Capital One Reports Record Second Quarter Results
Raises 2002 Earnings per Share Growth Target to 30%
Capital One Financial Corporation (NYSE: COF) today announced its 20th consecutive quarter of record earnings, driven by a 42 percent year-over-year increase in total revenues. The company also announced that it was raising its target for earnings per share growth for 2002 to 30 percent, up from the previous guidance of 20 percent. The company now expects to report earnings per share of approximately $3.79 for the year ending December 31, 2002. Consistent with its historical financial performance since 1995, the company expects to report earnings per share growth in 2003 of 20 percent or more. The company expects to release specific guidance on its 2003 earnings in October 2002.Earnings for the second quarter of 2002 were $213.1 million, or $0.92 per share, versus earnings of $155.3 million, or $0.70 per share, for the comparable period in the prior year. Earnings in the first quarter of 2002 were $188.0 million, or $0.83 per share.
Capital One also announced that following a routine regulatory review in connection with a pending application and the normal examination cycle, the company and its subsidiaries, Capital One Bank and Capital One, F.S.B., expect to enter into an informal memorandum of understanding with bank regulators addressing certain regulatory matters as described below. The company's new earnings targets take into account the expected understandings with the regulatory authorities.
"Capital One's earnings power allowed us to increase our 2002 earnings per share growth target to 30 percent," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "The actions we have taken have strengthened our balance sheet with additional capital and loss allowances at our bank subsidiaries and will make us a stronger company as we position ourselves for future growth."
The managed net charge-off rate increased to 4.36 percent for the second quarter of 2002 compared with 4.00 percent for the first quarter of 2002, consistent with the company's expectations for increasing charge-offs for Capital One and the industry in 2002. The managed delinquency rate (30+ days) decreased to 4.54 percent as of June 30, 2002, compared with 4.80 percent as of March 31, 2002. The company further strengthened its balance sheet in the second quarter by increasing its allowance for loan losses by $247.0 million.
"Revenue grew at a 42 percent annualized rate in the second quarter, a testament to the power of our information based strategy to identify and meet customer needs," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "I'm equally pleased that once again our credit risk management practices enabled us to achieve strong credit performance for the quarter."
Second quarter 2002 revenue, defined as managed net interest income and non-interest income, rose to $2.3 billion versus $2.1 billion in the first quarter of 2002. The company's managed consumer loan balances increased by $4.6 billion in the second quarter to $53.2 billion. In the second quarter, Capital One added 2.0 million net new accounts, bringing total accounts to 48.6 million. The company's managed revenue margin increased to 16.55 percent in the second quarter of 2002 from 16.47 percent in the first quarter of 2002.
The company also announced that, during the second quarter, it sold $1.0 billion of auto loans, with servicing retained by Capital One, and recorded a $17.3 million gain. The sale completely removes these loans from Capital One's managed consumer loan portfolio. Capital One plans to sell auto loans on an ongoing basis.
Marketing expense for the second quarter of 2002 was $320.4 million, down from $353.5 million in the first quarter of 2002. Other non-interest expenses (excluding marketing) for the second quarter of 2002 were $833.2 million versus $806.4 million for the first quarter of 2002. Annualized operating expenses per account decreased to $70 for the second quarter of 2002 from $71 in the prior quarter and from $77 in the second quarter of last year.
Bank regulatory authorities have recently completed a routine review of Capital One Bank and Capital One, F.S.B. in connection with a pending application and the normal examination cycle. Regulators have informed the company that they intend to request the company, Capital One Bank and Capital One, F.S.B., to enter into an informal memorandum of understanding with respect to capital, allowance for loan losses and other regulatory requirements. Further details regarding the expected memorandum of understanding and the company's business outlook can be found in Capital One's report on Form 8-K filed today with the Securities and Exchange Commission and available on the company's website (http://www.capitalone.com ).
