Capital One Reports Record First Quarter Earnings
FALLS CHURCH, Va., April 15 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced record first quarter 1999 earnings of $82.4 million, or $1.18 per share, versus earnings of $72.7 million, or $1.04 per share, for the fourth quarter of 1998 and $65.7 million, or $.96 per share, for the comparable period in the prior year.
"Capital One enjoyed another quarter of record earnings, fueled by record revenues and exceptional credit quality," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "And we continued our rapid growth trajectory, growing by more than one million customers for the third consecutive quarter."
The managed net charge-off rate decreased significantly to 3.93 percent for the first quarter of 1999 versus 4.51 percent for the fourth quarter of 1998 and 6.04 percent for the comparable period in the prior year. The managed delinquency rate (30+ days) decreased to 4.56 percent as of March 31, 1999, compared with 4.70 percent as of December 31, 1998.
"Our charge-off rate has declined for the sixth straight quarter and is the lowest among industry leaders, as well as the lowest we've seen in three years," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "Our improving credit picture helped to boost our risk adjusted margin to a record 14.42 percent."
The managed net interest margin increased to a record 10.59 percent in the first quarter of 1999 versus 9.48 percent in the fourth quarter of 1998 and 10.40 percent in the same period of 1998. The increased margin, higher non- interest income, and the aforementioned decrease in net charge-offs each contributed to the risk adjusted margin of 14.42 percent, which compares to 12.21 percent for the fourth quarter of 1998.
During the first quarter of 1999, the Company added 1.3 million net new accounts, bringing total accounts to 18.0 million. First quarter 1999 revenue, defined as managed net interest income and non-interest income, rose to $873 million versus $771 million in the fourth quarter of 1998 and $637 million for the comparable period in the prior year. For the quarter, Capital One's managed consumer loan balances increased by $49 million to $17.4 billion. This modest increase compares favorably to the typical first quarter decline that results after repricings and seasonal paydown.
Marketing expense for the first quarter of 1999 increased to a record $176 million versus $159 million in the fourth quarter of 1998 and $75 million in the comparable period of the prior year. Other non-interest expenses (excluding marketing) for the first quarter of 1999 were $374 million versus $309 million for the fourth quarter of 1998 and $214 million in the comparable period of the prior year. Operating expenses continue to reflect increased investment in staff levels associated with the Company's growing account base and the impact of expansion and diversification into new businesses and markets.
The allowance for loan losses increased by $20 million during the first quarter to $251 million or 3.46 percent of on-balance sheet receivables as of March 31, 1999, compared to 3.75 percent as of December 31, 1998. Capital ratios were strong as of March 31, 1999, at 13.96 percent of reported assets and 6.98 percent of managed assets.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation (www.CapitalOne.com) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products. Capital One's subsidiaries collectively had 18.0 million customers and $17.4 billion in managed loans outstanding as of March 31, 1999, and are among the largest providers of MasterCard and Visa credit cards in the world. Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 Index. Capital One was recently ranked #41 in Fortune's list of "Best Companies to Work For" and #15 best performer in Business Week's rating of the S&P 500.
(Note: This release and financial information are available on the Internet on Capital One's home page (address: http://www.capitalone.com). Click on "Investor Center" to view/download the release and financial information.)
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
99 98
(in millions, except per share data and as noted) Q1 Q4
Earnings (Managed Basis)
Net Interest Income $ 515.7 $ 443.4
Non-Interest Income 357.6 327.9
Total Revenue 873.3 771.3
Provision for Loan Losses 190.5 186.3
Marketing Expenses 176.1 159.0
Operating Expenses 373.9 308.9
Income Before Taxes 132.9 117.2
Tax Rate 38.0% 38.0%
Net Income $ 82.4 $ 72.7
Common Share Statistics
Basic EPS $ 1.25 $ 1.11
Diluted EPS $ 1.18 $ 1.04
Dividends Per Share $ 0.08 $ 0.08
Book Value Per Share (period end) $ 20.06 $ 19.35
Stock Price Per Share (period end) $ 151.00 $ 115.00
Total Market Capitalization (period end) $ 9,929.1 $ 7,551.1
Shares Outstanding (period end) 65.8 65.7
Shares Used to Compute Basic EPS 65.7 65.7
Shares Used to Compute Diluted EPS 70.0 69.7
Managed Loan Statistics (period avg.)
