Capital One Reports Third Quarter Earnings
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MCLEAN, Va., Oct. 20 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE: COF) today announced that its earnings for the third quarter of 2005 were $491.1 million, or $1.81 per share (diluted), compared with $490.2 million, or $1.97 per share (diluted), for the third quarter of 2004, and $531.1 million, or $2.03 per share (diluted), for the second quarter of 2005.
The results for the quarter include the impact of two one-time events: First, a $44 million impact related to the Gulf Coast hurricanes; and second, a $75 million impact from the unprecedented number of bankruptcy filings made last week immediately in advance of the new legislation, effective October 17, 2005. As a result of these two events, the company expects its 2005 earnings to be on the lower end of its range of between $6.60 and $7.00 per share (diluted), including the expected impact of completing the acquisition of Hibernia Corporation.
"Capital One had another solid quarter of revenue growth and profitability," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "The strength and resilience of our diversified businesses positions us well to weather one-time events, such as the temporary spike in bankruptcy filings, while continuing to deliver strong results and profitable growth."
Managed loans grew to $84.8 billion as of September 30, 2005, up $1.8 billion, or 9 percent annualized, from the previous quarter, and up $9.3 billion, or 12 percent, from the third quarter of 2004. The company currently expects that managed loans will grow at a rate of approximately 12 percent during 2005, excluding the impact of the Hibernia transaction. The company continues to expect 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 increased to 4.14 percent in the third quarter of 2005 from 4.10 percent in the previous quarter, and from 4.05 percent in the third quarter of 2004. Due to the unprecedented volume of bankruptcy filings made in October, management estimates the impact of the increased bankruptcy filings on its managed net charge-off rate in the fourth quarter of 2005 to be approximately 50 to 100 basis points. As a result, the company now expects its managed net charge-off rate for the fourth quarter of 2005 to be approximately five percent, excluding the impact of the Hibernia transaction.
The company increased its allowance for loan losses in the third quarter of 2005 by $42.0 million. The increase was driven by strong growth in auto loans, the increase in bankruptcy filings, and a build in allowance for loan losses related to the impact of the Gulf Coast hurricanes. The company expects a net build in allowance for the full year of 2005, excluding the impact of the Hibernia transaction.
The managed delinquency rate (30+ days) increased to 3.73 percent as of September 30, 2005 from 3.49 percent as of the end of the previous quarter. The managed delinquency rate as of September 30, 2004 was 3.90 percent.
Capital One's managed revenue margin decreased to 12.54 percent in the third quarter of 2005 from 12.65 percent in the previous quarter, and from 13.03 percent in the third 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.
Marketing expenses for the third quarter of 2005 were $343.7 million, up $66.7 million from the $277.0 million spent in the second quarter of 2005. Marketing expenses were $317.7 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 decreased to 4.88 percent in the third quarter of 2005, down from 5.13 percent in the previous quarter and down from 5.35 percent in the third quarter of 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.
"These results keep us 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 Corporation, albeit more likely at the lower end of the range," said Gary L. Perlin, Capital One's Chief Financial Officer. "While the anticipated closing of the acquisition has been delayed, it is not expected to have a material impact on the integration costs or synergies that Capital One expects to realize from the acquisition."
The acquisition of Hibernia is scheduled to close two business days following the special meeting of Hibernia shareholders, which is scheduled for November 14, 2005, subject to Hibernia shareholders' approval of the amended merger agreement.
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 October 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 failure of Hibernia stockholders to approve the Capital One -- Hibernia transaction; the risk that the Hibernia businesses will not be integrated successfully; the risk that the cost savings and any other synergies from the Hibernia transaction may not be fully realized or may take longer to realize than expected; disruption from the Hibernia transaction making it more difficult to maintain relationships with customers, employees or suppliers; the impact of property, credit and other losses expected as the result of Hurricane Katrina and Hurricane Rita; the amount of government, private and philanthropic investment, including deposits, in the geographic regions impacted by Hurricane Katrina and Hurricane Rita; the pace and magnitude of economic recovery in the region impacted by Hurricane Katrina and Hurricane Rita; and the potential impact of damages from future hurricanes and other storms.
