Capital One 2007 Annual Report Download - page 118

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96
As of December 1, 2006, the Company acquired North Fork Bancorporation, Inc., a commercial and retail bank in New York, which
created $9.7 billion of goodwill. The goodwill associated with the acquisition of North Fork was held in the Other category at
December 31, 2006. The North Fork acquisition goodwill was allocated across the reportable segments during 2007. Goodwill
associated with the 2005 acquisition of Hibernia Corporation was allocated across the reportable segments during 2006.
Goodwill impairment is tested at the reporting unit level, which is an operating segment or one level below on an annual basis in
accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets. In the third quarter of
2007, the Company shut down mortgage origination operations at its wholesale mortgage banking unit, GreenPoint. As a result of the
closure of the mortgage originations business, a goodwill impairment loss of $650.0 million ($646.0 million after tax) was recognized
as part of discontinued operations.
For the years ended December 31, 2007 and 2006, no additional impairment on goodwill was required to be recognized.
In connection with the acquisitions of Hibernia and North Fork, the Company recorded intangible assets that consisted of core deposit
intangibles, trust intangibles, lease intangibles, and other intangibles, which are subject to amortization. The core deposit and trust
intangibles reflect the estimated value of deposit and trust relationships. The lease intangibles reflect the difference between the
contractual obligation under current lease contracts and the fair market value of the lease contracts at the acquisition date. The other
intangible items relate to customer lists, brokerage relationships and insurance contracts. The following table summarizes the
Companys purchase accounting intangible assets subject to amortization.
December 31, 2007
Gross
Carrying
Amount
Accumulated
Amortization
Net Carrying
Amount
Amortization
Period
Core deposit intangibles $ 1,320,000 $ (305,606) $ 1,014,394 10.1 years
Lease intangibles(1) 44,862 (9,725) 35,137 7.5 years
Trust intangibles 10,500 (2,330) 8,170 16.0 years
Other intangibles 7,949 (2,836) 5,113 10.6 years
Total $ 1,383,311 $ (320,497) $ 1,062,814
December 31, 2006
Gross
Carrying
Amount
Accumulated
Amortization
Net
Carrying
Amount
Amortization
Period
Core deposit intangibles $ 1,306,806 $ (80,364) $ 1,226,442 11.1 years
Lease intangibles 15,911 (1,647) 14,264 9.0 years
Trust intangibles 10,500 (1,270) 9,230 17.0 years
Other intangibles 11,474 (2,154) 9,320 9.3 years
Total $ 1,344,691 $ (85,435) $ 1,259,256
(1) Above market lease intangibles of $30.6 million were reclassed to other liabilities in 2007.
Intangibles are amortized on an accelerated basis over their respective estimated useful lives. Intangible assets are recorded in Other
assets on the balance sheet. Amortization expense related to purchase accounting intangibles totaled $221.4 million for the year ended
December 31, 2007. Amortization expense for intangibles is recorded to non-interest expense. The weighted average amortization
period for all purchase accounting intangibles is 10.1 years. Estimated future amortization is as follows: 2008$200.6 million,
2009$178.2 million, 2010$156.5 million, 2011$135.5 million, 2012$114.5 million.