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Press release from PR Newswire

Capital One Reports Second Quarter 2011 Net Income of $911 Million, or $1.97 Per Share

Wednesday, July 13, 2011

Capital One Reports Second Quarter 2011 Net Income of $911 Million, or $1.97 Per Share06:18 EDT Wednesday, July 13, 2011- Estimated Tier 1 Common Equity Ratio of approximately 9.2 percent at June 30, 2011, up 80 basis points from 8.4 percent at March 31, 2011 - End of period loan balances up $4.9 billion to $129.0 billion - Net Interest Margin stable at 7.2 percent - Revenue Margin 9.2 percent, down 24 basis points compared to first quarter 2011 - Charge-off Rate of 2.91 percent, down 75 basis points from first quarter 2011 - Provision Expense of $343 million, down $191 million from first quarter 2011MCLEAN, Va., July 13, 2011 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2011 of $911 million, or $1.97 per diluted common share, compared with net income of $1.0 billion, or $2.21 per diluted common share, for the first quarter of 2011, and net income of $608 million, or $1.33 per diluted common share, for the second quarter of 2010.  "Our second quarter performance demonstrates that Capital One remains well positioned to continue to deliver attractive and sustainable results, including loan growth, deposit growth, strong returns and robust capital generation,"  said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Recently we announced our definitive agreement to acquire ING Direct.  This is a game-changing transaction that generates attractive financial results immediately, as well as compelling value creation over time. ING Direct has built a very special franchise - bringing great value and exceptional service to its customers - and we're committed to continuing that."All comparisons in the following paragraphs are for second quarter 2011 compared to first quarter 2011.Loan and Deposit VolumesPeriod-end loan balances increased $4.9 billion, or 4 percent, driven largely by the addition of the $3.7 billion Kohl's portfolio in the Domestic Card Segment, as well as growth in both Auto Finance and Commercial Banking. Excluding the addition of the Kohl's portfolio, period-end loans in the Domestic Card Segment declined modestly in the quarter, as about $200 million of growth in revolving card balances was more than offset by approximately $500 million of expected run off of the Installment Loan portfolio, which is included in the Domestic Card Segment. Purchase volume increased in the quarter to $34.3 billion, from $27.8 billion in the first quarter of 2011, owing to the addition of Kohl's, second quarter seasonality and continued strong growth in purchase volume across the company's Domestic Card Segment.While average loans in the quarter grew by $2.8 billion to $127.9 billion, average earning assets grew a more modest $603 million as a result of the expected decline in cash and investments due to the acquisition of the Kohl's portfolio.  Period-end total deposits increased $671 million to $126.1 billion, driven by growth in branch consumer deposits.  RevenuesTotal revenue in the second quarter of 2011 was $4.0 billion, down $89 million, or 2 percent. Net interest income remained stable at $3.1 billion.  Non-interest income declined $85 million in the quarter, driven by two factors.  First, retrospective regulatory requirements related to payment protection insurance, or PPI, in the company's UK business resulted in a contra-revenue of approximately $52 million as the company added to reserves in anticipation of refunds to UK customers.  Second, the company made a periodic adjustment to its rewards liability.  This "true up" of the rewards liability resulted in a contra-revenue of approximately $22 million in the second quarter.  MarginsNet interest margin was flat in the quarter at 7.2 percent, driven by a 15 basis point decline in earning asset yields partially offset by a 13 basis point improvement in cost of funds.  The decline in earning asset yields was primarily driven by the addition of the Kohl's portfolio. Revenue margin for the second quarter was 9.2 percent, down 24 basis points from the first quarter.  The decline in revenue margin resulted largely from the same factors that drove the decline in non-interest income.  Domestic Card revenue margin declined in the quarter, as expected, driven by the addition of the Kohl's portfolio, but remains above 16 percent.Non-Interest ExpensesOperating expense for the second quarter increased $40 million, or 2 percent, largely driven by period-specific partnership expenses, adjustments to compensation programs, and expenses to implement the retrospective regulatory changes related to PPI in the UK Card business.  