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Capital One Reports Second Quarter 2012 Net Income of $92 million, or $0.16 per share

July 18, 2012 at 4:25 PM EDT
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Both first and second quarter 2012 results were significantly impacted by acquisition accounting impacts and other items

MCLEAN, Va., July 18, 2012 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2012 of $92 million, or $0.16 per diluted common share, compared with net income of $1.4 billion, or $2.72 per diluted common share, for the first quarter of 2012, and net income of $911 million, or $1.97 per diluted common share, for the second quarter of 2011. 

"While second quarter results reflect significant purchase accounting impacts and other items, the strong underlying performance of our businesses continues to demonstrate that we're well positioned to deliver sustained shareholder value," said Richard Fairbank, Chairman and Chief Executive Officer. "We're focused on delivering that value, including distributing capital to shareholders through a meaningful dividend and opportunistic share buybacks, consistent with our long-standing commitment to maintaining a strong and resilient capital base."

Total Company Results

All comparisons in the following paragraphs are for second quarter 2012 compared to first quarter 2012 unless otherwise noted.   

Loan and Deposit Volumes

Period-end loans held for investment increased $28.9 billion, or 17 percent, driven largely by the $27.6 billion addition of HSBC U.S. Card portfolio to the Domestic Card business. Period-end loans in the Domestic Card business increased by $27.6 billion. Period-end loans in Commercial Banking increased $1.1 billion, or 3 percent, to $36.1 billion, and period-end loans in Auto Finance grew $1.7 billion, or 7 percent, to $25.3 billion

Average loans in the quarter grew by $39.7 billion, or 26 percent, to $192.6 billion, primarily as a result of the addition of the HSBC U.S. Card portfolio and the full quarter impact of the ING Direct acquisition.

Period-end total deposits decreased $2.6 billion to $213.9 billion, driven by a reduction in deposits in legacy banking segments. Deposit interest expense decreased 6 basis points in the quarter to 0.76 percent.

Other

As previously released, the company announced regulatory settlements related to cross-sell activities in its domestic card business.  As a result, the company recorded $60 million in civil money penalties in non-interest expense.  The company also announced that, pursuant to its agreement with the OCC, it is setting aside $150 million in cash to fund expected customer refunds.  The total income statement impact of these expected refunds is approximately $116 million, including a $75 million reserve accrued in the first quarter to reverse previously recognized revenues and an additional $41 million additional reserve this quarter to reflect the final agreements with the company's regulators. Additionally, the company is no longer recognizing revenue for any amounts billed for these products. This includes approximately $24 million of billed amounts in the second quarter. Until they receive their refunds later in the year, the company continues to bill affected customers for products sold to ensure continuity of coverage.

Revenues

Total net revenue in the second quarter of 2012 was $5.1 billion, an increase of $120 million, or 2 percent. Net interest income increased by $587 million, or 17 percent, in the quarter to $4.0 billion, primarily due to a 20 percent increase in average interest-earning assets resulting from the partial quarter impact of the HSBC U.S. Card acquisition and the full quarter impact of the ING Direct acquisition. Net interest income for the quarter was unfavorably impacted by certain charges related to the HSBC U.S. Card acquisition, including an expense of $174 million to establish a finance charge and fee reserve for estimated uncollectible billed finance charges and fees and loan premium amortization expense of $63 million.  Non-interest income declined $467 million, or 31 percent, in the quarter, driven primarily by the absence of the bargain purchase gain of $594 million related to the purchase of ING Direct recognized in the first quarter of 2012. Total net revenue was reduced by $41 million to reverse previously recognized revenues in connection with remediation activities related to cross-sell in the Domestic Card business.

Net Interest Margin

Net interest margin declined 16 basis points in the quarter to 6.04 percent, as lower asset yields were partially offset by the favorable changes in our funding mix.  The decrease in asset yields was primarily driven by lower yields in Domestic Card, which largely resulted from the finance charge and fee reserve build related to HSBC acquisition accounting. Cost of funds was lower by 14 basis points, driven by the favorable impact of a full quarter ING Direct's deposits on the company's funding mix.

