Capital One Reports Second Quarter Earnings
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Company Reaffirms Loan Growth, Return on Assets, and EPS Guidance for 2005
MCLEAN, Va., July 20 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE: COF) today announced that its earnings for the second quarter of 2005 were $531.1 million, or $2.03 per share (diluted), compared with $407.4 million, or $1.65 per share (diluted), for the second quarter of 2004, and $506.6 million, or $1.99 per share (diluted), for the first quarter of 2005.
"Capital One's second quarter results demonstrate the continued strength of our diversified consumer financial services company," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "The company delivered solid credit quality, loan growth, and profitability while planning for the acquisition of Hibernia and integrating our new auto and home loan businesses."
Capital One expects the acquisition of Hibernia Corporation to close on September 1, 2005, subject to approval by Hibernia's shareholders, the receipt of all necessary regulatory approvals and expiration of all regulatory waiting periods prior to that date.
Managed loans grew to $83.0 billion as of June 30, 2005, up $1.4 billion, or 7 percent annualized, from the previous quarter, and up $9.6 billion, or 13 percent, from the second quarter of 2004. The company continues to expect that managed loans will grow at a rate of between 12 and 15 percent during 2005, excluding the impact of the Hibernia transaction. Additionally, the company expects its US Card loan growth rate to be in the low single digits, and its Auto Finance and Global Financial Services businesses to grow at a faster rate than US Card.
The managed charge-off rate decreased to 4.10 percent in the second quarter of 2005 from 4.13 percent in the previous quarter, and from 4.42 percent in the second quarter of 2004. The company continues to expect its quarterly managed net charge-off rate to stay below 4.25 percent in 2005, with seasonal variations and excluding the impact of the Hibernia transaction. The company decreased its allowance for loan losses in the second quarter of 2005 by $35.0 million. The reduction was driven largely by continued loan diversification in our reported balance sheet and credit performance in our auto business. The company continues to expect a net increase in its allowance for loan losses in the full year 2005, inclusive of reductions taken in the first half of 2005 and excluding the impact of the Hibernia transaction.
The managed delinquency rate (30+ days) increased to 3.49 percent as of June 30, 2005 from 3.45 percent as of the end of the previous quarter. The managed delinquency rate as of June 30, 2004 was 3.76 percent. Capital One's managed revenue margin increased to 12.65 percent in the second quarter of 2005 from 12.50 percent in the previous quarter, and 12.53 percent in the second quarter of 2004. The company continues to expect a modest decline in managed revenue margin over time due to its diversification and bias towards lower loss assets.
"The company remains on track to deliver diluted earnings of between $6.60 and $7.00 per share in 2005, including the expected impact of completing the acquisition of Hibernia," said Gary L. Perlin, Capital One's Chief Financial Officer. "This guidance reflects the normal seasonality in loan growth and credit performance, which causes earnings in the second half of the year to be lower than those reported in the first half."
Marketing expenses for the second quarter of 2005 were $277.0 million, down $34.8 million from the $311.8 million spent in the first quarter of 2005. Marketing expenses were $253.8 million in the comparable quarter of the prior year. The company expects annual marketing spend for 2005 to be approximately $1.4 billion, excluding the impact of the Hibernia transaction.
Annualized operating expenses as a percentage of average managed loans increased to 5.13 percent in the second quarter of 2005, up from 4.98 percent in the previous quarter and down from 5.39 percent in the second quarter of 2004. Included in operating expenses were charges for a combination of employee termination benefits and continued facility consolidations totaling $26.0 million for the second quarter of 2005, $4.9 million for the first quarter of 2005 and $56.0 million for the second quarter of 2004. The company expects about $20 million in additional restructuring charges in 2005 related to programs initiated in 2004.
The company continues to expect a return on managed assets of between 1.7 and 1.8 percent in 2005, with some quarterly variability, excluding the impact of the Hibernia transaction.
