CAPITAL ONE FINANCIAL CORP
For the period ended Jun 30, 2025. Filed Jul 31, 2025.
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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.
Jun 30, 2025 · Filed Jul 31, 2025
Extracted filing text, with the paragraph anchors used by the comparison.
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Commercial Banking Business Results
Commercial Banking Business
The primary sources of revenue for our Commercial Banking business are net interest income from loans and deposits and non-interest income earned from products and services provided to our clients such as capital markets, advisory services, net interchange and treasury management. Because our Commercial Banking business has loans and investments that generate tax-exempt income, tax credits or other tax benefits, we present the revenues on a taxable-equivalent basis. Expenses primarily consist of the provision for credit losses and operating costs.
Our Commercial Banking business generated income from continuing operations, net of tax, of $280 million and $475 million in the second quarter and first six months of 2025, respectively, and $278 million and $558 million in the second quarter and first six months of 2024, respectively.
| 28 | Capital One Financial Corporation (COF) |
Table 11 summarizes the financial results of our Commercial Banking business and displays selected key metrics for the periods indicated.
Table 11: Commercial Banking Business Results
| Three Months Ended June 30, · Six Months Ended June 30, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in millions, except as noted) · 2025 · 2024 · Change · 2025 · 2024 · Change | |||||||||||
| Selected income statement data: | |||||||||||
| Net interest income | $602 | $609 | (1)% | $1,174 | $1,208 | (3)% | |||||
| Non-interest income | 335 | 271 | 24 | 647 | 552 | 17 | |||||
| Total net revenue(1) | 937 | 880 | 6 | 1,821 | 1,760 | 3 | |||||
| Provision for credit losses(2) | 81 | 34 | 138 | 223 | 32 | ** | |||||
| Non-interest expense | 489 | 483 | 1 | 975 | 998 | (2) | |||||
| Income from continuing operations before income taxes | 367 | 363 | 1 | 623 | 730 | (15) | |||||
| Income tax provision | 87 | 85 | 2 | 148 | 172 | (14) | |||||
| Income from continuing operations, net of tax | $280 | $278 | 1 | $475 | $558 | (15) | |||||
| Selected performance metrics: | |||||||||||
| Average loans held for investment: | |||||||||||
| Commercial and multifamily real estate | $32,522 | $33,801 | (4) | $32,129 | $34,055 | (6) | |||||
| Commercial and industrial | 55,847 | 55,234 | 1 | 55,806 | 55,401 | 1 | |||||
| Total commercial banking | $88,369 | $89,035 | (1) | $87,935 | $89,456 | (2) | |||||
| Average yield on loans held for investment(1)(3) | 6.40% | 7.23% | (83)bps | 6.35% | 7.18% | (83)bps | |||||
| Average deposits | $30,444 | $30,810 | (1)% | $31,045 | $31,327 | (1)% | |||||
| Average deposits interest rate | 2.06% | 2.55% | (49)bps | 2.09% | 2.60% | (51)bps | |||||
| Net charge-offs | $72 | $33 | 118% | $96 | $62 | 55% | |||||
| Net charge-off rate | 0.33% | 0.15% | 18bps | 0.22% | 0.14% | 8bps | |||||
| (Dollars in millions, except as noted) | June 30, 2025 | December 31, 2024 | Change | ||||||||
| Selected period-end data: | |||||||||||
| Loans held for investment: | |||||||||||
| Commercial and multifamily real estate | $32,967 | $31,903 | 3% | ||||||||
| Commercial and industrial | 55,388 | 55,272 | — | ||||||||
| Total commercial banking | $88,355 | $87,175 | 1 | ||||||||
| Nonperforming loan rate | 1.30% | 1.39% | (9)bps | ||||||||
| Nonperforming asset rate(4) | 1.30 | 1.39 | (9) | ||||||||
| Allowance for credit losses(2) | $1,535 | $1,400 | 10% | ||||||||
| Allowance coverage ratio | 1.74% | 1.61% | 13bps | ||||||||
| Deposits | $29,245 | $31,691 | (8)% | ||||||||
| Loans serviced for others | 52,271 | 52,749 | (1) | ||||||||
(1)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 reductions to the Other category.
(2)The provision for losses on unfunded lending commitments is included in the provision for credit losses in our consolidated statements of income and the related reserve is included in other liabilities on our consolidated balance sheets. Our reserve for unfunded lending commitments totaled $135 million and $143 million as of June 30, 2025 and December 31, 2024, respectively.
(3)Average yield is calculated based on annualized interest income for the period divided by average loans during the period and does not include any allocations, such as funds transfer pricing.
(4)Nonperforming assets consist of nonperforming loans and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment and other foreclosed assets.
| 29 | Capital One Financial Corporation (COF) |
Key factors affecting the results of our Commercial Banking business for the second quarter and first six months of 2025 compared to the second quarter and first six months of 2024, and changes in financial condition and credit performance between June 30, 2025 and December 31, 2024 include the following:
Net Interest Income: Net interest income remained relatively flat at $602 million in the second quarter of 2025 compared to the second quarter of 2024 and at $1.2 billion in the first six months of 2025 compared to the first six months of 2024.
Non-Interest Income: Non-interest income increased by $64 million to $335 million in the second quarter of 2025 and increased by $95 million to $647 million in the first six months of 2025 primarily driven by increased fees in our capital markets business.
Provision for Credit Losses: Provision for credit losses increased by $47 million to $81 million in the second quarter of 2025 primarily driven by higher net charge-offs. Provision for credit losses increased by $191 million to $223 million in the first six months of 2025 primarily driven by a net allowance build compared to a flat allowance for credit losses for the first six months of 2024.
Non-Interest Expense: Non-interest expense remained relatively flat at $489 million and $975 million in the second quarter and first six months of 2025 compared to the second quarter and first six months of 2024.
Period-end loans held for investment increased by $1.2 billion to $88.4 billion as of June 30, 2025 from December 31, 2024 primarily due to originations outpacing customer payments.
Average loans held for investment decreased by $666 million to $88.4 billion in the second quarter of 2025 compared to the second quarter of 2024 and decreased by $1.5 billion to $87.9 billion in the first six months of 2025 compared to the first six months of 2024 primarily due to customer payments outpacing originations.
Deposits:
Period-end deposits decreased by $2.4 billion to $29.2 billion as of June 30, 2025 from December 31, 2024 primarily driven by seasonality.
Net Charge-Off and Nonperforming Metrics:
The net charge-off rate increased by 18 bps to 0.33% in the second quarter of 2025 and increased by 8 bps to 0.22% in the first six months of 2025.
The nonperforming loan rate decreased by 9 bps to 1.30% as of June 30, 2025 compared to December 31, 2024.
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