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Capital One Reports Record Earnings

January 18, 2000 at 6:47 AM EST

Earnings Per Share Increased 30 Percent in 1999

FALLS CHURCH, Va., Jan. 18 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced record earnings for 1999. Earnings were $363.1 million, or $1.72 per share, in 1999 compared with earnings of $275.2 million, or $1.32 per share, in 1998. For the fourth quarter of 1999, earnings were $97.9 million, or $.47 per share, versus earnings of $72.7 million, or $.35 per share, for the comparable period in the prior year. All earnings per share amounts reflect the Company's three-for-one stock split distributed on June 1, 1999.

"The fourth quarter was one of our strongest ever, helping us achieve 30 percent earnings per share growth for the year," said Richard D. Fairbank, Chairman and Chief Executive Officer. "In each and every year since our IPO in 1994, we have exceeded our goal of 20 percent earnings per share growth. Our record fourth quarter gives us tremendous momentum as we target 30 percent earnings per share growth in 2000."

For the year, the Company increased managed receivables by $2.8 billion, or 16 percent, and added 7.0 million net new accounts, a 42 percent increase over 1998. During the fourth quarter, Capital One increased its managed portfolio by a record $1.7 billion to $20.2 billion in outstanding receivables and added a record 2.9 million net new accounts, bringing the total number of accounts to 23.7 million. Revenue for the year, defined as managed net interest income and non-interest income, was a record $3.8 billion, a 39 percent increase from revenues of $2.8 billion in 1998. For the fourth quarter, total revenue rose to $1.05 billion versus $998 million in the third quarter and $770 million for the comparable period in the prior year.

Managed net interest income for 1999 increased by 28 percent to $2.2 billion from $1.7 billion in 1998. In the fourth quarter, it increased to $575 million from $559 million in the third quarter and $442 million in the fourth quarter of 1998. The managed net interest margin for 1999 increased by 92 basis points to 10.83 percent from 9.91 percent in 1998. In the fourth quarter, the managed net interest margin decreased to 10.78 percent from 11.14 percent in the third quarter and increased from 9.45 percent for the comparable period of 1998. The fourth quarter 1999 decline in margin reflects the impact of management's decision to maintain higher levels of liquidity in the fourth quarter to insure against any Y2K problems.

Managed non-interest income for 1999 increased by 56 percent to $1.7 billion from $1.1 billion in 1998. In the fourth quarter, managed non-interest income increased to $474 million from $439 million in the third quarter and $328 million for the comparable quarter of 1998. This growth continues to reflect increased annual membership, interchange, cross sell and other fees.

Marketing investment for 1999 increased to a record $732 million, up 64 percent from $446 million in 1998. Fourth quarter marketing expense of $202 million represents the largest quarterly marketing level to date.

"We continue to build a powerful customer franchise, evidenced by our record marketing investment and 42 percent account growth in 1999," said Nigel W. Morris, President and Chief Operating Officer. "We are delighted that Capital One has achieved the best credit performance of any of the industry's major players, while at the same time, serving the broadest spectrum of customers."

The managed delinquency rate as of December 31, 1999 increased to 5.23 percent versus 5.06 percent as of September 30, 1999 and 4.70 percent as of December 31, 1998. In the fourth quarter, the managed net charge-off rate was 3.86 percent, a slight decrease from 3.88 percent in the third quarter of 1999. The allowance for loan losses increased $36 million during the fourth quarter of 1999 to $342 million or 3.45 percent of on-balance sheet receivables as of December 31, 1999. Capital ratios were strong as of December 31, 1999 at 12.18 percent of reported assets and 6.87 percent of managed assets.

Other non-interest expenses (excluding marketing) were $1.7 billion in 1999, up 70 percent from $1.0 billion in 1998. These expenses for the fourth quarter of 1999 were $479 million versus $454 million in the third quarter and $307 million in the comparable period of the prior year. Cost per account declined in the fourth quarter to $85.98 from $90.72 in the third quarter. In addition, during the fourth quarter, the Company recognized a tax benefit of $5 million related to a change in the tax law.

