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Capital One Reports First Quarter 2011 Net Income of $1.0 billion, or $2.21 Per Share

April 21, 2011 at 7:10 AM EDT

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Net Income improved $380 million, or 60 percent, from Q1 2010 and $319 million, or 46 percent, from Q4 2010
Results driven by positive credit trends and strong revenues
Card loan volumes declined consistent with historical seasonal trends; purchase volumes and account originations remain strong
Growth emerging in Auto and Commercial
Continued strong deposit growth
Strong capital generation: TCE increased to 7.3 percent from 6.9 percent; Tier 1 common dipped to 8.4 percent from 8.8 percent with the final phase-in of FAS 166/167

MCLEAN, Va., April 21, 2011 /PRNewswire via COMTEX/ --

Capital One Financial Corporation (NYSE: COF) today announced net income for the first quarter of 2011 of $1.0 billion, or $2.21 per common share, compared with net income of $636 million, or $1.40 per common share, in the first quarter of 2010 and net income of $697 million, or $1.52 per common share, in the fourth quarter of 2010.

"We are gaining momentum across our businesses, and the period of shrinking loans through the Great Recession came to an end in the first quarter," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Our solid first quarter results and our strong and resilient balance sheet put us in a good position to continue to generate capital and deliver strong and sustainable returns to our shareholders."

Total Company Results

  • Total revenue in the first quarter of 2011 of $4.1 billion increased $120 million, or 3.0 percent, from the fourth quarter of 2010, as a result of increasing margins and relatively stable average loans.
    • Net interest income increased $117 million, or 3.9 percent, from the prior quarter.
    • Net interest margin increased to 7.24 percent from 6.95 percent, driven by higher asset yields in the company's Card and Auto businesses and a nine basis point decrease in the company's cost of funds.
  • The cost of funds decreased to 1.41 percent in the first quarter from 1.50 percent in the prior quarter, driven by the mix shift toward lower-cost deposits.
  • Non-interest expense of $2.2 billion in the first quarter of 2011 increased $71 million, or 3.4 percent, from the prior quarter. One-time operating costs were partially offset by seasonally lower marketing expense.
  • Provision expense of $534 million in the first quarter decreased $305 million from the prior quarter, driven by a $249 million reduction in net charge-offs.
  • Net charge-offs as a percentage of average loans was 3.66 percent in the first quarter of 2011 compared with 4.45 percent in the prior quarter and 6.02 percent in first quarter of 2010.
  • Period-end loans held for investment declined $1.9 billion, or 1.5 percent, in the first quarter to $124.1 billion at March 31, 2011.
    • Excluding the expected run-off in the company's Installment Loan portfolio in Domestic Card, Home Loan portfolio in Consumer Banking and Small-Ticket Commercial Real Estate portfolio in Commercial Banking, total company loan balances declined approximately $824 million in the first quarter of 2011.
  • Average total deposits increased $2.4 billion, or 2.0 percent, during the quarter to $124.2 billion. Period-end total deposits increased by $3.2 billion, or 2.6 percent, to $125.4 billion.
  • The company's Tier 1 common equity ratio of 8.4 percent dipped 40 basis points from 8.8 percent in the prior quarter. The first quarter of 2011 marked the final quarter of the regulatory phase-in of the implementation of FAS 166/167.
  • The tangible common equity (TCE) ratio increased to 7.3 percent in the first quarter from 6.9 percent in the fourth quarter of 2010.

"We expect that our strong capital and capital generation will enable us to deploy substantial capital for the benefit of our shareholders," said Gary L. Perlin, Capital One's Chief Financial Officer.

Segment Results

The company reports the results of its business through three operating segments: Credit Card, Commercial Banking and Consumer Banking. Please refer to the Financial Supplement for additional details.

Credit Card Highlights

For more lending information and statistics on the segment results, please refer to the Financial Supplement.

  • Period-end loans in the Domestic Card segment were $50.6 billion in the first quarter, a decline of 6.1 percent from the prior quarter, as a result of the expected run-off of the Installment Loan portfolio and seasonal declines. Average loan balances in the quarter declined by 2.4 percent.
  • Excluding the run-off of the Installment Loans, loans declined $2.7 billion, or 5.3 percent, in Domestic Card compared to the fourth quarter of 2010.
  • First quarter Domestic Card purchase volumes grew $3.0 billion, or 13.8 percent, from the first quarter of 2010 but declined by $2.0 billion, or 7.3 percent, compared to the fourth quarter of 2010 due to seasonal patterns.
  • Domestic Card revenue margin increased 56 basis points to 17.22 percent in the first quarter from 16.66 percent in the prior quarter driven by continued favorable credit impacts and mix shifts within the portfolio.
  • Domestic Card provision expense decreased $275 million in the first quarter from the prior quarter. Strong underlying credit improvement trends, lower bankruptcy losses and higher recoveries more than offset expected seasonal headwinds.
  • International Card results were driven primarily by the acquisition of the Hudson's Bay Company (HBC) private label credit card portfolio in the quarter.
    • Credit card loans increased by $1.2 billion, or 16.1 percent, to $8.7 billion
    • Inclusion of HBC drove non-interest expense higher by approximately $30 million for the quarter
    • Higher provision was due primarily to a one-time allowance build for the HBC portfolio of $105 million
  • Net charge-off rates relative to the prior quarter:
    • Domestic Card - improved 108 basis points to 6.20 percent from 7.28 percent
    • International Card - improved 94 basis points to 5.74 percent from 6.68 percent
  • Delinquency rates relative to the prior quarter:
    • Domestic Card - improved 50 basis points to 3.59 percent from 4.09 percent
    • International Card - improved 20 basis points to 5.55 percent from 5.75 percent

Commercial Banking Highlights

For more lending information and statistics on the segment results, please refer to the Financial Supplement.

