CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS
| 2003 | 2003 | 2003 | 2002 | 2002 | ||||||||||||||||
| (in millions, except per share data and as noted) | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||||||||
Earnings (Reported Basis) | ||||||||||||||||||||
| Net Interest Income | $ | 703.9 | $ | 682.3 | $ | 734.8 | $ | 731.0 | $ | 722.4 | ||||||||||
| Non-Interest Income | 1,363.2 | 1,310.6 | 1,304.6 | 1,320.3 | 1,520.2 | |||||||||||||||
Total Revenue(1) | 2,067.1 | 1,992.9 | 2,039.4 | 2,051.4 | 2,242.6 | |||||||||||||||
| Provision for Loan Losses | 364.1 | 387.1 | 375.9 | 543.8 | 674.1 | |||||||||||||||
| Marketing Expenses | 316.0 | 270.6 | 241.7 | 210.8 | 185.8 | |||||||||||||||
| Operating Expenses | 924.6 | 880.0 | 931.2 | 910.2 | 965.2 | (2) | ||||||||||||||
| Income Before Taxes and Accounting Change | 462.4 | 455.2 | 490.6 | 386.6 | 417.5 | |||||||||||||||
| Tax Rate | 37.0 | % | 37.0 | % | 37.0 | % | 38.0 | % | 38.0 | % | ||||||||||
Cumulative Effect of Accounting Change, net of tax(3) | 15.0 | — | — | — | — | |||||||||||||||
| Net Income | $ | 276.3 | $ | 286.8 | $ | 309.1 | $ | 239.7 | $ | 258.8 | ||||||||||
Common Share Statistics | ||||||||||||||||||||
| Basic EPS | $ | 1.23 | $ | 1.28 | $ | 1.39 | $ | 1.08 | $ | 1.17 | ||||||||||
| Diluted EPS | $ | 1.17 | $ | 1.23 | $ | 1.35 | $ | 1.05 | $ | 1.13 | ||||||||||
| Dividends Per Share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | ||||||||||
| Book Value Per Share (period end) | $ | 24.53 | $ | 23.37 | $ | 21.78 | $ | 20.44 | $ | 19.55 | ||||||||||
| Stock Price Per Share (period end) | $ | 57.04 | $ | 49.18 | $ | 30.01 | $ | 29.72 | $ | 34.92 | ||||||||||
| Total Market Capitalization (period end) | $ | 13,073.6 | $ | 11,170.0 | $ | 6,791.8 | $ | 6,722.5 | $ | 7,744.2 | ||||||||||
| Shares Outstanding (period end) | 229.2 | 227.1 | 226.3 | 226.2 | 221.8 | |||||||||||||||
| Shares Used to Compute Basic EPS | 224.6 | 223.7 | 223.0 | 221.8 | 220.6 | |||||||||||||||
| Shares Used to Compute Diluted EPS | 236.3 | 232.6 | 228.4 | 228.2 | 228.4 | |||||||||||||||
Reported Balance Sheet Statistics (period avg.) | ||||||||||||||||||||
| Average Loans | $ | 28,949 | $ | 27,101 | $ | 27,316 | $ | 27,260 | $ | 26,058 | ||||||||||
| Average Earning Assets | $ | 38,133 | $ | 36,298 | $ | 34,144 | $ | 34,075 | $ | 32,449 | ||||||||||
| Average Assets | $ | 41,704 | $ | 39,678 | $ | 38,318 | $ | 37,208 | $ | 35,470 | ||||||||||
| Average Equity | $ | 5,424 | $ | 5,148 | $ | 4,823 | $ | 4,568 | $ | 4,418 | ||||||||||
| Net Interest Margin | 7.38 | % | 7.52 | % | 8.61 | % | 8.58 | % | 8.91 | % | ||||||||||
| Revenue Margin | 21.68 | % | 21.96 | % | 23.89 | % | 24.08 | % | 27.64 | % | ||||||||||
Risk Adjusted Margin(4) | 17.66 | % | 17.16 | % | 18.49 | % | 19.18 | % | 23.90 | % | ||||||||||
| Return on Average Assets (ROA) | 2.65 | % | 2.89 | % | 3.23 | % | 2.58 | % | 2.92 | % | ||||||||||
| Return on Average Equity (ROE) | 20.38 | % | 22.28 | % | 25.64 | % | 20.99 | % | 23.44 | % | ||||||||||
| Net Charge-Off Rate | 5.30 | % | 6.43 | % | 6.76 | % | 6.13 | % | 4.66 | % | ||||||||||
| Net Charge-Offs | $ | 383.2 | $ | 435.6 | $ | 461.5 | $ | 417.7 | $ | 303.9 | ||||||||||
Reported Balance Sheet Statistics (period end) | ||||||||||||||||||||
| Loans | $ | 30,618 | $ | 26,849 | $ | 27,634 | $ | 27,344 | $ | 27,598 | ||||||||||
| Delinquency Rate (30+ days) | 5.03 | % | 5.61 | % | 5.39 | % | 6.12 | % | 5.71 | % | ||||||||||
| Total Assets | $ | 43,446 | $ | 40,367 | $ | 37,911 | $ | 37,382 | $ | 36,910 | ||||||||||
| Allowance as a % of reported loans | 5.13 | % | 5.92 | % | 5.92 | % | 6.29 | % | 5.78 | % | ||||||||||
Capital(5) | $ | 6,449.8 | $ | 6,130.4 | $ | 5,749.0 | $ | 5,440.4 | $ | 5,149.6 | ||||||||||
| Capital to Assets Ratio | 14.85 | % | 15.19 | % | 15.16 | % | 14.55 | % | 13.95 | % | ||||||||||
| Capital plus Allowance to Assets Ratio | 18.46 | % | 19.24 | % | 19.48 | % | 19.15 | % | 18.27 | % | ||||||||||
(1) 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 2003 — $481.0 million, Q2 2003 — $497.3 million, Q1 2003 — $519.7 million, Q4 2002 — $675.7 million and Q3 2002 — $489.6 million.
