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Capital One Reports Second Quarter 2010 Net Income of $608 million, or $1.33 Per Share (diluted), Up from a Loss of $(0.66) in the Second Quarter of 2009

July 22, 2010 at 4:07 PM EDT

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Revenues of $3.9 billion were up $727 million, or 22.9 percent, as compared to same quarter a year ago
Operating Earnings of $812 million increased $583 million, more than doubling as compared to same quarter a year ago
Domestic Card charge-off rate improved almost 100 basis points in the quarter to 9.49 percent; delinquencies were down 51 basis points

MCLEAN, Va., July 22, 2010 /PRNewswire via COMTEX/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2010 of $608 million, or $1.33 per common share (diluted), versus first quarter 2010 net income of $636 million, or $1.40 per common share (diluted). This compares with a loss in the second quarter of 2009 of $(277) million, or $(0.66) per share (diluted). Income from continuing operations of $812 million increased $92 million, or 12.8 percent, from $720 million in the first quarter of 2010 and $583 million, or 255 percent, from $229 million in the second quarter of 2009.

"Capital One has demonstrated considerable resilience throughout the recession and the ongoing legislative and regulatory changes reshaping the financial services industry," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "While economic and regulatory uncertainty remains, those same forces are creating attractive opportunities for Capital One. We continue to be well positioned to take advantage of emerging opportunities and deliver significant shareholder value over the long-term."

Total Company Results

  • Total revenue in the second quarter of 2010 declined $385 million, or 9.0 percent, from the first quarter of 2010 to $3.9 billion as average loans declined 4.5 percent with no offsetting increase in margin. Non-interest income decreased $254 million in the second quarter, or 23.9 percent, relative to the prior quarter, due to the absence of one-time benefits experienced in the first quarter and an expected decline in overlimit fees in the Domestic Card business. Net interest income decreased $131 million, or 4.1 percent.
  • Net interest margin was stable at 7.09 percent, driven by a 7 basis point decrease in the cost of funds, partially offset by a 5 basis point decrease in loan yields.
  • Provision expense decreased $755 million from the prior quarter, or 51.1 percent, driven by lower charge-offs and a reduction in allowance balance of $1.0 billion. Charge-offs and delinquencies improved across our consumer businesses, with the exception of an expected seasonal up-tick in auto delinquencies. Commercial Banking charge-offs and non-performing asset rates improved in the quarter.
  • The continued improvement in credit drove allowance releases in all of the company's businesses in the second quarter, totaling $1.0 billion for the company. This compares to an allowance release of $566 million in the first quarter of 2010. The Card segment released $665 million, with the majority of that coming from the Domestic Card sub-segment. Better than expected loss performance in the portfolio and a lower level of delinquencies were the primary drivers of the second quarter allowance release. In addition, the $1.9 billion of lower period-end loans require lower allowance, all else being equal. The allowance as a percentage of outstanding loans was 5.35 percent at the end of the second quarter of 2010 as compared with 6.0 percent at the end of the prior quarter.
  • Period-end total assets decreased by $3.2 billion, or 1.6 percent, from the first quarter of 2010 to $197.5 billion at the end of the second quarter of 2010, with $3.0 billion of the decline coming from loans held for investment. Expected run-off continues in our Installment Loan portfolio in Domestic Card, our Mortgage portfolio in Consumer Banking, and our Small Ticket CRE portfolio in Commercial Banking. Loans held for investment at June 30, 2010 were $127.1 billion, a decline of 2.3 percent from the prior quarter.
  • Average total deposits during the quarter were $118.5 billion, an increase of $1.0 billion, or 0.8 percent, over the prior quarter. Period-end total deposits decreased by $0.5 billion, or 0.4 percent, to $117.3 billion.
  • The cost of funds decreased to 1.69 percent in the second quarter from 1.76 percent in the prior quarter.
  • Non-interest expenses of $2.0 billion increased $153 million in the second quarter of 2010 from the prior quarter, driven primarily by one-time expenses and infrastructure expenses, as well as an increase in marketing.
  • The company's TCE ratio increased to 6.1 percent, up 60 basis points from the first quarter 2010 ratio of 5.5 percent. The Tier 1 risk-based capital ratio of 9.9 percent increased 30 basis points relative to the ratio of 9.6 percent in the prior quarter. The recent enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act may have an impact on the Tier 1 treatment of the company's approximately $3.5 billion of trust preferred securities and provides for a phase-in period expected to begin in 2013. Given the potential change in capital treatment of these securities, the company anticipates that it will determine whether to exercise its rights to redeem its trust preferred securities at or near the beginning of the phase-in period. The company looks forward to receiving clarity on these issues through rule-making and other regulatory action.

"Capital One posted strong bottom-line results in the quarter, as the ongoing improvement in credit performance drove a material reduction in provision expense," said Gary L. Perlin, Capital One's Chief Financial Officer. "Taking into account our improved capital ratios and historically high allowance for loan losses, our total risk-bearing capacity is now greater than it was at any point during the financial crisis, even as we're past the peak in credit losses."

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.

  • Revenues relative to the prior quarter:
    • Domestic Card - declined $188.0 million, or 7.6 percent
    • International Card - declined $7.0 million, or 2.0 percent
  • Period-end loans in the Domestic Card segment were $54.6 billion in the second quarter, a decline of $1.6 billion, or 2.9 percent, from the prior quarter as the Installment Loan portfolio continued to run off. International credit card loans declined in the quarter by $309 million, or 4.1 percent, to $7.3 billion.
  • As expected, revenue margin in the Domestic Card sub-segment declined in the quarter. Revenue margin fell 48 basis points to 16.61 percent in the second quarter from 17.09 percent in the prior quarter. The company expects quarterly Domestic Card revenue margin to decline over the next several quarters to around 15 percent by the end of 2010 or early 2011.
  • Non-interest expense increased $88 million, or 9.6 percent, in the second quarter primarily due to higher marketing expense in Domestic Card and tax accruals in International Card.
  • Domestic Card provision expense decreased $421 million in the second quarter, or 38.4 percent, relative to the prior quarter. The lower provision expense resulted from both lower charge-offs and an allowance release in the quarter.
  • Net charge-off rates relative to the prior quarter:
    • Domestic Card - improved 99 basis points to 9.49 percent from 10.48 percent
    • International Card - improved 45 basis points to 8.38 percent from 8.83 percent
  • Delinquency rates relative to the prior quarter:
    • Domestic Card - improved 51 basis points to 4.79 percent from 5.30 percent
    • International Card - improved 36 basis points to 6.03 percent from 6.39 percent
  • Purchase volumes in Domestic Card increased $2.6 billion, or 11.0 percent, relative to the prior quarter.

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, which are summarized under Commercial Lending, and Small Ticket Commercial Real Estate.

  • Commercial Banking reported net income improved to $77 million in the second quarter compared to a net loss in of $49 million in the first quarter, largely as a result of improving credit.
  • Total revenue increased $25 million, or 7.1 percent, during the quarter to $379 million.
  • Period-end loans in Commercial Banking were $29.6 billion, essentially even with the prior quarter.
  • Average deposits increased by $312 million, or 1.4 percent, to $22.2 billion during the second quarter, while the deposit interest expense rate improved 5 basis points to 67 basis points.
  • Provision expense decreased $176 million relative to the prior quarter as a result of lower charge-offs and an allowance release in the quarter.
  • Charge-off rate relative to the prior quarter:
    • Total Commercial Banking -1.21 percent, a decline of 16 basis points
    • Commercial lending - 0.98 percent, a decline of 16 basis points
    • Small ticket commercial real estate - 4.21 percent, a decline of 22 basis points
  • Non-performing asset rate relative to the prior quarter:
    • Total Commercial Banking - 2.20 percent, a decline of 44 basis points
    • Commercial lending - 2.10 percent, a decline of 42 basis points
    • Small ticket commercial real estate - 3.57 percent, a decline of 61 basis points

Consumer Banking highlights

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

  • Total revenue decreased $115 million, or 9.5 percent, during the quarter to $1.1 billion.
  • Provision expense decreased $162 million relative to the prior quarter as a result of lower charge-offs and a larger allowance release relative to the prior quarter.
  • Period-end loans relative to the prior quarter:
    • Auto - declined $225 million, or 1.3 percent, to $17.2 billion.
    • Mortgage - declined $645 million, or 4.6 percent, to $13.3 billion. Mortgage loans continued to reflect expected run-off in the portfolio.
    • Retail banking - declined $200 million, or 4.0 percent, to $4.8 billion.
  • Auto loan originations increased 31.4 percent over the prior quarter to $1.8 billion in the second quarter.
  • Average deposits in Consumer Banking increased $2.0 billion, or 2.6 percent, to $77.1 billion during the second quarter. Improving interest rates and disciplined pricing drove a 9 basis point decline in the deposit interest expense rate in the quarter.
  • Net charge-off rates relative to the prior quarter:
    • Auto - 2.09 percent, a decrease of 88 basis points
    • Mortgage - 0.46 percent, an decrease of 48 basis points
    • Retail banking - 2.11 percent, even with the prior quarter

TCE and related ratios, as used throughout this release, are non-GAAP financial measures. For additional information, see Exhibit 99.3 included in the company's current report on Form 8-K filed July 22, 2010.

