Capital One 2010 Annual Report Download - page 115

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED STATEMENTS
95
NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company
Capital One Financial Corporation, which was established in 1995, is a diversified financial services holding company headquartered
in McLean, Virginia. Capital One Financial Corporation and its subsidiaries (the “Company”) offer a broad array of financial products
and services to consumers, small businesses and commercial clients through branches, the internet and other distribution channels. Our
principal subsidiaries include Capital One Bank (USA), National Association (“COBNA”) and Capital One, National Association
(“CONA”). The Company and its subsidiaries are hereafter collectively referred to as “we”, “us” or “our.” CONA and COBNA are
hereafter collectively referred to as the “Banks.” As one of the top 10 largest banks in the United States based on deposits, we serve
banking customers through branch locations primarily in New York, New Jersey, Texas, Louisiana, Maryland, Virginia and the
District of Columbia. In addition to bank lending and depository services, we offer credit and debit card products, mortgage banking
and treasury management services. We offer our products outside of the United States principally through operations in the United
Kingdom and Canada.
Our principal operations are currently organized into three primary business segments, which are defined based on the products and
services provided, or the type of customer served: Credit Card, Consumer Banking and Commercial Banking.
• Credit Card: Consists of our domestic consumer and small business card lending, domestic small business lending, national
closed end installment lending and the international card lending businesses in Canada and the United Kingdom.
• Consumer Banking: Consists of our branch-based lending and deposit gathering activities for consumer and small businesses,
national deposit gathering, national automobile lending and consumer home loan lending and servicing activities.
• Commercial Banking: Consists of our lending, deposit gathering and treasury management services to commercial real estate and
middle market customers.
Certain activities that are not part of a segment are included in the “Other” category. The results of our individual businesses are
prepared based on our internal management accounting system and reflect the manner in which management measures and evaluates
performance. The accounting policies with respect to activities specifically attributable to each business segment are generally the
same as those used in preparation of our consolidated financial statements. However, the preparation of business line results requires
management to allocate funding costs and benefits, expenses and other financial elements to each line of business. For details of our
business segment accounting policies, allocation methodologies and business segment results, see “Note 20—Business Segments.”
Basis of Presentation and Use of Estimates
The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States (“GAAP”). Additionally, where applicable, the policies conform to the accounting and reporting guidelines
prescribed by bank regulatory authorities. The preparation of financial statements in conformity with GAAP requires management to
make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related disclosures.
These estimates are based on information available as of the date of the consolidated financial statements. While management makes
its best judgment, actual amounts or results could differ from these estimates.
Principles of Consolidation
The consolidated financial statements include the accounts of Capital One Financial Corporation and all other entities in which we
have a controlling financial interest. All significant intercompany accounts and transactions have been eliminated. Certain prior period
amounts have been reclassified to conform to the current period presentation. We determine whether we have a controlling financial
interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”).
Voting Interest Entities
Voting interest entities are entities that have sufficient equity and provide the equity investors voting rights that give them the power
to make significant decisions relating to the entity’s operations. The usual condition for a controlling financial interest in a voting
interest entity is ownership of a majority voting interest. Accordingly, we consolidate our majority-owned subsidiaries and other
voting interest entities in which we hold, directly or indirectly, more than 50% of the voting rights or where we exercise control
through other contractual rights.