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Capital One Reports First Quarter EarningsRevises earnings guidance to $7.00 to $7.40 per share
MCLEAN, Va., April 19 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE: COF) today announced earnings for the first quarter of 2007 of $675.1 million, or $1.62 per share (diluted), compared with $883.3 million, or $2.86 per share (diluted), for the first quarter of 2006, and $390.7 million, or $1.14 per share (diluted), for the fourth quarter of 2006. Additionally, the company provided revised earnings guidance for 2007 of $7.00 to $7.40 per share (diluted). "While we face some earnings headwinds in 2007, underlying credit quality across our businesses continues to be strong. Our national lending businesses are delivering strong returns and our bank is generating solid deposit growth," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We remain well positioned to drive growth, generate capital, and deliver sustainable and attractive shareholder returns well into the future." This quarter, the company has changed its primary reportable segments to reflect its strategy of National Lending and Local Banking. National Lending is comprised of the legacy sub-segments: US Card, Auto Finance, and Global Financial Services. It also contains a new sub-segment called Mortgage Banking, which is the legacy business of GreenPoint Mortgage. The Local Banking segment includes the legacy banking business and North Fork Bank, excluding its auto portfolio and GreenPoint Mortgage, the acquisition of which was completed December 1, 2006. The company decreased its allowance for loan losses by $75.0 million in the first quarter of 2007 largely as a result of a normal seasonal reduction in reported loans. Managed loans held for investment at March 31, 2007 were $142.0 billion, up $38.1 billion, or 36.7 percent, from March 31, 2006. Managed loans at the end of the quarter were down $4.1 billion, or 2.8 percent from the previous quarter due primarily to normal seasonality of credit card loan balances. The company's efficiency ratio increased to 51.77 percent in the first quarter of 2007 from 45.51 percent in the first quarter of 2006, but decreased from 55.90 percent in the previous quarter driven primarily by the acquisition of North Fork and continued investments in infrastructure projects. Capital One's return on managed assets (ROA) for the first quarter of 2007 was 1.36 percent, down from 2.62 percent in the year ago first quarter, and up compared to 0.96 percent in the fourth quarter of 2006. Managed ROA trends reflect the inclusion of North Fork as well as the continued normalization of US consumer credit. "We've revised our earnings guidance down to $7.00-$7.40 per share for 2007, largely to reflect revised expectations for our mortgage banking business, which posted a modest loss in the first quarter. Assuming no improvement in the unusually weak conditions now present in the secondary market for non-conforming prime mortgage loans, including Alt-A, we expect that reduced volumes and margins would result in our mortgage banking business delivering no incremental earnings for the balance of 2007," said Gary L. Perlin, Capital One's Chief Financial Officer. "Our expectations for consumer credit to return to more normal levels and the yield curve to remain flat are unchanged. The company's core operations remain strong, and infrastructure upgrades completed in the quarter will provide opportunities to generate efficiencies and cost savings benefits in the future." Segment Results National Lending (US Card, Auto Finance, Global Financial Services, Mortgage Banking) Profits for the National Lending segment were down by 23 percent, as compared to the first quarter of 2006, primarily due to the continued return of charge-offs to more normal levels this quarter. The managed charge-off rate for the National Lending segment increased to 3.65 percent in the first quarter of 2007 from 2.99 percent in the first quarter of 2006 reflecting this continued normalization. Risk was solid across the sub-segments of National Lending, and managed charge-offs were relatively stable versus 3.63 percent in the previous quarter. The delinquency rate of 3.63 percent for National Lending increased from 3.26 percent as of March 31, 2006 but decreased from 4.09 percent as of the end of December 31, 2006. The company continues to sees no evidence of the pressures in the mortgage industry spreading into other lending products. The US Card sub-segment continues to report profitable growth despite a return to more normal credit levels. Net income for the first quarter of 2007 was $495.3 million, down from the record $602.8 million in the first quarter of 2006, but up from $337.2 million in the fourth quarter of 2006, reflecting expected seasonal patterns. The managed charge-off rate increased to 3.99 percent in the first quarter of 2007 from 2.93 percent in the first quarter of 2006 and from 3.82 percent in the previous quarter due to expected seasonality and normalization of credit. Managed loans at March 31, 2007 were $49.7 billion, up $2.5 billion, or 