Exhibit 99.1
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY REPORTED BASIS
(in millions, except per share data and as noted) | 2006 Q3 | 2006 Q2 | 2006 Q1 | 2005 Q4 | 2005 Q3 | |||||||||||||||
Earnings (Reported Basis) | ||||||||||||||||||||
Net Interest Income | $ | 1,294.5 | $ | 1,197.1 | $ | 1,206.9 | $ | 1,037.0 | $ | 910.2 | ||||||||||
Non-Interest Income | 1,761.4 | (3) | 1,709.9 | (3) | 1,858.3 | 1,665.5 | (2) | 1,594.6 | (1) | |||||||||||
Total Revenue(5) | 3,055.9 | 2,907.0 | 3,065.2 | (4) | 2,702.5 | 2,504.8 | ||||||||||||||
Provision for Loan Losses | 430.6 | 362.4 | 170.3 | (4) | 565.7 | 374.2 | (1) | |||||||||||||
Marketing Expenses | 368.5 | 356.7 | 323.8 | 447.4 | 343.7 | |||||||||||||||
Operating Expenses | 1,358.1 | 1,324.2 | 1,249.7 | 1,241.7 | (6) | 1,021.9 | ||||||||||||||
Income Before Taxes | 898.7 | 863.7 | 1,321.4 | 447.7 | 765.0 | |||||||||||||||
Tax Rate | 34.6 | %(7) | 36.0 | % | 33.2 | % | 37.3 | % | 35.8 | % | ||||||||||
Net Income | $ | 587.8 | $ | 552.6 | $ | 883.3 | $ | 280.3 | $ | 491.1 | ||||||||||
Common Share Statistics | ||||||||||||||||||||
Basic EPS | $ | 1.95 | $ | 1.84 | $ | 2.95 | $ | 1.01 | $ | 1.88 | ||||||||||
Diluted EPS | $ | 1.89 | $ | 1.78 | $ | 2.86 | $ | 0.97 | $ | 1.81 | ||||||||||
Dividends Per Share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | ||||||||||
Book Value Per Share (period end) | $ | 54.79 | $ | 52.31 | $ | 50.06 | $ | 46.97 | $ | 41.40 | ||||||||||
Stock Price Per Share (period end) | $ | 78.66 | $ | 85.45 | $ | 80.52 | $ | 86.40 | $ | 79.52 | ||||||||||
Total Market Capitalization (period end) | $ | 23,944.1 | $ | 25,968.3 | $ | 24,397.6 | $ | 25,989.1 | $ | 21,200.0 | ||||||||||
Shares Outstanding (period end) | 304.4 | 303.9 | 303.0 | 300.8 | 266.6 | |||||||||||||||
Shares Used to Compute Basic EPS | 301.6 | 300.8 | 299.3 | 278.8 | 260.9 | |||||||||||||||
Shares Used to Compute Diluted EPS | 310.4 | 310.0 | 309.1 | 287.7 | 270.7 | |||||||||||||||
Reported Balance Sheet Statistics (period avg.) | ||||||||||||||||||||
Average Loans | $ | 62,429 | $ | 58,833 | $ | 58,142 | $ | 48,701 | $ | 38,556 | ||||||||||
Average Earning Assets | $ | 81,297 | $ | 79,026 | $ | 78,148 | $ | 66,624 | $ | 53,453 | ||||||||||
Average Assets | $ | 92,575 | $ | 89,644 | $ | 88,895 | $ | 74,443 | $ | 59,204 | ||||||||||
Average Interest Bearing Deposits | $ | 43,019 | $ | 42,797 | $ | 43,357 | $ | 34,738 | $ | 26,618 | ||||||||||
Average Non-Interest Bearing Deposits | $ | 4,458 | $ | 4,412 | $ | 4,514 | $ | 2,356 | $ | 85 | ||||||||||
Average Equity | $ | 16,310 | $ | 15,581 | $ | 14,612 | $ | 12,528 | $ | 10,802 | ||||||||||
Return on Average Assets (ROA) | 2.54 | % | 2.47 | % | 3.97 | % | 1.51 | % | 3.32 | % | ||||||||||
Return on Average Equity (ROE) | 14.42 | % | 14.19 | % | 24.18 | % | 8.95 | % | 18.19 | % | ||||||||||
Reported Balance Sheet Statistics (period end) | ||||||||||||||||||||
Loans | $ | 63,612 | $ | 60,603 | $ | 58,119 | $ | 59,848 | $ | 38,852 | ||||||||||
Total Assets | $ | 95,457 | $ | 89,530 | $ | 89,273 | $ | 88,701 | $ | 60,425 | ||||||||||
Loan growth | $ | 3,009 | $ | 2,484 | $ | (1,729 | ) | $ | 20,996 | $ | 241 | |||||||||
% Loan Growth Y Over Y | 64 | % | 57 | % | 53 | % | 57 | % | 10 | % | ||||||||||
Revenue & Expense Statistics (Reported) | ||||||||||||||||||||
Net Interest Income Growth (annualized) | 33 | % | (3 | )% | 66 | % | 56 | % | 17 | % | ||||||||||
Non Interest Income Growth (annualized) | 12 | % | (32 | )% | 46 | % | 18 | % | 3 | % | ||||||||||
Revenue Growth (annualized) | 20 | % | (21 | )% | 54 | % | 32 | % | 8 | % | ||||||||||
Net Interest Margin | 6.37 | % | 6.06 | % | 6.18 | % | 6.23 | % | 6.81 | % | ||||||||||
Revenue Margin | 15.04 | % | 14.71 | % | 15.69 | % | 16.23 | % | 18.74 | % | ||||||||||
Risk Adjusted Margin(8) | 13.22 | % | 13.22 | % | 14.15 | % | 13.52 | % | 16.18 | % | ||||||||||
Operating Expense as a % of Revenues | 44.44 | % | 45.55 | % | 40.77 | % | 45.95 | % | 40.80 | % | ||||||||||
Operating Expense as a % of Avg Loans (annualized) | 8.70 | % | 9.00 | % | 8.60 | % | 10.20 | % | 10.60 | % | ||||||||||
Asset Quality Statistics (Reported) | ||||||||||||||||||||
Allowance | $ | 1,840 | $ | 1,765 | $ | 1,675 | $ | 1,790 | $ | 1,447 | (1) | |||||||||
30+ Day Delinquencies | $ | 2,060 | $ | 1,772 | $ | 1,559 | $ | 1,879 | $ | 1,497 | ||||||||||
Net Charge-Offs | $ | 369 | $ | 296 | $ | 301 | $ | 451 | $ | 342 | ||||||||||
Allowance as a % of Reported Loans | 2.89 | % | 2.91 | % | 2.88 | % | 2.99 | % | 3.72 | % | ||||||||||
Delinquency Rate (30+ days) | 3.24 | % | 2.92 | % | 2.68 | % | 3.14 | % | 3.85 | % | ||||||||||
Net Charge-Off Rate | 2.36 | % | 2.01 | % | 2.07 | % | 3.70 | % | 3.55 | % |
(1) | Includes a $15.6 million write-down for retained interests and a $28.5 million build in the allowance for loan losses related to the impact of the Gulf Coast Hurricanes. This also includes a $48.0 million write-down for retained interests and a $27.0 million build in the allowance related to the spike in bankruptcies experienced immediately before The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became effective in October 2005. |
