Jeffrey Li, Tom Van Spankeren, Jake Stoiber and
Yichen Sun
Presented March 10, 2015

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• Current Price: $79.84/share
Market Cap: 44.12B
• Bought 100 shares on 12/9/2013
@ $73.13/share
• Gain of $671
• 9.18% overall return
• 7.28% annualized return
• 1.50% dividend yield
($0.30/share quarterly)
2014 10-K Page 30

• Diversified financial services firm with banking and non-banking subsidiaries
• Established in 1994 out of McLean, Virginia
• One of top ten largest banks based on total deposits and has a large presence in the Eastern United States
• Fourth largest issuer of Visa® and MasterCard® credit cards in the United States
• Derives revenue from both interest and non-interest income
2014 10-K Page 1

• Capital One Bank, National Association “COBNA”
• Credit and debit card products, lending and deposit products
• Capital One, National Association “CONA”
• Banking products and financial services to consumers, small businesses and commercial enterprises
• 3 Segments: Credit Card, Consumer Banking and
Commercial Banking
2014 10-K Pages2

Commercial
Banking
• FY 2014 Loan Portfolio
(in millions)
10%
• Credit Card: $85,876
• Consumer Banking: $71,439
• Commercial Banking: $50,890
Consumer
Banking
29%
• FY 2014 Revenues
(in millions)
• Credit Card: $13,621
• Consumer Banking: $6,432
• Commercial Banking: $2,201
Commercial
• Other: $36 Banking
25%
• FY 2014 Net Income
(in millions)
• Credit Card: $2,479
• Consumer Banking: $1,195
• Commercial Banking: $659
• Other: $90
Loan Portfolio
Other
<1%
Credit Card
41%
REVENUE
Other
<1%
Commercial
Banking
15%
Consumer
Banking
27%
Credit Card
61%
NET INCOME
Other
2%
Credit Card
56%
2014 10-K Page 46
Consumer
Banking
34%

• Credit Card:
• Slight decline in net income due to a portfolio sale in 2013
• Strong growth in domestic credit card loan portfolio
• Consumer Banking:
• Decline in net income  compression in deposit spreads, declining home loan portfolio balances and margin compression in auto loans
• Strong growth in auto loan portfolio
• Commercial Banking:
• Lower net income due to increase in allowance for credit losses.
• Growth in net revenue attributable to Beech Street acquisition
Net Interest Margin
30+ Day Delinquency Rate
Net Charge-Off Rate
Allowance Coverage Ratio
Efficiency Ratio
Net Interest Income
Net Income Available to
Common Shareholders
Net Income per Diluted
Common Share
Dividends per Share
2014 2013 2012 2011
6.67% 6.80% 6.50% 7.27%
2.91% 2.96% 3.09% 3.95%
1.72% 2.04% 1.89% 2.94%
2.10% 2.19% 2.50% 3.13%
54.64
55.19
55.14
56.7
2014 2013 2012 2011
$17,818 $18,106 $16,589 $12,741
$4,343 $4,051 $3,462 $3,104
$7.59
$1.20
$6.89
$0.95
$6.11
$0.20
$6.76
$0.20
2014 10-K Page 32

• Consumer Sentiment Rising
• New Home Sales – 481K annualized
• Beat expectations prior 2 months
• Pending Existing home sales near 2 year highs
• Car sales slower in February yet still at near all-time highs
• 16.2 M annualized
• Could possibly be in bubble territory
• Unemployment down to 5.5%
• Low long term rates
• Ten Year Note at 2.25%
Thomson Reuters/University of Michigan http://www.bloomberg.com/news/articles/2015-02-25/new-homesin-u-s-sold-at-faster-pace-than-forecast-in-january http://www.businessinsider.com/us-auto-sales-feb-2015-2015-3

http://www.bloomberg.com/bw/articles/2014-09-
30/consumer-debt-hits-an-all-time-high

Entry of New
Competitors
(Low )
• Tightened capital and liquidity rules: Basel III
• Extensive capitalization requirement
• Brand recognition
• High firm concentration
Threat of
Substitutes
(High)
• Debit cards, checks, cash
• Savings and loan associations and credit unions
• Financial services providers
• Non-depository institutions
• Online electronic payment systems:
Paypal
Borrower’s
Power
(Medium)
• Little bargaining power on asset’s interest rates
• Extensive products available
• Easy to switch among providers
Funds Suppliers
Power (Low)
• Low bargaining power on liability interest rates
• Diversified and stable deposits inflows
Rivalry among
Existing
Competitors (High)
• Credit and debit card issuers
• Banks
• Larger-scaled competitors
• Other loan originators
• Decline in fee income
2014 10-K Page 15

