Capital One 2012 Annual Report Download - page 221

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Other
We have a variable interest in Capital One Financial Advisors, LLC which we consolidate as we have the power
to direct the activities that most significantly impact the VIE’s economic performance and the obligation to
absorb losses or the right to receive benefits that could be potentially significant to the VIE. The assets of the
VIE that we consolidated totaled approximately $1 million as of both December 31, 2012 and 2011. The assets
are consolidated in our balance sheet in cash and other assets.
We also have a variable interest in a trust that has a royalty interest in certain oil and gas properties. The activities of
the trust are financed solely with debt. The total assets of the trust were $255 million and $309 million as of
December 31, 2012 and 2011, respectively. We were not required to consolidate the trust because we do not have
the power to direct the activities of the trust that most significantly impact the trust’s economic performance. Our
retained interest in the trust, which totaled approximately $114 million and $139 million as of December 31, 2012
and 2011, respectively, is reflected on our consolidated balance sheets under loans held for investment. Our
maximum exposure is limited to our variable interest of $114 million as of December 31, 2012. The creditors of the
trust have no recourse to our general credit. We have not provided additional financial or other support during the
period that we were not previously contractually required to provide.
In April 2012, we purchased membership interests in three limited liability companies that each operates a
refined coal production facility. The sale of this refined coal qualifies for tax credits pursuant to Section 45 of the
Internal Revenue Code. In the aggregate, we paid $1 million in cash at closing and agreed to a fixed note payable
of $86 million and additional quarterly variable payments based on the amount of tax credits to be generated by
these entities from April 2012 to 2021. In addition, we have an ongoing commitment to fund a proportionate
share of the operating expenses of each of these entities based on our ownership percentage. These limited
liability companies were deemed to be VIEs and we determined that we were not the primary beneficiary as we
do not have the power to direct the activities of these entities that most significantly impact their economic
performance. Our membership interests in these entities are reflected on our consolidated balance sheet within
other assets. As of December 31, 2012, the carrying value of our aggregate membership interest in these entities
was $86 million. Our future obligation to these entities is predicated upon the generation of tax credits and their
operating performance in future periods. The parties involved with these entities have recourse to our general
credit for the quarterly variable payment amounts and ongoing funding commitments that become payable to
them. These payments will only be required if the refined coal production facilities are either currently
generating tax credits or expect to generate them imminently. We have not provided additional financial or other
support during the period that we were not contractually required to provide.
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