Capital One Reports Record Earnings for 2001; Earnings Per Share Rise 30% Over Year Ago Period
Earnings were $642.0 million, or $2.91 per share, in 2001 compared with earnings of $469.6 million, or $2.24 per share, in 2000. For the fourth quarter of 2001, earnings were $177.7 million, or $.80 per share, versus earnings of $128.3 million, or $0.61 per share, for the comparable period in the prior year.
"2001 was a banner year for Capital One as we delivered on our goal of 30 percent earnings per share growth -- our 18th consecutive quarter of record earnings," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Our stringent risk management practices again placed us in the lead with the best credit performance of any of the major credit card institutions -- with a charge-off rate in the fourth quarter of 4.42 percent. Despite the uncertainty concerning the strength and timing of an economic recovery, we expect to achieve our 20 percent earnings per share growth target in 2002."
Fourth quarter 2001 revenue, defined as managed net interest income and non-interest income, rose to $1.9 billion versus $1.8 billion in the third quarter of 2001 and $1.4 billion for the comparable period in the prior year. For the quarter, Capital One added 3.7 million net new accounts, bringing total accounts to 43.8 million. The company's managed consumer loan balances increased by $6.8 billion in the fourth quarter to $45.3 billion.
"Our focus on consistently providing innovative, value-add products has resulted in over 10 million net new accounts this year and enabled us to achieve a year-over-year revenue increase of 37 percent," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "We've created one of the world's largest customer franchises with more than 43 million customers."
The managed net charge-off rate increased to 4.42 percent for the fourth quarter of 2001 compared with 3.92 percent for the third quarter of 2001. The managed delinquency rate (30+ days) decreased to 4.95 percent as of December 31, 2001, compared with 5.20 percent as of September 30, 2001.
The company's managed net interest margin decreased to 8.68 percent in the fourth quarter of 2001 from 9.27 percent in the third quarter of 2001 primarily because of an increase in the amount of loans at teaser rates, continued growth of our superprime segment, and an increase in the company's liquidity during the quarter.
Marketing expense for the fourth quarter of 2001 increased $19.3 million to $301.2 million from $281.9 million in the third quarter of 2001, and increased $41.7 million over the $259.5 million spent in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the fourth quarter of 2001 were $773.4 million versus $793.0 million for the third quarter of 2001 and $617.1 million in the comparable period of the prior year. Annualized operating expenses per account decreased to $74 for the fourth quarter of 2001 from $77 (excluding one-time charges) in the prior quarter.
The company cautioned that its current expectations for 2002 earnings and future growth are forward looking statements and actual results could differ materially from current expectations due to a number of factors, including: competition in the credit card industry; the actual account and balance growth achieved by the company; the company's ability to access the capital markets at attractive rates and terms to fund its operations and future growth; and general economic conditions affecting consumer income and spending, which may affect consumer bankruptcies, defaults and charge-offs. A discussion of these and other factors can be found in Capital One's annual and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-K for the year ended December 31, 2000.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation (http://www.capitalone.com ) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products. Capital One's subsidiaries collectively had 43.8 million customers and $45.3 billion in managed loans outstanding as of December 31, 2001. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.
Note: This release, financial information and a live Webcast of today's 5:00pm (EDT) analyst conference call is accessible on the Internet on Capital One's home page (http://www.capitalone.com ). Choose "About Capital One" to access the Investor Center to view and download the earnings press release and other financial information.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
(in millions, except per share data 2001 2001
and as noted) Q4 Q3
Earnings (Managed Basis)
Net Interest Income $982.9 $926.7
Non-Interest Income 941.5 852.5
Total Revenue 1,924.5 1,779.2
Provision for Loan Losses 563.3 437.6
Marketing Expenses 301.2 281.9
Operating Expenses 773.4 793.0(2)
Income Before Taxes 286.6 266.7
Tax Rate 38.0% 38.0%
Net Income $177.7 $165.3
Common Share Statistics
Basic EPS $0.83 $0.78
Diluted EPS $0.80 $0.75
Dividends Per Share $0.03 $0.03
Book Value Per Share (period end) $15.40 $14.14
Stock Price Per Share (period end) $53.95 $46.03
Total Market Capitalization (period end) $11,644.8 $ 9,710.1
Shares Outstanding (period end) 215.8 211.0
Shares Used to Compute Basic EPS 214.7 210.8
Shares Used to Compute Diluted EPS 223.4 219.9
Managed Loan Statistics (period avg.)
