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Capital One Reports Second Quarter Earnings

July 20, 2006 at 4:07 PM EDT
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Affirms EPS Guidance for 2006; Banking Integration Remains on Track

MCLEAN, Va., July 20 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE: COF) today announced that its earnings for the second quarter of 2006 were $552.6 million, or $1.78 per share (diluted), compared with $531.1 million, or $2.03 per share (diluted), for the second quarter of 2005, and $883.3 million, or $2.86 per share (diluted), for the first quarter of 2006.

"Our businesses continued to post strong results in terms of loan growth and profitability in the second quarter, and credit performed well in all of our businesses with exception of the UK, which continued to operate in a challenging credit environment," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We're pleased with the solid results delivered by our banking segment and with the substantial progress on our integration. With the addition of North Fork, expected in the fourth quarter, we will have multiple growth platforms that will further enhance our ability to deliver long-term shareholder value."

The managed charge-off rate for the company decreased to 2.75 percent in the second quarter of 2006 from 4.10 percent in the second quarter of 2005 and rose modestly from 2.65 percent in the previous quarter. The company increased its allowance for loan losses by $90.0 million in the second quarter of 2006, driven largely by higher loan balances in the quarter and continued credit quality deterioration in the U.K. The managed delinquency rate (30+ days) decreased to 3.05 percent as of June 30, 2006 from 3.49 percent as of the end of June 30, 2005 and increased from 2.92 percent as of March 31, 2006.

As a result of the worsening credit environment in the UK, the company built incremental reserves of $42.9 million and took a write down of $36.4 million in expected servicing income from its UK securitizations. Together these UK-related actions impacted the company's second quarter earnings per share by approximately 16 cents.

Managed loans at June 30, 2006 were $108.4 billion, up $25.5 billion, or 31 percent, from June 30, 2005. This includes organic growth as well as $16.3 billion of loans acquired with the acquisition of Hibernia in November 2005. Managed loans increased $4.5 billion, or four percent, from the previous quarter driven primarily by growth in our North American businesses. The company expects that managed loans will grow at a rate of between seven and nine percent during 2006, excluding the loan growth that will come with the acquisition of North Fork.

Second quarter marketing expenses increased $79.7 million to $356.7 million from $277.0 million in the second quarter of 2005, and increased $32.9 million from the first quarter of 2006 expense of $323.8 million. Annualized operating expenses as a percentage of average managed loans decreased to 4.99 percent in the second quarter of 2006 from 5.13 percent in the second quarter of 2005 but increased from 4.78 percent in the previous quarter. Excluding the impact of the North Fork transaction, operating expenses in the second half of 2006 are expected to be approximately $200 million higher than in the first half of the year, as the company continues to make important business infrastructure investments to include the upgrade of its card holder systems and the cost associated with the opening of new bank branches.

"We are affirming our earnings guidance of between $7.40 and $7.80 per share (diluted) for 2006, taking into account earnings to date and including the expected close of the North Fork acquisition early in the fourth quarter," said Gary L. Perlin, Capital One's Chief Financial Officer. "While we are affirming this guidance based on current market conditions, market conditions on the day of close and the resultant impact on purchase accounting adjustments, in addition to the timing of the close, create significant uncertainty about the impact that North Fork will have on our reported results."

Capital One's managed revenue margin decreased to 10.77 percent in the second quarter of 2006 from 12.65 percent in the second quarter of 2005, primarily due to the addition of Hibernia's loan portfolio. The company's managed revenue margin was 11.30 percent in the first quarter of 2006. The company continues to expect stability in its annual return on managed assets, as lower revenue margins on higher credit quality loans are offset by reductions in provision and also by reductions in operating and marketing expenses as a percent of assets. The expectation for reported return on assets in 2006 is subject to uncertainties from the timing and accounting impacts of the North Fork transaction.

Segment results

The US Card segment's net income in the second quarter of 2006 was $421.8 million, compared with $432.4 million in the second quarter of 2005, and $602.8 million in the first quarter of 2006. Overall performance in the segment was driven principally by strong credit and solid loan growth. The business experienced compression in net interest margin due to a decline in past due fees which accompanied strong credit performance. Managed loans at June 30, 2006 were $48.7 billion, up $2.3 billion, or 5.0 percent, from June 30, 2005, and up $1.6 billion, or 3.4 percent from the prior quarter. The managed charge-off rate decreased to 3.29 percent in the second quarter of 2006 from 4.90 percent in the second quarter of 2005 but increased from 2.93 percent in the previous quarter. We expect credit card charge-offs to begin to return to more normal levels late in the year as the effects of the bankruptcy filing spike dissipate.

Results in the Auto Finance segment this quarter reflect continued growth in originations and strong credit. Net income in the second quarter of 2006 was $95.1 million, compared with $96.1 million in the second quarter of 2005, and $69.4 million in the first quarter of 2006. Auto loan originations during the quarter were $3.1 billion, up $473.6 million, or 18.0 percent, from the prior year's second quarter, and up $166.9 million, or 5.7 percent from the first quarter 2006. The managed charge-off rate decreased to 1.54 percent in the second quarter of 2006 from 1.74 percent in the second quarter of 2005 and 2.35 percent in the previous quarter.