(2) Includes $110.0 million of one-time charges in Q3 2002.
(3) Net charge from the adoption of FASB Interpretation No. 46, Consolidation of Variable Interest Entities.
(4) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets.
(5) Includes preferred interests and mandatory convertible securities.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUPPLEMENT REPORTED BASIS
| 2003 | 2003 | 2003 | 2002 | 2002 | ||||||||||||||||
| (in millions, except per share data and as noted) | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||||||||
Revenue & Expense Statistics (Reported) | ||||||||||||||||||||
| Net interest income growth (annualized) | 13 | % | (29 | )% | 2 | % | 5 | % | 42 | % | ||||||||||
| Non interest income growth (annualized) | 16 | % | 2 | % | (5 | )% | (53 | )% | 39 | % | ||||||||||
| Revenue growth (annualized) | 15 | % | (9 | )% | (2 | )% | (34 | )% | 40 | % | ||||||||||
Loan revenue margin(1) | 28.51 | % | 29.46 | % | 29.73 | % | 29.95 | % | 34.18 | % | ||||||||||
Loan risk adjusted margin(2) | 23.22 | % | 23.03 | % | 22.97 | % | 23.82 | % | 29.52 | % | ||||||||||
| Operating expense as a % of revenues | 44.73 | % | 44.16 | % | 45.66 | % | 44.37 | % | 43.04 | % | ||||||||||
| Operating expense as a % of average loans (annualized) | 12.78 | % | 12.99 | % | 13.64 | % | 13.36 | % | 14.82 | % | ||||||||||
Per Account Statistics (Reported) | ||||||||||||||||||||
| Net interest income per account (annualized) | $ | 61.08 | $ | 59.19 | $ | 62.68 | $ | 61.22 | $ | 59.72 | ||||||||||
| Non interest income per account (annualized) | $ | 118.29 | $ | 113.71 | $ | 111.28 | $ | 110.57 | $ | 125.67 | ||||||||||
| Revenue per account (annualized) | $ | 179.38 | $ | 172.90 | $ | 173.95 | $ | 171.78 | $ | 185.39 | ||||||||||
Growth Statistics (Reported) | ||||||||||||||||||||
| Consumer loan growth | $ | 3,769 | $ | (785 | ) | $ | 290 | $ | (254 | ) | $ | 3,102 | ||||||||
| % loan growth Q over Q (annualized) | 56 | % | (11 | )% | 4 | % | (4 | )% | 51 | % | ||||||||||
| % loan growth Y over Y | 11 | % | 10 | % | 15 | % | 31 | % | 58 | % | ||||||||||
(1) Loan revenue margin is total loan revenue, loan interest income less interest expense plus non-interest income, as a percent of average loans outstanding for the period. Loan interest expense is calculated using the cost of funds rate applied to the average consumer loan balance.