Forward looking statements

The company cautions that its current expectations in this release dated July 22, 2010; 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 quarter ended March 31, 2010.

About Capital One

Capital One Financial Corporation (http://www.capitalone.com/) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N. A., had $117.3 billion in deposits and $197.5 billion in total assets outstanding as of June 30, 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: Second quarter 2010 financial results, SEC Filings, and earnings conference call slides are accessible on Capital One's home page (http://www.capitalone.com/). Choose "Investors" on the bottom of the home page to view and download the earnings press release, slides, and other financial information. Additionally, a podcast and webcast of today's 5:00 pm (ET) earnings conference call is accessible through the same link.

                                CAPITAL ONE FINANCIAL CORPORATION (COF)
                                    FINANCIAL & STATISTICAL SUMMARY
                                              GAAP BASIS *

                                  2010          2010          2009
    (in millions, except per
     share data and as
     noted) (unaudited)          Q2            Q1            Q2
    ------------------------     ---           ---           ---
    Earnings
    Net Interest Income         $3,097        $3,228        $1,945
                                                      (7)
    Non-Interest Income (1)       $807  (7)   $1,061  (8)   $1,232      (9)
                                  ----        ------        ------
    Total Revenue (2)           $3,904        $4,289        $3,177
    Provision for Loan
     Losses                       $723        $1,478          $934
    Marketing Expenses            $219          $180          $134
    Restructuring Expenses
     (3)                            $-            $-           $44
    Operating Expenses (4)      $1,781        $1,667        $1,744     (10)
                                ------        ------        ------
    Income Before Taxes         $1,181          $964          $321
    Effective Tax Rate            31.2%         25.3%         28.7%
    Income From Continuing
     Operations, Net of Tax       $812          $720          $229
    Loss From Discontinued
     Operations, Net of Tax      $(204) (7)     $(84) (7)      $(6)
                                 -----          ----           ---
    Net Income                    $608          $636          $223
                                  ----          ----          ----
    Net Income (Loss)
     Available to Common
     Shareholders (A)             $608          $636         $(277)    (11)
    --------------------          ----          ----         -----
    Common Share Statistics
    Basic EPS: (B)
       Income (Loss) From
        Continuing Operations    $1.79         $1.59        $(0.64)
       Loss From Discontinued
        Operations              $(0.45)       $(0.18)       $(0.01)
                                ------        ------        ------
       Net Income (Loss)         $1.34         $1.41        $(0.66)
    Diluted EPS: (B)
       Income (Loss) From
        Continuing Operations    $1.78         $1.58        $(0.64)
       Loss From Discontinued
        Operations              $(0.45)       $(0.18)       $(0.01)
                                ------        ------        ------
       Net Income (Loss)         $1.33         $1.40        $(0.66)
    Dividends Per Common
     Share                       $0.05         $0.05         $0.05
    Tangible Book Value Per
     Common Share (period
     end) ( C )                 $24.89        $22.86        $24.95
    Stock Price Per Common
     Share (period end)         $40.30        $41.41        $21.88
    Total Market
     Capitalization (period
     end)                      $18,228       $18,713        $9,826
    Common Shares
     Outstanding (period
     end)                        452.3         451.9         449.1
    Shares Used to Compute
     Basic EPS                   452.1         451.0         421.9
    Shares Used to Compute
     Diluted EPS                 456.4         455.4         421.9
    ----------------------       -----         -----         -----
    Reported Balance Sheet
     Statistics (period
     average)
    Average Loans Held for
     Investment               $128,203      $134,206      $104,682
    Average Earning Assets    $174,650      $181,881      $150,804
    Total Average Assets      $199,329      $207,207      $177,628
    Average Interest Bearing
     Deposits                 $104,163      $104,018      $107,033
    Total Average Deposits    $118,484      $117,530      $119,604
                                                                     (12),
    Average Equity             $24,526       $23,681       $27,668     (13)
    Return on Average Assets
     (ROA)                        1.63%         1.39%         0.52%
    Return on Average Equity
     (ROE)                       13.24%        12.16%         3.31%
    Return on Average
     Tangible Common Equity
     (D)                         30.97%        29.98%         6.75%
    -----------------------      -----         -----          ----
    Reported Balance Sheet
     Statistics (period end)
    Loans Held for
     Investment               $127,140      $130,115      $100,940
    Total Assets (E)          $197,479      $200,691      $171,948
    Interest Bearing
     Deposits                 $103,172      $104,013      $104,121
    Total Deposits            $117,331      $117,787      $116,725
    Tangible Assets (E) (F)   $183,468      $186,647      $157,782
    Tangible Common Equity
     (TCE) (E) (G)             $11,259       $10,330       $11,204
    Tangible Common Equity
     to Tangible Assets
     Ratio (E) (H)                6.14%         5.53%         7.10  % (12)
    ----------------------        ----          ----          ----
    Performance Statistics
     (Reported) Quarter over
     Quarter
    Net Interest Income
     Growth (5)                    (4)%           65%            8%
    Non- Interest Income
     Growth (5)                   (24)%         (25)%           13%
    Revenue Growth (5)             (9)%           27%           10%
    Net Interest Margin           7.09%         7.10%         5.16%
    Revenue Margin                8.94%         9.43%         8.43%
    Risk-Adjusted Margin (I)      5.01%         4.99%         5.46%
    Non-Interest Expense as
     a % of Average Loans
     Held for Investment
     (annualized)                 6.24%         5.50%         7.34%
    Efficiency Ratio (J)         51.23%        43.06%        59.11%
    --------------------         -----         -----         -----
    Asset Quality Statistics
     (Reported) (6)
    Allowance                   $6,799        $7,752        $4,482
    Allowance as a % of
     Reported Loans Held for
     Investment                   5.35%         5.96%         4.44%
    Net Charge-Offs             $1,717        $2,018        $1,117
    Net Charge-Off Rate           5.36%         6.01%         4.28%
    30+ day performing
     delinquency rate             3.81%         4.22%         3.71%
                                  ----          ----          ----
    Full-time equivalent
     employees (in
     thousands)                   25.7          25.9          26.6
    --------------------          ----          ----          ----



    * 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 the accompanying schedule "Impact of Adopting
    New Accounting
    Guidance." While the adoption of these new accounting standards has 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)
                                  FINANCIAL & STATISTICAL SUMMARY
                                  MANAGED BASIS * (for 2009 data)