(2) | Includes a $34 million gain from the sale of previously purchased charged-off loan portfolios. |
(3) | 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 and $9.4 million in Q3 2006 related to the derivative entered into in April 2006 to mitigate certain exposures we face as a result of our expected acquisition of North Fork. |
(4) | Includes the impact of the sale of charged-off loans resulting in a $76.8 million increase to various revenue line items, the majority of which was recorded to other non-interest income and a $7.0 million reduction to the provision for loan losses through an increase in recoveries for the sale of charged-off loans originated by the Company and not securitized. |
(5) | In accordance with the Company’s finance charge and fee revenue recognition policy, the amounts billed to customers but not recognized as revenue were as follows: Q3 2006 - $226.3, Q2 2006 - $215.0, Q1 2006 - $170.9, Q4 2005 - $227.9 and Q3 2005 - $255.6. |
(6) | Includes a $28.2 million impairment charge related to our insurance business in Global Financial Services and a $20.6 million prepayment penalty for the refinancing of the McLean Headquarters facility. |
(7) | Includes resolution of IRS tax issues resulting in $18.7 million reduction of tax expense. |
(8) | 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) | 2006 Q3 | 2006 Q2 | 2006 Q1 | 2005 Q4 | 2005 Q3 | |||||||||||||||
Earnings (Managed Basis) | ||||||||||||||||||||
Net Interest Income | $ | 2,217.8 | $ | 2,140.8 | $ | 2,235.0 | $ | 2,075.2 | $ | 1,931.2 | ||||||||||
Non-Interest Income | 1,275.4 | (4) | 1,199.4 | (4) | 1,222.2 | 1,243.4 | (3) | 1,099.8 | (2) | |||||||||||
Total Revenue(6) | 3,493.2 | 3,340.2 | 3,457.2 | (5) | 3,318.6 | 3,031.0 | ||||||||||||||
Provision for Loan Losses | 867.9 | 795.6 | 562.3 | (5) | 1,181.8 | 900.4 | (2) | |||||||||||||
Marketing Expenses | 368.5 | 356.7 | 323.8 | 447.4 | 343.7 | |||||||||||||||
Operating Expenses | 1,358.1 | 1,324.2 | 1,249.7 | 1,241.7 | (7) | 1,021.9 | ||||||||||||||
Income Before Taxes | 898.7 | 863.7 | 1,321.4 | 447.7 | 765.0 | |||||||||||||||
Tax Rate | 34.6 | %(8) | 36.0 | % | 33.2 | % | 37.3 | % | 35.8 | % | ||||||||||
Net Income | $ | 587.8 | $ | 552.6 | $ | 883.3 | $ | 280.3 | $ | 491.1 | ||||||||||
Managed Balance Sheet Statistics (period avg.) | ||||||||||||||||||||
Average Loans | $ | 110,512 | $ | 106,090 | $ | 104,610 | $ | 94,241 | $ | 83,828 | ||||||||||
Average Earning Assets | $ | 127,601 | $ | 124,067 | $ | 122,403 | $ | 110,096 | $ | 96,696 | ||||||||||
Average Assets | $ | 140,114 | $ | 136,351 | $ | 134,797 | $ | 119,406 | $ | 103,913 | ||||||||||
Return on Average Assets (ROA) | 1.68 | % | 1.62 | % | 2.62 | % | 0.94 | % | 1.89 | % | ||||||||||
Managed Balance Sheet Statistics (period end) | ||||||||||||||||||||
Loans | $ | 112,239 | $ | 108,433 | $ | 103,907 | $ | 105,527 | $ | 84,768 | ||||||||||
Total Assets | $ | 143,527 | $ | 136,819 | $ | 134,530 | $ | 133,786 | $ | 105,743 | ||||||||||
Loan Growth | $ | 3,806 | $ | 4,526 | $ | (1,620 | ) | $ | 20,759 | $ | 1,817 | |||||||||
% Loan Growth Y over Y | 32 | % | 31 | % | 27 | % | 32 | % | 12 | % | ||||||||||
Tangible Assets(9) | $ | 139,223 | $ | 132,527 | $ | 130,211 | $ | 129,484 | $ | 105,007 | ||||||||||
Tangible Capital(10) | $ | 13,514 | $ | 12,094 | $ | 11,016 | $ | 9,994 | $ | 10,400 | ||||||||||
Tangible Capital to Tangible Assets Ratio | 9.71 | % | 9.13 | % | 8.46 | % | 7.72 | % | 9.90 | % | ||||||||||
% Off-Balance Sheet Securitizations | 43 | % | 44 | % | 44 | % | 43 | % | 54 | % | ||||||||||
Revenue & Expense Statistics (Managed) | ||||||||||||||||||||
Net Interest Income Growth (annualized) | 14 | % | (17 | )% | 31 | % | 30 | % | 22 | % | ||||||||||
Non Interest Income Growth (annualized) | 25 | % | (7 | )% | (7 | )% | 52 | % | (16 | )% | ||||||||||
Revenue Growth (annualized) | 18 | % | (14 | )% | 17 | % | 38 | % | 8 | % | ||||||||||
Net Interest Margin | 6.95 | % | 6.90 | % | 7.30 | % | 7.54 | % | 7.99 | % | ||||||||||
Revenue Margin | 10.95 | % | 10.77 | % | 11.30 | % | 12.06 | % | 12.54 | % | ||||||||||
Risk Adjusted Margin(11) | 8.42 | % | 8.42 | % | 9.03 | % | 8.18 | % | 8.95 | % | ||||||||||
Operating Expense as a % of Revenues | 38.88 | % | 39.64 | % | 36.15 | % | 37.42 | % | 33.71 | % | ||||||||||
Operating Expense as a % of Avg Loans (annualized) | 4.92 | % | 4.99 | % | 4.78 | % | 5.27 | % | 4.88 | % | ||||||||||
Asset Quality Statistics (Managed) | ||||||||||||||||||||
30+ Day Delinquencies | $ | 3,693 | $ | 3,306 | $ | 3,039 | $ | 3,424 | $ | 3,164 | ||||||||||
Net Charge-Offs | $ | 806 | $ | 729 | $ | 693 | $ | 1,067 | $ | 868 | ||||||||||
Delinquency Rate (30+ days) | 3.29 | % | 3.05 | % | 2.92 | % | 3.24 | % | 3.73 | % | ||||||||||
Net Charge-Off Rate | 2.92 | % | 2.75 | % | 2.65 | % | 4.53 | % | 4.14 | % |
