Capital One Reports Third Quarter 2020 Net Income of $2.4 billion, or $5.06 per share

Rhea-AI Summary

Capital One Financial Corporation (NYSE: COF) reported a strong third quarter in 2020, achieving a net income of $2.4 billion, or $5.06 per diluted share, a significant turnaround from a net loss of $918 million in Q2 2020. Total net revenue rose 13% to $7.4 billion, while non-interest expenses decreased by 6% to $3.5 billion. The company saw a dramatic 92% reduction in credit loss provisions to $331 million. Notably, equity investment gains significantly contributed to profits, alongside successful reserve releases related to loans. Analysts view the results as a positive indicator of resilience amid economic challenges.

Positive

• Net income increased by $3.3 billion compared to second quarter results.
• Total net revenue rose 13% to $7.4 billion.
• Non-interest expenses decreased by 6% to $3.5 billion.
• Credit loss provisions decreased by 92% to $331 million.

Negative

• Period-end loans held for investment decreased by $3.3 billion, or 1%.
• Credit Card period-end loans decreased $3.7 billion, or 3%.
• Domestic Card period-end loans decreased $3.8 billion, or 4%.

MCLEAN, Va., Oct. 22, 2020 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2020 of $2.4 billion, or $5.06 per diluted common share, compared with a net loss of $918 million, or $2.21 per diluted common share in the second quarter of 2020, and with net income of $1.3 billion, or $2.69 per diluted common share in the third quarter of 2019. Excluding adjusting items, net income for the third quarter of 2020 was $5.05 per diluted common share⁽¹⁾.

"Capital One posted strong third quarter results. We are leaning in to resilience and we continue to be well served by the choices we made before the pandemic," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "Our investments to transform our technology are powering our response to the downturn, and positioning us for the acceleration of digital change driven by the pandemic."

Adjusting items in the third quarter of 2020, which are excluded from diluted earnings per share (EPS), efficiency ratio and operating efficiency ratio metrics (see Table 15 in our Financial Supplement for additional information):

(Dollars in millions, except per share data)	Pre-Tax Impact			Diluted EPS Impact
U.K. Payment Protection Insurance customer refund reserve release ("U.K. PPI Reserve")	$	36		$	0.08
Legal reserve builds	(40)			(0.06)
Cybersecurity Incident expenses, net of insurance	(6)			(0.01)
The quarter included the following notable items:
(Dollars in millions, except per share data)	Pre-Tax Impact			Diluted EPS Impact
Equity investment gain	$	470		$	0.79
Allowance release associated with partnership loans moving to held-for-sale	327			0.54

All comparisons below are for the third quarter of 2020 compared with the second quarter of 2020 unless otherwise noted.

Third Quarter 2020 Income Statement Summary:

• Total net revenue increased 13 percent to $7.4 billion.
• Total non-interest expense decreased 6 percent to $3.5 billion:
• 4 percent increase in marketing.
• 7 percent decrease in operating expenses.
• Pre-provision earnings increased 38 percent to $3.8 billion⁽²⁾.
• Provision for credit losses decreased 92 percent to $331 million:
• Net charge-offs of $1.1 billion.
• $742 million reserve release.
• Net interest margin of 5.68 percent, decreased 10 basis points.
• Efficiency ratio of 48.07 percent.
• Efficiency ratio excluding adjusting items of 47.68 percent⁽¹⁾.
• Operating efficiency ratio of 44.24 percent.
• Operating efficiency ratio excluding adjusting items of 43.83 percent⁽¹⁾.

Third Quarter 2020 Balance Sheet Summary:

• Common equity Tier 1 capital ratio under Basel III Standardized Approach of 13.0 percent at September 30, 2020.
• Period-end loans held for investment in the quarter decreased $3.3 billion, or 1 percent, to $248.2 billion.
• Credit Card period-end loans decreased $3.7 billion, or 3 percent, to $103.6 billion.
• Domestic Card period-end loans decreased $3.8 billion, or 4 percent, to $95.5 billion.
• Consumer Banking period-end loans increased $2.0 billion, or 3 percent, to $68.7 billion.
• Auto period-end loans increased $2.1 billion, or 3 percent, to $65.4 billion.
• Commercial Banking period-end loans decreased $1.6 billion, or 2 percent, to $75.9 billion.
• Average loans held for investment in the quarter decreased $3.8 billion, or 2 percent, to $249.5 billion.
• Credit Card average loans decreased $3.4 billion, or 3 percent, to $105.4 billion.
• Domestic Card average loans decreased $3.7 billion, or 4 percent, to $97.3 billion.
• Consumer Banking average loans increased $3.0 billion, or 5 percent, to $67.8 billion.
• Auto average loans increased $2.7 billion, or 4 percent, to $64.5 billion.
• Commercial Banking average loans decreased $3.4 billion, or 4 percent, to $76.3 billion.
• Period-end total deposits increased $1.5 billion, or less than 1 percent, to $305.7 billion, while average deposits increased $17.2 billion, or 6 percent, to $305.5 billion.
• Interest-bearing deposits rate paid decreased 25 basis points to 0.69 percent.

(1)

Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance, both in the current period and across periods. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

(2)

Pre-provision earnings is calculated based on the sum of net interest income and non-interest income, less non-interest expense for the period.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on October 22, 2020 at 5:00 PM Eastern Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company's home page (www.capitalone.com). Under "About," choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation of non-GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through November 5, 2020 at 5:00 PM Eastern Time.

Forward-Looking Statements

Certain statements in this release may constitute forward-looking statements, which involve a number of risks and uncertainties. Capital One cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information due to a number of factors, including those listed from time to time in reports that Capital One files with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2019.

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 $305.7 billion in deposits and $421.9 billion in total assets as of  September 30, 2020. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

 

