Exhibit

EX-99.2 3 q42018earningsrelease-ex992.htm EXHIBIT 99.2 Exhibit

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement⁽¹⁾⁽²⁾

Fourth 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
Other
	Table 14:	Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)	18
	Table 15:	Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures	19

__________


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

⁽²⁾

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

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated



																2018 Q4 vs.				Year Ended December 31,
(Dollars in millions, except per share data and as noted)	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions, except per share data and as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Income Statement
Net interest income	$	5,820		$	5,786		$	5,551		$	5,718		$	5,813		1	%	—		$	22,875		$	22,460		2	%
Non-interest income	1,193			1,176			1,641			1,191			1,200			1		(1	)%	5,201			4,777			9
Total net revenue⁽¹⁾	7,013			6,962			7,192			6,909			7,013			1		—		28,076			27,237			3
Provision for credit losses	1,638			1,268			1,276			1,674			1,926			29		(15	)	5,856			7,551			(22	)
Non-interest expense:
Marketing	831			504			425			414			460			65		81		2,174			1,670			30
Operating expenses	3,301			3,269			2,999			3,159			3,319			1		(1	)	12,728			12,524			2
Total non-interest expense	4,132			3,773			3,424			3,573			3,779			10		9		14,902			14,194			5
Income from continuing operations before income taxes	1,243			1,921			2,492			1,662			1,308			(35	)	(5	)	7,318			5,492			33
Income tax provision (benefit)	(21		)	420			575			319			2,170			**		**		1,293			3,375			(62	)
Income (loss) from continuing operations, net of tax	1,264			1,501			1,917			1,343			(862		)	(16	)	**		6,025			2,117			185
Income (loss) from discontinued operations, net of tax	(3		)	1			(11		)	3			(109		)	**		(97	)	(10		)	(135		)	(93	)
Net income (loss)	1,261			1,502			1,906			1,346			(971		)	(16	)	**		6,015			1,982			**
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(9		)	(9		)	(12		)	(10		)	(1		)	—		**		(40		)	(13		)	**
Preferred stock dividends	(80		)	(53		)	(80		)	(52		)	(80		)	51		—		(265		)	(265		)	—
Net income (loss) available to common stockholders	$	1,172		$	1,440		$	1,814		$	1,284		$	(1,052	)	(19	)	**		$	5,710		$	1,704		**
Common Share Statistics
Basic earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.50		$	3.01		$	3.76		$	2.63		$	(1.95	)	(17	)%	**		$	11.92		$	3.80		**
Income (loss) from discontinued operations	(0.01		)	—			(0.02		)	0.01			(0.22		)	**		(95	)%	(0.02		)	(0.28		)	(93	)%
Net income (loss) per basic common share	$	2.49		$	3.01		$	3.74		$	2.64		$	(2.17	)	(17	)	**		$	11.90		$	3.52		**
Diluted earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.49		$	2.99		$	3.73		$	2.61		$	(1.95	)	(17	)	**		$	11.84		$	3.76		**
Income (loss) from discontinued operations	(0.01		)	—			(0.02		)	0.01			(0.22		)	**		(95	)	(0.02		)	(0.27		)	(93	)
Net income (loss) per diluted common share	$	2.48		$	2.99		$	3.71		$	2.62		$	(2.17	)	(17	)	**		$	11.82		$	3.49		**
Weighted-average common shares outstanding (in millions):
Basic	470.0			477.8			485.1			486.9			485.7			(2	)	(3	)	479.9			484.2			(1	)
Diluted	472.7			480.9			488.3			490.8			485.7			(2	)	(3	)	483.1			488.6			(1	)
Common shares outstanding (period-end, in millions)	467.7			473.7			478.4			485.9			485.5			(1	)	(4	)	467.7			485.5			(4	)
Dividends declared and paid per common share	$	0.40		$	0.40		$	0.40		$	0.40		$	0.40		—		—		$	1.60		$	1.60		—
Tangible book value per common share (period-end)⁽³⁾	69.20			66.15			63.86			61.29			60.28			5		15		69.20			60.28			15



											2018 Q4 vs.				Year Ended December 31,
(Dollars in millions)	2018		2018		2018		2018		2017		2018		2017						2018 vs.
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4		2018		2017		2017
Balance Sheet (Period-End)
Loans held for investment	$	245,899	$	238,761	$	236,124	$	248,256	$	254,473	3	%	(3	)%	$	245,899	$	254,473	(3	)%
Interest-earning assets	341,293		331,293		332,167		332,251		334,124		3		2		341,293		334,124		2
Total assets	372,538		362,909		363,989		362,857		365,693		3		2		372,538		365,693		2
Interest-bearing deposits	226,281		222,356		222,605		224,671		217,298		2		4		226,281		217,298		4
Total deposits	249,764		247,195		248,225		250,847		243,702		1		2		249,764		243,702		2
Borrowings	58,905		52,205		53,310		50,693		60,281		13		(2	)	58,905		60,281		(2	)
Common equity	47,307		46,277		45,566		44,842		44,370		2		7		47,307		44,370		7
Total stockholders’ equity	51,668		50,638		49,926		49,203		48,730		2		6		51,668		48,730		6
Balance Sheet (Average Balances)
Loans held for investment	$	241,371	$	236,766	$	240,758	$	249,726	$	252,566	2	%	(4	)%	$	242,118	$	245,565	(1	)%
Interest-earning assets	334,714		330,272		333,495		330,183		330,742		1		1		332,738		322,330		3
Total assets	365,243		360,937		363,929		362,049		363,045		1		1		363,036		354,924		2
Interest-bearing deposits	222,827		221,431		223,079		219,670		215,258		1		4		221,760		213,949		4
Total deposits	247,663		246,720		248,790		245,270		241,562		—		3		247,117		239,882		3
Borrowings	53,994		51,684		52,333		54,588		58,109		4		(7	)	53,144		53,659		(1	)
Common equity	46,753		46,407		45,466		44,670		46,350		1		1		45,831		45,170		1
Total stockholders’ equity	51,114		50,768		49,827		49,031		50,710		1		1		50,192		49,530		1

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated



																2018 Q4 vs.				Year Ended December 31,
(Dollars in millions, except as noted)	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Performance Metrics
Net interest income growth (period over period)	1		%	4		%	(3		)%	(2		)%	2		%	**		**		2		%	8		%	**
Non-interest income growth (period over period)	1			(28		)	38			(1		)	(7		)	**		**		9			3			**
Total net revenue growth (period over period)	1			(3		)	4			(1		)	—			**		**		3			7			**
Total net revenue margin⁽⁴⁾	8.38			8.43			8.63			8.37			8.48			(5	)bps	(10	)bps	8.44			8.45			(1	)bps
Net interest margin⁽⁵⁾	6.96			7.01			6.66			6.93			7.03			(5	)	(7	)	6.87			6.97			(10	)
Return on average assets	1.38			1.66			2.11			1.48			(0.95		)	(28	)	233		1.66			0.60			106
Return on average tangible assets⁽⁶⁾	1.44			1.74			2.20			1.55			(0.99		)	(30	)	243		1.73			0.62			111
Return on average common equity⁽⁷⁾	10.05			12.40			16.06			11.47			(8.14		)	(2	)%	18	%	12.48			4.07			8	%
Return on average tangible common equity⁽⁸⁾	14.78			18.32			23.99			17.32			(12.12		)	(4	)	27		18.56			6.16			12
Non-interest expense as a percentage of average loans held for investment	6.85			6.37			5.69			5.72			5.98			48	bps	87	bps	6.15			5.78			37	bps
Efficiency ratio⁽⁹⁾	58.92			54.19			47.61			51.72			53.89			5	%	5	%	53.08			52.11			1	%
Operating efficiency ratio⁽¹⁰⁾	47.07			46.95			41.70			45.72			47.33			—		—		45.33			45.98			(1	)
Effective income tax rate for continuing operations	(1.7		)	21.9			23.1			19.2			165.9			(24	)	(168	)	17.7			61.5			(44	)
Employees (in thousands), period-end	47.6			47.6			47.8			47.9			49.3			—		(3	)	47.6			49.3			(3	)
Credit Quality Metrics
Allowance for loan and lease losses	$	7,220		$	7,219		$	7,368		$	7,567		$	7,502		—		(4	)%	$	7,220		$	7,502		(4	)%
Allowance as a percentage of loans held for investment	2.94		%	3.02		%	3.12		%	3.05		%	2.95		%	(8	)bps	(1	)bps	2.94		%	2.95		%	(1	)bps
Net charge-offs	$	1,610		$	1,425		$	1,459		$	1,618		$	1,828		13	%	(12	)%	$	6,112		$	6,562		(7	)%
Net charge-off rate⁽¹¹⁾	2.67		%	2.41		%	2.42		%	2.59		%	2.89		%	26	bps	(22	)bps	2.52		%	2.67		%	(15	)bps
30+ day performing delinquency rate	3.62			3.28			2.88			2.72			3.23			34		39		3.62			3.23			39
30+ day delinquency rate	3.84			3.48			3.05			2.91			3.48			36		36		3.84			3.48			36
Capital Ratios⁽¹²⁾
Common equity Tier 1 capital	11.2		%	11.2		%	11.1		%	10.5		%	10.3		%	—		90	bps	11.2		%	10.3		%	90	bps
Tier 1 capital	12.7			12.8			12.6			12.0			11.8			(10	)bps	90		12.7			11.8			90
Total capital	15.1			15.2			15.1			14.5			14.4			(10	)	70		15.1			14.4			70
Tier 1 leverage	10.7			10.6			10.3			10.1			9.9			10		80		10.7			9.9			80
Tangible common equity (“TCE”)⁽¹³⁾	9.1			9.0			8.8			8.6			8.3			10		80		9.1			8.3			80

