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The McLean, Va., lender reported third-quarter earnings of $813 million, or $1.77 a share, beating the consensus EPS estimate of $1.68 among analysts polled by Thomson Reuters. Capital One bucked the industry trend with a 19 basis point expansion of its net interest margin --the difference between a bank's average yield on loans and investments and its average cost for loans and deposits -- during the third quarter, to 7.4%. Nearly half of the company's bank's loans held for investment are credit card loans. Capital One CEO Richard Fairbank said during the company's conference call after the market close on Thursday, that "the level of new accounts booked in the third quarter was more than double that of the year-earlier period, and purchase volume, excluding the impact of the Kohl's private-label portfolio that Capital One added earlier in 2011, increased by 17%."Fairbanks said earlier on Thursday that he expected "that the acquisitions of ING Direct and the HSBC (HBC) US Card Business will deliver attractive financial results in the near-term."Capital One's third-quarter return on average assets was a strong 1.72%.The Down Jones Industrial Average rose over 200 points, as investors hoped for some progress on a plan for expanding the eurozone recue fund. German Chancellor Angela Merkel and French President Nicolas Sarkozy extended their target date for agreement on an "ambitious plan" to settle the European debit crisis to Wednesday. The KBW Bank Index (I:BKX) rose 2% to close at 38.93, with all but four of the 24 index components showing gains. Shares of American International Group (AIG) rose % to close at $24.01, after the Wall Street Journal reported that the insurance giant's $10 billion mortgage putback lawsuit against Bank of America (BAC) was straining ties between the companies, with Bank of America declining an opportunity to provide AIG with new credit. Shares of Bank of America were down penny, closing at $6.46.Comerica (CMA) was up 6% to close at $24.38, recovering a portion of the previous two days' losses in the wake of a third-quarter earnings miss. Shares of Northern Trust (NTRS) rose 4% to close at $39.99. Commerce Bancshares saw its stock rise 3% to close at $38.45.KeyCorp (KEY) was up 2% to close at $6.96, after FBR Capital Markets analyst Paul Miller reiterated his "Market Perform" rating and $8 price target for the shares, saying that the company's third-quarter earnings beat was 'primarily driven by low provision expense and decent principal investing results." Miller added that while he remained "concerned regarding KEY's prospects for core earnings growth as its efficiency ratio remains elevated, NIM declined more than regional peers, and loan balances continue to shrink," the company had "maintained a strong capital base," with management saying it had requested regulatory permission for a combination of increased dividends and share repurchases.Other large U.S. banks seeing 2% gains to round out the week included Morgan Stanley (MS), which closed at $17.02; BB&T (BBT), at $23.05; Bank of New York Mellon (BK), at $20.68; Cullen/Frost Bankers (CFR), at $48.65; M&T Bank (MTB), at $75.02; New York Community Bancorp (NYB), at $12.41; Regions Financial (RF), at $3.78; U.S. Bancorp (USB), at $25.43; and Wells Fargo (WFC), which closed at $24.31.The sector loser was SunTrust (STI), with shares slipping over 3% to close at $18.57, after the Atlanta lender beat analysts' third-quarter estimates as credit quality continued to improve. RELATED STORIES: GE Earnings: Don't Buy the Headline, It's a Miss >Bank Earnings Gimmick Under Scrutiny >SunTrust Beats on Stable Revenue >-- To contact the writer, click here: Philip van Doorn.To follow the writer on Twitter, go to http://twitter.com/PhilipvanDoorn.
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