Capital One Financial Corporation and its subsidiaries (Capital One) is a diversified financial services holding company with banking and non-banking subsidiaries.
Capital One offers a broad array of financial products and services to consumers, small businesses and commercial clients through digital channels, branch locations, cafés and other distribution channels.
As of December 31, 2024, Capital One’s principal operating subsidiary was Capital One, National Association (‘CONA’). CONA is ref...
Capital One Financial Corporation and its subsidiaries (Capital One) is a diversified financial services holding company with banking and non-banking subsidiaries.
Capital One offers a broad array of financial products and services to consumers, small businesses and commercial clients through digital channels, branch locations, cafés and other distribution channels.
As of December 31, 2024, Capital One’s principal operating subsidiary was Capital One, National Association (‘CONA’). CONA is referred to as the ‘bank.’
The company was the third largest issuer of Visa (‘Visa’) and MasterCard (‘MasterCard’) credit cards in the U.S. based on the outstanding balance of credit card loans as of December 31, 2024. In addition to credit cards, the company offers debit cards, bank lending, treasury management and depository services, auto loans and other consumer lending products in markets across the U.S. As one of the nation’s largest banks based on deposits as of December 31, 2024, the company serviced banking customer accounts through digital channels and the company’s network of branch locations, cafés, call centers and automated teller machines (‘ATMs’).
The company also offers products and services outside of the U.S. principally through Capital One (Europe) plc (‘COEP’), an indirect subsidiary of CONA organized and located in the United Kingdom (‘U.K.’), and through a branch of CONA in Canada. Both COEP and the company’s Canadian branch of CONA have the authority to provide credit card loans.
Other Business Developments
The company regularly explores and evaluates opportunities to acquire financial products and services, as well as financial assets, including credit card and other loan portfolios, and enter into strategic partnerships as part of the company’s growth strategy. The company also explores opportunities to acquire technology companies and related assets to improve the company’s information technology infrastructure and to deliver on the company’s digital strategy. The company may issue equity or debt to fund the company’s acquisitions. In addition, the company regularly considers the potential disposition of certain of the company’s assets, branches, partnership agreements or lines of business.
Operations and Business Segments
The company’s principal operations are organized for management reporting purposes into three major business segments, which are defined primarily based on the products and services provided or the types of customers served: Credit Card, Consumer Banking and Commercial Banking. The operations of acquired businesses have been integrated into or managed as a part of the company’s existing business segments. Certain activities that are not part of a business segment are included in the Other category, such as the management of the company’s corporate investment portfolio and asset/liability positions performed by the company’s centralized Corporate Treasury group and any residual tax expense or benefit beyond what is assessed to the company’s business segments in order to arrive at the consolidated effective tax rate. The Other category also includes unallocated corporate expenses that do not directly support the operations of the business segments or for which the business segments are not considered financially accountable in evaluating their performance, such as certain restructuring charges and integration expenses related to the Transaction.
Credit Card: Consists of the company’s domestic consumer and small business card lending, and international card businesses in the U.K. and Canada.
Consumer Banking: Consists of the company’s deposit gathering and lending activities for consumers and small businesses, and national auto lending.
Commercial Banking: Consists of the company’s lending, deposit gathering, capital markets and treasury management services to commercial real estate and commercial and industrial customers. The company’s customers typically include companies with annual revenues between $20 million and $2 billion.
Primary Loan Products
The company provides a variety of lending products. The company’s primary loan products include credit cards, auto loans and commercial lending products.
Credit cards: The company originates both prime and subprime credit cards through a variety of channels. The company’s credit cards generally have variable interest rates. Credit card accounts are primarily underwritten using an automated underwriting system based on predictive models that the company has developed. The underwriting criteria, which are customized for individual products and marketing programs, are established based on an analysis of the net present value of expected revenues, expenses and losses, subject to further analysis using a variety of stress conditions. Underwriting decisions are generally based on credit bureau information, including payment history, debt burden and credit scores, such as Fair Isaac Corporation (‘FICO’) scores, and on other factors, such as applicant income. The company maintains a credit card securitization program and selectively sell charged-off credit card loans.
