Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - CAPITAL ONE FINANCIAL CORP | ex99_3.htm |
| EX-99.1 - EXHIBIT 99.1 - CAPITAL ONE FINANCIAL CORP | ex99_1.htm |
| 8-K - CAPITAL ONE FINANCIAL CORPORATION 8-K 1-20-2011 - CAPITAL ONE FINANCIAL CORP | form8k.htm |
Exhibit 99.2
Fourth Quarter 2010 Results
January 20, 2011
2
January 20, 2011
Forward looking statements
Please note that the following materials containing information regarding Capital One’s financial performance speak only as of the particular date or dates
indicated in these materials. Capital One does not undertake any obligation to update or revise any of the information contained herein whether as a result
of new information, future events or otherwise.
indicated in these materials. Capital One does not undertake any obligation to update or revise any of the information contained herein whether as a result
of new information, future events or otherwise.
Certain statements in this presentation and other oral and written statements made by Capital One from time to time are forward-looking statements,
including those that discuss, among other things, strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns,
accruals for claims in litigation and for other claims against us, earnings per share or other financial measures for Capital One; future financial and
operating results; and Capital One’s plans, objectives, expectations and intentions; and the assumptions that underlie these matters. To the extent that
any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities
Litigation Reform Act of 1995. Numerous factors could cause our actual results to differ materially from those described in such forward-looking
statements, including, among other things: general economic and business conditions in the U.S., the UK, or Capital One’s local markets, including
conditions affecting employment levels, interest rates, consumer income and confidence, spending and savings that may affect consumer bankruptcies,
defaults, charge-offs and deposit activity; an increase or decrease in credit losses (including increases due to a worsening of general economic conditions
in the credit environment); financial, legal, regulatory (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the
regulations to be promulgated thereunder), tax or accounting changes or actions, including with respect to any litigation matter involving Capital One;
increases or decreases in interest rates; the success of Capital One’s marketing efforts in attracting and retaining customers; the ability of Capital One to
securitize our credit cards and consumer loans and to otherwise access the capital markets at attractive rates and terms to capitalize and fund its
operations and future growth; with respect to financial and other products, increases or decreases in Capital One’s aggregate loan balances and/or the
number of customers and the growth rate and composition thereof, including increases or decreases resulting from factors such as a shifting product mix,
the amount of actual marketing expenses made by Capital One and attrition of loan balances; the level of future repurchase or indemnification requests
Capital One may receive, the actual future performance of loans relating to such requests, the success rates of claimants against Capital One, any
developments in litigation, and the actual recoveries Capital One may make on any collateral relating to claims against us; the amount and rate of deposit
growth; Capital One’s ability to control costs; changes in the reputation of or expectations regarding the financial services industry and/or Capital One with
respect to practices, products or financial condition; any significant disruption in Capital One’s operations or technology platform; Capital One’s ability to
maintain a compliance infrastructure suitable for its size and complexity; the amount of, and rate of growth in, Capital One’s expenses as Capital One’s
business develops or changes or as it expands into new market areas; Capital One’s ability to execute on its strategic and operational plans; any
significant disruption of, or loss of public confidence in, the United States Mail service affecting our response rates and consumer payments; Capital One’s
ability to recruit and retain experienced personnel to assist in the management and operations of new products and services; changes in the labor and
employment markets; the risk that cost savings and any other synergies from acquisitions may not be fully realized or may take longer to realize than
expected; disruptions from Capital One’s acquisitions negatively impacting Capital One’s ability to maintain relationships with customers, employees or
suppliers; competition from providers of products and services that compete with Capital One’s businesses; and other risk factors listed from time to time
in reports that Capital One files with the Securities and Exchange Commission (the “SEC”), including, but not limited to, the Annual Report on Form 10-K
for the year ended December 31, 2009. You should carefully consider the factors discussed above in evaluating these forward-looking statements. All
information in these slides is based on the consolidated results of Capital One Financial Corporation, unless otherwise noted. A reconciliation of any non-
GAAP financial measures included in this presentation can be found in Capital One’s most recent Form 10-K concerning annual financial results and in
our most recent Form 8-K filed January 20, 2011, available on Capital One’s website at www.capitalone.com under “Investors”.
