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Finance Receivables and Loans, Net
 9 Months Ended
Sep. 30, 2019
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, 2019
 
December 31, 2018
Consumer automotive (a)
 
$
73,071

 
$
70,539

Consumer mortgage
 
 
 
 
Mortgage Finance (b)
 
15,782

 
15,155

Mortgage — Legacy (c)
 
1,228

 
1,546

Total consumer mortgage
 
17,010

 
16,701

Total consumer
 
90,081

 
87,240

Commercial
 
 
 
 
Commercial and industrial
 
 
 
 
Automotive
 
29,122

 
33,672

Other
 
4,377

 
4,205

Commercial real estate
 
5,029

 
4,809

Total commercial
 
38,528

 
42,686

Total finance receivables and loans (d)
 
$
128,609

 
$
129,926

(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 $11 million and $18 million at September 30, 2019, and December 31, 2018, respectively, 14% of which are expected to start principal amortization in 2019, and 44% in 2020. The remainder of these loans have exited the interest-only period.
(c)
Includes loans originated as interest-only mortgage loans of $234 million and $341 million at September 30, 2019, and December 31, 2018, 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 $547 million and $587 million at September 30, 2019, and December 31, 2018, respectively.
The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans.
Three months ended September 30, 2019 ($ in millions)
 
Consumer automotive
 
Consumer mortgage
 
Commercial
 
Total
Allowance at July 1, 2019
 
$
1,078

 
$
49

 
$
155

 
$
1,282

Charge-offs (a)
 
(374
)
 
(3
)
 
(16
)
 
(393
)
Recoveries
 
121

 
5

 
—

 
126

Net charge-offs
 
(253
)
 
2

 
(16
)
 
(267
)
Provision for loan losses
 
264

 
(5
)
 
4

 
263

Other
 
1

 
(2
)
 
—

 
(1
)
Allowance at September 30, 2019
 
$
1,090

 
$
44

 
$
143

 
$
1,277

(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 2018 Annual Report on Form 10-K for more information regarding our charge-off policies.
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 2018 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, 2019 ($ in millions)
 
Consumer automotive
 
Consumer mortgage
 
Commercial
 
Total
Allowance at January 1, 2019
 
$
1,048

 
$
53

 
$
141

 
$
1,242

Charge-offs (a)
 
(1,027
)
 
(11
)
 
(33
)
 
(1,071
)
Recoveries
 
368

 
17

 
—

 
385

Net charge-offs
 
(659
)
 
6

 
(33
)
 
(686
)
Provision for loan losses
 
701

 
(13
)
 
34

 
722

Other
 
—

 
(2
)
 
1

 
(1
)
Allowance at September 30, 2019
 
$
1,090

 
$
44

 
$
143

 
$
1,277

Allowance for loan losses at September 30, 2019
 
 
 
 
 
 
 
 
Individually evaluated for impairment
 
$
37

 
$
18

 
$
32

 
$
87

Collectively evaluated for impairment
 
1,053

 
26

 
111

 
1,190

Finance receivables and loans at gross carrying value
 
 
 
 
 
 
 
 
Ending balance
 
$
73,071

 
$
17,010

 
$
38,528

 
$
128,609

Individually evaluated for impairment
 
514

 
213

 
179

 
906

Collectively evaluated for impairment
 
72,557

 
16,797

 
38,349

 
127,703

(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 2018 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 2018 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)

2019

2018
 
2019
 
2018
Consumer automotive

$
—


$
578

 
$
20

 
$
578

Consumer mortgage

940


—

 
940

 
5

Commercial

—


238

 
—

 
238

Total sales and transfers (a)

$
940

 
$
816

 
$
960

 
$
821


(a)
During the nine months ended September 30, 2019, we also sold $131 million of loans held-for-sale that were initially classified as finance receivables and loans held-for-investment, and transferred $79 million of finance receivables from held-for-sale to held-for-investment, both relating to equipment finance receivables from our commercial automotive business.
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)
 
2019
 
2018
 
2019
 
2018
Consumer automotive

$
92


$
251

 
$
409

 
$
652

Consumer mortgage

811


1,743

 
2,724

 
3,890

Commercial
 
13

 
14

 
16

 
14

Total purchases of finance receivables and loans

$
916

 
$
2,008

 
$
3,149

 
$
4,556


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, 2019
 
 
 
 
 
 
 
 
 
 
 
 
Consumer automotive
 
$
2,053

 
$
521

 
$
316

 
$
2,890

 
$
70,181

 
$
73,071

Consumer mortgage
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage Finance
 
107

 
6

 
10

 
123

 
15,659

 
15,782

Mortgage — Legacy
 
28

 
8

 
28

 
64

 
1,164

 
1,228

Total consumer mortgage
 
135

 
14

 
38

 
187

 
16,823

 
17,010

Total consumer
 
2,188

 
535

 
354

 
3,077

 
87,004

 
90,081

Commercial
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
 
 
Automotive
 
1

 
—

 
45

 
46

 
29,076

 
29,122

Other
 
—

 
—

 
18

 
18

 
4,359

 
4,377

Commercial real estate
 
2

 
—

 
1

 
3

 
5,026

 
5,029

Total commercial
 
3

 
—

 
64

 
67

 
38,461

 
38,528

Total consumer and commercial
 
$
2,191

 
$
535

 
$
418

 
$
3,144

 
$
125,465

 
$
128,609

December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
Consumer automotive
 
