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Press release from PR Newswire

Capital One Reports First Quarter 2012 Net Income of $1.4 billion, or $2.72 per share

Thursday, April 19, 2012

Capital One Reports First Quarter 2012 Net Income of $1.4 billion, or $2.72 per share16:09 EDT Thursday, April 19, 2012Excluding the impact of a bargain purchase gain related to acquisition of ING Direct, first quarter net income was $809 million, or $1.56 per share.MCLEAN, Va., April 19, 2012 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the first quarter of 2012 of $1.4 billion, or $2.72 per diluted common share. Without the impact of a bargain purchase gain related to the ING Direct acquisition, first quarter 2012 net income would have been $809 million, or $1.56 per diluted common share. This compares with net income of $407 million, or $0.88 per diluted common share, for the fourth quarter of 2011, and net income of $1.0 billion, or $2.21 per diluted common share, for the first quarter of 2011.   "We completed the ING Direct acquisition in the quarter, and we're thrilled to welcome the customers and associates of ING Direct to Capital One.  We now look forward to completing the acquisition of the HSBC US card business in the second quarter," said Richard Fairbank, Chairman and Chief Executive Officer.  "The combination of Capital One, ING Direct and the HSBC US card business puts us in an even stronger position to create sustained shareholder value through growth potential, strong returns and strong capital generation.  We're focused on delivering that value, including distributing capital to shareholders through a meaningful dividend and share buybacks, consistent with our long-standing commitment to maintaining a strong and resilient capital base."  Total Company ResultsAll comparisons in the following paragraphs are for first quarter 2012 compared to fourth quarter 2011 unless otherwise noted.    Loan and Deposit BalancesAverage loans increased $21.3 billion in the quarter, driven largely by the February 17, 2012 acquisition of ING Direct. Average loan balances in legacy businesses grew by $2 billion as the modest decline in the Domestic Card business attributable to expected seasonal paydowns were more than offset by growth in the Commercial Lending and Auto Finance businesses. Period-end loan balances increased $37.9 billion to $173.8 billion.  Period-end total deposits grew $88.3 billion, including the addition of $84.4 billion of deposits from the acquisition of ING Direct, to $216.5 billion. RevenuesTotal revenue in the first quarter of 2012 was $4.9 billion, up $885 million, or 22 percent. Higher revenue in our legacy businesses was driven in part by increased average loan balances and favorable margins.  In addition, non-interest income includes a bargain purchase gain of $594 million recognized in earnings for the quarter attributable to the February 17, 2012 acquisition of ING Direct. First quarter revenue also reflects a $160 million benefit related to the company's sale of Visa stock and subsequent reserve adjustments and the absence of approximately $150 million of unique contra-revenue items recorded in the fourth quarter.  These benefits were partially offset by a $75 million one-time reserve addition associated with Domestic Card.MarginsNet interest margin declined 102 basis points to 6.20 percent in the quarter as a result of the on-boarding of ING Direct's lower yielding assets and temporarily high cash balances.  Non-Interest ExpenseNon-interest expense for the first quarter, inclusive of ING Direct related expenses, decreased $114 million primarily due to a decline in marketing expense and a modest decrease in legacy operating expense.Pre-Provision Earnings (before tax)Pre-provision earnings increased in the quarter as a result of higher revenue due to the impacts of the ING Direct acquisition, higher loan balances in several legacy businesses and the absence of non-recurring items recorded in the fourth quarter of 2011.Provision ExpenseStrong credit performance led to a $288 million decrease in provision expense in the quarter, driven by both lower charge-offs and a larger allowance release. The charge-off rate decreased 65 basis points to 2.04 percent, while the coverage ratio of allowance to loans fell by 79 basis points to 2.34 percent. This drop was significantly impacted by the ING Direct loan.Net IncomeNet income in the quarter increased $996 million inclusive of a bargain purchase gain of $594 million attributable to the acquisition of ING Direct. In addition to the ING Direct bargain purchase gain, the increase in earnings was primarily driven by higher revenue and lower non-interest and provision expenses in our legacy businesses.Capital RatiosThe company's estimated Tier 1 common ratio increased 220 basis points from December 31, 2011, to   11.9 percent as of March 31, 2012, driven by strong retained earnings growth and capital actions related to the financing of the company's two acquisitions.  The company expects to close the acquisition of HSBC's US card portfolio in the second quarter of 2012, and expects that the acquisition will have a significant impact on reported results, especially in 2012, due to the purchase accounting effects, integration expenses and partial year impacts of the acquisition.   