The company generates earnings from its managed loan portfolio, which includes both on-balance sheet loans and securitized (off-balance sheet) loans. For this reason, the company believes managed financial measures to be useful to stakeholders. In compliance with Regulation G of the Securities and Exchange Commission, the company is providing a numerical reconciliation of managed financial measures to comparable measures calculated on a reported basis using generally accepted accounting principles (GAAP). Please see the schedule titled "Reconciliation to GAAP Financial Measures" attached to this release for more information.
The company cautions that its current expectations in this release, in the presentation slides available on the company's website and on its Form 8-K dated July 20, 2005 for 2005 earnings, charge-off rates, revenue margins, return on assets, allowance for loan losses, loan growth rates, marketing, the composition of loan growth, restructuring charges, the benefits of the business combination transaction involving Capital One and Hibernia, including future financial and operating results, and the new company's plans, objectives, expectations and intentions are forward-looking statements and actual results could differ materially from current expectations due to a number of factors, including: continued intense competition from numerous providers of products and services which compete with our businesses; changes in our aggregate accounts and balances, and the growth rate and composition thereof; the company's ability to continue to diversify its assets; the company's ability to access the capital markets at attractive rates and terms to fund its operations and future growth; changes in the reputation of the credit card industry and/or the company with respect to practices or products; the success of the company's marketing efforts; the company's ability to execute on its strategic and operating plans; and general economic conditions affecting interest rates and consumer income and spending, which may affect consumer bankruptcies, defaults, and charge-offs; the ability to obtain regulatory approvals of the proposed Capital One - Hibernia transaction on the proposed terms and schedule; the failure of Hibernia stockholders to approve the transaction; the risk that the businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the transaction may not be fully realized or may take longer to realize than expected; and disruption from the transaction making it more difficult to maintain relationships with customers, employees or suppliers.
A discussion of these and other factors can be found in Capital One's annual report 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 fiscal year ended December 31, 2004.
Additional Information About the Hibernia Transaction
Hibernia shareholders are urged to read the definitive proxy statement/prospectus regarding the proposed merger of Capital One Financial Corp. ("Capital One") and Hibernia Corporation ("Hibernia"), which was first mailed to Hibernia shareholders on or about June 20, 2005 because it contains important information. You may obtain a free copy of the definitive proxy statement/prospectus and other related documents filed by Capital One and Hibernia with the Securities and Exchange Commission ("SEC") at the SEC's website at http://www.sec.gov. The definitive proxy statement/prospectus and the other documents may also be obtained for free by accessing Capital One's website at http://www.capitalone.com under the tab "Investors" and then under the heading "SEC & Regulatory Filings" or by accessing Hibernia's website at http://www.hibernia.com under the tab "About Hibernia" and then under the heading "Investor Relations-SEC Filings."
Capital One, Hibernia and their respective directors, executive officers and certain other members of management and employees may be soliciting proxies from Hibernia stockholders in favor of the merger. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of the Hibernia stockholders in connection with the proposed merger is set forth in the definitive proxy statement/prospectus filed with the SEC. You can find information about Capital One's executive officers and directors in its definitive proxy statement filed with the SEC on March 21, 2005. You can find information about Hibernia's executive officers and directors in its definitive proxy statement filed with the SEC on March 15, 2005. You can obtain free copies of these documents from Capital One and Hibernia using the contact information above.
