COF 10-K & 10-Q changes, risk factors and insider trading
Capital One Financial Corp. (also COF-PI, COF-PJ, COF-PK, COF-PL, COF-PN) · NYSE · National Commercial Banks · CIK 927628 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We may not be able to successfully integrate our businesses associated with the Transaction, or such integration may be more difficult, time-consuming or costly than expected.”
New heading “We will continue to incur substantial expenses related to the integration of Discover, and the expenses may be greater than anticipated due to factors, some or all of which may be outside our control.”
New heading “We may fail to realize all of the anticipated benefits of the Transaction, or those benefits may take longer to realize than expected due to factors that may be outside our control.”
New heading “The integration of Discover may have an adverse effect on our business and results of operations due to the diversion of a substantial portion of the time and attention of our management team as well as potential employee attrition.”
New heading “Risks of external fraud exceeding our expectations due to larger, more sophisticated, or more frequent fraud attacks, failure to detect and respond to such attacks and/or the reduced capability to recover losses from those incidents. This could result in increased fraud loss, operational cost, customer dissatisfaction, reputational damage and/or constrained revenue growth for us.”
New heading “A change in market preference towards other operators of payment networks and alternative payment providers could result in reduced transaction volume, limited merchant acceptance of our cards and limited issuance of cards on our networks by third parties, and in turn may impact our revenue margins.”
New heading “If we are unsuccessful in creating and maintaining a strong base of network licensees and achieving meaningful global card acceptance, we may be unable to achieve long-term success in our recently acquired international network business.”
New heading “A reduction in the number of large merchants that accept cards on our recently acquired Discover Network or PULSE Network or in the rates they pay could materially adversely affect our business, financial condition, results of operations and cash flows.”
New heading “Defaults or risks from bankruptcies, liquidations, restructurings, consolidations and outages by our network participants may adversely affect our business, financial condition, cash flows and results of operations.”
Removed heading “The consummation of the Transaction is contingent upon the satisfaction of a number of conditions, including regulatory approvals, that may be outside either party’s control and that either party may be unable to satisfy or obtain or which may delay the consummation of the Transaction or result in the imposition of conditions that could reduce the anticipated benefits from the Transaction or cause the parties to abandon the Transaction.”
Removed heading “We expect to incur substantial expenses related to the Transaction and to the integration of Discover, and the expenses may be greater than anticipated due to unexpected events.”
Removed heading “We may fail to realize all of the anticipated benefits of the Transaction, or those benefits may take longer to realize than expected due to factors that may be outside our control or Discover’s control. We may also encounter significant difficulties in integrating Discover.”
Removed heading “Our future results may suffer if we do not effectively manage our expanded operations following the Transaction.”
Removed heading “While the Transaction is pending, we will be subject to business uncertainties and contractual restrictions that could adversely affect our business and operations.”
Removed heading “Fraudulent activity associated with our products could cause our fraud losses to increase, the use of our products to decrease and our brands to suffer reputational damage, all of which could have a material adverse effect on our business.”
Largest changes
“Defaults or risks from bankruptcies, liquidations, restructurings, consolidations and outages by our network participants may adversely affect our business, financial condition, cash flows and results of operations.”see in full comparison
“The legislative, regulatory and supervisory environment is beyond our control, may change rapidly and unpredictably, and may negatively influence our revenue, costs, earnings, growth, liquidity and capital levels. …”see in full comparison
“The legislative, regulatory and supervisory environment is beyond our control, may change rapidly and unpredictably, and may negatively influence our revenue, costs, operations, transaction volumes, earnings, growth, liquidity and capital levels. There have been efforts to impose price controls and other impositions. Such changes, among others, could impact credit availability, affect our ability or willingness to provide certain products or services, necessitate changes to our business practices or materially reduce our revenues. …”see in full comparison
Our ability to provide our products and services and communicate with oursee in full comparisoncustomers,customers and network participants depends upon the management and safeguarding of information systems and infrastructure, networks, software, data, technology, methodologies and business secrets, including those of our service providers. Our products and services involve the collection, authentication, management, usage, storage, transmission and destruction of sensitive and confidential information, including personal information, regarding our customers and their accounts, our employees, our partners and other third parties with which we do business. We also have arrangements in place with third-party business partners through which we share and receive information about their customers who are or may become our customers. The financial services industry, including Capital One, is particularly at risk because of the increased use of and reliance on digital banking products and other digital services, including mobile banking products, such as mobile payments, and other internet- and cloud-based products and applications, and the development of additional remote connectivity solutions, which increase cybersecurity risks and exposure. In addition, global events and geopolitical instability(including, without limitation, the conflict in the Middle East, the war between Ukraine and Russia and the related sanctions imposed by the U.S. and other countries, and increased geopolitical tensions between the U.S. and China)may lead to increasednation statenation-state targetingofus and other financial institutions in the U.S. andabroad.abroad, particularly given our expanded global footprint.
“We may use models and AI in processes such as determining the pricing of various products, identifying potentially fraudulent transactions, grading loans and extending credit, measuring interest rate and other market risks, predicting deposit levels or loan losses, assessing capital adequacy, calculating managerial and regulatory capital levels, estimating the value of financial instruments and balance sheet items, and other operational functions. …”see in full comparison
“However, there are significant risks involved in using models and AI, and we cannot assure that our use will enhance our businesses or produce only the intended or beneficial results. For example, generative AI has been known to produce false or “hallucinatory” inferences or output. Certain generative AI tools use machine learning and predictive analytics, which can create inaccurate, incomplete or misleading outputs; unexpected results; or errors or inadequacies, any of which may not be easily detectable. …”see in full comparison
Full comparison: every changed paragraph (208)
The following discussion sets forth what management currently believes could be the material risks and uncertainties that could impact our businesses, results of operations and financial condition. The events and consequences discussed in these risk factors could, in circumstances we may not be able to accurately predict, recognize,recognize or control, have a material adverse effect on our business, growth, reputation, prospects, financial condition, operating results, cash flows, liquidity,liquidity and stock price. These risk factors do not identify all risks that we face; our operations could also be affected by factors, events,events or uncertainties that are not presently known to us or that we currently do not consider to present significant risks to our operations. In addition, the global economic and political climate may amplify many of these risks.
•We may not be able to successfully integrate our businesses associated with the Transaction, or such integration may be more difficult, time-consuming or costly than expected.
•The consummation of the Transaction is contingent upon the satisfaction of a number of conditions, including regulatory approvals, that may be outside either party’s control and that either party may be unable to satisfy or obtain or which may delay the consummation of the Transaction or result in the imposition of conditions that could reduce the anticipated benefits from the Transaction or cause the parties to abandon the Transaction.
•We expectwill continue to incur substantial expenses related to the Transaction and to the integration of Discover, and the expenses may be greater than anticipated due to unexpectedfactors, events.some or all of which may be outside our control.
•We may fail to realize all of the anticipated benefits of the Transaction, or those benefits may take longer to realize than expected due to factors that may be outside our control or Discover’s control. We may also encounter significant difficulties in integrating Discover.
•The integration of Discover may have an adverse effect on our business and results of operations due to the diversion of a substantial portion of the time and attention of our management team as well as potential employee attrition.
•Our future results may suffer if we do not effectively manage our expanded operations following the Transaction.
•While the Transaction is pending, we will be subject to business uncertainties and contractual restrictions that could adversely affect our business and operations.
•Changes and instability in the macroeconomic environment could disrupt capital markets, reduce consumer and business activity,activity and weaken the labor market, all of which could impact borrowers’ ability to service their debt obligations and adversely impact our financial results.
•Risks of external fraud exceeding our expectations due to larger, more sophisticated, or more frequent fraud attacks, failure to detect and respond to such attacks and/or the reduced capability to recover losses from those incidents. This could result in increased fraud loss, operational cost, customer dissatisfaction, reputational damage and/or constrained revenue growth for us.
•Fraudulent activity associated with our products could cause our fraud losses to increase, the use of our products to decrease and our brands to suffer reputational damage, all of which could have a material adverse effect on our business.
•A change in market preference towards other operators of payment networks and alternative payment providers could result in reduced transaction volume, limited merchant acceptance of our cards and limited issuance of cards on our networks by third parties, and in turn may impact our revenue margins.
•If we are unsuccessful in creating and maintaining a strong base of network licensees and achieving meaningful global card acceptance, we may be unable to achieve long-term success in our recently acquired international network business.
•Our business, financial condition and results of operations may be adversely affected by legislation, regulation and merchants’ efforts to reduce the fees (including the interchange feescomponent) charged by credit and debit card networks and acquirers to facilitate card transactions.
