SEC Filing | Capital One Financial Corp.

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cof-20220125

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 25, 2022

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 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
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series L	COF PRL	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series N	COF PRN	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 25, 2022, Capital One Financial Corporation (the “Company”) issued a press release announcing its financial results for the fourth quarter ended December 31, 2021. 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 25 , 2022 - Fourth Quarter 2021
99.2						Financial Supplement - Fourth Quarter 2021
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 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. A replay of the webcast will be archived on the Company’s website through February 8, 2022 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 25, 2022

By:

/s/ TIMOTHY P. GOLDEN

Timothy P. Golden

Controller and Principal Accounting Officer

Document

Exhibit 99.1

News Release

https://cdn.kscope.io/61bfcdc05ee32d3357c263557b542057-earningsslidesvfinal1b58a.jpg


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

FOR IMMEDIATE RELEASE: January 25, 2022

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. (January 25, 2022) – 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.

Capital One Fourth Quarter 2021 Earnings

Page 2

•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.

(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.

Capital One Fourth Quarter 2021 Earnings

Page 3

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.

###

(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.

Document

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement(1)(2)

Fourth Quarter 2021

Table of Contents


Capital One Financial Corporation Consolidated Results			Page
	Table 1:	Financial Summary—Consolidated	1
	Table 2:	Selected Metrics—Consolidated	3
	Table 3:	Consolidated Statements of Income	4
	Table 4:	Consolidated Balance Sheets	6
	Table 5:	Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)	8
	Table 6:	Average Balances, Net Interest Income and Net Interest Margin	9
	Table 7:	Loan Information and Performance Statistics	10
	Table 8:	Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity	12
Business Segment Results
	Table 9:	Financial Summary—Business Segment Results	13
	Table 10:	Financial & Statistical Summary—Credit Card Business	14
	Table 11:	Financial & Statistical Summary—Consumer Banking Business	16
	Table 12:	Financial & Statistical Summary—Commercial Banking Business	17
	Table 13:	Financial & Statistical Summary—Other and Total	18
Other
	Table 14:	Notes to Net Interest Margin, Loan, Allowance and Business Segment Disclosures (Tables 6—13)	19
	Table 15:	Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures	20

__________

(1)The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation. Investors should refer to our Annual Report on Form 10-K for the period ended December 31, 2021 once it is filed with the Securities and Exchange Commission.

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

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated


											2021 Q4 vs.				Year Ended December 31,
(Dollars in millions, except per share data and as noted)	2021		2021		2021		2021		2020		2021		2020						2021 vs.
	Q4		Q3		Q2		Q1		Q4		Q3		Q4		2021		2020		2020
Income Statement
Net interest income	$	6,450	$	6,156	$	5,743	$	5,822	$	5,873	5	%	10	%	$	24,171	$	22,913	5	%
Non-interest income	1,668		1,674		1,631		1,291		1,464		—		14		6,264		5,610		12
Total net revenue(1)	8,118		7,830		7,374		7,113		7,337		4		11		30,435		28,523		7
Provision (benefit) for credit losses	381		(342)		(1,160)		(823)		264		**		44		(1,944)		10,264		**
Non-interest expense:
Marketing	999		751		620		501		563		33		77		2,871		1,610		78
Operating expense	3,679		3,435		3,346		3,239		3,446		7		7		13,699		13,446		2
Total non-interest expense	4,678		4,186		3,966		3,740		4,009		12		17		16,570		15,056		10
Income from continuing operations before income taxes	3,059		3,986		4,568		4,196		3,064		(23)		—		15,809		3,203		**
Income tax provision	633		882		1,031		869		496		(28)		28		3,415		486		**
Income from continuing operations, net of tax	2,426		3,104		3,537		3,327		2,568		(22)		(6)		12,394		2,717		**
Income from discontinued operations, net of tax	(1)		—		(1)		(2)		(2)		**		(50)		(4)		(3)		33
Net income	2,425		3,104		3,536		3,325		2,566		(22)		(5)		12,390		2,714		**
Dividends and undistributed earnings allocated to participating securities(2)	(21)		(26)		(30)		(28)		(19)		(19)		11		(105)		(20)		**
Preferred stock dividends	(74)		(79)		(60)		(61)		(68)		(6)		9		(274)		(280)		(2)
Issuance cost for redeemed preferred stock(3)	(34)		(12)		—		—		(17)		183		100		(46)		(39)		18
Net income available to common stockholders	$	2,296	$	2,987	$	3,446	$	3,236	$	2,462	(23)		(7)		$	11,965	$	2,375	**
Common Share Statistics
Basic earnings per common share:(2)
Net income from continuing operations	$	5.43	$	6.81	$	7.65	$	7.06	$	5.36	(20)	%	1	%	$	27.05	$	5.20	**
Income (loss) from discontinued operations	—		—		—		—		—		—		—		(0.01)		(0.01)		—
Net income per basic common share	$	5.43	$	6.81	$	7.65	$	7.06	$	5.36	(20)		1		$	27.04	$	5.19	**
Diluted earnings per common share:(2)
Net income from continuing operations	$	5.41	$	6.78	$	7.62	$	7.03	$	5.35	(20)	%	1	%	$	26.95	$	5.19	**
Income (loss) from discontinued operations	—		—		—		—		—		—		—		(0.01)		(0.01)		—
Net income per diluted common share	$	5.41	$	6.78	$	7.62	$	7.03	$	5.35	(20)		1		$	26.94	$	5.18	**
Weighted-average common shares outstanding (in millions):
Basic	422.5		438.8		450.6		458.6		459.1		(4)	%	(8)	%	442.5		457.8		(3)	%
Diluted	424.3		440.5		452.3		460.1		460.2		(4)		(8)		444.2		458.9		(3)
Common shares outstanding (period-end, in millions)	413.9		430.4		446.1		456.8		459.0		(4)		(10)		413.9		459.0		(10)
Dividends declared and paid per common share	$	0.60	$	1.20	$	0.40	$	0.40	$	0.10	(50)		**		$	2.60	$	1.00	160
Tangible book value per common share (period-end)(4)	99.74		99.60		97.20		90.96		88.34		—		13		99.74		88.34		13


