Capital One Reports Earnings for 2005
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Company Provides Earnings Guidance for 2006
MCLEAN, Va., Jan. 19 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE: COF) today announced earnings per share (diluted) for 2005 of $6.73. Additionally, the company provided earnings guidance for 2006 of between $7.40 and $7.80 per share (diluted).
Earnings were $1.8 billion, or $6.73 per share (diluted), for the year compared with $1.5 billion or $6.21 per share (diluted), in 2004. Earnings for the fourth quarter of 2005 were $280.3 million, or $.97 per share (diluted), compared with $195.1 million, or $.77 per share (diluted), for the fourth quarter of 2004, and $491.1 million, or $1.81 per share (diluted), in the previous quarter.
Current period results include a $30.6 million contribution to net income from the acquisition of Hibernia Corporation, which was completed on November 16, 2005.
"Capital One delivered another year of solid results across our diversified consumer financial services businesses and is well-positioned for continued growth and profitability in 2006," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "With the addition of Hibernia, we have further expanded our broad portfolio of lending and deposit products, as well as our distribution channels, to better serve our customers."
Managed loans at December 31, 2005 were $105.5 billion, up $25.7 billion, or 32 percent, from December 31, 2004. This includes organic growth in the quarter of $4.4 billion and $16.3 billion of loans acquired through Hibernia. Excluding the impact of Hibernia, managed loans grew 12 percent in 2005, in line with expectations. The company expects that managed loans will grow at a rate of between 7 and 9 percent during 2006.
The managed charge-off rate increased to 4.53 percent in the fourth quarter of 2005 from 4.14 percent in the previous quarter, and 4.37 percent in the fourth quarter of 2004, principally driven by the unusually high volume of bankruptcy filings in October in advance of the effective date of the new bankruptcy legislation. The company built its allowance for loan losses by $126.6 million in the fourth quarter of 2005, driven largely by the growth in reported loans.
The managed delinquency rate (30+ days) decreased to 3.24 percent as of December 31, 2005, driven largely by the addition of Hibernia loans to the portfolio. The delinquency rate decreased from 3.73 percent as of the end of the previous quarter and from 3.82 percent as of December 31, 2004.
Capital One's managed revenue margin decreased to 12.06 percent in the fourth quarter of 2005 from 12.54 percent in the previous quarter, primarily due to the addition of Hibernia's loan portfolio. The company's managed revenue margin was 12.66 percent in the fourth quarter of 2004. Return on managed assets for 2005 of 1.72 percent remained consistent with 1.73 percent in 2004.
"Expectations for continued steady growth in 2006 allow us to provide earnings guidance of between $7.40 and $7.80 per share (diluted) for 2006," said Gary L. Perlin, Capital One's Chief Financial Officer. "We also expect continued stability in return on managed assets in 2006 as decreases in revenue margin are expected to be offset primarily by reductions in provision expense and also by reductions in operating costs as a percent of assets."
Fourth quarter marketing expenses increased $103.7 million to $447.4 million from $343.7 million in the previous quarter and decreased $63.7 million from the fourth quarter of 2004. Marketing expenses for 2005 were $1.4 billion, up three percent over the $1.3 billion in marketing expenses in 2004.
Annualized operating expenses as a percentage of average managed loans increased to 5.27 percent in the fourth quarter of 2005, from 4.88 percent in the previous quarter and decreased from 5.44 percent in the fourth quarter of 2004.
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 January 19, 2006 for 2006 earnings, return on assets, loan growth rates, operating costs, and the 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 risks that the Hibernia businesses will not be integrated successfully and that the cost savings and other synergies from the Hibernia transaction may not be fully realized; the long-term impact of the Gulf Coast hurricanes on the impacted region, including the amount of property and credit losses, the amount of investment, including deposits, in the region, and the pace and magnitude of economic recovery in the region.
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-Q for the quarter ended September 30, 2005.
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., Capital One Auto Finance, Inc., and Hibernia National Bank (http://www.hibernia.com), offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One's subsidiaries collectively had $47.9 billion in deposits and $105.5 billion in managed loans outstanding as of December 31, 2005. Capital One, a Fortune 500 company, trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 500 index.