$
2,107

 
$
537

 
$
296

 
$
2,940

 
$
67,599

 
$
70,539

Consumer mortgage
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage Finance
 
67

 
5

 
4

 
76

 
15,079

 
15,155

Mortgage — Legacy
 
30

 
10

 
42

 
82

 
1,464

 
1,546

Total consumer mortgage
 
97

 
15

 
46

 
158

 
16,543

 
16,701

Total consumer
 
2,204

 
552

 
342

 
3,098

 
84,142

 
87,240

Commercial
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
 
 
Automotive
 
—

 
1

 
31

 
32

 
33,640

 
33,672

Other
 
—

 
4

 
16

 
20

 
4,185

 
4,205

Commercial real estate
 
—

 
—

 
1

 
1

 
4,808

 
4,809

Total commercial
 
—

 
5

 
48

 
53

 
42,633


42,686

Total consumer and commercial
 
$
2,204

 
$
557

 
$
390

 
$
3,151

 
$
126,775


$
129,926


The following table presents the gross carrying value of our finance receivables and loans on nonaccrual status.
($ in millions)
 
September 30, 2019
 
December 31, 2018
Consumer automotive
 
$
692

 
$
664

Consumer mortgage
 
 
 
 
Mortgage Finance
 
15

 
9

Mortgage — Legacy
 
43

 
70

Total consumer mortgage
 
58

 
79

Total consumer
 
750

 
743

Commercial
 
 
 
 
Commercial and industrial
 
 
 
 
Automotive
 
64

 
203

Other
 
111

 
142

Commercial real estate
 
4

 
4

Total commercial
 
179

 
349

Total consumer and commercial finance receivables and loans
 
$
929


$
1,092


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 more, or when full collection is not expected. Refer to Note 1 to the Consolidated Financial Statements in our 2018 Annual Report on Form 10-K for additional information.
 
 
September 30, 2019
 
December 31, 2018
($ in millions)
 
Performing
 
Nonperforming
 
Total
 
Performing
 
Nonperforming
 
Total
Consumer automotive
 
$
72,379

 
$
692

 
$
73,071

 
$
69,875

 
$
664

 
$
70,539

Consumer mortgage
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage Finance
 
15,767

 
15

 
15,782

 
15,146

 
9

 
15,155

Mortgage — Legacy
 
1,185

 
43

 
1,228

 
1,476

 
70

 
1,546

Total consumer mortgage
 
16,952

 
58

 
17,010

 
16,622

 
79

 
16,701

Total consumer
 
$
89,331

 
$
750

 
$
90,081

 
$
86,497

 
$
743

 
$
87,240


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, 2019
 
December 31, 2018
($ in millions)
 
Pass
 
Criticized (a)
 
Total
 
Pass
 
Criticized (a)
 
Total
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
 
 
Automotive
 
$
26,393

 
$
2,729

 
$
29,122

 
$
30,799

 
$
2,873

 
$
33,672

Other
 
3,545

 
832

 
4,377

 
3,373

 
832

 
4,205

Commercial real estate
 
4,764

 
265

 
5,029

 
4,538

 
271

 
4,809

Total commercial
 
$
34,702

 
$
3,826

 
$
38,528


$
38,710

 
$
3,976

 
$
42,686

(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 2018 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, 2019
 
 
 
 
 
 
 
 
 
 
Consumer automotive
 
$
527

 
$
514

 
$
107

 
$
407

 
$
37

Consumer mortgage
 
 
 
 
 
 
 
 
 
 
Mortgage Finance
 
13

 
14

 
6

 
8

 
—

Mortgage — Legacy
 
204

 
199

 
65

 
134

 
18

Total consumer mortgage
 
217

 
213

 
71

 
142

 
18

Total consumer
 
744

 
727

 
178

 
549

 
55

Commercial
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
Automotive
 
64

 
64

 
1

 
63

 
18

Other
 
149

 
111

 
80

 
31

 
14

Commercial real estate
 
4

 
4

 
4

 
—

 
—

Total commercial
 
217

 
179

 
85

 
94

 
32

Total consumer and commercial finance receivables and loans
 
$
961

 
$
906

 
$
263

 
$
643

 
$
87

December 31, 2018
 
 
 
 
 
 
 
 
 
 
Consumer automotive
 
$
503

 
$
495

 
$
105

 
$
390

 
$
44

Consumer mortgage
 
 
 
 
 
 
 
 
 
 
Mortgage Finance
 
15

 
15

 
6

 
9

 
1

Mortgage — Legacy
 
221

 
216

 
65

 
151

 
22

Total consumer mortgage
 
236

 
231

 
71

 
160

 
23

Total consumer
 
739

 
726

 
176

 
550

 
67

Commercial
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
Automotive
 
203

 
203

 
112

 
91

 
10

Other
 
159

 
142

 
40

 
102

 
46

Commercial real estate
 
4

 
4

 
4

 
—

 
—

Total commercial
 
366

 
349

 
156

 
193

 
56

Total consumer and commercial finance receivables and loans
 
$
1,105

 
$
1,075

 
$
332

 
$
743

 
$
123

(a)
Adjusted for charge-offs.
The following tables present average balance and interest income for our impaired finance receivables and loans.
 
