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.



($ in millions)	June 30, 2013		December 31, 2012
Consumer automobile	$	56,028	$	53,715
Consumer mortgage
1st Mortgage	6,774		7,173
Home equity	2,496		2,648
Total consumer mortgage	9,270		9,821
Commercial
Commercial and industrial
Automobile	27,518		30,270
Mortgage	—		—
Other	1,502		2,697
Commercial real estate
Automobile	2,675		2,552
Mortgage	—		—
Total commercial	31,695		35,519
Total finance receivables and loans (a) (b)	$	96,993	$	99,055


(a)	Totals are net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $781 million and $895 million at June 30, 2013, and December 31, 2012, respectively.


(b)	Includes $1 million and $2 million of international consumer automobile loans, and $15 million and $18 million of international commercial other loans at June 30, 2013, and December 31, 2012, respectively.

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



Three months ended June 30, 2013 ($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at April 1, 2013	$	599		$	451		$	147		$	1,197
Charge-offs (a)	(133		)	(31		)	(2		)	(166		)
Recoveries	53			5			5			63
Net charge-offs	(80		)	(26		)	3			(103		)
Provision for loan losses	92			6			(9		)	89
Other	(1		)	—			1			—
Allowance at June 30, 2013	$	610		$	431		$	142		$	1,183


(a)	Includes international commercial charge-offs of $1 million.



Three months ended June 30, 2012 ($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at April 1, 2012	$	832		$	501		$	213		$	1,546
Charge-offs (a)	(130		)	(41		)	(3		)	(174		)
Recoveries (b)	60			4			22			86
Net charge-offs	(70		)	(37		)	19			(88		)
Provision for loan losses	18			21			(6		)	33
Other (c)	(2		)	(13		)	(49		)	(64		)
Allowance at June 30, 2012	$	778		$	472		$	177		$	1,427


(a)	Includes international consumer automobile and international commercial charge-offs of $45 million and $2 million, respectively.


(b)	Includes international consumer automobile and international commercial recoveries of $18 million and $20 million, respectively.


(c)	Includes negative provision for loan losses relating to discontinued operations of $4 million.



Six months ended June 30, 2013 ($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at January 1, 2013	$	575		$	452		$	143		$	1,170
Charge-offs (a)	(275		)	(55		)	(3		)	(333		)
Recoveries	102			8			6			116
Net charge-offs	(173		)	(47		)	3			(217		)
Provision for loan losses	199			26			(5		)	220
Other	9			—			1			10
Allowance at June 30, 2013	$	610		$	431		$	142		$	1,183
Allowance for loan losses
Individually evaluated for impairment	$	22		$	214		$	26		$	262
Collectively evaluated for impairment	588			217			116			921
Loans acquired with deteriorated credit quality	—			—			—			—
Finance receivables and loans at historical cost
Ending balance	56,028			9,270			31,695			96,993
Individually evaluated for impairment	268			936			305			1,509
Collectively evaluated for impairment	55,744			8,334			31,390			95,468
Loans acquired with deteriorated credit quality	16			—			—			16


(a)	Includes international commercial charge-offs of $1 million.



Six months ended June 30, 2012 ($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at January 1, 2012	$	766		$	516		$	221		$	1,503
Charge-offs (a)	(266		)	(86		)	(5		)	(357		)
Recoveries (b)	122			6			34			162
Net charge-offs	(144		)	(80		)	29			(195		)
Provision for loan losses	101			48			(18		)	131
Other (c)	55			(12		)	(55		)	(12		)
Allowance at June 30, 2012	$	778		$	472		$	177		$	1,427
Allowance for loan losses
Individually evaluated for impairment	$	9		$	166		$	32		$	207
Collectively evaluated for impairment	763			306			145			1,214
Loans acquired with deteriorated credit quality	6			—			—			6
Finance receivables and loans at historical cost
Ending balance	68,136			9,823			41,954			119,913
Individually evaluated for impairment	97			688			1,525			2,310
Collectively evaluated for impairment	67,980			9,135			40,429			117,544
Loans acquired with deteriorated credit quality	59			—			—			59


(a)	Includes international consumer automobile and international commercial charge-offs of $81 million and $2 million, respectively.


(b)	Includes international consumer automobile and international commercial recoveries of $34 million and $25 million, respectively.


(c)	Includes provision for loan losses relating to discontinued operations of $37 million.

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.



