Exhibit 99.1
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
REPORTED BASIS
(in millions, except per share data and as noted) | 2007 Q3 | 2007 Q2 | 2007 Q1 | 2006 Q4 | 2006 Q3 | |||||||||||||||
| Earnings (Reported Basis) | ||||||||||||||||||||
Net Interest Income | $ | 1,624.5 | $ | 1,538.6 | (2) | $ | 1,604.5 | $ | 1,393.0 | $ | 1,294.5 | |||||||||
Non-Interest Income | 2,149.7 | 1,971.9 | 1,774.4 | (3) | 1,671.5 | 1,761.4 | ||||||||||||||
Total Revenue(6) | 3,774.2 | 3,510.5 | 3,378.9 | 3,064.5 | 3,055.9 | |||||||||||||||
Provision for Loan Losses | 595.5 | 396.7 | 350.0 | 513.2 | 430.6 | |||||||||||||||
Marketing Expenses | 332.7 | 326.1 | 330.9 | 395.4 | 368.5 | |||||||||||||||
Restructuring Expenses (5) | 19.4 | 91.1 | — | — | — | |||||||||||||||
Operating Expenses | 1,582.2 | (4) | 1,617.4 | (4),(13) | 1,643.2 | (4) | 1,567.3 | 1,358.1 | ||||||||||||
Income Before Taxes | 1,244.4 | 1,079.2 | 1,054.8 | 588.6 | 898.7 | |||||||||||||||
Tax Rate(7) | 34.4 | % | 28.9 | % | 35.0 | % | 31.6 | % | 34.6 | % | ||||||||||
Income From Continuing Operations, Net of Tax | $ | 816.4 | $ | 767.6 | $ | 686.1 | $ | 402.6 | $ | 587.8 | ||||||||||
(Loss) From Discontinued Operations, Net of Tax(1) | (898.0 | ) | (17.2 | ) | (11.1 | ) | (11.9 | ) | — | |||||||||||
Net (Loss) Income | $ | (81.6 | ) | $ | 750.4 | $ | 675.0 | $ | 390.7 | $ | 587.8 | |||||||||
| Common Share Statistics | ||||||||||||||||||||
Basic EPS: | ||||||||||||||||||||
Income From Continuing Operations | $ | 2.11 | $ | 1.96 | $ | 1.68 | $ | 1.20 | $ | 1.95 | ||||||||||
(Loss) From Discontinued Operations | $ | (2.32 | ) | $ | (0.04 | ) | $ | (0.03 | ) | $ | (0.04 | ) | $ | — | ||||||
Net (Loss) Income | $ | (0.21 | ) | $ | 1.92 | $ | 1.65 | $ | 1.16 | $ | 1.95 | |||||||||
Diluted EPS: | ||||||||||||||||||||
Income From Continuing Operations | $ | 2.09 | $ | 1.93 | $ | 1.65 | $ | 1.17 | $ | 1.89 | ||||||||||
(Loss) From Discontinued Operations | $ | (2.30 | ) | $ | (0.04 | ) | $ | (0.03 | ) | $ | (0.03 | ) | $ | — | ||||||
Net (Loss) Income | $ | (0.21 | ) | $ | 1.89 | $ | 1.62 | $ | 1.14 | $ | 1.89 | |||||||||
Dividends Per Share | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | $ | 0.03 | ||||||||||
Tangible Book Value Per Share (period end) | $ | 28.88 | $ | 29.11 | $ | 29.76 | $ | 27.95 | $ | 41.12 | ||||||||||
Stock Price Per Share (period end) | $ | 66.43 | $ | 78.44 | $ | 75.46 | $ | 76.82 | $ | 78.66 | ||||||||||
Total Market Capitalization (period end) | $ | 25,602.1 | $ | 30,701.4 | $ | 31,112.2 | $ | 31,488.5 | $ | 23,944.1 | ||||||||||
Shares Outstanding (period end) | 385.4 | 391.4 | 412.3 | 409.9 | 304.4 | |||||||||||||||
Shares Used to Compute Basic EPS | 386.1 | 390.8 | 408.7 | 336.5 | 301.6 | |||||||||||||||
Shares Used to Compute Diluted EPS | 390.8 | 397.5 | 415.5 | 343.8 | 310.4 | |||||||||||||||
| Reported Balance Sheet Statistics (period average) (8) | ||||||||||||||||||||
Average Loans Held for Investment | $ | 91,745 | $ | 91,145 | $ | 93,466 | $ | 74,738 | $ | 62,429 | ||||||||||
Average Earning Assets | $ | 117,694 | $ | 119,430 | $ | 120,766 | $ | 97,849 | $ | 81,437 | ||||||||||
Average Assets | $ | 143,291 | $ | 142,690 | $ | 143,130 | $ | 111,440 | $ | 92,295 | ||||||||||
Average Interest Bearing Deposits | $ | 73,555 | $ | 75,218 | $ | 74,867 | $ | 53,735 | $ | 42,984 | ||||||||||
Total Average Deposits | $ | 84,884 | $ | 86,719 | $ | 86,237 | $ | 60,382 | $ | 47,196 | ||||||||||
Average Equity | $ | 25,344 | $ | 25,128 | $ | 25,610 | $ | 18,311 | $ | 16,310 | ||||||||||
Return on Average Assets (ROA) | 2.28 | % | 2.15 | % | 1.92 | % | 1.45 | % | 2.55 | % | ||||||||||
Return on Average Equity (ROE) | 12.89 | % | 12.22 | % | 10.72 | % | 8.79 | % | 14.42 | % | ||||||||||
| Reported Balance Sheet Statistics (period end)(8) | ||||||||||||||||||||
Loans Held for Investment | $ | 93,789 | $ | 90,930 | $ | 90,869 | $ | 96,512 | $ | 63,612 | ||||||||||
Total Assets | $ | 143,884 | $ | 141,917 | $ | 143,832 | $ | 144,361 | $ | 94,907 | ||||||||||
Interest Bearing Deposits | $ | 72,503 | $ | 74,444 | $ | 76,306 | $ | 74,123 | $ | 43,468 | ||||||||||
Total Deposits | $ | 83,343 | $ | 85,680 | $ | 87,664 | $ | 85,771 | $ | 47,613 | ||||||||||
| Performance Statistics (Reported)(8) | ||||||||||||||||||||
Net Interest Income Growth (annualized) | 22 | % | (16 | )% | 61 | % | 30 | % | 33 | % | ||||||||||
Non Interest Income Growth (annualized) | 36 | % | 45 | % | 25 | % | (20 | )% | 12 | % | ||||||||||
Revenue Growth (annualized) | 30 | % | 16 | % | 41 | % | 1 | % | 20 | % | ||||||||||
Net Interest Margin | 5.52 | % | 5.15 | % | 5.31 | % | 5.69 | % | 6.36 | % | ||||||||||
Revenue Margin | 12.83 | % | 11.76 | % | 11.19 | % | 12.53 | % | 15.01 | % | ||||||||||
Risk Adjusted Margin(11) | 11.20 | % | 10.41 | % | 9.77 | % | 10.72 | % | 13.20 | % | ||||||||||
Non Interest Expense as a % of Average Loans Held for Investment (annualized) | 8.43 | % | 8.93 | % | 8.45 | % | 10.50 | % | 11.06 | % | ||||||||||
Efficiency Ratio(12) | 50.74 | % | 55.36 | % | 58.42 | % | 64.05 | % | 56.50 | % | ||||||||||
| Asset Quality Statistics (Reported)(8) | ||||||||||||||||||||
Allowance | $ | 2,237 | $ | 2,113 | $ | 2,105 | $ | 2,180 | $ | 1,840 | ||||||||||
Allowance as a % of Reported Loans Held for Investment | 2.39 | % | 2.32 | % | 2.32 | % | 2.26 | % | 2.89 | % | ||||||||||
Net Charge-Offs | $ | 480 | $ | 401 | $ | 430 | $ | 443 | $ | 369 | ||||||||||
Net Charge-Off Rate | 2.09 | % | 1.76 | %(14) | 1.84 | % | 2.37 | % | 2.36 | % | ||||||||||
Full-time equivalent employees (in thousands) | 27.5 | 29.5 | 30.8 | 31.1 | 21.1 | |||||||||||||||
1
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
MANAGED BASIS (*)
(in millions) | 2007 Q3 | 2007 Q2 | 2007 Q1 | 2006 Q4 | 2006 Q3 | |||||||||||||||
| Earnings (Managed Basis) | ||||||||||||||||||||
Net Interest Income | $ | 2,803.4 | $ | 2,613.3 | (2) | $ | 2,602.5 | $ | 2,339.1 | $ | 2,217.8 | |||||||||
Non-Interest Income | 1,518.0 | 1,387.5 | 1,294.1 | (3) | 1,210.3 | 1,275.4 | ||||||||||||||
Total Revenue(6) | 4,321.4 | 4,000.8 | 3,896.6 | 3,549.4 | 3,493.2 | |||||||||||||||
Provision for Loan Losses | 1,142.7 | 887.1 | 867.7 | 998.1 | 867.9 | |||||||||||||||
Marketing Expenses | 332.7 | 326.1 | 330.9 | 395.4 | 368.5 | |||||||||||||||
Restructuring Expenses(5) | 19.4 | 91.1 | — | — | — | |||||||||||||||
Operating Expenses | 1,582.2 | (4) | 1,617.4 | (4),(13) | 1,643.2 | (4) | 1,567.3 | 1,358.1 | ||||||||||||
Income Before Taxes | 1,244.4 | 1,079.1 | 1,054.8 | 588.6 | 898.7 | |||||||||||||||
Tax Rate(7) | 34.4 | % | 28.9 | % | 35.0 | % | 31.6 | % | 34.6 | % | ||||||||||
Income From Continuing Operations, Net of Tax | $ | 816.4 | $ | 767.6 | $ | 686.1 | $ | 402.6 | $ | 587.8 | ||||||||||
(Loss) From Discontinued Operations, Net of Tax(1) | (898.0 | ) | (17.2 | ) | (11.1 | ) | (11.9 | ) | — | |||||||||||
