Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)
This discussion contains forward-looking statements that are based upon management’s current expectations and are subject to significant uncertainties and changes in circumstances. Please review “Part I—Item 1. Business—Forward-Looking Statements” for more information on the forward-looking statements in 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 this Report. Unless otherwise specified, references to notes to our consolidated financial statements refer to the notes to our consolidated financial statements as of December 31, 2025 included in this Report.
Management monitors a variety of key indicators to evaluate our business results and financial condition. The following MD&A is intended to provide the reader with an understanding of our results of operations and financial condition, including capital and liquidity management, by focusing on changes from year to year in certain key measures used by management to evaluate performance, such as profitability, growth and credit quality metrics. MD&A is provided as a supplement to, and should be read in conjunction with, our audited consolidated financial statements as of and for the year ended December 31, 2025 and accompanying notes. MD&A is organized in the following sections:
• Selected Financial Data
• Capital Management
• Executive Summary
• Risk Management
• Consolidated Results of Operations
• Credit Risk Profile
• Consolidated Balance Sheets Analysis
• Liquidity Risk Profile
• Off-Balance Sheet Arrangements
• Market Risk Profile
• Business Segment Financial Performance
• Supplemental Tables
• Critical Accounting Policies and Estimates
• Glossary and Acronyms
• Accounting Changes and Developments
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SELECTED FINANCIAL DATA
The following table presents selected consolidated financial data and performance metrics for the three-year period ended December 31, 2025, 2024 and 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 U.S. GAAP, nor are they necessarily comparable to non-GAAP measures that may be presented by other companies.
Three-Year Summary of Selected Financial Data
(Dollars in millions, except per share data and as noted)
Income statement
Interest income
Interest expense
Net interest income
Non-interest income
Total net revenue
Provision for credit losses
Non-interest expense:
Marketing
Operating expense
Total non-interest expense
Income from continuing operations before income taxes
Income tax provision
Income from continuing operations, net of tax
Income from discontinued operations, net of tax
Net income
Dividends and undistributed earnings allocated to participating securities
Preferred stock dividends
Discount on redeemed preferred stock
Net income available to common stockholders
Common share statistics
Basic earnings per common share:
Net income from continuing operations
Income from discontinued operations
Net income per basic common share
Diluted earnings per common share:
Net income from continuing operations
Income from discontinued operations
Net income per diluted common share
Common shares outstanding (period-end, in millions)
Dividends declared and paid per common share
Book value per common share (period-end)
Tangible book value per common share (period-end) (1)
Common dividend payout ratio (2)
Stock price per common share (period-end)
Total market capitalization (period-end)
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(Dollars in millions, except per share data and as noted)
Balance sheet (average balances)
Loans held for investment
Interest-earning assets
Total assets
Interest-bearing deposits
Total deposits
Borrowings
Common equity
Total stockholders’ equity
Selected performance metrics
Purchase volume
Global Payment Network volume (3)
Total net revenue margin (4)
115bps
28bps
Net interest margin
Return on average assets (5)
Return on average tangible assets (6)
Return on average common equity (7)
Return on average tangible common equity (8)
Equity-to-assets ratio (9)
Efficiency ratio (10)
Operating efficiency ratio (11)
Effective income tax rate from continuing operations
Net charge-offs
Net charge-off rate
bps
bps
December 31,
Change
(Dollars in millions, except as noted)
Balance sheet (period-end)
Loans held for investment
Interest-earning assets
Total assets
Interest-bearing deposits
Total deposits
Borrowings
Common equity
Total stockholders’ equity
Credit quality metrics
Allowance for credit losses
Allowance coverage ratio
20bps
19bps
30+ day performing delinquency rate
30+ day delinquency rate
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December 31,
Change
(Dollars in millions, except as noted)
Capital ratios
Common equity Tier 1 capital (12)
80bps
60bps
Tier 1 capital (12)
Total capital (12)
Tier 1 leverage (12)
Tangible common equity (“TCE”) (13)
Supplementary leverage (12)
Other
Employees (period end, in thousands)
(1) Tangible book value per common share is a non-GAAP measure calculated based on TCE divided by common shares outstanding. See “Supplemental Table—Table B—Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.
(2) Common dividend payout ratio is calculated based on dividends per common share for the period divided by basic earnings per common share for the period.
(3) Global Payment Network volume includes transactions processed on the Discover Network, PULSE Network, Diners Club and Network Partners.
(4) Total net revenue margin is calculated based on total net revenue for the period divided by average interest-earning assets for the period.
(5) Return on average assets is calculated based on net income (loss) less income (loss) from discontinued operations, net of tax, for the period divided by average total assets for the period.
(6) Return on average tangible assets is a non-GAAP measure calculated based on net income (loss) less income (loss) from discontinued 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.
(7) Return on average common equity is calculated based on net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average common equity. Our calculation of return on average common equity may not be comparable to similarly-titled measures reported by other companies.
(8) Return on average tangible common equity is a non-GAAP measure calculated based on net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average TCE. Our calculation of return on average TCE may not be comparable to similarly-titled measures reported by other companies. See “Supplemental Table—Table B—Reconciliation of Non-GAAP Measures” for additional information on non-GAAP measures.
(9) Equity-to-assets ratio is calculated based on average stockholders’ equity for the period divided by average total assets for the period.
(10) Efficiency ratio is calculated based on total non-interest expense for the period divided by total net revenue for the period.
(11) Operating efficiency ratio is calculated based on operating expense for the period divided by total net revenue for the period.
(12) Capital ratios are calculated based on the Basel III standardized approach framework. See “Capital Management” for additional information.
(13) TCE 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.
** Not meaningful.
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EXECUTIVE SUMMARY
Financial Highlights
We reported net income of $2.5 billion ($4.03 per diluted common share) on total net revenue of $53.4 billion for 2025. In comparison, we reported net income of $4.8 billion ($11.59 per diluted common share) on total net revenue of $39.1 billion for 2024 and net income of $4.9 billion ($11.95 per diluted common share) on total net revenue of $36.8 billion for 2023.
Our CET1 capital ratio as calculated under the Basel III standardized approach was 14.3% and 13.5% as of December 31, 2025 and 2024, respectively. See “Capital Management” for additional information.
For the year ended 2025, we declared and paid common stock dividends of $1.5 billion and repurchased $3.8 billion 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 2025. These highlights are based on a comparison between the results of 2025 and 2024, except as otherwise noted. The changes in our financial condition and credit performance as of December 31, 2025 compared to December 31, 2024 were primarily driven by the Transaction. We provide a more detailed discussion of our financial performance in the sections following this “Executive Summary.”
Total Company Performance
• Earnings:
Our net income decreased by $2.3 billion to $2.5 billion in the year ended 2025 compared to 2024 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 non-interest expense primarily driven by impacts from the Transaction, including integration expenses, as well as continued investments in technology and higher marketing spend .
These drivers were partially offset by:
◦ Higher net interest income primarily driven by higher loan balances, including the impacts of the Transaction, and lower rates paid on 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.
• Loans Held for Investment:
◦ Loans held for investment increased by $125.8 billion to $453.6 billion as of December 31, 2025 compared to December 31, 2024 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 $79.3 billion to $396.7 billion in the year ended 2025 compared to 2024 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.
• Net Charge-Off and Delinquency Metrics:
◦ Our net charge-off rate decreased by 9 bps to 3.30% in 2025 compared to 2024.
◦ Our 30+ day delinquency rate decreased by 39 bps to 3.59% as of December 31, 2025 from December 31, 2024.
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• Allowance for Credit Losses: Our allowance for credit losses increased by $7.2 billion to $23.4 billion as of 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 20 bps to 5.16% as of December 31, 2025 compared to December 31, 2024 primarily driven by a higher concentration of credit card loans, which carry comparatively higher coverage than our auto and commercial loan portfolios.
CONSOLIDATED RESULTS OF OPERATIONS
The section below provides a comparative discussion of our consolidated financial performance for 2025, 2024 and 2023. We provide a discussion of our business segment results in the following section, “Business Segment Financial Performance.” This section should be read together with our “Executive Summary,” where we discuss trends and other factors that we expect will affect our future results of operations.
Net Interest Income
Net interest income represents the difference between interest income, including certain fees, earned on our interest-earning assets and the interest expense incurred on our interest-bearing liabilities. Our interest-earning assets include loans, investment securities and other interest-earning assets, while our interest-bearing liabilities include interest-bearing deposits, securitized debt obligations, senior and subordinated notes, other borrowings and other interest-bearing liabilities. Generally, we include in interest income any past due fees, net of reversals, on loans that we deem collectible. Our net interest margin 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 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.
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Table 1 below presents the average outstanding balance, interest income earned, interest expense incurred and average yield for 2025, 2024 and 2023 for each major category of our interest-earning assets and interest-bearing liabilities. Nonperforming loans are included in the average loan balances below.
Table 1: Average Balances, Net Interest Income and Net Interest Margin
Year Ended December 31,
(Dollars in millions)
Average
Balance
Interest Income/
Expense
Average Yield/
Rate (1)
Average
Balance
Interest Income/
Expense
Average Yield/
Rate (1)
Average
Balance
Interest Income/
Expense
Average Yield/
Rate (1)
Assets:
Interest-earning assets:
Loans: (2)
Credit card
Consumer banking
Commercial banking (3)
Other (4)
Total loans, including loans held for sale
Investment securities
Cash equivalents and other interest-earning assets
Total interest-earning assets
Cash and due from banks
Allowance for credit losses
Premises and equipment, net
Other assets
Assets of discontinued operations
Total assets
Liabilities and stockholders’ equity:
Interest-bearing liabilities:
Interest-bearing deposits
Securitized debt obligations
Senior and subordinated notes
Other borrowings and interest-bearing liabilities (5)
Total interest-bearing liabilities
Non-interest-bearing deposits
Other liabilities
Liabilities of discontinued operations
Total liabilities
Stockholders’ equity
Total liabilities and stockholders’ equity
Net interest income/spread
Impact of non-interest-bearing funding
Net interest margin
(1) Average yield is calculated based on interest income for the period divided by average loans during the period. Average yield is calculated using whole dollar values for average balances and interest income/expense.
(2) Past due fees, net of reversals, included in interest income totaled approximately $2.6 billion in 2025, $2.3 billion in 2024 and $2.2 billion in 2023.
(3) Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking
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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 2023, with corresponding reductions to the Other category.
(4) Interest income/expense in the Other category represents the impact of hedge accounting on our loan portfolios and the offsetting reduction of the taxable-equivalent adjustments of our commercial loans as described above.
(5) Includes amounts related to entities that provide capital to low-income and rural communities of $2.1 billion, $2.0 billion and $1.8 billion in 2025, 2024 and 2023, respectively. Related interest expense was $31 million, $31 million and $32 million for 2025, 2024 and 2023, respectively.
** Not meaningful.
Net interest income increased by $11.7 billion to $42.9 billion in 2025 compared to 2024 primarily driven by higher loan balances, including the impacts of the Transaction, and lower rates paid on deposits.
Net interest margin increased by 96 bps to 7.84% in 2025 compared to 2024 primarily driven by higher loan balances, including the impacts of the Transaction, and lower rates paid on deposits.
Our total company cumulative interest-bearing deposit beta increased to 23% as of December 31, 2025, from 11% as of December 31, 2024. 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.
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Table 2 displays the change in our net interest income between periods and the extent to which the variance is attributable to:
• Changes in the volume of our interest-earning assets and interest-bearing liabilities; or
• Changes in the interest rates related to these assets and liabilities.
Table 2: Rate/Volume Analysis of Net Interest Income (1)
(Dollars in millions)
Total Variance
Volume
Rate
Total Variance
Volume
Rate
Interest income:
Loans:
Credit card
Consumer banking
Commercial banking (2)
Other (3)
Total loans, including loans held for sale
Investment securities
Cash equivalents and other interest-earning assets
Total interest income
Interest expense:
Interest-bearing deposits
Securitized debt obligations
Senior and subordinated notes
Other borrowings and liabilities
Total interest expense
Net interest income
(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.
(2) 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.
(3) Interest income/expense in the Other category represents the impact of hedge accounting on our loan portfolios and the offsetting reduction of the taxable-equivalent adjustments of our commercial loans as described above.
Non-Interest Income
Table 3 displays the components of non-interest income for 2025, 2024 and 2023.
Table 3: Non-Interest Income
Year Ended December 31,
(Dollars in millions)
Discount and interchange fees, net
Service charges and other customer-related fees
Net securities gains (losses)
Other (1)(2)
Total non-interest income
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(1) Primarily consists of revenue from Capital One Shopping, treasury income, auto industry services and other investment income.
(2) Includes gains of $105 million, $94 million and $86 million on deferred compensation plan investments in 2025, 2024 and 2023, respectively. These amounts have corresponding offsets in non-interest expense.
Non-interest income increased by $2.7 billion to $10.6 billion in 2025 compared to 2024 primarily due to growth in our credit card portfolio and the impacts of acquiring the Global Payment Network, both as a result of the Transaction.
Provision for Credit Losses
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. We recorded a provision for credit losses of $20.7 billion in 2025, $11.7 billion in 2024 and $10.4 billion in 2023.
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.
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, see “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies.”
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Non-Interest Expense
Table 4 displays the components of non-interest expense for 2025, 2024 and 2023.
Table 4: Non-Interest Expense
Year Ended December 31,
(Dollars in millions)
Operating expense:
Salaries and associate benefits (1)
Occupancy and equipment
Professional services
Communications and data processing
Amortization of intangibles
Other non-interest expense:
Bankcard, regulatory and other fee assessments
Collections
Other
Total other non-interest expense
Total operating expense
Marketing
Total non-interest expense
(1) Includes expenses of $105 million, $94 million and $86 million related to our deferred compensation plan investments for 2025, 2024 and 2023, respectively. These amounts have corresponding offsets from investments in other non-interest income.
Non-interest expense increased by $9.0 billion to $30.5 billion in the year ended 2025 compared to 2024 primarily driven by impacts from the Transaction, including integration expenses, as well as continued investments in technology and higher marketing spend .
For the years ended December 31, 2025 and 2024, we have incurred $1.1 billion and $234 million, 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.
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Income Taxes
We recorded an income tax expense 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) in 2025, 2024 and 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.
We recorded a discrete tax benefit of $123 million in 2025 , a discrete tax benefit of $27 million in 2024 and a discrete tax expense of $6 million in 2023 . The discrete tax benefit in 2025 was primarily due to a State of California law change that resulted in a $128 million benefit.
We provide additional information on items affecting our income taxes and effective tax rate in “Item 8. Financial Statements and Supplementary Data—Note 16—Income Taxes.”
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.
CONSOLIDATED BALANCE SHEETS ANALYSIS
Total assets increased by $178.9 billion to $669.0 billion as of December 31, 2025 from December 31, 2024 primarily driven by the Transaction and 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 more information.
Total liabilities increased by $126 billion to $555.4 billion as of December 31, 2025 from December 31, 2024. The Transaction contributed $130.2 billion in identifiable liabilities as of the Closing Date, partially offset by maturities and paydowns of securitized debt obligations and senior and subordinated notes.
Stockholders’ equity increased by $52.8 billion to $113.6 billion as of December 31, 2025 from December 31, 2024 primarily driven by reissuance of treasury stock of $50.6 billion related to the Transaction.
The following is a discussion of material changes in the major components of our assets and liabilities during 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.
Investment Securities
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”) 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 97% and 96% of our total investment securities portfolio as of December 31, 2025 and 2024, respectively.
The fair value of our investment securities portfolio increased by $8.0 billion to $91.1 billion as of December 31, 2025 from 2024 primarily driven by net purchases, including securities acquired in the Transaction and decreases in relevant benchmark interest rates.
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Loans Held for Investment
Total loans held for investment consists of both unsecuritized loans and loans held in our consolidated trusts. Table 5 summarizes by segment the carrying value of our loans held for investment, the allowance for credit losses and net loan balance as of December 31, 2025 and 2024.
Table 5: Loans Held for Investment
December 31, 2025
December 31, 2024
(Dollars in millions)
Loans
Allowance
Net Loans
Loans
Allowance
Net Loans
Credit Card
Consumer Banking
Commercial Banking
Total
Loans held for investment increased by $125.8 billion to $453.6 billion as of December 31, 2025 compared to December 31, 2024 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.
We provide additional information on the composition of our loan portfolio and credit quality in “Credit Risk Profile,” “Consolidated Results of Operations” and “Item 8. Financial Statements and Supplementary Data—Note 4—Loans.”
Funding Sources
Our funding sources include deposits , senior and subordinated notes, securitized debt obligations, federal funds purchased, securities loaned or sold under agreements to repurchase and ad vances from the Federal Home Loan Bank (“FHLB”) 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.
Table 6 provides the composition of our primary sources of funding as of December 31, 2025 and 2024.
Table 6: Funding Sources Composition
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
% of Total
Amount
% of Total
Deposits:
Consumer Banking
Commercial Banking
Other (1)
Total deposits
Securitized debt obligations
Other debt
Total funding sources
(1) Includes brokered deposit s of $19.2 billion an d $11.6 billion as of December 31, 2025 and 2024, respectively.
Total depos its increased by $113.1 billion to $475.8 billion as of December 31, 2025 from December 31, 2024 primarily driven by the Transaction and continued growth from our national banking strategy. The Transaction contributed $106.9 billion of deposits as of the Closing Date.
As of December 31, 2025 and 2024, we held $71.9 billion and $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 December 31, 2025 and 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.
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Securitized debt oblig ations decreased by $1.4 billion to $12.9 billion as of December 31, 2025 from December 31, 2024 primarily driven by net maturities and paydowns.
Other debt increased by $6.9 billion to $38.1 billion as of December 31, 2025 from December 31, 2024 primarily driven by the Transaction, which contributed $7.5 billion of other debt as of the Closing Date.
We provide additional information on our funding sources in “Liquidity Risk Profile” and “Item 8. Financial Statements and Supplementary Data—Note 9—Deposits and Borrowings.”
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Deferred Tax Assets and Liabilities
Deferred tax assets and liabilities represent decreases or increases in taxes expected to be paid in the future because of future reversals of temporary differences between the financial reporting and tax bases of assets and liabilities, as well as from net operating loss and tax credit carryforwards. Deferred tax assets are recognized subject to management’s judgment that these future deductions are more likely than not to be realized. We evaluate the recoverability of these future tax deductions by assessing the adequacy of expected taxable income from all sources, including taxable income in carryback years, reversal of taxable temporary differences, forecasted operating earnings and available tax planning strategies. These sources of income rely heavily on estimates. We use our historical experience and our short and long-range business forecasts to make these estimates.