Average Loans $41,352 $37,017
Average Earning Assets $45,295 $39,994
Average Assets $48,906 $43,363
Average Equity $ 3,223 $2,935
Net Interest Margin 8.68% 9.27%
Risk Adjusted Margin(1) 12.96% 14.17%
Return on Average Assets (ROA) 1.45% 1.53%
Return on Average Equity (ROE) 22.05% 22.53%
Net Charge-Off Rate 4.42% 3.92%
Net Charge-Offs $456.9 $362.7
Cost Per Account (in dollars) $73.69 $81.03
Managed Loan Statistics (period end)
Reported Loans $20,921 $17,480
Securitized Loans 24,343 21,009
Total Loans $45,264 $38,489
Delinquency Rate (30+ days) 4.95% 5.20%
Number of Accounts (000's) 43,815 40,145
Total Assets $52,506 $44,497
Capital, Including Preferred Interests $3,422.2 $ 3,081.9
Capital to Managed Assets Ratio 6.52% 6.93%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
(in millions, except per share data 2001 2001
and as noted) Q2 Q1
Earnings (Managed Basis)
Net Interest Income $823.7 $759.3
Non-Interest Income 796.3 747.1
Total Revenue 1,620.0 1,506.4
Provision for Loan Losses 379.1 356.5
Marketing Expenses 268.7 231.2
Operating Expenses 721.6 687.0
Income Before Taxes 250.5 231.6
Tax Rate 38.0% 38.0%
Net Income $155.3 $143.6
Common Share Statistics
Basic EPS $0.74 $0.70
Diluted EPS $0.70 $0.66
Dividends Per Share $0.03 $0.03
Book Value Per Share (period end) $13.02 $11.81
Stock Price Per Share (period end) $60.15 $55.50
Total Market Capitalization (period end) $12,666.5 $11,509.1
Shares Outstanding (period end) 210.6 207.4
Shares Used to Compute Basic EPS 209.1 204.8
Shares Used to Compute Diluted EPS 221.2 217.8
Managed Loan Statistics (period avg.)
Average Loans $33,440 $30,505
Average Earning Assets $36,180 $32,983
Average Assets $38,820 $35,303
Average Equity $2,608 $2,347
Net Interest Margin 9.11% 9.21%
Risk Adjusted Margin(1) 14.23% 14.80%
Return on Average Assets (ROA) 1.60% 1.63%
Return on Average Equity (ROE) 23.83% 24.47%
Net Charge-Off Rate 3.98% 3.75%
Net Charge-Offs $332.8 $285.9
Cost Per Account (in dollars) $77.38 $78.26
Managed Loan Statistics (period end)
Reported Loans $16,327 $15,572
Securitized Loans 18,956 15,979
Total Loans $35,283 $31,551
Delinquency Rate (30+ days) 4.92% 4.72%
Number of Accounts (000's) 38,146 36,462
Total Assets $40,587 $36,749
Capital, Including Preferred Interests $2,840.1 $2,547.7
Capital to Managed Assets Ratio 7.00% 6.93%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
(in millions, except per share data 2000
and as noted) Q4
Earnings (Managed Basis)
Net Interest Income $716.1
Non-Interest Income 696.5
Total Revenue 1,412.5
Provision for Loan Losses 329.1
Marketing Expenses 259.5
Operating Expenses 617.1
Income Before Taxes 206.9
Tax Rate 38.0%
Net Income $128.3
Common Share Statistics
Basic EPS $0.65
Diluted EPS $0.61
Dividends Per Share $0.03
Book Value Per Share (period end) $9.94
Stock Price Per Share (period end) $65.81
Total Market Capitalization (period end) $12,989.3
Shares Outstanding (period end) 197.4
Shares Used to Compute Basic EPS 197.0
Shares Used to Compute Diluted EPS 210.4
Managed Loan Statistics (period avg.)
