SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
April 13, 2000
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(Date of earliest event reported)
Capital One Financial Corporation
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(Exact name of registrant as specified in its charter)
Delaware 1-13300 54-1719854
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(State of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
2980 Fairview Park Drive
Suite 1300
Falls Church, Virginia 22042
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 205-1000
Item 5. Other Events.
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(a) See attached press release.
(b) Cautionary Factors
The attached press release contains forward-looking statements which
involve a number of risks and uncertainties. The Company cautions readers that
any forward-looking information is not a guarantee of future performance and
that actual results could differ materially from those contained in the
forward-looking information as a result of various factors including, but not
limited to, the following: continued intense competition from numerous providers
of products and services which compete with the Company's businesses; with
respect to financial and other products, changes in the Company's aggregate
accounts or consumer loan balances and the growth rate thereof, including
changes resulting from factors such as shifting product mix, amount of actual
marketing expenses made by the Company and attrition of accounts and loan
balances; an increase in credit losses (including increases due to a worsening
of general economic conditions); the ability of the Company to continue to
securitize its credit cards and consumer loans and to otherwise access the
capital markets at attractive rates and terms to fund its operations and future
growth; difficulties or delays in the development, production, testing and
marketing of new products or services; losses associated with new products or
services or expansion internationally; financial, legal, regulatory or other
difficulties that may affect investment in, or the overall performance of, a
product or business, including changes in existing laws to regulate further the
credit card and consumer loan industry and the financial services industry, in
general (including the flexibility of financial service companies to use and
share data); the amount of, and rate of growth in, the Company's expenses
(including salaries and associate benefits and marketing expenses) as the
Company's business develops or changes or as it expands into new market areas;
the availability of capital necessary to fund the Company's new businesses; the
ability of the Company to build the operational and organizational
infrastructure necessary to engage in new businesses or to expand
internationally; the ability of the Company to recruit experienced personnel to
assist in the management and operations of new products and services; and other
factors listed from time to time in the Company's SEC reports, including, but
not limited to, the Annual Report on Form 10-K for the year ended December 31,
1999 (Part I, Item 1, Risk Factors).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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99.1. Press Release of the Company dated April 13, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned, thereto duly authorized.
CAPITAL ONE FINANCIAL CORPORATION
Dated: April 13, 2000 By: /s/ John G. Finneran, Jr.
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John G. Finneran, Jr.
Senior Vice President, General Counsel
and Corporate Secretary
EXHIBIT INDEX
99.1 Press Release of the Company dated April 13, 2000.
Exhibit 99.1
[LOGO OF CAPITAL ONE APPEARS HERE] NEWS RELEASE
FOR IMMEDIATE RELEASE: Contact: Paul Paquin Tatiana Stead
- -------------------- V.P., Investor Relations Media Relations
April 13, 2000 (703) 205-1039 (703) 289-6872
Capital One Reports Record First Quarter Earnings,
Surpasses 25 Million Customer Milestone
Falls Church, Va. (April 13, 2000) -- Capital One Financial Corporation (NYSE:
COF) today announced record first quarter 2000 earnings of $106.7 million, or
$0.51 per share, versus earnings of $82.4 million, or $0.39 per share, for the
comparable period in the prior year. These record earnings per share are up
$0.04 from the fourth quarter of 1999. All earnings per share amounts reflect
the Company's three-for-one stock split distributed on June 1, 1999.
"Our most valuable asset doesn't even appear on our balance sheet. Our
25 million customers comprise one of the largest customer franchises in the
world," said Richard D. Fairbank, Capital One's Chairman and Chief Executive
Officer. During the first quarter, Capital One added 1.6 million net new
accounts, bringing total accounts to 25.3 million.
The Company's managed net interest margin increased to a record 11.23
percent in the first quarter of 2000 versus 10.78 percent in the fourth quarter
of 1999 and 10.55 percent in the comparable period of 1999. The increased
margin, higher non-interest income, and stability in net charge-offs each
contributed to the record risk adjusted margin of 16.57 percent, which compares
to 16.24 percent for the fourth quarter of 1999 and 14.38 percent for the
comparable period in the prior year.
