Capital One Reports Fourth Quarter 2020 Net Income of $2.6 billion, or $5.35 per share

Excluding adjusting items, Fourth Quarter 2020 Net Income of $5.29 per share(1)

MCLEAN, Va., Jan. 26, 2021 /PRNewswire/ --  Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2020 of $2.6 billion, or $5.35 per diluted common share, compared with net income of $2.4 billion, or $5.06 per diluted common share in the third quarter of 2020, and with net income of $1.2 billion, or $2.25 per diluted common share in the fourth quarter of 2019. Excluding adjusting items, net income for the fourth quarter of 2020 was $5.29 per diluted common share(1). In addition, Capital One's Board of Directors has authorized a common stock repurchase program of up to $7.5 billion.

"Our long-standing strategic choices put us in a strong position to respond to both the near-term challenges and the emerging opportunities as the pandemic plays out," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "Despite the pressures of the pandemic in the near-term, nothing has changed about where we think our businesses are headed, or the long-term strategic opportunities that are being created as sweeping digital change continues to transform banking."

Adjusting items in the fourth quarter of 2020, which are excluded from diluted earnings per share (EPS), efficiency ratio and operating efficiency ratio metrics (see Table 15 in our Financial Supplement for additional information):

(Dollars in millions, except per share data)

Pre-Tax
Impact

Diluted EPS
Impact

Legal reserve activity, including insurance recoveries

$

37

$

0.07

Cybersecurity Incident expenses, net of insurance

(6)

(0.01)

The quarter included the following notable item:

(Dollars in millions, except per share data)

Pre-Tax
Impact

Diluted EPS
Impact

Equity investment gain

$

60

$

0.10

All comparisons below are for the fourth quarter of 2020 compared with the third quarter of 2020 unless otherwise noted.

Fourth Quarter 2020 Income Statement Summary:

  • Total net revenue decreased 1 percent to $7.3 billion.
  • Total non-interest expense increased 13 percent to $4.0 billion:
    • 99 percent increase in marketing.
    • 6 percent increase in operating expenses.
  • Pre-provision earnings decreased 13 percent to $3.3 billion(2).
  • Provision for credit losses decreased 20 percent to $264 million:
    • Net charge-offs of $856 million.
    • $593 million loan reserve release.
  • Net interest margin of 6.05 percent, an increase of 37 basis points.
  • Efficiency ratio of 54.64 percent.
    • Efficiency ratio excluding adjusting items of 55.06 percent(1).
  • Operating efficiency ratio of 46.97 percent.
    • Operating efficiency ratio excluding adjusting items of 47.39 percent(1).

Fourth Quarter 2020 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 13.7 percent at December 31, 2020.
  • Period-end loans held for investment in the quarter increased $3.4 billion, or 1 percent, to $251.6 billion.
    • Credit Card period-end loans increased $3.3 billion, or 3 percent, to $107.0 billion.
      • Domestic Card period-end loans increased $3.0 billion, or 3 percent, to $98.5 billion.
    • Consumer Banking period-end loans increased $200 million, or less than 1 percent, to $68.9 billion.
      • Auto period-end loans increased $368 million, or 1 percent, to $65.8 billion.
    • Commercial Banking period-end loans decreased $114 million, or less than 1 percent, to $75.8 billion.
  • Average loans held for investment in the quarter decreased $1.8 billion, or 1 percent, to $247.7 billion.
    • Credit Card average loans decreased $1.8 billion, or 2 percent, to $103.6 billion.
      • Domestic Card average loans decreased $1.9 billion, or 2 percent, to $95.5 billion.
    • Consumer Banking average loans increased $986 million, or 1 percent, to $68.8 billion.
      • Auto average loans increased $1.1 billion, or 2 percent, to $65.6 billion.
    • Commercial Banking average loans decreased $1.0 billion, or 1 percent, to $75.3 billion.
  • Period-end total deposits decreased $283 million, or less than 1 percent, to $305.4 billion, while average deposits decreased $1.0 billion, or less than 1 percent, to $304.5 billion.
  • Interest-bearing deposits rate paid decreased 18 basis points to 0.51 percent.