The Commercial Banking segment consists of commercial and multi-family real-estate, middle market lending and specialty lending.

  • Revenues of $392 million and period-end loans of $30.0 billion grew modestly compared to the fourth quarter.
  • Provision expense decreased $49 million from the fourth quarter to a negative provision of $15 million as a result of an allowance release and improving net charge-offs in the quarter.
  • Period-end deposits grew $1.6 billion, or 7.1 percent, from the fourth quarter to $24.2 billion. The deposit interest expense rate improved 6 basis points to 55 basis points.
  • Net charge-off rate relative to the prior quarter:
    • Total Commercial Banking - improved 64 basis points to 0.79 percent from 1.43 percent
    • Commercial lending - improved 62 basis points to 0.38 percent from 1.0 percent
  • Nonperforming asset rate relative to the prior quarter:
    • Total Commercial Banking - 1.95 percent, an increase of 15 basis points
    • Commercial lending - 1.86 percent, an increase of 10 basis points

Consumer Banking Highlights

For more lending information and statistics on the segment results, please refer to the Financial Supplement.

  • Revenues increased $23 million in the first quarter to $1.2 billion, driven by higher margins in the Auto Finance business. Non-interest expense decreased $30 million during the quarter, due primarily to reduced marketing expenditures.
  • Provision expense decreased $94 million, or nearly 50 percent, from the prior quarter as a result of better credit performance in Auto Finance, Home Loans and Retail Banking.
  • Net charge-off rates relative to the prior quarter:
    • Auto - 1.98 percent, a decline of 67 basis points
    • Home Loans - 0.71 percent, a decline of 18 basis points
    • Retail Banking - 2.24 percent, a decline of 16 basis points
  • Period-end loans were relatively stable in the first quarter with an increase in auto loans offset by continued run-off in home loans. Period-end loans relative to the prior quarter:
    • Auto - growth of $475 million, or 2.7 percent, to $18.3 billion
    • Home Loans - a decline of $362 million, or 3.0 percent, to $11.7 billion, due to continued run-off of the portfolio
    • Retail Banking - a decline of $190 million, or 4.3 percent, to $4.2 billion
  • Deposits in Consumer Banking showed strong growth in the quarter, with period-end deposits increasing $3.4 billion, or 4.1 percent from the fourth quarter, to $86.4 billion.

Tier 1 common equity ratio and related ratios, as used throughout this release, are non-GAAP financial measures. For additional information, see Table 12 in the Financial Supplement.

Forward looking statements

The company cautions that its current expectations in this release dated April 21, 2011, and the company's plans, objectives, expectations, and intentions, are forward-looking statements which speak only as of the date hereof. The company does not undertake any obligation to update or revise any of the information contained herein whether as a result of new information, future events or otherwise. Actual results could differ materially from current expectations due to a number of factors, including: general economic conditions in the U.S., the UK, Canada or the company's local markets, including conditions affecting consumer income, confidence, spending, and savings which may affect consumer bankruptcies, defaults, charge-offs, deposit activity, and interest rates; financial, legal, regulatory, tax or accounting changes or actions, including the impact of the Dodd-Frank Act and the regulations promulgated thereunder; developments, changes or actions relating to any litigation matter involving the company; increases or decreases in interest rates; the success of the company's marketing efforts in attracting or retaining customers; changes in the credit environment; increases or decreases in the company's aggregate loan balances or the number of customers and the growth rate and composition thereof; the level of future repurchase or indemnification requests the company may receive, the actual future performance of mortgage loans relating to such requests, the success rates of claimants against the company, any developments in litigation and the actual recoveries the company may make on any collateral relating to claims against it; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products, or financial condition; any significant disruption in the company's operations or technology platform; the company's ability to execute on its strategic and operational plans; changes in the labor and employment market; and competition from providers of products and services that compete with the company's businesses. A discussion of these and other factors can be found in the company's annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, the company's report on Form 10-K for the fiscal year ended December 31, 2010.

About Capital One

Capital One Financial Corporation (http://www.capitalone.com/) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N. A., had $125.4 billion in deposits and $199.3 billion in total assets outstanding as of March 31, 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.

NOTE:

First quarter 2011 financial results, SEC Filings, and earnings conference call slides are accessible on Capital One's home page (http://www.capitalone.com/). Choose "Investors" on the bottom of the home page to view and download the earnings press release, slides and other financial information. Additionally, a podcast and webcast of the earnings conference call is accessible through the same link.





