Capital One Reports Fourth Quarter 2023 Net Income of $706 million, or $1.67 per share

Net of adjusting items, Fourth Quarter 2023 Net Income of $2.24 per share(1)

MCLEAN, Va., Jan. 25, 2024 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the fourth quarter of 2023 of $706 million, or $1.67 per diluted common share, compared with net income of $1.8 billion, or $4.45 per diluted common share in the third quarter of 2023, and with net income of $1.2 billion, or $3.03 per diluted common share in the fourth quarter of 2022. Adjusted net income(1) for the fourth quarter of 2023 was $2.24 per diluted common share.

Capital One Financial

"We delivered solid results with strong top line growth in 2023," said Richard D. Fairbank, Founder, Chairman, and Chief Executive Officer. "Our modern technology capabilities are driving resilient growth, enabling efficiency improvement, and putting us in a strong position to deliver long-term shareholder value."

The quarter included the following adjusting item:

(Dollars in millions, except per share data)

Pre-Tax

Impact

After-Tax
Diluted EPS

Impact



FDIC special assessment

$                 289

$                 0.57


 

All comparisons below are for the fourth quarter of 2023 compared with the third quarter of 2023 unless otherwise noted.

Fourth Quarter 2023 Income Statement Summary:

  • Total net revenue increased 1 percent to $9.5 billion.
  • Total non-interest expense increased 18 percent to $5.7 billion:
    • 29 percent increase in marketing.
    • 15 percent increase in operating expenses.
  • Pre-provision earnings(2)  decreased 16 percent to $3.8 billion.
  • Provision for credit losses increased $573 million to $2.9 billion:
    • Net charge-offs of $2.5 billion.
    • $326 million loan reserve build.
  • Net interest margin of 6.73 percent, an increase of 4 basis points.
  • Efficiency ratio of 60.14 percent.
    • Adjusted efficiency ratio(1) of 57.10 percent.
  • Operating efficiency ratio of 46.95 percent.
    • Adjusted operating efficiency ratio(1) of 43.91 percent.

Fourth Quarter 2023 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.9 percent at December 31, 2023.
  • Period-end loans held for investment in the quarter increased $5.7 billion, or 2 percent, to $320.5 billion.
    • Credit Card period-end loans increased $7.8 billion, or 5 percent, to $154.5 billion.
      • Domestic Card period-end loans increased $7.3 billion, or 5 percent, to $147.7 billion.
    • Consumer Banking period-end loans decreased $1.4 billion, or 2 percent, to $75.4 billion.
      • Auto period-end loans decreased $1.4 billion, or 2 percent, to $74.1 billion.
    • Commercial Banking period-end loans decreased $665 million, or 1 percent, to $90.5 billion.
  • Average loans held for investment in the quarter increased $3.1 billion, or 1 percent, to $315.9 billion.
    • Credit Card average loans increased $4.6 billion, or 3 percent, to $148.6 billion.
      • Domestic Card average loans increased $4.6 billion, or 3 percent, to $142.1 billion.
    • Consumer Banking average loans decreased $916 million, or 1 percent, to $76.2 billion.
      • Auto average loans decreased $879 million, or 1 percent, to $74.9 billion.
    • Commercial Banking average loans decreased $531 million, or 1 percent, to $91.0 billion.
  • Period-end total deposits increased $2.4 billion, or 1 percent, to $348.4 billion, while average deposits increased $315 million, or less than 1 percent, to $345.3 billion.
  • Interest-bearing deposits rate paid increased 17 basis points to 3.47 percent.

