UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________________________

FORM 10-Q

___________________________________

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to             

Commission File No. 001-13300

____________________________________

CAPITAL ONE FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter) 

____________________________________

Delaware		54-1719854
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
1680 Capital One Drive,
McLean,	Virginia	22102
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (703) 720-1000
(Not Applicable)
(Former name, former address and former fiscal year, if changed since last report)
____________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock (par value $.01 per share)	COF	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series I	COF PRI	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series J	COF PRJ	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series K	COF PRK	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series L	COF PRL	New York Stock Exchange
Depositary Shares, Each Representing a 1/40th Interest in a Share of Fixed Rate Non-Cumulative Perpetual Preferred Stock, Series N	COF PRN	New York Stock Exchange
0.800% Senior Notes Due 2024	COF24	New York Stock Exchange
1.650% Senior Notes Due 2029	COF29	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2024, there were 381,922,067 shares of the registrant’s Common Stock outstanding.

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION		4
Item 1.	Financial Statements and Notes	72
	Consolidated Statements of Income	73
	Consolidated Statements of Comprehensive Income	74
	Consolidated Balance Sheets	75
	Consolidated Statements of Changes in Stockholders’ Equity	76
	Consolidated Statements of Cash Flows	77
	Notes to Consolidated Financial Statements	79
	Note 1—Summary of Significant Accounting Policies	79
	Note 2—Business Combinations	81
	Note 3—Investment Securities	82
	Note 4—Loans	85
	Note 5—Allowance for Credit Losses and Reserve for Unfunded Lending Commitments	96
	Note 6—Variable Interest Entities and Securitizations	100
	Note 7—Goodwill and Other Intangible Assets	104
	Note 8—Deposits and Borrowings	106
	Note 9—Derivative Instruments and Hedging Activities	107
	Note 10—Stockholders’ Equity	115
	Note 11—Earnings Per Common Share	118
	Note 12—Fair Value Measurement	119
	Note 13—Business Segments and Revenue from Contracts with Customers	126
	Note 14—Commitments, Contingencies, Guarantees and Others	129
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)	4
	Introduction	4
	Selected Financial Data	6
	Executive Summary	9
	Consolidated Results of Operations	10
	Consolidated Balance Sheets Analysis	16
	Off-Balance Sheet Arrangements	19
	Business Segment Financial Performance	20
	Critical Accounting Policies and Estimates	29
	Accounting Changes and Developments	30
	Capital Management	31
	Risk Management	36
	Credit Risk Profile	38
	Liquidity Risk Profile	51
	Market Risk Profile	56
	Supervision and Regulation	59
	Forward-Looking Statements	61
	Supplemental Table	64
	Glossary and Acronyms	66

1 Capital One Financial Corporation (COF)

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	133
Item 4.	Controls and Procedures	133
PART II—OTHER INFORMATION		134
Item 1.	Legal Proceedings	134
Item 1A.	Risk Factors	134
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	134
Item 3.	Defaults Upon Senior Securities	134
Item 4.	Mine Safety Disclosures	134
Item 5.	Other Information	134
Item 6.	Exhibits	134
EXHIBIT INDEX		135
SIGNATURES		136

2 Capital One Financial Corporation (COF)

INDEX OF MD&A AND SUPPLEMENTAL TABLE

MD&A Tables:		Page
1	Consolidated Financial Highlights	6
2	Average Balances, Net Interest Income and Net Interest Margin	11
3	Rate/Volume Analysis of Net Interest Income	13
4	Non-Interest Income	14
5	Non-Interest Expense	15
6	Loans Held for Investment	17
7	Funding Sources Composition	17
8	Business Segment Results	21
9	Credit Card Business Results	22
9.1	Domestic Card Business Results	24
10	Consumer Banking Business Results	25
11	Commercial Banking Business Results	26
12	Other Category Results	28
13	Capital Ratios Under Basel III	33
14	Regulatory Risk-Based Capital Components and Regulatory Capital Metrics	34
15	Preferred Stock Dividends Paid Per Share	35
16	Portfolio Composition of Loans Held for Investment	38
17	Credit Card Portfolio by Geographic Region	39
18	Consumer Banking Portfolio by Geographic Region	40
19	Commercial Real Estate Portfolio by Region	41
20	Commercial Loans by Industry	42
21	Credit Score Distribution	43
22	30+ Day Delinquencies	44
23	Aging and Geography of 30+ Day Delinquent Loans	45
24	90+ Day Delinquent Loans Accruing Interest	46
25	Nonperforming Loans and Other Nonperforming Assets	46
26	Net Charge-Offs	47
27	Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity	50
28	Liquidity Reserves	51
29	Deposits Composition and Average Deposits Interest Rates	53
30	Long-Term Debt Funding Activities	54
31	Senior Unsecured Long-Term Debt Credit Ratings	55
32	Interest Rate Sensitivity Analysis	58
Supplemental Table:
A	Reconciliation of Non-GAAP Measures	64

