Creditor Results: Cap One in Recession Mode as AT&T Goes Gangbusters

Capital One Financial Corp. (NYSE: COF) announced late yesterday its fourth quarter profits fell nearly 42 percent to $227 million. The decline could be attributed in part to a $95 million charge due to the closing of its GreenPoint Mortgage group. Revenues rose 28 percent to $3.9 billion.

Chairman and CEO Richard Fairbank said during a conference call with analysts that the slowing economy challenged the firm and that “we are managing the company today as (if a) recession were already here. We are pulling back on loan growth, focusing on our most resilient businesses, and closely managing credit.”

Cap One also took a $1.9 billion provision for loan losses in the fourth quarter.

Despite the problems, the bank’s U.S. Card division reported strong results with net income rising more than 54 percent to $522 million. However, the net charge off rate rose to 5.40 percent from 3.82 a year ago, and the 30-day delinquency rate rose to 4.95 percent from 3.74 percent. Fairbank said the division will see a managed charge-off rate in the mid six percent range in the first half of 2008.

The auto loan unit saw its net charge off rate rise to 4.00 percent in the quarter compared to 2.85 percent a year ago. The 30-day delinquency rate rose to 7.84 percent from 6.35 percent.

The news was much brighter in the telecom sector as AT&T Inc. (NYSE: T) today reported its 11th consecutive quarter and third straight year of double-digit growth in adjusted earnings per share as the number of new wireless subscribers went up and customer churn declined.

AT&T’s adjusted earnings, which exclude costs and accounting effects associated with acquisitions, totaled $4.3 billion, up from $2.4 billion in the year-earlier fourth quarter. Adjusted earnings per diluted share increased 16.4 percent to $0.71, up from $0.61 in the year-earlier quarter.

“We had an excellent fourth quarter, which affirms our outlook for 2008,” said Randall Stephenson, AT&T chairman, chief executive officer and president, in a prepared statement. “Our wireless business delivered outstanding results, with the largest quarterly subscriber gain ever posted by a U.S. provider.”

AT&T’s net gain of 2.7 million wireless subscribers marked a 13.5 percent rise from 2.4 million net adds in the year-earlier fourth quarter. The company also reported 6 million new subscribers, up 9.6 percent versus the year-earlier fourth quarter. Total average monthly subscriber churn was 1.7 percent, down 10 basis points versus the year-earlier quarter.