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Capital One Reports First Quarter Earnings per Share (diluted) of $1.47Diluted earning per share from continuing operations of $1.70 increased 2.9%
MCLEAN, Va., April 17 /PRNewswire-FirstCall/ -- Capital One Financial Corporation NYSE: COF today announced earnings for the first quarter of 2008 of $548.5 million, or $1.47 per share (diluted). Earnings from continuing operations in the first quarter of 2008 were $632.6 million, or $1.70 per share (diluted). In the first quarter of 2007, the company reported earnings of $675.0 million, or $1.62 per share (diluted), and earnings from continuing operations of $686.1 million, or $1.65 per share (diluted). Earnings from continuing operations exclude the loss from discontinued operations related to the shutdown of GreenPoint Mortgage. "In March, we completed a major milestone of our banking integration and launched the Capital One Bank brand in the New York region, marking the completion of our transformation into a diversified bank," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "We're well positioned to navigate near-term cyclical challenges with resilient businesses, experience in managing through prior cyclical downturns, and a strong balance sheet. We're actively managing the company to protect our franchises and deliver shareholder returns."
Highlights of the quarter:
-- Results include a $200 million benefit related to the VISA initial
public offering, a $310 million addition to the company's allowance for
loan losses, and a $104 million increase to the GreenPoint Mortgage rep
and warranty reserve
-- Credit performance was largely in line with expectations; but outlook
significantly deteriorated due to weakness in U.S. economy
-- Managed loans declined $3.3 billion; deposits grew $4.9 billion
-- Ratio of tangible common equity (TCE) to tangible managed assets
increased from 5.83 percent to 6.03 percent.
-- Increased the quarterly dividend per share from $0.027 to $0.375
-- Completed integration of multiple systems, including deposit platform,
and New York metro bank brand conversion.
"A substantial increase in revenue margin coupled with expense reductions largely offset the adverse impact of higher credit costs," said Gary L. Perlin, Capital One's Chief Financial Officer. "Because of the strong capital generation of our businesses, we were able to significantly raise our dividend as planned, while building capital to the high end of our range."
Total Company Results
-- Total deposits of $87.7 billion at March 31, 2008 were up $4.9 billion,
or 6.0 percent, from December 31, 2007 and $224.3 million, or
essentially flat relative to March 31, 2007.
-- Managed loans held for investment of $148.0 billion decreased from the
fourth quarter of 2007 by $3.3 billion, or 2.2 percent, but increased
from the year ago quarter by $6.0 billion, or 4.2 percent.
-- Managed revenue margin of 10.43 percent in the first quarter of 2008
was relatively flat compared to 10.40 percent in the fourth quarter of
2007, but up 123 basis points from 9.20 percent in the first quarter of
2007.
-- Managed provision expense was $1.8 billion. The company added $310.4
million to its allowance in the first quarter of 2008. This allowance
build is consistent with expected managed losses of $6.7 billion over
the next 12 months, ending March 31, 2009.
-- Operating expenses declined $277.5 million relative to the fourth
quarter of 2007. The managed efficiency ratio for the first quarter of
2008 was 38.61 percent, down from 46.15 percent in the fourth quarter
of 2007. Looking forward, the company expects its operating efficiency
ratio to be in the mid-forty percent range or lower for the full year
2008.
Segment Results
Local Banking Segment highlights
The Local Banking business posted modest loan and deposit growth while successfully completing a major platform integration in the quarter. Profits declined, mostly as a result of higher provision expense as the economy weakened. The successful integration of multiple systems, including the deposit platform, and the launch of the Capital One Bank brand in the New York area provide the foundations that will enable the Local Banking business to develop new growth strategies and continue the tradition of providing excellent customer service to banking customers across the franchise.
-- Net income of $75.8 million was down $27.8 million from $103.6 million
in the fourth quarter of 2007.
-- Loans held for investment were up $224.3 million relative to the fourth
quarter of 2007 to $44.2 billion.
-- Total Bank deposits increased $297.9 million from the fourth quarter of
2007 to $73.4 billion.
-- Net charge-off rate of 31 basis points and non-performing loans as a
percent of loans held for investment of 56 basis points increased from
28 basis points and 41 basis points in the fourth quarter of 2007,
respectively.
National Lending Segment In the first quarter of 2008 the company reorganized its National Lending subsegments from U.S. Card, Auto Finance and Global Financial Services to U.S. Card and Other National Lending. The U.S. Card subsegment contains the results of the company's domestic credit card business, as well as small business lending and the installment loan business, which were previously in Global Financial Services. The Other National Lending subsegment contains the results of the company's auto finance business, and the company's international lending businesses, which were previously in Global Financial Services. Components of the Other National Lending subsegment are separately disclosed. Segment and subsegment results have been restated for all periods presented.
-- Profits for the National Lending segment were flat as compared to the
fourth quarter of 2007, and down 26.6 percent relative to the first
quarter of 2007.
-- The managed charge-off rate for the National Lending segment increased
61 basis points to 5.34 percent in the first quarter of 2008 from 4.73
percent in the fourth quarter of 2007.
-- The delinquency rate of 4.73 percent in the first quarter of 2008 for
the National Lending subsegment decreased from 5.17 percent as of
December 31, 2007.
U.S. Card highlights Strong revenue growth and continuing expense reductions partially offset increasing provision expense, resulting in solid profits in the face of cyclical economic headwinds. The US Card business remains well positioned to navigate near-term challenges and continue its profitability through the economic cycle.
