Safe and Sound

Capital One, National Association

Mclean, VA
4
Star Rating
Capital One, National Association is a Mclean, VA-based, FDIC-insured bank founded in 1933. Regulatory filings show the bank having equity of $37.86 billion on $280.23 billion in assets, as of June 30, 2017.

Thanks to the efforts of 30,163 full-time employees in 668 offices in multiple states, the bank has amassed loans and leases worth $157.05 billion, including real estate loans of $51.29 billion. The bank currently holds $220.75 billion in deposits from U.S. customers.

Overall, Bankrate believes that, as of June 30, 2017, Capital One, National Association exhibited a good condition, earning 4 out of 5 stars for safety and soundness. Keep reading for a look at how the bank fared on the three important criteria Bankrate used to grade U.S. banks.

WHAT IS
SAFE AND SOUND?

Find out

THE INSTITUTION'S SCORE

Capital Score

Capital is a key measurement of an institution's financial resilience. It acts as a buffer against losses and affords protection for depositors when a bank is experiencing financial trouble. From a safety and soundness perspective, more capital is preferred.

On our test to measure capital adequacy, Capital One, National Association received a score of 8 out of a possible 30 points, failing to reach the national average of 11.67.

One important measure of this buffer is a bank's Tier 1 capital ratio. Capital One, National Association's Tier 1 capital ratio was 12.09 percent, above the 6 percent level considered adequate by regulators, but less than the national average of 12.50 percent. A higher capital ratio suggests the bank will be better able to stand up to financial downturns.

Overall, Capital One, National Association held equity amounting to 13.51 percent of its assets, which was lower than the national average of 13.94 percent.

Asset Quality Score

In this test, Bankrate tries to determine the impact of problem assets, such as past-due mortgages, on the bank's capitalization and allocated loan loss reserves.

Having large numbers of these kinds of assets could eventually require a bank to use capital to cover losses, diminishing its equity cushion. Many of those assets are also likely to be in non-accrual status and no longer earning money, resulting in lower earnings and potentially more risk of a failure in the future.

Capital One, National Association scored 36 out of a possible 40 points on Bankrate's test of asset quality, lower than the national average of 38.67.

A widely used indicator of asset quality is the percentage of problem assets a bank holds compared to its total assets. As of June 30, 2017, 1.23 percent of Capital One, National Association's loans were noncurrent, meaning they were more than 90 days past due or were in non-accrual status. That's below the national average of 1.24 percent.

Banks keep a reserve known as an "allowance for loan and lease losses" to deal with problem assets . Comparing how large that reserve is to the total amount of problem loans can be a useful indicator when evaluating a bank's ability to manage troubled assets. Unfortunately, the FDIC did not provide information on Capital One, National Association's loan loss allowance in its most recent filings.

Earnings score

A bank's earnings performance has an effect on its long-term survivability. Earnings may be retained by the bank, boosting its capital cushion, or be used to address problematic loans, potentially making the bank better able to withstand financial trouble. Obviously, banks that are losing money have less ability to do those things.

Capital One, National Association scored 12 out of a possible 30 on Bankrate's test of earnings, less than the national average of 20.00.

Return on equity, calculated by dividing net income (profit, essentially) by the total amount of equity, is one key measure of a bank's earnings. The most recent annualized quarterly return on equity for Capital One, National Association was 5.61 percent, below the national average of 9.24 percent.

The bank earned net income of $1.03 billion on total equity of $37.86 billion for the twelve months ended June 30, 2017. The bank reported an annualized return on average assets, or ROA, of 0.73 percent, below the 1 percent deemed satisfactory in accordance with industry standards and below the average for U.S. banks of 1.13 percent.

WHAT IS SAFE & SOUND?

Bankrate.com's Safe & Sound Ratings provide a star rating system to evaluate the current financial status of financial institutions. The information gathered about banks, credit unions and thrifts is updated as set forth in the Terms of Use of Safe & Sound Ratings and Reports. The Safe & Sound Ratings information is grouped by categories of banks, thrifts and credit unions.

Scoring methodology

Bankrate.com evaluates the financial condition of institutions and assigns a one- to five-star rating for each with five stars representing the highest rating. Institutions with satisfactory performance will generally receive a rating of three or more stars. The majority of institutions fall into the three- to four-star range. An institution with an "NR" rating may be too new to rate or may have limited the publicly available information in their regulatory filings. The "NR" is not an indication of financial strength or weakness. The Safe & Sound rating is believed to be reliable, but the information is not guaranteed. In addition, events since the information was collected may have altered the institution's financial condition.