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Press release from PR Newswire

Capital One Reports Third Quarter 2011 Net Income of $813 million, or $1.77 per share

Thursday, October 20, 2011

Capital One Reports Third Quarter 2011 Net Income of $813 million, or $1.77 per share16:05 EDT Thursday, October 20, 2011MCLEAN, Va., Oct 20, 2011 /PRNewswire/ --Estimated Tier 1 Common Equity Ratio of approximately 10.0 percent at September 30, 2011, up 60 basis points from 9.4 percent at June 30, 2011End of period loan balances up $1.0 billion to $130.0 billionNet Interest Margin expanded 19 basis points to 7.4 percent compared to second quarter 2011Revenue Margin 9.4 percent, up 18 basis points compared to second quarter 2011Charge-off Rate of 2.52 percent, down 39 basis points compared to second quarter 2011 Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2011 of $813 million, or $1.77 per diluted common share, compared with net income of $911 million, or $1.97 per diluted common share, for the second quarter of 2011, and net income of $803 million, or $1.76 per diluted common share, for the third quarter of 2010.  "Our strong third quarter results demonstrate that we remain well-positioned to win in the marketplace and deliver shareholder value, " said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We expect that the acquisitions of ING Direct and the HSBC US Card Business will deliver attractive financial results in the near-term, and put us in an even stronger position to enhance and sustain the value we can deliver to our customers, our communities and our shareholders." All comparisons in the following paragraphs are for third quarter 2011 compared to second quarter 2011 unless otherwise noted.    Loan and Deposit BalancesPeriod-end loan balances increased $987 million to $130.0 billion driven by growth in Auto Finance and Commercial Banking.  Excluding the expected decline in loan balances in the company's run-off portfolios, loan balances increased $2.0 billion.Period-end total deposits increased $2.2 billion to $128.3 billion, driven by growth in branch and direct deposits. RevenuesTotal revenue in the third quarter of 2011 was $4.2 billion, up $161 million, or 4.0 percent. Net interest income drove the majority of the increase in revenue, increasing $147 million to $3.3 billion.  Approximately half of this growth resulted from a decline in the level of revenue suppression in the Credit Card segment. This lower level of suppression was driven by an increase in the estimated collectability of billed finance charges and fees on existing credit card balances.In addition, there were two largely offsetting revenue items related to the company's balance sheet repositioning ahead of the pending acquisition of ING Direct.  The company recognized $239 million of gains from the sale of $6.4 billion of securities, which were predominately agency mortgage backed securities. Additionally, at the end of the quarter, the company recognized a $266 million mark-to-market loss on the previously announced pay-fixed swap executed in early August 2011.MarginsNet interest margin expanded 19 basis points in the quarter to 7.39 percent as average asset yield rose 13 basis points combined with a decline of six basis points in the cost of funds.  The decline was a result of a decline in deposit rates and a reduction in wholesale funding. Revenue margin for the third quarter was 9.35 percent, up 18 basis points.  The expansion of revenue margin resulted from the same factors that drove the increase in revenues in the quarter. Non-Interest ExpenseOperating expense for the third quarter increased $59 million primarily due to higher staffing costs as well as accruals against an earn-out agreement related to a previous acquisition.  Marketing expense decreased   $17 million, mostly driven by the timing of several large marketing programs which impacted expenses in the second quarter.  In line with usual historical patterns, the company expects marketing expense to rise in the fourth quarter.Pre-Provision Income (before tax)An increase in revenue in the quarter was partially offset by a modest increase in non-interest expenses.  Provision ExpenseAs overall credit trends are stabilizing after almost two years of rapidly declining charge-offs, quarterly credit metrics are increasingly driven by seasonal patterns.  Charge-offs continued to fall in the quarter, but a significantly smaller allowance release associated with stabilizing credit trends caused provision expense to increase to $622 million.  The charge-off rate improved 39 basis points to 2.52 percent, while the coverage ratio of allowance to loans came down by only 19 basis points to 3.29 percent.Representation & Warranty The company's reserve for representation and warranty claims was $892 million as of September 30, 2011, up from $869 million as of June 30, 2011.  The company added $72 million in additional reserves and paid $49 million in claims. As a result of some generally increased activity by investors in the non-GSE and non-insured securitization category, the company now believes that the upper end of the reasonably possible future losses from representation and warranty claims beyond current accrual levels could be as high as $1.5 billion. This estimate continues to be subject to the significant uncertainty and numerous factors described in the company's quarterly reports filed with the Securities and Exchange Commission.Net IncomeNet income decreased $98 million as higher pre-provision earnings were more than offset by higher provision expense.  