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Release Details

Capital One Reports Third Quarter 2010 Net Income of $803 Million, or $1.76 Per Diluted Share, Up from Net Income of $0.87 in the Third Quarter of 2009

October 18, 2010 at 5:35 PM EDT
The company will host a conference call at 8:15 a.m. ET October 19 to review financial and operating performance for the Third Quarter
Ending loans declined less than 1 percent in the quarter, the slowest pace of contraction since the second quarter of 2009
Excluding the impact of run-off portfolios, total loan balances would have been up modestly in the quarter
Credit performance continues to improve - charge-offs down almost $200 million in the quarter
Domestic Card charge-off rate improved 126 basis points in the quarter to 8.23 percent
Company completed successful conversion to Capital One Bank brand in metro Washington, DC

 

Printer Friendly Version of the Press Release (pdf format)

 

Printer Friendly Version of the Financial Supplement (pdf format)

 

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

 

MCLEAN, Va., Oct. 18 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE:COF - News) today announced net income for the third quarter of 2010 of $803 million, or $1.76 per diluted common share, a 32.1 percent increase compared to second quarter 2010 net income of $608 million, or $1.33 per diluted common share. Third quarter 2010 net income increased 103.8 percent compared to third quarter 2009 net income of $394 million, or $0.87 per diluted share.

Income from continuing operations of $818 million increased $6 million, or 0.7 percent, from $812 million in the second quarter of 2010 and increased $381 million, or 87.2 percent, from $437 million in the third quarter of 2009.

"Strong third quarter revenues, credit results, and profits continue to demonstrate our resilience in the face of ongoing economic and regulatory uncertainty," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer.  "We're well positioned to take advantage of emerging opportunities and deliver shareholder value over the long-term."

Conference Call Details

The company will host a conference call at 8:15 a.m. ET October 19 to review financial and operating performance for the quarter ending September 30, 2010. The call will be webcast live, and the earnings release will be available on the company's homepage at www.capitalone.com.  A replay of the webcast will be available 24 hours a day, beginning 2 hours after the conference call, until 5:00 p.m. ET on November 2, 2010, through the company's homepage.  Capital One will also make an MP3 file available for download the next business day following the conference call.

Total Company Results

  • Total revenue in the third quarter of 2010 of $4.0 billion increased $112 million, or 2.9 percent, from $3.9 billion in the second quarter of 2010, reflecting a modest increase in net interest income and a $100 million increase in non-interest income.
  • Net interest income increased $12 million as net interest margin improved to 7.21 percent from 7.09 percent. This improvement was partially offset by a 1.3 percent decline in average interest-earning assets.  
  • Non-interest income increased $100 million in the third quarter relative to the prior quarter driven by a smaller addition to the Rep and Warranty reserve.
  • Provision expense increased $144 million from the prior quarter driven by a smaller allowance release in the third quarter compared to the second quarter. The allowance release in the third quarter totaled $624 million for the company, compared with a release of $1.0 billion in the second quarter of 2010.  Continued improvement in credit loss and delinquency performance in the portfolio was the primary driver of the third quarter allowance release. The allowance as a percentage of outstanding loans was 4.89 percent at the end of the third quarter of 2010 compared with 5.35 percent at the end of the prior quarter.
  • Period-end total assets decreased by $557 million, or 0.28 percent, during the third quarter, to $196.9 billion at the end of the third quarter of 2010. Loans held for investment at September 30, 2010, were $126.3 billion, a decline of 0.6 percent from the prior quarter. Excluding the expected run-off in our Installment Loan portfolio in Domestic Card, our Mortgage portfolio in Consumer Banking, and our Small-Ticket CRE portfolio in Commercial Banking, loan balances were modestly higher than the prior quarter.
  • Average total deposits during the quarter were $118.3 billion, essentially even with the prior quarter. Period-end total deposits increased by $1.9 billion, or 1.6 percent, to $119.2 billion.
  • The cost of funds decreased to 1.64 percent in the third quarter from 1.69 percent in the prior quarter, driven by the continuing replacement of higher cost wholesale funding with lower cost liquid deposits.
  • Non-interest expense of $2.0 billion in the third quarter of 2010 was essentially flat compared with the prior quarter, as declining operating expenses were offset by an increase in marketing expenses.
  • The company's TCE ratio increased to 6.6 percent, up 50 basis points from the second quarter 2010 ratio of 6.1 percent. The Tier 1 risk-based capital ratio of 11.2 percent increased 130 basis points relative to the ratio of 9.9 percent in the prior quarter.  


"Our tangible common equity ratio is higher than it was at the end of 2009, even with improving credit and a substantially higher loan loss allowance," said Gary L. Perlin, Capital One's Chief Financial Officer. "We expect to reach currently defined Basel III levels and definitions in 2011, well ahead of the phase-in requirements."

 

Segment Results

The company reports the results of its business through three operating segments: Credit Card, Commercial Banking, and Consumer Banking. Please refer to the Financial Supplement for additional details.

 

Credit Card Highlights

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

 

  • Period-end loans in the Domestic Card segment were $53.8 billion in the third quarter, a decline of $789 million, or 1.4 percent, from the prior quarter, driven by $746 million in expected run-off from the Installment Loan portfolio. International credit card loans increased in the quarter by $218 million, or 3.0 percent, to $7.5 billion, driven by foreign exchange movements.  


  • Domestic Card revenue margin rose 16 basis points to 16.77 percent in the third quarter from 16.61 percent in the prior quarter.
  • Domestic Card provision expense decreased $98 million in the third quarter relative to the prior quarter, driven by lower charge-offs in the quarter.
  • Net charge-off rates relative to the prior quarter:
    • Domestic Card – improved 126 basis points to 8.23 percent from 9.49 percent
    • International Card – improved 78 basis points to 7.60 percent from 8.38 percent
  • Delinquency rates relative to the prior quarter:  
    • Domestic Card – improved 26 basis points to 4.53 percent from 4.79 percent
    • International Card – improved 19 basis points to 5.84 percent from 6.03 percent


  • Purchase volumes in Domestic Card increased $345 million, or 1.4 percent, relative to the prior quarter and 4.6 percent relative to the third quarter of 2009.


Commercial Banking Highlights

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

The Commercial Banking segment consists of commercial and multi-family real-estate, middle market lending, and specialty lending, which are summarized under Commercial Lending and Small Ticket Commercial Real Estate.