Exhibit 99.2
Capital One Financial Corporation
Financial Supplement(1)(2)
Third Quarter 2020
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	7
	Table 5:	Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)	10
	Table 6:	Average Balances, Net Interest Income and Net Interest Margin	11
	Table 7:	Loan Information and Performance Statistics	12
	Table 8:	Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity	15
Business Segment Results
	Table 9:	Financial Summary—Business Segment Results	17
	Table 10:	Financial & Statistical Summary—Credit Card Business	18
	Table 11:	Financial & Statistical Summary—Consumer Banking Business	20
	Table 12:	Financial & Statistical Summary—Commercial Banking Business	21
	Table 13:	Financial & Statistical Summary—Other and Total	22
Other
	Table 14:	Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)	23
	Table 15:	Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures	24
__________
(1)	The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Quarterly Report on Form 10-Q for the period ended September 30, 2020 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
																						2020 Q3 vs.						Nine Months Ended September 30,
(Dollars in millions, except per share data and as noted)		2020				2020				2020				2019				2019				2020			2019											2020 vs.
		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Income Statement
Net interest income		$	5,555			$	5,460			$	6,025			$	6,066			$	5,737			2	%		(3)	%		$	17,040			$	17,274			(1)	%
Non-interest income		1,826				1,096				1,224				1,361				1,222				67			49			4,146				3,892				7
Total net revenue(1)		7,381				6,556				7,249				7,427				6,959				13			6			21,186				21,166				—
Provision for credit losses		331				4,246				5,423				1,818				1,383				(92)			(76)			10,000				4,418				126
Non-interest expense:
Marketing		283				273				491				710				501				4			(44)			1,047				1,564				(33)
Operating expense		3,265				3,497				3,238				3,451				3,371				(7)			(3)			10,000				9,758				2
Total non-interest expense		3,548				3,770				3,729				4,161				3,872				(6)			(8)			11,047				11,322				(2)
Income (loss) from continuing operations before income taxes		3,502				(1,460)				(1,903)				1,448				1,704				**			106			139				5,426				(97)
Income tax provision (benefit)		1,096				(543)				(563)				270				375				**			192			(10)				1,071				**
Income (loss) from continuing operations, net of tax		2,406				(917)				(1,340)				1,178				1,329				**			81			149				4,355				(97)
Income (loss) from discontinued operations, net of tax		—				(1)				—				(2)				4				**			**			(1)				15				**
Net income (loss)		2,406				(918)				(1,340)				1,176				1,333				**			80			148				4,370				(97)
Dividends and undistributed earnings allocated to participating securities(2)		(20)				(1)				(3)				(7)				(10)				**			100			(5)				(34)				(85)
Preferred stock dividends		(67)				(90)				(55)				(97)				(53)				(26)			26			(212)				(185)				15
Issuance cost for redeemed preferred stock(3)		—				—				(22)				(31)				—				—			—			(22)				—				**
Net income (loss) available to common stockholders		$	2,319			$	(1,009)			$	(1,420)			$	1,041			$	1,270			**			83			$	(91)			$	4,151			**
Common Share Statistics
Basic earnings per common share:(2)
Net income (loss) from continuing operations		$	5.07			$	(2.21)			$	(3.10)			$	2.26			$	2.70			**			88	%		$	(0.20)			$	8.80			**
Income from discontinued operations		—				—				—				—				0.01				—			**			—				0.03				**
Net income (loss) per basic common share		$	5.07			$	(2.21)			$	(3.10)			$	2.26			$	2.71			**			87			$	(0.20)			$	8.83			**
Diluted earnings per common share:(2)
Net income (loss) from continuing operations		$	5.06			$	(2.21)			$	(3.10)			$	2.25			$	2.68			**			89			$	(0.20)			$	8.76			**
Income from discontinued operations		—				—				—				—				0.01				—			**			—				0.03				**
Net income (loss) per diluted common share		$	5.06			$	(2.21)			$	(3.10)			$	2.25			$	2.69			**			88			$	(0.20)			$	8.79			**
Weighted-average common shares outstanding (in millions):
Basic		457.8				456.7				457.6				460.9				469.5				—			(2)			457.4				469.9				(3)	%
Diluted		458.5				456.7				457.6				463.4				471.8				—			(3)			457.4				472.1				(3)
Common shares outstanding (period-end, in millions)		457.4				456.3				455.3				456.6				465.7				—			(2)			457.4				465.7				(2)
Dividends declared and paid per common share		$	0.10			$	0.40			$	0.40			$	0.40			$	0.40			(75)	%		(75)			$	0.90			$	1.20			(25)
Tangible book value per common share (period-end)(4)		83.67				78.82				80.68				83.72				80.46				6			4			83.67				80.46				4
																						2020 Q3 vs.						Nine Months Ended September 30,
(Dollars in millions)		2020				2020				2020				2019				2019				2020			2019											2020 vs.
		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Balance Sheet (Period-End)
Loans held for investment		$	248,223			$	251,512			$	262,990			$	265,809			$	249,355			(1)	%		—			$	248,223			$	249,355			—
Interest-earning assets		390,040				389,829				364,472				355,202				344,643				—			13	%		390,040				344,643				13	%
Total assets		421,883				421,296				396,878				390,365				378,810				—			11			421,883				378,810				11
Interest-bearing deposits		276,092				275,183				245,142				239,209				234,084				—			18			276,092				234,084				18
Total deposits		305,725				304,238				269,689				262,697				257,148				—			19			305,725				257,148				19
Borrowings		42,795				44,900				55,681				55,697				50,149				(5)			(15)			42,795				50,149				(15)
Common equity		53,093				50,835				51,620				53,157				52,412				4			1			53,093				52,412				1
Total stockholders' equity		58,424				56,045				56,830				58,011				58,235				4			—			58,424				58,235				—
Balance Sheet (Average Balances)
Loans held for investment		$	249,511			$	253,358			$	262,889			$	258,870			$	246,147			(2)	%		1	%		$	255,232			$	243,602			5	%
Interest-earning assets		391,451				378,145				355,347				349,150				340,949				4			15			375,041				338,936				11
Total assets		422,854				411,075				390,380				383,162				374,905				3			13			408,233				372,148				10
Interest-bearing deposits		276,339				261,256				241,115				236,250				232,063				6			19			259,631				230,045				13
Total deposits		305,516				288,344				264,653				260,040				255,082				6			20			286,242				253,389				13
Borrowings		44,161				49,827				51,795				51,442				49,413				(11)			(11)			48,577				50,804				(4)
Common equity		51,995				52,413				53,186				52,641				52,566				(1)			(1)			52,529				50,393				4
Total stockholders' equity		57,223				57,623				58,568				58,148				57,245				(1)			—			57,802				54,861				5

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 2: Selected Metrics—Consolidated
																						2020 Q3 vs.						Nine Months Ended September 30,
(Dollars in millions, except as noted)		2020				2020				2020				2019				2019				2020			2019											2020 vs.
		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Performance Metrics
Net interest income growth (period over period)		2		%		(9)		%		(1)		%		6		%		—				**			**			(1)		%		1		%		**
Non-interest income growth (period over period)		67				(10)				(10)				11				(11)		%		**			**			7				(3)				**
Total net revenue growth (period over period)		13				(10)				(2)				7				(2)				**			**			—				—				**
Total net revenue margin(5)		7.54				6.93				8.16				8.51				8.16				61	bps		(62)	bps		7.53				8.33				(80)	bps
Net interest margin(6)		5.68				5.78				6.78				6.95				6.73				(10)			(105)			6.06				6.80				(74)
Return on average assets		2.28				(0.89)				(1.37)				1.23				1.42				317			86			0.05				1.56				(151)
Return on average tangible assets(7)		2.36				(0.93)				(1.43)				1.28				1.48				329			88			0.05				1.63				(158)
Return on average common equity(8)		17.84				(7.69)				(10.68)				7.93				9.63				**			8	%		(0.23)				10.94				**
Return on average tangible common equity(9)		24.98				(10.74)				(14.85)				11.07				13.45				**			12			(0.32)				15.54				**
Non-interest expense as a percentage of average loans held for investment		5.69				5.95				5.67				6.43				6.29				(26)			(60)	bps		5.77				6.20				(43)
Efficiency ratio(10)		48.07				57.50				51.44				56.03				55.64				(9)	%		(8)	%		52.14				53.49				(135)
Operating efficiency ratio(11)		44.24				53.34				44.67				46.47				48.44				(9)			(4)			47.20				46.10				110
Effective income tax rate for continuing operations		31.3				37.2				29.6				18.6				22.0				(6)			9			(7.2)				19.7				(27)	%
Employees (period-end, in thousands)		52.5				53.1				52.1				51.9				52.1				(1)			1			52.5				52.1				1
Credit Quality Metrics
Allowance for credit losses		$	16,129			$	16,832			$	14,073			$	7,208			$	7,037			(4)	%		129	%		$	16,129			$	7,037			129	%
Allowance coverage ratio		6.50		%		6.69		%		5.35		%		2.71		%		2.82		%		(19)	bps		368	bps		6.50		%		2.82		%		368	bps
Net charge-offs		$	1,073			$	1,505			$	1,791			$	1,683			$	1,462			(29)	%		(27)	%		$	4,369			$	4,569			(4)	%
Net charge-off rate(12)		1.72		%		2.38		%		2.72		%		2.60		%		2.38		%		(66)	bps		(66)	bps		2.28		%		2.50		%		(22)	bps
30+ day performing delinquency rate(13)		1.97				2.09				2.95				3.51				3.28				(12)			(131)			1.97				3.28				(131)
30+ day delinquency rate(13)		2.22				2.30				3.16				3.74				3.51				(8)			(129)			2.22				3.51				(129)
Capital Ratios(14)
Common equity Tier 1 capital		13.0		%		12.4		%		12.0		%		12.2		%		12.5		%		60	bps		50	bps		13.0		%		12.5		%		50	bps
Tier 1 capital		14.8				14.2				13.7				13.7				14.4				60			40			14.8				14.4				40
Total capital		17.3				16.7				16.1				16.1				16.8				60			50			17.3				16.8				50
Tier 1 leverage		10.6				10.3				11.0				11.7				11.9				30			(130)			10.6				11.9				(130)
Tangible common equity ("TCE")(15)		9.4				8.8				9.6				10.2				10.3				60			(90)			9.4				10.3				(90)

