Capital One 2000 Annual Report Download - page 40

38 md&a
table 12: INTEREST RATE SENSITIVITY
Within >180 Days– >1 Year– Over
As of December 31, 2000 Subject to Repricing (Dollars in Millions) 180 Days 1 Year 5 Years 5 Years
EARNING ASSETS:
Federal funds sold and resale agreements $61
Interest-bearing deposits at other banks 102
Securities available for sale 156 $ 147 $ 895 $ 498
Consumer loans 6,131 6 8,976
Total earning assets 6,450 153 9,871 498
INTEREST-BEARING LIABILITIES:
Interest-bearing deposits 2,647 1,447 3,981 304
Other borrowings 2,826 100
Senior notes 522 143 2,745 641
Total interest-bearing liabilities 5,995 1,690 6,726 945
Non-rate related assets (1,616)
Interest sensitivity gap 455 (1,537) 3,145 (2,063)
Impact of swaps 3,854 (153) (3,592) (109)
Impact of consumer loan securitizations (4,476) (677) 5,853 (700)
Interest sensitivity gap adjusted for impact
of securitizations and swaps $ (167) $ (2,367) $ 5,406 $ (2,872)
Adjusted gap as a percentage of managed assets –0.50% –7.11% 16.24% –8.63%
Adjusted cumulative gap $ (167) $ (2,534) $ 2,872 $ —
Adjusted cumulative gap as a percentage
of managed assets – 0.50% –7.61% 8.63% 0.00%
BUSINESS OUTLOOK
Earnings, Goals and Strategies
This business outlook section summarizes Capital One's expectations
for earnings for the year ending December 31, 2001, and our primary
goals and strategies for continued growth. The statements contained
in this section are based on management’s current expectations.
Certain statements are forward looking and, therefore, actual results
could differ materially. Factors that could materially influence results
are set forth throughout this section and in Capital One's Annual
Report on Form 10-K for the year ended December 31, 2000 (Part I,
Item 1, Risk Factors).
We have set targets, dependent on the factors set forth below, to
achieve a 20% return on equity in 2001 and to increase Capital One's
2001 earnings per share by approximately 30% over earnings per
share for 2000. As discussed elsewhere in this report and below,
Capital One's actual earnings are a function of our revenues (net inter-
est income and non-interest income on our earning assets),
consumer usage and payment patterns, credit quality of our earning
assets (which affects fees and charge-offs), marketing expenses and
operating expenses.
Product and Market Opportunities
Our strategy for future growth has been, and is expected to con-
tinue to be, to apply our proprietary IBS to our lending and
non-lending businesses. We will seek to identify new product oppor-
tunities and to make informed investment decisions regarding new
and existing products. Our lending and other financial and non-
financial products are subject to competitive pressures, which
management anticipates will increase as these markets mature.
Lending
Lending includes credit card and other consumer lending products,
including automobile financing and unsecured installment lending.
Credit card opportunities include, and are expected to continue to
include, a wide variety of highly customized products with interest
rates, credit lines and other features specifically tailored for numer-
ous consumer segments. We expect continued growth across a
broad spectrum of new and existing customized products, which are
distinguished by a range of credit lines, pricing structures and other
characteristics. For example, our low introductory and non-introduc-
tory rate products, which are marketed to consumers with the best