Exhibit 99.2

Capital One Financial Corporation

Financial Supplement

First Quarter 2011

Table of Contents










Page

Capital One Financial Consolidated



Table 1:


Financial & Statistical Summary--Consolidated

1


Table 2:


Notes to Consolidated Financial & Statistical Summary (Table 1)

2


Table 3:


Consolidated Statements of Income

3


Table 4:


Consolidated Balance Sheets

4


Table 5:


Average Balances, Net Interest Income and Net Interest Margin

5


Table 6:


Loan Information and Performance Statistics

6

Business Segment Detail



Table 7:


Financial & Statistical Summary--Credit Card Business

7


Table 8:


Financial & Statistical Summary--Consumer Banking Business

8


Table 9:


Financial & Statistical Summary--Commercial Banking Business

9


Table 10:


Financial & Statistical Summary--Other and Total

10


Table 11:


Notes to Loan and Business Segment Disclosures (Tables 6 -- 10)

11

Other





Table 12:


Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures

12

CAPITAL ONE FINANCIAL CORPORATION (COF)








Table 1: Financial & Statistical Summary--Consolidated


















2011


2010


2010


(Dollars in millions, except per share data and as noted) (unaudited)


Q1


Q4


Q1


Earnings








Net interest income


$ 3,140


$ 3,023


$ 3,228


Non-interest income (1)(2)


942


939


1,061

(3)

Total revenue (4)


$ 4,082


$ 3,962


$ 4,289


Provision for loan and lease losses


534


839


1,478


Marketing expenses


276


308


180


Operating expenses (5)


1,886


1,783


1,667


Income from continuing operations before income taxes


$ 1,386


$ 1,032


$ 964


Income tax provision


354


331


244


Income from continuing operations, net of tax


1,032


701


720


Loss from discontinued operations, net of tax(2)


(16)


(4)


(84)


Net income


$ 1,016


$ 697


$ 636










Common Share Statistics








Basic EPS:








Income from continuing operations, net of tax


$ 2.27


$ 1.55


$ 1.59


Loss from discontinued operations, net of tax


(0.03)


(0.01)


(0.18)


Net income per common share


$ 2.24


$ 1.54


$ 1.41


Diluted EPS:








Income from continuing operations, net of tax


$ 2.24


$ 1.53


$ 1.58


Loss from discontinued operations, net of tax


(0.03)


(0.01)


(0.18)


Net income per common share


$ 2.21


$ 1.52


$ 1.40


Weighted average common shares outstanding:








Basic EPS


454.1


452.7


451.0


Diluted EPS


460.3


457.2


455.4


Common shares outstanding (period end)


455.2


452.8


451.9


Dividends per common share


$ 0.05


$ 0.05


$ 0.05


Tangible book value per common share (period end)(6)


29.70


27.73


22.86


Stock price per common share (period end)


51.96


42.56


41.41


Total market capitalization (period end)


23,652


19,271


18,713










Balance Sheet (Period End)








Loans held for investment


$ 124,092


$ 125,947


$ 130,115


Interest-earning assets


172,849


172,024


174,237


Total assets


199,300


197,503


200,708


Tangible assets (7)


184,928


183,158


186,647


Interest-bearing deposits


109,097


107,162


104,013


Total deposits


125,446


122,210


117,787


Borrowings


39,797


41,796


52,672


Stockholders' equity


27,550


26,541


24,374


Tangible common equity (TCE) (8)


13,520


12,558


10,330










Balance Sheet (Quarterly Average Balances)








Average loans held for investment


$ 125,077


$ 125,441


$ 134,206


Average interest-earning assets


173,540


173,992


181,902


Average total assets


198,075


197,704


207,232


Average interest-bearing deposits


108,633


106,597


104,018


Average total deposits


124,158


121,736


117,530


Average borrowings


40,538


42,428


59,973


Average stockholders' equity


27,009


26,255


23,681










Performance Metrics








Net interest income growth (quarter over quarter)


4

%

(3)

%

65

%

Non-interest income growth(quarter over quarter)


0


4


(25)


Revenue growth(quarter over quarter)


3


(1)


27


Revenue margin (9)


9.41


9.11


9.43


Net interest margin (10)


7.24


6.95


7.10


Risk-adjusted margin (11)


6.77


5.90


4.99


Return on average assets (12)


2.08


1.42


1.39


Return on average equity (13)


15.28


10.68


12.16


Return on average tangible common equity(14)


31.73


22.90


29.98


Non-interest expense as a % of average loans held for investment (15)


6.91


6.67


5.50


Efficiency ratio (16)


52.96


52.78


43.06


Effective income tax rate


25.5


32.1


25.3


Full-time equivalent employees (in thousands)


27.9


25.7


25.9










Credit Quality Metrics (17)








Allowance for loan and lease losses


$ 5,067


$ 5,628


$ 7,752


Allowance as a % of loans held for investment


4.08

%

4.47

%

5.96

%

Net charge-offs


$ 1,145


$ 1,394


$ 2,018


Net charge-off rate (18)


3.66

%

4.45

%

6.02

%

30+ day performing delinquency rate


3.11


3.60


4.22










Capital Ratios








Tier 1 risk-based capital ratio (19)


10.9

%

11.6

%

9.6

%

Tier 1 common equity ratio (20)


8.4


8.8


6.5


Total risk-based capital ratio (21)


14.2


16.8


16.9


Tangible common equity (TCE) ratio(22)


7.3


6.9


5.5


CAPITAL 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 $7 million in Q1 2011, $8 million in Q4 2010, and $(36) million in Q1 2010.



