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.



	2012						2011
December 31, ($ in millions)	Domestic		Foreign		Total		Domestic		Foreign		Total
Consumer automobile	$	53,713	$	2	$	53,715	$	46,576	$	16,883	$	63,459
Consumer mortgage
1st Mortgage	7,173		—		7,173		6,867		24		6,891
Home equity	2,648		—		2,648		3,102		—		3,102
Total consumer mortgage	9,821		—		9,821		9,969		24		9,993
Commercial
Commercial and industrial
Automobile	30,270		—		30,270		26,552		8,265		34,817
Mortgage	—		—		—		1,887		24		1,911
Other	2,679		18		2,697		1,178		63		1,241
Commercial real estate
Automobile	2,552		—		2,552		2,331		154		2,485
Mortgage	—		—		—		—		14		14
Total commercial	35,501		18		35,519		31,948		8,520		40,468
Loans at fair value (a)	—		—		—		603		232		835
Total finance receivables and loans (b)	$	99,035	$	20	$	99,055	$	89,096	$	25,659	$	114,755


(a)	Includes domestic consumer mortgages at fair value as a result of fair value option election. Refer to Note 25 for additional information.


(b)	Totals are net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $895 million and $2.9 billion at December 31, 2012, and December 31, 2011, 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, 2012	$	766		$	516		$	221		$	1,503
Charge-offs
Domestic	(438		)	(149		)	(8		)	(595		)
Foreign	(178		)	—			(3		)	(181		)
Total charge-offs	(616		)	(149		)	(11		)	(776		)
Recoveries
Domestic	171			11			11			193
Foreign	76			—			33			109
Total recoveries	247			11			44			302
Net charge-offs	(369		)	(138		)	33			(474		)
Provision for loan losses	257			86			(14		)	329
Foreign provision for loan losses	115			—			(50		)	65
Deconsolidation of ResCap	—			(9		)	—			(9		)
Other (a)	(194		)	(3		)	(47		)	(244		)
Allowance at December 31, 2012	$	575		$	452		$	143		$	1,170
Allowance for loan losses
Individually evaluated for impairment	$	16		$	186		$	26		$	228
Collectively evaluated for impairment	556			266			117			939
Loans acquired with deteriorated credit quality	3			—			—			3
Finance receivables and loans at historical cost
Ending balance	53,715			9,821			35,519			99,055
Individually evaluated for impairment	260			873			1,538			2,671
Collectively evaluated for impairment	53,425			8,948			33,981			96,354
Loans acquired with deteriorated credit quality	30			—			—			30


(a)	Other includes the allowance of foreign Automotive Finance operations finance receivables and loans that were reclassified as discontinued operations.



($ 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	102			129			(43		)	188
Foreign provision for loan losses	52			—			(21		)	31
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

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)	2012		2011
Consumer automobile	$	1,960	$	3,279
Consumer mortgage	40		107
Commercial	96		34
Total sales and transfers	$	2,096	$	3,420

The following table presents an analysis of our past due finance receivables and loans, net, 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
2012
Consumer automobile	$	920	$	213	$	138	$	1,271	$	52,444	$	53,715
Consumer mortgage
1st Mortgage	66		37		156		259		6,914		7,173
Home equity	15		6		18		39		2,609		2,648
Total consumer mortgage	81		43		174		298		9,523		9,821
Commercial
Commercial and industrial
Automobile	—		—		16		16		30,254		30,270
Mortgage	—		—		—		—		—		—
Other	—		—		1		1		2,696		2,697
Commercial real estate
Automobile	—		—		8		8		2,544		2,552
Mortgage	—		—		—		—		—		—
Total commercial	—		—		25		25		35,494		35,519
Total consumer and commercial	$	1,001	$	256	$	337	$	1,594	$	97,461	$	99,055
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

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)	2012		2011
Consumer automobile	$	260	$	228
Consumer mortgage
1st Mortgage	342		281
Home equity	40		58
Total consumer mortgage	382		339
Commercial
Commercial and industrial
Automobile	146		223
Mortgage	—		—
Other	33		37
Commercial real estate
Automobile	37		67
Mortgage	—		12
Total commercial	216		339
Total consumer and commercial finance receivables and loans	$	858	$	906

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 the population of loans by quality indicators for our 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. Nonperforming loans include finance receivables and loans on nonaccrual status when the principal or interest has been delinquent for 90 days or when full collection is determined not to be probable. Refer to Note 1 for additional information.



