Capital One Reports Record Third Quarter Results
Raises 2002 Earnings per Share Growth Target to 35% Maintains EPS Target for 2003
Capital One Financial Corporation (NYSE: COF) today announced record earnings for the third quarter of 2002 of $258.8 million, or $1.13 per fully diluted share, versus earnings of $165.3 million, or $0.75 per share, for the comparable period in the prior year. This represents a 51 percent year-over-year increase in earnings per share. Earnings in the second quarter of 2002 were $213.1 million, or $0.92 per fully diluted share. The company also announced that it was raising its target for earnings per share growth for 2002 to 35 percent, up from the previous guidance of 30 percent. The company now expects to report earnings per share of approximately $3.93 for the year ending December 31, 2002. Also, the company maintained its 2003 earnings target at approximately $4.55 per share, which represents a 15 percent increase over the company's expected 2002 earnings per share, and reaffirmed its long-term earnings per share growth target of 20 percent."Capital One continues to deliver strong financial performance despite the challenging environment," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "Assets grew by $3.6 billion in the quarter, profits are up over 50 percent over the same quarter of 2001, and credit quality performed as expected."
During the quarter, the company changed its financial statement presentation of recoveries for charged-off loan balances. The change was made to comply with the draft guidelines that were recently published by the Federal Financial Institutions Examination Council with respect to credit card industry account management. Under the company's new presentation, recoveries of the principal portion of charged-off accounts continue to be treated as a reduction of current period charge-offs. Recoveries of finance charges and fees are now reported as revenue instead of a reduction of charge-offs, and are reflected in the appropriate income statement line items.
The change in the treatment of recoveries also resulted in a change to the recoveries estimate used to calculate the company's allowance for loan losses and its estimate for uncollectable finance charge and fee revenue. This change in estimate increased the provision for loan losses by $133 million and increased the amount of finance charges and fees deemed collectible by $83 million. Recoveries recorded in prior period financial statements have been reclassified to conform with the new financial statement presentation. The accompanying tables illustrate the overall effects of the new recoveries presentation on income statement items as well as key statistics including charge-off rate, net interest margin, and revenue margin.
The company increased its allowance for loan losses by $358 million in the third quarter including $133 million due to the new recoveries presentation. The remainder of the allowance increase largely reflected growth in reported loans during the period.
The managed net charge-off rate decreased to 4.96 percent for the third quarter of 2002 compared with 4.98 percent for the second quarter of 2002. Fifty-seven basis points of the third quarter charge-off rate and 62 basis points of the second quarter charge-off rate was due to the change in financial statement presentation of recoveries. The managed delinquency rate (30+ days) increased to 5.36 percent as of September 30, 2002, compared with 4.54 percent as of June 30, 2002 and 5.20 percent at September 30, 2001.
Charge-offs are expected to rise in the fourth quarter of this year and the early part of next year due to the seasoning of subprime assets added in the fourth quarter of 2001 and early 2002, as well as the slowing of loan growth. The company expects that its managed charge-off rate will rise to the low-6 percent range in the fourth quarter (This is consistent with previous guidance that the fourth quarter charge-offs would be in the mid-5 percent range, prior to recoveries reclassification). The company expects charge-offs to rise to the high-6 percent range in the first half of 2003 and then decline somewhat in the second half of 2003.
Third quarter 2002 revenue, defined as managed net interest income and non-interest income, rose to $2.6 billion from $2.4 billion in the second quarter of 2002. The company's managed consumer loan balances increased by $3.7 billion in the third quarter to $56.9 billion. The company's managed revenue margin increased by 36 basis points to 17.49 percent in the third quarter of 2002 from 17.13 percent in the second quarter of 2002. This increase reflects both the one time and ongoing impacts detailed in the accompanying tables.
