Capital One Earnings Stifled by Loan Loss Provision

Banking, finance, and taxes

Published: October 16, 2014 4:42 pm

Last Updated: April 27, 2020 6:31 pm

Capital One Financial Corp. (NYSE: COF) reported its third-quarter earnings as $1.86 per share on $5.6 billion in revenue, against Thomson Reuters consensus estimates of $1.94 in earnings per share and $5.56 billion in revenue. In the third-quarter of the previous year, the company recorded its earnings at $1.86 per share and $5.65 billion in revenue.

No guidance was given for the fourth quarter, but Thomson Reuters has consensus estimates of $1.77 in earnings per share and $5.64 billion in revenue.

Period-end deposits fell less than 1% to $204.3 billion. Average deposits also fell less than 1% to $205.2 billion. The interest-bearing rate remained flat at 0.60%.

Period-end loans held for investment increased 2% to $201.6 billion, noting its largest percentage growth in Auto period-end loans that grew 4%. Average loans held for investment increased 2% to $199.4 billion.

Tangible book value per share was recorded at $48.72. The common equity Tier 1 capital ratio under Basel III standardized approach was 12.7% at the end of September.

Capitol One boosted its loan loss provision by 17% year-over-year to $993 million. Domestic credit card loans rose 3% to $73.1 billion. Apparently the company is a little nervous about getting paid on some of those loans.

Some notable statistics from the report were net income for the third quarter reading at $1.1 billion and provision for credit losses increasing 41% to $993 million. Capital One also maintained its dividend at $0.30.

Richard D. Fairbank, chair and chief executive officer, said:

Capital One delivered another quarter of solid results for the company and across our businesses, and we continued to return capital to our shareholders as we execute our announced $2.5 billion share repurchase program.

Baird has a rating of Outperform for Capital One and Oppenheimer reiterated its rating of Outperform but lowered its price target to $97 from $98.

Shares of Capital One decreased by less than 1% on the day to $78.53 from the previous close of $79.21. The initial reaction in the after-hours has been negative, with shares down around 2% to $77.01.

The stock has a consensus price target of $92.59 and a 52-week trading range $67.86 to $85.39. The company has a market cap of $45 billion.

ALSO READ: Goldman Sachs Blows Out Earnings and Raises Dividend

The Average American Is Their Savings Every Day (Sponsor)

If you’re like many Americans and keep your money ‘safe’ in a checking or savings account, think again. The average yield on a savings account is a paltry .4% today. Checking accounts are even worse.

But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.

Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.

Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.

¹https://www.fdic.gov/national-rates-and-rate-caps