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Company Provides Earnings Guidance for 2007
MCLEAN, Va., Jan. 18 /PRNewswire-FirstCall/ -- Capital One Financial
Corporation (NYSE: COF) today announced earnings per share (diluted) for 2006
of $7.62. Additionally, the company provided earnings guidance for 2007 of
between $7.40 and $7.80 per share (diluted).
Earnings for the fourth quarter of 2006 were $390.7 million, or $1.14 per
share (diluted), compared with $280.3 million, or $.97 per share (diluted),
for the fourth quarter of 2005, and $587.8 million, or $1.89 per share
(diluted), for the third quarter of 2006.
Full year results include a $0.32 per share (diluted) negative impact from
the acquisition of North Fork Bancorporation, which was completed on December
1, 2006. Full year results also include a $.07 per share (diluted) negative
impact from losses on the sale of securities in the fourth quarter of 2006 as
part of the rebalancing a portion of the company's investment portfolio.
The company's 2007 earnings estimates include expectations for a continued
challenging interest rate environment and cyclical pressures in the mortgage
industry, a return to more normal charge-off levels in its US unsecured
national lending businesses, and the repurchase of $2.25 billion of the
company's shares beginning in the second quarter of 2007. Additionally, the
2007 earnings estimates include $430.0 million (after-tax) of financing costs,
restructuring charges, and purchase accounting impacts resulting from the
acquisition of North Fork. While the company still expects to achieve the
target level of $275.0 million (pre-tax) of synergies in connection with the
North Fork integration, it expects these synergies will be realized partially
in 2007 and more significantly late in 2008 as a result of the challenging
interest rate environment and the timeline for conversion to a single deposit
platform and brand.
"Despite cyclical pressures in banking and the mortgage industry, the
acquisitions of North Fork and Hibernia position us to drive growth, generate
capital, and deliver sustainable and attractive shareholder returns well into
the future," said Richard D. Fairbank, Capital One's Chairman and Chief
Executive Officer. "Our focus now is on sure-footed execution as we integrate
these proven banking franchises and build the infrastructure to win long-
term."
Managed loans held for investment at December 31, 2006 were $146.2
billion, up $40.6 billion, or 38 percent, from December 31, 2005. Excluding
the impact of $31.7 billion of loans acquired through North Fork, managed
loans grew 8.4 percent in 2006, in line with expectations. Growth in the
fourth quarter of 2006, excluding the impact of North Fork, was $2.2 billion,
spread broadly across all of its North American businesses.
The managed charge-off rate for the company decreased to 2.99 percent in
the fourth quarter of 2006 from 4.53 percent in the fourth quarter of 2005,
but rose from 2.92 percent in the previous quarter. The company increased its
allowance for loan losses by $114.1 million in the fourth quarter of 2006,
excluding the addition of allowance from the acquisition of North Fork. This
increase was driven primarily by the expectation of continued normalization of
charge-offs in the company's US unsecured national lending businesses. The
managed delinquency rate (30+ days) decreased to 3.02 percent as of December
31, 2006 driven largely by the addition of North Fork loans to the portfolio.
The delinquency rate decreased from 3.24 percent as of the end of December 31,
2005 and decreased from 3.29 percent as of September 30, 2006. Without the
addition of the North Fork loans, the charge-off and delinquency rates would
have increased in the fourth quarter of 2006 to 3.25 percent and 3.68 percent,
respectively.
Fourth quarter marketing expenses decreased $51.7 million to $395.7
million from $447.4 million in the fourth quarter of 2005, but increased $27.2
million from the third quarter of 2006 expense of $368.5 million. Marketing
expenses for 2006 were $1.4 billion, up $64.7 million, or five percent, over
2005.
Annualized operating expenses as a percentage of average managed loans
decreased to 5.13 percent in the fourth quarter of 2006 from 5.27 percent in
the fourth quarter of 2005, but increased from 4.92 percent in the previous
quarter driven by the inclusion of North Fork, infrastructure investments, and
branch expansion. This quarter's results also include resolution of certain
federal and state tax issues resulting in a $28.8 million reduction of tax
expense.
Capital One's managed revenue margin decreased to 9.69 percent in the
fourth quarter of 2006 from 12.04 percent in the fourth quarter of 2005 and
decreased from 10.95 percent in the previous quarter driven largely by in the
inclusion of North Fork, seasonality, and one time impacts due to the
company's system conversion in the fourth quarter of 2006. Return on managed
assets for 2006 was 1.69 percent. Excluding the impact of the North Fork
acquisition, return on managed assets was 1.77 percent for 2006 as compared to
1.72 percent in 2005.
"Strong underlying business performance enabled Capital One to deliver 13
percent earnings per share growth in 2006 while achieving a number of
significant milestones including the successful integration of Hibernia, the
acquisition of North Fork, and a significant upgrade of our systems
infrastructure," said Gary L. Perlin, Capital One's Chief Financial Officer.
"We enter 2007 with a more diversified and resilient balance sheet."