Marketing expense for the third quarter of 2002 was $185.8 million, down from $320.4 million in the second quarter of 2002. Reflecting the lower marketing expense, Capital One's accounts declined to 48.2 million from 48.6 million at the end of the second quarter. Other non-interest expenses (excluding marketing) for the third quarter of 2002 were $965.2 million versus $833.2 million for the second quarter of 2002. Annualized operating expenses per account increased to $80 for the third quarter of 2002 from $70 in the prior quarter. The company incurred a number of one-time expenses totaling $110 million, or $9 in annualized operating costs per account.
"The lower marketing investment in the third quarter reflects our return to a more normal level of loan growth," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "We expect marketing to increase in 2003 as we take advantage of the attractive opportunities that we see in all major areas of our business including US card, installment and auto loans, and our international activities. This quarter clearly demonstrates our ability to grow our business and profitability on a stronger, more diversified business platform."
The company cautioned that its current expectations for fourth-quarter 2002 and full-year 2003 earnings, and future growth and charge-off expectations, 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; changes in regulation; 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, 2001.
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 48.2 million accounts and $56.9 billion in managed loans outstanding as of September 30, 2002. 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.
Note: This release, financial information and a live Webcast of today's 5:00pm (EDT) analyst conference call is accessible on the Internet on Capital One's home page (http://www.capitalone.com ). Choose "About Capital One" to access the Investor Center to view and download the earnings press release and other financial information.
CAPITAL ONE FINANCIAL CORPORATION
Impact of the Recoveries Reclassification
For the Three Months Ended September 30, 2002
(in thousands)(unaudited)
After
Reclassification, Impact of
Prior to Recoveries Prior to Change Change in Q3 2002
Recoveries Reclassifi- in Estimate Estimate Managed
Change cation
Managed:
Net
interest
income $1,349,731 $47,167 $1,396,898 $38,376 $1,435,274
Non-interest
Income 1,113,543 31,210 1,144,753 44,358 1,189,111
Total
revenue 2,463,274 78,377 2,541,651 82,734 2,624,385
Provision
for loan
losses 844,084 78,377 922,461 133,428 1,055,889
Marketing 185,795 185,795 185,795
Operations
costs 965,225 965,225 965,225
Income before
income taxes 468,170 - 468,170 (50,694) 417,476
Income taxes 177,905 177,905 (19,264) 158,641
Net income $290,265 $- $290,265 $ (31,430) $258,835
Diluted EPS $1.27 $1.27 $1.13
Revenue Margin 16.42% 16.94% 17.49%
Net Interest
Margin 9.00% 9.31% 9.57%
Risk Adjusted
Margin 12.37% 12.37% 12.92%
Charge-off
Rate 4.39% 4.96% 4.96%
Delinquency
Rate 5.22% 5.22% 5.36%
Allowance to
Reported Loans 5.20% 5.20% 5.68%
During the third quarter, the company changed its financial statement
presentation of recoveries for charged-off loans. The change was made in
response to draft guidelines that were recently published by the Federal
Financial Institutions Examination Council with respect to credit card account
management. Previously, the company recognized all recoveries of charged-off
loans in the allowance for loan losses and provision for loan losses. The
company now treats the portion of recoveries related to finance charges and fees
as revenue. All prior-period recoveries have been reclassified to conform to the
current financial statement presentation of recoveries.
In the third quarter, the change in the treatment of recoveries also resulted in a change to the recoveries estimate used to calculate the company's allowance for loan losses and its finance charge and fee revenue.
The table above and the following tables illustrate the overall effects of the change in the treatment of recoveries on income statement items as well as key statistics.
