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Capital One Reports Record Third Quarter Results

October 15, 2002 at 5:05 PM EDT
FALLS CHURCH, Va., Oct 15, 2002 /PRNewswire-FirstCall via COMTEX/ --

Raises 2002 Earnings per Share Growth Target to 35% Maintains EPS Target for 2003

Capital One Financial Corporation (NYSE: COF) today announced record earnings for the third quarter of 2002 of $258.8 million, or $1.13 per fully diluted share, versus earnings of $165.3 million, or $0.75 per share, for the comparable period in the prior year. This represents a 51 percent year-over-year increase in earnings per share. Earnings in the second quarter of 2002 were $213.1 million, or $0.92 per fully diluted share. The company also announced that it was raising its target for earnings per share growth for 2002 to 35 percent, up from the previous guidance of 30 percent. The company now expects to report earnings per share of approximately $3.93 for the year ending December 31, 2002. Also, the company maintained its 2003 earnings target at approximately $4.55 per share, which represents a 15 percent increase over the company's expected 2002 earnings per share, and reaffirmed its long-term earnings per share growth target of 20 percent.

"Capital One continues to deliver strong financial performance despite the challenging environment," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Assets grew by $3.6 billion in the quarter, profits are up over 50 percent over the same quarter of 2001, and credit quality performed as expected."

During the quarter, the company changed its financial statement presentation of recoveries for charged-off loan balances. The change was made to comply with the draft guidelines that were recently published by the Federal Financial Institutions Examination Council with respect to credit card industry account management. Under the company's new presentation, recoveries of the principal portion of charged-off accounts continue to be treated as a reduction of current period charge-offs. Recoveries of finance charges and fees are now reported as revenue instead of a reduction of charge-offs, and are reflected in the appropriate income statement line items.

The change in the treatment of recoveries also resulted in a change to the recoveries estimate used to calculate the company's allowance for loan losses and its estimate for uncollectable finance charge and fee revenue. This change in estimate increased the provision for loan losses by $133 million and increased the amount of finance charges and fees deemed collectible by $83 million. Recoveries recorded in prior period financial statements have been reclassified to conform with the new financial statement presentation. The accompanying tables illustrate the overall effects of the new recoveries presentation on income statement items as well as key statistics including charge-off rate, net interest margin, and revenue margin.

The company increased its allowance for loan losses by $358 million in the third quarter including $133 million due to the new recoveries presentation. The remainder of the allowance increase largely reflected growth in reported loans during the period.

The managed net charge-off rate decreased to 4.96 percent for the third quarter of 2002 compared with 4.98 percent for the second quarter of 2002. Fifty-seven basis points of the third quarter charge-off rate and 62 basis points of the second quarter charge-off rate was due to the change in financial statement presentation of recoveries. The managed delinquency rate (30+ days) increased to 5.36 percent as of September 30, 2002, compared with 4.54 percent as of June 30, 2002 and 5.20 percent at September 30, 2001.

Charge-offs are expected to rise in the fourth quarter of this year and the early part of next year due to the seasoning of subprime assets added in the fourth quarter of 2001 and early 2002, as well as the slowing of loan growth. The company expects that its managed charge-off rate will rise to the low-6 percent range in the fourth quarter (This is consistent with previous guidance that the fourth quarter charge-offs would be in the mid-5 percent range, prior to recoveries reclassification). The company expects charge-offs to rise to the high-6 percent range in the first half of 2003 and then decline somewhat in the second half of 2003.

Third quarter 2002 revenue, defined as managed net interest income and non-interest income, rose to $2.6 billion from $2.4 billion in the second quarter of 2002. The company's managed consumer loan balances increased by $3.7 billion in the third quarter to $56.9 billion. The company's managed revenue margin increased by 36 basis points to 17.49 percent in the third quarter of 2002 from 17.13 percent in the second quarter of 2002. This increase reflects both the one time and ongoing impacts detailed in the accompanying tables.

