Capital One Financial Corp. reported Thursday that net income for the second quarter fell 90 percent. The drop came in response to costs for an acquisition and a $210 million settlement with federal agencies involving charges of deceptive marketing by a vendor.
The McLean-based financial services company reported net income of $92 million, or 16 cents per share, compared with a net income of $911 million, or $1.97 per share, for the same period a year ago. Loans held for investment increased $28.9 billion, or 17 percent, driven largely by the $27.6 billion addition of HSBC’s U.S. credit card business.
“While second quarter results reflect significant purchase accounting impacts and other items, the strong underlying performance of our businesses continues to demonstrate that we’re well positioned to deliver sustained shareholder value,“ Richard Fairbank, chairman and CEO said in a statement.
On Wednesday, Capital One announced regulatory settlements related to cross-sell activities in its domestic card business by a third-party vendor. As a result, the company recorded $60 million in civil money penalties in non-interest expense. Also, as part of its agreement with the Office of the Comptroller of the Currency (OCC,) it is setting aside $150 million in cash to fund expected customer refunds. The total income statement impact of these expected refunds is approximately $116 million, including a $75 million reserve accrued in the first quarter to reverse previously recognized revenues and an additional $41 million additional reserve this quarter to reflect the final agreements with the company’s regulators.
Total net revenue for the quarter was $5.1 billion, a 2 percent increase from the previous year.
The company charge-off rate was 1.53 percent in the second quarter, down from 2.04 percent, driven by the absence of charge-offs in the HSBC U.S. Card portfolio, which were absorbed by the credit established through acquisition accounting, as well as continued improvement in credit in the legacy businesses.
There are no comments for this entry