1 Forward-Looking Statements This presentation and related communications should be read in conjunction with the financial statements, notes, and other information contained in Capital One's Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Please note that the following materials containing information regarding Capital One's financial performance is preliminary and based on Capital One's data available at the time of the earnings presentation. It speaks only as ...

Financial Data and Key Metrics Changes - In Q1 2025, Capital One earned $1.4 billion, or $3.45 per diluted common share, with adjusted earnings per share at $4.06 after accounting for legal reserve activities and integration expenses [9][10] - Revenue declined by 2% from the previous quarter, primarily due to two fewer days in the quarter, while non-interest expenses decreased by 5% on an adjusted basis [11][12] - The provision for credit losses was $2.4 billion, a decrease of $273 million compared to the prior quarter, driven by lower net charge-offs and a larger reserve release [11][12] Business Line Data and Key Metrics Changes - Domestic card business saw a year-over-year purchase volume growth of 5%, with ending loan balances increasing by $6.4 billion, or about 4% year over year [22][23] - Consumer banking segment reported a 5% increase in ending loan balances, with auto originations up 22% from the prior year quarter [28][30] - Commercial banking revenue decreased by 7% from the linked quarter, with ending deposits down about 5% [31] Market Data and Key Metrics Changes - Total liquidity reserves increased to $131 billion, with cash position ending at approximately $49 billion, up $5 billion from the prior quarter [16] - The net interest margin for Q1 was 6.93%, a decrease of 10 basis points from the previous quarter, but an increase of 24 basis points year-over-year [18] Company Strategy and Development Direction - The company is focused on the acquisition of Discover, expecting to achieve estimated synergies within 24 months post-transaction [34][35] - Capital One aims to build a digital-first national bank, leveraging technology transformation and aggressive pricing strategies to attract customers [99][100] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the U.S. consumer, citing stable unemployment rates and improving credit metrics [46][49] - The company is closely monitoring economic indicators and consumer spending trends, particularly in light of potential tariff impacts [60][61] Other Important Information - The company released $368 million in allowance this quarter, bringing the allowance balance to $15.9 billion, with a total portfolio coverage ratio of 4.91% [12][13] - Marketing expenses increased by 19% year-over-year, reflecting ongoing investments in customer growth and premium offerings [25][26] Q&A Session Summary Question: Concerns regarding tariffs and consumer state - Management noted that the U.S. consumer remains strong, with improving credit metrics and stable debt servicing burdens [46][49] Question: Timing for achieving synergies from the Discover acquisition - Management indicated that the timeline for achieving synergies would shift slightly due to the later closing date of the acquisition [70] Question: Marketing investment opportunities and risk management - Management highlighted three areas of marketing investment: customer growth, targeting heavy spenders, and building a national bank, while remaining vigilant about risks in the subprime market [78][90] Question: Technology integration between Capital One and Discover - Management expressed confidence in leveraging Capital One's technology transformation to modernize Discover's systems, although it may take several years [114][120] Question: Recession resiliency and strategic levers - Management emphasized that the business model is designed for resilience, with rigorous underwriting practices and stress testing to prepare for economic downturns [140]

