Capital One Financial Corporation (NYSE:COF) Q4 2019 Earnings Conference Call - Final Transcript

Jan 21, 2020 • 05:00 pm ET


Capital One Financial Corporation (NYSE:COF) Q4 2019 Earnings Conference Call - Final Transcript


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Welcome to the Capital One Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions] This conference is being recorded. Thank you.

I would now like to turn the call over to Mr. Jeff Norris, Senior Vice President of Global Finance. Sir, you may begin.

Jeff Norris

Thanks very much, Matt, and welcome everyone to Capital One's fourth quarter 2019 earnings confernece call. As usual, we are webcasting live over the Internet. To access the call on the Internet, please log on to Capital One's website at and follow the links from there. In addition to the press release and financials, we have included a presentation summarizing our fourth quarter 2019 results.

With me this evening are Mr. Richard Fairbank, Capital One's Chairman and Chief Executive Officer and Mr. Scott Blackley, Capital One's Chief Financial Officer. Rich and Scott are going to walk you through the presentation. To access a copy of the presentation and press release, please go to Capital One's website, click on Investors and then click on Quarterly Earnings Release.

Please note that this presentation may contain forward-looking statements. Information regarding Capital One's financial performance and any forward-looking statements contained in today's discussion and the materials speak only as of the particular date or dates indicated in the materials. Capital One does not undertake any obligation to update or revise any of this information whether as a result of new information, future events or otherwise. Numerous factors could cause our actual results to differ materially from those described in forward-looking statements. And for more information on these factors, please see the section titled Forward-looking Information in the earnings press release presentation and the Risk Factors section in our annual and quarterly reports accessible at the Capital One website and filed with the SEC.

And with that, I'll turn the call over to Mr. Blackley. Scott?

Scott Blackley

Thanks, Jeff. I'll begin tonight with Slide 3. Capital One earned $5.5 billion, or $11.05 per diluted common share in 2019. On an adjusted basis, earnings per share were $12.09 for 2019. In the fourth quarter net income was $1.2 billion, or $2.25 per share. Net of adjusting items, our EPS in the quarter was $2.49 per share. We had three adjusting items in the quarter, which are outlined on Slide 14 of our earnings presentation.

First, we had a $48 million or $0.08 per share expense of launch and integration costs associated with our Walmart partnership. This brings the full-year total expense to $211 million and concludes the one-time expenses related to the Walmart partnership launch. Additionally, we had an allowance reserve build for the acquired Walmart portfolio of $84 million or $0.13 per share. The reserve build as well as the launch and integration costs are recorded in our domestic card business. Lastly, we had $23 million of charges related to the cyber incident that we announced at the end of July. These charges were partially offset by an insurance reimbursement receivable of $7 million resulting in a net impact of $16 million or