Segment results
The US Card segment's net income for 2006 was $1.8 billion, up $214.0
million, or 13.3 percent, from $1.6 billion in 2005. US Card reported net
income for the fourth quarter of 2006 of $337.2 million, compared with $237.0
million in the fourth quarter of 2005, and $461.6 million in the third quarter
of 2006. The business continues to deliver strong profits driven by solid
credit and growth in managed loans. Managed loans at December 31, 2006 were
$53.6 billion, up $4.2 billion or 8.4 percent, from December 31, 2005, and up
$2.5 billion, or 4.9 percent from the prior quarter. The managed charge-off
rate decreased to 3.82 percent in the fourth quarter of 2006 from 5.70 percent
in the fourth quarter of 2005 but increased from 3.39 percent in the previous
quarter due to expected seasonality and normalization of credit.
Results in the Global Financial Services segment continue to reflect
strong performance in its North American businesses offset by ongoing
challenges in the UK. The segment's net income for 2006 was $274.0 million,
up $88.0 million, or 47.3 percent, from $186.0 million in 2005. Net income in
the fourth quarter of 2006 was $2.1 million, compared with $7.1 million in the
fourth quarter of 2005, and $107.2 million in the third quarter of 2006.
Managed loans at December 31, 2006 were $27.0 billion, up $3.6 billion, or
15.4 percent, from the prior year's fourth quarter, and up $.4 billion, or 1.4
percent, from the third quarter of 2006. The managed charge-off rate decreased
to 3.89 percent in the fourth quarter of 2006 from 4.33 percent in the fourth
quarter of 2005 driven largely by strong credit in its North American
businesses. The managed charge-off rate increased in the fourth quarter from
3.70 percent in the previous quarter reflecting seasonality.
The Auto Finance segment reported a solid quarter as it continues to gain
scale and grow originations by taking advantage of its multi-channel, full
credit spectrum strategy. The Auto Finance segment's net income for 2006 was
$233.5 million, up $101.4 million, or 76.8 percent, from $132.1 million in
2005. Net income in the fourth quarter of 2006 was $33.7 million, compared
with $8.1 million in the fourth quarter of 2005, and $35.3 million in the
third quarter of 2006. Managed loans at December 31, 2006 were $21.8 billion,
up $5.4 billion, or 32.9 percent, from December 31, 2005, and up $.6 billion,
or 2.8 percent from the prior quarter. The managed charge-off rate decreased
to 2.85 percent in the fourth quarter of 2006 from 3.32 percent in the fourth
quarter of 2005 because of a mix shift towards lower risk borrowers from the
acquisition of Hibernia in 2005. The managed charge-off rate increased from
2.34 percent in the previous quarter primarily driven by seasonality.
The Banking segment delivered $45.7 million of net income in the fourth
quarter of 2006, down $0.5 million, or 1.1 percent, from the third quarter of
2006. Decreases in revenue and increases in operating expenses where largely
off-set by a $26.0 million reduction in provision expense due to favorable
credit performance in loans impacted by 2005 Gulf Coast hurricanes. Total
deposits at the end of the quarter were $35.3 billion, relatively flat as
compared to $35.7 billion at the end of the third quarter of 2006. The company
has opened a total of 39 de novo branches since the beginning of 2006. The
integration of Hibernia is largely complete, and the company is on track to
achieve the expected run-rate synergies of $135.0 million in 2007.
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.
Forward looking statements
The company cautions that its current expectations in this release, in the
presentation slides available on the company's website and in its Form 8-K
dated January 18, 2007 for 2007 earnings, the interest rate environment,
charge-off rates, mortgage market trends, branch growth, integration costs and
synergies, and the benefits of the business combination transaction involving
Capital One and North Fork, including future financial and operating results,
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: the risk that the
company's acquired businesses will not be integrated successfully and that the
cost savings and other synergies from such acquisitions may not be fully
realized; continued intense competition from numerous providers of products
and services which compete with Capital One's businesses; changes in our
aggregate accounts and balances, and the growth rate and composition thereof;
the success of the company's marketing efforts; general economic conditions
affecting interest rates and consumer income, spending, and savings which may
affect consumer bankruptcies, defaults, charge-offs and deposit activity; and
the company's ability to execute on its strategic and operational plans. 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, 2005.
About Capital One
Headquartered in McLean, Virginia, Capital One Financial Corporation
(http://www.capitalone.com) is a financial holding company, with more than 700
locations in New York, New Jersey, Connecticut, Texas and Louisiana that offer
a broad spectrum of financial products and services to consumers, small
businesses and commercial clients. Its principal subsidiaries, Capital One
Bank, Capital One, F.S.B., Capital One Auto Finance, Inc., Capital One, N.A.,
and North Fork Bank offer a broad spectrum of financial products and services
to consumers, small businesses and commercial clients. Capital One's
subsidiaries collectively had $85.8 billion in deposits and $146.2 billion in
managed loans outstanding as of December 31, 2006. Capital One, a Fortune 500
company, trades on the New York Stock Exchange under the symbol "COF" and is
included in the S&P 100 index.