Net (Loss) Income | $ | (81.6 | ) | $ | 750.4 | $ | 675.0 | $ | 390.7 | $ | 587.8 | |||||||||
| Managed Balance Sheet Statistics (period average)(8) | ||||||||||||||||||||
Average Loans Held for Investment | $ | 143,781 | $ | 142,616 | $ | 144,113 | $ | 123,902 | $ | 110,512 | ||||||||||
Average Earning Assets | $ | 167,578 | $ | 168,841 | $ | 169,358 | $ | 145,113 | $ | 127,742 | ||||||||||
Average Assets | $ | 194,528 | $ | 193,446 | $ | 193,034 | $ | 159,947 | $ | 139,833 | ||||||||||
Return on Average Assets (ROA) | 1.68 | % | 1.59 | % | 1.42 | % | 1.01 | % | 1.68 | % | ||||||||||
| Managed Balance Sheet Statistics (period end)(8) | ||||||||||||||||||||
Loans Held for Investment(8) | $ | 144,769 | $ | 143,498 | $ | 142,005 | $ | 146,151 | $ | 112,239 | ||||||||||
Total Assets | $ | 194,019 | $ | 193,682 | $ | 194,252 | $ | 193,267 | $ | 142,977 | ||||||||||
Tangible Assets(10) | $ | 180,363 | $ | 179,888 | $ | 180,501 | $ | 179,487 | $ | 138,817 | ||||||||||
Tangible Common Equity(9) | $ | 11,131 | $ | 11,393 | $ | 12,270 | $ | 11,455 | $ | 12,517 | ||||||||||
Tangible Common Equity to Tangible Assets Ratio | 6.17 | % | 6.33 | % | 6.80 | % | 6.38 | % | 9.02 | % | ||||||||||
% Off-Balance Sheet Securitizations | 35 | % | 37 | % | 36 | % | 34 | % | 43 | % | ||||||||||
| Performance Statistics (Managed)(8) | ||||||||||||||||||||
Net Interest Income Growth (annualized) | 29 | % | 2 | % | 45 | % | 22 | % | 14 | % | ||||||||||
Non Interest Income Growth (annualized) | 38 | % | 29 | % | 28 | % | (20 | )% | 25 | % | ||||||||||
Revenue Growth (annualized) | 32 | % | 11 | % | 39 | % | 6 | % | 18 | % | ||||||||||
Net Interest Margin | 6.69 | % | 6.19 | % | 6.15 | % | 6.45 | % | 6.94 | % | ||||||||||
Revenue Margin | 10.31 | % | 9.48 | % | 9.20 | % | 9.78 | % | 10.94 | % | ||||||||||
Risk Adjusted Margin(11) | 7.86 | % | 7.37 | % | 6.97 | % | 7.23 | % | 8.41 | % | ||||||||||
Non Interest Expense as a of Average Loans Held for Investment (annualized) | 5.38 | % | 5.71 | % | 5.48 | % | 6.34 | % | 6.25 | % | ||||||||||
Efficiency Ratio(12) | 44.31 | % | 48.58 | % | 50.66 | % | 55.30 | % | 49.43 | % | ||||||||||
| Asset Quality Statistics (Managed)(8) | ||||||||||||||||||||
Net Charge-Offs | $ | 1,027 | $ | 891 | $ | 947 | $ | 927 | $ | 806 | ||||||||||
Net Charge-Off Rate | 2.86 | % | 2.50 | %(14) | 2.63 | % | 2.99 | % | 2.92 | % | ||||||||||
| (*) | 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
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY NOTES
| (1) | On August 20, 2007, the Company announced that it would cease residential mortgage origination operations of its wholesale mortgage banking unit, GreenPoint Mortgage which was acquired in Q4 2006. The results of the residential mortgage origination operations are being reported as discontinued operations for each period presented subsequent to the acquisition. The results of GreenPoint's Mortgage Servicing Business are reported as continuing operations for each period presented subsequent to the acquisition. The Company recorded a loss from discontinued operations of $898.0 million after-tax for Q3 2007. Approximately $646.0 million after-tax of this loss resulted from the non-cash write-down of goodwill associated with the acquisition of GreenPoint Mortgage as part of the North Fork Bancorporation in December 2006. The remaining $252.0 million of after-tax loss includes approximately $177.8 million after-tax valuation adjustments related to ongoing operations, $59.0 million in after-tax restructuring charges associated with severance benefits and facilities closure, and $15.2 million in loss from operations in the third quarter. |
| (2) | Includes a $17.4 million gain from the early extinguishment of Trust Preferred Securities in Q2 2007 included as a component of Interest expense. |
| (3) | Includes a $46.2 million gain resulting from the sale of a 7% stake in the privately held company, DealerTrack Holding Inc., a leading provider of on-demand software and data solutions for the automotive retail industry in Q1 2007. |
| (4) | Includes core deposit intangible amortization expense of $52.4 million in Q3 2007, $53.7 million in Q2 2007 and $55.0 million in Q1 2007, and integration costs of $30.3 million in Q3 2007, $24.5 million in Q2 2007 and $14.6 million in Q1 2007. |
| (5) | During the second quarter of 2007, the Company announced a broad-based initiative to reduce expenses and improve its competitive cost position. As part of this initiative $19.4 million and $91.1 million of restructuring charges were recognized as part of continuing operations during Q3 2007 and Q2 2007, respectively. |
| (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 2007 - $310.5 million, Q2 2007 - $236.3 million, Q1 2007 - $213.6 million, Q4 2006 - $248.3 million, and Q3 2006 - $226.3 million. |
| (7) | Includes a $69.0 million benefit in Q2 2007 resulting from changes in the Company’s international tax position and tax benefits from resolution of tax issues and miscellaneous tax adjustments in prior periods as follows: Q1 2007 - $11.7 million, Q4 2006 - $28.8 million and Q3 2006 - $18.7 million. |
| (8) | Based on continuing operations. Average equity and return on equity are based on the Company's stockholder’s equity. |
| (9) | Includes stockholders' equity and preferred interests less intangible assets and related deferred tax liability. Tangible Common Equity on a reported and managed basis is the same. |
| (10) | Tangible assets include managed assets less intangible assets. |
| (11) | Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets. |
| (12) | Efficiency ratio is Non-interest expense less restructuring expense divided by total revenue. |
| (13) | Includes a charge of $39.8 million as a result of the accelerated vesting of equity awards made in connection with the transition of the management team for Capital One’s Banking business following the North Fork acquisition in Q4 2006. |
| (14) | Managed and reported net charge-off rate for Q2 2007 was positively impacted 11 and 17 basis points, respectively, due to the implementation of a change in customer statement generation from 30 to 25 days grace. The change did not have a material impact on Net Provision for Q2 2007. |
3
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS
MANAGED BASIS(1)
(in thousands) | 2007 Q3 | 2007 Q2 | 2007 Q1 | 2006 Q4 | 2006 Q3 | |||||||||||||||
Local Banking:(3) | ||||||||||||||||||||
Interest Income | $ | 1,746,683 | $ | 1,724,239 | $ | 1,740,132 | $ | 721,102 | $ | 719,207 | ||||||||||
Interest Expense | 1,161,758 | 1,139,774 | 1,166,563 | 476,523 | 461,009 | |||||||||||||||
Net interest income | $ | 584,925 | $ | 584,465 | $ | 573,569 | $ | 244,579 | $ | 258,198 | ||||||||||
Non-interest income | 195,204 | 210,581 | 200,141 | 112,021 | 115,526 | |||||||||||||||
Provision for loan losses | (58,285 | ) | 23,929 | 23,776 | (21,549 | ) | 5,495 | |||||||||||||