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 October 1, 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 financial 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 49.2 million accounts and $84.8 billion in managed loans outstanding as of September 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: Third quarter 2005 financial results, SEC Filings, and third 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) Q3 Q2 Q3
Earnings (Reported Basis)
Net Interest Income $910.2 $872.5 $775.4
Non-Interest Income 1,594.6 (2) 1,582.0 1,539.4 (1)
Total Revenue(3) 2,504.8 2,454.5 2,314.8
Provision for Loan Losses 374.2 (2) 291.6 267.8
Marketing Expenses 343.7 277.0 317.7
Operating Expenses(4) 1,021.9 1,058.6 994.3
Income Before Taxes 765.0 827.3 735.0
Tax Rate 35.8 % 35.8 % 33.3 %
Net Income $491.1 $531.1 $490.2
Common Share Statistics
Basic EPS $1.88 $2.10 $2.07
Diluted EPS $1.81 $2.03 $1.97
Dividends Per Share $0.03 $0.03 $0.03
Book Value Per Share (period
end) $41.40 $39.51 $32.67
Stock Price Per Share (period
end) $79.52 $80.01 $73.90
Total Market Capitalization
(period end) $21,200.0 $21,082.6 $17,936.8
Shares Outstanding (period end) 266.6 263.5 242.7
Shares Used to Compute Basic EPS 260.9 252.6 236.4
Shares Used to Compute Diluted
EPS 270.7 261.7 249.0
Reported Balance Sheet
Statistics (period avg.)
Average Loans $38,556 $38,237 $34,772
Average Earning Assets $53,453 $51,694 $47,267
Average Assets $59,204 $56,963 $51,496
Average Equity $10,802 $8,925 $7,561
Return on Average Assets (ROA) 3.32 % 3.73 % 3.81 %
Return on Average Equity (ROE) 18.19 % 23.80 % 25.93 %
Reported Balance Sheet
Statistics (period end)
Loans $38,852 $38,611 $35,161
Total Assets $60,425 $56,996 $51,960
Capital (5) $11,137 $10,511 $8,769
Loan growth $241 $652 $610
% Loan Growth Q Over Q
(annualized) 2 % 7 % 7 %
% Loan Growth Y Over Y 10 % 12 % 15 %
Capital to Assets Ratio 18.43 % 18.44 % 16.88 %
Capital plus Allowance to Assets
Ratio 20.83 % 20.91 % 19.56 %
Revenue & Expense Statistics
(Reported)
Net Interest Income Growth
(annualized) 17 % 6 % 36 %
Non Interest Income Growth
(annualized) 3 % 17 % 41 %
Revenue Growth (annualized) 8 % 13 % 39 %
Net Interest Margin 6.81 % 6.75 % 6.56 %
Revenue Margin 18.74 % 18.99 % 19.59 %
Risk Adjusted Margin (6) 16.18 % 16.49 % 17.07 %
Operating Expense as a % of
Revenues 40.80 % 43.13 % 42.95 %
Operating Expense as a % of Avg
Loans (annualized) 10.60 % 11.07 % 11.44 %
Asset Quality Statistics
(Reported)
Allowance $1,447 (2) $1,405 $1,395
30+ Day Delinquencies $1,497 $1,400 $1,407
Net Charge-Offs $342 $324 $298
Allowance as a % of Reported
Loans 3.72 % 3.64 % 3.97 %
Delinquency Rate (30+ days) 3.85 % 3.62 % 4.00 %
Net Charge-Off Rate 3.55 % 3.39 % 3.43 %
(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) Includes a $15.6 million write-down for retained interests and a $28.5
million build in the allowance for loan losses related to the impact
of the Gulf Coast Hurricanes.