Deferred tax assets, net of deferred tax liabilities and valuation allowances, were approximately $5.9 billion as of December 31, 2025, a decrease of $3.1 billion from December 31, 2024. The decrease in our net deferred tax assets was mainly related to purchase accounting adjustments, including new intangibles and the revaluation of Discover’s assets and liabilities, favorable changes related to capitalized research costs from the One Big Beautiful Bill Act, and a decrease in the unrealized losses related to our available for sale securities and derivatives. These factors were partially offset by the initial establishment of Discover related allowance for credit losses.
Our recorded valuation allowance balances were $320 million and $529 million as of December 31, 2025 and 2024, respectively. If changes in circumstances lead us to change our judgment about our ability to realize deferred tax assets in future years, we will adjust our valuation allowances in the period that our change in judgment occurs and record a corresponding increase or charge to income.
We provide additional information on income taxes in “Consolidated Results of Operations” and “Item 8. Financial Statements and Supplementary Data—Note 16—Income Taxes.”
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OFF-BALANCE SHEET ARRANGEMENTS
In the ordinary course of business, we engage in certain activities that are not reflected on our consolidated balance sheets, generally referred to as off-balance sheet arrangements. These activities typically involve transactions with unconsolidated variable interest entities (“VIEs”) as well as other arrangements, such as letters of credit, loan commitments and guarantees, to meet the financing needs of our customers and support their ongoing operations. We provide additional information regarding these types of activities in “Item 8. Financial Statements and Supplementary Data—Note 6—Variable Interest Entities and Securitizations” and “Item 8. Financial Statements and Supplementary Data—Note 19—Commitments, Contingencies, Guarantees and Others.”
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BUSINESS SEGMENT FINANCIAL PERFORMANCE
Our principal operations are organized for management reporting purposes in to three major b usiness 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, integration expenses and certain 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. 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. The allocation is unique to each 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 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.
We refer to the business segment results derived from our internal management accounting and reporting process as our “managed” presentation, which differs in some cases from our reported results prepared based on U.S. GAAP. There is no comprehensive authoritative body of guidance for management accounting equivalent to U.S. GAAP; therefore, the managed presentation of our business segment results may not be comparable to similar information provided by other financial services companies. In addition, our individual business segment results should not be used as a substitute for comparable results determined in accordance with U.S. GAAP.
We summarize our business segment results for the years ended December 31, 2025, 2024 and 2023 and provide a comparative discussion of these results for 2025 and 2024, as well as changes in our financial condition and credit performance metrics as of December 31, 2025 compared to December 31, 2024. We provide a reconciliation of our total business segment results to our reported consolidated results in “Item 8. Financial Statements and Supplementary Data—Note 18—Business Segments and Revenue from Contracts with Customers.”
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Business Segment Financial Performance
Table 7 summarizes our business segment results, which we report based on total net revenue (loss) and net income (loss) from continuing operations, for the years ended December 31, 2025, 2024 and 2023. We provide information on the allocation methodologies used to derive our business segment results in “Item 8. Financial Statements and Supplementary Data—Note 18—Business Segments and Revenue from Contracts with Customers.”
Table 7 : Business Segment Results
Year Ended December 31,
Total Net
Revenue (Loss) (1)
Net Income
(Loss) (2)
Total Net
Revenue (Loss) (1)
Net Income
(Loss) (2)
Total Net
Revenue (Loss) (1)
Net Income
(Loss) (2)
(Dollars in millions)
Amount
Total
Amount
Total
Amount
Total
Amount
Total
Amount
Total
Amount
Total
Credit Card
Consumer Banking
Commercial Banking (3)
Other (3)
Total
(1) Total net revenue (loss) consists of net interest income and non-interest income.
(2) Net income (loss) for our business segments and the Other category is based on income (loss) from continuing operations, net of tax.
(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.
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Credit Card Business
The primary sources of revenue for our Credit Card business are net interest income, net discount and interchange income and fees collected from customers. Expenses primarily consist of operating costs, the provision for credit losses and marketing expenses.
Our Credit Card business genera ted income from continuing operations, net of tax, of $645 million , $3.3 billion and $3.5 billion in 2025 , 2024 and 2023, respectively.
Table 8 summarizes the financial results of our Credit Card business and displays selected key metrics for the periods indicated.
Table 8: Credit Card Business Results
Year Ended December 31,
Change
(Dollars in millions, except as noted)
Selected income statement data:
Net interest income
Non-interest income
Total net revenue (1)
Provision for credit losses
Non-interest expense
Income from continuing operations before income taxes
Income tax provision
Income from continuing operations, net of tax
Selected performance metrics:
Average loans held for investment:
Domestic credit card
Personal loans
International card businesses
Total credit card
Average yield on loans (2)
(114)bps
55bps
Total net revenue margin (3)
Net charge-offs
Net charge-off rate (4)
(79)bps
131bps
Purchase volume
(Dollars in millions, except as noted)
December 31, 2025
December 31, 2024
Change
Selected period-end data:
Loans held for investment:
Domestic credit card
Personal loans
International card businesses
Total credit card
30+ day performing delinquency rate
(60)bps
30+ day delinquency rate
Nonperforming loan rate (5)
Allowance for credit losses
Allowance coverage ratio
(80)bps
(1) We recognize finance charges and fee income on open-ended loans in accordance with the contractual provisions of the credit arrangements and charge off any uncollectible amounts. Total net revenue was reduced by $3.3 billion , $2.6 billion and $1.9 billion in 2025 , 2024 and 2023, respectively, for finance charges and fees charged off as uncollectible.
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(2) Average yield is calculated based on interest income for the period divided by average loans during the period and does not include any allocations, such as funds transfer pricing.
(3) Total net revenue margin is calculated based on total net revenue for the period divided by average loans during the period.
(4) Charge-offs exclude $19.4 billion of Discover loans acquired in the second quarter of 2025 that were fully charged-off, with expected recoveries of $3.3 billion included as a benefit to the allowance for credit losses.
(5) Within our credit card loan portfolio, certain loans in our international card and personal loan businesses are classified as nonperforming. See “Nonperforming Loans and Other Nonperforming Assets” for additional information.
** Not meaningful.
Key factors affecting the results of our Credit Card business for 2025 compared to 2024, and changes in financial condition and credit performance between December 31, 2025 and 2024 include the following:
• Net Interest Income: Net interest income increased by $9.7 billion to $31.8 billion in 2025 primarily driven by higher loan balances, including the impacts of the Transaction.
• Non-Interest Income: Non-interest income increased by $1.7 billion to $7.7 billion in 2025 primarily due to growth in our portfolio, including the impacts of the Transaction.
• Provision for Credit Losses: Provision for credit losses increased by $8.8 billion to $19.1 billion in 2025 primarily driven by the initial allowance for credit losses for non-PCD loans acquired in the Transaction.
• Non-Interest Expense: Non-interest expense increased by $6.1 billion to $19.6 billion in 2025 primarily driven by the impacts of the Transaction, continued investments in technology and higher marketing spend.
Loans Held for Investment:
• Period-end loans held for investment increased by $117.1 billion to $279.6 billion as of December 31, 2025 from December 31, 2024 primarily driven by the Transaction and growth across our portfolio. The Transaction contributed $108.2 billion in loans held for investment as of the Closing Date.
• Average loans held for investment increased by $74.4 billion to $227.3 billion in 2025 compared to 2024 primarily driven by the Transaction and growth across our portfolio.
Net Charge-Off and Delinquency Metrics:
• The net charge-off rate decreased by 79 bps to 5.09% in 2025 compared to 2024. The loan portfolio acquired as part of the Transaction decreased the net charge-off rate by 35 bps for the year ended 2025.
• The 30+ day delinquency rate decreased by 60 bps to 3.94% as of December 31, 2025 from December 31, 2024. The loan portfolio acquired as part of the Transaction decreased the 30+ day delinquency rate by 44 bps for the year ended 2025.
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Domestic Card Business
The Domestic Card business generated income from continuing operations, net of tax, of $858 million, $3.1 billion and $3.3 billion in 2025, 2024 and 2023, respectively. In 2025, 2024 and 2023, the Domestic Card business accounted for greater than 90% of total net revenue of our Credit Card business.
Table 8.1 summarizes the financial results for our Domestic Card business and displays selected key metrics for the periods indicated.
Table 8.1: Domestic Card Business Results
Year Ended December 31,
Change
(Dollars in millions, except as noted)
Selected income statement data:
Net interest income
Non-interest income
Total net revenue (1)
Provision for credit losses
Non-interest expense
Income from continuing operations before income taxes
Income tax provision
Income from continuing operations, net of tax
Selected performance metrics:
Average loans held for investment
Average yield on loans (2)
(111)bps
bps
Total net revenue margin (3)
Net charge-offs
Net charge-off rate (4)
(79)bps
bps
Purchase volume
(Dollars in millions, except as noted)
December 31, 2025
December 31, 2024
Change
Selected period-end data:
Loans held for investment
30+ day performing delinquency rate
(54)bps
Allowance for credit losses
Allowance coverage ratio
(86)bps
(1) We recognize finance charges and fee income on open-ended loans in accordance with the contractual provisions of the credit arrangements and charge off any uncollectible amounts. Finance charges and fees charged off as uncollectible are reflected as a reduction in total net revenue.
(2) Average yield is calculated based on interest income for the period divided by average loans during the period and does not include any allocations, such as funds transfer pricing.
(3) Total net revenue margin is calculated based on total net revenue for the period divided by average loans during the period.
(4) Charge-offs exclude $18.0 billion of Discover loans acquired in the second quarter of 2025 that were fully charged-off, with expected recoveries of $3.1 billion included as a benefit to the allowance for credit losses.
Because our Domestic Card business accounts for the substantial majority of our Credit Card business, the key factors driving the results are similar to the key factors affecting our total Credit Card business. Net income for our Domestic Card business decreased in 2025 compared to 2024 primarily driven by:
• Higher provision for credit losses primarily driven by the initial allowance for credit losses for non-PCD loans acquired in the Transaction.
• Higher non-interest expense primarily driven by the impacts of the Transaction, continued investments in technology and higher marketing spend.
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These drivers were partially offset by:
• Higher net interest income primarily driven by higher loan balances, including the impacts of the Transaction.
• Higher non-interest income primarily driven by growth in our portfolio, including the impacts of the Transaction.
Consumer Banking Business
The primary sources of revenue for our Consumer Banking business are net interest income from loans and deposits as well as service charges and customer-related fees, including revenue from processing transactions on the Global Payment Network. Expenses primarily consist of operating costs and the provision for credit losses.
Our Consumer Banking business generated income from continuing operations, net of tax, of $1.2 billion, $1.5 billion and $2.3 billion in 2025, 2024 and 2023, respectively.
Table 9 summarizes the financial results of our Consumer Banking business and displays selected key metrics for the periods indicated.
Table 9: Consumer Banking Business Results
Year Ended December 31,
Change
(Dollars in millions, except as noted)
Selected income statement data:
Net interest income
Non-interest income
Total net revenue
Provision for credit losses
Non-interest expense
Income from continuing operations before income taxes
Income tax provision
Income from continuing operations, net of tax
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Year Ended December 31,
Change
(Dollars in millions, except as noted)
Selected performance metrics:
Average loans held for investment:
Auto
Retail banking
Total consumer banking
Average yield on loans held for investment (1)
66bps
bps
Average deposits
Average deposits interest rate
(21)bps
bps
Net charge-offs
Net charge-off rate
(51)bps
bps
Global Payment Network volume
Auto loan originations
(Dollars in millions, except as noted)
December 31, 2025
December 31, 2024
Change
Selected period-end data:
Loans held for investment:
Auto
Retail banking
Total consumer banking
30+ day performing delinquency rate
(70)bps
30+ day delinquency rate
Nonperforming loan rate
Nonperforming asset rate (2)
Allowance for credit losses
Allowance coverage ratio
(18)bps
Deposits
(1) Average yield is calculated based on interest income for the period divided by average loans during the period and does not include any allocations, such as funds transfer pricing.
(2) Nonperforming assets primarily consist of nonperforming loans and repossessed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment and repossessed assets.
** Not meaningful.
Key factors affecting the results of our Consumer Banking business for 2025 compared to 2024, and changes in financial condition and credit performance between December 31, 2025 and 2024 include the following:
• Net Interest Income: Net interest income increased by $735 million to $8.8 billion in 2025 primarily driven by higher deposits as a result of the Transaction and higher average loan balances in our auto business.
• Non-Interest Income: Non-interest income increased by $980 million to $1.7 billion in 2025 primarily driven by the impacts of acquiring the Global Payment Network in the Transaction.
• Provision for Credit Losses: Provision for credit losses decreased by $133 million to $1.3 billion in 2025 primarily driven by favorable credit performance in our auto loan portfolio.
• Non-Interest Expense: Non-interest expense increased by $2.2 billion to $7.5 billion in 2025 primarily driven by the impacts of the Transaction, an increase in the litigation accrual, continued investments in technology and higher marketing spend.
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Loans Held for Investment:
• Period-end loans held for investment increased by $6.7 billion to $84.8 billion as of December 31, 2025 from December 31, 2024 primarily driven by growth in our auto loan portfolio.
• Average loans held for investment increased by $5.3 billion to $81.2 billion in 2025 compared to 2024 primarily driven by growth in our auto loan portfolio.
Deposits:
• Period-end deposits increased by $105.6 billion to $423.9 billion as of December 31, 2025 from December 31, 2024 primarily driven by the Transaction and continued growth from our national banking strategy. The Transaction contributed $91.7 billion in deposits as of the Closing Date.
Net Charge-Off and Delinquency Metrics:
• The net charge-off rate decreased by 51 bps to 1.59% in 2025 compared to 2024 primarily driven by favorable credit performance in our auto loan portfolio.
• The 30+ day delinquency rate decreased by 100 bps to 5.73% as of December 31, 2025 compared to December 31, 2024.
Commercial Banking Business
The primary sources of revenue for our Commercial Banking business are net interest income from loans and deposits and non-interest income earned from products and services provided to our clients such as capital markets, advisory services, net interchange and treasury management. Because our Commercial Banking business has loans and investments that generate tax-exempt income, tax credits or other tax benefits, we present the revenues on a taxable-equivalent basis. Expenses primarily consist of operating costs and the provision for credit losses.
Our Commercial Banking business generated income from continuing op erations, net of tax, of $1.0 billion , $1.2 billion and $691 million in 2025, 2024 and 2023, respectively.
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Table 10 summarizes the financial results of our Commercial Banking business and displays selected key metrics for the periods indicated.
Table 10: Commercial Banking Business Results
Year Ended December 31,
Change
(Dollars in millions, except as noted)
Selected income statement data:
Net interest income
Non-interest income
Total net revenue (1)
Provision for credit losses (2)
Non-interest expense
Income from continuing operations before income taxes
Income tax provision
Income from continuing operations, net of tax
Selected performance metrics:
Average loans held for investment:
Commercial and multifamily real estate
Commercial and industrial
Total commercial banking
Average yield on loans held for investment (1)(3)
(79)bps
23bps
Average deposits
Average deposits interest rate
(44)bps
(17)bps
Net charge-offs
Net charge-off rate
8bps
(43)bps
(Dollars in millions, except as noted)
December 31, 2025
December 31, 2024
Change
Selected period-end data:
Loans held for investment:
Commercial and multifamily real estate
Commercial and industrial
Total commercial banking
Nonperforming loan rate
(3)bps
Nonperforming asset rate (4)
Allowance for credit losses (2)
Allowance coverage ratio
2bps
Deposits
Loans serviced for others
(1) 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.
(2) The provision for losses on unfunded lending commitments is included in the provision for credit losses in our consolidated statements of income and the related reserve is included in other liabilities on our consolidated balance sheets. Our reserve for unfunded lending commitmen ts totaled $142 million , $143 million and $158 million as of December 31, 2025, 2024 and 2023 , respectively.
(3) Average yield is calculated based on interest income for the period divided by average loans during the period and does not include any allocations, such as funds transfer pricing.
(4) Nonperforming assets consist of nonperforming loans and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment and other foreclosed assets.
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Key factors affecting the results of our Commercial Banking business for 2025 compared to 2024, and changes in financial condition and credit performance between December 31, 2025 and 2024 include the following:
• Net Interest Income: Net interest income decreased by $57 million to $2.3 billion in 2025 primarily driven by lower margins.
• Non-Interest Income: Non-interest income increased by $111 million to $1.3 billion in 2025 primarily driven by our capital markets business.
• Provision for Credit Losses: Provision for credit losses increased by $279 million to $287 million in 2025 primarily driven by a net allowance build compared to a net allowance release in 2024.
• Non-Interest Expense: Non-interest expense remained substantially flat at $2.0 billion in 2025 compared to 2024.
Loans Held for Investment:
• Period-end loans held for investment increased by $2.1 billion to $89.3 billion as of December 31, 2025 from December 31, 2024 primarily due to originations outpacing customer payments.
• Average loans held for investment remained substantially flat at $88.2 billion in 2025 compared to 2024.
Deposits:
• Period-end deposits decreased by $441 million to $31.3 billion as of December 31, 2025 from December 31, 2024 primarily driven by isolated attrition.
Net Charge-Off and Nonperforming Metrics:
• The net charge-off rate increased by 8 bps to 0.27% in 2025 compared to 2024.
• The nonperforming loan rate decreased by 3 bps to 1.36% as of December 31, 2025 compared to December 31, 2024.
Other Category
Other includes unallocated amounts related to our centralized Corporate Treasury group activities, such as management of our corporate investment securities portfolio, asset/liability management and oversight of our funds transfer pricing process. Other also includes:
• unallocated corporate revenue and 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 and integration expenses related to the Transaction;
• residual tax expense or benefit to arrive at the consolidated effective tax rate that is not assessed to our primary business segments; and
• foreign exchange rate fluctuations on foreign currency-denominated balances. As a result of our derivative management activities, we believe our net exposure to foreign exchange risk is minimal.
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Table 11 summarizes the financial results of our Other category for the periods indicated.
Table 11: Other Category Results
Year Ended December 31,
Change
(Dollars in millions)
Selected income statement data:
Net interest loss
Non-interest income (loss)
Total net loss (1)
Provision for credit losses
Non-interest expense
Loss from continuing operations before income taxes
Income tax benefit
Loss from continuing operations, net of tax
(1) 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.
** Not meaningful.
Loss from continuing operations, net of tax decreased by $389 million to a loss of $825 million in 2025 compared to 2024 primarily driven by higher treasury income, partially offset by higher integration expenses related to the Transaction.
For the years ended December 31, 2025 and December 31, 2024, we incurred $1.1 billion and $234 million, 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.
