Capital One Reports Fourth Quarter 2022 Net Income of $1.2 billion, or $3.03 per share

Net of adjusting items, Fourth Quarter 2022 Net Income of $2.82 per share(1)

MCLEAN, Va., Jan. 24, 2023  /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2022 of $1.2 billion, or $3.03 per diluted common share, compared with net income of $1.7 billion, or $4.20 per diluted common share in the third quarter of 2022, and with net income of $2.4 billion, or $5.41 per diluted common share in the fourth quarter of 2021. Adjusted net income(1) for the Fourth Quarter of 2022 was $2.82 per diluted common share.

Capital One Financial (PRNewsfoto/Capital One Financial Corporation)

"We posted strong top line growth throughout 2022," said Richard D. Fairbank, Founder, Chairman, and Chief Executive Officer. "As a result of our investments to transform our technology and to drive resilient growth, we're in a strong position to deliver compelling long-term shareholder value and thrive in a broad range of possible economic scenarios."

The quarter included the following adjusting items that increase/(decrease) earnings:

(Dollars in millions, except per share data)

Pre-Tax

Impact

After-Tax
Diluted EPS

Impact

Insurance recoveries and legal reserve activity

$                 (177)

$                 (0.35)

Restructuring Charges

$                     72

$                   0.14

All comparisons below are for the fourth quarter of 2022 compared with the third quarter of 2022 unless otherwise noted.

(1) This is a non-GAAP measure. We believe non-GAAP measures 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.

Fourth Quarter 2022 Income Statement Summary:

  • Total net revenue increased 3 percent to $9.0 billion.
  • Total non-interest expense increased 3 percent to $5.1 billion:
    • 14 percent increase in marketing.
    • less than 1 percent decrease in operating expenses.
  • Pre-provision earnings(1) increased 3 percent to $4.0 billion.
  • Provision for credit losses increased $747 million to $2.4 billion:
    • Net charge-offs of $1.4 billion.
    • $1.0 billion loan reserve build.
  • Net interest margin of 6.84 percent, an increase of 4 basis points.
  • Efficiency ratio of 56.19 percent.
    • Adjusted efficiency ratio(2) of 57.36 percent.
  • Operating efficiency ratio of 43.83 percent.
    • Adjusted operating efficiency ratio(2) of 44.99 percent.

Fourth Quarter 2022 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.5 percent at December 31, 2022.
  • Period-end loans held for investment in the quarter increased $8.4 billion, or 3 percent, to $312.3 billion.
    • Credit Card period-end loans increased $10.8 billion, or 9 percent, to $137.7 billion.
      • Domestic Card period-end loans increased $10.3 billion, or 8 percent, to $131.6 billion.
    • Consumer Banking period-end loans decreased $1.3 billion, or 2 percent, to $79.9 billion.
      • Auto period-end loans decreased $1.2 billion, or 2 percent, to $78.4 billion.
    • Commercial Banking period-end loans decreased $1.2 billion, or 1 percent, to $94.7 billion.
  • Average loans held for investment in the quarter increased $6.7 billion, or 2 percent, to $306.9 billion.
    • Credit Card average loans increased $7.3 billion, or 6 percent, to $130.7 billion.
      • Domestic Card average loans increased $7.3 billion, or 6 percent, to $124.8 billion.
    • Consumer Banking average loans decreased $639 million, or 1 percent, to $80.7 billion.
      • Auto average loans decreased $633 million, or 1 percent, to $79.1 billion.
    • Commercial Banking average loans increased $39 million, or less than 1 percent, to $95.5 billion.
  • Period-end total deposits increased $15.8 billion, or 5 percent, to $333.0 billion, while average deposits increased $14.6 billion, or 5 percent, to $326.6 billion.
  • Interest-bearing deposits rate paid increased 82 basis points to 1.82 percent.

2022 Full Year Income Statement Summary:

  • Total net revenue increased 13% to $34.3 billion.
  • Total non-interest expense increased 16 percent to $19.2 billion:
    • 40 percent increase in marketing.
    • 11 percent increase in operating expenses.
  • Pre-provision earnings(1) increased 9 percent to $15.1 billion.
  • Provision for credit losses increased $7.8 billion to $5.8 billion.
  • Net interest margin of 6.67 percent, an increase of 46 basis points.
  • Efficiency ratio of 55.95 percent.
    • Adjusted efficiency ratio(2) of 56.26 percent.
  • Operating efficiency ratio of 44.22 percent.
    • Adjusted operating efficiency ratio(2) of 44.53 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.

