Capital One Reports Record First Quarter Earnings
FALLS CHURCH, Va., April 15 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced record first quarter 1999 earnings of $82.4 million, or $1.18 per share, versus earnings of $72.7 million, or $1.04 per share, for the fourth quarter of 1998 and $65.7 million, or $.96 per share, for the comparable period in the prior year.
"Capital One enjoyed another quarter of record earnings, fueled by record revenues and exceptional credit quality," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "And we continued our rapid growth trajectory, growing by more than one million customers for the third consecutive quarter."
The managed net charge-off rate decreased significantly to 3.93 percent for the first quarter of 1999 versus 4.51 percent for the fourth quarter of 1998 and 6.04 percent for the comparable period in the prior year. The managed delinquency rate (30+ days) decreased to 4.56 percent as of March 31, 1999, compared with 4.70 percent as of December 31, 1998.
"Our charge-off rate has declined for the sixth straight quarter and is the lowest among industry leaders, as well as the lowest we've seen in three years," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Our improving credit picture helped to boost our risk adjusted margin to a record 14.42 percent."
The managed net interest margin increased to a record 10.59 percent in the first quarter of 1999 versus 9.48 percent in the fourth quarter of 1998 and 10.40 percent in the same period of 1998. The increased margin, higher non- interest income, and the aforementioned decrease in net charge-offs each contributed to the risk adjusted margin of 14.42 percent, which compares to 12.21 percent for the fourth quarter of 1998.
During the first quarter of 1999, the Company added 1.3 million net new accounts, bringing total accounts to 18.0 million. First quarter 1999 revenue, defined as managed net interest income and non-interest income, rose to $873 million versus $771 million in the fourth quarter of 1998 and $637 million for the comparable period in the prior year. For the quarter, Capital One's managed consumer loan balances increased by $49 million to $17.4 billion. This modest increase compares favorably to the typical first quarter decline that results after repricings and seasonal paydown.
Marketing expense for the first quarter of 1999 increased to a record $176 million versus $159 million in the fourth quarter of 1998 and $75 million in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the first quarter of 1999 were $374 million versus $309 million for the fourth quarter of 1998 and $214 million in the comparable period of the prior year. Operating expenses continue to reflect increased investment in staff levels associated with the Company's growing account base and the impact of expansion and diversification into new businesses and markets.
The allowance for loan losses increased by $20 million during the first quarter to $251 million or 3.46 percent of on-balance sheet receivables as of March 31, 1999, compared to 3.75 percent as of December 31, 1998. Capital ratios were strong as of March 31, 1999, at 13.96 percent of reported assets and 6.98 percent of managed assets.
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 18.0 million customers and $17.4 billion in managed loans outstanding as of March 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. Capital One was recently ranked #41 in Fortune's list of "Best Companies to Work For" and #15 best performer in Business Week's rating of the S&P 500.
(Note: 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 release and financial information.)
CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY 99 98 (in millions, except per share data and as noted) Q1 Q4 Earnings (Managed Basis) Net Interest Income $ 515.7 $ 443.4 Non-Interest Income 357.6 327.9 Total Revenue 873.3 771.3 Provision for Loan Losses 190.5 186.3 Marketing Expenses 176.1 159.0 Operating Expenses 373.9 308.9 Income Before Taxes 132.9 117.2 Tax Rate 38.0% 38.0% Net Income $ 82.4 $ 72.7 Common Share Statistics Basic EPS $ 1.25 $ 1.11 Diluted EPS $ 1.18 $ 1.04 Dividends Per Share $ 0.08 $ 0.08 Book Value Per Share (period end) $ 20.06 $ 19.35 Stock Price Per Share (period end) $ 151.00 $ 115.00 Total Market Capitalization (period end) $ 9,929.1 $ 7,551.1 Shares Outstanding (period end) 65.8 65.7 Shares Used to Compute Basic EPS 65.7 65.7 Shares Used to Compute Diluted EPS 70.0 69.7 Managed Loan Statistics (period avg.) Average Loans $ 17,436 $ 16,547 Average Earning Assets $ 19,482 $ 18,702 Average Assets $ 20,722 $ 19,944 Average Equity $ 1,302 $ 1,212 Net Interest Margin 10.59% 9.48% Risk Adjusted Margin(1) 14.42% 12.21% Return on Average Assets (ROA) 1.59% 1.46% Return on Average Equity (ROE) 25.32% 23.99% Net Charge-Off Rate 3.93% 4.51% Net Charge-Offs $ 171.1 $ 186.5 Managed Loan Statistics (period end) Reported Loans $ 7,246 $ 6,157 Securitized Loans 10,198 11,238 Total Loans $ 17,444 $ 17,395 Delinquency Rate (30+ days) 4.56% 4.70% Number of Accounts (000's) 18,022 16,706 Total Assets $ 20,318 $ 20,619 Capital, Including Preferred Interests $ 1,417.2 $1,368.3 Capital to Managed Assets Ratio 6.98% 6.64% (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 98 98 (in millions, except per share data and as noted) Q3 Q2 Earnings (Managed Basis) Net Interest Income $ 440.8 $ 399.5 Non-Interest Income 264.6 253.2 Total Revenue 705.4 652.7 Provision for Loan Losses 208.9 213.1 Marketing Expenses 126.5 85.8 Operating Expenses 257.0 246.0 Income Before Taxes 112.9 107.8 Tax Rate 38.0% 38.0% Net Income $ 70.0 $ 66.9 Common Share Statistics Basic EPS $ 1.07 $ 1.02 Diluted EPS $ 1.00 $ 0.96 Dividends Per Share $ 0.08 $ 0.08 Book Value Per Share (period end) $ 17.83 $ 16.31 Stock Price Per Share (period end) $ 103.06 $ 124.19 Total Market Capitalization (period end) $ 6,758.0 $ 8,139.0 Shares Outstanding (period end) 65.6 65.5 Shares Used to Compute Basic EPS 65.7 65.5 Shares Used to Compute Diluted EPS 70.0 69.5 Managed Loan Statistics (period avg.) Average Loans $ 15,746 $ 14,417 Average Earning Assets $ 17,372 $ 16,242 Average Assets $ 18,597 $ 17,296 Average Equity $ 1,149 $ 1,037 Net Interest Margin 10.15% 9.84% Risk Adjusted Margin(1) 11.68% 10.83% Return on Average Assets (ROA) 1.51% 1.55% Return on Average Equity (ROE) 24.36% 25.78% Net Charge-Off Rate 5.03% 5.91% Net Charge-Offs $ 198.1 $ 213.0 Managed Loan Statistics (period end) Reported Loans $ 5,667 $ 5,140 Securitized Loans 10,671 9,829 Total Loans $ 16,338 $ 14,969 Delinquency Rate (30+ days) 4.90% 5.14% Number of Accounts (000's) 14,907 13,588 Total Assets $ 19,211 $ 17,462 Capital, Including Preferred Interests $ 1,267.0 $ 1,167.0 Capital to Managed Assets Ratio 6.60% 6.68% (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 98 (in millions, except per share data and as noted) Q1 Earnings (Managed Basis) Net Interest Income $ 416.7 Non-Interest Income 220.7 Total Revenue 637.4 Provision for Loan Losses 242.5 Marketing Expenses 75.0 Operating Expenses 213.9 Income Before Taxes 106.0 Tax Rate 38.0% Net Income $ 65.7 Common Share Statistics Basic EPS $ 1.00 Diluted EPS $ 0.96 Dividends Per Share $ 0.08 Book Value Per Share (period end) $ 15.08 Stock Price Per Share (period end) $ 78.88 Total Market Capitalization (period end) $ 5,163.7 Shares Outstanding (period end) 65.5 Shares Used to Compute Basic EPS 65.4 Shares Used to