1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the fiscal year ended December 31, 1996
Commission file number 1-13300
CAPITAL ONE FINANCIAL CORPORATION ASSOCIATE SAVINGS PLAN
2980 Fairview Park Drive
Suite 1300
Falls Church, Virginia 22042-4525
-----------------------------
CAPITAL ONE FINANCIAL CORPORATION
2980 Fairview Park Drive
Suite 1300
Falls Church, Virginia 22042-4525
2
Financial Statements and Exhibits
(a) Financial Statements
The Capital One Financial Corporation Associate Savings Plan (the "Plan",
formerly the Capital One Financial Corporation Employee Savings Plan) became
effective as of January 1, 1995. Filed as a part of this report on Form 11-K
are the audited financial statements of the Plan as of and for the years ended
December 31, 1996 and 1995.
(b) Exhibit
(1) Consent of Independent Auditors
2
3
SIGNATURES
The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934,
the trustees (or other persons who administer the employee benefit plan) have
duly caused this annual report to be signed on its behalf by the undersigned
thereunto duly authorized.
CAPITAL ONE FINANCIAL
CORPORATION ASSOCIATE
SAVINGS PLAN
-----------------------------------
(Name of Plan)
By: /s/ JAMES M. ZINN
-------------------------------
Name: James M. Zinn
on behalf of the Benefits
Committee, as Plan
Administrator
Dated: June 27, 1997
3
4
Financial Statements
and Supplemental Schedules
Capital One Financial Corporation
Associate Savings Plan
Years Ended December 31, 1996 and 1995
with Report of Independent Auditors
5
Capital One Financial Corporation Associate Savings Plan
Financial Statements
and Supplemental Schedules
Years Ended December 31, 1996 and 1995
CONTENTS
Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Audited Financial Statements
Statements of Net Assets Available for Benefits, with Fund Information . . . . . . . . . . . . . 2
Statements of Changes in Net Assets Available for Benefits, with Fund Information . . . . . . . . 6
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Supplemental Schedules
Schedule of Assets Held for Investment Purposes . . . . . . . . . . . . . . . . . . . . . . . . . 16
Schedule of Reportable Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6
Report of Independent Auditors
Benefits Committee
Capital One Financial Corporation
We have audited the accompanying statements of net assets available for
benefits of Capital One Financial Corporation Associate Savings Plan (formerly
the Capital One Financial Corporation Employee Savings Plan) as of December 31,
1996 and 1995, and the related statements of changes in net assets available
for benefits for the years then ended. These financial statements are the
responsibility of the Plan's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1996 and 1995, and the changes in its net assets available for
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes as of December 31, 1996, and reportable
transactions for the year then ended, are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974 and are
not a required part of the basic financial statements. The Fund Information in
the statements of net assets available for benefits and the statements of
changes in net assets available for benefits is presented for purposes of
additional analysis rather than to present the net assets available for
benefits and changes in net assets available for benefits of each fund. The
supplemental schedules and Fund Information have been subjected to the auditing
procedures applied in our audits of the basic financial statements and, in our
opinion, are fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
June 24, 1997
/s/ ERNST & YOUNG LLP
7
Capital One Financial Corporation Associate Savings Plan
Statement of Net Assets Available for Benefits,
with Fund Information
December 31, 1996
--------------------------------------------------------------------------
AMERICAN AMERICAN
CAPITAL EXPRESS EXPRESS
ONE TRUST TRUST
COMPANY SIGNET MONEY EQUITY
STOCK STOCK MARKET INDEX
POOLED FUND POOLED FUND FUND II FUND II
--------------------------------------------------------------------------
ASSETS
Investments, at fair value:
Units of Capital One Company Stock Pooled Fund $11,444,971
Units of Signet Stock Pooled Fund $2,612,609
Shares of registered investment companies $5,718,747 $4,028,636
Participant notes receivable
--------------------------------------------------------------------------
Total investments 11,444,971 2,612,609 5,718,747 4,028,636
Receivables:
Employer's contributions 215,017 373,249 111,063
Participants' contributions 72,485 41,885 35,858
Accrued income 24,824
--------------------------------------------------------------------------
Total receivables 287,502 439,958 146,921
Cash and cash equivalents