(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 $15.6 million write-down for retained interests and a $28.5 million build in the allowance for loan losses related to the impact of the Gulf Coast Hurricanes. This also includes a $48.0 million write-down for retained interests and a $27.0 million build in the allowance related to the spike in bankruptcies experienced immediately before The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became effective in October 2005. |
(3) | Includes a $34 million gain from the sale of previously purchased charged-off loan portfolios. |
(4) | 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 and $9.4 million in Q3 2006 related to the derivative entered into in April 2006 to mitigate certain exposures we face as a result of our expected acquisition of North Fork. |
(5) | Includes the impact of the sale of charged-off loans resulting in a $66.4 million increase to various revenue line items, the majority of which was recorded to other non-interest income and a $17.4 million reduction to the provision for loan losses through an increase in recoveries for the sale of charged-off loans originated by the Company. |
(6) | 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 2006 - $226.3, Q2 2006 - $215.0, Q1 2006 - $170.9, Q4 2005 - $227.9 and Q3 2005 - $255.6. |
(7) | 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. |
(8) | Includes resolution of IRS tax issues resulting in $18.7 million reduction of tax expense. |
(9) | Includes managed assets less intangible assets. |
(10) | Includes stockholders’ equity and preferred interests less intangible assets. Tangible Capital on a reported and managed basis is the same. |
(11) | 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 thousands) | 2006 Q3 | 2006 Q2 | 2006 Q1 | 2005 Q4 | 2005 Q3 | |||||||||||||||
Segment Statistics | ||||||||||||||||||||
US Card: | ||||||||||||||||||||
Interest Income | $ | 1,734,459 | $ | 1,628,144 | $ | 1,714,559 | $ | 1,665,450 | $ | 1,659,178 | ||||||||||
Interest Expense | 554,708 | 507,722 | 493,458 | 481,656 | 451,346 | |||||||||||||||
Net interest income | $ | 1,179,751 | $ | 1,120,422 | $ | 1,221,101 | $ | 1,183,794 | $ | 1,207,832 | ||||||||||
Non-interest income | 881,304 | 803,083 | 775,413 | 844,286 | 851,036 | |||||||||||||||
Provision for loan losses | 451,782 | 413,701 | 224,438 | 767,103 | 483,759 | |||||||||||||||
Non-interest expenses | 899,062 | 860,874 | 844,729 | 892,521 | 833,925 | |||||||||||||||
Income tax provision (benefit) | 248,574 | 227,125 | 324,573 | 131,415 | 259,414 | |||||||||||||||
Net income (loss) | $ | 461,637 | $ | 421,805 | $ | 602,774 | $ | 237,041 | $ | 481,770 | ||||||||||
Loans receivable | $ | 51,127,654 | $ | 48,736,483 | $ | 47,142,650 | $ | 49,463,522 | $ | 46,291,468 | ||||||||||
Average loans | $ | 50,131,562 | $ | 47,856,045 | $ | 48,217,926 | $ | 46,857,527 | $ | 46,405,569 | ||||||||||
Loan Yield | 13.84 | % | 13.61 | % | 14.22 | % | 14.22 | % | 14.30 | % | ||||||||||
Net charge-off rate | 3.39 | % | 3.29 | % | 2.93 | % | 5.70 | % | 4.69 | % | ||||||||||
Delinquency Rate (30+ days) | 3.53 | % | 3.30 | % | 3.31 | % | 3.44 | % | 3.86 | % | ||||||||||
Purchase Volume(2) | $ | 21,450,024 | $ | 20,878,732 | $ | 18,015,669 | $ | 21,209,357 | $ | 18,932,798 | ||||||||||
Number of Accounts (000s) | 37,483 | 37,199 | 37,258 | 37,645 | 37,863 | |||||||||||||||
Auto Finance: | ||||||||||||||||||||
Interest Income | $ | 591,711 | $ | 563,734 | $ | 536,657 | $ | 465,124 | $ | 436,058 | ||||||||||
Interest Expense | 227,053 | 207,497 | 187,827 | 151,100 | 135,956 | |||||||||||||||
Net interest income | $ | 364,658 | $ | 356,237 | $ | 348,830 | $ | 314,024 | $ | 300,102 | ||||||||||
Non-interest income | 4,846 | 13,839 | 391 | (1,358 | ) | 3,005 | ||||||||||||||
Provision for loan losses | 161,145 | 74,714 | 107,805 | 161,651 | 185,219 | |||||||||||||||
Non-interest expenses | 154,014 | 149,115 | 134,655 | 138,412 | 129,719 | |||||||||||||||
Income tax provision (benefit) | 19,021 | 51,186 | 37,366 | 4,512 | (4,141 | ) | ||||||||||||||
Net income (loss) | $ | 35,324 | $ | 95,061 | $ | 69,395 | $ | 8,091 | $ | (7,690 | ) | |||||||||
Loans receivable | $ | 21,158,797 | $ | 20,558,455 | $ | 19,848,190 | $ | 16,372,019 | $ | 15,730,713 | ||||||||||
Average loans | $ | 20,812,533 | $ | 20,187,631 | $ | 19,440,128 | $ | 16,095,793 | $ | 15,104,464 | ||||||||||
Loan Yield | 11.37 | % | 11.17 | % | 11.04 | % | 11.56 | % | 11.55 | % | ||||||||||
Net charge-off rate | 2.34 | % | 1.54 | % | 2.35 | % | 3.32 | % | 2.54 | % | ||||||||||
Delinquency Rate (30+ days) | 5.18 | % | 4.55 | % | 3.57 | % | 5.71 | % | 4.65 | % | ||||||||||
Auto Loan Originations(3) | $ | 3,158,481 | $ | 3,107,409 | $ | 2,940,540 | $ | 2,563,372 | $ | 3,217,209 | ||||||||||
Number of Accounts (000s) | 1,558 | 1,525 | 1,480 | 1,438 | 1,187 | |||||||||||||||
Global Financial Services: | ||||||||||||||||||||
Interest Income | $ | 768,262 | $ | 725,256 | $ | 692,246 | $ | 681,624 | $ | 661,420 | ||||||||||
Interest Expense | 307,518 | 279,804 | 253,997 | 249,289 | 237,791 | |||||||||||||||
