Capital One 2013 Annual Report Download - page 121

Net Charge-Offs
Net charge-offs consist of the unpaid principal balance of loans held for investment that we determine are
uncollectible, net of recovered amounts. We exclude accrued and unpaid finance charges and fees and fraud
losses from charge-offs. Charge-offs are recorded as a reduction to the allowance for loan and lease losses and
subsequent recoveries of previously charged off amounts are credited to the allowance for loan and lease losses.
Costs incurred to recover charged-off loans are recorded as collection expense and included in our consolidated
statements of income as a component of other non-interest expense. Our charge-off time frame for loans varies
based on the loan type. See “Note 1—Summary of Significant Accounting Policies—Loans” for information on
our charge-off policy for each of our loan categories.
Table 22 presents our net charge-off amounts and rates, by business segment, in 2013, 2012 and 2011.
Table 22: Net Charge-Offs
(Dollars in millions)
Year Ended December 31,
2013 2012 2011
Amount Rate(1)
Adjusted
Rate(2) Amount Rate(1)
Adjusted
Rate(2) Amount Rate(1)
Adjusted
Rate(2)
Credit Card:
Domestic credit card and
installment loans .......... $ 2,904 4.08% 4.08%$ 2,532 3.53% 3.54% $ 2,522 4.72% 4.72%
International credit card ...... 381 4.78 4.78 412 4.98 4.98 534 6.18 6.18
Total credit card ............ 3,285 4.15 4.15 2,944 3.68 3.69 3,056 4.92 4.92
Consumer Banking:
Auto ..................... 546 1.85 1.85 414 1.66 1.66 334 1.72 1.72
Home loan ................ 16 0.04 0.21 52 0.12 0.68 77 0.68 1.11
Retail banking .............. 54 1.46 1.47 65 1.57 1.59 73 1.78 1.81
Total consumer banking ...... 616 0.85 1.51 531 0.74 1.45 484 1.39 1.59
Commercial Banking:
Commercial and multifamily
real estate ............... (8) (0.04) (0.04) 5 0.03 0.03 65 0.46 0.47
Commercial and industrial .... 15 0.07 0.07 8 0.04 0.04 41 0.27 0.27
Total commercial lending ..... 7 0.02 0.02 13 0.04 0.04 106 0.36 0.37
Small-ticket commercial real
estate ................... 7 0.62 0.62 29 2.19 2.19 71 4.30 4.30
Total commercial banking .... 14 0.03 0.03 42 0.12 0.12 177 0.57 0.58
Other:
Other loans ................ 19 11.34 13.96 38 24.14 24.57 54 25.96 25.96
Total ..................... $ 3,934 2.04% 2.45%$ 3,555 1.89% 2.34% $ 3,771 2.94% 3.06%
Average loans held for
investment .............. $192,614 $187,915 $128,424
Average loans held for
investment (excluding
Acquired Loans) .......... 160,459 151,668 123,416
(1) Calculated for each loan category by dividing net charge-offs for the period by average loans held for investment during the period.
(2) Calculated by excluding Acquired Loans from the denominator.
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