--------------------------------------------------------------------------
Total assets 11,732,473 2,612,609 6,158,705 4,175,557
--------------------------------------------------------------------------
LIABILITIES
Administrative expenses payable
--------------------------------------------------------------------------
Net assets available for benefits $11,732,473 $2,612,609 $6,158,705 $4,175,557
==========================================================================
2
8
FUND INFORMATION
- ------------------------------------------------------------------------------------------------------------------
IDS Y IDS Y IDS Y
(AMERICAN (AMERICAN (AMERICAN
EXPRESS) EXPRESS) EXPRESS) AIM TEMPLETON
FEDERAL MUTUAL STOCK CONSTELLATION FOREIGN PARTICIPANT
INCOME FUND FUND FUND FUND FUND NOTES OTHER TOTAL
- ------------------------------------------------------------------------------------------------------------------------------------
$11,444,971
2,612,609
$829,434 $334,200 $2,874,448 $4,499,932 $792,575 19,077,972
$1,877,469 1,877,469
- ------------------------------------------------------------------------------------------------------------------------------------
829,434 334,200 2,874,448 4,499,932 792,575 1,877,469 35,013,021
26,009 27,066 73,258 146,336 39,026 1,011,024
7,754 7,763 22,582 46,682 12,197 247,206
24,824
- ------------------------------------------------------------------------------------------------------------------------------------
33,763 34,829 95,840 193,018 51,223 1,283,054
$ 5,485 5,485
- ------------------------------------------------------------------------------------------------------------------------------------
863,197 369,029 2,970,288 4,692,950 843,798 1,877,469 5,485 36,301,560
- ------------------------------------------------------------------------------------------------------------------------------------
36,749 36,749
- ------------------------------------------------------------------------------------------------------------------------------------
$863,197 $369,029 $2,970,288 $4,692,950 $843,798 $1,877,469 $(31,264) $36,264,811
====================================================================================================================================
See accompanying notes.
3
9
Capital One Financial Corporation Associate Savings Plan
Statement of Net Assets Available for Benefits,
with Fund Information
December 31, 1995
-------------------------------------------------------
CAPITAL
ONE
COMPANY SIGNET VIRTUS
STOCK STOCK STYLE
POOLED POOLED MANAGER
FUND FUND FUND
-------------------------------------------------------
ASSETS
Investments, at fair value:
Units of Capital One Stock Pooled Fund $6,031,120
Units of Signet Stock Pooled Fund $2,655,273
Shares of registered investment companies $1,509,467
Common trust fund
Participant notes receivable
-------------------------------------------------------
Total investments 6,031,120 2,655,273 1,509,467
Receivables:
Employer's contributions 406,198 98,455
Participants' contributions 50,762 14,650
Accrued income
-------------------------------------------------------
Total receivables 456,960 113,105
Cash and cash equivalents 1,671 284
-------------------------------------------------------
Net assets available for benefits $6,489,751 $2,655,557 $1,622,572
=======================================================
4
10
FUND INFORMATION
--------------------------------------------------------------------------------------------------------
AMERICAN
VIRTUS VIRTUS CENTURY-
TREASURY U.S. TWENTIETH VANGUARD SIGNET
MONEY GOVERNMENT CENTURY INDEX TRUST STABLE
MARKET SECURITIES ULTRA 500 VALUE PARTICIPANT
FUND FUND FUND PORTFOLIO FUND NOTES TOTAL
------------------------------------------------------------------------------------------------------------------------------
$ 6,031,120
2,655,273
$3,579,685 $562,273 $1,956,433 $1,909,249 9,517,107
$341 341
$1,089,355 1,089,355
------------------------------------------------------------------------------------------------------------------------------
3,579,685 562,273 1,956,433 1,909,249 341 1,089,355 19,293,196
272,992 47,112 162,860 147,997 1,135,614
32,082 5,815 26,754 26,949 157,012
2,558 2 2,560
------------------------------------------------------------------------------------------------------------------------------
305,074 55,485 189,614 174,946 2 1,295,186
524 1,990 2,168 6,637
------------------------------------------------------------------------------------------------------------------------------
$3,885,283 $617,758 $2,148,037 $2,086,363 $343 $1,089,355 $20,595,019
==============================================================================================================================
See accompanying notes.
