Capital One Reports Third Quarter 2022 Net Income of $1.7 billion, or $4.20 per share

MCLEAN, Va., Oct. 27, 2022 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2022 of $1.7 billion, or $4.20 per diluted common share, compared with net income of $2.0 billion, or $4.96 per diluted common share in the second quarter of 2022, and with net income of $3.1 billion, or $6.78 per diluted common share in the third quarter of 2021.

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"We delivered strong growth and revenue in the third quarter, and we continue to see opportunities to lean into marketing and resilient asset growth that can deliver sustained revenue annuities," said Richard D. Fairbank, Founder, Chairman, and Chief Executive Officer. "We're in a strong position to deliver compelling long-term shareholder value as modern digital technology continues to transform banking."

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

Third Quarter 2022 Income Statement Summary:

  • Total net revenue increased 7 percent to $8.8 billion.
  • Total non-interest expense increased 8 percent to $4.9 billion:
    • 2 percent decrease in marketing.
    • 11 percent increase in operating expenses.
  • Pre-provision earnings increased 6 percent to $3.9 billion.(1)
  • Provision for credit losses increased $584 million to $1.7 billion:
    • Net charge-offs of $931 million.
    • $734 million loan reserve build.
  • Net interest margin of 6.80 percent, an increase of 26 basis points.
  • Efficiency ratio of 56.21 percent.
  • Operating efficiency ratio of 45.10 percent.

Third Quarter 2022 Balance Sheet Summary:

  • Common equity Tier 1 capital ratio under Basel III Standardized Approach of 12.2 percent at September 30, 2022.
  • Period-end loans held for investment in the quarter increased $7.6 billion, or 3 percent, to $303.9 billion.
    • Credit Card period-end loans increased $6.0 billion, or 5 percent, to $126.9 billion.
      • Domestic Card period-end loans increased $6.3 billion, or 5 percent, to $121.3 billion.
    • Consumer Banking period-end loans decreased $332 million, or less than 1 percent, to $81.2 billion.
      • Auto period-end loans decreased $346 million, or less than 1 percent, to $79.6 billion.
    • Commercial Banking period-end loans increased $1.9 billion, or 2 percent, to $95.8 billion.
  • Average loans held for investment in the quarter increased $14.1 billion, or 5 percent, to $300.2 billion.
    • Credit Card average loans increased $7.5 billion, or 6 percent, to $123.4 billion.
      • Domestic Card average loans increased $7.5 billion, or 7 percent, to $117.5 billion.
    • Consumer Banking average loans increased $358 million, or less than 1 percent, to $81.3 billion.
      • Auto average loans increased $428 million, or 1 percent, to $79.7 billion.
    • Commercial Banking average loans increased $6.2 billion, or 7 percent, to $95.5 billion.
  • Period-end total deposits increased $9.3 billion, or 3 percent, to $317.2 billion, while average deposits increased $6.0 billion, or 2 percent, to $311.9 billion.
  • Interest-bearing deposits rate paid increased 56 basis points to 1.00 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.

 

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on October 27, 2022 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 November 10, 2022 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 $317.2 billion in deposits and $444.2 billion in total assets as of September 30, 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)

Third 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 Quarterly Report on Form 10-Q for the period ended September 30, 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.

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1: Financial Summary—Consolidated














2022 Q3 vs.


Nine Months Ended September 30,

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


2022

Q3


2022

Q2


2022

Q1


2021

Q4


2021

Q3


2022

Q2


2021

Q3


2022


2021


2022 vs.

2021











Income Statement





















Net interest income


$      7,003


$      6,517


$      6,397


$      6,450


$      6,156


7 %


14 %


$    19,917


$    17,721


12 %

Non-interest income


1,802


1,715


1,776


1,668


1,674


5


8


5,293


4,596


15

Total net revenue(1)


8,805


8,232


8,173


8,118


7,830


7


12


25,210


22,317


13

Provision (benefit) for credit losses


1,669


1,085


677


381


(342)


54


**


3,431


(2,325)


**

Non-interest expense:





















Marketing


978


1,003


918


999


751


(2)


30


2,899


1,872


55

Operating expense


3,971


3,580


3,633


3,679


3,435


11


16


11,184


10,020


12

Total non-interest expense


4,949


4,583


4,551


4,678


4,186


8


18


14,083


11,892


18

Income from continuing operations before income taxes


2,187


2,564


2,945


3,059


3,986


(15)