Marketing expense increased $53 million in the second quarter, driven by increased opportunities in the Card businesses.Provision ExpenseProvision expense of $343 million in the second quarter decreased $191 million from the prior quarter, primarily driven by a $214 million reduction in net charge-offs.  The net charge-off rate was 2.91 percent in the second quarter of 2011, as continued improvement in credit led to charge-off improvements across all business segments.  Strong underlying credit improvement trends led to a $579 million release of allowance for loan losses.  While the net charge-off rate was down 75 basis points from the prior quarter, the allowance coverage to loans ratio was only down 60 basis points to 3.48 percent.Rep & Warranty The company's reserve for representation and warranty claims was $869 million as of June 30, 2011, up from $846 million as of March 31, 2011.  The company added $37 million in additional reserves and paid $14 million in claims. The company continues to believe that the upper end of the reasonably possible future losses from representation and warranty claims beyond its current accrual levels could be as high as $1.1 billion. This estimate continues to be subject to the significant uncertainty and numerous factors described in the company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2011.Net IncomeNet income from continuing operations before income tax increased modestly, as lower pre-provision earnings were offset by lower provision expense.  The income tax provision for the second quarter increased by 96 million, which resulted in an $87 million decline in net income from continuing operations, net of tax.  For the total company, net income declined $105 million from the prior quarter to $911 million.Capital RatiosThe company's estimated Tier 1 common equity ratio rose to approximately 9.2 percent as of June 30, 2011, up 80 basis points from March 31, 2011.  The increase was driven by strong earnings, as well as a decrease in the amount of the company's deferred tax asset disallowed in the regulatory capital calculation.Tier 1 common equity ratio and related ratios, as used throughout this release, are non-GAAP financial measures.  For additional information, see Table 8 in the Financial Supplement.Detailed segment information will be available in the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2011.Forward-looking statementsThe company cautions that its current expectations in this release dated July 13, 2011, and the company's plans, objectives, expectations, and intentions, are forward-looking statements which speak only as of the date hereof. The company does not undertake any obligation to update or revise any of the information contained herein whether as a result of new information, future events or otherwise. Actual results could differ materially from current expectations due to a number of factors, including, but not limited to: general economic conditions in the U.S., the U.K., Canada or the company's local markets, including conditions affecting consumer income, confidence, spending, and savings which may affect consumer bankruptcies, defaults, charge-offs, deposit activity, and interest rates; financial, legal, regulatory, tax or accounting changes or actions, including the impact of the Dodd-Frank Act and the regulations promulgated thereunder; developments, changes or actions relating to any litigation matter involving the company; increases or decreases in interest rates; the success of the company's marketing efforts in attracting or retaining customers; changes in the credit environment; increases or decreases in the company's aggregate loan balances or the number of customers and the growth rate and composition thereof; the level of future repurchase or indemnification requests the company may receive, the actual future performance of mortgage loans relating to such requests, the success rates of claimants against the company, any developments in litigation and the actual recoveries the company may make on any collateral relating to claims against it; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products, or financial condition; any significant disruption in the company's operations or technology platform; the company's ability to execute on its strategic and operational plans; changes in the labor and employment market; competition from providers of products and services that compete with the company's businesses; the possibility that regulatory and other approvals and conditions to the ING Direct acquisition are not received or satisfied