Tier 1 common ratio, as used throughout this release, is a regulatory capital measure. For additional information, see Table 13 in the Financial Supplement.Business Segment ResultsCredit Card HighlightsIn the first quarter, Domestic Card delivered strong profits, improving credit and solid year-over-year growth in loans and purchase volumes. Net income in the first quarter was $515 million, an increase of 30.4 percent over the previous quarter. Total revenue declined 4.7 percent in the first quarter of 2012 driven by a one-time reserve addition in the first quarter.Credit performance improved in the quarter. Domestic Card net charge-off rate decreased 15 basis points in the quarter to 3.92 percent, and delinquencies declined 41 basis points to 3.25 percent, consistent with expected seasonal patterns.Domestic Card loan balances declined seasonally in the quarter by $3.4 billion to $53.2 billion. Compared to the first quarter of last year, loans grew 5.1 percent. Purchase volume grew 25.6 percent from the first quarter of 2011 and 14.6 percent excluding the Kohl's portfolio.  Consumer Banking HighlightsConsumer Banking delivered net income of $224 million in the first quarter of 2012, driven by the addition of ING Direct and strong results in Auto Finance. The significant increases in loan and deposit volumes, revenue and non-interest expense were all driven by the addition of ING Direct in the quarter.Period-end loan balances were up $41.0 billion, including $40.4 billion of loan balances attributable to the acquisition of ING Direct. Additionally, auto loans grew $1.8 billion. Growth in auto loans resulted from traction in geographic expansion and the company's strategy to deepen relationships with its most valued auto dealers.  Auto Finance originations in the quarter were $4.3 billion, up 19.1 percent from the fourth quarter of 2011. The company expects that the sizeable run-off of the ING Direct home loan portfolio and the continuing run-off of the legacy Home Loan portfolio will more than offset the growth in auto loans, driving a declining trend in Consumer Banking loan balances for several years.  Provision expense declined, with lower charge-offs in both the Home Loan portfolio and Auto Finance, partially offset by an allowance build driven by the increase in auto loan balances.  Charge-off rates improved with the addition of ING Direct home loans which have no charge-offs due to the credit mark recognized in purchase accounting and seasonal favorability in Auto Finance.  Consumer Banking deposits were $176.0 billion at the end of the quarter, an increase of $87.5 billion which includes $84.4 billion of deposits from the acquisition of ING Direct. Deposit interest expense decreased 11 basis points in the quarter.Commercial Banking HighlightsCommercial Banking delivered another quarter of solid profitability and steady loan growth, with total revenue of $516 million, up $4 million in the first quarter of 2012 and $69 million year-over-year. Net income increased $93 million to $210 million in the quarter.Period-end loans increased slightly from the prior quarter and 15.3 percent from the first quarter of 2011. Commercial deposits grew 5.1 percent in the quarter, and 15.2 percent year-over-year, with improvements in deposit interest expense.The charge-off rate for Commercial Banking was 0.19 percent, down 43 basis points from the prior quarter.  Excluding the run-off in the Small Ticket CRE portfolio, the charge-off rate in the core Commercial Lending businesses was zero in the quarter, an improvement of 47 basis points from the prior quarter. For more lending information and statistics on the segment results, please refer to the Financial Supplement.Forward-looking statementsThe company cautions that its current expectations in this release dated April 19, 2012 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, expenses, capital measures, 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 acquisition of ING Direct (the "ING Direct Transaction") and the pending acquisition of HSBC's U.S. credit card business (the "HSBC Transaction" and, with the ING Direct Transaction, 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 the company will not receive third-party consents necessary to fully realize the anticipated benefits of the HSBC Transaction; 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 the HSBC Transaction; difficulties and delays in integrating the assets and businesses acquired in the Transactions; business disruption during the pendency of or following the Transactions; diversion of management time on issues related to the Transactions, including integration of the assets and businesses acquired; 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; the accuracy of estimates and assumptions the company uses to determine the fair value of assets acquired and liabilities assumed in the Transactions, and the potential for its estimates or assumptions to change as additional information becomes available and the company completes the accounting analysis 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; the inability to sustain revenue and earnings growth; 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, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2011.About Capital OneCapital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., Capital One Bank (USA), N. A., and ING Bank, fsb, had $216.5 billion in deposits and $294.5 billion in total assets outstanding as of March 31, 2012. Headquartered in McLean, Virginia, Capital One and ING Direct offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. 