Capital One Reports Fourth Quarter 2021 Net Income of $2.4 billion, or $5.41 per share

Fourth Quarter 2021 Net Income of $5.41 per share

MCLEAN, Va., Jan. 25, 2022 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2021 of $2.4 billion, or $5.41 per diluted common share, compared with net income of $3.1 billion, or $6.78 per diluted common share in the third quarter of 2021, and with net income of $2.6 billion, or $5.35 per diluted common share in the fourth quarter of 2020.

"In the fourth quarter, we posted strong growth with strikingly strong credit results, and we continued to return capital to our shareholders," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "As we enter 2022, we continue to see attractive opportunities to grow and build our franchise."

The quarter included the following notable item:

(Dollars in millions, except per share data)

Pre-Tax

Impact

Diluted EPS

Impact

Legacy rewards program upgrade

$                  (92)

$                (0.16)

All comparisons below are for the fourth quarter of 2021 compared with the third quarter of 2021 unless otherwise noted.

Fourth Quarter 2021 Income Statement Summary:

  • Total net revenue increased 4 percent to $8.1 billion.
  • Total non-interest expense increased 12 percent to $4.7 billion:
    • 33 percent increase in marketing.
    • 7 percent increase in operating expenses.
  • Pre-provision earnings decreased 6 percent to $3.4 billion.(1)
  • Provision for credit losses increased $723 million to $381 million:
    • Net charge-offs of $527 million.
    • $145 million loan reserve release.
  • Net interest margin of 6.60 percent, an increase of 25 basis points.
  • Efficiency ratio of 57.63 percent.
  • Operating efficiency ratio of 45.32 percent.

Fourth Quarter 2021 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 13.1 percent at December 31, 2021.
  • Period-end loans held for investment in the quarter increased $16.0 billion, or 6 percent, to $277.3 billion.
    • Credit Card period-end loans increased $9.7 billion, or 9 percent, to $114.8 billion.
      • Domestic Card period-end loans increased $9.5 billion, or 10 percent, to $108.7 billion.
    • Consumer Banking period-end loans increased $534 million, or 1 percent, to $77.6 billion.
      • Auto period-end loans increased $1.1 billion, or 1 percent, to $75.8 billion.
    • Commercial Banking period-end loans increased $5.7 billion, or 7 percent, to $84.9 billion.
  • Average loans held for investment in the quarter increased $14.1 billion, or 6 percent, to $267.2 billion.
    • Credit Card average loans increased $6.5 billion, or 6 percent, to $108.6 billion.
      • Domestic Card average loans increased $6.4 billion, or 7 percent, to $102.7 billion.
    • Consumer Banking average loans increased $1.4 billion, or 2 percent, to $77.4 billion.
      • Auto average loans increased $2.0 billion, or 3 percent, to $75.3 billion.
    • Commercial Banking average loans increased $6.1 billion, or 8 percent, to $81.1 billion.
  • Period-end total deposits increased $5.0 billion, or 2 percent, to $311.0 billion, while average deposits increased $2.2 billion, or 1 percent, to $307.3 billion.
  • Interest-bearing deposits rate paid decreased 1 basis point to 0.33 percent.

2021 Full Year Income Statement Summary:

  • Total net revenue increased 7% to $30.4 billion.
  • Total non-interest expense increased 10 percent to $16.6 billion:
    • 78 percent increase in marketing.
    • 2 percent increase in operating expenses.
  • Pre-provision earnings increased 3 percent to $13.9 billion(1).
  • Provision for credit losses decreased 119 percent to $1.9 billion:
  • Net interest margin of 6.21 percent, an increase of 15 basis points.
  • Efficiency ratio of 54.44 percent.
    • Efficiency ratio excluding adjusting items of 54.12 percent(2).
  • Operating efficiency ratio of 45.01 percent.
    • Operating efficiency ratio excluding adjusting items of 44.68 percent(2).

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on January 25, 2022 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 8, 2022 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, 2020.

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 $311.0 billion in deposits and $432.4 billion in total assets as of December 31, 2021. 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.

(1)

Pre-provision earnings is calculated based on the sum of net interest income and non-interest income, less non-interest expense for the period. Management believes that this financial metric is useful in enabling investors and others to assess the Company's ability to generate income to cover credit losses through a credit cycle, which can vary significantly between periods.