5.4 percent, from March 31, 2006, but down $3.9 billion, or 7.4 percent from the prior quarter. The Global Financial Services business also delivered profitable loan growth amidst credit normalization in its North American businesses and continued challenges in the UK. The sub-segment's net income for the first quarter of 2007 was $74.8 million, down $38.7 million, or 34 percent, from $113.5 million from the first quarter of 2006. Net income in the fourth quarter of 2006 was $2.1 million. The managed charge-off rate increased to 4.18 percent in the first quarter of 2007 from 3.63 percent in the first quarter of 2006 driven largely by credit normalization in the US and continuing credit challenges in the UK relative to the prior year. The managed charge-off rate increased 29 basis points from 3.89 percent in the fourth quarter of 2006 reflecting continued credit normalization in the US. Managed loans at March 31, 2007 were $26.8 billion, up $3.1 billion from $23.7 billion, or 13.1 percent over the prior year's first quarter but down slightly from $27.0 billion at December 31, 2006. The Auto Finance business continued to deliver profits and grow originations by taking advantage of its multi-channel, full credit spectrum strategy. The Auto Finance business's net income was $44.4 million, down $25.0 million, or 36.0 percent, from $69.4 million in the first quarter of 2006 but was up $10.6 million, or 31.5 percent from the fourth quarter of 2006. The managed charge-off rate decreased slightly to 2.29 percent in the first quarter of 2007 from 2.35 percent in the first quarter of 2006. The managed charge-off rate decreased from 2.85 percent in the previous quarter, primarily driven by the addition of the North Fork portfolio. Managed loans at March 31, 2007 were $23.9 billion, up $4.1 billion, or 20.6 percent, from March 31, 2006, and up $2.2 billion, or 10.0 percent from the prior quarter. The Mortgage Banking sub-segment reported a net loss for the first quarter of 2007 of $12.6 million. Due to pressures in the secondary capital markets for loans associated with non-conforming prime mortgage loans, including Alt- A, results in the quarter were adversely impacted by a $19.0 million addition to the reserve related to representations and warranties and a $21.0 million warehouse valuation adjustment. The business originated $6.8 billion in loans during the quarter, down $1.0 billion from first quarter of 2006 originations and down $2.5 billion in originations in the last quarter of 2006. Local Banking The Local Banking business delivered solid performance in the first quarter and integration efforts remain on track. The company experienced growth in deposits across geographies and credit performance remains very strong. The company opened 16 new locations across our banking franchise in the first quarter. The business delivered $129.6 million of net income, including the results of North Fork, which were included in "Other" in the fourth quarter of 2006. The managed charge-off rate for the Local Banking business decreased to 0.15 percent in the first quarter of 2007 from 0.38 percent in the first quarter of 2006, and from 0.40 percent in the previous quarter. Non- performing loans as a percent of managed loans in the Local Banking business decreased to 0.19 percent as of March 31, 2007 from 0.79 percent at March 31, 2006 and from 0.48 percent from December 31, 2006. Total deposits at the end of the quarter were $74.5 billion, while managed loans at March 31, 2007 were $41.6 billion. 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 April 19, 2007 for 2007 earnings, the interest rate environment, charge- off rates, mortgage market trends, and operating efficiencies, 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 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; general economic and secondary market conditions in the mortgage industry; 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. About Capital One Headquartered in McLean, Virginia, Capital One Financial Corporation ( http://www.capitalone.com/ ) is a financial holding company, with more than 720 locations in New York, New Jersey, Connecticut, Texas and Louisiana that offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Its principal subsidiaries, Capital One Bank, Capital One, F.S.B., Capital One Auto Finance, Inc., Capital One, N.A., and North Fork Bank offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. Capital One's subsidiaries collectively had $87.7 billion in deposits and $142.0 billion in managed loans outstanding as of March 31, 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: First quarter 2007 financial results, SEC Filings, and first quarter earnings conference call slides are accessible on Capital One's home page ( http://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. CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
REPORTED BASIS
2007 2006 2006
(in millions, except per share
data and as noted) Q1 Q4 Q1
Earnings (Reported Basis)
Net Interest Income $1,622.8 $1,401.2 $1,206.9
Non-Interest Income 1,810.5 (1) 1,667.2 (3) 1,858.3
Total Revenue(5) 3,433.3 3,068.4 3,065.2 (4)
