9. Finance Receivables and Loans, Net

The composition of finance receivables and loans, net, reported at carrying value before allowance for loan losses was as follows.



	2011						2010
December 31, ($ in millions)	Domestic		Foreign		Total		Domestic		Foreign		Total
Consumer automobile	$	46,576	$	16,883	$	63,459	$	34,604	$	16,650	$	51,254
Consumer mortgage
1st Mortgage	6,867		24		6,891		6,917		390		7,307
Home equity	3,102		—		3,102		3,441		—		3,441
Total consumer mortgage	9,969		24		9,993		10,358		390		10,748
Commercial
Commercial and industrial
Automobile	26,552		8,265		34,817		24,944		8,398		33,342
Mortgage	1,887		24		1,911		1,540		41		1,581
Other	1,178		63		1,241		1,795		312		2,107
Commercial real estate
Automobile	2,331		154		2,485		2,071		216		2,287
Mortgage	—		14		14		1		78		79
Total commercial	31,948		8,520		40,468		30,351		9,045		39,396
Loans at fair value (a)	603		232		835		663		352		1,015
Total finance receivables and loans (b)	$	89,096	$	25,659	$	114,755	$	75,976	$	26,437	$	102,413


(a)	Includes domestic consumer mortgages at fair value as a result of fair value option election. Refer to Note 27 for additional information.


(b)	Totals are net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $2.9 billion at both December 31, 2011 and 2010, respectively.

The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans.



($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at January 1, 2011	$	970		$	580		$	323		$	1,873
Charge-offs
Domestic	(435		)	(205		)	(27		)	(667		)
Foreign	(145		)	(5		)	(63		)	(213		)
Total charge-offs	(580		)	(210		)	(90		)	(880		)
Recoveries
Domestic	186			16			25			227
Foreign	73			1			26			100
Total recoveries	259			17			51			327
Net charge-offs	(321		)	(193		)	(39		)	(553		)
Provision for loan losses	154			129			(64		)	219
Other	(37		)	—			1			(36		)
Allowance at December 31, 2011	$	766		$	516		$	221		$	1,503
Allowance for loan losses
Individually evaluated for impairment	$	7		$	172		$	61		$	240
Collectively evaluated for impairment	749			344			160			1,253
Loans acquired with deteriorated credit quality	10			—			—			10
Finance receivables and loans at historical cost
Ending balance	63,459			9,993			40,468			113,920
Individually evaluated for impairment	69			606			464			1,139
Collectively evaluated for impairment	63,302			9,387			40,004			112,693
Loans acquired with deteriorated credit quality	88			—			—			88



($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at January 1, 2010	$	1,024		$	640		$	781		$	2,445
Cumulative effect of change in accounting principles (a)	222			—			—			222
Charge-offs
Domestic	(776		)	(239		)	(282		)	(1,297		)
Foreign	(194		)	(4		)	(151		)	(349		)
Total charge-offs	(970		)	(243		)	(433		)	(1,646		)
Recoveries
Domestic	319			26			18			363
Foreign	71			1			13			85
Total recoveries	390			27			31			448
Net charge-offs	(580		)	(216		)	(402		)	(1,198		)
Provision for loan losses	304			164			(26		)	442
Discontinued operations	—			—			(4		)	(4		)
Other	—			(8		)	(26		)	(34		)
Allowance at December 31, 2010	$	970		$	580		$	323		$	1,873
Allowance for loan losses
Individually evaluated for impairment	$	—		$	100		$	127		$	227
Collectively evaluated for impairment	970			480			196			1,646
Loans acquired with deteriorated credit quality	20			—			—			20
Finance receivables and loans at historical cost
Ending balance	51,254			10,748			39,396			101,398
Individually evaluated for impairment	—			487			1,308			1,795
Collectively evaluated for impairment	51,254			10,261			38,088			99,603
Loans acquired with deteriorated credit quality	170			—			—			170


(a)	Effect of change in accounting principle due to adoption of ASU 2009-17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.

The following table presents information about significant sales of finance receivables and loans recorded at historical cost and transfers of finance receivables and loans from held-for-investment to held-for-sale.



December 31, ($ in millions)	2011
Consumer automobile	$	3,279
Consumer mortgage	107
Commercial	34
Total sales and transfers	$	3,420

The following table presents an analysis of our past due finance receivables and loans recorded at historical cost reported at carrying value before allowance for loan losses.



