Capital One Financial Corporation · NYSE:COF
Capital One Financial — Q3 2008 Earnings Presentation
16 slides from Capital One Financial's earnings presentation, Oct 16, 2008
Slide 1: Third quarter 2008 results
Third quarter 2008 results October 16, 2008 Exhibit 99.2
Slide 2: Forward looking statements
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 informatio
Slide 3: Margins as % of Managed Assets
Margins as % of Managed Assets Margins improved slightly in the quarter 9.38% 9.48% 9.12% 6.43% 6.19% 6.22% 5.86% 7.37% 5.70% Revenue Margin Net Interest Margin Risk-Adjusted Margin Q308 Drivers • Higher fees as early stage delinquencies rose • Seasonal impacts on fee recognition • Lower cost of fun
Slide 4: Efficiency Ratio
Efficiency Ratio We continue to drive efficiency gains 42.6% 44.2% 48.6% Excluding Visa one-time impacts
Slide 5: Monthly Managed Net Charge-off Rate and Delinquency Rate
Monthly Managed Net Charge-off Rate Monthly Managed Delinquency and Non-Performing Loan Rate Credit metrics continues to perform in-line with expectations Bankruptcy Filing Spike National Lending Local Banking Local Banking: Non-performing loans as % of loans National Lending 30+ Delinquency Rate Q3
Slide 6: National Lending Segment Allowance Coverage
National Lending Segment Allowance as % of Reported 30+ Delinquencies Allowance as % of Reported Loans 2.3% 2.4% 2.9% 3.3% 3.4% 3.6% Allowance coverage ratios remain high US Card Auto International Quarterly Highlights • Increased allowance for loan losses by $209M to $3.5B • Allowance consistent wi
Slide 7: Tangible Common Equity to Tangible Managed Assets Ratio
Tangible Common Equity to Tangible Managed Assets Ratio We remain well above our capital targets Target Range Quarterly Highlights • Issued approximately $750M of common stock • TCE ratio increased due to retained earnings growth and stock issuance • Tier 1 risk-based capital ratio of 11.9% (estimat
Slide 8: Readily Available Liquidity
Readily Available Liquidity We continue to maintain ample liquidity $B Undrawn FHLB Capacity Unencumbered Securities Undrawn Conduit $32B Highlights • $5.7B Holding company cash covers parent obligations for 2+ years, including dividend • $32B of readily available liquidity is 4x next 12 months of d
Slide 9: Q308 Investment Portfolio Mix
Q308 Investment Portfolio Mix Our conservative investment portfolio is a foundation of our strong balance sheet What is in our $27B investment portfolio • 65% Agency MBS: Guaranteed pass-throughs and CMOs • 13% Non-Agency MBS: – Mostly AAA rated, prime jumbo collateral – More than 2/3 super senior c
Slide 10: Net Income from Continuing Operations ($Millions)
Net Income from Continuing Operations ($Millions) Capital One delivered an operating profit of $386M despite increasing headwinds National Lending US Card $ 345.0 $ 340.4 $ 491.1 $ 498.7 $ 626.8 Auto Finance 14.5 33.6 (82.4) (112.4) (3.8) International 12.1 33.7 33.3 54.7 47.4 SUBTOTAL 371.6 407.6 4
Slide 11: US Card Credit Risk Metrics and Revenue Margin
US Card Credit Risk Metrics US Card Revenue Margin and Non-Interest Expenses as a % of Average Loans Our US Card business continues to deliver profits and generate capital despite a deteriorating economic environment 3.85% 4.84% 5.85% 3.56% 6.26% 6.13% 3.80% 2.98% 4.28% 4.04% 3.85% 4.20% 15.42% 14.9
Slide 12: Auto Credit Risk Metrics and Loan Originations
Credit Risk Metrics Auto Loan Originations and Managed Loans ($B) 5.00% 3.84% 2.35% 3.56% 3.98% 4.00% 9.32% 7.62% 6.42% 7.84% 7.15% 6.00% Managed Net Charge-off Rate Managed 30+ Delinquency Rate $3.0 $3.2 $3.6 $2.4 $1.5 $1.4 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 We’ve retrenched and repositio
Slide 13: Local Banking Credit Risk, Deposit and Loan Portfolio
Credit Risk Metrics Local Banking Deposit and Loan Portfolio ($B) In the most turbulent banking environment in a generation, our Local Banking business continues to manage credit exposures and grow deposits while maintaining pricing discipline and margins 0.46% 0.34% 0.19% 0.20% 0.31% 0.29% 0.96% 0.
Slide 14: 2008 Outlook
Commentary Loan/Deposit Growth Revenue Growth Cost Management Capital Management Credit Expectations 2008 Outlook We expect sound operating metrics in 2008, despite increasing credit headwinds Flat average loans High single-digit growth in average deposits Modest decline expected in Q4 revenues due
Slide 15: Strong Position, Decisive Actions
Strong Position Decisive Actions Despite continuing economic headwinds, Capital One remains well positioned to deliver value through the cycle • Resilient businesses • Conservatism imbedded in underwriting decisions • Strong balance sheet – Substantial and growing deposit base – Broad funding flexib
Slide 16: Capital One
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