Exhibit 99.1
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS
| (in millions, except per share data and as noted) | 2004 Q3 | 2004 Q2 | 2004 Q1 | 2003 Q4 | 2003 Q3 | |||||||||||||||
Earnings (Reported Basis) | ||||||||||||||||||||
Net Interest Income | $ | 775.4 | $ | 711.0 | $ | 732.0 | $ | 664.1 | $ | 703.9 | ||||||||||
Non-Interest Income | 1,539.4 | (1) | 1,396.1 | 1,443.1 | 1,437.5 | 1,363.2 | ||||||||||||||
Total Revenue(2) | 2,314.8 | 2,107.1 | 2,175.1 | 2,101.6 | 2,067.1 | |||||||||||||||
Provision for Loan Losses | 267.8 | 242.3 | 243.7 | 390.4 | 364.1 | |||||||||||||||
Marketing Expenses | 317.7 | 253.8 | 255.1 | 290.1 | 316.0 | |||||||||||||||
Operating Expenses | 994.3 | (3) | 975.0 | (3) | 969.7 | 999.3 | 925.8 | |||||||||||||
Income Before Taxes and Accounting Change | 735.0 | 636.0 | 706.6 | 421.7 | 461.2 | |||||||||||||||
Tax Rate | 33.3 | % | 36.0 | % | 36.2 | % | 37.0 | % | 37.0 | % | ||||||||||
Cumulative Effect of Accounting Change, net of tax(4) | — | — | — | — | 15.0 | |||||||||||||||
Net Income | $ | 490.2 | $ | 407.4 | $ | 450.8 | $ | 265.7 | $ | 275.5 | ||||||||||
Common Share Statistics | ||||||||||||||||||||
Basic EPS | $ | 2.07 | $ | 1.74 | $ | 1.94 | $ | 1.16 | $ | 1.23 | ||||||||||
Diluted EPS | $ | 1.97 | $ | 1.65 | $ | 1.84 | $ | 1.11 | $ | 1.17 | ||||||||||
Dividends Per Share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | ||||||||||
Book Value Per Share (period end) | $ | 32.67 | $ | 29.90 | $ | 28.54 | $ | 25.75 | $ | 24.53 | ||||||||||
Stock Price Per Share (period end) | $ | 73.90 | $ | 68.38 | $ | 75.43 | $ | 61.29 | $ | 57.04 | ||||||||||
Total Market Capitalization (period end) | $ | 17,936.8 | $ | 16,514.5 | $ | 18,084.9 | $ | 14,405.7 | $ | 13,073.6 | ||||||||||
Shares Outstanding (period end) | 242.7 | 241.5 | 239.8 | 235.0 | 229.2 | |||||||||||||||
Shares Used to Compute Basic EPS | 236.4 | 234.7 | 232.0 | 228.1 | 224.6 | |||||||||||||||
Shares Used to Compute Diluted EPS | 249.0 | 247.6 | 245.4 | 239.2 | 236.3 | |||||||||||||||
Reported Balance Sheet Statistics (period avg.) | ||||||||||||||||||||
Average Loans | $ | 34,772 | $ | 33,290 | $ | 32,878 | $ | 31,297 | $ | 28,949 | ||||||||||
Average Earning Assets | $ | 47,267 | $ | 45,705 | $ | 44,112 | $ | 40,792 | $ | 38,133 | ||||||||||
Average Assets | $ | 51,496 | $ | 50,020 | $ | 47,699 | $ | 45,002 | $ | 41,704 | ||||||||||
Average Equity | $ | 7,561 | $ | 6,943 | $ | 6,443 | $ | 5,887 | $ | 5,424 | ||||||||||
Return on Average Assets (ROA) | 3.81 | % | 3.26 | % | 3.78 | % | 2.36 | % | 2.64 | % | ||||||||||
Return on Average Equity (ROE) | 25.93 | % | 23.47 | % | 27.99 | % | 18.05 | % | 20.32 | % | ||||||||||
Reported Balance Sheet Statistics (period end) | ||||||||||||||||||||
Loans | $ | 35,161 | $ | 34,551 | $ | 33,172 | $ | 32,850 | $ | 30,618 | ||||||||||
Total Assets | $ | 51,960 | $ | 50,070 | $ | 49,146 | $ | 46,284 | $ | 43,446 | ||||||||||
Capital(5) | $ | 8,769 | $ | 8,057 | $ | 7,675 | $ | 6,882 | $ | 6,450 | ||||||||||
Loan growth | $ | 610 | $ | 1,379 | $ | 321 | $ | 2,232 | $ | 3,769 | ||||||||||
% Loan Growth Q Over Q (annualized) | 7 | % | 17 | % | 4 | % | 29 | % | 56 | % | ||||||||||
% Loan Growth Y Over Y | 15 | % | 29 | % | 20 | % | 20 | % | 11 | % | ||||||||||
Capital to Assets Ratio | 16.88 | % | 16.09 | % | 15.62 | % | 14.87 | % | 14.85 | % | ||||||||||
Capital plus Allowance to Assets Ratio | 19.56 | % | 18.94 | % | 18.66 | % | 18.31 | % | 18.46 | % | ||||||||||
Revenue & Expense Statistics (Reported) | ||||||||||||||||||||
Net Interest Income Growth (annualized) | 36 | % | (11 | )% | 41 | % | (23 | )% | 13 | % | ||||||||||
