<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
October 14, 1999
(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>
Item 5. Other Events.
------------
(a) See attached press release.
(b) Cautionary Factors
The attached press release contains forward-looking statements which
involve a number of risks and uncertainties. The Company cautions readers that
any forward-looking information is not a guarantee of future performance and
that actual results could differ materially from those contained in the
forward-looking information as a result of various factors including, but not
limited to, the following: continued intense competition from numerous providers
of products and services which compete with the Company's businesses; with
respect to financial and other products, changes in the Company's aggregate
accounts or consumer loan balances and the growth rate thereof, including
changes resulting from factors such as shifting product mix, amount of actual
marketing expenses made by the Company and attrition of accounts and loan
balances; an increase in credit losses (including increases due to a worsening
of general economic conditions); the ability of the Company to continue to
securitize its credit cards and consumer loans and to otherwise access the
capital markets at attractive rates and terms to fund its operations and future
growth; difficulties or delays in the development, production, testing and
marketing of new products or services; losses associated with new products or
services or expansion internationally; financial, legal, regulatory or other
difficulties that may affect investment in, or the overall performance of, a
product or business, including changes in existing laws to regulate further the
credit card and consumer loan industry and the financial services industry, in
general; the amount of, and rate of growth in, the Company's expenses (including
salaries and associate benefits and marketing expenses) as the Company's
business develops or changes or as it expands into new market areas; the
availability of capital necessary to fund the Company's new businesses; the
ability of the Company to build the operational and organizational
infrastructure necessary to engage in new businesses or to expand
internationally; the ability of the Company to recruit experienced personnel to
assist in the management and operations of new products and services; the
ability of the Company and its suppliers to successfully address Year 2000
compliance issues; and other factors listed from time to time in the Company's
SEC reports, including, but not limited to, the Annual Report on Form 10-K for
the year ended December 31, 1998 (Part I, Item 1, Risk Factors).
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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99.1. Press Release of the Company dated October 14, 1999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this Current Report on Form 8-K to be signed on its
behalf by the undersigned, thereto duly authorized.
CAPITAL ONE FINANCIAL CORPORATION
Dated: October 14, 1999 By: /s/ John G. Finneran, Jr.
--------------------------------------
John G. Finneran, Jr.
Senior Vice President, General Counsel
and Corporate Secretary
<PAGE>
EXHIBIT INDEX
99.1 Press Release of the Company dated October 14, 1999.
<PAGE>
Exhibit 99.1
<PAGE>
[LOGO OF CAPITAL ONE APPEARS HERE] NEWS RELEASE
FOR IMMEDIATE RELEASE: Contact: Paul Paquin Sam Wang
- --------------------- V.P., Investor Relations Dir., Media Relations
October 14, 1999 (703) 205-1039 (703) 289-6809
Capital One Reports Record Third Quarter Earnings
Falls Church, Va., (October 14, 1999) --- Capital One Financial Corporation
(NYSE: COF) today announced record third quarter 1999 earnings of $95.4 million,
or $.45 per share, versus earnings of $70.0 million, or $.33 per share, for the
comparable period in the prior year, a 36 percent increase. All earnings per
share amounts reflect the Company's three-for-one stock split distributed on
June 1, 1999.
"We're extremely proud of another record quarter that demonstrates the
outstanding earnings power of our Information-Based Strategy," said Richard D.
Fairbank, Capital One's Chairman and Chief Executive Officer. "This is the
second-largest quarter of account growth in our history and it puts us over the
20 million customer mark."
During the third quarter of 1999, the Company added 1.6 million net new
accounts, bringing total accounts to 20.8 million. Third quarter revenue,
defined as managed net interest income and non-interest income, increased to
$999 million versus $927 million in the second quarter of 1999, and $705 million
for the comparable period in the prior year. For the quarter, Capital One's
managed consumer loan balances increased by $657 million to $18.5 billion.
The managed net interest margin was 11.18 percent in the third quarter of
1999, an increase from 10.89 percent in the second quarter of 1999, and 10.15
percent in the comparable period of the prior year. The increased margin and
higher non-interest income contributed to the increase in risk adjusted margin
to 16.09 percent, compared to 15.50 percent for the second quarter of 1999 and
11.68 percent for the comparable period of the prior year.
The managed delinquency rate (30+ days) increased to 5.06 percent as of
September 30, 1999, compared with 4.72 percent as of June 30, 1999. The managed
net charge-off rate increased to 3.88 percent for the third quarter of 1999
compared with 3.73 percent in the second quarter of 1999.
"Our extraordinary growth is fueled by our robust investment in marketing,"
said Nigel W. Morris, Capital One's President and Chief Operating Officer.