-- U.S. Card reported net income of $491.2 million, a 1.5 percent decrease
relative to the fourth quarter of 2007 and an 8.8 percent decrease
relative to the first quarter of 2007.
-- Total revenues decreased $117.2 million, or 4.0 percent, compared to
the fourth quarter of 2007 but increased $474.1 million, or 20.3
percent, over the prior year's same quarter.
-- Non-interest expenses declined 3.8 percent over the previous quarter
and 8.6 percent relative to the first quarter of 2007.
-- Managed loans declined from the fourth quarter of 2007 by 3.4 percent,
or $2.3 billion, to $67.4 billion at March 31, 2008, but increased 3.1
percent from the year ago quarter.
-- Charge-offs rose in the first quarter of 2008 to 5.85 percent from 4.84
percent in the fourth quarter of 2007, and from 3.72 percent in the
first quarter of 2007. The company expects the charge-off rate to be in
the low six percent range for the next six months for the new U.S. Card
subsegment, but higher in the fourth quarter.
-- Delinquencies improved in the first quarter of 2008 to 4.04 percent
from 4.28 percent in the previous quarter but rose from 3.06 percent in
the year ago quarter.
Auto Finance highlights The Auto Finance business posted a net loss in the quarter as the company continued its significant pull back and repositioning of the business. The results of the Auto Finance business continue to be negatively impacted by both the current credit environment, and the company's credit outlook. Origination volumes were reduced significantly as a result of tightening credit policy and increased pricing. The company expects its actions to result in a substantially smaller but more stable Auto Finance business going forward.
-- Auto Finance posted a net loss of $82.4 million in the quarter,
compared to a loss of $112.4 million last quarter. Total revenues
increased $15.5 million and provision and operating expenses decreased
by $29.1 million.
-- Net charge-offs of 3.98 percent declined slightly from 4.00 percent in
the fourth quarter of 2007, but increased from 2.29 percent in the
first quarter of 2007. Delinquencies declined 142 basis points from the
prior quarter to 6.42 percent but rose from 4.64 percent in the year
ago quarter.
-- Originations in the first quarter of $2.4 billion were down 32.7
percent, or $1.2 billion, compared to the prior quarter.
-- Managed loans of $24.6 billion as of March 31, 2008 were down 2.0
percent relative to the fourth quarter of 2007 but up 2.9 percent from
the first quarter of 2007.
International highlights The Canadian credit card business continued to perform relatively well, with stable credit performance and solid returns. The company's credit performance has been stable to modestly improving for several quarters, reflecting a more stable UK credit environment. However, the company remains cautious about growth in the UK, given growing economic uncertainty in that market.
-- International's net income of $33.3 million declined $21.4 million from
the fourth quarter of 2007, but increased $13.8 million from $19.5
million in the year-ago quarter.
-- Charge-offs of 5.30 percent declined 31 basis points from 5.61 percent
in the fourth quarter of 2007, and 74 basis points from 6.04 percent in
the first quarter of 2007.
-- Delinquencies increased 33 basis points to 5.12 percent from 4.79
percent in the prior quarter and 34 basis points from 4.78 percent in
the year ago quarter.
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 17, 2008 for 2008 revenue growth, loan and deposit growth, return on equity, the projected charge-off rate and revenue margin in the U.S. Card subsegment for 2008, estimated loss levels for the 12 months ending March 31, 2009 underlying its provision expenses in the first quarter of 2008, credit performance and trends, operating efficiencies, operating expense reductions, and dividends, 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: general economic conditions affecting interest rates and consumer income, spending, and savings which may affect consumer bankruptcies, defaults, charge-offs and deposit activity; changes in the labor and employment market; changes in the credit environment in the U.S. and/or the UK; the company's ability to execute on its strategic and operational plans; 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 the company's aggregate accounts and balances, and the growth rate and composition thereof; the risk that the benefits of the company's restructuring initiative, including cost savings and other benefits, may not be fully realized; the success of the company's marketing efforts; and general secondary market conditions in the mortgage industry. 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, 2007. About Capital One Capital One Financial Corporation (www.capitalone.com) is a financial holding company whose subsidiaries collectively had $87.7 billion in deposits and $148.0 billion in managed loans outstanding as of March 31, 2008. Headquartered in McLean, VA, Capital One has 745 locations in New York, New Jersey, Connecticut, Texas and Louisiana. It is a diversified financial services company whose principal subsidiaries, Capital One, N.A., Capital One Bank (USA), N. A., and Capital One Auto Finance, Inc., offer a broad spectrum of financial products and services to consumers, small businesses and commercial clients. A Fortune 500 company, Capital One trades on the New York Stock Exchange under the symbol "COF" and is included in the S&P 100 index. NOTE: First quarter 2008 financial results, SEC Filings, and first quarter earnings conference call slides are accessible on Capital One's home page (www.capitalone.com). Choose "Investors" on the bottom of the home page to view and download the earnings press release, slides, and other financial information. Additionally, a podcast and 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
