CAPITAL ONE FINANCIAL CORP - FORM 8-K - EX-99.2 - EXHIBIT 99.2

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EX-99.1 - EXHIBIT 99.1 - CAPITAL ONE FINANCIAL CORP	q12018earningsrelease-ex991.htm
8-K - 8-K - CAPITAL ONE FINANCIAL CORP	q12018earningsrelease8-k.htm

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement⁽¹⁾⁽²⁾

First Quarter2018

Table of Contents



Capital One Financial Corporation Consolidated Results			Page
	Table 1:	Financial Summary—Consolidated	1
	Table 2:	Selected Metrics—Consolidated	3
	Table 3:	Consolidated Statements of Income	4
	Table 4:	Consolidated Balance Sheets	5
	Table 5:	Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)	7
	Table 6:	Average Balances, Net Interest Income and Net Interest Margin	8
	Table 7:	Loan Information and Performance Statistics	9
	Table 8:	Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity	11
Business Segment Results
	Table 9:	Financial Summary—Business Segment Results	12
	Table 10:	Financial & Statistical Summary—Credit Card Business	13
	Table 11:	Financial & Statistical Summary—Consumer Banking Business	15
	Table 12:	Financial & Statistical Summary—Commercial Banking Business	16
	Table 13:	Financial & Statistical Summary—Other and Total	17
	Table 14:	Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)	18
Other
	Table 15:	Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures	19

__________


⁽¹⁾	The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Quarterly Report on Form 10-Q for the period ended March 31, 2018 once it is filed with the Securities and Exchange Commission.

⁽²⁾

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

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated



																2018 Q1 vs.
(Dollars in millions, except per share data and as noted)	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except per share data and as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Income Statement
Net interest income	$	5,718		$	5,813		$	5,700		$	5,473		$	5,474		(2	)%	4	%
Non-interest income	1,191			1,200			1,285			1,231			1,061			(1	)	12
Total net revenue⁽¹⁾	6,909			7,013			6,985			6,704			6,535			(1	)	6
Provision for credit losses	1,674			1,926			1,833			1,800			1,992			(13	)	(16	)
Non-interest expense:
Marketing	414			460			379			435			396			(10	)	5
Operating expenses	3,159			3,319			3,188			2,979			3,038			(5	)	4
Total non-interest expense	3,573			3,779			3,567			3,414			3,434			(5	)	4
Income from continuing operations before income taxes	1,662			1,308			1,585			1,490			1,109			27		50
Income tax provision	319			2,170			448			443			314			(85	)	2
Income (loss) from continuing operations, net of tax	1,343			(862		)	1,137			1,047			795			**		69
Income (loss) from discontinued operations, net of tax	3			(109		)	(30		)	(11		)	15			**		(80	)
Net income (loss)	1,346			(971		)	1,107			1,036			810			**		66
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(10		)	(1		)	(8		)	(8		)	(5		)	**		100
Preferred stock dividends	(52		)	(80		)	(52		)	(80		)	(53		)	(35	)	(2	)
Net income (loss) available to common stockholders	$	1,284		$	(1,052	)	$	1,047		$	948		$	752		**		71
Common Share Statistics
Basic earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.63		$	(1.95	)	$	2.22		$	1.98		$	1.53		**		72	%
Income (loss) from discontinued operations	0.01			(0.22		)	(0.06		)	(0.02		)	0.03			**		(67	)
Net income (loss) per basic common share	$	2.64		$	(2.17	)	$	2.16		$	1.96		$	1.56		**		69
Diluted earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.61		$	(1.95	)	$	2.20		$	1.96		$	1.51		**		73
Income (loss) from discontinued operations	0.01			(0.22		)	(0.06		)	(0.02		)	0.03			**		(67	)
Net income (loss) per diluted common share	$	2.62		$	(2.17	)	$	2.14		$	1.94		$	1.54		**		70
Weighted-average common shares outstanding (in millions):
Basic	486.9			485.7			484.9			484.0			482.3			—		1
Diluted	490.8			485.7			489.0			488.1			487.9			1	%	1
Common shares outstanding (period-end, in millions)	485.9			485.5			484.4			483.7			482.8			—		1
Dividends declared and paid per common share	$	0.40		$	0.40		$	0.40		$	0.40		$	0.40		—		—
Tangible book value per common share (period-end)⁽³⁾	61.29			60.28			63.06			60.94			58.66			2		4



											2018 Q1 vs.
(Dollars in millions)	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Balance Sheet (Period-End)
Loans held for investment⁽⁴⁾	$	248,256	$	254,473	$	252,422	$	244,302	$	240,588	(2	)%	3	%
Interest-earning assets	332,251		334,124		329,002		319,286		316,712		(1	)	5
Total assets	362,857		365,693		361,402		350,593		348,549		(1	)	4
Interest-bearing deposits	224,671		217,298		212,956		213,810		214,818		3		5
Total deposits	250,847		243,702		239,062		239,763		241,182		3		4
Borrowings	50,693		60,281		59,458		49,954		48,439		(16	)	5
Common equity	44,842		44,370		45,794		44,777		43,680		1		3
Total stockholders’ equity	49,203		48,730		50,154		49,137		48,040		1		2
Balance Sheet (Average Balances)
Loans held for investment⁽⁴⁾	$	249,726	$	252,566	$	245,822	$	242,241	$	241,505	(1	)%	3	%
Interest-earning assets	330,183		330,742		322,015		318,078		318,358		—		4
Total assets	362,049		363,045		355,191		349,891		351,641		—		3
Interest-bearing deposits	219,670		215,258		213,137		214,412		212,973		2		3
Total deposits	245,270		241,562		238,843		240,550		238,550		2		3
Borrowings	54,588		58,109		54,271		48,838		53,357		(6	)	2
Common equity	44,670		46,350		45,816		44,645		43,833		(4	)	2
Total stockholders’ equity	49,031		50,710		50,176		49,005		48,193		(3	)	2