(2)

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.

 

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement(1)(2)

Fourth Quarter 2021

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

6

Table 5:

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

8

Table 6:

Average Balances, Net Interest Income and Net Interest Margin 

9

Table 7:

Loan Information and Performance Statistics

10

Table 8:

Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity

12

Business Segment Results

Table 9:

Financial Summary—Business Segment Results 

13

Table 10:

Financial & Statistical Summary—Credit Card Business

14

Table 11:

Financial & Statistical Summary—Consumer Banking Business

16

Table 12:

Financial & Statistical Summary—Commercial Banking Business

17

Table 13:

Financial & Statistical Summary—Other and Total

18

Other

Table 14:

Notes to Net Interest Margin, Loan, Allowance and Business Segment Disclosures (Tables 6—13)

19

Table 15:

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

20

__________

(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, 2021 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














2021 Q4 vs

Year Ended December 31,

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

2021

2021

2021

2021

2020

2021

2020




2021 vs

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2021

2020

2020

Income Statement



















Net interest income

$      6,450

$      6,156

$      5,743

$      5,822

$      5,873

5%

10%

$    24,171

$    22,913

5%

Non-interest income

1,668

1,674

1,631

1,291

1,464

—

14

6,264

5,610

12

Total net revenue(1)

8,118

7,830

7,374

7,113

7,337

4

11

30,435

28,523

7

Provision (benefit) for credit losses

381

(342)

(1,160)

(823)

264

**

44

(1,944)

10,264

**

Non-interest expense:



















     Marketing

999

751

620

501

563

33

77

2,871

1,610

78

     Operating expense

3,679

3,435

3,346

3,239

3,446

7

7

13,699

13,446

2

Total non-interest expense

4,678

4,186

3,966

3,740

4,009

12

17

16,570

15,056

10

Income from continuing operations before income taxes

3,059

3,986

4,568

4,196

3,064

(23)

—

15,809

3,203

**

Income tax provision

633

882

1,031

869

496

(28)

28

3,415

486

**

Income from continuing operations, net of tax

2,426

3,104

3,537

3,327

2,568

(22)

(6)

12,394

2,717

**

Income from discontinued operations, net of tax

(1)

—

(1)

(2)

(2)

**

(50)

(4)

(3)

33

Net income

2,425

3,104

3,536

3,325

2,566

(22)

(5)

12,390

2,714

**

Dividends and undistributed earnings allocated to participating securities(2)

(21)

(26)

(30)

(28)

(19)

(19)

11

(105)

(20)

**

Preferred stock dividends

(74)

(79)

(60)

(61)

(68)

(6)

9

(274)

(280)

(2)

Issuance cost for redeemed preferred stock(3)

(34)

(12)

—

—

(17)

183

100

(46)

(39)

18

Net income available to common stockholders

$      2,296

$      2,987

$      3,446

$      3,236

$      2,462

(23)

(7)

$    11,965

$      2,375

**

Common Share Statistics



















Basic earnings per common share:(2)



















     Net income from continuing operations

$       5.43

$       6.81

$       7.65

$       7.06

$       5.36

(20)%

1%

$      27.05

$       5.20

**

     Income (loss) from discontinued operations

—

—

—

—

—

—

—

(0.01)

(0.01)

—

     Net income per basic common share

$       5.43

$       6.81

$       7.65

$       7.06

$       5.36

(20)

1

$      27.04

$       5.19

**

Diluted earnings per common share:(2)



















     Net income from continuing operations

$       5.41

$       6.78

$       7.62

$       7.03

$       5.35

(20)%

1%

$      26.95

$       5.19

**

     Income (loss) from discontinued operations

—

—

—

—

—

—

—

(0.01)

(0.01)

—

     Net income per diluted common share

$       5.41

$       6.78

$       7.62

$       7.03

$       5.35

(20)

1

$      26.94

$       5.18

**

Weighted-average common shares outstanding (in millions):



















     Basic

422.5

438.8

450.6

458.6

459.1

(4)%

(8)%

442.5

457.8

(3)%

     Diluted

424.3

440.5

452.3

460.1

460.2

(4)

(8)

444.2

458.9

(3)

Common shares outstanding (period-end, in millions)

413.9

430.4

446.1

456.8

459.0

(4)

(10)

413.9

459.0

(10)