Provision for Loan Losses 350.0 513.2 170.3 (4)
Marketing Expenses 331.5 395.7 323.8
Operating Expenses 1,713.9 (2) 1,590.5 1,249.7
Income Before Taxes 1,037.9 569.0 1,321.4
Tax Rate(6) 35.0 % 31.3 % 33.2 %
Net Income $675.1 $390.7 $883.3
Common Share Statistics
Basic EPS $1.65 $1.16 $2.95
Diluted EPS $1.62 $1.14 $2.86
Dividends Per Share $0.03 $0.03 $0.03
Tangible Book Value Per Share
(period end) $28.18 $26.36 $36.31
Stock Price Per Share (period
end) $75.46 $76.82 $80.52
Total Market Capitalization
(period end) $31,112.2 $31,488.5 $24,397.6
Shares Outstanding (period end) 412.3 409.9 303.0
Shares Used to Compute Basic EPS 408.7 336.5 299.3
Shares Used to Compute Diluted
EPS 415.5 343.8 309.1
Reported Balance Sheet
Statistics (period average)
Average Loans Held for
Investment $93,466 $74,738 $58,142
Average Earning Assets $124,811 $99,416 $78,332
Average Assets $148,657 $113,642 $88,895
Average Interest Bearing
Deposits $74,867 $53,735 $43,357
Total Average Deposits $86,237 $60,382 $47,870
Average Equity $25,610 $18,311 $14,612
Return on Average Assets (ROA) 1.82 % 1.38 % 3.97 %
Return on Average Equity (ROE) 10.54 % 8.53 % 24.18 %
Reported Balance Sheet
Statistics (period end)
Loans Held for Investment $90,869 $96,512 $58,119
Total Assets $148,699 $149,739 $89,273
Interest Bearing Deposits $76,306 $74,123 $43,303
Total Deposits $87,664 $85,771 $47,779
Performance Statistics
(Reported)
Net Interest Income Growth
(annualized) 63 % 33 % 66 %
Non Interest Income Growth
(annualized) 34 % (21)% 46 %
Revenue Growth (annualized) 48 % 2 % 54 %
Net Interest Margin 5.20 % 5.64 % 6.16 %
Revenue Margin 11.00 % 12.35 % 15.65 %
Risk Adjusted Margin (9) 9.63 % 10.56 % 14.12 %
Non Interest Expense as a % of
Average Loans Held for
Investment (annualized) 8.75 % 10.63 % 10.83 %
Efficiency Ratio (10) 59.58 % 64.73 % 51.33 %
Asset Quality Statistics
(Reported)
Allowance $2,105 $2,180 $1,675
Allowance as a % of Reported
Loans Held for Investment 2.32 % 2.26 % 2.88 %
Net Charge-Offs $430 $443 $301
Net Charge-Off Rate 1.84 % 2.37 % 2.07 %
Full-time equivalent employees
(in thousands) 31.1 30.3 20.8
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
MANAGED BASIS (*)
2007 2006 2006
(in millions) Q1 Q4 Q1
Earnings (Managed Basis)
Net Interest Income $2,620.8 $2,347.3 $2,235.0
Non-Interest Income 1,330.2 (1) 1,206.0 (3) 1,222.2
Total Revenue(5) 3,951.0 3,553.3 3,457.2 (4)
Provision for Loan Losses 867.7 998.1 562.3 (4)
Marketing Expenses 331.5 395.7 323.8
Operating Expenses 1,713.9 (2) 1,590.5 1,249.7
Income Before Taxes 1,037.9 569.0 1,321.4
Tax Rate(6) 35.0 % 31.3 % 33.2 %
Net Income $675.1 $390.7 $883.3
Managed Balance Sheet Statistics
(period average)
Average Loans Held for
Investment $144,113 $123,902 $104,610
Average Earning Assets $173,403 $146,680 $122,587
Average Assets $198,561 $162,149 $134,797
Return on Average Assets (ROA) 1.36 % 0.96 % 2.62 %
Managed Balance Sheet Statistics
(period end)
Loans Held for Investment $142,005 $146,151 $103,907
Total Assets $199,118 $198,645 $134,530
Tangible Assets (8) $184,717 $184,215 $130,364
Tangible Common Equity (7) $11,620 $10,805 $11,003
Tangible Common Equity to
Tangible Assets Ratio 6.29 % 5.87 % 8.44 %
% Off-Balance Sheet
Securitizations 36 % 34 % 44 %
Performance Statistics (Managed)
Net Interest Income Growth
(annualized) 47 % 23 % 31 %
Non Interest Income Growth
(annualized) 41 % (22)% (7)%
Revenue Growth (annualized) 45 % 7 % 17 %
Net Interest Margin 6.05 % 6.40 % 7.29 %
Revenue Margin 9.11 % 9.69 % 11.28 %
Risk Adjusted Margin (9) 6.93 % 7.16 % 9.02 %
Non Interest Expense as a % of
Average Loans Held for
Investment (annualized) 5.68 % 6.41 % 6.02 %
Efficiency Ratio (10) 51.77 % 55.90 % 45.51 %
Asset Quality Statistics
(Managed)
Net Charge-Offs $947 $927 $693
Net Charge-Off Rate 2.63 % 2.99 % 2.65 %
(*) 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".
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY NOTES
(1) 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.
(2) Includes core deposit intangible amortization expense of $35.7
million and integration costs of $9.8 million.
(3) Includes a $19.9 million in Q4 2006 related to the derivative entered
into in April 2006 to mitigate certain exposures we faced as a result
of our acquisition of North Fork.
(4) Includes the impact of the sale of charged-off loans resulting in an
increase of $76.8 million on reported basis and $66.4 million on
managed basis, respectively, to various revenue line items, the
majority of which was recorded to other non-interest income and a
reduction of $7 million on reported basis and $17.4 million on
managed basis, respectively, to the provision for loan losses through
an increase in recoveries for the sale of charged-off loans
originated by the Company.
(5) In accordance with the Company's finance charge and fee revenue
recognition policy, the amounts billed to customers but not
recognized as revenue were as follows: Q1 2007 - $213.6, Q4 2006 -
$248.3, and Q1 2006 - $170.9.
(6) Includes resolution of IRS tax issues resulting in reduction of tax
expense of $28.8 million in Q4 2006, and $34.9 million in Q1 2006.