Non Interest Income Growth (annualized) | 41 | % | (13 | )% | 2 | % | 22 | % | 16 | % | ||||||||||
Revenue Growth (annualized) | 39 | % | (13 | )% | 14 | % | 7 | % | 15 | % | ||||||||||
Net Interest Margin | 6.56 | % | 6.22 | % | 6.64 | % | 6.51 | % | 7.38 | % | ||||||||||
Revenue Margin | 19.59 | % | 18.44 | % | 19.72 | % | 20.61 | % | 21.68 | % | ||||||||||
Risk Adjusted Margin(6) | 17.07 | % | 15.73 | % | 16.62 | % | 17.02 | % | 17.66 | % | ||||||||||
Operating Expense as a % of Revenues | 42.95 | % | 46.27 | % | 44.58 | % | 47.55 | % | 44.79 | % | ||||||||||
Operating Expense as a % of Avg Loans (annualized) | 11.44 | % | 11.72 | % | 11.80 | % | 12.77 | % | 12.79 | % | ||||||||||
Asset Quality Statistics (Reported) | ||||||||||||||||||||
Allowance | $ | 1,395 | $ | 1,425 | $ | 1,495 | $ | 1,595 | $ | 1,570 | ||||||||||
30+ Day Delinquencies | $ | 1,407 | $ | 1,351 | $ | 1,266 | $ | 1,573 | $ | 1,540 | ||||||||||
Net Charge-Offs | $ | 298 | $ | 310 | $ | 342 | $ | 366 | $ | 383 | ||||||||||
Allowance as a % of Reported Loans | 3.97 | % | 4.12 | % | 4.51 | % | 4.86 | % | 5.13 | % | ||||||||||
Delinquency Rate (30+ days) | 4.00 | % | 3.91 | % | 3.82 | % | 4.79 | % | 5.03 | % | ||||||||||
Net Charge-Off Rate | 3.43 | % | 3.72 | % | 4.17 | % | 4.68 | % | 5.30 | % | ||||||||||
| (1) | Includes a $31.5 million gain resulting from the sale of a joint venture investment in South Africa. |
| (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 2004 - $269.7, Q2 2004 - $263.5 million, Q1 2004 - $285.5 million, Q4 2003 - $454.8 million, and Q3 2003 - $481.0 million. |
| (3) | Includes employee termination benefits and charges for facility consolidation related to corporate-wide cost reduction initiatives of $26.7 million and $56.0 million for Q3 2004 and Q2 2004, respectively. In addition, Q3 2004 had charges of $20.6 million related to a change in fixed asset capitalization thresholds and $15.8 million related to impairment of internally developed software. |
| (4) | Net charge from the adoption of FASB Interpretation No. 46,Consolidation of Variable Interest Entities. |
| (5) | Includes preferred interests and mandatory convertible securities. |
| (6) | Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. |
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY MANAGED BASIS(1)
| (in millions, except per share data and as noted) | 2004 Q3 | 2004 Q2 | 2004 Q1 | 2003 Q4 | 2003 Q3 | |||||||||||||||
Earnings (Managed Basis) | ||||||||||||||||||||
Net Interest Income | $ | 1,670.4 | $ | 1,585.4 | $ | 1,677.1 | $ | 1,571.7 | $ | 1,500.8 | ||||||||||
Non-Interest Income | 1,099.8 | (2) | 1,011.3 | 1,014.5 | 1,077.5 | 1,049.2 | ||||||||||||||
Total Revenue(3) | 2,770.2 | 2,596.7 | 2,691.6 | 2,649.2 | 2,550.0 | |||||||||||||||
Provision for Loan Losses | 723.2 | 731.9 | 760.1 | 938.0 | 847.0 | |||||||||||||||
Marketing Expenses | 317.7 | 253.8 | 255.1 | 290.1 | 316.0 | |||||||||||||||
Operating Expenses | 994.3 | (4) | 975.0 | (4) | 969.7 | 999.3 | 925.8 | |||||||||||||
Income Before Taxes and Accounting Change | 735.0 | 636.0 | 706.6 | 421.7 | 461.2 | |||||||||||||||
Tax Rate | 33.3 | % | 36.0 | % | 36.2 | % | 37.0 | % | 37.0 | % | ||||||||||
Cumulative Effect of Accounting Change, net of tax(5) | — | — | — | — | 15.0 | |||||||||||||||
Net Income | $ | 490.2 | $ | 407.4 | $ | 450.8 | $ | 265.7 | $ | 275.5 | ||||||||||
Managed Balance Sheet Statistics (period avg.) | ||||||||||||||||||||
Average Loans | $ | 74,398 | $ | 72,327 | $ | 71,148 | $ | 68,679 | $ | 63,691 | ||||||||||
