July 22, 2009
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News: Capital One Second Qtr Profit
Capital One Financial Corporation's, Chief Executive Officer, Richard D. Fairbank announced last week that the company lost another $276 million in second quarter. According to the company, the losses resulted from continue credit card defaults and the repayment of government Troubled Asset Relief Program (TARP) bailout money. Fairbank noted that the company has raised its previous prediction of an unemployment rate of 9.6% to 10.3%. A rise in the unemployment rate is expected to impact losses with an increase in credit card delinquencies and defaults throughout the remainder of the year. Fairbank also noted that in the wake of a tough economy, the company has witness its credit cardholders attempts to remain current with monthly payments.
Capital One's second quarter loss is approximately 65 cents per share with a profit of $453 million. The company's move to repay $461.7 million of the $3.6 million in TARP money they received earlier this year. Capital One's credit card earnings dropped 51% compared to same time last year while still posting a $168 million profit for second quarter. Delinquencies of 30 days or more fell to 4.8% compared to 5.l% last quarter. Write-off's increased to 9.2% up from 8.4% first quarter. Although the bank posted millions in credit card defaults, Capital One is encouraged by the decrease in loan delinquencies. They have reduced their default provisions fund to $1.9 billion from the previous quarters $2.1 billion.
One of the nation's largest credit card companies and on the Fortune 500 list, Capital One purchased Chevy Chase Bank in February this year in a strategic move to utilize the bank's deposits as a source of capital. The acquisition also allowed Capital One to have a prominent position in the Washington, D.C. market. Capital One also offers personal loans, auto loans, banking online, branch banking, and business products. The company is traded on the NYSE under the symbol COF and is headquartered in McLean, Virginia.