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Capital One Reports Third Quarter Earnings

October 18, 2006 at 4:06 PM EDT
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EPS Increased Four Percent Over Third Quarter 2005

MCLEAN, Va., Oct. 18 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE: COF) today announced that its earnings for the third quarter of 2006 were $587.8 million, or $1.89 per share (diluted), compared with $491.1 million, or $1.81 per share (diluted), for the third quarter of 2005, and $552.6 million, or $1.78 per share (diluted), for the second quarter of 2006.

"Capital One delivered solid profit and loan growth in the third quarter, reflecting strong performance across our business segments, a continuing favorable credit environment, and expected seasonal patterns," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We continue to execute on our strategy of bringing together national scale lending and local banking businesses, and we look forward to continuing to drive our strategy with the acquisition of North Fork."

As previously announced, Capital One and North Fork expect the acquisition of North Fork by Capital One will close in the fourth quarter of 2006, pending the receipt of approval of the merger by the Federal Reserve Board, and the expiration of all regulatory waiting periods. Capital One and North Fork have not yet set a definitive election deadline by which North Fork stockholders can elect whether they would prefer to receive cash or Capital One common stock in the merger. The election deadline, which is expected to be approximately five business days prior to the expected closing date, will be announced at least five business days in advance of the deadline.

"We expect full year earnings per share (diluted) for 2006 to be at the higher end of the $7.40 to $7.80 range," said Gary L. Perlin, Capital One's Chief Financial Officer. "This includes an estimated 30 cent per share dilutive impact resulting from the expected fourth quarter close of the North Fork acquisition."

Managed loans at September 30, 2006 were $112.2 billion, up $27.5 billion, or 32 percent, from September 30, 2005, including $16.3 billion of loans acquired with the acquisition of Hibernia in November 2005. Managed loans increased $3.8 billion, or four percent, from the previous quarter. The company experienced growth across all of its North American businesses, most notably in its US Card segment. The company expects that managed loans will grow at a rate of between seven and nine percent during 2006, excluding the impacts of the North Fork acquisition.

The managed charge-off rate for the company decreased to 2.92 percent in the third quarter of 2006 from 4.14 percent in the third quarter of 2005 but rose from 2.75 percent in the previous quarter. The company increased its allowance for loan losses by $75 million in the third quarter of 2006, driven primarily by higher loan balances in the quarter. The managed delinquency rate (30+ days) decreased to 3.29 percent as of September 30, 2006 from 3.73 percent as of the end of September 30, 2005 but increased from 3.05 percent as of June 30, 2006.

Third quarter marketing expenses increased $24.8 million to $368.5 million from $343.7 million in the third quarter of 2005, and increased $11.8 million from the second quarter of 2006 expense of $356.7 million. Annualized operating expenses as a percentage of average managed loans increased to 4.92 percent in the third quarter of 2006 from 4.88 percent in the third quarter of 2005 but decreased from 4.99 percent in the previous quarter. This quarter's results also include resolution of certain IRS tax issues resulting in an $18.7 million reduction of tax expense.

Capital One's managed revenue margin decreased to 10.95 percent in the third quarter of 2006 from 12.54 percent in the third quarter of 2005, primarily due to the addition of Hibernia's loan portfolio. The company's managed revenue margin rose 18 basis points from 10.77 percent in the second quarter of 2006. The company continues to expect stability in its annual return on managed assets, as lower revenue margins on higher credit quality loans are offset by reductions in provision and also by reductions in operating and marketing expenses as a percent of assets.

Segment results

The US Card segment's net income in the third quarter of 2006 was $461.6 million, compared with $481.8 million in the third quarter of 2005, and $421.8 million in the second quarter of 2006. Overall performance in the segment continues to be driven by strong credit and solid loan growth. Managed loans at September 30, 2006 were $51.1 billion, up $4.8 billion or 10.4 percent, from September 30, 2005, and up $2.4 billion, or 4.9 percent from the prior quarter. The managed charge-off rate decreased to 3.39 percent in the third quarter of 2006 from 4.69 percent in the third quarter of 2005 but increased from 3.29 percent in the previous quarter. The company now expects credit card charge-offs to return to more normal levels in 2007 following the impacts of last year's bankruptcy legislation.

