Capital One Reports Record Earnings
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/