Capital One 2014 Annual Report Download - page 225

Offsetting of Financial Assets and Liabilities
We execute the majority of our derivative transactions and repurchase agreements under master netting arrangements.
Under our existing enforceable master netting arrangements, we generally have the right to offset exposure with the
same counterparty. In addition, either counterparty can generally request the net settlement of all contracts through
a single payment upon default on, or termination of, any one contract.
We present all of our derivative assets and liabilities on a gross basis on our consolidated balance sheets. As of
December 31, 2014 and 2013, the Company only had repurchase obligations outstanding and did not have any
reverse repurchase receivables. The following table presents as of December 31, 2014 and 2013, the gross and
net fair values of our derivative assets and liabilities and repurchase agreements, as well as the related offsetting
amount permitted under the accounting standard for offsetting assets and liabilities. Under the accounting
standard, gross positive fair values could be offset against gross negative fair values by counterparty pursuant to
legally enforceable master netting agreements, if certain conditions are met and the net presentation method is
elected. The table also includes cash and non-cash collateral received or pledged associated with such
arrangements. The collateral amounts related to derivative assets, derivative liabilities and repurchase agreements
are limited to the extent of the related net derivative fair values or outstanding balances, thus instances of
overcollateralization are not shown.
Table 10.2: Offsetting of Financial Assets and Financial Liabilities
Offsetting Amounts
Not Netted
Gross Offsetting Net Amounts Financial Collateral Net
(Dollars in millions) Amounts Amounts as Recognized Instruments Received Exposure(1)
As of December 31, 2014
Derivatives assets . . . . . . . . . . . . . . . . . . . $ 1,096 $ 0 $ 1,096 $ (161) $ (560) $ 375
As of December 31, 2013
Derivatives assets . . . . . . . . . . . . . . . . . . . $ 959 $ 0 $ 959 $ (262) $ (450) $ 247
Offsetting Amounts
Not Netted
Gross Offsetting Net Amounts Financial Collateral Net
(Dollars in millions) Amounts Amounts as Recognized Instruments Pledged Exposure
As of December 31, 2014
Derivatives liabilities . . . . . . . . . . . . . . . . $ 276 $ 0 $ 276 $ (161) $ (76) $ 39
Repurchase agreements . . . . . . . . . . . . . . 869 0 869 0 (869) 0
As of December 31, 2013
Derivatives liabilities . . . . . . . . . . . . . . . . $ 710 $ 0 $ 710 $ (262) $ (371) $ 77
Repurchase agreements . . . . . . . . . . . . . . 907 0 907 0 (907) 0
(1) The majority of the net position relates to customer-accommodation derivatives. Customer-accommodation derivatives are cross-
collateralized by the associated commercial loans and we do not require additional collateral on these transactions.
Credit Risk-Related Contingency Features and Collateral
Certain of our derivatives contracts include provisions requiring that our debt maintain a credit rating of investment
grade or above by each of the major credit rating agencies. In the event of a downgrade of our debt credit rating
below investment grade, some of our derivatives counterparties would have the right to terminate the derivative
contract and close out the existing positions, or demand immediate and ongoing full overnight collateralization on
derivative instruments in a net liability position. Certain of our derivatives contracts may also allow, in the event of
a downgrade of our debt credit rating of any kind, our derivatives counterparties to demand additional
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CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Capital One Financial Corporation (COF)