Capital One Financial Corporation
Impact of Recoveries Reclassification -- Managed
(in thousands)(unaudited)
2002
Third Quarter Second Quarter First Quarter
Managed -- Prior to
Reclassification
Net Interest Income $1,349,731 $1,185,151 $1,120,868
Non-Interest Income $1,113,543 $1,113,853 $959,881
Provision for Loan
Losses $844,084 $801,619 $617,601
Net Interest Margin 9.00% 8.53% 8.87%
Revenue Margin 16.42% 16.55% 16.47%
Net Charge-offs $607,300 $559,131 $466,683
Net Charge-off Rate 4.39% 4.36% 4.00%
Managed -- After
Reclassified
Net Interest Income $1,435,274 $1,234,307 $1,172,536
Non-Interest Income $1,189,111 $1,145,014 $990,161
Provision for Loan
Losses $1,055,889 $881,936 $699,549
Net Interest Margin 9.57% 8.89% 9.28%
Revenue Margin 17.49% 17.13% 17.12%
Net Charge-offs $685,677 $639,448 $548,631
Net Charge-off Rate 4.96% 4.98% 4.70%
Change in Managed
Net Interest Income $85,543 $49,156 $51,668
Non-Interest Income $75,568 $31,161 $30,280
Provision for Loan
Losses $211,805 $80,317 $81,948
Net Interest Margin 0.57%(1) 0.35% 0.41%
Revenue Margin 1.07%(2) 0.58% 0.65%
Net Charge-offs $78,377 $80,317 $81,948
Net Charge-off Rate 0.57% 0.62% 0.70%
(1) 26 basis point increase in net interest margin relates to the one-time
impact of the change in estimate.
(2) 55 basis point increase in revenue margin relates to the one-time impact of the change in estimate.
2001
Fourth Third Second First
Quarter Quarter Quarter Quarter
Managed -- Prior to
Reclassification
Net Interest Income $982,943 $926,668 $823,701 $759,308
Non-Interest Income $941,524 $852,504 $796,273 $747,096
Provision for Loan Losses $563,325 $437,594 $379,128 $356,523
Net Interest Margin 8.68% 9.27% 9.11% 9.21%
Revenue Margin 16.99% 17.79% 17.91% 18.27%
Net Charge-offs $456,861 $362,744 $332,815 $285,950
Net Charge-off Rate 4.42% 3.92% 3.98% 3.75%
Managed -- After
Reclassified
Net Interest Income $1,021,717 $962,122 $858,196 $791,782
Non-Interest Income $963,376 $872,115 $814,315 $763,971
Provision for Loan
Losses $623,951 $492,659 $431,665 $405,872
Net Interest Margin 9.02% 9.62% 9.49% 9.60%
Revenue Margin 17.53% 18.35% 18.49% 18.87%
Net Charge-offs $517,487 $417,809 $385,352 $335,299
Net Charge-off Rate 5.01% 4.51% 4.61% 4.40%
Change in Managed
Net Interest Income $38,774 $35,454 $34,495 $32,474
Non-Interest Income $21,852 $19,611 $18,042 $16,875
Provision for Loan Losses $60,626 $55,065 $52,537 $49,349
Net Interest Margin 0.34% 0.35% 0.38% 0.39%
Revenue Margin 0.54% 0.55% 0.58% 0.60%
Net Charge-offs $60,626 $55,065 $52,537 $49,349
Net Charge-off Rate 0.59% 0.59% 0.63% 0.65%
(1) 26 basis point increase in net interest margin relates to the one-time
impact of the change in estimate.
(2) 55 basis point increase in revenue margin relates to the one-time impact of the change in estimate.
Capital One Financial Corporation
Impact of Recoveries Reclassification -- Reported
(in thousands)(unaudited)
2002
Third Quarter Second Quarter First Quarter
Reported -- Prior to
Reclassification
Net Interest Income $663,596 $629,577 $584,107
Non-Interest Income $1,463,043 $1,369,586 $1,226,250
Provision for Loan
Losses $507,449 $501,780 $347,212
Net Interest Margin 8.18% 8.21% 8.56%
Revenue Margin 26.21% 26.07% 26.53%
Net Charge-offs $270,665 $259,292 $196,295
Net Charge-off Rate 4.08% 4.09% 3.50%
Reported -- After
Reclassified
Net Interest Income $722,429 $654,412 $611,238
Non-Interest Income $1,520,178 $1,384,812 $1,241,524
Provision for Loan
Losses $674,111 $541,841 $389,617
Net Interest Margin 8.91% 8.53% 8.96%
Revenue Margin 27.64% 26.59% 27.15%
Net Charge-offs $303,899 $299,353 $238,700
Net Charge-off Rate 4.58% 4.72% 4.26%
Change in Reported
Net Interest Income $58,833 $24,835 $27,131
Non-Interest Income $57,135 $15,226 $15,274
Provision for Loan
Losses $166,662 $40,061 $42,405
Net Interest Margin 0.73%(1) 0.32% 0.40%
Revenue Margin 1.43%(2) 0.52% 0.62%
Net Charge-offs $33,234 $40,061 $42,405
Net Charge-off Rate 0.50% 0.63% 0.76%
(1) 47 basis point increase in net interest margin relates to the one- time
impact of the change in estimate.
