Capital One Reports Second Quarter Earnings per Share Increase Of 34% Over Year Ago Period
MCLEAN, Va., Jul 16, 2003 /PRNewswire-FirstCall via COMTEX/ -- Capital One Financial Corporation (NYSE: COF) today announced that its second quarter of 2003 earnings per share increased by 34 percent over the same period in the prior year. This increase in earnings was driven primarily by the improved profitability of its auto and international businesses.
Earnings for the second quarter of 2003 were $286.8 million, or $1.23 per share (fully diluted) compared with earnings of $213.1 million, or $0.92 per share, for the second quarter of 2002. Earnings in the first quarter of 2003 were $309.1 million, or $1.35 per share.
The managed charge-off rate declined to 6.32 percent in the second quarter of 2003, from 6.47 percent in the previous quarter. The managed delinquency rate declined to 4.95 percent from 4.97 percent at the end of the previous quarter.
"We continue to expect that we will report earnings per share of at least $4.55 for 2003, as we increase our marketing and Allowance for Loan Losses to support the more robust portfolio growth we expect in the second half," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We are pleased that charge-offs declined in the quarter, as predicted, to 6.32 percent and we expect additional improvement in the second half of the year."
The company continues to shift its portfolio mix to higher quality loans. As a consequence, Capital One's managed revenue margin declined to 14.85 percent in the second quarter of 2003 from 15.70 percent in the previous quarter. The managed risk-adjusted margin declined to 9.23 percent from 9.77 percent in the previous quarter. The company expects that the revenue margin will drift lower as it continues to shift its mix to higher quality loans.
Capital One's managed loan balance increased by $1.5 billion to $60.7 billion at the end of the second quarter. Also, during the second quarter, as part of its ongoing program of auto-loan sales, the company sold $1.3 billion in auto loans, recording a gain of $35.0 million. The company expects to continue to sell auto loans in the second half of the year, yet hold a higher proportion of auto loan growth on its balance sheet. The company's accounts declined by 638 thousand to 45.8 million at the end of the second quarter.
"We continue to expect managed loan growth of 15 to 20 percent in 2003," said David R. Lawson, Capital One's Chief Financial Officer. "Our diversified efforts in auto finance and international will be an increasing contributor to the earnings growth of Capital One this year."
Marketing expenses for the second quarter of 2003 increased $28.9 million to $270.6 million from $241.7 million in the first quarter. Marketing expenses were $320.4 million in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the second quarter of 2003 were $880.0 million versus $931.2 million for the first quarter and $833.2 million in the comparable period of the prior year. Annualized operating cost per account decreased to $76.35 for the second quarter of 2003 from $79.43 in the prior quarter.
The company generates earnings from its managed loan portfolio which includes both on-balance sheet loans and off-balance sheet loans. For this reason the company believes the managed financial measures to be useful to stakeholders. In compliance with Regulation G of the Securities and Exchange Commission, the company is providing a numerical reconciliation of managed financial measures to comparable measures calculated on a reported basis using generally accepted accounting principles. Please see the schedule entitled "Reconciliation to GAAP Financial Measures" attached to this release for more information.
The company cautioned that its current expectations for 2003 earnings, charge-off rates, margins, marketing expense, Allowance for Loan Losses, and future loan 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-Q for the quarter ended March 31, 2003.
Headquartered in McLean, Virginia, Capital One Financial Corporation (www.capitalone.com) is a holding company whose principal subsidiaries include: Capital One Bank and Capital One, F.S.B., which offer consumer lending products, and Capital One Auto Finance, Inc., which offers auto loan products. Capital One's subsidiaries collectively had 45.8 million managed accounts and $60.7 billion in managed loans outstanding as of June 30, 2003. 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.
CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS(5) 2003 2003 Q2 Q1 (in millions, except per share data and as noted) Earnings (Reported Basis) Net Interest Income $ 682.3 $ 734.8 Non-Interest Income 1,310.6 1,304.6 Total Revenue(1) 1,992.9 2,039.4 Provision for Loan Losses 387.1 375.9 Marketing Expenses 270.6 241.7 Operating Expenses 880.0 931.2 Income Before Taxes 455.2 490.6 Tax Rate 37.0 % 37.0 % Net Income $ 286.8 $ 309.1 Common Share Statistics Basic EPS $ 1.28 $ 1.39 Diluted EPS $ 1.23 $ 1.35 Dividends Per Share $ 0.03 $ 0.03 Book Value Per Share (period end) $ 23.37 $ 21.78 Stock Price Per Share (period end) $ 49.18 $ 30.01 Total Market Capitalization (period end) $11,170.0 $ 6,791.8 Shares Outstanding (period end) 227.1 226.3 Shares Used to Compute Basic EPS 223.7 223.0 Shares Used to Compute Diluted EPS 232.6 228.4 Reported Balance Sheet Statistics (period avg.) Average Loans $ 27,101 $ 27,316 Average Earning Assets $ 36,298 $ 34,144 Average Assets $ 39,678 $ 38,318 Average Equity $ 5,148 $ 4,823 Net Interest Margin 7.52 % 8.61 % Revenue Margin 21.96 % 23.89 % Risk Adjusted Margin (2) 17.16 % 18.49 % Return on Average Assets (ROA) 2.89 % 3.23 % Return on Average Equity (ROE) 22.28 % 25.64 % Net Charge-Off Rate 6.43 % 6.76 % Net Charge-Offs $ 435.6 $ 461.5 Reported Balance Sheet Statistics (period end) Loans $ 26,849 $ 27,634 Delinquency Rate (30+ days) 5.61 % 5.39 % Total Assets $ 40,367 $ 37,911 Allowance as a % of reported loans 5.92 % 5.92 % Capital (4) $ 6,130.4 $ 5,749.0 Capital to Assets Ratio 15.19 % 15.16 % Capital plus Allowance to Assets Ratio 19.24 % 19.48 % (1) In accordance with the Company's finance charge and fee revenue recognition policy, the amounts billed to customers but not recognized as revenue were as follows: Q2 2003 - $497.3 million, Q1 2003 - $519.7 million, Q4 2002 - $675.7 million, Q3 2002 - $489.6 million and Q2 2002 - $574.4 million. (2) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. (3) Includes $110.0 million of one-time charges in Q3 2002. (4) Includes preferred interests and mandatory convertible securities. (5) Certain prior period amounts have been reclassified to conform to the current period presentation related to the adoption of Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS(5) 2002 2002 2002 Q4 Q3 Q2 (in millions, except per share data and as noted) Earnings (Reported Basis) Net Interest Income $ 731.0 $ 722.4 $ 654.4 Non-Interest Income 1,320.3 1,520.2 1,384.8 Total Revenue(1) 2,051.4 2,242.6 2,039.2 Provision for Loan Losses 543.8 674.1 541.8 Marketing Expenses 210.8 185.8 320.4 Operating Expenses 910.2 965.2(3) 833.2 Income Before Taxes 386.6 417.5 343.7 Tax Rate 38.0 % 38.0 % 38.0 % Net Income $ 239.7 $ 258.8 $ 213.1 Common Share Statistics Basic EPS $ 1.08 $ 1.17 $ 0.97 Diluted EPS $ 1.05 $ 1.13 $ 0.92 Dividends Per Share $ 0.03 $ 0.03 $ 0.03 Book Value Per Share (period end) $ 20.44 $ 19.55 $ 18.13 Stock Price Per Share (period end) $ 29.72 $ 34.92 $ 61.05 Total Market Capitalization (period end) $ 6,722.5 $ 7,744.2 $13,512.9 Shares Outstanding (period end) 226.2 221.8 221.3 Shares Used to Compute Basic EPS 221.8 220.6 220.0 Shares Used to Compute Diluted EPS 228.2 228.4 231.7 Reported Balance Sheet Statistics (period avg.) Average Loans $ 27,260 $ 26,058 $ 24,876 Average Earning Assets $ 34,075 $ 32,449 $ 30,678 Average Assets $ 37,208 $ 35,470 $ 34,040 Average Equity $ 4,568 $ 4,418 $ 4,021 Net Interest Margin 8.58 % 8.91 % 8.53 % Revenue Margin 24.08 % 27.64 % 26.59 % Risk Adjusted Margin (2) 19.18 % 23.90 % 22.69 % Return on Average Assets (ROA) 2.58 % 2.92 % 2.50 % Return on Average Equity (ROE) 20.99 % 23.44 % 21.20 % Net Charge-Off Rate 6.13 % 4.66 % 4.81 % Net Charge-Offs $ 417.7 $ 303.9 $ 299.4 Reported Balance Sheet Statistics (period end) Loans $ 27,344 $ 27,598 $ 24,496 Delinquency Rate (30+ days) 6.12 % 5.71 % 4.51 % Total Assets $ 37,382 $ 36,910 $ 33,834 Allowance as a % of reported loans 6.29 % 5.78 % 5.05 % Capital (4) $ 5,440.4 $ 5,149.6 $ 4,823.6 Capital to Assets Ratio 14.55 % 13.95 % 14.26 % Capital plus Allowance to Assets Ratio 19.15 % 18.27 % 17.91 % (1) In accordance with the Company's finance charge and fee revenue recognition policy, the amounts billed to customers but not recognized as revenue were as follows: Q2 2003 - $497.3 million, Q1 2003 - $519.7 million, Q4 2002 - $675.7 million, Q3 2002 - $489.6 million and Q2 2002 - $574.4 million. (2) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. (3) Includes $110.0 million of one-time charges in Q3 2002. (4) Includes preferred interests and mandatory convertible securities. (5) Certain prior period amounts have been reclassified to conform to the current period presentation related to the adoption of Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUPPLEMENT REPORTED BASIS(1) 2003 2003 Q2 Q1 (in millions, except per share data and as noted) Revenue & Expense Statistics (Reported) Net interest income growth (annualized) (29)% 2 % Non interest income growth (annualized) 2 % (5)% Revenue growth (annualized) (9)% (2)% Revenue margin (average loans) 29.41 % 29.86 % Risk adjusted margin (average loans) 22.98 % 23.11 % Ops cost as a % of revenues 44.16 % 45.66 % Ops cost as a % of average loans (annualized) 12.99 % 13.64 % Per Account Statistics (Reported) Net interest income per account (annualized) $ 59.19 $ 62.68 Non interest income per account (annualized) $ 113.71 $ 111.28 Revenue per account (annualized) $ 172.90 $ 173.95 Growth Statistics (Reported) Net new loans $ (785) $ 290 % loan growth Q over Q (annualized) (11)% 4 % % loan growth Y over Y 10 % 15 % (1) Certain prior period amounts have been reclassified to conform to the current period presentation related to the adoption of Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUPPLEMENT REPORTED BASIS(1) 2002 2002 2002 Q4 Q3 Q2 (in millions, except per share data and as noted) Revenue & Expense Statistics (Reported) Net interest income growth (annualized) 5 % 42 % 28 % Non interest income growth (annualized) (53)% 39 % 46 % Revenue growth (annualized) (34)% 40 % 40 % Revenue margin (average loans) 30.10 % 34.43 % 32.79 % Risk adjusted margin (average loans) 23.97 % 29.76 % 27.98 % Ops cost as a % of revenues 44.37 % 43.04 % 40.86 % Ops cost as a % of average loans (annualized) 13.36 % 14.82 % 13.40 % Per Account Statistics (Reported) Net interest income per account (annualized) $ 61.22 $ 59.72 $ 54.97 Non interest income per account (annualized) $ 110.57 $ 125.67 $ 116.33 Revenue per account (annualized) $ 171.78 $ 185.39 $ 171.30 Growth Statistics (Reported) Net new loans $ (254) $ 3,102 $ 532 % loan growth Q over Q (annualized) (4)% 51 % 9 % % loan growth Y over Y 31 % 58 % 50 % (1) Certain prior period amounts have been reclassified to conform to the current period presentation related to the adoption of Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS(4) 2003 2003 Q2 Q1 (in millions, except per share data and as noted) Earnings (Managed Basis) Net Interest Income $ 1,457.5 $ 1,508.0 Non-Interest Income 1,046.0 1,027.9 Total Revenue(1) 2,503.5 2,535.9 Provision for Loan Losses 897.7 872.3 Marketing Expenses 270.6 241.7 Operating Expenses 880.0 931.2 Income Before Taxes 455.2 490.6 Tax Rate 37.0 % 37.0 % Net Income $ 286.8 $ 309.1 Managed Balance Sheet Statistics (period avg.) Average Loans $ 59,916 $ 59,250 Average Earning Assets $ 67,451 $ 64,602 Average Assets $ 71,913 $ 69,670 Net Interest Margin 8.64 % 9.34 % Revenue Margin 14.85 % 15.70 % Risk Adjusted Margin (2) 9.23 % 9.77 % Return on Average Assets (ROA) 1.60 % 1.77 % Net Charge-Off Rate 6.32 % 6.47 % Net Charge-Offs $ 946.3 $ 957.9 Cost Per Account (in dollars) $ 76.35 $ 79.43 Managed Balance Sheet Statistics (period end) Loans $ 60,736 $ 59,214 Delinquency Rate (30+ days) 4.95 % 4.97 % plus Allowance to Assets Ratio 10.48 % 10.71 % (1) In accordance with the Company's finance charge and fee revenue recognition policy, the amounts billed to customers but not recognized as revenue were as follows: Q2 2003 - $497.3 million, Q1 2003 - $519.7 million, Q4 2002 - $675.7 million, Q3 2002 - $489.6 million and Q2 2002 - $574.4 million. (2) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. (3) Includes $110.0 million of one-time charges in Q3 2002. (4) The information in this statistical summary reflects the adjustment to add back the effect of securitized loans. See accompanying schedule - "Reconciliation to GAAP Financial Measures". CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS(4) 2002 2002 2002 Q4 Q3 Q2 (in millions, except per share data and as noted) Earnings (Managed Basis) Net Interest Income $ 1,442.2 $ 1,435.3 $ 1,234.3 Non-Interest Income 1,086.9 1,189.1 1,145.0 Total Revenue(1) 2,529.1 2,624.4 2,379.3 Provision for Loan Losses 1,021.5 1,055.9 881.9 Marketing Expenses 210.8 185.8 320.4 Operating Expenses 910.2 965.2(3) 833.2 Income Before Taxes 386.6 417.5 343.7 Tax Rate 38.0 % 38.0 % 38.0 % Net Income $ 239.7 $ 258.8 $ 213.1 Managed Balance Sheet Statistics (period avg.) Average Loans $ 57,669 $ 55,350 $ 51,343 Average Earning Assets $ 62,789 $ 60,016 $ 55,559 Average Assets $ 67,037 $ 64,193 $ 59,989 Net Interest Margin 9.19 % 9.57 % 8.89 % Revenue Margin 16.11 % 17.49 % 17.13 % Risk Adjusted Margin (2) 10.41 % 12.92 % 12.53 % Return on Average Assets (ROA) 1.43 % 1.61 % 1.42 % Net Charge-Off Rate 6.21 % 4.96 % 4.98 % Net Charge-Offs $ 895.5 $ 685.7 $ 639.4 Cost Per Account (in dollars) $ 76.22 $ 79.79 $ 69.99 Managed Balance Sheet Statistics (period end) Loans $ 59,747 $ 56,883 $ 53,208 Delinquency Rate (30+ days) 5.60 % 5.31 % 4.43 % Number of Accounts (000's) 47,369 48,163 48,612 Total Assets $ 69,205 $ 65,614 $ 62,022 Capital to Assets Ratio 7.86 % 7.85 % 7.78 % Capital plus Allowance to Assets Ratio 10.35 % 10.28 % 9.77 % (1) In accordance with the Company's finance charge and fee revenue recognition policy, the amounts billed to customers but not recognized as revenue were as follows: Q2 2003 - $497.3 million, Q1 2003 - $519.7 million, Q4 2002 - $675.7 million, Q3 2002 - $489.6 million and Q2 2002 - $574.4 million. (2) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. (3) Includes $110.0 million of one-time charges in Q3 2002. (4) The information in this statistical summary reflects the adjustment to add back the effect of securitized loans. See accompanying schedule - "Reconciliation to GAAP Financial Measures". CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUPPLEMENT MANAGED BASIS(1) 2003 2003 Q2 Q1 (in millions, except per share data and as noted) Revenue & Expense Statistics (Managed) Net interest income growth (annualized) (13)% 18 % Non interest income growth (annualized) 7 % (22)% Revenue growth (annualized) (5)% 1 % Revenue margin (average loans) 16.71 % 17.12 % Risk adjusted margin (average loans) 10.40 % 10.65 % Ops cost as a % of revenues 35.15 % 36.72 % Ops cost as a % of average loans (annualized) 5.87 % 6.29 % Per Account Statistics (Managed) Net interest income per account (annualized) $ 126.45 $ 128.62 Non interest income per account (annualized) $ 90.75 $ 