                                  2010          2010          2009
    (in millions, except
     per share data and as
     noted) (unaudited)          Q2            Q1            Q2
    ----------------------      ---           ---           ---
    Earnings
    Net Interest Income         $3,097        $3,228        $2,957
    Non-Interest Income                               (7)
     (1)                          $807  (7)   $1,061  (8)   $1,190      (9)
                                  ----        ------        ------
    Total Revenue (2)           $3,904        $4,289        $4,147
    Provision for Loan and
     Lease Losses                 $723        $1,478        $1,904
    Marketing Expenses            $219          $180          $134
    Restructuring Expenses
     (3)                            $-            $-           $44
    Operating Expenses (4)      $1,781        $1,667        $1,744     (10)
                                ------        ------        ------
    Income Before Taxes         $1,181          $964          $321
    Effective Tax Rate            31.2%         25.3%         28.7%
    Income From Continuing
     Operations, Net of
     Tax                          $812          $720          $229
    Loss From Discontinued
     Operations, Net of
     Tax                         $(204) (7)     $(84) (7)      $(6)
                                 -----          ----           ---
    Net Income                    $608          $636          $223
                                  ----          ----          ----
    Net Income (Loss)
     Available to Common
     Shareholders (A)             $608          $636         $(277)    (11)
    --------------------          ----          ----         -----
    Common Share
     Statistics
    Basic EPS: (B)
       Income (Loss) From
        Continuing Operations    $1.79         $1.59        $(0.64)
       Loss From Discontinued
        Operations              $(0.45)       $(0.18)       $(0.01)
                                ------        ------        ------
       Net Income (Loss)         $1.34         $1.41        $(0.66)
    Diluted EPS: (B)
       Income (Loss) From
        Continuing Operations    $1.78         $1.58        $(0.64)
       Loss From Discontinued
        Operations              $(0.45)       $(0.18)       $(0.01)
                                ------        ------        ------
       Net Income (Loss)         $1.33         $1.40        $(0.66)
    Dividends Per Common
     Share                       $0.05         $0.05         $0.05
    Tangible Book Value
     Per Common Share
     (period end) ( C )         $24.89        $22.86        $24.95
    Stock Price Per Common
     Share (period end)         $40.30        $41.41        $21.88
    Total Market
     Capitalization
     (period end)              $18,228       $18,713        $9,826
    Common Shares
     Outstanding (period
     end)                        452.3         451.9         449.1
    Shares Used to Compute
     Basic EPS                   452.1         451.0         421.9
    Shares Used to Compute
     Diluted EPS                 456.4         455.4         421.9
    ----------------------       -----         -----         -----
    Managed Balance Sheet
     Statistics (period
     average)
    Average Loans Held for
     Investment               $128,203      $134,206      $148,013
    Average Earning Assets    $174,650      $181,881      $191,208
    Total Average Assets      $199,329      $207,207      $218,402
    Average Interest
     Bearing Deposits         $104,163      $104,018      $107,033
    Total Average Deposits    $118,484      $117,530      $119,604
                                                                     (12),
    Average Equity             $24,526       $23,681       $27,668     (13)
    Return on Average
     Assets (ROA)                 1.63%         1.39%         0.42%
    Return on Average
     Equity (ROE)                13.24%        12.16%         3.31%
    Return on Average
     Tangible Common
     Equity (D)                  30.97%        29.98%         6.75%
    -----------------            -----         -----          ----
    Managed Balance Sheet
     Statistics (period
     end)
    Loans Held for
     Investment               $127,140      $130,115      $146,117
    Total Assets (E)          $197,479      $200,691      $214,178
    Interest Bearing
     Deposits                 $103,172      $104,013      $104,121
    Total Deposits            $117,331      $117,787      $116,725
    Tangible Assets(E) (F)    $183,468      $186,647      $200,012
    Tangible Common Equity
     (TCE) (E) (G)             $11,259       $10,330       $11,204
    Tangible Common Equity
     to Tangible Assets
     Ratio (E) (H)                6.14%         5.53%         5.60  % (12)
    ----------------------        ----          ----          ----
    Performance Statistics
     (Managed) Quarter
     over Quarter
    Net Interest Income
     Growth (5)                    (4)%            2%            8%
    Non-Interest Income
     Growth (5)                   (24)%         (12)%           21%
    Revenue Growth (5)             (9)%          (2)%           11%
    Net Interest Margin           7.09%         7.10%         6.19%
    Revenue Margin                8.94%         9.43%         8.68%
    Risk-Adjusted Margin
     (I)                          5.01%         4.99%         4.31%
    Non-Interest Expense
     as a % of Average
     Loans Held for
     Investment                   6.24%         5.50%         5.19%
    Efficiency Ratio (J)         51.23%        43.06%        45.29%
    --------------------         -----         -----         -----
    Asset Quality
     Statistics (Managed)
     (6)
    Net Charge-Offs             $1,717        $2,018        $2,087
    Net Charge-Off Rate           5.36%         6.01%         5.64%
    30+ day performing
     delinquency rate             3.81%         4.22%         4.10%
    ------------------            ----          ----          ----
    Full-time equivalent
     employees (in
     thousands)                   25.7          25.9          26.6
    --------------------          ----          ----          ----



    *Prior to the 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 "Reconciliation to
    GAAP Financial Measures" presents a reconciliation of the Company's
    non-
    GAAP "managed" results to its GAAP results for periods prior to
    January 1, 2010. See the accompanying schedule "Impact of Adopting
    New
    Accounting Guidance" for additional information on the impact of new
    accounting standards.

CAPITAL ONE FINANCIAL CORPORATION (COF)

FINANCIAL & STATISTICAL SUMMARY NOTES

( 1 ) Includes the impact from the change in fair value of retained interests, including the interest-only strips, which totaled $17.4 million in Q2 2010, $(35.7) million in Q1 2010 and $(114.5) million in Q2 2009.

( 2 ) In accordance with the Company's finance charge and fee revenue recognition policy, amounts billed not included in revenue totaled: $261.2 million in Q2 2010, $354.4 million in Q1 2010 and $571.9 million in Q2 2009.

( 3 ) The Company completed its 2007 restructuring initiative during 2009.

( 4 ) Includes core deposit intangible amortization expense of $50.4 million in Q2 2010, $52.1 million in Q1 2010 and $57.2 million in Q2 2009, and integration costs of $22.4 million in Q2 2010, $16.7 million in Q1 2010 and $8.8 million in Q2 2009.

( 5 ) 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").

( 6 ) The denominator used in calculating the allowance as a % of Loans Held for Investment, Net Charge-off Rate and 30+ Day Performing Delinquency Rate include loans acquired as part of the CCB acquisition. The metrics excluding such loans are as follows.

                                                 Q2 2010  Q1 2010  Q2 2009
                                                 -------  -------  -------
     CCB period end acquired loan portfolio (in
      millions)(unaudited)                        $6,381   $6,799   $8,644
     CCB average acquired loan portfolio (in
      millions)(unaudited)                        $6,541   $7,037   $8,499
     Allowance as a % of loans held for
      investment, excluding CCB                     5.63%    6.29%    4.86%
     Net charge-off rate (GAAP), excluding CCB      5.64%    6.35%    4.65%
     Net charge-off rate (Managed), excluding
      CCB                                           5.64%    6.35%    5.98%
     30+ day performing delinquency rate (GAAP),
      excluding CCB                                 4.01%    4.46%    4.06%
     30+ day performing delinquency rate
      (Managed), excluding CCB                      4.01%    4.46%    4.36%


( 7 ) During Q2 and Q1 2010, the Company recorded charges of $403.6 million and $224.4 million, respectively, related to representation and warranty matters. A portion of this expense is included in Discontinued Operations and the remainder is included in Non-Interest Income.

( 8 ) 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.

( 9 ) In Q2 2009, the Company elected to convert and sell 404,508 shares of MasterCard class B common stock, which resulted in a gain of $65.5 million that is included in non-interest income.

( 10 ) Includes the FDIC Special Assessment of $80.5 million.

( 11 ) Includes the impact from dividends of $38.0 million on preferred shares and from the accretion of $461.7 million of the discount on preferred shares. With the repayment of the preferred shares to the U.S. Treasury as described in note 13 below, the recognition of the remaining accretion was accelerated to Q2 2009 and accounted for as a dividend. Subsequent to this transaction, there is no difference between net income (loss) and net income (loss) available to common shareholders.

( 12 ) Includes the impact of the issuance of 56,000,000 common shares at $27.75 per share on May 14, 2009.

( 13 ) Average equity includes the impact of the Company's participation in the U.S. Treasury's Capital Purchase Program. On June 17, 2009, the Company repurchased from the U.S. Treasury for approximately $3.57 billion all 3,555,199 preferred shares issued in Q4 2008, including accrued dividends. The warrants to purchase common shares were sold by the U.S. Treasury on December 11, 2009 at a price of $11.75 per warrant. The sale by the U.S. Treasury had no impact on the Company's equity. The warrants remain outstanding and are included in paid-in capital on the balance sheet.

