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Press release from PR Newswire

Capital One Reports First Quarter 2013 Net Income of $1.1 billion, or $1.79 per share

Thursday, April 18, 2013

Capital One Reports First Quarter 2013 Net Income of $1.1 billion, or $1.79 per share

16:05 EDT Thursday, April 18, 2013

 

MCLEAN, Va., April 18, 2013 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the first quarter of 2013 of $1.1 billion, or $1.79 per diluted common share, compared with net income of $843 million, or $1.41 per diluted common share, for the fourth quarter of 2012 and net income of $1.4 billion, or $2.72 per diluted common share, for the first quarter of 2012. Without the impact of a bargain purchase gain related to the ING Direct acquisition, first quarter 2012 net income would have been $809 million, or $1.56 per diluted common share.

"Each of our businesses delivered solid results in the quarter and our balance sheet is strong," said Richard D. Fairbank, Chairman and Chief Executive Officer. "We continue to generate significant capital and we're focused on returning capital to our shareholders."

All comparisons in the following paragraphs are for the first quarter of 2013 compared with the fourth quarter of 2012 unless otherwise noted.   

Loans and Deposits

Period-end loans held for investment decreased $14.6 billion, or 7 percent, to $191.3 billion. The decrease was due in part to the movement of the Best Buy portfolio of approximately $7 billion of loans to held for sale from held for investment during the quarter. Domestic Card period-end loans decreased $12.8 billion, or 15 percent, to $70.4 billion, driven largely by the movement of loans to held for sale, seasonally lower balances and purchase volumes, and the anticipated run-off of certain acquired loans. Excluding loans reclassified to held for sale during the first quarter, Domestic Card period-end loans decreased $5.6 billion, or 7 percent. Commercial Banking period-end loans increased $330 million, or 0.9 percent, to $39.2 billion, and period-end loans in Auto Finance grew  $817 million, or 3 percent, to $27.9 billion. Period-end loans in Home Loans declined $2.2 billion, or 5 percent, to $41.9 billion, driven by the continued anticipated run-off of acquired portfolios. 

Average loans held for investment in the quarter decreased $6.9 billion, or 3 percent, to $196.0 billion. Average loans in Commercial Banking grew $978 million and Auto Finance average loans grew $596 million. Average Domestic Card loans declined $6.0 billion, or 7 percent.  Average Home Loans decreased by $2.2 billion, driven largely by the continued anticipated run-off of acquired portfolios. 

Period-end total deposits were essentially flat at $212.4 billion, while average deposits declined $1.9 billion. Deposit interest rates declined 4 basis points to 0.68 percent.

Revenues

Total net revenue for the first quarter of 2013 was $5.6 billion, a decline of $73 million, or 1 percent, driven principally by lower average loan balances and purchase volume partially offset by higher margins.

The reduction in interest expense and release of cash related to the redemption of high coupon trust preferred securities contributed to an increase in net interest margin of 19 basis points to 6.71 percent. Cost of funds in the first quarter declined 16 basis points to 0.83 percent.  

Non-Interest Expense

Non-interest expense was $3.0 billion, a decrease of $227 million, or 7 percent, driven largely by the lack of seasonally high year-end expenses recorded in the fourth quarter and lower amortization expense and acquisition-related costs including integration. Marketing expense decreased $76 million in the quarter to  $317 million.

Provision for Credit Losses

Provision for credit losses was $885 million in the quarter, a decrease of $266 million, largely driven by a $261 million release in allowance. The largest component of the allowance release was in Domestic Card, due to better than anticipated credit performance in the quarter, including delinquencies, and an improvement in drivers for the company's future outlook.

The net charge-off rate was 2.20 percent in the first quarter of 2013, a decline of 6 basis points from 2.26 percent in the fourth quarter.

Discontinued Operations

The company recorded a $107 million provision for mortgage representation and warranty reserve attributable to Discontinued Operations. This provision reflects the company's assessment of probable and estimable losses in light of the current environment, principally attributable to non-agency mortgage related legal developments.

Net Income

Net income increased $223 million, or 26 percent, in the first quarter driven primarily by lower non-interest expense and a reduction in credit expenses in the quarter.

Capital Ratios

The company's estimated Tier 1 common ratio was approximately 11.8 percent as of March 31, 2013, up from 11.0 percent as of December 31, 2012.

Detailed segment information will be available in the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on April 18, 2013 at 5:00 PM, Eastern Daylight Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company's home page (www.capitalone.com). Choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation to GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through May 2, 2013 at 5:00 PM.

Forward-looking Statements

The company cautions that its current expectations in this release dated April 18, 2013 and the company's plans, objectives, expectations and intentions, are forward-looking statements which speak only as of the date hereof. The company does not undertake any obligation to update or revise any of the information contained herein whether as a result of new information, future events or otherwise.

