Impaired Finance Receivables - Troubled Debt Restructurings

Consumer receivables in the post-acquisition portfolio that become classified as TDRs are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. At September 30, 2012, the financial effects of the accounts in the post-acquisition portfolio that became classified as TDRs resulted in an impairment charge recorded as part of the provision for loan losses. Accounts that become classified as TDRs because of a payment deferral still accrue interest at the contractual rate and an additional fee is collected at each time of deferral and recorded as a reduction of accrued interest. No interest or fees are forgiven on a payment deferral to a customer and therefore, there are no additional financial effects of deferred loans becoming classified as TDRs. Accounts in Chapter 13 bankruptcy would have already been placed on non-accrual, therefore there are no additional financial effects of these loans becoming classified as TDRs.

The outstanding recorded investment for consumer finance receivables that are considered to be TDRs and the related allowance as of September 30, 2012 is shown below (in thousands):



	September 30, 2012
Outstanding recorded investment	$	127,633
Less: allowance for loan losses	(21,981		)
Outstanding recorded investment, net of allowance	$	105,652
Unpaid principal balance	$	130,001

All accounts noted above had a related allowance for loan losses. At December 31, 2011, the amount of consumer finance receivables in the post-acquisition portfolio that would be considered TDRs was insignificant.

Interest income from loans accounted for as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs. Additional information about loans classified as TDRs is shown below (in thousands):



	Three Months Ended		Nine Months Ended
	September 30, 2012
Average recorded investment	$	91,462	$	69,888
Interest income recognized	3,275		4,453

The following table provides information on loans that became classified as TDRs (dollars in thousands):



	Three Months Ended			Nine Months Ended
	September 30, 2012
	Number of Accounts	Amount		Number of Accounts	Amount
Outstanding recorded investment	4,148	$	77,323	6,857	$	129,272

A redefault is when an account meets the requirements for evaluation under our charge-off policy (Refer to Note 1 - "Summary of Significant Accounting Policies" to the Consolidated Financial Statements in our 2011 Annual Report on Form 10-K for additional information). The following table presents the unpaid principal balance, net of recoveries, of loans that redefaulted during the reporting period and were within 12 months or less of being modified as a troubled debt restructuring (in thousands):



	Three Months Ended		Nine Months Ended
	September 30, 2012
Net recorded investment charged-off on TDRs that subsequently defaulted	$	927	$	1,146

Commercial Finance Receivables

A summary of our commercial finance receivables is as follows (in thousands):



	Three Months Ended			Nine Months Ended
	September 30, 2012
Balance at beginning of period	$	127,560		$
Loans funded	410,344			584,140
Principal collections and other	(253,491		)	(299,727		)
Balance at end of period	$	284,413		$	284,413

There were no commercial receivables on non-accrual as of September 30, 2012.

Credit Risk

Our commercial finance receivables consist of dealer floorplan financings and dealer loans. A proprietary model is used to assign a risk rating to each dealer. A credit review of each dealer is performed at least annually and, if necessary, the dealer's risk rating is adjusted on the basis of the review.

Delinquency

At September 30, 2012, all commercial receivables were current with respect to payment status.

Impaired Finance Receivables - Troubled Debt Restructurings

Commercial receivables classified as TDRs are assessed for impairment and included in our allowance for credit losses based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. For receivables where foreclosure is probable, the fair value of the collateral is used to estimate the specific impairment. At September 30, 2012, there were no outstanding commercial receivables classified as TDRs.