Capital RatiosThe company's estimated Tier 1 common equity ratio rose to 10.0 percent as of September 30, 2011, up 60 basis points from June 30, 2011.  The increase was driven by strong business performance as well as the expected continued decline of deferred tax assets disallowed in the regulatory capital calculation. "We continue to be comfortable with our strong capital levels and our underlying trajectory," said Gary L. Perlin, Capital One's Chief Financial Officer. "Using known Basel III definitions, our Tier 1 common equity ratio would have been approximately 10 basis points higher in the quarter, or 10.1 percent." Tier 1 common equity ratio, as used throughout this release, is a non-GAAP financial measure. For additional information, see Table 12 in the Financial Supplement.Credit Card HighlightsFor more lending information and statistics on the segment results, please refer to the Financial Supplement.The Domestic Card business delivered another quarter of strong returns.   The net charge-off rate improved 82 basis points in the quarter with approximately half of the improvement resulting from expected seasonal patterns and the remaining improvement driven by underlying credit performance. The company continues to see declining loss severity and strong credit performance in its newer vintages and portfolio seasoning as older vintages mature. Domestic Card loan balances declined modestly in the quarter, but excluding the Installment Loan run-off, revolving credit card loans grew $276 million in the quarter, up approximately 0.5 percent sequentially, and up about 4.4 percent compared to the third quarter of 2010. Purchase volume increased in the quarter to $34.9 billion, reflecting third quarter seasonality and continued strong growth in purchase volume across the company's Domestic Card business. Purchase volume grew 17 percent from the third quarter of 2010, excluding the impact of the Kohl's portfolio.Commercial Banking HighlightsFor more lending information and statistics on the segment results, please refer to the Financial Supplement.The Commercial Banking segment delivered its third consecutive quarter of strong profitability and continued loan growth.  Commercial deposits and commercial customer relationships continued to grow in the quarter.  Ending loans were up 2.9 percent from the prior quarter and up 8.7 percent from the third quarter of 2010.  Growth in loan commitments, an early indicator of future loan growth, was even stronger.  Commercial & Industrial and Commercial Real Estate businesses experienced the strongest growth in both loans and loan commitments.  Commercial Banking credit metrics have stabilized and improved modestly over the last five quarters. At a rate of 0.37 percent, net charge-offs for Commercial Banking are at their lowest levels since the third quarter of 2008.Consumer Banking HighlightsFor more lending information and statistics on the segment results, please refer to the Financial Supplement.In Consumer Banking, loan balances were up modestly as strong growth in auto loans was partially offset by expected runoff of the Home Loan portfolio.  Auto Finance originations were $3.4 billion, up 17 percent from the second quarter and 40 percent from the third quarter of 2010. In the Auto Finance business, charge-off and delinquency rates increased in the quarter, consistent with expected seasonal patterns.  Year-over-year, charge-offs and delinquencies improved 102 basis points and 108 basis points, respectively. Auto Finance credit performance remains strong, with originations continuing to perform better than originations from 2007 and 2008.  In fact, Auto Finance credit metrics are near their all-time lows, driven by the actions the company took to retrench and reposition the business, tight underwriting and loss mitigation actions through the recession, and continued strength in used car auction prices.  The charge-off rate improved in the Home Loan portfolio, while the delinquency rate increased modestly. Consumer Banking deposits were up $1.3 billion in the third quarter as the Consumer Banking segment continued to grow retail banking customer relationships.Forward-looking statementsThe company cautions that its current expectations in this release dated October 20, 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. Certain statements in this release are forward-looking statements, including those that discuss, among other things, strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns, accruals for claims in litigation and for other claims against the company, earnings per share or other financial measures for the company; future financial and operating results; the company's plans, objectives, expectations and intentions; the projected impact and benefits of the pending transactions involving the company, HSBC and ING Direct (the "transactions"); and the assumptions that underlie these matters.  