Certain statements in this release are forward-looking statements, including those that discuss, among other things: strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns, expenses, capital measures, accruals for claims in litigation and for other claims against the company, earnings per share or other financial measures for the company; future financial and operating results; the company's plans, objectives, expectations and intentions; the projected impact and benefits of the acquisition of ING Direct and HSBC's U.S. Card business (the "Acquisitions") and the sale of the Best Buy loan portfolio (the "Sale Transaction"); and the assumptions that underlie these matters.  To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities Litigation Reform Act of 1995. Numerous factors could cause the company's actual results to differ materially from those described in such forward-looking statements, including, among other things: general economic and business conditions in the U.S., the U.K., Canada or the company's local markets, including conditions affecting employment levels, interest rates, consumer income and confidence, spending and savings that may affect consumer bankruptcies, defaults, charge-offs and deposit activity; an increase or decrease in credit losses (including increases due to a worsening of general economic conditions in the credit environment); financial, legal, regulatory, tax or accounting changes or actions, including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder and regulations governing bank capital and liquidity standards, including Basel-related initiatives and potential changes to financial accounting and reporting standards; the possibility that the company may not fully realize the projected cost savings and other projected benefits of the Acquisitions; difficulties and delays in integrating the assets and businesses acquired in the Acquisitions; business disruption following the Acquisitions; diversion of management time on issues related to the Acquisitions, including integration of the assets and businesses acquired; reputational risks and the reaction of customers and counterparties to the Acquisitions; disruptions relating to the Acquisitions negatively impacting the company's ability to maintain relationships with customers, employees and suppliers; changes in asset quality and credit risk as a result of the Acquisitions; the possibility that conditions to the Sale Transaction are not received or satisfied on a timely basis or at all; the possibility that modifications to the terms of the Sale Transaction may be required in order to obtain or satisfy such conditions; changes in the anticipated timing for closing the Sale Transaction; developments, changes or actions relating to any  litigation matter involving the company; the inability to sustain revenue and earnings growth; increases or decreases in interest rates; the company's ability to access the capital markets at attractive rates and terms to capitalize and fund its operations and future growth; the success of the company's marketing efforts in attracting and retaining customers; increases or decreases in the company's aggregate loan balances or the number of customers and the growth rate and composition thereof, including increases or decreases resulting from factors such as shifting product mix, amount of actual marketing expenses the company incurs and attrition of loan balances; the level of future repurchase or indemnification requests the company may receive, the actual future performance of mortgage loans relating to such requests, the success rates of claimants against the company, any developments in litigation and the actual recoveries the company may make on any collateral relating to claims against the company; the amount and rate of deposit growth; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products or financial condition; any significant disruption in the company's operations or technology platform; the company's ability to maintain a compliance infrastructure suitable for the nature of our business; the company's ability to control costs; the amount of, and rate of growth in, the company's expenses as its business develops or changes or as it expands into new market areas; the company's ability to execute on its strategic and operational plans; any significant disruption of, or loss of public confidence in, the United States Mail service affecting the company's response rates and consumer payments; any significant disruption of, or loss of public confidence in, the internet affecting the ability of the company's customers to access their accounts and conduct banking transactions; the company's ability to recruit and retain experienced personnel to assist in the management and operations of new products and services; changes in the labor and employment markets; fraud or misconduct by the company's customers, employees or business partners; competition from providers of products and services that compete with the company's businesses; and other risk factors set forth from time to time in reports that the company files with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2012.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N. A., had $212.4 billion in deposits and    $300.2 billion in total assets as of March 31, 2013. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has more than 900 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. 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

     First Quarter 2013 (1) (2) (3)

    Table of Contents 

Page 

Capital One Financial Corporation Consolidated

Table   1:   

Financial Summary?Consolidated

1

Table   2:

Selected Metrics?Consolidated

2

Table   3:

Consolidated Statements of Income

3

Table   4:

Consolidated Balance Sheets

4

Table   5:

Notes to Financial & Selected Metrics and Consolidated Financial Statements (Tables 1 ? 4)

5

Table   6:

Average Balances, Net Interest Income and Net Interest Margin

6

Table   7:

Loan Information and Performance Statistics

7

Business Segment Detail

Table   8:

Financial & Statistical Summary?Credit Card Business

8

Table   9:

Financial & Statistical Summary?Consumer Banking Business

9

Table 10:

Financial & Statistical Summary?Commercial Banking Business

10

Table 11:

Financial & Statistical Summary?Other and Total 

11

Table 12:

Notes to Loan and Business Segment Disclosures (Tables 7 ? 11)

12

Other

Table 13:

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

13

(1)

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our March 31, 2013 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission. 

(2)

References to ING Direct refer to the business and assets acquired and liabilities assumed in the February 17, 2012 acquisition. References to the 2012 U.S. card acquisition refer to the May 1, 2012 transaction in which we acquired substantially all of HSBC's credit card and private-label credit card business in the United States.

(3)

We use the term "acquired loans" to refer to a limited portion of the credit card loans acquired in the 2012 U.S. card acquisition and the substantial majority of loans acquired in the ING Direct and Chevy Chase Bank ("CCB") acquisitions, which were recorded at fair value at acquisition and subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard formerly known as "SOP 03-3"). Because SOP 03-3 takes into consideration future credit losses expected to be incurred over the life of the loans, there are no charge-offs or an allowance associated with these loans unless the estimated cash flows expected to be collected decrease subsequent to acquisition. In addition, these loans are not classified as delinquent or nonperforming even though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans. The accounting and classification of these loans may significantly alter some of our reported credit quality metrics. We therefore supplement certain reported credit quality metrics with metrics adjusted to exclude the impact of these acquired loans.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1:  Financial Summary?Consolidated (1)(2)(3)

2013

2012

2012

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

Q1

Q4

Q1

Earnings

Net interest income

$    4,570

$    4,528

$    3,414

Non-interest income(4) (5)

981

1,096

1,521

Total net revenue(6)

5,551

5,624

4,935

Provision for credit losses

885

1,151

573

Non-interest expense:

    Marketing

317

393

321

    Amortization of intangibles(7)

177

191

62

    Acquisition-related (8)

46

69

86

    Operating expenses

2,488

2,602

2,035

Total non-interest expense

3,028

3,255

2,504

Income from continuing operations before income taxes 

1,638

1,218

1,858

Income tax provision

494

370

353

Income from continuing operations, net of tax

1,144

848

1,505

Loss from discontinued operations, net of tax(4)

(78)

(5)

(102)

Net income

1,066

843

1,403

Dividends and undistributed earnings allocated to participating securities(9)

(5)

(3)

(7)

Preferred stock dividends

(13)

(15)

?