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of financial statements in accordance with U.S. GAAP requires management to make a number of judgments, estimates and assumptions that affect the amount of assets, liabilities, income and expenses on the consolidated financial statements. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We provide a summary of our significant accounting policies under “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies.”
We have identified the following accounting estimates as critical because they require significant judgments and assumptions about highly complex and inherently uncertain matters and the use of reasonably different estimates and assumptions could have a material impact on our results of operations or financial condition. Our critical accounting policies and estimates are as follows:
• Loan loss reserves
• Goodwill
• Fair value
• Customer rewards reserve
We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary, based on changing conditions.
Loan Loss Reserves
We maintain an allowance for credit losses that represents management’s current estimate of expected credit losses inherent in our credit card, consumer banking and commercial banking segments as of each balance sheet date. We also reserve for the uncollectible portion of finance charges and fees related to credit card loan receivables in the allowance for credit losses consistent with the methodology we use to estimate the allowance for credit losses on the principal portion of our credit card loan receivables. We separately reserve for unfunded lending commitments that are not unconditionally cancellable. We recognize changes in our allowance for credit losses and reserve for unfunded lending commitments through the provision for credit losses. The allowance for credit losses was $23.4 billion as of December 31, 2025, compared to $16.3 billion as of December 31, 2024.
Our allowance for credit losses and reserve for unfunded lending commitments utilize models to derive a quantitative estimate of credit losses that is supplemented with additional qualitative considerations to capture risks and uncertainties not included in the quantitative result. Our estimate of expected credit losses, for all loan and unfunded lending commitments, includes a reasonable and supportable forecast period of one year and then reverts over a one-year period to historical losses at each relevant loss component of the estimate. We use externally produced consensus estimates as inputs for our forward-looking macroeconomic forecast and consider other forecasts and sources of uncertainty to develop the quantitative component. This quantitative result is then supplemented qualitatively by management for economic uncertainty, including the consideration of alternative macroeconomic scenarios, changes and trends in loan portfolios that may not be captured in the quantitative component. These adjustments represent management’s judgment of the imprecision and risks inherent in the processes and assumptions used in establishing the allowance for credit losses.
We have an established process, using analytical tools and management judgment, to determine our allowance for credit losses. Significant management judgment is required to determine the relevant information and estimation methods used to arrive at our best estimate of lifetime credit losses. Establishing the allowance on a quarterly basis involves evaluating and forecasting both credit and macroeconomic variables. The macroeconomic forecast used to inform both quantitative and qualitative components of our allowance for credit losses estimate is sensitive to certain variables, such as the U.S. Unemployment Rate, and the U.S. Real Gross Domestic Product (“GDP”) Growth Rate assu mptions. Our December 31, 2025 allowance assumes that the quarterly average U.S. unemployment rate is approximately 4.5% by the fourth quarter of 2026 and annual U.S. Real GDP grows by 1.7% in 2026.
In addition to macroeconomic factors, many credit factors inform our allowance for credit losses, including, but not limited to, historical loss and recovery experience, recent trends in delinquencies and charge-offs, risk ratings, the impact of bankruptcy
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filings, the value of collateral underlying secured loans, account seasoning, changes in our credit evaluation, underwriting and collection management policies, seasonality, credit bureau scores, current general economic conditions, changes in the legal and regulatory environment and uncertainties in forecasting and modeling techniques used in estimating our allowance for credit losses.
We have a governance framework supported by processes and controls intended to ensure that our estimate of the allowance for credit losses is appropriate. Our governance framework provides for oversight of methods, models, qualitative adjustments, process controls and results. At least quarterly, representatives from the Finance and Risk Management organizations review and assess our allowance methodologies, key assumptions and the appropriateness of the allowance for credit losses. Groups independent of our estimation functions participate in the review and validation process. Tasks performed by these groups include periodic review of the rationale for and quantification of inputs requiring judgment as well as adjustments to results.
We have model policies, established by an independent Model Risk Office, which govern the validation of models and related supporting documentation to ensure the appropriate use of models for estimating credit losses. The Model Risk Office validates all models and requires ongoing monitoring of their performance.
In addition to the allowance for credit losses, on a quarterly basis, we review and assess our estimate of expected losses related to unfunded lending commitments that are not unconditionally cancellable which are generally in our Commercial Banking business. The factors impacting our assessment generally align with those considered in our evaluation of the allowance for credit losses for the Commercial Banking business. The reserve for losses on unfunded lending commitments is included in other liabilities on our consolidated balance sheets and changes to it are recorded through the provision for credit losses in our consolidated statements of income.
Although we examine a variety of externally available data, as well as our internal loan performance data, to determine our allowance for credit losses and reserve for unfunded lending commitments, our estimation process is subject to risks and uncertainties, including a reliance on historical loss and trend information that may not be representative of current conditions and indicative of future performance as well as economic forecasts that may not align with actual future economic conditions. Accordingly, our actual credit loss experience may not be in line with our expectations. We provide additional information on the methodologies and key assumptions used in determining our allowance for credit losses in “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies.” We provide information on the components of our allowance, disaggregated by operating segment, and changes in our allowance in “Item 8. Financial Statements and Supplementary Data—Note 5—Allowance for Credit Losses and Reserve for Unfunded Lending Commitments.”
Goodwill
Goodwill represents the excess of the fair value of the consideration transferred, plus the fair value of any non-controlling interests in the acquiree, over the fair value of the assets acquired and liabilities assumed as of the acquisition date.
Goodwill totaled $28.5 billion and $15.1 billion as of December 31, 2025 and 2024, respectively. We recognized $13.4 billion of goodwill related to the Transaction in 2025. We did not recognize any goodwill impairment in 2025 or 2024. See “Item 8. Financial Statements and Supplementary Data—Note 2—Business Combinations and Discontinued Operations” and “Item 8. Financial Statements and Supplementary Data—Note 7—Goodwill and Other Intangible Assets” for additional information.
We perform our goodwill impairment test annually on October 1 at a reporting unit level. We are also required to test goodwill for impairment whenever events or circumstances indicate it is more-likely-than-not that an impairment may have occurred. An impairment of a reporting unit’s goodwill is determined based on the amount by which the reporting unit’s carrying amount exceeds its fair value, limited to the amount of goodwill allocated to the reporting unit. We have four reporting units: Credit Card, Auto Finance, Other Consumer Banking and Commercial Banking.
For the purpose of our goodwill impairment testing, we calculate the carrying amount of a reporting unit using an allocated capital approach based on each reporting unit’s specific regulatory capital requirements and underlying risks. The carrying amount for a reporting unit is the sum of its respective capital requirements, goodwill and other intangibles balances. Consolidated stockholder’s equity in excess of the sum of all reporting units capital requirements that is not identified for future capital needs, such as dividends, share buybacks, or other strategic initiatives, is allocated to the reporting units and the Other category and assumed to be distributed to equity holders.
Determining the fair value of a reporting unit is a subjective process that requires the use of estimates and the exercise of significant judgment. We calculate the fair value of our reporting units using a discounted cash flow (“DCF”) calculation, a
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form of the income approach. This DCF calculation uses projected cash flows based on each reporting unit’s internal forecast and the perpetuity growth method to calculate terminal values. Our DCF calculation requires management to make estimates about future loan, deposit and revenue growth, as well as credit losses and capital rates. These cash flows and terminal values are then discounted using discount rates based on our external cost of capital with adjustments for the risk inherent in each reporting unit. In the 2025 annual impairment test, discount rates used for our reporting units ranged from 8.3% to 13.3%, and we applied a terminal year long-term growth rate of 3.8% to all reporting units. The reasonableness of our DCF calculation is assessed by reference to a market-based approach using comparable market multiples and recent market transactions where available. The usefulness of market data is inherently limited due to the size and scope of our operations compared to most peer institutions and recent market transactions. The results of the 2025 annual impairment test indicated that the estimated fair values of the reporting units exceeded their carrying amounts by between 25% and 122%. We also compare the aggregate fair values of our reporting units to our market capitalization. Our assessment considers the level of premium expected to assume control of the Company in a market transaction including anticipated cost savings and other synergies that would be realized in a hypothetical transaction.
Assumptions used in estimating the fair value of a reporting unit are judgmental and inherently uncertain. A change in the economic conditions of a reporting unit, such as declines in business performance as a result of industry or macroeconomic trends or changes in our strategy, adverse impacts to loan or deposit growth trends, decreases in revenue, increases in expenses, deterioration in a significant loan portfolio, increases in credit losses, increases in capital requirements, deterioration of market conditions, declines in long-term growth expectations, an increase in disposition activity, the inability to achieve expected synergies from the Transaction, adverse impacts of regulatory or legislative changes or increases in the estimated cost of capital could cause the estimated fair values of our reporting units to decline in the future, and increase the risk of a goodwill impairment in a future period. We perform sensitivity analyses around certain assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.
We have a governance framework supported by processes and controls intended to ensure that the accounting and disclosure for goodwill is appropriate. Our governance framework provides for oversight of assumptions, forecast inputs, methods, process controls and results.
Fair Value
For our financial instruments subject to fair value measurement, the fair value accounting guidance provides a principles-based framework for measuring fair value. Fair value, also referred to as an exit price, is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value accounting guidance provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. The fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are described below:
Level 1: Valuation is based on quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Valuation is based on observable market-based inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3: Valuation is generated from techniques that use significant assumptions not observable in the market. Valuation techniques include pricing models, DCF methodologies or similar techniques.
The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted prices in active markets or observable market inputs. When quoted prices and observable data in active markets are not fully available, management judgment is necessary to estimate fair value. Changes in market conditions, such as reduced liquidity in the capital markets or changes in secondary market activities, may reduce the availability and reliability of quoted prices or observable data used to determine fair value.
We have developed policies and procedures to determine when markets for our financial assets and liabilities are inactive if the level and volume of activity has declined significantly relative to normal conditions. If markets are determined to be inactive, it
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may be appropriate to adjust price quotes received. When significant adjustments are required to price quotes or inputs, it may be appropriate to utilize an estimate based primarily on unobservable inputs.
Significant judgment may be required to determine whether certain financial instruments measured at fair value are classified as Level 2 or Level 3. In making this determination, we consider all available information that market participants use to measure the fair value of the financial instrument, including observable market data, indications of market liquidity and orderliness, and our understanding of the valuation techniques and significant inputs used. Based upon the specific facts and circumstances of each instrument or instrument category, judgments are made regarding the significance of the Level 3 inputs to the instruments’ fair value measurement in its entirety. If Level 3 inputs are considered significant, the instrument is classified as Level 3. The process for determining fair value using unobservable inputs is generally more subjective and involves a high degree of management judgment and assumptions. We discuss changes in the valuation inputs and assumptions used in determining the fair value of our financial instruments, including the extent to which we have relied on significant unobservable inputs to estimate fair value and our process for corroborating these inputs, in “Item 8. Financial Statements and Supplementary Data—Note 17—Fair Value Measurement.”
We have a governance framework and a number of key controls that are intended to ensure that our fair value measurements are appropriate and reliable. Our governance framework provides for independent oversight and segregation of duties. Our control processes include review and approval of new transaction types, price verification, and review of valuation judgments, methods, models, process controls and results.
Groups independent of our trading and investing functions participate in the review and validation process. Tasks performed by these groups include verification of fair value measurements at least quarterly to determine if assigned fair values are reasonable, including comparing prices from vendor pricing services to other available market information.
Our Fair Value Committee (“FVC”), which includes representation from business areas, Risk Management and Finance, provides guidance and oversight to ensure an appropriate valuation control environment. The FVC reviews and approves our fair valuations at least quarterly to ensure that our valuation practices are consistent with industry standards and adhere to regulatory and accounting guidance.
We have model policies, established by an independent Model Risk Office, which govern the validation of models and related supporting documentation to ensure the appropriate use of models for pricing and fair value measurements. The Model Risk Office validates all models and requires ongoing monitoring of their performance.
The fair value governance process is set up in a manner that allows the Chairperson of the FVC to escalate valuation disputes that cannot be resolved by the FVC to a more senior committee cal led the Valuations Advisory Committee (“VAC”) for resolution. The VAC is chaired by the Chief Financial Officer (“CFO”) and includes other members of senior management. There were no disputes escalated to the VAC for the years ended December 31, 2025 and 2024.
For additional disclosures regarding the methods used to determine the fair values of the significant assets acquired and liabilities assumed in the Transaction, refer to “Item 8. Financial Statements and Supplementary Data—Note 2—Business Combinations and Discontinued Operations.”
Customer Rewards Reserve
We offer products, primarily credit cards, which include programs that allow members to earn rewards based on account activity that can be redeemed for cash (primarily in the form of statement credits), gift cards, travel or covering eligible charges. The amount of rewards that a customer earns varies based on the terms and conditions of the rewards program and product. The majority of our rewards do not expire and there is no limit on the amount of rewards an eligible card member can earn. Customer rewards costs, which we generally record as an offset to interchange income, are driven by various factors such as card member purchase volume, the terms and conditions of the rewards program and rewards redemption cost. We establish a customer rewards reserve that reflects management’s judgment regarding rewards earned that are expected to be redeemed and the estimated redemption cost.
We use financial models to estimate ultimate redemption rates of rewards earned by current card members based on historical redemption trends, current enrollee redemption behavior, card product type, year of program enrollment, enrollment tenure and card spend levels. Our current assumption is that the substantial majority of all rewards earned will eventually be redeemed. We use the weighted-average redemption cost during the previous twelve months, adjusted as appropriate for recent changes in redemption costs, including changes related to the mix of rewards redeemed, to estimate future redemption costs. We
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continually evaluate our reserve and assumptions based on developments in redemption patterns, changes to the terms and conditions of the rewards program and other factors. While the rewards liability is sensitive to changes in assumptions for redemption rates and costs and involves management judgment, we believe portfolio characteristics and historical performance are the best indication of future reward redemption behavior and are the primary basis for our estimate. We recognized customer rewards expense of $11.5 billion, $9.0 billion and $8.2 billion in 2025, 2024 and 2023, respectively. Our customer rewards reserve, which is included in other liabilities on our consolidated balance sheets, totaled $11.1 billion and $8.2 billion as of December 31, 2025 and 2024, respectively.
We have a governance framework supported by processes and controls that are intended to ensure that our rewards liability estimate is appropriate and reliable. Our governance framework provides for oversight of assumptions, inputs, methods, process controls and results. Additional controls are performed to ensure all underlying data used to derive the rewards liability is complete and accurate.
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ACCOUNTING CHANGES AND DEVELOPMENTS
Accounting Standards Issued but Not Adopted as of December 31, 2025
Standard
Guidance
Adoption Timing and
Financial Statement Impacts
Disaggregation of Income Statement Expenses
Accounting Standards Update (“ASU”) No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses
Issued November 2024
Requires entities to separately disclose specific disaggregated expense categories on an annual and interim basis as well as disclose selling expenses on an annual basis.
Effective beginning with our annual period ending on December 31, 2027, with early adoption permitted. Prospective and retrospective applications are permitted. We are still assessing the extent of the impacts of adoption to our disclosures.
Internal-Use Software
ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software
Issued September 2025
Requires entities to capitalize costs associated with internal-use software based on a new methodology, which focuses on management’s authorization and commitment to funding the project and the probability that the software will be completed and used to perform the function intended.
Effective beginning with our interim period March 31, 2028, with early adoption permitted. Prospective, retrospective and modified transition applications are each permitted.
We are still assessing the extent of the impacts of adoption to our consolidated financial statements.
Purchased Seasoned Loans
ASU No. 2025-08, Financial Instruments - Credit Losses (Topic 326): Purchased Loans
Issued November 2025
Expands the population of acquired financial assets subject to the gross-up approach in Topic 326, which requires an entity to record an initial allowance for credit losses through an adjustment to the asset’s amortized cost basis rather than through a current-period provision for credit losses. The expanded population includes loan receivables, excluding credit cards, acquired without credit deterioration that are deemed “seasoned,” as defined by the update.
Effective beginning with our interim period March 31, 2027, with early adoption permitted. Prospective application is required.
We are still assessing the extent of the impacts of adoption to our consolidated financial statements.
Hedge Accounting Improvements
ASU No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements
Issued November 2025
Enables entities to achieve and maintain hedge accounting to a greater number of highly effective economic hedges.
Effective beginning with our interim period March 31, 2027, with early adoption permitted. Prospective application is required.
We are still assessing the extent of the impacts of adoption to our consolidated financial statements.
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CAPITAL MANAGEMENT
The level and composition of our capital are determined by multiple factors, including our consolidated regulatory capital requirements as described in more detail below and internal risk-based capital assessments such as internal stress testing. The level and composition of our capital may also be influenced by rating agency guidelines, subsidiary capital requirements, business environment, conditions in the financial markets and assessments of potential future losses due to adverse changes in our business and market environments.
Capital Standards and Prompt Corrective Action
The Company and the Bank are subject to Basel III Capital Rules. The Basel III Capital Rules implement certain capital requirements published by the Basel Committee, along with certain provisions of the Dodd-Frank Act and other capital provisions.
As a BHC with total consolidated assets of at least $250 billion but less than $700 billion and not exceeding any of the applicable risk-based thresholds, the Company is a Category III institution under the Basel III Capital Rules.
The Bank, as a subsidiary of a Category III institution, is a Category III bank. Moreover, the Bank, as an insured depository institution, is subject to PCA capital regulations.
Basel III and U.S. Capital Rules
Under the Basel III Capital Rules, we must maintain a minimum CET1 capital ratio of 4.5%, a Tier 1 capital ratio of 6.0% and a total capital ratio of 8.0%, in each case in relation to risk-weighted assets. In addition, we must maintain a minimum leverage ratio of 4.0% and a minimum supplementary leverage ratio of 3.0%. We are also subject to the capital conservation buffer requirement and countercyclical capital buffer requirement, each as described below. Our capital and leverage ratios are calculated based on the Basel III standardized approach framework.
We have elected to exclude certain elements of AOCI from our regulatory capital as permitted for a Category III institution. For information on the recognition of AOCI in regulatory capital under the proposed changes to the Basel III Capital Rules, see “Part I—Item 1. Business—Supervision and Regulation—Prudential Regulation of Banking—Capital and Stress Testing Regulation—Basel III Finalization Proposal.”
G-SIBs that are based in the U.S. are subject to an additional CET1 capital requirement known as the “G-SIB Surcharge.” We are not a G-SIB based on the most recent available data and thus we are not subject to a G-SIB Surcharge.
