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Capital One Reports Third Quarter 2019 Net Income of $1.3 billion, or $2.69 per share

October 24, 2019 4:06 PM

MCLEAN, Va., Oct. 24, 2019 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2019 of $1.3 billion, or $2.69 per diluted common share, compared with net income of $1.6 billion, or $3.24 per diluted common share in the second quarter of 2019, and with net income of $1.5 billion, or $2.99 per diluted common share in the third quarter of 2018. Excluding adjusting items, net income for the third quarter of 2019 was $3.32 per diluted common share(1).

"Our marketing and technology investments are building our momentum and creating great value," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "Our domestic card business delivered strong year-over-year growth in purchase volume and branded card loans, and our consumer banking business posted strong year-over-year growth in auto originations and retail deposits."

Adjusting items in the third quarter of 2019, which are excluded from diluted earnings per share (EPS), efficiency ratio and operating 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

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

$

212

$

0.45

Walmart launch and related integration expenses

84

0.14

Cybersecurity Incident expenses, net of insurance

22

0.04

All comparisons below are for the third quarter of 2019 compared with the second quarter of 2019 unless otherwise noted.

Third Quarter 2019 Income Statement Summary:

  • Total net revenue decreased 2 percent to $7.0 billion.
  • Total non-interest expense increased 2 percent to $3.9 billion:
    • 8 percent decrease in marketing.

(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.

    • 4 percent increase in operating expenses.
  • Pre-provision earnings decreased 8 percent to $3.1 billion(2).
  • Provision for credit losses increased 3 percent to $1.4 billion:
    • Net charge-offs of $1.5 billion.
    • $79 million reserve release.
  • Net interest margin of 6.73 percent, decreased 7 basis points.
  • Efficiency ratio of 55.64 percent.
    • Efficiency ratio excluding adjusting items of 52.04 percent(1).
  • Operating efficiency ratio of 48.44 percent.
    • Operating efficiency ratio excluding adjusting items of 44.98 percent(1).

Third Quarter 2019 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.5 percent at September 30, 2019.
  • Period-end loans held for investment in the quarter increased $4.9 billion, or 2 percent, to $249.4 billion.
    • Credit Card period-end loans increased $1.5 billion, or 1 percent, to $113.7 billion.
      • Domestic Card period-end loans increased $1.7 billion, or 2 percent, to $104.7 billion.
    • Consumer Banking period-end loans increased $1.7 billion, or 3 percent, to $62.0 billion.
      • Auto period-end loans increased $1.7 billion, or 3 percent, to $59.3 billion.
    • Commercial Banking period-end loans increased $1.7 billion, or 2 percent, to $73.7 billion.
  • Average loans held for investment in the quarter increased $3.5 billion, or 1 percent, to $246.1 billion.
    • Credit Card average loans increased $1.6 billion, or 1 percent, to $112.4 billion.
      • Domestic Card average loans increased $1.5 billion, or 1 percent, to $103.4 billion.
    • Consumer Banking average loans increased $1.4 billion, or 2 percent, to $61.3 billion.
      • Auto average loans increased $1.4 billion, or 3 percent, to $58.5 billion.
    • Commercial Banking average loans increased $510 million, or 1 percent, to $72.5 billion.
  • Period-end total deposits increased $2.6 billion, or 1 percent, to $257.1 billion, while average deposits increased $1.4 billion, or 1 percent, to $255.1 billion.
  • Interest-bearing deposits rate paid increased 4 basis points to 1.55 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.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on October 24, 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). Under "About," choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation of non-GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through November 7, 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, 2018.

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 $257.1 billion in deposits and $378.8 billion in total assets as of September 30, 2019. 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.

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement(1)(2)

Third Quarter 2019

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, 2019 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

2019 Q3 vs.

Nine Months Ended September 30,

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

2019

2019

2019

2018

2018

2019

2018

2019 vs.

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Income Statement

Net interest income

$

5,737

$

5,746

$

5,791

$

5,820

$

5,786

—

(1)

%

$

17,274

$

17,055

1

%

Non-interest income

1,222

1,378

1,292

1,193

1,176

(11)

%

4

3,892

4,008

(3)

Total net revenue(1)

6,959

7,124

7,083

7,013

6,962

(2)

—

21,166

21,063

—

Provision for credit losses

1,383

1,342

1,693

1,638

1,268

3

9

4,418

4,218

5

Non-interest expense:

Marketing

501

546

517

831

504

(8)

(1)

1,564

1,343

16

Operating expense

3,371

3,233

3,154

3,301

3,269

4

3

9,758

9,427

4

Total non-interest expense

3,872

3,779

3,671

4,132

3,773

2

3

11,322

10,770

5

Income from continuing operations before income taxes

1,704

2,003

1,719

1,243

1,921

(15)

(11)

5,426

6,075

(11)

Income tax provision (benefit)

375

387

309

(21)

420

(3)

(11)

1,071

1,314

(18)

Income from continuing operations, net of tax

1,329

1,616

1,410

1,264

1,501

(18)

(11)

4,355

4,761

(9)

Income (loss) from discontinued operations, net of tax

4

9

2

(3)

1

(56)

**

15

(7)

**

Net income

1,333

1,625

1,412

1,261

1,502

(18)

(11)

4,370

4,754

(8)

Dividends and undistributed earnings allocated to participating securities(2)

(10)

(12)

(12)

(9)

(9)

(17)

11

(34)

(32)

6

Preferred stock dividends

(53)

(80)

(52)

(80)

(53)

(34)

—

(185)

(185)

—

Net income available to common stockholders

$

1,270

$

1,533

$

1,348

$

1,172

$

1,440

(17)

(12)

$

4,151

$

4,537

(9)

Common Share Statistics

Basic earnings per common share:(2)

Net income from continuing operations

$

2.70

$

3.24

$

2.87

$

2.50

$

3.01

(17)

%

(10)

%

$

8.80

$

9.40

(6)

%

Income (loss) from discontinued operations

0.01

0.02

—

(0.01)

—

(50)

**

0.03

(0.01)

**

Net income per basic common share

$

2.71

$

3.26

$

2.87

$

2.49

$

3.01

(17)

(10)

$

8.83

$

9.39

(6)

Diluted earnings per common share:(2)

Net income from continuing operations

$

2.68

$

3.22

$

2.86

$

2.49

$

2.99

(17)

(10)

$

8.76

$

9.33

(6)

Income (loss) from discontinued operations

0.01

0.02

—

(0.01)

—

(50)

**

0.03

(0.01)

**

Net income per diluted common share

$

2.69

$

3.24

$

2.86

$

2.48

$

2.99

(17)

(10)

$

8.79

$

9.32

(6)

Weighted-average common shares outstanding (in millions):

Basic

469.5

470.8

469.4

470.0

477.8

—

(2)

469.9

483.2

(3)

Diluted

471.8

473.0

471.6

472.7

480.9

—

(2)

472.1

486.7

(3)

Common shares outstanding (period-end, in millions)

465.7

470.3

469.6

467.7

473.7

(1)

(2)

465.7

473.7

(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)

80.46

77.65

72.86

69.20

66.15

4

22

80.46

66.15

22

2019 Q3 vs.

Nine Months Ended September 30,

(Dollars in millions)

2019

2019

2019

2018

2018

2019

2018

2019 vs.