Net income available to common stockholders

$    1,048

$      825

$    1,396

Common Share Statistics

Basic EPS:(9) 

   Income from continuing operations, net of tax

$     1.94

$     1.43

$     2.94

   Loss from discontinued operations, net of tax

(0.13)

(0.01)

(0.20)

   Net income per common share 

$     1.81

$     1.42

$     2.74

Diluted EPS:(9) 

   Income from continuing operations, net of tax

$     1.92

$     1.42

$     2.92

   Loss from discontinued operations, net of tax

(0.13)

(0.01)

(0.20)

   Net income per common share

$     1.79

$     1.41

$     2.72

Weighted average common shares outstanding (in millions) for:

   Basic EPS

580.5

579.2

508.7

   Diluted EPS

586.3

585.6

513.1

Common shares outstanding (period end, in millions)

584.0

582.2

580.2

Dividends per common share

$     0.05

$     0.05

$     0.05

Tangible book value per common share (period end)(10)

41.87

40.23

39.37

Balance Sheet (Period End)

Loans held for investment(11)

$191,333

$205,889

$173,822

Interest-earning assets

268,479

280,096

265,398

Total assets

300,163

312,918

294,481

Interest-bearing deposits

191,093

190,018

197,254

Total deposits

212,410

212,485

216,528

Borrowings

37,492

49,910

32,885

Stockholders' equity

41,296

40,499

36,950

Balance Sheet (Quarterly Average Balances)

Average loans held for investment(10)

$195,997

$202,944

$152,900

Average interest-earning assets

272,345

277,886

220,246

Average total assets

303,223

308,096

246,384

Average interest-bearing deposits

190,612

192,122

151,625

Average total deposits

211,555

213,494

170,259

Average borrowings

41,574

44,189

35,994

Average stockholders' equity

40,960

40,212

32,982

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2:  Selected Metrics?Consolidated (1)(2)(3)

2013

2012

2012

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

Q1

Q4

Q1

Performance Metrics

Net interest income growth (quarter over quarter) 

1

%

(3)

%

7

%

Non-interest income growth(quarter over quarter)

(10)

(4)

75

Total net revenue growth(quarter over quarter)

(1)

(3)

22

Total net revenue margin(12)

8.15

8.10

8.96

Net interest margin(13)

6.71

6.52

6.20

Return on average assets(14)

1.51

1.10

2.44

Return on average total stockholders' equity(15)

11.17

8.44

18.25

Return on average tangible common equity(16) 

19.09

14.74

31.60

Non-interest expense as a % of average loans held for investment(17)

6.18

6.42

6.55

Efficiency ratio(18)

54.55

57.88

50.74

Effective income tax rate

30.2

30.4

19.0

Full-time equivalent employees (in thousands), period end

39.3

39.6

34.2

Credit Quality Metrics(11)(19)

Allowance for loan and lease losses 

$    4,606

$    5,156

$    4,060

Allowance as a % of loans held for investment 

2.41

%

2.50

%

2.34

%

Allowance as a % of loans held for investment (excluding acquired loans) 

2.91

3.02

3.08

Net charge-offs 

$    1,079

$    1,150

$      780

Net charge-off rate(20)

2.20

%

2.26

%

2.04

%

Net charge-off rate (excluding acquired loans)(20)

2.69

2.78

2.40

30+ day performing delinquency rate

2.37

2.70

2.23

30+ day performing delinquency rate (excluding acquired loans)

2.90

3.29

2.96

30+ day delinquency rate(21) 

**

3.09

2.69

30+ day delinquency rate (excluding acquired loans)(21) 

**

3.77

3.57

Capital Ratios (22)

Tier 1 common ratio

11.8

%

11.0

%

11.9

%

Tier 1 risk-based capital ratio

12.2

11.3

13.9

Total risk-based capital ratio

14.4

13.6

16.5

Tangible common equity ("TCE") ratio

8.6

7.9

8.2

 

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3:  Consolidated Statements of Income(1)(2)(3)

Three Months Ended

March 31,

December 31,

March 31,

(Dollars in millions, except per share data) (unaudited)

2013

2012

2012

Interest income:

Loans, including loans held for sale

$              4,649

$              4,727

$              3,657

Investment securities

374

361

298

Other

28

27

24

    Total interest income

5,051

5,115

3,979

Interest expense:

Deposits

326

348

311

Securitized debt obligations

56

58

80

Senior and subordinated notes

82

85

88

Other borrowings

17

96

86

    Total interest expense

481

587

565

Net interest income

4,570

4,528

3,414

Provision for credit losses

885

1,151

573

    Net interest income after provision for credit losses

3,685

3,377

2,841

Non-interest income:

Service charges and other customer-related fees

550

595

415

Interchange fees, net

445

459

328

Net other-than-temporary impairment losses recognized in earnings

(25)

(12)

(14)

Bargain purchase gain(5)

?

?