Non-Interest Expenses

Operating expense for the second quarter increased $625 million, or 29 percent, driven by the inclusion of a full quarter of ING Direct and a partial quarter of HSBC operating expenses and expenses related to the HSBC U.S. Card acquisition, including $85 million of PCCR amortization. As previously mentioned, the company recognized expense of $60 million in regulatory fines related to cross-sell activities in the Domestic Card business.  The company also recognized an expense of $98 million for net litigation reserves to cover interchange and other settlements in the quarter.  This reserve contemplates the anticipated short-term reduction in interchange fees going forward as well as additional amounts relating to a variety of other pending claims.

Provision for Credit Losses

Provision for credit losses of $1.7 billion in the quarter included a $1.2 billion allowance build for the non-impaired loans brought on to the balance sheet as a result of the HSBC U.S. Card acquisition. Strong credit performance in legacy businesses led to a $259 million allowance release in the quarter, driven by continued stability in credit performance including a lower levels of charge-offs.

The net charge-off rate was 1.53 percent in the second quarter of 2012, down from 2.04 percent, driven by the absence of charge-offs in the HSBC U.S. Card portfolio which were absorbed by the credit marks that were established through acquisition accounting, as well as continued improvement in credit in the legacy businesses.

Net Income

Net income from continuing operations before income tax of $236 million in the quarter was significantly impacted by acquisition accounting and other items including those outlined above.  Net income declined to $92 million from $1.4 billion in the prior quarter.

Discontinued Operations

The company recognized a $180 million representation and warranty expense, of which $154 million was recorded in discontinued operations and $26 million which was recorded in non-interest income in continuing operations.  The representation and warranty reserve now stands at $1.0 billion.

Capital Ratios

The company's estimated Tier 1 common ratio was approximately 9.9 percent as of June 30, 2012, down from 11.9 percent at March 31, 2012. The company's capital position remains strong after the closing of the HSBC U.S card transaction.

Detailed segment information will be available in the company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on July 19, 2012 at 8:30 AM, Eastern Standard Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company's home page (http://www.capitalone.com/). Choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation to GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through August 2, 2012 at 8:30 AM.

Forward-looking statements

The company cautions that its current expectations in this release dated July 18, 2012 and the company's plans, objectives, expectations and intentions, are forward-looking statements which speak only as of the date hereof. The company does not undertake any obligation to update or revise any of the information contained herein whether as a result of new information, future events or otherwise.

Certain statements in this release are forward-looking statements, including those that discuss, among other things: strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns, expenses, capital measures, accruals for claims in litigation and for other claims against the company, earnings per share or other financial measures for the company; future financial and operating results; the company's plans, objectives, expectations and intentions; the projected impact and benefits of the acquisition of ING Direct and HSBC's U.S. Card business (the "Transactions"); and the assumptions that underlie these matters.  To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities Litigation Reform Act of 1995. Numerous factors could cause the company's actual results to differ materially from those described in such forward-looking statements, including, among other things: general economic and business conditions in the U.S., the U.K., Canada or the company's local markets, including conditions affecting employment levels, interest rates, consumer income and confidence, spending and savings that may affect consumer bankruptcies, defaults, charge-offs and deposit activity; an increase or decrease in credit losses (including increases due to a worsening of general economic conditions in the credit environment); the possibility that the company may not fully realize the projected cost savings and other projected benefits of the Transactions; difficulties and delays in integrating the assets and businesses acquired in the Transactions; business disruption during the pendency of or following the Transactions; diversion of management time on issues related to the Transactions, including integration of the assets and businesses acquired; reputational risks and the reaction of customers and counterparties to the Transactions; disruptions relating to the Transactions negatively impacting the company's ability to maintain relationships with customers, employees and suppliers; changes in asset quality and credit risk as a result of the Transactions; the accuracy of estimates and assumptions the company uses to determine the fair value of assets acquired and liabilities assumed in the Transactions, and the potential for its estimates or assumptions to change as additional information becomes available and the company completes the accounting analysis of the Transactions; financial, legal, regulatory, tax or accounting changes or actions, including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations promulgated thereunder; developments, changes or actions relating to any  litigation matter involving the company; the inability to sustain revenue and earnings growth; increases or decreases in interest rates; the company's ability to access the capital markets at attractive rates and terms to capitalize and fund its operations and future growth; the success of the company's marketing efforts in attracting and retaining customers; increases or decreases in the company's aggregate loan balances or the number of customers and the growth rate and composition thereof, including increases or decreases resulting from factors such as shifting product mix, amount of actual marketing expenses the company incurs and attrition of loan balances; the level of future repurchase or indemnification requests the company may receive, the actual future performance of mortgage loans relating to such requests, the success rates of claimants against the company, any developments in litigation and the actual recoveries the company may make on any collateral relating to claims against the company; the amount and rate of deposit growth; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products or financial condition; any significant disruption in the company's operations or technology platform; the company's ability to maintain a compliance infrastructure suitable for its size and complexity; the company's ability to control costs; the amount of, and rate of growth in, the company's expenses as its business develops or changes or as it expands into new market areas; the company's ability to execute on its strategic and operational plans; any significant disruption of, or loss of public confidence in, the United States Mail service affecting the company's response rates and consumer payments; the company's ability to recruit and retain experienced personnel to assist in the management and operations of new products and services; changes in the labor and employment markets; fraud or misconduct by the company's customers, employees or business partners; competition from providers of products and services that compete with the company's businesses; and other risk factors set forth from time to time in reports that the company files with the Securities and Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2011.