(2) 102 basis point increase in revenue margin relates to the one-time impact of the change in estimate.
2001
Fourth Third Second First
Quarter Quarter Quarter Quarter
Reported -- Prior to
Reclassification
Net Interest Income $489,780 $427,821 $370,070 $375,719
Non-Interest Income $1,177,251 $1,144,190 $1,073,676 $1,024,776
Provision for Loan
Losses $305,889 $230,433 $202,900 $250,614
Net Interest Margin 8.09% 8.09% 7.63% 8.36%
Revenue Margin 27.55% 29.73% 29.76% 31.14%
Net Charge-offs $199,426 $155,584 $156,586 $180,041
Net Charge-off Rate 4.11% 3.55% 3.76% 4.64%
Reported -- After
Reclassified
Net Interest Income $511,768 $449,058 $392,008 $397,308
Non-Interest Income $1,189,015 $1,155,421 $1,084,255 $1,035,071
Provision for Loan Losses $339,641 $262,901 $235,417 $282,498
Net Interest Margin 8.46% 8.49% 8.08% 8.84%
Revenue Margin 28.10% 30.34% 30.43% 31.85%
Net Charge-offs $233,178 $188,052 $189,103 $211,925
Net Charge-off Rate 4.81% 4.29% 4.54% 5.47%
Change in Reported
Net Interest Income $21,988 $21,237 $21,938 $21,589
Non-Interest Income $11,764 $11,231 $10,579 $10,295
Provision for Loan
Losses $33,752 $32,468 $32,517 $31,884
Net Interest Margin 0.36% 0.40% 0.45% 0.48%
Revenue Margin 0.56% 0.61% 0.67% 0.71%
Net Charge-offs $33,752 $32,468 $32,517 $31,884
Net Charge-off Rate 0.70% 0.74% 0.78% 0.83%
(1) 47 basis point increase in net interest margin relates to the one-time
impact of the change in estimate.
(2) 102 basis point increase in revenue margin relates to the one-time impact of the change in estimate.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
(in millions,
except per share 2002 2002 2002 2001 2001
data and as noted) Q3 Q2 Q1 Q4 Q3
Earnings (Managed Basis)
Net Interest Income $1,435.3 $1,234.3 $1,172.5 $1,021.7 $962.1
Non-Interest Income 1,189.1 1,145.0 990.2 963.4 872.1
Total Revenue 2,624.4 2,379.3 2,162.7 1,985.1 1,834.2
Provision for
Loan Losses 1,055.9 881.9 699.5 624.0 492.7
Marketing Expenses 185.8 320.4 353.5 301.2 281.9
Operating Expenses 965.2(2) 833.2 806.4 773.4 793.0(2)
Income Before Taxes 417.5 343.7 303.3 286.6 266.7
Tax Rate 38.0% 38.0% 38.0% 38.0% 38.0%
Net Income $258.8 $213.1 $188.0 $177.7 $165.3
Common Share Statistics
Basic EPS $1.17 $0.97 $0.86 $0.83 $0.78
Diluted EPS $1.13 $0.92 $0.83 $0.80 $0.75
Dividends Per Share $0.03 $0.03 $0.03 $0.03 $0.03
Book Value Per Share
(period end) $19.55 $18.13 $16.69 $15.33 $14.14
Stock Price Per Share
(period end) $34.92 $61.05 $63.85 $53.95 $46.03
Total Market
Capitalization
(period end) $7,744.2 $13,512.9 $14,079.3 $11,695.2 $9,710.1
Shares Outstanding
(period end) 221.8 221.3 220.5 216.8 211.0
Shares Used to
Compute Basic EPS 220.6 220.0 217.5 214.7 210.8
Shares Used to Compute
Diluted EPS 228.4 231.7 226.6 223.4 219.9
Managed Loan Statistics
(period avg.)