NOTE: Fourth quarter 2006 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 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
2006 2006 2005
(in millions, except per share
data and as noted) Q4 Q3(10) Q4
Earnings (Reported Basis)
Net Interest Income $1,401.2 $1,294.5 $1,037.0
Non-Interest Income 1,667.2 (2) 1,761.4 (2) 1,665.5 (1)
Total Revenue(3) 3,068.4 3,055.9 2,702.5
Provision for Loan Losses 513.2 430.6 565.7
Marketing Expenses 395.7 368.5 447.4
Operating Expenses 1,590.5 1,358.1 1,241.7 (4)
Income Before Taxes 569.0 898.7 447.7
Tax Rate(5) 31.3 % 34.6 % 37.3 %
Net Income $390.7 $587.8 $280.3
Common Share Statistics
Basic EPS $1.16 $1.95 $1.01
Diluted EPS $1.14 $1.89 $0.97
Dividends Per Share $0.03 $0.03 $0.03
Book Value Per Share (period
end) $61.56 $54.79 $46.97
Stock Price Per Share (period
end) $76.82 $78.66 $86.40
Total Market Capitalization
(period end) $31,488.5 $23,944.1 $25,989.1
Shares Outstanding (period end) 409.9 304.4 300.8
Shares Used to Compute Basic EPS 336.5 301.6 278.8
Shares Used to Compute Diluted
EPS 343.8 310.4 287.7
Reported Balance Sheet
Statistics (period avg.)
Average Loans Held for
Investment $74,738 $62,429 $48,701
Average Earning Assets(6) $99,416 $81,311 $66,780
Average Assets $113,890 $92,295 $74,443
Average Interest Bearing
Deposits $53,735 $42,984 $34,738
Average Non-Interest Bearing
Deposits $6,647 $4,212 $2,356
Average Equity $18,311 $16,310 $12,528
Return on Average Assets (ROA) 1.37 % 2.55 % 1.51 %
Return on Average Equity (ROE) 8.53 % 14.42 % 8.95 %
Reported Balance Sheet
Statistics (period end)
Loans Held for Investment $96,512 $63,612 $59,848
Total Assets $149,996 $94,907 $88,701
Held for Investment Loan Growth
Q Over Q $32,900 $3,009 $20,996
% Held for Investment Loan
Growth Y Over Y 61 % 64 % 57 %
Revenue & Expense Statistics
(Reported)
Net Interest Income Growth
(annualized) 33 % 33 % 56 %
Non Interest Income Growth
(annualized) (21)% 12 % 18 %
Revenue Growth (annualized) 2 % 20 % 32 %
Net Interest Margin 5.64 % 6.37 % 6.21 %
Revenue Margin 12.35 % 15.03 % 16.19 %
Risk Adjusted Margin(9) 10.56 % 13.22 % 13.49 %
Operating Expense as a % of
Revenues 51.83 % 44.44 % 45.95 %
Operating Expense as a % of Avg
Loans (annualized) 8.51 % 8.70 % 10.20 %
Asset Quality Statistics
(Reported)
Allowance $2,180 $1,840 $1,790
30+ Day Delinquencies $2,648 $2,060 $1,879
Net Charge-Offs $443 $369 $451
Allowance as a % of Reported
Loans 2.26 % 2.89 % 2.99 %
Delinquency Rate (30+ days) 2.74 % 3.24 % 3.14 %
Net Charge-Off Rate 2.37 % 2.36 % 3.70 %
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS (*)
2006 2006 2005
(in millions) Q4 Q3(10) Q4
Earnings (Managed Basis)
Net Interest Income $2,347.3 $2,217.8 $2,075.2
Non-Interest Income 1,206.0 (2) 1,275.4 (2) 1,243.4 (1)
Total Revenue(3) 3,553.3 3,493.2 3,318.6
Provision for Loan Losses 998.1 867.9 1,181.8
Marketing Expenses 395.7 368.5 447.4
Operating Expenses 1,590.5 1,358.1 1,241.7 (4)
Income Before Taxes 569.0 898.7 447.7
Tax Rate(5) 31.3 % 34.6 % 37.3 %
Net Income $390.7 $587.8 $280.3
Managed Balance Sheet Statistics
(period avg.)
Average Loans Held for Investment $123,902 $110,512 $94,241
Average Earning Assets(6) $146,680 $127,616 $110,253
Average Assets $162,396 $139,833 $119,406
Return on Average Assets (ROA) 0.96 % 1.68 % 0.94 %
Managed Balance Sheet Statistics
(period end)
Loans Held for Investment $146,151 $112,239 $105,527
Total Assets $198,902 $142,977 $133,786
Held for Investment Loan Growth
Q Over Q $33,912 $3,806 $20,759
% Held for Investment Loan Growth
Y over Y 38 % 32 % 32 %
Tangible Assets(7) $184,007 $138,673 $129,484
Tangible Capital(8) $11,964 $13,514 $9,994
Tangible Capital to Tangible Assets
Ratio 6.50 % 9.75 % 7.72 %
% Off-Balance Sheet Securitizations 34 % 43 % 43 %
Revenue & Expense Statistics
(Managed)
Net Interest Income Growth
(annualized) 23 % 14 % 30 %
Non Interest Income Growth
(annualized) (22)% 25 % 52 %
Revenue Growth (annualized) 7 % 18 % 38 %
Net Interest Margin 6.40 % 6.95 % 7.53 %
Revenue Margin 9.69 % 10.95 % 12.04 %
Risk Adjusted Margin(9) 7.16 % 8.42 % 8.17 %
Operating Expense as a % of
Revenues 44.76 % 38.88 % 37.42 %
Operating Expense as a % of Avg
Loans (annualized) 5.13 % 4.92 % 5.27 %
Asset Quality Statistics (Managed)
30+ Day Delinquencies $4,414 $3,693 $3,424
Net Charge-Offs $927 $806 $1,067
Delinquency Rate (30+ days) 3.02 % 3.29 % 3.24 %
Net Charge-Off Rate 2.99 % 2.92 % 4.53 %
(*) 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 (COF)
FINANCIAL & STATISTICAL SUMMARY NOTES
(1) Includes a $34 million gain from the sale of previously purchased
charged-off loan portfolios.
