Capital One Financial Corporation

Good day and thank you for standing by. Welcome to the Capital One Q1 2026 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, everyone. To access the webcast of this call, please go to the investor section of Capital One's website at CapitalOne.com. A copy of the earnings presentation, press release, and financial supplement can also be found in the investor section of Capital One's website at 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 will walk you through the presentation summarizing our first quarter results for 2026. 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. And for more information on those factors, please see the section titled Forward-Looking Statements in the Earnings Release Presentation and the Risk Factor section of our annual and quarterly reports, which are accessible at Capital One's website and filed with the SEC. With that, I'll turn the call over to Andrew.

Thanks, Jeff, and good afternoon, everyone. I will start on slide three of tonight's presentation. in the first slide three of tonight's presentation. In the first quarter, Capital One earned $2.2 billion, or $3.34 per diluted common share. Included in the results for the quarter were adjusting items related to the ongoing Discover integration and purchase accounting impacts, which are outlined on the slide. Net of these adjusting items, first quarter earnings per share were $4.42. Relative to the fourth quarter, revenue declined 2% while non-interest expense declined 9%. Pre-provision earnings in the quarter increased sequentially by about $530 million or 8%. On an adjusted basis, pre-provision earnings increased about $430 million or 6%. Our provision for credit losses was roughly flat at $4.1 billion in the quarter. Included in the provision costs is about $3.8 billion of net charge-offs and an allowance billed of $230 million. Turning to slide four, I'll cover the allowance in greater detail. The $230 million allowance billed in the quarter brought the allowance balance to $23.6 billion. Our total portfolio coverage ratio increased 12 basis points and now stands at 5.28%. I'll cover the drivers of the changes in allowance and coverage ratio by segment on slide five. In our domestic card segment, the allowance balance was flat at $18.8 billion. Favorable observed credit in the quarter was offset by greater consideration to downside economic scenarios related to heightened geopolitical uncertainty. The coverage ratio increased 23 basis points to 7.4%, largely driven by the pay down of fourth quarter seasonal balances. In our consumer banking segment, we built $155 million of allowance. The allowance build was primarily driven by strong growth in the auto business, a slightly higher subprime mix in that growth, and a modestly lower outlook for vehicle values. The coverage ratio ended the quarter at 2.36%, 13 basis points higher than the fourth quarter. And finally, in our commercial banking segment, we built $83 million of allowance. The allowance billed was primarily driven by a very small number of specific reserves in our real estate portfolio, as well as a modest increase in our criticized rate. The commercial banking coverage ratio increased seven basis points quarter over quarter to 1.7%. Turning to page six, I'll now discuss liquidity. Total liquidity reserves ended the first quarter at about $165 billion, up about 21 billion from the prior quarter. Our cash position increased by $19 billion and ended the quarter at approximately 76 billion. The increase was driven by continued strong deposit growth in our retail banking business and the pay down of seasonal card balances. Our preliminary average liquidity coverage ratio was 166%. Turning to page 7, I'll cover our net interest margin. Our first quarter net interest margin was 7.87%, 39 basis points lower than the prior quarter. The decline was driven by several factors. First, two fewer days in the quarter drove 18 basis points of the decline. we had the normal seasonal effect of lower average card balances. And third, average cash levels were elevated due to a combination of the typical seasonal increase, strong deposit growth in the quarter, and the full quarter impact of last quarter's sale of the Discover Home Loans portfolio. 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%. 10 basis points higher than the fourth quarter. Income in the quarter and the seasonal decline in risk-weighted assets were partially offset by $2.5 billion in share repurchases. Before I pass the call over to Rich, I also want to highlight that we closed our acquisition of Brex shortly after the quarter closed. The consideration paid to shareholders was approximately $4.5 billion. As a reminder, the BREX transaction is expected to decrease the CET1 ratio by a little over 40 basis points in the second quarter. Given the recency of the close, we are still working through the purchase accounting marks and will provide a breakout of those impacts in the second quarter earnings call. With that, I will turn the call over to Rich.