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Capital One Reports First Quarter 2013 Net Income of $1.1 billion, or $1.79 per share.

MCLEAN, Va., April 18, 2013 /PRNewswire/ — Capital One Financial
Corporation (NYSE: COF) today announced net income for the first quarter
of 2013 of $1.1 billion, or $1.79 per diluted common share, compared
with net income of $843 million, or $1.41 per diluted common share, for
the fourth quarter of 2012 and net income of $1.4 billion, or $2.72 per
diluted common share, for the first quarter of 2012. Without the impact
of a bargain purchase gain related to the ING Direct acquisition, first
quarter 2012 net income would have been $809 million, or $1.56 per
diluted common share.

“Each of our businesses delivered solid results in the quarter
and our balance sheet is strong,” said Richard D. Fairbank,
Chairman and Chief Executive Officer. “We continue to generate
significant capital and we’re focused on returning capital to our

All comparisons in the following paragraphs are for the first
quarter of 2013 compared with the fourth quarter of 2012 unless
otherwise noted.

Loans and Deposits

Period-end loans held for investment decreased $14.6 billion, or 7
percent, to $191.3 billion. The decrease was due in part to the movement
of the Best Buy portfolio of approximately $7 billion of loans to held
for sale from held for investment during the quarter. Domestic Card
period-end loans decreased $12.8 billion, or 15 percent, to $70.4
billion, driven largely by the movement of loans to held for sale,
seasonally lower balances and purchase volumes, and the anticipated
run-off of certain acquired loans. Excluding loans reclassified to held
for sale during the first quarter, Domestic Card period-end loans
decreased $5.6 billion, or 7 percent. Commercial Banking period-end
loans increased $330 million, or 0.9 percent, to $39.2 billion, and
period-end loans in Auto Finance grew $817 million, or 3 percent, to
$27.9 billion. Period-end loans in Home Loans declined $2.2 billion, or
5 percent, to $41.9 billion, driven by the continued anticipated run-off
of acquired portfolios.

Average loans held for investment in the quarter decreased $6.9
billion, or 3 percent, to $196.0 billion. Average loans in Commercial
Banking grew $978 million and Auto Finance average loans grew $596
million. Average Domestic Card loans declined $6.0 billion, or 7
percent. Average Home Loans decreased by $2.2 billion, driven largely by
the continued anticipated run-off of acquired portfolios.

Period-end total deposits were essentially flat at $212.4 billion,
while average deposits declined $1.9 billion. Deposit interest rates
declined 4 basis points to 0.68 percent.


Total net revenue for the first quarter of 2013 was $5.6 billion, a
decline of $73 million, or 1 percent, driven principally by lower
average loan balances and purchase volume partially offset by higher

The reduction in interest expense and release of cash related to the
redemption of high coupon trust preferred securities contributed to an
increase in net interest margin of 19 basis points to 6.71 percent. Cost
of funds in the first quarter declined 16 basis points to 0.83

Non-Interest Expense

Non-interest expense was $3.0 billion, a decrease of $227 million,
or 7 percent, driven largely by the lack of seasonally high year-end
expenses recorded in the fourth quarter and lower amortization expense
and acquisition-related costs including integration. Marketing expense
decreased $76 million in the quarter to $317 million.

Provision for Credit Losses

Provision for credit losses was $885 million in the quarter, a
decrease of $266 million, largely driven by a $261 million release in
allowance. The largest component of the allowance release was in
Domestic Card, due to better than anticipated credit performance in the
quarter, including delinquencies, and an improvement in drivers for the
company’s future outlook.

The net charge-off rate was 2.20 percent in the first quarter of
2013, a decline of 6 basis points from 2.26 percent in the fourth

Discontinued Operations

The company recorded a $107 million provision for mortgage
representation and warranty reserve attributable to Discontinued
Operations. This provision reflects the company’s assessment of
probable and estimable losses in light of the current environment,
principally attributable to non-agency mortgage related legal

Net Income

Net income increased $223 million, or 26 percent, in the first
quarter driven primarily by lower non-interest expense and a reduction
in credit expenses in the quarter.

Capital Ratios

The company’s estimated Tier 1 common ratio was approximately
11.8 percent as of March 31, 2013, up from 11.0 percent as of December
31, 2012.

Detailed segment information will be available in the company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2013.

Earnings Conference Call Webcast Information

The company will hold an earnings conference call on April 18, 2013
at 5:00 PM, Eastern Daylight Time. The conference call will be
accessible through live webcast. Interested investors and other
individuals can access the webcast via the company’s home page
( Choose “Investors” to access the
Investor Center and view and/or download the earnings press release, the
financial supplement, including a reconciliation to GAAP financial
measures, and the earnings release presentation. The replay of the
webcast will be archived on the company’s website through May 2,
2013 at 5:00 PM.

Forward-looking Statements

The company cautions that its current expectations in this release
dated April 18, 2013 and the company’s plans, objectives,
expectations and intentions, are forward-looking statements which speak
only as of the date hereof. The company does not undertake any
obligation to update or revise any of the information contained herein
whether as a result of new information, future events or otherwise.

