<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 18, 2000
---------------------------------------
(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; 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 January 18, 2000.
Page 2
<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: January 18, 2000 By: /s/ John G. Finneran, Jr.
-----------------------------------
John G. Finneran, Jr.
Senior Vice President, General Counsel
and Corporate Secretary
Page 3
<PAGE>
EXHIBIT INDEX
99.1 Press Release of the Company dated January 18, 2000.
Page 4
<PAGE>
Exhibit 99.1
Page 5
<PAGE>
[LOGO OF CAPITAL ONE APPEARS HERE] NEWS RELEASE
<TABLE>
<S> <C> <C>
FOR IMMEDIATE RELEASE: Contact: Paul Paquin Sam Wang
- ---------------------- V.P., Investor Relations Dir., Media Relations
January 18, 2000 (703) 205-1039 (703) 289-6809
</TABLE>
Capital One Reports Record Earnings
Earnings Per Share Increased 30 Percent in 1999
FALLS CHURCH, Va. (January 18, 2000) -- Capital One Financial Corporation
(NYSE: COF) today announced record earnings for 1999. Earnings were $363.1
million, or $1.72 per share, in 1999 compared with earnings of $275.2 million,
or $1.32 per share, in 1998. For the fourth quarter of 1999, earnings were $97.9
million, or $.47 per share, versus earnings of $72.7 million, or $.35 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.
"The fourth quarter was one of our strongest ever, helping us achieve 30
percent earnings per share growth for the year," said Richard D. Fairbank,
Chairman and Chief Executive Officer. "In each and every year since our IPO in
1994, we have exceeded our goal of 20 percent earnings per share growth. Our
record fourth quarter gives us tremendous momentum as we target 30 percent
earnings per share growth in 2000."
For the year, the Company increased managed receivables by $2.8
billion, or 16 percent, and added 7.0 million net new accounts, a 42 percent
increase over 1998. During the fourth quarter, Capital One increased its
managed portfolio by a record $1.7 billion to $20.2 billion in outstanding
receivables and added a record 2.9 million net new accounts, bringing the total
number of accounts to 23.7 million. Revenue for the year, defined as managed
net interest income and non-interest income, was a record $3.8 billion, a 39
percent increase from revenues of $2.8 billion in 1998. For the fourth quarter,
total revenue rose to $1.05 billion versus $998 million in the third quarter and
$770 million for the comparable period in the prior year.
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<PAGE>
Capital One Reports Record Earnings
Page 2
Managed net interest income for 1999 increased by 28 percent to $2.2
billion from $1.7 billion in 1998. In the fourth quarter, it increased to $575
million from $559 million in the third quarter and $442 million in the fourth
quarter of 1998. The managed net interest margin for 1999 increased by 92 basis
points to 10.83 percent from 9.91 percent in 1998. In the fourth quarter, the
managed net interest margin decreased to 10.78 percent from 11.14 percent in the
third quarter and increased from 9.45 percent for the comparable period of 1998.
The fourth quarter 1999 decline in margin reflects the impact of management's
decision to maintain higher levels of liquidity in the fourth quarter to insure
against any Y2K problems.
Managed non-interest income for 1999 increased by 56 percent to $1.7
billion from $1.1 billion in 1998. In the fourth quarter, managed non-interest
income increased to $474 million from $439 million in the third quarter and $328
million for the comparable quarter of 1998. This growth continues to reflect
increased annual membership, interchange, cross sell and other fees.
Marketing investment for 1999 increased to a record $732 million, up
64 percent from $446 million in 1998. Fourth quarter marketing expense of $202
million represents the largest quarterly marketing level to date.
"We continue to build a powerful customer franchise, evidenced by our
record marketing investment and 42 percent account growth in 1999," said Nigel
W. Morris, President and Chief Operating Officer. "We are delighted that Capital
One has achieved the best credit performance of any of the industry's major
players, while at the same time, serving the broadest spectrum of customers."
The managed delinquency rate as of December 31, 1999 increased to 5.23
percent versus 5.06 percent as of September 30, 1999 and 4.70 percent as of
December 31, 1998. In the fourth quarter, the managed net charge-off rate was
3.86 percent, a slight decrease from 3.88 percent in the third quarter of 1999.