Average Earning Assets | $ | 85,045 | $ | 82,905 | $ | 80,495 | $ | 76,277 | $ | 71,022 | ||||||||||
Average Assets | $ | 90,543 | $ | 88,473 | $ | 85,324 | $ | 81,733 | $ | 75,831 | ||||||||||
Return on Average Assets (ROA) | 2.17 | % | 1.84 | % | 2.11 | % | 1.30 | % | 1.45 | % | ||||||||||
Managed Balance Sheet Statistics (period end) | ||||||||||||||||||||
Loans | $ | 75,457 | $ | 73,367 | $ | 71,817 | $ | 71,245 | $ | 67,260 | ||||||||||
Total Assets | $ | 91,665 | $ | 88,317 | $ | 87,197 | $ | 83,999 | $ | 79,465 | ||||||||||
Loan Growth | $ | 2,090 | $ | 1,550 | $ | 572 | $ | 3,985 | $ | 6,524 | ||||||||||
% Loan Growth Q over Q (annualized) | 11 | % | 9 | % | 3 | % | 24 | % | 43 | % | ||||||||||
% Loan Growth Y over Y | 12 | % | 21 | % | 21 | % | 19 | % | 18 | % | ||||||||||
Capital to Assets Ratio | 9.57 | % | 9.12 | % | 8.80 | % | 8.19 | % | 8.12 | % | ||||||||||
Capital plus Allowance to Assets Ratio | 11.09 | % | 10.74 | % | 10.52 | % | 10.09 | % | 10.09 | % | ||||||||||
Number of Accounts (000’s) | 47,224 | 46,591 | 46,712 | 47,038 | 46,406 | |||||||||||||||
% Off-Balance Sheet Securitizations | 53 | % | 53 | % | 53 | % | 53 | % | 54 | % | ||||||||||
% at Introductory Rate | 6 | % | 6 | % | 8 | % | 10 | % | 11 | % | ||||||||||
Revenue & Expense Statistics (Managed) | ||||||||||||||||||||
Net Interest Income Growth (annualized) | 21 | % | (22 | )% | 27 | % | 19 | % | 12 | % | ||||||||||
Non Interest Income Growth (annualized) | 35 | % | (1 | )% | (23 | )% | 11 | % | 1 | % | ||||||||||
Revenue Growth (annualized) | 27 | % | (14 | )% | 6 | % | 16 | % | 7 | % | ||||||||||
Net Interest Margin | 7.86 | % | 7.65 | % | 8.33 | % | 8.24 | % | 8.45 | % | ||||||||||
Revenue Margin | 13.03 | % | 12.53 | % | 13.38 | % | 13.89 | % | 14.36 | % | ||||||||||
Risk Adjusted Margin(6) | 9.48 | % | 8.67 | % | 9.11 | % | 9.10 | % | 9.48 | % | ||||||||||
Operating Expense as a % of Revenues | 35.89 | % | 37.55 | % | 36.03 | % | 37.72 | % | 36.31 | % | ||||||||||
Operating Expense as a % of Avg Loans (annualized) | 5.35 | % | 5.39 | % | 5.45 | % | 5.82 | % | 5.81 | % | ||||||||||
Asset Quality Statistics (Managed) | ||||||||||||||||||||
30+ Day Delinquencies | $ | 2,944 | $ | 2,756 | $ | 2,731 | $ | 3,178 | $ | 3,126 | ||||||||||
Net Charge-Offs | $ | 754 | $ | 800 | $ | 859 | $ | 914 | $ | 866 | ||||||||||
Delinquency Rate (30+ days) | 3.90 | % | 3.76 | % | 3.80 | % | 4.46 | % | 4.65 | % | ||||||||||
Net Charge-Off Rate | 4.05 | % | 4.42 | % | 4.83 | % | 5.32 | % | 5.44 | % | ||||||||||
| (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 $31.5 million gain resulting from the sale of a joint venture investment in South Africa. |
| (3) | In accordance with the Company’s finance charge and fee revenue recognition policy, the amounts billed to customers but not recognized as revenue were as follows: Q3 2004 - $269.7 million, Q2 2004 - $263.5 million, Q1 2004 - $285.5 million, Q4 2003 - $454.8 million, and Q3 2003 - $481.0 million. |
| (4) | Includes employee termination benefits and charges for facility consolidation related to corporate-wide cost reduction initiatives of $26.7 million and $56.0 million for Q3 2004 and Q2 2004, respectively. In addition, Q3 2004 had charges of $20.6 million related to a change in fixed asset capitalization thresholds and $15.8 million related to impairment of internally developed software. |
| (5) | Net charge from the adoption of FASB Interpretation No. 46,Consolidation of Variable Interest Entities. |
| (6) | Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. |
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY - MANAGED BASIS(1)