Other non-interest expenses | �� | 543,390 | 548,462 | 554,598 | 307,810 | 297,080 | ||||||||||||||
Income tax provision | 102,693 | 77,821 | 68,339 | 24,619 | 24,902 | |||||||||||||||
Net income | $ | 192,331 | $ | 144,834 | $ | 126,997 | $ | 45,720 | $ | 46,247 | ||||||||||
Loans Held for Investment | $ | 42,233,665 | $ | 41,919,645 | $ | 41,642,594 | $ | 12,145,533 | $ | 13,326,088 | ||||||||||
Average Loans Held for Investment | $ | 41,992,618 | $ | 42,110,537 | $ | 41,846,678 | $ | 13,330,876 | $ | 13,171,414 | ||||||||||
Core Deposits(2) | $ | 63,118,580 | $ | 63,828,306 | $ | 62,962,395 | $ | 27,071,324 | $ | 26,997,345 | ||||||||||
Total Deposits | $ | 73,419,558 | $ | 74,482,705 | $ | 74,509,054 | $ | 35,334,610 | $ | 35,163,849 | ||||||||||
Loans Held for Investment Yield | 7.13 | % | 7.03 | % | 6.99 | % | 7.98 | % | 8.02 | % | ||||||||||
Net Interest Margin - Loans(4) | 1.79 | % | 1.88 | % | 1.91 | % | 3.21 | % | 3.30 | % | ||||||||||
Net Interest Margin - Deposits(5) | 2.09 | % | 2.01 | % | 1.98 | % | 1.50 | % | 1.62 | % | ||||||||||
Efficiency Ratio(7) | 69.65 | % | 68.98 | % | 71.68 | % | 86.32 | % | 79.49 | % | ||||||||||
Net charge-off rate | 0.19 | % | 0.19 | % | 0.15 | % | 0.40 | % | 0.48 | % | ||||||||||
Non Performing Loans | $ | 112,794 | $ | 80,781 | $ | 80,162 | $ | 57,824 | $ | 79,042 | ||||||||||
Non Performing Loans as a % of Loans Held for Investment | 0.27 | % | 0.19 | % | 0.19 | % | 0.48 | % | 0.59 | % | ||||||||||
Non-Interest Expenses as a % of Average Loans Held for Investment | 5.18 | % | 5.21 | % | 5.30 | % | 9.24 | % | 9.02 | % | ||||||||||
Number of Active ATMs | 1,282 | 1,253 | 1,236 | 661 | 623 | |||||||||||||||
Number of locations | 732 | 724 | 723 | 358 | 342 | |||||||||||||||
National Lending: | ||||||||||||||||||||
Interest Income | $ | 3,511,878 | $ | 3,261,042 | $ | 3,254,596 | $ | 3,182,013 | $ | 3,078,097 | ||||||||||
Interest Expense | 1,232,115 | 1,197,106 | 1,184,284 | 1,163,106 | 1,089,279 | |||||||||||||||
Net interest income | $ | 2,279,763 | $ | 2,063,936 | $ | 2,070,312 | $ | 2,018,907 | $ | 1,988,818 | ||||||||||
Non-interest income | 1,312,146 | 1,177,139 | 1,138,499 | 1,105,240 | 1,213,924 | |||||||||||||||
Provision for loan losses | 1,196,087 | 869,149 | 849,216 | 1,010,837 | 862,375 | |||||||||||||||
Other non-interest expenses | 1,367,607 | 1,366,282 | 1,422,169 | 1,534,523 | 1,411,882 | |||||||||||||||
Income tax provision | 352,847 | 346,547 | 322,877 | 205,768 | 324,366 | |||||||||||||||
Net income | $ | 675,368 | $ | 659,097 | $ | 614,549 | $ | 373,019 | $ | 604,119 | ||||||||||
Loans Held for Investment | $ | 102,556,271 | $ | 101,590,039 | $ | 100,371,532 | $ | 102,359,180 | $ | 98,909,970 | ||||||||||
Average Loans Held for Investment | $ | 101,805,584 | $ | 100,520,138 | $ | 102,276,581 | $ | 99,881,480 | $ | 97,309,087 | ||||||||||
Core Deposits(2) | $ | 470 | $ | 1,124 | $ | 3,212 | $ | 6,061 | $ | 137,602 | ||||||||||
Total Deposits | $ | 2,295,131 | $ | 2,411,435 | $ | 2,409,291 | $ | 2,383,902 | $ | 2,461,941 | ||||||||||
Loans Held for Investment Yield | 13.77 | % | 12.95 | % | 12.70 | % | 12.72 | % | 12.63 | % | ||||||||||
Net Interest Margin | 8.96 | % | 8.21 | % | 8.10 | % | 8.09 | % | 8.18 | % | ||||||||||
Revenue Margin | 14.11 | % | 12.90 | % | 12.55 | % | 12.51 | % | 13.17 | % | ||||||||||
Risk Adjusted Margin | 10.15 | % | 9.43 | % | 8.90 | % | 8.88 | % | 9.92 | % | ||||||||||
Non-Interest Expenses as a % of Average Loans Held for Investment | 5.37 | % | 5.44 | % | 5.56 | % | 6.15 | % | 5.80 | % | ||||||||||
Efficiency Ratio(7) | 38.07 | % | 42.16 | % | 44.32 | % | 49.12 | % | 44.08 | % | ||||||||||
Net charge-off rate | 3.96 | % | 3.47 | %(6) | 3.65 | % | 3.63 | % | 3.25 | % | ||||||||||
Delinquency Rate (30+ days) | 4.70 | % | 3.89 | % | 3.63 | % | 4.09 | % | 3.70 | % | ||||||||||
Number of Loan Accounts (000s) | 48,473 | 48,536 | 48,668 | 49,374 | 49,176 | |||||||||||||||
Other:(3) | ||||||||||||||||||||
Net interest income | $ | (61,250 | ) | $ | (35,056 | ) | $ | (41,427 | ) | $ | 75,586 | $ | (29,194 | ) | ||||||
Non-interest income | 10,639 | (249 | ) | (44,564 | ) | (6,915 | ) | (54,041 | ) | |||||||||||
Provision for loan losses | 5,023 | (5,981 | ) | (5,330 | ) | 8,840 | 27 | |||||||||||||
Restructuring expenses | 19,354 | 91,074 | — | — | — | |||||||||||||||
Other non-interest expenses | 3,870 | 28,717 | (2,720 | ) | 120,353 | 17,667 | ||||||||||||||
Income tax benefit | (27,530 | ) | (112,796 | ) | (22,519 | ) | (44,395 | ) | (38,402 | ) | ||||||||||
Net loss | $ | (51,328 | ) | $ | (36,319 | ) | $ | (55,422 | ) | $ | (16,127 | ) | $ | (62,527 | ) | |||||
Loans Held for Investment | $ | (21,375 | ) | $ | (11,928 | ) | $ | (9,084 | ) | $ | 31,646,555 | $ | 2,488 | |||||||
Core Deposits(2) | $ | 5,967,308 | $ | 6,937,760 | $ | 7,532,854 | $ | 42,819,710 | $ | 7,301,435 | ||||||||||
Total Deposits | $ | 7,628,125 | $ | 8,786,315 | $ | 10,745,405 | $ | 48,052,380 | $ | 9,987,360 | ||||||||||
Total: | ||||||||||||||||||||
Interest Income | $ | 4,646,430 | $ | 4,380,376 | $ | 4,359,663 | $ | 3,901,560 | $ | 3,595,874 | ||||||||||
Interest Expense | 1,842,992 | 1,767,031 | 1,757,209 | 1,562,488 | 1,378,052 | |||||||||||||||
Net interest income | $ | 2,803,438 | $ | 2,613,345 | $ | 2,602,454 | $ | 2,339,072 | $ | 2,217,822 | ||||||||||
Non-interest income | 1,517,989 | 1,387,471 | 1,294,076 | 1,210,346 | 1,275,409 | |||||||||||||||
Provision for loan losses | 1,142,825 | 887,097 | 867,662 | 998,128 | 867,897 | |||||||||||||||
Restructuring expenses | 19,354 | 91,074 | — | — | — | |||||||||||||||
Other non-interest expenses | 1,914,867 | 1,943,461 | 1,974,047 | 1,962,686 | 1,726,629 | |||||||||||||||
Income tax provision | 428,010 | 311,572 | 368,697 | 185,992 | 310,866 | |||||||||||||||
Income From Continuing Operations, Net of Tax | $ | 816,371 | $ | 767,612 | $ | 686,124 | $ | 402,612 | $ | 587,839 | ||||||||||
Loans Held for Investment | $ | 144,768,561 | $ | 143,497,756 | $ | 142,005,042 | $ | 146,151,268 | $ | 112,238,546 | ||||||||||
Core Deposits(2) | $ | 69,086,358 | $ | 70,767,190 | $ | 70,498,461 | $ | 69,897,095 | $ | 34,436,382 | ||||||||||
Total Deposits | $ | 83,342,814 | $ | 85,680,455 | $ | 87,663,750 | $ | 85,770,892 | $ | 47,613,150 | ||||||||||
| (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.” |
On August 20, 2007, the Company announced that it would cease residential mortgage origination operations of its wholesale mortgage banking unit, GreenPoint Mortgage. The results of the residential mortgage origination operations are reported as discontinued operations and excluded from the segment results presented. The results of GreenPoint's Mortgage Servicing Business are reported as continuing operations for each period presented and included in Local Banking results for 2007 and in Other for Q4 2006.