Net interest income | $ | 460,744 | $ | 445,452 | $ | 438,249 | $ | 432,335 | $ | 423,629 | ||||||||||
Non-interest income | 311,439 | 297,080 | 283,352 | 250,349 | 273,067 | |||||||||||||||
Provision for loan losses | 249,448 | 296,614 | 217,365 | 263,664 | 217,032 | |||||||||||||||
Non-interest expenses | 358,806 | 365,149 | 330,172 | 410,670 | 356,254 | |||||||||||||||
Income tax provision (benefit) | 56,771 | 29,614 | 60,520 | 1,299 | 41,521 | |||||||||||||||
Net income (loss) | $ | 107,158 | $ | 51,155 | $ | 113,544 | $ | 7,051 | $ | 81,889 | ||||||||||
Loans receivable | $ | 26,623,519 | $ | 25,935,716 | $ | 23,732,515 | $ | 23,386,490 | $ | 22,770,803 | ||||||||||
Average loans | $ | 26,364,992 | $ | 24,910,879 | $ | 23,668,326 | $ | 23,129,203 | $ | 22,373,995 | ||||||||||
Loan Yield | 11.58 | % | 11.58 | % | 11.64 | % | 11.74 | % | 11.78 | % | ||||||||||
Net charge-off rate | 3.70 | % | 3.90 | % | 3.63 | % | 4.33 | % | 4.09 | % | ||||||||||
Delinquency Rate (30+ days) | 2.86 | % | 2.82 | % | 2.90 | % | 2.83 | % | 2.93 | % | ||||||||||
Number of Accounts (000s) | 10,135 | 10,130 | 10,013 | 9,928 | 9,774 |
(1) | The information in this statistical summary reflects the adjustment to add back the effect of securitization transactions qualifying as sales under generally accepted accounting principles. See accompanying schedule - “Reconciliation to GAAP Financial Measures”. |
(2) | Includes all purchase transactions net of returns and excludes cash advance transactions. |
(3) | Includes all organic auto loan originations and excludes auto loans added through acquisitions. |
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY - MANAGED BASIS(1) CONTINUED
(in thousands) | 2006 Q3 | 2006 Q2 | 2006 Q1 | 2005 Q4 | 2005 Q3 | |||||||||||||||
Segment Statistics | ||||||||||||||||||||
Banking: | ||||||||||||||||||||
Interest Income | $ | 719,207 | $ | 682,679 | $ | 650,985 | ||||||||||||||
Interest Expense | 461,009 | 433,451 | 406,061 | |||||||||||||||||
Net interest income | $ | 258,198 | $ | 249,228 | $ | 244,924 | ||||||||||||||
Non-interest income | 115,526 | 114,039 | 104,485 | |||||||||||||||||
Provision for loan losses | 5,495 | 6,632 | 9,821 | |||||||||||||||||
Non-interest expenses | 297,080 | 289,996 | 272,987 | |||||||||||||||||
Income tax provision (benefit) | 24,902 | 23,324 | 23,310 | |||||||||||||||||
Net income (loss) | $ | 46,247 | $ | 43,315 | $ | 43,291 | ||||||||||||||
Loans receivable | $ | 13,326,088 | $ | 13,189,112 | $ | 13,169,792 | ||||||||||||||
Average loans | $ | 13,171,414 | $ | 13,115,534 | $ | 13,283,515 | ||||||||||||||
Loan Yield | 8.02 | % | 7.63 | % | 7.38 | % | ||||||||||||||
Net charge-off rate | 0.48 | % | 0.45 | % | 0.38 | % | ||||||||||||||
Delinquency Rate (30+ days) | 0.36 | % | 0.38 | % | 0.75 | % | ||||||||||||||
Core Deposits(2) | 27,547,964 | 27,857,265 | 27,996,290 | |||||||||||||||||
Total Deposits | 35,714,468 | 35,281,970 | 35,396,221 | |||||||||||||||||
Number of Active ATMs | 623 | 586 | 542 | |||||||||||||||||
Number of locations(3) | 342 | 325 | 317 | |||||||||||||||||
Other: | ||||||||||||||||||||
Net interest income | $ | (45,529 | ) | $ | (30,510 | ) | $ | (18,134 | ) | $ | 145,043 | $ | (368 | ) | ||||||
Non-interest income | (37,706 | ) | (28,709 | ) | 58,553 | 150,153 | (27,301 | ) | ||||||||||||
Provision for loan losses | 27 | 3,950 | 2,877 | (10,631 | ) | 14,324 | ||||||||||||||
Non-interest expenses | 17,667 | 15,763 | (9,064 | ) | 247,583 | 45,740 | ||||||||||||||
Income tax provision (benefit) | (38,402 | ) | (20,183 | ) | (7,729 | ) | 30,109 | (22,913 | ) | |||||||||||
Net income (loss) | $ | (62,527 | ) | $ | (58,749 | ) | $ | 54,335 | $ | 28,135 | $ | (64,820 | ) | |||||||
Loans receivable | $ | 2,488 | $ | 13,673 | $ | 13,629 | $ | 16,305,460 | $ | (25,301 | ) | |||||||||
Total: | ||||||||||||||||||||
Interest Income | $ | 3,595,874 | $ | 3,414,411 | $ | 3,436,829 | $ | 3,175,960 | $ | 2,907,775 | ||||||||||
Interest Expense | 1,378,052 | 1,273,582 | 1,201,859 | 1,100,764 | 976,580 | |||||||||||||||
Net interest income | $ | 2,217,822 | $ | 2,140,829 | $ | 2,234,970 | $ | 2,075,196 | $ | 1,931,195 | ||||||||||
Non-interest income | 1,275,409 | 1,199,332 | 1,222,194 | 1,243,430 | 1,099,807 | |||||||||||||||
Provision for loan losses | 867,897 | 795,611 | 562,306 | 1,181,787 | 900,334 | |||||||||||||||
Non-interest expenses | 1,726,629 | 1,680,897 | 1,573,479 | 1,689,186 | 1,365,638 | |||||||||||||||
Income tax provision (benefit) | 310,866 | 311,066 | 438,040 | 167,335 | 273,881 | |||||||||||||||
Net income (loss) | $ | 587,839 | $ | 552,587 | $ | 883,339 | $ | 280,318 | $ | 491,149 | ||||||||||
Loans receivable | $ | 112,238,546 | $ | 108,433,439 | $ | 103,906,776 | $ | 105,527,491 | $ | 84,767,683 | �� |
(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) | 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. |
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended September 30, 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 Reported | Adjustments(1) | Total Managed(2) | ||||||||
Income Statement Measures | ||||||||||
