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Capital One Reports Record Second Quarter Earnings

July 12, 2000 at 4:34 PM EDT

FALLS CHURCH, Va., July 12 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced record second quarter 2000 earnings of $0.54 per share, or $112.5 million, versus earnings of $0.41 per share, or $87.5 million, for the comparable period in the prior year, an increase of 32 percent.

"Our results reflect the power of our information-based strategy in providing each of our more than 27 million customers with a unique and tailored journey through Capital One," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Our ability to deliver the right product to the right customer has allowed us to add 20,000 net new customers a day and grow our managed loans by an annualized rate of more than 30 percent during the quarter."

During the second quarter, Capital One added 1.8 million net new accounts, bringing total accounts to 27.1 million. For the quarter, Capital One's managed consumer loan balances increased by $1.6 billion to $21.9 billion. "This robust growth generates the earnings power to deliver a strong bottom line while investing heavily in our future," said Fairbank. On the Internet, online account originations and online account servicing increased to 410 thousand and 640 thousand, respectively, as of the end of the second quarter.

"Relentless scientific testing has fueled spectacular performance across the board and will be a springboard to continued stellar results," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "A key to measuring this success is our risk-adjusted margin which reached an all time record of 17.03 percent, up from the previous record of 16.57 percent set last quarter."

The managed net charge-off rate remained under four percent for the sixth straight quarter and was 3.97 percent for the three months ending June 30, 2000. In addition, the Company added $35 million to the allowance for loan losses during the second quarter of 2000, increasing the allowance to $407 million or 3.58 percent of reported consumer loans, as of June 30, 2000.

Contributing to the strong account and managed loan growth during the quarter was an increase in marketing expense to a record $212 million compared to $202 million in the first quarter of 2000 and $178 million in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the second quarter of 2000 were $531 million, resulting in an annualized operating cost per account of $80.97, down from $82.93 for the first quarter of 2000 and $91.93 for the comparable period in the prior year.

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 27.1 million accounts and $21.9 billion in managed loans outstanding as of June 30, 2000. Capital One is one of the major financial service providers on the Internet, with online account decisioning, real-time account numbering, online retail deposits and a growing number of customers serviced online. Capital One is a FORTUNE 500 company that 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 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

                                                       2000           2000

    (in millions, except per share data
     and as noted)                                      Q2             Q1
    Earnings (Managed Basis)
    Net Interest Income                               $614.4         $618.9
    Non-Interest Income                                554.4          489.3
    Total Revenue                                    1,168.8        1,108.2
    Provision for Loan Losses                          245.0          226.1
    Marketing Expenses                                 211.6          201.9
    Operating Expenses                                 530.7          508.0
    Income Before Taxes                                181.5          172.1
    Tax Rate                                            38.0%          38.0%
    Net Income                                        $112.5         $106.7

    Common Share Statistics
    Basic EPS                                          $0.57          $0.54
    Diluted EPS                                        $0.54          $0.51
    Dividends Per Share                                $0.03          $0.03
    Book Value Per Share (period end)                  $8.39          $7.93
    Stock Price Per Share (period end)                $44.63         $47.94
    Total Market Capitalization (period end)        $8,747.4       $9,376.5
    Shares Outstanding (period end)                    196.0          195.6
    Shares Used to Compute Basic EPS                   196.0          196.6
    Shares Used to Compute Diluted EPS                 208.6          208.7

    Managed Loan Statistics (period avg.)
    Average Loans                                    $20,915        $20,181
    Average Earning Assets                           $22,581        $22,038
    Average Assets                                   $24,567        $23,497
    Average Equity                                    $1,626         $1,567
    Net Interest Margin                                10.88%         11.23%
    Risk Adjusted Margin(1)                            17.03%         16.57%
    Return on Average Assets (ROA)                      1.83%          1.82%
    Return on Average Equity (ROE)                     27.68%         27.24%
    Net Charge-Off Rate                                 3.97%          3.87%
    Net Charge-Offs                                   $207.6         $195.3
    Cost Per Account (in dollars)                     $80.97         $82.93

    Managed Loan Statistics (period end)
    Reported Loans                                   $11,383         $9,449
    Securitized Loans                                 10,500         10,850
    Total Loans                                      $21,883        $20,299
    Delinquency Rate (30+ days)                         5.35%          5.26%
    Number of Accounts (000's)                        27,133         25,302
    Total Assets                                     $25,610        $23,361
    Capital, Including Preferred Interests          $1,743.9       $1,649.3
    Capital to Managed Assets Ratio                     6.81%          7.06%

(1) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets.