3 Capital One Financial Corporation (COF)

PART I—FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)

This discussion contains forward-looking statements that are based upon management’s current expectations and are subject to significant uncertainties and changes in circumstances. Please review “Forward-Looking Statements” for more information on the forward-looking statements in this Quarterly Report on Form 10-Q (“this Report”). All statements that address operating performance, events or developments that we expect or anticipate will occur in the future are forward-looking statements. Our actual results may differ materially from those included in these forward-looking statements due to a variety of factors including, but not limited to, those described in “Part I—Item 1A. Risk Factors” in our 2023 Annual Report on Form 10-K (“2023 Form 10-K”) and “Part II—Item 1A. Risk Factors” in this Report. Unless otherwise specified, references to notes to our consolidated financial statements refer to the notes to our consolidated financial statements as of March 31, 2024 included in this Report.

Management monitors a variety of key indicators to evaluate our business results and financial condition. The following MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and related notes in this Report and the more detailed information contained in our 2023 Form 10-K.

INTRODUCTION

Capital One Financial Corporation, a Delaware corporation established in 1994 and headquartered in McLean, Virginia, is a diversified financial services holding company with banking and non-banking subsidiaries. Capital One Financial Corporation and its subsidiaries (the “Company” or “Capital One”) offer a broad array of financial products and services to consumers, small businesses and commercial clients through digital channels, branch locations, cafés and other distribution channels.

As of March 31, 2024, Capital One Financial Corporation’s principal operating subsidiary was Capital One, National Association (“CONA”). The Company is hereafter collectively referred to as “we,” “us” or “our.” CONA is referred to as the “Bank.”

Our consolidated total net revenues are derived primarily from lending to consumer and commercial customers net of funding costs associated with our deposits, long-term debt and other borrowings. We also earn non-interest income which primarily consists of interchange income, net of reward expenses, service charges and other customer-related fees. Our expenses primarily consist of the provision for credit losses, operating expenses, marketing expenses and income taxes.

Our principal operations are organized for management reporting purposes into three major business segments, which are defined primarily based on the products and services provided or the types of customers served: Credit Card, Consumer Banking and Commercial Banking. The operations of acquired businesses have been integrated into or managed as a part of our existing business segments. Certain activities that are not part of a business segment are included in the Other category, such as the management of our corporate investment portfolio and asset/liability positions performed by our centralized Corporate Treasury group and any residual tax expense or benefit beyond what is assessed to our business segments in order to arrive at the consolidated effective tax rate. The Other category also includes unallocated corporate expenses that do not directly support the operations of the business segments or for which the business segments are not considered financially accountable in evaluating their performance, such as certain restructuring charges.

•Credit Card: Consists of our domestic consumer and small business card lending, and international card businesses in the United Kingdom (“U.K.”) and Canada.

•Consumer Banking: Consists of our deposit gathering and lending activities for consumers and small businesses, and national auto lending.

•Commercial Banking: Consists of our lending, deposit gathering, capital markets and treasury management services to commercial real estate and commercial and industrial customers. Our customers typically include companies with annual revenues between $20 million and $2 billion.

4 Capital One Financial Corporation (COF)

Business Developments

We regularly explore and evaluate opportunities to acquire financial products and services as well as financial assets, including credit card and other loan portfolios, and enter into strategic partnerships as part of our growth strategy. We also explore opportunities to acquire technology companies and related assets to improve our information technology infrastructure and to deliver on our digital strategy. We may issue equity or debt to fund our acquisitions. In addition, we regularly consider the potential disposition of certain of our assets, branches, partnership agreements or lines of business.