NOTE: Fourth quarter 2005 financial results, SEC Filings, and fourth 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 (ET) 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) Q4 Q3 Q4
Earnings (Reported Basis)
Net Interest Income $ 1,037.0 $ 910.2 $ 784.6
Non-Interest Income 1,665.5(3) 1,594.6(2) 1,521.5(1)
Total Revenue(4) 2,702.5 2,504.8 2,306.1
Provision for Loan Losses 565.7 374.2(2) 467.1
Marketing Expenses 447.4 343.7 511.1
Operating Expenses 1,241.7(5) 1,021.9 1,045.4
Income Before Taxes 447.7 765.0 282.5
Tax Rate 37.3 % 35.8 % 30.9 %
Net Income $ 280.3(6) $ 491.1 $ 195.1
Common Share Statistics
Basic EPS $ 1.01 $ 1.88 $ 0.82
Diluted EPS $ 0.97 $ 1.81 $ 0.77
Dividends Per Share $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period
end) $ 46.97 $ 41.40 $ 33.99
Stock Price Per Share (period
end) $ 86.40 $ 79.52 $ 84.21
Total Market Capitalization
(period end) $25,989.1 $21,200.0 $20,783.0
Shares Outstanding (period end) 300.8 266.6 246.8
Shares Used to Compute Basic EPS 278.8 260.9 239.2
Shares Used to Compute Diluted
EPS 287.7 270.7 253.0
Reported Balance Sheet
Statistics (period avg.)
Average Loans $ 48,701 $ 38,556 $ 36,096
Average Earning Assets $ 66,624 $ 53,453 $ 49,500
Average Assets $ 74,443 $ 59,204 $ 53,339
Average Equity $ 12,528 $ 10,802 $ 8,221
Return on Average Assets (ROA) 1.51 % 3.32 % 1.46 %
Return on Average Equity (ROE) 8.95 % 18.19 % 9.49 %
Reported Balance Sheet
Statistics (period end)
Loans $ 59,848 $ 38,852 $ 38,216
Total Assets $ 88,701 $ 60,425 $ 53,747
Loan growth $ 20,996 $ 241 $ 3,055
% Loan Growth Q Over Q
(annualized) 216 % 2 % 35 %
% Loan Growth Y Over Y 57 % 10 % 16 %
Revenue & Expense Statistics
(Reported)
Net Interest Income Growth
(annualized) 56 % 17 % 5 %
Non Interest Income Growth
(annualized) 18 % 3 % (5)%
Revenue Growth (annualized) 32 % 8 % (2)%
Net Interest Margin 6.23 % 6.81 % 6.34 %
Revenue Margin 16.23 % 18.74 % 18.64 %
Risk Adjusted Margin (7) 13.52 % 16.18 % 15.85 %
Operating Expense as a % of
Revenues 45.95 % 40.80 % 45.33 %
Operating Expense as a % of Avg
Loans (annualized) 10.20 % 10.60 % 11.58 %
Asset Quality Statistics
(Reported)
Allowance $ 1,790 $ 1,447(2) $ 1,505
30+ Day Delinquencies $ 1,879 $ 1,497 $ 1,472
Net Charge-Offs $ 451 $ 342 $ 345
Allowance as a % of Reported
Loans 2.99 % 3.72 % 3.94 %
Delinquency Rate (30+ days) 3.14 % 3.85 % 3.85 %
Net Charge-Off Rate 3.70 % 3.55 % 3.82 %
(1) Includes a $41.1 million gain resulting from the sale of the French
loan portfolio in Q4 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. This also includes a $48.0 million write-down
for retained interests and a $27.0 million build in the allowance related
to the spike in bankruptcies experienced immediately before The Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 became effective in
October 2005.
(3) Includes a $34.0 million gain from the sale of previously purchased
charged-off loan portfolios.
(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: Q4 2005 - $227.9, Q3 2005 - $255.6, Q2 2005 -
$259.8, Q1 2005 - $243.9 and Q4 2004 - $276.8.
(5) Includes a $28.2 million impairment charge related to our insurance
business in Global Financial Services and a $20.6 million prepayment
penalty for the refinancing of the McLean Headquarters facility.
(6) The operations of Hibernia contributed $30.6 million to net income.