on a timely basis or at all; the possibility that modifications to the terms of the ING Direct acquisition may be required in order to obtain or satisfy such approvals or conditions; changes in the anticipated timing for closing the ING Direct acquisition; difficulties and delays in integrating the company's and ING Direct's businesses or fully realizing projected cost savings and other projected benefits of the ING Direct acquisition; business disruption during the pendency of or following the ING Direct acquisition; the inability to sustain revenue and earnings growth; changes in interest rates and capital markets; diversion of management time on issues related to the ING Direct acquisition; and changes in asset quality and credit risk as a result of the ING Direct acquisition. A discussion of these and other factors can be found in the company's annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, the company's report on Form 10-K for the fiscal year ended December 31, 2010.About Capital OneCapital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N. A., had $126.1 billion in deposits and $199.8 billion in total assets outstanding as of June 30, 2011. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.Exhibit 99.2Capital One Financial CorporationFinancial SupplementSecond Quarter 2011Table of Contents Page Capital One Financial ConsolidatedTable   1:   Financial & Statistical Summary -- Consolidated1Table   2:Notes to Consolidated Financial & Statistical Summary (Table 1)2Table   3:Consolidated Statements of Income3Table   4:Consolidated Balance Sheets4Table   5:Average Balances, Net Interest Income and Net Interest Margin 5Table   6:Loan Information and Performance Statistics6Table   7:Notes to Loan Information and Performance Statistics (Table 6)7Table   8:Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures8CAPITAL ONE FINANCIAL CORPORATION (COF)Table 1:  Financial & Statistical Summary?Consolidated201120112010(Dollars in millions, except per share data and as noted) (unaudited)Q2Q1Q2EarningsNet interest income$     3,136$     3,140$     3,097Non-interest income (1)(2)857942807Total revenue $     3,993$     4,082$     3,904Provision for loan and lease losses343534723Marketing expenses329276219Operating expenses (3)1,9261,8861,781Income from continuing operations before income taxes $     1,395$     1,386$     1,181Income tax provision450354369Income from continuing operations, net of tax9451,032812Loss from discontinued operations, net of tax (2)(34)(16)(204)Net income$        911$     1,016$        608Common Share StatisticsBasic EPS:   Income from continuing operations, net of tax$       2.07$       2.27$       1.79   Loss from discontinued operations, net of tax(0.07)(0.03)(0.45)   Net income per common share $       2.00$       2.24$       1.34Diluted EPS:   Income from continuing operations, net of tax$       2.04$       2.24$       1.78   Loss from discontinued operations, net of tax(0.07)(0.03)(0.45)   Net income per common share$       1.97$       2.21$       1.33Weighted average common shares outstanding (in millions):   Basic EPS455.6454.1452.1   Diluted EPS462.2460.3456.4Common shares outstanding (period end)455.8455.2452.3Dividends per common share$       0.05$       0.05$       0.05Tangible book value per common share (period end) (4)32.3329.7024.89Stock price per common share (period end)51.6751.9640.30Total market capitalization (period end)23,55123,65218,228Balance Sheet (Period End)Loans held for investment (5)$ 128,965$ 124,092$ 127,255Interest-earning assets174,302172,849170,547Total assets199,753199,300197,489Tangible assets (6)185,778184,928183,474Interest-bearing deposits109,278109,097103,172Total deposits126,117125,446117,331Borrowings37,73539,79748,018Stockholders' equity28,68127,55025,270Tangible common equity (TCE) (7)14,73713,52011,259Balance Sheet (Quarterly Average Balances)Average loans held for investment (5)$ 127,916$ 125,077$ 128,335Average interest-earning assets174,143173,540174,782Average total assets199,229198,075199,357Average interest-bearing deposits109,251108,633104,163Average total deposits125,834124,158118,484Average borrowings39,45140,53850,404Average stockholders' equity28,25527,00924,526Performance MetricsNet interest income growth (quarter over quarter) 0%4%(4)%Non-interest income growth (quarter over quarter)(9)0(24)Revenue growth (quarter over quarter)(2)3(9)Revenue margin (8)9.179.418.94Net interest margin (9)7.207.247.09Risk-adjusted margin (10)7.036.775.01Return on average assets (11)1.902.081.63Return on average equity (12)13.3815.2813.24Return on average tangible common equity (13)26.4731.7330.97Non-interest expense as a % of average loans held for investment (14)7.056.916.23Efficiency ratio (15)56.4752.9651.23Effective income tax rate32.325.531.2Full-time equivalent employees (in thousands)28.227.925.7Credit Quality Metrics Allowance for loan and lease losses$     4,488$     5,067$     6,799Allowance as a % of loans held for investment 3.48%4.08%5.34%Net charge-offs $        931$     1,145$     1,717Net charge-off rate (16) (17)2.91%3.66%5.35%30+ day performing delinquency rate 2.903.073.81Capital RatiosTier 1 risk-based capital ratio (18)11.6%10.9%9.9%Tier 1 common equity ratio (19)9.28.47.0Total risk-based capital ratio (20)14.814.217.0Tangible common equity (TCE) ratio (21)7.97.36.1CAPITAL ONE FINANCIAL CORPORATION (COF)Table 2:  Notes to Consolidated Financial & Statistical Summary (Table 1)(1)Includes the impact from the change in fair value of retained interests, including interest-only strips, which totaled $16 million in Q2 2011, $7 million in Q1 2011 and $17 million in Q2 2010.(2)The mortgage representation and warranty reserve increased to $869 million as of June 30, 2011, from $846 million as of March 31, 2011. We recorded a provision for repurchase losses of $37 million in Q2 2011, $44 million in Q1 2011 and $404 million in Q2 2010.  The majority of the provision for repurchase losses is included in discontinued operations, with the remaining portion included in non-interest income.  (3)Includes core deposit intangible amortization expense of $44 million in Q2 2011, $45 million in Q1 2011 and $50 million in Q2 2010 and integration costs of $0 in Q2 2011, $2 million in Q1 2011 and $22 million in Q2 2010.(4)Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 8: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this measure.(5)Reflects the impact of the April 1, 2011 acquisition of the existing private-label credit card loan portfolio of Kohl's Department Stores ("Kohl's"), which had an outstanding principal and interest balance of approximately $3.7 billion at acquisition.(6)Tangible assets is a non-GAAP measure consisting of total assets less assets from discontinued operations and intangible assets. See "Table 8: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this measure.(7)Tangible common equity is a non-GAAP measure consisting of total stockholders' equity less intangible assets. See "Table 8: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this measure.(8)Calculated based on annualized total revenue for the period divided by average interest-earning assets for the period.(9)Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.(10)Calculated based on annualized total revenue less net charge-offs for the period divided by average interest-earning assets for the period.(11)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period. (12)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average stockholders' equity for the period. (13)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible common equity for the period. (14)Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period.(15)Calculated based on non-interest expense for the period divided by total revenue for the period. (16)In accordance with our loss share agreement with Kohl's, charge-offs for the portfolio are reported net of any reimbursement of credit losses from Kohl's, which has the impact of lowering the overall charge-off rate. (17)Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period.  Average loans held for investment include purchased credit impaired loans acquired as part of the Chevy Chase Bank acquisition. (18)Tier 1 risk-based capital ratio is a regulatory measure calculated based on Tier 1 capital divided by risk-weighted assets. See "Table 8: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.(19)Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity divided by risk-weighted assets. See "Table 8: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio and non-GAAP reconciliation.(20)Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighted assets. See "Table 8: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.