Capital One Reports Second Quarter 2023 Net Income of $1.4 billion, or $3.52 per share

MCLEAN, Va., July 20, 2023 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2023 of $1.4 billion, or $3.52 per diluted common share, compared with net income of $960 million, or $2.31 per diluted common share in the first quarter of 2023, and with net income of $2.0 billion, or $4.96 per diluted common share in the second quarter of 2022.

Capital One Financial

"We continue to lean into attractive opportunities to grow and build our franchise in our domestic card and national retail bank businesses, and our opportunities are enhanced by our technology transformation," said Richard D. Fairbank, Founder, Chairman, and Chief Executive Officer. "Our investments to build and leverage a modern technology infrastructure are expanding our opportunities and driving value creation over the long-term."

All comparisons below are for the second quarter of 2023 compared with the first quarter of 2023 unless otherwise noted.

Second Quarter 2023 Income Statement Summary:

  • Total net revenue increased 1 percent to $9.0 billion.
  • Total non-interest expense decreased 3 percent to $4.8 billion:
    • 1 percent decrease in marketing.
    • 3 percent decrease in operating expenses.
  • Pre-provision earnings(1)  increased 7 percent to  $4.2 billion.
  • Provision for credit losses decreased $305 million to $2.5 billion:
    • Net charge-offs of $2.2 billion.
    • $318 million loan reserve build.
  • Net interest margin of 6.48 percent, a decrease of 12 basis points.
  • Efficiency ratio of 53.20 percent.
  • Operating efficiency ratio of 43.36 percent.

Second Quarter 2023 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.7 percent.
  • Period-end loans held for investment in the quarter increased $2.5 billion, or 1 percent, to $311.3 billion.
    • Credit Card period-end loans increased $5.3 billion, or 4 percent, to $142.5 billion.
      • Domestic Card period-end loans increased $5.0 billion, or 4 percent, to $136.0 billion.
    • Consumer Banking period-end loans decreased $871 million, or 1 percent, to $77.3 billion.
      • Auto period-end loans decreased $811 million, or 1 percent, to $75.8 billion.
    • Commercial Banking period-end loans decreased $2.0 billion, or 2 percent, to $91.6 billion.
  • Average loans held for investment in the quarter increased $1.9 billion, or 1 percent, to $309.7 billion.
    • Credit Card average loans increased $4.1 billion, or 3 percent, to $138.8 billion.
      • Domestic Card average loans increased $3.9 billion, or 3 percent, to $132.5 billion.
    • Consumer Banking average loans decreased $1.3 billion, or 2 percent, to $77.7 billion.
      • Auto average loans decreased $1.2 billion, or 2 percent, to $76.2 billion.
    • Commercial Banking average loans decreased $897 million, or 1 percent, to $93.2 billion.
  • Period-end total deposits decreased $6.1 billion, or 2 percent, to $343.7 billion, while average deposits increased $3.6 billion, or 1 percent, to $343.7 billion.
  • Interest-bearing deposits rate paid increased 51 basis points to 2.91 percent.

(1)

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 July 20, 2023 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 July 20, 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 August 3, 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. 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 and Quarterly Reports on Form 10-Q and Current Reports on Form 8-K 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 $343.7 billion in deposits and $467.8 billion in total assets as of June 30, 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 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 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 Quarterly Report on Form 10-Q for the period ended June 30, 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 Q2 vs


Six Months Ended June 30,

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


2023

Q2


2023

Q1


2022

Q4


2022

Q3


2022

Q2


2023

Q1


2022

Q2


2023


2022


2023 vs

2022

Income Statement





















Net interest income


$      7,113


$      7,186


$      7,197


$      7,003


$      6,517


(1) %


9 %


$    14,299


$    12,914


11 %

Non-interest income


1,899


1,717


1,843


1,802


1,715


11


11


3,616


3,491


4

Total net revenue(1)


9,012


8,903


9,040


8,805


8,232


1


9


17,915


16,405


9

Provision for credit losses


2,490


2,795


2,416


1,669


1,085


(11)


129


5,285


1,762


200

Non-interest expense:





















Marketing


886


897


1,118


978


1,003


(1)


(12)


1,783


1,921


(7)