Results in the Auto Finance segment this quarter reflect continued growth in originations and seasonal impacts in credit. Net income in the third quarter of 2006 was $35.3 million, compared with a net loss of $7.7 million in the third quarter of 2005, and net income of $95.1 million in the second quarter of 2006. Managed loans at September 30, 2006 were $21.2 billion, up $5.4 billion, or 34.5 percent, from September 30, 2005, and up $.6 billion, or 2.9 percent from the prior quarter. The managed charge-off rate decreased to 2.34 percent in the third quarter of 2006 from 2.54 percent in the third quarter of 2005 but increased from 1.54 percent in the previous quarter.

Results in the Global Financial Services segment continue to reflect strong performance in its North American businesses offset by ongoing challenges in the UK. Net income in the third quarter of 2006 was $107.2 million, compared with $81.9 million in the third quarter of 2005, and $51.2 million in the second quarter of 2006. Managed loans at September 30, 2006 were $26.6 billion, up $3.9 billion, or 16.9 percent, from the prior year's third quarter, and up $.7 billion, or 2.7 percent, from the second quarter of 2006. The managed charge-off rate decreased to 3.70 percent in the third quarter of 2006 from 4.09 percent in the third quarter of 2005 and from 3.90 percent in the previous quarter.

The Banking segment delivered stable performance, with net income in the third quarter of 2006 of $46.2 million, up $2.9 million, or 6.8 percent, from the second quarter of 2006. Total deposits at the end of the quarter were $35.7 billion, relatively flat with $35.3 billion at the end of the second quarter of 2006. The company opened nine new branches in the quarter, bringing the year-to-date total to 19 new branches. The company is in various stages of construction on 23 additional de novo branches targeted to open in 2006, although some of these openings might spill over into early 2007. Integration continued to progress smoothly during the quarter with the conversion of the Banking segment's core processing platform, among other systems and processes. The company is on track to complete Hibernia-related integration projects in early 2007.

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

Forward looking statements

The company cautions that its current expectations in this release, in the presentation slides available on the company's website and on its Form 8-K dated October 18, 2006 for third quarter earnings, return on assets, loan growth rates, operating costs, charge-off rates, branch growth, integration costs and synergies, and the benefits of the business combination transaction involving Capital One and North Fork, including future financial and operating results, and the company's plans, objectives, expectations and intentions are forward-looking statements and actual results could differ materially from current expectations due to a number of factors, including: the ability to obtain regulatory approvals of the proposed acquisition of North Fork on the proposed terms and schedule; the exact timing of the close of the North Fork transaction and the magnitude of market-driven purchase accounting adjustments related to the close; the risk that the company's acquired businesses will not be integrated successfully and that the cost savings and other synergies from such acquisitions may not be fully realized; continued intense competition from numerous providers of products and services which compete with Capital One's businesses; changes in our aggregate accounts and balances, and the growth rate and composition thereof; the success of the company's marketing efforts; general economic conditions affecting interest rates and consumer income, spending, and savings which may affect consumer bankruptcies, defaults, and charge-offs and deposit activity; the long-term impact of the 2005 Gulf Coast hurricanes on the impacted regions; and the company's ability to execute on its strategic and operational plans. A discussion of these and other factors can be found in Capital One's annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-K for the fiscal year ended December 31, 2005.

Additional Information About the Capital One - North Fork Transaction

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

About Capital One

Headquartered in McLean, Virginia, Capital One Financial Corporation (http://www.capitalone.com) is a financial holding company, with more than 342 locations in Texas and Louisiana. Its principal subsidiaries, Capital One Bank, Capital One, F.S.B., Capital One Auto Finance, Inc., and Capital One, N.A., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One's subsidiaries collectively had $48.2 billion in deposits and $112.2 billion in managed loans outstanding as of September 30, 2006. Capital One, a Fortune 500 company, trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.

NOTE: Third quarter 2006 financial results, SEC Filings, and third quarter earnings conference call slides are accessible on Capital One's home page (http://www.capitalone.com). Choose "Investors" on the bottom of the home page to view and download the earnings press release, slides, and other financial information. Additionally, a webcast of today's 5:00 pm (ET) earnings conference call is accessible through the same link.



