Capital One 2013 Annual Report Download - page 206

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Table 4.12: Acquired Loans Accounted for Based on Expected Cash Flows
December 31, 2013 December 31, 2012
(Dollars in millions) Total
Impaired
Loans
Non-
Impaired
Loans Total
Impaired
Loans
Non-
Impaired
Loans
Contractual balance ........................ $30,565 $5,016 $25,549 $39,321 $6,195 $33,126
Carrying value(1) .......................... 28,580 3,285 25,295 37,109 4,069 33,040
(1) Includes $38 million and $57 million of allowance for these loans as of December 31, 2013 and 2012, respectively.
Changes in Accretable Yield
The following table presents changes in the accretable yield on loans related to the CCB, ING Direct, and 2012
U.S. card acquisitions:
Table 4.13: Changes in Accretable Yield on Acquired Loans
(Dollars in millions)
Total
Loans
Impaired
Loans
Non-
Impaired
Loans
Accretable yield as of December 31, 2011 ................................ $1,752 $1,566 $ 186
Acquired Loans accretable yield(1) ...................................... 5,616 306 5,310
Accretion recognized in earnings ....................................... (1,316) (390) (926)
Reclassifications from nonaccretable difference for loans with improving cash
flows(2) (3) ........................................................ 860 448 412
Reductions in accretable yield for non-credit related changes in expected cash
flows(4) .......................................................... (704) (31) (673)
Accretable yield as of December 31, 2012 ................................ $6,208 $1,899 $4,309
Accretion recognized in earnings ....................................... (1,182) (427) (755)
Reclassifications from nonaccretable difference for loans with improving cash
flows(2) .......................................................... 1,005 629 376
Increases/(Reductions) in accretable yield for non-credit related changes in
expected cash flows(4) .............................................. 389 13 376
Accretable yield as of December 31, 2013 ................................ $ 6,420 $2,114 $4,306
(1) Includes revised acquisition date accretable yield for ING Direct Acquired Loans.
(2) Represents increases in accretable yields for those pools with increases that are primarily the result of improved credit performance.
(3) Includes the implementation of the 2012 OCC update to the Bank Accounting Advisory Series, which requires write-down of performing
consumer loans restructured in bankruptcy to collateral value. Includes reductions of $28 million and $44 million for purchased
credit-impaired loans and non-impaired loans, respectively.
(4) Represents changes in accretable yields for those pools that are driven primarily by changes in actual and estimated prepayments.
We reduced the allowance through our provision for loan losses related to these loans by $19 million for the year
ended December 31, 2013 and increased the allowance by $31 million for the year ended December 31, 2012.
The allowance on these Acquired Loans totaled $38 million and $57 million as of December 31, 2013 and 2012,
respectively.
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