About Capital One
Headquartered in McLean, Virginia, Capital One Financial Corporation (http://www.capitalone.com) is a bank holding company whose principal subsidiaries, Capital One Bank, Capital One, F.S.B. and Capital One Auto Finance, Inc. offer a variety of consumer lending products. Capital One's subsidiaries collectively had 48.9 million accounts and $83.0 billion in managed loans outstanding as of June 30, 2005. Capital One is a Fortune 500 company and, through its subsidiaries, 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: Second quarter 2005 financial results, SEC Filings, and second quarter earnings conference call slides are accessible on Capital One's home page (http://www.capitalone.com). Choose "Investors" on the bottom right corner of the home page to view and download the earnings press release, slides, and other financial information. Additionally, a webcast of today's 5:00 pm (EDT) earnings conference call is accessible through the same link.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS
2005 2005 2004
(in millions, except per share
data and as noted) Q2 Q1 Q2
Earnings (Reported Basis)
Net Interest Income $ 872.5 $ 860.5 $ 711.0
Non-Interest Income 1,582.0 1,516.0 1,396.1
Total Revenue(2) 2,454.5 2,376.5 2,107.1
Provision for Loan Losses 291.6 259.6 242.3
Marketing Expenses 277.0 311.8 253.8
Operating Expenses(3) 1,058.6 1,016.1 975.0
Income Before Taxes 827.3 789.0 636.0
Tax Rate 35.8 % 35.8 % 36.0 %
Net Income $ 531.1 $ 506.6 $ 407.4
Common Share Statistics
Basic EPS $ 2.10 $ 2.08 $ 1.74
Diluted EPS $ 2.03 $ 1.99 $ 1.65
Dividends Per Share $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period end) $ 39.51 $ 35.62 $ 29.90
Stock Price Per Share (period end) $ 80.01 $ 74.77 $ 68.38
Total Market Capitalization
(period end) $ 21,082.6 $ 18,849.5 $ 16,514.5
Shares Outstanding (period end) 263.5 252.1 241.5
Shares Used to Compute Basic EPS 252.6 244.0 234.7
Shares Used to Compute Diluted EPS 261.7 255.2 247.6
Reported Balance Sheet Statistics
(period avg.)
Average Loans $ 38,237 $ 38,204 $ 33,290
Average Earning Assets $ 51,694 $ 50,898 $ 45,705
Average Assets $ 56,963 $ 56,288 $ 50,020
Average Equity $ 8,925 $ 8,568 $ 6,943
Return on Average Assets (ROA) 3.73 % 3.60 % 3.26 %
Return on Average Equity (ROE) 23.80 % 23.65 % 23.47 %
Reported Balance Sheet Statistics
(period end)
Loans $ 38,611 $ 37,959 $ 34,551
Total Assets $ 56,996 $ 55,632 $ 50,070
Capital (4) $ 10,511 $ 9,839 $ 8,057
Loan growth $ 652 $ (257) $ 1,379
% Loan Growth Q Over Q
(annualized) 7 % (3)% 17 %
% Loan Growth Y Over Y 12 % 14 % 29 %
Capital to Assets Ratio 18.44 % 17.69 % 16.09 %
Capital plus Allowance to
Assets Ratio 20.91 % 20.27 % 18.94 %
Revenue & Expense Statistics
(Reported)
Net Interest Income Growth
(annualized) 6 % 39 % (11)%
Non Interest Income Growth
(annualized) 17 % (1)% (13)%
Revenue Growth (annualized) 13 % 12 % (13)%
Net Interest Margin 6.75 % 6.76 % 6.22 %
Revenue Margin 18.99 % 18.68 % 18.44 %
Risk Adjusted Margin (5) 16.49 % 16.08 % 15.73 %
Operating Expense as a % of
Revenues 43.13 % 42.76 % 46.27 %
Operating Expense as a % of Avg
Loans (annualized) 11.07 % 10.64 % 11.72 %
Asset Quality Statistics (Reported)
Allowance $ 1,405 $ 1,440 $ 1,425
30+ Day Delinquencies $ 1,400 $ 1,319 $ 1,351
Net Charge-Offs $324 $330 $310
Allowance as a % of Reported Loans 3.64 % 3.79 % 4.12 %
Delinquency Rate (30+ days) 3.62 % 3.47 % 3.91 %
Net Charge-Off Rate 3.39 % 3.46 % 3.72 %
(1) Includes a $41.1 million gain resulting from the sale of the French
loan portfolio in Q4 2004 and a $31.5 million gain resulting from the
sale of a joint venture investment in South Africa in Q3 2004.
(2) In accordance with the Company's finance charge and fee revenue
recognition policy, the amounts billed to customers but not recognized
as revenue were as follows: Q2 2005 -- $259.8, Q1 2005 -- $243.9, Q4
2004 -- $276.8, Q3 2004 -- $269.7, and Q2 2004 -- $263.5 million.