                   CAPITAL ONE FINANCIAL CORPORATION (COF)
                       FINANCIAL & STATISTICAL SUMMARY

                                                       1999           1999
    (in millions, except per share data
     and as noted)                                      Q4             Q3
    Earnings (Managed Basis)
    Net Interest Income                               $574.8         $558.9
    Non-Interest Income                                473.6          438.6
    Total Revenue                                    1,048.4          997.5
    Provision for Loan Losses                          218.0          214.3
    Marketing Expenses                                 202.4          175.2
    Operating Expenses                                 478.8          454.3
    Income Before Taxes                                149.2          153.8
    Tax Rate                                            34.4%          38.0%
    Net Income                                         $97.9          $95.4

    Common Share Statistics
    Basic EPS                                          $0.50          $0.48
    Diluted EPS                                        $0.47          $0.45
    Dividends Per Share                                $0.03          $0.03
    Book Value Per Share (period end)                  $7.69          $7.29
    Stock Price Per Share (period end)                $48.19         $39.00
    Total Market Capitalization (period end)        $9,495.2       $7,686.9
    Shares Outstanding (period end)                    197.0          197.1
    Shares Used to Compute Basic EPS                   197.3          197.4
    Shares Used to Compute Diluted EPS                 210.3          210.1

    Managed Loan Statistics (period avg.)
    Average Loans                                    $18,974        $18,162
    Average Earning Assets                           $21,323        $20,060
    Average Assets                                   $22,714        $21,563
    Average Equity                                    $1,493         $1,461
    Net Interest Margin                                10.78%         11.14%
    Risk Adjusted Margin(1)                            16.24%         16.38%
    Return on Average Assets (ROA)                      1.72%          1.77%
    Return on Average Equity (ROE)                     26.22%         26.12%
    Net Charge-Off Rate                                 3.86%          3.88%
    Net Charge-Offs                                   $182.9         $176.0
    Cost Per Account (in dollars)                     $85.98         $90.72

    Managed Loan Statistics (period end)
    Reported Loans                                    $9,914         $8,286
    Securitized Loans                                 10,323         10,231
    Total Loans                                      $20,237        $18,517
    Delinquency Rate (30+ days)                         5.23%          5.06%
    Number of Accounts (000's)                        23,705         20,845
    Total Assets                                     $23,638        $21,577
    Capital, Including Preferred Interests          $1,613.7       $1,535.3
    Capital to Managed Assets Ratio                     6.83%          7.12%

(1) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets.

                   CAPITAL ONE FINANCIAL CORPORATION (COF)
                       FINANCIAL & STATISTICAL SUMMARY

                                                       1999
    (in millions, except per
     share data and as noted)                           Q2
    Earnings (Managed Basis)
    Net Interest Income                               $527.1
    Non-Interest Income                                398.5
    Total Revenue                                      925.6
    Provision for Loan Losses                          178.3
    Marketing Expenses                                 178.2
    Operating Expenses                                 427.9
    Income Before Taxes                                141.1
    Tax Rate                                            38.0%
    Net Income                                         $87.5

    Common Share Statistics
    Basic EPS                                          $0.44
    Diluted EPS                                        $0.41
    Dividends Per Share                                $0.03
    Book Value Per Share (period end)                  $7.11
    Stock Price Per Share (period end)                $55.69
    Total Market Capitalization (period end)       $10,991.3
    Shares Outstanding (period end)                    197.4
    Shares Used to Compute Basic EPS                   197.6
    Shares Used to Compute Diluted EPS                 211.5

    Managed Loan Statistics (period avg.)
    Average Loans                                    $17,598
    Average Earning Assets                           $19,428
    Average Assets                                   $20,714
    Average Equity                                    $1,374
    Net Interest Margin                                10.85%
    Risk Adjusted Margin(1)                            15.68%
    Return on Average Assets (ROA)                      1.69%
    Return on Average Equity (ROE)                     25.47%
    Net Charge-Off Rate                                 3.73%
    Net Charge-Offs                                   $164.0
    Cost Per Account (in dollars)                     $91.93