•A reduction in the number of large merchants that accept cards on our recently acquired Discover Network or PULSE Network or in the rates they pay could materially adversely affect our business, financial condition, results of operations and cash flows.
•Defaults or risks from bankruptcies, liquidations, restructurings, consolidations and outages by our network participants may adversely affect our business, financial condition, cash flows and results of operations.
Risks Relating to the AcquisitionTransaction and Integration of Discover
We may not be able to successfully integrate our businesses associated with the Transaction, or such integration may be more difficult, time-consuming or costly than expected.
We have identified certain additional risk factors in connection with the Merger Agreement and the proposed Transaction. For additional information concerning these risks, uncertainties and assumptions, please refer to the section entitled “Risk Factors” included in our joint proxy statement/prospectus included in the registration statement declared effective by the SEC on January 6, 2025.
The consummation of the Transaction is contingent upon the satisfaction of a number of conditions, including regulatory approvals, that may be outside either party’s control and that either party may be unable to satisfy or obtain or which may delay the consummation of the Transaction or result in the imposition of conditions that could reduce the anticipated benefits from the Transaction or cause the parties to abandon the Transaction.
Consummation of the Transaction is contingent upon the satisfaction of a number of conditions, some of which are beyond either party's control, including, the receipt of the requisite regulatory approvals and the absence of any order, injunction, decree or other legal restraint preventing the completion of the Transaction.
Each party’s obligation to complete the Transaction is also subject to certain additional customary conditions, including:
•subject to certain exceptions, the accuracy of the representations and warranties of the other party;
•performance in all material respects by the other party of its obligations under the Merger Agreement; and
•receipt by such party of an opinion from its counsel to the effect that the Merger and the Second Step Merger, taken together, will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.
These conditions to the closing of the Transaction may not be fulfilled in a timely manner, or at all, and, accordingly, the Transaction may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, or either party may elect to terminate the Merger Agreement in certain other circumstances.
As a condition to granting required regulatory approvals, governmental entities may impose conditions, limitations, obligations or costs or place restrictions on our conduct after the closing of the Transaction. Such conditions or changes and the process of obtaining regulatory approvals could, among other things, have the effect of delaying completion of the Transaction or of imposing additional costs or limitations on us following the Transaction, any of which may have an adverse effect on us.
Either party may also be subject to lawsuits challenging the Transaction, and adverse rulings in these lawsuits may delay or prevent the Transaction from being completed or require either party to incur significant costs to defend or settle these lawsuits. Any delay in completing the Transaction could cause us not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve if the Transaction is successfully completed within its expected time frame.
We expect to incur substantial expenses related to the Transaction and to the integration of Discover, and the expenses may be greater than anticipated due to unexpected events.
We have incurred and expect to incur a number of significant non-recurring costs associated with the Transaction and the integration of Discover. These costs include legal, financial advisory, accounting, consulting and other advisory fees, severance/employee benefit‐related costs, public company filing fees and other regulatory fees, financial printing and other printing costs and other related costs. In addition, we will incur integration costs following the completion of the Transaction as we integrate Discover’s business with ours, including facilities and systems consolidation costs and employment-related costs. There are a large number of processes, policies, procedures, operations, technologies and systems that may need to be integrated, including purchasing, accounting and finance, payroll, compliance, treasury management, branch operations, vendor management, risk management, lines of business, pricing and benefits.
While we have assumed that a certain level of costs will be incurred, there are many factors beyond our control that could affect the total amount or the timing of these expenses. Moreover, many of the expenses that we will incur are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale. These expenses may result in us recording increased expenses as a result of the Transaction or the integration of Discover, and the amount and timing of such charges are uncertain at the present and could exceed initial estimates.
We may fail to realize all of the anticipated benefits of the Transaction, or those benefits may take longer to realize than expected due to factors that may be outside our control or Discover’s control. We may also encounter significant difficulties in integrating Discover.
We may fail to realize the anticipated benefits of the proposed Transaction, including, among other things, anticipated revenue and cost synergies, due to factors that may be outside either party’s control. These factors include, but are not limited to, changes in laws or regulations or the implementation or interpretation of laws or regulation due to changes in government or general economic, political, legislative or regulatory conditions. For example, debit card transactions on three-party networks—comprising the cardholder, merchant and network provider—could become subject to the Federal Reserve’s Regulation II limitation on interchange fees or its prohibition on network exclusivity, and other changes in laws or regulation could impose additional limitations on the fees issuers or networks can charge on debit or credit card transactions or require merchants to be provided an alternative network for transaction routing, any of which may have an adverse effect on our business. Other factors that may impact our ability to achieve the anticipated benefits of the proposed Transaction include the outcome of any legal or regulatory proceedings that may be currently pending or later instituted against us (before or after completion of the Transaction) or against Discover, including those related to Discover’s card product misclassification issue. As a result of the Transaction, we will be the legal successor to Discover and as a result we will assume the risks relating to actions that may be currently pending or later instituted against Discover, as well as any ongoing expense in defending and resolving these actions, and may be subject to reputational and other risks associated with Discover’s actions.
BothThe partiessuccessful have operated and, until the completionintegration of thetwo Transaction,independent willbusinesses continueis tocomplex, operate,difficult, independently.time-consuming and costly. The success of the Transaction,Transaction including anticipated benefits and cost savings, will depend,depends, in part, on our ability to successfully integrate Discover’s operations in a manner that results in various benefits and that does not materially disrupt existing customer relationships or materially decrease revenues due to loss of customers,customers. asAdditionally, wellthe assuccess of the Transaction depends on our ability to successfully integrate Discover into our Framework,Risk Management Framework (the “Framework”), compliance systems and corporate culture, which we believe will requirerequires extensive investment, including to enhance the risk management function at Discover consistent with our risk management standards and those of regulators, as well as to address remediation obligations under existing and possible future regulatory orders. The costsdifficulties of these investments may be greater than anticipated andcombining the benefits thereof may take longer than expected to realize. The process of integrating operations could result in a loss of key personnel or cause an interruption of, or loss of momentum in, the activities of one or more of our businesses followinginclude, theamong completion of the Transaction. Inconsistencies in standards, controls, procedures and policies between us and Discover could adversely affect us following the completion of the Transaction. The diversion of management’s attention and any delays or difficulties encountered in connection with the Transaction and the integration of Discover’s operations could have an adverse effect on our business, financial condition, operating results and prospects.others:
•difficulties integrating operations, systems and networks, including related technology, operations and compliance programs;
•difficulties managing our expanded operations, including challenges related to management and monitoring of new operations and associated increased costs and complexity;
•difficulties managing our expanded international business footprint, including risks adapting to new markets, legal and regulatory regimes, languages, businesses and cultural practices;
•challenges in conforming standards, controls, procedures and accounting and other policies, such as the integration of Discover into our Framework and corporate culture;
An inability to realize the full extent of the anticipated benefits of Transaction, as well as any delays encountered in the integration process, could have an adverse effect on our revenues, levels of expenses and operating results following the completion of the Transaction.
Our future results may suffer if we do not effectively manage our expanded operations following the Transaction.
Following the Transaction, the size and scope of our business will increase significantly beyond our current size and scope. Our future success depends, in part, upon the ability to manage our expanded businesses, which will pose substantial challenges for management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances we will be successful or that we will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Transaction.
In•risks addition,arising following the Transaction, we may be subject tofrom increased scrutiny by, and/or additional regulatory requirements of, governmental authorities as a result of the TransactionTransaction, including those related to the integration process or the size, scope and complexity of our expanded business operations, which may have an adverse effect on our business, operations or stock price.;
•difficulties in retaining existing personnel or hiring and integrating new personnel;
•difficulties retaining existing customers or maintaining existing customer relationships;
•diversion of management’s attention to integration matters;
•potential failures, outages, interruptions, compromises and other disruptions resulting from the integration of certain systems, networks and infrastructures, such as our third-party cloud infrastructure platforms or mainframes;
•changes in laws or regulations or in the interpretation of existing laws or regulations;
•risks arising from known or potential unknown contingencies and liabilities of Discover assumed in connection with the consummation of the Transaction; and
•risks related to the outcome of any legal, regulatory, political or community group proceedings or inquiries that may be currently pending or later instituted against us in connection with the Transaction.
The successful combination of our businesses depends on the result of the factors listed above and on the resolution of any potential unknown liabilities, adverse consequences and unforeseen events and increased expenses associated with the Transaction, some or all of which may be outside of our control. If we are unable to successfully integrate our businesses or manage risks related to the above factors, the anticipated benefits of the Transaction may not be fully realized or at all, or may take longer to realize than expected, all of which may have an adverse effect on our business, financial condition and results of operations.