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated



																2018 Q1 vs.
(Dollars in millions, except as noted)	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Performance Metrics
Net interest income growth (period over period)	(2		)%	2		%	4		%	—			—			**		**
Non-interest income growth (period over period)	(1		)	(7		)	4			16		%	(5		)%	**		**
Total net revenue growth (period over period)	(1		)	—			4			3			—			**		**
Total net revenue margin⁽⁵⁾	8.37			8.48			8.68			8.43			8.21			(11	)bps	16	bps
Net interest margin⁽⁶⁾	6.93			7.03			7.08			6.88			6.88			(10	)	5
Return on average assets	1.48			(0.95		)	1.28			1.20			0.90			243		58
Return on average tangible assets⁽⁷⁾	1.55			(0.99		)	1.34			1.25			0.95			254		60
Return on average common equity⁽⁸⁾	11.47			(8.14		)	9.40			8.59			6.73			**		474
Return on average tangible common equity⁽⁹⁾	17.32			(12.12		)	14.11			13.09			10.37			**		695
Non-interest expense as a percentage of average loans held for investment	5.72			5.98			5.80			5.64			5.69			(26	)	3
Efficiency ratio⁽¹⁰⁾	51.72			53.89			51.07			50.92			52.55			(217	)	(83	)
Effective income tax rate for continuing operations	19.2			165.9			28.3			29.7			28.3			**		**
Employees (in thousands), period-end	47.9			49.3			50.4			49.9			48.4			(3	)%	(1	)%
Credit Quality Metrics
Allowance for loan and lease losses	$	7,567		$	7,502		$	7,418		$	7,170		$	6,984		1	%	8	%
Allowance as a percentage of loans held for investment	3.05		%	2.95		%	2.94		%	2.93		%	2.90		%	10	bps	15	bps
Net charge-offs	$	1,618		$	1,828		$	1,606		$	1,618		$	1,510		(11	)%	7	%
Net charge-off rate⁽¹¹⁾	2.59		%	2.89		%	2.61		%	2.67		%	2.50		%	(30	)bps	9	bps
30+ day performing delinquency rate	2.72			3.23			2.93			2.69			2.61			(51	)	11
30+ day delinquency rate	2.91			3.48			3.24			2.99			2.92			(57	)	(1	)
Capital Ratios⁽¹²⁾
Common equity Tier 1 capital	10.5		%	10.3		%	10.7		%	10.7		%	10.4		%	20	bps	10	bps
Tier 1 capital	12.0			11.8			12.2			12.2			12.0			20		—
Total capital	14.5			14.4			14.8			14.9			14.7			10		(20	)
Tier 1 leverage	10.1			9.9			10.5			10.3			9.9			20		20
Tangible common equity (“TCE”)⁽¹³⁾	8.6			8.3			8.8			8.8			8.5			30		10

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income



																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except per share data and as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Interest income:
Loans, including loans held for sale	$	6,134		$	6,133		$	5,960		$	5,669		$	5,626		—		9	%
Investment securities	452			431			431			433			416			5	%	9
Other	51			40			29			26			28			28		82
Total interest income	6,637			6,604			6,420			6,128			6,070			—		9
Interest expense:
Deposits	539			457			410			382			353			18		53
Securitized debt obligations	107			91			85			82			69			18		55
Senior and subordinated notes	251			209			194			179			149			20		68
Other borrowings	22			34			31			12			25			(35	)	(12	)
Total interest expense	919			791			720			655			596			16		54
Net interest income	5,718			5,813			5,700			5,473			5,474			(2	)	4
Provision for credit losses	1,674			1,926			1,833			1,800			1,992			(13	)	(16	)
Net interest income after provision for credit losses	4,044			3,887			3,867			3,673			3,482			4		16
Non-interest income:
Interchange fees, net	643			665			662			676			570			(3	)	13
Service charges and other customer-related fees	432			394			414			418			371			10		16
Net securities gains (losses)	8			1			68			(4		)	—			**		**
Other	108			140			141			141			120			(23	)	(10	)
Total non-interest income	1,191			1,200			1,285			1,231			1,061			(1	)	12
Non-interest expense:
Salaries and associate benefits	1,520			1,521			1,524			1,383			1,471			—		3
Occupancy and equipment	490			523			471			474			471			(6	)	4
Marketing	414			460			379			435			396			(10	)	5
Professional services	210			274			297			279			247			(23	)	(15	)
Communications and data processing	306			306			294			289			288			—		6
Amortization of intangibles	44			61			61			61			62			(28	)	(29	)
Other	589			634			541			493			499			(7	)	18
Total non-interest expense	3,573			3,779			3,567			3,414			3,434			(5	)	4
Income from continuing operations before income taxes	1,662			1,308			1,585			1,490			1,109			27		50
Income tax provision	319			2,170			448			443			314			(85	)	2
Income (loss) from continuing operations, net of tax	1,343			(862		)	1,137			1,047			795			**		69
Income (loss) from discontinued operations, net of tax	3			(109		)	(30		)	(11		)	15			**		(80	)
Net income (loss)	1,346			(971		)	1,107			1,036			810			**		66
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(10		)	(1		)	(8		)	(8		)	(5		)	**		100
Preferred stock dividends	(52		)	(80		)	(52		)	(80		)	(53		)	(35	)	(2	)
Net income (loss) available to common stockholders	$	1,284		$	(1,052	)	$	1,047		$	948		$	752		**		71

																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except per share data and as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Basic earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.63		$	(1.95	)	$	2.22		$	1.98		$	1.53		**		72	%
Income (loss) from discontinued operations	0.01			(0.22		)	(0.06		)	(0.02		)	0.03			**		(67	)
Net income (loss) per basic common share	$	2.64		$	(2.17	)	$	2.16		$	1.96		$	1.56		**		69
Diluted earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.61		$	(1.95	)	$	2.20		$	1.96		$	1.51		**		73
Income (loss) from discontinued operations	0.01			(0.22		)	(0.06		)	(0.02		)	0.03			**		(67	)
Net income (loss) per diluted common share	$	2.62		$	(2.17	)	$	2.14		$	1.94		$	1.54		**		70
Weighted-average common shares outstanding (in millions):
Basic common shares	486.9			485.7			484.9			484.0			482.3			—		1	%
Diluted common shares	490.8			485.7			489.0			488.1			487.9			1	%	1
Dividends declared and paid per common share	$	0.40		$	0.40		$	0.40		$	0.40		$	0.40		—		—

