Capital One Reports Third Quarter 2023 Net Income of $1.8 billion, or $4.45 per share

MCLEAN, Va., Oct. 26, 2023 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2023 of $1.8 billion, or $4.45 per diluted common share, compared with net income of $1.4 billion, or $3.52 per diluted common share in the second quarter of 2023, and with net income of $1.7 billion, or $4.20 per diluted common share in the third quarter of 2022.

"In the third quarter we continued to deliver solid results fueled by strong top-line growth in our domestic card business," said Richard D. Fairbank, Founder, Chairman, and Chief Executive Officer. "Our modern technology capabilities are generating opportunities and driving performance improvements across our businesses."

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

Third Quarter 2023 Income Statement Summary:

Total net revenue increased 4 percent to $9.4 billion.
Total non-interest expense increased 1 percent to $4.9 billion:
- 10 percent increase in marketing.
- 1 percent decrease in operating expenses.
Pre-provision earnings⁽¹⁾ increased 7 percent to $4.5 billion.
Provision for credit losses decreased $206 million to $2.3 billion:
- Net charge-offs of $2.0 billion.
- $322 million loan reserve build.
Net interest margin of 6.69 percent, an increase of 21 basis points.
Efficiency ratio of 51.89 percent.
Operating efficiency ratio of 41.51 percent.

Third Quarter 2023 Balance Sheet Summary:

Common equity Tier 1 capital ratio under Basel III Standardized Approach of 13.0 percent.
Period-end loans held for investment in the quarter increased $3.5 billion, or 1 percent, to $314.8 billion.
- Credit Card period-end loans increased $4.3 billion, or 3 percent, to $146.8 billion.
  - Domestic Card period-end loans increased $4.3 billion, or 3 percent, to $140.3 billion.
- Consumer Banking period-end loans decreased $436 million, or 1 percent, to $76.8 billion.
  - Auto period-end loans decreased $385 million, or 1 percent, to $75.5 billion.
- Commercial Banking period-end loans decreased $399 million, or less than 1 percent, to $91.2 billion.
Average loans held for investment in the quarter increased $3.1 billion, or 1 percent, to $312.8 billion.
- Credit Card average loans increased $5.3 billion, or 4 percent, to $144.0 billion.
  - Domestic Card average loans increased $5.0 billion, or 4 percent, to $137.5 billion.
- Consumer Banking average loans decreased $544 million, or 1 percent, to $77.2 billion.
  - Auto average loans decreased $493 million, or 1 percent, to $75.7 billion.
- Commercial Banking average loans decreased $1.6 billion, or 2 percent, to $91.6 billion.
Period-end total deposits increased $2.3 billion, or 1 percent, to $346.0 billion, while average deposits increased $1.3 billion, or less than 1 percent, to $345.0 billion.
Interest-bearing deposits rate paid increased 39 basis points to 3.30 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 October 26, 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 October 26, 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 November 9, 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 $346.0 billion in deposits and $471.4 billion in total assets as of September 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 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⁾ Third 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 September 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 Q3		Nine Months Ended September 30,
(Dollars in millions, except per share data and as noted)	2023 Q3	2023 Q2	2023 Q1	2022 Q4	2022 Q3	2023 Q2	2022 Q3	2023	2022	2023 vs 2022
Income Statement
Net interest income	$ 7,423	$ 7,113	$ 7,186	$ 7,197	$ 7,003	4 %	6 %	$ 21,722	$ 19,917	9 %
Non-interest income	1,943	1,899	1,717	1,843	1,802	2	8	5,559	5,293	5
Total net revenue⁽¹⁾	9,366	9,012	8,903	9,040	8,805	4	6	27,281	25,210	8
Provision for credit losses	2,284	2,490	2,795	2,416	1,669	(8)	37	7,569	3,431	121
Non-interest expense:
Marketing	972	886	897	1,118	978	10	(1)	2,755	2,899	(5)
Operating expense	3,888	3,908	4,048	3,962	3,971	(1)	(2)	11,844	11,184	6
Total non-interest expense	4,860	4,794	4,945	5,080	4,949	1	(2)	14,599	14,083	4
Income from continuing operations before income taxes	2,222	1,728	1,163	1,544	2,187	29	2	5,113	7,696	(34)
Income tax provision	432	297	203	312	493	45	(12)	932	1,568	(41)
Net income	1,790	1,431	960	1,232	1,694	25	6	4,181	6,128	(32)
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(28)	(23)	(16)	(14)	(21)	22	33	(67)	(74)	(9)
Preferred stock dividends	(57)	(57)	(57)	(57)	(57)	—	—	(171)	(171)	—
Net income available to common stockholders	$ 1,705	$ 1,351	$ 887	$ 1,161	$ 1,616	26	6	$ 3,943	$ 5,883	(33)
Common Share Statistics
Basic earnings per common share:⁽²⁾
Net income per basic common share	$ 4.46	$ 3.53	$ 2.32	$ 3.03	$ 4.21	26 %	6 %	$ 10.31	$ 14.90	(31) %
Diluted earnings per common share:⁽²⁾
Net income per diluted common share	$ 4.45	$ 3.52	$ 2.31	$ 3.03	$ 4.20	26 %	6 %	$ 10.28	$ 14.84	(31) %
Weighted-average common shares outstanding (in millions):
Basic	382.5	382.8	382.6	382.6	383.4	—	—	382.7	394.9	(3) %
Diluted	383.3	383.7	383.8	383.7	384.6	—	—	383.6	396.4	(3)
Common shares outstanding (period-end, in millions)	381.0	381.4	382.0	381.3	382.0	—	—	381.0	382.0	—
Dividends declared and paid per common share	$ 0.60	$ 0.60	$ 0.60	$ 0.60	$ 0.60	—	—	$ 1.80	$ 1.80	—
Tangible book value per common share (period-end)⁽³⁾	87.97	90.07	90.86	86.11	81.38	(2) %	8 %	87.97	81.38	8