											2021 Q4 vs.				Year Ended December 31,
(Dollars in millions)	2021		2021		2021		2021		2020		2021		2020						2021 vs.
	Q4		Q3		Q2		Q1		Q4		Q3		Q4		2021		2020		2020
Balance Sheet (Period-End)
Loans held for investment	$	277,340	$	261,390	$	249,597	$	243,131	$	251,624	6	%	10	%	$	277,340	$	251,624	10	%
Interest-earning assets	397,341		387,208		387,295		392,485		388,917		3		2		397,341		388,917		2
Total assets	432,381		425,377		423,420		425,175		421,602		2		3		432,381		421,602		3
Interest-bearing deposits	272,937		269,134		271,314		276,325		274,300		1		—		272,937		274,300		—
Total deposits	310,980		305,938		306,308		310,328		305,442		2		2		310,980		305,442		2
Borrowings	43,086		37,501		36,343		38,450		40,539		15		6		43,086		40,539		6
Common equity	56,184		57,632		58,136		56,341		55,356		(3)		1		56,184		55,356		1
Total stockholders’ equity	61,029		63,544		64,624		61,188		60,204		(4)		1		61,029		60,204		1
Balance Sheet (Average Balances)
Loans held for investment	$	267,159	$	253,101	$	246,463	$	243,937	$	247,689	6	%	8	%	$	252,730	$	253,335	—
Interest-earning assets	390,868		387,766		390,129		388,572		388,252		1		1		389,336		378,362		3	%
Total assets	427,845		424,506		424,099		421,808		420,011		1		2		424,521		411,187		3
Interest-bearing deposits	269,951		269,278		273,476		273,358		274,142		—		(2)		271,500		263,279		3
Total deposits	307,272		305,035		308,217		305,056		304,513		1		1		306,397		290,835		5
Borrowings	39,943		37,464		37,054		39,911		40,662		7		(2)		38,590		46,588		(17)
Common equity	56,946		58,230		56,885		55,775		54,220		(2)		5		56,966		52,954		8
Total stockholders’ equity	62,498		64,682		62,376		60,623		59,389		(3)		5		62,556		58,201		7

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated


																2021 Q4 vs.				Year Ended December 31,
(Dollars in millions, except as noted)	2021			2021			2021			2021			2020			2021		2020								2021 vs.
	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2021			2020			2020
Performance Metrics
Net interest income growth (period over period)	5%			7%			(1)		%	(1)		%	6		%	**		**		5%			(2)		%	**
Non-interest income growth (period over period)	—			3			26			(12)			(20)			**		**		12			7			**
Total net revenue growth (period over period)	4			6			4			(3)			(1)			**		**		7			—			**
Total net revenue margin(5)	8.31			8.08			7.56			7.32			7.56			23	bps	75	bps	7.82			7.54			28	bps
Net interest margin(6)	6.60			6.35			5.89			5.99			6.05			25		55		6.21			6.06			15
Return on average assets	2.27			2.92			3.34			3.16			2.45			(65)		(18)		2.92			0.66			226
Return on average tangible assets(7)	2.35			3.03			3.46			3.27			2.54			(68)		(19)		3.03			0.69			234
Return on average common equity(8)	16.13			20.52			24.24			23.22			18.18			(4)%		(205)		21.01			4.49			17%
Return on average tangible common equity(9)	21.82			27.50			32.75			31.61			25.02			(6)		(320)		28.39			6.24			22
Non-interest expense as a percentage of average loans held for investment	7.00			6.62			6.44			6.13			6.47			38	bps	53		6.56			5.94			62	bps
Efficiency ratio(10)	57.63			53.46			53.78			52.58			54.64			4%		299		54.44			52.79			165
Operating efficiency ratio(11)	45.32			43.87			45.38			45.54			46.97			145	bps	(165)		45.01			47.14			(213)
Effective income tax rate for continuing operations	20.7			22.1			22.6			20.7			16.2			(140)		5%		21.6			15.2			6%
Employees (period-end, in thousands)	50.8			50.8			52.0			51.7			52.0			—		(2)		50.8			52.0			(2)
Credit Quality Metrics
Allowance for credit losses	$	11,430		$	11,573		$	12,346		$	14,017		$	15,564		(1)%		(27)%		$	11,430		$	15,564		(27)%
Allowance coverage ratio	4.12		%	4.43		%	4.95		%	5.77		%	6.19		%	(31)	bps	(207)	bps	4.12		%	6.19		%	(207)	bps
Net charge-offs	$	527		$	426		$	541		$	740		$	856		24%		(38)%		$	2,234		$	5,225		(57)%
Net charge-off rate(12)	0.79		%	0.67		%	0.88		%	1.21		%	1.38		%	12	bps	(59)	bps	0.88		%	2.06		%	(118)	bps
30+ day performing delinquency rate	2.25			1.97			1.75			1.82			2.41			28		(16)		2.25			2.41			(16)
30+ day delinquency rate	2.41			2.13			1.89			1.98			2.61			28		(20)		2.41			2.61			(20)
Capital Ratios(13)
Common equity Tier 1 capital	13.1		%	13.8		%	14.5		%	14.6		%	13.7		%	(70)	bps	(60)	bps	13.1		%	13.7		%	(60)	bps
Tier 1 capital	14.5			15.7			16.6			16.2			15.3			(120)		(80)		14.5			15.3			(80)
Total capital	16.9			18.2			18.8			18.6			17.7			(130)		(80)		16.9			17.7			(80)
Tier 1 leverage	11.6			12.2			12.4			11.7			11.2			(60)		40		11.6			11.2			40
Tangible common equity (“TCE”)(14)	9.9			10.4			10.6			10.1			10.0			(50)		(10)		9.9			10.0			(10)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income


											2021 Q4 vs.		Year Ended December 31,
	2021		2021		2021		2021		2020		2021	2020					2021 vs.
(Dollars in millions, except per share data and as noted)	Q4		Q3		Q2		Q1		Q4		Q3	Q4	2021		2020		2020
Interest income:
Loans, including loans held for sale	$	6,451	$	6,205	$	5,753	$	5,854	$	5,954	4%	8%	$	24,263	$	24,074	1	%
Investment securities	368		317		370		391		422		16	(13)	1,446		1,877		(23)
Other	12		16		16		16		15		(25)	(20)	60		82		(27)
Total interest income	6,831		6,538		6,139		6,261		6,391		4	7	25,769		26,033		(1)
Interest expense:
Deposits	222		228		237		269		347		(3)	(36)	956		2,165		(56)
Securitized debt obligations	30		29		28		32		34		3	(12)	119		232		(49)
Senior and subordinated notes	121		116		122		129		128		4	(5)	488		679		(28)
Other borrowings	8		9		9		9		9		(11)	(11)	35		44		(20)
Total interest expense	381		382		396		439		518		—	(26)	1,598		3,120		(49)
Net interest income	6,450		6,156		5,743		5,822		5,873		5	10	24,171		22,913		5
Provision (benefit) for credit losses	381		(342)		(1,160)		(823)		264		**	44	(1,944)		10,264		**
Net interest income after provision for credit losses	6,069		6,498		6,903		6,645		5,609		(7)	8	26,115		12,649		106
Non-interest income:
Interchange fees, net	1,005		1,022		1,016		817		818		(2)	23	3,860		3,017		28
Service charges and other customer-related fees	435		407		384		352		338		7	29	1,578		1,243		27
Net securities gains	(4)		2		—		4		—		**	**	2		25		(92)
Other	232		243		231		118		308		(5)	(25)	824		1,325		(38)
Total non-interest income	1,668		1,674		1,631		1,291		1,464		—	14	6,264		5,610		12
Non-interest expense:
Salaries and associate benefits	1,941		1,852		1,781		1,847		1,755		5	11	7,421		6,805		9
Occupancy and equipment	527		481		523		472		572		10	(8)	2,003		2,118		(5)
Marketing	999		751		620		501		563		33	77	2,871		1,610		78
Professional services	449		358		341		292		394		25	14	1,440		1,312		10
Communications and data processing	326		319		315		302		295		2	11	1,262		1,215		4
Amortization of intangibles	13		5		5		6		8		160	63	29		60		(52)
Other	423		420		381		320		422		1	—	1,544		1,936		(20)
Total non-interest expense	4,678		4,186		3,966		3,740		4,009		12	17	16,570		15,056		10
Income from continuing operations before income taxes	3,059		3,986		4,568		4,196		3,064		(23)	—	15,809		3,203		**
Income tax provision	633		882		1,031		869		496		(28)	28	3,415		486		**
Income from continuing operations, net of tax	2,426		3,104		3,537		3,327		2,568		(22)	(6)	12,394		2,717		**
Income (loss) from discontinued operations, net of tax	(1)		—		(1)		(2)		(2)		**	(50)	(4)		(3)		33
Net income	2,425		3,104		3,536		3,325		2,566		(22)	(5)	12,390		2,714		**
Dividends and undistributed earnings allocated to participating securities(2)	(21)		(26)		(30)		(28)		(19)		(19)	11	(105)		(20)		425
Preferred stock dividends	(74)		(79)		(60)		(61)		(68)		(6)	9	(274)		(280)		(2)
Issuance cost for redeemed preferred stock(3)	(34)		(12)		—		—		(17)		183	100	(46)		(39)		18
Net income (loss) available to common stockholders	$	2,296	$	2,987	$	3,446	$	3,236	$	2,462	(23)	(7)	$	11,965	$	2,375	404



