.0

8.8

20

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income

2018 Q3 vs.

Nine Months Ended September 30,

2018

2018

2018

2017

2017

2018

2017

2018 vs.

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

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Interest income:

Loans, including loans held for sale

$

6,247

$

5,989

$

6,134

$

6,133

$

5,960

4

%

5

%

$

18,370

$

17,255

6

%

Investment securities

593

539

452

431

431

10

38

1,584

1,280

24

Other

55

68

51

40

29

(19)

90

174

83

110

Total interest income

6,895

6,596

6,637

6,604

6,420

5

7

20,128

18,618

8

Interest expense:

Deposits

681

622

539

457

410

9

66

1,842

1,145

61

Securitized debt obligations

127

124

107

91

85

2

49

358

236

52

Senior and subordinated notes

288

289

251

209

194

—

48

828

522

59

Other borrowings

13

10

22

34

31

30

(58)

45

68

(34)

Total interest expense

1,109

1,045

919

791

720

6

54

3,073

1,971

56

Net interest income

5,786

5,551

5,718

5,813

5,700

4

2

17,055

16,647

2

Provision for credit losses

1,268

1,276

1,674

1,926

1,833

(1)

(31)

4,218

5,625

(25)

Net interest income after provision for credit losses

4,518

4,275

4,044

3,887

3,867

6

17

12,837

11,022

16

Non-interest income:

Interchange fees, net

714

723

643

665

662

(1)

8

2,080

1,908

9

Service charges and other customer-related fees

410

391

432

394

414

5

(1)

1,233

1,203

2

Net securities gains (losses)

(196)

(1)

8

1

68

**

**

(189)

64

**

Other

248

528

108

140

141

(53)

76

884

402

120

Total non-interest income

1,176

1,641

1,191

1,200

1,285

(28)

(8)

4,008

3,577

12

Non-interest expense:

Salaries and associate benefits

1,432

1,430

1,520

1,521

1,524

—

(6)

4,382

4,378

—

Occupancy and equipment

515

503

490

523

471

2

9

1,508

1,416

6

Marketing

504

425

414

460

379

19

33

1,343

1,210

11

Professional services

275

234

210

274

297

18

(7)

719

823

(13)

Communications and data processing

311

317

306

306

294

(2)

6

934

871

7

Amortization of intangibles

44

43

44

61

61

2

(28)

131

184

(29)

Other

692

472

589

634

541

47

28

1,753

1,533

14

Total non-interest expense

3,773

3,424

3,573

3,779

3,567

10

6

10,770

10,415

3

Income from continuing operations before income taxes

1,921

2,492

1,662

1,308

1,585

(23)

21

6,075

4,184

45

Income tax provision

420

575

319

2,170

448

(27)

(6)

1,314

1,205

9

Income (loss) from continuing operations, net of tax

1,501

1,917

1,343

(862)

1,137

(22)

32

4,761

2,979

60

Income (loss) from discontinued operations, net of tax

1

(11)

3

(109)

(30)

**

**

(7)

(26)

(73)

Net income (loss)

1,502

1,906

1,346

(971)

1,107

(21)

36

4,754

2,953

61

Dividends and undistributed earnings allocated to participating securities(2)

(9)

(12)

(10)

(1)

(8)

(25)

13

(32)

(21)

52

Preferred stock dividends

(53)

(80)

(52)

(80)

(52)

(34)

2

(185)

(185)

—

Net income (loss) available to common stockholders

$

1,440

$

1,814

$

1,284

$

(1,052)

$

1,047

(21)

38

$

4,537

$

2,747

65

2018 Q3 vs.

Nine Months Ended September 30,

2018

2018

2018

2017

2017

2018

2017

2018 vs.

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

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Basic earnings per common share:(2)

Net income (loss) from continuing operations

$

3.01

$

3.76

$

2.63

$

(1.95)

$

2.22

(20)

%

36

%

$

9.40

$

5.73

64

%

Income (loss) from discontinued operations

—

(0.02)

0.01

(0.22)

(0.06)

**

**

(0.01)

(0.05)

(80)

Net income (loss) per basic common share

$

3.01

$

3.74

$

2.64

$

(2.17)

$

2.16

(20)

39

$

9.39

$

5.68

65

Diluted earnings per common share:(2)

Net income (loss) from continuing operations

$

2.99

$

3.73

$

2.61

$

(1.95)

$

2.20

(20)

36

$

9.33

$

5.68

64

Income (loss) from discontinued operations

—

(0.02)

0.01

(0.22)

(0.06)

**

**

(0.01)

(0.05)

(80)

Net income (loss) per diluted common share

$

2.99

$

3.71

$

2.62

$

(2.17)

$

2.14

(19)

40

$

9.32

$

5.63

66

Weighted-average common shares outstanding (in millions):

Basic common shares

477.8

485.1

486.9

485.7

484.9

(2)

(1)

483.2

483.7

—

Diluted common shares

480.9

488.3

490.8

485.7

489.0

(2)

(2)

486.7

488.1

—

Dividends declared and paid per common share

$

0.40

$

0.40

$

0.40

$

0.40

$

0.40

—

—

$

1.20

$

1.20

—

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets

2018 Q3 vs.

2018

2018

2018

2017

2017

2018

2017

(Dollars in millions)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Assets:

Cash and cash equivalents:

Cash and due from banks

$

4,547

$

4,499

$

4,220

$

4,458

$

4,154

1

%

9

%

Interest-bearing deposits and other short-term investments

6,335

7,774

9,788

9,582

4,330

(19)

46

Total cash and cash equivalents

10,882

12,273

14,008

14,040

8,484

(11)

28

Restricted cash for securitization investors

746

1,023

309

312

304

(27)

145

Investment securities:

Securities available for sale

47,384

50,691

47,155

37,655

39,742

(7)

19

Securities held to maturity

34,631

33,464

23,075

28,984

28,650

3

21

Total investment securities

82,015

84,155

70,230

66,639

68,392

(3)

20

Loans held for investment:

Unsecuritized loans held for investment

204,796

201,222

213,313

218,806

217,659

2

(6)

Loans held in consolidated trusts

33,965

34,902

34,943

35,667

34,763

(3)

(2)

Total loans held for investment

238,761

236,124

248,256

254,473

252,422

1

(5)

Allowance for loan and lease losses

(7,219)

(7,368)

(7,567)

(7,502)

(7,418)

(2)

(3)

Net loans held for investment

231,542

228,756

240,689

246,971

245,004

1

(5)

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

1,402

1,480

1,498

971

1,566

(5)

(10)

Premises and equipment, net

4,149

4,095

4,055

4,033

3,955

1

5

Interest receivable

1,518

1,493

1,496

1,536

1,426

2

6

Goodwill

14,513

14,531

14,536

14,533

14,532

—

—

Other assets

16,142

16,183

16,036

16,658

17,739

—

(9)