                     CAPITAL ONE FINANCIAL CORPORATION (COF)
                  FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS

                                        2006          2006          2005
    (in millions, except per share
    data and as noted)                   Q3            Q2            Q3

    Earnings (Reported Basis)
    Net Interest Income               $1,294.5      $1,197.1        $910.2
    Non-Interest Income                1,761.4 (3)   1,709.9 (3)   1,594.6 (1)
    Total Revenue(5)                   3,055.9       2,907.0       2,504.8
    Provision for Loan Losses            430.6         362.4         374.2 (1)
    Marketing Expenses                   368.5         356.7         343.7
    Operating Expenses                 1,358.1       1,324.2       1,021.9
    Income Before Taxes                  898.7         863.7         765.0
    Tax Rate                              34.6 %(7)     36.0 %        35.8 %
    Net Income                          $587.8        $552.6        $491.1
    Common Share Statistics
    Basic EPS                            $1.95         $1.84         $1.88
    Diluted EPS                          $1.89         $1.78         $1.81
    Dividends Per Share                  $0.03         $0.03         $0.03
    Book Value Per Share (period
     end)                               $54.79        $52.31        $41.40
    Stock Price Per Share (period
     end)                               $78.66        $85.45        $79.52
    Total Market Capitalization
     (period end)                    $23,944.1     $25,968.3     $21,200.0
    Shares Outstanding (period end)      304.4         303.9         266.6
    Shares Used to Compute Basic EPS     301.6         300.8         260.9
    Shares Used to Compute Diluted
     EPS                                 310.4         310.0         270.7

    Reported Balance Sheet
     Statistics (period avg.)
    Average Loans                      $62,429       $58,833       $38,556
    Average Earning Assets             $81,297       $79,026       $53,453
    Average Assets                     $92,575       $89,644       $59,204
    Average Interest Bearing
     Deposits                          $43,019       $42,797       $26,618
    Average Non-Interest Bearing
     Deposits                           $4,458        $4,412           $85
    Average Equity                     $16,310       $15,581       $10,802
    Return on Average Assets (ROA)        2.54 %        2.47 %        3.32 %
    Return on Average Equity (ROE)       14.42 %       14.19 %       18.19 %

    Reported Balance Sheet
     Statistics (period end)
    Loans                              $63,612       $60,603       $38,852
    Total Assets                       $95,457       $89,530       $60,425
    Loan growth                         $3,009        $2,484          $241
    % Loan Growth Y Over Y                  64 %          57 %          10 %

    Revenue & Expense Statistics
     (Reported)
    Net Interest Income Growth
     (annualized)                           33 %          (3)%          17 %
    Non Interest Income Growth
     (annualized)                           12 %         (32)%           3 %
    Revenue Growth (annualized)             20 %         (21)%           8 %
    Net Interest Margin                   6.37 %        6.06 %        6.81 %
    Revenue Margin                       15.04 %       14.71 %       18.74 %
    Risk Adjusted Margin (8)             13.22 %       13.22 %       16.18 %
    Operating Expense as a % of
     Revenues                            44.44 %       45.55 %       40.80 %
    Operating Expense as a % of Avg
     Loans (annualized)                   8.70 %        9.00 %       10.60 %

    Asset Quality Statistics
     (Reported)
    Allowance                           $1,840        $1,765        $1,447 (1)
    30+ Day Delinquencies               $2,060        $1,772        $1,497
    Net Charge-Offs                       $369          $296          $342
    Allowance as a % of Reported
     Loans                                2.89 %        2.91 %        3.72 %
    Delinquency Rate (30+ days)           3.24 %        2.92 %        3.85 %
    Net Charge-Off Rate                   2.36 %        2.01 %        3.55 %

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

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

    (3) Includes a $20.5 million gain in Q2 2006 as a result of the
        MasterCard, Inc. initial public offering and losses of $20.8 million
        in Q2 2006 and $9.4 million in Q3 2006 related to the derivative
        entered into in April 2006 to mitigate certain exposures we face as a
        result of our expected acquisition of North Fork.

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

    (5) In accordance with the Company's finance charge and fee revenue
        recognition policy, the amounts billed to customers but not recognized
        as revenue were as follows: Q3 2006 - $226.3, Q2 2006 - $215.0,
        Q1 2006 - $170.9, Q4 2005 - $227.9 and Q3 2005 - $255.6.

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

    (7) Includes resolution of IRS tax issues resulting in $18.7 million
        reduction of tax expense.