  • Commercial Banking reported net income of $39 million in the third quarter compared to $77 million in the second quarter. The decline is largely attributable to higher provision expense which resulted from a smaller allowance release.
  • Period-end loans in Commercial Banking were $29.5 billion, essentially even with the prior quarter.
  • Average deposits decreased by $272 million, or 1.2 percent, to $21.9 billion during the third quarter. The deposit interest expense rate remained at 67 basis points.
  • Provision expense increased $33 million primarily due to a smaller allowance release in the third quarter.
  • Charge-off rate relative to the prior quarter:
    • Total Commercial Banking – 1.27 percent, an increase of 6 basis points
    • Commercial lending – 1.11 percent, an increase of 13 basis points
    • Small ticket commercial real estate – 3.48 percent, a decline of 73 basis points


  • Non-performing asset rate relative to the prior quarter:
    • Total Commercial Banking – 1.94 percent, a decline of 26 basis points
    • Commercial lending – 1.94 percent, a decline of 16 basis points
    • Small ticket commercial real estate – 2.04 percent, a decline of 153 basis points


Consumer Banking highlights

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

  • Provision expense increased $226 million relative to the prior quarter as a result a smaller allowance release in the third quarter and seasonally higher charge-offs in auto finance.


  • Period-end loans relative to the prior quarter:
    • Auto – increased $422 million, or 2.5 percent, to $17.6 billion.
    • Mortgage – declined $559 million, or 4.2 percent, to $12.8 billion. Mortgage loans continued to reflect expected run-off in the portfolio.
    • Retail banking – declined $179 million, or 3.8 percent, to $4.6 billion.


  • Auto loan originations increased 38.2 percent over the prior quarter to $2.4 billion in the third quarter.
  • Average deposits in Consumer Banking increased $1.1 billion, or 1.5 percent, to $78.2 billion during the third quarter.
  • Net charge-off rates relative to the prior quarter:
    • Auto – 2.71 percent, an increase of 62 basis points
    • Mortgage – 0.41 percent, a decrease of 5 basis points
    • Retail banking –  2.20 percent, an increase of 9 basis points


TCE and related ratios, as used throughout this release, are non-GAAP financial measures.  For additional information, see "Regulatory and Non-GAAP Capital Ratios" in the Financial Supplement.

Forward looking statements  

The company cautions that its current expectations in this release dated October 18, 2010, and the company's plans, objectives, expectations, and intentions, are forward-looking statements. Actual results could differ materially from current expectations due to a number of factors, including: general economic conditions in the U.S., the UK, or the company's local markets, including conditions affecting consumer income, confidence, spending, and savings which may affect consumer bankruptcies, defaults, charge-offs, deposit activity, and interest rates; changes in the labor and employment market; changes in the credit environment; the company's ability to execute on its strategic and operational plans; competition from providers of products and services that compete with the company's businesses; increases or decreases in the company's aggregate accounts and balances, or the growth rate and/or composition thereof; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products, or financial condition; financial, legal, regulatory (including the impact of the Dodd-Frank Act and the regulations to be promulgated thereunder), tax or accounting changes or actions, including with respect to any litigation matter involving the company; and the success of the company's marketing efforts in attracting or retaining customers. A discussion of these and other factors can be found in the company's annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, the company's report on Form 10-K for the fiscal year ended December 31, 2009 and report on Form 10-Q for the quarters ended March 31, 2010, and June 30, 2010.

About Capital One

Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A. and Capital One Bank (USA), N. A., had $119.2 billion in deposits and     $196.9 billion in total assets outstanding as of September 30, 2010. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

NOTE:

Third quarter 2010 financial results, SEC Filings, and earnings conference call slides will are accessible on Capital One's home page (www.capitalone.com). Choose "Investors" on the bottom of the home page to view and download the earnings press release, slides, and other financial information. Additionally, a podcast and webcast of the earnings conference call is accessible through the same link.


Exhibit 99.1

CAPITAL ONE FINANCIAL CORPORATION (COF)

FINANCIAL & STATISTICAL SUMMARY

GAAP BASIS *


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

2010
Q3


2010
Q2


2009
Q3


Earnings







Net Interest Income

$                          3,109


$                          3,097


$                      2,005


Non-Interest Income (1)(7)

$                             907


$                             807


$                      1,553


Total Revenue (2)

$                          4,016


$                          3,904


$                      3,558


Provision for Loan and Lease Losses

$                             867


$                             723


$                      1,173


Marketing Expenses

$                             250


$                             219


$                         104


Restructuring Expenses (3)

$                                  -


$                                  -


$                           26


Operating Expenses (4)

$                          1,746


$                          1,781


$                      1,672


Income Before Taxes

$                          1,153


$                          1,181


$                         583


Effective Tax Rate

29.1

%

31.2

%

25.0

%

Income From Continuing Operations, Net of Tax

$                             818


$                             812


$                         437


Loss From Discontinued Operations, Net of Tax (7)

$                              (15)


$                            (204)


$                          (43)


Net Income

$                             803


$                             608


$                         394


Net Income Available to Common Shareholders (A)

$                             803


$                             608


$                         394


Common Share Statistics







Basic EPS: (B)







  Income From Continuing Operations

$                            1.81


$                            1.79


$                        0.97


  Loss From Discontinued Operations

$                           (0.03)


$                           (0.45)


$                       (0.09)


  Net Income

$                            1.78


$                            1.34


$                        0.88


Diluted EPS: (B)







  Income From Continuing Operations

$                            1.79


$                            1.78


$                        0.96


  Loss From Discontinued Operations

$                           (0.03)


$                           (0.45)


$                       (0.09)


  Net Income

$                            1.76


$                            1.33


$                        0.87


Dividends Per Common Share

$                            0.05


$                            0.05


$                        0.05


Tangible Book Value Per Common Share (period end) (C)

$                          26.60


$                          24.89


$                      26.86


Stock Price Per Common Share (period end)

$                          39.55


$                          40.30


$                      35.73


Total Market Capitalization (period end)

$                        17,900


$                        18,228


$                    16,064


Common Shares Outstanding (period end)

452.6


452.3


449.6


Shares Used to Compute Basic EPS

452.5


452.1


449.4


Shares Used to Compute Diluted EPS

456.6


456.4


453.7


Reported Balance Sheet Statistics (period average)







Average Loans Held for Investment

$                      126,307


$                      128,203


$                    99,354


Average Earning Assets

$                      172,473


$                      174,650


$                  145,280


Total Average Assets

$                      196,586


$                      199,329


$                  173,428


Average Interest Bearing Deposits

$                      104,186


$                      104,163


$                  103,105


Total Average Deposits

$                      118,255


$                      118,484


$                  115,882


Average Equity

$                        25,307


$                        24,526


$                    26,002


Return on Average Assets (ROA)

1.66

%

1.63

%

1.01

%

Return on Average Equity (ROE)

12.93

%

13.24

%

6.72

%

Return on Average Tangible Common Equity (D)

28.95

%

30.97

%

14.75

%

Reported Balance Sheet Statistics (period end)







Loans Held for Investment

$                      126,334


$                      127,140


$                    96,714


Total Assets (E)