First quarter 2000 revenue, defined as managed net interest income and
non-interest income, rose to $1.1 billion versus $1.0 billion in the fourth
quarter of 1999 and $872 million for the comparable period in the prior year.
For the quarter, Capital One's managed consumer loan balances increased by $62
million to $20.3 billion.
Marketing expense for the first quarter of 2000 remained the same as
the fourth quarter of 1999 at $202 million, and increased over the $176 million
spent in the comparable period of the prior year. Other non-interest expenses
(excluding marketing) for the first quarter of 2000 were $508 million versus
$479 million for the fourth quarter of 1999 and $372 million in the comparable
period of the prior year. Annualized operating expenses per account declined to
$82.93 for the first quarter of 2000 from $85.98 for the fourth quarter of 1999
and $85.74 from the comparable period in the prior year.
The managed net charge-off rate remained stable at 3.87 percent for the
first quarter of 2000 compared to 3.86 percent for the fourth quarter of 1999.
The managed delinquency rate (30+ days) also remained stable at 5.26 percent as
of March 31, 2000, compared to 5.23 percent as of December 31, 1999. The
allowance for loan losses increased by $30 million during the first quarter to
$372 million or 3.94 percent of on-balance sheet receivables as of March 31,
2000, compared to 3.45 percent as of December 31, 1999. The capital to managed
assets ratio was strong as of March 31, 2000, at 7.06 percent.
"Capital One has built a flexible business model and a fast-paced,
exciting, entrepreneurial culture that truly benefits consumers across the
credit spectrum," said Nigel W. Morris, Capital One's President and Chief
Operating Officer. "Our strong risk-adjusted margin reflects our ability to
innovate profitable products while our charge-off rate continues to be the
lowest among the major players in the industry."
Capital One is one of the major financial services providers on the
Internet, with on-line account decisioning, real-time account numbering, on-line
retail deposits and a growing number of customers serviced on-line. "Combining
the power of Capital One's customer base with a robust offering of financial
services and other products on the Internet is one of our key strategic
objectives," said Fairbank.
Headquartered in Falls Church, Virginia, Capital One Financial
Corporation (www.CapitalOne.com) is a holding company whose principal
subsidiaries, Capital One Bank and Capital One, F.S.B., offer consumer lending
products. Capital One's subsidiaries collectively had 25.3 million accounts and
$20.3 billion in managed loans outstanding as of March 31, 2000. As one of the
largest providers of MasterCard and Visa credit cards in the world, Capital One
was recently named to the Fortune 500. Capital One trades on the New York Stock
Exchange under the symbol "COF" and is included in the S&P 500 index.
###
Note: This release, financial information and a live webcast of today's 11:00am
(EDT) analyst conference call is accessible on the Internet on Capital One's
home page (http://www.CapitalOne.com). Click on "Investor Center" to
view/download the earnings press release and other financial information.
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
2000 1999 1999 1999 1999
(in millions, except per share data and as noted) Q1 Q4 Q3 Q2 Q1
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Earnings (Managed Basis)
Net Interest Income $ 618.9 $ 574.8 $ 558.9 $ 527.1 $ 513.9
Non-Interest Income 489.3 473.6 438.6 398.5 357.6
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Total Revenue 1,108.2 1,048.4 997.5 925.6 871.6
Provision for Loan Losses 226.1 218.0 214.3 178.3 190.5
Marketing Expenses 201.9 202.4 175.2 178.2 176.1
Operating Expenses 508.0 478.8 454.3 427.9 372.2
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Income Before Taxes 172.1 149.2 153.8 141.1 132.9
Tax Rate 38.0 % 34.4 % 38.0 % 38.0 % 38.0 %
Net Income $ 106.7 $ 97.9 $ 95.4 $ 87.5 $ 82.4
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Common Share Statistics (1)
Basic EPS $ 0.54 $ 0.50 $ 0.48 $ 0.44 $ 0.42
Diluted EPS $ 0.51 $ 0.47 $ 0.45 $ 0.41 $ 0.39
Dividends Per Share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period end) $ 7.93 $ 7.69 $ 7.29 $ 7.11 $ 6.69
Stock Price Per Share (period end) $ 47.94 $ 48.19 $ 39.00 $ 55.69 $ 50.33
Total Market Capitalization (period end) $9,376.5 $9,495.2 $7,686.9 $10,991.3 $9,929.1
Shares Outstanding (period end) 195.6 197.0 197.1 197.4 197.3
Shares Used to Compute Basic EPS 196.6 197.3 197.4 197.6 197.2
Shares Used to Compute Diluted EPS 208.7 210.3 210.1 211.5 210.0
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Managed Loan Statistics (period avg.)