Average Loans $55,350 $51,343 $46,688 $41,352 $37,017
Average Earning Assets $60,016 $55,559 $50,538 $45,295 $39,994
Average Assets $64,193 $59,989 $54,258 $48,906 $43,363
Average Equity $4,418 $4,021 $3,572 $3,223 $2,935
Net Interest Margin 9.57% 8.89% 9.28% 9.02% 9.62%
Revenue Margin 17.49% 17.13% 17.12% 17.53% 18.35%
Risk Adjusted Margin(1) 12.92% 12.53% 12.78% 12.96% 14.17%
Return on Average Assets
(ROA) 1.61% 1.42% 1.39% 1.45% 1.53%
Return on Average Equity
(ROE) 23.43% 21.20% 21.06% 22.05% 22.53%
Net Charge-Off Rate 4.96% 4.98% 4.70% 5.01% 4.51%
Net Charge-Offs $685.7 $639.4 $548.6 $517.5 $417.8
Cost Per Account
(in dollars) $79.79 $69.99 $71.33 $73.69 $81.03
Managed Loan Statistics
(period end)
Reported Loans $28,104 $24,965 $24,428 $20,921 $17,480
Off-Balance
Sheet Loans 28,779 28,243 24,136 24,343 21,009
Managed Loans $56,883 $53,208 $48,564 $45,264 $38,489
Delinquency Rate
(30+ days) 5.36% 4.54% 4.80% 4.95% 5.20%
Number of Accounts
(000's) 48,163 48,612 46,623 43,815 40,145
Total Assets $65,614 $62,022 $55,381 $52,506 $44,497
Capital (3) $5,149.6 $4,823.6 $3,778.4 $3,422.2 $3,081.9
Capital to Managed
Assets Ratio 7.85% 7.78% 6.82% 6.52% 6.93%
(1) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(2) Includes $110.0 million and $38.8 million of one-time charges in Q3
2002 and Q3 2001, respectively.
(3) Includes preferred interests and mandatory convertible securities.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUPPLEMENT
(in millions, except per 2002 2002 2002 2001 2001
share data and as noted) Q3 Q2 Q1 Q4 Q3
Revenue & Expense Statistics
Net interest income growth
(annualized) 65% 21% 59% 25% 48%
Non interest income growth
(annualized) 15% 63% 11% 42% 28%
Revenue growth (annualized) 41% 40% 36% 33% 39%
Revenue margin (receivables) 18.97% 18.54% 18.53% 19.20% 19.82%
Risk adjusted margin
(receivables) 14.01% 13.55% 13.83% 14.20% 15.31%
Ops cost as a % of revenues 36.78% 35.02% 37.28% 38.96% 43.23%
Ops cost as a % of average
loans (annualized) 6.98% 6.49% 6.91% 7.48% 8.57%
Per Account Statistics
Net interest income per
account (annualized) $118.65 $103.69 $103.72 $97.35 $98.31
Non interest income per
account (annualized) $98.30 $96.18 $87.59 $91.79 $89.12
Revenue per account
(annualized) $216.95 $199.87 $191.31 $189.15 $187.43
Net income per account
(annualized) $21.39 $17.90 $16.63 $16.93 $16.90
Ops cost per account
(annualized) $79.79 $69.99 $71.33 $73.69 $81.03
Credit Quality Statistics
Allowance as a % of
reported loans 5.68% 4.95% 4.05% 4.02% 4.16%
Allowance as a % of
charge-offs (annualized) 131.21% 103.29% 103.69% 90.05% 96.62%
Provision as a % of
charge-offs 153.99% 137.92% 127.51% 120.57% 117.92%
Growth Statistics
Average accounts (000's) 48,388 47,618 45,219 41,980 39,146
Net new accounts
per quarter (000's) (449) 1,989 2,808 3,670 1,999
% account growth Q over Q
(annualized) (4)% 17% 26% 37% 21%
% account growth Y over Y 20% 27% 28% 30% 36%
Net new loans $3,675 $4,644 $3,300 $6,775 $3,206
% loan growth Q over Q
(annualized) 28% 38% 29% 70% 36%
% loan growth Y over Y 48% 51% 54% 53% 59%
Balance Sheet Measures
% off-balance sheet
securitizations 51% 53% 50% 54% 55%
% at teaser rate
(introductory) 11% 12% 13% 12% 10%
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