- Increased disposable income
- Declined unemployment
• Loan loss provisions continue to fall
• Aggregate household debt increase
• Improving housing market
- Increasing importance of credit cards
• Online transactions
• Mobile technology
Contactless payment methods: Apple Pay
IBISWorld Industry Report http://clients1.ibisworld.com.proxy2.library.illinois.edu/reports/us/industry/default.as
px?entid=1288

Strengths
-Large market share
- Brand recognition
-Relationships with retailers
-Wide variety of services
Weakness
- Subprime borrowing
- Geographic concentration
Opportunities
- Macro recovery
- Industry growth
- Strategic acquisitions & partnerships
- Digital banking
- International expansion
2014 10-K Pages 25-29
Threats
Increased regulation
-Competition
- Cyber security
- Interest rate volatility
-Credit losses

• Interest Rate Risk
• Very sensitive to rates in the economy
• A 2% increase in rates will increase net interest income 4.5%
• A 50 basis point fall in rates will decrease net interest income 2.1%
• Credit Losses
• An increase in delinquencies and defaults will decrease net income substantially
• 53% of auto-loans and 32% of credit cards are considered sub-prime
• Macro Risks
• A lower demand for money and credit will hurt bottom line
• Compliance Risk
• Dodd-Frank, Basel III, Federal Reserve Stress Testing
• Technology Risk
• Recent hacks
2014 10-K Page 98

• Consumer Banking
• Domestic/International Credit Card: Originator of prime and subprime credit cards
• Consumer Banking
• Auto: Originator of auto loans typically with terms of 72 months or less, typically less than $75,000
• Home Loan: Typically acquire existing loans through acquisition however originate mortgages through branches
• Retail Banking: Checking accounts, CD’s , etc..
• Commercial Banking
• Commercial and multi-family real estate: Loans secured by real estate
• Commercial and industrial: Fixed or variable interest rate loans to middle market commercial and industrial firms
2014 10-K Page 78

• Richard Fairbank –
Chairman/CEO/President/Founder
- MasterCard International Global Board of Directors
- Fifth Federal Reserve District representative on Federal Advisor
Council 2010-2012
• Stephen Crawford – Chief Financial
Officer
- Stock price risen from $59.72 since appointment
Buysellsignals Monday, January 26, 2015 COF equity report

• Deepen and expand relationships with commercial customers
- Reflected in low net charge-off and nonperforming loan rates
• Development and use of technology and operational systems
- Reduce cost, improve quality and stay competitive
• Attract and retain a highly capable staff
- “Associates”
• Return value back to shareholders
- Increase in dividends and share buybacks

• Regularly explore and evaluate acquisition opportunities
• No significant M&A in 2014
• 2013
• Beech Street Capital Acquisition: $10 billion Commercial real estate loans
• Best Buy Private Label Credit Card Disposition: $6.4 billion
• 2012
• ING Direct: $40 billion loans, $84.4 billion deposits
• HSBC – U.S. Credit Card Business: $27.8 billion outstanding credit card receivables
• 2011
• Hudson’s Bay Company – Credit Card Portfolio: significantly expanded credit card business in Canada, $1.4 billion outstanding credit card loan receivables
• Kohl’s – Credit Card Portfolio: $3.7 billion outstanding principal and interest balance
• 2009
• Chevy Chase Bank: $0.48 billion, one of the largest retail depository institutions in the Washington DC
2010 10-K Page 111, 2011 10-K Page 158, 2012 10-K Page 159, 2013 10-K
Pages 1-2, 2014 10-K Pages 1-2

• Basel III
• Capital Requirement required for banks above $250 billion in assets
• Increase in bank capital requirements
• Dodd-Frank
• Annual Federal Reserve Stress
Testing
• Difficulty with acquisitions
• Work in progress
2014 10-k Pages 6-8 https://samples-breakingintowallstreetcom.s3.amazonaws.com/60-BIWS-Bank-Regulatory-
Capital.pdf