| (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) | Results of the North Fork acquisition were included in the Other category for Q4 2006. |
| (4) | Interest Income - funds transfer pricing charges divided by average managed loans |
| (5) | Interest Expense - funds transfer pricing credits divided by average retail deposits |
| (6) | Net charge-off rate for Q2 2007 was positively impacted by 16 basis points due to the implementation of a change in customer statement generation from 30 to 25 days grace. This change did not have a material impact on the provision for the quarter. |
| (7) | Efficiency ratio is Non-Interest Expenses divided by total Managed Revenue |
4
CAPITAL ONE FINANCIAL CORPORATION (COF)
NATIONAL LENDING SUBSEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS
MANAGED BASIS(1)
(in thousands) | 2007 Q3 | 2007 Q2 | 2007 Q1 | 2006 Q4 | 2006 Q3 | |||||||||||||||
US Card: | ||||||||||||||||||||
Interest Income | $ | 1,953,967 | $ | 1,779,670 | $ | 1,813,846 | $ | 1,795,345 | $ | 1,734,459 | ||||||||||
Interest Expense | 596,767 | 590,236 | 602,505 | 600,821 | 554,708 | |||||||||||||||
Net interest income | $ | 1,357,200 | $ | 1,189,434 | $ | 1,211,341 | $ | 1,194,524 | $ | 1,179,751 | ||||||||||
Non-interest income | 975,502 | 842,428 | 778,606 | 795,881 | 881,304 | |||||||||||||||
Provision for loan losses | 662,428 | 402,589 | 373,836 | 554,698 | 451,782 | |||||||||||||||
Non-interest expenses | 815,470 | 808,769 | 861,020 | 916,963 | 899,062 | |||||||||||||||
Income tax provision | 294,053 | 282,253 | 259,751 | 181,561 | 248,574 | |||||||||||||||
Net income | $ | 560,751 | $ | 538,251 | $ | 495,340 | $ | 337,183 | $ | 461,637 | ||||||||||
Loans Held for Investment | $ | 49,573,279 | $ | 50,032,530 | $ | 49,681,559 | $ | 53,623,680 | $ | 51,127,654 | ||||||||||
Average Loans Held for Investment | $ | 49,682,666 | $ | 49,573,957 | $ | 51,878,104 | $ | 51,686,135 | $ | 50,131,562 | ||||||||||
Loans Held for Investment Yield | 15.73 | % | 14.36 | % | 13.99 | % | 13.89 | % | 13.84 | % | ||||||||||
Net Interest Margin | 10.93 | % | 9.60 | % | 9.34 | % | 9.24 | % | 9.41 | % | ||||||||||
Revenue Margin | 18.78 | % | 16.39 | % | 15.34 | % | 15.40 | % | 16.45 | % | ||||||||||
Risk Adjusted Margin | 14.65 | % | 12.66 | % | 11.35 | % | 11.58 | % | 13.05 | % | ||||||||||
Non-Interest Expenses as a % of Average Loans Held for Investment | 6.57 | % | 6.53 | % | 6.64 | % | 7.10 | % | 7.17 | % | ||||||||||
Efficiency Ratio(2) | 34.96 | % | 39.80 | % | 43.27 | % | 46.07 | % | 43.62 | % | ||||||||||
Net charge-off rate | 4.13 | % | 3.73 | %(5) | 3.99 | % | 3.82 | % | 3.39 | % | ||||||||||
Delinquency Rate (30+ days) | 4.46 | % | 3.41 | % | 3.48 | % | 3.74 | % | 3.53 | % | ||||||||||
Purchase Volume(3) | $ | 21,522,104 | $ | 21,781,462 | $ | 19,346,812 | $ | 22,782,451 | $ | 21,450,024 | ||||||||||
Number of Loan Accounts (000s) | 36,504 | 36,608 | 36,758 | 37,630 | 37,483 | |||||||||||||||
Auto Finance: | ||||||||||||||||||||
Interest Income | $ | 661,471 | $ | 651,821 | $ | 637,609 | $ | 593,268 | $ | 575,376 | ||||||||||
Interest Expense | 283,949 | 277,783 | 265,556 | 242,311 | 227,053 | |||||||||||||||
Net interest income | $ | 377,522 | $ | 374,038 | $ | 372,053 | $ | 350,957 | $ | 348,323 | ||||||||||
Non-interest income | 13,514 | 23,273 | 60,586 | 14,143 | 21,181 | |||||||||||||||
Provision for loan losses | 244,537 | 182,278 | 200,058 | 151,171 | 161,145 | |||||||||||||||
Non-interest expenses | 152,275 | 157,044 | 164,948 | 162,022 | 154,014 | |||||||||||||||
Income tax provision | (1,987 | ) | 19,948 | 23,266 | 18,167 | 19,021 | ||||||||||||||
Net (loss) income | $ | (3,789 | ) | $ | 38,041 | $ | 44,367 | $ | 33,740 | $ | 35,324 | |||||||||
Loans Held for Investment | $ | 24,335,242 | $ | 24,067,760 | $ | 23,930,547 | $ | 21,751,827 | $ | 21,158,797 | ||||||||||
Average Loans Held for Investment | $ | 24,170,047 | $ | 23,898,070 | $ | 23,597,675 | $ | 21,498,205 | $ | 20,812,533 | ||||||||||
Loans Held for Investment Yield | 10.95 | % | 10.91 | % | 10.81 | % | 11.04 | % | 11.06 | % | ||||||||||
Net Interest Margin | 6.25 | % | 6.26 | % | 6.31 | % | 6.53 | % | 6.69 | % | ||||||||||
Revenue Margin | 6.47 | % | 6.65 | % | 7.33 | % | 6.79 | % | 7.10 | % | ||||||||||
Risk Adjusted Margin | 2.91 | % | 4.30 | % | 5.04 | % | 3.94 | % | 4.76 | % | ||||||||||
Non-Interest Expenses as a % of Average Loans Held for Investment | 2.52 | % | 2.63 | % | 2.80 | % | 3.01 | % | 2.96 | % | ||||||||||
Efficiency Ratio(2) | 38.94 | % | 39.53 | % | 38.13 | % | 44.38 | % | 41.68 | % | ||||||||||
Net charge-off rate | 3.56 | % | 2.35 | % | 2.29 | % | 2.85 | % | 2.34 | % | ||||||||||
Delinquency Rate (30+ days) | 7.15 | % | 6.00 | % | 4.64 | % | 6.35 | % | 5.18 | % | ||||||||||
Auto Loan Originations | $ | 3,248,747 | $ | 2,992,427 | $ | 3,311,868 | $ | 3,078,877 | $ | 3,158,481 | ||||||||||
Number of Loan Accounts (000s) | 1,731 | 1,771 | 1,762 | 1,589 | 1,558 | |||||||||||||||
Global Financial Services: | ||||||||||||||||||||
Interest Income | $ | 896,440 | $ | 829,551 | $ | 803,141 | $ | 793,400 | $ | 768,262 | ||||||||||
Interest Expense | 351,399 | 329,087 | 316,223 | 319,974 | 307,518 | |||||||||||||||
Net interest income | $ | 545,041 | $ | 500,464 | $ | 486,918 | $ | 473,426 | $ | 460,744 | ||||||||||
Non-interest income | 323,130 | 311,438 | 299,307 | 295,216 | 311,439 | |||||||||||||||
Provision for loan losses | 289,122 | 284,282 | 275,322 | 304,968 | 249,448 | |||||||||||||||
Non-interest expenses | 399,862 | 400,469 | 396,201 | 455,538 | 358,806 | |||||||||||||||
Income tax provision | 60,781 | 44,346 | 39,860 | 6,040 | 56,771 | |||||||||||||||
Net income | $ | 118,406 | $ | 82,805 | $ | 74,842 | $ | 2,096 | $ | 107,158 | ||||||||||
Loans Held for Investment | $ | 28,647,750 | $ | 27,489,749 | $ | 26,759,426 | $ | 26,983,673 | $ | 26,623,519 | ||||||||||
Average Loans Held for Investment | $ | 27,952,871 | $ | 27,048,111 | $ | 26,800,802 | $ | 26,697,140 | $ | 26,364,992 | ||||||||||
Loans Held for Investment Yield(4) | 12.72 | % | 12.16 | % | 11.88 | % | 11.80 | % | 11.58 | % | ||||||||||
Net Interest Margin | 7.80 | % | 7.40 | % | 7.27 | % | 7.09 | % | 6.99 | % | ||||||||||
Revenue Margin | 12.42 | % | 12.01 | % | 11.73 | % | 11.52 | % | 11.72 | % | ||||||||||
Risk Adjusted Margin | 8.42 | % | 8.03 | % | 7.55 | % | 7.63 | % | 8.02 | % | ||||||||||