5
11
Capital One Financial Corporation Associate Savings Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year Ended December 31, 1996
--------------------------------------------------------------------------
CAPITAL AMERICAN AMERICAN
ONE EXPRESS TRUST EXPRESS
COMPANY SIGNET MONEY TRUST
STOCK STOCK MARKET EQUITY INDEX
POOLED FUND POOLED FUND FUND II FUND II
--------------------------------------------------------------------------
Additions to net assets attributed to:
Investment Income:
Net appreciation (depreciation) in
fair value of investments $3,147,315 $651,232 $405,569
Interest 40,372 24,673 $22,299
Dividends 69,965 58,329 212,548
--------------------------------------------------------------------------
3,257,652 734,234 234,847 405,569
Contributions:
Employer's 1,759,386 2,075,115 854,296
Participants' 1,378,472 824,757 812,712
Rollovers 170,899 89,028 105,678
--------------------------------------------------------------------------
3,308,757 2,988,900 1,772,686
--------------------------------------------------------------------------
Total additions 6,566,409 734,234 3,223,747 2,178,255
Deductions from net assets attributed to:
Benefits paid to participants (359,567) (124,125) (417,154) (199,490)
Administrative expenses (83,922)
--------------------------------------------------------------------------
Total deductions (359,567) (124,125) (501,076) (199,490)
Net increase (decrease) prior to interfund transfers 6,206,842 610,109 2,722,671 1,978,765
Interfund transfers (net) (964,120) (653,057) 3,436,034 2,196,792
--------------------------------------------------------------------------
Net increase (decrease) 5,242,722 (42,948) 6,158,705 4,175,557
Net assets available for benefits:
Beginning of year 6,489,751 2,655,557
--------------------------------------------------------------------------
End of year $11,732,473 $2,612,609 $6,158,705 $4,175,557
==========================================================================
6
12
FUND INFORMATION
---------------------------------------------------------------------------------------------------------------------------
IDS Y IDS Y
(AMERICAN IDS Y (AMERICAN VIRTUS VIRTUS
EXPRESS) (AMERICAN EXPRESS) AIM TEMPLETON STYLE TREASURY
FEDERAL EXPRESS) STOCK CONSTELLATION FOREIGN MANAGER MONEY MARKET
INCOME FUND MUTUAL FUND FUND FUND FUND FUND FUND
---------------------------------------------------------------------------------------------------------------------------
$(83,088) $(1,937) $43,234 $127,856 $34,822 $(13,008)
2,283 16 49 1,392 22 $8,397
44,762 27,249 183,260 150,458 28,600
---------------------------------------------------------------------------------------------------------------------------
(36,043) 25,328 226,543 279,706 63,444 (13,008) 8,397
205,863 97,720 481,757 968,835 138,873
163,153 81,118 370,321 886,159 123,489
40,495 43,212 123,541 173,157 47,156
---------------------------------------------------------------------------------------------------------------------------
409,511 222,050 975,619 2,028,151 309,518
---------------------------------------------------------------------------------------------------------------------------
373,468 247,378 1,202,162 2,307,857 372,962 (13,008) 8,397
(18,723) (12,234) (106,350) (106,058) (8,908) (5,970)
---------------------------------------------------------------------------------------------------------------------------
(18,723) (12,234) (106,350) (106,058) (8,908) (5,970)
354,745 235,144 1,095,812 2,201,799 364,054 (13,008) 2,427
508,452 133,885 1,874,476 2,491,151 479,744 (1,609,564) (3,887,710)
---------------------------------------------------------------------------------------------------------------------------
863,197 369,029 2,970,288 4,692,950 843,798 (1,622,572) (3,885,283)
1,622,572 3,885,283
---------------------------------------------------------------------------------------------------------------------------
$863,197 $369,029 $2,970,288 $4,692,950 $843,798
===========================================================================================================================
13
----------------------------------------------------------------------------------------
AMERICAN
CENTURY-
TWENTIETH VANGUARD INDEX
CENTURY TRUST
ULTRA 500 PARTICIPANT
FUND PORTFOLIO NOTES OTHER TOTAL
--------------------------------------------------------------------------------------------------------------
$(76,724) $(29,826) $44 $4,205,489
$103,512 5,485 208,500
6 1,659 776,836
--------------------------------------------------------------------------------------------------------------
(76,718) (29,826) 103,512 7,188 5,190,825
6,581,845
4,640,181
793,166
--------------------------------------------------------------------------------------------------------------
12,015,192
--------------------------------------------------------------------------------------------------------------
(76,718) (29,826) 103,512 7,188 17,206,017
(56,975) (1,415,554)
(36,749) (120,671)
--------------------------------------------------------------------------------------------------------------
(56,975) (36,749) (1,536,225)
(76,718) (29,826) 46,537 (29,561) 15,669,792
(2,071,319) (2,056,537) 741,577 (619,804)
--------------------------------------------------------------------------------------------------------------
(2,148,037) (2,086,363) 788,114 (649,365) 15,669,792
2,148,037 2,086,363 1,089,355 618,101 20,595,019
--------------------------------------------------------------------------------------------------------------
$1,877,469 $(31,264) $36,264,811
==============================================================================================================
See accompanying notes.