	2012						2011
December 31, ($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automobile	$	53,455	$	260	$	53,715	$	63,231	$	228	$	63,459
Consumer mortgage
1st Mortgage	6,831		342		7,173		6,610		281		6,891
Home equity	2,608		40		2,648		3,044		58		3,102
Total consumer mortgage	$	9,439	$	382	$	9,821	$	9,654	$	339	$	9,993

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.



	2012						2011
December 31, ($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial
Commercial and industrial
Automobile	$	28,978	$	1,292	$	30,270	$	32,464	$	2,353	$	34,817
Mortgage	—		—		—		1,760		151		1,911
Other	2,417		280		2,697		883		358		1,241
Commercial real estate
Automobile	2,440		112		2,552		2,305		180		2,485
Mortgage	—		—		—		—		14		14
Total commercial	$	33,835	$	1,684	$	35,519	$	37,412	$	3,056	$	40,468


(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 have a 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
2012
Consumer automobile	$	260	$	260	$	90	$	170	$	16
Consumer mortgage
1st Mortgage	811		725		123		602		137
Home equity	147		148		1		147		49
Total consumer mortgage	958		873		124		749		186
Commercial
Commercial and industrial
Automobile	146		146		54		92		7
Mortgage	—		—		—		—		—
Other	33		33		9		24		7
Commercial real estate
Automobile	37		37		9		28		12
Mortgage	—		—		—		—		—
Total commercial	216		216		72		144		26
Total consumer and commercial finance receivables and loans	$	1,434	$	1,349	$	286	$	1,063	$	228
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

The following tables present average balance and interest income for our impaired finance receivables and loans.



	2012				2011				2010
Year ended December 31, ($ in millions)	Average balance		Interest income		Average balance		Interest income		Average balance		Interest income
Consumer automobile	$	131	$	12	$	35	$	2	$	—	$	—
Consumer mortgage
1st Mortgage	598		24		463		18		405		15
Home equity	95		4		90		4		79		4
Total consumer mortgage	693		28		553		22		484		19
Commercial
Commercial and industrial
Automobile	178		8		303		19		335		13
Mortgage	5		—		19		6		53		2
Other	32		6		84		1		650		6
Commercial real estate
Automobile	64		1		126		7		275		3
Mortgage	6		—		40		1		137		6
Total commercial	285		15		572		34		1,450		30
Total consumer and commercial finance receivables and loans	$	1,109	$	55	$	1,160	$	58	$	1,934	$	49

Troubled Debt Restructurings

TDRs are loan modifications where concessions were granted to borrowers experiencing financial difficulties. Numerous initiatives, such as the Home Affordable Modification Program (HAMP) 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 maturity date and rewriting the loan terms. Total TDRs recorded at historical cost and reported at carrying value before allowance for loan losses were $1.2 billion at December 31, 2012, reflecting an increase of $441 million from December 31, 2011. 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.



	2012 (a)					2011
Year ended December 31, ($ in millions)	Number of loans	Pre-modification carrying value before allowance		Post-modification carrying value before allowance		Number of loans	Pre-modification carrying value before allowance		Post-modification carrying value before allowance
Consumer automobile	36,285	$	407	$	295	6,411	$	85	$	85
Consumer mortgage
1st Mortgage	1,664	412		327		375	133		132
Home equity	1,305	24		23		888	51		47
Total consumer mortgage	2,969	436		350		1,263	184		179
Commercial
Commercial and industrial
Automobile	9	15		15		2	5		5
Mortgage	—	—		—		1	38		28
Other	—	—		—		2	11		10
Commercial real estate
Automobile	8	14		13		5	12		11
Mortgage	—	—		—		2	4		3
Total commercial	17	29		28		12	70		57
Total consumer and commercial finance receivables and loans	39,271	$	872	$	673	7,686	$	339	$	321


(a)	Due to recent industry practice, bankruptcy loans that have not been reaffirmed have been included within our TDR population beginning in the fourth quarter of 2012.

