Capital One 2010 Annual Report Download - page 75

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Table 18 summarizes loans that were 90 days or more past due as to interest or principal and still accruing interest as of December 31,
2010 and 2009. These loans consist primarily of credit card accounts between 90 days and 179 days past due. As permitted by
regulatory guidance issued by The Federal Financial Institutions Examination Council (“FFIEC”), we continue to accrue interest on
credit card loans through the date of charge-off, typically in the period the account becomes 180 days past due. While credit card loans
remain on accrual status until the loan is charged-off, we establish a reserve for finance charges and fees billed but not expected to be
collected and exclude this amount from revenue.
Table 18: 90+ Days Delinquent Loans Accruing Interest
December 31,
2010 2009
(Dollars in millions) Amount % of
Total Loans Amount % of Total Loans
Loan category:
Credit card ......................................................
.
$ 1,379 1.10% $ 2,054 1.50%
Consumer .......................................................
.
5
—
58 0.04
Commercial .....................................................
.
14 0.01 11 0.01
Total ..........................................................
.
$ 1,398 1.11% $ 2,123 1.55%
Geographic region:
Domestic ........................................................
.
$ 1,195 0.95% $ 1,838 1.34%
International .....................................................
.
203 0.16 285 0.21
Total ..........................................................
.
$ 1,398 1.11% $ 2,123 1.55%
Nonperforming Assets
Nonperforming assets consist of nonperforming loans and foreclosed property and repossessed assets. Nonperforming loans generally
include loans that have been placed on nonaccrual status and certain restructured loans whose contractual terms have been restructured
in a manner that grants a concession to a borrower experiencing financial difficulty. We do not report loans accounted for under the
fair value option and loans held for sale as nonperforming.
Our policies for classifying loans as nonperforming, by loan category, are as follows:
• Credit card loans: As permitted by regulatory guidance issued by the Federal Financial Institutions Examination Council
(“FFIEC”), our policy is generally to exempt credit card loans from being classified as nonperforming as these loans are generally
charged off in the period the account becomes 180 days past due. Consistent with industry conventions, we generally continue to
accrue interest and fees on delinquent credit card loans until the loans are charged-off. When we do not expect full payment of
billed finance charges and fees, we reduce the balance of the credit card account by the estimated uncollectible portion of any
billed finance charges and fees and exclude this amount from revenue.
• Consumer loans: We classify other non-credit card consumer loans as nonperforming at the earlier of the date when we determine
that the collectability of interest or principal on the loan is not reasonably assured or when the loan is 90 days past due for
automobile and mortgage loans, 180 days past due for unsecured small business revolving lines of credit and 120 days past due
for all other non-credit card consumer loans, including installment loans.
• Commercial loans: We classify commercial loans as nonperforming at the earlier of the date we determine that the collectability
of interest or principal on the loan is not reasonably assured or the loan is 90 days past due.
• Modified loans and troubled debt restructurings: Modified loans, including TDRs, that are current at the time of the restructuring
remain on accrual status if there is demonstrated performance prior to the restructuring and continued performance under the
modified terms is expected. Otherwise, the modified loan is classified as nonperforming and placed on nonaccrual status until the
borrower demonstrates a sustained period of performance over several payment cycles, generally six months of consecutive
payments, under the modified terms of the loan.
• Purchased credit-impaired loans: PCI loans primarily include loans acquired from Chevy Chase Bank, which we recorded at fair
value at acquisition. Because the initial fair value of these loans included an estimate of credit losses expected to be realized over
the remaining lives of the loans, our subsequent accounting for PCI loans differs from the accounting for non-PCI loans. We
therefore separately track and report PCI loans and exclude these loans from our delinquency and nonperforming loan statistics.