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

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EX-99.1 - EXHIBIT 99.1 - CAPITAL ONE FINANCIAL CORP	q42016earningsrelease-ex991.htm
8-K - 8-K - CAPITAL ONE FINANCIAL CORP	q42016earningsrelease8-k.htm

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement

Fourth Quarter2016⁽¹⁾⁽²⁾

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	6
	Table 5:	Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)	8
	Table 6:	Average Balances, Net Interest Income and Net Interest Margin	10
	Table 7:	Loan Information and Performance Statistics	11
	Table 8:	Allowance for Loan and Lease Losses and Reserve for Unfunded Lending Commitments Activity	13
Business Segment Results
	Table 9:	Financial Summary—Business Segment Results	14
	Table 10:	Financial & Statistical Summary—Credit Card Business	15
	Table 11:	Financial & Statistical Summary—Consumer Banking Business	17
	Table 12:	Financial & Statistical Summary—Commercial Banking Business	18
	Table 13:	Financial & Statistical Summary—Other and Total	19
	Table 14:	Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)	20
Other
	Table 15:	Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures	21

__________


⁽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, 2016 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 accounting principles generally accepted 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



																2016 Q4 vs.				Year Ended December 31,
(Dollars in millions, except per share data and as noted)	2016			2016			2016			2016			2015			2016		2015								2016 vs.
(Dollars in millions, except per share data and as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2016			2015			2015
Income Statement
Net interest income	$	5,447		$	5,277		$	5,093		$	5,056		$	4,961		3%		10%		$	20,873		$	18,834		11%
Non-interest income	1,119			1,184			1,161			1,164			1,233			(5	)	(9	)	4,628			4,579			1
Total net revenue⁽¹⁾	6,566			6,461			6,254			6,220			6,194			2		6		25,501			23,413			9
Provision for credit losses	1,752			1,588			1,592			1,527			1,380			10		27		6,459			4,536			42
Non-interest expense:
Marketing	575			393			415			428			564			46		2		1,811			1,744			4
Amortization of intangibles	101			89			95			101			103			13		(2	)	386			430			(10	)
Operating expenses	3,003			2,879			2,785			2,694			2,813			4		7		11,361			10,822			5
Total non-interest expense	3,679			3,361			3,295			3,223			3,480			9		6		13,558			12,996			4
Income from continuing operations before income taxes	1,135			1,512			1,367			1,470			1,334			(25	)	(15	)	5,484			5,881			(7	)
Income tax provision	342			496			424			452			426			(31	)	(20	)	1,714			1,869			(8	)
Income from continuing operations, net of tax	793			1,016			943			1,018			908			(22	)	(13	)	3,770			4,012			(6	)
Income (loss) from discontinued operations, net of tax⁽²⁾	(2		)	(11		)	(1		)	(5		)	12			(82	)	**		(19		)	38			**
Net income	791			1,005			942			1,013			920			(21	)	(14	)	3,751			4,050			(7	)
Dividends and undistributed earnings allocated to participating securities⁽³⁾	(6		)	(6		)	(6		)	(6		)	(4		)	—		50		(24		)	(20		)	20
Preferred stock dividends	(75		)	(37		)	(65		)	(37		)	(68		)	103		10		(214		)	(158		)	35
Net income available to common stockholders	$	710		$	962		$	871		$	970		$	848		(26	)	(16	)	$	3,513		$	3,872		(9	)
Common Share Statistics
Basic earnings per common share:⁽³⁾
Net income from continuing operations	$	1.47		$	1.94		$	1.70		$	1.86		$	1.58		(24)%		(7)%		$	7.00		$	7.08		(1)%
Income (loss) from discontinued operations	—			(0.02		)	—			(0.01		)	0.02			**		**		(0.04		)	0.07			**
Net income per basic common share	$	1.47		$	1.92		$	1.70		$	1.85		$	1.60		(23	)	(8	)	$	6.96		$	7.15		(3	)
Diluted earnings per common share:⁽³⁾
Net income from continuing operations	$	1.45		$	1.92		$	1.69		$	1.85		$	1.56		(24	)	(7	)	$	6.93		$	7.00		(1	)
Income (loss) from discontinued operations	—			(0.02		)	—			(0.01		)	0.02			**		**		(0.04		)	0.07			**
Net income per diluted common share	$	1.45		$	1.90		$	1.69		$	1.84		$	1.58		(24	)	(8	)	$	6.89		$	7.07		(3	)
Weighted-average common shares outstanding (in millions):
Basic	483.5			501.1			511.7			523.5			530.8			(4	)	(9	)	504.9			541.8			(7	)
Diluted	489.2			505.9			516.5			528.0			536.3			(3	)	(9	)	509.8			548.0			(7	)
Common shares outstanding (period-end, in millions)	480.2			489.2			505.9			514.5			527.3			(2	)	(9	)	480.2			527.3			(9	)
Dividends paid per common share	$	0.40		$	0.40		$	0.40		$	0.40		$	0.40		—		—		$	1.60		$	1.50		7
Tangible book value per common share (period-end)⁽⁴⁾	57.76			59.00			57.84			55.94			53.65			(2	)	8		57.76			53.65			8



											2016 Q4 vs.				Year Ended December 31,
(Dollars in millions)	2016		2016		2016		2016		2015		2016		2015						2016 vs.
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4		2016		2015		2015
Balance Sheet (Period-End)
Loans held for investment⁽⁵⁾	$	245,586	$	238,019	$	234,603	$	227,613	$	229,851	3%		7%		$	245,586	$	229,851	7%
Interest-earning assets	321,807		313,431		307,163		298,348		302,007		3		7		321,807		302,007		7
Total assets	357,033		345,061		339,117		330,346		334,048		3		7		357,033		334,048		7
Interest-bearing deposits	211,266		200,416		195,635		196,597		191,874		5		10		211,266		191,874		10
Total deposits	236,768		225,981		221,059		221,779		217,721		5		9		236,768		217,721		9
Borrowings	60,460		59,820		59,181		50,497		59,115		1		2		60,460		59,115		2
Common equity	43,154		44,336		44,813		44,411		43,990		(3	)	(2	)	43,154		43,990		(2	)
Total stockholders’ equity	47,514		48,213		48,108		47,707		47,284		(1	)	—		47,514		47,284		—
Balance Sheet (Average Balances)
Loans held for investment⁽⁵⁾	$	240,027	$	235,843	$	230,379	$	226,736	$	220,052	2%		9%		$	233,272	$	210,745	11%
Interest-earning assets	317,853		310,987		302,764		299,456		292,054		2		9		307,796		282,581		9
Total assets	350,225		343,153		334,479		331,919		323,354		2		8		339,974		313,474		8
Interest-bearing deposits	206,464		196,913		195,641		194,125		189,885		5		9		198,304		185,677		7
Total deposits	232,204		222,251		221,146		219,180		215,899		4		8		223,714		210,989		6
Borrowings	58,624		60,708		54,359		53,761		48,850		(3	)	20		56,878		45,420		25
Common equity	43,921		45,314		45,640		45,782		45,418		(3	)	(3	)	45,162		45,072		—
Total stockholders’ equity	47,972		49,033		48,934		49,078		48,712		(2	)	(2	)	48,753		47,713		2

