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, 2015		December 31, 2014
Consumer automotive (a)	$	63,610	$	56,570
Consumer mortgage (b)(c)	9,770		7,474
Commercial
Commercial and industrial
Automotive	29,020		30,871
Other	2,289		1,882
Commercial real estate — Automotive	3,302		3,151
Total commercial	34,611		35,904
Total finance receivables and loans (d)	$	107,991	$	99,948


(a)	Includes $107 million and $35 million of fair value adjustment for loans in hedge accounting relationships at September 30, 2015, and December 31, 2014, respectively. Refer to Note 20 for additional information.


(b)	Includes loans originated as interest-only mortgage loans of $1.0 billion and $1.2 billion at September 30, 2015, and December 31, 2014, respectively, 8% of which are expected to start principal amortization in the remainder of 2015, 33% in 2016, 21% in 2017, 2% in 2018, and 4% thereafter.


(c)	Includes consumer mortgages at a fair value of $1 million at both September 30, 2015, and December 31, 2014, as a result of fair value option election.


(d)	Totals include a net increase of $43 million at September 30, 2015, compared to a net reduction of $266 million at December 31, 2014, for unearned income, unamortized premiums and discounts, and deferred fees and costs.

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, 2015 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at July 1, 2015	$	767		$	119		$	88		$	974
Charge-offs	(220		)	(10		)	(1		)	(231		)
Recoveries	64			4			2			70
Net charge-offs	(156		)	(6		)	1			(161		)
Provision for loan losses	200			6			5			211
Other (a)	(7		)	—			1			(6		)
Allowance at September 30, 2015	$	804		$	119		$	95		$	1,018


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



Three months ended September 30, 2014 ($ in millions)	Consumer automotive			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 (a)	(11		)	—			—			(11		)
Allowance at September 30, 2014	$	693		$	283		$	137		$	1,113


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



Nine months ended September 30, 2015 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at January 1, 2015	$	685		$	152		$	140		$	977
Charge-offs	(579		)	(41		)	(1		)	(621		)
Recoveries	195			12			3			210
Net charge-offs	(384		)	(29		)	2			(411		)
Provision for loan losses	510			4			(47		)	467
Other (a)	(7		)	(8		)	—			(15		)
Allowance at September 30, 2015	$	804		$	119		$	95		$	1,018
Allowance for loan losses at September 30, 2015
Individually evaluated for impairment	$	22		$	48		$	19		$	89
Collectively evaluated for impairment	782			71			76			929
Loans acquired with deteriorated credit quality	—			—			—			—
Finance receivables and loans at historical cost at September 30, 2015
Ending balance	$	63,610		$	9,769		$	34,611		$	107,990
Individually evaluated for impairment	285			268			75			628
Collectively evaluated for impairment	63,325			9,501			34,536			107,362
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.



Nine months ended September 30, 2014 ($ in millions)	Consumer automotive			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 (a)	(11		)	(19		)	—			(30		)
Allowance at September 30, 2014	$	693		$	283		$	137		$	1,113
Allowance for loan losses at September 30, 2014
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 at September 30, 2014
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


(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 September 30,				Nine months ended September 30,
($ in millions)	2015		2014		2015		2014
Consumer automotive	$	704	$	1,562	$	704	$	1,562
Consumer mortgage	2		—		75		40
Commercial	1		—		1		—
Total sales and transfers	$	707	$	1,562	$	780	$	1,602

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)	2015		2014		2015		2014
Consumer automotive	$	272	$	—	$	272	$	—
Consumer mortgage	990		83		3,640		98
Total purchases of finance receivables and loans	$	1,262	$	83	$	3,912	$	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, 2015
Consumer automotive	$	1,439	$	310	$	180	$	1,929	$	61,681	$	63,610
Consumer mortgage	101		19		88		208		9,561		9,769
Commercial
Commercial and industrial
Automotive	—		—		6		6		29,014		29,020
Other	—		—		—		—		2,289		2,289
Commercial real estate — Automotive	—		—		—		—		3,302		3,302
Total commercial	—		—		6		6		34,605		34,611
Total consumer and commercial	$	1,540	$	329	$	274	$	2,143	$	105,847	$	107,990
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)	September 30, 2015		December 31, 2014
Consumer automotive	$	413	$	386
Consumer mortgage	149		177
Commercial
Commercial and industrial
Automotive	26		32
Other	45		46
Commercial real estate — Automotive	4		4
Total commercial	75		82
Total consumer and commercial finance receivables and loans	$	637	$	645

Management performs ongoing 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.