Tier 1 Common Ratio
Tier 1 Ratio
Total Capital Ratio
Leverage Ratio
P/Tangible Book
P/Book
EBT/Market Cap
Efficiency Ratio
Charge-offs / Avg. Loans
ROE
ROA
Capital And Funding
2010A 2011A
8.7%
11.6%
16.8%
10.8%
9.6%
12.0%
14.8%
10.1%
2012A
10.9%
11.3%
13.5%
8.6%
Multiples
2010A 2011A
1.5x
0.7x
10.8%
1.3x
0.7x
11.1%
2012A
1.5x
0.9x
10.8%
Operation Ratio
2010A
49.1%
2011A
57.3%
5.2% 2.9%
Profitability
2010A
11.5%
2011A
11.6%
1.7% 1.6%
2012A
55.1%
1.9%
2012A
10.6%
1.4%
2013A
12.2%
12.6%
14.7%
10.0%
2013A
1.6x
1.0x
14.6%
2013A
55.2%
2.0%
2013A
10.6%
1.4%
2014A
12.5%
13.2%
15.1%
8.1%
2014A
1.6x
1.0x
15.4%
2014A
54.6%
1.7%
2014A
10.2%
1.5%

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Historical Figures Historical Figures Forecasted Figures Forecasted Figures
2010A 2011A 2012A 2013A 2014A 2015E 2016E 2017E 2018E 2019E 2018E 2019E
Net Interest Margin 6.86% 7.03% 6.36% 6.68% 6.54% 6.58% 6.55% 6.45% 6.51% 6.66% 6.51% 6.66%
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Loan Portfolio
% Total Growth Rate
2014A 2011A 2012A 2013A 2014A 2015E 2016E 2017E 2018E 2019E
Credit Card:
Domestic credit card 37% 5% 47% -12%
International credit card 4% 13%
Total credit card 41% 6%
2%
41%
-7%
-11%
6% 5% 6% 8% 7% 6%
2% 2% 3% 2% 3% 2%
6% 5% 6% 7% 7% 6%
Consumer Banking:
Auto
Home loan
Retail banking
18% 22% 25% 17% 19% 18% 15% 6% 8% 6%
14%
Total consumer banking 34%
-14% 323%
6% 107%
-20%
-6%
-15%
2% -7% -5% -7% -1%
1%
-15%
1%
3%
-8%
1%
6%
5%
1%
5%
4%
1%
6%
4%
1%
5%
Commercial Banking:
Commercial and multifamily real estate
Commercial and industrial
Total commercial lending
Small-ticket commercial real estate
11% 16% 13% 17% 12% 12% 10% 12% 10% 12%
13% 18% 16% 17% 16% 16% 17% 15% 13% 16%
24%
0%
17%
-18%
15%
-20%
17%
-20%
14%
-18%
14% 14% 14% 12% 14%
-14% -13% -14% -13% -15%
Total commercial banking 24% 15% 13% 16% 13% 14% 14% 13% 12% 14%
Other:
Other loans 0% -23%
Total loans held for investment 100% 8%
7%
52%
-35%
-4%
-8%
6% 6% 8% 8% 8% 8%

in Millions
Net interest income
% Growth
Provision for credit losses
% of Net Interest Income
Net interest income after provision for credit losses
% of Net Interest Income
Total non-interest income
% of Net Interest Income
Total Revenue
% of Net Interest Income
Total non-interest expense
% of Net Interest Income
Income Statement
Historical Figures
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
12457 12741 16589 18106 17818 19250 20684 22088 24076 26611
2% 30% 9% -2% 8% 7% 7% 9% 11%
3907 2360 4415 3453 3541
Forecasted Figures
3826 4111 4390 4785 5288
31% 19% 27% 19% 20% 20% 20% 20% 20% 20%
8550 10381 12174 14653 14277 15424 16574 17698 19292 21323
69% 81% 73% 81% 80% 80% 80% 80% 80% 80%
3714 3538 4807 4278 4472 4461 4752 5008 5387 5901
30% 28% 29% 24% 25% 23% 23% 23% 22% 22%
12264 13919 16981 18931 18749 19885 21326 22707 24679 27224
98% 109% 102% 105% 105% 103% 103% 103% 103% 102%
7935 9333 11798 12354 12181 12497 13428 14340 15631 17276
64% 73% 71% 68% 68% 65% 65% 65% 65% 65%
Income from continuing operations before income taxes 4329 4586 5183 6577 6568 7388 7897 8367 9048 9948
% of Net Interest Income 35% 36% 31% 36% 37% 38% 38% 38% 38% 37%
Income tax provision
% Tax Rate
1280 1334 1475 2224 2146 2586 2764 2928 3167 3482
30% 29% 28% 34% 33% 35% 35% 35% 35% 35%
Income from continuing operations, net of tax 3049 3252 3708 4353 4422 4802 5133 5439 5881 6466
Income (loss) from discontinued operations, net of tax -307 -106 -217 -233 5
Net income
% of Net Interest Income
2742 3146 3491 4120 4427 4802 5133 5439 5881 6466
22% 25% 21% 23% 25% 25% 25% 25% 24% 24%