Results in the Global Financial Services segment reflect strong performance in its North American businesses offset by continuing challenges in the UK. Net income in the second quarter of 2006 was $51.2 million, compared with $26.7 million in the second quarter of 2005, and $113.5 million in the first quarter of 2006. Managed loans at June 30, 2006 were $25.9 billion, up $3.9 billion, or 17.6 percent, from the prior year's second quarter, and up $2.2 billion, or nine percent from the first quarter of 2006. The managed charge-off rate increased to 3.90 percent in the second quarter of 2006 from 3.89 percent in the second quarter of 2005 and from 3.63 percent in the previous quarter.

The Banking segment delivered solid results, with net income in the second quarter of 2006 of $43.3 million. Total deposits at the end of the quarter were $35.3 billion, down slightly from $35.4 billion at the end of the first quarter of 2006. The company opened seven new branches in the quarter and remains on track to open 40 new branches in 2006. Integration progressed smoothly during the quarter, and the company continues to expect integration costs and synergies to be greater than original estimates.

The company generates earnings from its managed loan portfolio, which includes both on-balance sheet loans and securitized (off-balance sheet) loans. For this reason, the company believes managed financial measures to be useful to stakeholders. In compliance with Regulation G of the Securities and Exchange Commission, the company is providing a numerical reconciliation of managed financial measures to comparable measures calculated on a reported basis using generally accepted accounting principles (GAAP). Please see the schedule titled "Reconciliation to GAAP Financial Measures" attached to this release for more information.

Forward looking statements

The company cautions that its current expectations in this release, in the presentation slides available on the company's website and on its Form 8-K dated July 20, 2006 for second quarter earnings, return on assets, loan growth rates, operating costs, charge-off rates, branch growth, integration costs and synergies, and the benefits of the business combination transaction involving Capital One and North Fork, including future financial and operating results, and the company's plans, objectives, expectations and intentions are forward- looking statements and actual results could differ materially from current expectations due to a number of factors, including: the ability to obtain regulatory approvals of the proposed acquisition of North Fork on the proposed terms and schedule; the failure of Capital One or North Fork stockholders to approve the transaction; the exact timing of the close of the North Fork transaction and the magnitude of market-driven purchase accounting adjustments related to the close; the risk that the company's acquired businesses will not be integrated successfully and that the cost savings and other synergies from such acquisitions may not be fully realized; continued intense competition from numerous providers of products and services which compete with Capital One's businesses; changes in our aggregate accounts and balances, and the growth rate and composition thereof; the success of the company's marketing efforts; general economic conditions affecting interest rates and consumer income, spending, and savings which may affect consumer bankruptcies, defaults, and charge-offs and deposit activity; the long-term impact of the Gulf Coast hurricanes on the impacted regions, including the amount of property and credit losses, the amount of investment, and the pace and magnitude of economic recovery in the region. A discussion of these and other factors can be found in Capital One's annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-K for the fiscal year ended December 31, 2005.

Additional Information About the Capital One - North Fork Transaction

In connection with the proposed merger of Capital One and North Fork Bancorporation, Inc., Capital One filed with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 that included a joint proxy statement of Capital One and North Fork that also constitutes a prospectus of Capital One. Capital One and North Fork mailed the definitive joint proxy statement/prospectus to their respective stockholders on or about July 14, 2006. Investors and security holders are urged to read the definitive joint proxy statement/prospectus regarding the proposed merger because it contains important information. You may obtain a free copy of the definitive joint proxy statement/prospectus and other related documents filed by Capital One and North Fork with the SEC at the SEC's website at http://www.sec.gov. The definitive joint proxy statement/prospectus and the other documents may also be obtained for free by accessing Capital One's website at http://www.capitalone.com under the heading "Investors" and then under the heading "SEC & Regulatory Filings" or by accessing North Fork's website at http://www.northforkbank.com under the tab "Investor Relations" and then under the heading "SEC Filings."

Participants in the Capital One - North Fork Transaction

Capital One, North Fork and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from stockholders in favor of the merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the stockholders in connection with the proposed merger will be set forth in the joint proxy statement/prospectus when it is filed with the SEC. You can find information about Capital One's executive officers and directors in Capital One's definitive proxy statement filed with the SEC on March 23, 2006. You can find information about North Fork's executive officers and directors in their Form 10-K/A filed with the SEC on April 28, 2006. You can obtain free copies of these documents from the Capital One or North Fork using the contact information above.

About Capital One

Headquartered in McLean, Virginia, Capital One Financial Corporation (http://www.capitalone.com) is a financial holding company, with more than 324 locations in Texas and Louisiana. Its principal subsidiaries, Capital One Bank, Capital One, F.S.B., Capital One Auto Finance, Inc., and Capital One, N.A., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One's subsidiaries collectively had $47.2 billion in deposits and $108.4 billion in managed loans outstanding as of June 30, 2006. Capital One, a Fortune 500 company, trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.

NOTE: Second quarter 2006 financial results, SEC Filings, and second quarter 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 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 REPORTED BASIS

                                         2006          2006          2005
    (in millions, except per share
     data and as noted)                   Q2            Q1            Q2

