CAPITAL ONE FINANCIAL CORP

The preparation of financial statements in accordance with U.S. GAAP requires management to make a number of judgments, estimates and assumptions that affect the amount of assets, liabilities, income and expenses on the consolidated financial statements. Understanding our accounting policies and the extent to which we use management judgment and estimates in applying these policies is integral to understanding our financial statements. We provide a summary of our significant accounting policies under “Part II—Item 8. Financial Statements and Supplementary Data—Note 1—Summary of Significant Accounting Policies” in our 2024 Form 10-K.

We have identified the following accounting estimates as critical because they require significant judgments and assumptions about highly complex and inherently uncertain matters and the use of reasonably different estimates and assumptions could have a material impact on our results of operations or financial condition.

•Loan loss reserves

•Goodwill

•Fair value

•Customer rewards reserve

We evaluate our critical accounting estimates and judgments on an ongoing basis and update them as necessary, based on changing conditions.

Goodwill

Upon completion of the Transaction, we recorded preliminary goodwill of $13.2 billion based on provisional estimates as of the Closing Date. The Company may obtain additional information during the measurement period that could result in changes to the preliminary fair value of net assets acquired and the preliminary goodwill. Preliminary goodwill has been temporarily allocated to the Other category, given the size and complexity of the Transaction and will be reallocated to the appropriate reporting units prior to the annual goodwill impairment test performed as of October 1, 2025. Total goodwill, including the preliminary goodwill resulting from the Transaction, was $28.3 billion as of June 30, 2025.

We perform our goodwill impairment test annually on October 1 at a reporting unit level. As of our last annual test and as of June 30, 2025, we had four reporting units with allocated goodwill: Credit Card, Auto, Other Consumer Banking and Commercial Banking.

We are required to test goodwill for impairment when a triggering event occurs that indicates it is more likely than not that the fair value of a reporting unit is below its carrying amount. During the second quarter of 2025, we concluded there were no triggering events and completed our qualitative assessment of impairment indicators, which included, among other things, an assessment of changes in macroeconomic conditions, comparison of the actual results to those forecasted in the most recent annual impairment test and performing sensitivity analysis on key assumptions. For the acquired Discover businesses, we also assessed the reasonableness of certain assumptions as of June 30, 2025, including the likelihood that expected synergies will be realized in the future.

The assumptions used in estimating the fair value of a reporting unit are judgmental and inherently uncertain. A change in the economic conditions of a reporting unit, such as declines in business performance as a result of industry or macroeconomic trends or changes in our strategy, adverse impacts to loan or deposit growth trends, decreases in revenue, increases in expenses, deterioration in a significant loan portfolio, increases in credit losses, increases in capital requirements, deterioration of market conditions, declines in long-term growth expectations, an increase in disposition activity, inability to achieve expected synergies from the Transaction, adverse impacts of regulatory or legislative changes or increases in the estimated cost of capital could cause the estimated fair values of our reporting units to decline in the future, and increase the risk of a goodwill impairment in a future period. We perform sensitivity analyses around certain assumptions in order to assess the reasonableness of the assumptions and the resulting estimated fair values.

There have been no additional changes to our critical accounting policies and estimates described in our 2024 Form 10-K under “Part II—Item 7. MD&A—Critical Accounting Policies and Estimates.”