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Capital One Reports Record First Quarter Earnings; Earnings Per Share Rise 29% Over Year Ago Period

April 17, 2001 at 4:38 PM EDT

FALLS CHURCH, Va., April 17 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced record first quarter 2001 earnings, driven by a 36 percent increase in total revenues, and the best credit performance of any of the major credit card institutions in the country.

Earnings for the first quarter of 2001 were $143.6 million, or $0.66 per share, versus earnings of $106.7 million, or $0.51 per share, for the comparable period in the prior year. Earnings in the fourth quarter of 2000 were $128.3 million, or $0.61 per share.

"Capital One achieved its fifteenth consecutive quarter of record earnings reflecting the extraordinary capacity of our information-based strategy to deliver consistent growth and performance," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Our ability to grow and manage the credit quality of our portfolio has put us on track for another year of 30 percent earnings growth."

First quarter 2001 revenue, defined as managed net interest income and non-interest income, rose to $1.5 billion versus $1.4 billion in the fourth quarter of 2000 and $1.1 billion for the comparable period in the prior year. For the quarter, Capital One added 2.7 million net new accounts, bringing total accounts to 36.5 million. The company's managed consumer loan balances increased by $2.0 billion to $31.6 billion.

The managed net charge-off rate declined to 3.75 percent for the first quarter of 2001 compared to 3.98 percent for the fourth quarter of 2000. The managed delinquency rate (30+ days) also declined to 4.72 percent as of March 31, 2001, compared to 5.23 percent as of December 31, 2000.

"Our relentless scientific testing and stringent risk management systems are evident in both our net charge-off rate and our managed delinquency rate. By continuing to deliver the right products to the right customers through a variety of channels, we've grown our customer base to a record 36.5 million worldwide. Our achievements this quarter reflect our absolute commitment to having the flexibility and disciplined marketing strategies necessary to quickly bring to market innovative products that meet our customers' needs," said Nigel W. Morris, Capital One's President and Chief Operating Officer.

The company's managed net interest margin decreased to 9.21 percent in the first quarter of 2001 versus 10.16 percent in the fourth quarter of 2000 and 11.23 percent in the comparable period of 2000, reflecting strong growth in the superprime portfolio and the success of the company's 0% purchase teaser offer. The decreased margin was the primary contributor to the decline in the risk adjusted margin to 14.80 percent, which compares to 16.32 percent for the fourth quarter of 2000 and 16.57 percent for the comparable period in the prior year.

Marketing expense for the first quarter of 2001 decreased to $231.2 million versus $259.5 million in the fourth quarter of 2000, and increased $29 million over the $201.9 million spent in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the first quarter of 2001 were $687 million versus $617 million for the fourth quarter of 2000 and $508 million in the comparable period of the prior year. Annualized operating expenses per account increased slightly to $78.26 for the first quarter of 2001 from $78.09 for the fourth quarter of 2000 and decreased from $82.93 from the comparable period in the prior year.

The allowance for loan losses increased by $70 million during the first quarter to $597 million or 3.83 percent of on-balance sheet receivables as of March 31, 2001, compared to 3.49 percent as of December 31, 2000. The capital to managed assets ratio was strong as of March 31, 2001, at 6.93 percent, reflecting the issuance of $413 million in equity in January 2001.

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 36.5 million accounts and $31.6 billion in managed loans outstanding as of March 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 ). Click on "Investor Center" to
view/download the earnings press release and other financial information.
                   CAPITAL ONE FINANCIAL CORPORATION (COF)
                       FINANCIAL & STATISTICAL SUMMARY

                                                       2001           2000
    (in millions, except per share data and as noted)   Q1             Q4