2023 Full Year Income Statement Summary:

  • Total net revenue increased 7 percent to $36.8 billion.
  • Total non-interest expense increased 6 percent to $20.3 billion:
    • Marketing expense remained flat at $4.0 billion.
    • 8 percent increase in operating expenses.
  • Pre-provision earnings(2) increased 9 percent to $16.5 billion.
  • Provision for credit losses increased $4.6 billion to $10.4 billion.
  • Net interest margin of 6.63 percent, a decrease of 4 basis points.
  • Efficiency ratio of 55.23 percent.
    • Adjusted efficiency ratio(1) of 54.44 percent.
  • Operating efficiency ratio of 44.33 percent.
    • Adjusted operating efficiency ratio(1) of 43.54 percent.


(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. "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" in Exhibit 99.2 for a reconciliation of our selected reported results to these non-GAAP measures.

(2)

Pre-provision earnings is a non-GAAP metric calculated based on total net revenue less non-interest expense for the period. Management believes that this financial metric is useful in assessing the ability of a lending institution to generate income in excess of its provision for credit losses. See our Financial Supplement, filed as Exhibit 99.2 to our Current Report on From 8-K on January 25, 2024 with the Securities and Exchange Commission (the "SEC"), "Table 15: Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures" for a reconciliation and additional information on non-GAAP measures.

 

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on January 25, 2024 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, 2024 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. Forward-looking statements often use words such as "will," "anticipate," "target," "expect," "think," "estimate," "intend," "plan," "goal," "believe," "forecast," "outlook" or other words of similar meaning. Any forward-looking statements made by Capital One or on its behalf speak only as of the date they are made or as of the date indicated, and Capital One does not undertake any obligation to update forward-looking statements as a result of new information, future events or otherwise. 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. For additional information on factors that could materially influence forward-looking statements included in this earnings press release, see the risk factors set forth under "Part I—Item 1A. Risk Factors" in the Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company which, along with its subsidiaries, had $348.4 billion in deposits and $478.5 billion in total assets as of December 31, 2023. 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 and Cafés located primarily in New York, Louisiana, Texas, Maryland, Virginia 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 2023

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

14






Table 10:

Financial & Statistical Summary—Credit Card Business

15






Table 11:

Financial & Statistical Summary—Consumer Banking Business

17






Table 12:

Financial & Statistical Summary—Commercial Banking Business

18






Table 13:

Financial & Statistical Summary—Other and Total

19





Other





Table 14:

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

20






Table 15:

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

21

__________

(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, 2023 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














2023 Q4


Year Ended December 31,

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


2023

Q4


2023

Q3


2023

Q2


2023

Q1


2022

Q4


2023

Q3


2022

Q4


2023


2022


2023 vs

2022

Income Statement





















Net interest income


$      7,519


$      7,423


$      7,113


$      7,186


$      7,197


1 %


4 %


$    29,241


$    27,114


8 %

Non-interest income


1,987


1,943


1,899


1,717


1,843


2


8


7,546


7,136


6

Total net revenue(1)


9,506


9,366


9,012


8,903


9,040


1


5


36,787


34,250


7

Provision for credit losses


2,857


2,284


2,490


2,795


2,416


25


18


10,426


5,847


78

Non-interest expense:





















Marketing


1,254


972


886


897


1,118


29


12


4,009


4,017


Operating expense


4,463


3,888


3,908


4,048


3,962


15


13


16,307


15,146


8

Total non-interest expense


5,717


4,860


4,794


4,945


5,080


18


13


20,316


19,163


6

Income from continuing operations before income taxes


932


2,222


1,728


1,163


1,544


(58)


(40)


6,045


9,240


(35)

Income tax provision


226


432


297


203


312


(48)


(28)


1,158


1,880


(38)

Net income


706


1,790


1,431


960


1,232


(61)


(43)


4,887


7,360


(34)

Dividends and undistributed earnings allocated to participating securities(2)


(10)


(28)


(23)


(16)


(14)


(64)


(29)


(77)


(88)


(13)

Preferred stock dividends


(57)


(57)


(57)


(57)


(57)




(228)


(228)


Net income available to common stockholders


$        639


$      1,705


$      1,351


$        887


$      1,161


(63)


(45)