Average Loans $ 20,181 $ 18,974 $ 18,162 $ 17,598 $ 17,436
Average Earning Assets $ 22,038 $ 21,323 $ 20,060 $ 19,428 $ 19,482
Average Assets $ 23,497 $ 22,714 $ 21,563 $ 20,714 $ 20,722
Average Equity $ 1,567 $ 1,493 $ 1,461 $ 1,374 $ 1,302
Net Interest Margin 11.23 % 10.78 % 11.14 % 10.85 % 10.55 %
Risk Adjusted Margin (2) 16.57 % 16.24 % 16.38 % 15.68 % 14.38 %
Return on Average Assets (ROA) 1.82 % 1.72 % 1.77 % 1.69 % 1.59 %
Return on Average Equity (ROE) 27.24 % 26.22 % 26.12 % 25.47 % 25.32 %
Net Charge-Off Rate 3.87 % 3.86 % 3.88 % 3.73 % 3.93 %
Net Charge-Offs $ 195.3 $ 182.9 $ 176.0 $ 164.0 $ 171.1
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Managed Loan Statistics (period end)
Reported Loans $ 9,449 $ 9,914 $ 8,286 $ 7,427 $ 7,246
Securitized Loans 10,850 10,323 10,231 10,433 10,198
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Total Loans $ 20,299 $ 20,237 $ 18,517 $ 17,860 $ 17,444
Delinquency Rate (30+ days) 5.26 % 5.23 % 5.06 % 4.72 % 4.56 %
Number of Accounts (000's) 25,302 23,705 20,845 19,213 18,022
Total Assets $ 23,361 $ 23,638 $ 21,577 $ 20,985 $ 20,318
Capital, Including Preferred Interests $1,649.3 $1,613.7 $1,535.3 $ 1,501.0 $1,417.2
Capital to Managed Assets Ratio 7.06 % 6.83 % 7.12 % 7.15 % 6.98 %
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(1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1,1999.
(2) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
March 31 December 31 March 31
2000 1999 1999
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Assets:
Cash and due from banks $ 84,084 $ 134,065 $ 13,276
Federal funds sold and resale agreements 18,000
Interest-bearing deposits at other banks 96,491 112,432 34,041
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Cash and cash equivalents 198,575 246,497 47,317
Securities available for sale 1,519,027 1,856,421 1,770,398
Consumer loans 9,449,498 9,913,549 7,245,847
Less: Allowance for loan losses (372,000) (342,000) (251,000)
------------ ------------ ------------
Net loans 9,077,498 9,571,549 6,994,847
Premises and equipment, net 501,238 470,732 283,159
Interest receivable 81,967 64,637 66,184
Accounts receivable from securitizations 666,972 661,922 637,563
Other 479,781 464,685 352,159
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Total assets $12,525,058 $13,336,443 $10,151,627
============ ============ ============
Liabilities:
Interest-bearing deposits $ 4,096,241 $ 3,783,809 $ 2,204,162
Other borrowings 1,955,978 2,780,466 1,269,424
Senior notes 3,818,936 4,180,548 4,610,049
Interest payable 88,438 116,405 87,501
Other 1,014,384 959,608 661,279
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Total liabilities 10,973,977 11,820,836 8,832,415
Stockholders' Equity:
Common stock(1) 1,997 1,997 1,997
Paid-in capital, net(1) 598,012 613,590 605,598
Retained earnings and cumulative other comprehensive income 1,092,021 991,034 779,625
Less: Treasury stock, at cost (140,949) (91,014) (68,008)
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Total stockholders' equity 1,551,081 1,515,607 1,319,212
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Total liabilities and stockholders' equity $12,525,058 $13,336,443 $10,151,627
============ ============ ============
(1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
March 31 December 31 March 31
2000 1999 1999
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Interest Income:
Consumer loans, including fees $ 488,937 $ 417,384 $ 325,067
Securities available for sale 24,734 31,437 26,222
Other 1,776 1,783 1,782
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Total interest income 515,447 450,604 353,071
Interest Expense:
Deposits 52,120 49,409 23,942
Other borrowings 41,454 32,820 25,552