We will continue to incur substantial expenses related to the integration of Discover, and the expenses may be greater than anticipated due to factors, some or all of which may be outside our control.
We have incurred and expect to incur a number of significant non-recurring costs associated with the integration of Discover. There are a large number of processes, policies, procedures, operations, technologies and systems that have been and will continue to be integrated, including purchasing, accounting and finance, payroll, cybersecurity, compliance, treasury management, customer management operations, vendor management, risk management, lines of business, pricing and benefits.
While we have assumed that a certain level of costs will be incurred, many of the expenses that we will incur are, by their nature, difficult to estimate accurately. Moreover, there are many factors beyond our control that could affect the total amount or the timing of integration expenses. These expenses could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale. These expenses may result in us recording increased expenses as a result of the integration of Discover, and the amount and timing of such charges are uncertain at the present and could exceed initial estimates.
We may fail to realize all of the anticipated benefits of the Transaction, or those benefits may take longer to realize than expected due to factors that may be outside our control.
We may fail to realize the anticipated benefits of the Transaction, including, among other things, anticipated revenue and cost synergies, due to factors that may be outside our control. Our ability to continue to grow our business depends upon our ability to successfully hire, train, supervise, retain and manage new employees, obtain financing for our capital needs, expand our systems effectively, control increasing costs, allocate our human resources optimally, maintain clear lines of communication between our operational functions and our finance and accounting functions and manage the pressures on our management and administrative, operational and financial infrastructure. There can be no assurance that we will be able to accurately anticipate and respond to the changing demands we will face as we continue to expand our operations or that we will be able to achieve further growth at all. Additionally, we face risks that any business, technology, service or product we integrate from Discover may significantly under-perform relative to our expectations, and that we may not achieve the benefits we expect, which could, among other things, result in a write-down of goodwill and other intangible assets associated with the Transaction.
Other factors include, but are not limited to, changes in laws or regulations or the implementation or interpretation of laws or regulations due to, among other things, changes in government or general economic, marketplace, technological, political, legislative or regulatory conditions. For example, debit card transactions on three-party networks could become subject to the Federal Reserve’s Regulation II (Debit Card Interchange Fees and Routing) requirements, and other changes in laws or regulations or in the interpretation of existing laws or regulations could impose additional limitations on the fees issuers or networks can charge on debit or credit card transactions or require merchants to be provided an alternative network for transaction routing, any of which may have an adverse effect on our business. Other factors that also may impact our ability to achieve the anticipated benefits of the Transaction include the outcome of any legal or regulatory proceedings that may be currently pending or later instituted against us, including those related to the Card Product Misclassification.
As a result of the Transaction, we have become the legal successor to Discover and, as a result, have assumed the risks relating to actions that were or may be later instituted against Discover or us relating to Discover’s previous actions, as well as ongoing expenses in defending and resolving these actions, and are subject to reputational and other risks associated with Discover’s previous actions.
If we fail to realize the anticipated benefits of the Transaction, or if those benefits take longer to realize than expected, it could have an adverse effect on our business, financial condition and results of operations.
The integration of Discover may have an adverse effect on our business and results of operations due to the diversion of a substantial portion of the time and attention of our management team as well as potential employee attrition.
Our management team has spent, and continues to spend, a significant amount of time and effort focusing on the integration of Discover. This diversion of attention may have an adverse effect on the conduct of our business, and, as a result, on our financial condition and results of operations, particularly if the time it takes to complete the integration is protracted. During this period of integration, our employees may face distraction and uncertainty, and we may experience increased levels of employee attrition. A loss of key personnel or material erosion of employee morale could have a materially adverse effect on our ability to meet customer expectations, thereby adversely affecting our business and results of operations. The failure to retain members of our management team and other key personnel could also impair our ability to execute our strategy and implement operational initiatives, thereby having a material adverse effect on our financial condition and results of operations.
Management's Discussion & Analysis (MD&A)
New heading “Income from Discontinued Operations, Net of Tax”
Removed heading “CECL Transition Rule”
Removed heading “Capital Planning and Regulatory Stress Testing”
Largest changes
“The results of the 2024 annual goodwill impairment test for our Commercial Banking reporting unit concluded that, while the estimated fair value of this reporting unit exceeded its carrying amount, the percentage by which the estimated fair value of this reporting unit exceeded its carrying amount was 11%. The assumptions leveraged in the valuation of each reporting unit, including the Commercial Banking reporting unit, and the related risk of changes in those assumptions are described further below.”see in full comparison
“As of February 11, 2025 Standard & Poor’s (“S&P”) and Fitch Ratings (“Fitch”) have our credit ratings on a stable outlook. Following the Company’s February 19, 2024 announcement of its agreement to acquire Discover, Moody’s Investors Service (“Moody’s”) placed our credit ratings on review for a downgrade. Moody’s said its review for downgrade may continue until the Transaction has been completed.”see in full comparison
“We define reputation risk as the risk of a material impact to Capital One’s business objectives or franchise value due to the negative perceptions held by our key constituents, including our associates, customers, legislators, regulators, the media, investors, and our communities, regarding our business strategies and activities. …”see in full comparison
Net charge-offs consist of the amortized cost basis, excluding accrued interest, of loans held for investment that we determine to be uncollectible, net of recovered amounts.see in full comparisonWeRecoverieschargeare recognized for payments received after a loan has been charged off, up to the amount that was charged off. The amount and timing of recoveries are impacted by our collection strategies, which are based on customer behavior and risk profile and include direct customer communications, repossession of collateral, the periodic sale of charged off loans asa reduction to the allowance for credit losses when we determine the loan is uncollectible and record subsequent recoveries of previously charged off amountswell asincreasesadditionaltostrategies,thesuchallowanceasfor credit losses.litigation. Uncollectible finance charges and fees are reversed through revenue and certain fraud losses are recorded in other non-interest expense. Generally, costs to recover charged off loans are recorded as collection expenses as incurred and are included in our consolidated statements of income as a component of other non-interest expense. Our charge-off policy for loans varies based on the loan type. See “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” for information on our charge-off policy for each of our loancategories.portfolio.
Full comparison: every changed paragraph (262)
The following table presents selected consolidated financial data and performance metrics for the three-year period ended December 31, 2024,2025, 20232024 and 2022.2023. 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”),GAAP, nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.
(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 B—Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.
(3)Global Payment Network volume includes transactions processed on the Discover Network, PULSE Network, Diners Club and Network Partners.
(45)Return on average assets is calculated based on net income (loss) less income (loss) from continuingdiscontinued operations, net of tax, for the period divided by average total assets for the period.
(56)Return on average tangible assets is a non-GAAP measure calculated based on net income (loss) less income (loss) from continuingdiscontinued operations, net of tax, for the period divided by average tangible assets for the period. See “Supplemental Table—Table B—Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.
(11)Adjusted operating efficiency ratio is a non-GAAP measure. See “Supplemental Table—Table B—Reconciliation of Non-GAAP Measures” for a reconciliation of our adjusted operating efficiency ratio (non-GAAP) to our operating efficiency ratio (GAAP).
(13)Tangible common equityTCE ratio is a non-GAAP measure calculated based on TCE divided by tangible assets. See “Supplemental Table—Table B—Reconciliation of Non-GAAP Measures” for the calculation of this measure and reconciliation to the comparative U.S. GAAP measure.
Our CET1 capital ratio as calculated under the Basel III standardized approach was 13.5%14.3% and 12.9%13.5% as of December 31, 20242025 and 2023,2024, respectively. See “Capital Management” for additional information.
For the year ended December 31, 2024,2025, we declared and paid common stock dividends of $937$1.5 millionbillion and repurchased $553$3.8 millionbillion of shares of our common stock. On October 20, 2025, our Board of Directors authorized the repurchase of up to $16 billion of shares of the Company’s common stock, effective October 21, 2025. This new authorization replaces the Company’s prior authorization to repurchase its common stock approved by our Board of Directors in April 2022. See “Capital Management—Dividend Policy and Stock Purchases” for additional information.
Below are additional highlights of our performance in 2024.2025. These highlights are based on a comparison between the results of 20242025 and 2023,2024, 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 December 31, 20242025 compared to December 31, 2023.2024 were primarily driven by the Transaction. We provide a more detailed discussion of our financial performance in the sections following this “Executive Summary.”