594

Other

11

54

198

    Total non-interest income

981

1,096

1,521

Non-interest expense:

Salaries and associate benefits

1,080

1,039

864

Occupancy and equipment

350

380

270

Marketing

317

393

321

Professional services

307

354

293

Communications and data processing

210

205

172

Amortization of intangibles(7)

177

191

62

Acquisition-related(8)

46

69

86

Other

541

624

436

    Total non-interest expense

3,028

3,255

2,504

Income from continuing operations before income taxes

1,638

1,218

1,858

Income tax provision

494

370

353

Income from continuing operations, net of tax

1,144

848

1,505

Loss from discontinued operations, net of tax(4)

(78)

(5)

(102)

    Net income

1,066

843

1,403

Dividends and undistributed earnings allocated to participating securities(9)

(5)

(3)

(7)

Preferred stock dividends

(13)

(15)

-

    Net income available to common stockholders

$              1,048

$                 825

$              1,396

Basic earnings per common share:(9)

    Income from continuing operations

$                1.94

$                1.43

$                2.94

    Loss from discontinued operations

(0.13)

(0.01)

(0.20)

    Net income per basic common share

$                1.81

$                1.42

$                2.74

Diluted earnings per common share:(9)

    Income from continuing operations

$                1.92

$                1.42

$                2.92

    Loss from discontinued operations

(0.13)

(0.01)

(0.20)

    Net income per diluted common share

$                1.79

$                1.41

$                2.72

Weighted average common shares outstanding (in millions) for:

    Basic EPS

580.5

579.2

508.7

    Diluted EPS

586.3

585.6

513.1

Dividends paid per common share

$                0.05

$                0.05

$                0.05

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4:  Consolidated Balance Sheets

March 31,

December 31,

March 31,

(Dollars in millions)(unaudited)

2013

2012

2012

Assets:

Cash and cash equivalents:

Cash and due from banks

$             1,947

$             3,440

$             2,183

Interest-bearing deposits with banks

4,563

7,617

28,165

Federal funds sold and securities purchased under agreements to resell

236

1

308

Total cash and cash equivalents

6,746

11,058

30,656

Restricted cash for securitization investors

1,018

428

1,090

Securities available for sale, at fair value

63,968

63,979

60,810

Loans held for investment:

Unsecuritized loans held for investment

150,721

162,059

128,927

Restricted loans for securitization investors

40,612

43,830

44,895

Total loans held for investment

191,333

205,889

173,822

    Less: Allowance for loan and lease losses

(4,606)

(5,156)

(4,060)

Net loans held for investment

186,727

200,733

169,762

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

6,410

201

627

Premises and equipment, net

3,736

3,587

3,062

Interest receivable

1,378

1,694

1,157

Goodwill

13,900

13,904

13,595

Other

16,280

17,334

13,722

Total assets

$         300,163

$         312,918

$         294,481

Liabilities:

Interest payable

$                310

$                450

$                384

Customer deposits:

Non-interest bearing deposits

21,317

22,467

19,274

Interest-bearing deposits

191,093

190,018

197,254

Total customer deposits

212,410

212,485

216,528

Securitized debt obligations

11,046

11,398

15,474

Other debt:

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

855

1,248

770

Senior and subordinated notes

13,255

12,686

11,948

Other borrowings

12,336

24,578

4,693

Total other debt

26,446

38,512

17,411

Other liabilities

8,655

9,574

7,734

Total liabilities

258,867

272,419

257,531

Stockholders' equity:

Preferred stock

?

?

?

Common stock

6

6

6

Additional paid-in capital, net

26,256

26,188

25,136

Retained earnings

17,876

16,853

14,841

Accumulated other comprehensive income

473

739

253

Treasury stock, at cost

(3,315)

(3,287)

(3,286)

Total stockholders' equity

41,296

40,499

36,950

Total liabilities and stockholders' equity

$         300,163

$         312,918

$         294,481

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 5: Notes to Financial & Selected Metrics and Consolidated Financial Statements (Tables 1 ? 4)

(1)

Certain prior period amounts have been reclassified to conform to the current period presentation.

(2)

Results for Q2 2012 and thereafter include the impact of the May 1, 2012 closing of the 2012 U.S. card acquisition, which resulted in the addition of $28.2 billion in credit card receivables at closing.

(3)

Results for Q1 2012 and thereafter include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans of $40.4 billion, other assets of $53.9 billion and deposits of $84.4 billion at acquisition.

(4)

We recorded a provision for mortgage representation and warranty losses of $97 million in Q1 2013.  We did not record a provision for mortgage representation and warranty losses in Q4 2012. We recorded a provision for mortgage representation and warranty losses of $169 million in Q1 2012. The majority of the provision for representation and warranty losses is generally included net of tax in discontinued operations, with the remaining amount included pre-tax in non-interest income. The mortgage representation and warranty reserve increased to $994 million as of March 31, 2013, from $899 million as of December 31, 2012.

(5)

Includes a bargain purchase gain of $594 million recognized in earnings in Q1 2012 attributable to the February 17, 2012 acquisition of ING Direct. Represents the excess of the fair value of the net assets acquired in the ING Direct acquisition as of the acquisition date of February 17, 2012 over the consideration transferred.

(6)

Total net revenue was reduced by $265 million in Q1 2013, $318 million in Q4 2012, and $123 million in Q1 2012 for the estimated uncollectible amount of billed finance charges and fees.  Premium amortization related to the 2012 U.S. card and ING Direct acquisitions reduced revenue by $111 million in Q1 2013, $124 million in Q4 2012, and $30 million in Q1 2012. 

