Capital One 2011 Annual Report Download - page 125

$2.1 billion in 2011, 2010 and 2009, respectively. The reserve for uncollectible billed finance charges and fees totaled
$74 million, $211 million and $624 million as of December 31, 2011, 2010 and 2009, respectively.
(3) Calculated by dividing loans in each geographic region as of the end of the period by the total loan portfolio.
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 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. Installment loans are included in our credit card segment and classified as
nonperforming when the loan is 120 days past due.
•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 auto, home loans, and unsecured small business revolving lines of
credit and 120 days past due for all other non-credit card consumer loans.
•Commercial loans: We classify commercial loans as nonperforming as of the date we determine that the
collectability of interest or principal on the loan is not reasonably assured.
•Modified loans and troubled debt restructurings: Modified loans, including troubled debt restructurings
(“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.
Table 27 presents comparative information on nonperforming loans, by loan category, as of December 31, 2011
and 2010, and the ratio of nonperforming loans to our total loans. Nonperforming loans held for sale are excluded
from nonperforming loans, as they are recorded at lower of cost or fair value.
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