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)