(2) This is a non-GAAP measure. We believe non-GAAP measures 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.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on January 24, 2023 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 7, 2023 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, 2021.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company which, along with its subsidiaries, had $333.0 billion in deposits and $455.2 billion in total assets as of December 31, 2022. 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)

Fourth Quarter 2022

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, 2022 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. See "Table 15 - Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for a reconciliation of any non-GAAP financial measures.

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated













2022 Q4 vs

Year Ended December 31,

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

2022

Q4

2022

Q3

2022

Q2

2022

Q1

2021

Q4

2022

Q3

2021

Q4

2022

2021

2022 vs.

2021

Income Statement



















Net interest income

$     7,197

$     7,003

$     6,517

$     6,397

$     6,450

3 %

12 %

$    27,114

$    24,171

12 %

Non-interest income

1,843

1,802

1,715

1,776

1,668

2

10

7,136

6,264

14

Total net revenue(1)

9,040

8,805

8,232

8,173

8,118

3

11

34,250

30,435

13

Provision (benefit) for credit losses

2,416

1,669

1,085

677

381

45

**

5,847

(1,944)

**

Non-interest expense:



















Marketing

1,118

978

1,003

918

999

14

12

4,017

2,871

40

Operating expense

3,962

3,971

3,580

3,633

3,679

—

8

15,146

13,699

11

Total non-interest expense

5,080

4,949

4,583

4,551

4,678

3

9

19,163

16,570

16

Income from continuing operations before income taxes

1,544

2,187

2,564

2,945

3,059

(29)

(50)

9,240

15,809

(42)

Income tax provision

312

493

533

542

633

(37)

(51)

1,880

3,415

(45)

Income from continuing operations, net of tax

1,232

1,694

2,031

2,403

2,426

(27)

(49)

7,360

12,394

(41)

Income (loss) from discontinued operations, net of tax

—

—

—

—

(1)

—

**

—

(4)

**

Net income

1,232

1,694

2,031

2,403

2,425

(27)

(49)

7,360

12,390

(41)

Dividends and undistributed earnings allocated to participating securities(2)

(14)

(21)

(25)

(28)

(21)

(33)

(33)

(88)

(105)

(16)

Preferred stock dividends

(57)

(57)

(57)

(57)

(74)

—

(23)

(228)

(274)

(17)

Issuance cost for redeemed preferred stock(3)

—

—

—

—

(34)

—

**

—

(46)

**

Net income available to common stockholders

$     1,161

$     1,616

$     1,949

$     2,318

$     2,296

(28)

(49)

$      7,044

$    11,965

(41)

Common Share Statistics



















Basic earnings per common share:(2)



















Net income from continuing operations

$       3.03

$       4.21

$       4.98

$       5.65

$       5.43

(28) %

(44) %

$      17.98

$      27.05

(34) %

Income (loss) from discontinued operations

—

—

—

—

—

—

—

—

(0.01)

**

Net income per basic common share

$       3.03

$       4.21

$       4.98

$       5.65

$       5.43

(28)

(44)

$      17.98

$      27.04

(34)

Diluted earnings per common share:(2)



















Net income from continuing operations

$       3.03

$       4.20

$       4.96

$       5.62

$       5.41

(28) %

(44) %

$      17.91

$      26.95

(34) %

Income (loss) from discontinued operations

—

—

—

—

—

—

—

—

(0.01)

**

Net income per diluted common share

$       3.03

$       4.20

$       4.96

$       5.62

$       5.41

(28)

(44)

$      17.91

$      26.94

(34)

Weighted-average common shares outstanding (in millions):



















Basic

382.6

383.4

391.2

410.4

422.5

—

(9) %

391.8

442.5

(11) %

Diluted

383.7

384.6

392.6

412.2

424.3

—

(10)

393.2

444.2

(11)

Common shares outstanding (period-end, in millions)

381.3

382.0

383.8

399.0

413.9

—

(8)

381.3

413.9

(8)

Dividends declared and paid per common share

$        0.60

$        0.60

$       0.60

$       0.60

$       0.60

—

—

$        2.40

$        2.60

(8)

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

86.11

81.38

87.84

91.77

99.74

6 %

(14)

86.11

99.74

(14)













2022 Q4 vs

Year Ended December 31,

(Dollars in millions)

2022

Q4

2022

Q3

2022

Q2

2022

Q1

2021

Q4

2022

Q3

2021

Q4

2022

2021

2022 vs.

