Capital One 2002 Annual Report Download - page 61

59
INTEREST-BEARING DEPOSITS
As of December 31, 2002, the Company had $17.3 billion in interest-bearing
deposits of which $7.2 billion represents large denomination certificates of
$100 thousand or more, with original maturities of up to ten years.
SENIOR NOTES
Bank Notes
Senior and Subordinated Global Bank Note Program
The Senior and Subordinated Global Bank Note Program gives the Bank the
ability to issue securities to both U.S. and non-U.S. lenders and to raise funds
in foreign currencies. The Senior and Subordinated Global Bank Note
Program has a total capacity of $5.0 billion of which $2.7 billion and $3.0
billion was outstanding at December 31, 2002 and 2001, respectively. In
January 2003, the Bank increased its capacity under the Senior and
Subordinated Global Bank Note Program to $8.0 billion. Prior to the
establishment of the Senior and Subordinated Global Bank Note Program, the
Bank issued senior unsecured debt through its $8.0 billion Senior Domestic
Bank Note Program, of which $1.3 billion and $1.8 billion was outstanding
at December 31, 2002 and 2001, respectively. During 2001, the Bank did
not renew the Senior Domestic Bank Note Program for future issuances.
In July 2002, the Company repurchased senior bank notes in the amount of
$230.4 million, which resulted in a pre-tax gain of $27.0 million.
During 2001, the Bank issued a $1.3 billion five-year fixed rate bank note
and a $750.0 million three-year fixed rate senior note under the Senior and
Subordinated Global Bank Note Program.
Mandatory Convertible Securities
In April 2002, the Company completed a public offering of mandatory
convertible debt securities (the “Upper Decs®”), that resulted in net proceeds
of approximately $725.1 million. The net proceeds were used for general
corporate purposes. Each Upper Dec®initially consists of and represents (i) a
senior note due May 17, 2007 with a principal amount of $50, on which
the Company will pay interest quarterly at the initial annual rate of 6.25%,
and (ii) a forward purchase contract pursuant to which the holder has agreed
to purchase, for $50, shares of the Company’s common stock on May 17,
2005 (or earlier under certain conditions), with such number of shares to be
determined based upon the average closing price per share of the Company’s
common stock for 20 consecutive trading days ending on the third trading
day immediately preceding the stock purchase date at a minimum per share
price of $63.91 and a maximum per share price of $78.61.
The senior notes will initially be pledged to secure the holder’s obligations
under the forward purchase contracts. Each holder of an Upper Dec®may
elect to withdraw the pledged senior notes or treasury securities underlying
Note F Borrowings
Borrowings as of December 31, 2002 and 2001 were as follows:
2002 2001
Weighted Weighted
Average Average
Outstanding Rate Outstanding Rate
Interest-bearing deposits $ 17,325,965 4.65% $ 12,838,968 5.34%
Senior notes
Bank - fixed rate $ 3,723,200 7.00% $ 4,454,041 6.96%
Bank - variable rate 275,000 2.31 332,000 3.45
Mandatory convertible securities 718,278 6.25 --
Corporation 849,137 7.75 549,188 7.20
Total $ 5,565,615 $ 5,335,229
Other borrowings
Secured borrowings $ 4,814,030 3.41% $ 3,013,418 4.62%
Junior subordinated capital income securities 98,950 3.26 98,693 3.78
Federal funds purchased and resale agreements 554,887 1.26 434,024 1.91
Other short-term borrowings 897,208 2.09 449,393 2.29
Total $ 6,365,075 $ 3,995,528