(in millions, except per 2008 2007 2007
share data and as noted) Q1 Q4 Q1
Earnings (Reported Basis)
Net Interest Income $1,811.9 $1,762.3 $1,604.5
Non-Interest Income 2,056.5 (8),(9) 2,158.3 (7) 1,774.4 (6)
Total Revenue (1) 3,868.4 3,920.6 3,378.9
Provision for Loan Losses 1,079.1 1,294.2 350.0
Marketing Expenses 297.8 358.2 330.9
Restructuring Expenses (2) 52.8 27.8 -
Operating Expenses 1,471.7 (3),(4) 1,749.2 (3),(4) 1,643.2 (3)
Income Before Taxes 967.0 491.2 1,054.8
Tax Rate 34.6 % 34.5 % 35.0 %
Income From Continuing
Operations, Net of Tax $632.6 $321.6 $686.1
Loss From Discontinued
Operations, Net of Tax (5) (84.1) (10) (95.0) (11.1)
Net Income $548.5 $226.6 $675.0
Common Share Statistics
Basic EPS:
Income From Continuing
Operations $1.71 $0.85 $1.68
Loss From Discontinued
Operations $(0.23) $(0.25) $(0.03)
Net Income $1.48 $0.60 $1.65
Diluted EPS:
Income From Continuing
Operations $1.70 $0.85 $1.65
Loss From Discontinued
Operations $(0.23) $(0.25) $(0.03)
Net Income $1.47 $0.60 $1.62
Dividends Per Share $0.375 $0.03 $0.03
Tangible Book Value Per
Share (period end) $29.94 $29.00 $29.76
Stock Price Per Share
(period end) $49.22 $47.26 $75.46
Total Market Capitalization
(period end) $18,442.7 $17,623.3 $31,112.2
Shares Outstanding (period
end) 374.7 372.9 412.3
Shares Used to Compute
Basic EPS 370.7 375.6 408.7
Shares Used to Compute
Diluted EPS 372.3 378.4 415.5
Reported Balance Sheet Statistics
(period average) (A)
Average Loans Held for
Investment $99,819 $97,785 $93,466
Average Earning Assets $127,820 $127,242 $120,766
Average Assets $149,460 $150,926 $143,130
Average Interest Bearing
Deposits $74,167 $72,074 $74,654
Total Average Deposits $84,779 $83,813 $86,024
Average Equity $24,569 $24,733 $25,610
Return on Average Assets (ROA) 1.69 % 0.85 % 1.92 %
Return on Average Equity (ROE) 10.30 % 5.20 % 10.72 %
Reported Balance Sheet Statistics
(period end) (A)
Loans Held for Investment $98,356 $101,805 $90,869
Total Assets $150,428 $150,202 $143,832
Interest Bearing Deposits $76,624 $71,715 $76,113
Total Deposits $87,695 $82,761 $87,471
Performance Statistics
(Reported) (A)
Net Interest Income Growth
(annualized) 11 % 34 % 61 %
Non Interest Income Growth
(annualized) (19)% 2 % 25 %
Revenue Growth (annualized) (5)% 16 % 41 %
Net Interest Margin 5.67 % 5.54 % 5.31 %
Revenue Margin 12.11 % 12.32 % 11.19 %
Risk Adjusted Margin (B) 9.71 % 10.28 % 9.77 %
Non Interest Expense as a %
of Average Loans Held for
Investment (annualized) 7.30 % 8.73 % 8.45 %
Efficiency Ratio (C) 45.74 % 53.75 % 58.42 %
Asset Quality Statistics
(Reported) (A)
Allowance $3,273 $2,963 $2,105
Allowance as a % of Reported
Loans Held for Investment 3.33 % 2.91 % 2.32 %
Net Charge-Offs $767 $650 $430
Net Charge-Off Rate 3.07 % 2.66 % 1.84 %
Full-time equivalent
employees (in thousands) 25.4 27.0 30.8
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
MANAGED BASIS (*)
2008 2007 2007
(in millions) Q1 Q4 Q1
Earnings (Managed Basis)
Net Interest Income $2,976.8 $3,000.5 $2,602.5
Non-Interest Income 1,606.7 (8),(9) 1,566.2 (7) 1,294.1 (6)
Total Revenue (1) 4,583.5 4,566.7 3,896.6
Provision for Loan Losses 1,794.2 1,940.3 867.7
Marketing Expenses 297.8 358.2 330.9
Restructuring Expenses (2) 52.8 27.8 -
Operating Expenses 1,471.7 (3),(4) 1,749.2 (3),(4) 1,643.2 (3)
Income Before Taxes 967.0 491.2 1,054.8
Tax Rate 34.6 % 34.5 % 35.0 %
Income From Continuing
Operations, Net of Tax $632.6 $321.6 $686.1
Loss From Discontinued
Operations, Net of Tax (5) (84.1) (10) (95.0) (11.1)
Net Income $548.5 $226.6 $675.0
Managed Balance Sheet Statistics
(period average) (A)
Average Loans Held for
Investment $149,719 $148,362 $144,113
Average Earning Assets $175,709 $175,652 $169,358
Average Assets $198,516 $200,658 $193,034
Return on Average Assets
(ROA) 1.27 % 0.64 % 1.42 %
Managed Balance Sheet
Statistics (period end) (A)
Loans Held for Investment $148,037 $151,362 $142,005
Total Assets $199,362 $198,908 $194,252
Tangible Assets(D) $185,962 $185,428 $180,501
Tangible Common Equity (E) $11,220 $10,814 $12,270
Tangible Common Equity to
Tangible Assets Ratio 6.03 % 5.83 % 6.80 %
% Off-Balance Sheet
Securitizations 34 % 33 % 36 %
Performance Statistics
(Managed) (A)
Net Interest Income Growth
(annualized) (3)% 28 % 45 %
Non Interest Income Growth
(annualized) 10 % 13 % 28 %
Revenue Growth (annualized) 1 % 23 % 39 %
Net Interest Margin 6.78 % 6.83 % 6.15 %
Revenue Margin 10.43 % 10.40 % 9.20 %
Risk Adjusted Margin (B) 7.06 % 7.45 % 6.97 %
Non Interest Expense as a %
of Average Loans Held for
Investment (annualized) 4.87 % 5.76 % 5.48 %
Efficiency Ratio (C) 38.61 % 46.15 % 50.66 %
Asset Quality Statistics
(Managed) (A)
Net Charge-Offs $1,482 $1,296 $947
Net Charge-Off Rate 3.96 % 3.49 % 2.63 %
(*) 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) 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 2008 - $407.6 million, Q4 2007 - $379.4
million and Q1 2007 - $213.6 million.