Agreement to Acquire Discover

On February 19, 2024, the Company entered into an agreement and plan of merger (the “Merger Agreement”), by and among Capital One, Discover Financial Services, a Delaware corporation (“Discover”) and Vega Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Company (“Merger Sub”), pursuant to which (a) Merger Sub will merge with and into Discover, with Discover as the surviving entity in the merger (the “Merger”); (b) immediately following the Merger, Discover, as the surviving entity, will merge with and into Capital One, with Capital One as the surviving entity in the second-step merger (the “Second Step Merger”); and (c) immediately following the Second Step Merger, Discover Bank, a Delaware-chartered and wholly owned subsidiary of Discover, will merge with and into CONA, with CONA as the surviving entity in the merger (the “CONA Bank Merger,” and collectively with the Merger and the Second Step Merger, the “Transaction”). The Merger Agreement was unanimously approved by the Boards of Directors of each of Capital One and Discover.

At the effective time of the Merger, each share of common stock of Discover outstanding immediately prior to the effective time of the Merger, other than certain shares held by Discover or Capital One, will be converted into the right to receive 1.0192 shares of common stock of Capital One. Holders of Discover common stock will receive cash in lieu of fractional shares. At the effective time of the Second Step Merger, each share of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C, of Discover, and each share of 6.125% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series D, of Discover, in each case outstanding immediately prior to the effective time of the Second Step Merger, will be converted into the right to receive a share of newly created series of preferred stock of Capital One having terms that are not materially less favorable than the applicable series of Discover preferred stock. The closing of the Transaction is subject to the satisfaction of customary closing conditions, including receipt of required regulatory approvals and approval by the stockholders of each of Capital One and Discover.

Consumer Financial Protection Bureau Final Rule

On March 5, 2024, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule amending Regulation Z that, when effective, would significantly lower the safe harbor amount for past due fees that a large credit card issuer, including the Bank, can charge on consumer credit card accounts. The final rule currently has an effective date of May 14, 2024 but is subject to ongoing litigation, the outcome of which remains uncertain.

The final rule, when effective, will have a significant impact on our revenue. In response to the final rule, we have developed a number of mitigating actions, including changes to our policies, products, and investment choices. Some of these mitigating actions have been implemented. Others may be implemented as matters related to the final rule continue to develop. After their implementation, we believe that these actions will gradually resolve the impact of the final rule on our results of operations over time.

For more information on risks related to these rules, see the risk factors set forth under “Part I—Item 1A. Risk Factors” in our 2023 Form 10-K.

5 Capital One Financial Corporation (COF)

SELECTED FINANCIAL DATA

The following table presents selected consolidated financial data and performance from our results of operations for the first quarters of 2024 and 2023 and selected comparative balance sheet data as of March 31, 2024 and December 31, 2023. We also provide selected key metrics we use in evaluating our performance, including certain metrics that are computed using non-GAAP measures. We consider these metrics to be key financial measures that management uses in assessing our operating performance, capital adequacy and the level of returns generated. We believe these non-GAAP metrics provide useful insight 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 United States of America (“U.S. GAAP”), nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.

Table 1: Consolidated Financial Highlights

	Three Months Ended March 31,
(Dollars in millions, except per share data and as noted)	2024		2023		Change
Income statement
Net interest income	$	7,488	$	7,186	4%
Non-interest income	1,914		1,717		11
Total net revenue	9,402		8,903		6
Provision for credit losses	2,683		2,795		(4)
Non-interest expense:
Marketing	1,010		897		13
Operating expense	4,127		4,048		2
Total non-interest expense	5,137		4,945		4
Income from continuing operations before income taxes	1,582		1,163		36
Income tax provision	302		203		49
Net income	1,280		960		33
Dividends and undistributed earnings allocated to participating securities	(23)		(16)		44
Preferred stock dividends	(57)		(57)		—
Net income available to common stockholders	$	1,200	$	887	35
Common share statistics
Basic earnings per common share:
Net income per basic common share	$	3.14	$	2.32	35%
Diluted earnings per common share:
Net income per diluted common share	$	3.13	$	2.31	35%
Weighted-average common shares outstanding (in millions):
Basic	382.2		382.6		—
Diluted	383.4		383.8		—
Common shares outstanding (period-end, in millions)	382.1		382.0		—
Dividends declared and paid per common share	$	0.60	$	0.60	—
Tangible book value per common share (period-end)(1)	98.67		90.86		9%