						2023 Q3		Nine Months Ended September 30,
(Dollars in millions)	2023 Q3	2023 Q2	2023 Q1	2022 Q4	2022 Q3	2023 Q2	2022 Q3	2023	2022	2023 vs 2022
Balance Sheet (Period-End)
Loans held for investment	$ 314,780	$ 311,323	$ 308,836	$ 312,331	$ 303,943	1 %	4 %	$ 314,780	$ 303,943	4 %
Interest-earning assets	445,428	441,250	445,166	427,248	415,262	1	7	445,428	415,262	7
Total assets	471,435	467,800	471,660	455,249	444,232	1	6	471,435	444,232	6
Interest-bearing deposits	317,217	314,393	318,641	300,789	282,802	1	12	317,217	282,802	12
Total deposits	346,011	343,705	349,827	332,992	317,193	1	9	346,011	317,193	9
Borrowings	49,247	50,258	48,777	48,715	54,607	(2)	(10)	49,247	54,607	(10)
Common equity	48,823	49,713	49,807	47,737	46,015	(2)	6	48,823	46,015	6
Total stockholders' equity	53,668	54,559	54,653	52,582	50,861	(2)	6	53,668	50,861	6
Balance Sheet (Average Balances)
Loans held for investment	$ 312,759	$ 309,655	$ 307,756	$ 306,881	$ 300,186	1 %	4 %	$ 310,075	$ 287,304	8 %
Interest-earning assets	443,532	439,139	435,199	421,051	412,171	1	8	439,321	401,793	9
Total assets	469,860	466,652	462,324	449,659	447,088	1	5	466,279	437,523	7
Interest-bearing deposits	316,032	313,207	308,788	292,793	275,900	1	15	312,702	271,957	15
Total deposits	345,013	343,678	340,123	326,558	311,928	—	11	342,956	309,168	11
Borrowings	49,736	48,468	48,016	49,747	58,628	3	(15)	48,746	51,431	(5)
Common equity	50,166	50,511	49,927	47,594	49,696	(1)	1	50,202	51,184	(2)
Total stockholders' equity	55,012	55,357	54,773	52,439	54,541	(1)	1	55,048	56,030	(2)

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 2: Selected Metrics—Consolidated

						2023 Q3		Nine Months Ended September 30,
(Dollars in millions, except as noted)	2023 Q3	2023 Q2	2023 Q1	2022 Q4	2022 Q3	2023 Q2	2022 Q3	2023	2022	2023 vs 2022