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets



																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Assets:
Cash and cash equivalents:
Cash and due from banks	$	4,220		$	4,458		$	4,154		$	3,352		$	3,489		(5	)%	21	%
Interest-bearing deposits and other short-term investments	9,788			9,582			4,330			3,363			5,826			2		68
Total cash and cash equivalents	14,008			14,040			8,484			6,715			9,315			—		50
Restricted cash for securitization investors	309			312			304			300			486			(1	)	(36	)
Investment securities:
Securities available for sale, at fair value	47,155			37,655			39,742			41,120			41,260			25		14
Securities held to maturity, at carrying value	23,075			28,984			28,650			27,720			26,170			(20	)	(12	)
Total investment securities	70,230			66,639			68,392			68,840			67,430			5		4
Loans held for investment:⁽⁴⁾
Unsecuritized loans held for investment	213,313			218,806			217,659			214,864			211,038			(3	)	1
Loans held in consolidated trusts	34,943			35,667			34,763			29,438			29,550			(2	)	18
Total loans held for investment	248,256			254,473			252,422			244,302			240,588			(2	)	3
Allowance for loan and lease losses	(7,567		)	(7,502		)	(7,418		)	(7,170		)	(6,984		)	1		8
Net loans held for investment	240,689			246,971			245,004			237,132			233,604			(3	)	3
Loans held for sale, at lower of cost or fair value	1,498			971			1,566			777			735			54		104
Premises and equipment, net	4,055			4,033			3,955			3,825			3,727			1		9
Interest receivable	1,496			1,536			1,426			1,346			1,368			(3	)	9
Goodwill	14,536			14,533			14,532			14,524			14,521			—		—
Other assets	16,036			16,658			17,739			17,134			17,363			(4	)	(8	)
Total assets	$	362,857		$	365,693		$	361,402		$	350,593		$	348,549		(1	)	4



																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Liabilities:
Interest payable	$	353		$	413		$	301		$	376		$	260		(15	)%	36	%
Deposits:
Non-interest-bearing deposits	26,176			26,404			26,106			25,953			26,364			(1	)	(1	)
Interest-bearing deposits	224,671			217,298			212,956			213,810			214,818			3		5
Total deposits	250,847			243,702			239,062			239,763			241,182			3		4
Securitized debt obligations	18,665			20,010			17,087			18,358			18,528			(7	)	1
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase	656			576			767			958			1,046			14		(37	)
Senior and subordinated notes	31,051			30,755			28,420			28,478			26,405			1		18
Other borrowings	321			8,940			13,184			2,160			2,460			(96	)	(87	)
Total other debt	32,028			40,271			42,371			31,596			29,911			(20	)	7
Other liabilities	11,761			12,567			12,427			11,363			10,628			(6	)	11
Total liabilities	313,654			316,963			311,248			301,456			300,509			(1	)	4

Stockholders’ equity:
Preferred stock	0			0			0			0			0			—		—
Common stock	7			7			7			7			7			—		—
Additional paid-in capital, net	31,779			31,656			31,526			31,413			31,326			—		1
Retained earnings	31,996			30,700			31,946			31,086			30,326			4		6
Accumulated other comprehensive loss	(1,599		)	(926		)	(622		)	(683		)	(934		)	73		71
Treasury stock, at cost	(12,980		)	(12,707		)	(12,703		)	(12,686		)	(12,685		)	2		2
Total stockholders’ equity	49,203			48,730			50,154			49,137			48,040			1		2
Total liabilities and stockholders’ equity	$	362,857		$	365,693		$	361,402		$	350,593		$	348,549		(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 $335 million in Q1 2018, $377 million in Q4 2017, $356 million in Q3 2017, $313 million in Q2 2017 and $321 million in Q1 2017 for the estimated uncollectible amount of billed finance charges and fees and related losses.

⁽²⁾

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


⁽³⁾	Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

⁽⁴⁾

Included in loans held for investment are purchased credit-impaired loans (“PCI loans”) 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,” or Accounting Standards Codification 310-30). These include certain of our consumer and commercial loans that were acquired through business combinations. The table below presents amounts related to PCI loans:



	2018		2017		2017		2017		2017
(Dollars in millions)	Q1		Q4		Q3		Q2		Q1
PCI loans:
Period-end unpaid principal balance	$	10,542	$	11,399	$	12,658	$	13,599	$	14,838
Period-end loans held for investment	9,935		10,775		11,985		12,895		14,102
Average loans held for investment	10,286		11,060		12,270		13,305		14,433


⁽⁵⁾	Total net revenue margin is calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.


⁽⁶⁾	Net interest margin is calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.


⁽⁷⁾	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.

⁽⁸⁾

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.

⁽⁹⁾

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.


⁽¹⁰⁾	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.


⁽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 Q1 2018 are preliminary and therefore subject to change. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for information on the calculation of each of these ratios.


⁽¹³⁾	TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.


**	Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	2018 Q1						2017 Q4						2017 Q1
	Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾
(Dollars in millions, except as noted)	Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾
Interest-earning assets:
Loans, including loans held for sale	$	250,906	$	6,134	9.78	%	$	254,080	$	6,133	9.66	%	$	242,249	$	5,626	9.29	%
Investment securities	69,576		452		2.60		68,992		431		2.50		68,418		416		2.43
Cash equivalents and other	9,701		51		2.10		7,670		40		2.09		7,691		28		1.46
Total interest-earning assets	$	330,183	$	6,637	8.04		$	330,742	$	6,604	7.99		$	318,358	$	6,070	7.63
Interest-bearing liabilities:
Interest-bearing deposits	$	219,670	$	539	0.98		$	215,258	$	457	0.85		$	212,973	$	353	0.66
Securitized debt obligations	19,698		107		2.17		19,751		91		1.84		17,176		69		1.61
Senior and subordinated notes	30,430		251		3.30		30,020		209		2.78		24,804		149		2.40
Other borrowings and liabilities	6,849		22		1.28		10,355		34		1.31		12,356		25		0.81
Total interest-bearing liabilities	$	276,647	$	919	1.33		$	275,384	$	791	1.15		$	267,309	$	596	0.89
Net interest income/spread			$	5,718	6.71				$	5,813	6.84				$	5,474	6.74
Impact of non-interest-bearing funding					0.22						0.19						0.14
Net interest margin					6.93	%					7.03	%					6.88	%