	Three months ended June 30,				Six months ended June 30,
($ in millions)	2013		2012		2013		2012
Consumer automobile	$	—	$	1,960	$	—	$	1,960
Consumer mortgage	—		—		—		40
Commercial	27		—		45		—
Total sales and transfers	$	27	$	1,960	$	45	$	2,000

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.



($ 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
June 30, 2013
Consumer automobile	$	868	$	193	$	134	$	1,195	$	54,833	$	56,028
Consumer mortgage
1st Mortgage	79		28		131		238		6,536		6,774
Home equity	12		5		12		29		2,467		2,496
Total consumer mortgage	91		33		143		267		9,003		9,270
Commercial
Commercial and industrial
Automobile	—		—		20		20		27,498		27,518
Mortgage	—		—		—		—		—		—
Other	—		—		—		—		1,502		1,502
Commercial real estate
Automobile	—		—		8		8		2,667		2,675
Mortgage	—		—		—		—		—		—
Total commercial	—		—		28		28		31,667		31,695
Total consumer and commercial	$	959	$	226	$	305	$	1,490	$	95,503	$	96,993
December 31, 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

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.



($ in millions)	June 30, 2013		December 31, 2012
Consumer automobile	$	277	$	260
Consumer mortgage
1st Mortgage	388		342
Home equity	36		40
Total consumer mortgage	424		382
Commercial
Commercial and industrial
Automobile	186		146
Mortgage	—		—
Other	88		33
Commercial real estate
Automobile	31		37
Mortgage	—		—
Total commercial	305		216
Total consumer and commercial finance receivables and loans	$	1,006	$	858

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 to the Consolidated Financial Statements in our 2012 Annual Report for additional information.



	June 30, 2013						December 31, 2012
($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automobile	$	55,751	$	277	$	56,028	$	53,455	$	260	$	53,715
Consumer mortgage
1st Mortgage	6,386		388		6,774		6,831		342		7,173
Home equity	2,460		36		2,496		2,608		40		2,648
Total consumer mortgage	$	8,846	$	424	$	9,270	$	9,439	$	382	$	9,821

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.



	June 30, 2013						December 31, 2012
($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial
Commercial and industrial
Automobile	$	26,118	$	1,400	$	27,518	$	28,978	$	1,292	$	30,270
Mortgage	—		—		—		—		—		—
Other	1,212		290		1,502		2,417		280		2,697
Commercial real estate
Automobile	2,593		82		2,675		2,440		112		2,552
Mortgage	—		—		—		—		—		—
Total commercial	$	29,923	$	1,772	$	31,695	$	33,835	$	1,684	$	35,519


(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 to the Consolidated Financial Statements in our 2012 Annual Report for additional information.

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



($ in millions)	Unpaid principal balance		Carrying value before allowance		Impaired with no allowance		Impaired with an allowance		Allowance for impaired loans
June 30, 2013
Consumer automobile	$	268	$	268	$	—	$	268	$	22
Consumer mortgage
1st Mortgage	795		789		126		663		162
Home equity	146		147		2		145		52
Total consumer mortgage	941		936		128		808		214
Commercial
Commercial and industrial
Automobile	186		186		69		117		9
Mortgage	—		—		—		—		—
Other	88		88		17		71		7
Commercial real estate
Automobile	31		31		8		23		10
Mortgage	—		—		—		—		—
Total commercial	305		305		94		211		26
Total consumer and commercial finance receivables and loans	$	1,514	$	1,509	$	222	$	1,287	$	262
December 31, 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

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



	2013				2012
Three months ended June 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automobile	$	275	$	5	$	94	$	3
Consumer mortgage
1st Mortgage	781		5		574		7
Home equity	147		2		96		1
Total consumer mortgage	928		7		670		8
Commercial
Commercial and industrial
Automobile	177		1		185		3
Mortgage	—		—		15		—
Other	68		1		25		5
Commercial real estate
Automobile	35		1		54		1
Mortgage	—		—		7		—
Total commercial	280		3		286		9
Total consumer and commercial finance receivables and loans	$	1,483	$	15	$	1,050	$	20