$      4,582


$      7,044


(35)

Common Share Statistics





















Basic earnings per common share:(2)





















Net income per basic common share


$       1.67


$       4.46


$       3.53


$       2.32


$       3.03


(63) %


(45) %


$      11.98


$      17.98


(33) %

Diluted earnings per common share:(2)





















Net income per diluted common share


$       1.67


$       4.45


$       3.52


$       2.31


$       3.03


(62) %


(45) %


$      11.95


$      17.91


(33) %

Weighted-average common shares outstanding (in millions):





















Basic


381.9


382.5


382.8


382.6


382.6




382.4


391.8


(2) %

Diluted


382.8


383.3


383.7


383.8


383.7




383.4


393.2


(2)

Common shares outstanding (period-end, in millions)


380.4


381.0


381.4


382.0


381.3




380.4


381.3


Dividends declared and paid per common share


$       0.60


$       0.60


$       0.60


$       0.60


$       0.60




$       2.40


$       2.40


Tangible book value per common share (period-end)(3)


99.78


87.97


90.07


90.86


86.11


13 %


16 %


99.78


86.11


16


































2023 Q4


Year Ended December 31,

(Dollars in millions)


2023

Q4


2023

Q3


2023

Q2


2023

Q1


2022

Q4


2023

Q3


2022

Q4


2023


2022


2023 vs

2022

Balance Sheet (Period-End)





















Loans held for investment


$  320,472


$  314,780


$  311,323


$  308,836


$  312,331


2 %


3 %


$  320,472


$  312,331


3 %

Interest-earning assets


449,701


445,428


441,250


445,166


427,248


1


5


449,701


427,248


5

Total assets


478,464


471,435


467,800


471,660


455,249


1


5


478,464


455,249


5

Interest-bearing deposits


320,389


317,217


314,393


318,641


300,789


1


7


320,389


300,789


7

Total deposits


348,413


346,011


343,705


349,827


332,992


1


5


348,413


332,992


5

Borrowings


49,856


49,247


50,258


48,777


48,715


1


2


49,856


48,715


2

Common equity


53,244


48,823


49,713


49,807


47,737


9


12


53,244


47,737


12

Total stockholders' equity


58,089


53,668


54,559


54,653


52,582


8


10


58,089


52,582


10

Balance Sheet (Average Balances)





















Loans held for investment


$  315,890


$  312,759


$  309,655


$  307,756


$  306,881


1 %


3 %


$  311,541


$  292,238


7 %

Interest-earning assets


446,929


443,532


439,139


435,199


421,051


1


6


441,238


406,646


9

Total assets


472,594


469,860


466,652


462,324


449,659


1


5


467,807


440,538


6

Interest-bearing deposits


316,808


316,032


313,207


308,788


292,793



8


313,737


277,208


13

Total deposits


345,328


345,013


343,678


340,123


326,558



6


343,554


313,551


10

Borrowings


51,070


49,736


48,468


48,016


49,747


3


3


49,332


51,006


(3)

Common equity


50,786


50,166


50,511


49,927


47,594


1


7


50,349


50,279


Total stockholders' equity


55,632


55,012


55,357


54,773


52,439


1


6


55,195


55,125


 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated














2023 Q4


Year Ended December 31,

(Dollars in millions, except as noted)


2023

Q4


2023

Q3


2023

Q2


2023

Q1


2022

Q4


2023

Q3


2022

Q4


2023


2022


2023 vs

2022

Performance Metrics





















Net interest income growth (period over period)


1 %


4 %


(1) %



3 %


**


**


8 %


12 %


**

Non-interest income growth (period over period)


2


2


11


(7) %


2


**


**


6


14


**

Total net revenue growth (period over period)


1


4


1


(2)


3


**


**


7


13


**

Total net revenue margin(4)


8.51


8.45


8.21


8.18


8.59


6 bps


(8) bps


8.34


8.42


(8) bps

Net interest margin(5)