$                      196,928


$                      197,485


$                  168,433


Interest Bearing Deposits

$                      104,741


$                      103,172


$                  101,769


Total Deposits

$                      119,212


$                      117,331


$                  114,504


Tangible Assets(E) (F)

$                      182,904


$                      183,474


$                  154,316


Tangible Common Equity (TCE) (E) (G)

$                        12,037


$                        11,259


$                    12,075


Tangible Common Equity to Tangible Assets Ratio (E) (H)

6.58

%

6.14

%

7.82

%  

Performance Statistics (Reported) Quarter over Quarter







Net Interest Income Growth

0

%

(4)

%

3

% (5)

Non- Interest Income Growth

12

%

(24)

%

26

% (5)

Revenue Growth

3

%

(9)

%

12

% (5)

Net Interest Margin

7.21

%

7.09

%

5.52

%

Revenue Margin

9.31

%

8.94

%

9.80

%

Risk-Adjusted Margin (I)

5.78

%

5.01

%

6.69

%

Non-Interest Expense as a % of Average Loans Held for Investment (annualized)

6.32

%

6.24

%

7.25

%

Efficiency Ratio (J)

49.70

%

51.23

%

49.92

%

Asset Quality Statistics (Reported) (6)







Allowance

$                          6,175


$                          6,799


$                      4,513


Allowance as a % of Reported Loans Held for Investment

4.89

%

5.35

%

4.67

%

Net Charge-Offs

$                          1,522


$                          1,717


$                      1,128


Net Charge-Off Rate

4.82

%

5.36

%

4.54

%  

30+ day performing delinquency rate

3.71

%

3.81

%

4.12

%  

Full-time equivalent employees (in thousands)

25.7


25.7


26.0









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



CAPITAL ONE FINANCIAL CORPORATION (COF)

FINANCIAL & STATISTICAL SUMMARY

MANAGED BASIS * (for 2009 data)



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

2010
Q3


2010
Q2


2009
Q3


Earnings







Net Interest Income

$               3,109


$               3,097


$                   3,212


Non-Interest Income (1)(7)

$                  907


$                  807


$                   1,373


Total Revenue (2)

$               4,016


$               3,904


$                   4,585


Provision for Loan and Lease Losses

$                  867


$                  723


$                   2,200


Marketing Expenses

$                  250


$                  219


$                      104


Restructuring Expenses (3)

$                       -


$                       -


$                        26


Operating Expenses (4)

$               1,746


$               1,781


$                   1,672


Income Before Taxes

$               1,153


$               1,181


$                      583


Effective Tax Rate

29.1

%

31.2

%

25.0

%

Income From Continuing Operations, Net of Tax

$                  818


$                  812


$                      437


Loss From Discontinued Operations, Net of Tax (7)

$                   (15)


$                 (204)


$                       (43)


Net Income

$                  803


$                  608


$                      394


Net Income Available to Common Shareholders (A)

$                  803


$                  608


$                      394


Common Share Statistics







Basic EPS: (B)







  Income From Continuing Operations

$                 1.81


$                 1.79


$                     0.97


  Loss From Discontinued Operations

$                (0.03)


$                (0.45)


$                    (0.09)


  Net Income

$                 1.78


$                 1.34


$                     0.88


Diluted EPS: (B)







  Income From Continuing Operations

$                 1.79


$                 1.78


$                     0.96


  Loss From Discontinued Operations

$                (0.03)


$                (0.45)


$                    (0.09)


  Net Income

$                 1.76


$                 1.33


$                     0.87


Dividends Per Common Share

$                 0.05


$                 0.05


$                     0.05


Tangible Book Value Per Common Share (period end) (C)

$               26.60


$               24.89


$                   26.86


Stock Price Per Common Share (period end)

$               39.55


$               40.30


$                   35.73


Total Market Capitalization (period end)

$             17,900


$             18,228


$                 16,064


Common Shares Outstanding (period end)

452.6


452.3


449.6


Shares Used to Compute Basic EPS

452.5


452.1


449.4


Shares Used to Compute Diluted EPS

456.6


456.4


453.7


Managed Balance Sheet Statistics (period average)







Average Loans Held for Investment

$           126,307


$           128,203


$               143,540


Average Earning Assets

$           172,473


$           174,650


$               185,874


Total Average Assets

$           196,586


$           199,329


$               214,655


Average Interest Bearing Deposits

$           104,186


$           104,163


$               103,105


Total Average Deposits

$           118,255


$           118,484


$               115,882


Average Equity

$             25,307


$             24,526


$                 26,002


Return on Average Assets (ROA)

1.66

%

1.63

%

0.81

%

Return on Average Equity (ROE)

12.93

%

13.24

%

6.72

%

Return on Average Tangible Common Equity (D)

28.95

%

30.97

%

14.75

%

Managed Balance Sheet Statistics (period end)







Loans Held for Investment

$           126,334


$           127,140


$               140,990


Total Assets (E)

$           196,928


$           197,485


$               209,684


Interest Bearing Deposits

$           104,741


$           103,172


$               101,769


Total Deposits

$           119,212


$           117,331


$               114,504


Tangible Assets(E) (F)

$           182,904


$           183,474


$               195,567


Tangible Common Equity (TCE) (E) (G)

$             12,037


$             11,259


$                 12,075


Tangible Common Equity to Tangible Assets Ratio (E) (H)

6.58

%

6.14

%

6.17

%

Performance Statistics (Managed) Quarter over Quarter







Net Interest Income Growth (5)

0

%

(4)

%

9

% (5)

Non-Interest Income Growth (5)

12

%

(24)

%

15

% (5)

Revenue Growth (5)

3

%

(9)

%

11

% (5)

Net Interest Margin

7.21

%

7.09

%

6.91

%

Revenue Margin

9.31

%

8.94

%

9.87

%

Risk-Adjusted Margin (I)

5.78

%

5.01

%

5.23

%

Non-Interest Expense as a % of Average Loans Held for Investment (annualized)

6.32

%

6.24

%

5.02

%

Efficiency Ratio (J)

49.70

%

51.23

%

38.74

%

Asset Quality Statistics (Managed) (6)







Net Charge-Offs

$               1,522


$               1,717


$                   2,155


Net Charge-Off Rate

4.82

%

5.36

%

6.00

%

30+ day performing delinquency rate

3.71

%

3.81

%

4.55

%

Full-time equivalent employees (in thousands)

25.7


25.7


26.0









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



CAPITAL ONE FINANCIAL CORPORATION (COF)

FINANCIAL & STATISTICAL SUMMARY NOTES


(1)

Includes the impact from the change in fair value of retained interests, including the interest-only strips, which totaled $6 million in Q3 2010, $17 million in Q2 2010 and $37 million in Q3 2009.