To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities Litigation Reform Act of 1995. Numerous factors could cause the company's actual results to differ materially from those described in such forward-looking statements, including, among other things: general economic and business conditions in the U.S., the U.K., Canada or the company's local markets, including conditions affecting employment levels, interest rates, consumer income and confidence, spending and savings that may affect consumer bankruptcies, defaults, charge-offs and deposit activity; an increase or decrease in credit losses (including increases due to a worsening of general economic conditions in the credit environment); the possibility that regulatory and other approvals and conditions to either of the transactions are not received or satisfied on a timely basis or at all; the possibility that modifications to the terms of either of the transactions may be required in order to obtain or satisfy such approvals or conditions; the possibility that the company will not receive third-party consents necessary to fully realize the anticipated benefits of the transactions; the possibility that the company may not fully realize the projected cost savings and other projected benefits of the transactions; changes in the anticipated timing for closing either of the transactions; difficulties and delays in integrating the assets and businesses acquired in the transactions; business disruption during the pendency of or following the transactions; the inability to sustain revenue and earnings growth; diversion of management time on issues related to the transactions; reputational risks and the reaction of customers and counterparties to the transactions; disruptions relating to the transactions negatively impacting the company's ability to maintain relationships with customers, employees and suppliers; changes in asset quality and credit risk as a result of the transactions; financial, legal, regulatory, tax or accounting changes or actions, including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection 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 company's ability to access the capital markets at attractive rates and terms to capitalize and fund its operations and future growth; the success of the company's marketing efforts in attracting and retaining customers; increases or decreases in the company's aggregate loan balances or the number of customers and the growth rate and composition thereof, including increases or decreases resulting from factors such as shifting product mix, amount of actual marketing expenses the company incurs and attrition of loan balances; 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 the company; the amount and rate of deposit growth; 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 maintain a compliance infrastructure suitable for its size and complexity; the company's ability to control costs; the amount of, and rate of growth in, the company's expenses as its business develops or changes or as it expands into new market areas; the company's ability to execute on its strategic and operational plans; any significant disruption of, or loss of public confidence in, the United States Mail service affecting the company's response rates and consumer payments; the company's ability to recruit and retain experienced personnel to assist in the management and operations of new products and services; changes in the labor and employment markets; fraud or misconduct by the company's customers, employees or business partners; competition from providers of products and services that compete with the company's businesses; and other risk factors set forth from time to time in reports that the company files with the Securities and Exchange Commission (the "SEC"), including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2010, and Exhibit 99.5 to the Current Report on Form 8-K filed on July 13, 2011. 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 $128.3 billion in deposits and $200.1 billion in total assets outstanding as of September 30, 2011. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.Exhibit 99.2Capital One Financial CorporationFinancial SupplementThird Quarter 2011(1)Table of Contents Page Capital One Financial ConsolidatedTable   1:   Financial & Statistical Summary ? Consolidated1Table   2:Notes to Consolidated Financial & Statistical Summary (Table 1)2Table   3:Consolidated Statements of Income3Table   4:Consolidated Balance Sheets4Table   5:Average Balances, Net Interest Income and Net Interest Margin 5Table   6:Loan Information and Performance Statistics6Business Segment DetailTable   7:Financial & Statistical Summary ? Credit Card Business7Table   8:Financial & Statistical Summary ? Consumer Banking Business8Table   9:Financial & Statistical Summary ? Commercial Banking Business9Table 10:Financial & Statistical Summary ? Other and Total 10Table 11:Notes to Loan and Business Segment Disclosures (Tables 6 ? 10)11OtherTable 12:Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures12(1) The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission.    CAPITAL ONE FINANCIAL CORPORATION (COF)Table 1:  Financial & Statistical Summary?Consolidated201120112011(Dollars in millions, except per share data and as noted) (unaudited)Q3Q2Q1EarningsNet interest income$     3,283$     3,136$     3,140Non-interest income (1)(2)871857942Total revenue (3)$     4,154$     3,993$     4,082Provision for loan and lease losses622343534Marketing expenses312329276Operating expenses (4)1,9851,9261,886Income from continuing operations before income taxes $     1,235$     1,395$     1,386Income tax provision370450354Income from continuing operations, net of tax8659451,032Loss from discontinued operations, net of tax (2)(52)(34)(16)Net income$        813$        911$     1,016Common Share StatisticsBasic EPS:   Income from continuing operations, net of tax$       1.90$       2.07$       2.27   Loss from discontinued operations, net of tax(0.12)(0.07)(0.03)   Net income per common share $       1.78$       2.00$       2.24Diluted EPS:   Income from continuing operations, net of tax$       1.88$       2.04$       2.24   Loss from discontinued operations, net