SEC Filing | Capital One Financial Corp.

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cof-20210126

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________

FORM 8-K

____________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

January 26, 2021

Date of Report (Date of earliest event reported)

____________________________________

CAPITAL ONE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

____________________________________


Delaware		001-13300	54-1719854
(State or other jurisdiction of incorporation)		(Commission File Number)	(IRS Employer Identification No.)
1680 Capital One Drive,
McLean,	Virginia		22102
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (703) 720-1000

(Not applicable)

(Former name or former address, if changed since last report)

____________________________________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock (par value $.01 per share)	COF	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series G	COF PRG	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series H	COF PRH	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series I	COF PRI	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series J	COF PRJ	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series K	COF PRK	New York Stock Exchange
0.800% Senior Notes Due 2024	COF24	New York Stock Exchange
1.650% Senior Notes Due 2029	COF29	New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On January 26, 2021, Capital One Financial Corporation (the “Company”) issued a press release announcing its financial results for the fourth quarter ended December 31, 2020. Copies of the Company’s press release and financial supplement are attached and furnished herewith as Exhibits 99.1 and 99.2 to this Form 8-K and are incorporated herein by reference.

Note: Information in this report (including Exhibits 99.1 and 99.2) furnished pursuant to Item 2.02 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.


Exhibit No.						Description
99.1						Press Release, dated January 26, 2021 - Fourth Quarter 2020
99.2						Financial Supplement - Fourth Quarter 2020
104						The cover page from this Current Report on Form 8-K, formatted in Inline XBRL

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. A replay of the webcast will be archived on the Company’s website through February 9, 2021 at 5:00 PM Eastern Time.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.

CAPITAL ONE FINANCIAL CORPORATION

Date: January 26, 2021

By:

/s/ TIMOTHY P. GOLDEN

Timothy P. Golden

Controller and Principal Accounting Officer

Document

Exhibit 99.1

News Release

https://cdn.kscope.io/57e1156577e86fff2522b8c51aac1c4b-earningsslidesvfinal1b581a.jpg


Contacts:
Investor Relations		Media Relations
Jeff Norris	Danielle Dietz	Sie Soheili	Tatiana Stead
jeff.norris@capitalone.com	danielle.dietz@capitalone.com	sie.soheili@capitalone.com	tatiana.stead@capitalone.com

FOR IMMEDIATE RELEASE: January 26, 2021

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. (January 26, 2021) – 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

0.10

(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.

Capital One Fourth Quarter 2020 Earnings

Page 2

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.

(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.

Capital One Fourth Quarter 2020 Earnings

Page 3

•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).

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.

###

(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.

Document

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	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	14
	Table 10:	Financial & Statistical Summary—Credit Card Business	15
	Table 11:	Financial & Statistical Summary—Consumer Banking Business	17
	Table 12:	Financial & Statistical Summary—Commercial Banking Business	18
	Table 13:	Financial & Statistical Summary—Other and Total	19
Other
	Table 14:	Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)	20
	Table 15:	Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures	21

__________

(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)		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)


											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
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 common shares	459.1		457.8		456.7		457.6		460.9		—		—		457.8		467.6		(2)
Diluted common shares	460.2		458.5		456.7		457.6		463.4		—		(1)		458.9		469.9		(2)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets


											2020 Q4 vs.
	2020		2020		2020		2020		2019		2020		2019
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4
Assets:
Cash and cash equivalents:
Cash and due from banks	$	4,708	$	4,267	$	4,583	$	4,545	$	4,129	10	%	14	%
Interest-bearing deposits and other short-term investments	35,801		39,839		51,235		20,391		9,278		(10)		**

Total cash and cash equivalents	40,509		44,106		55,818		24,936		13,407		(8)		**
Restricted cash for securitization investors	262		895		740		364		342		(71)		(23)


Securities available for sale	100,445		99,853		87,859		81,423		79,213		1		27


Loans held for investment:
Unsecuritized loans held for investment	225,698		217,878		222,310		231,318		231,992		4		(3)
Loans held in consolidated trusts	25,926		30,345		29,202		31,672		33,817		(15)		(23)
Total loans held for investment	251,624		248,223		251,512		262,990		265,809		1		(5)
Allowance for credit losses	(15,564)		(16,129)		(16,832)		(14,073)		(7,208)		(4)		116
Net loans held for investment	236,060		232,094		234,680		248,917		258,601		2		(9)
Loans held for sale	2,710		3,433		711		1,056		400		(21)		**
Premises and equipment, net	4,287		4,333		4,324		4,336		4,378		(1)		(2)
Interest receivable	1,471		1,551		1,574		1,687		1,758		(5)		(16)
Goodwill	14,653		14,648		14,645		14,645		14,653		—		—
Other assets	21,205		20,970		20,945		19,514		17,613		1		20
Total assets	$	421,602	$	421,883	$	421,296	$	396,878	$	390,365	—		8


											2020 Q4 vs.
	2020		2020		2020		2020		2019		2020		2019
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4
Liabilities:
Interest payable	$	352	$	332	$	380	$	359	$	439	6	%	(20)	%
Deposits:
Non-interest-bearing deposits	31,142		29,633		29,055		24,547		23,488		5		33
Interest-bearing deposits	274,300		276,092		275,183		245,142		239,209		(1)		15
Total deposits	305,442		305,725		304,238		269,689		262,697		—		16
Securitized debt obligations	12,414		13,566		15,761		17,141		17,808		(8)		(30)
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase	668		702		573		399		314		(5)		113
Senior and subordinated notes	27,382		28,448		28,481		32,049		30,472		(4)		(10)
Other borrowings	75		79		85		6,092		7,103		(5)		(99)
Total other debt	28,125		29,229		29,139		38,540		37,889		(4)		(26)
Other liabilities	15,065		14,607		15,733		14,319		13,521		3		11
Total liabilities	361,398		363,459		365,251		340,048		332,354		(1)		9

Stockholders’ equity:
Preferred stock	0		0		0		0		0		—		—
Common stock	7		7		7		7		7		—		—
Additional paid-in capital, net	33,480		33,793		33,556		33,450		32,980		(1)		2
Retained earnings	40,088		37,653		35,361		36,552		40,340		6		(1)
Accumulated other comprehensive income	3,494		3,833		3,981		3,679		1,156		(9)		**
Treasury stock, at cost	(16,865)		(16,862)		(16,860)		(16,858)		(16,472)		—		2
Total stockholders’ equity	60,204		58,424		56,045		56,830		58,011		3		4
Total liabilities and stockholders’ equity	$	421,602	$	421,883	$	421,296	$	396,878	$	390,365	—		8

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 5: Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)

(1)Total net revenue was reduced by $177 million in Q4 2020, $235 million in Q3 2020, $318 million in Q2 2020 and $389 million in Q1 2020 for credit card finance charges and fees charged-off as uncollectible, and by $365 million in Q4 2019 for the estimated uncollectible amount of credit card finance charges and fees and related losses.

