Capital One Reports Second Quarter Earnings

MCLEAN, Va., July 20 /PRNewswire-FirstCall/ -- Capital One Financial Corporation today announced that its earnings for the second quarter of 2005 were $531.1 million, or $2.03 per share (diluted), compared with $407.4 million, or $1.65 per share (diluted), for the second quarter of 2004, and $506.6 million, or $1.99 per share (diluted), for the first quarter of 2005.

"Capital One's second quarter results demonstrate the continued strength of our diversified consumer financial services company," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "The company delivered solid credit quality, loan growth, and profitability while planning for the acquisition of Hibernia and integrating our new auto and home loan businesses."

Capital One expects the acquisition of Hibernia Corporation to close on September 1, 2005, subject to approval by Hibernia's shareholders, the receipt of all necessary regulatory approvals and expiration of all regulatory waiting periods prior to that date.

Managed loans grew to $83.0 billion as of June 30, 2005, up $1.4 billion, or 7 percent annualized, from the previous quarter, and up $9.6 billion, or 13 percent, from the second quarter of 2004. The company continues to expect that managed loans will grow at a rate of between 12 and 15 percent during 2005, excluding the impact of the Hibernia transaction. Additionally, the company expects its US Card loan growth rate to be in the low single digits, and its Auto Finance and Global Financial Services businesses to grow at a faster rate than US Card.

The managed charge-off rate decreased to 4.10 percent in the second quarter of 2005 from 4.13 percent in the previous quarter, and from 4.42 percent in the second quarter of 2004. The company continues to expect its quarterly managed net charge-off rate to stay below 4.25 percent in 2005, with seasonal variations and excluding the impact of the Hibernia transaction. The company decreased its allowance for loan losses in the second quarter of 2005 by $35.0 million. The reduction was driven largely by continued loan diversification in our reported balance sheet and credit performance in our auto business. The company continues to expect a net increase in its allowance for loan losses in the full year 2005, inclusive of reductions taken in the first half of 2005 and excluding the impact of the Hibernia transaction.

The managed delinquency rate (30+ days) increased to 3.49 percent as of June 30, 2005 from 3.45 percent as of the end of the previous quarter. The managed delinquency rate as of June 30, 2004 was 3.76 percent. Capital One's managed revenue margin increased to 12.65 percent in the second quarter of 2005 from 12.50 percent in the previous quarter, and 12.53 percent in the second quarter of 2004. The company continues to expect a modest decline in managed revenue margin over time due to its diversification and bias towards lower loss assets.

"The company remains on track to deliver diluted earnings of between $6.60 and $7.00 per share in 2005, including the expected impact of completing the acquisition of Hibernia," said Gary L. Perlin, Capital One's Chief Financial Officer. "This guidance reflects the normal seasonality in loan growth and credit performance, which causes earnings in the second half of the year to be lower than those reported in the first half."

Marketing expenses for the second quarter of 2005 were $277.0 million, down $34.8 million from the $311.8 million spent in the first quarter of 2005. Marketing expenses were $253.8 million in the comparable quarter of the prior year. The company expects annual marketing spend for 2005 to be approximately $1.4 billion, excluding the impact of the Hibernia transaction.

Annualized operating expenses as a percentage of average managed loans increased to 5.13 percent in the second quarter of 2005, up from 4.98 percent in the previous quarter and down from 5.39 percent in the second quarter of 2004. Included in operating expenses were charges for a combination of employee termination benefits and continued facility consolidations totaling $26.0 million for the second quarter of 2005, $4.9 million for the first quarter of 2005 and $56.0 million for the second quarter of 2004. The company expects about $20 million in additional restructuring charges in 2005 related to programs initiated in 2004.

The company continues to expect a return on managed assets of between 1.7 and 1.8 percent in 2005, with some quarterly variability, excluding the impact of the Hibernia transaction.

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 Securities and Exchange Commission, the company is providing a numerical reconciliation of managed financial measures to comparable measures calculated on a reported basis using generally accepted accounting principles (GAAP). Please see the schedule titled "Reconciliation to GAAP Financial Measures" attached to this release for more information.