    Earnings (Reported Basis)
    Net Interest Income                $ 1,197.1     $ 1,206.9     $   872.5
    Non-Interest Income                  1,709.9 (3)   1,858.3       1,582.0
    Total Revenue(5)                     2,907.0       3,065.2 (4)   2,454.5
    Provision for Loan Losses              362.4         170.3 (4)     291.6
    Marketing Expenses                     356.7         323.8         277.0
    Operating Expenses                   1,324.2       1,249.7       1,058.6
    Income Before Taxes                    863.7       1,321.4         827.3
    Tax Rate                                36.0 %        33.2 %        35.8 %
    Net Income                         $   552.6     $   883.3     $   531.1
    Common Share Statistics
    Basic EPS                          $    1.84     $    2.95     $    2.10
    Diluted EPS                        $    1.78     $    2.86     $    2.03
    Dividends Per Share                $    0.03     $    0.03     $    0.03
    Book Value Per Share (period end)  $   52.31     $   50.06     $   39.51
    Stock Price Per Share (period end) $   85.45     $   80.52     $   80.01
    Total Market Capitalization
     (period end)                      $25,968.3     $24,397.6     $21,082.6
    Shares Outstanding (period end)        303.9         303.0         263.5
    Shares Used to Compute Basic EPS       300.8         299.3         252.6
    Shares Used to Compute Diluted EPS     310.0         309.1         261.7

    Reported Balance Sheet
     Statistics (period avg.)
    Average Loans                      $  58,833     $  58,142     $  38,237
    Average Earning Assets             $  79,026     $  78,148     $  51,694
    Average Assets                     $  89,644     $  88,895     $  56,963
    Average Interest Bearing
     Deposits                          $  42,797     $  43,357     $  26,391
    Average Non-Interest Bearing
     Deposits                          $   4,412     $   4,514     $      80
    Average Equity                     $  15,581     $  14,612     $   8,925
    Return on Average Assets (ROA)          2.47 %        3.97 %        3.73 %
    Return on Average Equity (ROE)         14.19 %       24.18 %       23.80 %

    Reported Balance Sheet
     Statistics (period end)
    Loans                              $  60,603     $  58,119     $  38,611
    Total Assets                       $  89,530     $  89,273     $  56,996
    Loan growth                        $   2,484     $  (1,729)    $     652
    % Loan Growth Y Over Y                    57 %          53 %          12 %

    Revenue & Expense Statistics
     (Reported)
    Net Interest Income Growth
     (annualized)                             (3)%          66 %           6 %
    Non Interest Income Growth
     (annualized)                            (32)%          46 %          17 %
    Revenue Growth (annualized)              (21)%          54 %          13 %
    Net Interest Margin                     6.06 %        6.18 %        6.75 %
    Revenue Margin                         14.71 %       15.69 %       18.99 %
    Risk Adjusted Margin(7)                13.22 %       14.15 %       16.49 %
    Operating Expense as a % of
     Revenues                              45.55 %       40.77 %       43.13 %
    Operating Expense as a % of Avg
     Loans (annualized)                     9.00 %        8.60 %       11.07 %

    Asset Quality Statistics (Reported)
    Allowance                          $   1,765     $   1,675     $   1,405
    30+ Day Delinquencies              $   1,772     $   1,559     $   1,400
    Net Charge-Offs                    $     296     $     301     $     324
    Allowance as a % of Reported Loans      2.91 %        2.88 %        3.64 %
    Delinquency Rate (30+ days)             2.92 %        2.68 %        3.62 %
    Net Charge-Off Rate                     2.01 %        2.07 %        3.39 %

    (1) Includes a $15.6 million write-down for retained interests and a $28.5
        million build in the allowance for loan losses related to the impact
        of the Gulf Coast Hurricanes. This also includes a $48.0 million
        write-down for retained interests and a $27.0 million build in the
        allowance related to the spike in bankruptcies experienced immediately
        before The Bankruptcy Abuse Prevention and Consumer Protection Act of
        2005 became effective in October 2005.

    (2) Includes a $34 million gain from the sale of previously purchased
        charged-off loan portfolios.

    (3) Includes a $20.5 million gain as a result of the MasterCard, Inc.
        initial public offering and a loss of $20.8 million related to the
        derivative entered into in April 2006 to mitigate certain exposures we
        face as a result of our expected acquisition of North Fork.

    (4) Includes the impact of the sale of charged-off loans resulting in a
        $76.8 million increase to various revenue line items, the majority of
        which was recorded to other non-interest income and a $7.0 million
        reduction to the provision for loan losses through an increase in
        recoveries for the sale of charged-off loans originated by the Company
        and not securitized.

    (5) In accordance with the Company's finance charge and fee revenue
        recognition policy, the amounts billed to customers but not recognized
        as revenue were as follows: Q2 2006 - $215.0, Q1 2006 - $170.9, Q4
        2005 - $227.9, Q3 2005 - $255.6 and Q2 2005 - $259.8.

    (6) Includes a $28.2 million impairment charge related to our insurance
        business in Global Financial Services and a $20.6 million prepayment
        penalty for the refinancing of the McLean Headquarters facility.

    (7) Risk adjusted margin is total revenue less net charge-offs as a
        percentage of average earning assets.



                     CAPITAL ONE FINANCIAL CORPORATION (COF)
                FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS(1)

                                            2006         2006         2005
    (in millions)                            Q2           Q1           Q2

    Earnings (Managed Basis)
    Net Interest Income                  $ 2,140.8    $ 2,235.0    $ 1,830.3
    Non-Interest Income                    1,199.4 (4)  1,222.2      1,144.8
    Total Revenue(6)                       3,340.2      3,457.2 (5)  2,975.1
    Provision for Loan Losses                795.6        562.3 (5)    812.2
    Marketing Expenses                       356.7        323.8        277.0
    Operating Expenses                     1,324.2      1,249.7      1,058.6
    Income Before Taxes                      863.7      1,321.4        827.3
    Tax Rate                                  36.0 %       33.2 %       35.8 %
    Net Income                           $   552.6    $   883.3    $   531.1