(2) Loan risk adjusted margin is total loan revenue, loan net interest income and non-interest income, less net charge-offs as a percentage of average loans outstanding for the period.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS(1)
| 2003 | 2003 | 2003 | 2002 | 2002 | ||||||||||||||||
| (in millions, except per share data and as noted) | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||||||||
Earnings (Managed Basis) | ||||||||||||||||||||
| Net Interest Income | $ | 1,500.8 | $ | 1,457.5 | $ | 1,508.0 | $ | 1,442.2 | $ | 1,435.3 | ||||||||||
| Non-Interest Income | 1,049.2 | 1,046.0 | 1,027.9 | 1,086.9 | 1,189.1 | |||||||||||||||
Total Revenue(2) | 2,550.0 | 2,503.5 | 2,535.9 | 2,529.1 | 2,624.4 | |||||||||||||||
| Provision for Loan Losses | 847.0 | 897.7 | 872.3 | 1,021.5 | 1,055.9 | |||||||||||||||
| Marketing Expenses | 316.0 | 270.6 | 241.7 | 210.8 | 185.8 | |||||||||||||||
| Operating Expenses | 924.6 | 880.0 | 931.2 | 910.2 | 965.2 | (3) | ||||||||||||||
| Income Before Taxes and Accounting Change | 462.4 | 455.2 | 490.6 | 386.6 | 417.5 | |||||||||||||||
| Tax Rate | 37.0 | % | 37.0 | % | 37.0 | % | 38.0 | % | 38.0 | % | ||||||||||
Cumulative Effect of Accounting Change, net of tax(4) | 15.0 | — | — | — | — | |||||||||||||||
| Net Income | $ | 276.3 | $ | 286.8 | $ | 309.1 | $ | 239.7 | $ | 258.8 | ||||||||||
Managed Balance Sheet Statistics (period avg.) | ||||||||||||||||||||
| Average Loans | $ | 63,691 | $ | 59,916 | $ | 59,250 | $ | 57,669 | $ | 55,350 | ||||||||||
| Average Earning Assets | $ | 71,022 | $ | 67,451 | $ | 64,602 | $ | 62,789 | $ | 60,016 | ||||||||||
| Average Assets | $ | 75,831 | $ | 71,913 | $ | 69,670 | $ | 67,037 | $ | 64,193 | ||||||||||
| Net Interest Margin | 8.45 | % | 8.64 | % | 9.34 | % | 9.19 | % | 9.57 | % | ||||||||||
| Revenue Margin | 14.36 | % | 14.85 | % | 15.70 | % | 16.11 | % | 17.49 | % | ||||||||||
Risk Adjusted Margin(5) | 9.48 | % | 9.23 | % | 9.77 | % | 10.41 | % | 12.92 | % | ||||||||||
| Return on Average Assets (ROA) | 1.46 | % | 1.60 | % | 1.77 | % | 1.43 | % | 1.61 | % | ||||||||||
| Net Charge-Off Rate | 5.44 | % | 6.32 | % | 6.47 | % | 6.21 | % | 4.96 | % | ||||||||||
| Net Charge-Offs | $ | 866.1 | $ | 946.3 | $ | 957.9 | $ | 895.5 | $ | 685.7 | ||||||||||
| Cost Per Account (in dollars) | $ | 80.23 | $ | 76.35 | $ | 79.43 | $ | 76.22 | $ | 79.79 | ||||||||||
Managed Balance Sheet Statistics (period end) | ||||||||||||||||||||
| Loans | $ | 67,260 | $ | 60,736 | $ | 59,214 | $ | 59,747 | $ | 56,883 | ||||||||||
| Delinquency Rate (30+ days) | 4.65 | % | 4.95 | % | 4.97 | % | 5.60 | % | 5.31 | % | ||||||||||
| Number of Accounts (000’s) | 46,406 | 45,785 | 46,423 | 47,369 | 48,163 | |||||||||||||||
| Total Assets | $ | 79,465 | $ | 73,636 | $ | 68,927 | $ | 69,205 | $ | 65,614 | ||||||||||
| Capital to Assets Ratio | 8.12 | % | 8.33 | % | 8.34 | % | 7.86 | % | 7.85 | % | ||||||||||
| Capital plus Allowance to Assets Ratio | 10.09 | % | 10.48 | % | 10.71 | % | 10.35 | % | 10.28 | % | ||||||||||
(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) 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 2003 — $481.0 million, Q2 2003 — $497.3 million, Q1 2003 — $519.7 million, Q4 2002 — $675.7 million and Q3 2002 — $489.6 million.
(3) Includes $110.0 million of one-time charges in Q3 2002.
(4) Net charge from the adoption of FASB Interpretation No. 46, Consolidation of Variable Interest Entities.
