Capital One Reports Record Third Quarter Earnings; Earnings Per Share Rise 29% Over Year Ago Period
FALLS CHURCH, Va., Oct. 16 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced its 17th consecutive quarter of record earnings, driven by a 38 percent increase in total revenues, and another quarter of the best credit performance of any of the major credit card institutions in the country.
Earnings for the third quarter of 2001 were $165.3 million, or $0.75 per share, versus earnings of $122.1 million, or $0.58 per share, for the comparable period in the prior year. Earnings in the second quarter of 2001 were $155.3 million, or $0.70 per share.
"Capital One's 17th consecutive quarter of record-breaking earnings was driven by a 38 percent increase in total revenues over last year," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Our stringent risk management practices again place us in the lead with the best credit performance of any of the major credit card institutions -- with a charge-off rate of 3.92 percent. We remain firmly on track to deliver this year's target of 30 percent earnings per share growth."
Third quarter 2001 revenue, defined as managed net interest income and non-interest income, rose to $1.8 billion versus $1.6 billion in the second quarter of 2001 and $1.3 billion for the comparable period in the prior year. For the quarter, Capital One added 2.0 million net new accounts, bringing total accounts to 40.1 million. The company's managed consumer loan balances increased by $3.2 billion in the third quarter to $38.5 billion.
"This quarter's strong performance continues to illustrate the power of our unique Information-Based Strategy and our ability to consistently deliver value to our more than 40 million customers," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Capital One's complete integration of marketing and technology continues to fuel our robust loan growth -- a 36 percent annualized increase in managed loans this quarter."
The managed net charge-off rate decreased to 3.92 percent for the third quarter of 2001 compared with 3.98 percent for the second quarter of 2001. The managed delinquency rate (30+ days) increased to 5.20 percent as of September 30, 2001, compared with 4.92 percent as of June 30, 2001.
The company's managed net interest margin was 9.27 percent in the third quarter of 2001 versus 9.11 percent in the second quarter of 2001 and 10.75 percent in the comparable period of 2000.
Marketing expense for the third quarter of 2001 increased $13.2 million to $281.9 million from $268.7 million in the second quarter of 2001, and increased $48.7 million over the $233.2 million spent in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the third quarter of 2001 were $793.0 million versus $721.6 million for the second quarter of 2001 and $585.8 million in the comparable period of the prior year. Annualized operating expenses per account, which included one-time expenses of $38.8 million, increased to $81.03 for the third quarter of 2001. Excluding the one-time expenses, annualized operating expenses per account would have been $77.06, down from $77.38 for the second quarter of 2001 and $82.84 for the comparable period in the prior year.
The company cautioned that its current expectations for 2001 earnings and future growth are forward looking statements and actual results could differ materially from current expectations due to a number of factors, including: competition in the credit card industry; the actual account and balance growth achieved by the company; the company's ability to access the capital markets at attractive rates and terms to fund its operations and future growth; and general economic conditions affecting consumer income and spending, which may affect consumer bankruptcies, defaults and charge-offs. A discussion of these and other factors can be found in Capital One's annual and other reports filed with the Securities and Exchange Commission, including, but not limited to, Capital One's report on Form 10-K for the year ended December 31, 2000.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation (http://www.capitalone.com ) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products. Capital One's subsidiaries collectively had 40.1 million customers and $38.5 billion in managed loans outstanding as of September 30, 2001. Capital One, a Fortune 500 company, is one of the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.
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CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2001 2001
(in millions, except per share data and as noted) Q3 Q2
Earnings (Managed Basis)
Net Interest Income $ 926.7 $ 823.7
Non-Interest Income 852.5 796.3
Total Revenue 1,779.2 1,620.0
Provision for Loan Losses 437.6 379.1
Marketing Expenses 281.9 268.7
Operating Expenses 793.0(2) 721.6
Income Before Taxes 266.7 250.5
Tax Rate 38.0% 38.0%
Net Income $ 165.3 $ 155.3
Common Share Statistics
Basic EPS $ 0.78 $ 0.74
Diluted EPS $ 0.75 $ 0.70
Dividends Per Share $ 0.03 $ 0.03
Book Value Per Share (period end) $ 14.14 $ 13.02
Stock Price Per Share (period end) $ 46.03 $ 60.15
Total Market Capitalization (period end) $ 9,710.1 $12,666.5
Shares Outstanding (period end) 211.0 210.6
Shares Used to Compute Basic EPS 210.8 209.1
Shares Used to Compute Diluted EPS 219.9 221.2
Managed Loan Statistics (period avg.)
