Capital One 1996 Annual Report Download - page 49

Note C Allow ance for Loan Losses
The following is a summary of changes in the allowance for
loan losses:
Year Ended December 31
1996 1995 1994
Balance at beginning of year $ 72,000 $ 68,516 $ 63,516
Provision for loan losses 167,246 65,895 30,727
Transfer to loans held for
securitization (27,887) (11,504) (4,869)
Increase from consumer loan
purchase 9,000
Charge-offs (115,159) (64,260) (31,948)
Recoveries 13,300 13,353 11,090
Net charge-offs (101,859) (50,907) (20,858)
Balance at end of year $ 118,500 $ 72,000 $ 68,516
Note D Borrow ings
Borrowings as of December 31, 1996 and 1995 were
as follows:
1996 1995
Weighted Weighted
Average Average
Outstanding Rate Outstanding Rate
Interest-
bearing deposits $ 943,022 4.31% $ 696,037 6.07%
Short-term
borrow ings
Federal funds
purchased $445,600 6.26% $709,803 5.76%
Credit facility 100,000 6.03
Other 85,383 6.43
Total $530,983 $809,803
Senior notes
Bank - fixed rate $3,140,237 7.31% $1,804,869 7.74%
Bank - variable rate 429,000 5.99 687,000 6.33
Corporation 125,000 7.25
Total $3,694,237 $2,491,869
Deposit notes
Fixed rate $224,996 6.71%
Variable rate 75,000 5.86
Total $299,996
On November 25, 1996, the Company entered into a
four-year, $1,700,000 unsecured revolving credit arrange-
ment (the “Credit Facility”), which replaced the 1995
Credit Facility, discussed below. The Credit Facility is com-
Capital One 47
prised of two tranches: a $1,375,000 Tranche A facility
available to the Bank and the Savings Bank, including an
option for up to $225,000 in multi-currency availability,
and a $325,000 Tranche B facility available to the
Corporation, the Bank and the Savings Bank, including an
option for up to $100,000 in multi-currency availability.
Each tranche under the facility is structured as a four-year
commitment and will be available for general corporate
purposes. The borrowings of the Savings Bank are limited
to $500,000 during the first year of the Credit Facility and
$750,000 thereafter. The Bank has irrevocably undertaken
to honor any demand by the lenders to repay any borrow-
ings which are due and payable by the Savings Bank but
which have not been paid. Any borrowing under the Credit
Facility will mature on November 24, 2000; however, the
final maturity of each tranche may be extended for three
additional one-year periods.
On April 30, 1996, the Bank amended and restated its
existing $3,500,000 bank note program. Under the amended
bank note program, the Bank may issue from time to time
up to $4,500,000 of senior bank notes with maturities from
30 days to 30 years and up to $200,000 of subordinated
bank notes (none issued as of December 31, 1996) with
maturities from five to 30 years.
The Corporation filed a $200,000 shelf registration
statement ($125,000 issued as of December 31, 1996) with
the Securities and Exchange Commission on September 19,
1996 under which the Corporation from time to time may
offer and sell (i) senior or subordinated debt securities, con-
sisting of debentures, notes and/or other unsecured evi-
dences, (ii) preferred stock, which may be issued in the
form of depository shares evidenced by depository receipts
and (iii) common stock. The securities will be limited to a
$200,000 aggregate public offering price or its equivalent
(based on the applicable exchange rate at the time of sale)
in one or more foreign currencies, currency units or com-
posite currencies as shall be designated by the Corporation.
On April 30, 1996, the Bank established a deposit note
program under which the Bank may issue from time to
time up to $2,000,000 of deposit notes with maturities from
30 days to 30 years.
Subsequent to year-end, the Bank through a subsidiary
created as a Delaware statutory business trust issued
$100,000 aggregate amount of Floating Rate Subordinated
Capital Income Securities that mature on February 1, 2027.