"Thanks to our surgically targeted marketing approach and our conservative
approach to lending, we continue to reap the benefits of the best charge-off
rate in the industry."
Marketing investment decreased slightly in the third quarter of 1999 to
$175 million versus $178 million in the second quarter of 1999, and $126 million
in the comparable period of the prior year. Other non-interest expenses
(excluding marketing) for the third quarter of 1999 were $456 million versus
$430 million for the second quarter of 1999, and $257 million in the comparable
period of the prior year. Operating expenses continue to reflect increased
investment in staff levels associated with the Company's growing account base.
The allowance for loan losses increased $40 million during the third
quarter of 1999 to $306 million or 3.69 percent of on-balance sheet receivables
as of September 30, 1999, compared to 3.58 percent as of June 30, 1999. Capital
ratios remained strong as of September 30, 1999 at 13.50 percent of reported
assets and 7.12 percent of managed assets.
Headquartered in Falls Church, Virginia, Capital One Financial Corporation
(www.CapitalOne.com) is a holding company whose principal subsidiaries, Capital
One Bank and Capital One, F.S.B., offer consumer lending products. Capital One's
subsidiaries collectively had 20.8 million customers and $18.5 billion in
managed loans outstanding as of September 30, 1999, and are among the largest
providers of MasterCard and Visa credit cards in the world. Capital One trades
on the New York Stock Exchange under the symbol "COF" and is included in the S&P
500 Index. Earlier this year, Capital One ranked #41 in Fortune's list of "Best
Places to Work" and #15 best performer in Business Week's rating of the S&P 500.
###
[Note: This release and financial information are available on the Internet
on Capital One's home page (address: http://www.CapitalOne.com). Click on
"Investor Center" to view/download the release and financial information.]
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<TABLE>
<CAPTION>
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
1999 1999 1999 1998 1998
(in millions, except per share data and as noted) Q3 Q2 Q1 Q4 Q3
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings (Managed Basis)
Net Interest Income $ 560.7 $ 528.8 $ 515.7 $ 443.4 $ 440.8
Non-Interest Income 438.6 398.5 357.6 327.9 264.6
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Total Revenue 999.3 927.3 873.3 771.3 705.4
Provision for Loan Losses 214.3 178.3 190.5 186.3 208.9
Marketing Expenses 175.2 178.2 176.1 159.0 126.5
Operating Expenses 456.1 429.6 373.9 308.9 257.0
---------------------------------------------------------------------
Income Before Taxes 153.8 141.1 132.9 117.2 112.9
Tax Rate 38.0 % 38.0 % 38.0 % 38.0 % 38.0 %
Net Income $ 95.4 $ 87.5 $ 82.4 $ 72.7 $ 70.0
- ------------------------------------------------------------------------------------------------------------------
Common Share Statistics
Basic EPS $ 0.48 $ 0.44 $ 0.42 $ 0.37 $ 0.36
Diluted EPS $ 0.45 $ 0.41 $ 0.39 $ 0.35 $ 0.33
Dividends Per Share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period end) $ 7.29 $ 7.11 $ 6.69 $ 6.45 $ 5.94
Stock Price Per Share (period end) $ 39.00 $ 55.69 $ 50.33 $ 38.33 $ 34.35
Total Market Capitalization (period end) $ 7,686.9 $ 10,991.3 $ 9,929.1 $ 7,551.1 $ 6,758.0
Shares Outstanding (period end) 197.1 197.4 197.3 197.0 196.7
Shares Used to Compute Basic EPS 197.4 197.6 197.2 197.0 197.2
Shares Used to Compute Diluted EPS 210.1 211.5 210.0 209.1 210.0
- ------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period avg.)