December 31, ($ in millions)	30-59 days past due		60-89 days past due		90 days or more past due		Total past due		Current		Total finance receivables and loans
2011
Consumer automobile	$	802	$	162	$	179	$	1,143	$	62,316	$	63,459
Consumer mortgage
1st Mortgage	91		35		162		288		6,603		6,891
Home equity	21		11		18		50		3,052		3,102
Total consumer mortgage	112		46		180		338		9,655		9,993
Commercial
Commercial and industrial
Automobile	—		1		126		127		34,690		34,817
Mortgage	—		—		—		—		1,911		1,911
Other	—		—		1		1		1,240		1,241
Commercial real estate
Automobile	2		1		34		37		2,448		2,485
Mortgage	—		2		12		14		—		14
Total commercial	2		4		173		179		40,289		40,468
Total consumer and commercial	$	916	$	212	$	532	$	1,660	$	112,260	$	113,920
2010
Consumer automobile	$	828	$	175	$	197	$	1,200	$	50,054	$	51,254
Consumer mortgage
1st Mortgage	115		67		205		387		6,920		7,307
Home equity	20		12		13		45		3,396		3,441
Total consumer mortgage	135		79		218		432		10,316		10,748
Commercial
Commercial and industrial
Automobile	21		19		85		125		33,217		33,342
Mortgage	—		36		4		40		1,541		1,581
Other	—		—		20		20		2,087		2,107
Commercial real estate
Automobile	—		4		78		82		2,205		2,287
Mortgage	—		—		71		71		8		79
Total commercial	21		59		258		338		39,058		39,396
Total consumer and commercial	$	984	$	313	$	673	$	1,970	$	99,428	$	101,398

The following table presents the carrying value before allowance for loan losses of our finance receivables and loans recorded at historical cost on nonaccrual status.



December 31, ($ in millions)	2011		2010
Consumer automobile	$	228	$	207
Consumer mortgage
1st Mortgage	281		500
Home equity	58		61
Total consumer mortgage	339		561
Commercial
Commercial and industrial
Automobile	223		296
Mortgage	—		40
Other	37		134
Commercial real estate
Automobile	67		199
Mortgage	12		71
Total commercial	339		740
Total consumer and commercial finance receivables and loans	$	906	$	1,508

Management performs a quarterly analysis of the consumer automobile, consumer mortgage, and commercial portfolios using a range of credit quality indicators to assess the adequacy of the allowance based on historical and current trends. The tables below present our finance receivables and loans by select credit quality indicators for the consumer automobile, consumer mortgage, and commercial portfolios.

The following table presents performing and nonperforming credit quality indicators in accordance with our internal accounting policies for our consumer finance receivables and loans recorded at historical cost reported at carrying value before allowance for loan losses.



	2011						2010
December 31, ($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automobile	$	63,231	$	228	$	63,459	$	51,047	$	207	$	51,254
Consumer mortgage
1st Mortgage	6,610		281		6,891		6,807		500		7,307
Home equity	3,044		58		3,102		3,380		61		3,441
Total consumer mortgage	$	9,654	$	339	$	9,993	$	10,187	$	561	$	10,748

The following table presents pass and criticized credit quality indicators based on regulatory definitions for our commercial finance receivables and loans recorded at historical cost reported at carrying value before allowance for loan losses.



	2011						2010
December 31, ($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial
Commercial and industrial
Automobile	$	32,464	$	2,353	$	34,817	$	31,254	$	2,088	$	33,342
Mortgage	1,760		151		1,911		1,504		77		1,581
Other	883		358		1,241		1,041		1,066		2,107
Commercial real estate
Automobile	2,305		180		2,485		2,013		274		2,287
Mortgage	—		14		14		—		79		79
Total commercial	$	37,412	$	3,056	$	40,468	$	35,812	$	3,584	$	39,396


(a)	Includes loans classified as special mention, substandard, or doubtful. These classifications are based on regulatory definitions and generally represent loans within our portfolio that are of higher default risk or have already defaulted.

Impaired Loans and Troubled Debt Restructurings

Impaired Loans

Loans are considered impaired when we determine it is probable that we will be unable to collect all amounts due according to the terms of the loan agreement. For more information on our impaired finance receivables and loans, refer to Note 1.

The following table presents information about our impaired finance receivables and loans recorded at historical cost.



