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Capital One Reports Fourth Quarter 2018 Net Income of $1.3 billion, or $2.48 per share

January 22, 2019 4:06 PM

MCLEAN, Va., Jan. 22, 2019 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2018 of $1.3 billion, or $2.48 per diluted common share, compared with net income of $1.5 billion, or $2.99 per diluted common share in the third quarter of 2018, and with net loss of $971 million, or $2.17 per diluted common share in the fourth quarter of 2017. Excluding adjusting items, net income for the fourth quarter of 2018 was $1.87 per diluted common share(1).

"In the fourth quarter, Capital One posted solid results as we invest to grow and to drive our digital transformation," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "For full year 2018, we delivered 41 percent growth in earnings per share, excluding adjusting items(1)."

Adjusting items in the fourth quarter of 2018, which are excluded from diluted EPS and our 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

Benefit as a result of tax methodology change on rewards costs

$

284

$

0.60

Net gains on the sales of exited businesses

74

0.12

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

(50)

(0.11)

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

Fourth Quarter 2018 Income Statement Summary:

  • Total net revenue increased 1 percent to $7.0 billion.
  • Recognized net gains of $74 million on the sales of exited businesses.

(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, both in the current period and across periods. Growth in earnings

per share, excluding adjusting items provides useful information to users of our financial information largely due

to the impacts of the Tax Act on full year 2017 results. See Table 15 in Exhibit 99.2 for a reconciliation of our

selected reported results to these non-GAAP measures.

  • Total non-interest expense increased 10 percent to $4.1 billion:
    • 65 percent increase in marketing.
    • 1 percent increase in operating expenses.
  • Pre-provision earnings decreased 10 percent to $2.9 billion(2).
  • Provision for credit losses increased 29 percent to $1.6 billion:
    • Net charge-offs of $1.6 billion.
    • $28 million reserve build.
  • Net interest margin of 6.96 percent, decreased 5 basis points.
  • Efficiency ratio of 58.92 percent.
    • Efficiency ratio excluding adjusting items was 58.92 percent(1).
  • Operating efficiency ratio of 47.07 percent.
    • Operating efficiency ratio excluding adjusting items was 46.97 percent(1).

Fourth Quarter 2018 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 11.2 percent at December 31, 2018.
  • Period-end loans held for investment in the quarter increased $7.1 billion, or 3 percent, to $245.9 billion.
    • Credit Card period-end loans increased $5.7 billion, or 5 percent, to $116.4 billion.
      • Domestic Card period-end loans increased $5.8 billion, or 6 percent, to $107.4 billion.
    • Consumer Banking period-end loans decreased $124 million, or less than 1 percent, to $59.2 billion.
      • Auto period-end loans decreased $81 million, or less than 1 percent, to $56.3 billion.
    • Commercial Banking period-end loans increased $1.6 billion, or 2 percent, to $70.3 billion.
  • Average loans held for investment in the quarter increased $4.6 billion, or 2 percent, to $241.4 billion.
    • Credit Card average loans increased $2.8 billion, or 3 percent, to $112.3 billion.
      • Domestic Card average loans increased $2.8 billion, or 3 percent, to $103.4 billion.
    • Consumer Banking average loans increased $122 million, or less than 1 percent, to $59.3 billion.
      • Auto average loans increased $172 million, or less than 1 percent, to $56.5 billion.
    • Commercial Banking average loans increased $1.6 billion, or 2 percent, to $69.7 billion.
  • Period-end total deposits increased $2.6 billion, or 1 percent, to $249.8 billion, while average deposits increased $943 million, or less than 1 percent, to $247.7 billion.
  • Interest-bearing deposits rate paid increased 13 basis points to 1.36 percent.

(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, both in the current period and across periods. 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.

All comparisons below are for the full year of 2018 compared with the full year of 2017 unless otherwise noted.

2018 Full Year Income Statement Summary:

  • Total net revenue increased 3 percent to $28.1 billion.
  • Recognized net gains of $615 million on the sales of exited businesses.
  • Total non-interest expense increased 5 percent to $14.9 billion:
    • 30 percent increase in marketing.
    • 2 percent increase in operating expenses.
  • Pre-provision earnings increased 1 percent to $13.2 billion(2).
  • Provision for credit losses decreased 22 percent to $5.9 billion.
  • Efficiency ratio of 53.08 percent.
    • Efficiency ratio excluding adjusting items was 53.11 percent(1).
  • Operating efficiency ratio of 45.33 percent.
    • Operating efficiency ratio excluding adjusting items was 45.21 percent(1).

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on January 22, 2019 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 February 5, 2019 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 $249.8 billion in deposits and $372.5 billion in total assets as of December 31, 2018. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

(1)

Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our

financial information understand the effect of adjusting items on our selected reported results and provide

alternate measurements of our performance, both in the current period and across periods. 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)

Fourth 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

5

Table 5:

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

7

Table 6:

Average Balances, Net Interest Income and Net Interest Margin

8

Table 7:

Loan Information and Performance Statistics

9

Table 8:

Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity

11

Business Segment Results

Table 9:

Financial Summary—Business Segment Results

12

Table 10:

Financial & Statistical Summary—Credit Card Business

13

Table 11:

Financial & Statistical Summary—Consumer Banking Business

15

Table 12:

Financial & Statistical Summary—Commercial Banking Business

16

Table 13:

Financial & Statistical Summary—Other and Total

17

Other

Table 14:

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

18

Table 15:

Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures

19

___________

(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 Annual Report on Form 10-K for the period ended

December 31, 2018 once it is filed with the Securities and Exchange Commission.

(2)

This Financial Supplement includes non-GAAP measures. We believe these non-GAAP measures are useful

to investors and users of our financial information as they provide an alternate measurement of our performance

and assist in assessing our capital adequacy and the level of return generated. These non-GAAP measures

should not be viewed as a substitute for reported results determined in accordance with generally accepted

accounting principles in the U.S. ("GAAP"), nor are they necessarily comparable to non-GAAP measures that

may be presented by other companies.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated

2018 Q4 vs.

Year Ended December 31,

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

2018

2018

2018

2018

2017

2018

2017

2018 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Income Statement

Net interest income

$

5,820

$

5,786

$

5,551

$

5,718

$

5,813

1

%

—

$

22,875

$

22,460

2

%

Non-interest income

1,193

1,176

1,641

1,191

1,200

1

(1)

%

5,201

4,777

9

Total net revenue(1)

7,013

6,962

7,192

6,909

7,013

1

—

28,076

27,237

3

Provision for credit losses

1,638

1,268

1,276

1,674

1,926

29

(15)

5,856

7,551

(22)

Non-interest expense:

Marketing

831

504

425

414

460

65

81

2,174

1,670

30

Operating expenses

3,301

3,269

2,999

3,159

3,319

1

(1)

12,728

12,524

2

Total non-interest expense

4,132

3,773

3,424

3,573

3,779

10

9

14,902

14,194

5

Income from continuing operations before income taxes

1,243

1,921

2,492

1,662

1,308

(35)

(5)

7,318

5,492

33

Income tax provision (benefit)

(21)

420

575

319

2,170

**

**

1,293

3,375

(62)

Income (loss) from continuing operations, net of tax

1,264

1,501

1,917

1,343

(862)

(16)

**

6,025

2,117

185

Income (loss) from discontinued operations, net of tax

(3)

1

(11)

3

(109)

**

(97)

(10)

(135)

(93)

Net income (loss)

1,261

1,502

1,906

1,346

(971)

(16)

**

6,015

1,982

**

Dividends and undistributed earnings allocated to participating securities(2)

(9)

(9)

(12)

(10)

(1)

—

**

(40)

(13)

**

Preferred stock dividends

(80)

(53)

(80)

(52)

(80)

51

—

(265)

(265)

—

Net income (loss) available to common stockholders

$

1,172

$

1,440

$

1,814

$

1,284

$

(1,052)