[Consolidated Results](index=2&type=section&id=Capital%20One%20Financial%20Corporation%20Consolidated%20Results) This section details Capital One Financial Corporation's consolidated financial performance and key metrics [Financial Summary—Consolidated](index=2&type=section&id=Table%201%3A%20Financial%20Summary%E2%80%94Consolidated) Capital One Financial Corporation's Q1 2025 consolidated financial summary reports a net income of $1,404 million, up 28% QoQ and 10% YoY, with diluted EPS rising to $3.45, alongside modest growth in loans and deposits despite a slight QoQ revenue decrease Consolidated Financial Summary (Dollars in millions, except per share data) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $8,013 | $8,098 | $7,488 | (1)% | 7% | | Non-interest income | $1,987 | $2,092 | $1,914 | (5)% | 4% | | Total net revenue | $10,000 | $10,190 | $9,402 | (2)% | 6% | | Provision for credit losses | $2,369 | $2,642 | $2,683 | (10)% | (12)% | | Total non-interest expense | $5,902 | $6,089 | $5,137 | (3)% | 15% | | Net income | $1,404 | $1,096 | $1,280 | 28% | 10% | | Net income per diluted common share | $3.45 | $2.67 | $3.13 | 29% | 10% | | Loans held for investment (period-end) | $323,598 | $327,775 | $315,154 | (1)% | 3% | | Total deposits (period-end) | $367,464 | $362,707 | $350,969 | 1% | 5% | | Common equity (period-end) | $58,697 | $55,938 | $52,955 | 5% | 11% | [Selected Metrics—Consolidated](index=4&type=section&id=Table%202%3A%20Selected%20Metrics%E2%80%94Consolidated) Q1 2025 consolidated metrics reveal improved return on average assets and common equity QoQ, strengthened capital ratios, and decreased credit loss allowance and delinquency rates, despite slight QoQ declines in net interest and total net revenue margins Selected Consolidated Metrics | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change | YoY Change | | :--------------------------------- | :------ | :------ | :------ | :--------- | :--------- | | Total net revenue margin | 8.64% | 8.85% | 8.40% | (21) bps | 24 bps | | Net interest margin | 6.93% | 7.03% | 6.69% | (10) bps | 24 bps | | Return on average assets | 1.14% | 0.90% | 1.08% | 24 bps | 6 bps | | Return on average common equity | 9.23% | 7.16% | 9.03% | 207 bps | 20 bps | | Efficiency ratio | 59.02% | 59.75% | 54.64% | (73) bps | 438 bps | | Allowance for credit losses | $15,899 | $16,258 | $15,380 | (2)% | 3% | | Net charge-off rate | 3.40% | 3.59% | 3.33% | (19) bps | 7 bps | | 30+ day performing delinquency rate | 3.29% | 3.69% | 3.40% | (40) bps | (11) bps | | Common equity Tier 1 capital | 13.6% | 13.5% | 13.1% | 10 bps | 50 bps | | Tangible common equity ("TCE") | 9.1% | 8.6% | 8.1% | 50 bps | 100 bps | [Consolidated Statements of Income](index=5&type=section&id=Table%203%3A%20Consolidated%20Statements%20of%20Income) Q1 2025 consolidated statements of income show a 28% QoQ increase in net income, driven by a significant reduction in provision for credit losses and modest non-interest expense decrease, despite slight QoQ declines in net interest and non-interest income Consolidated Statements of Income (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Total interest income | $11,418 | $11,717 | $11,177 | (3)% | 2% | | Total interest expense | $3,405 | $3,619 | $3,689 | (6)% | (8)% | | Net interest income | $8,013 | $8,098 | $7,488 | (1)% | 7% | | Provision for credit losses | $2,369 | $2,642 | $2,683 | (10)% | (12)% | | Total non-interest income | $1,987 | $2,092 | $1,914 | (5)% | 4% | | Total non-interest expense | $5,902 | $6,089 | $5,137 | (3)% | 15% | | Income from continuing operations, net of tax | $1,404 | $1,093 | $1,280 | 28% | 10% | | Net income available to common stockholders | $1,325 | $1,022 | $1,200 | 30% | 10% | [Consolidated Balance Sheets](index=7&type=section&id=Table%204%3A%20Consolidated%20Balance%20Sheets) Capital One's Q1 2025 consolidated balance sheet reports a 1% QoQ and 2% YoY increase in total assets to $493,604 million, with total deposits growing 1% QoQ and 5% YoY, alongside a slight QoQ decrease in loans held for investment and a modest reduction in allowance for credit losses Consolidated Balance Sheet (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Total cash and cash equivalents | $48,573 | $43,230 | $51,028 | 12% | (5)% | | Securities available for sale | $84,362 | $83,013 | $78,398 | 2% | 8% | | Total loans held for investment | $323,598 | $327,775 | $315,154 | (1)% | 3% | | Allowance for credit losses | $(15,899) | $(16,258) | $(15,380) | (2)% | 3% | | Total assets | $493,604 | $490,144 | $481,720 | 1% | 2% | | Total deposits | $367,464 | $362,707 | $350,969 | 1% | 5% | | Securitized debt obligations | $11,716 | $14,264 | $17,661 | (18)% | (34)% | | Total stockholders' equity | $63,542 | $60,784 | $57,801 | 5% | 10% | [Notes to Financial Summary, Selected Metrics and Consolidated Financial Statements (Tables 1—4)](index=9&type=section&id=Table%205%3A%20Notes%20to%20Financial%20Summary%2C%20Selected%20Metrics%20and%20Consolidated%20Financial%20Statements%20%28Tables%201%E2%80%944%29) This section clarifies definitions and methodologies for key financial metrics and non-GAAP measures, including total net revenue adjustments, EPS computation, and the non-GAAP nature of tangible book value and efficiency ratios, with reconciliations in Table 15 - Total net revenue is reduced by credit card finance charges and fees charged-off as uncollectible. For Q1 2025, this reduction was **$705 million**[11](index=11&type=chunk) - Tangible book value per common share, return on average tangible assets, return on average tangible common equity, efficiency ratio, and operating efficiency ratio are non-GAAP measures. Reconciliations are provided in Table 15[11](index=11&type=chunk) - Capital ratios for Q1 2025 are preliminary and subject to change[11](index=11&type=chunk) [Average Balances, Net Interest Income and Net Interest Margin](index=10&type=section&id=Table%206%3A%20Average%20Balances%2C%20Net%20Interest%20Income%20and%20Net%20Interest%20Margin) Q1 2025 saw average interest-earning assets and liabilities increase QoQ and YoY, with net interest income decreasing 1% QoQ but rising 7% YoY, resulting in a net interest margin of 6.93%, a slight QoQ decline but a 24 bps YoY improvement Average Balances, Net Interest Income and Net Interest Margin (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Total interest-earning assets (Average Balance) | $462,771 | $460,640 | $447,803 | — | 3% | | Total interest-bearing liabilities (Average Balance) | $384,214 | $379,817 | $370,870 | 1% | 4% | | Net interest income | $8,013 | $8,098 | $7,488 | (1)% | 7% | | Net interest margin | 6.93% | 7.03% | 6.69% | (10) bps | 24 bps | | Average yield on loans | 12.59% | 12.95% | 12.57% | (36) bps | 2 bps | | Average rate on interest-bearing deposits | 3.22% | 3.45% | 3.53% | (23) bps | (31) bps | [Loan Information and Performance Statistics](index=11&type=section&id=Table%207%3A%20Loan%20Information%20and%20Performance%20Statistics) Q1 2025 loan information indicates a slight QoQ decrease in total loans held for investment, primarily from domestic credit cards, but a 3% YoY increase, alongside QoQ improvements in net charge-off rates across all segments and falling delinquency rates Loan Information and Performance Statistics (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Total loans held for investment (Period-End) | $323,598 | $327,775 | $315,154 | (1)% | 3% | | Domestic credit card (Period-End) | $150,309 | $155,618 | $143,861 | (3)% | 4% | | Auto loans (Period-End) | $77,656 | $76,829 | $73,801 | 1% | 5% | | Total net charge-off rate | 3.40% | 3.59% | 3.33% | (19) bps | 7 bps | | Domestic credit card net charge-off rate | 6.19% | 6.06% | 5.94% | 13 bps | 25 bps | | Auto net charge-off rate | 1.55% | 2.32% | 1.99% | (77) bps | (44) bps | | Total 30+ day performing delinquency rate | 3.29% | 3.69% | 3.40% | (40) bps | (11) bps | | Total nonperforming loans rate | 0.56% | 0.61% | 0.57% | (5) bps | (1) bps | [Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity](index=13&type=section&id=Table%208%3A%20Allowance%20for%20Credit%20Losses%20and%20Reserve%20for%20Unfunded%20Lending%20Commitments%20Activity) Q1 2025 saw the allowance for credit losses decrease by $368 million QoQ to $15,899 million, mainly due to the credit card segment, with net