Capital One Reports Third Quarter 2012 Net Income of $1.2 billion, or $2.01 per share

Exhibit 99.2

Capital One Financial Corporation

Financial Supplement

     Third Quarter 2012 ^{(1) (2)}

    Table of Contents 

Page 

Capital One Financial Corporation Consolidated

Table   1:   

Financial & Statistical Summary―Consolidated

1

Table   2:

Notes to Consolidated Financial & Statistical Summary

(Table 1)

2

Table   3:

Consolidated Statements of Income

3

Table   4:

Consolidated Balance Sheets

4

Table   5:

Average Balances, Net Interest Income and Net Interest Margin

5

Table   6:

Loan Information and Performance Statistics

6

Table   7:

Loan Information and Performance Statistics (Excluding Acquired Loans) ⁽³⁾

7

Business Segment Detail

Table   8:

Financial & Statistical Summary―Credit Card Business

8

Table   9:

Financial & Statistical Summary―Consumer Banking Business

9

Table 10:

Financial & Statistical Summary―Commercial Banking Business

10

Table 11:

Financial & Statistical Summary―Other and Total 

11

Table 12:

Notes to Loan and Business Segment Disclosures

(Tables 6 —11)

12

Other

Table 13:

Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures

13

⁽¹⁾

The information contained in this Financial Supplement is preliminary and based on data available at the time of the earnings presentation, and investors should refer to our September 30, 2012 Quarterly Report on Form 10-Q once it is filed with the Securities and Exchange Commission. 

⁽²⁾

References to ING Direct refer to the business and assets acquired and liabilities assumed in the February 17, 2012 acquisition. References to HSBC refer to the May 1, 2012 transaction in which we acquired substantially all of HSBC's credit card and private-label credit card business in the United States ("HSBC U.S. card").

⁽³⁾

We use the term "acquired loans" to refer to a limited portion of the credit card loans acquired in the HSBC U.S. card acquisition and the substantial majority of loans acquired in the ING Direct and Chevy Chase Bank ("CCB") acquisitions, which were recorded at fair value at acquisition and subsequently accounted for based on estimated cash flows expected to be collected over the life of the loans (under the accounting standard formerly known as "SOP 03-3"). Because SOP 03-3 takes into consideration future credit losses expected to be incurred over the life of the loans, there are no charge-offs or an allowance associated with these loans unless the estimated cash flows expected to be collected decrease subsequent to acquisition. In addition, these loans are not classified as delinquent or nonperforming even though the customer may be contractually past due because we expect that we will fully collect the carrying value of these loans. The accounting and classification of these loans may significantly alter some of our reported credit quality metrics. We therefore supplement certain reported credit quality metrics with metrics adjusted to exclude the impact of these acquired loans.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 1:  Financial & Statistical Summary—Consolidated ^(1)(2)(3)

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

2012

Q3 

2012

Q2 

2011

Q3

Earnings

Net interest income

$            4,646

$            4,001

$              3,283

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

1,136

1,054

871

Total net revenue⁽⁶⁾

5,782

5,055

4,154

Provision for credit losses

1,014

1,677

622

Marketing expenses

316

334

312

Operating expenses⁽⁷⁾

2,729

2,808

1,985

Income from continuing operations before

income taxes 

1,723

236

1,235

Income tax provision

535

43

370

Income from continuing operations, net of tax

1,188

193

865

Loss from discontinued operations, net of tax⁽⁴⁾

(10)

(100)

(52)

Net income

1,178

93

813

Dividends and undistributed earnings allocated to participating securities

(5)

(1)

—

Net income available to common stockholders

$            1,173

$                92

$                 813

Common Share Statistics

Basic EPS⁽⁸⁾: 

   Income from continuing operations, net of tax

$             2.05

$             0.33

$                1.89

   Loss from discontinued operations, net of tax

(0.02)

(0.17)

(0.11)

   Net income per common share 

$             2.03

$             0.16

$                1.78

Diluted EPS⁽⁸⁾: 

