Capital One Reports Fourth Quarter 2010 Net Income of $697 million, or $1.52 per share

 Exhibit 99.1

Capital One Financial Corporation

Earnings Release Fourth Quarter 2010 — Financial Supplement

Table of Contents

Page

Table   1:

Financial & Statistical Summary ― Reported Basis

1

Table   2:

Financial & Statistical Summary ― Managed Basis

2

Table   3:

Notes to Financial & Statistical Summaries (Tables 1 and 2)

3

Table   4:

Impact from Adoption of New Consolidation Accounting Guidance

4

Table   5:

Consolidated Statements of Income

5

Table   6:

Consolidated Balance Sheets

6

Table   7:

Average Balances, Net Interest Income and Net Interest Margin — Reported and Managed Basis

7

Table   8:

Lending Information and Statistics

8

Table   9:

Credit Card Segment Financial & Statistical Summary

9

Table 10:

Consumer Banking Segment Financial & Statistical Summary

10

Table 11:

Commercial Banking Segment Financial & Statistical Summary

11

Table 12:

Other and Total Segment Financial & Statistical Summary

12

Table 13:

Notes to Loan and Segment Disclosures (Tables 8 — 12)

13

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1:  Financial & Statistical Summary—Reported Basis*

2010

2010

2010

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

Q4

Q3

Q2

Earnings

Net interest income

$     3,023

$     3,109

$     3,097

Non-interest income ⁽¹⁾⁽²⁾

939

907

807

Total revenue ⁽³⁾

$     3,962

$     4,016

$     3,904

Provision for loan and lease losses

839

867

723

Marketing expenses

308

250

219

Restructuring expenses ⁽⁴⁾

-

-

-

Operating expenses ⁽⁵⁾

1,783

1,746

1,781

Income from continuing operations before income taxes

$     1,032

$     1,153

$     1,181

Income tax provision

331

335

369

Income from continuing operations, net of tax

701

818

812

Loss from discontinued operations, net of tax ⁽²⁾

(4)

(15)

(204)

Net income

$        697

$        803

$        608

Net income available to common shareholders

$        697

$        803

$        608

Common Share Statistics

Basic EPS: ^(A)

  Income from continuing operations

$       1.55

$       1.81

$       1.79

  Loss from discontinued operations

(0.01)

(0.03)

(0.45)

  Net income per basic common share

$       1.54

$       1.78

$       1.34

Diluted EPS: ^(A)

  Income from continuing operations

$       1.53

$       1.79

$       1.78

  Loss from discontinued operations

(0.01)

(0.03)

(0.45)

  Net income per diluted common share

$       1.52

$       1.76

$       1.33

Weighted average common shares outstanding:

  Basic EPS

452.7

452.5

452.1

  Diluted EPS

457.2

456.6

456.4

Common shares outstanding (period end)

452.8

452.6

452.3

Dividends per common share

$       0.05

$       0.05

$       0.05

Tangible book value per common share (period end) ^(B)

$     27.73

$     26.60

$     24.89

Stock price per common share (period end)

$     42.56

$     39.55

$     40.30

Total market capitalization (period end)

$   19,271

$   17,900

$   18,228

Reported Balance Sheet Statistics (Quarterly Averages)

Average loans held for investment

$ 125,441

$ 126,307

$ 128,203

Average interest-earning assets

$ 173,991

$ 172,473

$ 174,650

Total average assets

$ 197,597

$ 196,598

$ 199,329

Average interest-bearing deposits

$ 106,597

$ 104,186

$ 104,163

Total average deposits

$ 121,736

$ 118,255

$ 118,484

Average equity ^(D)

$   26,255

$   25,307

$   24,526

Return on average assets (ROA)

1.42

%

1.66

%

1.63

%

Return on average equity (ROE) ^(D)

10.68

%

12.93

%

13.24

%

Return on average tangible common equity ^(C)

22.90

%

28.95

%

30.97

%

Reported Balance Sheet Statistics (Period End)

