UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
July 23, 2009
Date of Report (Date of earliest event reported)
CAPITAL ONE FINANCIAL CORPORATION
(Exact name of registrant as specified in its chapter)
| Delaware | 1-13300 | 54-1719854 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
| 1680 Capital One Drive, McLean, Virginia |
22102 | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (703) 720-1000
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02. | Results of Operations and Financial Condition |
On July 23, 2009, the Company issued a press release announcing its financial results for the second quarter ended June 30, 2009. A copy of the Company’s press release is attached and filed herewith as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference.
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, servicing fees, finance charges, and other fees, net of charge-offs, and interest paid to investors of securitizations are recognized as servicing and securitizations income on the “reported” income statement.
The Company’s “managed” consolidated financial statements reflect adjustments made related to 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 servicing and securitizations income generated from the securitized portfolio and distributes the revenue and expense 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.
| Item 7.01. | Regulation FD Disclosure. |
The Company hereby furnishes the information in Exhibit 99.2 hereto, Second Quarter Earnings Presentation for the quarter ended June 30, 2009.
Note: Information in Exhibit 99.2 furnished pursuant to Item 7.01 shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section. This report will not be deemed an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD. Furthermore, the information provided in Exhibit 99.2 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933.
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| Item 8.01. | Other Events. |
| (a) | See attached press release, at Exhibit 99.1. |
| (b) | Cautionary Factors. |
The attached press release and information provided pursuant to Items 2.02, 7.01 and 9.01 contain forward-looking statements, which involve a number of risks and uncertainties. The Company cautions readers that any forward-looking information is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking information as a result of various factors including, but not limited to, the following:
| • | general economic and business conditions in the U.S., the UK, or the Company’s local markets, including conditions affecting employment levels, interest rates, consumer income and confidence, spending and savings that may affect consumer bankruptcies, defaults, charge-offs, and deposit activity; |
| • | an increase or decrease in credit losses (including increases due to a worsening of general economic conditions in the credit environment); |
| • | financial, legal, regulatory, tax or accounting changes or actions, including with respect to any litigation matter involving the Company; |
| • | increases or decreases in interest rates; |
| • | the success of the Company’s marketing efforts in attracting and retaining customers; |
| • | the ability of the Company to continue to securitize its credit cards and consumer loans and to otherwise access the capital markets at attractive rates and terms to capitalize and fund its operations and future growth; |
| • | with respect to financial and other products, increases or decreases in the Company’s aggregate loan balances and/or number of customers and the growth rate and composition thereof, including increases or decreases resulting from factors such as shifting product mix, amount of actual marketing expenses made by the Company and attrition of loan balances; |
| • | the amount and rate of deposit growth; |
| • | the Company’s ability to control costs; |
| • | changes in the reputation of or expectations regarding the financial services industry and/or the Company with respect to practices, products or financial condition; |
| • | any significant disruption in the Company’s operations or technology platform; |
| • | the Company’s ability to maintain a compliance infrastructure suitable for its size and complexity; |
| • | the amount of, and rate of growth in, the Company’s expenses as the Company’s business develops or changes or as it expands into new market areas; |
| • | the Company’s ability to execute on its strategic and operational plans; |
| • | any significant disruption of, or loss of public confidence in, the United States Mail service affecting our response rates and consumer payments; |
| • | the ability of the Company to recruit and retain experienced personnel to assist in the management and operations of new products and services; |
| • | the risk that the cost savings and any other synergies from the Company’s acquisitions may not be fully realized or may take longer to realize than expected; |
| • | disruption from the acquisitions negatively impacting the Company’s ability to maintain relationships with customers, employees or suppliers; |
| • | competition from providers of products and services that compete with the Company’s businesses; and |
| • | other risk factors listed from time to time in the Company’s SEC reports including, but not limited to, the Annual Report on Form 10-K for the year ended December 31, 2008, and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2009. |
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| Item 9.01. | Financial Statements, Pro Forma Financial Information and Exhibits. |
| (c) | Exhibits. |
| Exhibit No. |
Description of Exhibit | |
| 99.1 | Press release, dated July 23, 2009. | |
| 99.2 | Second Quarter Earnings Presentation. |
Earnings Conference Call Webcast Information.
Capital One will hold an earnings conference call on July 23, 2009, 5:00 PM Eastern time. The conference call will be accessible through live webcast. Interested investors and other interested individuals can access the webcast via Capital One’s home page (http://www.capitalone.com). Choose “Investors” to access the Investor Center and view and/or download the earnings press release, a reconciliation to GAAP financial measures and other relevant financial information. The replay of the webcast will be archived on Capital One’s website through September 30, 2009.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Current Report on Form 8-K to be signed on its behalf by the undersigned, hereunto duly authorized.
| CAPITAL ONE FINANCIAL CORPORATION | ||||
| Dated: July 23, 2009 | By: | /s/ GARY L. PERLIN | ||
| Gary L. Perlin Chief Financial Officer | ||||
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Exhibit 99.1
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
REPORTED BASIS
| (in millions, except per share data and as noted) |
2009 Q2 |
2009 Q1 (10) |
2008 Q4 |
2008 Q3 |
2008 Q2 |
|||||||||||||||
| Earnings (Reported Basis) |
||||||||||||||||||||
| Net Interest Income |
$ | 1,946.6 | $ | 1,786.8 | $ | 1,802.4 | $ | 1,806.6 | $ | 1,727.8 | ||||||||||
| Non-Interest Income (2) |
1,231.7 | (5) | 1,090.3 | 1,368.3 | 1,696.9 | 1,622.3 | (5) | |||||||||||||
| Total Revenue (1) |
3,178.3 | 2,877.1 | 3,170.7 | 3,503.5 | 3,350.1 | |||||||||||||||
| Provision for Loan Losses |
934.0 | 1,279.1 | 2,098.9 | 1,093.9 | 829.1 | |||||||||||||||
| Marketing Expenses |
134.0 | 162.7 | 264.9 | 267.4 | 288.1 | |||||||||||||||
| Restructuring Expenses |
43.4 | 17.6 | 52.8 | 15.3 | 13.6 | |||||||||||||||
| Goodwill Impairment Charge |
— | — | 810.9 | (7) | — | — | ||||||||||||||
| Operating Expenses (3) |
1,744.4 | (11) | 1,564.8 | 1,629.3 | 1,527.5 | 1,517.9 | ||||||||||||||
| Income (Loss) Before Taxes |
322.5 | (147.1 | ) | (1,686.1 | ) | 599.4 | 701.4 | |||||||||||||
| Tax Rate |
28.6 | % | 40.9 | % | 17.2 | % | 35.6 | % | 34.1 | % | ||||||||||
| Income (Loss) From Continuing Operations, Net of Tax |
$ | 230.2 | $ | (86.9 | ) | $ | (1,396.3 | ) | $ | 385.8 | $ | 462.5 | ||||||||
| Loss From Discontinued Operations, Net of Tax |
(6.0 | ) | (25.0 | ) | (25.2 | ) | (11.7 | ) | (9.6 | ) | ||||||||||
| Net Income (Loss) |
$ | 224.2 | $ | (111.9 | ) | $ | (1,421.5 | ) | $ | 374.1 | $ | 452.9 | ||||||||
| Net Income (Loss) Available to Common Shareholders (F) |
$ | (275.5 | )(13) | $ | (176.1 | ) | $ | (1,454.3 | ) | $ | 374.1 | $ | 452.9 | |||||||
| Common Share Statistics |
||||||||||||||||||||
| Basic EPS: (G) |
||||||||||||||||||||
| Income (Loss) From Continuing Operations |
$ | (0.64 | ) | $ | (0.39 | ) | $ | (3.67 | ) | $ | 1.03 | $ | 1.24 | |||||||
| Loss From Discontinued Operations |
$ | (0.01 | ) | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.03 | ) | $ | (0.03 | ) | |||||
| Net Income (Loss) |
$ | (0.65 | ) | $ | (0.45 | ) | $ | (3.74 | ) | $ | 1.00 | $ | 1.21 | |||||||
| Diluted EPS: (G) |
||||||||||||||||||||
| Income (Loss) From Continuing Operations |
$ | (0.64 | ) | $ | (0.39 | ) | $ | (3.67 | ) | $ | 1.03 | $ | 1.24 | |||||||
| Loss From Discontinued Operations |
$ | (0.01 | ) | $ | (0.06 | ) | $ | (0.07 | ) | $ | (0.03 | ) | $ | (0.03 | ) | |||||
| Net Income (Loss) |
$ | (0.65 | ) | $ | (0.45 | ) | $ | (3.74 | ) | $ | 1.00 | $ | 1.21 | |||||||
| Dividends Per Common Share |
$ | 0.05 | $ | 0.375 | $ | 0.375 | $ | 0.375 | $ | 0.375 | ||||||||||
| Tangible Book Value Per Common Share (period end) |
$ | 25.34 | $ | 25.11 | $ | 28.24 | $ | 31.63 | $ | 30.77 | ||||||||||
| Stock Price Per Common Share (period end) |
$ | 21.88 | $ | 12.24 | $ | 31.89 | $ | 51.00 | $ | 38.01 | ||||||||||
| Total Market Capitalization (period end) |
$ | 9,826.3 | $ | 4,806.6 | $ | 12,411.6 | $ | 19,833.9 | $ | 14,280.4 | ||||||||||
| Common Shares Outstanding (period end) |
449.1 | 392.7 | 389.2 | 388.9 | 375.7 | |||||||||||||||
| Shares Used to Compute Basic EPS |
421.9 | 390.5 | 389.0 | 372.9 | 372.3 | |||||||||||||||
| Shares Used to Compute Diluted EPS |
421.9 | 390.5 | 389.0 | 374.3 | 373.7 | |||||||||||||||
| Reported Balance Sheet Statistics (period average) (A) |
||||||||||||||||||||
| Average Loans Held for Investment |
$ | 105,278 | $ | 103,445 | $ | 99,335 | $ | 98,778 | $ | 97,950 | ||||||||||
| Average Earning Assets |
$ | 151,400 | $ | 145,374 | $ | 137,799 | $ | 133,277 | $ | 131,629 | ||||||||||
| Average Assets |
$ | 177,589 | $ | 168,454 | $ | 161,976 | $ | 156,958 | $ | 154,288 | ||||||||||
| Average Interest Bearing Deposits |
$ | 107,040 | $ | 100,852 | $ | 93,144 | $ | 84,655 | $ | 78,675 | ||||||||||
| Total Average Deposits |
$ | 119,611 | $ | 112,138 | $ | 104,093 | $ | 95,328 | $ | 89,522 | ||||||||||
| Average Equity |
$ | 27,658 | (9),(12) | $ | 27,002 | $ | 26,658 | (9) | $ | 25,046 | $ | 24,839 | ||||||||
| Return on Average Assets (ROA) |