(21)Tangible common equity ratio ("TCE ratio") is a non-GAAP measure calculated based on tangible common equity divided by tangible assets. See "Table 8: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio and non-GAAP reconciliation.CAPITAL ONE FINANCIAL CORPORATION (COF)Table 3:  Consolidated Statements of IncomeThree Months EndedSix Months EndedJune 30,March 31,June 30,June 30,June 30,(Dollars in millions, except per share data) (unaudited)20112011201020112010Interest income:Loans held for investment, including past-due fees$  3,367$     3,417$  3,476$  6,784$  7,134Investment securities313316342629691Other1919173840    Total interest income3,6993,7523,8357,4517,865Interest expense:Deposits307322368629767Securitized debt obligations113140212253454Senior and subordinated notes636472127140Other borrowings808686166179    Total interest expense5636127381,1751,540Net interest income3,1363,1403,0976,2766,325Provision for loan and lease losses3435347238772,201Net interest income after provision for loan and lease losses2,7932,6062,3745,3994,124Non-interest income:Servicing and securitizations12112123(15)Service charges and other customer-related fees4605254969851,081Interchange331320333651644Net other-than-temporary impairment losses recognized in earnings(6)(3)(26)(9)(57)Other6089(17)149215    Total non-interest income8579428071,7991,868Non-interest expense:Salaries and associate benefits7157416501,4561,296Marketing329276219605399Communications and data processing162164164326333Supplies and equipment124135129259253Occupancy118119117237237Other8077277211,5341,329    Total non-interest expense2,2552,1622,0004,4173,847Income from continuing operations before income taxes1,3951,3861,1812,7812,145Income tax provision450354369804613Income from continuing operations, net of tax9451,0328121,9771,532Loss from discontinued operations, net of tax(34)(16)(204)(50)(288)Net income$     911$     1,016$     608$  1,927$  1,244Basic earnings per common share:  Income from continuing operations$    2.07$       2.27$    1.79$    4.35$    3.38  Loss from discontinued operations(0.07)(0.03)(0.45)(0.11)(0.63)  Net income per common share$    2.00$       2.24$    1.34$    4.24$    2.75Diluted earnings per common share:  Income from continuing operations$    2.04$       2.24$    1.78$    4.29$    3.36  Loss from discontinued operations(0.07)(0.03)(0.45)(0.11)(0.63)  Net income per common share$    1.97$       2.21$    1.33$    4.18$    2.73Weighted average common shares outstanding (in millions):   Basic EPS455.6454.1452.1454.9451.6   Diluted EPS462.2460.3456.4461.3455.9Dividends per common share$    0.05$       0.05$    0.05$    0.10$    0.10CAPITAL ONE FINANCIAL CORPORATION (COF)Table 4:  Consolidated Balance SheetsJune 30,December 31,June 30,(Dollars in millions)(unaudited)201120102010Assets:Cash and due from banks$     1,954$            2,067$     2,668Interest-bearing deposits with banks4,0372,7762,147Federal funds sold and repurchase agreements652406384Cash and cash equivalents6,6435,2495,199Restricted cash for securitization investors1,3281,6023,446Securities available for sale, at fair value39,47441,53739,424Loans held for investment:Unsecuritized loans held for investment, at amortized cost81,58571,92171,491Restricted loans for securitization investors47,38054,02655,649Total loans held for investment128,965125,947127,140    Less: Allowance for loan and lease losses(4,488)(5,628)(6,799)Net loans held for investment124,477120,319120,341Loans held for sale, at lower-of-cost-or-fair-value80228249Accounts receivable from securitizations106118206Premises and equipment, net2,7542,7492,730Interest receivable1,0271,0701,077Goodwill13,59613,59113,588Other10,26811,04011,229Total assets$ 199,753$        197,503$ 197,489Liabilities:Interest payable$        469$               488$        543Customer deposits:Non-interest bearing deposits16,83915,04814,159Interest-bearing deposits109,278107,162103,172Total customer deposits126,117122,210117,331Securitized debt obligations19,86026,91533,009Other debt:Federal funds purchased and securities loaned or sold under agreements to repurchase2,5751,517728Senior and subordinated notes8,6648,6509,424Other borrowings6,6364,7144,857Total other debt17,87514,88115,009Other liabilities6,7516,4686,327Total liabilities171,072170,962172,219Stockholders' equity:Common stock555Paid-in capital, net19,18819,08419,029Retained earnings 12,28710,4068,969Accumulated other comprehensive income442248467Less:  Treasury stock, at cost(3,241)(3,202)(3,200)Total stockholders' equity28,68126,54125,270Total liabilities and stockholders' equity$ 199,753$        197,503$ 197,489CAPITAL ONE FINANCIAL CORPORATION (COF)Table 5:  Average Balances, Net Interest Income and Net Interest MarginQuarter Ended 06/30/11Quarter Ended 03/31/11Quarter Ended 06/30/10(Dollars in millions)(unaudited)AverageBalanceInterest Income/Expense Yield/ RateAverageBalanceInterest Income/Expense Yield/ RateAverageBalanceInterest Income/Expense Yield/ RateInterest-earning assets:Loans held for investment$ 127,916$                  3,36710.53%$ 125,077$                  3,41710.93%$ 128,335$   3,47610.83%Investment securities 40,3813133.1041,5323163.0439,0223423.51Other5,846191.306,931191.107,425170.92Total interest-earning