STATISTICS / METRIC CALCULATIONS

( A ) Consists of net income (loss) less dividends on preferred shares.

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

( C ) Calculated based on tangible common equity divided by common shares outstanding.

( D ) Calculated based on income from continuing operations divided by average tangible common equity, which is a non-GAAP measure. See page 4, Reconciliation To GAAP Financial Measures, for a reconciliation of average equity to average tangible common equity.

( E ) Calculated based on continuing operations, except for Average Equity and Return on Average Equity (ROE), which are based on average stockholders' equity.

( F ) Consists of reported or managed assets less intangible assets and is a non-GAAP measure. See page 4, Reconciliation To GAAP Financial Measures, for a reconciliation of this measure to the reported common equity ratio.

( G ) Consists of stockholders' equity less preferred shares and intangible assets and the related deferred tax liabilities.

( H ) Tangible Common Equity to Tangible Assets Ratio ("TCE Ratio") is a non-GAAP measure. See page 4, Reconciliation To GAAP Financial Measures, for a reconciliation of this measure to the reported common equity ratio.

( I ) Calculated based on total revenue less net charge-offs divided by average earning assets, expressed as a percentage.

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

    CAPITAL ONE FINANCIAL CORPORATION
    Reconciliation to GAAP Financial Measures
    (dollars in millions)(unaudited)
    The table below presents a reconciliation of tangible common equity
    and tangible assets, which are the components used to reconcile the
    non-GAAP tangible
    common equity "TCE" ratio to the comparable GAAP measure.  The
    Company believes the non-GAAP TCE ratio is an important measure for
    investors to use
    in assessing the Company's capital strength. This measure may not be
    comparable to similarly titled measures used by other companies.

                                                 2010      2010      2009
                                                Q2        Q1        Q2
                                                ---       ---       ---
    Reconciliation of Average Equity to
     Average Tangible Common Equity
    Average Equity                            $24,526   $23,681   $27,668
    Less: Preferred Stock                           -         -        41
    Less: Average Intangible Assets (1)      (14,039)  (14,075)  (14,129)
    Average Tangible Common Equity            $10,487    $9,606   $13,580
                                              =======    ======   =======

    Reconciliation of Period End Equity to
     Tangible Common Equity
    Stockholders' Equity                      $25,270   $24,374   $25,332
    Less: Preferred Stock                           -         -        38
    Less: Intangible Assets (1)              (14,011)  (14,044)  (14,166)
    Period End Tangible Common Equity         $11,259   $10,330   $11,204
                                              =======   =======   =======

    Reconciliation of Period End Assets to
     Tangible Assets
    Total Assets                             $197,489  $200,707  $171,994
    Less: Discontinued Operations Assets          (10)      (16)      (46)
                                                  ---       ---       ---
    Total Assets- Continuing Operations       197,479   200,691   171,948
    Less: Intangible Assets (1)              (14,011)  (14,044)  (14,166)
    Period End Tangible Assets               $183,468  $186,647  $157,782
                                             ========  ========  ========

    TCE ratio (2)                                6.14%     5.53%     7.10%

    Reconciliation of Period End Assets to
     Tangible Assets on a Managed Basis (for
     2009) *
    Total Assets                             $197,489  $200,707  $171,994
    Securitization Adjustment (3)                   -         -    42,230
                                                  ---       ---    ------
    Total Assets on a Managed Basis           197,489   200,707   214,224
    Less: Assets-Discontinued Operations          (10)      (16)      (46)
                                                  ---       ---       ---
    Total Assets- Continuing Operations       197,479   200,691   214,178
    Less: Intangible Assets (1)              (14,011)  (14,044)  (14,166)
    Period End Tangible Assets               $183,468  $186,647  $200,012
                                             ========  ========  ========

    TCE ratio (2)                                6.14%     5.53%     5.60%



    (1) Includes impact from related deferred taxes.
    (2) Calculated based on tangible common equity divided by tangible assets.
    (3) Adjustments to our GAAP results to reflect loans that have been
    securitized and sold as though the loans remained on our
    consolidated balance sheet.
    * In addition to analyzing the Company's results on a reported basis,
    management previously evaluated Capital One's results on a "managed"
    basis, which
    consisted of non-GAAP financial measures.  Capital One's managed
    results reflected the Company's reported results, adjusted to
    reflect the consolidation of
    the majority of the Company's credit securitization trusts.  Because
    of the January 1, 2010, adoption of the new consolidation accounting
    standards, the
    Company's consolidated reported results subsequent to January 1, 2010
    are comparable to its "managed" results.  The accompanying Exhibit
    "Reconciliation
    to GAAP Financial Measures" presents a reconciliation of the
    Company's non-GAAP "managed" results to its GAAP results for
    periods prior to January 1,
    2010.

    Capital One Financial Corporation
    Impact of Adopting New Accounting Guidance

    Consolidation of VIEs

                             Opening                                Ending
                             Balance              VIE               Balance
                              Sheet         Consolidation            Sheet
    (dollars in            January 1,                            December 31,
     millions)(unaudited)     2010              Impact               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) (3)        (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:
    Securitization
     liability                  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) (3)        26,589
                                ------              ------             ------
      Total
       liabilities and
       stockholders'
       equity                 $211,511             $41,865           $169,646
                              --------             -------           --------

    Allocation of
     the Allowance
     by Segment

    (dollars in
     millions)             January 1,       Consolidation        December 31,
     (unaudited)              2010              Impact               2009
    -----------           -----------       --------------      -------------
    Domestic credit
     card                       $5,590              $3,663  (3)        $1,927
    International
     credit card                   727                 528                199
    Total credit
     card                        6,317               4,191              2,126
                                 -----               -----              -----
    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
                                   ---                 ---                ---
    Automobile                     665                   -                665
    Mortgage (inc
     all new CCB
     originations)                 248                  73  (2)           175
    Other retail                   236                   -                236
    Total consumer
     banking                     1,149                  73              1,076
                                 -----                 ---              -----
    Other                          140                   -                140
                                   ---                 ---                ---
    Total company               $8,391              $4,264             $4,127
                                ------              ------             ------



    (1) Included within the "Other assets" line item is a deferred tax
    asset of $3.9 billion, of which $1.6 billion related to the January
    1, 2010, adoption of the new consolidation accounting standards.

    (2) $73 million of the reduction in the allowance for the first
    quarter is associated with the deconsolidation of certain mortgage
    trusts. This reduction in the allowance is recorded in non-interest
    income.

    (3) An adjustment for $34 million to retained earnings and the
    allowance for loan and lease losses was made in the second quarter
    for the impact of impairment on consolidated loans accounted for
    troubled debt restructurings. These adjustments are not reflected in
    the above table.

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



                             Three Months Ended       Six Months Ended
                              June   March       June     June    June
                               30,    31,         30,      30,      30,
                               2010    2010     2009 (1)   2010  2009 (1)
                               ----    ----     -------    ----  -------


    Interest Income:
    Loans held for
     investment, including
     past-due fees           $3,476  $3,658      $2,237  $7,134   $4,428
    Investment securities       342     349         412     691      808
    Other                        17      23          68      40      131
                                ---     ---         ---     ---      ---
      Total interest income   3,835   4,030       2,717   7,865    5,367

    Interest Expense:
    Deposits                    368     399         560     767    1,187
    Securitized debt            212     242          74     454      165
    Senior and subordinated
     notes                       72      68          57     140      115
    Other borrowings             86      93          81     179      162
                                ---     ---         ---     ---      ---
      Total interest expense    738     802         772   1,540    1,629
                                ---     ---         ---   -----    -----
    Net interest income       3,097   3,228       1,945   6,325    3,738
    Provision for loan and
     lease losses               723   1,478         934   2,201    2,213
                                ---   -----         ---   -----    -----
    Net interest income
     after provision for
     loan and lease losses    2,374   1,750       1,011   4,124    1,525