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income



																2018 Q4 vs.				Year Ended December 31,
	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions, except per share data and as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Interest income:
Loans, including loans held for sale	$	6,358		$	6,247		$	5,989		$	6,134		$	6,133		2	%	4	%	$	24,728		$	23,388		6	%
Investment securities	627			593			539			452			431			6		45		2,211			1,711			29
Other	63			55			68			51			40			15		58		237			123			93
Total interest income	7,048			6,895			6,596			6,637			6,604			2		7		27,176			25,222			8
Interest expense:
Deposits	756			681			622			539			457			11		65		2,598			1,602			62
Securitized debt obligations	138			127			124			107			91			9		52		496			327			52
Senior and subordinated notes	297			288			289			251			209			3		42		1,125			731			54
Other borrowings	37			13			10			22			34			185		9		82			102			(20	)
Total interest expense	1,228			1,109			1,045			919			791			11		55		4,301			2,762			56
Net interest income	5,820			5,786			5,551			5,718			5,813			1		—		22,875			22,460			2
Provision for credit losses	1,638			1,268			1,276			1,674			1,926			29		(15	)	5,856			7,551			(22	)
Net interest income after provision for credit losses	4,182			4,518			4,275			4,044			3,887			(7	)	8		17,019			14,909			14
Non-interest income:
Interchange fees, net	743			714			723			643			665			4		12		2,823			2,573			10
Service charges and other customer-related fees	352			410			391			432			394			(14	)	(11	)	1,585			1,597			(1	)
Net securities gains (losses)	(20		)	(196		)	(1		)	8			1			(90	)	**		(209		)	65			**
Other	118			248			528			108			140			(52	)	(16	)	1,002			542			85
Total non-interest income	1,193			1,176			1,641			1,191			1,200			1		(1	)	5,201			4,777			9
Non-interest expense:
Salaries and associate benefits	1,345			1,432			1,430			1,520			1,521			(6	)	(12	)	5,727			5,899			(3	)
Occupancy and equipment	610			515			503			490			523			18		17		2,118			1,939			9
Marketing	831			504			425			414			460			65		81		2,174			1,670			30
Professional services	426			275			234			210			274			55		55		1,145			1,097			4
Communications and data processing	326			311			317			306			306			5		7		1,260			1,177			7
Amortization of intangibles	43			44			43			44			61			(2	)	(30	)	174			245			(29	)
Other	551			692			472			589			634			(20	)	(13	)	2,304			2,167			6
Total non-interest expense	4,132			3,773			3,424			3,573			3,779			10		9		14,902			14,194			5
Income from continuing operations before income taxes	1,243			1,921			2,492			1,662			1,308			(35	)	(5	)	7,318			5,492			33
Income tax provision (benefit)	(21		)	420			575			319			2,170			**		**		1,293			3,375			(62	)
Income (loss) from continuing operations, net of tax	1,264			1,501			1,917			1,343			(862		)	(16	)	**		6,025			2,117			185
Income (loss) from discontinued operations, net of tax	(3		)	1			(11		)	3			(109		)	**		(97	)	(10		)	(135		)	(93	)
Net income (loss)	1,261			1,502			1,906			1,346			(971		)	(16	)	**		6,015			1,982			**
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(9		)	(9		)	(12		)	(10		)	(1		)	—		**		(40		)	(13		)	**
Preferred stock dividends	(80		)	(53		)	(80		)	(52		)	(80		)	51		—		(265		)	(265		)	—
Net income (loss) available to common stockholders	$	1,172		$	1,440		$	1,814		$	1,284		$	(1,052	)	(19	)	**		$	5,710		$	1,704		**

																2018 Q4 vs.				Year Ended December 31,
	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions, except per share data and as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Basic earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.50		$	3.01		$	3.76		$	2.63		$	(1.95	)	(17	)%	**		$	11.92		$	3.80		**
Income (loss) from discontinued operations	(0.01		)	—			(0.02		)	0.01			(0.22		)	**		(95	)%	(0.02		)	(0.28		)	(93	)%
Net income (loss) per basic common share	$	2.49		$	3.01		$	3.74		$	2.64		$	(2.17	)	(17	)	**		$	11.90		$	3.52		**
Diluted earnings per common share:⁽²⁾
Net income (loss) from continuing operations	$	2.49		$	2.99		$	3.73		$	2.61		$	(1.95	)	(17	)	**		$	11.84		$	3.76		**
Income (loss) from discontinued operations	(0.01		)	—			(0.02		)	0.01			(0.22		)	**		(95	)	(0.02		)	(0.27		)	(93	)
Net income (loss) per diluted common share	$	2.48		$	2.99		$	3.71		$	2.62		$	(2.17	)	(17	)	**		$	11.82		$	3.49		**
Weighted-average common shares outstanding (in millions):
Basic common shares	470.0			477.8			485.1			486.9			485.7			(2	)	(3	)	479.9			484.2			(1	)
Diluted common shares	472.7			480.9			488.3			490.8			485.7			(2	)	(3	)	483.1			488.6			(1	)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets



																2018 Q4 vs.
	2018			2018			2018			2018			2017			2018		2017
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4
Assets:
Cash and cash equivalents:
Cash and due from banks	$	4,768		$	4,547		$	4,499		$	4,220		$	4,458		5	%	7	%
Interest-bearing deposits and other short-term investments	8,418			6,335			7,774			9,788			9,582			33		(12	)
Total cash and cash equivalents	13,186			10,882			12,273			14,008			14,040			21		(6	)
Restricted cash for securitization investors	303			746			1,023			309			312			(59	)	(3	)
Investment securities:
Securities available for sale	46,150			47,384			50,691			47,155			37,655			(3	)	23
Securities held to maturity	36,771			34,631			33,464			23,075			28,984			6		27
Total investment securities	82,921			82,015			84,155			70,230			66,639			1		24
Loans held for investment:
Unsecuritized loans held for investment	211,702			204,796			201,222			213,313			218,806			3		(3	)
Loans held in consolidated trusts	34,197			33,965			34,902			34,943			35,667			1		(4	)
Total loans held for investment	245,899			238,761			236,124			248,256			254,473			3		(3	)
Allowance for loan and lease losses	(7,220		)	(7,219		)	(7,368		)	(7,567		)	(7,502		)	—		(4	)
Net loans held for investment	238,679			231,542			228,756			240,689			246,971			3		(3	)
Loans held for sale, at lower of cost or fair value	1,192			1,402			1,480			1,498			971			(15	)	23
Premises and equipment, net	4,191			4,149			4,095			4,055			4,033			1		4
Interest receivable	1,614			1,518			1,493			1,496			1,536			6		5
Goodwill	14,544			14,513			14,531			14,536			14,533			—		—
Other assets	15,908			16,142			16,183			16,036			16,658			(1	)	(5	)
Total assets	$	372,538		$	362,909		$	363,989		$	362,857		$	365,693		3		2