The company cautioned that its current expectations for 2002 earnings and future growth are forward looking statements and actual results could differ materially from current expectations due to a number of factors, including: competition in the credit card industry; the actual account and balance growth achieved by the company; the company's ability to access the capital markets at attractive rates and terms to fund its operations and future growth; and general economic conditions affecting consumer income and spending, which may affect consumer bankruptcies, defaults and charge-offs. A discussion of these and other factors can be found in Capital One's annual and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-K for the year ended December 31, 2001.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation (http://www.capitalone.com ) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products. Capital One's subsidiaries collectively had 48.6 million accounts and $53.2 billion in managed loans outstanding as of June 30, 2002. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.
Note: This release, financial information and a live Webcast of today's 5:00pm (EDT) analyst conference call is accessible on the Internet on Capital One's home page (http://www.capitalone.com ). Choose "Investors" to access the Investor Center to view and download the earnings press release and other financial information.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2002 2002
(in millions, except per share data Q2 Q1
and as noted)
Earnings (Managed Basis)
Net Interest Income $ 1,185.2 $ 1,120.9
Non-Interest Income 1,113.9 959.9
Total Revenue 2,299.0 2,080.7
Provision for Loan Losses 801.6 617.6
Marketing Expenses 320.4 353.5
Operating Expenses 833.2 806.4
Income Before Taxes 343.7 303.3
Tax Rate 38.0% 38.0%
Net Income $ 213.1 $ 188.0
Common Share Statistics
Basic EPS $ 0.97 $ 0.86
Diluted EPS $ 0.92 $ 0.83
Dividends Per Share $ 0.03 $ 0.03
Book Value Per Share (period end) $ 18.13 $ 16.69
Stock Price Per Share (period end) $ 61.05 $ 63.85
Total Market Capitalization (period end) $13,512.9 $ 14,079.3
Shares Outstanding (period end) 221.3 220.5
Shares Used to Compute Basic EPS 220.0 217.5
Shares Used to Compute Diluted EPS 231.7 226.6
Managed Loan Statistics (period avg.)
Average Loans $ 51,343 $ 46,688
Average Earning Assets $ 55,559 $ 50,538
Average Assets $ 59,989 $ 54,258
Average Equity $ 4,021 $ 3,572
Net Interest Margin 8.53% 8.87%
Revenue Margin 16.55% 16.47%
Risk Adjusted Margin(1) 12.53% 12.78%
Return on Average Assets (ROA) 1.42% 1.39%
Return on Average Equity (ROE) 21.20% 21.06%
Net Charge-Off Rate 4.36% 4.00%
Net Charge-Offs $ 559.1 $ 466.7
Cost Per Account (in dollars) $ 69.99 $ 71.33
Managed Loan Statistics (period end)
Reported Loans $ 24,965 $ 24,428
Securitized Loans 28,243 24,136
Total Loans $ 53,208 $ 48,564
Delinquency Rate (30+ days) 4.54% 4.80%
Number of Accounts (000's) 48,612 46,623
Total Assets $ 62,022 $ 55,381
Capital(3) $ 4,823.6 $ 3,778.4
Capital to Managed Assets Ratio 7.78% 6.82%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
(3) Includes preferred interests and mandatory convertible securities.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2001 2001
(in millions, except per share data Q4 Q3
and as noted)
Earnings (Managed Basis)
Net Interest Income $ 982.9 $ 926.7
Non-Interest Income 941.5 852.5
Total Revenue 1,924.5 1,779.2
Provision for Loan Losses 563.3 437.6
Marketing Expenses 301.2 281.9
Operating Expenses 773.4 793.0 (2)
Income Before Taxes 286.6 266.7
Tax Rate 38.0% 38.0%
Net Income $ 177.7 $ 165.3
Common Share Statistics
Basic EPS $ 0.83 $ 0.78
Diluted EPS $ 0.80 $ 0.75
Dividends Per Share $ 0.03 $ 0.03
Book Value Per Share (period end) $ 15.33 $ 14.14
Stock Price Per Share (period end) $ 53.95 $ 46.03
Total Market Capitalization (period end) $11,695.2 $ 9,710.1
Shares Outstanding (period end) 216.8 211.0
Shares Used to Compute Basic EPS 214.7 210.8
Shares Used to Compute Diluted EPS 223.4 219.9
Managed Loan Statistics (period avg.)