Marketing expense for the third quarter of 2002 was $185.8 million, down from $320.4 million in the second quarter of 2002. Reflecting the lower marketing expense, Capital One's accounts declined to 48.2 million from 48.6 million at the end of the second quarter. Other non-interest expenses (excluding marketing) for the third quarter of 2002 were $965.2 million versus $833.2 million for the second quarter of 2002. Annualized operating expenses per account increased to $80 for the third quarter of 2002 from $70 in the prior quarter. The company incurred a number of one-time expenses totaling $110 million, or $9 in annualized operating costs per account.

"The lower marketing investment in the third quarter reflects our return to a more normal level of loan growth," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "We expect marketing to increase in 2003 as we take advantage of the attractive opportunities that we see in all major areas of our business including US card, installment and auto loans, and our international activities. This quarter clearly demonstrates our ability to grow our business and profitability on a stronger, more diversified business platform."

The company cautioned that its current expectations for fourth-quarter 2002 and full-year 2003 earnings, and future growth and charge-off expectations, are forward looking statements and actual results could differ materially from current expectations due to a number of factors, including: competition in the credit card industry; the actual account and balance growth achieved by the company; the company's ability to access the capital markets at attractive rates and terms to fund its operations and future growth; changes in regulation; and general economic conditions affecting consumer income and spending, which may affect consumer bankruptcies, defaults and charge-offs. A discussion of these and other factors can be found in Capital One's annual and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-K for the year ended December 31, 2001.

Headquartered in Falls Church, Virginia, Capital One Financial Corporation (http://www.capitalone.com ) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products. Capital One's subsidiaries collectively had 48.2 million accounts and $56.9 billion in managed loans outstanding as of September 30, 2002. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.

Note: This release, financial information and a live Webcast of today's 5:00pm (EDT) analyst conference call is accessible on the Internet on Capital One's home page (http://www.capitalone.com ). Choose "About Capital One" to access the Investor Center to view and download the earnings press release and other financial information.

                      CAPITAL ONE FINANCIAL CORPORATION
                  Impact of the Recoveries Reclassification
                For the Three Months Ended September 30, 2002
                          (in thousands)(unaudited)

                                             After
                                        Reclassification, Impact of
                Prior to    Recoveries   Prior to Change  Change in   Q3 2002
                Recoveries  Reclassifi-  in Estimate      Estimate    Managed
                 Change       cation

    Managed:
     Net
      interest
      income    $1,349,731    $47,167     $1,396,898      $38,376   $1,435,274
     Non-interest
      Income     1,113,543     31,210      1,144,753       44,358    1,189,111
     Total
      revenue    2,463,274     78,377      2,541,651       82,734    2,624,385
     Provision
      for loan
      losses       844,084     78,377        922,461      133,428    1,055,889
     Marketing     185,795                   185,795                   185,795
     Operations
      costs        965,225                   965,225                   965,225
     Income before
      income taxes 468,170        -          468,170      (50,694)     417,476
     Income taxes  177,905                   177,905      (19,264)     158,641
     Net income   $290,265       $-         $290,265    $ (31,430)    $258,835

     Diluted EPS     $1.27                     $1.27                     $1.13


    Revenue Margin  16.42%                    16.94%                    17.49%
    Net Interest
     Margin          9.00%                     9.31%                     9.57%
    Risk Adjusted
     Margin         12.37%                    12.37%                    12.92%
    Charge-off
     Rate            4.39%                     4.96%                     4.96%
    Delinquency
     Rate            5.22%                     5.22%                     5.36%
    Allowance to
     Reported Loans  5.20%                     5.20%                     5.68%
During the third quarter, the company changed its financial statement presentation of recoveries for charged-off loans. The change was made in response to draft guidelines that were recently published by the Federal Financial Institutions Examination Council with respect to credit card account management. Previously, the company recognized all recoveries of charged-off loans in the allowance for loan losses and provision for loan losses. The company now treats the portion of recoveries related to finance charges and fees as revenue. All prior-period recoveries have been reclassified to conform to the current financial statement presentation of recoveries.