All comparisons below are for the full year of 2020 compared with the full year of 2019 unless otherwise noted.

 2020 Full Year Income Statement Summary:

  • Total net revenue decreased less than 1% to $28.5 billion.
  • Total non-interest expense decreased 3 percent to $15.1 billion:
    • 29 percent decrease in marketing.
    • 2 percent increase in operating expenses.
  • Pre-provision earnings increased 3 percent to $13.5 billion(2).
  • Provision for credit losses increased 65 percent to $10.3 billion:
  • Efficiency ratio of 52.79 percent.
    • Efficiency ratio excluding adjusting items of 51.66 percent(1).
  • Operating efficiency ratio of 47.14 percent.
    • Operating efficiency ratio excluding adjusting items of 46.01 percent(1).

(1)

Amounts excluding adjusting items are non-GAAP measures that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results and provide alternate measurements of our performance, both in the current period and across periods. See Table 15 in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

(2)

Pre-provision earnings is calculated based on the sum of net interest income and non-interest income, less non-interest expense for the period.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on January 26, 2021 at 5:00 PM Eastern Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company's home page (www.capitalone.com). Under "About," choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation of non-GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through February 9, 2021 at 5:00 PM Eastern Time.

Forward-Looking Statements

Certain statements in this release may constitute forward-looking statements, which involve a number of risks and uncertainties. Capital One cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information due to a number of factors, including those listed from time to time in reports that Capital One files with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2019.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., and Capital One Bank (USA), N.A., had $305.4 billion in deposits and $421.6 billion in total assets as of  December 31, 2020. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has branches located primarily in New York, Louisiana, Texas, Maryland, Virginia, New Jersey and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

 

 

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement(1)(2)

Fourth Quarter 2020

Table of Contents

Capital One Financial Corporation Consolidated Results

Page

Table 1:

Financial Summary—Consolidated

1

Table 2:

Selected Metrics—Consolidated

3

Table 3:

Consolidated Statements of Income

4

Table 4:

Consolidated Balance Sheets

7

Table 5:

Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)

10

Table 6:

Average Balances, Net Interest Income and Net Interest Margin

11

Table 7:

Loan Information and Performance Statistics

12

Table 8:

Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity

15

Business Segment Results

Table 9:

Financial Summary—Business Segment Results

17

Table 10:

Financial & Statistical Summary—Credit Card Business

18

Table 11:

Financial & Statistical Summary—Consumer Banking Business

20

Table 12:

Financial & Statistical Summary—Commercial Banking Business

21

Table 13:

Financial & Statistical Summary—Other and Total

22

Other

Table 14:

Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)

23

Table 15:

Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures

24

__________

(1)

The information contained in this Financial Supplement is preliminary and based on data available at the time of the
earnings presentation. Investors should refer to our Annual Report on Form 10-K for the period ended December 31,
2020 once it is filed with the Securities and Exchange Commission.

(2)

This Financial Supplement includes non-GAAP measures. We believe these non-GAAP measures are useful to
investors and users of our financial information as they provide an alternate measurement of our performance and assist
in assessing our capital adequacy and the level of return generated. These non-GAAP measures should not be viewed
as a substitute for reported results determined in accordance with generally accepted accounting principles in the U.S.
("GAAP"), nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.