(3) Includes employee termination benefits and charges for facility
consolidation related to corporate-wide cost reduction initiatives of
$26.0 million, $23.7 million, $42.1 million, $26.7 million and $56.0
million for Q2 2005, Q1 2005, Q4 2004, Q3 2004 and Q2 2004,
respectively. In addition, Q1 2005 includes an $18.8 million reversal
of a previously recognized impairment related to the sale of the
Tampa, FL facility and Q3 2004 had charges of $20.6 million related to
a change in the fixed asset capitalization thresholds and $15.8
million related to impairment of internally developed software.
(4) Includes preferred interests for all periods presented and mandatory
convertible securities for all periods prior to Q2 2005.
(5) 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 MANAGED BASIS(1)
2005 2005 2004
(in millions) Q2 Q1 Q2
Earnings (Managed Basis)
Net Interest Income $ 1,830.3 $ 1,818.8 $ 1,585.4
Non-Interest Income 1,144.8 1,071.4 1,011.3
Total Revenue(3) 2,975.1 2,890.2 2,596.7
Provision for Loan Losses 812.2 773.3 731.9
Marketing Expenses 277.0 311.8 253.8
Operating Expenses(4) 1,058.6 1,016.1 975.0
Income Before Taxes 827.3 789.0 636.0
Tax Rate 35.8 % 35.8 % 36.0 %
Net Income $ 531.1 $ 506.6 $ 407.4
Managed Balance Sheet Statistics
(period avg.)
Average Loans $ 82,472 $ 81,652 $ 72,327
Average Earning Assets $ 94,075 $ 92,477 $ 82,905
Average Assets $ 100,640 $ 99,283 $ 88,473
Return on Average Assets (ROA) 2.11 % 2.04 % 1.84 %
Managed Balance Sheet Statistics
(period end)
Loans $ 82,951 $ 81,592 $ 73,367
Total Assets $ 100,757 $ 98,724 $ 88,317
Loan Growth $ 1,359 $ 1,731 $ 1,550
% Loan Growth Q over Q (annualized) 7 % 9 % 9 %
% Loan Growth Y over Y 13 % 14 % 21 %
Capital to Assets Ratio 10.43 % 9.97 % 9.12 %
Capital plus Allowance to
Assets Ratio 11.83 % 11.42 % 10.74 %
Number of Accounts (000's) 48,861 49,062 46,591
% Off-Balance Sheet Securitizations 53 % 53 % 53 %
% at Introductory Rate 6 % 6 % 6 %
Revenue & Expense Statistics
(Managed)
Net Interest Income Growth
(annualized) 3 % 28 % (22)%
Non Interest Income Growth
(annualized) 27 % (10)% (1)%
Revenue Growth (annualized) 12 % 13 % (14)%
Net Interest Margin 7.78 % 7.87 % 7.65 %
Revenue Margin 12.65 % 12.50 % 12.53 %
Risk Adjusted Margin (5) 9.06 % 8.85 % 8.67 %
Operating Expense as a % of Revenues 35.58 % 35.16 % 37.55 %
Operating Expense as a % of Avg Loans
(annualized) 5.13 % 4.98 % 5.39 %
Asset Quality Statistics (Managed)
30+ Day Delinquencies $ 2,893 $ 2,812 $ 2,756
Net Charge-Offs $ 845 $ 844 $ 800
Delinquency Rate (30+ days) 3.49 % 3.45 % 3.76 %
Net Charge-Off Rate 4.10 % 4.13 % 4.42 %
(1) The information in this statistical summary reflects the adjustment to
add back the effect of securitization transactions qualifying as sales
under generally accepted accounting principles. See accompanying
schedule -- "Reconciliation to GAAP Financial Measures."
(2) Includes a $41.1 million gain resulting from the sale of the French
loan portfolio in Q4 2004 and a $31.5 million gain resulting from the
sale of a joint venture investment in South Africa in Q3 2004.