Auto: The company originates both prime and subprime auto loans through a network of auto dealers and direct marketing. The company’s auto loans have fixed interest rates and loan terms of 84 months or less. Loan size limits are customized by program and are generally less than $75,000. Similar to credit card accounts, the underwriting criteria are customized for individual products and marketing programs and based on analysis of net present value of expected revenues, expenses and losses, and are subject to maintaining resilience under a variety of stress conditions. Underwriting decisions are generally based on an applicant’s income, estimated net disposable income, and credit bureau information including FICO scores, along with collateral characteristics such as loan-to-value (‘LTV’) ratio. The company maintains an auto securitization program.
Commercial: The company offers a range of commercial lending products, including loans secured by commercial real estate and loans to middle market commercial and industrial companies. The company’s commercial loans may have a fixed or variable interest rate; however, the majority of the company’s commercial loans have variable rates. The company’s underwriting standards require an analysis of the borrower’s financial condition and prospects, as well as an assessment of the industry in which the borrower operates. Where relevant, the company evaluates and appraises underlying collateral and guarantees. The company maintains underwriting guidelines and limits for major types of borrowers and loan products that specify, where applicable, guidelines for debt service coverage, leverage, LTV ratio and standard covenants and conditions. The company assigns a risk rating and establish a monitoring schedule for loans based on the risk profile of the borrower, industry segment, source of repayment, the underlying collateral and guarantees, if any, and current market conditions. Although the company generally retains the commercial loans the company underwrites, the company may syndicate positions for risk mitigation purposes, including bridge financing transactions the company has underwritten. In addition, the company originates and services multifamily commercial real estate loans, which are sold to government-sponsored enterprises where the company retains certain levels of residual risk after the loans are sold.
Geographic Composition
The company markets its credit card products throughout the United States, the United Kingdom and Canada. The company’s credit card loan portfolio is geographically diversified due to the company’s product and marketing approach.
The company’s auto loan portfolio is geographically diversified in the United States due to the company’s product and marketing approach. Retail banking includes small business loans and other consumer lending products originated through the company’s branch and café network.
The company originates commercial and multifamily real estate loans in most regions of the United States.
Deposits
As of December 31, 2024, the company’s deposits were interest-bearing checking accounts; saving deposits; and time deposits.
Investment Securities
The company’s investment securities portfolio consists of the following: U.S. government-sponsored enterprise or agency (‘GSE’ or ‘Agency’) and non-agency residential mortgage-backed securities (‘RMBS’), agency commercial mortgage-backed securities (‘CMBS’), U.S. Treasury securities and other securities. Agency securities include Government National Mortgage Association (‘Ginnie Mae’) guaranteed securities, Federal National Mortgage Association (‘Fannie Mae’) and Federal Home Loan Mortgage Corporation (‘Freddie Mac’) issued securities.
Loans
The company’s loan portfolio consists of loans held for investment, including loans held in the company’s consolidated trusts, and loans held for sale. The company further divides its loans held for investment into three portfolio segments: Credit Card, Consumer Banking and Commercial Banking. Credit card loans consist of domestic and international credit card loans. Consumer banking loans consist of auto and retail banking loans. Commercial banking loans consist of commercial and multifamily real estate as well as commercial and industrial loans.
Consumer Banking
The company’s consumer banking loan portfolio consists of auto and retail banking loans.
Competition
The company’s Credit Card business competes with international, national, regional and local issuers of Visa and MasterCard credit cards, as well as with American Express, Discover Card, private-label card brands, and to a certain extent, issuers of debit cards.
Supervision and Regulation
The company is a bank holding company (BHC) and a financial holding company (FHC) under the Bank Holding Company Act of 1956, as amended (BHC Act), and is subject to the requirements of the BHC Act, including approval requirements for investments in or acquisitions of banking organizations, capital adequacy standards and limitations on non-banking activities. As a BHC and FHC, the company is subject to supervision, examination and regulation by the Board of Governors of the Federal Reserve System (Federal Reserve).
The bank are national associations chartered under the National Bank Act, and the deposits of which are insured by the Federal Deposit Insurance Corporation (FDIC) up to applicable limits. The bank is subject to comprehensive regulation and periodic examination by the Office of the Comptroller of the Currency (OCC), the FDIC and the Consumer Financial Protection Bureau (CFPB).
The company is registered as a financial institution holding company under the laws of the Commonwealth of Virginia and as such, it is subject to periodic examination by the Virginia Bureau of Financial Institutions. The business activities of the company and the bank, as well as certain of the company's non-bank subsidiaries, are subject to regulation and supervision under various other laws and regulations.
