CAPITAL ONE FINANCIAL CORP Management Report and Analysis of Financial Position and Results of Operations (“MD&A”) (Form 10-Q)

This discussion contains forward-looking statements which are based on management’s current expectations and are subject to uncertainties and material changes in circumstances. Please see “MD & A-Forward-Looking Statements” for more information on the forward-looking statements contained in this quarterly report on Form 10-Q (“this report”). All statements that deal with operating performance, events or developments that we expect or anticipate will occur in the future, including those relating to operating results and to “Note 13-Commitments, contingencies, guarantees and others “as well as the potential impacts of the COVID-19 pandemic described in” MD & A-Introduction-Coronavirus Disease 2019 (COVID-19) Pandemic “are forward-looking statements. Our actual results may differ materially from those included in these forward-looking statements due to various factors including, but not limited to, those described in “Part I-Section 1A. Risk Factors” in our 2020 Annual Report on Form 10- K (“2020 Form 10-K”) and “Part II-Point 1A. Risk factors ”in this report. Unless otherwise indicated, references to the notes to our consolidated financial statements refer to the notes to our consolidated financial statements dated September 30, 2021
included in this report.

Management monitors various key indicators to assess our business results and financial condition. The following MD&A is provided in addition to, and should be read in conjunction with, our consolidated financial statements and related notes in this MD&A and the more detailed information contained in our Form 10-K 2020. INTRODUCTION

Capital One Financial Corporation, a Delaware corporation established in 1994
and headquartered in McLean, Virginia, is a diversified financial services
holding company with banking and non-banking subsidiaries. Capital One Financial
Corporation and its subsidiaries (the "Company") offer a broad array of
financial products and services to consumers, small businesses and commercial
clients through digital channels, branches, Cafés and other distribution
As of September 30, 2021, our principal subsidiaries included:
•Capital One Bank (USA), National Association ("COBNA"), which offers credit
card products along with other lending products and consumer services; and
•Capital One, National Association ("CONA"), which offers a broad spectrum of
banking products and financial services to consumers, small businesses and
commercial clients.
The Company is hereafter collectively referred to as "we," "us" or "our." COBNA
and CONA are collectively referred to as the "Banks." Certain business terms
used in this document are defined in the "MD&A-Glossary and Acronyms" and should
be read in conjunction with the consolidated financial statements included in
this Report.
Our consolidated total net revenues are derived primarily from lending to
consumer, small business and commercial customers net of funding costs
associated with interest on deposits, long-term debt and other borrowings. We
also earn non-interest income which primarily consists of interchange income,
net of reward expenses, service charges and other customer-related fees. Our
expenses primarily consist of the provision for credit losses, operating
expenses, marketing expenses and income taxes.
Our 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 customer served: Credit Card, Consumer
Banking and Commercial Banking. The operations of acquired businesses have been
integrated into or managed as a part of our existing business segments. Certain
activities that are not part of a segment, such as management of our corporate
investment portfolio, asset/liability management by our centralized Corporate
Treasury group and residual tax expense or benefit to arrive at the consolidated
effective tax rate that is not assessed to our primary business segments, are
included in the Other category.
•Credit Card: Consists of our domestic consumer and small business card lending,
and international card businesses in Canada and the United Kingdom ("U.K.").
                        4    Capital One Financial Corporation (COF)

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•Consumer Banking: Consists of our deposit gathering and lending activities for
consumers and small businesses, and national auto lending.
•Commercial Banking: Consists of our lending, deposit gathering, capital markets
and treasury management services to commercial real estate and commercial and
industrial customers. Our commercial and industrial customers typically include
companies with annual revenues between $20 million and $2 billion.
Business Developments
We regularly explore and evaluate opportunities to acquire financial services
and products as well as financial assets, including credit card and other loan
portfolios, and enter into strategic partnerships as part of our growth
strategy. We also explore opportunities to acquire technology companies and
related assets to improve our information technology infrastructure and to
deliver on our digital strategy. We may issue equity or debt to fund our
acquisitions. In addition, we regularly consider the potential disposition of
certain assets, branches, partnership agreements or lines of business.
Coronavirus Disease 2019 (COVID-19) Pandemic
The COVID-19 pandemic resulted in a global public-health crisis, disrupting
economies and introducing significant volatility into financial markets. We
transformed how we work in order to protect the well-being of our associates and
our customers, and were able to continue to serve our customers, successfully
manage critical functions, and keep our lines of business operating.
Since the start of the COVID-19 pandemic, a significant majority of our
associates across our workforce have transitioned to working remotely, relying
on our technology infrastructure and systems that have been designed for
resilience and security. The majority of our associates continue to work
remotely. In the future, we plan to adopt a hybrid work methodology that allows
for in-office collaboration while still enabling associates to work remotely. We
continue to monitor local conditions to ensure the safety of our associates.
For more information see "Part I-Item 1. Business-Overview-Coronavirus Disease
2019 (COVID-19) Pandemic" and "Part I-Item 1A. Risk Factors" in our 2020 Form
10-K along with "Part I-Item 2. MD&A-Introduction-Coronavirus Disease 2019
(COVID-19) Pandemic" and "Part I-Item 2. MD&A-Credit Risk Profile-COVID-19
Customer Assistance Programs and Loan Modifications" in our Quarterly Report on
Form 10-Q for the period ended March 31, 2021.
                        5    Capital One Financial Corporation (COF)

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The following table presents certain consolidated financial data and the performance of our operating results for the third quarter and the first nine months of 2021 and 2020 and certain comparative data of the balance sheet as of
September 30, 2021 and December 31, 2020. We also provide selected key measures that we use to assess our performance, including certain measures that are calculated using non-GAAP measures. We view these metrics as key financial metrics that management uses to assess our operational performance, capital adequacy and the level of return generated. We believe that these non-GAAP measures provide useful information to investors and users of our financial information, as they provide another measure of our performance and help assess the adequacy of our capital and the level of return generated.

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