Capital One 2007 Annual Report Download - page 100

78
Year Ended December 31, 2005
National Lending sub-segment detail U.S. Card Auto
Finance
Global
Financial
Services
Total
National
Lending
Net interest income $ 4,793,956 $ 1,149,377 $ 1,680,522 $ 7,623,855
Non-interest income 3,321,457 19,951 1,022,756 4,364,164
Provision for loan and lease losses 2,279,109 459,513 925,777 3,664,399
Non-interest expenses 3,356,600 506,480 1,496,678 5,359,758
Income tax provision 870,351 71,268 94,796 1,036,415
Net income $ 1,609,353 $ 132,067 $ 186,027 $ 1,927,447
Loans held for investment $ 49,463,522 $ 16,372,019 $ 23,386,490 $ 89,222,031
(1) Income statement adjustments for the year ended December 31, 2007 reclassify the net of finance charges of $6,334.8 million, past due fees of $1,004.1 million, other
interest income of $(167.3) million and interest expense of $2,681.7 million; and net charge-offs of $2,201.5 million to non-interest income from net interest income and
provision for loan losses, respectively.
Income statement adjustments for the year ended December 31, 2006 reclassify the net of finance charges of $5,485.0 million, past due fees of $938.6 million, other interest
income of $(239.7) million and interest expense of $2,342.7 million; and net charge-offs of $1,747.5 million to non-interest income from net interest income and provision
for loan losses, respectively.
Income statement adjustments for the year ended December 31, 2005 reclassify the net of finance charges of $5,052.8 million, past due fees of $1,006.1 million, other
interest income of $(196.4) million and interest expense of $1,887.3 million; and net charge-offs of $2,176.5 million to non-interest income from net interest income and
provision for loan losses, respectively.
(2) For 2006, Other category includes North Fork Bank results. For 2005, Other category includes Hibernia Bank results.
Significant Segment Adjustments
During 2007, the Company recognized a pre-tax charge of $79.8 million for liabilities in connection with the Visa antitrust lawsuit
settlement with American Express. Additionally, the Company recorded a legal reserve of $59.1 million for estimated possible
damages in connection with other pending Visa litigation, reflecting our share of such potential damages as a Visa member. The 2007
litigation charges were recorded in non-interest expense and held in the Other category.
During 2007, the Company completed the sale of its interest in a relationship agreement to develop and market consumer credit
products in Spain and recorded a net gain related to this sale of $31.3 million consisting of a $41.6 million increase in non-interest
income partially offset by a $10.3 million increase in non-interest expense. This gain was recorded in the Global Financial Services
sub-segment.
During 2007, the Company sold its remaining interest in DealerTrack, a leading provider of on-demand software and data solutions
for the automotive retail industry. The sale resulted in a $46.2 million gain, which was recorded in non-interest income and reported in
the Auto Finance sub-segment.
During 2007, the Company recorded $138.2 million of restructuring charges as part of its broad-based initiative to reduce expenses
and improve the Companys competitive cost position. The 2007 restructuring charges were recorded in non-interest expense and held
in the Other category.
During 2006, the Company sold a combination of previously purchased charged-off loan portfolios and the Company originated
charged-off loans resulting in the recognition of $83.8 million of non-interest income recognized in the Other category.
During 2006, the Company sold a number of Treasury and Agency securities realizing a loss of $34.9 million which was reported in
non-interest expense and held in the Other category.
During 2005, the Company sold previously purchased charged-off loan portfolios resulting in a gain of $34.0 million which was
reported in non-interest income and held in the Other category.
During 2005, the Company recognized non-interest expense of $76.3 million for employee termination and facility consolidation
charges related to continued cost reduction initiatives and other less material one-time charges. Of this amount, $41.7 million was
allocated to the U.S. Card sub-segment, $24.9 million was allocated to the Global Financial Services sub-segment, $8.5 million was
allocated to the Auto Finance sub-segment and the remainder was held in the Other category for the year ended December 31, 2005.
During 2005, the Company closed on the sale of its Tampa, Florida facilities. The ultimate sales price was greater than the impaired
value of the held-for-sale property, and as such, the Company reversed $18.8 million of its previously recorded 2004 impairment in
Occupancy expense. Of this amount, $17.4 million was allocated to the U.S. Card sub-segment, $1.3 million was allocated to the
Global Financial Services sub-segment, and the remainder of the balance was held in the Other category.
During 2005, the Company recognized a $20.6 million prepayment penalty for the refinancing of the McLean Headquarters facility.
Of this amount, $16.8 million was allocated to the U.S. Card sub-segment, $2.7 million was allocated to the Global Financial Services
sub-segment, $0.6 million was allocated to the Auto Finance segment, and the remainder of the balance was held in the Other
category.
During 2005, the Company recognized a $28.2 million impairment charge related to the write-off of the Companys insurance
brokerage business. The charge was recorded in non-interest expense and fully allocated to the Global Financial Services sub-
segment.