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
October 11, 2000
---------------------------------
(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 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.
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99.1. Press Release of the Company dated October 11, 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: October 11, 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 October 11, 2000.
Exhibit 99.1
FOR IMMEDIATE RELEASE: Contact: Paul Paquin Tatiana Stead
- --------------------- V.P., Investor Relations Media Relations
October 11, 2000 (703) 205-1039 (703) 205-1070
Capital One Reports Record Third Quarter Earnings
Falls Church, Va. (October 11, 2000) -- Capital One Financial Corporation (NYSE:
COF) today announced record third quarter 2000 earnings of $0.58 per share, or
$122.1 million, versus earnings of $0.45 per share, or $95.4 million, for the
comparable period in the prior year, an increase of 29 percent.
"This year continues to be a banner year for Capital One, as our
disciplined marketing strategies and investments are creating great value for
our customers. This quarter we posted our thirteenth consecutive quarter of
record earnings, and we are on track to deliver 30 percent earnings growth for
the year," said Richard D. Fairbank, Capital One's Chairman and Chief Executive
Officer. Fairbank cited the risk-adjusted margin, which reached an all time
record of 17.24 percent, up from the previous record of 17.03 percent set last
quarter, as a key measurement of Capital One's success.
During the third quarter, Capital One added 2.3 million net new
accounts, bringing total accounts to 29.4 million. For the quarter, Capital
One's managed consumer loan balances increased by $2.3 billion to $24.2 billion.
On the Internet, on line account originations and on line account servicing
increased to 760 thousand and 1.2 million, respectively, as of the end of the
third quarter.
"Our robust growth reflects our ability to bring empowering financial
solutions to our more than 29 million customers, while delivering unique
products and services to meet their individual needs," said Nigel W. Morris,
Capital One's President and Chief Operating Officer. "Our ability to deliver the
right product to the right customer allowed us to add more than 25,000 net new
customers a day and grow our managed loans during the quarter by an annualized
rate of more than 40 percent."
Contributing to the strong account and managed loan growth during the
quarter was an increase in marketing expense to a record $233 million compared
to $212 million in the second quarter of 2000 and $175 million in the comparable
period of the prior year.
The managed net charge-off ratio remained under four percent for the
seventh straight quarter and was 3.80 percent for the three months ended
September 30, 2000. In addition, the Company added $50 million to the allowance
for loan losses during the third quarter of 2000, increasing the allowance to
$457 million, or 3.71 percent of reported consumer loans, as of September 30,
2000.
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 29.4 million customers and
$24.2 billion in managed loans outstanding as of September 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.
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CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
(in millions, except per share data 2000 2000 2000 1999 1999
and as noted Q3 Q2 Q1 Q4 Q3
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Earnings (Managed Basis)
Net Interest Income $ 665.1 $ 614.4 $ 618.9 $ 574.8 $ 558.9
Non-Interest Income 619.9 554.4 489.3 473.6 438.6
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Total Revenue 1,285.0 1,168.8 1,108.2 1,048.4 997.5
Provision for Loan Losses 269.0 245.0 226.1 218.0 214.3
Marketing Expenses 233.2 211.6 201.9 202.4 175.2
Operating Expenses 585.8 530.7 508.0 478.8 454.3
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Income Before Taxes 197.0 181.5 172.1 149.2 153.8
Tax Rate 38.0 % 38.0 % 38.0 % 34.4 % 38.0 %
Net Income $ 122.1 $ 112.5 $ 106.7 $ 97.9 $ 95.4
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Common Share Statistics
Basic EPS $ 0.62 $ 0.57 $ 0.54 $ 0.50 $ 0.48
Diluted EPS $ 0.58 $ 0.54 $ 0.51 $ 0.47 $ 0.45
Dividends Per Share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period end) $ 9.02 $ 8.39 $ 7.93 $ 7.69 $ 7.29
Stock Price Per Share (period end) $ 70.06 $ 44.63 $ 47.94 $ 48.19 $ 39.00
Total Market Capitalization (period end) $13,783.1 $ 8,747.4 $ 9,376.5 $ 9,495.2 $ 7,686.9
Shares Outstanding (period end) 196.7 196.0 195.6 197.0 197.1
Shares Used to Compute Basic EPS 196.3 196.0 196.6 197.3 197.4
Shares Used to Compute Diluted EPS 210.1 208.6 208.7 210.3 210.1
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Managed Loan Statistics (period avg.)