Compute Diluted EPS 68.4 Managed Loan Statistics (period avg.) Average Loans $ 14,097 Average Earning Assets $ 16,020 Average Assets $ 16,834 Average Equity $ 950 Net Interest Margin 10.40% Risk Adjusted Margin(1) 10.60% Return on Average Assets (ROA) 1.56% Return on Average Equity (ROE) 27.66% Net Charge-Off Rate 6.04% Net Charge-Offs $ 212.7 Managed Loan Statistics (period end) Reported Loans $ 4,748 Securitized Loans 9,254 Total Loans $ 14,002 Delinquency Rate (30+ days) 5.75% Number of Accounts (000's) 12,674 Total Assets $ 16,464 Capital, Including Preferred Interests $ 1,085.2 Capital to Managed Assets Ratio 6.59% (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 1999 Assets: Cash and due from banks $ 13,276 Federal funds sold and resale agreements Interest-bearing deposits at other banks 34,041 Cash and cash equivalents 47,317 Securities available for sale 1,770,398 Consumer loans 7,245,847 Less: Allowance for loan losses (251,000) Net loans 6,994,847 Premises and equipment, net 283,159 Interest receivable 66,184 Accounts receivable from securitizations 637,563 Other 352,159 Total assets $ 10,151,627 Liabilities: Interest-bearing deposits $ 2,204,162 Other borrowings 1,171,440 Senior notes 4,610,049 Deposit notes Interest payable 87,501 Other 661,279 Total liabilities 8,734,431 Guaranteed Preferred Beneficial Interests In Capital One Bank's Floating Rate Junior Subordinated Capital Income Securities 97,984 Stockholders' Equity: Common stock 666 Paid-in capital, net 606,929 Retained earnings and cumulative other comprehensive income 779,625 Less:Treasury stock, at cost (68,008) Total stockholders' equity 1,319,212 Total liabilities and stockholders' equity $ 10,151,627 CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited) December 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 1,644,279 Senior notes 3,739,393 Deposit notes Interest payable 91,637 Other 575,788 Total liabilities 8,051,076 Guaranteed Preferred Beneficial Interests In Capital One Bank's Floating Rate Junior Subordinated Capital Income Securities 97,921 Stockholders' Equity: Common stock 666 Paid-in capital, net 599,498 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 CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited) March 31 1998 Assets: Cash and due from banks $ 2,983 Federal funds sold and resale agreements 105,000 Interest-bearing deposits at other banks 34,077 Cash and cash equivalents 142,060 Securities available for sale 1,513,398 Consumer loans 4,748,186 Less: Allowance for loan losses (213,000) Net loans 4,535,186 Premises and equipment, net 163,757 Interest receivable 44,213 Accounts receivable from securitizations 696,599 Other 128,689 Total assets $ 7,223,902 Liabilities: Interest-bearing deposits $ 1,160,850 Other borrowings 723,614 Senior notes 3,464,176 Deposit notes 299,996 Interest payable 67,544 Other 422,480 Total liabilities 6,138,660 Guaranteed Preferred Beneficial Interests In Capital One Bank's Floating Rate Junior Subordinated Capital Income Securities 97,727 Stockholders' Equity: Common stock 666 Paid-in capital, net 543,179 Retained earnings and cumulative other comprehensive income 488,075 Less: Treasury stock, at cost (44,405) Total stockholders' equity 987,515 Total liabilities and stockholders' equity $ 7,223,902 CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited) Three Months Ended March 31 December 31 1999 1998 Interest Income: Consumer loans, including fees $ 325,067 $ 269,016 Federal funds sold and resale agreements 1,487 4,389 Other 26,517 25,542 Total interest income 353,071 298,947 Interest Expense: Deposits 23,942 23,901 Other borrowings 23,837 27,420 Senior and deposit notes 72,495 64,444 Total interest expense 120,274 115,765 Net interest income 232,797 183,182 