Finance Receivables and Loans, Net

9 Months Ended

Sep. 30, 2018

Loans and Leases Receivable, Net Amount [Abstract]

Loans, Notes, Trade and Other Receivables Disclosure

Finance Receivables and Loans, Net

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

($ in millions)	September 30, 2018		December 31, 2017
Consumer automotive (a)	$	69,995	$	68,071
Consumer mortgage
Mortgage Finance (b)	14,840		11,657
Mortgage — Legacy (c)	1,666		2,093
Total consumer mortgage	16,506		13,750
Total consumer	86,501		81,821
Commercial
Commercial and industrial
Automotive	31,424		33,025
Other	4,132		3,887
Commercial real estate	4,548		4,160
Total commercial	40,104		41,072
Total finance receivables and loans (d)	$	126,605	$	122,893

(a) Certain finance receivables and loans are included in fair value hedging relationships. Refer to Note 17 for additional information.

(b) Includes loans originated as interest-only mortgage loans of $16 million and $20 million at September 30, 2018, and December 31, 2017, respectively, 38% of which are expected to start principal amortization in 2019, and 45% in 2020. The remainder of these loans has exited the interest-only period.

(c) Includes loans originated as interest-only mortgage loans of $381 million and $496 million at September 30, 2018, and December 31, 2017, respectively, of which 99% have exited the interest-only period.

(d) Totals include net unearned income, unamortized premiums and discounts, and deferred fees and costs of $606 million and $551 million at September 30, 2018, and December 31, 2017, 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, 2018 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at July 1, 2018	$	1,053		$	66		$	138		$	1,257
Charge-offs (a)	(343		)	(7		)	(3		)	(353		)
Recoveries	110			8			—			118
Net charge-offs	(233		)	1			(3		)	(235		)
Provision for loan losses	229			(4		)	8			233
Other (b)	(6		)	1			(2		)	(7		)
Allowance at September 30, 2018	$	1,043		$	64		$	141		$	1,248

(a) Represents the amount of the gross carrying value directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the gross carrying value of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2017 Annual Report on Form 10-K for more information regarding our charge-off policies.

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

Three months ended September 30, 2017 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at July 1, 2017	$	1,002		$	83		$	140		$	1,225
Charge-offs (a)	(327		)	(7		)	(10		)	(344		)
Recoveries	85			6			—			91
Net charge-offs	(242		)	(1		)	(10		)	(253		)
Provision for loan losses	314			—			—			314
Other	—			(1		)	1			—
Allowance at September 30, 2017	$	1,074		$	81		$	131		$	1,286

(a) Represents the amount of the gross carrying value directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the gross carrying value of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2017 Annual Report on Form 10-K for more information regarding our charge-off policies.

Nine months ended September 30, 2018 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at January 1, 2018	$	1,066		$	79		$	131		$	1,276
Charge-offs (a)	(1,004		)	(27		)	(5		)	(1,036		)
Recoveries	336			20			6			362
Net charge-offs	(668		)	(7		)	1			(674		)
Provision for loan losses	650			(7		)	9			652
Other (b)	(5		)	(1		)	—			(6		)
Allowance at September 30, 2018	$	1,043		$	64		$	141		$	1,248
Allowance for loan losses at September 30, 2018
Individually evaluated for impairment	$	43		$	24		$	35		$	102
Collectively evaluated for impairment	1,000			40			106			1,146
Finance receivables and loans at gross carrying value
Ending balance	$	69,995		$	16,506		$	40,104		$	126,605
Individually evaluated for impairment	483			231			184			898
Collectively evaluated for impairment	69,512			16,275			39,920			125,707

(a) Represents the amount of the gross carrying value directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the gross carrying value of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2017 Annual Report on Form 10-K for more information regarding our charge-off policies.

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

Nine months ended September 30, 2017 ($ in millions)	Consumer automotive			Consumer mortgage			Commercial			Total
Allowance at January 1, 2017	$	932		$	91		$	121		$	1,144
Charge-offs (a)	(958		)	(22		)	(10		)	(990		)
Recoveries	266			19			—			285
Net charge-offs	(692		)	(3		)	(10		)	(705		)
Provision for loan losses	841			(6		)	19			854
Other (b)	(7		)	(1		)	1			(7		)
Allowance at September 30, 2017	$	1,074		$	81		$	131		$	1,286
Allowance for loan losses at September 30, 2017
Individually evaluated for impairment	$	35		$	30		$	21		$	86
Collectively evaluated for impairment	1,039			51			110			1,200
Finance receivables and loans at gross carrying value
Ending balance	$	67,077		$	12,015		$	39,779		$	118,871
Individually evaluated for impairment	403			237			146			786
Collectively evaluated for impairment	66,674			11,778			39,633			118,085

(a) Represents the amount of the gross carrying value directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the gross carrying value of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2017 Annual Report on Form 10-K for more information regarding our charge-off policies.