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Balance Sheet (Period-End)

Loans held for investment

$

249,355

$

244,460

$

240,273

$

245,899

$

238,761

2

%

4

%

$

249,355

$

238,761

4

%

Interest-earning assets

344,643

339,160

340,071

341,293

331,293

2

4

344,643

331,293

4

Total assets

378,810

373,619

373,191

372,538

362,909

1

4

378,810

362,909

4

Interest-bearing deposits

234,084

231,161

230,199

226,281

222,356

1

5

234,084

222,356

5

Total deposits

257,148

254,535

255,107

249,764

247,195

1

4

257,148

247,195

4

Borrowings

50,149

49,233

50,358

58,905

52,205

2

(4)

50,149

52,205

(4)

Common equity

52,412

51,406

49,120

47,307

46,277

2

13

52,412

46,277

13

Total stockholders' equity

58,235

55,767

53,481

51,668

50,638

4

15

58,235

50,638

15

Balance Sheet (Average Balances)

Loans held for investment

$

246,147

$

242,653

$

241,959

$

241,371

$

236,766

1

%

4

%

$

243,602

$

242,369

1

%

Interest-earning assets

340,949

338,026

337,793

334,714

330,272

1

3

338,936

331,318

2

Total assets

374,905

371,095

370,394

365,243

360,937

1

4

372,148

362,293

3

Interest-bearing deposits

232,063

230,452

227,572

222,827

221,431

1

5

230,045

221,400

4

Total deposits

255,082

253,634

251,410

247,663

246,720

1

3

253,389

246,932

3

Borrowings

49,413

49,982

53,055

53,994

51,684

(1)

(4)

50,804

52,858

(4)

Common equity

52,566

50,209

48,359

46,753

46,407

5

13

50,393

45,521

11

Total stockholders' equity

57,245

54,570

52,720

51,114

50,768

5

13

54,861

49,882

10

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated

2019 Q3 vs.

Nine Months Ended September 30,

(Dollars in millions, except as noted)

2019

2019

2019

2018

2018

2019

2018

2019 vs.

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Performance Metrics

Net interest income growth (period over period)

—

(1)

%

—

1

%

4

%

**

**

1

%

2

%

**

Non-interest income growth (period over period)

(11)

%

7

8

%

1

(28)

**

**

(3)

12

**

Total net revenue growth (period over period)

(2)

1

1

1

(3)

**

**

—

4

**

Total net revenue margin(4)

8.16

8.43

8.39

8.38

8.43

(27)

bps

(27)

bps

8.33

8.48

(15)

bps

Net interest margin(5)

6.73

6.80

6.86

6.96

7.01

(7)

(28)

6.80

6.86

(6)

Return on average assets

1.42

1.74

1.52

1.38

1.66

(32)

(24)

1.56

1.75

(19)

Return on average tangible assets(6)

1.48

1.82

1.59

1.44

1.74

(34)

(26)

1.63

1.83

(20)

Return on average common equity(7)

9.63

12.14

11.13

10.05

12.40

(251)

(277)

10.94

13.31

(237)

Return on average tangible common equity(8)

13.45

17.26

16.11

14.78

18.32

(381)

(487)

15.54

19.88

(434)

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

6.29

6.23

6.07

6.85

6.37

6

(8)

6.20

5.92

28

Efficiency ratio(9)

55.64

53.05

51.83

58.92

54.19

259

145

53.49

51.13

236

Operating efficiency ratio(10)

48.44

45.38

44.53

47.07

46.95

306

149

46.10

44.76

134

Effective income tax rate for continuing operations

22.0

19.3

18.0

(1.7)

21.9

270

10

19.7

21.6

(190)

Employees (period-end, in thousands)

52.1

50.7

48.8

47.6

47.6

3

%

9

%

52.1

47.6

9

%

Credit Quality Metrics

Allowance for loan and lease losses

$

7,037

$

7,133

$

7,313

$

7,220

$

7,219

(1)

%

(3)

%

$

7,037

$

7,219

(3)

%

Allowance as a percentage of loans held for investment

2.82

%

2.92

%

3.04

%

2.94

%

3.02

%

(10)

bps

(20)

bps

2.82

%

3.02

%

(20)

bps

Net charge-offs

$

1,462

$

1,508

$

1,599

$

1,610

$

1,425

(3)

%

3

%

$

4,569

$

4,502

1

%

Net charge-off rate(11)

2.38

%

2.48

%

2.64

%

2.67

%

2.41

%

(10)

bps

(3)

bps

2.50

%

2.48

%

2

bps

30+ day performing delinquency rate

3.28

3.15

3.23

3.62

3.28

13

—

3.28

3.28

—

30+ day delinquency rate

3.51

3.35

3.40

3.84

3.48

16

3

3.51

3.48

3

Capital Ratios(12)

Common equity Tier 1 capital

12.5

%

12.3

%

11.9

%

11.2

%

11.2

%

20

bps

130

bps

12.5

%

11.2

%

130

bps

Tier 1 capital

14.4

13.8

13.4

12.7

12.8

60

160

14.4

12.8

160

Total capital

16.8

16.2

15.8

15.1

15.2

60

160

16.8

15.2

160

Tier 1 leverage

11.9

11.4

11.0

10.7

10.6

50

130

11.9

10.6

130

Tangible common equity ("TCE")(13)

10.3

10.2

9.6

9.1

9.0

10

130

10.3

9.0

130

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income

2019 Q3 vs.

Nine Months Ended September 30,

2019

2019

2019

2018

2018

2019

2018

2019 vs.

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

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Interest income:

Loans, including loans held for sale

$

6,429

$

6,383

$

6,368

$

6,358

$

6,247

1

%

3

%

$

19,180

$

18,370

4

%

Investment securities

583

629

655

627

593

(7)

(2)

1,867

1,584

18

Other

63

64

69

63

55

(2)

15

196

174

13

Total interest income

7,075

7,076

7,092

7,048

6,895

—

3

21,243

20,128

6

Interest expense:

Deposits

901

870

817

756

681

4

32

2,588

1,842

40

Securitized debt obligations

123

139

143

138

127

(12)

(3)

405

358

13

Senior and subordinated notes

299

310

314

297

288

(4)

4

923

828

11

Other borrowings

15

11

27

37

13

36

15

53

45

18

Total interest expense

1,338

1,330

1,301

1,228

1,109

1

21

3,969

3,073

29

Net interest income

5,737

5,746

5,791

5,820

5,786

—

(1)

17,274

17,055

1

Provision for credit losses

1,383

1,342

1,693

1,638

1,268

3

9

4,418

4,218

5

Net interest income after provision for credit losses

4,354

4,404

4,098

4,182

4,518

(1)

(4)

12,856

12,837

—

Non-interest income:

Interchange fees, net

790

820

758

743

714

(4)

11

2,368

2,080

14

Service charges and other customer-related fees

283

352

353

352

410

(20)

(31)

988

1,233

(20)

Net securities gains (losses)

5

15

24

(20)

(196)

(67)

**

44

(189)

**

Other

144

191

157

118

248

(25)

(42)

492

884

(44)

Total non-interest income

1,222

1,378

1,292

1,193

1,176

(11)

4

3,892

4,008

(3)

Non-interest expense:

Salaries and associate benefits

1,605

1,558

1,573

1,345

1,432

3

12

4,736

4,382

8

Occupancy and equipment

519

521

493

610

515

—

1

1,533

1,508

2

Marketing

501

546

517

831

504

(8)

(1)

1,564

1,343

16

Professional services

314

314

291

426

275

—

14

919

719

28

Communications and data processing

312

329

303

326

311

(5)

