Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - CAPITAL ONE FINANCIAL CORP | ex99_1.htm |
| EX-99.2 - EXHIBIT 99.2 - CAPITAL ONE FINANCIAL CORP | ex99_2.htm |
| 8-K - CAPITAL ONE FINANCIAL CORPORATION 8-K 1-20-2011 - CAPITAL ONE FINANCIAL CORP | form8k.htm |
Exhibit 99.3
CAPITAL ONE FINANCIAL CORPORATION (COF)
Reconciliation of Non-GAAP Measures and Regulatory Capital Measures
We refer to our consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") as our "reported" or GAAP financial statements. Effective January 1, 2010, we prospectively adopted two new consolidation accounting standards that resulted in the consolidation of the substantial majority of our securitization trusts that had been previously treated as off-balance sheet. Prior to our adoption of these new consolidation accounting standards, management evaluated the company's performance on a non-GAAP "managed" basis, which assumed that securitized loans were not sold and the earnings from securitized loans were classified in our results of operations in the same manner as the earnings from loans that we owned. We believed that our managed basis information is useful to investors because it portrays the results of both on- and off-balance sheet loans that we manage, which enables investors to understand and evaluate the credit risks associated with the portfolio of loans reported on our consolidated balance sheet and our retained interests in securitized loans. Our non-GAAP managed basis measures may not be comparable to similarly titled measures used by other companies.
As a result of the January 1, 2010 adoption of the new consolidation accounting standards, the accounting for the loans in our securitization trusts in our reported GAAP financial statements is similar to how we accounted for these loans on a managed basis prior to January 1, 2010. Consequently, we believe our managed basis presentations for periods prior to January 1, 2010 are generally comparable to our reported basis presentations for periods beginning after January 1, 2010. In periods prior to January 1, 2010, certain of our non-GAAP managed basis measures differed from our comparable reported measures because we assumed, for our managed basis presentation, that securitized loans that were accounted for as sales in our GAAP financial statements remained on our balance sheet.
The following tables, which are described below, provide a reconciliation of reported GAAP financial measures to the non-GAAP managed basis financial measures included in our filing. We also provide the details of the calculation of certain non-GAAP capital measures that management uses in assessing its capital adequacy.
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Page
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Table 1: Financial & Statistical Summary—Reported GAAP Measures
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—
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Reflects selected financial measures from our consolidated GAAP financial statements or metrics calculated based on our consolidated GAAP financial statements.
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1
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Table 2: Financial & Statistical Summary—Non-GAAP Securitization Reconciliation Adjustments
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—
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Presents the reconciling differences between our reported GAAP financial measures and our non-GAAP managed basis financial measures. These differences include certain reclassifications that assume loans securitized by Capital One and accounted for as sales and off-balance sheet transactions in our GAAP financial statements remain on our balance sheet. These adjustments do not impact income from continuing operations reported by our lines of business or the Company's consolidated net income.
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2
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Table 3: Financial & Statistical Summary—Non-GAAP Managed Basis Measures
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—
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Reflects selected financial measures and related metrics based on our non-GAAP managed basis results.
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3
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Table 4: Explanatory Notes (Tables 1 - 3)
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—
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Includes explanatory footnotes that provide additional information for certain financial and statistical measures presented in Tables 1, 2 and 3.
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4
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Table 5: Reconciliation of Non-GAAP Average Balances, Net Interest Income and Net Interest Margin
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—
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Presents a reconciliation of our average balances and net interest margin on a reported basis to our average balances and net interest margin on a non-GAAP managed basis.
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5
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Table 6: Reconciliation of Non-GAAP Capital Measures and Calculation of Regulatory Capital Measures
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—
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Presents a reconciliation of our regulatory capital measures to certain non-GAAP capital measures.