(2) During the second quarter of 2007, the Company announced a broad-based
initiative to reduce expenses and improve its competitive cost
position. As part of this initiative $52.8 million and $27.8 million
of restructuring charges were recognized as part of continuing
operations during Q1 2008 and Q4 2007, respectively.
(3) Includes core deposit intangible amortization expense of $49.8 million
in Q1 2008, $51.1 million in Q4 2007 and $55.0 million in Q1 2007, and
integration costs of $29.6 million in Q1 2008, $28.6 million in Q4
2007 and $14.6 million in Q1 2007.
(4) In Q4 2007, the Company recognized a pre-tax charge of approximately
$140 million for liabilities in connection with the Visa antitrust
lawsuit settlement with American Express and estimated possible
damages in connection with other pending Visa litigation. In Q1 2008,
the Company, in connection with the Visa initial public offering
(IPO), reversed approximately $91 million of these legal liabilities.
(5) In Q3 2007, the Company shutdown the mortgage origination operations
of its wholesale mortgage banking unit, GreenPoint Mortgage, realizing
an after tax loss of $898.0 million. The results of the mortgage
origination operation of GreenPoint have been accounted for as a
discontinued operation and have been removed from the Company's
results of continuing operations for all periods presented. The
results of GreenPoint's mortgage servicing business are reported in
continuing operations for all periods presented. Effective Q4 2007,
GreenPoint's held for investment commercial and consumer loan
portfolio results are included in continuing operations.
(6) Includes a $46.2 million gain resulting from the sale of a 7% stake
in the privately held company, DealerTrack Holding Inc., a leading
provider of on-demand software and data solutions for the automotive
retail industry in Q1 2007.
(7) During the fourth quarter 2007, the Company completed the sale of its
interest in a relationship agreement to develop and market consumer
credit products in the Spanish Market and recorded a gain related to
this sale of approximately $30 million in non-interest income.
(8) In Q1 2008 the Company recorded a gain of $109.0 million in
non-interest income from the redemption of 2.5 million shares related
to the Visa IPO.
(9) In Q1 2008 the Company repurchased approximately $1.0 billion of
certain senior unsecured debt, recognizing a gain of $52.0 million in
non-interest income. The Company initiated the repurchases to take
advantage of the current rate environment and replaced the borrowings
with lower-rate unsecured funding.
(10) In Q1 2008 the Company recorded a pre-tax expense of $104.2 million
in discontinued operations to cover expected future claims made under
representations and warranties provided by the Company on loans
previously sold to third parties by GreenPoint's mortgage origination
operation. See also note (5) above.
STATISTICS / METRIC DEFINITIONS
(A) Based on continuing operations. Average equity and return on equity
are based on the Company's stockholders' equity.
(B) Risk adjusted margin equals total revenue less net charge-offs as a
percentage of average earning assets.
(C) Efficiency ratio equals non-interest expense less restructuring
expense divided by total revenue.
(D) Tangible assets include managed assets less intangible assets.
(E) Includes stockholders' equity and preferred interests less intangible
assets and related deferred tax liabilities. Tangible Common Equity
on a reported and managed basis is the same.
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS
MANAGED BASIS (1)
2008 2007 2007
(in thousands) Q1 Q4 (6) Q1 (6)
Local Banking:
Interest Income $1,575,325 $1,707,377 $1,746,213
Interest Expense 1,008,371 1,122,841 1,169,160
Net interest income $566,954 $584,536 $577,053
Non-interest income 215,469 206,002 246,573
Provision for loan losses 60,394 42,665 23,776
Other non-interest expenses 605,351 589,943 585,915
Income tax provision 40,837 54,328 74,737
Net income $75,841 $103,602 $139,198
Loans Held for Investment $44,197,085 $43,972,795 $41,642,594
Average Loans Held for
Investment $43,887,387 $43,128,767 $41,846,678
Core Deposits (2) $62,811,696 $62,977,637 $62,769,255
Total Deposits $73,387,227 $73,089,284 $74,315,914
Loans Held for Investment
Yield 6.75% 7.02% 6.99%
Net Interest Margin - Loans (3) 1.92% 1.87% 1.91%
Net Interest Margin - Deposits (4) 1.93% 2.05% 1.99%
Efficiency Ratio (5) 77.37% 74.63% 71.14%
Net charge-off rate 0.31% 0.28% 0.15%
Non Performing Loans $249,055 $178,385 $80,162
Non Performing Loans as a % of
Loans Held for Investment 0.56% 0.41% 0.19%
Non-Interest Expenses as a %
of Average Loans Held for
Investment 5.52% 5.47% 5.60%
Number of Active ATMs 1,297 1,288 1,236
Number of locations 745 742 723
National Lending (8):
Interest Income $3,530,017 $3,670,404 $3,247,815
Interest Expense 1,121,434 1,231,978 1,180,987
Net interest income $2,408,583 $2,438,426 $2,066,828
Non-interest income 1,226,114 1,370,655 1,092,066
Provision for loan losses 1,677,220 1,777,327 849,216
Other non-interest expenses 1,279,171 1,361,709 1,390,851
Income tax provision 236,203 229,084 316,479
Net income $442,103 $440,961 $602,348
Loans Held for Investment $103,003,402 $106,508,443 $100,371,532
Average Loans Held for
Investment $104,973,633 $104,321,485 $102,276,581