Operating expense


3,908


4,048


3,962


3,971


3,580


(3)


9


7,956


7,213


10

Total non-interest expense


4,794


4,945


5,080


4,949


4,583


(3)


5


9,739


9,134


7

Income from continuing operations before income taxes


1,728


1,163


1,544


2,187


2,564


49


(33)


2,891


5,509


(48)

Income tax provision


297


203


312


493


533


46


(44)


500


1,075


(53)

Net income


1,431


960


1,232


1,694


2,031


49


(30)


2,391


4,434


(46)

Dividends and undistributed earnings allocated to participating securities(2)


(23)


(16)


(14)


(21)


(25)


44


(8)


(39)


(53)


(26)

Preferred stock dividends


(57)


(57)


(57)


(57)


(57)




(114)


(114)


Net income available to common stockholders


$     1,351


$       887


$     1,161


$     1,616


$      1,949


52


(31)


$     2,238


$     4,267


(48)

Common Share Statistics





















Basic earnings per common share:(2)





















Net income per basic common share


$       3.53


$       2.32


$       3.03


$       4.21


$       4.98


52 %


(29) %


$       5.85


$      10.65


(45) %

Diluted earnings per common share:(2)





















Net income per diluted common share


$       3.52


$       2.31


$       3.03


$       4.20


$       4.96


52 %


(29) %


$       5.83


$      10.61


(45) %

Weighted-average common shares outstanding (in millions):





















Basic


382.8


382.6


382.6


383.4


391.2



(2) %


382.7


400.8


(5) %

Diluted


383.7


383.8


383.7


384.6


392.6



(2)


383.8


402.3


(5)

Common shares outstanding (period-end, in millions)


381.4


382.0


381.3


382.0


383.8



(1)


381.4


383.8


(1)

Dividends declared and paid per common share


$       0.60


$       0.60


$       0.60


$       0.60


$       0.60




$       1.20


$        1.20


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


90.07


90.86


86.11


81.38


87.84


(1) %


3


90.07


87.84


3














2023 Q2 vs


Six Months Ended June 30,

(Dollars in millions)


2023

Q2


2023

Q1


2022

Q4


2022

Q3


2022

Q2


2023

Q1


2022

Q2


2023


2022


2023 vs

2022

Balance Sheet (Period-End)





















Loans held for investment


$  311,323


$  308,836


$  312,331


$  303,943


$  296,384


1 %


5 %


$  311,323


$  296,384


5 %

Interest-earning assets


441,250


445,166


427,248


415,262


406,565


(1)


9


441,250


406,565


9

Total assets


467,800


471,660


455,249


444,232


440,288


(1)


6


467,800


440,288


6

Interest-bearing deposits


314,393


318,641


300,789


282,802


270,881


(1)


16


314,393


270,881


16

Total deposits


343,705


349,827


332,992


317,193


307,885


(2)


12


343,705


307,885


12

Borrowings


50,258


48,777


48,715


54,607


58,938


3


(15)


50,258


58,938


(15)

Common equity


49,713


49,807


47,737


46,015


48,564



2


49,713


48,564


2

Total stockholders' equity


54,559


54,653


52,582


50,861


53,410



2


54,559


53,410


2

Balance Sheet (Average Balances)





















Loans held for investment


$  309,655


$  307,756


$  306,881


$  300,186


$  286,110


1 %


8 %


$  308,711


$  280,756


10 %

Interest-earning assets


439,139


435,199


421,051


412,171


398,934


1


10


437,180


396,521


10

Total assets


466,652


462,324


449,659


447,088


435,327


1


7


464,459


432,806


7

Interest-bearing deposits


313,207


308,788


292,793


275,900


268,104


1


17


311,010


269,953


15

Total deposits


343,678


340,123


326,558


311,928


305,954


1


12


341,910


307,765


11

Borrowings


48,468


48,016


49,747


58,628


53,208


1


(9)


48,243


47,773


1

Common equity


50,511


49,927


47,594


49,696


49,319


1


2


50,221


51,940


(3)

Total stockholders' equity


55,357


54,773


52,439


54,541


54,165


1


2


55,066


56,786


(3)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated














2023 Q2 vs


Six Months Ended June 30,

(Dollars in millions, except as noted)


