What happened

March was not a good month for Capital One Financial (COF 0.59%) as the firm's stock price dropped 11.8% for the month, according to S&P Global Market Intelligence. The stock is trading at around $95 per share as of April 7 and is up 2.3% year to date.

The major market indexes were all up in March, as the S&P 500 jumped 3.5%, the Dow Jones Industrial Average gained 1.9%, and the Nasdaq Composite climbed 3.5%.

So what

Banks across the board were hit hard in March following the collapse of SVB Financial's Silicon Valley Bank and Signature Bank earlier in the month.

Capital One was not immune from the fallout, as the banking crisis was the major catalyst for its decline in March. While things did stabilize after the federal government stepped in with an initiative to provide liquidity to any banks needing it, the market had already reacted swiftly, selling off bank stocks.

Capital One -- the ninth-largest bank in the country, with $453 billion in assets as of Dec. 31 -- is well protected from any type of deposit run that brought down the other banks. Its deposits increased 5% year over year in the fourth quarter to $15.8 billion and had a common equity tier 1 ratio of 12.5%, well over the regulatory minimum. It should be noted that as a bank with more than $250 billion in assets, it is subject to stress testing and liquidity requirements.

Capital One is also one of the largest credit card issuers in the country, meaning it issues credit cards and lends money to its cardholders. It got a bit of a boost late in March after the Federal Reserve raised interest rates by just 25 basis points, indicating it may be winding down its rate hikes. But other concerns are on the horizon.

Now what

With a growing number of economists predicting the economy is headed for recession, Capital One could be facing headwinds. As a major credit card issuer, an economic slowdown could lead to higher delinquency rates, higher provisions for credit losses, and a reduction in card use and lending. There are also pending rules from the Consumer Financial Protection Bureau that could curtail late fees, which could be a further drag on revenue.

Capital One is a good long-term stock but is prone to economic cycles, and this cycle is less than ideal. Capital One reports first-quarter earnings on April 27, so watch for more insight into the company.