											2021 Q4 vs.				Year Ended December 31,
	2021		2021		2021		2021		2020		2021		2020						2021 vs.
(Dollars in millions, except per share data and as noted)	Q4		Q3		Q2		Q1		Q4		Q3		Q4		2021		2020		2020
Basic earnings per common share:(2)
Net income from continuing operations	$	5.43	$	6.81	$	7.65	$	7.06	$	5.36	(20)	%	1	%	$	27.05	$	5.20	**
Income (loss) from discontinued operations	—		—		—		—		—		—		—		(0.01)		(0.01)		—
Net income per basic common share	$	5.43	$	6.81	$	7.65	$	7.06	$	5.36	(20)		1		$	27.04	$	5.19	**
Diluted earnings per common share:(2)
Net income from continuing operations	$	5.41	$	6.78	$	7.62	$	7.03	$	5.35	(20)		1		$	26.95	$	5.19	**
Income (loss) from discontinued operations	—		—		—		—		—		—		—		(0.01)		(0.01)		—
Net income per diluted common share	$	5.41	$	6.78	$	7.62	$	7.03	$	5.35	(20)		1		$	26.94	$	5.18	**
Weighted-average common shares outstanding (in millions):
Basic common shares	422.5		438.8		450.6		458.6		459.1		(4)		(8)		442.5		457.8		(3)
Diluted common shares	424.3		440.5		452.3		460.1		460.2		(4)		(8)		444.2		458.9		(3)

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets


											2021 Q4 vs.
	2021		2021		2021		2021		2020		2021		2020
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4
Assets:
Cash and cash equivalents:
Cash and due from banks	$	4,164	$	5,444	$	5,312	$	4,670	$	4,708	(24)	%	(12)	%
Interest-bearing deposits and other short-term investments	17,582		21,180		29,534		45,825		35,801		(17)		(51)
Total cash and cash equivalents	21,746		26,624		34,846		50,495		40,509		(18)		(46)
Restricted cash for securitization investors	308		234		242		1,779		262		32		18
Securities available for sale	95,261		98,149		101,766		99,165		100,445		(3)		(5)
Loans held for investment:
Unsecuritized loans held for investment	252,468		238,475		226,130		219,182		225,698		6		12
Loans held in consolidated trusts	24,872		22,915		23,467		23,949		25,926		9		(4)
Total loans held for investment	277,340		261,390		249,597		243,131		251,624		6		10
Allowance for credit losses	(11,430)		(11,573)		(12,346)		(14,017)		(15,564)		(1)		(27)
Net loans held for investment	265,910		249,817		237,251		229,114		236,060		6		13
Loans held for sale	5,888		6,300		6,522		2,896		2,710		(7)		117
Premises and equipment, net	4,210		4,204		4,227		4,277		4,287		—		(2)
Interest receivable	1,460		1,418		1,372		1,380		1,471		3		(1)
Goodwill	14,782		14,652		14,654		14,654		14,653		1		1
Other assets	22,816		23,979		22,540		21,415		21,205		(5)		8
Total assets	$	432,381	$	425,377	$	423,420	$	425,175	$	421,602	2		3


											2021 Q4 vs.
	2021		2021		2021		2021		2020		2021		2020
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4
Liabilities:
Interest payable	$	281	$	241	$	301	$	288	$	352	17	%	(20)	%
Deposits:
Non-interest-bearing deposits	38,043		36,804		34,994		34,003		31,142		3		22
Interest-bearing deposits	272,937		269,134		271,314		276,325		274,300		1		—
Total deposits	310,980		305,938		306,308		310,328		305,442		2		2
Securitized debt obligations	14,994		12,635		10,561		12,071		12,414		19		21
Other debt:
Federal funds purchased and securities loaned or sold under agreements to repurchase	820		825		845		842		668		(1)		23
Senior and subordinated notes	27,219		23,983		24,878		25,467		27,382		13		(1)
Other borrowings	53		58		59		70		75		(9)		(29)
Total other debt	28,092		24,866		25,782		26,379		28,125		13		—
Other liabilities	17,005		18,153		15,844		14,921		15,065		(6)		13
Total liabilities	371,352		361,833		358,796		363,987		361,398		3		3

Stockholders’ equity:
Preferred stock	0		0		0		0		0		—		—
Common stock	7		7		7		7		7		—		—
Additional paid-in capital, net	34,112		35,051		35,472		33,671		33,480		(3)		2
Retained earnings	51,006		48,944		46,461		43,167		40,088		4		27
Accumulated other comprehensive income	374		1,360		1,792		1,783		3,494		(73)		(89)
Treasury stock, at cost	(24,470)		(21,818)		(19,108)		(17,440)		(16,865)		12		45
Total stockholders’ equity	61,029		63,544		64,624		61,188		60,204		(4)		1
Total liabilities and stockholders’ equity	$	432,381	$	425,377	$	423,420	$	425,175	$	421,602	2		3

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 $151 million in Q4 2021, $123 million in Q3 2021, $175 million in Q2 2021, $180 million in Q1 2021 and $177 million in Q4 2020 for credit card finance charges and fees charged-off as uncollectible.

(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 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 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 September 1, 2021, we redeemed all outstanding shares of our fixed-to-floating rate non-cumulative perpetual preferred stock Series E, which reduced our net income available to common shareholders by $12 million in Q3 2021. On December 1, 2021, we redeemed all outstanding shares of our fixed rate 5.20% non-cumulative perpetual preferred stock Series G, and our fixed rate 6.00% non-cumulative perpetual preferred stock Series H, which together reduced our net income available to common shareholders by $34 million in Q4 2021.

(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)Capital ratios as of the end of Q4 2021 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.

(14)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.