   Income from continuing operations, net of tax

$             2.03

$             0.33

$                1.88

   Loss from discontinued operations, net of tax

(0.02)

(0.17)

(0.11)

   Net income per common share

$             2.01

$             0.16

$                1.77

Weighted average common shares outstanding (in millions):

   Basic EPS

578.3

577.7

456.0

   Diluted EPS

584.1

582.8

460.4

Common shares outstanding (period end, in millions)

581.3

580.7

459.6

Dividends per common share

$             0.05

$             0.05

$                0.05

Tangible book value per common share (period end)⁽⁹⁾

40.17

35.67

33.56

Balance Sheet (Period End)

Loans held for investment⁽¹⁰⁾

$        203,132

$        202,749

$           129,952

Interest-earning assets

270,661

264,331

174,307

Total assets

301,989

296,572

200,148

Interest-bearing deposits

192,488

193,859

110,777

Total deposits

213,255

213,931

128,318

Borrowings

38,377

35,874

34,315

Stockholders' equity

39,672

37,192

29,378

Balance Sheet (Quarterly Average Balances)

Average loans held for investment⁽¹⁰⁾

$        202,856

$        192,632

$           129,043

Average interest-earning assets

266,803

265,019

177,531

Average total assets

297,154

295,306

201,611

Average interest-bearing deposits

193,700

195,597

110,750

Average total deposits

213,323

214,914

128,268

Average borrowings

36,451

35,418

37,366

Average stockholders' equity

38,535

37,533

29,316

Performance Metrics

Net interest income growth (quarter over quarter) 

16

%

17

%

5

%

Non-interest income growth(quarter over quarter)

8

(31)

2

Total net revenue growth(quarter over quarter)

14

2

4

Total net revenue margin⁽¹¹⁾

8.67

7.63

9.36

Net interest margin⁽¹²⁾

6.97

6.04

7.40

Return on average assets⁽¹³⁾

1.60

0.26

1.72

Return on average total stockholders' equity⁽¹⁴⁾

12.33

2.06

11.80

Return on average tangible common equity⁽¹⁵⁾

21.48

3.53

22.58

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

6.00

6.52

7.12

Efficiency ratio⁽¹⁷⁾

52.66

62.16

55.30

Effective income tax rate

31.1

18.2

30.0

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

37.6

37.4

29.5

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

Allowance for loan and lease losses 

$            5,154

$            4,998

$              4,280

Allowance as a % of loans held for investment 

2.54

%

2.47

%

3.29

%

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

3.11

3.08

3.40

Net charge-offs 

$              887

$              738

$                 812

Net charge-off rate⁽¹⁹⁾

1.75

%

1.53

%

2.52

%

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

2.18

1.96

2.62

30+ day performing delinquency rate

2.54

2.06

3.13

30+ day performing delinquency rate (excluding acquired loans)

3.15

2.59

3.25

30+ day delinquency rate⁽²⁰⁾ 

**

2.43

3.81

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

**

3.06

3.95

Capital Ratios ⁽²¹⁾

Tier 1 common ratio⁽²²⁾

10.7

%

9.9

%

10.0

%

Tier 1 risk-based capital ratio⁽²³⁾

12.7

11.6

12.4

Total risk-based capital ratio⁽²⁴⁾

15.0

14.0

15.4

Tangible common equity ("TCE") ratio⁽²⁵⁾

8.2

7.4

8.3

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 2:  Notes to Consolidated Financial & Statistical Summary (Table 1)

⁽¹⁾

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

⁽²⁾

Results for Q2 2012 and thereafter include the impact of the May 1, 2012 closing of the HSBC transaction, which resulted in the addition of approximately $28.2 billion in credit card receivables at closing.

⁽³⁾

Results for Q1 2012 and thereafter include the impact of the February 17, 2012 acquisition of ING Direct, which resulted in the addition of loans of $40.4 billion, other assets of $53.9 billion and deposits of $84.4 billion at acquisition.