The company cautions that its current expectations in this release, in the presentation slides available on the company's website and on its Form 8-K dated July 20, 2005 for 2005 earnings, charge-off rates, revenue margins, return on assets, allowance for loan losses, loan growth rates, marketing, the composition of loan growth, restructuring charges, the benefits of the business combination transaction involving Capital One and Hibernia, including future financial and operating results, and the new company's plans, objectives, expectations and intentions are forward-looking statements and actual results could differ materially from current expectations due to a number of factors, including: continued intense competition from numerous providers of products and services which compete with our businesses; changes in our aggregate accounts and balances, and the growth rate and composition thereof; the company's ability to continue to diversify its assets; the company's ability to access the capital markets at attractive rates and terms to fund its operations and future growth; changes in the reputation of the credit card industry and/or the company with respect to practices or products; the success of the company's marketing efforts; the company's ability to execute on its strategic and operating plans; and general economic conditions affecting interest rates and consumer income and spending, which may affect consumer bankruptcies, defaults, and charge-offs; the ability to obtain regulatory approvals of the proposed Capital One - Hibernia transaction on the proposed terms and schedule; the failure of Hibernia stockholders to approve the transaction; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; and disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers.

A discussion of these and other factors can be found in Capital One's annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-K for the fiscal year ended December 31, 2004.

Additional Information About the Hibernia Transaction

Hibernia shareholders are urged to read the definitive proxy statement/prospectus regarding the proposed merger of Capital One Financial Corp. ("Capital One") and Hibernia Corporation ("Hibernia"), which was first mailed to Hibernia shareholders on or about June 20, 2005 because it contains important information. You may obtain a free copy of the definitive proxy statement/prospectus and other related documents filed by Capital One and Hibernia with the Securities and Exchange Commission ("SEC") at the SEC's website at http://www.sec.gov/. The definitive proxy statement/prospectus and the other documents may also be obtained for free by accessing Capital One's website at http://www.capitalone.com/ under the tab "Investors" and then under the heading "SEC & Regulatory Filings" or by accessing Hibernia's website at http://www.hibernia.com/ under the tab "About Hibernia" and then under the heading "Investor Relations-SEC Filings."

Capital One, Hibernia and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from Hibernia stockholders in favor of the merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the Hibernia stockholders in connection with the proposed merger is set forth in the definitive proxy statement/prospectus filed with the SEC. You can find information about Capital One's executive officers and directors in its definitive proxy statement filed with the SEC on March 21, 2005. You can find information about Hibernia's executive officers and directors in its definitive proxy statement filed with the SEC on March 15, 2005. You can obtain free copies of these documents from Capital One and Hibernia using the contact information above.

About Capital One

Headquartered in McLean, Virginia, Capital One Financial Corporation (http://www.capitalone.com/) is a bank holding company whose principal subsidiaries, Capital One Bank, Capital One, F.S.B. and Capital One Auto Finance, Inc. offer a variety of consumer lending products. Capital One's subsidiaries collectively had 48.9 million accounts and $83.0 billion in managed loans outstanding as of June 30, 2005. Capital One is a Fortune 500 company and, through its subsidiaries, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.

NOTE: Second quarter 2005 financial results, SEC Filings, and second quarter earnings conference call slides are accessible on Capital One's home page (http://www.capitalone.com/). Choose "Investors" on the bottom right corner of the home page to view and download the earnings press release, slides, and other financial information. Additionally, a webcast of today's 5:00 pm (EDT) earnings conference call is accessible through the same link.

CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS 2005 2005 2004 (in millions, except per share data and as noted) Q2 Q1 Q2 Earnings (Reported Basis) Net Interest Income $ 872.5 $ 860.5 $ 711.0 Non-Interest Income 1,582.0 1,516.0 1,396.1 Total Revenue(2) 2,454.5 2,376.5 2,107.1 Provision for Loan Losses 291.6 259.6 242.3 Marketing Expenses 277.0 311.8 253.8 Operating Expenses(3) 1,058.6 1,016.1 975.0 Income Before Taxes 827.3 789.0 636.0 Tax Rate 35.8 % 35.8 % 36.0 % Net Income $ 531.1 $ 506.6 $ 407.4 Common Share Statistics Basic EPS $ 2.10 $ 2.08 $ 1.74 Diluted EPS $ 2.03 $ 1.99 $ 1.65 Dividends Per Share $ 0.03 $ 0.03 $ 0.03 Book Value Per Share (period end) $ 39.51 $ 35.62 $ 29.90 Stock Price Per Share (period end) $ 80.01 $ 74.77 $ 68.38 Total Market Capitalization (period end) $ 21,082.6 $ 18,849.5 $ 16,514.5 Shares Outstanding (period end) 263.5 252.1 241.5 Shares Used to Compute Basic EPS 252.6 244.0 234.7 Shares Used to Compute Diluted EPS 261.7 255.2 247.6 Reported Balance Sheet Statistics (period avg.) Average Loans $ 38,237 $ 38,204 $ 33,290 Average Earning Assets $ 51,694 $ 50,898 $ 45,705 Average Assets $ 56,963 $ 56,288 $ 50,020 Average Equity $ 8,925 $ 8,568 $ 6,943 Return on Average Assets (ROA) 3.73 % 3.60 % 3.26 % Return on Average Equity (ROE) 23.80 % 23.65 % 23.47 % Reported Balance Sheet Statistics (period end) Loans $ 38,611 $ 37,959 $ 34,551 Total Assets $ 56,996 $ 55,632 $ 50,070 Capital (4) $ 10,511 $ 9,839 $ 8,057 Loan growth $ 652 $ (257) $ 1,379 % Loan Growth Q Over Q (annualized) 7 % (3)% 17 % % Loan Growth Y Over Y 12 % 14 % 29 % Capital to Assets Ratio 18.44 % 17.69 % 16.09 % Capital plus Allowance to Assets Ratio 20.91 % 20.27 % 18.94 % Revenue & Expense Statistics (Reported) Net Interest Income Growth (annualized) 6 % 39 % (11)% Non Interest Income Growth (annualized) 17 % (1)% (13)% Revenue Growth (annualized) 13 % 12 % (13)% Net Interest Margin 6.75 % 6.76 % 6.22 % Revenue Margin 18.99 % 18.68 % 18.44 % Risk Adjusted Margin (5) 16.49 % 16.08 % 15.73 % Operating Expense as a % of Revenues 43.13 % 42.76 % 46.27 % Operating Expense as a % of Avg Loans (annualized) 11.07 % 10.64 % 11.72 % Asset Quality Statistics (Reported) Allowance $ 1,405 $ 1,440 $ 1,425 30+ Day Delinquencies $ 1,400 $ 1,319 $ 1,351 Net Charge-Offs $324 $330 $310 Allowance as a % of Reported Loans 3.64 % 3.79 % 4.12 % Delinquency Rate (30+ days) 3.62 % 3.47 % 3.91 % Net Charge-Off Rate 3.39 % 3.46 % 3.72 % (1) Includes a $41.1 million gain resulting from the sale of the French loan portfolio in Q4 2004 and a $31.5 million gain resulting from the sale of a joint venture investment in South Africa in Q3 2004. (2) 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: Q2 2005 -- $259.8, Q1 2005 -- $243.9, Q4 2004 -- $276.8, Q3 2004 -- $269.7, and Q2 2004 -- $263.5 million. (3) Includes employee termination benefits and charges for facility consolidation related to corporate-wide cost reduction initiatives of $26.0 million, $23.7 million, $42.1 million, $26.7 million and $56.0 million for Q2 