SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
July 12, 2000
(Date of earliest event reported)
Capital One Financial Corporation
(Exact name of registrant as specified in its charter)
Delaware 1-13300 54-1719854
(State of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
2980 Fairview Park Drive
Suite 1300
Falls Church, Virginia 22042
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 205-1000
Item 5. Other Events.
(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 services companies to obtain,
use and share consumer 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.
99.1. Press Release of the Company dated July 12, 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: July 12, 2000 By: /s/ John G. Finneran, Jr.
--------------------------------------
John G. Finneran, Jr.
Senior Vice President, General Counsel
and Corporate Secretary
EXHIBIT INDEX
99.1 Press Release of the Company dated July 12, 2000.
Exhibit 99.1
FOR IMMEDIATE RELEASE: Contact: Paul Paquin Tatiana Stead
July 12, 2000 V.P., Investor Relations Media Relations
(703) 205-1039 (703) 289-6872
Capital One Reports Record Second Quarter Earnings
Falls Church, Va. (July 12, 2000) -- Capital One Financial Corporation (NYSE:
COF) today announced record second quarter 2000 earnings of $0.54 per share, or
$112.5 million, versus earnings of $0.41 per share, or $87.5 million, for the
comparable period in the prior year, an increase of 32 percent.
"Our results reflect the power of our information-based strategy in
providing each of our more than 27 million customers with a unique and tailored
journey through Capital One," said Richard D. Fairbank, Capital One's Chairman
and Chief Executive Officer. "Our ability to deliver the right product to the
right customer has allowed us to add 20,000 net new customers a day and grow our
managed loans by an annualized rate of more than 30 percent during the quarter."
During the second quarter, Capital One added 1.8 million net new
accounts, bringing total accounts to 27.1 million. For the quarter, Capital
One's managed consumer loan balances increased by $1.6 billion to $21.9 billion.
"This robust growth generates the earnings power to deliver a strong bottom line
while investing heavily in our future," said Fairbank. On the Internet, on line
account originations and on line account servicing increased to 410 thousand and
640 thousand, respectively, as of the end of the second quarter.
"Relentless scientific testing has fueled spectacular performance
across the board and will be a springboard to continued stellar results," said
Nigel W. Morris, Capital One's President and Chief Operating Officer. "A key to
measuring this success is our risk-adjusted margin which reached an all time
record of 17.03 percent, up from the previous record of 16.57 percent set last
quarter."
The managed net charge-off rate remained under four percent for the
sixth straight quarter and was 3.97 percent for the three months ending June 30,
2000. In addition, the Company added $35 million to the allowance for loan
losses during the second quarter of 2000, increasing the allowance to $407
million or 3.58 percent of reported consumer loans, as of June 30, 2000.
Contributing to the strong account and managed loan growth during the
quarter was an increase in marketing expense to a record $212 million compared
to $202 million in the first quarter of 2000 and $178 million in the comparable
period of the prior year. Other non-interest expenses (excluding marketing) for
the second quarter of 2000 were $531 million, resulting in an annualized
operating cost per account of $80.97, down from $82.93 for the first quarter of
2000 and $91.93 for the comparable period in the prior year.
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 27.1 million accounts and
$21.9 billion in managed loans outstanding as of June 30, 2000. Capital One is
one of the major financial service 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. Capital One is a FORTUNE 500
company that 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 5:00pm
(EDT) analyst 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 2000 1999 1999 1999
(in millions, except per share data Q2 Q1 Q4 Q3 Q2
and as noted)
- -------------------------------------------------------------------------------------------------------
Earnings (Managed Basis)
Net Interest Income $ 614.4 $ 618.9 $ 574.8 $ 558.9 $ 527.1
Non-Interest Income 554.4 489.3 473.6 438.6 398.5
----------------------------------------------------------------
Total Revenue 1,168.8 1,108.2 1,048.4 997.5 925.6
Provision for Loan Losses 245.0 226.1 218.0 214.3 178.3
Marketing Expenses 211.6 201.9 202.4 175.2 178.2
Operating Expenses 530.7 508.0 478.8 454.3 427.9
----------------------------------------------------------------
Income Before Taxes 181.5 172.1 149.2 153.8 141.1
Tax Rate 38.0% 38.0% 34.4% 38.0% 38.0%
Net Income $ 112.5 $ 106.7 $ 97.9 $ 95.4 $ 87.5
- -------------------------------------------------------------------------------------------------------
Common Share Statistics
Basic EPS $ 0.57 $ 0.54 $ 0.50 $ 0.48 $ 0.44
Diluted EPS $ 0.54 $ 0.51 $ 0.47 $ 0.45 $ 0.41
Dividends Per Share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period end) $ 8.39 $ 7.93 $ 7.69 $ 7.29 $ 7.11
Stock Price Per Share (period end) $ 44.63 $ 47.94 $ 48.19 $ 39.00 $ 55.69
Total Market Capitalization (period end) $8,747.4 $9,376.5 $9,495.2 $7,686.9 $10,991.3
Shares Outstanding (period end) 196.0 195.6 197.0 197.1 197.4
Shares Used to Compute Basic EPS 196.0 196.6 197.3 197.4 197.6
Shares Used to Compute Diluted EPS 208.6 208.7 210.3 210.1 211.5
- -------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period avg.)