(2)

In accordance with the Company's finance charge and fee revenue recognition policy, amounts billed but not included in revenue totaled: $190 million in Q3 2010, $261 million in Q2 2010 and $517 million in Q3 2009.


(3)

The Company completed its 2007 restructuring initiative during 2009.


(4)

Includes core deposit intangible amortization expense of $50 million in Q3 2010, $50 million in Q2 2010 and $56 million in Q3 2009 and integration costs of $27 million in Q3 2010, $22 million in Q2 2010 and $11 million in Q3 2009.


(5)

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


(6)

The ratios excluding the impact of loans acquired as part of the CCB acquisition are as follows.


Q3 2010


Q2 2010


Q3 2009


CCB period end acquired loan portfolio (in millions)(unaudited)

$           5,891


$              6,381


$            7,885


CCB average acquired loan portfolio (in millions)(unaudited)

$           6,014


$              6,541


$            8,029


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

5.12%


5.63%


5.08%


Net charge-off rate (GAAP), excluding CCB

5.06%


5.64%


4.94%


Net charge-off rate (Managed), excluding CCB

5.06%


5.64%


6.36%


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

3.89%


4.01%


4.48%


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

3.89%


4.01%


4.82%



(7)

During Q3 2010, Q2 2010 and Q3 2009, the Company recorded charges of $16 million, $404 million and $91 million, respectively, related to representation and warranty matters.  A portion of this expense is included in Discontinued Operations and the remainder is included in Non-Interest Income.






STATISTICS / METRIC CALCULATIONS



(A)

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



(B)

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



(C)

Calculated based on tangible common equity divided by common shares outstanding, which is a non-GAAP measure.  See page 4 for a reconciliation of our tangible common equity.



(D)

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



(E)

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



(F)

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



(G)

Consists of stockholders' equity, intangible assets and the related deferred tax liabilities.  



(H)

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



(I)

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



(J)

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



CAPITAL ONE FINANCIAL CORPORATION 


REGULATORY AND NON-GAAP CAPITAL MEASURES

In addition to disclosing required regulatory measures, the Company also reports certain non-GAAP capital measures that management uses in assessing its capital adequacy.  These measures include average tangible common equity, tangible common equity (TCE), TCE ratio, Tier 1 common equity and Tier 1 common equity ratio.  The table below provides the details of the calculation of each of these measures. While these non-GAAP capital measures are widely used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies, they may not be comparable to similarly titled measures reported by other companies.











2010


2010


2009


(dollars in millions)(unaudited)


Q3*


Q2*


Q3


Average Equity to Average Tangible Common Equity








Average Equity


$                       25,307


$                       24,526


$                      26,002


Less: Average Intangible Assets (1)


(14,003)


(14,039)


(14,151)


Average Tangible Common Equity


$                       11,304


$                       10,487


$                      11,851










Period End Equity Tangible Common Equity








Stockholders' Equity


$                       26,061


$                       25,270


$                      26,192


Less: Intangible Assets (1)


(14,024)


(14,011)


(14,117)


Period End Tangible Common Equity


$                       12,037


$                       11,259


$                      12,075










Tangible Assets








Total Assets


$                     196,933


$                     197,489


$                    168,464


Less: Discontinued Operations Assets


(5)


(4)


(31)


Total Assets-Continuing Operations


196,928


197,485


168,433


Less: Intangible Assets (1)


(14,024)


(14,011)


(14,117)


Period End Tangible Assets


$                     182,904


$                     183,474


$                    154,316










TCE ratio (2)


6.58

%

6.14

%

7.82

%









Reconciliation of Period End Assets to Tangible Assets on a Managed Basis (for 2009) *






Total Assets


$                     196,933


$                     197,489


$                    168,464


Securitization Adjustment (3)


-


-


41,251


Total Assets on a Managed Basis


196,933


197,489


209,715


Less: Assets-Discontinued Operations


(5)


(4)


(31)


Total Assets-Continuing Operations


196,928


197,485


209,684


Less: Intangible Assets (1)


(14,024)


(14,011)


(14,117)


Period End Tangible Assets


$                     182,904


$                     183,474


$                    195,567










TCE ratio (2)


6.58

%

6.14

%

6.17

%

















Tier 1 Common Equity AND Tier 1 Capital








Common Stockholders' Equity


$                       26,061


$                       25,270


$                      26,192


Less:  Net Unrealized Gains (Losses) on Available-For-Sale Securities (7)


580


661


230


Less:  Accumulated Net Gains (Losses) on Cash Flow Hedges (7)


(79)


(73)


(127)


Less:  Disallowed Goodwill and Other Intangibles


13,993


14,023


14,103


Less:  Disallowed Deferred Tax Assets


1,326


1,977


-


Less:  Other


2


2


(20)


Tier 1 Common Equity


10,239


8,680


12,006










Tier 1 Restricted Core Capital Items (4)


3,636


3,637


2,641










Total Tier 1 Common Capital


$                       13,875


$                       12,317


$                      14,647










Risk-Weighted Assets


$                     124,431


$                     124,038


$                    123,227










Tier 1 Common Equity Ratio (5) (6)


8.23%


7.00%


9.74%










Tier 1 Risk Based Capital Ratio (5) (8)


11.15%


9.93%


11.89%


















(1) Includes impact from related deferred taxes.

(2) Calculated based on tangible common equity divided by tangible assets.

(3) Adjustments to our GAAP results to reflect loans that have been securitized and sold as though the loans remained on our consolidated balance sheet.

(4) Consists primarily of trust preferred securities

(5)  Ratios as of the end of Q3 2010 are preliminary.

(6) Calculated based on Tier 1 common equity divided by risk-weighted assets.

(7) Amounts are net of tax impacts.

(8) Calculated based on Tier 1 capital divided by risk-weighted assets.

* In addition to analyzing the Company's results on a reported basis, management previously evaluated Capital One's results on a "managed" basis, which consisted of non-GAAP financial measures.  Capital One's managed results reflected the Company's reported results, adjusted to reflect the consolidation of the majority of the Company's credit securitization trusts.  Because of the January 1, 2010, adoption of the new consolidation accounting standards, the Company's consolidated reported results subsequent to January 1, 2010 are comparable to its "managed" results.  The accompanying Exhibit "Reconciliation to GAAP Financial Measures" presents a reconciliation of the Company's non-GAAP "managed" results to its GAAP results for periods prior to January 1, 2010.