(3) In accordance with the Company's finance charge and fee revenue
recognition policy, the amounts billed to customers but not recognized
as revenue were as follows: Q2 2005 -- $259.8, Q1 2005 -- $243.9, Q4
2004 -- $276.8, Q3 2004 -- $269.7, and Q2 2004 -- $263.5 million.
(4) Includes employee termination benefits and charges for facility
consolidation related to corporate-wide cost reduction initiatives of
$26.0 million, $23.7 million, $42.1 million, $26.7 million and $56.0
million for Q2 2005, Q1 2005, Q4 2004, Q3 2004 and Q2 2004,
respectively. In addition, Q1 2005 includes an $18.8 million reversal
of a previously recognized impairment related to the sale of the
Tampa, FL facility and Q3 2004 had charges of $20.6 million related to
a change in the fixed asset capitalization thresholds and $15.8
million related to impairment of internally developed software.
(5) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY -- MANAGED BASIS(1)
2005 2005 2004
(in thousands) Q2 Q1 Q2
Segment Statistics
US Card:
Net interest income $ 1,151,692 $ 1,250,638 $ 1,124,099
Non-interest income 846,720 779,415 816,034
Provision for loan losses 539,211 489,036 519,569
Non-interest expenses 794,012 836,142 820,424
Income tax provision (benefit) 232,816 246,706 216,051
Net income (loss) $ 432,373 $ 458,169 $ 384,089
Loans receivable $46,408,912 $46,629,763 $45,247,444
Net charge-off rate 4.90% 4.73% 5.19%
Delinquency Rate (30+ days) 3.60% 3.66% 3.95%
Auto Finance:
Net interest income $ 285,744 $ 249,507 $ 195,974
Non-interest income 6,964 11,339 22,666
Provision for loan losses 20,330 92,313 54,908
Non-interest expenses 124,584 113,765 81,345
Income tax provision (benefit) 51,728 19,169 29,659
Net income (loss) $ 96,066 $ 35,599 $ 52,728
Loans receivable $14,520,216 $13,292,953 $ 9,383,432
Net charge-off rate 1.74% 2.89% 2.53%
Delinquency Rate (30+ days) 4.09% 3.51% 5.59%
Global Financial Services:
Net interest income $ 411,825 $ 412,733 $ 338,192
Non-interest income 265,499 233,841 185,488
Provision for loan losses 256,766 188,316 159,001
Non-interest expenses 378,278 351,476 295,117
Income tax provision (benefit) 15,621 36,309 23,471
Net income (loss) $ 26,659 $ 70,473 $ 46,091
Loans receivable $22,053,145 $21,683,102 $18,722,812
Net charge-off rate 3.89% 3.55% 3.43%
Delinquency Rate (30+ days) 2.93% 3.04% 2.50%
Other:
Net interest income $ (18,959) $ (94,118) $ (72,795)
Non-interest income 25,577 46,806 (12,890)
Provision for loan losses (4,144) 3,627 (1,535)
Non-interest expenses 38,743 26,449 31,926
Income tax provision (benefit) (4,001) (19,709) (40,555)
Net income (loss) $ (23,980) $ (57,679) $ (75,521)
Loans receivable $ (30,921) $ (13,826) $ 13,664
Total:
Net interest income $ 1,830,302 $ 1,818,760 $ 1,585,470
Non-interest income 1,144,760 1,071,401 1,011,298
Provision for loan losses 812,163 773,292 731,943
Non-interest expenses 1,335,617 1,327,832 1,228,812
Income tax provision (benefit) 296,164 282,475 228,626
Net income (loss) $ 531,118 $ 506,562 $ 407,387
Loans receivable $82,951,352 $81,591,992 $73,367,352
Net charge-off rate 4.10% 4.13% 4.42%
Delinquency Rate (30+ days) 3.49% 3.45% 3.76%
(1) The information in this statistical summary reflects the adjustment to
add back the effect of securitization transactions qualifying as sales
under generally accepted accounting principles. See accompanying
schedule -- "Reconciliation to GAAP Financial Measures."