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated



													2016 Q4 vs.				Year Ended December 31,
(Dollars in millions except as noted)	2016			2016		2016		2016			2015		2016		2015						2016 vs.
(Dollars in millions except as noted)	Q4			Q3		Q2		Q1			Q4		Q3		Q4		2016		2015		2015
Performance Metrics
Net interest income growth (period over period)	3%			4%		1%		2%			4%		**		**		11%		6%		**
Non-interest income growth (period over period)	(5		)	2		—		(6		)	8		**		**		1		2		**
Total net revenue growth (period over period)	2			3		1		—			5		**		**		9		5		**
Total net revenue margin⁽⁶⁾	8.26			8.31		8.26		8.31			8.48		(5	)bps	(22	)bps	8.29		8.29		—
Net interest margin⁽⁷⁾	6.85			6.79		6.73		6.75			6.79		6		6		6.78		6.66		12	bps
Return on average assets	0.91			1.18		1.13		1.23			1.12		(27	)	(21	)	1.11		1.28		(17	)
Return on average tangible assets⁽⁸⁾	0.95			1.24		1.18		1.29			1.18		(29	)	(23	)	1.16		1.35		(19	)
Return on average common equity⁽⁹⁾	6.48			8.59		7.64		8.52			7.36		(211	)	(88	)	7.82		8.51		(69	)
Return on average tangible common equity⁽¹⁰⁾	10.00			13.06		11.61		12.94			11.11		(306	)	(111	)	11.93		12.87		(94	)
Non-interest expense as a percentage of average loans held for investment	6.13			5.70		5.72		5.69			6.33		43		(20	)	5.81		6.17		(36	)
Efficiency ratio⁽¹¹⁾	56.03			52.02		52.69		51.82			56.18		401		(15	)	53.17		55.51		(234	)
Effective income tax rate for continuing operations	30.1			32.8		31.0		30.7			31.9		(270	)	(180	)	31.3		31.8		(50	)
Employees (in thousands), period-end	47.3			46.5		46.1		45.8			45.4		2%		4%		47.3		45.4		4%
Credit Quality Metrics
Allowance for loan and lease losses	$	6,503		$	6,258	$	5,881	$	5,416		$	5,130	4%		27%		$	6,503	$	5,130	27%
Allowance as a percentage of loans held for investment	2.65%			2.63%		2.51%		2.38%			2.23%		2	bps	42	bps	2.65%		2.23%		42	bps
Net charge-offs	$	1,489		$	1,240	$	1,155	$	1,178		$	1,078	20%		38%		$	5,062	$	3,695	37%
Net charge-off rate⁽¹²⁾	2.48%			2.10%		2.01%		2.08%			1.96%		38	bps	52	bps	2.17%		1.75%		42	bps
30+ day performing delinquency rate	2.93			2.71		2.47		2.33			2.69		22		24		2.93		2.69		24
30+ day delinquency rate	3.27			3.04		2.79		2.64			3.00		23		27		3.27		3.00		27
Capital Ratios⁽¹³⁾
Common equity Tier 1 capital	10.1%			10.6%		10.9%		11.1%			11.1%		(50	)bps	(100	)bps	10.1%		11.1%		(100	)bps
Tier 1 capital	11.6			12.0		12.2		12.4			12.4		(40	)	(80	)	11.6		12.4		(80	)
Total capital	14.3			14.7		14.4		14.6			14.6		(40	)	(30	)	14.3		14.6		(30	)
Tier 1 leverage	9.9			10.1		10.2		10.2			10.6		(20	)	(70	)	9.9		10.6		(70	)
Tangible common equity (“TCE”)⁽¹⁴⁾	8.1			8.8		9.0		9.1			8.9		(70	)	(80	)	8.1		8.9		(80	)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income



	Three Months Ended									2016 Q4 vs.				Year Ended December 31,
	2016			2016			2015			2016		2015								2016 vs.
(Dollars in millions, except per share data and as noted)	Q4			Q3			Q4			Q3		Q4		2016			2015			2015
Interest income:
Loans, including loans held for sale	$	5,587		$	5,383		$	4,961		4%		13%		$	21,203		$	18,785		13%
Investment securities	393			386			401			2		(2	)	1,599			1,575			2
Other	29			25			22			16		32		89			99			(10	)
Total interest income	6,009			5,794			5,384			4		12		22,891			20,459			12
Interest expense:
Deposits	332			306			277			8		20		1,213			1,091			11
Securitized debt obligations	65			56			43			16		51		216			151			43
Senior and subordinated notes	138			121			89			14		55		476			330			44
Other borrowings	27			34			14			(21	)	93		113			53			113
Total interest expense	562			517			423			9		33		2,018			1,625			24
Net interest income	5,447			5,277			4,961			3		10		20,873			18,834			11
Provision for credit losses	1,752			1,588			1,380			10		27		6,459			4,536			42
Net interest income after provision for credit losses	3,695			3,689			3,581			—		3		14,414			14,298			1
Non-interest income:^(15)(16)
Service charges and other customer-related fees	412			417			463			(1	)	(11	)	1,646			1,856			(11	)
Interchange fees, net	624			603			625			3		—		2,452			2,264			8
Net securities gains (losses)	(4		)	1			(9		)	**		(56	)	(11		)	(32		)	(66	)
Other	87			163			154			(47	)	(44	)	541			491			10
Total non-interest income	1,119			1,184			1,233			(5	)	(9	)	4,628			4,579			1
Non-interest expense:^(15)(16)
Salaries and associate benefits	1,336			1,317			1,215			1		10		5,202			4,975			5
Occupancy and equipment	522			499			511			5		2		1,944			1,829			6
Marketing	575			393			564			46		2		1,811			1,744			4
Professional services	312			257			307			21		2		1,075			1,120			(4	)
Communications and data processing	297			291			289			2		3		1,169			1,055			11
Amortization of intangibles	101			89			103			13		(2	)	386			430			(10	)
Other	536			515			491			4		9		1,971			1,843			7
Total non-interest expense	3,679			3,361			3,480			9		6		13,558			12,996			4
Income from continuing operations before income taxes	1,135			1,512			1,334			(25	)	(15	)	5,484			5,881			(7	)
Income tax provision	342			496			426			(31	)	(20	)	1,714			1,869			(8	)
Income from continuing operations, net of tax	793			1,016			908			(22	)	(13	)	3,770			4,012			(6	)
Income (loss) from discontinued operations, net of tax⁽²⁾	(2		)	(11		)	12			(82	)	**		(19		)	38			**
Net income	791			1,005			920			(21	)	(14	)	3,751			4,050			(7	)
Dividends and undistributed earnings allocated to participating securities⁽³⁾	(6		)	(6		)	(4		)	—		50		(24		)	(20		)	20
Preferred stock dividends	(75		)	(37		)	(68		)	103		10		(214		)	(158		)	35
Net income available to common stockholders	$	710		$	962		$	848		(26	)	(16	)	$	3,513		$	3,872		(9	)



	Three Months Ended							2016 Q4 vs.				Year Ended December 31,
	2016		2016			2015		2016		2015							2016 vs.
(Dollars in millions, except per share data and as noted)	Q4		Q3			Q4		Q3		Q4		2016			2015		2015
Basic earnings per common share:⁽³⁾
Net income from continuing operations	$	1.47	$	1.94		$	1.58	(24)%		(7)%		$	7.00		$	7.08	(1)%
Income (loss) from discontinued operations	—		(0.02		)	0.02		**		**		(0.04		)	0.07		**
Net income per basic common share	$	1.47	$	1.92		$	1.60	(23	)	(8	)	$	6.96		$	7.15	(3	)
Diluted earnings per common share:⁽³⁾
Net income from continuing operations	$	1.45	$	1.92		$	1.56	(24	)	(7	)	$	6.93		$	7.00	(1	)
Income (loss) from discontinued operations	—		(0.02		)	0.02		**		**		(0.04		)	0.07		**
Net income per diluted common share	$	1.45	$	1.90		$	1.58	(24	)	(8	)	$	6.89		$	7.07	(3	)
Weighted-average common shares outstanding (in millions):
Basic common shares	483.5		501.1			530.8		(4	)	(9	)	504.9			541.8		(7	)
Diluted common shares	489.2		505.9			536.3		(3	)	(9	)	509.8			548.0		(7	)
Dividends paid per common share	$	0.40	$	0.40		$	0.40	—		—		$	1.60		$	1.50	7

