Capital One Reports Third Quarter Net Income of $425.6 million, or $0.94 per share
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Third Quarter Highlights
-- Managed revenue increased$482.0 million , or 11.6 percent, relative to the second quarter. -- Provision expense increased$296.4 million , due to an anticipated increase in charge-offs as well as a modest allowance build of$31.7 million in the third quarter. -- Allowance as a percentage of reported loans rose to 5.08 percent in the third quarter of 2009 from 4.84 percent in the second quarter of 2009. -- Tangible common equity to tangible managed assets, or "TCE ratio," increased to 6.2 percent, up 52 basis points from theJune 30, 2009 ratio of 5.7 percent, and Tier 1 capital rose to 11.8 percent.
"We've worked for years to position our company to be resilient, and our third quarter results demonstrate that resiliency in the midst of the most challenging economic cycle we've seen in generations," said
Total Company Results
-- Total managed revenue in the third quarter of 2009 was$4.6 billion , an increase of$482.0 million , or 11.6 percent, relative to the second quarter. Net interest income increased$298.3 million in the third quarter, or 10.1 percent, while non-interest income increased$183.7 million , or 15.4 percent. The increase in revenue was driven primarily by higher yields in Domestic Card, lower funding costs, a sequential improvement in valuation adjustments to retained securitization interests, and opportunistic moves in the investment portfolio that resulted in gains from securities sales. -- Provision expense increased$296.4 million quarter over quarter, due to an anticipated increase in charge-offs as well as a$31.7 million allowance build in the third quarter compared to a second quarter release of$166.2 million . The total company allowance build was a result of a significant increase in the Commercial Banking allowance partially offset by releases in both the Credit Card and Consumer Banking allowances. -- Credit Card total allowance release of$78 million -- Domestic credit card release of$89 million -- International credit card build of$11 million -- Consumer Banking total allowance release of$124 million -- Auto release of$190 million -- Other Consumer Banking build of$66 million -- Commercial Banking total allowance build of$256 million -- Allowance as a percentage of reported loans rose to 5.08 percent in the third quarter of 2009 from 4.84 percent in the second quarter of 2009 and from 3.59 percent from the third quarter of 2008, excluding the effect ofChevy Chase Bank . -- Average deposits decreased by$3.7 billion in the quarter to$115.9 billion , or 3.1 percent, over the prior quarter. -- The cost of managed interest-bearing liabilities decreased from 2.40 percent in the second quarter to 2.28 percent in the third quarter as the company benefited from lower interest rates and continued to replace the run off of higher cost funding with lower cost Consumer Banking and Commercial Banking deposits. The total cost of funds declined 12 basis points to 2.28 percent in the third quarter. -- Average assets held for investment decreased$4.9 billion in the quarter, driven primarily by reductions in loans outstanding. -- Non-interest expenses declined$119.3 million in the third quarter of 2009, driven primarily by the absence of theFDIC special assessment that impacted the second quarter as well as modestly lower marketing and restructuring expenses. The managed efficiency ratio decreased to 38.36 percent in the third quarter of 2009 from 45.28 percent in the second quarter of 2009, driven largely by increasing revenue. -- The company's TCE ratio increased to 6.2 percent onSeptember 30, 2009 , an improvement of 52 basis points from the second quarter level of 5.7 percent. The Tier 1 risk-based capital ratio of an estimated 11.8 percent, increased 2.1 percentage points, and continues to be well above the regulatory well-capitalized minimum.
"Despite continued credit pressures, Capital One posted solid growth in both revenues and bottom-line profits in the third quarter," said
Segment Results
During the third quarter of 2009, the company realigned its business segment reporting structure to better reflect the manner in which the performance of the company's operations is evaluated. The company now reports the results of its business through three operating segments: Credit Card, Commercial Banking, and Consumer Banking.
Credit Card Highlights
For details on the sub-segments' results, please refer to the Financial Supplement.
The Credit Card segment reported net income in the third quarter of
-- Revenues improved$296.4 million , or 11.0 percent, to$3.0 billion in the third quarter of 2009. -- Domestic Card - revenues up$271.6 million , or 11.4 percent from the second quarter -- International Card - revenues up$24.7 million , or 7.9 percent from the second quarter -- Revenue margin in the Domestic Card sub-segment improved to approximately 16.8 percent in the third quarter, up from 14.5 percent in the second quarter. The company expects Domestic Card revenue margin to remain above 16 percent in the fourth quarter. In 2010, the company expects Domestic Card quarterly revenue margin to moderate modestly, but remain close to its fourth quarter 2009 level. -- Period-end loans in the Credit Card segment were$70.4 billion , a decline of$3.0 billion , or 4.1 percent, from the second quarter of 2009. -- Domestic Card - loans declined$2.9 billion , or 4.4 percent from the second quarter. The continuing run-off of nationally-originated Installment Loans drove approximately 40 percent of the decline, although they comprise only 13 percent of the Domestic Card loan balances. -- International Card - loans declined$0.2 billion or 1.9 percent from the second quarter -- The managed net charge-off rate for the Credit Card segment increased 35 basis points to 9.59 percent in the third quarter of 2009 from 9.24 percent in the second quarter of 2009, primarily as a result of the continuing difficult credit environment. -- Domestic Card - net charge-offs increased to 9.64 percent in the third quarter from 9.23 percent in the second quarter. The increase was driven by declining balances, the implementation of the OCC minimum payment policies, and the absence of the one-time second quarter benefit from a change in bankruptcy processing partially offset by favorable seasonal trends and a modest improvement in the underlying charge-off rate. -- International Card - net charge-offs decreased to 9.19 percent in the third quarter from 9.32 percent in the second quarter. -- The delinquency rate for the Credit Card segment increased 54 basis points to 5.53 percent in the third quarter of 2009 from 4.99 percent in the second quarter of 2009. -- Domestic Card - delinquencies increased to 5.38 percent in the third quarter from 4.77 percent in the second quarter, reflecting seasonal patterns as well as revenue enhancements taken earlier in 2009. -- International Card - delinquencies remained basically flat, decreasing to 6.63 percent in the third quarter from 6.69 percent in the second quarter.
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. The total segment reported a net loss of
-- Commercial Banking revenue increased$16.8 million , or 5.2 percent, to$340.8 million in the third quarter of 2009, while non-interest expenses increased$10.5 million , or 6.7 percent, to$166.0 million .
-- Average loans declined$391.6 million , or 1.3 percent, to$30.1 billion during the third quarter from$30.5 billion during the second quarter of 2009. -- Commercial Lending - declined$320.5 million , or 1.1 percent, to$27.6 billion -- Small ticket commercial real estate - declined$71.1 million , or 2.8 percent, to$2.5 billion -- Average deposits increased$739.9 million , or 4.3 percent, to$17.8 billion during the third quarter from$17.0 billion during the second quarter of 2009, while the deposit interest expense was effectively stable at 75 basis points. -- The managed net charge-off rate for Commercial Banking increased 53 basis points in the third quarter of 2009 to 1.42 percent from 0.89 percent in the second quarter of 2009. -- Commercial Lending - 1.08 percent, an increase of 28 basis points over the second quarter of 2009 -- Small ticket commercial real estate - 5.19 percent, an increase of 333 basis points over the second quarter of 2009
-- Non-performing loans as a percentage of loans held for investment for Commercial Banking was 2.64 percent, an increase of 32 basis points from 2.32 percent at the end of the second quarter of 2009.
