Capital One Reports Record Third Quarter Earnings; Earnings Per Share Rise 29% Over Year Ago Period
FALLS CHURCH, Va., Oct. 16 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced its 17th consecutive quarter of record earnings, driven by a 38 percent increase in total revenues, and another quarter of the best credit performance of any of the major credit card institutions in the country.
Earnings for the third quarter of 2001 were $165.3 million, or $0.75 per share, versus earnings of $122.1 million, or $0.58 per share, for the comparable period in the prior year. Earnings in the second quarter of 2001 were $155.3 million, or $0.70 per share.
"Capital One's 17th consecutive quarter of record-breaking earnings was driven by a 38 percent increase in total revenues over last year," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Our stringent risk management practices again place us in the lead with the best credit performance of any of the major credit card institutions -- with a charge-off rate of 3.92 percent. We remain firmly on track to deliver this year's target of 30 percent earnings per share growth."
Third quarter 2001 revenue, defined as managed net interest income and non-interest income, rose to $1.8 billion versus $1.6 billion in the second quarter of 2001 and $1.3 billion for the comparable period in the prior year. For the quarter, Capital One added 2.0 million net new accounts, bringing total accounts to 40.1 million. The company's managed consumer loan balances increased by $3.2 billion in the third quarter to $38.5 billion.
"This quarter's strong performance continues to illustrate the power of our unique Information-Based Strategy and our ability to consistently deliver value to our more than 40 million customers," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Capital One's complete integration of marketing and technology continues to fuel our robust loan growth -- a 36 percent annualized increase in managed loans this quarter."
The managed net charge-off rate decreased to 3.92 percent for the third quarter of 2001 compared with 3.98 percent for the second quarter of 2001. The managed delinquency rate (30+ days) increased to 5.20 percent as of September 30, 2001, compared with 4.92 percent as of June 30, 2001.
The company's managed net interest margin was 9.27 percent in the third quarter of 2001 versus 9.11 percent in the second quarter of 2001 and 10.75 percent in the comparable period of 2000.
Marketing expense for the third quarter of 2001 increased $13.2 million to $281.9 million from $268.7 million in the second quarter of 2001, and increased $48.7 million over the $233.2 million spent in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the third quarter of 2001 were $793.0 million versus $721.6 million for the second quarter of 2001 and $585.8 million in the comparable period of the prior year. Annualized operating expenses per account, which included one-time expenses of $38.8 million, increased to $81.03 for the third quarter of 2001. Excluding the one-time expenses, annualized operating expenses per account would have been $77.06, down from $77.38 for the second quarter of 2001 and $82.84 for the comparable period in the prior year.
The company cautioned that its current expectations for 2001 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, 2000.
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 40.1 million customers and $38.5 billion in managed loans outstanding as of September 30, 2001. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.
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CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY
2001 2001 (in millions, except per share data and as noted) Q3 Q2 Earnings (Managed Basis) Net Interest Income $ 926.7 $ 823.7 Non-Interest Income 852.5 796.3 Total Revenue 1,779.2 1,620.0 Provision for Loan Losses 437.6 379.1 Marketing Expenses 281.9 268.7 Operating Expenses 793.0(2) 721.6 Income Before Taxes 266.7 250.5 Tax Rate 38.0% 38.0% Net Income $ 165.3 $ 155.3 Common Share Statistics Basic EPS $ 0.78 $ 0.74 Diluted EPS $ 0.75 $ 0.70 Dividends Per Share $ 0.03 $ 0.03 Book Value Per Share (period end) $ 14.14 $ 13.02 Stock Price Per Share (period end) $ 46.03 $ 60.15 Total Market Capitalization (period end) $ 9,710.1 $12,666.5 Shares Outstanding (period end) 211.0 210.6 Shares Used to Compute Basic EPS 210.8 209.1 Shares Used to Compute Diluted EPS 219.9 221.2 Managed Loan Statistics (period avg.) Average Loans $ 37,017 $ 33,440 Average Earning Assets $ 39,994 $ 36,180 Average Assets $ 43,363 $ 38,820 Average Equity $ 2,935 $ 2,608 Net Interest Margin 9.27% 9.11% Risk Adjusted Margin (1) 14.17% 14.23% Return on Average Assets (ROA) 1.53% 1.60% Return on Average Equity (ROE) 22.53% 23.83% Net Charge-Off Rate 3.92% 3.98% Net Charge-Offs $ 362.7 $ 332.8 Cost Per Account (in dollars) $ 81.03 $ 77.38 Managed Loan Statistics (period end) Reported Loans $ 17,480 $ 16,327 Securitized Loans 21,009 18,956 Total Loans $ 38,489 $ 35,283 Delinquency Rate (30+ days) 5.20% 4.92% Number of Accounts (000's) 40,145 38,146 Total Assets $ 44,497 $ 40,587 Capital, Including Preferred Interests $ 3,081.9 $ 2,840.1 Capital to Managed Assets Ratio 6.93% 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.
CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY
2001 2000 (in millions, except per share data and as noted) Q1 Q4 Earnings (Managed Basis) Net Interest Income $ 759.3 $ 716.1 Non-Interest Income 747.1 696.5 Total Revenue 1,506.4 1,412.5 Provision for Loan Losses 356.5 329.1 Marketing Expenses 231.2 259.5 Operating Expenses 687.0 617.1 Income Before Taxes 231.6 206.9 Tax Rate 38.0% 38.0% Net Income $ 143.6 $ 128.3 Common Share Statistics Basic EPS $ 0.70 $ 0.65 Diluted EPS $ 0.66 $ 0.61 Dividends Per Share $ 0.03 $ 0.03 Book Value Per Share (period end) $ 11.81 $ 9.94 Stock Price Per Share (period end) $ 55.50 $ 65.81 Total Market Capitalization (period end) $11,509.1 $12,989.3 Shares Outstanding (period end) 207.4 197.4 Shares Used to Compute Basic EPS 204.8 197.0 Shares Used to Compute Diluted EPS 217.8 210.4 Managed Loan Statistics (period avg.) Average Loans $ 30,505 $ 26,377 Average Earning Assets $ 32,983 $ 28,188 Average Assets $ 35,303 $ 30,234 Average Equity $ 2,347 $ 1,865 Net Interest Margin 9.21% 10.16% Risk Adjusted Margin (1) 14.80% 16.32% Return on Average Assets (ROA) 1.63% 1.70% Return on Average Equity (ROE) 24.47% 27.51% Net Charge-Off Rate 3.75% 3.98% Net Charge-Offs $ 285.9 $ 262.3 Cost Per Account (in dollars) $ 78.26 $ 78.09 Managed Loan Statistics (period end) Reported Loans $ 15,572 $ 15,113 Securitized Loans 15,979 14,411 Total Loans $ 31,551 $ 29,524 Delinquency Rate (30+ days) 4.72% 5.23% Number of Accounts (000's) 36,462 33,774 Total Assets $ 36,749 $ 33,286 Capital, Including Preferred Interests $ 2,547.7 $ 2,061.0 Capital to Managed Assets Ratio 6.93% 6.19%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY 2000 (in millions, except per share data and as noted) Q3 Earnings (Managed Basis) Net Interest Income $ 665.1 Non-Interest Income 619.9 Total Revenue 1,285.0 Provision for Loan Losses 269.0 Marketing Expenses 233.2 Operating Expenses 585.8 Income Before Taxes 197.0 Tax Rate 38.0% Net Income $ 122.1 Common Share Statistics Basic EPS $ 0.62 Diluted EPS $ 0.58 Dividends Per Share $ 0.03 Book Value Per Share (period end) $ 9.02 Stock Price Per Share (period end) $ 70.06 Total Market Capitalization (period end) $13,783.1 Shares Outstanding (period end) 196.7 Shares Used to Compute Basic EPS 196.3 Shares Used to Compute Diluted EPS 210.1 Managed Loan Statistics (period avg.) Average Loans $ 23,020 Average Earning Assets $ 24,749 Average Assets $ 27,015 Average Equity $ 1,743 Net Interest Margin 10.75% Risk Adjusted Margin (1) 17.24% Return on Average Assets (ROA) 1.81% Return on Average Equity (ROE) 28.02% Net Charge-Off Rate 3.80% Net Charge-Offs $ 218.4 Cost Per Account (in dollars) $ 82.84 Managed Loan Statistics (period end) Reported Loans $ 12,331 Securitized Loans 11,821 Total Loans $ 24,152 Delinquency Rate (30+ days) 5.32% Number of Accounts (000's) 29,437 Total Assets $ 28,185 Capital, Including Preferred Interests $ 1,873.8 Capital to Managed Assets Ratio 6.65%
(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.
CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited)
Sept 30 June 30 Sept 30 2001 2001 2000 Assets: Cash and due from banks $ 64,884 $ 134,918 $ 81,403 Federal funds sold and resale agreements 365,652 39,770 12,688 Interest-bearing deposits at other banks 102,094 62,050 128,377 Cash and cash equivalents 532,630 236,738 222,468 Securities available for sale 2,707,564 2,554,967 1,652,330 Consumer loans 17,479,715 16,326,617 12,331,088 Less: Allowance for loan losses (727,000) (647,000) (457,000) Net loans 16,752,715 15,679,617 11,874,088 Premises and equipment, net 740,144 729,525 560,974 Interest receivable 108,868 79,089 93,817 Accounts receivable from securitizations 1,949,361 1,708,055 1,403,377 Other 722,155 672,338 571,771 Total assets $23,513,437 $21,660,329 $16,378,825 Liabilities: Interest-bearing deposits $11,075,499 $10,029,736 $ 6,323,924 Other borrowings 1,810,208 2,320,734 2,820,533 Senior notes 5,462,025 4,757,481 4,119,101 Interest payable 148,931 151,429 109,842 Other 2,033,481 1,659,412 1,230,037 Total liabilities 20,530,144 18,918,792 14,603,437 Stockholders' Equity: Common stock 2,121 2,118 1,997 Paid-in capital, net 1,154,211 1,089,582 559,595 Retained earnings and cumulative other comprehensive income 1,872,520 1,695,468 1,322,744 Less: Treasury stock, at cost (45,559) (45,631) (108,948) Total stockholders' equity 2,983,293 2,741,537 1,775,388 Total liabilities and stockholders' equity $23,513,437 $21,660,329 $16,378,825 CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited)
Three Months Ended Sept 30 June 30 2001 2001 Interest Income: Consumer loans, including fees $ 667,335 $ 620,866 Securities available for sale 37,032 33,942 Other 18,323 2,408 Total interest income 722,690 657,216 Interest Expense: Deposits 161,411 155,479 Other borrowings 43,233 43,825 Senior notes 90,225 87,842 Total interest expense 294,869 287,146 Net interest income 427,821 370,070 Provision for loan losses 230,433 202,900 Net interest income after provision for loan losses 197,388 167,170 Non-Interest Income: Servicing and securitizations 618,633 572,591 Service charges and other customer-related fees 428,855 407,412 Interchange 96,702 93,673 Total non-interest income 1,144,190 1,073,676 Non-Interest Expense: Salaries and associate benefits 349,487 342,076 Marketing 281,910 268,709 Communications and data processing 92,735 72,906 Supplies and equipment 77,497 74,780 Occupancy 32,151 31,349 Other 241,117 200,496 Total non-interest expense 1,074,897 990,316 Income before income taxes 266,681 250,530 Income taxes 101,337 95,203 Net income $ 165,344 $ 155,327 Basic earnings per share $ 0.78 $ 0.74 Diluted earnings per share $ 0.75 $ 0.70 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 Sept 30 2000
Interest Income: Consumer loans, including fees $ 606,872 Securities available for sale 23,367 Other 1,474 Total interest income 631,713 Interest Expense: Deposits 90,197 Other borrowings 55,967 Senior notes 72,679 Total interest expense 218,843 Net interest income 412,870 Provision for loan losses 193,409 Net interest income after provision for loan losses 219,461 Non-Interest Income: Servicing and securitizations 307,343 Service charges and other customer-related fees 424,087 Interchange 65,039 Total non-interest income 796,469 Non-Interest Expense: Salaries and associate benefits 264,171 Marketing 233,188 Communications and data processing 78,064 Supplies and equipment 66,325 Occupancy 30,721 Other 146,488 Total non-interest expense 818,957 Income before income taxes 196,973 Income taxes 74,850 Net income $ 122,123 Basic earnings per share $ 0.62 Diluted earnings per share $ 0.58 Dividends paid per share $ 0.03 CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited)
