Capital One Drops after Earnings Miss; Expenses Jump

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Capital One Financial (COF) fell 5% after hours as the company missed earnings expectations.

Capital One posted 88 cents of EPS, against expectations for $1.55. Revenue fell 2.5% year over year to $4.1 billion. But Capital One’s expenses rose considerably in the quarter, with non-interest expenses rising $321 million “primarily due to a seasonal ramp in marketing expenses and an increase in operating expenses.”

“The increase in operating expenses includes approximately $90 million in litigation expenses and approximately $40 million in asset write downs and other costs as the company rationalized some facilities and equipment, principally related to acquired bank businesses. Additionally, the company accelerated its build-out of ‘top bank’ infrastructure, especially in the second half of 2011, to ensure our readiness to execute on attractive acquisition opportunities,” Capital One added in a statement.



Original Article Source by Barrons.com