Consumer Banking highlights
For more lending information and statistics on the segment's results, please refer to the Financial Supplement.
Consumer Banking reported net income for the third quarter of
-- Average loans declined$1.7 billion , or 4.0 percent, to$41.3 billion during the third quarter. Auto finance loans declined as a result of the company's earlier efforts to retrench and reposition the auto finance business. Mortgage loans fell as the company continued to experience expected run off in the portfolio. -- Auto - declined$667.3 million , or 3.3 percent, to$19.6 billion -- Mortgages - declined$857.3 million , or 5.0 percent, to$16.2 billion -- Retail banking - declined$211.4 million , or 3.7 percent, to$5.5 billion -- Average deposits in the Consumer Banking segment declined$1.0 billion , or 1.4 percent, to$73.3 billion during the third quarter from$74.3 billion during the second quarter of 2009. Improved deposit mix and favorable interest rates drove an 18 basis point improvement in the deposit interest expense rate in the third quarter. -- The managed net charge-off rate for Consumer Banking increased 46 basis points in the third quarter of 2009 to 2.67 percent from 2.21 percent in the second quarter of 2009. -- Auto - 4.38 percent, an increase of 73 basis points over the second quarter -- Mortgages - 0.68 percent, an increase of 26 basis points from the second quarter -- Retail Banking - 2.44 percent, an increase of 3 basis points from the second quarter
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
Forward looking statements
The company cautions that its current expectations in this release, in the presentation slides available on the company's website and in its Form 8-K dated
About Capital One
NOTE: Third quarter 2009 financial results, SEC Filings, and earnings conference call slides 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 today's
CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS (in millions, except per 2009 2009 2008 share data and as noted) Q3 Q2 Q3 ------------------------- -- -- -- Earnings (Reported Basis) Net Interest Income $2,050.7 $1,946.6 $1,806.6 Non-Interest Income (2) 1,552.4 1,231.7(5) 1,696.9 ------- ------- ------- Total Revenue (1) 3,603.1 3,178.3 3,503.5 Provision for Loan Losses 1,173.2 934.0 1,093.9 Marketing Expenses 103.7 134.0 267.4 Restructuring Expenses 26.4 43.4 15.3 Operating Expenses (3) 1,672.4 1,744.4(8) 1,527.5 ------- ------- ------- Income (Loss) Before Taxes 627.4 322.5 599.4 Tax Rate 25.2% 28.6% 35.6% Income (Loss) From Continuing Operations, Net of Tax $469.2 $230.2 $385.8 Loss From Discontinued Operations, Net of Tax (43.6) (6.0) (11.7) ----- ---- ----- Net Income (Loss) $425.6 $224.2 $374.1 ------ ------ ------ Net Income (Loss) Available to Common Shareholders (F) $425.6 $(275.5)(10) $374.1 -------------------- ------ ------- ------ Common Share Statistics Basic EPS: (G) Income (Loss) From Continuing Operations $1.04 $(0.64) $1.03 Loss From Discontinued Operations $(0.09) $(0.01) $(0.03) ------ ------ ------ Net Income (Loss) $0.95 $(0.65) $1.00 Diluted EPS: (G) Income (Loss) From Continuing Operations $1.03 $(0.64) $1.03 Loss From Discontinued Operations $(0.09) $(0.01) $(0.03) ------ ------ ------ Net Income (Loss) $0.94 $(0.65) $1.00 Dividends Per Common Share $0.05 $0.05 $0.375 Tangible Book Value Per Common Share (period end) $27.02 $25.34 $31.63 Stock Price Per Common Share (period end) $35.73 $21.88 $51.00 Total Market Capitalization (period end) $16,064.2 $9,826.3 $19,833.9 Common Shares Outstanding (period end) 449.6 449.1 388.9 Shares Used to Compute Basic EPS 449.4 421.9 372.9 Shares Used to Compute Diluted EPS 453.7 421.9 374.3 ---------------------- ----- ----- ----- Reported Balance Sheet Statistics (period average) (A) Average Loans Held for Investment $99,485 $105,278 $98,778 Average Earning Assets $145,410 $151,400 $133,277 Average Assets $173,348 $177,589 $156,958 Average Interest Bearing Deposits $103,105 $107,040 $84,655 Total Average Deposits $115,883 $119,611 $95,328 Average Equity $25,999 $27,658(7),(9) $25,046 Return on Average Assets (ROA) 1.08% 0.52% 0.98% Return on Average Equity (ROE) 7.22% 3.33% 6.16% ------------------------ ---- ---- ---- Reported Balance Sheet Statistics (period end) (A) Loans Held for Investment $96,783 $101,074 $97,965 Total Assets $168,472 $171,865 $154,783 Interest Bearing Deposits $101,769 $104,121 $88,248 Total Deposits $114,503 $116,724 $98,913 -------------- -------- -------- ------- Performance Statistics (Reported) (A) Net Interest Income Growth (annualized) 21% 36% 18% Non Interest Income Growth (annualized) 104% 52% 18% Revenue Growth (annualized) 53% 42% 18% Net Interest Margin 5.64% 5.14% 5.42% Revenue Margin 9.91% 8.40% 10.51% Risk Adjusted Margin (B) 6.81% 5.44% 7.90% Non Interest Expense as a % of Average Loans Held for Investment (annualized) 7.25% 7.30% 7.33% Efficiency Ratio (C) 49.29% 59.10% 51.23% -------------------- ----- ----- ----- Asset Quality Statistics (Reported) (A) Allowance $4,513 $4,482 $3,520 Allowance as a % of Reported Loans Held for Investment 4.66%(4) 4.43%(4) 3.59% Net Charge-Offs $1,127(4) $1,119(4) $872 Net Charge-Off Rate 4.53%(4) 4.25%(4) 3.53% 30+ day performing delinquency rate 4.11%(4) 3.71%(4) 3.85% --------------------------- ---- ---- ---- Full-time equivalent employees (in thousands) 26.0 26.6 23.5 ------------------------- ---- ---- ---- CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS (*) 2009 2009 2008 (in millions) Q3 Q2 Q3 ------------- -- -- -- Earnings (Managed Basis) Net Interest Income $3,257.5 $2,959.2 $2,889.3 Non-Interest Income (2) 1,372.7 1,189.0(5) 1,325.6 ------- ------- ------- Total Revenue (1) 4,630.2 4,148.2 4,214.9 Provision for Loan Losses 2,200.3 1,903.9 1,805.3 Marketing Expenses 103.7 134.0 267.4 Restructuring Expenses 26.4 43.4 15.3 Operating Expenses (3) 1,672.4 1,744.4(8) 1,527.5 ------- ------- ------- Income (Loss) Before Taxes 627.4 322.5 599.4 Tax Rate 25.2% 28.6% 35.6% Income (Loss) From Continuing Operations, Net of Tax $469.2 $230.2 $385.8 Loss From Discontinued Operations, Net of Tax (43.6) (6.0) (11.7) ----- ---- ----- Net Income (Loss) $425.6 $224.2 $374.1 ------ ------ ------ Net Income (Loss) Available to Common Shareholders (F) $425.6 $(275.5)(10) $374.1 ------------------------------ ------ ------- ------ Managed Balance Sheet Statistics (period average) (A) Average Loans Held for Investment $143,671 $148,609 $147,247 Average Earning Assets $186,005 $191,804 $179,753 Average Assets $214,575 $218,325 $204,694 Return on Average Assets (ROA) 0.87% 