| (in millions, except per share data and as noted) | 2004 Q3 | 2004 Q2 | 2004 Q1 | 2003 Q4 | 2003 Q3 | |||||||||||||||
Segment Statistics | ||||||||||||||||||||
US Card: | ||||||||||||||||||||
Loans receivable | $ | 46,082 | $ | 45,247 | $ | 45,298 | $ | 46,279 | $ | 44,300 | ||||||||||
Net income (loss) | $ | 414.4 | $ | 384.1 | $ | 386.8 | $ | 322.7 | $ | 276.2 | ||||||||||
Net charge-off rate | 4.68 | % | 5.19 | % | 5.41 | % | 6.16 | % | 6.16 | % | ||||||||||
Delinquency Rate (30+ days) | 4.14 | % | 3.95 | % | 3.99 | % | 4.60 | % | 4.88 | % | ||||||||||
Auto Finance: | ||||||||||||||||||||
Loans receivable | $ | 9,734 | $ | 9,383 | $ | 8,834 | $ | 8,467 | $ | 8,008 | ||||||||||
Net income (loss) | $ | 55.3 | $ | 52.7 | $ | 30.7 | $ | 34.4 | $ | 27.3 | ||||||||||
Net charge-off rate | 2.63 | % | 2.53 | % | 4.13 | % | 4.30 | % | 5.10 | % | ||||||||||
Delinquency Rate (30+ days) | 5.54 | % | 5.59 | % | 5.44 | % | 7.55 | % | 7.07 | % | ||||||||||
Global Financial Services: | ||||||||||||||||||||
Loans receivable | $ | 19,615 | $ | 18,723 | $ | 17,643 | $ | 16,508 | $ | 14,960 | ||||||||||
Net income (loss) | $ | 86.8 | $ | 46.1 | $ | 50.9 | $ | 3.3 | $ | 21.0 | ||||||||||
Net charge-off rate | 3.26 | % | 3.43 | % | 3.60 | % | 3.69 | % | 3.78 | % | ||||||||||
Delinquency Rate (30+ days) | 2.65 | % | 2.50 | % | 2.63 | % | 2.70 | % | 2.87 | % | ||||||||||
| (1) | The information in this statistical summary reflects the adjustment to add back the effect of securitization transactions qualifying as sales under generally accepted accounting principles. See accompanying schedule - “Reconciliation to GAAP Financial Measures”. |
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended September 30, 2004
(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 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 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 Reported | Adjustments(1) | Total Managed(2) | ||||||||
Income Statement Measures | ||||||||||
Net interest income | $ | 775,375 | $ | 894,992 | $ | 1,670,367 | ||||
Non-interest income | $ | 1,539,384 | $ | (439,611 | ) | $ | 1,099,773 | |||
Total revenue | $ | 2,314,759 | $ | 455,381 | $ | 2,770,140 | ||||
Provision for loan losses | $ | 267,795 | $ | 455,381 | $ | 723,176 | ||||
Net charge-offs | $ | 298,317 | $ | 455,381 | $ | 753,698 | ||||
Balance Sheet Measures | ||||||||||
Consumer loans | $ | 35,160,635 | $ | 40,296,196 | $ | 75,456,831 | ||||
Total assets | $ | 51,959,555 | $ | 39,705,803 | $ | 91,665,358 | ||||
Average consumer loans | $ | 34,772,489 | $ | 39,625,812 | $ | 74,398,301 | ||||
Average earning assets | $ | 47,267,410 | $ | 37,777,187 | $ | 85,044,597 | ||||
Average total assets | $ | 51,495,580 | $ | 39,047,286 | $ | 90,542,866 | ||||
Delinquencies | $ | 1,407,297 | $ | 1,537,166 | $ | 2,944,463 | ||||
| (1) | Includes adjustments made related to the effects of securitization transactions qualifying as sales under GAAP and adjustments made to reclassify to “managed” loans outstanding the collectible portion of billed finance charge and fee income on the investors’ interest in securitized loans excluded from loans outstanding on the “reported” balance sheet in accordance with Financial Accounting Standards Board Staff Position, “Accounting for Accrued Interest Receivable Related to Securitized and Sold Receivables under FASB Statement 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities”, issued April 2003. |
| (2) | The Managed loan portfolio does not include auto loans which have been sold in whole loan sale transactions where the Company has retained servicing rights. |