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 3: Consolidated Statements of Income
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020				2020				2019				2019				2020			2019											2020 vs.
(Dollars in millions, except per share data and as noted)		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Interest income:
Loans, including loans held for sale		$	5,758			$	5,820			$	6,542			$	6,682			$	6,429			(1)	%		(10)	%		$	18,120			$	19,180			(6)	%
Investment securities		443				482				530				544				583				(8)			(24)			1,455				1,867				(22)
Other		14				16				37				44				63				(13)			(78)			67				196				(66)
Total interest income		6,215				6,318				7,109				7,270				7,075				(2)			(12)			19,642				21,243				(8)
Interest expense:
Deposits		476				611				731				832				901				(22)			(47)			1,818				2,588				(30)
Securitized debt obligations		43				56				99				118				123				(23)			(65)			198				405				(51)
Senior and subordinated notes		132				180				239				236				299				(27)			(56)			551				923				(40)
Other borrowings		9				11				15				18				15				(18)			(40)			35				53				(34)
Total interest expense		660				858				1,084				1,204				1,338				(23)			(51)			2,602				3,969				(34)
Net interest income		5,555				5,460				6,025				6,066				5,737				2			(3)			17,040				17,274				(1)
Provision for credit losses		331				4,246				5,423				1,818				1,383				(92)			(76)			10,000				4,418				126
Net interest income after provision for credit losses		5,224				1,214				602				4,248				4,354				**			20			7,040				12,856				(45)
Non-interest income:
Interchange fees, net		775				672				752				811				790				15			(2)			2,199				2,368				(7)
Service charges and other customer-related fees		320				258				327				342				283				24			13			905				988				(8)
Net securities gains (losses)		25				—				—				(18)				5				**			**			25				44				(43)
Other		706				166				145				226				144				**			**			1,017				492				107
Total non-interest income		1,826				1,096				1,224				1,361				1,222				67			49			4,146				3,892				7
Non-interest expense:
Salaries and associate benefits		1,719				1,704				1,627				1,652				1,605				1			7			5,050				4,736				7
Occupancy and equipment		506				523				517				565				519				(3)			(3)			1,546				1,533				1
Marketing		283				273				491				710				501				4			(44)			1,047				1,564				(33)
Professional services		327				304				287				318				314				8			4			918				919				—
Communications and data processing		310				308				302				346				312				1			(1)			920				944				(3)
Amortization of intangibles		14				16				22				28				25				(13)			(44)			52				84				(38)
Other(16)		389				642				483				542				596				(39)			(35)			1,514				1,542				(2)
Total non-interest expense		3,548				3,770				3,729				4,161				3,872				(6)			(8)			11,047				11,322				(2)
Income (loss) from continuing operations before income taxes		3,502				(1,460)				(1,903)				1,448				1,704				**			106			139				5,426				(97)
Income tax provision (benefit)		1,096				(543)				(563)				270				375				**			192			(10)				1,071				**
Income (loss) from continuing operations, net of tax		2,406				(917)				(1,340)				1,178				1,329				**			81			149				4,355				(97)
Income (loss) from discontinued operations, net of tax		—				(1)				—				(2)				4				**			**			(1)				15				**
Net income (loss)		2,406				(918)				(1,340)				1,176				1,333				**			80			148				4,370				(97)
Dividends and undistributed earnings allocated to participating securities(2)		(20)				(1)				(3)				(7)				(10)				**			100			(5)				(34)				(85)
Preferred stock dividends		(67)				(90)				(55)				(97)				(53)				(26)			26			(212)				(185)				15
Issuance cost for redeemed preferred stock(3)		—				—				(22)				(31)				—				—			—			(22)				—				**
Net income (loss) available to common stockholders		$	2,319			$	(1,009)			$	(1,420)			$	1,041			$	1,270			**			83			$	(91)			$	4,151			**
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020				2020				2019				2019				2020			2019											2020 vs.
(Dollars in millions, except per share data and as noted)		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Basic earnings per common share:(2)
Net income (loss) from continuing operations		$	5.07			$	(2.21)			$	(3.10)			$	2.26			$	2.70			**			88	%		$	(0.20)			$	8.80			**
Income from discontinued operations		—				—				—				—				0.01				—			**			—				0.03				**
Net income (loss) per basic common share		$	5.07			$	(2.21)			$	(3.10)			$	2.26			$	2.71			**			87			$	(0.20)			$	8.83			**
Diluted earnings per common share:(2)
Net income (loss) from continuing operations		$	5.06			$	(2.21)			$	(3.10)			$	2.25			$	2.68			**			89			$	(0.20)			$	8.76			**
Income from discontinued operations		—				—				—				—				0.01				—			**			—				0.03				**
Net income (loss) per diluted common share		$	5.06			$	(2.21)			$	(3.10)			$	2.25			$	2.69			**			88			$	(0.20)			$	8.79			**
Weighted-average common shares outstanding (in millions):
Basic common shares		457.8				456.7				457.6				460.9				469.5				—			(2)			457.4				469.9				(3)	%
Diluted common shares		458.5				456.7				457.6				463.4				471.8				—			(3)			457.4				472.1				(3)

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 4: Consolidated Balance Sheets
																						2020 Q3 vs.
		2020				2020				2020				2019				2019				2020			2019
(Dollars in millions)		Q3				Q2				Q1				Q4				Q3				Q2			Q3
Assets:
Cash and cash equivalents:
Cash and due from banks		$	4,267			$	4,583			$	4,545			$	4,129			$	4,452			(7)	%		(4)	%
Interest-bearing deposits and other short-term investments		39,839				51,235				20,391				9,278				12,668				(22)			**
Total cash and cash equivalents		44,106				55,818				24,936				13,407				17,120				(21)			158
Restricted cash for securitization investors		895				740				364				342				417				21			115
Investment securities:
Securities available for sale		99,853				87,859				81,423				79,213				46,168				14			116
Securities held to maturity		—				—				—				—				33,894				—			**
Total investment securities		99,853				87,859				81,423				79,213				80,062				14			25
Loans held for investment:
Unsecuritized loans held for investment		217,878				222,310				231,318				231,992				215,892				(2)			1
Loans held in consolidated trusts		30,345				29,202				31,672				33,817				33,463				4			(9)
Total loans held for investment		248,223				251,512				262,990				265,809				249,355				(1)			—
Allowance for credit losses		(16,129)				(16,832)				(14,073)				(7,208)				(7,037)				(4)			129
Net loans held for investment		232,094				234,680				248,917				258,601				242,318				(1)			(4)
Loans held for sale		3,433				711				1,056				400				1,245				**			176
Premises and equipment, net		4,333				4,324				4,336				4,378				4,311				—			1
Interest receivable		1,551				1,574				1,687				1,758				1,627				(1)			(5)
Goodwill		14,648				14,645				14,645				14,653				14,624				—			—
Other assets		20,970				20,945				19,514				17,613				17,086				—			23
Total assets		$	421,883			$	421,296			$	396,878			$	390,365			$	378,810			—			11
																						2020 Q3 vs.
		2020				2020				2020				2019				2019				2020			2019
(Dollars in millions)		Q3				Q2				Q1				Q4				Q3				Q2			Q3
Liabilities:
Interest payable		$	332			$	380			$	359			$	439			$	370			(13)	%		(10)	%
Deposits:
Non-interest-bearing deposits		29,633				29,055				24,547				23,488				23,064				2			28
Interest-bearing deposits		276,092				275,183				245,142				239,209				234,084				—			18
Total deposits		305,725				304,238				269,689				262,697				257,148				—			19
Securitized debt obligations		13,566				15,761				17,141				17,808				18,910				(14)			(28)
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase		702				573				399				314				464				23			51
Senior and subordinated notes		28,448				28,481				32,049				30,472				30,682				—			(7)
Other borrowings		79				85				6,092				7,103				93				(7)			(15)
Total other debt		29,229				29,139				38,540				37,889				31,239				—			(6)
Other liabilities		14,607				15,733				14,319				13,521				12,908				(7)			13
Total liabilities		363,459				365,251				340,048				332,354				320,575				—			13
Stockholders' equity:
Preferred stock		0				0				0				0				0				—			—
Common stock		7				7				7				7				7				—			—
Additional paid-in capital, net		33,793				33,556				33,450				32,980				33,826				1			—
Retained earnings		37,653				35,361				36,552				40,340				39,476				6			(5)
Accumulated other comprehensive income		3,833				3,981				3,679				1,156				453				(4)			**
Treasury stock, at cost		(16,862)				(16,860)				(16,858)				(16,472)				(15,527)				—			9
Total stockholders' equity		58,424				56,045				56,830				58,011				58,235				4			—
Total liabilities and stockholders' equity		$	421,883			$	421,296			$	396,878			$	390,365			$	378,810			—			11

 

 