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended June 30, 2005
(dollars in thousands)(unaudited)
The Company's consolidated financial statements prepared in accordance with generally accepted accounting principles ("GAAP") are referred to as its "reported" financial statements. Loans included in securitization transactions which qualified as sales under GAAP have been removed from the Company's "reported" balance sheet. However, servicing fees, finance charges, and other fees, net of charge-offs, and interest paid to investors of securitizations are recognized as servicing and securitizations income on the "reported" income statement.
The Company's "managed" consolidated financial statements reflect
adjustments made related to effects of securitization transactions qualifying
as sales under GAAP. The Company generates earnings from its "managed" loan
portfolio which includes both the on-balance sheet loans and off-balance sheet
loans. The Company's "managed" income statement takes the components of the
servicing and securitizations income generated from the securitized portfolio
and distributes the revenue and expense to appropriate income statement line
items from which it originated. For this reason the Company believes the
"managed" consolidated financial statements and related managed metrics to be
useful to stakeholders.
Total Total
Reported Adjustments(1) Managed(2)
Income Statement Measures
Net interest income $ 872,503 $ 957,799 $ 1,830,302
Non-interest income $ 1,581,996 $ (437,236) $ 1,144,760
Total revenue $ 2,454,499 $ 520,563 $ 2,975,062
Provision for loan losses $ 291,600 $ 520,563 $ 812,163
Net charge-offs $ 324,047 $ 520,563 $ 844,610
Balance Sheet Measures
Consumer loans $ 38,610,787 $ 44,340,565 $ 82,951,352
Total assets $ 56,995,967 $ 43,761,307 $100,757,274
Average consumer loans $ 38,237,463 $ 44,234,365 $ 82,471,828
Average earning assets $ 51,693,930 $ 42,380,839 $ 94,074,769
Average total assets $ 56,962,652 $ 43,677,152 $100,639,804
Delinquencies $ 1,399,552 $ 1,493,307 $ 2,892,859
(1) Includes adjustments made related to the effects of securitization
transactions qualifying as sales under GAAP and adjustments made to
reclassify to "managed" loans outstanding the collectible portion of
billed finance charge and fee income on the investors' interest in
securitized loans excluded from loans outstanding on the "reported"
balance sheet in accordance with Financial Accounting Standards Board
Staff Position, "Accounting for Accrued Interest Receivable Related to
Securitized and Sold Receivables under FASB Statement 140, Accounting
for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities," issued April 2003.
(2) The Managed loan portfolio does not include auto loans which have been
sold in whole loan sale transactions where the Company has retained
servicing rights.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
June 30 March 31 June 30
2005 2005 2004
Assets:
Cash and due from banks $ 581,267 $ 761,234 $ 346,978
Federal funds sold and resale
agreements 1,283,015 12,283 1,082,939
Interest-bearing deposits at
other banks 721,806 446,793 290,242
Cash and cash equivalents 2,586,088 1,220,310 1,720,159
Securities available for sale 9,522,515 9,460,688 8,946,836
Consumer loans 38,610,787 37,959,203 34,551,343
Less: Allowance for
loan losses (1,405,000) (1,440,000) (1,425,000)
Net loans 37,205,787 36,519,203 33,126,343
Accounts receivable from
securitizations 4,890,933 5,605,009 3,972,754
Premises and equipment, net 782,372 806,411 868,203
Interest receivable 274,547 259,350 234,348
Goodwill 739,889 747,756 352,157
Other 993,836 1,012,839 848,861
Total assets $56,995,967 $55,631,566 $50,069,661
Liabilities:
Interest-bearing deposits $26,521,031 $25,854,025 $24,178,756
Senior and subordinated notes 6,692,311 6,876,432 7,727,810
