<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
January 22, 1997
----------------
(Date of earliest event reported)
Capital One Financial Corporation
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-13300 54-1719854
- - -------------------------- ---------------- ------------------
(State of incorporation (Commission File (IRS Employer
or organization) Number) Identification No.)
2980 Fairview Park Drive
Suite 1300
Falls Church, Virginia 22042
- - --------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 205-1000
Page 1 of 4 Pages
<PAGE>
Item 5. Other Events.
------------
On January 22, 1997, Capital One Financial Corporation (the "Company")
issued a news release announcing its earnings for the quarter ended December 31,
1996. The news release and financial information that is included herewith as
Exhibit 99.1 is incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
------------------------------------------------------------------
99.1 Earnings news release and financial information of the Company, dated
January 22, 1997.
Page 2 of 4 Pages
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereto duly authorized.
CAPITAL ONE FINANCIAL CORPORATION
Dated: January 27, 1997 By: /s/ John G. Finneran, Jr.
--------------------------
John G. Finneran, Jr.
Senior Vice President, General Counsel
and Corporate Secretary
Page 3 of 4 Pages
<PAGE>
EXHIBIT INDEX
99.1 Earnings news release and financial information of the Company, dated
January 22, 1997.
Page 4 of 4 Pages
<PAGE>
[CAPITAL ONE LETTERHEAD APPEARS HERE]
FOR IMMEDIATE RELEASE: Contact: Paul Paquin
- - ---------------------- V.P., Investor Relations
January 22, 1997 (703) 205-1039
Diana Sun
Director, Media Relations
(703) 205-1184
Capital One Reports Record Earnings
Earnings Per Share Increased 21 Percent in 1996
FALLS CHURCH, Va. (January 22, 1997) -- Capital One Financial
Corporation (NYSE: COF) today announced record earnings for 1996. Earnings were
$155.3 million, or $2.30 per share, compared with earnings of $126.5 million, or
$1.90 per share, in 1995. For the fourth quarter 1996, earnings were $40.3
million, or $.60 per share, versus earnings of $38.8 million, or $.58 per share
for the third quarter of 1996 and $37.8 million, or $.57 per share, for the
comparable period in the prior year.
"We are pleased with our success in delivering earnings growth and
return on equity in excess of 20 percent," said Richard D. Fairbank, Capital
One's Chairman and Chief Executive Officer. "We continue to see the successes
of our information-based strategy in the company's revenue power, which allows
us to maintain our margins in a softening consumer credit environment. We
believe that our strategy of delivering customized products and services will
continue to provide strong results."
For the year, the Company increased managed receivables by $2.4
billion, or 23 percent, and added 2.4 million net new accounts, a 40 percent
increase over 1995. During the fourth quarter, Capital One increased its
managed portfolio by $663 million to $12.8 billion in outstanding receivables
and added 354,000 net new accounts, bringing the total number of accounts to 8.6
million. Revenue for the year, defined as managed net interest income and non-
interest income, rose to almost $1.5 billion, a 63 percent increase from
revenues of $906 million in 1995. For the fourth quarter, total revenue rose to
$437 million versus $401 million in the third quarter and $264 million for the
comparable period in the prior year.
"By all measures, we had another solid year of growth," said Nigel W.
Morris, Capital One's President and Chief Operating Officer. "Our 1996 account
growth, managed loan growth
-more-
<PAGE>
Capital One Reports 1996 Earnings/Page 2
and revenue growth led to record profits. Our associates continue to harness the
information-based strategy to build the platform for future growth."
Managed net interest margin for the full year 1996 increased by 188
basis points to 8.16 percent from 6.28 percent in the prior year. The fourth
quarter managed net interest margin declined slightly to 8.29 percent from 8.35
percent in the third quarter; this compares to 6.49 percent for the comparable
period of 1995.
Managed non-interest income for 1996 increased by 67 percent to $460.5
million from $276.3 million in 1995. Managed non-interest income increased to
$154.3 million in the fourth quarter from $133.4 million in the third quarter of
1996 and $76.8 million in the comparable quarter in 1995.