The activities of the bank as consumer lenders are subject to regulation under various federal laws, including for example, the Truth in Lending Act (TILA), the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the Community Reinvestment Act (CRA), the Servicemembers Civil Relief Act and the Military Lending Act, as well as under various state laws. TILA, as amended, and together with its implementing rule, Regulation Z, imposes a number of restrictions on credit card practices impacting rates and fees, requires that a consumer's ability to pay be taken into account before issuing credit or increasing credit limits, and imposes revised disclosures required for open-end credit.
The company is subject to a variety of continuously evolving and developing laws and regulations regarding privacy, data protection and data security, including those related to the collection, storage, handling, use, disclosure, transfer, security and other processing of personal information. These areas have seen a considerable increase in legislative and regulatory activity over the past several years. At the federal level, the company is subject to the Gramm-Leach-Bliley Act (GLBA), among other laws and regulations.
Certain of the company's non-bank subsidiaries are subject to regulation and supervision by various federal and state authorities. Capital One Securities, Inc., KippsDeSanto & Company and TripleTree, LLC are registered broker-dealers regulated by the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Capital One Securities, Inc., KippsDeSanto & Company, and TripleTree, LLC are registered broker-dealers regulated by the SEC and the Financial Industry Regulatory Authority. CONA provisionally registered with the Commodity Futures Trading Commission (the CFTC) as a swap dealer in the third quarter of 2020. Registration as a swap dealer subjects the bank to additional regulatory requirements with respect to its swaps and other derivatives activities. As a result of the bank's swap dealer registration, it is subject to the rules of the OCC concerning capital and margin requirements for swap dealers, including the mandatory exchange of variation margin and initial margin with certain counterparties. Additionally, as a provisionally registered swap dealer, the bank is subject to requirements under the CFTC's regulatory regime, including rules regarding business conduct standards, recordkeeping obligations, regulatory reporting and procedures relating to swaps trading. The bank's swaps and other derivatives activities do not require it to register with the SEC as a security-based swap dealer.
Additionally, the bank is a bank within the meaning of Chapter 7 of Title 6.2 of the Code of Virginia governing the acquisition of interests in Virginia financial institutions (Virginia Financial Institution Holding Company Act). The Virginia Financial Institution Holding Company Act prohibits any person or entity from acquiring, or making any public offer to acquire, control of a Virginia financial institution or its holding company without making application to, and receiving prior approval from, the Virginia Bureau of Financial Institutions.
The bank, as an insured depository institution, is a member of the Deposit Insurance Fund (DIF) maintained by the FDIC. Through the DIF, the FDIC insures the deposits of insured depository institutions up to prescribed limits for each depositor. The FDIC sets a Designated Reserve Ratio (DRR) for the DIF.
The company and each of its subsidiaries, including the bank, are subject to the Volcker Rule, a provision of the Dodd-Frank Act that contains prohibitions on proprietary trading and certain investments in, and relationships with, covered funds (hedge funds, private equity funds and similar funds), subject to certain exemptions, in each case as the applicable terms are defined in the Volcker Rule and the implementing regulations.
The bank is subject to laws and regulations in foreign jurisdictions where it operates, primarily in the U.K. and Canada. In the U.K., the bank operates through COEP, an authorized payment institution regulated by the Financial Conduct Authority (FCA). COEP's parent, Capital One Global Corporation, is wholly owned by the bank and is subject to regulation by the Federal Reserve as an agreement corporation under the Federal Reserve's Regulation K. In Canada, the bank operates as an authorized foreign bank and is permitted to conduct its credit card business in Canada through its Canadian branch, Capital One Bank (Canada Branch) (Capital One Canada). The primary regulators of Capital One Canada are the Office of the Superintendent of Financial Institutions (OSFI) and the Financial Consumer Agency of Canada (FCAC).
The company is also subject to continuously evolving and developing laws and regulations in other jurisdictions regarding privacy, data protection and data security. For example, in Canada the company is subject to the Personal Information Protection and Electronic Documents Act (‘PIPEDA’), as well as the provincial privacy laws. The company is also subject to the U.K. General Data Protection Regulation (‘U.K. GDPR’). In addition, subject to limited exceptions, the European Union (‘EU’) General Data Protection Regulation (‘EU GDPR’) applies EU data protection laws to certain companies processing personal data of individuals in the European Economic Area, regardless of the company’s location.
History
Capital One Financial Corporation was founded in 1988. The company, a Delaware corporation, was incorporated in 1994.