—

944

934

1

Amortization of intangibles

25

29

30

43

44

(14)

(43)

84

131

(36)

Other(14)

596

482

464

551

692

24

(14)

1,542

1,753

(12)

Total non-interest expense

3,872

3,779

3,671

4,132

3,773

2

3

11,322

10,770

5

Income from continuing operations before income taxes

1,704

2,003

1,719

1,243

1,921

(15)

(11)

5,426

6,075

(11)

Income tax provision (benefit)

375

387

309

(21)

420

(3)

(11)

1,071

1,314

(18)

Income from continuing operations, net of tax

1,329

1,616

1,410

1,264

1,501

(18)

(11)

4,355

4,761

(9)

Income (loss) from discontinued operations, net of tax

4

9

2

(3)

1

(56)

**

15

(7)

**

Net income

1,333

1,625

1,412

1,261

1,502

(18)

(11)

4,370

4,754

(8)

Dividends and undistributed earnings allocated to participating securities(2)

(10)

(12)

(12)

(9)

(9)

(17)

11

(34)

(32)

6

Preferred stock dividends

(53)

(80)

(52)

(80)

(53)

(34)

—

(185)

(185)

—

Net income available to common stockholders

$

1,270

$

1,533

$

1,348

$

1,172

$

1,440

(17)

(12)

$

4,151

$

4,537

(9)

2019 Q3 vs.

Nine Months Ended September 30,

2019

2019

2019

2018

2018

2019

2018

2019 vs.

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

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Basic earnings per common share:(2)

Net income from continuing operations

$

2.70

$

3.24

$

2.87

$

2.50

$

3.01

(17)

%

(10)

%

$

8.80

$

9.40

(6)

%

Income (loss) from discontinued operations

0.01

0.02

—

(0.01)

—

(50)

**

0.03

(0.01)

**

Net income per basic common share

$

2.71

$

3.26

$

2.87

$

2.49

$

3.01

(17)

(10)

$

8.83

$

9.39

(6)

Diluted earnings per common share:(2)

Net income from continuing operations

$

2.68

$

3.22

$

2.86

$

2.49

$

2.99

(17)

(10)

$

8.76

$

9.33

(6)

Income (loss) from discontinued operations

0.01

0.02

—

(0.01)

—

(50)

**

0.03

(0.01)

**

Net income per diluted common share

$

2.69

$

3.24

$

2.86

$

2.48

$

2.99

(17)

(10)

$

8.79

$

9.32

(6)

Weighted-average common shares outstanding (in millions):

Basic common shares

469.5

470.8

469.4

470.0

477.8

—

(2)

469.9

483.2

(3)

Diluted common shares

471.8

473.0

471.6

472.7

480.9

—

(2)

472.1

486.7

(3)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets

2019 Q3 vs.

2019

2019

2019

2018

2018

2019

2018

(Dollars in millions)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Assets:

Cash and cash equivalents:

Cash and due from banks

$

4,452

$

5,184

$

4,572

$

4,768

$

4,547

(14)

%

(2)

%

Interest-bearing deposits and other short-term investments

12,668

9,927

12,897

8,418

6,335

28

100

Total cash and cash equivalents

17,120

15,111

17,469

13,186

10,882

13

57

Restricted cash for securitization investors

417

710

1,969

303

746

(41)

(44)

Investment securities:

Securities available for sale

46,168

45,658

45,888

46,150

47,384

1

(3)

Securities held to maturity

33,894

35,475

36,503

36,771

34,631

(4)

(2)

Total investment securities

80,062

81,133

82,391

82,921

82,015

(1)

(2)

Loans held for investment:

Unsecuritized loans held for investment

215,892

211,556

208,591

211,702

204,796

2

5

Loans held in consolidated trusts

33,463

32,904

31,682

34,197

33,965

2

(1)

Total loans held for investment

249,355

244,460

240,273

245,899

238,761

2

4

Allowance for loan and lease losses

(7,037)

(7,133)

(7,313)

(7,220)

(7,219)

(1)

(3)

Net loans held for investment

242,318

237,327

232,960

238,679

231,542

2

5

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

1,245

1,829

905

1,192

1,402

(32)

(11)

Premises and equipment, net

4,311

4,243

4,205

4,191

4,149

2

4

Interest receivable

1,627

1,544

1,615

1,614

1,518

5

7

Goodwill

14,624

14,545

14,546

14,544

14,513

1

1

Other assets

17,086

17,177

17,131

15,908

16,142

(1)

6

Total assets

$

378,810

$

373,619

$

373,191

$

372,538

$

362,909

1

4

2019 Q3 vs.

2019

2019

2019

2018

2018

2019

2018

(Dollars in millions)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

Liabilities:

Interest payable

$

370

$

437

$

382

$

458

$

391

(15)

%

(5)

%

Deposits:

Non-interest-bearing deposits

23,064

23,374

24,908

23,483

24,839

(1)

(7)

Interest-bearing deposits

234,084

231,161

230,199

226,281

222,356

1

5

Total deposits

257,148

254,535

255,107

249,764

247,195

1

4

Securitized debt obligations

18,910

16,959

19,273

18,307

18,649

12

1

Other debt:

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

464

359

335

352

384

29

21

Senior and subordinated notes

30,682

31,822

30,645

30,826

31,291

(4)

(2)

Other borrowings

93

93

105

9,420

1,881

—

(95)

Total other debt

31,239

32,274

31,085

40,598

33,556

(3)

(7)

Other liabilities

12,908

13,647

13,863

11,743

12,480

(5)

3

Total liabilities

320,575

317,852

319,710

320,870

312,271

1

3

Stockholders' equity:

Preferred stock

0

0

0

0

0

—

—

Common stock

7

7

7

7

7

—

—

Additional paid-in capital, net

33,826

32,262

32,160

32,040

31,978

5

6

Retained earnings

39,476

38,386

37,030

35,875

34,883

3

13

Accumulated other comprehensive income (loss)

453

170

(660)

(1,263)

(1,877)

**

**

Treasury stock, at cost

(15,527)

(15,058)

(15,056)

(14,991)

(14,353)

3

8

Total stockholders' equity

58,235

55,767

53,481

51,668

50,638

4

15

Total liabilities and stockholders' equity

$

378,810

$

373,619

$

373,191

$

372,538

$

362,909

1

4

CAPITAL ONE FINANCIAL CORPORATION (COF)

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

(1)

Total net revenue was reduced by $330 million in Q3 2019, $318 million in Q2 2019, $376 million in Q1 2019, $391 million in Q4 2018 and $305 million in Q3 2018 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 2019 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.

(14)

Includes $22 million of net Cybersecurity Incident expenses in Q3 2019, consisting of $49 million of expenses and $27 million of probable insurance recoveries.