The managed net charge-off rate for 1996 was 4.24 percent compared to
2.25 percent for 1995. The managed net charge-off rate increased to 5.11
percent in the fourth quarter versus 4.19 percent in the third quarter. The
year-end managed delinquency rate increased to 6.42 percent versus 5.31 percent
at September 30, 1996 and 4.20 percent at December 31, 1995. These increases
are due to continued softening of consumer credit, an ongoing shift in the
product mix to higher-yielding products for underserved segments and slower
portfolio growth.
Solicitation (marketing) expense for 1996 increased to a record $206.6
million, up 41 percent from $146.8 million in 1995. Fourth quarter solicitation
expense of $52.2 million represents the second largest quarterly marketing level
to date. This amount compares to $60.2 million in the third quarter of 1996 and
$37.3 million in the comparable period of the prior year.
The allowance for loan losses was increased by $26.0 million during
the fourth quarter and as a percentage of on-balance sheet receivables was 2.73
percent at year-end. Capital ratios were strong at quarter-end at 11.45 percent
of reported assets and 4.96 percent of managed assets.
Headquartered in Falls Church, Virginia, Capital One Financial
Corporation is a financial services company whose principal subsidiaries,
Capital One Bank, and Capital One, F.S.B., offer consumer lending products.
Capital One's subsidiaries collectively had 8.6 million customers and $12.8
billion in managed loans outstanding at December 31, 1996, and are among the
largest providers of MasterCard and Visa credit cards in the United States.
###
[Note: This release and financial statements are available on the Internet on
Capital One's home page (address: http://www.capitalone.com). Click on
"Financial Information" to view/download the release and financial information.]
<PAGE>
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
<TABLE>
<CAPTION>
(in millions, except per share 96 96 96 96 95
data and as noted) Q4 Q3 Q2 Q1 Q4
- - -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings (Managed Basis)
Net Interest Income $ 282.6 $ 267.2 $ 231.6 $ 232.1 $ 186.9
Non-Interest Income 154.3 133.4 96.1 76.6 76.8
-------------------------------------------------------------------------
Total Revenue 436.9 400.6 327.7 308.7 263.7
Provision for Loan Losses 171.5 141.2 107.7 92.0 68.8
Marketing Expenses 52.2 60.2 42.7 51.5 37.3
Operating Expenses 148.4 136.6 116.6 104.9 98.5
-------------------------------------------------------------------------
Income Before Taxes 64.9 62.6 60.6 60.3 59.1
Tax Rate 38.0 % 38.0 % 37.0 % 37.0 % 36.0 %
Net Income $ 40.3 $ 38.8 $ 38.2 $ 38.0 $ 37.8
- - -------------------------------------------------------------------------------------------------------------------
Common Share Statistics
EPS $ 0.60 $ 0.58 $ 0.57 $ 0.57 $ 0.57
Dividends Per Share $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08
Book Value Per Share (period end) $ 11.16 $ 10.58 $ 10.03 $ 9.51 $ 9.05
Stock Price Per Share (period end) $ 36.00 $ 29.88 $ 28.50 $ 27.50 $ 23.88
Total Market Capitalization (period end) $ 2,387.7 $ 1,980.3 $ 1,888.1 $ 1,820.9 $ 1,579.9
Shares Outstanding (period end) 66.3 66.3 66.2 66.2 66.2
Shares Used to Compute EPS 67.6 67.0 66.9 66.8 66.7
- - -------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period avg.)