of tax(0.11)(0.07)(0.03)   Net income per common share$       1.77$       1.97$       2.21Weighted average common shares outstanding (in millions):   Basic EPS456.0455.6454.1   Diluted EPS460.4462.2460.3Common shares outstanding (period end)456.1455.8455.2Dividends per common share$       0.05$       0.05$       0.05Tangible book value per common share (period end) (5)33.8232.2029.70Stock price per common share (period end)39.6351.6751.96Total market capitalization (period end)18,07523,55123,652Balance Sheet (Period End)Loans held for investment (6)$ 129,952$ 128,965$ 124,092Interest-earning assets174,308174,302172,849Total assets200,148199,753199,300Tangible assets (7)185,891185,715184,928Interest-bearing deposits110,777109,278109,097Total deposits128,318126,117125,446Borrowings34,31537,73539,797Stockholders' equity29,37828,68127,550Tangible common equity (TCE) (8)15,42514,67513,520Balance Sheet (Quarterly Average Balances)Average loans held for investment (6)$ 129,043$ 127,916$ 125,077Average interest-earning assets177,710174,143173,540Average total assets201,611199,229198,075Average interest-bearing deposits110,750109,251108,633Average total deposits128,268125,834124,158Average borrowings37,36639,45140,538Average stockholders' equity29,31628,25527,009Performance MetricsNet interest income growth (quarter over quarter) 5%(0)%4%Non-interest income growth (quarter over quarter)2(9)0Revenue growth (quarter over quarter)4(2)3Revenue margin (9)9.359.179.41Net interest margin 10)7.397.207.24Return on average assets (11)1.721.902.08Return on average equity (12)11.8013.3815.28Return on average tangible common equity (13)22.5826.5731.73Non-interest expense as a % of average loans held for investment (14)7.127.056.91Efficiency ratio (15)55.3056.4752.96Effective income tax rate30.032.325.5Full-time equivalent employees (in thousands)29.528.227.9Credit Quality Metrics (16)Allowance for loan and lease losses$     4,280$     4,488$     5,067Allowance as a % of loans held for investment 3.29%3.48%4.08%Net charge-offs $        812$        931$     1,145Net charge-off rate (17)(18)2.52%2.91%3.66%30+ day performing delinquency rate 3.132.903.07Capital RatiosTier 1 risk-based capital ratio (19)12.4%11.8%10.9%Tier 1 common equity ratio (20)10.09.48.4Total risk-based capital ratio (21)15.415.014.2Tangible common equity (TCE) ratio (22)8.37.97.3CAPITAL 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 $12 million in Q3 2011, $16 million in Q2 2011, and $7 million in Q1 2011.(2)The mortgage representation and warranty reserve increased to $892 million as of September 30, 2011, from $869 million as of June 30, 2011. We recorded a provision for repurchase losses of $72 million in Q3 2011, $37 million in Q2 2011, and $44 million in Q1 2011. The majority of the provision for repurchase losses is included in discontinued operations, with the remaining portion included in non-interest income.  (3)The estimated uncollectible amount of billed finance charges and fees excluded from revenue totaled $24 million in Q3 2011, $112 million in Q2 2011, and $105 million in Q1 2011. In the third quarter of 2011, we made a change to the way we estimate recoveries in determining the uncollectible amount of finance charges and fees, which significantly reduced the uncollectible amount of billed finance charges and fees excluded from revenue in Q3 2011.(4)Includes core deposit intangible amortization expense of $42 million in Q3 2011, $44 million in Q2 2011, and $45 million in Q1 2011 and integration costs of $1 million in Q3 2011, $0 million in Q2 2011, and $2 million in Q1 2011.(5)Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of tangible common equity.(6)Amounts for Q3 2011 and Q2 2011 reflect the impact of the April 1, 2011 acquisition of the existing private-label credit card loan portfolio of Kohl's, which had an outstanding principal and interest balance of approximately $3.7 billion at acquisition.(7)Tangible assets is a non-GAAP measure consisting of total assets less assets from discontinued operations and intangible assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this measure.(8)Tangible common equity is a non-GAAP measure consisting of total stockholders' equity less intangible assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this measure.(9)Calculated based on annualized total revenue for the period divided by average interest-earning assets for the period.(10)Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.(11)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period. (12)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average stockholders' equity for the period. (13)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible common equity for the period. (14)Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period.(15)Calculated based on non-interest expense for the period divided by total revenue for the period. (16)Purchased credit impaired ("PCI") loans acquired as part of the Chevy Chase Bank ("CCB") acquisition are included in the denominator used in calculating the credit quality metrics presented in Table 1.  These metrics excluding the impact of loans acquired from CCB from the denominator are presented below:201120112011 (Dollars in millions) (unaudited)Q3Q2Q1 CCB period-end acquired loan portfolio$    4,873$        5,181$        5,351 CCB average acquired loan portfolio4,9985,1125,305 Allowance as a % of loans held for investment, excluding CCB loans3.42%3.63%4.27% Net charge-off rate, excluding CCB loans2.623.033.82 30+ day performing delinquency rate, excluding CCB loans3.323.083.25(17)In accordance with our loss-sharing 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. (18)Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. (19)Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.