Capital One Reports Record Earnings; Earnings Per Share Increased 21 Percent in 1996
Capital One Reports Record Earnings; Earnings Per Share Increased 21 Percent in 1996
Falls Church, VA (January 22, 1997) - Capital One Financial Corporation (NYSE: COF) today announced record earnings for 1996. Earnings were $155.3 million, or $2.30 per share, compared with earnings of $126.5 million, or $1.90 per share, in 1995. For the fourth quarter 1996, earnings were $40.3 million, or $.60 per share, versus earnings of $38.8 million, or $.58 per share for the third quarter of 1996 and $37.8 million, or $.57 per share, for the comparable period in the prior year.
"We are pleased with our success in delivering earnings growth and return on equity in excess of 20 percent," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We continue to see the successes of our information-based strategy in the company's revenue power, which allows us to maintain our margins in a softening consumer credit environment. We believe that our strategy of delivering customized products and services will continue to provide strong results."
For the year, the Company increased managed receivables by $2.4 billion, or 23 percent, and added 2.4 million net new accounts, a 40 percent increase over 1995. During the fourth quarter, Capital One increased its managed portfolio by $663 million to $12.8 billion in outstanding receivables and added 354,000 net new accounts, bringing the total number of accounts to 8.6 million. Revenue for the year, defined as managed net interest income and non-interest income, rose to almost $1.5 billion, a 63 percent increase from revenues of $906 million in 1995. For the fourth quarter, total revenue rose to $437 million versus $401 million in the third quarter and $264 million for the comparable period in the prior year.
"By all measures, we had another solid year of growth," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Our 1996 account growth, managed loan growth and revenue growth led to record profits. Our associates continue to harness the information-based strategy to build the platform for future growth."
Managed net interest margin for the full year 1996 increased by 188 basis points to 8.16 percent from 6.28 percent in the prior year. The fourth quarter managed net interest margin declined slightly to 8.29 percent from 8.35 percent in the third quarter; this compares to 6.49 percent for the comparable period of 1995.
Managed non-interest income for 1996 increased by 67 percent to $460.5 million from $276.3 million in 1995. Managed non-interest income increased to $154.3 million in the fourth quarter from $133.4 million in the third quarter of 1996 and $76.8 million in the comparable quarter in 1995.
The managed net charge-off rate for 1996 was 4.24 percent compared to 2.25 percent for 1995. The managed net charge-off rate increased to 5.11 percent in the fourth quarter versus 4.19 percent in the third quarter. The year-end managed delinquency rate increased to 6.42 percent versus 5.31 percent at September 30, 1996 and 4.20 percent at December 31, 1995. These increases are due to continued softening of consumer credit, an ongoing shift in the product mix to higher-yielding products for underserved segments and slower portfolio growth.
Solicitation (marketing) expense for 1996 increased to a record $206.6 million, up 41 percent from $146.8 million in 1995. Fourth quarter solicitation expense of $52.2 million represents the second largest quarterly marketing level to date. This amount compares to $60.2 million in the third quarter of 1996 and $37.3 million in the comparable period of the prior year.
The allowance for loan losses was increased by $26.0 million during the fourth quarter and as a percentage of on-balance sheet receivables was 2.73 percent at year-end. Capital ratios were strong at quarter-end at 11.45 percent of reported assets and 4.96 percent of managed assets.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation is a financial services company whose principal subsidiaries, Capital One Bank, and Capital One, F.S.B., offer consumer lending products. Capital One's subsidiaries collectively had 8.6 million customers and $12.8 billion in managed loans outstanding at December 31, 1996, and are among the largest providers of MasterCard and Visa credit cards in the United States.
"We are pleased with our success in delivering earnings growth and return on equity in excess of 20 percent," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We continue to see the successes of our information-based strategy in the company's revenue power, which allows us to maintain our margins in a softening consumer credit environment. We believe that our strategy of delivering customized products and services will continue to provide strong results."
For the year, the Company increased managed receivables by $2.4 billion, or 23 percent, and added 2.4 million net new accounts, a 40 percent increase over 1995. During the fourth quarter, Capital One increased its managed portfolio by $663 million to $12.8 billion in outstanding receivables and added 354,000 net new accounts, bringing the total number of accounts to 8.6 million. Revenue for the year, defined as managed net interest income and non-interest income, rose to almost $1.5 billion, a 63 percent increase from revenues of $906 million in 1995. For the fourth quarter, total revenue rose to $437 million versus $401 million in the third quarter and $264 million for the comparable period in the prior year.
"By all measures, we had another solid year of growth," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Our 1996 account growth, managed loan growth and revenue growth led to record profits. Our associates continue to harness the information-based strategy to build the platform for future growth."
Managed net interest margin for the full year 1996 increased by 188 basis points to 8.16 percent from 6.28 percent in the prior year. The fourth quarter managed net interest margin declined slightly to 8.29 percent from 8.35 percent in the third quarter; this compares to 6.49 percent for the comparable period of 1995.
Managed non-interest income for 1996 increased by 67 percent to $460.5 million from $276.3 million in 1995. Managed non-interest income increased to $154.3 million in the fourth quarter from $133.4 million in the third quarter of 1996 and $76.8 million in the comparable quarter in 1995.
The managed net charge-off rate for 1996 was 4.24 percent compared to 2.25 percent for 1995. The managed net charge-off rate increased to 5.11 percent in the fourth quarter versus 4.19 percent in the third quarter. The year-end managed delinquency rate increased to 6.42 percent versus 5.31 percent at September 30, 1996 and 4.20 percent at December 31, 1995. These increases are due to continued softening of consumer credit, an ongoing shift in the product mix to higher-yielding products for underserved segments and slower portfolio growth.
Solicitation (marketing) expense for 1996 increased to a record $206.6 million, up 41 percent from $146.8 million in 1995. Fourth quarter solicitation expense of $52.2 million represents the second largest quarterly marketing level to date. This amount compares to $60.2 million in the third quarter of 1996 and $37.3 million in the comparable period of the prior year.
The allowance for loan losses was increased by $26.0 million during the fourth quarter and as a percentage of on-balance sheet receivables was 2.73 percent at year-end. Capital ratios were strong at quarter-end at 11.45 percent of reported assets and 4.96 percent of managed assets.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation is a financial services company whose principal subsidiaries, Capital One Bank, and Capital One, F.S.B., offer consumer lending products. Capital One's subsidiaries collectively had 8.6 million customers and $12.8 billion in managed loans outstanding at December 31, 1996, and are among the largest providers of MasterCard and Visa credit cards in the United States.