Average Loans $ 12,471 $ 11,581 $ 10,740 $ 10,265 $ 10,275
Average Earning Assets $ 13,635 $ 12,809 $ 11,673 $ 11,567 $ 11,523
Average Assets $ 14,459 $ 13,718 $ 12,392 $ 12,214 $ 12,152
Average Stockholders' Equity $ 733 $ 698 $ 644 $ 631 $ 591
Net Interest Margin 8.29 % 8.35 % 7.94 % 8.03 % 6.49 %
Return on Average Assets (ROA) 1.11 % 1.13 % 1.23 % 1.24 % 1.24 %
Return on Average Equity (ROE) 21.95 % 22.24 % 23.73 % 24.10 % 25.59 %
Charge-Off Rate 5.11 % 4.19 % 3.97 % 3.53 % 2.58 %
Net Charge-Offs $ 159.2 $ 121.4 $ 106.6 $ 90.6 $ 66.1
- - -------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period end)
Reported Loans $ 4,344 $ 4,462 $ 3,570 $ 2,592 $ 2,922
Securitized Loans 8,460 7,679 7,609 7,524 7,523
-------------------------------------------------------------------------
Total Loans $ 12,804 $ 12,141 $ 11,179 $ 10,116 $ 10,445
Delinquency Rate (over 30 days) 6.42 % 5.31 % 4.59 % 4.51 % 4.20 %
Number of Accounts (000's) 8,586 8,232 7,758 6,661 6,149
Total Assets $ 14,928 $ 14,272 $ 13,285 $ 11,866 $ 12,283
Stockholders' Equity $ 740.4 $ 701.3 $ 664.3 $ 629.8 $ 599.2
Equity to Managed Assets Ratio 4.96 % 4.91 % 5.00 % 5.31 % 4.88 %
Percent Introductory Rate Loans 27 % 27 % 28 % 26 % 44 %
Employees (FTE) 5,740 5,232 4,760 3,883 3,559
- - -------------------------------------------------------------------------------------------------------------------
</TABLE>
- 3 -
<PAGE>
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
<TABLE>
<CAPTION>
December 31 September 30 December 31
1996 1996 1995
----------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 48,724 $ 155,474 $ 51,680
Federal funds sold 450,000 250,000 465,000
Interest-bearing deposits at other banks 30,252 376,050 355,780
----------- ----------- -----------
Cash and cash equivalents 528,976 781,524 872,460
Securities available for sale 865,001 684,989 413,016
Consumer loans held for securitization 1,300,000 400,000
Consumer loans 4,343,902 3,162,008 2,521,679
Less: Allowance for loan losses (118,500) (92,500) (72,000)
----------- ----------- -----------
Net loans 4,225,402 3,069,508 2,449,679
Premises and equipment, net 174,661 164,630 139,074
Interest receivable 78,590 40,694 55,573
Accounts receivable from securitizations 502,520 483,239 359,379
Other assets 92,295 68,510 70,140
----------- ----------- -----------
Total assets $ 6,467,445 $ 6,593,094 $ 4,759,321
=========== =========== ===========
LIABILITIES
Interest-bearing deposits $ 943,022 $ 1,294,695 $ 696,037
Other short-term borrowings 530,983 716,492 809,803
Senior notes 3,694,237 3,363,123 2,491,869
Deposit notes 299,996 299,996
Interest payable 80,362 56,696 73,931
Other liabilities 178,454 160,813 88,490
----------- ----------- -----------
Total liabilities 5,727,054 5,891,815 4,160,130
STOCKHOLDERS' EQUITY
Common stock 663 663 662
Paid-in capital, net 481,383 476,921 469,830
Retained earnings 258,345 223,695 128,699
----------- ----------- -----------
Total stockholders' equity 740,391 701,279 599,191
----------- ----------- -----------
Total liabilities and stockholders' equity $ 6,467,445 $ 6,593,094 $ 4,759,321
=========== =========== ===========
</TABLE>
-4-
<PAGE>
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
December 31 September 30 December 31 December 31
1996 1996 1995 1996 1995
------------------------------------------ ----------------------
<S> <C> <C> <C> <C> <C>
Interest income:
Consumer loans, including fees $ 183,981 $ 170,593 $ 115,806 $ 592,088 $ 397,654
Federal funds sold 4,944 3,885 7,532 21,293 26,832
Other 12,428 13,757 11,659 47,102 32,923
------------------------------------------ ----------------------
Total interest income 201,353 188,235 134,997 660,483 457,409
Interest expense:
Deposits 16,129 16,569 13,254 56,272 49,547
Other short-term borrowings 7,059 7,535 14,142 28,509 66,214
Senior and deposit notes 64,596 57,477 42,545 210,218 133,635
------------------------------------------ ----------------------
Total interest expense 87,784 81,581 69,941 294,999 249,396
------------------------------------------ ----------------------
Net interest income 113,569 106,654 65,056 365,484 208,013
Provision for loan losses 63,035 53,933 21,347 167,246 65,895
------------------------------------------ ----------------------
Net interest income after provision for loan losses 50,534 52,721 43,709 198,238 142,118
Non-interest income:
Servicing income 112,983 109,549 110,439 459,833 409,927
Service charges 77,347 72,983 25,213 218,988 86,029