(7)

Includes purchased credit card relationship ("PCCR") intangible amortization of $116 million in Q1 2013, $127 million in Q4 2012, and $4 million in Q1 2012, the substantial majority of which is attributable to the 2012 U.S. card acquisition. Includes core deposit intangible amortization of $44 million in Q1 2013, $47 million in Q4 2012, and $46 million in Q1 2012. 

(8)

Acquisition-related costs include transaction costs, legal and other professional or consulting fees, restructuring costs and integration expense.

(9)

Dividends and undistributed earnings allocated to participating securities and EPS are computed independently for each period. Accordingly, the sum of each quarter may not agree to the year-to-date total.

(10)

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

(11)

Loans held for investment includes acquired loans accounted for based on cash flows expected to be collected.  See Table "Table 12: Notes to Loan and Business Segment Disclosures (Tables 7 ? 11)" for information on the amount of acquired loans for each of the periods presented.

(12)

Calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.

(13)

Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

(14)

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period. 

(15)

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average stockholders' equity for the period. 

(16)

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible common equity for the period.  See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

(17)

Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period.

(18)

Calculated based on non-interest expense, excluding goodwill impairment charges, for the period divided by total net revenue for the period. 

(19)

Loans acquired as part of the 2012 U.S. card, ING Direct and CCB acquisitions classified as held for investment are included in the denominator used in calculating our reported credit quality metrics.  We supplement certain reported credit quality metrics with metrics adjusted to exclude from the denominator acquired loans accounted for based on estimated expected cash flows to be collected (formerly SOP 03-3).

(20)

Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. 

(21)

The 30+ day delinquency rate as of the end of Q1 2013 will be provided in the Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.

(22)

Capital ratios as of the end of Q1 2013 are preliminary and therefore subject to change. TCE ratio is a non-GAAP capital ratio. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for information on the calculation of each of these ratios.

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

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

2013 Q1

2012 Q4

2012 Q1

Average

Interest Income/

 Yield/ 

Average

Interest Income/

 Yield/ 

Average

Interest Income/

 Yield/ 

(Dollars in millions)(unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Interest-earning assets:

    Loans, including loans held for sale

$200,441

$  4,649

9.28

%

$203,132

$  4,727

9.31

%

$153,332

$  3,657

9.54

%

    Investment securities

64,798

374

2.31

64,174

361

2.25

50,543

298

2.36

    Cash equivalents and other

7,106

28

1.58

10,580

27

1.02

16,371

24

0.59

Total interest-earning assets 

$272,345

$  5,051

7.42

%

$277,886

$  5,115

7.36

%

$220,246

$  3,979

7.23

%

Interest-bearing liabilities:

    Interest-bearing deposits

$190,612

$     326

0.68

%

$192,122

$     348

0.72

%

$151,625

$     311

0.82

%

    Securitized debt obligations

11,758

56

1.91

12,119

58

1.91

16,185

80

1.98

    Senior and subordinated notes

11,984

82

2.74

11,528

85

2.95

10,268

88

3.43

    Other borrowings

17,832

17

0.38

20,542

96

1.87

9,541

86

3.61

Total interest-bearing liabilities

$232,186

$     481

0.83

%

$236,311

$     587

0.99

%

$187,619

$     565

1.20

%

Net interest income/spread

$  4,570

6.59

%

$  4,528

6.37

%

$  3,414

6.03

%

Impact of non-interest bearing funding

0.12

0.15

0.17

Net interest margin

6.71

%

6.52

%

6.20

%

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics(1)(2)(3)(4)

2013

2012

2012

(Dollars in millions)(unaudited)

Q1

Q4

Q1 

Period-end Loans Held For Investment

Credit card:

   Domestic credit card 

$           70,361

$           83,141

$           53,173

   International credit card

8,036

8,614

8,303

      Total credit card

78,397

91,755

61,476

Consumer banking:

   Automobile

27,940

27,123

23,568

   Home loan

41,931

44,100

49,550

   Retail banking

3,742

3,904

4,182

      Total consumer banking

73,613

75,127

77,300

Commercial banking:

   Commercial and multifamily real estate

17,878

17,732

15,702

   Commercial and industrial

20,127

19,892

17,761

      Total commercial lending

38,005

37,624

33,463

   Small-ticket commercial real estate

1,145

1,196

1,443

      Total commercial banking

39,150

38,820

34,906

Other loans

173

187

140

     Total 

$         191,333

$         205,889

$         173,822

Average Loans Held For Investment

Credit card:

   Domestic credit card 

$           74,714

$           80,718

$           54,131

   International credit card

8,238

8,372

8,301

      Total credit card

82,952

89,090

62,432

Consumer banking:

   Automobile

27,477

26,881

22,582

   Home loan 

43,023

45,250

29,502

   Retail banking

3,786

3,967

4,179

      Total consumer banking

74,286

76,098

56,263

Commercial banking:

   Commercial and multifamily real estate

17,454

17,005

15,514

   Commercial and industrial

19,949

19,344

17,038

      Total commercial lending

37,403

36,349

32,552

   Small-ticket commercial real estate

1,173

1,249

1,480

      Total commercial banking

38,576

37,598

34,032

Other loans

183

158

173

      Total

$         195,997

$         202,944

$         152,900

Net Charge-off Rates

Credit card:

   Domestic credit card

4.43

%

4.35

%

3.92

%

   International credit card

4.59

3.99

5.52

      Total credit card

4.45

4.32

4.14

Consumer banking:

   Automobile

1.78

2.24

1.41

   Home loan

0.04

(0.06)

0.20

   Retail banking

1.85

2.45

1.39

      Total consumer banking

0.78

0.88

0.77

Commercial banking:

   Commercial and multifamily real estate

0.01

(0.08)

0.09

   Commercial and industrial

0.04

0.13

(0.08)

      Total commercial lending

0.03

0.03

-

   Small-ticket commercial real estate

1.41

2.02

4.24

      Total commercial banking

0.07

0.10

0.19

Other loans

14.53

24.23

23.30

      Total

2.20

%

2.26

%

2.04

%

30+ Day Performing Delinquency Rates

Credit card:

   Domestic credit card

3.37

%

3.61

%

3.25

%

   International credit card

4.04

3.58

5.14

      Total credit card

3.44

%

3.61

%

3.51

%

Consumer banking:

   Automobile

5.58

%

7.00

%

4.87

%

   Home loan

0.14

0.13

0.15

   Retail banking

0.83

0.76

0.80

      Total consumer banking

2.24

%

2.65

%

1.63

%

Nonperforming Asset Rates(5)

Credit card:

   International credit card

1.13

%

1.16

%

?

%

      Total credit card

0.12

%

0.11

%

?

%

Consumer banking:

   Automobile

0.40

%

0.63

%

0.32

%

   Home loan

1.02

1.00

0.94

   Retail banking

1.24

1.85

2.25

      Total consumer banking

0.80

%

0.91

%

0.82

%

Commercial banking:

   Commercial and multifamily real estate

0.76

%

0.82

%

1.55

%

   Commercial and industrial

0.64

0.72

0.69

      Total commercial lending

0.69

%

0.77

%

1.09

%

   Small-ticket commercial real estate

2.42

0.97

4.35

      Total commercial banking

0.74

%

0.77

%

1.23

%

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 8:  Financial & Statistical Summary?Credit Card Business(2)(4)

2013

2012

2012

(Dollars in millions) (unaudited)

Q1

Q4

Q1

Credit Card

Earnings:

  Net interest income

$            2,830

$            2,849

$            1,992

  Non-interest income

821

883

598

  Total net revenue

3,651

3,732

2,590

  Provision for credit losses

743

1,000

458

  Non-interest expense

1,848

1,933

1,268

  Income (loss) from continuing operations before taxes

1,060

799

864

  Income tax provision (benefit)

374

279

298

  Income (loss) from continuing operations, net of tax

$               686

$               520

$               566

Selected performance metrics:

  Period-end loans held for investment

$           78,397

$           91,755

$           61,476

  Average loans held for investment

82,952

89,090

62,432

  Average yield on loans held for investment(10)

15.16

%

14.33

%

14.41

%

  Total net revenue margin(11)

17.61

16.76

16.59

  Net charge-off rate

4.45

4.32

4.14

  30+ day performing delinquency rate

3.44

3.61

3.51

  30+ day delinquency rate(7)

**

3.69

3.51

  Nonperforming loan rate(5)

0.12

0.11

?

  PCCR intangible amortization

$               116

$               127

$                   4

  Purchase volume(6)

45,098

52,853

34,498

Domestic Card

Earnings:

  Net interest income

$            2,556

$            2,583

$            1,713

  Non-interest income

724

798

497

  Total net revenue

3,280

3,381

2,210

  Provision for credit losses

647

911

361

  Non-interest expense

1,633

1,727

1,052

  Income (loss) from continuing operations before taxes

1,000

743

797

  Income tax provision (benefit)

356

263

282

  Income (loss) from continuing operations, net of tax

$               644

$               480

$               515

Selected performance metrics:

  Period-end loans held for investment

$           70,361

$           83,141

$           53,173

  Average loans held for investment

74,714

80,718

54,131

  Average yield on loans held for investment(10)

15.07

%

14.20

%

14.11

%

  Total net revenue margin(11)

17.56

16.75

16.33

  Net charge-off rate

4.43

4.35

3.92

  30+ day performing delinquency rate

3.37

3.61

3.25

  30+ day delinquency rate(7)

**

3.61

3.25

  Purchase volume(6)

$           41,831

$           48,918

$           31,417

International Card

Earnings:

  Net interest income

$               274

$               266

$               279

  Non-interest income

97

85

101

  Total net revenue

371

351

380

  Provision for credit losses

96

89

97

  Non-interest expense

215

206

216

  Income (loss) from continuing operations before taxes

60

56

67

  Income tax provision (benefit)

18

16

16

  Income (loss) from continuing operations, net of tax

$                 42

$                 40

$                 51

Selected performance metrics:

  Period-end loans held for investment

$            8,036

$            8,614

$            8,303

  Average loans held for investment

8,238

8,372

8,301

  Average yield on loans held for investment

15.97

%

15.59

%

16.38

%

  Total net revenue margin

18.01

16.77

18.31

  Net charge-off rate

4.59

3.99

5.52

  30+ day performing delinquency rate

4.04

3.58

5.14

  30+ day delinquency rate(7)

**

4.49

5.14

  Nonperforming loan rate(5)

1.13

1.16

?

