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.

"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	—	4
Loans held in consolidated trusts	30,390	28,743	29,049