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 SupplementFirst Quarter 2012 (1)(2)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 Statistics6Table   7:Loan Information and Performance Statistics (Excluding Acquired Loans) (3)7Business Segment DetailTable   8:Financial & Statistical Summary?Credit Card Business8Table   9:Financial & Statistical Summary?Consumer Banking Business9Table 10:Financial & Statistical Summary?Commercial Banking Business10Table 11:Financial & Statistical Summary?Other and Total 11Table 12:Notes to Loan and Business Segment Disclosures (Tables 6 ? 11)12OtherTable 13:Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures13(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 March 31, 2012 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission. (2)References to ING Direct refer to the business and assets acquired and liabilities assumed in the February 17, 2012 acquisition.(3)Acquired loans consist of the substantial majority of loans acquired in the Chevy Chase Bank and ING Direct business combinations, which were recorded at fair value at acquisition and accounted for under applicable accounting guidance.  This accounting methodology takes into consideration estimated credit losses expected to be realized over the remaining lives of the loans.  Accordingly, we present certain credit quality metrics excluding the impact of these loans where applicable. CAPITAL ONE FINANCIAL CORPORATION (COF)Table 1:  Financial & Statistical Summary?Consolidated (1)201220112011(Dollars in millions, except per share data and as noted) (unaudited)Q1 (2)Q4Q1EarningsNet interest income$         3,414$              3,182$              3,140Non-interest income (3) (4)1,521868942Total revenue (5)4,9354,0504,082Provision for credit losses573861534Marketing expenses321420276Operating expenses (6)2,1832,1981,886Income from continuing operations before income taxes 1,8585711,386Income tax provision353160354Income from continuing operations, net of tax1,5054111,032Loss from discontinued operations, net of tax(3)(102)(4)(16)Net income1,4034071,016Dividends and undistributed earnings allocated to participating securities(7)(26)?Net income available to common stockholders$         1,396$                 381$              1,016Common Share StatisticsBasic EPS:    Income from continuing operations, net of tax$           2.94$                0.89$                2.27   Loss from discontinued operations, net of tax(0.20)(0.01)(0.03)   Net income per common share $           2.74$                0.88$                2.24Diluted EPS:    Income from continuing operations, net of tax$           2.92$                0.89$                2.24   Loss from discontinued operations, net of tax(0.20)(0.01)(0.03)   Net income per common share$           2.72$                0.88$                2.21Weighted average common shares outstanding (in millions):   Basic EPS508.7456.2454.1   Diluted EPS513.1458.5460.3Common shares outstanding (period end) 580.2459.9458.7Dividends per common share$           0.05$                0.05$                0.05Tangible book value per common share (period end)(7)39.3734.2629.47Balance Sheet (Period End)Loans held for investment (8)$      173,822$           135,892$           124,092Interest-earning assets265,398179,878172,870Total assets294,481206,019199,300Tangible assets(9)280,067191,806184,928Interest-bearing deposits197,254109,945109,097Total deposits216,528128,226125,446Borrowings32,88539,56139,797Stockholders' equity36,95029,66627,550Balance Sheet (Quarterly Average Balances)Average loans held for investment (8)$      152,900$           131,581$           125,077Average interest-earning assets220,246176,271173,440Average total assets246,384200,106198,075Average interest-bearing deposits151,625109,914108,633Average total deposits170,259128,450124,158Average borrowings35,99434,81240,538Average stockholders' equity32,98229,69827,009Performance MetricsNet interest income growth (quarter over quarter) 7%(3)%4%Non-interest income growth(quarter over quarter)75??Revenue growth(quarter over quarter)22(3)3Revenue margin (10)8.969.199.41Net interest margin (11)6.207.227.24Return on average assets (12)2.440.822.08Return on average equity (13)18.255.5415.28Return on average tangible common equity(14)31.6010.4331.73Non-interest expense as a % of average loans held for investment (15)6.557.966.91Efficiency ratio(16)50.7464.6452.96Effective income tax rate19.028.025.5Full-time equivalent employees (in thousands)34.230.527.9Credit Quality Metrics Allowance for loan and lease losses $         4,060$              4,250$              5,067Allowance as a % of loans held for investment 2.34%3.13%4.08%Allowance as a % of loans held for investment (excluding acquired loans) 3.083.224.23Net charge-offs $            780$                 884$              1,145Net charge-off rate (17) (18)2.04%2.69%3.66%Net charge-off rate (excluding acquired loans) 2.402.793.8230+ day performing delinquency rate  (19)2.233.353.0730+ day performing delinquency rate (excluding acquired loans)2.963.473.1830+ day delinquency rate(20) ?3.953.79Capital RatiosTier 1 risk-based capital ratio (21)13.9%12.0%10.9%Tier 1 common ratio (22)11.99.78.4Total risk-based capital ratio (23)16.514.914.2Tangible common equity (TCE) ratio(24)8.28.27.3 CAPITAL ONE FINANCIAL CORPORATION (COF)Table 2:  Notes to Consolidated Financial & Statistical Summary (Table 1)(1)Certain prior period amounts have been reclassified to conform to the current period presentation.(2)Results for Q1 2012 include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans with an outstanding principal and interest loan balance of $40.4 billion and deposits of $84.4 billion at acquisition.