Capital One 2004 Annual Report Download - page 26

PART I
Item 1. Business.
Overview
Capital One Financial Corporation (the “Corporation”) is a holding company, incorporated in Delaware on July
21, 1994, whose subsidiaries market a variety of consumer financial products and services. In 2004, the
Corporation became a bank holding company. The Corporation’s subsidiary, Capital One Bank (the “Bank”), a
Virginia state chartered bank, currently offers credit card products and takes retail deposits; the Bank can also,
consistent with its charter, engage in a wide variety of lending and other financial activities. Capital One, F.S.B.
(the “Savings Bank”), a federally chartered savings bank, offers consumer and commercial lending and consumer
deposit products, and Capital One Auto Finance, Inc. (“COAF”) offers automobile and other motor vehicle
financing products. Capital One Services, Inc., another subsidiary of the Corporation, provides various operating,
administrative and other services to the Corporation and its subsidiaries. Unless indicated otherwise, the terms
“Company”, “we”, “us”, and “our” refer to the Corporation and its consolidated subsidiaries.
As of December 31, 2004, we had 48.6 million accounts and $79.9 billion in managed consumer loans
outstanding.We are among the five largest issuers of Visa®(“Visa”) and MasterCard®(“MasterCard”) credit
cards in the United States based on managed credit card loans outstanding as of December 31, 2004. Important
factors underlying the growth of our managed credit card loans and accounts include credit card industry
dynamics, including the level of competition, and our business strategies around building, analyzing and
applying results derived from large quantities of data to reduce credit risk, mass customize products for
consumers and improve operational efficiency. We generally have labeled these strategies our “Information
Based Strategy” or “IBS”. With the conversion of the Corporation to a bank holding company and the conversion
of the Bank to a full-service bank, the Bank has the ability to engage in a variety of consumer lending and other
banking activities.
We offer our products throughout the United States. We also offer our products outside of the United States
principally through Capital One Bank (Europe) plc, an indirect subsidiary of the Bank organized and located in
the United Kingdom (the “U.K. Bank”), and a branch of the Bank in Canada. Our U.K. Bank has authority to
accept deposits and provide credit card and installment loans.
We generally strive to use IBS to differentiate among customers based on credit risk, usage and other
characteristics and to match customer characteristics with appropriate product offerings. To do this, we have
built, and continue to enhance, sophisticated models and information systems, while employing a well-trained
staff and a flexible culture to identify, develop and market credit card or other products and services to satisfy the
demands of a competitive and ever changing marketplace. By actively testing a wide variety of product and
service features, marketing channels and other aspects of offerings, we design customized solicitations, products
and services that are targeted at specific credit customer segments, thereby enhancing response levels and
maximizing returns on investment within given underwriting parameters.
We build on information derived from our initial sources with continued integrated testing and model
development to improve the quality, performance and profitability of our solicitation and account management
initiatives. We use this approach in all areas of our business, including solicitations, account management, credit
line management, pricing strategies, usage stimulation, collections, recoveries, and account and balance
retention.
Our common stock is listed on the New York Stock Exchange under the symbol COF and our Upper DECs®
securities are listed on the New York Stock Exchange under the symbol COFPRC. Our principal executive office
is located at 1680 Capital One Drive, McLean, Virginia 22102 (telephone number [phone]). The
Corporation maintains a website at www.capitalone.com. Documents available on our website include the
Corporation’s (i) Code of Business Conduct and Ethics, (ii) Corporate Governance Principles; (iii) and charters
for the Audit and Risk, Compensation, Finance, and Governance and Nominating Committees. These documents
are also available in print to any shareholder who requests a copy. In addition, we make available free of charge
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