Average Loans $26,377
Average Earning Assets $28,188
Average Assets $30,234
Average Equity $1,865
Net Interest Margin 10.16%
Risk Adjusted Margin(1) 16.32%
Return on Average Assets (ROA) 1.70%
Return on Average Equity (ROE) 27.51%
Net Charge-Off Rate 3.98%
Net Charge-Offs $262.3
Cost Per Account (in dollars) $78.09
Managed Loan Statistics (period end)
Reported Loans $15,113
Securitized Loans 14,411
Total Loans $29,524
Delinquency Rate (30+ days) 5.23%
Number of Accounts (000's) 33,774
Total Assets $33,286
Capital, Including Preferred Interests $2,061.0
Capital to Managed Assets Ratio 6.19%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
December 31
2001
Assets:
Cash and due from banks $355,680
Federal funds sold and resale agreements 19,802
Interest-bearing deposits at other banks 331,756
Cash and cash equivalents 707,238
Securities available for sale 3,115,891
Consumer loans 20,921,014
Less: Allowance for loan losses (840,000)
Net loans 20,081,014
Premises and equipment, net 759,683
Interest receivable 105,459
Accounts receivable from securitizations 2,452,548
Other 962,214
Total assets $28,184,047
Liabilities:
Interest-bearing deposits $12,838,968
Other borrowings 3,995,528
Senior notes 5,335,229
Interest payable 188,160
Other 2,502,684
Total liabilities 24,860,569
Stockholders' Equity:
Common stock 2,167
Paid-in capital, net 1,350,118
Retained earnings and cumulative
other comprehensive income 2,006,163
Less: Treasury stock, at cost (34,970)
Total stockholders' equity 3,323,478
Total liabilities and stockholders' equity $28,184,047
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
September 30
2001
Assets:
Cash and due from banks $64,884
Federal funds sold and resale agreements 365,652
Interest-bearing deposits at other banks 102,094
Cash and cash equivalents 532,630
Securities available for sale 2,707,564
Consumer loans 17,479,715
Less: Allowance for loan losses (727,000)
Net loans 16,752,715
Premises and equipment, net 740,144
Interest receivable 108,868
Accounts receivable from securitizations 1,949,361
Other 722,155
Total assets $23,513,437
Liabilities:
Interest-bearing deposits $11,075,499
Other borrowings 1,810,208
Senior notes 5,462,025
Interest payable 148,931
Other 2,033,481
Total liabilities 20,530,144
Stockholders' Equity:
Common stock 2,121
Paid-in capital, net 1,154,211
Retained earnings and cumulative
other comprehensive income 1,872,520
Less: Treasury stock, at cost (45,559)
Total stockholders' equity 2,983,293
Total liabilities and stockholders' equity $23,513,437
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
December 31
2000
Assets:
Cash and due from banks $74,493
Federal funds sold and resale agreements 60,600
Interest-bearing deposits at other banks 101,614
Cash and cash equivalents 236,707
Securities available for sale 1,696,815
Consumer loans 15,112,712
Less: Allowance for loan losses (527,000)
Net loans 14,585,712
Premises and equipment, net 664,461
Interest receivable 82,675
Accounts receivable from securitizations 1,143,902
Other 479,069
Total assets $18,889,341
Liabilities:
Interest-bearing deposits $8,379,025
Other borrowings 2,925,938
Senior notes 4,050,597
Interest payable 122,658
Other 1,448,609
Total liabilities 16,926,827
Stockholders' Equity:
Common stock 1,997
Paid-in capital, net 575,179
Retained earnings and cumulative
other comprehensive income 1,474,024
Less: Treasury stock, at cost (88,686)
Total stockholders' equity 1,962,514
Total liabilities and stockholders' equity $18,889,341
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
December 31 September 30
2001 2001
Interest Income:
Consumer loans, including fees $736,677 $667,335
Securities available for sale 38,980 37,032
Other 28,961 18,323
Total interest income 804,618 722,690
Interest Expense:
Deposits 176,619 161,411
Other borrowings 42,084 43,233
Senior notes 96,135 90,225
Total interest expense 314,838 294,869
Net interest income 489,780 427,821
Provision for loan losses 305,889 230,433
Net interest income after
provision for loan losses 183,891 197,388
Non-Interest Income:
Servicing and securitizations 624,915 618,633
Service charges and other
customer-related fees 437,765 428,855
Interchange 114,571 96,702
Total non-interest income 1,177,251 1,144,190
Non-Interest Expense:
Salaries and associate benefits 374,793 349,487
Marketing 301,160 281,910
Communications and data processing 86,810 92,735
Supplies and equipment 84,430 77,497
Occupancy 42,172 32,151
Other 185,202 241,117
Total non-interest expense 1,074,567 1,074,897
Income before income taxes 286,575 266,681
Income taxes 108,894 101,337
Net Income $177,681 $165,344
Basic earnings per share $0.83 $0.78
Diluted earnings per share $0.80 $0.75