Loans held for investment

$ 125,947

$ 126,334

$ 127,140

Total assets ^(D)

$ 197,503

$ 196,933

$ 197,485

Interest-bearing deposits

$ 107,162

$ 104,741

$ 103,172

Total deposits

$ 122,210

$ 119,212

$ 117,331

Tangible assets^{(D) (E)}

$ 183,158

$ 182,904

$ 183,474

Tangible common equity (TCE) ^{(D) (F)}

$   12,558

$   12,037

$   11,259

Tier 1 risk-based capital ratio ⁽⁶⁾

11.64

%

11.13

%

9.93

%

Tangible common equity (TCE) ratio ^{(D) (G)}

6.86

%

6.58

%

6.14

%

Tier 1 common equity ratio ⁽⁷⁾

8.78

%

8.21

%

7.00

%

Performance Statistics (Reported)

Net interest income growth (quarter over quarter) ⁽⁸⁾

(3)

%

0

%

(4)

%

Non-interest income growth (quarter over quarter) ⁽⁸⁾

4

%

12

%

(24)

%

Revenue growth (quarter over quarter) ⁽⁸⁾

(1)

%

3

%

(9)

%

Net interest margin

6.95

%

7.21

%

7.09

%

Revenue margin

9.11

%

9.31

%

8.94

%

Risk-adjusted margin ^(H)

5.90

%

5.78

%

5.01

%

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

6.67

%

6.32

%

6.24

%

Efficiency ratio ^(I)

52.78

%

49.70

%

51.23

%

Effective income tax rate

32.1

%

29.1

%

31.2

%

Full-time equivalent employees (in thousands)

25.7

25.7

25.7

Credit Quality Statistics (Reported) ⁽⁹⁾

Allowance for loan and lease losses

$     5,628

$     6,175

$     6,799

Allowance as a % of reported loans held for investment

4.47

%

4.89

%

5.35

%

Net charge-offs

$     1,394

$     1,522

$     1,717

Net charge-off rate

4.45

%

4.82

%

5.36

%

30+ day performing delinquency rate

3.60

%

3.71

%

3.81

%

___________________

* 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 "Table 4: Impact from Adoption of New Consolidation Accounting Guidance January 1, 2010." While the adoption of these new accounting standards had 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)

Table 2:  Financial & Statistical Summary—Managed Basis*

2010

2010

2010

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

Q4

Q3

Q2

Earnings

Net interest income

$     3,023

$     3,109

$     3,097

Non-interest income ⁽¹⁾⁽²⁾

939

907

807

Total revenue ⁽³⁾

$     3,962

$     4,016

$     3,904

Provision for loan and lease losses

839

867

723

Marketing expenses

308

250

219

Restructuring expenses ⁽⁴⁾

-

-

-

Operating expenses ⁽⁵⁾

1,783

1,746

1,781

Income from continuing operations before income taxes

$     1,032

$     1,153

$     1,181

Income tax provision

331

335

369

Income from continuing operations, net of tax

$        701

$        818

$        812

Loss from discontinued operations, net of tax ⁽²⁾

$          (4)

$        (15)

$      (204)

Net income

$        697

$        803

$        608

Net income available to common shareholders

$        697

$        803

$        608

Common Share Statistics

Basic EPS: ^(A)

  Income from continuing operations

$       1.55

$       1.81

$       1.79

  Loss from discontinued operations

(0.01)

(0.03)

(0.45)

  Net income per basic common share

$       1.54

$       1.78

$       1.34

Diluted EPS:^(A)

  Income from continuing operations

$       1.53

$       1.79

$       1.78

  Loss from discontinued operations

(0.01)

(0.03)

(0.45)

  Net income per diluted common share

$       1.52

$       1.76

$       1.33

Weighted average common shares outstanding:

  Basic EPS

452.7

452.5

452.1

  Diluted EPS

457.2

456.6

456.4

Common shares outstanding (period end)