    Non-Interest Income:
    Servicing and
     securitizations             21     (36)        363     (15)     816
    Service charges and
     other customer-related
     fees                       496     585         492   1,081      998
    Interchange                 333     311         126     644      267
    Net other-than-
     temporary impairment
     losses recognized in
     earnings(2)                (26)    (31)        (10)    (57)     (10)
    Other                       (17)    232         261     215      251
                                ---     ---         ---     ---      ---
      Total non-interest
       income                   807   1,061       1,232   1,868    2,322

    Non-Interest Expense:
    Salaries and associate
     benefits                   650     646         634   1,296    1,188
    Marketing                   219     180         134     399      297
    Communications and data
     processing                 164     169         195     333      394
    Supplies and equipment      129     124         128     253      247
    Occupancy                   117     120         115     237      215
    Restructuring expense
     (3)                          -       -          43       -       61
    Other                       721     608         673   1,329    1,265
                                ---     ---         ---   -----    -----
      Total non-interest
       expense                2,000   1,847       1,922   3,847    3,667
                              -----   -----       -----   -----    -----
    Income from continuing
     operations before
     income taxes             1,181     964         321   2,145      180
    Income tax provision        369     244          92     613       34
                                ---     ---         ---     ---      ---
    Income from continuing
     operations, net of tax     812     720         229   1,532      146
    Loss from discontinued
     operations, net of tax    (204)    (84)         (6)   (288)     (31)
    Net income                 $608    $636        $223  $1,244     $115
    Preferred stock
     dividends                    -       -        (500)      -     (564)
                                ---     ---        ----     ---     ----
    Net income (loss)
     available to common
     shareholders              $608    $636       $(277) $1,244    $(449)
                               ====    ====       =====  ======    =====



    Basic earnings per
     common share:
    Income (loss) from
     continuing operations    $1.79   $1.59      $(0.64)  $3.38   $(1.03)
    Loss from discontinued
     operations               (0.45)  (0.18)      (0.01)  (0.63)   (0.07)
    Net Income (loss) per
     common share             $1.34   $1.41      $(0.66)  $2.75   $(1.11)
                              =====   =====      ======   =====   ======

    Diluted earnings per
     common share:
    Income (loss) from
     continuing operations    $1.78   $1.58      $(0.64)  $3.36   $(1.03)
    Loss from discontinued
     operations               (0.45)  (0.18)      (0.01)  (0.63)   (0.07)
    Net Income (loss) per
     common share             $1.33   $1.40      $(0.66)  $2.73   $(1.11)
                              =====   =====      ======   =====   ======

    Dividends paid per
     common share             $0.05   $0.05       $0.05   $0.10    $0.43
                              =====   =====       =====   =====    =====




    (1) Certain prior period amounts have been revised to conform to the
    current period presentation.
    (2) For the three and six months ended June 30, 2010, the Company
    recorded other-than-temporary impairment losses of $26.2 million
    and $57.4 million, respectively. Additional unrealized losses of
    $119.7 million on these securities was recognized in other
    comprehensive income as a component of stockholders' equity at June
    30, 2010.
    (3) The Company completed its 2007 restructuring initiative during 2009.

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


                                              As of      As of     As of
                                                       December
                                             June 30       31     June 30
                                                 2010   2009 (1)  2009 (1)
                                                 ----    -------   -------

    Assets:
    Cash and due from banks                    $2,668     $3,100    $2,432
    Federal funds sold and repurchase
     agreements                                   384        542       604
    Interest-bearing deposits at other banks    2,147      5,043     1,166
                                                -----      -----     -----
      Cash and cash equivalents                 5,199      8,685     4,202
    Restricted cash for securitization
     investors                                  3,446        501       570
    Securities available for sale              39,424     38,830    37,667
    Securities held to maturity                     -         80        88
    Loans held for sale                           249        268       320
    Loans held for investment                  71,491     75,097    81,838
    Restricted loans for securitization
     investors                                 55,649     15,522    19,102
      Less:  Allowance for loan and lease
       losses                                  (6,799)    (4,127)   (4,482)
                                               ------     ------    ------
    Net loans held for investment             120,341     86,492    96,458
    Accounts receivable from securitizations      206      7,128     5,220
    Premises and equipment, net                 2,730      2,736     2,827
    Interest receivable                         1,077        936       951
    Goodwill                                   13,588     13,596    13,568
    Other                                      11,229     10,394    10,123
                                               ------     ------    ------
      Total assets                           $197,489   $169,646  $171,994
                                             ========   ========  ========


    Liabilities:
    Non-interest-bearing deposits             $14,159    $13,439   $12,604
    Interest-bearing deposits                 103,172    102,370   104,121
    Senior and subordinated notes               9,424      9,045    10,092
    Other borrowings                            5,585      8,015     7,990
    Securitized debt obligations               33,009      3,954     5,270
    Interest payable                              543        509       660
    Other                                       6,327      5,725     5,925
                                                -----      -----     -----
      Total liabilities                       172,219    143,057   146,662

    Stockholders' Equity:
    Preferred stock                                 -          -         -
    Common stock                                    5          5         5
    Paid-in capital, net                       19,029     18,955    18,891
    Retained earnings and accumulated other
     comprehensive income                       9,436     10,809     9,605
      Less:  Treasury stock, at cost           (3,200)    (3,180)   (3,169)
                                               ------     ------    ------
      Total stockholders' equity               25,270     26,589    25,332
                                               ------     ------    ------
      Total liabilities and stockholders'
       equity                                $197,489   $169,646  $171,994
                                             ========   ========  ========



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

    CAPITAL ONE FINANCIAL CORPORATION
    Statements of Average Balances, Income and Expense, Yields and Rates (1)
    (dollars in millions)(unaudited)



                                               Quarter Ended 06/30/10
                                               ----------------------
    GAAP Basis                            Average   Income/   Yield/
                                          Balance   Expense   Rate
                                          -------   -------   ----
    Interest-earning assets:

      Loans held for investment           $128,203   $3,476    10.85%
      Investment securities (2)             39,022      342     3.51%
      Other                                  7,425       17     0.92%
                                             -----      ---     ----
    Total interest-earning assets         $174,650   $3,835     8.78%
                                          ========   ======     ====

    Interest-bearing liabilities:
      Interest-bearing deposits
        NOW accounts                       $11,601      $10     0.34%
        Money market deposit accounts       42,127       99     0.94%
        Savings accounts                    21,017       44     0.84%
        Other consumer time deposits        20,744      150     2.89%
        Public fund CD's of $100,000 or
         more                                  240        1     1.67%
        CD's of $100,000 or more             7,601       63     3.32%
        Foreign time deposits                  833        1     0.48%
                                               ---      ---     ----
      Total interest-bearing deposits     $104,163     $368     1.41%
      Senior and subordinated notes          8,760       72     3.29%
      Other borrowings                       6,375       86     5.40%
      Securitization liability              35,248      212     2.41%
                                            ------      ---     ----
    Total interest-bearing
     liabilities                          $154,546     $738     1.91%
                                          ========     ====     ====


    Net interest spread                                         6.87%
                                                                ====

    Interest income to average
     interest-earning assets                                    8.78%
    Interest expense to average
     interest-earning assets                                    1.69%
    Net interest margin                                         7.09%
                                                                ====

    Managed Basis *

    Interest-earning assets:
      Loans held for investment           $128,203   $3,476    10.85%
      Investment securities (2)            $39,022     $342     3.51%
      Other                                 $7,425      $17     0.92%
                                            ------      ---     ----
    Total interest-earning assets         $174,650   $3,835     8.78%
                                          ========   ======     ====

    Interest-bearing liabilities:
      Interest-bearing deposits
        NOW accounts                       $11,601      $10     0.34%
        Money market deposit accounts      $42,127      $99     0.94%
        Savings accounts                   $21,017      $44     0.84%
        Other consumer time deposits       $20,744     $150     2.89%
        Public fund CD's of $100,000 or
         more                                 $240       $1     1.67%
        CD's of $100,000 or more            $7,601      $63     3.32%
        Foreign time deposits                 $833       $1     0.48%
                                              ----      ---     ----
      Total interest-bearing deposits     $104,163     $368     1.41%
      Senior and subordinated notes         $8,760       72     3.29%
      Other borrowings                      $6,375       86     5.40%
      Securitization liability             $35,248      212     2.41%
                                           -------      ---     ----
    Total interest-bearing
     liabilities                          $154,546     $738     1.91%
                                          ========     ====     ====