7
14
Capital One Financial Corporation Associate Savings Plan
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
Year Ended December 31, 1995
------------------------------------------------------------------------
CAPITAL
ONE VIRTUS
COMPANY SIGNET VIRTUS TREASURY
STOCK STOCK STYLE MONEY
POOLED POOLED MANAGER MARKET
FUND FUND FUND FUND
------------------------------------------------------------------------
Additions to net assets attributed to:
Investment income:
Net appreciation (depreciation) in fair
value of investments $1,566,314 $1,459,413 $ (6,466)
Interest $ 82,462
Dividends 177,141
------------------------------------------------------------------------
1,566,314 1,459,413 170,675 82,462
Contributions:
Employer's 845,877 (8,762) 159,637 434,951
Participants' 1,140,907 166,254 375,514
Rollovers 421,708 28,268 62,872
------------------------------------------------------------------------
2,408,492 (8,762) 354,159 873,337
------------------------------------------------------------------------
Total additions 3,974,806 1,450,651 524,834 955,799
Deductions from net assets attributed to:
Benefits paid to participants (308,306) (158,389) (68,762) (100,775)
------------------------------------------------------------------------
Net increase (decrease) prior to
interfund transfers 3,666,500 1,292,262 456,072 855,024
Interfund transfers (net) 2,513,252 (2,781,804) 1,166,500 2,221,429
------------------------------------------------------------------------
Net increase (decrease) 6,179,752 (1,489,542) 1,622,572 3,076,453
Transfer of net assets from
predecessor plan 309,999 4,145,099 808,830
------------------------------------------------------------------------
Net assets available for benefits $6,489,751 $2,655,557 $1,622,572 $3,885,283
========================================================================
8
15
FUND INFORMATION
- ----------------------------------------------------------------------------------------------------
AMERICAN
VIRTUS CENTURY- VANGUARD
U.S. TWENTIETH INDEX SIGNET
GOVERNMENT CENTURY TRUST STABLE VIRTUS
SECURITIES ULTRA 500 VALUE PARTICIPANT STOCK
FUND FUND PORTFOLIO FUND NOTES FUND TOTAL
- --------------------------------------------------------------------------------------------------------------------------
$ 21,727 $ 245,670 $ 348,365 $98,487 $ 3,733,510
$ 54,577 137,039
22,196 86,852 38,991 $103,919 2,269 431,368
- --------------------------------------------------------------------------------------------------------------------------
43,923 332,522 387,356 103,919 54,577 100,756 4,301,917
89,420 307,720 315,825 152,658 38,441 2,335,767
118,140 448,500 465,522 376,034 91,012 3,181,883
30,785 135,141 84,618 26,451 2,070 791,913
- --------------------------------------------------------------------------------------------------------------------------
238,345 891,361 865,965 555,143 131,523 6,309,563
- --------------------------------------------------------------------------------------------------------------------------
282,268 1,223,883 1,253,321 659,062 54,577 232,279 10,611,480
(18,246) (101,977) (80,972) (157,969) (68,545) (17,962) (1,081,903)
- --------------------------------------------------------------------------------------------------------------------------
264,022 1,121,906 1,172,349 501,093 (13,968) 214,317 9,529,577
96,777 342,267 177,183 (2,750,859) 399,492 (1,384,237)
- --------------------------------------------------------------------------------------------------------------------------
360,799 1,464,173 1,349,532 (2,249,766) 385,524 (1,169,920) 9,529,577
256,959 683,864 736,831 2,250,109 703,831 1,169,920 11,065,442
- --------------------------------------------------------------------------------------------------------------------------
$617,758 $2,148,037 $2,086,363 $343 $1,089,355 $20,595,019
==========================================================================================================================
See accompanying notes.