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



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

                                          2006         2006         2005
    (in millions)                          Q3           Q2           Q3

    Earnings (Managed Basis)
    Net Interest Income                 $2,217.8     $2,140.8     $1,931.2
    Non-Interest Income                  1,275.4 (4)  1,199.4 (4)  1,099.8 (2)
    Total Revenue(6)                     3,493.2      3,340.2      3,031.0
    Provision for Loan Losses              867.9        795.6        900.4 (2)
    Marketing Expenses                     368.5        356.7        343.7
    Operating Expenses                   1,358.1      1,324.2      1,021.9
    Income Before Taxes                    898.7        863.7        765.0
    Tax Rate                                34.6 %(8)    36.0 %       35.8 %
    Net Income                            $587.8       $552.6       $491.1

    Managed Balance Sheet Statistics
     (period avg.)
    Average Loans                       $110,512     $106,090      $83,828
    Average Earning Assets              $127,601     $124,067      $96,696
    Average Assets                      $140,114     $136,351     $103,913
    Return on Average Assets (ROA)          1.68 %       1.62 %       1.89 %

    Managed Balance Sheet Statistics
     (period end)
    Loans                               $112,239     $108,433      $84,768
    Total Assets                        $143,527     $136,819     $105,743
    Loan Growth                           $3,806       $4,526       $1,817
    % Loan Growth Y over Y                    32 %         31 %         12 %
    Tangible Assets (9)                 $139,223     $132,527     $105,007
    Tangible Capital (10)                $13,514      $12,094      $10,400
    Tangible Capital to Tangible Assets
     Ratio                                  9.71 %       9.13 %       9.90 %
    % Off-Balance Sheet Securitizations       43 %         44 %         54 %

    Revenue & Expense Statistics
     (Managed)
    Net Interest Income Growth
     (annualized)                             14 %        (17)%         22 %
    Non Interest Income Growth
     (annualized)                             25 %         (7)%        (16)%
    Revenue Growth (annualized)               18 %        (14)%          8 %
    Net Interest Margin                     6.95 %       6.90 %       7.99 %
    Revenue Margin                         10.95 %      10.77 %      12.54 %
    Risk Adjusted Margin (11)               8.42 %       8.42 %       8.95 %
    Operating Expense as a % of
     Revenues                              38.88 %      39.64 %      33.71 %
    Operating Expense as a % of Avg
     Loans (annualized)                     4.92 %       4.99 %       4.88 %

    Asset Quality Statistics (Managed)
    30+ Day Delinquencies                 $3,693       $3,306       $3,164
    Net Charge-Offs                         $806         $729         $868
    Delinquency Rate (30+ days)             3.29 %       3.05 %       3.73 %
    Net Charge-Off Rate                     2.92 %       2.75 %       4.14 %

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

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

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

    (4)  Includes a $20.5 million gain in Q2 2006 as a result of the
         MasterCard, Inc. initial public offering and losses of $20.8 million
         in Q2 2006 and $9.4 million in Q3 2006 related to the derivative
         entered into in April 2006 to mitigate certain exposures we face as a
         result of our expected acquisition of North Fork.

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

    (6)  In accordance with the Company's finance charge and fee revenue
         recognition policy, the amounts billed to customers but not
         recognized as revenue were as follows: Q3 2006 - $226.3,
         Q2 2006 - $215.0, Q1 2006 - $170.9, Q4 2005 - $227.9 and
         Q3 2005 - $255.6.

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

    (8)  Includes resolution of IRS tax issues resulting in $18.7 million
         reduction of tax expense.

    (9)  Includes managed assets less intangible assets.

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

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



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

                                           2006         2006         2005
    (in thousands)                          Q3           Q2           Q3

    Segment Statistics
    US Card:
      Interest Income                    $1,734,459   $1,628,144   $1,659,178
      Interest Expense                      554,708      507,722      451,346
      Net interest income                $1,179,751   $1,120,422   $1,207,832
      Non-interest income                   881,304      803,083      851,036
      Provision for loan losses             451,782      413,701      483,759
      Non-interest expenses                 899,062      860,874      833,925
      Income tax provision (benefit)        248,574      227,125      259,414
      Net income (loss)                    $461,637     $421,805     $481,770