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets



																2016 Q4 vs.
	2016			2016			2016			2016			2015			2016		2015
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4
Assets:
Cash and cash equivalents:
Cash and due from banks	$	4,185		$	3,350		$	3,253		$	3,241		$	3,407		25%		23%
Interest-bearing deposits and other short-term investments	5,791			5,744			3,896			1,994			4,616			1		25
Total cash and cash equivalents	9,976			9,094			7,149			5,235			8,023			10		24
Restricted cash for securitization investors	2,517			287			265			960			1,017			**		147
Securities available for sale, at fair value	40,737			41,511			39,960			40,092			39,061			(2	)	4
Securities held to maturity, at carrying value	25,712			25,019			25,120			25,080			24,619			3		4
Loans held for investment:⁽⁵⁾
Unsecuritized loans held for investment	213,824			206,763			202,778			195,705			196,068			3		9
Loans held in consolidated trusts	31,762			31,256			31,825			31,908			33,783			2		(6	)
Total loans held for investment	245,586			238,019			234,603			227,613			229,851			3		7
Allowance for loan and lease losses	(6,503		)	(6,258		)	(5,881		)	(5,416		)	(5,130		)	4		27
Net loans held for investment	239,083			231,761			228,722			222,197			224,721			3		6
Loans held for sale, at lower of cost or fair value	1,043			994			1,220			1,251			904			5		15
Premises and equipment, net	3,675			3,561			3,556			3,542			3,584			3		3
Interest receivable	1,351			1,251			1,236			1,221			1,189			8		14
Goodwill	14,519			14,493			14,495			14,492			14,480			—		—
Other assets	18,420			17,090			17,394			16,276			16,450			8		12
Total assets	$	357,033		$	345,061		$	339,117		$	330,346		$	334,048		3		7



																2016 Q4 vs.
	2016			2016			2016			2016			2015			2016		2015
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4
Liabilities:
Interest payable	$	327		$	237		$	301		$	217		$	299		38%		9%
Deposits:
Non-interest-bearing deposits	25,502			25,565			25,424			25,182			25,847			—		(1	)
Interest-bearing deposits	211,266			200,416			195,635			196,597			191,874			5		10
Total deposits	236,768			225,981			221,059			221,779			217,721			5		9
Securitized debt obligations	18,826			18,411			16,130			14,913			16,166			2		16
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase	992			1,079			999			917			981			(8	)	1
Senior and subordinated notes	23,431			24,001			21,872			21,736			21,837			(2	)	7
Other borrowings	17,211			16,329			20,180			12,931			20,131			5		(15	)
Total other debt	41,634			41,409			43,051			35,584			42,949			1		(3	)
Other liabilities	11,964			10,810			10,468			10,146			9,629			11		24
Total liabilities	309,519			296,848			291,009			282,639			286,764			4		8

Stockholders’ equity:
Preferred stock	0			0			0			0			0			—		—
Common stock	7			7			7			7			6			—		17
Additional paid-in capital, net	31,157			30,439			29,786			29,709			29,655			2		5
Retained earnings	29,766			29,245			28,479			27,808			27,045			2		10
Accumulated other comprehensive income (loss)	(949		)	121			241			(41		)	(616		)	**		54
Treasury stock, at cost	(12,467		)	(11,599		)	(10,405		)	(9,776		)	(8,806		)	7		42
Total stockholders’ equity	47,514			48,213			48,108			47,707			47,284			(1	)	—
Total liabilities and stockholders’ equity	$	357,033		$	345,061		$	339,117		$	330,346		$	334,048		3		7

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 $321 million in Q4 2016, $289 million in Q3 2016, $244 million in Q2 2016, $228 million in Q1 2016 and $222 million in Q4 2015 for the estimated uncollectible amount of billed finance charges and fees and related losses.


⁽²⁾	Historically, the majority of the provision (benefit) for representation and warranty losses has been included, net of tax, in discontinued operations. The provision (benefit) for mortgage representation and warranty losses included the following activity:



	2016			2016		2016			2016			2015
(Dollars in millions)	Q4			Q3		Q2			Q1			Q4
Provision (benefit) for mortgage representation and warranty losses before income taxes:
Recorded in continuing operations	—			—		$	(1	)	$	(1	)	$	(1	)
Recorded in discontinued operations	(2		)	18		2			3			(21		)
Total provision (benefit) for mortgage representation and warranty losses before income taxes	$	(2	)	$	18	$	1		$	2		$	(22	)

The mortgage representation and warranty reserve was $630 million as of December 31, 2016, $632 million as of September 30, 2016 and $610 million as of December 31, 2015.


⁽³⁾	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.


⁽⁴⁾	Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See “Table 15: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on non-GAAP measures.

⁽⁵⁾

Included in loans held for investment are purchased credit-impaired loans (“PCI loans”) recorded at fair value at acquisition and subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard formerly known as “SOP 03-3,” or Accounting Standards Codification 310-30). These include certain of our consumer and commercial loans that were acquired through business combinations. The table below presents amounts related to PCI loans:



	2016		2016		2016		2016		2015
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4
PCI loans:
Period-end unpaid principal balance	$	15,896	$	17,011	$	18,256	$	19,492	$	20,434
Period-end loans held for investment	15,071		16,149		17,358		18,568		19,518
Average loans held for investment	15,443		16,529		17,783		18,894		19,319


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


⁽⁷⁾	Net interest margin is calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.


⁽⁸⁾	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: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on non-GAAP measures.

⁽⁹⁾

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.

⁽¹⁰⁾

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: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on non-GAAP measures.


⁽¹¹⁾	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: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on our non-GAAP measures.


⁽¹²⁾	Net charge-off rate is calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.


⁽¹³⁾	Capital ratios as of the end of Q4 2016 are preliminary and therefore subject to change. See “Table 15: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for information on the calculation of each of these ratios.


⁽¹⁴⁾	TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See “Table 15: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures” for additional information on non-GAAP measures.

⁽¹⁵⁾

We made certain non-interest income and non-interest expense reclassifications in Q4 2016. The changes were primarily related to a reclassification of certain consumer and commercial banking income from Other to Service charges and other customer-related fees within Non-interest income, and a reclassification of certain system processing costs from Professional services to Communications and data processing within Non-interest expense. We have also consolidated the Non-interest income presentation of Other-than-temporary impairment (“OTTI”) with net realized gains or losses from investment securities into a new Net securities gains (losses) line. These reclassifications were made to better reflect the nature of income earned and expenses incurred. All prior period amounts presented have been reclassified to conform to the current period presentation.

⁽¹⁶⁾

The primary net effects of the reclassifications discussed in footnote 15 above for Q3 2016, Q4 2015, and the years ended December 31, 2016 and 2015 were (i) increases to Service charges and other customer-related fees of $30 million, $37 million, $71 million and $141 million, respectively; (ii) decreases to Other non-interest income of $31 million, $39 million, $84 million and $168 million, respectively; and (iii) increases to Communications and data processing expense of $39 million, $43 million, $115 million and $172 million, respectively, with corresponding decreases to Professional services.


