Capital One Reports Record First Quarter Earnings
Earnings Per Share Rise 26% Over Year Ago Period
Capital One Financial Corporation (NYSE: COF) today announced its 19th consecutive quarter of record earnings, driven by a 38 percent year-over-year increase in total revenues, and another quarter of superior credit performance. The company also announced that it is launching a $500 million publicly marketed mandatory convertible transaction.Earnings for the first quarter of 2002 were $188.0 million, or $0.83 per share, versus earnings of $143.6 million, or $0.66 per share, for the comparable period in the prior year. Earnings in the fourth quarter of 2001 were $177.7 million, or $.80 per share.
"Capital One achieved its 19th consecutive quarter of record earnings despite our increase in marketing expense to a record $354 million -- an accomplishment that demonstrates our ability to both deliver results today and invest in our future. As a result, we remain confident we will achieve our 20 percent earnings per share growth target in 2002," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "I'm equally pleased that once again our stringent risk management practices enabled us to achieve superior credit performance -- with a charge-off rate of 4.00 percent."
First quarter 2002 revenue, defined as managed net interest income and non-interest income, rose to $2.1 billion versus $1.9 billion in the fourth quarter of 2001. In the first quarter, Capital One added 2.8 million net new accounts, bringing total accounts to 46.6 million. The company's managed consumer loan balances increased by $3.3 billion in the first quarter to $48.6 billion.
"Each quarter, our earnings performance solidifies our position as an industry powerhouse -- which is remarkable given the recent economic uncertainty," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Capital One's broad-based growth, coupled with our improved brand recognition, continues to fuel our success. A rapidly growing number of customers world-wide are turning to Capital One for financial products and solutions."
The managed net charge-off rate decreased to 4.00 percent for the first quarter of 2002 compared with 4.42 percent for the fourth quarter of 2001. The managed delinquency rate (30+ days) decreased to 4.80 percent as of March 31, 2002, compared with 4.95 percent as of December 31, 2001. The company also further strengthened its balance sheet by increasing the allowance for loan losses by $150 million.
The company's managed net interest margin increased to 8.87 percent in the first quarter of 2002 from 8.68 percent in the fourth quarter of 2001 primarily because of a decrease in the company's cost of funds.
Marketing expense for the first quarter of 2002 increased $52.4 million to $353.5 million from $301.2 million in the fourth quarter of 2001, and increased $122.3 million over the $231.2 million spent in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the first quarter of 2002 were $806.4 million versus $773.4 million for the fourth quarter of 2001 and $687.0 million in the comparable period of the prior year. Annualized operating expenses per account decreased to $71 for the first quarter of 2002 from $74 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, 2001.
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 46.6 million accounts and $48.6 billion in managed loans outstanding as of March 31, 2002. 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 5:00 p.m. (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
2002 2001
(in millions, except per share data and as noted) Q1 Q4
Earnings (Managed Basis)
Net Interest Income $1,120.9 $982.9
Non-Interest Income 959.9 941.5
Total Revenue 2,080.7 1,924.5
Provision for Loan Losses 617.6 563.3
Marketing Expenses 353.5 301.2
Operating Expenses 806.4 773.4
Income Before Taxes 303.3 286.6
Tax Rate 38.0% 38.0%
Net Income $188.0 $177.7
Common Share Statistics
Basic EPS $0.86 $0.83
Diluted EPS $0.83 $0.80
Dividends Per Share $0.03 $0.03
Book Value Per Share (period end) $16.69 $15.33
Stock Price Per Share (period end) $63.85 $53.95
Total Market Capitalization (period end) $14,079.3 $11,695.2
Shares Outstanding (period end) 220.5 216.8
Shares Used to Compute Basic EPS 217.5 214.7
Shares Used to Compute Diluted EPS 226.6 223.4
Managed Loan Statistics (period avg.)