0.52 | % | (0.21 | )% | (3.45 | )% | 0.98 | % | 1.20 | % | ||||||||||
| Return on Average Equity (ROE) |
3.33 | % | (1.29 | )% | (20.95 | )% | 6.16 | % | 7.45 | % | ||||||||||
| Reported Balance Sheet Statistics (period end) (A) |
||||||||||||||||||||
| Loans Held for Investment |
$ | 101,074 | $ | 105,527 | $ | 101,018 | $ | 97,965 | $ | 97,065 | ||||||||||
| Total Assets |
$ | 171,865 | $ | 177,357 | $ | 165,878 | $ | 154,783 | $ | 150,978 | ||||||||||
| Interest Bearing Deposits |
$ | 104,121 | $ | 108,696 | $ | 97,327 | $ | 88,248 | $ | 81,655 | ||||||||||
| Total Deposits |
$ | 116,724 | $ | 121,119 | $ | 108,621 | $ | 98,913 | $ | 92,407 | ||||||||||
| Performance Statistics (Reported) (A) |
||||||||||||||||||||
| Net Interest Income Growth (annualized) |
36 | % | (3 | )% | (1 | )% | 18 | % | (19 | )% | ||||||||||
| Non Interest Income Growth (annualized) |
52 | % | (81 | )% | (77 | )% | 18 | % | (84 | )% | ||||||||||
| Revenue Growth (annualized) |
42 | % | (37 | )% | (38 | )% | 18 | % | (54 | )% | ||||||||||
| Net Interest Margin |
5.14 | % | 4.92 | % | 5.23 | % | 5.42 | % | 5.25 | % | ||||||||||
| Revenue Margin |
8.40 | % | 7.92 | % | 9.20 | % | 10.51 | % | 10.18 | % | ||||||||||
| Risk Adjusted Margin (B) |
5.44 | % | 4.90 | % | 6.17 | % | 7.90 | % | 7.77 | % | ||||||||||
| Non Interest Expense as a % of Average Loans Held for Investment (annualized) |
7.30 | % | 6.75 | % | 7.84 | %(8) | 7.33 | % | 7.43 | % | ||||||||||
| Efficiency Ratio (C) |
59.10 | % | 60.04 | % | 59.74 | %(8) | 51.23 | % | 53.91 | % | ||||||||||
| Asset Quality Statistics (Reported) (A) |
||||||||||||||||||||
| Allowance |
$ | 4,482 | $ | 4,648 | $ | 4,524 | $ | 3,520 | $ | 3,311 | ||||||||||
| Allowance as a % of Reported Loans Held for Investment |
4.84 | %(4) | 4.84 | %(4) | 4.48 | % | 3.59 | % | 3.41 | % | ||||||||||
| Net Charge-Offs |
$ | 1,119 | (4) | $ | 1,097 | (4) | $ | 1,045 | $ | 872 | $ | 793 | ||||||||
| Net Charge-Off Rate |
4.66 | %(4) | 4.41 | %(4) | 4.21 | % | 3.53 | % | 3.24 | % | ||||||||||
| Delinquency Rate (30+ days) |
4.04 | %(4) | 3.99 | %(4) | 4.37 | % | 3.85 | % | 3.43 | % | ||||||||||
| Full-time equivalent employees (in thousands) |
26.6 | 27.5 | 23.7 | 23.5 | 24.0 | |||||||||||||||
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CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
MANAGED BASIS (*)
| (in millions) |
2009 Q2 |
2009 Q1 (10) |
2008 Q4 |
2008 Q3 |
2008 Q2 |
|||||||||||||||
| Earnings (Managed Basis) |
||||||||||||||||||||
| Net Interest Income |
$ | 2,959.2 | $ | 2,743.8 | $ | 2,767.9 | $ | 2,889.3 | $ | 2,788.0 | ||||||||||
| Non-Interest Income (2) |
1,189.0 | (5) | 986.2 | 1,183.2 | 1,325.6 | 1,302.0 | (5) | |||||||||||||
| Total Revenue (1) |
4,148.2 | 3,730.0 | 3,951.1 | 4,214.9 | 4,090.0 | |||||||||||||||
| Provision for Loan Losses |
1,903.9 | 2,132.0 | 2,879.3 | 1,805.3 | 1,569.0 | |||||||||||||||
| Marketing Expenses |
134.0 | 162.7 | 264.9 | 267.4 | 288.1 | |||||||||||||||
| Restructuring Expenses |
43.4 | 17.6 | 52.8 | 15.3 | 13.6 | |||||||||||||||
| Goodwill Impairment Charge |
— | — | 810.9 | (7) | — | — | ||||||||||||||
| Operating Expenses (3) |
1,744.4 | (11) | 1,564.8 | 1,629.3 | 1,527.5 | 1,517.9 | ||||||||||||||
| Income (Loss) Before Taxes |
322.5 | (147.1 | ) | (1,686.1 | ) | 599.4 | 701.4 | |||||||||||||
| Tax Rate |
28.6 | % | 40.9 | % | 17.2 | % | 35.6 | % | 34.1 | % | ||||||||||
| Income (Loss) From Continuing Operations, Net of Tax |
$ | 230.2 | $ | (86.9 | ) | $ | (1,396.3 | ) | $ | 385.8 | $ | 462.5 | ||||||||
| Loss From Discontinued Operations, Net of Tax |
(6.0 | ) | (25.0 | ) | (25.2 | ) | (11.7 | ) | (9.6 | ) | ||||||||||
| Net Income (Loss) |
$ | 224.2 | $ | (111.9 | ) | $ | (1,421.5 | ) | $ | 374.1 | $ | 452.9 | ||||||||
| Net Income (Loss) Available to Common Shareholders (F) |
$ | (275.5 | )(13) | $ | (176.1 | ) | $ | (1,454.3 | ) | $ | 374.1 | $ | 452.9 | |||||||
| Managed Balance Sheet Statistics (period average) (A) |
||||||||||||||||||||
| Average Loans Held for Investment |
$ | 148,609 | $ | 147,385 | $ | 146,586 | $ | 147,247 | $ | 147,716 | ||||||||||
| Average Earning Assets |
$ | 191,804 | $ | 186,817 | $ | 182,660 | $ | 179,753 | $ | 179,421 | ||||||||||
| Average Assets |
$ | 218,325 | $ | 210,133 | $ | 207,240 | $ | 204,694 | $ | 203,308 | ||||||||||
| Return on Average Assets (ROA) |
0.42 | % | (0.17 | )% | (2.70 | )% | 0.75 | % | 0.91 | % | ||||||||||
| Managed Balance Sheet Statistics (period end) (A) |
||||||||||||||||||||
| Loans Held for Investment |
$ | 146,251 | $ | 150,335 | $ | 146,937 | $ | 147,346 | $ | 147,247 | ||||||||||
| Total Assets |
$ | 214,095 | $ | 219,883 | $ | 209,840 | $ | 203,452 | $ | 200,420 | ||||||||||
| Tangible Assets (D) |
$ | 200,110 | $ | 206,161 | $ | 197,337 | $ | 190,141 | $ | 187,059 | ||||||||||
| Tangible Common Equity (E) |
$ | 11,379 | $ | 9,862 | $ | 10,990 | $ | 12,301 | $ | 11,560 | ||||||||||
| Tangible Common Equity to Tangible Assets Ratio (H) |
5.69 | %(6) | 4.78 | % | 5.57 | % | 6.47 | %(6) | 6.18 | % | ||||||||||
| % Off-Balance Sheet Securitizations |
31 | % | 30 | % | 31 | % | 34 | % | 34 | % | ||||||||||
| Performance Statistics (Managed) (A) |
||||||||||||||||||||
| Net Interest Income Growth (annualized) |
31 | % | (3 | )% | (17 | )% | 15 | % | (25 | )% | ||||||||||
| Non Interest Income Growth (annualized) |
82 | % | (67 | )% | (43 | )% | 7 | % | (76 | )% | ||||||||||
| Revenue Growth (annualized) |
45 | % | (22 | )% | (25 | )% | 12 | % | (43 | )% | ||||||||||
| Net Interest Margin |
6.17 | % | 5.87 | % | 6.06 | % | 6.43 | % | 6.22 | % | ||||||||||
| Revenue Margin |
8.65 | % | 7.99 | % | 8.65 | % | 9.38 | % | 9.12 | % | ||||||||||
| Risk Adjusted Margin (B) |
4.29 | % | 3.72 | % | 4.65 | % | 5.86 | % | 5.70 | % | ||||||||||
| Non Interest Expense as a % of Average Loans Held for Investment (annualized) |
5.17 | % | 4.74 | % | 5.31 | %(8) | 4.92 | % | 4.93 | % | ||||||||||
| Efficiency Ratio (C) |
45.28 | % | 46.31 | % | 47.94 | %(8) | 42.58 | % | 44.16 | % | ||||||||||
| Asset Quality Statistics (Managed) (A) |
||||||||||||||||||||
| Net Charge-Offs |
$ | 2,089 | (4) | $ | 1,991 | (4) | $ | 1,826 | $ | 1,583 | $ | 1,533 | ||||||||
| Net Charge-Off Rate |
6.00 | %(4) | 5.52 | %(4) | 4.98 | % | 4.30 | % | 4.15 | % | ||||||||||
| Delinquency Rate (30+ days) |
4.34 | %(4) | 4.36 | %(4) | 4.49 | % | 3.99 | % | 3.64 | % | ||||||||||
| (*) | The information in this statistical summary reflects the adjustment to add back the effect of securitization transactions qualifying as sales under generally accepted accounting principles. See accompanying schedule—“Reconciliation to GAAP Financial Measures”. |
2
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY NOTES
| (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 2009—$571.9 million, Q1 2009—$544.4 million, Q4 2008—$591.0 million, Q3 2008—$445.7 million, and Q2 2008—$476.0 million. |
| (2) | Includes the impact from the decrease in fair value of retained interests, including the interest-only strips, of $127.0 million in Q2 2009, $128.0 million in Q1 2009, $158.2 million in Q4 2008, $73.5 million in Q3 2008 and $71.7 million in Q2 2008. |
| (3) | Includes core deposit intangible amortization expense of $57.4 million in Q2 2009, $49.2 million in Q1 2009, $46.0 million in Q4 2008, $47.3 million in Q3 2008, and $48.5 million in Q2 2008, and integration costs of $8.8 million in Q2 2009, $23.6 million in Q1 2009, $3.2 million in Q4 2008, $10.3 million in Q3 2008, and $27.4 million in Q2 2008. |
| (4) | Excludes the impact from the Chevy Chase Bank, FSB acquired loan portfolio. See accompanying schedule Impact of Chevy Chase Bank, FSB (CCB) Acquisition. |
| (5) | In Q2 2009 and 2008 the Company elected to convert and sell 404,508 shares and 154,991 shares of MasterCard class B common stock, respectively. The Company recognized gains of $65.5 million and $44.9 million in non-interest income from those transactions, respectively. |
| (6) | The Q2 2009 TCE ratio reflects the issuance of 56,000,000 common shares on May 14, 2009 at $27.75 per share. The Q3 2008 TCE ratio reflects the issuance of 15,527,000 shares on September 30, 2008 at $49 per share. |
| (7) | In Q4 2008 the Company recorded impairment of goodwill in its Auto Finance sub-segment of $810.9 million. |
| (8) | Excludes the impact of the goodwill impairment of $810.9 million. |
| (9) | Average equity includes the impact of the Company’s participation in the U.S. Treasury’s Capital Purchase Program. On November 14, 2008, the Company issued 3,555,199 preferred shares and 12,657,960 warrants to purchase common shares, while receiving proceeds of $3.56 billion. The allocated fair value for the preferred shares and the warrants to purchase common shares was $3.06 billion and $491.5 million, respectively. On June 17, 2009, the Company repurchased all 3,555,199 preferred shares issued in Q4 2008 for approximately $3.57 billion, including accrued dividends. The warrants to purchase common shares of $491.5 million remain outstanding and are included in paid-in capital on the balance sheet. |
| (10) | Effective February 27, 2009 the Company acquired Chevy Chase Bank, FSB for $475.9 million, which included $9.8 billion in loans and $13.6 billion in deposits. The Company paid cash of $445.0 million and issued 2.6 million shares valued at $30.9 million. |
| (11) | Includes the FDIC Special Assessment of $80.5 million. |
| (12) | Average equity includes the impact of the issuance of 56,000,000 common shares on May 14, 2009 at $27.75 per share. |
| (13) | The calculation of net income (loss) available to common shareholders includes the impact from dividends on preferred shares of $38.0 million and from the accretion of the discount on preferred shares of $461.7 million. With the repayment of the preferred shares to the U.S. Treasury, the remaining accretion was accelerated to Q2 2009 and treated as a dividend. |
STATISTICS / METRIC DEFINITIONS
| (A) | Based on continuing operations. Average equity and return on equity are based on the Company’s stockholders’ equity. |
| (B) | Risk adjusted margin equals total revenue less net charge-offs as a percentage of average earning assets. |
| (C) | Efficiency ratio equals non-interest expense less restructuring expense divided by total revenue. |
| (D) | Tangible assets include managed assets less intangible assets and is considered a non-GAAP measure. See accompanying schedule Reconciliation To GAAP Financial Measures for a reconciliation of tangible assets. |
| (E) | Includes stockholders’ equity less preferred shares less intangible assets and related deferred tax liabilities. Tangible Common Equity on a reported and managed basis is the same and is considered a non-GAAP measure. See accompanying schedule Reconciliation To GAAP Financial Measures for a reconciliation of tangible common equity. |