Capital Buffer Requirements
The Basel III Capital Rules require banking institutions to maintain a capital conservation buffer, composed of CET1 capital, above the regulatory minimum ratios. Under the Stress Capital Buffer Rule, the Company’s “standardized approach capital conservation buffer” includes its stress capital buffer requirement (as described below) and any G-SIB Surcharge (which is not applicable to us) and the countercyclical capital buffer requirement applicable to the Company generally would be effective twelve months after the announcement of such an increase, unless the Federal Reserve sets an earlier effective date.
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. In particular, the Company’s stress capital buffer requirement equals, subject to a floor of 2.5%, 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 (for the fourth to seventh quarters of the planning horizon) 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.
Based on the Company’s 2024 supervisory stress test results, the Company’s stress capital buffer requirement for the period beginning on October 1, 2024 through September 30, 2025 was 5.5%. Therefore, 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 were 10.0%, 11.5% and 13.5%, respectively, for the period from October 1, 2024 through September 30, 2025 .
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Based on the Company’s 2025 supervisory stress test results, the Company’s final stress capital buffer requirement for the period beginning on October 1, 2025 through September 30, 2026 is 4.5%. On February 4, 2026, the Federal Reserve notified all participating firms, including the Company, that because the Stress Testing Transparency Proposal remains subject to public comment, the Federal Reserve is maintaining stress capital buffer requirements for all such firms at their current levels. Consequently, absent further action from the Federal Reserve, the Company’s stress capital buffer requirement will remain at 4.5% 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%, 10.5% and 12.5%, respectively, for the period from October 1, 2025 through September 30, 2027.
For additional information regarding the SCB Averaging Proposal and the Stress Testing Transparency Proposal, see “Part I—Item 1. Business—Supervision and Regulation.”
The Stress Capital Buffer Rule does not apply to the Bank. Pursuant to the OCC’s capital regulations, which are only applicable to the Bank, the capital conservation buffer for the Bank continues to be fixed at 2.5%. The Bank is also subject to the countercyclical capital buffer requirement (which is currently set at 0%). Any determination to increase the countercyclical capital buffer applicable to the Bank generally would be effective twelve months after the announcement of such an increase, unless the OCC sets an earlier effective date. Accordingly, the Bank’s minimum capital requirements plus its capital conservation buffer for CET1 capital, Tier 1 capital and total capital ratios are 7.0%, 8.5% and 10.5%, respectively.
If the Company or the Bank fails to maintain its capital ratios above the minimum capital requirements plus the applicable capital conservation buffer requirements, it will face increasingly strict automatic limitations on capital distributions and discretionary bonus payments to certain executive officers.
As of December 31, 2025 and 2024, respectively, the Company and the Bank each exceeded the minimum capital requirements and the capital conservation buffer requirements applicable to them, and the Company and the Bank were each “well-capitalized.” The “well-capitalized” standards applicable to the Company are established in the Federal Reserve’s regulations, and the “well-capitalized” standards applicable to the Bank are established in the OCC’s PCA capital requirements.
Market Risk Rule
The “Market Risk Rule” supplements the Basel III Capital Rules by requiring institutions subject to the rule to adjust their risk-based capital ratios to reflect the market risk in their trading book. The Market Risk Rule generally applies to institutions with aggregate trading assets and liabilities equal to 10% or more of total assets or $1 billion or more. As of December 31, 2025, the Company and the Bank are subject to the Market Risk Rule. See “Market Risk Profile” below for additional information.
For the description of the regulatory capital rules to which we are subject, including recent proposed amendments to these rules under the Basel III Finalization Proposal, see “Part I—Item 1. Business—Supervision and Regulation.”
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Table 12 provides a comparison of our regulatory capital ratios under the Basel III standardized approach, the regulatory minimum capital adequacy ratios and the applicable well-capitalized standards as of December 31, 2025 and 2024.
Table 12: Capital Ratios Under Basel III (1)(2)
December 31, 2025
December 31, 2024
Ratio
Minimum
Capital
Adequacy
Well-
Capitalized
Ratio
Minimum
Capital
Adequacy
Well-
Capitalized
Capital One Financial Corp:
Common equity Tier 1 capital (3)
Tier 1 capital (4)
Total capital (5)
Tier 1 leverage (6)
Supplementary leverage (7)
CONA:
Common equity Tier 1 capital (3)
Tier 1 capital (4)
Total capital (5)
Tier 1 leverage (6)
Supplementary leverage (7)
(1) Capital requirements that are not applicable are denoted by “N/A.”
(2) Capital ratios as of December 31, 2024 reflect the Company’s and the Bank’s election to adopt the optional five-year transition period provided by the Federal Banking Agencies’ final rule (“CECL Transition Rule”) as of January 1, 2020, which was fully effective January 1, 2025.
(3) Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on common equity Tier 1 capital divided by risk-weighted assets.
(4) Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.
(5) Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets.
(6) Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by adjusted average assets.
(7) Supplementary leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by total leverage exposure.
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Table 13 presents regulatory capital under the Basel III standardized approach and regulatory capital metrics as of December 31, 2025 and 2024.
Table 13: Regulatory Risk-Based Capital Components and Regulatory Capital Metrics
(Dollars in millions)
December 31, 2025
December 31, 2024
Regulatory capital under Basel III standardized approach
Common equity excluding AOCI
Adjustments and deductions:
AOCI, net of tax (1)
Goodwill, net of related deferred tax liabilities
Other intangible and deferred tax assets, net of deferred tax liabilities
Common equity Tier 1 capital
Tier 1 capital instruments
Tier 1 capital
Tier 2 capital instruments
Qualifying allowance for credit losses
Tier 2 capital
Total capital
Regulatory capital metrics
Risk-weighted assets
Adjusted average assets (2)
Total leverage exposure (3)
(1) Excludes certain components of AOCI in accordance with rules applicable to Category III institutions. See “Capital Management—Capital Standards and Prompt Corrective Action—Basel III and U.S. Capital Rules” in this Report.
(2) Includes on-balance sheet asset adjustments subject to deduction from Tier 1 capital under the Basel III Capital Rules.
(3) Reflects on- and off-balance sheet amounts for the denominator of the supplementary leverage ratio as set forth by the Basel III Capital Rules.
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Dividend Policy and Stock Purchases
On November 4, 2025, our Board of Directors authorized an increase to our quarterly common stock dividend from $0.60 per share to $0.80 per share beginning with our dividend payable in the fourth quarter of 2025. For the year ended December 31, 2025, we declared and paid common stock dividends of $1.5 billion, or $2.60 per share. We declared and paid $252 million of preferred stock dividends for the year ended December 31, 2025.
The following table summarizes the dividends paid per share on our various preferred stock series in each quarter of 2025.
Table 14: Preferred Stock Dividends Paid Per Share (1)
Series
Description
Issuance Date
Per Annum
Dividend Rate
Dividend Frequency
Series I
Non-Cumulative
September 11,
Quarterly
Series J
Non-Cumulative
January 31,
Quarterly
Series K
Non-Cumulative
September 17,
Quarterly
Series L
Non-Cumulative
May 4,
Quarterly
Series M
3.950% Fixed Rate Reset
Non-Cumulative
June 10,
3.950% through 8/31/2026; resets 9/1/2026 and every subsequent 5 year anniversary at 5-Year Treasury Rate +3.157%
Quarterly
Series N
Non-Cumulative
July 29,
Quarterly
Series O
Fixed-to-Floating Rate Non-Cumulative
May 18,
5.500% through 10/29/2027; resets 10/30/2027 and every quarter thereafter at three-month term SOFR + 3.338%
Semi-Annually through 10/30/2027; Quarterly thereafter
Series P (2)
6.125% Fixed-Rate Reset
Non-Cumulative
May 18,
6.125% through 9/22/2025; resets 9/23/2025 and every subsequent 5 year anniversary at 5-Year Treasury Rate +5.783%
Semi-Annually
(1) For Series I, J, K, L, M and N, the liquidation preference for each share of non-cumulative perpetual preferred stock is $1,000 per share of preferred stock. For Series O and P, the liquidation preference for each share of non-cumulative perpetual preferred stock is $100,000 per share of preferred stock. For Series I, J, K, L and N, ownership is held in the form of depositary shares, each representing a 1/40th interest in a share of non-cumulative perpetual preferred stock. For Series O and P, ownership is held in the form of depositary shares, each representing a 1/100th interest in a share of non-cumulative perpetual preferred stock.
(2) Series P was fully redeemed on June 30, 2025.
The declaration and payment of dividends to our stockholders, as well as the amount thereof, are subject to the discretion of our Board of Directors and depend upon our results of operations, financial condition, capital levels, cash requirements, future prospects, regulatory requirements and other factors deemed relevant by the Board of Directors.
As a BHC, our ability to pay dividends is largely dependent upon the receipt of dividends or other payments from our subsidiaries. The Bank is subject to regulatory restrictions that limit its ability to transfer funds to our BHC. As of December 31, 2025, funds available for dividend payments from the Bank were $1.4 billion. There can be no assurance that we will declare and pay any dividends to stockholders.
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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. During the fourth quarter of 2025, we repurchased a total of $2.5 billion of our common stock, consisting of $614 million under the prior authorization and $1.9 billion under the new authorization. For the year ended December 31, 2025, we repurchased $3.8 billion of shares of our common stock as a part of the publicly announced plans.
The timing and exact amount of any future common stock repurchases will depend on various factors, including market conditions, opportunities for growth, our capital position and the amount of retained earnings, as well as regulatory considerations. The Board authorized stock repurchase program does not include specific price targets or number of shares, may be executed through open market purchases, tender offers, or privately negotiated transactions, including utilizing Rule 10b5-1 plans, does not have a set expiration date and may be modified, suspended or terminated at any time. For additional information on dividends and stock repurchases, see “Part I—Item 1. Business—Supervision and Regulation—Prudential Regulation of Banking— Funding and Dividends from Subsidiaries. ”
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RISK MANAGEMENT
Risk Management Framework
Our Framework sets consistent expectations for risk management across the Company. It also sets expectations for our “Three Lines of Defense” model, which defines the roles, responsibilities and accountabilities for taking and managing risk across the Company. Accountability for overseeing an effective Framework resides with our Board of Directors either directly or through its committees.
First Line
Identifies and Owns Risk
Second Line
Advises & Challenges First Line
Third Line
Provides Independent Assurance
Definition
Business areas that are accountable for risk and responsible for: i) generating revenue or reducing expenses; ii) supporting the business to provide products or services to customers; or iii) providing technology services for the first line.
Independent Risk Management (“IRM”) and Support Functions (e.g., Human Resources, Accounting, Legal) that provide support services to the Company.
Internal Audit and Credit Review.
Key Responsibilities
Identify, assess, measure, monitor, control and report the risks associated with their business.
IRM: Independently oversees and assesses risk taking activities for the first line of defense.
Support Functions: Centers of specialized expertise that provide support services to the enterprise.
Provides independent and objective assurance to the Board of Directors and senior management that the systems and governance processes are designed and working as intended.
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Our Framework sets consistent expectations for risk management across the Company and consists of the following nine elements:
Governance and Accountability
Strategy and Risk Alignment
Risk Identification
Assessment, Measurement
and Response
Monitoring and Testing
Aggregation, Reporting and Escalation
Capital and Liquidity Management (including Stress Testing)
Risk Data and Enabling Technology
Culture and Talent Management
Governance and Accountability
This element of the Framework sets the foundation for the methods for governing risk taking and the interactions within and among our three lines of defense.
We established a risk governance structure and accountabilities to effectively and consistently oversee the management of risks across the Company. Our Board of Directors, CEO and management establish the tone at the top regarding the culture of the Company, including management of risk. Management reinforces expectations at the various levels of the organization.
Strategy and Risk Alignment
Our strategy is informed by and aligned with risk appetite, from development to execution. The CEO develops the strategy with input from the first, second and third lines of defense, as well as the Board of Directors. The strategic planning process considers relevant changes to the Company’s overall risk profile.
Our Board of Directors approves a Risk Appetite Statement for the Company to set forth the high-level principles that govern risk taking at the Company. The Risk Appetite Statement defines the Board of Directors’ tolerance for certain risk outcomes at an enterprise level and enables senior management to manage and report within these boundaries. This Risk Appetite Statement is also supported by risk category specific risk appetite statements as well as metrics and, where appropriate, Board Limits and Board Notification Thresholds.
Risk Identification
The first line of defense and certain Support Functions identify new and emerging risks, including concentration of risk, across the relevant risk categories associated with their business activities and objectives, in consultation with IRM. Risk identification also must be informed by major changes in infrastructure or organization, introduction of new products and services, acquisitions of businesses, or substantial changes in the internal or external environment.
IRM and certain Support Functions, where appropriate, provide effective challenge in the risk identification process. IRM is also responsible for identifying our material aggregate risks on an ongoing basis.
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Assessment, Measurement and Response
Management assesses risks associated with our activities. Risks identified are assessed to understand the severity of each risk and likelihood of occurrence under both normal and stressful conditions. Risk severity is measured through modeling and other quantitative estimation approaches, as well as qualitative approaches, based on management judgment. As part of the risk assessment process, the first and second lines of defense also evaluate the effectiveness of the existing control environment and mitigation strategies.
Management determines the appropriate risk response. Risks may be mitigated or accepted. Actions taken to respond to the risk include implementing new controls, enhancing existing controls, developing additional mitigation strategies to reduce the impact of the risk, and/or monitoring the risk.
Monitoring and Testing
Management periodically monitors risks to evaluate and measure how the risk is affecting our strategy and business objectives, in alignment with risk appetite, including established concentration risk limits. The scope and frequency of monitoring activities depends on the results of relevant risk assessments, as well as specific business risk operations and activities.
The first line of defense is required to evaluate the effectiveness of risk management practices and controls through testing and other activities. IRM and Support Functions, as appropriate, assess the first line of defense’s evaluation of risk management, which may include conducting effective challenge, performing independent monitoring, or conducting risk or control validations. The third line of defense provides independent assurance for first and second line risk management practices and controls.
Aggregation, Reporting and Escalation
Risk aggregation supports strategic decision making and risk management practices through collectively reporting risks across different levels of the Company and providing a comprehensive view of performance against risk appetite. Our risk aggregation processes are designed to aggregate risk information from lower levels of the business hierarchy to high levels and to aggregate risk information to determine material risk themes.
Material risks, new or emerging risks, aggregate risks, risk appetite metrics and other measures across all risk categories are reported to the appropriate governance forum no less than quarterly. Material risks are reported to the Board of Directors and senior management committees no less than quarterly.
Capital and Liquidity Management (including Stress Testing)
Our capital management processes are linked to our risk management practices, including the enterprise-wide identification, assessment and measurement of risks to ensure that all relevant risks are incorporated in the assessment of the Company's capital adequacy. We use identified risks to inform key aspects of the Company’s capital planning, including the development of stress scenarios, the assessment of the adequacy of post-stress capital levels, and the appropriateness of potential capital actions considering the Company’s capital objectives. We quantify capital needs through stress testing, regulatory capital, economic capital and assessments of market considerations. In assessing its capital adequacy, we identify how and where our material risks are accounted for within the capital planning process. Monitoring and escalation processes exist for key capital thresholds and metrics to continuously monitor capital adequacy.
We manage liquidity risk by applying our Liquidity Adequacy Framework (the “Liquidity Framework”). The Liquidity Framework uses internal and regulatory stress testing and the evaluation of other balance sheet metrics to confirm that we maintain a fortified balance sheet that is resilient to uncertainties that may arise as a consequence of systemic, idiosyncratic, or combined liquidity events.
Risk Data and Enabling Technology
Risk data and technology provides the basis for risk reporting and is used in decision making and to monitor and review changes to our risk profile. There are core Governance, Risk Management and Compliance systems which are used as the system of record for risks, controls, issues and events for our risk categories and supports the analysis, aggregation and reporting capabilities across the categories.
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Culture and Talent Management
The Framework must be supported with the right culture, talent and skills to enable effective risk management across the Company.
Every associate at the Company is responsible for risk management; however, associates with specific risk management skills and expertise within the first, second and third lines of defense are critical to execute appropriate risk management across the enterprise.
Risk Categories
We apply our Framework to protect the Company from the major categories of risk that we are exposed to through our business activities. We have seven major categories of risk as noted below.
Major Categories of Risk
Compliance
The risk to current or anticipated earnings or capital arising from violations of laws, rules or regulations. Compliance risk can also arise from nonconformance with prescribed practices, internal policies and procedures, contractual obligations or ethical standards that reinforce those laws, rules or regulations
Credit
The risk to current or projected financial condition and resilience arising from an obligor’s failure to meet the terms of any contract with the Company or otherwise perform as agreed
Liquidity
The risk that the Company will not be able to meet its future financial obligations as they come due, or invest in future asset growth because of an inability to obtain funds at a reasonable price within a reasonable time
Market
The risk that an institution’s earnings or the economic value of equity could be adversely impacted by changes in interest rates, foreign exchange rates or other market factors
Operational
The risk of loss, capital impairment, adverse customer experience or reputational impact resulting from failure to comply with policies and procedures, failed internal processes or systems, or from external events
Reputation
The risk to market value, recruitment and retention of talented associates and maintenance of a loyal customer base due to the negative perceptions of our internal and external constituents regarding our business strategies and activities
Strategic
The risk of a material impact on current or anticipated earnings, capital, franchise or enterprise value arising from the Company’s competitive and market position and evolving forces in the industry that can affect that position; lack of responsiveness to these conditions; strategic decisions to change the Company’s scale, market position or operating model; or, failure to appropriately consider implementation risks inherent in the Company’s strategy
The Company is in the process of integrating Discover Financial Services into its existing risk management practices, policies and processes.
We provide an overview of how we manage our seven major categories of risk below.
Compliance Risk Management
We recognize that compliance requirements for financial institutions are increasingly complex and that there are heightened expectations from our regulators and our customers. In response, we continuously evaluate the regulatory environment and proactively adjust our compliance program to fully address these expectations.
Our Compliance Management Program establishes expectations for determining compliance requirements, assessing the risk of new product offerings, creating appropriate controls and training to address requirements, monitoring for control performance,
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and independently testing for adherence to compliance requirements. The program also establishes regular compliance reporting to senior business leaders, the executive committee and the Board of Directors.
The Chief Compliance Officer is responsible for establishing and overseeing our Compliance Management Program. Business areas incorporate compliance requirements and controls into their business policies, standards, processes and procedures. They regularly monitor and report on the efficacy of their compliance controls and our Compliance team periodically independently tests to validate the effectiveness of business controls.
