Capital One Reports Record Second Quarter Earnings
FALLS CHURCH, Va., July 17 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced its 16th consecutive quarter of record earnings, driven by a 39 percent year-over-year increase in total revenues, and another quarter of the best credit performance of any of the major credit card institutions in the country.
Earnings for the second quarter of 2001 were $155.3 million, or $0.70 per share, versus earnings of $112.5 million, or $0.54 per share, for the comparable period in the prior year. Earnings in the first quarter of 2001 were $143.6 million, or $0.66 per share.
"Capital One achieved its 16th consecutive quarter of record-breaking earnings driven by a 39 percent increase in total revenues," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Our focus on the superprime sector resulted in robust loan growth -- a 47 percent annualized increase in managed loans. We remain firmly on track to deliver this year's target of 30 percent earnings per share growth."
Second quarter 2001 revenue, defined as managed net interest income and non-interest income, rose to $1.6 billion versus $1.5 billion in the first quarter of 2001 and $1.2 billion for the comparable period in the prior year. For the quarter, Capital One added 1.7 million net new accounts, bringing total accounts to 38.1 million. The company's managed consumer loan balances increased by $3.7 billion in the second quarter to $35.3 billion.
"This quarter's outstanding performance once again proves the strength of our unique information-based strategy and our ability to consistently deliver value to our more than 38 million customers," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Our stringent risk management practices again resulted in the best credit performance of any of the major credit card institutions -- 3.98 percent."
The managed net charge-off rate increased to 3.98 percent for the second quarter of 2001 compared with 3.75 percent for the first quarter of 2001. The managed delinquency rate (30+ days) increased slightly to 4.92 percent as of June 30, 2001, compared with 4.72 percent as of March 31, 2001.
The company's managed net interest margin was 9.11 percent in the second quarter of 2001 versus 9.21 percent in the first quarter of 2001 and 10.88 percent in the comparable period of 2000, reflecting strong growth in the superprime portfolio and the success of the company's 0% purchase teaser offer.
Marketing expense for the second quarter of 2001 increased $37.5 million to $268.7 million from $231.2 million in the first quarter of 2001, and increased $57.1 million over the $211.6 million spent in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the second quarter of 2001 were $721.6 million versus $687 million for the first quarter of 2001 and $530.7 million in the comparable period of the prior year. Annualized operating expenses per account decreased to $77.38 for the second quarter of 2001 from $78.26 for the first quarter of 2001 and $80.97 from the comparable period in the prior year.
The company cautioned that its current expectations for 2001 earnings and future growth are forward-looking statements and actual results could differ materially from current expectations due to a number of factors, including: competition in the credit card industry; the actual account and balance growth achieved by the company; the company's ability to access the capital markets at attractive rates and terms to fund its operations and future growth; and general economic conditions affecting consumer income and spending, which may affect consumer bankruptcies, defaults and charge-offs. A discussion of these and other factors can be found in Capital One's annual and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-K for the year ended December 31, 2000.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation (http://www.CapitalOne.com ) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products. Capital One's subsidiaries collectively had 38.1 million customers and $35.3 billion in managed loans outstanding as of June 30, 2001. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.
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CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2001 2001
(in millions, except per share data and as noted) Q2 Q1
Earnings (Managed Basis)
Net Interest Income $ 823.7 $ 759.3
Non-Interest Income 796.3 747.1
Total Revenue 1,620.0 1,506.4
Provision for Loan Losses 379.1 356.5
Marketing Expenses 268.7 231.2
Operating Expenses 721.6 687.0
Income Before Taxes 250.5 231.6
Tax Rate 38.0% 38.0%
Net Income $ 155.3 $ 143.6
Common Share Statistics
Basic EPS $ 0.74 $ 0.70
Diluted EPS $ 0.70 $ 0.66
Dividends Per Share $ 0.03 $ 0.03
Book Value Per Share (period end) $ 13.02 $ 11.81
Stock Price Per Share (period end) $ 60.15 $ 55.50
Total Market Capitalization (period end) $ 12,666.5 $ 11,509.1
Shares Outstanding (period end) 210.6 207.4
Shares Used to Compute Basic EPS 209.1 204.8
Shares Used to Compute Diluted EPS 221.2 217.8
Managed Loan Statistics (period avg.)