(19)

**

$

5,710

$

1,704

**

Common Share Statistics

Basic earnings per common share:(2)

Net income (loss) from continuing operations

$

2.50

$

3.01

$

3.76

$

2.63

$

(1.95)

(17)

%

**

$

11.92

$

3.80

**

Income (loss) from discontinued operations

(0.01)

—

(0.02)

0.01

(0.22)

**

(95)

%

(0.02)

(0.28)

(93)

%

Net income (loss) per basic common share

$

2.49

$

3.01

$

3.74

$

2.64

$

(2.17)

(17)

**

$

11.90

$

3.52

**

Diluted earnings per common share:(2)

Net income (loss) from continuing operations

$

2.49

$

2.99

$

3.73

$

2.61

$

(1.95)

(17)

**

$

11.84

$

3.76

**

Income (loss) from discontinued operations

(0.01)

—

(0.02)

0.01

(0.22)

**

(95)

(0.02)

(0.27)

(93)

Net income (loss) per diluted common share

$

2.48

$

2.99

$

3.71

$

2.62

$

(2.17)

(17)

**

$

11.82

$

3.49

**

Weighted-average common shares outstanding (in millions):

Basic

470.0

477.8

485.1

486.9

485.7

(2)

(3)

479.9

484.2

(1)

Diluted

472.7

480.9

488.3

490.8

485.7

(2)

(3)

483.1

488.6

(1)

Common shares outstanding (period-end, in millions)

467.7

473.7

478.4

485.9

485.5

(1)

(4)

467.7

485.5

(4)

Dividends declared and paid per common share

$

0.40

$

0.40

$

0.40

$

0.40

$

0.40

—

—

$

1.60

$

1.60

—

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

69.20

66.15

63.86

61.29

60.28

5

15

69.20

60.28

15

2018 Q4 vs.

Year Ended December 31,

(Dollars in millions)

2018

2018

2018

2018

2017

2018

2017

2018 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Balance Sheet (Period-End)

Loans held for investment

$

245,899

$

238,761

$

236,124

$

248,256

$

254,473

3

%

(3)

%

$

245,899

$

254,473

(3)

%

Interest-earning assets

341,293

331,293

332,167

332,251

334,124

3

2

341,293

334,124

2

Total assets

372,538

362,909

363,989

362,857

365,693

3

2

372,538

365,693

2

Interest-bearing deposits

226,281

222,356

222,605

224,671

217,298

2

4

226,281

217,298

4

Total deposits

249,764

247,195

248,225

250,847

243,702

1

2

249,764

243,702

2

Borrowings

58,905

52,205

53,310

50,693

60,281

13

(2)

58,905

60,281

(2)

Common equity

47,307

46,277

45,566

44,842

44,370

2

7

47,307

44,370

7

Total stockholders' equity

51,668

50,638

49,926

49,203

48,730

2

6

51,668

48,730

6

Balance Sheet (Average Balances)

Loans held for investment

$

241,371

$

236,766

$

240,758

$

249,726

$

252,566

2

%

(4)

%

$

242,118

$

245,565

(1)

%

Interest-earning assets

334,714

330,272

333,495

330,183

330,742

1

1

332,738

322,330

3

Total assets

365,243

360,937

363,929

362,049

363,045

1

1

363,036

354,924

2

Interest-bearing deposits

222,827

221,431

223,079

219,670

215,258

1

4

221,760

213,949

4

Total deposits

247,663

246,720

248,790

245,270

241,562

—

3

247,117

239,882

3

Borrowings

53,994

51,684

52,333

54,588

58,109

4

(7)

53,144

53,659

(1)

Common equity

46,753

46,407

45,466

44,670

46,350

1

1

45,831

45,170

1

Total stockholders' equity

51,114

50,768

49,827

49,031

50,710

1

1

50,192

49,530

1

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated

2018 Q4 vs.

Year Ended December 31,

(Dollars in millions, except as noted)

2018

2018

2018

2018

2017

2018

2017

2018 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Performance Metrics

Net interest income growth (period over period)

1

%

4

%

(3)

%

(2)

%

2

%

**

**

2

%

8

%

**

Non-interest income growth (period over period)

1

(28)

38

(1)

(7)

**

**

9

3

**

Total net revenue growth (period over period)

1

(3)

4

(1)

—

**

**

3

7

**

Total net revenue margin(4)

8.38

8.43

8.63

8.37

8.48

(5)

bps

(10)

bps

8.44

8.45

(1)

bps

Net interest margin(5)

6.96

7.01

6.66

6.93

7.03

(5)

(7)

6.87

6.97

(10)

Return on average assets

1.38

1.66

2.11

1.48

(0.95)

(28)

233

1.66

0.60

106

Return on average tangible assets(6)

1.44

1.74

2.20

1.55

(0.99)

(30)

243

1.73

0.62

111

Return on average common equity(7)

10.05

12.40

16.06

11.47

(8.14)

(2)

%

18

%

12.48

4.07

8

%

Return on average tangible common equity(8)

14.78

18.32

23.99

17.32

(12.12)

(4)

27

18.56

6.16

12

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

6.85

6.37

5.69

5.72

5.98

48

bps

87

bps

6.15

5.78

37

bps

Efficiency ratio(9)

58.92

54.19

47.61

51.72

53.89

5

%

5

%

53.08

52.11

1

%

Operating efficiency ratio(10)

47.07

46.95

41.70

45.72

47.33

—

—

45.33

45.98

(1)

Effective income tax rate for continuing operations

(1.7)

21.9

23.1

19.2

165.9

(24)

(168)

17.7

61.5

(44)

Employees (in thousands), period-end

47.6

47.6

47.8

47.9

49.3

—

(3)

47.6

49.3

(3)

Credit Quality Metrics

Allowance for loan and lease losses

$

7,220

$

7,219

$

7,368

$

7,567

$

7,502

—

(4)

%

$

7,220

$

7,502

(4)

%

Allowance as a percentage of loans held for investment

2.94

%

3.02

%

3.12

%

3.05

%

2.95

%

(8)

bps

(1)

bps

2.94

%

2.95

%

(1)

bps

Net charge-offs

$

1,610

$

1,425

$

1,459

$

1,618

$

1,828

13

%

(12)

%

$

6,112

$

6,562

(7)

%

Net charge-off rate(11)

2.67

%

2.41

%

2.42

%

2.59

%

2.89

%

26

bps

(22)

bps

2.52

%

2.67

%

(15)

bps

30+ day performing delinquency rate

3.62

3.28

2.88

2.72

3.23

34

39

3.62

3.23

39

30+ day delinquency rate

3.84

3.48

3.05

2.91

3.48

36

36

3.84

3.48

36

Capital Ratios(12)

Common equity Tier 1 capital

11.2

%

11.2

%

11.1

%

10.5

%

10.3

%

—

90

bps

11.2

%

10.3

%

90

bps

Tier 1 capital

12.7

12.8

12.6

12.0

11.8

(10)

bps

90

12.7

11.8

90

Total capital

15.1

15.2

15.1

14.5

14.4

(10)

70

15.1

14.4

70

Tier 1 leverage

10.7

10.6

10.3

10.1

9.9

10

80

10.7

9.9

80

Tangible common equity ("TCE")(13)

9.1

9.0

8.8

8.6

8.3

10

80

9.1

8.3

80

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income

2018 Q4 vs.

Year Ended December 31,

2018

2018

2018

2018

2017

2018

2017

2018 vs.

