Capital One and Hibernia Corporation Renegotiate Acquisition Price After Katrina

MCLEAN, VA and NEW ORLEANS – Capital One Financial Corporation and Hibernia Corporation today announced that they have renegotiated the purchase price of the Capital One acquisition of Hibernia, which is now valued at approximately $5.0 billion. This represents a reduction in economic value of 9 percent relative to the previous terms. The companies now expect the transaction will close in the fourth quarter of 2005.

The companies have made careful assessments of the potential impact of Hurricane Katrina on Hibernia. To account for the considerable uncertainty in the aftermath of Katrina, each company developed a range of scenarios, incorporating the results of intensive due diligence performed over the last week. The boards of directors of both companies have concluded that completing the transaction under the new terms is in the best interest of their respective shareholders.

Due diligence efforts included an initial assessment of the impact of Katrina on Hibernia’s facilities (including its retail branches and headquarters building in New Orleans), its loan portfolio, and its future business prospects including the significant federal and state aid and insurance proceeds expected to be received by victims of the hurricane in Louisiana. Hibernia will continue to assess the expected impacts, including any expected near-term impact to third quarter earnings.

Capital One expects to update its earnings guidance for the full year ending December 31, 2005, as well as estimated financial impacts of the transaction in 2006 and 2007, in connection with its third quarter earnings announcement.

Status of Hibernia’s Operations
Hibernia’s business critical systems are up and running to support open branches and the bank’s customers. 107 of Hibernia’s 321 locations are in areas impacted by Katrina. 47 of these branches have been reopened, and work is underway to open more as the situation allows. Of the 60 branches yet to be reopened, 21 appear to have sustained significant damage. These 21 branches account for approximately 5 percent of Hibernia’s deposits.

“Hurricane Katrina will continue to have a significant impact on the people and communities in our region,” said Hibernia’s President and CEO Herb Boydstun. “The banking community is an essential element of the rebuilding process and we are committed to partnering with our neighbors and communities every step of the way. Capital One has demonstrated consistent commitment and support to Hibernia’s employees, customers, and communities, particularly in this most challenging time.”

“We all know what a difficult time this has been for the people of New Orleans and other communities throughout Louisiana and the Gulf Coast,” said Richard D. Fairbank, Chairman and Chief Executive Officer of Capital One. “I have been tremendously impressed by the dedication and courage demonstrated by Hibernia’s employees in the aftermath of Katrina. While no one can predict the impact of Katrina with certainty, I remain convinced of the strategic value of this transaction and believe that Hibernia is well-positioned to grow and generate significant shareholder value over time.”

Terms of the Agreement
Under the terms of the amendment to the merger agreement, which has been approved by both companies’ boards of directors, Hibernia shareholders will have the right, subject to proration, to elect to receive cash or Capital One common stock, in either case having a value per Hibernia share equal to $13.95 plus the value at closing of .2055 Capital One shares. Based on the price of Capital One shares at the close of business on Tuesday, Sept. 6, 2005, of $80.50, the transaction is valued at $30.49 per Hibernia share. The actual value on consummation of the acquisition will depend on Capital One’s share price at that time. The total transaction value of approximately $5.0 billion, based on Capital One’s closing share price of Sept. 6, 2005, includes approximately $2.2 billion in cash.

The transaction is subject to the satisfaction of customary closing conditions, including Hibernia shareholder approval of the revised terms, and is expected to close in the fourth quarter of 2005. The impact of hurricane- related actions and events will be disregarded in determining whether closing conditions are satisfied.

Hibernia shareholders who have made elections as to their preferred form of merger consideration will be allowed to withdraw those elections. All shareholders will be given the right to make new elections until the business day prior to the Hibernia shareholder meeting to be held to approve the revised transaction. The companies expect to communicate promptly with Hibernia stockholders regarding the procedure for withdrawing existing elections.