Capital One 2010 Annual Report Download - page 143

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED STATEMENTS
123
Impaired Loans and Troubled Debt Restructurings
A loan is considered impaired when, based on current information and events, it is probable that we will be unable to collect all
amounts due from the borrower in accordance with the original contractual terms of the loan. Loans with insignificant delays or
insignificant short falls in the amount of payments expected to be collected are not considered to be impaired. Loans defined as
individually impaired, based on applicable accounting guidance, include larger balance nonperforming loans and TDR loans. The
following table presents information about our impaired loans, excluding purchased credit-impaired loans, which are reported
separately and discussed below:
December 31, 2010
(Dollars in millions) With an
Allowance
Without
an
Allowance
Total
Recorded
Investment Related
Allowance
Net
Recorded
Investment
Unpaid
Principal
Balance
Average
Recorded
Investment
Interest
Income
Recognized
Credit card:
Domestic ............
.
$ 753 $ 0 $ 753 $ 253 $ 500 $ 739 $ 644 $ 76
International .........
.
160 0 160 133 27 154 128 0
Total credit card .....
.
913 0 913 386 527 893 772 76
Consumer:
Auto ................
.
0 0 0 0 0 0 0 0
Home loan ..........
.
57 0 57 1 56 57 28 1
Retail banking .......
.
23 17 40 1 39 51 46 1
Total consumer ......
.
80 17 97 2 95 108 74 2
Commercial:
Commercial and
multifamily real
estate .............
.
40 283 323 6 317 436 385 4
Middle market .......
.
25 95 120 7 113 156 109 1
Specialty lending ....
.
1 20 21 0 21 22 35 0
Total commercial
lending ............
.
66 398 464 13 451 614 529 5
Small-ticket
commercial real
estate .............
.
16 20 36 2 34 73 41 1
Total commercial ....
.
82 418 500 15 485 687 570 6
Other:
Other loans ..........
.
0 0 0 0 0 0 0 0
Total ................
.
$ 1,075 $ 435 $ 1,510 $ 403 $ 1,107 $ 1,688 $ 1,416 $ 84
TDR loans accounted for $1.1 billion of impaired loans as of December 31, 2010. Consumer and commercial TDR loans classified as
performing totaled $79 million and $970 million, respectively, as of December 31, 2010.
We had $1.0 billion in total impaired loans as of December 31, 2009, consisting of impaired credit card and other consumer loans of
$323 million and impaired commercial loans of $724 million. TDR loans accounted for $280 million of the impaired loans as of
December 31, 2009. Consumer and commercial TDR loans classified as performing totaled $21 million and $239 million,
respectively, as of December 31, 2009. The average recorded investment in consumer and commercial impaired loans was $839
million and $686 million, respectively, in 2009. The recorded investment in impaired loans requiring an allowance was $512 million
as of December 31, 2009, and the related allowance was $131 million. Interest income recognized on impaired loans totaled $63
million in 2009.
Purchased Credit Impaired Loans
In connection with the acquisition of Chevy Chase Bank on February 27, 2009, we acquired loans with a contractual outstanding
unpaid principal and interest balance at acquisition of $15.4 billion. We recorded these loans on our consolidated balance sheet at
estimated fair value at the date of acquisition of $9.0 billion. We concluded that the substantial majority of the loans we acquired from
Chevy Chase Bank were PCI loans. PCI loans are acquired loans with evidence of credit quality deterioration since origination for
which it is probable at the date of purchase that we will be unable to collect all contractually required payments. The Chevy Chase