Interchange 14,135 14,847 9,805 51,399 33,457
Other 10,496 9,337 5,777 33,204 23,630
------------------------------------------ ----------------------
Total non-interest income 214,961 206,716 151,234 763,424 553,043
Non-interest expense:
Salaries and associate benefits 63,662 57,562 37,743 215,155 135,833
Solicitation 52,186 60,177 37,336 206,620 146,810
Communications and data processing 21,771 20,251 14,595 76,841 61,508
Supplies and equipment 17,784 15,486 12,368 60,053 42,081
Occupancy 7,619 5,692 3,843 22,330 13,655
Other 37,553 37,655 29,949 132,183 97,543
------------------------------------------ ----------------------
Total non-interest expense 200,575 196,823 135,834 713,182 497,430
------------------------------------------ ----------------------
Income before income taxes 64,920 62,614 59,109 248,480 197,731
Income taxes 24,670 23,793 21,301 93,213 71,220
------------------------------------------ ----------------------
Net income $ 40,250 $ 38,821 $ 37,808 $ 155,267 $ 126,511
========================================== ======================
Earnings per share $ .60 $ .58 $ .57 $ 2.30 $ 1.90
========================================== ======================
Dividends paid per share $ .08 $ .08 $ .08 $ .32 $ .24
========================================== ======================
</TABLE>
-5-
<PAGE>
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
<TABLE>
<CAPTION>
Managed (1) Quarter Ended 12/31/96 Quarter Ended 9/30/96
----------------------------------- -------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Assets:
Earning assets
Consumer loans $ 12,471,141 $ 464,469 14.90% $ 11,581,054 $ 438,280 15.14%
Federal funds sold 365,112 4,944 5.42% 281,598 3,685 5.52%
Other securities 799,039 12,428 6.22% 946,156 13,757 5.82%
----------------------------------- --------------------------------
Total earning assets 13,635,292 481,841 14.14% 12,808,810 455,922 14.24%
Cash and due from banks 60,715 30,405
Allowance for loan losses (105,497) (80,830)
Premises and equipment, net 170,127 160,140
Other assets 698,346 799,109
----------------- --------------
Total assets $ 14,458,983 $ 13,717,634
================= ==============
Liabilities and Equity:
Interest-bearing liabilities
Deposits $ 1,298,103 $ 16,129 4.97% $ 1,234,066 $ 16,569 5.37%
Other short-term borrowings 471,708 7,059 5.99% 465,596 7,535 6.47%
Senior and deposit notes 3,842,830 64,596 6.72% 3,434,769 57,477 6.69%
Securitization liability 7,823,379 111,421 5.70% 7,625,933 107,107 5.62%
----------------------------------- --------------------------------
Total interest-bearing liabilities 13,436,020 199,205 5.93% 12,760,364 188,688 5.91%
Other liabilities 289,567 259,028
----------------- --------------
Total liabilities 13,725,587 13,019,392
Equity 733,396 698,242
----------------- --------------
Total liabilities and equity $ 14,458,983 $ 13,717,634
================= ==============
-------- --------
Net interest spread 8.21% 8.33%
======== ========
Interest income to average earning assets 14.14% 14.24%
Interest expense to average earning assets 5.85% 5.89%
-------- --------
Net interest margin 8.29% 8.35%
======== ========
<CAPTION>
Quarter Ended 12/31/95
------------------------------------
Average Income/ Yield/
Balance Expense Rate
------- ------- ----
<S> <C> <C> <C>
Assets:
Earning assets
Consumer loans $ 10,275,160 $ 343,509 13.37%
Federal funds sold 515,513 7,532 5.84%
Other securities 732,182 11,659 6.37%
------------------------------------
Total earning assets 11,522,852 362,700 12.59%
Cash and due from banks 21,840
Allowance for loan losses (74,087)
Premises and equipment, net 152,790
Other assets 528,910
--------------
Total assets $ 12,152,308
==============
Liabilities and Equity:
Interest-bearing liabilities
Deposits $ 842,472 $ 13,254 6.29%
Other short-term borrowings 935,098 14,142 6.05%
Senior and deposit notes 2,491,868 42,545 6.83%
Securitization liability 7,108,769 105,873 5.96%
------------------------------------
Total interest-bearing liabilities 11,378,207 175,814 6.18%
Other liabilities 183,018
--------------
Total liabilities 11,561,225
Equity 591,083
--------------
Total liabilities and equity $ 12,152,308
==============
--------
Net interest spread 6.41%
========
Interest income to average earning assets 12.59%
Interest expense to average earning assets 6.10%
--------
Net interest margin 6.49%
========
</TABLE>
(1) The information in this table reflects the adjustment to add back the effect
of securitized loans.