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 $235 million in Q3 2020, $318 million in Q2 2020 and $389 million in Q1 2020 for credit card finance charges and fees charged-off as uncollectible, and by $365 million in Q4 2019 and $330 million in Q3 2019 for the estimated uncollectible amount of credit card 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)	On March 2, 2020, we redeemed all outstanding shares of our fixed rate 6.00% non-cumulative perpetual preferred stock Series B. The redemption increased our net loss available to common shareholders by $22 million in Q1 2020. On December 2, 2019, we redeemed all outstanding shares of our fixed rate 6.25% non-cumulative perpetual preferred stock Series C and fixed rate 6.70% non-cumulative perpetual preferred stock Series D. The redemption reduced our net income available to common shareholders by $31 million in Q4 2019.
(4)	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.
(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 (loss) 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 net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average common equity. 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 net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average tangible common equity ("TCE"). Our calculation of return on average TCE 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)	Operating efficiency ratio is calculated based on operating expense for the period divided by total net revenue for the period. We also provide an adjusted operating efficiency ratio, which is a non-GAAP measure. See "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for additional information on our non-GAAP measures.
(12)	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.
(13)	Metrics for Q3 2020, Q2 2020 and Q1 2020 include the impact of COVID-19 customer assistance programs where applicable.
(14)	Capital ratios as of the end of Q3 2020 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.
(15)	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.
(16)	Includes net Cybersecurity Incident expenses of $6 million in Q3 2020, $11 million in Q2 2020, $4 million in Q1 2020, $16 million in Q4 2019 and $22 million in Q3 2019, respectively.
**	Not meaningful.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 6: Average Balances, Net Interest Income and Net Interest Margin
		2020 Q3												2020 Q2																						2019 Q3
		Average Balance				Interest Income/ Expense				Yield/Rate				Average Balance								Interest Income/ Expense								Yield/Rate						Average Balance								Interest Income/ Expense								Yield/Rate
(Dollars in millions, except as noted)
Interest-earning assets:
Loans, including loans held for sale		$	250,525			$	5,758			9.19	%			$		254,402						$		5,820						9.15		%				$		247,419						$		6,429						10.39		%
Investment securities		91,777				443				1.93				81,095								482								2.38						80,762								583								2.88
Cash equivalents and other		49,149				14				0.11				42,648								16								0.15						12,768								63								2.00
Total interest-earning assets		$	391,451			$	6,215			6.35				$		378,145						$		6,318						6.68						$		340,949						$		7,075						8.30
Interest-bearing liabilities:
Interest-bearing deposits		$	276,339			$	476			0.69				$		261,256						$		611						0.94						$		232,063						$		901						1.55
Securitized debt obligations		15,032				43				1.14				16,432								56								1.37						16,750								123								2.94
Senior and subordinated notes		28,497				132				1.86				31,294								180								2.30						31,220								299								3.84
Other borrowings and liabilities		2,119				9				1.77				3,554								11								1.21						2,698								15								2.14
Total interest-bearing liabilities		$	321,987			$	660			0.82				$		312,536						$		858						1.10						$		282,731						$		1,338						1.89
Net interest income/spread						$	5,555			5.53												$		5,460						5.58														$		5,737						6.41
Impact of non-interest-bearing funding										0.15																				0.20																						0.32
Net interest margin										5.68	%																			5.78		%																				6.73		%
														Nine Months Ended September 30,
														2020																						2019
														Average Balance								Interest Income/ Expense								Yield/Rate						Average Balance								Interest Income/ Expense								Yield/Rate
(Dollars in millions, except as noted)
Interest-earning assets:
Loans, including loans held for sale														$		256,165						$		18,120						9.43		%				$		244,743						$		19,180						10.45		%
Investment securities														83,724								1,455								2.32						82,264								1,867								3.03
Cash equivalents and other														35,152								67								0.25						11,929								196								2.19
Total interest-earning assets														$		375,041						$		19,642						6.98						$		338,936						$		21,243						8.36
Interest-bearing liabilities:
Interest-bearing deposits														$		259,631						$		1,818						0.93						$		230,045						$		2,588						1.50
Securitized debt obligations														16,500								198								1.60						17,912								405								3.02
Senior and subordinated notes														30,371								551								2.42						30,897								923								3.98
Other borrowings and liabilities														3,147								35								1.50						3,228								53								2.19
Total interest-bearing liabilities														$		309,649						$		2,602						1.12						$		282,082						$		3,969						1.88
Net interest income/spread																						$		17,040						5.86														$		17,274						6.48
Impact of non-interest-bearing funding																														0.20																						0.32
Net interest margin																														6.06		%																				6.80		%

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 7: Loan Information and Performance Statistics
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020				2020				2019				2019				2020			2019			2020				2019				2020 vs.
(Dollars in millions, except as noted)		Q3				Q2				Q1				Q4				Q3				Q2			Q3											2019
Loans Held for Investment (Period-End)
Credit card:
Domestic credit card(7)		$	95,541			$	99,390			$	109,549			$	118,606			$	104,664			(4)	%		(9)	%		$	95,541			$	104,664			(9)	%
International card businesses		8,100				7,920				8,248				9,630				9,017				2			(10)			8,100				9,017				(10)
Total credit card(1)		103,641				107,310				117,797				128,236				113,681				(3)			(9)			103,641				113,681				(9)
Consumer banking:
Auto		65,394				63,319				61,364				60,362				59,278				3			10			65,394				59,278				10
Retail banking		3,294				3,393				2,669				2,703				2,737				(3)			20			3,294				2,737				20
Total consumer banking		68,688				66,712				64,033				63,065				62,015				3			11			68,688				62,015				11
Commercial banking:
Commercial and multifamily real estate		31,197				30,953				32,373				30,245				30,009				1			4			31,197				30,009				4
Commercial and industrial		44,697				46,537				48,787				44,263				43,650				(4)			2			44,697				43,650				2
Total commercial banking		75,894				77,490				81,160				74,508				73,659				(2)			3			75,894				73,659				3
Total loans held for investment		$	248,223			$	251,512			$	262,990			$	265,809			$	249,355			(1)			—			$	248,223			$	249,355			—
Loans Held for Investment (Average)
Credit card:
Domestic credit card		$	97,306			$	100,996			$	113,711			$	112,965			$	103,426			(4)	%		(6)	%		$	103,980			$	102,677			1	%
International card businesses		8,061				7,752				9,065				9,120				8,945				4			(10)			8,292				8,868				(6)
Total credit card(1)		105,367				108,748				122,776				122,085				112,371				(3)			(6)			112,272				111,545				1
Consumer banking:
Auto		64,476				61,798				61,005				59,884				58,517				4			10			62,434				57,282				9
Retail banking		3,346				3,053				2,666				2,712				2,752				10			22			3,023				2,790				8
Total consumer banking		67,822				64,851				63,671				62,596				61,269				5			11			65,457				60,072				9
Commercial banking:
Commercial and multifamily real estate		30,918				31,723				31,081				30,173				29,698				(3)			4			31,239				29,418				6
Commercial and industrial		45,404				48,036				45,361				44,016				42,807				(5)			6			46,264				42,474				9
Total commercial lending		76,322				79,759				76,442				74,189				72,505				(4)			5			77,503				71,892				8
Small-ticket commercial real estate		—				—				—				—				2				**			**			—				93				**
Total commercial banking		76,322				79,759				76,442				74,189				72,507				(4)			5			77,503				71,985				8
Total average loans held for investment		$	249,511			$	253,358			$	262,889			$	258,870			$	246,147			(2)			1			$	255,232			$	243,602			5
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020					2020			2019				2019				2020			2019			2020				2019				2020 vs.
		Q3				Q2					Q1			Q4				Q3				Q2			Q3											2019
Net Charge-Off Rates
Credit card:
Domestic credit card			3.64	%			4.53	%			4.68	%			4.32	%			4.12	%		(89)	bps		(48)	bps			4.31	%			4.67	%		(36)	bps
International card businesses			2.89				3.47				4.65				4.22				3.78			(58)			(89)				3.71				3.54			17
Total credit card			3.58				4.46				4.68				4.31				4.09			(88)			(51)				4.26				4.58			(32)
Consumer banking:
Auto			0.23				1.16				1.51				1.90				1.60			(93)			(137)				0.95				1.38			(43)
Retail banking			1.38				1.78				2.37				2.77				2.55			(40)			(117)				1.80				2.51			(71)
Total consumer banking			0.28				1.19				1.54				1.93				1.64			(91)			(136)				0.99				1.43			(44)
Commercial banking:
Commercial and multifamily real estate			0.41				0.09				—				—				0.02			32			39				0.17				0.01			16
Commercial and industrial			0.45				0.78				0.96				0.60				0.55			(33)			(10)				0.73				0.28			45
Total commercial banking			0.43				0.51				0.57				0.35				0.33			(8)			10				0.50				0.17			33
Total net charge-offs			1.72				2.38				2.72				2.60				2.38			(66)			(66)				2.28				2.50			(22)
30+ Day Performing Delinquency Rates(2)
Credit card:
Domestic credit card			2.21	%			2.74	%			3.69	%			3.93	%			3.71	%		(53)	bps		(150)	bps			2.21	%			3.71	%		(150)	bps
International card businesses			2.15				2.71				3.66				3.47				3.52			(56)			(137)				2.15				3.52			(137)
Total credit card			2.20				2.74				3.69				3.89				3.69			(54)			(149)				2.20				3.69			(149)
Consumer banking:
Auto			3.76				3.28				5.29				6.88				6.47			48			(271)				3.76				6.47			(271)
Retail banking			0.83				0.89				1.27				1.02				1.01			(6)			(18)				0.83				1.01			(18)
Total consumer banking			3.62				3.16				5.12				6.63				6.23			46			(261)				3.62				6.23			(261)
Nonperforming Loans and Nonperforming Assets Rates(3)(4)
Credit card:
International card businesses			0.25	%			0.29	%			0.29	%			0.26	%			0.25	%		(4)	bps		—				0.25	%			0.25	%		—
Total credit card			0.02				0.02				0.02				0.02				0.02			—			—				0.02				0.02			—
Consumer banking:
Auto			0.36				0.41				0.62				0.81				0.73			(5)			(37)	bps			0.36				0.73			(37)	bps
Retail banking			0.77				0.70				0.88				0.87				0.91			7			(14)				0.77				0.91			(14)
Total consumer banking			0.38				0.43				0.63				0.81				0.74			(5)			(36)				0.38				0.74			(36)
Commercial banking:
Commercial and multifamily real estate			0.58				0.54				0.22				0.12				0.12			4			46				0.58				0.12			46
Commercial and industrial			1.31				1.06				0.87				0.93				0.95			25			36				1.31				0.95			36
Total commercial banking			1.01				0.85				0.61				0.60				0.61			16			40				1.01				0.61			40
Total nonperforming loans			0.42				0.38				0.35				0.37				0.37			4			5				0.42				0.37			5
Total nonperforming assets			0.44				0.39				0.37				0.39				0.40			5			4				0.44				0.40			4