Average Loans $ 33,440 $ 30,505
Average Earning Assets $ 36,180 $ 32,983
Average Assets $ 38,820 $ 35,303
Average Equity $ 2,608 $ 2,347
Net Interest Margin 9.11% 9.21%
Risk Adjusted Margin(1) 14.23% 14.80%
Return on Average Assets (ROA) 1.60% 1.63%
Return on Average Equity (ROE) 23.83% 24.47%
Net Charge-Off Rate 3.98% 3.75%
Net Charge-Offs $ 332.8 $ 285.9
Cost Per Account (in dollars) $ 77.38 $ 78.26
Managed Loan Statistics (period end)
Reported Loans $ 16,327 $ 15,572
Securitized Loans 18,956 15,979
Total Loans $ 35,283 $ 31,551
Delinquency Rate (30+ days) 4.92% 4.72%
Number of Accounts (000's) 38,146 36,462
Total Assets $ 40,587 $ 36,749
Capital, Including Preferred Interests $ 2,840.1 $ 2,547.7
Capital to Managed Assets Ratio 7.00% 6.93%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2000 2000
(in millions, except per share data and as noted) Q4 Q3
Earnings (Managed Basis)
Net Interest Income $ 716.1 $ 665.1
Non-Interest Income 696.5 619.9
Total Revenue 1,412.5 1,285.0
Provision for Loan Losses 329.1 269.0
Marketing Expenses 259.5 233.2
Operating Expenses 617.1 585.8
Income Before Taxes 206.9 197.0
Tax Rate 38.0% 38.0%
Net Income $ 128.3 $ 122.1
Common Share Statistics
Basic EPS $ 0.65 $ 0.62
Diluted EPS $ 0.61 $ 0.58
Dividends Per Share $ 0.03 $ 0.03
Book Value Per Share (period end) $ 9.94 $ 9.02
Stock Price Per Share (period end) $ 65.81 $ 70.06
Total Market Capitalization (period end) $12,989.3 $13,783.1
Shares Outstanding (period end) 197.4 196.7
Shares Used to Compute Basic EPS 197.0 196.3
Shares Used to Compute Diluted EPS 210.4 210.1
Managed Loan Statistics (period avg.)
Average Loans $ 26,377 $ 23,020
Average Earning Assets $ 28,188 $ 24,749
Average Assets $ 30,234 $ 27,015
Average Equity $ 1,865 $ 1,743
Net Interest Margin 10.16% 10.75%
Risk Adjusted Margin(1) 16.32% 17.24%
Return on Average Assets (ROA) 1.70% 1.81%
Return on Average Equity (ROE) 27.51% 28.02%
Net Charge-Off Rate 3.98% 3.80%
Net Charge-Offs $ 262.3 $ 218.4
Cost Per Account (in dollars) $ 78.09 $ 82.84
Managed Loan Statistics (period end)
Reported Loans $ 15,113 $ 12,331
Securitized Loans 14,411 11,821
Total Loans $ 29,524 $ 24,152
Delinquency Rate (30+ days) 5.23% 5.32%
Number of Accounts (000's) 33,774 29,437
Total Assets $ 33,286 $ 28,185
Capital, Including Preferred Interests $ 2,061.0 $ 1,873.8
Capital to Managed Assets Ratio 6.19% 6.65%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2000
(in millions, except per share data and as noted) Q2
Earnings (Managed Basis)
Net Interest Income $ 614.4
Non-Interest Income 554.4
Total Revenue 1,168.8
Provision for Loan Losses 245.0
Marketing Expenses 211.6
Operating Expenses 530.7
Income Before Taxes 181.5
Tax Rate 38.0%
Net Income $ 112.5
Common Share Statistics
Basic EPS $ 0.57
Diluted EPS $ 0.54
Dividends Per Share $ 0.03
Book Value Per Share (period end) $ 8.39
Stock Price Per Share (period end) $ 44.63
Total Market Capitalization (period end) $ 8,747.4
Shares Outstanding (period end) 196.0
Shares Used to Compute Basic EPS 196.0
Shares Used to Compute Diluted EPS 208.6
Managed Loan Statistics (period avg.)