^**	Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	2016 Q4					2016 Q3					2015 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)	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	$	241,110	$	5,587	9.27%	$	237,067	$	5,383	9.08%	$	220,760	$	4,961	8.99%
Investment securities	67,827		393		2.32	66,291		386		2.33	64,444		401		2.49
Cash equivalents and other	8,916		29		1.30	7,629		25		1.31	6,850		22		1.28
Total interest-earning assets	$	317,853	$	6,009	7.56	$	310,987	$	5,794	7.45	$	292,054	$	5,384	7.37
Interest-bearing liabilities:
Interest-bearing deposits	$	206,464	$	332	0.64	$	196,913	$	306	0.62	$	189,885	$	277	0.58
Securitized debt obligations	18,300		65		1.42	17,389		56		1.29	15,993		43		1.08
Senior and subordinated notes	23,605		138		2.34	22,342		121		2.17	21,987		89		1.62
Other borrowings and liabilities	17,654		27		0.61	21,840		34		0.62	11,542		14		0.49
Total interest-bearing liabilities	$	266,023	$	562	0.85	$	258,484	$	517	0.80	$	239,407	$	423	0.71
Net interest income/spread			$	5,447	6.71			$	5,277	6.65			$	4,961	6.66
Impact of non-interest-bearing funding					0.14					0.14					0.13
Net interest margin					6.85%					6.79%					6.79%



	Year Ended December 31,
	2016					2015
	Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾	Average Balance		Interest Income/Expense⁽¹⁾		Yield/Rate⁽¹⁾
(Dollars in millions)	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	$	234,338	$	21,203	9.05%	$	211,549	$	18,785	8.88%
Investment securities	66,260		1,599		2.41	63,738		1,575		2.47
Cash equivalents and other	7,198		89		1.24	7,294		99		1.36
Total interest-earning assets	$	307,796	$	22,891	7.44	$	282,581	$	20,459	7.24
Interest-bearing liabilities:
Interest-bearing deposits	$	198,304	$	1,213	0.61	$	185,677	$	1,091	0.59
Securitized debt obligations	16,576		216		1.30	13,929		151		1.08
Senior and subordinated notes	22,417		476		2.12	20,935		330		1.58
Other borrowings and liabilities	18,736		113		0.60	11,297		53		0.47
Total interest-bearing liabilities	$	256,033	$	2,018	0.79	$	231,838	$	1,625	0.70
Net interest income/spread			$	20,873	6.65			$	18,834	6.54
Impact of non-interest-bearing funding					0.13					0.12
Net interest margin					6.78%					6.66%

__________


⁽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.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics



											2016 Q4 vs.				Year Ended December 31,
(Dollars in millions)	2016 Q4		2016 Q3		2016 Q2		2016 Q1		2015 Q4		2016 Q3		2015 Q4		2016		2015		2016 vs. 2015
Loans Held For Investment (Period-End)
Credit card:
Domestic credit card	$	97,120	$	90,955	$	88,581	$	84,561	$	87,939	7%		10%		$	97,120	$	87,939	10%
International credit card	8,432		8,246		8,323		8,138		8,186		2		3		8,432		8,186		3
Total credit card	105,552		99,201		96,904		92,699		96,125		6		10		105,552		96,125		10
Consumer banking:
Auto	47,916		46,311		44,502		42,714		41,549		3		15		47,916		41,549		15
Home loan	21,584		22,448		23,358		24,343		25,227		(4	)	(14	)	21,584		25,227		(14	)
Retail banking	3,554		3,526		3,555		3,534		3,596		1		(1	)	3,554		3,596		(1	)
Total consumer banking	73,054		72,285		71,415		70,591		70,372		1		4		73,054		70,372		4
Commercial banking:
Commercial and multifamily real estate	26,609		26,507		26,341		25,559		25,518		—		4		26,609		25,518		4
Commercial and industrial	39,824		39,432		39,313		38,102		37,135		1		7		39,824		37,135		7
Total commercial lending	66,433		65,939		65,654		63,661		62,653		1		6		66,433		62,653		6
Small-ticket commercial real estate	483		518		548		580		613		(7	)	(21	)	483		613		(21	)
Total commercial banking	66,916		66,457		66,202		64,241		63,266		1		6		66,916		63,266		6
Other loans	64		76		82		82		88		(16	)	(27	)	64		88		(27	)
Total loans held for investment	$	245,586	$	238,019	$	234,603	$	227,613	$	229,851	3		7		$	245,586	$	229,851	7
Loans Held For Investment (Average)
Credit card:
Domestic credit card	$	92,623	$	89,763	$	85,981	$	85,148	$	83,760	3%		11%		$	88,394	$	78,743	12%
International credit card	8,168		8,253		8,401		7,839		8,127		(1	)	1		8,166		7,992		2
Total credit card	100,791		98,016		94,382		92,987		91,887		3		10		96,560		86,735		11
Consumer banking:
Auto	47,126		45,355		43,605		41,962		41,333		4		14		44,521		39,967		11
Home loan	21,984		22,852		23,835		24,781		25,776		(4	)	(15	)	23,358		27,601		(15	)
Retail banking	3,549		3,520		3,548		3,553		3,595		1		(1	)	3,543		3,582		(1	)
Total consumer banking	72,659		71,727		70,988		70,296		70,704		1		3		71,422		71,150		—
Commercial banking:
Commercial and multifamily real estate	26,445		26,154		25,661		25,015		25,613		1		3		25,821		23,728		9
Commercial and industrial	39,573		39,346		38,713		37,762		31,132		1		27		38,852		28,349		37
Total commercial lending	66,018		65,500		64,374		62,777		56,745		1		16		64,673		52,077		24
Small-ticket commercial real estate	497		534		564		598		634		(7	)	(22	)	548		692		(21	)
Total commercial banking	66,515		66,034		64,938		63,375		57,379		1		16		65,221		52,769		24
Other loans	62		66		71		78		82		(6	)	(24	)	69		91		(24	)
Total average loans held for investment	$	240,027	$	235,843	$	230,379	$	226,736	$	220,052	2		9		$	233,272	$	210,745	11



										2016 Q4 vs.				Year Ended December 31,
	2016 Q4		2016 Q3	2016 Q2		2016 Q1		2015 Q4		2016 Q3		2015 Q4		2016		2015		2016 vs. 2015
Net Charge-Off (Recovery) Rates
Credit card:
Domestic credit card	4.66%		3.74%	4.07%		4.16%		3.75%		92	bps	91	bps	4.16%		3.45%		71	bps
International credit card	3.35		3.18	3.54		3.24		2.76		17		59		3.33		2.50		83
Total credit card	4.56		3.70	4.02		4.09		3.66		86		90		4.09		3.36		73
Consumer banking:
Auto	2.07		1.85	1.20		1.60		2.10		22		(3	)	1.69		1.69		—
Home loan	0.08		0.03	0.09		0.05		0.05		5		3		0.06		0.03		3
Retail banking	1.73		1.75	1.26		1.36		1.43		(2	)	30		1.53		1.33		20
Total consumer banking	1.45		1.26	0.83		1.04		1.32		19		13		1.15		1.03		12
Commercial banking:
Commercial and multifamily real estate	(0.02	)	0.01	(0.02	)	(0.01	)	(0.03	)	(3	)	1		(0.01	)	(0.06	)	5
Commercial and industrial	0.80		1.09	0.62		0.49		0.07		(29	)	73		0.75		0.21		54
Total commercial lending	0.47		0.66	0.37		0.29		0.02		(19	)	45		0.45		0.09		36
Small-ticket commercial real estate	(0.02	)	0.74	0.33		0.13		0.34		(76	)	(36	)	0.30		0.36		(6	)
Total commercial banking	0.47		0.66	0.37		0.29		0.03		(19	)	44		0.45		0.09		36
Total net charge-offs	2.48		2.10	2.01		2.08		1.96		38		52		2.17		1.75		42
30+ Day Performing Delinquency Rates
Credit card:
Domestic credit card	3.95%		3.68%	3.14%		3.09%		3.39%		27	bps	56	bps	3.95%		3.39%		56	bps
International credit card	3.36		3.33	3.24		3.32		2.98		3		38		3.36		2.98		38
Total credit card	3.91		3.65	3.15		3.11		3.36		26		55		3.91		3.36		55
Consumer banking:
Auto	6.12		5.67	5.59		5.14		6.69		45		(57	)	6.12		6.69		(57	)
Home loan	0.20		0.19	0.14		0.14		0.16		1		4		0.20		0.16		4
Retail banking	0.70		0.59	0.62		0.61		0.76		11		(6	)	0.70		0.76		(6	)
Total consumer banking	4.10		3.72	3.56		3.19		4.05		38		5		4.10		4.05		5
Nonperforming Loans and Nonperforming Assets Rates⁽¹⁾⁽²⁾
Credit card:
International credit card	0.50%		0.53%	0.53%		0.59%		0.65%		(3	)bps	(15	)bps	0.50%		0.65%		(15	)bps
Total credit card	0.04		0.04	0.05		0.05		0.06		—		(2	)	0.04		0.06		(2	)
Consumer banking:
Auto	0.47		0.43	0.38		0.31		0.53		4		(6	)	0.47		0.53		(6	)
Home loan	1.26		1.23	1.24		1.26		1.23		3		3		1.26		1.23		3
Retail banking	0.86		1.05	0.89		0.83		0.77		(19	)	9		0.86		0.77		9
Total consumer banking	0.72		0.71	0.69		0.66		0.79		1		(7	)	0.72		0.79		(7	)
Commercial banking:
Commercial and multifamily real estate	0.11		0.08	0.10		0.12		0.03		3		8		0.11		0.03		8
Commercial and industrial	2.48		2.44	2.58		2.66		1.45		4		103		2.48		1.45		103
Total commercial lending	1.53		1.49	1.59		1.64		0.87		4		66		1.53		0.87		66
Small-ticket commercial real estate	0.85		2.13	1.59		1.11		0.83		(128	)	2		0.85		0.83		2
Total commercial banking	1.53		1.50	1.59		1.63		0.87		3		66		1.53		0.87		66
Total nonperforming loans	0.65		0.66	0.68		0.69		0.51		(1	)	14		0.65		0.51		14
Total nonperforming assets	0.76		0.77	0.80		0.83		0.65		(1	)	11		0.76		0.65		11