Provision for loan losses 74,586 54,580 Net interest income after provision for loan losses158,211 128,602 Non-Interest Income: Servicing and securitizations 271,954 248,683 Service charges and other fees 222,453 179,695 Interchange 30,219 28,098 Total non-interest income 524,626 456,476 Non-Interest Expense: Salaries and associate benefits 179,194 138,901 Marketing 176,088 158,972 Communications and data processing 58,072 47,602 Supplies and equipment 36,704 29,702 Occupancy 13,914 12,488 Other 85,996 80,205 Total non-interest expense 549,968 467,870 Income before income taxes 132,869 117,208 Income taxes 50,490 44,539 Net income $ 82,379 $ 72,669 Basic earnings per share $ 1.25 $ 1.11 Diluted earnings per share $ 1.18 $ 1.04 Dividends paid per share $ 0.08 $ 0.08 CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited) Three Months Ended March 31 1998 Interest Income: Consumer loans, including fees $ 229,638 Federal funds sold and resale agreements 5,078 Other 23,326 Total interest income 258,042 Interest Expense: Deposits 14,138 Other borrowings 16,053 Senior and deposit notes 63,029 Total interest expense 93,220 Net interest income 164,822 Provision for loan losses 85,866 Net interest income after provision for loan losses 78,956 Non-Interest Income: Servicing and securitizations 168,655 Service charges and other fees 132,445 Interchange 14,799 Total non-interest income 315,899 Non-Interest Expense: Salaries and associate benefits 107,953 Marketing 75,000 Communications and data processing 29,363 Supplies and equipment 22,615 Occupancy 10,644 Other 43,308 Total non-interest expense 288,883 Income before income taxes 105,972 Income taxes 40,269 Net income $ 65,703 Basic earnings per share $ 1.00 Diluted earnings per share $ 0.96 Dividends paid per share $ 0.08 CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (dollars in thousands)(unaudited) Managed(1) Quarter Ended 3/31/99 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $ 17,435,530 $745,643 17.11% Federal funds sold and resale agreements 126,493 1,487 4.70 Other 1,920,191 26,517 5.52 Total earning assets $ 19,482,214 $773,647 15.88% Interest-bearing liabilities: Deposits $ 2,101,086 $ 23,942 4.56% Other borrowings 1,680,026 23,837 5.68 Senior and deposit notes 4,189,839 72,495 6.92 Securitization liability 10,570,532 137,720 5.21 Total interest-bearing liabilities $ 18,541,483 $257,994 5.57% Net interest spread 10.31% Interest income to average earning assets 15.88% Interest expense to average earning assets 5.29 Net interest margin 10.59% (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 1,605,798 27,420 6.83 Senior and deposit notes 3,741,707 64,444 6.89 Securitization liability 10,751,360 160,625 5.98 Total interest-bearing liabilities $ 17,984,825 $276,390 6.15% Net interest spread 9.25% Interest income to average earning assets 15.40% Interest expense to average earning assets 5.92 Net interest margin 9.48% (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 3/31/98 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $ 14,097,475 $615,053 17.45% Federal funds sold and resale agreements 362,680 5,078 5.60 Other 1,559,732 23,326 5.98 Total earning assets $ 16,019,887 $643,457 16.06% Interest-bearing liabilities: Deposits $ 1,266,064 $ 14,138 4.47% Other borrowings 1,077,082 16,053 5.96 Senior and deposit notes 3,683,113 63,029 6.85 Securitization liability 9,297,590 133,526 5.74 Total interest-bearing liabilities $ 15,323,849 $226,746 5.92% Net interest spread 10.14% Interest income to average earning assets 16.06% Interest expense to average earning assets 5.66 Net interest margin 10.40% (1) The information in this table reflects the adjustment to add back the effect of securitized loans. SOURCE Capital One Financial Corporation