6 Capital One Financial Corporation (COF)

	Three Months Ended March 31,
(Dollars in millions, except per share data and as noted)	2024			2023			Change
Balance sheet (average balances)
Loans held for investment	$	314,614		$	307,756		2%
Interest-earning assets	447,803			435,199			3
Total assets	474,995			462,324			3
Interest-bearing deposits	318,450			308,788			3
Total deposits	345,657			340,123			2
Borrowings	50,474			48,016			5
Common equity	53,152			49,927			6
Total stockholders’ equity	57,998			54,773			6
Selected performance metrics
Purchase volume	$	150,171		$	141,658		6%
Total net revenue margin(2)	8.40%			8.18		%	22bps
Net interest margin	6.69			6.60			9
Return on average assets(3)	1.08			0.83			25
Return on average tangible assets(4)	1.11			0.86			25
Return on average common equity(5)	9.03			7.11			192
Return on average tangible common equity(6)	12.67			10.15			252
Equity-to-assets ratio(7)	12.21			11.85			36
Efficiency ratio(8)	54.64			55.54			(90)
Operating efficiency ratio(9)	43.89			45.47			(158)
Adjusted operating efficiency ratio(10)	43.45			45.47			(202)
Effective income tax rate from continuing operations	19.1			17.5			160
Net charge-offs	$	2,616		$	1,697		54%
Net charge-off rate	3.33		%	2.21		%	112bps

    

(Dollars in millions, except as noted)	March 31, 2024			December 31, 2023			Change
Balance sheet (period-end)
Loans held for investment	$	315,154		$	320,472		(2)%
Interest-earning assets	453,557			449,701			1
Total assets	481,720			478,464			1
Interest-bearing deposits	323,352			320,389			1
Total deposits	350,969			348,413			1
Borrowings	50,361			49,856			1
Common equity	52,955			53,244			(1)
Total stockholders’ equity	57,801			58,089			—
Credit quality metrics
Allowance for credit losses	$	15,380		$	15,296		1%
Allowance coverage ratio	4.88		%	4.77		%	11	bps
30+ day performing delinquency rate	3.40			3.71			(31)
30+ day delinquency rate	3.67			3.99			(32)

7 Capital One Financial Corporation (COF)

(Dollars in millions, except as noted)	March 31, 2024		December 31, 2023		Change
Capital ratios
Common equity Tier 1 capital(11)	13.1	%	12.9	%	20	bps
Tier 1 capital(11)	14.4		14.2		20
Total capital(11)	16.2		16.0		20
Tier 1 leverage(11)	11.3		11.2		10
Tangible common equity(12)	8.1		8.2		(10)
Supplementary leverage(11)	9.6		9.6		—
Other
Employees (period end, in thousands)	51.3		52.0		(1)%

__________

(1)Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity (“TCE”) divided by common shares outstanding. See “Supplemental Table—Table A—Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

(2)Total net revenue margin is calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.

(3)Return on average assets is calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period.

(4)Return on average tangible assets is a non-GAAP measure calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible assets for the period. See “Supplemental Table—Table A—Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

(5)Return on average common equity is calculated based on annualized net income (loss) available to common stockholders less annualized income (loss) from discontinued operations, net of tax, for the period, divided by average common equity. Our calculation of return on average common equity may not be comparable to similarly-titled measures reported by other companies.

(6)Return on average tangible common equity is a non-GAAP measure calculated based on annualized net income (loss) available to common stockholders less annualized income (loss) from discontinued operations, net of tax, for the period, divided by average TCE. Our calculation of return on average TCE may not be comparable to similarly-titled measures reported by other companies. See “Supplemental Table—Table A—Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.

(7)Equity-to-assets ratio is calculated based on average stockholders’ equity for the period divided by average total assets for the period.

(8)Efficiency ratio is calculated based on total non-interest expense for the period divided by total net revenue for the period.

(9)Operating efficiency ratio is calculated based on operating expense for the period divided by total net revenue for the period.

(10)Adjusted operating efficiency ratio is a non-GAAP measure. See “Supplemental Table—Table A—Reconciliation of Non-GAAP Measures” for a reconciliation of our adjusted operating efficiency ratio (non-GAAP) to our operating efficiency ratio (GAAP).

(11)Capital ratios are calculated based on the Basel III standardized approach framework, see “Capital Management” for additional information.