** Not meaningful.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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


	2021 Q4						2021 Q3						2020 Q4
(Dollars in millions, except as noted)	Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
Interest-earning assets:
Loans, including loans held for sale	$	272,805	$	6,451	9.46	%	$	260,235	$	6,205	9.54	%	$	251,135	$	5,954	9.48	%
Investment securities	96,421		368		1.53		98,802		317		1.28		97,640		422		1.73
Cash equivalents and other	21,642		12		0.22		28,729		16		0.22		39,477		15		0.15
Total interest-earning assets	$	390,868	$	6,831	6.99		$	387,766	$	6,538	6.74		$	388,252	$	6,391	6.58
Interest-bearing liabilities:
Interest-bearing deposits	$	269,951	$	222	0.33		$	269,278	$	228	0.34		$	274,143	$	347	0.51
Securitized debt obligations	13,775		30		0.87		12,420		29		0.93		12,651		34		1.08
Senior and subordinated notes	25,454		121		1.90		24,241		116		1.91		27,386		128		1.87
Other borrowings and liabilities	2,279		8		1.50		2,357		9		1.49		2,095		9		1.75
Total interest-bearing liabilities	$	311,459	$	381	0.49		$	308,296	$	382	0.49		$	316,275	$	518	0.65
Net interest income/spread			$	6,450	6.50				$	6,156	6.25				$	5,873	5.93
Impact of non-interest-bearing funding					0.10						0.10						0.12
Net interest margin					6.60	%					6.35	%					6.05	%



	Year Ended December 31,
	2021						2020
(Dollars in millions, except as noted)	Average Balance		Interest Income/ Expense		Yield/Rate		Average Balance		Interest Income/ Expense		Yield/Rate
Interest-earning assets:
Loans, including loans held for sale	$	257,328	$	24,263	9.43	%	$	254,901	$	24,074	9.44	%
Investment securities	98,394		1,446		1.47		87,222		1,877		2.15
Cash equivalents and other	33,614		60		0.18		36,239		82		0.23
Total interest-earning assets	$	389,336	$	25,769	6.62		$	378,362	$	26,033	6.88
Interest-bearing liabilities:
Interest-bearing deposits	$	271,500	$	956	0.35		$	263,279	$	2,165	0.82
Securitized debt obligations	12,336		119		0.96		15,533		232		1.49
Senior and subordinated notes	25,530		488		1.91		29,621		679		2.29
Other borrowings and liabilities	2,261		35		1.57		2,882		44		1.55
Total interest-bearing liabilities	$	311,627	$	1,598	0.51		$	311,315	$	3,120	1.00
Net interest income/spread			$	24,171	6.11				$	22,913	5.88
Impact of non-interest-bearing funding					0.10						0.18
Net interest margin					6.21	%					6.06	%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Loan Information and Performance Statistics


											2021 Q4 vs.				Year Ended December 31,
	2021		2021		2021		2021		2020		2021		2020		2021		2020		2021 vs. 2020
(Dollars in millions, except as noted)	Q4		Q3		Q2		Q1		Q4		Q3		Q4
Loans Held for Investment (Period-End)
Credit card:
Domestic credit card(1)	$	108,723	$	99,258	$	95,309	$	91,099	$	98,504	10	%	10	%	$	108,723	$	98,504	10	%
International card businesses(2)	6,049		5,772		5,708		8,028		8,452		5		(28)		6,049		8,452		(28)
Total credit card	114,772		105,030		101,017		99,127		106,956		9		7		114,772		106,956		7
Consumer banking:
Auto	75,779		74,716		71,713		67,059		65,762		1		15		75,779		65,762		15
Retail banking	1,867		2,396		3,046		3,143		3,126		(22)		(40)		1,867		3,126		(40)
Total consumer banking	77,646		77,112		74,759		70,202		68,888		1		13		77,646		68,888		13
Commercial banking:
Commercial and multifamily real estate	35,262		33,096		29,616		30,008		30,681		7		15		35,262		30,681		15
Commercial and industrial	49,660		46,152		44,205		43,794		45,099		8		10		49,660		45,099		10
Total commercial banking	84,922		79,248		73,821		73,802		75,780		7		12		84,922		75,780		12

Total loans held for investment	$	277,340	$	261,390	$	249,597	$	243,131	$	251,624	6		10		$	277,340	$	251,624	10
Loans Held for Investment (Average)
Credit card:
Domestic credit card	$	102,717	$	96,309	$	91,535	$	92,594	$	95,453	7	%	8	%	$	95,818	$	101,837	(6)	%
International card businesses	5,871		5,737		8,139		7,940		8,108		2		(28)		6,913		8,245		(16)
Total credit card	108,588		102,046		99,674		100,534		103,561		6		5		102,731		110,082		(7)
Consumer banking:
Auto	75,284		73,296		69,543		66,185		65,590		3		15		71,108		63,227		12
Retail banking	2,160		2,700		3,162		3,049		3,218		(20)		(33)		2,765		3,072		(10)
Total consumer banking	77,444		75,996		72,705		69,234		68,808		2		13		73,873		66,299		11
Commercial banking:
Commercial and multifamily real estate	33,591		30,314		30,124		29,856		30,825		11		9		30,980		31,135		—
Commercial and industrial	47,536		44,745		43,960		44,313		44,495		6		7		45,146		45,819		(1)
Total commercial banking	81,127		75,059		74,084		74,169		75,320		8		8		76,126		76,954		(1)
Total average loans held for investment	$	267,159	$	253,101	$	246,463	$	243,937	$	247,689	6		8		$	252,730	$	253,335	—


											2021 Q4 vs.				Year Ended December 31,
	2021		2021		2021		2021		2020		2021		2020		2021		2020		2021 vs. 2020
	Q4		Q3		Q2		Q1		Q4		Q3		Q4
Net Charge-Off (Recovery) Rates
Credit card:
Domestic credit card	1.49	%	1.36	%	2.28	%	2.54	%	2.69	%	13	bps	(120)	bps	1.90	%	3.93	%	(203)	bps
International card businesses	0.14		2.72		2.41		2.30		1.86		(258)		(172)		1.96		3.26		(130)
Total credit card	1.42		1.43		2.29		2.52		2.63		(1)		(121)		1.90		3.88		(198)
Consumer banking:
Auto	0.58		0.18		(0.12)		0.47		0.47		40		11		0.28		0.83		(55)
Retail banking	6.69		2.45		1.41		1.68		1.88		4%		5%		2.77		1.82		95
Total consumer banking	0.75		0.27		(0.06)		0.52		0.53		48	bps	22	bps	0.37		0.87		(50)
Commercial banking:
Commercial and multifamily real estate	—		0.01		0.04		0.06		0.02		(1)		(2)		0.03		0.13		(10)
Commercial and industrial	(0.03)		0.07		(0.21)		0.11		0.74		(10)		(77)		(0.01)		0.73		(74)
Total commercial banking	(0.02)		0.05		(0.11)		0.09		0.45		(7)		(47)		—		0.49		(49)
Total net charge-offs	0.79		0.67		0.88		1.21		1.38		12		(59)		0.88		2.06		(118)
30+ Day Performing Delinquency Rates
Credit card:
Domestic credit card	2.22	%	1.93	%	1.68	%	2.24	%	2.42	%	29	bps	(20)	bps	2.22	%	2.42	%	(20)	bps
International card businesses	3.42		3.27		2.89		2.51		2.61		15		81		3.42		2.61		81
Total credit card	2.28		2.00		1.75		2.26		2.44		28		(16)		2.28		2.44		(16)
Consumer banking:
Auto	4.32		3.65		3.26		3.12		4.78		67		(46)		4.32		4.78		(46)
Retail banking	1.92		1.15		0.79		1.02		1.32		77		60		1.92		1.32		60
Total consumer banking	4.26		3.58		3.16		3.03		4.62		68		(36)		4.26		4.62		(36)
Nonperforming Loans and Nonperforming Assets Rates(3)(4)
Credit card:
International card businesses	0.16	%	0.16	%	0.20	%	0.17	%	0.24	%	—		(8)	bps	0.16	%	0.24	%	(8)	bps
Total credit card	0.01		0.01		0.01		0.01		0.02		—		(1)		0.01		0.02		(1)
Consumer banking:
Auto	0.45		0.36		0.29		0.29		0.45		9	bps	—		0.45		0.45		—
Retail banking	2.51		2.20		1.75		1.16		0.96		31		155		2.51		0.96		155
Total consumer banking	0.50		0.42		0.35		0.33		0.47		8		3		0.50		0.47		3
Commercial banking:
Commercial and multifamily real estate	1.09		0.87		1.02		0.78		0.65		22		44		1.09		0.65		44
Commercial and industrial	0.64		0.68		1.03		1.02		1.00		(4)		(36)		0.64		1.00		(36)
Total commercial banking	0.82		0.76		1.03		0.92		0.86		6		(4)		0.82		0.86		(4)
Total nonperforming loans	0.40		0.35		0.41		0.38		0.40		5		—		0.40		0.40		—
Total nonperforming assets	0.41		0.37		0.43		0.40		0.41		4		—		0.41		0.41		—

