Finance Receivables and Loans, Net

The composition of finance receivables and loans reported at gross carrying value was as follows.



($ in millions)	September 30, 2016		December 31, 2015
Consumer automotive (a)	$	64,816	$	64,292
Consumer mortgage
Mortgage Finance (b)	7,931		6,413
Mortgage — Legacy (c)	2,926		3,360
Total consumer mortgage	10,857		9,773
Total consumer	75,673		74,065
Commercial
Commercial and industrial
Automotive	32,260		31,469
Other	3,250		2,640
Commercial real estate — Automotive	3,776		3,426
Total commercial	39,286		37,535
Total finance receivables and loans (d)	$	114,959	$	111,600


(a)	Includes $66 million of fair value adjustment for loans in hedge accounting relationships at both September 30, 2016, and December 31, 2015. Refer to Note 20 for additional information.


(b)	Includes loans originated as interest-only mortgage loans of $32 million and $44 million at September 30, 2016, and December 31, 2015, respectively, none of which are expected to start principal amortization in 2016, 3% in 2017, none in 2018, 39% in 2019, and 39% thereafter.


(c)	Includes loans originated as interest-only mortgage loans of $771 million and $941 million at September 30, 2016, and December 31, 2015, respectively, 8% of which are expected to start principal amortization in 2016, 23% in 2017, 2% in 2018, none in 2019, and 1% thereafter.


(d)	Totals include a net increase of $310 million and $110 million at September 30, 2016, and December 31, 2015, respectively, 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, 2016 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial		Total
Allowance at July 1, 2016	$	862		$	109		$	118	$	1,089
Charge-offs	(293		)	(10		)	—		(303		)
Recoveries	74			16			—		90
Net charge-offs	(219		)	6			—		(213		)
Provision for loan losses	269			(15		)	4		258
Allowance at September 30, 2016	$	912		$	100		$	122	$	1,134



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.



Nine months ended September 30, 2016 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at January 1, 2016	$	834		$	114		$	106		$	1,054
Charge-offs	(773		)	(29		)	(1		)	(803		)
Recoveries	233			25			1			259
Net charge-offs	(540		)	(4		)	—			(544		)
Provision for loan losses	644			(10		)	16			650
Other (a)	(26		)	—			—			(26		)
Allowance at September 30, 2016	$	912		$	100		$	122		$	1,134
Allowance for loan losses at September 30, 2016
Individually evaluated for impairment	$	24		$	35		$	25		$	84
Collectively evaluated for impairment	888			65			97			1,050
Loans acquired with deteriorated credit quality	—			—			—			—
Finance receivables and loans at gross carrying value
Ending balance	$	64,816		$	10,857		$	39,286		$	114,959
Individually evaluated for impairment	349			251			111			711
Collectively evaluated for impairment	64,467			10,606			39,175			114,248
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, 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 gross carrying value
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.

The following table presents the gross carrying value of significant sales of finance receivables and loans 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)	2016		2015		2016		2015
Consumer automotive	$	57	$	704	$	4,216	$	704
Consumer mortgage	6		2		12		75
Commercial	—		1		28		1
Total sales and transfers	$	63	$	707	$	4,256	$	780

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)	2016		2015		2016		2015
Consumer automotive	$	—	$	272	$	—	$	272
Consumer mortgage	467		990		2,855		3,640
Total purchases of finance receivables and loans	$	467	$	1,262	$	2,855	$	3,912

The following table presents an analysis of our past due finance receivables and loans recorded at gross carrying value.