charge-offs of $2,736 million offset by $956 million in recoveries, and a stable reserve for unfunded lending commitments Allowance for Credit Losses and Reserve Activity (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | QoQ Change | | :--------------------------------- | :------ | :------ | :--------- | | Balance as of period-end (Allowance for credit losses) | $15,899 | $16,258 | $(359) | | Net charge-offs | $(2,736) | $(2,884) | $148 | | Provision for credit losses | $2,368 | $2,642 | $(274) | | Allowance build (release) for credit losses | $(368) | $(262) | $(106) | | Reserve for unfunded lending commitments (period-end) | $144 | $143 | $1 | | Combined allowance and reserve | $16,043 | $16,401 | $(358) | [Business Segment Results](index=14&type=section&id=Business%20Segment%20Results) This section presents the financial performance and key statistics for Capital One's Credit Card, Consumer Banking, and Commercial Banking segments [Financial Summary—Business Segment Results](index=14&type=section&id=Table%209%3A%20Financial%20Summary%E2%80%94Business%20Segment%20Results) In Q1 2025, the Credit Card segment significantly increased income from continuing operations by 41% QoQ, remaining the largest contributor to net interest income and total net revenue, while Consumer Banking saw a slight decrease and Commercial Banking a 50% QoQ decline due to higher credit loss provisions Financial Summary—Business Segment Results (Dollars in millions) | Segment | Net Interest Income (2025 Q1) | Total Net Revenue (2025 Q1) | Income from Continuing Operations, Net of Tax (2025 Q1) | | :-------------------- | :---------------------------- | :-------------------------- | :------------------------------------------------------- | | Credit Card | $5,654 | $7,165 | $1,219 | | Consumer Banking | $1,943 | $2,126 | $186 | | Commercial Banking | $572 | $884 | $195 | | Other | $(156) | $(175) | $(196) | | Total | $8,013 | $10,000 | $1,404 | - **QoQ Change in Income from Continuing Operations, Net of Tax:** - Credit Card: **+41%** (from $866 million in Q4 2024 to $1,219 million in Q1 2025)[16](index=16&type=chunk) - Consumer Banking: **-9%** (from $205 million in Q4 2024 to $186 million in Q1 2025)[16](index=16&type=chunk) - Commercial Banking: **-50%** (from $388 million in Q4 2024 to $195 million in Q1 2025)[16](index=16&type=chunk) [Financial & Statistical Summary—Credit Card Business](index=15&type=section&id=Table%2010%3A%20Financial%20%26%20Statistical%20Summary%E2%80%94Credit%20Card%20Business) The Credit Card business reported a strong Q1 2025, with income from continuing operations increasing by 41% QoQ and 27% YoY to $1,219 million, driven by a 19% QoQ decrease in provision for credit losses, despite a slight QoQ decline in total net revenue Credit Card Business Summary (Dollars in millions, except as noted) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $5,654 | $5,779 | $5,272 | (2)% | 7% | | Total net revenue | $7,165 | $7,364 | $6,748 | (3)% | 6% | | Provision for credit losses | $1,926 | $2,384 | $2,259 | (19)% | (15)% | | Income from continuing operations, net of tax | $1,219 | $866 | $961 | 41% | 27% | | Average loans held for investment | $156,407 | $157,326 | $149,645 | (1)% | 5% | | Net charge-off rate | 6.14% | 6.02% | 5.90% | 12 bps | 24 bps | | 30+ day performing delinquency rate | 4.26% | 4.53% | 4.50% | (27) bps | (24) bps | | Purchase volume | $157,948 | $172,919 | $150,171 | (9)% | 5% | | Domestic Card: Greater than 660 FICO scores | 69% | 69% | 68% | — | 1% | [Financial & Statistical Summary—Consumer Banking Business](index=17&type=section&id=Table%2011%3A%20Financial%20%26%20Statistical%20Summary%E2%80%94Consumer%20Banking%20Business) The Consumer Banking business reported a Q1 2025 income from continuing operations of $186 million, a 9% QoQ and 51% YoY decrease, despite improved credit quality metrics with a 78 bps QoQ decrease in net charge-off rate and falling delinquency rates Consumer Banking Business Summary (Dollars in millions, except as noted) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $1,943 | $1,959 | $2,011 | (1)% | (3)% | | Total net revenue | $2,126 | $2,141 | $2,170 | (1)% | (2)% | | Provision for credit losses | $301 | $328 | $426 | (8)% | (29)% | | Income from continuing operations, net of tax | $186 | $205 | $381 | (9)% | (51)% | | Average loans held for investment | $78,480 | $77,221 | $75,092 | 2% | 5% | | Auto loan originations | $9,210 | $9,399 | $7,522 | (2)% | 22% | | Average deposits | $319,950 | $313,992 | $294,448 | 2% | 9% | | Net charge-off rate | 1.60% | 2.38% | 2.03% | (78) bps | (43) bps | | 30+ day performing delinquency rate | 4.87% | 5.87% | 5.21% | (100) bps | (34) bps | | Auto—At origination FICO scores: Greater than 660 | 53% | 54% | 53% | (1)% | — | [Financial & Statistical Summary—Commercial Banking Business](index=18&type=section&id=Table%2012%3A%20Financial%20%26%20Statistical%20Summary%E2%80%94Commercial%20Banking%20Business) The Commercial Banking business reported a Q1 2025 income from continuing operations of $195 million, a 50% QoQ and 30% YoY decrease, primarily due to a $142 million provision for credit losses compared to a prior quarter benefit, despite stable loan and deposit balances Commercial Banking Business Summary (Dollars in millions, except as noted) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $572 | $587 | $599 | (3)% | (5)% | | Total net revenue | $884 | $953 | $880 | (7)% | — | | Provision (benefit) for credit losses | $142 | $(72) | $(2) | ** | ** | | Income from continuing operations, net of tax | $195 | $388 | $280 | (50)% | (30)% | | Average loans held for investment | $87,498 | $87,324 | $89,877 | — | (3)% | | Average deposits | $31,654 | $31,545 | $31,844 | — | (1)% | | Net charge-off rate | 0.11% | 0.26% | 0.13% | (15) bps | (2) bps | | Nonperforming loan rate | 1.40% | 1.39% | 1.28% | 1 bps | 12 bps | | Criticized performing loans as % of total | 6.41% | 6.35% | 8.39% | 6 bps | (198) bps | | Criticized nonperforming loans as % of total | 1.40% | 1.39% | 1.28% | 1 bps | 12 bps | [Financial & Statistical Summary—Other and Total](index=19&type=section&id=Table%2013%3A%20Financial%20%26%20Statistical%20Summary%E2%80%94Other%20and%20Total) The 'Other' segment reported a Q1 2025 net loss from continuing operations of $196 million, a 46% QoQ and 43% YoY improvement, while consolidated total net revenue slightly decreased QoQ but increased YoY, with net income seeing a significant QoQ rise 'Other' Segment Summary (Dollars in millions) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest loss | $(156) | $(227) | $(394) | (31)% | (60)% | | Total net loss | $(175) | $(268) | $(396) | (35)% | (56)% | | Loss from continuing operations, net of tax | $(196) | $(366) | $(342) | (46)% | (43)% | Total Consolidated Summary (Dollars in millions) | Metric | 2025 Q1 | 2024 Q4 | 2024 Q1 | QoQ Change (%) | YoY Change (%) | | :--------------------------------- | :------ | :------ | :------ | :------------- | :------------- | | Net interest income | $8,013 | $8,098 | $7,488 | (1)% | 7% | | Total net revenue | $10,000 | $10,190 | $9,402 | (2)% | 6% | | Income from continuing operations, net of tax | $1,404 | $1,093 | $1,280 | 28% | 10% | | Period-end loans held for investment | $323,598 | $327,775 | $315,154 | (1)% | 3% | | Period-end deposits | $367,464 | $362,707 | $350,969 | 1% | 5% | [Other Disclosures](index=20&type=section&id=Other) This section provides additional disclosures, including notes to financial statements, regulatory capital calculations, and reconciliations of non-GAAP financial measures [Notes to Net Interest Margin, Loan, Allowance and Business Segment Disclosures (Tables 6—13)](index=20&type=section&id=Table%2014%3A%20Notes%20to%20Net%20Interest%20Margin%2C%20Loan%2C%20Allowance%20and%20Business%20Segment%20Disclosures%20%28Tables%206%E2%80%9413%29) This section provides important contextual notes and definitions for financial and statistical data in Tables 6-13, detailing the impact of the Walmart Program Termination on net interest margin and domestic card net charge-off rates, clarifying credit quality terms, and outlining Discover integration expenses and FDIC special assessments - The