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

The company will host a conference call at 8:15 a.m. ET October 19 to review financial and operating performance for the Third Quarter

Ending loans declined less than 1 percent in the quarter, the slowest pace of contraction since the second quarter of 2009

Excluding the impact of run-off portfolios, total loan balances would have been up modestly in the quarter

Credit performance continues to improve - charge-offs down almost $200 million in the quarter

Domestic Card charge-off rate improved 126 basis points in the quarter to 8.23 percent

Company completed successful conversion to Capital One Bank brand in metro Washington, DC

Oct 18, 2010, 17:21 ET from Capital One Financial Corporation

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

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

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

Conference Call Details

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

Total Company Results

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

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

Segment Results

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

Credit Card Highlights

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

  • Period-end loans in the Domestic Card segment were $53.8 billion in the third quarter, a decline of $789 million, or 1.4 percent, from the prior quarter, driven by $746 million in expected run-off from the Installment Loan portfolio. International credit card loans increased in the quarter by $218 million, or 3.0 percent, to $7.5 billion, driven by foreign exchange movements.  
  • Domestic Card revenue margin rose 16 basis points to 16.77 percent in the third quarter from 16.61 percent in the prior quarter.
  • Domestic Card provision expense decreased $98 million in the third quarter relative to the prior quarter, driven by lower charge-offs in the quarter.
  • Net charge-off rates relative to the prior quarter:
    • Domestic Card – improved 126 basis points to 8.23 percent from 9.49 percent
    • International Card – improved 78 basis points to 7.60 percent from 8.38 percent
  • Delinquency rates relative to the prior quarter:  
    • Domestic Card – improved 26 basis points to 4.53 percent from 4.79 percent
    • International Card – improved 19 basis points to 5.84 percent from 6.03 percent
  • Purchase volumes in Domestic Card increased $345 million, or 1.4 percent, relative to the prior quarter and 4.6 percent relative to the third quarter of 2009.

Commercial Banking Highlights

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

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

  • Commercial Banking reported net income of $39 million in the third quarter compared to $77 million in the second quarter. The decline is largely attributable to higher provision expense which resulted from a smaller allowance release.
  • Period-end loans in Commercial Banking were $29.5 billion, essentially even with the prior quarter.
  • Average deposits decreased by $272 million, or 1.2 percent, to $21.9 billion during the third quarter. The deposit interest expense rate remained at 67 basis points.
  • Provision expense increased $33 million primarily due to a smaller allowance release in the third quarter.
  • Charge-off rate relative to the prior quarter:
    • Total Commercial Banking – 1.27 percent, an increase of 6 basis points
    • Commercial lending – 1.11 percent, an increase of 13 basis points
    • Small ticket commercial real estate – 3.48 percent, a decline of 73 basis points
  • Non-performing asset rate relative to the prior quarter:
    • Total Commercial Banking – 1.94 percent, a decline of 26 basis points
    • Commercial lending – 1.94 percent, a decline of 16 basis points
    • Small ticket commercial real estate – 2.04 percent, a decline of 153 basis points

Consumer Banking highlights

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

  • Provision expense increased $226 million relative to the prior quarter as a result a smaller allowance release in the third quarter and seasonally higher charge-offs in auto finance.
  • Period-end loans relative to the prior quarter:
    • Auto – increased $422 million, or 2.5 percent, to $17.6 billion.
    • Mortgage – declined $559 million, or 4.2 percent, to $12.8 billion. Mortgage loans continued to reflect expected run-off in the portfolio.
    • Retail banking – declined $179 million, or 3.8 percent, to $4.6 billion.
  • Auto loan originations increased 38.2 percent over the prior quarter to $2.4 billion in the third quarter.
  • Average deposits in Consumer Banking increased $1.1 billion, or 1.5 percent, to $78.2 billion during the third quarter.
  • Net charge-off rates relative to the prior quarter:
    • Auto – 2.71 percent, an increase of 62 basis points
    • Mortgage – 0.41 percent, a decrease of 5 basis points
    • Retail banking –  2.20 percent, an increase of 9 basis points

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

Forward looking statements  

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

About Capital One

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

NOTE:

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

Exhibit 99.1

CAPITAL ONE FINANCIAL CORPORATION (COF)

FINANCIAL & STATISTICAL SUMMARY

GAAP BASIS *

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

2010 Q3

2010 Q2

2009 Q3

Earnings

Net Interest Income

$                          3,109

$                          3,097

$                      2,005

Non-Interest Income (1)(7)

$                             907

$                             807

$                      1,553

Total Revenue (2)

$                          4,016

$                          3,904

$                      3,558

Provision for Loan and Lease Losses

$                             867

$                             723

$                      1,173

Marketing Expenses

$                             250

$                             219

$                         104

Restructuring Expenses (3)

$                                  -

$                                  -

$                           26

Operating Expenses (4)

$                          1,746

$                          1,781

$                      1,672

Income Before Taxes

$                          1,153

$                          1,181

$                         583

Effective Tax Rate

29.1

%

31.2

%

25.0

%

Income From Continuing Operations, Net of Tax

$                             818

$                             812

$                         437

Loss From Discontinued Operations, Net of Tax (7)

$                              (15)

$                            (204)

$                          (43)

Net Income

$                             803

$                             608

$                         394

Net Income Available to Common Shareholders (A)

$                             803

$                             608

$                         394

Common Share Statistics

Basic EPS: (B)