Average Loans $ 41,352 $ 37,017
Average Earning Assets $ 45,295 $ 39,994
Average Assets $ 48,906 $ 43,363
Average Equity $ 3,223 $ 2,935
Net Interest Margin 8.68% 9.27%
Revenue Margin 17.00% 17.79%
Risk Adjusted Margin(1) 12.96% 14.17%
Return on Average Assets (ROA) 1.45% 1.53%
Return on Average Equity (ROE) 22.05% 22.53%
Net Charge-Off Rate 4.42% 3.92%
Net Charge-Offs $ 456.9 $ 362.7
Cost Per Account (in dollars) $ 73.69 $ 81.03
Managed Loan Statistics (period end)
Reported Loans $ 20,921 $ 17,480
Securitized Loans 24,343 21,009
Total Loans $ 45,264 $ 38,489
Delinquency Rate (30+ days) 4.95% 5.20%
Number of Accounts (000's) 43,815 40,145
Total Assets $ 52,506 $ 44,497
Capital(3) $ 3,422.2 $ 3,081.9
Capital to Managed Assets Ratio 6.52% 6.93%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
(3) Includes preferred interests and mandatory convertible securities.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2001
(in millions, except per share data Q2
and as noted)
Earnings (Managed Basis)
Net Interest Income $ 823.7
Non-Interest Income 796.3
Total Revenue 1,620.0
Provision for Loan Losses 379.1
Marketing Expenses 268.7
Operating Expenses 721.6
Income Before Taxes 250.5
Tax Rate 38.0%
Net Income $ 155.3
Common Share Statistics
Basic EPS $ 0.74
Diluted EPS $ 0.70
Dividends Per Share $ 0.03
Book Value Per Share (period end) $ 13.02
Stock Price Per Share (period end) $ 60.15
Total Market Capitalization (period end) $12,666.5
Shares Outstanding (period end) 210.6
Shares Used to Compute Basic EPS 209.1
Shares Used to Compute Diluted EPS 221.2
Managed Loan Statistics (period avg.)
Average Loans $ 33,440
Average Earning Assets $ 36,180
Average Assets $ 38,820
Average Equity $ 2,608
Net Interest Margin 9.11%
Revenue Margin 17.91%
Risk Adjusted Margin(1) 14.23%
Return on Average Assets (ROA) 1.60%
Return on Average Equity (ROE) 23.83%
Net Charge-Off Rate 3.98%
Net Charge-Offs $ 332.8
Cost Per Account (in dollars) $ 77.38
Managed Loan Statistics (period end)
Reported Loans $ 16,327
Securitized Loans 18,956
Total Loans $ 35,283
Delinquency Rate (30+ days) 4.92%
Number of Accounts (000's) 38,146
Total Assets $ 40,587
Capital(3) $ 2,840.1
Capital to Managed Assets Ratio 7.00%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
(3) Includes preferred interests and mandatory convertible securities.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
June 30
2002
Assets:
Cash and due from banks $ 244,857
Federal funds sold and resale agreements 432,124
Interest-bearing deposits at other banks 448,363
Cash and cash equivalents 1,125,344
Securities available for sale 4,538,223
Consumer loans 24,965,210
Less: Allowance for loan losses (1,237,000)
Net loans 23,728,210
Accounts receivable from securitizations 2,417,775
Premises and equipment, net 808,972
Interest receivable 151,828
Other 1,064,127
Total assets $ 33,834,479
Liabilities:
Interest-bearing deposits $ 16,014,392
Senior notes 6,069,719
Other borrowings 4,590,716
Interest payable 235,108
Other 2,910,638
Total liabilities 29,820,573
Stockholders' Equity:
Common stock 2,222
Paid-in capital, net 1,600,489
Retained earnings and cumulative
other comprehensive income 2,446,147
Less: Treasury stock, at cost (34,952)
Total stockholders' equity 4,013,906
Total liabilities and stockholders' equity $ 33,834,479
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
March 31
2002
Assets:
Cash and due from banks $ 350,738
Federal funds sold and resale agreements 13,260
Interest-bearing deposits at other banks 105,063
Cash and cash equivalents 469,061
Securities available for sale 3,175,366
Consumer loans 24,427,642
Less: Allowance for loan losses (990,000)
Net loans 23,437,642