Our net income decreased by $137$2.3 millionbillion to $4.8$2.5 billion in 2024the year ended 2025 compared to 20232024 primarily driven by:
◦Higher provision for credit losses primarily driven by the initial allowance for credit losses for non-purchased credit deteriorated (“non-PCD”) loans acquired in the Transaction.
◦Higher provision for credit losses primarily driven by higher net charge-offs in our domestic credit card loan portfolio, including the impacts of the elimination of loss sharing provisions due to the Walmart Program Termination, partially offset by a lower allowance build.
◦Higher non-interest expense primarily driven by growthimpacts from the Transaction, including integration expenses, as well as continued investments in ourtechnology Creditand Card business, including increasedhigher marketing spend.
◦Higher net-interestnet interest income primarily driven by higher average loan balances and margins in our credit card loan portfolio,balances, including the impacts of the eliminationTransaction, ofand revenue sharing provisions due to the Walmart Program Termination, partially offset by higherlower rates paid on interest-bearing deposits.
◦Higher non-interest income primarily driven by growth in our credit card portfolio and the impacts of acquiring the Global Payment Network, both as a result of the Transaction.
◦Period-end loansLoans held for investment increased by $7.3$125.8 billion to $327.8$453.6 billion as of December 31, 20242025 fromcompared to December 31, 20232024 primarily driven by growth in our credit card loan portfolio, including the impact of the Transaction, as well as growth in our auto loan portfolio. The Transaction contributed $108.2 billion of loans held for investment as of the Closing Date.
◦Average loans held for investment increased by $5.9$79.3 billion to $317.4$396.7 billion in 2024the year ended 2025 compared to 20232024 primarily driven by growth in our credit card loan portfolio, including the impact of the Transaction, as well as growth in our auto loan portfolio.
◦Our net charge-off rate increaseddecreased by 699 basis points (“bps”) to 3.39%3.30% in 20242025 compared to 2023.2024.
◦Our 30+ day delinquency rate remaineddecreased substantiallyby flat39 atbps 3.98%to 3.59% as of December 31, 20242025 compared to 3.99% as offrom December 31, 2023.2024.
•Allowance for Credit Losses: Our allowance for credit losses increased by $962$7.2 millionbillion to $16.3$23.4 billion andas ourof December 31, 2025 compared to December 31, 2024 primarily driven by the initial allowance for credit losses acquired in the Transaction. Our allowance coverage ratio increased by 1920 bps to 4.96%5.16% as of December 31, 20242025 compared to December 31, 20232024 primarily driven by ana allowancehigher build due to the Walmart Program Termination in the second quarterconcentration of 2024.credit card loans, which carry comparatively higher coverage than our auto and commercial loan portfolios.
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 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.funding and excluding discontinued operations. 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. Loans, other assets and liabilities associated with discontinued operations, and their related income and expense, are excluded from the net interest margin calculation.
(1)Average yield is calculated based on interest income for the period divided by average loans during the period. 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.
(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 reductions to the Other category. Taxable-equivalent adjustments included in the interest income and yield computations for our commercial loans totaled approximately $80 million in 2025, $79 million in 2024 and $74 million in both 2023 and 2022,2023, with corresponding reductions to the Other category.
(6) The Walmart Program Termination increased net interest margin by 13 bps in 2024.
Net interest income increased by $2.0$11.7 billion to $31.2$42.9 billion in 20242025 compared to 20232024 primarily driven by higher average loan balances and margins in our credit card loan portfolio,balances, including the impacts of the eliminationTransaction, ofand revenue sharing provisions due to the Walmart Program Termination, partially offset by higherlower rates paid on interest-bearing deposits.
Net interest margin increased by 2596 bps to 6.88%7.84% in 20242025 compared to 20232024 primarily driven by higher assetloan yieldsbalances, including the impacts of the Transaction, and growth in our credit card loan portfolio, partially offset by higherlower rates paid on interest-bearing deposits.
Our total company cumulative interest-bearing deposit beta forincreased to 23% as of December 31, 2025, from 11% as of December 31, 2024. We define cumulative deposit beta as the risingratio rateof cycle peaked at 62%changes in the secondaverage quarterrate paid on our average interest-bearing deposits to changes in the upper bound of 2024 before the federal funds rate began to decrease. As of December 31, 2024, our total company cumulative deposit beta forduring the falling rate cycle was 11% as our total company depositinterest rate decreased as the federal funds rate decreased.cycle.
(1)We calculate the change in interest income and interest expense separately for each item. The portion of interest income or interest expense attributable to both volume and rate is allocated proportionately when the calculation results in a positive value. When the portion of interest income or interest expense attributable to both volume and rate results in a negative value, the total amount is allocated to volume or rate, depending on which amount is positive. The portion of interest income or interest expense attributable to both volume and rate is calculated using rounded dollars in millions for average balances and interest income/expense.
(1)Primarily consists of revenue from Capital One Shopping, treasury income, auto industry services and other investment income and commercial mortgage banking revenue.income.
(2)Includes gains of $105 million, $94 million and $86 million and losses of $78 million on deferred compensation plan investments forin 2024,2025, 20232024 and 2022,2023, respectively. These amounts have corresponding offsets in non-interest expense.
Non-interest income increased by $358$2.7 millionbillion to $7.9$10.6 billion in 20242025 compared to 20232024 primarily drivendue by higher capital markets activity in our Commercial Banking business andto growth in our Creditcredit Cardcard business.portfolio and the impacts of acquiring the Global Payment Network, both as a result of the Transaction.
Our provision for credit losses increased by $8.9 billion to $20.7 billion in 2025 as compared to 2024 primarily driven by the initial allowance for credit losses of $8.8 billion for non-PCD loans acquired in the Transaction.
Our provision for credit losses increased by $1.3 billion to $11.7 billion in 2024 as compared to 2023 driven by higher net charge-offs in our domestic credit card loan portfolio, including the impacts of the elimination of loss sharing provisions due to the Walmart Program Termination, partially offset by a lower allowance build.
We provide additional information on the provision for credit losses and changes in the allowance for credit losses within “Credit Risk Profile” and “Item 8. Financial Statements and Supplementary Data—Note 5—Allowance for Credit Losses and Reserve for Unfunded Lending Commitments.” For information on the allowance methodology for each of our loan categories,methodology, see “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies.”
(1)Includes expenses of $105 million, $94 million and $86 million and a benefit of $78 million related to our deferred compensation plan investments for 2024,2025, 20232024 and 2022,2023, respectively. These amounts have corresponding offsets from investments in other non-interest income.
Non-interest expense increased by $1.2$9.0 billion to $21.5$30.5 billion in the year ended 20242025 compared to 2023,2024 primarily driven by growthimpacts from the Transaction, including integration expenses, as well as continued investments in ourtechnology Creditand Card business, including increasedhigher marketing spend.
For the yearyears ended December 31, 2025 and 2024, we have incurred $1.1 billion and $234 millionmillion, respectively, of integration expenses related to the Transaction, primarily driven by salaries, associate benefits and professional services, which are included within operating expense in our consolidated statements of income.
We recorded an income tax provisionexpense of $193 million (8.5% effective income tax rate), $1.2 billion (19.7% effective income tax rate), and $1.2 billion (19.2% effective income tax rate) and $1.9 billion (20.3% effective income tax rate) in 2024,2025, 20232024 and 2022,2023, respectively. Our effective tax rate on income from continuing operations varies between periods due, in part, to the impact of changes in pre-tax income and changes in tax credits, tax-exempt income and non-deductible expenses relative to our pre-tax earnings.
OurWe effectiverecorded incomea discrete tax ratebenefit of $123 million in 20242025, increased by 0.5% compared to 2023. We recordeda discrete tax benefit of $27 million in 2024,2024 and a discrete tax expense of $6 million in 2023,2023. andThe discrete tax benefit in 2025 was primarily due to a State of $71California law change that resulted in a $128 million in 2022.benefit.
Income from Discontinued Operations, Net of Tax
Income from discontinued operations consists of results from the discontinued Discover Home Loan business acquired as a part of the Transaction. Income from discontinued operations, net of tax, was $365 million in 2025 primarily driven by a $483 million pre-tax gain on the sale of the Discover Home Loans Business in the fourth quarter of 2025. See “Item 8. Financial Statements and Supplementary Data—Note 2—Business Combinations and Discontinued Operations” for additional information.
Total assets increased by $11.7$178.9 billion to $490.1$669.0 billion as of December 31, 20242025 from December 31, 20232024 primarily driven by higherthe loansTransaction heldand growth in our credit card and auto loan portfolios. The Transaction contributed $168.6 billion in identifiable assets as of the Closing Date. See “Item 8. Financial Statements and Supplementary Data—Note 2—Business Combinations and Discontinued Operations” for investmentmore and securities available for sale balances.information.