  Income From Continuing Operations

$                            1.81

$                            1.79

$                        0.97

  Loss From Discontinued Operations

$                           (0.03)

$                           (0.45)

$                       (0.09)

  Net Income

$                            1.78

$                            1.34

$                        0.88

Diluted EPS: (B)

  Income From Continuing Operations

$                            1.79

$                            1.78

$                        0.96

  Loss From Discontinued Operations

$                           (0.03)

$                           (0.45)

$                       (0.09)

  Net Income

$                            1.76

$                            1.33

$                        0.87

Dividends Per Common Share

$                            0.05

$                            0.05

$                        0.05

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

$                          26.60

$                          24.89

$                      26.86

Stock Price Per Common Share (period end)

$                          39.55

$                          40.30

$                      35.73

Total Market Capitalization (period end)

$                        17,900

$                        18,228

$                    16,064

Common Shares Outstanding (period end)

452.6

452.3

449.6

Shares Used to Compute Basic EPS

452.5

452.1

449.4

Shares Used to Compute Diluted EPS

456.6

456.4

453.7

Reported Balance Sheet Statistics (period average)

Average Loans Held for Investment

$                      126,307

$                      128,203

$                    99,354

Average Earning Assets

$                      172,473

$                      174,650

$                  145,280

Total Average Assets

$                      196,586

$                      199,329

$                  173,428

Average Interest Bearing Deposits

$                      104,186

$                      104,163

$                  103,105

Total Average Deposits

$                      118,255

$                      118,484

$                  115,882

Average Equity

$                        25,307

$                        24,526

$                    26,002

Return on Average Assets (ROA)

1.66

%

1.63

%

1.01

%

Return on Average Equity (ROE)

12.93

%

13.24

%

6.72

%

Return on Average Tangible Common Equity (D)

28.95

%

30.97

%

14.75

%

Reported Balance Sheet Statistics (period end)

Loans Held for Investment

$                      126,334

$                      127,140

$                    96,714

Total Assets (E)

$                      196,928

$                      197,485

$                  168,433

Interest Bearing Deposits

$                      104,741

$                      103,172

$                  101,769

Total Deposits

$                      119,212

$                      117,331

$                  114,504

Tangible Assets(E) (F)

$                      182,904

$                      183,474

$                  154,316

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

$                        12,037

$                        11,259

$                    12,075

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

6.58

%

6.14

%

7.82

%  

Performance Statistics (Reported) Quarter over Quarter

Net Interest Income Growth

0

%

(4)

%

3

% (5)

Non- Interest Income Growth

12

%

(24)

%

26

% (5)

Revenue Growth

3

%

(9)

%

12

% (5)

Net Interest Margin

7.21

%

7.09

%

5.52

%

Revenue Margin

9.31

%

8.94

%

9.80

%

Risk-Adjusted Margin (I)

5.78

%

5.01

%

6.69

%

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

6.32

%

6.24

%

7.25

%

Efficiency Ratio (J)

49.70

%

51.23

%

49.92

%

Asset Quality Statistics (Reported) (6)

Allowance

$                          6,175

$                          6,799

$                      4,513

Allowance as a % of Reported Loans Held for Investment

4.89

%

5.35

%

4.67

%

Net Charge-Offs

$                          1,522

$                          1,717

$                      1,128

Net Charge-Off Rate

4.82

%

5.36

%

4.54

%  

30+ day performing delinquency rate

3.71

%

3.81

%

4.12

%  

Full-time equivalent employees (in thousands)

25.7

25.7

26.0

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

CAPITAL ONE FINANCIAL CORPORATION (COF)

FINANCIAL & STATISTICAL SUMMARY

MANAGED BASIS * (for 2009 data)

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

2010 Q3

2010 Q2

2009 Q3

Earnings

Net Interest Income

$               3,109

$               3,097

$                   3,212

Non-Interest Income (1)(7)

$                  907

$                  807

$                   1,373

Total Revenue (2)

$               4,016

$               3,904

$                   4,585

Provision for Loan and Lease Losses

$                  867

$                  723

$                   2,200

Marketing Expenses

$                  250

$                  219

$                      104

Restructuring Expenses (3)

$                       -

$                       -

$                        26

Operating Expenses (4)

$               1,746

$               1,781

$                   1,672

Income Before Taxes

$               1,153

$               1,181

$                      583

Effective Tax Rate

29.1

%

31.2

%

25.0

%

Income From Continuing Operations, Net of Tax

$                  818

$                  812

$                      437

Loss From Discontinued Operations, Net of Tax (7)

$                   (15)

$                 (204)

$                       (43)

Net Income

$                  803

$                  608

$                      394

Net Income Available to Common Shareholders (A)

$                  803

$                  608

$                      394

Common Share Statistics

Basic EPS: (B)

  Income From Continuing Operations

$                 1.81

$                 1.79

$                     0.97

  Loss From Discontinued Operations

$                (0.03)

$                (0.45)

$                    (0.09)

  Net Income

$                 1.78

$                 1.34

$                     0.88

Diluted EPS: (B)

  Income From Continuing Operations

$                 1.79

$                 1.78

$                     0.96

  Loss From Discontinued Operations

$                (0.03)

$                (0.45)

$                    (0.09)

  Net Income

$                 1.76

$                 1.33

$                     0.87

Dividends Per Common Share

$                 0.05

$                 0.05

$                     0.05

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

$               26.60

$               24.89

$                   26.86

Stock Price Per Common Share (period end)