About Capital One

Capital One Financial Corporation (http://www.capitalone.com/) is a financial holding company whose subsidiaries, which include Capital One, N.A., Capital One Bank (USA), N. A., and ING Bank, fsb, had $213.9 billion in deposits and $296.6 billion in total assets outstanding as of June 30, 2012. Headquartered in McLean, Virginia, Capital One and ING Direct offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

 



Exhibit 99.2

Capital One Financial Corporation

Financial Supplement

       Second Quarter 2012 (1) (2)

    Table of Contents 








Page 

Capital One Financial Corporation Consolidated


Table   1: 

Financial & Statistical Summary―Consolidated

1


Table   2:

Notes to Consolidated Financial & Statistical Summary (Table 1)

2


Table   3:

Consolidated Statements of Income

3


Table   4:

Consolidated Balance Sheets

4


Table   5:

Average Balances, Net Interest Income and Net Interest Margin

5


Table   6:

Loan Information and Performance Statistics

6


Table   7:

 

Loan Information and Performance Statistics (Excluding Acquired Loans) (3)

7

Business Segment Detail


Table   8:

Financial & Statistical Summary―Credit Card Business

8


Table   9:

Financial & Statistical Summary―Consumer Banking Business

9


Table 10:

Financial & Statistical Summary―Commercial Banking Business

10


Table 11:

Financial & Statistical Summary―Other and Total 

11


Table 12:

Notes to Loan and Business Segment Disclosures (Tables 6 — 11)

12

Other




Table 13:

 

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

13









(1)

 

 

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our June 30, 2012 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission. 






(2)

References to ING Direct refer to the business and assets acquired and liabilities assumed in the February 17, 2012 acquisition. References to HSBC refer to the May 1, 2012 transaction in which we acquired substantially all of HSBC's credit card and private-label credit card business in the United States ("HSBC U.S. card").





(3)

 

 

 

We use the term "acquired loans" to refer to a limited portion of the credit card loans acquired in the HSBC transaction and the substantial majority of loans acquired in the ING Direct and Chevy Chase Bank ("CCB") acquisitions, which were recorded at fair value at acquisition and subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans ( formerly "SOP 03-3"). Because SOP 03-3 takes into consideration estimated credit losses expected to be realized over the life of the loans, including these loans in our credit quality metrics may have a material impact. We therefore present our credit quality metrics with and without acquired loans accounted for under SOP 03-3.

 

CAPITAL ONE FINANCIAL CORPORATION (COF)






Table 1:  Financial & Statistical Summary—Consolidated (1)















2012


2012


2011


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


    Q2 (2)(3)


    Q1 (3)


Q2


Earnings








Net interest income


$      4,001


$    3,414


$            3,136


Non-interest income(4) (5)


1,054


1,521


857


Total net revenue(5) (6)


5,055


4,935


3,993


Provision for credit losses


1,677


573


343


Marketing expenses


334


321


329


Operating expenses(7)


2,808


2,183


1,926


Income from continuing operations before income taxes 


236


1,858


1,395


Income tax provision


43


353


450


Income from continuing operations, net of tax


193


1,505


945


Loss from discontinued operations, net of tax(4)


(100)


(102)


(34)


Net income


93


1,403


911


Dividends and undistributed earnings allocated to participating securities


(1)


(7)



Net income available to common stockholders


$             92


$     1,396


$               911










Common Share Statistics








Basic EPS: 