assets $ 174,143$                  3,6998.50%$ 173,540$                  3,7528.65%$ 174,782$   3,8358.78%Interest-bearing liabilities:Interest-bearing depositsNOW accounts$   13,186$                         90.27%$   13,648$                         90.26%$   11,601$        100.34%Money market deposit accounts45,527990.8745,6131100.9642,127990.94Savings accounts29,329600.8226,801550.8221,017440.84Other consumer time deposits14,330912.5415,344992.5820,7441502.89Public fund CD's of $100,000 or more11013.6414912.6824011.67CD's of $100,000 or more5,867463.146,097473.087,601633.32Foreign time deposits90210.4498110.4183310.48Total interest-bearing deposits$ 109,251$                     3071.12%$ 108,633$                     3221.19%$ 104,163$      3681.41%Securitized debt obligations22,1911132.0425,5151402.1935,2482122.41Senior and subordinated notes8,093633.118,090643.168,760723.29Other borrowings9,167803.496,933864.966,396865.38Total interest-bearing liabilities$ 148,702$                     5631.51%$ 149,171$                     6121.64%$ 154,567$      7381.91%Net interest income/spread$                  3,1366.99%$                  3,1407.01%$   3,0976.87%Interest income to average interest-earning assets8.50%8.65%8.78%Interest expense to average interest-earning assets1.301.411.69Net interest margin7.20%7.24%7.09%CAPITAL ONE FINANCIAL CORPORATION (COF)Table 6: Loan Information and Performance Statistics (1)201120112010(Dollars in millions)(unaudited)Q2Q1Q2Period-end loans held for investmentCredit card:   Domestic credit card (2)$   53,994$   50,570$   54,628   International credit card8,7118,7357,269      Total credit card62,70559,30561,897Consumer banking:   Automobile19,22318,34217,221   Home loan11,32311,74113,322   Retail banking4,0464,2234,770      Total consumer banking34,59234,30635,313Commercial banking:   Commercial and multifamily real estate14,03513,54313,580   Middle market11,40410,75810,203   Specialty lending4,1223,9363,815      Total commercial lending29,56128,23727,598   Small-ticket commercial real estate1,6421,7801,977      Total commercial banking31,20330,01729,575Other loans (3)465464470     Total $ 128,965$ 124,092$ 127,255Average loans held for investmentCredit card:   Domestic credit card (2)$   53,868$   51,889$   55,252   International credit card8,8238,6977,427      Total credit card62,69160,58662,679Consumer banking:   Automobile18,75318,02517,276   Home loan11,53411,96013,573   Retail banking4,1544,2514,811      Total consumer banking34,44134,23635,660Commercial banking:   Commercial and multifamily real estate13,59713,34513,543   Middle market10,97910,66610,276   Specialty lending4,0143,9643,654      Total commercial lending28,59027,97527,473   Small-ticket commercial real estate1,7261,8182,060      Total commercial banking30,31629,79329,533Other loans (3)468462463      Total$ 127,916$ 125,077$ 128,335Net charge-off ratesCredit card:   Domestic credit card (4)4.74%6.20%9.49%   International credit card7.025.748.38      Total credit card5.06%6.13%9.36%Consumer banking:   Automobile1.11%1.98%2.09%   Home loan0.600.710.46   Retail banking1.732.242.11      Total consumer banking1.01%1.57%1.47%Commercial banking:   Commercial and multifamily real estate0.39%0.56%1.17%   Middle market 0.130.180.78   Specialty lending0.470.300.87      Total commercial lending0.30%0.38%0.98%   Small-ticket commercial real estate3.777.144.21      Total commercial banking0.50%0.79%1.21%Other loans10.59%19.91%27.95%      Total2.91%3.66%5.36%30+ day performing delinquency ratesCredit card:   Domestic credit card 3.33%3.59%4.79%   International credit card5.305.556.03      Total credit card3.60%3.88%4.94%Consumer banking:   Automobile6.09%5.79%7.25%   Home loan0.700.610.68   Retail banking0.760.930.87      Total consumer banking3.70%3.42%3.91%Nonperforming asset rates(5) (6)Consumer banking:   Automobile0.49%0.39%0.56%   Home loan4.404.343.78   Retail banking2.452.442.25      Total consumer banking2.00%2.00%2.00%Commercial banking:   Commercial and multifamily real estate2.35%2.63%2.82%   Middle market 1.191.141.20   Specialty lending0.951.191.94      Total commercial lending1.71%1.86%2.10%   Small-ticket commercial real estate0.753.393.57      Total commercial banking1.66%1.95%2.20%CAPITAL ONE FINANCIAL CORPORATION (COF)Table 7:  Notes to Loan Information and Performance Statistics (Table 6)(1) Certain prior period amounts have been reclassified to conform to the current period presentation.(2)Reflects the impact of the April 1, 2011 acquisition of the existing private-label credit card loan portfolio of Kohl's Department Stores ("Kohl's"), which had an outstanding principal and interest balance of approximately $3.7 billion at acquisition.