Capital One Financial Corporation

Impact of Adopting New Accounting Guidance


Consolidation of VIEs



Opening Balance Sheet


VIE Consolidation


Ending Balance Sheet

(dollars in millions)(unaudited)

January 1, 2010


Impact


December 31, 2009








Assets:






Cash and due from banks

$                                 12,683


$                               3,998


$                                        8,685

Loans held for investment

138,184


47,565


90,619


Allowance for loan and lease losses

(8,391)


(4,264)

(2)

(4,127)

Net loans held for investment

129,793


43,301


86,492

Accounts receivable from securitizations

166


(7,463)


7,629

Other assets


68,869

(1)

2,029


66,840


Total assets

211,511


41,865


169,646

Liabilities:






Securitization liability

48,300


44,346


3,954

Other liabilities

139,561


458


139,103


Total liabilities

187,861


44,804


143,057

Stockholders' equity

23,650


(2,939)

(2)

26,589


Total liabilities and stockholders' equity

$                               211,511


$                             41,865


$                                    169,646








Allocation of the Allowance by Segment












(dollars in millions)(unaudited)

January 1, 2010


Consolidation Impact


December 31, 2009

  Domestic credit card

$                                   5,590


$                               3,663

(2)

$                                        1,927

  International credit card

727


528


199

Total credit card

6,317


4,191


2,126

  Commercial and multi-family real estate

471


-


471

  Middle market

131


-


131

  Specialty lending

90


-


90

Total commercial lending

692


-


692

  Small ticket commercial real estate

93


-


93

Total commercial banking

785


-


785

  Automobile

665


-


665

  Mortgage (includes all new CCB originations)

248


73

(3)

175

  Other retail

236


-


236

Total consumer banking

1,149


73


1,076

  Other

140


-


140

Total company

$                                   8,391


$                               4,264


$                                        4,127


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


(2) An adjustment of $34 million to retained earnings and the allowance for loan and lease losses was made in the second quarter of 2010 for the impact of impairment on consolidated loans accounted for troubled debt restructurings. These adjustments are not reflected in the above table.


(3) $73 million of the reduction in the allowance for the first quarter of 2010 is associated with the deconsolidation of certain mortgage trusts. This reduction in the allowance is recorded in non-interest income.



CAPITAL ONE FINANCIAL CORPORATION

Consolidated Statements of Income

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




Three Months Ended



Nine Months Ended


September 30,


June 30,


September 30,



September 30,


September 30,


2010


2010


2009 (1)



2010


2009 (1)























Interest Income:











Loans held for investment, including past-due fees

$             3,447

$

3,476

$

2,220


$

10,582

$

6,649

Investment securities

347


342


399



1,037


1,206

Other

21


17


83



60


214


Total interest income

3,815


3,835


2,702



11,679


8,069












Interest Expense:











Deposits

358


368


479



1,125


1,666

Securitized debt

191


212


63



644


228

Senior and subordinated notes

72


72


74



211


189

Other borrowings

85


86


81



265


243


Total interest expense

706


738


697



2,245


2,326

Net interest income

3,109


3,097


2,005



9,434


5,743

Provision for loan and lease losses

867


723


1,173



3,069


3,386

Net interest income after provision for loan and lease losses

2,242


2,374


832



6,365


2,357












Non-Interest Income:











Servicing and securitizations

9


21


721



(6)


1,537

Service charges and other customer-related fees

496


496


496



1,577


1,494

Interchange

346


333


123



991


389

Net other-than-temporary impairment losses recognized in earnings

(1)


(26)


(11)



(59)


(22)

Other

57


(17)


224



272


476


Total non-interest income

907


807


1,553



2,775


3,874












Non-Interest Expense:











Salaries and associate benefits

641


650


648



1,937


1,837

Marketing

250


219


104



650


400

Communications and data processing

178


164


176



512


569

Supplies and equipment

129


129


123



381


370

Occupancy

135


117


114



371


329

Restructuring expense (2)

-


-


26



-


87

Other

663


721


611



1,992


1,877


Total non-interest expense

1,996


2,000


1,802



5,843


5,469

Income from continuing operations before income taxes

1,153


1,181


583



3,297


762

Income tax provision

335


369


146



948


179

Income from continuing operations, net of tax

818


812


437



2,349


583

Loss from discontinued operations, net of tax

(15)


(204)


(43)



(303)


(75)

Net income

$                803

$

608

$

394


$

2,046

$

508

Preferred stock dividends

-


-


-



-


(564)

Net income (loss) available to common shareholders

$                803

$

608

$

394


$

2,046

$

(56)


































Basic earnings per common share:










Income (loss) from continuing operations

$               1.81

$

1.79

$

0.97


$

5.19

$

0.04

Loss from discontinued operations

(0.03)


(0.45)


(0.09)



(0.66)


(0.18)

Net Income (loss) per common share

$               1.78

$

1.34

$

0.88


$

4.53

$

(0.13)












Diluted earnings per common share:









Income (loss) from continuing operations

$               1.79

$

1.78

$

0.96


$

5.15

$

0.04

Loss from discontinued operations

(0.03)


(0.45)


(0.09)



(0.66)


(0.18)

Net Income (loss) per common share

$               1.76

$

1.33

$

0.87


$

4.49

$

(0.13)












Dividends paid per common share

$               0.05

$

0.05

$

0.05


$

0.15

$

0.48























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

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



CAPITAL ONE FINANCIAL CORPORATION

Consolidated Balance Sheets

(in millions)(unaudited)



As of


As of


As of


September 30


December 31


September 30


2010


2009 (1)


2009 (1)







Assets:







Cash and due from banks


$                    2,015


$                    3,100


$               2,719

Interest-bearing deposits with banks


2,391


5,043


863

Federal funds sold and repurchase agreements


536


542


545


Cash and cash equivalents


4,942


8,685


4,127

Restricted cash for securitization investors


2,686


501


547

Investment in securities:








Available for sale, at fair value


39,926


38,830


37,693


Held to maturity, at amortized cost


-


80


84


Total investment in securities


39,926


38,910


37,777

Loans held for investment:








Unsecuritized loans held for investment, at amortized cost

74,719


75,097


78,392


Restricted loans for securitization investors


51,615


15,522


18,322


Total loans held for investment


126,334


90,619


96,714



Less: Allowance for loan and lease losses

(6,175)


(4,127)


(4,513)


Net loans held for investment


120,159


86,492


92,201

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

197


268


141

Accounts receivable from securitizations


127


7,128


6,438

Premises and equipment, net


2,722


2,736


2,773

Interest receivable


1,025


936


911

Goodwill


13,593


13,596


13,565

Other


11,556


10,394


9,984


Total assets


$                196,933


$                169,646


$           168,464

















Liabilities:







Interest payable


$                       464


$                       509


$                  583

Customer deposits


119,212


115,809


114,504

Securitized debt obligations


29,504


3,954


4,608

Other debt:








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

947


1,140


1,621


Senior and subordinated notes


9,083


9,045


9,209


Other borrowings


4,799


6,875


5,897


Total other debt


14,829


17,060


16,727

Other liabilities


6,863


5,725


5,850


Total liabilities


170,872


143,057


142,272









Stockholders' Equity:







Common stock


5


5


5

Paid-in capital, net


19,059


18,955


18,928

Retained earnings and accumulated other comprehensive income

10,199


10,809


10,431


Less:  Treasury stock, at cost


(3,202)


(3,180)


(3,172)


Total stockholders' equity


26,061


26,589


26,192


Total liabilities and stockholders' equity


$                196,933


$                169,646


$           168,464









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



CAPITAL ONE FINANCIAL CORPORATION

Statements of Average Balances, Income and Expense, Yields and Rates (1)

(dollars in millions)(unaudited)




Quarter Ended 09/30/10


Quarter Ended 06/30/10


Quarter Ended 09/30/09 (3)

GAAP Basis


Average

Income/

Yield/


Average

Income/

Yield/


Average

Income/

Yield/



Balance

Expense

Rate


Balance

Expense

Rate


Balance

Expense

Rate

Interest-earning assets:



























Loans held for investment


$              126,307

$            3,447

10.92%


$                128,203

$               3,476

10.85%


$                  99,354

$                2,220

8.94%


Investment securities (2)


39,872

347

3.48%


39,022

342

3.51%


37,377

399

4.27%


Other


6,294

21

1.33%


7,425

17

0.92%


8,549

83

3.88%

Total interest-earning assets


$              172,473

$            3,815

8.85%


$                174,650

$               3,835

8.78%


$                145,280

$                2,702

7.44%














Interest-bearing liabilities:














Interest-bearing deposits















NOW accounts


$                11,333

$                 10

0.35%


$                  11,601

$                    10

0.34%


$                  10,419

$                     13

0.50%



Money market deposit accounts


43,260

104

0.96%


42,127

99

0.94%


36,037

96

1.07%



Savings accounts


22,572

49

0.87%


21,017

44

0.84%


12,266

23

0.75%



Other consumer time deposits


18,726

133

2.84%


20,744

150

2.89%


32,076

248

3.09%



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


220

1

1.82%


240

1

1.67%


1,061

3

1.13%



CD's of $100,000 or more


7,256

59

3.25%


7,601

63

3.32%


9,764

93

3.81%



Foreign time deposits


819

2

0.98%


833

1

0.48%


1,482

3

0.81%


Total interest-bearing deposits


$              104,186

$               358

1.37%


$                104,163

$                  368

1.41%


$                103,105

$                   479

1.86%


Senior and subordinated notes


8,677

72

3.32%


8,760

72

3.29%


9,554

74

3.10%


Other borrowings


6,483

85

5.24%


6,375

86

5.40%


8,553

81

3.79%


Securitization liability


30,750

191

2.48%


35,248

212

2.41%


4,928

63

5.11%

Total interest-bearing liabilities


$              150,096

$               706

1.88%


$                154,546

$                  738

1.91%


$                126,140

$                   697

2.21%
















Net interest spread




6.97%




6.87%




5.23%
















Interest income to average interest-earning assets




8.85%




8.78%




7.44%

Interest expense to average interest-earning assets




1.64%




1.69%




1.92%

Net interest margin




7.21%




7.09%




5.52%
















Managed Basis *




























Interest-earning assets:














Loans held for investment


$              126,307

$            3,447

10.92%


$                128,203

$               3,476

10.85%


$                143,540

$                3,750

10.45%


Investment securities (2)


39,872

347

3.48%


39,022

342

3.51%


37,377

399

4.27%


Other


6,294

21

1.33%


7,425

17

0.92%


4,957

18

1.45%

Total interest-earning assets


$              172,473

$            3,815

8.85%


$                174,650

$               3,835

8.78%


$                185,874

$                4,167

8.97%
















Interest-bearing liabilities:














Interest-bearing deposits















NOW accounts


$                11,333

$                 10

0.35%


11,601

10

0.34%


$                  10,419

$                     13

0.50%



Money market deposit accounts


43,260

104

0.96%


42,127

99

0.94%


36,037

96

1.07%



Savings accounts


22,572

49

0.87%


21,017

44

0.84%


12,266

23

0.75%



Other consumer time deposits


18,726

133

2.84%


20,744

150

2.89%


32,076

248

3.09%



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


220

1

1.82%


240

1

1.67%


1,061

3

1.13%



CD's of $100,000 or more


7,256

59

3.25%


7,601

63

3.32%


9,764

93

3.81%



Foreign time deposits


819

2

0.98%


833

1

0.48%


1,482

3

0.81%


Total interest-bearing deposits


$              104,186

$               358

1.37%


$                104,163

$                  368

1.41%


$                103,105

$                   479

1.86%


Senior and subordinated notes


8,677

72

3.32%


8,760

72

3.29%


9,554

74

3.10%


Other borrowings


6,483

85

5.24%


6,375

86

5.40%


8,553

81

3.79%


Securitization liability


30,750

191

2.48%


35,248

212

2.41%


46,179

320

2.77%

Total interest-bearing liabilities


$              150,096

$               706

1.88%


$                154,546

$                  738

1.91%


$                167,391

$                   954

2.28%














Net interest spread




6.97%




6.87%




6.69%














Interest income to average interest-earning assets




8.85%




8.78%




8.97%

Interest expense to average interest-earning assets




1.64%




1.69%




2.05%

Net interest margin




7.21%




7.09%




6.91%














(1) Reflects amounts based on continuing operations.

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

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

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



CAPITAL ONE FINANCIAL CORPORATION (COF)

LENDING INFORMATION AND STATISTICS

MANAGED BASIS (1)


2010


2010


2009

(Dollars in millions) (unaudited)

Q3


Q2


Q3







Period end loans held for investment












Domestic credit card

$                       53,839


$                       54,628


$                   61,892

International credit card

7,487


7,269


8,477

 Total Credit Card

$                       61,326


$                       61,897


$                   70,369







Commercial and multifamily real estate

$                       13,383


$                       13,580


$                   13,978

Middle market

10,456


10,203


10,023

Specialty lending

3,813


3,815


3,399

 Total Commercial Lending

$                       27,652


$                       27,598


$                   27,400

Small-ticket commercial real estate

1,890


1,977


2,413

 Total Commercial Banking

$                       29,542


$                       29,575


$                   29,813







Automobile

$                       17,643


$                       17,221


$                   19,295

Mortgages

12,763


13,322


15,639

Retail banking

4,591


4,770


5,215

 Total Consumer Banking

$                       34,997


$                       35,313


$                   40,149







Other loans (2)

