<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
July 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>
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.
------------------------------------------------------------------
99.1. Press Release of the Company dated July 15, 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: July 15, 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 July 15, 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
July 15, 1999 (703) 205-1039 (703) 205-1180
CAPITAL ONE REPORTS RECORD SECOND QUARTER EARNINGS
FALLS CHURCH, Va., (July 15, 1999) --- Capital One Financial Corporation (NYSE:
COF) today announced record second quarter 1999 earnings of $87.5 million, or
$.41 per share, versus earnings of $82.4 million, or $.39 per share, for the
first quarter of 1999 and $66.9 million, or $.32 per share, for the comparable
period in the prior year. All earnings per share amounts reflect the Company's
three-for-one stock split distributed on June 1, 1999.
"Capital One is extremely pleased to report record quarterly earnings
once again. And we've added more than one million customers for the fourth
consecutive quarter," said Richard D. Fairbank, Capital One's Chairman and Chief
Executive Officer. "This robust growth enables us to continue delivering strong
returns while investing in the future."
The managed net charge-off rate decreased significantly to 3.73 percent
for the second quarter of 1999 versus 3.93 percent for the first quarter of 1999
and 5.91 percent for the comparable period in the prior year. The managed
delinquency rate (30+ days) increased to 4.72 percent as of June 30, 1999,
compared with 4.56 percent as of March 31, 1999.
"For the seventh consecutive quarter, our charge-off rate has declined
and continues to be the lowest among industry leaders," said Nigel W. Morris,
Capital One's President and Chief Operating Officer. "We continue to be pleased
by our strong credit performance and revenue growth, which have increased our
margins to record levels."
The managed net interest margin increased to 10.89 percent in the
second quarter of 1999 versus 10.59 percent in the first quarter of 1999 and
9.84 percent for the comparable period in the prior year. The increased margin,
higher non-interest income and the aforementioned decrease in net charge-offs
each contributed to the increase in risk adjusted margin to 15.50 percent,
compared to 14.42 percent for the first quarter of 1999 and 10.83 percent for
the comparable period of the prior year.
During the second quarter of 1999, the Company added 1.2 million net
new accounts, bringing total accounts to 19.2 million. Second quarter 1999
revenue, defined as managed net interest income and non-interest income, rose to
$927 million versus $873 million in the first quarter of 1999 and $653 million
for the comparable period in the prior year. For the quarter, Capital One's
managed consumer loan balances increased by $416 million to $17.9 billion.
Marketing expense for the second quarter of 1999 was a record $178
million compared to $176 million in the first quarter of 1999 and $86 million in
the comparable period of the prior year. Other non-interest expenses (excluding
marketing) for the second quarter of 1999 were $430 million versus $374 million
for the first quarter of 1999 and $246 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 investment in the
Internet.
The allowance for loan losses increased by $15 million during the
second quarter of 1999 to $266 million or 3.58 percent of on-balance sheet
receivables as of June 30, 1999, compared to 3.46 percent as of March 31, 1999.
Capital ratios remained strong as of June 30, 1999 at 14.19 percent of reported
assets and 7.15 percent of managed assets.
The Company also announced that it will begin reporting on America One
as a separate business segment. For the first six months of 1999, the
telecommunications business produced an operating loss (net revenue less
marketing and direct expenses) of $57 million on gross revenues of $67 million.
"These results are consistent with expectations and reflect our upfront
marketing investment in this rapidly growing business," said Mr. Fairbank. "In
response to aggressive competitive pricing, America One is significantly slowing
its investment in certain core wireless market segments and, over time will
increase its investment in market segments that are generally not being served
by major wireless competitors."