Headquartered in Falls Church, Virginia, Capital One Financial Corporation (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 23.7 million accounts and $20.2 billion in managed loans outstanding as of December 31, 1999, and are among 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. For the second consecutive year, Fortune magazine has named Capital One to its list of the "Best Places to Work in the US."

                      CAPITAL ONE FINANCIAL CORPORATION (COF)
                          FINANCIAL & STATISTICAL SUMMARY

                                                        1999        1999
     (in millions, except per share data and as noted)   Q4          Q3

     Earnings (Managed Basis)
     Net Interest Income                            $   574.8   $   558.9
     Non-Interest Income                                473.6       438.6
     Total Revenue                                    1,048.4       997.5
     Provision for Loan Losses                          218.0       214.3
     Marketing Expenses                                 202.4       175.2
     Operating Expenses                                 478.8       454.3
     Income Before Taxes                                149.2       153.8
     Tax Rate                                            34.4%       38.0%
     Net Income                                     $    97.9   $    95.4

     Common Share Statistics
     Basic EPS                                      $    0.50   $    0.48
     Diluted EPS                                    $    0.47   $    0.45
     Dividends Per Share                            $    0.03   $    0.03
     Book Value Per Share (period end)              $    7.69   $    7.29
     Stock Price Per Share (period end)             $   48.19   $   39.00
     Total Market Capitalization (period end)       $ 9,495.2   $ 7,686.9
     Shares Outstanding (period end)                    197.0       197.1
     Shares Used to Compute Basic EPS                   197.3       197.4
     Shares Used to Compute Diluted EPS                 210.3       210.1

     Managed Loan Statistics (period avg.)
     Average Loans                                  $  18,974   $  18,162
     Average Earning Assets                         $  21,323   $  20,060
     Average Assets                                 $  22,714   $  21,563
     Average Equity                                 $   1,493   $   1,461
     Net Interest Margin                                10.78%      11.14%
     Risk Adjusted Margin(1)                            16.24%      16.06%
     Return on Average Assets (ROA)                      1.72%       1.77%
     Return on Average Equity (ROE)                     26.22%      26.12%
     Net Charge-Off Rate                                 3.86%       3.88%
     Net Charge-Offs                                $   182.9   $   176.0

     Managed Loan Statistics (period end)
     Reported Loans                                 $   9,914   $   8,286
     Securitized Loans                                 10,323      10,231
     Total Loans                                    $  20,237   $  18,517
     Delinquency Rate (30+ days)                         5.23%       5.06%
     Number of Accounts (000's)                        23,705      20,845
     Total Assets                                   $  23,638   $  21,577
     Capital, Including Preferred Interests         $ 1,624.6   $ 1,535.3
     Capital to Managed Assets Ratio                     6.87%       7.12%

    (1) Risk adjusted margin is total revenue less net charge-offs as a
        percentage of average earning assets.

                      CAPITAL ONE FINANCIAL CORPORATION (COF)
                          FINANCIAL & STATISTICAL SUMMARY

                                                        1999        1999
     (in millions, except per share data and as noted)   Q2         Q1

     Earnings (Managed Basis)
     Net Interest Income                            $   527.1   $   513.9
     Non-Interest Income                                398.5       357.6
     Total Revenue                                      925.6       871.6
     Provision for Loan Losses                          178.3       190.5
     Marketing Expenses                                 178.2       176.1
     Operating Expenses                                 427.9       372.2
     Income Before Taxes                                141.1       132.9
     Tax Rate                                            38.0%       38.0%
     Net Income                                     $    87.5   $    82.4

     Common Share Statistics
     Basic EPS                                      $   0.44   $    0.42
     Diluted EPS                                    $    0.41   $    0.39
     Dividends Per Share                            $    0.03   $    0.03
     Book Value Per Share (period end)              $    7.11   $    6.69
     Stock Price Per Share (period end)             $   55.69   $   50.33
     Total Market Capitalization (period end)       $10,991.3   $ 9,929.1
     Shares Outstanding (period end)                    197.4       197.3
     Shares Used to Compute Basic EPS                   197.6       197.2
     Shares Used to Compute Diluted EPS                 211.5       210.0