CAPITAL ONE FINANCIAL CORPORATION (COF)

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



	Three Months Ended December 31, 2021
	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, 2021	$	7,968	$	338	$	8,306	$	1,988	$	73	$	2,061	$	1,206	$	11,573
Charge-offs	(702)		(84)		(786)		(305)		(40)		(345)		(1)		(1,132)
Recoveries	318		82		400		195		5		200		5		605
Net charge-offs	(384)		(2)		(386)		(110)		(35)		(145)		4		(527)
Provision (benefit) for credit losses	384		39		423		(26)		28		2		(43)		382
Allowance build (release) for credit losses	—		37		37		(136)		(7)		(143)		(39)		(145)
Other changes(5)	—		2		2		—		—		—		—		2
Balance as of December 31, 2021	7,968		377		8,345		1,852		66		1,918		1,167		11,430
Reserve for unfunded lending commitments:
Balance as of September 30, 2021	—		—		—		—		—		—		166		166
Provision (benefit) for losses on unfunded lending commitments	—		—		—		—		—		—		(1)		(1)

Balance as of December 31, 2021	—		—		—		—		—		—		165		165
Combined allowance and reserve as of December 31, 2021	$	7,968	$	377	$	8,345	$	1,852	$	66	$	1,918	$	1,332	$	11,595



	Year Ended December 31, 2021
	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, 2020	$	10,650	$	541	$	11,191	$	2,615	$	100	$	2,715	$	1,658	$	15,564
Charge-offs	(3,138)		(343)		(3,481)		(1,118)		(93)		(1,211)		(48)		(4,740)
Recoveries	1,318		207		1,525		918		17		935		46		2,506
Net charge-offs	(1,820)		(136)		(1,956)		(200)		(76)		(276)		(2)		(2,234)
Provision (benefit) for credit losses	(868)		(34)		(902)		(563)		42		(521)		(489)		(1,912)
Allowance build (release) for credit losses	(2,688)		(170)		(2,858)		(763)		(34)		(797)		(491)		(4,146)
Other changes(5)	6		6		12		—		—		—		—		12
Balance as of December 31, 2021	7,968		377		8,345		1,852		66		1,918		1,167		11,430
Reserve for unfunded lending commitments:
Balance as of December 31, 2020	—		—		—		—		—		—		195		195


Provision (benefit) for losses on unfunded lending commitments	—		—		—		—		—		—		(30)		(30)

Balance as of December 31, 2021	—		—		—		—		—		—		165		165
Combined allowance and reserve as of December 31, 2021	$	7,968	$	377	$	8,345	$	1,852	$	66	$	1,918	$	1,332	$	11,595

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial Summary—Business Segment Results


	Three Months Ended December 31, 2021										Year Ended December 31, 2021
(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)	$	3,865	$	2,158	$	595	$	(168)	$	6,450	$	14,074	$	8,448	$	2,153	$	(504)	$	24,171
Non-interest income (loss)	1,261		142		345		(80)		1,668		4,806		554		1,148		(244)		6,264
Total net revenue (loss)	5,126		2,300		940		(248)		8,118		18,880		9,002		3,301		(748)		30,435
Provision (benefit) for credit losses	423		2		(44)		—		381		(902)		(521)		(519)		(2)		(1,944)
Non-interest expense	2,799		1,285		520		74		4,678		9,621		4,711		1,815		423		16,570
Income (loss) from continuing operations before income taxes	1,904		1,013		464		(322)		3,059		10,161		4,812		2,005		(1,169)		15,809
Income tax provision (benefit)	451		239		109		(166)		633		2,403		1,136		473		(597)		3,415
Income (loss) from continuing operations, net of tax	$	1,453	$	774	$	355	$	(156)	$	2,426	$	7,758	$	3,676	$	1,532	$	(572)	$	12,394

	Three Months Ended September 30, 2021
(Dollars in millions)	Credit Card		Consumer Banking		Commercial Banking(6)		Other(6)		Total
Net interest income (loss)	$	3,620	$	2,159	$	578	$	(201)	$	6,156
Non-interest income (loss)	1,263		127		306		(22)		1,674
Total net revenue (loss)	4,883		2,286		884		(223)		7,830
Provision (benefit) for credit losses	(198)		(91)		(53)		—		(342)
Non-interest expense	2,424		1,186		459		117		4,186
Income (loss) from continuing operations before income taxes	2,657		1,191		478		(340)		3,986
Income tax provision (benefit)	627		282		113		(140)		882
Income (loss) from continuing operations, net of tax	$	2,030	$	909	$	365	$	(200)	$	3,104