Other borrowings 9,692,941 10,243,235 7,885,340
Interest payable 252,677 242,464 256,293
Other 3,425,226 3,435,680 2,800,405
Total liabilities 46,584,186 46,651,836 42,848,604
Stockholders' Equity:
Common stock 2,650 2,536 2,428
Paid-in capital, net 3,783,074 2,878,237 2,348,401
Retained earnings and cumulative
other comprehensive income 6,695,753 6,166,070 4,919,656
Less: Treasury stock, at cost (69,696) (67,113) (49,428)
Total stockholders' equity 10,411,781 8,979,730 7,221,057
Total liabilities and
stockholders' equity $56,995,967 $55,631,566 $50,069,661
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
June 30 March 31 June 30
2005 2005 2004
Interest Income:
Consumer loans, including
past-due fees $1,190,098 $1,184,036 $1,019,076
Securities available for sale 91,245 90,164 76,081
Other 70,557 62,068 56,789
Total interest income 1,351,900 1,336,268 1,151,946
Interest Expense:
Deposits 279,438 264,025 244,978
Senior and subordinated notes 104,593 114,480 124,809
Other borrowings 95,366 97,242 71,142
Total interest expense 479,397 475,747 440,929
Net interest income 872,503 860,521 711,017
Provision for loan losses 291,600 259,631 242,256
Net interest income after
provision for loan losses 580,903 600,890 468,761
Non-Interest Income:
Servicing and securitizations 1,024,629 951,602 868,041
Service charges and other
customer- related fees 360,410 401,186 368,469
Interchange 132,068 123,440 117,329
Other 64,889 39,751 42,225
Total non-interest income 1,581,996 1,515,979 1,396,064
Non-Interest Expense:
Salaries and associate benefits 442,101 433,501 419,695
Marketing 277,034 311,759 253,838
Communications and data processing 138,916 142,819 108,191
Supplies and equipment 83,661 86,446 74,582
Occupancy 40,209 17,901 70,494
Other 353,696 335,406 302,012
Total non-interest expense 1,335,617 1,327,832 1,228,812
Income before income taxes 827,282 789,037 636,013
Income taxes 296,164 282,475 228,626
Net income $ 531,118 $ 506,562 $ 407,387
Basic earnings per share $ 2.10 $ 2.08 $ 1.74
Diluted earnings per share $ 2.03 $ 1.99 $ 1.65
Dividends paid per share $ 0.03 $ 0.03 $ 0.03
Six Months Ended
June 30 June 30
2005 2004
Interest Income:
Consumer loans, including past-due fees $ 2,374,134 $ 2,054,093
Securities available for sale 181,409 139,797
Other 132,625 122,787
Total interest income 2,688,168 2,316,677
Interest Expense:
Deposits 543,463 484,490
Senior and subordinated notes 219,073 249,227
Other borrowings 192,608 139,921
Total interest expense 955,144 873,638
Net interest income 1,733,024 1,443,039
Provision for loan losses 551,231 485,924
Net interest income after provision
for loan losses 1,181,793 957,115
Non-Interest Income:
Servicing and securitizations 1,976,231 1,785,710
Service charges and other customer-
related fees 761,596 722,962
Interchange 255,508 222,924
Other 104,640 107,602
Total non-interest income 3,097,975 2,839,198
Non-Interest Expense:
Salaries and associate benefits 875,602 844,087
Marketing 588,793 508,985
Communications and data processing 281,735 225,297
Supplies and equipment 170,107 162,903
Occupancy 58,110 109,213
Other 689,102 603,223
Total non-interest expense 2,663,449 2,453,708
Income before income taxes 1,616,319 1,342,605
Income taxes 578,639 484,412
Net income $ 1,037,680 $ 858,193
Basic earnings per share $ 4.18 $ 3.68
Diluted earnings per share $ 4.02 $ 3.48
Dividends paid per share $ 0.05 $ 0.05
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Reported Quarter Ended 6/30/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $38,237,463 $ 1,190,098 12.45%
Securities available for sale 9,592,645 91,245 3.80%
Other 3,863,822 70,557 7.30%
Total earning assets $51,693,930 $ 1,351,900 10.46%
Interest-bearing liabilities:
Deposits $26,391,233 $279,438 4.24%
Senior and subordinated notes 6,987,888 104,593 5.99%
