CAPITAL ONE FINANCIAL CORP

Capital One Financial Corporation, a Delaware corporation established in 1994 and headquartered in McLean, Virginia, is a diversified financial services holding company with banking and non-banking subsidiaries that operates as a global payments provider and diversified financial institution, delivering a broad array of financial products and services to consumers, small businesses and commercial clients through digital channels, branch locations, cafés and other distribution channels. As of December 31, 2025, the Company's principal operating subsidiary was Capital One, National Association. On May 18, 2025, Discover Financial Services merged into Capital One and Discover Bank merged into CONA. The Company was the largest issuer of credit cards in the United States based on the outstanding balance of credit card loans as of December 31, 2025, and also operates as one of the nation's largest banks based on deposits as of December 31, 2025. Through the acquisition of Discover, the Company acquired new products including personal loans as well as the Discover Network, the PULSE Network, Diners Club International and Network Partners, collectively the Global Payment Network.

Each of the Company's business segments operates in a highly competitive environment, facing competition from numerous bank and non-bank providers of financial services. The Credit Card business competes with international, national, regional and local issuers of Visa and Mastercard credit cards, as well as with American Express, private-label card brands and, to a certain extent, issuers of debit cards. The Consumer Banking and Commercial Banking businesses compete with national, state and direct banks as well as with savings and loan associations and credit unions for loans and deposits, and also with automotive finance companies, commercial banking companies and other financial services providers. As a result of the acquisition of the Global Payment Network, the Company now competes in the global payments industry, both with traditional competitors and new, emerging alternative payment providers, and also considers new and emerging companies in digital and mobile payments and other financial technology providers among its competitors.

The Company's consolidated total net revenues are derived primarily from lending to consumer and commercial customers net of funding costs associated with deposits, long-term debt and other borrowings. Non-interest income primarily consists of discount and interchange income, net of reward expenses, and service charges and other customer-related fees. Expenses primarily consist of the provision for credit losses, operating expenses, marketing expenses and income taxes. The principal operations are organized into three major business segments: Credit Card, Consumer Banking and Commercial Banking. The Global Payment Network earns fees paid by network participants for transactions on the Global Payment Network, and for transactions on Bank-issued credit and debit cards processed on the Global Payment Network, a portion of the amount that merchants pay is passed through to the Bank. The Bank also earns interchange fees when customers use its cards on other networks.

The Credit Card segment consists of domestic consumer card lending, personal loans, domestic small business card lending and international card businesses in the U.K. and Canada. The Consumer Banking segment consists of deposit gathering and lending activities for consumers and small businesses, national auto lending and services offered by the Global Payment Network. The Commercial Banking segment consists of lending, deposit gathering, capital markets and treasury management services to commercial real estate and commercial and industrial customers, with customers typically including companies with annual revenues between $20 million and $2 billion. The results related to the acquired Home Loan business have been reflected as discontinued operations.

On May 18, 2025, the Company closed the acquisition of Discover, pursuant to which each share of common stock of Discover was converted into the right to receive 1.0192 shares of common stock of Capital One. As of the Closing Date, the fair value of purchase consideration transferred was $51.8 billion ¹. The fair value of total identifiable assets acquired was $168.6 billion ², which included $108.2 billion ³ of loans held for investment. The fair value of deposits assumed was $106.9 billion ⁴. On November 24, 2025, the Company completed the sale of the Discover Home Loan Business. On January 22, 2026, the Company entered into an agreement to acquire Brex Inc. for $5.15 billion ⁵ in aggregate consideration, consisting of approximately $2.58 billion ⁶ in cash and approximately 10.6 million ⁷ shares of common stock of Capital One.

For the fiscal year ended December 31, 2025, total net revenues were $60.807 billion ⁸, compared to $50.988 billion ⁹ in 2024. Net income from continuing operations was $8.088 billion ¹⁰ in 2025, compared to $5.802 billion ¹¹ in 2024. Diluted earnings per common share from continuing operations were $12.48 ¹² in 2025, compared to $14.70 ¹³ in 2024. The provision for credit losses was $16.091 billion ¹⁴ in 2025, compared to $12.759 billion ¹⁵ in 2024. Total non-interest expense was $30.419 billion ¹⁶ in 2025, compared to $24.476 billion ¹⁷ in 2024.

The Company's stress capital buffer requirement for the period beginning on October 1, 2025 through September 30, 2026 is 4.5% ¹⁸. On February 4, 2026, the Federal Reserve notified all participating firms that because the Stress Testing Transparency Proposal remains subject to public comment, the Federal Reserve is maintaining stress capital buffer requirements at their current levels, and consequently, absent further action, the Company's stress capital buffer requirement will remain at 4.5% ¹⁹ until September 30, 2027. Accordingly, the Company's minimum capital requirements plus the standardized approach capital conservation buffer for CET1 capital, Tier 1 capital and total capital ratios under the stress capital buffer framework are 9.0% ²⁰, 10.5% ²¹ and 12.5% ²², respectively, for the period from October 1, 2025 through September 30, 2027.

The Transaction enables the Company to leverage its newly acquired networks, customer base, technology, and data ecosystem to drive value for merchants, consumers and small businesses. The Company has substantially completed the reissuance of legacy Capital One customer debit cards onto the Global Payment Network. The Company regularly explores and evaluates opportunities to acquire financial products and services as well as financial assets, including credit card and other loan portfolios, and enter into strategic partnerships as part of its growth strategy, and also explores opportunities to acquire technology companies and related assets to improve its information technology infrastructure and to deliver on its digital strategy.