																2018 Q4 vs.
	2018			2018			2018			2018			2017			2018		2017
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4
Liabilities:
Interest payable	$	458		$	391		$	450		$	353		$	413		17	%	11	%
Deposits:
Non-interest-bearing deposits	23,483			24,839			25,620			26,176			26,404			(5	)	(11	)
Interest-bearing deposits	226,281			222,356			222,605			224,671			217,298			2		4
Total deposits	249,764			247,195			248,225			250,847			243,702			1		2
Securitized debt obligations	18,307			18,649			19,649			18,665			20,010			(2	)	(9	)
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase	352			384			553			656			576			(8	)	(39	)
Senior and subordinated notes	30,826			31,291			32,920			31,051			30,755			(1	)	—
Other borrowings	9,420			1,881			188			321			8,940			**		5
Total other debt	40,598			33,556			33,661			32,028			40,271			21		1
Other liabilities	11,743			12,480			12,078			11,761			12,567			(6	)	(7	)
Total liabilities	320,870			312,271			314,063			313,654			316,963			3		1

Stockholders’ equity:
Preferred stock	0			0			0			0			0			—		—
Common stock	7			7			7			7			7			—		—
Additional paid-in capital, net	32,040			31,978			31,868			31,779			31,656			—		1
Retained earnings	35,875			34,883			33,626			31,996			30,700			3		17
Accumulated other comprehensive loss	(1,263		)	(1,877		)	(1,793		)	(1,599		)	(926		)	(33	)	36
Treasury stock, at cost	(14,991		)	(14,353		)	(13,782		)	(12,980		)	(12,707		)	4		18
Total stockholders’ equity	51,668			50,638			49,926			49,203			48,730			2		6
Total liabilities and stockholders’ equity	$	372,538		$	362,909		$	363,989		$	362,857		$	365,693		3		2

CAPITAL ONE FINANCIAL CORPORATION (COF)

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


⁽¹⁾	Total net revenue was reduced by $391 million in Q4 2018, $305 million in Q3 2018, $309 million in Q2 2018, $335 million in Q1 2018 and $377 million in Q4 2017 for the estimated uncollectible amount of billed finance charges and fees and related losses.

⁽²⁾

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


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


⁽⁴⁾	Total net revenue margin is calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.


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


⁽⁶⁾	Return on average tangible assets is a non-GAAP measure calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible assets for the period. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

⁽⁷⁾

Return on average common equity is calculated based on annualized (i) income from continuing operations, net of tax; (ii) less dividends and undistributed earnings allocated to participating securities; (iii) less preferred stock dividends, for the period, divided by average common equity for the period. Our calculation of return on average common equity may not be comparable to similarly-titled measures reported by other companies.

⁽⁸⁾

Return on average tangible common equity (“ROTCE”) is a non-GAAP measure calculated based on annualized (i) income from continuing operations, net of tax; (ii) less dividends and undistributed earnings allocated to participating securities; (iii) less preferred stock dividends, for the period, divided by average tangible common equity for the period. Our calculation of ROTCE may not be comparable to similarly-titled measures reported by other companies. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.


⁽⁹⁾	Efficiency ratio is calculated based on total non-interest expense for the period divided by total net revenue for the period. We also provide an adjusted efficiency ratio, which is a non-GAAP measure. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on our non-GAAP measures.


⁽¹⁰⁾	Operating efficiency ratio is calculated based on operating expense for the period divided by total net revenue for the period. We also provide an adjusted operating efficiency ratio, which is a non-GAAP measure. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on our non-GAAP measures.


⁽¹¹⁾	Net charge-off rate is calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.


⁽¹²⁾	Capital ratios as of the end of Q4 2018 are preliminary and therefore subject to change. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for information on the calculation of each of these ratios.


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


**	Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	2018 Q4						2018 Q3						2017 Q4
	Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾
(Dollars in millions, except as noted)	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	$	242,534	$	6,358	10.49	%	$	238,150	$	6,247	10.49	%	$	254,080	$	6,133	9.66	%
Investment securities	83,391		627		3.01		83,894		593		2.83		68,992		431		2.50
Cash equivalents and other	8,789		63		2.87		8,228		55		2.66		7,670		40		2.09
Total interest-earning assets	$	334,714	$	7,048	8.42		$	330,272	$	6,895	8.35		$	330,742	$	6,604	7.99
Interest-bearing liabilities:
Interest-bearing deposits	$	222,827	$	756	1.36		$	221,431	$	681	1.23		$	215,258	$	457	0.85
Securitized debt obligations	18,312		138		2.99		18,917		127		2.68		19,751		91		1.84
Senior and subordinated notes	30,831		297		3.86		31,660		288		3.63		30,020		209		2.78
Other borrowings and liabilities	6,123		37		2.43		3,084		13		1.67		10,355		34		1.31
Total interest-bearing liabilities	$	278,093	$	1,228	1.77		$	275,092	$	1,109	1.62		$	275,384	$	791	1.15
Net interest income/spread			$	5,820	6.65				$	5,786	6.73				$	5,813	6.84
Impact of non-interest-bearing funding					0.31						0.28						0.19
Net interest margin					6.96	%					7.01	%					7.03	%



	Year Ended December 31,
	2018						2017
	Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾		Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾
(Dollars in millions, except as noted)	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	$	243,371	$	24,728	10.16	%	$	246,613	$	23,388	9.48	%
Investment securities	79,224		2,211		2.79		68,896		1,711		2.48
Cash equivalents and other	10,143		237		2.33		6,821		123		1.80
Total interest-earning assets	$	332,738	$	27,176	8.17		$	322,330	$	25,222	7.82
Interest-bearing liabilities:
Interest-bearing deposits	$	221,760	$	2,598	1.17		$	213,949	$	1,602	0.75
Securitized debt obligations	19,014		496		2.61		18,237		327		1.79
Senior and subordinated notes	31,295		1,125		3.60		27,866		731		2.62
Other borrowings and liabilities	4,028		82		2.04		8,917		102		1.14
Total interest-bearing liabilities	$	276,097	$	4,301	1.56		$	268,969	$	2,762	1.03
Net interest income/spread			$	22,875	6.61				$	22,460	6.79
Impact of non-interest-bearing funding					0.26						0.18
Net interest margin					6.87	%					6.97	%

__________

⁽¹⁾

Interest income and interest expense and the calculation of average yields on interest-earning assets and average rates on interest-bearing liabilities include the impact of hedge accounting. In the first quarter of 2018, we adopted Accounting Standard Update No. 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. As a result, interest income and interest expense amounts shown above include $1 million and $2 million for Q4 2018, respectively, and $2 million and $38 million for the year ended December 31, 2018, respectively, related to hedge ineffectiveness that was previously included in other non-interest income.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics



											2018 Q4 vs.				Year Ended December 31,
(Dollars in millions, except as noted)	2018 Q4		2018 Q3		2018 Q2		2018 Q1		2017 Q4		2018 Q3		2017 Q4		2018		2017		2018 vs. 2017
Loans Held for Investment (Period-End)
Credit card:
Domestic credit card	$	107,350	$	101,564	$	100,714	$	98,535	$	105,293	6	%	2	%	$	107,350	$	105,293	2	%
International card businesses	9,011		9,121		9,063		9,041		9,469		(1	)	(5	)	9,011		9,469		(5	)
Total credit card	116,361		110,685		109,777		107,576		114,762		5		1		116,361		114,762		1
Consumer banking:
Auto	56,341		56,422		55,781		54,811		53,991		—		4		56,341		53,991		4
Home loan⁽¹⁾	—		—		—		16,630		17,633		**		**		—		17,633		**
Retail banking	2,864		2,907		2,946		3,233		3,454		(1	)	(17	)	2,864		3,454		(17	)
Total consumer banking	59,205		59,329		58,727		74,674		75,078		—		(21	)	59,205		75,078		(21	)
Commercial banking:
Commercial and multifamily real estate	28,899		29,064		28,292		27,360		26,150		(1	)	11		28,899		26,150		11
Commercial and industrial	41,091		39,325		38,948		38,208		38,025		4		8		41,091		38,025		8
Total commercial lending	69,990		68,389		67,240		65,568		64,175		2		9		69,990		64,175		9
Small-ticket commercial real estate	343		358		369		385		400		(4	)	(14	)	343		400		(14	)
Total commercial banking	70,333		68,747		67,609		65,953		64,575		2		9		70,333		64,575		9
Other loans	—		—		11		53		58		**		**		—		58		**
Total loans held for investment	$	245,899	$	238,761	$	236,124	$	248,256	$	254,473	3		(3	)	$	245,899	$	254,473	(3	)
Loans Held for Investment (Average)
Credit card:
Domestic credit card	$	103,391	$	100,566	$	98,895	$	100,450	$	101,087	3	%	2	%	$	100,832	$	94,923	6	%
International card businesses	8,958		8,944		8,998		9,052		8,942		—		—		8,988		8,545		5
Total credit card	112,349		109,510		107,893		109,502		110,029		3		2		109,820		103,468		6
Consumer banking:
Auto	56,469		56,297		55,298		54,344		53,747		—		5		55,610		51,477		8
Home loan⁽¹⁾	—		—		8,098		17,224		18,109		**		**		6,266		19,681		(68	)
Retail banking	2,873		2,923		3,084		3,429		3,433		(2	)	(16	)	3,075		3,463		(11	)
Total consumer banking	59,342		59,220		66,480		74,997		75,289		—		(21	)	64,951		74,621		(13	)
Commercial banking:
Commercial and multifamily real estate	28,855		28,354		27,302		26,542		27,770		2		4		27,771		27,370		1
Commercial and industrial	40,476		39,318		38,686		38,246		39,020		3		4		39,188		39,606		(1	)
Total commercial lending	69,331		67,672		65,988		64,788		66,790		2		4		66,959		66,976		—
Small-ticket commercial real estate	349		364		376		393		410		(4	)	(15	)	371		442		(16	)
Total commercial banking	69,680		68,036		66,364		65,181		67,200		2		4		67,330		67,418		—
Other loans	—		—		21		46		48		**		**		17		58		(71	)
Total average loans held for investment	$	241,371	$	236,766	$	240,758	$	249,726	$	252,566	2		(4	)	$	242,118	$	245,565	(1	)



											2018 Q4 vs.				Year Ended December 31,
	2018 Q4		2018 Q3		2018 Q2		2018 Q1		2017 Q4		2018 Q3		2017 Q4		2018		2017		2018 vs. 2017
Net Charge-Off (Recovery) Rates
Credit card:
Domestic credit card⁽²⁾	4.64	%	4.35	%	4.72	%	5.26	%	5.08	%	29	bps	(44	)bps	4.74	%	4.99	%	(25	)bps
International card businesses	4.22		1.92		4.14		2.49		3.92		230		30		3.19		3.69		(50	)
Total credit card⁽²⁾	4.61		4.15		4.67		5.03		4.99		46		(38	)	4.62		4.88		(26	)
Consumer banking:
Auto	1.98		1.73		1.32		1.53		2.12		25		(14	)	1.64		1.86		(22	)
Home loan⁽¹⁾	—		—		—		(0.03	)	0.23		**		**		(0.02	)	0.08		**
Retail banking	2.56		2.62		2.07		1.89		1.94		(6	)	62		2.26		1.92		34
Total consumer banking	2.01		1.77		1.19		1.19		1.66		24		35		1.51		1.39		12
Commercial banking:
Commercial and multifamily real estate	(0.01	)	0.04		—		—		(0.01	)	(5	)	—		0.01		—		1
Commercial and industrial	0.17		0.25		(0.07	)	0.20		1.47		(8	)	(130	)	0.14		1.17		(103	)
Total commercial lending	0.10		0.16		(0.04	)	0.12		0.86		(6	)	(76	)	0.08		0.69		(61	)
Small-ticket commercial real estate	0.13		0.56		(0.40	)	(0.18	)	(0.05	)	(43	)	18		0.02		0.24		(22	)
Total commercial banking	0.10		0.16		(0.04	)	0.11		0.85		(6	)	(75	)	0.08		0.69		(61	)
Total net charge-offs	2.67		2.41		2.42		2.59		2.89		26		(22	)	2.52		2.67		(15	)
30+ Day Performing Delinquency Rates
Credit card:
Domestic credit card	4.04	%	3.80	%	3.32	%	3.57	%	4.01	%	24	bps	3	bps	4.04	%	4.01	%	3	bps
International card businesses	3.52		3.55		3.39		3.62		3.64		(3	)	(12	)	3.52		3.64		(12	)
Total credit card	4.00		3.78		3.32		3.58		3.98		22		2		4.00		3.98		2
Consumer banking:
Auto	6.95		6.27		5.57		5.15		6.51		68		44		6.95		6.51		44
Home loan⁽¹⁾	—		—		—		0.20		0.20		**		**		—		0.20		**
Retail banking	1.01		0.80		0.84		0.75		0.76		21		25		1.01		0.76		25
Total consumer banking	6.67		6.01		5.33		3.86		4.76		66		191		6.67		4.76		191
Nonperforming Loans and Nonperforming Assets Rates⁽³⁾⁽⁴⁾
Credit card:
International card businesses	0.25	%	0.22	%	0.22	%	0.25	%	0.25	%	3	bps	—		0.25	%	0.25	%	—
Total credit card	0.02		0.02		0.02		0.02		0.02		—		—		0.02		0.02		—
Consumer banking:
Auto	0.80		0.70		0.55		0.50		0.70		10		10	bps	0.80		0.70		10	bps
Home loan⁽¹⁾	—		—		—		0.86		1.00		**		**		—		1.00		**
Retail banking	1.04		1.13		1.15		1.04		1.00		(9	)	4		1.04		1.00		4
Total consumer banking	0.81		0.72		0.58		0.61		0.78		9		3		0.81		0.78		3
Commercial banking:
Commercial and multifamily real estate	0.29		0.13		0.01		0.01		0.15		16		14		0.29		0.15		14
Commercial and industrial	0.54		0.55		0.57		0.78		0.63		(1	)	(9	)	0.54		0.63		(9	)
Total commercial lending	0.44		0.37		0.33		0.46		0.43		7		1		0.44		0.43		1
Small-ticket commercial real estate	1.80		1.65		1.18		1.46		1.65		15		15		1.80		1.65		15
Total commercial banking	0.44		0.38		0.34		0.47		0.44		6		—		0.44		0.44		—
Total nonperforming loans	0.33		0.30		0.25		0.32		0.35		3		(2	)	0.33		0.35		(2	)
Total nonperforming assets	0.35		0.33		0.30		0.35		0.41		2		(6	)	0.35		0.41		(6	)

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	Three Months Ended December 31, 2018
	Credit Card									Consumer Banking
(Dollars in millions)	Domestic Card			International Card Businesses			Total Credit Card			Auto			Retail Banking			Total Consumer Banking			Commercial Banking			Total
Allowance for loan and lease losses:
Balance as of September 30, 2018	$	5,116		$	404		$	5,520		$	985		$	58		$	1,043		$	656		$	7,219
Charge-offs	(1,503		)	(122		)	(1,625		)	(496		)	(22		)	(518		)	(43		)	(2,186		)
Recoveries	302			28			330			217			3			220			26			576
Net charge-offs	(1,201		)	(94		)	(1,295		)	(279		)	(19		)	(298		)	(17		)	(1,610		)
Provision (benefit) for loan and lease losses	1,229			97			1,326			284			19			303			(3		)	1,626
Allowance build (release) for loan and lease losses	28			3			31			5			—			5			(20		)	16
Other changes⁽⁵⁾	—			(16		)	(16		)	—			—			—			1			(15		)
Balance as of December 31, 2018	5,144			391			5,535			990			58			1,048			637			7,220
Reserve for unfunded lending commitments:
Balance as of September 30, 2018	—			—			—			—			4			4			106			110
Provision for losses on unfunded lending commitments	—			—			—			—			—			—			12			12
Balance as of December 31, 2018	—			—			—			—			4			4			118			122
Combined allowance and reserve as of December 31, 2018	$	5,144		$	391		$	5,535		$	990		$	62		$	1,052		$	755		$	7,342



