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Capital One Reports Fourth Quarter 2010 Net Income of $697 million, or $1.52 per share

January 20, 2011 at 4:17 PM EST

Earnings for full year 2010 were $2.7 billion, or $6.01 per share
Compared to fourth quarter 2009, earnings were up $321 million, or 85 percent

 

MCLEAN, Va., Jan. 20, 2011 /PRNewswire/ --

Credit performance continues to improve

Charge-offs improved by approximately 36 percent, or nearly $0.8 billion, from the fourth quarter of 2009

Charge-offs improved $128 million in the fourth quarter compared to the third quarter of 2010

Domestic Card charge-off rate improved 231 basis points relative to fourth quarter of 2009 to 7.28 percent

 

Printer Friendly Version of the Press Release (pdf format)

 

Printer Friendly Version of the Financial Supplement (pdf format)

 

Printer Friendly Version of the Earnings Conference Call Presentation (pdf format)

 

Balance sheet remains strong

Excluding run-off portfolios, loans grew $1 billion in the quarter

Strong deposit growth with disciplined pricing continued, with Commercial and Consumer Banking deposits up more than $10 billion, or 11.6 percent, in 2010

Tier 1 common equity ratio improved to 8.78 percent in the fourth quarter

Capital One Financial Corporation (NYSE:COF - News) today announced net income for the fourth quarter of 2010 of $697 million, or $1.52 per common share, an increase of 85 percent compared to fourth quarter 2009 net income of $376 million, or $0.83 per share.  For the full year of 2010, net income was $2.7 billion, or $6.01 per share, compared to net income of $320 million, or $0.74 per share for 2009 including the ($563.9) million, or ($1.31) per share, impact to net income from the repayment of the government's TARP preferred share investment in 2009.

"In the second half of 2010, improvements in our credit results outpaced the economic recovery, and we began to see some stabilization in loan volumes and early signs of a return to loan growth in 2011," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer.  "With high performing businesses, a well-recognized brand, and a strong balance sheet, we have emerged from the recession well-positioned to create shareholder value in 2011 and beyond."

Total Company Results

  • Total revenue in the fourth quarter of 2010 of $4.0 billion decreased $54 million, or 1.3 percent, reflecting slightly lower average loans and the full quarter impact of implementing the CARD Act.
    • Net interest income decreased $86 million, and net interest margin declined to 6.95 percent from 7.21 percent.
    • Non-interest income increased $32 million in the fourth quarter relative to the prior quarter.
  • Provision expense of $839 million in the fourth quarter decreased $28 million from the prior quarter driven by lower charge-offs which were partially offset by a smaller allowance release in the fourth quarter.  Continued improvement in charge-offs and delinquency performance in the portfolio was the primary driver of the fourth quarter allowance release. 
  • The allowance as a percentage of loans was 4.47 percent at the end of the fourth quarter of 2010 compared with 4.89 percent at the end of the prior quarter.
  • Charge-offs as a percentage of loans were 4.45 percent at the end of the fourth quarter of 2010 compared with 4.82 percent at the end of the prior quarter and 6.33 percent at the end of 2009.
  • Ending managed loans held for investment declined $387 million, or 0.3 percent, in the fourth quarter to $125.9 billion at December 31, 2010.
    • Excluding the expected run-off in the company's Installment Loan portfolio in Domestic Card, Home Loan portfolio in Consumer Banking, and Small-Ticket CRE portfolio in Commercial Banking, loan balances grew approximately $1.0 billion in the fourth quarter of 2010.
  • For the year 2010, ending managed loans declined by $10.9 billion, or 7.9 percent, with approximately $6.0 billion of that decline coming from the expected runoff of Home Loans, Installment Loans, and Small-Ticket CRE.
  • Average total deposits increased $3.5 billion, or 2.9 percent, during the quarter to $121.7 billion. Period-end total deposits increased by $3.0 billion, or 2.5 percent, to $122.2 billion.
  • The cost of funds decreased to 1.50 percent in the fourth quarter from 1.64 percent in the prior quarter, driven by the continuing replacement of higher cost wholesale funding with lower cost deposits.
  • Non-interest expense of $2.0 billion in the fourth quarter of 2010 increased $95 million, or 4.8 percent, compared with the prior quarter, driven in large part by an increase in marketing expenses. Compared with the prior year, non-interest expenses increased $517 million, or 7.0 percent, driven primarily by a 63 percent increase in marketing relative to 2009.
  • The company's Tier 1 common equity ratio of 8.78 percent increased 57 basis points relative to the ratio of 8.21 percent in the prior quarter.  


"Loan balances are stabilizing, marketing and partnership opportunities are evident, and headwinds such as charge-offs and the runoff of portfolios continue to abate," said Gary L. Perlin, Capital One's Chief Financial Officer. "We also expect that our strong capital position and generation will enable us to deploy capital in the service of shareholders to generate attractive returns in 2011 and beyond."

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 $53.8 billion in the fourth quarter, flat with the prior quarter, as expected run-off from the Installment Loan portfolio offset seasonal growth. Excluding the run-off of the Installment Loans, loans grew $679 million compared to the third quarter of 2010.
  • Fourth quarter Domestic Card purchase volumes increased $2.1 billion, or 8.6 percent, relative to the prior quarter, even as overall loan balances have declined.
  • International credit card loans increased in the quarter by $35 million, or 0.47 percent, to $7.5 billion, due to seasonality.  
  • Domestic Card revenue margin declined 11 basis points to 16.66 percent in the fourth quarter from 16.77 percent in the prior quarter driven by a full quarter of lower late fees resulting from implementing the CARD Act.
  • Domestic Card provision expense decreased $72 million in the fourth quarter relative to the prior quarter, driven by lower charge-offs.
  • Net charge-off rates relative to the prior quarter:
    • Domestic Card – improved 95 basis points to 7.28 percent from 8.23 percent
    • International Card – improved 92 basis points 6.68 to percent from 7.60 percent
  • Delinquency rates relative to the prior quarter:  
    • Domestic Card – improved 44 basis points to 4.09 percent from 4.53 percent
    • International Card – improved 9 basis points to 5.75 percent from 5.84 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 increased $30 million, or 8.5 percent, in the fourth quarter due to modest loan growth with stable loan yields and an increase in non-interest income due to the absence of a third quarter loss from the sale of GreenPoint HFS loans.
  • Provision expense decreased $61 million due to an allowance release in the fourth quarter.
  • Average deposits grew $909 million, or 4.2 percent, to $22.8 billion. The deposit interest expense rate improved 6 basis points to 61 basis points.
  • Charge-off rate relative to the prior quarter:
    • Total Commercial Banking – 1.43 percent, an increase of 16 basis points
    • Commercial lending – 1.00 percent, a decrease of 11 basis points
  • Non-performing asset rate relative to the prior quarter:
    • Total Commercial Banking – 1.80 percent, a decline of 14 basis points
    • Commercial lending – 1.76 percent, a decline of 18 basis points


Consumer Banking Highlights

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

  • Revenues were stable in the fourth quarter at $1.1 billion, while non-interest expenses increased $13 million during the quarter, primarily due to higher marketing.