$               39.55

$               40.30

$                   35.73

Total Market Capitalization (period end)

$             17,900

$             18,228

$                 16,064

Common Shares Outstanding (period end)

452.6

452.3

449.6

Shares Used to Compute Basic EPS

452.5

452.1

449.4

Shares Used to Compute Diluted EPS

456.6

456.4

453.7

Managed Balance Sheet Statistics (period average)

Average Loans Held for Investment

$           126,307

$           128,203

$               143,540

Average Earning Assets

$           172,473

$           174,650

$               185,874

Total Average Assets

$           196,586

$           199,329

$               214,655

Average Interest Bearing Deposits

$           104,186

$           104,163

$               103,105

Total Average Deposits

$           118,255

$           118,484

$               115,882

Average Equity

$             25,307

$             24,526

$                 26,002

Return on Average Assets (ROA)

1.66

%

1.63

%

0.81

%

Return on Average Equity (ROE)

12.93

%

13.24

%

6.72

%

Return on Average Tangible Common Equity (D)

28.95

%

30.97

%

14.75

%

Managed Balance Sheet Statistics (period end)

Loans Held for Investment

$           126,334

$           127,140

$               140,990

Total Assets (E)

$           196,928

$           197,485

$               209,684

Interest Bearing Deposits

$           104,741

$           103,172

$               101,769

Total Deposits

$           119,212

$           117,331

$               114,504

Tangible Assets(E) (F)

$           182,904

$           183,474

$               195,567

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

$             12,037

$             11,259

$                 12,075

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

6.58

%

6.14

%

6.17

%

Performance Statistics (Managed) Quarter over Quarter

Net Interest Income Growth (5)

0

%

(4)

%

9

% (5)

Non-Interest Income Growth (5)

12

%

(24)

%

15

% (5)

Revenue Growth (5)

3

%

(9)

%

11

% (5)

Net Interest Margin

7.21

%

7.09

%

6.91

%

Revenue Margin

9.31

%

8.94

%

9.87

%

Risk-Adjusted Margin (I)

5.78

%

5.01

%

5.23

%

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

6.32

%

6.24

%

5.02

%

Efficiency Ratio (J)

49.70

%

51.23

%

38.74

%

Asset Quality Statistics (Managed) (6)

Net Charge-Offs

$               1,522

$               1,717

$                   2,155

Net Charge-Off Rate

4.82

%

5.36

%

6.00

%

30+ day performing delinquency rate

3.71

%

3.81

%

4.55

%

Full-time equivalent employees (in thousands)

25.7

25.7

26.0

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

CAPITAL ONE FINANCIAL CORPORATION (COF)

FINANCIAL & STATISTICAL SUMMARY NOTES

(1)

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

(2)

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

(3)

The Company completed its 2007 restructuring initiative during 2009.

(4)

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

(5)

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

(6)

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

Q3 2010

Q2 2010

Q3 2009

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

$           5,891

$              6,381

$            7,885

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

$           6,014

$              6,541

$            8,029

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

5.12%

5.63%

5.08%

Net charge-off rate (GAAP), excluding CCB

5.06%

5.64%

4.94%

Net charge-off rate (Managed), excluding CCB

5.06%

5.64%

6.36%

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

3.89%

4.01%

4.48%

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

3.89%

4.01%

4.82%

(7)

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

STATISTICS / METRIC CALCULATIONS

(A)

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

(B)

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

(C)

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

(D)

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

(E)

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

(F)

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

(G)

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

(H)

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

(I)

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

(J)

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

CAPITAL ONE FINANCIAL CORPORATION 

REGULATORY AND NON-GAAP CAPITAL MEASURES

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

2010

2010

2009

(dollars in millions)(unaudited)

Q3*

Q2*

Q3

Average Equity to Average Tangible Common Equity

Average Equity

$                       25,307

$                       24,526

$                      26,002

Less: Average Intangible Assets (1)

(14,003)

(14,039)

(14,151)

Average Tangible Common Equity

$                       11,304

$                       10,487

$                      11,851

Period End Equity Tangible Common Equity

Stockholders' Equity

$                       26,061

$                       25,270

$                      26,192

Less: Intangible Assets (1)

(14,024)

(14,011)

(14,117)

Period End Tangible Common Equity

$                       12,037

$                       11,259

$                      12,075

Tangible Assets

Total Assets

$                     196,933

$                     197,489

$                    168,464

Less: Discontinued Operations Assets

(5)

(4)

(31)

Total Assets-Continuing Operations

196,928

197,485

168,433

Less: Intangible Assets (1)

(14,024)

(14,011)

(14,117)

Period End Tangible Assets

$                     182,904

$                     183,474

$                    154,316

TCE ratio (2)

6.58

%

6.14

%

7.82

%

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

Total Assets

$                     196,933

$                     197,489

$                    168,464

Securitization Adjustment (3)

-

-

41,251

Total Assets on a Managed Basis

196,933

197,489

209,715

Less: Assets-Discontinued Operations

(5)

(4)

(31)

Total Assets-Continuing Operations

196,928

197,485

209,684

Less: Intangible Assets (1)

(14,024)

(14,011)

(14,117)

Period End Tangible Assets

$                     182,904

$                     183,474

$                    195,567

TCE ratio (2)