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 8: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity
		Three Months Ended September 30, 2020
		Credit Card												Consumer Banking
(Dollars in millions)		Domestic Card				International Card Businesses				Total Credit Card				Auto				Retail Banking				Total Consumer Banking				Commercial Banking				Total
Allowance for credit losses:
Balance as of June 30, 2020		$	11,569			$	522			$	12,091			$	2,726			$	112			$	2,838			$	1,903			$	16,832
Charge-offs		(1,198)				(98)				(1,296)				(280)				(15)				(295)				(88)				(1,679)
Recoveries		313				40				353				244				3				247				6				606
Net charge-offs		(885)				(58)				(943)				(36)				(12)				(48)				(82)				(1,073)
Provision (benefit) for credit losses		378				72				450				(43)				—				(43)				(51)				356
Allowance build (release) for credit losses		(507)				14				(493)				(79)				(12)				(91)				(133)				(717)
Other changes(5)		—				14				14				—				—				—				—				14
Balance as of September 30, 2020		11,062				550				11,612				2,647				100				2,747				1,770				16,129
Reserve for unfunded lending commitments:
Balance as of June 30, 2020		—				—				—				—				—				—				218				218
Benefit for losses on unfunded lending commitments		—				—				—				—				—				—				(23)				(23)
Balance as of September 30, 2020		—				—				—				—				—				—				195				195
Combined allowance and reserve as of September 30, 2020		$	11,062			$	550			$	11,612			$	2,647			$	100			$	2,747			$	1,965			$	16,324
		Nine Months Ended September 30, 2020
		Credit Card												Consumer Banking
(Dollars in millions)		Domestic Card				International Card Businesses				Total Credit Card				Auto				Retail Banking				Total Consumer Banking				Commercial Banking				Total
Allowance for credit losses:
Balance as of December 31, 2019		$	4,997			$	398			$	5,395			$	984			$	54			$	1,038			$	775			$	7,208
Cumulative effects from adoption of the current expected credit loss ("CECL") standard		2,237				4				2,241				477				25				502				102				2,845
Finance charge and fee reserve reclassification(1)		439				23				462				—				—				—				—				462
Balance as of January 1, 2020		7,673				425				8,098				1,461				79				1,540				877				10,515
Charge-offs		(4,406)				(351)				(4,757)				(1,155)				(52)				(1,207)				(303)				(6,267)
Recoveries		1,047				120				1,167				710				11				721				10				1,898
Net charge-offs		(3,359)				(231)				(3,590)				(445)				(41)				(486)				(293)				(4,369)
Provision for credit losses		6,748				348				7,096				1,631				62				1,693				1,186				9,975
Allowance build for credit losses		3,389				117				3,506				1,186				21				1,207				893				5,606
Other changes(5)		—				8				8				—				—				—				—				8
Balance as of September 30, 2020		11,062				550				11,612				2,647				100				2,747				1,770				16,129
Reserve for unfunded lending commitments:
Balance as of December 31, 2019		—				—				—				—				5				5				130				135
Cumulative effects from adoption of the CECL standard		—				—				—				—				(5)				(5)				42				37
Balance as of January 1, 2020		—				—				—				—				—				—				172				172
Provision for losses on unfunded lending commitments		—				—				—				—				—				—				23				23
Balance as of September 30, 2020		—				—				—				—				—				—				195				195
Combined allowance and reserve as of September 30, 2020		$	11,062			$	550			$	11,612			$	2,647			$	100			$	2,747			$	1,965			$	16,324

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 9: Financial Summary—Business Segment Results
		Three Months Ended September 30, 2020																				Nine Months Ended September 30, 2020
(Dollars in millions)		Credit Card				Consumer Banking				Commercial Banking(6)				Other(6)				Total				Credit Card				Consumer Banking				Commercial Banking(6)				Other(6)				Total
Net interest income (loss)		$	3,292			$	1,904			$	517			$	(158)			$	5,555			$	10,363			$	5,226			$	1,526			$	(75)			$	17,040
Non-interest income		1,013				107				237				469				1,826				2,769				330				655				392				4,146
Total net revenue		4,305				2,011				754				311				7,381				13,132				5,556				2,181				317				21,186
Provision (benefit) for credit losses		450				(43)				(74)				(2)				331				7,096				1,693				1,209				2				10,000
Non-interest expense		2,003				1,011				424				110				3,548				6,180				3,038				1,261				568				11,047
Income (loss) from continuing operations before income taxes		1,852				1,043				404				203				3,502				(144)				825				(289)				(253)				139
Income tax provision (benefit)		438				247				95				316				1,096				(34)				195				(69)				(102)				(10)
Income (loss) from continuing operations, net of tax		$	1,414			$	796			$	309			$	(113)			$	2,406			$	(110)			$	630			$	(220)			$	(151)			$	149
		Three Months Ended June 30, 2020
(Dollars in millions)		Credit Card				Consumer Banking				Commercial Banking(6)				Other(6)				Total
Net interest income (loss)		$	3,369			$	1,665			$	518			$	(92)			$	5,460
Non-interest income (loss)		845				97				180				(26)				1,096
Total net revenue (loss)		4,214				1,762				698				(118)				6,556
Provision (benefit) for credit losses		2,944				876				427				(1)				4,246
Non-interest expense		1,969				1,036				425				340				3,770
Loss from continuing operations before income taxes		(699)				(150)				(154)				(457)				(1,460)
Income tax benefit		(166)				(36)				(36)				(305)				(543)
Loss from continuing operations, net of tax		$	(533)			$	(114)			$	(118)			$	(152)			$	(917)
		Three Months Ended September 30, 2019																				Nine Months Ended September 30, 2019
(Dollars in millions)		Credit Card				Consumer Banking				Commercial Banking(6)				Other(6)				Total				Credit Card				Consumer Banking				Commercial Banking(6)				Other(6)				Total
Net interest income		$	3,546			$	1,682			$	486			$	23			$	5,737			$	10,667			$	5,070			$	1,489			$	48			$	17,274
Non-interest income (loss)		870				165				221				(34)				1,222				2,858				491				608				(65)				3,892
Total net revenue (loss)		4,416				1,847				707				(11)				6,959				13,525				5,561				2,097				(17)				21,166
Provision for credit losses		1,087				203				93				—				1,383				3,571				603				244				—				4,418
Non-interest expense		2,360				985				414				113				3,872				6,784				2,981				1,258				299				11,322
Income (loss) from continuing operations before income taxes		969				659				200				(124)				1,704				3,170				1,977				595				(316)				5,426
Income tax provision (benefit)		235				154				46				(60)				375				747				461				138				(275)				1,071
Income (loss) from continuing operations, net of tax		$	734			$	505			$	154			$	(64)			$	1,329			$	2,423			$	1,516			$	457			$	(41)			$	4,355

