<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
April 15, 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 1 of ___ Pages
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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 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.
------------------------------------------------------------------
99.1. Press Release of the Company dated April 15, 1999.
Page 2 of ___ Pages
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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: April 15, 1999 By: /s/ John G. Finneran, Jr.
--------------------------------------
John G. Finneran, Jr.
Senior Vice President, General Counsel
and Corporate Secretary
Page 3 of ___ Pages
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EXHIBIT INDEX
99.1 Press Release of the Company dated April 15, 1999.
Page 4 of ___ Pages
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Exhibit 99.1
Page 5 of ___ Pages
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[LOGO OF CAPITAL ONE APPEARS HERE] NEWS RELEASE
FOR IMMEDIATE RELEASE: Contact: Paul Paquin Sam Wang
- --------------------- V.P., Investor Relations Dir., Media Relations
April 15, 1999 (703) 205-1039 (703) 205-1180
CAPITAL ONE REPORTS RECORD FIRST QUARTER EARNINGS
FALLS CHURCH, VA., (April 15, 1999) --- Capital One Financial Corporation (NYSE:
COF) today announced record first quarter 1999 earnings of $82.4 million, or
$1.18 per share, versus earnings of $72.7 million, or $1.04 per share, for the
fourth quarter of 1998 and $65.7 million, or $.96 per share, for the comparable
period in the prior year.
"Capital One enjoyed another quarter of record earnings, fueled by record
revenues and exceptional credit quality," said Richard D. Fairbank, Capital
One's Chairman and Chief Executive Officer. "And we continued our rapid growth
trajectory, growing by more than one million customers for the third consecutive
quarter."
The managed net charge-off rate decreased significantly to 3.93 percent
for the first quarter of 1999 versus 4.51 percent for the fourth quarter of 1998
and 6.04 percent for the comparable period in the prior year. The managed
delinquency rate (30+ days) decreased to 4.56 percent as of March 31, 1999,
compared with 4.70 percent as of December 31, 1998.
"Our charge-off rate has declined for the sixth straight quarter and is
the lowest among industry leaders, as well as the lowest we've seen in three
years," said Nigel W. Morris, Capital One's President and Chief Operating
Officer. "Our improving credit picture helped to boost our risk adjusted margin
to a record 14.42 percent."
The managed net interest margin increased to a record 10.59 percent in the
first quarter of 1999 versus 9.48 percent in the fourth quarter of 1998 and
10.40 percent in the same period of 1998. The increased margin, higher
non-interest income, and the aforementioned decrease in net charge-offs each
contributed to the risk adjusted margin of 14.42 percent, which compares to
12.21 percent for the fourth quarter of 1998.
-more-
<PAGE>
CAPITAL ONE REPORTS RECORD FIRST QUARTER EARNINGS
PAGE 2
During the first quarter of 1999, the Company added 1.3 million net new
accounts, bringing total accounts to 18.0 million. First quarter 1999 revenue,
defined as managed net interest income and non-interest income, rose to $873
million versus $771 million in the fourth quarter of 1998 and $637 million for
the comparable period in the prior year. For the quarter, Capital One's managed
consumer loan balances increased by $49 million to $17.4 billion. This modest
increase compares favorably to the typical first quarter decline that results
after repricings and seasonal paydown.
Marketing expense for the first quarter of 1999 increased to a record $176
million versus $159 million in the fourth quarter of 1998 and $75 million in the
comparable period of the prior year. Other non-interest expenses (excluding
marketing) for the first quarter of 1999 were $374 million versus $309 million
for the fourth quarter of 1998 and $214 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 and the impact of
expansion and diversification into new businesses and markets.
The allowance for loan losses increased by $20 million during the first
quarter to $251 million or 3.46 percent of on-balance sheet receivables as of
March 31, 1999, compared to 3.75 percent as of December 31, 1998. Capital ratios
were strong as of March 31, 1999, at 13.96 percent of reported assets and 6.98
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 18.0 million customers and $17.4 billion in
managed loans outstanding as of March 31, 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. Capital One was recently ranked #41 in Fortune's list of "Best
Companies to Work For" 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
99 98 98 98 98
(in millions, except per share data and as noted Q1 Q4 Q3 Q2 Q1
- ----------------------------------------------------------------------------------------------------------------------------
Earnings (Managed Basis)
<S> <C> <C> <C> <C> <C>
Net Interest Income $ 515.7 $ 443.4 $ 440.8 $ 399.5 $ 416.7
Non-Interest Income 357.6 327.9 264.6 253.2 220.7
---------------------------------------------------------------------------------
Total Revenue 873.3 771.3 705.4 652.7 637.4
Provision for Loan Losses 190.5 186.3 208.9 213.1 242.5
Marketing Expenses 176.1 159.0 126.5 85.8 75.0
Operating Expenses 373.9 308.9 257.0 246.0 213.9
---------------------------------------------------------------------------------
Income Before Taxes 132.9 117.2 112.9 107.8 106.0
Tax Rate 38.0 % 38.0 % 38.0 % 38.0 % 38.0 %
Net Income $ 82.4 $ 72.7 $ 70.0 $ 66.9 $ 65.7
- ----------------------------------------------------------------------------------------------------------------------------
Common Share Statistics
Basic EPS $ 1.25 $ 1.11 $ 1.07 $ 1.02 $ 1.00
Diluted EPS $ 1.18 $ 1.04 $ 1.00 $ 0.96 $ 0.96
Dividends Per Share $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08
Book Value Per Share (period end) $ 20.06 $ 19.35 $ 7.83 $ 16.31 $ 15.08
Stock Price Per Share (period end) $ 151.00 $ 115.00 $ 103.06 $ 124.19 $ 78.88
Total Market Capitalization (period end) $9,929.1 $7,551.1 $6,758.0 $ 8,139.0 $5,163.7
Shares Outstanding (period end) 65.8 65.7 65.6 65.5 65.5
Shares Used to Compute Basic EPS 65.7 65.7 65.7 65.5 65.4
Shares Used to Compute Diluted EPS 70.0 69.7 70.0 69.5 68.4
- ----------------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period avg.)