Average Loans $ 20,915 $ 20,181 $ 18,974 $ 18,162 $ 17,598
Average Earning Assets $ 22,581 $ 22,038 $ 21,323 $ 20,060 $ 19,428
Average Assets $ 24,567 $ 23,497 $ 22,714 $ 21,563 $ 20,714
Average Equity $ 1,626 $ 1,567 $ 1,493 $ 1,461 $ 1,374
Net Interest Margin 10.88% 11.23% 10.78% 11.14% 10.85%
Risk Adjusted Margin (1) 17.03% 16.57% 16.24% 16.38% 15.68%
Return on Average Assets (ROA) 1.83% 1.82% 1.72% 1.77% 1.69%
Return on Average Equity (ROE) 27.68% 27.24% 26.22% 26.12% 25.47%
Net Charge-Off Rate 3.97% 3.87% 3.86% 3.88% 3.73%
Net Charge-Offs $ 207.6 $ 195.3 $ 182.9 $ 176.0 $ 164.0
Cost Per Account (in dollars) $ 80.97 $ 82.93 $ 85.98 $ 90.72 $ 91.93
- -------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period end)
Reported Loans $ 11,383 $ 9,449 $ 9,914 $ 8,286 $ 7,427
Securitized Loans 10,500 10,850 10,323 10,231 10,433
----------------------------------------------------------------
Total Loans $ 21,883 $ 20,299 $ 20,237 $ 18,517 $ 17,860
Delinquency Rate (30+ days) 5.35% 5.26% 5.23% 5.06% 4.72%
Number of Accounts (000's) 27,133 25,302 23,705 20,845 19,213
Total Assets $ 25,610 $ 23,361 $ 23,638 $ 21,577 $ 20,985
Capital, Including Preferred Interests $1,743.9 $1,649.3 $1,613.7 $1,535.3 $ 1,501.0
Capital to Managed Assets Ratio 6.81% 7.06% 6.83% 7.12% 7.15%
- -------------------------------------------------------------------------------------------------------------------
(1) 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)
June 30 March 31 June 30
2000 2000 1999
------------ ------------- --------------
Assets:
Cash and due from banks $ 100,999 $ 84,084 $ 25,582
Federal funds sold and resale agreements 10,000 18,000
Interest-bearing deposits at other banks 78,226 96,491 72,616
------------- ------------- -------------
Cash and cash equivalents 189,225 198,575 98,198
Securities available for sale 1,507,770 1,519,027 1,615,422
Consumer loans 11,382,780 9,449,498 7,426,974
Less: Allowance for loan losses (407,000) (372,000) (266,000)
------------- ------------- -------------
Net loans 10,975,780 9,077,498 7,160,974
Premises and equipment, net 545,262 501,238 347,168
Interest receivable 51,799 81,967 60,858
Accounts receivable from securitizations 1,302,424 666,972 886,680
Other 554,631 479,781 411,324
------------- ------------- -------------
Total assets $ 15,126,891 $ 12,525,058 $ 10,580,624
============= ============= =============
Liabilities:
Interest-bearing deposits $ 5,288,927 $ 4,096,241 $ 2,414,933
Other borrowings 2,773,050 1,955,978 1,454,422
Senior notes 4,176,394 3,818,936 4,539,776
Interest payable 96,493 88,438 101,150
Other 1,146,451 1,014,384 667,407
------------- ------------- -------------
Total liabilities 13,481,315 10,973,977 9,177,688
Stockholders' Equity:
Common stock 1,997 1,997 1,997
Paid-in capital, net 578,915 598,012 626,796
Retained earnings and cumulative other comprehensive income 1,197,370 1,092,021 852,105
Less: Treasury stock, at cost (132,706) (140,949) (77,962)
------------- ------------- -------------
Total stockholders' equity 1,645,576 1,551,081 1,402,936
------------- ------------- -------------
Total liabilities and stockholders' equity $ 15,126,891 $ 12,525,058 $ 10,580,624
============= ============= =============
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended Six Months Ended
June 30 March 31 June 30 June 30 June 30
2000 2000 1999 2000 1999
---------- ---------- ---------- ------------- ------------
Interest Income:
Consumer loans, including fees $ 511,886 $ 488,937 $ 353,193 $ 1,000,823 $ 678,260
Securities available for sale 22,845 24,734 23,522 47,579 49,745
Other 1,776 1,776 1,058 3,552 2,839
---------- ---------- ----------- ------------- ------------
Total interest income 536,507 515,447 377,773 1,051,954 730,844
Interest Expense:
Deposits 63,619 52,120 26,438 115,739 50,380
Other borrowings 46,914 41,454 21,196 88,368 46,748
Senior notes 62,016 68,376 80,654 130,392 153,149
---------- ---------- ----------- ------------- ------------
Total interest expense 172,549 161,950 128,288 334,499 250,277
---------- ---------- ----------- ------------- ------------
Net interest income 363,958 353,497 249,485 717,455 480,567
Provision for loan losses 151,010 126,525 74,301 277,535 148,887