Nine Months Ended Sept 30 Sept 30 2001 2000 Interest Income: Consumer loans, including fees $1,906,090 $1,607,695 Securities available for sale 99,208 70,946 Other 24,481 5,026 Total interest income 2,029,779 1,683,667 Interest Expense: Deposits 463,851 205,936 Other borrowings 130,958 144,335 Senior notes 261,360 203,071 Total interest expense 856,169 553,342 Net interest income 1,173,610 1,130,325 Provision for loan losses 683,947 470,944 Net interest income after provision for loan losses 489,663 659,381 Non-Interest Income: Servicing and securitizations 1,735,015 860,741 Service charges and other customer-related fees 1,242,401 1,140,025 Interchange 265,226 161,570 Total non-interest income 3,242,642 2,162,336 Non-Interest Expense: Salaries and associate benefits 1,017,279 735,625 Marketing 781,819 646,686 Communications and data processing 240,933 221,819 Supplies and equipment 225,880 176,766 Occupancy 94,802 83,263 Other 622,747 406,982 Total non-interest expense 2,983,460 2,271,141 Income before income taxes 748,845 550,576 Income taxes 284,561 209,219 Net income $ 464,284 $ 341,357 Basic earnings per share $ 2.23 $ 1.73 Diluted earnings per share $ 2.11 $ 1.63 Dividends paid per share $ 0.08 $ 0.08 CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (dollars in thousands)(unaudited) Managed (1) Quarter Ended 9/30/01 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $37,017,405 $1,437,367 15.53% Securities available for sale 2,645,982 37,032 5.60 Other 330,863 2,646 3.20 Total earning assets $39,994,250 $1,477,045 14.77% Interest-bearing liabilities: Deposits $10,537,193 $ 161,411 6.13% Other borrowings 3,103,263 43,233 5.57 Senior notes 5,280,860 90,225 6.83 Securitization liability 19,472,058 255,508 5.25 Total interest-bearing liabilities $38,393,374 $ 550,377 5.73% Net interest spread 9.04% Interest income to average earning assets 14.77% Interest expense to average earning assets 5.50 Net interest margin 9.27%
(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% Other borrowings 2,915,245 43,825 6.01 Senior notes 4,899,045 87,842 7.17 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.
CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (dollars in thousands)(unaudited) Managed (1) Quarter Ended 9/30/00 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $23,020,158 $1,039,473 18.06% Securities available for sale 1,557,088 23,367 6.00 Other 171,881 1,474 3.43 Total earning assets $24,749,127 $1,064,314 17.20% Interest-bearing liabilities: Deposits $ 5,787,748 $ 90,197 6.23% Other borrowings 3,084,407 55,967 7.26 Senior notes 4,139,665 72,679 7.02 Securitization liability 10,908,397 180,412 6.62 Total interest-bearing liabilities $23,920,217 $ 399,255 6.68% Net interest spread 10.52% Interest income to average earning assets 17.20% Interest expense to average earning assets 6.45 Net interest margin 10.75%
(1) The information in this table reflects the adjustment to add back
the effect of securitized loans.
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SOURCE Capital One Financial Corporation
CONTACT: Paul Paquin, V.P., Investor Relations, +1-703-205-1039; or Tatiana Stead, Corporate Media, +1-703-205-1070, both of Capital One Financial Corporation/