termination of the Walmart program agreement increased net interest margin by **20 basis points** in Q1 2025 and **21 basis points** in Q4 2024. Excluding this impact, the net interest margin would have been 6.73% and 6.82% respectively[24](index=24&type=chunk) - The Walmart Program Termination also increased the Domestic Card net charge-off rate by **42 basis points** in Q1 2025 and **40 basis points** in Q4 2024[24](index=24&type=chunk) - Non-interest expense in Q1 2025 includes **$110 million** in Discover integration expenses, following **$140 million** in Q4 2024[24](index=24&type=chunk) - Criticized exposures correspond to 'Special Mention,' 'Substandard,' and 'Doubtful' asset categories as defined by bank regulatory authorities[24](index=24&type=chunk) [Calculation of Regulatory Capital Measures and Reconciliation of Non-GAAP Measures](index=21&type=section&id=Table%2015%3A%20Calculation%20of%20Regulatory%20Capital%20Measures%20and%20Reconciliation%20of%20Non-GAAP%20Measures) This section details Capital One's regulatory capital measures under Basel III and provides comprehensive reconciliations for various non-GAAP financial metrics, offering alternative views of the company's financial health and operating performance [Regulatory Capital Metrics](index=21&type=section&id=Regulatory%20Capital%20Metrics) This subsection presents Capital One's regulatory capital metrics, including Common Equity Tier 1, Tier 1, and Total Capital ratios, along with risk-weighted assets and the Tangible Common Equity ratio Regulatory Capital Metrics (Dollars in millions, except as noted) | Metric | March 31, 2025 | December 31, 2024 | March 31, 2024 | | :--------------------------------- | :------------- | :---------------- | :------------- | | Common equity Tier 1 capital | $51,205 | $50,807 | $48,007 | | Tier 1 capital | $56,050 | $55,652 | $52,852 | | Total capital | $63,930 | $61,805 | $59,484 | | Risk-weighted assets | $375,874 | $377,145 | $366,161 | | Common equity Tier 1 capital ratio | 13.6% | 13.5% | 13.1% | | Tier 1 capital ratio | 14.9% | 14.8% | 14.4% | | Total capital ratio | 17.0% | 16.4% | 16.2% | | Tier 1 leverage ratio | 11.6% | 11.6% | 11.3% | | TCE ratio | 9.1% | 8.6% | 8.1% | - Regulatory capital metrics and capital ratios as of March 31, 2025, are preliminary and subject to change[33](index=33&type=chunk) [Reconciliation of Non-GAAP Measures](index=22&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) This subsection provides detailed reconciliations of non-GAAP financial measures, including adjusted diluted EPS, efficiency ratios, tangible common equity, and related performance indicators, to their most directly comparable GAAP measures Adjusted Diluted Earnings Per Share (Dollars in millions, except per share data) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | | :--------------------------------- | :------ | :------ | :------ | | Net income available to common stockholders (GAAP) | $1,325 | $1,022 | $1,200 | | Legal reserve activities | $198 | $75 | — | | Discover integration expenses | $110 | $140 | — | | Adjusted net income available to common stockholders (non-GAAP) | $1,557 | $1,185 | $1,232 | | Diluted EPS (GAAP) | $3.45 | $2.67 | $3.13 | | Adjusted diluted EPS (non-GAAP) | $4.06 | $3.09 | $3.21 | Adjusted Efficiency Ratios (Dollars in millions, except as noted) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | | :--------------------------------- | :------ | :------ | :------ | | Non-interest expense (GAAP) | $5,902 | $6,089 | $5,137 | | Adjusted non-interest expense (non-GAAP) | $5,594 | $5,874 | $5,095 | | Total net revenue (GAAP) | $10,000 | $10,190 | $9,402 | | Adjusted net revenue (non-GAAP) | $10,000 | $10,190 | $9,402 | | Efficiency ratio (GAAP) | 59.02% | 59.75% | 54.64% | | Adjusted efficiency ratio (non-GAAP) | 55.94% | 57.64% | 54.19% | | Operating expense (GAAP) | $4,700 | $4,714 | $4,127 | | Adjusted operating expense (non-GAAP) | $4,392 | $4,499 | $4,085 | | Operating efficiency ratio (GAAP) | 47.00% | 46.26% | 43.89% | | Adjusted operating efficiency ratio (non-GAAP) | 43.92% | 44.15% | 