| (F) | Net income (loss) available to common shareholders equals net income (loss) less dividends on preferred shares. |
| (G) | Earnings per share is based on net income (loss) available to common shareholders. |
| (H) | Tangible Common Equity to Tangible Assets Ratio (“TCE Ratio”) is considered a non-GAAP measure. See accompanying schedule Reconciliation To GAAP Financial Measures for a reconciliation of the TCE Ratio. |
3
CAPITAL ONE FINANCIAL CORPORATION (COF)
IMPACT OF CHEVY CHASE BANK, FSB (CCB) ACQUISITION
| (in millions, except per share data and as noted) |
Q2 2009 | |||||||||||
| COF | CCB | COF w/out CCB |
||||||||||
| Earnings (Reported Basis) |
||||||||||||
| Total Revenue |
$ | 3,178.3 | $ | 179.3 | $ | 2,999.0 | ||||||
| Provision for Loan Losses |
934.0 | 2.8 | 931.2 | |||||||||
| Marketing Expenses |
134.0 | 1.8 | 132.2 | |||||||||
| Restructuring Expenses |
43.4 | — | 43.4 | |||||||||
| Operating Expenses |
1,744.4 | 151.1 | 1,593.3 | |||||||||
| Income (Loss) From Continuing Operations, Net of Tax |
230.2 | 15.3 | 214.9 | |||||||||
| Loss From Discontinued Operations, Net of Tax |
(6.0 | ) | — | (6.0 | ) | |||||||
| Net Income (Loss) |
$ | 224.2 | $ | 15.3 | $ | 208.9 | ||||||
| Net Income (Loss) Available to Common Shareholders |
$ | (275.5 | ) | $ | 15.3 | $ | (290.8 | ) | ||||
| Common Share Statistics |
||||||||||||
| Diluted EPS |
$ | (0.65 | ) | $ | (0.69 | ) | ||||||
| Shares Used to Compute Diluted EPS |
421.9 | 419.3 | ||||||||||
| Reported Balance Sheet Statistics (period end) (2) |
||||||||||||
| Loans (1) |
$ | 101,378 | $ | 9,010 | $ | 92,368 | ||||||
| Less: Allowance for Loan and Lease Losses |
$ | (4,482 | ) | $ | (3 | ) | $ | (4,479 | ) | |||
| Net Loans |
$ | 96,896 | $ | 9,007 | $ | 87,889 | ||||||
| Goodwill |
$ | 13,381 | $ | 1,405 | $ | 11,976 | ||||||
| Core Deposit Intangible |
$ | 958 | $ | 223 | $ | 735 | ||||||
| Total Assets |
$ | 171,865 | $ | 15,396 | $ | 156,469 | ||||||
| Total Deposits |
$ | 116,724 | $ | 13,873 | $ | 102,851 | ||||||
| Borrowings |
$ | 23,338 | $ | 932 | $ | 22,406 | ||||||
| Return on Average Assets (ROA) (period average) (2) |
||||||||||||
| ROA (Reported) |
0.52 | % | 0.52 | % | ||||||||
| ROA (Managed) |
0.42 | % | 0.41 | % | ||||||||
| Managed Balance Sheet Statistics (period end) (2) |
||||||||||||
| Loans (1) |
$ | 146,555 | $ | 9,010 | $ | 137,545 | ||||||
| Tangible Assets |
$ | 200,110 | $ | 186,298 | ||||||||
| Tangible Common Equity |
$ | 11,379 | $ | 12,936 | ||||||||
| Tangible Common Equity to Tangible Assets Ratio |
5.69 | % | 6.94 | % | ||||||||
| Revenue & Expense Statistics |
||||||||||||
| Revenue Margin (Reported) |
8.40 | % | 8.53 | % | ||||||||
| Revenue Margin (Managed) |
8.65 | % | 8.77 | % | ||||||||
| Reconciliation of Credit Mark |
||||||||||||
| Balance at beginning of period—March 31, 2009 |
$ | 2,165 | ||||||||||
| Charge-offs applied to credit mark |
$ | 151 | ||||||||||
| Balance at end of period—June 30, 2009 |
$ | 2,014 | ||||||||||
| Acquired Loan Portfolio Information |
||||||||||||
| Loans 30 to 89 days past due |
$ | 254 | ||||||||||
| Loans 90+ days past due |
$ | 1,117 | ||||||||||
| Foreclosed assets |
$ | 162 | ||||||||||
| (1) | Loans include loans held for investment of $8.7 billion and loans held for sale of $304.0 million. Loans represent acquired and originated loans. Loans held for investment originated since acquisition total $301.3 million. Total loans are inclusive of the credit mark of $2.0 billion at June 30, 2009. |
| (2) | Based on continuing operations. |
4
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS
MANAGED BASIS (1)
| (in thousands) |
2009 Q2 |
2009 Q1 |
2008 Q4 |
2008 Q3 |
2008 Q2 |
|||||||||||||||
| Local Banking (6): |
||||||||||||||||||||
| Interest Income |
$ | 1,317,886 | $ | 1,324,980 | $ | 1,512,139 | $ | 1,519,217 | $ | 1,489,612 | ||||||||||
| Interest Expense |
680,503 | 725,951 | 869,723 | 895,481 | 899,907 | |||||||||||||||
| Net interest income |
$ | 637,383 | $ | 599,029 | $ | 642,416 | $ | 623,736 | $ | 589,705 | ||||||||||
| Non-interest income |
189,475 | 184,510 | 189,814 | 215,701 | 192,758 | |||||||||||||||
| Provision for loan losses |
195,765 | 219,369 | 214,154 | 81,052 | 92,043 | |||||||||||||||
| Other non-interest expenses |
631,417 | 619,854 | 628,110 | 622,697 | 587,211 | |||||||||||||||
| Income tax provision |
(113 | ) | (19,490 | ) | (3,512 | ) | 47,491 | 36,123 | ||||||||||||
| Net income (loss) |
$ | (211 | ) | $ | (36,194 | ) | $ | (6,522 | ) | $ | 88,197 | $ | 67,086 | |||||||
| Loans Held for Investment |
$ | 43,662,945 | $ | 44,458,675 | $ | 45,082,981 | $ | 44,662,818 | $ | 44,270,734 | ||||||||||
| Average Loans Held for Investment |
$ | 44,171,188 | $ | 44,836,954 | $ | 44,810,117 | $ | 44,319,475 | $ | 44,250,451 | ||||||||||
| Core Deposits(2) |
$ | 68,118,408 | $ | 67,848,575 | $ | 67,546,102 | $ | 64,386,336 | $ | 63,407,571 | ||||||||||
| Total Deposits |
$ | 78,502,170 | $ | 79,114,684 | $ | 78,938,391 | $ | 75,045,812 | $ | 74,245,677 | ||||||||||
| Loans Held for Investment Yield |
5.32 | % | 5.36 | % | 6.08 | % | 6.25 | % | 6.35 | % | ||||||||||
| Deposit Interest Expense Rate |
1.59 | % | 1.80 | % | 2.23 | % | 2.23 | % | 2.28 | % | ||||||||||
| Net Interest Margin—Loans (3) |
2.20 | % | 2.25 | % | 2.11 | % | 1.98 | % | 1.99 | % | ||||||||||
| Net Interest Margin—Deposits (4) |
2.08 | % | 1.87 | % | 2.12 | % | 2.18 | % | 2.04 | % | ||||||||||
| Efficiency Ratio (5) |
76.36 | % | 79.11 | % | 75.47 | % | 74.18 | % | 75.05 | % | ||||||||||
| Net charge-off rate |
1.10 | % | 0.76 | % | 0.90 | % | 0.46 | % | 0.34 | % | ||||||||||
| Non Performing Loans |
$ | 1,026,177 | $ | 785,279 | $ | 565,791 | $ | 430,211 | $ | 359,017 | ||||||||||
| Foreclosed Assets |
72,116 | 63,173 | 63,970 | 41,290 | 29,607 | |||||||||||||||
| Non Performing Assets (8) |
$ | 1,098,293 | $ | 848,452 | $ | 629,761 | $ | 471,501 | $ | 388,624 | ||||||||||
| Non Performing Loans as a % of Loans Held for Investment |
2.35 | % | 1.77 | % | 1.25 | % | 0.96 | % | 0.81 | % | ||||||||||
| Non Performing Asset Rate (8) |
2.51 | % | 1.91 | % | 1.39 | % | 1.05 | % | 0.88 | % | ||||||||||
| Number of Active ATMs |
1,345 | (11) | 1,338 | (11) | 1,311 | 1,310 | 1,303 | |||||||||||||
| Number of Locations (12) |
732 | (13) | 728 | (13) | 726 | 729 | 725 | |||||||||||||
| National Lending: |
||||||||||||||||||||
| Interest Income |
$ | 2,880,617 | $ | 2,837,945 | $ | 3,104,769 | $ | 3,251,446 | $ | 3,181,773 | ||||||||||
| Interest Expense |
710,301 | 776,254 | 921,542 | 1,019,911 | 1,014,244 | |||||||||||||||
| Net interest income |
$ | 2,170,316 | $ | 2,061,691 | $ | 2,183,227 | $ | 2,231,535 | $ | 2,167,529 | ||||||||||
| Non-interest income |
908,301 | 1,005,446 | 1,151,066 | 1,195,622 | 1,164,810 | |||||||||||||||
| Provision for loan losses |
1,646,258 | 1,848,955 | 2,602,101 | 1,678,513 | 1,470,642 | |||||||||||||||
| Goodwill impairment charge |
— | — | 810,876 | (9) | — | — | ||||||||||||||
| Other non-interest expenses |
1,016,331 | 1,100,770 | 1,201,764 | 1,176,396 | 1,236,567 | |||||||||||||||
| Income tax provision |
145,198 | 41,532 | (169,060 | ) | 200,626 | 217,496 | ||||||||||||||
| Net income (loss) |
$ | 270,830 | $ | 75,880 | $ | (1,111,388 | ) | $ | 371,622 | $ | 407,634 | |||||||||
| Loans Held for Investment |
$ | 93,300,970 | $ | 95,753,037 | $ | 101,147,134 | $ | 101,922,850 | $ | 102,201,802 | ||||||||||
| Average Loans Held for Investment |
$ | 94,481,457 | $ | 98,680,911 | $ | 101,038,849 | $ | 102,142,752 | $ | 102,629,246 | ||||||||||
| Core Deposits(2) |
$ | — | $ | 478 | $ | 2,219 | $ | 2,171 | $ | 1,954 | ||||||||||
| Total Deposits |
$ | 1,281,217 | $ | 1,279,562 | $ | 1,459,131 | $ | 1,650,507 | $ | 1,644,241 | ||||||||||
| Loans Held for Investment Yield |
12.20 | % | 11.50 | % | 12.29 | % | 12.73 | % | 12.40 | % | ||||||||||
| Net Interest Margin |
9.19 | % | 8.36 | % | 8.64 | % | 8.74 | % | 8.45 | % | ||||||||||
| Revenue Margin |
13.03 | % | 12.43 | % | 13.20 | % | 13.42 | % | 12.99 | % | ||||||||||
| Risk Adjusted Margin |
4.99 | % | 4.88 | % | 6.54 | % | 7.57 | % | 7.31 | % | ||||||||||
| Non-Interest Expenses as a % of Average Loans Held for Investment |
4.30 | % | 4.46 | % | 4.76 | %(10) | 4.61 | % | 4.82 | % | ||||||||||
| Efficiency Ratio (5) |
33.01 | % | 35.89 | % | 36.04 | %(10) | 34.33 | % | 37.11 | % | ||||||||||
| Net charge-off rate |
8.04 | % | 7.55 | % | 6.66 | % | 5.85 | % | 5.67 | % | ||||||||||
| Delinquency Rate (30+ days) |
5.82 | % | 5.70 | % | 5.93 | % | 5.43 | % | 4.87 | % | ||||||||||
| Number of Loan Accounts (000s) |
40,697 | 42,549 | 44,816 | 45,314 | 45,812 | |||||||||||||||
| Other (6): |
||||||||||||||||||||
| Net interest income |
$ | 151,494 | $ | 83,033 | $ | (57,763 | ) | $ | 34,059 | $ | 30,761 | |||||||||
| Non-interest income |
91,239 | (203,804 | ) | (157,700 | ) | (85,764 | ) | (55,594 | ) | |||||||||||
| Provision for loan losses |
61,950 | 63,633 | 63,043 | 45,705 | 6,342 | |||||||||||||||
| Restructuring expenses |
43,374 | 17,627 | 52,839 | 15,306 | 13,560 | |||||||||||||||
| Other non-interest expenses |
230,634 | 6,841 | 64,354 | (4,193 | ) | (17,737 | ) | |||||||||||||
| Income tax provision (benefit) |
(52,807 | ) | (82,265 | ) | (117,284 | ) | (34,493 | ) | (14,776 | ) | ||||||||||
| Net income (loss) |
$ | (40,418 | ) | $ | (126,607 | ) | $ | (278,415 | ) | $ | (74,030 | ) | $ | (12,222 | ) | |||||
| Loans Held for Investment |
$ | 9,286,809 | $ | 10,123,282 | $ | 706,639 | $ | 760,078 | $ | 774,724 | ||||||||||
| Core Deposits(2) |
$ | 34,755,086 | $ | 37,853,289 | $ | 27,067,784 | $ | 20,800,890 | $ | 14,800,701 | ||||||||||
| Total Deposits |
$ | 36,940,803 | $ | 40,724,652 | $ | 28,223,267 | $ | 22,216,655 | $ | 16,517,143 | ||||||||||
| Total: |
||||||||||||||||||||
| Interest Income |
$ | 3,994,692 | $ | 3,888,885 | $ | 4,205,821 | $ | 4,346,261 | $ | 4,270,572 | ||||||||||
| Interest Expense |
1,035,499 | 1,145,132 | 1,437,941 | 1,456,931 | 1,482,577 | |||||||||||||||
| Net interest income |
$ | 2,959,193 | $ | 2,743,753 | $ | 2,767,880 | $ | 2,889,330 | $ | 2,787,995 | ||||||||||
| Non-interest income |
1,189,015 | 986,152 | 1,183,180 | 1,325,559 | 1,301,974 | |||||||||||||||
| Provision for loan losses |
1,903,973 | 2,131,957 | 2,879,298 | 1,805,270 | 1,569,027 | |||||||||||||||
| Restructuring expenses |
43,374 | 17,627 | 52,839 | 15,306 | 13,560 | |||||||||||||||
| Goodwill impairment charge |
— | — | 810,876 | — | — | |||||||||||||||
| Other non-interest expenses |
1,878,382 | 1,727,465 | 1,894,228 | 1,794,900 | 1,806,041 | |||||||||||||||