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 19.2 million customers and $17.9 billion in
managed loans outstanding as of June 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
99 99 98 98 98
(in millions, except per share data and as noted) Q2 Q1 Q4 Q3 Q2
- --------------------------------------------------------------------------------------------------------------------------------
Earnings (Managed Basis)
<S> <C> <C> <C> <C> <C>
Net Interest Income $ 528.8 $ 515.7 $ 443.4 $ 440.8 $ 399.5
Non-Interest Income 398.5 357.6 327.9 264.6 253.2
------------------------------------------------------------------------------------
Total Revenue 927.3 873.3 771.3 705.4 652.7
Provision for Loan Losses 178.3 190.5 186.3 208.9 213.1
Marketing Expenses 178.2 176.1 159.0 126.5 85.8
Operating Expenses 429.6 373.9 308.9 257.0 246.0
------------------------------------------------------------------------------------
Income Before Taxes 141.1 132.9 117.2 112.9 107.8
Tax Rate 38.0 % 38.0 % 38.0 % 38.0 % 38.0 %
Net Income $ 87.5 $ 82.4 $ 72.7 $ 70.0 $ 66.9
- --------------------------------------------------------------------------------------------------------------------------------
Common Share Statistics
Basic EPS $ 0.44 $ 0.42 $ 0.37 $ 0.36 $ 0.34
Diluted EPS $ 0.41 $ 0.39 $ 0.35 $ 0.33 $ 0.32
Dividends Per Share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period end) $ 7.11 $ 6.69 $ 6.45 $ 5.94 $ 5.44
Stock Price Per Share (period end) $ 55.69 $ 50.33 $ 38.33 $ 34.35 $ 41.40
Total Market Capitalization (period end) $10,991.3 $9,929.1 $7,551.1 $6,758.0 $8,139.0
Shares Outstanding (period end) 197.4 197.3 197.0 196.7 196.6
Shares Used to Compute Basic EPS 197.6 197.2 197.0 197.2 196.6
Shares Used to Compute Diluted EPS 211.5 210.0 209.1 210.0 208.6
- --------------------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period avg.)
Average Loans $ 17,598 $ 17,436 $ 16,547 $ 15,746 $ 14,417
Average Earning Assets $ 19,428 $ 19,482 $ 18,702 $ 17,372 $ 16,242
Average Assets $ 20,714 $ 20,722 $ 19,944 $ 18,597 $ 17,296
Average Equity $ 1,320 $ 1,302 $ 1,212 $ 1,149 $ 1,037
Net Interest Margin 10.89 % 10.59 % 9.48 % 10.15 % 9.84 %
Risk Adjusted Margin (1) 15.50 % 14.42 % 12.21 % 11.68 % 10.83 %
Return on Average Assets (ROA) 1.69 % 1.59 % 1.46 % 1.51 % 1.55 %
Return on Average Equity (ROE) 26.52 % 25.32 % 23.99 % 24.36 % 25.78 %
Net Charge-Off Rate 3.73 % 3.93 % 4.51 % 5.03 % 5.91 %
Net Charge-Offs $ 164.0 $ 171.1 $ 186.5 $ 198.1 $ 213.0
- --------------------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period end)
Reported Loans $ 7,427 $ 7,246 $ 6,157 $ 5,667 $ 5,140
Securitized Loans 10,433 10,198 11,238 10,671 9,829
------------------------------------------------------------------------------------
Total Loans $ 17,860 $ 17,444 $ 17,395 $ 16,338 $ 14,969
Delinquency Rate (30+ days) 4.72 % 4.56 % 4.70 % 4.90 % 5.14 %
Number of Accounts (000's) 19,213 18,022 16,706 14,907 13,588
Total Assets $ 20,985 $ 20,318 $ 20,619 $ 19,211 $ 17,462
Capital, Including Preferred Interests $ 1,501.0 $1,417.2 $1,368.3 $1,267.0 $1,167.0
Capital to Managed Assets Ratio 7.15 % 6.98 % 6.64 % 6.60 % 6.68 %
- --------------------------------------------------------------------------------------------------------------------------------
(1) Risk adjusted margin is total revenue less net charge-offs as a percentage of average earning assets.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
June 30 December 31 June 30
1999 1998 1998
-------------- --------------- ---------------