(3)The mortgage representation and warranty reserve increased to $1.1 billion as of March 31, 2012, from $943 million as of December 31, 2011. We recorded a provision for repurchase losses of $169 million in Q1 2012, $59 million in Q4 2011, and $44 million in Q1 2011. The majority of the provision for repurchase losses is generally included in discontinued operations, with the remaining portion included in non-interest income.  (4)Includes a bargain purchase gain of $594 million recognized in earnings in Q1 2012 attributable to the February 17, 2012 acquisition of ING Direct. (5)The estimated uncollectible amount of billed finance charges and fees excluded from revenue totaled $123 million in Q1 2012, $130 million in Q4 2011, and $105 million in Q1 2011. (6)Includes merger-related expenses attributable to acquisitions of $86 million in Q1 2012 and $27 million in Q4 2011. Also, includes core deposit intangible amortization expense of $46 million in Q1 2012, $40 million in Q4 2011, and $45 million in Q1 2011. (7)Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of tangible common equity.(8)See Table 7 for additional information on acquired loans and our credit quality metrics excluding acquired loans.(9)Tangible assets is a non-GAAP measure consisting of total assets less assets from discontinued operations and intangible assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this measure.(10)Calculated based on annualized total revenue for the period divided by average interest-earning assets for the period.(11)Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.(12)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period. (13)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average stockholders' equity for the period. (14)Calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible common equity for the period. (15)Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period.(16)Calculated based on non-interest expense for the period divided by total revenue for the period. (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)The 30+ day performing delinquency rate for acquired loans, which is presented below, is calculated based on the contractual past due unpaid principal balance divided by the total outstanding unpaid principal balance of acquired loans as of the end of each period.201220112011(Dollars in millions) (unaudited) Q1Q4Q1Total period-end acquired loan portfolio (unpaid principal balance)$44,798$5,751$6,69830+ day performing delinquency rates (acquired loans)3.05%3.05%2.97%(20)The 30+ day total delinquency rate as of the end of Q1 2012 will be provided in the March 31, 2012 Quarterly Report on Form 10-Q.(21)Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.(22)Tier 1 common ratio is a regulatory capital measure calculated based on Tier 1 common capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.(23)Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.(24)TCE ratio is a non-GAAP measure calculated based on tangible common equity divided by tangible assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio and non-GAAP reconciliation.CAPITAL ONE FINANCIAL CORPORATION (COF)Table 3:  Consolidated Statements of IncomeThree Months EndedMarch 31,December 31,March 31,(Dollars in millions, except per share data) (unaudited)201220112011Interest income:Loans held for investment, including past-due fees$             3,655$                    3,440$                  3,417Investment securities298244316Other261719Total interest income3,9793,7013,752Interest expense:Deposits311264322Securitized debt obligations8080140Senior and subordinated notes888964Other borrowings868686Total interest expense565519612Net interest income3,4143,1823,140Provision for credit losses573861534Net interest income after provision for credit losses2,8412,3212,606Non-interest income:Service charges and other customer-related fees415452525Interchange fees, net328346320Net other-than-temporary impairment losses recognized in earnings(14)(6)(3)Bargain purchase gain (1)594??Other19876100Total non-interest income1,521868942Non-interest expense:Salaries and associate benefits891817741Marketing321420276Communications and data processing173177164Supplies and equipment150137135Occupancy123131119Other846936727Total non-interest expense2,5042,6182,162Income from continuing operations before income taxes1,8585711,386Income tax provision353160354Income from continuing operations, net of tax1,5054111,032Loss from discontinued operations, net of tax(102)(4)(16)Net income1,4034071,016Dividends and undistributed earnings allocated to participating securities(7)(26)?Net income available to common stockholders$             1,396$                       381$                   1,016Basic earnings per common share:  Income from continuing operations$               2.94$                      0.89$                     2.27  Loss from discontinued operations(0.20)(0.01)(0.03)  Net income per basic common share$               2.74$                      0.88$                     2.24Diluted earnings per common share:  Income from continuing operations$               2.92$                      0.89$                     2.24  Loss from discontinued operations(0.20)(0.01)(0.03)  Net income per diluted common share$               2.72$                      0.88$                     2.21Weighted average common shares outstanding (in millions):   Basic EPS508.7456.2454.1   Diluted EPS513.1458.5460.3Dividends