Capital One 2004 Annual Report Download - page 27

through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on
Form 8-K and amendments to those reports as soon as reasonably practicable after electronic filing or furnishing
of such material with the SEC.
Business Description
With more than 48.6 million accounts, Capital One is one of the world’s largest financial services franchises. We
are a diversified financial services corporation focused primarily on consumer lending. Our principal business
segments are domestic credit card lending, automobile and other motor vehicle financing and global financial
services. For further discussion of our segments, see pages 45-47 in Item 7 “Management’s Discussion and
Analysis of Financial Condition and Results of Operations—Reportable Segments” and pages 68-70 in Item 8
“Financial Statements and Supplementary Data—Notes to the Consolidated Financial Statements—Note 2”.
U.S. Card Segment. We offer a wide variety of credit card products throughout the United States. We customize
our products to appeal to different consumer preferences and needs by combining different product features,
including annual percentage rates, fees and credit limits, rewards programs and other special features. We
routinely test new products to develop ones that appeal to different and changing consumer preferences. Our
customized products include both products offered to a wide range of consumer credit risk profiles, as well as
products aimed at special consumer interests. Our pricing strategies are risk-based; lower risk customers may
likely be offered products with more favorable pricing and we expect these products to yield lower delinquencies
and credit losses. On products offered to higher risk customers, however, we are likely to experience higher
delinquencies and losses, and we price these products accordingly.
Auto Finance Segment. We also apply IBS to our auto finance business. Through COAF, we purchase retail
installment contracts, secured by automobiles or other motor vehicles, through dealer networks throughout the
United States. Additionally, we utilize direct marketing to offer automobile financing directly to consumers. Our
direct marketed products include financing for the purchase of new and used vehicles, as well as refinancing of
existing motor vehicle loans. In October 2001, we acquired PeopleFirst Inc., the nation’s largest online provider
of direct motor vehicle loans. In January 2005, we acquired Onyx Acceptance Corporation, an auto finance
company that provides financing to franchised and select independent dealerships throughout the United States.
Similar to our credit card strategy, we customize product features, such as interest rate, loan amount, and loan
terms, enabling us to lend to customers with a wide range of credit profiles.
Global Financial Services Segment. Our Global Financial Services (“GFS”) segment includes a variety of diverse
products for consumers in the United States and internationally. Domestically, GFS manages installment lending,
healthcare financing (through Amerifee Corporation, which we acquired in May 2001), and small business
lending activities. In addition, in 2004, the Company entered into a definitive agreement to acquire a mortgage
lending business, eSmartloan and an insurance brokerage business, InsLogic. Both acquisitions closed in early
2005. We have, and may in the future achieve further diversification through acquisition, organic growth or both.
GFS also includes our international businesses, where we are using methodologies and approaches we have
learned in our U.S. credit card and other consumer lending businesses in new geographies. Internationally, we are
currently operating primarily in the United Kingdom and Canada. In 2004, we continued to grow in the number
of accounts and loan balances in our international lending business, with most of our growth coming from the
United Kingdom. The Company also completed its acquisition of Hfs Group, a home equity broker in the United
Kingdom, in January 2005.
Recent Developments—Pending Acquisition of Hibernia Corporation
On March 6, 2005, we entered into an Agreement and Plan of Merger with Hibernia Corporation (“Hibernia”), a
financial holding company that provides a wide array of financial products and services through its bank and
non-bank subsidiaries, including a full range of deposit products, small business, commercial, mortgage and
private and international banking, trust and investment management, brokerage, investment banking and
insurance. Under the merger agreement. Hibernia would merge with and into the Company, and we would
continue as the surviving corporation.
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