(2) Includes a $20.5 million gain in Q2 2006 as a result of the
MasterCard, Inc. initial public offering and losses of $20.8 million
in Q2 2006, $9.4 million in Q3 2006 and $19.9 million in Q4 2006
related to the derivative entered into in April 2006 to mitigate
certain exposures we faced as a result of our acquisition of North
Fork.
(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: Q4 2006 - $248.3, Q3 2006 -
$226.3, Q2 2006 - $215.0, Q1 2006 - $170.9 and Q4 2005 - $227.9.
(4) 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.
(5) Includes resolution of IRS tax issues resulting in reduction of tax
expense as follows: Q4 2006 - $28.8 million, Q3 2006 - $18.7 million,
Q2 - $10.7 million and Q1 - $34.9 million.
(6) Prior quarter data has been updated to include Average Mortgage Loans
Held for Sale.
(7) Includes managed assets less intangible assets.
(8) Includes stockholders' equity and preferred interests less intangible
assets. Tangible Capital on a reported and managed basis is the
same.
(9) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(10) Subsequent to the Company's Form 8-K filing dated October 18, 2006,
two balances on the Balance Sheet have been adjusted. Interest-
bearing deposits at other banks and Non-interest bearing deposits
have been revised, as well as the related metrics impacted by the
decrease in earning assets. This adjustment, reflected in the Form
10-Q, increased reported and managed return on assets, net interest
margin, revenue margin and net interest spread.
CAPITAL ONE FINANCIAL CORPORATION (COF)
IMPACT OF NORTH FORK BANCORPORATION (NFB) ACQUISITION
Q4 2006
(in millions, except per share Adjust- COF w/out
data and as noted) COF NFB (1) ments(2) NFB
Earnings (Reported Basis)
Total Revenue $3,068.4 $160.1 $(61.0) $2,969.3
Provision for Loan Losses 513.2 3.5 - 509.7
Total Non-interest Expense 1,986.2 98.9 3.9 1,883.4
Net Income $390.7 $37.5 $(42.8) $396.0
Common Share Statistics
Diluted EPS $1.14 $1.28
Shares Used to Compute Diluted
EPS 343.8 309.7
Reported Balance Sheet
Statistics (period end)
Liquidity Portfolio (3) $27,967 $13,554 $14 $14,399
Loans Held for Investment $96,512 $31,741 $64,771
Less: Allowance for loan losses $(2,180) $(222) $(1,958)
Net Loans Held for Investment $94,332 $31,519 $62,813
Goodwill $13,635 $9,714 $3,921
Core deposit intangible $1,318 $938 $380
Total Assets $149,996 $58,744 $347 $90,905
Deposits (4) $85,771 $38,544 $47,227
Debt (5) $33,982 $4,878 $5,528 $23,576
Return on Average Assets (ROA)
(period avg.)
ROA (Reported) 1.37 % 1.69 %
ROA (Managed) 0.96 % 1.11 %
Managed Balance Sheet Statistics
(period end)
Loans Held for Investment $146,151 $31,741 $114,410
Revenue & Expense Statistics
Revenue Margin (Reported) 12.35 % 14.16 %
Revenue Margin (Managed) 9.69 % 10.54 %
Asset Quality Statistics
Delinquency Rate (30+ days)
(Reported) 2.74 % 3.77 %
Delinquency Rate (30+ days)
(Managed) 3.02 % 3.68 %
Net Charge-Off Rate (Reported) 2.37 % 2.72 %
Net Charge-Off Rate (Managed) 2.99 % 3.25 %
2006
(in millions, except per share Adjust- COF w/out
data and as noted) COF NFB (1) ments(2) NFB
Earnings (Reported Basis)
Total Revenue $12,096.4 $160.1 $(104.4) $12,040.7
Provision for Loan Losses 1,476.4 3.5 - $1,472.9
Total Non-interest Expense 6,967.2 98.9 4.9 $6,863.4
Net Income $2,414.5 $37.5 $(72.2) $2,449.2
Common Share Statistics
Diluted EPS $7.62 $7.94
Shares Used to Compute Diluted
EPS 317.0 308.4
Reported Balance Sheet
Statistics (period end)
Liquidity Portfolio (3) $27,967 $13,554 $14 $14,399
Loans Held for Investment $96,512 $31,741 $64,771
Less: Allowance for loan
losses $(2,180) $(222) $(1,958)
Net Loans Held for Investment $94,332 $31,519 $62,813
Goodwill $13,635 $9,714 $3,921
Core deposit intangible $1,318 $938 $380
Total Assets $149,996 $58,744 $347 $90,905
Deposits (4) $85,771 $38,544 $47,227
Debt (5) $33,982 $4,878 $5,528 $23,576
Return on Average Assets (ROA)
(period avg.)