(2)

The mortgage representation and warranty reserve increased to $846 million as of March 31, 2011, from $816 million as of December 31, 2010. We recorded a provision for repurchase losses of $44 million in Q1 2011, $(7) million in Q4 2010, and $224 million in Q1 2010. The majority of the provision for repurchase losses is included in discontinued operations, with the remaining portion included in non-interest income.



(3)

During Q1 2010, certain mortgage trusts were deconsolidated as a result of the sale of interest-only bonds associated with the trusts. The net effect of the deconsolidation resulted in a gain of $128 million, which is included in non-interest income.



(4)

The estimated uncollectible portion of billed finance charges and fees excluded from revenue totaled $105 million in Q1 2011, $144 million in Q4 2010, and $354 million in Q1 2010.



(5)

Includes core deposit intangible amortization expense of $45 million in Q1 2011, $47 million in Q4 2010, and $52 million in Q1 2010 and integration costs of $2 million in Q1 2011, $15 million in Q4 2010, and $17 million in Q1 2010.



(6)

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 this measure.



(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 total revenue less net charge-offs 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, excluding restructuring and goodwill impairment charges, for the period divided by average loans held for investment for the period.



(16)

Calculated based on non-interest expense, excluding restructuring and goodwill impairment charges, for the period divided by total revenue for the period.



(17)

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:







2011


2010


2010



(Dollars in millions) (unaudited)


Q1


Q4


Q1



CCB period-end acquired loan portfolio


$ 5,351


$ 5,532


$ 6,799



CCB average acquired loan portfolio


5,305


5,633


7,037



Allowance as a % of loans held for investment, excluding CCB loans


4.27%


4.67%


6.29%



Net charge-off rate, excluding CCB loans


3.82


4.65


6.35



30+ day performing delinquency rate (Reported), excluding CCB


3.25


3.76


4.46










(18)

Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. Average loans held for investment include purchased credit impaired loans acquired as part of the Chevy Chase Bank acquisition.



(19)

Tier 1 risk-based capital ratio is a regulatory 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 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 Income





Three Months Ended



March 31,


December 31,


March 31,

(Dollars in millions, except per share data) (unaudited)


2011


2010


2010








Interest income:







Loans held for investment, including past-due fees


$ 3,417


$ 3,352


$ 3,658

Investment securities


316


305


349

Other


19


17


23


Total interest income


3,752


3,674


4,030








Interest expense:







Deposits


322


340


399

Securitized debt obligations


146


165


242

Senior and subordinated notes


64


65


68

Other borrowings


80


81


93


Total interest expense


612


651


802








Net interest income


3,140


3,023


3,228

Provision for loan and lease losses


534


839


1,478

Net interest income after provision for loan and lease losses


2,606


2,184


1,750








Non-interest income:







Servicing and securitizations


11


12


(36)

Service charges and other customer-related fees


525


496


585

Interchange


320


350


311

Net other-than-temporary impairment losses recognized in earnings


(3)


(3)


(31)

Other


89


84


232


Total non-interest income


942


939


1,061








Non-interest expense:







Salaries and associate benefits


741


657


646

Marketing


276


308


180

Communications and data processing


164


182


169

Supplies and equipment


135


139


124

Occupancy


119


114


120

Other


727


691


608


Total non-interest expense


2,162


2,091


1,847

Income from continuing operations before income taxes


1,386


1,032


964

Income tax provision


354


331


244

Income from continuing operations, net of tax


1,032


701


720

Loss from discontinued operations, net of tax


(16)


(4)


(84)

Net income


$ 1,016


$ 697


$ 636








Basic earnings per common share:







Income from continuing operations, net of tax


$ 2.27


$ 1.55


$ 1.59

Loss from discontinued operations, net of tax


(0.03)


(0.01)


(0.18)

Net income per common share


$ 2.24


$ 1.54


$ 1.41








Diluted earnings per common share:







Income from continuing operations


$ 2.24


$ 1.53


$ 1.58

Loss from discontinued operations


(0.03)


(0.01)


(0.18)

Net income per common share


$ 2.21


$ 1.52


$ 1.40








Weighted average common shares outstanding (in millions):







Basic EPS


454.1


452.7


451.0

Diluted EPS


460.3


457.2


455.4








Dividends per common share


$ 0.05


$ 0.05


$ 0.05

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Consolidated Balance Sheets






March 31,


December 31,


March 31,

(Dollars in millions)(unaudited)


2011


2010


2010








Assets:







Cash and due from banks


$ 2,028


$ 2,067


$ 2,929

Interest-bearing deposits with banks


5,397


2,776


4,092

Federal funds sold and repurchase agreements


546


406


477


Cash and cash equivalents


7,971


5,249


7,498

Restricted cash for securitization investors


2,556


1,602


3,286

Securities available for sale, at fair value


41,566


41,537


38,251

Loans held for investment:








Unsecuritized loans held for investment, at amortized cost


75,184


71,921


72,592


Restricted loans for securitization investors


48,908


54,026


57,523


Total loans held for investment


124,092


125,947


130,115


Less: Allowance for loan and lease losses


(5,067)


(5,628)


(7,752)