Total liabilities increased by $9.0$126 billion to $429.4$555.4 billion as of December 31, 20242025 from December 31, 20232024. primarilyThe drivenTransaction bycontributed deposit$130.2 growthbillion duein toidentifiable ourliabilities nationalas consumerof bankingthe strategy,Closing Date, partially offset by net maturities and paydowns of our securitized debt obligations. Our national consumer banking strategy includes our national brandobligations and marketing strategy, caféssenior and techsubordinated / digital investments, which have enabled us to both deepen and grow our overall customer base.notes.
Stockholders’ equity increased by $2.7$52.8 billion to $60.8$113.6 billion as of December 31, 20242025 from December 31, 20232024 primarily driven by net incomereissuance of $4.8 billion, partially offset bytreasury stock dividendsof and$50.6 anbillion increaserelated into accumulatedthe other comprehensive loss.Transaction.
The following is a discussion of material changes in the major components of our assets and liabilities during 2024.2025. Period-end balance sheet amounts may vary from average balance sheet amounts due to the Transaction, timing of normal balance sheet management activities that are intended to support our capital and liquidity positions, our market risk profile and the needs of our customers.
Our investment securities portfolio consists of the following: U.S. government-sponsored enterprise or agency (“GSE” or “Agency”) and non-agency residential mortgage-backed securities (“RMBS”), agency commercial mortgage-backed securities (“CMBS”), U.S. Treasury securities and other securities. Agency securities include securities guaranteed by the Government National Mortgage Association (“Ginnie Mae”) guaranteedand securities,securities issued by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”) issued securities.. The carrying value of our investments in Agency and U.S. Treasury securities represented 96%97% and 97%96% of our total investment securities portfolio as of December 31, 20242025 and 2023,2024, respectively.
The fair value of our available for saleinvestment securities portfolio increased by $3.9$8.0 billion to $83.0$91.1 billion as of December 31, 20242025 from December 31, 2023,2024 primarily driven by net purchases.purchases, Seeincluding “Itemsecurities 8.acquired Financialin Statementsthe Transaction and Supplementarydecreases Data—Notein 3—Investmentrelevant Securities”benchmark forinterest more information.rates.
Total loans held for investment consists of both unsecuritized loans and loans held in our consolidated trusts. Table 5 summarizes,summarizes by portfolio segment,segment the carrying value of our loans held for investment, the allowance for credit losses and net loan balance as of December 31, 20242025 and 2023.2024.
Loans held for investment increased by $7.3$125.8 billion to $327.8$453.6 billion as of December 31, 20242025 compared to December 31, 20232024 primarily driven by growth in our credit card loan portfolio, including the impact of the Transaction, as well as growth in our auto loan portfolio. The Transaction contributed $108.2 billion of loans held for investment as of the Closing Date.
Our primary source of funding comessources from insured retailinclude deposits, as they are a relatively stable and lower cost source of funding. In addition to deposits, we raise funding through the issuance of senior and subordinated notes, securitized debt obligations, federal funds purchased, securities loaned or sold under agreements to repurchase,repurchase and advances from the Federal Home Loan Bank (“FHLB”) advances secured by certain portions of our loan and securities portfolios. Insured deposits in our Consumer Banking business represent our primary source of funding, as they are a relatively stable and low cost source of funding.
Total deposits increased by $14.3$113.1 billion to $362.7$475.8 billion as of December 31, 20242025 from December 31, 20232024 primarily driven by the Transaction and continued growth from our national consumer banking strategy,strategy. partiallyThe offsetTransaction bycontributed maturities$106.9 inbillion brokeredof deposits.deposits as of the Closing Date.
As of December 31, 20242025 and 2023,2024, we held $64.9$71.9 billion and $64.2$64.9 billion, respectively, of estimated uninsured deposits. These amounts were primarily comprised of checking and savings deposits. These estimated uninsured deposits comprised approximately 15% and 18% of our total deposits as of both December 31, 20242025 and 2023.2024, respectively. We estimate our uninsured amounts based on methodologies and assumptions used for our “Consolidated Reports of Condition and Income” (FFIEC 031) filed with the Federal Banking Agencies, primarily adjusted to exclude intercompany balances and cash collateral received on certain derivative contracts which are not presented within deposits on our consolidated balance sheet.
Securitized debt obligations decreased by $3.8$1.4 billion to $14.3$12.9 billion as of December 31, 20242025 from December 31, 20232024 primarily driven by net maturities ofand securitized debt obligations.paydowns.
Other debt decreasedincreased by $526$6.9 millionbillion to $31.3$38.1 billion as of December 31, 20242025 from December 31, 20232024 primarily driven by netthe maturitiesTransaction, which contributed $7.5 billion of unsecuredother seniordebt debt.as of the Closing Date.
Deferred tax assets, net of deferred tax liabilities and valuation allowances, were approximately $9.1$5.9 billion as of December 31, 2024,2025, ana increasedecrease of $1.1$3.1 billion from December 31, 2023.2024. The increasedecrease in our net deferred tax assets was primarilymainly drivenrelated byto anpurchase increaseaccounting inadjustments, ourincluding new intangibles and the revaluation of Discover’s assets and liabilities, favorable changes related to capitalized research costs,costs anfrom increasethe One Big Beautiful Bill Act, and a decrease in the unrealized losses related to our available for sale securities and derivativesderivatives. andThese anfactors increasewere inpartially ouroffset by the initial establishment of Discover related allowance for credit losses.
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 customer 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 andcharges, integration expenses relatedand tocertain liabilities incurred by Discover ahead of the Transaction.
The results related to the acquired Home Loan business have been reflected as discontinued operations. As such, the related results have been excluded from continuing operations and business segment results.
The results of our individual businesses, which we report on a continuing operations basis, reflect the manner in which management evaluates performance and makes decisions about funding our operations and allocating resources. We may periodically change our business segments or reclassify business segment results based on modifications to our management reporting methodologies and changes in organizational alignment. Our business segment results are intended to reflect each segment as if it were a stand-alone business. We use an internal management and reporting process to derive our business segment results. Our internal management and reporting process employs various allocation methodologies, including funds transfer pricing, to assign certain balance sheet assets, deposits and other liabilities and their related revenues and expenses directly or indirectly attributable to each business segment.business. Total interest income and non-interest income are directly attributable to the segment in which they are reported. The net interest income of each segment reflects the results of our funds transfer pricing process, which is primarily based on a matched funding concept that takes into consideration market interest rates. Our funds transfer pricing process is managed by our centralized Corporate Treasury group and provides a funds credit for sources of funds, such as deposits generated by our Consumer Banking and Commercial Banking businesses, and a charge for the use of funds by each business segment.business. The allocation is unique to each business segment and acquired business and is based on the composition of assets and liabilities. The funds transfer pricing process considers the interest rate and liquidity risk characteristics of assets and liabilities and off-balance sheet products. Periodically, the methodology and assumptions utilized in the funds transfer pricing process are adjusted to reflect economic conditions and other factors, which may impact the allocation of net interest income to the business segments.businesses. We regularly assess the assumptions, methodologies and reporting classifications used for segment reporting, which may result in the implementation of refinements or changes in future periods.
The primary sources of revenue for our Credit Card business are net interest income, net discount and interchange income and annual membership fees collected from customers. Expenses primarily consist of operating costs, the provision for credit losses, operating costslosses and marketing expenses.
What changed in the latest 10-Q
Risk Factors
We are not aware of any material changes from the risk factors set forth under “Part I—Item 1A. Risk Factors” in our 2025 Form 10-K.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “Integration Expenses”
New heading “CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)”
New heading “Table 2.1: Allocation of Purchase Consideration”
Removed heading “Basel III Finalization Proposals”
Removed heading “Resolution and Recovery Planning”
Removed heading “Investment Securities”
Removed heading “Allowance for Credit Losses - Investment Securities”
Largest changes
“We evaluate impairment on a quarterly basis at the individual security level and determine whether any portion of the decline in fair value is due to a credit loss. We make this determination through the use of quantitative and qualitative analyses. Our qualitative analysis includes factors such as the extent to which fair value is less than amortized cost basis, any changes in the security’s credit rating, past defaults or delayed payments, and adverse conditions impacting the security or issuer. …”see in full comparison
“We classify investment securities as available for sale or held to maturity based on our investment strategy and management’s assessment of our intent and ability to hold the securities until maturity. Securities that we may sell prior to maturity in response to changes in our investment strategy, liquidity needs, interest rate risk profile or for other reasons are classified as available for sale. Securities that we have the intent and ability to hold until maturity are classified as held to maturity.”see in full comparison
“On March 31, 2026, the OCC issued a final rule rescinding its enforceable recovery planning guidelines. These guidelines required banks with assets of $100 billion or more, including the Bank, to develop recovery plans detailing the actions they would take to remain a going concern when they experience considerable financial or non-financial risks but have not deteriorated to the point that resolution is imminent. The rescission was effective May 1, 2026.”see in full comparison
“CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)”see in full comparison
“For our remaining securities available for sale, we maintain an allowance for credit losses that represents management’s current estimate of expected credit losses over the contractual terms. When an investment security available for sale is impaired due to credit factors, we recognize that impairment through the provision for credit losses in our consolidated statements of income and correspondingly establish an allowance for credit losses on our consolidated balance sheets. …”see in full comparison
Full comparison: every changed paragraph (337)
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 2025 Annual Report on Form 10-K (“2025 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 MarchJune 31,30, 2026 included in this Report.