9
16
Capital One Financial Corporation Associate Savings Plan
Notes to Financial Statements
December 31, 1996
NOTE 1--DESCRIPTION OF PLAN
Effective January 1, 1995, Capital One Financial Corporation (the
"Corporation") established and adopted the Capital One Financial Corporation
Associate Savings Plan (the "Plan", formerly the Capital One Financial
Corporation Employee Savings Plan) for the benefit of its eligible associates.
The Plan is a continuation of the Signet Banking Corporation ("Signet")
Employee Savings Plan for participants who transferred employment from Signet
to the Corporation on or within twelve months after the date of distribution of
the Corporation's stock to shareholders of Signet on February 28, 1995.
Balances of Corporation associates in the Signet plan were transferred to the
Plan effective as of January 1, 1995. The market value of the assets
attributable to those participant accounts transferred from the Signet plan on
January 1, 1995 was $11,065,442.
The following description of the Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
GENERAL
The Plan is a defined contribution plan covering substantially all associates
of the Corporation and provides for pension, disability, death and termination
benefits. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 (ERISA).
10
17
CONTRIBUTIONS
Each year, participants may contribute 1% to 15% of pre-tax annual
compensation, as defined in the Plan. Such contributions may be pre-tax
dollars, or a combination of pre- and after-tax dollars. Participants may also
contribute amounts representing distributions from other qualified plans
("rollover contributions"). The Corporation contributes 50% of the first 6% of
the participant's annual compensation that a participant contributes to the
Plan. Beginning January 1, 1996, the Corporation contributes 3% of
participants' eligibile salaries, regardless of participation in the Plan.
Additional amounts equal to 3% of the participants' eligible salaries for those
participants making pre-tax contributions to the Plan at year end may be
contributed at the option of the Corporation's Board of Directors.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of the Corporation's contributions and Plan earnings. Allocations
are based upon the number of units of the Plan in each participant's account.
Forfeited balances of terminated participants' nonvested accounts are used to
pay administrative expenses of the Plan, to the extent available. Plan
expenses in excess of forfeitures, if any, are absorbed by the Corporation.
Excess forfeitures, if any, are applied as employer contributions made in
advance, and reduce the Corporation's future contributions. The benefit to
which a participant is entitled is the benefit that can be provided from the
participant's account.
Participant accounts are represented by units of ownership in the Plan which
are valued daily. As of December 31, 1996 and 1995, there were 9,336,407 and
5,832,730 participant units outstanding with a net asset value of $3.88 and
$3.53 per unit, respectively.
VESTING
Participants are immediately vested in their contributions plus actual earnings
thereon. Vesting in the Corporation contribution portion of their accounts
plus actual earnings thereon is based on years of continuous service. A
participant is 100% vested after two years of service.
INVESTMENT OPTIONS
Upon enrollment in the Plan, a participant may direct employer and employee
contributions in any of eight investment options. Participants may change
their investment options at any time. Current investment options, as well as
options previously available through the former investment manager, are
described below.
Current Options:
CAPITAL ONE COMPANY STOCK POOLED FUND (PREVIOUSLY CAPITAL ONE STOCK
UNITIZED INVESTMENT FUND) - Monies are invested by the Trustee in a
unitized trust fund which invests in shares of the Corporation's
common stock. The Trustee shall also be permitted to invest in
short-term temporary investments, including pooled funds which bear
interest at market rates.
11
18
AMERICAN EXPRESS TRUST MONEY MARKET FUND II - Monies are invested
primarily in short-term debt securities.