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

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Interest income:

Loans, including loans held for sale

$

6,358

$

6,247

$

5,989

$

6,134

$

6,133

2

%

4

%

$

24,728

$

23,388

6

%

Investment securities

627

593

539

452

431

6

45

2,211

1,711

29

Other

63

55

68

51

40

15

58

237

123

93

Total interest income

7,048

6,895

6,596

6,637

6,604

2

7

27,176

25,222

8

Interest expense:

Deposits

756

681

622

539

457

11

65

2,598

1,602

62

Securitized debt obligations

138

127

124

107

91

9

52

496

327

52

Senior and subordinated notes

297

288

289

251

209

3

42

1,125

731

54

Other borrowings

37

13

10

22

34

185

9

82

102

(20)

Total interest expense

1,228

1,109

1,045

919

791

11

55

4,301

2,762

56

Net interest income

5,820

5,786

5,551

5,718

5,813

1

—

22,875

22,460

2

Provision for credit losses

1,638

1,268

1,276

1,674

1,926

29

(15)

5,856

7,551

(22)

Net interest income after provision for credit losses

4,182

4,518

4,275

4,044

3,887

(7)

8

17,019

14,909

14

Non-interest income:

Interchange fees, net

743

714

723

643

665

4

12

2,823

2,573

10

Service charges and other customer-related fees

352

410

391

432

394

(14)

(11)

1,585

1,597

(1)

Net securities gains (losses)

(20)

(196)

(1)

8

1

(90)

**

(209)

65

**

Other

118

248

528

108

140

(52)

(16)

1,002

542

85

Total non-interest income

1,193

1,176

1,641

1,191

1,200

1

(1)

5,201

4,777

9

Non-interest expense:

Salaries and associate benefits

1,345

1,432

1,430

1,520

1,521

(6)

(12)

5,727

5,899

(3)

Occupancy and equipment

610

515

503

490

523

18

17

2,118

1,939

9

Marketing

831

504

425

414

460

65

81

2,174

1,670

30

Professional services

426

275

234

210

274

55

55

1,145

1,097

4

Communications and data processing

326

311

317

306

306

5

7

1,260

1,177

7

Amortization of intangibles

43

44

43

44

61

(2)

(30)

174

245

(29)

Other

551

692

472

589

634

(20)

(13)

2,304

2,167

6

Total non-interest expense

4,132

3,773

3,424

3,573

3,779

10

9

14,902

14,194

5

Income from continuing operations before income taxes

1,243

1,921

2,492

1,662

1,308

(35)

(5)

7,318

5,492

33

Income tax provision (benefit)

(21)

420

575

319

2,170

**

**

1,293

3,375

(62)

Income (loss) from continuing operations, net of tax

1,264

1,501

1,917

1,343

(862)

(16)

**

6,025

2,117

185

Income (loss) from discontinued operations, net of tax

(3)

1

(11)

3

(109)

**

(97)

(10)

(135)

(93)

Net income (loss)

1,261

1,502

1,906

1,346

(971)

(16)

**

6,015

1,982

**

Dividends and undistributed earnings allocated to participating securities(2)

(9)

(9)

(12)

(10)

(1)

—

**

(40)

(13)

**

Preferred stock dividends

(80)

(53)

(80)

(52)

(80)

51

—

(265)

(265)

—

Net income (loss) available to common stockholders

$

1,172

$

1,440

$

1,814

$

1,284

$

(1,052)

(19)

**

$

5,710

$

1,704

**

2018 Q4 vs.

Year Ended December 31,

2018

2018

2018

2018

2017

2018

2017

2018 vs.

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

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Basic earnings per common share:(2)

Net income (loss) from continuing operations

$

2.50

$

3.01

$

3.76

$

2.63

$

(1.95)

(17)

%

**

$

11.92

$

3.80

**

Income (loss) from discontinued operations

(0.01)

—

(0.02)

0.01

(0.22)

**

(95)

%

(0.02)

(0.28)

(93)

%

Net income (loss) per basic common share

$

2.49

$

3.01

$

3.74

$

2.64

$

(2.17)

(17)

**

$

11.90

$

3.52

**

Diluted earnings per common share:(2)

Net income (loss) from continuing operations

$

2.49

$

2.99

$

3.73

$

2.61

$

(1.95)

(17)

**

$

11.84

$

3.76

**

Income (loss) from discontinued operations

(0.01)

—

(0.02)

0.01

(0.22)

**

(95)

(0.02)

(0.27)

(93)

Net income (loss) per diluted common share

$

2.48

$

2.99

$

3.71

$

2.62

$

(2.17)

(17)

**

$

11.82

$

3.49

**

Weighted-average common shares outstanding (in millions):

Basic common shares

470.0

477.8

485.1

486.9

485.7

(2)

(3)

479.9

484.2

(1)

Diluted common shares

472.7

480.9

488.3

490.8

485.7

(2)

(3)

483.1

488.6

(1)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets

2018 Q4 vs.

2018

2018

2018

2018

2017

2018

2017

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

Assets:

Cash and cash equivalents:

Cash and due from banks

$

4,768

$

4,547

$

4,499

$

4,220

$

4,458

5

%

7

%

Interest-bearing deposits and other short-term investments

8,418

6,335

7,774

9,788

9,582

33

(12)

Total cash and cash equivalents

13,186

10,882

12,273

14,008

14,040

21

(6)

Restricted cash for securitization investors

303

746

1,023

309

312

(59)

(3)

Investment securities:

Securities available for sale

46,150

47,384

50,691

47,155

37,655

(3)

23

Securities held to maturity

36,771

34,631

33,464

23,075

28,984

6

27

Total investment securities

82,921

82,015

84,155

70,230

66,639

1

24

Loans held for investment:

Unsecuritized loans held for investment

211,702

204,796

201,222

213,313

218,806

3

(3)

Loans held in consolidated trusts

34,197

33,965

34,902

34,943

35,667

1

(4)

Total loans held for investment

245,899

238,761

236,124

248,256

254,473

3

(3)

Allowance for loan and lease losses

(7,220)

(7,219)

(7,368)

(7,567)

(7,502)

—

(4)

Net loans held for investment

238,679

231,542

228,756

240,689

246,971

3

(3)

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

1,192

1,402

1,480

1,498

971

(15)

23

Premises and equipment, net

4,191

4,149

4,095

4,055

4,033

1

4

Interest receivable

1,614

1,518

1,493

1,496

1,536

6

5

Goodwill

14,544

14,513

14,531

14,536

14,533

—

—

Other assets

15,908

16,142

16,183

16,036

16,658

(1)

(5)

Total assets

$

372,538

$

362,909

$

363,989

$

362,857

$

365,693

3

2

2018 Q4 vs.

2018

2018

2018

2018

2017

2018

2017

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

Liabilities:

Interest payable

$

458

$

391

$

450

$

353

$

413

17

%

11

%

Deposits:

Non-interest-bearing deposits

23,483

24,839

25,620

26,176

26,404

(5)

(11)

Interest-bearing deposits

226,281

222,356

222,605

224,671

217,298

2

4

Total deposits

249,764

247,195

248,225

250,847

243,702

1

2

Securitized debt obligations

18,307

18,649

19,649

18,665

20,010

(2)

(9)

Other debt:

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

352

384

553

656

576

(8)

(39)

Senior and subordinated notes

30,826

31,291

32,920

31,051

30,755

(1)

—

Other borrowings

9,420

1,881

188

321

8,940

**

5

Total other debt

40,598

33,556

33,661

32,028

40,271

21

1

Other liabilities

11,743

12,480

12,078

11,761

12,567

(6)

(7)

Total liabilities

320,870

312,271

314,063

313,654

316,963

3

1

Stockholders' equity:

Preferred stock

0

0

0

0

0

—

—

Common stock

7

7

7

7

7

—

—

Additional paid-in capital, net

32,040

31,978

31,868

31,779

31,656

—

1

Retained earnings

35,875

34,883

33,626

31,996

30,700

3

17

Accumulated other comprehensive loss

(1,263)

(1,877)

(1,793)

(1,599)

(926)

(33)

36

Treasury stock, at cost

(14,991)

(14,353)

(13,782)

(12,980)

(12,707)