Credit Risk Management
We recognize that we are exposed to cyclical changes in credit quality. Consequently, we try to ensure our credit portfolio is resilient to economic downturns. Our most important tool in this endeavor is sound underwriting. In unsecured consumer loan underwriting, we generally assume that loans will be subject to an environment in which losses are higher than those prevailing at the time of underwriting. In commercial underwriting, we generally require strong cash flow, collateral, covenants and guarantees. In addition to sound underwriting, we continually monitor our portfolio and take steps to collect or work out distressed loans.
The Chief Credit and Financial Risk Officer, in conjunction with the Chief Credit Officers, is responsible for establishing credit risk policies and procedures, including underwriting and hold guidelines and credit approval authority, and monitoring credit exposure and performance of our lending related transactions. Our Chief Credit Officers are responsible for evaluating the risk implications of credit strategy and the oversight of credit for both the existing portfolio and any new credit investments. They also have formal approval authority for various types and levels of credit decisions, including individual commercial loan transactions. Division Presidents within each segment are responsible for managing the credit risk within their divisions and maintaining processes to control credit risk and comply with credit policies and guidelines. In addition, the Chief Credit and Financial Risk Officer establishes policies, delegates approval authority and monitors performance for non-loan credit exposure entered into with financial counterparties or through the purchase of credit sensitive securities in our investment portfolio.
Our credit policies establish standards in five areas: customer selection, underwriting, monitoring, remediation and portfolio management. The standards in each area provide a framework comprising specific objectives and control processes. These standards are supported by detailed policies and procedures for each component of the credit process. Starting with customer selection, our goal is to generally provide credit on terms that generate above hurdle returns. We use a number of quantitative and qualitative factors to manage credit risk, including setting credit risk limits and guidelines for each of our lines of business. We monitor performance relative to these guidelines and report results and any required mitigating actions to appropriate senior management committees and our Board of Directors.
Liquidity Risk Management
We recognize that liquidity risk is embedded within our day-to-day and strategic decisions. Liquidity is essential for banks to meet customer withdrawals, account for balance sheet changes and provide funding for growth. We have acquired and built deposit gathering businesses and actively monitor our funding concentration. We manage our liquidity risk, which is driven by both internal and external factors, centrally and establish quantitative risk limits to continually assess our liquidity adequacy.
The Chief Credit and Financial Risk Officer, in conjunction with the Head of Liquidity, Market and Capital Risk Oversight, is responsible for the establishment of liquidity risk management policies and standards for governance and monitoring of liquidity risk at a corporate level. We assess liquidity strength by evaluating several different balance sheet metrics under severe stress scenarios to ensure we can withstand significant funding degradation. Results are reported to the Asset Liability Committee monthly and to the Risk Committee no less than quarterly. We also continuously monitor market and economic conditions to evaluate emerging stress conditions and to develop appropriate action plans in accordance with our Contingency Funding Plan and our Recovery Plan.
We use internal and regulatory stress testing and the evaluation of other balance sheet metrics within our Liquidity Framework to confirm we maintain a fortified balance sheet. We rely on a combination of stable and diversified funding sources, along with a stockpile of liquidity reserves, to effectively manage our liquidity risk. We maintain a sizable liquidity reserve of cash and cash equivalents, high-quality unencumbered securities and investment securities and certain loans that are either readily-marketable or pledgeable. We also continue to maintain access to secured and unsecured debt markets through regular issuance.
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Market Risk Management
We recognize that interest rate and foreign exchange risk are present in our business due to the nature of our assets and liabilities. Market risk is inherent from the financial instruments associated with our business operations and activities including loans, deposits, securities, short-term borrowings, long-term debt and derivatives. We manage market risk exposure, which is principally driven by balance sheet interest rate risk, centrally and establish quantitative risk limits to monitor and control our exposure.
The Chief Credit and Financial Risk Officer, in conjunction with the Head of Liquidity, Market and Capital Risk Oversight, is responsible for the establishment of market risk management policies and standards for the governance and monitoring of market risk at a corporate level. The market risk position is calculated and analyzed against pre-established limits. We use industry accepted techniques to analyze and measure interest rate and foreign exchange risk and we perform sensitivity analysis to identify our risk exposures under a broad range of scenarios. Results are reported to the Asset Liability Committee monthly and to the Risk Committee no less than quarterly.
Management is authorized to utilize financial instruments as outlined in our policy to actively manage market risk exposure. Investment securities and derivatives are the main levers for the management of interest rate risk. In addition, we also use derivatives to manage our foreign exchange risk.
Operational Risk Management
We recognize the criticality of managing operational risk on both a strategic and day-to-day basis and that there are heightened expectations from our regulators and our customers. We have implemented appropriate operational risk management policies, standards, processes and controls to enable the delivery of high quality and consistent customer experiences and to achieve business objectives in a controlled manner.
The Chief Operational Risk Officer, in collaboration with the CTRO, is responsible for establishing and overseeing our Operational Risk Management Program. The program establishes practices for assessing the operational risk profile and executing key control processes for operational risks. These risks include topics such as internal and external fraud, cyber and technology risk, data management, model risk, third-party management, and business continuity. Operational Risk Management and Tech and Data Risk Management enforce these practices and deliver reporting of operational risk results to senior business leaders, the executive committee and the Board of Directors. For additional information on how we manage cybersecurity and technology risk, see “Part I—Item 1C. Cybersecurity” of this Report.
Reputation Risk Management
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. Our approach to reputation risk management is guided by our commitment to provide intuitive, easy-to-use products and services, and deliver high quality and consistent customer experiences, with a focus on business continuity, resilience and compliance with applicable laws and regulations. The Executive Vice President of External Affairs is responsible for managing our overall reputation risk program. Day-to-day activities are controlled by the frameworks set forth in our Reputation Risk Management Policy and other risk management policies
Strategic Risk Management
We recognize that strategic risk is present within our business and the Company’s strategy. We monitor risks for the impact on current or future earnings, capital growth or enterprise value arising from changes to the Company’s competitive and market positions, including as a result of evolving forces in the industry. Additionally, we monitor timely and effective responsiveness to these conditions, strategic decisions that impact the Company’s scale, market position or operating model and failure to appropriately consider implementation risks in the Company’s strategy. Potential areas of opportunity or risk inform the Company’s strategy, which is led by the CEO and other senior executives. The Chief Enterprise Risk Officer, in consultation with the Chief Credit and Financial Risk Officer, oversees the identification and assessment of risks associated with the Company’s strategy and the monitoring of these risks throughout the year.
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Our Strategic Risk Management Policy, processes and controls encompass an ongoing assessment of risks associated with corporate or line of business specific strategies. These risks are managed through periodic reviews, along with regular updates to senior management and the Board.
CREDIT RISK PROFILE
Our loan portfolio accounts for the substantial majority of our credit risk exposure. Through the Transaction, we acquired new lending products, including personal loans. Our lending activities are governed under our credit policies and are subject to independent review and approval. Below we provide information about the composition of our loan portfolio, key concentrations and credit performance metrics.
We also engage in certain non-lending activities that may give rise to ongoing credit and counterparty settlement risk, including purchasing securities for our investment securities portfolio, entering into derivative transactions to manage our market risk exposure and to accommodate customers, extending short-term advances on syndication activity including bridge financing transactions we have underwritten, depositing certain operational cash balances in other financial institutions, executing certain foreign exchange transactions and extending customer overdrafts. We provide additional information related to our investment securities portfolio under “Consolidated Balance Sheets Analysis—Investment Securities” and “Item 8. Financial Statements and Supplementary Data—Note 3—Investment Securities” as well as credit risk related to derivative transactions in “Item 8. Financial Statements and Supplementary Data—Note 10—Derivative Instruments and Hedging Activities.”
Primary Loan Products
We provide a variety of lending products. Our primary loan products include credit cards, auto loans and commercial lending products.
• Credit cards: Consists of our domestic consumer card lending, personal loans, domestic small business card lending and international card businesses in the U.K. and Canada. We originate credit cards and personal loans through a variety of channels. Our credit cards generally have variable interest rates and personal loans have fixed interest rates. Both our credit cards and personal loans are primarily underwritten using an automated underwriting system based on predictive models that we have developed. The underwriting criteria are established based on an analysis of the expected revenues, expenses and losses, and are designed to be resilient to a variety of stress scenarios. Underwriting decisions are generally based on credit bureau information, including Fair Isaac Corporation (“FICO”) scores, and on other factors, such as applicant income. We maintain a credit card securitization program.
• Auto: We originate auto loans through a network of auto dealers and direct marketing. Our auto loans have fixed interest rates. Our underwriting criteria are based on analysis of expected revenues, expenses and losses, and are designed to be resilient to a variety of stress scenarios. Underwriting decisions are generally based on credit bureau information including FICO scores, an applicant’s information, including income and collateral characteristics such as loan-to-value (“LTV”) ratio. We maintain an auto securitization program.
• Commercial: We offer a range of commercial lending products, including loans secured by commercial real estate and loans to middle market commercial and industrial companies. Our commercial loans may have a fixed or variable interest rate; however, the majority of our commercial loans have variable rates. Our underwriting standards require an analysis of the borrower’s financial condition and prospects, as well as an assessment of the industry in which the borrower operates. Where relevant, we evaluate and appraise underlying collateral and guarantees. We maintain underwriting guidelines and limits for major types of borrowers and loan products that specify, where applicable, guidelines for debt service coverage, leverage, LTV ratio and standard covenants and conditions. We assign a risk rating and establish a monitoring schedule for loans based on the risk profile of the borrower, industry segment, source of repayment, the underlying collateral and guarantees, if any, and current market conditions. Although we generally retain the commercial loans we underwrite, we may syndicate positions for risk mitigation purposes, including bridge financing transactions we have underwritten. In addition, we originate and service multifamily commercial real estate loans which are sold to GSE or Agency where we retain certain levels of residual risk after the loans are sold.
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Portfolio of Loans Held for Investment
Our loan portfolio consists of loans held for investment, including loans held in our consolidated trusts, and loans held for sale. The information presented in this section excludes loans held for sale, which totaled $760 million and $202 million as of December 31, 2025 and 2024, respectively.
Table 15 presents the maturities of our loans held for investment portfolio as of December 31, 2025. Determinations of maturities are based on scheduled repayments. Due to the revolving nature of credit card loans, we report the majority of our credit card loans as due in one year or less.
Table 15: Loan Maturity Schedule
December 31, 2025
(Dollars in millions)
Due Up to
1 Year
> 1 Year
to 5 Years
> 5 Years to 15 Years
> 15 Years
Total
Fixed rate:
Credit card
Consumer banking
Commercial banking
Total fixed-rate loans
Variable rate:
Credit card
Consumer banking
Commercial banking
Total variable-rate loans
Total loans
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Geographic Composition
We market our credit card products throughout the United States, the U.K. and Canada. Our credit card loan portfolio is geographically diversified due to our product and marketing approach. The table below presents the geographic profile of our domestic credit card loan portfolio as of December 31, 2025 and 2024.
Table 16: Domestic Credit Card Portfolio by Geographic Region
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
% of Total
Amount
% of Total
Domestic credit card:
California
Texas
Florida
New York
Pennsylvania
Illinois
Ohio
New Jersey
Georgia
North Carolina
Other
Total domestic credit card
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Our auto loan portfolio is geographically diversified in the United States due to our product and marketing approach. The table below presents the geographic profile of our auto loan portfolio as of December 31, 2025 and 2024.
Table 17: Auto Loan Portfolio by Geographic Region
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
% of Total
Amount
% of Total
Auto:
Texas
California
Florida
Ohio
Pennsylvania
Illinois
Georgia
North Carolina
New Jersey
New York
Other
Total auto
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We originate commercial and multifamily real estate loans in most regions of the United States. The table below presents the geographic profile of our commercial real estate portfolio as of December 31, 2025 and 2024.
Table 18: Commercial Real Estate Portfolio by Region
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
% of Total
Amount
% of Total
Geographic concentration: (1)
Northeast
South
Pacific West
Mid-Atlantic
Mountain
Midwest
Total
(1) Geographic concentration is generally determined by the location of the borrower’s business or the location of the collateral associated with the loan. Northeast consists of CT, MA, ME, NH, NJ, NY, PA, RI and VT. South consists of AL, AR, FL, GA, KY, LA, MS, NC, OK, SC, TN and TX. Pacific West consists of: AK, CA, HI, OR and WA. Mid-Atlantic consists of DC, DE, MD, VA and WV. Midwest consists of: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD and WI. Mountain consists of: AZ, CO, ID, MT, NM, NV, UT and WY.
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Commercial Loans by Industry
Table 19 summarizes our commercial loans held for investment by industry classification as of December 31, 2025 and 2024. Industry classifications below are based on our interpretation of the Federal Loan Classification codes as they pertain to each individual loan.
Table 19: Commercial Loans by Industry
(Percentage of portfolio)
December 31, 2025
December 31, 2024
Industry Classification:
Finance
Real Estate & Construction
Government & Education
Commercial Services
Health Care & Pharmaceuticals
Food & Beverage Manufacturing & Wholesale
Oil, Gas & Pipelines
Technology, Telecommunications & Media
Other
Total
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Credit Risk Measurement
We closely monitor economic conditions and loan performance trends to assess and manage our exposure to credit risk. Trends in delinquency rates are the key credit quality indicator for our credit card, personal loans and retail banking loan portfolios as changes in delinquency rates can provide an early warning of changes in potential future credit losses. The key indicator we monitor when assessing the credit quality and risk of our auto loan portfolio is borrower credit scores as they provide insight into borrower risk profiles, which give indications of potential future credit losses. The key credit quality indicator for our commercial loan portfolio is our internal risk ratings as we generally classify loans that have been delinquent for an extended period of time and other loans with significant risk of loss as nonperforming. In addition to these credit quality indicators, we also manage and monitor other credit quality metrics such as level of nonperforming loans and net charge-off rates.
We underwrite most consumer loans using proprietary models, which typically include credit bureau data, such as borrower credit scores, application information and, where applicable, collateral and deal structure data. We continuously adjust our management of credit lines and collection strategies based on customer behavior and risk profile changes. We also use borrower credit scores for subprime classification, for competitive benchmarking and, in some cases, to drive product segmentation decisions.
Table 20 provides details on the credit scores of our domestic credit card, personal and auto loan portfolios as of December 31, 2025 and 2024.
Table 20: Credit Score Distribution
(Percentage of portfolio)
December 31, 2025
December 31, 2024
Domestic credit card—Refreshed FICO scores: (1)
Greater than 660
660 or below
Total
Personal loans — Refreshed FICO scores: (1)
Greater than 660
620 or below
Total
Auto — At origination FICO scores: (2)
Greater than 660
620 or below
Total
(1) Percentages represent period-end loans held for investment in each credit score category. Domestic credit card and personal loan credit scores generally represent FICO scores. These scores are obtained from one of the major credit bureaus at origination and are refreshed monthly thereafter and may be based on different versions of FICO over time. We approximate non-FICO credit scores to comparable FICO scores for consistency purposes. Balances for which no credit score is available or the credit score is invalid are included in the 660 or below category for Domestic credit card and 620 or below for personal loans.
(2) Percentages represent period-end loans held for investment in each credit score category. Auto loan credit scores generally represent average FICO scores obtained from three credit bureaus at the time of application and are not refreshed thereafter. Balances for which no credit score is available or the credit score is invalid are included in the 620 or below category.
In our commercial loan portfolio, we assign internal risk ratings to loans based on relevant information about the ability of the borrowers to repay their debt. In determining the risk rating of a particular loan, some of the factors considered are the borrower’s current financial condition, historical and projected future credit performance, prospects for support from financially responsible guarantors, the estimated realizable value of any collateral and current economic trends.
We present information in the section below on the credit performance of our loan portfolio, including the key metrics we use in tracking changes in the credit quality of our loan portfolio. See “Item 8. Financial Statements and Supplementary Data—Note 4—Loans” for additional credit quality information and see “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” for information on our accounting policies for delinquent and nonperforming loans, charge-offs and loan modifications and restructurings.
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Delinquency Rates
We consider the entire balance of an account to be delinquent if the minimum required payment is not received by the customer’s due date, measured at each balance sheet date. Our 30+ day delinquency metrics include all loans held for investment that are 30 or more days past due, whereas our 30+ day performing delinquency metrics include all loans held for investment that are 30 or more days past due but are currently classified as performing and accruing interest. The 30+ day delinquency and 30+ day performing delinquency metrics are the same for domestic credit card loans, as we continue to classify these loans as performing until the account is charged off, typically when the account is 180 days past due. See “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” for information on our policies for classifying loans as nonperforming. We provide additional information on our credit quality metrics in “Business Segment Financial Performance.”
Table 21 presents our 30+ day performing delinquency rates and 30+ day delinquency rates of our portfolio of loans held for investment, by portfolio, as of December 31, 2025 and 2024.
Table 21: 30+ Day Delinquencies
December 31, 2025
December 31, 2024
30+ Day Performing Delinquencies
30+ Day Delinquencies
30+ Day Performing Delinquencies
30+ Day Delinquencies
(Dollars in millions)
Amount
Rate (1)
Amount
Rate (1)
Amount
Rate (1)
Amount
Rate (1)
Credit Card:
Domestic credit card
Personal loans
International card businesses
Total credit card
Consumer Banking:
Auto
Retail banking
Total consumer banking
Commercial Banking:
Commercial and multifamily real estate
Commercial and industrial
Total commercial banking
Total
(1) Delinquency rates are calculated by dividing delinquency amounts by period-end loans held for investment for each specified loan category.
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Table 22 presents our 30+ day delinquent loans held for investment, by aging and geography, as of December 31, 2025 and 2024.
Table 22: Aging and Geography of 30+ Day Delinquent Loans
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
Rate (1)
Amount
Rate (1)
Delinquency status:
30 – 59 days
60 – 89 days
> 90 days
Total
Geographic region:
Domestic
International
Total
(1) Delinquency rates are calculated by dividing delinquency amounts by total period-end loans held for investment.
Table 23 summarizes loans that were 90+ days delinquent, in regards to interest or principal payments, and still accruing interest as of December 31, 2025 and 2024. These loans consist primarily of credit card accounts between 90 days and 179 days past due. As permitted by regulatory guidance issued by the FFIEC, we continue to accrue interest and fees on domestic credit card loans through the date of charge off, which is typically in the period the account becomes 180 days past due.
Table 23: 90+ Day Delinquent Loans Accruing Interest
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
Rate (1)
Amount
Rate (1)
Loan segment:
Credit card
Commercial banking
Total
Geographic region:
Domestic
International
Total
(1) Delinquency rates are calculated by dividing delinquency amounts by period-end loans held for investment for each specified loan category.