Net interest income | $ | 1,294,515 | $ | 923,307 | $ | 2,217,822 | ||||
Non-interest income | $ | 1,761,385 | $ | (485,976 | ) | $ | 1,275,409 | |||
Total revenue | $ | 3,055,900 | $ | 437,331 | $ | 3,493,231 | ||||
Provision for loan losses | $ | 430,566 | $ | 437,331 | $ | 867,897 | ||||
Net charge-offs | $ | 368,656 | $ | 437,331 | $ | 805,987 | ||||
Balance Sheet Measures | ||||||||||
Loans | $ | 63,612,169 | $ | 48,626,377 | $ | 112,238,546 | ||||
Total assets | $ | 95,457,365 | $ | 48,069,798 | $ | 143,527,163 | ||||
Average loans | $ | 62,428,789 | $ | 48,083,477 | $ | 110,512,266 | ||||
Average earning assets | $ | 81,297,372 | $ | 46,304,077 | $ | 127,601,449 | ||||
Average total assets | $ | 92,575,211 | $ | 47,538,556 | $ | 140,113,767 | ||||
Delinquencies | $ | 2,059,777 | $ | 1,633,477 | $ | 3,693,254 |
(1) | Income statement adjustments reclassify the net of finance charges of $1,357.3 million, past-due fees of $229.0 million, other interest income of $(55.5) million and interest expense of $607.5 million; and net charge-offs of $437.3 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 September 30 2006 | As of June 30 2006 | As of September 30 2005 | ||||||||||
Assets: | ||||||||||||
Cash and due from banks | $ | 1,461,132 | $ | 1,388,384 | $ | 812,330 | ||||||
Federal funds sold and resale agreements | 3,340,809 | 339,613 | 2,409,392 | |||||||||
Interest-bearing deposits at other banks | 1,348,327 | 870,049 | 1,380,880 | |||||||||
Cash and cash equivalents | 6,150,268 | 2,598,046 | 4,602,602 | |||||||||
Securities available for sale | 13,960,709 | 15,292,446 | 9,436,667 | |||||||||
Loans | 63,612,169 | 60,602,803 | 38,851,763 | |||||||||
Less: Allowance for loan losses | (1,840,000 | ) | (1,765,000 | ) | (1,447,000 | ) | ||||||
Net loans | 61,772,169 | 58,837,803 | 37,404,763 | |||||||||
Accounts receivable from securitizations | 5,617,113 | 4,818,512 | 6,126,282 | |||||||||
Premises and equipment, net | 1,532,006 | 1,467,922 | 768,198 | |||||||||
Interest receivable | 529,104 | 526,267 | 367,757 | |||||||||
Goodwill | 3,964,177 | 3,933,621 | 736,058 | |||||||||
Other | 1,931,819 | 2,055,569 | 982,190 | |||||||||
Total assets | $ | 95,457,365 | $ | 89,530,186 | $ | 60,424,517 | ||||||
Liabilities: | ||||||||||||
Non-interest-bearing deposits | $ | 4,695,792 | $ | 4,487,837 | $ | 91,684 | ||||||
Interest-bearing deposits | 43,467,977 | 42,698,976 | 26,772,538 | |||||||||
Senior and subordinated notes | 8,701,794 | 5,490,690 | 6,651,891 | |||||||||
Other borrowings | 17,619,817 | 16,836,398 | 11,613,179 | |||||||||
Interest payable | 387,000 | 349,091 | 350,842 | |||||||||
Other | 3,908,008 | 3,770,131 | 3,907,156 | |||||||||
Total liabilities | 78,780,388 | 73,633,123 | 49,387,290 | |||||||||
Stockholders’ Equity: | ||||||||||||
Common stock | 3,065 | 3,060 | 2,682 | |||||||||
Paid-in capital, net | 7,237,785 | 7,151,376 | 3,979,525 | |||||||||
Retained earnings and cumulative other comprehensive income | 9,551,504 | 8,857,963 | 7,124,900 | |||||||||
Less: Treasury stock, at cost | (115,377 | ) | (115,336 | ) | (69,880 | ) | ||||||
Total stockholders’ equity | 16,676,977 | 15,897,063 | 11,037,227 | |||||||||
Total liabilities and stockholders’ equity | $ | 95,457,365 | $ | 89,530,186 | $ | 60,424,517 | ||||||
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30 2006 | June 30 2006 | September 30 (1) 2005 | September 30 2006 | September 30 (1) 2005 | |||||||||||
Interest Income: | |||||||||||||||
Loans, including past-due fees | $ | 1,814,803 | $ | 1,616,937 | $ | 1,228,160 | $ | 5,044,362 | $ | 3,602,294 | |||||
Securities available for sale | 160,198 | 167,804 | 87,978 | 493,102 | 269,387 | ||||||||||
Other | 90,070 | 112,416 | 88,477 | 303,346 | 221,102 | ||||||||||
Total interest income | 2,065,071 | 1,897,157 | 1,404,615 | 5,840,810 | 4,092,783 | ||||||||||
Interest Expense: | |||||||||||||||
Deposits | 442,571 | 416,232 | 285,611 | 1,262,412 | 829,074 | ||||||||||
Senior and subordinated notes | 96,300 | 84,707 | 98,309 | 275,361 | 317,382 | ||||||||||
Other borrowings | 231,685 | 199,136 | 110,476 | 604,563 | 303,084 | ||||||||||
Total interest expense | 770,556 | 700,075 | 494,396 | 2,142,336 | 1,449,540 | ||||||||||
Net interest income | 1,294,515 | 1,197,082 | 910,219 | 3,698,474 | 2,643,243 | ||||||||||
Provision for loan losses | 430,566 | 362,445 | 374,167 | 963,281 | 925,398 | ||||||||||
Net interest income after provision for loan losses | 863,949 | 834,637 | 536,052 | 2,735,193 | 1,717,845 | ||||||||||
Non-Interest Income: | |||||||||||||||
Servicing and securitizations | 1,071,091 | 1,025,506 | 993,788 | 3,250,201 | 2,923,768 | ||||||||||
Service charges and other customer-related fees | 459,125 | 413,398 | 355,871 | 1,308,254 | 1,117,467 | ||||||||||
Interchange | 150,474 | 131,538 | 125,454 | 401,503 | 380,962 | ||||||||||
Other | 80,695 | 139,471 | 119,503 | 369,591 | 270,394 | ||||||||||
Total non-interest income | 1,761,385 | 1,709,913 | 1,594,616 | 5,329,549 | 4,692,591 | ||||||||||