  • Provision expense increased $75 million relative to the prior quarter as a result of increased charge-offs in the quarter and a modest increase in allowance in Home Loan.


  • Net charge-off rates relative to the prior quarter:
  • Auto – 2.65 percent, a decrease of 6 basis points
  • Home Loan – 0.89 percent, an increase of 48 basis points
  • Retail banking –  2.40 percent, an increase of 20 basis points


  • Period-end loans relative to the prior quarter:
  • Auto – modest growth of $224 million, or 1.3 percent, to $17.9 billion. Third and fourth quarter 2010 originations equate to an annual "run rate" of approximately $9 billion.
  • Home Loan – Home loans continued to reflect expected run-off in the portfolio with a decline of $660 million, or 5.2 percent, to $12.1 billion.
  • Retail banking – declined $178 million, or 3.9 percent, to $4.4 billion.


  • Deposits in Consumer Banking showed strong growth in the quarter, with average deposits increasing $3.6 billion, or 4.6 percent, to $81.8 billion and ending the year at $83 billion.


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

Forward looking statements  

The company cautions that its current expectations in this release dated January 20, 2011, and the company's plans, objectives, expectations, and intentions, are forward-looking statements. Actual results could differ materially from current expectations due to a number of factors, including: general economic conditions in the U.S., the UK, 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; changes in the labor and employment market; changes in the credit environment; the company's ability to execute on its strategic and operational plans; competition from providers of products and services that compete with the company's businesses; increases or decreases in the company's aggregate accounts and balances, or the growth rate and/or composition thereof; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products, or financial condition; financial, legal, regulatory (including the impact of the Dodd-Frank Act and the regulations to be promulgated thereunder), tax or accounting changes or actions, including with respect to any litigation matter involving the company; and the success of the company's marketing efforts in attracting or retaining customers. 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, 2009 and report on Form 10-Q for the quarters ended March 31, 2010, and June 30, 2010, and September 30, 2010.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N. A., had $122.2 billion in deposits and     $197.5 billion in total assets outstanding as of December 31, 2010. 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:

Fourth quarter 2010 financial results, SEC Filings, and earnings conference call slides are accessible on Capital One's home page (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 99.1

Capital One Financial Corporation

Earnings Release Fourth Quarter 2010 — Financial Supplement

Table of Contents






Page




Table   1:

Financial & Statistical Summary ― Reported Basis

1

Table   2:

Financial & Statistical Summary ― Managed Basis

2

Table   3:

Notes to Financial & Statistical Summaries (Tables 1 and 2)

3

Table   4:

Impact from Adoption of New Consolidation Accounting Guidance

4

Table   5:

Consolidated Statements of Income

5

Table   6:

Consolidated Balance Sheets

6

Table   7:

Average Balances, Net Interest Income and Net Interest Margin — Reported and Managed Basis

7

Table   8:

Lending Information and Statistics

8

Table   9:

Credit Card Segment Financial & Statistical Summary

9

Table 10:

Consumer Banking Segment Financial & Statistical Summary

10

Table 11:

Commercial Banking Segment Financial & Statistical Summary

11

Table 12:

Other and Total Segment Financial & Statistical Summary

12

Table 13:

Notes to Loan and Segment Disclosures (Tables 8 — 12)

13



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1:  Financial & Statistical Summary—Reported Basis*








2010


2010


2010


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


Q4


Q3


Q2


Earnings








Net interest income


$     3,023


$     3,109


$     3,097


Non-interest income (1)(2)


939


907


807


Total revenue (3)


$     3,962


$     4,016


$     3,904


Provision for loan and lease losses


839


867


723


Marketing expenses


308


250


219


Restructuring expenses (4)


-


-


-


Operating expenses (5)


1,783


1,746


1,781


Income from continuing operations before income taxes


$     1,032


$     1,153


$     1,181


Income tax provision


331


335


369


Income from continuing operations, net of tax


701


818


812


Loss from discontinued operations, net of tax (2)


(4)


(15)


(204)


Net income


$        697


$        803


$        608


Net income available to common shareholders


$        697


$        803


$        608










Common Share Statistics








Basic EPS: (A)








  Income from continuing operations


$       1.55


$       1.81


$       1.79


  Loss from discontinued operations


(0.01)


(0.03)


(0.45)


  Net income per basic common share


$       1.54


$       1.78


$       1.34


Diluted EPS: (A)








  Income from continuing operations


$       1.53


$       1.79


$       1.78


  Loss from discontinued operations


(0.01)


(0.03)


(0.45)


  Net income per diluted common share


$       1.52


$       1.76


$       1.33


Weighted average common shares outstanding:








  Basic EPS


452.7


452.5


452.1


  Diluted EPS


457.2


456.6


456.4


Common shares outstanding (period end)


452.8


452.6


452.3


Dividends per common share


$       0.05


$       0.05


$       0.05


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


$     27.73


$     26.60


$     24.89


Stock price per common share (period end)


$     42.56


$     39.55


$     40.30


Total market capitalization (period end)


$   19,271


$   17,900


$   18,228










Reported Balance Sheet Statistics (Quarterly Averages)








Average loans held for investment


$ 125,441


$ 126,307


$ 128,203


Average interest-earning assets


$ 173,991


$ 172,473


$ 174,650


Total average assets


$ 197,597


$ 196,598


$ 199,329


Average interest-bearing deposits


$ 106,597


$ 104,186


$ 104,163


Total average deposits


$ 121,736


$ 118,255


$ 118,484


Average equity (D)


$   26,255


$   25,307


$   24,526


Return on average assets (ROA)


1.42

%

1.66

%

1.63

%

Return on average equity (ROE) (D)


10.68

%

12.93

%

13.24

%

Return on average tangible common equity (C)


22.90

%

28.95

%

30.97

%









Reported Balance Sheet Statistics (Period End)








Loans held for investment


$ 125,947


$ 126,334


$ 127,140


Total assets (D)


$ 197,503


$ 196,933


$ 197,485


Interest-bearing deposits


$ 107,162


$ 104,741


$ 103,172


Total deposits


$ 122,210


$ 119,212


$ 117,331


Tangible assets(D) (E)


