Capital One Financial Mission Statement: “Helping to build strong and healthy communities benefits us all. We apply the same principles of innovation, collaboration and empowerment to our work in the community that we do in our business.”
Capital One is ranked 10th on the list of largest banks in the United States by assets. The bank has 755 branches including 30 café style locations and 2,000 ATMs. It is ranked 101st on the Fortune 500, 17th on Fortune’s 100 Best Companies to Work For list, and conducts business in the United States, Canada, and the United Kingdom. The company helped pioneer the mass marketing of credit cards in the 1990s. In 2016, it was the 5th largest credit card issuer by purchase volume, after American Express, JP Morgan Chase, Bank of America, and Citigroup.
In the fourth quarter of 2018, 75% of the company’s revenues were from credit cards, 14% were from consumer banking, and 11% were from commercial banking.
Capital One operates 3 divisions:
- Credit Cards – Capital One issues credit cards in the United States, Canada, and the United Kingdom and is the 3rd largest credit card issuer, after JP Morgan Chase and Citigroup. As of December 31, 2018, Capital One had $107.350 billion in credit card loans outstanding in the United States and $9.011 billion of credit card loans outstanding in Canada and the United Kingdom, with credit cards in total representing 47.3% of total loans outstanding.
- Consumer Banking – offers banking services, including checking accounts, saving accounts, and money market accounts via its branches and direct bank as well as retail and auto loans. As of December 31, 2018, the company had $2.864 billion in retail loans outstanding and $56.341 billion in car finance loans outstanding, representing 22.9% of total loans outstanding.
- Commercial banking – As of December 31, 2018, Capital One had $70.333 billion in loans outstanding secured by commercial, multifamily, and industrial properties, representing 28.6% of total loans outstanding.
Capital One retail footprint
On July 27, 1994, Richmond, Virginia-based Signet Financial Corp (now part of Wells Fargo) announced the corporate spin-off of its credit card division, OakStone Financial, naming Richard Fairbank as CEO. Signet renamed the subsidiary Capital One in October 1994.
At that time, Capital One was a monoline bank, meaning that all of its revenue came from a single product, in this case, credit cards. This strategy is risky in that it can lead to losses during bad times. Capital One attributed its relative success as a monoline to its use of data collection to build demographic profiles, allowing it to target personalized offers of credit direct to consumers.
Capital One began operations in Canada in 1996.
Activities announcing the opening of the CapitalOne 360 Café in Boston.
In July 1998, Capital One acquired auto financing company Summit Acceptance Corporation.
In 1999, Capital One was looking to expand beyond credit cards. CEO Richard Fairbank announced moves to use Capital One’s experience with collecting consumer data to offer loans, insurance, and phone service.
In October 2001, PeopleFirst Finance LLC was acquired by Capital One.
The companies were combined and rebranded as Capital One Auto Finance Corporation in 2003.
In late 2002, Capital One and the United States Postal Service proposed a negotiated services agreement for bulk discount in mailing services. The resulting three-year agreement was extended in 2006. In June 2008, however, Capital One had filed a complaint with the USPS regarding the terms of the next agreement, citing the terms of the NSA of Capital One’s competitor, Bank of America. Capital One subsequently withdrew its complaint to the Postal Regulatory Commission following a settlement with the USPS.
Onyx Acceptance Corporation was acquired by Capital One in January 2005
While many other monolines were acquired by larger, diverse banks, Capital One expanded into retail banking with a focus on subprime customers.
Capital One acquired New Orleans, Louisiana-based Hibernia National Bank for $4.9 billion in cash and stock in 2005 and acquired Melville, New York-based North Fork Bank for $13.2 billion in cash and stock in 2006, which reduced its dependency on credit cards from 90% to 55%.
In 2007, Capital One acquired NetSpend, a marketer of prepaid debit cards, for $700 million.
During the 2007 subprime mortgage financial crisis, Capital One closed its mortgage platform, GreenPoint Mortgage, due in part to investor pressures.
