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Finance Receivables (Tables)

9 Months Ended

Sep. 30, 2020

Accounts, Notes, Loans and Financing Receivable, Gross, Allowance, and Net [Abstract]


	September 30, 2020		December 31, 2019
Retail finance receivables
Retail finance receivables, net of fees(a)	$	48,695	$	42,268
Less: allowance for loan losses	(1,936)		(866)
Total retail finance receivables, net	46,759		41,402
Commercial finance receivables
Commercial finance receivables, net of fees(b)	8,461		12,149
Less: allowance for loan losses	(67)		(78)
Total commercial finance receivables, net	8,394		12,071
Total finance receivables, net	$	55,153	$	53,473
Fair value utilizing Level 2 inputs	$	8,394	$	12,071
Fair value utilizing Level 3 inputs	$	48,973	$	42,012

________________

(a) Net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $63 million and $83 million at September 30, 2020 and December 31, 2019.

(b) Net of dealer cash management balances of $1.4 billion and $1.2 billion at September 30, 2020 and December 31, 2019.

Allowance for Credit Losses on Financing Receivables

A summary of the activity in the allowance for retail loan losses is as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Allowance for retail loan losses beginning balance	$	2,044	$	881	$	866	$	844
Impact of adopting ASU 2016-13 (Note 1)	—		—		801		—
Provision for loan losses	31		149		819		492
Charge-offs	(280)		(300)		(876)		(886)
Recoveries	133		133		378		410
Foreign currency translation	8		(7)		(52)		(4)
Allowance for retail loan losses ending balance	$	1,936	$	856	$	1,936	$	856

Financing Receivable Credit Quality Indicators

A summary of the amortized cost of the retail finance receivables by FICO score or its equivalent, determined at origination, for each vintage of the retail finance receivables portfolio at September 30, 2020 is as follows:


	Year of Origination
	2020		2019		2018		2017		2016		2015		Prior		Total		Percent
Prime - FICO Score 680 and greater	$	14,746	$	8,064	$	5,296	$	2,348	$	744	$	177	$	5	$	31,380	64.4	%
Near-prime - FICO Score 620 to 679	2,725		2,293		1,392		712		280		103		15		7,520		15.5
Sub-prime - FICO Score less than 620	2,701		2,922		1,785		1,265		707		311		104		9,795		20.1
Retail finance receivables, net of fees	$	20,172	$	13,279	$	8,473	$	4,325	$	1,731	$	591	$	124	$	48,695	100.0	%

Effective January 1, 2020, we updated our commercial risk model and our risk rating categories as follows:


Dealer Risk Rating						Description
I						Performing accounts with strong to acceptable financial metrics with at least satisfactory capacity to meet financial commitments.
II						Performing accounts experiencing potential weakness in financial metrics and repayment prospects resulting in increased monitoring.
III						Non-Performing accounts with inadequate paying capacity for current obligations and that have the distinct possibility of creating a loss if deficiencies are not corrected.
IV						Non-Performing accounts with inadequate paying capacity for current obligations and inherent weaknesses that make collection or liquidation in full highly questionable or improbable.

The following table summarizes the credit risk profile by dealer risk rating of commercial finance receivables at September 30, 2020:


	Year of Origination(a)
Dealer Risk Rating	Revolving		2020		2019		2018		2017		2016		2015		Prior		Total		Percent
I	$	6,723	$	400	$	198	$	92	$	113	$	93	$	44	$	—	$	7,663	90.6	%
II	428		1		7		12		15		13		13		22		511		6.0
III	227		—		9		29		2		11		1		—		279		3.3
IV	4		—		—		—		—		—		4		—		8		0.1
Balance at end of period	$	7,382	$	401	$	214	$	133	$	130	$	117	$	62	$	22	$	8,461	100.0	%

________________

(a) Floorplan advances comprise 98% of the total revolving balance. Dealer term loans are presented by year of origination.

Past Due Financing Receivables

The following table is a consolidated summary of the delinquency status of the outstanding amortized cost of retail finance receivables for each vintage of the portfolio at September 30, 2020:


	Year of Origination
	2020		2019		2018		2017		2016		2015		Prior		Total		Percent
Current	$	19,962	$	12,848	$	8,143	$	4,083	$	1,580	$	513	$	93	$	47,222	97.0	%

31 - 60 days	147		294		227		167		102		53		19		1,009		2.1
Greater than 60 days	57		122		92		69		45		23		11		419		0.8
Finance receivables more than 30 days delinquent	204		416		319		236		147		76		30		1,428		2.9
In repossession	6		15		11		6		4		2		1		45		0.1
Finance receivables more than 30 days delinquent or in repossession	210		431		330		242		151		78		31		1,473		3.0
Retail finance receivables, net of fees	$	20,172	$	13,279	$	8,473	$	4,325	$	1,731	$	591	$	124	$	48,695	100.0	%

Troubled Debt Restructurings on Financing Receivables

Additional TDR activity is presented below:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020		2019		2018		2020		2019		2018
Number of loans classified as TDRs during the period	13,785		19,074		17,924		43,431		53,013		51,020
Outstanding amortized cost of loans classified as TDRs during the period	$	254	$	343	$	319	$	789	$	969	$	932