Non-Interest Expense: | |||||||||||||||
Salaries and associate benefits | 554,504 | 536,465 | 414,348 | 1,607,113 | 1,289,950 | ||||||||||
Marketing | 368,498 | 356,695 | 343,708 | 1,048,964 | 932,501 | ||||||||||
Communications and data processing | 183,020 | 172,734 | 144,321 | 524,958 | 426,056 | ||||||||||
Supplies and equipment | 111,625 | 113,028 | 86,866 | 322,837 | 256,973 | ||||||||||
Occupancy | 49,710 | 52,753 | 39,426 | 151,840 | 97,536 | ||||||||||
Other | 459,272 | 449,222 | 336,969 | 1,325,293 | 1,026,071 | ||||||||||
Total non-interest expense | 1,726,629 | 1,680,897 | 1,365,638 | 4,981,005 | 4,029,087 | ||||||||||
Income before income taxes | 898,705 | 863,653 | 765,030 | 3,083,737 | 2,381,349 | ||||||||||
Income taxes | 310,866 | 311,066 | 273,881 | 1,059,972 | 852,520 | ||||||||||
Net income | $ | 587,839 | $ | 552,587 | $ | 491,149 | $ | 2,023,765 | $ | 1,528,829 | |||||
Basic earnings per share | $ | 1.95 | $ | 1.84 | $ | 1.88 | $ | 6.73 | $ | 6.05 | |||||
Diluted earnings per share | $ | 1.89 | $ | 1.78 | $ | 1.81 | $ | 6.53 | $ | 5.82 | |||||
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. |
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Quarter Ended 9/30/06 | Quarter Ended 6/30/06 | Quarter Ended 9/30/05 | |||||||||||||||||||||||||
Reported | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||||
Earning assets: | |||||||||||||||||||||||||||
Loans | $ | 62,428,789 | $ | 1,814,803 | 11.63 | % | $ | 58,833,376 | $ | 1,616,937 | 10.99 | % | $ | 38,555,575 | $ | 1,228,160 | 12.74 | % | |||||||||
Securities available for sale | 14,587,307 | 160,198 | 4.39 | % | 14,364,402 | 167,804 | 4.67 | % | 9,535,858 | 87,978 | 3.69 | % | |||||||||||||||
Other | 4,281,276 | 90,070 | 8.42 | % | 5,827,923 | 112,416 | 7.72 | % | 5,361,490 | 88,477 | 6.60 | % | |||||||||||||||
Total earning assets | $ | 81,297,372 | $ | 2,065,071 | 10.16 | % | $ | 79,025,701 | $ | 1,897,157 | 9.60 | % | $ | 53,452,923 | $ | 1,404,615 | 10.51 | % | |||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||
Interest-bearing deposits | |||||||||||||||||||||||||||
NOW accounts | $ | 619,460 | $ | 4,816 | 3.11 | % | $ | 597,406 | $ | 4,052 | 2.71 | % | $ | — | $ | — | — | ||||||||||
Money market deposit accounts | 11,237,206 | 103,073 | 3.67 | % | 11,093,056 | 89,076 | 3.21 | % | 3,592,402 | 30,180 | 3.36 | % | |||||||||||||||
Savings accounts | 3,911,765 | 28,604 | 2.92 | % | 3,919,465 | 26,237 | 2.68 | % | — | — | — | ||||||||||||||||
Other Consumer Time Deposits | 14,325,784 | 153,881 | 4.30 | % | 13,980,892 | 145,401 | 4.16 | % | 10,415,635 | 109,658 | 4.21 | % | |||||||||||||||
Public Fund CD’s of $100,000 or more | 1,022,465 | 13,046 | 5.10 | % | 971,511 | 11,332 | 4.67 | % | 97,728 | 802 | 3.28 | % | |||||||||||||||
CD’s of $100,000 or more | 8,302,487 | 95,229 | 4.59 | % | 8,878,461 | 100,094 | 4.51 | % | 9,977,047 | 111,876 | 4.49 | % | |||||||||||||||
Foreign time deposits | 3,564,708 | 43,922 | 4.93 | % | 3,355,924 | 40,040 | 4.77 | % | 2,535,660 | 33,095 | 5.22 | % | |||||||||||||||
Total Interest-bearing deposits | $ | 42,983,875 | $ | 442,571 | 4.12 | % | $ | 42,796,715 | $ | 416,232 | 3.89 | % | $ | 26,618,472 | $ | 285,611 | 4.29 | % | |||||||||
Senior and subordinated notes | 6,544,768 | 96,300 | 5.89 | % | 5,576,041 | 84,707 | 6.08 | % | 6,683,533 | 98,309 | 5.88 | % | |||||||||||||||
Other borrowings | 18,010,737 | 231,685 | 5.15 | % | 16,928,273 | 199,136 | 4.71 | % | 10,698,216 | 110,476 | 4.13 | % | |||||||||||||||
Total interest-bearing liabilities | $ | 67,539,380 | $ | 770,556 | 4.56 | % | $ | 65,301,029 | $ | 700,075 | 4.29 | % | $ | 44,000,221 | $ | 494,396 | 4.49 | % | |||||||||
Net interest spread | 5.60 | % | 5.31 | % | 6.02 | % | |||||||||||||||||||||
Interest income to average earning assets | 10.16 | % | 9.60 | % | 10.51 | % | |||||||||||||||||||||
Interest expense to average earning assets | 3.79 | % | 3.54 | % | 3.70 | % | |||||||||||||||||||||
Net interest margin | 6.37 | % | 6.06 | % | 6.81 | % | |||||||||||||||||||||
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Quarter Ended 9/30/06 | Quarter Ended 6/30/06 | Quarter Ended 9/30/05 | |||||||||||||||||||||||||
Managed (1) | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | Average Balance | Income/ Expense | Yield/ Rate | ||||||||||||||||||
Earning assets: | |||||||||||||||||||||||||||
Loans | $ | 110,512,266 | $ | 3,401,130 | 12.31 | % | $ | 106,089,894 | $ | 3,195,827 | 12.05 | % | $ | 83,827,465 | $ | 2,784,301 | 13.29 | % | |||||||||
Securities available for sale | 14,587,307 | 160,198 | 4.39 | % | 14,364,402 | 167,804 | 4.67 | % | 9,535,858 | 87,978 | 3.69 | % | |||||||||||||||
Other | 2,501,876 | 34,546 | 5.52 | % | 3,612,502 | 50,780 | 5.62 | % | 3,333,021 | 35,496 | 4.26 | % | |||||||||||||||
Total earning assets | $ | 127,601,449 | $ | 3,595,874 | 11.27 | % | $ | 124,066,798 | $ | 3,414,411 | 11.01 | % | $ | 96,696,344 | $ | 2,907,775 | 12.03 | % | |||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||
Interest-bearing deposits | |||||||||||||||||||||||||||