**

Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 6: Average Balances, Net Interest Income and Net Interest Margin

2019 Q3

2019 Q2

2018 Q3

Average Balance

Interest Income/Expense

Yield/Rate

Average Balance

Interest Income/Expense

Yield/Rate

Average Balance

Interest Income/Expense

Yield/Rate

(Dollars in millions, except as noted)

Interest-earning assets:

Loans, including loans held for sale

$

247,419

$

6,429

10.39

%

$

243,831

$

6,383

10.47

%

$

238,150

$

6,247

10.49

%

Investment securities

80,762

583

2.88

82,383

629

3.05

83,894

593

2.83

Cash equivalents and other

12,768

63

2.00

11,812

64

2.16

8,228

55

2.66

Total interest-earning assets

$

340,949

$

7,075

8.30

$

338,026

$

7,076

8.37

$

330,272

$

6,895

8.35

Interest-bearing liabilities:

Interest-bearing deposits

$

232,063

$

901

1.55

$

230,452

$

870

1.51

$

221,431

$

681

1.23

Securitized debt obligations

16,750

123

2.94

18,262

139

3.04

18,917

127

2.68

Senior and subordinated notes

31,220

299

3.84

30,630

310

4.05

31,660

288

3.63

Other borrowings and liabilities

2,698

15

2.14

2,322

11

1.91

3,084

13

1.67

Total interest-bearing liabilities

$

282,731

$

1,338

1.89

$

281,666

$

1,330

1.89

$

275,092

$

1,109

1.62

Net interest income/spread

$

5,737

6.41

$

5,746

6.48

$

5,786

6.73

Impact of non-interest-bearing funding

0.32

0.32

0.28

Net interest margin

6.73

%

6.80

%

7.01

%

Nine Months Ended September 30,

2019

2018

Average Balance

Interest Income/Expense

Yield/Rate

Average Balance

Interest Income/Expense

Yield/Rate

(Dollars in millions, except as noted)

Interest-earning assets:

Loans, including loans held for sale

$

244,743

$

19,180

10.45

%

$

243,653

$

18,370

10.05

%

Investment securities

82,264

1,867

3.03

77,819

1,584

2.71

Cash equivalents and other

11,929

196

2.19

9,846

174

2.36

Total interest-earning assets

$

338,936

$

21,243

8.36

$

331,318

$

20,128

8.10

Interest-bearing liabilities:

Interest-bearing deposits

$

230,045

$

2,588

1.50

$

221,400

$

1,842

1.11

Securitized debt obligations

17,912

405

3.02

19,251

358

2.46

Senior and subordinated notes

30,897

923

3.98

31,452

828

3.51

Other borrowings and liabilities

3,228

53

2.19

4,674

45

1.28

Total interest-bearing liabilities

$

282,082

$

3,969

1.88

$

276,777

$

3,073

1.49

Net interest income/spread

$

17,274

6.48

$

17,055

6.61

Impact of non-interest-bearing funding

0.32

0.25

Net interest margin

6.80

%

6.86

%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics

2019 Q3 vs.

Nine Months Ended September 30,

(Dollars in millions, except as noted)

2019Q3

2019Q2

2019Q1

2018Q4

2018Q3

2019Q2

2018Q3

2019

2018

2019 vs.2018

Loans Held for Investment (Period-End)

Credit card:

Domestic credit card

$

104,664

$

102,959

$

101,052

$

107,350

$

101,564

2

%

3

%

$

104,664

$

101,564

3

%

International card businesses

9,017

9,182

8,784

9,011

9,121

(2)

(1)

9,017

9,121

(1)

Total credit card

113,681

112,141

109,836

116,361

110,685

1

3

113,681

110,685

3

Consumer banking:

Auto

59,278

57,556

56,444

56,341

56,422

3

5

59,278

56,422

5

Retail banking

2,737

2,771

2,804

2,864

2,907

(1)

(6)

2,737

2,907

(6)

Total consumer banking

62,015

60,327

59,248

59,205

59,329

3

5

62,015

59,329

5

Commercial banking:

Commercial and multifamily real estate

30,009

29,861

28,984

28,899

29,064

—

3

30,009

29,064

3

Commercial and industrial

43,650

42,125

42,197

41,091

39,325

4

11

43,650

39,325

11

Total commercial lending

73,659

71,986

71,181

69,990

68,389

2

8

73,659

68,389

8

Small-ticket commercial real estate

—

6

8

343

358

**

**

—

358

**

Total commercial banking

73,659

71,992

71,189

70,333

68,747

2

7

73,659

68,747

7

Total loans held for investment

$

249,355

$

244,460

$

240,273

$

245,899

$

238,761

2

4

$

249,355

$

238,761

4

Loans Held for Investment (Average)

Credit card:

Domestic credit card

$

103,426

$

101,930

$

102,667

$

103,391

$

100,566

1

%

3

%

$

102,677

$

99,970

3

%

International card businesses

8,945

8,868

8,789

8,958

8,944

1

—

8,868

8,998

(1)

Total credit card

112,371

110,798

111,456

112,349

109,510

1

3

111,545

108,968

2

Consumer banking:

Auto

58,517

57,070

56,234

56,469

56,297

3

4

57,282

55,320

4

Home loan(1)

—

—

—

—

—

**

**

—

8,377

**

Retail banking

2,752

2,788

2,831

2,873

2,923

(1)

(6)

2,790

3,144

(11)

Total consumer banking

61,269

59,858

59,065

59,342

59,220

2

3

60,072

66,841

(10)

Commercial banking:

Commercial and multifamily real estate

29,698

29,514

29,034

28,855

28,354

1

5

29,418

27,406

7

Commercial and industrial

42,807

42,476

42,132

40,476

39,318

1

9

42,474

38,754

10

Total commercial lending

72,505

71,990

71,166

69,331

67,672

1

7

71,892

66,160

9

Small-ticket commercial real estate

2

7

272

349

364

(71)

(99)

93

378

(75)

Total commercial banking

72,507

71,997

71,438

69,680

68,036

1

7

71,985

66,538

8

Other loans

—

—

—

—

—

**

**

—

22

**

Total average loans held for investment

$

246,147

$

242,653

$

241,959

$

241,371

$

236,766

1

4

$

243,602

$

242,369

1

2019 Q3 vs.

Nine Months Ended September 30,

2019Q3

2019Q2

2019Q1

2018Q4

2018Q3

2019Q2

2018Q3

2019

2018

2019 vs.2018

Net Charge-Off (Recovery) Rates

Credit card:

Domestic credit card(2)

4.12

%

4.86

%

5.04

%

4.64

%

4.35

%

(74)

bps

(23)

bps

4.67

%

4.78

%

(11)

bps

International card businesses

3.78

3.63

3.20

4.22

1.92

15

186

3.54

2.85

69

Total credit card(2)

4.09

4.76

4.90

4.61

4.15

(67)

(6)

4.58

4.62

(4)

Consumer banking:

Auto

1.60

1.09

1.44

1.98

1.73

51

(13)

1.38

1.53

(15)

Retail banking

2.55

2.42

2.56

2.56

2.62

13

(7)

2.51

2.18

33

Total consumer banking

1.64

1.15

1.49

2.01

1.77

49

(13)

1.43

1.36

7

Commercial banking:

Commercial and multifamily real estate

0.02

—

—

(0.01)

0.04

2

(2)

0.01

0.01

—

Commercial and industrial

0.55

0.15

0.13

0.17

0.25

40

30

0.28

0.13

15

Total commercial lending

0.33

0.09

0.08

0.10

0.16

24

17

0.17

0.08

9

Small-ticket commercial real estate

**

**

0.23

0.13

0.56

**

**

**

(0.02)

**

Total commercial banking

0.33

0.09

0.08

0.10

0.16

24

17

0.17

0.08

9

Total net charge-offs

2.38

2.48

2.64

2.67

2.41

(10)

(3)

2.50

2.48

2

30+ Day Performing Delinquency Rates

Credit card:

Domestic credit card

3.71

%

3.40

%

3.72

%

4.04

%

3.80

%

31

bps

(9)

bps

3.71

%

3.80

%

(9)

bps

International card businesses

3.52

3.40

3.61

3.52

3.55

12

(3)

