Capital One Financial Corporation · NYSE:COF

Capital One Financial — Q1 2010 Earnings Presentation

18 slides from Capital One Financial's earnings presentation, Apr 22, 2010

  1. Slide 1: First Quarter 2010 Results

    Exhibit 99.2 First Quarter 2010 Results April 22, 2010

  2. Slide 2: Forward looking statements

    Forward looking statements Please note that the following materials containing information regarding Capital One’s financial performance speak only as of the particular date or dates indicated in these materials. Capital One does not undertake any obligation to update or revise any of the informatio

  3. Slide 3: Quarterly earnings were up $260MM to $636MM, or $1.40 per share

    Quarterly earnings were up $260MM to $636MM, or $1.40 per share Q110 Q409 Change Highlights $MM • Pre-provision earnings up $21MM, or 1%, as modest decline in revenue more than Net Interest Income 3,228 3,170 58 offset by decline in non-interest expense Non Interest Income 1,062 1,199 (137) – Revenu

  4. Slide 4: Loan balances fell in line with expectations as deposits continue to drive lower funding costs

    Loan balances fell in line with expectations as deposits continue to drive lower funding costs 1 End of Period Assets Asset Highlights $B 220 – Loans down $6.7B or 4.9% driven by 5.3 4.7 9.2 200 37.8 10.8 Cash & Cash • $2.0B of charge-offs 37.8 38.9 Equivalents 180 38.3 Securities • $1.9B of run-off

  5. Slide 5: Impacts from Consolidation on Reported Balance Sheet

    Impacts from Consolidation on Reported Balance Sheet FAS 167 12/31/2009 Adjustments 1/1/2010 $B Assets: Cash and cash equivalents 8.7 4.0 12.7 Loans held for investment 90.6 47.6 138.2 Less: Allowance for loan and lease losses (4.1) (4.3) (8.4) Net loans held for investment 86.5 43.3 129.8 Accounts

  6. Slide 6: Allowance to loans ratio increased to 6% in Q1 2010 as a result of the consolidation of $48B of credit card loans

    Allowance to loans ratio increased to 6% in Q1 2010 as a result of the consolidation of $48B of credit card loans Allowance Balance Allowance as % of Loans $MM 12% Q4 '09 Jan 1 2010 Q1 '10 Build/(Release) Credit Card Credit Card 10% Domestic $ 1,927 $ 5,590 $ 5,162 $ (428) International 199 727 612

  7. Slide 7: Our capacity to absorb risk remains high

    Our capacity to absorb risk remains high Tangible Common Equity + Allowance to Tier 1 Capital to Tangible Managed Assets Risk Weighted Assets 14% 13.8% 12% 12% 11.9% 10% 9.7% 9.1% 9.9% 8.5% 8.4% 9.7% 9.6% 10% 7.8% 8% Allowance 8% 6.3% Other 6.2% Tier 1 6% 5.6% 5.5% 4.8% 6% 4% Common 4% TCE 2% 2% 0%

  8. Slide 8: Lower funding costs and strong Domestic Card revenue margin drove stable to improving margins in the quarter

    Lower funding costs and strong Domestic Card revenue margin drove stable to improving margins in the quarter Margins as % of Managed Assets 16% Funding costs improved 17 basis points 14% • Mix shift from wholesale funding to bank deposits Revenue Margin 12% • Favorable mix shift within the deposit p

  9. Slide 9: Our Domestic Card business has delivered solid pre-provision and bottom-line ROA

    Our Domestic Card business has delivered solid “pre-provision” and bottom-line ROA Return on Managed Assets - Domestic Card 18% Revenue Margin 17.1% 15.8% 15.7% 16% 15.6% 15.5% 15.5% 14.5% Non-interest 14% Expense 12% 10% 8% Provision 6% 4% Taxes 2% ROA 0% 2004 2005 2006 2007 2008 2009 Q1'10 April 2

  10. Slide 10: The first quarter of 2010 is likely the peak of consumer credit charge-offs

    The first quarter of 2010 is likely the peak of consumer credit charge-offs Domestic Credit Card ($58.1B*) International Credit Card ($7.8B*) 11% Net Charge-off Rate 9.19% 9.52% 10% 9.32% 10% 9% 8.83% 9% 9.64% 10.48% Net Charge-off Rate 8.39% 9.23% 9.59% 8% 7.30% 8% 6.69% 6.63% 6.55% 6.39% 7% 6.25%

  11. Slide 11: Commercial Banking non-performing asset rates increased in the first quarter of 2010

    Commercial Banking non-performing asset rates increased in the first quarter of 2010 Total Commercial Lending Total Commercial Banking ($29.7B*) Excluding Small Ticket CRE ($27.6B*) 5% 5% 4% Non Performing 4% Non Performing Asset Rate Asset Rate 2.84% 2.52% 3% 2.64% 3% 2.52% 2.47% 2.33% 1.95% 2.08%

  12. Slide 12: We remain well positioned to deliver significant shareholder value over the long term

    We remain well positioned to deliver significant shareholder value over the long term Weathered Path to Delivering the Storm “Normalized” Earnings Long-Term Value • Delivered resilient • Lower pre-provision • Businesses with sustainable, profitability earnings into 2011 above-hurdle returns – Margin

  13. Slide 13: Appendix

    Appendix April 22, 2010 13

  14. Slide 14: Domestic Card delivered another quarter of strong pre-provision earnings and net income

    Domestic Card delivered another quarter of strong pre-provision earnings and net income Domestic Card Highlights Q1 2010 Q4 2009 Q1 2009 (in thousands) • Revenues declined modestly from Q409, Earnings but were up modestly from Q109 Declining loan balances partially Net interest income 1,865,280 1,78

  15. Slide 15: The International Card business posted increased net income as credit results and provision expense improved

    The International Card business posted increased net income as credit results and provision expense improved International Card Highlights Q1 2010 Q4 2009 Q1 2009 (in thousands) • Revenues relatively stable compared to Earnings Q409, and up from Q109 Net interest income 247,795 247,648 186,993 • Sea

  16. Slide 16: Commercial Banking pre-provision earnings were relatively stable, with elevated credit costs driving a net loss

    Commercial Banking pre-provision earnings were relatively stable, with elevated credit costs driving a net loss in the quarter Commercial Banking Highlights (in thousands) Earnings Q1 2010 Q4 2009 Q1 2009 • Revenues declined modestly from Q4 Net interest income 311,401 318,576 245,459 Non-interest i

  17. Slide 17: Consumer Banking profits increased in the quarter, driven by strong deposit results and improving credit

    Consumer Banking profits increased in the quarter, driven by strong deposit results and improving credit Consumer Banking Highlights (in thousands) Earnings Q1 2010 Q4 2009 Q1 2009 • Revenue improvement from Q409 driven Net interest income 896,588 833,369 723,654 by sale of I/O bonds and deconsolida

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