2005, Q1 2005, Q4 2004, Q3 2004 and Q2 2004, respectively. In addition, Q1 2005 includes an $18.8 million reversal of a previously recognized impairment related to the sale of the Tampa, FL facility and Q3 2004 had charges of $20.6 million related to a change in the fixed asset capitalization thresholds and $15.8 million related to impairment of internally developed software. (4) Includes preferred interests for all periods presented and mandatory convertible securities for all periods prior to Q2 2005. (5) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS(1) 2005 2005 2004 (in millions) Q2 Q1 Q2 Earnings (Managed Basis) Net Interest Income $ 1,830.3 $ 1,818.8 $ 1,585.4 Non-Interest Income 1,144.8 1,071.4 1,011.3 Total Revenue(3) 2,975.1 2,890.2 2,596.7 Provision for Loan Losses 812.2 773.3 731.9 Marketing Expenses 277.0 311.8 253.8 Operating Expenses(4) 1,058.6 1,016.1 975.0 Income Before Taxes 827.3 789.0 636.0 Tax Rate 35.8 % 35.8 % 36.0 % Net Income $ 531.1 $ 506.6 $ 407.4 Managed Balance Sheet Statistics (period avg.) Average Loans $ 82,472 $ 81,652 $ 72,327 Average Earning Assets $ 94,075 $ 92,477 $ 82,905 Average Assets $ 100,640 $ 99,283 $ 88,473 Return on Average Assets (ROA) 2.11 % 2.04 % 1.84 % Managed Balance Sheet Statistics (period end) Loans $ 82,951 $ 81,592 $ 73,367 Total Assets $ 100,757 $ 98,724 $ 88,317 Loan Growth $ 1,359 $ 1,731 $ 1,550 % Loan Growth Q over Q (annualized) 7 % 9 % 9 % % Loan Growth Y over Y 13 % 14 % 21 % Capital to Assets Ratio 10.43 % 9.97 % 9.12 % Capital plus Allowance to Assets Ratio 11.83 % 11.42 % 10.74 % Number of Accounts (000's) 48,861 49,062 46,591 % Off-Balance Sheet Securitizations 53 % 53 % 53 % % at Introductory Rate 6 % 6 % 6 % Revenue & Expense Statistics (Managed) Net Interest Income Growth (annualized) 3 % 28 % (22)% Non Interest Income Growth (annualized) 27 % (10)% (1)% Revenue Growth (annualized) 12 % 13 % (14)% Net Interest Margin 7.78 % 7.87 % 7.65 % Revenue Margin 12.65 % 12.50 % 12.53 % Risk Adjusted Margin (5) 9.06 % 8.85 % 8.67 % Operating Expense as a % of Revenues 35.58 % 35.16 % 37.55 % Operating Expense as a % of Avg Loans (annualized) 5.13 % 4.98 % 5.39 % Asset Quality Statistics (Managed) 30+ Day Delinquencies $ 2,893 $ 2,812 $ 2,756 Net Charge-Offs $ 845 $ 844 $ 800 Delinquency Rate (30+ days) 3.49 % 3.45 % 3.76 % Net Charge-Off Rate 4.10 % 4.13 % 4.42 % (1) 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." (2) Includes a $41.1 million gain resulting from the sale of the French loan portfolio in Q4 2004 and a $31.5 million gain resulting from the sale of a joint venture investment in South Africa in Q3 2004. (3) 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: Q2 2005 -- $259.8, Q1 2005 -- $243.9, Q4 2004 -- $276.8, Q3 2004 -- $269.7, and Q2 2004 -- $263.5 million. (4) Includes employee termination benefits and charges for facility consolidation related to corporate-wide cost reduction initiatives of $26.0 million, $23.7 million, $42.1 million, $26.7 million and $56.0 million for Q2 2005, Q1 2005, Q4 2004, Q3 