⁽⁴⁾

We did not record a provision for repurchase losses in Q3 2012.  We recorded a provision for repurchase losses of $180 million in Q2 2012 and $72 million in Q3 2011. The majority of the provision for repurchase losses is generally included net of tax in discontinued operations, with the remaining amount included pre-tax in non-interest income. The mortgage representation and warranty reserve decreased to $919 million as of September 30, 2012, from $1.0 billion as of June 30, 2012, due to the settlement of claims in Q3 2012 totaling $83 million.

⁽⁵⁾

Includes a bargain purchase gain of $594 million recognized in earnings in Q1 2012 attributable to the February 17, 2012 acquisition of ING Direct. 

⁽⁶⁾

Total net revenue was reduced by $185 million in Q3 2012, $311 million in Q2 2012, $123 million in Q1 2012, $130 million in Q4 2011 and $24 million in Q3 2011, for the estimated uncollectible amount of billed finance charges and fees.  Premium amortization related to the HSBC U.S. card and ING Direct acquisitions reduced revenue by $133 million in Q3 2012, $104 million in Q2 2012, and $30 million in Q1 2012.

⁽⁷⁾

Includes merger-related expenses, including transaction costs, attributable to acquisitions of $48 million in Q3 2012, $133 million in Q2 2012, and $18 million in Q3 2011.  Also includes intangible amortization expense related to purchased credit card relationships ("PCCR") from the HSBC U.S. card acquisition of $127 million in Q3 2012 and $85 million in Q2 2012.  Other asset and intangible amortization expense related to the HSBC U.S. card and ING Direct acquisitions totaled $42 million in Q3 2012 and $41 million in Q2 2012.

⁽⁸⁾

Earnings per share is computed independently for each period. Accordingly, the sum of the quarterly earnings per share amounts may not agree to the year-to-date amounts.

⁽⁹⁾

Tangible book value per common share is a non-GAAP measure calculated based on tangible common equity divided by common shares outstanding. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of tangible common equity.

⁽¹⁰⁾

See "Table 12: Notes to Loan and Business Segment Disclosures (Tables 6 — 11)" for information on acquired loans accounted for based on estimated cash flows expected to be collected.

⁽¹¹⁾

Calculated based on annualized total net revenue for the period divided by average interest-earning assets for the period.

⁽¹²⁾

Calculated based on annualized net interest income for the period divided by average interest-earning assets for the period.

⁽¹³⁾

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average total assets for the period. 

⁽¹⁴⁾

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average stockholders' equity for the period. 

⁽¹⁵⁾

Calculated based on annualized income from continuing operations, net of tax, for the period divided by average tangible common equity for the period. 

⁽¹⁶⁾

Calculated based on annualized non-interest expense for the period divided by average loans held for investment for the period.

⁽¹⁷⁾

Calculated based on non-interest expense, excluding goodwill impairment charges, for the period divided by total net revenue for the period. 

⁽¹⁸⁾

Loans acquired as part of the HSBC U.S. card, ING Direct and CCB acquisitions classified as held for investment are included in the denominator used in calculating our reported credit quality metrics.  We supplement certain reported credit quality metrics with metrics adjusted to exclude from the denominator acquired loans accounted for based on estimated expected cash flows to be collected (formerly SOP 03-3).  See "Table 7: Loan Information and Performance Statistics (Excluding Acquired Loans)" for additional information.

⁽¹⁹⁾

Calculated based on annualized net charge-offs for the period divided by average loans held for investment for the period. 

⁽²⁰⁾

The 30+ day total delinquency rate as of the end of Q3 2012 will be provided in the September 30, 2012 Quarterly Report on Form 10-Q.

⁽²¹⁾

Regulatory capital ratios as of the end of Q3 2012 are preliminary and therefore subject to change.

⁽²²⁾

Tier 1 common ratio is a regulatory capital measure calculated based on Tier 1 common capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.

⁽²³⁾

Tier 1 risk-based capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.