4

18

Total stockholders' equity

51,668

50,638

49,926

49,203

48,730

2

6

Total liabilities and stockholders' equity

$

372,538

$

362,909

$

363,989

$

362,857

$

365,693

3

2

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 $391 million in Q4 2018, $305 million in Q3 2018, $309 million in Q2 2018,

$335 million in Q1 2018 and $377 million in Q4 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 Q4 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 Q4

2018 Q3

2017 Q4

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

$

242,534

$

6,358

10.49

%

$

238,150

$

6,247

10.49

%

$

254,080

$

6,133

9.66

%

Investment securities

83,391

627

3.01

83,894

593

2.83

68,992

431

2.50

Cash equivalents and other

8,789

63

2.87

8,228

55

2.66

7,670

40

2.09

Total interest-earning assets

$

334,714

$

7,048

8.42

$

330,272

$

6,895

8.35

$

330,742

$

6,604

7.99

Interest-bearing liabilities:

Interest-bearing deposits

$

222,827

$

756

1.36

$

221,431

$

681

1.23

$

215,258

$

457

0.85

Securitized debt obligations

18,312

138

2.99

18,917

127

2.68

19,751

91

1.84

Senior and subordinated notes

30,831

297

3.86

31,660

288

3.63

30,020

209

2.78

Other borrowings and liabilities

6,123

37

2.43

3,084

13

1.67

10,355

34

1.31

Total interest-bearing liabilities

$

278,093

$

1,228

1.77

$

275,092

$

1,109

1.62

$

275,384

$

791

1.15

Net interest income/spread

$

5,820

6.65

$

5,786

6.73

$

5,813

6.84

Impact of non-interest-bearing funding

0.31

0.28

0.19

Net interest margin

6.96

%

7.01

%

7.03

%

Year Ended December 31,

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

$

243,371

$

24,728

10.16

%

$

246,613

$

23,388

9.48

%

Investment securities

79,224

2,211

2.79

68,896

1,711

2.48

Cash equivalents and other

10,143

237

2.33

6,821

123

1.80

Total interest-earning assets

$

332,738

$

27,176

8.17

$

322,330

$

25,222

7.82

Interest-bearing liabilities:

Interest-bearing deposits

$

221,760

$

2,598

1.17

$

213,949

$

1,602

0.75

Securitized debt obligations

19,014

496

2.61

18,237

327

1.79

Senior and subordinated notes

31,295

1,125

3.60

27,866

731

2.62

Other borrowings and liabilities

4,028

82

2.04

8,917

102

1.14

Total interest-bearing liabilities

$

276,097

$

4,301

1.56

$

268,969

$

2,762

1.03

Net interest income/spread

$

22,875

6.61

$

22,460

6.79

Impact of non-interest-bearing funding

0.26

0.18

Net interest margin

6.87

%

6.97

%

__________

(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 $1 million and $2 million for Q4 2018, respectively, and $2 million and $38

million for the year ended December 31, 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 Q4 vs.

Year Ended December 31,

(Dollars in millions, except as noted)

2018

Q4

2018

Q3

2018

Q2

2018

Q1

2017

Q4

2018

Q3

2017

Q4

2018

2017

2018 vs.

2017

Loans Held for Investment (Period-End)

Credit card:

Domestic credit card

$

107,350

$

101,564

$

100,714

$

98,535

$

105,293

6

%

2

%

$

107,350

$

105,293

2

%

International card businesses

9,011

9,121

9,063

9,041

9,469

(1)

(5)

9,011

9,469

(5)

Total credit card

116,361

110,685

109,777

107,576

114,762

5

1

116,361

114,762

1

Consumer banking:

Auto

56,341

56,422

55,781

54,811

53,991

—

4

56,341

53,991

4

Home loan(1)

—

—

—

16,630

17,633

**

**

—

17,633

**

Retail banking

2,864

2,907

2,946

3,233

3,454

(1)

(17)

2,864

3,454

(17)

Total consumer banking

59,205

59,329

58,727

74,674

75,078

—

(21)

59,205

75,078

(21)

Commercial banking:

Commercial and multifamily real estate

28,899

29,064

28,292

27,360

26,150

(1)

11

28,899

26,150

11

Commercial and industrial

41,091

39,325

38,948

38,208

38,025

4

8

41,091

38,025

8

Total commercial lending

69,990

68,389

67,240

65,568

64,175

2

9

69,990

64,175

9

Small-ticket commercial real estate

343

358

369

385

400

(4)

(14)

343

400

(14)

Total commercial banking

70,333

68,747

67,609

65,953

64,575

2

9

70,333

64,575

9

Other loans

—

—

11

53

58

**

**

—

58

**

Total loans held for investment

$

245,899

$

238,761

$

236,124

$

248,256

$

254,473

3

(3)

$

245,899

$

254,473

(3)

Loans Held for Investment (Average)

Credit card:

Domestic credit card

$

103,391

$

100,566

$

98,895

$

100,450

$

101,087

3

%

2

%

$

100,832

$

94,923

6

%

International card businesses

8,958

8,944

8,998

9,052

8,942

—

—

8,988

8,545

5

Total credit card

112,349

109,510

107,893

109,502

110,029

3

2

109,820

103,468

6

Consumer banking:

Auto

56,469

56,297

55,298

54,344

53,747

—

5

55,610

51,477

8

Home loan(1)

—

—

8,098

17,224

18,109

**

**

6,266

19,681

(68)

Retail banking

2,873

2,923

3,084

3,429

3,433

(2)

(16)

3,075

3,463

(11)

Total consumer banking

59,342

59,220

66,480

74,997

75,289

—

(21)

64,951

74,621

(13)

Commercial banking:

Commercial and multifamily real estate

28,855

28,354

27,302

26,542

27,770

2

4

27,771

27,370

1

Commercial and industrial

40,476

39,318

38,686

38,246

39,020

3

4

39,188

39,606

(1)

Total commercial lending

69,331

67,672

65,988

64,788

66,790

2

4

66,959

66,976

—

Small-ticket commercial real estate

349

364

376

393

410

(4)

(15)

371

442

(16)

Total commercial banking

69,680

68,036

66,364

65,181

67,200

2

4

67,330

67,418

—

Other loans

—

—

21

46

48

**

**

17

58

(71)

Total average loans held for investment

$

241,371

$

236,766

$

240,758

$

249,726

$

252,566

2

(4)

$

242,118

$

245,565

(1)

2018 Q4 vs.

Year Ended December 31,

2018

Q4

2018

Q3

2018

Q2

2018

Q1

2017

Q4

2018

Q3

2017

Q4

2018

2017

2018 vs.

2017

Net Charge-Off (Recovery) Rates

Credit card:

Domestic credit card(2)

4.64

%

4.35

%

4.72

%

5.26

%

5.08

%

29

bps

(44)

bps

4.74

%

4.99

%

(25)

bps

International card businesses

4.22

1.92

4.14

2.49

3.92

230

30

3.19

3.69

(50)

Total credit card(2)

4.61

4.15

4.67

5.03

4.99

46

(38)

4.62

4.88

(26)

Consumer banking:

Auto

1.98

1.73

1.32

1.53

2.12

25

(14)

1.64

1.86

(22)

Home loan(1)

—

—

—

(0.03)

0.23

**

**

(0.02)

0.08

**

Retail banking

2.56

2.62

2.07

1.89

1.94

(6)

62

2.26

1.92

34

Total consumer banking

2.01

1.77

1.19

1.19

1.66

24

35

1.51

1.39

12

Commercial banking:

Commercial and multifamily real estate

(0.01)

0.04

—

—

(0.01)

(5)

—

0.01

—

1

Commercial and industrial

0.17

0.25

(0.07)

0.20

1.47

(8)

(130)

0.14

1.17

(103)

Total commercial lending

0.10

0.16

(0.04)

0.12

0.86

(6)

(76)

0.08

0.69

(61)

Small-ticket commercial real estate

0.13

0.56

(0.40)

(0.18)

(0.05)

(43)

18

0.02

0.24

(22)