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6
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Table 1: Financial & Statistical Summary—Reported GAAP Measures(1)
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2009
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2008
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(dollars in millions)(unaudited)
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Full Year
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Q4
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Q3
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Q2
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Q1 (2)
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Full Year
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||||||||||||||||||
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Earnings
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||||||||||||||||||||||||
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Net interest income
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$ | 7,697 | $ | 1,954 | $ | 2,005 | $ | 1,945 | $ | 1,793 | $ | 7,149 | ||||||||||||
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Non-interest income (3)
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5,286 | 1,411 | 1,553 | 1,232 | (4) | 1,090 | 6,744 | |||||||||||||||||
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Total revenue (5)
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$ | 12,983 | $ | 3,365 | $ | 3,558 | $ | 3,177 | $ | 2,883 | $ | 13,893 | ||||||||||||
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Provision for loan and lease losses
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4,230 | 844 | 1,173 | 934 | 1,279 | 5,101 | ||||||||||||||||||
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Balance Sheet Statistics (Period Average)
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Average loans held for investment
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$ | 99,787 | $ | 94,732 | $ | 99,354 | $ | 104,682 | $ | 103,242 | $ | 98,971 | ||||||||||||
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Average earning assets
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145,310 | 143,663 | 145,280 | 150,804 | 145,172 | 133,123 | ||||||||||||||||||
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Average assets
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171,598 | 169,856 | 173,428 | 177,628 | 168,489 | 156,292 | ||||||||||||||||||
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Average liabilities
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144,992 | 143,338 | 147,426 | 149,960 | 141,485 | 131,014 | ||||||||||||||||||
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Return on average assets (ROA)
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0.58 | % | 0.95 | % | 1.01 | % | 0.52 | % | (0.20 | )% | 0.05 | % | ||||||||||||
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Balance Sheet Statistics (Period End)
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Loans held for investment
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$ | 90,619 | $ | 90,619 | $ | 96,714 | $ | 100,940 | $ | 104,921 | $ | 101,018 | ||||||||||||
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Total assets
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169,646 | 169,646 | 168,464 | 171,994 | 177,462 | 165,913 | ||||||||||||||||||
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Total liabilities
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143,057 | 143,057 | 142,272 | 146,662 | 150,714 | 139,301 | ||||||||||||||||||
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Tangible assets (A)
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155,516 | 155,516 | 154,315 | 157,782 | 163,230 | 153,410 | ||||||||||||||||||
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Tangible common equity (TCE) ratio (B)
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8.03 | % | 8.03 | % | 7.82 | % | 7.10 | %(6) | 5.75 | % | 7.18 | % | ||||||||||||
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Performance Statistics
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Net interest income growth (quarter over quarter) (7)
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8 | % | (3 | )% | 3 | % | 8 | % | (1 | )% | 9 | % | ||||||||||||
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Non-interest income growth (quarter over quarter) (7)
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(22 | )% | (9 | )% | 26 | % | 13 | % | (20 | )% | (16 | )% | ||||||||||||
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Revenue growth (quarter over quarter)
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(7 | )% | (5 | )% | 12 | % | 10 | % | (9 | )% | (5 | )% | ||||||||||||
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Net interest margin
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5.30 | % | 5.44 | % | 5.52 | % | 5.16 | % | 4.94 | % | 5.37 | % | ||||||||||||
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Revenue margin
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8.94 | % | 9.37 | % | 9.80 | % | 8.43 | % | 7.94 | % | 10.44 | % | ||||||||||||
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Risk-adjusted margin (C)
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5.79 | % | 6.07 | % | 6.69 | % | 5.46 | % | 4.81 | % | 7.83 | % | ||||||||||||
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Non-interest expense as a % of average loans held for investment (annualized)
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7.43 | % | 8.23 | % | 7.25 | % | 7.34 | % | 6.76 | % | 8.30 | % | ||||||||||||
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Efficiency ratio (D)
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56.21 | % | 56.92 | % | 49.92 | % | 59.11 | % | 59.93 | % | 58.13 | % | ||||||||||||
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Credit Quality Statistics
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Net charge-offs
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$ | 4,568 | $ | 1,185 | $ | 1,128 | $ | 1,117 | $ | 1,138 | $ | 3,478 | ||||||||||||
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Net charge-off rate (8)
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4.58 | % | 5.00 | % | 4.54 | % | 4.28 | % | 4.41 | % | 3.51 | % | ||||||||||||
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30+ day performing delinquencies
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$ | 3,746 | $ | 3,746 | $ | 3,983 | $ | 3,746 | $ | 3,834 | $ | 4,418 | ||||||||||||
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30+ day performing delinquency rate (8)