December 31, ($ in millions)	Unpaid principal balance		Carrying value before allowance			Impaired with no allowance		Impaired with an allowance		Allowance for impaired loans
2011
Consumer automobile	$	69	$	69		$	—	$	69	$	7
Consumer mortgage
1st Mortgage	516		508			83		425		126
Home equity	97		98			—		98		46
Total consumer mortgage	613		606			83		523		172
Commercial
Commercial and industrial
Automobile	222		222			64		158		22
Mortgage	—		—			—		—		—
Other	37		37			25		12		5
Commercial real estate
Automobile	68		68			32		36		18
Mortgage	12		12			1		11		5
Total commercial	339		339			122		217		50
Total consumer and commercial finance receivables and loans	$	1,021	$	1,014		$	205	$	809	$	229
2010
Consumer automobile	$	—	$	—	—	$	—	$	—	$	—
Consumer mortgage
1st Mortgage	410		404			—		404		59
Home equity	82		83			—		83		40
Total consumer mortgage	492		487			—		487		99
Commercial
Commercial and industrial
Automobile	340		356			33		323		23
Mortgage	44		40			—		40		14
Other	135		133			20		113		51
Commercial real estate
Automobile	206		197			108		89		29
Mortgage	71		71			28		43		10
Total commercial	796		797			189		608		127
Total consumer and commercial finance receivables and loans	$	1,288	$	1,284		$	189	$	1,095	$	226

The following table presents average balance and interest income for our impaired finance receivables and loans.



	2011				2010				2009
Year ended December 31, ($ in millions)	Average balance		Interest income		Average balance		Interest income		Average balance		Interest income
Consumer automobile	$	35	$	2	$	—	$	—	$	—	$	—
Consumer mortgage
1st Mortgage	463		18		405		15		520		21
Home equity	90		4		79		4		90		4
Total consumer mortgage	553		22		484		19		610		25
Commercial
Commercial and industrial
Automobile	303		19		335		13		1,014		17
Mortgage	19		6		53		2		—		—
Other	84		1		650		6		661		31
Commercial real estate
Automobile	126		7		275		3		262		9
Mortgage	40		1		137		6		881		3
Total commercial	572		34		1,450		30		2,818		60
Total consumer and commercial finance receivables and loans	$	1,160	$	58	$	1,934	$	49	$	3,428	$	85

Troubled Debt Restructurings

TDRs are loan modifications where concessions were granted to borrowers experiencing financial difficulties. Numerous initiatives, such as Home Affordable Modification Program are in place to provide support to our mortgage customers in financial distress, including principal forgiveness, maturity extensions, delinquent interest capitalization, and changes to contractual interest rates. Additionally for automobile loans, we offer several types of assistance to aid our customers including changing the due date, and rewriting the loan terms. Total TDRs recorded at historical cost and reported at carrying value before allowance for loan losses at December 31, 2011, increased $224 million to $734 million from December 31, 2010. Refer to Note 1 for additional information.

The following table presents information related to finance receivables and loans recorded at historical cost modified in connection with a troubled debt restructuring during the period.



Year ended December 31, 2011 ($ in millions)	Number of loans	Pre-modification carrying value before allowance		Post-modification carrying value before allowance
Consumer automobile	6,411	$	85	$	85
Consumer mortgage
1st Mortgage	375	133		132
Home equity	888	51		47
Total consumer mortgage	1,263	184		179
Commercial
Commercial and Industrial
Automobile	2	5		5
Mortgage	1	38		28
Other	2	11		10
Commercial real estate
Automobile	5	12		11
Mortgage	2	4		3
Total commercial	12	70		57
Total consumer and commercial finance receivables and loans	7,686	$	339	$	321

The following table presents information about finance receivables and loans recorded at historical cost that have redefaulted during the reporting period and were within 12 months or less of being modified as a troubled debt restructuring. Redefault is when finance receivables and loans meet the requirements for evaluation under our charge-off policy (Refer to Note 1 for additional information) except for commercial finance receivables and loans where default is defined as 90 days past due.



Year ended December 31, 2011 ($ in millions)	Number of loans	Carrying value before allowance		Charge-off amount
Consumer automobile	420	$	4	$	2
Consumer mortgage
1st Mortgage	11	2		—
Home equity	28	2		1
Total consumer mortgage	39	4		1
Commercial
Commercial and industrial
Automobile	1	3		—
Total commercial	1	3		—
Total consumer and commercial finance receivables and loans	460	$	11	$	3

At December 31, 2011, and December 31, 2010, commercial commitments to lend additional funds to debtors owing receivables whose terms had been modified in a troubled debt restructuring were $45 million and $15 million, respectively.