Total commercial banking

0.10

0.16

(0.04)

0.11

0.85

(6)

(75)

0.08

0.69

(61)

Total net charge-offs

2.67

2.41

2.42

2.59

2.89

26

(22)

2.52

2.67

(15)

30+ Day Performing Delinquency Rates

Credit card:

Domestic credit card

4.04

%

3.80

%

3.32

%

3.57

%

4.01

%

24

bps

3

bps

4.04

%

4.01

%

3

bps

International card businesses

3.52

3.55

3.39

3.62

3.64

(3)

(12)

3.52

3.64

(12)

Total credit card

4.00

3.78

3.32

3.58

3.98

22

2

4.00

3.98

2

Consumer banking:

Auto

6.95

6.27

5.57

5.15

6.51

68

44

6.95

6.51

44

Home loan(1)

—

—

—

0.20

0.20

**

**

—

0.20

**

Retail banking

1.01

0.80

0.84

0.75

0.76

21

25

1.01

0.76

25

Total consumer banking

6.67

6.01

5.33

3.86

4.76

66

191

6.67

4.76

191

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

Credit card:

International card businesses

0.25

%

0.22

%

0.22

%

0.25

%

0.25

%

3

bps

—

0.25

%

0.25

%

—

Total credit card

0.02

0.02

0.02

0.02

0.02

—

—

0.02

0.02

—

Consumer banking:

Auto

0.80

0.70

0.55

0.50

0.70

10

10

bps

0.80

0.70

10

bps

Home loan(1)

—

—

—

0.86

1.00

**

**

—

1.00

**

Retail banking

1.04

1.13

1.15

1.04

1.00

(9)

4

1.04

1.00

4

Total consumer banking

0.81

0.72

0.58

0.61

0.78

9

3

0.81

0.78

3

Commercial banking:

Commercial and multifamily real estate

0.29

0.13

0.01

0.01

0.15

16

14

0.29

0.15

14

Commercial and industrial

0.54

0.55

0.57

0.78

0.63

(1)

(9)

0.54

0.63

(9)

Total commercial lending

0.44

0.37

0.33

0.46

0.43

7

1

0.44

0.43

1

Small-ticket commercial real estate

1.80

1.65

1.18

1.46

1.65

15

15

1.80

1.65

15

Total commercial banking

0.44

0.38

0.34

0.47

0.44

6

—

0.44

0.44

—

Total nonperforming loans

0.33

0.30

0.25

0.32

0.35

3

(2)

0.33

0.35

(2)

Total nonperforming assets

0.35

0.33

0.30

0.35

0.41

2

(6)

0.35

0.41

(6)

CAPITAL ONE FINANCIAL CORPORATION (COF)

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

Three Months Ended December 31, 2018

Credit Card

Consumer Banking

(Dollars in millions)

Domestic Card

International Card Businesses

Total Credit Card

Auto

Retail

Banking

Total

Consumer

Banking

Commercial Banking

Total

Allowance for loan and lease losses:

Balance as of September 30, 2018

$

5,116

$

404

$

5,520

$

985

$

58

$

1,043

$

656

$

7,219

Charge-offs

(1,503)

(122)

(1,625)

(496)

(22)

(518)

(43)

(2,186)

Recoveries

302

28

330

217

3

220

26

576

Net charge-offs

(1,201)

(94)

(1,295)

(279)

(19)

(298)

(17)

(1,610)

Provision (benefit) for loan and lease losses

1,229

97

1,326

284

19

303

(3)

1,626

Allowance build (release) for loan and lease losses

28

3

31

5

—

5

(20)

16

Other changes(5)

—

(16)

(16)

—

—

—

1

(15)

Balance as of December 31, 2018

5,144

391

5,535

990

58

1,048

637

7,220

Reserve for unfunded lending commitments:

Balance as of September 30, 2018

—

—

—

—

4

4

106

110

Provision for losses on unfunded lending commitments

—

—

—

—

—

—

12

12

Balance as of December 31, 2018

—

—

—

—

4

4

118

122

Combined allowance and reserve as of December 31, 2018

$

5,144

$

391

$

5,535

$

990

$

62

$

1,052

$

755

$

7,342

Year Ended December 31, 2018

Credit Card

Consumer Banking

(Dollars in millions)

Domestic Card

International Card Businesses

Total Credit Card

Auto

Home

Loan(1)

Retail

Banking

Total

Consumer

Banking

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

(6,152)

(505)

(6,657)

(1,746)

—

(86)

(1,832)

(119)

(7)

(8,615)

Recoveries

1,370

218

1,588

834

1

16

851

63

1

2,503

Net charge-offs

(4,782)

(287)

(5,069)

(912)

1

(70)

(981)

(56)

(6)

(6,112)

Provision (benefit) for loan and lease losses

4,653

331

4,984

783

(6)

64

841

82

(49)

5,858

Allowance build (release) for loan and lease losses

(129)

44

(85)

(129)

(5)

(6)

(140)

26

(55)

(254)

Other changes(1)(5)

—

(28)

(28)

—

(53)

(1)

(54)

—

54

(28)

Balance as of December 31, 2018

5,144

391

5,535

990

—

58

1,048

637

—

7,220

Reserve for unfunded lending commitments:

Balance as of December 31, 2017

—

—

—

—

—

7

7

117

—

124

Provision (benefit) for losses on unfunded lending commitments

—

—

—

—

—

(3)

(3)

1

—

(2)

Balance as of December 31, 2018

—

—

—

—

—

4

4

118

—

122

Combined allowance and reserve as of December 31, 2018

$

5,144

$

391

$

5,535

$

990

$

—

$

62

$

1,052

$

755

$

—

$

7,342

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results

Three Months Ended December 31, 2018

Year Ended December 31, 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 (loss)

$

3,617

$

1,689

$

528

$

(14)

$

5,820

$

14,167

$

6,549

$

2,152

$

7

$

22,875

Non-interest income (loss)

886

159

159

(11)

1,193

3,520

663

744

274

5,201

Total net revenue (loss)

4,503

1,848

687

(25)

7,013

17,687

7,212

2,896

281

28,076

Provision (benefit) for credit losses

1,326

303

9

—

1,638

4,984

838

83

(49)

5,856

Non-interest expense

2,496

1,085

434

117

4,132

8,542

4,027

1,654

679

14,902

Income (loss) from continuing operations before income taxes

681

460

244

(142)

1,243

4,161

2,347

1,159

(349)

7,318

Income tax provision (benefit)

160

107

57

(345)

(21)

970

547

270

(494)

1,293

Income from continuing operations, net of tax

$

521

$

353

$

187

$

203

$

1,264

$

3,191

$

1,800

$

889

$

145

$

6,025

Three Months Ended September 30, 2018

(Dollars in millions)

Credit Card

Consumer Banking

Commercial Banking(6)(7)

Other(6)(7)

Total

Net interest income

$

3,596

$

1,636

$

539

$

15

$

5,786

Non-interest income (loss)

893

155

189

(61)

1,176

Total net revenue (loss)

4,489

1,791

728

(46)

6,962

Provision (benefit) for credit losses

1,031

184

54

(1)

1,268

Non-interest expense

2,103

979

408

283

3,773

Income (loss) from continuing operations before income taxes

1,355

628

266

(328)

1,921

Income tax provision (benefit)

315

146

62

(103)

420

Income (loss) from continuing operations, net of tax

$

1,040

$

482

$

204

$

(225)

$

1,501

Three Months Ended December 31, 2017

Year Ended December 31, 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

$

3,568

$

1,636

$

566

$

43

$

5,813

$

13,648

$

6,380

$

2,261

$

171

$

22,460

Non-interest income (loss)

847

179

188

(14)

1,200

3,325

749

708

(5)

4,777

Total net revenue

4,415

1,815

754

29

7,013

16,973

7,129

2,969

166

27,237

Provision for credit losses

1,486

340

100

—

1,926

6,066

1,180

301

4

7,551

Non-interest expense

2,108

1,081

437

153

3,779

7,916

4,233

1,603

442

14,194

Income (loss) from continuing operations before income taxes

821

394

217

(124)

1,308

2,991

1,716

1,065

(280)

5,492

Income tax provision

297

144

79

1,650

2,170

1,071

626

389

1,289

3,375

Income (loss) from continuing operations, net of tax

$

524

$

250

$

138

$

(1,774)

$

(862)

$

1,920

$

1,090

$

676

$

(1,569)

$

2,117

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business

2018 Q4 vs.

Year Ended December 31,

2018

2018

2018

2018

2017

2018

2017

2018 vs.