__________

⁽¹⁾

Interest income and interest expense and the calculation of average yields on interest-earning assets and average rates on interest-bearing liabilities include the impact of hedge accounting. In the first quarter of 2018, we adopted Accounting Standard Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. As a result, interest income and interest expense amounts shown above for Q1 2018 include $1 million and $30 million, respectively, related to hedge ineffectiveness that was previously included in other non-interest income.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics



											2018 Q1 vs.
	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions, except as noted)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Loans Held for Investment (Period-End)
Credit card:
Domestic credit card	$	98,535	$	105,293	$	99,981	$	92,866	$	91,092	(6	)%	8	%
International card businesses	9,041		9,469		9,149		8,724		8,121		(5	)	11
Total credit card	107,576		114,762		109,130		101,590		99,213		(6	)	8
Consumer banking:
Auto	54,811		53,991		53,290		51,765		49,771		2		10
Home loan	16,630		17,633		18,820		19,724		20,738		(6	)	(20	)
Retail banking	3,233		3,454		3,454		3,484		3,473		(6	)	(7	)
Total consumer banking	74,674		75,078		75,564		74,973		73,982		(1	)	1
Commercial banking:
Commercial and multifamily real estate	27,360		26,150		27,944		27,428		27,218		5		1
Commercial and industrial	38,208		38,025		39,306		39,801		39,638		—		(4	)
Total commercial lending	65,568		64,175		67,250		67,229		66,856		2		(2	)
Small-ticket commercial real estate	385		400		420		443		464		(4	)	(17	)
Total commercial banking	65,953		64,575		67,670		67,672		67,320		2		(2	)
Other loans	53		58		58		67		73		(9	)	(27	)
Total loans held for investment	$	248,256	$	254,473	$	252,422	$	244,302	$	240,588	(2	)	3
Loans Held for Investment (Average)
Credit card:
Domestic credit card	$	100,450	$	101,087	$	93,729	$	91,769	$	93,034	(1	)%	8	%
International card businesses	9,052		8,942		8,816		8,274		8,135		1		11
Total credit card	109,502		110,029		102,545		100,043		101,169		—		8
Consumer banking:
Auto	54,344		53,747		52,615		50,803		48,673		1		12
Home loan	17,224		18,109		19,302		20,203		21,149		(5	)	(19	)
Retail banking	3,429		3,433		3,446		3,463		3,509		—		(2	)
Total consumer banking	74,997		75,289		75,363		74,469		73,331		—		2
Commercial banking:
Commercial and multifamily real estate	26,542		27,770		27,703		27,401		26,587		(4	)	—
Commercial and industrial	38,246		39,020		39,723		39,815		39,877		(2	)	(4	)
Total commercial lending	64,788		66,790		67,426		67,216		66,464		(3	)	(3	)
Small-ticket commercial real estate	393		410		433		453		474		(4	)	(17	)
Total commercial banking	65,181		67,200		67,859		67,669		66,938		(3	)	(3	)
Other loans	46		48		55		60		67		(4	)	(31	)
Total average loans held for investment	$	249,726	$	252,566	$	245,822	$	242,241	$	241,505	(1	)	3



											2018 Q1 vs.
	2018		2017		2017		2017		2017		2017		2017
(Dollars in millions, except as noted)	Q1		Q4		Q3		Q2		Q1		Q4		Q1
Net Charge-Off (Recovery) Rates
Credit card:
Domestic credit card	5.26	%	5.08	%	4.64	%	5.11	%	5.14	%	18	bps	12	bps
International card businesses	2.49		3.92		3.08		4.08		3.69		(143	)	(120	)
Total credit card	5.03		4.99		4.51		5.02		5.02		4		1
Consumer banking:
Auto	1.53		2.12		1.96		1.70		1.64		(59	)	(11	)
Home loan	(0.03	)	0.23		0.02		0.04		0.03		(26	)	(6	)
Retail banking	1.89		1.94		2.10		1.71		1.92		(5	)	(3	)
Total consumer banking	1.19		1.66		1.47		1.25		1.19		(47	)	—
Commercial banking:
Commercial and multifamily real estate	—		(0.01	)	(0.01	)	0.03		—		1		—
Commercial and industrial	0.20		1.47		1.64		1.34		0.22		(127	)	(2	)
Total commercial lending	0.12		0.86		0.97		0.81		0.13		(74	)	(1	)
Small-ticket commercial real estate	(0.18	)	(0.05	)	0.12		(0.22	)	1.05		(13	)	(123	)
Total commercial banking	0.11		0.85		0.96		0.80		0.14		(74	)	(3	)
Total net charge-offs	2.59		2.89		2.61		2.67		2.50		(30	)	9
30+ Day Performing Delinquency Rates
Credit card:
Domestic credit card	3.57	%	4.01	%	3.94	%	3.63	%	3.71	%	(44	)bps	(14	)bps
International card businesses	3.62		3.64		3.54		3.28		3.39		(2	)	23
Total credit card	3.58		3.98		3.91		3.60		3.68		(40	)	(10	)
Consumer banking:
Auto	5.15		6.51		5.71		5.40		5.03		(136	)	12
Home loan	0.20		0.20		0.17		0.14		0.15		—		5
Retail banking	0.75		0.76		0.73		0.54		0.59		(1	)	16
Total consumer banking	3.86		4.76		4.10		3.79		3.45		(90	)	41
Nonperforming Loans and Nonperforming Assets Rates⁽¹⁾⁽²⁾
Credit card:
International card businesses	0.25	%	0.25	%	0.28	%	0.37	%	0.47	%	—		(22	)bps
Total credit card	0.02		0.02		0.02		0.03		0.04		—		(2	)
Consumer banking:
Auto	0.50		0.70		0.65		0.53		0.36		(20	)bps	14
Home loan	0.86		1.00		0.84		1.31		1.27		(14	)	(41	)
Retail banking	1.04		1.00		0.97		0.96		0.82		4		22
Total consumer banking	0.61		0.78		0.71		0.75		0.64		(17	)	(3	)
Commercial banking:
Commercial and multifamily real estate	0.01		0.15		0.23		0.13		0.13		(14	)	(12	)
Commercial and industrial	0.78		0.63		1.82		1.62		2.02		15		(124	)
Total commercial lending	0.46		0.43		1.16		1.01		1.25		3		(79	)
Small-ticket commercial real estate	1.46		1.65		1.59		1.89		1.65		(19	)	(19	)
Total commercial banking	0.47		0.44		1.16		1.01		1.25		3		(78	)
Total nonperforming loans	0.32		0.35		0.54		0.53		0.57		(3	)	(25	)
Total nonperforming assets	0.35		0.41		0.60		0.60		0.66		(6	)	(31	)