      Loans receivable                  $51,127,654  $48,736,483  $46,291,468
      Average loans                     $50,131,562  $47,856,045  $46,405,569
      Loan Yield                             13.84%       13.61%       14.30%
      Net charge-off rate                     3.39%        3.29%        4.69%
      Delinquency Rate (30+ days)             3.53%        3.30%        3.86%
      Purchase Volume (2)               $21,450,024  $20,878,732  $18,932,798
      Number of Accounts (000s)              37,483       37,199       37,863

    Auto Finance:
      Interest Income                      $591,711     $563,734     $436,058
      Interest Expense                      227,053      207,497      135,956
      Net interest income                  $364,658     $356,237     $300,102
      Non-interest income                     4,846       13,839        3,005
      Provision for loan losses             161,145       74,714      185,219
      Non-interest expenses                 154,014      149,115      129,719
      Income tax provision (benefit)         19,021       51,186       (4,141)
      Net income (loss)                     $35,324      $95,061      $(7,690)

      Loans receivable                  $21,158,797  $20,558,455  $15,730,713
      Average loans                     $20,812,533  $20,187,631  $15,104,464
      Loan Yield                             11.37%       11.17%       11.55%
      Net charge-off rate                     2.34%        1.54%        2.54%
      Delinquency Rate (30+ days)             5.18%        4.55%        4.65%
      Auto Loan Originations (3)         $3,158,481   $3,107,409   $3,217,209
      Number of Accounts (000s)               1,558        1,525        1,187

    Global Financial Services:
      Interest Income                      $768,262     $725,256     $661,420
      Interest Expense                      307,518      279,804      237,791
      Net interest income                  $460,744     $445,452     $423,629
      Non-interest income                   311,439      297,080      273,067
      Provision for loan losses             249,448      296,614      217,032
      Non-interest expenses                 358,806      365,149      356,254
      Income tax provision (benefit)         56,771       29,614       41,521
      Net income (loss)                    $107,158      $51,155      $81,889

      Loans receivable                  $26,623,519  $25,935,716  $22,770,803
      Average loans                     $26,364,992  $24,910,879  $22,373,995
      Loan Yield                             11.58%       11.58%       11.78%
      Net charge-off rate                     3.70%        3.90%        4.09%
      Delinquency Rate (30+ days)             2.86%        2.82%        2.93%
      Number of Accounts (000s)              10,135       10,130        9,774


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

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

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



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

                                          2006          2006         2005
    (in thousands)                         Q3            Q2           Q3

    Segment Statistics
    Banking:
      Interest Income                     $719,207      $682,679
      Interest Expense                     461,009       433,451
      Net interest income                 $258,198      $249,228
      Non-interest income                  115,526       114,039
      Provision for loan losses              5,495         6,632
      Non-interest expenses                297,080       289,996
      Income tax provision (benefit)        24,902        23,324
      Net income (loss)                    $46,247       $43,315

      Loans receivable                 $13,326,088   $13,189,112
      Average loans                    $13,171,414   $13,115,534
      Loan Yield                             8.02%         7.63%
      Net charge-off rate                    0.48%         0.45%
      Delinquency Rate (30+ days)            0.36%         0.38%
      Core Deposits(2)                  27,547,964    27,857,265
      Total Deposits                    35,714,468    35,281,970
      Number of Active ATMs                    623           586
      Number of locations(3)                   342           325

    Other:
      Net interest income                 $(45,529)     $(30,510)       $(368)
      Non-interest income                  (37,706)      (28,709)     (27,301)
      Provision for loan losses                 27         3,950       14,324
      Non-interest expenses                 17,667        15,763       45,740
      Income tax provision (benefit)       (38,402)      (20,183)     (22,913)
      Net income (loss)                   $(62,527)     $(58,749)    $(64,820)

      Loans receivable                      $2,488       $13,673     $(25,301)

    Total:
      Interest Income                   $3,595,874    $3,414,411   $2,907,775
      Interest Expense                   1,378,052     1,273,582      976,580
      Net interest income               $2,217,822    $2,140,829   $1,931,195
      Non-interest income                1,275,409     1,199,332    1,099,807
      Provision for loan losses            867,897       795,611      900,334
      Non-interest expenses              1,726,629     1,680,897    1,365,638
      Income tax provision (benefit)       310,866       311,066      273,881
      Net income (loss)                   $587,839      $552,587     $491,149

      Loans receivable                $112,238,546  $108,433,439  $84,767,683

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

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

    (3) Q3: Number of locations includes 329 branches and 13 other customer
        centers and excludes 7 branches that remain closed due to hurricane
        damage.  Q2: Number of locations includes 312 branches and 13 other
        customer centers and excludes 16 branches that remain closed due to
        hurricane damage. Q1: Number of locations includes 303 branches and 14
        other customer centers and excludes 18 branches that remain closed due
        to hurricane damage.