Non-Interest Expenses as a % of Average Loans Held for Investment | 5.72 | % | 5.92 | % | 5.91 | % | 6.83 | % | 5.44 | % | ||||||||||
Efficiency Ratio(2) | 46.06 | % | 49.32 | % | 50.39 | % | 59.27 | % | 46.47 | % | ||||||||||
Net charge-off rate | 4.00 | % | 3.98 | % | 4.18 | % | 3.89 | % | 3.70 | % | ||||||||||
Delinquency Rate (30+ days) | 3.02 | % | 2.93 | % | 2.99 | % | 2.97 | % | 2.86 | % | ||||||||||
Number of Loan Accounts (000s) | 10,238 | 10,157 | 10,148 | 10,155 | 10,135 | |||||||||||||||
| (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) | Efficiency ration is non-Interest Expenses divided by total Managed Revenue |
| (3) | Includes all purchase transactions net of returns and excludes cash advance transactions. |
| (4) | Excludes “GFS - Home Loans Originations” and “GFS - Settlement Services” from Other Interest Income. |
| (5) | Net charge-off rate for Q2 2007 was positively impacted by 31 basis points due to the implementation of a change in customer statement generation from 30 to 25 days grace. This change did not have a material impact on the provision for the quarter. |
5
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended September 30, 2007
(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(3) | ||||||||||
Net interest income | $ | 1,624,474 | $ | 1,178,964 | $ | 2,803,438 | ||||
Non-interest income | 2,149,662 | $ | (631,673 | ) | 1,517,989 | |||||
Total revenue | 3,774,136 | $ | 547,291 | 4,321,427 | ||||||
Provision for loan losses | 595,534 | $ | 547,291 | 1,142,825 | ||||||
Net charge-offs | $ | 480,065 | $ | 547,291 | $ | 1,027,356 | ||||
Balance Sheet Measures | ||||||||||
Loans Held for Investment | $ | 95,405,217 | $ | 50,980,053 | $ | 146,385,270 | ||||
Total assets | $ | 147,154,835 | $ | 50,135,190 | $ | 197,290,025 | ||||
Average loans Held for Investment | $ | 92,450,865 | $ | 52,036,422 | $ | 144,487,287 | ||||
Average earning assets | $ | 121,169,771 | $ | 49,884,042 | $ | 171,053,813 | ||||
Average total assets | $ | 147,884,578 | $ | 51,237,294 | $ | 199,121,872 | ||||
Delinquencies | $ | 3,077,211 | $ | 2,020,368 | $ | 5,097,579 | ||||
| (1) | Income statement adjustments reclassify the net of finance charges of $1,659.5 million, past-due fees of $262.7 million, other interest income of $(42.7) million and interest expense of $700.5 million; and net charge-offs of $547.3 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. |
| (3) | Based on continuing operations. |
6
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
| As of | As of | As of | ||||||||||
| September 30 | June 30 | September 30 | ||||||||||
| 2007 | 2007(1) | 2006(1) | ||||||||||
Assets: | ||||||||||||
Cash and due from banks | $ | 1,819,121 | $ | 2,354,393 | $ | 1,461,132 | ||||||
Federal funds sold and resale agreements | 1,922,735 | 3,940,269 | 3,340,809 | |||||||||
Interest-bearing deposits at other banks | 703,805 | 753,160 | 797,708 | |||||||||
Cash and cash equivalents | 4,445,661 | 7,047,822 | 5,599,649 | |||||||||
Securities available for sale | 19,959,247 | 20,203,381 | 13,631,409 | |||||||||
Mortgage loans held for sale | 1,454,457 | 2,732,044 | 311,169 | |||||||||
Loans held for investment | 95,405,217 | 91,617,353 | 63,612,169 | |||||||||
Less: Allowance for loan and lease losses | (2,320,000 | ) | (2,120,000 | ) | (1,840,000 | ) | ||||||
Net loans held for investment | 93,085,217 | 89,497,353 | 61,772,169 | |||||||||
Accounts receivable from securitizations | 6,905,859 | 5,481,686 | 5,617,113 | |||||||||
Premises and equipment, net | 2,268,034 | 2,260,928 | 1,532,006 | |||||||||
Interest receivable | 793,693 | 768,617 | 529,104 | |||||||||
Goodwill | 12,952,838 | 13,612,005 | 3,964,177 | |||||||||
Other | 5,289,829 | 4,334,121 | 1,949,950 | |||||||||
Total assets | $ | 147,154,835 | $ | 145,937,957 | $ | 94,906,746 | ||||||
Liabilities: | ||||||||||||
Non-interest-bearing deposits | $ | 10,840,189 | $ | 11,236,110 | $ | 4,145,173 | ||||||
Interest-bearing deposits | 72,502,625 | 74,444,345 | 43,467,977 | |||||||||
Senior and subordinated notes | 10,784,182 | 9,222,506 | 8,701,794 | |||||||||
Other borrowings | 22,722,519 | 20,681,289 | 17,619,817 | |||||||||
Interest payable | 552,674 | 543,805 | 387,000 | |||||||||
Other | 4,965,794 | 4,623,241 | 3,908,008 | |||||||||
Total liabilities | 122,367,983 | 120,751,296 | 78,229,769 | |||||||||
Stockholders' Equity: | ||||||||||||
Common stock | 4,183 | 4,174 | 3,065 | |||||||||
Paid-in capital, net | 15,768,525 | 15,682,009 | 7,237,785 | |||||||||
Retained earnings and cumulative other comprehensive income | 11,395,226 | 11,386,625 | 9,551,504 | |||||||||
Less: Treasury stock, at cost | (2,381,082 | ) | (1,886,147 | ) | (115,377 | ) | ||||||
Total stockholders' equity | 24,786,852 | 25,186,661 | 16,676,977 | |||||||||
Total liabilities and stockholders' equity | $ | 147,154,835 | $ | 145,937,957 | $ | 94,906,746 | ||||||
| (1) | Certain prior period amounts have been reclassified to conform to the current period presentation. |
7
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30 | June 30(1) | September 30 (1) | September 30 | September 30 (1) | ||||||||||||||
| 2007 | 2007 | 2006 | 2007 | 2006 | ||||||||||||||
Interest Income: | ||||||||||||||||||
Loans held for investment, including past-due fees | $ | 2,381,096 | $ | 2,255,573 | $ | 1,814,803 | $ | 6,963,349 | $ | 5,044,362 | ||||||||
Securities available for sale | 252,550 | 237,978 | 151,616 | 694,608 | 483,078 | |||||||||||||
Other | 133,321 | 145,135 | 98,652 | 460,005 | 313,370 | |||||||||||||
Total interest income | 2,766,967 | 2,638,686 | 2,065,071 | 8,117,962 | 5,840,810 | |||||||||||||
Interest Expense: | ||||||||||||||||||
Deposits | 740,091 | 749,603 | 442,571 | 2,220,177 | 1,262,412 | |||||||||||||
Senior and subordinated notes | 144,643 | 134,061 | 96,300 | 417,250 | 275,361 | |||||||||||||
Other borrowings | 257,759 | 216,441 | 231,685 | 712,937 | 604,563 | |||||||||||||
Total interest expense | 1,142,493 | 1,100,105 | 770,556 | 3,350,364 | 2,142,336 | |||||||||||||
Net interest income | 1,624,474 | 1,538,581 | 1,294,515 | 4,767,598 | 3,698,474 | |||||||||||||
Provision for loan and lease losses | 595,534 | 396,713 | 430,566 | 1,342,292 | 963,281 | |||||||||||||
Net interest income after provision for loan and lease losses | 1,028,940 | 1,141,868 | 863,949 | 3,425,306 | 2,735,193 | |||||||||||||
