-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, B1MH0DPOMOUoCDS2bNNvbwcwsYks1A5wKoT9mSScVm43TyJvP6hawxzt/YwlxQ83 0skixZHZuBUmlvYZzbJvOg== 0000922869-98-000007.txt : 19980717 0000922869-98-000007.hdr.sgml : 19980717 ACCESSION NUMBER: 0000922869-98-000007 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19980716 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980716 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL ONE MASTER TRUST CENTRAL INDEX KEY: 0000922869 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 541719855 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-25762 FILM NUMBER: 98667045 BUSINESS ADDRESS: STREET 1: 11013 W BROAD ST RD CITY: GLEN ALLEN STATE: VA ZIP: 23060 BUSINESS PHONE: 8049671000 MAIL ADDRESS: STREET 1: 11013 WEST BROAD ST RD CITY: GLEN ALLEN STATE: VA ZIP: 23060 FORMER COMPANY: FORMER CONFORMED NAME: SIGNET MASTER TRUST DATE OF NAME CHANGE: 19940509 8-K 1 FORM 8-K 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 16, 1998 ------------------------------- (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 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); difficulties or delays in the development, production, testing and marketing of new products or services; losses associated with new products or services; 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 associate 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 the Annual Report on Form 10-K for the year ended December 31, 1997 (Part I, Item 1, Cautionary Statements). Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. ------------------------------------------------------------------- 99.1. Press Release of the Company dated July 16, 1998. 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: July 16, 1998 By: /s/ James M. Zinn ------------------ James M. Zinn Senior Vice President and Chief Financial Officer EXHIBIT INDEX 99.1 Press Release of the Company dated July 16, 1998. Exhibit 99.1 [Capital One Financial Corporation Letterhead] FOR IMMEDIATE RELEASE: Contact: Paul Paquin - --------------------- July 16, 1998 V.P., Investor Relations (703) 205-1039 Sam Wang Manager, Media Relations (703) 205-1180 Capital One Reports Record Second Quarter Earnings Falls Church, Va. (July 16, 1998) - Capital One Financial Corporation (NYSE: COF) today announced record second quarter 1998 earnings of $66.9 million, or $.96 per share, versus earnings of $65.7 million, or $.96 per share, for the first quarter of 1998 and $39.4 million, or $.58 per share, for the comparable period in the prior year. Earnings per share amounts are reported on a diluted basis. "We are pleased that our information-based strategy continues to allow us to identify new opportunities in our domestic and international businesses," said Richard D. Fairbank, Capital One's Chairman and Chief Executive Officer. "These opportunities and an improving credit risk picture are enabling us to invest in record levels of marketing." Revenue, defined as managed net interest income and non-interest income, increased to $653 million in the second quarter of 1998 versus $637 million in the first quarter of 1998 and increased 40 percent over $466 million for the comparable period in the prior year. For the quarter, Capital One's managed consumer loan balances increased by $967 million to $15.0 billion. The Company also added 914,000 net new accounts, bringing total accounts to 13.6 million. The managed net interest margin was 9.84 percent in the second quarter of 1998, an expected decrease from 10.40 percent in the first quarter of 1998 and an increase from 8.30 percent in the comparable period of the prior year. The lower margin from the previous quarter primarily reflects decreases in late fees as the Company's delinquency levels declined. Non-interest income increased $33 million compared to the first quarter of 1998 and $84 million for the comparable period in the prior year. This growth reflects increased fees (including annual membership, interchange, and overlimit) on our customized products and strategic cross-sell initiatives. The managed delinquency rate (30+ days) decreased to 5.14 percent as of June 30, 1998, compared with 5.75 percent as of March 31, 1998, exceeding typical seasonal patterns. The managed net charge-off rate decreased to 5.91 percent for the second quarter of 1998 compared with 6.04 percent in the first quarter of 1998. These decreases demonstrate the combination of high-quality growth and improving consumer