CAPITAL ONE FINANCIAL CORP

Table 5 displays the components of non-interest expense for the second quarter and first six months of 2025 and 2024.

Table 5: Non-Interest Expense

(1)Includes expense of $57 million and $41 million related to our deferred compensation plan investments for the second quarter and first six months of 2025, respectively, and expenses of $11 million and $53 million related to our deferred compensation plan investments for the second quarter and first six months of 2024, respectively. These amounts have corresponding offsets from investments in other non-interest income.

Non-interest expense increased by $2.0 billion to $7.0 billion in the second quarter of 2025 compared to the second quarter of 2024 and increased by $2.8 billion to $12.9 billion in the first six months of 2025 compared to the first six months of 2024 primarily driven by impacts from the Transaction, including integration expenses, as well as continued investment in technology.

For the three and six months ended June 30, 2025, we incurred $299 million and $409 million, respectively, of integration expenses related to the Transaction, primarily driven by salaries and associate benefits and professional services, which are included within operating expense in our consolidated statements of income. Since the announcement of the Transaction in the first quarter of 2024, we have incurred $643 million of integration expenses as of June 30, 2025.

Income Taxes

We recorded an income tax benefit of $1.7 billion (28.1% effective income tax rate) and $1.3 billion (31.9% effective income tax rate) in the second quarter and first six months of 2025, respectively, compared to an income tax provision of $54 million (8.3% effective income tax rate) and $356 million (15.9% effective income tax rate) in the second quarter and first six months of 2024, respectively. Our effective tax rate on income from continuing operations varies between periods due, in part, to the impact of changes in pre-tax income and changes in tax credits, tax-exempt income and non-deductible expenses relative to our pre-tax earnings.

We recorded discrete tax benefits of $148 million and $179 million in the second quarter and first six months of 2025, respectively. The discrete tax benefit in the second quarter and six months was primarily due to a State of California law change that increased our effective tax rate and resulted in a $128 million benefit.

Our effective tax rate in the second quarter of 2025 was computed utilizing the year-to-date method which treats the year-to-date period as if it was the annual period and determines the income tax expense or benefit on that basis. We changed our methodology due to our conclusion that we could not reliably estimate our annual effective tax rate for 2025 because of the relationship of our tax credit investments in proportion to our pre-tax loss, resulting from $8.8 billion of the recorded allowance for credit losses for non-PCD loans. The continued use of the year-to-date method will be reevaluated for appropriateness in future periods.

We provide additional information on items affecting our income taxes and effective tax rate in “Part II—Item 8. Financial Statements and Supplementary Data—Note 16—Income Taxes” in our 2024 Form 10-K.

Loss from Discontinued Operations, Net of Tax

Loss from discontinued operations consists of results from the discontinued Home Loan business acquired as a part of the Transaction. Loss from discontinued operations, net of tax was $14 million in the second quarter of 2025. See “Part I—Item 1. Financial Statements—Note 2—Business Combinations and Discontinued Operations” for additional information.