(b) 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 and transfers of finance receivables and loans from held-for-investment to held-for-sale based on net carrying value.

	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2018		2017		2018		2017
Consumer automotive	$	578	$	28	$	578	$	1,326
Consumer mortgage	—		3		5		9
Commercial	238		—		238		—
Total sales and transfers	$	816	$	31	$	821	$	1,335

The following table presents information about significant purchases of finance receivables and loans based on unpaid principal balance at the time of purchase.

	Three months ended September 30,				Nine months ended September 30,
($ in millions)	2018		2017		2018		2017
Consumer automotive	$	251	$	83	$	652	$	762
Consumer mortgage	1,743		1,183		3,890		2,319
Commercial	14		—		14		—
Total purchases of finance receivables and loans	$	2,008	$	1,266	$	4,556	$	3,081

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, 2018
Consumer automotive	$	1,831	$	442	$	262	$	2,535	$	67,460	$	69,995
Consumer mortgage
Mortgage Finance	56		6		10		72		14,768		14,840
Mortgage — Legacy	36		14		51		101		1,565		1,666
Total consumer mortgage	92		20		61		173		16,333		16,506
Total consumer	1,923		462		323		2,708		83,793		86,501
Commercial
Commercial and industrial
Automotive	—		—		15		15		31,409		31,424
Other	4		—		15		19		4,113		4,132
Commercial real estate	—		—		—		—		4,548		4,548
Total commercial	4		—		30		34		40,070		40,104
Total consumer and commercial	$	1,927	$	462	$	353	$	2,742	$	123,863	$	126,605
December 31, 2017
Consumer automotive	$	1,994	$	478	$	268	$	2,740	$	65,331	$	68,071
Consumer mortgage
Mortgage Finance	60		11		18		89		11,568		11,657
Mortgage — Legacy	43		25		62		130		1,963		2,093
Total consumer mortgage	103		36		80		219		13,531		13,750
Total consumer	2,097		514		348		2,959		78,862		81,821
Commercial
Commercial and industrial
Automotive	5		—		3		8		33,017		33,025
Other	—		—		—		—		3,887		3,887
Commercial real estate	—		—		—		—		4,160		4,160
Total commercial	5		—		3		8		41,064		41,072
Total consumer and commercial	$	2,102	$	514	$	351	$	2,967	$	119,926	$	122,893

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

($ in millions)	September 30, 2018		December 31, 2017
Consumer automotive	$	620	$	603
Consumer mortgage
Mortgage Finance	18		25
Mortgage — Legacy	81		92
Total consumer mortgage	99		117
Total consumer	719		720
Commercial
Commercial and industrial
Automotive	78		27
Other	99		44
Commercial real estate	7		1
Total commercial	184		72
Total consumer and commercial finance receivables and loans	$	903	$	792

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 at least 90 days or when full collection is not expected. Refer to Note 1 to the Consolidated Financial Statements in our 2017 Annual Report on Form 10-K for additional information.

	September 30, 2018						December 31, 2017
($ in millions)	Performing		Nonperforming		Total		Performing		Nonperforming		Total
Consumer automotive	$	69,375	$	620	$	69,995	$	67,468	$	603	$	68,071
Consumer mortgage
Mortgage Finance	14,822		18		14,840		11,632		25		11,657
Mortgage — Legacy	1,585		81		1,666		2,001		92		2,093
Total consumer mortgage	16,407		99		16,506		13,633		117		13,750
Total consumer	$	85,782	$	719	$	86,501	$	81,101	$	720	$	81,821

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, 2018						December 31, 2017
($ in millions)	Pass		Criticized (a)		Total		Pass		Criticized (a)		Total
Commercial and industrial
Automotive	$	28,789	$	2,635	$	31,424	$	30,982	$	2,043	$	33,025
Other	3,328		804		4,132		2,986		901		3,887
Commercial real estate	4,333		215		4,548		4,023		137		4,160
Total commercial	$	36,450	$	3,654	$	40,104	$	37,991	$	3,081	$	41,072

(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 2017 Annual Report on Form 10-K.

