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Capital One Reports Third Quarter 2012 Net Income of $1.2 billion, or $2.01 per share

October 18, 2012 at 4:06 PM EDT
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Tier 1 common ratio of 10.7% under Basel I; expected to be above 8% on Basel III basis in 2013(1)

MCLEAN, Va., Oct. 18, 2012 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced net income for the third quarter of 2012 of $1.2 billion, or $2.01 per diluted common share, compared with net income of $93 million, or $0.16 per diluted common share, for the second quarter of 2012, and net income of $813 million, or $1.77 per diluted common share, for the third quarter of 2011. 

"Capital One posted solid results across all of our businesses in the third quarter, including strong contributions from ING Direct and the HSBC U.S. credit card business," said Richard D. Fairbank, Chairman and Chief Executive Officer. "We are well positioned to sustain strong returns and capital generation, even in an environment with low industry growth and prolonged low interest rates."

Total Company Results

All comparisons in the following paragraphs are for the third quarter of 2012 compared with the second quarter of 2012 unless otherwise noted.   

Loans and Deposits
Period-end loans held for investment remained essentially flat at $203.1 billion. Domestic Card period-end loans decreased by $177 million as modest organic growth in revolving credit card loans was more than offset by the expected run-off in the quarter of HSBC credit card loans and the continuing run-off of installment loans. Period-end loans in Home Loans decreased by $1.9 billion, or 4 percent, to $46.3 billion driven by continued run-off of acquired portfolios.  Commercial Banking's period-end loans increased $1.2 billion, or 3 percent, to $37.2 billion, and period-end loans in Auto Finance grew $1.2 billion, or 5 percent, to $26.4 billion due to strong growth in both businesses.   

Average loans in the quarter grew by $10.2 billion, or 5 percent, to $202.9 billion, primarily as a result of a $9.0 billion, or 13 percent, increase in Domestic Card average loans due to the full-quarter impact of the HSBC U.S. credit card acquisition.  Average Home Loans decreased by $1.7 billion, or 3 percent, to $47.3 billion driven by continued run-off of acquired portfolios.  Average Commercial Banking loans increased $1.5 billion, or 4 percent, to $36.8 billion, and average Auto Finance loans grew $1.4 billion, or 6 percent, to $25.9 billion, again due to strong growth in both businesses. 

Period-end total deposits decreased $676 million to $213.3 billion, driven by a reduction in deposits in legacy banking segments. Deposit interest rates remained essentially flat in the quarter.

Revenues
Total net revenue for the third quarter of 2012 was $5.8 billion, an increase of $727 million, or 14 percent, largely due to the full-quarter impact of the HSBC credit card loans acquired in the second quarter and a lower non-principal reserve build related to the HSBC acquisition. This resulted in an increase in net interest margin of 93 basis points to 6.97 percent. Cost of funds in the third quarter of 1.06 percent remained flat relative to the second quarter.

Non-interest income increased $82 million, or 8 percent, also due to the full-quarter impact of the HSBC U.S. credit card acquisition.

Non-Interest Expense
Operating expense for the third quarter decreased $79 million, or 3 percent, largely due to a decrease in charges for legal and regulatory matters and unique items as well as lower merger-related expenses, which were partially offset by the full-quarter impact of the HSBC U.S. credit card acquisition.  Marketing expense declined $18 million, or 5 percent.

Provision for Credit Losses
Provision for credit losses was $1.0 billion in the quarter, down $663 million from the previous quarter, driven by a significantly lower HSBC-related allowance build.

The net charge-off rate was 1.75 percent in the third quarter of 2012, an increase of 22 basis points from 1.53 percent in the second quarter, largely because a lower proportion of charge-offs on the HSBC U.S. credit card loans was absorbed by the credit mark on such loans than in the second quarter. The net charge-off rate for Domestic Card remained at low levels, driven by merger-related impacts and favorable seasonal patterns. The company expects the Domestic Card charge-off rate to increase significantly in the fourth quarter as the impact of the mark has largely run its course and because the third quarter is the seasonal low point for the underlying Domestic Card charge-off rate. The net charge-off rate for Auto increased 68 basis points primarily due to seasonality, while the rate for Commercial Banking declined 19 basis points.