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4.13 | % | 4.13 | % | 4.12 | % | 3.71 | % | 3.65 | % | 4.37 | % | ||||||||||||
Page 1
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 2: Financial & Statistical Summary—Non-GAAP Securitization Reconciliation Adjustments
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2009
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2008
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(dollars in millions)(unaudited)
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Full Year
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Q4
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Q3
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Q2
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Q1
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Full Year
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Earnings
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Net interest income
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$ | 4,392 | $ | 1,216 | $ | 1,207 | $ | 1,012 | $ | 957 | $ | 4,273 | ||||||||||||
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Non-interest income
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(539 | ) | (213 | ) | (180 | ) | (42 | ) | (104 | ) | (1,327 | ) | ||||||||||||
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Total revenue
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3,853 | 1,003 | 1,027 | 970 | 853 | 2,946 | ||||||||||||||||||
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Provision for loan and lease losses
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3,853 | 1,003 | 1,027 | 970 | 853 | 2,946 | ||||||||||||||||||
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Balance Sheet Statistics (Period Average)
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Average loans held for investment
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$ | 43,727 | $ | 43,452 | $ | 44,186 | $ | 43,331 | $ | 43,940 | $ | 48,841 | ||||||||||||
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Average earning assets
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40,666 | 40,236 | 40,594 | 40,404 | 41,442 | 46,264 | ||||||||||||||||||
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Average assets
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41,060 | 40,569 | 41,227 | 40,774 | 41,680 | 47,262 | ||||||||||||||||||
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Average liabilities
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41,060 | 40,569 | 41,227 | 40,774 | 41,680 | 47,262 | ||||||||||||||||||
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Return on average assets (ROA)
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(0.12 | )% | (0.18 | )% | (0.20 | )% | (0.10 | )% | 0.04 | % | (0.01 | )% | ||||||||||||
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Balance Sheet Statistics (Period End)
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Loans held for investment
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$ | 46,184 | $ | 46,184 | $ | 44,275 | $ | 45,177 | $ | 44,809 | $ | 45,919 | ||||||||||||
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Total assets
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42,743 | 42,743 | 41,219 | 42,184 | 42,496 | 43,962 | ||||||||||||||||||
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Total liabilities
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42,767 | 42,767 | 41,219 | 42,184 | 42,496 | 43,961 | ||||||||||||||||||
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Tangible assets (A)
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42,767 | 42,767 | 41,251 | 42,230 | 42,526 | 43,927 | ||||||||||||||||||
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Tangible common equity (TCE) ratio (B)
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(1.73 | )% | (1.73 | )% | (1.65 | )% | (1.50 | )% | (1.19 | )% | (1.61 | )% | ||||||||||||
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Performance Statistics
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Net interest income growth
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(2 | )% | 2 | % | 6 | % | - | % | - | % | (5 | )% | ||||||||||||
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Non-interest income growth
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10 | % | (4 | )% | (11 | )% | 8 | % | 3 | % | 10 | % | ||||||||||||
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Revenue growth
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7 | % | - | % | (1 | )% | 1 | % | 4 | % | 5 | % | ||||||||||||
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Net interest margin
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1.20 | % | 1.46 | % | 1.39 | % | 1.03 | % | 0.95 | % | 1.00 | % | ||||||||||||
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Revenue margin
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0.11 | % | 0.13 | % | 0.07 | % | 0.25 | % | 0.07 | % | (1.05 | )% | ||||||||||||
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Risk-adjusted margin(C)
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(1.26 | )% | (1.33 | )% | (1.46 | )% | (1.15 | )% | (1.07 | )% | (2.02 | )% | ||||||||||||
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Non-interest expense as a % of average loans held for investment (annualized)
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(2.26 | )% | (2.59 | )% | (2.23 | )% | (2.15 | )% | (2.02 | )% | (2.75 | )% | ||||||||||||
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Efficiency ratio (D)
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(12.86 | )% | (13.07 | )% | (11.19 | )% | (13.82 | )% | (13.68 | )% | (10.17 | )% | ||||||||||||
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Credit Quality Statistics
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Net charge-offs
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$ | 3,853 | $ | 1,003 | $ | 1,027 | $ | 970 | $ | 853 | $ | 2,947 | ||||||||||||
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Net charge-off rate
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1.29 | % | 1.33 | % | 1.46 | % | 1.36 | % | 1.00 | % | 0.84 | % | ||||||||||||
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30+ day performing delinquencies
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$ | 2,719 | $ | 2,719 | $ | 2,434 | $ | 2,241 | $ | 2,312 | $ | 2,178 | ||||||||||||
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30+ day performing delinquency rate
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0.60 | % | 0.60 | % | 0.43 | % | 0.39 | % | 0.45 | % | 0.12 | % | ||||||||||||
Page 2
CAPITAL ONE FINANCIAL CORPORATION (COF)
Table 3: Financial & Statistical Summary—Non-GAAP Managed Basis Measures(1)(9)