Average Loans $ 17,436 $ 16,547 $ 15,746 $ 14,417 $ 14,097
Average Earning Assets $ 19,482 $ 18,702 $ 17,372 $ 16,242 $ 16,020
Average Assets $ 20,722 $ 19,944 $ 18,597 $ 17,296 $ 16,834
Average Equity $ 1,302 $ 1,212 $ 1,149 $ 1,037 $ 950
Net Interest Margin 10.59 % 9.48 % 10.15 % 9.84 % 10.40 %
Risk Adjusted Margin (1) 14.42 % 12.21 % 11.68 % 10.83 % 10.60 %
Return on Average Assets (ROA) 1.59 % 1.46 % 1.51 % 1.55 % 1.56 %
Return on Average Equity (ROE) 25.32 % 23.99 % 24.36 % 25.78 % 27.66 %
Net Charge-Off Rate 3.93 % 4.51 % 5.03 % 5.91 % 6.04 %
Net Charge-Offs $ 171.1 $ 186.5 $ 198.1 $ 213.0 $ 212.7
- ----------------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period end)
Reported Loans $ 7,246 $ 6,157 $ 5,667 $ 5,140 $ 4,748
Securitized Loans 10,198 11,238 10,671 9,829 9,254
---------------------------------------------------------------------------------
Total Loans $ 17,444 $ 17,395 $ 16,338 $ 14,969 $ 14,002
Delinquency Rate (30+ days) 4.56 % 4.70 % 4.90 % 5.14 % 5.75 %
Number of Accounts (000's) 18,022 16,706 14,907 13,588 12,674
Total Assets $ 20,318 $ 20,619 $ 19,211 $ 17,462 $ 16,464
Capital, Including Preferred Interests $1,417.2 $1,368.3 $1,267.0 $ 1,167.0 $1,085.2
Capital to Managed Assets Ratio 6.98 % 6.64 % 6.60 % 6.68 % 6.59 %
- ----------------------------------------------------------------------------------------------------------------------------
(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)
March 31 December 31 March 31
1999 1998 1998
--------------- --------------- ---------------
Assets:
<S> <C> <C> <C>
Cash and due from banks $ 13,276 $ 15,974 $ 2,983
Federal funds sold and resale agreements 0 261,800 105,000
Interest-bearing deposits at other banks 34,041 22,393 34,077
--------------- --------------- ---------------
Cash and cash equivalents 47,317 300,167 142,060
Securities available for sale 1,770,398 1,796,787 1,513,398
Consumer loans 7,245,847 6,157,111 4,748,186
Less: Allowance for loan losses (251,000) (231,000) (213,000)
--------------- --------------- ---------------
Net loans 6,994,847 5,926,111 4,535,186
Premises and equipment, net 283,159 242,147 163,757
Interest receivable 66,184 52,917 44,213
Accounts receivable from securitizations 637,563 833,143 696,599
Other 352,159 268,131 128,689
--------------- --------------- ---------------
Total assets $ 10,151,627 $ 9,419,403 $ 7,223,902
=============== =============== ===============
Liabilities:
Interest-bearing deposits $ 2,204,162 $ 1,999,979 $ 1,160,850
Other borrowings 1,171,440 1,644,279 723,614
Senior notes 4,610,049 3,739,393 3,464,176
Deposit notes 0 0 299,996
Interest payable 87,501 91,637 67,544
Other 661,279 575,788 422,480
--------------- --------------- ---------------
Total liabilities 8,734,431 8,051,076 6,138,660
Guaranteed Preferred Beneficial Interests
In Capital One Bank's Floating Rate Junior
Subordinated Capital Income Securities 97,984 97,921 97,727
Stockholders' Equity:
Common stock 666 666 666
Paid-in capital, net 606,929 599,498 543,179
Retained earnings and cumulative other comprehensive income 779,625 740,493 488,075
Less: Treasury stock, at cost (68,008) (70,251) (44,405)
--------------- --------------- ---------------
Total stockholders' equity 1,319,212 1,270,406 987,515
--------------- --------------- ---------------
Total liabilities and stockholders' equity $ 10,151,627 $ 9,419,403 $ 7,223,902
=============== =============== ===============
</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
March 31 December 31 March 31
1999 1998 1998
-------------- --------------- ---------------
Interest Income:
<S> <C> <C> <C>
Consumer loans, including fees $ 325,067 $ 269,016 $ 229,638
Federal funds sold and resale agreements 1,487 4,389 5,078
Other 26,517 25,542 23,326
-------------- --------------- ---------------
Total interest income 353,071 298,947 258,042
Interest Expense:
Deposits 23,942 23,901 14,138
Other borrowings 23,837 27,420 16,053
Senior and deposit notes 72,495 64,444 63,029