     Managed Loan Statistics (period avg.)
     Average Loans                                  $  17,598   $  17,436
     Average Earning Assets                         $  19,428   $  19,482
     Average Assets                                 $  20,714   $  20,722
     Average Equity                                 $   1,374   $   1,302
     Net Interest Margin                                10.85%      10.55%
     Risk Adjusted Margin(1)                            15.47%      14.38%
     Return on Average Assets (ROA)                      1.69%       1.59%
     Return on Average Equity (ROE)                     25.47%      25.32%
     Net Charge-Off Rate                                 3.73%       3.93%
     Net Charge-Offs                                $   164.0   $   171.1

     Managed Loan Statistics (period end)
     Reported Loans                                 $   7,427   $   7,246
     Securitized Loans                                 10,433      10,198
     Total Loans                                    $  17,860   $  17,444
     Delinquency Rate (30+ days)                         4.72%       4.56%
     Number of Accounts (000's)                        19,213      18,022
     Total Assets                                   $  20,985   $  20,318
     Capital, Including Preferred Interests         $ 1,501.0   $ 1,417.2
     Capital to Managed Assets Ratio                     7.15%       6.98%

    (1) Risk adjusted margin is total revenue less net charge-offs as a
        percentage of average earning assets.

                      CAPITAL ONE FINANCIAL CORPORATION (COF)
                          FINANCIAL & STATISTICAL SUMMARY

                                                        1998
     (in millions, except per share data and as noted)   Q4

     Earnings (Managed Basis)
     Net Interest Income                             $  441.6
     Non-Interest Income                                327.9
     Total Revenue                                      769.5
     Provision for Loan Losses                          186.3
     Marketing Expenses                                 159.0
     Operating Expenses                                 307.1
     Income Before Taxes                                117.2
     Tax Rate                                            38.0%
     Net Income                                      $   72.7

     Common Share Statistics
     Basic EPS                                       $   0.37
     Diluted EPS                                     $   0.35
     Dividends Per Share                             $   0.03
     Book Value Per Share (period end)               $   6.45
     Stock Price Per Share (period end)              $  38.33
     Total Market Capitalization (period end)        $7,551.0
     Shares Outstanding (period end)                    197.0
     Shares Used to Compute Basic EPS                   197.0
     Shares Used to Compute Diluted EPS                 209.1

     Managed Loan Statistics (period avg.)
     Average Loans                                   $ 16,547
     Average Earning Assets                          $ 18,702
     Average Assets                                  $ 19,944
     Average Equity                                  $  1,212
     Net Interest Margin                                 9.45%
     Risk Adjusted Margin(1)                            12.16%
     Return on Average Assets (ROA)                      1.46%
     Return on Average Equity (ROE)                     23.99%
     Net Charge-Off Rate                                 4.51%
     Net Charge-Offs                                 $  186.5

     Managed Loan Statistics (period end)
     Reported Loans                                  $  6,157
     Securitized Loans                                 11,238
     Total Loans                                     $ 17,395
     Delinquency Rate (30+ days)                         4.70%
     Number of Accounts (000's)                        16,706
     Total Assets                                    $ 20,619
     Capital, Including Preferred Interests          $1,368.3
     Capital to Managed Assets Ratio                     6.64%

    (1) Risk adjusted margin is total revenue less net charge-offs as a
        percentage of average earning assets.

                         CAPITAL ONE FINANCIAL CORPORATION
                            Consolidated Balance Sheets
                             (in thousands)(unaudited)

                                                            Dec 31
                                                             1999

     Assets:
     Cash and due from banks                              $    134,065
     Federal funds sold and resale agreements
     Interest-bearing deposits at other banks                  112,432
       Cash and cash equivalents                               246,497
     Securities available for sale                           1,856,421
     Consumer loans                                          9,913,549
       Less:  Allowance for loan losses                       (342,000)
     Net loans                                               9,571,549
     Premises and equipment, net                               470,732
     Interest receivable                                        64,637
     Accounts receivable from securitizations                  661,922
     Other                                                     464,685
        Total assets                                       $13,336,443


