Capital One 2015 Annual Report Download - page 84

65 Capital One Financial Corporation (COF)
Deposits
Our deposits represent our largest source of funding for our operations, providing a consistent source of low-cost funds. Total
deposits increased by $12.2 billion to $217.7 billion as of December 31, 2015 from December 31, 2014. The increase in deposits
was primarily driven by the issuance of brokered deposits and growth in our Consumer Banking and Commercial Banking businesses
as a result of our continued focus on deposit relationships with existing customers and our ongoing marketing strategy to attract
new business from our commercial customers. We provide information on the composition of our deposits, average outstanding
balances, interest expense and yield below in “Liquidity Risk Profile.”
Securitized Debt Obligations
Securitized debt obligations increased by $4.5 billion to $16.2 billion as of December 31, 2015 from December 31, 2014 primarily
driven by debt issuances of approximately $5.1 billion, offset by debt maturities of $500 million during 2015. We provide additional
information on our borrowings below in “Liquidity Risk Profile.”
Other Debt
Other debt, which consists primarily of federal funds purchased and securities loaned or sold under agreements to repurchase,
senior and subordinated notes, and Federal Home Loan Banks (“FHLB”) advances, totaled $42.9 billion as of December 31, 2015,
of which $42.0 billion represented long-term debt and the remainder represented short-term borrowings. Other debt totaled $36.8
billion as of December 31, 2014, of which $17.1 billion represented short-term borrowings and $19.7 billion represented long-
term debt. During 2015, we extended the maturity of our FHLB advances which resulted in a decrease in our short-term borrowings
and a corresponding increase in our long-term debt.
The increase in other debt of $6.1 billion in 2015 was primarily attributable to a net increase of $2.8 billion in FHLB advances,
$3.2 billion in unsecured senior notes and $101 million in federal funds purchased and securities loaned or sold under agreements
to repurchase. We provide additional information on our borrowings below in “Liquidity Risk Profile” and in “Note 10—Deposits
and Borrowings.”
Mortgage Representation and Warranty Reserve
We acquired three subsidiaries that originated residential mortgage loans and sold these loans to various purchasers, including
purchasers who created securitization trusts. These subsidiaries are Capital One Home Loans, LLC, which was acquired in February
2005; GreenPoint, which was acquired in December 2006 as part of the North Fork Bancorporation, Inc. (“North Fork”) acquisition;
and CCB, which was acquired in February 2009 and subsequently merged into CONA.
We have established representation and warranty reserves for losses associated with the mortgage loans sold by each subsidiary
that we consider to be both probable and reasonably estimable, including both litigation and non-litigation liabilities. These reserves
are reported on our consolidated balance sheets as a component of other liabilities. The reserve setting process relies heavily on
estimates, which are inherently uncertain, and requires judgment. We evaluate these estimates on a quarterly basis. We build our
representation and warranty reserves through the provision for mortgage representation and warranty losses, which we report in
our consolidated statements of income as a component of non-interest income for loans originated and sold by CCB and Capital
One Home Loans, LLC and as a component of discontinued operations for loans originated and sold by GreenPoint. The aggregate
reserve for all three entities totaled $610 million as of December 31, 2015, compared to $731 million as of December 31, 2014.