ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY OF RECEIVABLES

12 Months Ended

Nov. 02, 2025

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY OF RECEIVABLES

ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY OF RECEIVABLES

NOTE 4. ALLOWANCE FOR CREDIT LOSSES AND CREDIT QUALITY OF RECEIVABLES

Credit Quality

We monitor the credit quality of Receivables based on delinquency status, defined as follows:

● Past due balances represent Receivables still accruing finance income with any payments 30 days or more past the contractual payment due date.

● Non-performing Receivables represent Receivables for which we have stopped accruing finance income, which generally occurs when Customer Receivables are 90 days delinquent and when interest-bearing wholesale receivables become 60 days delinquent. Accrued finance income and lease revenue previously recognized on non-performing Receivables is reversed and subsequently recognized on a cash basis. Accrual of finance income and lease revenue is resumed when the receivable becomes contractually current, and collections are reasonably assured.  

Accrued finance income and lease revenue reversed on non-performing Receivables, and finance income and lease revenue recognized from cash payments on non-performing Receivables were as follows:

	2025		2024		2023
Accrued finance income and lease revenue reversed	$	63.3	$	43.1	$	17.1
Finance income and lease revenue recognized on cash payments		57.0		37.1		18.4

Total Receivable balances represent principal plus accrued interest. Receivable balances are written off to the allowance for credit losses when, in the judgment of management, they are considered uncollectible. Write-offs generally occur when Customer Receivables are 120 days delinquent, and on a case-by-case basis when wholesale receivables are 60 days delinquent. In these situations, collateral is repossessed (for collateral-dependent Receivables) or the account is designated for litigation, and the estimated uncollectible amount is written off to the allowance for credit losses.

The credit quality and aging analysis of Customer Receivables by year of origination was as follows:

	November 2, 2025
	2025		2024		2023		2022		2021		Prior Years		Revolving Charge Accounts		Total
Customer Receivables:
Agriculture and turf
Current	$	10,793.0	$	7,561.2	$	4,784.4	$	2,755.4	$	1,228.4	$	260.0	$	4,489.1	$	31,871.5
30-59 days past due		33.0		65.9		53.1		34.8		14.5		5.9		33.9		241.1
60-89 days past due		11.7		30.7		22.4		11.2		6.9		2.2		9.0		94.1
90+ days past due		.5		1.8		.4		.8		2.2		.5				6.2
Non-performing		38.8		97.2		89.0		51.6		28.1		15.6		13.5		333.8
Construction and forestry
Current		2,774.6		1,726.0		888.1		392.5		108.6		9.1		124.1		6,023.0
30-59 days past due		38.8		42.0		27.4		11.6		3.6		1.3		4.6		129.3
60-89 days past due		19.2		13.3		11.7		6.3		1.5		.7		1.7		54.4
90+ days past due		.2		.8						.3						1.3
Non-performing		27.5		80.6		70.6		34.1		17.5		7.0		1.1		238.4
Total	$	13,737.3	$	9,619.5	$	5,947.1	$	3,298.3	$	1,411.6	$	302.3	$	4,677.0	$	38,993.1
Write-offs for 2025:
Agriculture and turf	$	5.0	$	29.3	$	33.0	$	19.1	$	6.7	$	6.2	$	99.9	$	199.2
Construction and forestry		7.2		32.4		26.2		10.3		2.7		1.6		7.3		87.7
Total	$	12.2	$	61.7	$	59.2	$	29.4	$	9.4	$	7.8	$	107.2	$	286.9