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2009
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2008
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(dollars in millions)(unaudited)
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Full Year
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Q4
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Q3
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Q2
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Q1 (2)
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Full Year
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Non-GAAP Managed Earnings
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Net interest income
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$ | 12,089 | $ | 3,170 | $ | 3,212 | $ | 2,957 | $ | 2,750 | $ | 11,422 | ||||||||||||
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Non-interest income (3)
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4,747 | 1,198 | 1,373 | 1,190 | (4) | 986 | 5,417 | |||||||||||||||||
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Total revenue (5)
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16,836 | 4,368 | 4,585 | 4,147 | 3,736 | 16,839 | ||||||||||||||||||
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Provision for loan and lease losses
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8,083 | 1,847 | 2,200 | 1,904 | 2,132 | 8,047 | ||||||||||||||||||
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Non-GAAP Managed Balance Sheet Statistics (Period Average)
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Average loans held for investment
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$ | 143,514 | $ | 138,184 | $ | 143,540 | $ | 148,013 | $ | 147,182 | $ | 147,812 | ||||||||||||
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Average earning assets
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185,976 | 183,899 | 185,874 | 191,208 | 186,614 | 179,387 | ||||||||||||||||||
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Average assets
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212,657 | 210,425 | 214,655 | 218,402 | 210,169 | 203,554 | ||||||||||||||||||
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Average liabilities
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186,052 | 183,907 | 188,653 | 190,734 | 183,165 | 178,276 | ||||||||||||||||||
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Return on average assets (ROA)
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0.46 | % | 0.77 | % | 0.81 | % | 0.42 | % | (0.16 | )% | 0.04 | % | ||||||||||||
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Non-GAAP Managed Balance Sheet Statistics (Period End)
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Loans held for investment
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$ | 136,803 | $ | 136,803 | $ | 140,990 | $ | 146,117 | $ | 149,730 | $ | 146,937 | ||||||||||||
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Total assets
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212,389 | 212,389 | 209,683 | 214,178 | 219,958 | 209,875 | ||||||||||||||||||
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Total liabilities
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185,824 | 185,824 | 183,491 | 188,846 | 193,210 | 183,262 | ||||||||||||||||||
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Tangible assets (A)
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198,283 | 198,283 | 195,566 | 200,012 | 205,756 | 197,337 | ||||||||||||||||||
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Tangible common equity (TCE) ratio (B)
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6.30 | % | 6.30 | % | 6.17 | % | 5.60 | %(6) | 4.56 | % | 5.57 | % | ||||||||||||
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Non-GAAP Managed Performance Statistics
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Net interest income growth (quarter over quarter) (7)
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6 | % | (1 | )% | 9 | % | 8 | % | (1 | )% | 4 | % | ||||||||||||
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Non-interest income growth (quarter over quarter) (7)
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(12 | )% | (13 | )% | 15 | % | 21 | % | (17 | )% | (6 | )% | ||||||||||||
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Revenue growth (quarter over quarter)
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― | % | (5 | )% | 11 | % | 11 | % | (5 | )% | ― | % | ||||||||||||
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Net interest margin
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6.50 | % | 6.90 | % | 6.91 | % | 6.19 | % | 5.89 | % | 6.37 | % | ||||||||||||
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Revenue margin
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9.05 | % | 9.50 | % | 9.87 | % | 8.68 | % | 8.01 | % | 9.39 | % | ||||||||||||
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Risk-adjusted margin (C)
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4.53 | % | 4.74 | % | 5.23 | % | 4.31 | % | 3.74 | % | 5.81 | % | ||||||||||||
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Non-interest expense as a % of average loans held for investment (annualized)
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5.17 | % | 5.64 | % | 5.02 | % | 5.19 | % | 4.74 | % | 5.55 | % | ||||||||||||
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Efficiency ratio (D)
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43.35 | % | 43.85 | % | 38.73 | % | 45.29 | % | 46.25 | % | 47.96 | % | ||||||||||||
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Non-GAAP Managed Credit Quality Statistics
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Net charge-offs
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$ | 8,421 | $ | 2,188 | $ | 2,155 | $ | 2,087 | $ | 1,991 | $ | 6,425 | ||||||||||||
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Net charge-off rate (8)
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5.87 | % | 6.33 | % | 6.00 | % | 5.64 | % | 5.41 | % | 4.35 | % | ||||||||||||
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30+ day performing delinquencies
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6,465 | 6,465 | 6,417 | 5,987 | 6,146 | 6,596 | ||||||||||||||||||
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30+ day performing delinquency rate (8)
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4.73 | % | 4.73 | % | 4.55 | % | 4.10 | % | 4.10 | % | 4.49 | % | ||||||||||||
Page 3
Table 4: Explanatory Notes (Tables 1 - 3)
Notes
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(1)
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Based on continuing operations.