6.58

%

6.14

%

6.17

%

Tier 1 Common Equity AND Tier 1 Capital

Common Stockholders' Equity

$                       26,061

$                       25,270

$                      26,192

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

580

661

230

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

(79)

(73)

(127)

Less:  Disallowed Goodwill and Other Intangibles

13,993

14,023

14,103

Less:  Disallowed Deferred Tax Assets

1,326

1,977

-

Less:  Other

2

2

(20)

Tier 1 Common Equity

10,239

8,680

12,006

Tier 1 Restricted Core Capital Items (4)

3,636

3,637

2,641

Total Tier 1 Common Capital

$                       13,875

$                       12,317

$                      14,647

Risk-Weighted Assets

$                     124,431

$                     124,038

$                    123,227

Tier 1 Common Equity Ratio (5) (6)

8.23%

7.00%

9.74%

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

11.15%

9.93%

11.89%

(1) Includes impact from related deferred taxes.

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

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

(4) Consists primarily of trust preferred securities

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

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

(7) Amounts are net of tax impacts.

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

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

Capital One Financial Corporation

Impact of Adopting New Accounting Guidance

Consolidation of VIEs

Opening Balance Sheet

VIE Consolidation

Ending Balance Sheet

(dollars in millions)(unaudited)

January 1, 2010

Impact

December 31, 2009

Assets:

Cash and due from banks

$                                 12,683

$                               3,998

$                                        8,685

Loans held for investment

138,184

47,565

90,619

Allowance for loan and lease losses

(8,391)

(4,264)

(2)

(4,127)

Net loans held for investment

129,793

43,301

86,492

Accounts receivable from securitizations

166

(7,463)

7,629

Other assets

68,869

(1)

2,029

66,840

Total assets

211,511

41,865

169,646

Liabilities:

Securitization liability

48,300

44,346

3,954

Other liabilities

139,561

458

139,103

Total liabilities

187,861

44,804

143,057

Stockholders' equity

23,650

(2,939)

(2)

26,589

Total liabilities and stockholders' equity

$                               211,511

$                             41,865

$                                    169,646

Allocation of the Allowance by Segment

(dollars in millions)(unaudited)

January 1, 2010

Consolidation Impact

December 31, 2009

  Domestic credit card

$                                   5,590

$                               3,663

(2)

$                                        1,927

  International credit card

727

528

199

Total credit card

6,317

4,191

2,126

  Commercial and multi-family real estate

471

-

471

  Middle market

131

-

131

  Specialty lending

90

-

90

Total commercial lending

692

-

692

  Small ticket commercial real estate

93

-

93

Total commercial banking

785

-

785

  Automobile

665

-

665

  Mortgage (includes all new CCB originations)

248

73

(3)

175

  Other retail

236

-

236

Total consumer banking

1,149

73

1,076

  Other

140

-

140

Total company

$                                   8,391

$                               4,264

$                                        4,127

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

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

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

CAPITAL ONE FINANCIAL CORPORATION

Consolidated Statements of Income

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

Three Months Ended

Nine Months Ended

September 30,

June 30,

September 30,

September 30,

September 30,

2010

2010

2009 (1)

2010

2009 (1)

Interest Income:

Loans held for investment, including past-due fees

$             3,447

$

3,476

$

2,220

$

10,582

$

6,649

Investment securities

347

342

399

1,037

1,206

Other

21

17

83

60

214

Total interest income

3,815

3,835

2,702

11,679

8,069

Interest Expense:

Deposits

358

368

479

1,125

1,666

Securitized debt

191

212

63

644

228

Senior and subordinated notes

72

72

74

211

189

Other borrowings

85

86

81

265

243

Total interest expense

706

738

697

2,245

2,326

Net interest income

3,109

3,097

2,005

9,434

5,743

Provision for loan and lease losses

867

723

1,173

3,069

3,386

Net interest income after provision for loan and lease losses

2,242

2,374

832

6,365

2,357

Non-Interest Income:

Servicing and securitizations

9

21

721

(6)

1,537

Service charges and other customer-related fees

496

496

496

1,577

1,494

Interchange

346

333

123

991

389

Net other-than-temporary impairment losses recognized in earnings

(1)

(26)

(11)

(59)

(22)

Other

57

(17)

224

272

476

Total non-interest income

907

807

1,553

2,775

3,874

Non-Interest Expense:

Salaries and associate benefits

641

650

648

1,937

1,837

Marketing

250

219

104

650

400

Communications and data processing

178

164

176

512

569

Supplies and equipment

129

129

123

381

370

Occupancy

135

117

114

371

329

Restructuring expense (2)

-

-

26

-

87

Other

663

721

611

1,992

1,877

Total non-interest expense

1,996

2,000

1,802

5,843

5,469

Income from continuing operations before income taxes

1,153

1,181

583

3,297

762

Income tax provision

335

369

146

948

179

Income from continuing operations, net of tax

818

812

437

2,349

583

Loss from discontinued operations, net of tax

(15)

(204)

(43)

(303)

(75)

Net income

$                803

$

608

$

394

$

2,046

$

508

Preferred stock dividends

-

-

-

-

(564)

Net income (loss) available to common shareholders

$                803

$

608

$

394

$

2,046

$

(56)

Basic earnings per common share:

Income (loss) from continuing operations

$               1.81

$

1.79

$

0.97

$

5.19

$

0.04

Loss from discontinued operations

(0.03)

(0.45)

(0.09)

(0.66)

(0.18)