2023

Q2


2023

Q1


2022

Q4


2022

Q3


2022

Q2


2023

Q1


2022

Q2


2023


2022


2023 vs

2022

Performance Metrics





















Net interest income growth (period over period)


(1) %



3 %


7 %


2 %


**


**


11 %


12 %


**

Non-interest income growth (period over period)


11


(7) %


2


5


(3)


**


**


4


19


**

Total net revenue growth (period over period)


1


(2)


3


7


1


**


**


9


13


**

Total net revenue margin(4)


8.21


8.18


8.59


8.55


8.25


3 bps


(4) bps


8.20


8.27


(7) bps

Net interest margin(5)


6.48


6.60


6.84


6.80


6.54


(12)


(6)


6.54


6.51


3

Return on average assets


1.23


0.83


1.10


1.52


1.87


40


(64)


1.03


2.05


(102)

Return on average tangible assets(6)


1.27


0.86


1.13


1.57


1.93


41


(66)


1.06


2.12


(106)

Return on average common equity(7)


10.70


7.11


9.76


13.01


15.81


359


(511)


8.91


16.43


(752)

Return on average tangible common equity(8)


15.30


10.15


14.22


18.59


22.63


515


(733)


12.74


23.03


(1,029)

Efficiency ratio(9)


53.20


55.54


56.19


56.21


55.67


(234)


(247)


54.36


55.68


(132)

Operating efficiency ratio(10)


43.36


45.47


43.83


45.10


43.49


(211)


(13)


44.41


43.97


44

Effective income tax rate for continuing operations


17.2


17.5


20.2


22.5


20.8


(30)


(360)


17.3


19.5


(220)

Employees (period-end, in thousands)


55.6


56.1


56.0


55.1


53.6


(1) %


4 %


55.6


53.6


4 %

Credit Quality Metrics





















Allowance for credit losses


$  14,646


$  14,318


$  13,240


$  12,209


$  11,491


2 %


27 %


$    14,646


$    11,491


27 %

Allowance coverage ratio


4.70 %


4.64 %


4.24 %


4.02 %


3.88 %


6 bps


82 bps


4.70 %


3.88 %


 82 bps

Net charge-offs


$    2,185


$    1,697


$    1,430


$       931


$       845


29 %


159 %


$      3,882


$      1,612


141 %

Net charge-off rate(11)


2.82 %


2.21 %


1.86 %


1.24 %


1.18 %


61 bps


164 bps


2.52 %


1.15 %


137 bps

30+ day performing delinquency rate


3.08


2.88


2.96


2.58


2.36


20


72


3.08


2.36


72

30+ day delinquency rate


3.36


3.09


3.21


2.78


2.54


27


82


3.36


2.54


82

Capital Ratios(12)





















Common equity Tier 1 capital 


12.7 %


12.5 %


12.5 %


12.2 %


12.1 %


20 bps


60 bps


12.7 %


12.1 %


60 bps

Tier 1 capital


14.0


13.9


13.9


13.6


13.5


10


50


14.0


13.5


50

Total capital


16.0


15.9


15.8


15.7


15.7


10


30


16.0


15.7


30

Tier 1 leverage


11.0


10.9


11.1


11.0


11.1


10


(10)


11.0


11.1


(10)

Tangible common equity ("TCE")(13)


7.6


7.6


7.5


7.2


7.9



(30)


7.6


7.9


(30)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income














2023 Q2 vs


Six Months Ended June 30,

(Dollars in millions, except as noted)


2023

Q2


2023

Q1


2022

Q4


2022

Q3


2022

Q2


2023

Q1


2022

Q2


2023


2022


2023 vs

2022

Interest income:





















Loans, including loans held for sale


$      9,057


$      8,723


$      8,360


$      7,578


$      6,605


4 %


37 %


$     17,780


$     12,972


37 %

Investment securities


639


615


548


499


435


4


47


1,254


837


50

Other


470


416


250


123


55


13


**  


886


70


**  

Total interest income


10,166


9,754


9,158


8,200


7,095


4


43


19,920


13,879


44

Interest expense:





