(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: Q3 2005 - $255.6, Q2 2005 - $259.8, Q1
2005 - $243.9, Q4 2004 - $276.8, and Q3 2004 - $269.7.
(4) Includes employee termination benefits and charges for facility
consolidation related to corporate-wide cost reduction initiatives of
$16.2 million, $26.0 million, $23.7 million, $42.1 million, and $26.7
million for Q3 2005, Q2 2005, Q1 2005, Q4 2004, and Q3 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) Includes preferred interests for all periods presented and mandatory
convertible securities for all periods prior to Q2 2005.
(6) 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) Q3 Q2 Q3
Earnings (Managed Basis)
Net Interest Income $1,931.2 $1,830.3 $1,670.4
Non-Interest Income 1,099.8 (3) 1,144.8 1,099.8 (2)
Total Revenue(4) 3,031.0 2,975.1 2,770.2
Provision for Loan Losses 900.4 (3) 812.2 723.2
Marketing Expenses 343.7 277.0 317.7
Operating Expenses(5) 1,021.9 1,058.6 994.3
Income Before Taxes 765.0 827.3 735.0
Tax Rate 35.8 % 35.8 % 33.3 %
Net Income $491.1 $531.1 $490.2
Managed Balance Sheet Statistics
(period avg.)
Average Loans $83,828 $82,472 $74,398
Average Earning Assets $96,696 $94,075 $85,045
Average Assets $103,913 $100,640 $90,543
Return on Average Assets (ROA) 1.89 % 2.11 % 2.17 %
Managed Balance Sheet Statistics
(period end)
Loans $84,768 $82,951 $75,457
Total Assets $105,743 $100,757 $91,665
Loan Growth $1,817 $1,359 $2,090
% Loan Growth Q over Q (annualized) 9 % 7 % 11 %
% Loan Growth Y over Y 12 % 13 % 12 %
Capital to Assets Ratio 10.53 % 10.43 % 9.57 %
Capital plus Allowance to Assets
Ratio 11.90 % 11.83 % 11.09 %
Number of Accounts (000's) 49,192 48,861 47,224
% Off-Balance Sheet Securitizations 54 % 53 % 53 %
% at Introductory Rate 6 % 6 % 6 %
Revenue & Expense Statistics
(Managed)
Net Interest Income Growth
(annualized) 22 % 3 % 21 %
Non Interest Income Growth
(annualized) (16)% 27 % 35 %
Revenue Growth (annualized) 8 % 12 % 27 %
Net Interest Margin 7.99 % 7.78 % 7.86 %
Revenue Margin 12.54 % 12.65 % 13.03 %
Risk Adjusted Margin (6) 8.95 % 9.06 % 9.48 %
Operating Expense as a % of
Revenues 33.71 % 35.58 % 35.89 %
Operating Expense as a % of Avg
Loans (annualized) 4.88 % 5.13 % 5.35 %
Asset Quality Statistics (Managed)
30+ Day Delinquencies $3,164 $2,893 $2,944
Net Charge-Offs $868 $845 $754
Delinquency Rate (30+ days) 3.73 % 3.49 % 3.90 %
Net Charge-Off Rate 4.14 % 4.10 % 4.05 %
(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) Includes a $15.6 million write-down for retained interests and a $28.5
million build in the allowance for loan losses related to the impact
of the Gulf Coast Hurricanes.
(4) 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: Q3 2005 - $255.6, Q2 2005 - $259.8, Q1
2005 - $243.9, Q4 2004 - $276.8, and Q3 2004 - $269.7.
(5) Includes employee termination benefits and charges for facility
consolidation related to corporate-wide cost reduction initiatives of
$16.2 million, $26.0 million, $23.7 million, $42.1 million, and $26.7
million for Q3 2005, Q2 2005, Q1 2005, Q4 2004, and Q3 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.