$ 183,158


$ 182,904


$ 183,474


Tangible common equity (TCE) (D) (F)


$   12,558


$   12,037


$   11,259


Tier 1 risk-based capital ratio (6)


11.64

%

11.13

%

9.93

%

Tangible common equity (TCE) ratio (D) (G)


6.86

%

6.58

%

6.14

%

Tier 1 common equity ratio (7)


8.78

%

8.21

%

7.00

%









Performance Statistics (Reported)








Net interest income growth (quarter over quarter) (8)


(3)

%

0

%

(4)

%

Non-interest income growth (quarter over quarter) (8)


4

%

12

%

(24)

%

Revenue growth (quarter over quarter) (8)


(1)

%

3

%

(9)

%

Net interest margin


6.95

%

7.21

%

7.09

%

Revenue margin


9.11

%

9.31

%

8.94

%

Risk-adjusted margin (H)


5.90

%

5.78

%

5.01

%

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


6.67

%

6.32

%

6.24

%

Efficiency ratio (I)


52.78

%

49.70

%

51.23

%

Effective income tax rate


32.1

%

29.1

%

31.2

%

Full-time equivalent employees (in thousands)


25.7


25.7


25.7










Credit Quality Statistics (Reported) (9)








Allowance for loan and lease losses


$     5,628


$     6,175


$     6,799


Allowance as a % of reported loans held for investment


4.47

%

4.89

%

5.35

%

Net charge-offs


$     1,394


$     1,522


$     1,717


Net charge-off rate


4.45

%

4.82

%

5.36

%

30+ day performing delinquency rate


3.60

%

3.71

%

3.81

%

___________________









* Effective January 1, 2010, Capital One prospectively adopted two new accounting standards that resulted in the consolidation of the majority of the Company's credit card securitization trusts. The adoption of these new accounting standards resulted in the addition of approximately $41.9 billion of assets, consisting primarily of credit card loan receivables, and a reduction of $2.9 billion in stockholders' equity as of January 1, 2010. As the new accounting standards were adopted prospectively, prior period results have not been adjusted. See "Table 4: Impact from Adoption of New Consolidation Accounting Guidance January 1, 2010." While the adoption of these new accounting standards had a significant impact on the comparability of the Company's GAAP financial results prior to and subsequent to adoption, the Company's reported GAAP results after adoption are now comparable to the prior "managed" results.



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2:  Financial & Statistical Summary—Managed Basis*




2010


2010


2010


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


Q4


Q3


Q2


Earnings








Net interest income


$     3,023


$     3,109


$     3,097


Non-interest income (1)(2)


939


907


807


Total revenue (3)


$     3,962


$     4,016


$     3,904


Provision for loan and lease losses


839


867


723


Marketing expenses


308


250


219


Restructuring expenses (4)


-


-


-


Operating expenses (5)


1,783


1,746


1,781


Income from continuing operations before income taxes


$     1,032


$     1,153


$     1,181


Income tax provision


331


335


369


Income from continuing operations, net of tax


$        701


$        818


$        812


Loss from discontinued operations, net of tax (2)


$          (4)


$        (15)


$      (204)


Net income


$        697


$        803


$        608


Net income available to common shareholders


$        697


$        803


$        608










Common Share Statistics








Basic EPS: (A)








  Income from continuing operations


$       1.55


$       1.81


$       1.79


  Loss from discontinued operations


(0.01)


(0.03)


(0.45)


  Net income per basic common share


$       1.54


$       1.78


$       1.34


Diluted EPS:(A)








  Income from continuing operations


$       1.53


$       1.79


$       1.78


  Loss from discontinued operations


(0.01)


(0.03)


(0.45)


  Net income per diluted common share


$       1.52


$       1.76


$       1.33


Weighted average common shares outstanding:








  Basic EPS


452.7


452.5


452.1


  Diluted EPS


457.2


456.6


456.4


Common shares outstanding (period end)


452.8


452.6


452.3


Dividends per common share


$       0.05


$       0.05


$       0.05


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


$     27.73


$     26.60


$     24.89


Stock price per common share (period end)


$     42.56


$     39.55


$     40.30


Total market capitalization (period end)


$   19,271


$   17,900


$   18,228










Managed Balance Sheet Statistics (Quarterly Averages)








Average loans held for investment


$ 125,441


$ 126,391


$ 128,335


Average interest-earning assets


$ 173,991


$ 172,557


$ 174,782


Total average assets


$ 197,597


$ 196,598


$ 199,329


Average interest-bearing deposits


$ 106,597


$ 104,186


$ 104,163


Total average deposits


$ 121,736


$ 118,255


$ 118,484


Average equity (D)


$   26,255


$   25,307


$   24,526


Return on average assets (ROA)


1.42

%

1.66

%

1.63

%

Return on average equity (ROE) (D)


10.68

%

12.93

%

13.24

%

Return on average tangible common equity (C)


22.90

%

28.95

%

30.97

%









Managed Balance Sheet Statistics (Period End)








Loans held for investment


$ 125,947


$ 126,334


$ 127,255


Total assets (D)


$ 197,503


$ 196,933


$ 197,485


Interest-bearing deposits


$ 107,162


$ 104,741


$ 103,172


Total deposits


$ 122,210


$ 119,212


$ 117,331


Tangible assets(D) (E)


$ 183,158


$ 182,904


$ 183,474


Tangible common equity (TCE) (D) (F)


$   12,558


$   12,037


$   11,259


Tangible common equity (TCE) ratio (D) (G)


6.86

%

6.58

%

6.14

%









Performance Statistics (Managed)








Net interest income growth (quarter over quarter) (8)


(3)

%

0

%

(4)

%

Non-interest income growth (quarter over quarter) (8)


4

%

12

%

(24)

%

Revenue growth (quarter over quarter) (8)


(1)

%

3

%

(9)

%

Net interest margin


6.95

%

7.21

%

7.09

%

Revenue margin


9.11

%

9.31

%

8.93

%

Risk-adjusted margin (H)


5.90

%

5.78

%

5.01

%

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


6.67

%

6.32

%

6.23

%

Efficiency ratio (I)


52.78

%

49.70

%

51.23

%

Effective income tax rate


32.1

%

29.1

%

31.2

%

Full-time equivalent employees (in thousands)


25.7


25.7


25.7










Credit Quality Statistics (Managed) (9)








Net charge-offs


$     1,394


$     1,522


$     1,717


Net charge-off rate


4.45

%

4.82

%

5.35

%

30+ day performing delinquency rate


3.60

%

3.71

%

3.81

%

___________________









*Prior to the January 1, 2010 adoption of the new consolidation accounting standards, management evaluated the Company and each of its lines of business results on a "managed" basis, which is a non-GAAP measure. With the adoption of the new consolidation accounting standards, the Company's reported results are comparable to the "managed" basis, which reflect the consolidation of the majority of the Company's credit card securitization trusts.  The accompanying "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" presents a reconciliation of the Company's non-GAAP "managed" results to its reported GAAP results for periods prior to January 1, 2010. See the accompanying schedule "Table 4: Impact from Adoption of New Consolidation Accounting Guidance January 1, 2010" for additional information on the impact from the new accounting standards.











