Capital One Reports Fourth Quarter 2012 Net Income of $843 million, or $1.41 per share

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement

     Fourth Quarter 2012 ^{(1) (2)}

    Table of Contents 

Page 

Capital One Financial Corporation Consolidated

Table   1:   

Financial & Statistical Summary―Consolidated

1

Table   2:

Consolidated Statements of Income

2

Table   3:

Consolidated Balance Sheets

3

Table   4:

Notes to Consolidated Financial Statements & Statistical Summary (Tables 1-3)

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 December 31, 2012 Annual Report on Form 10-K 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

Q4

2012

Q3

2011
Q4

Earnings

Net interest income

$            4,528

$            4,646

$              3,182

Non-interest income^{(4) (5)}

1,096

1,136

868

Total net revenue⁽⁶⁾

5,624

5,782

4,050

Provision for credit losses

1,151

1,014

861

Marketing expenses

393

316

420

Operating expenses⁽⁷⁾

2,862

2,729

2,198

Income from continuing operations before income taxes 

1,218

1,723

571

Income tax provision

370

535

160

Income from continuing operations, net of tax

848

1,188

411

Loss from discontinued operations, net of tax⁽⁴⁾

(5)

(10)

(4)

Net income

843

1,178

407

Dividends and undistributed earnings allocated to participating securities ⁽⁸⁾

(3)

(5)

(26)

Preferred stock dividends

(15)

—

—

Net income available to common stockholders

$              825

$            1,173

$                 381

Common Share Statistics

Basic EPS:⁽⁸⁾ 

   Income from continuing operations, net of tax

$             1.43

$             2.05

$                0.89

   Loss from discontinued operations, net of tax

(0.01)

(0.02)

(0.01)

   Net income per common share 

$             1.42

$             2.03

$                0.88

Diluted EPS:⁽⁸⁾ 

   Income from continuing operations, net of tax

$             1.42

$             2.03

$                0.89

   Loss from discontinued operations, net of tax

(0.01)

(0.02)

(0.01)

   Net income per common share

$             1.41

$             2.01

$                0.88

Weighted average common shares outstanding (in millions):

   Basic EPS

579.2

578.3

456.2

   Diluted EPS

585.6

584.1

458.5

Common shares outstanding (period end, in millions)

582.2

581.3

459.9

Dividends per common share

$             0.05

$             0.05

$                0.05

Tangible book value per common share (period end)^{(9) (26)}

40.23

38.70

34.26

Balance Sheet (Period End)

Loans held for investment⁽¹⁰⁾

$        205,889

$        203,132

$           135,892

Interest-earning assets

280,096

270,661

179,878

Total assets

312,918

301,989

206,019

Interest-bearing deposits

190,018

192,488

109,945

Total deposits

212,485

213,255

128,226

Borrowings

49,910

38,377

39,561

Stockholders' equity

40,499

39,672

29,666

Balance Sheet (Quarterly Average Balances)

Average loans held for investment⁽¹⁰⁾

$        202,944

$        202,856

$           131,581

Average interest-earning assets

277,886

266,803

176,271

Average total assets

308,096

297,154

200,106

Average interest-bearing deposits

192,122

193,700

109,914

Average total deposits

213,494

213,323

128,450

Average borrowings

44,189

36,451

34,811

Average stockholders' equity

40,212

38,535

29,698

Performance Metrics

Net interest income growth (quarter over quarter) 

(3)

%

16

%

(3)

%

Non-interest income growth(quarter over quarter)

(4)

8

—

Total net revenue growth(quarter over quarter)

(3)

14

(3)

Total net revenue margin⁽¹¹⁾

8.10

8.67

9.19

Net interest margin⁽¹²⁾

6.52

6.97

7.22

Return on average assets⁽¹³⁾

1.10

1.60

0.82

Return on average total stockholders' equity⁽¹⁴⁾

8.44

12.33

5.54

Return on average tangible common equity^{(15) (26)}

14.74

21.93

10.43

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

6.42

6.00

7.96

Efficiency ratio⁽¹⁷⁾

57.88

52.66

64.64

Effective income tax rate

30.4

31.1

28.0

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

39.6

37.6

30.5

Credit Quality Metrics^{(10) (18)}

Allowance for loan and lease losses 

$            5,156

$            5,154

$              4,250

Allowance as a % of loans held for investment 

2.50

%

2.54

%

3.13

%

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

3.02

3.11

3.22

Net charge-offs 

$            1,150

$              887

$                 884

Net charge-off rate⁽¹⁹⁾

2.26

%

1.75

%

2.69

%

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

2.78

2.18

2.79

30+ day performing delinquency rate

2.70

2.54

3.35

30+ day performing delinquency rate (excluding acquired loans)