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

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

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


                                          Total                      Total
                                        Reported   Adjustments(1)  Managed(2)

    Income Statement Measures
    Net interest income                 $1,294,515     $923,307    $2,217,822
    Non-interest income                 $1,761,385    $(485,976)   $1,275,409
    Total revenue                       $3,055,900     $437,331    $3,493,231
    Provision for loan losses             $430,566     $437,331      $867,897
    Net charge-offs                       $368,656     $437,331      $805,987

    Balance Sheet Measures
    Loans                              $63,612,169  $48,626,377  $112,238,546
    Total assets                       $95,457,365  $48,069,798  $143,527,163
    Average loans                      $62,428,789  $48,083,477  $110,512,266
    Average earning assets             $81,297,372  $46,304,077  $127,601,449
    Average total assets               $92,575,211  $47,538,556  $140,113,767
    Delinquencies                       $2,059,777   $1,633,477    $3,693,254

    (1) Income statement adjustments reclassify the net of finance charges of
        $1,357.3 million, past-due fees of $229.0 million, other interest
        income of $(55.5) million and interest expense of $607.5 million; and
        net charge-offs of $437.3 million from Non-interest income to Net
        interest income and Provision for loan losses, respectively.

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



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

                                           As of        As of        As of
                                       September 30    June 30   September 30
                                           2006         2006         2005

    Assets:
    Cash and due from banks              $1,461,132   $1,388,384     $812,330
    Federal funds sold and resale
     agreements                           3,340,809      339,613    2,409,392
    Interest-bearing deposits at other
     banks                                1,348,327      870,049    1,380,880
      Cash and cash equivalents           6,150,268    2,598,046    4,602,602
    Securities available for sale        13,960,709   15,292,446    9,436,667
    Loans                                63,612,169   60,602,803   38,851,763
      Less:  Allowance for loan losses   (1,840,000)  (1,765,000)  (1,447,000)
    Net loans                            61,772,169   58,837,803   37,404,763
    Accounts receivable from
     securitizations                      5,617,113    4,818,512    6,126,282
    Premises and equipment, net           1,532,006    1,467,922      768,198
    Interest receivable                     529,104      526,267      367,757
    Goodwill                              3,964,177    3,933,621      736,058
    Other                                 1,931,819    2,055,569      982,190
      Total assets                      $95,457,365  $89,530,186  $60,424,517


    Liabilities:
    Non-interest-bearing deposits        $4,695,792   $4,487,837      $91,684
    Interest-bearing deposits            43,467,977   42,698,976   26,772,538
    Senior and subordinated notes         8,701,794    5,490,690    6,651,891
    Other borrowings                     17,619,817   16,836,398   11,613,179
    Interest payable                        387,000      349,091      350,842
    Other                                 3,908,008    3,770,131    3,907,156
      Total liabilities                  78,780,388   73,633,123   49,387,290

    Stockholders' Equity:
    Common stock                              3,065        3,060        2,682
    Paid-in capital, net                  7,237,785    7,151,376    3,979,525
    Retained earnings and cumulative
     other comprehensive income           9,551,504    8,857,963    7,124,900
      Less:  Treasury stock, at cost       (115,377)    (115,336)     (69,880)
      Total stockholders' equity         16,676,977   15,897,063   11,037,227
      Total liabilities and
       stockholders' equity             $95,457,365  $89,530,186  $60,424,517



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


                                                Three Months Ended

                                       September 30   June 30  September 30(1)
                                           2006         2006        2005


    Interest Income:
    Loans, including past-due fees       $1,814,803  $1,616,937  $1,228,160
    Securities available for sale           160,198     167,804      87,978
    Other                                    90,070     112,416      88,477
       Total interest income              2,065,071   1,897,157   1,404,615