	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

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary—Credit Card Business


																2021 Q4 vs.				Year Ended December 31,
	2021			2021			2021			2021			2020			2021		2020								2021 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2021			2020			2020
Credit Card
Earnings:
Net interest income	$	3,865		$	3,620		$	3,217		$	3,372		$	3,413		7%		13%		$	14,074		$	13,776		2%
Non-interest income	1,261			1,263			1,253			1,029			1,054			—		20		4,806			3,823			26
Total net revenue	5,126			4,883			4,470			4,401			4,467			5		15		18,880			17,599			7
Provision (benefit) for credit losses	423			(198)			(635)			(492)			231			**		83		(902)			7,327			**
Non-interest expense	2,799			2,424			2,263			2,135			2,311			15		21		9,621			8,491			13
Income from continuing operations before income taxes	1,904			2,657			2,842			2,758			1,925			(28)		(1)		10,161			1,781			**
Income tax provision	451			627			672			653			454			(28)		(1)		2,403			420			**
Income from continuing operations, net of tax	$	1,453		$	2,030		$	2,170		$	2,105		$	1,471		(28)		(1)		$	7,758		$	1,361		**
Selected performance metrics:
Period-end loans held for investment(1)(2)	$	114,772		$	105,030		$	101,017		$	99,127		$	106,956		9		7		$	114,772		$	106,956		7
Average loans held for investment	108,588			102,046			99,674			100,534			103,561			6		5		102,731			110,082			(7)
Average yield on loans outstanding(7)	14.94		%	14.88		%	14.04		%	14.49		%	14.24		%	6	bps	70	bps	14.60		%	14.08		%	52	bps
Total net revenue margin(8)	18.11			18.33			17.59			17.17			16.92			(22)		119		17.81			15.91			190
Net charge-off rate	1.42			1.43			2.29			2.52			2.63			(1)		(121)		1.90			3.88			(198)
30+ day performing delinquency rate	2.28			2.00			1.75			2.26			2.44			28		(16)		2.28			2.44			(16)
30+ day delinquency rate	2.29			2.00			1.75			2.27			2.45			29		(16)		2.29			2.45			(16)
Nonperforming loan rate(3)	0.01			0.01			0.01			0.01			0.02			—		(1)		0.01			0.02			(1)
Purchase volume(9)	$	149,982		$	136,614		$	132,676		$	108,333		$	117,141		10	%	28%		$	527,605		$	414,312		27%


																2021 Q4 vs.				Year Ended December 31,
	2021			2021			2021			2021			2020			2021		2020								2021 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2021			2020			2020
Domestic Card
Earnings:
Net interest income	$	3,558		$	3,319		$	2,944		$	3,095		$	3,129		7%		14%		$	12,916		$	12,599		3%
Non-interest income	1,190			1,200			1,183			959			994			(1)		20		4,532			3,583			26
Total net revenue	4,748			4,519			4,127			4,054			4,123			5		15		17,448			16,182			8
Provision (benefit) for credit losses	384			(200)			(561)			(491)			231			**		66		(868)			6,979			**
Non-interest expense	2,564			2,191			2,034			1,923			2,063			17		24		8,712			7,625			14
Income from continuing operations before income taxes	1,800			2,528			2,654			2,622			1,829			(29)		(2)		9,604			1,578			**
Income tax provision	424			597			626			619			433			(29)		(2)		2,266			374			**
Income from continuing operations, net of tax	$	1,376		$	1,931		$	2,028		$	2,003		$	1,396		(29)		(1)		$	7,338		$	1,204		**
Selected performance metrics:
Period-end loans held for investment(1)	$	108,723		$	99,258		$	95,309		$	91,099		$	98,504		10		10		$	108,723		$	98,504		10
Average loans held for investment	102,717			96,309			91,535			92,594			95,453			7		8		95,818			101,837			(6)
Average yield on loans outstanding(7)	14.86		%	14.80		%	13.91		%	14.34		%	14.07		%	6	bps	79	bps	14.49		%	13.88		%	61	bps
Total net revenue margin(8)	18.14			18.40			17.66			17.15			16.91			(26)		123		17.85			15.80			205
Net charge-off rate	1.49			1.36			2.28			2.54			2.69			13		(120)		1.90			3.93			(203)
30+ day performing delinquency rate	2.22			1.93			1.68			2.24			2.42			29		(20)		2.22			2.42			(20)
Purchase volume(9)	$	138,825		$	126,057		$	122,456		$	99,960		$	107,572		10%		29%		$	487,297		$	380,787		28%
Refreshed FICO scores:(10)
Greater than 660	71		%	71		%	72		%	70		%	69		%	—		2		71		%	69		%	2
660 or below	29			29			28			30			31			—		(2)		29			31			(2)
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11: Financial & Statistical Summary—Consumer Banking Business


																2021 Q4 vs.				Year Ended December 31,
	2021			2021			2021			2021			2020			2021		2020								2021 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2021			2020			2020
Consumer Banking
Earnings:
Net interest income	$	2,158		$	2,159		$	2,101		$	2,030		$	2,012		—		7%		$	8,448		$	7,238		17%
Non-interest income	142			127			144			141			136			12%		4		554			466			19
Total net revenue	2,300			2,286			2,245			2,171			2,148			1		7		9,002			7,704			17
Provision (benefit) for credit losses	2			(91)			(306)			(126)			60			**		(97)		(521)			1,753			**
Non-interest expense	1,285			1,186			1,123			1,117			1,121			8		15		4,711			4,159			13
Income from continuing operations before income taxes	1,013			1,191			1,428			1,180			967			(15)		5		4,812			1,792			169
Income tax provision	239			282			337			278			230			(15)		4		1,136			425			167
Income from continuing operations, net of tax	$	774		$	909		$	1,091		$	902		$	737		(15)		5		$	3,676		$	1,367		169
Selected performance metrics:
Period-end loans held for investment	$	77,646		$	77,112		$	74,759		$	70,202		$	68,888		1		13		$	77,646		$	68,888		13
Average loans held for investment	77,444			75,996			72,705			69,234			68,808			2		13		73,873			66,299			11
Average yield on loans held for investment(7)	7.55		%	7.78		%	7.99		%	8.16		%	8.28		%	(23)	bps	(73)	bps	7.86		%	8.37		%	(51)	bps
Auto loan originations	$	9,721		$	11,570		$	12,959		$	8,833		$	7,371		(16)%		32%		$	43,083		$	32,282		33%
Period-end deposits	256,407			252,387			251,155			254,001			249,815			2		3		256,407			249,815			3
Average deposits	253,372			251,307			252,488			249,499			249,419			1		2		251,676			236,369			6
Average deposits interest rate	0.30		%	0.30		%	0.31		%	0.36		%	0.47		%	—		(17)	bps	0.32		%	0.76		%	(44)	bps
Net charge-off (recovery) rate	0.75			0.27			(0.06)			0.52			0.53			48	bps	22		0.37			0.87			(50)
30+ day performing delinquency rate	4.26			3.58			3.16			3.03			4.62			68		(36)		4.26			4.62			(36)
30+ day delinquency rate	4.66			3.88			3.40			3.25			5.00			78		(34)		4.66			5.00			(34)
Nonperforming loan rate(3)	0.50			0.42			0.35			0.33			0.47			8		3		0.50			0.47			3
Nonperforming asset rate(4)	0.56			0.47			0.40			0.39			0.54			9		2		0.56			0.54			2
Auto—At origination FICO scores:(11)
Greater than 660	50		%	49		%	48		%	47		%	46		%	1%		4%		50		%	46		%	4%
621 - 660	20			20			20			20			20			—		—		20			20			—
620 or below	30			31			32			33			34			(1)		(4)		30			34			(4)
Total	100		%	100		%	100		%	100		%	100		%					100		%	100		%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12: Financial & Statistical Summary—Commercial Banking Business