0.42% 0.75% ------------------------------ ---- ---- ---- Managed Balance Sheet Statistics (period end) (A) Loans Held for Investment $141,059 $146,251 $147,346 Total Assets $209,723 $214,095 $203,452 Tangible Assets(D) $195,647 $200,110 $190,141 Tangible Common Equity (E) $12,146 $11,379 $12,301 Tangible Common Equity to Tangible Assets Ratio (H) 6.21% 5.69%(6) 6.47%(6) % Off-Balance Sheet Securitizations 31% 31% 34% -------------------- -- -- -- Performance Statistics (Managed) (A) Net Interest Income Growth (annualized) 40% 31% 15% Non Interest Income Growth (annualized) 62% 82% 7% Revenue Growth (annualized) 46% 45% 12% Net Interest Margin 7.01% 6.17% 6.43% Revenue Margin 9.96% 8.65% 9.38% Risk Adjusted Margin (B) 5.32% 4.30% 5.86% Non Interest Expense as a % of Average Loans Held for Investment (annualized) 5.02% 5.17% 4.92% Efficiency Ratio (C) 38.36% 45.28% 42.58% -------------------- ----- ----- ----- Asset Quality Statistics (Managed) (A) Net Charge-Offs $2,155(4) $2,087(4) $1,583 Net Charge-Off Rate 6.00%(4) 5.62%(4) 4.30% 30+ day performing delinquency rate 4.55%(4) 4.09%(4) 3.99% ---------------------------- ---- ---- ---- (*) 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". CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY NOTES (1) 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 2009 - $517.0 million, Q2 2009 - $571.9 million and Q3 2008 - $445.7 million. (2) Includes the impact from the change in fair value of retained interests, including the interest-only strips, of an increase of $37.3 million in Q3 2009, and a decrease of $114.5 million in Q2 2009 and $73.5 million in Q3 2008. (3) Includes core deposit intangible amortization expense of$55.5 million in Q3 2009, $57.4 million in Q2 2009 and $47.3 million in Q3 2008 and integration costs of $10.7 million in Q3 2009, $8.8 million in Q2 2009 and $10.3 million in Q3 2008. (4) Allowance as a % of Reported Loans Held for Investment, Net Charge-off Rate and 30+ Days Performing Delinquency Rate on both a Reported and Managed basis include period end loans held for investment and average loans held for investment acquired as part of theChevy Chase Bank , FSB (CCB) acquisition. The period end and average loans held for investment and metrics excluding such loans are as follows. The net charge-off dollars were unchanged. Q3 2009 Q2 2009 ------- ------- CCB period end acquired loan portfolio (in millions) $8,002.3 $8,552.9 CCB average acquired loan portfolio (in millions) $8,525.2 $8,931.9 Allowance as a % of reported loans held for investment 5.08% 4.84% Net charge-off rate (Reported) 4.96% 4.65% Net charge-off rate (Managed) 6.38% 5.98% 30+ day performing delinquency rate(Reported) 4.48% 4.05% 30+ day performing delinquency rate(Managed) 4.82% 4.35% (5) In Q2 2009 the Company elected to convert and sell 404,508 shares ofMasterCard class B common stock and recognized a gain of$65.5 Million in non-interest income from the transaction. (6) The Q2 2009 TCE ratio reflects the issuance of 56,000,000 common shares on May 14, 2009 at $27.75 per share. The Q3 2008 TCE ratio reflects the issuance of 15,527,000 shares onSeptember 30, 2008 at$49 per share. (7) Average equity includes the impact of the Company's participation in the U.S. Treasury's Capital Purchase Program. OnJune 17, 2009 , the Company repurchased all 3,555,199 preferred shares issued in Q4 2008 for approximately$3.57 billion , including accrued dividends. The warrants to purchase common shares of$491.5 million remain outstanding and are included in paid-in capital on the balance sheet. (8) Includes the FDIC Special Assessment of$80.5 million . (9) Average equity includes the impact of the issuance of 56,000,000 common shares onMay 14, 2009 at$27.75 per share. (10) The calculation of net income (loss) available to common shareholders includes the impact from dividends on preferred shares of$38.0 million and from the accretion of the discount on preferred shares of$461.7 million . With the repayment of the preferred shares to the U.S. Treasury, the remaining accretion was accelerated to Q2 2009 and treated as a dividend. STATISTICS / METRIC DEFINITIONS ------------------------------- (A) Based on continuing operations. Average equity and return on equity are based on the Company's stockholders' equity. (B) Risk adjusted margin equals total revenue less net charge-offs as a percentage of average earning assets. (C) Efficiency ratio equals non-interest expense less restructuring expense divided by total revenue. (D) Tangible assets include managed assets less intangible assets and is considered a non-GAAP measure. See accompanying schedule Reconciliation to GAAP Financial Measures for a reconciliation of tangible assets. (E) Includes stockholders' equity less preferred shares less intangible assets and related deferred tax liabilities. Tangible Common Equity on a reported and managed basis is the same and is considered a non- GAAP measure. See accompanying schedule Reconciliation To GAAP Financial Measures for a reconciliation of tangible common equity. (F) Net income (loss) available to common shareholders equals net income (loss) less dividends on preferred shares. (G) Earnings per share is based on net income (loss) available to common shareholders. (H) Tangible Common Equity to Tangible Assets Ratio ("TCE Ratio") is considered a non-GAAP measure. See accompanying schedule Reconciliation To GAAP Financial Measures for a reconciliation of the TCE Ratio.CAPITAL ONE FINANCIAL CORPORATION Reconciliation to GAAP Financial Measures For the Three Months EndedSeptember 30, 2009 (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 they originated. For this reason the Company believes the "managed" consolidated financial statements and related managed metrics to be useful to stakeholders. Total Reported Adjustments(1) Total Managed(2) ---------------------- -------------- -------------- ---------------- Income Statement Measures(3) Net interest income $2,050,680 $1,206,867 $3,257,547 Non-interest income 1,552,380 (179,700) 1,372,680 --------- -------- --------- Total revenue 3,603,060 1,027,167 4,630,227 Provision for loan and lease losses 1,173,165 1,027,167 2,200,332 Net charge-offs $1,127,465 $1,027,167 $2,154,632 --------------- ---------- ---------- ---------- Balance Sheet Measures Loans held for investment $96,783,165 $44,275,350 $141,058,515 Total assets $168,503,921 $41,250,924 $209,754,845 Total liabilities $142,281,769 $41,250,924 $183,532,693 Average loans held for investment $99,484,847 $44,185,873 $143,670,720 Average earning assets $145,425,656 $40,594,656 $186,020,312 Average total assets $173,389,149 $41,226,895 $214,616,044 Average total liabilities $147,390,307 $41,226,895 $188,617,202 Delinquencies $3,982,504 $2,434,461 $6,416,965 ------------- ---------- ---------- ---------- The table below presents a reconciliation of tangible common equity and tangible assets, which are the components used to calculate the tangible common equity "TCE" ratio. The Company believes the TCE ratio is an important financial measure of capital strength to our investors and readers even though it is considered to be a non-GAAP measure. (dollars in 2009 2009 2008 millions)(unaudited) Q3 Q2 Q3 -- -- -- Equity $26,222 $25,326 $25,612 Less: preferred stock - 38 - Less: intangible assets (4) (14,076) (13,985) (13,311) ------- ------- ------- Tangible common equity $12,146 $11,379 $12,301 ======= ======= ======= Total assets 209,754 214,141 203,472 Less: discontinued ops assets (31) (46) (20) --- --- --- Total assets-continuing ops 209,723 214,095 203,452 Less: intangible assets (4) (14,076) (13,985) (13,311) ------- ------- ------- Tangible assets $195,647 $200,110 $190,141 ======== ======== ======== TCE ratio 6.21 5.69 6.47 (1) Income statement adjustments reclassify the net of finance charges of$1,317.2 million , past-due fees of$198.3 million , other interest income of$(51.0) million and interest expense of$257.6 million ; and net charge-offs of$1,027.2 million from non-interest income to net interest income and provision for loan and lease losses, respectively. (2) The managed loan portfolio does not include auto loans or mortgage loans which have been sold in whole loan sale transactions or securitizations where the Company has retained servicing rights. (3) Based on continuing operations. (4) Includes impact from related deferred taxes.CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited) As of As of As of September 30 June 30 September 30 2009 2009 2008 ---- ---- ---- Assets: Cash and due from banks $2,719,100 $3,001,944 $3,511,558 Federal funds sold and resale agreements 544,793 603,564 1,435,521 Interest-bearing deposits at other banks 863,310 1,166,419 673,662 ------- --------- ------- Cash and cash equivalents 4,127,203 4,771,927 5,620,741 Securities available for sale 37,693,001 37,667,165 26,969,471 Securities held to maturity 83,608 87,545 - Mortgage loans held for sale 141,158 319,975 98,900 Loans held for investment 96,783,165 101,073,629 97,965,351 Less: Allowance for loan and lease losses (4,513,493) (4,481,827) (3,519,610) ---------- ---------- ---------- Net loans held for investment(1) 92,269,672 96,591,802 94,445,741 Accounts receivable from securitizations 6,985,200 5,219,968 4,980,823 Premises and equipment, net 2,773,173 2,824,785 2,305,286 Interest receivable 947,738 951,201 750,717 Goodwill(1) 13,524,978 13,381,056 12,815,642 Other(1) 9,958,190 10,095,883 6,815,792 --------- ---------- --------- Total assets $168,503,921 $171,911,307 $154,803,113 ============ ============ ============ Liabilities: Non-interest-bearing deposits $12,734,589 $12,603,548 $10,665,286 Interest-bearing deposits 101,768,522 104,120,642 88,247,688 Senior and subordinated notes 9,208,769 10,092,619 8,278,856 Other borrowings 12,126,181 13,260,589 15,962,072 Interest payable 582,969 659,784 508,091 Other(1) 5,860,739 5,848,464 5,529,580 --------- --------- --------- Total liabilities 142,281,769 146,585,646 129,191,573 Stockholders' Equity: Preferred stock - - - Common stock 5,021 5,019 4,383 Paid-in capital, net 18,928,719 18,891,333 16,752,078 Retained earnings and cumulative other comprehensive income 10,460,779 9,598,606 12,020,490 Less: Treasury stock, at cost (3,172,367) (3,169,297) (3,165,411) ---------- ---------- ---------- Total stockholders' equity 26,222,152 25,325,661 25,611,540 ---------- ---------- ---------- Total liabilities and stockholders' equity $168,503,921 $171,911,307 $154,803,113 ============ ============ ============ (1) Balances atSeptember 30, 2009 reflect adjustments made to the allocation of purchase price of theChevy Chase Bank acquisition. The balances atJune 30, 2009 have not been adjusted, however, if the adjustments had been made atJune 30, 2009 , net loans held for investment would have been$96,518.7 million (a decrease of$73.1 million ), goodwill would have been$13,527.9 million (an increase of$146.9 million ), other assets would have been$10,045.2 million (an decrease of$50.7 million ) and other liabilities would have been$5,822.8 million (a decrease of$25.7 million ). The allocation of purchase price is still preliminary and will be finalized upon completion of the analysis of the fair values ofChevy Chase Bank's assets and liabilities.CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited) Three Months Ended Nine Months Ended September June September September September 30 30 30 30 30 2009 2009 2008 2009 2008 Interest Income: Loans held for investment, including past-due fees $2,265,720 $2,233,808 $2,347,480 $6,689,859 $7,153,582 Investment securities 398,835 412,845 317,268 1,206,460 856,093 Other 83,195 67,982 107,048 214,294 333,503 ------ ------ ------- ------- ------- Total interest income 2,747,750 2,714,635 2,771,796 8,110,613 8,343,178 Interest Expense: Deposits 479,178 555,579 624,319 1,666,605 1,827,284 Senior and subordinated notes 74,032 57,113 96,568 189,189 352,335 Other borrowings 143,860 155,357 244,264 470,802 817,241 ------- ------- ------- ------- ------- Total interest expense 697,070 768,049 965,151 2,326,596 2,996,860 ------- ------- ------- --------- --------- Net interest income 2,050,680 1,946,586 1,806,645 5,784,017 5,346,318 Provision for loan and lease losses 1,173,165 934,038 1,093,917 3,386,340 3,002,119 --------- ------- --------- --------- --------- Net interest income after provision for loan and lease losses 877,515 1,012,548 712,728 2,397,677 2,344,199 Non-Interest Income: Servicing and securitizations 720,698 362,416 875,718 1,536,751 2,793,520 Service charges and other customer- related fees 496,404 491,763 576,762 1,494,292 1,675,032 Mortgage servicing and other 8,656 13,163 39,183 45,199 90,990 Interchange 122,585 126,702 148,076 389,378 432,708 Net impairment losses recognized in earnings(1) (11,173) (10,031) - (21,567) - Other 215,210 247,674 57,152 430,348 383,435 ------- ------- ------ ------- ------- Total non-interest income 1,552,380 1,231,687 1,696,891 3,874,401 5,375,685 Non-Interest Expense: Salaries and associate benefits 648,180 633,819 571,686 1,836,430 1,761,538 Marketing 103,698 133,970 267,372 400,380 853,265 Communications and