	September 30, 2015						December 31, 2014
($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automotive	$	63,197	$	413	$	63,610	$	56,184	$	386	$	56,570
Consumer mortgage	9,620		149		9,769		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.



	September 30, 2015						December 31, 2014
($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial
Commercial and industrial
Automotive	$	27,423	$	1,597	$	29,020	$	29,150	$	1,721	$	30,871
Other	1,856		433		2,289		1,509		373		1,882
Commercial real estate — Automotive	3,156		146		3,302		3,015		136		3,151
Total commercial	$	32,435	$	2,176	$	34,611	$	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
September 30, 2015
Consumer automotive	$	285	$	285	$	—	$	285	$	22
Consumer mortgage	271		268		63		205		48
Commercial
Commercial and industrial
Automotive	26		26		9		17		4
Other	45		45		—		45		15
Commercial real estate — Automotive	4		4		4		—		—
Total commercial	75		75		13		62		19
Total consumer and commercial finance receivables and loans	$	631	$	628	$	76	$	552	$	89
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 tables present average balance and interest income for our impaired finance receivables and loans.



	2015				2014
Three months ended September 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automotive	$	288	$	4	$	297	$	5
Consumer mortgage	268		3		914		7
Commercial
Commercial and industrial
Automotive	36		—		32		—
Other	45		—		51		—
Commercial real estate — Automotive	6		—		3		—
Total commercial	87		—		86		—
Total consumer and commercial finance receivables and loans	$	643	$	7	$	1,297	$	12



	2015				2014
Nine months ended September 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automotive	$	291	$	13	$	298	$	14
Consumer mortgage	283		7		923		22
Commercial
Commercial and industrial
Automotive	35		1		68		1
Other	39		3		62		4
Commercial real estate — Automotive	5		—		7		—
Total commercial	79		4		137		5
Total consumer and commercial finance receivables and loans	$	653	$	24	$	1,358	$	41

Troubled Debt Restructurings

Troubled Debt Restructurings (TDRs) are loan modifications where concessions were granted to borrowers experiencing financial difficulties. 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. Additionally, 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. Refer to Note 1 to the Consolidated Financial Statements in our 2014 Annual Report on Form 10-K for additional information. Total TDRs recorded at historical cost and reported at carrying value before allowance for loan losses were $601 million and $681 million at September 30, 2015, and December 31, 2014, respectively. The decrease was primarily due to the whole-loan sale of consumer mortgage TDRs during the first quarter of 2015.

The following tables present 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 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 automotive	4,612	$	75	$	66	4,361	$	72	$	63
Consumer mortgage	53	13		13		37	7		6
Commercial
Commercial and industrial
Automotive	—	—		—		—	—		—
Other	1	21		21		—	—		—
Commercial real estate — Automotive	1	3		3		—	—		—
Total commercial	2	24		24		—	—		—
Total consumer and commercial finance receivables and loans	4,667	$	112	$	103	4,398	$	79	$	69



	2015					2014
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 automotive	12,763	$	202	$	173	13,681	$	223	$	193
Consumer mortgage	169	42		40		350	71		66
Commercial
Commercial and industrial
Automotive	—	—		—		3	23		23
Other	1	21		21		3	48		48
Commercial real estate — Automotive	1	3		3		—	—		—
Total commercial	2	24		24		6	71		71
Total consumer and commercial finance receivables and loans	12,934	$	268	$	237	14,037	$	365	$	330

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 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 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 automotive	1,742	$	21	$	12	1,790	$	22	$	12
Consumer mortgage	2	1		—		5	1		—
Commercial	—	—		—		—	—		—
Total consumer and commercial finance receivables and loans	1,744	$	22	$	12	1,795	$	23	$	12



	2015					2014
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 automotive	4,822	$	58	$	33	5,020	$	62	$	33
Consumer mortgage	9	1		—		10	2		—
Commercial	—	—		—		—	—		—
Total consumer and commercial finance receivables and loans	4,831	$	59	$	33	5,030	$	64	$	33

At September 30, 2015, and December 31, 2014, commercial commitments to lend additional funds to borrowers owing receivables whose terms had been modified in a TDR were $2 million and $4 million, respectively.