Average Loans $ 17,436 $ 16,547
Average Earning Assets $ 19,482 $ 18,702
Average Assets $ 20,722 $ 19,944
Average Equity $ 1,302 $ 1,212
Net Interest Margin 10.59% 9.48%
Risk Adjusted Margin(1) 14.42% 12.21%
Return on Average Assets (ROA) 1.59% 1.46%
Return on Average Equity (ROE) 25.32% 23.99%
Net Charge-Off Rate 3.93% 4.51%
Net Charge-Offs $ 171.1 $ 186.5
Managed Loan Statistics (period end)
Reported Loans $ 7,246 $ 6,157
Securitized Loans 10,198 11,238
Total Loans $ 17,444 $ 17,395
Delinquency Rate (30+ days) 4.56% 4.70%
Number of Accounts (000's) 18,022 16,706
Total Assets $ 20,318 $ 20,619
Capital, Including Preferred Interests $ 1,417.2 $1,368.3
Capital to Managed Assets Ratio 6.98% 6.64%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
98 98
(in millions, except per share data and as noted) Q3 Q2
Earnings (Managed Basis)
Net Interest Income $ 440.8 $ 399.5
Non-Interest Income 264.6 253.2
Total Revenue 705.4 652.7
Provision for Loan Losses 208.9 213.1
Marketing Expenses 126.5 85.8
Operating Expenses 257.0 246.0
Income Before Taxes 112.9 107.8
Tax Rate 38.0% 38.0%
Net Income $ 70.0 $ 66.9
Common Share Statistics
Basic EPS $ 1.07 $ 1.02
Diluted EPS $ 1.00 $ 0.96
Dividends Per Share $ 0.08 $ 0.08
Book Value Per Share (period end) $ 17.83 $ 16.31
Stock Price Per Share (period end) $ 103.06 $ 124.19
Total Market Capitalization (period end) $ 6,758.0 $ 8,139.0
Shares Outstanding (period end) 65.6 65.5
Shares Used to Compute Basic EPS 65.7 65.5
Shares Used to Compute Diluted EPS 70.0 69.5
Managed Loan Statistics (period avg.)
Average Loans $ 15,746 $ 14,417
Average Earning Assets $ 17,372 $ 16,242
Average Assets $ 18,597 $ 17,296
Average Equity $ 1,149 $ 1,037
Net Interest Margin 10.15% 9.84%
Risk Adjusted Margin(1) 11.68% 10.83%
Return on Average Assets (ROA) 1.51% 1.55%
Return on Average Equity (ROE) 24.36% 25.78%
Net Charge-Off Rate 5.03% 5.91%
Net Charge-Offs $ 198.1 $ 213.0
Managed Loan Statistics (period end)
Reported Loans $ 5,667 $ 5,140
Securitized Loans 10,671 9,829
Total Loans $ 16,338 $ 14,969
Delinquency Rate (30+ days) 4.90% 5.14%
Number of Accounts (000's) 14,907 13,588
Total Assets $ 19,211 $ 17,462
Capital, Including Preferred Interests $ 1,267.0 $ 1,167.0
Capital to Managed Assets Ratio 6.60% 6.68%
(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
98
(in millions, except per share data and as noted) Q1
Earnings (Managed Basis)
Net Interest Income $ 416.7
Non-Interest Income 220.7
Total Revenue 637.4
Provision for Loan Losses 242.5
Marketing Expenses 75.0
Operating Expenses 213.9
Income Before Taxes 106.0
Tax Rate 38.0%
Net Income $ 65.7
Common Share Statistics
Basic EPS $ 1.00
Diluted EPS $ 0.96
Dividends Per Share $ 0.08
Book Value Per Share (period end) $ 15.08
Stock Price Per Share (period end) $ 78.88
Total Market Capitalization (period end) $ 5,163.7
Shares Outstanding (period end) 65.5
Shares Used to Compute Basic EPS 65.4
Shares Used to Compute Diluted EPS 68.4
Managed Loan Statistics (period avg.)