Capital One also spent $2.3 million in integration costs during the
quarter. See Impact of Hibernia Corporation Acquisition schedule.
(7) 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) Q4 Q3 Q4
Earnings (Managed Basis)
Net Interest Income $ 2,075.2 $ 1,931.2 $ 1,701.8
Non-Interest Income 1,243.4(4) 1,099.8(3) 1,099.0(2)
Total Revenue(5) 3,318.6 3,031.0 2,800.8
Provision for Loan Losses 1,181.8 900.4(3) 961.8
Marketing Expenses 447.4 343.7 511.1
Operating Expenses 1,241.7(6) 1,021.9 1,045.4
Income Before Taxes 447.7 765.0 282.5
Tax Rate 37.3 % 35.8 % 30.9 %
Net Income $ 280.3(7) $ 491.1 $ 195.1
Managed Balance Sheet Statistics
(period avg.)
Average Loans $ 94,241 $ 83,828 $ 76,930
Average Earning Assets $ 110,096 $ 96,696 $ 88,461
Average Assets $ 119,406 $ 103,913 $ 93,574
Return on Average Assets (ROA) 0.94 % 1.89 % 0.83 %
Managed Balance Sheet Statistics
(period end)
Loans $ 105,527 $ 84,768 $ 79,861
Total Assets $ 133,786 $ 105,743 $ 94,792
Loan Growth $ 20,759 $ 1,817 $ 4,404
% Loan Growth Q over Q
(annualized) 98 % 9 % 23 %
% Loan Growth Y over Y 32 % 12 % 12 %
Tangible Assets(8) $ 129,484 $ 105,007 $ 94,440
Tangible Capital(9) $ 9,994 $ 10,400 $ 8,730
Tangible Capital to Tangible
Assets Ratio 7.72 % 9.90 % 9.24 %
Number of Accounts (000s)(10) 49,113 49,192 48,573
% Off-Balance Sheet
Securitizations 43 % 54 % 52 %
% at Introductory Rate(10) 8 % 6 % 7 %
Revenue & Expense Statistics
(Managed)
Net Interest Income Growth
(annualized) 30 % 22 % 8 %
Non Interest Income Growth
(annualized) 52 % (16)% 0 %
Revenue Growth (annualized) 38 % 8 % 4 %
Net Interest Margin 7.54 % 7.99 % 7.70 %
Revenue Margin 12.06 % 12.54 % 12.66 %
Risk Adjusted Margin(11) 8.18 % 8.95 % 8.87 %
Operating Expense as a % of
Revenues 37.42 % 33.71 % 37.33 %
Operating Expense as a % of
Avg Loans (annualized) 5.27 % 4.88 % 5.44 %
Asset Quality Statistics (Managed)
30+ Day Delinquencies $ 3,424 $ 3,164 $ 3,054
Net Charge-Offs $ 1,067 $ 868 $ 840
Delinquency Rate (30+ days) 3.24 % 3.73 % 3.82 %
Net Charge-Off Rate 4.53 % 4.14 % 4.37 %
(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.
(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. This also includes a $48.0 million write-down
for retained interests and a $27.0 million build in the allowance related
to the spike in bankruptcies experienced immediately before The Bankruptcy
Abuse Prevention and Consumer Protection Act of 2005 became effective in
October 2005.
(4) Includes a $34.0 million gain from the sale of previously purchased
charged-off loan portfolios.
(5) 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: Q4 2005 - $227.9, Q3 2005 - $255.6, Q2 2005 -
$259.8, Q1 2005 - $243.9 and Q4 2004 - $276.8.
(6) Includes a $28.2 million impairment charge related to our insurance
business in Global Financial Services and a $20.6 million prepayment
penalty for the refinancing of the McLean Headquarters facility.
(7) The operations of Hibernia contributed $30.6 million to net income.
Capital One also spent $2.3 million in integration costs during the
quarter.
(8) Includes managed assets less intangible assets.
(9) Includes stockholders' equity and preferred interests for all periods
presented, 80% of mandatory convertible securities for all periods prior
to Q2 2005, less intangible assets. Tangible Capital on a reported and
managed basis is the same.
(10) Does not include the accounts or loan balances of Hibernia
Corporation.
