Capital One 2015 Annual Report Download - page 105

86 Capital One Financial Corporation (COF)
Impaired loans, including TDRs, totaled $2.5 billion and $1.9 billion as of December 31, 2015 and 2014, respectively. Loans
modified in TDRs accounted for $1.8 billion and $1.7 billion of impaired loans as of December 31, 2015 and 2014, respectively.
We provide additional information on our impaired loans, including the allowance for loan and lease losses established for these
loans, in “Note 5—Loans” and “Note 6—Allowance for Loan and Lease Losses.”
Allowance for Loan and Lease Losses
Our allowance for loan and lease losses represents management’s best estimate of incurred loan and lease credit losses inherent
in our held for investment portfolio as of each balance sheet date. The allowance for loan and lease losses is increased through the
provision for credit losses and reduced by net charge-offs. We provide additional information on the methodologies and key
assumptions used in determining our allowance for loan and lease losses in “Note 1—Summary of Significant Accounting Policies.”
Our allowance for loan and lease losses increased by $747 million to $5.1 billion as of December 31, 2015 from December 31,
2014. The allowance coverage ratio increased by 13 basis points to 2.23% as of December 31, 2015 from December 31, 2014.
The increase in the allowance for loan and lease losses was primarily driven by continued loan growth, coupled with our expectations
of rising charge-off rates in our domestic credit card portfolio driven by growth, as well as adverse market conditions impacting
our oil and gas portfolio and taxi medallion lending portfolio in our Commercial Banking business.
Table 28 presents changes in our allowance for loan and lease losses and unfunded lending commitments for 2015 and 2014, and
details the provision for credit losses recognized in our consolidated statements of income and charge-offs and recoveries by
portfolio segment.