(6) 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) Q3 Q2 Q3
Segment Statistics
US Card:
Net interest income $1,207,832 $1,151,692 $1,172,447
Non-interest income 851,036 846,720 811,465
Provision for loan losses 483,759 539,211 503,179
Non-interest expenses 833,925 794,012 833,183
Income tax provision (benefit) 259,414 232,816 233,118
Net income (loss) $481,770 $432,373 $414,432
Loans receivable $46,291,468 $46,408,912 $46,081,967
Net charge-off rate 4.69% 4.90% 4.68%
Delinquency Rate (30+ days) 3.86% 3.60% 4.14%
Auto Finance:
Net interest income $300,102 $285,744 $205,385
Non-interest income 3,005 6,964 20,926
Provision for loan losses 185,219 20,330 56,483
Non-interest expenses 129,719 124,584 83,401
Income tax provision (benefit) (4,141) 51,728 31,114
Net income (loss) $(7,690) $96,066 $55,313
Loans receivable $15,730,713 $14,520,216 $9,734,254
Net charge-off rate 2.54% 1.74% 2.63%
Delinquency Rate (30+ days) 4.65% 4.09% 5.54%
Global Financial Services:
Net interest income $423,629 $411,825 $361,165
Non-interest income 273,067 265,499 240,597
Provision for loan losses 217,032 256,766 150,921
Non-interest expenses 356,254 378,278 322,552
Income tax provision (benefit) 41,521 15,621 41,445
Net income (loss) $81,889 $26,659 $86,844
Loans receivable $22,770,803 $22,053,145 $19,614,693
Net charge-off rate 4.09% 3.89% 3.26%
Delinquency Rate (30+ days) 2.93% 2.93% 2.65%
Other:
Net interest income $(368) $(18,959) $(68,630)
Non-interest income (27,301) 25,577 26,785
Provision for loan losses 14,324 (4,144) 12,593
Non-interest expenses 45,740 38,743 72,848
Income tax provision (benefit) (22,913) (4,001) (60,858)
Net income (loss) $(64,820) $(23,980) $(66,428)
Loans receivable $(25,301) $(30,921) $25,917
Total:
Net interest income $1,931,195 $1,830,302 $1,670,367
Non-interest income 1,099,807 1,144,760 1,099,773
Provision for loan losses 900,334 812,163 723,176
Non-interest expenses 1,365,638 1,335,617 1,311,984
Income tax provision (benefit) 273,881 296,164 244,819
Net income (loss) $491,149 $531,118 $490,161
Loans receivable $84,767,683 $82,951,352 $75,456,831
Net charge-off rate 4.14% 4.10% 4.05%
Delinquency Rate (30+ days) 3.73% 3.49% 3.90%
(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 September 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 $910,219 $1,020,976 $1,931,195
Non-interest income $1,594,616 $(494,809) $1,099,807
Total revenue $2,504,835 $526,167 $3,031,002
Provision for loan losses $374,167 $526,167 $900,334
Net charge-offs $341,821 $526,167 $867,988
Balance Sheet Measures
Consumer loans $38,851,763 $45,915,920 $84,767,683
Total assets $60,424,517 $45,318,131 $105,742,648
Average consumer loans $38,555,575 $45,271,890 $83,827,465
Average earning assets $53,452,923 $43,243,421 $96,696,344
Average total assets $59,203,532 $44,709,269 $103,912,801
Delinquencies $1,496,713 $1,667,064 $3,163,777
(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)
September 30 June 30 September 30
2005 2005 2004
Assets:
Cash and due from banks $812,330 $581,267 $454,843
Federal funds sold and resale
agreements 2,409,392 1,283,015 449,700
Interest-bearing deposits at other
banks 1,380,880 721,806 538,324
Cash and cash equivalents 4,602,602 2,586,088 1,442,867
Securities available for sale 9,436,667 9,522,515 9,519,089
Consumer loans 38,851,763 38,610,787 35,160,635
Less: Allowance for loan losses (1,447,000) (1,405,000) (1,395,000)
Net loans 37,404,763 37,205,787 33,765,635
Accounts receivable from
securitizations 6,126,282 4,890,933 4,955,739
Premises and equipment, net 768,198 782,372 812,724