Net Income (loss) per common share

$               1.78

$

1.34

$

0.88

$

4.53

$

(0.13)

Diluted earnings per common share:

Income (loss) from continuing operations

$               1.79

$

1.78

$

0.96

$

5.15

$

0.04

Loss from discontinued operations

(0.03)

(0.45)

(0.09)

(0.66)

(0.18)

Net Income (loss) per common share

$               1.76

$

1.33

$

0.87

$

4.49

$

(0.13)

Dividends paid per common share

$               0.05

$

0.05

$

0.05

$

0.15

$

0.48

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

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

CAPITAL ONE FINANCIAL CORPORATION

Consolidated Balance Sheets

(in millions)(unaudited)

As of

As of

As of

September 30

December 31

September 30

2010

2009 (1)

2009 (1)

Assets:

Cash and due from banks

$                    2,015

$                    3,100

$               2,719

Interest-bearing deposits with banks

2,391

5,043

863

Federal funds sold and repurchase agreements

536

542

545

Cash and cash equivalents

4,942

8,685

4,127

Restricted cash for securitization investors

2,686

501

547

Investment in securities:

Available for sale, at fair value

39,926

38,830

37,693

Held to maturity, at amortized cost

-

80

84

Total investment in securities

39,926

38,910

37,777

Loans held for investment:

Unsecuritized loans held for investment, at amortized cost

74,719

75,097

78,392

Restricted loans for securitization investors

51,615

15,522

18,322

Total loans held for investment

126,334

90,619

96,714

Less: Allowance for loan and lease losses

(6,175)

(4,127)

(4,513)

Net loans held for investment

120,159

86,492

92,201

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

197

268

141

Accounts receivable from securitizations

127

7,128

6,438

Premises and equipment, net

2,722

2,736

2,773

Interest receivable

1,025

936

911

Goodwill

13,593

13,596

13,565

Other

11,556

10,394

9,984

Total assets

$                196,933

$                169,646

$           168,464

Liabilities:

Interest payable

$                       464

$                       509

$                  583

Customer deposits

119,212

115,809

114,504

Securitized debt obligations

29,504

3,954

4,608

Other debt:

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

947

1,140

1,621

Senior and subordinated notes

9,083

9,045

9,209

Other borrowings

4,799

6,875

5,897

Total other debt

14,829

17,060

16,727

Other liabilities

6,863

5,725

5,850

Total liabilities

170,872

143,057

142,272

Stockholders' Equity:

Common stock

5

5

5

Paid-in capital, net

19,059

18,955

18,928

Retained earnings and accumulated other comprehensive income

10,199

10,809

10,431

Less:  Treasury stock, at cost

(3,202)

(3,180)

(3,172)

Total stockholders' equity

26,061

26,589

26,192

Total liabilities and stockholders' equity

$                196,933

$                169,646

$           168,464

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

CAPITAL ONE FINANCIAL CORPORATION

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

(dollars in millions)(unaudited)

Quarter Ended 09/30/10

Quarter Ended 06/30/10

Quarter Ended 09/30/09 (3)

GAAP Basis

Average

Income/

Yield/

Average

Income/

Yield/

Average

Income/

Yield/

Balance

Expense

Rate

Balance

Expense

Rate

Balance

Expense

Rate

Interest-earning assets:

Loans held for investment

$              126,307

$            3,447

10.92%

$                128,203

$               3,476

10.85%

$                  99,354

$                2,220

8.94%

Investment securities (2)

39,872

347

3.48%

39,022

342

3.51%

37,377

399

4.27%

Other

6,294

21

1.33%

7,425

17

0.92%

8,549

83

3.88%

Total interest-earning assets

$              172,473

$            3,815

8.85%

$                174,650

$               3,835

8.78%

$                145,280

$                2,702

7.44%

Interest-bearing liabilities:

Interest-bearing deposits

NOW accounts

$                11,333

$                 10

0.35%

$                  11,601

$                    10

0.34%

$                  10,419

$                     13

0.50%

Money market deposit accounts

43,260

104

0.96%

42,127

99

0.94%

36,037

96

1.07%

Savings accounts

22,572

49

0.87%

21,017

44

0.84%

12,266

23

0.75%

Other consumer time deposits

18,726

133

2.84%

20,744

150

2.89%

32,076

248

3.09%

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

220

1

1.82%

240

1

1.67%

1,061

3

1.13%

CD's of $100,000 or more

7,256

59

3.25%

7,601

63

3.32%

9,764

93

3.81%

Foreign time deposits

819

2

0.98%

833

1

0.48%

1,482

3

0.81%

Total interest-bearing deposits

$              104,186

$               358

1.37%

$                104,163

$                  368

1.41%

$                103,105

$                   479

1.86%

Senior and subordinated notes

8,677

72

3.32%

8,760

72

3.29%

9,554

74

3.10%

Other borrowings

6,483

85

5.24%

6,375

86

5.40%

8,553

81

3.79%

Securitization liability

30,750

191

2.48%

35,248

212

2.41%

4,928

63

5.11%

Total interest-bearing liabilities

$              150,096

$               706

1.88%

$                154,546

$                  738

1.91%

$                126,140

$                   697

2.21%

Net interest spread

6.97%

6.87%

5.23%

Interest income to average interest-earning assets

8.85%

8.78%

7.44%

Interest expense to average interest-earning assets

1.64%

1.69%

1.92%

Net interest margin

7.21%

7.09%

5.52%

Managed Basis *

Interest-earning assets:

Loans held for investment

$              126,307

$            3,447

10.92%

$                128,203

$               3,476

10.85%

$                143,540

$                3,750

10.45%

Investment securities (2)

39,872

347

3.48%

39,022

342

3.51%

37,377

399

4.27%

Other

6,294

21

1.33%

7,425

17

0.92%

4,957

18

1.45%

Total interest-earning assets

$              172,473

$            3,815

8.85%

$                174,650

$               3,835

8.78%

$                185,874

$                4,167

8.97%

Interest-bearing liabilities:

Interest-bearing deposits

NOW accounts

$                11,333

$                 10

0.35%

11,601

10

0.34%

$                  10,419

$                     13

0.50%

Money market deposit accounts

43,260

104

0.96%

42,127

99

0.94%

36,037

96

1.07%

Savings accounts

22,572

49

0.87%

21,017

44

0.84%

12,266

23

0.75%

Other consumer time deposits

18,726

133

2.84%

20,744

150

2.89%

32,076

248

3.09%

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

220

1

1.82%

240

1

1.67%

1,061

3

1.13%

CD's of $100,000 or more

7,256

59

3.25%

7,601

63

3.32%

9,764

93

3.81%

Foreign time deposits

819

2

0.98%

833

1

0.48%

1,482

3

0.81%

Total interest-bearing deposits

$              104,186

$               358

1.37%

$                104,163

$                  368

1.41%

$                103,105

$                   479

1.86%

Senior and subordinated notes

8,677

72

3.32%

8,760

72

3.29%

9,554

74

3.10%

Other borrowings

6,483

85

5.24%

6,375

86

5.40%

8,553

81

3.79%

Securitization liability

30,750

191

2.48%

35,248

212

2.41%

46,179

320

2.77%

Total interest-bearing liabilities

$              150,096

$               706

1.88%

$                154,546

$                  738

1.91%

$                167,391

$                   954

2.28%

Net interest spread

6.97%

6.87%

6.69%

Interest income to average interest-earning assets

8.85%

8.78%

8.97%

Interest expense to average interest-earning assets

1.64%

1.69%

2.05%

Net interest margin

7.21%

7.09%

6.91%

(1) Reflects amounts based on continuing operations.

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

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

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

CAPITAL ONE FINANCIAL CORPORATION (COF)

LENDING INFORMATION AND STATISTICS

MANAGED BASIS (1)

2010

2010

2009

(Dollars in millions) (unaudited)

Q3

Q2

Q3

Period end loans held for investment

Domestic credit card

$                       53,839

$                       54,628

$                   61,892

International credit card

7,487

7,269

8,477

 Total Credit Card

$                       61,326

$                       61,897

$                   70,369

Commercial and multifamily real estate

$                       13,383

$                       13,580

$                   13,978

Middle market

10,456

10,203

10,023

Specialty lending

3,813

3,815

3,399

 Total Commercial Lending

$                       27,652

$                       27,598

$                   27,400

Small-ticket commercial real estate

1,890

1,977

2,413

 Total Commercial Banking

$                       29,542

$                       29,575

$                   29,813

Automobile

$                       17,643

$                       17,221

$                   19,295

Mortgages

12,763

13,322

15,639

Retail banking

4,591

4,770

5,215

 Total Consumer Banking

$                       34,997

$                       35,313

$                   40,149

Other loans (2)

$                            469

$                            470

$                        659

    Total

$                     126,334

$                     127,255

$                 140,990

Average loans held for investment

Domestic credit card

$                       54,049

$                       55,252

$                   63,299

International credit card

7,342

7,427

8,609

 Total Credit Card

$                       61,391

$                       62,679

$                   71,908

Commercial and multifamily real estate

$                       13,411

$                       13,543

$                   13,938

Middle market

10,352

10,276

9,911

Specialty lending

3,715

3,654

3,753

 Total Commercial Lending

$                       27,478

$                       27,473

$                   27,602

Small-ticket commercial real estate

1,957

2,060

2,471

 Total Commercial Banking

$                       29,435

$                       29,533

$                   30,073

Automobile

$                       17,397

$                       17,276

$                   19,636

Mortgages

13,024

13,573

15,925

Retail banking

4,669

4,811

5,515

 Total Consumer Banking

$                       35,090

$                       35,660

$                   41,076

Other loans (2)

$                            475

$                            463

$                        483

    Total

$                     126,391

$                     128,335

$                 143,540

Net charge-off rates

Domestic credit card

8.23%

9.49%

9.64%

International credit card

7.60%

8.38%

9.19%

 Total Credit Card

8.16%

9.36%

9.59%

Commercial and multifamily real estate (3)

1.78%

1.17%

1.37%

Middle market (3)

0.43%

0.78%

0.56%

Specialty lending

0.64%

0.87%

1.39%

 Total Commercial Lending (3)

1.11%

0.98%

1.08%

Small-ticket commercial real estate

3.48%

4.21%

5.19%

 Total Commercial Banking (3)

1.27%

1.21%

1.42%

Automobile

2.71%

2.09%

4.38%

Mortgages (3)

0.41%

0.46%

0.69%

Retail banking (3)

2.20%

2.11%

2.44%

 Total Consumer Banking (3)