including those that discuss, among other things, strategies, goals, outlook or other non-historical matters; projections, revenues, income, returns,
accruals for claims in litigation and for other claims against us, earnings per share or other financial measures for Capital One; future financial and
operating results; and Capital One’s plans, objectives, expectations and intentions; and the assumptions that underlie these matters. To the extent that
any such information is forward-looking, it is intended to fit within the safe harbor for forward-looking information provided by the Private Securities
Litigation Reform Act of 1995. Numerous factors could cause our actual results to differ materially from those described in such forward-looking
statements, including, among other things: general economic and business conditions in the U.S., the UK, or Capital One’s local markets, including
conditions affecting employment levels, interest rates, consumer income and confidence, spending and savings that may affect consumer bankruptcies,
defaults, charge-offs and deposit activity; an increase or decrease in credit losses (including increases due to a worsening of general economic conditions
in the credit environment); financial, legal, regulatory (including the impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the
regulations to be promulgated thereunder), tax or accounting changes or actions, including with respect to any litigation matter involving Capital One;
increases or decreases in interest rates; the success of Capital One’s marketing efforts in attracting and retaining customers; the ability of Capital One to
securitize our credit cards and consumer loans and to otherwise access the capital markets at attractive rates and terms to capitalize and fund its
operations and future growth; with respect to financial and other products, increases or decreases in Capital One’s aggregate loan balances and/or the
number of customers and the growth rate and composition thereof, including increases or decreases resulting from factors such as a shifting product mix,
the amount of actual marketing expenses made by Capital One and attrition of loan balances; the level of future repurchase or indemnification requests
Capital One may receive, the actual future performance of loans relating to such requests, the success rates of claimants against Capital One, any
developments in litigation, and the actual recoveries Capital One may make on any collateral relating to claims against us; the amount and rate of deposit
growth; Capital One’s ability to control costs; changes in the reputation of or expectations regarding the financial services industry and/or Capital One with
respect to practices, products or financial condition; any significant disruption in Capital One’s operations or technology platform; Capital One’s ability to
maintain a compliance infrastructure suitable for its size and complexity; the amount of, and rate of growth in, Capital One’s expenses as Capital One’s
business develops or changes or as it expands into new market areas; Capital One’s ability to execute on its strategic and operational plans; any
significant disruption of, or loss of public confidence in, the United States Mail service affecting our response rates and consumer payments; Capital One’s
ability to recruit and retain experienced personnel to assist in the management and operations of new products and services; changes in the labor and
employment markets; the risk that cost savings and any other synergies from acquisitions may not be fully realized or may take longer to realize than
expected; disruptions from Capital One’s acquisitions negatively impacting Capital One’s ability to maintain relationships with customers, employees or
suppliers; competition from providers of products and services that compete with Capital One’s businesses; and other risk factors listed from time to time
in reports that Capital One files with the Securities and Exchange Commission (the “SEC”), including, but not limited to, the Annual Report on Form 10-K
for the year ended December 31, 2009. You should carefully consider the factors discussed above in evaluating these forward-looking statements. All
information in these slides is based on the consolidated results of Capital One Financial Corporation, unless otherwise noted. A reconciliation of any non-
GAAP financial measures included in this presentation can be found in Capital One’s most recent Form 10-K concerning annual financial results and in
our most recent Form 8-K filed January 20, 2011, available on Capital One’s website at www.capitalone.com under “Investors”.
3
January 20, 2011
Net Interest Income
Non-Interest Income
Revenue
Marketing Expense
Operating Expense
Pre-Provision Earnings (before tax)
Net Charge-offs
Other
Allowance Build (Release)
Provision Expense
Discontinued Operations, net of tax
Total Company (after tax)
EPS Available to Common Shareholders
Tax Expense
Pretax Income
$MM
Operating Earnings (after tax)
Fourth quarter 2010 earnings were $697MM or $1.52 per share, compared with
$803MM, or $1.76 per share, in the third quarter
$803MM, or $1.76 per share, in the third quarter
Non-Interest Expense
3,109
907
4,016
250
1,746
1,996
2,020
1,522
(31)
(624)
867
803
818
(15)
$1.76
1,153
335
Q310
3,023
939
3,962
308
1,783
2,091
1,871
1,394
(8)
(547)
839
697
701
(4)
$1.52
1,032
331
Q410
(86)
32
(54)
(58)
(37)
95
(149)
128
(23)
(77)
28
(106)
(117)
11
(121)
(0.24)
Fav/(Unfav) ($)
(3)
4
(1)
(23)
(2)
5
(7)
8
(74)
(12)
3
(13)
(14)
73
(11)
(1)
(14)
Fav/(Unfav) (%)
4
4
January 20, 2011
Full year 2010 earnings were $2,743MM, or $6.01 per share, compared with
$884MM, or $0.74 per share in full year 2009
$884MM, or $0.74 per share in full year 2009
Net Interest Income
Non-Interest Income
Revenue
Marketing Expense
Operating Expense
Restructuring Expense
Non-Interest Expense
Pre-Provision Earnings (before tax)
Net Charge-offs
Other
Allowance Build (Release)
Provision Expense
Discontinued Operations, net of tax
Total Company (after tax)
EPS Available to Common Shareholders
Tax Expense
Pretax Income
$MM
1 2009 amounts represent our managed results.
