Capital One Financial Corporation

Solid Q3 earnings & operating momentum (with an “adjusted” lens): - Reported Q3 2026 earnings: $3.5B ($5.61/diluted share). - After acquisition-related adjusting items (Discover/Brex), adjusted EPS: $6.69. - Pre-provision earnings +10% QoQ (and +9% adjusted), driven by revenue +3% QoQ and non-interest expense -2% QoQ. - Provision for credit losses -2% QoQ to $2.9B, consisting of $3.1B net charge-offs and a $225M allowance release (a key swing factor).

Credit performance looks strong; allowance release is supportive (but investors should watch for normalization): - Allowance release of $225M brought allowance balance to $22.7B. - Total portfolio coverage ratio: 4.92% (down 10 bps)—declines largely reflect improved credit, partially offset by downside considerations. - Domestic cards: released $250M; coverage 6.86% (-13 bps). Charge-off rate 3.98% (down 73 bps QoQ, down 65 bps YoY). Delinquency 3.74% (up 35 bps QoQ, down 15 bps YoY; aligned with seasonality). - Consumer banking (incl. auto): built $41M of allowance; coverage 2.34% (-5 bps). Auto charge-offs 1.59% (up 16 bps QoQ, up 5 bps YoY), reflecting mix/transition returning toward pre-pandemic levels. - Management framed the forward story as: delinquencies are now more in line with seasonality (not continuously outshining), so future results may be less “tailwind-driven” than the recent period.

Net interest margin expansion and balance sheet/liquidity moves: - NIM: 8.41%, up 40 bps vs prior quarter, attributed to higher domestic card yields, lower average cash balances (avg cash declined ~$13B), and an additional day in the quarter. - Liquidity reserves ended ~ $134B, down $10B QoQ; ending cash ~$49B (down ~$6B). - Preliminary average liquidity coverage ratio: 163% (still strong).