Capital One 2006 Annual Report Download - page 103

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85
anticipated losses and a decrease to goodwill. The $30.8 million is related to the allowance for loan losses that existed for
those loans prior to the hurricanes. In addition, the estimate of fair value of the loans continuing to be accounted for under
SOP 03-3 was finalized during the allocation period. Together, the adjustments resulted in a $68.8 million decrease to
goodwill. Also in the fourth quarter of 2006, loans totaling approximately $376.5 million continuing to be accounted for
under SOP 03-3 were transferred to mortgage loans held for sale.
Loans acquired during each year for which it was probable at acquisition that all contractually required payments would not
be collected are as follows:
2006 2005
Contractually required payments receivable at acquisition
Consumer $ $ 2,932,051
Commercial 2,100,306
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
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.
The Company considered if there was evidence of deterioration in credit quality for the loans acquired in the North Fork
acquisition. The Company determined that none of these loans were required to be accounted for in accordance with
SOP 03-3.
Note 8
Premises and Equipment
Premises and equipment were as follows:
December 31
2006 2005
Land $ 396,554 $ 214,696
Buildings and improvements 1,265,524 722,679
Furniture and equipment 1,003,142 796,668
Computer software 786,626 568,731
In process 245,883 134,525
3,697,729 2,437,299
Less: Accumulated depreciation and amortization (1,494,449) (1,245,893)
Total premises and equipment, net $ 2,203,280 $ 1,191,406
Depreciation and amortization expense was $270.5 million, $210.2 million, and $224.3 million, for the years ended
December 31, 2006, 2005 and 2004, respectively.
As discussed in Note 2Business Combinations, the Company completed its acquisition of North Fork Bank in December
2006. The acquisition added: $168.5 million in land, $299.4 million in buildings and improvements, $87.2 million of
furniture and equipment, $24.8 million of computer software and $24.8 million of construction in process at December 31,
2006, which are reflected in the table above.
During 2005, the Company closed on the sale of certain facilities in Seattle, Washington and Tampa, Florida as part of its
facility consolidation efforts. The final sales price of the Tampa, Florida facility was greater than the recorded impaired
value, and as such, the Company reversed $18.8 million of its previously recorded impairment in Occupancy expense during
the year ended December 31, 2005.