452.8

452.6

452.3

Dividends per common share

$       0.05

$       0.05

$       0.05

Tangible book value per common share (period end) ^(B)

$     27.73

$     26.60

$     24.89

Stock price per common share (period end)

$     42.56

$     39.55

$     40.30

Total market capitalization (period end)

$   19,271

$   17,900

$   18,228

Managed Balance Sheet Statistics (Quarterly Averages)

Average loans held for investment

$ 125,441

$ 126,391

$ 128,335

Average interest-earning assets

$ 173,991

$ 172,557

$ 174,782

Total average assets

$ 197,597

$ 196,598

$ 199,329

Average interest-bearing deposits

$ 106,597

$ 104,186

$ 104,163

Total average deposits

$ 121,736

$ 118,255

$ 118,484

Average equity ^(D)

$   26,255

$   25,307

$   24,526

Return on average assets (ROA)

1.42

%

1.66

%

1.63

%

Return on average equity (ROE) ^(D)

10.68

%

12.93

%

13.24

%

Return on average tangible common equity ^(C)

22.90

%

28.95

%

30.97

%

Managed Balance Sheet Statistics (Period End)

Loans held for investment

$ 125,947

$ 126,334

$ 127,255

Total assets ^(D)

$ 197,503

$ 196,933

$ 197,485

Interest-bearing deposits

$ 107,162

$ 104,741

$ 103,172

Total deposits

$ 122,210

$ 119,212

$ 117,331

Tangible assets^{(D) (E)}

$ 183,158

$ 182,904

$ 183,474

Tangible common equity (TCE) ^{(D) (F)}

$   12,558

$   12,037

$   11,259

Tangible common equity (TCE) ratio ^{(D) (G)}

6.86

%

6.58

%

6.14

%

Performance Statistics (Managed)

Net interest income growth (quarter over quarter) ⁽⁸⁾

(3)

%

0

%

(4)

%

Non-interest income growth (quarter over quarter) ⁽⁸⁾

4

%

12

%

(24)

%

Revenue growth (quarter over quarter) ⁽⁸⁾

(1)

%

3

%

(9)

%

Net interest margin

6.95

%

7.21

%

7.09

%

Revenue margin

9.11

%

9.31

%

8.93

%

Risk-adjusted margin ^(H)

5.90

%

5.78

%

5.01

%

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

6.67

%

6.32

%

6.23

%

Efficiency ratio ^(I)

52.78

%

49.70

%

51.23

%

Effective income tax rate

32.1

%

29.1

%

31.2

%

Full-time equivalent employees (in thousands)

25.7

25.7

25.7

Credit Quality Statistics (Managed) ⁽⁹⁾

Net charge-offs

$     1,394

$     1,522

$     1,717

Net charge-off rate

4.45

%

4.82

%

5.35

%

30+ day performing delinquency rate

3.60

%

3.71

%

3.81

%

___________________

*Prior to the January 1, 2010 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 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" presents a reconciliation of the Company's non-GAAP "managed" results to its reported GAAP results for periods prior to January 1, 2010. See the accompanying schedule "Table 4: Impact from Adoption of New Consolidation Accounting Guidance January 1, 2010" for additional information on the impact from the new accounting standards.

CAPITAL ONE FINANCIAL CORPORATION (COF) 

Table 3:  Notes to Financial & Statistical Summaries (Tables 1 and 2)

(1)

Includes the impact from the change in fair value of retained interests, including the interest-only strips, which totaled $8 million in Q4 2010, $6 million in Q3 2010, $17 million in Q2 2010, $(36) million in Q1 2010 and $55 million in Q4 2009.

(2)

The Company's mortgage representation and warranty reserve decreased to $816 million as of December 31, 2010, from $836 million as of September 30, 2010.  The decrease in the reserve reflected a negative provision for repurchase losses of $(7) million in Q4 2010, compared with a provision for repurchase losses of $16 million, $404 million, $224 million and $47 million in Q3 2010, Q2 2010, Q1 2010 and Q4 2009, respectively.  The majority of the provision for repurchase losses is recorded in discontinued operations, with the remaining portion recorded in non-interest income.  