Average Loans $ 37,017 $ 33,440
Average Earning Assets $ 39,994 $ 36,180
Average Assets $ 43,363 $ 38,820
Average Equity $ 2,935 $ 2,608
Net Interest Margin 9.27% 9.11%
Risk Adjusted Margin (1) 14.17% 14.23%
Return on Average Assets (ROA) 1.53% 1.60%
Return on Average Equity (ROE) 22.53% 23.83%
Net Charge-Off Rate 3.92% 3.98%
Net Charge-Offs $ 362.7 $ 332.8
Cost Per Account (in dollars) $ 81.03 $ 77.38
Managed Loan Statistics (period end)
Reported Loans $ 17,480 $ 16,327
Securitized Loans 21,009 18,956
Total Loans $ 38,489 $ 35,283
Delinquency Rate (30+ days) 5.20% 4.92%
Number of Accounts (000's) 40,145 38,146
Total Assets $ 44,497 $ 40,587
Capital, Including Preferred Interests $ 3,081.9 $ 2,840.1
Capital to Managed Assets Ratio 6.93% 7.00%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2001 2000
(in millions, except per share data and as noted) Q1 Q4
Earnings (Managed Basis)
Net Interest Income $ 759.3 $ 716.1
Non-Interest Income 747.1 696.5
Total Revenue 1,506.4 1,412.5
Provision for Loan Losses 356.5 329.1
Marketing Expenses 231.2 259.5
Operating Expenses 687.0 617.1
Income Before Taxes 231.6 206.9
Tax Rate 38.0% 38.0%
Net Income $ 143.6 $ 128.3
Common Share Statistics
Basic EPS $ 0.70 $ 0.65
Diluted EPS $ 0.66 $ 0.61
Dividends Per Share $ 0.03 $ 0.03
Book Value Per Share (period end) $ 11.81 $ 9.94
Stock Price Per Share (period end) $ 55.50 $ 65.81
Total Market Capitalization (period end) $11,509.1 $12,989.3
Shares Outstanding (period end) 207.4 197.4
Shares Used to Compute Basic EPS 204.8 197.0
Shares Used to Compute Diluted EPS 217.8 210.4
Managed Loan Statistics (period avg.)
Average Loans $ 30,505 $ 26,377
Average Earning Assets $ 32,983 $ 28,188
Average Assets $ 35,303 $ 30,234
Average Equity $ 2,347 $ 1,865
Net Interest Margin 9.21% 10.16%
Risk Adjusted Margin (1) 14.80% 16.32%
Return on Average Assets (ROA) 1.63% 1.70%
Return on Average Equity (ROE) 24.47% 27.51%
Net Charge-Off Rate 3.75% 3.98%
Net Charge-Offs $ 285.9 $ 262.3
Cost Per Account (in dollars) $ 78.26 $ 78.09
Managed Loan Statistics (period end)
Reported Loans $ 15,572 $ 15,113
Securitized Loans 15,979 14,411
Total Loans $ 31,551 $ 29,524
Delinquency Rate (30+ days) 4.72% 5.23%
Number of Accounts (000's) 36,462 33,774
Total Assets $ 36,749 $ 33,286
Capital, Including Preferred Interests $ 2,547.7 $ 2,061.0
Capital to Managed Assets Ratio 6.93% 6.19%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2000
(in millions, except per share data and as noted) Q3
Earnings (Managed Basis)
Net Interest Income $ 665.1
Non-Interest Income 619.9
Total Revenue 1,285.0
Provision for Loan Losses 269.0
Marketing Expenses 233.2
Operating Expenses 585.8
Income Before Taxes 197.0
Tax Rate 38.0%
Net Income $ 122.1
Common Share Statistics
Basic EPS $ 0.62
Diluted EPS $ 0.58
Dividends Per Share $ 0.03
Book Value Per Share (period end) $ 9.02
Stock Price Per Share (period end) $ 70.06
Total Market Capitalization (period end) $13,783.1
Shares Outstanding (period end) 196.7
Shares Used to Compute Basic EPS 196.3
Shares Used to Compute Diluted EPS 210.1
Managed Loan Statistics (period avg.)