	Year Ended December 31, 2018
	Credit Card									Consumer Banking
(Dollars in millions)	Domestic Card			International Card Businesses			Total Credit Card			Auto			Home Loan⁽¹⁾			Retail Banking			Total Consumer Banking			Commercial Banking			Other⁽¹⁾			Total
Allowance for loan and lease losses:
Balance as of December 31, 2017	$	5,273		$	375		$	5,648		$	1,119		$	58		$	65		$	1,242		$	611		$	1		$	7,502
Charge-offs	(6,152		)	(505		)	(6,657		)	(1,746		)	—			(86		)	(1,832		)	(119		)	(7		)	(8,615		)
Recoveries	1,370			218			1,588			834			1			16			851			63			1			2,503
Net charge-offs	(4,782		)	(287		)	(5,069		)	(912		)	1			(70		)	(981		)	(56		)	(6		)	(6,112		)
Provision (benefit) for loan and lease losses	4,653			331			4,984			783			(6		)	64			841			82			(49		)	5,858
Allowance build (release) for loan and lease losses	(129		)	44			(85		)	(129		)	(5		)	(6		)	(140		)	26			(55		)	(254		)
Other changes⁽¹⁾⁽⁵⁾	—			(28		)	(28		)	—			(53		)	(1		)	(54		)	—			54			(28		)
Balance as of December 31, 2018	5,144			391			5,535			990			—			58			1,048			637			—			7,220
Reserve for unfunded lending commitments:
Balance as of December 31, 2017	—			—			—			—			—			7			7			117			—			124
Provision (benefit) for losses on unfunded lending commitments	—			—			—			—			—			(3		)	(3		)	1			—			(2		)
Balance as of December 31, 2018	—			—			—			—			—			4			4			118			—			122
Combined allowance and reserve as of December 31, 2018	$	5,144		$	391		$	5,535		$	990		$	—		$	62		$	1,052		$	755		$	—		$	7,342

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results



	Three Months Ended December 31, 2018												Year Ended December 31, 2018
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾⁽⁷⁾		Other⁽⁶⁾⁽⁷⁾			Total			Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾⁽⁷⁾		Other⁽⁶⁾⁽⁷⁾			Total
Net interest income (loss)	$	3,617	$	1,689	$	528	$	(14	)	$	5,820		$	14,167	$	6,549	$	2,152	$	7		$	22,875
Non-interest income (loss)	886		159		159		(11		)	1,193			3,520		663		744		274			5,201
Total net revenue (loss)	4,503		1,848		687		(25		)	7,013			17,687		7,212		2,896		281			28,076
Provision (benefit) for credit losses	1,326		303		9		—			1,638			4,984		838		83		(49		)	5,856
Non-interest expense	2,496		1,085		434		117			4,132			8,542		4,027		1,654		679			14,902
Income (loss) from continuing operations before income taxes	681		460		244		(142		)	1,243			4,161		2,347		1,159		(349		)	7,318
Income tax provision (benefit)	160		107		57		(345		)	(21		)	970		547		270		(494		)	1,293
Income from continuing operations, net of tax	$	521	$	353	$	187	$	203		$	1,264		$	3,191	$	1,800	$	889	$	145		$	6,025

	Three Months Ended September 30, 2018
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾⁽⁷⁾		Other⁽⁶⁾⁽⁷⁾			Total
Net interest income	$	3,596	$	1,636	$	539	$	15		$	5,786
Non-interest income (loss)	893		155		189		(61		)	1,176
Total net revenue (loss)	4,489		1,791		728		(46		)	6,962
Provision (benefit) for credit losses	1,031		184		54		(1		)	1,268
Non-interest expense	2,103		979		408		283			3,773
Income (loss) from continuing operations before income taxes	1,355		628		266		(328		)	1,921
Income tax provision (benefit)	315		146		62		(103		)	420
Income (loss) from continuing operations, net of tax	$	1,040	$	482	$	204	$	(225	)	$	1,501

	Three Months Ended December 31, 2017												Year Ended December 31, 2017
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾		Other⁽⁶⁾			Total			Credit Card		Consumer Banking		Commercial Banking⁽⁶⁾		Other⁽⁶⁾			Total
Net interest income	$	3,568	$	1,636	$	566	$	43		$	5,813		$	13,648	$	6,380	$	2,261	$	171		$	22,460
Non-interest income (loss)	847		179		188		(14		)	1,200			3,325		749		708		(5		)	4,777
Total net revenue	4,415		1,815		754		29			7,013			16,973		7,129		2,969		166			27,237
Provision for credit losses	1,486		340		100		—			1,926			6,066		1,180		301		4			7,551
Non-interest expense	2,108		1,081		437		153			3,779			7,916		4,233		1,603		442			14,194
Income (loss) from continuing operations before income taxes	821		394		217		(124		)	1,308			2,991		1,716		1,065		(280		)	5,492
Income tax provision	297		144		79		1,650			2,170			1,071		626		389		1,289			3,375
Income (loss) from continuing operations, net of tax	$	524	$	250	$	138	$	(1,774	)	$	(862	)	$	1,920	$	1,090	$	676	$	(1,569	)	$	2,117

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business



																2018 Q4 vs.				Year Ended December 31,
	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Credit Card
Earnings:
Net interest income	$	3,617		$	3,596		$	3,396		$	3,558		$	3,568		1	%	1	%	$	14,167		$	13,648		4	%
Non-interest income	886			893			884			857			847			(1	)	5		3,520			3,325			6
Total net revenue	4,503			4,489			4,280			4,415			4,415			—		2		17,687			16,973			4
Provision for credit losses	1,326			1,031			1,171			1,456			1,486			29		(11	)	4,984			6,066			(18	)
Non-interest expense	2,496			2,103			1,904			2,039			2,108			19		18		8,542			7,916			8
Income from continuing operations before income taxes	681			1,355			1,205			920			821			(50	)	(17	)	4,161			2,991			39
Income tax provision	160			315			282			213			297			(49	)	(46	)	970			1,071			(9	)
Income from continuing operations, net of tax	$	521		$	1,040		$	923		$	707		$	524		(50	)	(1	)	$	3,191		$	1,920		66
Selected performance metrics:
Period-end loans held for investment	$	116,361		$	110,685		$	109,777		$	107,576		$	114,762		5		1		$	116,361		$	114,762		1
Average loans held for investment	112,349			109,510			107,893			109,502			110,029			3		2		109,820			103,468			6
Average yield on loans held for investment⁽⁸⁾	15.63		%	15.79		%	15.06		%	15.24		%	15.13		%	(16	)bps	50	bps	15.43		%	15.21		%	22	bps
Total net revenue margin⁽⁹⁾	16.03			16.40			15.87			16.13			16.05			(37	)	(2	)	16.11			16.40			(29	)
Net charge-off rate⁽²⁾	4.61			4.15			4.67			5.03			4.99			46		(38	)	4.62			4.88			(26	)
30+ day performing delinquency rate	4.00			3.78			3.32			3.58			3.98			22		2		4.00			3.98			2
30+ day delinquency rate	4.01			3.80			3.33			3.59			3.99			21		2		4.01			3.99			2
Nonperforming loan rate⁽³⁾	0.02			0.02			0.02			0.02			0.02			—		—		0.02			0.02			—
Purchase volume⁽¹⁰⁾	$	105,696		$	97,469		$	97,392		$	86,545		$	95,659		8	%	10	%	$	387,102		$	336,440		15	%



