Capital One 2014 Annual Report Download - page 267

NOTE 19—BUSINESS SEGMENTS
Our principal operations are currently organized into three major business segments, which are defined 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. 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, 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. Other category also includes foreign exchange-rate fluctuations
on foreign currency-denominated transactions; 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.
Basis of Presentation
We report the results of each of our business segments on a continuing operations basis. See “Note 2—Discontinued
Operations” for a discussion of discontinued operations. The results of our individual businesses reflect the manner
in which management evaluates performance and makes decisions about funding our operations and allocating
resources.
Business Segment Reporting Methodology
The results of our business segments are intended to reflect each segment as if it were a stand-alone business. Our
internal management and reporting process used to derive our segment results employs various allocation
methodologies, including funds transfer pricing, to assign certain balance sheet assets, deposits and other liabilities
and their related revenue and expenses directly or indirectly attributable to each business segment. Our funds transfer
pricing process provides a funds credit for sources of funds, such as deposits generated by our Consumer Banking
and Commercial Banking businesses, and a funds charge for the use of funds by each segment. Due to the integrated
nature of our business segments, estimates and judgments have been made in allocating certain revenue and expense
items. Transactions between segments are based on specific criteria or approximate third-party rates. We regularly
assess the assumptions, methodologies and reporting classifications used for segment reporting, which may result
in the implementation of refinements or changes in future periods.
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CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Capital One Financial Corporation (COF)