(2)Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total. We also provide adjusted diluted earnings per share, which is a non-GAAP measure. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on our non-GAAP measures.

(3)On December 1, 2020, we redeemed all outstanding shares of our fixed rate 6.20% non-cumulative perpetual preferred stock Series F, which reduced our net income available to common shareholders by $17 million in Q4 2020. On March 2, 2020, we redeemed all outstanding shares of our fixed rate 6.00% non-cumulative perpetual preferred stock Series B, which increased our net loss available to common shareholders by $22 million in Q1 2020. On December 2, 2019, we redeemed all outstanding shares of our fixed rate 6.25% non-cumulative perpetual preferred stock Series C and fixed rate 6.70% non-cumulative perpetual preferred stock Series D, which reduced our net income available to common shareholders by $31 million in Q4 2019.

(4)Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

(5)Total net revenue margin is calculated based on total net revenue for the period divided by average interest-earning assets for the period.

(6)Net interest margin is calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

(7)Return on average tangible assets is a non-GAAP measure calculated based on annualized income (loss) from continuing operations, net of tax, for the period divided by average tangible assets for the period. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

(8)Return on average common equity is calculated based on net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average common equity. Our calculation of return on average common equity may not be comparable to similarly-titled measures reported by other companies.

(9)Return on average tangible common equity (“ROTCE”) is a non-GAAP measure calculated based on net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average tangible common equity (“TCE”). Our calculation of return on average TCE may not be comparable to similarly-titled measures reported by other companies. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

(10)Efficiency ratio is calculated based on total non-interest expense for the period divided by total net revenue for the period. We also provide an adjusted efficiency ratio, which is a non-GAAP measure. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on our non-GAAP measures.

(11)Operating efficiency ratio is calculated based on operating expense for the period divided by total net revenue for the period. We also provide an adjusted operating efficiency ratio, which is a non-GAAP measure. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on our non-GAAP measures.

(12)Net charge-off rate is calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.

(13)Metrics for Q4 2020, Q3 2020, Q2 2020 and Q1 2020 include the impact of COVID-19 customer assistance programs where applicable.

(14)Capital ratios as of the end of Q4 2020 are preliminary and therefore subject to change. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for information on the calculation of each of these ratios.

(15)TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See “Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

(16)Includes net Cybersecurity Incident expenses of $6 million in Q4 2020, $6 million in Q3 2020, $11 million in Q2 2020, $4 million in Q1 2020 and $16 million in Q4 2019, respectively.

** Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 6: Average Balances, Net Interest Income and Net Interest Margin


	2020 Q4						2020 Q3						2019 Q4
	Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
(Dollars in millions, except as noted)
Interest-earning assets:
Loans, including loans held for sale	$	251,135	$	5,954	9.48	%	$	250,525	$	5,758	9.19	%	$	259,855	$	6,682	10.29	%
Investment securities	97,640		422		1.73		91,777		443		1.93		79,104		544		2.75
Cash equivalents and other	39,477		15		0.15		49,149		14		0.11		10,191		44		1.70
Total interest-earning assets	$	388,252	$	6,391	6.58		$	391,451	$	6,215	6.35		$	349,150	$	7,270	8.33
Interest-bearing liabilities:
Interest-bearing deposits	$	274,143	$	347	0.51		$	276,339	$	476	0.69		$	236,250	$	832	1.41
Securitized debt obligations	12,651		34		1.08		15,032		43		1.14		18,339		118		2.58
Senior and subordinated notes	27,386		128		1.87		28,497		132		1.86		30,597		236		3.08
Other borrowings and liabilities	2,095		9		1.75		2,119		9		1.77		3,789		18		1.95
Total interest-bearing liabilities	$	316,275	$	518	0.65		$	321,987	$	660	0.82		$	288,975	$	1,204	1.67
Net interest income/spread			$	5,873	5.93				$	5,555	5.53				$	6,066	6.66
Impact of non-interest-bearing funding					0.12						0.15						0.29
Net interest margin					6.05	%					5.68	%					6.95	%


	Year Ended December 31,
	2020						2019
	Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
(Dollars in millions, except as noted)
Interest-earning assets:
Loans, including loans held for sale	$	254,901	$	24,074	9.44	%	$	248,552	$	25,862	10.41	%
Investment securities	87,222		1,877		2.15		81,467		2,411		2.96
Cash equivalents and other	36,239		82		0.23		11,491		240		2.08
Total interest-earning assets	$	378,362	$	26,033	6.88		$	341,510	$	28,513	8.35
Interest-bearing liabilities:
Interest-bearing deposits	$	263,279	$	2,165	0.82		$	231,609	$	3,420	1.48
Securitized debt obligations	15,533		232		1.49		18,020		523		2.90
Senior and subordinated notes	29,621		679		2.29		30,821		1,159		3.76
Other borrowings and liabilities	2,882		44		1.55		3,369		71		2.12
Total interest-bearing liabilities	$	311,315	$	3,120	1.00		$	283,819	$	5,173	1.82
Net interest income/spread			$	22,913	5.88				$	23,340	6.53
Impact of non-interest-bearing funding					0.18						0.30
Net interest margin					6.06	%					6.83	%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics


											2020 Q4 vs.				Year Ended December 31,
	2020		2020		2020		2020		2019		2020		2019		2020		2019		2020 vs. 2019
(Dollars in millions, except as noted)	Q4		Q3		Q2		Q1		Q4		Q3		Q4
Loans Held for Investment (Period-End)
Credit card:
Domestic credit card(7)	$	98,504	$	95,541	$	99,390	$	109,549	$	118,606	3	%	(17)	%	$	98,504	$	118,606	(17)	%
International card businesses	8,452		8,100		7,920		8,248		9,630		4		(12)		8,452		9,630		(12)
Total credit card(1)	106,956		103,641		107,310		117,797		128,236		3		(17)		106,956		128,236		(17)
Consumer banking:
Auto	65,762		65,394		63,319		61,364		60,362		1		9		65,762		60,362		9