In 2008, Capital One received an investment of US$3.56 billion from the United States Treasury as a result of the Troubled Asset Relief Program. On June 17, 2009, Capital One completed the repurchase of the stock the company issued to the U.S. Treasury paying a total of US$3.67 billion, resulting in a profit of over $100 million to the U.S. Treasury.
The U.S. Securities and Exchange Commission criticized Capital One’s conduct during the crisis, claiming that they understated auto loan losses during the financial crisis of 2007–2008. In 2013, Capital One paid $3.5 million to settle the case, but was not required to directly address the allegations of wrongdoing.
In February 2009, Capital One acquired Chevy Chase Bank for $520 million in cash and stock.
In June 2011, ING Group announced the sale of its ING Direct division to Capital One for US$9 billion in cash and stock. On August 26, 2011, the Federal Reserve Board of Governors announced it would hold public hearings on the Capital One acquisition of ING Direct, and extend to October 12, 2011, the public comment period that had been scheduled to end August 22. The move came amidst rising scrutiny of the deal on systemic risk, or “Too-Big-to-Fail,” performance under the Community Reinvestment Act, and pending legal challenges. A coalition of national civil rights and consumer groups, led by the National Community Reinvestment Coalition, were joined by Rep. Barney Frank to challenge immediate approval of the deal. The groups argued that the acquisition was a test of the Dodd-Frank Wall Street Reform and Consumer Protection Act, under which systemically risky firms must demonstrate a public benefit that outweighs new risk before they are allowed to grow. Kansas City Federal Reserve Bank head Thomas M. Hoenigwas also skeptical of the deal. In February 2012, the acquisition was approved by regulators and Capital One completed its acquisition of ING Direct. Capital One received permission to merge ING into its business in October 2012, and rebranded ING Direct as Capital One 360 in November 2012.
In August 2011, Capital One reached a deal with HSBC to acquire its U.S. credit card operations. Capital One paid US$31.3 billion in exchange for US$28.2 billion in loans and $600 million in other assets. The acquisition was completed in May 2012.
On February 26, 2012, along with several other banks, Capital One announced support for the Isis Mobile Wallet payment system. However, in September 2013, Capital One dropped support for the venture.
In 2012, Capital One closed 41 branch locations.
In 2015, Capital One closed several branch locations to leave 174 operating branches in the D.C. metro area.
On February 19, 2014, Capital One became a 25% owner in ClearXchange, a Peer-to-peer transaction money transfer service designed to make electronic funds transfers to customers within the same bank and other financial institutions via mobile phone number or email address. ClearXchange was sold to Early Warning in 2016.
In January 2015, Capital One acquired Level Money, a budgeting app for consumer.
On July 8, 2015, the company acquired Monsoon, a design studio, development shop, marketing house and strategic consultancy.
In October 2016, Capital One acquired Paribus, a price tracking service, for an undisclosed amount.
In November 2017, Sanjiv Yajnik announced that the mortgage market is too competitive in the low rate environment to make money in the business. The company exited the mortgage origination business on November 7, 2017, laying off 1,100 employees. This was the second closure; the first occurred on August 20, 2007, when GreenPoint Mortgage unit was closed. GreenPoint had been acquired December 2006 when Capital One paid $13.2 billion to North Fork Bancorp Inc. The re-emergence into the mortgage industry came in 2011 with the purchase of online bank ING Direct USA.
In May 2018, the company acquired Confyrm, a digital identity and fraud alert service.
Capital One Stock
Since 2001, Capital One has been the principal sponsor of the college football Florida Citrus Bowl, which has been called the Capital One Bowl since 2003. It sponsors a mascot challenge every year, announcing the winner on the day of the Capital One Bowl. Capital One is one of the top three sponsors of the NCAA, paying an estimated $35 million annually in exchange for advertising and access to consumer data. Capital One also sponsored the EFL Cup, an English Soccer Competition, from 2012 to 2016. The company sponsored Sheffield United F.C. from 2006 to 2008. In 2017, the company became the sponsor of the Capital One Arena in Washington D.C.