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	Three Months Ended March 31, 2018
	Credit Card									Consumer Banking
(Dollars in millions)	Domestic Card			International Card Businesses			Total Credit Card			Auto			Home Loan			Retail Banking			Total Consumer Banking			Commercial Banking			Other⁽³⁾			Total
Allowance for loan and lease losses:
Balance as of December 31, 2017	$	5,273		$	375		$	5,648		$	1,119		$	58		$	65		$	1,242		$	611		$	1		$	7,502
Charge-offs	(1,697		)	(128		)	(1,825		)	(410		)	—			(21		)	(431		)	(21		)	1			(2,276		)
Recoveries	376			72			448			202			1			5			208			2			—			658
Net charge-offs	(1,321		)	(56		)	(1,377		)	(208		)	1			(16		)	(223		)	(19		)	1			(1,618		)
Provision (benefit) for loan and lease losses	1,380			76			1,456			226			(6		)	14			234			(5		)	(1		)	1,684
Allowance build (release) for loan and lease losses	59			20			79			18			(5		)	(2		)	11			(24		)	—			66
Other changes⁽⁴⁾	—			(1		)	(1		)	—			—			—			—			—			—			(1		)
Balance as of March 31, 2018	5,332			394			5,726			1,137			53			63			1,253			587			1			7,567
Reserve for unfunded lending commitments:
Balance as of December 31, 2017	—			—			—			—			—			7			7			117			—			124
Benefit for losses on unfunded lending commitments	—			—			—			—			—			(1		)	(1		)	(9		)	—			(10		)
Balance as of March 31, 2018	—			—			—			—			—			6			6			108			—			114
Combined allowance and reserve as of March 31, 2018	$	5,332		$	394		$	5,726		$	1,137		$	53		$	69		$	1,259		$	695		$	1		$	7,681

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results



	Three Months Ended March 31, 2018
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾⁽⁷⁾			Other⁽⁶⁾⁽⁷⁾			Total
Net interest income	$	3,558	$	1,615	$	536		$	9		$	5,718
Non-interest income	857		174		187			(27		)	1,191
Total net revenue (loss)	4,415		1,789		723			(18		)	6,909
Provision (benefit) for credit losses	1,456		233		(14		)	(1		)	1,674
Non-interest expense	2,039		1,000		403			131			3,573
Income (loss) from continuing operations before income taxes	920		556		334			(148		)	1,662
Income tax provision (benefit)	213		130		78			(102		)	319
Income (loss) from continuing operations, net of tax	$	707	$	426	$	256		$	(46	)	$	1,343

	Three Months Ended December 31, 2017
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾			Other⁽⁵⁾⁽⁶⁾			Total
Net interest income	$	3,568	$	1,636	$	566		$	43		$	5,813
Non-interest income	847		179		188			(14		)	1,200
Total net revenue	4,415		1,815		754			29			7,013
Provision for credit losses	1,486		340		100			—			1,926
Non-interest expense	2,108		1,081		437			153			3,779
Income (loss) from continuing operations before income taxes	821		394		217			(124		)	1,308
Income tax provision	297		144		79			1,650			2,170
Income (loss) from continuing operations, net of tax	$	524	$	250	$	138		$	(1,774	)	$	(862	)

	Three Months Ended March 31, 2017
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾			Other⁽⁶⁾			Total
Net interest income	$	3,346	$	1,517	$	566		$	45		$	5,474
Non-interest income	738		195		158			(30		)	1,061
Total net revenue	4,084		1,712		724			15			6,535
Provision (benefit) for credit losses	1,717		279		(2		)	(2		)	1,992
Non-interest expense	1,929		1,042		391			72			3,434
Income (loss) from continuing operations before income taxes	438		391		335			(55		)	1,109
Income tax provision (benefit)	167		143		122			(118		)	314
Income from continuing operations, net of tax	$	271	$	248	$	213		$	63		$	795

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business



																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Credit Card
Earnings:
Net interest income	$	3,558		$	3,568		$	3,440		$	3,294		$	3,346		—		6	%
Non-interest income	857			847			865			875			738			1	%	16
Total net revenue	4,415			4,415			4,305			4,169			4,084			—		8
Provision for credit losses	1,456			1,486			1,466			1,397			1,717			(2	)	(15	)
Non-interest expense	2,039			2,108			1,961			1,918			1,929			(3	)	6
Income from continuing operations before income taxes	920			821			878			854			438			12		110
Income tax provision	213			297			306			301			167			(28	)	28
Income from continuing operations, net of tax	$	707		$	524		$	572		$	553		$	271		35		161
Selected performance metrics:
Period-end loans held for investment	$	107,576		$	114,762		$	109,130		$	101,590		$	99,213		(6	)	8
Average loans held for investment	109,502			110,029			102,545			100,043			101,169			—		8
Average yield on loans held for investment⁽⁸⁾	15.24		%	15.13		%	15.58		%	15.14		%	14.99		%	11	bps	25	bps
Total net revenue margin⁽⁹⁾	16.13			16.05			16.79			16.67			16.14			8		(1	)
Net charge-off rate	5.03			4.99			4.51			5.02			5.02			4		1
30+ day performing delinquency rate	3.58			3.98			3.91			3.60			3.68			(40	)	(10	)
30+ day delinquency rate	3.59			3.99			3.92			3.62			3.71			(40	)	(12	)
Nonperforming loan rate⁽¹⁾	0.02			0.02			0.02			0.03			0.04			—		(2	)
Purchase volume⁽¹⁰⁾	$	86,545		$	95,659		$	84,505		$	83,079		$	73,197		(10	)%	18	%