Performance Metrics
Net interest income growth (period over period)	4 %	(1) %	—	3 %	7 %	**	**	9 %	12 %	**
Non-interest income growth (period over period)	2	11	(7) %	2	5	**	**	5	15	**
Total net revenue growth (period over period)	4	1	(2)	3	7	**	**	8	13	**
Total net revenue margin⁽⁴⁾	8.45	8.21	8.18	8.59	8.55	24 bps	(10) bps	8.28	8.37	(9) bps
Net interest margin⁽⁵⁾	6.69	6.48	6.60	6.84	6.80	21	(11)	6.59	6.61	(2)
Return on average assets	1.52	1.23	0.83	1.10	1.52	29	—	1.20	1.87	(67)
Return on average tangible assets⁽⁶⁾	1.58	1.27	0.86	1.13	1.57	31	1	1.24	1.93	(69)
Return on average common equity⁽⁷⁾	13.59	10.70	7.11	9.76	13.01	289	58	10.47	15.33	(486)
Return on average tangible common equity⁽⁸⁾	19.59	15.30	10.15	14.22	18.59	429	100	15.01	21.62	(661)
Efficiency ratio⁽⁹⁾	51.89	53.20	55.54	56.19	56.21	(131)	(432)	53.51	55.86	(235)
Operating efficiency ratio⁽¹⁰⁾	41.51	43.36	45.47	43.83	45.10	(185)	(359)	43.41	44.36	(95)
Effective income tax rate for continuing operations	19.4	17.2	17.5	20.2	22.5	220	(310)	18.2	20.4	(220)
Employees (period-end, in thousands)	54.2	55.6	56.1	56.0	55.1	(3) %	(2) %	54.2	55.1	(2) %
Credit Quality Metrics
Allowance for credit losses	$ 14,955	$ 14,646	$ 14,318	$ 13,240	$ 12,209	2 %	22 %	$ 14,955	$ 12,209	22 %
Allowance coverage ratio	4.75 %	4.70 %	4.64 %	4.24 %	4.02 %	5 bps	73 bps	4.75 %	4.02 %	73 bps
Net charge-offs	$ 1,999	$ 2,185	$ 1,697	$ 1,430	$ 931	(9) %	115 %	$ 5,881	$ 2,543	131 %
Net charge-off rate⁽¹¹⁾	2.56 %	2.82 %	2.21 %	1.86 %	1.24 %	(26) bps	132 bps	2.53 %	1.18 %	135 bps
30+ day performing delinquency rate	3.42	3.08	2.88	2.96	2.58	34	84	3.42	2.58	84
30+ day delinquency rate	3.71	3.36	3.09	3.21	2.78	35	93	3.71	2.78	93
Capital Ratios⁽¹²⁾
Common equity Tier 1 capital	13.0 %	12.7 %	12.5 %	12.5 %	12.2 %	30 bps	80 bps	13.0 %	12.2 %	80 bps
Tier 1 capital	14.3	14.0	13.9	13.9	13.6	30	70	14.3	13.6	70
Total capital	16.2	16.0	15.9	15.8	15.7	20	50	16.2	15.7	50
Tier 1 leverage	11.2	11.0	10.9	11.1	11.0	20	20	11.2	11.0	20
Tangible common equity ("TCE")⁽¹³⁾	7.3	7.6	7.6	7.5	7.2	(30)	10	7.3	7.2	10

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 3: Consolidated Statements of Income