| Income tax provision |
92,278 | (60,223 | ) | (289,856 | ) | 213,624 | 238,843 | |||||||||||||
| Net income (loss) |
$ | 230,201 | $ | (86,921 | ) | $ | (1,396,325 | ) | $ | 385,789 | $ | 462,498 | ||||||||
| Loans Held for Investment |
$ | 146,250,724 | $ | 150,334,994 | $ | 146,936,754 | $ | 147,345,746 | $ | 147,247,260 | ||||||||||
| Core Deposits(2) |
$ | 102,873,494 | $ | 105,702,342 | $ | 94,616,105 | $ | 85,189,397 | $ | 78,210,226 | ||||||||||
| Total Deposits |
$ | 116,724,190 | $ | 121,118,898 | $ | 108,620,789 | $ | 98,912,974 | $ | 92,407,061 | ||||||||||
5
CAPITAL ONE FINANCIAL CORPORATION (COF)
LOCAL BANKING SEGMENT FINANCIAL & STATISTICAL INFORMATION
| (in thousands) |
2009 Q2 |
2009 Q1 |
2008 Q4 |
2008 Q3 |
2008 Q2 |
|||||||||||||||
| Loans Held for Investment: |
||||||||||||||||||||
| Commercial Lending |
||||||||||||||||||||
| Commercial and Multi-Family Real Estate |
$ | 13,646,921 | $ | 13,619,009 | $ | 13,382,909 | $ | 13,043,369 | $ | 12,948,037 | ||||||||||
| Middle Market |
9,755,280 | 9,850,735 | 10,081,823 | 9,768,420 | 8,923,233 | |||||||||||||||
| Specialty Lending |
3,469,699 | 3,489,813 | 3,547,287 | 3,634,212 | 3,693,532 | |||||||||||||||
| Total Commercial Lending |
$ | 26,871,900 | $ | 26,959,557 | $ | 27,012,019 | $ | 26,446,001 | $ | 25,564,802 | ||||||||||
| Small Ticket Commercial Real Estate |
$ | 2,503,034 | $ | 2,568,395 | $ | 2,609,123 | $ | 2,695,570 | $ | 2,746,931 | ||||||||||
| Small Business Lending |
$ | 4,561,896 | $ | 4,729,266 | $ | 4,747,783 | $ | 4,580,299 | $ | 4,555,432 | ||||||||||
| Consumer Lending |
||||||||||||||||||||
| Mortgages |
$ | 6,438,461 | $ | 6,831,471 | $ | 7,187,805 | $ | 7,402,290 | $ | 7,803,032 | ||||||||||
| Branch Based Home Equity & Other Consumer |
3,486,990 | 3,593,638 | 3,773,397 | 3,782,342 | 3,887,936 | |||||||||||||||
| Total Consumer Lending |
$ | 9,925,451 | $ | 10,425,109 | $ | 10,961,202 | $ | 11,184,632 | $ | 11,690,968 | ||||||||||
| Other |
$ | (199,336 | ) | $ | (223,652 | ) | $ | (247,146 | ) | $ | (243,684 | ) | $ | (287,399 | ) | |||||
| Total Loans Held for Investment |
$ | 43,662,945 | $ | 44,458,675 | $ | 45,082,981 | $ | 44,662,818 | $ | 44,270,734 | ||||||||||
| Non Performing Asset Rates (8): |
||||||||||||||||||||
| Commercial Lending |
||||||||||||||||||||
| Commercial and Multi-Family Real Estate |
2.24 | % | 1.98 | % | 1.20 | % | 1.06 | % | 0.87 | % | ||||||||||
| Middle Market |
1.21 | % | 0.57 | % | 0.43 | % | 0.26 | % | 0.31 | % | ||||||||||
| Specialty Lending |
1.97 | % | 1.16 | % | 1.05 | % | 0.38 | % | 0.25 | % | ||||||||||
| Total Commercial Lending |
1.83 | % | 1.36 | % | 0.89 | % | 0.67 | % | 0.58 | % | ||||||||||
| Small Ticket Commercial Real Estate |
10.08 | % | 8.00 | % | 6.67 | % | 4.49 | % | 2.74 | % | ||||||||||
| Small Business Lending |
2.20 | % | 1.95 | % | 1.79 | % | 1.14 | % | 1.17 | % | ||||||||||
| Consumer Lending |
||||||||||||||||||||
| Mortgages |
3.56 | % | 2.36 | % | 1.55 | % | 1.41 | % | 1.22 | % | ||||||||||
| Branch Based Home Equity & Other Consumer |
0.61 | % | 0.58 | % | 0.46 | % | 0.40 | % | 0.39 | % | ||||||||||
| Total Consumer Lending |
2.53 | % | 1.75 | % | 1.18 | % | 1.07 | % | 0.95 | % | ||||||||||
| Total Non Performing Asset Rate |
2.51 | % | 1.91 | % | 1.39 | % | 1.05 | % | 0.88 | % | ||||||||||
| Net Charge Off Rates: |
||||||||||||||||||||
| Commercial Lending |
||||||||||||||||||||
| Commercial and Multi-Family Real Estate |
0.95 | % | 0.62 | % | 1.15 | % | 0.14 | % | 0.10 | % | ||||||||||
| Middle Market |
0.62 | % | 0.07 | % | 0.48 | % | 0.15 | % | 0.05 | % | ||||||||||
| Specialty Lending |
0.99 | % | 0.85 | % | 0.47 | % | 0.26 | % | 0.16 | % | ||||||||||
| Total Commercial Lending |
0.83 | % | 0.45 | % | 0.81 | % | 0.16 | % | 0.09 | % | ||||||||||
| Small Ticket Commercial Real Estate |
1.90 | % | 1.75 | % | 0.90 | % | 0.10 | % | (0.03 | )% | ||||||||||
| Small Business Lending |
1.99 | % | 1.55 | % | 1.12 | % | 1.17 | % | 0.91 | % | ||||||||||
| Consumer Lending |
||||||||||||||||||||
| Mortgages |
0.86 | % | 0.46 | % | 0.48 | % | 0.50 | % | 0.35 | % | ||||||||||
| Branch Based Home Equity & Other Consumer |
1.47 | % | 1.42 | % | 1.34 | % | 1.01 | % | 1.02 | % | ||||||||||
| Total Consumer Lending |
1.07 | % | 0.79 | % | 0.78 | % | 0.67 | % | 0.57 | % | ||||||||||
| Total Net Charge Off Rate |
1.10 | % | 0.76 | % | 0.90 | % | 0.46 | % | 0.34 | % | ||||||||||
6
CAPITAL ONE FINANCIAL CORPORATION (COF)
NATIONAL LENDING SUB-SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS
MANAGED BASIS (1)
| (in thousands) |
2009 Q2 |
2009 Q1 |
2008 Q4 |
2008 Q3 |
2008 Q2 |
|||||||||||||||
| US Card: |
||||||||||||||||||||
| Interest Income |
$ | 2,004,268 | $ | 1,971,389 | $ | 2,179,456 | $ | 2,240,896 | $ | 2,132,284 | ||||||||||
| Interest Expense |
417,582 | 466,694 | 570,751 | 624,858 | 608,655 | |||||||||||||||
| Net interest income |
$ | 1,586,686 | $ | 1,504,695 | $ | 1,608,705 | $ | 1,616,038 | $ | 1,523,629 | ||||||||||
| Non-interest income |
794,440 | 883,891 | 1,018,689 | 1,027,918 | 1,010,177 | |||||||||||||||
| Provision for loan losses |
1,336,736 | 1,521,997 | 2,000,928 | 1,240,580 | 1,099,453 | |||||||||||||||
| Non-interest expenses |
785,273 | 862,915 | 896,572 | 872,588 | 910,619 | |||||||||||||||
| Income tax provision |
90,691 | 1,286 | (94,537 | ) | 185,775 | 183,307 | ||||||||||||||
| Net income (loss) |
$ | 168,426 | $ | 2,388 | $ | (175,569 | ) | $ | 345,013 | $ | 340,427 | |||||||||
| Loans Held for Investment |
$ | 64,760,128 | $ | 67,015,166 | $ | 70,944,581 | $ | 69,361,743 | $ | 68,059,998 | ||||||||||
| Average Loans Held for Investment |
$ | 65,862,569 | $ | 69,187,704 | $ | 69,643,290 | $ | 68,581,983 | $ | 67,762,384 | ||||||||||
| Loans Held for Investment Yield |
12.17 | % | 11.40 | % | 12.52 | % | 13.07 | % | 12.59 | % | ||||||||||
| Net Interest Margin |
9.64 | % | 8.70 | % | 9.24 | % | 9.43 | % | 8.99 | % | ||||||||||
| Revenue Margin |
14.46 | % | 13.81 | % | 15.09 | % | 15.42 | % | 14.96 | % | ||||||||||
| Risk Adjusted Margin |
5.23 | % | 5.42 | % | 8.01 | % | 9.29 | % | 8.70 | % | ||||||||||
| Non-Interest Expenses as a % of Average Loans Held for Investment |
4.77 | % | 4.99 | % | 5.15 | % | 5.09 | % | 5.38 | % | ||||||||||
| Efficiency Ratio (5) |
32.98 | % | 36.13 | % | 34.12 | % | 33.00 | % | 35.94 | % | ||||||||||
| Net charge-off rate |
9.23 | % | 8.39 | % | 7.08 | % | 6.13 | % | 6.26 | % | ||||||||||
| Delinquency Rate (30+ days) |
4.77 | % | 5.08 | % | 4.78 | % | 4.20 | % | 3.85 | % | ||||||||||
| Purchase Volume (7) |
$ | 23,610,760 | $ | 21,601,837 | $ | 25,217,781 | $ | 26,536,070 | $ | 26,738,213 | ||||||||||
| Number of Loan Accounts (000s) |
33,709 | 35,273 | 37,436 | 37,916 | 38,415 | |||||||||||||||
| Auto Finance: |
||||||||||||||||||||
| Interest Income |
$ | 596,900 | $ | 606,392 | $ | 622,244 | $ | 635,305 | $ | 666,499 | ||||||||||
| Interest Expense |
223,887 | 236,389 | 255,501 | 265,804 | 276,911 | |||||||||||||||
| Net interest income |
$ | 373,013 | $ | 370,003 | $ | 366,743 | $ | 369,501 | $ | 389,588 | ||||||||||
| Non-interest income |
10,861 | 19,965 | 12,846 | 14,607 | 15,672 | |||||||||||||||
| Provision for loan losses |
125,966 | 166,169 | 437,572 | 244,078 | 230,614 | |||||||||||||||
| Goodwill impairment charge |
— | — | 810,876 | (9) | — | — | ||||||||||||||
| Non-interest expenses |
108,315 | 113,884 | 127,075 | 117,677 | 123,021 | |||||||||||||||
| Income tax (benefit) provision |
52,358 | 38,470 | (71,290 | ) | 7,824 | 18,069 | ||||||||||||||
| Net income (loss) |
$ | 97,235 | $ | 71,445 | $ | (924,644 | ) | $ | 14,529 | $ | 33,556 | |||||||||
| Loans Held for Investment |
$ | 19,902,401 | $ | 20,667,910 | $ | 21,481,911 | $ | 22,306,394 | $ | 23,401,160 | ||||||||||
| Average Loans Held for Investment |
$ | 20,291,029 | $ | 21,110,528 | $ | 21,954,587 | $ | 22,857,540 | $ | 24,098,881 | ||||||||||
| Loans Held for Investment Yield |
11.77 | % | 11.49 | % | 11.34 | % | 11.12 | % | 11.06 | % | ||||||||||
| Net Interest Margin |
7.35 | % | 7.01 | % | 6.68 | % | 6.47 | % | 6.47 | % | ||||||||||
| Revenue Margin |
7.57 | % | 7.39 | % | 6.92 | % | 6.72 | % | 6.73 | % | ||||||||||
| Risk Adjusted Margin |
3.91 | % | 2.51 | % | 1.24 | % | 1.73 | % | 2.88 | % | ||||||||||
| Non-Interest Expenses as a % of Average Loans Held for Investment |
2.14 | % | 2.16 | % | 2.32 | %(10) | 2.06 | % | 2.04 | % | ||||||||||
| Efficiency Ratio (5) |
28.22 | % | 29.20 | % | 33.48 | %(10) | 30.64 | % | 30.36 | % | ||||||||||
| Net charge-off rate |
3.65 | % | 4.88 | % | 5.67 | % | 5.00 | % | 3.84 | % | ||||||||||
| Delinquency Rate (30+ days) |
8.89 | % | 7.52 | % | 9.91 | % | 9.32 | % | 7.62 | % | ||||||||||
| Auto Loan Originations |
$ | 1,341,583 | $ | 1,463,402 | $ | 1,476,136 | $ | 1,444,291 | $ | 1,513,686 | ||||||||||
| Number of Loan Accounts (000s) |
1,584 | 1,610 | 1,634 | 1,665 | 1,710 | |||||||||||||||
| International: |
||||||||||||||||||||
| Interest Income |
$ | 279,449 | $ | 260,164 | $ | 303,069 | $ | 375,245 | $ | 382,990 | ||||||||||
| Interest Expense |
68,832 | 73,171 | 95,290 | 129,249 | 128,678 | |||||||||||||||
| Net interest income |
$ | 210,617 | $ | 186,993 | $ | 207,779 | $ | 245,996 | $ | 254,312 | ||||||||||
| Non-interest income |
103,000 | 101,590 | 119,531 | 153,097 | 138,961 | |||||||||||||||
| Provision for loan losses |
183,556 | 160,789 | 163,601 | 193,855 | 140,575 | |||||||||||||||
| Non-interest expenses |
122,743 | 123,971 | 178,117 | 186,131 | 202,927 | |||||||||||||||
| Income tax provision |
2,149 | 1,776 | (3,233 | ) | 7,027 | 16,120 | ||||||||||||||
| Net income (loss) |
$ | 5,169 | $ | 2,047 | $ | (11,175 | ) | $ | 12,080 | $ | 33,651 | |||||||||
| Loans Held for Investment |
$ | 8,638,441 | $ | 8,069,961 | $ | 8,720,642 | $ | 10,254,713 | $ | 10,740,644 | ||||||||||
| Average Loans Held for Investment |
$ | 8,327,859 | $ | 8,382,679 | $ | 9,440,972 | $ | 10,703,229 | $ | 10,767,981 | ||||||||||
| Loans Held for Investment Yield |
13.42 | % | 12.41 | % | 12.84 | % | 14.02 | % | 14.23 | % | ||||||||||
| Net Interest Margin |
10.12 | % | 8.92 | % | 8.80 | % | 9.19 | % | 9.45 | % | ||||||||||
| Revenue Margin |
15.06 | % | 13.77 | % | 13.87 | % | 14.91 | % | 14.61 | % | ||||||||||
| Risk Adjusted Margin |
5.75 | % | 6.47 | % | 8.02 | % | 9.01 | % | 8.54 | % | ||||||||||
| Non-Interest Expenses as a % of Average Loans Held for Investment |
5.90 | % | 5.92 | % | 7.55 | % | 6.96 | % | 7.54 | % | ||||||||||
| Efficiency Ratio (5) |
39.14 | % | 42.96 | % | 54.42 | % | 46.64 | % | 51.60 | % | ||||||||||
| Net charge-off rate |
9.32 | % | 7.30 | % | 5.84 | % | 5.90 | % | 6.07 | % | ||||||||||
| Delinquency Rate (30+ days) |
6.69 | % | 6.25 | % | 5.51 | % | 5.24 | % | 5.35 | % | ||||||||||