    Interest Expense:
    Deposits                                442,571     416,232     285,611
    Senior and subordinated notes            96,300      84,707      98,309
    Other borrowings                        231,685     199,136     110,476
       Total interest expense               770,556     700,075     494,396
    Net interest income                   1,294,515   1,197,082     910,219
    Provision for loan losses               430,566     362,445     374,167
    Net interest income after provision
     for loan losses                        863,949     834,637     536,052

    Non-Interest Income:
    Servicing and securitizations         1,071,091   1,025,506     993,788
    Service charges and other customer-
     related fees                           459,125     413,398     355,871
    Interchange                             150,474     131,538     125,454
    Other                                    80,695     139,471     119,503
       Total non-interest income          1,761,385   1,709,913   1,594,616

    Non-Interest Expense:
    Salaries and associate benefits         554,504     536,465     414,348
    Marketing                               368,498     356,695     343,708
    Communications and data processing      183,020     172,734     144,321
    Supplies and equipment                  111,625     113,028      86,866
    Occupancy                                49,710      52,753      39,426
    Other                                   459,272     449,222     336,969
       Total non-interest expense         1,726,629   1,680,897   1,365,638
    Income before income taxes              898,705     863,653     765,030
    Income taxes                            310,866     311,066     273,881
    Net income                             $587,839    $552,587    $491,149


    Basic earnings per share                  $1.95       $1.84       $1.88

    Diluted earnings per share                $1.89       $1.78       $1.81

    Dividends paid per share                  $0.03       $0.03       $0.03


                                                   Nine Months Ended
                                            September 30       September 30(1)
                                                2006               2005


    Interest Income:
    Loans, including past-due fees           $5,044,362         $3,602,294
    Securities available for sale               493,102            269,387
    Other                                       303,346            221,102
       Total interest income                  5,840,810          4,092,783

    Interest Expense:
    Deposits                                  1,262,412            829,074
    Senior and subordinated notes               275,361            317,382
    Other borrowings                            604,563            303,084
       Total interest expense                 2,142,336          1,449,540
    Net interest income                       3,698,474          2,643,243
    Provision for loan losses                   963,281            925,398
    Net interest income after provision
     for loan losses                          2,735,193          1,717,845

    Non-Interest Income:
    Servicing and securitizations             3,250,201          2,923,768
    Service charges and other customer-
     related fees                             1,308,254          1,117,467
    Interchange                                 401,503            380,962
    Other                                       369,591            270,394
       Total non-interest income              5,329,549          4,692,591

    Non-Interest Expense:
    Salaries and associate benefits           1,607,113          1,289,950
    Marketing                                 1,048,964            932,501
    Communications and data processing          524,958            426,056
    Supplies and equipment                      322,837            256,973
    Occupancy                                   151,840             97,536
    Other                                     1,325,293          1,026,071
       Total non-interest expense             4,981,005          4,029,087
    Income before income taxes                3,083,737          2,381,349
    Income taxes                              1,059,972            852,520
    Net income                               $2,023,765         $1,528,829


    Basic earnings per share                      $6.73              $6.05

    Diluted earnings per share                    $6.53              $5.82

    Dividends paid per share                      $0.08              $0.08

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



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

    Reported                                     Quarter Ended 9/30/06
                                            Average       Income/    Yield/
                                            Balance       Expense     Rate
    Earning assets:
     Loans                                 $62,428,789   $1,814,803   11.63%
     Securities available for sale          14,587,307      160,198    4.39%
     Other                                   4,281,276       90,070    8.42%
    Total earning assets                   $81,297,372   $2,065,071   10.16%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                          $619,460       $4,816    3.11%
        Money market deposit accounts       11,237,206      103,073    3.67%
        Savings accounts                     3,911,765       28,604    2.92%
        Other Consumer Time Deposits        14,325,784      153,881    4.30%
        Public Fund CD's of $100,000 or
         more                                1,022,465       13,046    5.10%
        CD's of $100,000 or more             8,302,487       95,229    4.59%
        Foreign time deposits                3,564,708       43,922    4.93%
     Total Interest-bearing deposits       $42,983,875     $442,571    4.12%
     Senior and subordinated notes           6,544,768       96,300    5.89%
     Other borrowings                       18,010,737      231,685    5.15%
    Total interest-bearing liabilities     $67,539,380     $770,556    4.56%

    Net interest spread                                                5.60%

    Interest income to average earning
     assets                                                           10.16%
    Interest expense to average earning
     assets                                                            3.79%
    Net interest margin                                                6.37%


