Capital One 2002 Annual Report Download - page 75

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73
Accounts receivable from securitizations
The carrying amount approximated fair value.
Derivatives
The carrying amount of derivatives approximated fair value and was
represented by the estimated unrealized gains as determined by quoted
market prices. This value generally reflects the estimated amounts that the
Corporation would have received to terminate the interest rate swaps,
currency swaps and forward foreign currency exchange (“f/x”) contracts at
the respective dates, taking into account the forward yield curve on the swaps
and the forward rates on the currency swaps and f/x contracts. These
derivatives are included in other assets on the balance sheet.
FINANCIAL LIABILITIES
Interest-bearing deposits
The fair value of interest-bearing deposits was calculated by discounting the
future cash flows using estimates of market rates for corresponding
contractual terms.
Other borrowings
The carrying amount of federal funds purchased and resale agreements and
other short-term borrowings approximated fair value. The fair value of
secured borrowings was calculated by discounting the future cash flows using
estimates of market rates for corresponding contractual terms and assumed
maturities when no stated final maturity was available. The fair value of the
junior subordinated capital income securities was determined based on
quoted market prices.
Senior notes
The fair value of senior notes was determined based on quoted market prices.
Interest payable
The carrying amount approximated the fair value of this asset due to its
relatively short-term nature.
December 31 2002 2001
Percentage Percentage
Geographic Region: Loans of Total Loans of Total
South $ 20,394,077 34.13% $ 15,404,688 34.03%
West 12,507,242 20.93 9,354,934 20.67
Midwest 11,396,942 19.08 8,855,719 19.56
Northeast 10,117,735 16.94 7,678,378 16.97
International 5,330,541 8.92 3,970,244 8.77
59,746,537 100.00% 45,263,963 100.00%
Less securitized balances (31,892,885 ) (24,342,949)
Total $ 27,853,652 $ 20,921,014
Note U Disclosures About Fair Value
of Financial Instruments
The following discloses the fair value of financial instruments whether or not
recognized in the balance sheets as of December 31, 2002 and 2001. In cases
where quoted market prices are not available, fair values are based on
estimates using present value or other valuation techniques. Those techniques
are significantly affected by the assumptions used, including the discount rate
and estimates of future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets
and, in many cases, could not be realized in immediate settlement of the
instrument. As required under GAAP, these disclosures exclude certain
financial instruments and all non-financial instruments. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value
of the Company.
The Company, in estimating the fair value of its financial instruments as of
December 31, 2002 and 2001, used the following methods and assumptions:
FINANCIAL ASSETS
Cash and cash equivalents
The carrying amounts of cash and due from banks, federal funds sold and
resale agreements and interest-bearing deposits at other banks approximated
fair value.
Securities available for sale
The fair value of securities available for sale was determined using current
market prices. See Note C for fair values by type of security.
Consumer loans
The net carrying amount of consumer loans approximated fair value due to
the relatively short average life and variable interest rates on a substantial
number of these loans. This amount excluded any value related to account
relationships.
Interest receivable
The carrying amount approximated the fair value of this asset due to its
relatively short-term nature.