The allowance for loan losses increased $36 million during the fourth quarter of
1999 to $342 million or 3.45 percent of on-balance sheet receivables as of
December 31, 1999. Capital ratios were strong as of December 31, 1999 at 12.18
percent of reported assets and 6.87 percent of managed assets.
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<PAGE>
Capital One Reports Record Earnings
Page 3
Other non-interest expenses (excluding marketing) were $1.7 billion in
1999, up 70 percent from $1.0 billion in 1998. These expenses for the fourth
quarter of 1999 were $479 million versus $454 million in the third quarter and
$307 million in the comparable period of the prior year. Cost per account
declined in the fourth quarter to $85.98 from $90.72 in the third quarter. In
addition, during the fourth quarter, the Company recognized a tax benefit of $5
million related to a change in the tax law.
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 23.7 million accounts and
$20.2 billion in managed loans outstanding as of December 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. For the second consecutive year, Fortune
magazine has named Capital One to its list of the "Best Places to Work in the
US."
###
[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 earnings press release and other
financial information.]
<PAGE>
CAPITAL ONE FINANCIAL CORPORATION (COF)
FINANCIAL & STATISTICAL SUMMARY
<TABLE>
<CAPTION>
1999 1999 1999 1999 1998
(in millions, except per share data and as noted) Q4 Q3 Q2 Q1 Q4
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Earnings (Managed Basis)
Net Interest Income $ 574.8 $ 558.9 $ 527.1 $ 513.9 $ 441.6
Non-Interest Income 473.6 438.6 398.5 357.6 327.9
----------------------------------------------------------------------
Total Revenue 1,048.4 997.5 925.6 871.6 769.5
Provision for Loan Losses 218.0 214.3 178.3 190.5 186.3
Marketing Expenses 202.4 175.2 178.2 176.1 159.0
Operating Expenses 478.8 454.3 427.9 372.2 307.2
----------------------------------------------------------------------
Income Before Taxes 149.2 153.8 141.1 132.9 117.2
Tax Rate 34.4 % 38.0 % 38.0 % 38.0 % 38.0 %
Net Income $ 97.9 $ 95.4 $ 87.5 $ 82.4 $ 72.7
- ---------------------------------------------------------------------------------------------------------------------
Common Share Statistics
Basic EPS $ 0.50 $ 0.48 $ 0.44 $ 0.42 $ 0.37
Diluted EPS $ 0.47 $ 0.45 $ 0.41 $ 0.39 $ 0.35
Dividends Per Share $ 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.03
Book Value Per Share (period end) $ 7.69 $ 7.29 $ 7.11 $ 6.69 $ 6.45
Stock Price Per Share (period end) $ 48.19 $ 39.00 $ 55.69 $ 50.33 $ 38.33
Total Market Capitalization (period end) $9,495.2 $7,686.9 $10,991.3 $9,929.1 $7,551.1
Shares Outstanding (period end) 197.0 197.1 197.4 197.3 197.0
Shares Used to Compute Basic EPS 197.3 197.4 197.6 197.2 197.0
Shares Used to Compute Diluted EPS 210.3 210.1 211.5 210.0 209.1
- ---------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period avg.)