	2013				2012
Six months ended June 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automobile	$	273	$	9	$	88	$	5
Consumer mortgage
1st Mortgage	760		12		546		11
Home equity	139		3		97		2
Total consumer mortgage	899		15		643		13
Commercial
Commercial and industrial
Automobile	167		3		197		5
Mortgage	—		—		9		—
Other	63		1		29		5
Commercial real estate
Automobile	35		1		58		1
Mortgage	—		—		10		—
Total commercial	265		5		303		11
Total consumer and commercial finance receivables and loans	$	1,437	$	29	$	1,034	$	29

Troubled Debt Restructurings

Troubled debt restructurings (TDRs) are loan modifications where concessions were granted to borrowers experiencing financial difficulties. Numerous initiatives 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 extension of 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 $1.3 billion and $1.2 billion at June 30, 2013, and December 31, 2012, respectively. Refer to Note 1 to the Consolidated Financial Statements in our 2012 Annual Report for additional information.

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



	2013 (a)					2012
Three months ended June 30, ($ 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	4,414	$	68	$	57	1,980	$	25	$	25
Consumer mortgage
1st Mortgage	144	42		35		845	231		161
Home equity	43	2		2		54	3		3
Total consumer mortgage	187	44		37		899	234		164
Commercial
Commercial and industrial
Automobile	2	7		7		3	5		5
Mortgage	—	—		—		—	—		—
Other	2	20		20		—	—		—
Commercial real estate
Automobile	1	2		2		3	7		6
Mortgage	—	—		—		—	—		—
Total commercial	5	29		29		6	12		11
Total consumer and commercial finance receivables and loans	4,606	$	141	$	123	2,885	$	271	$	200


(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.



	2013 (a)					2012
Six months ended June 30, ($ 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	9,699	$	147	$	125	4,772	$	58	$	58
Consumer mortgage
1st Mortgage	618	207		165		922	259		188
Home equity	114	6		6		227	13		12
Total consumer mortgage	732	213		171		1,149	272		200
Commercial
Commercial and industrial
Automobile	6	32		32		6	8		8
Mortgage	—	—		—		—	—		—
Other	3	53		51		—	—		—
Commercial real estate
Automobile	4	13		13		4	9		8
Mortgage	—	—		—		—	—		—
Total commercial	13	98		96		10	17		16
Total consumer and commercial finance receivables and loans	10,444	$	458	$	392	5,931	$	347	$	274


(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 TDR. Redefault is when finance receivables and loans meet the requirements for evaluation under our charge-off policy (Refer to Note 1 to the Consolidated Financial Statements in our 2012 Annual Report for additional information) except for commercial finance receivables and loans where redefault is defined as 90 days past due.



	2013 (a)					2012
Three months ended June 30, ($ in millions)	Number of loans	Carrying value before allowance		Charge-off amount		Number of loans	Carrying value before allowance		Charge-off amount
Consumer automobile	1,414	$	18	$	9	161	$	1	$	1
Consumer mortgage
1st Mortgage	2	—		—		7	2		1
Home equity	—	—		—		9	—		—
Total consumer mortgage	2	—		—		16	2		1
Commercial
Commercial and industrial
Automobile	—	—		—		2	1		—
Commercial real estate
Automobile	—	—		—		1	2		—
Total commercial	—	—		—		3	3		—
Total consumer and commercial finance receivables and loans	1,416	$	18	$	9	180	$	6	$	2


(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.



	2013 (a)					2012
Six months ended June 30, ($ in millions)	Number of loans	Carrying value before allowance		Charge-off amount		Number of loans	Carrying value before allowance		Charge-off amount
Consumer automobile	2,747	$	34	$	17	369	$	3	$	2
Consumer mortgage
1st Mortgage	10	2		—		12	3		1
Home equity	2	—		—		13	1		1
Total consumer mortgage	12	2		—		25	4		2
Commercial
Commercial and industrial
Automobile	—	—		—		4	3		—
Commercial real estate
Automobile	—	—		—		1	2		—
Total commercial	—	—		—		5	5		—
Total consumer and commercial finance receivables and loans	2,759	$	36	$	17	399	$	12	$	4


(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 June 30, 2013, and December 31, 2012, commercial commitments to lend additional funds to debtors owing receivables whose terms had been modified in a TDR were $18 million and $25 million, respectively.

Higher-Risk Mortgage Concentration Risk

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.



($ in millions)	June 30, 2013		December 31, 2012
Interest-only mortgage loans (a)	$	1,746	$	2,063
Below-market rate (teaser) mortgages	177		192
Total higher-risk mortgage finance receivables and loans	$	1,923	$	2,255


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