Capital One Financial Corporation

Good day and thank you for standing by. Welcome to the Capital One Q3 2025 earnings call. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Jeff Norris, Senior Vice President of Finance. Please go ahead.

Thanks very much, Josh, and welcome everybody to tonight's earnings call. To access the live webcast of this call, please go to the investor section of Capital One's website, CapitalOne.com. A copy of the earnings presentation, press release, and financial supplement can also be found in the investor section of the Capital One website, CapitalOne.com, by selecting financials and then quarterly earnings release. With me this evening are Mr. Richard Fairbank, Capital One's chairman and chief executive officer, and Mr. Andrew Young, Capital One's Chief Financial Officer. Rich and Andrew are gonna walk you through this presentation that summarizes our third quarter results for 2025. Please note that this presentation may contain forward-looking statements. Information regarding Capital One's financial performance and any forward-looking statements contained in today's discussion and the materials speak only as of the particular date or dates indicated in the materials. Capital One does not undertake any obligation to update or revise any of this information. whether as a result of new information, future events, or otherwise. Numerous factors could cause our actual results to differ materially from those described in forward-looking statements. For more information on these factors, please see the section titled forward-looking information in the earnings release presentation, and the risk factor section of our annual and quarterly reports, accessible at our website and filed with the SEC. Now I'll turn the call over to Mr. Young.

Andrew. Thank you, Jeff, and good afternoon, everyone. I will start on slide three of tonight's presentation. In the third quarter, Capital One earned $3.2 billion, or $4.83 per diluted common share. There were multiple adjusting items related to the Discover acquisition in the quarter, including integration costs, intangible amortization expense, and loan and deposit fair value mark amortization. Net of these adjusting items third quarter earnings per share were $5.95. As expected, we continue to refine our purchase accounting assumptions while we are in the measurement period. In the quarter, our adjustments included a modest increase to goodwill along with other refinements. You can find the revised purchase consideration walk and amortization schedules in the appendix of tonight's presentation. The results in the third quarter were impacted by the full quarter effect of the Discover acquisition. On a gap and adjusted basis, revenue in the third quarter increased $2.9 billion or 23% compared to the second quarter. Non-interest expense increased 18% or 16% net of adjustments. And pre-provision earnings were up 29% or 30% net of adjustments. Our provision for credit losses was $2.7 billion in the quarter. Excluding the $8.8 billion initial allowance billed for Discover that we recognized last quarter, provision for credit losses increased about $50 million. Higher net charge-offs from the full quarter impact of Discover was roughly offset by a larger allowance release. Turning to slide four, I'll now cover the allowance in greater detail. The $760 million of allowance release in the quarter brought the allowance balance to $23.1 billion. Our total portfolio coverage ratio decreased 22 basis points and now stands at 5.21%. I'll cover the drivers of the changes in allowance and coverage ratio by segment on slide five. In our domestic card segment, we released $753 million of allowance in the quarter. The primary drivers of this quarter's release were continued observed credit favorability in both losses and recoveries, as well as a slight improvement in the forecasted unemployment rate. These factors were partially offset by greater consideration of potential economic downside. The domestic card coverage ratio now stands at 7.28%. The allowance balance in our consumer banking segment was largely flat at $1.9 billion. Growth in the auto business was largely offset by observed credit favorability and continued strong vehicle prices. The ending coverage ratio of 2.26% was down three basis points from the prior quarter. And finally, in our commercial banking segment, we released $37 million of allowance in the quarter. The allowance release was largely driven by recent favorable credit performance. The commercial banking coverage ratio declined five basis points and now stands at 1.69%. Turning to page six, I'll now discuss liquidity. Total liquidity reserves ended the quarter at $143 billion, down roughly one billion from last quarter. Our cash position ended the quarter at $55.3 billion, $3.8 billion lower than the second quarter. Our preliminary average liquidity coverage ratio increased slightly during the third quarter to 161%. Turning to page seven, I'll cover our net interest margin. Our third quarter net interest margin was 8.36%. 74 basis points higher than the prior quarter. Recall that in the second quarter, the partial quarter benefit from the acquisition of Discover was roughly 40 basis points. The full quarter of Discover in the third quarter drove approximately 45 basis points of incremental net interest margin. The remaining increase in NIM in the quarter was largely driven by higher yield on legacy Capital One domestic card loans and one additional day in the quarter. Turning to slide eight, I will end by discussing our capital position. Our common equity tier one capital ratio ended the quarter at 14.4%, approximately 40 basis points higher than the prior quarter. Income in the quarter was partially offset by $1 billion in share repurchases, dividends, and an increase in risk weighted assets. In the third quarter, we completed our bottoms up capital assessment for the combined franchise. Based on the results of that analysis, we believe the long-term capital need of the combined company is 11%. Now that we've completed this work, our board of directors has approved a new repurchase authorization of up to $16 billion of the company's common stock. This new authorization becomes effective today and supersedes our previous repurchase authorization. In addition, we expect to increase our quarterly common stock dividend from 60 cents per share to 80 cents per share, beginning in the fourth quarter, subject to board approval. With that, I will turn the call over to Rich. Rich?