(20)Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity divided by risk-weighted assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio and non-GAAP reconciliation..(21)Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighted assets. See "Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.(22)Tangible common equity ratio ("TCE ratio") is a non-GAAP measure calculated based on tangible common equity divided by tangible assets. See "Table 12: 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 EndedNine Months Ended(Dollars in millions, except per share data)September 30,June 30,September 30,September 30,September 30, (unaudited)20112011201020112010Interest income:Loans held for investment, including past-due fees$         3,550$         3,367$         3,447$       10,334$         10,582Investment securities2643133478931,037Cash equivalents and other2119215960Total interest income3,8353,6993,81511,28611,679Interest expense:Deposits2943073589231,125Securitized debt obligations89113191342644Senior and subordinated notes846372211211Other borrowings858085251265Total interest expense5525637061,7272,245Net interest income3,2833,1363,1099,5599,434Provision for loan and lease losses6223438671,4993,069Net interest income after provision for loan and lease losses2,6612,7932,2428,0606,365Non-interest income:Servicing and securitizations12121335(3)Service charges and other customer-related fees5424604961,5271,577Interchange321331346972991Net other-than-temporary impairment losses recognized in earnings(6)(6)(5)(15)(62)Other26057151272Total non-interest income8718579072,6702,775Non-interest expense:Salaries and associate benefits7507156412,2061,937Marketing312329250917650Communications and data processing178162178504512Supplies and equipment143124129402381Occupancy122118135359371Other7928076632,3261,992Total non-interest expense2,2972,2551,9966,7145,843Income from continuing operations before income taxes1,2351,3951,1534,0163,297Income tax provision3704503351,174948Income from continuing operations, net of tax8659458182,8422,349Loss from discontinued operations, net of tax(52)(34)(15)(102)(303)Net income$            813$           911$           803$          2,740$          2,046Basic earnings per common share:  Income from continuing operations$            1.90$           2.07$          1.81$            6.24$             5.19  Loss from discontinued operations(0.12)(0.07)(0.03)(0.22)(0.66)  Net income per common share$             1.78$             2.00$           1.78$             6.02$              4.53Diluted earnings per common share:  Income from continuing operations$             1.88$           2.04$           1.79$            6.17$              5.15  Loss from discontinued operations(0.11)(0.07)(0.03)(0.22)(0.66)  Net income per common share$             1.77$            1.97$           1.76$            5.95$              4.49Weighted average common shares outstanding (in millions):   Basic EPS456.0455.6452.5455.2451.9   Diluted EPS460.4462.2456.6461.0456.0Dividends per common share$             0.05$           0.05$          0.05$           0.15$            0.15CAPITAL ONE FINANCIAL CORPORATION (COF)Table 4:  Consolidated Balance SheetsSeptember  30,December 31,September  30,(Dollars in millions)(unaudited)201120102010Assets:Cash and due from banks$               1,794$            2,067$               2,015Interest-bearing deposits with banks3,2382,7762,391Federal funds sold and repurchase agreements1,326406536Cash and cash equivalents6,3585,2494,942Restricted cash for securitization investors9841,6022,686Securities available for sale, at fair value38,40041,53739,926Loans held for investment:Unsecuritized loans held for investment, at amortized cost83,01071,92174,719Restricted loans for securitization investors46,94254,02651,615Total loans held for investment129,952125,947126,334    Less: Allowance for loan and lease losses(4,280)(5,628)(6,175)Net loans held for investment125,672120,319120,159Loans held for sale, at lower-of-cost-or-fair-value312228197Accounts receivable from securitizations101118127Premises and equipment, net2,7852,7492,722Interest receivable9581,0701,025Goodwill13,59313,59113,593Other10,98511,04011,556Total assets$           200,148$        197,503$           196,933Liabilities:Interest payable$                  401$               488$                  464Customer deposits:Non-interest bearing deposits17,54115,04814,471Interest-bearing deposits110,777107,162104,741Total customer deposits128,318122,210119,212Securitized debt obligations17,12026,91529,504Other debt:Federal funds purchased and securities loaned or sold under agreements to repurchase1,4411,517947Senior and subordinated notes11,0518,6509,083Other borrowings4,7034,7144,799Total other debt17,19514,88114,829Other liabilities7,7366,4686,863Total liabilities170,770170,962170,872Stockholders' equity:Common stock555Paid-in capital, net19,23419,08419,059Retained earnings and accumulated other comprehensive income13,38210,65410,199Less:  Treasury stock, at cost(3,243)(3,202)(3,202)Total stockholders' equity29,37826,54126,061Total liabilities and stockholders' equity$           200,148$        197,503$           196,933CAPITAL ONE FINANCIAL CORPORATION (COF) Table 5:  Average Balances, Net Interest Income and Net Interest MarginQuarter Ended 09/30/11 Quarter Ended 06/30/11 Quarter Ended 09/30/10 (Dollars in millions)AverageInterest Income/ Yield/ AverageInterestIncome/ Yield/ AverageInterest Income/ Yield/ (unaudited)BalanceExpenseRateBalanceExpenseRateBalanceExpenseRateInterest-earning assets:Loans held for investment$ 129,043$   3,55011.00%$ 127,916$     3,36710.53%$ 126,307$       3,44710.92%Investment securities 37,1892642.8440,3813133.1039,8723473.48Cash equivalents and other11,478210.735,846191.306,294211.33Total interest-earning assets $ 177,710$   3,8358.63%$ 174,143$     3,6998.50%$ 172,473$       3,8158.85%Interest-bearing liabilities:Interest-bearing depositsNOW accounts$   12,602$          90.29%$   13,186$            90.27%$   11,333$            100.35%Money market deposit accounts47,4831000.8445,527990.8743,2601040.96Savings accounts30,944560.7229,329600.8222,572490.87Other consumer time deposits13,530842.4814,330912.5418,7261332.84Public fund CD's of $100,000 or more9214.3511013.6422011.82CD's of $100,000 or more5,407433.185,867463.147,256593.25Foreign time deposits69210.5890210.4481920.98Total interest-bearing deposits$ 110,750$      2941.06%$ 109,251$         3071.12%$ 104,186$          3581.37%Securitized debt obligations18,478891.9322,1911132.0430,7501912.48Senior and subordinated notes10,519843.198,093633.118,677723.32Other borrowings8,369854.069,167803.496,483855.24Total interest-bearing liabilities$ 148,116$      5521.49%$ 148,702$        5631.51%$ 150,096$          7061.88%Net interest income/spread$   3,2837.14%$     3,1366.99%$       3,1096.96%Interest income to average interest-earning assets8.63%8.50%8.85%Interest expense to average interest-earning assets1.241.301.64Net interest margin7.39%7.20%7.21%CAPITAL ONE FINANCIAL CORPORATION (COF)Table 6: Loan Information and Performance Statistics(1)201120112011(Dollars in millions)(unaudited)Q3Q2Q1Period-end loans held for investmentCredit card:   Domestic credit card(2)$   53,820$   53,994$   50,570   International credit card8,2108,7118,735      Total credit card62,03062,70559,305Consumer banking:   Automobile20,42219,22318,342   Home loan10,91611,32311,741   Retail banking4,0144,0464,223      Total consumer banking35,35234,59234,306Commercial banking:   Commercial and multifamily real estate14,38914,03513,543   Middle market11,92411,40410,758   Specialty lending4,2214,1223,936      Total commercial lending30,53429,56128,237   Small-ticket commercial real estate1,5711,6421,780      Total commercial banking32,10531,20330,017Other loans(3)465465464     Total $ 129,952$ 128,965$ 124,092Average loans held for investmentCredit card:   Domestic credit card(2)$   53,668$   53,868$   51,889   International credit card8,7038,8238,697      Total credit card62,37162,69160,586Consumer banking:   Automobile19,75718,75318,025   Home loan11,12611,53411,960   Retail banking3,9794,1544,251      Total consumer banking34,86234,44134,236Commercial banking:   Commercial and multifamily real estate14,02113,59713,345   Middle market11,57210,97910,666   Specialty lending4,1544,0143,964      Total commercial lending29,74728,59027,975   Small-ticket commercial real estate1,5981,7261,818      Total commercial banking31,34530,31629,793Other loans(3)465468462      Total$ 129,043$ 127,916$ 125,077Net charge-off ratesCredit card:   Domestic credit card(4)3.92%4.74%6.20%   International credit card6.157.025.74      Total credit card4.23%5.06%6.13%Consumer banking:   Automobile(5)1.69%1.11%1.98%   Home loan(6)0.530.600.71   Retail banking(6)1.671.732.24      Total consumer banking(6)1.32%1.01%1.57%Commercial banking:   Commercial and multifamily real estate(6)0.12%0.39%0.56%   Middle market (6)0.410.130.18   Specialty lending0.440.470.30      Total commercial lending(6)0.28%0.30%0.38%   Small-ticket commercial real estate2.193.777.14      Total commercial banking(6)0.37%0.50%0.79%Other loans6.39%10.57%19.91%      Total2.52%2.91%3.66%30+ day performing delinquency ratesCredit card:   Domestic credit card3.65%3.33%3.59%   International credit card5.355.305.55      Total credit card3.87%3.60%3.88%Consumer banking:   Automobile6.34%6.09%5.79%   Home loan(6)0.780.700.61   Retail banking(6)0.890.760.93      Total consumer banking(6)4.01%3.70%3.42%Nonperforming asset rates(7) (8)Consumer banking:   Automobile0.53%0.49%0.39%   Home loan(6)4.744.404.34   Retail banking(6)2.372.452.44      Total consumer banking(6)2.04%2.00%2.00%Commercial banking:   Commercial and multifamily real estate(6)2.16%2.35%2.63%   Middle market (6)1.041.191.14   Specialty lending0.870.951.19      Total commercial lending(6)1.54%1.71%1.86%   Small-ticket commercial real estate1.580.753.39      Total commercial banking(6)1.55%1.66%1.95%CAPITAL ONE FINANCIAL CORPORATION (COF)Table 7:  Financial & Statistical Summary - Credit Card Business201120112011(Dollars in millions) (unaudited)Q3Q2Q1Credit CardEarnings:  Net interest income$   2,042$   1,890$   1,941  Non-interest income678619674  Total revenue$   2,720$   2,509$   2,615  Provision for loan and lease losses511309450  Non-interest expense1,1881,2381,178  Income from continuing operations before taxes1,021962987  Income tax provision358344344  Income from continuing operations, net of tax$      663$      618$      643Selected metrics:  Period end loans held for investment$ 62,030$ 62,705$ 59,305  Average loans held for investment62,37162,69160,586  Average yield on loans held for investment14.84%13.83%14.68%  Revenue margin17.4416.0117.26  Net charge-off rate4.235.066.13  30+ day delinquency rate(9)3.873.603.88  Purchase volume(10)$ 34,918$ 34,226$ 27,797Domestic CardEarnings:  Net interest income$   1,753$   1,607$   1,651  Non-interest