-6-
<PAGE>
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
<TABLE>
<CAPTION>
Reported Quarter Ended 12/31/96 Quarter Ended 9/30/96
--------------------------------------------- ---------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Assets:
Earning assets
Consumer loans $ 4,647,762 $ 183,981 15.83% $ 3,955,121 $ 170,593 17.25%
Federal funds sold 365,112 4,944 5.42% 281,598 3,885 5.52%
Other securities 799,039 12,428 6.22% 946,158 13,757 5.82%
--------------------------------------------- ---------------------------------------------
Total earning assets 5,811,913 201,353 13.86% 5,182,877 188,235 14.53%
Cash and due from banks 60,715 30,405
Allowance for loan losses (105,497) (80,830)
Premises and equipment, net 170,127 160,140
Other assets 698,346 799,109
---------------- ---------------
Total assets $ 6,635,604 $ 6,091,701
================ ===============
Liabilities and Equity:
Interest-bearing liabilities
Deposits $ 1,298,103 $ 16,129 4.97% $ 1,234,066 $ 16,569 5.37%
Other short-term borrowings 471,708 7,059 5.99% 465,596 7,535 6.47%
Senior and deposit notes 3,842,830 64,596 6.72% 3,434,769 57,477 6.69%
--------------------------------------------- ---------------------------------------------
Total interest-bearing liabilities 5,612,641 87,784 6.26% 5,134,431 81,581 6.36%
Other liabilities 289,567 259,028
---------------- ---------------
Total liabilities 5,902,208 5,393,459
Equity 733,396 698,242
---------------- ---------------
Total liabilities and equity $ 6,635,604 $ 6,091,701
================ ===============
-------- --------
Net interest spread 7.60% 8.17%
======== ========
Interest income to average earning assets 13.86% 14.53%
Interest expense to average earning assets 6.04% 6.30%
-------- --------
Net interest margin 7.82% 8.23%
======== ========
</TABLE>
<TABLE>
<CAPTION>
Quarter Ended 12/31/95
---------------------------------------------
Average Income/ Yield/
Balance Expense Rate
------- ------- ----
<S> <C> <C> <C>
Assets:
Earning assets
Consumer loans $ 3,166,392 $ 115,806 14.63%
Federal funds sold 515,513 7,532 5.84%
Other securities 732,182 11,659 6.37%
---------------------------------------------
Total earning assets 4,414,087 134,997 12.23%
Cash and due from banks 21,840
Allowance for loan losses (74,087)
Premises and equipment, net 152,790
Other assets 528,909
----------------
Total assets $ 5,043,539
================
Liabilities and Equity:
Interest-bearing liabilities
Deposits $ 842,472 $ 13,254 6.29%
Other short-term borrowings 935,098 14,142 6.05%
Senior and deposit notes 2,491,868 42,545 6.83%
----------------------------------------------
Total interest-bearing liabilities 4,269,438 69,941 6.55%
Other liabilities 183,018
----------------
Total liabilities 4,452,456
Equity 591,083
----------------
Total liabilities and equity $ 5,043,539
================
--------
Net interest spread 5.68%
========
Interest income to average earning assets 12.23%
Interest expense to average earning assets 6.33%
--------
Net interest margin 5.90%
========
</TABLE>