(3)

In accordance with the Company's finance charge and fee revenue recognition policy, amounts billed but not included in revenue totaled: $144 million in Q4 2010, $190 million in Q3 2010, $261 million in Q2 2010, $354 million in Q1 2010 and $490 million in Q4 2009.

(4)

In 2009, the Company completed its restructuring initiative that was initiated in 2007.

(5)

Includes core deposit intangible amortization expense of $51 million in Q4 2010, $50 million in Q3 2010, $50 million in Q2 2010, $52 million in Q1 2010 and $54 million in Q4 2009 and integration costs of $15 million in Q4 2010, $27 million in Q3 2010, $22 million in Q2 2010, $17 million in Q1 2010 and $22 million in Q4 2009.

(6)

Tier 1 risk-based capital ratio is a regulatory measure calculated based on Tier 1 capital divided by risk-weighted assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.

(7)

Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity divided by risk-weighted assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.

(8)

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").

(9)

The credit quality statistics excluding the impact of loans acquired from Chevy Chase Bank (CCB) are as follows.

2010

2010

2010

(dollars in millions) (unaudited)

Q4

Q3

Q2

CCB period end acquired loan portfolio

$     5,532

$     5,891

$     6,381

CCB average acquired loan portfolio

$     5,633

$     6,014

$     6,541

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

4.67%

5.12%

5.63%

Net charge-off rate (Reported), excluding CCB

4.65%

5.06%

5.64%

Net charge-off rate (Managed), excluding CCB

4.65%

5.06%

5.64%

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

3.76%

3.89%

4.01%

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

3.76%

3.89%

4.01%

(10)

During Q1 2010, certain mortgage trusts were deconsolidated based on the sale of interest-only bonds associated with the trusts. The net effect of the deconsolidation resulted in $128 million of income which is included in non-interest income.

Statistical/Metric Calculations

(A)

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

(B)

Calculated based on tangible common equity divided by common shares outstanding, which is a non-GAAP measure.  See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.

(C)

Calculated based on income from continuing operations divided by average tangible common equity, which is a non-GAAP measure. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.

(D)

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

(E)

Non-GAAP measure consisting of reported or managed assets less intangible assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.

(F)

See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.

(G)

Tangible common equity ratio ("TCE ratio") is a non-GAAP measure calculated based on tangible common equity divided by tangible assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation components.

(H)

Calculated based on total revenue less net charge-offs divided by average earning assets.

(I)

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

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4:  Impact from Adoption of New Consolidation Accounting Guidance January 1, 2010

Consolidation Impact

(dollars in millions)(unaudited)

January 1, 2010

Consolidation 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:

Securitized debt

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

Credit card:

  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

Consumer banking:

  Automobile

665

-

665

  Home loan (includes all new CCB originations)

248

73

⁽³⁾

175

  Other retail

236

-

236

      Total consumer banking

1,149

73

1,076

Commercial banking:

  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

  Other

140

-

140

Total company

$       8,391

$             4,264

$                        4,127

___________________

(1)  Other assets includes a deferred tax asset of $3.9 billion as of January 1, 2010.  Of this amount, $1.6 billion relates to the impact from the January 1, 2010 adoption of the new consolidation accounting standards.      

(2)  In the second quarter of 2010, an adjustment was made to reduce retained earnings and the allowance for loan and lease losses by $34 million.  These adjustments, which related to the impairment of consolidated loans accounted for as troubled debt restructurings, are not reflected in the above table.  

(3)  $73 million of the reduction in the allowance in the first quarter of 2010 was related to the deconsolidation of certain mortgage trusts. The  offset to the reduction in the allowance was recorded in non-interest income.  