In the third quarter, the change in the treatment of recoveries also resulted in a change to the recoveries estimate used to calculate the company's allowance for loan losses and its finance charge and fee revenue.

The table above and the following tables illustrate the overall effects of the change in the treatment of recoveries on income statement items as well as key statistics.

                      Capital One Financial Corporation
               Impact of Recoveries Reclassification -- Managed
                          (in thousands)(unaudited)

                                                 2002

                             Third Quarter    Second Quarter    First Quarter

    Managed -- Prior to
     Reclassification

      Net Interest Income     $1,349,731        $1,185,151        $1,120,868
      Non-Interest Income     $1,113,543        $1,113,853          $959,881
      Provision for Loan
       Losses                   $844,084          $801,619          $617,601
      Net Interest Margin          9.00%             8.53%             8.87%
      Revenue Margin              16.42%            16.55%            16.47%
      Net Charge-offs           $607,300          $559,131          $466,683
      Net Charge-off Rate          4.39%             4.36%             4.00%

    Managed -- After
     Reclassified

      Net Interest Income     $1,435,274        $1,234,307        $1,172,536
      Non-Interest Income     $1,189,111        $1,145,014          $990,161
      Provision for Loan
       Losses                 $1,055,889          $881,936          $699,549
      Net Interest Margin          9.57%             8.89%             9.28%
      Revenue Margin              17.49%            17.13%            17.12%
      Net Charge-offs           $685,677          $639,448          $548,631
      Net Charge-off Rate          4.96%             4.98%             4.70%

    Change in Managed

      Net Interest Income        $85,543           $49,156           $51,668
      Non-Interest Income        $75,568           $31,161           $30,280
      Provision for Loan
       Losses                   $211,805           $80,317           $81,948
      Net Interest Margin          0.57%(1)          0.35%             0.41%
      Revenue Margin               1.07%(2)          0.58%             0.65%
      Net Charge-offs            $78,377           $80,317           $81,948
      Net Charge-off Rate          0.57%             0.62%             0.70%
(1) 26 basis point increase in net interest margin relates to the one-time impact of the change in estimate.

(2) 55 basis point increase in revenue margin relates to the one-time impact of the change in estimate.

                                                  2001

                                   Fourth      Third       Second      First
                                   Quarter     Quarter     Quarter     Quarter

    Managed -- Prior to
     Reclassification

      Net Interest Income         $982,943    $926,668    $823,701    $759,308
      Non-Interest Income         $941,524    $852,504    $796,273    $747,096
      Provision for Loan Losses   $563,325    $437,594    $379,128    $356,523
      Net Interest Margin            8.68%       9.27%       9.11%       9.21%
      Revenue Margin                16.99%      17.79%      17.91%      18.27%
      Net Charge-offs             $456,861    $362,744    $332,815    $285,950
      Net Charge-off Rate            4.42%       3.92%       3.98%       3.75%

    Managed -- After
     Reclassified

      Net Interest Income       $1,021,717    $962,122    $858,196    $791,782
      Non-Interest Income         $963,376    $872,115    $814,315    $763,971
      Provision for Loan
       Losses                     $623,951    $492,659    $431,665    $405,872
      Net Interest Margin            9.02%       9.62%       9.49%       9.60%
      Revenue Margin                17.53%      18.35%      18.49%      18.87%
      Net Charge-offs             $517,487    $417,809    $385,352    $335,299
      Net Charge-off Rate            5.01%       4.51%       4.61%       4.40%

    Change in Managed

     Net Interest Income           $38,774     $35,454     $34,495     $32,474
     Non-Interest Income           $21,852     $19,611     $18,042     $16,875
     Provision for Loan Losses     $60,626     $55,065     $52,537     $49,349
     Net Interest Margin             0.34%       0.35%       0.38%       0.39%
     Revenue Margin                  0.54%       0.55%       0.58%       0.60%
     Net Charge-offs               $60,626     $55,065     $52,537     $49,349
     Net Charge-off Rate             0.59%       0.59%       0.63%       0.65%
(1) 26 basis point increase in net interest margin relates to the one-time impact of the change in estimate.