Average Loans $ 18,162 $ 17,598 $ 17,436 $ 16,547 $ 15,746
Average Earning Assets $ 20,060 $ 19,428 $ 19,482 $ 18,702 $ 17,372
Average Assets $ 21,563 $ 20,714 $ 20,722 $ 19,944 $ 18,597
Average Equity $ 1,461 $ 1,374 $ 1,302 $ 1,212 $ 1,149
Net Interest Margin 11.18 % 10.89 % 10.59 % 9.48 % 10.15 %
Risk Adjusted Margin (1) 16.09 % 15.50 % 14.42 % 12.21 % 11.68 %
Return on Average Assets (ROA) 1.77 % 1.69 % 1.59 % 1.46 % 1.51 %
Return on Average Equity (ROE) 26.12 % 25.47 % 25.32 % 23.99 % 24.36 %
Net Charge-Off Rate 3.88 % 3.73 % 3.93 % 4.51 % 5.03 %
Net Charge-Offs $ 176.0 $ 164.0 $ 171.1 $ 186.5 $ 198.1
- ------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period end)
Reported Loans $ 8,286 $ 7,427 $ 7,246 $ 6,157 $ 5,667
Securitized Loans 10,231 10,433 10,198 11,238 10,671
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Total Loans $ 18,517 $ 17,860 $ 17,444 $ 17,395 $ 16,338
Delinquency Rate (30+ days) 5.06 % 4.72 % 4.56 % 4.70 % 4.90 %
Number of Accounts (000's) 20,845 19,213 18,022 16,706 14,907
Total Assets $ 21,577 $ 20,985 $ 20,318 $ 20,619 $ 19,211
Capital, Including Preferred Interests $ 1,535.3 $ 1,501.0 $ 1,417.2 $ 1,368.3 $ 1,267.0
Capital to Managed Assets Ratio 7.12 % 7.15 % 6.98 % 6.64 % 6.60 %
- ------------------------------------------------------------------------------------------------------------------
(1) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets.
</TABLE>
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<TABLE>
<CAPTION>
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
Sept 30 June 30 Sept 30
1999 1999 1998
--------------- -------------- ------------
Assets:
<S> <C> <C> <C>
Cash and due from banks $ 59,934 $ 25,582 $ 14,974
Federal funds sold and resale agreements 0 0 365,000
Interest-bearing deposits at other banks 53,493 72,616 32,993
--------------- -------------- ------------
Cash and cash equivalents 113,427 98,198 412,967
Securities available for sale 1,708,609 1,615,422 1,296,959
Consumer loans 8,286,210 7,426,974 5,666,998
Less: Allowance for loan losses (306,000) (266,000) (231,000)
--------------- -------------- ------------
Net loans 7,980,210 7,160,974 5,435,998
Premises and equipment, net 429,504 347,168 228,550
Interest receivable 65,350 60,858 49,934
Accounts receivable from securitizations 614,962 886,680 921,602
Other 460,847 411,324 234,766
--------------- -------------- ------------
Total assets $ 11,372,909 $ 10,580,624 $ 8,580,776
=============== ============== ============
Liabilities:
Interest-bearing deposits $ 3,576,400 $ 2,414,933 $ 1,598,335
Other borrowings 1,016,868 1,356,374 1,439,690
Senior notes 4,328,237 4,539,776 3,729,234
Interest payable 87,688 101,150 80,373
Other 828,422 667,407 466,160
--------------- -------------- ------------
Total liabilities 9,837,615 9,079,640 7,313,792
Capital Securities 98,113 98,048 97,856
Stockholders' Equity:
Common stock(1) 1,997 1,997 1,997
Paid-in capital, net(1) 625,771 626,796 598,205
Retained earnings and cumulative other comprehensive income 897,353 852,105 643,855
Less: Treasury stock, at cost (87,940) (77,962) (74,929)
--------------- -------------- ------------
Total stockholders' equity 1,437,181 1,402,936 1,169,128
--------------- -------------- ------------
Total liabilities and stockholders' equity $ 11,372,909 $ 10,580,624 $ 8,580,776
=============== ============== ============
(1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999.
</TABLE>
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<TABLE>
<CAPTION>
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Statements of Income
(in thousands, except per share data)(unaudited)
Three Months Ended Nine Months Ended
Sept 30 June 30 Sept 30 Sept 30 Sept 30
1999 1999 1998 1999 1998
------------- ------------- ------------- ------------- -------------
Interest Income:
<S> <C> <C> <C> <C> <C>
Consumer loans, including fees $ 386,727 $ 353,193 $ 259,339 $ 1,064,987 $ 734,106
Federal funds sold and resale agreements 638 764 957 2,889 8,175
Other 24,671 23,816 22,813 75,004 70,308
------------- ------------- ------------- ------------- -------------
Total interest income 412,036 377,773 283,109 1,142,880 812,589
Interest Expense:
Deposits 38,003 26,438 15,805 88,383 43,578
Other borrowings 19,030 19,484 24,752 62,351 61,180
Senior and deposit notes 76,980 80,654 65,498 230,129 196,231
------------- ------------- ------------- ------------- -------------
Total interest expense 134,013 126,576 106,055 380,863 300,989
------------- ------------- ------------- ------------- -------------
