Great Places to Work & Acquisition Impact
Key financial assumptions
•
Standalone Modeled
Forecasts
Capital
•
Loan Credit Marks
Fair Value Marks
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Goodwill and
Intangibles
Acquisition and
Integration Expenses
• Consensus estimates for Capital One in 2024/2025 and extrapolated 2026+
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•
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Consensus estimates for Discover in 2024/2025 and extrapolated 2026+, with two adjustments:
о Assumes the exit of student lending in 2024
о
Assumes 2024 charge-offs are consistent with consensus and that 2025 charge-offs are similar to 2024
before improving over time
Anticipate 13.9% pro forma combined CET1 at close; Discover to suspend share repurchases through closing
Assumes consensus pro forma CET1 of 12.5% in 2026+
$8.6 billion (7.3% of Discover loans), equal to Discover allowance at close¹
о $2.9 billion or 33% allocated to purchase credit deteriorated (PCD)
о $5.7 billion or 67% allocated to non-PCD
PCD credit mark will be established as an allowance through purchase accounting
Non-PCD credit mark accreted into earnings over an estimated 2-3 years
•
$7.3 billion loan rate mark amortizing over an estimated 2-3 years
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•
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$0.2 billion of other rate marks amortizing over the lives of the related instruments (securities, time deposits, and
long-term debt)
$10.1 billion purchased credit card relationships or 10.0% of Discover card receivables; to be amortized on an
accelerated basis over 7 years
$0.3 billion core deposit intangible or 0.6% of Discover core deposits
$3.5 billion of goodwill
•
$2.8 billion pre-tax
.
Substantially all expected to be incurred within approximately 2 years of closing
Note: 1) Net of acquired loans previously charged off by Discover
Source: Capital One management
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