3.29

3.15

3.47

30+ day delinquency rate⁽²⁰⁾ 

**

2.92

3.95

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

**

3.62

4.09

Capital Ratios ⁽²¹⁾

Tier 1 common ratio⁽²²⁾

11.0

%

10.7

%

9.7

%

Tier 1 risk-based capital ratio⁽²³⁾

11.4

12.7

12.0

Total risk-based capital ratio⁽²⁴⁾

13.6

15.0

14.9

Tangible common equity ("TCE") ratio^{(25) (26)}

7.9

7.9

8.2

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2:  Consolidated Statements of Income ^(1)(2)(3)

Three Months Ended

Year Ended

December 31,

September 30,

December 31,

December 31,

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

2012

2012

2011

2012

2011

Interest income:

Loans held for investment

$              4,726

$              4,901

$              3,440

$            17,537

$            13,774

Investment securities

361

335

244

1,329

1,137

Other

28

18

17

98

76

Total interest income

5,115

5,254

3,701

18,964

14,987

Interest expense:

Deposits

348

371

264

1,403

1,187

Securitized debt obligations

58

64

80

271

422

Senior and subordinated notes

85

85

89

345

300

Other borrowings

96

88

86

356

337

Total interest expense

587

608

519

2,375

2,246

Net interest income

4,528

4,646

3,182

16,589

12,741

Provision for credit losses

1,151

1,014

861

4,415

2,360

Net interest income after provision for credit losses

3,377

3,632

2,321

12,174

10,381

Non-interest income:

Service charges and other customer-related fees

595

557

452

2,106

1,979

Interchange fees, net

459

452

346

1,647

1,318

Net other-than-temporary impairment losses recognized in earnings

(12)

(13)

(6)

(52)

(21)

Bargain purchase gain ⁽⁵⁾

—

—

—

594

—

Other ⁽⁴⁾

54

140

76

512

262

Total non-interest income

1,096

1,136

868

4,807

3,538

Non-interest expense:

Salaries and associate benefits

1,039

1,002

817

3,876

3,023

Occupancy and equipment

384

354

268

1,331

1,029

Marketing

393

316

420

1,364

1,337

Professional services

362

307

366

1,270

1,198

Communications and data processing

205

198

177

778

681

Amortization of intangibles ⁽⁷⁾

190

197

51

604

216

Merger-related expense ⁽⁷⁾

69

48

27

336

45

Other

613

623

492

2,387

1,803

Total non-interest expense

3,255

3,045

2,618

11,946

9,332

Income from continuing operations before income taxes

1,218

1,723

571

5,035

4,587

Income tax provision

370

535

160

1,301

1,334

Income from continuing operations, net of tax

848

1,188

411

3,734

3,253

Loss from discontinued operations, net of tax ⁽⁴⁾

(5)

(10)

(4)

(217)

(106)

Net income

843

1,178

407

3,517

3,147

Dividends and undistributed earnings allocated to participating securities ⁽⁸⁾

(3)

(5)

(26)

(15)

(26)

Preferred stock dividends

(15)

—

—

(15)

—

Net income available to common stockholders

$                 825

$              1,173

$                 381

$              3,487

$              3,121

Basic earnings per common share: ⁽⁸⁾

Income from continuing operations

$                1.43

$                2.05

$                0.89

$                6.60

$                7.08

Loss from discontinued operations

(0.01)

(0.02)

(0.01)

(0.39)

(0.23)

Net income per basic common share

$                1.42

$                2.03

$                0.88

$                6.21

$                6.85

Diluted earnings per common share: ⁽⁸⁾

Income from continuing operations

$                1.42

$                2.03

$                0.89

$                6.54

$                7.03

Loss from discontinued operations

(0.01)

(0.02)

(0.01)

(0.38)

(0.23)

Net income per diluted common share

$                1.41

$                2.01

$                0.88

$                6.16

$                6.80

Weighted average common shares outstanding (in millions):

Basic EPS

579.2

578.3

456.2

561.1

455.5

Diluted EPS

585.6

584.1

458.5

566.5

459.1

Dividends paid per common share

$                0.05

$                0.05

$                0.05

$                0.20

$                0.20

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3:  Consolidated Balance Sheets

December 31,

September 30,

December 31,

(Dollars in millions)(unaudited)

2012

2012

2011

Assets:

Cash and due from banks

$             3,440

$             1,855

$             2,097

Interest-bearing deposits with banks

7,617

3,860

3,399

Federal funds sold and securities purchased under agreements to resell

1

254

342

Cash and cash equivalents

11,058

5,969

5,838

Restricted cash for securitization investors

428

760

791

Securities available for sale, at fair value

63,979

61,464

38,759

Loans held for investment:

Unsecuritized loans held for investment

163,341

159,219

88,242

Restricted loans for securitization investors

42,548

43,913

47,650

Total loans held for investment

205,889

203,132

135,892

    Less: Allowance for loan and lease losses

(5,156)

(5,154)

(4,250)

Net loans held for investment

200,733

197,978

131,642

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

201

187

201

Premises and equipment, net

3,587

3,519

2,748

Interest receivable

1,694

1,614

1,029

Goodwill

13,904

13,901

13,592

Other

17,334

16,597

11,419

Total assets

$         312,918

$         301,989

$         206,019

Liabilities:

Interest payable

$                450

$                368

$                466

Customer deposits:

Non-interest bearing deposits

22,467

20,767

18,281

Interest-bearing deposits

190,018

192,488

109,945

Total customer deposits

212,485

213,255

128,226

Securitized debt obligations

11,398

12,686

16,527

Other debt:

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

1,248

967

1,464

Senior and subordinated notes

12,686

11,756

11,034

Other borrowings

24,578

12,968

10,536

Total other debt

38,512

25,691

23,034

Other liabilities

9,574

10,317

8,100

Total liabilities

272,419

262,317

176,353

Stockholders' equity:

Preferred stock

853

853

—

Common stock

6

6

5

Paid-in capital, net

25,335

25,265

19,274

Retained earnings and accumulated other comprehensive income

17,592

16,835

13,631

Treasury stock, at cost

(3,287)

(3,287)

(3,244)

Total stockholders' equity

40,499

39,672

29,666

Total liabilities and stockholders' equity

$         312,918

$         301,989

$         206,019

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4: Notes to Consolidated Financial Statements & Statistical Summary (Tables 1-3)

⁽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 mortgage representation and warranty losses in Q4 or Q3 2012. We recorded a provision for mortgage representation and warranty losses of $59 million in Q4 2011. The majority of the provision for representation and warranty 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 $899 million as of December 31, 2012, from $919 million as of September 30, 2012, due to the settlement of claims in Q4 2012 totaling $20 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. 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.

⁽⁶⁾

Total net revenue was reduced by $318 million in Q4 2012, $185 million in Q3 2012 and $130 million in Q4 2011, for the estimated uncollectible amount of billed finance charges and fees. Premium amortization related to the ING Direct and HSBC U.S. card acquisitions reduced revenue by $124 million in Q4 2012 and $133 million in Q3 2012.

⁽⁷⁾

Includes merger-related expenses, including transaction costs, attributable to acquisitions of $69 million in Q4 2012, $48 million in Q3 2012, and $27 million in Q4 2011. Also includes intangible amortization expense related to purchased credit card relationships ("PCCR") from the HSBC U.S. card acquisition of $122 million in Q4 2012 and $127 million in Q3 2012. Other asset and intangible amortization expense related to the ING Direct and HSBC U.S. Card acquisitions totaled $48 million in Q4 2012 and $42 million in Q3 2012.

⁽⁸⁾

Dividends and undistributed earnings allocated to participating securities and EPS are computed independently for each period. Accordingly, the sum of each quarter may not agree to the year-to-date total.

⁽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 additional information.

⁽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. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

⁽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 CCB, ING Direct and HSBC U.S. card 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 Q4 2012 will be provided in the Annual Report on Form 10-K for the year ended December 31, 2012 .

⁽²¹⁾

Regulatory capital ratios as of the end of Q4 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 additional information.

⁽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 additional information.

⁽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 additional information.

⁽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 additional information.

⁽²⁶⁾

The previously reported TCE as of the end of Q3 2012 has been revised to exclude noncumulative perpetual preferred stock. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for additional information.

CAPITAL ONE FINANCIAL CORPORATION (COF)

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

2012 Q4

2012 Q3

2011 Q4

Average

Interest Income/

 Yield/ 

Average

Interest Income/

 Yield/ 

Average

Interest Income/

 Yield/ 

(Dollars in millions)(unaudited)

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Interest-earning assets:

Cash equivalents and other

$    10,768

$       28

1.04

%

$      6,019

$       18

1.20

%

$      5,685

$       17

1.20

%

Securities available for sale 

64,174

361

2.25

57,928

335

2.31

39,005

244

2.50

Loans held for investment

202,944

4,726

9.31

202,856

4,901

9.66

131,581

3,440

10.46

Total interest-earning assets 

$  277,886

$  5,115

7.36

%

$  266,803

$  5,254

7.88

%

$  176,271

$  3,701

8.40

%

Interest-bearing liabilities:

Interest-bearing deposits

$  192,122

$     348

0.72

%

$  193,700

$     371

0.77

%

$  109,914

$     264

0.96

%

Securitized debt obligations

12,119

58

1.91

13,331

64

1.92

16,780

80

1.91

Senior and subordinated notes

11,528

85

2.95

11,035

85

3.08

10,237

89

3.48

Other borrowings

20,542

96

1.87

12,085

88

2.91

7,794

86

4.41

Total interest-bearing liabilities

$  236,311

$     587

0.99

%

$  230,151

$     608

1.06

%

$  144,725

$     519

1.43

%

Net interest income/spread

$  4,528

6.37

%

$  4,646

6.82

%

$  3,182

6.97

%

Impact of non-interest bearing funding

0.15

0.15

0.25

Net interest margin

6.52

%

6.97

%

7.22

%