    Managed Balance Sheet Statistics
     (period avg.)
    Average Loans                        $ 106,090    $ 104,610    $  82,472
    Average Earning Assets               $ 124,067    $ 122,403    $  94,075
    Average Assets                       $ 136,351    $ 134,797    $ 100,640
    Return on Average Assets (ROA)            1.62 %       2.62 %       2.11 %

    Managed Balance Sheet Statistics
     (period end)
    Loans                                $ 108,433    $ 103,907    $  82,951
    Total Assets                         $ 136,819    $ 134,530    $ 100,757
    Loan Growth                          $   4,526    $  (1,620)   $   1,359
    % Loan Growth Y over Y                      31 %         27 %         13 %
    Tangible Assets (8)                  $ 132,527    $ 130,211    $ 100,017
    Tangible Capital (9)                 $  12,094    $  11,016    $   9,771
    Tangible Capital to Tangible
     Assets Ratio                             9.13 %       8.46 %       9.77 %
    % Off-Balance Sheet Securitizations         44 %         44 %         53 %

    Revenue & Expense Statistics
     (Managed)
    Net Interest Income Growth
     (annualized)                              (17)%         31 %          3 %
    Non Interest Income Growth
     (annualized)                               (7)%         (7)%         27 %
    Revenue Growth (annualized)                (14)%         17 %         12 %
    Net Interest Margin                       6.90 %       7.30 %       7.78 %
    Revenue Margin                           10.77 %      11.30 %      12.65 %
    Risk Adjusted Margin(10)                  8.42 %       9.03 %       9.06 %
    Operating Expense as a % of Revenues     39.64 %      36.15 %      35.58 %
    Operating Expense as a % of Avg
     Loans (annualized)                       4.99 %       4.78 %       5.13 %

    Asset Quality Statistics (Managed)
    30+ Day Delinquencies                $   3,306    $   3,039    $   2,893
    Net Charge-Offs                      $     729    $     693    $     845
    Delinquency Rate (30+ days)               3.05 %       2.92 %       3.49 %
    Net Charge-Off Rate                       2.75 %       2.65 %       4.10 %

    (1)  The information in this statistical summary reflects the adjustment
         to add back the effect of securitization transactions qualifying as
         sales under generally accepted accounting principles. See
         accompanying schedule -- "Reconciliation to GAAP Financial Measures."

    (2)  Includes a $15.6 million write-down for retained interests and a
         $28.5 million build in the allowance for loan losses related to the
         impact of the Gulf Coast Hurricanes. This also includes a $48.0
         million write-down for retained interests and a $27.0 million build
         in the allowance related to the spike in bankruptcies experienced
         immediately before The Bankruptcy Abuse Prevention and Consumer
         Protection Act of 2005 became effective in October 2005.

    (3) Includes a $34 million gain from the sale of previously purchased
        charged-off loan portfolios.

    (4)  Includes a $20.5 million gain as a result of the MasterCard, Inc.
         initial public offering and a loss of $20.8 million related to the
         derivative entered into in April 2006 to mitigate certain exposures
         we face as a result of our expected acquisition of North Fork.

    (5)  Includes the impact of the sale of charged-off loans resulting in a
         $66.4 million increase to various revenue line items, the majority of
         which was recorded to other non-interest income and a $17.4 million
         reduction to the provision for loan losses through an increase in
         recoveries for the sale of charged-off loans originated by the
         Company.

    (6)  In accordance with the Company's finance charge and fee revenue
         recognition policy, the amounts billed to customers but not
         recognized as revenue were as follows: Q2 2006 - $215.0, Q1 2006 -
         $170.9, Q4 2005 - $227.9, Q3 2005 - $255.6, and Q2 2005 - $259.8.

    (7)  Includes a $28.2 million impairment charge related to our insurance
         business in Global Financial Services and a $20.6 million prepayment
         penalty for the refinancing of the McLean Headquarters facility.

    (8)  Includes managed assets less intangible assets.

    (9)  Includes stockholders' equity and preferred interests less intangible
         assets.  Tangible Capital on a reported and managed basis is the
         same.

    (10) Risk adjusted margin is total revenue less net charge-offs as a
         percentage of average earning assets.



                   CAPITAL ONE FINANCIAL CORPORATION (COF)
          SEGMENT FINANCIAL & STATISTICAL SUMMARY - MANAGED BASIS(1)

                                           2006         2006         2005
    (in thousands)                          Q2           Q1           Q2

    Segment Statistics
    US Card:
      Interest Income                     1,628,144    1,714,559    1,596,247
      Interest Expense                      507,722      493,458      444,555
      Net interest income               $ 1,120,422  $ 1,221,101  $ 1,151,692
      Non-interest income                   803,083      775,413      846,720
      Provision for loan losses             413,701      224,438      539,211
      Non-interest expenses                 860,874      844,729      794,012
      Income tax provision (benefit)        227,125      324,573      232,816
      Net income (loss)                 $   421,805  $   602,774  $   432,373

      Loans receivable                  $48,736,483  $47,142,650  $46,408,912
      Average loans                     $47,856,045  $48,217,926  $46,504,945
      Loan Yield                             13.61%       14.22%       13.73%
      Net charge-off rate                     3.29%        2.93%        4.90%
      Delinquency Rate (30+ days)             3.30%        3.31%        3.60%
      Purchase Volume (2)               $20,878,732  $18,015,669  $17,946,667
      Number of Accounts (000s)              37,199       37,258       37,760