Net loans held for investment


119,025


120,319


122,363

Loans held for sale, at lower-of-cost-or-fair-value


117


228


248

Accounts receivable from securitizations


112


118


206

Premises and equipment, net


2,739


2,749


2,735

Interest receivable


1,025


1,070


1,135

Goodwill


13,597


13,591


13,589

Other


10,592


11,040


11,397


Total assets


$ 199,300


$ 197,503


$ 200,708

















Liabilities:







Interest payable


$ 411


$ 488


$ 522

Customer deposits:








Non-interest bearing deposits


16,349


15,048


13,773


Interest-bearing deposits


109,097


107,162


104,013


Total customer deposits


125,446


122,210


117,786

Securitized debt obligations


24,506


26,915


37,830

Other debt:








Federal funds purchased and securities loaned or sold under agreements to repurchase


1,970


1,517


840


Senior and subordinated notes


8,545


8,650


9,134


Other borrowings


4,776


4,714


4,868


Total other debt


15,291


14,881


14,842

Other liabilities


6,096


6,468


5,353


Total liabilities


171,750


170,962


176,333









Stockholders' equity:







Common stock


5


5


5

Paid-in capital, net


19,141


19,084


18,991

Retained earnings and accumulated other comprehensive income


11,644


10,654


8,577


Less: Treasury stock, at cost


(3,240)


(3,202)


(3,198)


Total stockholders' equity


27,550


26,541


24,375


Total liabilities and stockholders' equity


$ 199,300


$ 197,503


$ 200,708

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 5: Average Balances, Net Interest Income and Net Interest Margin






Quarter Ended 03/31/11


Quarter Ended 12/31/10


Quarter Ended 03/31/10




(Dollars in millions)(unaudited)



Average

Balance


Interest Income/

Expense


Yield/

Rate



Average

Balance


Interest Income/

Expense


Yield/

Rate



Average

Balance


Interest Income/

Expense


Yield/

Rate

Interest-earning assets:




















Loans held for investment


$ 125,077


$ 3,417


10.93%


$ 125,441


$ 3,352


10.69%


$ 134,206


$ 3,658


10.90%


Investment securities


41,532


316


3.04


41,004


305


2.98


38,087


349


3.67


Other


6,931


19


1.10


7,547


17


0.90


9,609


23


0.96

Total interest-earning assets


$ 173,540


$ 3,752


8.65%


$ 173,992


$ 3,674


8.45%


$ 181,902


$ 4,030


8.86%






















Interest-bearing liabilities:




















Interest-bearing deposits





















NOW accounts


$ 13,648


$ 9


0.26%


$ 12,918


$ 8


0.25%


$ 12,276


$ 16


0.52%



Money market deposit accounts


45,613


110


0.96


43,822


110


1.00


39,364


96


0.98



Savings accounts


26,801


55


0.82


25,121


54


0.86


18,627


42


0.90



Other consumer time deposits


15,344


99


2.58


16,941


112


2.64


24,253


174


2.87



Public fund CD's of $100,000 or more


149


1


2.68


204


1


1.96


400


2


2.00



CD's of $100,000 or more


6,097


47


3.08


6,696


54


3.23


8,180


68


3.33



Foreign time deposits


981


1


0.41


895


1


0.45


918


1


0.44


Total interest-bearing deposits


$ 108,633


$ 322


1.19%


$ 106,597


$ 340


1.28%


$ 104,018


$ 399


1.53%


Securitized debt obligations


25,515


146


2.29


27,708


165


2.38


45,581


242


2.12


Senior and subordinated notes


8,090


64


3.16


8,096


65


3.21


8,757


68


3.11


Other borrowings


6,933


80


4.62


6,624


81


4.89


5,634


93


6.60

Total interest-bearing liabilities


$ 149,171


$ 612


1.64%


$ 149,025


$ 651


1.75%


$ 163,990


$ 802


1.96%






















Net interest income/spread




$ 3,140


7.01%




$ 3,023


6.70%




$ 3,228


6.90%






















Interest income to average interest-earning assets






8.65%






8.45%






8.86%

Interest expense to average interest-earning assets






1.41






1.50






1.76

Net interest margin






7.24%






6.95%






7.10%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 6: Lending Information and Statistics



2011


2010


2010

(Dollars in millions)(unaudited)


Q1


Q4


Q1

Period-end loans held for investment







Credit card:







Domestic credit card


$ 50,570


$ 53,849


$ 56,228

International credit card


8,735


7,522


7,578

Total credit card


59,305


61,371


63,806








Consumer banking:







Automobile


18,342


17,867


17,446

Home loan


11,741


12,103


13,967

Retail banking


4,223


4,413


4,970

Total consumer banking


34,306


34,383


36,383








Commercial banking:







Commercial and multifamily real estate


13,543


13,396


13,618

Middle market


10,758


10,484


10,310

Specialty lending


3,936


4,020


3,619

Total commercial lending


28,237


27,900


27,547

Small-ticket commercial real estate


1,780


1,842


2,065

Total commercial banking


30,017


29,742


29,612








Other loans(1)


464


451


464

Total


$ 124,092


$ 125,947


$ 130,265








Average loans held for investment







Credit card:







Domestic credit card


$ 51,889


$ 53,189


$ 58,108

International credit card


8,697


7,419


7,814

Total credit card


60,586


60,608


65,922








Consumer banking:







Automobile


18,025


17,763


17,769

Home loan


11,960


12,522


15,434

Retail banking


4,251


4,466


5,042

Total consumer banking


34,236


34,751


38,245








Commercial banking:







Commercial and multifamily real estate


13,345


13,323


13,716

Middle market


10,666


10,460


10,324

Specialty lending


3,964


3,947


3,609

Total commercial lending


27,975


27,730


27,649

Small-ticket commercial real estate


1,818


1,887


2,074

Total commercial banking


29,793


29,617


29,723








Other loans (1)


462


465


489

Total


$ 125,077


$ 125,441


$ 134,379








Net charge-off rates







Credit card:







Domestic credit card


6.20%


7.28%


10.48%

International credit card


5.74


6.68


8.83

Total credit card


6.13%


7.21%


10.29%








Consumer banking:







Automobile


1.98%


2.65%


2.97%

Home loan(2)


0.71


0.89


0.94

Retail banking(2)


2.24


2.40


2.11

Total consumer banking(2)


1.57%


1.98%


2.03%








Commercial banking:







Commercial and multifamily real estate(2)


0.56%


1.15%


1.45%

Middle market (2)


0.18


0.94


0.82

Specialty lending


0.30


0.63


0.90

Total commercial lending(2)


0.38%


1.00%


1.14%

Small-ticket commercial real estate


7.14


7.72


4.43

Total commercial banking(2)


0.79%


1.43%


1.37%








Other loans


19.91%


21.11%


18.82%

Total


3.66%


4.45%


6.01%








30+ day performing delinquency rates







Credit card:







Domestic credit card


3.59%


4.09%


5.30%

International credit card


5.55


5.75


6.39

Total credit card


3.88%


4.29%


5.43%








Consumer banking:







Automobile


5.79%


7.58%


7.10%

Home loan(2)


0.61


0.64


0.93

Retail banking(2)


0.93


0.93


1.02

Total consumer banking(2)


3.42%


4.28%


3.90%








Nonperforming asset rates(3) (4)







Consumer banking:







Automobile


0.39%


0.64%


0.55%

Home loan(2)


4.34


4.25


3.17

Retail banking(2)


2.44


2.66


2.07

Total consumer banking(2)


2.00%


2.17%


1.76%








Commercial banking:







Commercial and multifamily real estate(2)


2.63%


2.23%


3.65%

Middle market (2)


1.14


1.33


1.15

Specialty lending


1.19


1.30


2.18

Total commercial lending(2)


1.86%


1.76%


2.52%

Small-ticket commercial real estate


3.39


2.38


4.18

Total commercial banking(2)


1.95%


1.80%


2.64%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7: Financial & Statistical Summary - Credit Card Business



2011


2010


2010

(Dollars in millions) (unaudited)


Q1


Q4


Q1

Credit Card







Earnings:







Net interest income


$ 1,941


$ 1,870


$ 2,113

Non-interest income


674


672


718

Total revenue


$ 2,615


$ 2,542


$ 2,831

Provision for loan and lease losses


450


589


1,175

Non-interest expense


1,178


1,056


914

Income from continuing operations before taxes


987


897


742

Income tax provision


344


311


253

Income from continuing operations, net of tax


$ 643


$ 586


$ 489








Selected metrics:







Period end loans held for investment


$ 59,305


$ 61,371


$ 63,806

Average loans held for investment


60,586


60,608


65,922

Loans held for investment yield


14.93%


13.97%


14.88%

Revenue margin


17.26


16.78


17.18

Net charge-off rate


6.13


7.21


10.29

30+ day performing delinquency rate


3.88


4.29


5.43

Purchase volume (5)


$ 27,797


$ 29,379


$ 23,924








Domestic Card







Earnings:







Net interest income


$ 1,651


$ 1,621


$ 1,865

Non-interest income


583


594


618

Total revenue


$ 2,234


$ 2,215


$ 2,483

Provision for loan and lease losses


230


505


1,096

Non-interest expense


990


935


809

Income from continuing operations before taxes


1,014


775


578

Income tax provision


360


276


206

Income from continuing operations, net of tax


$ 654


$ 499


$ 372








Selected metrics:







Period end loans held for investment


$ 50,570


$ 53,849


$ 56,228

Average loans held for investment


51,889


53,189


58,108

Loans held for investment yield


14.65%


13.57%


14.78%

Revenue margin


17.22


16.66


17.09

Net charge-off rate


6.20


7.28


10.48

30+ day performing delinquency rate


3.59


4.09


5.30

Purchase volume (5)


$ 25,024


$ 26,985


$ 21,988








International Card







Earnings:







Net interest income


$ 290


$ 249


$ 248

Non-interest income


91


78


100

Total revenue


$ 381


$ 327


$ 348

Provision for loan and lease losses


220


84


79

Non-interest expense


188


121


105

Income (loss) from continuing operations before taxes


(27)


122


164

Income tax provision (benefit)


(16)


35


47

Income (loss) from continuing operations, net of tax


$ (11)


$ 87


$ 117








Selected metrics:







Period end loans held for investment


$ 8,735


$ 7,522


$ 7,578

Average loans held for investment


8,697


7,419


7,814

Loans held for investment yield


16.65%


16.82%


15.66%

Revenue margin


17.52


17.63


17.81

Net charge-off rate


5.74


6.68


8.83

30+ day performing delinquency rate


5.55


5.75


6.39

Purchase volume (5)