ROA (Reported) 2.51 % 2.69 %
ROA (Managed) 1.69 % 1.77 %
Managed Balance Sheet
Statistics (period end)
Loans Held for Investment $146,151 $31,741 $114,410
Revenue & Expense Statistics
Revenue Margin (Reported) 14.31 % 14.94 %
Revenue Margin (Managed) 10.63 % 10.91 %
Asset Quality Statistics
Delinquency Rate (30+ days)
(Reported) 2.74 % 3.77 %
Delinquency Rate (30+ days)
(Managed) 3.02 % 3.68 %
Net Charge-Off Rate (Reported) 2.21 % 2.30 %
Net Charge-Off Rate (Managed) 2.84 % 2.90 %
(1) Includes the stand alone assets and liabilities of North Fork as of
December 31, 2006, and the stand alone income and expenses of North
Fork for the period December 1, 2006 through December 31, 2006. These
results include the impact of core deposit amortization and exclude
the gain on sale of mortgage loans that were marked to market as a
result of the acquisition.
(2) Income statement adjustments include interest expense on debt
issued partially offset by income on the related liquidity portfolio,
swaption expense, and North Fork integration charges. Balance sheet
adjustments include assets and liabilities held by the parent of North
Fork at acquisition and additional debt incurred to finance the
acquisition.
(3) Includes federal funds sold and resale agreements, interest-bearing
deposits at other banks, securities available for sale and mortgage
loans held for sale.
(4) Includes non-interest bearing and interest-bearing deposits.
(5) Includes senior and subordinated notes and other borrowings.
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY - MANAGED BASIS (1)
2006 2006 2005
(in thousands) Q4 Q3 Q4
Segment Statistics
US Card:
Interest Income 1,795,345 1,734,459 1,665,450
Interest Expense 600,821 554,708 481,656
Net interest income $1,194,524 $1,179,751 $1,183,794
Non-interest income 795,881 881,304 844,286
Provision for loan losses 554,698 451,782 767,103
Non-interest expenses 916,963 899,062 892,521
Income tax provision (benefit) 181,561 248,574 131,415
Net income (loss) $337,183 $461,637 $237,041
Loans Held for Investment $53,623,680 $51,127,654 $49,463,522
Average loans Held for Investment $51,686,135 $50,131,562 $46,857,527
Loan Yield 13.89% 13.84% 14.22%
Net charge-off rate 3.82% 3.39% 5.70%
Delinquency Rate (30+ days) 3.74% 3.53% 3.44%
Core Deposits (5) -- 131,772 N/A
Total Deposits -- 131,772 N/A
Purchase Volume (2) $22,782,451 $21,450,024 $21,209,357
Number of Accounts (000s) 37,630 37,483 37,645
Auto Finance:
Interest Income 610,381 591,711 465,124
Interest Expense 242,311 227,053 151,100
Net interest income $368,070 $364,658 $314,024
Non-interest income (2,970) 4,846 (1,358)
Provision for loan losses 151,171 161,145 161,651
Non-interest expenses 162,022 154,014 138,412
Income tax provision (benefit) 18,167 19,021 4,512
Net income (loss) $33,740 $35,324 $8,091
Loans Held for Investment $21,751,827 $21,158,797 $16,372,019
Average loans Held for Investment $21,498,205 $20,812,533 $16,095,793
Loan Yield 11.36% 11.37% 11.56%
Net charge-off rate 2.85% 2.34% 3.32%
Delinquency Rate (30+ days) 6.35% 5.18% 5.71%
Core Deposits (5) 6,061 5,818 N/A
Total Deposits 6,061 5,818 N/A
Auto Loan Originations (3) $3,078,877 $3,158,481 $2,563,372
Number of Accounts (000s) 1,589 1,558 1,438
Global Financial Services:
Interest Income 793,400 768,262 681,624
Interest Expense 319,974 307,518 249,289
Net interest income $473,426 $460,744 $432,335
Non-interest income 295,216 311,439 250,349
Provision for loan losses 304,968 249,448 263,664
Non-interest expenses 455,538 358,806 410,670
Income tax provision (benefit) 6,040 56,771 1,299
Net income (loss) $2,096 $107,158 $7,051
Loans Held for Investment $26,983,673 $26,623,519 $23,386,490
Average loans Held for Investment $26,697,140 $26,364,992 $23,129,203
Loan Yield (4) 11.80% 11.58% 11.74%
Net charge-off rate 3.89% 3.70% 4.33%
Delinquency Rate (30+ days) 2.97% 2.86% 2.83%
Core Deposits (5) -- 12 N/A
Total Deposits 2,377,841 2,324,351 N/A
Number of Accounts (000s) 10,155 10,135 9,928
(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.
(4) Excludes "GFS - Home Loans Originations" and "GFS - Settlement
Services" from Other Interest Income.
(5) Includes domestic non-interest bearing deposits, NOW accounts, money
market deposit accounts, savings accounts, certificates of deposit of
less than $100,000 and other consumer time deposits.