| Purchase Volume (7) |
$ | 2,136,039 | $ | 1,871,723 | $ | 2,346,969 | $ | 2,857,975 | $ | 2,879,223 | ||||||||||
| Number of Loan Accounts (000s) |
5,404 | 5,666 | 5,747 | 5,733 | 5,687 | |||||||||||||||
7
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT AND NATIONAL LENDING SUB-SEGMENT
FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS NOTES
| (1) | The information in this financial and statistical summary reflects the adjustment to add back the effect of securitization transactions qualifying as sales under generally accepted accounting principles. See accompanying schedule—“Reconciliation to GAAP Financial Measures.” In Q3 2007, the Company shutdown the mortgage origination operations of its wholesale mortgage banking unit, GreenPoint Mortgage. The results of the mortgage origination operation of GreenPoint have been accounted for as a discontinued operation and have been removed from the Company’s results of continuing operations for all periods presented. The results of GreenPoint’s mortgage servicing business are reported in continuing operations for all periods presented. Effective Q4 2007, GreenPoint’s held for investment commercial and consumer loan portfolio results are included in continuing operations. |
| (2) | Includes domestic non-interest bearing deposits, NOW accounts, money market deposit accounts, savings accounts, certificates of deposit of less than $100,000 and other consumer time deposits. |
| (3) | Net Interest Margin—Loans equals net interest income earned on loans divided by average managed loans. |
| (4) | Net Interest Margin—Deposits equals net interest income earned on deposits divided by average deposits. |
| (5) | Efficiency Ratio equals non-interest expenses divided by total managed revenue. |
| (6) | The balances and results of Chevy Chase Bank, FSB are included in the Other segment. |
| (7) | Includes all purchase transactions net of returns and excludes cash advance transactions. |
| (8) | Non performing assets is comprised of non performing loans and foreclosed assets. The non performing asset rate equals non performing assets divided by the sum of loans held for investment and foreclosed assets. |
| (9) | In Q4 2008 the Company recorded impairment of goodwill in its Auto Finance sub-segment of $810.9 million. |
| (10) | Excludes the impact of the goodwill impairment of $810.9 million recorded in the Auto Finance sub-segment of National Lending. |
| (11) | Excludes acquired Chevy Chase Bank, FSB ATM locations of 911 in Q2 2009 and 907 in Q1 2009. |
| (12) | Excludes drive-up locations of 18 in Q2 2009, 18 in Q1 2009, 19 in Q4 2008, 19 in Q3 2008 and 19 in Q2 2008. |
| (13) | Excludes acquired Chevy Chase Bank, FSB branches of 251 in Q2 2009 and 250 in Q1 2009. |
8
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended June 30, 2009
(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, servicing fees, finance charges, and other fees, net of charge-offs, and interest paid to investors of securitizations are recognized as servicing and securitizations income on the “reported” income statement.
The Company’s “managed” consolidated financial statements reflect adjustments made related to 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 servicing and securitizations income generated from the securitized portfolio and distributes the revenue and expense to appropriate income statement line items from which they originated. For this reason the Company believes the “managed” consolidated financial statements and related managed metrics to be useful to stakeholders.
| Total Reported | Adjustments(1) | Total Managed(2) | ||||||||
| Income Statement Measures(3) |
||||||||||
| Net interest income |
$ | 1,946,586 | $ | 1,012,607 | $ | 2,959,193 | ||||
| Non-interest income |
1,231,687 | (42,672 | ) | 1,189,015 | ||||||
| Total revenue |
3,178,273 | 969,935 | 4,148,208 | |||||||
| Provision for loan and lease losses |
934,038 | 969,935 | 1,903,973 | |||||||
| Net charge-offs |
$ | 1,119,155 | $ | 969,935 | $ | 2,089,090 | ||||
| Balance Sheet Measures |
||||||||||
| Loans held for investment |
$ | 101,073,629 | $ | 45,177,095 | $ | 146,250,724 | ||||
| Total assets |
$ | 171,911,307 | $ | 42,229,427 | $ | 214,140,734 | ||||
| Total liabilities |
$ | 146,585,646 | $ | 42,229,427 | $ | 188,815,073 | ||||
| Average loans held for investment |
$ | 105,278,045 | $ | 43,331,087 | $ | 148,609,132 | ||||
| Average earning assets |
$ | 151,416,846 | $ | 40,403,928 | $ | 191,820,774 | ||||
| Average total assets |
$ | 177,589,212 | $ | 40,773,947 | $ | 218,363,159 | ||||
| Average total liabilities |
$ | 149,931,060 | $ | 40,773,947 | $ | 190,705,007 | ||||
| Delinquencies |
$ | 3,745,697 | $ | 2,241,752 | $ | 5,987,449 | ||||
The table below presents a reconciliation of tangible common equity and tangible assets, which are the components used to calculate the tangible common equity “TCE” ratio. The Company believes the TCE ratio is an important financial measure of capital strength to our investors and readers even though it is considered to be a non-GAAP measure.
| (dollars in millions)(unaudited) | 2009 Q2 |
2009 Q1 |
2008 Q4 |
2008 Q3 |
2008 Q2 |
|||||||||||||||
| Equity |
$ | 25,326 | $ | 26,744 | $ | 26,612 | $ | 25,612 | $ | 24,921 | ||||||||||
| Less: preferred stock |
38 | (3,159 | ) | (3,120 | ) | — | — | |||||||||||||
| Less: intangible assets (4) |
(13,985 | ) | (13,723 | ) | (12,503 | ) | (13,311 | ) | (13,361 | ) | ||||||||||
| Tangible common equity |
$ | 11,379 | $ | 9,862 | $ | 10,990 | $ | 12,301 | $ | 11,560 | ||||||||||
| Total assets |
214,141 | 219,914 | 209,875 | 203,472 | 200,556 | |||||||||||||||
| Less: discontinued ops assets |
(46 | ) | (31 | ) | (35 | ) | (20 | ) | (136 | ) | ||||||||||
| Total assets- continuing ops |
214,095 | 219,883 | 209,840 | 203,452 | 200,420 | |||||||||||||||
| Less: intangible assets (4) |
(13,985 | ) | (13,723 | ) | (12,503 | ) | (13,311 | ) | (13,361 | ) | ||||||||||
| Tangible assets |
$ | 200,110 | $ | 206,160 | $ | 197,337 | $ | 190,141 | $ | 187,059 | ||||||||||
| TCE ratio |
5.69 | 4.78 | 5.57 | 6.47 | 6.18 | |||||||||||||||
| (1) | Income statement adjustments reclassify the net of finance charges of $1,153.9 million, past-due fees of $164.6 million, other interest income of $(38.5) million and interest expense of $267.4 million; and net charge-offs of $969.9 million from non-interest income to net interest income and provision for loan and lease losses, respectively. |
| (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. |
| (3) | Based on continuing operations. |
| (4) | Includes impact from related deferred taxes. |
9
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
| As of June 30 2009 |
As of Mar 31 2009 |
As of June 30 2008 |
||||||||||
| Assets: |
||||||||||||
| Cash and due from banks |
$ | 3,001,944 | $ | 3,076,926 | $ | 2,280,244 | ||||||
| Federal funds sold and resale agreements |
603,564 | 663,721 | 1,526,799 | |||||||||
| Interest-bearing deposits at other banks |
1,166,419 | 4,013,678 | 718,070 | |||||||||
| Cash and cash equivalents |
4,771,927 | 7,754,325 | 4,525,113 | |||||||||
| Securities available for sale |
37,667,165 | 36,326,951 | 25,028,355 | |||||||||
| Securities held to maturity |
87,545 | 90,990 | — | |||||||||
| Mortgage loans held for sale |
319,975 | 289,337 | 111,824 | |||||||||
| Loans held for investment (1) |
101,073,629 | 105,526,911 | 97,065,238 | |||||||||
| Less: Allowance for loan and lease losses |
(4,481,827 | ) | (4,648,031 | ) | (3,311,003 | ) | ||||||
| Net loans held for investment |
96,591,802 | 100,878,880 | 93,754,235 | |||||||||
| Accounts receivable from securitizations |
5,219,968 | 4,850,508 | 5,301,906 | |||||||||
| Premises and equipment, net |
2,824,785 | 2,790,733 | 2,321,487 | |||||||||
| Interest receivable |
951,201 | 815,738 | 778,595 | |||||||||
| Goodwill (1) |
13,381,056 | 13,076,754 | 12,826,738 | |||||||||
| Other (1) |
10,095,883 | 10,513,243 | 6,466,018 | |||||||||
| Total assets |
$ | 171,911,307 | $ | 177,387,459 | $ | 151,114,271 | ||||||
| Liabilities: |
||||||||||||
| Non-interest-bearing deposits |
$ | 12,603,548 | $ | 12,422,456 | $ | 10,752,059 | ||||||
| Interest-bearing deposits |
104,120,642 | 108,696,442 | 81,655,001 | |||||||||
| Senior and subordinated notes |
10,092,619 | 8,258,212 | 8,506,339 | |||||||||
| Other borrowings |
13,260,589 | 14,610,092 | 19,302,185 | |||||||||
| Interest payable |
659,784 | 656,769 | 621,489 | |||||||||
| Other |
5,848,464 | 5,999,327 | 5,355,733 | |||||||||
| Total liabilities |
146,585,646 | 150,643,298 | 126,192,806 | |||||||||
| Stockholders’ Equity: |
||||||||||||
| Preferred stock |
— | 3,115,722 | — | |||||||||
| Common stock |
5,019 | 4,425 | 4,223 | |||||||||
| Paid-in capital, net |
18,891,333 | 17,348,217 | 15,966,810 | |||||||||
| Retained earnings and cumulative other comprehensive income |
9,598,606 | 9,444,639 | 12,115,480 | |||||||||
| Less: Treasury stock, at cost |
(3,169,297 | ) | (3,168,842 | ) | (3,165,048 | ) | ||||||
| Total stockholders’ equity |
25,325,661 | 26,744,161 | 24,921,465 | |||||||||
| Total liabilities and stockholders’ equity |
$ | 171,911,307 | $ | 177,387,459 | $ | 151,114,271 | ||||||
| (1) | Balances at June 30, 2009 reflect adjustments made to the allocation of purchase price of the Chevy Chase Bank acquisition. The balances at March 31, 2009 have not been adjusted, however, if the adjustments had been made at March 31, 2009, net loans held for investment would have been $100,410.3 million (a decrease of $468.6 million), goodwill would have been $13,367.9 million (an increase of $291.1 million) and other assets would have been $10,664.8 million (an increase of $151.6 million). The allocation of purchase price is still preliminary and will be finalized upon completion of the analysis of the fair values of Chevy Chase Bank’s assets and liabilities. |
10
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||||||
| June 30 2009 |
Mar 31 2009 |
June 30 2008 |
June 30 2009 |
June 30 2008 |
||||||||||||||||
| Interest Income: |
||||||||||||||||||||
| Loans held for investment, including past-due fees |
$ | 2,233,808 | $ | 2,190,331 | $ | 2,297,709 | $ | 4,424,139 | $ | 4,806,102 | ||||||||||
| Investment securities |
412,845 | 394,780 | 281,084 | 807,625 | 538,825 | |||||||||||||||
| Other |
67,982 | 63,117 | 113,064 | 131,099 | 226,455 | |||||||||||||||
| Total interest income |
2,714,635 | 2,648,228 | 2,691,857 | 5,362,863 | 5,571,382 | |||||||||||||||
| Interest Expense: |
||||||||||||||||||||
| Deposits |
555,579 | 631,848 | 592,576 | 1,187,427 | 1,202,965 | |||||||||||||||
| Senior and subordinated notes |
57,113 | 58,044 | 114,797 | 115,157 | 255,767 | |||||||||||||||
| Other borrowings |
