Capital One 2014 Annual Report Download - page 141

Glossary and Acronyms
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: Refers to the substantial majority of consumer and commercial loans acquired in the ING Direct and
Chevy Chase Bank acquisitions, and a limited portion of the credit card loans acquired in the 2012 U.S. card acquisition,
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” or “ASC 310-30”). 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 from the
previous estimate 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 our “2014 Form 10-K” or “2014 Annual Report” or “this Report” are to our Annual
Report on Form 10-K for the fiscal year ended December 31, 2014.
Banks: Refers to COBNA and CONA.
Basel Committee: The Basel Committee on Banking Supervision.
Basel III Advanced Approaches: The Basel III Advanced Approaches is mandatory for those institutions with
consolidated total assets of $250 billion or more or consolidated total on-balance-sheet foreign exposure of $10
million or more. The Final Rule modified the Advanced Approaches version of Basel II to create the Basel III
Advanced Approaches.
Basel III Standardized Approach: The Final Rule modified Basel I to create the Basel III Standardized Approach,
which requires for Basel III Advanced Approaches banking organizations that have yet to exit parallel run to use the
Basel III Standardized Approach to calculate regulatory capital, including capital ratios, subject to transition provisions.
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 the 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 consolidated balance sheets. For
loans recorded at amortized cost, carrying value is the unpaid principal balance net of unamortized deferred loan
119 Capital One Financial Corporation (COF)