Concentration Risk

Consumer

We monitor our consumer loan portfolio for concentration risk across the geographies in which we lend. The highest concentrations of loans in the United States are in Texas and California, which represent an aggregate of 16.4% of our total outstanding consumer loans at December 31, 2011.

Concentrations in our mortgage portfolio are closely monitored given the volatility of the housing markets. Our consumer mortgage loan concentrations in California, Florida, and Michigan receive particular attention as the real estate value depreciation in these states has been the most severe.

The following table shows the percentage of total consumer finance receivables and loans recorded at historical cost reported at carrying value before allowance for loan losses by state and foreign concentration.



	2011 (a)				2010
December 31,	Automobile		1st Mortgage and home equity		Automobile		1st Mortgage and home equity
Texas	9.5	%	5.5	%	9.2	%	4.4	%
California	4.6		25.7		4.6		24.5
Florida	4.8		4.0		4.4		4.1
Michigan	4.0		4.8		3.7		5.0
Illinois	3.1		5.0		2.8		4.7
New York	3.5		2.3		3.4		2.4
Pennsylvania	3.6		1.6		3.2		1.7
Ohio	2.9		1.0		2.5		1.0
Georgia	2.5		1.8		2.2		1.8
North Carolina	2.2		2.1		2.0		2.0
Other United States	32.9		45.9		29.4		44.7
Canada	11.8		0.2		14.2		3.6
Brazil	4.7		—		5.2		—
Germany	4.3		—		5.7		—
Other foreign	5.6		0.1		7.5		0.1
Total consumer loans	100.0	%	100.0	%	100.0	%	100.0	%


(a)	Presentation is in descending order as a percentage of total consumer finance receivables and loans at December 31, 2011.

The following table presents our five largest state and foreign concentrations within our held-for-investment mortgage finance receivables and loans recorded at historical cost and reported at carrying value before allowance for loan losses by higher-risk loan type.



December 31, ($ in millions)	Interest-only mortgage loans		Below-market rate (teaser) mortgages		All higher-risk mortgage loans
2011
California	$	748	$	78	$	826
Virginia	274		10		284
Maryland	217		6		223
Michigan	199		9		208
Illinois	153		8		161
Other United States	1,356		137		1,493
Total	$	2,947	$	248	$	3,195
2010
California	$	993	$	89	$	1,082
Virginia	330		12		342
Maryland	256		7		263
Michigan	225		10		235
Illinois	197		8		205
Other United States and foreign	1,680		158		1,838
Total	$	3,681	$	284	$	3,965

Commercial Real Estate

The commercial real estate portfolio consists of loans issued primarily to automotive dealers. The following table shows the percentage of total commercial real estate finance receivables and loans reported at carrying value before allowance for loan losses by geographic region and property type.



December 31,	2011		2010
Geographic region
Michigan	14.1	%	10.1	%
Texas	12.4		10.5
Florida	12.4		10.3
California	9.3		9.6
Virginia	4.1		4.4
New York	3.5		3.8
Pennsylvania	2.9		3.7
Alabama	2.6		2.4
Georgia	2.5		2.7
North Carolina	2.1		1.9
Other United States	27.5		28.1
Canada	3.5		4.4
United Kingdom	1.8		5.0
Mexico	1.0		2.4
Other foreign	0.3		0.7
Total outstanding commercial real estate finance receivables and loans	100.0	%	100.0	%
Property type
Automotive dealers	99.4	%	91.8	%
Other	0.6		8.2
Total outstanding commercial real estate finance receivables and loans	100.0	%	100.0	%

Commercial Criticized Exposure

Finance receivables and loans classified as special mention, substandard, or doubtful are deemed as criticized. These classifications are based on regulatory definitions and generally represent finance receivables and loans within our portfolio that have a higher default risk or have already defaulted. The following table presents the percentage of total commercial criticized finance receivables and loans reported at carrying value before allowance for loan losses by industry concentrations.



December 31,	2011		2010
Industry
Automotive	82.9	%	66.5	%
Real estate	4.5		12.1
Banks and finance companies	4.2		1.0
Other	8.4		20.4
Total commercial criticized finance receivables and loans	100.0	%	100.0	%