Average Loans $ 23,020 $ 20,915 $ 20,181 $ 18,974 $ 18,162
Average Earning Assets $ 24,749 $ 22,581 $ 22,038 $ 21,323 $ 20,060
Average Assets $ 27,015 $ 24,567 $ 23,497 $ 22,714 $ 21,563
Average Equity $ 1,743 $ 1,626 $ 1,567 $ 1,493 $ 1,461
Net Interest Margin 10.75 % 10.88 % 11.23 % 10.78 % 11.14 %
Risk Adjusted Margin (1) 17.24 % 17.03 % 16.57 % 16.24 % 16.38 %
Return on Average Assets (ROA) 1.81 % 1.83 % 1.82 % 1.72 % 1.77 %
Return on Average Equity (ROE) 28.02 % 27.68 % 27.24 % 26.22 % 26.12 %
Net Charge-Off Rate 3.80 % 3.97 % 3.87 % 3.86 % 3.88 %
Net Charge-Offs $ 218.4 $ 207.6 $ 195.3 $ 182.9 $ 176.0
Cost Per Account (in dollars) $ 82.84 $ 80.97 $ 82.93 $ 85.98 $ 90.72
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Managed Loan Statistics (period end)
Reported Loans $ 12,331 $ 11,383 $ 9,449 $ 9,914 $ 8,286
Securitized Loans 11,821 10,500 10,850 10,323 10,231
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Total Loans $ 24,152 $ 21,883 $ 20,299 $ 20,237 $ 18,517
Delinquency Rate (30+ days) 5.32 % 5.35 % 5.26 % 5.23 % 5.06 %
Number of Accounts (000's) 29,437 27,133 25,302 23,705 20,845
Total Assets $ 28,185 $ 25,610 $ 23,361 $ 23,638 $ 21,577
Capital, Including Preferred Interests $ 1,873.8 $ 1,743.9 $ 1,649.3 $ 1,613.7 $ 1,535.3
Capital to Managed Assets Ratio 6.65 % 6.81 % 7.06 % 6.83 % 7.12 %
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(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)
Sept 30 June 30 Sept 30
2000 2000 1999
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Assets:
Cash and due from banks $ 81,403 $ 100,999 $ 59,934
Federal funds sold and resale agreements 12,688 10,000
Interest-bearing deposits at other banks 128,377 78,226 53,493
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Cash and cash equivalents 222,468 189,225 113,427
Securities available for sale 1,652,330 1,507,770 1,708,609
Consumer loans 12,331,088 11,382,780 8,286,210
Less: Allowance for loan losses (457,000) (407,000) (306,000)
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Net loans 11,874,088 10,975,780 7,980,210
Premises and equipment, net 560,974 545,262 429,504
Interest receivable 93,817 51,799 65,350
Accounts receivable from securitizations 1,403,377 1,302,424 614,962
Other 571,771 554,631 460,847
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Total assets $16,378,825 $15,126,891 $11,372,909
============ ============ ============
Liabilities:
Interest-bearing deposits $ 6,323,924 $ 5,288,927 $ 3,576,400
Other borrowings 2,820,533 2,773,050 1,016,868
Senior notes 4,119,101 4,176,394 4,328,237
Interest payable 109,842 96,493 87,688
Other 1,230,037 1,146,451 926,535
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Total liabilities 14,603,437 13,481,315 9,935,728
Stockholders' Equity:
Common stock 1,997 1,997 1,997
Paid-in capital, net 559,595 578,915 625,771
Retained earnings and cumulative
other comprehensive income 1,322,744 1,197,370 897,353
Less: Treasury stock, at cost (108,948) (132,706) (87,940)
------------ ------------ ------------
Total stockholders' equity 1,775,388 1,645,576 1,437,181
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Total liabilities and stockholders' equity $16,378,825 $15,126,891 $11,372,909
============ ============ ============
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended Nine Months Ended
Sept 30 June 30 Sept 30 Sept 30 Sept 30
2000 2000 1999 2000 1999
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Interest Income:
Consumer loans, including fees $ 606,872 $ 511,886 $ 386,727 $1,607,695 $1,064,987
Securities available for sale 23,367 22,845 24,256 70,946 74,001
Other 1,474 1,776 1,053 5,026 3,892
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Total interest income 631,713 536,507 412,036 1,683,667 1,142,880
Interest Expense:
Deposits 90,197 63,619 38,003 205,936 88,383
Other borrowings 55,967 46,914 20,824 144,335 67,572
Senior notes 72,679 62,016 76,980 203,071 230,129
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Total interest expense 218,843 172,549 135,807 553,342 386,084
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Net interest income 412,870 363,958 276,229 1,130,325 756,796
Provision for loan losses 193,409 151,010 114,061 470,944 262,948
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Net interest income after provision