-------------- --------------- ---------------
Total interest expense 120,274 115,765 93,220
-------------- --------------- ---------------
Net interest income 232,797 183,182 164,822
Provision for loan losses 74,586 54,580 85,866
-------------- --------------- ---------------
Net interest income after provision for loan losses 158,211 128,602 78,956
Non-Interest Income:
Servicing and securitizations 271,954 248,683 168,655
Service charges and other fees 222,453 179,695 132,445
Interchange 30,219 28,098 14,799
-------------- --------------- ---------------
Total non-interest income 524,626 456,476 315,899
Non-Interest Expense:
Salaries and associate benefits 179,194 138,901 107,953
Marketing 176,088 158,972 75,000
Communications and data processing 58,072 47,602 29,363
Supplies and equipment 36,704 29,702 22,615
Occupancy 13,914 12,488 10,644
Other 85,996 80,205 43,308
-------------- --------------- ---------------
Total non-interest expense 549,968 467,870 288,883
-------------- --------------- ---------------
Income before income taxes 132,869 117,208 105,972
Income taxes 50,490 44,539 40,269
-------------- --------------- ---------------
Net income $ 82,379 $ 72,669 $ 65,703
============== =============== ===============
Basic earnings per share $ 1.25 $ 1.11 $ 1.00
============== =============== ===============
Diluted earnings per share $ 1.18 $ 1.04 $ 0.96
============== =============== ===============
Dividends paid per share $ 0.08 $ 0.08 $ 0.08
============== =============== ===============
</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 3/31/99 Quarter Ended 12/31/98
------------------------------------- -----------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ----
Earning assets:
<S> <C> <C> <C> <C> <C> <C>
Consumer loans $17,435,530 $ 745,643 17.11 % $16,546,962 $ 689,907 16.68 %
Federal funds sold and resale agreements 126,493 1,487 4.70 343,987 4,389 5.10
Other 1,920,191 26,517 5.52 1,810,761 25,542 5.64
------------------------------------- -----------------------------------
Total earning assets $19,482,214 $ 773,647 15.88 % $18,701,710 $ 719,838 15.40 %
========================= ========================
Interest-bearing liabilities:
Deposits $ 2,101,086 $ 23,942 4.56 % $ 1,885,960 $ 23,901 5.07 %
Other borrowings 1,680,026 23,837 5.68 1,605,798 27,420 6.83
Senior and deposit notes 4,189,839 72,495 6.92 3,741,707 64,444 6.89
Securitization liability 10,570,532 137,720 5.21 10,751,360 160,625 5.98
------------------------------------- -----------------------------------
Total interest-bearing liabilities $18,541,483 $ 257,994 5.57 % $17,984,825 $ 276,390 6.15 %
========================= =========================
--------- ------
Net interest spread 10.31 % 9.25 %
========= ======
Interest income to average earning assets 15.88 % 15.40 %
Interest expense to average earning assets 5.29 5.92
-------- -------
Net interest margin 10.59 % 9.48 %
========= =======
Net interest margin
Quarter Ended 3/31/98
Average Income/ Yield/
Balance Expense Rate
Earning assets:
<S> <C> <C> <C>
Consumer loans $14,097,475 $ 615,053 17.45 %
Federal funds sold and resale agreements 362,680 5,078 5.60
Other 1,559,732 23,326 5.98
----------- ----------- ---------
Total earning assets $16,019,887 $ 643,457 16.06 %
=========== ===========
Interest-bearing liabilities:
Deposits $ 1,266,064 $ 14,138 4.47 %
Other borrowings 1,077,082 16,053 5.96
Senior and deposit notes 3,683,113 63,029 6.85
Securitization liability 9,297,590 133,526 5.74
----------- ----------- ---------
Total interest-bearing liabilities $15,323,849 $ 226,746 5.92 %
=========== ===========
----------- ----------- ---------
Net interest spread 10.31 % 9.25 % 10.14 %
=========== =========== =========
Interest income to average earning assets 16.06 %
Interest expense to average earning assets 5.66
-------
Net interest margin 10.40 %
=======
(1) The information in this table reflects the adjustment to add back the effect of securitized loans.
</TABLE>