    Managed Loan Statistics (period end)
    Reported Loans                                    $7,427
    Securitized Loans                                 10,433
    Total Loans                                      $17,860
    Delinquency Rate (30+ days)                         4.72%
    Number of Accounts (000's)                        19,213
    Total Assets                                     $20,985
    Capital, Including Preferred Interests          $1,501.0
    Capital to Managed Assets Ratio                     7.15%

(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)

                                                     June 30
                                                      2000
    Assets:
    Cash and due from banks                         $100,999
    Federal funds sold and resale agreements          10,000
    Interest-bearing deposits at other banks          78,226
     Cash and cash equivalents                       189,225
    Securities available for sale                  1,507,770
    Consumer loans                                11,382,780
     Less: Allowance for loan losses                (407,000)
    Net loans                                     10,975,780
    Premises and equipment, net                      545,262
    Interest receivable                               51,799
    Accounts receivable from securitizations       1,302,424
    Other                                            554,631
     Total assets                                $15,126,891

    Liabilities:
    Interest-bearing deposits                     $5,288,927
    Other borrowings                               2,773,050
    Senior notes                                   4,176,394
    Interest payable                                  96,493
    Other                                          1,146,451
     Total liabilities                            13,481,315

    Stockholders' Equity:
    Common stock                                       1,997
    Paid-in capital, net                             578,915
    Retained earnings and cumulative
    other comprehensive income                     1,197,370
     Less: Treasury stock, at cost                  (132,706)
     Total stockholders' equity                    1,645,576
     Total liabilities and
    stockholders' equity                         $15,126,891

                      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 Balance Sheets
                          (in thousands)(unaudited)

                                                     June 30
                                                       1999
    Assets:
    Cash and due from banks                          $25,582
    Federal funds sold and resale agreements
    Interest-bearing deposits at other banks          72,616
     Cash and cash equivalents                        98,198
    Securities available for sale                  1,615,422
    Consumer loans                                 7,426,974
     Less: Allowance for loan losses                (266,000)
    Net loans                                      7,160,974
    Premises and equipment, net                      347,168
    Interest receivable                               60,858
    Accounts receivable from securitizations         886,680
    Other                                            411,324
     Total assets                                $10,580,624

    Liabilities:
    Interest-bearing deposits                     $2,414,933
    Other borrowings                               1,454,422
    Senior notes                                   4,539,776
    Interest payable                                 101,150
    Other                                            667,407
     Total liabilities                             9,177,688

    Stockholders' Equity:
    Common stock                                       1,997
    Paid-in capital, net                             626,796
    Retained earnings and cumulative
     other comprehensive income                      852,105
     Less: Treasury stock, at cost                   (77,962)
     Total stockholders' equity                    1,402,936
     Total liabilities and
    stockholders' equity                         $10,580,624


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

                                                      Three Months Ended
                                                     June 30       March 31
                                                        2000           2000

    Interest Income:
    Consumer loans, including fees                  $511,886       $488,937
    Securities available for sale                     22,845         24,734
    Other                                              1,776          1,776
     Total interest income                           536,507        515,447

    Interest Expense:
    Deposits                                          63,619         52,120
    Other borrowings                                  46,914         41,454
    Senior notes                                      62,016         68,376
     Total interest expense                          172,549        161,950
    Net interest income                              363,958        353,497
    Provision for loan losses                        151,010        126,525
    Net interest income after
     provision for loan losses                       212,948        226,972

    Non-Interest Income:
    Servicing and securitizations                    282,640        270,758
    Service charges and other fees                   374,706        341,232
    Interchange                                       53,461         43,070
     Total non-interest income                       710,807        655,060

    Non-Interest Expense:
    Salaries and associate benefits                  236,618        234,836
    Marketing                                        211,560        201,938
    Communications and data processing                72,933         70,822
    Supplies and equipment                            58,167         52,274
    Occupancy                                         27,250         25,292
    Other                                            135,736        124,758
     Total non-interest expense                      742,264        709,920
    Income before income taxes                       181,491        172,112
    Income taxes                                      68,966         65,403
    Net income                                      $112,525       $106,709

    Basic earnings per share                           $0.57          $0.54
    Diluted earnings per share                         $0.54          $0.51
    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
                                                   June 30
                                                     1999
    Interest Income:
    Consumer loans, including fees                  $353,193
    Securities available for sale                     23,522
    Other                                              1,058
     Total interest income                           377,773