2004 and Q2 2004, respectively. In addition, Q1 2005 includes an $18.8 million reversal of a previously recognized impairment related to the sale of the Tampa, FL facility and Q3 2004 had charges of $20.6 million related to a change in the fixed asset capitalization thresholds and $15.8 million related to impairment of internally developed software. (5) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. CAPITAL ONE FINANCIAL CORPORATION (COF) SEGMENT FINANCIAL & STATISTICAL SUMMARY -- MANAGED BASIS(1) 2005 2005 2004 (in thousands) Q2 Q1 Q2 Segment Statistics US Card: Net interest income $ 1,151,692 $ 1,250,638 $ 1,124,099 Non-interest income 846,720 779,415 816,034 Provision for loan losses 539,211 489,036 519,569 Non-interest expenses 794,012 836,142 820,424 Income tax provision (benefit) 232,816 246,706 216,051 Net income (loss) $ 432,373 $ 458,169 $ 384,089 Loans receivable $46,408,912 $46,629,763 $45,247,444 Net charge-off rate 4.90% 4.73% 5.19% Delinquency Rate (30+ days) 3.60% 3.66% 3.95% Auto Finance: Net interest income $ 285,744 $ 249,507 $ 195,974 Non-interest income 6,964 11,339 22,666 Provision for loan losses 20,330 92,313 54,908 Non-interest expenses 124,584 113,765 81,345 Income tax provision (benefit) 51,728 19,169 29,659 Net income (loss) $ 96,066 $ 35,599 $ 52,728 Loans receivable $14,520,216 $13,292,953 $ 9,383,432 Net charge-off rate 1.74% 2.89% 2.53% Delinquency Rate (30+ days) 4.09% 3.51% 5.59% Global Financial Services: Net interest income $ 411,825 $ 412,733 $ 338,192 Non-interest income 265,499 233,841 185,488 Provision for loan losses 256,766 188,316 159,001 Non-interest expenses 378,278 351,476 295,117 Income tax provision (benefit) 15,621 36,309 23,471 Net income (loss) $ 26,659 $ 70,473 $ 46,091 Loans receivable $22,053,145 $21,683,102 $18,722,812 Net charge-off rate 3.89% 3.55% 3.43% Delinquency Rate (30+ days) 2.93% 3.04% 2.50% Other: Net interest income $ (18,959) $ (94,118) $ (72,795) Non-interest income 25,577 46,806 (12,890) Provision for loan losses (4,144) 3,627 (1,535) Non-interest expenses 38,743 26,449 31,926 Income tax provision (benefit) (4,001) (19,709) (40,555) Net income (loss) $ (23,980) $ (57,679) $ (75,521) Loans receivable $ (30,921) $ (13,826) $ 13,664 Total: Net interest income $ 1,830,302 $ 1,818,760 $ 1,585,470 Non-interest income 1,144,760 1,071,401 1,011,298 Provision for loan losses 812,163 773,292 731,943 Non-interest expenses 1,335,617 1,327,832 1,228,812 Income tax provision (benefit) 296,164 282,475 228,626 Net income (loss) $ 531,118 $ 506,562 $ 407,387 Loans receivable $82,951,352 $81,591,992 $73,367,352 Net charge-off rate 4.10% 4.13% 4.42% Delinquency Rate (30+ days) 3.49% 3.45% 3.76% (1) 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 Reconciliation to GAAP Financial Measures For the Three Months Ended June 30, 2005 (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 it originated. For this reason the Company believes the "managed" consolidated financial statements and related managed metrics to be useful to stakeholders.