(7) 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.
(8) Includes managed assets less intangible assets.
(9) Risk adjusted margin is total revenue less net charge-offs as a
percentage of average earning assets.
(10) Non-interest expense divided by Total Revenue
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY
MANAGED BASIS (1)
2007 2006 2006
(in thousands) Q1 Q4 Q1
Local Banking: (3)
Interest Income $1,740,132 $721,102 $650,985
Interest Expense 1,166,563 476,523 406,061
Net interest income $573,569 $244,579 $244,924
Non-interest income 186,873 112,021 104,485
Provision for loan losses 23,776 (21,549) 9,821
Non-interest expenses 539,064 307,810 272,987
Income tax provision (benefit) 67,975 24,619 23,310
Net income (loss) $129,627 $45,720 $43,291
Loans Held for Investment $41,642,594 $12,145,533 $13,169,792
Average loans Held for
Investment $41,846,678 $13,330,876 $13,283,515
Core Deposits(2) $62,962,395 $27,071,324 $27,996,290
Total Deposits $74,509,054 $35,334,610 $35,396,221
Loan Yield 7.44% 7.98% 7.38%
Net Interest Margin - Loans (4) 1.47% 2.78% 2.84%
Net Interest Margin - Deposits (5) 2.22% 1.75% 1.75%
Efficiency Ratio 70.89% 86.32% 78.13%
Net charge-off rate 0.15% 0.40% 0.38%
Non Performing Loans $80,162 $57,824 $104,080
Non Performing Loans as a % of
Loans Held for Investment 0.19% 0.48% 0.79%
Non-Interest Expenses to
Managed Loans 5.15% 9.24% 8.22%
Number of Active ATMS 1,236 661 542
Number of locations 723 358 317
National Lending:
Interest Income $3,330,300 $3,182,013 $2,927,635
Interest Expense 1,241,685 1,163,106 935,282
Net interest income $2,088,615 $2,018,907 $1,992,353
Non-interest income 1,187,922 1,105,240 1,074,983
Provision for loan losses 849,216 1,010,837 549,608
Non-interest expenses 1,509,057 1,534,523 1,309,556
Income tax provision (benefit) 316,285 205,768 422,459
Net income (loss) $601,979 $373,019 $785,713
Managed Loans $100,371,532 $102,359,180 $90,723,355
Average Managed Loans $102,276,581 $99,881,480 $91,326,380
Core Deposits(2) $3,212 $6,061 $148,321
Total Deposits $2,409,291 $2,383,902 $2,417,664
Loan Yield 12.70% 12.72% 12.81%
Net Interest Margin 8.17% 8.09% 8.73%
Revenue Margin 12.81% 12.51% 13.43%
Risk Adjusted Margin 9.17% 8.88% 10.45%
Non-Interest Expenses to
Managed Loans 5.90% 6.15% 5.74%
Efficiency Ratio 46.06% 49.12% 42.69%
Net charge-off rate 3.65% 3.63% 2.99%
Delinquency Rate (30+ days) 3.63% 4.09% 3.26%
Number of Loan Accounts (000s) 48,668 49,374 48,751
Other: (3)
Net interest income $(41,427) $83,770 $(2,307)
Non-interest income (44,564) (11,207) 42,726
Provision for loan losses (5,330) 8,840 2,877
Non-interest expenses (2,720) 143,855 (9,064)
Income tax provision (benefit) (21,385) (52,121) (7,729)
Net income (loss) $(56,556) $(28,011) $54,335
Loans Held for Investment $(9,084) $31,646,555 $13,629
Core Deposits(2) $7,532,854 $42,819,710 $5,990,673
Total Deposits $10,745,405 $48,052,380 $9,965,600
Total:
Interest Income $4,435,367 $3,931,054 $3,436,829
Interest Expense 1,814,610 1,583,798 1,201,859
Net interest income $2,620,757 $2,347,256 $2,234,970
Non-interest income 1,330,231 1,206,054 1,222,194
Provision for loan losses 867,662 998,128 562,306
Non-interest expenses 2,045,401 1,986,188 1,573,479
Income tax provision (benefit) 362,875 178,266 438,040
Net income (loss) $675,050 $390,728 $883,339
Loans Held for Investment $142,005,042 $146,151,268 $103,906,776
Core Deposits(2) $70,498,461 $69,897,095 $34,135,284
Total Deposits $87,663,750 $85,770,892 $47,779,485
(1) The information in this statistical summary reflects the adjustment to
add back the effect of securitization transactions qualifying as sales
under generally accepted accounting principles. See accompanying
schedule - "Reconciliation to GAAP Financial Measures."
(2) Includes domestic non-interest bearing deposits, NOW accounts, money
market deposit accounts, savings accounts, certificates of deposit of
less than $100,000 and other consumer time deposits.