 

                

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated













2020 Q4 vs.

Year Ended December 31,

(Dollars in millions, except per share data and as noted)

2020

2020

2020

2020

2019

2020

2019




2020 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2020

2019

2019

Income Statement



















Net interest income

$

5,873

$

5,555

$

5,460

$

6,025

$

6,066

6

%

(3)

%

$

22,913

$

23,340

(2)

%

Non-interest income

1,464

1,826

1,096

1,224

1,361

(20)

8

5,610

5,253

7

Total net revenue(1)

7,337

7,381

6,556

7,249

7,427

(1)

(1)

28,523

28,593

—

Provision for credit losses

264

331

4,246

5,423

1,818

(20)

(85)

10,264

6,236

65

Non-interest expense:



















Marketing

563

283

273

491

710

99

(21)

1,610

2,274

(29)

Operating expense

3,446

3,265

3,497

3,238

3,451

6

—

13,446

13,209

2

Total non-interest expense

4,009

3,548

3,770

3,729

4,161

13

(4)

15,056

15,483

(3)

Income (loss) from continuing operations before income taxes

3,064

3,502

(1,460)

(1,903)

1,448

(13)

112

3,203

6,874

(53)

Income tax provision (benefit)

496

1,096

(543)

(563)

270

(55)

84

486

1,341

(64)

Income (loss) from continuing operations, net of tax

2,568

2,406

(917)

(1,340)

1,178

7

118

2,717

5,533

(51)

Income (loss) from discontinued operations, net of tax

(2)

—

(1)

—

(2)

**

—

(3)

13

**

Net income (loss)

2,566

2,406

(918)

(1,340)

1,176

7

118

2,714

5,546

(51)

Dividends and undistributed earnings allocated to participating securities(2)

(19)

(20)

(1)

(3)

(7)

(5)

171

(20)

(41)

(51)

Preferred stock dividends

(68)

(67)

(90)

(55)

(97)

1

(30)

(280)

(282)

(1)

Issuance cost for redeemed preferred stock(3)

(17)

—

—

(22)

(31)

**

(45)

(39)

(31)

26

Net income (loss) available to common stockholders

$

2,462

$

2,319

$

(1,009)

$

(1,420)

$

1,041

6

137

$

2,375

$

5,192

(54)

Common Share Statistics



















Basic earnings per common share:(2)



















Net income (loss) from continuing operations

$

5.36

$

5.07

$

(2.21)

$

(3.10)

$

2.26

6

%

137

%

$

5.20

$

11.07

(53)

%

Income (loss) from discontinued operations

—

—

—

—

—

—

—

(0.01)

0.03

**

Net income (loss) per basic common share

$

5.36

$

5.07

$

(2.21)

$

(3.10)

$

2.26

6

137

$

5.19

$

11.10

(53)

Diluted earnings per common share:(2)



















Net income (loss) from continuing operations

$

5.35

$

5.06

$

(2.21)

$

(3.10)

$

2.25

6

138

$

5.19

$

11.02

(53)

Income (loss) from discontinued operations

—

—

—

—

—

—

—

(0.01)

0.03

**

Net income (loss) per diluted common share

$

5.35

$

5.06

$

(2.21)

$

(3.10)

$

2.25

6

138

$

5.18

$

11.05

(53)

Weighted-average common shares outstanding (in millions):



















Basic

459.1

457.8

456.7

457.6

460.9

—

—

457.8

467.6

(2)

Diluted

460.2

458.5

456.7

457.6

463.4

—

(1)

458.9

469.9

(2)

Common shares outstanding (period-end, in millions)

459.0

457.4

456.3

455.3

456.6

—

1

459.0

456.6

1

Dividends declared and paid per common share

$

0.10

$

0.10

$

0.40

$

0.40

$

0.40

—

(75)

$

1.00

$

1.60

(38)

Tangible book value per common share (period-end)(4)

88.34

83.67

78.82

80.68

83.72

6

6

88.34

83.72

6










































































2020 Q4 vs.

Year Ended December 31,

(Dollars in millions)

2020

2020

2020

2020

2019

2020

2019




2020 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2020

2019

2019

Balance Sheet (Period-End)



















Loans held for investment

$

251,624

$

248,223

$

251,512

$

262,990

$

265,809

1

%

(5)

%

$

251,624

$

265,809

(5)

%

Interest-earning assets

388,917

390,040

389,829

364,472

355,202

—

9

388,917

355,202

9

Total assets

421,602

421,883

421,296

396,878

390,365

—

8

421,602

390,365

8

Interest-bearing deposits

274,300

276,092

275,183

245,142

239,209

(1)