    Interest Expense:
    Deposits                                          26,438
    Other borrowings                                  21,196
    Senior notes                                      80,654
     Total interest expense                          128,288
    Net interest income                              249,485
    Provision for loan losses                         74,301
    Net interest income after
     provision for loan losses                       175,184

    Non-Interest Income:
    Servicing and securitizations                    293,606
    Service charges and other fees                   244,874
    Interchange                                       33,567
     Total non-interest income                       572,047

    Non-Interest Expense:
    Salaries and associate benefits                  194,461
    Marketing                                        178,242
    Communications and data processing                62,478
    Supplies and equipment                            42,303
    Occupancy                                         16,381
    Other                                            112,272
     Total non-interest expense                      606,137
    Income before income taxes                       141,094
    Income taxes                                      53,616
    Net income                                       $87,478

    Basic earnings per share                           $0.44
    Diluted earnings per share                         $0.41
    Dividends paid per share                           $0.03

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

                                                       Six Months Ended
                                                   June 30         June 30
                                                     2000            1999
    Interest Income:
    Consumer loans, including fees                $1,000,823       $678,260
    Securities available for sale                     47,579         49,745
    Other                                              3,552          2,839
     Total interest income                         1,051,954        730,844

    Interest Expense:
    Deposits                                         115,739         50,380
    Other borrowings                                  88,368         46,748
    Senior notes                                     130,392        153,149
     Total interest expense                          334,499        250,277
    Net interest income                              717,455        480,567
    Provision for loan losses                        277,535        148,887
    Net interest income after
     provision for loan losses                       439,920        331,680

    Non-Interest Income:
    Servicing and securitizations                    553,398        565,560
    Service charges and other fees                   715,938        467,327
    Interchange                                       96,531         63,786
     Total non-interest income                     1,365,867      1,096,673

    Non-Interest Expense:
    Salaries and associate benefits                  471,454        373,655
    Marketing                                        413,498        354,330
    Communications and data processing               143,755        120,550
    Supplies and equipment                           110,441         79,007
    Occupancy                                         52,542         30,295
    Other                                            260,494        196,553
     Total non-interest expense                    1,452,184      1,154,390
    Income before income taxes                       353,603        273,963
    Income taxes                                     134,369        104,106
    Net income                                      $219,234       $169,857

    Basic earnings per share                           $1.11          $0.86
    Diluted earnings per share                         $1.05          $0.80
    Dividends paid per share                           $0.05          $0.05

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

    Managed (1)                      Quarter Ended 06/30/00

                                  Average          Income/          Yield/
                                  Balance          Expense           Rate
    Earning assets:
     Consumer loans             $20,915,125        $937,935         17.94
     Securities available
    for sale                      1,519,369          22,845          6.01
     Other                          146,760           1,776          4.84
     Total earning assets       $22,581,254        $962,556         17.05%

    Interest-bearing liabilities:
     Deposits                    $4,495,242         $63,619          5.66%
     Other borrowings             2,687,569          46,914          6.98
     Senior notes                 3,659,603          62,016          6.78
     Securitization liability    10,870,733         175,655          6.46
    Total interest-bearing
     liabilities                $21,713,147        $348,204          6.41%

    Net interest spread                                             10.64%
    Interest income to
     average earning assets                                         17.05%
    Interest expense to
     average earning assets                                          6.17
    Net interest margin                                             10.88%

(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.

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

    Managed (1)                            Quarter Ended 06/30/99

                                    Average         Income/        Yield/
                                    Balance         Expense         Rate

    Earning assets:
     Consumer loans             $17,597,571        $766,595         17.43%
     Securities available
    for sale                      1,673,433          23,522          5.62
     Other                          157,425           1,058          2.69
    Total earning assets        $19,428,429        $791,175         16.29%

    Interest-bearing liabilities:
     Deposits                    $2,270,769         $26,438          4.66%
     Other borrowings             1,599,977          21,196          5.30
     Senior notes                 4,620,921          80,654          6.98
     Securitization liability    10,161,421         135,788          5.35
     Total interest-bearing
    liabilities                 $18,653,088        $264,076          5.66%

    Net interest spread                                             10.63%

    Interest income to average
     earning assets                                                 16.29%
    Interest expense to average
     earning assets                                                  5.44
    Net interest margin                                             10.85%

(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, 703-289-6872, both of Capital One Financial Corporation/