(Dollars in millions, except as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Credit Card

Earnings:

Net interest income

$

3,617

$

3,596

$

3,396

$

3,558

$

3,568

1

%

1

%

$

14,167

$

13,648

4

%

Non-interest income

886

893

884

857

847

(1)

5

3,520

3,325

6

Total net revenue

4,503

4,489

4,280

4,415

4,415

—

2

17,687

16,973

4

Provision for credit losses

1,326

1,031

1,171

1,456

1,486

29

(11)

4,984

6,066

(18)

Non-interest expense

2,496

2,103

1,904

2,039

2,108

19

18

8,542

7,916

8

Income from continuing operations before income taxes

681

1,355

1,205

920

821

(50)

(17)

4,161

2,991

39

Income tax provision

160

315

282

213

297

(49)

(46)

970

1,071

(9)

Income from continuing operations, net of tax

$

521

$

1,040

$

923

$

707

$

524

(50)

(1)

$

3,191

$

1,920

66

Selected performance metrics:

Period-end loans held for investment

$

116,361

$

110,685

$

109,777

$

107,576

$

114,762

5

1

$

116,361

$

114,762

1

Average loans held for investment

112,349

109,510

107,893

109,502

110,029

3

2

109,820

103,468

6

Average yield on loans held for investment(8)

15.63

%

15.79

%

15.06

%

15.24

%

15.13

%

(16)

bps

50

bps

15.43

%

15.21

%

22

bps

Total net revenue margin(9)

16.03

16.40

15.87

16.13

16.05

(37)

(2)

16.11

16.40

(29)

Net charge-off rate(2)

4.61

4.15

4.67

5.03

4.99

46

(38)

4.62

4.88

(26)

30+ day performing delinquency rate

4.00

3.78

3.32

3.58

3.98

22

2

4.00

3.98

2

30+ day delinquency rate

4.01

3.80

3.33

3.59

3.99

21

2

4.01

3.99

2

Nonperforming loan rate(3)

0.02

0.02

0.02

0.02

0.02

—

—

0.02

0.02

—

Purchase volume(10)

$

105,696

$

97,469

$

97,392

$

86,545

$

95,659

8

%

10

%

$

387,102

$

336,440

15

%

2018 Q4 vs.

Year Ended December 31,

2018

2018

2018

2018

2017

2018

2017

2018 vs.

(Dollars in millions, except as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Domestic Card

Earnings:

Net interest income

$

3,309

$

3,280

$

3,108

$

3,229

$

3,268

1

%

1

%

$

12,926

$

12,504

3

%

Non-interest income

828

819

818

774

781

1

6

3,239

3,069

6

Total net revenue

4,137

4,099

3,926

4,003

4,049

1

2

16,165

15,573

4

Provision for credit losses

1,229

950

1,094

1,380

1,402

29

(12)

4,653

5,783

(20)

Non-interest expense

2,216

1,890

1,683

1,832

1,880

17

18

7,621

7,078

8

Income from continuing operations before income taxes

692

1,259

1,149

791

767

(45)

(10)

3,891

2,712

43

Income tax provision

162

293

268

184

280

(45)

(42)

907

990

(8)

Income from continuing operations, net of tax

$

530

$

966

$

881

$

607

$

487

(45)

9

$

2,984

$

1,722

73

Selected performance metrics:

Period-end loans held for investment

$

107,350

$

101,564

$

100,714

$

98,535

$

105,293

6

2

$

107,350

$

105,293

2

Average loans held for investment

103,391

100,566

98,895

100,450

101,087

3

2

100,832

94,923

6

Average yield on loans held for investment(8)

15.58

%

15.73

%

15.05

%

15.10

%

15.08

%

(15)

bps

50

bps

15.36

%

15.16

%

20

bps

Total net revenue margin(9)

16.01

16.30

15.88

15.94

16.03

(29)

(2)

16.03

16.41

(38)

Net charge-off rate(2)

4.64

4.35

4.72

5.26

5.08

29

(44)

4.74

4.99

(25)

30+ day delinquency rate

4.04

3.80

3.32

3.57

4.01

24

3

4.04

4.01

3

Purchase volume(10)

$

96,818

$

89,205

$

88,941

$

79,194

$

87,287

9

%

11

%

$

354,158

$

306,824

15

%

Refreshed FICO scores:(11)

Greater than 660

67

%

67

%

68

%

66

%

66

%

—

1

67

%

66

%

1

660 or below

33

33

32

34

34

—

(1)

33

34

(1)

Total

100

%

100

%

100

%

100

%

100

%

100

%

100

%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business

2018 Q4 vs.

Year Ended December 31,

2018

2018

2018

2018

2017

2018

2017

2018 vs.

(Dollars in millions, except as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Consumer Banking

Earnings:

Net interest income

$

1,689

$

1,636

$

1,609

$

1,615

$

1,636

3

%

3

%

$

6,549

$

6,380

3

%

Non-interest income

159

155

175

174

179

3

(11)

663

749

(11)

Total net revenue

1,848

1,791

1,784

1,789

1,815

3

2

7,212

7,129

1

Provision for credit losses

303

184

118

233

340

65

(11)

838

1,180

(29)

Non-interest expense

1,085

979

963

1,000

1,081

11

—

4,027

4,233

(5)

Income from continuing operations before income taxes

460

628

703

556

394

(27)

17

2,347

1,716

37

Income tax provision

107

146

164

130

144

(27)

(26)

547

626

(13)

Income from continuing operations, net of tax

$

353

$

482

$

539

$

426

$

250

(27)

41

$

1,800

$

1,090

65

Selected performance metrics:

Period-end loans held for investment(1)

$

59,205

$

59,329

$

58,727

$

74,674

$

75,078

—

(21)

$

59,205

$

75,078

(21)

Average loans held for investment(1)

59,342

59,220

66,480

74,997

75,289

—

(21)

64,951

74,621

(13)

Average yield on loans held for investment(8)

8.14

%

8.03

%

7.32

%

6.86

%

6.84

%

11

bps

130

bps

7.54

%

6.67

%

87

bps

Auto loan originations

$

5,932

$

6,643

$

6,994

$

6,707

$

6,215

(11)

%

(5)

%

$

26,276

$

27,737

(5)

%

Period-end deposits

198,607

196,635

194,962

193,073

185,842

1

7

198,607

185,842

7

Average deposits

196,348

194,687

193,278

187,785

184,799

1

6

193,053

185,201

4

Average deposits interest rate

1.10

%

1.00

%

0.88

%

0.80

%

0.69

%

10

bps

41

bps

0.95

%

0.62

%

33

bps

Net charge-off rate

2.01

1.77

1.19

1.19

1.66

24

35

1.51

1.39

12

30+ day performing delinquency rate

6.67

6.01

5.33

3.86

4.76

66

191

6.67

4.76

191

30+ day delinquency rate

7.36

6.61

5.80

4.27

5.34

75

202

7.36

5.34

202

Nonperforming loan rate(3)

0.81

0.72

0.58

0.61

0.78

9

3

0.81

0.78

3

Nonperforming asset rate(4)

0.90

0.82

0.73

0.70

0.91

8

(1)

0.90

0.91

(1)

Auto—At origination FICO scores:(12)

Greater than 660

50

%

50

%

50

%

51

%

51

%

—

(1)

%

50

%

51

%

(1)

%

621 - 660

19

19

19

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 Q4 vs.