Retail banking	3,126		3,294		3,393		2,669		2,703		(5)		16		3,126		2,703		16
Total consumer banking	68,888		68,688		66,712		64,033		63,065		—		9		68,888		63,065		9
Commercial banking:
Commercial and multifamily real estate	30,681		31,197		30,953		32,373		30,245		(2)		1		30,681		30,245		1
Commercial and industrial	45,099		44,697		46,537		48,787		44,263		1		2		45,099		44,263		2


Total commercial banking	75,780		75,894		77,490		81,160		74,508		—		2		75,780		74,508		2

Total loans held for investment	$	251,624	$	248,223	$	251,512	$	262,990	$	265,809	1		(5)		$	251,624	$	265,809	(5)
Loans Held for Investment (Average)
Credit card:
Domestic credit card	$	95,453	$	97,306	$	100,996	$	113,711	$	112,965	(2)	%	(16)	%	$	101,837	$	105,270	(3)	%
International card businesses	8,108		8,061		7,752		9,065		9,120		1		(11)		8,245		8,932		(8)
Total credit card(1)	103,561		105,367		108,748		122,776		122,085		(2)		(15)		110,082		114,202		(4)
Consumer banking:
Auto	65,590		64,476		61,798		61,005		59,884		2		10		63,227		57,938		9

Retail banking	3,218		3,346		3,053		2,666		2,712		(4)		19		3,072		2,770		11
Total consumer banking	68,808		67,822		64,851		63,671		62,596		1		10		66,299		60,708		9
Commercial banking:
Commercial and multifamily real estate	30,825		30,918		31,723		31,081		30,173		—		2		31,135		29,608		5
Commercial and industrial	44,495		45,404		48,036		45,361		44,016		(2)		1		45,819		42,863		7
Total commercial lending	75,320		76,322		79,759		76,442		74,189		(1)		2		76,954		72,471		6
Small-ticket commercial real estate	—		—		—		—		—		**		**		—		69		**
Total commercial banking	75,320		76,322		79,759		76,442		74,189		(1)		2		76,954		72,540		6

Total average loans held for investment	$	247,689	$	249,511	$	253,358	$	262,889	$	258,870	(1)		(4)		$	253,335	$	247,450	2


											2020 Q4 vs.				Year Ended December 31,
	2020		2020		2020		2020		2019		2020		2019		2020		2019		2020 vs. 2019
	Q4		Q3		Q2		Q1		Q4		Q3		Q4
Net Charge-Off Rates
Credit card:
Domestic credit card	2.69	%	3.64	%	4.53	%	4.68	%	4.32	%	(95)	bps	(163)	bps	3.93	%	4.58	%	(65)	bps
International card businesses	1.86		2.89		3.47		4.65		4.22		(103)		(236)		3.26		3.71		(45)
Total credit card	2.63		3.58		4.46		4.68		4.31		(95)		(168)		3.88		4.51		(63)
Consumer banking:
Auto	0.47		0.23		1.16		1.51		1.90		24		(143)		0.83		1.51		(68)
Retail banking	1.88		1.38		1.78		2.37		2.77		50		(89)		1.82		2.57		(75)
Total consumer banking	0.53		0.28		1.19		1.54		1.93		25		(140)		0.87		1.56		(69)
Commercial banking:
Commercial and multifamily real estate	0.02		0.41		0.09		—		—		(39)		2		0.13		—		13
Commercial and industrial	0.74		0.45		0.78		0.96		0.60		29		14		0.73		0.36		37
Total commercial banking	0.45		0.43		0.51		0.57		0.35		2		10		0.49		0.22		27
Total net charge-offs	1.38		1.72		2.38		2.72		2.60		(34)		(122)		2.06		2.53		(47)
30+ Day Performing Delinquency Rates(2)
Credit card:
Domestic credit card	2.42	%	2.21	%	2.74	%	3.69	%	3.93	%	21	bps	(151)	bps	2.42	%	3.93	%	(151)	bps
International card businesses	2.61		2.15		2.71		3.66		3.47		46		(86)		2.61		3.47		(86)
Total credit card	2.44		2.20		2.74		3.69		3.89		24		(145)		2.44		3.89		(145)
Consumer banking:
Auto	4.78		3.76		3.28		5.29		6.88		102		(210)		4.78		6.88		(210)

Retail banking	1.32		0.83		0.89		1.27		1.02		49		30		1.32		1.02		30
Total consumer banking	4.62		3.62		3.16		5.12		6.63		100		(201)		4.62		6.63		(201)
Nonperforming Loans and Nonperforming Assets Rates(3)(4)
Credit card:
International card businesses	0.24	%	0.25	%	0.29	%	0.29	%	0.26	%	(1)	bps	(2)	bps	0.24	%	0.26	%	(2)	bps
Total credit card	0.02		0.02		0.02		0.02		0.02		—		—		0.02		0.02		—
Consumer banking:
Auto	0.45		0.36		0.41		0.62		0.81		9		(36)		0.45		0.81		(36)

Retail banking	0.96		0.77		0.70		0.88		0.87		19		9		0.96		0.87		9
Total consumer banking	0.47		0.38		0.43		0.63		0.81		9		(34)		0.47		0.81		(34)
Commercial banking:
Commercial and multifamily real estate	0.65		0.58		0.54		0.22		0.12		7		53		0.65		0.12		53
Commercial and industrial	1.00		1.31		1.06		0.87		0.93		(31)		7		1.00		0.93		7


Total commercial banking	0.86		1.01		0.85		0.61		0.60		(15)		26		0.86		0.60		26
Total nonperforming loans	0.40		0.42		0.38		0.35		0.37		(2)		3		0.40		0.37		3
Total nonperforming assets	0.41		0.44		0.39		0.37		0.39		(3)		2		0.41		0.39		2

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 8: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity



	Three Months Ended December 31, 2020
	Credit Card						Consumer Banking
(Dollars in millions)	Domestic Card		International Card Businesses		Total Credit Card		Auto		Retail Banking		Total Consumer Banking		Commercial Banking		Total
Allowance for credit losses:
Balance as of September 30, 2020	$	11,062	$	550	$	11,612	$	2,647	$	100	$	2,747	$	1,770	$	16,129
Charge-offs	(912)		(80)		(992)		(309)		(18)		(327)		(91)		(1,410)
Recoveries	269		43		312		232		3		235		7		554
Net charge-offs	(643)		(37)		(680)		(77)		(15)		(92)		(84)		(856)
Provision (benefit) for credit losses	231		—		231		45		15		60		(28)		263
Allowance release for credit losses	(412)		(37)		(449)		(32)		—		(32)		(112)		(593)
Other changes(5)	—		28		28		—		—		—		—		28
Balance as of December 31, 2020	10,650		541		11,191		2,615		100		2,715		1,658		15,564
Reserve for unfunded lending commitments:
Balance as of September 30, 2020	—		—		—		—		—		—		195		195
Provision for losses on unfunded lending commitments	—		—		—		—		—		—		—		—

Balance as of December 31, 2020	—		—		—		—		—		—		195		195
Combined allowance and reserve as of December 31, 2020	$	10,650	$	541	$	11,191	$	2,615	$	100	$	2,715	$	1,853	$	15,759



	Year Ended December 31, 2020
	Credit Card						Consumer Banking
(Dollars in millions)	Domestic Card		International Card Businesses		Total Credit Card		Auto		Retail Banking		Total Consumer Banking		Commercial Banking		Total
Allowance for credit losses:
Balance as of December 31, 2019	$	4,997	$	398	$	5,395	$	984	$	54	$	1,038	$	775	$	7,208
Cumulative effects from adoption of the current expected credit loss (“CECL”) standard	2,237		4		2,241		477		25		502		102		2,845
Finance charge and fee reserve reclassification(1)	439		23		462		—		—		—		—		462
Balance as of January 1, 2020	7,673		425		8,098		1,461		79		1,540		877		10,515
Charge-offs	(5,318)		(431)		(5,749)		(1,464)		(70)		(1,534)		(394)		(7,677)
Recoveries	1,316		163		1,479		942		14		956		17		2,452
Net charge-offs	(4,002)		(268)		(4,270)		(522)		(56)		(578)		(377)		(5,225)
Provision for credit losses	6,979		348		7,327		1,676		77		1,753		1,158		10,238
Allowance build for credit losses	2,977		80		3,057		1,154		21		1,175		781		5,013
Other changes(5)	—		36		36		—		—		—		—		36
Balance as of December 31, 2020	10,650		541		11,191		2,615		100		2,715		1,658		15,564
Reserve for unfunded lending commitments:
Balance as of December 31, 2019	—		—		—		—		5		5		130		135
Cumulative effects from adoption of the CECL standard	—		—		—		—		(5)		(5)		42		37
Balance as of January 1, 2020	—		—		—		—		—		—		172		172
Provision for losses on unfunded lending commitments	—		—		—		—		—		—		23		23

Balance as of December 31, 2020	—		—		—		—		—		—		195		195
Combined allowance and reserve as of December 31, 2020	$	10,650	$	541	$	11,191	$	2,615	$	100	$	2,715	$	1,853	$	15,759

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results


	Three Months Ended December 31, 2020										Year Ended December 31, 2020
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(6)		Other(6)		Total		Credit Card		Consumer Banking		Commercial Banking(6)		Other(6)		Total
Net interest income (loss)	$	3,413	$	2,012	$	522	$	(74)	$	5,873	$	13,776	$	7,238	$	2,048	$	(149)	$	22,913
Non-interest income	1,054		136		268		6		1,464		3,823		466		923		398		5,610
Total net revenue (loss)	4,467		2,148		790		(68)		7,337		17,599		7,704		2,971		249		28,523
Provision (benefit) for credit losses	231		60		(28)		1		264		7,327		1,753		1,181		3		10,264
Non-interest expense	2,311		1,121		445		132		4,009		8,491		4,159		1,706		700		15,056
Income (loss) from continuing operations before income taxes	1,925		967		373		(201)		3,064		1,781		1,792		84		(454)		3,203
Income tax provision (benefit)	454		230		88		(276)		496		420		425		19		(378)		486
Income (loss) from continuing operations, net of tax	$	1,471	$	737	$	285	$	75	$	2,568	$	1,361	$	1,367	$	65	$	(76)	$	2,717

	Three Months Ended September 30, 2020
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(6)		Other(6)		Total
Net interest income (loss)	$	3,292	$	1,904	$	517	$	(158)	$	5,555
Non-interest income	1,013		107		237		469		1,826
Total net revenue	4,305		2,011		754		311		7,381
Provision (benefit) for credit losses	450		(43)		(74)		(2)		331
Non-interest expense	2,003		1,011		424		110		3,548
Income (loss) from continuing operations before income taxes	1,852		1,043		404		203		3,502
Income tax provision (benefit)	438		247		95		316		1,096
Income (loss) from continuing operations, net of tax	$	1,414	$	796	$	309	$	(113)	$	2,406

	Three Months Ended December 31, 2019										Year Ended December 31, 2019
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(6)		Other(6)		Total		Credit Card		Consumer Banking		Commercial Banking(6)		Other(6)		Total
Net interest income	$	3,794	$	1,662	$	494	$	116	$	6,066	$	14,461	$	6,732	$	1,983	$	164	$	23,340
Non-interest income (loss)	1,030		152		223		(44)		1,361		3,888		643		831		(109)		5,253
Total net revenue	4,824		1,814		717		72		7,427		18,349		7,375		2,814		55		28,593
Provision for credit losses	1,421		335		62		—		1,818		4,992		938		306		—		6,236
Non-interest expense	2,487		1,110		441		123		4,161		9,271		4,091		1,699		422		15,483
Income (loss) from continuing operations before income taxes	916		369		214		(51)		1,448		4,086		2,346		809		(367)		6,874
Income tax provision (benefit)	212		86		50		(78)		270		959		547		188		(353)		1,341
Income (loss) from continuing operations, net of tax	$	704	$	283	$	164	$	27	$	1,178	$	3,127	$	1,799	$	621	$	(14)	$	5,533