	October 27, 2024
	2024		2023		2022		2021		2020		Prior Years		Revolving Charge Accounts		Total
Customer Receivables:
Agriculture and turf
Current	$	12,957.7	$	7,528.9	$	4,715.5	$	2,633.1	$	915.6	$	232.8	$	4,351.5	$	33,335.1
30-59 days past due		39.5		93.3		49.2		25.2		10.6		3.6		39.2		260.6
60-89 days past due		18.4		43.7		16.7		8.8		7.0		1.9		12.3		108.8
90+ days past due		.4		.9		.3		2.2		.2						4.0
Non-performing		22.2		84.9		69.9		40.4		18.4		11.7		13.9		261.4
Construction and forestry
Current		2,636.0		1,564.0		893.1		380.1		83.2		41.9		114.2		5,712.5
30-59 days past due		49.4		41.3		23.2		9.8		2.5		1.5		4.0		131.7
60-89 days past due		20.0		23.5		8.2		5.8		1.5		.3		1.8		61.1
90+ days past due		.4		.5		.1		.2		.2						1.4
Non-performing		38.2		89.4		64.5		30.6		8.5		3.8		1.9		236.9
Total	$	15,782.2	$	9,470.4	$	5,840.7	$	3,136.2	$	1,047.7	$	297.5	$	4,538.8	$	40,113.5
Write-offs for 2024:
Agriculture and turf	$	4.0	$	29.2	$	23.5	$	10.3	$	9.9	$	3.1	$	86.0	$	166.0
Construction and forestry		8.2		33.4		23.4		10.3		4.7		2.5		7.8		90.3
Total	$	12.2	$	62.6	$	46.9	$	20.6	$	14.6	$	5.6	$	93.8	$	256.3

The credit quality and aging analysis of wholesale receivables was as follows:

	November 2, 2025		October 27, 2024
Wholesale receivables:
Agriculture and turf
Current	$	9,427.4	$	10,439.1
30-59 days past due		5.2		4.5
60-89 days past due				4.2
90+ days past due		.6		10.2
Non-performing		9.1		35.3
Construction and forestry
Current		3,205.7		3,599.9
30-59 days past due		1.1		8.1
60-89 days past due		1.1		5.1
90+ days past due		5.7		7.7
Total	$	12,655.9	$	14,114.1

An analysis of the allowance for credit losses and investment in Receivables at November 2, 2025, October 27, 2024, and October 29, 2023 was as follows:

	Retail Notes		Revolving
	& Financing		Charge		Wholesale		Total
	Leases		Accounts		Receivables		Receivables
2025
Allowance:
Beginning of year balance	$	192.4	$	7.6	$	27.5	$	227.5
Provision (credit) for credit losses*		198.4		65.7		(7.6)		256.5
Write-offs		(179.7)		(107.2)		(3.8)		(290.7)
Recoveries		13.7		41.3				55.0
Translation adjustments		.3				1.5		1.8
End of year balance	$	225.1	$	7.4	$	17.6	$	250.1
Receivables:
End of year balance	$	34,316.1	$	4,677.0	$	12,655.9	$	51,649.0

2024
Allowance:
Beginning of year balance	$	114.9	$	20.4	$	11.1	$	146.4
Provision for credit losses*		228.8		51.6		18.2		298.6
Write-offs		(162.5)		(93.8)				(256.3)
Recoveries		11.6		29.4		.2		41.2
Translation adjustments		(.4)				(2.0)		(2.4)
End of year balance	$	192.4	$	7.6	$	27.5	$	227.5
Receivables:
End of year balance	$	35,574.7	$	4,538.8	$	14,114.1	$	54,227.6

2023
Allowance:
Beginning of year balance	$	95.4	$	21.9	$	11.1	$	128.4
Provision (credit) for credit losses*		67.6		21.2		(.2)		88.6
Write-offs		(60.8)		(44.4)		(.2)		(105.4)
Recoveries		12.9		21.8		.6		35.3
Translation adjustments		(.2)		(.1)		(.2)		(.5)
End of year balance	$	114.9	$	20.4	$	11.1	$	146.4
Receivables:
End of year balance	$	33,419.7	$	4,594.4	$	13,330.1	$	51,344.2

* Excludes provision (credit) for credit losses on unfunded commitments of $.3, $2.3, and $(.1) for the years ended November 2, 2025, October 27, 2024, and October 29, 2023, respectively. The estimated credit losses related to unfunded commitments are recorded in “Accounts payable and accrued expenses.”

The allowance for credit losses increased in 2025 compared to 2024, primarily due to higher expected losses on agricultural and turf customer accounts as a result of elevated delinquencies and a decline in market conditions. We monitor the economy as part of the allowance setting process, including potential impacts of the agricultural market business cycle, global trade policies, and interest rates, among other factors, and qualitative adjustments to the allowance are incorporated as necessary.

