Capital One 2012 Annual Report Download - page 127
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Allowance for Loan and Lease Losses
Our allowance for loan and lease losses represents management’s best estimate of incurred loan and lease losses
inherent in our held-for-investment portfolio as of each balance sheet date. We do not maintain an allowance for
held-for-sale loans or acquired loans that are performing in accordance with or better than our expectations as of
the date of acquisition, as the fair values of these loans already reflect a credit component. The allowance for
loan and lease losses is increased through the provision for credit losses and reduced by net charge-offs. The
provision for credit losses, which is charged to earnings, reflects loan and lease losses we believe have been
incurred and will eventually be reflected over time in our charge-offs. Charge-offs of uncollectible amounts are
deducted from the allowance and subsequent recoveries are added.
Table 23, which displays changes in our allowance for loan and lease losses for 2012, 2011 and 2010, details, by
loan type, the provision for credit losses recognized in our consolidated statements of income each period and the
charge-offs recorded against our allowance for loan and lease losses.
108