EX-12.1 2 cof-09302014x10xkxex121.htm EXHIBIT 12.1 COF-09.30.2014-10-K-Ex12.1


Exhibit 12.1

COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES AND
EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS(1)(2) 
 
 
Nine Months Ended
September 30, 2014
 
Year Ended December 31,
 
(Dollars in millions)
 
 
2013
 
2012
 
2011
 
2010
 
2009
 
Ratios (including interest expense on deposits):
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
 
$
5,149

 
$
6,578

 
$
5,184

  
$
4,688

  
$
4,406

  
$
1,398

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed charges
 
1,195

 
1,796

 
2,377

  
2,251

  
2,903

  
2,975

 
Equity in undistributed loss (gain) of unconsolidated subsidiaries
 
5

 
(16
)
 
(22
)
  
4

  
8

  
(3
)
 
Earnings available for fixed charges, as adjusted
 
6,349

 
8,358

 
7,539

  
6,943

  
7,317

  
4,370

 
Fixed charges:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense on deposits and borrowings
 
1,190

 
1,792

 
2,375

  
2,246

  
2,896

  
2,967

 
Interest factor in rent expense
 
5

 
4

 
2

  
5

  
7

  
8

 
Total fixed charges
 
1,195

 
1,796

 
2,377

  
2,251

  
2,903

  
2,975

 
Preferred stock dividend requirements(4)
 
69

 
77

 
20

 
—

 
—

 
188

 
Total combined fixed charges and preferred stock dividends
 
$
1,264

 
$
1,873

 
$
2,397

 
$
2,251

 
$
2,903

 
$
3,136

 
Ratio of earnings to fixed charges
 
5.31

 
4.65

 
3.17

 
3.08

 
2.52

 
1.47

 
Ratio of earnings to combined fixed charges and preferred stock dividends
 
5.02
 
4.46
 
3.15
  
3.08
  
2.52
  
1.39
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ratios (excluding interest expense on deposits):
 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings:
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from continuing operations before income taxes
 
$
5,149

 
$
6,578

 
$
5,184

  
$
4,688

  
$
4,406

  
$
1,398

 
Adjustments:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed charges
 
376

 
555

 
974

  
1,064

  
1,438

  
882

 
Equity in undistributed loss (gain) of unconsolidated subsidiaries
 
5

 
(16
)
 
(22
)
  
4

  
8

  
(3
)
 
Earnings available for fixed charges, as adjusted
 
5,530

 
7,117

 
6,136

  
5,756

  
5,852

  
2,277

 
Fixed charges:
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense on borrowings(3)
 
371

 
551

 
972

  
1,059

  
1,431

  
874

 
Interest factor in rent expense
 
5

 
4

 
2

  
5

  
7

  
8

 
Total fixed charges
 
376

 
555

 
974

  
1,064

  
1,438

  
882

 
Preferred stock dividend requirements(4)
 
69

 
77

 
20

 
—

 
—

 
188

 
Total combined fixed charges and preferred stock dividends
 
$
445

 
$
632

 
$
994

 
$
1,064

 
$
1,438

 
$
1,070

 
Ratio of earnings to fixed charges, excluding interest on deposits
 
14.71

 
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
 
12.43
 
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 $819 million for the nine months ended September 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.