Capital One 2008 Annual Report Download - page 83

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Federal Home Loan Bank Advances
The Banks are members of various Federal Home Loan Banks (FHLB). The FHLB provides additional sources of funding through
advances to the Banks. The FHLB advances are secured by the Companys securities, residential mortgage loan portfolio, multifamily
loans, commercial real estate loans and home equity lines of credit. As of December 31, 2008, the Company had approximately $20.1
billion in securities and loans pledged as collateral to the FHLB. In addition, the Companys FHLB membership is secured by the
Companys investment in FHLB stock, which totaled $267.5 million at December 31, 2008 and is included in other assets. Total
advances with FHLB agencies at December 31, 2008 were $4.9 billion. During 2008, the Company received $15.4 billion in new
advances and had $17.3 billion in advances mature.
Collateralized Revolving Credit Facilities
In March 2002, the Company entered into a revolving warehouse credit facility collateralized by a security interest in certain auto loan
assets (the Capital One Auto Loan Facility I). As of December 31, 2008, the Capital One Auto Loan Facility I had the capacity to
issue up to $1.05 billion in secured notes. The Capital One Auto Loan Facility I has multiple participants each with separate renewal
dates. The facility does not have a final maturity date. Instead, each participant may elect to renew the commitment for another set
period of time. Interest on the facility is based on commercial paper rates. The Capital One Auto Loan Facility I was paid down in
January 2008.
In March 2005, the Company entered into a second revolving warehouse credit facility collateralized by a security interest in certain
auto loan assets (the Capital One Auto Loan Facility II). As of December 31, 2008, the Capital One Auto Loan Facility II had the
capacity to issue up to $0.5 billion in secured notes. The facility does not have a final maturity date. Instead, the participant may elect
to renew the commitment for another set period of time. Interest on the facility is based on commercial paper rates. The Capital One
Auto Loan Facility II was paid down in January 2008.
Government Programs
The Company is eligible or may be eligible to participate in a number of U.S. government programs designed to support financial
institutions and increase access to credit markets. The Company evaluates each of these programs and determines, based on the costs
and benefits of each program, whether to participate. During 2008, the Company participated in or was eligible to participate in the
U.S. Treasury Departments Capital Purchase Program (CPP), the FDICs Temporary Liquidity Guarantee Program (TLGP), the
Federal Reserves Discount Window (the Discount Window) and the Federal Reserves Term Auction Facility (TAF).
U.S. Treasury Departments Capital Purchase Program
On October 27, 2008, the Company announced its intention to take part in the CPP. On November 14, 2008 the Company entered into
an agreement (the Securities Purchase Agreement) to issue 3,555,199 Fixed Rate Cumulative Perpetual Preferred Shares, Series A,
par value $0.01 per share, liquidation preference $1,000 per share (the Series A Preferred Stock), to the U.S. Treasury as part of the
Companys participation in the CPP. The Series A Preferred Stock pays cumulative dividends at a rate of 5% per year for the first five
years and thereafter at a rate of 9% per year. In addition, the Company issued a warrant (the Warrant) to purchase 12,657,960 of the
Companys common shares to the U.S. Treasury as part of the Securities Purchase Agreement. The Company received proceeds of
$3.55 billion for the Series A Preferred Stock and the Warrant.
FDICs Temporary Liquidity Guarantee Program
As of December 31, 2008, the Company is a participant in the FDICs TLGP. The TLGP is comprised of the Debt Guarantee Program
(DGP) and the Transaction Account Guarantee Program (TAGP). For further information regarding the TLGP and TAGP see
Item 1 Supervision and Regulation.
The DGP provides an FDIC guarantee of certain senior unsecured debt of FDIC-insured institutions and their holding companies. The
unsecured debt must be issued on or after October 14, 2008 and not later than October 31, 2009, and the guarantee is effective through
the earlier of the maturity date or June 30, 2012. The DGP coverage limit is generally 125% of the eligible entitys eligible debt
outstanding on September 30, 2008 and scheduled to mature on or before June 30, 2009 or, for certain insured institutions, 2% of their
liabilities as of September 30, 2008. Based on the Companys outstanding senior unsecured debt as of September 30, 2008, the
Company has capacity to issue $1.2 billion under the DGP. As of December 31, 2008, the Company has not issued any debt under the
DGP.