(12)Tangible common equity ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See “Supplemental Table—Table A—Reconciliation of Non-GAAP Measures” for the calculation of this measure and reconciliation to the comparative U.S. GAAP measure.

8 Capital One Financial Corporation (COF)

EXECUTIVE SUMMARY

Financial Highlights

We reported net income of $1.3 billion ($3.13 per diluted common share) on total net revenue of $9.4 billion for the first quarter of 2024. In comparison, we reported net income of $960 million ($2.31 per diluted common share) on total net revenue of $8.9 billion for the first quarter of 2023.

Our common equity Tier 1 (“CET1”) capital ratio as calculated under the Basel III standardized approach was 13.1% and 12.9% as of March 31, 2024 and December 31, 2023, respectively. See “Capital Management” for additional information.

In the first quarter of 2024, we declared and paid common stock dividends of $238 million and repurchased $103 million of shares of our common stock. See “Capital Management—Dividend Policy and Stock Purchases” for additional information.

Below are additional highlights of our performance in the first quarter of 2024. These highlights are based on a comparison between the results of the first quarters of 2024 and 2023, except as otherwise noted. The changes in our financial condition and credit performance are generally based on our financial condition and credit performance as of March 31, 2024 compared to December 31, 2023. We provide a more detailed discussion of our financial performance in the sections following this “Executive Summary.”

Total Company Performance

•Earnings:

Our net income increased by $320 million to $1.3 billion in the first quarter of 2024 compared to the first quarter of 2023 primarily driven by:

◦Higher net interest income primarily driven by higher average loan balances in our credit card loan portfolio and higher asset yields, partially offset by higher deposit rates paid.

◦Higher non-interest income primarily driven by growth in our Credit Card business.

These drivers were partially offset by:

◦Higher non-interest expense primarily driven by increased marketing spend and the $42 million of incremental expense recognized in the first quarter of 2024 for the Federal Deposit Insurance Corporation (“FDIC”) special assessment related to certain regional bank failures.

•Loans Held for Investment:

◦Period-end loans held for investment decreased by $5.3 billion to $315.2 billion as of March 31, 2024 from December 31, 2023 primarily driven by seasonal paydowns in our credit card loan portfolio.

◦Average loans held for investment increased by $6.9 billion to $314.6 billion in the first quarter of 2024 compared to the first quarter of 2023 primarily driven by growth in our credit card loan portfolio.

•Net Charge-Off and Delinquency Metrics:

◦Our net charge-off rate increased by 112 basis points (“bps”) to 3.33% in the first quarter of 2024 compared to the first quarter of 2023 primarily driven by higher net charge-offs in our domestic credit card loan portfolio.

◦Our 30+ day delinquency rate decreased by 32 bps to 3.67% as of March 31, 2024 from December 31, 2023 primarily driven by seasonally lower delinquency inventories in our auto and domestic credit card loan portfolios.

•Allowance for Credit Losses: Our allowance for credit losses increased by $84 million to $15.4 billion and our allowance coverage ratio increased by 11 bps to 4.88% as of March 31, 2024 compared to December 31, 2023.

9 Capital One Financial Corporation (COF)

CONSOLIDATED RESULTS OF OPERATIONS

The section below provides a comparative discussion of our consolidated financial performance for the first quarters of 2024 and 2023. We provide a discussion of our business segment results in the following section, “Business Segment Financial Performance.” This section should be read together with our “Executive Summary,” where we discuss trends and other factors that we expect will affect our future results of operations.

Net Interest Income

Net interest income represents the difference between interest income, including certain fees, earned on our interest-earning assets and the interest expense incurred on our interest-bearing liabilities. Our interest-earning assets include loans, investment securities and other interest-earning assets, while our interest-bearing liabilities include interest-bearing deposits, securitized debt obligations, senior and subordinated notes, other borrowings and other interest-bearing liabilities. Generally, we include in interest income any past due fees, net of reversals, on loans that we deem collectible. Our net interest margin, based on our consolidated results, represents the difference between the yield on our interest-earning assets and the cost of our interest-bearing liabilities, including the notional impact of non-interest-bearing funding. We expect net interest income and our net interest margin to fluctuate based on changes in interest rates and changes in the amount and composition of our interest-earning assets and interest-bearing liabilities.

10 Capital One Financial Corporation (COF)

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)	Average Balance		Interest Income/ Expense		Average Yield/ Rate(1)		Average Balance		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