Capital One Reports Record Third Quarter Earnings
FALLS CHURCH, Va., Oct. 14 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced record third quarter 1999 earnings of $95.4 million, or $.45 per share, versus earnings of $70.0 million, or $.33 per share, for the comparable period in the prior year, a 36 percent increase. All earnings per share amounts reflect the Company's three-for-one stock split distributed on June 1, 1999.
"We're extremely proud of another record quarter that demonstrates the outstanding earnings power of our Information-Based Strategy," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "This is the second-largest quarter of account growth in our history and it puts us over the 20 million customer mark."
During the third quarter of 1999, the Company added 1.6 million net new accounts, bringing total accounts to 20.8 million. Third quarter revenue, defined as managed net interest income and non-interest income, increased to $999 million versus $927 million in the second quarter of 1999, and $705 million for the comparable period in the prior year. For the quarter, Capital One's managed consumer loan balances increased by $657 million to $18.5 billion.
The managed net interest margin was 11.18 percent in the third quarter of 1999, an increase from 10.89 percent in the second quarter of 1999, and 10.15 percent in the comparable period of the prior year. The increased margin and higher non-interest income contributed to the increase in risk adjusted margin to 16.09 percent, compared to 15.50 percent for the second quarter of 1999 and 11.68 percent for the comparable period of the prior year.
The managed delinquency rate (30+ days) increased to 5.06 percent as of September 30, 1999, compared with 4.72 percent as of June 30, 1999. The managed net charge-off rate increased to 3.88 percent for the third quarter of 1999 compared with 3.73 percent in the second quarter of 1999.
"Our extraordinary growth is fueled by our robust investment in marketing," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Thanks to our surgically targeted marketing approach and our conservative approach to lending, we continue to reap the benefits of the best charge-off rate in the industry."
Marketing investment decreased slightly in the third quarter of 1999 to $175 million versus $178 million in the second quarter of 1999, and $126 million in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the third quarter of 1999 were $456 million versus $430 million for the second quarter of 1999, and $257 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.
The allowance for loan losses increased $40 million during the third quarter of 1999 to $306 million or 3.69 percent of on-balance sheet receivables as of September 30, 1999, compared to 3.58 percent as of June 30, 1999. Capital ratios remained strong as of September 30, 1999 at 13.50 percent of reported assets and 7.12 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 20.8 million customers and $18.5 billion in managed loans outstanding as of September 30, 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. Earlier this year, Capital One ranked #41 in Fortune's list of "Best Places to Work" 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
1999 1999
(in millions, except per share data and as noted) Q3 Q2
Earnings (Managed Basis)
Net Interest Income $ 560.7 $ 528.8
Non-Interest Income 438.6 398.5
Total Revenue 999.3 927.3
Provision for Loan Losses 214.3 178.3
Marketing Expenses 175.2 178.2
Operating Expenses 456.1 429.6
Income Before Taxes 153.8 141.1
Tax Rate 38.0% 38.0%
Net Income $ 95.4 $ 87.5
Common Share Statistics
Basic EPS $ 0.48 $ 0.44
Diluted EPS $ 0.45 $ 0.41
Dividends Per Share $ 0.03 $ 0.03
Book Value Per Share (period end) $ 7.29 $ 7.11
Stock Price Per Share (period end) $ 39.00 $ 55.69
Total Market Capitalization (period end) $ 7,686.9 $ 10,991.3
Shares Outstanding (period end) 197.1 197.4
Shares Used to Compute Basic EPS 197.4 197.6
Shares Used to Compute Diluted EPS 210.1 211.5
Managed Loan Statistics (period avg.)