Average Loans $ 20,915
Average Earning Assets $ 22,581
Average Assets $ 24,567
Average Equity $ 1,626
Net Interest Margin 10.88%
Risk Adjusted Margin(1) 17.03%
Return on Average Assets (ROA) 1.83%
Return on Average Equity (ROE) 27.68%
Net Charge-Off Rate 3.97%
Net Charge-Offs $ 207.6
Cost Per Account (in dollars) $ 80.97
Managed Loan Statistics (period end)
Reported Loans $ 11,383
Securitized Loans 10,500
Total Loans $ 21,883
Delinquency Rate (30+ days) 5.35%
Number of Accounts (000's) 27,133
Total Assets $ 25,610
Capital, Including Preferred Interests $ 1,743.9
Capital to Managed Assets Ratio 6.81%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
June 30
2001
Assets:
Cash and due from banks $ 134,918
Federal funds sold and resale agreements 39,770
Interest-bearing deposits at other banks 62,050
Cash and cash equivalents 236,738
Securities available for sale 2,554,967
Consumer loans 16,326,617
Less: Allowance for loan losses (647,000)
Net loans 15,679,617
Premises and equipment, net 729,525
Interest receivable 79,089
Accounts receivable from securitizations 1,708,055
Other 672,338
Total assets $ 21,660,329
Liabilities:
Interest-bearing deposits $ 10,029,736
Other borrowings 2,320,734
Senior notes 4,757,481
Interest payable 151,429
Other 1,659,412
Total liabilities 18,918,792
Stockholders' Equity:
Common stock 2,118
Paid-in capital, net 1,089,582
Retained earnings and cumulative
other comprehensive income 1,695,468
Less: Treasury stock, at cost (45,631)
Total stockholders' equity 2,741,537
Total liabilities and stockholders' equity $ 21,660,329
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
March 31
2001
Assets:
Cash and due from banks $ 49,842
Federal funds sold and resale agreements 247,676
Interest-bearing deposits at other banks 492,390
Cash and cash equivalents 789,908
Securities available for sale 2,112,180
Consumer loans 15,571,754
Less: Allowance for loan losses (597,000)
Net loans 14,974,754
Premises and equipment, net 709,207
Interest receivable 108,944
Accounts receivable from securitizations 1,492,818
Other 614,194
Total assets $ 20,802,005
Liabilities:
Interest-bearing deposits $ 9,390,524
Other borrowings 1,845,509
Senior notes 5,040,761
Interest payable 135,863
Other 1,940,103
Total liabilities 18,352,760
Stockholders' Equity:
Common stock 2,086
Paid-in capital, net 974,503
Retained earnings and cumulative
other comprehensive income 1,519,855
Less: Treasury stock, at cost (47,199)
Total stockholders' equity 2,449,245
Total liabilities and stockholders' equity $ 20,802,005
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
June 30
2000
Assets:
Cash and due from banks $ 100,999
Federal funds sold and resale agreements 10,000
Interest-bearing deposits at other banks 78,226
Cash and cash equivalents 189,225
Securities available for sale 1,507,770
Consumer loans 11,382,780
Less: Allowance for loan losses (407,000)
Net loans 10,975,780
Premises and equipment, net 545,262
Interest receivable 51,799
Accounts receivable from securitizations 1,302,424
Other 554,631
Total assets $ 15,126,891
Liabilities:
Interest-bearing deposits $ 5,288,927
Other borrowings 2,773,050
Senior notes 4,176,394
Interest payable 96,493
Other 1,146,451
Total liabilities 13,481,315
Stockholders' Equity:
Common stock 1,997
Paid-in capital, net 578,915
Retained earnings and cumulative
other comprehensive income 1,197,370
Less: Treasury stock, at cost (132,706)
Total stockholders' equity 1,645,576
Total liabilities and stockholders' equity $ 15,126,891
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
June 30 March 31
2001 2001
Interest Income:
Consumer loans, including fees $ 620,866 $617,889
Securities available for sale 33,942 28,234
Other 2,408 3,750
Total interest income 657,216 649,873
Interest Expense:
Deposits 155,479 146,961
Other borrowings 43,825 43,900
Senior notes 87,842 83,293
Total interest expense 287,146 274,154
Net interest income 370,070 375,719
Provision for loan losses 202,900 250,614
Net interest income after provision
for loan losses 167,170 125,105
Non-Interest Income:
Servicing and securitizations 572,591 543,791
Service charges and other customer-related fees 407,412 406,134
Interchange 93,673 74,851
Total non-interest income 1,073,676 1,024,776
Non-Interest Expense:
Salaries and associate benefits 342,076 325,716
Marketing 268,709 231,200
Communications and data processing 72,906 75,292
Supplies and equipment 74,780 73,603
Occupancy 31,349 31,302
Other 200,496 181,134
Total non-interest expense 990,316 918,247
Income before income taxes 250,530 231,634
Income taxes 95,203 88,021
Net Income $ 155,327 $ 143,613
Basic earnings per share $ 0.74 $ 0.70