2021

Balance Sheet (Period-End)



















Loans held for investment

$  312,331

$  303,943

$  296,384

$  280,466

$  277,340

3 %

13 %

$  312,331

$  277,340

13 %

Interest-earning assets

427,248

415,262

406,565

398,241

397,341

3

8

427,248

397,341

8

Total assets

455,249

444,232

440,288

434,195

432,381

2

5

455,249

432,381

5

Interest-bearing deposits

300,789

282,802

270,881

275,648

272,937

6

10

300,789

272,937

10

Total deposits

332,992

317,193

307,885

313,429

310,980

5

7

332,992

310,980

7

Borrowings

48,715

54,607

58,938

45,358

43,086

(11)

13

48,715

43,086

13

Common equity

47,737

46,015

48,564

51,499

56,184

4

(15)

47,737

56,184

(15)

Total stockholders' equity

52,582

50,861

53,410

56,345

61,029

3

(14)

52,582

61,029

(14)

Balance Sheet (Average Balances)



















Loans held for investment

$  306,881

$  300,186

$  286,110

$  275,342

$  267,159

2 %

15 %

$  292,238

$  252,730

16 %

Interest-earning assets

421,051

412,171

398,934

394,082

390,868

2

8

406,646

389,336

4

Total assets

449,659

447,088

435,327

430,372

427,845

1

5

440,538

424,521

4

Interest-bearing deposits

292,793

275,900

268,104

271,823

269,951

6

8

277,208

271,500

2

Total deposits

326,558

311,928

305,954

309,597

307,272

5

6

313,551

306,397

2

Borrowings

49,747

58,628

53,208

42,277

39,943

(15)

25

51,006

38,590

32

Common equity

47,594

49,696

49,319

54,591

56,946

(4)

(16)

50,279

56,966

(12)

Total stockholders' equity

52,439

54,541

54,165

59,437

62,498

(4)

(16)

55,125

62,556

(12)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated













2022 Q4 vs

Year Ended December 31,

(Dollars in millions, except as noted)

2022

Q4

2022

Q3

2022

Q2

2022

Q1

2021

Q4

2022

Q3

2021

Q4

2022

2021

2022 vs.

2021

Performance Metrics

















Net interest income growth (period over period)

3 %

7 %

2 %

(1 %)

5 %

**

**

12 %

5 %

**

Non-interest income growth (period over period)

2

5

(3)

6

—

**

**

14

12

**

Total net revenue growth (period over period)

3

7

1

1

4

**

**

13

7

**

Total net revenue margin(5)

8.59

8.55

8.25

8.30

8.31

4 bps

28 bps

8.42

7.82

60 bps

Net interest margin(6)

6.84

6.80

6.54

6.49

6.60

4

24

6.67

6.21

46

Return on average assets

1.10

1.52

1.87

2.23

2.27

(42)

(117)

1.67

2.92

(125)

Return on average tangible assets(7)

1.13

1.57

1.93

2.31

2.35

(44)

(122)

1.73

3.03

(130)

Return on average common equity(8)

9.76

13.01

15.81

16.98

16.13

(325)

(6) %

14.01

21.01

(7) %

Return on average tangible common equity(9)

14.22

18.59

22.63

23.36

21.82

(4) %

(8)

19.91

28.39

(8)

Efficiency ratio(10)

56.19

56.21

55.67

55.68

57.63

(2) bps

(144) bps

55.95

54.44

151 bps

Operating efficiency ratio(11)

43.83

45.10

43.49

44.45

45.32

(127)

(149)

44.22

45.01

(79)

Effective income tax rate for continuing operations


20.2

22.5

20.8

18.4

20.7

(230)

(50)

20.3

21.6

(130)

Employees (period-end, in thousands)

56.0

55.1

53.6

51.5

50.8

2 %

10 %

56.0

50.8

10 %

Credit Quality Metrics



















Allowance for credit losses

$    13,240

$    12,209

$    11,491

$    11,308

$    11,430

8 %

16 %

$    13,240

$    11,430

16 %

Allowance coverage ratio

4.24 %

4.02 %

3.88 %

4.03 %

4.12 %

22 bps

12 bps

4.24 %

4.12 %

12 bps

Net charge-offs

$      1,430

$         931

$         845

$         767

$         527

54 %

171 %

$      3,973

$      2,234

78 %

Net charge-off rate(12)

1.86 %

1.24 %

1.18 %

1.11 %

0.79 %

62 bps

107 bps

1.36 %

0.88 %

48 bps

30+ day performing delinquency rate

2.96

2.58

2.36

2.08

2.25

38

71

2.96

2.25

71

30+ day delinquency rate

3.21

2.78

2.54

2.21

2.41

43

80

3.21

2.41

80

Capital Ratios(13)



















Common equity Tier 1 capital 

12.5 %

12.2 %

12.1 %

12.7 %

13.1 %

30 bps

(60) bps

12.5 %

13.1 %

(60) bps

Tier 1 capital

13.9

13.6

13.5

14.1

14.5

30

(60)

13.9

14.5

(60)

Total capital

15.8

15.7

15.7

16.4

16.9

10

(110)

15.8

16.9

(110)

Tier 1 leverage

11.1

11.0

11.1

11.3

11.6

10

(50)

11.1

11.6

(50)

Tangible common equity ("TCE")(14)

7.5

7.2

7.9

8.7

9.9

30

(240)

7.5

9.9

(240)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income













2022 Q4 vs

Year Ended December 31,

(Dollars in millions, except as noted)

2022

Q4

2022

Q3

2022

Q2

2022

Q1

2021

Q4

2022

Q3

2021

Q4

2022

2021

2022 vs.