3.52

3.55

(3)

Total credit card

3.69

3.40

3.71

4.00

3.78

29

(9)

3.69

3.78

(9)

Consumer banking:

Auto

6.47

6.10

5.78

6.95

6.27

37

20

6.47

6.27

20

Retail banking

1.01

0.93

0.84

1.01

0.80

8

21

1.01

0.80

21

Total consumer banking

6.23

5.87

5.55

6.67

6.01

36

22

6.23

6.01

22

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

Credit card:

International card businesses

0.25

%

0.25

%

0.26

%

0.25

%

0.22

%

—

3

bps

0.25

%

0.22

%

3

bps

Total credit card

0.02

0.02

0.02

0.02

0.02

—

—

0.02

0.02

—

Consumer banking:

Auto

0.73

0.64

0.57

0.80

0.70

9

bps

3

0.73

0.70

3

Retail banking

0.91

1.02

1.10

1.04

1.13

(11)

(22)

0.91

1.13

(22)

Total consumer banking

0.74

0.66

0.59

0.81

0.72

8

2

0.74

0.72

2

Commercial banking:

Commercial and multifamily real estate

0.12

0.14

0.24

0.29

0.13

(2)

(1)

0.12

0.13

(1)

Commercial and industrial

0.95

0.74

0.71

0.54

0.55

21

40

0.95

0.55

40

Total commercial lending

0.61

0.49

0.52

0.44

0.37

12

24

0.61

0.37

24

Small-ticket commercial real estate

**

**

**

1.80

1.65

**

**

**

1.65

**

Total commercial banking

0.61

0.50

0.53

0.44

0.38

11

23

0.61

0.38

23

Total nonperforming loans

0.37

0.32

0.31

0.33

0.30

5

7

0.37

0.30

7

Total nonperforming assets

0.40

0.34

0.33

0.35

0.33

6

7

0.40

0.33

7

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, 2019

Credit Card

Consumer Banking

(Dollars in millions)

Domestic Card

International Card Businesses

TotalCredit Card

Auto

RetailBanking

TotalConsumerBanking

Commercial Banking

Total

Allowance for loan and lease losses:

Balance as of June 30, 2019

$

4,925

$

417

$

5,342

$

997

$

58

$

1,055

$

736

$

7,133

Charge-offs

(1,403)

(128)

(1,531)

(468)

(21)

(489)

(66)

(2,086)

Recoveries

338

42

380

234

4

238

6

624

Net charge-offs

(1,065)

(86)

(1,151)

(234)

(17)

(251)

(60)

(1,462)

Provision for loan and lease losses

1,010

77

1,087

189

14

203

84

1,374

Allowance build (release) for loan and lease losses

(55)

(9)

(64)

(45)

(3)

(48)

24

(88)

Other changes(5)

—

(8)

(8)

—

—

—

—

(8)

Balance as of September 30, 2019

4,870

400

5,270

952

55

1,007

760

7,037

Reserve for unfunded lending commitments:

Balance as of June 30, 2019

—

—

—

—

4

4

140

144

Provision for losses on unfunded lending commitments

—

—

—

—

—

—

9

9

Balance as of September 30, 2019

—

—

—

—

4

4

149

153

Combined allowance and reserve as of September 30, 2019

$

4,870

$

400

$

5,270

$

952

$

59

$

1,011

$

909

$

7,190

Nine Months Ended September 30, 2019

Credit Card

Consumer Banking

(Dollars in millions)

Domestic Card

International Card Businesses

TotalCredit Card

Auto

RetailBanking

TotalConsumerBanking

Commercial Banking

Total

Allowance for loan and lease losses:

Balance as of December 31, 2018

$

5,144

$

391

$

5,535

$

990

$

58

$

1,048

$

637

$

7,220

Charge-offs

(4,635)

(389)

(5,024)

(1,318)

(65)

(1,383)

(109)

(6,516)

Recoveries

1,036

153

1,189

726

13

739

19

1,947

Net charge-offs

(3,599)

(236)

(3,835)

(592)

(52)

(644)

(90)

(4,569)

Provision for loan and lease losses

3,325

246

3,571

554

49

603

213

4,387

Allowance build (release) for loan and lease losses

(274)

10

(264)

(38)

(3)

(41)

123

(182)

Other changes(5)

—

(1)

(1)

—

—

—

—

(1)

Balance as of September 30, 2019

4,870

400

5,270

952

55

1,007

760

7,037

Reserve for unfunded lending commitments:

Balance as of December 31, 2018

—

—

—

—

4

4

118

122

Provision for losses on unfunded lending commitments

—

—

—

—

—

—

31

31

Balance as of September 30, 2019

—

—

—

—

4

4

149

153

Combined allowance and reserve as of September 30, 2019

$

4,870

$

400

$

5,270

$

952

$

59

$

1,011

$

909

$

7,190

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2019

(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

$

3,546

$

1,682

$

486

$

23

$

5,737

$

10,667

$

5,070

$

1,489

$

48

$

17,274

Non-interest income (loss)

870

165

221

(34)

1,222

2,858

491

608

(65)

3,892

Total net revenue (loss)

4,416

1,847

707

(11)

6,959

13,525

5,561

2,097

(17)

21,166

Provision for credit losses

1,087

203

93

—

1,383

3,571

603

244

—

4,418

Non-interest expense

2,360

985

414

113

3,872

6,784

2,981

1,258

299

11,322

Income (loss) from continuing operations before income taxes

969

659

200

(124)

1,704

3,170

1,977

595

(316)

5,426

Income tax provision (benefit)

235

154

46

(60)

375

747

461

138

(275)

1,071

Income (loss) from continuing operations, net of tax

$

734

$

505

$

154

$

(64)

$

1,329

$

2,423

$

1,516

$

457

$

(41)

$

4,355

Three Months Ended June 30, 2019

(Dollars in millions)

Credit Card

Consumer Banking

Commercial Banking(6)(7)

Other(6)(7)

Total

Net interest income (loss)

$

3,531

$

1,709

$

514

$

(8)

$

5,746

Non-interest income (loss)

1,038

166

200

(26)

1,378

Total net revenue (loss)

4,569

1,875

714

(34)

7,124

Provision for credit losses

1,095

165

82

—

1,342

Non-interest expense

2,253

1,002

427

97

3,779

Income (loss) from continuing operations before income taxes

1,221

708

205

(131)

2,003

Income tax provision (benefit)

283

165

48

(109)

387

Income (loss) from continuing operations, net of tax

$

938

$

543

$

157

$

(22)

$

1,616

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

$

513

$

41

$

5,786

$

10,550

$

4,860

$

1,536

$

109

$

17,055

Non-interest income (loss)

893

155

189

(61)

1,176

2,634

504

585

285

4,008

Total net revenue (loss)

4,489

1,791

702

(20)

6,962

13,184

5,364

2,121

394

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

240

(302)

1,921

3,480

1,887

827

(119)

6,075

Income tax provision (benefit)

315

146

56

(97)

420

810

440

193

(129)

1,314

Income (loss) from continuing operations, net of tax

$

1,040

$

482

$

184

$

(205)

$

1,501

$

2,670

$

1,447

$

634

$

10

$

4,761

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business

2019 Q3 vs.

Nine Months Ended September 30,

2019

2019

2019

2018

2018

2019

2018

2019 vs.

