Capital One Reports Second Quarter 2021 Net Income of $3.5 billion, or $7.62 per share

·9 min read

Excluding adjusting items, Second Quarter 2021 Net Income of $7.71 per share(1)

MCLEAN, Va., July 22, 2021 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2021 of $3.5 billion, or $7.62 per diluted common share, compared with net income of $3.3 billion, or $7.03 per diluted common share in the first quarter of 2021, and with a net loss of $918 million, or $2.21 per diluted common share in the second quarter of 2020. Excluding adjusting items, net income for the second quarter of 2021 was $7.71 per diluted common share.(1)

"We are seeing increasing near-term opportunities to build our franchise as we emerge from the pandemic," said Richard D. Fairbank, Founder, Chairman and Chief Executive Officer. "Our modern technology is powering our current performance and setting us up to capitalize on the accelerating digital revolution in banking."

The quarter included the following adjusting item:

(Dollars in millions, except per share data)

Pre-Tax

Impact

Diluted EPS

Impact



Legal reserve build

$

55


$

0.09











All comparisons below are for the second quarter of 2021 compared with the first quarter of 2021 unless otherwise noted.

Second Quarter 2021 Income Statement Summary:

  • Total net revenue increased 4 percent to $7.4 billion.

  • Total non-interest expense increased 6 percent to $4.0 billion:

  • Pre-provision earnings increased 1 percent to $3.4 billion.(2)

  • Provision (benefit) for credit losses decreased $337 million to $(1.2) billion:

  • Net interest margin of 5.89 percent, a decrease of 10 basis points.

  • Efficiency ratio of 53.78 percent.

  • Operating efficiency ratio of 45.38 percent.

Second Quarter 2021 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 14.5 percent at June 30, 2021.

  • Period-end loans held for investment in the quarter increased $6.5 billion, or 3 percent, to $249.6 billion.

  • Average loans held for investment in the quarter increased $2.5 billion, or 1 percent, to $246.5 billion.

  • Period-end total deposits decreased $4.0 billion, or 1 percent, to $306.3 billion, while average deposits increased $3.2 billion, or 1 percent, to $308.2 billion.

  • Interest-bearing deposits rate paid decreased 4 basis points to 0.35 percent.

(1)

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

(2)

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

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on July 22, 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 August 5, 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, 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 $306.3 billion in deposits and $423.4 billion in total assets as of June 30, 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.


Exhibit 99.2


Capital One Financial Corporation

Financial Supplement(1)(2)

Second 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

7


Table 5:

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

10


Table 6:

Average Balances, Net Interest Income and Net Interest Margin

11


Table 7:

Loan Information and Performance Statistics

12


Table 8:

Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity

14

Business Segment Results



Table 9:

Financial Summary—Business Segment Results

15


Table 10:

Financial & Statistical Summary—Credit Card Business

16


Table 11:

Financial & Statistical Summary—Consumer Banking Business

18


Table 12:

Financial & Statistical Summary—Commercial Banking Business

19


Table 13:

Financial & Statistical Summary—Other and Total

20

Other



Table 14:

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

21


Table 15:

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

22

__________

(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 Quarterly Report on Form 10-Q for the period ended June 30, 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 Q2 vs.


Six Months Ended June 30,

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


2021


2021


2020


2020


2020


2021


2020






2021 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2021


2020


2020

Income Statement





















Net interest income


$

5,743



$

5,822



$

5,873



$

5,555



$

5,460



(1)

%


5

%


$

11,565



$

11,485



1

%

Non-interest income


1,631



1,291



1,464



1,826



1,096



26



49



2,922



2,320



26


Total net revenue(1)


7,374



7,113



7,337



7,381



6,556



4



12



14,487



13,805



5


Provision (benefit) for credit losses


(1,160)



(823)



264



331



4,246



41



**



(1,983)



9,669



**


Non-interest expense:





















Marketing


620



501



563



283



273



24



127



1,121



764



47


Operating expense


3,346



3,239



3,446



3,265



3,497



3



(4)