Beta
Risk Free Rate
CAPM
Market Premium
CAPM
1.62
2.00%
5.50%
10.94%
1Yr
Return to Owner
Return to Owner
Half Yr
Annualized
-7.76%
8.41%
2Yr
5Yr
Adj Return to Owner
18.82%
13.73%
9.50%
ROE
2014 ROE
2013 ROE
2012 ROE
Average ROE
9.83%
9.89%
9.80%
9.84%
Cost of Equity
Adj Return to Owner
CAPM
Average ROE
Adj Cost of Equity
Cost of Equity
Business Risk Premium
Discount Rate
Terminal Growth Rate
9.50%
10.94%
9.84%
10.09%
10.1%
1.0%
11.1%
2.3%

Beginning Common Stock Equity
Less: Preferred Stock
Less: Preferred Stock Dividends
Plus: Net Income
Plus: Stock Issuances:
Plus: Stock-Based Comp.:
Plus: Other Comprehensive Income (Loss)
Less: Stock Repurchases:
Less: Common Dividends Dividend Growth rate
Ending Common Stock Equity
Residual Income Model
2014 2015 2016 2017 2018 2019 Terminal
41632 42261 45783 49599 53684 58571
-1822
-67
4427
100
-67
4802
-67
5133
-67
5439
-67
5881
-67
6466
274
442
-2045
-680
-500
-714
-500
-750
-500
-787
-100
-827
-100
-868
42261 45783 49599 53684 58571 64002
Net Income
Less : Equity Charge
Residual Income
PV of Residual Income
4802
4265
538
484
5133
4620
513
416
5439
5005
433
316
5881
5417
464
305
6466
5911
555
328
6462
3819
Current Value from Common Share Equity
Residual Income from Yr 2015-2019
Terminal Residual Income After 2019
Present Value of Equity
Diluted Common Share Outstanding
Implied Share Price
$42,261.33
$1,848.70
% to Equity Value
88.2%
3.9%
$3,819.17
8.0%
$47,929.20
100.0%
Cost of Equity
Business Risk Premium
Discount Rate
Terminal Growth Rate
571.9
$83.81
10.1%
1.0%
11.1%
2.3%

•
• Fifth Third Bancorp (FITB)
• Regions Financial Corporation (RF)
• The PNC Financial Services Group, Inc. (PNC)
• SunTrust Banks, Inc. (STI)
• American Express Company (AXP)
• Ally Financial Inc. (ALLY)
• Discover Financial Services (DFS)
• Synchrony Financial (SYF)

Multiples
Market Cap/EBT
Trailing P/E
Forward P/E
Price/Book
Price/Tangible Book
COF
Multiples High
6.51x
10.42x
10.38x
0.97x
1.47x
9.33x
15.50x
Median
7.84x
12.60x
Low
14.66x
3.96x
4.88x
12.09x
1.16x
1.50x
6.83x
11.22x
10.76x
0.72x
0.72x
Mean
7.96x
12.88x
12.31x
1.73x
2.09x
Multiple
Market Cap/EBT
Trailing P/E
Forward P/E
Price/Book
Price/Tangible Book
COF Implied Stock Price
COF Current Price
Weight
0.1
Implied COF Stock Price
89.98
0.1
0.13
0.33
95.61
96.88
94.91
0.33
81.70
$90.35
$79.84

• HOLD!
• Market: $79.84
• Residual Income Model: $83.81
• Comparable: $90.35
• Well established company
• Offers exposure to the financial sector in our portfolio
• Near fair value
• Be vigilant of
• Interest rates
• Consumer spending
• Subprime lending