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands) (unaudited)
| September 30 2004 | June 30 2004 | September 30 2003 | ||||||||||
Assets: | ||||||||||||
Cash and due from banks | $ | 454,843 | $ | 346,978 | $ | 250,514 | ||||||
Federal funds sold and resale agreements | 449,700 | 1,082,939 | 889,106 | |||||||||
Interest-bearing deposits at other banks | 538,324 | 290,242 | 163,025 | |||||||||
Cash and cash equivalents | 1,442,867 | 1,720,159 | 1,302,645 | |||||||||
Securities available for sale | 9,519,089 | 8,946,836 | 5,408,671 | |||||||||
Consumer loans | 35,160,635 | 34,551,343 | 30,617,843 | |||||||||
Less: Allowance for loan losses | (1,395,000 | ) | (1,425,000 | ) | (1,570,000 | ) | ||||||
Net loans | 33,765,635 | 33,126,343 | 29,047,843 | |||||||||
Accounts receivable from securitizations | 4,955,739 | 3,972,754 | 5,204,170 | |||||||||
Premises and equipment, net | 812,724 | 868,203 | 898,997 | |||||||||
Interest receivable | 232,808 | 234,348 | 201,783 | |||||||||
Other | 1,230,693 | 1,201,018 | 1,382,228 | |||||||||
Total assets | $ | 51,959,555 | $ | 50,069,661 | $ | 43,446,337 | ||||||
Liabilities: | ||||||||||||
Interest-bearing deposits | $ | 25,354,323 | $ | 24,178,756 | $ | 20,936,517 | ||||||
Senior and subordinated notes | 6,968,182 | 7,727,810 | 6,338,772 | |||||||||
Other borrowings | 8,490,631 | 7,885,340 | 7,519,770 | |||||||||
Interest payable | 250,227 | 256,293 | 231,365 | |||||||||
Other | 2,966,132 | 2,800,405 | 2,796,719 | |||||||||
Total liabilities | 44,029,495 | 42,848,604 | 37,823,143 | |||||||||
Stockholders’ Equity: | ||||||||||||
Common stock | 2,440 | 2,428 | 2,305 | |||||||||
Paid-in capital, net | 2,463,629 | 2,348,401 | 1,835,519 | |||||||||
Retained earnings and cumulative other comprehensive income | 5,513,694 | 4,919,656 | 3,834,536 | |||||||||
Less: Treasury stock, at cost | (49,703 | ) | (49,428 | ) | (49,166 | ) | ||||||
Total stockholders’ equity | 7,930,060 | 7,221,057 | 5,623,194 | |||||||||
Total liabilities and stockholders’ equity | $ | 51,959,555 | $ | 50,069,661 | $ | 43,446,337 | ||||||
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data) (unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||
| September 30 2004 | June 30 2004 | September 30 2003 | September 30 2004 | September 30 2003 | |||||||||||
Interest Income: | |||||||||||||||
Consumer loans, including past-due fees | $ | 1,083,286 | $ | 1,019,076 | $ | 989,318 | $ | 3,137,379 | $ | 2,962,724 | |||||
Securities available for sale | 84,492 | 76,081 | 49,440 | 224,289 | 140,266 | ||||||||||
Other | 60,635 | 56,789 | 64,267 | 183,422 | 176,881 | ||||||||||
Total interest income | 1,228,413 | 1,151,946 | 1,103,025 | 3,545,090 | 3,279,871 | ||||||||||
Interest Expense: | |||||||||||||||
Deposits | 257,349 | 244,978 | 224,078 | 741,839 | 654,026 | ||||||||||
Senior and subordinated notes | 121,166 | 124,809 | 108,336 | 370,393 | 306,035 | ||||||||||
Other borrowings | 74,523 | 71,142 | 66,690 | 214,444 | 198,822 | ||||||||||
Total interest expense | 453,038 | 440,929 | 399,104 | 1,326,676 | 1,158,883 | ||||||||||
Net interest income | 775,375 | 711,017 | 703,921 | 2,218,414 | 2,120,988 | ||||||||||
Provision for loan losses | 267,795 | 242,256 | 364,144 | 753,719 | 1,127,092 | ||||||||||
Net interest income after provision for loan losses | 507,580 | 468,761 | 339,777 | 1,464,695 | 993,896 | ||||||||||
Non-Interest Income: | |||||||||||||||
Servicing and securitizations | 942,587 | 868,041 | 820,515 | 2,728,297 | 2,292,900 | ||||||||||
