Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 1-13300 CAPITAL ONE FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Delaware 54-1719854 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1680 Capital One Drive, McLean, Virginia 22102 (Address of Principal Executive Offices) (Zip Code) Registrant’s telephone number, including area code: (703) 720-1000 Securities registered pursuant to section 12(b) of the act: Title of Each Class Name of Each Exchange on Which Registered Common Stock (par value $.01 per share) New York Stock Exchange Warrants (expiring November 14, 2018) New York Stock Exchange 7.50% Enhanced Trust Preferred Securities (Enhanced TRUPS®) New York Stock Exchange Securities Registered Pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15 (d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Indicate by check mark whether the registrant is a Shell Company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒ The aggregate market value of the voting stock held by non-affiliates of the registrant as of the close of business on June 30, 2011. Common Stock, $.01 Par Value: $23,504,061,823* *In determining this figure, the registrant assumed that the executive officers of the registrant and the registrant’s directors are affiliates of the registrant. Such assumption shall not be deemed to be conclusive for any other purpose. The number of shares outstanding of the registrant’s common stock as of the close of business on January 31, 2012. Common Stock, $.01 Par Value: 459,408,409 shares DOCUMENTS INCORPORATED BY REFERENCE 1. Portions of the Proxy Statement for the annual meeting of stockholders to be held on May 8, 2012, are incorporated by reference into Part III. Table of Contents TABLE OF CONTENTS Page PART I 1 Item 1. Business 1 Overview 1 Operations and Business Segments 3 Supervision and Regulation 4 Competition 14 Employees 15 Additional Information 15 Forward-Looking Statements 16 Item 1A. Risk Factors 18 Item 1B. Unresolved Staff Comments 32 Item 2. Properties 32 Item 3. Legal Proceedings 32 Item 4. Mine Safety Disclosure 32 PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 33 Item 6. Selected Financial Data 36 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) 41 Introduction 41 Executive Summary and Business Outlook 43 Critical Accounting Policies and Estimates 48 Consolidated Results of Operations 54 Business Segment Financial Performance 63 Consolidated Balance Sheet Analysis 77 Off-Balance Sheet Arrangements and Variable Interest Entities 85 Capital Management 86 Risk Management 89 Credit Risk Profile 96 Liquidity Risk Profile 114 Market Risk Profile 119 Accounting Changes and Developments 122 Supplemental Tables 123 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 130 Item 8. Financial Information and Supplementary Data 134 Consolidated Statements of Income 134 Consolidated Balance Sheets 135 Consolidated Statements of Changes in Stockholders’ Equity 136 Consolidated Statements of Cash Flows 138 Notes to Consolidated Statements 139 Note 1—Summary of Significant Accounting Policies 139 Note 2—Acquisitions and Restructuring Activities 157 Note 3—Discontinued Operations 159 Note 4—Investment Securities 160 Note 5—Loans 168 Note 6—Allowance for Loan and Lease Losses 184 Note 7—Variable Interest Entities and Securitizations 187 Note 8—Goodwill and Other Intangible Assets 195 i Table of Contents Page Note 9—Premises, Equipment and Lease Commitments 199 Note 10—Deposits and Borrowings 200 Note 11—Derivative Instruments and Hedging Activities 203 Note 12—Stockholders’ Equity 209 Note 13—Regulatory and Capital Adequacy 210 Note 14—Earnings Per Common Share 211 Note 15—Other Non-Interest Expense 212 Note 16—Stock-Based Compensation Plan 212 Note 17—Employee Benefit Plans 216 Note 18—Income Taxes 221 Note 19—Fair Value of Financial Instruments 225 Note 20—Business Segments 235 Note 21—Commitments, Contingencies and Guarantees 240 Note 22—Significant Concentration of Credit Risk 251 Note 23—Capital One Financial Corporation (Parent Company Only) 253 Note 24—International Operations 256 Note 25—Related Party Transactions 257 Note 26—Subsequent Events 257 Selected Quarterly Financial Information 259 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 260 Item 9A. Controls and Procedures 260 Item 9B. Other Information 260 PART III Item 10. Directors, Executive Officers and Corporate Governance 261 Item 11. Executive Compensation 261 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 261 Item 13. Certain Relationships and Related Transactions, and Director Independence 261 Item 14. Principal Accountant Fees and Services 261 PART IV Item 15. Exhibits, Financial Statement Schedules 262 SIGNATURES 263 EXHIBIT INDEX 264 ii Table of Contents INDEX OF MD&A TABLES AND SUPPLEMENTAL TABLES Table Description Page — MD&A Tables: 1 Business Segment Results 42 2 Average Balances, Net Interest Income and Net Interest Yield (Reported Basis) 56 3 Average Balances, Net Interest Income and Net Interest Yield (Managed Basis) 58 4 Rate/Volume Analysis of Net Interest Income 59 5 Non-Interest Income 61 6 Non-Interest Expense 62 7 Credit Card Business Results 65 8 Consumer Banking Business Results 71 9 Commercial Banking Business Results 74 10 Investment Securities 77 11 Non-Agency Investment Securities Credit Ratings 79 12 Net Loans Held for Investment 79 13 Unpaid Principal Balance of Mortgage Loans Originated and Sold to Third Parties Based on Category of Purchaser 81 14 Open Pipeline All Vintages (all entities) 82 15 Changes in Representation and Warranty Reserve 84 16 Allocation of Representation and Warranty Reserve 85 17 Capital Ratios Under Basel I 87 18 Risk-Based Capital Components Under Basel I 87 19 Loan Portfolio Composition 98 20 Loan Maturity Schedule 99 21 Credit Card Concentrations 100 22 Consumer Banking Concentrations 101 23 Commercial Banking Concentrations 102 24 30+ Day Delinquencies 103 25 Aging of 30+ Day Delinquent Loans 104 26 90+ Days Delinquent Loans Accruing Interest 104 27 Nonperforming Loans and Other Nonperforming Assets 106 28 Net Charge-Offs 107 29 Loan Modifications and Restructurings 109 30 Summary of Allowance for Loan and Lease Losses 111 31 Allocation of the Allowance for Loan and Lease Losses 113 32 Liquidity Reserves 114 33 Deposits 114 34 Maturities of Large Domestic Denomination Certificates—$100,000 or More 115 35 Deposit Composition and Average Deposit Rates 115 36 Short-term Borrowings 116 37 Expected Maturity Profile of Short-term Borrowings and Long-term Debt 117 38 Contractual Obligations 118 39 Senior Unsecured Debt Credit Ratings 119 40 Interest Rate Sensitivity Analysis 122 — Supplemental Tables: A Loan Portfolio Composition 123 B Performing Delinquencies 125 C Nonperforming Assets 126 D Net Charge-Offs 127 E Summary of Allowance for Loan And Lease Losses 128 F Reconciliation of Non-GAAP Measures and Calculation of Regulatory Capital Measures 129 iii Table of Contents PART I Item 1. Business OVERVIEW General Capital One Financial Corporation, which was established in 1995, is a diversified financial services holding company headquartered in McLean, Virginia. Capital One Financial Corporation and its subsidiaries (the “Company”) offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients through branches, the internet and other distribution channels. As of December 31, 2011, our principal subsidiaries included: • Capital One Bank (USA), National Association (“COBNA”), which currently offers credit and debit card products, other lending products and deposit products; and • Capital One, National Association (“CONA”), which offers a broad spectrum of banking products and financial services to consumers, small businesses and commercial clients. The Company and its subsidiaries are hereafter collectively referred to as “we”, “us” or “our.” CONA and COBNA are collectively referred to as the “Banks” in this report.