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(2)
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Effective February 27, 2009, the Company acquired Chevy Chase Bank, FSP for $476 million, which included a cash payment of $445 million and the issuance of 2.6 million common shares valued at $31 million. The acquisition of Chevy Chase Bank included $10 billion in loans and $13.6 billion in deposits.
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(3)
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Includes the impact from the change in fair value of retained interests, including interest-only strips, totaling $(146) million for the year 2009, $55 million in Q4 2009, $38 million in Q3 2009, $(115) million in Q2 2009 and $(124) million in Q1 2009, and $(260) million in 2008.
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(4)
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In Q2 2009, the Company elected to convert and sell 404,508 shares of MasterCard class B common stock, which resulted in the recognition of a gain of $66 million that was recorded in non-interest income.
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(5)
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Billed finance charges and fees not recognized in revenue totaled $2.1 billion for the year 2009, $490 million in Q4 2009, $517 million in Q3 2009, $572 million in Q2 2009, $544 million in Q1 2009, and $1.9 billion in 2008.
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(6)
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Includes the impact of the issuance of 56,000,000 common shares at $27.75 per share on May 14, 2009.
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(7)
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Prior period amounts have been reclassified to conform to the current period presentation and adjusted to reflect purchase accounting refinements related to the acquisition of Chevy Chase Bank, FSB ("CCB").
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(8)
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The denominator used in calculating the allowance as a % of loans held for investment, the net charge-off rate and the 30+ day performing delinquency rate include loans acquired as part of the CCB acquisition. These metrics, calculated excluding CCB loans, are presented below.
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2009
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(dollars in millions) (unaudited)
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Full Year
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Q4
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Q3
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Q2
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Q1
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CCB period end acquired loan portfolio
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$ | 7,251 | $ | 7,251 | $ | 7,885 | $ | 8,644 | $ | 8,859 | ||||||||||
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CCB average acquired loan portfolio
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$ | 7,996 | $ | 7,512 | $ | 8,029 | $ | 8,499 | $ | 3,073 | ||||||||||
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Allowance as a % of loans held for investment, excluding CCB
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4.95 | % | 4.95 | % | 5.08 | % | 4.86 | % | 4.84 | % | ||||||||||
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Net charge-off rate (Reported), excluding CCB
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4.98 | % | 5.44 | % | 4.94 | % | 4.65 | % | 4.54 | % | ||||||||||
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Net charge-off rate (Managed), excluding CCB
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6.21 | % | 6.70 | % | 6.36 | % | 5.98 | % | 5.53 | % | ||||||||||
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30+ day performing delinquency rate (Reported), excluding CCB
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4.49 | % | 4.49 | % | 4.48 | % | 4.06 | % | 3.99 | % | ||||||||||
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30+ day performing delinquency rate (Managed), excluding CCB
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4.99 | % | 4.99 | % | 4.82 | % | 4.36 | % | 4.36 | % | ||||||||||
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(9)
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The managed loan portfolio does not include automobile or home loans that have been sold in whole loan sale transactions where the Company has retained servicing rights.
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Statistical/Metric Calculations
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(A)
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Tangible assets represents total assets from continuing operations less identifiable intangible assets and goodwill. See "Table 6: Reconciliation of Non-GAAP Capital Measures and Calculation of Regulatory Capital Measures."
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(B)
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Tangible common equity ("TCE") represents common stockholders' equity (total stockholders' equity less preferred stock) less identifiable intangible assets and goodwill. See "Table 6: Reconciliation of Non-GAAP Capital Measures and Calculation of Regulatory Capital Measures."
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(C)
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Calculated based on total revenue less net charge-offs divided by average earning assets.
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(D)
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Calculated based on non-interest expense less restructuring expense divided by total revenue.