data processing 175,575 194,578 176,720 569,257 559,065 Supplies and equipment 122,777 128,483 126,781 370,160 389,649 Occupancy 113,913 114,885 96,483 329,049 264,700 Restructuring expense 26,357 43,374 15,306 87,358 81,625 Other 611,978 672,647 555,858 1,876,692 1,542,242 ------- ------- ------- --------- --------- Total non-interest expense 1,802,478 1,921,756 1,810,206 5,469,326 5,452,084 --------- --------- --------- --------- --------- Income from continuing operations before income taxes 627,417 322,479 599,413 802,752 2,267,800 Income taxes 158,191 92,278 213,624 190,246 786,958 ------- ------ ------- ------- ------- Income from continuing operations, net of tax 469,226 230,201 385,789 612,506 1,480,842 Loss from discontinued operations, net of tax (43,587) (5,998) (11,650) (74,543) (105,294) ------- ------ ------- ------- -------- Net income $425,639 $224,203 $374,139 $537,963 $1,375,548 ======== ======== ======== ======== ========== Net income (loss) available to common shareholders $425,639 $(275,515) $374,139 $(25,945) $1,375,548 ======== ========= ======== ======== ========== Basic earnings per common share Income (loss) from continuing operations $1.04 $(0.64) $1.03 $0.12 $3.98 Loss from discontinued operations (0.09) (0.01) (0.03) (0.18) (0.28) ----- ----- ----- ----- ----- Net Income (loss) per common share $0.95 $(0.65) $1.00 $(0.06) $3.70 ===== ====== ===== ====== ===== Diluted earnings per common share Income (loss) from continuing operations $1.03 $(0.64) $1.03 $0.12 $3.96 Loss from discontinued operations (0.09) (0.01) (0.03) (0.18) (0.28) ----- ----- ----- ----- ----- Net Income (loss) per common share $0.94 $(0.65) $1.00 $(0.06) $3.68 ===== ====== ===== ====== ===== Dividends paid per common share $0.05 $0.05 $0.375 $0.475 $1.125 ===== ===== ====== ====== ===== (1) Total other-than-temporary impairment losses for the three and nine months endedSeptember 30, 2009 are$131.0 million and$290.6 million , respectively. The portion of loss recognized in other comprehensive income (before taxes) for the three and nine months endedSeptember 30, 2009 are$119.9 million and$269.0 million , respectively. Total other-than- temporary impairment losses for the three months endedJune 30, 2009 is$159.2 million . The portion of loss recognized in other comprehensive income (before taxes) for the three months endedJune 30, 2009 is$149.2 million .CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (1) (dollars in thousands)(unaudited) Reported Quarter Ended 09/30/09 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $99,484,847 $2,265,720 9.11% Investment Securities (2) 37,376,895 398,835 4.27% Other 8,548,610 83,195 3.89% --------- ------ ---- Total earning assets $145,410,352 $2,747,750 7.56% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts 10,418,557 12,745 0.49% Money market deposit accounts 36,036,826 96,477 1.07% Savings accounts 12,266,254 22,772 0.74% Other consumer time deposits 32,075,905 248,272 3.10% Public fund CD's of$100,000 or more 1,061,134 2,789 1.05% CD's of $100,000 or more 9,764,172 92,681 3.80% Foreign time deposits 1,482,519 3,442 0.93% --------- ----- ---- Total interest-bearing deposits $103,105,367 $479,178 1.86% Senior and subordinated notes 9,553,950 74,032 3.10% Other borrowings 13,480,527 143,860 4.27% ---------- ------- ---- Total interest-bearing liabilities $126,139,844 $697,070 2.21% ============ ======== ---- Net interest spread 5.35% ==== Interest income to average earning assets 7.56% Interest expense to average earning assets 1.92% ---- Net interest margin 5.64% ==== Reported Quarter Ended 06/30/09 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $105,278,045 $2,233,808 8.49% Investment Securities (2) 37,499,187 412,845 4.40% Other 8,623,100 67,982 3.15% --------- ------ ---- Total earning assets $151,400,332 $2,714,635 7.17% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $10,914,679 $14,602 0.54% Money market deposit accounts 35,751,007 103,855 1.16% Savings accounts 9,931,058 13,399 0.54% Other consumer time deposits 35,841,099 300,572 3.35% Public fund CD's of$100,000 or more 1,117,460 3,450 1.23% CD's of $100,000 or more 11,097,722 108,228 3.90% Foreign time deposits 2,387,093 11,473 1.92% --------- ------ ---- Total interest-bearing deposits $107,040,118 $555,579 2.08% Senior and subordinated notes 8,322,746 57,113 2.74% Other borrowings 16,274,845 155,357 3.82% ---------- ------- ---- Total interest-bearing liabilities $131,637,709 $768,049 2.33% ============ ======== ---- Net interest spread 4.84% ==== Interest income to average earning assets 7.17% Interest expense to average earning assets 2.03% ---- Net interest margin 5.14% ==== Reported Quarter Ended 09/30/08 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $98,778,393 $2,347,480 9.51% Investment Securities (2) 25,780,198 317,268 4.92% Other 8,718,392 107,048 4.91% --------- ------- ---- Total earning assets $133,276,983 $2,771,796 8.32% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $9,292,819 $30,263 1.30% Money market deposit accounts 26,914,607 187,740 2.79% Savings accounts 7,759,024 16,243 0.84% Other consumer time deposits 26,733,531 262,101 3.92% Public fund CD's of$100,000 or more 1,305,438 8,233 2.52% CD's of $100,000 or more 9,084,740 89,192 3.93% Foreign time deposits 3,564,449 30,547 3.43% --------- ------ ---- Total interest-bearing deposits $84,654,608 $624,319 2.95% Senior and subordinated notes 8,282,536 96,568 4.66% Other borrowings 22,368,976 244,264 4.37% ---------- ------- ---- Total interest-bearing liabilities $115,306,120 $965,151 3.35% ============ ======== ---- Net interest spread 4.97% ==== Interest income to average earning assets 8.32% Interest expense to average earning assets 2.90% ---- Net interest margin 5.42% ==== (1) Average balances, income and expenses, yields and rates are based on continuing operations. (2) Includes securities available for sale and securities held to maturity.CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (2) (dollars in thousands)(unaudited) Managed (1) Quarter Ended 09/30/09 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $143,670,720 $3,795,387 10.57% Investment Securities (3) 37,376,895 398,835 4.27% Other 4,957,393 18,038 1.46% --------- ------ ---- Total earning assets $186,005,008 $4,212,260 9.06% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $10,418,557 $12,745 0.49% Money market deposit accounts 36,036,826 96,477 1.07% Savings accounts 12,266,254 22,772 0.74% Other consumer time deposits 32,075,905 248,272 3.10% Public fund CD's of$100,000 or more 1,061,134 2,789 