Capital One Reports Record Earnings
Earnings Per Share Increased 30 Percent in 1999
FALLS CHURCH, Va., Jan. 18 /PRNewswire/ -- Capital One Financial Corporation (NYSE: COF) today announced record earnings for 1999. Earnings were $363.1 million, or $1.72 per share, in 1999 compared with earnings of $275.2 million, or $1.32 per share, in 1998. For the fourth quarter of 1999, earnings were $97.9 million, or $.47 per share, versus earnings of $72.7 million, or $.35 per share, for the comparable period in the prior year. All earnings per share amounts reflect the Company's three-for-one stock split distributed on June 1, 1999.
"The fourth quarter was one of our strongest ever, helping us achieve 30 percent earnings per share growth for the year," said Richard D. Fairbank, Chairman and Chief Executive Officer. "In each and every year since our IPO in 1994, we have exceeded our goal of 20 percent earnings per share growth. Our record fourth quarter gives us tremendous momentum as we target 30 percent earnings per share growth in 2000."
For the year, the Company increased managed receivables by $2.8 billion, or 16 percent, and added 7.0 million net new accounts, a 42 percent increase over 1998. During the fourth quarter, Capital One increased its managed portfolio by a record $1.7 billion to $20.2 billion in outstanding receivables and added a record 2.9 million net new accounts, bringing the total number of accounts to 23.7 million. Revenue for the year, defined as managed net interest income and non-interest income, was a record $3.8 billion, a 39 percent increase from revenues of $2.8 billion in 1998. For the fourth quarter, total revenue rose to $1.05 billion versus $998 million in the third quarter and $770 million for the comparable period in the prior year.
Managed net interest income for 1999 increased by 28 percent to $2.2 billion from $1.7 billion in 1998. In the fourth quarter, it increased to $575 million from $559 million in the third quarter and $442 million in the fourth quarter of 1998. The managed net interest margin for 1999 increased by 92 basis points to 10.83 percent from 9.91 percent in 1998. In the fourth quarter, the managed net interest margin decreased to 10.78 percent from 11.14 percent in the third quarter and increased from 9.45 percent for the comparable period of 1998. The fourth quarter 1999 decline in margin reflects the impact of management's decision to maintain higher levels of liquidity in the fourth quarter to insure against any Y2K problems.
Managed non-interest income for 1999 increased by 56 percent to $1.7 billion from $1.1 billion in 1998. In the fourth quarter, managed non-interest income increased to $474 million from $439 million in the third quarter and $328 million for the comparable quarter of 1998. This growth continues to reflect increased annual membership, interchange, cross sell and other fees.
Marketing investment for 1999 increased to a record $732 million, up 64 percent from $446 million in 1998. Fourth quarter marketing expense of $202 million represents the largest quarterly marketing level to date.
"We continue to build a powerful customer franchise, evidenced by our record marketing investment and 42 percent account growth in 1999," said Nigel W. Morris, President and Chief Operating Officer. "We are delighted that Capital One has achieved the best credit performance of any of the industry's major players, while at the same time, serving the broadest spectrum of customers."
The managed delinquency rate as of December 31, 1999 increased to 5.23 percent versus 5.06 percent as of September 30, 1999 and 4.70 percent as of December 31, 1998. In the fourth quarter, the managed net charge-off rate was 3.86 percent, a slight decrease from 3.88 percent in the third quarter of 1999. The allowance for loan losses increased $36 million during the fourth quarter of 1999 to $342 million or 3.45 percent of on-balance sheet receivables as of December 31, 1999. Capital ratios were strong as of December 31, 1999 at 12.18 percent of reported assets and 6.87 percent of managed assets.
Other non-interest expenses (excluding marketing) were $1.7 billion in 1999, up 70 percent from $1.0 billion in 1998. These expenses for the fourth quarter of 1999 were $479 million versus $454 million in the third quarter and $307 million in the comparable period of the prior year. Cost per account declined in the fourth quarter to $85.98 from $90.72 in the third quarter. In addition, during the fourth quarter, the Company recognized a tax benefit of $5 million related to a change in the tax law.
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 23.7 million accounts and $20.2 billion in managed loans outstanding as of December 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. For the second consecutive year, Fortune magazine has named Capital One to its list of the "Best Places to Work in the US."
CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY 1999 1999 (in millions, except per share data and as noted) Q4 Q3 Earnings (Managed Basis) Net Interest Income $ 574.8 $ 558.9 Non-Interest Income 473.6 438.6 Total Revenue 1,048.4 997.5 Provision for Loan Losses 218.0 214.3 Marketing Expenses 202.4 175.2 Operating Expenses 478.8 454.3 Income Before Taxes 149.2 153.8 Tax Rate 34.4% 38.0% Net Income $ 97.9 $ 95.4 Common Share Statistics Basic EPS $ 0.50 $ 0.48 Diluted EPS $ 0.47 $ 0.45 Dividends Per Share $ 0.03 $ 0.03 Book Value Per Share (period end) $ 7.69 $ 7.29 Stock Price Per Share (period end) $ 48.19 $ 39.00 Total Market Capitalization (period end) $ 9,495.2 $ 7,686.9 Shares Outstanding (period end) 197.0 197.1 Shares Used to Compute Basic EPS 197.3 197.4 Shares Used to Compute Diluted EPS 210.3 210.1 Managed Loan Statistics (period avg.) Average Loans $ 18,974 $ 18,162 Average Earning Assets $ 21,323 $ 20,060 Average Assets $ 22,714 $ 21,563 Average Equity $ 1,493 $ 1,461 Net Interest Margin 10.78% 11.14% Risk Adjusted Margin(1) 16.24% 16.06% Return on Average Assets (ROA) 1.72% 1.77% Return on Average Equity (ROE) 26.22% 26.12% Net Charge-Off Rate 3.86% 3.88% Net Charge-Offs $ 182.9 $ 176.0 Managed Loan Statistics (period end) Reported Loans $ 9,914 $ 8,286 Securitized Loans 10,323 10,231 Total Loans $ 20,237 $ 18,517 Delinquency Rate (30+ days) 5.23% 5.06% Number of Accounts (000's) 23,705 20,845 Total Assets $ 23,638 $ 21,577 Capital, Including Preferred Interests $ 1,624.6 $ 1,535.3 Capital to Managed Assets Ratio 6.87% 7.12% (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 1999 1999 (in millions, except per share data and as noted) Q2 Q1 Earnings (Managed Basis) Net Interest Income $ 527.1 $ 513.9 Non-Interest Income 398.5 357.6 Total Revenue 925.6 871.6 Provision for Loan Losses 178.3 190.5 Marketing Expenses 178.2 176.1 Operating Expenses 427.9 372.2 Income Before Taxes 141.1 132.9 Tax Rate 38.0% 38.0% Net Income $ 87.5 $ 82.4 Common Share Statistics Basic EPS $ 0.44 $ 0.42 Diluted EPS $ 0.41 $ 0.39 Dividends Per Share $ 0.03 $ 0.03 Book Value Per Share (period end) $ 7.11 $ 6.69 Stock Price Per Share (period end) $ 55.69 $ 50.33 Total Market Capitalization (period end) $10,991.3 $ 9,929.1 Shares Outstanding (period end) 197.4 197.3 Shares Used to Compute Basic EPS 197.6 197.2 Shares Used to Compute Diluted EPS 211.5 210.0 Managed Loan Statistics (period avg.) Average Loans $ 17,598 $ 17,436 Average Earning Assets $ 19,428 $ 19,482 Average Assets $ 20,714 $ 20,722 Average Equity $ 1,374 $ 1,302 Net Interest Margin 10.85% 10.55% Risk Adjusted Margin(1) 15.47% 14.38% Return on Average Assets (ROA) 1.69% 1.59% Return on Average Equity (ROE) 25.47% 25.32% Net Charge-Off Rate 3.73% 3.93% Net Charge-Offs $ 164.0 $ 171.1 Managed Loan Statistics (period end) Reported Loans $ 7,427 $ 7,246 Securitized Loans 10,433 10,198 Total Loans $ 17,860 $ 17,444 Delinquency Rate (30+ days) 4.72% 4.56% Number of Accounts (000's) 19,213 18,022 Total Assets $ 20,985 $ 20,318 Capital, Including Preferred Interests $ 1,501.0 $ 1,417.2 Capital to Managed Assets Ratio 7.15% 6.98% (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 1998 (in millions, except per share data and as noted) Q4 Earnings (Managed Basis) Net Interest Income $ 441.6 Non-Interest Income 327.9 Total Revenue 769.5 Provision for Loan Losses 186.3 Marketing Expenses 159.0 Operating Expenses 307.1 Income Before Taxes 117.2 Tax Rate 38.0% Net Income $ 72.7 Common Share Statistics Basic EPS $ 0.37 Diluted EPS $ 0.35 Dividends Per Share $ 0.03 Book Value Per Share (period end) $ 6.45 Stock Price Per Share (period end) $ 38.33 Total Market Capitalization (period end) $7,551.0 Shares Outstanding (period end) 197.0 Shares Used to Compute Basic EPS 197.0 Shares Used to Compute Diluted EPS 209.1 Managed Loan Statistics (period avg.) Average Loans $ 16,547 Average Earning Assets $ 18,702 Average Assets $ 19,944 Average Equity $ 1,212 Net Interest Margin 9.45% Risk Adjusted Margin(1) 12.16% Return on Average Assets (ROA) 1.46% Return on Average Equity (ROE) 23.99% Net Charge-Off Rate 4.51% Net Charge-Offs $ 186.5 Managed Loan Statistics (period end) Reported Loans $ 6,157 Securitized Loans 11,238 Total Loans $ 17,395 Delinquency Rate (30+ days) 4.70% Number of Accounts (000's) 