																2018 Q4 vs.				Year Ended December 31,
	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Domestic Card
Earnings:
Net interest income	$	3,309		$	3,280		$	3,108		$	3,229		$	3,268		1	%	1	%	$	12,926		$	12,504		3	%
Non-interest income	828			819			818			774			781			1		6		3,239			3,069			6
Total net revenue	4,137			4,099			3,926			4,003			4,049			1		2		16,165			15,573			4
Provision for credit losses	1,229			950			1,094			1,380			1,402			29		(12	)	4,653			5,783			(20	)
Non-interest expense	2,216			1,890			1,683			1,832			1,880			17		18		7,621			7,078			8
Income from continuing operations before income taxes	692			1,259			1,149			791			767			(45	)	(10	)	3,891			2,712			43
Income tax provision	162			293			268			184			280			(45	)	(42	)	907			990			(8	)
Income from continuing operations, net of tax	$	530		$	966		$	881		$	607		$	487		(45	)	9		$	2,984		$	1,722		73
Selected performance metrics:
Period-end loans held for investment	$	107,350		$	101,564		$	100,714		$	98,535		$	105,293		6		2		$	107,350		$	105,293		2
Average loans held for investment	103,391			100,566			98,895			100,450			101,087			3		2		100,832			94,923			6
Average yield on loans held for investment⁽⁸⁾	15.58		%	15.73		%	15.05		%	15.10		%	15.08		%	(15	)bps	50	bps	15.36		%	15.16		%	20	bps
Total net revenue margin⁽⁹⁾	16.01			16.30			15.88			15.94			16.03			(29	)	(2	)	16.03			16.41			(38	)
Net charge-off rate⁽²⁾	4.64			4.35			4.72			5.26			5.08			29		(44	)	4.74			4.99			(25	)
30+ day delinquency rate	4.04			3.80			3.32			3.57			4.01			24		3		4.04			4.01			3
Purchase volume⁽¹⁰⁾	$	96,818		$	89,205		$	88,941		$	79,194		$	87,287		9	%	11	%	$	354,158		$	306,824		15	%
Refreshed FICO scores:⁽¹¹⁾
Greater than 660	67		%	67		%	68		%	66		%	66		%	—		1		67		%	66		%	1
660 or below	33			33			32			34			34			—		(1	)	33			34			(1	)
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business



																2018 Q4 vs.				Year Ended December 31,
	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Consumer Banking
Earnings:
Net interest income	$	1,689		$	1,636		$	1,609		$	1,615		$	1,636		3	%	3	%	$	6,549		$	6,380		3	%
Non-interest income	159			155			175			174			179			3		(11	)	663			749			(11	)
Total net revenue	1,848			1,791			1,784			1,789			1,815			3		2		7,212			7,129			1
Provision for credit losses	303			184			118			233			340			65		(11	)	838			1,180			(29	)
Non-interest expense	1,085			979			963			1,000			1,081			11		—		4,027			4,233			(5	)
Income from continuing operations before income taxes	460			628			703			556			394			(27	)	17		2,347			1,716			37
Income tax provision	107			146			164			130			144			(27	)	(26	)	547			626			(13	)
Income from continuing operations, net of tax	$	353		$	482		$	539		$	426		$	250		(27	)	41		$	1,800		$	1,090		65
Selected performance metrics:
Period-end loans held for investment⁽¹⁾	$	59,205		$	59,329		$	58,727		$	74,674		$	75,078		—		(21	)	$	59,205		$	75,078		(21	)
Average loans held for investment⁽¹⁾	59,342			59,220			66,480			74,997			75,289			—		(21	)	64,951			74,621			(13	)
Average yield on loans held for investment⁽⁸⁾	8.14		%	8.03		%	7.32		%	6.86		%	6.84		%	11	bps	130	bps	7.54		%	6.67		%	87	bps
Auto loan originations	$	5,932		$	6,643		$	6,994		$	6,707		$	6,215		(11	)%	(5	)%	$	26,276		$	27,737		(5	)%
Period-end deposits	198,607			196,635			194,962			193,073			185,842			1		7		198,607			185,842			7
Average deposits	196,348			194,687			193,278			187,785			184,799			1		6		193,053			185,201			4
Average deposits interest rate	1.10		%	1.00		%	0.88		%	0.80		%	0.69		%	10	bps	41	bps	0.95		%	0.62		%	33	bps
Net charge-off rate	2.01			1.77			1.19			1.19			1.66			24		35		1.51			1.39			12
30+ day performing delinquency rate	6.67			6.01			5.33			3.86			4.76			66		191		6.67			4.76			191
30+ day delinquency rate	7.36			6.61			5.80			4.27			5.34			75		202		7.36			5.34			202
Nonperforming loan rate⁽³⁾	0.81			0.72			0.58			0.61			0.78			9		3		0.81			0.78			3
Nonperforming asset rate⁽⁴⁾	0.90			0.82			0.73			0.70			0.91			8		(1	)	0.90			0.91			(1	)
Auto—At origination FICO scores:⁽¹²⁾
Greater than 660	50		%	50		%	50		%	51		%	51		%	—		(1	)%	50		%	51		%	(1	)%
621 - 660	19			19			19			18			18			—		1		19			18			1
620 or below	31			31			31			31			31			—		—		31			31			—
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business



																2018 Q4 vs.				Year Ended December 31,
	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Commercial Banking
Earnings:
Net interest income	$	528		$	539		$	549		$	536		$	566		(2	)%	(7	)%	$	2,152		$	2,261		(5	)%
Non-interest income	159			189			209			187			188			(16	)	(15	)	744			708			5
Total net revenue⁽⁶⁾⁽⁷⁾	687			728			758			723			754			(6	)	(9	)	2,896			2,969			(2	)
Provision (benefit) for credit losses	9			54			34			(14		)	100			(83	)	(91	)	83			301			(72	)
Non-interest expense	434			408			409			403			437			6		(1	)	1,654			1,603			3
Income from continuing operations before income taxes	244			266			315			334			217			(8	)	12		1,159			1,065			9
Income tax provision	57			62			73			78			79			(8	)	(28	)	270			389			(31	)
Income from continuing operations, net of tax	$	187		$	204		$	242		$	256		$	138		(8	)	36		$	889		$	676		32
Selected performance metrics:
Period-end loans held for investment	$	70,333		$	68,747		$	67,609		$	65,953		$	64,575		2		9		$	70,333		$	64,575		9
Average loans held for investment	69,680			68,036			66,364			65,181			67,200			2		4		67,330			67,418			—
Average yield on loans held for investment⁽⁶⁾⁽⁸⁾	4.67		%	4.55		%	4.43		%	4.16		%	4.03		%	12	bps	64	bps	4.46		%	3.87		%	59	bps
Period-end deposits	$	29,480		$	30,474		$	31,078		$	34,449		$	33,938		(3	)%	(13	)%	$	29,480		$	33,938		(13	)%
Average deposits	30,680			31,061			32,951			34,057			34,117			(1	)	(10	)	32,175			33,947			(5	)
Average deposits interest rate	0.95		%	0.79		%	0.65		%	0.52		%	0.46		%	16	bps	49	bps	0.72		%	0.39		%	33	bps
Net charge-off (recovery) rate	0.10			0.16			(0.04		)	0.11			0.85			(6	)	(75	)	0.08			0.69			(61	)
Nonperforming loan rate⁽³⁾	0.44			0.38			0.34			0.47			0.44			6		—		0.44			0.44			—
Nonperforming asset rate⁽⁴⁾	0.45			0.41			0.37			0.49			0.52			4		(7	)	0.45			0.52			(7	)
Risk category:⁽¹³⁾
Noncriticized	$	68,043		$	65,926		$	64,923		$	62,773		$	61,162		3	%	11	%	$	68,043		$	61,162		11	%
Criticized performing	1,848			2,204			2,088			2,432			2,649			(16	)	(30	)	1,848			2,649			(30	)
Criticized nonperforming	312			259			229			309			284			20		10		312			284			10
PCI loans	130			358			369			439			480			(64	)	(73	)	130			480			(73	)
Total commercial loans	$	70,333		$	68,747		$	67,609		$	65,953		$	64,575		2		9		$	70,333		$	64,575		9
Risk category as a percentage of period-end loans held for investment:⁽¹³⁾
Noncriticized	96.8		%	95.9		%	96.1		%	95.1		%	94.7		%	90	bps	210	bps	96.8		%	94.7		%	210	bps
Criticized performing	2.6			3.2			3.1			3.7			4.1			(60	)	(150	)	2.6			4.1			(150	)
Criticized nonperforming	0.4			0.4			0.3			0.5			0.4			—		—		0.4			0.4			—
PCI loans	0.2			0.5			0.5			0.7			0.8			(30	)	(60	)	0.2			0.8			(60	)
Total commercial loans	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%					100.0		%	100.0		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Financial & Statistical Summary—Other and Total