   Income from continuing operations, net of tax


$          0.33


$        2.94


$              2.07


   Loss from discontinued operations, net of tax


(0.17)


(0.20)


(0.07)


   Net income per common share 


$          0.16


$        2.74


$              2.00


Diluted EPS: 








   Income from continuing operations, net of tax


$          0.33


$        2.92


$              2.04


   Loss from discontinued operations, net of tax


(0.17)


(0.20)


(0.07)


   Net income per common share


$          0.16


$        2.72


$              1.97


Weighted average common shares outstanding (in millions):








   Basic EPS


577.7


508.7


455.6


   Diluted EPS


582.8


513.1


462.2


Common shares outstanding (period end, in millions)


580.7


580.2


459.4


Dividends per common share


$          0.05


$        0.05


$              0.05


Tangible book value per common share (period end)(8)


35.67


39.37


31.94










Balance Sheet (Period End)








Loans held for investment(9)


$    202,749


$  173,822


$        128,965


Interest-earning assets


264,331


265,398


174,323


Total assets


296,572


294,481


199,753


Interest-bearing deposits


193,859


197,254


109,278


Total deposits


213,931


216,528


126,117


Borrowings


35,874


32,885


37,735


Stockholders' equity


37,192


36,950


28,681










Balance Sheet (Quarterly Average Balances)








Average loans held for investment(9)


$    192,632


$  152,900


$        127,916


Average interest-earning assets


265,019


220,246


174,113


Average total assets


295,306


246,384


199,229


Average interest-bearing deposits


195,597


151,625


109,251


Average total deposits


214,914


170,259


125,834


Average borrowings


35,418


35,994


39,451


Average stockholders' equity


37,533


32,982


28,255










Performance Metrics








Net interest income growth (quarter over quarter) 


17

%

7

%

%

Non-interest income growth(quarter over quarter)


(31)


75


(9)


Total net revenue growth(quarter over quarter)


2


22


(2)


Total net revenue margin(10)


7.63


8.96


9.17


Net interest margin(11)


6.04


6.20


7.20


Return on average assets(12)


0.26


2.44


1.90


Return on average total stockholders' equity(13)


2.06


18.25


13.38


Return on average tangible common equity(14)


3.53


31.60


26.57


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


6.52


6.55


7.05


Efficiency ratio(16)


62.16


50.74


56.47


Effective income tax rate


18.2


19.0


32.3


Full-time equivalent employees (in thousands), period end


37.4


34.2


28.2










Credit Quality Metrics(17)








Allowance for loan and lease losses 


$        4,998


$      4,060


$            4,488


Allowance as a % of loans held for investment 


2.47

%

2.34

%

3.48

%

Allowance as a % of loans held for investment (excluding acquired loans) 


3.08


3.08


3.62


Net charge-offs 


$           738


$         780


$               931


Net charge-off rate(18)


1.53

%

2.04

%

2.91

%

Net charge-off rate (excluding acquired loans)(18)


1.96


2.40


3.03


30+ day performing delinquency rate


2.06


2.23


2.90


30+ day performing delinquency rate (excluding acquired loans)


2.59


2.96


3.02


30+ day delinquency rate(19) 


**


2.69


3.57


30+ day delinquency rate (excluding acquired loans)(19) 


**


3.57


3.72










Capital Ratios (20)








Tier 1 common ratio(21)


9.9

%

11.9

%

9.4

%

Tier 1 risk-based capital ratio(22)


11.6


13.9


11.8


Total risk-based capital ratio(23)


14.0


16.5


15.0


Tangible common equity ("TCE") ratio(24)


7.4


8.2


7.9


 

CAPITAL ONE FINANCIAL CORPORATION (COF)










Table 2:  Notes to Consolidated Financial & Statistical Summary (Table 1)





















(1)

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

















(2)

Results for Q2 2012 include the impact of the May 1, 2012 closing of the HSBC transaction, which resulted in the addition of approximately $28.2 billion in credit card receivables at closing.

















(3)

Results for Q1 2012 and thereafter include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans with a gross outstanding principal and interest balance of $40.4 billion and deposits of $84.4 billion at acquisition.

















