What was the primary driver of Capital One's financial performance in Q1 2009?

The primary driver of Capital One's financial performance in Q1 2009 was the ongoing U.S. economic recession, which led to a significant increase in the provision for loan and lease losses and a decline in revenue. This resulted in a net loss for the quarter, a reversal from the profitability seen in the prior year.

How did the acquisition of Chevy Chase Bank impact Capital One's financial statements?

The acquisition of Chevy Chase Bank on February 27, 2009, was accounted for using the acquisition method, resulting in the recognition of $1.1 billion in goodwill. Chevy Chase Bank's results were included in Capital One's consolidated financial statements from the acquisition date onwards. This acquisition also contributed to an increase in total assets, deposits, and loans held for investment.

What is Capital One's outlook for credit quality and charge-offs?

Capital One anticipates continued pressure on credit quality due to the worsening economic conditions. The company expects managed charge-off dollars in 2009 to be higher than previously projected, with the U.S. Card charge-off rate projected to cross 10% in the coming months. This is influenced by economic deterioration, regulatory changes impacting minimum payments, and a 'denominator effect' from a shrinking portfolio.

What is the company's capital position, and has it required additional capital?

Capital One successfully completed the Federal Reserve's Stress Test and was determined not to need any additional Tier 1 capital or Tier 1 common equity under the "more adverse" scenario. The company's capital ratios remained strong, with Tier 1 Capital at 11.38% and Total Capital at 14.12% for Capital One Financial Corp. at March 31, 2009.

CAPITAL ONE FINANCIAL CORP 10-Q Quarterly Report Q1 FY2009

Summary

Capital One Financial Corporation (COF) reported a net loss of $111.9 million ($0.45 per diluted share) for the first quarter of 2009, a significant decline from the $548.5 million net income ($1.47 per diluted share) reported in the same period of 2008. This loss was primarily driven by a substantial increase in the provision for loan and lease losses, which rose by 18.5% to $1.3 billion, reflecting the continued deterioration of credit quality amid the ongoing U.S. economic recession. Revenue also faced pressure, with total revenue declining 25% year-over-year, impacted by reduced consumer spending, lower interchange income, and a significant drop in servicing and securitizations income. Despite the challenging operating environment, Capital One completed the acquisition of Chevy Chase Bank on February 27, 2009, for $475.9 million. This acquisition is expected to strengthen the Company's core deposit funding base and expand its retail branch presence in the Washington D.C. region. The company also announced its intention to reduce its quarterly dividend to $0.05 per common share from $0.375 to preserve capital. Management indicated that while the U.S. economic recession continues to impact credit performance, the company is taking steps to fortify its financial position for recovery.

Financial Highlights

22 data points

Beta

Net Income

-$108.06M

EPS (Diluted)

$-0.44

Free Cash Flow

$1.37B

Financial Statements

Beta

Operating Income	-$83.10M
Interest Expense	$857.02M
Net Income	-$108.06M
EPS (Basic)	$-0.44
EPS (Diluted)	$-0.44

Key Highlights

1Net loss of $111.9 million ($0.45/share) in Q1 2009, a stark contrast to a net income of $548.5 million ($1.47/share) in Q1 2008.
2Provision for loan and lease losses increased by 18.5% to $1.3 billion due to worsening economic conditions and increased net charge-offs.
3Total revenue decreased by 25% to $2.9 billion, impacted by lower consumer spending and a significant drop in non-interest income.
4Acquisition of Chevy Chase Bank completed on February 27, 2009, for $475.9 million, adding goodwill of $1.1 billion and strengthening the deposit base.
5Managed charge-off rate increased to 5.52% from 3.96% year-over-year, reflecting continued credit quality deterioration.
6Quarterly common stock dividend reduced from $0.375 to $0.05 to preserve capital.
7Capital One successfully passed the Federal Reserve's "Stress Test" without the need for additional capital.

CAPITAL ONE FINANCIAL CORP Quarterly Report for Q1 Ended Mar 31, 2009

Summary

Financial Highlights

Key Highlights

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