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, 2018
Consumer automotive	$	492	$	483	$	108	$	375	$	43
Consumer mortgage
Mortgage Finance	14		14		5		9		1
Mortgage — Legacy	222		217		63		154		23
Total consumer mortgage	236		231		68		163		24
Total consumer	728		714		176		538		67
Commercial
Commercial and industrial
Automotive	78		78		8		70		10
Other	112		99		40		59		25
Commercial real estate	7		7		5		2		—
Total commercial	197		184		53		131		35
Total consumer and commercial finance receivables and loans	$	925	$	898	$	229	$	669	$	102
December 31, 2017
Consumer automotive	$	438	$	430	$	91	$	339	$	36
Consumer mortgage
Mortgage Finance	8		8		4		4		—
Mortgage — Legacy	228		223		58		165		27
Total consumer mortgage	236		231		62		169		27
Total consumer	674		661		153		508		63
Commercial
Commercial and industrial
Automotive	27		27		9		18		3
Other	54		44		10		34		11
Commercial real estate	1		1		—		1		—
Total commercial	82		72		19		53		14
Total consumer and commercial finance receivables and loans	$	756	$	733	$	172	$	561	$	77

(a) Adjusted for charge-offs.

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

	2018				2017
Three months ended September 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automotive	$	485	$	7	$	389	$	5
Consumer mortgage
Mortgage Finance	12		1		8		—
Mortgage — Legacy	217		2		231		2
Total consumer mortgage	229		3		239		2
Total consumer	714		10		628		7
Commercial
Commercial and industrial
Automotive	83		—		77		1
Other	101		—		63		—
Commercial real estate	7		—		7		—
Total commercial	191		—		147		1
Total consumer and commercial finance receivables and loans	$	905	$	10	$	775	$	8

	2018				2017
Nine months ended September 30, ($ in millions)	Average balance		Interest income		Average balance		Interest income
Consumer automotive	$	477	$	21	$	368	$	15
Consumer mortgage
Mortgage Finance	10		1		8		—
Mortgage — Legacy	219		7		236		7
Total consumer mortgage	229		8		244		7
Total consumer	706		29		612		22
Commercial
Commercial and industrial
Automotive	65		2		55		2
Other	76		—		73		8
Commercial real estate	5		—		6		—
Total commercial	146		2		134		10
Total consumer and commercial finance receivables and loans	$	852	$	31	$	746	$	32

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, for mortgage loans, as part of certain programs, we offer mortgage loan modifications to qualified borrowers. These programs 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. Total TDRs recorded at gross carrying value were $790 million and $712 million at September 30, 2018, and December 31, 2017, respectively.

Total commitments to lend additional funds to borrowers whose terms had been modified in a TDR were $4 million and $6 million at September 30, 2018, and December 31, 2017, respectively. Refer to Note 1 to the Consolidated Financial Statements in our 2017 Annual Report on Form 10-K 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.

	2018					2017
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	6,759	$	67	$	67	7,165	$	80	$	75
Consumer mortgage
Mortgage Finance	10	4		4		2	—		—
Mortgage — Legacy	65	8		6		37	4		4
Total consumer mortgage	75	12		10		39	4		4
Total consumer	6,834	79		77		7,204	84		79
Commercial
Commercial and industrial
Automotive	—	—		—		3	13		13
Commercial real estate	—	—		—		1	3		3
Total commercial	—	—		—		4	16		16
Total consumer and commercial finance receivables and loans	6,834	$	79	$	77	7,208	$	100	$	95

	2018					2017
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	19,699	$	302	$	270	19,374	$	298	$	262
Consumer mortgage
Mortgage Finance	18	7		7		3	—		—
Mortgage — Legacy	154	24		22		109	19		18
Total consumer mortgage	172	31		29		112	19		18
Total consumer	19,871	333		299		19,486	317		280
Commercial
Commercial and industrial
Automotive	3	4		4		3	13		13
Other	2	55		51		2	44		44
Commercial real estate	—	—		—		1	3		3
Total commercial	5	59		55		6	60		60
Total consumer and commercial finance receivables and loans	19,876	$	392	$	354	19,492	$	377	$	340

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 Consolidated Financial Statements in our 2017 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.

	2018					2017
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	2,466	$	27	$	19	2,222	$	25	$	18
Consumer mortgage
Mortgage Finance	—	—		—		—	—		—
Mortgage — Legacy	—	—		—		1	—		—
Total consumer finance receivables and loans	2,466	$	27	$	19	2,223	$	25	$	18

	2018					2017
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	7,217	$	84	$	54	6,354	$	74	$	51
Consumer mortgage
Mortgage Finance	—	—		—		1	1		—
Mortgage — Legacy	1	—		—		1	—		—
Total consumer finance receivables and loans	7,218	$	84	$	54	6,356	$	75	$	51