Capital One Reports First Quarter Earnings

Credit card company COF reports earnings and allows a peek into the wallets of consumers. Credit performance was largely in line with expectations; but outlook significantly deteriorated due to weakness in the U.S. economy.

Total Company Results
Managed provision expense was $1.8 billion. The company added $310.4 million to its allowance in the first quarter of 2008. This allowance build is consistent with expected managed losses of $6.7 billion over the next 12 months, ending March 31, 2009.
Local Banking Segment highlights
Net charge-off rate of 31 basis points and non-performing loans as a percent of loans held for investment of 56 basis points up from 28 and 41 in the fourth quarter of 2007, respectively.
National Lending Segment
The charge-off rate increased 61 basis points to 5.34% in the first quarter of 2008 from 4.73% in the fourth quarter of 2007.
The delinquency rate of 4.73% in the first quarter of 2008 decreased from 5.17% as of December 31st 2007.
U.S. Card highlights
Charge-offs rose in the first quarter of 2008 to 5.85% from 4.84% in the fourth quarter of 2007, and from 3.72% in the first quarter of 2007. The company expects the charge-off rate to be in the low six percent range for the next six months for the new U.S. Card subsegment, but higher in the fourth quarter.
Delinquencies improved in the first quarter of 2008 to 4.04% from 4.28% in the previous quarter but rose from 3.06% in the year ago quarter.
Auto Finance highlights
Net charge-offs of 3.98% declined slightly from 4.00% in the fourth quarter of 2007, but increased from 2.29% in the first quarter of 2007.
Delinquencies declined 142 basis points from the prior quarter to 6.42% but rose from 4.64% in the year ago quarter.
International highlights
Charge-offs of 5.30% declined 31 basis points from the fourth quarter of 2007, and 74 basis points from the first quarter of 2007.
Delinquencies increased 33 basis points to 5.12 percent from the prior quarter and 34 basis points from the year ago quarter.