Service charges and other customer-related fees | 385,648 | 368,469 | 405,063 | 1,108,610 | 1,249,259 | ||||||||||
Interchange | 117,043 | 117,329 | 95,879 | 339,967 | 270,371 | ||||||||||
Other | 94,106 | 42,225 | 41,751 | 201,708 | 165,903 | ||||||||||
Total non-interest income | 1,539,384 | 1,396,064 | 1,363,208 | 4,378,582 | 3,978,433 | ||||||||||
Non-Interest Expense: | |||||||||||||||
Salaries and associate benefits | 415,988 | 419,695 | 388,819 | 1,260,075 | 1,161,531 | ||||||||||
Marketing | 317,653 | 253,838 | 316,026 | 826,638 | 828,277 | ||||||||||
Communications and data processing | 112,191 | 108,191 | 107,385 | 337,488 | 331,893 | ||||||||||
Supplies and equipment | 94,190 | 74,582 | 88,753 | 257,093 | 260,245 | ||||||||||
Occupancy | 41,407 | 70,494 | 47,205 | 150,620 | 133,534 | ||||||||||
Other | 330,555 | 302,012 | 293,575 | 933,778 | 851,771 | ||||||||||
Total non-interest expense | 1,311,984 | 1,228,812 | 1,241,763 | 3,765,692 | 3,567,251 | ||||||||||
Income before income taxes and cumulative effect of accounting change | 734,980 | 636,013 | 461,222 | 2,077,585 | 1,405,078 | ||||||||||
Income taxes | 244,819 | 228,626 | 170,653 | 729,231 | 519,880 | ||||||||||
Income before cumulative effect of accounting change | 490,161 | 407,387 | 290,569 | 1,348,354 | 885,198 | ||||||||||
Cumulative effect of accounting change, net of taxes of $8,832 | — | — | 15,037 | — | 15,037 | ||||||||||
Net income | $ | 490,161 | $ | 407,387 | $ | 275,532 | $ | 1,348,354 | $ | 870,161 | |||||
Basic earnings per share before cumulative effect of accounting change | $ | 2.07 | $ | 1.74 | $ | 1.29 | $ | 5.75 | $ | 3.96 | |||||
Basic earnings per share after cumulative effect of accounting change | $ | 2.07 | $ | 1.74 | $ | 1.23 | $ | 5.75 | $ | 3.89 | |||||
Diluted earnings per share before cumulative effect of accounting change | $ | 1.97 | $ | 1.65 | $ | 1.23 | $ | 5.45 | $ | 3.81 | |||||
Diluted earnings per share after cumulative effect of accounting change | $ | 1.97 | $ | 1.65 | $ | 1.17 | $ | 5.45 | $ | 3.74 | |||||
Dividends paid per share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.08 | $ | 0.08 | |||||
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands) (unaudited)
| Reported | Quarter Ended 9/30/04 | Quarter Ended 6/30/04 | Quarter Ended 9/30/03 | ||||||||||||||||||||||||||||
| Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | |||||||||||||||||||||||
Earning assets: | |||||||||||||||||||||||||||||||
Consumer loans | $ | 34,772,489 | $ | 1,083,286 | 12.46 | % | $ | 33,290,487 | $ | 1,019,076 | 12.24 | % | $ | 28,949,372 | $ | 989,318 | 13.67 | % | |||||||||||||
Securities available for sale | 9,372,713 | 84,492 | 3.61 | 9,291,237 | 76,081 | 3.28 | 5,702,955 | 49,440 | 3.47 | ||||||||||||||||||||||
Other | 3,122,208 | 60,635 | 7.77 | 3,123,672 | 56,789 | 7.27 | 3,480,727 | 64,267 | 7.39 | ||||||||||||||||||||||
Total earning assets | $ | 47,267,410 | $ | 1,228,413 | 10.40 | % | $ | 45,705,396 | $ | 1,151,946 | 10.08 | % | $ | 38,133,054 | $ | 1,103,025 | 11.57 | % | |||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||
Deposits | $ | 24,713,924 | $ | 257,349 | 4.17 | % | $ | 23,948,154 | $ | 244,978 | 4.09 | % | $ | 20,302,524 | $ | 224,078 | 4.41 | % | |||||||||||||
Senior and subordinated notes | 7,218,916 | 121,166 | 6.71 | 7,380,437 | 124,809 | 6.76 | 6,065,935 | 108,336 | 7.14 | ||||||||||||||||||||||
Other borrowings | 8,674,298 | 74,523 | 3.44 | 8,488,027 | 71,142 | 3.35 | 6,891,889 | 66,690 | 3.87 | ||||||||||||||||||||||