We offer credit cards, debit cards, bank lending, treasury management and depository services, auto loans, and other consumer lending products in markets across the United States (“U.S.”). We service banking customer accounts through digital channels and our network of branch locations, cafés, call centers and automated teller machines (“ATMs”). Additionally, through the acquisition of Discover, we acquired new productsproducts, including personal loans as well as the Discover Network, the PULSE Network and Diners Club (collectively, the “Global Payment Network”).
•Credit Card: Consists of our domestic consumer card lending, personal loans, domestic small business card lending, corporate card lending and international card businesses in the U.K. and Canada.
On February 19, 2024, the Company entered into an agreement and plan of merger (the “Merger Agreement”), by and among Capital One, Discover, a Delaware corporation and Vega Merger Sub, Inc., a Delaware corporation and a direct, wholly owned subsidiary of the Company (“Merger Sub”). On May 18, 2025, the Company closed the acquisition of Discover, pursuant to which (i) Merger Sub merged with and into Discover, with Discover as the surviving entity in the merger (the “Merger”); (ii) immediately following the Merger, Discover, as the surviving entity, merged with and into Capital One, with Capital One as the surviving entity in the second-step merger (the “Second Step Merger”); and (iii) immediately following the Second Step Merger, Discover Bank, a Delaware-chartered and wholly owned subsidiary of Discover, merged with and into CONA, with CONA as the surviving entity in the merger (the “CONA Bank Merger,” and collectively with the Merger and Second Step Merger, the “Transaction” or “Discover acquisition”).
On April 7, 2026, the Company completed its previously announced acquisition of Brex Inc., a Delaware corporation (“Brex” and such acquisition, the “Brex acquisition”), pursuant to the terms of an Agreement and Plan of Merger and Reorganization, dated as of January 22, 2026 with Brex and certain other parties thereto. Brex offers businesses solutions to issue corporate cards, automate expense management and make secure, real-time payments. The Brex acquisition enhances the Company'sCompany’s offerings in the business payments marketplace. The total consideration paid to Brex shareholders for the acquisition was approximately $4.5 billion and included $2.6 billion of cash consideration and 10.6 million shares of common stock, par value $0.01 per share, of the Company with a fair value of $1.9 billion. The consideration is also subject to customary post-closing adjustments. Immediately following the completion of the Brex acquisition, the Company settledpaid Brex'soff Brex’s outstanding debt of $1.1 billion.
The following table presents selected consolidated financial data and performance from our results of operations for the second quarter and first quarterssix months of 2026 and 2025 and selected comparative balance sheet data as of MarchJune 31,30, 2026 and December 31, 2025. 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 U.S. (“U.S. GAAP”), nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.
We reported net income of $2.2$3.0 billion ($3.34$4.73 per diluted common share) on total net revenue of $15.2$15.9 billion for the first quarter of 2026. In comparison, we reportedand net income of $1.4$5.2 billion ($3.45$8.07 per diluted common share) on total net revenue of $10.0$31.1 billion for the firstsecond quarter and first six months of 2025.2026, respectively. In comparison, we reported net loss of $4.3 billion ($(8.58) per diluted common share) on total net revenue of $12.5 billion and net loss of $2.9 billion ($(6.74) per diluted common share) on total net revenue of $22.5 billion for the second quarter and first six months of 2025, respectively.
Our common equity Tier 1 (“CET1”) capital ratio as calculated under the Basel III standardized approach was 14.4%13.7% and 14.3% as of MarchJune 31,30, 2026 and December 31, 2025, respectively. See “Capital Management” for additional information.
In the firstsecond quarter of 2026, we declared and paid common stock dividends of $505$501 million and repurchased $2.5$2.7 billion of sharesour common stock. During the first six months of 2026, we declared and paid common stock dividends of $1.0 billion and repurchased $5.2 billion of our common stock. See “Capital Management—Dividend Policy and Stock Purchases” for additional information.
Below are additional highlights of our performance in the second quarter and first quartersix months of 2026. These highlights are based on a comparison between the results of the second quarter and first quarterssix months of 2026 and 2025, except as otherwise noted. Highlights related to changes in our financial condition and credit performance are based on MarchJune 31,30, 2026 compared to December 31, 2025. We provide a more detailed discussion of our financial performance in the sections following this “Executive Summary.”
Our net income increased by $770$7.3 millionbillion to $2.2$3.0 billion in the firstsecond quarter of 2026 compared to the second quarter of 2025 and increased by $8.1 billion to $5.2 billion in the first quartersix months of 2026 compared to the first six months of 2025 primarily driven by:
◦Lower provision for credit losses primarily driven by the absence of the initial allowance for credit losses for loans acquired in the Discover acquisition.
◦Higher non-interest income primarily driven by growth in our credit card loan portfolio, largely due toincluding the addition of Discover.Discover, as well as impacts from the reissuance of legacy Capital One customer debit cards onto the Global Payment Network.
◦Higher provision for credit losses primarily driven by higher net losses in our credit card loan portfolio, largely due to the addition of Discover.
◦Higher non-interest expense primarily driven by the addition of Discover, amortization of the intangibles recognized in the TransactionDiscover and higher Discoveracquisition integrationamortization expenses.
◦Loans held for investment decreasedincreased by $5.9$3.5 billion to $447.8$457.2 billion as of MarchJune 31,30, 2026 compared to December 31, 2025 primarily driven by growth in our auto and commercial loan portfolios, partially offset by seasonal paydowns in our credit card loan portfolio, partially offset by growth in our auto loan portfolio.
◦Average loans held for investment increased by $123.9$72.5 billion to $446.2$450.7 billion in the firstsecond quarter of 2026 compared to the second quarter of 2025 and increased by $98.0 billion to $448.5 billion in the first quartersix months of 2026 compared to the first six months of 2025 primarily driven by the addition of Discover.
◦Our net charge-off rate increaseddecreased by 51 basis pointspoint (“bps”) to 3.45%3.23% in the firstsecond quarter of 2026 compared to the firstsecond quarter of 2025 and increased by 3 bps to 3.34% in the first six months of 2026 compared to the first six months of 2025.
◦Our 30+ day delinquency rate decreased by 3546 bps to 3.24%3.13% as of MarchJune 31,30, 2026 from December 31, 2025.
•Allowance for Credit Losses: Our allowance for credit losses increaseddecreased by $221$443 million to $23.6$23.0 billion as of MarchJune 31,30, 2026 compared to December 31, 2025 primarily driven by an allowance buildsrelease in our Domestic Card loan portfolio, partially offset by a build in our auto andloan commercial businesses.portfolio. Our allowance coverage ratio increaseddecreased by 1214 bps to 5.28%5.02% as of MarchJune 31,30, 2026 compared to December 31, 2025 primarily driven by seasonally lower loan balances and a substantially flat allowance forfavorable credit lossesperformance onin our creditDomestic cardCard loan portfolio.
The section below provides a comparative discussion of our consolidated financial performance for the second quarter and first quarterssix months of 2026 and 2025. 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.
Table 2 below presents the average outstanding balance, interest income earned, interest expense incurred and average yield for the second quarter and first quarterssix months of 2026 and 2025 for each major category of our interest-earning assets and interest-bearing liabilities. Nonperforming loans are included in the average loan balances below.