    Net interest spread                                         6.87%
                                                                ====

    Interest income to average
     interest-earning assets                                    8.78%
    Interest expense to average
     interest-earning assets                                    1.69%
    Net interest margin                                         7.09%
                                                                ====



                                                     Quarter Ended 3/31/10
                                                     ---------------------
    GAAP Basis                                Average   Income/   Yield/
                                              Balance   Expense    Rate
                                              -------   -------    ----
    Interest-earning assets:

      Loans held for investment               $134,206   $3,658    10.90%
      Investment securities (2)                 38,087      349     3.67%
      Other                                      9,588       23     0.96%
                                                 -----      ---     ----
    Total interest-earning assets             $181,881   $4,030     8.86%
                                              ========   ======     ====

    Interest-bearing liabilities:
      Interest-bearing deposits
        NOW accounts                           $12,276      $16     0.52%
        Money market deposit accounts           39,364       96     0.98%
        Savings accounts                        18,627       41     0.88%
        Other consumer time deposits            24,253      174     2.87%
        Public fund CD's of $100,000 or
         more                                      400        2     2.00%
        CD's of $100,000 or more                 8,180       68     3.33%
        Foreign time deposits                      918        2     0.87%
                                                   ---      ---     ----
      Total interest-bearing deposits         $104,018     $399     1.53%
      Senior and subordinated notes              8,757       68     3.11%
      Other borrowings                           7,431       93     5.01%
      Securitization liability                  43,764      242     2.21%
                                                ------      ---     ----
    Total interest-bearing
     liabilities                              $163,970     $802     1.96%
                                              ========     ====     ====


    Net interest spread                                             6.90%
                                                                    ====

    Interest income to average
     interest-earning assets                                        8.86%
    Interest expense to average
     interest-earning assets                                        1.76%
    Net interest margin                                             7.10%
                                                                    ====

    Managed Basis *

    Interest-earning assets:
      Loans held for investment               $134,206   $3,658    10.90%
      Investment securities (2)                 38,087      349     3.67%
      Other                                      9,588       23     0.96%
                                                 -----      ---     ----
    Total interest-earning assets             $181,881   $4,030     8.86%
                                              ========   ======     ====

    Interest-bearing liabilities:
      Interest-bearing deposits
        NOW accounts                           $12,276      $16     0.52%
        Money market deposit accounts           39,364       96     0.98%
        Savings accounts                        18,627       41     0.88%
        Other consumer time deposits            24,253      174     2.87%
        Public fund CD's of $100,000 or
         more                                      400        2     2.00%
        CD's of $100,000 or more                 8,180       68     3.33%
        Foreign time deposits                      918        2     0.87%
                                                   ---      ---     ----
      Total interest-bearing deposits         $104,018     $399     1.53%
      Senior and subordinated notes              8,757       68     3.11%
      Other borrowings                           7,431       93     5.01%
      Securitization liability                  43,764      242     2.21%
                                                ------      ---     ----
    Total interest-bearing
     liabilities                              $163,970     $802     1.96%
                                              ========     ====     ====


    Net interest spread                                             6.90%
                                                                    ====

    Interest income to average
     interest-earning assets                                        8.86%
    Interest expense to average
     interest-earning assets                                        1.76%
    Net interest margin                                             7.10%
                                                                    ====



                                                   Quarter Ended 06/30/09
                                                                      (3)
                                                 -----------------------
    GAAP Basis                                Average   Income/   Yield/
                                              Balance   Expense   Rate
                                              -------   -------   ----
    Interest-earning assets:

      Loans held for investment               $104,682   $2,237     8.55%
      Investment securities (2)                 37,499      412     4.39%
      Other                                      8,623       68     3.15%
                                                 -----      ---     ----
    Total interest-earning assets             $150,804   $2,717     7.21%
                                              ========   ======     ====

    Interest-bearing liabilities:
      Interest-bearing deposits
        NOW accounts                           $10,915      $15     0.55%
        Money market deposit accounts           35,751      104     1.16%
        Savings accounts                         9,931       13     0.52%
        Other consumer time deposits            35,834      305     3.40%
        Public fund CD's of $100,000 or
         more                                    1,117        3     1.07%
        CD's of $100,000 or more                11,098      108     3.89%
        Foreign time deposits                    2,387       12     2.01%
                                                 -----      ---     ----
      Total interest-bearing deposits         $107,033     $560     2.09%
      Senior and subordinated notes              8,323       57     2.74%
      Other borrowings                          10,399       81     3.12%
      Securitization liability                   5,876       74     5.04%
                                                 -----      ---     ----
    Total interest-bearing
     liabilities                              $131,631     $772     2.35%
                                              ========     ====     ====


    Net interest spread                                             4.86%
                                                                    ====

    Interest income to average
     interest-earning assets                                        7.21%
    Interest expense to average
     interest-earning assets                                        2.05%
    Net interest margin                                             5.16%
                                                                    ====

    Managed Basis *

    Interest-earning assets:
      Loans held for investment               $148,013   $3,568     9.64%
      Investment securities (2)                 37,499      412     4.39%
      Other                                      5,696       17     1.19%
                                                 -----      ---     ----
    Total interest-earning assets             $191,208   $3,997     8.36%
                                              ========   ======     ====

    Interest-bearing liabilities:
      Interest-bearing deposits
        NOW accounts                           $10,915      $15     0.55%
        Money market deposit accounts           35,751      104     1.16%
        Savings accounts                         9,931       13     0.52%
        Other consumer time deposits            35,834      305     3.40%
        Public fund CD's of $100,000 or
         more                                    1,117        3     1.07%
        CD's of $100,000 or more                11,098      108     3.89%
        Foreign time deposits                    2,387       12     2.01%
                                                 -----      ---     ----
      Total interest-bearing deposits         $107,033     $560     2.09%
      Senior and subordinated notes              8,323       57     2.74%
      Other borrowings                          10,399       81     3.12%
      Securitization liability                  46,682      342     2.93%
                                                ------      ---     ----
    Total interest-bearing
     liabilities                              $172,437   $1,040     2.41%
                                              ========   ======     ====


    Net interest spread                                             5.95%
                                                                    ====

    Interest income to average
     interest-earning assets                                        8.36%
    Interest expense to average
     interest-earning assets                                        2.17%
    Net interest margin                                             6.19%
                                                                    ====



    (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 revised to conform to the
    current period presentation.
    * Prior to the adoption of the new consolidation accounting
    standards, management evaluated the Company and each of its lines of
    business results on a "managed" basis. With
    the adoption of the new consolidation accounting standards, the
    Company's reported results are comparable to the "managed" basis
    which now reflect the consolidation of the
    majority of the Company's credit card securitization trusts.  The
    accompanying Exhibit "Reconciliation to GAAP Financial Measures"
    presents a reconciliation of the Company's
    non-GAAP "managed" results to its reported results for periods prior
    to January 1, 2010.