Diluted earnings per share $ 0.70 $ 0.66
Dividends paid per share $ 0.03 $ 0.03
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
June 30
2000
Interest Income:
Consumer loans, including fees $ 511,886
Securities available for sale 22,845
Other 1,776
Total interest income 536,507
Interest Expense:
Deposits 63,619
Other borrowings 46,914
Senior notes 62,016
Total interest expense 172,549
Net interest income 363,958
Provision for loan losses 151,010
Net interest income after provision
for loan losses 212,948
Non-Interest Income:
Servicing and securitizations 282,640
Service charges and other customer-related fees 374,706
Interchange 53,461
Total non-interest income 710,807
Non-Interest Expense:
Salaries and associate benefits 236,618
Marketing 211,560
Communications and data processing 72,933
Supplies and equipment 58,167
Occupancy 27,250
Other 135,736
Total non-interest expense 742,264
Income before income taxes 181,491
Income taxes 68,966
Net income $ 112,525
Basic earnings per share $ 0.57
Diluted earnings per share $ 0.54
Dividends paid per share $ 0.03
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Six Months Ended
June 30 June 30
2001 2000
Interest Income:
Consumer loans, including fees $ 1,238,755 $ 1,000,823
Securities available for sale 62,176 47,579
Other 6,158 3,552
Total interest income 1,307,089 1,051,954
Interest Expense:
Deposits 302,440 115,739
Other borrowings 87,725 88,368
Senior notes 171,135 130,392
Total interest expense 561,300 334,499
Net interest income 745,789 717,455
Provision for loan losses 453,514 277,535
Net interest income after provision
for loan losses 292,275 439,920
Non-Interest Income:
Servicing and securitizations 1,116,382 553,398
Service charges and other customer-related fees 813,546 715,938
Interchange 168,524 96,531
Total non-interest income 2,098,452 1,365,867
Non-Interest Expense:
Salaries and associate benefits 667,792 471,454
Marketing 499,909 413,498
Communications and data processing 148,198 143,755
Supplies and equipment 148,383 110,441
Occupancy 62,651 52,542
Other 381,630 260,494
Total non-interest expense 1,908,563 1,452,184
Income before income taxes 482,164 353,603
Income taxes 183,224 134,369
Net Income $ 298,940 $ 219,234
Basic earnings per share $ 1.44 $ 1.11
Diluted earnings per share $ 1.36 $ 1.05
Dividends paid per share $ 0.05 $ 0.05
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 06/30/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $33,439,690 $1,307,819 15.64%
Securities available for sale 2,344,047 33,942 5.79
Other 396,659 2,408 2.43
Total earning assets $36,180,396 $1,344,169 14.86%
Interest-bearing liabilities:
Deposits $ 9,685,882 $ 155,479 6.42%
Other borrowings 2,915,245 43,825 6.01
Senior notes 4,899,045 87,842 7.17
Securitization liability 16,741,276 233,322 5.57
Total interest-bearing liabilities $34,241,448 $ 520,468 6.08%
Net interest spread 8.78%
Interest income to average earning assets 14.86%
Interest expense to average earning assets 5.75
Net interest margin 9.11%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 03/31/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $30,505,450 $1,235,002 16.19%
Securities available for sale 1,913,357 28,234 5.90
Other 564,592 3,750 2.66
Total earning assets $32,983,399 $1,266,986 15.37%
Interest-bearing liabilities:
Deposits $ 8,996,414 $ 146,961 6.53%
Other borrowings 2,442,200 43,900 7.19
Senior notes 4,678,452 83,293 7.12
Securitization liability 14,948,262 233,524 6.25
Total interest-bearing liabilities $31,065,328 $ 507,678 6.54%
Net interest spread 8.83%
Interest income to average earning assets 15.37%
Interest expense to average earning assets 6.16
Net interest margin 9.21%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 06/30/00
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $20,915,125 $ 937,935 17.94%
Securities available for sale 1,519,369 22,845 6.01
Other 146,760 1,776 4.84
Total earning assets $22,581,254 $ 962,556 17.05%
Interest-bearing liabilities:
Deposits $ 4,495,242 $ 63,619 5.66%
Other borrowings 2,687,569 46,914 6.98
Senior notes 3,659,603 62,016 6.78
Securitization liability 10,870,733 175,655 6.46
Total interest-bearing liabilities $21,713,147 $ 348,204 6.41%
Net interest spread 10.64%
Interest income to average earning assets 17.05%
Interest expense to average earning assets 6.17
Net interest margin 10.88%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
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SOURCE Capital One Financial Corporation
CONTACT: Paul Paquin, V.P., Investor Relations, +1-703-205-1039, or Tatiana Stead, Corporate Media, +1-703-205-1070, both of Capital One Financial Corporation/