$                            469


$                            470


$                        659

    Total

$                     126,334


$                     127,255


$                 140,990







Average loans held for investment












Domestic credit card

$                       54,049


$                       55,252


$                   63,299

International credit card

7,342


7,427


8,609

 Total Credit Card

$                       61,391


$                       62,679


$                   71,908







Commercial and multifamily real estate

$                       13,411


$                       13,543


$                   13,938

Middle market

10,352


10,276


9,911

Specialty lending

3,715


3,654


3,753

 Total Commercial Lending

$                       27,478


$                       27,473


$                   27,602

Small-ticket commercial real estate

1,957


2,060


2,471

 Total Commercial Banking

$                       29,435


$                       29,533


$                   30,073







Automobile

$                       17,397


$                       17,276


$                   19,636

Mortgages

13,024


13,573


15,925

Retail banking

4,669


4,811


5,515

 Total Consumer Banking

$                       35,090


$                       35,660


$                   41,076







Other loans (2)

$                            475


$                            463


$                        483

    Total

$                     126,391


$                     128,335


$                 143,540







Net charge-off rates






Domestic credit card

8.23%


9.49%


9.64%

International credit card

7.60%


8.38%


9.19%

 Total Credit Card

8.16%


9.36%


9.59%







Commercial and multifamily real estate (3)

1.78%


1.17%


1.37%

Middle market (3)

0.43%


0.78%


0.56%

Specialty lending

0.64%


0.87%


1.39%

 Total Commercial Lending (3)

1.11%


0.98%


1.08%

Small-ticket commercial real estate

3.48%


4.21%


5.19%

 Total Commercial Banking (3)

1.27%


1.21%


1.42%







Automobile

2.71%


2.09%


4.38%

Mortgages (3)

0.41%


0.46%


0.69%

Retail banking (3)

2.20%


2.11%


2.44%

 Total Consumer Banking (3)

1.79%


1.47%


2.69%







Other loans

17.63%


27.95%


28.53%

    Total

4.82%


5.36%


6.00%







30+ day performing delinquency rate






Domestic credit card

4.53%


4.79%


5.38%

International credit card

5.84%


6.03%


6.63%

 Total Credit Card

4.69%


4.94%


5.53%







Automobile

7.95%


7.74%


9.52%

Mortgages (3)

0.69%


0.68%


1.17%

Retail banking (3)

1.08%


0.87%


1.26%

 Total Consumer Banking (3)

4.40%


4.15%


5.19%







Nonperforming asset rates (5) (6)






Commercial and multifamily real estate (3)

2.44%


2.82%


2.66%

Middle market (3)

1.36%


1.20%


1.25%

Specialty lending

1.75%


1.94%


2.12%

 Total Commercial Lending (3)

1.94%


2.10%


2.08%

Small-ticket commercial real estate

2.04%


3.57%


11.39%

 Total Commercial Banking (3)

1.94%


2.20%


2.84%







Automobile (4)

0.60%


0.56%


0.87%

Mortgages (3)

4.09%


3.78%


1.83%

Retail banking (3)

2.41%


2.25%


1.98%

 Total Consumer Banking (3)

2.11%


2.00%


1.39%



CAPITAL ONE FINANCIAL CORPORATION (COF)

CREDIT CARD SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS

MANAGED BASIS (1)


2010


2010


2009

(Dollars in millions) (unaudited)

Q3


Q2


Q3

Credit Card:






Earnings






 Net interest income

$                         1,934


$                         1,977


$                     2,024

 Non-interest income

671


659


967

 Total revenue

$                         2,605


$                         2,636


$                     2,991

 Provision for loan and lease losses

660


765


1,644

 Non-interest expense

978


1,002


897

 Income before taxes

967


869


450

 Income tax provision

336


301


158

 Net income

$                            631


$                            568


$                        292







Selected Metrics






 Period end loans held for investment

$                       61,326


$                       61,897


$                   70,369

 Average loans held for investment

$                       61,391


$                       62,679


$                   71,908

 Loans held for investment yield

14.27%


14.24%


13.75%

 Revenue margin

16.97%


16.82%


16.64%

 Net charge-off rate

8.16%


9.36%


9.59%

 30+ day performing delinquency rate

4.69%


4.94%


5.53%

 Purchase volume (7)

$                       27,039


$                       26,570


$                   25,982







Domestic Card Sub-segment






Earnings






 Net interest income

$                         1,691


$                         1,735


$                     1,797

 Non-interest income

575


560


856

 Total revenue

$                         2,266


$                         2,295


$                     2,653

 Provision for loan and lease losses

577


675


1,437

 Non-interest expense

844


869


770

 Income before taxes

845


751


446

 Income tax provision

301


268


156

 Net income

$                            544


$                            483


$                        290







Selected Metrics






 Period end loans held for investment

$                       53,839


$                       54,628


$                   61,892

 Average loans held for investment

$                       54,049


$                       55,252


$                   63,299

 Loans held for investment yield

13.95%


13.98%


13.74%

 Revenue margin

16.77%


16.61%


16.76%

 Net charge-off rate

8.23%


9.49%


9.64%

 30+ day performing delinquency rate

4.53%


4.79%


5.38%

 Purchase volume (7)

$                       24,858


$                       24,513


$                   23,761







International Card Sub-segment






Earnings






 Net interest income

$                            243


$                            242


$                        227

 Non-interest income

96


99


111

 Total revenue

$                            339


$                            341


$                        338

 Provision for loan and lease losses

83


90


207

 Non-interest expense

134


133


127

 Income before taxes

122


118


4

 Income tax provision

35


33


2

 Net income

$                              87


$                              85


$                            2







Selected Metrics






 Period end loans held for investment

$                         7,487


$                         7,269


$                     8,477

 Average loans held for investment

$                         7,342


$                         7,427


$                     8,609

 Loans held for investment yield

16.62%


16.21%


13.80%

 Revenue margin

18.47%


18.37%


15.70%

 Net charge-off rate

7.60%


8.38%


9.19%

 30+ day performing delinquency rate

5.84%


6.03%


6.63%

 Purchase volume (7)

$                         2,181


$                         2,057


$                     2,221



CAPITAL ONE FINANCIAL CORPORATION (COF)

COMMERCIAL BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS

MANAGED BASIS (1)


2010


2010


2009

(Dollars in millions) (unaudited)

Q3


Q2


Q3

Commercial Banking:






Earnings






 Net interest income

$           325


$        319


$         301

 Non-interest income

30


60


43

 Total revenue

$           355


$        379


$         344

 Provision for loan and lease losses

95


62


375

 Non-interest expense

199


198


166

 Income (loss) before taxes

61


119


(197)

 Income tax provision (benefit)

22


42


(69)

 Net income (loss)

$             39


$          77


$       (128)







Selected Metrics






 Period end loans held for investment

$      29,542


$   29,575


$    29,813

 Average loans held for investment

$      29,435


$   29,533


$    30,073

 Loans held for investment yield

5.13%


4.94%


5.06%

 Period end deposits

$      22,100


$   21,527


$    18,617

 Average deposits

$      21,899


$   22,171


$    17,761

 Deposit interest expense rate

0.67%


0.67%


0.75%

 Core deposit intangible amortization

$             14


$          14


$           10

 Net charge-off rate (3)