Core Deposits(2) $2,171 $1,599 $3,212
Total Deposits $1,774,690 $2,050,861 $2,409,291
Loans Held for Investment
Yield 13.45% 14.07% 12.70%
Net Interest Margin 9.18% 9.35% 8.08%
Revenue Margin 13.85% 14.61% 12.35%
Risk Adjusted Margin 8.51% 9.88% 8.71%
Non-Interest Expenses as a %
of Average Loans Held for
Investment 4.87% 5.22% 5.44%
Efficiency Ratio (5) 35.19% 35.75% 44.03%
Net charge-off rate 5.34% 4.73% 3.65%
Delinquency Rate (30+ days) 4.73% 5.17% 3.63%
Number of Loan Accounts (000s) 48,065 48,537 48,667
Other:
Net interest income $1,313 $(22,449) $(41,427)
Non-interest income 165,102 (10,425) (44,563)
Provision for loan losses 56,598 120,376 (5,330)
Restructuring expenses 52,759 27,809 -
Other non-interest expenses (115,004) 155,746 (2,719)
Income tax provision (benefit) 57,451 (113,854) (22,519)
Net income (loss) $114,611 $(222,951) $(55,422)
Loans Held for Investment $836,041 $881,179 $(9,084)
Core Deposits (2) $10,729,004 $6,107,779 $7,532,854
Total Deposits $12,533,025 $7,621,031 $10,745,405
Total:
Interest Income $4,628,257 $4,863,246 $4,359,663
Interest Expense 1,651,407 1,862,733 1,757,209
Net interest income $2,976,850 $3,000,513 $2,602,454
Non-interest income 1,606,685 1,566,232 1,294,076
Provision for loan losses 1,794,212 1,940,368 867,662
Restructuring expenses 52,759 27,809 -
Other non-interest expenses 1,769,518 2,107,398 1,974,047
Income tax provision 334,491 169,558 368,697
Net Income $632,555 $321,612 $686,124
Loans Held for Investment $148,036,528 $151,362,417 $142,005,042
Core Deposits (2) $73,542,871 $69,087,015 $70,305,321
Total Deposits $87,694,942 $82,761,176 $87,470,610
CAPITAL ONE FINANCIAL CORPORATION (COF)
NATIONAL LENDING SUBSEGMENT FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING
OPERATIONS
MANAGED BASIS (1), (8)
2008 2007 2007
(in thousands) Q1 Q4 (6) Q1 (6)
US Card:
Interest Income $2,433,665 $2,548,929 $2,225,128
Interest Expense 689,951 780,985 777,382
Net interest income $1,743,714 $1,767,944 $1,447,746
Non-interest income 1,070,831 1,163,795 892,668
Provision for loan losses 1,120,025 1,195,469 492,051
Non-interest expenses 938,860 976,118 1,027,549
Income tax provision 264,481 261,492 282,360
Net income $491,179 $498,660 $538,454
Loans Held for Investment $67,382,004 $69,723,169 $65,369,362
Average Loans Held for Investment $68,544,190 $67,727,632 $67,258,715
Loans Held for Investment Yield 14.20% 15.05% 13.23%
Net Interest Margin 10.18% 10.44% 8.61%
Revenue Margin 16.42% 17.31% 13.92%
Risk Adjusted Margin 10.58% 12.47% 10.20%
Non-Interest Expenses as a % of
Average Loans Held for
Investment 5.48% 5.76% 6.11%
Efficiency Ratio 33.36% 33.29% 43.90%
Net charge-off rate 5.85% 4.84% 3.72%
Delinquency Rate (30+ days) 4.04% 4.28% 3.06%
Purchase Volume (7) $24,543,082 $28,230,725 $24,075,372
Number of Loan Accounts (000s) 40,611 41,044 41,318
Auto Finance:
Interest Income $690,919 $687,389 $637,609
Interest Expense 289,357 300,133 265,556
Net interest income $401,562 $387,256 $372,053
Non-interest income 16,110 14,888 60,586
Provision for loan losses 408,251 429,247 200,058
Non-interest expenses 136,169 144,301 164,948
Income tax (benefit) provision (44,362) (58,963) 23,266
Net (loss) income $(82,386) $(112,441) $44,367
Loans Held for Investment $24,633,665 $25,128,352 $23,930,547
Average Loans Held for Investment $25,047,501 $24,920,380 $23,597,675
Loans Held for Investment Yield 11.03% 11.03% 10.81%
Net Interest Margin 6.41% 6.22% 6.31%
Revenue Margin 6.67% 6.45% 7.33%
Risk Adjusted Margin 2.69% 2.46% 5.04%
Non-Interest Expenses as a % of
Average Loans Held for
Investment 2.17% 2.32% 2.80%
Efficiency Ratio 32.60% 35.88% 38.13%
Net charge-off rate 3.98% 4.00% 2.29%
Delinquency Rate (30+ days) 6.42% 7.84% 4.64%
Auto Loan Originations $2,440,227 $3,623,491 $3,311,868
Number of Loan Accounts (000s) 1,763 1,771 1,762
International:
Interest Income $405,433 $434,086 $385,078
Interest Expense 142,126 150,860 138,049
Net interest income $263,307 $283,226 $247,029
Non-interest income 139,173 191,972 138,812
Provision for loan losses 148,944 152,611 157,107
Non-interest expenses 204,142 241,290 198,354
Income tax provision 16,084 26,555 10,853
Net income $33,310 $54,742 $19,527
Loans Held for Investment $10,987,733 $11,656,922 $11,071,623
Average Loans Held for Investment $11,381,942 $11,673,473 $11,420,191
Loans Held for Investment Yield 14.25% 14.87% 13.49%
Net Interest Margin 9.25% 9.70% 8.65%
Revenue Margin 14.14% 16.28% 13.51%
Risk Adjusted Margin 8.84% 10.67% 7.47%
Non-Interest Expenses as a % of
Average Loans Held for
Investment 7.17% 8.27% 6.95%
Efficiency Ratio 50.72% 50.78% 51.41%
Net charge-off rate 5.30% 5.61% 6.04%
Delinquency Rate (30+ days) 5.12% 4.79% 4.78%
Purchase Volume (7) $2,716,060 $2,966,350 $1,874,981
Number of Loan Accounts (000s) 5,691 5,722 5,587
CAPITAL ONE FINANCIAL CORPORATION (COF)
SEGMENT AND NATIONAL LENDING SUBSEGMENT
FINANCIAL & STATISTICAL SUMMARY FOR CONTINUING OPERATIONS NOTES
(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." In Q3 2007,
the Company shutdown the mortgage origination operations of its
wholesale mortgage banking unit, GreenPoint Mortgage. The results of
the mortgage origination operation of GreenPoint have been accounted
for as a discontinued operation and have been removed from the
Company's results of continuing operations for all periods presented.