Net charge-offs include approximately $25 million from the required implementation of newly issued Office of the Comptroller of the Currency (OCC) guidance regarding the treatment of consumer loans where the borrower has gone through Chapter 7 bankruptcy.

Net Income
Income from continuing operations before income taxes of $1.7 billion in the quarter was impacted by lower provision expense and a full-quarter of HSBC results relative to the second quarter.  Net income was $1.2 billion in the third quarter, up from $93 million in the prior quarter.

Capital Ratios
The company's estimated Tier 1 common ratio was approximately 10.7 percent as of September 30, 2012, up from 9.9 percent as of June 30, 2012.

"Given our strong capital trajectory, we expect to exceed an assumed Basel III Tier 1 common ratio target of  8 percent in 2013," said Gary L. Perlin, Capital One's Chief Financial Officer. "This includes the estimated impact of implementing the Basel II Advanced Approaches to calculating regulatory capital, which we expect will apply to Capital One in 2016 or later."    

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

1 Assumed 8 percent Basel III Tier 1 common ratio target assumes a buffer of 50 basis points for a systemically important financial institution (SIFI) under applicable rules and regulations and a further buffer of 50 basis points. Actual target will depend on regulatory expectations and business judgments.  Estimated based on the company's current interpretation, expectations and understanding of the Basel III capital rules and other capital regulations proposed by U.S. regulators and the application of such rules to its businesses as currently conducted.  Basel III calculations are necessarily subject to change based on, among other things, the scope and terms of the final rules and regulations, model calibration and other implementation guidance, changes in the company's businesses and certain actions of management, including those affecting the composition of its balance sheet.  The company believes this ratio provides useful information to investors and others by measuring its progress against expected future regulatory capital standards.   

Earnings Conference Call Webcast Information
The company will hold an earnings conference call on October 18, 2012 at 5:00 PM, Eastern Daylight Time. The conference call will be accessible through live webcast. Interested investors and other individuals can access the webcast via the company's home page (www.capitalone.com). Choose "Investors" to access the Investor Center and view and/or download the earnings press release, the financial supplement, including a reconciliation to GAAP financial measures, and the earnings release presentation. The replay of the webcast will be archived on the company's website through November 1, 2012 at 10:00 PM.

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

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

About Capital One
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., Capital One Bank (USA), N. A., and ING Bank, fsb, had $213.3 billion in deposits and $302.0 billion in total assets outstanding as of September 30, 2012. Headquartered in McLean, Virginia, Capital One and ING Direct offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients through a variety of channels. Capital One, N.A. has approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index.

  










Exhibit 99.2

Capital One Financial Corporation

Financial Supplement

     Third Quarter 2012 (1) (2)

    Table of Contents 










Page 

Capital One Financial Corporation Consolidated



Table   1:   


Financial & Statistical Summary―Consolidated

1


Table   2:


Notes to Consolidated Financial & Statistical Summary

(Table 1)

2


Table   3:


Consolidated Statements of Income

3


Table   4:


Consolidated Balance Sheets

4


Table   5:


Average Balances, Net Interest Income and Net Interest Margin

5


Table   6:


Loan Information and Performance Statistics

6


Table   7:


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

7

Business Segment Detail



Table   8:


Financial & Statistical Summary―Credit Card Business

8


Table   9:


Financial & Statistical Summary―Consumer Banking Business

9


Table 10:


Financial & Statistical Summary―Commercial Banking Business

10


Table 11:


Financial & Statistical Summary―Other and Total 

11


Table 12:


Notes to Loan and Business Segment Disclosures

(Tables 6 11)

