Capital One Financial Corporation · NYSE:COF
Capital One Financial — Merger or Acquisition (June 2011)
27 slides from Capital One Financial's merger presentation, Jun 16, 2011
Slide 1: Investor Presentation
Exhibit 99.1 Investor Presentation June 16, 2011
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act giving Capital One’s expectations or predictions of future financial or business performance or conditions. Such forward- looking statements include, bu
Slide 3: Transaction summary and strategic rationale; Financial overview
• Transaction summary and strategic rationale • Financial overview 3
Slide 4: Transaction Summary
Transaction Summary 1 Transaction Value $9.0 Billion Form of Consideration to Fixed Number of Capital One shares of approximately 55.9 million 1 ING (9.9% COF pro forma ownership) 2 Fixed cash amount of approximately $6.2 billion Source of Funds Planned market equity raise prior to closing of approx
Slide 5: The ING Direct acquisition delivers attractive financial results and long-term strategic value
The ING Direct acquisition delivers attractive financial results and long-term strategic value Attractive Deal Compelling Strategic Economics Value • Accretive to EPS in 2012 • Industry-leading direct banking franchise with • Mid-single digit EPS national reach accretion in 2013 • 7 million young, h
Slide 6: ING Direct has grown rapidly to become the nation's 15th largest bank
th ING Direct has grown rapidly to become the nation’s 15 largest bank, and by far the largest direct banking franchise B ING Direct Deposits $90 $80 77.7 75.0 71.8 Time $70 60.6 $60 $50 47.2 40.0 Savings/ $40 MMDA $30 28.8 $20 16.2 9.3 Electric $10 Orange 2.9 .7 Checking $0 2000 2001 2002 2003 2004
Slide 7: Mortgages and investment securities are ING Direct's predominant assets
Mortgages and investment securities are ING Direct’s predominant assets Mortgage Loans Investment Securities • $40.7B outstanding as of 3/31/2011 • $29.6B outstanding as of 3/31/11 – $28.7B Fair Value • 62% of portfolio is 2008 or newer – $0.9B HFI vintages • Majority are mortgage related – $15.0B U
Slide 8: Capital One can build on ING Direct's franchise to realize greater value
Capital One can build on ING Direct’s franchise to realize greater value for customers, associates and shareholders Achievable cost Capital synergy Deposit synergies synergies Opportunity to Opportunity to expand and swap higher-yield deepen Capital One loans relationships with for ING assets large
Slide 9: Capital One has been a successful player in direct banking for over a decade
Capital One has been a successful player in direct banking for over a decade Capital One Direct Bank $B Deposit Balances $35 $30 $29 $27 $25 $22 $21 $20 $15 $15 $14 $14 $14 $12 $10 $9 $8 $6 $5 $0 9
Slide 10: ING Direct's all-in cost of deposits is competitive due to lower non-interest expense
ING Direct’s all-in cost of deposits is competitive due in large part to much lower non-interest expense Non Interest Expense for 3.0% Interest Expense for Liquid 3.0% Liquid Deposits* Deposits* (2010) 2.5% 2.45% 2.5% 2.0% 2.0% 1.75% 1.55% 1.5% 1.5% 1.11% 1.0% 1.0% 0.70% 0.51% 0.5% 0.5% 0.23% 0.23%
Slide 11: We are a leader in deposit growth
We are a leader in deposit growth Deposit Growth 14% Q1 2010 – Q1 2011 12.2% 12% 10.0% 10% 9.0% 8% 5.9% 6% 5.3% 4.7% 4.6% 4% 2.7% 2.6% 2.3% 1.9% 2% 0% -2% (0.5%)(0.5%) (1.9%)(2.4%) -4% (2.5%) -6% -8% -10% (10.7%) (10.8%) -12% * Excludes foreign deposits ** Excludes brokered deposits. *** Excludes im
Slide 12: ING Direct deposit customers are exceptionally loyal
ING Direct deposit customers are exceptionally loyal Annual Customer Attrition ING Direct Annual Customer Attrition 18% 2007-2009 Average 18% 16.2% 16% 16% 14% 14% 12% 12% 10% 10% 8% 8% 5.8% 6% 6% 6% 5% 5% 5% 4.0% 4% 4% average 4% 3% 3% 3% 2% 2% 2% 2% 0% 0% National average ING Direct Capital One 20
Slide 13: ING Direct customers maintain and grow balances over time
ING Direct customers maintain and grow balances over time ING Direct Balance View by Cohort* 140% 2006 130% 120% 2005 110% 2007 2009 100% 2008 90% 80% 70% 60% 50% 1 2 3 4 5 6 *Includes certificate of deposit bookings 13 Source: ING Direct; BAI Deposit Performance Benchmarking (May 2010)
Slide 14: A handful of banks are breaking away from the pack