     Liabilities:
     Interest-bearing deposits                            $  3,783,809
     Other borrowings                                        2,780,466
     Senior notes                                            4,180,548
     Interest payable                                          116,405
     Other                                                     959,608
        Total liabilities                                   11,820,836

     Stockholders' Equity:
     Common stock(1)                                             1,997
     Paid-in capital, net(1)                                   613,590
     Retained earnings and cumulative
       other comprehensive income                              991,034
        Less: Treasury stock, at cost                          (91,014)
        Total stockholders' equity                           1,515,607
        Total liabilities and stockholders' equity         $13,336,443

    (1) All periods have been restated to reflect the Company's three-for-one
        stock split effective June 1, 1999.


                         CAPITAL ONE FINANCIAL CORPORATION
                            Consolidated Balance Sheets
                             (in thousands)(unaudited)

                                                             Sept 30
                                                               1999

     Assets:
     Cash and due from banks                              $     59,934
     Federal funds sold and resale agreements
     Interest-bearing deposits at other banks                   53,493
       Cash and cash equivalents                               113,427
     Securities available for sale                           1,708,609
     Consumer loans                                          8,286,210
       Less:  Allowance for loan losses                       (306,000)
     Net loans                                               7,980,210
     Premises and equipment, net                               429,504
     Interest receivable                                        65,350
     Accounts receivable from securitizations                  614,962
     Other                                                     460,847
        Total assets                                       $11,372,909


     Liabilities:
     Interest-bearing deposits                            $  3,576,400
     Other borrowings                                        1,114,981
     Senior notes                                            4,328,237
     Interest payable                                           87,688
     Other                                                     828,422
        Total liabilities                                    9,935,728

     Stockholders' Equity:
     Common stock(1)                                             1,997
     Paid-in capital, net(1)                                   625,771
     Retained earnings and cumulative
       other comprehensive income                              897,353
        Less: Treasury stock, at cost                          (87,940)
        Total stockholders' equity                           1,437,181
        Total liabilities and stockholders' equity         $11,372,909

    (1) All periods have been restated to reflect the Company's three-for-one
        stock split effective June 1, 1999.


                         CAPITAL ONE FINANCIAL CORPORATION
                            Consolidated Balance Sheets
                             (in thousands)(unaudited)

                                                              Dec 31
                                                               1998

     Assets:
     Cash and due from banks                                $   15,974
     Federal funds sold and resale agreements                  261,800
     Interest-bearing deposits at other banks                   22,393
       Cash and cash equivalents                               300,167
     Securities available for sale                           1,796,787
     Consumer loans                                          6,157,111
       Less:  Allowance for loan losses                       (231,000)
     Net loans                                               5,926,111
     Premises and equipment, net                               242,147
     Interest receivable                                        52,917
     Accounts receivable from securitizations                  833,143
     Other                                                     268,131
        Total assets                                        $9,419,403


     Liabilities:
     Interest-bearing deposits                              $1,999,979
     Other borrowings                                        1,742,200
     Senior notes                                            3,739,393
     Interest payable                                           91,637
     Other                                                     575,788
        Total liabilities                                    8,148,997

     Stockholders' Equity:
     Common stock(1)                                             1,997
     Paid-in capital, net(1)                                   598,167
     Retained earnings and cumulative
       other comprehensive income                              740,493
        Less: Treasury stock, at cost                          (70,251)
        Total stockholders' equity                           1,270,406
        Total liabilities and stockholders' equity          $9,419,403

    (1) All periods have been restated to reflect the Company's three-for-one
        stock split effective June 1, 1999.