Total interest-bearing liabilities | $ | 40,607,138 | $ | 453,038 | 4.46 | % | $ | 39,816,618 | $ | 440,929 | 4.43 | % | $ | 33,260,348 | $ | 399,104 | 4.80 | % | |||||||||||||
Net interest spread | 5.94 | % | 5.65 | % | 6.77 | % | |||||||||||||||||||||||||
Interest income to average earning assets | 10.40 | % | 10.08 | % | 11.57 | % | |||||||||||||||||||||||||
Interest expense to average earning assets | 3.84 | 3.86 | 4.19 | ||||||||||||||||||||||||||||
Net interest margin | 6.56 | % | 6.22 | % | 7.38 | % | |||||||||||||||||||||||||
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands) (unaudited)
| Managed(1) | Quarter Ended 9/30/04 | Quarter Ended 6/30/04 | Quarter Ended 9/30/03 | ||||||||||||||||||||||||||||
| Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | |||||||||||||||||||||||
Earning assets: | |||||||||||||||||||||||||||||||
Consumer loans | $ | 74,398,301 | $ | 2,419,685 | 13.01 | % | $ | 72,327,220 | $ | 2,314,957 | 12.80 | % | $ | 63,691,261 | $ | 2,180,109 | 13.69 | % | |||||||||||||
Securities available for sale | 9,372,713 | 84,492 | 3.61 | 9,291,237 | 76,081 | 3.28 | 5,702,955 | 49,440 | 3.47 | ||||||||||||||||||||||
Other | 1,273,583 | 12,587 | 3.95 | 1,286,629 | 9,517 | 2.96 | 1,627,898 | 9,501 | 2.33 | ||||||||||||||||||||||
Total earning assets | $ | 85,044,597 | $ | 2,516,764 | 11.84 | % | $ | 82,905,086 | $ | 2,400,555 | 11.58 | % | $ | 71,022,114 | $ | 2,239,050 | 12.61 | % | |||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||||||
Deposits | $ | 24,713,924 | $ | 257,349 | 4.17 | % | $ | 23,948,154 | $ | 244,978 | 4.09 | % | $ | 20,302,524 | $ | 224,078 | 4.41 | % | |||||||||||||
Senior and subordinated notes | 7,218,916 | 121,166 | 6.71 | 7,380,437 | 124,809 | 6.76 | 6,065,935 | 108,336 | 7.14 | ||||||||||||||||||||||
Other borrowings | 8,674,298 | 74,523 | 3.44 | 8,488,027 | 71,142 | 3.35 | 6,891,889 | 66,690 | 3.87 | ||||||||||||||||||||||
Securitization liability | 39,101,228 | 393,359 | 4.02 | 38,514,533 | 374,156 | 3.89 | 34,156,144 | 339,182 | 3.97 | ||||||||||||||||||||||
Total interest-bearing liabilities | $ | 79,708,366 | $ | 846,397 | 4.25 | % | $ | 78,331,151 | $ | 815,085 | 4.16 | % | $ | 67,416,492 | $ | 738,286 | 4.38 | % | |||||||||||||
Net interest spread | 7.59 | % | 7.42 | % | 8.23 | % | |||||||||||||||||||||||||
Interest income to average earning assets | 11.84 | % | 11.58 | % | 12.61 | % | |||||||||||||||||||||||||
Interest expense to average earning assets | 3.98 | 3.93 | 4.16 | ||||||||||||||||||||||||||||
Net interest margin | 7.86 | % | 7.65 | % | 8.45 | % | |||||||||||||||||||||||||
| (1) | The information in this table reflects the adjustment to add back the effect of securitized loans. |
[Capital One® Logo]
1680 Capital One Drive McLean, VA 22102-3491
FOR IMMEDIATE RELEASE: October 20, 2004
Contacts: | Paul Paquin | Tatiana Stead | ||
| V.P., Investor Relations | Director, Corporate Media | |||
| (703) 720-2456 | (703) 720-2352 |
Capital One Reports Third Quarter Earnings per Share
Company Increases 2004 Earnings Guidance
Company Sets 2005 Earnings Guidance
McLean, Va. (October 20, 2004) – Capital One Financial Corporation (NYSE: COF) today announced that earnings for the third quarter of 2004 were $490.2 million, or $1.97 per share (fully diluted), compared with earnings of $275.5 million, or $1.17 per share, for the third quarter of 2003 and $407.4 million, or $1.65 per share, in the second quarter of 2004. In addition, the company increased its 2004 earnings guidance to be between $6.10 and $6.40 per share (fully diluted) and announced its 2005 earnings guidance to be between $6.60 and $7.00 per share (fully diluted).