Average Loans $ 18,162 $ 17,598
Average Earning Assets $ 20,060 $ 19,428
Average Assets $ 21,563 $ 20,714
Average Equity $ 1,461 $ 1,374
Net Interest Margin 11.18% 10.89%
Risk Adjusted Margin(1) 16.09% 15.50%
Return on Average Assets (ROA) 1.77% 1.69%
Return on Average Equity (ROE) 26.12% 25.47%
Net Charge-Off Rate 3.88% 3.73%
Net Charge-Offs $ 176.0 $ 164.0
Managed Loan Statistics (period end)
Reported Loans $ 8,286 $ 7,427
Securitized Loans 10,231 10,433
Total Loans $ 18,517 $ 17,860
Delinquency Rate (30+ days) 5.06% 4.72%
Number of Accounts (000's) 20,845 19,213
Total Assets $ 21,577 $ 20,985
Capital, Including Preferred Interests $ 1,535.3 $ 1,501.0
Capital to Managed Assets Ratio 7.12% 7.15%
(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 1998
(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 $ 0.42 $ 0.37
Diluted EPS $ 0.39 $ 0.35
Dividends Per Share $ 0.03 $ 0.03
Book Value Per Share (period end) $ 6.69 $ 6.45
Stock Price Per Share (period end) $ 50.33 $ 38.33
Total Market Capitalization (period end) $9,929.1 $7,551.1
Shares Outstanding (period end) 197.3 197.0
Shares Used to Compute Basic EPS 197.2 197.0
Shares Used to Compute Diluted EPS 210.0 209.1
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
1998
(in millions, except per share data and as noted) Q3
Earnings (Managed Basis)
Net Interest Income $ 440.8
Non-Interest Income 264.6
Total Revenue 705.4
Provision for Loan Losses 208.9
Marketing Expenses 126.5
Operating Expenses 257.0
Income Before Taxes 112.9
Tax Rate 38.0%
Net Income $ 70.0
Common Share Statistics
Basic EPS $ 0.36
Diluted EPS $ 0.33
Dividends Per Share $ 0.03
Book Value Per Share (period end) $ 5.94
Stock Price Per Share (period end) $ 34.35
Total Market Capitalization (period end) $6,758.0
Shares Outstanding (period end) 196.7
Shares Used to Compute Basic EPS 197.2
Shares Used to Compute Diluted EPS 210.0
Managed Loan Statistics (period avg.)
Average Loans $ 15,746
Average Earning Assets $ 17,372
Average Assets $ 18,597
Average Equity $ 1,149
Net Interest Margin 10.15%
Risk Adjusted Margin(1) 11.68%
Return on Average Assets (ROA) 1.51%
Return on Average Equity (ROE) 24.36%
Net Charge-Off Rate 5.03%
Net Charge-Offs $ 198.1
Managed Loan Statistics (period end)
Reported Loans $ 5,667
Securitized Loans 10,671
Total Loans $ 16,338
Delinquency Rate (30+ days) 4.90%
Number of Accounts (000's) 14,907
Total Assets $ 19,211
Capital, Including Preferred Interests $1,267.0
Capital to Managed Assets Ratio 6.60%
(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)
Sept 30
1999
Assets:
Cash and due from banks $ 59,934
Federal funds sold and resale agreements
Interest-bearing deposits at other banks 53,493
Cash and cash equivalents 113,427
Securities available for sale 1,708,609
Consumer loans 8,286,210
Less: Allowance for loan losses (306,000)
Net loans 7,980,210
Premises and equipment, net 429,504
Interest receivable 65,350
Accounts receivable from securitizations 614,962
Other 460,847
Total assets $ 11,372,909
Liabilities:
Interest-bearing deposits $ 3,576,400
Other borrowings 1,016,868
Senior notes 4,328,237
Interest payable 87,688
Other 828,422
Total liabilities 9,837,615
Capital Securities 98,113
Stockholders' Equity:
Common stock(1) 1,997
Paid-in capital, net(1) 625,771
Retained earnings 897,353
Less: Treasury stock, at cost (87,940)
Total stockholders' equity 1,437,181
Total liabilities and stockholders' equity $ 11,372,909
(1) All periods have been restated to reflect the Company's three-for-one
stock split effective June 1, 1999.