  Purchase volume(6)

$            3,267

$            3,935

$            3,081

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9:  Financial & Statistical Summary?Consumer Banking Business(3)(4)

2013

2012

2012

(Dollars in millions) (unaudited)

Q1

Q4

Q1 

Consumer Banking

Earnings:

Net interest income

$            1,478

$            1,503

$            1,288

Non-interest income

181

161

176

Total net revenue

1,659

1,664

1,464

Provision for credit losses

175

169

174

Non-interest expense

890

992

943

Income from continuing operations before taxes

594

503

347

Income tax provision

211

178

123

Income from continuing operations, net of tax

$               383

$               325

$               224

Selected performance metrics:

Period-end loans held for investment 

$           73,613

$           75,127

$           77,300

Average loans held for investment 

74,286

76,098

56,263

Average yield on loans held for investment

5.93

%

5.94

%

7.20

%

Auto loan originations

$            3,789

$            3,479

$            4,270

Period-end deposits

172,605

172,396

176,007

Average deposits 

171,089

172,654

129,915

Deposit interest expense rate

0.64

%

0.68

%

0.73

%

Core deposit intangible amortization

$                 37

$                 39

$                 37

Net charge-off rate

0.78

%

0.88

%

0.77

%

30+ day performing delinquency rate

2.24

2.65

1.63

30+ day delinquency rate(7)

**

3.34

2.25

Nonperforming loan rate

0.74

0.85

0.77

Nonperforming asset rate(5)

0.80

0.91

0.82

Period-end loans serviced for others

$           14,869

$           15,333

$           17,586

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10:  Financial & Statistical Summary?Commercial Banking Business(3)(4)

2013

2012

2012

(Dollars in millions) (unaudited)

Q1

Q4

Q1 

Commercial Banking

Earnings:

Net interest income

$               454

$               450

$               431

Non-interest income

84

86

85

Total net revenue(8)

538

536

516

Provision for credit losses

(35)

(20)

(69)

Non-interest expense

258

294

261

Income from continuing operations before taxes

315

262

324

Income tax provision 

112

93

114

Income from continuing operations, net of tax

$               203

$               169

$               210

Selected performance metrics:

Period-end loans held for investment 

$           39,150

$           38,820

$           34,906

Average loans held for investment 

38,576

37,598

34,032

Average yield on loans held for investment

3.91

%

4.15

%

4.47

%

Period-end deposits 

$           30,275

$           29,866

$           28,046

Average deposits 

30,335

29,476

27,569

Deposit interest expense rate

0.28

%

0.28

%

0.37

%

Core deposit intangible amortization

$                   7

$                   8

$                   9

Net charge-off rate

0.07

%

0.10

%

0.19

%

Nonperforming loan rate

0.71

0.73

1.15

Nonperforming asset rate(5)

0.74

0.77

1.23

Risk category:(9)

Noncriticized

$           37,359

$           36,839

$           32,339

Criticized performing

1,191

1,340

1,695

Criticized nonperforming

277

282

402

    Total risk-rated loans

38,827

38,461

34,436

Acquired commercial loans

323

359

470

    Total commercial loans

$           39,150

$           38,820

$           34,906

% of period-end commercial loans held for investment:

Noncriticized

95.4

%

94.9

%

92.6

%

Criticized performing

3.1

3.5

4.9

Criticized nonperforming

0.7

0.7

1.2

    Total risk-rated loans

99.2

99.1

98.7

Acquired commercial loans

0.8

0.9

1.3

    Total commercial loans

100.0

%

100.0

%

100.0

%

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11:  Financial & Statistical Summary?Other and Total(2)(3)

2013

2012

2012

(Dollars in millions) (unaudited)

Q1

Q4

Q1

Other 

Earnings:

Net interest expense

$                  (192)

$                  (274)

$                 (297)

Non-interest income

(105)

(34)

662

Total net revenue

(297)

(308)

365

Provision for credit losses

2

2

10

Non-interest expense

32

36

32

Income (loss) from continuing operations before taxes

(331)

(346)

323

Income tax benefit

(203)

(180)

(182)

Income (loss) from continuing operations, net of tax

$                  (128)

$                  (166)

$                  505

Selected performance metrics:

Period-end loans held for investment

$                   173

$                   187

$                  140

Average loans held for investment

183

158

173

Period-end deposits

9,530

10,223

12,475

Average deposits

10,131

11,364

12,775

Total

Earnings:

Net interest income

$                4,570

$                4,528

$               3,414

Non-interest income

981

1,096

1,521

Total net revenue

5,551

5,624

4,935

Provision for credit losses

885

1,151

573

Non-interest expense

3,028

3,255

2,504

Income from continuing operations before taxes

1,638

1,218

1,858

Income tax provision

494

370

353

Income from continuing operations, net of tax

$                1,144

$                   848

$               1,505

Selected performance metrics:

Period-end loans held for investment 

$            191,333

$            205,889

$           173,822

Average loans held for investment

195,997

202,944

152,900

Period-end deposits

212,410

212,485

216,528

Average deposits

211,555

213,494

170,259

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12:  Notes to Loan and Business Segment Disclosures (Tables 7 ? 11)

(1)

Certain prior period amounts have been reclassified to conform to the current period presentation.

(2)

Results for Q2 2012 and thereafter include the impact of the May 1, 2012 closing of the 2012 U.S. card acquisition, which resulted in the addition of approximately $28.2 billion in credit card receivables at closing.

(3)

Results for Q1 2012 and thereafter include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans of $40.4 billion, other assets of $53.9 billion and deposits of $84.4 billion at acquisition.

(4)

Loans acquired as part of the 2012 U.S. card, ING Direct and CCB acquisitions are included in the denominator used in calculating our reported credit quality metrics. We therefore present certain reported credit quality metrics, adjusted to exclude from the denominator acquired loans accounted for based on estimated cash flows expected to be collected over the life of the loans (formerly SOP 03-3). The table below presents amounts related to acquired loans accounted for under SOP 03-3.