(4)

We recorded a provision for repurchase losses of $180 million in Q2 2012, $169 million in Q1 2012  and $37 million in Q2 2011. The majority of the provision for repurchase losses is generally included net of tax in discontinued operations, with the remaining amount included pre-tax in non-interest income. The mortgage representation and warranty reserve decreased to $1.0 billion as of June 30, 2012, from $1.1 billion as of March 31. The decrease was due to the settlement of claims in Q2 2012 totaling $280 million, which more than offset the provision expense of $180 million recorded for the quarter.
















(5)

Includes a bargain purchase gain of $594 million recognized in earnings in Q1 2012 attributable to the February 17, 2012 acquisition of ING Direct. 

















(6)

Total net revenue was reduced by $311 million in Q2 2012, $123 million in Q1 2012 and $112 million in Q2 2011, for the estimated uncollectible amount of billed finance charges and fees.
















(7)

Includes merger-related expenses, including transaction costs, attributable to acquisitions of $133 million in Q2 2012 and $86 million in Q1 2012. Also includes core deposit intangible amortization expense of $51 million in Q2 2012, $46 million in Q1 2012 and $44 million in Q2 2011. 
















(8)

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of tangible common equity.
















(9)

See Table 12 for information on acquired loans accounted for based on cash flows expected to be collected.
















(10)

Calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.
















(11)

Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.
















(12)

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period. 
















(13)

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average stockholders' equity for the period. 
















(14)

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible common equity for the period. 
















(15)

Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period.
















(16)

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
















(17)

Loans acquired as part of the HSBC domestic card, ING Direct and Chevy Chase Bank acquisitions classified as held for investment are included in the denominator used in calculating the credit quality metrics.  We also present these metrics adjusted to exclude from the denominator acquired loans accounted for based on estimated expected cash flows to be collected (formerly SOP 03-3).  See "Table 7: Loan Information and Performance Statistics (Excluding Acquired Loans)" for additional information.
















(18)

Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. 
















(19)

The 30+ day total delinquency rate as of the end of Q2 2012 will be provided in the June 30, 2012 Quarterly Report on Form 10-Q.
















(20)

Regulatory capital ratios as of the end of Q2 2012 are preliminary and therefore subject to change.


















(21)

Tier 1 common ratio is a regulatory capital measure calculated based on Tier 1 common capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.
















(22)

Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.
















(23)

Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.
















(24)

TCE ratio is a non-GAAP measure calculated based on tangible common equity divided by tangible assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio and non-GAAP reconciliation.

 

CAPITAL ONE FINANCIAL CORPORATION (COF)







Table 3:  Consolidated Statements of Income






















































Three Months Ended



Six Months Ended

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


June 30,

2012


March 31,

2012


June 30,

2011



June 30,

2012


June 30,

2011




















Interest income:













Loans held for investment, including past-due fees


$            4,255


$             3,655


$            3,367



$             7,910


$            6,784

Investment securities




335


298


313



633


629

Other







26


26


19



52


38


Total interest income



4,616


3,979


3,699



8,595


7,451




















Interest expense:













Deposits







373


311


307



684


629

Securitized debt obligations



69


80


113



149


253

Senior and subordinated notes


87


88


63



175


127

Other borrowings





86


86


80



172


166


Total interest expense



615


565


563



1,180


1,175




















Net interest income


4,001


3,414


3,136



7,415


6,276

Provision for credit losses



1,677


573


343



2,250


877


Net interest income after provision for credit losses


2,324


2,841


2,793



5,165


5,399




















Non-interest income:












Service charges and other customer-related fees



539


415


460



954


985

Interchange fees, net




408


328


331



736


651

Net other-than-temporary impairment losses recognized in earnings


(13)


(14)


(6)



(27)


(9)

Bargain purchase gain (1)




594




594


Other







120


198


72



318


172


Total non-interest income


1,054


1,521


857



2,575


1,799




















Non-interest expense:












Salaries and associate benefits



971


864


715



1,835


1,456

Marketing







334


321


329



655


605

Communications and data processing


203


172


162



375


326

Supplies and equipment




178


147


124



325


259

Occupancy






145


123


118



268


237

Merger-related expenses




133


86




219


Other







1,178


791


807



1,969


1,534


Total non-interest expense


3,142


2,504


2,255



5,646


4,417

Income from continuing operations before income taxes


236


1,858


1,395



2,094


2,781

Income tax provision




43


353


450



396


804

Income from continuing operations, net of tax


193


1,505


945



1,698


1,977

Loss from discontinued operations, net of tax


(100)


(102)


(34)



(202)


(50)