(5) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUPPLEMENT MANAGED BASIS(1)
| 2003 | 2003 | 2003 | 2002 | 2002 | |||||||||||||||||
| (in millions, except per share data and as noted) | Q3 | Q2 | Q1 | Q4 | Q3 | ||||||||||||||||
Revenue & Expense Statistics (Managed) | |||||||||||||||||||||
| Net interest income growth (annualized) | 12 | % | (13 | )% | 18 | % | 2 | % | 65 | % | |||||||||||
| Non interest income growth (annualized) | 1 | % | 7 | % | (22 | )% | (34 | )% | 15 | % | |||||||||||
| Revenue growth (annualized) | 7 | % | (5 | )% | 1 | % | (15 | )% | 41 | % | |||||||||||
Loan revenue margin(2) | 16.15 | % | 16.87 | % | 17.20 | % | 17.58 | % | 19.01 | % | |||||||||||
Loan risk adjusted margin(3) | 10.71 | % | 10.56 | % | 10.73 | % | 11.37 | % | 14.06 | % | |||||||||||
| Operating expense as a % of revenues | 36.26 | % | 35.15 | % | 36.72 | % | 35.99 | % | 36.78 | % | |||||||||||
| Operating expense as a % of average loans (annualized) | 5.81 | % | 5.87 | % | 6.29 | % | 6.31 | % | 6.98 | % | |||||||||||
Per Account Statistics (Managed) | |||||||||||||||||||||
| Net interest income per account (annualized) | $ | 130.23 | $ | 126.45 | $ | 128.62 | $ | 120.77 | $ | 118.65 | |||||||||||
| Non interest income per account (annualized) | $ | 91.05 | $ | 90.75 | $ | 87.68 | $ | 91.02 | $ | 98.30 | |||||||||||
| Revenue per account (annualized) | $ | 221.28 | $ | 217.21 | $ | 216.30 | $ | 211.79 | $ | 216.95 | |||||||||||
| Net income per account (annualized) | $ | 23.98 | $ | 24.88 | $ | 26.37 | $ | 20.07 | $ | 21.39 | |||||||||||
Growth Statistics (Managed) | |||||||||||||||||||||
| Average accounts (000’s) | 46,096 | 46,104 | 46,896 | 47,766 | 48,388 | ||||||||||||||||
| Net new accounts per quarter (000’s) | 621 | (638 | ) | (946 | ) | (794 | ) | (449 | ) | ||||||||||||
| % account growth Q over Q (annualized) | 5 | % | (5 | )% | (8 | )% | (7 | )% | (4 | )% | |||||||||||
| % account growth Y over Y | (4 | )% | (6 | )% | — | % | 8 | % | 20 | % | |||||||||||
| Consumer loan growth | $ | 6,524 | $ | 1,522 | $ | (533 | ) | $ | 2,864 | $ | 3,675 | ||||||||||
| % loan growth Q over Q (annualized) | 43 | % | 10 | % | (4 | )% | 20 | % | 28 | % | |||||||||||
| % loan growth Y over Y | 18 | % | 14 | % | 22 | % | 32 | % | 48 | % | |||||||||||
Balance Sheet Measures | |||||||||||||||||||||
| % off-balance sheet securitizations | 54 | % | 55 | % | 53 | % | 53 | % | 51 | % | |||||||||||
| % at introductory rate | 11 | % | 10 | % | 9 | % | 10 | % | 11 | % | |||||||||||
Segment Statistics | |||||||||||||||||||||
Consumer Lending: | |||||||||||||||||||||
| Loans receivable | $ | 52,545 | $ | 47,182 | $ | 45,963 | $ | 47,290 | $ | 45,021 | |||||||||||
| Net income (loss) | $ | 290.7 | $ | 289.8 | $ | 309.2 | $ | 183.1 | $ | 291.3 | |||||||||||
| Net charge-off rate | 5.74 | % | 6.95 | % | 7.12 | % | 6.45 | % | 5.16 | % | |||||||||||
| Delinquency rate | 4.41 | % | 4.83 | % | 4.99 | % | 5.54 | % | 5.41 | % | |||||||||||
Auto Finance: | |||||||||||||||||||||
| Loans receivable | $ | 8,008 | $ | 7,380 | $ | 7,742 | $ | 6,992 | $ | 6,496 | |||||||||||
| Net income (loss) | $ | 27.3 | $ | 44.0 | $ | (6.5 | ) | $ | 8.8 | $ | (3.4 | ) | |||||||||
| Net charge-off rate | 5.10 | % | 4.22 | % | 4.91 | % | 4.83 | % | 3.97 | % | |||||||||||
| Delinquency rate | 7.07 | % | 6.97 | % | 5.37 | % | 7.15 | % | 6.30 | % | |||||||||||
International: | |||||||||||||||||||||
| Loans receivable | $ | 6,562 | $ | 6,061 | $ | 5,390 | $ | 5,331 | $ | 5,255 | |||||||||||
| Net income (loss) | $ | 21.5 | $ | 13.6 | $ | 18.1 | $ | (6.2 | ) | $ | (1.1 | ) | |||||||||
| Net charge-off rate | 4.01 | % | 4.48 | % | 4.28 | % | 3.92 | % | 3.61 | % | |||||||||||
| Delinquency rate | 4.08 | % | 3.92 | % | 4.22 | % | 4.18 | % | 3.78 | % | |||||||||||
(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) Loan revenue margin is total loan revenue, loan interest income less interest expense plus non-interest income, as a percent of average loans outstanding for the period. Loan interest expense is calculated using the cost of funds rate applied to the average consumer loan balance.
(3) Loan risk adjusted margin is total loan revenue, loan net interest income and non-interest income, less net charge-offs as a percentage of average loans outstanding for the period.