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY - MANAGED BASIS (1) CONTINUED
2006 2006 2005
(in thousands) Q4 Q3 Q4
Segment Statistics
Banking:
Interest Income 721,102 719,207
Interest Expense 476,523 461,009
Net interest income $244,579 $258,198
Non-interest income 112,021 115,526
Provision for loan losses (21,549) 5,495
Non-interest expenses 307,810 297,080
Income tax provision (benefit) 24,619 24,902
Net income (loss) $45,720 $46,247
Loans Held for Investment $12,145,533 $13,326,088
Average loans Held for
Investment $13,330,876 $13,171,414
Loan Yield 7.98% 8.02%
Net charge-off rate 0.40% 0.48%
Delinquency Rate (30+ days) 0.31% 0.36%
Core Deposits(2) 27,071,324 26,997,345
Total Deposits 35,334,610 35,163,849
Number of Active ATMs 661 623
Number of locations(3) 358 342
Other:(4)
Net interest income $66,657 $(45,529) $145,043
Non-interest income 5,906 (37,706) 150,153
Provision for loan losses 8,840 27 (10,631)
Non-interest expenses 143,855 17,667 247,583
Income tax provision (benefit) (52,121) (38,402) 30,109
Net income (loss) $(28,011) $(62,527) $28,135
Loans Held for Investment $31,646,555 $2,488 $16,305,460
Core Deposits (2) 42,819,710 7,301,435 N/A
Total Deposits 48,052,380 9,987,360 N/A
Total:
Interest Income $3,931,054 $3,595,874 $3,175,960
Interest Expense $1,583,798 1,378,052 1,100,764
Net interest income $2,347,256 $2,217,822 $2,075,196
Non-interest income 1,206,054 1,275,409 1,243,430
Provision for loan losses 998,128 867,897 1,181,787
Non-interest expenses 1,986,188 1,726,629 1,689,186
Income tax provision (benefit) 178,266 310,866 167,335
Net income (loss) $390,728 $587,839 $280,318
Loans Held for Investment $146,151,268 $112,238,546 $105,527,491
Core Deposits (2) 69,897,095 34,436,382 N/A
Total Deposits 85,770,892 47,613,150 N/A
(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 domestic non-interest bearing deposits, NOW accounts, money
market deposit accounts, savings accounts, certificates of deposit of
less than $100,000 and other consumer time deposits.
(3) Q4: Number of locations includes 344 branches and 14 other customer
centers and excludes 7 branches that remain closed due to hurricane
damage. Q3: Number of locations includes 329 branches and 13 other
customer centers and excludes 7 branches that remain closed due to
hurricane damage. Q2: Number of locations includes 312 branches and
13 other customer centers and excludes 16 branches that remain closed
due to hurricane damage. Q1: Number of locations includes 303 branches
and 14 other customer centers and excludes 18 branches that remain
closed due to hurricane damage.
(4) Q4 2005 includes the acquisition of Hibernia and Q4 2006 includes the
acquisition of North Fork.
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended December 31, 2006
(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 $1,401,156 $946,100 $2,347,256
Non-interest income $1,667,183 $(461,129) $1,206,054
Total revenue $3,068,339 $484,971 $3,553,310
Provision for loan losses $513,157 $484,971 $998,128
Net charge-offs $442,521 $484,971 $927,492
Balance Sheet Measures
Loans Held for Investment $96,512,139 $49,639,129 $146,151,268
Total assets $149,995,737 $48,905,780 $198,901,517
Average loans Held for Investment $74,737,753 $49,164,207 $123,901,960
Average earning assets $99,415,904 $47,264,449 $146,680,353
Average total assets $113,889,864 $48,506,384 $162,396,248
Delinquencies $2,648,403 $1,765,642 $4,414,045
(1) Income statement adjustments reclassify the net of finance charges of
$1,422.4 million, past-due fees of $216.1 million, and interest
expense of $692.4 million; and net charge-offs of $485.0 million from
Non-interest income to Net interest income and Provision for loan
losses, respectively.
(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)
As of As of As of
December 31 September 30 December 31
2006 2006 2005
Assets:
Cash and due from banks $2,817,519 $1,461,132 $2,022,175
Federal funds sold and resale
agreements 1,099,156 3,340,809 1,305,537
Interest-bearing deposits at other
banks 743,821 797,708 743,555
Cash and cash equivalents 4,660,496 5,599,649 4,071,267
Securities available for sale 15,688,770 13,960,709 14,350,249
Mortgage loans held for sale 10,435,295 311,169 197,444
Loans held for investment 96,512,139 63,612,169 59,847,681
Less: Allowance for loan losses (2,180,000) (1,840,000) (1,790,000)
Net loans 94,332,139 61,772,169 58,057,681
Accounts receivable from
securitizations 4,589,235 5,617,113 4,904,547
Premises and equipment, net 2,203,280 1,532,006 1,191,406
Interest receivable 816,426 529,104 563,542
Goodwill 13,635,435 3,964,177 3,906,399
Other 3,634,661 1,620,650 1,458,876
Total assets $149,995,737 $94,906,746 $88,701,411
Liabilities:
Non-interest-bearing deposits $11,648,070 $4,145,173 $4,841,171
Interest-bearing deposits 74,122,822 43,467,977 43,092,096
Senior and subordinated notes 9,725,470 8,701,794 6,743,979
Other borrowings 24,257,007 17,619,817 15,534,161
Interest payable 574,763 387,000 371,681