6,585



6,735



(2)


Total non-interest expense


3,966



3,740



4,009



3,548



3,770



6



5



7,706



7,499



3


Income (loss) from continuing operations before income taxes


4,568



4,196



3,064



3,502



(1,460)



9



**



8,764



(3,363)



**


Income tax provision (benefit)


1,031



869



496



1,096



(543)



19



**



1,900



(1,106)



**


Income (loss) from continuing operations, net of tax


3,537



3,327



2,568



2,406



(917)



6



**



6,864



(2,257)



**


Loss from discontinued operations, net of tax


(1)



(2)



(2)





(1)



(50)





(3)



(1)



**


Net income (loss)


3,536



3,325



2,566



2,406



(918)



6



**



6,861



(2,258)



**


Dividends and undistributed earnings allocated to participating securities(2)


(30)



(28)



(19)



(20)



(1)



7



**



(58)



(4)



**


Preferred stock dividends


(60)



(61)



(68)



(67)



(90)



(2)



(33)



(121)



(145)



(17)


Issuance cost for redeemed preferred stock(3)






(17)













(22)



**


Net income (loss) available to common stockholders


$

3,446



$

3,236



$

2,462



$

2,319



$

(1,009)



6



**



$

6,682



$

(2,429)



**


Common Share Statistics





















Basic earnings per common share:(2)





















Net income (loss) from continuing operations


$

7.65



$

7.06



$

5.36



$

5.07



$

(2.21)



8

%


**



$

14.70



$

(5.31)



**


Net income (loss) per basic common share


$

7.65



$

7.06



$

5.36



$

5.07



$

(2.21)



8



**



$

14.70



$

(5.31)



**


Diluted earnings per common share:(2)





















Net income (loss) from continuing operations


$

7.62



$

7.03



$

5.35



$

5.06



$

(2.21)



8



**



$

14.65



$

(5.31)



**


Net income (loss) per diluted common share


$

7.62



$

7.03



$

5.35



$

5.06



$

(2.21)



8



**



$

14.65



$

(5.31)



**


Weighted-average common shares outstanding (in millions):





















Basic


450.6



458.6



459.1

...

457.8



456.7



(2)



(1)

%


454.6



457.1



(1)

%

Diluted


452.3



460.1



460.2



458.5



456.7



(2)



(1)



456.2



457.1




Common shares outstanding (period-end, in millions)


446.1



456.8



459.0



457.4



456.3



(2)



(2)



446.1



456.3



(2)


Dividends declared and paid per common share


$

0.40



$

0.40



$

0.10



$

0.10



$

0.40







$

0.80



$

0.80




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


97.20



90.96



88.34



83.67



78.82



7



23



97.20



78.82



23















2021 Q2 vs.


Six Months Ended June 30,

(Dollars in millions)


2021


2021


2020


2020


2020


2021


2020






2021 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2021


2020


2020

Balance Sheet (Period-End)





















Loans held for investment


$

249,597



$

243,131



$

251,624



$

248,223



$

251,512



3

%


(1)

%


$

249,597



$

251,512



(1)

%

Interest-earning assets


387,295



392,485



388,917



390,040



389,829



(1)



(1)



387,295



389,829



(1)


Total assets


423,420



425,175



421,602



421,883



421,296





1



423,420



421,296



1


Interest-bearing deposits


271,314



276,325



274,300



276,092



275,183



(2)



(1)



271,314



275,183



(1)


Total deposits


306,308



310,328



305,442



305,725



304,238



(1)



1



306,308



304,238



1


Borrowings


36,343



38,450



40,539



42,795



44,900



(5)



(19)



36,343



44,900



(19)


Common equity


58,136



56,341



55,356



53,093



50,835



3



14



58,136



50,835



14


Total stockholders' equity


64,624



61,188



60,204



58,424



56,045



6



15



64,624



56,045



15


Balance Sheet (Average Balances)





