2 Includes ($1.31) impact of dividend and repayment expense of the government’s preferred share investment.
Operating Earnings (after tax)
Average Loans Held For Investment
Revenue Margin
Net Interest Margin
2009
119
12,089
4,747
16,836
588
6,710
7,417
9,419
8,421
59
(397)
8,083
884
987
(103)
$0.74
1,336
349
143,514
9.05%
6.50%
2010
0
0
12,457
3,714
16,171
958
6,976
7,934
8,237
6,651
(2,744)
3,907
2,743
3,050
(307)
$6.01
4,330
1,280
128,526
9.20%
7.09%
Fav/(Unfav) ($)
119
368
(1,033)
(665)
(370)
(266)
(517)
(1,182)
1,770
59
2,347
4,176
1,859
2,063
(204)
$5.27
2,994
(931)
(14,988)
15 bps
59 bps
Fav/(Unfav) (%)
100
3
(22)
(4)
(63)
(4)
(7)
(13)
21
100
591
52
210
209
(198)
712
224
(267)
(10)
2
9
2
1
5
January 20, 2011
Our capacity to generate capital is strong
Tier 1 Common Equity + Allowance Ratio to Risk-Weighted Assets
Allowance
Tier 1 Common
13.4%
14.2%
13.0%
12.5%
13.2%
13.2%
1
1 Tier 1 common equity ratio is a non-GAAP measure calculated based on Tier 1 common equity divided by risk-weighted
assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation
components.
assets. See "Exhibit 99.3—Reconciliation of Non-GAAP Measures and Regulatory Capital Measures" for the calculation
components.
6
January 20, 2011
Loan balances are stabilizing
Liability Highlights
Asset Highlights
• End of period loans down $11B in 2010, or 8%
• More than $6B from run-off portfolios
• End of period loans down $387MM in Q4, or less
than 1%
than 1%
• Run-off portfolios down $1.4B
• Excluding run off portfolios, loan balances higher
• Cost of funds decreased to 1.50% quarter over
quarter
quarter
• Continued shift in funding to lower priced deposits
from securitization
from securitization
• Loan to deposit ratio at 1.03
End of Period Liabilities1
Cost of Interest-
Bearing Liabilities 1.96% 1.91% 1.88% 1.75%
Bearing Liabilities 1.96% 1.91% 1.88% 1.75%
Total Cost
of Funds 1.76% 1.69% 1.64% 1.50%
of Funds 1.76% 1.69% 1.64% 1.50%
Securitization
Interest Bearing
Deposits
Deposits
Other Debt
Non-Interest
Bearing Deposits
Bearing Deposits
Other Liabilities
End of Period Assets1
Domestic Card
Commercial
Int’l Card
Consumer
$B
Other
Cash & Cash
Equivalents
Securities
7
January 20, 2011
Margins as % of Managed Assets
Revenue Margin
Net Interest Margin
Margins remain attractive, although asset yields were down modestly in the
quarter
quarter
Modest NIM decline
• Lower asset yields
• Slight mix shift from loans to
investment portfolio
investment portfolio
Revenue Margin decreased
• Lower net interest margin
• Reduced FCFR release
Partially offset by:
• Gain on MSR impairment
8
January 20, 2011
Domestic Credit Card ($53.2*)
Net Charge-off Rate
Home Loan Credit ($12.5B*)
Auto Credit ($17.8B*)
International Credit Card ($7.4B*)
Net Charge-off Rate
30+ Day Delinquency Rate
Net Charge-off Rate
30+ Day Delinquency Rate
Net Charge-off Rate
30+ Day Delinquency Rate
* Average assets for Q4
Credit improvement in our consumer businesses continues to run ahead of
broader economic indicators
broader economic indicators
9
January 20, 2011
Total Commercial Banking ($29.8B*)
Nonperforming
Asset Rate
Asset Rate
Commercial & MultiFamily Real Estate ($13.4B*)
Middle Market ($10.5B*)
Nonperforming
Asset Rate
Asset Rate
Charge-off
Rate
Rate
Total Commercial Lending
Excluding Small Ticket CRE ($27.9B*)
Excluding Small Ticket CRE ($27.9B*)
Nonperforming
Asset Rate
Asset Rate
Charge-off
Rate
Rate
Nonperforming
Asset Rate
Asset Rate
Charge-off
Rate
Rate
* Period end assets for Q4
Commercial Banking credit metrics are showing signs of improvement
10
January 20, 2011
As a bank with great national lending and local banking businesses,
