Capital One 2007 Annual Report Download - page 3

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We recruited an all-star management team to the bank, and we are making
strong progress on our integration of North Fork Bank as we prepare to convert
to the Capital One brand in 2008. We largely cleared the decks of our exposure
to the vagaries of the secondary mortgage market. We tightened underwriting in
our national consumer lending businesses, especially in the markets hardest hit by
home price depreciation. And we remained focused on the disciplined deployment
of our shareholders’ capital, completing $3 billion of share repurchases in 2007,
well ahead of our original mid-2008 target date.
While the exogenous environment has taken its toll, we have been well-served by
the choices we have made over the years to fortify our company in anticipation of
difficult times. We made the decision to transform our company with our entry into
banking, significantly reducing our reliance on the capital markets. Nearly half
of our assets are now deposit funded. Our bank has provided us with stability,
shielding us from the market disruption that has left many non-depository specialty
lenders starved for funding. In addition, our long-standing focus on building a
strong balance sheet has put us on solid footing.
While our bank acquisitions have insulated us from the volatility of the capital
markets, we inherited GreenPoint Mortgage as part of the North Fork deal. In the
face of the unprecedented disruption in the secondary mortgage markets, we acted
CHAIRMAN’S LETTER
2007 was a tough year across the financial services industry, and
Capital One®was not immune from these difficulties. Total shareholder
return was disappointing, at minus 38 percent, in the midst of the
worst year for financial stocks since 1990.
Despite industry headwinds, the fundamentals of our national
lending and local banking businesses remained solid. Our businesses,
particularly U.S. Card and our bank, generated solid returns and
significant capital. We continued to drive revenue growth and
revenue margin expansion. We attacked costs and are on track to
save $700 million by the end of 2009.
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