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Nonperforming Loans and Nonperforming Assets
Nonperforming loans include loans that have been placed on nonaccrual status. Nonperforming assets consist of nonperforming loans, repossessed assets and other foreclosed assets. See “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” for information on our policies for classifying loans as nonperforming for each of our loan portfolios.
Table 24 presents our nonperforming loans by portfolio and other nonperforming assets as of December 31, 2025 and 2024. We do not classify loans held for sale as nonperforming. We provide additional information on our credit quality metrics in “Business Segment Financial Performance.”
Table 24: Nonperforming Loans and Other Nonperforming Assets (1)
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
Rate
Amount
Rate
Nonperforming loans held for investment: (2)
Credit Card:
Personal loans
International card businesses
Total credit card
Consumer Banking:
Auto
Retail banking
Total consumer banking
Commercial Banking:
Commercial and multifamily real estate
Commercial and industrial
Total commercial banking
Total nonperforming loans held for investment (3)
Other nonperforming assets (4)
Total nonperforming assets
(1) We recognized interest income for loans classified as nonperforming of $96 million and $111 million in 2025 and 2024, respectively.
(2) Nonperforming loan rates are calculated based on nonperforming loans for each category divided by period-end total loans held for investment for each respective category.
(3) Excluding the impact of domestic credit card loans, nonperforming loans as a percentage of total loans held for investment was 0.95% and 1.16% as of December 31, 2025 and 2024, respectively.
(4) The denominators used in calculating nonperforming asset rates consist of total loans held for investment and other nonperforming assets.
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Net Charge-Offs
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. Recoveries are 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 as well as additional strategies, such as 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 loan portfolio.
Table 25 presents our net charge-off amounts and rates, by portfolio, in 2025, 2024 and 2023.
Table 25: Net Charge-Offs (Recoveries)
Year Ended December 31,
(Dollars in millions)
Amount
Rate (1)
Amount
Rate (1)
Amount
Rate (1)
Credit Card (2) :
Domestic credit card
Personal loans
International card businesses
Total credit card
Consumer Banking:
Auto
Retail banking
Total consumer banking
Commercial Banking:
Commercial and multifamily real estate
Commercial and industrial
Total commercial banking
Total net charge-offs
Average loans held for investment
(1) Net charge-off rates are calculated by dividing net charge-offs by average loans held for investment for the period for each loan category.
(2) Charge-offs exclude $19.4 billion of Discover loans acquired in the second quarter of 2025 that were fully charged-off, with expected recoveries of $3.3 billion included as a benefit to the allowance for credit losses.
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Financial Difficulty Modifications to Borrowers
A financial difficulty modification (“FDM”) occurs when a modification in the form of principal forgiveness, interest rate reduction, an other-than-insignificant payment delay, a term extension or a combination of these modifications is granted to a borrower experiencing financial difficulty.
As part of our loss mitigation efforts, we may provide short-term (one to twelve months) or long-term (greater than twelve months) modifications to a borrower experiencing financial difficulty to improve long-term collectibility of the loan and to avoid the need for repossession or foreclosure of collateral.
We consider the impact of all loan modifications, including FDMs, when estimating the credit quality of our loan portfolio and establishing allowance levels. For our Commercial Banking customers, loan modifications are also considered in the assignment of an internal risk rating.
In our Credit Card business, the majority of our FDMs receive an interest rate reduction and are placed on a fixed payment plan not exceeding 60 months. If the customer does not comply with the modified payment terms, then the credit card loan agreement may revert to its original payment terms, generally resulting in any loan outstanding being reflected in the appropriate delinquency category and charged off in accordance with our standard charge-off policy.
In our Consumer Banking business, the majority of our FDMs receive an extension, an interest rate reduction, principal reduction, or a combination of these modifications.
In our Commercial Banking business, the majority of our FDMs receive an extension. A portion of FDMs receive an interest rate reduction, principal reduction, or a combination of modifications.
For more information on FDMs, see “Item 8. Financial Statements and Supplementary Data—Note 4—Loans.”
Allowance for Credit Losses and Reserve for Unfunded Lending Commitments
Our allowance for credit losses represents management’s current estimate of expected credit losses over the contractual terms of our loans held for investment as of each balance sheet date. Expected recoveries of amounts previously charged off or expected to be charged off are recognized within the allowance. Charge-offs of uncollectible amounts result in a reduction to the allowance and recoveries of previously charged off amounts are credited to the allowance. We also estimate expected credit losses related to unfunded lending commitments that are not unconditionally cancellable. The provision for losses on unfunded lending commitments is included in the provision for credit losses in our consolidated statements of income and the related reserve for unfunded lending commitments is included in other liabilities on our consolidated balance sheets. We provide additional information on the methodologies and key assumptions used in determining our allowance for credit losses in “Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies.”
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Table 26 presents changes in our allowance for credit losses and reserve for unfunded lending commitments for 2025 and 2024, and details by portfolio for the provision for credit losses, charge-offs and recoveries.
Table 26: Allowance for Credit Losses and Reserve for Unfunded Lending Commitments Activity
Credit Card
Consumer Banking
(Dollars in millions)
Domestic Card
Personal Loans
International Card Businesses
Total Credit Card
Auto
Retail Banking
Total Consumer Banking
Commercial Banking
Total
Allowance for credit losses:
Balance as of December 31, 2023
Charge-offs
Recoveries (1)
Net charge-offs
Provision for credit losses
Allowance build (release) for credit losses
Other changes (2)
Balance as of December 31, 2024
Reserve for unfunded lending commitments:
Balance as of December 31, 2023
Provision (benefit) for losses on unfunded lending commitments
Balance as of December 31, 2024
Combined allowance and reserve as of December 31, 2024
Allowance for credit losses:
Balance as of December 31, 2024
Charge-offs (3)
Recoveries (1)
Net charge-offs
Initial allowance for purchased credit deteriorated loans
Benefit from expected recoveries of charged off loans (4)
Provision for credit losses (5)
Allowance build (release) for credit losses
Other changes (2)
Balance as of December 31, 2025
Reserve for unfunded lending commitments:
Balance as of December 31, 2024
Provision (benefit) for losses on unfunded lending commitments
Balance as of December 31, 2025
Combined allowance and reserve as of December 31, 2025
(1) 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 as well as additional strategies, such as litigation.
(2) Primarily represents foreign currency translation adjustments for the year ended December 31, 2025 and 2024.
(3) Charge-offs exclude $19.4 billion of Discover loans acquired in the second quarter of 2025 that were fully charged-off, with expected recoveries of $3.3 billion included as a benefit to the allowance for credit losses.
(4) Represents contractual rights to collect on recoveries of acquired Discover loans that are charged off.
(5) The provision for credit losses includes the initial allowance for credit losses of $8.8 billion for non-PCD loans acquired in the Transaction.
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Allowance Coverage Ratios for Specified Loan Category
O ur allowance for credit losses increased by $7.2 billion to $23.4 billion as of December 31, 2025 compared to 2024 and our allowance coverage ratio increased by 20 bps to 5.16% as of December 31, 2025 compared to 2024.
The ratio of the allowance for credit losses divided by total nonperforming loans held for investment of $1.8 billion and $2.0 billion as of December 31, 2025 and 2024, respectively, increased by 472% to 1,287% as of December 31, 2025 from 815% as of December 31, 2024. Excluding the impact of the allowance for credit losses related to Domestic Card of $18.8 billion and $12.5 billion as of December 31, 2025 and 2024, respectively, this ratio increased by 64% to 253% as of December 31, 2025 from 189% as of December 31, 2024. The increase in the ratio for the allowance for credit losses divided by total nonperforming loans was driven by an increase in total allowance and a decrease in total nonperforming loans.
LIQUIDITY RISK PROFILE
We manage our funding and liquidity risk in an integrated manner in support of the current and future cash flow needs of our business. We maintained liquidity reserv es of $144 billion and $123.8 billion as of December 31, 2025 and 2024 , respectively, as shown in Table 27 below. Included in liquidity reserv es are cash and cash equivalents, investment securities and FHLB borrowing capacity secured by loans.
As of December 31, 2025, we had available issuance capacity of $39.0 billion under shelf registrations associated with our credit card and auto loan securitization programs. We also maintain a shelf registration that enables us to issue an indeterminate amount of senior or subordinated debt securities, preferred stock, depositary shares, common stock, purchase contracts, warrants and units. Our ability to issue under each shelf registration is subject to market conditions.
Finally, as of December 31, 2025, we had access to available contingent liquidity source s totaling $108.9 billion through the prepositioning of collateral, including a portion of the investment securities included in the liquidity reserves amount in the following table, at th e Federal Reserve Discount Window, the Standing Repo Facility, FHLB and the Fixed Income Clearing Corporation - Government Securities Division (“FICC - GSD”).
As of December 31, 2025 and 2024, our funding sources t otaled $526.8 billion and $408.3 billion, resp ectively, primarily composed of consumer deposits, as sh own in “Consolidated Balance Sheets Analysis— Table 6: Funding Sources Composition.”
Our liquidity reserves, borrowing capacity, contingent liquidity sources and total funding sources are all discussed in more detail in the following sections.
Table 27 below presents the composition of our liquidity reserves as of December 31, 2025 and 2024.
Table 27: Liquidity Reserves
(Dollars in millions)
December 31, 2025
December 31, 2024
Cash and cash equivalents
Securities available for sale (1)
FHLB borrowing capacity secured by loans
Outstanding FHLB advances and letters of credit secured by loans and investment securities
Other encumbrances of investment securities
Total liquidity reserves
(1) Includes securities that have been pledged or otherwise encumbered within the below Liquidity Reserves line items “Outstanding FHLB advances and letters of credit secured by loans and investment securities” and “Other encumbrances of investment securities . ”
Our liquidity reserves increased by $20.1 billion to $144.0 billion as of December 31, 2025 from December 31, 2024, primarily due to increases in cash and cash equivalents acquired in the Transaction. In addition to these liquidity reserves, we maintain access to a diversified mix of funding sources as discussed in the “Borrowing Cap acity” and “Funding” sections below. See “Part II—Item 7. MD&A—Risk Management” for additional information on our management of liquidity risk.
Capital One Financial Corporation (COF)
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Liquidity Coverage Ratio
We are subject to the Federal Reserve’s and OCC’s LCR Rule. The LCR Rule requires both the Company and the Bank to calculate its respective LCR daily. It also requires the Company to publicly disclose, on a quarterly basis, its LCR, certain related quantitative liquidity metrics, and a qualitative discussion of its LCR. Our average LCR during the fourth quarter of 2025 wa s 173% , whic h exceeded the LCR Rule requirement of 100%. The calculation and the underlying components are based on our interpretations, expectations and assumptions of relevant regulations, as well as interpretations provided by our regulators, and are subject to change based on changes to future regulations and interpretations. See “Part I—Item 1. Business—Supervision and Regulation” for additional information.
Net Stable Funding Ratio
We are subject to the Federal Reserve’s and OCC’s NSFR Rule. The NSFR Rule requires both the Company and the Bank to maintain an NSFR of 100% on an ongoing basis. It also requires the Company to publicly disclose, on a semi-annual basis each second and fourth quarter, its NSFR, certain related quantitative liquidity metrics and qualitative discussion of its NSF R. Our average NSFR for each of the third and fourth quarter of 2025 was 136%, which exceeded the NSFR Rule requirement of 100%. Th e calculation and the underlying components are based on our interpretations, expectations and assumptions of the relevant regulations, as well as interpretations provided by our regulators, and are subject to change based on changes to future regulations and interpretations. See “Part I—Item 1. Business—Supervision and Regulation” for additional information.
Borrowing Capacity
We maintain a shelf registration with the SEC so that we may periodically offer and sell an indeterminate aggregate amount of senior or subordinated debt securities, preferred stock, depositary shares, common stock, purchase contracts, warrants and units. There is no limit under this shelf registration to the amount or number of such securities that we may offer and sell, subject to market conditions. In addition, we also maintain a shelf registration associated with our Capital One Multi-asset Execution Trust (“COMET”) that allows us to periodically offer and sell up to $24.0 billion of securitized debt obligations and a shelf registration associated with our Capital One Prime Auto Receivables Trusts (“COPAR”) that allows us to periodically offer and sell up to $18.6 billion of securitized debt obligations. These shelf registration statements are subject to periodic renewal and, thus, change, which may be reviewed by the SEC at the time of each such renewal. As part of each periodic renewal, we assess registered amounts under each shelf registration statement which may be updated as appropriate. As of December 31, 2025, we had $21.5 billion and $17.5 billion of available issuance capacity in our COMET and COPAR securitization programs, respectively.
In connection with the Transaction, we also acquired a shelf registration associated with the Discover Card Execution Note Trust (“DCENT”). On December 18, 2025, we defeased the outstanding DiscoverSeries Class A Notes issued by DCENT as part of the wind down of that issuance platform. As a result, that shelf registration statement is no longer active.
In addition to our issuance capacity under the shelf registration statements, we also have collateral pledged to support our access to FHLB advances, the Federal Reserve Discount Window, the Standing Repo Facility and FICC - GSD general collateral financing repurchase agreement service. For each of these programs, the ability to borrow utilizing these sources is dependent on meeting the respective membership requirements. Our borrowing capacity in each program is a function of the collateral the Bank has posted with each counterparty, including any respective haircuts applied to that collateral.
A s of December 31, 2025, we pledged loans and securities to the FHLB to secure a maximum borrowing capacity of $34.4 billion , of which $1.3 billion was used. Our FHLB membership is supported by our investment in FHLB stock of $89 million and $18 million as of December 31, 2025 and 2024 , respectively.
As of December 31, 2025, we pledged loans to secure a borrowing capacity of $53.3 billion under the Federal Reserve Discount Window. Our membership with the Federal Reserve is supported by our investment in Federal Reserve stock, which totaled $2.6 billion and $1.3 billion as of December 31, 2025 and 2024 , respectively.
As a member of FICC - GSD, we have $21.2 billion of readily available borrowing capacity secured by securities from our investment portfolio as of December 31, 2025. Our FICC - GSD membership is supported by our investment in Depository Trust and Clearing Corporation (“DTCC”) common stock of $488 thousand and $412 thousand as of December 31, 2025 and 2024 , respectively.
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Deposits
Table 28 provides a comparison of the average balances, interest expense and average deposits interest rates for December 31, 2025, 2024 and 2023.
Table 28: Deposits Composition and Average Deposits Interest Rates
Year Ended December 31,
(Dollars in millions)
Average
Balance
Interest
Expense
Average
Deposits
Interest Rate
Average
Balance
Interest
Expense
Average
Deposits
Interest Rate
Average
Balance
Interest
Expense
Average
Deposit
Interest Rate
Interest-bearing checking accounts (1)
Saving deposits (2)
Time deposits
Total interest-bearing deposits
(1) Includes negotiable order of withdrawal accounts.
(2) Includes money market deposit accounts.
The F DIC limits the acceptance of brokered deposits to well-capitalized insured depository institutions and, with a waiver from the FDIC, to adequately-capitalized instituti ons. The Bank was well-capitalized, as defined under the federal banking regulatory guidelines, as of both December 31, 2025 and 2024 . See “Part I—Item 1. Business—Supervision and Regulation” for additional information. We provide additional information on the composition of deposits in “Consolidated Balance Sheets Analysis—Table 6: Funding Sources Composition ” and in “Item 8. Financial Statements and Supplementary Data—Note 9—Deposits and Borrowings.”
Funding
Our funding sources in clude deposits, senior and subordinated notes, securitized debt obligations, federal funds purchased, securities loaned or sold under agreements to repurchase and FHLB advances secured by certain portions of our loan and securities portfolios. A key objective in our use of these markets is to maintain access to a diversified mix of wholesale funding sources. Insured deposits in our Cons umer Banking business represent our primary source of funding, as they are a relatively stable and low cost source of funding. See “Consolidated Balance Sheets Analysis—Table 6: Funding Sources Composition” for additional information on our primary sources of funding.
In the normal course of business, we enter into various contractual obligations that may require future cash payments that affect our short-term and long-term liquidity and capital resource needs. Our future cash outflows primarily relate to deposits, borrowings and operating leases. The actual timing and amounts of future cash payments may vary over time due to a number of factors, such as early debt redemptions and changes in deposit balances.
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As of December 31, 2025 and 2024, we held $71.9 billion and $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 December 31, 2025 and 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.
Table 29 presents, by contractual maturity, the estimated uninsured portion of total time deposits as of December 31, 2025 and 2024. Our funding and liquidity management activities factor in the expected maturities of these deposits.
Table 29: Amount of Uninsured Time Deposits by Contractual Maturity (1)
December 31, 2025
December 31, 2024
(Dollars in millions)
Amount
% of Total
Amount
% of Total
Up to three months
> 3 months to 6 months
> 6 months to 12 months
> 12 months
Total
(1) Some customers have time deposits in excess of the federal deposit insurance limit, making a portion of the deposit uninsured. As of December 31, 2025 and 2024, the total time deposit amount with some portion in excess of the insured amount was $17.4 billion and $15.2 billion, respectively.
Short-Term Borrowings and Long-Term Debt
We access the capital markets to meet our funding needs through the issuance of senior and subordinated notes, securitized debt obligations and federal funds purchased and securities loaned or sold under agreements to repurchase. In addition, we have access to short-term and long-term FHLB advances secured by certain investment securities, multifamily real estate loans and commercial real estate loans.
Our short-term borrowings, which include those borrowings with an original contractual maturity of one year or less, typically consist of federal funds purchased, securities loaned or sold under agreements to repurchase or short-term FHLB advances, and do not include the current portion of long-term debt. Our short-term borrowings increased by $525 million to $1.1 billion as of December 31, 2025 from December 31, 2024 driven by an increase in FHLB advances.
Our long-term funding, which primarily consists of securitized debt obligations and senior and subordinated notes and FHLB advances, increased by $4.9 billion to $49.9 billion as of December 31, 2025 from December 31, 2024 primarily driven by debt assumed from the Transaction. We provide more information on our securitization activity in “ Item 8. Financial Statements and Supplementary Data —Note 6—Variable Interest Entities and Securitizations” and on our borrowi ngs in “Item 8. Financial Statements and Supplementary Data—Note 9—Deposits and Borrowings.”
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The following table summarizes issuances of securitized debt obligations, senior and subordinated notes, long-term FHLB advances and their respective maturities or redemptions for the years ended December 31, 2025, 2024 and 2023.
Table 30: Long-Term Debt Funding Activities
Issuances (1)
Maturities/Redemptions
Year Ended December 31,
Year Ended December 31,
(Dollars in millions)
Securitized debt obligations
Senior and subordinated notes
FHLB advances
Total
(1) Issuances for the year ended December 31, 2025 includes $13.2 billion of debt assumed in the Transaction.