Other 4,432,399 3,908,008 3,989,409
Total liabilities 124,760,531 78,229,769 74,572,497
Stockholders' Equity:
Common stock 4,122 3,065 3,028
Paid-in capital, net 15,333,137 7,237,785 6,848,544
Retained earnings and cumulative
other comprehensive income 10,026,364 9,551,504 7,384,144
Less: Treasury stock, at cost (128,417) (115,377) (106,802)
Total stockholders' equity 25,235,206 16,676,977 14,128,914
Total liabilities and
stockholders' equity $149,995,737 $94,906,746 $88,701,411
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
December 31 September 30 December 31
2006 2006 (1) 2005 (1)
Interest Income:
Loans held for investment, including
past-due fees $2,002,111 $1,814,803 $1,408,545
Securities available for sale 186,480 160,198 119,189
Mortgage loans held for sale 55,896 6,354 8,799
Other 108,932 83,716 97,565
Total interest income 2,353,419 2,065,071 1,634,098
Interest Expense:
Deposits 552,385 442,571 344,063
Senior and subordinated notes 136,282 96,300 103,836
Other borrowings 263,596 231,685 149,200
Total interest expense 952,263 770,556 597,099
Net interest income 1,401,156 1,294,515 1,036,999
Provision for loan losses 513,157 430,566 565,674
Net interest income after provision
for loan losses 887,999 863,949 471,325
Non-Interest Income:
Servicing and securitizations 959,436 1,071,091 1,021,415
Service charges and other customer-
related fees 462,086 459,125 376,223
Mortgage banking operations 54,232 45,775 118,255
Interchange 147,571 150,474 133,234
Other 43,858 34,920 16,387
Total non-interest income 1,667,183 1,761,385 1,665,514
Non-Interest Expense:
Salaries and associate benefits 632,355 554,504 459,788
Marketing 395,671 368,498 447,437
Communications and data processing 188,481 183,020 154,936
Supplies and equipment 137,843 111,625 98,761
Occupancy 66,425 49,710 54,554
Other 565,413 459,272 473,710
Total non-interest expense 1,986,188 1,726,629 1,689,186
Income before income taxes 568,994 898,705 447,653
Income taxes 178,266 310,866 167,335
Net income $390,728 $587,839 $280,318
Basic earnings per share $1.16 $1.95 $1.01
Diluted earnings per share $1.14 $1.89 $0.97
Dividends paid per share $0.03 $0.03 $0.03
Year Ended
December 31 December 31
2006 2005 (1)
Interest Income:
Loans held for investment, including
past-due fees $7,046,473 $5,010,839
Securities available for sale 679,582 388,576
Mortgage loans held for sale 71,063 8,799
Other 397,111 318,667
Total interest income 8,194,229 5,726,881
Interest Expense:
Deposits 1,814,797 1,173,137
Senior and subordinated notes 411,643 421,218
Other borrowings 868,159 452,284
Total interest expense 3,094,599 2,046,639
Net interest income 5,099,630 3,680,242
Provision for loan losses 1,476,438 1,491,072
Net interest income after provision
for loan losses 3,623,192 2,189,170
Non-Interest Income:
Servicing and securitizations 4,209,637 3,945,183
Service charges and other customer-
related fees 1,770,340 1,493,690
Mortgage banking operations 173,320 142,894
Interchange 549,074 514,196
Other 294,361 262,142
Total non-interest income 6,996,732 6,358,105
Non-Interest Expense:
Salaries and associate benefits 2,239,468 1,749,738
Marketing 1,444,635 1,379,938
Communications and data processing 713,439 580,992
Supplies and equipment 460,680 355,734
Occupancy 218,265 152,090
Other 1,890,706 1,499,781
Total non-interest expense 6,967,193 5,718,273
Income before income taxes 3,652,731 2,829,002
Income taxes 1,238,238 1,019,855
Net income $2,414,493 $1,809,147
Basic earnings per share $7.80 $6.98
Diluted earnings per share $7.62 $6.73
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 12/31/06
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $3,480,664 $55,896 6.42%
Loans held for investment 74,737,753 2,002,111 10.72%
Securities available for sale 15,248,950 186,480 4.89%
Other 5,948,537 108,932 7.32%
Total earning assets $99,415,904 $2,353,419 9.47%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts 2,094,623 $14,546 2.78%
Money market deposit accounts 15,762,255 149,831 3.80%
Savings accounts 5,425,790 31,386 2.31%
Other Consumer Time Deposits 16,656,731 190,489 4.57%
Public Fund CD's of $100,000 or
more 1,281,768 16,636 5.19%
CD's of $100,000 or more 8,682,658 101,535 4.68%
Foreign time deposits 3,831,401 47,962 5.01%
Total Interest-bearing deposits $53,735,226 $552,385 4.11%
Senior and subordinated notes 9,034,696 136,282 6.03%
Other borrowings 20,555,748 263,596 5.13%
Total interest-bearing liabilities $83,325,670 $952,263 4.57%
Net interest spread 4.90%
Interest income to average earning
assets 9.47%
Interest expense to average earning
assets 3.83%
Net interest margin 5.64%
Reported Quarter Ended 9/30/06 (1)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $294,574 $6,354 8.63%
Loans held for investment 62,428,789 1,814,803 11.63%
Securities available for sale 14,587,307 160,198 4.39%
Other 4,000,827 83,716 8.37%
Total earning assets $81,311,497 $2,065,071 10.16%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $619,460 $4,816 3.11%