NOW accounts | $ | 619,460 | $ | 4,816 | 3.11 | % | $ | 597,406 | $ | 4,052 | 2.71 | % | $ | — | $ | — | |||||||||||
Money market deposit accounts | 11,237,206 | 103,073 | 3.67 | % | 11,093,056 | 89,076 | 3.21 | % | 3,592,402 | 30,180 | 3.36 | % | |||||||||||||||
Savings accounts | 3,911,765 | 28,604 | 2.92 | % | 3,919,465 | 26,237 | 2.68 | % | — | — | — | ||||||||||||||||
Other Consumer Time Deposits | 14,325,784 | 153,881 | 4.30 | % | 13,980,892 | 145,401 | 4.16 | % | 10,415,320 | 109,658 | 4.21 | % | |||||||||||||||
Public Fund CD’s of $100,000 or more | 1,022,465 | 13,046 | 5.10 | % | 971,511 | 11,332 | 4.67 | % | 97,728 | 802 | 3.28 | % | |||||||||||||||
CD’s of $100,000 or more | 8,302,487 | 95,229 | 4.59 | % | 8,878,461 | 100,094 | 4.51 | % | 9,977,047 | 111,876 | 4.49 | % | |||||||||||||||
Foreign time deposits | 3,564,708 | 43,922 | 4.93 | % | 3,355,924 | 40,040 | 4.77 | % | 2,535,975 | 33,095 | 5.22 | % | |||||||||||||||
Total Interest-bearing deposits | $ | 42,983,875 | $ | 442,571 | 4.12 | % | $ | 42,796,715 | $ | 416,232 | 3.89 | % | $ | 26,618,472 | $ | 285,611 | 4.29 | % | |||||||||
Senior and subordinated notes | 6,544,768 | 96,300 | 5.89 | % | 5,576,041 | 84,707 | 6.08 | % | 6,683,533 | 98,309 | 5.88 | % | |||||||||||||||
Other borrowings | 18,010,737 | 231,672 | 5.15 | % | 16,928,273 | 199,136 | 4.71 | % | 10,698,216 | 110,476 | 4.13 | % | |||||||||||||||
Securitization liability | 47,648,021 | 607,510 | 5.10 | % | 46,827,712 | 573,507 | 4.90 | % | 44,814,893 | 482,184 | 4.30 | % | |||||||||||||||
Total interest-bearing liabilities | $ | 115,187,401 | $ | 1,378,053 | 4.79 | % | $ | 112,128,741 | $ | 1,273,582 | 4.54 | % | $ | 88,815,114 | $ | 976,580 | 4.40 | % | |||||||||
Net interest spread | 6.49 | % | 6.47 | % | 7.63 | % | |||||||||||||||||||||
Interest income to average earning assets | 11.27 | % | 11.01 | % | 12.03 | % | |||||||||||||||||||||
Interest expense to average earning assets | 4.32 | % | 4.11 | % | 4.04 | % | |||||||||||||||||||||
Net interest margin | 6.95 | % | 6.90 | % | 7.99 | % | |||||||||||||||||||||
(1) | The information in this table reflects the adjustment to add back the effect of securitized loans. |
1680 Capital One Drive, McLean, VA 22102-3491
News Release
FOR IMMEDIATE RELEASE: October 18, 2006
Contacts: | Investor Relations | Media Relations | ||
Mike Rowen | Tatiana Stead Julie Rakes | |||
703-720-2455 | 703-720-2352 804-284-5800 |
Capital One Reports Third Quarter Earnings
EPS increased four percent over third quarter 2005
McLean, Va. (October 18, 2006) – Capital One Financial Corporation (NYSE: COF) today announced that its earnings for the third quarter of 2006 were $587.8 million, or $1.89 per share (diluted), compared with $491.1 million, or $1.81 per share (diluted), for the third quarter of 2005, and $552.6 million, or $1.78 per share (diluted), for the second quarter of 2006.
“Capital One delivered solid profit and loan growth in the third quarter, reflecting strong performance across our business segments, a continuing favorable credit environment, and expected seasonal patterns,” said Richard D. Fairbank, Capital One’s Chairman and Chief Executive Officer. “We continue to execute on our strategy of bringing together national scale lending and local banking businesses, and we look forward to continuing to drive our strategy with the acquisition of North Fork.”
As previously announced, Capital One and North Fork expect the acquisition of North Fork by Capital One will close in the fourth quarter of 2006, pending the receipt of approval of the merger by the Federal Reserve Board, and the expiration of all regulatory waiting periods. Capital One and North Fork have not yet set a definitive election deadline by which North Fork stockholders can elect whether they would prefer to receive cash or Capital One common stock in the merger. The election deadline, which is expected to be approximately five business days prior to the expected closing date, will be announced at least five business days in advance of the deadline.
“We expect full year earnings per share (diluted) for 2006 to be at the higher end of the $7.40 to $7.80 range,” said Gary L. Perlin, Capital One’s Chief Financial Officer. “This includes an estimated 30 cent per share dilutive impact resulting from the expected fourth quarter close of the North Fork acquisition.”
Managed loans at September 30, 2006 were $112.2 billion, up $27.5 billion, or 32 percent, from September 30, 2005, including $16.3 billion of loans acquired with the acquisition of Hibernia in November 2005. Managed loans increased $3.8 billion, or four percent, from the previous quarter. The company experienced growth across all of its North American businesses,
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Capital One Reports Third Quarter Earnings
Page 2
most notably in its US Card segment. The company expects that managed loans will grow at a rate of between seven and nine percent during 2006, excluding the impacts of the North Fork acquisition.
