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)

(38)

$    14.90

$     21.52

(31)

Diluted earnings per common share:(2)