Loans held for investment


$

246,463



$

243,937



$

247,689



$

249,511



$

253,358



1

%


(3)

%


$

245,207



$

258,124



(5)

%

Interest-earning assets


390,129



388,572



388,252



391,451



378,145





3



389,355



366,746



6


Total assets


424,099



421,808



420,011



422,854



411,075



1



3



422,959



400,845



6


Interest-bearing deposits


273,476



273,358



274,142



276,339



261,256





5



273,417



251,185



9


Total deposits


308,217



305,056



304,513



305,516



288,344



1



7



306,645



276,498



11


Borrowings


37,054



39,911



40,662



44,161



49,827



(7)



(26)



38,475



50,810



(24)


Common equity


56,885



55,775



54,220



51,995



52,413



2



9



56,333



52,799



7


Total stockholders' equity


62,376



60,623



59,389



57,223



57,623



3



8



61,504



58,096



6


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated













2021 Q2 vs.


Six Months Ended June 30,

(Dollars in millions, except as noted)


2021


2021


2020


2020


2020


2021


2020






2021 vs.


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2021


2020


2020

Performance Metrics





















Net interest income growth (period over period)


(1)

%


(1)

%


6

%


2

%


(9)

%


**



**



1

%




**


Non-interest income growth (period over period)


26



(12)



(20)



67



(10)



**



**



26



(13)

%


**


Total net revenue growth (period over period)


4



(3)



(1)



13



(10)



**



**



5



(3)



**


Total net revenue margin(5)


7.56



7.32



7.56



7.54



6.93



24

bps


63

bps


7.44



7.53



(9)

bps

Net interest margin(6)


5.89



5.99



6.05



5.68



5.78



(10)



11



5.94



6.26



(32)


Return on average assets


3.34



3.16



2.45



2.28



(0.89)



18



4

%


3.25



(1.13)



4

%

Return on average tangible assets(7)


3.46



3.27



2.54



2.36



(0.93)



19



4



3.36



(1.17)



5


Return on average common equity(8)


24.24



23.22



18.18



17.84



(7.69)



102



32



23.73



(9.20)



33


Return on average tangible common equity(9)


32.75



31.61



25.02



24.98



(10.74)



114



43



32.19



(12.81)



45


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


6.44



6.13



6.47



5.69



5.95



31



49

bps


6.29



5.81



48

bps

Efficiency ratio(10)


53.78



52.58



54.64



48.07



57.50



120



(4)

%


53.19



54.32



(113)


Operating efficiency ratio(11)


45.38



45.54



46.97



44.24



53.34



(16)



(8)



45.45



48.79



(334)


Effective income tax rate for continuing operations


22.6



20.7



16.2



31.3



37.2



190



(15)



21.7



32.9



(11)

%

Employees (period-end, in thousands)


52.0



51.7



52.0



52.5



53.1



1

%


(2)



52.0



53.1



(2)


Credit Quality Metrics





















Allowance for credit losses


$

12,346



$

14,017



$

15,564



$

16,129



$

16,832



(12)

%


(27)

%


$

12,346



$

16,832



(27)

%

Allowance coverage ratio


4.95

%


5.77

%


6.19

%


6.50

%


6.69

%


(82)

bps


(174)

bps


4.95

%


6.69

%


(174)

bps

Net charge-offs


$

541



$

740



$

856



$

1,073



$

1,505



(27)

%


(64)

%


$

1,281



$

3,296



(61)

%

Net charge-off rate(12)


0.88

%


1.21

%


1.38

%


1.72

%


2.38

%


(33)

bps


(150)

bps


1.04

%


2.55

%


(151)

bps

30+ day performing delinquency rate(13)


1.75



1.82



2.41



1.97



2.09



(7)



(34)



1.75



2.09



(34)


30+ day delinquency rate(13)


1.89



1.98



2.61



2.22



2.30



(9)



(41)



1.89



2.30



(41)


Capital Ratios(14)





