6.73


6.69


6.48


6.60


6.84


4


(11)


6.63


6.67


(4)

Return on average assets


0.60


1.52


1.23


0.83


1.10


(92)


(50)


1.04


1.67


(63)

Return on average tangible assets(6)


0.62


1.58


1.27


0.86


1.13


(96)


(51)


1.08


1.73


(65)

Return on average common equity(7)


5.03


13.59


10.70


7.11


9.76


(856)


(473)


9.10


14.01


(491)

Return on average tangible common equity(8)


7.20


19.59


15.30


10.15


14.22


(1,239)


(702)


13.04


19.91


(687)

Efficiency ratio(9)


60.14


51.89


53.20


55.54


56.19


825


395


55.23


55.95


(72)

Operating efficiency ratio(10)


46.95


41.51


43.36


45.47


43.83


544


312


44.33


44.22


11

Effective income tax rate for continuing operations


24.2


19.4


17.2


17.5


20.2


480


400


19.2


20.3


(110)

Employees (period-end, in thousands)


52.0


54.2


55.6


56.1


56.0


(4) %


(7) %


52.0


56.0


(7) %

Credit Quality Metrics





















Allowance for credit losses


$  15,296


$  14,955


$  14,646


$  14,318


$  13,240


2 %


16 %


$    15,296


$    13,240


16 %

Allowance coverage ratio


4.77 %


4.75 %


4.70 %


4.64 %


4.24 %


2 bps


53 bps


4.77 %


4.24 %


53 bps

Net charge-offs


$    2,533


$    1,999


$    2,185


$    1,697


$    1,430


27 %


77 %


$      8,414


$      3,973


112 %

Net charge-off rate(11)


3.21 %


2.56 %


2.82 %


2.21 %


1.86 %


65 bps


135 bps


2.70 %


1.36 %


134 bps

30+ day performing delinquency rate


3.71


3.42


3.08


2.88


2.96


29


75


3.71


2.96


75

30+ day delinquency rate


3.99


3.71


3.36


3.09


3.21


28


78


3.99


3.21


78

Capital Ratios(12)





















Common equity Tier 1 capital 


12.9 %


13.0 %


12.7 %


12.5 %


12.5 %


(10) bps


40 bps


12.9 %


12.5 %


40 bps

Tier 1 capital


14.2


14.3


14.0


13.9


13.9


(10)


30


14.2


13.9


30

Total capital


16.0


16.2


16.0


15.9


15.8


(20)


20


16.0


15.8


20

Tier 1 leverage


11.2


11.2


11.0


10.9


11.1



10


11.2


11.1


10

Tangible common equity ("TCE")(13)


8.2


7.3


7.6


7.6


7.5


90


70


8.2


7.5


70

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income














2023 Q4


Year Ended December 31,

(Dollars in millions, except as noted)


2023

Q4


2023

Q3


2023

Q2


2023

Q1


2022

Q4


2023

Q3


2022

Q4


2023


2022


2023 vs

2022

Interest income:





















Loans, including loans held for sale


$      9,934


$      9,696


$      9,057


$      8,723


$      8,360


2 %


19 %


$     37,410


$     28,910


29 %

Investment securities


669


627


639


615


548


7


22


2,550


1,884


35

Other


542


550


470


416


250


(1)


117


1,978


443


**

Total interest income


11,145


10,873


10,166


9,754


9,158


3


22


41,938


31,237


34

Interest expense:





















Deposits


2,745


2,611


2,277


1,856


1,335


5


106


9,489


2,535


**

Securitized debt obligations


263


249


236


211


170


6


55


959


384


150

Senior and subordinated notes


608


579


528


489


430


5


41


2,204


1,074


105

Other borrowings


10


11


12


12


26


(9)


(62)


45


130


(65)