During 2025, 2024, and 2023, $38.4, $54.0, and $17.0, respectively, was recorded in “Other income” related to recoveries from freestanding credit enhancements. The 2024 amount reflected expected recoveries on bank guarantee contracts related to an overseas dealer experiencing financial difficulties. During 2025, our estimate of expected credit losses for this dealer improved, resulting in both a decrease in the wholesale specific allowance and related bank guarantee accrual. Excluding this item, recoveries from other freestanding credit enhancements, primarily dealer deposits, increased in 2025 compared to 2024 due to market conditions. At November 2, 2025 and October 27, 2024, we had $115.2 and $119.3, respectively, of deposits withheld from John Deere dealers and merchants available as credit enhancements for retail notes and financing leases.

Modifications

We occasionally grant contractual modifications to customers experiencing financial difficulties. Before offering a modification, we evaluate the ability of the customer to meet the modified payment terms. Finance charges continue to accrue during the deferral or extension period except for modifications related to bankruptcy proceedings. Our allowance for credit losses incorporates historical loss information, including the effects of loan modifications with customers. Therefore, additional adjustments to the allowance are generally not recorded upon modification of a loan.

We continue to monitor the performance of Receivables that are modified with borrowers experiencing financial difficulty. The ending amortized cost and performance of Receivables modified in 2025 and 2024 were as follows:

	2025				2024
Current	$	148.9		$	68.0
30-59 days past due		6.3			1.3
60-89 days past due		2.6			1.4
90+ days past due					.1
Non-performing		12.5			12.7
Total	$	170.3		$	83.5
Percent of Receivable portfolio		0.33	%		0.15	%

Modifications offered include payment deferrals, term extensions or a combination thereof. The weighted-average effects for contract modifications were as follows in months:

	2025	2024
Payment deferral	7	8
Term extension	10	10
Combination modification
Payment deferral	5	2
Term extension	10	8

Defaults and subsequent write-offs of Receivables modified in the prior twelve months were not significant during 2025 and 2024. In addition, at November 2, 2025, commitments to provide additional financing to these customers were $22.5.

Troubled Debt Restructuring

Prior to adopting ASU 2022-02, modifications of loans to borrowers experiencing financial difficulty were considered troubled debt restructurings when the modification resulted in a concession we would not otherwise consider.

The following table includes Receivable contracts identified as troubled debt restructurings, which were primarily retail notes:

	2023
Number of receivable contracts		149
Pre-modification balance	$	7.2
Post-modification balance		6.7

In 2023, we had no significant troubled debt restructurings that subsequently defaulted and were written off.

Write-offs

Write-offs and recoveries of Receivables, and as a percentage of average balances held, by product, during the year, were as follows:

	2025				2024				2023
	Dollars		Percent		Dollars		Percent		Dollars		Percent
Write-offs:
Retail notes & financing leases:
Agriculture and turf	$	(99.3)	(.35)	%	$	(80.0)	(.28)	%	$	(31.7)	(.12)	%
Construction and forestry		(80.4)	(1.29)			(82.5)	(1.44)			(29.1)	(.55)
Total retail notes & financing leases		(179.7)	(.52)			(162.5)	(.48)			(60.8)	(.20)
Revolving charge accounts		(107.2)	(2.55)			(93.8)	(2.40)			(44.4)	(1.17)
Wholesale receivables		(3.8)	(.03)							(.2)
Total write-offs		(290.7)	(.55)			(256.3)	(.48)			(105.4)	(.23)
Recoveries:
Retail notes & financing leases:
Agriculture and turf		8.5	.03			8.4	.03			8.8	.03
Construction and forestry		5.2	.08			3.2	.06			4.1	.08
Total retail notes & financing leases		13.7	.04			11.6	.03			12.9	.04
Revolving charge accounts		41.3	.99			29.4	.75			21.8	.58
Wholesale receivables						.2				.6	.01
Total recoveries		55.0	.10			41.2	.08			35.3	.08
Total net write-offs	$	(235.7)	(.45)	%	$	(215.1)	(.40)	%	$	(70.1)	(.15)	%