1.27%


1.21%


1.42%

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

1.81%


2.04%


2.65%

 Nonperforming asset rate (3)

1.94%


2.20%


2.84%



CAPITAL ONE FINANCIAL CORPORATION (COF)

CONSUMER BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS

MANAGED BASIS (1)


2010


2010


2009

(Dollars in millions) (unaudited)

Q3


Q2


Q3

Consumer Banking:






Earnings






 Net interest income

$                        946


$                        935


$                           848

 Non-interest income

196


162


212

 Total revenue

$                     1,142


$                     1,097


$                        1,060

 Provision for loan and lease losses

114


(112)


156

 Non-interest expenses

757


735


681

 Income before taxes

271


474


223

 Income tax provision

96


169


78

 Net income

$                        175


$                        305


$                           145







Selected Metrics






 Period end loans held for investment

$                   34,997


$                   35,313


$                      40,149

 Average loans held for investment

$                   35,090


$                   35,660


$                      41,076

 Loans held for investment yield

9.28%


8.99%


8.89%

 Auto loan originations

$                     2,439


$                     1,765


$                        1,513

 Period end deposits

$                   79,506


$                   77,407


$                      72,253

 Average deposits

$                   78,224


$                   77,082


$                      73,284

 Deposit interest expense rate

1.18%


1.18%


1.58%

 Core deposit intangible amortization

$                          36


$                          36


$                             46

 Net charge-off rate (3)

1.79%


1.47%


2.69%

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

1.92%


1.82%


1.26%

 Nonperforming asset rate (3) (4)

2.11%


2.00%


1.39%

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

4.40%


4.15%


5.19%

 Period end loans serviced for others

$                   20,298


$                   21,425


$                      30,659



CAPITAL ONE FINANCIAL CORPORATION (COF)

OTHER AND TOTAL SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS

MANAGED BASIS (1)


2010


2010


2009

(Dollars in millions) (unaudited)

Q3


Q2


Q3

Other:






Earnings






 Net interest income (expense)

$                         (93)


$                       (132)


$                          39

 Non-interest income (expense)

7


(74)


151

 Total revenue

$                         (86)


$                       (206)


$                        190

 Provision for loan and lease losses

(2)


10


25

 Restructuring expenses (8)

-


-


26

 Non-interest expense

62


65


32

 Income (loss) before taxes

(146)


(281)


107

 Income tax benefit

(119)


(143)


(21)

 Net income (loss)

$                         (27)


$                       (138)


$                        128







Selected Metrics






 Period end loans held for investment (2)

$                         469


$                         470


$                        659

 Average loans held for investment (2)

$                         475


$                         463


$                        483

 Period end deposits

$                    17,606


$                    18,397


$                   23,634

 Average deposits

$                    18,132


$                    19,231


$                   24,837







Total:






Earnings






 Net interest income

$                      3,112


$                      3,099


$                     3,212

 Non-interest income

904


807


1,373

 Total revenue

$                      4,016


$                      3,906


$                     4,585

 Provision for loan and lease losses

867


725


2,200

 Restructuring expenses (8)

-


-


26

 Non-interest expense

1,996


2,000


1,776

 Income before taxes

1,153


1,181


583

 Income tax provision

335


369


146

 Net income

$                         818


$                         812


$                        437







Selected Metrics






 Period end loans held for investment

$                  126,334


$                  127,255


$                 140,990

 Average loans held for investment

$                  126,391


$                  128,335


$                 143,540

 Period end deposits

$                  119,212


$                  117,331


$                 114,504

 Average deposits

$                  118,255


$                  118,484


$                 115,882



CAPITAL ONE FINANCIAL CORPORATION (COF)

LOAN DISCLOSURES AND SEGMENT

FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS NOTES


(1)

Prior to the adoption of the new consolidation accounting standards management evaluated the Company and each of its lines of business results on a "managed' basis, which is a non-GAAP measure. With the adoption of the new consolidation accounting standards, the Company's reported results are comparable to the "managed" basis, which now reflect the consolidation of the majority of the Company's credit card securitization trusts. However, the Company's total segment results differs from its reported consolidated results because our segment results include the loans underlying one of our securitization trusts that remains unconsolidated.  The Company exercised its clean-up call option on this trust effective September 15, 2010.  At this time the trust was called, $93 million of loans were moved on-balance sheet. The accompanying Exhibit "Reconciliation to GAAP Financial Measures" presents a reconciliation of the Company's non-GAAP "managed" results to its GAAP results for periods prior to January 1, 2010.


(2)

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


(3)

The ratios excluding the impact of loans acquired as part of the CCB acquisition are as follows.


Q3 2010


Q2 2010


Q3 2009


CCB period end acquired loan portfolio (in millions)(unaudited)

$            5,891


$            6,381


$            7,885


CCB average acquired loan portfolio (in millions)(unaudited)

$            6,014


$            6,541


$            8,029


Net charge-off rate







    Commercial and Multifamily Real Estate

1.81%


1.19%


1.38%


    Middle Market

0.44%


0.82%


0.56%


        Total Commercial Lending

1.14%


1.01%


1.08%


           Total Commercial Banking

1.30%


1.24%


1.43%









    Mortgage

0.68%


0.77%


1.24%


    Retail Banking

2.29%


2.23%


2.57%


           Total Consumer Banking

2.11%


1.76%


3.28%









30+ day performing delinquency rate







    Mortgage

1.16%


1.14%


2.06%


    Retail Banking

1.12%


0.91%


1.33%


           Total Consumer Banking

5.19%


4.93%


6.27%









Nonperforming asset rate







    Commercial and Multifamily Real Estate

2.47%


2.90%


2.79%


    Middle Market

1.42%


1.25%


1.30%


        Total Commercial Lending

1.98%


2.16%


2.15%


           Total Commercial Banking

1.98%


2.26%


2.95%









    Mortgage

6.83%


6.30%


3.24%


    Retail Banking

2.51%


2.37%


2.09%


           Total Consumer Banking

2.49%


2.38%


1.68%









Nonperforming loans as a percentage of loans held for investment







    Commercial Banking

1.84%


2.09%


2.72%


    Consumer Banking

2.26%


2.16%


1.53%


(4)

Includes nonaccrual consumer auto loans 90+ days past due.


(5)

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


(6)

The Company's policy is not to classify delinquent credit card loans as nonperforming as permitted by regulatory guidance. Instead, we continue to accrue finance charges and fees on credit card loans until the loan is charged off, typically when the account becomes 180 days past due.  Billed finance charges and fees considered uncollectible are not recognized in income.


(7)

Includes all purchase transactions net of returns.  Excludes cash advance transactions.


(8)

The Company completed its 2007 restructuring initiative during 2009.