Total assets

$

362,909

$

363,989

$

362,857

$

365,693

$

361,402

—

—

2018 Q3 vs.

2018

2018

2018

2017

2017

2018

2017

(Dollars in millions)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Liabilities:

Interest payable

$

391

$

450

$

353

$

413

$

301

(13)

%

30

%

Deposits:

Non-interest-bearing deposits

24,839

25,620

26,176

26,404

26,106

(3)

(5)

Interest-bearing deposits

222,356

222,605

224,671

217,298

212,956

—

4

Total deposits

247,195

248,225

250,847

243,702

239,062

—

3

Securitized debt obligations

18,649

19,649

18,665

20,010

17,087

(5)

9

Other debt:

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

384

553

656

576

767

(31)

(50)

Senior and subordinated notes

31,291

32,920

31,051

30,755

28,420

(5)

10

Other borrowings

1,881

188

321

8,940

13,184

**

(86)

Total other debt

33,556

33,661

32,028

40,271

42,371

—

(21)

Other liabilities

12,480

12,078

11,761

12,567

12,427

3

—

Total liabilities

312,271

314,063

313,654

316,963

311,248

(1)

—

Stockholders' equity:

Preferred stock

0

0

0

0

0

—

—

Common stock

7

7

7

7

7

—

—

Additional paid-in capital, net

31,978

31,868

31,779

31,656

31,526

—

1

Retained earnings

34,883

33,626

31,996

30,700

31,946

4

9

Accumulated other comprehensive loss

(1,877)

(1,793)

(1,599)

(926)

(622)

5

**

Treasury stock, at cost

(14,353)

(13,782)

(12,980)

(12,707)

(12,703)

4

13

Total stockholders' equity

50,638

49,926

49,203

48,730

50,154

1

1

Total liabilities and stockholders' equity

$

362,909

$

363,989

$

362,857

$

365,693

$

361,402

—

—

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 $305 million in Q3 2018, $309 million in Q2 2018, $335 million in Q1 2018, $377 million in Q4 2017 and $356 million in Q3 2017 for the estimated uncollectible amount of billed finance charges and fees and related losses.

(2)

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

(3)

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

(4)

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

(5)

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

(6)

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

(7)

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

(8)

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

(9)

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

(10)

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

(11)

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

(12)

Capital ratios as of the end of Q3 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 Q3

2018 Q2

2017 Q3

Average Balance

Interest Income/Expense(1)

Yield/Rate(1)

Average Balance

Interest Income/Expense(1)

Yield/Rate(1)

Average Balance

Interest Income/Expense(1)

Yield/Rate(1)

(Dollars in millions, except as noted)

Interest-earning assets:

Loans, including loans held for sale

$

238,150

$

6,247

10.49

%

$

242,043

$

5,989

9.90

%

$

247,022

$

5,960

9.65

%

Investment securities

83,894

593

2.83

79,829

539

2.70

69,302

431

2.49

Cash equivalents and other

8,228

55

2.66

11,623

68

2.34

5,691

29

2.04

Total interest-earning assets

$

330,272

$

6,895

8.35

$

333,495

$

6,596

7.91

$

322,015

$

6,420

7.97

Interest-bearing liabilities:

Interest-bearing deposits

$

221,431

$

681

1.23

$

223,079

$

622

1.12

$

213,137

$

410

0.77

Securitized debt obligations

18,917

127

2.68

19,147

124

2.59

17,598

85

1.93

Senior and subordinated notes

31,660

288

3.63

32,250

289

3.58

28,753

194

2.70

Other borrowings and liabilities

3,084

13

1.67

4,132

10

0.97

9,320

31

1.33

Total interest-bearing liabilities

$

275,092

$

1,109

1.62

$

278,608

$

1,045

1.50

$

268,808

$

720

1.07

Net interest income/spread

$

5,786

6.73

$

5,551

6.41

$

5,700

6.90

Impact of non-interest-bearing funding

0.28

0.25

0.18

Net interest margin

7.01

%

6.66

%

7.08

%

Nine Months Ended September 30,

2018

2017

Average Balance

Interest Income/Expense(1)

Yield/Rate(1)

Average Balance

Interest Income/Expense(1)

Yield/Rate(1)

(Dollars in millions, except as noted)

Interest-earning assets:

Loans, including loans held for sale

$

243,653

$

18,370

10.05

%

$

244,097

$

17,255

9.43

%

Investment securities

77,819

1,584

2.71

68,862

1,280

2.48

Cash equivalents and other

9,846

174

2.36

6,538

83

1.69

Total interest-earning assets

$

331,318

$

20,128

8.10

$

319,497

$

18,618

7.77

Interest-bearing liabilities:

Interest-bearing deposits

$

221,400

$

1,842

1.11

$

213,508

$

1,145

0.72

Securitized debt obligations

19,251

358

2.46

17,726

236

1.78

Senior and subordinated notes

31,452

828

3.51

27,140

522

2.56

Other borrowings and liabilities

4,674

45

1.28

8,434

68

1.08

Total interest-bearing liabilities

$

276,777

$

3,073

1.49

$

266,808

$

1,971

0.98

Net interest income/spread

$

17,055

6.61

$

16,647

6.79

Impact of non-interest-bearing funding

0.25

0.16

Net interest margin

6.86

%

6.95

%

__________

(1)

Interest income and interest expense and the calculation of average yields on interest-earning assets and average rates on interest-bearing liabilities include the impact of hedge accounting. In the first quarter of 2018, we adopted Accounting Standard Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. As a result, interest income and interest expense amounts shown above include $2 million and $10 million for Q3 2018, and $1 million and $36 million for the nine months ended September 30, 2018, respectively, related to hedge ineffectiveness that was previously included in other non-interest income.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics

2018 Q3 vs.

Nine Months Ended September 30,

(Dollars in millions, except as noted)

2018Q3

2018Q2

2018Q1

2017Q4

2017Q3

2018Q2

2017Q3

2018

2017

2018 vs.2017

Loans Held for Investment (Period-End)

Credit card:

Domestic credit card

$

101,564

$

100,714

$

98,535

$

105,293

$

99,981

1

%

2

%

$

101,564

$

99,981

2

%

International card businesses

9,121

9,063

9,041

9,469

9,149

1

—

9,121

9,149

—

Total credit card

110,685

109,777

107,576

114,762

109,130

1

1

110,685

109,130

1

Consumer banking:

Auto

56,422

55,781

54,811

53,991

53,290

1

6

56,422

53,290

6

Home loan(1)

—

—

16,630

17,633

18,820

**

**

—

18,820

**

Retail banking

2,907

2,946

3,233

3,454

3,454

(1)

(16)

2,907

3,454

(16)

Total consumer banking

59,329

58,727

74,674

75,078

75,564

1

(21)

59,329

75,564

(21)

Commercial banking:

Commercial and multifamily real estate

29,064

28,292

27,360

26,150

27,944

3

4

29,064

27,944

4

Commercial and industrial

39,325

38,948

38,208

38,025

39,306

1

—

39,325

39,306

—

Total commercial lending

68,389

67,240

65,568

64,175

67,250

2

2

68,389

67,250

2

Small-ticket commercial real estate

358

369

385

400

420

(3)

(15)

358

420

(15)

Total commercial banking

68,747

67,609

65,953

64,575

67,670

2

2

68,747

67,670

2

Other loans

—

11

53

58

58

**

**

—

58

**

Total loans held for investment

$

238,761

$

236,124

$

248,256

$

254,473

$

252,422

1

(5)

$

238,761

$

252,422

(5)

Loans Held for Investment (Average)

Credit card:

Domestic credit card

$

100,566

$

98,895

$

100,450

$

101,087

$

93,729

2

%

7

%

$

99,970

$

92,847

8

%

International card businesses

8,944

8,998

9,052

8,942

8,816

(1)

1

8,998

8,411

7

Total credit card

109,510

107,893

109,502

110,029

102,545

1

7

108,968

101,258

8

Consumer banking:

Auto

56,297

55,298

54,344

53,747

52,615

2

7

55,320

50,711

9

Home loan(1)

—

8,098

17,224

18,109

19,302

**

**

8,377

20,211

(59)

Retail banking

2,923

3,084

3,429

3,433

3,446

(5)

(15)

3,144

3,473

(9)

Total consumer banking

59,220

66,480

74,997

75,289

75,363

(11)

(21)

66,841

74,395

(10)

Commercial banking:

Commercial and multifamily real estate

28,354

27,302

26,542

27,770

27,703

4

2

27,406

27,235

1

Commercial and industrial

39,318

38,686

38,246

39,020

39,723

2

(1)

38,754

39,804

(3)

Total commercial lending

67,672

65,988

64,788

66,790

67,426

3

—

66,160

67,039

(1)

Small-ticket commercial real estate

364

376

393

410

433

(3)

(16)

378

453

(17)

Total commercial banking

68,036

66,364

65,181

67,200

67,859

3

—

66,538

67,492

(1)

Other loans

—

21

46

48

55

**

**

22

60

(63)

Total average loans held for investment

$

236,766

$

240,758

$

249,726

$

252,566

$

245,822

(2)

(4)

$

242,369

$

243,205

—

2018 Q3 vs.

Nine Months Ended September 30,

(Dollars in millions, except as noted)

2018Q3

2018Q2

2018Q1

2017Q4

2017Q3

2018Q2

2017Q3

2018

2017

2018 vs.2017

Net Charge-Off (Recovery) Rates

Credit card:

Domestic credit card(2)

4.35

%

4.72

%

5.26

%

5.08

%

4.64

%

(37)

bps

(29)

bps

4.78

%

4.96

%

(18)

bps

International card businesses

1.92

4.14

2.49

3.92

3.08

(222)

(116)

2.85

3.60

(75)

Total credit card(2)

4.15

4.67

5.03

4.99

4.51

(52)

(36)

4.62

4.85

(23)

Consumer banking:

Auto

1.73

1.32

1.53

2.12

1.96

41

(23)

1.53

1.77

(24)

Home loan(1)

—

—

(0.03)

0.23

0.02

**

**

(0.02)

0.03

**

Retail banking

2.62

2.07

1.89

1.94

2.10

55

52

2.18

1.91

27

Total consumer banking

1.77

1.19

1.19

1.66

1.47

58

30

1.36

1.30

6

Commercial banking:

Commercial and multifamily real estate

0.04

—

—

(0.01)

(0.01)

4

5

0.01

0.01

—

Commercial and industrial

0.25

(0.07)

0.20

1.47

1.64

32

(139)

0.13

1.07

(94)

Total commercial lending

0.16

(0.04)

0.12

0.86

0.97

20

(81)

0.08

0.64

(56)

Small-ticket commercial real estate

0.56

(0.40)

(0.18)

(0.05)

0.12

96

44

(0.02)

0.33

(35)

Total commercial banking

0.16

(0.04)

0.11

0.85

0.96

20

(80)

0.08

0.64

(56)

Total net charge-offs

2.41

2.42

2.59

2.89

2.61

(1)

(20)

2.48

2.60

(12)

30+ Day Performing Delinquency Rates

Credit card:

Domestic credit card

3.80

%

3.32

%

3.57

%

4.01

%

3.94

%

48

bps

(14)

bps

3.80

%

3.94

%

(14)

bps

International card businesses

3.55

3.39

3.62

3.64

3.54

16

1

3.55

3.54

1

Total credit card

3.78

3.32

3.58

3.98

3.91

46

(13)

3.78

3.91

(13)

Consumer banking:

Auto

6.27

5.57

5.15

6.51

5.71

70

56

6.27

5.71

56

Home loan(1)

—

—

0.20

0.20

0.17

**

**

—

0.17

**

Retail banking

0.80

0.84

0.75

0.76

0.73

(4)

7

0.80

0.73

7

Total consumer banking

6.01

5.33

3.86

4.76

4.10

68

191

6.01

4.10

191

Nonperforming Loans and Nonperforming Assets Rates(3)(4)

Credit card:

International card businesses

0.22

%

0.22

%

0.25

%

0.25

%

0.28

%

—

(6)

bps

0.22

%

0.28

%

(6)

bps

Total credit card

0.02

0.02

0.02

0.02

0.02

—

—

0.02

0.02

—

Consumer banking:

Auto

0.70

0.55

0.50

0.70

0.65

15

bps

5

0.70

0.65

5

Home loan(1)

—

—

0.86

1.00

0.84

**

**

—

0.84

**

Retail banking

1.13

1.15

1.04

1.00

0.97

(2)

16

1.13

0.97

16

Total consumer banking

0.72

0.58

0.61

0.78

0.71

14

1

0.72

0.71

1

Commercial banking:

Commercial and multifamily real estate

0.13

0.01

0.01

0.15

0.23

12

(10)

0.13

0.23

(10)

Commercial and industrial

0.55

0.57

0.78

0.63

1.82

(2)

(127)

0.55

1.82

(127)

Total commercial lending

0.37

0.33

0.46

0.43

1.16

4

(79)

0.37

1.16

(79)

Small-ticket commercial real estate

1.65

1.18

1.46

1.65

1.59

47

6

1.65

1.59

6

Total commercial banking

0.38

0.34

0.47

0.44

1.16

4

(78)

0.38

1.16

(78)

Total nonperforming loans

0.30

0.25

0.32

0.35

0.54

5

(24)

0.30

0.54

(24)

Total nonperforming assets

0.33

0.30

0.35

0.41

0.60

3

(27)

0.33

0.60

(27)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 8: Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity

Three Months Ended September 30, 2018

Credit Card

Consumer Banking

(Dollars in millions)