for loan losses 219,461 212,948 162,168 659,381 493,848
Non-Interest Income:
Servicing and securitizations 307,343 282,640 311,217 860,741 876,777
Service charges and other fees 424,087 374,706 275,900 1,140,025 743,227
Interchange 65,039 53,461 33,946 161,570 97,732
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Total non-interest income 796,469 710,807 621,063 2,162,336 1,717,736
Non-Interest Expense:
Salaries and associate benefits 264,171 236,618 199,048 735,625 572,703
Marketing 233,188 211,560 175,163 646,686 529,493
Communications and data processing 78,064 72,933 68,755 221,819 189,305
Supplies and equipment 66,325 58,167 48,076 176,766 127,083
Occupancy 30,721 27,250 19,117 83,263 49,412
Other 146,488 135,736 119,262 406,982 315,815
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Total non-interest expense 818,957 742,264 629,421 2,271,141 1,783,811
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Income before income taxes 196,973 181,491 153,810 550,576 427,773
Income taxes 74,850 68,966 58,448 209,219 162,554
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Net income $ 122,123 $ 112,525 $ 95,362 $ 341,357 $ 265,219
========== ========== ========== ========== ==========
Basic earnings per share $ 0.62 $ 0.57 $ 0.48 $ 1.73 $ 1.34
========== ========== ========== ========== ==========
Diluted earnings per share $ 0.58 $ 0.54 $ 0.45 $ 1.63 $ 1.26
========== ========== ========== ========== ==========
Dividends paid per share $ 0.03 $ 0.03 $ 0.03 $ 0.08 $ 0.08
========== ========== ========== ========== ==========
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 9/30/00 Quarter Ended 6/30/00
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Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ------ ------- ------- ------
Earning assets:
Consumer loans $23,020,158 $1,039,473 18.06 % $20,915,125 $ 937,935 17.94 %
Securities available for sale 1,557,088 23,367 6.00 1,519,369 22,845 6.01
Other 171,881 1,474 3.43 146,760 1,776 4.84
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Total earning assets $24,749,127 $1,064,314 17.20 % $22,581,254 $ 962,556 17.05 %
======================= =======================
Interest-bearing liabilities:
Deposits $ 5,787,748 $ 90,197 6.23 % $ 4,495,242 $ 63,619 5.66 %
Other borrowings 3,084,407 55,967 7.26 2,687,569 46,914 6.98
Senior notes 4,139,665 72,679 7.02 3,659,603 62,016 6.78
Securitization liability 10,908,397 180,412 6.62 10,870,733 175,655 6.46
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Total interest-bearing liabilities $23,920,217 $ 399,255 6.68 % $21,713,147 $ 348,204 6.41 %
======================= =======================
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Net interest spread 10.52 % 10.64 %
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Interest income to average earning assets 17.20 % 17.05 %
Interest expense to average earning assets 6.45 6.17
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Net interest margin 10.75 % 10.88 %
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(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) (continued)
Managed (1) Quarter Ended 9/30/99
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Average Income/ Yield/
Balance Expense Rate
------- ------- -----
Earning assets:
Consumer loans $18,161,975 $ 813,643 17.92 %
Securities available for sale 1,683,839 24,256 5.76
Other 213,784 845 1.58
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Total earning assets $20,059,598 $ 838,744 16.72 %
=======================
Interest-bearing liabilities:
Deposits $ 3,001,711 $ 38,003 5.06 %
Other borrowings 1,333,434 20,824 6.25
Senior notes 4,494,440 76,980 6.85
Securitization liability 10,343,724 144,048 5.57
--------------------------------
Total interest-bearing liabilities $19,173,309 $ 279,855 5.84 %
=======================
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Net interest spread 10.88 %
=======
Interest income to average earning assets 16.72 %
Interest expense to average earning assets 5.58
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Net interest margin 11.14 %
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(1) The information in this table reflects the adjustment to add back the effect of securitized loans.