Capital One 2013 Annual Report Download - page 159

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In determining whether we are the primary beneficiary of a VIE, we consider both qualitative and quantitative
factors regarding the nature, size and form of our involvement with the VIE, such as our role in establishing the
VIE and our ongoing rights and responsibilities; our economic interests, including debt and equity investments,
servicing fees, and other arrangements deemed to be variable interests in the VIE; the design of the VIE,
including the capitalization structure, subordination of interests, payment priority, relative share of interests held
across various classes within the VIE’s capital structure and the reasons why the interests are held by us.
We perform on-going reassessments of whether entities previously evaluated under the majority voting-interest
framework have become VIEs and should be subject to the VIE consolidation framework or whether changes in
the nature of our involvement with a VIE results in a change in our consolidation conclusion. In the normal
course of business, we have entered into various types of transactions with entities that are considered to be VIEs
including securitization transactions in which we transferred assets from our balance sheet to securitization trusts.
See “Note 6—Variable Interest Entities and Securitizations” for further details.
Cash and Cash Equivalents
Cash and cash equivalents include cash and due from banks, federal funds sold and securities purchased under
agreements to resell and interest-bearing deposits with banks, all of which, if applicable, have stated maturities of
three months or less when acquired.
Securities Resale and Repurchase Agreements
Securities purchased under resale agreements and securities loaned or sold under agreements to repurchase,
principally U.S. government and agency obligations, are not accounted for as sales but as collateralized financing
transactions and recorded at the amounts at which the securities were acquired or sold, plus accrued interest. We
continually monitor the market value of these securities and deliver additional collateral to or obtain additional
collateral from counterparties, as appropriate.
Investment Securities
Our investment securities consist primarily of fixed-income debt securities and equity securities. The accounting
and measurement framework for our investment securities differs depending on the security classification. We
classify securities as available for sale or held to maturity based on our investment strategy and management’s
assessment of our intent and ability to hold the securities until maturity. Securities that we intend to hold for an
indefinite period of time and may sell prior to maturity in response to changes in our investment strategy,
liquidity needs, interest rate risk profile or for other reasons are classified as available for sale. Securities that we
have the intent and ability to hold until maturity are classified as held to maturity.
We report securities available for sale in our consolidated balance sheets at fair value with unrealized gains and
losses recorded, net of tax, as a component of Accumulated Other Comprehensive Income (“AOCI”). We report
securities held to maturity on our consolidated balance sheets at carrying value. Carrying value generally consists
of amortized cost. For securities transferred from available for sale to held to maturity, carrying value also
includes unrealized gains and losses recognized in AOCI at the date of transfer. Investment securities transferred
into the held to maturity category from the available for sale category are recorded at fair value at the date of
transfer. Such unrealized gains or losses are accreted over the remaining life of the security with no impact on
future net income.
139