Common equity Tier 1 capital


14.5

%


14.6

%


13.7

%


13.0

%


12.4

%


(10)

bps


210

bps


14.5

%


12.4

%


210

bps

Tier 1 capital


16.6



16.2



15.3



14.8



14.2



40



240



16.6



14.2



240


Total capital


18.8



18.6



17.7



17.3



16.7



20



210



18.8



16.7



210


Tier 1 leverage


12.4



11.7



11.2



10.6



10.3



70



210



12.4



10.3



210


Tangible common equity ("TCE")(15)


10.6



10.1



10.0



9.4



8.8



50



180



10.6



8.8



180


CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income













2021 Q2 vs.


Six Months Ended June 30,



2021


2021


2020


2020


2020


2021


2020






2021 vs.

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


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2021


2020


2020

Interest income:





















Loans, including loans held for sale


$

5,753



$

5,854



$

5,954



$

5,758



$

5,820



(2)

%


(1)

%


$

11,607



$

12,362



(6)

%

Investment securities


370



391



422



443



482



(5)



(23)



761



1,012



(25)


Other


16



16



15



14



16







32



53



(40)


Total interest income


6,139



6,261



6,391



6,215



6,318



(2)



(3)



12,400



13,427



(8)


Interest expense:





















Deposits


237



269



347



476



611



(12)



(61)



506



1,342



(62)


Securitized debt obligations


28



32



34



43



56



(13)



(50)



60



155



(61)


Senior and subordinated notes


122



129



128



132



180



(5)



(32)



251



419



(40)


Other borrowings


9



9



9



9



11





(18)



18



26



(31)


Total interest expense


396



439



518



660



858



(10)



(54)



835



1,942



(57)


Net interest income


5,743



5,822



5,873



5,555



5,460



(1)



5



11,565



11,485



1


Provision (benefit) for credit losses


(1,160)



(823)



264



331



4,246



41



**



(1,983)



9,669



**


Net interest income after provision for credit losses


6,903



6,645



5,609



5,224



1,214



4



**



13,548



1,816



**


Non-interest income:





















Interchange fees, net


1,016



817



818



775



672



24



51



1,833



1,424



29


Service charges and other customer-related fees


384



352



338



320



258



9



49



736



585



26


Net securities gains




4





25





**





4





**


Other


231



118



308



706



166



96



39



349



311



12


Total non-interest income


1,631



1,291



1,464



1,826



1,096



26



49



2,922



2,320



26


Non-interest expense:





















Salaries and associate benefits


1,781



1,847



1,755



1,719



1,704



(4)



5



3,628



3,331



9


Occupancy and equipment


523



472



572



506



523



11





995



1,040



(4)


Marketing


620



501



563



283



273



24



127



1,121



764



47


Professional services


341



292



394



327



304



17



12



633



591



7


Communications and data processing


315



302



295



310



308



4



2



617



610



1


Amortization of intangibles


5



6



8



14



16



(17)



(69)



11



38



(71)


Other


381



320



422



389



642



19



(41)



701



1,125



(38)


Total non-interest expense


3,966



3,740



4,009



3,548



3,770



6



5



7,706



7,499



3


Income (loss) from continuing operations before income taxes


4,568



4,196



3,064



3,502



(1,460)



9



**



8,764



(3,363)



**


Income tax provision (benefit)


1,031



869



496



1,096



(543)



19



**



1,900



(1,106)



**


Income (loss) from continuing operations, net of tax


3,537



3,327



2,568



2,406



(917)



6



**



6,864



(2,257)



**


Loss from discontinued operations, net of tax


(1)



(2)



(2)





(1)



(50)





(3)



(1)



**


Net income (loss)


3,536



3,325



2,566



2,406



(918)



6



**



6,861



(2,258)



**


Dividends and undistributed earnings allocated to participating securities(2)


(30)



(28)



(19)



(20)



(1)



7



**



(58)



(4)



**


Preferred stock dividends


(60)



(61)



(68)



(67)



(90)



(2)



(33)



(121)



(145)



(17)


Issuance cost for redeemed preferred stock(3)






(17)













(22)



**


Net income (loss) available to common stockholders


$

3,446



$

3,236



$

2,462



$

2,319



$

(1,009)



6



**



$

6,682



$

(2,429)



**



































2021 Q2 vs.


Six Months Ended June 30,



2021


2021


2020


2020


2020


2021


2020






2021 vs.