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, 2016
	Credit Card									Consumer Banking
(Dollars in millions)	Domestic Card			International Card			Total Credit Card			Auto			Home Loan			Retail Banking			Total Consumer Banking			Commercial Banking			Other⁽³⁾			Total
Allowance for loan and lease losses:
Balance as of September 30, 2016	$	4,079		$	366		$	4,445		$	862		$	62		$	79		$	1,003		$	808		$	2		$	6,258
Provision (benefit) for loan and lease losses	1,229			93			1,322			339			8			17			364			63			(1		)	1,748
Charge-offs	(1,299		)	(112		)	(1,411		)	(339		)	(7		)	(18		)	(364		)	(83		)	(1		)	(1,859		)
Recoveries	220			43			263			95			2			3			100			5			2			370
Net charge-offs	(1,079		)	(69		)	(1,148		)	(244		)	(5		)	(15		)	(264		)	(78		)	1			(1,489		)
Other changes⁽⁴⁾	—			(13		)	(13		)	—			—			(1		)	(1		)	—			—			(14		)
Balance as of December 31, 2016	4,229			377			4,606			957			65			80			1,102			793			2			6,503
Reserve for unfunded lending commitments:
Balance as of September 30, 2016	—			—			—			—			—			6			6			126			—			132
Provision (benefit) for losses on unfunded lending commitments	—			—			—			—			—			1			1			3			—			4
Balance as of December 31, 2016	—			—			—			—			—			7			7			129			—			136
Combined allowance and reserve as of December 31, 2016	$	4,229		$	377		$	4,606		$	957		$	65		$	87		$	1,109		$	922		$	2		$	6,639



	Year Ended December 31, 2016
	Credit Card									Consumer Banking
(Dollars in millions)	Domestic Card			International Card			Total Credit Card			Auto			Home Loan			Retail Banking			Total Consumer Banking			Commercial Banking			Other⁽³⁾			Total
Allowance for loan and lease losses:
Balance as of December 31, 2015	$	3,355		$	299		$	3,654		$	726		$	70		$	72		$	868		$	604		$	4		$	5,130
Provision (benefit) for loan and lease losses	4,555			371			4,926			983			9			63			1,055			515			(5		)	6,491
Charge-offs	(4,586		)	(433		)	(5,019		)	(1,135		)	(22		)	(69		)	(1,226		)	(307		)	(3		)	(6,555		)
Recoveries	905			161			1,066			383			8			15			406			15			6			1,493
Net charge-offs	(3,681		)	(272		)	(3,953		)	(752		)	(14		)	(54		)	(820		)	(292		)	3			(5,062		)
Other changes⁽⁴⁾	—			(21		)	(21		)	—			—			(1		)	(1		)	(34		)	—			(56		)
Balance as of December 31, 2016	4,229			377			4,606			957			65			80			1,102			793			2			6,503
Reserve for unfunded lending commitments:
Balance as of December 31, 2015	—			—			—			—			—			7			7			161			—			168
Provision (benefit) for losses on unfunded lending commitments	—			—			—			—			—			—			—			(32		)	—			(32		)
Balance as of December 31, 2016	—			—			—			—			—			7			7			129			—			136
Combined allowance and reserve as of December 31, 2016	$	4,229		$	377		$	4,606		$	957		$	65		$	87		$	1,109		$	922		$	2		$	6,639

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results



	Three Months Ended December 31, 2016											Year Ended December 31, 2016
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Other			Total		Credit Card		Consumer Banking		Commercial Banking		Other			Total
Net interest income	$	3,353	$	1,498	$	565	$	31		$	5,447	$	12,635	$	5,829	$	2,216	$	193		$	20,873
Non-interest income	849		166		175		(71		)	1,119		3,380		733		578		(63		)	4,628
Total net revenue⁽⁵⁾	4,202		1,664		740		(40		)	6,566		16,015		6,562		2,794		130			25,501
Provision (benefit) for credit losses	1,322		365		66		(1		)	1,752		4,926		1,055		483		(5		)	6,459
Non-interest expense	2,073		1,109		393		104			3,679		7,703		4,139		1,407		309			13,558
Income (loss) from continuing operations before income taxes	807		190		281		(143		)	1,135		3,386		1,368		904		(174		)	5,484
Income tax provision (benefit)	295		70		102		(125		)	342		1,226		498		329		(339		)	1,714
Income (loss) from continuing operations, net of tax	$	512	$	120	$	179	$	(18	)	$	793	$	2,160	$	870	$	575	$	165		$	3,770

	Three Months Ended September 30, 2016
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Other			Total
Net interest income	$	3,204	$	1,472	$	555	$	46		$	5,277
Non-interest income	825		201		156		2			1,184
Total net revenue⁽⁵⁾	4,029		1,673		711		48			6,461
Provision (benefit) for credit losses	1,272		256		61		(1		)	1,588
Non-interest expense	1,884		1,034		349		94			3,361
Income (loss) from continuing operations before income taxes	873		383		301		(45		)	1,512
Income tax provision (benefit)	318		139		110		(71		)	496
Income (loss) from continuing operations, net of tax	$	555	$	244	$	191	$	26		$	1,016

	Three Months Ended December 31, 2015											Year Ended December 31, 2015
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking		Other			Total		Credit Card		Consumer Banking		Commercial Banking		Other			Total
Net interest income	$	2,996	$	1,434	$	484	$	47		$	4,961	$	11,161	$	5,755	$	1,865	$	53		$	18,834
Non-interest income	902		182		142		7			1,233		3,421		710		487		(39		)	4,579
Total net revenue⁽⁵⁾	3,898		1,616		626		54			6,194		14,582		6,465		2,352		14			23,413
Provision (benefit) for credit losses	1,022		240		118		—			1,380		3,417		819		302		(2		)	4,536
Non-interest expense	2,021		1,057		342		60			3,480		7,502		4,026		1,156		312			12,996
Income (loss) from continuing operations before income taxes	855		319		166		(6		)	1,334		3,663		1,620		894		(296		)	5,881
Income tax provision (benefit)	302		115		60		(51		)	426		1,309		586		324		(350		)	1,869
Income (loss) from continuing operations, net of tax	$	553	$	204	$	106	$	45		$	908	$	2,354	$	1,034	$	570	$	54		$	4,012