2021

Interest income:


















Loans, including loans held for sale

$      8,360

$      7,578

$      6,605

$      6,367

$      6,451

10 %

30 %

$   28,910

$   24,263

19 %

Investment securities

548

499

435

402

368

10

49

1,884

1,446

30

Other

250

123

55

15

12

103

**

443

60

**

Total interest income

9,158

8,200

7,095

6,784

6,831

12

34

31,237

25,769

21

Interest expense:



















Deposits

1,335

689

293

218

222

94

**

2,535

956

165

Securitized debt obligations

170

120

65

29

30

42

**

384

119

**

Senior and subordinated notes

430

319

194

131

121

35

**

1,074

488

120

Other borrowings

26

69

26

9

8

(62)

**

130

35

**

Total interest expense

1,961

1,197

578

387

381

64

**

4,123

1,598

158

Net interest income

7,197

7,003

6,517

6,397

6,450

3

12

27,114

24,171

12

Provision (benefit) for credit losses

2,416

1,669

1,085

677

381

45

**

5,847

(1,944)

**

Net interest income after provision for credit losses

4,781

5,334

5,432

5,720

6,069

(10)

(21)

21,267

26,115

(19)

Non-interest income:



















Interchange fees, net

1,177

1,195

1,201

1,033

1,005

(2)

17

4,606

3,860

19

Service charges and other customer-related fees

395

415

415

400

435

(5)

(9)

1,625

1,578

3

Other

271

192

99

343

228

41

19

905

826

10

Total non-interest income

1,843

1,802

1,715

1,776

1,668

2

10

7,136

6,264

14

Non-interest expense:



















Salaries and associate benefits

2,266

2,187

1,946

2,026

1,941

4

17

8,425

7,421

14

Occupancy and equipment

554

502

481

513

527

10

5

2,050

2,003

2

Marketing

1,118

978

1,003

918

999

14

12

4,017

2,871

40

Professional services

481

471

458

397

449

2

7

1,807

1,440

25

Communications and data processing

352

349

339

339

326

1

8

1,379

1,262

9

Amortization of intangibles

25

17

14

14

13

47

92

70

29

141

Other

284

445

342

344

423

(36)

(33)

1,415

1,544

(8)

Total non-interest expense

5,080

4,949

4,583

4,551

4,678

3

9

19,163

16,570

16

Income from continuing operations before income taxes

1,544

2,187

2,564

2,945

3,059

(29)

(50)

9,240

15,809

(42)

Income tax provision

312

493

533

542

633

(37)

(51)

1,880

3,415

(45)

Income from continuing operations, net of tax

1,232

1,694

2,031

2,403

2,426

(27)

(49)

7,360

12,394

(41)

Income (loss) from discontinued operations, net of tax

—

—

—

—

(1)

—

**

—

(4)

**

Net income

1,232

1,694

2,031

2,403

2,425

(27)

(49)

7,360

12,390

(41)

Dividends and undistributed earnings allocated to participating securities(2)

(14)

(21)

(25)

(28)

(21)

(33)

(33)

(88)

(105)

(16)

Preferred stock dividends

(57)

(57)

(57)

(57)

(74)

—

(23)

(228)

(274)

(17)

Issuance cost for redeemed preferred stock(3)

—

—

—

—

(34)

—

**

—

(46)

**

Net income available to common stockholders

$      1,161

$      1,616

$      1,949

$      2,318

$      2,296

(28)

(49)

$    7,044

$   11,965

(41)











































































2022 Q4 vs

Year Ended December 31,


2022

Q4

2022

Q3

2022

Q2

2022

Q1

2021

Q4

2022

Q3

2021

Q4

2022

2021

2022 vs.

2021

Basic earnings per common share:(2)



















Net income from continuing operations

$        3.03

$        4.21

$        4.98

$        5.65

$        5.43

(28) %

(44) %

$    17.98

$     27.05

(34) %

Income (loss) from discontinued operations

—

—

—

—

—

—

—

—

(0.01)

**

Net income per basic common share

$        3.03

$        4.21

$        4.98

$        5.65

$        5.43

(28)

(44)

$    17.98

$     27.04

(34)

Diluted earnings per common share:(2)