    Earnings (Managed Basis)
    Net Interest Income                               $759.3         $716.1
    Non-Interest Income                                747.1          696.5
    Total Revenue                                    1,506.4        1,412.5
    Provision for Loan Losses                          356.5          329.1
    Marketing Expenses                                 231.2          259.5
    Operating Expenses                                 687.0          617.1
    Income Before Taxes                                231.6          206.9
    Tax Rate                                            38.0%          38.0%
    Net Income                                        $143.6         $128.3

    Common Share Statistics
    Basic EPS                                          $0.70          $0.65
    Diluted EPS                                        $0.66          $0.61
    Dividends Per Share                                $0.03          $0.03
    Book Value Per Share (period end)                 $11.81          $9.94
    Stock Price Per Share (period end)                $55.50         $65.81
    Total Market Capitalization (period end)       $11,509.1      $12,989.3
    Shares Outstanding (period end)                    207.4          197.4
    Shares Used to Compute Basic EPS                   204.8          197.0
    Shares Used to Compute Diluted EPS                 217.8          210.4

    Managed Loan Statistics (period avg.)
    Average Loans                                    $30,505        $26,377
    Average Earning Assets                           $32,983        $28,188
    Average Assets                                   $35,303        $30,234
    Average Equity                                    $2,347         $1,865
    Net Interest Margin                                 9.21%         10.16%
    Risk Adjusted Margin(1)                            14.80%         16.32%
    Return on Average Assets (ROA)                      1.63%          1.70%
    Return on Average Equity (ROE)                     24.47%         27.51%
    Net Charge-Off Rate                                 3.75%          3.98%
    Net Charge-Offs                                   $285.9         $262.3
    Cost Per Account (in dollars)                     $78.26         $78.09

    Managed Loan Statistics (period end)
    Reported Loans                                   $15,572        $15,113
    Securitized Loans                                 15,979         14,411
    Total Loans                                      $31,551        $29,524
    Delinquency Rate (30+ days)                         4.72%          5.23%
    Number of Accounts (000's)                        36,462         33,774
    Total Assets                                     $36,749        $33,286
    Capital, Including Preferred Interests          $2,547.7       $2,061.0
    Capital to Managed Assets Ratio                     6.93%          6.19%

(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

                                                       2000           2000
    (in millions, except per share data and as noted)   Q3             Q2

    Earnings (Managed Basis)
    Net Interest Income                               $665.1         $614.4
    Non-Interest Income                                619.9          554.4
    Total Revenue                                    1,285.0        1,168.8
    Provision for Loan Losses                          269.0          245.0
    Marketing Expenses                                 233.2          211.6
    Operating Expenses                                 585.8          530.7
    Income Before Taxes                                197.0          181.5
    Tax Rate                                            38.0%          38.0%
    Net Income                                        $122.1         $112.5

    Common Share Statistics
    Basic EPS                                          $0.62          $0.57
    Diluted EPS                                        $0.58          $0.54
    Dividends Per Share                                $0.03          $0.03
    Book Value Per Share (period end)                  $9.02          $8.39
    Stock Price Per Share (period end)                $70.06         $44.63
    Total Market Capitalization (period end)       $13,783.1       $8,747.4
    Shares Outstanding (period end)                    196.7          196.0
    Shares Used to Compute Basic EPS                   196.3          196.0
    Shares Used to Compute Diluted EPS                 210.1          208.6

    Managed Loan Statistics (period avg.)
    Average Loans                                    $23,020        $20,915
    Average Earning Assets                           $24,749        $22,581
    Average Assets                                   $27,015        $24,567
    Average Equity                                    $1,743         $1,626
    Net Interest Margin                                10.75%         10.88%
    Risk Adjusted Margin(1)                            17.24%         17.03%
    Return on Average Assets (ROA)                      1.81%          1.83%
    Return on Average Equity (ROE)                     28.02%         27.68%
    Net Charge-Off Rate                                 3.80%          3.97%
    Net Charge-Offs                                   $218.4         $207.6
    Cost Per Account (in dollars)                     $82.84         $80.97