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business


																2020 Q4 vs.				Year Ended December 31,
	2020			2020			2020			2020			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2020			2019			2019
Credit Card
Earnings:
Net interest income	$	3,413		$	3,292		$	3,369		$	3,702		$	3,794		4%		(10)%		$	13,776		$	14,461		(5)%
Non-interest income	1,054			1,013			845			911			1,030			4		2		3,823			3,888			(2)
Total net revenue	4,467			4,305			4,214			4,613			4,824			4		(7)		17,599			18,349			(4)
Provision for credit losses	231			450			2,944			3,702			1,421			(49)		(84)		7,327			4,992			47
Non-interest expense	2,311			2,003			1,969			2,208			2,487			15		(7)		8,491			9,271			(8)
Income (loss) from continuing operations before income taxes	1,925			1,852			(699)			(1,297)			916			4		110		1,781			4,086			(56)
Income tax provision (benefit)	454			438			(166)			(306)			212			4		114		420			959			(56)
Income (loss) from continuing operations, net of tax	$	1,471		$	1,414		$	(533)		$	(991)		$	704		4		109		$	1,361		$	3,127		(56)
Selected performance metrics:
Period-end loans held for investment(1)(7)	$	106,956		$	103,641		$	107,310		$	117,797		$	128,236		3		(17)		$	106,956		$	128,236		(17)
Average loans held for investment(1)	103,561			105,367			108,748			122,776			122,085			(2)		(15)		110,082			114,202			(4)
Average yield on loans outstanding(8)	14.24		%	13.83		%	13.72		%	14.46		%	15.02		%	41	bps	(78)	bps	14.08		%	15.49		%	(141)	bps
Total net revenue margin(9)	16.92			16.34			15.50			15.03			15.80			58		112		15.91			16.07			(16)
Net charge-off rate	2.63			3.58			4.46			4.68			4.31			(95)		(168)		3.88			4.51			(63)
30+ day performing delinquency rate	2.44			2.20			2.74			3.69			3.89			24		(145)		2.44			3.89			(145)
30+ day delinquency rate	2.45			2.21			2.75			3.70			3.91			24		(146)		2.45			3.91			(146)
Nonperforming loan rate(3)	0.02			0.02			0.02			0.02			0.02			—		—		0.02			0.02			—
Purchase volume(10)	$	117,141		$	107,102		$	90,149		$	99,920		$	116,631		9%		—		$	414,312		$	424,765		(2)%


																2020 Q4 vs.				Year Ended December 31,
	2020			2020			2020			2020			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2020			2019			2019
Domestic Card
Earnings:
Net interest income	$	3,129		$	2,995		$	3,094		$	3,381		$	3,473		4%		(10)%		$	12,599		$	13,265		(5)%
Non-interest income	994			952			795			842			962			4		3		3,583			3,684			(3)
Total net revenue	4,123			3,947			3,889			4,223			4,435			4		(7)		16,182			16,949			(5)
Provision for credit losses	231			378			2,906			3,464			1,346			(39)		(83)		6,979			4,671			49
Non-interest expense	2,063			1,802			1,776			1,984			2,249			14		(8)		7,625			8,308			(8)
Income (loss) from continuing operations before income taxes	1,829			1,767			(793)			(1,225)			840			4		118		1,578			3,970			(60)
Income tax provision (benefit)	433			419			(188)			(290)			196			3		121		374			925			(60)
Income (loss) from continuing operations, net of tax	$	1,396		$	1,348		$	(605)		$	(935)		$	644		4		117		$	1,204		$	3,045		(60)
Selected performance metrics:
Period-end loans held for investment(1)(7)	$	98,504		$	95,541		$	99,390		$	109,549		$	118,606		3		(17)		$	98,504		$	118,606		(17)
Average loans held for investment(1)	95,453			97,306			100,996			113,711			112,965			(2)		(16)		101,837			105,270			(3)
Average yield on loans outstanding(8)	14.07		%	13.57		%	13.52		%	14.30		%	14.91		%	50	bps	(84)	bps	13.88		%	15.47		%	(159)	bps
Total net revenue margin(9)	16.91			16.22			15.40			14.86			15.70			69		121		15.80			16.10			(30)
Net charge-off rate	2.69			3.64			4.53			4.68			4.32			(95)		(163)		3.93			4.58			(65)
30+ day performing delinquency rate	2.42			2.21			2.74			3.69			3.93			21		(151)		2.42			3.93			(151)
Purchase volume(10)	$	107,572		$	98,107		$	82,860		$	92,248		$	107,154		10%		—		$	380,787		$	390,032		(2)%
Refreshed FICO scores:(11)
Greater than 660	69		%	69		%	67		%	65		%	67		%	—		2%		69		%	67		%	2
660 or below	31			31			33			35			33			—		(2)		31			33			(2)
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business


																2020 Q4 vs.				Year Ended December 31,
	2020			2020			2020			2020			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2020			2019			2019
Consumer Banking
Earnings:
Net interest income	$	2,012		$	1,904		$	1,665		$	1,657		$	1,662		6%		21%		$	7,238		$	6,732		8%
Non-interest income	136			107			97			126			152			27		(11)		466			643			(28)
Total net revenue	2,148			2,011			1,762			1,783			1,814			7		18		7,704			7,375			4
Provision (benefit) for credit losses	60			(43)			876			860			335			**		(82)		1,753			938			87
Non-interest expense	1,121			1,011			1,036			991			1,110			11		1		4,159			4,091			2
Income (loss) from continuing operations before income taxes	967			1,043			(150)			(68)			369			(7)		162		1,792			2,346			(24)
Income tax provision (benefit)	230			247			(36)			(16)			86			(7)		167		425			547			(22)
Income (loss) from continuing operations, net of tax	$	737		$	796		$	(114)		$	(52)		$	283		(7)		160		$	1,367		$	1,799		(24)
Selected performance metrics:
Period-end loans held for investment	$	68,888		$	68,688		$	66,712		$	64,033		$	63,065		—		9		$	68,888		$	63,065		9
Average loans held for investment	68,808			67,822			64,851			63,671			62,596			1		10		66,299			60,708			9
Average yield on loans held for investment(8)	8.28		%	8.36		%	8.41		%	8.46		%	8.51		%	(8)	bps	(23)	bps	8.37		%	8.37		%	—
Auto loan originations	$	7,371		$	8,979		$	8,292		$	7,640		$	7,527		(18)%		(2)%		$	32,282		$	29,251		10%
Period-end deposits	249,815			249,684			246,804			217,607			213,099			—		17		249,815			213,099			17
Average deposits	249,419			248,418			232,293			215,071			209,783			—		19		236,369			205,012			15
Average deposits interest rate	0.47		%	0.66		%	0.89		%	1.06		%	1.20		%	(19)	bps	(73)	bps	0.76		%	1.24		%	(48)	bps
Net charge-off rate	0.53			0.28			1.19			1.54			1.93			25		(140)		0.87			1.56			(69)
30+ day performing delinquency rate	4.62			3.62			3.16			5.12			6.63			100		(201)		4.62			6.63			(201)
30+ day delinquency rate	5.00			3.90			3.48			5.65			7.34			110		(234)		5.00			7.34			(234)
Nonperforming loan rate(3)	0.47			0.38			0.43			0.63			0.81			9		(34)		0.47			0.81			(34)
Nonperforming asset rate(4)	0.54			0.43			0.46			0.71			0.91			11		(37)		0.54			0.91			(37)
Auto—At origination FICO scores:(12)
Greater than 660	46		%	46		%	46		%	47		%	48		%	—		(2)%		46		%	48		%	(2)%
621 - 660	20			20			20			20			20			—		—		20			20			—
620 or below	34			34			34			33			32			—		2		34			32			2
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business