Certain statements in this release are forward-looking statements,
including those that discuss, among other things: strategies, goals,
outlook or other non-historical matters; projections, revenues, income,
returns, expenses, capital measures, accruals for claims in litigation
and for other claims against the company, earnings per share or other
financial measures for the company; future financial and operating
results; the company’s plans, objectives, expectations and
intentions; the projected impact and benefits of the acquisition of ING
Direct and HSBC’s U.S. Card business (the “Acquisitions”)
and the sale of the Best Buy loan portfolio (the “Sale
Transaction”); and the assumptions that underlie these matters. To
the extent that any such information is forward-looking, it is intended
to fit within the safe harbor for forward-looking information provided
by the Private Securities Litigation Reform Act of 1995. Numerous
factors could cause the company’s actual results to differ
materially from those described in such forward-looking statements,
including, among other things: general economic and business conditions
in the U.S., the U.K., Canada or the company’s local markets,
including conditions affecting employment levels, interest rates,
consumer income and confidence, spending and savings that may affect
consumer bankruptcies, defaults, charge-offs and deposit activity; an
increase or decrease in credit losses (including increases due to a
worsening of general economic conditions in the credit environment);
financial, legal, regulatory, tax or accounting changes or actions,
including the impact of the Dodd-Frank Wall Street Reform and Consumer
Protection Act and the regulations promulgated thereunder and
regulations governing bank capital and liquidity standards, including
Basel-related initiatives and potential changes to financial accounting
and reporting standards; the possibility that the company may not fully
realize the projected cost savings and other projected benefits of the
Acquisitions; difficulties and delays in integrating the assets and
businesses acquired in the Acquisitions; business disruption following
the Acquisitions; diversion of management time on issues related to the
Acquisitions, including integration of the assets and businesses
acquired; reputational risks and the reaction of customers and
counterparties to the Acquisitions; disruptions relating to the
Acquisitions negatively impacting the company’s ability to maintain
relationships with customers, employees and suppliers; changes in asset
quality and credit risk as a result of the Acquisitions; the possibility
that conditions to the Sale Transaction are not received or satisfied on
a timely basis or at all; the possibility that modifications to the
terms of the Sale Transaction may be required in order to obtain or
satisfy such conditions; changes in the anticipated timing for closing
the Sale Transaction; developments, changes or actions relating to any
litigation matter involving the company; the inability to sustain
revenue and earnings growth; increases or decreases in interest rates;
the company’s ability to access the capital markets at attractive
rates and terms to capitalize and fund its operations and future growth;
the success of the company’s marketing efforts in attracting and
retaining customers; increases or decreases in the company’s
aggregate loan balances or the number of customers and the growth rate
and composition thereof, including increases or decreases resulting from
factors such as shifting product mix, amount of actual marketing
expenses the company incurs and attrition of loan balances; the level of
future repurchase or indemnification requests the company may receive,
the actual future performance of mortgage loans relating to such
requests, the success rates of claimants against the company, any
developments in litigation and the actual recoveries the company may
make on any collateral relating to claims against the company; the
amount and rate of deposit growth; changes in the reputation of or
expectations regarding the financial services industry or the company
with respect to practices, products or financial condition; any
significant disruption in the company’s operations or technology
platform; the company’s ability to maintain a compliance
infrastructure suitable for the nature of our business; the
company’s ability to control costs; the amount of, and rate of
growth in, the company’s expenses as its business develops or
changes or as it expands into new market areas; the company’s
ability to execute on its strategic and operational plans; any
significant disruption of, or loss of public confidence in, the United
States Mail service affecting the company’s response rates and
consumer payments; any significant disruption of, or loss of public
confidence in, the internet affecting the ability of the company’s
customers to access their accounts and conduct banking transactions; the
company’s ability to recruit and retain experienced personnel to
assist in the management and operations of new products and services;
changes in the labor and employment markets; fraud or misconduct by the
company’s customers, employees or business partners; competition
from providers of products and services that compete with the
company’s businesses; and other risk factors set forth from time to
time in reports that the company files with the Securities and Exchange
Commission, including, but not limited to, the Annual Report on Form
10-K for the year ended December 31, 2012.

About Capital One

Capital One Financial Corporation ( is a
financial holding company whose subsidiaries, which include Capital One,
N.A., and Capital One Bank (USA), N. A., had $212.4 billion in deposits
and $300.2 billion in total assets as of March 31, 2013. Headquartered
in McLean, Virginia, Capital One offers a broad spectrum of financial
products and services to consumers, small businesses and commercial
clients through a variety of channels. Capital One, N.A. has more than
900 branch locations primarily in New York, New Jersey, Texas,
Louisiana, Maryland, Virginia and the District of Columbia. A Fortune
500 company, Capital One trades on the New York Stock Exchange under the
symbol “COF” and is included in the S&P 100 index.

SOURCE Capital One Financial Corporation