Capital One 2006 Annual Report Download - page 102

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84
Note 6
Loans Held for Investment
The composition of the loans held for investment portfolio was as follows:
December 31
2006 2005
Year-End Balances:
Reported loans:
Consumer loans:
Credit cards
Domestic $ 18,102,140 $ 16,389,054
International 3,203,148 3,356,415
Total credit cards 21,305,288 19,745,469
Installment loans
Domestic 7,057,270 5,763,538
International 637,982 551,460
Total installment loans 7,695,252 6,314,998
Auto loans 23,180,455 18,041,894
Mortgage loans 12,586,905 5,281,009
Total consumer loans 64,767,900 49,383,370
Commercial loans 31,744,239 10,464,311
Total reported loans held for investment $ 96,512,139 $ 59,847,681
Note 7
Loans Acquired in a Transfer
In conjunction with the Hibernia merger transaction in 2005, 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 segregated into pools apart from the remaining
portfolio and accounted for under Statement of Position 03-3, Accounting for Certain Loans or Debt Securities Acquired in a
Transfer (SOP 03-3).
The carrying amount of those loans is included in loans held for investment in the consolidated balance sheet at December 31
and is as follows:
December 31
2006 2005
Consumer $  $ 2,428,886
Commercial 607,540 1,695,151
Total Outstanding $ 607,540 $ 4,124,037
Total carrying amount $ 560,054 $ 3,938,394
Accretable Yield
2006 2005
Balance at beginning of year $ 565,739 $ 
Additions 602,729
Accretion (183,092) (36,990)
Adjustments during allocation period (269,850)
Transfers to held for sale (24,093)
Balance at end of year $ 88,704 $ 565,739
The majority of these loans were accounted for under SOP 03-3 because of the expected impact of the Gulf Coast Hurricanes.
During the one year allocation period following the merger date, the Company determined that certain loans, for which it was
considered probable at acquisition that all contractually required payments would not be collected, did not have the evidence
of deterioration of credit quality originally considered. As a result, the Company reclassified $2.0 billion of loans out of the
existing SOP 03-3 loan pools at par with a corresponding $30.8 million increase to the allowance for loan losses to cover