Deposits


2,277


1,856


1,335


689


293


23


**  


4,133


511


**  

Securitized debt obligations


236


211


170


120


65


12


**  


447


94


**  

Senior and subordinated notes


528


489


430


319


194


8


172


1,017


325


**  

Other borrowings


12


12


26


69


26



(54)


24


35


(31)

Total interest expense


3,053


2,568


1,961


1,197


578


19


**  


5,621


965


**  

Net interest income


7,113


7,186


7,197


7,003


6,517


(1)


9


14,299


12,914


11

Provision for credit losses


2,490


2,795


2,416


1,669


1,085


(11)


129


5,285


1,762


200

Net interest income after provision for credit losses


4,623


4,391


4,781


5,334


5,432


5


(15)


9,014


11,152


(19)

Non-interest income:





















Interchange fees, net


1,213


1,139


1,177


1,195


1,201


6


1


2,352


2,234


5

Service charges and other customer-related fees


411


379


395


415


415


8


(1)


790


815


(3)

Other


275


199


271


192


99


38


178


474


442


7

Total non-interest income


1,899


1,717


1,843


1,802


1,715


11


11


3,616


3,491


4

Non-interest expense:





















Salaries and associate benefits


2,317


2,427


2,266


2,187


1,946


(5)


19


4,744


3,972


19

Occupancy and equipment


506


508


554


502


481



5


1,014


994


2

Marketing


886


897


1,118


978


1,003


(1)


(12)


1,783


1,921


(7)

Professional services


290


324


481


471


458


(10)


(37)


614


855


(28)

Communications and data processing


344


350


352


349


339


(2)


1


694


678


2

Amortization of intangibles


22


14


25


17


14


57


57


36


28


29

Other


429


425


284


445


342


1


25


854


686


24

Total non-interest expense


4,794


4,945


5,080


4,949


4,583


(3)


5


9,739


9,134


7

Income from continuing operations before income taxes


1,728


1,163


1,544


2,187


2,564


49


(33)


2,891


5,509


(48)

Income tax provision


297


203


312


493


533


46


(44)


500


1,075


(53)

Net income


1,431


960


1,232


1,694


2,031


49


(30)


2,391


4,434


(46)

Dividends and undistributed earnings allocated to participating securities(2)


(23)


(16)


(14)


(21)


(25)


44


(8)


(39)


(53)


(26)

Preferred stock dividends


(57)


(57)


(57)


(57)


(57)




(114)


(114)


Net income available to common stockholders


$      1,351


$         887


$      1,161


$      1,616


$      1,949


52


(31)


$      2,238


$      4,267


(48)











































































































































2023 Q2 vs


Six Months Ended June 30,



2023

Q2


2023

Q1


2022

Q4


2022

Q3


2022

Q2


2023

Q1


2022

Q2


2023


2022


2023 vs

2022

Basic earnings per common share:(2)





















Net income per basic common share


$        3.53


$        2.32


$        3.03


$        4.21


$        4.98


52 %


(29) %


$        5.85


$      10.65


(45) %

Diluted earnings per common share:(2)





















Net income per diluted common share


$        3.52


$        2.31


$        3.03


$        4.20


$        4.96


52 %


(29) %


$        5.83


$      10.61


(45) %

Weighted-average common shares outstanding (in millions):





















Basic common shares


382.8


382.6


382.6


383.4


391.2



(2)


382.7


400.8


(5)

Diluted common shares


383.7


383.8


383.7


384.6


392.6



(2)


383.8


402.3


(5)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets














2023 Q2 vs

 

 

(Dollars in millions)


2023

Q2


2023

Q1


2022

Q4


2022

Q3


2022

Q2


2023

Q1


2022

Q2

Assets:















Cash and cash equivalents:















Cash and due from banks


$     3,360


$     3,347


$     5,193


$     3,716


$     4,825



(30) %

Interest-bearing deposits and other short-term investments


38,236


43,166


25,663


21,176


16,728


(11) %


129

Total cash and cash equivalents


41,596


46,513


30,856


24,892


21,553


(11)


93

Restricted cash for securitization investors


452


460


400


399


697


(2)


(35)

Securities available for sale


78,412


81,925


76,919


75,303


83,022


(4)


(6)

Loans held for investment:















Unsecuritized loans held for investment


280,933


280,093


283,282


277,576


271,339