($ 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, 2016
Consumer automotive	$	1,584	$	343	$	260	$	2,187	$	62,629	$	64,816
Consumer mortgage
Mortgage Finance	64		4		4		72		7,859		7,931
Mortgage — Legacy	49		12		60		121		2,805		2,926
Total consumer mortgage	113		16		64		193		10,664		10,857
Total consumer	1,697		359		324		2,380		73,293		75,673
Commercial
Commercial and industrial
Automotive	—		—		—		—		32,260		32,260
Other	—		—		—		—		3,250		3,250
Commercial real estate — Automotive	—		—		—		—		3,776		3,776
Total commercial	—		—		—		—		39,286		39,286
Total consumer and commercial	$	1,697	$	359	$	324	$	2,380	$	112,579	$	114,959
December 31, 2015
Consumer automotive	$	1,618	$	369	$	222	$	2,209	$	62,083	$	64,292
Consumer mortgage
Mortgage Finance	44		5		10		59		6,354		6,413
Mortgage — Legacy	53		20		73		146		3,214		3,360
Total consumer mortgage	97		25		83		205		9,568		9,773
Total consumer	1,715		394		305		2,414		71,651		74,065
Commercial
Commercial and industrial
Automotive	—		—		—		—		31,469		31,469
Other	—		—		—		—		2,640		2,640
Commercial real estate — Automotive	—		—		—		—		3,426		3,426
Total commercial	—		—		—		—		37,535		37,535
Total consumer and commercial	$	1,715	$	394	$	305	$	2,414	$	109,186	$	111,600

The following table presents the gross carrying value of our finance receivables and loans on nonaccrual status.



($ in millions)	September 30, 2016		December 31, 2015
Consumer automotive	$	542	$	475
Consumer mortgage
Mortgage Finance	9		15
Mortgage — Legacy	91		113
Total consumer mortgage	100		128
Total consumer	642		603
Commercial
Commercial and industrial
Automotive	44		25
Other	62		44
Commercial real estate — Automotive	5		8
Total commercial	111		77
Total consumer and commercial finance receivables and loans	$	753	$	680

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 gross carrying value. 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 not expected. Refer to Note 1 to the Annual Consolidated Financial Statements for additional information.



	September 30, 2016						December 31, 2015
($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automotive	$	64,274	$	542	$	64,816	$	63,817	$	475	$	64,292
Consumer mortgage
Mortgage Finance	7,922		9		7,931		6,398		15		6,413
Mortgage — Legacy	2,835		91		2,926		3,247		113		3,360
Total consumer mortgage	10,757		100		10,857		9,645		128		9,773
Total consumer	$	75,031	$	642	$	75,673	$	73,462	$	603	$	74,065

The following table presents pass and criticized credit quality indicators based on regulatory definitions for our commercial finance receivables and loans recorded at gross carrying value.



	September 30, 2016						December 31, 2015
($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial and industrial
Automotive	$	30,355	$	1,905	$	32,260	$	29,613	$	1,856	$	31,469
Other	2,574		676		3,250		2,122		518		2,640
Commercial real estate — Automotive	3,600		176		3,776		3,265		161		3,426
Total commercial	$	36,529	$	2,757	$	39,286	$	35,000	$	2,535	$	37,535


(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 Annual Consolidated Financial Statements.

The following table presents information about our impaired finance receivables and loans.



($ in millions)	Unpaid principal balance (a)		Gross carrying value		Impaired with no allowance		Impaired with an allowance		Allowance for impaired loans
September 30, 2016
Consumer automotive	$	385	$	349	$	124	$	225	$	24
Consumer mortgage
Mortgage Finance	7		7		3		4		—
Mortgage — Legacy	248		244		56		188		35
Total consumer mortgage	255		251		59		192		35
Total consumer	640		600		183		417		59
Commercial
Commercial and industrial
Automotive	44		44		10		34		6
Other	76		62		—		62		18
Commercial real estate — Automotive	5		5		1		4		1
Total commercial	125		111		11		100		25
Total consumer and commercial finance receivables and loans	$	765	$	711	$	194	$	517	$	84
December 31, 2015
Consumer automotive	$	315	$	315	$	—	$	315	$	22
Consumer mortgage
Mortgage Finance	9		9		5		4		1
Mortgage — Legacy	260		257		59		198		43
Total consumer mortgage	269		266		64		202		44
Total consumer	584		581		64		517		66
Commercial
Commercial and industrial
Automotive	25		25		4		21		3
Other	44		44		—		44		15
Commercial real estate — Automotive	8		8		1		7		2
Total commercial	77		77		5		72		20
Total consumer and commercial finance receivables and loans	$	661	$	658	$	69	$	589	$	86


(a)	Adjusted for charge-offs.