CAPITAL ONE FINANCIAL CORPORATION (COF) 

Table 3:  Notes to Financial & Statistical Summaries (Tables 1 and 2)


(1)

Includes the impact from the change in fair value of retained interests, including the interest-only strips, which totaled $8 million in Q4 2010, $6 million in Q3 2010, $17 million in Q2 2010, $(36) million in Q1 2010 and $55 million in Q4 2009.



(2)

The Company's mortgage representation and warranty reserve decreased to $816 million as of December 31, 2010, from $836 million as of September 30, 2010.  The decrease in the reserve reflected a negative provision for repurchase losses of $(7) million in Q4 2010, compared with a provision for repurchase losses of $16 million, $404 million, $224 million and $47 million in Q3 2010, Q2 2010, Q1 2010 and Q4 2009, respectively.  The majority of the provision for repurchase losses is recorded in discontinued operations, with the remaining portion recorded in non-interest income.  



(3)

In accordance with the Company's finance charge and fee revenue recognition policy, amounts billed but not included in revenue totaled: $144 million in Q4 2010, $190 million in Q3 2010, $261 million in Q2 2010, $354 million in Q1 2010 and $490 million in Q4 2009.



(4)

In 2009, the Company completed its restructuring initiative that was initiated in 2007.



(5)

Includes core deposit intangible amortization expense of $51 million in Q4 2010, $50 million in Q3 2010, $50 million in Q2 2010, $52 million in Q1 2010 and $54 million in Q4 2009 and integration costs of $15 million in Q4 2010, $27 million in Q3 2010, $22 million in Q2 2010, $17 million in Q1 2010 and $22 million in Q4 2009.



(6)

Tier 1 risk-based capital ratio is a regulatory measure calculated based on Tier 1 capital divided by risk-weighted assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.



(7)

Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity divided by risk-weighted assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.



(8)

Prior period amounts have been reclassified to conform with the current period presentation and adjusted to reflect purchase accounting refinements related to the acquisition of Chevy Chase Bank, FSB ("CCB").



(9)

The credit quality statistics excluding the impact of loans acquired from Chevy Chase Bank (CCB) are as follows.







2010


2010


2010



(dollars in millions) (unaudited)


Q4


Q3


Q2



CCB period end acquired loan portfolio


$     5,532


$     5,891


$     6,381



CCB average acquired loan portfolio


$     5,633


$     6,014


$     6,541



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

4.67%


5.12%


5.63%



Net charge-off rate (Reported), excluding CCB

4.65%


5.06%


5.64%



Net charge-off rate (Managed), excluding CCB

4.65%


5.06%


5.64%



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

3.76%


3.89%


4.01%



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

3.76%


3.89%


4.01%



(10)

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



Statistical/Metric Calculations

(A)

Calculated based on net income (loss) available to common shareholders.



(B)

Calculated based on tangible common equity divided by common shares outstanding, which is a non-GAAP measure.  See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.



(C)

Calculated based on income from continuing operations divided by average tangible common equity, which is a non-GAAP measure. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.



(D)

Calculated based on continuing operations, except for average equity and return on average equity (ROE), which are based on average stockholders' equity.



(E)

Non-GAAP measure consisting of reported or managed assets less intangible assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.



(F)

See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.



(G)

Tangible common equity ratio ("TCE ratio") is a non-GAAP measure calculated based on tangible common equity divided by tangible assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.



(H)

Calculated based on total revenue less net charge-offs divided by average earning assets.



(I)

Calculated based on non-interest expense less restructuring expense divided by total revenue.



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4:  Impact from Adoption of New Consolidation Accounting Guidance January 1, 2010









Consolidation Impact















(dollars in millions)(unaudited)


January 1, 2010


Consolidation Impact


December 31, 2009









Assets:







Cash and due from banks


$     12,683


$            3,998


$             8,685

Loans held for investment


138,184


47,565


90,619


Allowance for loan and lease losses


(8,391)


(4,264)

(2)

(4,127)

Net loans held for investment


129,793


43,301


86,492

Accounts receivable from securitizations


166


(7,463)


7,629

Other assets


68,869

(1)

2,029


66,840


Total assets


$     211,511


$          41,865


$       169,646

Liabilities:







Securitized debt


48,300


44,346


3,954

Other liabilities


139,561


458


139,103


Total liabilities


187,861


44,804


143,057

Stockholders' equity


23,650


(2,939)

(2)

26,589


Total liabilities and stockholders' equity


$   211,511


$           41,865


$      169,646

















Allocation of the Allowance by Segment















(dollars in millions)(unaudited)


January 1, 2010


Consolidation Impact


December 31, 2009









Credit card:







  Domestic credit card


$       5,590


$            3,663

(2)

$       1,927

  International credit card


727


528


199

      Total credit card


6,317


4,191


2,126

Consumer banking:







  Automobile


665


-


665

  Home loan (includes all new CCB originations)


248


73

(3)

175

  Other retail


236


-


236

      Total consumer banking


1,149


73


1,076

Commercial banking:







  Commercial and multi-family real estate


471


-


471

  Middle market


131


-


131

  Specialty lending


90


-


90

      Total commercial lending


692


-


692

  Small-ticket commercial real estate


93


-


93

      Total commercial banking


785


-


785

  Other


140


-


140

Total company


$       8,391


$             4,264


$                        4,127

















___________________















(1)  Other assets includes a deferred tax asset of $3.9 billion as of January 1, 2010.  Of this amount, $1.6 billion relates to the impact from the January 1, 2010 adoption of the new consolidation accounting standards.      


(2)  In the second quarter of 2010, an adjustment was made to reduce retained earnings and the allowance for loan and lease losses by $34 million.  These adjustments, which related to the impairment of consolidated loans accounted for as troubled debt restructurings, are not reflected in the above table.  


(3)  $73 million of the reduction in the allowance in the first quarter of 2010 was related to the deconsolidation of certain mortgage trusts. The  offset to the reduction in the allowance was recorded in non-interest income.  