---------- ---------- ----------- ------------- ------------
Net interest income after provision for loan 212,948 226,972 175,184 439,920 331,680
losses
Non-Interest Income:
Servicing and securitizations 282,640 270,758 293,606 553,398 565,560
Service charges and other fees 374,706 341,232 244,874 715,938 467,327
Interchange 53,461 43,070 33,567 96,531 63,786
---------- ---------- ----------- ------------- ------------
Total non-interest income 710,807 655,060 572,047 1,365,867 1,096,673
Non-Interest Expense:
Salaries and associate benefits 236,618 234,836 194,461 471,454 373,655
Marketing 211,560 201,938 178,242 413,498 354,330
Communications and data processing 72,933 70,822 62,478 143,755 120,550
Supplies and equipment 58,167 52,274 42,303 110,441 79,007
Occupancy 27,250 25,292 16,381 52,542 30,295
Other 135,736 124,758 112,272 260,494 196,553
---------- ---------- ----------- ------------- -----------
Total non-interest expense 742,264 709,920 606,137 1,452,184 1,154,390
---------- ---------- ----------- ------------- ------------
Income before income taxes 181,491 172,112 141,094 353,603 273,963
Income taxes 68,966 65,403 53,616 134,369 104,106
---------- ---------- ----------- ------------- ------------
========== ========== =========== ============= ===========
Net income $ 112,525 $ 106,709 $ 87,478 $ 219,234 $ 169,857
========== ========== =========== ============= ============
Basic earnings per share $ 0.57 $ 0.54 $ 0.44 $ 1.11 $ 0.86
========== ========== =========== ============= ============
Diluted earnings per share $ 0.54 $ 0.51 $ 0.41 $ 1.05 $ 0.80
========== ========== =========== ============= ============
Dividends paid per share $ 0.03 $ 0.03 $ 0.03 $ 0.05 $ 0.05
========== ========== =========== ============= ============
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 6/30/00 Quarter Ended 3/31/00
--------------------------------- --------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ------ ------- ------- ------
Earning assets:
Consumer loans $ 20,915,125 $ 937,935 17.94% $ 20,181,373 $ 911,418 18.06%
Securities available for sale 1,519,369 22,845 6.01 1,681,537 24,734 5.88
Other 146,760 1,776 4.84 174,658 1,776 4.07
-------------------------------------------------------------------------
Total earning assets $ 22,581,254 $ 962,556 17.05% $ 22,037,568 $ 937,928 17.02%
======================== ==========================
Interest-bearing liabilities:
Deposits $ 4,495,242 $ 63,619 5.66% $ 3,894,250 $ 52,120 5.35%
Other borrowings 2,687,569 46,914 6.98 2,504,724 41,454 6.62
Senior notes 3,659,603 62,016 6.78 4,019,484 68,376 6.80
Securitization liability 10,870,733 175,655 6.46 10,458,226 57,124 6.01
--------------------------------- -------------------------------------
Total interest-bearing liabilities $ 21,713,147 $ 348,204 6.41% $ 20,876,684 $ 319,074 6.11%
========================= ==========================
======= =======
Net interest spread 10.64% 10.91%
======= =======
Interest income to average earning assets 17.05% 17.02%
Interest expense to average earning assets 6.17 5.79
======= =======
Net interest margin 10.88% 11.23%
======= =======
(1) The information in this table reflects the adjustment to add back the effect
of securitized loans.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 6/30/99
--------------------------------
Average Income/ Yield/
Balance Expense Rate
------- ------- -----
Earning assets:
Consumer loans $ 17,597,571 $ 766,595 17.43%
Securities available for sale 1,673,433 23,522 5.62
Other 157,425 1,058 2.69
--------------------------------
Total earning assets $ 19,428,429 $ 791,175 16.29%
======================
Interest-bearing liabilities:
Deposits $ 2,270,769 $ 26,438 4.66%
Other borrowings 1,599,977 21,196 5.30
Senior notes 4,620,921 80,654 6.98
Securitization liability 10,161,421 135,788 5.35
-------------------------------
Total interest-bearing liabilities $ 18,653,088 $ 264,076 5.66%
====================== =======
Net interest spread 10.63%
========
Interest income to average earning assets 16.29%
Interest expense to average earning assets 5.44
========
Net interest margin 10.85%
========
(1) The information in this table reflects the adjustment to add back the effect
of securitized loans.