87.68 Revenue per account (annualized) $ 217.21 $ 216.30 Net income per account (annualized) $ 24.88 $ 26.37 Growth Statistics (Managed) Average accounts (000's) 46,104 46,896 Net new accounts per quarter (000's) (638) (946) % account growth Q over Q (annualized) (5)% (8)% % account growth Y over Y (6)% - % Net new loans $ 1,522 $ (533) % loan growth Q over Q (annualized) 10 % (4)% % loan growth Y over Y 14 % 22 % Balance Sheet Measures % off-balance sheet securitizations 55 % 53 % % at introductory rate 10 % 9 % Segment Statistics Consumer Lending: Loans receivable $ 47,182 $ 45,963 Net income (loss) $ 289.8 $ 309.2 Net charge-off rate 6.95 % 7.12 % Delinquency rate 4.83 % 4.99 % Auto Finance: Loans receivable $ 7,380 $ 7,742 Net income (loss) $ 44.0 $ (6.5) Net charge-off rate 4.22 % 4.91 % Delinquency rate 6.97 % 5.37 % International: Loans receivable $ 6,061 $ 5,390 Net income (loss) $ 13.6 $ 18.1 Net charge-off rate 4.48 % 4.28 % Delinquency rate 3.92 % 4.22 % (1) The information in this statistical summary supplement reflects the adjustment to add back the effect of securitized loans. See accompanying schedule -- "Reconciliation to GAAP Financial Measures". CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUPPLEMENT MANAGED BASIS(1) 2002 2002 2002 Q4 Q3 Q2 (in millions, except per share data and as noted) Revenue & Expense Statistics (Managed) Net interest income growth (annualized) 2 % 65 % 21 % Non interest income growth (annualized) (34)% 15 % 63 % Revenue growth (annualized) (15)% 41 % 40 % Revenue margin (average loans) 17.54 % 18.97 % 18.54 % Risk adjusted margin (average loans) 11.33 % 14.01 % 13.55 % Ops cost as a % of revenues 35.99 % 36.78 % 35.02 % Ops cost as a % of average loans (annualized) 6.31 % 6.98 % 6.49 % Per Account Statistics (Managed) Net interest income per account (annualized) $ 120.77 $ 118.65 $ 103.69 Non interest income per account (annualized) $ 91.02 $ 98.30 $ 96.18 Revenue per account (annualized) $ 211.79 $ 216.95 $ 199.87 Net income per account (annualized) $ 20.07 $ 21.39 $ 17.90 Growth Statistics (Managed) Average accounts (000's) 47,766 48,388 47,618 Net new accounts per quarter (000's) (794) (449) 1,989 % account growth Q over Q (annualized) (7)% (4)% 17 % % account growth Y over Y 8 % 20 % 27 % Net new loans $ 2,864 $ 3,675 $ 4,644 % loan growth Q over Q (annualized) 20 % 28 % 38 % % loan growth Y over Y 32 % 48 % 51 % Balance Sheet Measures % off-balance sheet securitizations 53 % 51 % 53 % % at introductory rate 10 % 11 % 12 % Segment Statistics Consumer Lending: Loans receivable $ 47,290 $ 45,021 $ 42,819 Net income (loss) $ 183.1 $ 291.3 $ 296.6 Net charge-off rate 6.45 % 5.16 % 5.46 % Delinquency rate 5.54 % 5.41 % 4.51 % Auto Finance: Loans receivable $ 6,992 $ 6,496 $ 5,354 Net income (loss) $ 8.8 $ (3.4) $ 14.9 Net charge-off rate 4.83 % 3.97 % 2.84 % Delinquency rate 7.15 % 6.30 % 5.38 % International: Loans receivable $ 5,331 $ 5,255 $ 4,985 Net income (loss) $ (6.2) $ (1.1) $ (19.8) Net charge-off rate 3.92 % 3.61 % 3.91 % Delinquency rate 4.18 % 3.78 % 3.78 % (1) The information in this statistical summary supplement reflects the adjustment to add back the effect of securitized loans. See accompanying schedule -- "Reconciliation to GAAP Financial Measures". CAPITAL ONE FINANCIAL CORPORATION Reconciliation to GAAP Financial Measures For the Three Months Ended June 30, 2003 (dollars in thousands)(unaudited)