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 redefault is defined as 90 days past due.



	2012 (a)					2011
Year ended December 31, ($ in millions)	Number of loans	Carrying value before allowance		Charge-off amount		Number of loans	Carrying value before allowance		Charge-off amount
Consumer automobile	2,290	$	26	$	12	420	$	4	$	2
Consumer mortgage
1st Mortgage	112	16		1		11	2		—
Home equity	41	3		2		28	2		1
Total consumer mortgage	153	19		3		39	4		1
Commercial
Commercial and industrial
Automobile	4	3		—		1	3		—
Commercial real estate
Automobile	3	3		—		—	—		—
Total commercial	7	6		—		1	3		—
Total consumer and commercial finance receivables and loans	2,450	$	51	$	15	460	$	11	$	3


(a)	Due to recent industry practice, bankruptcy loans that have not been reaffirmed have been included within our TDR population beginning in the fourth quarter of 2012.

At December 31, 2012, and December 31, 2011, commercial commitments to lend additional funds to debtors owing receivables whose terms had been modified in a troubled debt restructuring were $25 million and $45 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 21.0% of our total outstanding consumer loans at December 31, 2012.

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.



	2012 (a)				2011
December 31,	Automobile		1st Mortgage and home equity		Automobile		1st Mortgage and home equity
Texas	12.9	%	5.8	%	9.5	%	5.5	%
California	5.6		29.2		4.6		25.7
Florida	6.7		3.6		4.8		4.0
Michigan	5.0		4.1		4.0		4.8
Pennsylvania	5.2		1.6		3.6		1.6
Illinois	4.3		4.8		3.1		5.0
New York	4.6		2.0		3.5		2.3
Ohio	4.0		0.8		2.9		1.0
Georgia	3.7		1.9		2.5		1.8
North Carolina	3.3		2.0		2.2		2.1
Other United States	44.7		44.2		32.9		45.9
Foreign (b)	—		—		26.4		0.3
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, 2012.


(b)	Foreign consumer finance receivables and loans as of December 31, 2012, was $2 million. These remaining foreign balances are within Finland and the Czech Republic.

Consumer Higher-Risk Mortgage

The following table summarizes 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)	2012		2011
Interest-only mortgage loans (a)	$	2,063	$	2,947
Below-market rate (teaser) mortgages	192		248
Total higher-risk mortgage finance receivables and loans	$	2,255	$	3,195


(a)	The majority of the interest-only mortgage loans are expected to start principal amortization in 2015 or beyond.

The following table presents our five largest state 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		Total higher-risk mortgage loans
2012
California	$	500	$	60	$	560
Virginia	216		9		225
Maryland	166		5		171
Illinois	107		6		113
Michigan	106		5		111
Other United States	968		107		1,075
Total higher-risk mortgage loans	$	2,063	$	192	$	2,255
2011
California	$	748	$	78	$	826
Virginia	274		10		284
Maryland	217		6		223
Illinois	153		8		161
Michigan	199		9		208
Other United States	1,356		137		1,493
Total higher-risk mortgage loans	$	2,947	$	248	$	3,195

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,	2012		2011
Geographic region
Texas	13.0	%	12.4	%
Michigan	12.6		14.1
Florida	11.7		12.4
California	9.3		9.3
New York	4.9		3.5
Virginia	3.9		4.1
North Carolina	3.9		2.1
Pennsylvania	3.3		2.9
Georgia	3.0		2.5
Tennessee	2.3		1.8
Other United States	32.1		28.3
Foreign	—		6.6
Total commercial real estate finance receivables and loans	100.0	%	100.0	%
Property type
Automotive dealers	100.0	%	99.4	%
Other	—		0.6
Total 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,	2012		2011
Industry
Automotive	85.7	%	82.9	%
Manufacturing	5.5		1.8
Services	4.9		1.9
Other	3.9		13.4
Total commercial criticized finance receivables and loans	100.0	%	100.0	%