1.79%

1.47%

2.69%

Other loans

17.63%

27.95%

28.53%

    Total

4.82%

5.36%

6.00%

30+ day performing delinquency rate

Domestic credit card

4.53%

4.79%

5.38%

International credit card

5.84%

6.03%

6.63%

 Total Credit Card

4.69%

4.94%

5.53%

Automobile

7.95%

7.74%

9.52%

Mortgages (3)

0.69%

0.68%

1.17%

Retail banking (3)

1.08%

0.87%

1.26%

 Total Consumer Banking (3)

4.40%

4.15%

5.19%

Nonperforming asset rates (5) (6)

Commercial and multifamily real estate (3)

2.44%

2.82%

2.66%

Middle market (3)

1.36%

1.20%

1.25%

Specialty lending

1.75%

1.94%

2.12%

 Total Commercial Lending (3)

1.94%

2.10%

2.08%

Small-ticket commercial real estate

2.04%

3.57%

11.39%

 Total Commercial Banking (3)

1.94%

2.20%

2.84%

Automobile (4)

0.60%

0.56%

0.87%

Mortgages (3)

4.09%

3.78%

1.83%

Retail banking (3)

2.41%

2.25%

1.98%

 Total Consumer Banking (3)

2.11%

2.00%

1.39%

CAPITAL ONE FINANCIAL CORPORATION (COF)

CREDIT CARD SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS

MANAGED BASIS (1)

2010

2010

2009

(Dollars in millions) (unaudited)

Q3

Q2

Q3

Credit Card:

Earnings

 Net interest income

$                         1,934

$                         1,977

$                     2,024

 Non-interest income

671

659

967

 Total revenue

$                         2,605

$                         2,636

$                     2,991

 Provision for loan and lease losses

660

765

1,644

 Non-interest expense

978

1,002

897

 Income before taxes

967

869

450

 Income tax provision

336

301

158

 Net income

$                            631

$                            568

$                        292

Selected Metrics

 Period end loans held for investment

$                       61,326

$                       61,897

$                   70,369

 Average loans held for investment

$                       61,391

$                       62,679

$                   71,908

 Loans held for investment yield

14.27%

14.24%

13.75%

 Revenue margin

16.97%

16.82%

16.64%

 Net charge-off rate

8.16%

9.36%

9.59%

 30+ day performing delinquency rate

4.69%

4.94%

5.53%

 Purchase volume (7)

$                       27,039

$                       26,570

$                   25,982

Domestic Card Sub-segment

Earnings

 Net interest income

$                         1,691

$                         1,735

$                     1,797

 Non-interest income

575

560

856

 Total revenue

$                         2,266

$                         2,295

$                     2,653

 Provision for loan and lease losses

577

675

1,437

 Non-interest expense

844

869

770

 Income before taxes

845

751

446

 Income tax provision

301

268

156

 Net income

$                            544

$                            483

$                        290

Selected Metrics

 Period end loans held for investment

$                       53,839

$                       54,628

$                   61,892

 Average loans held for investment

$                       54,049

$                       55,252

$                   63,299

 Loans held for investment yield

13.95%

13.98%

13.74%

 Revenue margin

16.77%

16.61%

16.76%

 Net charge-off rate

8.23%

9.49%

9.64%

 30+ day performing delinquency rate

4.53%

4.79%

5.38%

 Purchase volume (7)

$                       24,858

$                       24,513

$                   23,761

International Card Sub-segment

Earnings

 Net interest income

$                            243

$                            242

$                        227

 Non-interest income

96

99

111

 Total revenue

$                            339

$                            341

$                        338

 Provision for loan and lease losses

83

90

207

 Non-interest expense

134

133

127

 Income before taxes

122

118

4

 Income tax provision

35

33

2

 Net income

$                              87

$                              85

$                            2

Selected Metrics

 Period end loans held for investment

$                         7,487

$                         7,269

$                     8,477

 Average loans held for investment

$                         7,342

$                         7,427

$                     8,609

 Loans held for investment yield

16.62%

16.21%

13.80%

 Revenue margin

18.47%

18.37%

15.70%

 Net charge-off rate

7.60%

8.38%

9.19%

 30+ day performing delinquency rate

5.84%

6.03%

6.63%

 Purchase volume (7)

$                         2,181

$                         2,057

$                     2,221

CAPITAL ONE FINANCIAL CORPORATION (COF)

COMMERCIAL BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS

MANAGED BASIS (1)

2010

2010

2009

(Dollars in millions) (unaudited)

Q3

Q2

Q3

Commercial Banking:

Earnings

 Net interest income

$           325

$        319

$         301

 Non-interest income

30

60

43

 Total revenue

$           355

$        379

$         344

 Provision for loan and lease losses

95

62

375

 Non-interest expense

199

198

166

 Income (loss) before taxes

61

119

(197)

 Income tax provision (benefit)

22

42

(69)

 Net income (loss)

$             39

$          77

$       (128)

Selected Metrics

 Period end loans held for investment

$      29,542

$   29,575

$    29,813

 Average loans held for investment

$      29,435

$   29,533

$    30,073

 Loans held for investment yield

5.13%

4.94%

5.06%

 Period end deposits

$      22,100

$   21,527

$    18,617

 Average deposits

$      21,899

$   22,171

$    17,761

 Deposit interest expense rate

0.67%

0.67%

0.75%

 Core deposit intangible amortization

$             14

$          14

$           10

 Net charge-off rate (3)

1.27%

1.21%

1.42%

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

1.81%

2.04%

2.65%

 Nonperforming asset rate (3)