               CAPITAL ONE FINANCIAL CORPORATION (COF)
                 LENDING INFORMATION AND STATISTICS
                          MANAGED BASIS (1)

                                       2010           2010          2009
    (Dollars in millions)
     (unaudited)                      Q2             Q1            Q2
    ---------------------            ---            ---           ---

    Period end loans held for
     investment

    Domestic credit card            $54,628        $56,228       $64,760
    International credit card         7,269          7,578         8,639
      Total Credit Card             $61,897        $63,806       $73,399
                                    -------        -------       -------

    Commercial and multifamily
     real estate                    $13,580        $13,618       $14,225
    Middle market                    10,203         10,310        10,219
    Specialty lending                 3,815          3,619         3,228
                                      -----          -----         -----
      Total Commercial Lending      $27,598        $27,547       $27,672
    Small-ticket commercial
     real estate                      1,977          2,065         2,503
                                      -----          -----         -----
      Total Commercial Banking      $29,575        $29,612       $30,175
                                    -------        -------       -------

    Automobile                      $17,221        $17,446       $19,902
    Mortgages                        13,322         13,967        16,579
    Retail banking                    4,770          4,970         5,367
      Total Consumer Banking        $35,313        $36,383       $41,848
                                    -------        -------       -------

    Other loans (2)                    $470           $464          $695
                                       ----           ----          ----
         Total                     $127,255       $130,265      $146,117
                                   ========       ========      ========

    Average loans held for
     investment

    Domestic credit card            $55,252        $58,108       $65,862
    International credit card         7,427          7,814         8,328
      Total Credit Card             $62,679        $65,922       $74,190
                                    -------        -------       -------

    Commercial and multifamily
     real estate                    $13,543        $13,716       $14,122
    Middle market                    10,276         10,324        10,429
    Specialty lending                 3,654          3,609         3,472
                                      -----          -----         -----
      Total Commercial Lending      $27,473        $27,649       $28,023
    Small-ticket commercial
     real estate                      2,060          2,074         2,542
                                      -----          -----         -----
      Total Commercial Banking      $29,533        $29,723       $30,565
                                    -------        -------       -------

    Automobile                      $17,276        $17,769       $20,303
    Mortgages                        13,573         15,434        16,707
    Retail banking                    4,811          5,042         5,712
      Total Consumer Banking        $35,660        $38,245       $42,722
                                    -------        -------       -------

    Other loans (2)                    $464           $489          $536
                                       ----           ----          ----
         Total                     $128,336       $134,379      $148,013
                                   ========       ========      ========

    Net charge-off rates
    Domestic credit card               9.49%         10.48%         9.23%
    International credit card          8.38%          8.83%         9.32%
      Total Credit Card                9.36%         10.29%         9.24%
                                       ----          -----          ----

    Commercial and multifamily
     real estate (3)                   1.17%          1.45%         0.92%
    Middle market (3)                  0.78%          0.82%         0.58%
    Specialty lending                  0.87%          0.90%         0.99%
                                       ----           ----          ----
      Total Commercial Lending
       (3)                             0.98%          1.14%         0.80%
    Small-ticket commercial
     real estate                       4.21%          4.43%         1.86%
                                       ----           ----          ----
      Total Commercial Banking
       (3)                             1.21%          1.37%         0.89%
                                       ----           ----          ----

    Automobile                         2.09%          2.97%         3.65%
    Mortgages (3)                      0.46%          0.94%         0.43%
    Retail banking (3)                 2.11%          2.11%         2.42%
      Total Consumer Banking (3)       1.47%          2.03%         2.23%
                                       ----           ----          ----

    Other loans                       27.95%         18.82%        37.00%
                                      -----          -----         -----
         Total                         5.36%          6.02%         5.64%
                                       ====           ====          ====

    30+ day performing
     delinquency rate
    Domestic credit card               4.79%          5.30%         4.77%
    International credit card          6.03%          6.39%         6.69%
      Total Credit Card                4.94%          5.43%         4.99%
                                       ----           ----          ----

    Automobile                         7.74%          7.58%         8.89%
    Mortgages (3)                      0.68%          0.93%         0.97%
    Retail banking (3)                 0.87%          1.02%         0.91%
      Total Consumer Banking (3)       4.15%          4.13%         4.73%
                                       ====           ====          ====

    Nonperforming asset rates
     (5) (6)
    Commercial and multifamily
     real estate (3)                   2.82%          3.65%         2.15%
    Middle market (3)                  1.20%          1.15%         1.15%
    Specialty lending                  1.94%          2.18%         2.11%
                                       ----           ----          ----
      Total Commercial Lending
       (3)                             2.10%          2.52%         1.78%
    Small-ticket commercial
     real estate                       3.57%          4.18%        10.08%
                                       ----           ----         -----
      Total Commercial Banking
       (3)                             2.20%          2.64%         2.47%
                                       ----           ----          ----

    Automobile (4)                     0.56%          0.55%         0.78%
    Mortgages (3)                      3.78%          3.17%         1.51%
    Retail banking (3)                 2.25%          2.07%         1.88%
      Total Consumer Banking (3)       2.00%          1.76%         1.21%
                                       ====           ====          ====


                  CAPITAL ONE FINANCIAL CORPORATION (COF)
    CREDIT CARD SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING
                                OPERATIONS
                             MANAGED BASIS (1)

                                              2010     2010     2009
    (Dollars in millions) (unaudited)        Q2       Q1       Q2
    ---------------------------------        ---      ---      ---
    Credit Card:
    ------------
    Earnings
      Interest income                       $2,232   $2,453   $2,283
      Interest expense                         255      340      486
                                               ---      ---      ---
      Net interest income                   $1,977   $2,113   $1,797
      Non-interest income                      659      718      898
                                               ---      ---      ---
      Total revenue                         $2,636   $2,831   $2,695
      Provision for loan and lease losses      765    1,175    1,520
      Non-interest expense                   1,002      914      910
                                             -----      ---      ---
      Income before taxes                      869      742      265
      Income tax provision                     301      253       92
                                               ---      ---      ---
      Net income                              $568     $489     $173
                                              ====     ====     ====

    Selected Metrics
      Period end loans held for investment $61,897  $63,806  $73,399
      Average loans held for investment    $62,679  $65,922  $74,190
      Loans held for investment yield        14.24%   14.88%   12.31%
      Revenue margin                         16.82%   17.18%   14.53%
      Net charge-off rate                     9.36%   10.29%    9.24%
      30+ day performing delinquency rate     4.94%    5.43%    4.99%
      Purchase volume (7)                  $26,570  $23,924  $25,747

    Domestic Card Sub-segment
    Earnings
      Net interest income                   $1,735   $1,865   $1,586
      Non-interest income                      560      618      795
                                               ---      ---      ---
      Total revenue                         $2,295   $2,483   $2,381
      Provision for loan and lease losses      675    1,096    1,336
      Non-interest expense                     869      809      788
                                               ---      ---      ---
      Income before taxes                      751      578      257
      Income tax provision                     268      206       90
                                               ---      ---      ---
      Net income                              $483     $372     $167
                                              ====     ====     ====

    Selected Metrics
      Period end loans held for investment $54,628  $56,228  $64,760
      Average loans held for investment    $55,252  $58,108  $65,862
      Loans held for investment yield        13.98%   14.78%   12.17%
      Revenue margin                         16.61%   17.09%   14.46%
      Net charge-off rate                     9.49%   10.48%    9.23%
      30+ day performing delinquency rate     4.79%    5.30%    4.77%
      Purchase volume (7)                  $24,513  $21,988  $23,611

    International Card Sub-segment
    Earnings
      Net interest income                     $242     $248     $211
      Non-interest income                       99      100      103
                                               ---      ---      ---
      Total revenue                           $341     $348     $314
      Provision for loan and lease losses       90       79      184
      Non-interest expense                     133      105      122
                                               ---      ---      ---
      Income before taxes                      118      164        8
      Income tax provision                      33       47        2
                                               ---      ---      ---
      Net income                               $85     $117       $6
                                               ===     ====      ===

    Selected Metrics
      Period end loans held for investment  $7,269   $7,578   $8,639
      Average loans held for investment     $7,427   $7,814   $8,328
      Loans held for investment yield        16.21%   15.66%   13.40%
      Revenue margin                         18.37%   17.81%   15.08%
      Net charge-off rate                     8.38%    8.83%    9.32%
      30+ day performing delinquency rate     6.03%    6.39%    6.69%
      Purchase volume (7)                   $2,057   $1,936   $2,136


                     CAPITAL ONE FINANCIAL CORPORATION (COF)
          COMMERCIAL BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR
                              CONTINUING OPERATIONS
                                MANAGED BASIS (1)

                                                      2010     2010     2009
    (Dollars in millions) (unaudited)                Q2       Q1       Q2
    ---------------------------------                ---      ---      ---
    Commercial Banking:
    -------------------
    Earnings
      Net interest income                             $319     $312     $279
      Non-interest income                               60       42       49
                                                       ---      ---      ---
      Total revenue                                   $379     $354     $328
      Provision for loan and lease losses               62      238      122
      Non-interest expense                             198      192      156
                                                       ---      ---      ---
      Income (loss) before taxes                       119      (76)      50
      Income tax provision (benefit)                    42      (27)      17
                                                       ---      ---      ---
      Net income (loss)                                $77     $(49)     $33
                                                       ===     ====      ===

