Capital One Financial reported earnings on late Thursday, and the results were anything but pretty -- the bank said it swung to its first quarterly loss ever, reporting a net loss of $81.6 million, or $0.21 per diluted share. Driving the loss was a $898.0 million charge associated with the company's shutdown of GreenPoint Mortgage in August (see here). But weakness in the mortgage business wasn't the sole factor behind the poor quarterly performance, per the Washington Post:
Capital One reported an increasing number of delinquencies and defaults in both the credit card and auto finance sectors. As a result, the company said its expenses associated with covering bad loans have increased. The company said 4.7 percent of its loans were delinquent in the third quarter, up from 3.7 percent in the comparable quarter last year. And the proportion of loans written off increased to 3.96 percent from 3.25 a year earlier. Capital One warned that the number of loan defaults is likely to increase over the next year.
Capital One isn't the only bank seeing signs of deteriorating performance in consumer credit -- Citi and BofA both noted the same in their earnings reports -- although it seems as if it's too early to characterize the increases being reported now as an area of particular concern relative to what's taking place in the mortgage sector. I've got a feeling things will get more difficult in the mortgage industry during the fourth quarter. Not exactly a world-shaking assessment, I know, but something to keep in mind as most financial operations tied to mortgage banking are having a painful third quarter.