(2) 55 basis point increase in revenue margin relates to the one-time impact of the change in estimate.

                      Capital One Financial Corporation
              Impact of Recoveries Reclassification -- Reported
                          (in thousands)(unaudited)

                                               2002

                            Third Quarter    Second Quarter    First Quarter

    Reported -- Prior to
     Reclassification

      Net Interest Income     $663,596         $629,577           $584,107
      Non-Interest Income   $1,463,043       $1,369,586         $1,226,250
      Provision for Loan
       Losses                 $507,449         $501,780           $347,212
      Net Interest Margin        8.18%            8.21%              8.56%
      Revenue Margin            26.21%           26.07%             26.53%
      Net Charge-offs         $270,665         $259,292           $196,295
      Net Charge-off Rate        4.08%            4.09%              3.50%

    Reported -- After
     Reclassified

      Net Interest Income     $722,429         $654,412           $611,238
      Non-Interest Income   $1,520,178       $1,384,812         $1,241,524
      Provision for Loan
       Losses                 $674,111         $541,841           $389,617
      Net Interest Margin        8.91%            8.53%              8.96%
      Revenue Margin            27.64%           26.59%             27.15%
      Net Charge-offs         $303,899         $299,353           $238,700
      Net Charge-off Rate        4.58%            4.72%              4.26%

    Change in Reported

      Net Interest Income      $58,833          $24,835            $27,131
      Non-Interest Income      $57,135          $15,226            $15,274
      Provision for Loan
       Losses                 $166,662          $40,061             $42,405
      Net Interest Margin         0.73%(1)        0.32%               0.40%
      Revenue Margin              1.43%(2)        0.52%               0.62%
      Net Charge-offs           $33,234         $40,061             $42,405
      Net Charge-off Rate         0.50%           0.63%               0.76%
(1) 47 basis point increase in net interest margin relates to the one- time impact of the change in estimate.

(2) 102 basis point increase in revenue margin relates to the one-time impact of the change in estimate.

                                                  2001

                                   Fourth      Third       Second      First
                                   Quarter     Quarter     Quarter     Quarter

    Reported -- Prior to
     Reclassification

      Net Interest Income         $489,780    $427,821    $370,070    $375,719
      Non-Interest Income       $1,177,251  $1,144,190  $1,073,676  $1,024,776
      Provision for Loan
       Losses                     $305,889    $230,433     $202,900   $250,614
      Net Interest Margin            8.09%       8.09%        7.63%      8.36%
      Revenue Margin                27.55%      29.73%       29.76%     31.14%
      Net Charge-offs             $199,426    $155,584     $156,586   $180,041
      Net Charge-off Rate            4.11%       3.55%        3.76%      4.64%

    Reported -- After
     Reclassified

      Net Interest Income         $511,768    $449,058     $392,008   $397,308
      Non-Interest Income       $1,189,015  $1,155,421   $1,084,255 $1,035,071
      Provision for Loan Losses   $339,641    $262,901     $235,417   $282,498
      Net Interest Margin            8.46%       8.49%        8.08%      8.84%
      Revenue Margin                28.10%      30.34%       30.43%     31.85%
      Net Charge-offs             $233,178    $188,052     $189,103   $211,925
      Net Charge-off Rate            4.81%       4.29%        4.54%      5.47%

    Change in Reported

      Net Interest Income          $21,988     $21,237     $21,938     $21,589
      Non-Interest Income          $11,764     $11,231     $10,579     $10,295
      Provision for Loan
       Losses                      $33,752     $32,468     $32,517     $31,884
      Net Interest Margin            0.36%       0.40%       0.45%       0.48%
      Revenue Margin                 0.56%       0.61%       0.67%       0.71%
      Net Charge-offs              $33,752     $32,468     $32,517     $31,884
      Net Charge-off Rate            0.70%       0.74%       0.78%       0.83%
(1) 47 basis point increase in net interest margin relates to the one-time impact of the change in estimate.