A handful of banks are breaking away from the pack to build very large customer bases M 120 Number of Customer Accounts 106 12/31/2010 100 88 80 76 70 60 47 40 37 33 20 17 9 9 8 8 7 7 7 6 5 3 3 3 0 Data is U.S. Only for firms with large Internationalpresence (Citi, ING, TD Bank); May include account
Slide 15: ING Direct's customers are young and have attractive income and potential
ING Direct’s customers are young and have attractive income and potential Household Age Income Distribution 100% 5% 3% 3% 5% 3% 3% $200k+ 2% 6% 5% 5% 4% $150-$199k 18% 17% 7% 90% 21% 65+ 15% 15% 24% 17% $100-$149k 80% 19% 13% 18% 12% 57-64 70% 16% 11% 60% 18% 39% 40% $50k-$99k 41% 50% 23% 48-56 44%
Slide 16: ING Direct customers are avid supporters of the franchise
ING Direct customers are avid supporters of the franchise 1 Net Promoter Score (“NPS”) 70% 2010 Q3 60% 58% 50% 40% 35% 34% 31% 30% 30% 20% 10% 0% ING Direct Wells Chase BofA Citi 1 When asked if the customer would recommend their bank, NPS is defined as % scored 9 or 10 less % 1 to 6, scores out of
Slide 17: Banking is increasingly moving to digital channels
Banking is increasingly moving to digital channels Consumer Distribution Channel Penetration Percent of U.S. Households, 1980-2009 100% 90% Debit Cards Direct Deposit 80% ATM 70% Branch Banking (at least once in 60% last 12 months) 50% Online Banking (% of U.S. 40% banking households) 30% 20% 10% Mo
Slide 18: ING Direct complements our advantaged access to assets and local-scale banking
ING Direct complements our advantaged access to assets and local-scale banking with national reach Advantaged Local-scale banking National banking access to in attractive markets reach assets • Credit Card • Commercial • Industry-leading direct banking franchise • Auto Finance • Small Business • Dir
Slide 19: With ING Direct we become the 5th largest U.S. bank
th With ING Direct we become the 5 largest U.S. bank $B Total U.S. Domestic Deposits $1,000 As of 12/31/2010 $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 19 Source: SNL Financial
Slide 20: With ING Direct we become the largest direct bank
With ING Direct we become the largest direct bank $B Direct U.S. Banks: Liquid Domestic Deposits $100 $93 As of 12/31/2010 $90 $80 $70 $60 $50 $40 $28 $30 $22 $20 $20 $10 $9 $9 $10 $7 $7 $0 20 Source: SNL Financial, Company reports
Slide 21: Transaction risks are low
Transaction risks are low Demonstrated Acquiring fully capability to marked balance Modest cost Strong cultural effectively mark sheet without reduction targets alignment and manage paying significant mortgage loans premium 21
Slide 22: Transaction summary and strategic rationale; Financial overview
• Transaction summary and strategic rationale • Financial overview 22
Slide 23: Transaction Summary
Transaction Summary 1 Transaction Value $9.0 Billion Form of Consideration to Fixed Number of Capital One shares of approximately 55.9 million 1 ING (9.9% COF pro forma ownership) 2 Fixed cash amount of approximately$6.2 billion Source of Funds Planned market equity raise prior to closing of approxi
Slide 24: Financial Assumptions
Financial Assumptions 1 Earnings COF: IBES EPS estimates through 2013 1 ING Direct: Baseline annual earnings of $630MM Synergies Base case includes cost and modest funding synergies See next Upside potential from balance sheet repositioning, cross-sell, and page additional funding synergies 2 Gross
Slide 25: We believe there is upside potential from our modeled synergies
We believe there is upside potential from our modeled synergies Pre-Tax Annual Synergies Long-Term Potential 2013 Modeled Impact Run-Rate • Consolidation of direct banking and $90MM $90MM mortgage platform (~12% of ING Direct’s • Infrastructure / data center savings costs) Cost Savings • Corporate s
Slide 26: Attractive Financial Transaction
Attractive Financial Transaction Attractive Valuation Price to tangible book multiple of 1.0x Premium to core deposits of 0.4% Accretive Transaction EPS accretive in 2012 Mid-single digit EPS accretion in 2013 Accretive to tangible book value per share at closing Attractive Shareholder IRR in excess
Slide 27: ING Direct is a game-changing acquisition that delivers compelling financial results
ING Direct is a game-changing acquisition that delivers compelling financial results immediately and over the long-term Combines valuable Accelerates winning ING Direct deposit Provides significant banking strategy Strengthens our franchise with financial and positioned where customer franchise Capi
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