Dividends declared and paid per common share

$       0.60

$       1.20

$       0.40

$       0.40

$       0.10

(50)

**

$       2.60

$       1.00

160

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

99.74

99.60

97.20

90.96

88.34

—

13

99.74

88.34

13













2021 Q4 vs

Year Ended December 31,

(Dollars in millions)

2021

2021

2021

2021

2020

2021

2020




2021 vs

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2021

2020

2020

Balance Sheet (Period-End)



















Loans held for investment

$  277,340

$  261,390

$  249,597

$  243,131

$  251,624

6%

10%

$  277,340

$  251,624

10%

Interest-earning assets

397,341

387,208

387,295

392,485

388,917

3

2

397,341

388,917

2

Total assets

432,381

425,377

423,420

425,175

421,602

2

3

432,381

421,602

3

Interest-bearing deposits

272,937

269,134

271,314

276,325

274,300

1

—

272,937

274,300

—

Total deposits

310,980

305,938

306,308

310,328

305,442

2

2

310,980

305,442

2

Borrowings

43,086

37,501

36,343

38,450

40,539

15

6

43,086

40,539

6

Common equity

56,184

57,632

58,136

56,341

55,356

(3)

1

56,184

55,356

1

Total stockholders' equity

61,029

63,544

64,624

61,188

60,204

(4)

1

61,029

60,204

1

Balance Sheet (Average Balances)



















Loans held for investment

$  267,159

$  253,101

$  246,463

$  243,937

$  247,689

6%

8%

$  252,730

$  253,335

—

Interest-earning assets

390,868

387,766

390,129

388,572

388,252

1

1

389,336

378,362

3%

Total assets

427,845

424,506

424,099

421,808

420,011

1

2

424,521

411,187

3

Interest-bearing deposits

269,951

269,278

273,476

273,358

274,142

—

(2)

271,500

263,279

3

Total deposits

307,272

305,035

308,217

305,056

304,513

1

1

306,397

290,835

5

Borrowings

39,943

37,464

37,054

39,911

40,662

7

(2)

38,590

46,588

(17)

Common equity

56,946

58,230

56,885

55,775

54,220

(2)

5

56,966

52,954

8

Total stockholders' equity

62,498

64,682

62,376

60,623

59,389

(3)

5

62,556

58,201

7

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated













2021
Q4 vs

Year Ended
December 31,

(Dollars in millions, except as noted)

2021

2021

2021

2021

2020

2021

2020




2021 vs

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2021

2020

2020

Performance Metrics



















Net interest income growth (period over period)

5%

7%

(1)%

(1)%

6%

**

**

5%

(2)%

**

Non-interest income growth (period over period)

—

3

26

(12)

(20)

**

**

12

7

**

Total net revenue growth (period over period)

4

6

4

(3)

(1)

**

**

7

—

**

Total net revenue margin(5)

8.31

8.08

7.56

7.32

7.56

       23 bps

       75 bps

7.82

7.54

       28 bps

Net interest margin(6)

6.60

6.35

5.89

5.99

6.05

25

55

6.21

6.06

15

Return on average assets

2.27

2.92

3.34

3.16

2.45

(65)

(18)

2.92

0.66

226

Return on average tangible assets(7)

2.35

3.03

3.46

3.27

2.54

(68)

(19)

3.03

0.69

234

Return on average common equity(8)

16.13

20.52

24.24

23.22

18.18

(4)%

(205)

21.01

4.49

17%

Return on average tangible common equity(9)

21.82

27.50

32.75

31.61

25.02

(6)

(320)

28.39

6.24

22

Non-interest expense as a percentage

of average loans held for investment

7.00

6.62

6.44

6.13

6.47

       38 bps

53

6.56

5.94

       62 bps

Efficiency ratio(10)

57.63

53.46

53.78

52.58

54.64

4%

299

54.44

52.79

165

Operating efficiency ratio(11)

45.32

43.87

45.38

45.54

46.97

     145 bps

(165)

45.01

47.14

(213)

Effective income tax rate for continuing

operations

20.7

22.1

22.6

20.7

16.2

(140)

5%

21.6

15.2

6%

Employees (period-end, in thousands)

50.8

50.8

52.0

51.7

52.0

—

(2)

50.8

52.0

(2)