Capital One is well positioned to generate attractive returns
Capital One is well positioned to generate attractive returns
Local Banking
Commercial
Banking
Banking
Powerful Brand, Strong Balance Sheet
Retail
Banking
• Industry Leading ROA
• Moderate to Strong Growth
• Access to Assets
• Low Risk Commercial Assets
• Strong Deposit Growth
• Moderate Loan Growth
• Core Deposit Funding
Card
Auto
National Lending
11
January 20, 2011
Appendix
12
January 20, 2011
Domestic Card
Commercial Banking
Consumer Banking
Commentary
Excluding “run off” portfolios, ending loan balances grew modestly in Q4
• $1.4 billion decline in “run off” portfolios of ILs, Home
Loans and Small-Ticket CRE
Loans and Small-Ticket CRE
• Excluding “run off” portfolios, ending loan balances
grew $1.0 billion in Q4
grew $1.0 billion in Q4
$B
$B
Commercial
Lending
Lending
Small-Ticket
CRE
CRE
Auto & Retail
Home
Loan
Loan
$B
Domestic
Card
Card
Installment
Loans
13
January 20, 2011
Q4 2009
Q4 2010
Strong credit continues to drive Domestic Card profits
Highlights
Domestic Card
• Revenue margin declined by 11 bps from
Q3
Q3
- Full quarter of reasonable fees
driving lower net interest income
driving lower net interest income
• NIE increase driven by higher marketing
and seasonally elevated operating
expenses
and seasonally elevated operating
expenses
• Credit improvement continued
- Lower provision from declining
charge-offs
charge-offs
- Delinquency rate improved 44bps
from Q3 despite seasonal pressure
from Q3 despite seasonal pressure
• Ending Loans flat compared to Q3
- Installment loans run-off offset
seasonal growth
seasonal growth
- Excluding IL run off, loans grew $679
million compared to Q3
million compared to Q3
• Seasonally strong Q4 purchase volume
growth was also 10% higher YoY
growth was also 10% higher YoY
- Improving retail sales
- Shift toward higher spend Rewards
products
products
Net interest income
Non-interest income
Total revenue
Provision for loan and lease losses
Non-interest expenses
Income before taxes
Income taxes
Net income
Selected Metrics
Period end loans held for investment
Average loans held for investment
Loans held for investment yield
Revenue margin
Net charge-off rate
30+ day performing delinquency rate
Purchase volume
Earnings
(in millions)
594
505
935
2,215
775
276
499
53,849
53,189
13.57%
16.66%
4.09%
26,985
1,621
7.28%
794
1,033
833
2,575
709
248
461
60,300
60,443
14.08%
17.04%
5.78%
24,593
1,781
9.59%
Q3 2010
575
577
844
2,266
845
301
544
53,839
54,049
13.95%
16.77%
4.53%
24,858
1,691
8.23%
14
January 20, 2011
Q4 2009
Q4 2010
International Card net income was stable in Q4
Highlights
International Card
• Revenue decreased slightly in Q4,
primarily driven by a decrease in non-
interest income in UK
primarily driven by a decrease in non-
interest income in UK
• Non-interest expense decreased due to an
adjustment to the reserve for Canada
goods and service tax
adjustment to the reserve for Canada
goods and service tax
• Credit improved along with economic
improvements in UK and Canada
improvements in UK and Canada
- Lower charge-offs drove reduced
Provision expense
Provision expense
- Delinquency rate improved 9bps from
Q3
Q3
• Ending loans increased slightly in the
quarter due to seasonality
quarter due to seasonality
Net interest income
Non-interest income
Total revenue
Provision for loan and lease losses
Non-interest expenses
Income before taxes
Net income
Selected Metrics
Period end loans held for investment
Average loans held for investment
Loans held for investment yield
Revenue margin
Net charge-off rate
30+ day performing delinquency rate
Purchase volume
Earnings
(in million)
Income taxes
78
84
121
327
122
35
87
7,522