credit. "We continue to see favorable risk trends as both the delinquency and charge-off rates improved modestly in the quarter," said Nigel W. Morris, Capital One's President and Chief Operating Officer. "These improvements exceeded seasonal expectations but we remain cautious in our outlook." Marketing investment increased in the second quarter of 1998 to a record $86 million versus $75 million in the first quarter of 1998 and $45 million in the comparable period of the prior year. Other non-interest expenses (excluding marketing and performance-based stock options) for the second quarter of 1998 were $222 million versus $182 million for the first quarter of 1998 and $157 million in the comparable period of the prior year. Operating expenses reflect increased investments in staff levels and infrastructure development to position the Company for continued growth. The allowance for loan losses was maintained at $213 million, and decreased to 4.14 percent of on-balance sheet receivables as of June 30, 1998, from 4.49 percent as of March 31, 1998. Capital ratios were strong as of June 30, 1998 at 15.25 percent of reported assets and 6.68 percent of managed assets. Separately, earlier this week Capital One signed an agreement to acquire Summit Acceptance Corporation. Based in Dallas, Texas, Summit is a proven performer in the subprime automobile finance industry with approximately 180 employees and serviced loans of approximately $260 million as of June 30, 1998. The acquisition price for Summit will be approximately $55 million which will be paid through the issuance of Capital One stock. The acquisition will be accounted for as a purchase and goodwill of approximately $70 million will be amortized over 15 years. The acquisition is expected to be completed by the end of the third quarter and its impact is expected to be neutral to earnings per share in 1998 and accretive to earnings per share in 1999. Headquartered in Falls Church, Virginia, Capital One Financial Corporation is a holding company whose principal subsidiaries, Capital One Bank and Capital One, F.S.B., offer financial consumer lending products. Capital One's subsidiaries collectively had 13.6 million customers and $15.0 billion in managed loans outstanding as of June 30, 1998, 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. ### [Note: This release and financial information 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.] CAPITAL ONE FINANCIAL CORPORATION (COF) FINANCIAL & STATISTICAL SUMMARY
98 98 97 97 97 Q2 Q1 Q4 Q3 Q2 (in millions, except per share data and as noted) - ------------------------------------------------------------------------------------------------------------ Earnings (Managed Basis) Net Interest Income $ 399.5 $ 416.7 $ 361.6 $ 330.7 $ 296.3 Non-Interest Income 253.2 220.7 230.4 218.5 169.3 ----------------------------------------------------------------------- Total Revenue 652.7 637.4 592.0 (1) 549.2 465.6 Provision for Loan Losses 213.1 242.5 255.7 243.6 200.1 Marketing Expenses 85.8 75.0 65.0 60.8 45.0 Operating Expenses 246.0 (2) 213.9 (2) 177.4 165.2 157.1 ----------------------------------------------------------------------- Income Before Taxes 107.8 106.0 93.9 79.6 63.5 Tax Rate 38.0% 38.0% 38.0% 38.0% 38.0% Net Income $ 66.9 $ 65.7 $ 58.2 $ 49.3 $ 39.4 - ------------------------------------------------------------------------------------------------------------ Common Share Statistics Basic EPS $ 1.02 $ 1.00 $ 0.89 $ 0.75 $ 0.59 Diluted EPS $ 0.96 $ 0.96 $ 0.86 $ 0.73 $ 0.58 Dividends Per Share $ 0.08 $ 0.08 $ 0.08 $ 0.08 $ 0.08 Book Value Per Share (period end) $ 16.31 $ 15.08 $ 13.66 $ 12.84 $ 12.35 Stock Price Per Share (period end) $ 124.19 $ 78.88 $ 54.19 $ 45.75 $ 37.75 Total Market Capitalization (period end) $8,139.0 $5,163.7 $ 3,542.2 $ 3,001.0 $ 2,509.8 Shares Outstanding (period end) 65.5 65.5 65.4 65.6 66.5 Shares Used to Compute Basic EPS 65.5 65.4 65.5 66.2 66.4 Shares Used to Compute Diluted EPS 69.5 68.4 67.5 67.6 67.6 - ------------------------------------------------------------------------------------------------------------ Managed Loan Statistics (period avg.) Average Loans $ 14,417 $ 14,097 $ 13,824 $ 12,918 $ 12,715 Average Earning Assets $ 16,242 $ 16,020 $ 15,655 $ 14,608 $ 14,278 Average Assets $ 17,296 $ 16,834 $ 16,367 $ 15,618 $ 15,272 Average Equity $ 1,037 $ 950 $ 892 $ 841 $ 798 Net Interest Margin 9.84% 10.40% 9.24%(3) 9.05% 8.30% Return on Average Assets (ROA) 1.55% 