Capital One 2014 Annual Report Download - page 61

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)
This discussion contains forward-looking statements that are based upon management’s current expectations and are
subject to significant uncertainties and changes in circumstances. Please review “Forward-Looking Statements” for
more information on the forward-looking statements in this 2014 Annual Report on Form 10-K (“this Report”). Our
actual results may differ materially from those included in these forward-looking statements due to a variety of factors
including, but not limited to, those described in “Part I—Item 1A. Risk Factors” in this Report. Unless otherwise specified,
references to notes to our consolidated financial statements refer to the notes to our consolidated financial statements
as of December 31, 2014 included in this Report.
Management monitors a variety of key indicators to evaluate our business results and financial condition. The
following MD&A is intended to provide the reader with an understanding of our results of operations, financial
condition and liquidity by focusing on changes from year to year in certain key measures used by management to
evaluate performance, such as profitability, growth and credit quality metrics. MD&A is provided as a supplement
to, and should be read in conjunction with, our audited consolidated financial statements as of and for the year ended
December 31, 2014 and accompanying notes. MD&A is organized in the following sections:
• Executive Summary and Business Outlook • Capital Management
• Critical Accounting Policies and Estimates • Risk Management
• Accounting Changes and Developments • Credit Risk Profile
• Consolidated Results of Operations • Liquidity Risk Profile
• Business Segment Financial Performance • Market Risk Profile
• Consolidated Balance Sheets Analysis • Supplemental Tables
• Off-Balance Sheet Arrangements and Variable • Glossary and Acronyms
Interest Entities
EXECUTIVE SUMMARY AND BUSINESS OUTLOOK
In 2014, all three of our business segments delivered strong underlying performance and grew our loan portfolios.
We continue to deliver risk-adjusted returns while investing to improve profitability. We remain focused on creating
value and sustained performance.
Financial Highlights
We reported net income of $4.4 billion ($7.59 per diluted common share) on total net revenue of $22.3 billion for
2014, with each of our three business segments contributing to our earnings. In comparison, we reported net income
of $4.1 billion ($6.89 per diluted common share) on total net revenue of $22.4 billion for 2013 and $3.5 billion
($6.11 per diluted share) on total net revenue of $21.4 billion for 2012.
Beginning on January 1, 2014, we calculate our regulatory capital under the Basel III Standardized Approach subject
to transition provisions. Our common equity Tier 1 capital ratio, as calculated under the Basel III Standardized
Approach, including transition provisions, was 12.46% as of December 31, 2014. Our Tier 1 common ratio, as
calculated under Basel I, was 12.19% as of December 31, 2013. These numbers are not directly comparable due to
methodological differences in the calculation of the ratios. We formally entered parallel run for Basel III Advanced
Approaches as of January 1, 2015. See “Capital Management” below for additional information.
On March 26, 2014, we announced that our Board of Directors had authorized the repurchase of up to $2.5 billion
of shares of our common stock (“2014 Stock Repurchase Program”). During 2014, we repurchased approximately
39 Capital One Financial Corporation (COF)