Average Loans $46,688 $41,352
Average Earning Assets $50,538 $45,295
Average Assets $54,258 $48,906
Average Equity $3,572 $3,223
Net Interest Margin 8.87% 8.68%
Risk Adjusted Margin(1) 12.78% 12.96%
Return on Average Assets (ROA) 1.39% 1.45%
Return on Average Equity (ROE) 21.06% 22.05%
Net Charge-Off Rate 4.00% 4.42%
Net Charge-Offs $466.7 $456.9
Cost Per Account (in dollars) $71.33 $73.69
Managed Loan Statistics (period end)
Reported Loans $24,428 $20,921
Securitized Loans 24,136 24,343
Total Loans $48,564 $45,264
Delinquency Rate (30+ days) 4.80% 4.95%
Number of Accounts (000's) 46,623 43,815
Total Assets $55,381 $52,506
Capital, Including Preferred Interests $3,778.4 $3,422.2
Capital to Managed Assets Ratio 6.82% 6.52%
(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
2001 2001
(in millions, except per share data and as noted) Q3 Q2
Earnings (Managed Basis)
Net Interest Income $926.7 $823.7
Non-Interest Income 852.5 796.3
Total Revenue 1,779.2 1,620.0
Provision for Loan Losses 437.6 379.1
Marketing Expenses 281.9 268.7
Operating Expenses 793.0 (2) 721.6
Income Before Taxes 266.7 250.5
Tax Rate 38.0% 38.0%
Net Income $165.3 $155.3
Common Share Statistics
Basic EPS $0.78 $0.74
Diluted EPS $0.75 $0.70
Dividends Per Share $0.03 $0.03
Book Value Per Share (period end) $14.14 $13.02
Stock Price Per Share (period end) $46.03 $60.15
Total Market Capitalization (period end) $9,710.1 $12,666.5
Shares Outstanding (period end) 211.0 210.6
Shares Used to Compute Basic EPS 210.8 209.1
Shares Used to Compute Diluted EPS 219.9 221.2
Managed Loan Statistics (period avg.)
Average Loans $37,017 $33,440
Average Earning Assets $39,994 $36,180
Average Assets $43,363 $38,820
Average Equity $2,935 $2,608
Net Interest Margin 9.27% 9.11%
Risk Adjusted Margin(1) 14.17% 14.23%
Return on Average Assets (ROA) 1.53% 1.60%
Return on Average Equity (ROE) 22.53% 23.83%
Net Charge-Off Rate 3.92% 3.98%
Net Charge-Offs $362.7 $332.8
Cost Per Account (in dollars) $81.03 $77.38
Managed Loan Statistics (period end)
Reported Loans $17,480 $16,327
Securitized Loans 21,009 18,956
Total Loans $38,489 $35,283
Delinquency Rate (30+ days) 5.20% 4.92%
Number of Accounts (000's) 40,145 38,146
Total Assets $44,497 $40,587
Capital, Including Preferred Interests $3,081.9 $2,840.1
Capital to Managed Assets Ratio 6.93% 7.00%
(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
2001
(in millions, except per share data and as noted) Q1
Earnings (Managed Basis)
Net Interest Income $759.3
Non-Interest Income 747.1
Total Revenue 1,506.4
Provision for Loan Losses 356.5
Marketing Expenses 231.2
Operating Expenses 687.0
Income Before Taxes 231.6
Tax Rate 38.0%
Net Income $143.6
Common Share Statistics
Basic EPS $0.70
Diluted EPS $0.66
Dividends Per Share $0.03
Book Value Per Share (period end) $11.81
Stock Price Per Share (period end) $55.50
Total Market Capitalization (period end) $11,509.1
Shares Outstanding (period end) 207.4
Shares Used to Compute Basic EPS 204.8
Shares Used to Compute Diluted EPS 217.8
Managed Loan Statistics (period avg.)
Average Loans $30,505
Average Earning Assets $32,983
Average Assets $35,303
Average Equity $2,347
Net Interest Margin 9.21%
Risk Adjusted Margin(1) 14.80%
Return on Average Assets (ROA) 1.63%
Return on Average Equity (ROE) 24.47%
Net Charge-Off Rate 3.75%
Net Charge-Offs $285.9
Cost Per Account (in dollars) $78.26
Managed Loan Statistics (period end)
Reported Loans $15,572
Securitized Loans 15,979
Total Loans $31,551
Delinquency Rate (30+ days) 4.72%
Number of Accounts (000's) 36,462
Total Assets $36,749
Capital, Including Preferred Interests $2,547.7
Capital to Managed Assets Ratio 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
Consolidated Balance Sheets
(in thousands)(unaudited)
March 31
2002
Assets:
Cash and due from banks $350,738
Federal funds sold and resale agreements 13,260
Interest-bearing deposits at other banks 105,063
Cash and cash equivalents 469,061
Securities available for sale 3,175,366
Consumer loans 24,427,642
Less: Allowance for loan losses (990,000)
Net loans 23,437,642
Accounts receivable from securitizations 2,218,472
Premises and equipment, net 789,572
Interest receivable 148,547
Other 1,026,051
Total assets $31,264,711
Liabilities:
Interest-bearing deposits $14,633,871
Senior notes 5,422,896
Other borrowings 4,879,427
Interest payable 173,659
Other 2,475,226
Total liabilities 27,585,079
Stockholders' Equity:
Common stock 2,214
Paid-in capital, net 1,532,034
Retained earnings and cumulative
other comprehensive income 2,180,336
Less: Treasury stock, at cost (34,952)
Total stockholders' equity 3,679,632
Total liabilities and stockholders' equity $31,264,711
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
Accounts receivable from securitizations 2,452,548
Premises and equipment, net 759,683
Interest receivable 105,459
Other 962,214
Total assets $28,184,047
Liabilities:
Interest-bearing deposits $12,838,968
Senior notes 5,335,229
Other borrowings 3,995,528
Interest payable 188,160
Other 2,502,684
Total liabilities 24,860,569
Stockholders' Equity:
Common stock 2,177
Paid-in capital, net 1,350,108
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)
March 31
2001
Assets:
Cash and due from banks $49,842
Federal funds sold and resale agreements 247,676
Interest-bearing deposits at other banks 492,390
Cash and cash equivalents 789,908
Securities available for sale 2,112,180
Consumer loans 15,571,754
Less: Allowance for loan losses (597,000)
Net loans 14,974,754
Accounts receivable from securitizations 1,492,818
Premises and equipment, net 709,207
Interest receivable 108,944
Other 614,194
Total assets $20,802,005
Liabilities:
Interest-bearing deposits $9,390,524
Senior notes 5,040,761
Other borrowings 1,845,509
Interest payable 135,863
Other 1,940,103
Total liabilities 18,352,760
Stockholders' Equity:
Common stock 2,086
Paid-in capital, net 974,503
Retained earnings and cumulative
other comprehensive income 1,519,855
Less: Treasury stock, at cost (47,199)
Total stockholders' equity 2,449,245
Total liabilities and stockholders' equity $20,802,005
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
March 31 December 31
2002 2001
Interest Income:
Consumer loans, including fees $836,955 $736,677
Securities available for sale 42,344 38,980
Other 27,931 28,961
Total interest income 907,230 804,618
Interest Expense:
Deposits 178,163 176,619
Other borrowings 51,056 42,084
Senior notes 93,904 96,135
Total interest expense 323,123 314,838
Net interest income 584,107 489,780
Provision for loan losses 347,212 305,889
Net interest income after
provision for loan losses 236,895 183,891
Non-Interest Income:
Servicing and securitizations 626,147 635,848
Service charges and other customer-related fees 502,007 426,832
Interchange 98,096 114,571
Total non-interest income 1,226,250 1,177,251
Non-Interest Expense:
Salaries and associate benefits 380,735 374,793
Marketing 353,536 301,160
Communications and data processing 92,193 86,810
Supplies and equipment 84,507 84,430
Occupancy 33,381 42,172
Other 215,543 185,202
Total non-interest expense 1,159,895 1,074,567
Income before income taxes 303,250 286,575
Income taxes 115,235 108,894
Net Income $188,015 $177,681
Basic earnings per share $0.86 $0.83
Diluted earnings per share $0.83 $0.80
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
March 31
2001
Interest Income:
Consumer loans, including fees $617,889
Securities available for sale 28,234
Other 3,750
Total interest income 649,873
Interest Expense:
Deposits 146,961
Other borrowings 43,900
Senior notes 83,293
Total interest expense 274,154
Net interest income 375,719
Provision for loan losses 250,614
Net interest income after provision for loan losses 125,105
Non-Interest Income:
Servicing and securitizations 553,537
Service charges and other customer-related fees 396,388
Interchange 74,851
Total non-interest income 1,024,776
Non-Interest Expense:
Salaries and associate benefits 325,716
Marketing 231,200
Communications and data processing 75,292
Supplies and equipment 73,603
Occupancy 31,302
Other 181,134
Total non-interest expense 918,247
Income before income taxes 231,634
Income taxes 88,021
Net income $143,613
Basic earnings per share $0.70
Diluted earnings per share $0.66
Dividends paid per share $0.03
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 3/31/02
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $46,687,578 $1,672,655 14.33%
Securities available
for sale 3,367,786 42,344 5.03
Other 482,290 2,358 1.96
Total earning assets $50,537,654 $1,717,357 13.59
Interest-bearing liabilities:
Deposits $13,505,586 $178,163 5.28%
Other borrowings 4,925,669 51,056 4.15
Senior notes 5,429,992 93,904 6.92
Securitization liability 24,262,546 273,366 4.51
Total interest-bearing
liabilities $48,123,793 $596,489 4.96%
Net interest spread 8.63%
Interest income to average earning assets 13.59%
Interest expense to average earning assets 4.72
Net interest margin 8.87%
(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 12/31/01
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 3/31/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $30,505,450 $1,235,002 16.19%
Securities available
for sale 1,913,357 28,234 5.90
Other 564,592 3,750 2.66
Total earning assets $32,983,399 $1,266,986 15.37%
Interest-bearing liabilities:
Deposits $8,996,414 $146,961 6.53%
Other borrowings 2,442,200 43,900 7.19
Senior notes 4,678,452 83,293 7.12
Securitization liability 14,948,262 233,524 6.25
Total interest-bearing
liabilities $31,065,328 $507,678 6.54%
Net interest spread 8.83%
Interest income to average earning assets 15.37%
Interest expense to average earning assets 6.16
Net interest margin 9.21%
(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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