155,357 | 171,585 | 256,728 | 326,942 | 572,977 | |||||||||||||||
| Total interest expense |
768,049 | 861,477 | 964,101 | 1,629,526 | 2,031,709 | |||||||||||||||
| Net interest income |
1,946,586 | 1,786,751 | 1,727,756 | 3,733,337 | 3,539,673 | |||||||||||||||
| Provision for loan and lease losses |
934,038 | 1,279,137 | 829,130 | 2,213,175 | 1,908,202 | |||||||||||||||
| Net interest income after provision for loan and lease losses |
1,012,548 | 507,614 | 898,626 | 1,520,162 | 1,631,471 | |||||||||||||||
| Non-Interest Income: |
||||||||||||||||||||
| Servicing and securitizations |
362,416 | 453,637 | 834,740 | 816,053 | 1,917,802 | |||||||||||||||
| Service charges and other customer-related fees |
491,763 | 506,125 | 524,209 | 997,888 | 1,098,270 | |||||||||||||||
| Mortgage servicing and other |
13,163 | 23,380 | 16,552 | 36,543 | 51,807 | |||||||||||||||
| Interchange |
126,702 | 140,091 | 132,730 | 266,793 | 284,632 | |||||||||||||||
| Other |
237,643 | (32,899 | ) | 114,085 | 204,744 | 326,283 | ||||||||||||||
| Total non-interest income |
1,231,687 | 1,090,334 | 1,622,316 | 2,322,021 | 3,678,794 | |||||||||||||||
| Non-Interest Expense: |
||||||||||||||||||||
| Salaries and associate benefits |
633,819 | 554,431 | 578,572 | 1,188,250 | 1,189,852 | |||||||||||||||
| Marketing |
133,970 | 162,712 | 288,100 | 296,682 | 585,893 | |||||||||||||||
| Communications and data processing |
194,578 | 199,104 | 195,102 | 393,682 | 382,345 | |||||||||||||||
| Supplies and equipment |
128,483 | 118,900 | 131,937 | 247,383 | 262,868 | |||||||||||||||
| Occupancy |
114,885 | 100,251 | 80,137 | 215,136 | 168,217 | |||||||||||||||
| Restructuring expense |
43,374 | 17,627 | 13,560 | 61,001 | 66,319 | |||||||||||||||
| Other |
672,647 | 592,067 | 532,193 | 1,264,714 | 986,384 | |||||||||||||||
| Total non-interest expense |
1,921,756 | 1,745,092 | 1,819,601 | 3,666,848 | 3,641,878 | |||||||||||||||
| Income (loss) from continuing operations before income taxes |
322,479 | (147,144 | ) | 701,341 | 175,335 | 1,668,387 | ||||||||||||||
| Income taxes |
92,278 | (60,223 | ) | 238,843 | 32,055 | 573,334 | ||||||||||||||
| Income (loss) from continuing operations, net of tax |
230,201 | (86,921 | ) | 462,498 | 143,280 | 1,095,053 | ||||||||||||||
| Loss from discontinued operations, net of tax |
(5,998 | ) | (24,958 | ) | (9,593 | ) | (30,956 | ) | (93,644 | ) | ||||||||||
| Net income (loss) |
$ | 224,203 | $ | (111,879 | ) | $ | 452,905 | $ | 112,324 | $ | 1,001,409 | |||||||||
| Net income (loss) available to common shareholders |
$ | (275,515 | ) | $ | (176,069 | ) | $ | 452,905 | $ | (451,584 | ) | $ | 1,001,409 | |||||||
| Basic earnings per common share |
||||||||||||||||||||
| Income (loss) from continuing operations |
$ | (0.64 | ) | $ | (0.39 | ) | $ | 1.24 | $ | (1.03 | ) | $ | 2.95 | |||||||
| Loss from discontinued operations |
(0.01 | ) | (0.06 | ) | (0.03 | ) | (0.08 | ) | (0.25 | ) | ||||||||||
| Net Income (loss) per common share |
$ | (0.65 | ) | $ | (0.45 | ) | $ | 1.21 | $ | (1.11 | ) | $ | 2.70 | |||||||
| Diluted earnings per common share |
||||||||||||||||||||
| Income (loss) from continuing operations |
$ | (0.64 | ) | $ | (0.39 | ) | $ | 1.24 | $ | (1.03 | ) | $ | 2.94 | |||||||
| Loss from discontinued operations |
(0.01 | ) | (0.06 | ) | (0.03 | ) | (0.08 | ) | (0.25 | ) | ||||||||||
| Net Income (loss) per common share |
$ | (0.65 | ) | $ | (0.45 | ) | $ | 1.21 | $ | (1.11 | ) | $ | 2.69 | |||||||
| Dividends paid per common share |
$ | 0.05 | $ | 0.375 | $ | 0.375 | $ | 0.425 | $ | 0.75 | ||||||||||
11
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates (1)
(dollars in thousands)(unaudited)
| Reported | Quarter Ended 06/30/09 | Quarter Ended 03/31/09 | Quarter Ended 06/30/08 | ||||||||||||||||||||||||
| Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
|||||||||||||||||||
| Earning assets: |
|||||||||||||||||||||||||||
| Loans held for investment |
$ | 105,278,045 | $ | 2,233,808 | 8.49 | % | $ | 103,445,130 | $ | 2,190,331 | 8.47 | % | $ | 97,949,572 | $ | 2,297,709 | 9.38 | % | |||||||||
| Investment Securities (2) |
37,499,187 | 412,845 | 4.40 | % | 34,209,102 | 394,780 | 4.62 | % | 24,165,083 | 281,084 | 4.65 | % | |||||||||||||||
| Other |
8,623,100 | 67,982 | 3.15 | % | 7,720,249 | 63,117 | 3.27 | % | 9,514,367 | 113,064 | 4.75 | % | |||||||||||||||
| Total earning assets |
$ | 151,400,332 | $ | 2,714,635 | 7.17 | % | $ | 145,374,481 | $ | 2,648,228 | 7.29 | % | $ | 131,629,022 | $ | 2,691,857 | 8.18 | % | |||||||||
| Interest-bearing liabilities: |
|||||||||||||||||||||||||||
| Interest-bearing deposits |
|||||||||||||||||||||||||||
| NOW accounts |
$ | 10,914,679 | $ | 14,602 | 0.54 | % | $ | 10,842,553 | $ | 11,554 | 0.43 | % | $ | 8,769,608 | $ | 24,802 | 1.13 | % | |||||||||
| Money market deposit accounts |
35,751,007 | 103,855 | 1.16 | % | 30,839,817 | 115,017 | 1.49 | % | 24,881,125 | 165,871 | 2.67 | % | |||||||||||||||
| Savings accounts |
9,931,058 | 13,399 | 0.54 | % | 7,631,999 | 7,210 | 0.38 | % | 8,191,586 | 19,521 | 0.95 | % | |||||||||||||||
| Other consumer time deposits |
35,841,099 | 300,572 | 3.35 | % | 37,097,765 | 371,194 | 4.00 | % | 22,676,841 | 243,921 | 4.30 | % | |||||||||||||||
| Public fund CD’s of $100,000 or more |
1,117,460 | 3,450 | 1.23 | % | 1,209,347 | 5,146 | 1.70 | % | 1,476,155 | 10,313 | 2.79 | % | |||||||||||||||
| CD’s of $100,000 or more |
11,097,722 | 108,228 | 3.90 | % | 10,673,089 | 107,215 | 4.02 | % | 9,124,586 | 98,516 | 4.32 | % | |||||||||||||||
| Foreign time deposits |
2,387,093 | 11,473 | 1.92 | % | 2,557,479 | 14,512 | 2.27 | % | 3,555,189 | 29,632 | 3.33 | % | |||||||||||||||
| Total interest-bearing deposits |
$ | 107,040,118 | $ | 555,579 | 2.08 | % | $ | 100,852,049 | $ | 631,848 | 2.51 | % | $ | 78,675,090 | $ | 592,576 | 3.01 | % | |||||||||
| Senior and subordinated notes |
8,322,746 | 57,113 | 2.74 | % | 7,771,343 | 58,044 | 2.99 | % | 9,125,017 | 114,797 | 5.03 | % | |||||||||||||||
| Other borrowings |
16,274,845 | 155,357 | 3.82 | % | 15,697,078 | 171,585 | 4.37 | % | 24,851,821 | 256,728 | 4.13 | % | |||||||||||||||
| Total interest-bearing liabilities |
$ | 131,637,709 | $ | 768,049 | 2.33 | % | $ | 124,320,470 | $ | 861,477 | 2.77 | % | $ | 112,651,928 | $ | 964,101 | 3.42 | % | |||||||||
| Net interest spread |
4.84 | % | 4.52 | % | 4.76 | % | |||||||||||||||||||||
| Interest income to average earning assets |
7.17 | % | 7.29 | % | 8.18 | % | |||||||||||||||||||||
| Interest expense to average earning assets |
2.03 | % | 2.37 | % | 2.93 | % | |||||||||||||||||||||
| Net interest margin |
5.14 | % | 4.92 | % | 5.25 | % | |||||||||||||||||||||
| (1) | Average balances, income and expenses, yields and rates are based on continuing operations. |
| (2) | Includes securities available for sale and securities held to maturity. |
12
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates (2)
(dollars in thousands)(unaudited)
| Managed (1) | Quarter Ended 06/30/09 | Quarter Ended 03/31/09 | Quarter Ended 06/30/08 | ||||||||||||||||||||||||
| Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
Average Balance |
Income/ Expense |
Yield/ Rate |
|||||||||||||||||||
| Earning assets: |
|||||||||||||||||||||||||||
| Loans held for investment |
$ | 148,609,132 | $ | 3,564,773 | 9.60 | % | $ | 147,384,816 | $ | 3,478,362 | 9.44 | % | $ | 147,715,693 | $ | 3,929,069 | 10.64 | % | |||||||||
| Investment Securities (3) |
37,499,187 | 412,845 | 4.40 | % | 34,209,102 | 394,780 | 4.62 | % | 24,165,083 | 281,084 | 4.65 | % | |||||||||||||||
| Other |
5,695,941 | 17,074 | 1.20 | % | 5,222,716 | 15,743 | 1.21 | % | 7,539,750 | 60,419 | 3.21 | % | |||||||||||||||
| Total earning assets |
$ | 191,804,260 | $ | 3,994,692 | 8.33 | % | $ | 186,816,634 | $ | 3,888,885 | 8.33 | % | $ | 179,420,526 | $ | 4,270,572 | 9.52 | % | |||||||||
| Interest-bearing liabilities: |
|||||||||||||||||||||||||||
| Interest-bearing deposits |
|||||||||||||||||||||||||||
| NOW accounts |
$ | 10,914,679 | $ | 14,602 | 0.54 | % | $ | 10,842,553 | $ | 11,554 | 0.43 | % | $ | 8,769,608 | $ | 24,802 | 1.13 | % | |||||||||
| Money market deposit accounts |
35,751,007 | 103,855 | 1.16 | % | 30,839,817 | 115,017 | 1.49 | % | 24,881,125 | 165,871 | 2.67 | % | |||||||||||||||
| Savings accounts |
9,931,058 | 13,399 | 0.54 | % | 7,631,999 | 7,210 | 0.38 | % | 8,191,586 | 19,521 | 0.95 | % | |||||||||||||||
| Other consumer time deposits |
35,841,099 | 300,572 | 3.35 | % | 37,097,765 | 371,194 | 4.00 | % | 22,676,841 | 243,921 | 4.30 | % | |||||||||||||||
| Public fund CD’s of $100,000 or more |
1,117,460 | 3,450 | 1.23 | % | 1,209,347 | 5,146 | 1.70 | % | 1,476,155 | 10,313 | 2.79 | % | |||||||||||||||
| CD’s of $100,000 or more |
11,097,722 | 108,228 | 3.90 | % | 10,673,089 | 107,215 | 4.02 | % | 9,124,586 | 98,516 | 4.32 | % | |||||||||||||||
| Foreign time deposits |
2,387,093 | 11,473 | 1.92 | % | 2,557,479 | 14,512 | 2.27 | % | 3,555,189 | 29,632 | 3.33 | % | |||||||||||||||
| Total interest-bearing deposits |
$ | 107,040,118 | $ | 555,579 | 2.08 | % | $ | 100,852,049 | $ | 631,848 | 2.51 | % | $ | 78,675,090 | $ | 592,576 | 3.01 | % | |||||||||
| Senior and subordinated notes |
8,322,746 | 57,113 | 2.74 | % | 7,771,343 | 58,044 | 2.99 | % | 9,125,017 | 114,797 | 5.03 | % | |||||||||||||||
| Other borrowings |
16,274,845 | 155,357 | 3.82 | % | 15,697,078 | 171,585 | 4.37 | % | 24,851,821 | 256,728 | 4.13 | % | |||||||||||||||
| Securitization liability |
40,806,188 | 267,450 | 2.62 | % | 41,766,616 | 283,655 | 2.72 | % | 49,317,336 | 518,477 | 4.21 | % | |||||||||||||||
| Total interest-bearing liabilities |
$ | 172,443,897 | $ | 1,035,499 | 2.40 | % | $ | 166,087,086 | $ | 1,145,132 | 2.76 | % | $ | 161,969,264 | $ | 1,482,578 | 3.66 | % | |||||||||
| Net interest spread |
5.93 | % | 5.57 | % | 5.86 | % | |||||||||||||||||||||
| Interest income to average earning assets |
8.33 | % | 8.33 | % | 9.52 | % | |||||||||||||||||||||
| Interest expense to average earning assets |
2.16 | % | 2.46 | % | 3.30 | % | |||||||||||||||||||||
| Net interest margin |
6.17 | % | 5.87 | % | 6.22 | % | |||||||||||||||||||||
| (1) | The information in this table reflects the adjustment to add back the effect of securitized loans. |
| (2) | Average balances, income and expenses, yields and rates are based on continuing operations. |
| (3) | Includes securities available for sale and securities held to maturity. |
13
| Press Release | ||||||
 |
Contacts: Investor Relations Jeff Norris Danielle Dietz 703.720.2455 703.720.2455 |
Media Relations Tatiana Stead Julie Rakes 703.720.2352 804.284.5800 | ||||
FOR IMMEDIATE RELEASE: July 23, 2009
Capital One Reports Net Income of $224.2 million, excluding the impact of TARP preferred shares redeemed in the quarter
