Capital One Financial Corporation

Good day and thank you for standing by. Welcome to the Capital One Q2 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 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 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 live webcast of this call, please go to the Investors 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 Investors section of Capital One's website 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 going to walk you through this presentation summarizing our second 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 these factors, please see the section titled forward-looking statements in the earnings release presentation and the risk factors section of our annual and quarterly reports accessible at Capital One's website and filed with the SEC. Now I'll turn the call over to Mr. Young.

Andrew. Andrew Young Thank you, Jeff, and good afternoon, everyone. I will start on slide three of tonight's presentation. In the second quarter, Capital One earned $3 billion, or $4.73 per diluted common share. As a reminder, the BREX acquisition closed in early April, and we have provided additional details related to the purchase accounting in the appendix of tonight's presentation. The results for the quarter included several adjusting items related to the Discover and BREX acquisitions, which are outlined on slide three. Net of these adjusting items Second quarter earnings per share were $5.81. Relative to the first quarter, revenue increased 4% and non-interest expense grew 7%, resulting in pre-provision earnings growth of 1%. On an adjusted basis, pre-provision earnings were flat quarter over quarter. Our provision for credit losses decreased $1.1 billion, or 27%, to $3 billion in the quarter. The provision reflects $3.7 billion of net charge-offs of $662 million. Turning to slide four, I'll cover the allowance in greater detail. The $662 million allowance release in the quarter brought the allowance balance to $23 billion. Our total portfolio coverage ratio decreased 26 basis points and now stands at 5.02%. 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 $705 million of allowance. The coverage ratio decreased by 41 basis points and now stands at 6.99%. The decline in the coverage ratio was driven by continued favorable observed credit in the quarter and a modest decrease in the consideration given to economic uncertainties. In our consumer banking segment, we built $115 million of allowance. The allowance build was primarily driven by strong growth in the auto business. The coverage ratio ended the quarter at 2.39%, three basis points higher than the first quarter. And finally, in our commercial banking segment, We released $59 million of allowance. The allowance release was primarily driven by specific reserves on loans that were charged off in the quarter. The commercial banking coverage ratio decreased eight basis points quarter over quarter to 1.62%. Turning to page six, I'll now discuss liquidity. Liquidity reserves ended the second quarter at about $144 billion. down $21 billion from the prior quarter. Our ending cash position decreased by about $22 billion to approximately $55 billion. The decrease in cash was primarily driven by growth in our loan portfolio, wholesale funding maturities late in the quarter, and the impacts from BREX. Our preliminary average liquidity coverage ratio was 165%, and our preliminary average net stable funding ratio was 136%. Turning to page seven, I'll cover our net interest margin. Our second quarter net interest margin was 8.01%, 14 basis points higher than the prior quarter. The increase was largely driven by a nine basis point impact from one additional day in the quarter. The remaining increase was driven by a lower rate paid on retail deposits and a $5 billion decline in average cash balances. Turning to slide eight, I will end by discussing our capital position. Our common equity tier one capital ratio ended the quarter at 13.7%, 70 basis points lower than the first quarter. The combination of $2.7 billion of share repurchases approximately 40 basis point impact from the Brex transaction, and an increase in risk-weighted assets more than offset net income in the quarter. With that, I will turn the call over to Rich.