Money market deposit accounts 11,237,206 103,073 3.67%
Savings accounts 3,911,765 28,604 2.92%
Other Consumer Time Deposits 14,325,784 153,881 4.30%
Public Fund CD's of $100,000 or
more 1,022,465 13,046 5.10%
CD's of $100,000 or more 8,302,487 95,229 4.59%
Foreign time deposits 3,564,708 43,922 4.93%
Total Interest-bearing deposits $42,983,875 $442,571 4.12%
Senior and subordinated notes 6,544,768 96,300 5.89%
Other borrowings 18,010,737 231,685 5.15%
Total interest-bearing liabilities $67,539,380 $770,556 4.56%
Net interest spread 5.64%
Interest income to average earning
assets 10.16%
Interest expense to average earning
assets 3.79%
Net interest margin 6.37%
Reported Quarter Ended 12/31/05 (1)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $156,376 $8,799 22.51%
Loans held for investment 48,700,689 1,408,545 11.57%
Securities available for sale 11,683,013 119,189 4.08%
Other 6,240,217 97,565 6.25%
Total earning assets $66,780,295 $1,634,098 9.79%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $253,473 $1,293 2.04%
Money market deposit accounts 6,871,855 51,037 2.97%
Savings accounts 1,621,793 9,079 2.24%
Other Consumer Time Deposits 12,973,630 135,914 4.19%
Public Fund CD's of $100,000 or
more 494,702 4,823 3.90%
CD's of $100,000 or more 9,595,516 106,145 4.42%
Foreign time deposits 2,926,965 35,772 4.89%
Total 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 5.46%
Interest income to average earning
assets 9.79%
Interest expense to average earning
assets 3.58%
Net interest margin 6.21%
(1) Prior quarter data has been updated to reclass for Mortgage Loans
Held for Sale.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 12/31/06
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $3,480,664 $55,896 6.42%
Loans held for investment 123,901,960 3,640,588 11.75%
Securities available for sale 15,248,950 186,480 4.89%
Other 4,048,779 48,089 4.75%
Total earning assets $146,680,353 $3,931,053 10.72%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $2,094,623 $14,546 2.78%
Money market deposit accounts 15,762,255 149,831 3.80%
Savings accounts 5,425,790 31,386 2.31%
Other Consumer Time Deposits 16,656,731 190,489 4.57%
Public Fund CD's of $100,000 or
more 1,281,768 16,636 5.19%
CD's of $100,000 or more 8,682,658 101,535 4.68%
Foreign time deposits 3,831,401 47,962 5.01%
Total Interest-bearing deposits $53,735,226 $552,385 4.11%
Senior and subordinated notes 9,034,696 136,282 6.03%
Other borrowings 20,555,748 263,609 5.13%
Securitization liability 48,603,831 631,521 5.20%
Total interest-bearing liabilities $131,929,501 $1,583,797 4.80%
Net interest spread 5.92%
Interest income to average earning
assets 10.72%
Interest expense to average earning
assets 4.32%
Net interest margin 6.40%
Managed (1) Quarter Ended 9/30/06 (2)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $294,574 $6,354 8.63%
Loans held for investment 110,512,266 3,401,130 12.31%
Securities available for sale 14,587,307 160,198 4.39%
Other 2,221,427 28,192 5.08%
Total earning assets $127,615,574 $3,595,874 11.27%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $619,460 $4,816 3.11%
Money market deposit accounts 11,237,206 103,073 3.67%
Savings accounts 3,911,765 28,604 2.92%
Other Consumer Time Deposits 14,325,784 153,881 4.30%
Public Fund CD's of $100,000 or
more 1,022,465 13,046 5.10%
CD's of $100,000 or more 8,302,487 95,229 4.59%
Foreign time deposits 3,564,708 43,922 4.93%
Total Interest-bearing deposits $42,983,875 $442,571 4.12%
Senior and subordinated notes 6,544,768 96,300 5.89%
Other borrowings 18,010,737 231,672 5.15%
Securitization liability 47,648,021 607,510 5.10%
Total interest-bearing liabilities $115,187,401 $1,378,053 4.79%
Net interest spread 6.49%
Interest income to average earning
assets 11.27%
Interest expense to average earning
assets 4.32%
Net interest margin 6.95%
Managed (1) Quarter Ended 12/31/05 (2)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $156,376 $8,799 22.51%
Loans held for investment 94,241,240 3,001,361 12.74%
Securities available for sale 11,683,013 119,189 4.08%
Other 4,171,939 46,611 4.47%
Total earning assets $110,252,568 $3,175,960 11.52%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $253,473 $1,293 2.04%
Money market deposit accounts 6,871,855 51,037 2.97%
Savings accounts 1,621,793 9,079 2.24%
Other Consumer Time Deposits 12,973,630 135,914 4.19%
Public Fund CD's of $100,000 or
more 494,702 4,823 3.90%
CD's of $100,000 or more 9,595,516 106,145 4.42%
Foreign time deposits 2,926,965 35,772 4.89%
Total 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 7.13%
Interest income to average earning
assets 11.52%
Interest expense to average earning
assets 3.99%
Net interest margin 7.53%
(1) The information in this table reflects the adjustment to add back
the effect of securitized loans.
(2) Prior quarter data has been updated to reclass for Mortgage Loans
Held for Sale.
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
Web site: http://www.capitalone.com