    Auto Finance:
      Interest Income                       563,734      536,657      401,991
      Interest Expense                      207,497      187,827      116,247
      Net interest income               $   356,237  $   348,830  $   285,744
      Non-interest income                    13,839          391        6,964
      Provision for loan losses              74,714      107,805       20,330
      Non-interest expenses                 149,115      134,655      124,584
      Income tax provision (benefit)         51,186       37,366       51,728
      Net income (loss)                 $    95,061  $    69,395  $    96,066

      Loans receivable                  $20,558,455  $19,848,190  $14,520,216
      Average loans                     $20,187,631  $19,440,128  $13,993,998
      Loan Yield                             11.17%       11.04%       11.49%
      Net charge-off rate                     1.54%        2.35%        1.74%
      Delinquency Rate (30+ days)             4.55%        3.57%        4.09%
      Auto Loan Originations (3)        $ 3,107,409  $ 2,940,540  $ 2,633,857
      Number of Accounts (000s)               1,525        1,480        1,124

    Global Financial Services:
      Interest Income                       725,256      692,246      642,481
      Interest Expense                      279,804      253,997      230,656
      Net interest income               $   445,452  $   438,249  $   411,825
      Non-interest income                   297,080      283,352      265,499
      Provision for loan losses             296,614      217,365      256,766
      Non-interest expenses                 365,149      330,172      378,278
      Income tax provision (benefit)         29,614       60,520       15,621
      Net income (loss)                 $    51,155  $   113,544  $    26,659

      Loans receivable                  $25,935,716  $23,732,515  $22,053,145
      Average loans                     $24,910,879  $23,668,326  $21,971,839
      Loan Yield                             11.58%       11.64%       11.67%
      Net charge-off rate                     3.90%        3.63%        3.89%
      Delinquency Rate (30+ days)             2.82%        2.90%        2.93%
      Number of Accounts (000s)              10,130       10,013        9,639


    (1) The information in this statistical summary reflects the adjustment to
        add back the effect of securitization transactions qualifying as sales
        under generally accepted accounting principles. See accompanying
        schedule -- "Reconciliation to GAAP Financial Measures."

    (2) Includes all purchase transactions net of returns and excludes cash
        advance transactions.

    (3) Includes all organic auto loan originations and excludes auto loans
        added through acquisitions.



                   CAPITAL ONE FINANCIAL CORPORATION (COF)
     SEGMENT FINANCIAL & STATISTICAL SUMMARY - MANAGED BASIS(1) CONTINUED

                                          2006          2006         2005
    (in thousands)                         Q2            Q1           Q2
    Segment Statistics

    Banking:
      Interest Income                      682,679       650,985
      Interest Expense                     433,451       406,061
      Net interest income             $    249,228  $    244,924
      Non-interest income                  114,039       104,485
      Provision for loan losses              6,632         9,821
      Non-interest expenses                289,996       272,987
      Income tax provision (benefit)        23,324        23,310
      Net income (loss)               $     43,315  $     43,291

      Loans receivable                $ 13,189,112  $ 13,169,792
      Average loans                   $ 13,115,534  $ 13,283,515
      Loan Yield                             7.63%         7.38%
      Net charge-off rate                    0.45%         0.38%
      Delinquency Rate (30+ days)            0.38%         0.75%
      Core Deposits(2)                  27,857,265    27,996,290
      Total Deposits                    35,281,970    35,396,221
      Number of ATMs                           705           669
      Number of locations(3)                   324           316

    Other:
      Net interest income             $    (30,510) $    (18,134) $   (18,959)
      Non-interest income                  (28,709)       58,553       25,577
      Provision for loan losses              3,950         2,877       (4,144)
      Non-interest expenses                 15,763        (9,064)      38,743
      Income tax provision (benefit)       (20,183)       (7,729)      (4,001)
      Net income (loss)               $    (58,749) $     54,335  $   (23,980)

      Loans receivable                $     13,673  $     13,629  $   (30,921)

    Total:
      Interest Income                 $  3,414,411  $  3,436,829  $ 2,766,118
      Interest Expense                   1,273,582     1,201,859      935,816
      Net interest income             $  2,140,829  $  2,234,970  $ 1,830,302
      Non-interest income                1,199,332     1,222,194    1,144,760
      Provision for loan losses            795,611       562,306      812,163
      Non-interest expenses              1,680,897     1,573,479    1,335,617
      Income tax provision (benefit)       311,066       438,040      296,164
      Net income (loss)               $    552,587  $    883,339  $   531,118

      Loans receivable                $108,433,439  $103,906,776  $82,951,352

    (1) The information in this statistical summary reflects the adjustment to
        add back the effect of securitization transactions qualifying as sales
        under generally accepted accounting principles. See accompanying
        schedule -- "Reconciliation to GAAP Financial Measures."

    (2) Includes domestic non-interest bearing deposits, NOW accounts, money
        market deposit accounts, savings accounts, certificates of deposit of
        less than $100,000 and other consumer time deposits.

    (3) Q2: Number of locations includes 311 branches and 13 other customer
        centers and excludes 16 branches that remain closed due to hurricane
        damage. Q1: Number of locations includes 302 branches and 14 other
        customer centers and excludes 18 branches that remain closed due to
        hurricane damage.



    CAPITAL ONE FINANCIAL CORPORATION
    Reconciliation to GAAP Financial Measures
    For the Three Months Ended June 30, 2006
    (dollars in thousands)(unaudited)

The Company's consolidated financial statements prepared in accordance with generally accepted accounting principles ("GAAP") are referred to as its "reported" financial statements. Loans included in securitization transactions which qualified as sales under GAAP have been removed from the Company's "reported" balance sheet. However, servicing fees, finance charges, and other fees, net of charge-offs, and interest paid to investors of securitizations are recognized as servicing and securitizations income on the "reported" income statement.