(3) 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
CAPITAL ONE FINANCIAL CORPORATION (COF)
NATIONAL LENDING SUBSEGMENT FINANCIAL & STATISTICAL SUMMARY
MANAGED BASIS (1)
2007 2006 2006
(in thousands) Q1 Q4 Q1
US Card:
Interest Income $1,813,846 $1,795,345 $1,714,559
Interest Expense 602,505 600,821 493,458
Net interest income $1,211,341 $1,194,524 $1,221,101
Non-interest income 778,606 795,881 775,413
Provision for loan losses 373,836 554,698 224,438
Non-interest expenses 861,020 916,963 844,729
Income tax provision (benefit) 259,751 181,561 324,573
Net income (loss) $495,340 $337,183 $602,774
Managed Loans $49,681,559 $53,623,680 $47,142,650
Average Managed Loans $51,878,104 $51,686,135 $48,217,926
Loan Yield 13.99% 13.89% 14.22%
Net Interest Margin 9.34% 9.24% 10.13%
Revenue Margin 15.34% 15.40% 16.56%
Risk Adjusted Margin 11.35% 11.58% 13.63%
Non-Interest Expenses to Managed
Loans 6.64% 7.10% 7.01%
Efficiency Ratio (2) 43.27% 46.07% 42.31%
Net charge-off rate 3.99% 3.82% 2.93%
Delinquency Rate (30+ days) 3.48% 3.74% 3.31%
Purchase Volume (3) $19,346,812 $22,782,451 $18,015,669
Number of Loan Accounts (000s) 36,758 37,630 37,258
Auto Finance:
Interest Income $637,609 $593,268 $520,830
Interest Expense 265,556 242,311 187,827
Net interest income $372,053 $350,957 $333,003
Non-interest income 60,586 14,143 16,218
Provision for loan losses 200,058 151,171 107,805
Non-interest expenses 164,948 162,022 134,655
Income tax provision (benefit) 23,266 18,167 37,366
Net income (loss) $44,367 $33,740 $69,395
Managed Loans $23,930,547 $21,751,827 $19,848,190
Average Managed Loans $23,597,675 $21,498,205 $19,440,128
Loan Yield 10.81% 11.04% 10.72%
Net Interest Margin 6.31% 6.53% 6.85%
Revenue Margin 7.33% 6.79% 7.19%
Risk Adjusted Margin 5.04% 3.94% 4.84%
Non-Interest Expenses to Managed
Loans 2.80% 3.01% 2.77%
Efficiency Ratio (2) 38.13% 44.38% 38.56%
Net charge-off rate 2.29% 2.85% 2.35%
Delinquency Rate (30+ days) 4.64% 6.35% 3.57%
Auto Loan Originations $3,311,868 $3,078,877 $2,940,540
Number of Loan Accounts (000s) 1,762 1,589 1,480
Global Financial Services:
Interest Income $803,141 $793,400 $692,246
Interest Expense 316,223 319,974 253,997
Net interest income $486,918 $473,426 $438,249
Non-interest income 299,307 295,216 283,352
Provision for loan losses 275,322 304,968 217,365
Non-interest expenses 396,201 455,538 330,172
Income tax provision (benefit) 39,860 6,040 60,520
Net income (loss) $74,842 $2,096 $113,544
Managed Loans $26,759,426 $26,983,673 $23,732,515
Average Managed Loans $26,800,802 $26,697,140 $23,668,326
Loan Yield (4) 11.88% 11.80% 11.64%
Net Interest Margin 7.27% 7.09% 7.41%
Revenue Margin 11.73% 11.52% 12.20%
Risk Adjusted Margin 7.55% 7.63% 8.57%
Non-Interest Expenses to Managed
Loans 5.91% 6.83% 5.58%
Efficiency Ratio (2) 50.39% 59.27% 45.76%
Net charge-off rate 4.18% 3.89% 3.63%
Delinquency Rate (30+ days) 2.99% 2.97% 2.90%
Number of Loan Accounts (000s) 10,148 10,155 10,013
(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) 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.
CAPITAL ONE FINANCIAL CORPORATION (COF)
NATIONAL LENDING SUBSEGMENT FINANCIAL & STATISTICAL SUMMARY
MANAGED BASIS (1)
2007 2006 2006
(in thousands) Q1 Q4 Q1
Mortgage Banking: (3)
Interest Income $75,704
Interest Expense 57,401
Net interest income $18,303
Non-interest income 49,423
Non-interest expenses 86,888
Income tax provision (benefit) (6,592)
Net income (loss) $(12,570)
Net Gain on Sale Margin (4) 51 bps
Efficiency Ratio (2) 128%
Mortgage Loan Originations $6,795,468
(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) Non-Interest Expenses divided by total Managed Revenue
(3) Results of the North Fork acquisition were included in the Other
category for Q4 2006
(4) Gain on Sale Margin is net of repurchases and lower of cost or market
adjustments
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended March 31, 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
Total Reported Adjustments(1) Managed(2)
Income Statement Measures
Net interest income $1,622,846 $997,911 $2,620,757
Non-interest income $1,810,525 $(480,294) $1,330,231
Total revenue $3,433,371 $517,617 $3,950,988
Provision for loan losses $350,045 $517,617 $867,662
Net charge-offs $429,648 $517,617 $947,265
Balance Sheet Measures
Loans Held for Investment $90,869,496 $51,135,546 $142,005,042
Total assets $148,698,605 $50,419,697 $199,118,302
Average loans Held for Investment $93,465,873 $50,646,916 $144,112,789
Average earning assets $124,811,430 $48,591,353 $173,402,783
Average total assets $148,656,771 $49,903,892 $198,560,663
Delinquencies $2,093,316 $1,712,659 $3,805,975
(1) Income statement adjustments reclassify the net of finance charges of
$1,462.4 million, past-due fees of $218.6 million, other interest
income of $(62.0) million and interest expense of $649.4 million; and
net charge-offs of $517.6 million from Non-interest income to Net
interest income and Provision for loan losses, respectively.