12

Other





Table 13:


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

13











(1)

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






(2)

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







(3)

We use the term "acquired loans" to refer to a limited portion of the credit card loans acquired in the HSBC U.S. card acquisition and the substantial majority of loans acquired in the ING Direct and Chevy Chase Bank ("CCB") acquisitions, which were recorded at fair value at acquisition and subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard formerly known as "SOP 03-3"). Because SOP 03-3 takes into consideration future credit losses expected to be incurred over the life of the loans, there are no charge-offs or an allowance associated with these loans unless the estimated cash flows expected to be collected decrease subsequent to acquisition. In addition, these loans are not classified as delinquent or nonperforming even though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans. The accounting and classification of these loans may significantly alter some of our reported credit quality metrics. We therefore supplement certain reported credit quality metrics with metrics adjusted to exclude the impact of these acquired loans.







CAPITAL ONE FINANCIAL CORPORATION (COF)







Table 1:  Financial & Statistical Summary—Consolidated (1)(2)(3)












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


   

2012

Q3 


   

2012

Q2 


2011

Q3


Earnings








Net interest income


$            4,646


$            4,001


$              3,283


Non-interest income(4) (5)


1,136


1,054


871


Total net revenue(6)


5,782


5,055


4,154


Provision for credit losses


1,014


1,677


622


Marketing expenses


316


334


312


Operating expenses(7)


2,729


2,808


1,985


Income from continuing operations before

income taxes 


1,723


236


1,235


Income tax provision


535


43


370


Income from continuing operations, net of tax


1,188


193


865


Loss from discontinued operations, net of tax(4)


(10)


(100)


(52)


Net income


1,178


93


813


Dividends and undistributed earnings allocated to participating securities


(5)


(1)



Net income available to common stockholders


$            1,173


$                92


$                 813










Common Share Statistics








Basic EPS(8): 








   Income from continuing operations, net of tax


$             2.05


$             0.33


$                1.89


   Loss from discontinued operations, net of tax


(0.02)


(0.17)


(0.11)


   Net income per common share 


$             2.03


$             0.16


$                1.78


Diluted EPS(8): 








   Income from continuing operations, net of tax


$             2.03


$             0.33


$                1.88


   Loss from discontinued operations, net of tax


(0.02)


(0.17)


(0.11)


   Net income per common share


$             2.01


$             0.16


$                1.77


Weighted average common shares outstanding (in millions):








   Basic EPS


578.3


577.7


456.0


   Diluted EPS


584.1


582.8


460.4


Common shares outstanding (period end, in millions)


581.3


580.7


459.6


Dividends per common share


$             0.05


$             0.05


$                0.05


Tangible book value per common share (period end)(9)


40.17


35.67


33.56










Balance Sheet (Period End)








Loans held for investment(10)


$        203,132


$        202,749


$           129,952


Interest-earning assets


270,661


264,331


174,307


Total assets


301,989


296,572


200,148


Interest-bearing deposits


192,488


193,859


110,777


Total deposits


213,255


213,931


128,318


Borrowings


38,377


35,874


34,315


Stockholders' equity


39,672


37,192


29,378










Balance Sheet (Quarterly Average Balances)








Average loans held for investment(10)


$        202,856


$        192,632


$           129,043


Average interest-earning assets


266,803


265,019


177,531


Average total assets


297,154


295,306


201,611


Average interest-bearing deposits


193,700


195,597


110,750


Average total deposits


213,323


214,914


128,268


Average borrowings


36,451


35,418


37,366


Average stockholders' equity


38,535


37,533


29,316










Performance Metrics








Net interest income growth (quarter over quarter) 


16

%

17

%

5

%

Non-interest income growth(quarter over quarter)


8


(31)


2


Total net revenue growth(quarter over quarter)


14


2


4


Total net revenue margin(11)


8.67


7.63


9.36


Net interest margin(12)