Accounts receivable from securitizations 2,218,472
Premises and equipment, net 789,572
Interest receivable 148,547
Other 1,026,051
Total assets $ 31,264,711
Liabilities:
Interest-bearing deposits $ 14,633,871
Senior notes 5,422,896
Other borrowings 4,879,427
Interest payable 173,659
Other 2,475,226
Total liabilities 27,585,079
Stockholders' Equity:
Common stock 2,214
Paid-in capital, net 1,532,034
Retained earnings and cumulative
other comprehensive income 2,180,336
Less: Treasury stock, at cost (34,952)
Total stockholders' equity 3,679,632
Total liabilities and stockholders' equity $ 31,264,711
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
June 30
2001
Assets:
Cash and due from banks $ 134,918
Federal funds sold and resale agreements 39,770
Interest-bearing deposits at other banks 62,050
Cash and cash equivalents 236,738
Securities available for sale 2,554,967
Consumer loans 16,326,617
Less: Allowance for loan losses (647,000)
Net loans 15,679,617
Accounts receivable from securitizations 1,708,055
Premises and equipment, net 729,525
Interest receivable 79,089
Other 672,338
Total assets $ 21,660,329
Liabilities:
Interest-bearing deposits $ 10,029,736
Senior notes 4,757,481
Other borrowings 2,320,734
Interest payable 151,429
Other 1,659,412
Total liabilities 18,918,792
Stockholders' Equity:
Common stock 2,118
Paid-in capital, net 1,089,582
Retained earnings and cumulative
other comprehensive income 1,695,468
Less: Treasury stock, at cost (45,631)
Total stockholders' equity 2,741,537
Total liabilities and stockholders' equity $ 21,660,329
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
June 30 March 31
2002 2002
Interest Income:
Consumer loans, including fees $ 925,257 $ 836,955
Securities available for sale 45,815 42,344
Other 28,754 27,931
Total interest income 999,826 907,230
Interest Expense:
Deposits 203,112 178,163
Senior notes 109,687 93,904
Other Borrowings 57,450 51,056
Total interest expense 370,249 323,123
Net interest income 629,577 584,107
Provision for loan losses 501,780 347,212
Net interest income after
provision for loan losses 127,797 236,895
Non-Interest Income:
Servicing and securitizations 718,347 626,147
Service charges and other
customer-related fees 513,886 502,007
Interchange 137,353 98,096
Total non-interest income 1,369,586 1,226,250
Non-Interest Expense:
Salaries and associate benefits 379,363 380,735
Marketing 320,446 353,536
Communications and data processing 101,601 92,193
Supplies and equipment 88,844 84,507
Occupancy 38,275 33,381
Other 225,117 215,543
Total non-interest expense 1,153,646 1,159,895
Income before income taxes 343,737 303,250
Income taxes 130,620 115,235
Net Income $ 213,117 $ 188,015
Basic earnings per share $ 0.97 $ 0.86
Diluted earnings per share $ 0.92 $ 0.83
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
2001
Interest Income:
Consumer loans, including fees $620,866
Securities available for sale 33,942
Other 2,408
Total interest income 657,216
Interest Expense:
Deposits 155,479
Senior notes 87,842
Other Borrowings 43,825
Total interest expense 287,146
Net interest income 370,070
Provision for loan losses 202,900
Net interest income after provision for loan losses 167,170
Non-Interest Income:
Servicing and securitizations 594,584
Service charges and other customer-related fees 385,419
Interchange 93,673
Total non-interest income 1,073,676
Non-Interest Expense:
Salaries and associate benefits 342,076
Marketing 268,709
Communications and data processing 72,906
Supplies and equipment 74,780
Occupancy 31,349
Other 200,496
Total non-interest expense 990,316
Income before income taxes 250,530
Income taxes 95,203
Net income $155,327
Basic earnings per share $ 0.74
Diluted earnings per share $ 0.70