(11) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
CAPITAL ONE FINANCIAL CORPORATION (COF)
IMPACT OF HIBERNIA CORPORATION (HIB) ACQUISITION
Q4 2005
(in millions, except per share data COF w/out
and as noted) COF HIB(1) HIB
Earnings (Reported Basis)
Total Revenue $ 2,702.5 $ 163.2 $ 2,539.3
Provision for Loan Losses 565.7 11.1 554.6
Total Non-interest Expense 1,689.1 108.1 1,581.0
Net Income $ 280.3 $ 30.6 $ 249.7
Common Share Statistics
Diluted EPS $ 0.97 $ 0.92
Shares Used to Compute Diluted EPS 287.7 271.1
Reported Balance Sheet Statistics
(period end)
Liquidity Portfolio(2) $ 16,399 $ 5,879 $ 10,520
Loans $ 59,848 $ 16,325 $ 43,523
Less: Allowance for loan losses $ (1,790) $ (214) $ (1,576)
Net Loans $ 58,058 $ 16,111 $ 41,947
Goodwill $ 3,906 $ 3,188 $ 718
Core deposit intangible $ 371 $ 371 $ -
Deposits(3) $ 47,933 $ 21,671 $ 26,262
Debt(4) $ 22,278 $ 2,308 $ 19,970
Return on Average Assets (ROA)
(period avg.)
ROA (Reported) 1.51 % 1.67 %
ROA (Managed) 0.94 % 0.95 %
Managed Balance Sheet Statistics
(period end)
Loans $ 105,527 $ 16,325 $ 89,202
Revenue & Expense Statistics
Revenue Margin (Reported) 16.23 % 18.44 %
Revenue Margin (Managed) 12.06 % 12.81 %
Asset Quality Statistics
Delinquency Rate (30+ days)
(Reported) 3.14 % 3.99 %
Delinquency Rate (30+ days) (Managed) 3.24 % 3.68 %
Net Charge-Off Rate (Reported) 3.70 % 4.29 %
Net Charge-Off Rate (Managed) 4.53 % 4.89 %
2005
(in millions, except per share data COF w/out
and as noted) COF HIB(1) HIB
Earnings (Reported Basis)
Total Revenue $10,038.3 $ 163.2 $ 9,875.1
Provision for Loan Losses 1,491.1 11.1 1,480.0
Total Non-interest Expense 5,718.3 108.1 5,610.2
Net Income $ 1,809.1 $ 30.6 $ 1,778.5
Common Share Statistics
Diluted EPS $ 6.73 $ 6.72
Shares Used to Compute Diluted EPS 268.9 264.7
Reported Balance Sheet Statistics
(period end)
Liquidity Portfolio(2) $ 16,399 $ 5,879 $ 10,520
Loans $ 59,848 $ 16,325 $ 43,523
Less: Allowance for loan losses $ (1,790) $ (214) $ (1,576)
Net Loans $ 58,058 $ 16,111 $ 41,947
Goodwill $ 3,906 $ 3,188 $ 718
Core deposit intangible $ 371 $ 371 $ -
Deposits(3) $ 47,933 $ 21,671 $ 26,262
Debt(4) $ 22,278 $ 2,308 $ 19,970
Return on Average Assets (ROA)
(period avg.)
ROA (Reported) 2.95 % 3.08 %
ROA (Managed) 1.72 % 1.75 %
Managed Balance Sheet Statistics
(period end)
Loans $ 105,527 $16,325 $ 89,202
Revenue & Expense Statistics
Revenue Margin (Reported) 18.09 % 18.78 %
Revenue Margin (Managed) 12.46 % 12.67 %
Asset Quality Statistics
Delinquency Rate (30+ days)(Reported) 3.14 % 3.99 %
Delinquency Rate (30+ days) (Managed) 3.24 % 3.68 %
Net Charge-Off Rate (Reported) 3.55 % 3.70 %
Net Charge-Off Rate (Managed) 4.25 % 4.34 %
(1) As of December 31, 2005 and for the period November 16, 2005 through
December 31,2005.
(2) Includes federal funds sold and resale agreements, interest-bearing
deposits at other banks, and securities available for sale.
(3) Includes non-interest bearing and interest-bearing deposits.
(4) Includes senior and subordinated notes and other borrowings.