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

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

    Net interest spread                                                5.31%

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


    Reported                                     Quarter Ended 9/30/05
                                            Average       Income/    Yield/
                                            Balance       Expense     Rate
    Earning assets:
     Loans                                 $38,555,575   $1,228,160   12.74%
     Securities available for sale           9,535,858       87,978    3.69%
     Other                                   5,361,490       88,477    6.60%
    Total earning assets                   $53,452,923   $1,404,615   10.51%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                       $       -     $      -        -
        Money market deposit accounts        3,592,402       30,180    3.36%
        Savings accounts                           -            -        -
        Other Consumer Time Deposits        10,415,635      109,658    4.21%
        Public Fund CD's of $100,000 or
         more                                   97,728          802    3.28%
        CD's of $100,000 or more             9,977,047      111,876    4.49%
        Foreign time deposits                2,535,660       33,095    5.22%
     Total Interest-bearing deposits       $26,618,472     $285,611    4.29%
     Senior and subordinated notes           6,683,533       98,309    5.88%
     Other borrowings                       10,698,216      110,476    4.13%
    Total interest-bearing liabilities     $44,000,221     $494,396    4.49%

    Net interest spread                                                6.02%

    Interest income to average earning
     assets                                                           10.51%
    Interest expense to average earning
     assets                                                            3.70%
    Net interest margin                                                6.81%



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

    Managed (1)                                   Quarter Ended 9/30/06
                                             Average       Income/    Yield/
                                             Balance       Expense     Rate
    Earning assets:
     Loans                                 $110,512,266   $3,401,130   12.31%
     Securities available for sale           14,587,307      160,198    4.39%
     Other                                    2,501,876       34,546    5.52%
    Total earning assets                   $127,601,449   $3,595,874   11.27%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                           $619,460       $4,816    3.11%
        Money market deposit accounts        11,237,206      103,073    3.67%
        Savings accounts                      3,911,765       28,604    2.92%
        Other Consumer Time Deposits         14,325,784      153,881    4.30%
        Public Fund CD's of $100,000 or
         more                                 1,022,465       13,046    5.10%
        CD's of $100,000 or more              8,302,487       95,229    4.59%
        Foreign time deposits                 3,564,708       43,922    4.93%
     Total Interest-bearing deposits        $42,983,875     $442,571    4.12%
     Senior and subordinated notes            6,544,768       96,300    5.89%
     Other borrowings                        18,010,737      231,672    5.15%
     Securitization liability                47,648,021      607,510    5.10%
    Total interest-bearing liabilities     $115,187,401   $1,378,053    4.79%

    Net interest spread                                                 6.49%

    Interest income to average earning
     assets                                                            11.27%
    Interest expense to average earning
     assets                                                             4.32%
    Net interest margin                                                 6.95%


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

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

    Net interest spread                                                 6.47%

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


    Managed (1)                                  Quarter Ended 9/30/05
                                            Average       Income/    Yield/
                                            Balance       Expense     Rate
    Earning assets:
     Loans                                 $83,827,465   $2,784,301   13.29%
     Securities available for sale           9,535,858       87,978    3.69%
     Other                                   3,333,021       35,496    4.26%
    Total earning assets                   $96,696,344   $2,907,775   12.03%

    Interest-bearing liabilities:
     Interest-bearing deposits
        NOW accounts                       $       -     $      -
        Money market deposit accounts        3,592,402       30,180    3.36%
        Savings accounts                           -            -        -
        Other Consumer Time Deposits        10,415,320      109,658    4.21%
        Public Fund CD's of $100,000 or
         more                                   97,728          802    3.28%
        CD's of $100,000 or more             9,977,047      111,876    4.49%
        Foreign time deposits                2,535,975       33,095    5.22%
     Total Interest-bearing deposits       $26,618,472     $285,611    4.29%
     Senior and subordinated notes           6,683,533       98,309    5.88%
     Other borrowings                       10,698,216      110,476    4.13%
     Securitization liability               44,814,893      482,184    4.30%
    Total interest-bearing liabilities     $88,815,114     $976,580    4.40%

    Net interest spread                                                7.63%

    Interest income to average earning
     assets                                                           12.03%
    Interest expense to average earning
     assets                                                            4.04%
    Net interest margin                                                7.99%

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

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