Non-Interest Income: | ||||||||||||||||||
Servicing and securitizations | 1,354,303 | 1,226,896 | 1,071,091 | 3,569,281 | 3,250,201 | |||||||||||||
Service charges and other customer-related fees | 522,374 | 482,979 | 459,125 | 1,484,820 | 1,308,254 | |||||||||||||
Mortgage banking operations | 52,661 | 68,365 | 44,520 | 172,476 | 118,378 | |||||||||||||
Interchange | 103,799 | 125,979 | 150,474 | 347,889 | 401,503 | |||||||||||||
Other | 116,525 | 67,632 | 36,175 | 321,417 | 251,213 | |||||||||||||
Total non-interest income | 2,149,662 | 1,971,851 | 1,761,385 | 5,895,883 | 5,329,549 | |||||||||||||
Non-Interest Expense: | ||||||||||||||||||
Salaries and associate benefits | 627,358 | 667,904 | 554,504 | 1,970,433 | 1,607,113 | |||||||||||||
Marketing | 332,693 | 326,067 | 368,498 | 989,654 | 1,048,964 | |||||||||||||
Communications and data processing | 194,551 | 192,620 | 183,020 | 569,405 | 524,958 | |||||||||||||
Supplies and equipment | 134,639 | 116,434 | 111,625 | 384,971 | 322,837 | |||||||||||||
Occupancy | 77,597 | 75,843 | 49,710 | 230,835 | 151,840 | |||||||||||||
Restructuring expense | 19,354 | 91,074 | — | 110,428 | — | |||||||||||||
Other | 548,029 | 564,593 | 459,272 | 1,687,077 | 1,325,293 | |||||||||||||
Total non-interest expense | 1,934,221 | 2,034,535 | 1,726,629 | 5,942,803 | 4,981,005 | |||||||||||||
Income from continuing operations before income taxes | 1,244,381 | 1,079,184 | 898,705 | 3,378,386 | 3,083,737 | |||||||||||||
Income taxes | 428,010 | 311,572 | 310,866 | 1,108,279 | 1,059,972 | |||||||||||||
Income from continuing operations, net of tax(2) | 816,371 | 767,612 | 587,839 | 2,270,107 | 2,023,765 | |||||||||||||
(Loss) from discontinued operations, net of tax | (898,029 | ) | (17,240 | ) | — | (926,343 | ) | — | ||||||||||
Net (loss) income | $ | (81,658 | ) | $ | 750,372 | $ | 587,839 | $ | 1,343,764 | $ | 2,023,765 | |||||||
Basic earnings per share | ||||||||||||||||||
Net income from continuing operations | $ | 2.11 | $ | 1.96 | $ | 1.95 | $ | 5.74 | $ | 6.73 | ||||||||
Net (loss) from discontinued operations | (2.32 | ) | (0.04 | ) | — | (2.34 | ) | — | ||||||||||
Net (loss) income | $ | (0.21 | ) | $ | 1.92 | $ | 1.95 | $ | 3.40 | $ | 6.73 | |||||||
Diluted earnings per share | ||||||||||||||||||
Net income from continuing operations | $ | 2.09 | $ | 1.93 | $ | 1.89 | $ | 5.66 | $ | 6.53 | ||||||||
Net (loss) from discontinued operations | (2.30 | ) | (0.04 | ) | — | (2.31 | ) | — | ||||||||||
Net (loss) income | $ | (0.21 | ) | $ | 1.89 | $ | 1.89 | $ | 3.35 | $ | 6.53 | |||||||
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. |
| (2) | On August 20, 2007, the Company announced that it would cease residential mortgage origination operations of its wholesale mortgage banking unit, GreenPoint Mortgage, which was acquired in Q4 2006. The results of the residential mortgage origination operations are being reported as discontinued operations for each period presented subsequent to the acquisition. |
8
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
| Reported | Quarter Ended 9/30/07 | Quarter Ended 6/30/07(1) | Quarter Ended 9/30/06(1) | ||||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||
Earning assets: | |||||||||||||||||||||||||||
Loans held for investment | 91,744,846 | 2,381,096 | 10.38 | % | 91,144,738 | 2,255,573 | 9.90 | % | 62,428,789 | 1,814,803 | 11.63 | % | |||||||||||||||
Securities available for sale | 20,041,177 | 252,550 | 5.04 | % | 19,144,926 | 237,978 | 4.97 | % | 14,259,073 | 151,616 | 4.25 | % | |||||||||||||||
Other | 5,908,249 | 133,321 | 9.03 | % | 9,140,405 | 145,135 | 6.35 | % | 4,749,636 | 98,652 | 8.31 | % | |||||||||||||||
Total earning assets(2) | $ | 117,694,272 | $ | 2,766,967 | 9.40 | % | $ | 119,430,069 | $ | 2,638,686 | 8.84 | % | $ | 81,437,498 | $ | 2,065,071 | 10.14 | % | |||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||
Interest-bearing deposits | |||||||||||||||||||||||||||
NOW accounts | $ | 4,759,665 | $ | 34,030 | 2.86 | % | $ | 5,115,994 | $ | 36,764 | 2.87 | % | $ | 619,460 | $ | 4,816 | 3.11 | % | |||||||||
Money market deposit accounts | 28,696,735 | 294,873 | 4.11 | % | 27,612,189 | 276,038 | 4.00 | % | 11,237,206 | 103,073 | 3.67 | % | |||||||||||||||
Savings accounts | 8,345,638 | 37,474 | 1.80 | % | 8,409,684 | 36,294 | 1.73 | % | 3,911,765 | 28,604 | 2.92 | % | |||||||||||||||
Other Consumer Time Deposits | 17,203,453 | 194,256 | 4.52 | % | 18,494,150 | 217,700 | 4.71 | % | 14,325,784 | 153,881 | 4.30 | % | |||||||||||||||
Public Fund CD’s of $100,000 or more | 1,884,767 | 23,092 | 4.90 | % | 1,981,883 | 24,290 | 4.90 | % | 1,022,465 | 13,046 | 5.10 | % | |||||||||||||||
CD’s of $100,000 or more | 8,673,860 | 103,296 | 4.76 | % | 9,609,949 | 107,491 | 4.47 | % | 8,302,487 | 95,229 | 4.59 | % | |||||||||||||||
Foreign time deposits | 3,991,056 | 53,070 | 5.32 | % | 3,994,639 | 51,026 | 5.11 | % | 3,564,708 | 43,922 | 4.93 | % | |||||||||||||||
Total Interest-bearing deposits | $ | 73,555,174 | $ | 740,091 | 4.02 | % | $ | 75,218,488 | $ | 749,603 | 3.99 | % | $ | 42,983,875 | $ | 442,571 | 4.12 | % | |||||||||
Senior and subordinated notes | 9,811,821 | 144,643 | 5.90 | % | 9,336,130 | 134,061 | 5.74 | % | 6,544,768 | 96,300 | 5.89 | % | |||||||||||||||
Other borrowings | 18,892,876 | 257,759 | 5.46 | % | 17,124,784 | 216,441 | 5.06 | % | 18,010,737 | 231,685 | 5.15 | % | |||||||||||||||
Total interest-bearing liabilities | $ | 102,259,871 | $ | 1,142,493 | 4.47 | % | $ | 101,679,402 | $ | 1,100,105 | 4.33 | % | $ | 67,539,380 | $ | 770,556 | 4.56 | % | |||||||||
Net interest spread | 4.93 | % | 4.51 | % | 5.58 | % | |||||||||||||||||||||
Interest income to average earning assets | 9.40 | % | 8.84 | % | 10.14 | % | |||||||||||||||||||||
Interest expense to average earning assets | 3.88 | % | 3.69 | % | 3.78 | % | |||||||||||||||||||||
Net interest margin | 5.52 | % | 5.15 | % | 6.36 | % | |||||||||||||||||||||
| (1) | Prior period amounts have been reclassified to conform with current period presentation. |
| (2) | Average balances, income and expenses, yields and rates are based on continuing operations. |
9
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
| Managed(1) | Quarter Ended 9/30/07 | Quarter Ended 6/30/07(2) | Quarter Ended 9/30/06(2) | ||||||||||||||||||||||||
| Average | Income/ | Yield/ | Average | Income/ | Yield/ | Average | Income/ | Yield/ | |||||||||||||||||||