15

274,300

239,209

15

Total deposits

305,442

305,725

304,238

269,689

262,697

—

16

305,442

262,697

16

Borrowings

40,539

42,795

44,900

55,681

55,697

(5)

(27)

40,539

55,697

(27)

Common equity

55,356

53,093

50,835

51,620

53,157

4

4

55,356

53,157

4

Total stockholders' equity

60,204

58,424

56,045

56,830

58,011

3

4

60,204

58,011

4

Balance Sheet (Average Balances)



















Loans held for investment

$

247,689

$

249,511

$

253,358

$

262,889

$

258,870

(1)

%

(4)

%

$

253,335

$

247,450

2

%

Interest-earning assets

388,252

391,451

378,145

355,347

349,150

(1)

11

378,362

341,510

11

Total assets

420,011

422,854

411,075

390,380

383,162

(1)

10

411,187

374,924

10

Interest-bearing deposits

274,142

276,339

261,256

241,115

236,250

(1)

16

263,279

231,609

14

Total deposits

304,513

305,516

288,344

264,653

260,040

—

17

290,835

255,065

14

Borrowings

40,662

44,161

49,827

51,795

51,442

(8)

(21)

46,588

50,965

(9)

Common equity

54,220

51,995

52,413

53,186

52,641

4

3

52,954

50,960

4

Total stockholders' equity

59,389

57,223

57,623

58,568

58,148

4

2

58,201

55,690

5

 

                

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated













2020 Q4 vs.

Year Ended December 31,

(Dollars in millions, except as noted)

2020

2020

2020

2020

2019

2020

2019




2020 vs.

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2020

2019

2019

Performance Metrics



















Net interest income growth (period over period)

6

%

2

%

(9)

%

(1)

%

6

%

**

**

(2)

%

2

%

**

Non-interest income growth (period over period)

(20)

67

(10)

(10)

11

**

**

7

1

**

Total net revenue growth (period over period)

(1)

13

(10)

(2)

7

**

**

—

2

**

Total net revenue margin(5)

7.56

7.54

6.93

8.16

8.51

2

bps

(95)

bps

7.54

8.37

(83)

bps

Net interest margin(6)

6.05

5.68

5.78

6.78

6.95

37

(90)

6.06

6.83

(77)

Return on average assets

2.45

2.28

(0.89)

(1.37)

1.23

17

122

0.66

1.48

(82)

Return on average tangible assets(7)

2.54

2.36

(0.93)

(1.43)

1.28

18

126

0.69

1.54

(85)

Return on average common equity(8)

18.18

17.84

(7.69)

(10.68)

7.93

34

10

%

4.49

10.16

(6)

%

Return on average tangible common equity(9)

25.02

24.98

(10.74)

(14.85)

11.07

4

14

6.24

14.37

(8)

Non-interest expense as a percentage of average loans held for
investment

6.47

5.69

5.95

5.67

6.43

78

4

bps

5.94

6.26

(32)

bps

Efficiency ratio(10)

54.64

48.07

57.50

51.44

56.03

7

%

(139)

52.79

54.15

(136)

Operating efficiency ratio(11)

46.97

44.24

53.34

44.67

46.47

273

bps

50

47.14

46.20

94

Effective income tax rate for continuing operations

16.2

31.3

37.2

29.6

18.6

(15)

%

(240)

15.2

19.5

(4)

%

Employees (period-end, in thousands)

52.0

52.5

53.1

52.1

51.9

(1)

—

52.0

51.9

—

Credit Quality Metrics



















Allowance for credit losses

$

15,564

$

16,129

$

16,832

$

14,073

$

7,208

(4)

%

116

%

$

15,564

$

7,208

116

%

Allowance coverage ratio

6.19

%

6.50

%

6.69

%

5.35

%

2.71

%

(31)

bps

348

bps

6.19

%

2.71

%

348

bps

Net charge-offs

$

856

$

1,073

$

1,505

$

1,791

$

1,683

(20)

