Capital One Financial (COF) 10-Q 2014 Q1 Quarterly report

Exhibit 12.1

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND

EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS⁽¹⁾⁽²⁾

(Dollars in millions)	Three Months Ended March 31, 2014			Year Ended December 31,
				2013			2012			2011			2010			2009
Ratios (including interest expense on deposits):
Earnings:
Income from continuing operations before income taxes	$	1,703		$	6,578		$	5,184		$	4,688		$	4,406		$	1,398
Fixed charges		405			1,796			2,377			2,251			2,903			2,975
Equity in undistributed (gain) loss of unconsolidated subsidiaries		1			(16	)		(22	)		4			8			(3	)
Earnings available for fixed charges, as adjusted		2,109			8,358			7,539			6,943			7,317			4,370
Fixed charges:
Interest expense on deposits and borrowings		403			1,792			2,375			2,246			2,896			2,967
Interest factor in rent expense		2			4			2			5			7			8
Total fixed charges		405			1,796			2,377			2,251			2,903			2,975
Preferred stock dividend requirements(4)		20			77			20			—			—			188
Total combined fixed charges and preferred stock dividends	$	425		$	1,873		$	2,397		$	2,251		$	2,903		$	3,136
Ratio of earnings to fixed charges		5.21	%		4.65	%		3.17	%		3.08	%		2.52	%		1.47	%
Ratio of earnings to combined fixed charges preferred stock dividends		4.96			4.46			3.15			3.08			2.52			1.39
Ratios (excluding interest expense on deposits):
Earnings:
Income from continuing operations before income taxes	$	1,703		$	6,578		$	5,184		$	4,688		$	4,406		$	1,398
Fixed charges		129			555			974			1,064			1,438			882
Equity in undistributed (gain) loss of unconsolidated subsidiaries		1			(16	)		(22	)		4			8			(3	)
Earnings available for fixed charges, as adjusted		1,833			7,117			6,136			5,756			5,852			2,277
Fixed charges:
Interest expense on borrowings(3)		127			551			972			1,059			1,431			874
Interest factor in rent expense		2			4			2			5			7			8
Total fixed charges		129			555			974			1,064			1,438			882
Preferred stock dividend requirements(4)		20			77			20			—			—			188
Total combined fixed charges and preferred stock dividends	$	149		$	632		$	994		$	1,064		$	1,438		$	1,070
Ratio of earnings to fixed charges, excluding interest on deposits		14.21	%		12.82	%		6.30	%		5.41	%		4.07	%		2.58	%
Ratio of earnings to combined fixed charges, excluding interest on deposits, and preferred stock dividends		12.30			11.26			6.17			5.41			4.07			2.13

⁽¹⁾  In the first quarter of 2014, we adopted the proportional amortization method of accounting for Investments in Qualified Affordable Housing Projects. See “MD&A—Accounting Changes and Development” for expanded discussion. Prior periods have been recast to conform to this presentation.

⁽²⁾ On February 27, 2009, we acquired CCB on February 17, 2012, we acquired ING Direct. On May 1, 2012, we closed the 2012 U.S. card acquisition. Each of these transactions was accounted for under the acquisition method of accounting, and their respective results of operations are included in our results from each respective transaction date.

⁽³⁾  Represents total interest expense reported in our consolidated statements of income, excluding interest on deposits of $276 million for the three months ended March 31, 2014, $1.2 billion, $1.4 billion, $1.2 billion, $1.5 billion, and $2.1 billion for the years ended December 31, 2013, 2012, 2011, 2010, and 2009, respectively.

⁽⁴⁾  Preferred stock dividends represent pre-tax earnings that would be required to cover any preferred stock dividends requirements, computed using our effective tax rate, whenever there is an income tax provision, for the relevant periods.