    The Company's "managed" consolidated financial statements reflect
adjustments made related to effects of securitization transactions qualifying
as sales under GAAP. The Company generates earnings from its "managed" loan
portfolio which includes both the on-balance sheet loans and off-balance sheet
loans. The Company's "managed" income statement takes the components of the
servicing and securitizations income generated from the securitized portfolio
and distributes the revenue and expense to appropriate income statement line
items from which it originated. For this reason the Company believes the
"managed" consolidated financial statements and related managed metrics to be
useful to stakeholders.


                                        Total        Total
                                      Reported   Adjustments(1)   Managed(2)
    Income Statement Measures
    Net interest income             $  1,197,082  $   943,747   $   2,140,829
    Non-interest income             $  1,709,913  $  (510,581)  $   1,199,332
    Total revenue                   $  2,906,995  $   433,166   $   3,340,161
    Provision for loan losses       $    362,445  $   433,166   $     795,611
    Net charge-offs                 $    295,844  $   433,166   $     729,010

    Balance Sheet Measures
    Loans                           $ 60,602,803  $ 47,830,636  $ 108,433,439
    Total assets                    $ 89,530,186  $ 47,288,672  $ 136,818,858
    Average loans                   $ 58,833,376  $ 47,256,518  $ 106,089,894
    Average earning assets          $ 79,025,701  $ 45,041,097  $ 124,066,798
    Average total assets            $ 89,643,629  $ 46,707,317  $ 136,350,946
    Delinquencies                   $  1,772,191  $  1,534,202  $   3,306,393

    (1) Income statement adjustments reclassify the net of finance charges of
        $1,341.8 million, past-due fees of $237.1 million, other interest
        income of $(61.6) million and interest expense of $573.5 million; and
        net charge-offs of $433.2 million from Non-interest income to Net
        interest income and Provision for loan losses, respectively.

    (2) The managed loan portfolio does not include auto loans which have been
        sold in whole loan sale transactions where the Company has retained
        servicing rights.



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

                                          June 30      March 31     June 30
                                           2006          2006        2005

    Assets:
    Cash and due from banks             $ 1,388,384  $ 1,434,804  $   581,267
    Federal funds sold and resale
     agreements                             339,613    2,763,746    1,283,015
    Interest-bearing deposits at
     other banks                            870,049    1,099,025      721,806
      Cash and cash equivalents           2,598,046    5,297,575    2,586,088
    Securities available for sale        15,292,446   14,659,166    9,522,515
    Loans                                60,602,803   58,118,659   38,610,787
      Less: Allowance for loan losses    (1,765,000)  (1,675,000)  (1,405,000)
    Net loans                            58,837,803   56,443,659   37,205,787
    Accounts receivable from
     securitizations                      4,818,512    5,293,392    4,890,933
    Premises and equipment, net           1,467,922    1,387,302      782,372
    Interest receivable                     526,267      512,136      274,547
    Goodwill                              3,933,621    3,941,128      739,889
    Other                                 2,055,569    1,738,721      993,836
      Total assets                      $89,530,186  $89,273,079  $56,995,967


    Liabilities:
    Non-interest-bearing deposits       $ 4,487,837  $ 4,476,351  $    80,822
    Interest-bearing deposits            42,698,976   43,303,134   26,521,031
    Senior and subordinated notes         5,490,690    5,726,109    6,692,311
    Other borrowings                     16,836,398   16,544,698    9,692,941
    Interest payable                        349,091      353,882      252,677
    Other                                 3,770,131    3,699,659    3,344,404
      Total liabilities                  73,633,123   74,103,833   46,584,186

    Stockholders' Equity:
    Common stock                              3,060        3,051        2,650
    Paid-in capital, net                  7,151,376    7,032,073    3,783,074
    Retained earnings and cumulative
     other comprehensive income           8,857,963    8,245,186    6,695,753
      Less: Treasury stock, at cost        (115,336)    (111,064)     (69,696)
      Total stockholders' equity         15,897,063   15,169,246   10,411,781
      Total liabilities and
       stockholders' equity             $89,530,186  $89,273,079  $56,995,967



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

                                                  Three Months Ended
                                             June 30    March 31   June 30(1)
                                               2006       2006        2005


    Interest Income:
    Loans, including past-due fees         $1,616,937  $1,612,622  $1,190,098
    Securities available for sale             167,804     165,100      91,245
    Other                                     112,416     100,860      70,557
       Total interest income                1,897,157   1,878,582   1,351,900

    Interest Expense:
    Deposits                                  416,232     403,609     279,438
    Senior and subordinated notes              84,707      94,354     104,593
    Other borrowings                          199,136     173,742      95,366
       Total interest expense                 700,075     671,705     479,397
    Net interest income                     1,197,082   1,206,877     872,503
    Provision for loan losses                 362,445     170,270     291,600
    Net interest income after provision
     for loan losses                          834,637   1,036,607     580,903

    Non-Interest Income:
    Servicing and securitizations           1,025,506   1,153,604     996,043
    Service charges and other customer-
     related fees                             413,398     435,731     360,410
    Interchange                               131,538     119,491     132,068
    Other                                     139,471     149,425      93,475
       Total non-interest income            1,709,913   1,858,251   1,581,996