																2020 Q4 vs.				Year Ended December 31,
	2020			2020			2020			2020			2019			2020		2019								2020 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2020			2019			2019
Commercial Banking
Earnings:
Net interest income	$	522		$	517		$	518		$	491		$	494		1%		6%		$	2,048		$	1,983		3%
Non-interest income	268			237			180			238			223			13		20		923			831			11
Total net revenue(6)	790			754			698			729			717			5		10		2,971			2,814			6
Provision (benefit) for credit losses	(28)			(74)			427			856			62			(62)		**		1,181			306			286
Non-interest expense	445			424			425			412			441			5		1		1,706			1,699			—
Income (loss) from continuing operations before income taxes	373			404			(154)			(539)			214			(8)		74		84			809			(90)
Income tax provision (benefit)	88			95			(36)			(128)			50			(7)		76		19			188			(90)
Income (loss) from continuing operations, net of tax	$	285		$	309		$	(118)		$	(411)		$	164		(8)		74		$	65		$	621		(90)
Selected performance metrics:
Period-end loans held for investment	$	75,780		$	75,894		$	77,490		$	81,160		$	74,508		—		2		$	75,780		$	74,508		2
Average loans held for investment	75,320			76,322			79,759			76,442			74,189			(1)		2		76,954			72,540			6
Average yield on loans held for investment(6)(8)	2.83		%	2.82		%	3.00		%	3.88		%	4.22		%	1	bps	(139)	bps	3.13		%	4.51		%	(138)	bps
Period-end deposits	$	39,590		$	36,783		$	35,669		$	32,822		$	32,134		8%		23%		$	39,590		$	32,134		23%
Average deposits	38,676			36,278			34,635			32,238			32,034			7		21		35,468			31,229			14
Average deposits interest rate	0.23		%	0.25		%	0.30		%	0.89		%	1.10		%	(2)	bps	(87)	bps	0.40		%	1.18		%	(78)	bps
Net charge-off rate	0.45			0.43			0.51			0.57			0.35			2		10		0.49			0.22			27
Nonperforming loan rate(3)	0.86			1.01			0.85			0.61			0.60			(15)		26		0.86			0.60			26
Nonperforming asset rate(4)	0.86			1.01			0.85			0.61			0.60			(15)		26		0.86			0.60			26
Risk category:(13)
Noncriticized	$	67,964		$	68,533		$	70,881		$	77,714		$	71,848		(1)%		(5)%		$	67,964		$	71,848		(5)%
Criticized performing	7,166			6,593			5,949			2,952			2,181			9		**		7,166			2,181			**
Criticized nonperforming	650			768			660			494			448			(15)		45		650			448			45
PCI loans	—			—			—			—			31			—		**		—			31			**
Total commercial banking loans	$	75,780		$	75,894		$	77,490		$	81,160		$	74,508		—		2		$	75,780		$	74,508		2
Risk category as a percentage of period-end loans held for investment:(13)
Noncriticized	89.6		%	90.3		%	91.4		%	95.8		%	96.5		%	(70)	bps	(690)	bps	89.6		%	96.5		%	(690)	bps
Criticized performing	9.5			8.7			7.7			3.6			2.9			80		660		9.5			2.9			660
Criticized nonperforming	0.9			1.0			0.9			0.6			0.6			(10)		30		0.9			0.6			30

Total commercial banking loans	100.0		%	100.0		%	100.0		%	100.0		%	100.0		%					100.0		%	100.0		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13: Financial & Statistical Summary—Other and Total


											2020 Q4 vs.				Year Ended December 31,
	2020		2020		2020		2020		2019		2020		2019						2020 vs.
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4		2020		2019		2019
Other
Earnings:
Net interest income (loss)	$	(74)	$	(158)	$	(92)	$	175	$	116	(53)	%	**		$	(149)	$	164	**
Non-interest income (loss)	6		469		(26)		(51)		(44)		(99)		**		398		(109)		**
Total net revenue (loss)(6)	(68)		311		(118)		124		72		**		**		249		55		**
Provision (benefit) for credit losses	1		(2)		(1)		5		—		**		**		3		—		**
Non-interest expense(14)(15)	132		110		340		118		123		20		7%		700		422		66	%
Income (loss) from continuing operations before income taxes	(201)		203		(457)		1		(51)		**		**		(454)		(367)		24
Income tax provision (benefit)	(276)		316		(305)		(113)		(78)		**		254		(378)		(353)		7
Income (loss) from continuing operations, net of tax	$	75	$	(113)	$	(152)	$	114	$	27	**		178		$	(76)	$	(14)	**
Selected performance metrics:


Period-end deposits	$	16,037	$	19,258	$	21,765	$	19,260	$	17,464	(17)		(8)		$	16,037	$	17,464	(8)
Average deposits	16,418		20,820		21,416		17,344		18,223		(21)		(10)		18,998		18,824		1
Total
Earnings:
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	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	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)
Selected performance metrics:
Period-end loans held for investment	$	251,624	$	248,223	$	251,512	$	262,990	$	265,809	1		(5)		$	251,624	$	265,809	(5)
Average loans held for investment	247,689		249,511		253,358		262,889		258,870		(1)		(4)		253,335		247,450		2
Period-end deposits	305,442		305,725		304,238		269,689		262,697		—		16		305,442		262,697		16
Average deposits	304,513		305,516		288,344		264,653		260,040		—		17		290,835		255,065		14

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 14: Notes to Loan, Allowance and Business Segment Disclosures (Tables 7—13)

(1)Concurrent with our adoption of the CECL standard in the first quarter of 2020, we reclassified our finance charge and fee reserve to our allowance for credit losses, with a corresponding increase to credit card loans held for investment.