																2021 Q4 vs.				Year Ended December 31,
	2021			2021			2021			2021			2020			2021		2020								2021 vs.
(Dollars in millions, except as noted)	Q4			Q3			Q2			Q1			Q4			Q3		Q4		2021			2020			2020
Commercial Banking
Earnings:
Net interest income	$	595		$	578		$	460		$	520		$	522		3%		14%		$	2,153		$	2,048		5%
Non-interest income	345			306			257			240			268			13		29		1,148			923			24
Total net revenue(6)	940			884			717			760			790			6		19		3,301			2,971			11
Provision (benefit) for credit losses	(44)			(53)			(219)			(203)			(28)			(17)		57		(519)			1,181			**
Non-interest expense	520			459			417			419			445			13		17		1,815			1,706			6
Income from continuing operations before income taxes	464			478			519			544			373			(3)		24		2,005			84			**
Income tax provision	109			113			123			128			88			(4)		24		473			19			**
Income from continuing operations, net of tax	$	355		$	365		$	396		$	416		$	285		(3)		25		$	1,532		$	65		**
Selected performance metrics:
Period-end loans held for investment	$	84,922		$	79,248		$	73,821		$	73,802		$	75,780		7		12		$	84,922		$	75,780		12
Average loans held for investment	81,127			75,059			74,084			74,169			75,320			8		8		76,126			76,954			(1)
Average yield on loans held for investment(6)(7)	2.71		%	2.77		%	2.72		%	2.76		%	2.83		%	(6)	bps	(12)	bps	2.74		%	3.13		%	(39)	bps
Period-end deposits	$	44,809		$	43,347		$	42,973		$	41,552		$	39,590		3%		13%		$	44,809		$	39,590		13%
Average deposits	44,206			42,729			42,311			40,107			38,676			3		14		42,350			35,468			19
Average deposits interest rate	0.12		%	0.15		%	0.14		%	0.18		%	0.23		%	(3)	bps	(11)	bps	0.14		%	0.40		%	(26)	bps
Net charge-off (recovery) rate	(0.02)			0.05			(0.11)			0.09			0.45			**		**		—			0.49			**
Nonperforming loan rate(3)	0.82			0.76			1.03			0.92			0.86			6		(4)		0.82			0.86			(4)
Nonperforming asset rate(4)	0.82			0.76			1.03			0.92			0.86			6		(4)		0.82			0.86			(4)
Risk category:(12)
Noncriticized	$	79,014		$	73,218		$	67,481		$	66,299		$	67,964		8%		16%		$	79,014		$	67,964		16%
Criticized performing	5,209			5,429			5,581			6,821			7,166			(4)		(27)		5,209			7,166			(27)
Criticized nonperforming	699			601			759			682			650			16		8		699			650			8
Total commercial banking loans	$	84,922		$	79,248		$	73,821		$	73,802		$	75,780		7		12		$	84,922		$	75,780		12
Risk category as a percentage of period-end loans held for investment:(12)
Noncriticized	93.1		%	92.3		%	91.4		%	89.9		%	89.6		%	80	bps	350	bps	93.1		%	89.6		%	350	bps
Criticized performing	6.1			6.9			7.6			9.2			9.5			(80)		(340)		6.1			9.5			(340)
Criticized nonperforming	0.8			0.8			1.0			0.9			0.9			—		(10)		0.8			0.9			(10)
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


											2021 Q4 vs.				Year Ended December 31,
	2021		2021		2021		2021		2020		2021		2020						2021 vs.
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4		Q3		Q4		2021		2020		2020
Other
Earnings:
Net interest loss	$	(168)	$	(201)	$	(35)	$	(100)	$	(74)	(16)	%	127	%	$	(504)	$	(149)	**
Non-interest income (loss)	(80)		(22)		(23)		(119)		6		**		**		(244)		398		**
Total net revenue (loss)(6)	(248)		(223)		(58)		(219)		(68)		11		**		(748)		249		**
Provision (benefit) for credit losses	—		—		—		(2)		1		—		**		(2)		3		**
Non-interest expense(13)	74		117		163		69		132		(37)		(44)		423		700		(40)	%
Loss from continuing operations before income taxes	(322)		(340)		(221)		(286)		(201)		(5)		60		(1,169)		(454)		157
Income tax benefit	(166)		(140)		(101)		(190)		(276)		19		(40)		(597)		(378)		58
Income (loss) from continuing operations, net of tax	$	(156)	$	(200)	$	(120)	$	(96)	$	75	(22)		**		$	(572)	$	(76)	**
Selected performance metrics:
Period-end deposits	$	9,764	$	10,204	$	12,180	$	14,775	$	16,037	(4)		(39)		$	9,764	$	16,037	(39)
Average deposits	9,694		10,999		13,418		15,450		16,418		(12)		(41)		12,371		18,998		(35)
Total
Earnings:
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	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	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	**
Selected performance metrics:
Period-end loans held for investment	$	277,340	$	261,390	$	249,597	$	243,131	$	251,624	6		10		$	277,340	$	251,624	10
Average loans held for investment	267,159		253,101		246,463		243,937		247,689		6		8		252,730		253,335		—
Period-end deposits	310,980		305,938		306,308		310,328		305,442		2		2		310,980		305,442		2
Average deposits	307,272		305,035		308,217		305,056		304,513		1		1		306,397		290,835		5

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 14: Notes to Net Interest Margin, Loan, Allowance and Business Segment Disclosures (Tables 6—13)

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

(2)We reclassified $2.6 billion in international partnership loans to held for sale as of June 30, 2021.

(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)Primarily 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)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.

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

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

(10)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.

(11)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.

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

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

** 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, 2021			September 30, 2021			June 30, 2021			March 31, 2021			December 31, 2020
Regulatory Capital Metrics
Common equity excluding AOCI	$	58,206		$	58,705		$	58,969		$	57,607		$	55,299
Adjustments:
AOCI, net of tax(2)	(23)			(33)			(5)			(13)			(29)
Goodwill, net of related deferred tax liabilities	(14,562)			(14,435)			(14,440)			(14,444)			(14,448)
Intangible assets, net of related deferred tax liabilities	(108)			(84)			(76)			(81)			(86)
Other	(12)			(15)			(16)			(18)			—
Common equity Tier 1 capital	$	43,501		$	44,138		$	44,432		$	43,051		$	40,736
Tier 1 capital	$	48,346		$	50,049		$	50,920		$	47,898		$	45,583
Total capital(3)	56,089			57,851			57,932			54,780			52,788
Risk-weighted assets	332,684			318,729			307,334			295,209			297,903
Adjusted average assets(4)	415,141			411,216			411,032			408,596			406,762
Capital Ratios
Common equity Tier 1 capital(5)	13.1		%	13.8		%	14.5		%	14.6		%	13.7		%
Tier 1 capital(6)	14.5			15.7			16.6			16.2			15.3
Total capital(7)	16.9			18.2			18.8			18.6			17.7
Tier 1 leverage(4)	11.6			12.2			12.4			11.7			11.2
Tangible common equity (“TCE”)(8)	9.9			10.4			10.6			10.1			10.0

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.