    Managed Loan Statistics (period end)
    Reported Loans                                   $12,331        $11,383
    Securitized Loans                                 11,821         10,500
    Total Loans                                      $24,152        $21,883
    Delinquency Rate (30+ days)                         5.32%          5.35%
    Number of Accounts (000's)                        29,437         27,133
    Total Assets                                     $28,185        $25,610
    Capital, Including Preferred Interests          $1,873.8       $1,743.9
    Capital to Managed Assets Ratio                     6.65%          6.81%

(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

                                                            2000
    (in millions, except per share data and as noted)        Q1

    Earnings (Managed Basis)
    Net Interest Income                                     $618.9
    Non-Interest Income                                      489.3
    Total Revenue                                          1,108.2
    Provision for Loan Losses                                226.1
    Marketing Expenses                                       201.9
    Operating Expenses                                       508.0
    Income Before Taxes                                      172.1
    Tax Rate                                                  38.0%
    Net Income                                              $106.7

    Common Share Statistics
    Basic EPS                                                $0.54
    Diluted EPS                                              $0.51
    Dividends Per Share                                      $0.03
    Book Value Per Share (period end)                        $7.93
    Stock Price Per Share (period end)                      $47.94
    Total Market Capitalization (period end)              $9,376.5
    Shares Outstanding (period end)                          195.6
    Shares Used to Compute Basic EPS                         196.6
    Shares Used to Compute Diluted EPS                       208.7

    Managed Loan Statistics (period avg.)
    Average Loans                                          $20,181
    Average Earning Assets                                 $22,038
    Average Assets                                         $23,497
    Average Equity                                          $1,567
    Net Interest Margin                                      11.23%
    Risk Adjusted Margin(1)                                  16.57%
    Return on Average Assets (ROA)                            1.82%
    Return on Average Equity (ROE)                           27.24%
    Net Charge-Off Rate                                       3.87%
    Net Charge-Offs                                         $195.3
    Cost Per Account (in dollars)                           $82.93

    Managed Loan Statistics (period end)
    Reported Loans                                          $9,449
    Securitized Loans                                       10,850
    Total Loans                                            $20,299
    Delinquency Rate (30+ days)                               5.26%
    Number of Accounts (000's)                              25,302
    Total Assets                                           $23,361
    Capital, Including Preferred Interests                $1,649.3
    Capital to Managed Assets Ratio                           7.06%

(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)

                                                           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
    Premises and equipment, net                            709,207
    Interest receivable                                    108,944
    Accounts receivable from securitizations             1,492,818
    Other                                                  614,194
       Total assets                                    $20,802,005


    Liabilities:
    Interest-bearing deposits                           $9,390,524
    Other borrowings                                     1,845,509
    Senior notes                                         5,040,761
    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 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 Balance Sheets
                          (in thousands)(unaudited)

                                                          March 31
                                                              2000

    Assets:
    Cash and due from banks                                $84,084
    Federal funds sold and resale agreements                18,000
    Interest-bearing deposits at other banks                96,491
      Cash and cash equivalents                            198,575
    Securities available for sale                        1,519,027
    Consumer loans                                       9,449,498
      Less: Allowance for loan losses                     (372,000)
    Net loans                                            9,077,498
    Premises and equipment, net                            501,238
    Interest receivable                                     81,967
    Accounts receivable from securitizations               666,972
    Other                                                  479,781
       Total assets                                    $12,525,058

    Liabilities:
    Interest-bearing deposits                           $4,096,241
    Other borrowings                                     1,955,978
    Senior notes                                         3,818,936
    Interest payable                                        88,438
    Other                                                1,014,384
       Total liabilities                                10,973,977

    Stockholders' Equity:
    Common stock                                             1,997
    Paid-in capital, net                                   598,012
    Retained earnings and cumulative
      other comprehensive income                         1,092,021
       Less: Treasury stock, at cost                      (140,949)
       Total stockholders' equity                        1,551,081
       Total liabilities and stockholders' equity      $12,525,058