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 5:  Consolidated Statements of Income


















Three Months Ended










December 31,


September 30,


December 31,



Year Ended December 31,

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


2010


2010


2009 (1)



2010


2009 (1)
















Interest income:












Loans held for investment, including past-due fees


$  3,352


$  3,447


$  2,108



$ 13,934


$ 8,757

Investment securities


305


347


404



1,342


1,610

Other




17


21


83



77


297


Total interest income


3,674


3,815


2,595



15,353


10,664
















Interest expense:












Deposits



340


358


427



1,465


2,093

Securitized debt


165


191


54



809


282

Senior and subordinated notes


65


72


71



276


260

Other borrowings


81


85


89



346


332


Total interest expense


651


706


641



2,896


2,967
















Net interest income


3,023


3,109


1,954



12,457


7,697

Provision for loan and lease losses


839


867


844



3,907


4,230

Net interest income after provision for loan and lease losses


2,184


2,242


1,110



8,550


3,467
















Non-interest income:












Servicing and securitizations


12


13


743



7


2,280

Service charges and other customer-related fees


496


496


503



2,073


1,997

Interchange



350


346


112



1,340


502

Net other-than-temporary impairment losses recognized in earnings


(3)


(5)


(10)



(62)


(32)

Other




84


57


64



356


539


Total non-interest income


939


907


1,412



3,714


5,286
















Non-interest expense:












Salaries and associate benefits


657


641


641



2,594


2,478

Marketing



308


250


188



958


588

Communications and data processing


182


178


171



693


740

Supplies and equipment


139


129


130



520


500

Occupancy



114


135


122



486


451

Restructuring expense (2)


-


-


32



-


119

Other




691


663


664



2,683


2,541


Total non-interest expense


2,091


1,996


1,948



7,934


7,417

Income from continuing operations before income taxes


1,032


1,153


574



4,330


1,336

Income tax provision


331


335


170



1,280


349

Income from continuing operations, net of tax


701


818


404



3,050


987

Loss from discontinued operations, net of tax


(4)


(15)


(28)



(307)


(103)

Net income



$     697


$    803


$    376



$   2,743


$    884

Preferred stock dividends


-


-


-



-


(564)

Net income available to common shareholders


$     697


$    803


$    376



$   2,743


$    320
















Basic earnings per common share:












 Income from continuing operations


$    1.55


$   1.81


$   0.90



$     6.74


$   0.99

 Loss from discontinued operations


(0.01)


(0.03)


(0.07)



(0.67)


(0.24)

 Net income per common share


$    1.54


$   1.78


$   0.83



$     6.07


$   0.75
















Diluted earnings per common share:












 Income from continuing operations


$    1.53


$    1.79


$   0.89



$     6.68


$   0.98

 Loss from discontinued operations


(0.01)


(0.03)


(0.06)



(0.67)


(0.24)

 Net income per common share


$    1.52


$    1.76


$   0.83



$     6.01


$   0.74
















Weighted average common shares outstanding (in millions):












  Basic EPS



452.7


452.5


450.0



452.1


428.1

  Diluted EPS


457.2


456.6


454.9



456.4


431.4
















Dividends per common share


$    0.05


$   0.05


$   0.05



$     0.20


$   0.53
















___________________



























(1) Certain prior period amounts have been reclassified to conform to the current period presentation.

(2) In 2009, the Company completed its restructuring initiative that was initiated in 2007.  



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 6:  Consolidated Balance Sheets




















December 31,


September 30,


December 31,

(dollars in millions)(unaudited)


2010


2010


2009 (1)









Assets:







Cash and due from banks


$     2,067


$       2,015


$     3,100

Interest-bearing deposits with banks


2,776


2,391


5,043

Federal funds sold and repurchase agreements


406


536


542


Cash and cash equivalents


5,249


4,942


8,685

Restricted cash for securitization investors


1,602


2,686


501

Investment in securities:








Available for sale, at fair value


41,537


39,926


38,830


Held to maturity, at amortized cost


-


-


80


Total investment in securities


41,537


39,926


38,910

Loans held for investment:








Unsecuritized loans held for investment, at amortized cost


71,921


74,719


75,097


Restricted loans for securitization investors


54,026


51,615


15,522


Total loans held for investment


125,947


126,334


90,619


   Less: Allowance for loan and lease losses


(5,628)


(6,175)


(4,127)


Net loans held for investment


120,319


120,159


86,492

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


228


197


268

Accounts receivable from securitizations


118


127


7,128

Premises and equipment, net


2,749


2,722


2,736

Interest receivable


1,070


1,025


936

Goodwill


13,591


13,593


13,596

Other


11,040


11,556


10,394


Total assets


$ 197,503


$   196,933


$ 169,646

















Liabilities:







Interest payable


$        488


$         464


$        509

Customer deposits:








Non-interest bearing deposits


15,048


14,471


13,439


Interest-bearing deposits


107,162


104,741


102,370


Total customer deposits


122,210


119,212


115,809

Securitized debt obligations


26,915


29,504


3,954

Other debt:








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


1,517


947


1,140


Senior and subordinated notes


8,650


9,083


9,045


Other borrowings


4,714


4,799


6,875


Total other debt


14,881


14,829


17,060

Other liabilities


6,468


6,863


5,725


Total liabilities


170,962


170,872


143,057









Stockholders' equity:







Common stock


5


5


5

Paid-in capital, net


19,084


19,059


18,955

Retained earnings and accumulated other comprehensive income


10,654


10,199


10,809


Less:  Treasury stock, at cost


(3,202)


(3,202)


(3,180)


Total stockholders' equity


26,541


26,061


26,589


Total liabilities and stockholders' equity


$ 197,503


$   196,933


$ 169,646

















___________________















(1) Certain prior period amounts have been reclassified to conform to the current period presentation.