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



	2016				2015
Three months ended September 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automotive	$	347	$	4	$	288	$	4
Consumer mortgage
Mortgage Finance	8		—		7		—
Mortgage — Legacy	245		2		261		3
Total consumer mortgage	253		2		268		3
Total consumer	600		6		556		7
Commercial
Commercial and industrial
Automotive	48		1		36		—
Other	63		—		45		—
Commercial real estate — Automotive	6		—		6		—
Total commercial	117		1		87		—
Total consumer and commercial finance receivables and loans	$	717	$	7	$	643	$	7



	2016				2015
Nine months ended September 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automotive	$	340	$	12	$	291	$	13
Consumer mortgage
Mortgage Finance	8		—		7		—
Mortgage — Legacy	250		7		276		7
Total consumer mortgage	258		7		283		7
Total consumer	598		19		574		20
Commercial
Commercial and industrial
Automotive	35		1		35		1
Other	58		1		39		3
Commercial real estate — Automotive	6		—		5		—
Total commercial	99		2		79		4
Total consumer and commercial finance receivables and loans	$	697	$	21	$	653	$	24

Troubled Debt Restructurings

Troubled Debt Restructurings (TDRs) are loan modifications where concessions were granted to borrowers experiencing financial difficulties. For mortgage loans, as part of our participation in certain governmental programs, we offer mortgage loan modifications to qualified borrowers. 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 gross carrying value were $640 million and $625 million at September 30, 2016, and December 31, 2015, respectively. Commercial commitments to lend additional funds to borrowers owing receivables whose terms had been modified in a TDR were $2 million, at both September 30, 2016, and December 31, 2015. Refer to Note 1 to the Annual Consolidated Financial Statements for additional information.

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



	2016					2015
Three months ended September 30, ($ in millions)	Number of loans	Pre-modification gross carrying value		Post-modification gross carrying value		Number of loans	Pre-modification gross carrying value		Post-modification gross carrying value
Consumer automotive	4,427	$	70	$	58	4,612	$	75	$	66
Consumer mortgage
Mortgage Finance	2	—		—		3	2		2
Mortgage — Legacy	35	6		6		50	11		11
Total consumer mortgage	37	6		6		53	13		13
Total consumer	4,464	76		64		4,665	88		79
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	4,464	$	76	$	64	4,667	$	112	$	103



	2016					2015
Nine months ended September 30, ($ in millions)	Number of loans	Pre-modification gross carrying value		Post-modification gross carrying value		Number of loans	Pre-modification gross carrying value		Post-modification gross carrying value
Consumer automotive	14,816	$	238	$	202	12,763	$	202	$	173
Consumer mortgage
Mortgage Finance	5	2		2		5	3		3
Mortgage — Legacy	92	14		14		164	39		37
Total consumer mortgage	97	16		16		169	42		40
Total consumer	14,913	254		218		12,932	244		213
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	14,913	$	254	$	218	12,934	$	268	$	237

The following tables present information about finance receivables and loans recorded at gross carrying value 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 Annual Consolidated Financial Statements for additional information) except for commercial finance receivables and loans, where redefault is defined as 90 days past due.



	2016					2015
Three months ended September 30, ($ in millions)	Number of loans	Gross carrying value		Charge-off amount		Number of loans	Gross carrying value		Charge-off amount
Consumer automotive	1,959	$	23	$	14	1,742	$	21	$	12
Consumer mortgage
Mortgage Finance	—	—		—		—	—		—
Mortgage — Legacy	1	—		—		2	1		—
Total consumer finance receivables and loans	1,960	$	23	$	14	1,744	$	22	$	12



	2016					2015
Nine months ended September 30, ($ in millions)	Number of loans	Gross carrying value		Charge-off amount		Number of loans	Gross carrying value		Charge-off amount
Consumer automotive	5,617	$	69	$	39	4,822	$	58	$	33
Consumer mortgage
Mortgage Finance	—	—		—		—	—		—
Mortgage — Legacy	4	—		—		9	1		—
Total consumer finance receivables and loans	5,621	$	69	$	39	4,831	$	59	$	33