						2023 Q3		Nine Months Ended September 30,
(Dollars in millions, except as noted)	2023 Q3	2023 Q2	2023 Q1	2022 Q4	2022 Q3	2023 Q2	2022 Q3	2023	2022	2023 vs 2022
Interest income:
Loans, including loans held for sale	$ 9,696	$ 9,057	$ 8,723	$ 8,360	$ 7,578	7 %	28 %	$ 27,476	$ 20,550	34 %
Investment securities	627	639	615	548	499	(2)	26	1,881	1,336	41
Other	550	470	416	250	123	17	**	1,436	193	**
Total interest income	10,873	10,166	9,754	9,158	8,200	7	33	30,793	22,079	39
Interest expense:
Deposits	2,611	2,277	1,856	1,335	689	15	**	6,744	1,200	**
Securitized debt obligations	249	236	211	170	120	6	108	696	214	**
Senior and subordinated notes	579	528	489	430	319	10	82	1,596	644	148
Other borrowings	11	12	12	26	69	(8)	(84)	35	104	(66)
Total interest expense	3,450	3,053	2,568	1,961	1,197	13	188	9,071	2,162	**
Net interest income	7,423	7,113	7,186	7,197	7,003	4	6	21,722	19,917	9
Provision for credit losses	2,284	2,490	2,795	2,416	1,669	(8)	37	7,569	3,431	121
Net interest income after provision for credit losses	5,139	4,623	4,391	4,781	5,334	11	(4)	14,153	16,486	(14)
Non-interest income:
Interchange fees, net	1,234	1,213	1,139	1,177	1,195	2	3	3,586	3,429	5
Service charges and other customer-related fees	453	411	379	395	415	10	9	1,243	1,230	1
Other	256	275	199	271	192	(7)	33	730	634	15
Total non-interest income	1,943	1,899	1,717	1,843	1,802	2	8	5,559	5,293	5
Non-interest expense:
Salaries and associate benefits	2,274	2,317	2,427	2,266	2,187	(2)	4	7,018	6,159	14
Occupancy and equipment	518	506	508	554	502	2	3	1,532	1,496	2
Marketing	972	886	897	1,118	978	10	(1)	2,755	2,899	(5)
Professional services	295	290	324	481	471	2	(37)	909	1,326	(31)
Communications and data processing	344	344	350	352	349	—	(1)	1,038	1,027	1
Amortization of intangibles	24	22	14	25	17	9	41	60	45	33
Other	433	429	425	284	445	1	(3)	1,287	1,131	14
Total non-interest expense	4,860	4,794	4,945	5,080	4,949	1	(2)	14,599	14,083	4
Income from continuing operations before income taxes	2,222	1,728	1,163	1,544	2,187	29	2	5,113	7,696	(34)
Income tax provision	432	297	203	312	493	45	(12)	932	1,568	(41)
Net income	1,790	1,431	960	1,232	1,694	25	6	4,181	6,128	(32)
Dividends and undistributed earnings allocated to participating securities⁽²⁾	(28)	(23)	(16)	(14)	(21)	22	33	(67)	(74)	(9)
Preferred stock dividends	(57)	(57)	(57)	(57)	(57)	—	—	(171)	(171)	—
Net income available to common stockholders	$ 1,705	$ 1,351	$ 887	$ 1,161	$ 1,616	26	6	$ 3,943	$ 5,883	(33)


						2023 Q3		Nine Months Ended September 30,
	2023 Q3	2023 Q2	2023 Q1	2022 Q4	2022 Q3	2023 Q2	2022 Q3	2023	2022	2023 vs 2022
Basic earnings per common share:⁽²⁾
Net income per basic common share	$ 4.46	$ 3.53	$ 2.32	$ 3.03	$ 4.21	26 %	6 %	$ 10.31	$ 14.90	(31) %
Diluted earnings per common share:⁽²⁾
Net income per diluted common share	$ 4.45	$ 3.52	$ 2.31	$ 3.03	$ 4.20	26 %	6 %	$ 10.28	$ 14.84	(31) %
Weighted-average common shares outstanding (in millions):
Basic common shares	382.5	382.8	382.6	382.6	383.4	—	—	382.7	394.9	(3)
Diluted common shares	383.3	383.7	383.8	383.7	384.6	—	—	383.6	396.4	(3)

CAPITAL ONE FINANCIAL CORPORATION (COF) Table 4: Consolidated Balance Sheets

						2023 Q3
(Dollars in millions)	2023 Q3	2023 Q2	2023 Q1	2022 Q4	2022 Q3	2023 Q2	2022 Q3
Assets:
Cash and cash equivalents:
Cash and due from banks	$ 4,620	$ 3,360	$ 3,347	$ 5,193	$ 3,716	38 %	24 %
Interest-bearing deposits and other short-term investments	40,249	38,236	43,166	25,663	21,176	5	90
Total cash and cash equivalents	44,869	41,596	46,513	30,856	24,892	8	80
Restricted cash for securitization investors	435	452	460	400	399	(4)	9
Securities available for sale	74,837	78,412	81,925	76,919	75,303	(5)	(1)
Loans held for investment:
Unsecuritized loans held for investment	284,953	280,933	280,093	283,282	277,576	1	3
Loans held in consolidated trusts	29,827	30,390	28,743	29,049	26,367	(2)	13
Total loans held for investment	314,780	311,323	308,836	312,331	303,943	1	4
Allowance for credit losses	(14,955)