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended September 30, 2003
(dollars in thousands)(unaudited)
| Total Reported | Adjustments(1) | Total Managed(2) | ||||||||||
Income Statement Measures | ||||||||||||
| Net interest income | $ | 703,921 | $ | 796,843 | $ | 1,500,764 | ||||||
| Non-interest income | $ | 1,363,208 | $ | (313,997 | ) | $ | 1,049,211 | |||||
| Total revenue | $ | 2,067,129 | $ | 482,846 | $ | 2,549,975 | ||||||
| Provision for loan losses | $ | 364,144 | $ | 482,846 | $ | 846,990 | ||||||
Balance Sheet Measures | ||||||||||||
| Consumer loans | $ | 30,617,843 | $ | 36,642,030 | $ | 67,259,873 | ||||||
| Total assets | $ | 43,446,337 | $ | 36,018,801 | $ | 79,465,138 | ||||||
| Average consumer loans | $ | 28,949,372 | $ | 34,741,889 | $ | 63,691,261 | ||||||
| Average earning assets | $ | 38,133,054 | $ | 32,889,060 | $ | 71,022,114 | ||||||
| Average total assets | $ | 41,704,153 | $ | 34,126,592 | $ | 75,830,745 | ||||||
| Delinquencies | $ | 1,539,761 | $ | 1,586,061 | $ | 3,125,822 | ||||||
(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.
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, interest income, interchange, fees and recoveries generated from the securitized loan portfolio net of charge-offs in excess of the interest paid to investors of asset-backed securitizations are recognized as non-interest income on the “reported” income statement.
The Company’s “managed” consolidated financial statements add back the 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 non-interest income generated from the securitized portfolio and distributes the revenue 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.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets(1)
(in thousands)(unaudited)
| September 30 | June 30 | September 30 | |||||||||||
| 2003 | 2003 | 2002 | |||||||||||
Assets: | |||||||||||||
| Cash and due from banks | $ | 250,514 | $ | 296,551 | $ | 316,010 | |||||||
| Federal funds sold and resale agreements | 889,106 | 2,320,658 | 304,782 | ||||||||||
| Interest-bearing deposits at other banks | 163,025 | 578,479 | 112,248 | ||||||||||
| Cash and cash equivalents | 1,302,645 | 3,195,688 | 733,040 | ||||||||||
| Securities available for sale | 5,408,671 | 5,418,817 | 4,290,441 | ||||||||||
| Consumer loans | 30,617,843 | 26,848,578 | 27,597,872 | ||||||||||
| Less: Allowance for loan losses | (1,570,000 | ) | (1,590,000 | ) | (1,595,000 | ) | |||||||
| Net loans | 29,047,843 | 25,258,578 | 26,002,872 | ||||||||||
| Accounts receivable from securitizations | 5,204,170 | 4,092,961 | 3,090,842 | ||||||||||
| Premises and equipment, net | 898,997 | 760,376 | 789,726 | ||||||||||
| Interest receivable | 201,783 | 200,517 | 182,300 | ||||||||||
| Other | 1,382,228 | 1,439,714 | 1,820,749 | ||||||||||
| Total assets | $ | 43,446,337 | $ | 40,366,651 | $ | 36,909,970 | |||||||
Liabilities: | |||||||||||||
| Interest-bearing deposits | $ | 20,936,517 | $ | 19,821,881 | $ | 16,885,553 | |||||||
| Senior notes | 6,338,772 | 5,987,125 | 5,561,489 | ||||||||||
| Other borrowings | 7,519,770 | 6,237,419 | 6,638,560 | ||||||||||
| Interest payable | 231,365 | 230,836 | 214,220 | ||||||||||
| Other | 2,796,719 | 2,782,400 | 3,274,637 | ||||||||||
| Total liabilities | 37,823,143 | 35,059,661 | 32,574,459 | ||||||||||
Stockholders’ Equity: | |||||||||||||
| Common stock | 2,305 | 2,284 | 2,227 | ||||||||||
| Paid-in capital, net | 1,833,520 | 1,762,469 | 1,636,738 | ||||||||||
| Retained earnings and cumulative other comprehensive income | 3,836,535 | 3,591,403 | 2,731,498 | ||||||||||
| Less: Treasury stock, at cost | (49,166 | ) | (49,166 | ) | (34,952 | ) | |||||||
| Total stockholders’ equity | 5,623,194 | 5,306,990 | 4,335,511 | ||||||||||
| Total liabilities and stockholders’ equity | $ | 43,446,337 | $ | 40,366,651 | $ | 36,909,970 | |||||||
(1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, “Accounting for Accrued Interest Receivable Related to Securitized and Sold Receivables under FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, that was issued in April 2003.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income(1)
(in thousands, except per share data)(unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||