(2) The managed loan portfolio does not include auto loans which have been
sold in whole loan sale transactions where the Company has retained
servicing rights.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
As of As of As of
March 31 December 31 March 31
2007 2006 2006
Assets:
Cash and due from banks $2,286,913 $2,817,519 $1,434,804
Federal funds sold and resale
agreements 8,293,338 1,099,156 2,763,746
Interest-bearing deposits at
other banks 844,907 743,821 1,099,025
Cash and cash equivalents 11,425,158 4,660,496 5,297,575
Securities available for sale 17,657,734 15,452,047 14,551,720
Mortgage loans held for sale 4,738,765 10,435,295 218,640
Loans held for investment 90,869,496 96,512,139 58,118,659
Less: Allowance for loan and
lease losses (2,105,000) (2,180,000) (1,675,000)
Net loans held for investment 88,764,496 94,332,139 56,443,659
Accounts receivable from
securitizations 5,371,385 4,589,235 5,293,392
Premises and equipment, net 2,258,861 2,203,280 1,387,302
Interest receivable 720,511 816,426 512,136
Goodwill 13,619,445 13,635,435 3,941,128
Other 4,142,250 3,614,932 1,627,527
Total assets $148,698,605 $149,739,285 $89,273,079
Liabilities:
Non-interest-bearing deposits $11,357,736 $11,648,070 $4,476,351
Interest-bearing deposits 76,306,014 74,122,822 43,303,134
Senior and subordinated notes 9,436,021 9,725,470 5,726,109
Other borrowings 20,244,842 24,257,007 16,544,698
Interest payable 540,160 574,763 353,882
Other 4,793,062 4,175,947 3,699,659
Total liabilities 122,677,835 124,504,079 74,103,833
Stockholders' Equity:
Common stock 4,146 4,122 3,051
Paid-in capital, net 15,465,341 15,333,137 7,032,073
Retained earnings and cumulative
other comprehensive income 10,684,768 10,026,364 8,245,186
Less: Treasury stock, at cost (133,485) (128,417) (111,064)
Total stockholders' equity 26,020,770 25,235,206 15,169,246
Total liabilities and
stockholders' equity $148,698,605 $149,739,285 $89,273,079
(1) Certain prior period amounts have been reclassified to conform to the
current period presentation.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
March 31 December 31 March 31
2007 2006 2006
Interest Income:
Loans held for investment, including
past-due fees $2,326,680 $2,002,111 $1,612,622
Securities available for sale 204,080 185,424 164,110
Mortgage loans held for sale 144,759 55,896 4,099
Other 112,494 109,988 97,751
Total interest income 2,788,013 2,353,419 1,878,582
Interest Expense:
Deposits 730,483 552,385 403,609
Senior and subordinated notes 138,546 136,282 94,354
Other borrowings 296,138 263,596 173,742
Total interest expense 1,165,167 952,263 671,705
Net interest income 1,622,846 1,401,156 1,206,877
Provision for loan and lease losses 350,045 513,157 170,270
Net interest income after provision
for loan and lease losses 1,272,801 887,999 1,036,607
Non-Interest Income:
Servicing and securitizations 988,082 959,436 1,153,604
Service charges and other customer-
related fees 479,467 462,086 435,731
Mortgage banking operations 86,543 54,232 31,671
Interchange 118,111 147,571 119,491
Other 138,322 43,858 117,754
Total non-interest income 1,810,525 1,667,183 1,858,251
Non-Interest Expense:
Salaries and associate benefits 724,259 632,355 516,144
Marketing 331,549 395,671 323,771
Communications and data processing 185,988 188,481 169,204
Supplies and equipment 134,602 137,843 98,184
Occupancy 85,845 66,425 49,377
Other 583,158 565,413 416,799
Total non-interest expense 2,045,401 1,986,188 1,573,479
Income before income taxes 1,037,925 568,994 1,321,379
Income taxes 362,875 178,266 438,040
Net income $675,050 $390,728 $883,339
Basic earnings per share $1.65 $1.16 $2.95
Diluted earnings per share $1.62 $1.14 $2.86
Dividends paid per share $0.03 $0.03 $0.03
(1) Certain prior period amounts have been reclassified to conform to the
current period presentation.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Reported Quarter Ended 3/31/07
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $9,115,298 $144,759 6.35%
Loans held for investment 93,465,873 2,326,680 9.96%
Securities available for sale 16,598,686 204,080 4.92%
Other 5,631,573 112,494 7.99%
Total earning assets $124,811,430 $2,788,013 8.94%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $5,066,120 $35,414 2.80%
Money market deposit accounts 25,486,826 249,654 3.92%
Savings accounts 8,384,994 35,529 1.69%
Other Consumer Time Deposits 19,599,576 213,051 4.35%
Public Fund CD's of $100,000 or
more 2,038,785 24,897 4.88%
CD's of $100,000 or more 10,339,958 122,618 4.74%
Foreign time deposits 3,950,808 49,320 4.99%
Total Interest-bearing deposits $74,867,067 $730,483 3.90%
Senior and subordinated notes 9,517,209 138,546 5.82%
Other borrowings 21,820,513 296,138 5.43%
Total interest-bearing liabilities $106,204,789 $1,165,167 4.39%
Net interest spread 4.55%
Interest income to average earning
assets 8.94%
Interest expense to average earning
assets 3.73%
Net interest margin 5.20%
(1) Prior period amounts have been reclassified to conform with current
period presentation.