6.97


6.04


7.40


Return on average assets(13)


1.60


0.26


1.72


Return on average total stockholders' equity(14)


12.33


2.06


11.80


Return on average tangible common equity(15)


21.48


3.53


22.58


Non-interest expense as a % of average loans held for investment(16)


6.00


6.52


7.12


Efficiency ratio(17)


52.66


62.16


55.30


Effective income tax rate


31.1


18.2


30.0


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


37.6


37.4


29.5










Credit Quality Metrics(10) (18)








Allowance for loan and lease losses 


$            5,154


$            4,998


$              4,280


Allowance as a % of loans held for investment 


2.54

%

2.47

%

3.29

%

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


3.11


3.08


3.40


Net charge-offs 


$              887


$              738


$                 812


Net charge-off rate(19)


1.75

%

1.53

%

2.52

%

Net charge-off rate (excluding acquired loans)(19)


2.18


1.96


2.62


30+ day performing delinquency rate


2.54


2.06


3.13


30+ day performing delinquency rate (excluding acquired loans)


3.15


2.59


3.25


30+ day delinquency rate(20) 


**


2.43


3.81


30+ day delinquency rate (excluding acquired loans)(20) 


**


3.06


3.95










Capital Ratios (21)








Tier 1 common ratio(22)


10.7

%

9.9

%

10.0

%

Tier 1 risk-based capital ratio(23)


12.7


11.6


12.4


Total risk-based capital ratio(24)


15.0


14.0


15.4


Tangible common equity ("TCE") ratio(25)


8.2


7.4


8.3










CAPITAL ONE FINANCIAL CORPORATION (COF)













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





















(1)

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

















(2)

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

















(3)

Results for Q1 2012 and thereafter include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans of $40.4 billion, other assets of $53.9 billion and deposits of $84.4 billion at acquisition.

















(4)

We did not record a provision for repurchase losses in Q3 2012.  We recorded a provision for repurchase losses of $180 million in Q2 2012 and $72 million in Q3 2011. The majority of the provision for repurchase losses is generally included net of tax in discontinued operations, with the remaining amount included pre-tax in non-interest income. The mortgage representation and warranty reserve decreased to $919 million as of September 30, 2012, from $1.0 billion as of June 30, 2012, due to the settlement of claims in Q3 2012 totaling $83 million.
















(5)

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

















(6)

Total net revenue was reduced by $185 million in Q3 2012, $311 million in Q2 2012, $123 million in Q1 2012, $130 million in Q4 2011 and $24 million in Q3 2011, for the estimated uncollectible amount of billed finance charges and fees.  Premium amortization related to the HSBC U.S. card and ING Direct acquisitions reduced revenue by $133 million in Q3 2012, $104 million in Q2 2012, and $30 million in Q1 2012.
















(7)

Includes merger-related expenses, including transaction costs, attributable to acquisitions of $48 million in Q3 2012, $133 million in Q2 2012, and $18 million in Q3 2011.  Also includes intangible amortization expense related to purchased credit card relationships ("PCCR") from the HSBC U.S. card acquisition of $127 million in Q3 2012 and $85 million in Q2 2012.  Other asset and intangible amortization expense related to the HSBC U.S. card and ING Direct acquisitions totaled $42 million in Q3 2012 and $41 million in Q2 2012.
















(8)

Earnings per share is computed independently for each period. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts.


















(9)

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
















(10)

See "Table 12: Notes to Loan and Business Segment Disclosures (Tables 6 — 11)" for information on acquired loans accounted for based on estimated cash flows expected to be collected.
















(11)

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
















(12)

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
















(13)

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
















(14)

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
















(15)

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
















(16)

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
















(17)

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
















(18)

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
















(19)

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
















(20)

The 30+ day total delinquency rate as of the end of Q3 2012 will be provided in the September 30, 2012 Quarterly Report on Form 10-Q.
