Credit Quality Metrics



















Allowance for credit losses

$  11,430

$   11,573

$   12,346

$   14,017

$   15,564

(1)%

(27)%

$  11,430

$   15,564

(27)%

Allowance coverage ratio

4.12%

4.43%

4.95%

5.77%

6.19%

     (31) bps

    (207) bps

4.12%

6.19%

    (207) bps

Net charge-offs

$       527

$        426

$        541

$        740

$        856

24%

(38)%

$     2,234

$     5,225

(57)%

Net charge-off rate(12)

0.79%

0.67%

0.88%

1.21%

1.38%

       12 bps

     (59) bps

0.88%

2.06%

    (118) bps

30+ day performing delinquency rate

2.25

1.97

1.75

1.82

2.41

28

(16)

2.25

2.41

(16)

30+ day delinquency rate

2.41

2.13

1.89

1.98

2.61

28

(20)

2.41

2.61

(20)

Capital Ratios(13)



















Common equity Tier 1 capital

13.1%

13.8%

14.5%

14.6%

13.7%

     (70) bps

     (60) bps

13.1%

13.7%

     (60) bps

Tier 1 capital

14.5

15.7

16.6

16.2

15.3

(120)

(80)

14.5

15.3

(80)

Total capital

16.9

18.2

18.8

18.6

17.7

(130)

(80)

16.9

17.7

(80)

Tier 1 leverage

11.6

12.2

12.4

11.7

11.2

(60)

40

11.6

11.2

40

Tangible common equity ("TCE")(14)

9.9

10.4

10.6

10.1

10.0

(50)

(10)

9.9

10.0

(10)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income













2021 Q4 vs

Year Ended December 31,


2021

2021

2021

2021

2020

2021

2020




2021 vs

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

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2021

2020

2020

Interest income:



















     Loans, including loans held for sale

$      6,451

$      6,205

$      5,753

$      5,854

$      5,954

4%

8%

$   24,263

$   24,074

1%

     Investment securities

368

317

370

391

422

16

(13)

1,446

1,877

(23)

     Other

12

16

16

16

15

(25)

(20)

60

82

(27)

Total interest income

6,831

6,538

6,139

6,261

6,391

4

7

25,769

26,033

(1)

Interest expense:



















     Deposits

222

228

237

269

347

(3)

(36)

956

2,165

(56)

     Securitized debt obligations

30

29

28

32

34

3

(12)

119

232

(49)

     Senior and subordinated notes

121

116

122

129

128

4

(5)

488

679

(28)

     Other borrowings

8

9

9

9

9

(11)

(11)

35

44

(20)

Total interest expense

381

382

396

439

518

—

(26)

1,598

3,120

(49)

Net interest income

6,450

6,156

5,743

5,822

5,873

5

10

24,171

22,913

5

     Provision (benefit) for credit losses

381

(342)

(1,160)

(823)

264

**

44

(1,944)

10,264

**

Net interest income after provision for credit losses

6,069

6,498

6,903

6,645

5,609

(7)

8

26,115

12,649

106

Non-interest income:



















     Interchange fees, net

1,005

1,022

1,016

817

818

(2)

23

3,860

3,017

28

     Service charges and other customer-related fees

435

407

384

352

338

7

29

1,578

1,243

27

     Net securities gains

(4)

2

—

4

—

**

**

2

25

(92)

     Other

232

243

231

118

308

(5)

(25)

824

1,325

(38)

Total non-interest income

1,668

1,674

1,631

1,291

1,464

—

14

6,264

5,610

12

Non-interest expense:



















     Salaries and associate benefits

1,941

1,852

1,781

1,847

1,755

5

11

7,421

6,805

9

     Occupancy and equipment

527

481

523

472

572

10

(8)

2,003

2,118

(5)

     Marketing

999

751

620

501

563

33

77

2,871

1,610

78

     Professional services

449

358

341

292

394

25

14

1,440

1,312

10

     Communications and data processing

326

319

315

302

295

2

11

1,262

1,215

4

     Amortization of intangibles

13

5

5

6

8

160

63

29

60

(52)

     Other

423

420

381

320

422

1

—

1,544

1,936

(20)

Total non-interest expense

4,678

4,186

3,966

3,740

4,009

12

17

16,570

15,056

10

Income from continuing operations before income taxes

3,059

3,986

4,568

4,196

3,064

(23)