Average Loans $ 23,020
Average Earning Assets $ 24,749
Average Assets $ 27,015
Average Equity $ 1,743
Net Interest Margin 10.75%
Risk Adjusted Margin (1) 17.24%
Return on Average Assets (ROA) 1.81%
Return on Average Equity (ROE) 28.02%
Net Charge-Off Rate 3.80%
Net Charge-Offs $ 218.4
Cost Per Account (in dollars) $ 82.84
Managed Loan Statistics (period end)
Reported Loans $ 12,331
Securitized Loans 11,821
Total Loans $ 24,152
Delinquency Rate (30+ days) 5.32%
Number of Accounts (000's) 29,437
Total Assets $ 28,185
Capital, Including Preferred Interests $ 1,873.8
Capital to Managed Assets Ratio 6.65%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes one-time charges of $38.8 million.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
Sept 30 June 30 Sept 30
2001 2001 2000
Assets:
Cash and due from banks $ 64,884 $ 134,918 $ 81,403
Federal funds sold and resale
agreements 365,652 39,770 12,688
Interest-bearing deposits at
other banks 102,094 62,050 128,377
Cash and cash equivalents 532,630 236,738 222,468
Securities available for sale 2,707,564 2,554,967 1,652,330
Consumer loans 17,479,715 16,326,617 12,331,088
Less: Allowance for loan
losses (727,000) (647,000) (457,000)
Net loans 16,752,715 15,679,617 11,874,088
Premises and equipment, net 740,144 729,525 560,974
Interest receivable 108,868 79,089 93,817
Accounts receivable from
securitizations 1,949,361 1,708,055 1,403,377
Other 722,155 672,338 571,771
Total assets $23,513,437 $21,660,329 $16,378,825
Liabilities:
Interest-bearing deposits $11,075,499 $10,029,736 $ 6,323,924
Other borrowings 1,810,208 2,320,734 2,820,533
Senior notes 5,462,025 4,757,481 4,119,101
Interest payable 148,931 151,429 109,842
Other 2,033,481 1,659,412 1,230,037
Total liabilities 20,530,144 18,918,792 14,603,437
Stockholders' Equity:
Common stock 2,121 2,118 1,997
Paid-in capital, net 1,154,211 1,089,582 559,595
Retained earnings and cumulative
other comprehensive income 1,872,520 1,695,468 1,322,744
Less: Treasury stock, at cost (45,559) (45,631) (108,948)
Total stockholders' equity 2,983,293 2,741,537 1,775,388
Total liabilities and
stockholders' equity $23,513,437 $21,660,329 $16,378,825
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
Sept 30 June 30
2001 2001
Interest Income:
Consumer loans, including fees $ 667,335 $ 620,866
Securities available for sale 37,032 33,942
Other 18,323 2,408
Total interest income 722,690 657,216
Interest Expense:
Deposits 161,411 155,479
Other borrowings 43,233 43,825
Senior notes 90,225 87,842
Total interest expense 294,869 287,146
Net interest income 427,821 370,070
Provision for loan losses 230,433 202,900
Net interest income after provision for loan losses 197,388 167,170
Non-Interest Income:
Servicing and securitizations 618,633 572,591
Service charges and other customer-related fees 428,855 407,412
Interchange 96,702 93,673
Total non-interest income 1,144,190 1,073,676
Non-Interest Expense:
Salaries and associate benefits 349,487 342,076
Marketing 281,910 268,709
Communications and data processing 92,735 72,906
Supplies and equipment 77,497 74,780
Occupancy 32,151 31,349
Other 241,117 200,496
Total non-interest expense 1,074,897 990,316
Income before income taxes 266,681 250,530
Income taxes 101,337 95,203
Net income $ 165,344 $ 155,327
Basic earnings per share $ 0.78 $ 0.74
Diluted earnings per share $ 0.75 $ 0.70
Dividends paid per share $ 0.03 $ 0.03
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
Sept 30
2000
Interest Income:
Consumer loans, including fees $ 606,872
Securities available for sale 23,367
Other 1,474
Total interest income 631,713
Interest Expense:
Deposits 90,197
Other borrowings 55,967
Senior notes 72,679
Total interest expense 218,843
Net interest income 412,870
Provision for loan losses 193,409
Net interest income after provision for loan losses 219,461
Non-Interest Income:
Servicing and securitizations 307,343
Service charges and other customer-related fees 424,087
Interchange 65,039
Total non-interest income 796,469
Non-Interest Expense:
Salaries and associate benefits 264,171
Marketing 233,188
Communications and data processing 78,064