The results of GreenPoint's mortgage servicing business are reported
in continuing operations for all periods presented. Effective Q4
2007, GreenPoint's held for investment commercial and consumer loan
portfolio results are included in continuing operations.
(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) Net Interest Margin - Loans equals interest income earned on loans
divided by average managed loans.
(4) Net Interest Margin - Deposits equals interest expense incurred on
deposits divided by average retail deposits.
(5) Efficiency Ratio equals non-interest expenses divided by total managed
revenue.
(6) Certain prior period amounts have been reclassified to conform with
current period presentation.
(7) Includes all purchase transactions net of returns and excludes cash
advance transactions.
(8) In Q1 2008 the Company reorganized its National Lending subsegments
from U.S. Card, Auto Finance and Global Financial Services to U.S.
Card and Other National Lending. The U.S. Card subsegment contains
the results of the Company's domestic credit card business, small
business lending and the installment loan business. The Other
National Lending subsegment contains the results of the Company's auto
finance business and the Company's international lending businesses.
Components of the Other National Lending subsegment are separately
disclosed. Segment and subsegment results have been restated for all
periods presented.
CAPITAL ONE FINANCIAL CORPORATION (COF)
U.S. CARD SUBSEGMENT
MONTHLY CHARGE-OFF AND DELINQUENCY STATISTICS(1)
(in thousands) March 2008 February 2008 January 2008
US Card:
Net Principal Charge-Offs $342,098 $314,455 $345,673
Average Loans Held for Investment $67,585,454 $68,635,480 $69,407,764
Annualized Net Charge-Off Rate 6.07% 5.50% 5.98%
30 Days + Delinquencies $2,723,515 $2,871,007 $3,009,706
Period-end Loans Held for
Investment $67,382,681 $68,247,741 $69,080,666
30 Days + Delinquency Rate 4.04% 4.21% 4.36%
(1) In connection with the National Lending subsegment reorganization in
Q1 2008 the Company is restating the monthly charge-off and
delinquency statistics for U.S. Card. The restated U.S. Card
subsegment contains the results of the Company's domestic credit card
business, small business lending and the installment loan business.
CAPITAL ONE FINANCIAL CORPORATION
Reconciliation to GAAP Financial Measures
For the Three Months Ended March 31, 2008
(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(3)
Net interest income $1,811,917 $1,164,933 $2,976,850
Non-interest income 2,056,478 (449,793) 1,606,685
Total revenue 3,868,395 715,140 4,583,535
Provision for loan losses 1,079,072 715,140 1,794,212
Net charge-offs $767,134 $715,140 $1,482,274
Balance Sheet Measures
Loans held for investment $98,356,088 $49,680,440 $148,036,528
Total assets $150,608,527 $48,933,606 $199,542,133
Average loans held for investment $99,818,867 $49,900,631 $149,719,498
Average earning assets $127,867,951 $47,888,798 $175,756,749
Average total assets $151,294,899 $49,055,552 $200,350,451
Delinquencies $3,206,724 $2,061,963 $5,268,687
(1) Income statement adjustments reclassify the net of finance charges of
$1,524.0 million, past-due fees of $263.5 million, other interest
income of $(38.8) million and interest expense of $583.8 million; and
net charge-offs of $715.1 million from non-interest income to net
interest income and provision for loan losses, respectively.
(2) The managed loan portfolio does not include auto loans which have been
sold in whole loan sale transactions where the Company has retained
servicing rights.
(3) Based on continuing operations.