(Dollars in millions, except as noted)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Credit Card

Earnings:

Net interest income

$

3,546

$

3,531

$

3,590

$

3,617

$

3,596

—

(1)

%

$

10,667

$

10,550

1

%

Non-interest income

870

1,038

950

886

893

(16)

%

(3)

2,858

2,634

9

Total net revenue

4,416

4,569

4,540

4,503

4,489

(3)

(2)

13,525

13,184

3

Provision for credit losses

1,087

1,095

1,389

1,326

1,031

(1)

5

3,571

3,658

(2)

Non-interest expense

2,360

2,253

2,171

2,496

2,103

5

12

6,784

6,046

12

Income from continuing operations before income taxes

969

1,221

980

681

1,355

(21)

(28)

3,170

3,480

(9)

Income tax provision

235

283

229

160

315

(17)

(25)

747

810

(8)

Income from continuing operations, net of tax

$

734

$

938

$

751

$

521

$

1,040

(22)

(29)

$

2,423

$

2,670

(9)

Selected performance metrics:

Period-end loans held for investment

$

113,681

$

112,141

$

109,836

$

116,361

$

110,685

1

3

$

113,681

$

110,685

3

Average loans held for investment

112,371

110,798

111,456

112,349

109,510

1

3

111,545

108,968

2

Average yield on loans held for investment(8)

15.55

%

15.66

%

15.77

%

15.63

%

15.79

%

(11)

bps

(24)

bps

15.66

%

15.37

%

29

bps

Total net revenue margin(9)

15.72

16.50

16.29

16.03

16.40

(78)

(68)

16.17

16.13

4

Net charge-off rate(2)

4.09

4.76

4.90

4.61

4.15

(67)

(6)

4.58

4.62

(4)

30+ day performing delinquency rate

3.69

3.40

3.71

4.00

3.78

29

(9)

3.69

3.78

(9)

30+ day delinquency rate

3.71

3.42

3.72

4.01

3.80

29

(9)

3.71

3.80

(9)

Nonperforming loan rate(3)

0.02

0.02

0.02

0.02

0.02

—

—

0.02

0.02

—

Purchase volume(10)

$

108,034

$

106,903

$

93,197

$

105,696

$

97,469

1

%

11

%

$

308,134

$

281,406

9

%

2019 Q3 vs.

Nine Months Ended September 30,

2019

2019

2019

2018

2018

2019

2018

2019 vs.

(Dollars in millions, except as noted)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Domestic Card

Earnings:

Net interest income

$

3,299

$

3,220

$

3,273

$

3,309

$

3,280

2

%

1

%

$

9,792

$

9,617

2

%

Non-interest income

878

971

873

828

819

(10)

7

2,722

2,411

13

Total net revenue

4,177

4,191

4,146

4,137

4,099

—

2

12,514

12,028

4

Provision for credit losses

1,010

1,024

1,291

1,229

950

(1)

6

3,325

3,424

(3)

Non-interest expense

2,076

2,034

1,949

2,216

1,890

2

10

6,059

5,405

12

Income from continuing operations before income taxes

1,091

1,133

906

692

1,259

(4)

(13)

3,130

3,199

(2)

Income tax provision

254

264

211

162

293

(4)

(13)

729

745

(2)

Income from continuing operations, net of tax

$

837

$

869

$

695

$

530

$

966

(4)

(13)

$

2,401

$

2,454

(2)

Selected performance metrics:

Period-end loans held for investment

$

104,664

$

102,959

$

101,052

$

107,350

$

101,564

2

3

$

104,664

$

101,564

3

Average loans held for investment

103,426

101,930

102,667

103,391

100,566

1

3

102,677

99,970

3

Average yield on loans held for investment(8)

15.74

%

15.60

%

15.69

%

15.58

%

15.73

%

14

bps

1

bps

15.67

%

15.29

%

38

bps

Total net revenue margin(9)

16.15

16.45

16.15

16.01

16.30

(30)

(15)

16.25

16.04

21

Net charge-off rate(2)

4.12

4.86

5.04

4.64

4.35

(74)

(23)

4.67

4.78

(11)

30+ day delinquency rate

3.71

3.40

3.72

4.04

3.80

31

(9)

3.71

3.80

(9)

Purchase volume(10)

$

99,087

$

98,052

$

85,738

$

96,818

$

89,205

1

%

11

%

$

282,878

$

257,340

10

%

Refreshed FICO scores:(11)

Greater than 660

68

%

68

%

66

%

67

%

67

%

—

1

68

%

67

%

1

660 or below

32

32

34

33

33

—

(1)

32

33

(1)

Total

100

%

100

%

100

%

100

%

100

%

100

%

100

%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business

2019 Q3 vs.

Nine Months Ended September 30,

2019

2019

2019

2018

2018

2019

2018

2019 vs.

(Dollars in millions, except as noted)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Consumer Banking

Earnings:

Net interest income

$

1,682

$

1,709

$

1,679

$

1,689

$

1,636

(2)

%

3

%

$

5,070

$

4,860

4

%

Non-interest income

165

166

160

159

155

(1)

6

491

504

(3)

Total net revenue

1,847

1,875

1,839

1,848

1,791

(1)

3

5,561

5,364

4

Provision for credit losses

203

165

235

303

184

23

10

603

535

13

Non-interest expense

985

1,002

994

1,085

979

(2)

1

2,981

2,942

1

Income from continuing operations before income taxes

659

708

610

460

628

(7)

5

1,977

1,887

5

Income tax provision

154

165

142

107

146

(7)

5

461

440

5

Income from continuing operations, net of tax

$

505

$

543

$

468

$

353

$

482

(7)

5

$

1,516

$

1,447

5

Selected performance metrics:

Period-end loans held for investment(1)

$

62,015

$

60,327

$

59,248

$

59,205

$

59,329

3

5

$

62,015

$

59,329

5

Average loans held for investment(1)

61,269

59,858

59,065

59,342

59,220

2

3

60,072

66,841

(10)

Average yield on loans held for investment(8)

8.47

%

8.36

%

8.15

%

8.14

%

8.03

%

11

bps

44

bps

8.33

%

7.36

%

97

bps

Auto loan originations

$

8,175

$

7,327

$

6,222

$

5,932

$

6,643

12

%

23

%

$

21,723

$

20,345

7

%

Period-end deposits

206,423

205,220

205,439

198,607

196,635

1

5

206,423

196,635

5

Average deposits

204,933

204,164

201,072

196,348

194,687

—

5

203,404

191,942

6

Average deposits interest rate

1.31

%

1.26

%

1.18

%

1.10

%

1.00

%

5

bps

31

bps

1.25

%

0.89

%

36

bps

Net charge-off rate

1.64

1.15

1.49

2.01

1.77

49

(13)

1.43

1.36

7

30+ day performing delinquency rate

6.23

5.87

5.55

6.67

6.01

36

22

6.23

6.01

22

30+ day delinquency rate

6.86

6.41

6.02

7.36

6.61

45

25

6.86

6.61

25

Nonperforming loan rate(3)

0.74

0.66

0.59

0.81

0.72

8

2

0.74

0.72

2

Nonperforming asset rate(4)

0.83

0.75

0.68

0.90

0.82

8

1

0.83

0.82

1

Auto—At origination FICO scores:(12)

Greater than 660

48

%

49

%

49

%

50

%

50

%

(1)

%

(2)

%

48

%

50

%

(2)

%

621 - 660

20

19

19

19

19

1

1

20

19

1

620 or below

32

32

32

31

31

—

1

32

31

1

Total

100

%

100

%

100

%

100

%

100

%

100

%

100

%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business

2019 Q3 vs.

Nine Months Ended September 30,

2019

2019

2019

2018

2018

2019

2018

2019 vs.