    Selected Metrics
      Period end loans held for investment         $29,575  $29,612  $30,175
      Average loans held for investment            $29,533  $29,723  $30,565
      Loans held for investment yield                 4.94%    5.03%    5.01%
      Period end deposits                          $21,527  $21,605  $16,897
      Average deposits                             $22,171  $21,859  $17,021
      Deposit interest expense rate                   0.67%    0.72%    0.77%
      Core deposit intangible amortization             $14      $14      $10
      Net charge-off rate (3)                         1.21%    1.37%    0.89%
      Nonperforming loans as a percentage of loans
       held for investment (3)                        2.04%    2.48%    2.33%
      Nonperforming asset rate (3)                    2.20%    2.64%    2.47%


                    CAPITAL ONE FINANCIAL CORPORATION (COF)
         CONSUMER BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR
                             CONTINUING OPERATIONS
                               MANAGED BASIS (1)

                                                 2010     2010     2009
    (Dollars in millions) (unaudited)           Q2       Q1       Q2
    ---------------------------------           ---      ---      ---
    Consumer Banking:
    -----------------
    Earnings
      Net interest income                        $935     $896     $826
      Non-interest income                         162      316      226
                                                  ---      ---      ---
      Total revenue                            $1,097   $1,212   $1,052
      Provision for loan and lease losses        (112)      50      202
      Non-interest expenses                       735      688      725
                                                  ---      ---      ---
      Income (loss) before taxes                  474      474      125
      Income tax provision (benefit)              169      169       44
                                                  ---      ---      ---
      Net income (loss)                          $305     $305      $81
                                                 ====     ====      ===

    Selected Metrics
      Period end loans held for investment    $35,313  $36,383  $41,848
      Average loans held for investment       $35,660  $38,245  $42,722
      Loans held for investment yield            8.99%    8.96%    8.69%
      Auto loan originations                    1,765    1,343    1,342
      Period end deposits                     $77,407  $76,883  $73,883
      Average deposits                        $77,082  $75,115  $74,321
      Deposit interest expense rate              1.18%    1.27%    1.76%
      Core deposit intangible amortization        $36      $38      $47
      Net charge-off rate (3)                    1.47%    2.03%    2.23%
      Nonperforming loans as a percentage of
       loans held                                1.82%    1.62%    1.08%
      for investment (3) (4)
      Nonperforming asset rate (3) (4)           2.00%    1.76%    1.21%
      30+ day performing delinquency rate (3)
       (4)                                       4.15%    4.13%    4.73%
      Period end loans serviced for others    $23,730  $26,778  $31,492


                   CAPITAL ONE FINANCIAL CORPORATION (COF)
         OTHER AND TOTAL SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR
                            CONTINUING OPERATIONS
                              MANAGED BASIS (1)

                                               2010      2010      2009
    (Dollars in millions) (unaudited)         Q2        Q1        Q2
    ---------------------------------        ---       ---       ---
    Other:
    ------
    Earnings
      Net interest income (expense)           $(132)     $(91)      $55
      Non-interest income (expense)             (74)      (14)       17
                                                ---       ---       ---
      Total revenue                           $(206)    $(105)      $72
      Provision for loan and lease losses        10        18        60
      Restructuring expenses (8)                  -         -        43
      Non-interest expense                       65        53        88
                                                ---       ---       ---
      Income (loss) before taxes               (281)     (176)     (119)
      Income tax benefit                       (143)     (151)      (61)
                                               ----      ----       ---
      Net income (loss)                       $(138)     $(25)     $(58)
                                              =====      ====      ====

    Selected Metrics
      Period end loans held for investment
       (2)                                     $470      $464      $695
      Average loans held for investment
       (2)                                     $464      $489      $536
      Period end deposits                   $18,397   $19,299   $25,945
      Average deposits                      $19,231   $20,556   $28,262

    Total:
    ------
    Earnings
      Net interest income                    $3,099    $3,230    $2,957
      Non-interest income                       807     1,062     1,190
                                                ---     -----     -----
      Total revenue                          $3,906    $4,292    $4,147
      Provision for loan and lease losses       725     1,481     1,904
      Restructuring expenses (8)                  -         -        43
      Non-interest expense                    2,000     1,847     1,879
                                              -----     -----     -----
      Income before taxes                     1,181       964       321
      Income tax provision                      369       244        92
                                                          ---       ---
      Net income                               $812      $720      $229
                                               ====      ====      ====

    Selected Metrics
      Period end loans held for investment $127,255  $130,265  $146,117
      Average loans held for investment    $128,336  $134,379  $148,013
      Period end deposits                  $117,331  $117,787  $116,725
      Average deposits                     $118,484  $117,530  $119,604


CAPITAL ONE FINANCIAL CORPORATION (COF)

LOAN DISCLOSURES AND SEGMENT

FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS NOTES

( 1 ) Prior to the 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 now reflect the consolidation of the majority of the Company's credit card securitization trusts. However, the Company's total segment results differs from its reported consolidated results because our segment results include the loans underlying one of our securitization trusts that remains unconsolidated. The outstanding balance of the loans in this off-balance sheet trust are reflected in our segment results as $114.8 million as of June 30, 2010. The accompanying Exhibit "Reconciliation to GAAP Financial Measures" presents a reconciliation of the Company's non-GAAP "managed" results to its GAAP results for periods prior to January 1, 2010.

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

( 3 ) The denominator used in calculating the allowance as a % of Loans Held for Investment, Net Charge-off Rate and 30+ Day Performing Delinquency Rate include loans acquired as part of the Chevy Chase Bank, FSB ("CCB") acquisition. The metrics excluding such loans are as follows.

                                                  Q2 2010  Q1 2010  Q2 2009
                                                  -------  -------  -------
     CCB period end acquired loan portfolio (in
      millions)(unaudited)                         $6,381   $6,799   $8,644
     CCB average acquired loan portfolio (in
      millions)(unaudited)                         $6,541   $7,037   $8,499
     Net charge-off rate
          Commercial and Multifamily Real Estate     1.19%    1.48%    0.95%
          Middle Market                              0.82%    0.87%    0.61%
                                                     ----     ----     ----
              Total Commercial Lending               1.01%    1.48%    0.83%
                                                     ----     ----     ----
                 Total Commercial Banking            1.24%    1.41%    0.92%

          Mortgage                                   0.77%    1.02%    0.77%
          Retail Banking                             2.23%    2.22%    2.56%
                                                     ----     ----     ----
                 Total Consumer Banking              1.76%    2.28%    2.72%

     30+ day performing delinquency rate
          Mortgage                                   1.14%    1.58%    1.76%
          Retail Banking                             0.91%    1.07%    0.96%
                                                     ----     ----     ----
                 Total Consumer Banking              4.93%    4.95%    5.61%

     Nonperforming asset rate
          Commercial and Multifamily Real Estate     2.90%    3.71%    2.25%
          Middle Market                              1.25%    1.23%    1.21%
                                                     ----     ----     ----
              Total Commercial Lending               2.16%    2.60%    1.85%
                                                     ----     ----     ----
                 Total Commercial Banking            2.26%    2.72%    2.54%

          Mortgage                                   6.30%    5.36%    2.73%
          Retail Banking                             2.37%    2.17%    1.88%
                                                     ----     ----     ----
                 Total Consumer Banking              2.38%    2.11%    1.47%

     Nonperforming loans as a percentage of loans
      held for investment
          Commercial Banking                         2.09%    2.55%    2.41%
          Consumer Banking                           2.16%    1.93%    1.32%


( 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 the segment.

( 6 ) The Company's policy is not to classify delinquent credit card loans as nonperforming as permitted by regulatory guidance. 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 ) Includes all purchase transactions net of returns. Excludes cash advance transactions.

( 8 ) The Company completed its 2007 restructuring initiative during 2009.

SOURCE: Capital One Financial Corporation