43.45% | Tangible Common Equity & Assets (Dollars in millions) | Item | 2025 Q1 | 2024 Q4 | 2024 Q1 | | :--------------------------------- | :------ | :------ | :------ | | Tangible common equity (Period-End) | $43,558 | $40,782 | $37,699 | | Tangible common equity (Average) | $42,246 | $41,724 | $37,873 | | Return on tangible common equity (Average) | 12.55% | 9.77% | 12.67% | | Tangible assets (Period-End) | $478,465 | $474,987 | $466,463 | | Tangible assets (Average) | $476,668 | $473,105 | $459,715 | | Return on tangible assets (Average) | 1.18% | 0.92% | 1.11% | | Tangible book value per common share | $113.74 | $106.97 | $98.67 |

Group 1 - Capital One has received federal approval to acquire Discover for $35.3 billion, with the deal expected to close on May 18 [2][3] - The merger is anticipated to enhance competition in payment networks and expand product offerings for customers, according to Discover's interim CEO [2] - Concerns have been raised that the merger may reduce competition among credit card companies, potentially leading to higher prices and fees for consumers [3] Group 2 - The acquisition could provide Discover with the necessary support to compete against Visa and Mastercard, which dominate the credit card network market [4] - Increased competition among payment networks may result in lower swipe fees, benefiting retailers and potentially cardholders [4] - Changes for cardholders are expected to be communicated in advance, with no immediate alterations following the merger's closing [6][7] Group 3 - Capital One's credit cards are likely to transition from Visa or Mastercard to the Discover network after the merger [6] - This change may affect card perks, protections, and acceptance rates, particularly outside the US, as Discover has a narrower acceptance compared to Visa and Mastercard [6][8] - Both Capital One and Discover rank highly in customer service, suggesting that customers may not face significant challenges post-merger [7]

Capital One Financial's (COF 1.20%) planned acquisition of Discover Financial Services (DFS 3.35%) has received regulatory approval, and investors are breathing a sigh of relief.Shares of Discover opened up 7% and Capital One up 5%, before retreating with the broader market to up 2% and 1% as of 11:30 a.m. ET. MasterCard (MA -2.30%) and Visa (V -3.47%) were headed in the other direction, both down about 3% midday.A credit card powerhouseCapital One and Discover are two of the biggest names in credit cards. ...

Core Viewpoint - Capital One has received all necessary regulatory approvals to proceed with its acquisition of Discover Financial Services, valued at $35.3 billion, with the transaction expected to close on May 18, 2024, subject to customary conditions [1][2]. Group 1: Regulatory Approvals - The Federal Reserve Board and the Office of the Comptroller of the Currency (OCC) have approved the merger, indicating a thorough review process over the past 14 months [1][4]. - The OCC's approval is contingent upon addressing any outstanding enforcement actions against Discover [5]. Group 2: Company Statements - Capital One's CEO emphasized the importance of a competitive banking system and acknowledged the regulators' engagement during the review [2]. - Discover's Interim CEO stated that the merger would enhance competition in payment networks and provide a broader range of products, along with community benefits [2]. Group 3: Community Impact - Capital One has argued that the merger will provide greater benefits to underserved communities compared to the companies operating separately, addressing concerns raised by community groups [3]. Group 4: Regulatory Context - The Federal Reserve Board evaluated the merger based on financial resources, community needs, and competitive stability [4]. - The OCC's analysis focused on the merger's impact on communities and the overall banking industry [4]. Group 5: Recent Developments - On the same day as the merger approvals, the FDIC and Federal Reserve fined Discover for misclassifying consumer credit cards, which led to higher interchange fees for merchants [6].