Year Ended December 31,

2018

2018

2018

2018

2017

2018

2017

2018 vs.

(Dollars in millions, except as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Commercial Banking

Earnings:

Net interest income

$

528

$

539

$

549

$

536

$

566

(2)

%

(7)

%

$

2,152

$

2,261

(5)

%

Non-interest income

159

189

209

187

188

(16)

(15)

744

708

5

Total net revenue(6)(7)

687

728

758

723

754

(6)

(9)

2,896

2,969

(2)

Provision (benefit) for credit losses

9

54

34

(14)

100

(83)

(91)

83

301

(72)

Non-interest expense

434

408

409

403

437

6

(1)

1,654

1,603

3

Income from continuing operations before income taxes

244

266

315

334

217

(8)

12

1,159

1,065

9

Income tax provision

57

62

73

78

79

(8)

(28)

270

389

(31)

Income from continuing operations, net of tax

$

187

$

204

$

242

$

256

$

138

(8)

36

$

889

$

676

32

Selected performance metrics:

Period-end loans held for investment

$

70,333

$

68,747

$

67,609

$

65,953

$

64,575

2

9

$

70,333

$

64,575

9

Average loans held for investment

69,680

68,036

66,364

65,181

67,200

2

4

67,330

67,418

—

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

4.67

%

4.55

%

4.43

%

4.16

%

4.03

%

12

bps

64

bps

4.46

%

3.87

%

59

bps

Period-end deposits

$

29,480

$

30,474

$

31,078

$

34,449

$

33,938

(3)

%

(13)

%

$

29,480

$

33,938

(13)

%

Average deposits

30,680

31,061

32,951

34,057

34,117

(1)

(10)

32,175

33,947

(5)

Average deposits interest rate

0.95

%

0.79

%

0.65

%

0.52

%

0.46

%

16

bps

49

bps

0.72

%

0.39

%

33

bps

Net charge-off (recovery) rate

0.10

0.16

(0.04)

0.11

0.85

(6)

(75)

0.08

0.69

(61)

Nonperforming loan rate(3)

0.44

0.38

0.34

0.47

0.44

6

—

0.44

0.44

—

Nonperforming asset rate(4)

0.45

0.41

0.37

0.49

0.52

4

(7)

0.45

0.52

(7)

Risk category:(13)

Noncriticized

$

68,043

$

65,926

$

64,923

$

62,773

$

61,162

3

%

11

%

$

68,043

$

61,162

11

%

Criticized performing

1,848

2,204

2,088

2,432

2,649

(16)

(30)

1,848

2,649

(30)

Criticized nonperforming

312

259

229

309

284

20

10

312

284

10

PCI loans

130

358

369

439

480

(64)

(73)

130

480

(73)

Total commercial loans

$

70,333

$

68,747

$

67,609

$

65,953

$

64,575

2

9

$

70,333

$

64,575

9

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

Noncriticized

96.8

%

95.9

%

96.1

%

95.1

%

94.7

%

90

bps

210

bps

96.8

%

94.7

%

210

bps

Criticized performing

2.6

3.2

3.1

3.7

4.1

(60)

(150)

2.6

4.1

(150)

Criticized nonperforming

0.4

0.4

0.3

0.5

0.4

—

—

0.4

0.4

—

PCI loans

0.2

0.5

0.5

0.7

0.8

(30)

(60)

0.2

0.8

(60)

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 Q4 vs.

Year Ended December 31,

2018

2018

2018

2018

2017

2018

2017

2018 vs.

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2018

2017

2017

Other(14)

Earnings:

Net interest income (loss)

$

(14)

$

15

$

(3)

$

9

$

43

**

**

$

7

$

171

(96)

%

Non-interest income (loss)

(11)

(61)

373

(27)

(14)

(82)

%

(21)

%

274

(5)

**

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

(25)

(46)

370

(18)

29

(46)

**

281

166

69

Provision (benefit) for credit losses

—

(1)

(47)

(1)

—

**

**

(49)

4

**

Non-interest expense(15)

117

283

148

131

153

(59)

(24)

679

442

54

Income (loss) from continuing operations before income taxes

(142)

(328)

269

(148)

(124)

(57)

15

(349)

(280)

25

Income tax provision (benefit)

(345)

(103)

56

(102)

1,650

**

**

(494)

1,289

**

Income (loss) from continuing operations, net of tax

$

203

$

(225)

$

213

$

(46)

$

(1,774)

**

**

$

145

$

(1,569)

**

Selected performance metrics:

Period-end loans held for investment

—

—

$

11

$

53

$

58

**

**

—

$

58

**

Average loans held for investment

—

—

21

46

48

**

**

$

17

58

(71)

Period-end deposits

$

21,677

$

20,086

22,185

23,325

23,922

8

(9)

21,677

23,922

(9)

Average deposits

20,635

20,972

22,561

23,428

22,646

(2)

(9)

21,889

20,734

6

Total

Earnings:

Net interest income

$

5,820

$

5,786

$

5,551

$

5,718

$

5,813

1

%

—

$

22,875

$

22,460

2

%

Non-interest income

1,193

1,176

1,641

1,191

1,200

1

(1)

%

5,201

4,777

9

Total net revenue

7,013

6,962

7,192

6,909

7,013

1

—

28,076

27,237

3

Provision for credit losses

1,638

1,268

1,276

1,674

1,926

29

(15)

5,856

7,551

(22)

Non-interest expense

4,132

3,773

3,424

3,573

3,779

10

9

14,902

14,194

5

Income from continuing operations before income taxes

1,243

1,921

2,492

1,662

1,308

(35)

(5)

7,318

5,492

33

Income tax provision (benefit)

(21)

420

575

319

2,170

**

**

1,293

3,375

(62)

Income (loss) from continuing operations, net of tax

$

1,264

$

1,501

$

1,917

$

1,343

$

(862)

(16)

**

$

6,025

$

2,117

185

Selected performance metrics:

Period-end loans held for investment

$

245,899

$

238,761

$

236,124

$

248,256

$

254,473

3

(3)

$

245,899

$

254,473

(3)

Average loans held for investment

241,371

236,766

240,758

249,726

252,566

2

(4)

242,118

245,565

(1)

Period-end deposits

249,764

247,195

248,225

250,847

243,702

1

2

249,764

243,702

2

Average deposits

247,663

246,720

248,790

245,270

241,562

—

3

247,117

239,882

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. In the fourth quarter of 2018, we sold all of

the remaining consumer home loan portfolio.

(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 3 basis points for both total

credit card and domestic credit card for the year ended December 31, 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

$40 million and $126 million in revenue in our Commercial Banking business in the fourth quarter and year

ended December 31, 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, and there

were no material adjustments made to this amount during the measurement period, which ended in

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)

December 31,

2018

September 30,

2018

June 30,

2018

March 31,

2018

December 31,

2017

Regulatory Capital Metrics

Common equity excluding AOCI

$

48,570

$

48,154

$

47,359

$

46,441

$

45,296

Adjustments:

AOCI(2)(3)

(1,263)

(1,877)

(1,793)

(1,599)

(808)

Goodwill, net of related deferred tax liabilities

(14,373)

(14,345)

(14,368)

(14,379)

(14,380)

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

(254)

(284)

(328)

(371)

(330)

Other

391

817

735

620

258

Common equity Tier 1 capital

$

33,071

$

32,465

$

31,605

$

30,712

$

30,036

Tier 1 capital

$

37,431

$

36,826

$

35,965

$

35,073

$

34,396

Total capital(4)

44,645

43,947

43,082

42,259

41,962

Risk-weighted assets

294,955

288,694

285,223

291,346

292,225

Adjusted average assets(5)

350,606

346,297

349,222

347,287

348,424

Capital Ratios

Common equity Tier 1 capital(6)

11.2

%

11.2

%

11.1

%

10.5

%

10.3

%

Tier 1 capital(7)

12.7

12.8

12.6

12.0

11.8

Total capital(8)

15.1

15.2

15.1

14.5

14.4

Tier 1 leverage(5)

10.7

10.6

10.3

10.1

9.9

Tangible common equity ("TCE")(9)

9.1

9.0

8.8

8.6

8.3

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, both in the current period and across periods. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.