(2)Past due fees, net of reversals, included in interest income totaled approximately $671$677 million and $549$1.3 millionbillion in the second quarter and first quarterssix months of 20262026, respectively, and $634 million and $1.2 billion in the second quarter and first six months of 2025, 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 a blended federal and state statutory tax rate, with offsetting reductions to the Other category. Taxable-equivalent adjustments included in the interest income and yield computations for our commercial loans totaled approximately $20 million and $40 million in both the second quarter and first quarterssix months of 20262026, respectively, and $20 million and $40 million in the second quarter and first six months of 2025, respectively, with corresponding reductions to the Other category.
(5)Includes amounts related to entities that provide capital to low-income and rural communities of $2.2$2.4 billion and $1.9$2.3 billion in the second quarter and first quarterssix months of 20262026, respectively, and $2.2 billion and $2.1 billion in the second quarter and first six months of 2025, respectively. Related interest expense was $9 million and $17 million for the second quarter and first six months of 2026, respectively, and $8 million and $7$15 million infor the second quarter and first quarterssix months of 2026 and 2025, respectively.
Net interest income increased by $4.1$2.4 billion to $12.1$12.4 billion in the firstsecond quarter of 2026 compared to the second quarter of 2025 and increased by $6.5 billion to $24.5 billion in the first quartersix months of 2026 compared to the first six months of 2025 primarily driven by higher average credit card loan balances, largely due to the addition of Discover.
Net interest margin increased by 9439 bps to 7.87%8.01% in the firstsecond quarter of 2026 compared to the second quarter of 2025 and increased by 65 bps to 7.94% in the first quartersix months of 2026 compared to the first six months of 2025 primarily driven by higher average credit card loan balances, largely due to the addition of Discover.
Our total company cumulative interest-bearing deposit beta increased to 32%37% as of MarchJune 31,30, 2026, from 23% as of December 31, 2025. We define cumulative deposit beta as the ratio of changes in the average rate paid on our average interest-bearing deposits to changes in the upper bound of the federal funds rate during the falling interest rate cycle.
Table 4 displays the components of non-interest income for the second quarter and first quarterssix months of 2026 and 2025.
(2)Includes lossesgains of $18$94 million and $16$76 million on deferred compensation plan investments in the second quarter and first quarterssix months of 20262026, respectively, and gains of $57 million and $41 million on deferred compensation plan investments in the second quarter and first six months of 2025, respectively. These amounts have corresponding offsets in non-interest expense.
Non-interest income increased by $1.1$979 billionmillion to $3.1$3.5 billion in the firstsecond quarter of 2026 compared to the second quarter of 2025 and increased by $2.1 billion to $6.6 billion in the first quartersix months of 2026 compared to the first six months of 2025 primarily driven by growth in our credit card loan portfolio, largely due toincluding the addition of Discover.Discover, as well as impacts from the reissuance of legacy Capital One customer debit cards onto the Global Payment Network.
Our provision for credit losses in each period is driven by net charge-offs, changes to the allowance for credit losses and changes to the reserve for unfunded lending commitments. Our provision for credit losses increaseddecreased by $1.7$8.4 billion to $4.1$3.0 billion in the second quarter of 2026 and decreased by $6.7 billion to $7.1 billion in the first quartersix months of 2026 compared to the first quarter of 2025 primarily driven by higherthe netabsence charge-offsof the initial allowance for credit losses for loans acquired in our credit card loan portfolio, largely due to the additionDiscover of Discover.acquisition.
Table 5 displays the components of non-interest expense for the second quarter and first quarterssix months of 2026 and 2025.
(1)Includes benefitsexpenses of $18$94 million and $16$76 million related to our deferred compensation plan investments for the second quarter and first quarterssix months of 20262026, respectively, and expenses of $57 million and $41 million related to our deferred compensation plan investments for the second quarter and first six months of 2025, respectively. These amounts have corresponding offsets from investments in other non-interest income.
Non-interest expense increased by $2.6$2.1 billion to $8.5$9.0 billion in the firstsecond quarter of 2026 compared to the second quarter of 2025 and increased by $4.6 billion to $17.5 billion in the first quartersix months of 2026 compared to the first six months of 2025 primarily driven by the addition of Discover, amortization of the intangibles recognized in the TransactionDiscover and higher Discoveracquisition integrationamortization expenses.
Integration Expenses
Discover integration expenses remained substantially flat at $298 million in the second quarter of 2026 compared to the second quarter of 2025. Discover integration expenses increased by $305$304 million to $415$713 million in the first quartersix months of 2026 compared to the first six months of 2025 primarily driven by higher salaries and associate benefits, which are included within operating expense in our consolidated statements of income.income and within the Other category for business segment results. Since the announcement of the Transaction in the first quarter of 2024, we have incurred $1.8$2.1 billion of Discover integration expenses as of MarchJune 31,30, 2026.
In the second quarter and first six months of 2026, we incurred $96 million of integration expenses related to the Brex acquisition, primarily driven by salaries and associate benefits and professional services, which are included within operating expense in our consolidated statements of income and within Domestic Card for business segment results.
We recorded an income tax expense of $798 million (20.9% effective income tax rate) and $1.3 billion (20.2% effective income tax rate) in the second quarter and first six months of 2026, respectively, compared to an income tax benefit of $1.7 billion (28.1% effective income tax rate) and $1.3 billion (31.9% effective income tax rate) in the second quarter and first six months of 2025, respectively. The difference in our tax provision and effective tax rate was primarily driven by the $8.8 billion initial allowance for credit losses for loans acquired in the Discover acquisition in the second quarter of 2025.
We recorded an income tax expense of $518 million (19.2% effective income tax rate) and $325 million (18.8% effective income tax rate) in the first quarters of 2026 and 2025, respectively. Our effective tax rate on income from continuing operations varies between periods due, in part,due to the impact of changes in pre-tax income and changes in tax credits, tax-exempt income and non-deductible expenses relative to our pre-tax earnings.
Total assets increased by $13.9 billion to $682.9 billion as of March 31, 2026 from December 31, 2025 primarily driven by increases in our cash balances from deposit growth and seasonal paydowns in our credit card loan portfolio.
Total liabilitiesassets increased by $15.3$4.8 billion to $570.6$673.8 billion as of MarchJune 31,30, 2026 from December 31, 2025 primarily driven by continued deposit growth fromin ourloans nationalheld bankingfor strategy.investment.
Stockholders’Total equityliabilities decreasedincreased by $1.4$4.6 billion to $112.3$560.0 billion as of MarchJune 31,30, 2026 from December 31, 2025 primarily driven by purchasescontinued ofdeposit treasurygrowth stockfrom andour stocknational dividends,banking strategy, partially offset by ansecuritized increasedebt in net income.maturities.
Stockholders’ equity remained substantially flat at $113.8 billion as of June 30, 2026 from December 31, 2025 primarily driven by net income, partially offset by net purchases of treasury stock.
The following is a discussion of material changes in the major components of our assets and liabilities during the first quartersix months of 2026. Period-end balance sheet amounts may vary from average balance sheet amounts due to the timing of normal balance sheet management activities that are intended to support our capital and liquidity positions, our market risk profile and the needs of our customers.
Our investment securities portfolio consists of the following debt securities: U.S. government-sponsored enterprise or agency (“GSE” or “Agency”) and non-agency residential mortgage-backed securities (“RMBS”), agency commercial mortgage-backed securities (“CMBS”), U.S. Treasury securities and other debt securities. Agency securities include securities guaranteed by the Government National Mortgage Association (“Ginnie Mae”) and securities issued by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”). The carrying value of our investments in Agency and U.S. Treasury securities represented 96% and 97% of our total investment securities portfolio as of MarchJune 31,30, 2026 and December 31, 2025, respectively.
The carrying value of our investment securities portfolio increased by $1.3$1.7 billion to $92.3$92.8 billion as of MarchJune 31,30, 2026 from December 31, 2025 primarily driven by net purchases.
Total loans held for investment consists of both unsecuritized loans and loans held in our consolidated trusts. Table 6 summarizes by segment the carrying value of our loans held for investment, the allowance for credit losses and net loan balance as of MarchJune 31,30, 2026 and December 31, 2025.
Loans held for investment decreasedincreased by $5.9$3.5 billion to $447.8$457.2 billion as of MarchJune 31,30, 2026 compared to December 31, 2025 primarily driven by growth in our auto and commercial loan portfolios, partially offset by seasonal paydowns in our credit card loan portfolio, partially offset by growth in our auto loan portfolio.
Table 7 provides the composition of our primary sources of funding as of MarchJune 31,30, 2026 and December 31, 2025.
(1)Includes brokered deposits of $18.5$16.7 billion and $19.2 billion as of MarchJune 31,30, 2026 and December 31, 2025, respectively.