—

15,809

3,203

**

Income tax provision

633

882

1,031

869

496

(28)

28

3,415

486

**

Income from continuing operations, net of tax

2,426

3,104

3,537

3,327

2,568

(22)

(6)

12,394

2,717

**

Income (loss) from discontinued operations, net of tax

(1)

—

(1)

(2)

(2)

**

(50)

(4)

(3)

33

Net income

2,425

3,104

3,536

3,325

2,566

(22)

(5)

12,390

2,714

**

Dividends and undistributed earnings allocated to participating securities(2)

(21)

(26)

(30)

(28)

(19)

(19)

11

(105)

(20)

425

Preferred stock dividends

(74)

(79)

(60)

(61)

(68)

(6)

9

(274)

(280)

(2)

Issuance cost for redeemed preferred stock(3)

(34)

(12)

—

—

(17)

183

100

(46)

(39)

18

Net income (loss) available to common stockholders

$      2,296

$      2,987

$      3,446

$      3,236

$      2,462

(23)

(7)

$   11,965

$     2,375

404






















































2021 Q4 vs

Year Ended December 31,


2021

2021

2021

2021

2020

2021

2020




2021 vs

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

Q4

Q3

Q2

Q1

Q4

Q3

Q4

2021

2020

2020

Basic earnings per common share:(2)



















Net income from continuing operations

$        5.43

$        6.81

$        7.65

$        7.06

$        5.36

(20)%

1%

$    27.05

$       5.20

**

Income (loss) from discontinued operations

—

—

—

—

—

—

—

(0.01)

(0.01)

—

Net income per basic common share

$        5.43

$        6.81

$        7.65

$        7.06

$        5.36

(20)

1

$    27.04

$       5.19

**

Diluted earnings per common share:(2)



















Net income from continuing operations

$        5.41

$        6.78

$        7.62

$        7.03

$        5.35

(20)

1

$    26.95

$       5.19

**

Income (loss) from discontinued operations

—

—

—

—

—

—

—

(0.01)

(0.01)

—

Net income per diluted common share

$        5.41

$        6.78

$        7.62

$        7.03

$        5.35

(20)

1

$    26.94

$       5.18

**

Weighted-average common shares outstanding (in millions):



















Basic common shares

422.5

438.8

450.6

458.6

459.1

(4)

(8)

442.5

457.8

(3)

Diluted common shares

424.3

440.5

452.3

460.1

460.2

(4)

(8)

444.2

458.9

(3)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets














2021 Q4 vs


2021

2021

2021

2021

2020

2021

2020

(Dollars in millions)

Q4

Q3

Q2

Q1

Q4

Q3

Q4

Assets:













Cash and cash equivalents:













     Cash and due from banks

$     4,164

$     5,444

$     5,312

$     4,670

$     4,708

(24)%

(12)%

     Interest-bearing deposits and other short-term investments

17,582

21,180

29,534

45,825

35,801

(17)

(51)

Total cash and cash equivalents

21,746

26,624

34,846

50,495

40,509

(18)

(46)

Restricted cash for securitization investors

308

234

242

1,779

262

32

18

Securities available for sale

95,261

98,149

101,766

99,165

100,445

(3)

(5)

Loans held for investment:













     Unsecuritized loans held for investment

252,468

238,475

226,130

219,182

225,698

6

12

     Loans held in consolidated trusts

24,872

22,915

23,467

23,949

25,926

9

(4)

Total loans held for investment

277,340

261,390

249,597

243,131

251,624

6

10

     Allowance for credit losses

(11,430)

(11,573)

(12,346)

(14,017)

(15,564)

(1)

(27)

Net loans held for investment

265,910

249,817

237,251

229,114

236,060

6

13

Loans held for sale

5,888

6,300

6,522

2,896

2,710

(7)

117

Premises and equipment, net

4,210

4,204

4,227

4,277

4,287

—

(2)

Interest receivable

1,460

1,418

1,372

1,380

1,471

3

(1)

Goodwill

14,782

14,652

14,654

14,654

14,653

1

1

Other assets

22,816

23,979

22,540

21,415

21,205

(5)

8

Total assets

$ 432,381

$ 425,377

$ 423,420

$ 425,175

$ 421,602

2

3



























2021 Q4 vs


2021

2021

2021

2021

2020

2021

2020

(Dollars in millions)