(2) 102 basis point increase in revenue margin relates to the one-time impact of the change in estimate.

                     CAPITAL ONE FINANCIAL CORPORATION (COF)
                         FINANCIAL & STATISTICAL SUMMARY
    (in millions,
     except per share         2002      2002      2002      2001     2001
     data and as noted)        Q3        Q2        Q1        Q4       Q3

    Earnings (Managed Basis)
    Net Interest Income     $1,435.3  $1,234.3  $1,172.5  $1,021.7   $962.1
    Non-Interest Income      1,189.1   1,145.0     990.2     963.4    872.1
    Total Revenue            2,624.4   2,379.3   2,162.7   1,985.1  1,834.2
    Provision for
     Loan Losses             1,055.9     881.9     699.5     624.0    492.7
    Marketing Expenses         185.8     320.4     353.5     301.2    281.9
    Operating Expenses         965.2(2)  833.2     806.4     773.4    793.0(2)
    Income Before Taxes        417.5     343.7     303.3     286.6    266.7
    Tax Rate                    38.0%     38.0%     38.0%     38.0%    38.0%
    Net Income                $258.8    $213.1    $188.0    $177.7   $165.3

    Common Share Statistics
    Basic EPS                   $1.17     $0.97     $0.86     $0.83    $0.78
    Diluted EPS                 $1.13     $0.92     $0.83     $0.80    $0.75
    Dividends Per Share         $0.03     $0.03     $0.03     $0.03    $0.03
    Book Value Per Share
     (period end)              $19.55    $18.13    $16.69    $15.33   $14.14
    Stock Price Per Share
     (period end)              $34.92    $61.05    $63.85    $53.95   $46.03
    Total Market
     Capitalization
     (period end)           $7,744.2 $13,512.9 $14,079.3 $11,695.2 $9,710.1
    Shares Outstanding
     (period end)              221.8     221.3     220.5     216.8    211.0
    Shares Used to
     Compute Basic EPS         220.6     220.0     217.5     214.7    210.8
    Shares Used to Compute
     Diluted EPS               228.4     231.7     226.6     223.4    219.9

    Managed Loan Statistics
     (period avg.)
    Average Loans            $55,350   $51,343   $46,688   $41,352  $37,017
    Average Earning Assets   $60,016   $55,559   $50,538   $45,295  $39,994
    Average Assets           $64,193   $59,989   $54,258   $48,906  $43,363
    Average Equity            $4,418    $4,021    $3,572    $3,223   $2,935
    Net Interest Margin         9.57%     8.89%     9.28%     9.02%    9.62%
    Revenue Margin             17.49%    17.13%    17.12%    17.53%   18.35%
    Risk Adjusted Margin(1)    12.92%    12.53%    12.78%    12.96%   14.17%
    Return on Average Assets
     (ROA)                      1.61%     1.42%     1.39%     1.45%    1.53%
    Return on Average Equity
     (ROE)                     23.43%    21.20%    21.06%    22.05%   22.53%
    Net Charge-Off Rate         4.96%     4.98%     4.70%     5.01%    4.51%
    Net Charge-Offs           $685.7    $639.4    $548.6    $517.5   $417.8
    Cost Per Account
     (in dollars)             $79.79    $69.99    $71.33    $73.69   $81.03

    Managed Loan Statistics
     (period end)
    Reported Loans           $28,104   $24,965   $24,428   $20,921  $17,480
    Off-Balance
     Sheet Loans              28,779    28,243    24,136    24,343   21,009
    Managed Loans            $56,883   $53,208   $48,564   $45,264  $38,489
    Delinquency Rate
     (30+ days)                 5.36%     4.54%     4.80%     4.95%    5.20%
    Number of Accounts
     (000's)                  48,163    48,612    46,623    43,815   40,145
    Total Assets             $65,614   $62,022   $55,381   $52,506  $44,497
    Capital (3)             $5,149.6  $4,823.6  $3,778.4  $3,422.2 $3,081.9
    Capital to Managed
     Assets Ratio               7.85%     7.78%     6.82%     6.52%    6.93%

    (1) Risk adjusted margin is total revenue less net charge-offs as a
        percentage of average earning assets.
    (2) Includes $110.0 million and $38.8 million of one-time charges in Q3
        2002 and Q3 2001, respectively.
    (3) Includes preferred interests and mandatory convertible securities.