(2)Metrics for Q4 2020, Q3 2020, Q2 2020 and Q1 2020 include the impact of COVID-19 customer assistance programs where applicable.

(3)Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.

(4)Nonperforming assets consist of nonperforming loans, repossessed assets and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment, repossessed assets and other foreclosed assets.

(5)Represents foreign currency translation adjustments.

(6)Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reductions to the Other category.

(7)We reclassified $2.1 billion in partnership loans to held for sale as of September 30, 2020.

(8)Average yield is calculated based on annualized interest income for the period divided by average loans during the period. Annualized interest income does not include any allocations, such as funds transfer pricing.

(9)Total net revenue margin is calculated based on annualized total net revenue for the period divided by average loans outstanding during the period.

(10)Purchase volume consists of purchase transactions, net of returns, for the period, and excludes cash advance and balance transfer transactions.

(11)Percentages represent period-end loans held for investment in each credit score category. Domestic card credit scores generally represent FICO scores. These scores are obtained from one of the major credit bureaus at origination and are refreshed monthly thereafter. We approximate non-FICO credit scores to comparable FICO scores for consistency purposes. Balances for which no credit score is available or the credit score is invalid are included in the 660 or below category.

(12)Percentages represent period-end loans held for investment in each credit score category. Auto credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.

(13)Criticized exposures correspond to the “Special Mention,” “Substandard” and “Doubtful” asset categories defined by bank regulatory authorities.

(14)Includes charges incurred as a result of restructuring activities.

(15)Includes net Cybersecurity Incident expenses of $6 million in Q4 2020, $6 million in Q3 2020, $11 million in Q2 2020, $4 million in Q1 2020 and $16 million in Q4 2019, respectively.

** Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures(1)


	Basel III Standardized Approach
(Dollars in millions, except as noted)	December 31, 2020			September 30, 2020			June 30, 2020			March 31, 2020			December 31, 2019
Regulatory Capital Metrics
Common equity excluding AOCI	$	55,299		$	52,839		$	50,614		$	51,018		$	52,001
Adjustments:
AOCI, net of tax(2)	(29)			(122)			(145)			(170)			1,156
Goodwill, net of related deferred tax liabilities	(14,448)			(14,448)			(14,449)			(14,453)			(14,465)
Intangible assets, net of related deferred tax liabilities	(86)			(95)			(135)			(151)			(170)
Other(2)	—			—			—			—			(360)
Common equity Tier 1 capital	$	40,736		$	38,174		$	35,885		$	36,244		$	38,162
Tier 1 capital	$	45,583		$	43,505		$	41,094		$	41,453		$	43,015
Total capital(3)	52,783			50,955			48,508			48,775			50,350
Risk-weighted assets	297,483			293,852			290,222			302,871			313,155
Adjusted average assets(4)	406,762			409,602			398,062			377,360			368,511
Capital Ratios
Common equity Tier 1 capital(5)	13.7		%	13.0		%	12.4		%	12.0		%	12.2		%
Tier 1 capital(6)	15.3			14.8			14.2			13.7			13.7
Total capital(7)	17.7			17.3			16.7			16.1			16.1
Tier 1 leverage(4)	11.2			10.6			10.3			11.0			11.7
Tangible common equity (“TCE”)(8)	10.0			9.4			8.8			9.6			10.2

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of our adjusted results that we believe help investors and users of our financial information understand the effect of adjusting items on our selected reported results. These adjusted results provide alternate measurements of our operating performance, both for the current period and trends across multiple periods. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.


	2020												2019												Year Ended December 31,
(Dollars in millions, except per share data and as noted)	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1			2020			2019
Adjusted diluted EPS:
Net income (loss) available to common stockholders (GAAP)	$	2,462		$	2,319		$	(1,009)		$	(1,420)		$	1,041		$	1,270		$	1,533		$	1,348		$	2,375		$	5,192
Legal reserve activity, including insurance recoveries	(37)			40			265			45			—			—			—			—			313			—
U.K. Payment Protection Insurance customer refund reserve (“U.K. PPI Reserve”)	—			(36)			—			—			—			212			—			—			(36)			212
Cybersecurity Incident expenses, net of insurance	6			6			11			4			16			22			—			—			27			38
Initial allowance build on acquired Walmart portfolio	—			—			—			—			84			—			—			—			—			84
Walmart launch and related integration expenses	—			—			—			—			48			84			54			25			—			211
Restructuring charges	—			—			—			—			—			—			28			—			—			28
Adjusted net income (loss) available to common stockholders before income tax impacts (non-GAAP)	2,431			2,329			(733)			(1,371)			1,189			1,588			1,615			1,373			2,679			5,765
Income tax impacts	5			(12)			(3)			(12)			(35)			(21)			(19)			(6)			(22)			(81)
Dividends and undistributed earnings allocated to participating securities(9)	—			—			—			—			(1)			(2)			(1)			—			(2)			(3)
Adjusted net income (loss) available to common stockholders (non-GAAP)	$	2,436		$	2,317		$	(736)		$	(1,383)		$	1,153		$	1,565		$	1,595		$	1,367		$	2,655		$	5,681

Diluted weighted-average common shares outstanding (in millions) (GAAP)	460.2			458.5			456.7			457.6			463.4			471.8			473.0			471.6			458.9			469.9

Diluted EPS (GAAP)	$	5.35		$	5.06		$	(2.21)		$	(3.10)		$	2.25		$	2.69		$	3.24		$	2.86		$	5.18		$	11.05
Impact of adjustments noted above	(0.06)			(0.01)			0.60			0.08			0.24			0.63			0.13			0.04			0.61			1.04
Adjusted diluted EPS	$	5.29		$	5.05		$	(1.61)		$	(3.02)		$	2.49		$	3.32		$	3.37		$	2.90		$	5.79		$	12.09