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Page 4
Table 5: Reconciliation of Non-GAAP Average Balances, Net Interest Income and Net Interest Margin(1)
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Quarter Ended 12/31/09
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Year Ended 12/31/09
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(dollars in millions)(unaudited)
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Average Balance
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Interest
Income/
Expense
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Yield/
Rate
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Average Balance
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Interest
Income/
Expense
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Yield/
Rate
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Reported Basis
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Interest-earning assets:
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Loans held for investment
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$ | 133,219 | $ | 2,512 | 7.54 | % | $ | 136,697 | $ | 10,367 | 7.58 | % | ||||||||||||
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Other
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10,444 | 83 | 3.18 | % | 8,596 | 297 | 3.46 | % | ||||||||||||||||
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Total interest-earning assets
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$ | 143,663 | $ | 2,595 | 7.23 | % | $ | 145,293 | $ | 10,664 | 7.34 | % | ||||||||||||
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Interest-bearing liabilities:
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Securitization liability
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$ | 4,249 | $ | 54 | 5.08 | % | $ | 5,516 | $ | 282 | 5.11 | % | ||||||||||||
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Total interest-bearing liabilities
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$ | 124,060 | $ | 641 | 2.07 | % | $ | 126,583 | $ | 2,967 | 2.34 | % | ||||||||||||
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Net interest income/spread
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$ | 1,954 | 5.16 | % | $ | 7,697 | 5.00 | % | ||||||||||||||||
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Interest income to average interest-earning assets
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7.23 | % | 7.34 | % | ||||||||||||||||||||
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Interest expense to average interest-earning assets
|
1.78 | % | 2.04 | % | ||||||||||||||||||||
|
Net interest margin
|
5.45 | % | 5.30 | % | ||||||||||||||||||||
|
Quarter Ended 12/31/09
|
Year Ended 12/31/09
|
|||||||||||||||||||||||
|
Average Balance
|
Interest
Income/
Expense
|
Yield/
Rate
|
Average Balance
|
Interest
Income/
Expense
|
Yield/
Rate
|
|||||||||||||||||||
|
Non-GAAP Securitization Reconciliation Adjustments
|
||||||||||||||||||||||||
|
Interest-earning assets:
|
||||||||||||||||||||||||
|
Loans held for investment
|
$ | 43,452 | $ | 1,530 | 1.61 | % | $ | 43,727 | $ | 5,678 | 1.31 | % | ||||||||||||
|
Other
|
(3,216 | ) | (66 | ) | (2.24 | )% | (3,061 | ) | (229 | ) | (2.23 | )% | ||||||||||||
|
Total interest-earning assets
|
$ | 40,236 | $ | 1,464 | 1.60 | % | $ | 40,666 | $ | 5,449 | 1.32 | % | ||||||||||||
|
Interest-bearing liabilities:
|
||||||||||||||||||||||||
|
Securitization liability
|
$ | 40,588 | $ | 247 | (2.39 | )% | $ | 41,100 | $ | 1,055 | (2.24 | )% | ||||||||||||
|
Total interest-bearing liabilities
|
$ | 40,588 | $ | 247 | 0.09 | % | $ | 41,101 | $ | 1,238 | 0.17 | % | ||||||||||||
|
Net interest income/spread
|
$ | 1,216 | 1.51 | % | $ | 4,392 | 1.16 | % | ||||||||||||||||
|
Interest income to average interest-earning assets
|
1.60 | % | 1.32 | % | ||||||||||||||||||||
|
Interest expense to average interest-earning assets
|
0.15 | % | 0.22 | % | ||||||||||||||||||||
|
Net interest margin
|
1.45 | % | 1.10 | % | ||||||||||||||||||||
|
Quarter Ended 12/31/09
|
Year Ended 12/31/09
|
|||||||||||||||||||||||
|
Average Balance
|
Interest
Income/
Expense
|
Yield/
Rate
|
Average Balance
|
Interest
Income/
Expense
|
Yield/
Rate
|
|||||||||||||||||||
|
Non-GAAP Managed Basis
|
||||||||||||||||||||||||
|
Interest-earning assets:
|
||||||||||||||||||||||||
|
Loans held for investment
|
$ | 176,671 | $ | 4,042 | 9.15 | % | $ | 180,424 | $ | 16,045 | 8.89 | % | ||||||||||||
|
Other
|
7,228 | 17 | 0.94 | % | 5,535 | 68 | 1.23 | % | ||||||||||||||||
|
Total interest-earning assets
|
$ | 183,899 | $ | 4,059 | 8.83 | % | $ | 185,959 | $ | 16,113 | 8.66 | % | ||||||||||||
|
Interest-bearing liabilities:
|
||||||||||||||||||||||||
|
Securitization liability
|
$ | 44,837 | $ | 301 | 2.69 | % | $ | 46,616 | $ | 1,337 | 2.87 | % | ||||||||||||
|
Total interest-bearing liabilities
|
$ | 164,648 | $ | 888 | 2.16 | % | $ | 167,684 | $ | 4,205 | 2.51 | % | ||||||||||||
|
Net interest income/spread
|
$ | 3,170 | 6.67 | % | $ | 12,089 | 6.16 | % | ||||||||||||||||
|
Interest income to average interest-earning assets
|
8.83 | % | 8.66 | % | ||||||||||||||||||||
|
Interest expense to average interest-earning assets
|
1.93 | % | 2.26 | % | ||||||||||||||||||||
|
Net interest margin
|
6.90 | % | 6.40 | % | ||||||||||||||||||||
________________
|
(1)
|
Reflects amounts based on continuing operations.
