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)	March 31, 2015		December 31, 2014
Consumer automotive (a)	$	57,447	$	56,570
Consumer mortgage (b)(c)	7,653		7,474
Commercial
Commercial and industrial
Automotive	29,544		30,871
Other	2,004		1,882
Commercial Real Estate — Automotive	3,209		3,151
Total commercial	34,757		35,904
Total finance receivables and loans (d)	$	99,857	$	99,948


(a)	Includes $68 million and $35 million of fair value adjustment for loans in hedge accounting relationships at March 31, 2015, and December 31, 2014, respectively. Refer to Note 20 for additional information.


(b)	Includes loans originated as interest-only mortgage loans of $1.1 billion and $1.2 billion at March 31, 2015, and December 31, 2014, respectively, 17% of which are expected to start principal amortization in 2015, 32% in 2016, 21% in 2017, 2% in 2018, and 5% thereafter.


(c)	Includes consumer mortgages at a fair value of $1 million at both March 31, 2015, and December 31, 2014, 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 $180 million and $266 million at March 31, 2015, and December 31, 2014, respectively.

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



Three months ended March 31, 2015 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at January 1, 2015	$	685		$	152		$	140		$	977
Charge-offs	(193		)	(22		)	—			(215		)
Recoveries	61			3			1			65
Net charge-offs	(132		)	(19		)	1			(150		)
Provision for loan losses	158			(5		)	(37		)	116
Other (a)	—			(9		)	(1		)	(10		)
Allowance at March 31, 2015	$	711		$	119		$	103		$	933
Allowance for loan losses
Individually evaluated for impairment	$	21		$	54		$	15		$	90
Collectively evaluated for impairment	690			65			88			843
Loans acquired with deteriorated credit quality	—			—			—			—
Finance receivables and loans at historical cost
Ending balance	$	57,447		$	7,652		$	34,757		$	99,856
Individually evaluated for impairment	278			253			65			596
Collectively evaluated for impairment	57,169			7,399			34,692			99,260
Loans acquired with deteriorated credit quality	—			—			—			—


(a)	Primarily related to the transfer of finance receivables and loans from held-for-investment to held-for-sale.



Three months ended March 31, 2014 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at January 1, 2014	$	673		$	389		$	146		$	1,208
Charge-offs	(180		)	(15		)	(1		)	(196		)
Recoveries	59			3			1			63
Net charge-offs	(121		)	(12		)	—			(133		)
Provision for loan losses	163			(23		)	(3		)	137
Other (a)	—			(21		)	1			(20		)
Allowance at March 31, 2014	$	715		$	333		$	144		$	1,192
Allowance for loan losses
Individually evaluated for impairment	$	23		$	200		$	25		$	248
Collectively evaluated for impairment	692			133			119			944
Loans acquired with deteriorated credit quality	—			—			—			—
Finance receivables and loans at historical cost
Ending balance	$	56,775		$	8,137		$	34,711		$	99,623
Individually evaluated for impairment	290			935			173			1,398
Collectively evaluated for impairment	56,480			7,202			34,538			98,220
Loans acquired with deteriorated credit quality	5			—			—			5


(a)	Primarily related to the transfer of finance receivables and loans from held-for-investment to held-for-sale.

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 March 31,
($ in millions)	2015		2014
Consumer mortgage	$	69	$	40
Total sales and transfers	$	69	$	40

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



	Three months ended March 31,
($ in millions)	2015		2014
Consumer mortgage	$	654	$	—
Total purchases of finance receivables and loans	$	654	$	—

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
March 31, 2015
Consumer automotive	$	968	$	182	$	148	$	1,298	$	56,149	$	57,447
Consumer mortgage	87		22		107		216		7,436		7,652
Commercial
Commercial and industrial
Automotive	—		—		8		8		29,536		29,544
Other	—		—		—		—		2,004		2,004
Commercial real estate — Automotive	—		—		—		—		3,209		3,209
Total commercial	—		—		8		8		34,749		34,757
Total consumer and commercial	$	1,055	$	204	$	263	$	1,522	$	98,334	$	99,856
December 31, 2014
Consumer automotive	$	1,340	$	293	$	164	$	1,797	$	54,773	$	56,570
Consumer mortgage	76		25		124		225		7,248		7,473
Commercial
Commercial and industrial
Automotive	—		9		—		9		30,862		30,871
Other	—		—		—		—		1,882		1,882
Commercial real estate — Automotive	—		—		—		—		3,151		3,151
Total commercial	—		9		—		9		35,895		35,904
Total consumer and commercial	$	1,416	$	327	$	288	$	2,031	$	97,916	$	99,947