16,706 Total Assets $ 20,619 Capital, Including Preferred Interests $1,368.3 Capital to Managed Assets Ratio 6.64% (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) Dec 31 1999 Assets: Cash and due from banks $ 134,065 Federal funds sold and resale agreements Interest-bearing deposits at other banks 112,432 Cash and cash equivalents 246,497 Securities available for sale 1,856,421 Consumer loans 9,913,549 Less: Allowance for loan losses (342,000) Net loans 9,571,549 Premises and equipment, net 470,732 Interest receivable 64,637 Accounts receivable from securitizations 661,922 Other 464,685 Total assets $13,336,443 Liabilities: Interest-bearing deposits $ 3,783,809 Other borrowings 2,780,466 Senior notes 4,180,548 Interest payable 116,405 Other 959,608 Total liabilities 11,820,836 Stockholders' Equity: Common stock(1) 1,997 Paid-in capital, net(1) 613,590 Retained earnings and cumulative other comprehensive income 991,034 Less: Treasury stock, at cost (91,014) Total stockholders' equity 1,515,607 Total liabilities and stockholders' equity $13,336,443 (1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999. CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited) Sept 30 1999 Assets: Cash and due from banks $ 59,934 Federal funds sold and resale agreements Interest-bearing deposits at other banks 53,493 Cash and cash equivalents 113,427 Securities available for sale 1,708,609 Consumer loans 8,286,210 Less: Allowance for loan losses (306,000) Net loans 7,980,210 Premises and equipment, net 429,504 Interest receivable 65,350 Accounts receivable from securitizations 614,962 Other 460,847 Total assets $11,372,909 Liabilities: Interest-bearing deposits $ 3,576,400 Other borrowings 1,114,981 Senior notes 4,328,237 Interest payable 87,688 Other 828,422 Total liabilities 9,935,728 Stockholders' Equity: Common stock(1) 1,997 Paid-in capital, net(1) 625,771 Retained earnings and cumulative other comprehensive income 897,353 Less: Treasury stock, at cost (87,940) Total stockholders' equity 1,437,181 Total liabilities and stockholders' equity $11,372,909 (1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999. CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited) Dec 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 1,742,200 Senior notes 3,739,393 Interest payable 91,637 Other 575,788 Total liabilities 8,148,997 Stockholders' Equity: Common stock(1) 1,997 Paid-in capital, net(1) 598,167 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 (1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999. CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited) Three Months Ended Dec 31 Sept 30 1999 1999 Interest Income: Consumer loans, including fees $417,384 $386,727 Federal funds sold and resale agreements 752 638 Other 32,468 24,671 Total interest income 450,604 412,036 Interest Expense: Deposits 49,409 38,003 Other borrowings 32,820 20,824 Senior and deposit notes 72,569 76,980 Total interest expense 154,798 135,807 Net interest income 295,806 276,229 Provision for loan losses 120,000 114,061 Net interest income after provision for loan losses 175,806 162,168 Non-Interest Income: Servicing and securitizations 310,321 311,217 Service charges and other fees 297,717 275,900 Interchange 46,585 33,946 Total non-interest income 654,623 621,063 Non-Interest Expense: Salaries and associate benefits 207,457 199,048 Marketing 202,405 175,163 Communications and data processing 75,592 68,755 Supplies and equipment 54,580 48,076 Occupancy 22,863 19,117 Other 118,288 119,262 Total non-interest expense 681,185 629,421 Income before income taxes 149,244 153,810 Income taxes 51,372 58,448 Net income $ 97,872 $ 95,362 Basic earnings per share(1) $ 0.50 $ 0.48 Diluted earnings per share(1) $ 0.47 $ 0.45 Dividends paid per share(1) $ 0.03 $ 0.03 (1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999. CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited) Three Months Ended Dec 31 1998 Interest Income: Consumer loans, including fees $269,016 Federal funds sold and resale agreements 4,389 Other 25,542 Total interest income 298,947 Interest Expense: Deposits 23,901 Other borrowings 29,256 Senior and deposit notes 64,444 Total interest expense 117,601 Net interest income 181,346 Provision for loan losses 54,580 Net interest income after