What caused the net loss in the third quarter of 2007?

The reported net loss of $81.6 million was primarily due to an $898.0 million after-tax charge recognized from the shutdown of Capital One's wholesale mortgage banking unit, GreenPoint. This charge included goodwill write-downs, valuation adjustments, and restructuring costs.

How did the acquisition of North Fork Bancorporation impact the results?

The acquisition of North Fork, completed in December 2006, significantly contributed to the growth in total deposits (up 75%) and loans held for investment (up 29%). It also boosted net interest income and overall revenue for the quarter compared to the prior year.

What is the trend in loan quality and losses?

The provision for loan and lease losses increased by 38%, driven by the continued normalization of charge-offs from historically low levels. While net charge-off rates on a reported basis decreased slightly year-over-year, the dollar amount of net charge-offs increased, indicating a deteriorating credit environment that the company is managing.

What is the company's outlook for the remainder of 2007 and 2008?

Capital One affirmed its full-year 2007 earnings per share guidance of approximately $5.00. For 2008, the company anticipates low to mid-single digit growth in loans and deposits, revenue growth in line with asset growth, and operating efficiency in the mid-40 percent range. The charge-off outlook assumes credit normalization by year-end 2007, with potential variations based on economic conditions and delinquency trends.

CAPITAL ONE FINANCIAL CORP 10-Q Quarterly Report Q3 FY2007

Summary

Capital One Financial Corporation's third quarter of 2007 financial results indicate a net loss of $81.6 million, or $(0.21) per diluted share. This loss was primarily driven by an $898 million after-tax charge related to the shutdown of its wholesale mortgage banking unit, GreenPoint. Excluding this discontinued operation, income from continuing operations was $816.4 million, or $2.09 per diluted share, representing a significant increase compared to the prior year quarter, largely due to the acquisition of North Fork Bancorporation in late 2006 and improved net interest income. The company experienced strong growth in total deposits and loans held for investment, largely attributable to the North Fork acquisition. While overall revenue and net interest income increased, the provision for loan and lease losses also rose, reflecting the normalization of credit trends. Management is focused on improving operational efficiency and managing costs, as highlighted by a restructuring initiative. Despite the reported net loss, the underlying performance of continuing operations demonstrates resilience and strategic integration progress.

Key Highlights

1Reported a net loss of $81.6 million for the quarter due to a substantial charge from discontinuing mortgage origination operations.
2Income from continuing operations was $816.4 million, or $2.09 per diluted share, up from $587.8 million ($1.89 per diluted share) in the prior year quarter.
3Net interest income grew significantly by 25% to $1.62 billion, driven by acquisitions, loan growth, and improved margins in the U.S. Card portfolio.
4Provision for loan and lease losses increased by 38% to $595.5 million, reflecting the normalization of credit charge-offs.
5Total deposits increased by 75% to $83.3 billion, primarily due to the North Fork acquisition.
6Managed loans held for investment grew 29% to $144.8 billion, also heavily influenced by the North Fork acquisition.
7The company announced and recognized charges related to a 2007 cost initiative aimed at improving operational efficiency.

CAPITAL ONE FINANCIAL CORP Quarterly Report for Q3 Ended Sep 30, 2007

Summary

Key Highlights

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