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)	March 31, 2015		December 31, 2014
Consumer automotive	$	377	$	386
Consumer mortgage	151		177
Commercial
Commercial and industrial
Automotive	35		32
Other	26		46
Commercial real estate — Automotive	4		4
Total commercial	65		82
Total consumer and commercial finance receivables and loans	$	593	$	645

Management performs a quarterly analysis of the consumer automotive, 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 following tables present the population of loans by quality indicators for our consumer automotive, 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 2014 Annual Report on Form 10-K for additional information.



	March 31, 2015						December 31, 2014
($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automotive	$	57,070	$	377	$	57,447	$	56,184	$	386	$	56,570
Consumer mortgage	7,501		151		7,652		7,296		177		7,473

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.



	March 31, 2015						December 31, 2014
($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial
Commercial and industrial
Automotive	$	27,823	$	1,721	$	29,544	$	29,150	$	1,721	$	30,871
Other	1,503		501		2,004		1,509		373		1,882
Commercial real estate — Automotive	3,059		150		3,209		3,015		136		3,151
Total commercial	$	32,385	$	2,372	$	34,757	$	33,674	$	2,230	$	35,904


(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 2014 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
March 31, 2015
Consumer automotive	$	278	$	278	$	—	$	278	$	21
Consumer mortgage	254		253		62		191		54
Commercial
Commercial and industrial
Automotive	35		35		5		30		6
Other	26		26		—		26		8
Commercial real estate — Automotive	4		4		1		3		1
Total commercial	65		65		6		59		15
Total consumer and commercial finance receivables and loans	$	597	$	596	$	68	$	528	$	90
December 31, 2014
Consumer automotive	$	282	$	282	$	—	$	282	$	23
Consumer mortgage	340		336		86		250		62
Commercial
Commercial and industrial
Automotive	32		32		4		28		5
Other	46		46		—		46		15
Commercial real estate — Automotive	4		4		1		3		1
Total commercial	82		82		5		77		21
Total consumer and commercial finance receivables and loans	$	704	$	700	$	91	$	609	$	106

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



	2015				2014
Three months ended March 31, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automotive	$	290	$	4	$	294	$	4
Consumer mortgage	311		2		928		8
Commercial
Commercial and industrial
Automotive	34		—		104		1
Other	40		3		74		—
Commercial real estate — Automotive	4		—		11		—
Total commercial	78		3		189		1
Total consumer and commercial finance receivables and loans	$	679	$	9	$	1,411	$	13

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 automotive 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 $557 million and $681 million at March 31, 2015, and December 31, 2014, respectively. The decrease was primarily due to the whole-loan sale of consumer mortgage TDRs. Refer to Note 1 to the Consolidated Financial Statements in our 2014 Annual Report on Form 10-K 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.



	2015					2014
Three months ended March 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 automotive	4,055	$	63	$	53	5,359	$	84	$	71
Consumer mortgage	40	7		6		218	49		45
Commercial
Commercial and industrial
Automotive	—	—		—		3	23		23
Other	—	—		—		3	48		48
Total commercial	—	—		—		6	71		71
Total consumer and commercial finance receivables and loans	4,095	$	70	$	59	5,583	$	204	$	187

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 2014 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.



	2015					2014
Three months ended March 31, ($ in millions)	Number of loans	Carrying value before allowance		Charge-off amount		Number of loans	Carrying value before allowance		Charge-off amount
Consumer automotive	1,581	$	19	$	11	1,614	$	20	$	10
Consumer mortgage	4	—		—		2	1		—
Commercial	—	—		—		—	—		—
Total consumer and commercial finance receivables and loans	1,585	$	19	$	11	1,616	$	21	$	10

At March 31, 2015, there were no commercial commitments to lend additional funds to borrowers owing receivables whose terms had been modified in a TDR. At December 31, 2014, commercial commitments to lend additional funds to borrowers owing receivables whose terms had been modified in a TDR were $4 million.