(21)

Regulatory capital ratios as of the end of Q3 2012 are preliminary and therefore subject to change.


















(22)

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
















(23)

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
















(24)

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
















(25)

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

CAPITAL ONE FINANCIAL CORPORATION (COF)







Table 3:  Consolidated Statements of Income










































Three Months Ended



Nine Months Ended

(Dollars in millions, except

per share data) (unaudited)


September 30,

2012


June 30,

2012


September 30,

2011



September 30,

2012


September 30,

2011
















Interest income:












Loans held for investment


$              4,901


$              4,255


$              3,550



$            12,811


$            10,334

Investment securities


335


335


264



968


893

Other



18


26


21



70


59


Total interest income


5,254


4,616


3,835



13,849


11,286
















Interest expense:












Deposits



371


373


294



1,055


923

Securitized debt obligations


64


69


89



213


342

Senior and subordinated notes


85


87


84



260


211

Other borrowings


88


86


85



260


251


Total interest expense


608


615


552



1,788


1,727
















Net interest income


4,646


4,001


3,283



12,061


9,559

Provision for credit losses


1,014


1,677


622



3,264


1,499


Net interest income after provision for credit losses


3,632


2,324


2,661



8,797


8,060
















Non-interest income:












Service charges and other customer-related fees


557


539


542



1,511


1,527

Interchange fees, net


452


408


321



1,188


972

Net other-than-temporary impairment losses recognized in earnings


(13)


(13)


(6)



(40)


(15)

Bargain purchase gain (1)






594


Other



140


120


14



458


186


Total non-interest income


1,136


1,054


871



3,711


2,670
















Non-interest expense:












Salaries and associate benefits


1,002


971


750



2,837


2,206

Marketing



316


334


312



971


917

Communications and data processing


198


203


178



573


504

Supplies and equipment


209


178


143



534


402

Occupancy


145


145


122



413


359

Merger-related expenses


48


133


18



267


18

Other



1,127


1,178


774



3,096


2,308


Total non-interest expense


3,045


3,142


2,297



8,691


6,714

Income from continuing operations before income taxes


1,723


236


1,235



3,817


4,016

Income tax provision


535


43


370



931


1,174

Income from continuing operations, net of tax


1,188


193


865



2,886


2,842

Loss from discontinued operations, net of tax


(10)


(100)


(52)



(212)


(102)


Net income


1,178


93


813



2,674


2,740

Dividends and undistributed earnings allocated to participating securities


(5)


(1)




(12)



Net income available to common stockholders


$              1,173


$                   92


$                 813



$              2,662


$              2,740
















Basic earnings per common share:













Income from continuing operations


$                2.05


$                0.33


$                1.89



$                5.18


$                6.24


Loss from discontinued operations


(0.02)


(0.17)


(0.11)



(0.38)


(0.22)


Net income per basic common share


$                2.03


$                0.16


$                1.78



$                4.80


$                6.02
















Diluted earnings per common share:













Income from continuing operations


$                2.03


$                0.33


$                1.88



$                5.13


$                6.17


Loss from discontinued operations


(0.02)


(0.17)


(0.11)



(0.38)


(0.22)


Net income per diluted common share


$                2.01


$                0.16


$                1.77



$                4.75


$                5.95
















Weighted average common shares outstanding (in millions):













Basic EPS


578.3


577.7


456.0



555.0


455.2


Diluted EPS


584.1


582.8


460.4



560.1


461.0
















Dividends paid per common share


$                0.05


$                0.05


$                0.05



$                0.15


$                0.15































(1)

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

CAPITAL ONE FINANCIAL CORPORATION (COF)





Table 4:  Consolidated Balance Sheets




























September 30,


June 30,


December 31,


September 30,

(Dollars in millions)(unaudited)


2012


2012


2011


2011











Assets:









Cash and due from banks


$             1,855


$             2,297


$             2,097


$             1,794

Interest-bearing deposits with banks


3,860


3,352


3,399


3,238

Federal funds sold and securities purchased under agreements to resell


254


330


342


1,326


Cash and cash equivalents


5,969


5,979


5,838


6,358

Restricted cash for securitization investors


760


370


791


984

Securities available for sale, at fair value


61,464


55,289


38,759


38,400

Loans held for investment:










Unsecuritized loans held for investment


159,219


158,680


88,242


83,010


Restricted loans for securitization investors


43,913


44,069


47,650


46,942


Total loans held for investment


203,132


202,749


135,892


129,952


    Less: Allowance for loan and lease losses


(5,154)


(4,998)


(4,250)


(4,280)


Net loans held for investment


197,978


197,751


131,642


125,672

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


187


1,047


201


312

Accounts receivable from securitizations


166


96


94


101

Premises and equipment, net


3,519


3,556


2,748


2,785

Interest receivable


1,614


1,623


1,029


958

Goodwill


13,901


13,864


13,592


13,593

Other


16,431


16,997


11,325


10,985


Total assets


$         301,989


$         296,572


$         206,019


$         200,148





















Liabilities:









Interest payable


$                368


$                462


$                466


$                401

Customer deposits:










Non-interest bearing deposits


20,767


20,072


18,281


17,541


Interest-bearing deposits


192,488


193,859


109,945


110,777


Total customer deposits


213,255


213,931


128,226


128,318

Securitized debt obligations


12,686


13,608


16,527


17,120

Other debt:










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


967


1,101


1,464


1,441


Senior and subordinated notes


11,756


12,079


11,034


11,051


Other borrowings


12,968


9,086


10,536


4,703


Total other debt


25,691


22,266


23,034


17,195

Other liabilities


10,317


9,113


8,100


7,736


Total liabilities


262,317


259,380


176,353


170,770











Stockholders' equity:









Preferred stock


853




Common stock


6


6


5


5

Paid-in capital, net


25,265


25,217


19,274


19,234

Retained earnings and accumulated other comprehensive income


16,835


15,255


13,631


13,382

Treasury stock, at cost


(3,287)


(3,286)


(3,244)


(3,243)


Total stockholders' equity


39,672


37,192


29,666


29,378


Total liabilities and stockholders' equity


$         301,989


$         296,572


$         206,019


$         200,148











CAPITAL ONE FINANCIAL CORPORATION (COF)













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































































2012 Q3



2012 Q2



2011 Q3


(Dollars in millions)(unaudited)


Average

Balance


Interest Income/

Expense


Yield/

Rate



Average

Balance


Interest

Income/

Expense


Yield/

Rate



Average

Balance


Interest

Income/

Expense


Yield/

Rate


Interest-earning assets:























Loans held for investment


$  202,856


$  4,901


9.66

%


$  192,632


$  4,255


8.84

%


$  129,043


$  3,550


11.00

%


Investment securities 


57,928


335


2.31



56,972


335


2.35



37,189


264


2.84



Cash equivalents and other


6,019


18


1.20



15,415


26


0.67



11,299


21


0.74


Total interest-earning assets 


$  266,803


$  5,254


7.88

%


$  265,019


$  4,616


6.97

%


$  177,531


$  3,835


8.64

%

























Interest-bearing liabilities:























Interest-bearing deposits
























NOW accounts


$    36,965


$       61


0.66

%


$    35,783


$       56


0.63

%


$    12,602


$         9


0.29

%



Money market deposit accounts


107,340


189


0.70



108,401


190


0.70



47,483


100


0.84




Savings accounts


29,963


21


0.28



31,379


25


0.32



30,944


56


0.72




CD's of $100,000 or more


4,838


35


2.89



5,030


35


2.78



5,407


43


3.18




Other consumer time deposits


12,878


63


1.96



13,658


65


1.90



13,530


84


2.48




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


68


1


5.88



75


1


5.33



92


1


4.35




Foreign time deposits


1,648


1


0.24



1,271


1


0.31



692


1


0.58



Total interest-bearing deposits


193,700


371


0.77



195,597


373


0.76



110,750


294


1.06



Securitized debt obligations


13,331


64


1.92



14,948


69


1.85



18,478


89


1.93



Senior and subordinated notes


11,035


85


3.08



11,213


87


3.10



10,519


84


3.19



Other borrowings


12,085


88


2.91



9,257


86


3.72



8,369


85


4.06


Total interest-bearing liabilities


$  230,151


$     608


1.06

%


$  231,015


$     615


1.06

%


$  148,116


$     552


1.49

%

Net interest income/spread




$  4,646


6.82

%




$  4,001


5.91

%




$  3,283


7.15

%

Impact of non-interest bearing funding






0.15







0.13







0.25


Net interest margin






6.97

%






6.04

%






7.40

%

























CAPITAL ONE FINANCIAL CORPORATION (COF)






Table 6: Loan Information and Performance Statistics(1)(2)(3)














2012


2012


2011


(Dollars in millions)(unaudited)


Q3 


Q2 


Q3


Period-end Loans Held For Investment








Credit card:








   Domestic credit card 


$           80,621


$           80,798


$           53,820


   International credit card


8,412


8,116


8,210


      Total credit card


89,033


88,914


62,030


Consumer banking:








   Automobile


26,434


25,251


20,422


   Home loan


46,275


48,224


10,916


   Retail banking


4,029


4,140


4,014


      Total consumer banking


76,738


77,615


35,352


Commercial banking:(4)








   Commercial and multifamily real estate


16,963


16,254


14,660


   Commercial and industrial


18,965


18,467


16,145


      Total commercial lending


35,928


34,721


30,805


   Small-ticket commercial real estate


1,281


1,335


1,571


      Total commercial banking


37,209


36,056


32,376


Other loans


152


164


194


     Total 


$         203,132


$         202,749


$         129,952










Average Loans Held For Investment








Credit card:








   Domestic credit card 


$           80,502


$           71,468


$           53,668


   International credit card


8,154


8,194


8,703


      Total credit card


88,656


79,662


62,371


Consumer banking:








   Automobile


25,923


24,487


19,757


   Home loan 


47,262


48,966


11,126


   Retail banking


4,086


4,153


3,979


      Total consumer banking


77,271


77,606


34,862


Commercial banking:(4)








   Commercial and multifamily real estate


16,654


15,838


14,291


   Commercial and industrial


18,817


18,001


15,726


      Total commercial lending


35,471


33,839


30,017


   Small-ticket commercial real estate


1,296


1,388


1,598


      Total commercial banking


36,767


35,227


31,615


Other loans


162


137


195


      Total


$         202,856


$         192,632


$         129,043










Net Charge-off Rates(7)








Credit card:








   Domestic credit card


3.04

%

2.86

%

3.92

%

   International credit card


4.95


5.49


6.15


      Total credit card


3.22


3.13


4.23


Consumer Banking:








   Automobile


1.79


1.11


1.69


   Home loan


0.28


0.09


0.53


   Retail banking


1.20


1.27


1.67


      Total consumer banking


0.83


0.48


1.32


Commercial banking:(4)








   Commercial and multifamily real estate


(0.05)


0.18


0.11


   Commercial and industrial


-


0.10


0.42


      Total commercial lending


(0.03)


0.14


0.27


   Small-ticket commercial real estate


0.79


1.46


2.19


      Total commercial banking


-


0.19


0.37


Other loans


30.11


18.04


15.28


      Total


1.75

%

1.53

%

2.52

%









30+ Day Performing Delinquency Rates(7)








Credit card:








   Domestic credit card


3.52

%

2.79

%

3.65

%

   International credit card


4.92


4.84


5.35


      Total credit card


3.65

%

2.97

%

3.87

%

Consumer Banking:








   Automobile


6.12

%

5.20

%

6.34

%

   Home loan


0.15


0.15


0.78


   Retail banking


0.73


0.69


0.89


      Total consumer banking


2.23

%

1.82

%

4.01

%









Nonperforming Asset Rates(5)(6)(7)








Consumer banking:








   Automobile


0.52

%

0.41

%

0.53

%

   Home loan


0.98


0.94


4.74


   Retail banking


2.25


2.21


2.37


      Total consumer banking


0.89

%

0.83

%

2.04

%

Commercial banking:(4)








   Commercial and multifamily real estate


1.04

%

1.28

%

2.12

%

   Commercial and industrial


0.68


0.81


1.00


      Total commercial lending


0.85

%

1.03

%

1.53

%

   Small-ticket commercial real estate


1.49


1.25


1.58


      Total commercial banking


0.87

%

1.04

%

1.54

%

















CAPITAL ONE FINANCIAL CORPORATION (COF)







Table 7: Loan Information and Performance Statistics (Excluding Acquired Loans)(1)(2)(3)(7)











2012


2012


2011


(Dollars in millions)(unaudited)


Q3 


Q2 


Q3


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








Credit card:








   Domestic credit card 


$           80,250


$           80,269


$           53,820


   International credit card


8,412


8,116


8,210


      Total credit card


88,662


88,385


62,030


Consumer banking:








   Automobile


26,411


25,221


20,366


   Home loan


7,719


7,582


6,634


   Retail banking


3,990


4,099


3,969


      Total consumer banking


38,120


36,902


30,969


Commercial banking:(4)








   Commercial and multifamily real estate


16,800


16,064


14,496


   Commercial and industrial


18,729


18,226


15,820


      Total commercial lending


35,529


34,290


30,316


   Small-ticket commercial real estate


1,281


1,335


1,571


      Total commercial banking


36,810


35,625


31,887


Other loans


152


164


194


     Total 


$         163,744


$         161,076


$         125,080










Average Loans Held For Investment (Excluding Acquired Loans)








Credit card:








   Domestic credit card 


$           80,079


$           71,080


$           53,668


   International credit card


8,154


8,194


8,703


      Total credit card


88,233


79,274


62,371


Consumer banking:








   Automobile


25,897


24,454


19,692


   Home loan 


7,996


7,686


6,759


   Retail banking


4,046


4,110


3,933


      Total consumer banking


37,939


36,250


30,384


Commercial banking:(4)








   Commercial and multifamily real estate


16,489


15,646


14,101


   Commercial and industrial


18,579


17,755


15,396


      Total commercial lending


35,068


33,401


29,497


   Small-ticket commercial real estate


1,296


1,388


1,598


      Total commercial banking


36,364


34,789


31,095


Other loans


162


137


195


      Total


$         162,698


$         150,450


$         124,045










Net Charge-off Rates (Excluding Acquired Loans)








Credit card:








   Domestic credit card


3.06

%

2.87

%

3.92

%

   International credit card


4.95


5.49


6.15


      Total credit card


3.23


3.14


4.23


Consumer Banking:








   Automobile


1.79


1.11


1.69


   Home loan


1.65


0.60


0.87


   Retail banking


1.22


1.29


1.69


      Total consumer banking


1.70


1.02


1.51


Commercial banking:(4)








   Commercial and multifamily real estate


(0.05)


0.18


0.11


   Commercial and industrial


-


0.10


0.43


      Total commercial lending


(0.03)


0.14


0.28


   Small-ticket commercial real estate


0.79


1.46


2.19


      Total commercial banking


-


0.19


0.38


Other loans


30.11


18.04


15.28


      Total


2.18

%

1.96

%

2.62

%









30+ Day Performing Delinquency Rates (Excluding Acquired Loans)








Credit card:








   Domestic credit card


3.53

%

2.81

%

3.65

%

   International credit card


4.92


4.84


5.35


      Total credit card


3.67

%