Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - CAPITAL ONE FINANCIAL CORP | d284436d8k.htm |
| EX-99.2 - FINANCIAL SUPPLEMENT - CAPITAL ONE FINANCIAL CORP | d284436dex992.htm |
| EX-99.1 - PRESS RELEASE - CAPITAL ONE FINANCIAL CORP | d284436dex991.htm |
 Fourth Quarter 2011
Results January 19, 2012
Exhibit 99.3 |
| 2
January 19, 2012
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.
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, expenses, capital measures,
accruals for claims in litigation and for other claims against Capital One, earnings per share or other
financial measures for Capital One; future financial and operating results; Capital One’s
plans, objectives, expectations and intentions; the projected impact and benefits of the pending transactions involving Capital One,
HSBC and ING Direct (the “transactions”); 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
Capital
One’s
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 U.K., Canada 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); the possibility that regulatory and other approvals and conditions to either of the
transactions are not obtained or satisfied on a timely basis or at all; the
possibility
that
modifications
to
the
terms
of
either
of
the
transactions
may
be
required
in
order
to
obtain
or
satisfy
such
approvals
or
conditions;
the
possibility
that
Capital
One
will
not
receive
third-party
consents
necessary
to
fully
realize
the
anticipated
benefits
of
the
transactions;
the
possibility
that
Capital
One
may
not
fully
realize
the
projected
cost
savings
and
other
projected
benefits
of
the
transactions;
changes
in
the
anticipated
timing
for
closing
either
of
the
transactions;
difficulties
and
delays
in
integrating
the
assets
and
businesses
acquired
in
the
transactions;
business
disruption
during
the
pendency
of
or
following
the
transactions;
the
inability
to
sustain
revenue
and
earnings
growth;
diversion
of
management
time
on
issues
related
to
the
transactions;
reputational
risks
and
the
reaction of customers and counterparties to the transactions; disruptions relating to the transactions
negatively impacting Capital One’s ability to maintain relationships
with
customers,
employees
and
suppliers;
changes
in
asset
quality
and
credit
risk
as
a
result
of
the
transactions;
financial,
legal,
regulatory,
tax
or
accounting changes or actions, including the impact of the Dodd-Frank Wall Street Reform and
Consumer Protection Act and the regulations promulgated thereunder; developments, changes or
actions relating to any litigation matter involving Capital One; increases or decreases in interest rates; Capital One’s ability to
access the capital markets at attractive rates and terms to capitalize and fund its operations and
future growth; the success of Capital One’s marketing efforts in
attracting and retaining customers; increases or decreases in Capital One’s aggregate loan balances
or the number of customers and the growth rate and composition thereof, including increases or
decreases resulting from factors such as shifting product mix, amount of actual marketing expenses Capital One incurs
and attrition of loan balances; the level of future repurchase or indemnification requests Capital One
may receive, the actual future performance of mortgage 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 Capital One; the amount and rate of deposit growth; changes in the
reputation of or expectations regarding the financial services industry 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;
Capital One’s ability to control costs; the amount of, and rate of growth in, Capital
One’s expenses as its 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 Capital One’s 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;
fraud
or
misconduct
by
Capital
One’s
customers,
employees
or
business
partners;
competition
from
providers
of
products
and
services that compete with Capital One’s businesses; and other risk factors set forth from time to
time in reports that Capital One files with the Securities and
Exchange Commission, including, but not limited to, the Annual Report on Form 10-K for the year
ended December 31, 2010, and Exhibit 99.5 to the Current Report on Form 8-K filed on July 13,