paid per common share$               0.05$                      0.05$                     0.05(1) Represents the excess of the fair value of the net assets acquired in the ING Direct acquisition as of the acquisition date of February 17, 2012 over the consideration transferred. CAPITAL ONE FINANCIAL CORPORATION (COF)Table 4:  Consolidated Balance SheetsMarch 31,December 31,March  31,(Dollars in millions)(unaudited)201220112011Assets:Cash and due from banks$         27,341$         2,097$       2,028Interest-bearing deposits with banks3,0073,3995,397Federal funds sold and securites purchased under agreements to resell308342546Cash and cash equivalents30,6565,8387,971Restricted cash for securitization investors1,0907912,556Securities available for sale, at fair value60,81038,75941,566Loans held for investment:Unsecuritized loans held for investment128,92788,24275,184Restricted loans for securitization investors44,89547,65048,908Total loans held for investment173,822135,892124,092    Less: Allowance for loan and lease losses(4,060)(4,250)(5,067)Net loans held for investment169,762131,642119,025Loans held for sale, at lower-of-cost-or-fair-value627201117Accounts receivable from securitizations9694112Premises and equipment, net3,0622,7482,739Interest receivable1,1571,0291,025Goodwill13,59513,59213,597Other13,62611,32510,592Total assets$     294,481$      206,019$    199,300Liabilities:Interest payable$            384$             466$           411Customer deposits:Non-interest bearing deposits19,27418,28116,349Interest-bearing deposits197,254109,945109,097Total customer deposits216,528128,226125,446Securitized debt obligations15,47416,52724,506Other debt:Federal funds purchased and securities loaned or sold under agreements to repurchase7701,4641,970Senior and subordinated notes11,94811,0348,545Other borrowings4,69310,5364,776Total other debt17,41123,03415,291Other liabilities7,7348,1006,096Total liabilities257,531176,353171,750Stockholders' equity:Common stock655Paid-in capital, net25,13619,27419,141Retained earnings and accumulated other comprehensive income15,09413,63111,644Less:  Treasury stock, at cost(3,286)(3,244)(3,240)Total stockholders' equity36,95029,66627,550Total liabilities and stockholders' equity$      294,481$      206,019$      199,300 CAPITAL ONE FINANCIAL CORPORATION (COF)Table 5:  Average Balances, Net Interest Income and Net Interest Margin2012 Q12011 Q42011 Q1(Dollars in millions)(unaudited)AverageBalance Interest Income/ExpenseYield/Rate AverageBalance Interest Income/ExpenseYield/ Rate AverageBalance Interest Income/Expense Yield/ RateInterest-earning assets:Loans held for investment$ 152,900$  3,6559.56%$ 131,581$   3,44010.46%$  125,077$  3,41710.93%Investment securities 50,5432982.3639,0052442.5041,5323163.04Cash equivalents and other16,803260.625,685171.206,831191.11Total interest-earning assets $ 220,246$  3,9797.23%$ 176,271$   3,7018.40%$  173,440$  3,7528.65%Interest-bearing liabilities:Interest-bearing depositsNOW accounts$  24,912$       340.55%$  13,700$        120.35%$   13,648$         90.26%Money market deposit accounts76,3621310.6947,167870.7445,6131100.96Savings accounts31,743340.4331,422470.6026,801550.82Other consumer time deposits12,763742.3212,264772.5115,344992.58Public fund CD's of $100,000 or more84--8414.7614912.68CD's of $100,000 or more4,787373.094,748393.296,097473.08Foreign time deposits97410.4152910.7698110.41Total interest-bearing deposits$ 151,625$    3110.82%$ 109,914$      2640.96%$  108,633$    3221.19%Securitized debt obligations16,185801.9816,780801.9125,5151402.19Senior and subordinated notes10,268883.4310,237893.488,090643.16Other borrowings9,541863.617,794864.416,933864.96Total interest-bearing liabilities$ 187,619$    5651.20%$ 144,725$      5191.43%$   149,171$    6121.64%Net interest income/spread$  3,4146.03%$   3,1826.97%$  3,1407.01%Impact of non-interest bearing funding0.170.250.23Net interest margin6.20%7.22%7.24% CAPITAL ONE FINANCIAL CORPORATION (COF)Table 6: Loan Information and Performance Statistics (1)201220112011(Dollars in millions)(unaudited)Q1(2)Q4Q1Period-end Loans Held For InvestmentCredit card:   Domestic credit card $              53,173$            56,609$            50,570   International credit card8,3038,4668,735      Total credit card61,47665,07559,305Consumer banking:   Automobile23,56821,77918,342   Home loan49,55010,43311,741   Retail banking4,1824,1034,223      Total consumer banking77,30036,31534,306Commercial banking: (3)   Commercial and multifamily real estate15,70215,73613,791   Commercial and industrial17,76117,08814,694      Total commercial lending33,46332,82428,485   Small-ticket commercial real estate1,4431,5031,780      Total commercial banking34,90634,32730,265Other loans140175216     Total $            173,822$           135,892$           124,092Average Loans Held For InvestmentCredit card:   Domestic credit card $              54,131$            54,403$            51,889   International credit card8,3018,3618,697      Total credit card62,43262,76460,586Consumer banking:   Automobile22,58221,10118,025   Home loan 29,50210,68311,960   Retail banking4,1794,0074,251      Total consumer banking56,26335,79134,236Commercial banking: (3)   Commercial and multifamily real estate15,51414,92013,579   Commercial and industrial17,03816,37614,630      Total commercial lending32,55231,29628,209   Small-ticket commercial real estate1,4801,5471,818      Total commercial banking34,03232,84330,027Other loans173183228      Total$            152,900$           131,581$           125,077Net Charge-off RatesCredit card:   Domestic credit card (4)3.92%4.07%6.20%   International credit card5.525.775.74      Total credit card4.14%4.30%6.13%Consumer banking:   Automobile(5)1.41%2.07%1.98%   Home loan (5)0.200.900.71   Retail banking (5)1.391.442.24      Total consumer banking (5)0.77%1.65%1.57%Commercial banking: (3)   Commercial and multifamily real estate (5)0.09%0.75%0.58%   Commercial and industrial (5)(0.08)0.210.21      Total commercial lending (5)?