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 1,356,374
Senior notes 4,539,776
Interest payable 101,150
Other 667,407
Total liabilities 9,079,640
Capital Securities 98,048
Stockholders' Equity:
Common stock(1) 1,997
Paid-in capital, net(1) 626,796
Retained earnings 852,105
Less: Treasury stock, at cost (77,962)
Total stockholders' equity 1,402,936
Total liabilities and stockholders' equity $ 10,580,624
(1) All periods have been restated to reflect the Company's three-for-one
stock split effective June 1, 1999.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
Sept 30
1998
Assets:
Cash and due from banks $ 14,974
Federal funds sold and resale agreements 365,000
Interest-bearing deposits at other banks 32,993
Cash and cash equivalents 412,967
Securities available for sale 1,296,959
Consumer loans 5,666,998
Less: Allowance for loan losses (231,000)
Net loans 5,435,998
Premises and equipment, net 228,550
Interest receivable 49,934
Accounts receivable from securitizations 921,602
Other 234,766
Total assets $8,580,776
Liabilities:
Interest-bearing deposits $1,598,335
Other borrowings 1,439,690
Senior notes 3,729,234
Interest payable 80,373
Other 466,160
Total liabilities 7,313,792
Capital Securities 97,856
Stockholders' Equity:
Common stock(1) 1,997
Paid-in capital, net(1) 598,205
Retained earnings 643,855
Less: Treasury stock, at cost (74,929)
Total stockholders' equity 1,169,128
Total liabilities and stockholders' equity $8,580,776
(1) All periods have been restated to reflect the Company's three-for-one
stock split effective June 1, 1999.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
Sept 30 June 30
1999 1999
Interest Income:
Consumer loans, including fees $386,727 $353,193
Federal funds sold and resale agreements 638 764
Other 24,671 23,816
Total interest income 412,036 377,773
Interest Expense:
Deposits 38,003 26,438
Other borrowings 19,030 19,484
Senior and deposit notes 76,980 80,654
Total interest expense 134,013 126,576
Net interest income 278,023 251,197
Provision for loan losses 114,061 74,301
Net interest income after provision
for loan losses 163,962 176,896
Non-Interest Income:
Servicing and securitizations 311,217 293,606
Service charges and other fees 275,900 244,874
Interchange 33,946 33,567
Total non-interest income 621,063 572,047
Non-Interest Expense:
Salaries and associate benefits 199,048 194,461
Marketing 175,163 178,242
Communications and data processing 68,755 62,478
Supplies and equipment 48,076 42,303
Occupancy 19,117 16,381
Other 121,056 113,984
Total non-interest expense 631,215 607,849
Income before income taxes 153,810 141,094
Income taxes 58,448 53,616
Net income $ 95,362 $ 87,478
Basic earnings per share(1) $ 0.48 $ 0.44
Diluted earnings per share(1) $ 0.45 $ 0.41
Dividends paid per share(1) $ 0.03 $ 0.03
(1) All periods have been restated to reflect the Company's three-for-one
stock split effective June 1, 1999.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
Sept 30
1998
Interest Income:
Consumer loans, including fees $259,339
Federal funds sold and resale agreements 957
Other 22,813
Total interest income 283,109
Interest Expense:
Deposits 15,805
Other borrowings 24,752
Senior and deposit notes 65,498
Total interest expense 106,055
Net interest income 177,054
Provision for loan losses 67,569
Net interest income after provision
for loan losses 109,485
Non-Interest Income:
Servicing and securitizations 217,094
Service charges and other fees 146,648
Interchange 23,213
Total non-interest income 386,955
Non-Interest Expense:
Salaries and associate benefits 116,107
Marketing 126,481
Communications and data processing 38,415
Supplies and equipment 27,416
Occupancy 11,115
Other 63,993
Total non-interest expense 383,527
Income before income taxes 112,913
Income taxes 42,907