provision for loan losses 126,766 Non-Interest Income: Servicing and securitizations 248,683 Service charges and other fees 179,695 Interchange 28,098 Total non-interest income 456,476 Non-Interest Expense: Salaries and associate benefits 138,901 Marketing 158,972 Communications and data processing 47,602 Supplies and equipment 29,702 Occupancy 12,488 Other 78,369 Total non-interest expense 466,034 Income before income taxes 117,208 Income taxes 44,539 Net income $ 72,669 Basic earnings per share(1) $ 0.37 Diluted earnings per share(1) $ 0.35 Dividends paid per share(1) $ 0.03 (1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999. CAPITAL ONE FINANCIAL CORPORATION Consolidated Statements of Income (in thousands, except per share data)(unaudited) Year Ended Dec 31 Dec 31 1999 1998 Interest Income: Consumer loans, including fees $1,482,371 $1,003,122 Federal funds sold and resale agreements 3,641 12,564 Other 107,472 95,850 Total interest income 1,593,484 1,111,536 Interest Expense: Deposits 137,792 67,479 Other borrowings 100,392 96,130 Senior and deposit notes 302,698 260,675 Total interest expense 540,882 424,284 Net interest income 1,052,602 687,252 Provision for loan losses 382,948 267,028 Net interest income after provision for loan losses 669,654 420,224 Non-Interest Income: Servicing and securitizations 1,187,098 789,844 Service charges and other fees 1,040,944 611,958 Interchange 144,317 86,481 Total non-interest income 2,372,359 1,488,283 Non-Interest Expense: Salaries and associate benefits 780,160 476,389 Marketing 731,898 446,264 Communications and data processing 264,897 150,220 Supplies and equipment 181,663 112,101 Occupancy 72,275 45,337 Other 434,103 234,275 Total non-interest expense 2,464,996 1,464,586 Income before income taxes 577,017 443,921 Income taxes 213,926 168,690 Net income $ 363,091 $ 275,231 Basic earnings per share(1) $ 1.84 $ 1.40 Diluted earnings per share(1) $ 1.72 $ 1.32 Dividends paid per share(1) $ 0.11 $ 0.11 (1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999. CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (dollars in thousands)(unaudited) Managed(1) Quarter Ended 12/31/99 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $18,974,409 $848,176 17.88% Federal funds sold and resale agreements 58,560 752 5.14 Other 2,289,773 33,242 5.81 Total earning assets $21,322,742 $882,170 16.55% Interest-bearing liabilities: Deposits $ 3,648,919 $ 49,409 5.42% Other borrowings 2,037,805 32,820 6.44 Senior and deposit notes 4,258,661 72,569 6.82 Securitization liability 10,329,929 152,572 5.91 Total interest-bearing liabilities $20,275,314 $307,370 6.06% Net interest spread 10.49% Interest income to average earning assets 16.55% Interest expense to average earning assets 5.77 Net interest margin 10.78% (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 9/30/99 Average Income/ Yield/ Balance Expense Rate Earning assets: Consumer loans $18,161,975 $813,643 17.92% Federal funds sold and resale agreements 54,375 638 4.69 Other 1,843,248 24,463 5.31 Total earning assets $20,059,598 $838,744 16.72% Interest-bearing liabilities: Deposits $ 3,001,711 $ 38,003 5.06% Other borrowings 1,333,434 20,824 6.25 Senior and deposit notes 4,494,440 76,980 6.85 Securitization liability 10,343,724 144,048 5.57 Total interest-bearing liabilities $19,173,309 $279,855 5.84% Net interest spread 10.88% Interest income to average earning assets 16.72% Interest expense to average earning assets 5.58 Net interest margin 11.14% (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 1,703,688 29,256 6.87 Senior and deposit notes 3,741,707 64,444 6.89 Securitization liability 10,751,360 160,625 5.98 Total interest-bearing liabilities $18,082,715 $278,226 6.15% Net interest spread 9.25% Interest income to average earning assets 15.40% Interest expense to average earning assets 5.95 Net interest margin 9.45% (1) The information in this table reflects the adjustment to add back the effect of securitized loans. SOURCE Capital One Financial Corporation
/NOTE TO EDITORS: 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 earnings press release and other financial information./
CONTACT: Paul Paquin, V.P., Investor Relations, 703-205-1039, or Sam Wang, Dir., Media Relations, 703-289-6809, both of Capital One Financial Corporation/