CAPITAL ONE FINANCIAL CORP

Commercial Banking Business

The primary sources of revenue for our Commercial Banking business are net interest income from loans and deposits and non-interest income earned from products and services provided to our clients such as capital markets, advisory services, net interchange and treasury management. Because our Commercial Banking business has loans and investments that generate tax-exempt income, tax credits or other tax benefits, we present the revenues on a taxable-equivalent basis. Expenses primarily consist of the provision for credit losses and operating costs.

Our Commercial Banking business generated net income from continuing operations of $195 million and $280 million in the first quarters of 2025 and 2024, respectively.

Table 11 summarizes the financial results of our Commercial Banking business and displays selected key metrics for the periods indicated.

Table 11: Commercial Banking Business Results

(1)Some of our commercial investments generate tax-exempt income, tax credits or other tax benefits. Accordingly, we present our Commercial Banking revenue and yields on a taxable-equivalent basis, calculated using the federal statutory tax rate of 21% and state taxes where applicable, with offsetting reductions to the Other category.

(2)The provision for losses on unfunded lending commitments is included in the provision for credit losses in our consolidated statements of income and the related reserve is included in other liabilities on our consolidated balance sheets. Our reserve for unfunded lending commitments totaled $144 million and $143 million as of March 31, 2025 and December 31, 2024, respectively.

(3)Average yield is calculated based on annualized interest income for the period divided by average loans during the period and does not include any allocations, such as funds transfer pricing.

(4)Nonperforming assets consist of nonperforming loans and other foreclosed assets. The total nonperforming asset rate is calculated based on total nonperforming assets divided by the combined period-end total loans held for investment and other foreclosed assets.

Key factors affecting the results of our Commercial Banking business for the first quarter of 2025 compared to the first quarter of 2024, and changes in financial condition and credit performance between March 31, 2025 and December 31, 2024 include the following:

•Net Interest Income: Net interest income decreased by $27 million to $572 million in the first quarter of 2025 primarily driven by lower average loan balances.

•Non-Interest Income: Non-interest income increased by $31 million to $312 million in the first quarter of 2025 primarily driven by increased fees in our capital markets business.

•Provision for Credit Losses: Provision for credit losses increased by $144 million to $142 million in the first quarter of 2025 primarily driven by an allowance build of $117 million compared to an allowance release of $7 million in the first quarter of 2024.

•Non-Interest Expense: Non-interest expense decreased by $29 million to $486 million in the first quarter of 2025 primarily driven by decreased operating expenses.

•Period-end loans held for investment remained substantially flat at $87.5 billion as of March 31, 2025 compared to December 31, 2024.

•Average loans held for investment decreased by $2.4 billion to $87.5 billion in the first quarter of 2025 compared to the first quarter of 2024 primarily driven by customer payments outpacing originations.

Deposits:

•Period-end deposits decreased by $1.7 billion to $30.0 billion as of March 31, 2025 from December 31, 2024 primarily driven by seasonality.

Net Charge-Off and Nonperforming Metrics:

•The net charge-off rate decreased by 2 bps to 0.11% in the first quarter of 2025 compared to the first quarter of 2024.

•The nonperforming loan rate increased by 1 bps to 1.40% as of March 31, 2025 compared to December 31, 2024.