    Non-Interest Expense:
    Salaries and associate benefits           536,465     516,144     442,101
    Marketing                                 356,695     323,771     277,034
    Communications and data processing        172,734     169,204     138,916
    Supplies and equipment                    113,028      98,184      83,661
    Occupancy                                  52,753      49,377      40,209
    Other                                     449,222     416,799     353,696
       Total non-interest expense           1,680,897   1,573,479   1,335,617
    Income before income taxes                863,653   1,321,379     827,282
    Income taxes                              311,066     438,040     296,164
    Net income                             $  552,587  $  883,339  $  531,118


    Basic earnings per share               $     1.84  $     2.95  $     2.10

    Diluted earnings per share             $     1.78  $     2.86  $     2.03

    Dividends paid per share               $     0.03  $     0.03  $     0.03


                                                        Six Months Ended
                                                     June 30       June 30 (1)
                                                       2006           2005

    Interest Income:
    Loans, including past-due fees                  $3,229,559     $2,374,134
    Securities available for sale                      332,904        181,409
    Other                                              213,276        132,625
       Total interest income                         3,775,739      2,688,168

    Interest Expense:
    Deposits                                           819,841        543,463
    Senior and subordinated notes                      179,061        219,073
    Other borrowings                                   372,878        192,608
       Total interest expense                        1,371,780        955,144
    Net interest income                              2,403,959      1,733,024
    Provision for loan losses                          532,715        551,231
    Net interest income after provision for loan
     losses                                          1,871,244      1,181,793

    Non-Interest Income:
    Servicing and securitizations                    2,179,110      1,929,980
    Service charges and other customer-related fees    849,129        761,596
    Interchange                                        251,029        255,508
    Other                                              288,896        150,891
       Total non-interest income                     3,568,164      3,097,975

    Non-Interest Expense:
    Salaries and associate benefits                  1,052,609        875,602
    Marketing                                          680,466        588,793
    Communications and data processing                 341,938        281,735
    Supplies and equipment                             211,212        170,107
    Occupancy                                          102,130         58,110
    Other                                              866,021        689,102
       Total non-interest expense                    3,254,376      2,663,449
    Income before income taxes                       2,185,032      1,616,319
    Income taxes                                       749,106        578,639
    Net income                                      $1,435,926     $1,037,680


    Basic earnings per share                        $     4.79     $     4.18

    Diluted earnings per share                      $     4.64     $     4.02

    Dividends paid per share                        $     0.05     $     0.05

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



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

    Managed (1)                                   Quarter Ended 6/30/06
                                             Average       Income/     Yield/
                                             Balance       Expense      Rate
    Earning assets:
     Loans                                 $106,089,894  $ 3,195,827   12.05%
     Securities available for sale           14,364,402      167,804    4.67%
     Other                                    3,612,502       50,780    5.62%
    Total earning assets                   $124,066,798  $ 3,414,411   11.01%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                       $    597,406  $     4,052    2.71%
        Money market deposit accounts        11,093,056       89,076    3.21%
        Savings accounts                      3,919,465       26,237    2.68%
        Other Consumer Time Deposits         13,980,892      145,401    4.16%
        Public Fund CD's of $100,000
         or more                                971,511       11,332    4.67%
        CD's of $100,000 or more              8,878,461      100,094    4.51%
        Foreign time deposits                 3,355,924       40,040    4.77%
     Total Interest-bearing deposits       $ 42,796,715  $   416,232    3.89%
     Senior and subordinated notes            5,576,041       84,707    6.08%
     Other borrowings                        16,928,273      199,136    4.71%
     Securitization liability                46,827,712      573,507    4.90%
    Total interest-bearing liabilities     $112,128,741  $ 1,273,582    4.54%

    Net interest spread                                                 6.47%

    Interest income to average
     earning assets                                                    11.01%
    Interest expense to average
     earning assets                                                     4.11%
    Net interest margin                                                 6.90%


    Managed (1)                                   Quarter Ended 3/31/06
                                             Average       Income/     Yield/
                                             Balance       Expense      Rate
    Earning assets:
     Loans                                 $104,610,200  $ 3,232,530   12.36%
     Securities available for sale           15,045,469      165,100    4.39%
     Other                                    2,746,833       39,199    5.71%
    Total earning assets                   $122,402,502  $ 3,436,829   11.23%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                       $    572,181  $     3,328    2.33%
        Money market deposit accounts        10,716,774       76,038    2.84%
        Savings accounts                      3,719,994       23,181    2.49%
        Other Consumer Time Deposits         14,647,708      149,393    4.08%
        Public Fund CD's of $100,000
         or more                                964,181       10,295    4.27%
        CD's of $100,000 or more              9,407,892      102,714    4.37%
        Foreign time deposits                 3,327,788       38,660    4.65%
     Total Interest-bearing deposits       $ 43,356,518  $   403,609    3.72%
     Senior and subordinated notes            6,097,711       94,354    6.19%
     Other borrowings                        16,074,344      173,742    4.32%
     Securitization liability                46,018,001      530,154    4.61%
    Total interest-bearing liabilities     $111,546,574  $ 1,201,859    4.31%

    Net interest spread                                                 6.92%

    Interest income to average
     earning assets                                                    11.23%
    Interest expense to average
     earning assets                                                     3.93%
    Net interest margin                                                 7.30%