																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Domestic Card
Earnings:
Net interest income	$	3,229		$	3,268		$	3,132		$	3,011		$	3,093		(1	)%	4	%
Non-interest income	774			781			787			802			699			(1	)	11
Total net revenue	4,003			4,049			3,919			3,813			3,792			(1	)	6
Provision for credit losses	1,380			1,402			1,417			1,327			1,637			(2	)	(16	)
Non-interest expense	1,832			1,880			1,754			1,727			1,717			(3	)	7
Income from continuing operations before income taxes	791			767			748			759			438			3		81
Income tax provision	184			280			273			277			160			(34	)	15
Income from continuing operations, net of tax	$	607		$	487		$	475		$	482		$	278		25		118
Selected performance metrics:
Period-end loans held for investment	$	98,535		$	105,293		$	99,981		$	92,866		$	91,092		(6	)	8
Average loans held for investment	100,450			101,087			93,729			91,769			93,034			(1	)	8
Average yield on loans held for investment⁽⁸⁾	15.10		%	15.08		%	15.51		%	15.07		%	15.01		%	2	bps	9	bps
Total net revenue margin⁽⁹⁾	15.94			16.03			16.72			16.62			16.30			(9	)	(36	)
Net charge-off rate	5.26			5.08			4.64			5.11			5.14			18		12
30+ day delinquency rate	3.57			4.01			3.94			3.63			3.71			(44	)	(14	)
Purchase volume⁽¹⁰⁾	$	79,194		$	87,287		$	76,806		$	75,781		$	66,950		(9	)%	18	%
Refreshed FICO scores:⁽¹¹⁾
Greater than 660	66		%	66		%	65		%	64		%	63		%	—		3
660 or below	34			34			35			36			37			—		(3	)
Total	100		%	100		%	100		%	100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business



																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Consumer Banking
Earnings:
Net interest income	$	1,615		$	1,636		$	1,649		$	1,578		$	1,517		(1	)%	6	%
Non-interest income	174			179			192			183			195			(3	)	(11	)
Total net revenue	1,789			1,815			1,841			1,761			1,712			(1	)	4
Provision for credit losses	233			340			293			268			279			(31	)	(16	)
Non-interest expense	1,000			1,081			1,051			1,059			1,042			(7	)	(4	)
Income from continuing operations before income taxes	556			394			497			434			391			41		42
Income tax provision	130			144			181			158			143			(10	)	(9	)
Income from continuing operations, net of tax	$	426		$	250		$	316		$	276		$	248		70		72
Selected performance metrics:
Period-end loans held for investment	$	74,674		$	75,078		$	75,564		$	74,973		$	73,982		(1	)	1
Average loans held for investment	74,997			75,289			75,363			74,469			73,331			—		2
Average yield on loans held for investment⁽⁸⁾	6.86		%	6.84		%	6.79		%	6.56		%	6.48		%	2	bps	38	bps
Auto loan originations	$	6,707		$	6,215		$	7,043		$	7,453		$	7,025		8	%	(5	)%
Period-end deposits	193,073			185,842			184,719			186,607			188,216			4		3
Average deposits	187,785			184,799			185,072			186,989			183,936			2		2
Average deposits interest rate	0.80		%	0.69		%	0.62		%	0.59		%	0.57		%	11	bps	23	bps
Net charge-off rate	1.19			1.66			1.47			1.25			1.19			(47	)	—
30+ day performing delinquency rate	3.86			4.76			4.10			3.79			3.45			(90	)	41
30+ day delinquency rate	4.27			5.34			4.61			4.33			3.93			(107	)	34
Nonperforming loan rate⁽¹⁾	0.61			0.78			0.71			0.75			0.64			(17	)	(3	)
Nonperforming asset rate⁽²⁾	0.70			0.91			0.88			0.96			0.92			(21	)	(22	)
Auto—At origination FICO scores:⁽¹²⁾
Greater than 660	51		%	51		%	51		%	51		%	51		%	—		—
621-660	18			18			18			18			18			—		—
620 or below	31			31			31			31			31			—		—
Total	100		%	100		%	100		%	100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business



																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions, except as noted)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Commercial Banking
Earnings:
Net interest income	$	536		$	566		$	560		$	569		$	566		(5	)%	(5	)%
Non-interest income	187			188			179			183			158			(1	)	18
Total net revenue⁽⁶⁾⁽⁷⁾	723			754			739			752			724			(4	)	—
Provision (benefit) for credit losses	(14		)	100			63			140			(2		)	**		**
Non-interest expense	403			437			394			381			391			(8	)	3
Income from continuing operations before income taxes	334			217			282			231			335			54		—
Income tax provision	78			79			103			85			122			(1	)	(36	)
Income from continuing operations, net of tax	$	256		$	138		$	179		$	146		$	213		86		20
Selected performance metrics:
Period-end loans held for investment	$	65,953		$	64,575		$	67,670		$	67,672		$	67,320		2		(2	)
Average loans held for investment	65,181			67,200			67,859			67,669			66,938			(3	)	(3	)
Average yield on loans held for investment⁽⁶⁾⁽⁸⁾	4.16		%	4.03		%	3.98		%	3.81		%	3.65		%	13	bps	51	bps
Period-end deposits	$	34,449		$	33,938		$	32,783		$	33,153		$	33,735		2	%	2	%
Average deposits	34,057			34,117			33,197			34,263			34,219			—		—
Average deposits interest rate	0.52		%	0.46		%	0.42		%	0.36		%	0.31		%	6	bps	21	bps
Net charge-off rate	0.11			0.85			0.96			0.80			0.14			(74	)	(3	)
Nonperforming loan rate⁽¹⁾	0.47			0.44			1.16			1.01			1.25			3		(78	)
Nonperforming asset rate⁽²⁾	0.49			0.52			1.22			1.04			1.27			(3	)	(78	)
Risk category:⁽¹³⁾
Noncriticized	$	62,773		$	61,162		$	63,501		$	63,802		$	63,390		3	%	(1	)%
Criticized performing	2,432			2,649			2,878			2,660			2,492			(8	)	(2	)
Criticized nonperforming	309			284			788			686			844			9		(63	)
PCI loans	439			480			503			524			594			(9	)	(26	)
Total commercial loans	$	65,953		$	64,575		$	67,670		$	67,672		$	67,320		2		(2	)
Risk category as a percentage of period-end loans held for investment:⁽¹³⁾
Noncriticized	95.1		%	94.7		%	93.8		%	94.3		%	94.2		%	40	bps	90	bps
Criticized performing	3.7			4.1			4.3			3.9			3.7			(40	)	—
Criticized nonperforming	0.5			0.4			1.2			1.0			1.2			10		(70	)
PCI loans	0.7			0.8			0.7			0.8			0.9			(10	)	(20	)
Total commercial loans	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Financial & Statistical Summary—Other and Total