Assets:
<S> <C> <C> <C>
Cash and due from banks $ 25,582 $ 15,974 $ 8,463
Federal funds sold and resale agreements 261,800
Interest-bearing deposits at other banks 72,616 22,393 30,926
-------------- --------------- ---------------
Cash and cash equivalents 98,198 300,167 39,389
Securities available for sale 1,615,422 1,796,787 1,431,091
Consumer loans 7,426,974 6,157,111 5,140,340
Less: Allowance for loan losses (266,000) (231,000) (213,000)
-------------- --------------- ---------------
Net loans 7,160,974 5,926,111 4,927,340
Premises and equipment, net 347,168 242,147 188,727
Interest receivable 60,858 52,917 45,866
Accounts receivable from securitizations 886,680 833,143 836,274
Other 411,324 268,131 182,751
-------------- --------------- ---------------
Total assets $ 10,580,624 $ 9,419,403 $ 7,651,438
============== =============== ===============
Liabilities:
Interest-bearing deposits $ 2,414,933 $ 1,999,979 $ 1,287,402
Other borrowings 1,356,374 1,644,279 959,480
Senior notes 4,539,776 3,739,393 3,709,404
Deposit notes 99,996
Interest payable 101,150 91,637 83,167
Other 667,407 575,788 345,037
-------------- --------------- ---------------
Total liabilities 9,079,640 8,051,076 6,484,486
Capital Securities 98,048 97,921 97,791
Stockholders' Equity:
Common stock(1) 1,997 1,997 1,997
Paid-in capital, net(1) 626,796 598,167 560,187
Retained earnings and cumulative other comprehensive income 852,105 740,493 550,906
Less: Treasury stock, at cost (77,962) (70,251) (43,929)
-------------- --------------- ---------------
Total stockholders' equity 1,402,936 1,270,406 1,069,161
-------------- --------------- ---------------
Total liabilities and stockholders' equity $ 10,580,624 $ 9,419,403 $ 7,651,438
============== =============== ===============
(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 Six Months Ended
June 30 March 31 June 30 June 30 June 30
1999 1999 1998 1999 1998
------------ ------------ ------------ ------------ ------------
Interest Income:
<S> <C> <C> <C> <C> <C>
Consumer loans, including fees $ 353,193 $ 325,067 $ 245,129 $ 678,260 $ 474,767
Federal funds sold and resale agreements 764 1,487 2,140 2,251 7,218
Other 23,816 26,517 24,169 50,333 47,495
------------ ------------ ------------ ------------ ------------
Total interest income 377,773 353,071 271,438 730,844 529,480
Interest Expense:
Deposits 26,438 23,942 13,635 50,380 27,773
Other borrowings 19,484 23,837 20,375 43,321 36,428
Senior and deposit notes 80,654 72,495 67,704 153,149 130,733
------------ ------------ ------------ ------------ ------------
Total interest expense 126,576 120,274 101,714 246,850 194,934
------------ ------------ ------------ ------------ ------------
Net interest income 251,197 232,797 169,724 483,994 334,546
Provision for loan losses 74,301 74,586 59,013 148,887 144,879
------------ ------------ ------------ ------------ ------------
Net interest income after provision for loan loss 176,896 158,211 110,711 335,107 189,667
Non-Interest Income:
Servicing and securitizations 293,606 271,954 155,412 565,560 324,067
Service charges and other fees 244,874 222,453 153,170 467,327 285,615
Interchange 33,567 30,219 20,371 63,786 35,170
------------ ------------ ------------ ------------ ------------
Total non-interest income 572,047 524,626 328,953 1,096,673 644,852
Non-Interest Expense:
Salaries and associate benefits 194,461 179,194 113,428 373,655 221,381
Marketing 178,242 176,088 85,811 354,330 160,811
Communications and data processing 62,478 58,072 34,840 120,550 64,203