September 30 June 30 September 30
2002 2002 2001
Assets:
Cash and due from banks $316,010 $244,857 $64,884
Federal funds sold and resale
agreements 304,782 432,124 365,652
Interest-bearing deposits at
other banks 112,248 448,363 102,094
Cash and cash equivalents 733,040 1,125,344 532,630
Securities available for sale 4,290,441 4,538,223 2,707,564
Consumer loans 28,104,186 24,965,210 17,479,715
Less: Allowance for loan
losses (1,595,000) (1,237,000) (727,000)
Net loans 26,509,186 23,728,210 16,752,715
Accounts receivable from
securitizations 2,584,528 2,417,775 1,949,361
Premises and equipment, net 789,726 808,972 740,144
Interest receivable 182,300 151,828 108,868
Other 1,820,749 1,064,127 722,155
Total assets $36,909,970 $33,834,479 $23,513,437
Liabilities:
Interest-bearing deposits $16,885,553 $16,014,392 $11,075,499
Senior notes 5,561,489 6,069,719 5,462,025
Other borrowings 6,638,560 4,590,716 1,810,208
Interest payable 214,220 235,108 148,931
Other 3,274,637 2,910,638 2,033,481
Total liabilities 32,574,459 29,820,573 20,530,144
Stockholders' Equity:
Common stock 2,227 2,222 2,121
Paid-in capital, net 1,636,738 1,600,489 1,154,211
Retained earnings and cumulative
other comprehensive income 2,731,498 2,446,147 1,872,520
Less: Treasury stock, at cost (34,952) (34,952) (45,559)
Total stockholders' equity 4,335,511 4,013,906 2,983,293
Total liabilities and
stockholders' equity $36,909,970 $33,834,479 $23,513,437
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
September 30 June 30 September 30
2002 2002 2001
Interest Income:
Consumer loans,
including fees $1,022,810 $950,092 $688,572
Securities available
for sale 45,965 45,815 37,032
Other 39,304 28,754 18,323
Total interest income 1,108,079 1,024,661 743,927
Interest Expense:
Deposits 215,470 203,112 161,411
Senior notes 110,464 109,687 90,225
Other Borrowings 59,716 57,450 43,233
Total interest expense 385,650 370,249 294,869
Net interest income 722,429 654,412 449,058
Provision for loan losses 674,111 541,841 262,901
Net interest income
after provision
for loan losses 48,318 112,571 186,157
Non-Interest Income:
Servicing and securitizations 815,267 718,347 657,175
Service charges and other
customer-related fees 586,708 529,112 401,544
Interchange 118,203 137,353 96,702
Total non-interest income 1,520,178 1,384,812 1,155,421
Non-Interest Expense:
Salaries and associate
benefits 417,189 379,363 349,487
Marketing 185,795 320,446 281,910
Communications and data
processing 106,128 101,601 92,735
Supplies and equipment 88,639 88,844 77,497
Occupancy 86,942 38,275 32,151
Other 266,327 225,117 241,117
Total non-interest expense 1,151,020 1,153,646 1,074,897
Income before income taxes 417,476 343,737 266,681
Income taxes 158,641 130,620 101,337
Net income $258,835 $213,117 $165,344
Basic earnings per share $1.17 $0.97 $0.78
Diluted earnings per share $1.13 $0.92 $0.75
Dividends paid per share $0.03 $0.03 $0.03
Nine Months Ended
September 30 September 30
2002 2001
Interest Income:
Consumer loans, including fees $2,836,989 $1,970,854
Securities available for sale 134,124 99,208
Other 95,989 24,481
Total interest income 3,067,102 2,094,543
Interest Expense:
Deposits 596,745 463,851
Senior notes 314,055 261,360