(45)


7,696


12,750


(40)

Income tax provision


493


533


542


633


882


(8)


(44)


1,568


2,782


(44)

Income from continuing operations, net of tax


1,694


2,031


2,403


2,426


3,104


(17)


(45)


6,128


9,968


(39)

Income (loss) from discontinued operations, net of tax





(1)






(3)


**

Net income


1,694


2,031


2,403


2,425


3,104


(17)


(45)


6,128


9,965


(39)

Dividends and undistributed earnings allocated to participating securities(2)


(21)


(25)


(28)


(21)


(26)


(16)


(19)


(74)


(84)


(12)

Preferred stock dividends


(57)


(57)


(57)


(74)


(79)



(28)


(171)


(200)


(15)

Issuance cost for redeemed preferred stock(3)





(34)


(12)



**



(12)


**

Net income available to common stockholders


$      1,616


$      1,949


$      2,318


$      2,296


$      2,987


(17)


(46)


$      5,883


$      9,669


(39)

Common Share Statistics





















Basic earnings per common share:(2)





















Net income from continuing operations


$       4.21


$       4.98


$       5.65


$       5.43


$       6.81


(15) %


(38) %


$      14.90


$      21.53


(31) %

Income (loss) from discontinued operations










(0.01)


**

Net income per basic common share


$       4.21


$       4.98


$       5.65


$       5.43


$       6.81


(15)


(38)


$      14.90


$      21.52


(31)

Diluted earnings per common share:(2)





















Net income from continuing operations


$       4.20


$       4.96


$       5.62


$       5.41


$       6.78


(15) %


(38) %


$      14.84


$      21.45


(31) %

Income (loss) from discontinued operations










(0.01)


**

Net income per diluted common share


$       4.20


$       4.96


$       5.62


$       5.41


$       6.78


(15)


(38)


$      14.84


$      21.44


(31)

Weighted-average common shares outstanding (in millions):





















Basic


383.4


391.2


410.4


422.5


438.8


(2) %


(13) %


394.9


449.2


(12) %

Diluted


384.6


392.6


412.2


424.3


440.5


(2)


(13)


396.4


450.9


(12)

Common shares outstanding (period-end, in millions)


382.0


383.8


399.0


413.9


430.4



(11)


382.0


430.4


(11)

Dividends declared and paid per common share


$       0.60


$       0.60


$       0.60


$       0.60


$       1.20



(50)


$       1.80


$       2.00


(10)

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


81.38


87.84


91.77


99.74


99.60


(7)


(18)


81.38


99.60


(18)















2022 Q3 vs.


Nine Months Ended September 30,

(Dollars in millions)


2022

Q3


2022

Q2


2022

Q1


2021

Q4


2021

Q3


2022

Q2


2021

Q3


2022


2021


2022 vs.

2021











Balance Sheet (Period-End)





















Loans held for investment


$  303,943


$  296,384


$  280,466


$  277,340


$  261,390


3 %


16 %


$  303,943


$  261,390


16 %

Interest-earning assets


415,262


406,565


398,241


397,341


387,208


2


7


415,262


387,208


7

Total assets


444,232


440,288


434,195


432,381


425,377


1


4


444,232


425,377


4

Interest-bearing deposits


282,802


270,881


275,648


272,937


269,134


4


5


282,802


269,134


5

Total deposits


317,193


307,885


313,429


310,980


305,938


3


4


317,193


305,938


4

Borrowings


54,607


58,938


45,358


43,086


37,501


(7)


46


54,607


37,501


46

Common equity


46,015


48,564


51,499


56,184


57,632


(5)


(20)


46,015


57,632


(20)

Total stockholders' equity


50,861


53,410


56,345


61,029


63,544


(5)


(20)


50,861


63,544


(20)

Balance Sheet (Average Balances)





















