Capital One Reports Record Earnings: Earnings Per Share Increased 25 Percent in 1995
Capital One Reports Record Earnings: Earnings Per Share Increased 25 Percent in 1995
Falls Church, VA (January 24, 1996) - Capital One Financial Corporation (NYSE: COF) today announced record earnings for 1995. Earnings were $126.5 million, or $1.90 per share, compared with pro forma earnings of $100.2 million, or $1.52 per share, in 1994. These pro forma earnings do not include a non-recurring $31.9 million (after-tax), or $.48 per share, contract termination charge taken in the third quarter of 1994. For the fourth quarter 1995, earnings were $37.8 million, or $.57 per share, versus pro forma earnings of $21.8 million, or $.33 per share, for the comparable period in the prior year.
Pro forma results present the Company's past performance as if Capital One were fully independent from Signet Banking Corporation for all periods presented. The pro forma adjustments were made on a basis consistent with those made in the registration statement filed in connection with the November 1994 initial public offering of Capital One's common stock. The Company's 1995 earnings of $126.5 million, or $1.90 per share, compare with historically reported net income of $95.3 million, or $1.44 per share, for 1994. The results for 1994 include a contract termination expense of $49.0 million, or $.48 per share. Additionally, prior year historic results reflect funding and other costs as a division of Signet Banking Corporation.
“We are pleased with our very successful first full year as a stand-alone company,” said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. “In 1995, return on equity and growth in earnings per share were in excess of 20 percent, while our managed loans and accounts grew 42 percent and 22 percent, respectively. As we look to 1996 and beyond, we're excited about the prospects for continued growth in earnings.”
For the year, the Company increased receivables by $3.1 billion, or 42 percent, and added 1.1 million accounts, a 22 percent increase over 1994. During the fourth quarter, Capital One increased its managed credit card loan portfolio by $244 million to $10.4 billion in outstanding receivables and added 134,000 net new accounts, bringing the total accounts to 6.1 million.
“By all measures, we had a terrific year,” said Nigel W. Morris, Capital One's President and Chief Operating Officer. “Our account growth and managed loan growth were very solid for the year, with some slowing in the fourth quarter due to the ongoing strategic shift in our business focus. This shift will create lower balance growth but higher account growth and a very solid foundation for earnings growth and excellent returns on equity in the periods ahead.”
Net interest margin (managed) was 6.49 percent in the fourth quarter versus a pro forma margin of 5.40 percent for the comparable period for 1994 and 6.12 percent in the third quarter 1995. This increase reflects the impact of introductory rate repricings and lower introductory rate growth.
Asset quality remained strong, as credit losses increased within anticipated levels as the existing portfolio matured. The charge-off rate was 2.58 percent on a managed basis in the fourth quarter versus 2.35 percent in the third quarter. The year-end managed delinquency rate increased to 4.20 percent versus 3.37 percent in the third quarter, primarily due to continued seasoning of existing portfolios and lower growth. The allowance for loan losses as a percentage of on-balance sheet receivables was 2.85 percent at year-end.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation is a financial services company that offers credit card products through its wholly owned subsidiary, Capital One Bank, as its primary business. Capital One Bank had 6.1 million credit card customers and $10.4 billion in managed loans outstanding at December 31, 1995, and is one of the largest providers of MasterCard and Visa credit cards in the United States.
Pro forma results present the Company's past performance as if Capital One were fully independent from Signet Banking Corporation for all periods presented. The pro forma adjustments were made on a basis consistent with those made in the registration statement filed in connection with the November 1994 initial public offering of Capital One's common stock. The Company's 1995 earnings of $126.5 million, or $1.90 per share, compare with historically reported net income of $95.3 million, or $1.44 per share, for 1994. The results for 1994 include a contract termination expense of $49.0 million, or $.48 per share. Additionally, prior year historic results reflect funding and other costs as a division of Signet Banking Corporation.
“We are pleased with our very successful first full year as a stand-alone company,” said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. “In 1995, return on equity and growth in earnings per share were in excess of 20 percent, while our managed loans and accounts grew 42 percent and 22 percent, respectively. As we look to 1996 and beyond, we're excited about the prospects for continued growth in earnings.”
For the year, the Company increased receivables by $3.1 billion, or 42 percent, and added 1.1 million accounts, a 22 percent increase over 1994. During the fourth quarter, Capital One increased its managed credit card loan portfolio by $244 million to $10.4 billion in outstanding receivables and added 134,000 net new accounts, bringing the total accounts to 6.1 million.
“By all measures, we had a terrific year,” said Nigel W. Morris, Capital One's President and Chief Operating Officer. “Our account growth and managed loan growth were very solid for the year, with some slowing in the fourth quarter due to the ongoing strategic shift in our business focus. This shift will create lower balance growth but higher account growth and a very solid foundation for earnings growth and excellent returns on equity in the periods ahead.”
Net interest margin (managed) was 6.49 percent in the fourth quarter versus a pro forma margin of 5.40 percent for the comparable period for 1994 and 6.12 percent in the third quarter 1995. This increase reflects the impact of introductory rate repricings and lower introductory rate growth.
Asset quality remained strong, as credit losses increased within anticipated levels as the existing portfolio matured. The charge-off rate was 2.58 percent on a managed basis in the fourth quarter versus 2.35 percent in the third quarter. The year-end managed delinquency rate increased to 4.20 percent versus 3.37 percent in the third quarter, primarily due to continued seasoning of existing portfolios and lower growth. The allowance for loan losses as a percentage of on-balance sheet receivables was 2.85 percent at year-end.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation is a financial services company that offers credit card products through its wholly owned subsidiary, Capital One Bank, as its primary business. Capital One Bank had 6.1 million credit card customers and $10.4 billion in managed loans outstanding at December 31, 1995, and is one of the largest providers of MasterCard and Visa credit cards in the United States.