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 5:  Consolidated Statements of Income

Three Months Ended

December 31,

September 30,

December 31,

Year Ended December 31,

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

2010

2010

2009 ⁽¹⁾

2010

2009 ⁽¹⁾

Interest income:

Loans held for investment, including past-due fees

$  3,352

$  3,447

$  2,108

$ 13,934

$ 8,757

Investment securities

305

347

404

1,342

1,610

Other

17

21

83

77

297

Total interest income

3,674

3,815

2,595

15,353

10,664

Interest expense:

Deposits

340

358

427

1,465

2,093

Securitized debt

165

191

54

809

282

Senior and subordinated notes

65

72

71

276

260

Other borrowings

81

85

89

346

332

Total interest expense

651

706

641

2,896

2,967

Net interest income

3,023

3,109

1,954

12,457

7,697

Provision for loan and lease losses

839

867

844

3,907

4,230

Net interest income after provision for loan and lease losses

2,184

2,242

1,110

8,550

3,467

Non-interest income:

Servicing and securitizations

12

13

743

7

2,280

Service charges and other customer-related fees

496

496

503

2,073

1,997

Interchange

350

346

112

1,340

502

Net other-than-temporary impairment losses recognized in earnings

(3)

(5)

(10)

(62)

(32)

Other

84

57

64

356

539

Total non-interest income

939

907

1,412

3,714

5,286

Non-interest expense:

Salaries and associate benefits

657

641

641

2,594

2,478

Marketing

308

250

188

958

588

Communications and data processing

182

178

171

693

740

Supplies and equipment

139

129

130

520

500

Occupancy

114

135

122

486

451

Restructuring expense ⁽²⁾

-

-

32

-

119

Other

691

663

664

2,683

2,541

Total non-interest expense

2,091

1,996

1,948

7,934

7,417

Income from continuing operations before income taxes

1,032

1,153

574

4,330

1,336

Income tax provision

331

335

170

1,280

349

Income from continuing operations, net of tax

701

818

404

3,050

987

Loss from discontinued operations, net of tax

(4)

(15)

(28)

(307)

(103)

Net income

$     697

$    803

$    376

$   2,743

$    884

Preferred stock dividends

-

-

-

-

(564)

Net income available to common shareholders

$     697

$    803

$    376

$   2,743

$    320

Basic earnings per common share:

 Income from continuing operations

$    1.55

$   1.81

$   0.90

$     6.74

$   0.99

 Loss from discontinued operations

(0.01)

(0.03)

(0.07)

(0.67)

(0.24)

 Net income per common share

$    1.54

$   1.78

$   0.83

$     6.07

$   0.75

Diluted earnings per common share:

 Income from continuing operations

$    1.53

$    1.79

$   0.89

$     6.68

$   0.98

 Loss from discontinued operations

(0.01)

(0.03)

(0.06)

(0.67)

(0.24)

 Net income per common share

$    1.52

$    1.76

$   0.83

$     6.01

$   0.74

Weighted average common shares outstanding (in millions):

  Basic EPS

452.7

452.5

450.0

452.1

428.1

  Diluted EPS

457.2

456.6

454.9

456.4

431.4

Dividends per common share

$    0.05

$   0.05

$   0.05

$     0.20

$   0.53

___________________

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

(2) In 2009, the Company completed its restructuring initiative that was initiated in 2007.  

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 6:  Consolidated Balance Sheets

December 31,

September 30,

December 31,

(dollars in millions)(unaudited)

2010

2010

2009 ⁽¹⁾

Assets:

Cash and due from banks

$     2,067

$       2,015

$     3,100

Interest-bearing deposits with banks

2,776

2,391

5,043

Federal funds sold and repurchase agreements

406

536

542

Cash and cash equivalents

5,249

4,942

8,685

Restricted cash for securitization investors

1,602

2,686

501

Investment in securities:

Available for sale, at fair value

41,537

39,926

38,830

Held to maturity, at amortized cost

-

-

80

Total investment in securities

41,537

39,926