Loans held for investment


$  300,186


$  286,110


$  275,342


$  267,159


$  253,101


5 %


19 %


$  287,304


$  247,867


16 %

Interest-earning assets


412,171


398,934


394,082


390,868


387,766


3


6


401,793


388,820


3

Total assets


447,088


435,327


430,372


427,845


424,506


3


5


437,523


423,457


3

Interest-bearing deposits


275,900


268,104


271,823


269,951


269,278


3


2


271,957


272,022


Total deposits


311,928


305,954


309,597


307,272


305,035


2


2


309,168


306,102


1

Borrowings


58,628


53,208


42,277


39,943


37,464


10


56


51,431


38,134


35

Common equity


49,696


49,319


54,591


56,946


58,230


1


(15)


51,184


56,972


(10)

Total stockholders' equity


54,541


54,165


59,437


62,498


64,682


1


(16)


56,030


62,575


(10)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2: Selected Metrics—Consolidated














2022 Q3 vs.


Nine Months Ended September 30,

(Dollars in millions, except as noted)


2022

Q3


2022

Q2


2022

Q1


2021

Q4


2021

Q3


2022

Q2


2021

Q3


2022


2021


2022 vs.

2021











Performance Metrics





















Net interest income growth (period over period)


7 %


2 %


(1) %


5 %


7 %


**


**


12 %


4 %


**

Non-interest income growth (period over period)


5


(3)


6



3


**


**


15


11


**

Total net revenue growth (period over period)


7


1


1


4


6


**


**


13


5


**

Total net revenue margin(5)


8.55


8.25


8.30


8.31


8.08


30 bps


47 bps


8.37


7.65


72 bps

Net interest margin(6)


6.80


6.54


6.49


6.60


6.35


26


45


6.61


6.08


53

Return on average assets


1.52


1.87


2.23


2.27


2.92


(35)


(140)


1.87


3.14


(127)

Return on average tangible assets(7)


1.57


1.93


2.31


2.35


3.03


(36)


(146)


1.93


3.25


(132)

Return on average common equity(8)


13.01


15.81


16.98


16.13


20.52


(3) %


(8) %


15.33


22.64


(7) %

Return on average tangible common equity(9)


18.59


22.63


23.36


21.82


27.50


(4)


(9)


21.62


30.57


(9)

Non-interest expense as a percentage of average loans held for investment


6.59


6.41


6.61


7.00


6.62


18 bps


(3) bps


6.54


6.40


14 bps

Efficiency ratio(10)


56.21


55.67


55.68


57.63


53.46


54


275


55.86


53.29


257

Operating efficiency ratio(11)


45.10


43.49


44.45


45.32


43.87


161


123


44.36


44.90


(54)

Effective income tax rate for continuing operations


22.5


20.8


18.4


20.7


22.1


170


40


20.4


21.8


(140)

Employees (period-end, in thousands)


55.1


53.6


51.5


50.8


50.8


3 %


8 %


55.1


50.8


8 %

Credit Quality Metrics





















Allowance for credit losses


$    12,209


$    11,491


$    11,308


$    11,430


$    11,573


6 %


5 %


$    12,209


$    11,573


5 %

Allowance coverage ratio


4.02 %


3.88 %


4.03 %


4.12 %


4.43 %


14 bps


(41) bps


4.02 %


4.43 %


(41) bps

Net charge-offs


$         931


$         845


$         767


$         527


$         426


10 %


119 %


$      2,543


$      1,707


49 %

Net charge-off rate(12)


1.24 %


1.18 %


1.11 %


0.79 %


0.67 %


6 bps


57 bps


1.18 %


0.92 %


  26 bps

30+ day performing delinquency rate


2.58


2.36


2.08


2.25


1.97


22


61


2.58


1.97


61

30+ day delinquency rate


2.78


2.54


2.21


2.41


2.13


24


65


2.78


2.13


65

Capital Ratios(13)





















Common equity Tier 1 capital


12.2 %


12.1 %


12.7 %


13.1 %


13.8 %


10 bps


(160) bps


12.2 %


13.8 %


(160) bps

Tier 1 capital


13.6


13.5


14.1


14.5


15.7


10


(210)


13.6


15.7


(210)

Total capital


15.7


15.7


16.4


16.9


18.2



(250)


15.7


18.2


(250)

Tier 1 leverage


11.0


11.1


11.3


11.6


12.2


(10)


(120)


11.0


12.2


(120)

Tangible common equity ("TCE")(14)


7.2


7.9


8.7


9.9


10.4


(70)


(320)


7.2


10.4


(320)

 

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3: Consolidated Statements of Income














2022 Q3 vs.


Nine Months Ended September 30,

(Dollars in millions, except as noted)


2022

Q3


2022

Q2


2022

Q1


2021

Q4


2021

Q3


2022

Q2


2021

Q3


2022


2021


2022 vs.