⁽²⁴⁾

Total risk-based capital ratio is a regulatory capital measure calculated based on total risk-based capital divided by risk-weighted assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio.

⁽²⁵⁾

TCE ratio is a non-GAAP measure calculated based on tangible common equity divided by tangible assets. See "Table 13: Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures" for the calculation of this ratio and non-GAAP reconciliation.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 3:  Consolidated Statements of Income

Three Months Ended

Nine Months Ended

(Dollars in millions, except

per share data) (unaudited)

September 30,

2012

June 30,

2012

September 30,

2011

September 30,

2012

September 30,

2011

Interest income:

Loans held for investment

$              4,901

$              4,255

$              3,550

$            12,811

$            10,334

Investment securities

335

335

264

968

893

Other

18

26

21

70

59

Total interest income

5,254

4,616

3,835

13,849

11,286

Interest expense:

Deposits

371

373

294

1,055

923

Securitized debt obligations

64

69

89

213

342

Senior and subordinated notes

85

87

84

260

211

Other borrowings

88

86

85

260

251

Total interest expense

608

615

552

1,788

1,727

Net interest income

4,646

4,001

3,283

12,061

9,559

Provision for credit losses

1,014

1,677

622

3,264

1,499

Net interest income after provision for credit losses

3,632

2,324

2,661

8,797

8,060

Non-interest income:

Service charges and other customer-related fees

557

539

542

1,511

1,527

Interchange fees, net

452

408

321

1,188

972

Net other-than-temporary impairment losses recognized in earnings

(13)

(13)

(6)

(40)

(15)

Bargain purchase gain ⁽¹⁾

—

—

—

594

—

Other

140

120

14

458

186

Total non-interest income

1,136

1,054

871

3,711

2,670

Non-interest expense:

Salaries and associate benefits

1,002

971

750

2,837

2,206

Marketing

316

334

312

971

917

Communications and data processing

198

203

178

573

504

Supplies and equipment

209

178

143

534

402

Occupancy

145

145

122

413

359

Merger-related expenses

48

133

18

267

18

Other

1,127

1,178

774

3,096

2,308

Total non-interest expense

3,045

3,142

2,297

8,691

6,714

Income from continuing operations before income taxes

1,723

236

1,235

3,817

4,016

Income tax provision

535

43

370

931

1,174

Income from continuing operations, net of tax

1,188

193

865

2,886

2,842

Loss from discontinued operations, net of tax

(10)

(100)

(52)

(212)

(102)

Net income

1,178

93

813

2,674

2,740

Dividends and undistributed earnings allocated to participating securities

(5)

(1)

—

(12)

—

Net income available to common stockholders

$              1,173

$                   92

$                 813

$              2,662

$              2,740

Basic earnings per common share:

Income from continuing operations

$                2.05

$                0.33

$                1.89

$                5.18

$                6.24

Loss from discontinued operations

(0.02)

(0.17)

(0.11)

(0.38)

(0.22)

Net income per basic common share

$                2.03

$                0.16

$                1.78

$                4.80

$                6.02

Diluted earnings per common share:

Income from continuing operations

$                2.03

$                0.33

$                1.88

$                5.13

$                6.17

Loss from discontinued operations

(0.02)

(0.17)

(0.11)

(0.38)

(0.22)

Net income per diluted common share

$                2.01

$                0.16

$                1.77

$                4.75

$                5.95

Weighted average common shares outstanding (in millions):

Basic EPS

578.3

577.7

456.0

555.0

455.2

Diluted EPS

584.1

582.8

460.4

560.1

461.0

Dividends paid per common share

$                0.05

$                0.05

$                0.05

$                0.15

$                0.15

⁽¹⁾

Represents the excess of the fair value of the net assets acquired in the ING Direct acquisition as of the acquisition date of February 17, 2012 over the consideration transferred.