(Dollars in millions, except as noted)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Commercial Banking

Earnings:

Net interest income

$

486

$

514

$

489

$

508

$

513

(5)

%

(5)

%

$

1,489

$

1,536

(3)

%

Non-interest income

221

200

187

159

189

11

17

608

585

4

Total net revenue(6)(7)

707

714

676

667

702

(1)

1

2,097

2,121

(1)

Provision for credit losses

93

82

69

9

54

13

72

244

74

230

Non-interest expense

414

427

417

434

408

(3)

1

1,258

1,220

3

Income from continuing operations before income taxes

200

205

190

224

240

(2)

(17)

595

827

(28)

Income tax provision

46

48

44

52

56

(4)

(18)

138

193

(28)

Income from continuing operations, net of tax

$

154

$

157

$

146

$

172

$

184

(2)

(16)

$

457

$

634

(28)

Selected performance metrics:

Period-end loans held for investment

$

73,659

$

71,992

$

71,189

$

70,333

$

68,747

2

7

$

73,659

$

68,747

7

Average loans held for investment

72,507

71,997

71,438

69,680

68,036

1

7

71,985

66,538

8

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

4.45

%

4.75

%

4.62

%

4.67

%

4.55

%

(30)

bps

(10)

bps

4.61

%

4.38

%

23

bps

Period-end deposits

$

30,923

$

30,761

$

31,248

$

29,480

$

30,474

1

%

1

%

$

30,923

$

30,474

1

%

Average deposits

30,693

31,364

30,816

30,680

31,061

(2)

(1)

30,957

32,679

(5)

Average deposits interest rate

1.25

%

1.28

%

1.11

%

0.95

%

0.79

%

(3)

bps

46

bps

1.21

%

0.65

%

56

bps

Net charge-off rate

0.33

0.09

0.08

0.10

0.16

24

17

0.17

0.08

9

Nonperforming loan rate(3)

0.61

0.50

0.53

0.44

0.38

11

23

0.61

0.38

23

Nonperforming asset rate(4)

0.61

0.50

0.53

0.45

0.41

11

20

0.61

0.41

20

Risk category:(13)

Noncriticized

$

71,144

$

69,390

$

68,594

$

68,043

$

65,926

3

%

8

%

$

71,144

$

65,926

8

%

Criticized performing

2,035

2,211

2,094

1,848

2,204

(8)

(8)

2,035

2,204

(8)

Criticized nonperforming

449

360

378

312

259

25

73

449

259

73

PCI loans

31

31

123

130

358

—

(91)

31

358

(91)

Total commercial banking loans

$

73,659

$

71,992

$

71,189

$

70,333

$

68,747

2

7

$

73,659

$

68,747

7

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

Noncriticized

96.6

%

96.4

%

96.4

%

96.8

%

95.9

%

20

bps

70

bps

96.6

%

95.9

%

70

bps

Criticized performing

2.8

3.1

2.9

2.6

3.2

(30)

(40)

2.8

3.2

(40)

Criticized nonperforming

0.6

0.5

0.5

0.4

0.4

10

20

0.6

0.4

20

PCI loans

—

—

0.2

0.2

0.5

—

(50)

—

0.5

(50)

Total commercial banking 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

2019 Q3 vs.

Nine Months Ended September 30,

2019

2019

2019

2018

2018

2019

2018

2019 vs.

(Dollars in millions)

Q3

Q2

Q1

Q4

Q3

Q2

Q3

2019

2018

2018

Other

Earnings:

Net interest income (loss)

$

23

$

(8)

$

33

$

6

$

41

**

(44)

%

$

48

$

109

(56)

%

Non-interest income (loss)

(34)

(26)

(5)

(11)

(61)

31

%

(44)

(65)

285

**

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

(11)

(34)

28

(5)

(20)

(68)

(45)

(17)

394

**

Benefit for credit losses

—

—

—

—

(1)

—

**

—

(49)

**

Non-interest expense(14)(15)

113

97

89

117

283

16

(60)

299

562

(47)

Loss from continuing operations before income taxes

(124)

(131)

(61)

(122)

(302)

(5)

(59)

(316)

(119)

166

Income tax benefit

(60)

(109)

(106)

(340)

(97)

(45)

(38)

(275)

(129)

113

Income (loss) from continuing operations, net of tax

$

(64)

$

(22)

$

45

$

218

$

(205)

191

(69)

$

(41)

$

10

**

Selected performance metrics:

Average loans held for investment

—

—

—

—

—

—

—

—

$

22

**

Period-end deposits

$

19,802

$

18,554

$

18,420

$

21,677

$

20,086

7

(1)

$

19,802

20,086

(1)

Average deposits

19,456

18,106

19,522

20,635

20,972

7

(7)

19,028

22,311

(15)

Total

Earnings:

Net interest income

$

5,737

$

5,746

$

5,791

$

5,820

$

5,786

—

(1)

%

$

17,274

$

17,055

1

%

Non-interest income

1,222

1,378

1,292

1,193

1,176

(11)

%

4

3,892

4,008

(3)

Total net revenue

6,959

7,124

7,083

7,013

6,962

(2)

—

21,166

21,063

—

Provision for credit losses

1,383

1,342

1,693

1,638

1,268

3

9

4,418

4,218

5

Non-interest expense

3,872

3,779

3,671

4,132

3,773

2

3

11,322

10,770

5

Income from continuing operations before income taxes

1,704

2,003

1,719

1,243

1,921

(15)

(11)

5,426

6,075

(11)

Income tax provision (benefit)

375

387

309

(21)

420

(3)

(11)

1,071

1,314

(18)

Income from continuing operations, net of tax

$

1,329

$

1,616

$

1,410

$

1,264

$

1,501

(18)

(11)

$

4,355

$

4,761

(9)

Selected performance metrics:

Period-end loans held for investment

$

249,355

$

244,460

$

240,273

$

245,899

$

238,761

2

4

$

249,355

$

238,761

4

Average loans held for investment

246,147

242,653

241,959

241,371

236,766

1

4

243,602

242,369

1

Period-end deposits

257,148

254,535

255,107

249,764

247,195

1

4

257,148

247,195

4

Average deposits

255,082

253,634

251,410

247,663

246,720

1

3

253,389

246,932

3

CAPITAL ONE FINANCIAL CORPORATION (COF)

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

(1)

In 2018, we sold all of our consumer home loan portfolio and recognized a net gain of approximately $499 million in the Other category, including a benefit for credit losses of $46 million.

(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.

(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.

(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 of 21% and state taxes where applicable, with offsetting reductions to the Other category.

(7)

In the first quarter of 2019, we made a change in how revenue is measured in our Commercial Banking business by revising the allocation of tax benefits on certain tax-advantaged investments. As such, prior period results have been recast to conform with the current period presentation. The result of this measurement change reduced the previously reported total net revenue in our Commercial Banking business by $30 million in Q1 2018, $32 million in Q2 2018, $26 million in Q3 2018, and $20 million in Q4 2018, with an offsetting increase in 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)

Includes charges incurred as a result of restructuring activities.

(15)

Includes $22 million of net Cybersecurity Incident expenses in Q3 2019, consisting of $49 million of expenses and $27 million of probable insurance recoveries.