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 10: Financial & Statistical Summary—Credit Card Business
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020				2020				2019				2019				2020			2019											2020 vs.
(Dollars in millions, except as noted)		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Credit Card
Earnings:
Net interest income		$	3,292			$	3,369			$	3,702			$	3,794			$	3,546			(2)	%		(7)	%		$	10,363			$	10,667			(3)	%
Non-interest income		1,013				845				911				1,030				870				20			16			2,769				2,858				(3)
Total net revenue		4,305				4,214				4,613				4,824				4,416				2			(3)			13,132				13,525				(3)
Provision for credit losses		450				2,944				3,702				1,421				1,087				(85)			(59)			7,096				3,571				99
Non-interest expense		2,003				1,969				2,208				2,487				2,360				2			(15)			6,180				6,784				(9)
Income (loss) from continuing operations before income taxes		1,852				(699)				(1,297)				916				969				**			91			(144)				3,170				**
Income tax provision (benefit)		438				(166)				(306)				212				235				**			86			(34)				747				**
Income (loss) from continuing operations, net of tax		$	1,414			$	(533)			$	(991)			$	704			$	734			**			93			$	(110)			$	2,423			**
Selected performance metrics:
Period-end loans held for investment(1)(7)		$	103,641			$	107,310			$	117,797			$	128,236			$	113,681			(3)			(9)			$	103,641			$	113,681			(9)
Average loans held for investment(1)		105,367				108,748				122,776				122,085				112,371				(3)			(6)			112,272				111,545				1
Average yield on loans held for investment(8)		13.83		%		13.72		%		14.46		%		15.02		%		15.55		%		11	bps		(172)	bps		14.03		%		15.66		%		(163)	bps
Total net revenue margin(9)		16.34				15.50				15.03				15.80				15.72				84			62			15.59				16.17				(58)
Net charge-off rate		3.58				4.46				4.68				4.31				4.09				(88)			(51)			4.26				4.58				(32)
30+ day performing delinquency rate		2.20				2.74				3.69				3.89				3.69				(54)			(149)			2.20				3.69				(149)
30+ day delinquency rate		2.21				2.75				3.70				3.91				3.71				(54)			(150)			2.21				3.71				(150)
Nonperforming loan rate(3)		0.02				0.02				0.02				0.02				0.02				—			—			0.02				0.02				—
Purchase volume(10)		$	107,102			$	90,149			$	99,920			$	116,631			$	108,034			19	%		(1)	%		$	297,171			$	308,134			(4)	%
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020				2020				2019				2019				2020			2019											2020 vs.
(Dollars in millions, except as noted)		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Domestic Card
Earnings:
Net interest income		$	2,995			$	3,094			$	3,381			$	3,473			$	3,299			(3)	%		(9)	%		$	9,470			$	9,792			(3)	%
Non-interest income		952				795				842				962				878				20			8			2,589				2,722				(5)
Total net revenue		3,947				3,889				4,223				4,435				4,177				1			(6)			12,059				12,514				(4)
Provision for credit losses		378				2,906				3,464				1,346				1,010				(87)			(63)			6,748				3,325				103
Non-interest expense		1,802				1,776				1,984				2,249				2,076				1			(13)			5,562				6,059				(8)
Income (loss) from continuing operations before income taxes		1,767				(793)				(1,225)				840				1,091				**			62			(251)				3,130				**
Income tax provision (benefit)		419				(188)				(290)				196				254				**			65			(59)				729				**
Income (loss) from continuing operations, net of tax		$	1,348			$	(605)			$	(935)			$	644			$	837			**			61			$	(192)			$	2,401			**
Selected performance metrics:
Period-end loans held for investment(1)(7)		$	95,541			$	99,390			$	109,549			$	118,606			$	104,664			(4)			(9)			$	95,541			$	104,664			(9)
Average loans held for investment(1)		97,306				100,996				113,711				112,965				103,426				(4)			(6)			103,980				102,677				1
Average yield on loans held for investment(8)		13.57		%		13.52		%		14.30		%		14.91		%		15.74		%		5	bps		(217)	bps		13.82		%		15.67		%		(185)	bps
Total net revenue margin(9)		16.22				15.40				14.86				15.70				16.15				82			7			15.46				16.25				(79)
Net charge-off rate		3.64				4.53				4.68				4.32				4.12				(89)			(48)			4.31				4.67				(36)
30+ day performing delinquency rate		2.21				2.74				3.69				3.93				3.71				(53)			(150)			2.21				3.71				(150)
Purchase volume(10)		$	98,107			$	82,860			$	92,248			$	107,154			$	99,087			18	%		(1)	%		$	273,215			$	282,878			(3)	%
Refreshed FICO scores:(11)
Greater than 660		69		%		67		%		65		%		67		%		68		%		2			1			69		%		68		%		1
660 or below		31				33				35				33				32				(2)			(1)			31				32				(1)
Total		100		%		100		%		100		%		100		%		100		%								100		%		100		%

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 11: Financial & Statistical Summary—Consumer Banking Business
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020				2020				2019				2019				2020			2019											2020 vs.
(Dollars in millions, except as noted)		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Consumer Banking
Earnings:
Net interest income		$	1,904			$	1,665			$	1,657			$	1,662			$	1,682			14	%		13	%		$	5,226			$	5,070			3	%
Non-interest income		107				97				126				152				165				10			(35)			330				491				(33)
Total net revenue		2,011				1,762				1,783				1,814				1,847				14			9			5,556				5,561				—
Provision (benefit) for credit losses		(43)				876				860				335				203				**			**			1,693				603				181
Non-interest expense		1,011				1,036				991				1,110				985				(2)			3			3,038				2,981				2
Income (loss) from continuing operations before income taxes		1,043				(150)				(68)				369				659				**			58			825				1,977				(58)
Income tax provision (benefit)		247				(36)				(16)				86				154				**			60			195				461				(58)
Income (loss) from continuing operations, net of tax		$	796			$	(114)			$	(52)			$	283			$	505			**			58			$	630			$	1,516			(58)
Selected performance metrics:
Period-end loans held for investment		$	68,688			$	66,712			$	64,033			$	63,065			$	62,015			3			11			$	68,688			$	62,015			11
Average loans held for investment		67,822				64,851				63,671				62,596				61,269				5			11			65,457				60,072				9
Average yield on loans held for investment(8)		8.36		%		8.41		%		8.46		%		8.51		%		8.47		%		(5)	bps		(11)	bps		8.41		%		8.33		%		8	bps
Auto loan originations		$	8,979			$	8,292			$	7,640			$	7,527			$	8,175			8	%		10	%		$	24,910			$	21,723			15	%
Period-end deposits		249,684				246,804				217,607				213,099				206,423				1			21			249,684				206,423				21
Average deposits		248,418				232,293				215,071				209,783				204,933				7			21			231,988				203,404				14
Average deposits interest rate		0.66		%		0.89		%		1.06		%		1.20		%		1.31		%		(23)	bps		(65)	bps		0.86		%		1.25		%		(39)	bps
Net charge-off rate		0.28				1.19				1.54				1.93				1.64				(91)			(136)			0.99				1.43				(44)
30+ day performing delinquency rate		3.62				3.16				5.12				6.63				6.23				46			(261)			3.62				6.23				(261)
30+ day delinquency rate		3.90				3.48				5.65				7.34				6.86				42			(296)			3.90				6.86				(296)
Nonperforming loan rate(3)		0.38				0.43				0.63				0.81				0.74				(5)			(36)			0.38				0.74				(36)
Nonperforming asset rate(4)		0.43				0.46				0.71				0.91				0.83				(3)			(40)			0.43				0.83				(40)
Auto—At origination FICO scores:(12)
Greater than 660		46		%		46		%		47		%		48		%		48		%		—			(2)	%		46		%		48		%		(2)	%
621 - 660		20				20				20				20				20				—			—			20				20				—
620 or below		34				34				33				32				32				—			2			34				32				2
Total		100		%		100		%		100		%		100		%		100		%								100		%		100		%

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 12: Financial & Statistical Summary—Commercial Banking Business
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020				2020				2019				2019				2020			2019											2020 vs.
(Dollars in millions, except as noted)		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Commercial Banking
Earnings:
Net interest income		$	517			$	518			$	491			$	494			$	486			—			6	%		$	1,526			$	1,489			2	%
Non-interest income		237				180				238				223				221				32	%		7			655				608				8
Total net revenue(6)		754				698				729				717				707				8			7			2,181				2,097				4
Provision (benefit) for credit losses		(74)				427				856				62				93				**			**			1,209				244				**
Non-interest expense		424				425				412				441				414				—			2			1,261				1,258				—
Income (loss) from continuing operations before income taxes		404				(154)				(539)				214				200				**			102			(289)				595				**
Income tax provision (benefit)		95				(36)				(128)				50				46				**			107			(69)				138				**
Income (loss) from continuing operations, net of tax		$	309			$	(118)			$	(411)			$	164			$	154			**			101			$	(220)			$	457			**
Selected performance metrics:
Period-end loans held for investment		$	75,894			$	77,490			$	81,160			$	74,508			$	73,659			(2)			3			$	75,894			$	73,659			3
Average loans held for investment		76,322				79,759				76,442				74,189				72,507				(4)			5			77,503				71,985				8
Average yield on loans held for investment(6)(8)		2.82		%		3.00		%		3.88		%		4.22		%		4.45		%		(18)	bps		(163)	bps		3.23		%		4.61		%		(138)	bps
Period-end deposits		$	36,783			$	35,669			$	32,822			$	32,134			$	30,923			3	%		19	%		$	36,783			$	30,923			19	%
Average deposits		36,278				34,635				32,238				32,034				30,693				5			18			34,391				30,957				11
Average deposits interest rate		0.25		%		0.30		%		0.89		%		1.10		%		1.25		%		(5)	bps		(100)	bps		0.47		%		1.21		%		(74)	bps
Net charge-off rate		0.43				0.51				0.57				0.35				0.33				(8)			10			0.50				0.17				33
Nonperforming loan rate(3)		1.01				0.85				0.61				0.60				0.61				16			40			1.01				0.61				40
Nonperforming asset rate(4)		1.01				0.85				0.61				0.60				0.61				16			40			1.01				0.61				40
Risk category:(13)
Noncriticized		$	68,533			$	70,881			$	77,714			$	71,848			$	71,144			(3)	%		(4)	%		$	68,533			$	71,144			(4)	%
Criticized performing		6,593				5,949				2,952				2,181				2,035				11			**			6,593				2,035				**
Criticized nonperforming		768				660				494				448				449				16			71			768				449				71
PCI loans		—				—				—				31				31				—			**			—				31				**
Total commercial banking loans		$	75,894			$	77,490			$	81,160			$	74,508			$	73,659			(2)			3			$	75,894			$	73,659			3
Risk category as a percentage of period-end loans held for investment:(13)
Noncriticized		90.3		%		91.4		%		95.8		%		96.5		%		96.6		%		(110)	bps		(630)	bps		90.3		%		96.6		%		(630)	bps
Criticized performing		8.7				7.7				3.6				2.9				2.8				100			590			8.7				2.8				590
Criticized nonperforming		1.0				0.9				0.6				0.6				0.6				10			40			1.0				0.6				40
Total commercial banking loans		100.0		%		100.0		%		100.0		%		100.0		%		100.0		%								100.0		%		100.0		%