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business



											2016 Q4 vs.				Year Ended December 31,
	2016		2016		2016		2016		2015		2016		2015						2016 vs.
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4		2016		2015		2015
Credit Card
Earnings:
Net interest income	$	3,353	$	3,204	$	3,045	$	3,033	$	2,996	5%		12%		$	12,635	$	11,161	13%
Non-interest income	849		825		859		847		902		3		(6	)	3,380		3,421		(1	)
Total net revenue	4,202		4,029		3,904		3,880		3,898		4		8		16,015		14,582		10
Provision (benefit) for credit losses	1,322		1,272		1,261		1,071		1,022		4		29		4,926		3,417		44
Non-interest expense	2,073		1,884		1,883		1,863		2,021		10		3		7,703		7,502		3
Income (loss) from continuing operations before income taxes	807		873		760		946		855		(8	)	(6	)	3,386		3,663		(8	)
Income tax provision (benefit)	295		318		276		337		302		(7	)	(2	)	1,226		1,309		(6	)
Income (loss) from continuing operations, net of tax	$	512	$	555	$	484	$	609	$	553	(8	)	(7	)	$	2,160	$	2,354	(8	)
Selected performance metrics:
Period-end loans held for investment	$	105,552	$	99,201	$	96,904	$	92,699	$	96,125	6		10		$	105,552	$	96,125	10
Average loans held for investment	100,791		98,016		94,382		92,987		91,887		3		10		96,560		86,735		11
Average yield on loans held for investment⁽⁶⁾	14.93%		14.68%		14.49%		14.60%		14.45%		25	bps	48	bps	14.68%		14.28%		40	bps
Total net revenue margin⁽⁷⁾	16.68		16.44		16.55		16.69		16.97		24		(29	)	16.59		16.81		(22	)
Net charge-off rate	4.56		3.70		4.02		4.09		3.66		86		90		4.09		3.36		73
30+ day performing delinquency rate	3.91		3.65		3.15		3.11		3.36		26		55		3.91		3.36		55
30+ day delinquency rate	3.94		3.69		3.18		3.15		3.40		25		54		3.94		3.40		54
Nonperforming loan rate⁽¹⁾	0.04		0.04		0.05		0.05		0.06		—		(2	)	0.04		0.06		(2	)
PCCR intangible amortization	$	58	$	62	$	67	$	70	$	74	(6)%		(22)%		$	257	$	316	(19)%
Purchase volume⁽⁸⁾	82,824		78,106		78,019		68,189		75,350		6		10		307,138		271,167		13



																2016 Q4 vs.				Year Ended December 31,
	2016			2016			2016			2016			2015			2016		2015								2016 vs.
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2016			2015			2015
Domestic Card
Earnings:
Net interest income	$	3,090		$	2,956		$	2,769		$	2,756		$	2,718		5%		14%		$	11,571		$	10,147		14%
Non-interest income	791			759			792			774			830			4		(5	)	3,116			3,183			(2	)
Total net revenue	3,881			3,715			3,561			3,530			3,548			4		9		14,687			13,330			10
Provision (benefit) for credit losses	1,229			1,190			1,164			972			945			3		30		4,555			3,204			42
Non-interest expense	1,859			1,696			1,669			1,671			1,796			10		4		6,895			6,627			4
Income (loss) from continuing operations before income taxes	793			829			728			887			807			(4	)	(2	)	3,237			3,499			(7	)
Income tax provision (benefit)	288			302			265			323			293			(5	)	(2	)	1,178			1,267			(7	)
Income (loss) from continuing operations, net of tax	$	505		$	527		$	463		$	564		$	514		(4	)	(2	)	$	2,059		$	2,232		(8	)
Selected performance metrics:
Period-end loans held for investment	$	97,120		$	90,955		$	88,581		$	84,561		$	87,939		7		10		$	97,120		$	87,939		10
Average loans held for investment	92,623			89,763			85,981			85,148			83,760			3		11		88,394			78,743			12
Average yield on loans held for investment⁽⁶⁾	14.91%			14.71%			14.40%			14.43%			14.31%			20	bps	60	bps	14.62%			14.21%			41	bps
Total net revenue margin⁽⁷⁾	16.76			16.55			16.57			16.58			16.95			21		(19	)	16.62			16.93			(31	)
Net charge-off rate	4.66			3.74			4.07			4.16			3.75			92		91		4.16			3.45			71
30+ day delinquency rate	3.95			3.68			3.14			3.09			3.39			27		56		3.95			3.39			56
Purchase volume⁽⁸⁾	$	75,639		$	71,331		$	71,050		$	62,617		$	68,740		6%		10%		$	280,637		$	246,740		14%
Refreshed FICO scores:⁽⁹⁾
Greater than 660	64		%	64		%	65		%	65		%	66		%	—		(2	)	64		%	66		%	(2	)
660 or below	36			36			35			35			34			—		2		36			34			2
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business



																2016 Q4 vs.				Year Ended December 31,
	2016			2016			2016			2016			2015			2016		2015								2016 vs.
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2016			2015			2015
Consumer Banking
Earnings:
Net interest income	$	1,498		$	1,472		$	1,439		$	1,420		$	1,434		2%		4%		$	5,829		$	5,755		1%
Non-interest income	166			201			175			191			182			(17	)	(9	)	733			710			3
Total net revenue	1,664			1,673			1,614			1,611			1,616			(1	)	3		6,562			6,465			2
Provision (benefit) for credit losses	365			256			204			230			240			43		52		1,055			819			29
Non-interest expense	1,109			1,034			1,006			990			1,057			7		5		4,139			4,026			3
Income (loss) from continuing operations before income taxes	190			383			404			391			319			(50	)	(40	)	1,368			1,620			(16	)
Income tax provision (benefit)	70			139			147			142			115			(50	)	(39	)	498			586			(15	)
Income (loss) from continuing operations, net of tax	$	120		$	244		$	257		$	249		$	204		(51	)	(41	)	$	870		$	1,034		(16	)
Selected performance metrics:
Period-end loans held for investment	$	73,054		$	72,285		$	71,415		$	70,591		$	70,372		1		4		$	73,054		$	70,372		4
Average loans held for investment	72,659			71,727			70,988			70,296			70,704			1		3		71,422			71,150			—
Average yield on loans held for investment⁽⁶⁾	6.50%			6.41%			6.28%			6.18%			6.25%			9	bps	25	bps	6.34%			6.26%			8	bps
Auto loan originations	$	6,542		$	6,804		$	6,529		$	5,844		$	4,977		(4)%		31%		$	25,719		$	21,185		21%
Period-end deposits	181,917			178,793			176,340			177,803			172,702			2		5		181,917			172,702			5
Average deposits	180,019			177,402			176,808			174,254			171,521			1		5		177,129			170,757			4
Average deposit interest rate	0.57%			0.56%			0.55%			0.54%			0.54%			1	bps	3	bps	0.56%			0.56%			—
Net charge-off rate	1.45			1.26			0.83			1.04			1.32			19		13		1.15			1.03			12	bps
30+ day performing delinquency rate	4.10			3.72			3.56			3.19			4.05			38		5		4.10			4.05			5
30+ day delinquency rate	4.67			4.26			4.07			3.67			4.67			41		—		4.67			4.67			—
Nonperforming loan rate⁽¹⁾	0.72			0.71			0.69			0.66			0.79			1		(7	)	0.72			0.79			(7	)
Nonperforming asset rate⁽²⁾	1.09			0.98			0.96			0.95			1.10			11		(1	)	1.09			1.10			(1	)
Auto—At origination FICO scores:⁽¹⁰⁾
Greater than 660	52		%	51		%	51		%	51		%	51		%	1%		1%		52		%	51		%	1%
621 - 660	17			17			17			17			17			—		—		17			17			—
620 or below	31			32			32			32			32			(1	)	(1	)	31			32			(1	)
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business