The managed charge-off rate for the company decreased to 2.92 percent in the third quarter of 2006 from 4.14 percent in the third quarter of 2005 but rose from 2.75 percent in the previous quarter. The company increased its allowance for loan losses by $75 million in the third quarter of 2006, driven primarily by higher loan balances in the quarter. The managed delinquency rate (30+ days) decreased to 3.29 percent as of September 30, 2006 from 3.73 percent as of the end of September 30, 2005 but increased from 3.05 percent as of June 30, 2006.
Third quarter marketing expenses increased $24.8 million to $368.5 million from $343.7 million in the third quarter of 2005, and increased $11.8 million from the second quarter of 2006 expense of $356.7 million. Annualized operating expenses as a percentage of average managed loans increased to 4.92 percent in the third quarter of 2006 from 4.88 percent in the third quarter of 2005 but decreased from 4.99 percent in the previous quarter. This quarter’s results also include resolution of certain IRS tax issues resulting in an $18.7 million reduction of tax expense.
Capital One’s managed revenue margin decreased to 10.95 percent in the third quarter of 2006 from 12.54 percent in the third quarter of 2005, primarily due to the addition of Hibernia’s loan portfolio. The company’s managed revenue margin rose 18 basis points from 10.77 percent in the second quarter of 2006. The company continues to expect stability in its annual return on managed assets, as lower revenue margins on higher credit quality loans are offset by reductions in provision and also by reductions in operating and marketing expenses as a percent of assets.
Segment results
The US Card segment’s net income in the third quarter of 2006 was $461.6 million, compared with $481.8 million in the third quarter of 2005, and $421.8 million in the second quarter of 2006. Overall performance in the segment continues to be driven by strong credit and solid loan growth. Managed loans at September 30, 2006 were $51.1 billion, up $4.8 billion or 10.4 percent, from September 30, 2005, and up $2.4 billion, or 4.9 percent from the prior quarter. The managed charge-off rate decreased to 3.39 percent in the third quarter of 2006 from 4.69 percent in the third quarter of 2005 but increased from 3.29 percent in the previous quarter. The company now expects credit card charge-offs to return to more normal levels in 2007 following the impacts of last year’s bankruptcy legislation.
Capital One Reports Third Quarter Earnings
Page 3
Results in the Auto Finance segment this quarter reflect continued growth in originations and seasonal impacts in credit. Net income in the third quarter of 2006 was $35.3 million, compared with a net loss of $7.7 million in the third quarter of 2005, and net income of $95.1 million in the second quarter of 2006. Managed loans at September 30, 2006 were $21.2 billion, up $5.4 billion, or 34.5 percent, from September 30, 2005, and up $.6 billion, or 2.9 percent from the prior quarter. The managed charge-off rate decreased to 2.34 percent in the third quarter of 2006 from 2.54 percent in the third quarter of 2005 but increased from 1.54 percent in the previous quarter.
Results in the Global Financial Services segment continue to reflect strong performance in its North American businesses offset by ongoing challenges in the UK. Net income in the third quarter of 2006 was $107.2 million, compared with $81.9 million in the third quarter of 2005, and $51.2 million in the second quarter of 2006. Managed loans at September 30, 2006 were $26.6 billion, up $3.9 billion, or 16.9 percent, from the prior year’s third quarter, and up $.7 billion, or 2.7 percent, from the second quarter of 2006. The managed charge-off rate decreased to 3.70 percent in the third quarter of 2006 from 4.09 percent in the third quarter of 2005 and from 3.90 percent in the previous quarter.
The Banking segment delivered stable performance, with net income in the third quarter of 2006 of $46.2 million, up $2.9 million, or 6.8 percent, from the second quarter of 2006. Total deposits at the end of the quarter were $35.7 billion, relatively flat with $35.3 billion at the end of the second quarter of 2006. The company opened nine new branches in the quarter, bringing the year-to-date total to 19 new branches. The company is in various stages of construction on 23 additional de novo branches targeted to open in 2006, although some of these openings might spill over into early 2007. Integration continued to progress smoothly during the quarter with the conversion of the Banking segment’s core processing platform, among other systems and processes. The company is on track to complete Hibernia-related integration projects in early 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.
Capital One Reports Third Quarter Earnings
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Forward looking statements
The company cautions that its current expectations in this release, in the presentation slides available on the company’s website and on its Form 8-K dated October 18, 2006 for third quarter earnings, return on assets, loan growth rates, operating costs, charge-off rates, 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 ability to obtain regulatory approvals of the proposed acquisition of North Fork on the proposed terms and schedule; the exact timing of the close of the North Fork transaction and the magnitude of market-driven purchase accounting adjustments related to the close; 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, and charge-offs and deposit activity; the long-term impact of the 2005 Gulf Coast hurricanes on the impacted regions; 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.
Additional Information About the Capital One – North Fork Transaction
In connection with the proposed merger of Capital One and North Fork Bancorporation, Inc., Capital One filed with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that included a joint proxy statement of Capital One and North Fork that also constitutes a prospectus of Capital One. Capital One and North Fork mailed the definitive joint proxy statement/prospectus to their respective stockholders on or about July 14, 2006. Investors and security holders are urged to read the definitive joint proxy statement/prospectus regarding the proposed merger because it contains important information. You may obtain a free copy of the definitive joint proxy statement/prospectus and other related documents filed by Capital One and North Fork with the SEC at the SEC’s website at www.sec.gov. The definitive joint proxy statement/prospectus and the other documents may also be obtained for free by accessing Capital One’s website atwww.capitalone.com under the heading “Investors” and then under the heading “SEC & Regulatory Filings” or by accessing North Fork’s website atwww.northforkbank.com under the tab “Investor Relations” and then under the heading “SEC Filings.”
Capital One Reports Third Quarter Earnings
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About Capital One
Headquartered in McLean, Virginia, Capital One Financial Corporation (www.capitalone.com) is a financial holding company, with more than 342 locations in Texas and Louisiana. Its principal subsidiaries, Capital One Bank, Capital One, F.S.B., Capital One Auto Finance, Inc., andCapital One, N.A., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One’s subsidiaries collectively had $48.2 billion in deposits and $112.2 billion in managed loans outstanding as of September 30, 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 500 index.
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NOTE: Third quarter 2006 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 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.