2011. 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 Current Report on Form 8-K filed January
19, 2012, available on Capital One’s website at www.capitalone.com under
“Investors.” |
| 3
January 19, 2012
Fourth Quarter and Full Year 2011 Highlights
•
Q4 2011 net income was $407MM or $0.88 per share
–
5% loan growth over Q311
–
Slightly
lower
revenue
due
to
impact
of
UK
reserve
and
the
absence
of
Q311
FCFR
release
–
Higher non-interest expense driven by increased marketing & operating expenses, including
litigation reserves
–
Higher provision expense driven by seasonally higher charge-offs and stabilizing allowance
•
Full year 2011 net income was $3.1B or $6.80 per share
–
Strong and stable revenue margins
–
Increased marketing & operating expenses
–
Significant credit improvement, now stabilizing at strong levels
–
Return to loan growth
–
Deposit growth with disciplined pricing
–
Enhanced balance sheet strength, Tier 1 Common Ratio near 10% |
 4
January 19, 2012
Fourth Quarter 2011 earnings were $407MM, or $0.88 per share,
compared with $813MM, or $1.77 per share, in Third Quarter 2011
Highlights
•
Revenue negatively impacted by
absence of Q311 FCFR release of
$83MM and by UK PPI Reserve ($81MM)
in Q411
•
OpEx increase includes $90MM of litigation
related expenses and accelerated
infrastructure build
•
Provision expense increased with seasonally
higher charge-offs and smaller allowance
release
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
Tax expense
Pretax income
$MM
Operating Earnings (after tax)
Non-Interest Expense
3,182
868
4,050
420
2,198
2,618
1,432
884
7
(30)
861
407
411
(4)
$0.88
571
160
Q411
3,283
871
4,154
312
1,985
2,297
1,857
812
18
(208)
622
813
865
(52)
$1.77
1,235
370
Q311
3,023
939
3,962
308
1,783
2,091
1,871
1,394
(14)
(547)
839
697
701
(4)
$1.52
1,032
331
Q410 |
 5
January 19, 2012
Loan balances increased and net interest margin was stable in the
fourth quarter
Average Balances & Margin Highlights
Average
Yield/
Average
Yield/
(Dollars in millions)
Balance
Rate
Balance
Rate
Interest-earning assets:
Loans held for investment
$
131,581
10.46
%
129,043
$
11.00
%
Investment securities
39,005
2.50
37,189
2.84
Cash equivalents and other
5,681
1.20
11,478
0.73
Total interest-earning assets
$
176,267
8.40
%
177,710
$
8.63
%
Interest-bearing liabilities:
Total interest-bearing deposits
$
109,914
0.96
%
110,750
$
1.06
%
Securitized debt obligations
16,780
1.91
18,478
1.93
Senior and subordinated notes
3.48
10,519
3.19
Other borrowings
4.41
8,369
4.06
Total interest-bearing liabilities
$
1.43
%
148,116
$
1.49
%
Impact of non-interest bearing funding
0.25
%
0.25
%
Net interest margin
7.22
%
7.39
%
Quarter Ended 12/31/11
Quarter Ended 09/30/11
10,237
7,794
144,725 |
 6
January 19, 2012
Full year 2011 earnings were $3,147MM, or $6.80 per share, compared
with $2,743MM, or $6.01 per share, in full year 2010
Net interest income
Non-interest income
Revenue
Marketing expense
Operating 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
Tax expense
Pretax income
$MM
Operating Earnings (after tax)
Average Loans Held For Investment
Revenue Margin
Net Interest Margin
2010
12,457
3,714
16,171
958
6,976
7,934
8,237
6,651
72
(2,816)
3,907
2,743
3,050
(307)
$6.01
4,330
1,280
$
128,526
9.20%
7.09%
Fav/(Unfav) ($)
284
(176)
108
(379)
(1,019)
(1,398)
(1,290)
2,879
106
(1,438)
1,547
404
203
201
$0.79
257
$
(102)
8 bps
18bps
2011
12,741
3,538
16,279
1,337
7,995
9,332
6,947
3,772
(34)
(1,378)
2,360
3,147
3,253
(106)
$6.80
4,587
1,334
$
128,424
9.28%
7.27%
Period-end Loans Held For Investment
$
125,947
$
9,945
$
135,892
(54) |
 7
January 19, 2012
Our capital position remains strong
Tier
1
Common
Equity
to
Risk-Weighted
Assets
(Basel
I)
Disallowed DTA
RWA
EOP Loans
(1.2)
127
126
(1.4)
142
124
Tier 1 Common excluding
disallowed DTA
($B)
12.4
13.4
Tier 1 Common
11.2
12.0
(0.6)
146
129
14.3
13.7
(0.2)
149
130
15.1
14.9
2
(0.5)
155
15.6
15.1
2
136
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 99.2—Table 12:
Reconciliation of Non-GAAP Measures and Calculation of Regulatory
Capital Measures" for the calculation of this ratio. 2 Tier 1 Common Equity ratio as of
the quarter end does not reflect any impact from the equity forward sale agreements executed in July 2011 which have not
been settled in whole or in part.