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY - MANAGED BASIS(1)
2005 2005 2004
(in thousands) Q4 Q3 Q4
Segment Statistics
US Card:
Net interest income $ 1,183,794 $ 1,207,832 $ 1,158,773
Non-interest income 844,286 851,036 823,012
Provision for loan losses 767,103 483,759 649,862
Non-interest expenses 892,521 833,925 1,016,384
Income tax provision (benefit) 131,415 259,414 113,594
Net income (loss) $ 237,041 $ 481,770 $ 201,945
Loans receivable $ 49,463,522 $46,291,468 $48,609,571
Net charge-off rate 5.70% 4.69% 4.93%
Delinquency Rate (30+ days) 3.44% 3.86% 3.97%
Purchase Volume(2) $ 21,209,357 $18,932,798 $17,799,996
Auto Finance:
Net interest income $ 314,024 $ 300,102 $ 207,379
Non-interest income (1,358) 3,005 13,690
Provision for loan losses 161,651 185,219 88,408
Non-interest expenses 138,412 129,719 93,482
Income tax provision (benefit) 4,512 (4,141) 14,104
Net income (loss) $ 8,091 $ (7,690) $ 25,075
Loans receivable $ 16,372,019 $15,730,713 $ 9,997,497
Net charge-off rate 3.32% 2.54% 3.87%
Delinquency Rate (30+ days) 5.71% 4.65% 5.50%
Auto Loan Originations(3) $ 2,563,372 $ 3,217,209 $ 1,488,029
Global Financial Services:
Net interest income $ 432,335 $ 423,629 $ 390,262
Non-interest income 250,349 273,067 240,781
Provision for loan losses 263,664 217,032 220,253
Non-interest expenses 410,670 356,254 368,020
Income tax provision (benefit) 1,299 41,521 13,561
Net income (loss) $ 7,051 $ 81,889 $ 29,209
Loans receivable $ 23,386,490 $22,770,803 $21,240,325
Net charge-off rate 4.33% 4.09% 3.30%
Delinquency Rate (30+ days) 2.83% 2.93% 2.81%
Other:
Net interest income $ 145,043 $ (368) $ (54,587)
Non-interest income 150,153 (27,301) 21,496
Provision for loan losses (10,631) 14,324 3,277
Non-interest expenses 247,583 45,740 78,641
Income tax provision (benefit) 30,109 (22,913) (53,908)
Net income (loss) $ 28,135 $ (64,820) $ (61,101)
Loans receivable $ 16,305,460 $ (25,301) $ 13,906
Total:
Net interest income $ 2,075,196 $ 1,931,195 $ 1,701,827
Non-interest income 1,243,430 1,099,807 1,098,979
Provision for loan losses 1,181,787 900,334 961,800
Non-interest expenses 1,689,186 1,365,638 1,556,527
Income tax provision (benefit) 167,335 273,881 87,351
Net income (loss) $ 280,318 $ 491,149 $ 195,128
Loans receivable $105,527,491 $84,767,683 $79,861,299
Net charge-off rate 4.53% 4.14% 4.37%
Delinquency Rate (30+ days) 3.24% 3.73% 3.82%
(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 all purchase transactions net of returns and excludes cash
advance transactions.
(3) Includes all organic auto loan originations and excludes auto loans
added through acquisitions.