| September 30 | June 30 | September 30 | September 30 | September 30 | |||||||||||||||||
| 2003 | 2002 | 2002 | 2003 | 2002 | |||||||||||||||||
Interest Income: | |||||||||||||||||||||
| Consumer loans, including past-due fees | $ | 989,318 | $ | 960,124 | $ | 1,003,988 | $ | 2,962,724 | $ | 2,779,280 | |||||||||||
| Securities available for sale | 49,440 | 47,895 | 45,965 | 140,266 | 134,124 | ||||||||||||||||
| Other | 64,267 | 62,261 | 58,126 | 176,881 | 153,698 | ||||||||||||||||
| Total interest income | 1,103,025 | 1,070,280 | 1,108,079 | 3,279,871 | 3,067,102 | ||||||||||||||||
Interest Expense: | |||||||||||||||||||||
| Deposits | 224,078 | 220,640 | 215,470 | 654,026 | 596,745 | ||||||||||||||||
| Senior notes | 114,989 | 106,151 | 110,464 | 325,237 | 314,055 | ||||||||||||||||
| Other borrowings | 60,037 | 61,226 | 59,716 | 179,620 | 168,222 | ||||||||||||||||
| Total interest expense | 399,104 | 388,017 | 385,650 | 1,158,883 | 1,079,022 | ||||||||||||||||
| Net interest income | 703,921 | 682,263 | 722,429 | 2,120,988 | 1,988,080 | ||||||||||||||||
| Provision for loan losses | 364,144 | 387,097 | 674,111 | 1,127,092 | 1,605,570 | ||||||||||||||||
| Net interest income after provision for loan losses | 339,777 | 295,166 | 48,318 | 993,896 | 382,510 | ||||||||||||||||
Non-Interest Income: | |||||||||||||||||||||
| Servicing and securitizations | 820,515 | 742,696 | 815,267 | 2,292,900 | 2,159,761 | ||||||||||||||||
| Service charges and other customer-related fees | 405,063 | 402,970 | 535,732 | 1,249,259 | 1,462,350 | ||||||||||||||||
| Interchange | 95,879 | 89,141 | 118,203 | 270,371 | 353,652 | ||||||||||||||||
| Other | 41,751 | 75,815 | 50,976 | 165,903 | 170,751 | ||||||||||||||||
| Total non-interest income | 1,363,208 | 1,310,622 | 1,520,178 | 3,978,433 | 4,146,514 | ||||||||||||||||
Non-Interest Expense: | |||||||||||||||||||||
| Salaries and associate benefits | 387,653 | 373,257 | 417,189 | 1,158,359 | 1,177,287 | ||||||||||||||||
| Marketing | 316,026 | 270,555 | 185,795 | 828,277 | 859,777 | ||||||||||||||||
| Communications and data processing | 107,385 | 112,456 | 106,128 | 331,893 | 299,922 | ||||||||||||||||
| Supplies and equipment | 88,753 | 87,680 | 88,639 | 260,245 | 261,990 | ||||||||||||||||
| Occupancy | 47,205 | 42,755 | 86,942 | 133,534 | 158,598 | ||||||||||||||||
| Other | 293,575 | 263,865 | 266,327 | 851,771 | 706,987 | ||||||||||||||||
| Total non-interest expense | 1,240,597 | 1,150,568 | 1,151,020 | 3,564,079 | 3,464,561 | ||||||||||||||||
| Income before income taxes and cumulative effect of accounting change | 462,388 | 455,220 | 417,476 | 1,408,250 | 1,064,463 | ||||||||||||||||
| Income taxes | 171,084 | 168,431 | 158,641 | 521,053 | 404,496 | ||||||||||||||||
| Income before cumulative effect of accounting change | 291,304 | 286,789 | 258,835 | 887,197 | 659,967 | ||||||||||||||||
| Cumulative effect of accounting change, net of taxes of $8,832 | 15,037 | — | — | 15,037 | — | ||||||||||||||||
| Net income | $ | 276,267 | $ | 286,789 | $ | 258,835 | $ | 872,160 | $ | 659,967 | |||||||||||
| Basic earnings per share before cumulative effect of accounting change | $ | 1.30 | $ | 1.28 | $ | 1.17 | $ | 3.97 | $ | 3.00 | |||||||||||
| Basic earnings per share after cumulative effect of accounting change | $ | 1.23 | $ | 1.28 | $ | 1.17 | $ | 3.90 | $ | 3.00 | |||||||||||
| Diluted earnings per share before cumulative effect of accounting change | $ | 1.23 | $ | 1.23 | $ | 1.13 | $ | 3.82 | $ | 2.88 | |||||||||||
| Diluted earnings per share after cumulative effect of accounting change | $ | 1.17 | $ | 1.23 | $ | 1.13 | $ | 3.75 | $ | 2.88 | |||||||||||
| Dividends paid per share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.08 | $ | 0.08 | |||||||||||
(1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, “Accounting for Accrued Interest Receivable Related to Securitized and Sold Receivables under FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, that was issued April 2003.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates(1)
(dollars in thousands)(unaudited)
Reported | Quarter Ended 9/30/03 | Quarter Ended 6/30/03 | Quarter Ended 9/30/02 | |||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | ||||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | ||||||||||||||||||
