Capital One 2001 Annual Report Download - page 34

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FUNDING
The Company has established access to a variety of funding
alternatives, in addition to securitization of its consumer loans. In June
2000, the Company established a $5.0 billion global senior and
subordinated bank note program, of which $3.0 billion was
outstanding as of December 31, 2001 with original terms of three to
five years. In 2001, the Company issued a $1.3 billion five-year fixed
rate senior bank note and a $750.0 million three-year fixed rate senior
bank note under the global bank note program. The Company has
historically issued senior unsecured debt of the Bank through its $8.0
billion domestic bank note program, of which $1.8 billion was
outstanding as of December 31, 2001, with original terms of one to ten
years. The Company did not renew such program and it is no longer
available for future issuances. Internationally, the Company has
funding programs designed for foreign investors or to raise funds in
foreign currencies allowing the Company to borrow from both U.S.
and non-U.S. lenders, including two committed revolving credit
facilities offering foreign currency funding options. The Company
funds its foreign assets by directly or synthetically borrowing or
securitizing in the local currency to mitigate the financial statement
effect of currency translation.
Additionally, the Company has three shelf registration statements
under which the Company from time to time may offer and sell senior
or subordinated debt securities, preferred stock and common stock. As
of December 31, 2001, the Company had existing unsecured senior
debt outstanding under the shelf registrations of $550.0 million and
had issued 6,750,390 shares of common stock in a public offering,
increasing equity by $412.8 million. As of December 31, 2001, the
Company had $587.2 million available for future issuance under these
registration statements. On January 30, 2002, the Company issued
$300.0 million aggregate principal amount of senior notes due in 2007.
Following such issuance, the Company had $287.2 million available for
future issuance under these registration statements. The Company has
also filed a new shelf registration statement that will enable the
Company to sell senior or subordinated debt securities, preferred
stock, common stock, common equity units, stock purchase contracts
and, through one or more subsidiary trusts, other preferred securities,
in an aggregate amount not to exceed $1.5 billion.
The Company has significantly expanded its retail deposit gathering
efforts through both direct and broker marketing channels. The
Company uses its IBS capabilities to test and market a variety of retail
deposit origination strategies, including via the Internet, as well as to
develop customized account management programs. As of December
31, 2001, the Company had $12.8 billion in interest-bearing deposits,
with original maturities up to ten years.
32 md&a
table 8: Summary of Allowance for Loan Losses
Year Ended December 31 (Dollars in Thousands) 2001 2000 1999 1998 1997
Provision for loan losses:
Domestic 920,155 611,406 320,978 230,821 254,904
Foreign 69,681 106,764 61,970 36,207 7,933
Total provisions for loan losses 989,836 718,170 382,948 267,028 262,837
Acquisitions/other 14,800 (549) 3,522 7,503 (2,770)
Charge-offs:
Domestic (908,065) (693,106) (344,679) (282,455) (221,401)
Foreign (110,285) (79,296) (55,464) (11,840) (1,628)
Total charge-offs (1,018,350) (772,402) (400,143) (294,295) (223,029)
Recoveries:
Domestic 304,919 230,123 122,258 67,683 27,445
Foreign 21,795 9,658 2,415 81 17
Total recoveries 326,714 239,781 124,673 67,764 27,462
Net charge-offs (691,636) (532,621) (275,470) (226,531) (195,567)
Balance at end of year $840,000 $ 527,000 $ 342,000 $ 231,000 $ 183,000
Allowance for loan losses to loans at end of year 4.02% 3.49% 3.45% 3.75% 3.76%
Allowance for loan losses by geographic distribution:
Domestic $784,857 $ 451,074 $ 299,424 $ 198,419 $ 174,659
Foreign 55,143 75,926 42,576 32,581 8,341
Funding ($ millions)
INTEREST BEARING DEPOSITS
OTHER BORROWINGS
SENIOR NOTES <3 YEARS
SENIOR NOTES >3 YEARS