On April 19, Capital One
- The company lowered earnings guidance for 2007 to $7.00-$7.40 from $7.40-$7.80.
- Earnings per diluted shares dropped 43% because of three factors: the normalization of U.S. consumer credit (echoed by American Express'
(NYSE:AXP) results), the North Fork Bank acquisition, and a weak demand in the secondary market for mortgages. - In light of problems in the mortgage industry, the company strengthened its repurchase reserve and increased its valuation allowance for mortgage loans held for sale.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q1 2007 |
Q1 2006 |
Change |
|
|---|---|---|---|
|
Total Revenue |
$3,083.3 |
$2,894.8 |
6.5% |
|
Net Interest Income |
$1,622.8 |
$1,206.8 |
34.5% |
|
Net Profit |
$675.0 |
$833.3 |
(19.0%) |
|
EPS |
$1.62 |
$2.86 |
(43.4%) |
Get back to basics with the income statement.
Margin Checkup
|
Q1 2007 |
Q1 2006 |
Change* |
|
|---|---|---|---|
|
Net Interest Margin |
5.20% |
6.16% |
(0.44%) |
|
Efficiency Ratio |
51.77% |
45.51% |
6.26% |
|
Net Charge-Off Rate** |
3.99% |
2.93% |
0.66% |
|
Return on Average Assets |
1.82% |
3.97% |
(2.15%) |
|
Return on Average Equity |
10.54% |
24.18% |
(13.64%) |
**U.S. Card segment
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q1 2007 |
Q1 2006 |
Change |
|---|---|---|---|
|
Net Loans Held for Investment |
$88,765 |
$56,444 |
57.3% |
|
Total Assets |
148,699 |
$89,273 |
66.6% |
The balance sheet reflects the company's health.
Related Foolishness:
- The Best Financial Stock for 2007: Capital One
- Capital One's Short-Term Pain for Long-Term Gain
- Fool on the Street: Capital One's Capital Strategy
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Fool contributor Emil Lee is an analyst and a disciple of value investing. He doesn't own shares in any of the companies mentioned above. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.