Average Loans $ 14,097
Average Earning Assets $ 16,020
Average Assets $ 16,834
Average Equity $ 950
Net Interest Margin 10.40%
Risk Adjusted Margin(1) 10.60%
Return on Average Assets (ROA) 1.56%
Return on Average Equity (ROE) 27.66%
Net Charge-Off Rate 6.04%
Net Charge-Offs $ 212.7
Managed Loan Statistics (period end)
Reported Loans $ 4,748
Securitized Loans 9,254
Total Loans $ 14,002
Delinquency Rate (30+ days) 5.75%
Number of Accounts (000's) 12,674
Total Assets $ 16,464
Capital, Including Preferred Interests $ 1,085.2
Capital to Managed Assets Ratio 6.59%
(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)
March 31
1999
Assets:
Cash and due from banks $ 13,276
Federal funds sold and resale agreements
Interest-bearing deposits at other banks 34,041
Cash and cash equivalents 47,317
Securities available for sale 1,770,398
Consumer loans 7,245,847
Less: Allowance for loan losses (251,000)
Net loans 6,994,847
Premises and equipment, net 283,159
Interest receivable 66,184
Accounts receivable from securitizations 637,563
Other 352,159
Total assets $ 10,151,627
Liabilities:
Interest-bearing deposits $ 2,204,162
Other borrowings 1,171,440
Senior notes 4,610,049
Deposit notes
Interest payable 87,501
Other 661,279
Total liabilities 8,734,431
Guaranteed Preferred Beneficial Interests
In Capital One Bank's Floating Rate Junior
Subordinated Capital Income Securities 97,984
Stockholders' Equity:
Common stock 666
Paid-in capital, net 606,929
Retained earnings and cumulative
other comprehensive income 779,625
Less:Treasury stock, at cost (68,008)
Total stockholders' equity 1,319,212
Total liabilities and stockholders' equity $ 10,151,627
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
December 31
1998
Assets:
Cash and due from banks $ 15,974
Federal funds sold and resale agreements 261,800
Interest-bearing deposits at other banks 22,393
Cash and cash equivalents 300,167
Securities available for sale 1,796,787
Consumer loans 6,157,111
Less: Allowance for loan losses (231,000)
Net loans 5,926,111
Premises and equipment, net 242,147
Interest receivable 52,917
Accounts receivable from securitizations 833,143
Other 268,131
Total assets $ 9,419,403
Liabilities:
Interest-bearing deposits $ 1,999,979
Other borrowings 1,644,279
Senior notes 3,739,393
Deposit notes
Interest payable 91,637
Other 575,788
Total liabilities 8,051,076
Guaranteed Preferred Beneficial Interests
In Capital One Bank's Floating Rate Junior
Subordinated Capital Income Securities 97,921
Stockholders' Equity:
Common stock 666
Paid-in capital, net 599,498
Retained earnings and cumulative
other comprehensive income 740,493
Less:Treasury stock, at cost (70,251)
Total stockholders' equity 1,270,406
Total liabilities and stockholders' equity $ 9,419,403
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
March 31
1998
Assets:
Cash and due from banks $ 2,983
Federal funds sold and resale agreements 105,000
Interest-bearing deposits at other banks 34,077
Cash and cash equivalents 142,060
Securities available for sale 1,513,398
Consumer loans 4,748,186
Less: Allowance for loan losses (213,000)
Net loans 4,535,186
Premises and equipment, net 163,757
Interest receivable 44,213
Accounts receivable from securitizations 696,599
Other 128,689
Total assets $ 7,223,902
Liabilities:
Interest-bearing deposits $ 1,160,850
Other borrowings 723,614
Senior notes 3,464,176
Deposit notes 299,996
Interest payable 67,544
Other 422,480
Total liabilities 6,138,660
Guaranteed Preferred Beneficial Interests
In Capital One Bank's Floating Rate Junior
Subordinated Capital Income Securities 97,727
Stockholders' Equity:
Common stock 666
Paid-in capital, net 543,179
Retained earnings and cumulative
other comprehensive income 488,075
Less: Treasury stock, at cost (44,405)
Total stockholders' equity 987,515
Total liabilities and stockholders' equity $ 7,223,902
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
March 31 December 31
1999 1998
Interest Income:
Consumer loans, including fees $ 325,067 $ 269,016
Federal funds sold and resale agreements 1,487 4,389
Other 26,517 25,542
Total interest income 353,071 298,947
Interest Expense:
Deposits 23,942 23,901
Other borrowings 23,837 27,420
Senior and deposit notes 72,495 64,444
Total interest expense 120,274 115,765
Net interest income 232,797 183,182
Provision for loan losses 74,586 54,580
Net interest income after provision for loan losses158,211 128,602
Non-Interest Income:
Servicing and securitizations 271,954 248,683
Service charges and other fees 222,453 179,695
Interchange 30,219 28,098
Total non-interest income 524,626 456,476
Non-Interest Expense:
Salaries and associate benefits 179,194 138,901
Marketing 176,088 158,972
Communications and data processing 58,072 47,602
Supplies and equipment 36,704 29,702
Occupancy 13,914 12,488
Other 85,996 80,205
Total non-interest expense 549,968 467,870
Income before income taxes 132,869 117,208
Income taxes 50,490 44,539
Net income $ 82,379 $ 72,669
Basic earnings per share $ 1.25 $ 1.11
Diluted earnings per share $ 1.18 $ 1.04
Dividends paid per share $ 0.08 $ 0.08
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
March 31
1998
Interest Income:
Consumer loans, including fees $ 229,638
Federal funds sold and resale agreements 5,078
Other 23,326
Total interest income 258,042
Interest Expense:
Deposits 14,138
Other borrowings 16,053
Senior and deposit notes 63,029
Total interest expense 93,220
Net interest income 164,822
Provision for loan losses 85,866
Net interest income after provision for loan losses 78,956
Non-Interest Income:
Servicing and securitizations 168,655
Service charges and other fees 132,445
Interchange 14,799
Total non-interest income 315,899
Non-Interest Expense:
Salaries and associate benefits 107,953
Marketing 75,000
Communications and data processing 29,363
Supplies and equipment 22,615
Occupancy 10,644
Other 43,308
Total non-interest expense 288,883
Income before income taxes 105,972
Income taxes 40,269
Net income $ 65,703
Basic earnings per share $ 1.00
Diluted earnings per share $ 0.96
Dividends paid per share $ 0.08
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed(1) Quarter Ended 3/31/99
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $ 17,435,530 $745,643 17.11%
Federal funds sold and
resale agreements 126,493 1,487 4.70
Other 1,920,191 26,517 5.52
Total earning assets $ 19,482,214 $773,647 15.88%
Interest-bearing liabilities:
Deposits $ 2,101,086 $ 23,942 4.56%
Other borrowings 1,680,026 23,837 5.68
Senior and deposit notes 4,189,839 72,495 6.92
Securitization liability 10,570,532 137,720 5.21
Total interest-bearing liabilities $ 18,541,483 $257,994 5.57%
Net interest spread 10.31%
Interest income to average earning assets 15.88%
Interest expense to average earning assets 5.29
Net interest margin 10.59%
(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 12/31/98
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $ 16,546,962 $689,907 16.68%
Federal funds sold and
resale agreements 343,987 4,389 5.10
Other 1,810,761 25,542 5.64
Total earning assets $ 18,701,710 $719,838 15.40%
Interest-bearing liabilities:
Deposits $ 1,885,960 $ 23,901 5.07%
Other borrowings 1,605,798 27,420 6.83
Senior and deposit notes 3,741,707 64,444 6.89
Securitization liability 10,751,360 160,625 5.98
Total interest-bearing liabilities $ 17,984,825 $276,390 6.15%
Net interest spread 9.25%
Interest income to average earning assets 15.40%
Interest expense to average earning assets 5.92
Net interest margin 9.48%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed(1) Quarter Ended 3/31/98
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $ 14,097,475 $615,053 17.45%
Federal funds sold and
resale agreements 362,680 5,078 5.60
Other 1,559,732 23,326 5.98
Total earning assets $ 16,019,887 $643,457 16.06%
Interest-bearing liabilities:
Deposits $ 1,266,064 $ 14,138 4.47%
Other borrowings 1,077,082 16,053 5.96
Senior and deposit notes 3,683,113 63,029 6.85
Securitization liability 9,297,590 133,526 5.74
Total interest-bearing liabilities $ 15,323,849 $226,746 5.92%
Net interest spread 10.14%
Interest income to average earning assets 16.06%
Interest expense to average earning assets 5.66
Net interest margin 10.40%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
SOURCE Capital One Financial Corporation