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
As of As of As of
March 31 December 31 March 31
2008 2007 2007
Assets:
Cash and due from banks $2,324,079 $2,377,287 $2,286,913
Federal funds sold and resale
agreements 1,842,775 1,766,762 8,293,338
Interest-bearing deposits at
other banks 663,150 677,360 844,907
Cash and cash equivalents 4,830,004 4,821,409 11,425,158
Securities available for sale 22,190,739 19,781,587 17,657,734
Mortgage loans held for sale 192,584 315,863 4,738,765
Loans held for investment 98,356,088 101,805,027 90,869,496
Less: Allowance for loan and
lease losses (3,273,355) (2,963,000) (2,105,000)
Net loans held for investment 95,082,733 98,842,027 88,764,496
Accounts receivable from
securitizations 5,396,943 4,717,879 5,371,385
Premises and equipment, net 2,316,233 2,299,603 2,258,861
Interest receivable 750,319 839,317 720,511
Goodwill 12,826,419 12,830,740 13,619,445
Other 7,022,553 6,141,944 4,142,250
Total assets $150,608,527 $150,590,369 $148,698,605
Liabilities:
Non-interest-bearing deposits $11,071,116 $11,046,549 $11,357,736
Interest-bearing deposits 76,623,826 71,714,627 76,112,874
Senior and subordinated notes 9,834,392 10,712,706 9,436,021
Other borrowings 21,673,670 26,812,969 20,437,982
Interest payable 509,278 631,609 540,160
Other 6,276,718 5,377,797 4,793,062
Total liabilities 125,989,000 126,296,257 122,677,835
Stockholders' Equity:
Common stock 4,213 4,192 4,146
Paid-in capital, net 15,918,230 15,860,490 15,465,341
Retained earnings and
cumulative other
comprehensive income 11,860,288 11,582,816 10,684,768
Less: Treasury stock, at
cost (3,163,204) (3,153,386) (133,485)
Total stockholders' equity 24,619,527 24,294,112 26,020,770
Total liabilities and
stockholders' equity $150,608,527 $150,590,369 $148,698,605
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended
March 31 December 31 March 31(1)
2008 2007 2007
Interest Income:
Loans held for investment, including
past-due fees $2,507,724 $2,536,779 $2,326,680
Securities available for sale 257,747 256,364 204,080
Other 114,054 167,051 181,549
Total interest income 2,879,525 2,960,194 2,712,309
Interest Expense:
Deposits 610,389 686,174 730,483
Senior and subordinated notes 140,970 159,878 138,546
Other borrowings 316,249 351,895 238,737
Total interest expense 1,067,608 1,197,947 1,107,766
Net interest income 1,811,917 1,762,247 1,604,543
Provision for loan and lease losses 1,079,072 1,294,210 350,045
Net interest income after provision
for loan and lease losses 732,845 468,037 1,254,498
Non-Interest Income:
Servicing and securitizations 1,083,062 1,271,396 988,082
Service charges and other customer-
related fees 574,061 573,034 479,467
Mortgage servicing and other 35,255 (5,700) 51,450
Interchange 151,902 152,595 118,111
Other 212,198 167,015 137,260
Total non-interest income 2,056,478 2,158,340 1,774,370
Non-Interest Expense:
Salaries and associate benefits 611,280 622,101 675,171
Marketing 297,793 358,182 330,894
Communications and data processing 187,243 189,415 182,234
Supplies and equipment 130,931 146,267 133,898
Occupancy 88,080 91,675 77,395
Restructuring expense 52,759 27,809 -
Other 454,191 699,758 574,455
Total non-interest expense 1,822,277 2,135,207 1,974,047
Income from continuing operations
before income taxes 967,046 491,170 1,054,821
Income taxes 334,491 169,558 368,697
Income from continuing operations, net
of tax 632,555 321,612 686,124
Loss from discontinued operations, net
of tax(2) (84,051) (95,044) (11,074)
Net income $548,504 $226,568 $675,050
Basic earnings per share
Income from continuing operations $1.71 $0.85 $1.68
Loss from discontinued operations (0.23) (0.25) (0.03)
Net income $1.48 $0.60 $1.65
Diluted earnings per share
Income from continuing operations $1.70 $0.85 $1.65
Loss from discontinued operations (0.23) (0.25) (0.03)
Net income $1.47 $0.60 $1.62
Dividends paid per share $0.375 $0.03 $0.03
(1) Certain prior period amounts have been reclassified to conform to the
current period presentation.