                     CAPITAL ONE FINANCIAL CORPORATION (COF)
                       FINANCIAL & STATISTICAL SUPPLEMENT

    (in millions, except per      2002     2002      2002     2001     2001
     share data and as noted)      Q3       Q2        Q1       Q4       Q3

    Revenue & Expense Statistics
    Net interest income growth
     (annualized)                   65%      21%       59%      25%      48%
    Non interest income growth
     (annualized)                   15%      63%       11%      42%      28%
    Revenue growth (annualized)     41%      40%       36%      33%      39%
    Revenue margin (receivables) 18.97%   18.54%    18.53%   19.20%   19.82%
    Risk adjusted margin
     (receivables)               14.01%   13.55%    13.83%   14.20%   15.31%
    Ops cost as a % of revenues  36.78%   35.02%    37.28%   38.96%   43.23%
    Ops cost as a % of average
     loans (annualized)           6.98%    6.49%     6.91%    7.48%    8.57%

    Per Account Statistics
    Net interest income per
     account (annualized)      $118.65  $103.69   $103.72   $97.35   $98.31
    Non interest income per
     account (annualized)       $98.30   $96.18    $87.59   $91.79   $89.12
    Revenue per account
     (annualized)              $216.95  $199.87   $191.31  $189.15  $187.43
    Net income per account
     (annualized)               $21.39   $17.90    $16.63   $16.93   $16.90
    Ops cost per account
     (annualized)               $79.79   $69.99    $71.33   $73.69   $81.03

    Credit Quality Statistics
    Allowance as a % of
     reported loans              5.68%    4.95%     4.05%    4.02%    4.16%
    Allowance as a % of
     charge-offs (annualized)  131.21%  103.29%   103.69%   90.05%   96.62%
    Provision as a % of
     charge-offs                153.99%  137.92%   127.51%  120.57%  117.92%

    Growth Statistics
    Average accounts (000's)    48,388   47,618    45,219   41,980   39,146
    Net new accounts
     per quarter (000's)          (449)   1,989     2,808    3,670    1,999
    % account growth Q over Q
     (annualized)                   (4)%     17%       26%      37%      21%
    % account growth Y over Y       20%      27%       28%      30%      36%
    Net new loans               $3,675   $4,644    $3,300   $6,775   $3,206
    % loan growth Q over Q
     (annualized)                   28%      38%       29%      70%      36%
    % loan growth Y over Y          48%      51%       54%      53%      59%

    Balance Sheet Measures
    % off-balance sheet
     securitizations                51%      53%       50%      54%      55%
    % at teaser rate
     (introductory)                 11%      12%       13%      12%      10%



    CAPITAL ONE FINANCIAL CORPORATION
    Consolidated Balance Sheets
    (in thousands)(unaudited)

                                        September 30    June 30   September 30
                                            2002          2002          2001

    Assets:
    Cash and due from banks              $316,010      $244,857       $64,884
    Federal funds sold and resale
     agreements                           304,782       432,124       365,652
    Interest-bearing deposits at
     other banks                          112,248       448,363       102,094
      Cash and cash equivalents           733,040     1,125,344       532,630
    Securities available for sale       4,290,441     4,538,223     2,707,564
    Consumer loans                     28,104,186    24,965,210    17,479,715
      Less:  Allowance for loan
       losses                          (1,595,000)   (1,237,000)     (727,000)
    Net loans                          26,509,186    23,728,210    16,752,715
    Accounts receivable from
     securitizations                    2,584,528     2,417,775     1,949,361
    Premises and equipment, net           789,726       808,972       740,144
    Interest receivable                   182,300       151,828       108,868
    Other                               1,820,749     1,064,127       722,155
      Total assets                    $36,909,970   $33,834,479   $23,513,437