Supplies and equipment 42,303 36,704 32,368 79,007 54,983
Occupancy 16,381 13,914 11,090 30,295 21,734
Other 113,984 85,996 54,299 199,980 97,607
------------ ------------ ------------ ------------ ------------
Total non-interest expense 607,849 549,968 331,836 1,157,817 620,719
------------ ------------ ------------ ------------ ------------
Income before income taxes 141,094 132,869 107,828 273,963 213,800
Income taxes 53,616 50,490 40,975 104,106 81,244
============ ============ ============ ============ ============
Net income $ 87,478 $ 82,379 $ 66,853 $ 169,857 $ 132,556
============ ============ ============ ============ ============
Basic earnings per share(1) $ 0.44 $ 0.42 $ 0.34 $ 0.86 $ 0.67
============ ============ ============ ============ ============
Diluted earnings per share(1) $ 0.41 $ 0.39 $ 0.32 $ 0.80 $ 0.64
============ ============ ============ ============ ============
Dividends paid per share(1) $ 0.03 $ 0.03 $ 0.03 $ 0.05 $ 0.05
============ ============ ============ ============ ============
(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 6/30/99 Quarter Ended 3/31/99
------------------------------------- ------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ----
Earning assets:
<S> <C> <C> <C> <C> <C> <C>
Consumer loans $ 17,597,571 $ 766,595 17.43 % $ 17,435,530 $ 745,643 17.11 %
Federal funds sold and resale agreements 63,578 764 4.81 126,493 1,487 4.70
Other 1,767,280 23,816 5.39 1,920,191 26,517 5.52
------------------------------------- ------------------------------------
Total earning assets $ 19,428,429 $ 791,175 16.29 % $ 19,482,214 $ 773,647 15.88 %
=========================== ==========================
Interest-bearing liabilities:
Deposits $ 2,270,769 $ 26,438 4.66 % $ 2,101,086 $ 23,942 4.56 %
Other borrowings 1,501,960 19,484 5.19 1,680,026 23,837 5.68
Senior and deposit notes 4,620,921 80,654 6.98 4,189,839 72,495 6.92
Securitization liability 10,161,421 135,788 5.35 10,570,532 137,720 5.21
------------------------------------- ------------------------------------
Total interest-bearing liabilities $ 18,555,071 $ 262,364 5.66 % $ 18,541,483 $ 257,994 5.57 %
=========================== ==========================
======= =======
Net interest spread 10.63 % 10.31 %
======= =======
Interest income to average earning assets 16.29 % 15.88 %
Interest expense to average earning assets 5.40 5.29
======= =======
Net interest margin 10.89 % 10.59 %
======= =======
Quarter Ended 6/30/98
-------------------------------------
Average Income/ Yield/
Balance Expense Rate
------- ------- ----
Earning assets:
<S> <C> <C> <C>
Consumer loans $ 14,416,722 $ 607,247 16.85 %
Federal funds sold and resale agreements 151,275 2,140 5.66
Other 1,674,381 24,169 5.77
-------------------------------------
Total earning assets $ 16,242,378 $ 633,556 15.60 %
===========================
Interest-bearing liabilities:
Deposits $ 1,193,508 $ 13,635 4.57 %
Other borrowings 1,318,889 20,375 6.18
Senior and deposit notes 3,905,684 67,704 6.93
Securitization liability 9,190,007 132,337 5.76
-------------------------------------
Total interest-bearing liabilities $ 15,608,088 $ 234,051 6.00 %
===========================
=======
Net interest spread 9.60 %
=======
Interest income to average earning assets 15.60 %
Interest expense to average earning assets 5.76
=======
Net interest margin 9.84 %
=======
(1) The information in this table reflects the adjustment to add back the effect of securitized loans.
</TABLE>