Merger Approval - The merger between Capital One and Discover Financial Services has received regulatory approval, moving the $35 billion deal closer to completion [1][3] - The Federal Reserve and the Office of the Comptroller of the Currency have signed off on the deal, which was initially announced in February 2024 [1][3] Regulatory Actions - The Federal Reserve imposed a $100 million fine on Discover for overcharging certain interchange fees from 2007 to 2023, which Discover has since terminated and is repaying affected customers [1][2] - Capital One has committed to comply with the Federal Reserve's actions against Discover as a condition of the merger approval [3] Industry Context - The merger combines two of the largest non-bank credit card companies, positioning them to compete more effectively against the Visa-Mastercard duopoly [4][6] - The deal will enhance Discover's payment network by providing a significant credit card partner, potentially revitalizing its competitive stance in the market [5][6] - Both companies primarily serve customers seeking cash back or modest travel rewards, indicating a similar target demographic [5][7]

The pending merger between Capital One and Discover Financial services received approval from several regulators on Friday, bringing the $35bn tie-up closer to completion.The Federal Reserve and the office of the comptroller of the currency (OCC) signed off on the deal, which was first announced in February 2024.The Federal Reserve Board said it entered into a consent order with Discover and assessed a fine of $100m for overcharging certain interchange fees from 2007 through 2023. Discover has since termina ...

Core Points - The Federal Deposit Insurance Corp. (FDIC) and the Federal Reserve Board fined Discover Financial Services and its subsidiaries for misclassifying consumer credit cards as commercial, leading to higher interchange fees for merchants [1][2][4] - Discover Bank was ordered to pay $1.225 billion in restitution and a $150 million civil penalty due to the misclassification affecting millions of consumer credit cards over 17 years [2][3] - Merchants were overcharged over $1 billion in interchange fees as a result of the misclassification [3] - The Federal Reserve issued a consent order requiring corrective action and imposed a $100 million civil penalty on Discover Financial Services and DFS Services LLC [4][6] - Capital One Financial's application to merge with Discover Financial Services was approved, with a commitment to comply with the Federal Reserve's actions against Discover [5][6] - Capital One expects the process of addressing Discover Financial's regulatory challenges to be lengthy and costly [7] Summary by Category Regulatory Actions - FDIC fined Discover Financial Services and its subsidiaries for misclassifying credit cards, resulting in higher interchange fees for merchants [1][4] - Discover Bank ordered to pay $1.225 billion in restitution and a $150 million civil penalty for misclassification affecting millions of credit cards over 17 years [2][3] - Federal Reserve issued a consent order with a $100 million civil penalty against Discover Financial Services and DFS Services LLC [4][6] Financial Impact - Merchants overcharged over $1 billion in interchange fees due to the misclassification of credit cards [3] - The restitution of $1.225 billion will be paid to affected merchants and intermediaries [2][3] Corporate Developments - Capital One Financial's merger application with Discover Financial Services was approved, with conditions to comply with regulatory actions [5][6] - Capital One anticipates a long and expensive process to resolve Discover Financial's regulatory challenges [7]

Core Viewpoint - Capital One Financial's acquisition of Discover Financial Services for $35.3 billion in an all-stock deal has received regulatory approval from the Federal Reserve and the Office of the Comptroller of the Currency [1][2]. Group 1: Acquisition Details - The acquisition was first announced in February 2024, and it includes the indirect acquisition of Discover Bank [3]. - Discover shareholders will receive 1.0192 Capital One shares for each Discover share, representing a 26% premium over Discover's closing price of $110.49 at the time of the announcement [3]. - After the merger, Capital One shareholders will own 60% of the combined entity, while Discover shareholders will hold 40% [4]. Group 2: Regulatory Approval - The Federal Reserve evaluated the acquisition based on statutory factors, including the financial and managerial resources of both companies, community needs, and the competitive and financial stability impacts of the merger [2]. - The deal is expected to close on May 18, 2024, according to a joint statement from both companies [4]. Group 3: Market Position - Both Capital One and Discover are among the largest credit card issuers in the U.S., and the merger will enhance Capital One's deposit base and credit card offerings [4].