Earning assets: | ||||||||||||||||||||||||||
| Consumer loans | $ | 28,949,372 | $ | 989,318 | 13.67 | % | $ | 27,101,042 | $ | 960,124 | 14.17 | % | $ | 26,057,884 | $ | 1,003,988 | 15.41 | % | ||||||||
| Securities available for sale | 5,702,955 | 49,440 | 3.47 | 5,386,070 | 47,895 | 3.56 | 3,877,119 | 45,965 | 4.74 | |||||||||||||||||
| Other | 3,480,727 | 64,267 | 7.39 | 3,810,810 | 62,261 | 6.54 | 2,514,445 | 58,126 | 9.25 | |||||||||||||||||
| Total earning assets | $ | 38,133,054 | $ | 1,103,025 | 11.57 | % | $ | 36,297,922 | $ | 1,070,280 | 11.79 | % | $ | 32,449,448 | $ | 1,108,079 | 13.66 | % | ||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||
| Deposits | $ | 20,302,524 | $ | 224,078 | 4.41 | % | $ | 19,178,154 | $ | 220,640 | 4.60 | % | $ | 16,519,572 | $ | 215,470 | 5.22 | % | ||||||||
| Senior notes | 6,065,935 | 114,989 | 7.58 | 5,533,693 | 106,151 | 7.67 | 5,718,548 | 110,464 | 7.73 | |||||||||||||||||
| Other borrowings | 6,891,889 | 60,037 | 3.48 | 6,682,797 | 61,226 | 3.66 | 5,631,470 | 59,716 | 4.24 | |||||||||||||||||
| Total interest-bearing liabilities | $ | 33,260,348 | $ | 399,104 | 4.80 | % | $ | 31,394,644 | $ | 388,017 | 4.94 | % | $ | 27,869,590 | $ | 385,650 | 5.54 | % | ||||||||
| Net interest spread | 6.77 | % | 6.85 | % | 8.12 | % | ||||||||||||||||||||
| Interest income to average earning asets | 11.57 | % | 11.79 | % | 13.66 | % | ||||||||||||||||||||
| Interest expense to average earning assets | 4.19 | 4.27 | 4.75 | |||||||||||||||||||||||
| Net interest margin | 7.38 | % | 7.52 | % | 8.91 | % | ||||||||||||||||||||
(1) Certain prior period amounts have been reclassified to conform to the current period presentation for the Financial Accounting Standards Board Staff Position, “Accounting for Accrued Interest Receivable Related to Securitized and Sold Receivables under FASB Statement No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, that was issued April 2003.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
| Managed (1) | Quarter Ended 9/30/03 | Quarter Ended 6/30/03 | Quarter Ended 9/30/02 | ||||||||||||||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||||||||||||
Earning assets: | |||||||||||||||||||||||||||||||||||||
| Consumer loans | $ | 63,691,261 | $ | 2,180,109 | 13.69 | % | $ | 59,915,797 | $ | 2,110,859 | 14.09 | % | $ | 55,350,137 | $ | 2,081,399 | 15.04 | % | |||||||||||||||||||
| Securities available for sale | 5,702,955 | 49,440 | 3.47 | 5,386,070 | 47,895 | 3.56 | 3,877,119 | 45,965 | 4.74 | ||||||||||||||||||||||||||||
| Other | 1,627,898 | 9,501 | 2.33 | 2,148,972 | 12,802 | 2.38 | 788,347 | 5,122 | 2.60 | ||||||||||||||||||||||||||||
| Total earning assets | $ | 71,022,114 | $ | 2,239,050 | 12.61 | % | $ | 67,450,839 | $ | 2,171,556 | 12.88 | % | $ | 60,015,603 | $ | 2,132,486 | 14.21 | % | |||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||
| Deposits | $ | 20,302,524 | $ | 224,078 | 4.41 | % | $ | 19,178,154 | $ | 220,640 | 4.60 | % | $ | 16,519,572 | $ | 215,470 | 5.22 | % | |||||||||||||||||||
| Senior notes | 6,065,935 | 114,989 | 7.58 | 5,533,693 | 106,151 | 7.67 | 5,718,548 | 110,464 | 7.73 | ||||||||||||||||||||||||||||
| Other borrowings | 6,891,889 | 60,037 | 3.48 | 6,682,797 | 61,226 | 3.66 | 5,631,470 | 59,716 | 4.24 | ||||||||||||||||||||||||||||
| Securitization liability | 34,156,144 | 339,182 | 3.97 | 32,249,105 | 326,022 | 4.04 | 28,740,188 | 311,562 | 4.34 | ||||||||||||||||||||||||||||
| Total interest-bearing liabilities | $ | 67,416,492 | $ | 738,286 | 4.38 | % | $ | 63,643,749 | $ | 714,039 | 4.49 | % | $ | 56,609,778 | $ | 697,212 | 4.93 | % | |||||||||||||||||||
| Net interest spread | 8.23 | % | 8.39 | % | 9.28 | % | |||||||||||||||||||||||||||||||
| Interest income to average earning assets | 12.61 | % | 12.88 | % | 14.21 | % | |||||||||||||||||||||||||||||||
| Interest expense to average earning assets | 4.16 | 4.24 | 4.64 | ||||||||||||||||||||||||||||||||||
| Net interest margin | 8.45 | % | 8.64 | % | 9.57 | % | |||||||||||||||||||||||||||||||
(1) The information in this table reflects the adjustment to add back the effect of securitized loans.