The Company's consolidated financial statements prepared in accordance with generally accepted accounting principles ("GAAP") are referred to as its "reported" financial statements. Loans included in securitization transactions which qualified as sales under GAAP have been removed from the Company's "reported" balance sheet. However, interest income, interchange, fees and recoveries generated from the securitized loan portfolio net of charge-offs in excess of the interest paid to investors of asset-backed securitizations are recognized as non-interest income on the "reported" income statement.
The Company's "managed" consolidated financial statements add back the effects of securitization transactions qualifying as sales under GAAP. The Company generates earnings from its "managed" loan portfolio which includes both the on-balance sheet loans and off-balance sheet loans. The Company's "managed" income statement takes the components of the non-interest income generated from the securitized portfolio and distributes the revenue to appropriate income statement line items from which it originated. For this reason the Company believes the "managed" consolidated financial statements and related managed metrics to be useful to stakeholders.
Total Total Reported Adjustments(1) Managed(2) Income Statement Measures Net interest income $ 682,263 $ 775,254 $ 1,457,517 Non-interest income $ 1,310,622 $ (264,610)$ 1,046,012 Total revenue $ 1,992,885 $ 510,644 $ 2,503,529 Provision for loan losses $ 387,097 $ 510,644 $897,741 Balance Sheet Measures Consumer loans $ 26,848,578 $ 33,887,231 $ 60,735,809 Total assets $ 40,366,651 $ 33,269,431 $ 73,636,082 Average consumer loans $ 27,101,042 $ 32,814,755 $ 59,915,797 Average earning assets $ 36,297,922 $ 31,152,917 $ 67,450,839 Average total assets $ 39,678,236 $ 32,235,014 $ 71,913,250 Delinquencies $ 1,506,812 $ 1,497,314 $ 3,004,126 (1) Includes adjustments made related to the effects of securitization transactions qualifying as sales under GAAP and adjustments made to reclassify to "managed" loans outstanding the collectible portion of billed finance charge and fee income on the investors' interest in securitized loans excluded from loans outstanding on the "reported" balance sheet in accordance with Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", issued April 2003. (2) The Managed loan portfolio does not include auto loans which have been sold in whole loan sale transactions where the company has retained servicing rights. CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets(1) (in thousands)(unaudited) June 30 March 31 June 30 2003 2003 2002 Assets: Cash and due from banks $ 296,551 $ 328,791 $ 244,857 Federal funds sold and resale agreements 2,320,658 864,036 432,124 Interest-bearing deposits at other banks 578,479 247,560 448,363 Cash and cash equivalents 3,195,688 1,440,387 1,125,344 Securities available for sale 5,418,817 4,817,322 4,538,223 Consumer loans 26,848,578 27,634,440 24,496,006 Less: Allowance for loan losses (1,590,000) (1,635,000) (1,237,000) Net loans 25,258,578 25,999,440 23,259,006 Accounts receivable from securitizations 4,092,961 3,378,593 2,886,979 Premises and equipment, net 760,376 769,112 808,972 Interest receivable 200,517 208,998 151,828 Other 1,439,714 1,297,115 1,064,127 Total assets $ 40,366,651 $ 37,910,967 $ 33,834,479 Liabilities: Interest-bearing deposits $ 19,821,881 $ 18,489,388 $ 16,014,392 Senior notes 5,987,125 5,116,591 6,069,719 Other borrowings 6,237,419 6,576,876 4,590,716 Interest payable 230,836 194,629 235,108 Other 2,782,400 2,604,818 2,910,638 Total liabilities 35,059,661 32,982,302 29,820,573 Stockholders' Equity: Common stock 2,284 2,275 2,222 Paid-in capital, net 1,762,469 1,730,883 1,600,489 Retained earnings and cumulative other comprehensive income 3,591,403 3,244,673 2,446,147 Less: Treasury stock, at cost (49,166) (49,166) (34,952) Total stockholders' equity 5,306,990 4,928,665 4,013,906 Total