|
Page 5
Table 6: Reconciliation of Non-GAAP Capital Measures and Calculation of Regulatory Capital Measures
In addition to disclosing required regulatory measures, the Company also reports certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible common equity, tangible common equity (TCE), TCE ratio, Tier 1 common equity and Tier 1 common equity ratio. The table below provides the details of the calculation of each of these measures. While these non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies.
|
(dollars in millions)(unaudited)
|
2010
Q4 |
2010
Q3 |
2010
Q2 |
2010
Q1 |
2009
Q4 |
|||||||||||||||
|
Average Equity to Non-GAAP Average Tangible Common Equity
|
||||||||||||||||||||
|
Average total stockholders' equity
|
$ | 26,255 | $ | 25,307 | $ | 24,526 | $ | 23,681 | $ | 26,518 | ||||||||||
|
Less: Average preferred stock
|
- | - | - | - | - | |||||||||||||||
|
Less: Average intangible assets (1)
|
(14,008 | ) | (14,003 | ) | (14,039 | ) | (14,075 | ) | (14,105 | ) | ||||||||||
|
Average tangible common equity
|
$ | 12,247 | $ | 11,304 | $ | 10,487 | $ | 9,606 | $ | 12,413 | ||||||||||
|
Stockholders Equity to Non-GAAP Tangible Common Equity
|
||||||||||||||||||||
|
Total stockholders' equity
|
$ | 26,541 | $ | 26,061 | $ | 25,270 | $ | 24,374 | $ | 26,589 | ||||||||||
|
Less: Preferred stock
|
- | - | - | - | - | |||||||||||||||
|
Less: Intangible assets (1)
|
(13,983 | ) | (14,024 | ) | (14,011 | ) | (14,044 | ) | (14,106 | ) | ||||||||||
|
Tangible common equity
|
$ | 12,558 | $ | 12,037 | $ | 11,259 | $ | 10,330 | $ | 12,483 | ||||||||||
|
Total Assets to Tangible Assets
|
||||||||||||||||||||
|
Total assets
|
$ | 197,503 | $ | 196,933 | $ | 197,489 | $ | 200,707 | $ | 169,646 | ||||||||||
|
Less: Assets from discontinued operations
|
(362 | ) | (5 | ) | (4 | ) | (16 | ) | (24 | ) | ||||||||||
|
Total assets from continuing operations
|
197,141 | 196,928 | 197,485 | 200,691 | 169,622 | |||||||||||||||
|
Less: Intangible assets (1)
|
(13,983 | ) | (14,024 | ) | (14,011 | ) | (14,044 | ) | (14,106 | ) | ||||||||||
|
Tangible assets
|
$ | 183,158 | $ | 182,904 | $ | 183,474 | $ | 186,647 | $ | 155,516 | ||||||||||
|
Non-GAAP TCE Ratio
|
||||||||||||||||||||
|
Tangible common equity
|
$ | 12,558 | $ | 12,037 | $ | 11,259 | $ | 10,330 | $ | 12,483 | ||||||||||
|
Tangible assets
|
$ | 183,158 | $ | 182,904 | $ | 183,474 | $ | 186,647 | $ | 155,516 | ||||||||||
|
TCE ratio(2)
|
6.86 | % | 6.58 | % | 6.14 | % | 5.53 | % | 8.03 | % | ||||||||||
|
Non-GAAP Managed Basis TCE Ratio
|
||||||||||||||||||||
|
Total reported assets
|
$ | 197,503 | $ | 196,933 | $ | 197,489 | $ | 200,707 | $ | 169,646 | ||||||||||
|
Plus: Securitization adjustment (3)
|
- | - | - | - | 42,767 | |||||||||||||||
|
Total managed assets
|
$ | 197,503 | $ | 196,933 | $ | 197,489 | $ | 200,707 | $ | 212,413 | ||||||||||
|
Less: Assets from discontinued operations
|
(362 | ) | (5 | ) | (4 | ) | (16 | ) | (24 | ) | ||||||||||
|
Total assets from continuing operations
|
197,141 | 196,928 | 197,485 | 200,691 | 212,389 | |||||||||||||||
|
Less: Intangible assets (1)
|
(13,983 | ) | (14,024 | ) | (14,011 | ) | (14,044 | ) | (14,106 | ) | ||||||||||
|
Managed tangible assets
|
$ | 183,158 | $ | 182,904 | $ | 183,474 | $ | 186,647 | $ | 198,283 | ||||||||||
|
Tangible common equity
|
$ | 12,558 | $ | 12,037 | $ | 11,259 | $ | 10,330 | $ | 12,483 | ||||||||||
|