Credit Ratings
Our credit ratings impact our ability to access capital markets and our borrowing costs. For more information, see “ Part I —Item 1A. Risk Factors”— “A downgrade in our credit ratings could significantly impact our liquidity, funding costs and access to the capital markets.”
Table 31 provides a summary of the credit ratings for the senior unsecured long-term debt of Capital One Financial Corporation and CONA as of December 31, 2025 and 2024.
Table 31: Senior Unsecured Long-Term Debt Credit Ratings
December 31, 2025
December 31, 2024
Capital One
Financial
Corporation
CONA
Capital One
Financial
Corporation
CONA
Moody’s
Baa1
Baa1
BBB
BBB+
BBB
BBB+
Fitch
As of February 13, 2026, Moody’s Investors Service (“Moody’s”) and Fitch Ratings (“Fitch”) have our credit ratings on a stable outlook and Standard & Poor’s (“S&P”) has our credit ratings on a positive outlook.
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Other Commitments
In the normal course of business, we enter into other contractual obligations that may require future cash payments that affect our short-term and long-term liquidity and capital resource needs. Our other contractual obligations include lending commitments, leases, purchase obligations and other contractual arrangements.
As of December 31, 2025 and 2024, our total unfunded lending commitments were $729.6 billion an d $458.1 billion, respectively, consisting of credit card lines, loan commitments to customers of both our Commercial Banking and Consumer Banking businesses, as well as standby and commercial letters of credit. We generally manage the potential risk of unfunded lending commitments by limiting the total amount of arrangements, monitoring the size and maturity structure of these portfolios and applying the same credit standards for all of our credit activities. For additional information, refer to “Item 8. Financial Statements and Supplementary Data—Note 19—Commitments, Contingencies, Guarantees and Others” in this Report.
Our primary involvement with leases is in the capacity as a lessee where we lease premises to support our business. The majority of our leases are operating leases of office space, retail bank branches and cafés. Our operating leases expire at various dates th rough 2071, although some have extension or termination options, and we assess the likelihood of exercising such options. If it is reasonably certain that we will exercise the options, then we include the impact in the measurement of our right-of-use assets and lease liabilities. As of both December 31, 2025 and 2024 , we had $1.5 billion in a ggregate operating lease obligations, of which $254 million will be due the following 12 months. We provide more information on our lease activity in “Item 8. Financial Statements and Supplementary Data—Note 8—Premises, Equipment and Leases” in this Report.
We have enforceable and legally binding purchase obligations for goods and services such as data management, media and other software and third-party services. As of December 31, 2025 and 2024, we had $3.8 billion and $4 billion, respectively, in aggregate purchase obligations.
We also enter into various contractual arrangements that may require future cash payments, including short-term obligations such as trade payables, commitments to fund certain equity investments, obligations for pension and post-retirement benefit plans, and representation and warranty reserves. These arrangements are discussed in more detail in “Item 8. Financial Statements and Supplementary Data—Note 6—Variable Interest Entities and Securitizations,” “Item 8. Financial Statements and Supplementary Data—Note 15—Employee Benefit Plans” and “Item 8. Financial Statements and Supplementary Data—Note 19—Commitments, Contingencies, Guarantees and Others.”
MARKET RISK PROFILE
Our primary market risk exposures include interest rate risk, foreign exchange risk and commodity pricing risk. We are exposed to market risk primarily from the following operations and activities:
• Traditional banking activities of deposit gathering and lending;
• Asset/liability management activities including the management of investment securities, short-term and long-term borrowings and derivatives;
• Foreign operations within our Credit Card and Consumer Banking businesses; and
• Customer accommodation activities within our Commercial Banking business.
We have enterprise-wide risk management policies and limits, approved by our Board of Directors, which govern our market risk management activities. Our objective is to manage our exposure to market risk in accordance with these policies and limits based on prevailing market conditions and long-term expectations. We provide additional information below about our primary sources of market risk, our market risk management strategies and the measures that we use to evaluate these exposures.
Interest Rate Risk
Interest rate risk represents exposure to financial instruments whose values vary with the level or volatility of interest rates. We are exposed to interest rate risk primarily from the differences in the timing between the maturities or repricing of assets and liabilities. We manage our interest rate risk primarily by entering into interest rate swaps and other derivative instruments which could include caps, floors, options, futures and forward contracts.
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We use various industry standard market risk measurement techniques and analyses to measure, assess and manage the impact of changes in interest rates on our net interest income and our economic value of equity and changes in foreign exchange rates on our non-dollar-denominated funding and non-dollar equity investments in foreign operations.
As of June 30, 2025, we integrated the acquired assets and assumed liabilities of Discover that are part of our continuing operations into our interest rate risk framework. The Transaction, and subsequent business actions, have resulted in modest impacts to both our net interest income and economic value of equity sensitivities.
Net Interest Income Sensitivity
Our net interest income sensitivity measure estimates the impact of hypothetical instantaneous movements in interest rates relative to our baseline interest rate forecast on our projected 12-month net interest income. Net interest income sensitivity metrics are derived using the following key assumptions :
• As of December 31, 2025, our metrics assume a market implied baseline interest rate projection for the upper limit of the Federal Funds Target Rate of 3.25% at both December 31, 2026 and 2027.
• In addition to our existing assets, liabilities and derivative positions, we incorporate expected future business growth assumptions. These assumptions include loan and deposit growth, pricing, plans for projected changes in our funding mix and our securities and cash position from our internal corporate outlook that is used in our financial planning process.
• The analysis assumes this forecast of expected future business growth remains unchanged between the baseline rate forecast and rate shock scenarios, including no changes to our interest rate risk management activities like securities and hedging actions.
• We incorporate the dynamic nature of deposit re-pricing, which includes pricing lags and changes in deposit beta and mix as interest rates change, and the prepayment sensitivity of our mortgage securities to the level of interest rates. In our models, deposit betas and mortgage security prepayments vary dynamically based on the level of interest rates and by product type. In the contexts used in this section, “beta” refers to the change in deposit rate paid relative to the change in the federal funds rate.
• In instances where an interest rate scenario would result in a rate less th an 0%, we assume a rate of 0% for that scenario. This assumption applies only to jurisdictions that do not have a practice of employing negative policy rates. In jurisdictions that have negative policy rates, we do not floor interest rates a t 0%.
At the current level of interest rates, our projected 12-month net interest income is expected to increase in higher rate scenarios and decrease in lower rate scenarios. The decrease in lower rate scenarios is driven by lower interest income from our assets, including floating rate credit card and commercial loans, being partially offset by lower interest expense from our deposits and other liabilities, net of our interest rate hedges. Our combined 12-month net interest income sensitivity was largely unchanged as compared to December 31, 2024.
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Economic Value of Equity Sensitivity
Our economic value of equity sensitivity measure estimates the impact of hypothetical instantaneous movements in interest rates on the net present value of our assets and liabilities, including derivative exposures. Economic value of equity sensitivity metrics are derived using the following key assumptions:
• As of December 31, 2025, our metrics assume a market implied baseline interest rate projection for the upper limit of the Federal Funds Target Rate of 3.25% and 3.25% at both December 31, 2026 and 2027.
• The analysis includes only existing assets, liabilities and derivative positions and does not incorporate business growth assumptions or projected balance sheet changes.
• Similar to our net interest income sensitivity measure, we incorporate the dynamic nature of deposit repricing and attrition, which includes pricing lags and changes in deposit beta as interest rates change and the prepayment sensitivity of our mortgage securities to the level of interest rates. In our models, deposit betas and mortgage security prepayments vary dynamically based on the level of interest rates and by product type.
• Balance attrition assumptions for loans, including credit card, personal, auto and commercial loans, remain unchanged between the baseline interest rate forecast and interest rate shock scenarios as the majority of these loans are floating rate or shorter duration fixed rate loans and hence paydowns have a low sensitivity to the level of interest rates.
• For assets and liabilities with embedded optionality, such as mortgage securities and deposit balances, we utilize Monte Carlo simulations to assess economic value with industry-standard term structure modeling of interest rates.
• Our calculations of net present value apply appropriate spreads over the benchmark yield curve for select assets and liabilities to capture the inherent risks (including credit risk) to discount expected interest and principal cash flows.
• In instances where an interest rate scenario would result in a rate less than 0%, we assume a rate of 0% for that scenario. This assumption applies only to jurisdictions that do not have a practice of employing negative policy rates. In jurisdictions that have negative policy rates, we do not floor interest rates at 0%.
Our current economic value of equity sensitivity profile demonstrates that our economic value of equity decreases in higher interest rate scenarios and increases in lower interest rate scenarios. The decrease in higher rate scenarios is due to the declines in the projected value of our fixed rate assets being only partially offset by corresponding movements in the projected value of our deposits and other liabilities. The pace of economic value of equity decrease is larger for the +200 bps scenario as our deposits are assumed to reprice more rapidly in higher interest rate environments.
Our combined economic value of equity sensitivity decreased as compared to December 31, 2024, driven largely by the Transaction. Discover’s assets had a large concentration of short duration, floating rate Credit Card balances and we terminated Discover’s existing interest rate swaps in cash flow hedging relationships as they no longer met the conditions of a qualifying accounting hedge at the Closing Date.
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Table 32 shows the estimated percentage impact on our projected baseline net interest income and our current economic value of equity calculated under the methodology described above as of December 31, 2025 and 2024.
Table 32: Interest Rate Sensitivity Analysis
December 31, 2025
December 31, 2024
Estimated impact on projected baseline net interest income:
+200 basis points
+100 basis points
+50 basis points
–50 basis points
–100 basis points
–200 basis points
Estimated impact on economic value of equity:
+200 basis points
+100 basis points
+50 basis points
–50 basis points
–100 basis points
–200 basis points
In addition to these industry standard measures, we also consider the potential impact of alternative interest rate scenarios, such as larger rate shocks, higher than +/- 200 bps, as well as steepening and flattening yield curve scenarios in our internal interest rate risk management decisions. We also regularly review the sensitivity of our interest rate risk metrics to changes in our key modeling assumptions, such as our loan and deposit balance forecasts, mortgage prepayments and deposit repricing.
Limitations of Market Risk Measures
The interest rate risk models that we use in deriving these measures incorporate contractual information, internally-developed assumptions and proprietary modeling methodologies, which project borrower and depositor behavior patterns in certain interest rate environments. Other market inputs, such as interest rates, market prices and interest rate volatility, are also critical components of our interest rate risk measures. We regularly evaluate, update and enhance these assumptions, models and analytical tools as we believe appropriate to reflect our best assessment of the market environment and the expected behavior patterns of our existing assets and liabilities.
There are inherent limitations in any methodology used to estimate the exposure to changes in market interest rates. The sensitivity analysis described above contemplates only certain movements in interest rates and is performed at a particular point in time based on our existing balance sheet and, in some cases, expected future business growth and funding mix assumptions. The strategic actions that management may take to manage our balance sheet may differ significantly from our projections, which could cause our actual earnings and economic value of equity sensitivities to differ substantially from the above sensitivity analysis.
For further information on our interest rate exposures, see “Item 8. Financial Statements and Supplementary Data—Note 10—Derivative Instruments and Hedging Activities.”
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Foreign Exchange Risk
Foreign exchange risk represents exposure to changes in the values of current holdings and future cash flows denominated in other currencies. We are exposed to foreign exchange risk primarily from the intercompany funding denominated in pound sterling (“GBP”) and the Canadian dollar (“CAD”) that we provide to our businesses in the U.K. and Canada and net equity investments in those businesses. We are also exposed to foreign exchange risk due to changes in the dollar-denominated value of future earnings and cash flows from our foreign operations and from our Euro (“EUR”)-denominated borrowing.
Our non-dollar denominated intercompany funding and EUR-denominated borrowing expose our earnings to foreign exchange transaction risk. We manage these transaction risks by using forward foreign currency derivatives and cross-currency swaps to hedge our exposures. We measure our foreign exchange transaction risk exposures by applying a 1% U.S. dollar appreciation shock against the value of the non-dollar denominated intercompany funding and EUR-denominated borrowing and their related hedges, which shows the impact to our earnings from foreign exchange risk. Our nominal with interest accrued intercompany funding outstanding was 1.5 billion GBP and 1.3 billion GBP as of December 31, 2025 and 2024, respectively, and 1.1 billion CAD and 1.4 billion CAD as of December 31, 2025 and 2024, respectively. Our nominal EUR-denominated borrowing outstanding with interest accrued were 505 million EUR as of both December 31, 2025 and 2024.
Certain non-dollar equity investments in foreign operations expose our balance sheet and capital ratios to translation risk in AOCI. We manage our translation risk by entering into foreign currency derivatives designated as net investment hedges. We measure these exposures by applying a 30% U.S. dollar appreciation shock, which we believe approximates a significant adverse shock over a one-year time horizon, against the value of the equity invested in our foreign operations net of related net investment hedges where applicable. Our primary exposure is to our U.K. and Canadian operations and the gross equity amounts were 2.3 billion GBP and 2.2 billion GBP as of December 31, 2025 and 2024, respectively, and 2.8 billion CAD and 2.6 billion CAD as of December 31, 2025 and 2024, respectively. Additionally, we have immaterial foreign translation exposure to a small number of other currencies.
As a result of our derivative management activities, we believe our net exposure to foreign exchange risk is minimal. For m ore information, see “ Item 8. Financial Statements and Supplementary Data—Note 10—Derivative Instruments and Hedging Activities” and “Item 8. Financial Statements and Supplementary Data—Note 11—Stockholders’ Equity.”
Risk Related to Customer Accommodation Derivatives
We offer interest rate, commodity and foreign currency derivatives as an accommodation to our customers within our Commercial Banking business. We offset the majority of the market risk of these customer accommodation derivatives by entering into offsetting derivatives transactions with other counterparties. We use value-at-risk (“VaR”) as the primary method to measure the market risk in our customer accommodation derivative activities on a daily basis. VaR is a statistical risk measure used to estimate the potential loss from movements observed in the recent market environment. We employ a historical simulation approach using the most recent 500 business days and use a 99% confidence level and a holding period of one business day. As a result of offsetting our customer exposures with other counterparties, we believe that our net exposure to market risk in our customer accommodation derivatives is minimal. For further information on our risk related to customer accommodation derivatives, see “Item 8. Financial Statements and Supplementary Data—Note 10—Derivative Instruments and Hedging Activities.”
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SUPPLEMENTAL TABLES
Table A—Net Charge-Offs
Year Ended December 31,
(Dollars in millions)
Average loans held for investment
Net charge-offs
Net charge-off rate
Table B— Reconciliation of Non-GAAP Measures
The following non-GAAP measures consist of TCE, tangible assets and metrics computed using these amounts, which include tangible book value per common share, return on average tangible assets, return on average TCE and TCE ratio. We consider these metrics to be key financial performance measures that management uses in assessing capital adequacy and the level of returns generated. While these non-GAAP measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly-titled measures reported by other companies. The following table presents reconciliations of these non-GAAP measures to the applicable amounts measured in accordance with U.S. GAAP. These non-GAAP measures should not be viewed as a substitute for reported results determined in accordance with U.S. GAAP.
December 31,
(Dollars in millions, except as noted)
Tangible Common Equity (Period-End):
Stockholders’ equity
Goodwill and other intangible assets (1)
Noncumulative perpetual preferred stock
Tangible common equity
Tangible Assets (Period-End):
Total assets
Goodwill and other intangible assets (1)
Tangible assets
Tangible Common Equity (Average):
Stockholders’ equity
Goodwill and other intangible assets (1)
Noncumulative perpetual preferred stock
Tangible common equity
Tangible Assets (Average):
Total assets
Goodwill and other intangible assets (1)
Tangible assets
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December 31,
(Dollars in millions, except as noted)
TCE Ratio:
Tangible common equity (period-end)
Tangible assets (period-end)
TCE Ratio (2)
Tangible Book Value per Share:
Tangible common equity (period-end)
Outstanding Common Shares
Tangible book value per common share (period-end) (3)
Return on Tangible Assets (Average):
Net income
Income from discontinued operations, net of tax
Net income less income from discontinued operations, net of tax
Tangible assets (Average)
Return on tangible assets (4)
Return on Tangible Common Equity (Average):
Net income available to common stockholders
Income from discontinued operations, net of tax
Net income available to common stockholders less income from discontinued operations, net of tax
Tangible common equity (Average)
Return on tangible common equity (5)
(1) Includes impact of related deferred taxes.
(2) TCE ratio is a non-GAAP measure calculated based on TCE divided by period-end tangible assets.
(3) Tangible book value per common share is a non-GAAP measure calculated based on TCE divided by common shares outstanding.
(4) Return on average tangible assets is a non-GAAP measure calculated based on net income (loss) less income (loss) from discontinued operations, net of tax, for the period divided by average tangible assets for the period.
(5) Return on average tangible common equity is a non-GAAP measure calculated based on net income (loss) available to common stockholders less income (loss) from discontinued operations, net of tax, for the period, divided by average TCE.
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GLOSSARY AND ACRONYMS
2004 Plan: The Amended and Restated 2004 Stock Incentive Plan.
2019 Cybersecurity Incident: The unauthorized access by an outside individual who obtained certain types of personal information relating to people who had applied for our credit card products and to our credit card customers that we announced on July 29, 2019.
2022 Call Report: Consolidated Reports of Condition and Income, (“FFIEC 031”) as of December 31, 2022.
Allowance coverage ratio: Allowance for credit losses as a percentage of loans held for investment.
Amortized cost basis: The amount at which a financing receivable or investment is originated or acquired, adjusted for applicable accrued interest, accretion, or amortization of premium, discount, and net deferred fees or costs, collection of cash, write-offs, foreign exchange and fair value hedge accounting adjustments.
AML Act: Anti-Money Laundering Act of 2020, enacted as part of the National Defense Authorization Act, requires the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) to issue a number of rules that will update and expand the BSA’s regulatory requirements.
Annual Report: References to “this Report” or our “2025 Form 10-K” or “2025 Annual Report” are to our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Bank: CONA, Capital One Financial Corporation’s principal operating subsidiary.
Basel Committee: The Basel Committee on Banking Supervision.
Basel III Capital Rules: The regulatory capital requirements established by the Federal Banking Agencies in July 2013 to implement the Basel III capital framework developed by the Basel Committee as well as certain Dodd-Frank Act and other capital provisions.
Basel III Finalization Proposal: The notice of proposed rulemaking released by the Federal Banking Agencies on July 27, 2023 to revise the Basel III Capital Rules applicable to banking organizations with total assets of $100 billion or more and their subsidiary depository institutions.