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 7:  Average Balances, Net Interest Income and Net Interest Margin — Reported and Managed Basis(1)


Reported Basis






Quarter Ended 12/31/10


Quarter Ended 09/30/10


Quarter Ended 12/31/09 (3)





Average


Interest Income/


Yield/


Average


Interest Income/


Yield/


Average


Interest Income/


Yield/

(dollars in millions)(unaudited)


Balance


Expense


Rate


Balance


Expense


Rate


Balance


Expense


Rate

Interest-earning assets:




















Loans held for investment


$ 125,441


$      3,352


10.69%


$ 126,307


$    3,447


10.92%


$   94,732


$   2,108


8.90%


Investment securities (2)


41,004


305


2.98%


39,872


347


3.48%


38,487


404


4.20%


Other


7,546


17


0.90%


6,294


21


1.33%


10,444


83


3.18%

Total interest-earning assets


$ 173,991


$      3,674


8.45%


$ 172,473


$    3,815


8.85%


$ 143,663


$   2,595


7.23%






















Interest-bearing liabilities:




















Interest-bearing deposits





















NOW accounts


$   12,918


$           8


0.25%


$   11,333


$        10


0.35%


$   10,588


$        14


0.53%



Money market deposit accounts


43,822


110


1.00%


43,260


104


0.96%


37,460


97


1.04%



Savings accounts


25,121


54


0.86%


22,572


49


0.87%


15,416


35


0.91%



Other consumer time deposits


16,941


112


2.64%


18,726


133


2.84%


27,273


201


2.95%



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


204


1


1.96%


220


1


1.82%


754


2


1.06%



CD's of $100,000 or more


6,696


54


3.23%


7,256


59


3.25%


8,634


77


3.57%



Foreign time deposits


895


1


0.45%


819


2


0.98%


1,019


1


0.39%


Total interest-bearing deposits


$ 106,597


$      340


1.28%


$ 104,186


$     358


1.37%


$ 101,144


$      427


1.69%


Senior and subordinated notes


8,096


65


3.21%


8,677


72


3.32%


8,759


71


3.24%


Other borrowings


6,622


81


4.89%


6,483


85


5.24%


9,908


89


3.59%


Securitization debt obligations


27,708


165


2.38%


30,750


191


2.48%


4,249


54


5.08%

Total interest-bearing liabilities


$ 149,023


$      651


1.75%


$ 150,096


$     706


1.88%


$ 124,060


$      641


2.07%






















Net interest income/spread




$    3,023


6.70%




$  3,109


6.97%




$   1,954


5.16%






















Interest income to average interest-earning assets






8.45%






8.85%






7.23%

Interest expense to average interest-earning assets






1.50%






1.64%






1.79%

Net interest margin






6.95%






7.21%






5.44%
























Managed Basis






Quarter Ended 12/31/10


Quarter Ended 09/30/10


Quarter Ended 12/31/09





Average


Interest Income/


Yield/


Average


Interest Income/


Yield/


Average


Interest Income/


Yield/





Balance


Expense


Rate


Balance


Expense


Rate


Balance


Expense


Rate











































Interest-earning assets:




















Loans held for investment


$ 125,441


$      3,352


10.69%


$ 126,391


$   3,447


10.91%


$ 138,184


$   3,637


10.53%


Investment securities (2)


41,004


305


2.98%


39,872


347


3.48%


38,487


404


4.20%


Other


7,546


17


0.90%


6,294


21


1.33%


7,228


17


0.94%

Total interest-earning assets


$ 173,991


$      3,674


8.45%


$ 172,557


$    3,815


8.84%


$ 183,899


$   4,058


8.83%






















Interest-bearing liabilities:




















Interest-bearing deposits





















NOW accounts


$   12,918


$       8


0.25%


$   11,333


$     10


0.35%


$   10,588


$        14


0.53%



Money market deposit accounts


43,822


110


1.00%


43,260


104


0.96%


37,460


97


1.04%



Savings accounts


25,121


54


0.86%


22,572


49


0.87%


15,416


35


0.91%



Other consumer time deposits


16,941


112


2.64%


18,726


133


2.84%


27,273


201


2.95%



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


204


1


1.96%


220


1


1.82%


754


2


1.06%



CD's of $100,000 or more


6,696


54


3.23%


7,256


59


3.25%


8,634


77


3.57%



Foreign time deposits


895


1


0.45%


819


2


0.98%


1,019


1


0.39%


Total interest-bearing deposits


$ 106,597


$       340


1.28%


$ 104,186


$     358


1.37%


$ 101,144


$      427


1.69%


Senior and subordinated notes


8,096


65


3.21%


8,677


72


3.32%


8,759


71


3.24%


Other borrowings


6,622


81


4.89%


6,483


85


5.24%


9,908


89


3.59%


Securitization debt obligations


27,708


165


2.38%


30,750


191


2.48%


44,837


301


2.69%

Total interest-bearing liabilities


$ 149,023


$       651


1.75%


$ 150,096


$      706


1.88%


$ 164,648


$      888


2.16%






















Net interest income/spread




$      3,023


6.70%




$    3,109


6.96%




$   3,170


6.67%






















Interest income to average interest-earning assets






8.45%






8.84%






8.83%

Interest expense to average interest-earning assets






1.50%






1.64%






1.93%

Net interest margin






6.95%






7.21%






6.90%






















___________________








































(1) Reflects amounts based on continuing operations.

(2) Consists of available-for-sale and held-to-maturity securities.

(3) Certain prior period amounts have been reclassified to conform to the current period presentation.


*Prior to the January 1, 2010 adoption of the new consolidation accounting standards, management evaluated the Company and each of its lines of business results on a "managed" basis, which is a non-GAAP measure. With the adoption of the new consolidation accounting standards, the Company's reported results are comparable to the "managed" basis, which reflect the consolidation of the majority of the Company's credit card securitization trusts.  The accompanying "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" presents a reconciliation of the Company's non-GAAP "managed" results to its reported GAAP results for periods prior to January 1, 2010. See the accompanying schedule "Table 4: Impact from Adoption of New Consolidation Accounting Guidance January 1, 2010" for additional information on the impact from the new accounting standards.



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 8: Lending Information and Statistics(1)



2010


2010


2010

(dollars in millions)(unaudited)


Q4


Q3


Q2

Period-end loans held for investment







Credit card:







  Domestic credit card


$   53,849


$   53,839


$   54,628

  International credit card


7,522


7,487


7,269

     Total credit card


61,371


61,326


61,897








Consumer banking:







  Automobile


17,867


17,643


17,221

  Home loan


12,103


12,763


13,322

  Retail banking


4,413


4,591


4,770

     Total consumer banking


34,383


34,997


35,313








Commercial banking:







  Commercial and multifamily real estate


13,396


13,383


13,580

  Middle market


10,484


10,456


10,203

  Specialty lending


4,020


3,813


3,815

     Total commercial lending


27,900


27,652


27,598

  Small-ticket commercial real estate


1,842


1,890


1,977

     Total commercial banking


29,742


29,542


29,575








Other loans (2)


451


469


470

    Total


$ 125,947


$ 126,334


$ 127,255








Average loans held for investment







Credit card:







  Domestic credit card


$   53,189


$   54,049


$   55,252

  International credit card


7,419


7,342


7,427

     Total credit card


60,608


61,391


62,679








Consumer banking:







  Automobile


17,763


17,397


17,276

  Home loan


12,522


13,024


13,573

  Retail banking


4,466


4,669


4,811

     Total consumer banking


34,751


35,090


35,660








Commercial banking:







  Commercial and multifamily real estate


13,323


13,411


13,543

  Middle market


10,460


10,352


10,276

  Specialty lending


3,947


3,715


3,654

     Total commercial lending


27,730


27,478


27,473

  Small-ticket commercial real estate


1,887


1,957


2,060

     Total commercial banking


29,617


29,435


29,533








Other loans (2)


465


475


463

     Total


$ 125,441


$ 126,391


$ 128,335








Net charge-off rates







Credit card:







  Domestic credit card


7.28%


8.23%


9.49%

  International credit card


6.68%


7.60%


8.38%

     Total credit card


7.21%


8.16%


9.36%








Consumer banking:







  Automobile


2.65%


2.71%


2.09%

  Home loan(3)


0.89%


0.41%


0.46%

  Retail banking(3)


2.40%


2.20%


2.11%

     Total consumer banking(3)


1.98%


1.79%


1.47%








Commercial banking:







  Commercial and multifamily real estate(3)


1.15%


1.78%


1.17%

  Middle market (3)


0.94%


0.43%


0.78%

  Specialty lending


0.63%


0.64%


0.87%

     Total commercial lending(3)


1.00%


1.11%


0.98%

  Small-ticket commercial real estate


7.72%


3.48%


4.21%

     Total commercial banking(3)


1.43%


1.27%


1.21%








Other loans


21.11%


17.63%


27.95%

     Total


4.45%


4.82%


5.35%








30+ day performing delinquency rates







Credit card:







  Domestic credit card


4.09%


4.53%


4.79%

  International credit card


5.75%


5.84%


6.03%

     Total credit card


4.29%


4.69%


4.94%








Consumer banking:







  Automobile


8.14%


7.95%


7.74%

  Home loan(3)


0.64%


0.69%


0.68%

  Retail banking(3)


0.93%


1.08%


0.87%

     Total consumer banking(3)


4.57%


4.40%


4.15%








Nonperforming asset rates(5) (6)







Consumer banking:







  Automobile(4)


0.64%


0.60%


0.56%

  Home loan(3)


4.25%


4.09%


3.78%

  Retail banking(3)


2.66%


2.41%


2.25%

     Total consumer banking(3)


2.17%


2.11%


2.00%








Commercial banking:







  Commercial and multifamily real estate(3)


2.23%


2.44%


2.82%

  Middle market (3)


1.33%


1.36%


1.20%

  Specialty lending


1.30%


1.75%


1.94%

     Total commercial lending(3)


1.76%


1.94%


2.10%

  Small-ticket commercial real estate


2.38%


2.04%


3.57%

     Total commercial banking(3)


1.80%


1.94%


2.20%



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 9:  Credit Card Segment Financial & Statistical Summary(1)



2010


2010


2010

(dollars in millions) (unaudited)


Q4


Q3


Q2

Credit Card







Earnings:







 Net interest income


$   1,870


$   1,934


$   1,977

 Non-interest income


672


671


659

 Total revenue


$   2,542


$   2,605


$   2,636

 Provision for loan and lease losses


589


660


765

 Non-interest expense


1,056


978


1,002

 Income from continuing operations before taxes


897


967


869

 Income tax provision


311


336


301

 Income from continuing operations, net of tax


$      586


$      631


$      568








Selected metrics:







 Period end loans held for investment


$ 61,371


$ 61,326


$ 61,897

 Average loans held for investment


$ 60,608


$ 61,391


$ 62,679

 Loans held for investment yield


13.97%


14.27%


14.24%

 Revenue margin


16.78%


16.97%


16.82%

 Net charge-off rate


7.21%


8.16%


9.36%

 30+ day performing delinquency rate


4.29%


4.69%


4.94%

 Purchase volume (8)


$ 29,379


$ 27,039


$ 26,570








Domestic Card







Earnings:







 Net interest income


$   1,621


$   1,691


$   1,735

 Non-interest income


594


575


560

 Total revenue


$   2,215


$   2,266


$   2,295

 Provision for loan and lease losses


505


577


675

 Non-interest expense


935


844


869

 Income from continuing operations before taxes


775


845


751

 Income tax provision


276


301


268

 Income from continuing operations, net of tax


$      499


$      544


$      483








Selected metrics:







 Period end loans held for investment


$ 53,849


$ 53,839


$ 54,628

 Average loans held for investment


$ 53,189


$ 54,049


$ 55,252

 Loans held for investment yield


13.57%


13.95%


13.98%

 Revenue margin


16.66%


16.77%


16.61%

 Net charge-off rate


7.28%


8.23%


9.49%

 30+ day performing delinquency rate


4.09%


4.53%


4.79%

 Purchase volume (8)


$ 26,985


$ 24,858


$ 24,513








International Card







Earnings:







 Net interest income


$      249


$      243


$      242

 Non-interest income


78


96


99

 Total revenue


$      327


$      339


$      341

 Provision for loan and lease losses


84


83


90

 Non-interest expense


121


134


133

 Income from continuing operations before taxes


122


122


118

 Income tax provision


35


35


33

 Income from continuing operations, net of tax


$        87


$        87


$        85








Selected metrics:







 Period end loans held for investment


$   7,522


$   7,487


$   7,269

 Average loans held for investment


$   7,419


$   7,342


$   7,427

 Loans held for investment yield


16.82%


16.62%


16.21%

 Revenue margin


17.63%


18.47%


18.37%

 Net charge-off rate


6.68%


7.60%


8.38%

 30+ day performing delinquency rate


5.75%


5.84%


6.03%

 Purchase volume (8)


$   2,394


$   2,181


$   2,057



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 10:  Consumer Banking Segment Financial & Statistical Summary(1)




2010


2010


2010

(dollars in millions) (unaudited)


Q4


Q3


Q2

Consumer Banking







Earnings:








Net interest income


$      950


$      946


$      935


Non-interest income


196


196


162


Total revenue


$   1,146


$   1,142


$   1,097


Provision for loan and lease losses


189


114


(112)


Non-interest expense


770


757


735


Income from continuing operations before taxes


187


271


474


Income tax provision (benefit)


67


96


169


Income (loss) from continuing operations, net of tax


$      120


$      175


$      305









Selected metrics:








Period end loans held for investment


$ 34,383


$ 34,997


$ 35,313


Average loans held for investment


$ 34,751


$ 35,090


$ 35,660


Loans held for investment yield


9.20%


9.28%


8.99%


Auto loan originations


$   2,217


$   2,439


$   1,765


Period-end deposits


$ 82,959


$ 79,506


$ 77,407


Average deposits


$ 81,834


$ 78,224


$ 77,082


Deposit interest expense rate


1.13%


1.18%


1.18%


Core deposit intangible amortization


$        34


$        36


$        36


Net charge-off rate (3)


