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)	September 30, 2014		December 31, 2013
Consumer automobile (a)	$	58,675	$	56,417
Consumer mortgage (b)(c)	7,595		8,444
Commercial
Commercial and industrial
Automobile	28,453		30,948
Other	1,756		1,664
Commercial Real Estate — Automobile	3,039		2,855
Total commercial	33,248		35,467
Total finance receivables and loans (d)	$	99,518	$	100,328


(a)	Includes $16 million and $1 million of fair value adjustment for loans in hedge accounting relationships at September 30, 2014, and December 31, 2013, respectively. Refer to Note 19 for additional information.


(b)	Includes interest-only mortgage loans of $1.3 billion and $1.5 billion at September 30, 2014, and December 31, 2013, respectively, the majority of which are expected to start principal amortization in 2015 or beyond.


(c)	Includes consumer mortgages at a fair value of $1 million at both September 30, 2014, and December 31, 2013, as a result of fair value option election.


(d)	Totals are net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $392 million and $595 million at September 30, 2014, and December 31, 2013, respectively.

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



Three months ended September 30, 2014 ($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at July 1, 2014	$	729		$	302		$	140		$	1,171
Charge-offs	(188		)	(13		)	—			(201		)
Recoveries	51			1			—			52
Net charge-offs	(137		)	(12		)	—			(149		)
Provision for loan losses	112			(7		)	(3		)	102
Other	(11		)	—			—			(11		)
Allowance at September 30, 2014	$	693		$	283		$	137		$	1,113



Three months ended September 30, 2013 ($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at July 1, 2013	$	610		$	431		$	142		$	1,183
Charge-offs	(168		)	(16		)	—			(184		)
Recoveries	53			5			—			58
Net charge-offs	(115		)	(11		)	—			(126		)
Provision for loan losses	156			(12		)	(3		)	141
Other	—			(1		)	1			—
Allowance at September 30, 2013	$	651		$	407		$	140		$	1,198



Nine months ended September 30, 2014 ($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at January 1, 2014	$	673		$	389		$	146		$	1,208
Charge-offs	(511		)	(38		)	(5		)	(554		)
Recoveries	170			6			11			187
Net charge-offs	(341		)	(32		)	6			(367		)
Provision for loan losses	372			(55		)	(15		)	302
Other	(11		)	(19		)	—			(30		)
Allowance at September 30, 2014	$	693		$	283		$	137		$	1,113
Allowance for loan losses
Individually evaluated for impairment	$	25		$	180		$	15		$	220
Collectively evaluated for impairment	668			103			122			893
Loans acquired with deteriorated credit quality	—			—			—			—
Finance receivables and loans at historical cost
Ending balance	58,675			7,594			33,248			99,517
Individually evaluated for impairment	289			904			73			1,266
Collectively evaluated for impairment	58,384			6,690			33,175			98,249
Loans acquired with deteriorated credit quality	2			—			—			2



Nine months ended September 30, 2013 ($ in millions)	Consumer automobile			Consumer mortgage			Commercial			Total
Allowance at January 1, 2013	$	575		$	452		$	143		$	1,170
Charge-offs	(443		)	(71		)	(3		)	(517		)
Recoveries	155			13			6			174
Net charge-offs	(288		)	(58		)	3			(343		)
Provision for loan losses	355			14			(8		)	361
Other	9			(1		)	2			10
Allowance at September 30, 2013	$	651		$	407		$	140		$	1,198
Allowance for loan losses
Individually evaluated for impairment	$	22		$	199		$	28		$	249
Collectively evaluated for impairment	629			208			112			949
Loans acquired with deteriorated credit quality	—			—			—			—
Finance receivables and loans at historical cost
Ending balance	56,450			8,772			30,059			95,281
Individually evaluated for impairment	269			916			251			1,436
Collectively evaluated for impairment	56,170			7,856			29,808			93,834
Loans acquired with deteriorated credit quality	11			—			—			11

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 September 30,				Nine months ended September 30,
($ in millions)	2014		2013		2014		2013
Consumer automobile	$	1,562	$	—	$	1,562	$	—
Consumer mortgage	—		—		40		—
Commercial	—		2		—		47
Total sales and transfers	$	1,562	$	2	$	1,602	$	47

The following table presents information about significant purchases of finance receivables and loans.



	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2014		2013		2014		2013
Consumer mortgage	$	83	$	—	$	98	$	—
Total purchases	$	83	$	—	$	98	$	—

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
September 30, 2014
Consumer automobile	$	1,179	$	243	$	145	$	1,567	$	57,108	$	58,675
Consumer mortgage (a)	110		41		138		289		7,305		7,594
Commercial
Commercial and industrial
Automobile	—		—		—		—		28,453		28,453
Other	—		—		—		—		1,756		1,756
Commercial real estate — Automobile	—		—		—		—		3,039		3,039
Total commercial	—		—		—		—		33,248		33,248
Total consumer and commercial	$	1,289	$	284	$	283	$	1,856	$	97,661	$	99,517
December 31, 2013
Consumer automobile	$	1,145	$	255	$	157	$	1,557	$	54,860	$	56,417
Consumer mortgage	82		31		124		237		8,206		8,443
Commercial
Commercial and industrial
Automobile	—		—		36		36		30,912		30,948
Other	—		—		—		—		1,664		1,664
Commercial real estate — Automobile	—		—		6		6		2,849		2,855
Total commercial	—		—		42		42		35,425		35,467
Total consumer and commercial	$	1,227	$	286	$	323	$	1,836	$	98,491	$	100,327


(a)	During the three months ended September 30, 2014, we completed a sub-servicing transfer of our mortgage held-for-investment loan portfolio. This caused what is expected to be a temporary increase in the delinquency levels at September 30, 2014, and is not believed to be indicative of a degradation in underlying credit quality.