Supplies and equipment 66,325
Occupancy 30,721
Other 146,488
Total non-interest expense 818,957
Income before income taxes 196,973
Income taxes 74,850
Net income $ 122,123
Basic earnings per share $ 0.62
Diluted earnings per share $ 0.58
Dividends paid per share $ 0.03
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Nine Months Ended
Sept 30 Sept 30
2001 2000
Interest Income:
Consumer loans, including fees $1,906,090 $1,607,695
Securities available for sale 99,208 70,946
Other 24,481 5,026
Total interest income 2,029,779 1,683,667
Interest Expense:
Deposits 463,851 205,936
Other borrowings 130,958 144,335
Senior notes 261,360 203,071
Total interest expense 856,169 553,342
Net interest income 1,173,610 1,130,325
Provision for loan losses 683,947 470,944
Net interest income after provision for loan losses 489,663 659,381
Non-Interest Income:
Servicing and securitizations 1,735,015 860,741
Service charges and other customer-related fees 1,242,401 1,140,025
Interchange 265,226 161,570
Total non-interest income 3,242,642 2,162,336
Non-Interest Expense:
Salaries and associate benefits 1,017,279 735,625
Marketing 781,819 646,686
Communications and data processing 240,933 221,819
Supplies and equipment 225,880 176,766
Occupancy 94,802 83,263
Other 622,747 406,982
Total non-interest expense 2,983,460 2,271,141
Income before income taxes 748,845 550,576
Income taxes 284,561 209,219
Net income $ 464,284 $ 341,357
Basic earnings per share $ 2.23 $ 1.73
Diluted earnings per share $ 2.11 $ 1.63
Dividends paid per share $ 0.08 $ 0.08
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 9/30/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $37,017,405 $1,437,367 15.53%
Securities available for sale 2,645,982 37,032 5.60
Other 330,863 2,646 3.20
Total earning assets $39,994,250 $1,477,045 14.77%
Interest-bearing liabilities:
Deposits $10,537,193 $ 161,411 6.13%
Other borrowings 3,103,263 43,233 5.57
Senior notes 5,280,860 90,225 6.83
Securitization liability 19,472,058 255,508 5.25
Total interest-bearing liabilities $38,393,374 $ 550,377 5.73%
Net interest spread 9.04%
Interest income to average earning assets 14.77%
Interest expense to average earning assets 5.50
Net interest margin 9.27%
(1) The information in this table reflects the adjustment to add back
the effect of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 6/30/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $33,439,690 $1,307,819 15.64%
Securities available for sale 2,344,047 33,942 5.79
Other 396,659 2,408 2.43
Total earning assets $36,180,396 $1,344,169 14.86%
Interest-bearing liabilities:
Deposits $ 9,685,882 $ 155,479 6.42%
Other borrowings 2,915,245 43,825 6.01
Senior notes 4,899,045 87,842 7.17
Securitization liability 16,741,276 233,322 5.57
Total interest-bearing liabilities $34,241,448 $ 520,468 6.08%
Net interest spread 8.78%
Interest income to average earning assets 14.86%
Interest expense to average earning assets 5.75
Net interest margin 9.11%
(1) The information in this table reflects the adjustment to add back
the effect of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 9/30/00
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $23,020,158 $1,039,473 18.06%
Securities available for sale 1,557,088 23,367 6.00
Other 171,881 1,474 3.43
Total earning assets $24,749,127 $1,064,314 17.20%
Interest-bearing liabilities:
Deposits $ 5,787,748 $ 90,197 6.23%
Other borrowings 3,084,407 55,967 7.26
Senior notes 4,139,665 72,679 7.02
Securitization liability 10,908,397 180,412 6.62
Total interest-bearing liabilities $23,920,217 $ 399,255 6.68%
Net interest spread 10.52%
Interest income to average earning assets 17.20%
Interest expense to average earning assets 6.45
Net interest margin 10.75%
(1) The information in this table reflects the adjustment to add back
the effect of securitized loans.
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SOURCE Capital One Financial Corporation
CONTACT: Paul Paquin, V.P., Investor Relations, +1-703-205-1039; or Tatiana Stead, Corporate Media, +1-703-205-1070, both of Capital One Financial Corporation/