1.98%


1.79%


1.47%


Nonperforming loans as a percentage of loans held for investment (3)(4)


1.97%


1.92%


1.82%


Nonperforming asset rate (3) (4)


2.17%


2.11%


2.00%


30+ day performing delinquency rate (3) (4)


4.57%


4.40%


4.15%


Period-end loans serviced for others


$ 20,689


$ 20,298


$ 21,425



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 11:  Commercial Banking Segment Financial & Statistical Summary(1)











2010


2010


2010

(dollars in millions) (unaudited)


Q4


Q3


Q2

Commercial Banking







Earnings:








Net interest income


$      336


$      325


$      319


Non-interest income


49


30


60


Total revenue


$      385


$      355


$      379


Provision for loan and lease losses


34


95


62


Non-interest expense


207


199


198


Income (loss) from continuing operations before taxes


144


61


119


Income tax provision (benefit)


51


22


42


Income (loss) from continuing operations, net of tax


$        93


$        39


$        77









Selected metrics:








Period end loans held for investment


$ 29,742


$ 29,542


$ 29,575


Average loans held for investment


$ 29,617


$ 29,435


$ 29,533


Loans held for investment yield


5.13%


5.13%


4.94%


Period end deposits


$ 22,630


$ 22,100


$ 21,527


Average deposits


$ 22,808


$ 21,899


$ 22,171


Deposit interest expense rate


0.61%


0.67%


0.67%


Core deposit intangible amortization


$        13


$        14


$        14


Net charge-off rate (3)


1.43%


1.27%


1.21%


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


1.66%


1.81%


2.04%


Nonperforming asset rate (3)


1.80%


1.94%


2.20%



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 12:  Other and Total Segment Financial & Statistical Summary(1)











2010


2010


2010

(dollars in millions) (unaudited)


Q4


Q3


Q2

Other







Earnings:








Net interest income (expense)


$      (133)


$        (93)


$      (132)


Non-interest income (expense)


22


7


(74)


Total revenue


$      (111)


$        (86)


$      (206)


Provision for loan and lease losses


27


(2)


10


Restructuring expense (9)


-


-


-


Non-interest expense


58


62


65


Income (loss) from continuing operations before taxes


(196)


(146)


(281)


Income tax benefit


(98)


(119)


(143)


Income (loss) from continuing operations, net of tax


$        (98)


$        (27)


$      (138)









Selected metrics:








Period end loans held for investment (2)


$        451


$        469


$        470


Average loans held for investment (2)


$        465


$        475


$        463


Period end deposits


$   16,621


$   17,606


$   18,397


Average deposits


$   17,094


$   18,132


$   19,231









Total







Earnings:








Net interest income


$     3,023


$     3,112


$     3,099


Non-interest income


939


904


807


Total revenue


$     3,962


$     4,016


$     3,906


Provision for loan and lease losses


839


867


725


Restructuring expense (9)


-


-


-


Non-interest expense


2,091


1,996


2,000


Income from continuing operations before taxes


1,032


1,153


1,181


Income tax provision


331


335


369


Income from continuing operations, net of tax


$        701


$        818


$        812









Selected metrics:








 Period end loans held for investment


$ 125,947


$ 126,334


$ 127,255


 Average loans held for investment


$ 125,441


$ 126,391


$ 128,335


 Period end deposits


$ 122,210


$ 119,212


$ 117,331


 Average deposits


$ 121,736


$ 118,255


$ 118,484



CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 13:  Notes to Loan and Segment Disclosures (Tables 8 — 12)



(1)  Prior to the January 1, 2010 adoption of the new consolidation accounting standards, management evaluated the financial performance of the Company and the results of each of its business segments on a non-GAAP "managed" basis.  Our managed presentations assumed that our securitized loans had not been sold and that the earnings from securitized loans were classified in our results of operations in the same manner as the earnings on loans that we owned.  The adoption of the new consolidation accounting standards resulted in the consolidation of the majority of the Company's credit card securitization trusts.  As a result, the Company's reported and managed basis presentations are generally comparable for periods beginning after January 1, 2010, except for one securitization trust that remained unconsolidated during the first two quarters of 2010. The Company exercised its clean-up call option on this trust effective September 15, 2010, which resulted in the consolidation of $93 million of loans underlying this trust in the third quarter of 2010. The accompanying Exhibit "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" presents a reconciliation of the Company's non-GAAP "managed" results to its reported GAAP results.  


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


(3)  The credit quality statistics excluding the impact of loans acquired from Chevy Chase Bank (CCB) are as follows.














2010


2010


2010

(in millions) (unaudited)


Q4


Q3


Q2

CCB period end acquired loan portfolio

$ 5,532


$ 5,891


$ 6,381

CCB average acquired loan portfolio

$ 5,633


$ 6,014


$ 6,541

Net charge-off rates






 Consumer banking:







    Home loan

1.46%


0.68%


0.77%

    Retail banking

2.49%


2.29%


2.23%

        Total consumer banking

2.32%


2.11%


1.76%








 Commercial banking:







    Commercial and multifamily real estate

1.17%


1.81%


1.19%

    Middle market

0.97%


0.44%


0.82%

        Total commercial lending

1.02%


1.14%


1.01%

        Total commercial banking

1.45%


1.30%


1.24%








30+ day performing delinquency rates






 Consumer banking:







    Home loan

1.06%


1.16%


1.14%

    Retail banking

0.97%


1.12%


0.91%

        Total consumer banking

5.35%


5.19%


4.93%








Nonperforming asset rates






 Consumer banking:







    Home loan

7.05%


6.83%


6.30%

    Retail banking

2.77%


2.51%


2.37%

        Total consumer banking

2.54%


2.49%


2.38%








 Commercial banking:







    Commercial and multifamily real estate

2.28%


2.47%


2.90%

    Middle market

1.36%


1.42%


1.25%

        Total commercial lending

1.79%


1.98%


2.16%

        Total commercial banking

1.83%


1.98%


2.26%








Nonperforming loans as a percentage of loans held for investment






 Consumer banking


2.30%


2.26%


2.16%

 Commercial banking

1.69%


1.84%


2.09%








(4)  Includes nonaccrual consumer auto loans 90+ days past due.


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


(6)  As permitted by regulatory guidance, the Company's policy is not to classify delinquent credit card loans as nonperforming. Instead, 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.


(7)  During Q4 2009, the Company reclassified small-ticket commercial real estate loans totaling $128 million to loans held from sale from loans held for investment and recognized charge-offs of $80 million.


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


(9)  In 2009, the Company completed its restructuring initiative that was initiated in 2007.