                         CAPITAL ONE FINANCIAL CORPORATION
                         Consolidated Statements of Income
                 (in thousands, except per share data)(unaudited)


                                                        Three Months Ended
                                                        Dec 31      Sept 30
                                                         1999        1999


     Interest Income:
     Consumer loans, including fees                    $417,384    $386,727
     Federal funds sold and resale agreements               752         638
     Other                                               32,468      24,671
       Total interest income                            450,604     412,036

     Interest Expense:
     Deposits                                            49,409      38,003
     Other borrowings                                    32,820      20,824
     Senior and deposit notes                            72,569      76,980
       Total interest expense                           154,798     135,807
     Net interest income                                295,806     276,229
     Provision for loan losses                          120,000     114,061
     Net interest income after provision
      for loan losses                                   175,806     162,168

     Non-Interest Income:
     Servicing and securitizations                      310,321     311,217
     Service charges and other fees                     297,717     275,900
     Interchange                                         46,585      33,946
       Total non-interest income                        654,623     621,063

     Non-Interest Expense:
     Salaries and associate benefits                    207,457     199,048
     Marketing                                          202,405     175,163
     Communications and data processing                  75,592      68,755
     Supplies and equipment                              54,580      48,076
     Occupancy                                           22,863      19,117
     Other                                              118,288     119,262
       Total non-interest expense                       681,185     629,421
     Income before income taxes                         149,244     153,810
     Income taxes                                        51,372      58,448
     Net income                                        $ 97,872    $ 95,362

     Basic earnings per share(1)                       $   0.50    $   0.48
     Diluted earnings per share(1)                     $   0.47    $   0.45
     Dividends paid per share(1)                       $   0.03    $   0.03

    (1) All periods have been restated to reflect the Company's three-for-one
        stock split effective June 1, 1999.


                         CAPITAL ONE FINANCIAL CORPORATION
                         Consolidated Statements of Income
                 (in thousands, except per share data)(unaudited)


                                                   Three Months Ended
                                                        Dec 31
                                                          1998

     Interest Income:
     Consumer loans, including fees                    $269,016
     Federal funds sold and resale agreements             4,389
     Other                                               25,542
       Total interest income                            298,947

     Interest Expense:
     Deposits                                            23,901
     Other borrowings                                    29,256
     Senior and deposit notes                            64,444
       Total interest expense                           117,601
     Net interest income                                181,346
     Provision for loan losses                           54,580
     Net interest income after provision
      for loan losses                                   126,766

     Non-Interest Income:
     Servicing and securitizations                      248,683
     Service charges and other fees                     179,695
     Interchange                                         28,098
       Total non-interest income                        456,476

     Non-Interest Expense:
     Salaries and associate benefits                    138,901
     Marketing                                          158,972
     Communications and data processing                  47,602
     Supplies and equipment                              29,702
     Occupancy                                           12,488
     Other                                               78,369
       Total non-interest expense                       466,034
     Income before income taxes                         117,208
     Income taxes                                        44,539
     Net income                                        $ 72,669

     Basic earnings per share(1)                       $   0.37
     Diluted earnings per share(1)                     $   0.35
     Dividends paid per share(1)                       $   0.03

    (1) All periods have been restated to reflect the Company's three-for-one
        stock split effective June 1, 1999.


                         CAPITAL ONE FINANCIAL CORPORATION
                         Consolidated Statements of Income
                 (in thousands, except per share data)(unaudited)


                                                             Year Ended
                                                        Dec 31      Dec 31
                                                         1999        1998

     Interest Income:
     Consumer loans, including fees                   $1,482,371  $1,003,122
     Federal funds sold and resale agreements              3,641      12,564
     Other                                               107,472      95,850
       Total interest income                           1,593,484   1,111,536

     Interest Expense:
     Deposits                                            137,792      67,479
     Other borrowings                                    100,392      96,130
     Senior and deposit notes                            302,698     260,675
       Total interest expense                            540,882     424,284
     Net interest income                               1,052,602     687,252
     Provision for loan losses                           382,948     267,028
     Net interest income after provision
      for loan losses                                    669,654     420,224

     Non-Interest Income:
     Servicing and securitizations                     1,187,098     789,844
     Service charges and other fees                    1,040,944     611,958
     Interchange                                         144,317      86,481
       Total non-interest income                       2,372,359   1,488,283