%0.47%0.39%   Small-ticket commercial real estate4.243.737.14      Total commercial banking (5)0.19%0.62%0.80%Other loans23.30%24.08%38.33%      Total2.04%2.69%3.66%30+ Day Performing Delinquency Rates (6)Credit card:   Domestic credit card3.25%3.66%3.59%   International credit card5.145.185.55      Total credit card3.51%3.86%3.88%Consumer banking:   Automobile(5)4.87%6.88%5.79%   Home loan (5)0.150.890.61   Retail banking (5)0.800.830.93      Total consumer banking (5)1.63%4.47%3.42%Nonperforming Asset Rates (7) (8)Consumer banking:   Automobile(5)0.32%0.58%0.39%   Home loan (5)0.944.584.34   Retail banking (5)2.252.502.44      Total consumer banking (5)0.82%1.94%2.00%Commercial banking: (3)   Commercial and multifamily real estate (5)1.55%1.40%2.59%   Commercial and industrial (5)0.690.801.15      Total commercial lending (5)1.09%1.09%1.85%   Small-ticket commercial real estate4.352.863.39      Total commercial banking (5)1.23%1.17%1.94% CAPITAL ONE FINANCIAL CORPORATION (COF)Table 7: Loan Information and Performance Statistics (Excluding Acquired Loans)(1) (5)201220112011(Dollars in millions) (unaudited)Q1Q4Q1Total period-end acquired loan portfolio (9)$      43,132$      4,689$         5,351Total average acquired loan portfolio (9) 23,0674,7815,305Net Charge-off RatesConsumer banking:     Auto1.41%2.07%1.98%     Home loan0.821.481.16     Retail banking1.401.462.32         Total consumer banking1.29%1.87%1.82%Commercial banking:     Commercial and multifamily real estate0.09%0.76%0.59%     Commercial and industrial(0.08)0.220.22         Total commercial lending0.010.480.40         Total commercial banking0.19%0.63%0.81%30+ Day Performing Delinquency RatesConsumer banking:     Auto 4.88%6.90%5.83%     Home loan1.101.471.02     Retail banking0.810.840.93         Total consumer banking3.63%5.06%3.98%Nonperforming Asset RatesConsumer banking:     Auto0.32%0.58%0.39%     Home loan6.667.557.24     Retail banking2.282.522.44         Total consumer banking1.83%2.20%2.32%Commercial banking:     Commercial and multifamily real estate1.57%1.42%2.64%     Commercial and industrial0.700.811.17         Total commercial lending1.111.101.88         Total commercial banking1.25%1.18%1.97%Nonperforming Loans as a Percentage of Period-end Loans Held for Investment  Consumer banking1.71%2.03%2.14%  Commercial banking1.171.101.86CAPITAL ONE FINANCIAL CORPORATION (COF)Table 8:  Financial & Statistical Summary?Credit Card Business201220112011(Dollars in millions) (unaudited)Q1 (2)Q4Q1Credit CardEarnings:  Net interest income$                      1,992$               1,949$              1,941  Non-interest income598638674  Total revenue2,5902,5872,615  Provision for credit losses458600450  Non-interest expense1,2681,4311,178  Income from continuing operations before taxes864556987  Income tax provision298203344  Income from continuing operations, net of tax$                        566$                  353$                 643Selected metrics:  Period-end loans held for investment$                    61,476$             65,075$            59,305  Average loans held for investment62,43262,76460,586  Average yield on loans held for investment14.41%14.12%14.68%  Revenue margin16.5916.4917.26  Net charge-off rate4.144.306.13  30+ day delinquency rate3.513.863.88  Purchase volume (10)$                    34,296$             38,179$            27,797Domestic CardEarnings:  Net interest income$                      1,713$               1,706$              1,651  Non-interest income497613583  Total revenue2,2102,3192,234  Provision for credit losses361519230  Non-interest expense1,0521,183990  Income from continuing operations before taxes7976171,014  Income tax provision282222360  Income from continuing operations, net of tax$                        515$                  395$                 654Selected metrics:  Period-end loans held for investment$                    53,173$             56,609$            50,570  Average loans held for investment54,13154,40351,889  Average yield on loans held for investment14.11%14.05%14.42%  Revenue margin16.3317.0517.22  Net charge-off rate (4)3.924.076.20  30+ day delinquency rate 3.253.663.59  Purchase volume (10)$                    31,418$             34,586$            25,024International CardEarnings:  Net interest income$                        279$                  243$                 290  Non-interest income1012591  Total revenue380268381  Provision for credit losses9781220  Non-interest expense216248188  Income (loss) from continuing operations before taxes67(61)(27)  Income tax provision (benefit)16(19)(16)  Income (loss) from continuing operations, net of tax$                          51$                   (42)$                  (11)Selected metrics:  Period-end loans held for investment$                      8,303$               8,466$              8,735  Average loans held for investment8,3018,3618,697  Average yield on loans held for investment16.38%14.57%16.28%  Revenue Margin18.3112.8217.52  Net charge-off rate5.525.775.74  