2021











Interest income:





















Loans, including loans held for sale


$      7,578


$      6,605


$      6,367


$      6,451


$      6,205


15 %


22 %


$   20,550


$   17,812


15 %

Investment securities


499


435


402


368


317


15


57


1,336


1,078


24

Other


123


55


15


12


16


124


**


193


48


**

Total interest income


8,200


7,095


6,784


6,831


6,538


16


25


22,079


18,938


17

Interest expense:





















Deposits


689


293


218


222


228


135


**


1,200


734


63

Securitized debt obligations


120


65


29


30


29


85


**


214


89


140

Senior and subordinated notes


319


194


131


121


116


64


175


644


367


75

Other borrowings


69


26


9


8


9


165


**


104


27


**

Total interest expense


1,197


578


387


381


382


107


**


2,162


1,217


78

Net interest income


7,003


6,517


6,397


6,450


6,156


7


14


19,917


17,721


12

Provision (benefit) for credit losses


1,669


1,085


677


381


(342)


54


**


3,431


(2,325)


**

Net interest income after provision for credit losses


5,334


5,432


5,720


6,069


6,498


(2)


(18)


16,486


20,046


(18)

Non-interest income:





















Interchange fees, net


1,195


1,201


1,033


1,005


1,022



17


3,429


2,855


20

Service charges and other customer-related fees


415


415


400


435


407



2


1,230


1,143


8

Other


192


99


343


228


245


94


(22)


634


598


6

Total non-interest income


1,802


1,715


1,776


1,668


1,674


5


8


5,293


4,596


15

Non-interest expense:





















Salaries and associate benefits


2,187


1,946


2,026


1,941


1,852


12


18


6,159


5,480


12

Occupancy and equipment


502


481


513


527


481


4


4


1,496


1,476


1

Marketing


978


1,003


918


999


751


(2)


30


2,899


1,872


55

Professional services


471


458


397


449


358


3


32


1,326


991


34

Communications and data processing


349


339


339


326


319


3


9


1,027


936


10

Amortization of intangibles


17


14


14


13


5


21


**


45


16


181

Other


445


342


344


423


420


30


6


1,131


1,121


1

Total non-interest expense


4,949


4,583


4,551


4,678


4,186


8


18


14,083


11,892


18

Income from continuing operations before income taxes


2,187


2,564


2,945


3,059


3,986


(15)


(45)


7,696


12,750


(40)

Income tax provision


493


533


542


633


882


(8)


(44)


1,568


2,782


(44)

Income from continuing operations, net of tax


1,694


2,031


2,403


2,426


3,104


(17)


(45)


6,128


9,968


(39)

Income (loss) from discontinued operations, net of tax





(1)






(3)


**

Net income


1,694


2,031


2,403


2,425


3,104


(17)


(45)


6,128


9,965


(39)

Dividends and undistributed earnings allocated to participating securities(2)


(21)


(25)


(28)


(21)


(26)


(16)


(19)


(74)


(84)


(12)

Preferred stock dividends


(57)


(57)


(57)


(74)


(79)



(28)


(171)


(200)


(15)

Issuance cost for redeemed preferred stock(3)





(34)


(12)



**



(12)


**

Net income available to common stockholders


$      1,616


$      1,949


$      2,318


$      2,296


$      2,987


(17)


(46)


$    5,883


$     9,669


(39)












































































2022 Q3 vs.


Nine Months Ended September 30,



2022

Q3


2022

Q2


2022

Q1


2021

Q4


2021

Q3


2022

Q2


2021

Q3


2022


2021


2022 vs.

2021











Basic earnings per common share:(2)





















Net income from continuing operations


$        4.21


$        4.98


$        5.65


$        5.43


$        6.81


(15) %


(38) %


$    14.90


$     21.53


(31) %

Income (loss) from discontinued operations










(0.01)


**

Net income per basic common share


$        4.21


$        4.98


$        5.65


$        5.43


$        6.81


(15)