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Capital One Reports Record First Quarter Earnings

April 15, 1999 at 8:59 AM EDT

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