Net income





93


1,403


911



1,496


1,927

Dividends and undistributed earnings allocated to participating securities


(1)


(7)




(8)



Net income available to common stockholders


$                  92


$             1,396


$                911



$             1,488


$             1,927




















Basic earnings per common share:












Income from continuing operations



$               0.33


$               2.94


$               2.07



$               3.11


$               4.35


Loss from discontinued operations


(0.17)


(0.20)


(0.07)



(0.37)


(0.11)


Net income per basic common share



$               0.16


$               2.74


$               2.00



$               2.74


$               4.24




















Diluted earnings per common share:













Income from continuing operations


$               0.33


$               2.92


$               2.04



$               3.09


$               4.29


Loss from discontinued operations


(0.17)


(0.20)


(0.07)



(0.37)


(0.11)


Net income per basic common share



$               0.16


$               2.72


$               1.97



$               2.72


$               4.18




















Weighted average common shares outstanding (in millions):













Basic EPS





577.7


508.7


455.6



543.3


454.9


Diluted EPS





582.8


513.1


462.2



548.0


461.3




















Dividends paid per common share



$               0.05


$               0.05


$               0.05



$               0.10


$               0.10







































(1)

Represents the excess of the fair value of the net assets acquired in the ING Direct acquisition as of the acquisition date of February 17, 2012 over the consideration transferred.



 

CAPITAL ONE FINANCIAL CORPORATION (COF)





Table 4:  Consolidated Balance Sheets
























June 30,


December 31,


June 30,

(Dollars in millions)(unaudited)


2012


2011


2011









Assets:







Cash and due from banks


$             2,297


$             2,097


$             1,954

Interest-bearing deposits with banks


3,352


3,399


4,037

Federal funds sold and securities purchased under agreements to resell


330


342


652


Cash and cash equivalents


5,979


5,838


6,643

Restricted cash for securitization investors


370


791


1,328

Securities available for sale, at fair value


55,289


38,759


39,474

Loans held for investment:








Unsecuritized loans held for investment


158,680


88,242


81,585


Restricted loans for securitization investors


44,069


47,650


47,380


Total loans held for investment


202,749


135,892


128,965


    Less: Allowance for loan and lease losses


(4,998)


(4,250)


(4,488)


Net loans held for investment


197,751


131,642


124,477

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


1,047


201


80

Accounts receivable from securitizations


96


94


106

Premises and equipment, net


3,556


2,748


2,754

Interest receivable


1,623


1,029


1,027

Goodwill


13,864


13,592


13,596

Other


16,997


11,325


10,268


Total assets


$         296,572


$         206,019


$         199,753

















Liabilities:







Interest payable


$                462


$                466


$                469

Customer deposits:








Non-interest bearing deposits


20,072


18,281


16,839


Interest-bearing deposits


193,859


109,945


109,278


Total customer deposits


213,931


128,226


126,117

Securitized debt obligations


13,608


16,527


19,860

Other debt:








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


1,101


1,464


2,575


Senior and subordinated notes


12,079


11,034


8,664


Other borrowings


9,086


10,536


6,636


Total other debt


22,266


23,034


17,875

Other liabilities


9,113


8,100


6,751


Total liabilities


259,380


176,353


171,072









Stockholders' equity:







Common stock


6


5


5

Paid-in capital, net


25,217


19,274


19,188

Retained earnings and accumulated other comprehensive income


15,255


13,631


12,729

Less:  Treasury stock, at cost


(3,286)


(3,244)


(3,241)


Total stockholders' equity


37,192


29,666


28,681


Total liabilities and stockholders' equity


$         296,572


$         206,019


$         199,753

 

CAPITAL ONE FINANCIAL CORPORATION (COF)
















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































































2012 Q2



2012 Q1



2011 Q2


(Dollars in millions)(unaudited)


Average

Balance


Interest Income/

Expense


Yield/ Rate



Average

Balance


Interest Income/

Expense


Yield/ Rate



Average

Balance


Interest Income/

Expense


Yield/ Rate


Interest-earning assets:























Loans held for investment


$  192,632


$  4,255


8.84

%


$  152,900


$  3,655


9.56

%


$  127,916


$  3,367


10.53

%


Investment securities 


56,972


335


2.35



50,543


298


2.36



40,381


313


3.10



Cash equivalents and other


15,415


26


0.67



16,803


26


0.62



5,846


19


1.30


Total interest-earning assets 


$  265,019


$  4,616


6.97

%


$  220,246


$  3,979


7.23

%


$  174,143


$  3,699


8.50

%

























Interest-bearing liabilities:























Interest-bearing deposits
























NOW accounts


$    35,783


$       56


0.63

%


$    24,912


$       34


0.55

%


$    13,186


$         9


0.27

%



Money market deposit accounts


108,401


190


0.70



76,362


131


0.69



45,527


99


0.87




Savings accounts


31,379


25


0.32



31,743


34


0.43



29,329


60


0.82




Other consumer time deposits


13,658


65


1.90



12,763


74


2.32



14,330


91


2.54




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


75


1


5.33



84





110


1


3.64




CD's of $100,000 or more


5,030


35


2.78



4,787


37


3.09



5,867


46


3.14




Foreign time deposits


1,271


1


0.31



974


1


0.41



902


1


0.44



Total interest-bearing deposits


195,597


373


0.76



151,625


311


0.82



109,251


307


1.12



Securitized debt obligations


14,948


69


1.85



16,185


80


1.98



22,191


113


2.04



Senior and subordinated notes


11,213


87


3.10



10,268


88


3.43



8,093


63


3.11



Other borrowings


9,257


86


3.72



9,541


86


3.61



9,167


80


3.49


Total interest-bearing liabilities


$  231,015


$     615


1.06

%


$  187,619


$     565


1.20

%


$  148,702


$     563


1.51

%

Net interest income/spread




$  4,001


5.90

%




$  3,414


6.03

%




$  3,136


6.99

%

Impact of non-interest bearing funding






0.14







0.17







0.21


Net interest margin






6.04

%






6.20

%






7.20

%

 

CAPITAL ONE FINANCIAL CORPORATION (COF)






Table 6: Loan Information and Performance Statistics(1)














2012


2012


2011


(Dollars in millions)(unaudited)


Q2 (2)(3)


Q1 (3)


Q2


Period-end Loans Held For Investment








Credit card:








   Domestic credit card 


$           80,798


$           53,173


$           53,994


   International credit card


8,116


8,303


8,711


      Total credit card


88,914


61,476


62,705


Consumer banking:








   Automobile


25,251


23,568


19,223


   Home loan


48,224


49,550


11,323


   Retail banking


4,140


4,182


4,046


      Total consumer banking


77,615


77,300


34,592


Commercial banking:(4)








   Commercial and multifamily real estate


16,254


15,702


14,304


   Commercial and industrial


18,467


17,761


15,526


      Total commercial lending


34,721


33,463


29,830


   Small-ticket commercial real estate


1,335


1,443


1,641


      Total commercial banking


36,056


34,906


31,471


Other loans


164


140


197


     Total 


$         202,749


$         173,822


$         128,965










Average Loans Held For Investment








Credit card:








   Domestic credit card 


$           71,468


$           54,131


$           53,868


   International credit card


8,194


8,301


8,823


      Total credit card


79,662


62,432


62,691


Consumer banking:








   Automobile


24,487


22,582


18,753


   Home loan 


48,966


29,502


11,534


   Retail banking


4,153


4,179


4,154


      Total consumer banking


77,606


56,263


34,441


Commercial banking:(4)








   Commercial and multifamily real estate


15,838


15,514


13,859


   Commercial and industrial


18,001


17,038


14,993


      Total commercial lending


33,839


32,552


28,852


   Small-ticket commercial real estate


1,388


1,480


1,726


      Total commercial banking


35,227


34,032


30,578


Other loans


137


173


206


      Total


$         192,632


$         152,900


$         127,916










Net Charge-off Rates








Credit card:








   Domestic credit card


2.86

%

3.92

%

4.74

%

   International credit card


5.49


5.52


7.02


      Total credit card


3.13


4.14


5.06


Consumer Banking:








   Automobile


1.11


1.41


1.11


   Home loan


0.09


0.20


0.60


   Retail banking


1.27


1.39


1.73


      Total consumer banking


0.48


0.77


1.01


Commercial banking:(4)








   Commercial and multifamily real estate


0.18


0.09


0.38


   Commercial and industrial


0.10


(0.08)


0.22


      Total commercial lending


0.14



0.30


   Small-ticket commercial real estate


1.46


4.24


3.77


      Total commercial banking


0.19


0.19


0.50


Other loans


18.04


23.30


23.96


      Total


1.53

%

2.04

%

2.91

%









30+ Day Performing Delinquency Rates








Credit card:








   Domestic credit card


2.79

%

3.25

%

3.33

%

   International credit card


4.84


5.14


5.30


      Total credit card


2.97

%

3.51

%

3.60

%

Consumer Banking:








   Automobile


5.20

%

4.87

%

6.09

%

   Home loan


0.15


0.15


0.70


   Retail banking


0.69


0.80


0.76


      Total consumer banking


1.82

%

1.63

%

3.70

%









Nonperforming Asset Rates(5)(6)








Consumer banking:








   Automobile


0.41

%

0.32

%

0.49

%

   Home loan


0.94


0.94


4.40


   Retail banking


2.21


2.25


2.45


      Total consumer banking


0.83

%

0.82

%

2.00

%

Commercial banking:(4)








   Commercial and multifamily real estate


1.28

%

1.55

%

2.31

%

   Commercial and industrial


0.81


0.69


1.13


      Total commercial lending


1.03

%

1.09

%

1.69

%

   Small-ticket commercial real estate


1.25


4.35


0.75


      Total commercial banking


1.04

%

1.23

%

1.64

%

 

CAPITAL ONE FINANCIAL CORPORATION (COF)





Table 7: Loan Information and Performance Statistics (Excluding Acquired Loans)(1)(7)












2012


2012


2011


(Dollars in millions)(unaudited)


Q2 (2)(3)


Q1 (3)


Q2


Period-end Loans Held For Investment (Excluding Acquired Loans)








Credit card:








   Domestic credit card 


$           80,269


$           53,173


$           53,994


   International credit card


8,116


8,303


8,711


      Total credit card


88,385


61,476


62,705


Consumer banking:








   Automobile


25,221


23,530


19,152


   Home loan


7,582


6,967


6,738


   Retail banking


4,099


4,142


3,997


      Total consumer banking


36,902


34,639


29,887


Commercial banking:(4)








   Commercial and multifamily real estate


16,064


15,490


14,089


   Commercial and industrial


18,226


17,503


15,265


      Total commercial lending


34,290


32,993


29,354


   Small-ticket commercial real estate


1,335


1,443


1,641


      Total commercial banking


35,625


34,436


30,995


Other loans


164


140


197


     Total 


$         161,076


$         130,691


$         123,784










Average Loans Held For Investment (Excluding Acquired Loans)








Credit card:








   Domestic credit card 


$           71,080


$           54,131


$           53,868


   International credit card


8,194


8,301


8,823


      Total credit card


79,274


62,432


62,691


Consumer banking:








   Automobile


24,454


22,540


18,679


   Home loan 


7,686


6,994


7,002


   Retail banking


4,110


4,136


4,083


      Total consumer banking


36,250


33,670


29,764


Commercial banking:(4)








   Commercial and multifamily real estate


15,646


15,328


13,640


   Commercial and industrial


17,755


16,750


14,777


      Total commercial lending


33,401


32,078


28,417


   Small-ticket commercial real estate


1,388


1,480


1,726


      Total commercial banking


34,789


33,558


30,143


Other loans


137


173


206


      Total


$         150,450


$         129,833


$         122,804










Net Charge-off Rates (Excluding Acquired Loans)








Credit card:








   Domestic credit card


2.87

%

3.92

%

4.74

%

   International credit card


5.49


5.52


7.02


      Total credit card


3.14


4.14


5.06


Consumer Banking:








   Automobile


1.11


1.41


1.12


   Home loan


0.60


0.82


0.98


   Retail banking


1.29


1.40


1.76


      Total consumer banking


1.02


1.29


1.17


Commercial banking:(4)








   Commercial and multifamily real estate


0.18


0.09


0.39


   Commercial and industrial


0.10


(0.08)


0.23


      Total commercial lending


0.14


0.01


0.30


   Small-ticket commercial real estate


1.46


4.24


3.77


      Total commercial banking


0.19


0.19


0.50


Other loans


18.04


23.30


23.96


      Total


1.96

%

2.40

%

3.03

%









30+ Day Performing Delinquency Rates (Excluding Acquired Loans)








Credit card:








   Domestic credit card


2.81

%

3.25

%

3.33

%

   International credit card


4.84


5.14


5.30


      Total credit card


2.99

%

3.51

%

3.60

%