Dividends paid per share $0.03 $0.03
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
December 31
2000
Interest Income:
Consumer loans, including fees $679,079
Securities available for sale 25,608
Other 1,548
Total interest income 706,235
Interest Expense:
Deposits 118,072
Other borrowings 57,699
Senior notes 71,904
Total interest expense 247,675
Net interest income 458,560
Provision for loan losses 247,226
Net interest income after provision for loan losses 211,334
Non-Interest Income:
Servicing and securitizations 291,634
Service charges and other customer-related fees 504,239
Interchange 76,207
Total non-interest income 872,080
Non-Interest Expense:
Salaries and associate benefits 287,742
Marketing 259,461
Communications and data processing 74,436
Supplies and equipment 76,171
Occupancy 29,404
Other 149,302
Total non-interest expense 876,516
Income before income taxes 206,898
Income taxes 78,621
Net income $128,277
Basic earnings per share $0.65
Diluted earnings per share $0.61
Dividends paid per share $0.03
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Year Ended
December 31 December 31
2001 2000
Interest Income:
Consumer loans, including fees $2,642,767 $2,286,774
Securities available for sale 138,188 96,554
Other 53,442 6,574
Total interest income 2,834,397 2,389,902
Interest Expense:
Deposits 640,470 324,008
Other borrowings 173,042 202,034
Senior notes 357,495 274,975
Total interest expense 1,171,007 801,017
Net interest income 1,663,390 1,588,885
Provision for loan losses 989,836 718,170
Net interest income after
provision for loan losses 673,554 870,715
Non-Interest Income:
Servicing and securitizations 2,359,930 1,152,375
Service charges and other
customer-related fees 1,680,166 1,644,264
Interchange 379,797 237,777
Total non-interest income 4,419,893 3,034,416
Non-Interest Expense:
Salaries and associate benefits 1,392,072 1,023,367
Marketing 1,082,979 906,147
Communications and data processing 327,743 296,255
Supplies and equipment 310,310 252,937
Occupancy 136,974 112,667
Other 807,949 556,284
Total non-interest expense 4,058,027 3,147,657
Income before income taxes 1,035,420 757,474
Income taxes 393,455 287,840
Net Income $641,965 $469,634
Basic earnings per share $3.06 $2.39
Diluted earnings per share $2.91 $2.24
Dividends paid per share $0.11 $0.11
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 12/31/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $41,352,084 $1,532,978 14.83%
Securities available for sale 3,187,417 38,980 4.89
Other 755,573 4,620 2.45
Total earning assets $45,295,074 $1,576,578 13.92%
Interest-bearing liabilities:
Deposits $12,237,144 $176,619 5.77%
Other borrowings 3,495,732 42,084 4.82
Senior notes 5,388,881 96,135 7.14
Securitization liability 21,926,552 278,797 5.09
Total interest-bearing
liabilities $43,048,309 $593,635 5.52%
Net interest spread 8.40%
Interest income to
average earning assets 13.92%
Interest expense to
average earning assets 5.24
Net interest margin 8.68%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 09/30/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $37,017,405 $1,437,367 15.53%
Securities available for sale 2,645,982 37,032 5.60
Other 330,863 2,646 3.20
Total earning assets $39,994,250 $1,477,045 14.77%
Interest-bearing liabilities:
Deposits $10,537,193 $161,411 6.13%
Other borrowings 3,103,263 43,233 5.57
Senior notes 5,280,860 90,225 6.83
Securitization liability 19,472,058 255,508 5.25
Total interest-bearing
liabilities $38,393,374 $550,377 5.73%
Net interest spread 9.04%
Interest income to
average earning assets 14.77%
Interest expense to
average earning assets 5.50
Net interest margin 9.27%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 12/31/00
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $26,377,427 $1,146,056 17.38%
Securities available for sale 1,688,092 25,608 6.07
Other 122,192 1,548 5.07
Total earning assets $28,187,711 $1,173,212 16.65%
Interest-bearing liabilities:
Deposits $7,155,771 $118,072 6.60%
Other borrowings 3,290,499 57,699 7.01
Senior notes 4,084,761 71,904 7.04
Securitization liability 12,274,193 209,481 6.83
Total interest-bearing
liabilities $26,805,224 $457,156 6.82%
Net interest spread 9.83%
Interest income to
average earning assets 16.65%
Interest expense to
average earning assets 6.49
Net interest margin 10.16%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
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SOURCE Capital One Financial Corporation
CONTACT: Paul Paquin, V.P., Investor Relations, +1-703-205-1039, or
Tatiana Stead, Corporate Media, +1-703-205-1070, both of Capital One Financial
Corporation
URL: http://www.capitalone.com
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