“Capital One’s third quarter results demonstrate the sustained earnings power of our US credit card and diversified businesses,” said Richard D. Fairbank, Capital One’s Chairman and Chief Executive Officer. “Today, 39 percent of our loans and 29 percent of our earnings are generated from our businesses beyond our US credit card segment.”
During the third quarter of 2004, Capital One grew its managed loan portfolio by $2.1 billion to $75.5 billion. The company expects that the managed loan growth rate for the year will be in the 10-13 percent range. The company expects a managed loan growth range of 12-15 percent for 2005.
Marketing expense for the third quarter of 2004 increased $63.9 million to $317.7 million from $253.8 million in the previous quarter. Marketing expenses were $316.0 million in the comparable quarter of the prior year. The company expects to make a significantly higher investment in marketing in the fourth quarter leading to a marketing expense for the full year of 2004 that will be somewhat higher than the $1.1 billion in 2003. Additionally, the company expects annual marketing spend for 2005 to be similar to 2004.
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2 Capital One Reports Third Quarter Earnings
The managed charge-off rate declined to 4.05 percent in the third quarter of 2004, from 4.42 percent in the previous quarter, and 5.44 percent in the third quarter of 2003. The company continues to expect its quarterly managed charge-off rate to range between 4.0 and 4.5 percent through the end of 2005, with normal seasonal variations. Additionally, after reducing its allowance for loan losses this year by $200 million through the third quarter of 2004, the company expects that fourth quarter loan growth will drive a substantial increase in its allowance for loan losses in the fourth quarter of 2004. The managed delinquency rate (30+ days) increased to 3.90 percent as of September 30, 2004, from 3.76 percent as of the end of the previous quarter. The managed delinquency rate at September 30, 2003 was 4.65 percent.
Capital One’s managed revenue margin increased to 13.03 percent in the third quarter of 2004, from 12.53 percent in the previous quarter. The company’s managed revenue margin was 14.36 percent in the third quarter of 2003. The company expects revenue margin to move modestly lower over time, given its continued diversification into lower-loss assets.
Annualized operating expenses as a percentage of average managed loans declined to 5.35 percent in the third quarter of 2004, from 5.39 percent in the previous quarter and 5.81 percent in the third quarter of 2003. As part of operating expenses, the company took charges totaling $63.1 million in the third quarter of 2004 for asset write-offs and a combination of employee termination benefits and continued facility consolidations. The latter charges result from an ongoing review of operational expenses to ensure business lines are operating in the most efficient manner possible to continuously position the company for success. The company expects to take an additional $30 to $50 million of charges in the fourth quarter of 2004 for continued corporate-wide cost reduction efforts. Additionally, as part of its ongoing review of operations, the company sold its interest in a South African joint venture, recording a gain of $31.5 million in the third quarter of 2004. In October of 2004, the company sold its French loan portfolio and expects to record an estimated gain on sale of $43 million in the fourth quarter.
“We expect a return on managed assets of around 1.7 percent in 2004,” said Gary L. Perlin, Capital One’s Chief Financial Officer. “Although we expect to see a modest decline in our revenue margin going forward as we continue to diversify, we expect to continue to improve our operating efficiency in order to position our company for sustained success. We also expect a stable return on managed assets of around 1.7 percent in 2005 with quarterly variability.”
3 Capital One Reports Third Quarter Earnings
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 (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 (www.capitalone.com), and on its Form 10-K for the fiscal year ended December 31, 2003, for 2004 and 2005 earnings, charge-off rates, revenue margins, return on assets, allowance for loan losses, expenses, loan growth rates, and the composition of loan growth 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; the company’s ability to execute on its strategic and operating plans; 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 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, 2003.
About Capital One
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., offers automobile and other motor vehicle financing products. Capital One’s subsidiaries collectively had 47.2 million accounts and $75.5 billion in managed loans outstanding as of September 30, 2004. Capital One, aFortune 500company, 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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4 Capital One Reports Third Quarter Earnings
NOTE: Third quarter 2004 financial results, SEC Filings, and third quarter earnings conference call slides are accessible on Capital One’s home page (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 5:00pm (EDT) earnings conference call is accessible through the same link.