    Managed (1)                                  Quarter Ended 6/30/05
                                            Average       Income/     Yield/
                                            Balance       Expense      Rate
    Earning assets:
     Loans                                 $82,471,828  $ 2,652,370   12.86%
     Securities available for sale           9,592,645       91,245    3.80%
     Other                                   2,010,296       22,503    4.48%
    Total earning assets                   $94,074,769  $ 2,766,118   11.76%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                       $         -  $         -
        Money market deposit accounts        2,967,145       23,160    3.12%
        Savings accounts                             -            -
        Other Consumer Time Deposits         9,849,495      103,044    4.18%
        Public Fund CD's of $100,000
         or more                                73,908          530    2.87%
        CD's of $100,000 or more            10,864,437      118,360    4.36%
        Foreign time deposits                2,636,248       34,344    5.21%
     Total Interest-bearing deposits       $26,391,233  $   279,438    4.24%
     Senior and subordinated notes           6,987,888      104,593    5.99%
     Other borrowings                       10,838,955       95,366    3.52%
     Securitization liability               43,810,547      456,419    4.17%
    Total interest-bearing liabilities     $88,028,623  $   935,816    4.25%

    Net interest spread                                                7.51%

    Interest income to average
     earning assets                                                   11.76%
    Interest expense to average
     earning assets                                                    3.98%
    Net interest margin                                                7.78%


    (1) The information in this table reflects the adjustment to add back the
        effect of securitized loans.



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

    Reported                                     Quarter Ended 6/30/06
                                            Average       Income/     Yield/
                                            Balance       Expense      Rate
    Earning assets:
     Loans                                 $58,833,376  $ 1,616,937   10.99%
     Securities available for sale          14,364,402      167,804    4.67%
     Other                                   5,827,923      112,416    7.72%
    Total earning assets                   $79,025,701  $ 1,897,157    9.60%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                       $   597,406  $     4,052    2.71%
        Money market deposit accounts       11,093,056       89,076    3.21%
        Savings accounts                     3,919,465       26,237    2.68%
        Other Consumer Time Deposits        13,980,892      145,401    4.16%
        Public Fund CD's of $100,000
         or more                               971,511       11,332    4.67%
        CD's of $100,000 or more             8,878,461      100,094    4.51%
        Foreign time deposits                3,355,924       40,040    4.77%
     Total Interest-bearing deposits       $42,796,715  $   416,232    3.89%
     Senior and subordinated notes           5,576,041       84,707    6.08%
     Other borrowings                       16,928,273      199,136    4.71%
    Total interest-bearing liabilities     $65,301,029  $   700,075    4.29%

    Net interest spread                                                5.31%

    Interest income to average
     earning assets                                                    9.60%
    Interest expense to average
     earning assets                                                    3.54%
    Net interest margin                                                6.06%


    Reported                                     Quarter Ended 3/31/06
                                            Average       Income/     Yield/
                                            Balance       Expense      Rate
    Earning assets:
     Loans                                 $58,142,418  $ 1,612,622   11.09%
     Securities available for sale          15,045,469      165,100    4.39%
     Other                                   4,959,597      100,860    8.13%
    Total earning assets                   $78,147,484  $ 1,878,582    9.62%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                       $   572,181  $     3,328    2.33%
        Money market deposit accounts       10,716,774       76,038    2.84%
        Savings accounts                     3,719,994       23,181    2.49%
        Other Consumer Time Deposits        14,647,708      149,393    4.08%
        Public Fund CD's of $100,000
         or more                               964,181       10,295    4.27%
        CD's of $100,000 or more             9,407,892      102,714    4.37%
        Foreign time deposits                3,327,788       38,660    4.65%
     Total Interest-bearing deposits       $43,356,518  $   403,609    3.72%
     Senior and subordinated notes           6,097,711       94,354    6.19%
     Other borrowings                       16,074,344      173,742    4.32%
    Total interest-bearing liabilities     $65,528,573  $   671,705    4.10%

    Net interest spread                                                5.52%

    Interest income to average
     earning assets                                                    9.62%
    Interest expense to average
     earning assets                                                    3.44%
    Net interest margin                                                6.18%


    Reported                                     Quarter Ended 6/30/05
                                            Average       Income/     Yield/
                                            Balance       Expense      Rate
    Earning assets:
     Loans                                 $38,237,463  $ 1,190,098   12.45%
     Securities available for sale           9,592,645       91,245    3.80%
     Other                                   3,863,822       70,557    7.30%
    Total earning assets                   $51,693,930  $ 1,351,900   10.46%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                       $         -  $         -
        Money market deposit accounts        2,967,145       23,160    3.12%
        Savings accounts                             -            -
        Other Consumer Time Deposits         9,849,495      103,044    4.18%
        Public Fund CD's of $100,000
         or more                                73,908          530    2.87%
        CD's of $100,000 or more            10,864,437      118,360    4.36%
        Foreign time deposits                2,636,248       34,344    5.21%
     Total Interest-bearing deposits       $26,391,233  $   279,438    4.24%
     Senior and subordinated notes           6,987,888      104,593    5.99%
     Other borrowings                       10,838,955       95,366    3.52%
    Total interest-bearing liabilities     $44,218,076  $   479,397    4.34%

    Net interest spread                                                6.12%

    Interest income to average
     earning assets                                                   10.46%
    Interest expense to average
     earning assets                                                    3.71%
    Net interest margin                                                6.75%

SOURCE Capital One Financial Corporation
CONTACT: Investor Relations: Mike Rowen, +1-703-720-2455, or Media
Relations: Tatiana Stead, +1-703-720-2352, Julie Rakes, +1-804-284-5800, all
of Capital One Financial Corporation
Web site: http://www.capitalone.com
(COF)