Reported Quarter Ended 12/31/06 (1)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $3,480,664 $55,896 6.42%
Loans held for investment 74,737,753 2,002,111 10.72%
Securities available for sale 15,090,001 185,424 4.92%
Other 6,107,486 109,988 7.20%
Total earning assets $99,415,904 $2,353,419 9.47%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts 2,094,623 $14,546 2.78%
Money market deposit accounts 15,762,255 149,831 3.80%
Savings accounts 5,425,790 31,386 2.31%
Other Consumer Time Deposits 16,656,731 190,489 4.57%
Public Fund CD's of $100,000 or
more 1,281,768 16,636 5.19%
CD's of $100,000 or more 8,682,658 101,535 4.68%
Foreign time deposits 3,831,401 47,962 5.01%
Total Interest-bearing deposits $53,735,226 $552,385 4.11%
Senior and subordinated notes 9,034,696 136,282 6.03%
Other borrowings 20,555,748 263,596 5.13%
Total interest-bearing liabilities $83,325,670 $952,263 4.57%
Net interest spread 4.90%
Interest income to average earning
assets 9.47%
Interest expense to average earning
assets 3.83%
Net interest margin 5.64%
(1) Prior period amounts have been reclassified to conform with current
period presentation.
Reported Quarter Ended 3/31/06 (1)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $184,418 $4,099 8.89%
Loans held for investment $58,142,418 $1,612,622 11.09%
Securities available for sale 14,938,925 164,110 4.39%
Other 5,066,141 97,751 7.72%
Total earning assets $78,331,902 $1,878,582 9.59%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $572,181 $3,328 2.33%
Money market deposit accounts 10,716,774 76,038 2.84%
Savings accounts 3,719,994 23,181 2.49%
Other Consumer Time Deposits 14,647,708 149,393 4.08%
Public Fund CD's of $100,000 or
more 964,181 10,295 4.27%
CD's of $100,000 or more 9,407,892 102,714 4.37%
Foreign time deposits 3,327,788 38,660 4.65%
Total Interest-bearing deposits $43,356,518 $403,609 3.72%
Senior and subordinated notes 6,097,711 94,354 6.19%
Other borrowings 16,074,344 173,742 4.32%
Total interest-bearing liabilities $65,528,573 $671,705 4.10%
Net interest spread 5.49%
Interest income to average earning
assets 9.59%
Interest expense to average earning
assets 3.43%
Net interest margin 6.16%
(1) Prior period amounts have been reclassified to conform with current
period presentation.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 3/31/07
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $9,115,298 $144,759 6.35%
Loans held for investment 144,112,789 4,035,997 11.20%
Securities available for sale 16,598,686 204,080 4.92%
Other 3,576,010 50,531 5.65%
Total earning assets $173,402,783 $4,435,367 10.23%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $5,066,120 $35,414 2.80%
Money market deposit accounts $25,486,826 $249,654 3.92%
Savings accounts $8,384,994 $35,529 1.69%
Other Consumer Time Deposits $19,599,576 $213,051 4.35%
Public Fund CD's of $100,000 or
more $2,038,785 $24,897 4.88%
CD's of $100,000 or more $10,339,958 $122,618 4.74%
Foreign time deposits $3,950,808 $49,320 4.99%
Total Interest-bearing deposits $74,867,067 $730,483 3.90%
Senior and subordinated notes $9,517,209 $138,546 5.82%
Other borrowings $21,820,513 $296,138 5.43%
Securitization liability 49,999,873 649,443 5.20%
Total interest-bearing liabilities $156,204,662 $1,814,610 4.65%
Net interest spread 5.58%
Interest income to average earning
assets 10.23%
Interest expense to average earning
assets 4.19%
Net interest margin 6.05%
(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.
