Capital One Financial Corporation · NYSE:COF
Capital One Financial — 2004 Debt & Equity Conference
18 slides from Capital One Financial's conference presentation, Nov 4, 2004
Slide 1: 2004 Debt & Equity Conference: Financial Foundations
2004 Debt & Equity Conference Financial Foundations Gary Perlin November 4, 2004
Slide 2: Forward-looking statements disclaimer
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
Slide 3: History of results and strong financial position are the foundation for next decade
Our history of results and strong financial position are the foundation for Capital One's next decade Sustained Earnings Power Strong Balance Sheet
Slide 4: Capital One has delivered consistently strong returns
Capital One has delivered consistently strong returns * Compound Annual Growth Rate EPS Growth ROE Managed ROA 1995 33% 23% 1.20% 1996 20% 23% 1.18% 1997 21% 23% 1.22% 1998 42% 25% 1.51% 1999 30% 26% 1.69% 2000 30% 28% 1.78% 2001 30% 23% 1.54% 2002 35% 22% 1.47% 2003 23% 21% 1.52% 2004(E) 26-32% ~21
Slide 5: Consistently strong returns compare favorably to the broader market
Capital One's consistently strong returns compare favorably to the broader market Source: Factset (Reuters) Last 10 Years Last 5 Years Last 3 Years Last 1 Year* Capital One S&P Financials S&P 500 Capital One S&P Financials S&P 500 29% 30% 29% 23% 12% 9% 14% 17% 10% 8% 11% 17% 24% 24% 22% 21% 16% 15%
Slide 6: Business strategy delivers consistent annual returns with quarterly variability
Our business strategy delivers consistent annual returns that can exhibit quarterly variability ROA Trailing 4 quarters Q1 99 0.01590191 Q2 99 0.016816688 Q3 99 0.017689818 Q4 99 0.017235858 Q1 00 0.018165784 Q2 00 0.018321 Q3 00 0.018082342 Q4 00 0.016974267 Q1 01 0.0163 0.0174 Q2 01 0.016 0.0169 Q
Slide 7: Drivers of quarterly variability evident in Q4 2004
Allowance (Release)/Build Significantly higher than Q304 Change in Quarterly Marketing These drivers of quarterly variability will be evident in Q4 2004 Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 (E) Marketing 31 29 45 -26 -35 -1 64 Significant Build Q103 Q203 Q303 Q403 Q104 Q204 Q304 Q404 (E) Allowanc
Slide 8: Quarterly EPS variability compares favorably to S&P 500 Financials
Capital One's quarterly EPS variability compares favorably to the S&P 500 Financials and the S&P 500 COF 0.33 S&P Financials 0.38 S&P 500 0.67 Source: Factset, EPS numbers as reported 1 Defined as standard deviation of EPS over the period as a percentage of the absolute value of the EPS mean over th
Slide 9: Bottom line focus has delivered consistent annual returns
Rev Mgn Provision Ops Cost Mktg Tax 1994 0.096 0.0812 0.0379 0.0225 0.0146 1995 0.0856 0.0657 0.0326 0.0187 0.012 1996 0.1118 0.0729 0.0345 0.0188 0.0118 1997 0.135 0.0764 0.0343 0.0197 0.0122 1998 0.1546 0.1051 0.049 0.0244 0.0151 1999 0.1834 0.1419 0.0611 0.0269 0.0169 2000 0.1945 0.1483 0.0631 0.
Slide 10: Declining revenue margin more than offset by declining costs
Our declining revenue margin has been more than offset by declining costs As a Percentage of Average Managed Assets 1 Through September 30, 2004 * Also includes 0.02% cumulative effect of accounting change in 2003 related to FIN 46 2004 (E) 1.70%
Slide 11: Sustained earnings power is a function of discipline across the businesses
Sustained earnings power is a function of discipline applied across the businesses Focus on long-term economics Measured approach to market entry/exit Credit at the core Grounded assumptions Hedged interest rate risk Expense recognition Revenue recognition Securitization gain on sale Decision-Making
Slide 12: We start our second decade with a solid balance sheet
We start our second decade with a solid balance sheet Well Capitalized 9.57% capital to managed assets ratio as of Q304 Capital generative portfolio Fortified Funding Diversified and stockpiled AAA capacity of $12.8B as of Q304 Strong Liquidity $21.5B as of Q304 Supports refinancing and growth
Slide 13: Deposit balances have grown consistently over time
Deposit balances have grown consistently over time $ B 1) Ranking is based on domestic deposits as of Q1 04. 1998 1999 2000 2001 2002 2003 Q104 Q304 Deposits 2 3.784 8.379 12.839 17.326 22.416 22.9 25.4 Unsecured 3.739 4.181 4.051 5.335 5.566 Other 1.742 2.78 2.926 3.996 6.365 Securitization 11.238
Slide 14: Increasing breadth and scope of funding programs
We continue to increase the breadth and scope of our funding programs Products Investors US Card Master Trust De-linked Cross currency Asset backed commercial paper (Trust Liquidity Notes) Auto Trusts Prime Non-Prime UK Card Master Trust (cross currency) Unsecured products Parent level notes Senior
Slide 15: Investor demand for expanding US Card ABS programs remains strong
Investor demand for our expanding US Card ABS programs remains strong Date 10/29/2004 10/22/2004 10/15/2004 10/8/2004 10/1/2004 9/24/2004 9/17/2004 9/10/2004 9/3/2004 8/27/2004 8/20/2004 8/13/2004 8/6/2004 7/30/2004 7/23/2004 7/16/2004 7/9/2004 7/2/2004 6/25/2004 6/18/2004 6/11/2004 6/4/2004 5/28/20
Slide 16: Continued build in available liquidity and debt maturities
2000 2001 Q4 02 Q1 03 Q2 03 Q3 03 Q4 03 Q1 04 Q2 04 Q3 04 Credit Lines 2.01553 1.46685 1.51449 1.528 1.3 1.34969 1.37785 1.45448 0.75 0.75 Cash 0.918778 3.195688 1.302645 1.980282 Securities 4.423677 5.418817 5.408671 5.866628 Cash and Securities 1.933522 3.823129 5.342455 6.258 8.614505 6.711316 7.
Slide 17: Sustained Earnings Power and Strong Balance Sheet
Sustained Earnings Power Strong Balance Sheet Winning business strategy Discipline applied consistently across the businesses Strong and consistent returns Diversified and fortified funding Robust capital and liquidity Our history of results and strong financial position are the foundation for Capit
Slide 18: Gary Perlin, November 4, 2004
Gary Perlin November 4, 2004 2004 Debt & Equity Conference Financial Foundations
Capital One Financial — 2004 Debt & Equity Conference on 6ix