| Balance | Expense | Rate | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||||||
Earning assets: | |||||||||||||||||||||||||||
Loans held for investment | 143,781,268 | 4,324,272 | 12.03 | % | 142,616,011 | 4,055,689 | 11.38 | % | 110,512,266 | 3,401,130 | 12.31 | % | |||||||||||||||
Securities available for sale | 20,041,177 | 252,550 | 5.04 | % | 19,144,926 | 237,978 | 4.97 | % | 14,259,073 | 151,616 | 4.25 | % | |||||||||||||||
Other | 3,755,869 | 69,610 | 7.41 | % | 7,080,441 | 86,709 | 4.90 | % | 2,970,236 | 43,128 | 5.81 | % | |||||||||||||||
Total earning assets(3) | $ | 167,578,314 | $ | 4,646,432 | 11.09 | % | $ | 168,841,378 | $ | 4,380,376 | 10.38 | % | $ | 127,741,575 | $ | 3,595,874 | 11.26 | % | |||||||||
Interest-bearing liabilities: | �� | ||||||||||||||||||||||||||
Interest-bearing deposits | |||||||||||||||||||||||||||
NOW accounts | $ | 4,759,665 | $ | 34,030 | 2.86 | % | $ | 5,115,994 | $ | 36,764 | 2.87 | % | $ | 619,460 | $ | 4,816 | 3.11 | % | |||||||||
Money market deposit accounts | 28,696,735 | 294,873 | 4.11 | % | 27,612,189 | 276,038 | 4.00 | % | 11,237,206 | 103,073 | 3.67 | % | |||||||||||||||
Savings accounts | 8,345,638 | 37,474 | 1.80 | % | 8,409,684 | 36,294 | 1.73 | % | 3,911,765 | 28,604 | 2.92 | % | |||||||||||||||
Other Consumer Time Deposits | 17,203,453 | 194,256 | 4.52 | % | 18,494,150 | 217,700 | 4.71 | % | 14,325,784 | 153,881 | 4.30 | % | |||||||||||||||
Public Fund CD’s of $100,000 or more | 1,884,767 | 23,092 | 4.90 | % | 1,981,883 | 24,290 | 4.90 | % | 1,022,465 | 13,046 | 5.10 | % | |||||||||||||||
CD’s of $100,000 or more | 8,673,860 | 103,296 | 4.76 | % | 9,609,949 | 107,491 | 4.47 | % | 8,302,487 | 95,229 | 4.59 | % | |||||||||||||||
Foreign time deposits | 3,991,056 | 53,070 | 5.32 | % | 3,994,639 | 51,026 | 5.11 | % | 3,564,708 | 43,922 | 4.93 | % | |||||||||||||||
Total Interest-bearing deposits | $ | 73,555,174 | $ | 740,091 | 4.02 | % | $ | 75,218,488 | $ | 749,603 | 3.99 | % | $ | 42,983,875 | $ | 442,571 | 4.12 | % | |||||||||
Senior and subordinated notes | 9,811,821 | 144,643 | 5.90 | % | 9,336,130 | 134,061 | 5.74 | % | 6,544,768 | 96,300 | 5.89 | % | |||||||||||||||
Other borrowings | 18,892,876 | 257,759 | 5.46 | % | 17,124,784 | 216,441 | 5.06 | % | 18,010,737 | 231,672 | 5.15 | % | |||||||||||||||
Securitization liability | 51,320,446 | 700,501 | 5.46 | % | 50,841,894 | 666,926 | 5.25 | % | 47,648,021 | 607,510 | 5.10 | % | |||||||||||||||
Total interest-bearing liabilities | $ | 153,580,317 | $ | 1,842,994 | 4.80 | % | $ | 152,521,296 | $ | 1,767,031 | 4.63 | % | $ | 115,187,401 | $ | 1,378,053 | 4.79 | % | |||||||||
Net interest spread | 6.29 | % | 5.75 | % | 6.47 | % | |||||||||||||||||||||
Interest income to average earning assets | 11.09 | % | 10.38 | % | 11.26 | % | |||||||||||||||||||||
Interest expense to average earning assets | 4.40 | % | 4.19 | % | 4.32 | % | |||||||||||||||||||||
Net interest margin | �� | 6.69 | % | 6.19 | % | 6.94 | % | ||||||||||||||||||||
| (1) | The information in this table reflects the adjustment to add back the effect of securitized loans. |
| (2) | Prior period amounts have been reclassified to conform with current period presentation. |
| (3) | Average balances, income and expenses, yields and rates are based on continuing operations. |
10
News Release
FOR IMMEDIATE RELEASE: October 18, 2007
| Contacts: | Investor Relations | Media Relations | ||||
| Jeff Norris | Tatiana Stead | Julie Rakes | ||||
| 703-720-2455 | 703-720-2352 | 804-284-5800 | ||||
Capital One Reports Third Quarter Earnings
Affirms earnings guidance of approximately $5.00 per share in 2007
McLean, Va. (Oct. 18, 2007) – Capital One Financial Corporation (NYSE: COF) today announced a net loss for the third quarter of 2007 of $81.6 million, or $0.21 per share (diluted). Earnings were $2.09 per share (diluted) excluding the loss from discontinued operations of $898.0 million related to the shutdown of GreenPoint Mortgage announced in August 2007. This compares to net income of $587.8 million, or $1.89 per share (diluted), for the third quarter of 2006, and income from continuing operations of $767.6 million, or $1.93 per share (diluted), for the second quarter of 2007. Additionally, the Company continues to expect earnings for 2007 of approximately $5.00 per share (diluted).
“Capital One remains focused on driving revenue growth, reducing costs, and effectively deploying capital to generate strong returns for our investors,” said Richard D. Fairbank, Capital One’s Chairman and Chief Executive Officer. “Our businesses are generating robust revenue margins, even as we continue to take a cautious approach to underwriting and managing credit risk in the current environment.”
Highlights of the quarter:
| • | Announced the shutdown of GreenPoint Mortgage, which is largely complete. When the Company announced the shutdown, it estimated total after-tax charges to be $860 million, whereas the total impact in the third quarter of 2007 was approximately $883 million due primarily to increased valuation adjustments. The Company expects to incur approximately $23 million of additional after-tax charges associated with GreenPoint Mortgage in the fourth quarter of 2007 and into early 2008. |
| • | Executed $477.5 million of open market share repurchases in the quarter, and completed the $1.5 billion Accelerated Share Repurchase program that was launched in April. The Company expects to complete the $3.0 billion share repurchase program in the fourth quarter with additional repurchases of $772.5 million. |
| • | Successfully executed $3.8 billion in funding transactions despite difficult capital market conditions. |
| • | Company-wide cost initiative and bank integration programs remain on track. |
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Capital One Reports Third Quarter Earnings
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“Earnings from continuing operations in the third quarter grew 6.4 percent over the second quarter of 2007 driven by increased revenues which more than offset increased credit costs in the quarter,” said Gary L. Perlin, Capital One’s Chief Financial Officer. “We also realized significant operating leverage. Continued cost discipline and capital management will be two key drivers of future shareholder returns.”