AMERICAN EXPRESS TRUST EQUITY INDEX FUND II - Ninety percent of the
monies held by this fund are invested in common stock and the balance
is invested in S&P 500 stock index futures.
IDS Y (AMERICAN EXPRESS) FEDERAL INCOME FUND - Monies are invested in
U.S. government agency securities.
IDS Y (AMERICAN EXPRESS) MUTUAL FUND - Monies are invested in common
stocks and senior securities, such as bonds and preferred stocks.
IDS Y (AMERICAN EXPRESS) STOCK FUND - Monies are invested in large
capitalization, blue chip stocks and investment grade bonds.
AIM CONSTELLATION FUND - Monies are invested in the common stock of
primarily small and medium-sized companies.
TEMPLETON FOREIGN FUND - Monies are invested primarily in the common
stock of companies outside the U.S.
Previous Options:
SIGNET STOCK POOLED FUND (PREVIOUSLY SIGNET STOCK UNITIZED INVESTMENT
FUND) - Monies are invested in a unitized trust fund that invested in
shares of Signet's common stock. Participants may continue to hold
this investment; however, future investment in the Fund is prohibited.
VIRTUS STYLE MANAGER FUND (PREVIOUSLY VIRTUS STRATEGIC STOCK FUND) -
Monies were invested in a diversified portfolio of common stocks of
U.S. corporations.
VIRTUS TREASURY MONEY MARKET FUND - Monies were invested in U.S.
Treasury obligations maturing in one year or less, with an average
maturity of 60 days or less.
VIRTUS U.S. GOVERNMENT SECURITIES FUND - Monies were invested in a
diversified portfolio of short to intermediate term fixed income U.S.
Government securities.
AMERICAN CENTURY-TWENTIETH CENTURY ULTRA FUND (PREVIOUSLY TWENTIETH
CENTURY ULTRA INVESTORS FUND) - Monies were invested in small to
medium-sized companies, with accelerating earnings and revenues, that
appear to have begun their upward trend, as evidenced by increased
trading volume.
VANGUARD INDEX TRUST 500 PORTFOLIO - Monies were invested in all of the
stocks in the Standard & Poors 500 Index in approximately the
proportions as they are represented in the Index.
SIGNET STABLE VALUE FUND - Monies were invested in a common trust fund
that invested in a diversified portfolio of guaranteed insurance
contracts.
12
19
PARTICIPANT NOTES RECEIVABLE
Participants may elect to borrow from their fund accounts a minimum of $1,000;
up to a maximum of the lesser of $50,000, or 50% of their account balance.
Loan transactions are treated as a transfer from (to) the investment fund to
(from) the loan fund. Loan terms range from 1 to 5 years or up to 10 years for
the purchase of a primary residence. The loans are secured by the balance in
the participant's account and bear interest at a rate commensurate with local
prevailing rates as determined by the Benefits Committee. Principal and
interest are paid ratably through monthly payroll deductions.
PAYMENT OF BENEFITS
On termination of service, a participant may elect to receive an amount equal
to the vested value of his or her account through a lump-sum distribution or
equal, or nearly equal, payments made at least annually for a period not to
exceed 15 years. If the participant has invested in the Capital One or Signet
Stock pooled funds, he or she may elect to receive distributions of whole
shares of common stock with fractional shares paid in cash.
NOTE 2--SUMMARY OF ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements of the Plan are prepared under the accrual method of
accounting.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
VALUATION AND INCOME RECOGNITION
The Plan's investments are stated at fair value. Units in the Capital One and
Signet Stock pooled funds are valued based upon the stock price at the last
reported sales price on the last business day of the plan year. The shares of
registered investment companies are valued at quoted market prices which
represent the net asset values of shares held by the Plan as of year-end.