Total Total Reported Adjustments(1) Managed(2) Income Statement Measures Net interest income $ 872,503 $ 957,799 $ 1,830,302 Non-interest income $ 1,581,996 $ (437,236) $ 1,144,760 Total revenue $ 2,454,499 $ 520,563 $ 2,975,062 Provision for loan losses $ 291,600 $ 520,563 $ 812,163 Net charge-offs $ 324,047 $ 520,563 $ 844,610 Balance Sheet Measures Consumer loans $ 38,610,787 $ 44,340,565 $ 82,951,352 Total assets $ 56,995,967 $ 43,761,307 $100,757,274 Average consumer loans $ 38,237,463 $ 44,234,365 $ 82,471,828 Average earning assets $ 51,693,930 $ 42,380,839 $ 94,074,769 Average total assets $ 56,962,652 $ 43,677,152 $100,639,804 Delinquencies $ 1,399,552 $ 1,493,307 $ 2,892,859 (1) Includes adjustments made related to the effects of securitization transactions qualifying as sales under GAAP and adjustments made to reclassify to "managed" loans outstanding the collectible portion of billed finance charge and fee income on the investors' interest in securitized loans excluded from loans outstanding on the "reported" balance sheet in accordance with Financial Accounting Standards Board Staff Position, "Accounting for Accrued Interest Receivable Related to Securitized and Sold Receivables under FASB Statement 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities," issued April 2003. (2) The Managed loan portfolio does not include auto loans which have been sold in whole loan sale transactions where the Company has retained servicing rights. CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited) June 30 March 31 June 30 2005 2005 2004 Assets: Cash and due from banks $ 581,267 $ 761,234 $ 346,978 Federal funds sold and resale agreements 1,283,015 12,283 1,082,939 Interest-bearing deposits at other banks 721,806 446,793 290,242 Cash and cash equivalents 2,586,088 1,220,310 1,720,159 Securities available for sale 9,522,515 9,460,688 8,946,836 Consumer loans 38,610,787 37,959,203 34,551,343 Less: Allowance for loan losses (1,405,000) (1,440,000) (1,425,000) Net loans 37,205,787 36,519,203 33,126,343 Accounts receivable from securitizations 4,890,933 5,605,009 3,972,754 Premises and equipment, net 782,372 806,411 868,203 Interest receivable 274,547 259,350 234,348 Goodwill 739,889 747,756 352,157 Other 993,836 1,012,839 848,861 Total assets $56,995,967 $55,631,566 $50,069,661 Liabilities: Interest-bearing deposits $26,521,031 $25,854,025 $24,178,756 Senior and subordinated notes 6,692,311 6,876,432 7,727,810 Other borrowings 9,692,941 10,243,235 7,885,340 Interest payable 252,677 242,464 256,293 Other 3,425,226 3,435,680 2,800,405 Total liabilities 46,584,186 46,651,836 42,848,604 Stockholders' Equity: Common stock 2,650 2,536 2,428 Paid-in capital, net 3,783,074 2,878,237 2,348,401 Retained earnings and cumulative other comprehensive income 6,695,753 6,166,070 4,919,656 Less: Treasury stock, at cost (69,696) (67,113) (49,428) Total stockholders' equity 10,411,781 8,979,730 7,221,057 Total liabilities and stockholders' equity $56,995,967 $55,631,566 $50,069,661 CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited) Three Months Ended June 30 March 31 June 30 2005 2005 2004 Interest Income: Consumer loans, including past-due fees $1,190,098 $1,184,036 $1,019,076 Securities available for sale 91,245 90,164 76,081 Other 70,557 62,068 56,789 Total interest income 1,351,900 1,336,268 1,151,946 Interest Expense: Deposits 279,438 264,025 244,978 Senior and subordinated notes 104,593 114,480 124,809 Other borrowings 95,366 97,242 71,142 Total interest expense 479,397 475,747 440,929 Net interest income 872,503 860,521 711,017 Provision for loan losses 291,600 259,631 242,256 Net interest income after provision for loan losses 580,903 600,890 468,761 Non-Interest Income: Servicing and securitizations 1,024,629 951,602 868,041 Service charges and other customer- related fees 360,410 401,186 368,469 Interchange 132,068 123,440 117,329 Other 64,889 39,751 42,225 Total non-interest income 1,581,996 1,515,979 1,396,064 Non-Interest Expense: Salaries and associate benefits 442,101 433,501 419,695 Marketing 277,034 311,759 253,838 Communications and data processing 138,916 142,819 108,191 Supplies and equipment 83,661 86,446 74,582 Occupancy 40,209 17,901 70,494 Other 353,696 335,406 302,012 Total non-interest expense 1,335,617 1,327,832 1,228,812 Income before income taxes 827,282 789,037 636,013 Income taxes 296,164 282,475 228,626 Net income $ 531,118 $ 506,562 $ 407,387 Basic earnings per share $ 2.10 $ 2.08 $ 1.74 Diluted earnings per share $ 2.03 $ 1.99 $ 1.65 Dividends paid per share $ 0.03 $ 0.03 $ 0.03 Six Months Ended June 30 June 30 2005 2004 Interest Income: Consumer loans, including past-due fees $ 2,374,134 $ 2,054,093 Securities available for sale 181,409 139,797 Other 132,625 122,787 Total interest income 2,688,168 2,316,677 Interest Expense: Deposits 543,463 484,490 Senior and subordinated notes 219,073 249,227 Other borrowings 192,608 139,921 Total interest expense 955,144 873,638 Net interest income 1,733,024 1,443,039 