30+ day delinquency rate 5.145.185.55  Purchase volume (10)$                      2,878$               3,593$              2,773CAPITAL ONE FINANCIAL CORPORATION (COF)Table 9:  Financial & Statistical Summary?Consumer Banking Business201220112011(Dollars in millions) (unaudited)Q1 (2)Q4Q1Consumer BankingEarnings:Net interest income$       1,288$              1,105$                 983Non-interest income176152186Total revenue1,4641,2571,169Provision for credit losses17418095Non-interest expense943893740Income from continuing operations before taxes347184334Income tax provision12367119Income from continuing operations, net of tax$          224$                 117$                 215Selected metrics:Period-end loans held for investment $      77,300$            36,315$            34,306Average loans held for investment 56,26335,79134,236Average yield on loans held for investment7.20%9.46%9.60%Auto loan originations$       4,270$              3,586$              2,571Period-end deposits176,00788,54086,355Average deposits 129,91588,39083,884Deposit interest expense rate0.73%0.84%1.06%Core deposit intangible amortization$            37$                   31$                   35Net charge-off rate (5)0.77%1.65%1.57%30+ day performing delinquency rate (5) (6) 1.634.473.4230+ day delinquency rate (5) (6)?5.994.96Nonperforming loans as a percentage of loans held for investment (5) (7) 0.771.791.84Nonperforming asset rate (5) (7)0.821.942.00Period-end loans serviced for others$      17,586$            17,998$            19,956CAPITAL ONE FINANCIAL CORPORATION (COF)Table 10:  Financial & Statistical Summary?Commercial Banking Business201220112011(Dollars in millions) (unaudited)Q1(2)Q4Q1Commercial Banking(3)(12)Earnings:Net interest income$              431$                 425$                 376Non-interest income858771Total revenue516512447Provision for credit losses(69)76(16)Non-interest expense261254212Income from continuing operations before taxes324182251Income tax provision 1146589Income from continuing operations, net of tax$              210$                 117$                 162Selected metrics:Period-end loans held for investment $          34,906$            34,327$            30,265Average loans held for investment 34,03232,84330,027Average yield on loans held for investment4.47%4.70%4.81%Period-end deposits $          28,046$            26,683$            24,336Average deposits 27,56926,18524,232Deposit interest expense rate0.37%0.42%0.55%Core deposit intangible amortization$                  9$                    9$                   11Net charge-off rate (5)0.19%0.62%0.80%Nonperforming loans as a percentage of loans held for investment (5) (7)1.151.081.83Nonperforming asset rate (5) (7) 1.231.171.94Risk category: (11)Noncriticized$          32,339$            31,617$            27,254Criticized performing1,6951,8571,925Criticized nonperforming402372554    Total risk-rated loans34,43633,84629,733Acquired commercial loans470481532    Total commercial loans$          34,906$            34,327$            30,265% of period-end held for investment commercial loans:Noncriticized92.64%92.11%90.05%Criticized performing4.865.416.36Criticized nonperforming1.151.081.83    Total risk-rated loans98.6598.6098.24Acquired commercial loans1.351.401.76    Total commercial loans100.00%100.00%100.00% CAPITAL ONE FINANCIAL CORPORATION (COF)Table 11:  Financial & Statistical Summary?Other and Total 201220112011(Dollars in millions) (unaudited)Q1 (2)Q4Q1Other (3)Earnings:Net interest expense$         (297)$                (297)$                (160)Non-interest income (expense)662(9)11Total revenue365(306)(149)Provision for credit losses1055Non-interest expense324032Loss from continuing operations before taxes323(351)(186)Income tax benefit(182)(175)(198)Income (loss) from continuing operations, net of tax$          505$                (176)$                   12Selected metrics:Period-end loans held for investment$          140$                 175$                 216Average loans held for investment173183228Period-end deposits12,47513,00314,755Average deposits12,77513,87516,042TotalEarnings:Net interest income$       3,414$              3,182$              3,140Non-interest income1,521868942Total revenue4,9354,0504,082Provision credit losses573861534Non-interest expense2,5042,6182,162Income from continuing operations before taxes1,8585711,386Income tax provision353160354Income from continuing operations, net of tax$       1,505$                 411$              1,032Selected metrics:  Period-end loans held for investment $   173,822$           135,892$           124,092  Average loans held for investment152,900131,581125,077  Period-end deposits216,528128,226125,446  Average deposits170,259128,450124,158 CAPITAL ONE FINANCIAL CORPORATION (COF)Table 12:  Notes to Loan and Business Segment Disclosures (Tables 6 ? 11)(1)Certain prior period amounts have been reclassified to conform to the current period presentation.(2) Results for Q1 2012 include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans with an outstanding principal and interest loan balance of $40.4 billion and deposits of $84.4 billion at acquisition.(3)    In Q1 2012, we re-aligned the products within our Commercial Banking segment to reflect the business operations by product rather than by customer type.  As a result of this re-alignment, we now report three product categories: commercial and multifamily real estate, commercial and industrial loans and small-ticket commercial real estate.  