CAPITAL ONE FINANCIAL CORP
For the period ended Mar 31, 2024. Filed May 2, 2024.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2024 · Filed May 2, 2024
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Average Balances, Net Interest Income and Net Interest Margin
Table 2 below presents the average outstanding balance, interest income earned, interest expense incurred and average yield for the first quarters of 2024 and 2023 for each major category of our interest-earning assets and interest-bearing liabilities. Nonperforming loans are included in the average loan balances below.
Table 2: Average Balances, Net Interest Income and Net Interest Margin
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2024 · 2023 | ||||||||
| (Dollars in millions) · AverageBalance · Interest Income/Expense · Average Yield/Rate(1) · AverageBalance · Interest Income/Expense · Average Yield/Rate(1) | ||||||||
| Assets: | ||||||||
| Interest-earning assets: | ||||||||
| Loans:(2) | ||||||||
| Credit card | $150,049 | $7,067 | 18.84% | $134,669 | $6,053 | 17.98% | ||
| Consumer banking | 75,091 | 1,564 | 8.33 | 79,000 | 1,461 | 7.40 | ||
| Commercial banking(3) | 90,423 | 1,612 | 7.13 | 94,446 | 1,488 | 6.30 | ||
| Other(4) | — | (323) | ** | — | (279) | ** | ||
| Total loans, including loans held for sale | 315,563 | 9,920 | 12.57 | 308,115 | 8,723 | 11.32 | ||
| Investment securities | 88,581 | 687 | 3.10 | 89,960 | 615 | 2.73 | ||
| Cash equivalents and other interest-earning assets | 43,659 | 570 | 5.21 | 37,124 | 416 | 4.49 | ||
| Total interest-earning assets | 447,803 | 11,177 | 9.98 | 435,199 | 9,754 | 8.96 | ||
| Cash and due from banks | 3,947 | 4,155 | ||||||
| Allowance for credit losses | (15,293) | (13,203) | ||||||
| Premises and equipment, net | 4,391 | 4,349 | ||||||
| Other assets | 34,147 | 31,824 | ||||||
| Total assets | $474,995 | $462,324 | ||||||
| Liabilities and stockholders’ equity: | ||||||||
| Interest-bearing liabilities: | ||||||||
| Interest-bearing deposits | $318,450 | $2,812 | 3.53% | $308,788 | $1,856 | 2.40% | ||
| Securitized debt obligations | 17,836 | 261 | 5.85 | 17,251 | 211 | 4.90 | ||
| Senior and subordinated notes | 32,211 | 606 | 7.52 | 30,136 | 489 | 6.49 | ||
| Other borrowings and interest-bearing liabilities(5) | 2,373 | 10 | 1.78 | 2,335 | 12 | 2.08 | ||
| Total interest-bearing liabilities | 370,870 | 3,689 | 3.98 | 358,510 | 2,568 | 2.87 | ||
| Non-interest-bearing deposits | 27,207 | 31,335 | ||||||
| Other liabilities | 18,920 | 17,706 | ||||||
| Total liabilities | 416,997 | 407,551 | ||||||
| Stockholders’ equity | 57,998 | 54,773 | ||||||
| Total liabilities and stockholders’ equity | $474,995 | $462,324 | ||||||
| Net interest income/spread | $7,488 | 6.00 | $7,186 | 6.10 | ||||
| Impact of non-interest-bearing funding | 0.69 | 0.50 | ||||||
| Net interest margin | 6.69% | 6.60% | ||||||
(1)Average yield is calculated based on annualized interest income for the period divided by average loans during the period. Annualized interest income does not include any allocations, such as funds transfer pricing. Average yield is calculated using whole dollar values for average balances and interest income/expense.
(2)Past due fees, net of reversals, included in interest income totaled approximately $547 million and $503 million in the first quarters of 2024 and 2023, respectively.
(3)Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting
| 11 | Capital One Financial Corporation (COF) |
reductions to the Other category. Taxable-equivalent adjustments included in the interest income and yield computations for our commercial loans totaled approximately $19 million and $18 million in the first quarters of 2024 and 2023, respectively, with corresponding reductions to the Other category.
(4)Interest income/expense in the Other category represents the impact of hedge accounting on our loan portfolios and the offsetting reduction of the taxable-equivalent adjustments of our commercial loans as described above.
(5)Includes amounts related to entities that provide capital to low-income and rural communities of $1.9 billion and $1.7 billion for the first quarters of 2024 and 2023, respectively, and related interest expense of $8 million for both the first quarters of 2024 and 2023.
Net interest income increased by $302 million to $7.5 billion in the first quarter of 2024 compared to the first quarter of 2023 primarily driven by higher average loan balances in our credit card loan portfolio and higher asset yields, partially offset by higher deposit rates paid.
Net interest margin increased by 9 bps to 6.69% in the first quarter of 2024 compared to the first quarter of 2023 primarily driven by higher asset yields and growth in our credit card loan portfolio, partially offset by higher rates paid on interest-bearing liabilities.
Our cumulative deposit beta increased to 61% as of March 31, 2024, from 60% as of December 31, 2023. We define cumulative deposit beta as the ratio of changes in the average rate paid on our average interest-bearing deposits to the increases in the upper bound of the federal funds rate during the current rising interest rate cycle.
| 12 | Capital One Financial Corporation (COF) |
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