     Non-Interest Expense:
     Salaries and associate benefits                     780,160     476,389
     Marketing                                           731,898     446,264
     Communications and data processing                  264,897     150,220
     Supplies and equipment                              181,663     112,101
     Occupancy                                            72,275      45,337
     Other                                               434,103     234,275
       Total non-interest expense                      2,464,996   1,464,586
     Income before income taxes                          577,017     443,921
     Income taxes                                        213,926     168,690
     Net income                                       $  363,091  $  275,231

     Basic earnings per share(1)                      $     1.84  $     1.40
     Diluted earnings per share(1)                    $     1.72  $     1.32
     Dividends paid per share(1)                      $     0.11  $     0.11

    (1) All periods have been restated to reflect the Company's three-for-one
        stock split effective June 1, 1999.

                         CAPITAL ONE FINANCIAL CORPORATION
       Statements of Average Balances, Income and Expense, Yields and Rates
                         (dollars in thousands)(unaudited)

     Managed(1)                                   Quarter Ended 12/31/99

                                                Average     Income/   Yield/
                                                Balance     Expense   Rate
     Earning assets:
       Consumer loans                        $18,974,409   $848,176   17.88%
       Federal funds sold and
         resale agreements                        58,560        752    5.14
       Other                                   2,289,773     33,242    5.81
     Total earning assets                    $21,322,742   $882,170   16.55%

     Interest-bearing liabilities:
       Deposits                              $ 3,648,919   $ 49,409    5.42%
       Other borrowings                        2,037,805     32,820    6.44
       Senior and deposit notes                4,258,661     72,569    6.82
       Securitization liability               10,329,929    152,572    5.91
     Total interest-bearing liabilities      $20,275,314   $307,370    6.06%

     Net interest spread                                              10.49%

     Interest income to average earning assets                        16.55%
     Interest expense to average earning assets                        5.77
     Net interest margin                                              10.78%

    (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 9/30/99

                                                Average     Income/   Yield/
                                                Balance     Expense   Rate
     Earning assets:
       Consumer loans                        $18,161,975   $813,643   17.92%
       Federal funds sold and
         resale agreements                        54,375        638    4.69
       Other                                   1,843,248     24,463    5.31
     Total earning assets                    $20,059,598   $838,744   16.72%

     Interest-bearing liabilities:
       Deposits                              $ 3,001,711   $ 38,003    5.06%
       Other borrowings                        1,333,434     20,824    6.25
       Senior and deposit notes                4,494,440     76,980    6.85
       Securitization liability               10,343,724    144,048    5.57
     Total interest-bearing liabilities      $19,173,309   $279,855    5.84%

     Net interest spread                                              10.88%

     Interest income to average earning assets                        16.72%
     Interest expense to average earning assets                        5.58
     Net interest margin                                              11.14%

    (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 12/31/98

                                                Average     Income/   Yield/
                                                Balance     Expense   Rate
     Earning assets:
       Consumer loans                       $ 16,546,962   $689,907   16.68%
       Federal funds sold and
         resale agreements                       343,987      4,389    5.10
       Other                                   1,810,761     25,542    5.64
     Total earning assets                   $ 18,701,710   $719,838   15.40%

     Interest-bearing liabilities:
       Deposits                              $ 1,885,960    $23,901    5.07%
       Other borrowings                        1,703,688     29,256    6.87
       Senior and deposit notes                3,741,707     64,444    6.89
       Securitization liability               10,751,360    160,625    5.98
     Total interest-bearing liabilities      $18,082,715   $278,226    6.15%

     Net interest spread                                               9.25%

     Interest income to average earning assets                        15.40%
     Interest expense to average earning assets                        5.95
     Net interest margin                                               9.45%

    (1) The information in this table reflects the adjustment to add back the
        effect of securitized loans.

SOURCE  Capital One Financial Corporation

/NOTE TO EDITORS: This release and financial information are available on the Internet on Capital One's home page (address: http://www.capitalone.com). Click on "Investor Center" to view/download the earnings press release and other financial information./

CONTACT: Paul Paquin, V.P., Investor Relations, 703-205-1039, or Sam Wang, Dir., Media Relations, 703-289-6809, both of Capital One Financial Corporation/