It's 5,159 miles from Athens to McLean, Va., but for Capital One, the Greek capital — and its debt crisis — is much much closer to home.

On Wednesday, the banking company surprised observers by coming to market with a $2 billion common stock offering intended to help pay for the $9 billion cash-and-stock acquisition of ING Group NV's U.S. online banking unit.

Capital One moved now to get ahead of any adverse denouement in the European debt crisis and to take advantage of its bullish quarterly results, themselves announced ahead of time. Capital One had promised an offering when it announced the ING deal last month. But it had said the deal was likely to close in the fourth quarter or first quarter of 2012, so many did not foresee an offering this soon.

The move underscores how remote events like the European debt crisis and backyard realities like the sputtering U.S. recovery affect daily business decisions at large financial services companies.

"They had a good quarter, so why not put out the good news and go out with an … offering," said Scott Valentin, an analyst with FBR Capital Markets. Valentin cited fears that European debt defaults could disturb the capital markets and hinder fund-raising.

"Given a high level of uncertainty, why not raise the capital while you have the chance?" Valentin said.

Capital One announced plans to buy the ING unit on June 16 to diversify beyond credit cards. The company is expected to gain $80 billion of deposits and take on a $41 billion mortgage portfolio.

Like other companies with large card portfolios, Capital One has benefited from lower delinquencies and chargeoffs, which has allowed it to boost earnings by stocking away less money for future loan losses.

"The tail wind is clearly there with all these credit card companies," said Henry Coffey Jr., a managing director with Sterne Agee.

This quarter was no exception for Capital One, the first of the major banks to report earnings. It was not expected to release earnings until July 22 but reported them early because of the stock offering.

Net chargeoffs for its entire loan portfolio continued their downward trend, falling to 2.91% in the second quarter, from 5.36% a year earlier. For its credit card portfolio specifically, net chargeoffs fell to 5.06%, from 9.36%.

The percentage of credit card loans 30 days or more past due also fell, to 3.6%, from 4.94%.

"I have been surprised by the level of improvement [with] fewer people entering delinquency," said John Stilmar, an analyst with SunTrust Robinson Humphrey.

That trend, Stilmar said, is reflected in declining bankruptcy rates.

"Our second-quarter performance demonstrates that Capital One remains well positioned to continue to deliver attractive and sustainable results," Richard Fairbank, the chairman and chief executive of Capital One, said in a press release.

In a so-called quiet period due to the stock offering, Capital One did not hold a conference call about the earnings on Wednesday.

Revenue rose 2.3% from a year earlier, to $3.99 billion, supported by a small increase in net interest income and a 6.2% increase in noninterest income.

Improved credit performance helped the bank record a smaller provision for future loan losses. Such provisions fell 52.5%, to $343 million. Its total allowance for loan losses fell 34%, to $4.5 billion. That reduction in turn helped boost net income to $911 million, or $1.97 per diluted share, from $608 million, or $1.33 per diluted share.

Capital One's earnings beat Coffey's estimate of $1.74 per share. However, Coffey said, loan growth remains "disappointing."

Average credit card loans for the quarter were $62.7 billion, about flat compared with a year earlier. Average total loans were $127.9 billion, down from $128.3 billion a year earlier. "We're hoping that as the seasonality of borrowing picks up that receivables start to grow, but it's more of a hope than … a vote of confidence," Coffey said.

Capital One's acquisition of the ING unit could help it achieve loan growth, as well as position it to acquire credit card portfolios.

The company has bid on the U.S. credit card portfolio of HSBC Holdings PLC, which in May announced plans to sell $32 billion worth of private-label and general-purpose cards, according to The Wall Street Journal.

Capital One, which has picked up other smaller portfolios in the last two years, is likeliest to win the HSBC portfolio, analysts say.

"We think Capital One is the most logical acquirer of HSBC's card portfolio in our coverage universe, given its capacity and capabilities," Sanjay Sakhrani, an analyst with Keefe, Bruyette & Woods, wrote in a research report on Tuesday.

Sakhrani noted that the company has entered several card partnerships, most recently completing the acquisition of Kohl's Corp.'s private-label credit card portfolio.

"We think [Capital One's] pending acquisition of ING Direct could serve as a stepping stone for another potentially more accretive deal."

The stock offering will help it complete that deal.

The company said Barclays Capital, Morgan Stanley, Bank of America Corp.'s Merrill Lynch unit and JPMorgan Chase & Co. are serving as the underwriters for the deal.

Capital One also plans to grant the underwriters a 30-day option to purchase an additional $300 million of common stock to cover over-allotments, the company said in a press release. In addition, the company entered into forward-sale agreements with Barclays Capital and Morgan Stanley, which will borrow and sell to the public shares of Capital One's common stock.


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