(3)Other loans held for investment includes unamortized premiums and discounts on loans acquired as part of the North Fork and Hibernia acquisitions.(4)In accordance with our loss share agreement with Kohl's, charge-offs for the portfolio are reported net of any reimbursement of credit losses from Kohl's, which has the impact of lowering the overall Domestic Card charge-off rate. (5)Nonperforming assets consist of nonperforming loans and real estate owned ("REO") and foreclosed assets. The nonperforming asset ratios are calculated based on nonperforming assets for each segment divided by the combined total of loans held for investment, REO and foreclosed assets for each respective segment.(6)As permitted by regulatory guidance, our policy is generally to exempt delinquent credit card loans from being classified as nonperforming. We continue to accrue finance charges and fees on credit card loans until the loan is charged off, typically when the account becomes 180 days past due.  Billed finance charges and fees considered uncollectible are not recognized in income.CAPITAL ONE FINANCIAL CORPORATION (COF)Table 8: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital MeasuresIn addition to disclosing required regulatory capital measures, we also report certain non-GAAP capital measures that management uses in assessing its capital adequacy. These non-GAAP measures include average tangible common equity, tangible common equity (TCE), TCE ratio, Tier 1 common equity and Tier 1 common equity ratio. The table below provides the details of the calculation of each of these measures. While these non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies. 201120112010(Dollars in millions)(unaudited)Q2Q1Q4Average Equity to Non-GAAP Average Tangible Common EquityAverage total stockholders' equity$   28,255$   27,009$   26,255Less:  Average intangible assets (1)(13,973)(14,001)(14,008)Average tangible common equity$   14,282$   13,008$   12,247Stockholders' Equity to Non-GAAP Tangible Common EquityTotal stockholders' equity$   28,681$   27,550$   26,541Less:  Intangible assets (1)(13,944)(14,030)(13,983)Tangible common equity$   14,737$   13,520$   12,558Total Assets to Tangible AssetsTotal assets$ 199,753$ 199,300$ 197,503Less:  Assets from discontinued operations(31)(342)(362)Total assets from continuing operations199,722198,958197,141Less:  Intangible assets (1)(13,944)(14,030)(13,983)Tangible assets$ 185,778$ 184,928$ 183,158Non-GAAP TCE RatioTangible common equity$   14,737$   13,520$   12,558Tangible assets185,778184,928183,158TCE ratio(2)7.9%7.3%6.9%Non-GAAP Tier 1 Common Equity and Regulatory Capital RatiosTotal stockholders' equity$   28,681$   27,550$   26,541Less:  Net unrealized (gains) losses on AFS securities recorded in AOCI (3)(482)(314)(368)     Net (gains) losses on cash flow hedges recorded in AOCI(3)719586     Disallowed goodwill and other intangible assets(13,954)(13,993)(13,953)     Disallowed deferred tax assets(648)(1,377)(1,150)     Other (2)(2)(2)Tier 1 common equity$   13,666$   11,959$   11,154Plus:  Tier 1 restricted core capital items(4)3,6363,6363,636Tier 1 capital$   17,302$   15,595$   14,790Plus:  Long-term debt qualifying as Tier 2 capital2,7272,8272,827     Qualifying allowance for loan and lease losses1,8731,8253,748     Other Tier 2 components282029Tier 2 capital$     4,628$     4,672$     6,604Total risk-based capital(5)$   21,930$   20,267$   21,394Risk-weighted assets(6)$ 148,619$ 142,495$ 127,043Tier 1 common equity ratio (7)9.2%(10)8.4%8.8%Tier 1 risk-based capital ratio (8)11.6(10)10.911.6Total risk-based capital ratio (9)14.8(10)14.216.8___________________  (1)  Includes impact from related deferred taxes.    (2)  Calculated based on tangible common equity divided by tangible assets.      (3)  Amounts presented are net of tax.    (4)  Consists primarily of trust preferred securities.    (5)  Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.    (6)  Calculated based on prescribed regulatory guidelines.    (7)  Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity divided by risk-weighted assets.    (8)  Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.    (9)  Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighted assets.   (10)  Capital ratios as of the end of Q2 2011 are preliminary and therefore subject to change once the calculations have been finalized.    SOURCE Capital One Financial CorporationFor further information: Investor Relations: Jeff Norris, +1-703-720-2455, or Danielle Dietz, +1-703-720-2455; or Media Relations: Julie Rakes, +1-804-284-5800, or Tatiana Stead, +1-703-720-2352