Total interest expense


3,626


3,450


3,053


2,568


1,961


5


85


12,697


4,123


**

Net interest income


7,519


7,423


7,113


7,186


7,197


1


4


29,241


27,114


8

Provision for credit losses


2,857


2,284


2,490


2,795


2,416


25


18


10,426


5,847


78

Net interest income after provision for credit losses


4,662


5,139


4,623


4,391


4,781


(9)


(2)


18,815


21,267


(12)

Non-interest income:





















Interchange fees, net


1,207


1,234


1,213


1,139


1,177


(2)


3


4,793


4,606


4

Service charges and other customer-related fees


424


453


411


379


395


(6)


7


1,667


1,625


3

Net securities gains (losses)


(34)






**



(34)


(9)


**

Other


390


256


275


199


271


52


44


1,120


914


23

Total non-interest income


1,987


1,943


1,899


1,717


1,843


2


8


7,546


7,136


6

Non-interest expense:





















Salaries and associate benefits


2,284


2,274


2,317


2,427


2,266



1


9,302


8,425


10

Occupancy and equipment


628


518


506


508


554


21


13


2,160


2,050


5

Marketing


1,254


972


886


897


1,118


29


12


4,009


4,017


Professional services


359


295


290


324


481


22


(25)


1,268


1,807


(30)

Communications and data processing


345


344


344


350


352



(2)


1,383


1,379


Amortization of intangibles


22


24


22


14


25


(8)


(12)


82


70


17

Other


825


433


429


425


284


91


190


2,112


1,415


49

Total non-interest expense


5,717


4,860


4,794


4,945


5,080


18


13


20,316


19,163


6

Income from continuing operations before income taxes


932


2,222


1,728


1,163


1,544


(58)


(40)


6,045


9,240


(35)

Income tax provision


226


432


297


203


312


(48)


(28)


1,158


1,880


(38)

Net income


706


1,790


1,431


960


1,232


(61)


(43)


4,887


7,360


(34)

Dividends and undistributed earnings allocated to participating securities(2)


(10)


(28)


(23)


(16)


(14)


(64)


(29)


(77)


(88)


(13)

Preferred stock dividends


(57)


(57)


(57)


(57)


(57)




(228)


(228)


Net income available to common stockholders


$         639


$      1,705


$      1,351


$         887


$      1,161


(63)


(45)


$      4,582


$      7,044


(35)






















































































































2023 Q4


Year Ended December 31,



2023

Q4


2023

Q3


2023

Q2


2023

Q1


2022

Q4


2023

Q3


2022

Q4


2023


2022


2023 vs
2022

Basic earnings per common share:(2)





















Net income per basic common share


$        1.67


$        4.46


$        3.53


$        2.32


$        3.03


(63) %


(45) %


$      11.98


$      17.98


(33) %

Diluted earnings per common share:(2)





















Net income per diluted common share


$        1.67


$        4.45


$        3.52


$        2.31


$        3.03


(62) %


(45) %


$      11.95


$      17.91


(33) %

Weighted-average common shares outstanding (in millions):





















Basic common shares


381.9


382.5


382.8


382.6


382.6




382.4


391.8


(2) %

Diluted common shares


382.8


383.3


383.7


383.8


383.7




383.4


393.2


(2)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets














2023 Q4

(Dollars in millions)


2023

Q4


2023

Q3


2023

Q2


2023

Q1


2022

Q4


2023

Q3


2022

Q4

Assets:















Cash and cash equivalents:















Cash and due from banks


$     4,903


$     4,620


$     3,360


$     3,347


$     5,193


6 %


(6) %

Interest-bearing deposits and other short-term investments


38,394


40,249


38,236


43,166


25,663


(5)


50

Total cash and cash equivalents


43,297


44,869


41,596


46,513


30,856


(4)


40

Restricted cash for securitization investors


458


435


452


460


400


5


15

Securities available for sale


79,117


74,837


78,412


81,925


76,919


6