																2016 Q4 vs.				Year Ended December 31,
	2016			2016			2016			2016			2015			2016		2015								2016 vs.
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2016			2015			2015
Commercial Banking
Earnings:
Net interest income	$	565		$	555		$	559		$	537		$	484		2%		17%		$	2,216		$	1,865		19%
Non-interest income	175			156			129			118			142			12		23		578			487			19
Total net revenue⁽⁵⁾	740			711			688			655			626			4		18		2,794			2,352			19
Provision (benefit) for credit losses	66			61			128			228			118			8		(44	)	483			302			60
Non-interest expense	393			349			343			322			342			13		15		1,407			1,156			22
Income (loss) from continuing operations before income taxes	281			301			217			105			166			(7	)	69		904			894			1
Income tax provision (benefit)	102			110			79			38			60			(7	)	70		329			324			2
Income (loss) from continuing operations, net of tax	$	179		$	191		$	138		$	67		$	106		(6	)	69		$	575		$	570		1
Selected performance metrics:
Period-end loans held for investment	$	66,916		$	66,457		$	66,202		$	64,241		$	63,266		1		6		$	66,916		$	63,266		6
Average loans held for investment	66,515			66,034			64,938			63,375			57,379			1		16		65,221			52,769			24
Average yield on loans held for investment⁽⁵⁾⁽⁶⁾	3.55%			3.50%			3.45%			3.38%			3.18%			5	bps	37	bps	3.47%			3.21%			26	bps
Period-end deposits	$	33,866		$	33,611		$	34,281		$	33,383		$	34,257		1%		(1)%		$	33,866		$	34,257		(1)%
Average deposits	34,029			33,498			33,764			34,076			33,797			2		1		33,841			33,058			2
Average deposit interest rate	0.30%			0.30%			0.27%			0.27%			0.26%			—		4	bps	0.28%			0.25%			3	bps
Net charge-off rate	0.47			0.66			0.37			0.29			0.03			(19	)bps	44		0.45			0.09			36
Nonperforming loan rate^(1)(11)	1.53			1.50			1.59			1.63			0.87			3		66		1.53			0.87			66
Nonperforming asset rate^(2)(11)	1.54			1.51			1.60			1.64			0.87			3		67		1.54			0.87			67
Risk category:^(11)(12)
Noncriticized	$	62,828		$	62,336		$	61,926		$	59,663		$	59,743		1%		5%		$	62,828		$	59,743		5%
Criticized performing	2,453			2,473			2,456			2,595			2,015			(1	)	22		2,453			2,015			22
Criticized nonperforming	1,022			994			1,050			1,050			550			3		86		1,022			550			86
PCI loans⁽¹¹⁾	613			654			770			933			958			(6	)	(36	)	613			958			(36	)
Total commercial loans	$	66,916		$	66,457		$	66,202		$	64,241		$	63,266		1		6		$	66,916		$	63,266		6
Risk category as a percentage of period-end loans held for investment:^(11)(12)
Noncriticized	93.9%			93.8%			93.5%			92.9%			94.4%			10	bps	(50	)bps	93.9%			94.4%			(50	)bps
Criticized performing	3.7			3.7			3.7			4.0			3.2			—		50		3.7			3.2			50
Criticized nonperforming	1.5			1.5			1.6			1.6			0.9			—		60		1.5			0.9			60
PCI loans⁽¹¹⁾	0.9			1.0			1.2			1.5			1.5			(10	)	(60	)	0.9			1.5			(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



																2016 Q4 vs.				Year Ended December 31,
	2016			2016			2016			2016			2015			2016		2015								2016 vs.
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2016			2015			2015
Other
Earnings:
Net interest income (expense)	$	31		$	46		$	50		$	66		$	47		(33)%		(34)%		$	193		$	53		**
Non-interest income	(71		)	2			(2		)	8			7			**		**		(63		)	(39		)	62	%
Total net revenue (loss)⁽⁵⁾	(40		)	48			48			74			54			**		**		130			14			**
Provision (benefit) for credit losses	(1		)	(1		)	(1		)	(2		)	—			—		**		(5		)	(2		)	150
Non-interest expense	104			94			63			48			60			11		73		309			312			(1	)
Income (loss) from continuing operations before income taxes	(143		)	(45		)	(14		)	28			(6		)	**		**		(174		)	(296		)	(41	)
Income tax provision (benefit)	(125		)	(71		)	(78		)	(65		)	(51		)	76		145		(339		)	(350		)	(3	)
Income (loss) from continuing operations, net of tax	$	(18	)	$	26		$	64		$	93		$	45		**		**		$	165		$	54		**
Selected performance metrics:
Period-end loans held for investment	$	64		$	76		$	82		$	82		$	88		(16	)	(27	)	$	64		$	88		(27	)
Average loans held for investment	62			66			71			78			82			(6	)	(24	)	69			91			(24	)
Period-end deposits	20,985			13,577			10,438			10,593			10,762			55		95		20,985			10,762			95
Average deposits	18,156			11,351			10,574			10,850			10,581			60		72		12,744			7,174			78
Total
Earnings:
Net interest income	$	5,447		$	5,277		$	5,093		$	5,056		$	4,961		3%		10%		$	20,873		$	18,834		11%
Non-interest income	1,119			1,184			1,161			1,164			1,233			(5	)	(9	)	4,628			4,579			1
Total net revenue	6,566			6,461			6,254			6,220			6,194			2		6		25,501			23,413			9
Provision (benefit) for credit losses	1,752			1,588			1,592			1,527			1,380			10		27		6,459			4,536			42
Non-interest expense	3,679			3,361			3,295			3,223			3,480			9		6		13,558			12,996			4
Income (loss) from continuing operations before income taxes	1,135			1,512			1,367			1,470			1,334			(25	)	(15	)	5,484			5,881			(7	)
Income tax provision (benefit)	342			496			424			452			426			(31	)	(20	)	1,714			1,869			(8	)
Income (loss) from continuing operations, net of tax	$	793		$	1,016		$	943		$	1,018		$	908		(22	)	(13	)	$	3,770		$	4,012		(6	)
Selected performance metrics:
Period-end loans held for investment	$	245,586		$	238,019		$	234,603		$	227,613		$	229,851		3		7		$	245,586		$	229,851		7
Average loans held for investment	240,027			235,843			230,379			226,736			220,052			2		9		233,272			210,745			11
Period-end deposits	236,768			225,981			221,059			221,779			217,721			5		9		236,768			217,721			9
Average deposits	232,204			222,251			221,146			219,180			215,899			4		8		223,714			210,989			6

CAPITAL ONE FINANCIAL CORPORATION (COF)

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


⁽¹⁾	Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.

⁽²⁾

Nonperforming assets consist of nonperforming loans, real estate owned (“REO”) and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment, REO and other foreclosed assets. Prior to Q4 2016, the nonperforming asset rate for our Consumer Banking business excluded the impact of REOs related to our acquired home loan portfolio which, if included, would increase the nonperforming asset rate by approximately 10 basis points in each of the prior periods presented.


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


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

⁽⁵⁾

Some of our tax-related commercial investments generate tax-exempt income or tax credits. Accordingly, we make certain reclassifications within our Commercial Banking business results to present revenues and yields on a taxable-equivalent basis, calculated assuming an effective tax rate approximately equal to our federal statutory tax rate of 35% with offsetting reclassifications to the Other category.


⁽⁶⁾	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.


⁽⁷⁾	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.


⁽⁸⁾	Includes purchase transactions, net of returns, for the period for loans both classified as held for investment and held for sale. Excludes cash advance and balance transfer transactions.

⁽⁹⁾

Percentages represent period-end loans held for investment in each credit score category. 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.


⁽¹⁰⁾	Percentages represent period-end loans held for investment in each credit score category. 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.