Three Months Ended

Nine Months Ended

Year Ended

December 31, 2018

September 30, 2018

December 31, 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

Selected income statement data:

Net interest income

$

5,820

$

6

$

5,826

$

17,055

$

26

$

17,081

$

22,875

$

32

$

22,907

Non-interest income

1,193

(64)

1,129

4,008

(514)

3,494

5,201

(578)

4,623

Total net revenue

7,013

(58)

6,955

21,063

(488)

20,575

28,076

(546)

27,530

Provision for credit losses

1,638

—

1,638

4,218

48

4,266

5,856

48

5,904

Non-interest expense

4,132

(34)

4,098

10,770

(248)

10,522

14,902

(282)

14,620

Income from continuing operations before income taxes

1,243

(24)

1,219

6,075

(288)

5,787

7,318

(312)

7,006

Income tax provision (benefit)

(21)

266

245

1,314

(121)

1,193

1,293

145

1,438

Income from continuing operations, net of tax

1,264

(290)

974

4,761

(167)

4,594

6,025

(457)

5,568

Income (loss) from discontinued operations, net of tax

(3)

—

(3)

(7)

—

(7)

(10)

—

(10)

Net income

1,261

(290)

971

4,754

(167)

4,587

6,015

(457)

5,558

Dividends and undistributed earnings allocated to participating securities(12)

(9)

2

(7)

(32)

1

(31)

(40)

3

(37)

Preferred stock dividends

(80)

—

(80)

(185)

—

(185)

(265)

—

(265)

Net income available to common stockholders

$

1,172

$

(288)

$

884

$

4,537

$

(166)

$

4,371

$

5,710

$

(454)

$

5,256

Selected performance metrics:

Diluted EPS(12)

$

2.48

$

(0.61)

$

1.87

$

9.32

$

(0.34)

$

8.98

$

11.82

$

(0.94)

$

10.88

Efficiency ratio

58.92

%

—

58.92

%

51.13

%

1

bps

51.14

%

53.08

%

3

bps

53.11

%

Operating efficiency ratio

47.07

(10)

bps

46.97

44.76

(15)

44.61

45.33

(12)

45.21

Three Months Ended

Nine Months Ended

Year Ended

December 31, 2017

September 30, 2017

December 31, 2017

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

Reported Results

Adj.(11)

Adjusted Results

Reported Results

Adj.(11)

Adjusted Results

Reported Results

Adj.(11)

Adjusted Results

Selected income statement data:

Net interest income

$

5,813

$

11

$

5,824

$

16,647

$

33

$

16,680

$

22,460

$

44

$

22,504

Non-interest income

1,200

9

1,209

3,577

37

3,614

4,777

46

4,823

Total net revenue

7,013

20

7,033

20,224

70

20,294

27,237

90

27,327

Provision for credit losses

1,926

—

1,926

5,625

(88)

5,537

7,551

(88)

7,463

Non-interest expense

3,779

(87)

3,692

10,415

(166)

10,249

14,194

(253)

13,941

Income from continuing operations before income taxes

1,308

107

1,415

4,184

324

4,508

5,492

431

5,923

Income tax provision

2,170

(1,742)

428

1,205

82

1,287

3,375

(1,660)

1,715

Income (loss) from continuing operations, net of tax

(862)

1,849

987

2,979

242

3,221

2,117

2,091

4,208

Income (loss) from discontinued operations, net of tax

(109)

—

(109)

(26)

—

(26)

(135)

—

(135)

Net income (loss)

(971)

1,849

878

2,953

242

3,195

1,982

2,091

4,073

Dividends and undistributed earnings allocated to participating securities(12)

(1)

(5)

(6)

(21)

—

(21)

(13)

(15)

(28)

Preferred stock dividends

(80)

—

(80)

(185)

—

(185)

(265)

—

(265)

Net income (loss) available to common stockholders

$

(1,052)

$

1,844

$

792

$

2,747

$

242

$

2,989

$

1,704

$

2,076

$

3,780

Selected performance metrics:

Diluted EPS(12)

$

(2.17)

$

3.79

$

1.62

$

5.63

$

0.49

$

6.12

$

3.49

$

4.25

$

7.74

Efficiency ratio

53.89

%

(139)

bps

52.50

%

51.50

%

(100)

bps

50.50

%

52.11

%

(109)

bps

51.02

%

Operating efficiency ratio

47.33

(138)

45.95

45.52

(98)

44.54

45.98

(108)

44.90

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

our non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services

companies, they may not be comparable to similarly-titled measures reported by other companies. The following tables present reconciliations of

these non-GAAP measures to the applicable amounts measured in accordance with GAAP.

2018

2018

2018

2018

2017

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Tangible Common Equity (Period-End)

Stockholders' equity

$

51,668

$

50,638

$

49,926

$

49,203

$

48,730

Goodwill and intangible assets(13)

(14,941)

(14,945)

(15,013)

(15,063)

(15,106)

Noncumulative perpetual preferred stock

(4,360)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

32,367

$

31,333

$

30,553

$

29,780

$

29,264

Tangible Common Equity (Average)

Stockholders' equity

$

51,114

$

50,768

$

49,827

$

49,031

$

50,710

Goodwill and intangible assets(13)

(14,953)

(14,982)

(15,043)

(15,092)

(15,223)

Noncumulative perpetual preferred stock

(4,360)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

31,801

$

31,426

$

30,424

$

29,579

$

31,127

Tangible Assets (Period-End)

Total assets

$

372,538

$

362,909

$

363,989

$

362,857

$

365,693

Goodwill and intangible assets(13)

(14,941)

(14,945)

(15,013)

(15,063)

(15,106)

Tangible assets

$

357,597

$

347,964

$

348,976

$

347,794

$

350,587

Tangible Assets (Average)

Total assets

$

365,243

$

360,937

$

363,929

$

362,049

$

363,045

Goodwill and intangible assets(13)

(14,953)

(14,982)

(15,043)

(15,092)

(15,223)

Tangible assets

$

350,290

$

345,955

$

348,886

$

346,957

$

347,822

__________

(1) Regulatory capital metrics and capital ratios as of December 31, 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) The adjustments in 2018 consist of:

Three Months Ended

Nine Months Ended

Year Ended

(Dollars in millions)

December 31, 2018

September 30, 2018

December 31, 2018

Net gains on the sales of exited businesses

$

(74)

$

(541)

$

(615)

Benefit as a result of tax methodology change on rewards costs

(284)

—

(284)

Legal reserve build

—

170

170

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

50

49

99

Restructuring charges

—

34

34

Total

(308)

(288)

(596)

Income tax provision

18

121

139

Net income

$

(290)

$

(167)

$

(457)

(11) The adjustments in 2017 consist of:

Three Months Ended

Nine Months Ended

Year Ended

(Dollars in millions)

December 31, 2017

September 30, 2017

December 31, 2017

Impacts of the Tax Act

$

1,769

—

$

1,769

Restructuring charges

76

$

108

184

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

31

99

130

Charges related to the Cabela's acquisition

—

117

117

Total

1,876

324

2,200

Income tax benefit

(27)

(82)

(109)

Net income

$

1,849

$

242

$

2,091

(12) 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.

(13) Includes impact of related deferred taxes.

Cision View original content:http://www.prnewswire.com/news-releases/capital-one-reports-fourth-quarter-2018-net-income-of-1-3-billion-or-2-48-per-share-300782384.html

SOURCE Capital One Financial Corporation

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