Capital One 2013 Annual Report Download - page 263

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Senior and Subordinated Notes
We engage multiple third party pricing services in order to estimate the fair value of senior and subordinated
notes. The pricing service utilizes a pricing model that incorporates available trade, bid and other market
information. It also incorporates spread assumptions, volatility assumptions and relevant credit information into
the pricing models.
Federal Funds Purchased and Securities Loaned or Sold under Agreements to Repurchase and Other
Borrowings
The carrying amount of federal funds purchased and repurchase agreements approximates fair value. The fair
value of FHLB advances was determined based on discounted expected cash flows using discount rates
consistent with current market rates for FHLB advances with similar remaining terms. The decrease in fair value
of our other borrowings at December 31, 2013 was primarily due to a decline in the volume of those borrowings.
Interest Payable
The carrying amount of interest payable approximates the fair value of this liability due to its relatively short-
term nature.
NOTE 19—BUSINESS SEGMENTS
Our principal operations are currently organized for management reporting purposes into three primary business
segments, which are defined primarily based on the products and services provided or the type of customer
served: Credit Card, Consumer Banking and Commercial Banking. The operations of acquired businesses have
been integrated into our existing business segments. The acquired ING Direct business is primarily reflected in
our Consumer Banking business, while the business acquired in the 2012 U.S. card acquisition is reflected in our
Credit Card business. Certain activities that are not part of a segment, such as management of our corporate
investment portfolio and asset/liability management by our centralized Corporate Treasury group, are included in
the “Other” category.
•Credit Card: Consists of our domestic consumer and small business card 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 consumers and
small businesses, national deposit gathering, national auto 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 commercial and industrial customers. Our commercial and industrial customers
typically include companies with annual revenues between $10 million to $1 billion.
•Other Category: Includes the residual impact of the allocation of our centralized Corporate Treasury group
activities, such as management of our corporate investment portfolio and asset/liability management, to our
business segments. Accordingly, net gains and losses on our investment securities portfolio and certain
trading activities are included in the Other category. The Other category also includes foreign exchange-rate
fluctuations related to the revaluation of foreign currency-denominated investments; unallocated corporate
expenses that do not directly support the operations of the business segments or for which the business
segments are not considered financially accountable in evaluating their performance, such as acquisition and
restructuring charges; certain provisions for representation and warranty reserves related to continuing
operations; certain material items that are non-recurring in nature; and offsets related to certain line-item
reclassifications.
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