Net interest income 278,023 251,197 177,054 762,017 511,600
Provision for loan losses 114,061 74,301 67,569 262,948 212,448
------------- ------------- ------------- ------------- -------------
Net interest income after provision for loan loss 163,962 176,896 109,485 499,069 299,152
Non-Interest Income:
Servicing and securitizations 311,217 293,606 217,094 876,777 541,161
Service charges and other fees 275,900 244,874 146,648 743,227 432,263
Interchange 33,946 33,567 23,213 97,732 58,383
------------- ------------- ------------- ------------- -------------
Total non-interest income 621,063 572,047 386,955 1,717,736 1,031,807
Non-Interest Expense:
Salaries and associate benefits 199,048 194,461 116,107 572,703 337,488
Marketing 175,163 178,242 126,481 529,493 287,292
Communications and data processing 68,755 62,478 38,415 189,305 102,618
Supplies and equipment 48,076 42,303 27,416 127,083 82,399
Occupancy 19,117 16,381 11,115 49,412 32,849
Other 121,056 113,984 63,993 321,036 161,600
------------- ------------- ------------- ------------- -------------
Total non-interest expense 631,215 607,849 383,527 1,789,032 1,004,246
------------- ------------- ------------- ------------- -------------
Income before income taxes 153,810 141,094 112,913 427,773 326,713
Income taxes 58,448 53,616 42,907 162,554 124,151
------------- ------------- ------------- ------------- -------------
Net income $ 95,362 $ 87,478 $ 70,006 $ 265,219 $ 202,562
============= ============= ============= ============= =============
Basic earnings per share(1) $ 0.48 $ 0.44 $ 0.36 $ 1.34 $ 1.03
============= ============= ============= ============= =============
Diluted earnings per share(1) $ 0.45 $ 0.41 $ 0.33 $ 1.26 $ 0.97
============= ============= ============= ============= =============
Dividends paid per share(1) $ 0.03 $ 0.03 $ 0.03 $ 0.08 $ 0.08
============= ============= ============= ============= =============
(1) All periods have been restated to reflect the Company's three-for-one stock split effective June 1, 1999.
</TABLE>
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<TABLE>
<CAPTION>
CAPITAL ONE FINANCIAL CORPORATION
Statements of Average Balances, Income and Expense, Yields and Rates
(dollars in thousands)(unaudited)
Managed (1) Quarter Ended 9/30/99 Quarter Ended 6/30/99
-------------------------------- --------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ----
Earning assets:
<S> <C> <C> <C> <C> <C> <C>
Consumer loans $ 18,161,975 $ 813,643 17.92 % $ 17,597,571 $ 766,595 17.43 %
Federal funds sold and resale agreement 54,375 638 4.69 63,578 764 4.81
Other 1,843,248 24,463 5.31 1,767,280 23,816 5.39
-------------------------------- --------------------------------
Total earning assets $ 20,059,598 $ 838,744 16.72 % $ 19,428,429 $ 791,175 16.29 %
======================= =======================
Interest-bearing liabilities:
Deposits $ 3,001,711 $ 38,003 5.06 % $ 2,270,769 $ 26,438 4.66 %
Other borrowings 1,235,352 19,030 6.16 1,501,960 19,484 5.19
Senior and deposit notes 4,494,440 76,980 6.85 4,620,921 80,654 6.98
Securitization liability 10,343,724 144,048 5.57 10,161,421 135,788 5.35
-------------------------------- --------------------------------
Total interest-bearing liabilities $ 19,075,227 $ 278,061 5.83 % $ 18,555,071 $ 262,364 5.66 %
======================= =======================
======= =======
Net interest spread 10.89 % 10.63 %
======= =======
Interest income to average earning assets 16.72 % 16.29 %
Interest expense to average earning assets 5.54 5.40
======= =======
Net interest margin 11.18 % 10.89 %
======= =======
Quarter Ended 9/30/98
--------------------------------
Average Income/ Yield/
Balance Expense Rate
Earning assets:
<S> <C> <C> <C>
Consumer loans $ 15,746,091 $ 671,665 17.06 %
Federal funds sold and resale agreement 69,293 957 5.52
Other 1,556,874 22,813 5.86
--------------------------------
Total earning assets $ 17,372,258 $ 695,435 16.01 %
=======================
Interest-bearing liabilities:
Deposits $ 1,368,833 $ 15,805 4.62 %
Other borrowings 1,495,731 24,752 6.62
Senior and deposit notes 3,819,061 65,498 6.86
Securitization liability 10,090,262 148,620 5.89
--------------------------------
Total interest-bearing liabilities $ 16,773,887 $ 254,675 6.07 %
=======================
=======
Net interest spread 9.94 %
=======
Interest income to average earning assets 16.01 %
Interest expense to average earning assets 5.86
=======
Net interest margin 10.15 %
=======
(1) The information in this table reflects the adjustment to add back the effect of securitized loans.
</TABLE>