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended December 31, 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 $ 1,036,999 $ 1,038,197 $ 2,075,196
Non-interest income $ 1,665,514 $ (422,084) $ 1,243,430
Total revenue $ 2,702,513 $ 616,113 $ 3,318,626
Provision for loan losses $ 565,674 $ 616,113 $ 1,181,787
Net charge-offs $ 450,510 $ 616,113 $ 1,066,623
Balance Sheet Measures
Loans $59,847,681 $45,679,810 $105,527,491
Total assets $88,701,411 $45,084,125 $133,785,536
Average loans $48,700,689 $45,540,551 $ 94,241,240
Average earning assets $66,623,919 $43,472,273 $110,096,192
Average total assets $74,443,344 $44,962,509 $119,405,853
Delinquencies $ 1,879,008 $ 1,544,812 $ 3,423,820
(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)
December 31 September 30 December 31
2005 2005 2004
Assets:
Cash and due from banks $ 2,022,175 $ 812,330 $ 327,517
Federal funds sold and resale
agreements 1,305,537 2,409,392 773,695
Interest-bearing deposits at
other banks 743,555 1,380,880 309,999
Cash and cash equivalents 4,071,267 4,602,602 1,411,211
Securities available for sale 14,350,249 9,436,667 9,300,454
Loans 59,847,681 38,851,763 38,215,591
Less: Allowance for loan losses (1,790,000) (1,447,000) (1,505,000)
Net loans 58,057,681 37,404,763 36,710,591
Accounts receivable from
securitizations 4,904,547 6,126,282 4,081,271
Premises and equipment, net 1,191,406 768,198 817,704
Interest receivable 563,542 367,757 252,857
Goodwill 3,906,399 736,058 352,157
Other 1,656,320 982,190 821,010
Total assets $88,701,411 $60,424,517 $53,747,255
Liabilities:
Non-interest-bearing deposits $ 4,841,171 $ 91,684 $ 50,155
Interest-bearing deposits 43,092,096 26,772,538 25,636,802
Senior and subordinated notes 6,743,979 6,651,891 6,874,790
Other borrowings 15,534,161 11,613,179 9,637,019
Interest payable 371,681 350,842 237,227
Other 3,989,409 3,907,156 2,923,073
Total liabilities 74,572,497 49,387,290 45,359,066
Stockholders' Equity:
Common stock 3,028 2,682 2,484
Paid-in capital, net 6,848,544 3,979,525 2,711,327
Retained earnings and cumulative
other comprehensive income 7,384,144 7,124,900 5,741,131
Less: Treasury stock, at cost (106,802) (69,880) (66,753)
Total stockholders' equity 14,128,914 11,037,227 8,388,189
Total liabilities and
stockholders' equity $88,701,411 $60,424,517 $53,747,255
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
December 31 September 30 December 31
2005 2005(1) 2004(1)
Interest Income:
Loans, including past-due fees $ 1,408,545 $ 1,228,160 $ 1,097,041
Securities available for sale 119,189 87,978 88,085
Other 106,364 88,477 64,204
Total interest income 1,634,098 1,404,615 1,249,330
Interest Expense:
Deposits 344,063 285,611 267,706
Senior and subordinated notes 103,836 98,309 116,419
Other borrowings 149,200 110,476 80,641
Total interest expense 597,099 494,396 464,766
Net interest income 1,036,999 910,219 784,564
Provision for loan losses 565,674 374,167 467,133
Net interest income after
provision for loan losses 471,325 536,052 317,431
Non-Interest Income:
Servicing and securitizations 1,021,415 993,788 910,860
Service charges and other
customer-related fees 376,223 355,871 374,048
Interchange 133,234 125,454 135,843
Other 134,642 119,503 100,824
Total non-interest income 1,665,514 1,594,616 1,521,575
Non-Interest Expense:
Salaries and associate benefits 459,788 414,348 382,646
Marketing 447,437 343,708 511,142
Communications and data processing 154,936 144,321 137,867
Supplies and equipment 98,761 86,866 92,827
Occupancy 54,554 39,426 55,994
Other 473,710 336,969 376,051
Total non-interest expense 1,689,186 1,365,638 1,556,527
Income before income taxes 447,653 765,030 282,479
Income taxes 167,335 273,881 87,351
Net income $ 280,318 $ 491,149 $ 195,128
Basic earnings per share $ 1.01 $ 1.88 $ 0.82
Diluted earnings per share $ 0.97 $ 1.81 $ 0.77
Dividends paid per share $ 0.03 $ 0.03 $ 0.03
Year Ended
December, 31 December, 31
2005 2004(1)
Interest Income:
Loans, including past-due fees $ 5,010,839 $ 4,234,420
Securities available for sale 388,576 312,374
Other 327,466 247,626
Total interest income 5,726,881 4,794,420
Interest Expense:
Deposits 1,173,137 1,009,545
Senior and subordinated notes 421,218 486,812