Middle market and specialty lending related products are included in commercial and industrial loans.  All tax-related  investments, some of which were previously included in the "Other" segment, are included in the commercial and multifamily real estate category of our Commercial Banking segment.  (4) In accordance with our loss-sharing agreement with Kohl's, charge-offs for the portfolio are reported net of any reimbursement of credit losses from Kohl's, which has the impact of lowering the overall Domestic Card charge-off rate. (5) Loans acquired as part of the ING Direct and Chevy Chase Bank acquisitions are included in the denominator used in calculating the credit quality metrics presented in Table 6. These metrics excluding the impact of these acquired loans from the denominator are presented in Table 7.(6) The 30+ day performing delinquency rate for acquired loans, which is presented below, is calculated based on the contractual past due unpaid principal balance divided by the total outstanding unpaid principal balance of acquired loans as of the end of each period.201220112011(Dollars in millions) (unaudited)Q1Q4Q1Total period-end acquired loan portfolio (unpaid principal balance)$       44,256$     5,205$     6,10830+ day performing delinquency rates (acquired loans):Consumer banking:Auto4.30%5.31%3.72%     Home loan3.082.932.62     Retail banking5.422.209.35         Total consumer banking3.08%2.94%2.69%The 30+ day total delinquency rate as of the end of Q1 2012 will be provided in the March 31, 2012 Quarterly Report on Form 10-Q.(7)  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 category divided by the combined period-end total of loans held for investment, REO and foreclosed assets for each respective category.(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) Reported based on carrying value of acquired loans. See Table 2, footnote (19) for the outstanding unpaid principal balance as of the end of each period.(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 bank regulatory authorities.(12)  Because some of our tax-related commercial investments generate tax-exempt income or tax credits, we make certain reclassifications to our Commercial Banking business results to present revenues on a taxable-equivalent basis based on the assumption of approximately 35% effective tax rate. CAPITAL ONE FINANCIAL CORPORATION (COF)Table 13: 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") and TCE ratio. The table below provides the details of the calculation of our regulatory capital and non-GAAP capital measures. While our 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. 201220112011(Dollars in millions)(unaudited)Q1Q4Q1Average Equity to Non-GAAP Average Tangible Common EquityAverage total stockholders' equity$      32,982$     29,698$     27,009Less:  Average intangible assets(1)(13,931)(13,935)(14,001)Average tangible common equity$      19,051$     15,763$     13,008Stockholders' Equity to Non-GAAP Tangible Common EquityTotal stockholders' equity$      36,950$     29,666$     27,550Less:  Intangible assets(1)(14,110)(13,908)(14,030)Tangible common equity$      22,840$     15,758$     13,520Total Assets to Tangible AssetsTotal assets$    294,481$    206,019$    199,300Less:  Assets from discontinued operations(304)(305)(342)Total assets from continuing operations294,177205,714198,958Less:  Intangible assets(1)(14,110)(13,908)(14,030)Tangible assets$    280,067$    191,806$    184,928Non-GAAP TCE RatioTangible common equity$      22,840$      15,758$      13,520Tangible assets280,067191,806184,928TCE ratio (2)8.2%8.2%7.3%Regulatory Capital Ratios (3)Total stockholders' equity$      36,950$     29,666$     27,550Less:  Net unrealized (gains) losses on AFS securities recorded in AOCI (4)(327)(289)(314)Net (gains) losses on cash flow hedges recorded in AOCI (4)707195Disallowed goodwill and other intangible assets(14,057)(13,855)(13,993)Disallowed deferred tax assets(902)(534)(1,377)Other (2)(2)(2)Tier 1 common capital$      21,732$     15,057$     11,959Plus:  Tier 1 restricted core capital items (5)3,6363,6353,636Tier 1 capital$      25,368$     18,692$     15,595Plus:  Long-term debt qualifying as Tier 2 capital2,4382,4382,827Qualifying allowance for loan and lease losses2,3151,9791,825Other Tier 2 components172320Tier 2 capital$        4,770$       4,440$       4,672Total risk-based capital (6)$      30,138$     23,132$     20,267Risk-weighted assets (7)$     182,779$   155,657$   142,495Tier 1 common ratio (8)11.9%9.7%8.4%Tier 1 risk-based capital ratio (9)13.912.010.9Total risk-based capital ratio (10)16.514.914.2___________________(1)Includes impact from related deferred taxes.(2)Calculated based on tangible common equity divided by tangible assets.  (3)Capital ratios as of the end of Q1 2012 are preliminary and therefore subject to change once the calculations have been finalized. (4)Amounts presented are net of tax.(5)Consists primarily of trust preferred securities.(6)Total risk-based capital equals the sum of Tier 1 capital and Tier 2 capital.(7)Calculated based on prescribed regulatory guidelines.(8)Tier 1 common ratio is a regulatory measure calculated based on Tier 1 common capital divided by risk-weighted assets.(9)Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighed assets.(10)Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighed assets. SOURCE Capital One Financial CorporationFor further information: Investor Relations: Jeff Norris, 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