Capital One Financial (COF) 10-Q 2014 Q2 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)	Six Months Ended June 30, 2014		Year Ended December 31,
			2013		2012		2011		2010		2009
Ratios (including interest expense on deposits):
Earnings:
Income from continuing operations before income taxes	$	3,488	$	6,578	$	5,184	$	4,688	$	4,406	$	1,398
Adjustments:
Fixed charges		804		1,796		2,377		2,251		2,903		2,975
Equity in undistributed loss (gain) of unconsolidated subsidiaries		6		(16)		(22)		4		8		(3)
Earnings available for fixed charges, as adjusted		4,298		8,358		7,539		6,943		7,317		4,370
Fixed charges:
Interest expense on deposits and borrowings		800		1,792		2,375		2,246		2,896		2,967
Interest factor in rent expense		4		4		2		5		7		8
Total fixed charges		804		1,796		2,377		2,251		2,903		2,975
Preferred stock dividend requirements(4)		39		77		20		—		—		188
Total combined fixed charges and preferred stock dividends	$	843	$	1,873	$	2,397	$	2,251	$	2,903	$	3,136
Ratio of earnings to fixed charges		5.35		4.65		3.17		3.08		2.52		1.47
Ratio of earnings to combined fixed charges and preferred  stock dividends		5.10		4.46		3.15		3.08		2.52		1.39
Ratios (excluding interest expense on deposits):
Earnings:
Income from continuing operations before income taxes	$	3,488	$	6,578	$	5,184	$	4,688	$	4,406	$	1,398
Adjustments:
Fixed charges		256		555		974		1,064		1,438		882
Equity in undistributed loss (gain) of unconsolidated subsidiaries		6		(16)		(22)		4		8		(3)
Earnings available for fixed charges, as adjusted		3,750		7,117		6,136		5,756		5,852		2,277
Fixed charges:
Interest expense on borrowings(3)		252		551		972		1,059		1,431		874
Interest factor in rent expense		4		4		2		5		7		8
Total fixed charges		256		555		974		1,064		1,438		882
Preferred stock dividend requirements(4)		39		77		20		—		—		188
Total combined fixed charges and preferred stock dividends	$	295	$	632	$	994	$	1,064	$	1,438	$	1,070
Ratio of earnings to fixed charges, excluding interest on  deposits		14.65		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		12.71		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 “Note 1—Summary of Significant Accounting Policies” for additional information. Prior periods have been recast to conform to this presentation.

⁽²⁾  We acquired CCB on February 27, 2009 and ING Direct on February 17, 2012. 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.

⁽³⁾  Represents total interest expense reported on our consolidated statements of income, excluding interest on deposits of $548 million for the six months ended June 30, 2014 and $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.