Capital One Financial Corp (COF)

[OptionMonster]

Capital One Affirms 2008 Expectations

Expects to build allowance for loan losses by approximately $200 million in the third quarter

MCLEAN, Va., Sept. 23 /PRNewswire-FirstCall/ -- Capital One Financial Corporation (NYSE:COF) today affirmed its 2008 financial expectations, as originally articulated in the Second Quarter 2008 Earnings Presentation dated July 17, 2008.

For 2008:

The company expects a low single-digit decline in year-end managed loans, and double-digit growth in year-end deposits.

The company expects low to mid-single digit revenue growth. If revenue margins remain at or near second quarter levels, the company expects to be toward the lower end of this range for full year 2008.

The company expects its efficiency ratio for full year 2008 to be in the mid 40 percent range or lower, with the quarterly efficiency ratio drifting up modestly in the second half of the year. Revenue trends will be the biggest driver of efficiency ratio. The company expects 2008 operating expenses to be at least $200.0 million below their 2007 level.

The company expects to continue its quarterly dividend of 0.375 cents per share, while maintaining its Tangible Common Equity ratio at or above its 5.5 to 6.0 percent target range through 2008.

The company expects continuing weakness in the U.S. economy.

The company expects the charge-off rate for its U.S. Card line of business to be in the low 6 percent range for the third quarter of 2008, rising to around 7 percent in the fourth quarter.

In addition to affirming the 2008 outlook summarized above, the company currently expects to build its allowance for loan losses by approximately $200.0 million in the third quarter, consistent with the company's expectation of continuing weakness in the U.S. economy, as observed in recent trends in economic indicators, including home prices and the unemployment rate. This expected allowance build would result in an allowance for loan losses as of September 30, 2008 that would have the capacity to absorb the equivalent of approximately $7.2 billion in managed losses over the next 12 months, through the end of the third quarter of 2009.