2013

2012

2012

(Dollars in millions) (unaudited)

Q1

Q4

Q1 

Acquired loans accounted for under SOP 03-3:

Period-end unpaid principal balance

$       36,216

$       38,477

$    44,798

Period-end loans held for investment

34,943

37,134

43,131

Average loans held for investment

35,706

37,899

23,067

(5)

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

(6)

Includes credit card purchase transactions, net of returns. Excludes cash advance transactions.

(7)

The 30+ day delinquency rate as of the end of Q1 2013 will be provided in our Quarterly Report on Form 10-Q for the period ended March 31, 2013.

(8)

Because some of our tax-related commercial investments generate tax-exempt income or tax credits, we make certain reclassifications within our Commercial Banking business results to present revenues on a taxable-equivalent basis, calculated assuming an effective tax rate approximately equal to our federal statutory tax rate of 35%.

(9)

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

(10)

The transfer of the Best Buy Stores, L.P. ("Best Buy") portfolio to held for sale resulted in an increase in the average yield for Domestic Card and Total Card of 107 basis points and 97 basis points, respectively, in Q1 2013.

(11)

The transfer of the Best Buy portfolio to held for sale resulted in an increase in the net revenue margin for Domestic Card and Total Card of 123 basis points and 112 basis points, respectively, in Q1 2013.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures

In addition to disclosing required regulatory capital measures, we also report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible common equity, tangible common equity ("TCE") and TCE ratio. The table below provides the details of the calculation of our regulatory capital and non-GAAP capital measures. While our non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies. 

2013

2012

2012

(Dollars in millions)(unaudited)

Q1

Q4

Q1

Average Equity to Non-GAAP Average Tangible Common Equity

Average total stockholders' equity

$     40,960

$     40,212

$      32,982

Less:  Average intangible assets(1)

(16,141)

(16,340)

(13,931)

           Noncumulative perpetual preferred stock(2)

(853)

(853)

?

Average tangible common equity(3)

$     23,966

$     23,019

$      19,051

Stockholders' Equity to Non-GAAP Tangible Common Equity

Total stockholders' equity

$     41,296

$     40,499

$      36,950

Less:  Goodwill and other intangible assets(1)

(15,992)

(16,224)

(14,110)

           Noncumulative perpetual preferred stock(2)

(853)

(853)

?

Tangible common equity(3)

$     24,451

$     23,422

$      22,840

Total Assets to Tangible Assets

Total assets

$    300,163

$    312,918

$    294,481

Less:  Assets from discontinued operations

(309)

(309)

(304)

Total assets from continuing operations

299,854

312,609

294,177

Less:  Goodwill and other intangible assets(1)

(15,992)

(16,224)

(14,110)

Tangible assets

$    283,862

$    296,385

$    280,067

Non-GAAP TCE Ratio

Tangible common equity(3)

$     24,451

$     23,422

$      22,840

Tangible assets

283,862

296,385

280,067

TCE ratio(3)

8.6

%

7.9

%

8.2

%

Regulatory Capital Ratios(4)

Total stockholders' equity

$     41,296

$     40,499

$      36,950

Less:  Net unrealized gains on AFS securities recorded in accumulated other

  comprehensive income ("AOCI")(5)

(583)

(712)

(327)

           Net (gains) losses on cash flow hedges recorded in AOCI(5)

15

2

70

           Disallowed goodwill and other intangible assets

(14,361)

(14,428)

(14,057)

           Disallowed deferred tax assets

?

?

(902)

           Noncumulative perpetual preferred stock(2)

(853)

(853)

?

           Other 

(4)

(12)

(3)

Tier 1 common capital

25,510

24,496

21,731

Plus:   Noncumulative perpetual preferred stock(2)

853

853

?

           Tier 1 restricted core capital items(6)

1

2

3,636

Tier 1 capital

26,364

25,351

25,367

Plus:   Long-term debt qualifying as Tier 2 capital

2,122

2,119

2,438

           Qualifying allowance for loan and lease losses

2,737

2,830

2,314

           Other Tier 2 components

11

13

17

Tier 2 capital

4,870

4,962

4,769

Total risk-based capital(7)

$     31,234

$     30,313

$      30,136

Risk-weighted assets(8)

$    216,474

$    223,472

$    182,704

Tier 1 common ratio(9)

11.8

%

11.0

%

11.9

%

Tier 1 risk-based capital ratio(10)

12.2

11.3

13.9

Total risk-based capital ratio(11)

14.4

13.6

16.5

___________________

(1)

Includes impact from related deferred taxes.

(2)

Noncumulative perpetual preferred stock qualifies for Tier 1 capital; however, it is not includable in Tier 1 common capital.

(3)

TCE ratio is a non-GAAP measure calculated based on tangible common equity divided by tangible assets.  

(4)

Regulatory capital ratios as of the end of Q1 2013 are preliminary and therefore subject to change.

(5)

Amounts presented are net of tax.

(6)

Consists primarily of trust preferred securities.

(7)

Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.

(8)

Calculated based on prescribed regulatory guidelines.

(9)

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

(10)

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

(11)

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

 

 

SOURCE Capital One Financial Corporation

For further information: Investor Relations, Jeff Norris or Danielle Dietz, 703.720.2455, or Media Relations, Julie Rakes, 804.284.5800, or Tatiana Stead, 703.720.2352

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