(2) In Q3 2007, the Company shutdown the mortgage origination operations
of its wholesale mortgage banking unit, GreenPoint Mortgage. The
results of the mortgage origination operation of GreenPoint have been
accounted for as a discontinued operation and have been removed from
the Company's results of continuing operations for all periods
presented.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Reported Quarter Ended 3/31/08
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans held for investment $99,818,867 $2,507,724 10.05%
Securities available for sale 21,211,356 257,747 4.86%
Other 6,789,537 114,054 6.72%
Total earning assets (2) $127,819,760 $2,879,525 9.01%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $3,958,482 $17,714 1.79%
Money market deposit accounts 29,636,896 211,436 2.85%
Savings accounts 8,064,412 24,008 1.19%
Other Consumer Time Deposits 18,429,463 204,942 4.45%
Public Fund CD's of $100,000 or
more 1,671,936 15,718 3.76%
CD's of $100,000 or more 8,756,978 99,264 4.53%
Foreign time deposits 3,648,797 37,307 4.09%
Total Interest-bearing deposits $74,166,964 $610,389 3.29%
Senior and subordinated notes 10,099,878 140,970 5.58%
Other borrowings 25,449,240 316,249 4.97%
Total interest-bearing liabilities(2) $109,716,082 $1,067,608 3.89%
Net interest spread 5.12%
Interest income to average earning
assets 9.01%
Interest expense to average earning
assets 3.34%
Net interest margin 5.67%
Reported Quarter Ended 12/31/07 (1)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans held for investment $97,784,813 $2,536,779 10.38%
Securities available for sale 20,102,440 256,364 5.10%
Other 9,355,161 167,051 7.14%
Total earning assets (2) $127,242,414 $2,960,194 9.31%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $4,674,490 $30,443 2.61%
Money market deposit accounts 28,745,701 270,943 3.77%
Savings accounts 8,172,510 32,520 1.59%
Other Consumer Time Deposits 16,374,958 183,570 4.48%
Public Fund CD's of $100,000 or
more 1,902,442 23,126 4.86%
CD's of $100,000 or more 8,335,941 97,335 4.67%
Foreign time deposits 3,868,444 48,237 4.99%
Total Interest-bearing deposits $72,074,486 $686,174 3.81%
Senior and subordinated notes 10,682,635 159,878 5.99%
Other borrowings 26,671,101 351,895 5.28%
Total interest-bearing liabilities(2) $109,428,222 $1,197,947 4.38%
Net interest spread 4.93%
Interest income to average earning
assets 9.31%
Interest expense to average earning
assets 3.77%
Net interest margin 5.54%
Reported Quarter Ended 3/31/07 (1)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans held for investment $93,465,873 $2,326,680 9.96%
Securities available for sale 16,598,686 204,080 4.92%
Other 10,701,814 181,549 6.79%
Total earning assets (2) $120,766,373 $2,712,309 8.98%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $5,066,120 $35,414 2.80%
Money market deposit accounts 25,273,763 249,654 3.95%
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 $74,654,004 $730,483 3.91%
Senior and subordinated notes 9,517,209 138,546 5.82%
Other borrowings 17,908,044 238,737 5.33%
Total interest-bearing liabilities(2) $102,079,257 $1,107,766 4.34%
Net interest spread 4.64%
Interest income to average earning
assets 8.98%
Interest expense to average earning
assets 3.67%
Net interest margin 5.31%
(1) Prior period amounts have been reclassified to conform with current
period presentation.
(2) Average balances, income and expenses, yields and rates are based on
continuing operations.
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 3/31/08
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans held for investment $149,719,498 $4,315,625 11.53%
Securities available for sale 21,211,356 257,747 4.86%
Other 4,777,704 54,884 4.60%
Total earning assets (3) $175,708,558 $4,628,256 10.54%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $3,958,482 $17,714 1.79%
Money market deposit accounts 29,636,896 211,436 2.85%
Savings accounts 8,064,412 24,008 1.19%
Other Consumer Time Deposits 18,429,463 204,942 4.45%
Public Fund CD's of $100,000 or
more 1,671,936 15,718 3.76%
CD's of $100,000 or more 8,756,978 99,264 4.53%
Foreign time deposits 3,648,797 37,307 4.09%
Total Interest-bearing deposits $74,166,964 $610,389 3.29%
Senior and subordinated notes 10,099,878 140,970 5.58%
Other borrowings 25,449,240 316,249 4.97%
Securitization liability 49,270,231 583,798 4.74%
Total interest-bearing liabilities(3) $158,986,313 $1,651,406 4.15%
Net interest spread 6.39%
Interest income to average earning
assets 10.54%
Interest expense to average earning
assets 3.76%
Net interest margin 6.78%
Managed (1) Quarter Ended 12/31/07 (2)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans held for investment $148,362,338 $4,512,219 12.17%
Securities available for sale 20,102,440 256,364 5.10%
Other 7,186,892 94,663 5.27%
Total earning assets (3) $175,651,670 $4,863,246 11.07%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $4,674,490 $30,443 2.61%
Money market deposit accounts 28,745,701 270,943 3.77%
Savings accounts 8,172,510 32,520 1.59%
Other Consumer Time Deposits 16,374,958 183,570 4.48%
Public Fund CD's of $100,000 or
more 1,902,442 23,126 4.86%
CD's of $100,000 or more 8,335,941 97,335 4.67%
Foreign time deposits 3,868,444 48,237 4.99%
Total Interest-bearing deposits $72,074,486 $686,174 3.81%
Senior and subordinated notes 10,682,635 159,878 5.99%
Other borrowings 26,671,101 351,895 5.28%
Securitization liability 49,847,555 664,786 5.33%
Total interest-bearing liabilities(3) $159,275,777 $1,862,733 4.68%
Net interest spread 6.39%
Interest income to average earning
assets 11.07%
Interest expense to average earning
assets 4.24%
Net interest margin 6.83%
Managed (1) Quarter Ended 3/31/07 (2)
Average Income/ Yield/
Balance Expense Rate
Earning assets:
Loans held for investment $144,112,789 $4,035,997 11.20%
Securities available for sale 16,598,686 204,080 4.92%
Other 8,646,251 119,586 5.53%
Total earning assets (3) $169,357,726 $4,359,663 10.30%
Interest-bearing liabilities:
Interest-bearing deposits
NOW accounts $5,066,120 $35,414 2.80%
Money market deposit accounts 25,273,763 249,654 3.95%
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 $74,654,004 $730,483 3.91%
Senior and subordinated notes 9,517,209 138,546 5.82%
Other borrowings 17,908,044 238,737 5.33%
Securitization liability 49,999,873 649,443 5.20%
Total interest-bearing liabilities(3) $152,079,130 $1,757,209 4.62%
Net interest spread 5.68%
Interest income to average earning
assets 10.30%
Interest expense to average earning
assets 4.15%
Net interest margin 6.15%
(1) The information in this table reflects the adjustment to add back the
effect of securitized loans.
(2) Prior period amounts have been reclassified to conform with current
period presentation.
(3) Average balances, income and expenses, yields and rates are based on
continuing operations.
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