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)	September 30, 2014		December 31, 2013
Consumer automobile	$	355	$	329
Consumer mortgage	193		192
Commercial
Commercial and industrial
Automobile	21		116
Other	51		74
Commercial real estate — Automobile	1		14
Total commercial	73		204
Total consumer and commercial finance receivables and loans	$	621	$	725

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 for loan losses 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 2013 Annual Report on Form 10-K for additional information.



	September 30, 2014						December 31, 2013
($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automobile	$	58,320	$	355	$	58,675	$	56,088	$	329	$	56,417
Consumer mortgage	7,401		193		7,594		8,251		192		8,443

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.



	September 30, 2014						December 31, 2013
($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial
Commercial and industrial
Automobile	$	26,879	$	1,574	$	28,453	$	29,194	$	1,754	$	30,948
Other	1,501		255		1,756		1,388		276		1,664
Commercial real estate — Automobile	2,938		101		3,039		2,770		85		2,855
Total commercial	$	31,318	$	1,930	$	33,248	$	33,352	$	2,115	$	35,467


(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 2013 Annual Report on Form 10-K.

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
September 30, 2014
Consumer automobile	$	289	$	289	$	—	$	289	$	25
Consumer mortgage	909		904		128		776		180
Commercial
Commercial and industrial
Automobile	21		21		4		17		1
Other	51		51		—		51		14
Commercial real estate — Automobile	1		1		1		—		—
Total commercial	73		73		5		68		15
Total consumer and commercial finance receivables and loans	$	1,271	$	1,266	$	133	$	1,133	$	220
December 31, 2013
Consumer automobile	$	281	$	281	$	—	$	281	$	23
Consumer mortgage	924		919		128		791		199
Commercial
Commercial and industrial
Automobile	116		116		57		59		7
Other	74		74		—		74		16
Commercial real estate — Automobile	14		14		9		5		3
Total commercial	204		204		66		138		26
Total consumer and commercial finance receivables and loans	$	1,409	$	1,404	$	194	$	1,210	$	248

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



	2014				2013
Three months ended September 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automobile	$	297	$	5	$	275	$	5
Consumer mortgage	914		7		924		7
Commercial
Commercial and industrial
Automobile	32		—		163		2
Other	51		—		84		—
Commercial real estate — Automobile	3		—		29		—
Total commercial	86		—		276		2
Total consumer and commercial finance receivables and loans	$	1,297	$	12	$	1,475	$	14



	2014				2013
Nine months ended September 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automobile	$	298	$	14	$	274	$	14
Consumer mortgage	923		22		905		22
Commercial
Commercial and industrial
Automobile	68		1		160		5
Other	62		4		69		1
Commercial real estate — Automobile	7		—		33		1
Total commercial	137		5		262		7
Total consumer and commercial finance receivables and loans	$	1,358	$	41	$	1,441	$	43

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 may offer several types of assistance to aid our customers, including extension of the loan 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 at both September 30, 2014, and December 31, 2013. Refer to Note 1 to the Consolidated Financial Statements in our 2013 Annual Report on Form 10-K for additional information.

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



	2014					2013
Three months ended September 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	4,361	$	72	$	63	4,610	$	69	$	57
Consumer mortgage	37	7		6		121	33		32
Commercial
Commercial and industrial
Automobile	—	—		—		2	5		5
Other	—	—		—		1	27		27
Commercial real estate — Automobile	—	—		—		1	7		7
Total commercial	—	—		—		4	39		39
Total consumer and commercial finance receivables and loans	4,398	$	79	$	69	4,735	$	141	$	128



	2014					2013
Nine months ended September 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	13,681	$	223	$	193	14,309	$	216	$	182
Consumer mortgage	350	71		66		853	246		203
Commercial
Commercial and industrial
Automobile	3	23		23		8	37		37
Other	3	48		48		4	80		78
Commercial real estate — Automobile	—	—		—		5	20		20
Total commercial	6	71		71		17	137		135
Total consumer and commercial finance receivables and loans	14,037	$	365	$	330	15,179	$	599	$	520

The following tables present 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 2013 Annual Report on Form 10-K for additional information) except for commercial finance receivables and loans, where redefault is defined as 90 days past due.



	2014					2013
Three months ended September 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	1,790	$	22	$	12	1,562	$	19	$	9
Consumer mortgage	5	1		—		4	2		—
Commercial
Commercial and industrial — Automobile	—	—		—		—	—		—
Commercial real estate — Automobile	—	—		—		—	—		—
Total commercial	—	—		—		—	—		—
Total consumer and commercial finance receivables and loans	1,795	$	23	$	12	1,566	$	21	$	9



	2014					2013
Nine months ended September 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	5,020	$	62	$	33	4,309	$	53	$	26
Consumer mortgage	10	2		—		16	4		—
Commercial
Commercial and industrial — Automobile	—	—		—		—	—		—
Commercial real estate — Automobile	—	—		—		—	—		—
Total commercial	—	—		—		—	—		—
Total consumer and commercial finance receivables and loans	5,030	$	64	$	33	4,325	$	57	$	26

At September 30, 2014, and December 31, 2013, commercial commitments to lend additional funds to borrowers owing receivables whose terms had been modified in a TDR were $4 million and $26 million, respectively.