Managed (1) Quarter Ended 12/31/06 (2)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $3,480,664 $55,896 6.42%
Loans held for investment 123,901,960 3,640,588 11.75%
Securities available for sale 15,090,001 185,424 4.92%
Other 4,207,728 49,145 4.67%
Total earning assets $146,680,353 $3,931,053 10.72%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $2,094,623 $14,546 2.78%
Money market deposit accounts 15,762,255 149,831 3.80%
Savings accounts 5,425,790 31,386 2.31%
Other Consumer Time Deposits 16,656,731 190,489 4.57%
Public Fund CD's of $100,000 or
more 1,281,768 16,636 5.19%
CD's of $100,000 or more 8,682,658 101,535 4.68%
Foreign time deposits 3,831,401 47,962 5.01%
Total Interest-bearing deposits $53,735,226 $552,385 4.11%
Senior and subordinated notes 9,034,696 136,282 6.03%
Other borrowings 20,555,748 263,609 5.13%
Securitization liability 48,603,831 631,521 5.20%
Total interest-bearing liabilities $131,929,501 $1,583,797 4.80%
Net interest spread 5.92%
Interest income to average earning
assets 10.72%
Interest expense to average earning
assets 4.32%
Net interest margin 6.40%
(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.
Managed (1) Quarter Ended 3/31/06 (2)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Mortgage loans held for sale $184,418 $4,099 8.89%
Loans held for investment $104,610,200 $3,232,530 12.36%
Securities available for sale 14,938,925 164,110 4.39%
Other 2,853,377 36,090 5.06%
Total earning assets $122,586,920 $3,436,829 11.21%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $572,181 $3,328 2.33%
Money market deposit accounts 10,716,774 76,038 2.84%
Savings accounts 3,719,994 23,181 2.49%
Other Consumer Time Deposits 14,647,708 149,393 4.08%
Public Fund CD's of $100,000 or
more 964,181 10,295 4.27%
CD's of $100,000 or more 9,407,892 102,714 4.37%
Foreign time deposits 3,327,788 38,660 4.65%
Total Interest-bearing deposits $43,356,518 $403,609 3.72%
Senior and subordinated notes 6,097,711 94,354 6.19%
Other borrowings 16,074,344 173,742 4.32%
Securitization liability 46,018,001 530,154 4.61%
Total interest-bearing liabilities $111,546,574 $1,201,859 4.31%
Net interest spread 6.90%
Interest income to average earning
assets 11.21%
Interest expense to average earning
assets 3.92%
Net interest margin 7.29%
(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.
CAPITAL ONE FINANCIAL CORPORATION (COF)
SELECTED PRO FORMA FINANCIAL SUMMARY OF CAPITAL ONE AND NORTH FORK
BANCORPORATION
MANAGED BASIS (1)(2)
UNAUDITED
2007 2006 2006
(in thousands) Q1 Q4 Q1
Auto Finance:
Net interest income $372,053 $345,277 $326,538
Non-interest income 60,587 31,041 31,280
Provision for loan losses 200,058 153,270 109,205
Non-interest expenses 164,949 166,176 137,202
Income tax provision (benefit) 23,266 19,905 38,994
Net income (loss) $44,367 $36,967 $72,417
Ending Managed Loans $23,930,547 $23,370,058 $21,212,452
Mortgage Banking
Net interest income $18,303 $21,155 $18,070
Non-interest income excluding
purchase Accounting 49,423 104,971 117,485
Non-interest income Purchase
Accounting - (9,090) -
Non-interest expense excluding
Integration Expenses 86,764 87,541 81,090
Non-interest expense
Integration Expenses 124 205 -
Income tax provision (benefit) (6,592) 10,251 19,063
Net income (loss) $(12,570) $19,039 $35,402
Banking
Net interest income excluding
Purchase Accounting $564,048 $589,397 $577,889
Net interest income Purchase
Accounting 9,521 14,892 12,622
Non-interest income 186,873 168,066 166,830
Provision for loan losses 23,776 (8,267) 17,421
Non-interest expense excluding
Purchase Accounting
and Integration expenses 469,521 480,408 493,080
Non-interest expense Purchase
Accounting 54,951 35,860 23,188
Non-interest expense
Integration Expenses 14,592 16,832 18,118
Income tax provision (benefit) 67,975 86,633 71,937
Net income (loss) $129,627 $160,889 $133,597
Ending Loans held for
investment $41,642,594 $42,275,103 $45,953,753
Ending Total Deposits $74,509,054 $73,167,877 $71,858,715
(1) The above schedule reflects the combined legacy Capital One and North
Fork Bancorporation results, assuming a 1/1/06 acquisition date and
the application of Capital One management reporting methodologies (FTP
rates, cost allocations). Purchase accounting adjustments and
integration costs reflect the impacts of both the North Fork and
Hibernia acquisitions.
(2) 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.
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