1.94%

2.20%

2.84%

CAPITAL ONE FINANCIAL CORPORATION (COF)

CONSUMER BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS

MANAGED BASIS (1)

2010

2010

2009

(Dollars in millions) (unaudited)

Q3

Q2

Q3

Consumer Banking:

Earnings

 Net interest income

$                        946

$                        935

$                           848

 Non-interest income

196

162

212

 Total revenue

$                     1,142

$                     1,097

$                        1,060

 Provision for loan and lease losses

114

(112)

156

 Non-interest expenses

757

735

681

 Income before taxes

271

474

223

 Income tax provision

96

169

78

 Net income

$                        175

$                        305

$                           145

Selected Metrics

 Period end loans held for investment

$                   34,997

$                   35,313

$                      40,149

 Average loans held for investment

$                   35,090

$                   35,660

$                      41,076

 Loans held for investment yield

9.28%

8.99%

8.89%

 Auto loan originations

$                     2,439

$                     1,765

$                        1,513

 Period end deposits

$                   79,506

$                   77,407

$                      72,253

 Average deposits

$                   78,224

$                   77,082

$                      73,284

 Deposit interest expense rate

1.18%

1.18%

1.58%

 Core deposit intangible amortization

$                          36

$                          36

$                             46

 Net charge-off rate (3)

1.79%

1.47%

2.69%

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

1.92%

1.82%

1.26%

 Nonperforming asset rate (3) (4)

2.11%

2.00%

1.39%

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

4.40%

4.15%

5.19%

 Period end loans serviced for others

$                   20,298

$                   21,425

$                      30,659

CAPITAL ONE FINANCIAL CORPORATION (COF)

OTHER AND TOTAL SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS

MANAGED BASIS (1)

2010

2010

2009

(Dollars in millions) (unaudited)

Q3

Q2

Q3

Other:

Earnings

 Net interest income (expense)

$                         (93)

$                       (132)

$                          39

 Non-interest income (expense)

7

(74)

151

 Total revenue

$                         (86)

$                       (206)

$                        190

 Provision for loan and lease losses

(2)

10

25

 Restructuring expenses (8)

-

-

26

 Non-interest expense

62

65

32

 Income (loss) before taxes

(146)

(281)

107

 Income tax benefit

(119)

(143)

(21)

 Net income (loss)

$                         (27)

$                       (138)

$                        128

Selected Metrics

 Period end loans held for investment (2)

$                         469

$                         470

$                        659

 Average loans held for investment (2)

$                         475

$                         463

$                        483

 Period end deposits

$                    17,606

$                    18,397

$                   23,634

 Average deposits

$                    18,132

$                    19,231

$                   24,837

Total:

Earnings

 Net interest income

$                      3,112

$                      3,099

$                     3,212

 Non-interest income

904

807

1,373

 Total revenue

$                      4,016

$                      3,906

$                     4,585

 Provision for loan and lease losses

867

725

2,200

 Restructuring expenses (8)

-

-

26

 Non-interest expense

1,996

2,000

1,776

 Income before taxes

1,153

1,181

583

 Income tax provision

335

369

146

 Net income

$                         818

$                         812

$                        437

Selected Metrics

 Period end loans held for investment

$                  126,334

$                  127,255

$                 140,990

 Average loans held for investment

$                  126,391

$                  128,335

$                 143,540

 Period end deposits

$                  119,212

$                  117,331

$                 114,504

 Average deposits

$                  118,255

$                  118,484

$                 115,882

CAPITAL ONE FINANCIAL CORPORATION (COF)

LOAN DISCLOSURES AND SEGMENT

FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS NOTES

(1)

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

(2)

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

(3)

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

Q3 2010

Q2 2010

Q3 2009

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

$            5,891

$            6,381

$            7,885

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

$            6,014

$            6,541

$            8,029

Net charge-off rate

    Commercial and Multifamily Real Estate

1.81%

1.19%

1.38%

    Middle Market

0.44%

0.82%

0.56%

        Total Commercial Lending

1.14%

1.01%

1.08%

           Total Commercial Banking

1.30%

1.24%

1.43%

    Mortgage

0.68%

0.77%

1.24%

    Retail Banking

2.29%

2.23%

2.57%

           Total Consumer Banking

2.11%

1.76%

3.28%

30+ day performing delinquency rate

    Mortgage

1.16%

1.14%

2.06%

    Retail Banking

1.12%

0.91%

1.33%

           Total Consumer Banking

5.19%

4.93%

6.27%

Nonperforming asset rate

    Commercial and Multifamily Real Estate

2.47%

2.90%

2.79%

    Middle Market

1.42%

1.25%

1.30%

        Total Commercial Lending

1.98%

2.16%

2.15%

           Total Commercial Banking

1.98%

2.26%

2.95%

    Mortgage

6.83%

6.30%

3.24%

    Retail Banking

2.51%

2.37%

2.09%

           Total Consumer Banking

2.49%

2.38%

1.68%

Nonperforming loans as a percentage of loans held for investment

    Commercial Banking

1.84%

2.09%

2.72%

    Consumer Banking

2.26%

2.16%

1.53%

(4)

Includes nonaccrual consumer auto loans 90+ days past due.

(5)

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

(6)

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

(7)

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

(8)

The Company completed its 2007 restructuring initiative during 2009.

SOURCE Capital One Financial Corporation



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