1.05% CD's of $100,000 or more 9,764,172 92,681 3.80% Foreign time deposits 1,482,519 3,442 0.93% --------- ----- ---- Total interest-bearing deposits $103,105,367 $479,178 1.86% Senior and subordinated notes 9,553,950 74,032 3.10% Other borrowings 13,480,527 143,860 4.27% Securitization liability 41,251,788 257,643 2.50% ---------- ------- ---- Total interest-bearing liabilities $167,391,632 $954,713 2.28% ============ ======== ---- Net interest spread 6.78% ==== Interest income to average earning assets 9.06% Interest expense to average earning assets 2.05% ---- Net interest margin 7.01% ==== Managed (1) Quarter Ended 06/30/09 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $148,609,132 $3,564,773 9.60% Investment Securities (3) 37,499,187 412,845 4.40% Other 5,695,941 17,074 1.20% --------- ------ ---- Total earning assets $191,804,260 $3,994,692 8.33% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $10,914,679 $14,602 0.54% Money market deposit accounts 35,751,007 103,855 1.16% Savings accounts 9,931,058 13,399 0.54% Other consumer time deposits 35,841,099 300,572 3.35% Public fund CD's of$100,000 or more 1,117,460 3,450 1.23% CD's of $100,000 or more 11,097,722 108,228 3.90% Foreign time deposits 2,387,093 11,473 1.92% --------- ------ ---- Total interest-bearing deposits $107,040,118 $555,579 2.08% Senior and subordinated notes 8,322,746 57,113 2.74% Other borrowings 16,274,845 155,357 3.82% Securitization liability 40,806,188 267,450 2.62% ---------- ------- ---- Total interest-bearing liabilities $172,443,897 $1,035,499 2.40% ============ ========== ---- Net interest spread 5.93% ==== Interest income to average earning assets 8.33% Interest expense to average earning assets 2.16% ---- Net interest margin 6.17% ==== Managed (1) Quarter Ended 09/30/08 ---------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- -------- Earning assets: Loans held for investment $147,247,398 $3,974,375 10.80% Investment Securities (3) 25,780,198 317,268 4.92% Other 6,725,201 54,618 3.25% --------- ------ ---- Total earning assets $179,752,797 $4,346,261 9.67% ============ ========== Interest-bearing liabilities: Interest-bearing deposits NOW accounts $9,292,819 $30,263 1.30% Money market deposit accounts 26,914,607 187,740 2.79% Savings accounts 7,759,024 16,243 0.84% Other consumer time deposits 26,733,531 262,101 3.92% Public fund CD's of$100,000 or more 1,305,438 8,233 2.52% CD's of $100,000 or more 9,084,740 89,192 3.93% Foreign time deposits 3,564,449 30,547 3.43% --------- ------ ---- Total interest-bearing deposits $84,654,608 $624,319 2.95% Senior and subordinated notes 8,282,536 96,568 4.66% Other borrowings 22,368,976 244,264 4.37% Securitization liability 48,069,177 491,780 4.09% ---------- ------- ---- Total interest-bearing liabilities $163,375,297 $1,456,931 3.57% ============ ========== ---- Net interest spread 6.10% ==== Interest income to average earning assets 9.67% Interest expense to average earning assets 3.24% ---- Net interest margin 6.43% ==== (1) The information in this table reflects the adjustment to add back the effect of securitized loans. (2) Average balances, income and expenses, yields and rates are based on continuing operations. (3) Includes securities available for sale and securities held to maturity. CAPITAL ONE FINANCIAL CORPORATION (COF) LENDING INFORMATION AND STATISTICS MANAGED BASIS (1) (8) 2009 2009 2008 Q3 Q2 Q3 -- -- -- Period end loans held for investment (in thousands) Domestic credit card $61,891,573 $64,760,128 $69,361,743 International credit card 8,477,236 8,638,441 10,254,713 --------- --------- ---------- Total Credit Card $70,368,809 $73,398,569 $79,616,456 ----------- ----------- ----------- Commercial and multi-family real estate $13,920,431 $14,153,752 $12,997,111 Middle market 9,987,237 10,190,701 9,768,420 Specialty lending 3,542,350 3,469,699 3,634,212 --------- --------- --------- Total Commercial Lending $27,450,018 $27,814,152 $26,399,743 Small ticket commercial real estate 2,412,400 2,503,035 2,695,570 --------- --------- --------- Total Commercial Banking $29,862,418 $30,317,187 $29,095,313 ----------- ----------- ----------- Automobile $19,295,218 $19,916,167 $22,318,970 Mortgages 15,838,327 16,674,368 10,355,853 Retail banking 5,346,260 5,593,040 5,402,783 --------- --------- --------- Total Consumer Banking $40,479,805 $42,183,575 $38,077,606 ----------- ----------- ----------- Other loans (7) $347,483 $351,393 $556,371 -------- -------- -------- Total $141,058,515 $146,250,724 $147,345,746 ============ ============ ============ Average loans held for investment (in thousands) Domestic credit card $63,298,525 $65,862,569 $68,581,983 International credit card 8,609,235 8,327,859 10,703,229 --------- --------- ---------- Total Credit Card $71,907,760 $74,190,428 $79,285,212 ----------- ----------- ----------- Commercial and multi-family real estate $13,956,465 $14,056,005 $12,937,927 Middle market 9,924,849 10,426,572 9,303,068 Specialty lending 3,753,054 3,472,258 3,657,406 --------- --------- --------- Total Commercial Lending $27,634,368 $27,954,835 $25,898,401 Small ticket commercial real estate 2,470,961 2,542,082 2,709,568 --------- --------- --------- Total Commercial Banking $30,105,329 $30,496,917 $28,607,969 ----------- ----------- ----------- Automobile $19,635,979 $20,303,296 $22,870,070 Mortgages 16,156,009 17,013,312 10,562,385 Retail banking 5,515,647 5,727,032 5,391,590 --------- --------- --------- Total Consumer Banking $41,307,635 $43,043,640 $38,824,045 ----------- ----------- ----------- Other loans (7) $349,996 $878,147 $530,172 -------- -------- -------- Total $143,670,720 $148,609,132 $147,247,398 ============ ============ ============ Net Charge-off Rates Domestic credit card 9.64% 9.23% 6.13% International credit card 9.19% 9.32% 5.90% ---- ---- ---- Total Credit Card 9.59% 9.24% 6.10% ---- ---- ---- Commercial and multi-family real estate (4) 1.37% 0.92% 0.14% Middle market (4) 0.56% 0.58% 0.15% Specialty lending 1.39% 0.99% 0.27% ---- ---- ---- Total Commercial Lending (4) 1.08% 0.80% 0.16% Small ticket commercial real estate 5.19% 1.86% 0.10% ---- ---- ---- Total Commercial Banking (4) 1.42% 0.89% 0.16% ---- ---- ---- Automobile 4.38% 3.65% 4.99% Mortgages (4) 0.68% 0.42% 0.43% Retail banking (4) 2.44% 2.41% 2.08% ---- ---- ---- Total Consumer Banking (4) 2.67% 2.21% 3.35% ---- ---- ---- Other loans 28.53% 37.00% 18.98% ----- ----- ----- Total 6.00% 5.62% 4.30% ==== ==== ==== 30+ day performing delinquency rate Domestic credit card 5.38% 4.77% 4.20% International credit card 6.63% 6.69% 