Capital One Financial Corp.

Earnings headline + key drivers (good): - Capital One Q2 2026 net income was $3B / $4.73 EPS. - After adjusting items tied to Discover and the Brex acquisitions, adjusted EPS was $5.81. - Revenue grew 4% QoQ, noninterest expense rose 7% QoQ, so pre-provision earnings grew 1% (and was flat on an adjusted basis vs Q1). - Provision for credit losses fell 27% to $3.0B (down $1.1B), reflecting net charge-offs of $3.7B and coverage improvements overall driven by reserve releases in some segments.

Credit quality & reserves (mixed, with a “watch item”): - Allowance released $662M, bringing the allowance balance to $23B. - Total portfolio coverage ratio: 5.02%, down 26 bps QoQ—mostly because domestic cards had favorable credit. - Domestic card: released $705M; coverage 6.99% (down 41 bps) driven by favorable observed credit and a modest decrease in economic-uncertainty consideration. - Consumer banking (auto): built $115M; coverage 2.39% (slightly up 3 bps)—auto growth is strong but credit has a mix/seasonal headwind. - Commercial banking: released $59M; coverage 1.62% (down 8 bps), tied to specific reserves behind loans charged off.

Liquidity + NIM outlook (good near-term “plus,” but volatility risk): - Liquidity reserves ended ~ $144B, down $21B QoQ (cash ended ~$55B, down ~$22B), attributed to loan growth funding needs, wholesale maturities, and Brex impacts. - Preliminary LCR ~165% and NSFR ~136% (both remain strong). - NIM was 8.01%, up 14 bps QoQ. - Management expects NIM to catch up in Q3 because ending cash fell more than average cash (i.e., average cash should rise vs Q2 ending cash), plus the back half has 1 extra day per quarter (~+9 bps tailwind). - Risk/uncertainty: changes in balance sheet mix or Fed moves can affect NIM timing (though they expect NII roughly neutral to rates over time).