Average Loans $ 18,974 $ 18,162 $ 17,598 $ 17,436 $ 16,547
Average Earning Assets $ 21,323 $ 20,060 $ 19,428 $ 19,482 $ 18,702
Average Assets $ 22,714 $ 21,563 $ 20,714 $ 20,722 $ 19,944
Average Equity $ 1,493 $ 1,461 $ 1,374 $ 1,302 $ 1,212
Net Interest Margin 10.78 % 11.14 % 10.85 % 10.55 % 9.45 %
Risk Adjusted Margin (1) 16.24 % 16.06 % 15.47 % 14.38 % 12.16 %
Return on Average Assets (ROA) 1.72 % 1.77 % 1.69 % 1.59 % 1.46 %
Return on Average Equity (ROE) 26.22 % 26.12 % 25.47 % 25.32 % 23.99 %
Net Charge-Off Rate 3.86 % 3.88 % 3.73 % 3.93 % 4.51 %
Net Charge-Offs $ 182.9 $ 176.0 $ 164.0 $ 171.1 $ 186.5
- ---------------------------------------------------------------------------------------------------------------------
Managed Loan Statistics (period end)
Reported Loans $ 9,914 $ 8,286 $ 7,427 $ 7,246 $ 6,157
Securitized Loans 10,323 10,231 10,433 10,198 11,238
----------------------------------------------------------------------
Total Loans $ 20,237 $ 18,517 $ 17,860 $ 17,444 $ 17,395
Delinquency Rate (30+ days) 5.23 % 5.06 % 4.72 % 4.56 % 4.70 %
Number of Accounts (000's) 23,705 20,845 19,213 18,022 16,706
Total Assets $ 23,638 $ 21,577 $ 20,985 $ 20,318 $ 20,619
Capital, Including Preferred Interests $1,624.6 $1,535.3 $1,501.0 $1,417.2 $1,368.3
Capital to Managed Assets Ratio 6.87 % 7.12 % 7.15 % 6.98 % 6.64 %
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Risk adjusted margin is total revenue less net charge-offs as a percentage
of average earning assets.
<PAGE>
CAPITAL ONE FINANCIAL CORPORATION
Consolidated Balance Sheets
(in thousands)(unaudited)
<TABLE>
<CAPTION>
December 31 September 30 December 31
1999 1999 1998
----------- ------------ -----------
<S> <C> <C> <C>
Assets:
Cash and due from banks $ 134,065 $ 59,934 $ 15,974
Federal funds sold and resale agreements 261,800
Interest-bearing deposits at other banks 112,432 53,493 22,393
----------- ----------- ----------
Cash and cash equivalents 246,497 113,427 300,167
Securities available for sale 1,856,421 1,708,609 1,796,787
Consumer loans 9,913,549 8,286,210 6,157,111
Less: Allowance for loan losses (342,000) (306,000) (231,000)
----------- ----------- ----------
Net loans 9,571,549 7,980,210 5,926,111
Premises and equipment, net 470,732 429,504 242,147
Interest receivable 64,637 65,350 52,917
Accounts receivable from securitizations 661,922 614,962 833,143
Other 464,685 460,847 268,131
----------- ----------- ----------
Total assets $13,336,443 $11,372,909 $9,419,403
=========== =========== ==========
Liabilities:
Interest-bearing deposits $ 3,783,809 $ 3,576,400 $1,999,979
Other borrowings 2,780,466 1,114,981 1,742,200
Senior notes 4,180,548 4,328,237 3,739,393
Interest payable 116,405 87,688 91,637
Other 959,608 828,422 575,788
----------- ----------- ----------
Total liabilities 11,820,836 9,935,728 8,148,997
Stockholders' Equity:
Common stock(1) 1,997 1,997 1,997
Paid-in capital, net(1) 613,590 625,771 598,167
Retained earnings and cumulative other comprehensive income 991,034 897,353 740,493
Less: Treasury stock, at cost (91,014) (87,940) (70,251)
----------- ----------- ----------
Total stockholders' equity 1,515,607 1,437,181 1,270,406
----------- ----------- ----------
Total liabilities and stockholders' equity $13,336,443 $11,372,909 $9,419,403
=========== =========== ==========
</TABLE>
(1) All periods have been restated to reflect the Company's three-for-one stock
split effective June 1, 1999.
