Capital One 1996 Annual Report Download - page 26

Table 3 Statement of Average Balances, Income and Expense, Yields and Rates
Year Ended December 31
1996 1995 1994
Average Income/ Yield/ Average Income/ Yield/ Average Income/ Yield/
(dollars in thousands) Balance Expense Rate Balance Expense Rate Balance Expense Rate
Assets:
Earning assets
Consumer loans(1) $3,651,908 $592,088 16.21% $2,940,208 $397,654 13.52% $2,286,684 $255,115 11.16%
Federal funds sold 394,939 21,293 5.39 453,797 26,832 5.91 49,709 2,483 5.00
Other securities 752,140 47,102 6.26 496,126 32,923 6.64 12,917 1,074 8.31
Total earning assets 4,798,987 $660,483 13.76% 3,890,131 $457,409 11.76% 2,349,310 $258,672 11.01%
Cash and due from banks 40,698 9,309 8,331
Allowance for loan losses (83,573) (69,939) (66,434)
Premises and equipment, net 156,441 123,472 53,039
Other assets 656,407 483,082 285,674
Total assets $5,568,960 $4,436,055 $2,629,920
Liabilities and Equity:
Interest-bearing liabilities
Deposits $1,046,122 $ 56,272 5.38% $ 769,688 $ 49,547 6.44% $ 36,248 $ 2,364 6.52%
Short-term borrowings 454,899 28,509 6.27 1,028,075 66,214 6.44 2,286,779 91,278 3.99
Senior and deposit notes 3,168,205 210,218 6.64 1,924,087 133,635 6.95 695 53 7.63
Total interest-bearing liabilities 4,669,226 $294,999 6.32% 3,721,850 $249,396 6.70% 2,323,722 $ 93,695 4.03%
Other liabilities 222,975 170,841 66,582
Total liabilities 4,892,201 3,892,691 2,390,304
Equity 676,759 543,364 239,616
Total liabilities and equity $5,568,960 $4,436,055 $2,629,920
Net interest spread 7.44% 5.06% 6.98%
Interest income to average
earning assets 13.76% 11.76% 11.01%
Interest expense to average
earning assets 6.14 6.41 3.99
Net interest margin 7.62% 5.35% 7.02%
(1) Interest income includes past-due fees on loans of approximately $94,393, $50,384 and $16,478 for the years ended December 31, 1996, 1995 and 1994,
respectively.
Capital One
Management’s Discussion and Analysis of
Financial Condition and Results of Operations (continued)
24
Table 4 sets forth the dollar amount of the increase
(decrease) in interest income and interest expense result-
ing from changes in the volume of earning assets and inter-
est-bearing liabilities and from changes in yields and rates.
Interest Variance Analysis
Net interest income is affected by changes in the aver-
age interest rate earned on earning assets and the
average interest rate paid on interest-bearing liabilities. In
addition, net interest income is affected by changes in the
volume of earning assets and interest-bearing liabilities.
was also impacted by an increased percentage of lower
yielding securities (24% of average earning assets in 1995
versus 3% in 1994). The increase in the cost of funds
reflected the increase in average short-term market inter-
est rates and incrementally higher market cost of funds
paid by the Company on a stand-alone basis after the
Separation versus the amounts allocated by Signet in 1994.
Table 3 provides average balance sheet data, an analysis
of net interest income, net interest spread (the difference
between the yield on earning assets and the cost of inter-
est-bearing liabilities) and net interest margin for each of
the years ended December 31, 1996, 1995 and 1994,
respectively.