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


Q2


Q1


Q4


Q3


Q2


Q1


Q2


2021


2020


2020

Basic earnings per common share:(2)





















Net income (loss) from continuing operations


$

7.65



$

7.06



$

5.36



$

5.07



$

(2.21)



8

%


**



$

14.70



$

(5.31)



**


Net income (loss) per basic common share


$

7.65



$

7.06



$

5.36



$

5.07



$

(2.21)



8



**



$

14.70



$

(5.31)



**


Diluted earnings per common share:(2)





















Net income (loss) from continuing operations


$

7.62



$

7.03



$

5.35



$

5.06



$

(2.21)



8



**



$

14.65



$

(5.31)



**


Net income (loss) per diluted common share


$

7.62



$

7.03



$

5.35



$

5.06



$

(2.21)



8



**



$

14.65



$

(5.31)



**


Weighted-average common shares outstanding (in millions):





















Basic common shares


450.6



458.6



459.1



457.8



456.7



(2)



(1)

%


454.6



457.1



(1)

%

Diluted common shares


452.3



460.1



460.2



458.5



456.7



(2)



(1)



456.2



457.1




CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets













2021 Q2 vs.



2021


2021


2020


2020


2020


2021


2020

(Dollars in millions)


Q2


Q1


Q4


Q3


Q2


Q1


Q2

Assets:















Cash and cash equivalents:















Cash and due from banks


$

5,312



$

4,670



$

4,708



$

4,267



$

4,583



14

%


16

%

Interest-bearing deposits and other short-term investments


29,534



45,825



35,801



39,839



51,235



(36)



(42)


Total cash and cash equivalents


34,846



50,495



40,509



44,106



55,818



(31)



(38)


Restricted cash for securitization investors


242



1,779



262



895



740



(86)



(67)


Securities available for sale


101,766



99,165



100,445



99,853



87,859



3



16


Loans held for investment:















Unsecuritized loans held for investment


226,130



219,182



225,698



217,878



222,310



3



2


Loans held in consolidated trusts


23,467



23,949



25,926



30,345



29,202



(2)



(20)


Total loans held for investment


249,597



243,131



251,624



248,223



251,512



3



(1)


Allowance for credit losses


(12,346)



(14,017)



(15,564)



(16,129)



(16,832)



(12)



(27)


Net loans held for investment


237,251



229,114



236,060



232,094



234,680



4



1


Loans held for sale


6,522



2,896



2,710



3,433



711



125



**


Premises and equipment, net


4,227



4,277



4,287



4,333



4,324



(1)



(2)


Interest receivable


1,372



1,380



1,471



1,551



1,574



(1)



(13)


Goodwill


14,654



14,654



14,653



14,648



14,645






Other assets


22,540



21,415



21,205



20,970



20,945



5



8


Total assets


$

423,420



$

425,175



$

421,602



$

421,883



$

421,296





1














2021 Q2 vs.



2021


2021


2020


2020


2020


2021


2020

(Dollars in millions)


Q2


Q1


Q4


Q3


Q2


Q1


Q2

Liabilities:















Interest payable


$

301



$

288



$

352



$

332



$

380



5

%


(21)

%

Deposits:















Non-interest-bearing deposits


34,994



34,003



31,142



29,633



29,055



3



20


Interest-bearing deposits


271,314



276,325



274,300



276,092



275,183



(2)



(1)


Total deposits


306,308



310,328



305,442



305,725



304,238



(1)



1


Securitized debt obligations


10,561



12,071



12,414



13,566



15,761



(13)