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