Interest receivable 367,757 274,547 232,808
Goodwill 736,058 739,889 352,157
Other 982,190 993,836 878,536
Total assets $60,424,517 $56,995,967 $51,959,555
Liabilities:
Interest-bearing deposits $26,772,538 $26,521,031 $25,354,323
Senior and subordinated notes 6,651,891 6,692,311 6,968,182
Other borrowings 11,613,179 9,692,941 8,490,631
Interest payable 350,842 252,677 250,227
Other 3,998,840 3,425,226 2,966,132
Total liabilities 49,387,290 46,584,186 44,029,495
Stockholders' Equity:
Common stock 2,682 2,650 2,440
Paid-in capital, net 3,979,525 3,783,074 2,463,629
Retained earnings and cumulative
other comprehensive income 7,124,900 6,695,753 5,513,694
Less: Treasury stock, at cost (69,880) (69,696) (49,703)
Total stockholders' equity 11,037,227 10,411,781 7,930,060
Total liabilities and
stockholders' equity $60,424,517 $56,995,967 $51,959,555
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
September 30 June 30 September 30
2005 2005(1) 2004(1)
Interest Income:
Consumer loans, including
past-due fees $1,228,160 $1,190,098 $1,083,286
Securities available for sale 87,978 91,245 84,492
Other 88,477 70,557 60,635
Total interest income 1,404,615 1,351,900 1,228,413
Interest Expense:
Deposits 285,611 279,438 257,349
Senior and subordinated notes 98,309 104,593 121,166
Other borrowings 110,476 95,366 74,523
Total interest expense 494,396 479,397 453,038
Net interest income 910,219 872,503 775,375
Provision for loan losses 374,167 291,600 267,795
Net interest income after provision
for loan losses 536,052 580,903 507,580
Non-Interest Income:
Servicing and securitizations 993,788 996,043 940,246
Service charges and other customer-
related fees 381,381 383,280 385,648
Interchange 125,454 132,068 117,043
Other 93,993 70,605 96,447
Total non-interest income 1,594,616 1,581,996 1,539,384
Non-Interest Expense:
Salaries and associate benefits 414,348 442,101 415,988
Marketing 343,708 277,034 317,653
Communications and data processing 144,321 138,916 112,191
Supplies and equipment 86,866 83,661 94,190
Occupancy 39,426 40,209 41,407
Other 336,969 353,696 330,555
Total non-interest expense 1,365,638 1,335,617 1,311,984
Income before income taxes 765,030 827,282 734,980
Income taxes 273,881 296,164 244,819
Net income $491,149 $531,118 $490,161
Basic earnings per share $1.88 $2.10 $2.07
Diluted earnings per share $1.81 $2.03 $1.97
Dividends paid per share $0.03 $0.03 $0.03
(1) Certain prior period amounts have been reclassified to conform to the
current period presentation.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Nine Months Ended
September 30 September 30
2005 2004(1)
Interest Income:
Consumer loans, including past-due
fees $3,602,294 $3,137,379
Securities available for sale 269,387 224,289
Other 221,102 183,422
Total interest income 4,092,783 3,545,090
Interest Expense:
Deposits 829,074 741,839
Senior and subordinated notes 317,382 370,393
Other borrowings 303,084 214,444
Total interest expense 1,449,540 1,326,676
Net interest income 2,643,243 2,218,414
Provision for loan losses 925,398 753,719
Net interest income after provision
for loan losses 1,717,845 1,464,695
Non-Interest Income:
Servicing and securitizations 2,923,768 2,724,605
Service charges and other customer-
related fees 1,179,857 1,108,610
Interchange 380,962 339,967
Other 208,004 205,400
Total non-interest income 4,692,591 4,378,582
Non-Interest Expense:
Salaries and associate benefits 1,289,950 1,260,075
Marketing 932,501 826,638
Communications and data processing 426,056 337,488