 
2019
 
2018
Three months ended September 30, ($ in millions)
 
Average balance
 
Interest income
 
Average balance
 
Interest income
Consumer automotive
 
$
505

 
$
9

 
$
485

 
$
7

Consumer mortgage
 
 
 
 
 
 
 
 
Mortgage Finance
 
14

 
—

 
12

 
1

Mortgage — Legacy
 
203

 
2

 
217

 
2

Total consumer mortgage
 
217

 
2

 
229

 
3

Total consumer
 
722

 
11

 
714

 
10

Commercial
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
Automotive
 
76

 
—

 
83

 
—

Other
 
115

 
—

 
101

 
—

Commercial real estate
 
5

 
—

 
7

 
—

Total commercial
 
196

 
—

 
191

 
—

Total consumer and commercial finance receivables and loans
 
$
918

 
$
11

 
$
905

 
$
10


 
 
2019
 
2018
Nine months ended September 30, ($ in millions)
 
Average balance
 
Interest income
 
Average balance
 
Interest income
Consumer automotive
 
$
502

 
$
26

 
$
477

 
$
21

Consumer mortgage
 
 
 
 
 
 
 
 
Mortgage Finance
 
15

 
—

 
10

 
1

Mortgage — Legacy
 
208

 
7

 
219

 
7

Total consumer mortgage
 
223

 
7

 
229

 
8

Total consumer
 
725

 
33

 
706

 
29

Commercial
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
Automotive
 
124

 
1

 
65

 
2

Other
 
118

 
—

 
76

 
—

Commercial real estate
 
5

 
—

 
5

 
—

Total commercial
 
247

 
1

 
146

 
2

Total consumer and commercial finance receivables and loans
 
$
972

 
$
34

 
$
852

 
$
31

Troubled Debt Restructurings
Troubled Debt Restructurings (TDRs) are loan modifications where concessions were granted to borrowers experiencing financial difficulties. For consumer automotive loans, we may offer several types of assistance to aid our customers, including payment extensions and rewrites of 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 $838 million and $812 million at September 30, 2019, and December 31, 2018, respectively.
Total commitments to lend additional funds to borrowers whose terms had been modified in a TDR were $18 million and $4 million at September 30, 2019, and December 31, 2018, respectively. Refer to Note 1 to the Consolidated Financial Statements in our 2018 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.
 
 
2019
 
2018
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
 
7,197

 
$
124

 
$
107

 
6,759

 
$
67

 
$
67

Consumer mortgage
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage Finance
 
1

 
—

 
—

 
10

 
4

 
4

Mortgage — Legacy
 
8

 
1

 
1

 
65

 
8

 
6

Total consumer mortgage
 
9

 
1

 
1

 
75

 
12

 
10

Total consumer
 
7,206

 
125

 
108

 
6,834

 
79

 
77

Commercial
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
 
 
Automotive
 
1

 
5

 
5

 
—

 
—

 
—

Other
 
1

 
25

 
25

 
—

 
—

 
—

Total commercial
 
2

 
30

 
30

 
—

 
—

 
—

Total consumer and commercial finance receivables and loans
 
7,208

 
$
155

 
$
138

 
6,834

 
$
79

 
$
77

 
 
2019
 
2018
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
 
20,222

 
$
349

 
$
303

 
19,699

 
$
302

 
$
270

Consumer mortgage
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage Finance
 
4

 
—

 
—

 
18

 
7

 
7

Mortgage — Legacy
 
46

 
7

 
7

 
154

 
24

 
22

Total consumer mortgage
 
50

 
7

 
7

 
172

 
31

 
29

Total consumer
 
20,272

 
356

 
310

 
19,871

 
333

 
299

Commercial
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
 
 
 
 
 
 
 
 
 
 
 
Automotive
 
7

 
46

 
46

 
3

 
4

 
4

Other
 
2

 
47

 
31

 
2

 
55

 
51

Total commercial
 
9

 
93

 
77

 
5

 
59

 
55

Total consumer and commercial finance receivables and loans
 
20,281

 
$
449

 
$
387

 
19,876

 
$
392

 
$
354

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 twelve 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 2018 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.
 
 
2019
 
2018
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
 
1,713

 
$
18

 
$
13

 
2,466

 
$
27

 
$
19

Total consumer finance receivables and loans
 
1,713

 
$
18

 
$
13

 
2,466

 
$
27

 
$
19


 
 
2019
 
2018
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
 
5,674

 
$
64

 
$
41

 
7,217

 
$
84

 
$
54

Consumer mortgage
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage — Legacy
 
—

 
—

 
—

 
1

 
—

 
—

Total consumer finance receivables and loans
 
5,674

 
$
64

 
$
41

 
7,218

 
$
84

 
$
54