<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 December 31
1999 1999 1998 1999 1998
----------- ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Interest Income:
Consumer loans, including fees $ 417,384 $386,727 $269,016 $1,482,371 $1,003,122
Federal funds sold and resale agreements 752 638 4,389 3,641 12,564
Other 32,468 24,671 25,542 107,472 95,850
----------- --------- --------- ------------ ------------
Total interest income 450,604 412,036 298,947 1,593,484 1,111,536
Interest Expense:
Deposits 49,409 38,003 23,901 137,792 67,479
Other borrowings 32,820 20,824 29,256 100,392 96,130
Senior and deposit notes 72,569 76,980 64,444 302,698 260,675
----------- --------- --------- ------------ ------------
Total interest expense 154,798 135,807 117,601 540,882 424,284
----------- --------- --------- ------------ ------------
Net interest income 295,806 276,229 181,346 1,052,602 687,252
Provision for loan losses 120,000 114,061 54,580 382,948 267,028
----------- --------- --------- ------------ ------------
Net interest income after provision for loan losses 175,806 162,168 126,766 669,654 420,224
Non-Interest Income:
Servicing and securitizations 310,321 311,217 248,683 1,187,098 789,844
Service charges and other fees 297,717 275,900 179,695 1,040,944 611,958
Interchange 46,585 33,946 28,098 144,317 86,481
----------- --------- --------- ------------ ------------
Total non-interest income 654,623 621,063 456,476 2,372,359 1,488,283
Non-Interest Expense:
Salaries and associate benefits 207,457 199,048 138,901 780,160 476,389
Marketing 202,405 175,163 158,972 731,898 446,264
Communications and data processing 75,592 68,755 47,602 264,897 150,220
Supplies and equipment 54,580 48,076 29,702 181,663 112,101
Occupancy 22,863 19,117 12,488 72,275 45,337
Other 118,288 119,262 78,369 434,103 234,275
----------- --------- --------- ------------ ------------
Total non-interest expense 681,185 629,421 466,034 2,464,996 1,464,586
----------- --------- --------- ------------ ------------
Income before income taxes 149,244 153,810 117,208 577,017 443,921
Income taxes 51,372 58,448 44,539 213,926 168,690
----------- --------- --------- ------------ ------------
Net income $ 97,872 $ 95,362 $ 72,669 $ 363,091 $ 275,231
=========== ========= ========= ============ ============
Basic earnings per share(1) $ 0.50 $ 0.48 $ 0.37 $ 1.84 $ 1.40
=========== ========= ========= ============ ============
Diluted earnings per share(1) $ 0.47 $ 0.45 $ 0.35 $ 1.72 $ 1.32
=========== ========= ========= ============ ============
Dividends paid per share(1) $ 0.03 $ 0.03 $ 0.03 $ 0.11 $ 0.11
=========== ========= ========= ============ ============
</TABLE>
(1) All periods have been restated to reflect the Company's three-for-one stock
split effective June 1, 1999.
<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 12/31/99 Quarter Ended 9/30/99 Quarter Ended 12/31/98
----------------------------- ----------------------------- ------------------------------
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance Expense Rate
------- ------- ------ ----------- -------- ------ ----------- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Earning assets:
Consumer loans $18,974,409 $848,176 17.88% $18,161,975 $813,643 17.92% $16,546,962 $689,907 16.68%
Federal funds sold and resale
agreements 58,560 752 5.14 54,375 638 4.69 343,987 4,389 5.10
Other 2,289,773 33,242 5.81 1,843,248 24,463 5.31 1,810,761 25,542 5.64
----------------------------- ----------------------------- ------------------------------
Total earning assets $21,322,742 $882,170 16.55% $20,059,598 $838,744 16.72% $18,701,710 $719,838 15.40%
====================== ====================== =======================
Interest-bearing liabilities:
Deposits $ 3,648,919 $ 49,409 5.42% $ 3,001,711 $ 38,003 5.06% $ 1,885,960 $ 23,901 5.07%
Other borrowings 2,037,805 32,820 6.44 1,333,434 20,824 6.25 1,703,688 29,256 6.87
Senior and deposit notes 4,258,661 72,569 6.82 4,494,440 76,980 6.85 3,741,707 64,444 6.89
Securitization liability 10,329,929 152,572 5.91 10,343,724 144,048 5.57 10,751,360 160,625 5.98
----------------------------- ----------------------------- ------------------------------
Total interest-bearing liabilities $20,275,314 $307,370 6.06% $19,173,309 $279,855 5.84% $18,082,715 $278,226 6.15%
====================== ====================== =======================
------ ------- ------
Net interest spread 10.49% 10.88% 9.25%
====== ======= ======
Interest income to average
earning assets 16.55% 16.72% 15.40%
Interest expense to average
earning assets 5.77 5.58 5.95
------ ------- ------
Net interest margin 10.78% 11.14% 9.45%
====== ======= ======
</TABLE>
(1) The information in this table reflects the adjustment to add back the effect
of securitized loans.