																2018 Q1 vs.
	2018			2017			2017			2017			2017			2017		2017
(Dollars in millions)	Q1			Q4			Q3			Q2			Q1			Q4		Q1
Other⁽⁵⁾
Earnings:
Net interest income	$	9		$	43		$	51		$	32		$	45		(79	)%	(80	)%
Non-interest income	(27		)	(14		)	49			(10		)	(30		)	93		(10	)
Total net revenue (loss)⁽⁶⁾⁽⁷⁾	(18		)	29			100			22			15			**		**
Provision (benefit) for credit losses	(1		)	—			11			(5		)	(2		)	**		(50	)
Non-interest expense⁽¹⁴⁾	131			153			161			56			72			(14	)	82
Loss from continuing operations before income taxes	(148		)	(124		)	(72		)	(29		)	(55		)	19		169
Income tax provision (benefit)	(102		)	1,650			(142		)	(101		)	(118		)	**		(14	)
Income (loss) from continuing operations, net of tax	$	(46	)	$	(1,774	)	$	70		$	72		$	63		(97	)	**
Selected performance metrics:
Period-end loans held for investment	$	53		$	58		$	58		$	67		$	73		(9	)	(27	)
Average loans held for investment	46			48			55			60			67			(4	)	(31	)
Period-end deposits	23,325			23,922			21,560			20,003			19,231			(2	)	21
Average deposits	23,428			22,646			20,574			19,298			20,395			3		15
Total
Earnings:
Net interest income	$	5,718		$	5,813		$	5,700		$	5,473		$	5,474		(2	)%	4	%
Non-interest income	1,191			1,200			1,285			1,231			1,061			(1	)	12
Total net revenue	6,909			7,013			6,985			6,704			6,535			(1	)	6
Provision for credit losses	1,674			1,926			1,833			1,800			1,992			(13	)	(16	)
Non-interest expense	3,573			3,779			3,567			3,414			3,434			(5	)	4
Income from continuing operations before income taxes	1,662			1,308			1,585			1,490			1,109			27		50
Income tax provision	319			2,170			448			443			314			(85	)	2
Income (loss) from continuing operations, net of tax	$	1,343		$	(862	)	$	1,137		$	1,047		$	795		**		69
Selected performance metrics:
Period-end loans held for investment	$	248,256		$	254,473		$	252,422		$	244,302		$	240,588		(2	)	3
Average loans held for investment	249,726			252,566			245,822			242,241			241,505			(1	)	3
Period-end deposits	250,847			243,702			239,062			239,763			241,182			3		4
Average deposits	245,270			241,562			238,843			240,550			238,550			2		3

CAPITAL ONE FINANCIAL CORPORATION (COF)

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


⁽¹⁾	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.


⁽²⁾	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.


⁽³⁾	Primarily consists of the legacy loan portfolio of our discontinued GreenPoint mortgage operations.


⁽⁴⁾	Represents foreign currency translation adjustments and the net impact of loan transfers and sales where applicable.

⁽⁵⁾

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


⁽⁶⁾	Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate (21% for the first quarter of 2018 and 35% for all periods in 2017) and state taxes where applicable, with offsetting reductions to the Other category.

⁽⁷⁾

In the first quarter of 2018, we made a change in how revenue is measured in our Commercial Banking business to include the tax benefits of losses on certain investments. These tax benefits are included in revenue on a taxable-equivalent basis within our Commercial Banking business, with an offsetting reduction to the Other category. In addition, all revenue presented on a taxable-equivalent basis in our Commercial Banking business was impacted by the reduction of the federal tax rate set forth in the Tax Act. The net impact of the measurement change and the reduction of the federal tax rate was a decrease of $28 million in revenue in our Commercial Banking business in the first quarter of 2018, with an offsetting impact to the Other category.


⁽⁸⁾	Average yield on loans held for investment is calculated based on annualized interest income for the period divided by average loans held for investment during the period for the respective loan category. Annualized interest income is computed based on the effective yield of the respective loan category and does not include any allocations, such as funds transfer pricing.


⁽⁹⁾	Total net revenue margin is calculated based on annualized total net revenue for the period divided by average loans held for investment during the period for the respective loan category.


⁽¹⁰⁾	Purchase volume consists of purchase transactions, net of returns, for the period, and excludes cash advance and balance transfer transactions.

⁽¹¹⁾

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


⁽¹²⁾	Percentages represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.


⁽¹³⁾	Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities.


⁽¹⁴⁾	Includes charges incurred as a result of restructuring activities.