The Company's stress capital buffer requirement is recalibrated every year based on the Company's supervisory stress test results unless otherwise determined by the Federal Reserve. The Company's stress capital buffer requirement equals, subject to a floor of 2.5% ²³, the sum of (i) the difference between the Company's starting CET1 capital ratio and its lowest projected CET1 capital ratio under the severely adverse scenario of the Federal Reserve's supervisory stress test plus (ii) the ratio of the Company's projected four quarters of common stock dividends to the projected risk-weighted assets for the quarter in which the Company's projected CET1 capital ratio reaches its minimum under the supervisory stress test.

The Company and the Bank are subject to the LCR standard as implemented by the Federal Reserve and OCC, respectively. The LCR Rule requires both the Company and the Bank to hold an amount of eligible HQLA that equals or exceeds 100% ²⁴ of its respective projected adjusted net cash outflows over a 30-day period. As a Category III institution with less than $75 billion in weighted average short-term wholesale funding, the Company's and the Bank's total net cash outflows are multiplied by an outflow adjustment percentage of 85% ²⁵. The Company and the Bank are subject to the NSFR standard, and as a Category III institution, each is required to maintain available stable funding in an amount at least equal to 85% ²⁶ of its required stable funding.

The Company is required to submit to the Federal Reserve and FDIC every three years a resolution plan for orderly resolution. As a result of the Transaction, the Federal Reserve and the FDIC in May 2025 required the Company to file an interim update to its resolution plan by October 1, 2025 and extended the Company's deadline for the next full resolution submission from October 1, 2025 to July 1, 2026. The Bank, as an insured depository institution, is required by FDIC regulation to submit its own resolution plan to the FDIC. In June 2024, the FDIC issued a final rule amending the resolution plan submission requirements applicable to insured depository institutions with $50 billion or more in total assets, including the Bank.

The Company considers various factors in the management of capital, including the impact of both internal and supervisory stress scenarios on its capital levels as determined by internal modeling and the Federal Reserve's estimation of losses in supervisory stress scenarios that are used to annually set its stress capital buffer requirement. The Company also considers various factors in the management of liquidity, including maintaining sufficient liquid assets to meet the requirements of several internal and regulatory stress tests. Growth in total consolidated assets or cross-jurisdictional activity could affect the Company's continued classification as a Category III institution, and if the Company were to have $700 billion or more in total consolidated assets or $75 billion or more in cross-jurisdictional activity, it would become subject to more stringent capital and liquidity regulations as a Category II institution.

Changes and instability in the macroeconomic environment could disrupt capital markets, reduce consumer and business activity and weaken the labor market, all of which could impact borrowers' ability to service their debt obligations and adversely impact financial results. Factors that could disrupt capital markets include monetary policy actions such as changes to interest rates, fiscal policy actions, geopolitical conflicts or instabilities such as the war in Ukraine and the ongoing conflict in the Middle East, trade wars, tariffs, economic sanctions, labor shortages, inflation and deflation, concerns over a potential recession, technology-driven disruption of certain industries, adverse developments impacting the U.S. or global banking industry, changes in immigration policies, lower demand for credit, and changes in usage of commercial real estate.

Fluctuations in interest rates could adversely affect the business, results of operations and financial condition. Higher interest rates may increase borrowing costs, require increases in interest paid on deposits and reduce the market value of securities holdings. If interest rates increase or persist for an extended period, expenses may increase further. Some customers have been and may continue to be less willing or able to borrow at higher interest rates, and higher interest rates have hindered and may continue to hinder the ability of some borrowers to support required loan payments. If the rate of economic growth decreased sharply, causing the Federal Reserve to lower interest rates, net income could be adversely affected as variable-rate assets tend to be more immediately responsive to changes in market rates than most deposit liabilities.

The Company faces material risks related to the integration of Discover, including difficulties integrating operations, systems and networks, challenges in conforming standards and controls, and the diversion of management's attention, which could cause the anticipated benefits of the Transaction to not be fully realized or to take longer than expected. The Company may fail to realize all of the anticipated benefits of the Transaction, including anticipated revenue and cost synergies, and may incur substantial non-recurring costs associated with the integration that could exceed initial estimates. Changes and instability in the macroeconomic environment, including monetary and fiscal policy actions, geopolitical conflicts, inflation, deflation, and potential recessions, could disrupt capital markets, reduce consumer and business activity, and weaken the labor market, impacting borrowers' ability to service debt obligations. Fluctuations in interest rates could adversely affect results of operations and financial condition, as higher interest rates may increase borrowing costs, reduce the market value of securities holdings, and hinder borrowers' ability to support required loan payments. The Company may experience increases in delinquencies and credit losses, or may incorrectly estimate expected losses, which could result in inadequate reserves, and the Company's business, financial condition and results of operations may be adversely affected by legislation, regulation and merchants' efforts to reduce the fees charged by credit and debit card networks, including interchange fees, which are a meaningful source of revenue.

Management's message emphasizes the strategic significance of the Discover acquisition, which closed on May 18, 2025, and the integration of Discover's operations, including the Global Payment Network, as a key priority. The Company has substantially completed the reissuance of legacy Capital One customer debit cards onto the Global Payment Network. Management also highlights the agreement to acquire Brex Inc. on January 22, 2026 for $5.15 billion ²⁷ in aggregate consideration, consisting of approximately $2.58 billion ²⁸ in cash and approximately 10.6 million ²⁹ shares of common stock, subject to customary closing conditions. The forward-looking statements discuss strategies, goals, projections for revenues, income, returns, expenses, assets, liabilities, capital and liquidity measures, capital allocation plans, earnings per share, efficiency ratio, and other financial measures, and the assumptions that underlie these matters.