Other borrowings 10,838,955 95,366 3.52%
Total interest-bearing liabilities $44,218,076 $ 479,397 4.34%
Net interest spread 6.12%
Interest income to average
earning assets 10.46%
Interest expense to average
earning assets 3.71%
Net interest margin 6.75%
Reported Quarter Ended 3/31/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $38,203,914 $ 1,184,036 12.40%
Securities available for sale 9,654,437 90,164 3.74%
Other 3,039,304 62,068 8.17%
Total earning assets $50,897,655 $ 1,336,268 10.50%
Interest-bearing liabilities:
Deposits $25,654,741 $ 264,025 4.12%
Senior and subordinated notes 6,908,505 114,480 6.63%
Other borrowings 10,698,085 97,242 3.64%
Total interest-bearing liabilities $43,261,331 $ 475,747 4.40%
Net interest spread 6.10%
Interest income to average
earning assets 10.50%
Interest expense to average
earning assets 3.74%
Net interest margin 6.76%
Reported Quarter Ended 6/30/04
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $33,290,487 $ 1,019,076 12.24%
Securities available for sale 9,291,237 76,081 3.28%
Other 3,123,672 56,789 7.27%
Total earning assets $45,705,396 $ 1,151,946 10.08%
Interest-bearing liabilities:
Deposits $23,948,154 $ 244,978 4.09%
Senior and subordinated notes 7,380,437 124,809 6.76%
Other borrowings 8,488,027 71,142 3.35%
Total interest-bearing liabilities $39,816,618 $ 440,929 4.43%
Net interest spread 5.65%
Interest income to average
earning assets 10.08%
Interest expense to average
earning assets 3.86%
Net interest margin 6.22%
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 6/30/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $82,471,828 $ 2,652,370 12.86%
Securities available for sale 9,592,645 91,245 3.80%
Other 2,010,296 22,503 4.48%
Total earning assets $94,074,769 $ 2,766,118 11.76%
Interest-bearing liabilities:
Deposits $26,391,233 $ 279,438 4.24%
Senior and subordinated notes 6,987,888 104,593 5.99%
Other borrowings 10,838,955 95,366 3.52%
Securitization liability 43,810,547 456,419 4.17%
Total interest-bearing liabilities $88,028,623 $ 935,816 4.25%
Net interest spread 7.51%
Interest income to average
earning assets 11.76%
Interest expense to average
earning assets 3.98%
Net interest margin 7.78%
Managed (1) Quarter Ended 3/31/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $81,652,485 $ 2,631,751 12.89%
Securities available for sale 9,654,437 90,164 3.74%
Other 1,170,566 17,672 6.04%
Total earning assets $92,477,488 $ 2,739,587 11.85%
Interest-bearing liabilities:
Deposits $25,654,741 $ 264,025 4.12%
Senior and subordinated notes 6,908,505 114,480 6.63%
Other borrowings 10,698,085 97,242 3.64%
Securitization liability 43,215,671 445,080 4.12%
Total interest-bearing liabilities $86,477,002 $ 920,827 4.26%
Net interest spread 7.59%
Interest income to average
earning assets 11.85%
Interest expense to average
earning assets 3.98%
Net interest margin 7.87%
Managed (1) Quarter Ended 6/30/04
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $72,327,220 $ 2,314,957 12.80%
Securities available for sale 9,291,237 76,081 3.28%
Other 1,286,629 9,517 2.96%
Total earning assets $82,905,086 $ 2,400,555 11.58%
Interest-bearing liabilities:
Deposits $23,948,154 $ 244,978 4.09%
Senior and subordinated notes 7,380,437 124,809 6.76%
Other borrowings 8,488,027 71,142 3.35%
Securitization liability 38,514,533 374,156 3.89%
Total interest-bearing liabilities $78,331,151 $ 815,085 4.16%
Net interest spread 7.42%
Interest income to average
earning assets 11.58%
Interest expense to average
earning assets 3.93%
Net interest margin 7.65%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
SOURCE Capital One Financial Corporation
CONTACT: Investor Relations: Mike Rowen, +1-703-720-2455, or Media Relations: Tatiana Stead, +1-703-720-2352 or Julie Rakes, +1-804-284-5800, all of Capital One Financial Corporation