Senior and deposit notes 68,376 72,569 72,495
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Total interest expense 161,950 154,798 121,989
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Net interest income 353,497 295,806 231,082
Provision for loan losses 126,525 120,000 74,586
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Net interest income after provision for loan losses 226,972 175,806 156,496
Non-Interest Income:
Servicing and securitizations 270,758 310,321 271,954
Service charges and other fees 341,232 297,717 222,453
Interchange 43,070 46,585 30,219
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Total non-interest income 655,060 654,623 524,626
Non-Interest Expense:
Salaries and associate benefits 234,836 207,457 179,194
Marketing 201,938 202,405 176,088
Communications and data processing 70,822 75,592 58,072
Supplies and equipment 52,274 54,580 36,704
Occupancy 25,292 22,863 13,914
Other 124,758 118,288 84,281
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Total non-interest expense 709,920 681,185 548,253
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Income before income taxes 172,112 149,244 132,869
Income taxes 65,403 51,372 50,490
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Net income $ 106,709 $ 97,872 $ 82,379
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Basic earnings per share(1) $ 0.54 $ 0.50 $ 0.42
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Diluted earnings per share(1) $ 0.51 $ 0.47 $ 0.39
=========== =========== ===========
Dividends paid per share(1) $ 0.03 $ 0.03 $ 0.03
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(1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 3/31/00 Quarter Ended 12/31/99 Quarter Ended 3/31/99
------------------------------ ------------------------------ ------------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
----------- -------- ------- ----------- -------- ------- ----------- -------- -------
Earning assets:
Consumer loans $20,181,373 $911,418 18.06 % $18,974,409 $848,176 17.88 % $17,435,530 $745,643 17.11 %
Securities available for sale 1,681,537 24,734 5.88 2,175,963 31,437 5.78 1,876,636 26,222 5.59
Other 174,658 1,776 4.07 172,370 2,557 5.93 170,048 1,782 4.19
------------------------------ ------------------------------ ------------------------------
Total earning assets $22,037,568 $937,928 17.02 % $21,322,742 $882,170 16.55 % $19,482,214 $773,647 15.88 %
===================== ===================== ============ ========
Interest-bearing liabilities:
Deposits $ 3,894,250 $ 52,120 5.35 % $ 3,648,919 $ 49,409 5.42 % $ 2,101,086 $ 23,942 4.56 %
Other borrowings 2,504,724 41,454 6.62 2,037,805 32,820 6.44 1,777,980 25,552 5.75
Senior and deposit notes 4,019,484 68,376 6.80 4,258,661 72,569 6.82 4,189,839 72,495 6.92
Securitization liability 10,458,226 157,124 6.01 10,329,929 152,572 5.91 10,570,532 137,720 5.21
------------------------------ ------------------------------ ------------------------------
Total interest-bearing liabilities $20,876,684 $319,074 6.11 % $20,275,314 $307,370 6.06 % $18,639,437 $259,709 5.57 %
===================== ===================== =====================
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Net interest spread 10.91 % 10.49 % 10.31 %
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Interest income to average earning assets 17.02 % 16.55 % 15.88 %
Interest expense to average earning assets 5.79 5.77 5.33
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Net interest margin 11.23 % 10.78 % 10.55 %
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(1) The information in this table reflects the adjustment to add back the effect of securitized loans.