Capital One 2011 Annual Report Download - page 179

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED STATEMENTS—(Continued)
losses in our consolidated statements of income. We also report the related allowance for loan and lease losses
attributable to the Kohl’s portfolio in our consolidated balance sheets net of the loss sharing amount due from
Kohl’s.
Interest income was reduced by $607 million for the year ended December 31, 2011, for amounts earned by
Kohl’s. Loss sharing amounts attributable to Kohl’s reduced charge-offs by $118 million in 2011. In addition, the
expected reimbursement from Kohl’s netted in our allowance for loan and lease losses was approximately $139
million as of December 31, 2011. The reduction in the provision for loan and lease losses attributable to Kohl’s
was $257 million for the year ended December 31, 2011.
Restructuring Activities
In 2009, we completed the broad-based initiative started in 2007 to reduce expenses and improve our competitive
cost position. Restructuring initiatives leveraged the capabilities of infrastructure projects in several of our
businesses. The scope and timing of the cost reductions were the result of an ongoing, comprehensive review of
operations within and across our businesses.
Total incurred charges exceeded the original estimate of $300 million by $63 million. The increase occurred
because we extended the initiative past the original timeline due to the continued economic deterioration.
Approximately half of these charges were related to severance benefits, while the remaining charges were
associated with items such as contract and lease terminations and consolidation of facilities and infrastructure.
We recognized restructuring expense of $119 million in 2009. We did not recognize any restructuring expense in
2011 and 2010.
NOTE 3—DISCONTINUED OPERATIONS
Shutdown of Mortgage Origination Operations of Wholesale Mortgage Banking Unit
In the third quarter of 2007, we closed the mortgage origination operations of our wholesale mortgage banking
unit, acquired by us in December 2006 as part of the North Fork acquisition. The results of the mortgage
origination operations and wholesale banking unit have been accounted for as a discontinued operation and
therefore not included in our results from continuing operations in 2011, 2010 and 2009. We have no significant
continuing involvement in these operations.
The following table summarizes the results from discontinued operations related to the closure of our wholesale
mortgage banking unit:
Year Ended December 31,
(Dollars in millions) 2011 2010 2009
Net interest expense ...................................................... $0$ (1) $ (2)
Non-interest expense ...................................................... (168) (475) (157)
Loss from discontinued operations before taxes ................................. (168) (476) (159)
Income tax benefit ........................................................ 62 169 56
Loss from discontinued operations, net of taxes ................................. $(106) $(307) $(103)
159