Money market funds and participant notes receivable are valued at cost, which
approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
13
20
NOTE 3--INVESTMENTS
The Plan's investments are held in a trust fund administered by American
Express Trust Company. The fair values of the following individual investments
represented 5% or more of the Plan's net assets as of December 31, 1996 and
1995:
DECEMBER 31,
1996 1995
---------------------------------------
Capital One Company Stock Pooled Fund $11,444,971 $6,031,120
American Express Trust Money Market Fund II 5,718,747
AIM Constellation Fund 4,499,932
American Express Trust Equity Index Fund II 4,028,636
IDS Y (American Express) Stock Fund 2,874,448
Signet Stock Pooled Fund 2,612,609 2,655,273
Participant Notes 1,877,469 1,089,355
Virtus Treasury Money Market Fund 3,579,685
American Century - Twentieth Century Ultra Fund 1,956,433
Vanguard Index Trust 500 Portfolio 1,909,249
Virtus Style Manager Fund 1,509,467
NOTE 4--PLAN TERMINATION
Although it has not expressed any intent to do so, the Corporation has the
right to terminate the Plan subject to the provisions of ERISA. In the event
of Plan termination, participants will become 100% vested in their accounts.
NOTE 5--TAX STATUS
The Internal Revenue Service ruled on April 1, 1997 that the Plan qualifies
under Section 401(a) of the Internal Revenue Code (IRC) and, therefore, the
related trust is not subject to tax under present income tax law. Once
qualified, the Plan is required to operate in conformity with the IRC to
maintain its qualification. The Benefits Committee is not aware of any course
of action or events that have occurred that might adversely affect the Plan's
qualified status.
NOTE 6--TRANSACTIONS WITH PARTIES-IN-INTEREST
Effective January 1, 1996, American Express Trust Company was named trustee of
the Plan and investment manager of the Plan assets. During January 1996,
investments held by the previous trustee Signet Trust Company, and managed by
Virtus Capital Management, Inc., ("Virtus"), were transferred to American
Express Trust Company. The market value of the assets attributable to those
participant accounts transferred from the Signet Trust Company was $19,223,330.
Cash transferred from Signet to American
14
21
Express Trust Company was invested temporarily in short-term interest-bearing
investments until purchase of registered investment companies were made.
Interest earned on these investments was allocated pro rata to all funds.
The Plan's trustee during 1995 was Signet Trust Company, a subsidiary of
Signet. The Plan's investments in registered investment companies were managed
in 1995 by Virtus, a subsidiary of Signet. During 1995, the Plan earned
$388,202 on amounts invested with Signet Trust Company or managed by Virtus.
The amount invested with Signet Trust Company or managed by Virtus had a fair
value of $14,338,159 as of December 31, 1995.
As of December 31, 1996 and 1995, respectively, the Plan had invested
$11,444,971 and $6,031,120, at fair value, in the Capital One Stock pooled fund
and $2,612,609 and $2,655,273, at fair value, in the Signet Stock pooled fund.
15
22
Supplemental Schedules
23
Capital One Financial Corporation Associate Savings Plan
Schedule of Assets Held for Investment Purposes
December 31, 1996
UNITS/ FAIR
SHARES COST VALUE
------------------------------------------------------
Capital One Company Stock Pooled Fund 771,398 $8,236,567 $11,444,971
Signet Stock Pooled Fund 189,182 1,888,036 2,612,609
Registered Investment Companies:
American Express Trust Money Market Fund II 5,718,747 5,718,747 5,718,747
American Express Trust Equity Index Fund II 206,649 3,439,800 4,028,636
IDS Y (American Express) Federal Income Fund 166,587 840,483 829,434
IDS Y (American Express) Mutual Fund 24,796 336,473 334,200
IDS Y (American Express) Stock Fund 126,963 2,669,963 2,874,448
AIM Constellation Fund 178,145 4,171,208 4,499,932
Templeton Foreign Fund 76,503 759,510 792,575
------------------------------------
17,936,184 19,077,972
Participant Notes 1,877,469 1,877,469 1,877,469
------------------------------------
Total $29,938,256 $35,013,021
====================================
16
24
Capital One Financial Corporation Associate Savings Plan