Basel III standardized approach: The Basel III Capital Rules modified Basel I to create the Basel III standardized approach.
Capital One Canada: Capital One Bank (Canada Branch).
Capital One or the Company: Capital One Financial Corporation and its subsidiaries.
Carrying value (with respect to loans ) : The amount at which a loan is recorded on the consolidated balance sheets. For loans recorded at amortized cost basis, carrying value is the unpaid principal balance net of unamortized deferred loan origination fees and costs, and unamortized purchase premium or discount. For loans that are or have been on nonaccrual status, the carrying value is also reduced by any net charge-offs that have been recorded and the amount of interest payments applied as a reduction of principal under the cost recovery method. For credit card loans, the carrying value also includes interest that has been billed to the customer, net of any related reserves. Loans held for sale are recorded at either fair value (if we elect the fair value option) or at the lower of cost or fair value.
CECL: In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments . This ASU requires an impairment model (known as the CECL model) that is based on expected rather than incurred losses, with an anticipated result of more timely loss recognition. This guidance was effective for us on January 1, 2020.
CECL Transition Rule: A rule adopted by the Federal Banking Agencies and effective in 2020 that provides banking institutions an optional five-year transition period to phase in the impact of the CECL standard on their regulatory capital.
Closing Date: The Transaction was completed on May 18, 2025.
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CODM : The Chief Operating Decision Maker for each of our business segments.
Common equity Tier 1 (“CET1”) capital: CET1 capital primarily includes qualifying common shareholders’ equity, retained earnings and certain AOCI amounts less certain deductions for goodwill, intangible assets, and certain deferred tax assets.
CONA: Capital One, National Association, one of our wholly-owned subsidiaries, which offers a broad spectrum of banking products and financial services to consumers, small businesses and commercial clients.
CONA Bank Merger: The merger of Discover Bank, a Delaware-chartered bank and wholly owned subsidiary of Discover, with and into CONA, with CONA as the surviving entity.
Contingency Funding Plan: A plan that describes the Company’s event management process and management response plans to ensure that the Company is prepared to respond to a liquidity crisis and to maintain the liquidity necessary to fund normal operating requirements. The plan establishes liquidity monitoring, quantitative assessment (including sizing of potential access to alternative contingent liquidity resources), qualitative and quantitative triggers that would signal risk, the liquidity event management process, and annual testing of the different components of the CFP.
Credit risk: The risk to current or projected financial condition and resilience arising from an obligor’s failure to meet the terms of any contract with the Company or otherwise perform as agreed.
Deposit Insurance Fund (“DIF”): A fund maintained by the FDIC to provide insurance coverage for certain deposits. It is funded through assessments on banks.
Derivative: A contract or agreement whose value is derived from changes in interest rates, foreign exchange rates, prices of securities or commodities, credit worthiness for credit default swaps or financial or commodity indices.
Diners Club: Diners Club International, a global payments network of licensees, which are generally financial institutions, that issue Diners Club branded charge cards and/or provide card acceptance services.
Discontinued operations: The operating results of a component of an entity, as defined by Accounting Standards Codification 205, that are removed from continuing operations when that component has been disposed of or it is management’s intention to sell the component.
Discover: Discover Financial Services, a Delaware corporation.
Discover Network: The network which processes transactions for Discover-branded credit and debit cards and provides payment transaction processing and settlement services.
Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank Act”): Regulatory reform legislation signed into law on July 21, 2010. This law broadly affects the financial services industry and contains numerous provisions aimed at strengthening the sound operation of the financial services sector.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Expanded Risk-Based Approach: The proposed framework for calculating risk-weighted assets for credit risk, operational risk, credit valuation adjustment risk and market risk that was introduced by the Basel III Finalization Proposal.
eXtensible Business Reporting Language (“XBRL”): A language for the electronic communication of business and financial data.
Federal Banking Agencies: The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corporation.
Federal Deposit Insurance Corporation (“FDIC”): An independent U.S. governmental agency that administers the Deposit Insurance Fund.
Federal Reserve: The Board of Governors of the Federal Reserve System.
FFIEC 031: Consolidated Reports of Condition and Income for a Bank with Domestic and Foreign Offices filed quarterly with the Federal Banking Agencies.
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FICO score: A measure of consumer credit risk provided by credit bureaus, typically produced from statistical modeling software created by FICO (formerly known as “Fair Isaac Corporation”) utilizing data collected by the credit bureaus.
Financial Difficulty Modification (“FDM”): A FDM is deemed to occur when a loan modification is made to a borrower experiencing financial difficulty in the form of principal forgiveness, an interest rate reduction, an other-than-insignificant payment delay, a term extension, or a combination of these modifications in the current reporting period. FDMs became effective with the adoption of ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures on January 1, 2023.
Foreign exchange contracts: Contracts that provide for the future receipt or delivery of foreign currency at previously agreed-upon terms.
Framework: The Capital One enterprise-wide risk management framework.
Global Payment Network: The Discover Network, PULSE Network, Diners Club International and Network Partners, collectively.
GSE or Agency: A government-sponsored enterprise or agency is a financial services corporation created by the United States Congress. Examples of U.S. government agencies include Federal National Mortgage Association (“Fannie Mae”), Federal Home Loan Mortgage Corporation (“Freddie Mac”), Government National Mortgage Association (“Ginnie Mae”) and the Federal Home Loan Bank (“FHLB”).
Globally Systematically Important Bank Surcharge (“G-SIB Surcharge”): The capital buffer imposed on U.S. banking organizations designated as global systematically important banks (“G-SIBs”) under the Federal Reserve’s capital framework. The surcharge increases a G-SIB’s minimum Common Tier Equity 1 (CET1) capital requirement based on its systematic risk score, which considers factors such as size, interconnectedness, complexity, cross-jurisdictional activity and sustainability.
Interest method: Method of amortization used to arrive at periodic interest income at a constant effective yield on the net investment in a financial asset.
Interest rate sensitivity: The exposure to interest rate movements.
Interest rate swaps: Contracts in which a series of interest rate flows in a single currency are exchanged over a prescribed period. Interest rate swaps are the most common type of derivative contract that we use in our asset/liability management activities.
Investment grade: Represents a Moody’s long-term rating of Baa3 or better; and/or a S&P long-term rating of BBB- or better; and/or a Fitch long-term rating of BBB- or better; or if unrated, an equivalent rating using our internal risk ratings. Instruments that fall below these levels are considered to be non-investment grade.
Investor Entities: Entities that invest in community development entities (“CDE”) that provide debt financing to businesses and non-profit entities in low-income and rural communities.
LCR Rule: The final rules published by the Basel Committee and as implemented by the Federal Banking Agencies in 2014 for the Basel III Liquidity Coverage Ratio (“LCR”) in the United States. The LCR is calculated by dividing the amount of an institution’s high quality, unencumbered liquid assets by its estimated net cash outflow, as defined and calculated in accordance with the LCR Rule.
Leverage ratio: Tier 1 capital divided by average assets after certain adjustments, as defined by regulators.
Liquidity risk: The risk that the Company will not be able to meet its future financial obligations as they come due, or invest in future asset growth because of an inability to obtain funds at a reasonable price within a reasonable time.
Loan-to-value (“LTV”) ratio: The relationship, expressed as a percentage, between the principal amount of a loan and the appraised value of the collateral securing the loan.
LTD Proposal: The proposed rule released by the Federal Banking Agencies on August 29, 2023 that would require banking organizations with $100 billion or more in total assets to comply with certain long-term debt requirements and clean holding company requirements.
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Loss severity: Loss given default.
Managed presentation: A non-GAAP presentation of business segment results derived from our internal management accounting and reporting process, which 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. The results of our individual businesses reflect the manner in which management evaluates performance and makes decisions about funding our operations and allocating resources and are intended to reflect each segment as if it were a stand-alone business.
Market risk: The risk that an institution’s earnings or the economic value of equity could be adversely impacted by changes in interest rates, foreign exchange rates or other market factors.
Master netting agreement: An agreement between two counterparties that have multiple contracts with each other that provides for the net settlement of all contracts through a single payment in the event of default or termination of any one contract.
Measurement Period : The duration of time allowed after a merger closing date for fair value estimation of the related assets acquired and liabilities assumed.
Merger Agreement: Agreement and Plan of Merger, dated as of February 19, 2024, by and among Discover, Capital One and Merger Sub.
Merger: The merger of Merger Sub with and into Discover, with Discover as the surviving entity, pursuant to the Merger Agreement.
Merger Sub: Vega Merger Sub, Inc.
Mortgage servicing rights (“MSRs”): The right to service a mortgage loan when the underlying loan is sold or securitized. Servicing includes collections of principal, interest and escrow payments from borrowers and accounting for and remitting principal and interest payments to investors.
Net charge-off rate : Represents (annualized) net charge-offs divided by average loans held for investment for the period. Negative net charge-offs and related rates are captioned as net recoveries.
Net interest margin: Represents (annualized) net interest income divided by average interest-earning assets for the period.
Network Partners: Financial institutions, financial technology firms, networks, network-to-network partners and other commercial service providers which we have agreements with for the provision of card issuing, payments processing and related services on the Global Payment Network.
Nonperforming loans: Generally include loans that have been placed on nonaccrual status. We do not report loans classified as held for sale as nonperforming.
NSFR Rule: The final rules published by the Basel Committee and as issued by the Federal Banking Agencies in October 2020 implementing the net stable funding ratio (“NSFR”) in the United States. The NSFR measures the stability of our funding profile and requires us to maintain minimum amounts of stable funding to support our assets, commitments and derivatives exposures over a one-year period.
Patriot Act: The USA PATRIOT Act of 2001.
Proxy Statement: Proxy statement for the 2026 Annual Stockholder Meeting.
Public Fund Deposits: Deposits that are derived from a variety of political subdivisions such as school districts and municipalities.
PULSE Network: The network which operates an electronic funds transfer network, providing financial institutions issuing debit cards on the PULSE Network with access to ATMs domestically and internationally, as well as merchant acceptance throughout the U.S. for debit card transactions.
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Purchase Plan: Our Associate Stock Purchase Plan, which is a compensatory plan under the accounting guidance for stock-based compensation.
Purchase volume: Consists of purchase transactions, net of returns, for the period, and excludes cash advance and balance transfer transactions.
Rating agency: An independent agency that assesses the credit quality and likelihood of default of an issue or issuer and assigns a rating to that issue or issuer.
Recovery Plan: A plan that describes the Company’s approach for effectively responding to severely-adverse stress at both CONA and the Company. The Recovery Plan establishes qualitative and quantitative triggers for CONA and the Company that would signal the risk or existence of severely-adverse stress at the respective entity and identifies several specific remedial actions for recovery status that the Company can use to effectively respond to the stress environment. The Recovery Plan is separate from, but complementary to, the CFP.
Repurchase agreement: An instrument used to raise short-term funds whereby securities are sold with an agreement for the seller to buy back the securities at a later date.
Restructuring charges: Charges associated with the realignment of resources supporting various businesses, primarily consisting of severance and related benefits pursuant to our ongoing benefit programs and impairment of certain assets related to the business locations and/or activities being exited.
Risk Committee: The Risk Committee of the Board of Directors.
Risk-weighted assets: On- and off-balance sheet assets that are assigned to one of several broad risk categories and weighted by factors representing their risk and potential for default.
Second Step Merger: The merger of Discover with and into Capital One, with Capital One as the surviving entity
Securitized debt obligations: A type of asset-backed security and structured credit product constructed from a portfolio of fixed-income assets.
Stress capital buffer requirement: A component of our standardized approach capital conservation buffer, which is recalibrated annually based on the results of our supervisory stress tests.
Stress Capital Buffer Rule: The final rule issued by the Federal Reserve in March 2020 to implement the stress capital buffer requirement.
Subprime: For purposes of lending in our Credit Card business, we generally consider FICO scores of 660 or below, or other equivalent risk scores, to be subprime. For purposes of auto lending in our Consumer Banking business, we generally consider FICO scores of 620 or below to be subprime.
Tangible common equity (“TCE”): A non-GAAP financial measure calculated as common equity less goodwill and other intangible assets inclusive of any related deferred tax liabilities.
This Report: This Annual Report on Form 10-K for the period ended December 31, 2025.
Transaction: On May 18, 2025, we completed the acquisition of Discover in an all-stock transaction as outlined in the Merger Agreement dated February 19, 2024.
Trapped Liquidity: The amount of high-quality liquid assets (HQLA) held by a bank that may not be transferred to other affiliates. This amount is excluded from the bank's HQLA amount.
Troubled debt restructuring (“TDR”): A TDR is deemed to occur when the contractual terms of a loan agreement are modified by granting a concession to a borrower that is experiencing financial difficulty. The accounting guidance for TDRs was eliminated by ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures , which we adopted as of January 1, 2023.
Unfunded lending commitments: Legally binding agreements to provide a defined level of financing until a specified future date.
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U.S. GAAP: Accounting principles generally accepted in the United States of America. Accounting rules and conventions defining acceptable practices in preparing financial statements in the U.S.
U.S. Real Gross Domestic Product (“GDP”) : An inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year.
Variable interest entity (“VIE”): An entity that, by design, either (i) lacks sufficient equity to permit the entity to finance its activities without additional subordinated financial support from other parties; or (ii) has equity investors that do not have (a) the ability to make significant decisions relating to the entity’s operations through voting rights, (b) the obligation to absorb the expected losses, and/or (c) the right to receive the residual returns of the entity.
Virginia Financial Institution Holding Company Act: Chapter 7 of Title 6.2 of the Code of Virginia governing the acquisition of interests in Virginia financial institutions.
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Acronyms
ABS: Asset-backed securities
ACL: Allowance for credit losses
AML: Anti-money laundering
AI: Artificial Intelligence
AOCI: Accumulated other comprehensive income
ASU: Accounting Standards Update
ATM: Automated teller machine
AWS: Amazon Web Services, Inc.
BHC: Bank holding company
BHC Act: The Bank Holding Company Act of 1956, as amended.
bps: Basis points
BSA: The Bank Secrecy Act
CAD: Canadian dollar
CAP: Compliance Assurance Process
CCPA: California Consumer Privacy Act (as amended by the California Privacy Rights Act)
CBP : Community Benefits Plan
CCP: Central Counterparty Clearinghouse, or Central Clearinghouse
CDE: Community development entities
CECL: Current expected credit loss
CEO: Chief Executive Officer
CET1: Common equity Tier 1 capital
CFO: Chief Financial Officer
CFPB: Consumer Financial Protection Bureau
CFTC: Commodity Futures Trading Commission
CIBC: Change in Bank Control Act
CIO: Chief Information Officer
CIRCIA: Cyber Incident Reporting for Critical Infrastructure Act
CISA: Cybersecurity and Infrastructure Security Agency
CISO: Chief Information Security Officer
CMBS: Commercial mortgage-backed securities
CME: Chicago Mercantile Exchange
CODM: Chief Operating Decision Maker
COEP: Capital One (Europe) plc
COF: Capital One Financial Corporation
COMET: Capital One Multi-asset Execution Trust
CONA : Capital One, National Association
COSO: Committee of Sponsoring Organizations of the Treadway Commission
CRA: Community Reinvestment Act
CTRO: Chief Technology Risk Officer
COPAR: Capital One Prime Auto Receivables Trusts
CVA: Credit valuation adjustment
DCENT: Discover Card Execution Note Trust
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DCF: Discounted cash flow
DFAST: Dodd-Frank Act Stress Tests
DIF : Deposit Insurance Fund
DRR: Designated Reserve Ratio
DTCC: Depository Trust and Clearing Corporation
DVA: Debit valuation adjustment
ECRP: Enterprise Cyber Response Plan
EU: European Union
EU GDPR: EU General Data Protection Regulation
EUR: Euro
Fannie Mae: Federal National Mortgage Association
FASB: Financial Accounting Standards Board
FCA: Financial Conduct Authority
FCAC: Financial Consumer Agency of Canada
FCM: Futures commission merchant
FCRA: Fair Credit Reporting Act
FDM: Financial difficulty modification
FDIC: Federal Deposit Insurance Corporation
FDICIA: Federal Deposit Insurance Corporation Improvement Act of 1991
FFIEC: Federal Financial Institutions Examination Council
FHC: Financial Holding Company
FHLB: Federal Home Loan Bank
FICC - GSD : Fixed Income Clearing Corporation - Government Securities Division
FICO: Fair Isaac Corporation
FinCEN: Financial Crimes Enforcement Network
FINRA: Financial Industry Regulatory Authority
FIS: Fidelity Information Services
Fitch: Fitch Ratings
Freddie Mac: Federal Home Loan Mortgage Corporation
FS-ISAC: Financial Services Information Sharing and Analysis Center
FVC: Fair Value Committee
GAAP: Generally accepted accounting principles in the U.S.
GBP: Pound sterling
GDPR: General Data Protection Regulation
Ginnie Mae: Government National Mortgage Association
GLBA: Gramm-Leach-Bliley Act
G-SIB: Global systemically important banks
GSE or Agency: Government-sponsored enterprise
HFI: Held for Investment
HQLA: High-Quality Liquid Assets
ICE: Intercontinental Exchange
IRM: Independent Risk Management
IRS: Internal Revenue Service
LCH: LCH Group
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LCR: Liquidity coverage ratio
LLC: Limited liability company
LTV: Loan-to-Value
Moody’s: Moody’s Investors Service
MSRs: Mortgage servicing rights
NOIT: Notice of Intent to Terminate
Non-PCD: Non-purchased credit deteriorated
NSFR: Net stable funding ratio
NYSE: New York Stock Exchange
OCC: Office of the Comptroller of the Currency
OCI: Other comprehensive income
OFAC: Office of Foreign Assets Control
OSFI: Office of the Superintendent of Financial Institutions
OTC: Over-the-counter
PCA: Prompt corrective action
PCAOB: Public Company Accounting Oversight Board
PCCR: Purchased credit card relationship
PCD: Purchased Credit-Deteriorated
PIPEDA: Personal Information Protection and Electronic Document Act
PSU: Performance share units
RMBS: Residential mortgage-backed securities
ROU: Right-of-use
RSU: Restricted stock unit
S&P: Standard & Poor’s
SEC: U.S. Securities and Exchange Commission
SOFR: Secured Overnight Financing Rate
TCE: Tangible common equity
TDR: Troubled debt restructuring
TILA: Truth in Lending Act
TSYS: Total System Services LLC
U.K.: United Kingdom
U.K. GDPR: U.K. General Data Protection Regulation
U.S.: United States of America
USD: United States Dollar
VAC: Valuations Advisory Committee
VaR: Value-At-Risk
VIE: Variable interest entity
VOE: Voting interest entity
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