CAPITAL ONE FINANCIAL CORPORATION (COF)

Table 4:  Consolidated Balance Sheets

September 30,

June 30,

December 31,

September 30,

(Dollars in millions)(unaudited)

2012

2012

2011

2011

Assets:

Cash and due from banks

$             1,855

$             2,297

$             2,097

$             1,794

Interest-bearing deposits with banks

3,860

3,352

3,399

3,238

Federal funds sold and securities purchased under agreements to resell

254

330

342

1,326

Cash and cash equivalents

5,969

5,979

5,838

6,358

Restricted cash for securitization investors

760

370

791

984

Securities available for sale, at fair value

61,464

55,289

38,759

38,400

Loans held for investment:

Unsecuritized loans held for investment

159,219

158,680

88,242

83,010

Restricted loans for securitization investors

43,913

44,069

47,650

46,942

Total loans held for investment

203,132

202,749

135,892

129,952

    Less: Allowance for loan and lease losses

(5,154)

(4,998)

(4,250)

(4,280)

Net loans held for investment

197,978

197,751

131,642

125,672

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

187

1,047

201

312

Accounts receivable from securitizations

166

96

94

101

Premises and equipment, net

3,519

3,556

2,748

2,785

Interest receivable

1,614

1,623

1,029

958

Goodwill

13,901

13,864

13,592

13,593

Other

16,431

16,997

11,325

10,985

Total assets

$         301,989

$         296,572

$         206,019

$         200,148

Liabilities:

Interest payable

$                368

$                462

$                466

$                401

Customer deposits:

Non-interest bearing deposits

20,767

20,072

18,281

17,541

Interest-bearing deposits

192,488

193,859

109,945

110,777

Total customer deposits

213,255

213,931

128,226

128,318

Securitized debt obligations

12,686

13,608

16,527

17,120

Other debt:

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

967

1,101

1,464

1,441

Senior and subordinated notes

11,756

12,079

11,034

11,051

Other borrowings

12,968

9,086

10,536

4,703

Total other debt

25,691

22,266

23,034

17,195

Other liabilities

10,317

9,113

8,100

7,736

Total liabilities

262,317

259,380

176,353

170,770

Stockholders' equity:

Preferred stock

853

—

—

—

Common stock

6

6

5

5

Paid-in capital, net

25,265

25,217

19,274

19,234

Retained earnings and accumulated other comprehensive income

16,835

15,255

13,631

13,382

Treasury stock, at cost

(3,287)

(3,286)

(3,244)

(3,243)

Total stockholders' equity

39,672

37,192

29,666

29,378

Total liabilities and stockholders' equity

$         301,989

$         296,572

$         206,019

$         200,148

CAPITAL ONE FINANCIAL CORPORATION (COF)

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

2012 Q3

2012 Q2

2011 Q3

(Dollars in millions)(unaudited)

Average

Balance

Interest Income/

Expense

Yield/

Rate

Average

Balance

Interest

Income/

Expense

Yield/

Rate

Average

Balance

Interest

Income/

Expense

Yield/

Rate

Interest-earning assets:

Loans held for investment

$  202,856

$  4,901

9.66

%

$  192,632

$  4,255

8.84

%

$  129,043

$  3,550

11.00

%

Investment securities 

57,928

335

2.31

56,972

335

2.35

37,189

264

2.84

Cash equivalents and other

6,019

18

1.20

15,415

26

0.67

11,299

21

0.74

Total interest-earning assets 

$  266,803

$  5,254

7.88

%

$  265,019

$  4,616

6.97

%

$  177,531

$  3,835

8.64

%

Interest-bearing liabilities:

Interest-bearing deposits

NOW accounts

$    36,965

$       61

0.66

%

$    35,783

$       56

0.63

%

$    12,602

$         9

0.29

%

Money market deposit accounts

107,340

189

0.70

108,401

190

0.70

47,483

100

0.84

Savings accounts

29,963

21

0.28

31,379

25

0.32

30,944

56

0.72

CD's of $100,000 or more

4,838

35

2.89

5,030

35

2.78

5,407

43

3.18

Other consumer time deposits

12,878

63

1.96

13,658

65

1.90

13,530

84

2.48

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

68