News Release
1680 Capital One Drive McLean, VA 22102-3491
| October 22, 2003 FOR IMMEDIATE RELEASE: | ||||
| Contacts: | Paul Paquin V.P., Investor Relations (703) 720-2456 | Tatiana Stead Corporate Media (703) 720-2352 |
Capital One Reports Third Quarter 2003 Earnings per Share Increase
Over Third Quarter 2002
McLean, Va.(October 22, 2003) – Capital One Financial Corporation (NYSE: COF) today announced that its earnings for the third quarter of 2003 were $276.3 million, or $1.17 per share (fully diluted), compared with earnings of $258.8 million, or $1.13 per share, for the comparable period of the prior year and $286.8 million, or $1.23 per share, in the previous quarter. Also, the company maintained its 2003 earnings guidance of at least $4.55 per share and announced that it expects managed loan growth of around 20 percent in 2003. The company expects to release its 2004 earnings guidance on October 29, 2003.
During the third quarter of 2003, Capital One grew its managed loan portfolio by $6.5 billion to $67.3 billion. The managed charge-off rate declined to 5.44 percent in the third quarter of 2003, from 6.32 percent in the previous quarter. The managed delinquency rate (30+ days) declined to 4.65 percent from 4.95 percent at the end of the previous quarter.
“Our loan growth was broadly based across products and geographies, and was largely fueled by growth in superprime assets,” said Richard D. Fairbank, Capital One’s Chairman and Chief Executive Officer. “We are also pleased by our continued strong credit performance.”
The company continues to diversify its portfolio and shift its product mix upmarket. As a result, Capital One’s managed revenue margin declined to 14.36 percent in the third quarter of 2003 from 14.85 percent in the previous quarter. The managed risk-adjusted margin rose to 9.48 percent from 9.23 percent in the previous quarter due to lower charge-offs in the third quarter. As the company continues its asset diversification and its shift upmarket, management expects revenue margins and charge-offs to continue to trend generally downward, after a slight seasonal increase in charge-offs in the fourth quarter of 2003.
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Capital One Reports Third Quarter Earnings
Marketing expenses for the third quarter of 2003 increased $45.4 million to $316.0 million from $270.6 million in the previous quarter. Marketing expenses were $185.8 million in the comparable quarter of the prior year. Other non-interest expenses (excluding marketing) for the third quarter of 2003 were $924.6 million versus $880.0 million for the second quarter and $965.2 million in the comparable period of the prior year. The company’s accounts increased by 621 thousand to 46.4 million at the end of the third quarter.
In July 2003, the company adopted the provisions of FASB Interpretation No. 46 (“FIN 46”),Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51. The company has consolidated all Variable Interest Entities (VIEs) for which the company is the primary beneficiary, as defined by FIN 46. The VIEs relate to certain office building operating leases. This consolidation resulted in a $15.0 million ($23.9 million pre-tax) charge for a cumulative effect of a change in accounting principle.
The company generates earnings from its managed loan portfolio, which includes both on-balance sheet loans and securitized 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. Please see the schedule entitled “Reconciliation to GAAP Financial Measures” attached to this release for more information.
The company cautioned that its current expectations in this release, in the presentation slides available on the company’s website (www.capitalone.com), and Form 8–K dated October 22, 2003, for 2003 earnings, charge-off rates, margins, and future loan growth are forward-looking statements and actual results could differ materially from current expectations due to a number of factors, including: competition in the credit card industry; the actual account and balance growth achieved by the company; the company’s ability to access the capital markets at attractive rates and terms to fund its operations and future growth; and general economic conditions affecting consumer income and spending, which may affect consumer bankruptcies, defaults and charge-offs. A discussion of these and other factors can be found in Capital One’s annual 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 June 30, 2003.
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Capital One Reports Third Quarter Earnings
Headquartered in McLean, Virginia, Capital One Financial Corporation (www.capitalone.com) is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending products and Capital One Auto Finance, Inc., which offers auto loan products. Capital One’s subsidiaries collectively had 46.4 million managed accounts and $67.3 billion in managed loans outstanding as of September, 2003. Capital One, aFortune500 company, 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.
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NOTE: Third quarter 2003 financial results, SEC Fillings, and third quarter earnings conference call slides are accessible on Capital One’s home page (www.capitalone.com). Choose “About Capital One” to access the Investor Center to view and download the earnings press release, slides, and other financial information (http://www.capitalone/about/invest/financials). Additionally, a webcast of today’s 5:00pm (EDT) earnings conference call is accessible through the company’s home page.
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