Capital One 2013 Annual Report Download - page 145

Return on tangible common equity: Income, excluding amortization of intangible assets, divided by average
tangible common shareholders’ equity.
Risk-weighted assets: Risk-weighted assets consist of on- and off-balance sheet assets that are assigned to one
of several broad risk categories and weighted by factors representing their risk and potential for default. On-
balance sheet assets are risk-weighted based on the perceived credit risk associated with the obligor or
counterparty, the nature of any collateral, and the guarantor, if any. Off-balance sheet assets such as lending-
related commitments, guarantees, derivatives and other applicable off-balance sheet positions are risk-weighted
by multiplying the contractual amount by the appropriate credit conversion factor to determine the on-balance
sheet credit equivalent amount, which is then risk-weighted based on the same factors used for on-balance sheet
assets. Risk-weighted assets also incorporate a measure for market risk related to applicable trading assets, debt
and equity instruments, and foreign exchange and commodity derivatives. The resulting risk-weighted values for
each of the risk categories are then aggregated to determine total risk-weighted assets.
Securitized Debt Obligations: A type of asset-backed security and structured credit product constructed from a
portfolio of fixed-income assets.
SOP 03-3: Statement of Position 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer.
Small-ticket commercial real estate: Our small-ticket commercial real estate portfolio is predominantly low, or
no documentation loans, with balances generally less than $2 million. This portfolio was originated on a national
basis through a broker network, and is in a run-off mode.
Subprime: For purposes of lending in our Credit Card business we generally consider FICO scores of 660 or
below, or other equivalent risk scores, to be subprime. For purposes of auto lending in our Consumer Banking
business we generally consider FICO scores of 620 or below to be subprime.
Tangible common equity (“TCE”): Common equity less goodwill and intangible assets adjusted for deferred
tax liabilities associated with non-tax deductible intangible assets and tax deductible goodwill.
Tier 1 Common Capital: Tier 1 capital less preferred stock, qualifying trust preferred securities, hybrid
securities and qualifying noncontrolling interest in subsidiaries.
Troubled debt restructuring (“TDR”): A TDR is deemed to occur when the Company modifies the original
terms of a loan agreement by granting a concession to a borrower that is experiencing financial difficulty.
U.S. federal banking agencies: The Federal Reserve, the OCC and the FDIC.
U.S. GAAP: Accounting principles generally accepted in the United States of America. Accounting rules and
conventions defining acceptable practices in preparing financial statements in the U.S.
U.S. Treasury: U.S. Department of the Treasury.
Unfunded commitments: Legally binding agreements to provide a defined level of financing until a specified
future date.
Variable Interest Entity (“VIE”): An entity that: (1) lacks enough equity investment at risk to permit the entity
to finance its activities without additional financial support from other parties; (2) has equity owners that lack the
right to make significant decisions affecting the entity’s operations; and/or (3) has equity owners that do not have
an obligation to absorb or the right to receive the entity’s losses or return.
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