Net income $ 70,006
Basic earnings per share(1) $ 0.36
Diluted earnings per share(1) $ 0.33
Dividends paid per share(1) $ 0.03
(1) All periods have been restated to reflect the Company's three-for-one
stock split effective June 1, 1999.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Nine Months Ended
Sept 30 Sept 30
1999 1998
Interest Income:
Consumer loans, including fees $1,064,987 $734,106
Federal funds sold and resale agreements 2,889 8,175
Other 75,004 70,308
Total interest income 1,142,880 812,589
Interest Expense:
Deposits 88,383 43,578
Other borrowings 62,351 61,180
Senior and deposit notes 230,129 196,231
Total interest expense 380,863 300,989
Net interest income 762,017 511,600
Provision for loan losses 262,948 212,448
Net interest income after provision
for loan losses 499,069 299,152
Non-Interest Income:
Servicing and securitizations 876,777 541,161
Service charges and other fees 743,227 432,263
Interchange 97,732 58,383
Total non-interest income 1,717,736 1,031,807
Non-Interest Expense:
Salaries and associate benefits 572,703 337,488
Marketing 529,493 287,292
Communications and data processing 189,305 102,618
Supplies and equipment 127,083 82,399
Occupancy 49,412 32,849
Other 321,036 161,600
Total non-interest expense 1,789,032 1,004,246
Income before income taxes 427,773 326,713
Income taxes 162,554 124,151
Net income $ 265,219 $202,562
Basic earnings per share(1) $ 1.34 $ 1.03
Diluted earnings per share(1) $ 1.26 $ 0.97
Dividends paid per share(1) $ 0.08 $ 0.08
(1) All periods have been restated to reflect the Company's three-for-one
stock split effective June 1, 1999.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed(1) Quarter Ended 9/30/99
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $18,161,975 $813,643 17.92%
Federal funds sold and
resale agreements 54,375 638 4.69
Other 1,843,248 24,463 5.31
Total earning assets $20,059,598 $838,744 16.72%
Interest-bearing liabilities:
Deposits $ 3,001,711 $ 38,003 5.06%
Other borrowings 1,235,352 19,030 6.16
Senior and deposit notes 4,494,440 76,980 6.85
Securitization liability 10,343,724 144,048 5.57
Total interest-bearing liabilities $19,075,227 $278,061 5.83%
Net interest spread 10.89%
Interest income to average earning assets 16.72%
Interest expense to average earning assets 5.54
Net interest margin 11.18%
(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 6/30/99
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $17,597,571 $766,595 17.43%
Federal funds sold and
resale agreements 63,578 764 4.81
Other 1,767,280 23,816 5.39
Total earning assets $19,428,429 $791,175 16.29%
Interest-bearing liabilities:
Deposits $ 2,270,769 $ 26,438 4.66%
Other borrowings 1,501,960 19,484 5.19
Senior and deposit notes 4,620,921 80,654 6.98
Securitization liability 10,161,421 135,788 5.35
Total interest-bearing liabilities $18,555,071 $262,364 5.66%
Net interest spread 10.63%
Interest income to average earning assets 16.29%
Interest expense to average earning assets 5.40
Net interest margin 10.89%
(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 9/30/98
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $15,746,091 $671,665 17.06%
Federal funds sold and
resale agreements 69,293 957 5.52
Other 1,556,874 22,813 5.86
Total earning assets $17,372,258 $695,435 16.01%
Interest-bearing liabilities:
Deposits $ 1,368,833 $ 15,805 4.62%
Other borrowings 1,495,731 24,752 6.62
Senior and deposit notes 3,819,061 65,498 6.86
Securitization liability 10,090,262 148,620 5.89
Total interest-bearing liabilities $16,773,887 $254,675 6.07%
Net interest spread 9.94%
Interest income to average earning assets 16.01%
Interest expense to average earning assets 5.86
Net interest margin 10.15%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
SOURCE Capital One Financial Corporation