Domestic Card

International Card Businesses

Total Credit Card

Auto

RetailBanking

TotalConsumerBanking

Commercial Banking

Other

Total

Allowance for loan and lease losses:

Balance as of June 30, 2018

$

5,260

$

364

$

5,624

$

1,060

$

60

$

1,120

$

624

—

$

7,368

Charge-offs

(1,403)

(125)

(1,528)

(447)

(22)

(469)

(48)

$

1

(2,044)

Recoveries

309

82

391

204

3

207

21

—

619

Net charge-offs

(1,094)

(43)

(1,137)

(243)

(19)

(262)

(27)

1

(1,425)

Provision (benefit) for loan and lease losses

950

81

1,031

168

17

185

60

(1)

1,275

Allowance build (release) for loan and lease losses

(144)

38

(106)

(75)

(2)

(77)

33

—

(150)

Other changes(5)

—

2

2

—

—

—

(1)

—

1

Balance as of September 30, 2018

5,116

404

5,520

985

58

1,043

656

—

7,219

Reserve for unfunded lending commitments:

Balance as of June 30, 2018

—

—

—

—

5

5

112

—

117

Benefit for losses on unfunded lending commitments

—

—

—

—

(1)

(1)

(6)

—

(7)

Balance as of September 30, 2018

—

—

—

—

4

4

106

—

110

Combined allowance and reserve as of September 30, 2018

$

5,116

$

404

$

5,520

$

985

$

62

$

1,047

$

762

$

—

$

7,329

Nine Months Ended September 30, 2018

Credit Card

Consumer Banking

(Dollars in millions)

Domestic Card

International Card Businesses

Total Credit Card

Auto

Home Loan(1)

RetailBanking

TotalConsumerBanking

Commercial Banking

Other(1)

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

(4,649)

(383)

(5,032)

(1,250)

—

(64)

(1,314)

(76)

(7)

(6,429)

Recoveries

1,068

190

1,258

617

1

13

631

37

1

1,927

Net charge-offs

(3,581)

(193)

(3,774)

(633)

1

(51)

(683)

(39)

(6)

(4,502)

Provision (benefit) for loan and lease losses

3,424

234

3,658

499

(6)

45

538

85

(49)

4,232

Allowance build (release) for loan and lease losses

(157)

41

(116)

(134)

(5)

(6)

(145)

46

(55)

(270)

Other changes(1)(5)

—

(12)

(12)

—

(53)

(1)

(54)

(1)

54

(13)

Balance as of September 30, 2018

5,116

404

5,520

985

—

58

1,043

656

—

7,219

Reserve for unfunded lending commitments:

Balance as of December 31, 2017

—

—

—

—

—

7

7

117

—

124

Benefit for losses on unfunded lending commitments

—

—

—

—

—

(3)

(3)

(11)

—

(14)

Balance as of September 30, 2018

—

—

—

—

—

4

4

106

—

110

Combined allowance and reserve as of September 30, 2018

$

5,116

$

404

$

5,520

$

985

$

—

$

62

$

1,047

$

762

$

—

$

7,329

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results

Three Months Ended September 30, 2018

Nine Months Ended September 30, 2018

(Dollars in millions)

Credit Card

Consumer Banking

Commercial Banking(6)(7)

Other(6)(7)

Total

Credit Card

Consumer Banking

Commercial Banking(6)(7)

Other(6)(7)

Total

Net interest income

$

3,596

$

1,636

$

539

$

15

$

5,786

$

10,550

$

4,860

$

1,624

$

21

$

17,055

Non-interest income

893

155

189

(61)

1,176

2,634

504

585

285

4,008

Total net revenue (loss)

4,489

1,791

728

(46)

6,962

13,184

5,364

2,209

306

21,063

Provision (benefit) for credit losses

1,031

184

54

(1)

1,268

3,658

535

74

(49)

4,218

Non-interest expense

2,103

979

408

283

3,773

6,046

2,942

1,220

562

10,770

Income (loss) from continuing operations before income taxes

1,355

628

266

(328)

1,921

3,480

1,887

915

(207)

6,075

Income tax provision (benefit)

315

146

62

(103)

420

810

440

213

(149)

1,314

Income (loss) from continuing operations, net of tax

$

1,040

$

482

$

204

$

(225)

$

1,501

$

2,670

$

1,447

$

702

$

(58)

$

4,761

Three Months Ended June 30, 2018

(Dollars in millions)

Credit Card

Consumer Banking

Commercial Banking(6)(7)

Other(6)(7)

Total

Net interest income

$

3,396

$

1,609

$

549

$

(3)

$

5,551

Non-interest income

884

175

209

373

1,641

Total net revenue

4,280

1,784

758

370

7,192

Provision (benefit) for credit losses

1,171

118

34

(47)

1,276

Non-interest expense

1,904

963

409

148

3,424

Income from continuing operations before income taxes

1,205

703

315

269

2,492

Income tax provision

282

164

73

56

575

Income from continuing operations, net of tax

$

923

$

539

$

242

$

213

$

1,917

Three Months Ended September 30, 2017

Nine Months Ended September 30, 2017

(Dollars in millions)

Credit Card

Consumer Banking

Commercial Banking(6)

Other(6)

Total

Credit Card

Consumer Banking

Commercial Banking(6)

Other(6)

Total

Net interest income

$

3,440

$

1,649

$

560

$

51

$

5,700

$

10,080

$

4,744

$

1,695

$

128

$

16,647

Non-interest income

865

192

179

49

1,285

2,478

570

520

9

3,577

Total net revenue

4,305

1,841

739

100

6,985

12,558

5,314

2,215

137

20,224

Provision for credit losses

1,466

293

63

11

1,833

4,580

840

201

4

5,625

Non-interest expense

1,961

1,051

394

161

3,567

5,808

3,152

1,166

289

10,415

Income (loss) from continuing operations before income taxes

878

497

282

(72)

1,585

2,170

1,322

848

(156)

4,184

Income tax provision (benefit)

306

181

103

(142)

448

774

482

310

(361)

1,205

Income from continuing operations, net of tax

$

572

$

316

$

179

$

70

$

1,137

$

1,396

$

840

$

538

$

205

$

2,979

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business

2018 Q3 vs.

Nine Months Ended September 30,

2018

2018

2018

2017

2017

2018

2017

2018 vs.