Other Borrowings 168,222 130,958
Total interest expense 1,079,022 856,169
Net interest income 1,988,080 1,238,374
Provision for loan losses 1,605,570 780,816
Net interest income after
provision for loan losses 382,510 457,558
Non-Interest Income:
Servicing and securitizations 2,159,761 1,805,296
Service charges and other
customer-related fees 1,633,101 1,204,225
Interchange 353,652 265,226
Total non-interest income 4,146,514 3,274,747
Non-Interest Expense:
Salaries and associate benefits 1,177,287 1,017,279
Marketing 859,777 781,819
Communications and data processing 299,922 240,933
Supplies and equipment 261,990 225,880
Occupancy 158,598 94,802
Other 706,987 622,747
Total non-interest expense 3,464,561 2,983,460
Income before income taxes 1,064,463 748,845
Income taxes 404,496 284,561
Net income $659,967 $464,284
Basic earnings per share $3.00 $2.23
Diluted earnings per share $2.88 $2.11
Dividends paid per share $0.08 $0.08
Managed (1)
Quarter Ended 9/30/02
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $55,350,137 $2,081,399 15.04%
Securities available
for sale 3,877,119 45,965 4.74
Other 788,347 5,122 2.60
Total earning assets $60,015,603 $2,132,486 14.21%
Interest-bearing
liabilities:
Deposits $16,519,572 $215,470 5.22%
Senior notes 5,718,548 110,464 7.73
Other borrowings 5,631,470 59,716 4.24
Securitization
liability 28,740,188 311,562 4.34
Total interest-bearing
liabilities $56,609,778 $697,212 4.93%
Net interest spread 9.28%
Interest income to average earning assets 14.21%
Interest expense to average earning assets 4.64
Net interest margin 9.57%
(1) The information in this table reflects the adjustment to add back the effect
of securitized loans.
Managed (1)
Quarter Ended 6/30/02
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $51,342,764 $1,838,672 14.32%
Securities available
for sale $3,662,832 45,815 5.00
Other 553,595 2,110 1.52
Total earning assets $55,559,191 $1,886,597 13.58%
Interest-bearing
liabilities:
Deposits $15,276,514 $203,112 5.32%
Senior notes 5,959,240 109,687 7.36
Other borrowings 5,946,983 57,450 3.86
Securitization
liability 25,965,894 282,041 4.34
Total interest-bearing
liabilities $53,148,631 $652,290 4.91%
Net interest spread 8.66%
Interest income to average earning assets 13.58%
Interest expense to average earning assets 4.69
Net interest margin 8.89%
(1) The information in this table reflects the adjustment to add back the effect
of securitized loans.
Managed (1)
Quarter Ended 9/30/01
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $37,017,405 $1,472,821 15.91%
Securities available 2,645,982 37,032 5.60
for sale
Other 330,863 2,646 3.20
Total earning assets $39,994,250 $1,512,499 15.13%
Interest-bearing
liabilities:
Deposits $10,537,193 $161,411 6.13%
Senior notes 5,280,860 90,225 6.83
Other borrowings 3,103,263 43,233 5.57
Securitization
liability 19,472,058 255,508 5.25
Total interest-bearing
liabilities $38,393,374 $550,377 5.73%
Net interest spread 9.40%
Interest income to average earning assets 15.13%
Interest expense to average earning assets 5.51
Net interest margin 9.62%
(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
URL: http://www.capitalone.com
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