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 13: Financial & Statistical Summary—Other and Total
																						2020 Q3 vs.						Nine Months Ended September 30,
		2020				2020				2020				2019				2019				2020			2019											2020 vs.
(Dollars in millions)		Q3				Q2				Q1				Q4				Q3				Q2			Q3			2020				2019				2019
Other
Earnings:
Net interest income (loss)		$	(158)			$	(92)			$	175			$	116			$	23			72	%		**			$	(75)			$	48			**
Non-interest income (loss)		469				(26)				(51)				(44)				(34)				**			**			392				(65)				**
Total net revenue (loss)(6)		311				(118)				124				72				(11)				**			**			317				(17)				**
Provision (benefit) for credit losses		(2)				(1)				5				—				—				100			**			2				—				**
Non-interest expense(14)(15)		110				340				118				123				113				(68)			(3)	%		568				299				90	%
Income (loss) from continuing operations before income taxes		203				(457)				1				(51)				(124)				**			**			(253)				(316)				(20)
Income tax provision (benefit)		316				(305)				(113)				(78)				(60)				**			**			(102)				(275)				(63)
Income (loss) from continuing operations, net of tax		$	(113)			$	(152)			$	114			$	27			$	(64)			(26)			77			$	(151)			$	(41)			**
Selected performance metrics:
Period-end deposits		$	19,258			$	21,765			$	19,260			$	17,464			$	19,802			(12)			(3)			$	19,258			$	19,802			(3)
Average deposits		20,820				21,416				17,344				18,223				19,456				(3)			7			19,863				19,028				4
Total
Earnings:
Net interest income		$	5,555			$	5,460			$	6,025			$	6,066			$	5,737			2	%		(3)	%		$	17,040			$	17,274			(1)	%
Non-interest income		1,826				1,096				1,224				1,361				1,222				67			49			4,146				3,892				7
Total net revenue		7,381				6,556				7,249				7,427				6,959				13			6			21,186				21,166				—
Provision for credit losses		331				4,246				5,423				1,818				1,383				(92)			(76)			10,000				4,418				126
Non-interest expense		3,548				3,770				3,729				4,161				3,872				(6)			(8)			11,047				11,322				(2)
Income (loss) from continuing operations before income taxes		3,502				(1,460)				(1,903)				1,448				1,704				**			106			139				5,426				(97)
Income tax provision (benefit)		1,096				(543)				(563)				270				375				**			192			(10)				1,071				**
Income (loss) from continuing operations, net of tax		$	2,406			$	(917)			$	(1,340)			$	1,178			$	1,329			**			81			$	149			$	4,355			(97)
Selected performance metrics:
Period-end loans held for investment		$	248,223			$	251,512			$	262,990			$	265,809			$	249,355			(1)			—			$	248,223			$	249,355			—
Average loans held for investment		249,511				253,358				262,889				258,870				246,147				(2)			1			255,232				243,602				5
Period-end deposits		305,725				304,238				269,689				262,697				257,148				—			19			305,725				257,148				19
Average deposits		305,516				288,344				264,653				260,040				255,082				6			20			286,242				253,389				13

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 14: Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)
(1)	Concurrent with our adoption of the CECL standard in the first quarter of 2020, we reclassified our finance charge and fee reserve to our allowance for credit losses, with a corresponding increase to credit card loans held for investment.
(2)	Metrics for Q3 2020, Q2 2020 and Q1 2020 include the impact of COVID-19 customer assistance programs where applicable.
(3)	Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.
(4)	Nonperforming assets consist of nonperforming loans, repossessed assets 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, repossessed assets and other foreclosed assets.
(5)	Represents foreign currency translation adjustments.
(6)	Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reductions to the Other category.
(7)	We reclassified $2.1 billion in partnership loans to held for sale as of September 30, 2020.
(8)	Average yield on loans held for investment is calculated based on annualized interest income for the period divided by average loans held for investment during the period for the respective loan category. Annualized interest income is computed based on the effective yield of the respective loan category and does not include any allocations, such as funds transfer pricing.
(9)	Total net revenue margin is calculated based on annualized total net revenue for the period divided by average loans held for investment during the period for the respective loan category.
(10)	Purchase volume consists of purchase transactions, net of returns, for the period, and excludes cash advance and balance transfer transactions.
(11)	Percentages represent period-end loans held for investment in each credit score category. Domestic card credit scores generally represent FICO scores. These scores are obtained from one of the major credit bureaus at origination and are refreshed monthly thereafter. We approximate non-FICO credit scores to comparable FICO scores for consistency purposes. Balances for which no credit score is available or the credit score is invalid are included in the 660 or below category.
(12)	Percentages represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.
(13)	Criticized exposures correspond to the "Special Mention," "Substandard" and "Doubtful" asset categories defined by bank regulatory authorities.
(14)	Includes charges incurred as a result of restructuring activities.
(15)	Includes net Cybersecurity Incident expenses of $6 million in Q3 2020, $11 million in Q2 2020, $4 million in Q1 2020, $16 million in Q4 2019 and $22 million in Q3 2019, respectively.
**	Not meaningful.

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures(1)
		Basel III Standardized Approach
(Dollars in millions, except as noted)		September 30, 2020				June 30, 2020				March 31, 2020				December 31, 2019				September 30, 2019
Regulatory Capital Metrics
Common equity excluding AOCI		$	52,839			$	50,614			$	51,018			$	52,001			$	51,959
Adjustments:
AOCI, net of tax(2)		(122)				(145)				(170)				1,156				453
Goodwill, net of related deferred tax liabilities		(14,448)				(14,449)				(14,453)				(14,465)				(14,439)
Intangible assets, net of related deferred tax liabilities		(95)				(135)				(151)				(170)				(180)
Other(2)		—				—				—				(360)				(588)
Common equity Tier 1 capital		$	38,174			$	35,885			$	36,244			$	38,162			$	37,205
Tier 1 capital		$	43,505			$	41,094			$	41,453			$	43,015			$	43,028
Total capital(3)		50,954				48,508				48,775				50,350				50,174
Risk-weighted assets		293,790				290,222				302,871				313,155				298,130
Adjusted average assets(4)		409,602				398,062				377,360				368,511				360,266
Capital Ratios
Common equity Tier 1 capital(5)		13.0		%		12.4		%		12.0		%		12.2		%		12.5		%
Tier 1 capital(6)		14.8				14.2				13.7				13.7				14.4
Total capital(7)		17.3				16.7				16.1				16.1				16.8
Tier 1 leverage(4)		10.6				10.3				11.0				11.7				11.9
Tangible common equity ("TCE")(8)		9.4				8.8				9.6				10.2				10.3

 

 