(Dollars in millions, except as noted)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Credit Card

Earnings:

Net interest income

$

3,596

$

3,396

$

3,558

$

3,568

$

3,440

6

%

5

%

$

10,550

$

10,080

5

%

Non-interest income

893

884

857

847

865

1

3

2,634

2,478

6

Total net revenue

4,489

4,280

4,415

4,415

4,305

5

4

13,184

12,558

5

Provision for credit losses

1,031

1,171

1,456

1,486

1,466

(12)

(30)

3,658

4,580

(20)

Non-interest expense

2,103

1,904

2,039

2,108

1,961

10

7

6,046

5,808

4

Income from continuing operations before income taxes

1,355

1,205

920

821

878

12

54

3,480

2,170

60

Income tax provision

315

282

213

297

306

12

3

810

774

5

Income from continuing operations, net of tax

$

1,040

$

923

$

707

$

524

$

572

13

82

$

2,670

$

1,396

91

Selected performance metrics:

Period-end loans held for investment

$

110,685

$

109,777

$

107,576

$

114,762

$

109,130

1

1

$

110,685

$

109,130

1

Average loans held for investment

109,510

107,893

109,502

110,029

102,545

1

7

108,968

101,258

8

Average yield on loans held for investment(8)

15.79

%

15.06

%

15.24

%

15.13

%

15.58

%

73

bps

21

bps

15.37

%

15.24

%

13

bps

Total net revenue margin(9)

16.40

15.87

16.13

16.05

16.79

53

(39)

16.13

16.54

(41)

Net charge-off rate(2)

4.15

4.67

5.03

4.99

4.51

(52)

(36)

4.62

4.85

(23)

30+ day performing delinquency rate

3.78

3.32

3.58

3.98

3.91

46

(13)

3.78

3.91

(13)

30+ day delinquency rate

3.80

3.33

3.59

3.99

3.92

47

(12)

3.80

3.92

(12)

Nonperforming loan rate(3)

0.02

0.02

0.02

0.02

0.02

—

—

0.02

0.02

—

Purchase volume(10)

$

97,469

$

97,392

$

86,545

$

95,659

$

84,505

—

15

%

$

281,406

$

240,781

17

%

2018 Q3 vs.

Nine Months Ended September 30,

2018

2018

2018

2017

2017

2018

2017

2018 vs.

(Dollars in millions, except as noted)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Domestic Card

Earnings:

Net interest income

$

3,280

$

3,108

$

3,229

$

3,268

$

3,132

6

%

5

%

$

9,617

$

9,236

4

%

Non-interest income

819

818

774

781

787

—

4

2,411

2,288

5

Total net revenue

4,099

3,926

4,003

4,049

3,919

4

5

12,028

11,524

4

Provision for credit losses

950

1,094

1,380

1,402

1,417

(13)

(33)

3,424

4,381

(22)

Non-interest expense

1,890

1,683

1,832

1,880

1,754

12

8

5,405

5,198

4

Income from continuing operations before income taxes

1,259

1,149

791

767

748

10

68

3,199

1,945

64

Income tax provision

293

268

184

280

273

9

7

745

710

5

Income from continuing operations, net of tax

$

966

$

881

$

607

$

487

$

475

10

103

$

2,454

$

1,235

99

Selected performance metrics:

Period-end loans held for investment

$

101,564

$

100,714

$

98,535

$

105,293

$

99,981

1

2

$

101,564

$

99,981

2

Average loans held for investment

100,566

98,895

100,450

101,087

93,729

2

7

99,970

92,847

8

Average yield on loans held for investment(8)

15.73

%

15.05

%

15.10

%

15.08

%

15.51

%

68

bps

22

bps

15.29

%

15.20

%

9

bps

Total net revenue margin(9)

16.30

15.88

15.94

16.03

16.72

42

(42)

16.04

16.55

(51)

Net charge-off rate(2)

4.35

4.72

5.26

5.08

4.64

(37)

(29)

4.78

4.96

(18)

30+ day delinquency rate

3.80

3.32

3.57

4.01

3.94

48

(14)

3.80

3.94

(14)

Purchase volume(10)

$

89,205

$

88,941

$

79,194

$

87,287

$

76,806

—

16

%

$

257,340

$

219,537

17

%

Refreshed FICO scores:(11)

Greater than 660

67

%

68

%

66

%

66

%

65

%

(1)

%

2

67

%

65

%

2

660 or below

33

32

34

34

35

1

(2)

33

35

(2)

Total

100

%

100

%

100

%

100

%

100

%

100

%

100

%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business

2018 Q3 vs.

Nine Months Ended September 30,

2018

2018

2018

2017

2017

2018

2017

2018 vs.

(Dollars in millions, except as noted)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Consumer Banking

Earnings:

Net interest income

$

1,636

$

1,609

$

1,615

$

1,636

$

1,649

2

%

(1)

%

$

4,860

$

4,744

2

%

Non-interest income

155

175

174

179

192

(11)

(19)

504

570

(12)

Total net revenue

1,791

1,784

1,789

1,815

1,841

—

(3)

5,364

5,314

1

Provision for credit losses

184

118

233

340

293

56

(37)

535

840

(36)

Non-interest expense

979

963

1,000

1,081

1,051

2

(7)

2,942

3,152

(7)

Income from continuing operations before income taxes

628

703

556

394

497

(11)

26

1,887

1,322

43

Income tax provision

146

164

130

144

181

(11)

(19)

440

482

(9)

Income from continuing operations, net of tax

$

482

$

539

$

426

$

250

$

316

(11)

53

$

1,447

$

840

72

Selected performance metrics:

Period-end loans held for investment(1)

$

59,329

$

58,727

$

74,674

$

75,078

$

75,564

1

(21)

$

59,329

$

75,564

(21)

Average loans held for investment(1)

59,220

66,480

74,997

75,289

75,363

(11)

(21)

66,841

74,395

(10)

Average yield on loans held for investment(8)

8.03

%

7.32

%

6.86

%

6.84

%

6.79

%

71

bps

124

bps

7.36

%

6.61

%

75

bps

Auto loan originations

$

6,643

$

6,994

$

6,707

$

6,215

$

7,043

(5)

%

(6)

%

$

20,345

$

21,521

(5)

%

Period-end deposits

196,635

194,962

193,073

185,842

184,719

1

6

196,635

184,719

6

Average deposits

194,687

193,278

187,785

184,799

185,072

1

5

191,942

185,336

4

Average deposits interest rate

1.00

%

0.88

%

0.80

%

0.69

%

0.62

%

12

bps

38

bps

0.89

%

0.60

%

29

bps

Net charge-off rate

1.77

1.19

1.19

1.66

1.47

58

30

1.36

1.30

6

30+ day performing delinquency rate

6.01

5.33

3.86

4.76

4.10

68

191

6.01

4.10

191

30+ day delinquency rate

6.61

5.80

4.27

5.34

4.61

81

200

6.61

4.61

200

Nonperforming loan rate(3)

0.72

0.58

0.61

0.78

0.71

14

1

0.72

0.71

1

Nonperforming asset rate(4)

0.82

0.73

0.70

0.91

0.88

9

(6)

0.82

0.88

(6)

Auto—At origination FICO scores:(12)

Greater than 660

50

%

50

%

51

%

51

%

51

%

—

(1)

%

50

%

51

%

(1)

%

621-660

19

19

18

18

18

—

1

19

18

1

620 or below

31

31

31

31

31

—

—

31

31

—

Total

100

%

100

%

100

%

100

%

100

%

100

%

100

%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business

2018 Q3 vs.

Nine Months Ended September 30,

2018

2018

2018

2017

2017

2018

2017

2018 vs.