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

                                                      Three Months Ended
                                                    March 31      December 31
                                                      2001            2000

    Interest Income:
    Consumer loans, including fees                  $617,889       $679,079
    Securities available for sale                     28,234         25,608
    Other                                              3,750          1,548
      Total interest income                          649,873        706,235

    Interest Expense:
    Deposits                                         146,961        118,072
    Other borrowings                                  43,900         57,699
    Senior notes                                      83,293         71,904
      Total interest expense                         274,154        247,675
    Net interest income                              375,719        458,560
    Provision for loan losses                        250,614        247,226
    Net interest income after
     provision for loan losses                       125,105        211,334

    Non-Interest Income:
    Servicing and securitizations                    543,791        291,634
    Service charges and other customer-related fees  406,134        504,239
    Interchange                                       74,851         76,207
      Total non-interest income                    1,024,776        872,080

    Non-Interest Expense:
    Salaries and associate benefits                  325,716        287,742
    Marketing                                        231,200        259,461
    Communications and data processing                75,292         74,436
    Supplies and equipment                            73,603         76,171
    Occupancy                                         31,302         29,404
    Other                                            181,134        149,302
      Total non-interest expense                     918,247        876,516
    Income before income taxes                       231,634        206,898
    Income taxes                                      88,021         78,621
    Net income                                      $143,613       $128,277

    Basic earnings per share                           $0.70          $0.65
    Diluted earnings per share                         $0.66          $0.61
    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
                                                             2000

    Interest Income:
    Consumer loans, including fees                        $488,937
    Securities available for sale                           24,734
    Other                                                    1,776
      Total interest income                                515,447

    Interest Expense:
    Deposits                                                52,120
    Other borrowings                                        41,454
    Senior notes                                            68,376
      Total interest expense                               161,950
    Net interest income                                    353,497
    Provision for loan losses                              126,525
    Net interest income after provision for loan losses    226,972

    Non-Interest Income:
    Servicing and securitizations                          270,758
    Service charges and other customer-related fees        341,232
    Interchange                                             43,070
      Total non-interest income                            655,060

    Non-Interest Expense:
    Salaries and associate benefits                        234,836
    Marketing                                              201,938
    Communications and data processing                      70,822
    Supplies and equipment                                  52,274
    Occupancy                                               25,292
    Other                                                  124,758
      Total non-interest expense                           709,920
    Income before income taxes                             172,112
    Income taxes                                            65,403
    Net income                                            $106,709

    Basic earnings per share                                 $0.54
    Diluted earnings per share                               $0.51
    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 03/31/01

                                           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.

                      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.

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

    Managed (1)                               Quarter Ended 03/31/00

                                           Average     Income/    Yield/
                                           Balance     Expense      Rate
    Earning assets:
      Consumer loans                   $20,181,373    $911,418     18.06%
      Securities available for sale      1,681,537      24,734      5.88
      Other                                174,658       1,776      4.07
    Total earning assets               $22,037,568    $937,928     17.02%

    Interest-bearing liabilities:
      Deposits                          $3,894,250     $52,120      5.35%
      Other borrowings                   2,504,724      41,454      6.62
      Senior notes                       4,019,484      68,376      6.80
      Securitization liability          10,458,226     157,124      6.01
    Total interest-bearing
     liabilities                       $20,876,684    $319,074      6.11%

    Net interest spread                                            10.91%

    Interest income to average earning assets                      17.02%
    Interest expense to average earning assets                      5.79
    Net interest margin                                            11.23%

(1) The information in this table reflects the adjustment to add back the

effect of securitized loans. SOURCE Capital One Financial Corporation

CONTACT: Paul Paquin V.P., Investor Relations, 703-205-1039, or Tatiana Stead, Media Relations, 703-205-1070, both of Capital One Financial Corporation/