    Liabilities:
    Interest-bearing deposits         $16,885,553   $16,014,392   $11,075,499
    Senior notes                        5,561,489     6,069,719     5,462,025
    Other borrowings                    6,638,560     4,590,716     1,810,208
    Interest payable                      214,220       235,108       148,931
    Other                               3,274,637     2,910,638     2,033,481
      Total liabilities                32,574,459    29,820,573    20,530,144

    Stockholders' Equity:
    Common stock                            2,227         2,222         2,121
    Paid-in capital, net                1,636,738     1,600,489     1,154,211
    Retained earnings and cumulative
     other comprehensive income         2,731,498     2,446,147     1,872,520
      Less:  Treasury stock, at cost      (34,952)      (34,952)      (45,559)
      Total stockholders' equity        4,335,511     4,013,906     2,983,293
      Total liabilities and
       stockholders' equity           $36,909,970   $33,834,479   $23,513,437




                      CAPITAL ONE FINANCIAL CORPORATION
                      Consolidated Statements of Income
               (in thousands, except per share data)(unaudited)

                                             Three Months Ended
                                 September 30      June 30    September 30
                                     2002            2002         2001

    Interest Income:
    Consumer loans,
     including fees              $1,022,810        $950,092      $688,572
    Securities available
     for sale                        45,965          45,815        37,032
    Other                            39,304          28,754        18,323
      Total interest income       1,108,079       1,024,661       743,927

    Interest Expense:
    Deposits                        215,470         203,112       161,411
    Senior notes                    110,464         109,687        90,225
    Other Borrowings                 59,716          57,450        43,233
      Total interest expense        385,650         370,249       294,869
    Net interest income             722,429         654,412       449,058
    Provision for loan losses       674,111         541,841       262,901
    Net interest income
     after provision
     for loan losses                 48,318         112,571       186,157

    Non-Interest Income:
    Servicing and securitizations   815,267         718,347       657,175
    Service charges and other
     customer-related fees          586,708         529,112       401,544
    Interchange                     118,203         137,353        96,702
      Total non-interest income   1,520,178       1,384,812     1,155,421

    Non-Interest Expense:
    Salaries and associate
     benefits                       417,189         379,363       349,487
    Marketing                       185,795         320,446       281,910
    Communications and data
     processing                     106,128         101,601        92,735
    Supplies and equipment           88,639          88,844        77,497
    Occupancy                        86,942          38,275        32,151
    Other                           266,327         225,117       241,117
      Total non-interest expense  1,151,020       1,153,646     1,074,897
    Income before income taxes      417,476         343,737       266,681
    Income taxes                    158,641         130,620       101,337
    Net income                     $258,835        $213,117      $165,344

    Basic earnings per share          $1.17           $0.97         $0.78
    Diluted earnings per share        $1.13           $0.92         $0.75
    Dividends paid per share          $0.03           $0.03         $0.03


                                                     Nine Months Ended
                                                September 30   September 30
                                                    2002          2001


    Interest Income:
    Consumer loans, including fees                $2,836,989     $1,970,854
    Securities available for sale                    134,124         99,208
    Other                                             95,989         24,481
      Total interest income                        3,067,102      2,094,543

    Interest Expense:
    Deposits                                         596,745        463,851
    Senior notes                                     314,055        261,360
    Other Borrowings                                 168,222        130,958
      Total interest expense                       1,079,022        856,169
    Net interest income                            1,988,080      1,238,374
    Provision for loan losses                      1,605,570        780,816
    Net interest income after
     provision for loan losses                       382,510        457,558

    Non-Interest Income:
    Servicing and securitizations                  2,159,761      1,805,296
    Service charges and other
     customer-related fees                         1,633,101      1,204,225
    Interchange                                      353,652        265,226
      Total non-interest income                    4,146,514      3,274,747