Schedule of Reportable Transactions
Year Ended December 31, 1996
PURCHASE SELLING NET
DESCRIPTION OF ASSETS UNITS/SHARES PRICE PRICE COST FAIR VALUE GAIN(LOSS)
----------------------------------------------------------------------------------------------------------------------------------
Category (i) - individual transactions in excess of 5 percent of plan assets:
-----------------------------------------------------------------------------
Virtus Style Manager Fund 144,307 $1,516,661 $1,567,885 $1,516,661 $ (51,224)
Virtus Treasury Money Market Fund 3,636,752 3,636,752 3,636,752 3,636,752
Vanguard Index Trust 500 Portfolio 33,846 1,920,743 1,665,394 1,920,743 255,349
American Century - Twentieth Century Ultra Fund 76,604 1,917,636 1,797,137 1,917,636 120,499
American Express Trust Equity Index Fund II 122,107 $1,920,743 1,920,743 1,920,743
IDS Y (American Express) Federal Income Fund 75,659 1,516,661 1,516,661 1,516,661
American Express Trust Money Market Fund II 3,637,551 3,637,551 3,637,551 3,637,551
AIM Constellation Fund 87,444 1,917,636 1,917,636 1,917,636
17
25
Capital One Financial Corporation Associate Savings Plan
Schedule of Reportable Transactions
Year Ended December 31, 1996
PURCHASE SELLING NET
DESCRIPTION OF ASSETS UNITS/SHARES PRICE PRICE COST FAIR VALUE GAIN/(LOSS)
-----------------------------------------------------------------------------------------------------------------------------------
Category (iii) - series of transactions in excess of 5 percent of plan assets:
------------------------------------------------------------------------------
Virtus Style Manager Fund 144,307 $1,516,661 $1,567,885 $1,516,661 $ (51,224)
Virtus Treasury Money Market Fund 3,636,752 3,636,752 3,636,752 3,636,752
Vanguard Index Trust 500 Portfolio 33,846 1,920,743 1,665,394 1,920,743 255,349
American Century - Twentieth Century Ultra Fund 76,604 1,917,636 1,797,137 1,917,636 120,499
American Express Trust Money Market Fund II 7,365,790 $7,365,790 7,365,790 7,365,790
American Express Trust Money Market Fund II 1,646,975 1,646,975 1,646,975 1,646,975
Capital One Company Stock Pooled Fund 363,765 4,214,790 4,214,790 4,214,790
Capital One Company Stock Pooled Fund 155,238 1,954,665 1,590,012 1,954,665 364,653
American Express Trust Equity Index Fund II 233,663 3,876,629 3,876,629 3,876,629
American Express Trust Equity Index Fund II 27,013 477,701 436,829 477,701 40,872
IDS Y (American Express) Federal Income Fund 205,407 1,037,107 1,037,107 1,037,107
IDS Y (American Express) Federal Income Fund 38,819 192,317 196,624 192,317 (4,307)
AIM Constellation Fund 191,462 4,475,739 4,475,739 4,475,739
AIM Constellation Fund 13,317 329,428 304,531 329,428 24,897
IDS Y (American Express) Stock Fund 137,677 2,889,679 2,889,679 2,889,679
IDS Y (American Express) Stock Fund 10,714 237,093 219,716 237,093 17,377
Participant Notes 1,325,080 1,325,080 1,325,080 1,325,080
Participant Notes 508,770 508,770 508,770 508,770
All transactions were made on the market.
There were no category (ii) or (iv) reportable transactions during 1996.
18
26
EXHIBITS INDEX
Exhibit
Number Description Page Number
- ------ ----------- -----------
23 Consent of Independent Auditors 19
1
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the following Registration
Statements of our report dated June 24, 1997, with respect to the financial
statements and schedules of the Capital One Financial Corporation Associate
Savings Plan (formerly the Capital One Financial Corporation Employee Savings
Plan) included in this Annual Report (Form 11-K) for the year ended
December 31, 1996:
Registration
Statement
Number Form Description
------ ---- -----------
33-80263 Form S-8 Marketing and Management
Services Agreement
33-86874 Form S-8 Employee Stock Purchase Plan
33-86876 Form S-8 Employee Savings Plan
33-86986 Form S-8 1994 Stock Incentive Plan
33-91790 Form S-8 1995 Non-Employees Directors
Stock Incentive Plan
33-97032 Form S-8 Amendment to 1994 Stock
Incentive Plan
33-99748 Form S-3 Dividend Reinvestment and
Stock Purchase Plan
333-3580 Form S-3 Debt Securities and
Preferred Stock
333-4586 Form S-8 Amendment to 1994 Stock
Incentive Plan
/s/ ERNST & YOUNG LLP
Washington, D.C.
June 24, 1997