%

(49)

%

$

5,225

$

6,252

(16)

%

Net charge-off rate(12)

1.38

%

1.72

%

2.38

%

2.72

%

2.60

%

(34)

bps

(122)

bps

2.06

%

2.53

%

(47)

bps

30+ day performing delinquency rate(13)

2.41

1.97

2.09

2.95

3.51

44

(110)

2.41

3.51

(110)

30+ day delinquency rate(13)

2.61

2.22

2.30

3.16

3.74

39

(113)

2.61

3.74

(113)

Capital Ratios(14)



















Common equity Tier 1 capital

13.7

%

13.0

%

12.4

%

12.0

%

12.2

%

70

bps

150

bps

13.7

%

12.2

%

150

bps

Tier 1 capital

15.3

14.8

14.2

13.7

13.7

50

160

15.3

13.7

160

Total capital

17.7

17.3

16.7

16.1

16.1

40

160

17.7

16.1

160

Tier 1 leverage

11.2

10.6

10.3

11.0

11.7

60

(50)

11.2

11.7

(50)

Tangible common equity ("TCE")(15)

10.0

9.4

8.8

9.6

10.2

60

(20)

10.0

10.2

(20)

 

 

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income













2020 Q4 vs.

Year Ended December 31,


2020

2020

2020

2020

2019

2020

2019




2020 vs.

(Dollars in millions, except per share data and as noted)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2020

2019

2019

Interest income:



















Loans, including loans held for sale

$

5,954

$

5,758

$

5,820

$

6,542

$

6,682

3

%

(11)

%

$

24,074

$

25,862

(7)

%

Investment securities

422

443

482

530

544

(5)

(22)

1,877

2,411

(22)

Other

15

14

16

37

44

7

(66)

82

240

(66)

Total interest income

6,391

6,215

6,318

7,109

7,270

3

(12)

26,033

28,513

(9)

Interest expense:



















Deposits

347

476

611

731

832

(27)

(58)

2,165

3,420

(37)

Securitized debt obligations

34

43

56

99

118

(21)

(71)

232

523

(56)

Senior and subordinated notes

128

132

180

239

236

(3)

(46)

679

1,159

(41)

Other borrowings

9

9

11

15

18

—

(50)

44

71

(38)

Total interest expense

518

660

858

1,084

1,204

(22)

(57)

3,120

5,173

(40)

Net interest income

5,873

5,555

5,460

6,025

6,066

6

(3)

22,913

23,340

(2)

Provision for credit losses

264

331

4,246

5,423

1,818

(20)

(85)

10,264

6,236

65

Net interest income after provision for credit losses

5,609

5,224

1,214

602

4,248

7

32

12,649

17,104

(26)

Non-interest income:



















Interchange fees, net

818

775

672

752

811

6

1

3,017

3,179

(5)

Service charges and other customer-related fees

338

320

258

327

342

6

(1)

1,243

1,330

(7)

Net securities gains (losses)

—

25

—

—

(18)

**

**

25

26

(4)

Other

308

706

166

145

226

(56)

36

1,325

718

85

Total non-interest income

1,464

1,826

1,096

1,224

1,361

(20)

8

5,610

5,253

7

Non-interest expense:



















Salaries and associate benefits

1,755

1,719

1,704

1,627

1,652

2

6

6,805

6,388

7

Occupancy and equipment

572

506

523

517

565

13

1

2,118

2,098

1

Marketing

563

283

273

491

710

99

(21)

1,610

2,274

(29)

Professional services

394

327

304

287

318

20

24

1,312

1,237

6

Communications and data processing

295

310

308

302

346

(5)

(15)

1,215

1,290

(6)

Amortization of intangibles

8

14

16

22

28

(43)

(71)

60

112

(46)

Other(16)

422

389

642

483

542

8

(22)

1,936

2,084

(7)

Total non-interest expense

4,009

3,548

3,770

3,729

4,161

13

(4)