    Non-Interest Expense:
    Salaries and associate benefits                1,177,287      1,017,279
    Marketing                                        859,777        781,819
    Communications and data processing               299,922        240,933
    Supplies and equipment                           261,990        225,880
    Occupancy                                        158,598         94,802
    Other                                            706,987        622,747
      Total non-interest expense                   3,464,561      2,983,460
    Income before income taxes                     1,064,463        748,845
    Income taxes                                     404,496        284,561
    Net income                                      $659,967       $464,284

    Basic earnings per share                           $3.00          $2.23
    Diluted earnings per share                         $2.88          $2.11
    Dividends paid per share                           $0.08          $0.08



    Managed (1)

                                         Quarter Ended 9/30/02
                                 Average         Income/         Yield/
                                 Balance         Expense         Rate

    Earning assets:

     Consumer loans           $55,350,137      $2,081,399       15.04%
     Securities available
      for sale                  3,877,119          45,965        4.74
     Other                        788,347           5,122        2.60
    Total earning assets      $60,015,603      $2,132,486       14.21%

    Interest-bearing
     liabilities:

      Deposits                $16,519,572        $215,470        5.22%
      Senior notes              5,718,548         110,464        7.73
      Other borrowings          5,631,470          59,716        4.24
      Securitization
       liability               28,740,188         311,562        4.34
    Total interest-bearing
     liabilities              $56,609,778        $697,212        4.93%

    Net interest spread                                          9.28%

    Interest income to average earning assets                   14.21%
    Interest expense to average earning assets                   4.64
    Net interest margin                                          9.57%
(1) The information in this table reflects the adjustment to add back the effect of securitized loans.

    Managed (1)

                                       Quarter Ended 6/30/02
                                 Average         Income/         Yield/
                                 Balance         Expense         Rate

    Earning assets:

     Consumer loans           $51,342,764      $1,838,672        14.32%
     Securities available
      for sale                 $3,662,832          45,815         5.00
     Other                        553,595           2,110         1.52
    Total earning assets      $55,559,191      $1,886,597        13.58%

    Interest-bearing
     liabilities:

      Deposits                $15,276,514        $203,112        5.32%
      Senior notes              5,959,240         109,687        7.36
      Other borrowings          5,946,983          57,450        3.86
      Securitization
       liability               25,965,894         282,041        4.34
    Total interest-bearing
     liabilities              $53,148,631        $652,290        4.91%

    Net interest spread                                          8.66%

    Interest income to average earning assets                   13.58%
    Interest expense to average earning assets                   4.69
    Net interest margin                                          8.89%
(1) The information in this table reflects the adjustment to add back the effect of securitized loans.

    Managed (1)

                                       Quarter Ended 9/30/01
                                 Average         Income/         Yield/
                                 Balance         Expense         Rate


    Earning assets:
     Consumer loans              $37,017,405      $1,472,821        15.91%
     Securities available          2,645,982          37,032         5.60
      for sale
     Other                           330,863           2,646         3.20
    Total earning assets         $39,994,250      $1,512,499        15.13%

    Interest-bearing
     liabilities:

      Deposits                   $10,537,193        $161,411         6.13%
      Senior notes                 5,280,860          90,225         6.83
      Other borrowings             3,103,263          43,233         5.57
      Securitization
       liability                  19,472,058         255,508         5.25
    Total interest-bearing
     liabilities                 $38,393,374        $550,377         5.73%

    Net interest spread                                              9.40%

    Interest income to average earning assets                       15.13%
    Interest expense to average earning assets                       5.51
    Net interest margin                                              9.62%
(1) The information in this table reflects the adjustment to add back the effect of securitized loans.

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SOURCE Capital One Financial Corporation

CONTACT:          Paul Paquin, V.P., Investor Relations, +1-703-205-1039, or
                  Tatiana Stead, Corporate Media, +1-703-205-1070, both of Capital One Financial
                  Corporation

URL:              http://www.capitalone.com
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