Including the impact of TARP, loss per share in the second quarter was $0.65 (diluted)
Second Quarter Highlights
| • | Managed revenue increased 11.2 percent relative to the first quarter of 2009. |
| • | Lower provision expense relative to the first quarter as an increase in charge-offs was more than offset by an allowance release of $166.2 million. |
| • | The allowance release was due to a $4.5 billion reduction in reported loan balances. |
| • | Allowance as a percentage of reported loans for the company remained stable and strong at 4.84 percent. |
| • | Pre-tax results include an expense of $80.5 million for the FDIC special assessment |
| • | Repurchased the $3.6 billion of preferred stock issued through Treasury’s Capital Purchase Program (CPP) of the Troubled Asset Relief Program (TARP) |
| • | Tangible common equity to tangible managed assets, or “TCE ratio”, increased to 5.7 percent, up 90 basis points from March 31, 2009 ratio of 4.8 percent |
McLean, Va. (July 23, 2009) – Capital One Financial Corporation (NYSE: COF) today announced net income for the second quarter of 2009 of $224.2 million, or $0.53 per common share (diluted) prior to the impact of the government’s TARP preferred share investment. After including the $461.7 million impact of the June redemption of the preferred shares and the $38.0 million dividend payment on these shares in the quarter, Capital One posted a net loss available to common shareholders of $0.65 per common share (diluted).
“Second quarter results reflect the economic environment and our actions to decisively manage the company through the downturn for the benefit of our shareholders,” said Richard D. Fairbank, Capital One’s Chairman and Chief Executive Officer. “Despite turbulence in the marketplace, we believe that we remain well positioned to weather the storm, deliver
COF – Second Quarter 2009 Results
Page 2
shareholder value over the cycle, and achieve our vision of combining great local banking franchises with a high return credit card business.”
Total Company Results
| • | Total managed revenues in the second quarter of 2009 of $4.1 billion increased $418.2 million, or 11.2 percent relative to the first quarter. Net interest income increased $215.4 million in the second quarter while non-interest income increased $202.8 million. The increase in revenue was driven by a number of factors, including a full quarter of Chevy Chase results and an improvement in both net interest and revenue margins. |
| • | Provision expense was down $228.1 million quarter over quarter as the expected increase in charge-offs in the second quarter was more than offset by the $166.2 million allowance release in the quarter versus an increase in allowance of $124.1 million in the first quarter. |
| – | The allowance release was driven by a reduction in reported loan balances of $4.5 billion. |
| – | Allowance as a percent of reported loans remained at 4.84 percent in the second quarter and increased 143 basis points from the second quarter of 2008. |
| • | The full quarter effect of Chevy Chase Bank increased average deposits in the quarter by $7.5 billion, while total deposits on June 30, 2009 were $116.7 billion, a decline of $4.4 billion, or 3.6 percent over the prior quarter, as the company allowed higher cost deposits to run-off as loans contracted in the quarter. |
| – | Deposits represented 65.0 percent of the company’s total funding at the end of the second quarter. |
| – | Interest-bearing deposit costs decreased from 2.51 percent in the first quarter to 2.08 percent in the second quarter. |
| • | The weighted average cost of funds decreased by 36 basis points, from 2.76 percent in the first quarter to 2.40 percent in the second quarter. |
| • | Managed loans held for investment decreased by $4.1 billion, or 2.7 percent, from the first quarter of 2009 to $146.3 billion at June 30, 2009, and decreased $996.0 million, or 0.7 percent, from the year ago quarter, primarily as a result of the weak economic environment. |
| • | Non-interest expense increased $176.7 million in the second quarter of 2009 as compared to the first quarter primarily as a result of an expense of $80.5 million for the |
COF – Second Quarter 2009 Results
Page 3
FDIC special assessment, which is recorded in the “Other” segment, and from a full quarter of Chevy Chase Bank expenses.
| – | The managed efficiency ratio decreased 103 basis points to 45.28 percent in the second quarter of 2009 from 46.31 percent in the first quarter of 2009. |
| • | TCE ratio was 5.7 percent on June 30, 2009, an improvement of 90 basis points from the first quarter level of 4.8 percent. The Tier 1 risk-based capital ratio of an estimated 9.7 percent reflects impact of the repayment of TARP preferred shares in the second quarter and continues to be well above the regulatory well-capitalized minimum. |
“Our capital strength was evident in the quarter as we repaid the government’s preferred share investment and increased our Tangible Common Equity ratio by 90 basis points to 5.7 percent,” said Gary L. Perlin, Capital One’s Chief Financial Officer. “In addition, the company’s strong deposit franchise helped drive margin expansion through lower funding costs and will continue to serve as a cornerstone of our rock-solid balance sheet.”
Segment Results
Local Banking Segment highlights
The Local Banking business posted a net loss of $0.2 million in the second quarter of 2009, an improvement of $36.0 million from the first quarter of 2009. (The results of Chevy Chase Bank are reported in the “Other” segment.) The revenue increase in the quarter resulted from favorable loan and deposit pricing, higher average deposit balances, and improving deposit mix. Increases in non-performing loans and charge-offs in the Commercial Lending portfolio were driven primarily by worsening in the Middle Market portfolio, while increases in the Consumer charge-offs and non-performing loans were attributed to falling home prices in the residential mortgage portfolio.
| • | Local Banking reported a net loss for the second quarter of 2009 of $0.2 million, versus a net loss in the first quarter of 2009 of $36.2 million. |
| • | Revenues improved $43.3 million, or 5.5 percent, primarily due to an increase in deposit margins. Operating expenses increased $11.6 million relative to the first quarter of 2009. |
COF – Second Quarter 2009 Results
Page 4
| • | Local Banking deposits declined $612.5 million, or 0.8 percent, during the second quarter of 2009 to $78.5 billion, while the net interest margin on deposits increased by 21 basis points to 2.08 percent. |
| • | Loans held for investment of $43.7 billion declined $795.7 million, or 1.8 percent, from the first quarter of 2009, primarily driven by the continued run-off of residential mortgage loans, and a decline in small business lending. |
| • | The net charge-off rate increased 34 basis points to 1.10 percent in the second quarter of 2009 from 76 basis points in the first quarter of 2009, primarily as a result of the continuing difficult credit environment. |
| • | Non-performing loans as a percent of loans held for investment was 2.35 percent, an increase of 58 basis points from 1.77 percent at the end of the first quarter of 2009. The Commercial Loan portfolio’s rate increased 47 basis points in the quarter while Consumer Lending’s rate increased 78 basis points. |
National Lending Segment highlights
The National Lending segment contains the results of the company’s U.S. Card, Auto Finance and International Lending businesses. For details on each of these subsegments’ results, please refer to the Financial Supplement.
National Lending reported a profit of $270.8 million in the second quarter, up from $75.9 million in the prior quarter, but down relative to $407.6 million in the year ago quarter. Each business within National Lending also reported a profit in the second quarter of 2009 – U.S. Card delivered $168.4 million, the Auto Finance business reported $97.2 million, and International contributed $5.2 million.
Performance in the National Lending segment primarily reflects expected continued economic deterioration during the second quarter, although the pace of deterioration was partially offset by seasonal benefits and the company’s ongoing efforts to aggressively manage credit risk.
| • | National Lending segment revenues of $3.1 billion were up $11.5 million in the second quarter of 2009 compared to the first quarter of 2009, but down $253.7 million compared to the second quarter of 2008. |
COF – Second Quarter 2009 Results
Page 5
| • | Revenue margin expanded from 12.43 percent in the first quarter of 2009 to 13.03 percent in the second quarter for National Lending. The individual businesses also reported revenue margin expansion. The company now expects the full year U.S. Card revenue margin to be a bit below 15 percent. |
| • | The managed net charge-off rate for the National Lending segment increased 49 basis points in the second quarter of 2009 to 8.04 percent from 7.55 percent in the first quarter of 2009. |
| o | U.S. Card – 9.23 percent, an increase of 84 basis points over the first quarter of 2009 |
| o | Auto Finance – 3.65 percent, a decline of 123 basis points from the first quarter |
| o | International – 9.32 percent, an increase of 202 basis points over the first quarter of 2009. |
| • | The delinquency rate for the segment was 5.82 percent as of June 30, 2009, an increase of 12 basis points from 5.70 percent as of March 31, 2009. |
| o | U.S. Card – 4.77 percent, a decline of 31 basis points over the first quarter of 2009 |
| o | Auto Finance – 8.89 percent, an increase of 137 basis points from the first quarter |
| o | International – 6.69 percent, an increase of 44 basis points over the first quarter of 2009. |
| • | Managed loans held for investment declined $2.5 billion, or 2.6 percent, to $93.3 billion from $95.8 billion at the end of the first quarter of 2009, and down 8.7 percent relative to the year-ago quarter. |
| o | U.S. Card – declined $2.3 billion, or 3.4 percent, to $64.8 billion |
| o | Auto Finance – declined $765.5 million, or 3.7 percent, to $19.9 billion |
| o | International – increased $568.5 million, or 7.0 percent, to $8.6 billion |
The company generates earnings from its managed loan portfolio, which includes both on-balance sheet loans and securitized (off-balance sheet) loans. For this reason, the company believes 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 (GAAP). Please see the
COF – Second Quarter 2009 Results
Page 6
schedule titled “Reconciliation to GAAP Financial Measures” attached to this release for more information.
