Capital One 2013 Annual Report Download - page 141

Glossary
2002 DRP: Dividend Reinvestment and Stock Purchase Plan.
2012 U.S. card acquisition: On May 1, 2012, pursuant to the agreement with HSBC Finance Corporation,
HSBC USA Inc. and HSBC Technology and Services (USA) Inc. (collectively, “HSBC”), we closed the
acquisition of substantially all of the assets and assumed liabilities of HSBC’s credit card and private label credit
card business in the United States (other than the HSBC Bank USA, consumer credit card program and certain
other retained assets and liabilities).
Acquired Loans: A limited portion of the credit card loans acquired in the 2012 U.S. card acquisition and the
substantial majority of consumer and commercial loans acquired in the ING Direct and Chevy Chase Bank
acquisitions, which were recorded at fair value at acquisition and subsequently accounted for based on expected
cash flows to be collected (under the accounting standard formerly known as “Statement of Position 03-3,
Accounting for Certain Loans or Debt Securities Acquired in a Transfer,” commonly referred to as “SOP 03-3”).
The difference between the fair value at acquisition and expected cash flows represents the accretable yield,
which is recognized into interest income over the life of the loans. The difference between the contractual
payments on the loans and expected cash flows represents the nonaccretable difference or the amount of principal
and interest not considered collectible, which incorporates future expected credit losses over the life of the loans.
Decreases in expected cash flows resulting from further credit deterioration will generally result in an
impairment charge recognized in our provision for credit losses and an increase in the allowance for loan and
lease losses. Charge-offs are not recorded until the expected credit losses within the nonaccretable difference is
depleted. In addition, Acquired Loans are not classified as delinquent or nonperforming as we expect to collect
our net investment in these loans and the nonaccretable difference will absorb the majority of the losses
associated with these loans.
Annual Report: References to “this Report” or our “2013 Form 10-K” or “2013 Annual Report” are to our
“Annual Report” on Form 10-K for the fiscal year ended December 31, 2013.
Banks: Refers to COBNA and CONA.
Basel Committee: The Basel Committee on Banking Supervision.
Benefit obligation and Projected Benefit Obligation: Benefit Obligation refers to the total of the projected
benefit obligation for pension plans and the accumulated postretirement benefit obligations. Projected Benefit
Obligation represents actuarial present value of all benefits accrued on employee service rendered prior to the
calculation date, including allowance for future salary increases if the pension benefit is based on future
compensation levels.
BHC Act: The Bank Holding Company Act of 1956, as amended (12 U.S.C. § 1842).
Capital One: Capital One Financial Corporation and its subsidiaries.
Carrying Value (with respect to loans):The amount at which a loan is recorded on the balance sheet. For loans
recorded at amortized cost, carrying value is the unpaid principal balance net of unamortized deferred loan
origination fees and costs, and unamortized purchase premium or discount. For loans that are or have been on
nonaccrual status, the carrying value is also reduced by any net charge-offs that have been recorded and the
amount of interest payments applied as a reduction of principal under the cost recovery method. For credit card
loans, the carrying value also includes interest that has been billed to the customer. For loans classified as held-
for-sale, carrying value is the lower of carrying value as described in the sentences above, or fair value. For
Acquired Loans, the carrying value equals fair value upon acquisition adjusted for subsequent cash collections
and yield accreted to date.
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