**

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 30,2019

June 30,2019

March 31,2019

December 31,2018

September 30,2018

Regulatory Capital Metrics

Common equity excluding AOCI

$

51,959

$

51,236

$

49,781

$

48,570

$

48,154

Adjustments:

AOCI(2)

453

170

(660)

(1,263)

(1,877)

Goodwill, net of related deferred tax liabilities

(14,439)

(14,365)

(14,369)

(14,373)

(14,345)

Intangible assets, net of related deferred tax liabilities

(180)

(194)

(223)

(254)

(284)

Other

(588)

(401)

113

391

817

Common equity Tier 1 capital

$

37,205

$

36,446

$

34,642

$

33,071

$

32,465

Tier 1 capital

$

43,028

$

40,806

$

39,002

$

37,431

$

36,826

Total capital(3)

50,174

47,919

46,042

44,645

43,947

Risk-weighted assets

298,082

295,255

291,483

294,950

288,694

Adjusted average assets(4)

360,266

356,518

355,781

350,606

346,297

Capital Ratios

Common equity Tier 1 capital(5)

12.5

%

12.3

%

11.9

%

11.2

%

11.2

%

Tier 1 capital(6)

14.4

13.8

13.4

12.7

12.8

Total capital(7)

16.8

16.2

15.8

15.1

15.2

Tier 1 leverage(4)

11.9

11.4

11.0

10.7

10.6

Tangible common equity ("TCE")(8)

10.3

10.2

9.6

9.1

9.0

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. These adjusted results provide alternate measurements of our operating performance, both for the current period and trends across multiple periods. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.

2019

2019

2019

Nine Months Ended

Q3

Q2

Q1

September 30, 2019

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

Reported Results

Adj.(9)

Adjusted Results

Reported Results

Adj.(9)

Adjusted Results

Reported Results

Adj.(9)

Adjusted Results

Reported Results

Adj.(9)

Adjusted Results

Selected income statement data:

Net interest income

$

5,737

$

67

$

5,804

$

5,746

—

$

5,746

$

5,791

—

$

5,791

$

17,274

$

67

$

17,341

Non-interest income

1,222

73

1,295

1,378

$

1

1,379

1,292

—

1,292

3,892

74

3,966

Total net revenue

6,959

140

7,099

7,124

1

7,125

7,083

—

7,083

21,166

141

21,307

Provision for credit losses

1,383

—

1,383

1,342

—

1,342

1,693

—

1,693

4,418

—

4,418

Non-interest expense

3,872

(178)

3,694

3,779

(81)

3,698

3,671

$

(25)

3,646

11,322

(284)

11,038

Income from continuing operations before income taxes

1,704

318

2,022

2,003

82

2,085

1,719

25

1,744

5,426

425

5,851

Income tax provision

375

21

396

387

19

406

309

6

315

1,071

46

1,117

Income from continuing operations, net of tax

1,329

297

1,626

1,616

63

1,679

1,410

19

1,429

4,355

379

4,734

Income from discontinued operations, net of tax

4

—

4

9

—

9

2

—

2

15

—

15

Net income

1,333

297

1,630

1,625

63

1,688

1,412

19

1,431

4,370

379

4,749

Dividends and undistributed earnings allocated to participating securities(10)

(10)

(2)

(12)

(12)

(1)

(13)

(12)

—

(12)

(34)

(3)

(37)

Preferred stock dividends

(53)

—

(53)

(80)

—

(80)

(52)

—

(52)

(185)

—

(185)

Net income available to common stockholders

$

1,270

$

295

$

1,565

$

1,533

$

62

$

1,595

$

1,348

$

19

$

1,367

$

4,151

$

376

$

4,527

Selected performance metrics:

Diluted EPS(10)

$

2.69

$

0.63

$

3.32

$

3.24

$

0.13

$

3.37

$

2.86

$

0.04

$

2.90

$

8.79

$

0.80

$

9.59

Efficiency ratio

55.64

%

(360)

bps

52.04

%

53.05

%

(115)

bps

51.90

%

51.83

%

(35)

bps

51.48

%

53.49

%

(169)

bps

51.80

%

Operating efficiency ratio

48.44

(346)

44.98

45.38

(114)

44.24

44.53

(35)

44.18

46.10

(164)

44.46

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.(9)

Adjusted Results

Reported Results

Adj.(9)

Adjusted Results

Reported Results

Adj.(9)

Adjusted Results

Reported Results

Adj.(9)

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(10)

(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(10)

$

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

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of 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.

2019

2019

2019

2018

2018

(Dollars in millions)

Q3

Q2

Q1

Q4

Q3

Tangible Common Equity (Period-End)

Stockholders' equity

$

58,235

$

55,767

$

53,481

$

51,668

$

50,638

Goodwill and intangible assets(11)

(14,940)

(14,886)

(14,904)

(14,941)

(14,945)

Noncumulative perpetual preferred stock

(5,823)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

37,472

$

36,521

$

34,217

$

32,367

$

31,333

Tangible Common Equity (Average)

Stockholders' equity

$

57,245

$

54,570

$

52,720

$

51,114

$

50,768

Goodwill and intangible assets(11)

(14,908)

(14,900)

(14,932)

(14,953)

(14,982)

Noncumulative perpetual preferred stock

(4,678)

(4,360)

(4,360)

(4,360)

(4,360)

Tangible common equity

$

37,659

$

35,310

$

33,428

$

31,801

$

31,426

Tangible Assets (Period-End)

Total assets

$

378,810

$

373,619

$

373,191

$

372,538

$

362,909

Goodwill and intangible assets(11)

(14,940)

(14,886)

(14,904)

(14,941)

(14,945)

Tangible assets

$

363,870

$

358,733

$

358,287

$

357,597

$

347,964

Tangible Assets (Average)

Total assets

$

374,905

$

371,095

$

370,394

$

365,243

$

360,937

Goodwill and intangible assets(11)

(14,908)

(14,900)

(14,932)

(14,953)

(14,982)

Tangible assets

$

359,997

$

356,195

$

355,462

$

350,290

$

345,955

__________

(1) Regulatory capital metrics and capital ratios as of September 30, 2019 are preliminary and therefore subject to change.

(2) Amounts presented are net of tax.

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

(4) 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.

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

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

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

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

(9) The adjustments for the following periods consist of:

2019

2019

2019

Nine Months Ended

2018

2018

2018

Nine Months Ended

(Dollars in millions)

Q3

Q2

Q1

September 30, 2019

Q3

Q2

Q1

September 30, 2018

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

$

212

—

—

$

212

—

$

49

—

$

49

Walmart launch and related integration expenses

84

$

54

$

25

163

—

—

—

—

Cybersecurity Incident expenses, net of insurance

22

—

—

22

—

—

—

—

Restructuring charges

—

28

—

28

—

15

$

19

34

Net gains on the sales of exited businesses

—

—

—

—

$

(141)

(400)

—

(541)

Legal reserve build

—

—

—

—

170

—

—

170

Total

318

82

25

425

29

(336)

19

(288)

Income tax provision (benefit)

21

19

6

46

(33)

(92)

4

(121)

Net income

$

297

$

63

$

19

$

379

$

62

$

(244)

$

15

$

(167)

(10) 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.

(11) Includes impact of related deferred taxes.

Cision View original content:http://www.prnewswire.com/news-releases/capital-one-reports-third-quarter-2019-net-income-of-1-3-billion-or-2-69-per-share-300945171.html

SOURCE Capital One Financial Corporation

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