$ 2,773


$ 2,394


$ 1,936

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 8: Financial & Statistical Summary - Consumer Banking Business




2011


2010


2010

(Dollars in millions) (unaudited)


Q1


Q4


Q1

Consumer Banking







Earnings:








Net interest income


$ 983


$ 950


$ 896


Non-interest income


186


196


316


Total revenue


$ 1,169


$ 1,146


$ 1,212


Provision for loan and lease losses


95


189


50


Non-interest expense


740


770


688


Income from continuing operations before taxes


334


187


474


Income tax provision


119


67


169


Income from continuing operations, net of tax


$ 215


$ 120


$ 305









Selected metrics:








Period end loans held for investment


$ 34,306


$ 34,383


$ 36,383


Average loans held for investment


34,236


34,751


38,245


Loans held for investment yield


9.60%


9.20%


8.96%


Auto loan originations


$ 2,571


$ 2,217


$ 1,343


Period end deposits


86,355


82,959


76,883


Average deposits


83,884


81,834


75,115


Deposit interest expense rate


1.06%


1.13%


1.27%


Core deposit intangible amortization


$ 35


$ 34


$ 38


Net charge-off rate (2)


1.57%


1.98%


2.03%


Nonperforming loans as a percentage of loans held for investment (2)(3)


1.84


1.97


1.62


Nonperforming asset rate (2) (3)


2.00


2.17


1.76


30+ day performing delinquency rate (2) (3)


3.42


4.28


3.90


Period end loans serviced for others


$ 19,956


$ 20,689


$ 26,778

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9: Financial & Statistical Summary - Commercial Banking Business




2011


2010


2010

(Dollars in millions) (unaudited)


Q1


Q4


Q1

Commercial Banking







Earnings:








Net interest income


$ 321


$ 336


$ 312


Non-interest income


71


49


42


Total revenue


$ 392


$ 385


$ 354


Provision for loan and lease losses


(15)


34


238


Non-interest expense


177


207


192


Income (loss) from continuing operations before taxes


230


144


(76)


Income tax provision (benefit)


82


51


(27)


Income (loss) from continuing operations, net of tax


$ 148


$ 93


$ (49)









Selected metrics:








Period end loans held for investment


$ 30,017


$ 29,742


$ 29,612


Average loans held for investment


29,793


29,617


29,723


Loans held for investment yield


4.80%


5.13%


5.03%


Period end deposits


$ 24,244


$ 22,630


$ 21,605


Average deposits


24,138


22,808


21,859


Deposit interest expense rate


0.55%


0.61%


0.72%


Core deposit intangible amortization


$ 11


$ 13


$ 14


Net charge-off rate (2)


0.79%


1.43%


1.37%


Nonperforming loans as a percentage of loans held for investment (2)


1.84


1.66


2.48


Nonperforming asset rate (2)


1.95


1.80


2.64









Internal risk ratings criticized loans: (6)








Noncriticized


$ 26,983


$ 26,663


$ 25,519


Criticized performing


1,919


2,025


2,483


Criticized nonperforming


553


494


735


Total non-PCI loans


29,455


29,182


28,737


Total PCI loans


562


560


875


Total


$ 30,017


$ 29,742


$ 29,612










% of period end held for investment commercial loans:








Noncriticized


89.89%


89.65%


86.18%


Criticized performing


6.39


6.81


8.39


Criticized nonperforming


1.84


1.66


2.48


Total non-PCI loans


98.13%


98.12%


97.05%


Total PCI loans


1.87


1.88


2.95


Total


100.00%


100.00%


100.00%

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10: Financial & Statistical Summary - Other and Total Segment











2011


2010


2010

(Dollars in millions) (unaudited)


Q1


Q4


Q1

Other







Earnings:








Net interest income (expense)


$ (105)


$ (133)


$ (91)


Non-interest income (expense)


11


22


(14)


Total revenue


$ (94)


$ (111)


$ (105)


Provision for loan and lease losses


4


27


18


Non-interest expense


67


58


53


Income (loss) from continuing operations before taxes


(165)


(196)


(176)


Income tax benefit


(191)


(98)


(151)


Income (loss) from continuing operations, net of tax


$ 26


$ (98)


$ (25)









Selected metrics:








Period end loans held for investment (1)


$ 464


$ 451


$ 464


Average loans held for investment (1)


462


465


489


Period end deposits


14,847


16,621


19,299


Average deposits


16,136


17,094


20,556









Total







Earnings:








Net interest income


$ 3,140


$ 3,023


$ 3,230


Non-interest income


942


939


1,062


Total revenue


$ 4,082


$ 3,962


$ 4,292


Provision for loan and lease losses


534


839


1,481


Non-interest expense


2,162


2,091


1,847


Income from continuing operations before taxes


1,386


1,032


964


Income tax provision


354


331


244


Income from continuing operations, net of tax


$ 1,032


$ 701


$ 720









Selected metrics:








Period end loans held for investment


$ 124,092


$ 125,947


$ 130,265


Average loans held for investment


125,077


125,441


134,379


Period end deposits


125,446


122,210


117,787


Average deposits


124,158


121,736


117,530

CAPITAL ONE FINANCIAL CORPORATION (COF)


Table 11: Notes to Loan and Segment Disclosures (Tables 6 -- 10)




(1)

Other loans held for investment includes unamortized premiums and discounts on loans acquired as part of the North Fork and Hibernia acquisitions.