Total Company Results
| • | Total deposits at the end of the third quarter of $83.3 billion were down $2.3 billion from the second quarter of 2007 primarily as a result of the intended run-off of high cost brokered and public deposits. |
| • | Managed loans held for investment from continuing operations increased from the previous quarter by $1.3 billion driven largely by the growth in Global Financial Services. |
| • | Total managed revenue is up 8.0 percent relative to the second quarter of 2007 driven largely by revenue margin expansion in our U.S. Card sub-segment. The company expects 2008 revenue growth to be in-line or slightly higher than asset growth. |
| • | Provision expense was up quarter over quarter and year over year, in anticipation of higher charge-offs over the next twelve months, primarily in U.S. Card and Auto Finance.The provision increase related to continuing operations of $124.2 million is net of a $91.4 million release in allowance associated with the integration of bank allowance methodologies. Without this methodology change, the allowance would have increased $215.6 million due primarily to a build in the National Lending segment. |
| • | Operating expenses declined $35.2 million relative to the second quarter of 2007 driven by continued efficiency gains across the businesses. Looking forward, the company expects its operating efficiency ratio to be in the mid-forty percent range for the full year 2008. |
Segment Results
Local Banking Segment highlights relative to Q2 2007
| • | Net income of $192.3 million was up $47.5 million over the second quarter due primarily to a third quarter release in reserves that resulted from aligning the Banking segment’s allowance methodologies with the company’s methodology. |
| • | Loans held for investment were essentially flat relative to the second quarter of 2007 at $42.2 billion. Total Bank deposits declined $1.1 billion to $73.4 billion. |
Capital One Reports Third Quarter Earnings
Page 3
| • | Credit at the Bank remained strong and stable, with the net charge-off rate at 19 basis points and non-performing loans at 27 basis points. |
| • | Integration efforts continue to be on track. |
National Lending Segment
Following are highlights from the National Lending Segment, followed by highlights from each of the sub-segments of National Lending: U.S. Card, Global Financial Services (GFS), and Auto Finance. Mortgage Finance information is now included in Discontinued Operations.
| • | Profits for the National Lending segment were up 11.8 percent as compared to the third quarter of 2006, driven by increased profits in U.S. Card and GFS. |
| • | The managed charge-off rate for the National Lending segment increased 71 basis points to 3.96 percent in the third quarter of 2007 from 3.25 percent in the third quarter of 2006 due to normalization of credit year over year and as a result of a mix shift in U.S. Card and credit worsening in Auto Finance. The delinquency rate of 4.70 percent for National Lending increased from 3.70 percent as of September 30, 2006. |
U.S. Card highlights relative to Q3 2006
| • | U.S. Card reported net income of $560.8 million, a 21.5 percent increase, year over year, driven by growth in revenue and reductions in non-interest expenses. |
| • | Revenue increased 13.2 percent from the third quarter of 2006 largely as a result of pricing changes implemented in some of the company’s products after completion of the card holder system conversion. This increase was partially offset by an increase in provision expense resulting from increased credit costs in the quarter and an allowance build for expected future credit losses. |
| • | Non-interest expenses declined 9.3 percent as the business began to leverage its new infrastructure to streamline processes and reduce costs as a part of the broader corporate cost initiative. |
| • | Managed loans declined from the third quarter of 2006 by 3.0 percent, or $1.6 billion to $49.6 billion at September 30, 2007, resulting from the continued low levels of marketing of teaser rate offers in the prime market and a $600.0 million portfolio sale in the first quarter of 2007. |
| • | Charge-offs rose in the third quarter of 2007 to 4.13 percent from 3.39 percent in the third quarter of 2006, and delinquencies rose to 4.46 percent from 3.53 percent. The increases |
Capital One Reports Third Quarter Earnings
Page 4
resulted primarily from continued normalization of consumer credit and the mix effects of the company’s decline in prime revolver loans. Given current loan growth and delinquency trends, the company expects the U.S. Card charge-off rate to be around 5.25 percent in the fourth quarter. |
| • | Delinquencies increased 105 basis points from the sequential quarter primarily due to normal seasonality, the company’s change to a 25 day grace period, changes in the company’s pricing and fee policies, and mix effects of the decline in prime revolver loan balances. These delinquency trends are consistent with the expected rise in card charge-offs in the fourth quarter. |
Global Financial Services (GFS) highlights relative to Q3 2006
| • | Net income rose 10.5 percent from the third quarter of 2006, to $118.4 million. Net income growth resulted from strong growth in revenues partially offset by higher provision expense. |
| • | Managed loans as of September 30, 2007 grew 7.6 percent, to $28.6 billion relative to September 30, 2006, with growth from North American businesses more than offsetting a modest decline in loans in the UK. About half of the dollar growth resulted from stronger Canadian and UK currencies versus the third quarter of 2006. |
| • | Risk metrics were up modestly from the third quarter of 2006 as expected normalization continues in the U.S. Credit in the UK remains stable. |
Auto Finance highlights relative to Q3 2006
| • | Auto Finance posted a net loss of $3.8 million in the quarter. A 5.8 percent increase in revenues was more than offset by a 51.7 percent increase in provision. |
| • | Charge-off and delinquencies increases were a result of continued consumer credit normalization from historically low levels in the third quarter of 2006, continued elevated losses, and delinquencies in recent Dealer Prime vintages, and industry-wide increases in loan-to-value ratios and extended loan terms in subprime. |
| • | Originations in the third quarter of $3.2 billion were up 2.9 percent compared to the year ago third quarter. |
| • | Managed loans of $24.3 billion as of September 30, 2007 were up 15.0 percent relative to the third quarter of 2006 from ongoing originations as well as the addition of loans from the North Fork portfolio. |
Capital One Reports Third Quarter Earnings
Page 5
The company generates earnings from its managed loan portfolio, which includes both on-balance sheet loans and securitized (off-balance sheet) loans. For this reason, the company believes managed financial measures to be useful to stakeholders. In compliance with Regulation G of the Securities and Exchange Commission, the company is providing a numerical reconciliation of managed financial measures to comparable measures calculated on a reported basis using generally accepted accounting principles (GAAP). Please see the schedule titled “Reconciliation to GAAP Financial Measures” attached to this release for more information.
Forward looking statements
The company cautions that its current expectations in this release, in the presentation slides available on the company’s website and in its Form 8-K dated October 18, 2007 for 2007 earnings, loan and deposit growth, revenue growth, return on equity, projected charge-offs for the fourth quarter of 2007 and for 2008, credit trends, dividends, operating efficiencies and ongoing cost reductions, including future financial and operating results, and the company’s plans, objectives, expectations, and intentions, are forward-looking statements and actual results could differ materially from current expectations due to a number of factors, including: the risk that the company’s acquired businesses will not be integrated successfully and that the cost savings and other synergies from such acquisitions may not be fully realized; continued intense competition from numerous providers of products and services which compete with Capital One’s businesses; changes in our aggregate accounts and balances, and the growth rate and composition thereof; the risk that the benefits of the company’s restructuring initiative, including cost savings and other benefits, may not be fully realized; the success of the company’s marketing efforts; general economic conditions affecting interest rates and consumer income, spending, and savings which may affect consumer bankruptcies, defaults, charge-offs and deposit activity; changes in the labor market; general secondary market conditions in the mortgage industry; changes in the credit environment in the U.S. and or the UK; 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, 2006, and reports on Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007.
About Capital One
Headquartered in McLean, Virginia, Capital One Financial Corporation (www.capitalone.com) is a financial holding company, with 732 locations in New York, New Jersey, Connecticut, Texas and Louisiana. Its principal subsidiaries, Capital One Bank, Capital One Auto Finance, Inc., and Capital
Capital One Reports Third Quarter Earnings
Page 6
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 $83.3 billion in deposits and $146.4 billion in managed loans outstanding as of September 30, 2007. Capital One, a Fortune 500 company, trades on the New York Stock Exchange under the symbol “COF” and is included in the S&P 100 index.
###
NOTE: Third quarter 2007 financial results, SEC Filings, and first 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.