																2018 Q4 vs.				Year Ended December 31,
	2018			2018			2018			2018			2017			2018		2017								2018 vs.
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2018			2017			2017
Other⁽¹⁴⁾
Earnings:
Net interest income (loss)	$	(14	)	$	15		$	(3	)	$	9		$	43		**		**		$	7		$	171		(96	)%
Non-interest income (loss)	(11		)	(61		)	373			(27		)	(14		)	(82	)%	(21	)%	274			(5		)	**
Total net revenue (loss)⁽⁶⁾⁽⁷⁾	(25		)	(46		)	370			(18		)	29			(46	)	**		281			166			69
Provision (benefit) for credit losses	—			(1		)	(47		)	(1		)	—			**		**		(49		)	4			**
Non-interest expense⁽¹⁵⁾	117			283			148			131			153			(59	)	(24	)	679			442			54
Income (loss) from continuing operations before income taxes	(142		)	(328		)	269			(148		)	(124		)	(57	)	15		(349		)	(280		)	25
Income tax provision (benefit)	(345		)	(103		)	56			(102		)	1,650			**		**		(494		)	1,289			**
Income (loss) from continuing operations, net of tax	$	203		$	(225	)	$	213		$	(46	)	$	(1,774	)	**		**		$	145		$	(1,569	)	**
Selected performance metrics:
Period-end loans held for investment	—			—			$	11		$	53		$	58		**		**		—			$	58		**
Average loans held for investment	—			—			21			46			48			**		**		$	17		58			(71	)
Period-end deposits	$	21,677		$	20,086		22,185			23,325			23,922			8		(9	)	21,677			23,922			(9	)
Average deposits	20,635			20,972			22,561			23,428			22,646			(2	)	(9	)	21,889			20,734			6
Total
Earnings:
Net interest income	$	5,820		$	5,786		$	5,551		$	5,718		$	5,813		1	%	—		$	22,875		$	22,460		2	%
Non-interest income	1,193			1,176			1,641			1,191			1,200			1		(1	)%	5,201			4,777			9
Total net revenue	7,013			6,962			7,192			6,909			7,013			1		—		28,076			27,237			3
Provision for credit losses	1,638			1,268			1,276			1,674			1,926			29		(15	)	5,856			7,551			(22	)
Non-interest expense	4,132			3,773			3,424			3,573			3,779			10		9		14,902			14,194			5
Income from continuing operations before income taxes	1,243			1,921			2,492			1,662			1,308			(35	)	(5	)	7,318			5,492			33
Income tax provision (benefit)	(21		)	420			575			319			2,170			**		**		1,293			3,375			(62	)
Income (loss) from continuing operations, net of tax	$	1,264		$	1,501		$	1,917		$	1,343		$	(862	)	(16	)	**		$	6,025		$	2,117		185
Selected performance metrics:
Period-end loans held for investment	$	245,899		$	238,761		$	236,124		$	248,256		$	254,473		3		(3	)	$	245,899		$	254,473		(3	)
Average loans held for investment	241,371			236,766			240,758			249,726			252,566			2		(4	)	242,118			245,565			(1	)
Period-end deposits	249,764			247,195			248,225			250,847			243,702			1		2		249,764			243,702			2
Average deposits	247,663			246,720			248,790			245,270			241,562			—		3		247,117			239,882			3

CAPITAL ONE FINANCIAL CORPORATION (COF)

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

⁽¹⁾

In the second quarter of 2018, we sold the substantial majority of our consumer home loan portfolio and the related servicing. We also transferred the remaining consumer home loan portfolio of $398 million to loans held for sale as of June 30, 2018. These actions resulted in a net gain of approximately $400 million in the second quarter of 2018, including a benefit for credit losses of $46 million, which was reflected in the Other category. In the third quarter of 2018, we sold substantially all of the remaining consumer home loan portfolio and recognized a net gain of $99 million in the Other category. In the fourth quarter of 2018, we sold all of the remaining consumer home loan portfolio.

⁽²⁾

In August 2018, we accelerated charge-off recognition for certain domestic credit card accounts where the cardholder is deceased. This acceleration led to a one-time increase in net charge-offs of approximately $32 million, increasing the net charge-off rate for total credit card and domestic credit card by approximately 12 basis points and 13 basis points, respectively, for the third quarter of 2018, and 3 basis points for both total credit card and domestic credit card for the year ended December 31, 2018.


⁽³⁾	Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.


⁽⁴⁾	Nonperforming assets consist of nonperforming loans, real estate owned (“REO”) and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment, REO and other foreclosed assets.


⁽⁵⁾	Represents foreign currency translation adjustments and the net impact of loan transfers and sales where applicable.


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

⁽⁷⁾

In the first quarter of 2018, we made a change in how revenue is measured in our Commercial Banking business to include the tax benefits of losses on certain tax-advantaged investments. These tax benefits are included in revenue on a taxable-equivalent basis within our Commercial Banking business, with an offsetting reduction to the Other category. In addition, all revenue presented on a taxable-equivalent basis in our Commercial Banking business was impacted by the reduction of the federal tax rate set forth in the Tax Act. The net impact of the measurement change and the reduction of the federal tax rate was a decrease of $40 million and $126 million in revenue in our Commercial Banking business in the fourth quarter and year ended December 31, 2018, respectively, with an offsetting impact to the Other category.


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


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


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

⁽¹¹⁾

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


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


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

⁽¹⁴⁾

Charges for the impacts of the Tax Act of $1.77 billion were reflected in the Other category of our business segment results for Q4 2017. This amount was a reasonable estimate as of December 31, 2017, and there were no material adjustments made to this amount during the measurement period, which ended in December 2018. The Tax Act refers to the Act to provide for reconciliation pursuant to titles II and V of the concurrent resolution on budget for fiscal year 2018 enacted on December 22, 2017.


⁽¹⁵⁾	Includes charges incurred as a result of restructuring activities.


^**	Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	Basel III Standardized Approach
(Dollars in millions, except as noted)	December 31, 2018			September 30, 2018			June 30, 2018			March 31, 2018			December 31, 2017
Regulatory Capital Metrics
Common equity excluding AOCI	$	48,570		$	48,154		$	47,359		$	46,441		$	45,296
Adjustments:
AOCI⁽²⁾⁽³⁾	(1,263		)	(1,877		)	(1,793		)	(1,599		)	(808		)
Goodwill, net of related deferred tax liabilities	(14,373		)	(14,345		)	(14,368		)	(14,379		)	(14,380		)
Intangible assets, net of related deferred tax liabilities⁽³⁾	(254		)	(284		)	(328		)	(371		)	(330		)
Other	391			817			735			620			258
Common equity Tier 1 capital	$	33,071		$	32,465		$	31,605		$	30,712		$	30,036
Tier 1 capital	$	37,431		$	36,826		$	35,965		$	35,073		$	34,396
Total capital⁽⁴⁾	44,645			43,947			43,082			42,259			41,962
Risk-weighted assets	294,955			288,694			285,223			291,346			292,225
Adjusted average assets⁽⁵⁾	350,606			346,297			349,222			347,287			348,424
Capital Ratios
Common equity Tier 1 capital⁽⁶⁾	11.2		%	11.2		%	11.1		%	10.5		%	10.3		%
Tier 1 capital⁽⁷⁾	12.7			12.8			12.6			12.0			11.8
Total capital⁽⁸⁾	15.1			15.2			15.1			14.5			14.4
Tier 1 leverage⁽⁵⁾	10.7			10.6			10.3			10.1			9.9
Tangible common equity (“TCE”)⁽⁹⁾	9.1			9.0			8.8			8.6			8.3

