Capital One 2005 Annual Report Download - page 88

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Note 7
L
oans Acquired in a Transfer
In conjunction with the Hibernia merger transaction, the Company acquired certain loans for which there was, at acquisition,
evidence of deterioration of credit quality since origination and for which it was probable, at acquisition, that all contractually
required payments would not be collected. Those loans are accounted for under Statement of Position 03-3, Accounting for
Certain Loans or Debt Securities Acquired in a Transfer (“SOP 03-3”) and are as follows:
(In Thousands) 2005
Contractually required principal and interest at acquisition:
Consumer $ 2,932,051
Small business 1,188,341
Commercial 911,965
Total $ 5,032,357
Nonaccretable difference (expected losses and foregone interest) 215,025
Cash flows expected to be collected at acquisition $ 4,817,332
Accretable yield (interest component of expected cash flows) 602,729
Basis in acquired loans at acquisition $ 4,214,603
The carrying amount of these loans is included in the balance sheet amounts of loans receivable at December 31, 2005 and is
s follows: a
December 31,
2005
Consumer $ 2,428,886
Small business 925,412
Commercial 769,739
Total outstanding balance $ 4,124,037
Carrying Amount $ 3,938,394
Accretable
Yield
Balance at December 31, 2004 $ —
Additions 602,729
Accretion (36,990)
Balance at December 31, 2005 $ 565,739
There were no loans acquired that were not accounted for using the income recognition model of SOP 03-03. The Company
was able to reasonably estimate cash flows expected to be collected. Judgmental prepayment assumptions were applied to
both contractually required payments and cash flows expected to be collected at acquisition for each portfolio to account for
higher than average prepayments resulting from insurance proceeds for loans impacted by Gulf Coast Hurricanes.
Note 8
remises and Equipment P
Premises and equipment were as follows:
December 31
2005 2004
Land $ 214,696 $ 106,627
Buildings and improvements 722,679 604,072
Furniture and equipment 796,668 731,026
Computer software 568,731 440,494
In process 134,525 98,774
2,437,299 1,980,993
Less: Accumulated depreciation and amortization (1,245,893) (1,163,289)
Total premises and equipment, net $ 1,191,406 $ 817,704
Depreciation and amortization expense was $210.2 million, $224.3 million, and $260.6 million, for the years ended
December 31, 2005, 2004 and 2003, respectively.
79