In 2018, to celebrate the Washington Capitals‘ second-ever Stanley Cup Finals appearance, the firm temporarily changed its logo by replacing the word “Capital” with the Capitals’ titular logo, without the “s” plural
Capital One Stock
Capital One operates some charitable programs, such as the “No Hassle Giving” web portal, in which Capital One covers the transaction fees on customer and non-customer donations made through the site. The accountability organization National Committee for Responsive Philanthropy has been highly critical of Capital One’s relatively low rate of giving, stating that “Capital One’s philanthropic track record is dismal”. The organization pointed out that Capital One’s donations of 0.024% of revenue were much less than the industry median of 0.11% of revenue Capital One has disputed the groups figures, saying that “… In 2011 alone, our giving totals are more than 6 times greater ($30 million) than the number given by the NCRP”.
In July 2012, Capital One was fined by the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau for misleading millions of its customers, such as paying extra for payment protection or credit monitoring when they took out a card. The company agreed to pay $210 million to settle the legal action and to refund two million customers. This was the CFPB’s first public enforcement action.
In August 2014, Capital One and three collection agencies entered into an agreement to pay $75.5 million to end a consolidated class action lawsuit pending in the United States District Court for the Northern District of Illinois alleging that the companies used an automated dialer to call customers’ cellphones without consent, which is a violation of the Telephone Consumer Protection Act of 1991. It is notable that this legal action involved informational telephone calls, which are not subject to the “prior express written consent” requirements which have been in place for telemarketing calls since October 2013.
in 2018 Capital One has agreed to buy roughly $9 billion in Walmart credit card balances from Synchrony Financial, a move that could be seen as adding significant risk, as these accounts have high credit losses already. Plus, while Capital One is taking over as Walmart’s co-branding partner,
Domestic credit card loans increased by 8%, but marketing expenses jumped by a staggering 65%. Competition has never been higher in the credit card industry, so companies are having to pay more and offer higher incentives in order to win new customers.
recent Capital One COF awards and recognition received for serving as a business leader, creating a great place to work, being a good corporate citizen, and more.
National and Leadership
- Drucker Institute “250 Top Management” (#153)
- FORTUNE “100 Best Companies to Work For” (#17)
- FORTUNE “World’s Most Admired Companies”
- FORTUNE “Best 50 Workplaces for Giving Back” (#37)
- FORTUNE “Best Workplaces in Financial Services & Insurance”
- Glassdoor “15 Top Companies That Will Help You Retire A Millionaire” (#6)
- LinkedIn “Top 50 Companies Where the U.S. Wants to Work Now” (#42)
- Women’s Choice “Best Companies to Work For”
- Women’s Choice “Best Companies for Millenials”
- Digital Edge 50 “Digital Transformation”
- Richard D. Fairbank, Glassdoor.com “Highest Rated CEOs – Employees’ Choice” (#33)
- Richard D. Fairbank, Minority Business News USA “Best in the Class” Circle of Honor/ Supplier Diversity Professionals in the CEO Category
- Jim Gorzalski, Minority Business News USA “Supplier Diversity Champion”
- Meghan Welch, Profiles in Diversity Journal Diversity Leader
Diversity & Inclusion
- CAREERS & the disABLED Magazine “Top 50 Employers” (#2)
- Forbes “Best Employers” (#198)
- FORTUNE “250 America’s Best Employers” (#198)
- National Association of Female Executives’ “Top 70 Companies for Executive Women”
- Globe and Mail Inc “Canada’s Best Diversity Employers”
- Women’s Choice “Best Companies for Multicultural Women”
- Women’s Business Enterprise National Council “Top Corporate Award” (Gold)
- Forbes 100 “America’s Best Corporate Citizens”
- Junior Achievement “Gold U.S. President’s Volunteer Service Award”
- National Conference on Citizenship, Points of Light and Bloomberg “Civic 50” Most Community-Minded Companies in the S&P 500
Capital one may be a good stock to own as it pays you, however one will do well to buy the dips that are always inevitable with all stocks. Keep a close eye on capital one as it only keeps growing. Capital one is Worth keeping or buying a few shares and adding dips to build long term dividend re-investment wealth.
Pays a dividend, COF has a good dividend history.
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