Reconciliation of Non-GAAP Measures

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



	Three Months Ended									Nine Months Ended									Year Ended
	December 31, 2018									September 30, 2018									December 31, 2018
(Dollars in millions, except per share data and as noted)	Reported Results			Adj.⁽¹⁰⁾			Adjusted Results			Reported Results			Adj.⁽¹⁰⁾			Adjusted Results			Reported Results			Adj.⁽¹⁰⁾			Adjusted Results
Selected income statement data:
Net interest income	$	5,820		$	6		$	5,826		$	17,055		$	26		$	17,081		$	22,875		$	32		$	22,907
Non-interest income	1,193			(64		)	1,129			4,008			(514		)	3,494			5,201			(578		)	4,623
Total net revenue	7,013			(58		)	6,955			21,063			(488		)	20,575			28,076			(546		)	27,530
Provision for credit losses	1,638			—			1,638			4,218			48			4,266			5,856			48			5,904
Non-interest expense	4,132			(34		)	4,098			10,770			(248		)	10,522			14,902			(282		)	14,620
Income from continuing operations before income taxes	1,243			(24		)	1,219			6,075			(288		)	5,787			7,318			(312		)	7,006
Income tax provision (benefit)	(21		)	266			245			1,314			(121		)	1,193			1,293			145			1,438
Income from continuing operations, net of tax	1,264			(290		)	974			4,761			(167		)	4,594			6,025			(457		)	5,568
Income (loss) from discontinued operations, net of tax	(3		)	—			(3		)	(7		)	—			(7		)	(10		)	—			(10		)
Net income	1,261			(290		)	971			4,754			(167		)	4,587			6,015			(457		)	5,558
Dividends and undistributed earnings allocated to participating securities⁽¹²⁾	(9		)	2			(7		)	(32		)	1			(31		)	(40		)	3			(37		)
Preferred stock dividends	(80		)	—			(80		)	(185		)	—			(185		)	(265		)	—			(265		)
Net income available to common stockholders	$	1,172		$	(288	)	$	884		$	4,537		$	(166	)	$	4,371		$	5,710		$	(454	)	$	5,256
Selected performance metrics:
Diluted EPS⁽¹²⁾	$	2.48		$	(0.61	)	$	1.87		$	9.32		$	(0.34	)	$	8.98		$	11.82		$	(0.94	)	$	10.88
Efficiency ratio	58.92		%	—			58.92		%	51.13		%	1		bps	51.14		%	53.08		%	3		bps	53.11		%
Operating efficiency ratio	47.07			(10		)bps	46.97			44.76			(15		)	44.61			45.33			(12		)	45.21



	Three Months Ended									Nine Months Ended									Year Ended
	December 31, 2017									September 30, 2017									December 31, 2017
(Dollars in millions, except per share data and as noted)	Reported Results			Adj.⁽¹¹⁾			Adjusted Results			Reported Results			Adj.⁽¹¹⁾			Adjusted Results			Reported Results			Adj.⁽¹¹⁾			Adjusted Results
Selected income statement data:
Net interest income	$	5,813		$	11		$	5,824		$	16,647		$	33		$	16,680		$	22,460		$	44		$	22,504
Non-interest income	1,200			9			1,209			3,577			37			3,614			4,777			46			4,823
Total net revenue	7,013			20			7,033			20,224			70			20,294			27,237			90			27,327
Provision for credit losses	1,926			—			1,926			5,625			(88		)	5,537			7,551			(88		)	7,463
Non-interest expense	3,779			(87		)	3,692			10,415			(166		)	10,249			14,194			(253		)	13,941
Income from continuing operations before income taxes	1,308			107			1,415			4,184			324			4,508			5,492			431			5,923
Income tax provision	2,170			(1,742		)	428			1,205			82			1,287			3,375			(1,660		)	1,715
Income (loss) from continuing operations, net of tax	(862		)	1,849			987			2,979			242			3,221			2,117			2,091			4,208
Income (loss) from discontinued operations, net of tax	(109		)	—			(109		)	(26		)	—			(26		)	(135		)	—			(135		)
Net income (loss)	(971		)	1,849			878			2,953			242			3,195			1,982			2,091			4,073
Dividends and undistributed earnings allocated to participating securities⁽¹²⁾	(1		)	(5		)	(6		)	(21		)	—			(21		)	(13		)	(15		)	(28		)
Preferred stock dividends	(80		)	—			(80		)	(185		)	—			(185		)	(265		)	—			(265		)
Net income (loss) available to common stockholders	$	(1,052	)	$	1,844		$	792		$	2,747		$	242		$	2,989		$	1,704		$	2,076		$	3,780
Selected performance metrics:
Diluted EPS⁽¹²⁾	$	(2.17	)	$	3.79		$	1.62		$	5.63		$	0.49		$	6.12		$	3.49		$	4.25		$	7.74
Efficiency ratio	53.89		%	(139		)bps	52.50		%	51.50		%	(100		)bps	50.50		%	52.11		%	(109		)bps	51.02		%
Operating efficiency ratio	47.33			(138		)	45.95			45.52			(98		)	44.54			45.98			(108		)	44.90

Reconciliation of Non-GAAP Measures

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



	2018			2018			2018			2018			2017
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4
Tangible Common Equity (Period-End)
Stockholders’ equity	$	51,668		$	50,638		$	49,926		$	49,203		$	48,730
Goodwill and intangible assets⁽¹³⁾	(14,941		)	(14,945		)	(15,013		)	(15,063		)	(15,106		)
Noncumulative perpetual preferred stock	(4,360		)	(4,360		)	(4,360		)	(4,360		)	(4,360		)
Tangible common equity	$	32,367		$	31,333		$	30,553		$	29,780		$	29,264
Tangible Common Equity (Average)
Stockholders’ equity	$	51,114		$	50,768		$	49,827		$	49,031		$	50,710
Goodwill and intangible assets⁽¹³⁾	(14,953		)	(14,982		)	(15,043		)	(15,092		)	(15,223		)
Noncumulative perpetual preferred stock	(4,360		)	(4,360		)	(4,360		)	(4,360		)	(4,360		)
Tangible common equity	$	31,801		$	31,426		$	30,424		$	29,579		$	31,127
Tangible Assets (Period-End)
Total assets	$	372,538		$	362,909		$	363,989		$	362,857		$	365,693
Goodwill and intangible assets⁽¹³⁾	(14,941		)	(14,945		)	(15,013		)	(15,063		)	(15,106		)
Tangible assets	$	357,597		$	347,964		$	348,976		$	347,794		$	350,587
Tangible Assets (Average)
Total assets	$	365,243		$	360,937		$	363,929		$	362,049		$	363,045
Goodwill and intangible assets⁽¹³⁾	(14,953		)	(14,982		)	(15,043		)	(15,092		)	(15,223		)
Tangible assets	$	350,290		$	345,955		$	348,886		$	346,957		$	347,822

__________


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


⁽²⁾	Amounts presented are net of tax.


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


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


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


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


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


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


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


⁽¹⁰⁾	The adjustments in 2018 consist of:



	Three Months Ended			Nine Months Ended			Year Ended
(Dollars in millions)	December 31, 2018			September 30, 2018			December 31, 2018
Net gains on the sales of exited businesses	$	(74	)	$	(541	)	$	(615	)
Benefit as a result of tax methodology change on rewards costs	(284		)	—			(284		)
Legal reserve build	—			170			170
U.K. Payment Protection Insurance customer refund reserve (“U.K. PPI Reserve”)	50			49			99
Restructuring charges	—			34			34
Total	(308		)	(288		)	(596		)
Income tax provision	18			121			139
Net income	$	(290	)	$	(167	)	$	(457	)


⁽¹¹⁾	The adjustments in 2017 consist of:



	Three Months Ended			Nine Months Ended			Year Ended
(Dollars in millions)	December 31, 2017			September 30, 2017			December 31, 2017
Impacts of the Tax Act	$	1,769		—			$	1,769
Restructuring charges	76			$	108		184
U.K. Payment Protection Insurance customer refund reserve (“U.K. PPI Reserve”)	31			99			130
Charges related to the Cabela’s acquisition	—			117			117
Total	1,876			324			2,200
Income tax benefit	(27		)	(82		)	(109		)
Net income	$	1,849		$	242		$	2,091


⁽¹²⁾	Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total.


⁽¹³⁾	Includes impact of related deferred taxes.