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
2002 2001
Interest Income:
Consumer loans, including fees $1,762,212 $1,238,755
Securities available for sale 88,159 62,176
Other 56,685 6,158
Total interest income 1,907,056 1,307,089
Interest Expense:
Deposits 381,275 302,440
Senior notes 203,591 171,135
Other Borrowings 108,506 87,725
Total interest expense 693,372 561,300
Net interest income 1,213,684 745,789
Provision for loan losses 848,992 453,514
Net interest income after
provision for loan losses 364,692 292,275
Non-Interest Income:
Servicing and securitizations 1,344,494 1,148,121
Service charges and other customer-related fees 1,015,893 781,807
Interchange 235,449 168,524
Total non-interest income 2,595,836 2,098,452
Non-Interest Expense:
Salaries and associate benefits 760,098 667,792
Marketing 673,982 499,909
Communications and data processing 193,794 148,198
Supplies and equipment 173,351 148,383
Occupancy 71,656 62,651
Other 440,660 381,630
Total non-interest expense 2,313,541 1,908,563
Income before income taxes 646,987 482,164
Income taxes 245,855 183,224
Net Income $ 401,132 $ 298,940
Basic earnings per share $ 1.83 $ 1.44
Diluted earnings per share $ 1.75 $ 1.36
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 6/30/02
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $ 51,342,764 $1,789,516 13.94%
Securities available for sale 3,662,832 45,815 5.00
Other 553,595 2,110 1.52
Total earning assets $ 55,559,191 $1,837,441 13.23%
Interest-bearing liabilities:
Deposits $ 15,276,514 $ 203,112 5.32%
Senior notes 5,959,240 109,687 7.36
Other borrowings 5,946,983 57,450 3.86
Securitization liability 25,965,894 282,041 4.34
Total interest-bearing liabilities $ 53,148,631 $ 652,290 4.91%
Net interest spread 8.32%
Interest income to average earning assets 13.23%
Interest expense to average earning assets 4.70
Net interest margin 8.53%
(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 3/31/02
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $ 46,687,578 $1,672,655 14.33%
Securities available for sale 3,367,786 42,344 5.03
Other 482,290 2,358 1.96
Total earning assets $ 50,537,654 $1,717,357 13.59%
Interest-bearing liabilities:
Deposits $ 13,505,586 $ 178,163 5.28%
Senior notes 5,429,992 93,904 6.92
Other borrowings 4,925,669 51,056 4.15
Securitization liability 24,262,546 273,366 4.51
Total interest-bearing liabilities $ 48,123,793 $ 596,489 4.96%
Net interest spread 8.63%
Interest income to average earning assets 13.59%
Interest expense to average earning assets 4.72
Net interest margin 8.87%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 6/30/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $ 33,439,690 $1,307,819 15.64%
Securities available for sale 2,344,047 33,942 5.79
Other 396,659 2,408 2.43
Total earning assets $ 36,180,396 $1,344,169 14.86%
Interest-bearing liabilities:
Deposits $ 9,685,882 $ 155,479 6.42%
Senior notes 4,899,045 87,842 7.17
Other borrowings 2,915,245 43,825 6.01
Securitization liability 16,741,276 233,322 5.57
Total interest-bearing liabilities $ 34,241,448 $ 520,468 6.08%
Net interest spread 8.78%
Interest income to average earning assets 14.86%
Interest expense to average earning assets 5.75
Net interest margin 9.11%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
MAKE YOUR OPINION COUNT - Click Here
http://tbutton.prnewswire.com/prn/11690X69743356
SOURCE Capital One Financial Corporation
CONTACT: Paul Paquin, V.P., Investor Relations, +1-703-205-1039, or
Tatiana Stead, Director, Corporate Media, +1-703-205-1070, both of Capital One
Financial Corporation
URL: http://www.capitalone.com
http://www.prnewswire.com
Copyright (C) 2002 PR Newswire. All rights reserved.