Adjusted efficiency ratio:
Non-interest expense (GAAP)	$	4,009		$	3,548		$	3,770		$	3,729		$	4,161		$	3,872		$	3,779		$	3,671		$	15,056		$	15,483
Legal reserve activity, including insurance recoveries	37			(40)			(265)			(45)			—			—			—			—			(313)			—
Cybersecurity Incident expenses, net of insurance	(6)			(6)			(11)			(4)			(16)			(22)			—			—			(27)			(38)
Walmart launch and related integration expenses	—			—			—			—			(48)			(84)			(54)			(25)			—			(211)
U.K. PPI Reserve	—			—			—			—			—			(72)			—			—			—			(72)
Restructuring charges	—			—			—			—			—			—			(27)			—			—			(27)
Adjusted non-interest expense (non-GAAP)	$	4,040		$	3,502		$	3,494		$	3,680		$	4,097		$	3,694		$	3,698		$	3,646		$	14,716		$	15,135

Total net revenue (GAAP)	$	7,337		$	7,381		$	6,556		$	7,249		$	7,427		$	6,959		$	7,124		$	7,083		$	28,523		$	28,593
U.K. PPI Reserve	—			(36)			—			—			—			140			—			—			(36)			140
Restructuring charges	—			—			—			—			—			—			1			—			—			1
Adjusted net revenue (non-GAAP)	$	7,337		$	7,345		$	6,556		$	7,249		$	7,427		$	7,099		$	7,125		$	7,083		$	28,487		$	28,734

Adjusted efficiency ratio	55.06		%	47.68		%	53.29		%	50.77		%	55.16		%	52.04		%	51.90		%	51.48		%	51.66		%	52.67		%


	2020												2019												Year Ended December 31,
(Dollars in millions, except per share data and as noted)	Q4			Q3			Q2			Q1			Q4			Q3			Q2			Q1			2020			2019
Adjusted operating efficiency ratio:
Operating expense (GAAP)	$	3,446		$	3,265		$	3,497		$	3,238		$	3,451		$	3,371		$	3,233		$	3,154		$	13,446		$	13,209
Legal reserve activity, including insurance recoveries	37			(40)			(265)			(45)			—			—			—			—			(313)			—
Cybersecurity Incident expenses, net of insurance	(6)			(6)			(11)			(4)			(16)			(22)			—			—			(27)			(38)
Walmart launch and related integration expenses	—			—			—			—			(48)			(84)			(54)			(25)			—			(211)
U.K. PPI Reserve	—			—			—			—			—			(72)			—			—			—			(72)
Restructuring charges	—			—			—			—			—			—			(27)			—			—			(27)
Adjusted operating expense (non-GAAP)	$	3,477		$	3,219		$	3,221		$	3,189		$	3,387		$	3,193		$	3,152		$	3,129		$	13,106		$	12,861

Adjusted net revenue (non-GAAP)	$	7,337		$	7,345		$	6,556		$	7,249		$	7,427		$	7,099		$	7,125		$	7,083		$	28,487		$	28,734

Adjusted operating efficiency ratio	47.39		%	43.83		%	49.13		%	43.99		%	45.60		%	44.98		%	44.24		%	44.18		%	46.01		%	44.76		%

Reconciliation of Non-GAAP Measures

The following non-GAAP measures consist of TCE, tangible assets and metrics computed using these amounts, which include tangible book value per common share, return on average tangible assets, return on average TCE and TCE ratio. We consider these metrics to be key financial performance measures that management uses in assessing capital adequacy and the level of returns generated. While our non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly-titled measures reported by other companies. The following tables present reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with GAAP.


	2020		2020		2020		2020		2019
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4
Tangible Common Equity (Period-End)
Stockholders’ equity	$	60,204	$	58,424	$	56,045	$	56,830	$	58,011
Goodwill and intangible assets(10)	(14,809)		(14,825)		(14,869)		(14,888)		(14,932)
Noncumulative perpetual preferred stock	(4,847)		(5,330)		(5,209)		(5,209)		(4,853)
Tangible common equity	$	40,548	$	38,269	$	35,967	$	36,733	$	38,226
Tangible Common Equity (Average)
Stockholders’ equity	$	59,389	$	57,223	$	57,623	$	58,568	$	58,148
Goodwill and intangible assets(10)	(14,824)		(14,867)		(14,880)		(14,930)		(14,967)
Noncumulative perpetual preferred stock	(5,168)		(5,228)		(5,209)		(5,382)		(5,506)
Tangible common equity	$	39,397	$	37,128	$	37,534	$	38,256	$	37,675
Tangible Assets (Period-End)
Total assets	$	421,602	$	421,883	$	421,296	$	396,878	$	390,365
Goodwill and intangible assets(10)	(14,809)		(14,825)		(14,869)		(14,888)		(14,932)
Tangible assets	$	406,793	$	407,058	$	406,427	$	381,990	$	375,433
Tangible Assets (Average)
Total assets	$	420,011	$	422,854	$	411,075	$	390,380	$	383,162
Goodwill and intangible assets(10)	(14,824)		(14,867)		(14,880)		(14,930)		(14,967)
Tangible assets	$	405,187	$	407,987	$	396,195	$	375,450	$	368,195

__________

(1)Regulatory capital metrics and capital ratios as of December 31, 2020 are preliminary and therefore subject to change.

(2)In the first quarter of 2020, we elected to exclude from our regulatory capital ratios certain components of AOCI as permitted under the Tailoring Rules. As such, we revised our presentation herein to only include those components of AOCI that impact our regulatory capital ratios.

(3)Total capital equals the sum of Tier 1 capital and Tier 2 capital.

(4)Adjusted average assets for the purpose of calculating our Tier 1 leverage ratio represents total average assets adjusted for amounts that are deducted from Tier 1 capital, predominately goodwill and intangible assets. Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets.

(5)Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on common equity Tier 1 capital divided by risk-weighted assets.

(6)Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.

(7)Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets.

(8)TCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets.

(9)Dividends and undistributed earnings allocated to participating securities and earnings per share are computed independently for each period. Accordingly, the sum of each quarterly amount may not agree to the year-to-date total.

(10)Includes impact of related deferred taxes.