7,419
16.82%
17.63%
5.75%
2,394
249
6.68%
103
171
110
351
70
21
49
8,224
8,300
15.19%
16.90%
6.55%
2,273
248
9.52%
Q3 2010
96
83
134
339
122
35
87
7,487
7,342
16.62%
18.47%
5.84%
2,181
243
7.60%
15
January 20, 2011
Q4 2009
Q4 2010
Commercial Banking net profits were higher in Q4 driven by lower provision
expenses and increased revenue
expenses and increased revenue
Highlights
Commercial Banking
• Revenues increased from Q3 to Q4
- Modest loan growth with stable loan
yield drove higher Net Interest
Income
yield drove higher Net Interest
Income
- Non-interest income increased due
to the absence of a Q3 loss on the
sale of Greenpoint HFS loans
to the absence of a Q3 loss on the
sale of Greenpoint HFS loans
• Provision expenses decreased due to an
allowance release in Q4
allowance release in Q4
• Non-performing loans as a % of loans HFI
improved 15 bps compared to Q3
improved 15 bps compared to Q3
• Deposits grew and deposit interest
expense improved in the quarter
expense improved in the quarter
Net interest income
Non-interest income
Total revenue
Provision for loan and lease losses
Non-interest expenses
Income (loss) before taxes
Net income (loss)
Selected Metrics
Period end loans held for investment
Average loans held for investment
Loans held for investment yield
Period end deposits
Average deposits
Deposit interest expense rate
Core deposit intangible amortization
Net charge-off rate
Earnings
Non-performing loans as a %
of loans HFI
of loans HFI
Non-performing asset rate
(in millions)
Income taxes (benefit)
49
34
207
385
144
51
93
29,742
29,617
5.11%
22,630
22,808
13
1.43%
336
0.61%
1.80%
1.66%
38
368
197
356
(209)
(73)
(136)
29,613
29,867
5.11%
20,480
19,420
14
2.91%
318
0.80%
2.52%
2.37%
Q3 2010
30
95
199
355
61
22
39
29,542
29,435
5.13%
22,100
21,899
14
1.27%
325
0.67%
1.94%
1.81%
16
January 20, 2011
20,019
4.57%
1,146
986
Q4 2009
Q4 2010
Consumer Banking net income decreased due to higher provision expenses
and higher non-interest expenses
and higher non-interest expenses
Highlights
Consumer Banking
• Revenue stable in Q4
• Non-interest expenses increased slightly
due primarily to higher marketing
due primarily to higher marketing
• Provision expense increased
– Higher NACO and a modest
allowance build in Mortgage
allowance build in Mortgage
– Auto Finance credit performance
remained strong
remained strong
• Ending loans declined $0.6B from Q3
- Continuing run off in Home Loans
- Modest growth in Auto loans
- Q3 and Q4 Auto loan originations
equivalent to $9 billion annual “run
rate”
equivalent to $9 billion annual “run
rate”
• Strong deposit growth with continued
improvement in the deposit interest
expense rate
improvement in the deposit interest
expense rate
Net interest income
Non-interest income
Total revenue
Provision for loan and lease losses
Non-interest expenses
Income (loss) before taxes
Net income (loss)
Selected Metrics
Period end loans held for investment
Average loans held for investment
Loans held for investment yield
Auto loan originations
Period end deposits
Average deposits
Deposit interest expense rate
Core deposit intangible amortization
Earnings
Non-performing loans as a %
of loans HFI
of loans HFI
Non-performing asset rate
Net charge-off rate
30+ day performing delinquency rate
Period end loans serviced for others
(in millions)
Income taxes (benefit)
196
189
770
187
67
120
34,383
34,751
9.20%
2,217
82,959
1.13%
34
950
81,834
2.17%
1.97%
1.98%
153
249
749
(12)
(4)
(8)
38,214
39,114
8.83%
1,018
74,145
833
72,976
1.45%
5.43%
30,283
1.41%
40
2.85%
1.60%
4.40%
1,142
Q3 2010
196
114
757
271
96
175
34,997
35,090
9.28%
2,439
79,506
1.18%
36
946
78,224
2.11%
1.92%
1.79%
20,298