**	Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	Basel III Standardized Approach
(Dollars in millions, except as noted)	March 31, 2018			December 31, 2017			September 30, 2017			June 30, 2017			March 31, 2017
Regulatory Capital Metrics
Common equity excluding AOCI	$	46,441		$	45,296		$	46,415		$	45,459		$	44,614
Adjustments:
AOCI⁽²⁾⁽³⁾	(1,599		)	(808		)	(538		)	(593		)	(807		)
Goodwill, net of related deferred tax liabilities	(14,379		)	(14,380		)	(14,300		)	(14,299		)	(14,302		)
Intangible assets, net of related deferred tax liabilities⁽³⁾	(371		)	(330		)	(372		)	(419		)	(465		)
Other	620			258			93			78			121
Common equity Tier 1 capital	$	30,712		$	30,036		$	31,298		$	30,226		$	29,161
Tier 1 capital	$	35,073		$	34,396		$	35,657		$	34,585		$	33,519
Total capital⁽⁴⁾	42,264			41,962			43,272			42,101			40,979
Risk-weighted assets	291,352			292,225			292,041			283,231			279,302
Adjusted average assets⁽⁵⁾	347,287			348,424			340,579			335,248			336,990
Capital Ratios
Common equity Tier 1 capital⁽⁶⁾	10.5		%	10.3		%	10.7		%	10.7		%	10.4		%
Tier 1 capital⁽⁷⁾	12.0			11.8			12.2			12.2			12.0
Total capital⁽⁸⁾	14.5			14.4			14.8			14.9			14.7
Tier 1 leverage⁽⁵⁾	10.1			9.9			10.5			10.3			9.9
Tangible common equity (“TCE”)⁽⁹⁾	8.6			8.3			8.8			8.8			8.5

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of our adjusted results that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.



	2018									2017									2017
	Q1									Q4									Q1
(Dollars in millions, except per share data and as noted)	Reported Results			Adj.⁽¹⁰⁾			Adjusted Results			Reported Results			Adj.⁽¹⁰⁾			Adjusted Results			Reported Results			Adj.⁽¹⁰⁾			Adjusted Results
Selected income statement data:
Net interest income	$	5,718		—			$	5,718		$	5,813		$	11		$	5,824		$	5,474		$	33		$	5,507
Non-interest income	1,191			$	2		1,193			1,200			9			1,209			1,061			37			1,098
Total net revenue	6,909			2			6,911			7,013			20			7,033			6,535			70			6,605
Provision for credit losses	1,674			—			1,674			1,926			—			1,926			1,992			—			1,992
Non-interest expense	3,573			(17		)	3,556			3,779			(87		)	3,692			3,434			(29		)	3,405
Income from continuing operations before income taxes	1,662			19			1,681			1,308			107			1,415			1,109			99			1,208
Income tax provision (benefit)	319			4			323			2,170			(1,742		)	428			314			(1		)	313
Income (loss) from continuing operations, net of tax	1,343			15			1,358			(862		)	1,849			987			795			100			895
Income (loss) from discontinued operations, net of tax	3			—			3			(109		)	—			(109		)	15			—			15
Net income (loss)	1,346			15			1,361			(971		)	1,849			878			810			100			910
Dividends and undistributed earnings allocated to participating securities⁽¹¹⁾	(10		)	—			(10		)	(1		)	(5		)	(6		)	(5		)	—			(5		)
Preferred stock dividends	(52		)	—			(52		)	(80		)	—			(80		)	(53		)	—			(53		)
Net income (loss) available to common stockholders	$	1,284		$	15		$	1,299		$	(1,052	)	$	1,844		$	792		$	752		$	100		$	852
Selected performance metrics:
Diluted EPS⁽¹¹⁾	$	2.62		$	0.03		$	2.65		$	(2.17	)	$	3.79		$	1.62		$	1.54		$	0.21		$	1.75
Efficiency ratio	51.72		%	(27		)bps	51.45		%	53.89		%	(139		)bps	52.50		%	52.55		%	(100		)bps	51.55		%

Reconciliation of Non-GAAP Measures

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



	2018			2017			2017			2017			2017
(Dollars in millions)	Q1			Q4			Q3			Q2			Q1
Tangible Common Equity (Period-End)
Stockholders’ equity	$	49,203		$	48,730		$	50,154		$	49,137		$	48,040
Goodwill and intangible assets⁽¹²⁾	(15,063		)	(15,106		)	(15,249		)	(15,301		)	(15,360		)
Noncumulative perpetual preferred stock	(4,360		)	(4,360		)	(4,360		)	(4,360		)	(4,360		)
Tangible common equity	$	29,780		$	29,264		$	30,545		$	29,476		$	28,320
Tangible Common Equity (Average)
Stockholders’ equity	$	49,031		$	50,710		$	50,176		$	49,005		$	48,193
Goodwill and intangible assets⁽¹²⁾	(15,092		)	(15,223		)	(15,277		)	(15,336		)	(15,395		)
Noncumulative perpetual preferred stock	(4,360		)	(4,360		)	(4,360		)	(4,360		)	(4,360		)
Tangible common equity	$	29,579		$	31,127		$	30,539		$	29,309		$	28,438
Tangible Assets (Period-End)
Total assets	$	362,857		$	365,693		$	361,402		$	350,593		$	348,549
Goodwill and intangible assets⁽¹²⁾	(15,063		)	(15,106		)	(15,249		)	(15,301		)	(15,360		)
Tangible assets	$	347,794		$	350,587		$	346,153		$	335,292		$	333,189
Tangible Assets (Average)
Total assets	$	362,049		$	363,045		$	355,191		$	349,891		$	351,641
Goodwill and intangible assets⁽¹²⁾	(15,092		)	(15,223		)	(15,277		)	(15,336		)	(15,395		)
Tangible assets	$	346,957		$	347,822		$	339,914		$	334,555		$	336,246

__________


⁽¹⁾	Regulatory capital metrics and capital ratios as of March 31, 2018 are preliminary and therefore subject to change.


⁽²⁾	Amounts presented are net of tax.


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


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


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


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


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


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


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


⁽¹⁰⁾	Adjustments for the following periods consist of:



	2018		2017		2017
(Dollars in millions)	Q1		Q4		Q1
Restructuring charges	$	19	$	76	—
Impacts of the Tax Act	—		1,769		—
U.K. Payment Protection Insurance customer refund reserve (“U.K. PPI Reserve”)	—		31		$	99
Total	19		1,876		99
Income tax provision (benefit)	4		27		(1		)
Net income	$	15	$	1,849	$	100


⁽¹¹⁾	Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total.


⁽¹²⁾	Includes impact of related deferred taxes.

CAPITAL ONE FINANCIAL CORP - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - April 24, 2018

Attached files