income588584583  Total revenue$   2,341$   2,191$   2,234  Provision for loan and lease losses381187230  Non-interest expense9721,008990  Income from continuing operations before taxes9889961,014  Income tax provision351354360  Income from continuing operations, net of tax$      637$      642$      654Selected metrics:  Period end loans held for investment$ 53,820$ 53,994$ 50,570  Average loans held for investment53,66853,86851,889  Average yield on loans held for investment14.62%13.52%14.42%  Revenue margin17.4516.2717.22  Net charge-off rate(4)3.924.746.20  30+ day delinquency rate(9)3.653.333.59  Purchase volume(10)$ 31,686$ 31,070$ 25,024International CardEarnings:  Net interest income$      289$      283$      290  Non-interest income903591  Total revenue$      379$      318$      381  Provision for loan and lease losses130122220  Non-interest expense216230188  Income (loss) from continuing operations before taxes33(34)(27)  Income tax provision (benefit)7(10)(16)  Income (loss) from continuing operations, net of tax$        26$      (24)$      (11)Selected metrics:  Period end loans held for investment$   8,210$   8,711$   8,735  Average loans held for investment8,7038,8238,697  Average yield on loans held for investment16.24%15.77%16.28%  Revenue margin17.4214.4217.52  Net charge-off rate6.157.025.74  30+ day delinquency rate(9)5.355.305.55  Purchase volume(10)$   3,232$   3,156$   2,773CAPITAL ONE FINANCIAL CORPORATION (COF)Table 8:  Financial & Statistical Summary - Consumer Banking Business201120112011(Dollars in millions) (unaudited)Q3Q2Q1Consumer BankingEarnings:Net interest income$   1,097$   1,051$      983Non-interest income188194186Total revenue$   1,285$   1,245$   1,169Provision for loan and lease losses1364195Non-interest expense853758740Income from continuing operations before taxes296446334Income tax provision106159119Income from continuing operations, net of tax$      190$      287$      215Selected metrics:Period end loans held for investment$ 35,352$ 34,592$ 34,306Average loans held for investment34,86234,44134,236Average yield on loans held for investment9.83%9.51%9.60%Auto loan originations$   3,409$   2,910$   2,571Period end deposits88,58987,28286,355Average deposits88,26686,92683,884Deposit interest expense rate0.95%1.00%1.06%Core deposit intangible amortization$        32$        34$        35Net charge-off rate(5)(6)1.32%1.01%1.57%Nonperforming loans as a percentage of loans held for investment(5)(6)1.881.831.84Nonperforming asset rate(6)(7)2.042.002.0030+ day performing delinquency rate(6)(7)4.013.703.42Period end loans serviced for others$ 18,624$ 19,226$ 19,956CAPITAL ONE FINANCIAL CORPORATION (COF)Table 9:  Financial & Statistical Summary - Commercial Banking Business201120112011(Dollars in millions) (unaudited)Q3Q2Q1Commercial BankingEarnings:Net interest income$      353$      333$      321Non-interest income626271Total revenue$      415$      395$      392Provision for loan and lease losses(10)(18)(15)Non-interest expense200192177Income from continuing operations before taxes225221230Income tax provision 807982Income from continuing operations, net of tax$      145$      142$      148Selected metrics:Period end loans held for investment$ 32,105$ 31,203$ 30,017Average loans held for investment31,34530,31629,793Average yield on loans held for investment4.69%4.74%4.80%Period end deposits$ 25,282$ 24,304$ 24,244Average deposits25,22724,28224,138Deposit interest expense rate0.48%0.52%0.55%Core deposit intangible amortization$        10$        10$        11Net charge-off rate(6)0.37%0.50%0.79%Nonperforming loans as a percentage of loans held for investment(6)1.431.541.84Nonperforming asset rate(6)1.551.661.95Risk category:(11)Noncriticized$ 29,374$ 28,459$ 27,008Criticized performing1,7811,7651,924Criticized nonperforming459481553Total non-PCI loans31,61430,70529,485Total PCI loans491498532Total$ 32,105$ 31,203$ 30,017% of period end held for investment commercial loans:Noncriticized91.49%91.21%89.98%Criticized performing5.555.666.41Criticized nonperforming1.431.541.84Total non-PCI loans98.4798.4098.23Total PCI loans1.531.601.77Total100.00%100.00%100.00%CAPITAL ONE FINANCIAL CORPORATION (COF)Table 10:  Financial & Statistical Summary -  Other and Total 201120112011(Dollars in millions) (unaudited)Q3Q2Q1OtherEarnings:Net interest expense$      (209)$      (138)$      (105)Non-interest income (expense)(57)(18)11Total revenue$      (266)$      (156)$        (94)Provision for loan and lease losses(15)114Non-interest expense566767Loss from continuing operations before taxes(307)(234)(165)Income tax benefit(174)(132)(191)Income (loss) from continuing operations, net of tax$      (133)$      (102)$          26Selected metrics:Period end loans held for investment(4)$        465$        465$        464Average loans held for investment(4)465468462Period end deposits14,44714,53114,847Average deposits14,77514,62616,136TotalEarnings:Net interest income$     3,283$     3,136$     3,140Non-interest income871857942Total revenue$     4,154$     3,993$     4,082Provision for loan and lease losses622343534Non-interest expense2,2972,2552,162Income from continuing operations before taxes1,2351,3951,386Income tax provision370450354Income from continuing operations, net of tax$        865$        945$     1,032Selected metrics:  Period-end loans held for investment$ 129,952$ 128,965$ 124,092  Average loans held for investment129,043127,916125,077  Period end deposits128,318126,117125,446  Average deposits128,268125,834124,158CAPITAL ONE FINANCIAL CORPORATION (COF)Table 11:  Notes to Loan and Segment Disclosures (Tables 6 ? 