Forward looking statements
The company cautions that its current expectations in this release, in the presentation slides available on the company’s website and in its Form 8-K dated July 23, 2009; and the company’s plans, objectives, expectations, and intentions, are forward-looking statements. Actual results could differ materially from current expectations due to a number of factors, including: general economic conditions in the U.S., the UK, or the company’s local markets, including conditions affecting consumer income, confidence, spending, and savings which may affect consumer bankruptcies, defaults, charge-offs, deposit activity, and interest rates; changes in the labor and employment market; changes in the credit environment; the company’s ability to execute on its strategic and operational plans; competition from providers of products and services that compete with the company’s businesses; increases or decreases in the company’s aggregate accounts and balances, or the growth rate and/or composition thereof; changes in the reputation of or expectations regarding the financial services industry or the company with respect to practices, products or financial condition; financial, legal, regulatory, tax or accounting changes or actions, including with respect to any litigation matter involving the company; and the success of the company’s marketing efforts in attracting or retaining customers. A discussion of these and other factors can be found in the company’s annual report and other reports filed with the Securities and Exchange Commission, including, but not limited to, the company’s reports on Form 10-K for the fiscal year ended December 31, 2008 and report on Form 10-Q for the quarter ended March 31, 2009.
About Capital One
Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries, which include Capital One, N.A., Capital One Bank (USA), N. A., and Chevy Chase F.S.B. collectively, had $116.7 billion in deposits and $146 billion in managed loans outstanding as of June 30, 2009. Headquartered in McLean, Virginia, Capital One offers a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One, N.A. and Chevy Chase Bank, F.S.B. have approximately 1,000 branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia, and the District of Columbia. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.
COF – Second Quarter 2009 Results
Page 7
###
NOTE: Second quarter 2009 financial results, SEC Filings, and earnings conference call slides are accessible on Capital One’s home page (www.capitalone.com). Choose “Investors” on the bottom of the home page to view and download the earnings press release, slides, and other financial information. Additionally, a podcast and webcast of today’s 5:00 pm (ET) earnings conference call is accessible through the same link.
 Second Quarter 2009
Results July 23, 2009 Exhibit 99.2 |
 2 July 23, 2009 Forward looking statements Please note that the following materials containing information regarding Capital One’s financial
performance speak only as of the particular date or dates indicated in these materials. Capital
One does not undertake any obligation to update or revise any of the information contained herein whether as a result of new information, future events or otherwise. Certain statements in this presentation and other oral and written statements made by Capital One from time
to time are forward-looking statements, including those that discuss, among other things,
strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns, earnings per share or other financial measures for Capital One; future financial and operating results; and
Capital One’s plans, objectives, expectations and intentions; and the assumptions that
underlie these matters. To the extent that any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private
Securities Litigation Reform Act of 1995. Numerous factors could cause our actual results to differ materially from those described in such forward-looking statements, including, among other things: general economic and business conditions in the U.S., the UK, or Capital One’s local markets, including conditions affecting consumer income and confidence, spending and repayments; changes in the credit environment, including an increase or decrease
in credit losses or changes in the interest rate environment; financial, legal, regulatory, tax or accounting changes or actions, including actions with respect to litigation matters involving Capital One; increases or decreases in our aggregate accounts or consumer loan balances or the
growth rate or composition thereof; the amount and rate of deposit growth; changes in the
reputation of or expectations regarding the financial services industry and/or Capital One with respect to practices, products or financial condition; the risk that synergies from Capital One’s
acquisitions may not be fully realized or may take longer to realize than expected; disruptions
from Capital One’s acquisitions negatively impacting Capital One’s ability to maintain relationships with customers, employees or suppliers; Capital One’s ability to access the capital markets at attractive
rates and terms to fund its operations and future growth; losses associated with new or changed
products or services; competition from providers of products and services that compete with Capital One’s businesses; Capital One’s ability to execute on its strategic and operational plans; any significant disruption in Capital One’s operations or technology platform; Capital One’s ability to effectively control costs; the success of Capital
One’s marketing efforts in attracting and retaining customers; Capital One’s ability
to recruit and retain experienced management personnel; changes in the labor and employment market; and other factors listed from time to time in reports that Capital One files with the Securities and Exchange
Commission (the “SEC”), including, but not limited to, factors set forth under the caption “Risk Factors” in its Annual Report on Form 10-K for the year ended December 31, 2008 and in its Quarterly Report on Form 10-Q for the quarter ended March 31, 2009. You should carefully consider the factors
discussed above in evaluating these forward- looking statements. All information in these
slides is based on the consolidated results of Capital One Financial Corporation, unless otherwise noted. A reconciliation of any non-GAAP financial measures included in this presentation can be found in
Capital One’s most recent Form 10-K concerning annual financial results, available on Capital One’s website at www.capitalone.com under “Investors”. |
 3 July 23, 2009 Capital One earned $224MM, or $0.53 per share, in the second quarter of 2009, excluding the impact of TARP preferred shares redeemed in the quarter 1 Includes one month of Chevy Chase 2 Includes full quarter of Chevy Chase 3 Includes TARP dividend and accounting impact of June redemption of TARP preferred shares Revenue excl. Retained Interest & Suppression Retained Interests Valuation Changes Revenue Suppression Revenue Marketing Expense Operating Expense Restructuring Expense Non-Interest Expense Pre-Provision Earnings (before tax) Net Charge-offs Other Allowance Build (Release) Provision Expense Operating Earnings (after tax) Discontinued Operations Total Company (after tax) Available to Common Shareholders 3 19 336 317 (36) (290) (228) 241 98 179 25 177 418 (29) Change 445 1 (28) Q109 1 Q209 2 4,402 4,847 (128) (127) (544) (572) 3,730 4,148 163 134 1,565 1,744 18 43 1,745 1,922 1,985 2,226 1,991 2,089 17 (19) 124 (166) 2,132 1,904 (112) 224 (87) 230 (25) (6) $0.55 EPS ($0.23) EPS ($0.29) EPS $0.53 EPS ($0.45) EPS ($0.65) EPS |
 4 July 23, 2009 Allowance as % of Reported Loans National Lending Allowance as % of Reported 30+ Delinquencies 172% 208% 57% 54% 133% 150% 0% 50% 100% 150% 200% Q208 Q308 Q408 Q109 Q209 US Card Auto International 6.30% 9.50% 9.20% 5.80% 4.80% 4.30% 1.60% 0.90% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Q208 Q308 Q408 Q109 Q209 US Card Auto International Total Company: 3.33% 3.41% 3.59% 4.48% 4.84% 4.84% Bank We continued to increase allowance coverage ratios |
 5 July 23, 2009 Margins improved in the second quarter Revenue Margin Net Interest Margin 9.12% 9.38% 8.65% 8.03% 8.65% 6.43% 6.06% 6.22% 5.87% 6.17% 0% 2% 4% 6% 8% 10% 12% Q208 Q308 Q408 Q109 Q209 Margins as % of Managed Assets 45.3% 46.3% 47.9% 42.6% 44.2% 0% 10% 20% 30% 40% 50% 60% 70% Q208 Q308 Q408 Q109 Q209 Efficiency Ratio |
 6 July 23, 2009 Average cost of funds fell while asset yields remained constant Average Earning Asset Type Weighted Avg Yield of Assets 9.21% 8.33% 8.33% 9.3 29.0 34.2 37.5 7.8 5.9 6.4 65.9 69.2 69.6 21.1 20.3 22.0 8.4 9.4 8.3 44.8 44.1 44.8 3.2 $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Q408 Q109 Q209 Card Auto Int’l Bank $B CCB Securities $182.6 $186.8 $191.8 Average Funding Mix 29% 26% 26% 9% 9% 10% 62% 65% 64% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q408 Q109 Q209 Securitization Deposits Other Other Ending Loan/ Deposit Ratio: 1.25 Weighted Avg Cost of Funds 2.40% 3.52% 2.76% 1.35 1.24 |
 7 July 23, 2009 Our low risk investment portfolio provides balance sheet flexibility $MM March 31, 2009 Book Value Net Unrealized Gain/(Loss) Treasuries/Agencies $1,514 56 Agency MBS 25,908 528 Non-Agency MBS 3,533 (997) ABS 4,475 (74) CMBS 1,070 (121) Other 384 (7) Total $36,884 $(615) June 30, 2009 Book Value Net Unrealized Gain/(Loss) $ 892 38 26,414 547 3,263 (924) 5,900 97 1,054 (56) 443 (1) $37,966 $(299) |
 8 July 23, 2009 9.7% 11.3% 11.4% 0% 2% 4% 6% 8% 10% 12% 14% Q408 Pro-forma Q109 Q209 Our capital ratios remain strong 5.7% 4.8% 4.6% 0% 1% 2% 3% 4% 5% 6% Q408 Pro-forma Q109 Q209 Well Capitalized Tangible Common Equity to Tangible Managed Assets Tier 1 Capital to Risk Weighted Assets Other Common TARP 8.5% 8.5% |
 9 July 23, 2009 Net Income from Continuing Operations ($Millions) Q408 Q109 Q209 National Lending US Card $ (175.6) $ 2.4 168.4 Auto Finance (924.6) 71.4 97.2 International (11.2) 2.0 5.2 SUBTOTAL (1,111.4) 75.8 270.8 Local Banking (6.5) (36.2) (0.2) Other (278.4) (126.6) (40.4) Total Company $ (1,396.3) $ (87.0) 230.2 Capital One delivered a profit from continuing operations of $230MM $ $ |
 10 July 23, 2009 The worsening economy and denominator impacts drove rising delinquency and loss trends across most of our consumer lending
businesses 6.26% 6.13% 7.08% 5.85% 8.39% 9.23% 3.85% 4.04% 4.20% 4.78% 5.08% 4.77% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Q108 Q208 Q308 Q408 Q109 Q209 US Card ($64.8 B) Managed Net Charge-off Rate Managed 30+ Delinquency Rate 3.65% 4.88% 3.98% 3.84% 5.67% 5.00% 8.89% 7.52% 9.91% 9.32% 7.62% 6.42% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Q108 Q208 Q308 Q408 Q109 Q209 Managed Net Charge-off Rate Managed 30+ Delinquency Rate Auto Finance ($19.9 B) International ($8.6 B) 6.07% 5.90% 5.84% 5.30% 7.30% 9.32% 5.35% 5.12% 5.24% 5.51% 6.25% 6.69% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% Q108 Q208 Q308 Q408 Q109 Q209 Managed Net Charge-off Rate Managed 30+ Delinquency Rate |
 11 July 23, 2009 0.46% 0.90% 0.76% 0.34% 1.10% 1.05% 0.88% 1.39% 1.91% 2.51% 0% 1% 2% 3% 4% 5% Q208 Q308 Q408 Q109 Q209 Total Bank Segment ($43.7 B) Non Performing Asset Rate Charge-off Rate Commercial & Multi Family ($13.6 B) 0.14% 0.95% 2.24% 0.62% 0.10% 1.15% 0.87% 1.06% 1.98% 1.20% 0% 1% 2% 3% 4% 5% 0.62% 0.05% 0.15% 0.07% 0.48% 1.21% 0.57% 0.43% 0.26% 0.31% 0% 1% 2% 3% 4% 5% Middle Market ($9.8 B) Q208 Q308 Q408 Q109 Q209 Q208 Q308 Q408 Q109 Q209 Non Performing Asset Rate Charge-off Rate Non Performing Asset Rate Charge-off Rate The worsening economy and denominator impacts drove rising delinquency and loss trends across our commercial lending businesses |
 12 July 23, 2009 The new law on credit card practices will bring significant change to the industry CARD Act • Repricing • Payment Allocation • Fees • Near Term: – Transitional risks – Potential profit pressures at the confluence of “The Great Recession” and implementation of the new law • Long Term: – Constriction of credit – Reduced resilience – Redistribution of revenue model – Slightly lower, but still very attractive, returns – Level playing field Potential Impacts on US Credit Card Business |
 13 July 23, 2009 The “level playing field” following the implementation of the CARD law could create opportunities for Capital One Capital One Share of U.S. Card Industry Outstandings Note: Capital One is legacy U.S. Card (excludes Small Business and IL) *1H 2009 includes mail through March 2009 Note: Includes BT and purchase teasers; % of mail collected (not projected to industry) Source: Mintel Comperemedia % of Mail with 0% Long Teasers 12 Months+ 0% 20% 40% 60% 80% 100% 6.8% 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% |
 14 July 23, 2009 • Decisive actions – Tightened underwriting – Retrenched or exited least resilient businesses – Increased collections intensity – Aggressively managing costs – Optimizing mix of earning assets, liabilities, and capital • Balance sheet strength and flexibility – Historically high coverage ratios – Conservative investment portfolio – Deposit-led funding and strong liquidity – Strong capital We continue to decisively and aggressively manage the company through the downturn for the benefit of shareholders • Positioned to grow when the time is right – Shift earning assets back to higher-margin loans as the cycle turns – Capital and funding provide significant balance sheet flexibility • Scale and franchise value of core businesses intact, despite cyclical volume declines and regulatory changes • Great Local Banking franchises with a high- return, sustainable credit card business Weather the Storm Deliver Long-Term Value |
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