(Dollars in millions, except as noted)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Commercial Banking

Earnings:

Net interest income

$

539

$

549

$

536

$

566

$

560

(2)

%

(4)

%

$

1,624

$

1,695

(4)

%

Non-interest income

189

209

187

188

179

(10)

6

585

520

13

Total net revenue(6)(7)

728

758

723

754

739

(4)

(1)

2,209

2,215

—

Provision (benefit) for credit losses

54

34

(14)

100

63

59

(14)

74

201

(63)

Non-interest expense

408

409

403

437

394

—

4

1,220

1,166

5

Income from continuing operations before income taxes

266

315

334

217

282

(16)

(6)

915

848

8

Income tax provision

62

73

78

79

103

(15)

(40)

213

310

(31)

Income from continuing operations, net of tax

$

204

$

242

$

256

$

138

$

179

(16)

14

$

702

$

538

30

Selected performance metrics:

Period-end loans held for investment

$

68,747

$

67,609

$

65,953

$

64,575

$

67,670

2

2

$

68,747

$

67,670

2

Average loans held for investment

68,036

66,364

65,181

67,200

67,859

3

—

66,538

67,492

(1)

Average yield on loans held for investment(6)(8)

4.55

%

4.43

%

4.16

%

4.03

%

3.98

%

12

bps

57

bps

4.38

%

3.81

%

57

bps

Period-end deposits

$

30,474

$

31,078

$

34,449

$

33,938

$

32,783

(2)

%

(7)

%

$

30,474

$

32,783

(7)

%

Average deposits

31,061

32,951

34,057

34,117

33,197

(6)

(6)

32,679

33,890

(4)

Average deposits interest rate

0.79

%

0.65

%

0.52

%

0.46

%

0.42

%

14

bps

37

bps

0.65

%

0.37

%

28

bps

Net charge-off (recovery) rate

0.16

(0.04)

0.11

0.85

0.96

20

(80)

0.08

0.64

(56)

Nonperforming loan rate(3)

0.38

0.34

0.47

0.44

1.16

4

(78)

0.38

1.16

(78)

Nonperforming asset rate(4)

0.41

0.37

0.49

0.52

1.22

4

(81)

0.41

1.22

(81)

Risk category:(13)

Noncriticized

$

65,926

$

64,923

$

62,773

$

61,162

$

63,501

2

%

4

%

$

65,926

$

63,501

4

%

Criticized performing

2,204

2,088

2,432

2,649

2,878

6

(23)

2,204

2,878

(23)

Criticized nonperforming

259

229

309

284

788

13

(67)

259

788

(67)

PCI loans

358

369

439

480

503

(3)

(29)

358

503

(29)

Total commercial loans

$

68,747

$

67,609

$

65,953

$

64,575

$

67,670

2

2

$

68,747

$

67,670

2

Risk category as a percentage of period-end loans held for investment:(13)

Noncriticized

95.9

%

96.1

%

95.1

%

94.7

%

93.8

%

(20)

bps

210

bps

95.9

%

93.8

%

210

bps

Criticized performing

3.2

3.1

3.7

4.1

4.3

10

(110)

3.2

4.3

(110)

Criticized nonperforming

0.4

0.3

0.5

0.4

1.2

10

(80)

0.4

1.2

(80)

PCI loans

0.5

0.5

0.7

0.8

0.7

—

(20)

0.5

0.7

(20)

Total commercial loans

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

100.0

%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Financial & Statistical Summary—Other and Total

2018 Q3 vs.

Nine Months Ended September 30,

2018

2018

2018

2017

2017

2018

2017

2018 vs.

(Dollars in millions)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2018

2017

2017

Other(14)

Earnings:

Net interest income

$

15

$

(3)

$

9

$

43

$

51

**

(71)

%

$

21

$

128

(84)

%

Non-interest income

(61)

373

(27)

(14)

49

**

**

285

9

**

Total net revenue (loss)(6)(7)

(46)

370

(18)

29

100

**

**

306

137

123

Provision (benefit) for credit losses

(1)

(47)

(1)

—

11

(98)

%

**

(49)

4

**

Non-interest expense(15)

283

148

131

153

161

91

76

562

289

94

Income (loss) from continuing operations before income taxes

(328)

269

(148)

(124)

(72)

**

**

(207)

(156)

33

Income tax provision (benefit)

(103)

56

(102)

1,650

(142)

**

(27)

(149)

(361)

(59)

Income (loss) from continuing operations, net of tax

$

(225)

$

213

$

(46)

$

(1,774)

$

70

**

**

$

(58)

$

205

**

Selected performance metrics:

Period-end loans held for investment

—

$

11

$

53

$

58

$

58

**

**

—

$

58

**

Average loans held for investment

—

21

46

48

55

**

**

$

22

60

(63)

Period-end deposits

$

20,086

22,185

23,325

23,922

21,560

(9)

(7)

20,086

21,560

(7)

Average deposits

20,972

22,561

23,428

22,646

20,574

(7)

2

22,311

20,090

11

Total

Earnings:

Net interest income

$

5,786

$

5,551

$

5,718

$

5,813

$

5,700

4

%

2

%

$

17,055

$

16,647

2

%

Non-interest income

1,176

1,641

1,191

1,200

1,285

(28)

(8)

4,008

3,577

12

Total net revenue

6,962

7,192

6,909

7,013

6,985

(3)

—

21,063

20,224

4

Provision for credit losses

1,268

1,276

1,674

1,926

1,833

(1)

(31)

4,218

5,625

(25)

Non-interest expense

3,773

3,424

3,573

3,779

3,567

10

6

10,770

10,415

3

Income from continuing operations before income taxes

1,921

2,492

1,662

1,308

1,585

(23)

21

6,075

4,184

45

Income tax provision

420

575

319

2,170

448

(27)

(6)

1,314

1,205

9

Income (loss) from continuing operations, net of tax

$

1,501

$

1,917

$

1,343

$

(862)

$

1,137

(22)

32

$

4,761

$

2,979

60

Selected performance metrics:

Period-end loans held for investment

$

238,761

$

236,124

$

248,256

$

254,473

$

252,422

1

(5)

$

238,761

$

252,422

(5)

Average loans held for investment

236,766

240,758

249,726

252,566

245,822

(2)

(4)

242,369

243,205

—

Period-end deposits

247,195

248,225

250,847

243,702

239,062

—

3

247,195

239,062

3

Average deposits

246,720

248,790

245,270

241,562

238,843

(1)

3

246,932

239,316

3

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 14: Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)

(1)

In the second quarter of 2018, we sold the substantial majority of our consumer home loan portfolio and the related servicing. We also transferred the remaining consumer home loan portfolio of $398 million to loans held for sale as of June 30, 2018. These actions resulted in a net gain of approximately $400 million in the second quarter of 2018, including a benefit for credit losses of $46 million, which was reflected in the Other category. In the third quarter of 2018, we sold substantially all of the remaining consumer home loan portfolio and recognized a net gain of $99 million in the Other category.