Managed tangible assets
|
$ | 183,158 | $ | 182,904 | $ | 183,474 | $ | 186,647 | $ | 198,283 | ||||||||||
|
Managed TCE ratio (2)
|
6.86 | % | 6.58 | % | 6.14 | % | 5.53 | % | 6.30 | % | ||||||||||
|
Non-GAAP Tier 1 Common Equity and Regulatory Capital Ratios
|
||||||||||||||||||||
|
Total stockholders' equity
|
$ | 26,541 | $ | 26,061 | $ | 25,270 | $ | 24,374 | $ | 26,589 | ||||||||||
|
Less: Net unrealized (gains) losses on AFS securities recorded in AOCI (4)
|
(368 | ) | (580 | ) | (661 | ) | (319 | ) | (200 | ) | ||||||||||
|
Net (gains) losses on cash flow hedges recorded in AOCI(4)
|
86 | 79 | 73 | 80 | 92 | |||||||||||||||
|
Disallowed goodwill and other intangible assets
|
(13,953 | ) | (13,993 | ) | (14,023 | ) | (14,078 | ) | (14,125 | ) | ||||||||||
|
Disallowed deferred tax assets
|
(1,150 | ) | (1,324 | ) | (1,977 | ) | (2,183 | ) | - | |||||||||||
|
Other
|
(2 | ) | (2 | ) | (2 | ) | (1 | ) | (9 | ) | ||||||||||
|
Tier 1 common equity
|
$ | 11,154 | $ | 10,241 | $ | 8,680 | $ | 7,873 | $ | 12,347 | ||||||||||
|
Plus: Tier 1 restricted core capital items(5)
|
3,636 | 3,636 | 3,637 | 3,638 | 3,642 | |||||||||||||||
|
Tier 1 capital
|
$ | 14,790 | $ | 13,877 | $ | 12,317 | $ | 11,511 | $ | 15,989 | ||||||||||
|
Plus: Long-term debt qualifying as Tier 2 capital
|
2,827 | 2,827 | 2,898 | 3,018 | 3,018 | |||||||||||||||
|
Qualifying allowance for loan and lease losses
|
3,748 | 3,726 | 5,836 | 5,802 | 1,581 | |||||||||||||||
|
Other Tier 2 components
|
29 | 24 | 25 | 4 | 4 | |||||||||||||||
|
Tier 2 capital
|
$ | 6,604 | $ | 6,577 | $ | 8,759 | $ | 8,824 | $ | 4,603 | ||||||||||
|
Total risk-based capital(6)
|
$ | 21,394 | $ | 20,454 | $ | 21,076 | $ | 20,335 | $ | 20,592 | ||||||||||
|
Risk-weighted assets(7)
|
$ | 127,043 | $ | 124,726 | $ | 124,038 | $ | 120,330 | $ | 116,309 | ||||||||||
|
Tier 1 common equity ratio (8)
|
8.78 | %(11) | 8.21 | % | 7.00 | % | 6.54 | % | 10.62 | % | ||||||||||
|
Tier 1 risk-based capital ratio (9)
|
11.64 | %(11) | 11.13 | % | 9.93 | % | 9.57 | % | 13.75 | % | ||||||||||
|
Total risk-based capital ratio (10)
|
16.84 | %(11) | 16.40 | % | 16.99 | % | 16.90 | % | 17.70 | % | ||||||||||
___________________
|
(1)
|
Includes impact from related deferred taxes.
|
|
(2)
|
Calculated based on tangible common equity divided by tangible assets. The managed TCE ratio, which is the same as the TCE ratio for periods subsequent to January 1, 2010, is calculated based on tangible common equity divided by managed tangible assets.
|
|
(3)
|
Reflects the adjustment to reported total consolidated assets to reflect loans underlying off-balance sheet securitized trusts in the same manner as on-balance sheet loans.
|
|
(4)
|
Amounts presented are net of tax.
|
|
(5)
|
Consists primarily of trust preferred securities.
|
|
(6)
|
Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.
|
|
(7)
|
Calculated based on prescribed regulatory guidelines.
|
|
(8)
|
Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity divided by risk-weighted assets.
|
|
(9)
|
Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighed assets.
|
|
(10)
|
Total risk-based capital ratio is a regulatory capital measure calculated based on Total risk-based capital divided by risk-weighed assets.
|
|
(11)
|
Regulatory capital ratios as of the end of Q4 2010 are preliminary and therefore subject to change once the calculations have been finalized.
|
Page 6