1.56% 1.42% 1.26% 1.03% Return on Average Equity (ROE) 25.78% 27.66% 26.12% 23.47% 19.72% Net Charge-Off Rate 5.91% 6.04% 6.37%(4) 6.66% 6.38% Net Charge-Offs $ 213.0 $ 212.7 $ 255.6 (4) $ 215.1 $ 202.8 - ------------------------------------------------------------------------------------------------------------ Managed Loan Statistics (period end) Reported Loans $ 5,140 $ 4,748 $ 4,862 $ 4,330 $ 3,624 Securitized Loans 9,829 9,254 9,369 9,143 9,113 ----------------------------------------------------------------------- Total Loans $ 14,969 $ 14,002 $ 14,231 $ 13,473 $ 12,737 Delinquency Rate (30+ days) 5.14%(5) 5.75%(5) 6.20%(5) 6.36% 6.33% Number of Accounts (000's) 13,588 12,674 11,747 10,664 9,796 Total Assets $ 17,462 $ 16,464 $ 16,433 $ 15,440 $ 15,270 Capital, Including Preferred Interests $1,167.0 $1,085.2 $ 990.9 $ 939.7 $ 918.5 Capital to Managed Assets Ratio 6.68% 6.59% 6.03% 6.09% 6.01% Percent Introductory Rate Loans 20% 22% 27% 26% 25% - ------------------------------------------------------------------------------------------------------------
(1) Net of a $73.3 million reduction to more conservatively report uncollectible finance charge and fee income receivables and the charge-off of credit card loans at 180 days past-due. (2) Operating expenses include $24.0 million and $32.4 million in compensation expense in Q298 and Q198, respectively, for performance-based stock options. (3) The net interest margin, without the modifications in charge-off policy and finance charge and fee income recognition, was 10.13%. (4) The net charge-off rate and net charge-offs, without the modification in charge-off policy, were 6.02% and $208.2 million, respectively. (5) The delinquency rate reflects the modifications in charge-off policy and finance charge and fee income recognition. CAPITAL ONE FINANCIAL CORPORATION Consolidated Balance Sheets (in thousands)(unaudited)
June 30 March 31 June 30 1998 1998 1997 ------------- ------------- ------------- Assets: Cash and due from banks $ 8,463 $ 2,983 $ 136,112 Federal funds sold and resale agreements 105,000 295,507 Interest-bearing deposits at other banks 30,926 34,077 21,441 ------------- ------------- ------------- Cash and cash equivalents 39,389 142,060 453,060 Securities available for sale 1,431,091 1,513,398 1,142,328 Consumer loans 5,140,340 4,748,186 3,623,952 Less: Allowance for loan losses (213,000) (213,000) (118,500) ------------- ------------- ------------- Net loans 4,927,340 4,535,186 3,505,452 Premises and equipment, net 188,727 163,757 181,078 Interest receivable 45,866 44,213 48,135 Accounts receivable from securitizations 836,274 696,599 729,238 Other 182,751 128,689 100,144 ------------- ------------- ------------- Total assets $ 7,651,438 $ 7,223,902 $ 6,159,435 ============= ============= ============= Liabilities: Interest-bearing deposits $ 1,287,402 $ 1,160,850 $ 869,801 Other borrowings 959,480 723,614 293,734 Senior notes 3,709,404 3,464,176 3,468,801 Deposit notes 99,996 299,996 299,996 Interest payable 83,167 67,544 72,261 Other 345,037 422,480 236,343 ------------- ------------- ------------- Total liabilities 6,484,486 6,138,660 5,240,936 Guaranteed Preferred Beneficial Interests In Capital One Bank's Floating Rate Junior Subordinated Capital Income Securities: 97,791 97,727 97,534 Stockholders' Equity: Common stock 666 666 665 Paid-in capital, net 561,518 543,179 491,953 Retained earnings 547,485 485,750 327,896 Cumulative other comprehensive income 3,421 2,325 451 Less: Treasury stock, at cost (43,929) (44,405) ------------- ------------- ------------- Total stockholders' equity 1,069,161 987,515 820,965 ------------- ------------- ------------- Total liabilities and stockholders' equity $ 7,651,438 $ 7,223,902 $ 6,159,435 ============= ============= =============
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 1998 1998 1997 1998 1997 ----------------------------------------------- ----------------------------- Interest Income: Consumer loans, including fees $ 245,129 $ 229,638 $ 143,485 $ 474,767 $ 289,997 Federal funds sold and resale agreements 2,140 5,078 2,613 7,218 8,277 Other 24,169 23,326 20,772 47,495 37,190 --------------------------------------------------------------------------------- Total interest income 271,438 258,042 166,870 529,480 335,464 Interest Expense: Deposits 13,635 14,138 8,635 27,773 19,072 Other borrowings 20,375 16,053 10,453 36,428 16,977 Senior and deposit notes 67,704 63,029 64,523 130,733 