(2)

In August 2018, we accelerated charge-off recognition for certain domestic credit card accounts where the cardholder is deceased. This acceleration led to a one-time increase in net charge-offs of approximately $32 million, increasing the net charge-off rate for total credit card and domestic credit card by approximately 12 basis points and 13 basis points, respectively, for the third quarter of 2018, and 4 basis points for both total credit card and domestic credit card for the first nine months of 2018.

(3)

Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.

(4)

Nonperforming assets consist of nonperforming loans, real estate owned ("REO") and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment, REO and other foreclosed assets.

(5)

Represents foreign currency translation adjustments and the net impact of loan transfers and sales where applicable.

(6)

Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate (21% and 35% for all periods presented in 2018 and 2017, respectively) and state taxes where applicable, with offsetting reductions to the Other category.

(7)

In the first quarter of 2018, we made a change in how revenue is measured in our Commercial Banking business to include the tax benefits of losses on certain tax-advantaged investments. These tax benefits are included in revenue on a taxable-equivalent basis within our Commercial Banking business, with an offsetting reduction to the Other category. In addition, all revenue presented on a taxable-equivalent basis in our Commercial Banking business was impacted by the reduction of the federal tax rate set forth in the Tax Act. The net impact of the measurement change and the reduction of the federal tax rate was a decrease of $30 million and $86 million in revenue in our Commercial Banking business in the third quarter and first nine months of 2018, respectively, with an offsetting impact to the Other category.

(8)

Average yield on loans held for investment is calculated based on annualized interest income for the period divided by average loans held for investment during the period for the respective loan category. Annualized interest income is computed based on the effective yield of the respective loan category and does not include any allocations, such as funds transfer pricing.

(9)

Total net revenue margin is calculated based on annualized total net revenue for the period divided by average loans held for investment during the period for the respective loan category.

(10)

Purchase volume consists of purchase transactions, net of returns, for the period, and excludes cash advance and balance transfer transactions.

(11)

Percentages represent period-end loans held for investment in each credit score category. Domestic card credit scores generally represent FICO scores. These scores are obtained from one of the major credit bureaus at origination and are refreshed monthly thereafter. We approximate non-FICO credit scores to comparable FICO scores for consistency purposes. Balances for which no credit score is available or the credit score is invalid are included in the 660 or below category.

(12)

Percentages represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.

(13)

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

(14)

Charges for the impacts of the Tax Act of $1.77 billion were reflected in the Other category of our business segment results for Q4 2017. This amount was a reasonable estimate as of December 31, 2017, which may be adjusted during the measurement period ending no later than December 2018. The Tax Act refers to the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on budget for fiscal year 2018 enacted on December 22, 2017.

(15)

Includes charges incurred as a result of restructuring activities.

**

Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures(1)

Basel III Standardized Approach

(Dollars in millions, except as noted)

September 30,2018

June 30,2018

March 31,2018

December 31,2017

September 30,2017

Regulatory Capital Metrics

Common equity excluding AOCI

$

48,154

$

47,359

$

46,441

$

45,296

$

46,415

Adjustments:

AOCI(2)(3)

(1,877)

(1,793)

(1,599)

(808)

(538)

Goodwill, net of related deferred tax liabilities

(14,345)

(14,368)

(14,379)

(14,380)

(14,300)

Intangible assets, net of related deferred tax liabilities(3)

(284)

(328)

(371)

(330)

(372)

Other

817

735

620

258

93

Common equity Tier 1 capital

$

32,465

$

31,605

$

30,712

$

30,036

$

31,298

Tier 1 capital

$

36,826

$

35,965

$

35,073

$

34,396

$

35,657

Total capital(4)

43,946

43,082

42,259

41,962

43,272

Risk-weighted assets

288,678

285,223

291,346

292,225

292,041

Adjusted average assets(5)

346,297

349,222

347,287

348,424

340,579

Capital Ratios

Common equity Tier 1 capital(6)

11.2

%

11.1

%

10.5

%

10.3

%

10.7

%

Tier 1 capital(7)

12.8

12.6

12.0

11.8

12.2

Total capital(8)

15.2

15.1

14.5

14.4

14.8

Tier 1 leverage(5)

10.6

10.3

10.1

9.9

10.5

Tangible common equity ("TCE")(9)

9.0

8.8

8.6

8.3

8.8

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of our adjusted results 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. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.

2018

2018

2018

Nine Months Ended

Q3

Q2

Q1

September 30, 2018

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

Reported Results

Adj.(10)

Adjusted Results

Reported Results

Adj.(10)

Adjusted Results

Reported Results

Adj.(10)

Adjusted Results

Reported Results

Adj.(10)

Adjusted Results

Selected income statement data:

Net interest income

$

5,786

—

$

5,786

$

5,551

$

26

$

5,577

$

5,718

—

$

5,718

$

17,055

$

26

$

17,081

Non-interest income

1,176

$

(155)

1,021

1,641

(361)

1,280

1,191

$

2

1,193

4,008

(514)

3,494

Total net revenue

6,962

(155)

6,807

7,192

(335)

6,857

6,909

2

6,911

21,063

(488)

20,575

Provision for credit losses

1,268

2

1,270

1,276

46

1,322

1,674

—

1,674

4,218

48

4,266

Non-interest expense

3,773

(186)

3,587

3,424

(45)

3,379

3,573

(17)

3,556

10,770

(248)

10,522

Income from continuing operations before income taxes

1,921

29

1,950

2,492

(336)

2,156

1,662

19

1,681

6,075

(288)

5,787

Income tax provision (benefit)

420

(33)

387

575

(92)

483

319

4

323

1,314

(121)

1,193

Income from continuing operations, net of tax

1,501

62

1,563

1,917

(244)

1,673

1,343

15

1,358

4,761

(167)

4,594

Income (loss) from discontinued operations, net of tax

1

—

1

(11)

—

(11)

3

—

3

(7)

—

(7)

Net income

1,502

62

1,564

1,906

(244)

1,662

1,346

15

1,361

4,754

(167)

4,587

Dividends and undistributed earnings allocated to participating securities(11)

(9)

—

(9)

(12)

2

(10)

(10)

—

(10)

(32)

1

(31)

Preferred stock dividends

(53)

—

(53)

(80)

—

(80)

(52)

—

(52)

(185)

—

(185)

Net income available to common stockholders

$

1,440

$

62

$

1,502

$

1,814

$

(242)

$

1,572

$

1,284

$

15

$

1,299

$

4,537

$

(166)