liabilities and stockholders' equity $ 40,366,651 $ 37,910,967 $ 33,834,479 (1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income(1) (in thousands, except per share data)(unaudited) Three Months Ended June 30 March 31 June 30 2003 2003 2002 Interest Income: Consumer loans, including past-due fees $ 960,124 $1,013,282 $ 930,751 Securities available for sale 47,895 42,931 45,815 Other 62,261 50,353 48,095 Total interest income 1,070,280 1,106,566 1,024,661 Interest Expense: Deposits 220,640 209,308 203,112 Senior notes 106,151 104,097 109,687 Other borrowings 61,226 58,357 57,450 Total interest expense 388,017 371,762 370,249 Net interest income 682,263 734,804 654,412 Provision for loan losses 387,097 375,851 541,841 Net interest income after provision for loan losses 295,166 358,953 112,571 Non-Interest Income: Servicing and securitizations 742,696 729,689 718,347 Service charges and other customer- related fees 402,970 441,226 460,984 Interchange 89,141 85,351 137,353 Other 75,815 48,337 68,128 Total non-interest income 1,310,622 1,304,603 1,384,812 Non-Interest Expense: Salaries and associate benefits 373,257 397,449 379,363 Marketing 270,555 241,696 320,446 Communications and data processing 112,456 112,052 101,601 Supplies and equipment 87,680 83,812 88,844 Occupancy 42,755 43,574 38,275 Other 263,865 294,331 225,117 Total non-interest expense 1,150,568 1,172,914 1,153,646 Income before income taxes 455,220 490,642 343,737 Income taxes 168,431 181,538 130,620 Net income $ 286,789 $ 309,104 $ 213,117 Basic earnings per share $ 1.28 $ 1.39 $ 0.97 Diluted earnings per share $ 1.23 $ 1.35 $ 0.92 Dividends paid per share $ 0.03 $ 0.03 $ 0.03 (1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income(1) (in thousands, except per share data)(unaudited) Six Months Ended June 30 June 30 2003 2002 Interest Income: Consumer loans, including past-due fees $1,973,406 $1,775,291 Securities available for sale 90,826 88,159 Other 112,614 95,572 Total interest income 2,176,846 1,959,022 Interest Expense: Deposits 429,948 381,275 Senior notes 210,248 203,591 Other borrowings 119,583 108,506 Total interest expense 759,779 693,372 Net interest income 1,417,067 1,265,650 Provision for loan losses 762,948 931,458 Net interest income after provision for loan losses 654,119 334,192 Non-Interest Income: Servicing and securitizations 1,472,385 1,344,494 Service charges and other customer- related fees 844,196 926,618 Interchange 174,492 235,449 Other 124,152 119,775 Total non-interest income 2,615,225 2,626,336 Non-Interest Expense: Salaries and associate benefits 770,706 760,098 Marketing 512,251 673,982 Communications and data processing 224,508 193,794 Supplies and equipment 171,492 173,351 Occupancy 86,329 71,656 Other 558,196 440,660 Total non-interest expense 2,323,482 2,313,541 Income before income taxes 945,862 646,987 Income taxes 349,969 245,855 Net income $ 595,893 $ 401,132 Basic earnings per share $ 2.67 $ 1.83 Diluted earnings per share $ 2.58 $ 1.75 Dividends paid per share $ 0.05 $ 0.05 (1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates(1) (dollars in thousands)(unaudited) Reported Quarter Ended 6/30/03 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $ 27,101,042 $ 960,124 14.17% Securities available for sale 5,386,070 47,895 3.56% Other 3,810,810 62,261 6.54% Total earning assets $ 36,297,922 $ 1,070,280 11.79% Interest-bearing liabilities: Deposits $ 19,178,154 220,640 4.60% Senior notes 5,533,693 106,151 7.67% Other borrowings 6,682,797 61,226 3.66% Total interest-bearing liabilities $ 31,394,644 $ 388,017 4.94% Net interest spread 6.85% Interest income to average earning assets 11.79% Interest expense to