Supplies and equipment 256,973 257,093
Occupancy 97,536 150,620
Other 1,026,071 933,778
Total non-interest expense 4,029,087 3,765,692
Income before income taxes 2,381,349 2,077,585
Income taxes 852,520 729,231
Net income $1,528,829 $1,348,354
Basic earnings per share $6.05 $5.75
Diluted earnings per share $5.82 $5.45
Dividends paid per share $0.08 $0.08
(1) Certain prior period amounts have been reclassified to conform to the
current period presentation.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Reported Quarter Ended 9/30/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $38,555,575 $1,228,160 12.74%
Securities available for sale 9,535,858 87,978 3.69%
Other 5,361,490 88,477 6.60%
Total earning assets $53,452,923 $1,404,615 10.51%
Interest-bearing liabilities:
Deposits $26,618,472 $285,611 4.29%
Senior and subordinated notes 6,683,533 98,309 5.88%
Other borrowings 10,698,216 110,476 4.13%
Total interest-bearing liabilities $44,000,221 $494,396 4.49%
Net interest spread 6.02%
Interest income to average earning
assets 10.51%
Interest expense to average earning
assets 3.70%
Net interest margin 6.81%
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%
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Reported Quarter Ended 9/30/04
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $34,772,489 $1,083,286 12.46%
Securities available for sale 9,372,713 84,492 3.61%
Other 3,122,208 60,635 7.77%
Total earning assets $47,267,410 $1,228,413 10.40%
Interest-bearing liabilities:
Deposits $24,713,924 $257,349 4.17%
Senior and subordinated notes 7,218,916 121,166 6.71%
Other borrowings 8,674,298 74,523 3.44%
Total interest-bearing liabilities $40,607,138 $453,038 4.46%
Net interest spread 5.94%
Interest income to average earning
assets 10.40%
Interest expense to average earning
assets 3.84%
Net interest margin 6.56%
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 9/30/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $83,827,465 $2,784,301 13.29%
Securities available for sale 9,535,858 87,978 3.69%
Other 3,333,021 35,496 4.26%
Total earning assets $96,696,344 $2,907,775 12.03%
Interest-bearing liabilities:
Deposits $26,618,472 $285,611 4.29%
Senior and subordinated notes 6,683,533 98,309 5.88%
Other borrowings 10,698,216 110,476 4.13%
Securitization liability 44,814,893 482,184 4.30%
Total interest-bearing liabilities $88,815,114 $976,580 4.40%
Net interest spread 7.63%
Interest income to average earning
assets 12.03%
Interest expense to average earning
assets 4.04%
Net interest margin 7.99%
(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 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%
(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 9/30/04
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Consumer loans $74,398,301 $2,419,685 13.01%
Securities available for sale 9,372,713 84,492 3.61%
Other 1,273,583 12,587 3.95%
Total earning assets $85,044,597 $2,516,764 11.84%
Interest-bearing liabilities:
Deposits $24,713,924 $257,349 4.17%
Senior and subordinated notes 7,218,916 121,166 6.71%
Other borrowings 8,674,298 74,523 3.44%
Securitization liability 39,101,228 393,359 4.02%
Total interest-bearing liabilities $79,708,366 $846,397 4.25%
Net interest spread 7.59%
Interest income to average earning
assets 11.84%
Interest expense to average earning
assets 3.98%
Net interest margin 7.86%
(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, Media Relations: Tatiana Stead, +1-703-720-2352, or Julie Rakes, +1-804-284-5800, all of Capital One Financial Corporation