Total deposits increased by $13.3$8.5 billion to $489.1$484.3 billion as of MarchJune 31,30, 2026 from December 31, 2025 primarily driven by continued growth from our national banking strategy.
As of MarchJune 31,30, 2026 and December 31, 2025, we held $73.6$72.3 billion and $71.9 billion, respectively, of estimated uninsured deposits. These amounts were primarily comprised of checking and savings deposits. These estimated uninsured deposits comprised approximately 15% of our total deposits as of both MarchJune 31,30, 2026 and December 31, 2025. We estimate our uninsured amounts based on methodologies and assumptions used for our “Consolidated Reports of Condition and Income” Federal Financial Institutions Examination Council (“FFIEC”) 031 filed with the Board of Governors of the Federal Reserve System (“Federal Reserve”), the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”), hereafter collectively referred to as the “Federal Banking Agencies,” adjusted to exclude intercompany balances and cash collateral received on certain derivative contracts which are not presented within deposits on our consolidated balance sheet.
Securitized debt obligations decreased by $1.6$4.4 billion to $11.3$8.5 billion as of MarchJune 31,30, 2026 from December 31, 2025 primarily driven by net maturities and paydowns.
Other debt increaseddecreased by $2.5$1.3 billion to $40.6$36.9 billion as of MarchJune 31,30, 2026 from December 31, 2025 primarily driven by net maturities of subordinated debt and FHLB advances, partially offset by net issuances of unsecured senior debt.
We summarize our business segment results for the second quarter and first quarterssix months of 2026 and 2025 and provide a comparative discussion of these results, as well as changes in our financial condition and credit performance metrics as of MarchJune 31,30, 2026 compared to December 31, 2025. We provide a reconciliation of our total business segment results to our reported consolidated results in “Part I—Item 1. Financial Statements—Note 13—Business Segments and Revenue from Contracts with Customers.”
Table 8 summarizes our business segment results, which we report based on total net revenue (loss) and net income (loss) from continuing operations, for the second quarter and first quarterssix months of 2026 and 2025.
Table 8: Business Segment Results(1)
(1)Effective in the second quarter of 2026, Domestic Card results include Brex and our legacy corporate card product.
Our Credit Card business generated income from continuing operations, net of tax, of $1.9$2.4 billion and $1.2$4.3 billion in the second quarter and first quarterssix months of 20262026, respectively, compared to loss from continuing operations, net of tax, of $4.9 billion and $3.7 billion in the second quarter and first six months of 2025, respectively.
COF insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 19 filings (8 insiders, 16 trade dates, 54,147 shares, about $11.2M; 17 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -54,147 (purchases minus sales); net value about -$11.2M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-10-06 | Cooper Matthew W |
Open-market sale |
3,500 | $196.22 | $686.8K |
| 2026-09-15 | Karam Celia |
Open-market sale |
2,017 | $206.07 | $415.6K |
| 2026-09-15 | Dean Lia |
Open-market sale |
2,066 | $206.07 | $425.7K |
| 2026-09-01 | Cooper Matthew W |
Open-market sale |
3,500 | $214.10 | $749.4K |
| 2026-08-17 | Dean Lia |
Open-market sale |
2,192 | $225.52 | $494.3K |
| 2026-08-17 | Dean Lia |
Open-market sale |
1 | $225.92 | $226 |
| 2026-08-17 | Karam Celia |
Open-market sale |
1 | $225.92 | $226 |
| 2026-08-17 | Karam Celia |
Open-market sale |
1,887 | $225.52 | $425.6K |
| 2026-08-13 | Mouadeb Mark Daniel |
Open-market sale |
1,199 | $225.00 | $269.8K |
| 2026-08-10 | Zamsky Michael |
Open-market sale | 5,473 | $218.02 | $1.2M |
| 2026-08-07 | Raghu Ravi |
Open-market sale |
50 | $218.49 | $10.9K |
| 2026-08-04 | Mouadeb Mark Daniel |
Open-market sale |
1,183 | $220.00 | $260.3K |
| 2026-08-04 | Cooper Matthew W |
Open-market sale |
3,500 | $219.33 | $767.7K |
| 2026-08-03 | Mouadeb Mark Daniel |
Open-market sale |
690 | $215.00 | $148.3K |
| 2026-08-01 | Hanson Jason P. |
Option exercise | 2,014 | — | — |
| 2026-08-01 | Hanson Jason P. |
Shares withheld for tax | 893 | $209.01 | $186.6K |
| 2026-07-31 | Raghu Ravi |
Open-market sale |
444 | $210.70 | $93.6K |
| 2026-07-31 | Raghu Ravi |
Open-market sale |
3,462 | $209.27 | $724.5K |
| 2026-07-31 | Raghu Ravi |
Open-market sale |
5,820 | $210.02 | $1.2M |
| 2026-07-29 | Golden Timothy P |
Open-market sale | 3,487 | $211.00 | $735.8K |
| 2026-07-07 | Cooper Matthew W |
Open-market sale |
3,500 | $208.00 | $728.0K |
| 2026-06-02 | Cooper Matthew W |
Open-market sale |
3,500 | $183.36 | $641.8K |
| 2026-05-13 | Haggerty Kaitlin |
Open-market sale |
119 | $182.59 | $21.7K |
| 2026-05-12 | Haggerty Kaitlin |
Open-market sale |
1,307 | $183.93 | $240.4K |
| 2026-05-12 | Cooper Matthew W |
Open-market sale |
3,500 | $183.93 | $643.8K |
| 2026-05-08 | Locoh-Donou Francois |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Detrick Christine Rose |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Harford Suni P |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Leenaars Cornelis Paj |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Raskind Peter E |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Archibong Ime |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Killalea Peter Thomas |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Shattuck Mayo A Iii |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Wong Jennifer L. |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Williams Craig A. |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Shepherd Michael |
Grant/award | 1,294 | — | — |
| 2026-05-08 | Serra Eileen |
Grant/award | 1,294 | — | — |
| 2026-05-01 | Karam Celia |
Open-market sale |
1,749 | $192.58 | $336.8K |
Well-known investors holding COF (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Harris Associates (Oakmark Funds) | 2026-06-30 | 11,492,010 | $2.3B | 3.07% | Added 11% |
| Dodge & Cox | 2026-06-30 | 9,117,926 | $1.8B | 0.96% | Added 4% |
| Davis Selected Advisers (Chris Davis) | 2026-06-30 | 8,270,946 | $1.7B | 7.13% | Reduced 3% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 5,271,438 | $1.1B | 0.37% | Added 46% |
| D. E. Shaw & Co. | 2026-06-30 | 4,579,708 | $918.8M | 0.57% | Added 94% |
| Berkshire Hathaway (Warren Buffett) | 2026-06-30 | 3,000,000 | $601.9M | 0.2% | Reduced 58% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 2,529,289 | $507.4M | 0.78% | Added 53% |
| Lone Pine Capital (Stephen Mandel) | 2026-06-30 | 2,267,056 | $413.6M | — | Sold out |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 2,059,363 | $413.1M | 0.24% | Added 47% |
| Ruane, Cunniff & Goldfarb (Sequoia Fund) | 2026-06-30 | 1,956,084 | $392.4M | 6.11% | Reduced 3% |
| Millennium Management (Israel Englander) | 2026-06-30 | 1,720,453 | $345.2M | 0.23% | Added 24% |
| Two Sigma Investments | 2026-06-30 | 1,342,795 | $269.4M | 0.2% | Added 1837% |
| D1 Capital Partners (Dan Sundheim) | 2026-06-30 | 1,093,438 | $219.4M | 0.63% | Reduced 2% |
| Third Point (Dan Loeb) | 2026-06-30 | 825,000 | $165.5M | 3.56% | Added 489% |
| Renaissance Technologies | 2026-06-30 | 591,504 | $118.7M | 0.16% | Reduced 20% |
| Leon Cooperman | 2026-06-30 | 455,000 | $91.3M | 2.57% | Added 23% |
| Viking Global Investors (Andreas Halvorsen) | 2026-06-30 | 387,815 | $77.8M | 0.22% | Reduced 76% |
| PRIMECAP Management | 2026-06-30 | 377,440 | $75.7M | 0.04% | Reduced 1% |
| Soros Fund Management | 2026-06-30 | 147,062 | $29.5M | 0.39% | Reduced 18% |
| Bridgewater Associates | 2026-06-30 | 145,544 | $29.2M | 0.12% | New position |
| Markel Group (Tom Gayner) | 2026-06-30 | 91,000 | $18.3M | 0.14% | No change |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 16,135 | $3.2M | 0.01% | Reduced 2% |