Other borrowings 452,284 295,085
Total interest expense 2,046,639 1,791,442
Net interest income 3,680,242 3,002,978
Provision for loan losses 1,491,072 1,220,852
Net interest income after provision
for loan losses 2,189,170 1,782,126
Non-Interest Income:
Servicing and securitizations 3,945,183 3,635,465
Service charges and other customer-
related fees 1,493,690 1,482,658
Interchange 514,196 475,810
Other 405,036 306,224
Total non-interest income 6,358,105 5,900,157
Non-Interest Expense:
Salaries and associate benefits 1,749,738 1,642,721
Marketing 1,379,938 1,337,780
Communications and data processing 580,992 475,355
Supplies and equipment 355,734 349,920
Occupancy 152,090 206,614
Other 1,499,781 1,309,829
Total non-interest expense 5,718,273 5,322,219
Income before income taxes 2,829,002 2,360,064
Income taxes 1,019,855 816,582
Net income $ 1,809,147 $ 1,543,482
Basic earnings per share $ 6.98 $ 6.55
Diluted earnings per share $ 6.73 $ 6.21
Dividends paid per share $ 0.11 $ 0.11
(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 12/31/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans $48,700,689 $ 1,408,545 11.57%
Securities available for sale 11,683,013 119,189 4.08%
Other 6,240,217 106,364 6.82%
Total earning assets $66,623,919 $ 1,634,098 9.81%
Interest-bearing liabilities:
Interest-bearing deposits $34,737,934 $ 344,063 3.96%
Senior and subordinated notes 6,707,285 103,836 6.19%
Other borrowings 13,703,303 149,200 4.36%
Total interest-bearing liabilities $55,148,522 $ 597,099 4.33%
Net interest spread 5.48%
Interest income to average
earning assets 9.81%
Interest expense to average
earning assets 3.58%
Net interest margin 6.23%
Reported Quarter Ended 9/30/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
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:
Interest-bearing 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%
Reported Quarter Ended 12/31/04
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans $36,096,481 $ 1,097,041 12.16%
Securities available for sale 9,741,355 88,085 3.62%
Other 3,662,512 64,204 7.01%
Total earning assets $49,500,348 $ 1,249,330 10.10%
Interest-bearing liabilities:
Interest-bearing deposits $25,580,044 $ 267,706 4.19%
Senior and subordinated notes 6,946,109 116,419 6.70%
Other borrowings 9,076,531 80,641 3.55%
Total interest-bearing liabilities $41,602,684 $ 464,766 4.47%
Net interest spread 5.63%
Interest income to average
earning assets 10.10%
Interest expense to average
earning assets 3.76%
Net interest margin 6.34%
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 12/31/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans $ 94,241,240 $ 3,001,361 12.74%
Securities available for sale 11,683,013 119,189 4.08%
Other 4,171,939 55,410 5.31%
Total earning assets $110,096,192 $ 3,175,960 11.54%
Interest-bearing liabilities:
Interest-bearing deposits $ 34,737,934 $ 344,063 3.96%
Senior and subordinated notes 6,707,285 103,836 6.19%
Other borrowings 13,703,303 149,200 4.36%
Securitization liability 45,085,090 503,665 4.47%
Total interest-bearing liabilities $100,233,612 $ 1,100,764 4.39%
Net interest spread 7.15%
Interest income to average
earning assets 11.54%
Interest expense to average
earning assets 4.00%
Net interest margin 7.54%
Managed (1) Quarter Ended 9/30/05
Average Income/ Yield/
Balance Expense Rate
Earning assets:
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:
Interest-bearing 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%
Managed (1) Quarter Ended 12/31/04
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans $ 76,929,973 $ 2,476,365 12.88%
Securities available for sale 9,741,355 88,085 3.62%
Other 1,789,742 16,940 3.79%
Total earning assets $ 88,461,070 $ 2,581,390 11.67%
Interest-bearing liabilities:
Interest-bearing deposits $ 25,580,044 $ 267,706 4.19%
Senior and subordinated notes 6,946,109 116,419 6.70%
Other borrowings 9,076,531 80,641 3.55%
Securitization liability 40,291,395 414,797 4.12%
Total interest-bearing liabilities $ 81,894,079 $ 879,563 4.30%
Net interest spread 7.37%
Interest income to average
earning assets 11.67%
Interest expense to average
earning assets 3.97%
Net interest margin 7.70%
(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