8.8%
8.4%
9.4%
10.0%
9.7%
0%
2%
4%
6%
8%
10%
12%
Q410
Q111
Q211
Q311
Q411 |
 8
January 19, 2012
Loan balances grew across all business segments in the fourth quarter
and the full year
Credit Card
13,396
13,543
14,035
14,389
15,410
10,484
10,758
11,404
11,924
12,684
4,020
3,936
4,122
4,221
4,404
1,842
1,780
1,642
1,571
1,503
0
5
10
15
20
25
30
35
40
Q410
Q111
Q211
Q311
Q411
Commercial Banking
Consumer Banking
Comm’l & Multi-Family
Middle Market
49,970
47,298
51,234
51,510
54,682
7,522
8,735
8,711
8,210
8,466
3,879
3,272
2,760
2,310
1,927
0
10
20
30
40
50
60
70
80
Q410
Q111
Q211
Q311
Q411
Revolving
Domestic Card
International
17,867
18,342
19,223
20,422
21,779
12,103
11,741
11,323
10,916
10,433
4,413
4,223
4,046
4,014
4,103
0
5
10
15
20
25
30
35
40
45
50
Q410
Q111
Q211
Q311
Q411
Home Loans
Retail
Banking
Auto
Specialty Lending
Small Ticket CRE
$M
$M
$M
Installment
loans |
 9
January 19, 2012
Consumer credit is exhibiting expected seasonal patterns
4.07%
7.28%
3.92%
4.74%
6.20%
3.66%
3.65%
3.33%
4.09%
3.59%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
Q410
Q111
Q211
Q311
Q411
Domestic Credit Card ($54.4B*)
Net Charge-off Rate
30+ Day Delinquency Rate
Home Loan ($10.7B*)
0.90%
0.71%
0.53%
0.89%
0.60%
0.89%
0.64%
0.61%
0.78%
0.70%
0%
1%
2%
3%
Q410
Q111
Q211
Q311
Q411
Auto ($21.1B*)
5.74%
7.02%
6.15%
6.68%
5.77%
5.55%
5.75%
5.30%
5.35%
5.18%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Q410
Q111
Q211
Q311
Q411
International Credit Card ($8.4B*)
2.07%
1.98%
1.69%
2.65%
1.11%
6.88%
7.58%
5.79%
6.34%
6.09%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
11%
Q410
Q111
Q211
Q311
Q411
Net Charge-off Rate
30+ Day Delinquency Rate
Net Charge-off Rate
30+ Day Performing
Delinquency Rate
Net Charge-off Rate
30+ Day Performing
Delinquency Rate
* Average Loans for Q4 2011 |
 10
January 19, 2012
Commercial Banking credit metrics have stabilized and improved
over the last five quarters
* Average Loans for Q4 2011
0.79%
0.50%
0.37%
1.43%
0.63%
1.95%
1.80%
1.66%
1.55%
1.17%
0%
1%
2%
3%
4%
5%
Q410
Q111
Q211
Q311
Q411
Total Commercial Banking ($32.6B*)
Nonperforming
Asset Rate
Charge-off
Rate
Commercial & Multi-Family Real Estate ($14.6B*)
0.76%
0.56%
0.12%
1.15%
0.39%
1.43%
2.23%
2.63%
2.16%
2.35%
0%
1%
2%
3%
4%
5%
Q410
Q111
Q211
Q311
Q411
Middle Market ($12.1B*)
Nonperforming
Asset Rate
Charge-off
Rate
0.38%
0.30%
0.28%
1.00%
0.47%
1.86%
1.76%
1.71%
1.54%
1.10%
0%
1%
2%
3%
4%
5%
Q410
Q111
Q211
Q311
Q411
Total Commercial Lending
Excluding Small Ticket CRE ($31.0B*)
Nonperforming
Asset Rate
Charge-off
Rate
0.20%
0.18%
0.41%
0.94%
0.13%
0.82%
1.33%
1.14%
1.04%
1.19%
0%
1%
2%
3%
4%
5%
Q410
Q111
Q211
Q311
Q411
Nonperforming
Asset Rate
Charge-off
Rate |
 We are in a strong
position to deliver sustained shareholder value Outlook
2011 Results
•
Strong and stable margins and revenue
•
Significant credit improvement offset
growth in non-interest expense
–
Invested in infrastructure
–
Prepared for acquisitions
–
“Primed the pump”
for growth
•
Returned to loan growth
•
Deposit growth with improving interest
expense rate
•
Expect acquisitions will have significant impacts
on reported results, especially in 2012
–
Purchase accounting impacts
–
Integration expenses
–
Partial-year results
•
Expect continuing strength in underlying
businesses
•
Positioned to deliver sustained shareholder value
–
Growth potential (off a larger base)
–
Strong returns and capital generation
–
Strong balance sheet and financial resilience
11 |
 |