⁽¹¹⁾

The loans held for investment acquired in the HFS acquisition included $518 million, $556 million, $667 million, $825 million and $835 million of PCI loans as of December 31, 2016, September 30, 2016, June 30, 2016, March 31, 2016 and December 31, 2015, respectively, that are being accounted for under ASC 310-30 (formerly “SOP 03-3”) due to their deterioration in credit quality since origination. From a managed perspective, we evaluate loans based on their actual risk ratings, and accordingly we are also including our nonperforming and criticized ratios measured on that basis. The table below presents our nonperforming loan rate, nonperforming asset rate and risk category information as if these PCI loans were classified based on their risk ratings in each of the periods impacted by the HFS acquisition.



	2016			2016		2016		2016		2015
(Dollars in millions)	Q4			Q3		Q2		Q1		Q4
Selected performance metrics:
Nonperforming loan rate	1.56%			1.53%		1.63%		1.69%		0.93%
Nonperforming asset rate	1.57			1.54		1.64		1.70		0.93
Risk category:
Noncriticized	$	63,078		$	62,575	$	62,058	$	59,729	$	59,743
Criticized performing	2,700			2,766		2,961		3,321		2,814
Criticized nonperforming	1,042			1,018		1,080		1,083		586
Risk category as a percentage of period-end loans held for investment:
Noncriticized	94.3		%	94.2%		93.7%		93.0%		94.4%
Criticized performing	4.0			4.2		4.5		5.2		4.5
Criticized nonperforming	1.6			1.5		1.6		1.7		0.9


⁽¹²⁾	Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities.


^**	Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	Basel III Standardized Approach
(Dollars in millions)	December 31, 2016			September 30, 2016			June 30, 2016			March 31, 2016			December 31, 2015
Regulatory Capital Metrics
Common equity excluding AOCI	$	44,103		$	44,214		$	44,572		$	44,452		$	44,606
Adjustments:
AOCI⁽²⁾⁽³⁾	(674		)	199			332			117			(254		)
Goodwill⁽⁴⁾	(14,307		)	(14,288		)	(14,296		)	(14,301		)	(14,296		)
Intangible assets⁽³⁾⁽⁴⁾	(384		)	(435		)	(483		)	(532		)	(393		)
Other	65			(498		)	(639		)	(505		)	(119		)
Common equity Tier 1 capital	$	28,803		$	29,192		$	29,486		$	29,231		$	29,544
Tier 1 capital	$	33,162		$	33,069		$	32,780		$	32,525		$	32,838
Total capital⁽⁵⁾	40,816			40,564			38,767			38,399			38,838
Risk-weighted assets	285,654			275,198			269,667			262,368			265,739
Adjusted average assets⁽⁶⁾	335,835			328,627			319,968			317,403			309,037
Capital Ratios
Common equity Tier 1 capital⁽⁷⁾	10.1		%	10.6%			10.9%			11.1%			11.1%
Tier 1 capital⁽⁸⁾	11.6			12.0			12.2			12.4			12.4
Total capital⁽⁹⁾	14.3			14.7			14.4			14.6			14.6
Tier 1 leverage⁽⁶⁾	9.9			10.1			10.2			10.2			10.6
Tangible common equity (“TCE”)⁽¹⁰⁾	8.1			8.8			9.0			9.1			8.9

Reconciliation of Non-GAAP Measures

We report certain non-GAAP measures that management uses in assessing its capital adequacy and the level of return generated. These non-GAAP measures consist of selected adjusted results, 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 key financial performance measures. 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 tables below present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.



	2016							2016							2016							Year Ended December 31,
	Q4							Q3							Q2							2016
(Dollars in millions)	Reported Results		Adjustments⁽¹¹⁾			Adjusted Results		Reported Results		Adjustments⁽¹¹⁾			Adjusted Results		Reported Results		Adjustments⁽¹¹⁾			Adjusted Results		Reported Results		Adjustments⁽¹¹⁾			Adjusted Results
Selected income statement data:
Net interest income	$	5,447	$	13		$	5,460	$	5,277	$	34		$	5,311	$	5,093	$	7		$	5,100	$	20,873	$	54		$	20,927
Non-interest income	1,119		14			1,133		1,184		13			1,197		1,161		8			1,169		4,628		35			4,663
Total net revenue	6,566		27			6,593		6,461		47			6,508		6,254		15			6,269		25,501		89			25,590
Non-interest expense	3,679		(45		)	3,634		3,361		(16		)	3,345		3,295		(15		)	3,280		13,558		(76		)	13,482
Selected performance metrics:
Efficiency ratio	56.03%		(91		)bps	55.12%		52.02%		(62		)bps	51.40%		52.69%		(37		)bps	52.32%		53.17%		(49		)bps	52.68%



	2016			2016			2016			2016			2015
(Dollars in millions)	Q4			Q3			Q2			Q1			Q4
Tangible Common Equity (Period-End)
Stockholders’ equity	$	47,514		$	48,213		$	48,108		$	47,707		$	47,284
Goodwill and intangible assets⁽⁴⁾	(15,420		)	(15,475		)	(15,553		)	(15,629		)	(15,701		)
Noncumulative perpetual preferred stock⁽¹²⁾	(4,360		)	(3,877		)	(3,294		)	(3,296		)	(3,294		)
Tangible common equity	$	27,734		$	28,861		$	29,261		$	28,782		$	28,289
Tangible Common Equity (Average)
Stockholders’ equity	$	47,972		$	49,033		$	48,934		$	49,078		$	48,712
Goodwill and intangible assets⁽⁴⁾	(15,455		)	(15,507		)	(15,585		)	(15,654		)	(15,316		)
Noncumulative perpetual preferred stock⁽¹²⁾	(4,051		)	(3,719		)	(3,294		)	(3,296		)	(3,294		)
Tangible common equity	$	28,466		$	29,807		$	30,055		$	30,128		$	30,102
Tangible Assets (Period-End)
Total assets	$	357,033		$	345,061		$	339,117		$	330,346		$	334,048
Goodwill and intangible assets⁽⁴⁾	(15,420		)	(15,475		)	(15,553		)	(15,629		)	(15,701		)
Tangible assets	$	341,613		$	329,586		$	323,564		$	314,717		$	318,347
Tangible Assets (Average)
Total assets	$	350,225		$	343,153		$	334,479		$	331,919		$	323,354
Goodwill and intangible assets⁽⁴⁾	(15,455		)	(15,507		)	(15,585		)	(15,654		)	(15,316		)
Tangible assets	$	334,770		$	327,646		$	318,894		$	316,265		$	308,038

_________


⁽¹⁾	Regulatory capital metrics and capital ratios as of December 31, 2016 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 40% for 2015 and 60% for 2016.


⁽⁴⁾	Includes impact of related deferred taxes.


⁽⁵⁾	Total capital equals the sum of Tier 1 capital and Tier 2 capital.


⁽⁶⁾	Adjusted average assets for the purpose of calculating our Tier 1 leverage ratio represents total average assets adjusted for amounts that 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.


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


⁽⁸⁾	Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.


⁽⁹⁾	Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets.


⁽¹⁰⁾	TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets.

⁽¹¹⁾

In Q4 2016, we recorded charges totaling $72 million consisting of a build in the U.K. Payment Protection Insurance customer refund reserve (“U.K. PPI Reserve”) of $44 million and an impairment associated with certain acquired intangible and software assets of $28 million. In Q3 2016, we recorded a build in the U.K. PPI Reserve of $63 million. In Q2 2016, we recorded charges totaling $30 million associated with a build of $54 million in the U.K. PPI Reserve, partially offset by a gain of $24 million related to the exchange of our ownership interest in Visa Europe with Visa Inc. as a result of Visa Inc.’s acquisition of Visa Europe.


⁽¹²⁾	Includes related surplus.

CAPITAL ONE FINANCIAL CORP - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - January 24, 2017

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