127,959 --------------------------------------------------------------------------------- Total interest expense 101,714 93,220 83,611 194,934 164,008 --------------------------------------------------------------------------------- Net interest income 169,724 164,822 83,259 334,546 171,456 Provision for loan losses 59,013 85,866 46,776 144,879 95,963 --------------------------------------------------------------------------------- Net interest income after provision for loan losses 110,711 78,956 36,483 189,667 75,493 Non-Interest Income: Servicing and securitizations 155,412 168,655 148,562 324,067 318,595 Service charges 128,191 113,324 57,278 241,515 110,926 Interchange 20,371 14,799 11,405 35,170 20,720 Other 24,979 19,121 11,797 44,100 21,858 --------------------------------------------------------------------------------- Total non-interest income 328,953 315,899 229,042 644,852 472,099 Non-Interest Expense: Salaries and associate benefits 113,428 107,953 69,287 221,381 139,923 Marketing 85,811 75,000 44,995 160,811 99,046 Communications and data processing 34,840 29,363 24,320 64,203 46,110 Supplies and equipment 32,368 22,615 18,406 54,983 36,479 Occupancy 11,090 10,644 7,388 21,734 15,189 Other 54,299 43,308 37,659 97,607 78,855 --------------------------------------------------------------------------------- Total non-interest expense 331,836 288,883 202,055 620,719 415,602 --------------------------------------------------------------------------------- Income before income taxes 107,828 105,972 63,470 213,800 131,990 Income taxes 40,975 40,269 24,118 81,244 50,156 --------------------------------------------------------------------------------- Net income $ 66,853 $ 65,703 $ 39,352 $ 132,556 $ 81,834 ================================================================================= Basic earnings per share $ 1.02 $ 1.00 $ 0.59 $ 2.02 $ 1.23 ================================================================================ Diluted earnings per share $ 0.96 $ 0.96 $ 0.58 $ 1.92 $ 1.21 ================================================================================ Dividends paid per share $ 0.08 $ 0.08 $ 0.08 $ 0.16 $ 0.16 ================================================================================
CAPITAL ONE FINANCIAL CORPORATION Statements of Average Balances, Income and Expense, Yields and Rates (dollars in thousands)(unaudited)
Managed (1) Quarter Ended 6/30/98 Quarter Ended 3/31/98 ---------------------------------- ----------------------------------- Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate ------- ------- ------ ------- ------- ------ Earning assets: Consumer loans $ 14,416,722 $ 607,247 16.85% $ 14,097,475 $ 615,053 17.45% Federal funds sold and resale agreements 151,275 2,140 5.66 362,680 5,078 5.60 Other securities 1,674,381 24,169 5.77 1,559,732 23,326 5.98 ---------------------------------- ----------------------------------- Total earning assets $ 16,242,378 $ 633,556 15.60% $ 16,019,887 $ 643,457 16.06% ======================== ========================= Interest-bearing liabilities: Deposits $ 1,193,508 $ 13,635 4.57% $ 1,266,064 $ 14,138 4.47% Other borrowings 1,318,889 20,375 6.18 1,077,082 16,053 5.96 Senior and deposit notes 3,905,684 67,704 6.93 3,683,113 63,029 6.85 Securitization liability 9,190,007 132,337 5.76 9,297,590 133,526 5.74 ---------------------------------- ---------------------------------- Total interest-bearing liabilities $ 15,608,088 $ 234,051 6.00% $ 15,323,849 $ 226,746 5.92% ========================= ========================= ========= ========= Net interest spread 9.60% 10.14% ========= ========= Interest income to average earning assets 15.60% 16.06% Interest expense to average earning assets 5.76 5.66 --------- --------- Net interest margin 9.84% 10.40% ========= =========
Quarter Ended 6/30/97 - ----------------------------------- Average Income/ Yield/ Balance Expense Rate ------- ------- ------- $ 12,714,870 $ 482,088 15.17% 187,650 2,613 5.57 1,375,364 20,772 6.04 - ----------------------------------- $ 14,277,884 $ 505,473 14.16% ========================= $ 817,936 $ 8,635 4.22% 694,814 10,453 6.02 3,768,797 64,523 6.85 8,713,517 125,531 5.76 - ----------------------------------- $ 13,995,064 $ 209,142 5.98% ========================= --------- 8.18% ========= 14.16% 5.86 --------- 8.30% =========
(1) The information in this table reflects the adjustment to add back the effect of securitized loans. -----END PRIVACY-ENHANCED MESSAGE-----