(2)

Purchased credit impaired loans acquired as part of the Chevy Chase Bank (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:










2011


2010


2010


(Dollars in millions) (unaudited)

Q1


Q4


Q1


CCB period end acquired loan portfolio

$ 5,351


$ 5,532


$ 6,799


CCB average acquired loan portfolio

5,305


5,633


7,037









Net charge-off rates







Consumer banking:







Home loan

1.16%


1.46%


1.02%


Retail banking

2.32


2.49


2.22


Total consumer banking

1.82%


2.32%


2.28%









Commercial banking:







Commercial and multifamily real estate

0.57%


1.17%


1.48%


Middle market

0.18


0.97


0.87


Total commercial lending

0.38%


1.02%


1.48%


Total commercial banking

0.80%


1.45%


1.41%









30+ day performing delinquency rates







Consumer banking:








Home loan

1.02%


1.06%


1.58%


Retail banking

0.93


0.97


1.07


Total consumer banking

3.98%


5.01%


4.67%









Nonperforming asset rates







Consumer banking:








Home loan

7.24%


7.05%


5.36%


Retail banking

2.44


2.77


2.17


Total consumer banking

2.32%


2.54%


2.11%









Commercial banking:








Commercial and multifamily real estate

2.68%


2.28%


3.71%


Middle market

1.17


1.36


1.23


Total commercial lending

1.90%


1.79%


2.60%


Total commercial banking

1.99%


1.83%


2.72%









Nonperforming loans as a percentage of loans held for investment







Consumer banking


2.14%


2.30%


1.93%


Commercial banking

1.88


1.69


2.55


(3)

Nonperforming assets consist of nonperforming loans and real estate owned ("REO") and foreclosed assets. The nonperforming asset ratios are calculated based on nonperforming assets for each segment divided by the combined total of loans held for investment, REO and foreclosed assets for each respective segment.



(4)

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.



(5)

Includes credit card purchase transactions net of returns. Excludes cash advance transactions.



(6)

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.













(Dollars in millions)(unaudited)



2011

Q1





2010

Q4



2010

Q1



Average Equity to Non-GAAP Average Tangible Common Equity









Average total stockholders' equity


$ 27,009



$ 26,255


$ 23,681


Less: Average intangible assets (1)


(14,001)



(14,008)


(14,075)


Average tangible common equity


$ 13,008



$ 12,247


$ 9,606












Stockholders' Equity to Non-GAAP Tangible Common Equity









Total stockholders' equity


$ 27,550



$ 26,541


$ 24,374


Less: Intangible assets (1)


(14,030)



(13,983)


(14,044)


Tangible common equity


$ 13,520



$ 12,558


$ 10,330












Total Assets to Tangible Assets









Total assets


$ 199,300



$ 197,503


$ 200,708


Less: Assets from discontinued operations


(342)



(362)


(16)


Total assets from continuing operations


198,958



197,141


200,692


Less: Intangible assets (1)


(14,030)



(13,983)


(14,044)


Tangible assets


$ 184,928



$ 183,158


$ 186,648












Non-GAAP TCE Ratio









Tangible common equity


$ 13,520



$ 12,558


$ 10,330


Tangible assets


184,928



183,158


186,648


TCE ratio(2)


7.3

%

6.9

%

5.5

%





















Non-GAAP Tier 1 Common Equity and Regulatory Capital Ratios









Total stockholders' equity


$ 27,550



$ 26,541


$ 24,374


Less: Net unrealized (gains) losses on AFS securities recorded in AOCI (3)


(314)



(368)


(319)



Net (gains) losses on cash flow hedges recorded in AOCI(3)


95



86


80



Disallowed goodwill and other intangible assets


(13,993)



(13,953)


(14,078)



Disallowed deferred tax assets


(1,377)



(1,150)


(2,183)



Other


(2)



(2)


(1)


Tier 1 common equity


$ 11,959



$ 11,154


$ 7,873


Plus: Tier 1 restricted core capital items(4)


3,636



3,636


3,638


Tier 1 capital


$ 15,595



$ 14,790


$ 11,511


Plus: Long-term debt qualifying as Tier 2 capital


2,827



2,827


3,018



Qualifying allowance for loan and lease losses


1,825



3,748


5,802



Other Tier 2 components


20



29


4


Tier 2 capital


$ 4,672



$ 6,604


$ 8,824


Total risk-based capital(5)


$ 20,267



$ 21,394


$ 20,335












Risk-weighted assets(6)


$ 142,495



$ 127,043


$ 120,330












Tier 1 common equity ratio (7)


8.4

%

(10)

8.8

%

6.5

%

Tier 1 risk-based capital ratio (8)


10.9

%

(10)

11.6

%

9.6

%

Total risk-based capital ratio (9)


14.2

%

(10)

16.8

%

16.9

%




















(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) Regulatory capital ratios as of the end of Q1 2011 are preliminary and therefore subject to change once the calculations have been finalized.

SOURCE Capital One Financial Corporation