5.24% ---- ---- ---- Total Credit Card 5.53% 4.99% 4.34% ---- ---- ---- Automobile (6) 9.52% 8.89% 9.31% Mortgages (4) 1.15% 0.97% 0.82% Retail banking (4) 1.23% 0.88% 0.89% ---- ---- ---- Total Consumer Banking (4) 5.15% 4.69% 5.81% ==== ==== ==== Non Performing Asset Rates (2) (5) Commercial and multi-family real estate (4) 2.68% 2.16% 1.07% Middle market (4) 1.26% 1.16% 0.26% Specialty lending 2.04% 1.96% 0.38% ---- ---- ---- Total Commercial Lending (4) 2.08% 1.77% 0.67% Small ticket commercial real estate 11.39% 10.08% 4.49% ----- ----- ---- Total Commercial Banking (4) 2.83% 2.46% 1.03% ---- ---- ---- Automobile (6) 0.87% 0.78% 0.99% Mortgages (4) 1.81% 1.50% 1.16% Retail banking (4) 1.93% 1.80% 0.97% ---- ---- ---- Total Consumer Banking (4) 1.38% 1.20% 1.03% ==== ==== ==== CAPITAL ONE FINANCIAL CORPORATION (COF) CREDIT CARD SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS MANAGED BASIS (1) (8) 2009 2009 2008 (in thousands) Q3 Q2 Q3 -------------- -- -- -- Credit Card: ------------ Earnings Net interest income $2,024,250 $1,797,303 $1,862,034 Non-interest income 966,862 897,440 1,181,015 ------- ------- --------- Total revenue $2,991,112 $2,694,743 $3,043,049 Provision for loan and lease losses 1,643,721 1,520,292 1,434,435 Non-interest expenses 897,578 909,572 1,059,641 ------- ------- --------- Income (loss) before taxes 449,813 264,879 548,973 Income taxes (benefit) 158,074 92,251 192,461 ------- ------ ------- Net income (loss) $291,739 $172,628 $356,512 ======== ======== ======== Selected Metrics Period end loans held for investment $70,368,809 $73,398,569 $79,616,456 Average loans held for investment $71,907,760 $74,190,428 $79,285,212 Loans held for investment yield 13.75% 12.31% 13.20% Revenue margin 16.64% 14.53% 15.35% Net charge-off rate 9.59% 9.24% 6.10% 30+ day performing delinquency rate 5.53% 4.99% 4.34% Purchase Volume (3) $25,982,259 $25,746,799 $29,394,045 Domestic Card Sub-segment Earnings Net interest income $1,797,173 $1,586,686 $1,616,038 Non-interest income 855,571 794,440 1,027,918 ------- ------- --------- Total revenue $2,652,744 $2,381,126 $2,643,956 Provision for loan and lease losses 1,436,959 1,336,736 1,240,580 Non-interest expenses 769,995 787,624 873,866 ------- ------- ------- Income (loss) before taxes 445,790 256,766 529,510 Income taxes (benefit) 156,027 89,868 185,328 ------- ------ ------- Net income (loss) $289,763 $166,898 $344,182 ======== ======== ======== Selected Metrics Period end loans held for investment $61,891,573 $64,760,128 $69,361,743 Average loans held for investment $63,298,525 $65,862,569 $68,581,983 Loans held for investment yield 13.74% 12.17% 13.07% Revenue margin 16.76% 14.46% 15.42% Net charge-off rate 9.64% 9.23% 6.13% 30+ day performing delinquency rate 5.38% 4.77% 4.20% Purchase Volume (3) $23,760,963 $23,610,760 $26,536,070 International Card Sub-segment Earnings Net interest income $227,077 $210,617 $245,996 Non-interest income 111,291 103,000 153,097 ------- ------- ------- Total revenue $338,368 $313,617 $399,093 Provision for loan and lease losses 206,762 183,556 193,855 Non-interest expenses 127,583 121,948 185,775 ------- ------- ------- Income (loss) before taxes 4,023 8,113 19,463 Income taxes (benefit) 2,047 2,383 7,133 ----- ----- ----- Net income (loss) $1,976 $5,730 $12,330 ====== ====== ======= Selected Metrics Period end loans held for investment $8,477,236 $8,638,441 $10,254,713 Average loans held for investment $8,609,235 $8,327,859 $10,703,229 Loans held for investment yield 13.81% 13.42% 14.02% Revenue margin 15.72% 15.06% 14.91% Net charge-off rate 9.19% 9.32% 5.90% 30+ day performing delinquency rate 6.63% 6.69% 5.24% Purchase Volume (3) $2,221,296 $2,136,039 $2,857,975 CAPITAL ONE FINANCIAL CORPORATION (COF) COMMERCIAL BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS MANAGED BASIS (1) (8) 2009 2009 2008 (in thousands) Q3 Q2 Q3 -------------- -- -- -- Commercial Banking: ------------------- Earnings Net interest income $297,484 $274,927 $238,641 Non-interest income 43,299 49,043 35,608 ------ ------ ------ Total revenue $340,783 $323,970 $274,249 Provision for loan and lease losses 375,095 122,497 41,706 Non-interest expenses 166,043 155,591 121,558 ------- ------- ------- Income (loss) before taxes (200,355) 45,882 110,985 Income taxes (benefit) (70,125) 16,059 38,845 ------- ------ ------ Net income (loss) $(130,230) $29,823 $72,140 ========= ======= ======= Selected Metrics Period end loans held for investment $29,862,418 $30,317,187 $29,095,313 Average loans held for investment $30,105,329 $30,496,917 $28,607,969 Loans held for investment yield 5.01% 4.97% 5.82% Period end deposits $18,617,112 $16,897,441 $16,764,330 Average deposits $17,760,860 $17,020,998 $17,152,610 Deposit interest expense rate 0.75% 0.77% 1.75% Core deposit intangible amortization $9,664 $9,975 $9,614 Net charge-off rate (4) 1.42% 0.89% 0.16% Non-performing loans as a percentage of loans held for investment (4) 2.64% 2.32% 1.00% Non-performing asset rate (4) 2.83% 2.46% 1.03% CAPITAL ONE FINANCIAL CORPORATION (COF) CONSUMER BANKING SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS MANAGED BASIS (1) (8) 2009 2009 2008 (in thousands) Q3 Q2 Q3 -------------- -- -- -- Consumer Banking: ----------------- Earnings Net interest income $908,744 $839,304 $754,439 Non-interest income 212,716 225,627 194,741 ------- ------- ------- Total revenue $1,121,460 $1,064,931 $949,180 Provision for loan and lease losses 156,052 202,055 283,424 Non-interest expenses 681,391 724,760 614,740 ------- ------- ------- Income (loss) before taxes 284,017 138,116 51,016 Income taxes (benefit) 99,406 48,340 17,856 ------ ------ ------ Net income (loss) $184,611 $89,776 $33,160 ======== ======= ======= Selected Metrics Period end loans held for investment $40,479,805 $42,183,575 $38,077,606 Average loans held for investment $41,307,635 $43,043,640 $38,824,045 Loans held for investment yield 9.50% 8.52% 9.19% Auto loan originations 1,512,707 1,341,583 1,444,291 Period end deposits $72,252,596 $73,882,639 $57,492,140 Average deposits $73,284,397 $74,320,889 $57,034,702 Deposit interest expense rate 1.58% 1.76% 2.39% Core deposit intangible amortization $45,856 $47,447 $37,637 Net charge-off rate (4) 2.67% 2.21% 3.35% Non-performing loans as a percentage of loans held for investment (4)(6) 1.25% 1.07% 0.81% Non-performing asset rate (4)(6) 1.38% 1.20% 1.03% 30+ day performing delinquency rate(4)(6) 5.15% 4.69% 5.81% Period end loans serviced for others $30,659,074 $31,491,554 $25,384,945 CAPITAL ONE FINANCIAL CORPORATION (COF) OTHER AND TOTAL SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS MANAGED BASIS (1) (8) 2009 2009 2008 (in thousands) Q3 Q2 Q3 -------------- -- -- -- Other: ------ Earnings Net interest income $27,070 $47,659 $34,216 Non-interest income 149,802 16,905 (85,805) ------- ------ ------- Total revenue $176,872 $64,564 $(51,589) Provision for loan and lease losses 25,464 59,129 45,705 Restructuring expenses 26,357 43,374 15,306 Non-interest expenses 31,109 88,459 (1,039) ------ ------ ------ Income (loss) before taxes 93,942 (126,398) (111,561) Income taxes (benefit) (29,164) (64,372) (35,538) ------- ------- ------- Net income (loss) $123,106 $(62,026) $(76,023) ======== ======== ======== Selected Metrics Period end loans held for investment (7) $347,483 $351,393 $556,371 Average loans held for investment (7) $349,996 $878,147 $530,172 Period end deposits $23,633,403 $25,944,110 $24,656,504 Average deposits $24,837,483 $28,268,755 $21,140,718 Total: ------ Earnings Interest income $4,212,260 $3,994,692 $4,346,261 Interest expense 954,712 1,035,499 1,456,931 ------- --------- --------- Net interest income $3,257,548 $2,959,193 $2,889,330 Non-interest income 1,372,679 1,189,015 1,325,559 --------- --------- --------- Total revenue $4,630,227 $4,148,208 $4,214,889 Provision for loan and lease losses 2,200,332 1,903,973 1,805,270 Restructuring expenses 26,357 43,374 15,306 Non-interest expenses 1,776,121 1,878,382 1,794,900 --------- --------- --------- Income (loss) before taxes 627,417 322,479 599,413 Income taxes (benefit) 158,191 92,278 213,624 ------- ------ ------- Net income (loss) $469,226 $230,201 $385,789 ======== ======== ======== Selected Metrics Period end loans held for investment $141,058,515 $146,250,724 $147,345,746 Average loans held for investment $143,670,720 $148,609,132 $147,247,398 Period end deposits $114,503,111 $116,724,190 $98,912,974 Average deposits $115,882,740 $119,610,642 $95,328,030 CAPITAL ONE FINANCIAL CORPORATION (COF) LOAN DISCLOSURES AND SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS NOTES (1) The information in this report 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) Non performing assets is comprised of non performing loans and other real estate owned (OREO). The non performing asset rate equals non performing assets divided by the sum of loans held for investment and OREO. (3) Includes all purchase transactions net of returns and excludes cash advance transactions. (4) Net charge-off rates and 30+ day performing delinquency rates include period end loans held for investment and average loans held for investment acquired as part of theChevy Chase Bank , FSB (CCB) acquisition. The period end and average loans held for investment and metrics excluding such loans are as follows. Net charge-off dollars were unchanged. Q3 2009 Q2 2009 ------- ------- CCB period end acquired loan portfolio (in millions) $8,002.3 $8,552.9 CCB average acquired loan portfolio (in millions) $8,525.2 $8,931.9 Net charge-off rate Commercial and Multi-Family Real Estate 1.42% 0.95% Middle Market 0.59% 0.61% ---- ---- Total Commercial Lending 1.12% 0.83% ---- ---- Total Commercial Banking 1.46% 0.92% Mortgage 1.24% 0.77% Retail Banking 2.57% 2.56% ---- ---- Total Consumer Banking 3.28% 2.72% 3(TM)0+ day performing delinquency rate Mortgage 2.06% 1.74% Retail Banking 1.29% 0.92% ---- ---- Total Consumer Banking 6.27% 5.74% Non performing asset rate Commercial and Multi-Family Real Estate 2.76% 2.25% Middle Market 1.30% 1.20% ---- ---- Total Commercial Lending 2.16% 1.83% ---- ---- Total Commercial Banking 2.91% 2.53% Mortgage 3.23% 2.78% Retail Banking 2.03% 1.90% ---- ---- Total Consumer Banking 1.68% 1.47% Non performing loans as a percentage of loans held for investment Commercial Banking 2.71% 2.39% Consumer Banking 1.52% 1.31% (5) The Company's policy is not to reclassify credit card loans as nonperforming loans. Credit card loans continue to accrue finance charges and fees until charged off. The amount of finance charges and fees considered uncollectible are suppressed and are not recognized in income. (6) Includes non accrual consumer auto loans 90+ days past due. (7) Other loans held for investment includes unamortized premiums and discounts and certain other purchase accounting adjustments on loans acquired in theChevy Chase Bank ,North Fork andHibernia acquisitions. (8) During the third quarter of 2009, the Company realigned its business segment reporting structure to better reflect the manner in which the performance of the Company's operations are evaluated. The Company now reports the results of its business through three operating segments: Credit Card, Commercial Banking, and Consumer Banking. Segment and certain sub-segment results have been recasted for all periods presented. The three segments consist of the following: -- Credit Card includes the Company's domestic consumer and small business card lending, domestic national small business lending, national closed end installment lending and the international card lending businesses in Canada and the United Kingdom. -- Commercial Banking includes the Company's lending, deposit gathering and treasury management services to commercial real estate and middle market customers. The Commercial segment also includes the financial results of a national portfolio of small ticket commercial real estate loans that are in run-off mode. -- Consumer Banking includes the Company's branch based lending and deposit gathering activities for small business customers as well as its branch-based consumer deposit gathering and lending activities, national deposit gathering, consumer mortgage lending and servicing activities and national automobile lending. The segment reorganization includes the allocation ofChevy Chase Bank to the appropriate segments.Chevy Chase Bank's operations are included in the Commercial Banking and Consumer Banking segments beginning in the second quarter 2009.Chevy Chase Bank's operations for the first quarter of 2009 remain in the Other category.Chevy Chase Bank's operations are impacted by the Company's analysis of the fair values and purchase price allocation ofChevy Chase Bank's assets and liabilities. As ofSeptember 30, 2009 , the Company has not finalized the analysis. Changes to the purchase price allocation could result in the Company recasting results ofChevy Chase Bank's operations.
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Media: Julie Rakes, +1-804-284-5800 (office), julie.rakes@capitalone.com or Investors: Jeff Norris, 703-720-2455, both of Capital One