average earning assets 4.27% Net interest margin 7.52% (1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates(1) (dollars in thousands)(unaudited) Reported Quarter Ended 3/31/03 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $ 27,316,194 $ 1,013,282 14.84% Securities available for sale 4,417,538 42,931 3.89% Other 2,410,750 50,353 8.35% Total earning assets $ 34,144,482 $ 1,106,566 12.96% Interest-bearing liabilities: Deposits $ 17,940,058 $209,308 4.67% Senior notes 5,309,690 104,097 7.84% Other borrowings 7,009,915 58,357 3.33% Total interest-bearing liabilities $ 30,259,663 $ 371,762 4.91% Net interest spread 8.05% Interest income to average earning assets 12.96% Interest expense to average earning assets 4.35% Net interest margin 8.61% (1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates(1) (dollars in thousands)(unaudited) Reported Quarter Ended 6/30/02 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $ 24,876,120 $ 930,751 14.97% Securities available for sale 3,662,832 45,815 5.00% Other 2,138,553 48,095 9.00% Total earning assets $ 30,677,505 $ 1,024,661 13.36% 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% Total interest-bearing liabilities $ 27,182,737 $ 370,249 5.45% Net interest spread 7.91% Interest income to average earning assets 13.36% Interest expense to average earning assets 4.83% Net interest margin 8.53% (1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, "Accrued Interest Receivable", that was issued in April 2003. CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (dollars in thousands)(unaudited) Managed (1) Quarter Ended 6/30/03 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $ 59,915,797 $ 2,110,859 14.09% Securities available for sale 5,386,070 47,895 3.56% Other 2,148,972 12,802 2.38% Total earning assets $ 67,450,839 $ 2,171,556 12.88% Interest-bearing liabilities: Deposits $ 19,178,154 $ 220,640 4.60% Senior notes 5,533,693 106,151 7.67% Other borrowings 6,682,797 61,226 3.66% Securitization liability 32,249,105 326,022 4.04% Total interest-bearing liabilities $ 63,643,749 $ 714,039 4.49% Net interest spread 8.39% Interest income to average earning assets 12.88% Interest expense to average earning assets 4.24% Net interest margin 8.64% (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 3/31/03 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $ 59,249,698 $ 2,148,419 14.50% Securities available for sale 4,417,538 42,931 3.89% Other 934,382 5,323 2.28% Total earning assets $ 64,601,618 $ 2,196,673 13.60% Interest-bearing liabilities: Deposits $ 17,940,058 $ 209,308 4.67% Senior notes 5,309,690 104,097 7.84% Other borrowings 7,009,915 58,357 3.33% Securitization liability 31,361,051 316,960 4.04% Total interest-bearing liabilities $ 61,620,714 $ 688,722 4.47% Net interest spread 9.13% Interest income to average earning assets 13.60% Interest expense to average earning assets 4.26% Net interest margin 9.34% (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 6/30/02 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $ 51,342,764 $ 1,838,672 14.32% Securities available for sale 3,662,832 45,815 5.00% Other 553,595 2,110 1.52% Total earning assets $ 55,559,191 $ 1,886,597 13.58% 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 8.67% Interest income to average earning assets 13.58% Interest expense to average earning assets 4.69% Net interest margin 8.89% (1) The information in this table reflects the adjustment to add back the effect of securitized loans.
SOURCE Capital One Financial Corporation
Paul Paquin, V.P., Investor Relations, +1-703-720-2456, or Tatiana Stead, Director, Corporate Media, +1-703-720-2352, both of Capital One Financial Corporation