	2021								2020								Year Ended December 31,
(Dollars in millions, except per share data and as noted)	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1		2021		2020
Adjusted diluted EPS:
Net income (loss) available to common stockholders (GAAP)	$	2,296	$	2,987	$	3,446	$	3,236	$	2,462	$	2,319	$	(1,009)	$	(1,420)	$	11,965	$	2,375
Legal reserve activity, including insurance recoveries	—		45		55		—		(37)		40		265		45		100		313
U.K. Payment Protection Insurance customer refund reserve (“U.K. PPI Reserve”)	—		—		—		—		—		(36)		—		—		—		(36)
Cybersecurity Incident expenses, net of insurance	—		—		—		—		6		6		11		4		—		27
Adjusted net income (loss) available to common stockholders before income tax impacts (non-GAAP)	2,296		3,032		3,501		3,236		2,431		2,329		(733)		(1,371)		12,065		2,679
Income tax impacts	—		(11)		(13)		—		5		(12)		(3)		(12)		(24)		(22)
Dividends and undistributed earnings allocated to participating securities(10)	—		—		—		—		—		—		—		—		—		(2)
Adjusted net income (loss) available to common stockholders (non-GAAP)	$	2,296	$	3,021	$	3,488	$	3,236	$	2,436	$	2,317	$	(736)	$	(1,383)	$	12,041	$	2,655

Diluted weighted-average common shares outstanding (in millions) (GAAP)	424.3		440.5		452.3		460.1		460.2		458.5		456.7		457.6		444.2		458.9

Diluted EPS (GAAP)	$	5.41	$	6.78	$	7.62	$	7.03	$	5.35	$	5.06	$	(2.21)	$	(3.10)	$	26.94	$	5.18
Impact of adjustments noted above	—		0.08		0.09		—		(0.06)		(0.01)		0.60		0.08		0.17		0.61
Adjusted diluted EPS (non-GAAP)	$	5.41	$	6.86	$	7.71	$	7.03	$	5.29	$	5.05	$	(1.61)	$	(3.02)	$	27.11	$	5.79

Adjusted efficiency ratio:
Non-interest expense (GAAP)	$	4,678	$	4,186	$	3,966	$	3,740	$	4,009	$	3,548	$	3,770	$	3,729	$	16,570	$	15,056
Legal reserve activity, including insurance recoveries	—		(45)		(55)		—		37		(40)		(265)		(45)		(100)		(313)
Cybersecurity Incident expenses, net of insurance	—		—		—		—		(6)		(6)		(11)		(4)		—		(27)
Adjusted non-interest expense (non-GAAP)	$	4,678	$	4,141	$	3,911	$	3,740	$	4,040	$	3,502	$	3,494	$	3,680	$	16,470	$	14,716

Total net revenue (GAAP)	$	8,118	$	7,830	$	7,374	$	7,113	$	7,337	$	7,381	$	6,556	$	7,249	$	30,435	$	28,523
U.K. PPI Reserve	—		—		—		—		—		(36)		—		—		—		(36)
Adjusted net revenue (non-GAAP)	$	8,118	$	7,830	$	7,374	$	7,113	$	7,337	$	7,345	$	6,556	$	7,249	$	30,435	$	28,487


	2021								2020								Year Ended December 31,
(Dollars in millions, except per share data and as noted)	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1		2021		2020
Efficiency ratio (GAAP)	57.63%		53.46%		53.78%		52.58%		54.64%		48.07%		57.50%		51.44%		54.44%		52.79%
Impact of adjustments noted above	—bps		(57)bps		(74)bps		—bps		42bps		(39)bps		(421)bps		(67)bps		(32)bps		(113)bps
Adjusted efficiency ratio (non-GAAP)	57.63%		52.89%		53.04%		52.58%		55.06%		47.68%		53.29%		50.77%		54.12%		51.66%

Adjusted operating efficiency ratio:
Operating expense (GAAP)	$	3,679	$	3,435	$	3,346	$	3,239	$	3,446	$	3,265	$	3,497	$	3,238	$	13,699	$	13,446
Legal reserve activity, including insurance recoveries	—		(45)		(55)		—		37		(40)		(265)		(45)		(100)		(313)
Cybersecurity Incident expenses, net of insurance	—		—		—		—		(6)		(6)		(11)		(4)		—		(27)
Adjusted operating expense (non-GAAP)	$	3,679	$	3,390	$	3,291	$	3,239	$	3,477	$	3,219	$	3,221	$	3,189	$	13,599	$	13,106

Total net revenue (GAAP)	$	8,118	$	7,830	$	7,374	$	7,113	$	7,337	$	7,381	$	6,556	$	7,249	$	30,435	$	28,523
U.K. PPI Reserve	—		—		—		—		—		(36)		—		—		—		(36)
Adjusted net revenue (non-GAAP)	$	8,118	$	7,830	$	7,374	$	7,113	$	7,337	$	7,345	$	6,556	$	7,249	$	30,435	$	28,487

Operating efficiency ratio (GAAP)	45.32%		43.87%		45.38%		45.54%		46.97%		44.24%		53.34%		44.67%		45.01%		47.14%
Impact of adjustments noted above	—bps		(57)bps		(75)bps		—bps		42bps		(41)bps		(421)bps		(68)bps		(33)bps		(113)bps
Adjusted operating efficiency ratio (non-GAAP)	45.32%		43.30%		44.63%		45.54%		47.39%		43.83%		49.13%		43.99%		44.68%		46.01%

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.


	2021		2021		2021		2021		2020
(Dollars in millions)	Q4		Q3		Q2		Q1		Q4
Tangible Common Equity (Period-End)
Stockholders’ equity	$	61,029	$	63,544	$	64,624	$	61,188	$	60,204
Goodwill and intangible assets(9)	(14,907)		(14,766)		(14,774)		(14,789)		(14,809)
Noncumulative perpetual preferred stock	(4,845)		(5,912)		(6,488)		(4,847)		(4,847)
Tangible common equity	$	41,277	$	42,866	$	43,362	$	41,552	$	40,548
Tangible Common Equity (Average)
Stockholders’ equity	$	62,498	$	64,682	$	62,376	$	60,623	$	59,389
Goodwill and intangible assets(9)	(14,847)		(14,777)		(14,788)		(14,807)		(14,824)
Noncumulative perpetual preferred stock	(5,552)		(6,452)		(5,491)		(4,847)		(5,168)
Tangible common equity	$	42,099	$	43,453	$	42,097	$	40,969	$	39,397
Tangible Assets (Period-End)
Total assets	$	432,381	$	425,377	$	423,420	$	425,175	$	421,602
Goodwill and intangible assets(9)	(14,907)		(14,766)		(14,774)		(14,789)		(14,809)
Tangible assets	$	417,474	$	410,611	$	408,646	$	410,386	$	406,793
Tangible Assets (Average)
Total assets	$	427,845	$	424,506	$	424,099	$	421,808	$	420,011
Goodwill and intangible assets(9)	(14,847)		(14,777)		(14,788)		(14,807)		(14,824)
Tangible assets	$	412,998	$	409,729	$	409,311	$	407,001	$	405,187

__________

(1)Regulatory capital metrics and capital ratios as of December 31, 2021 are preliminary and therefore subject to change.

(2)Excludes certain components of AOCI as permitted under the Tailoring Rules.

(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)Includes impact of related deferred taxes.

(10)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.