Reconciliation of Non-GAAP Measures
The following non-GAAP measures consist of our adjusted results that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results. These adjusted results provide alternate measurements of our operating performance, both for the current period and trends across multiple periods. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.
		2020												2020												2020												Nine Months Ended
		Q3												Q2												Q1												September 30, 2020
(Dollars in millions, except per share data and as noted)		Reported Results				Adj.(9)				Adjusted Results				Reported Results				Adj.(9)				Adjusted Results				Reported Results				Adj.(9)				Adjusted Results				Reported Results				Adj.(9)				Adjusted Results
Selected income statement data:
Net interest income		$	5,555			$	(18)			$	5,537			$	5,460			—				$	5,460			$	6,025			—				$	6,025			$	17,040			$	(18)			$	17,022
Non-interest income		1,826				(18)				1,808				1,096				—				1,096				1,224				—				1,224				4,146				(18)				4,128
Total net revenue		7,381				(36)				7,345				6,556				—				6,556				7,249				—				7,249				21,186				(36)				21,150
Provision for credit losses		331				—				331				4,246				—				4,246				5,423				—				5,423				10,000				—				10,000
Non-interest expense		3,548				(46)				3,502				3,770				$	(276)			3,494				3,729				$	(49)			3,680				11,047				(371)				10,676
Income (loss) from continuing operations before income taxes		3,502				10				3,512				(1,460)				276				(1,184)				(1,903)				49				(1,854)				139				335				474
Income tax provision (benefit)		1,096				12				1,108				(543)				3				(540)				(563)				12				(551)				(10)				27				17
Income (loss) from continuing operations, net of tax		2,406				(2)				2,404				(917)				273				(644)				(1,340)				37				(1,303)				149				308				457
Income (loss) from discontinued operations, net of tax		—				—				—				(1)				—				(1)				—				—				—				(1)				—				(1)
Net income (loss)		2,406				(2)				2,404				(918)				273				(645)				(1,340)				37				(1,303)				148				308				456
Dividends and undistributed earnings allocated to participating securities(10)		(20)				—				(20)				(1)				—				(1)				(3)				—				(3)				(5)				—				(5)
Preferred stock dividends		(67)				—				(67)				(90)				—				(90)				(55)				—				(55)				(212)				—				(212)
Issuance cost for redeemed preferred stock		—				—				—				—				—				—				(22)				—				(22)				(22)				—				(22)
Net income (loss) available to common stockholders		$	2,319			$	(2)			$	2,317			$	(1,009)			$	273			$	(736)			$	(1,420)			$	37			$	(1,383)			$	(91)			$	308			$	217
Selected performance metrics:
Diluted EPS(10)		$	5.06			$	(0.01)			$	5.05			$	(2.21)			$	0.60			$	(1.61)			$	(3.10)			$	0.08			$	(3.02)			$	(0.20)			$	0.67			$	0.47
Efficiency ratio		48.07		%		(39)		bps		47.68		%		57.50		%		(421)		bps		53.29		%		51.44		%		(67)		bps		50.77		%		52.14		%		(166)		bps		50.48		%
Operating efficiency ratio		44.24				(41)				43.83				53.34				(421)				49.13				44.67				(68)				43.99				47.20				(167)				45.53
		2019												2019												2019												Nine Months Ended
		Q3												Q2												Q1												September 30, 2019
(Dollars in millions, except per share data and as noted)		Reported Results				Adj.(9)				Adjusted Results				Reported Results				Adj.(9)				Adjusted Results				Reported Results				Adj.(9)				Adjusted Results				Reported Results				Adj.(9)				Adjusted Results
Selected income statement data:
Net interest income		$	5,737			$	67			$	5,804			$	5,746			—				$	5,746			$	5,791			—				$	5,791			$	17,274			$	67			$	17,341
Non-interest income		1,222				73				1,295				1,378				$	1			1,379				1,292				—				1,292				3,892				74				3,966
Total net revenue		6,959				140				7,099				7,124				1				7,125				7,083				—				7,083				21,166				141				21,307
Provision for credit losses		1,383				—				1,383				1,342				—				1,342				1,693				—				1,693				4,418				—				4,418
Non-interest expense		3,872				(178)				3,694				3,779				(81)				3,698				3,671				$	(25)			3,646				11,322				(284)				11,038
Income from continuing operations before income taxes		1,704				318				2,022				2,003				82				2,085				1,719				25				1,744				5,426				425				5,851
Income tax provision		375				21				396				387				19				406				309				6				315				1,071				46				1,117
Income from continuing operations, net of tax		1,329				297				1,626				1,616				63				1,679				1,410				19				1,429				4,355				379				4,734
Income from discontinued operations, net of tax		4				—				4				9				—				9				2				—				2				15				—				15
Net income		1,333				297				1,630				1,625				63				1,688				1,412				19				1,431				4,370				379				4,749
Dividends and undistributed earnings allocated to participating securities(10)		(10)				(2)				(12)				(12)				(1)				(13)				(12)				—				(12)				(34)				(3)				(37)
Preferred stock dividends		(53)				—				(53)				(80)				—				(80)				(52)				—				(52)				(185)				—				(185)
Net income available to common stockholders		$	1,270			$	295			$	1,565			$	1,533			$	62			$	1,595			$	1,348			$	19			$	1,367			$	4,151			$	376			$	4,527
Selected performance metrics:
Diluted EPS(10)		$	2.69			$	0.63			$	3.32			$	3.24			$	0.13			$	3.37			$	2.86			$	0.04			$	2.90			$	8.79			$	0.80			$	9.59
Efficiency ratio		55.64		%		(360)		bps		52.04		%		53.05		%		(115)		bps		51.90		%		51.83		%		(35)		bps		51.48		%		53.49		%		(169)		bps		51.80		%
Operating efficiency ratio		48.44				(346)				44.98				45.38				(114)				44.24				44.53				(35)				44.18				46.10				(164)				44.46

 

 

Reconciliation of Non-GAAP Measures
The following non-GAAP measures consist of TCE, tangible assets and metrics computed using these amounts, which include tangible book value per common share, return on average tangible assets, return on average TCE and TCE ratio. We consider these metrics to be key financial performance measures that management uses in assessing capital adequacy and the level of returns generated. While our non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly-titled measures reported by other companies. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.
														2020				2020				2020				2019				2019
(Dollars in millions)														Q3				Q2				Q1				Q4				Q3
Tangible Common Equity (Period-End)
Stockholders' equity														$	58,424			$	56,045			$	56,830			$	58,011			$	58,235
Goodwill and intangible assets(11)														(14,825)				(14,869)				(14,888)				(14,932)				(14,940)
Noncumulative perpetual preferred stock														(5,330)				(5,209)				(5,209)				(4,853)				(5,823)
Tangible common equity														$	38,269			$	35,967			$	36,733			$	38,226			$	37,472
Tangible Common Equity (Average)
Stockholders' equity														$	57,223			$	57,623			$	58,568			$	58,148			$	57,245
Goodwill and intangible assets(11)														(14,867)				(14,880)				(14,930)				(14,967)				(14,908)
Noncumulative perpetual preferred stock														(5,228)				(5,209)				(5,382)				(5,506)				(4,678)
Tangible common equity														$	37,128			$	37,534			$	38,256			$	37,675			$	37,659
Tangible Assets (Period-End)
Total assets														$	421,883			$	421,296			$	396,878			$	390,365			$	378,810
Goodwill and intangible assets(11)														(14,825)				(14,869)				(14,888)				(14,932)				(14,940)
Tangible assets														$	407,058			$	406,427			$	381,990			$	375,433			$	363,870
Tangible Assets (Average)
Total assets														$	422,854			$	411,075			$	390,380			$	383,162			$	374,905
Goodwill and intangible assets(11)														(14,867)				(14,880)				(14,930)				(14,967)				(14,908)
Tangible assets														$	407,987			$	396,195			$	375,450			$	368,195			$	359,997
__________
(1)        Regulatory capital metrics and capital ratios as of September 30, 2020 are preliminary and therefore subject to change.
(2)        In the first quarter of 2020, we elected to exclude from our regulatory capital ratios certain components of AOCI as permitted under the Tailoring Rules. As such, we revised our presentation herein to only include            those components of AOCI that impact our regulatory capital ratios.
(3)        Total capital equals the sum of Tier 1 capital and Tier 2 capital.
(4)        Adjusted average assets for the purpose of calculating our Tier 1 leverage ratio represents total average assets adjusted for amounts that are deducted from Tier 1 capital, predominately goodwill and intangible            assets. Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets.
(5)        Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on common equity Tier 1 capital divided by risk-weighted assets.
(6)        Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.
(7)        Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets.
(8)        TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets.
(9)        The adjustments for the following periods consist of:
		2020				2020				2020				Nine Months Ended				2019				2019				2019				Nine Months Ended
(Dollars in millions)		Q3				Q2				Q1				September 30, 2020				Q3				Q2				Q1				September 30, 2019
Legal reserve builds		$	40			$	265			$	45			$	350			—				—				—				—
U.K. Payment Protection Insurance customer refund reserve ("U.K. PPI Reserve")		(36)				—				—				(36)				$	212			—				—				$	212
Cybersecurity Incident expenses, net of insurance		6				11				4				21				22				—				—				22
Walmart launch and related integration expenses		—				—				—				—				84				$	54			$	25			163
Restructuring charges		—				—				—				—				—				28				—				28
Total		10				276				49				335				318				82				25				425
Income tax provision		12				3				12				27				21				19				6				46
Net income (loss)		$	(2)			$	273			$	37			$	308			$	297			$	63			$	19			$	379
(10)       Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the             year-to-date total.
(11)       Includes impact of related deferred taxes.

 

 

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SOURCE Capital One Financial Corporation