Provision for loan losses 551,231 485,924 Net interest income after provision for loan losses 1,181,793 957,115 Non-Interest Income: Servicing and securitizations 1,976,231 1,785,710 Service charges and other customer- related fees 761,596 722,962 Interchange 255,508 222,924 Other 104,640 107,602 Total non-interest income 3,097,975 2,839,198 Non-Interest Expense: Salaries and associate benefits 875,602 844,087 Marketing 588,793 508,985 Communications and data processing 281,735 225,297 Supplies and equipment 170,107 162,903 Occupancy 58,110 109,213 Other 689,102 603,223 Total non-interest expense 2,663,449 2,453,708 Income before income taxes 1,616,319 1,342,605 Income taxes 578,639 484,412 Net income $ 1,037,680 $ 858,193 Basic earnings per share $ 4.18 $ 3.68 Diluted earnings per share $ 4.02 $ 3.48 Dividends paid per share $ 0.05 $ 0.05 CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (dollars in thousands)(unaudited) Reported Quarter Ended 6/30/05 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $38,237,463 $ 1,190,098 12.45% Securities available for sale 9,592,645 91,245 3.80% Other 3,863,822 70,557 7.30% Total earning assets $51,693,930 $ 1,351,900 10.46% Interest-bearing liabilities: Deposits $26,391,233 $279,438 4.24% Senior and subordinated notes 6,987,888 104,593 5.99% Other borrowings 10,838,955 95,366 3.52% Total interest-bearing liabilities $44,218,076 $ 479,397 4.34% Net interest spread 6.12% Interest income to average earning assets 10.46% Interest expense to average earning assets 3.71% Net interest margin 6.75% Reported Quarter Ended 3/31/05 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $38,203,914 $ 1,184,036 12.40% Securities available for sale 9,654,437 90,164 3.74% Other 3,039,304 62,068 8.17% Total earning assets $50,897,655 $ 1,336,268 10.50% Interest-bearing liabilities: Deposits $25,654,741 $ 264,025 4.12% Senior and subordinated notes 6,908,505 114,480 6.63% Other borrowings 10,698,085 97,242 3.64% Total interest-bearing liabilities $43,261,331 $ 475,747 4.40% Net interest spread 6.10% Interest income to average earning assets 10.50% Interest expense to average earning assets 3.74% Net interest margin 6.76% Reported Quarter Ended 6/30/04 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $33,290,487 $ 1,019,076 12.24% Securities available for sale 9,291,237 76,081 3.28% Other 3,123,672 56,789 7.27% Total earning assets $45,705,396 $ 1,151,946 10.08% Interest-bearing liabilities: Deposits $23,948,154 $ 244,978 4.09% Senior and subordinated notes 7,380,437 124,809 6.76% Other borrowings 8,488,027 71,142 3.35% Total interest-bearing liabilities $39,816,618 $ 440,929 4.43% Net interest spread 5.65% Interest income to average earning assets 10.08% Interest expense to average earning assets 3.86% Net interest margin 6.22% CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (dollars in thousands)(unaudited) Managed (1) Quarter Ended 6/30/05 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $82,471,828 $ 2,652,370 12.86% Securities available for sale 9,592,645 91,245 3.80% Other 2,010,296 22,503 4.48% Total earning assets $94,074,769 $ 2,766,118 11.76% Interest-bearing liabilities: Deposits $26,391,233 $ 279,438 4.24% Senior and subordinated notes 6,987,888 104,593 5.99% Other borrowings 10,838,955 95,366 3.52% Securitization liability 43,810,547 456,419 4.17% Total interest-bearing liabilities $88,028,623 $ 935,816 4.25% Net interest spread 7.51% Interest income to average earning assets 11.76% Interest expense to average earning assets 3.98% Net interest margin 7.78% Managed (1) Quarter Ended 3/31/05 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $81,652,485 $ 2,631,751 12.89% Securities available for sale 9,654,437 90,164 3.74% Other 1,170,566 17,672 6.04% Total earning assets $92,477,488 $ 2,739,587 11.85% Interest-bearing liabilities: Deposits $25,654,741 $ 264,025 4.12% Senior and subordinated notes 6,908,505 114,480 6.63% Other borrowings 10,698,085 97,242 3.64% Securitization liability 43,215,671 445,080 4.12% Total interest-bearing liabilities $86,477,002 $ 920,827 4.26% Net interest spread 7.59% Interest income to average earning assets 11.85% Interest expense to average earning assets 3.98% Net interest margin 7.87% Managed (1) Quarter Ended 6/30/04 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $72,327,220 $ 2,314,957 12.80% Securities available for sale 9,291,237 76,081 3.28% Other 1,286,629 9,517 2.96% Total earning assets $82,905,086 $ 2,400,555 11.58% Interest-bearing liabilities: Deposits $23,948,154 $ 244,978 4.09% Senior and subordinated notes 7,380,437 124,809 6.76% Other borrowings 8,488,027 71,142 3.35% Securitization liability 38,514,533 374,156 3.89% Total interest-bearing liabilities $78,331,151 $ 815,085 4.16% Net interest spread 7.42% Interest income to average earning assets 11.58% Interest expense to average earning assets 3.93% Net interest margin 7.65% (1) The information in this table reflects the adjustment to add back the effect of securitized loans.