$

4,371

Selected performance metrics:

Diluted EPS(11)

$

2.99

$

0.13

$

3.12

$

3.71

$

(0.49)

$

3.22

$

2.62

$

0.03

$

2.65

$

9.32

$

(0.34)

$

8.98

Efficiency ratio

54.19

%

(149)

bps

52.70

%

47.61

%

167

bps

49.28

%

51.72

%

(27)

bps

51.45

%

51.13

%

1

bps

51.14

%

Operating efficiency ratio

46.95

(166)

45.29

41.70

138

43.08

45.72

(26)

45.46

44.76

(15)

44.61

2017

2017

2017

Nine Months Ended

Q3

Q2

Q1

September 30, 2017

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

Reported Results

Adj.(10)

Adjusted Results

Reported Results

Adj.(10)

Adjusted Results

Reported Results

Adj.(10)

Adjusted Results

Reported Results

Adj.(10)

Adjusted Results

Selected income statement data:

Net interest income

$

5,700

—

$

5,700

$

5,473

—

$

5,473

$

5,474

$

33

$

5,507

$

16,647

$

33

$

16,680

Non-interest income

1,285

—

1,285

1,231

—

1,231

1,061

37

1,098

3,577

37

3,614

Total net revenue

6,985

—

6,985

6,704

—

6,704

6,535

70

6,605

20,224

70

20,294

Provision for credit losses

1,833

$

(88)

1,745

1,800

—

1,800

1,992

—

1,992

5,625

(88)

5,537

Non-interest expense

3,567

(125)

3,442

3,414

$

(12)

3,402

3,434

(29)

3,405

10,415

(166)

10,249

Income from continuing operations before income taxes

1,585

213

1,798

1,490

12

1,502

1,109

99

1,208

4,184

324

4,508

Income tax provision (benefit)

448

79

527

443

4

447

314

(1)

313

1,205

82

1,287

Income from continuing operations, net of tax

1,137

134

1,271

1,047

8

1,055

795

100

895

2,979

242

3,221

Income (loss) from discontinued operations, net of tax

(30)

—

(30)

(11)

—

(11)

15

—

15

(26)

—

(26)

Net income

1,107

134

1,241

1,036

8

1,044

810

100

910

2,953

242

3,195

Dividends and undistributed earnings allocated to participating securities(11)

(8)

—

(8)

(8)

—

(8)

(5)

—

(5)

(21)

—

(21)

Preferred stock dividends

(52)

—

(52)

(80)

—

(80)

(53)

—

(53)

(185)

—

(185)

Net income available to common stockholders

$

1,047

$

134

$

1,181

$

948

$

8

$

956

$

752

$

100

$

852

$

2,747

$

242

$

2,989

Selected performance metrics:

Diluted EPS(11)

$

2.14

$

0.28

$

2.42

$

1.94

$

0.02

$

1.96

$

1.54

$

0.21

$

1.75

$

5.63

$

0.49

$

6.12

Efficiency ratio

51.07

%

(179)

bps

49.28

%

50.92

%

(17)

bps

50.75

%

52.55

%

(100)

bps

51.55

%

51.50

%

(100)

bps

50.50

%

Operating efficiency ratio

45.64

(179)

43.85

44.44

(18)

44.26

46.49

(93)

45.56

45.52

(98)

44.54

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of tangible common equity ("TCE"), tangible assets and metrics computed using these amounts, which include tangible book value per common share, return on average tangible assets, return on average TCE and TCE ratio. We consider these metrics to be key financial performance measures that management uses in assessing capital adequacy and the level of returns generated. While these non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, our measures may not be comparable to similarly-titled measures reported by other companies. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.

2018

2018

2018

2017

2017

(Dollars in millions)

Q3

Q2

Q1

Q4

Q3

Tangible Common Equity (Period-End)

Stockholders' equity

$

50,638

$

49,926

$

49,203

$

48,730

$

50,154

Goodwill and intangible assets(12)

(14,945)

(15,013)

(15,063)

(15,106)

(15,249)

Noncumulative perpetual preferred stock

(4,360)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

31,333

$

30,553

$

29,780

$

29,264

$

30,545

Tangible Common Equity (Average)

Stockholders' equity

$

50,768

$

49,827

$

49,031

$

50,710

$

50,176

Goodwill and intangible assets(12)

(14,982)

(15,043)

(15,092)

(15,223)

(15,277)

Noncumulative perpetual preferred stock

(4,360)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

31,426

$

30,424

$

29,579

$

31,127

$

30,539

Tangible Assets (Period-End)

Total assets

$

362,909

$

363,989

$

362,857

$

365,693

$

361,402

Goodwill and intangible assets(12)

(14,945)

(15,013)

(15,063)

(15,106)

(15,249)

Tangible assets

$

347,964

$

348,976

$

347,794

$

350,587

$

346,153

Tangible Assets (Average)

Total assets

$

360,937

$

363,929

$

362,049

$

363,045

$

355,191

Goodwill and intangible assets(12)

(14,982)

(15,043)

(15,092)

(15,223)

(15,277)

Tangible assets

$

345,955

$

348,886

$

346,957

$

347,822

$

339,914

__________

(1) Regulatory capital metrics and capital ratios as of September 30, 2018 are preliminary and therefore subject to change.

(2) Amounts presented are net of tax.

(3) Amounts based on transition provisions for regulatory capital deductions and adjustments of 80% for 2017 and 100% for 2018.

(4) Total capital equals the sum of Tier 1 capital and Tier 2 capital.

(5) Adjusted average assets for the purpose of calculating our Tier 1 leverage ratio represents total average assets adjusted for amounts that are deducted from Tier 1 capital, predominately goodwill and intangible assets. Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets.

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

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

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

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

(10) Adjustments for the following periods consist of:

2018

2018

2018

Nine Months Ended

2017

2017

2017

Nine Months Ended

(Dollars in millions)

Q3

Q2

Q1

September 30, 2018

Q3

Q2

Q1

September 30, 2017

Net gains on the sales of exited businesses

$

(141)

$

(400)

—

$

(541)

—

—

—

—

Legal reserve build

170

—

—

170

—

—

—

—

Restructuring charges

—

15

$

19

34

$

108

—

—

$

108

U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve")

—

49

—

49

—

—

$

99

99

Charges related to the Cabela's acquisition

—

—

—

—

105

$

12

—

117

Total

29

(336)

19

(288)

213

12

99

324

Income tax provision (benefit)

(33)

(92)

4

(121)

79

4

(1)

82

Net income

$

62

$

(244)

$

15

$

(167)

$

134

$

8

$

100

$

242

(11) 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.

(12) Includes impact of related deferred taxes.

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/capital-one-reports-third-quarter-2018-net-income-of-1-5-billion-or-2-99-per-share-300736477.html

SOURCE Capital One Financial Corporation

Categories

Press Releases

Next Articles