10)(1)Certain prior period amounts have been reclassified to conform to the current period presentation.(2)   Amounts for Q3 2011 and Q2 2011 reflect 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 $3.7 billion at acquisition.(3)Other loans held for investment includes unamortized premiums and discounts on loans acquired as part of the North Fork and Hibernia acquisitions.(4)In accordance with our loss-sharing agreement with Kohl's, charge-offs for the portfolio are reported net of any reimbursement of credit losses from Kohl's, which has the impact of lowering the overall Domestic Card charge-off rate. (5)The third quarter 2011 annualized net charge-off rate for Auto reflects the impact of a true-up of recoveries for certain bankruptcy-related Auto loans that were previously charged-off, which resulted in a decrease in the annualized net charge off rate of 19 basis points in the Q3 2011.  (6)PCI loans acquired as part of the CCB acquisition are included in the denominator used in calculating the credit quality ratios presented in Tables 6-10. These metrics excluding the impact of loans acquired from CCB from the denominator are presented below:201120112011(Dollars in millions) (unaudited)Q3Q2Q1CCB period end acquired loan portfolio$ 4,873$ 5,181$ 5,351CCB average acquired loan portfolio4,9985,1125,305Net charge-off rates  Consumer banking:     Home loan0.87%0.98%1.16%     Retail banking1.691.762.32         Total consumer banking1.51%1.17%1.82%  Commercial banking:     Commercial and multifamily real estate0.12%0.40%0.57%     Middle market0.420.130.18         Total commercial lending0.28%0.31%0.38%         Total commercial banking0.38%0.51%0.80%30+ day performing delinquency rates  Consumer banking:     Home loan1.28%1.18%1.02%     Retail banking0.900.770.93         Total consumer banking4.57%4.29%3.98%Nonperforming asset rates  Consumer banking:     Home loan7.80%7.38%7.24%     Retail banking2.402.482.44         Total consumer banking2.33%2.32%2.32%  Commercial banking:     Commercial and multifamily real estate2.18%2.39%2.68%     Middle market1.071.221.17         Total commercial lending1.57%1.73%1.90%         Total commercial banking1.57%1.68%1.99%Nonperforming loans as a percentage of loans held for investment  Consumer banking2.15%2.12%2.14%  Commercial banking1.451.561.88(7)Nonperforming assets consist of nonperforming loans, 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.(8)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.(9)The September 30, 2011 30+ day delinquency rate for Domestic Card reflects the impact of a change in the way we estimate recoveries in determining the uncollectible amount of finance charges and fees, which resulted in an increase of 11 basis points as of September 30, 2011.  For International Card, the change did not have a significant impact on the 30+ day delinquency rate as of September 30, 2011.(10)Includes credit card purchase transactions net of returns.  Excludes cash advance transactions.(11)Criticized exposures correspond to the "Special Mention," "Substandard" and "Doubtful" asset categories defined by banking regulatory authorities.CAPITAL ONE FINANCIAL CORPORATION (COF) Table 12: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures In 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. 201120112011(Dollars in millions)(unaudited)Q3Q2Q1Average Equity to Non-GAAP Average Tangible Common EquityAverage total stockholders' equity$   29,316$   28,255$   27,009Less:  Average intangible assets (1)(13,990)(14,025)(14,001)Average tangible common equity$   15,326$   14,230$   13,008Stockholders' Equity to Non-GAAP Tangible Common EquityTotal stockholders' equity$   29,378$   28,681$   27,550Less:  Intangible assets (1)(13,953)(14,006)(14,030)Tangible common equity$   15,425$   14,675$   13,520Total Assets to Tangible AssetsTotal assets$ 200,148$ 199,753$ 199,300Less:  Assets from discontinued operations(304)(32)(342)Total assets from continuing operations199,844199,721198,958Less:  Intangible assets (1)(13,953)(14,006)(14,030)Tangible assets$ 185,891$ 185,715$ 184,928Non-GAAP TCE RatioTangible common equity$   15,425$   14,675$   13,520Tangible assets185,891185,715184,928TCE ratio(2)8.3%7.9%7.3%Non-GAAP Tier 1 Common Equity and Regulatory Capital RatiosTotal stockholders' equity$   29,378$   28,681$   27,550Less:  Net unrealized (gains) losses on AFS securities recorded in AOCI (3)(401)(482)(314)Net (gains) losses on cash flow hedges recorded in AOCI(3)547195Disallowed goodwill and other intangible assets(13,899)(13,954)(13,993)Disallowed deferred tax assets(227)(647)(1,377)Other (2)(2)(2)Tier 1 common equity$   14,903$   13,667$   11,959Plus:  Tier 1 restricted core capital items(4)3,6363,6363,636Tier 1 capital$   18,539$   17,303$   15,595Plus:  Long-term debt qualifying as Tier 2 capital2,4382,7272,827Qualifying allowance for loan and lease losses1,8971,8641,825Other Tier 2 components242820Tier 2 capital$     4,359$     4,619$     4,672Total risk-based capital(5)$   22,898$   21,922$   20,267Risk-weighted assets(6)$ 149,050$ 146,201$ 142,495Tier 1 common equity ratio (7)10.0%(10)9.4%8.4%Tier 1 risk-based capital ratio (8)12.4(10)11.810.9Total risk-based capital ratio (9)15.4(10)15.014.2___________________(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-weighed assets.(9)Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighed assets.(10)Capital ratios as of the end of Q3 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; Media Relations: Julie Rakes, +1-804-284-5800 or Tatiana Stead, +1-703-720-2352