Finance Receivables (Tables)

6 Months Ended

Jun. 30, 2015

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

The finance receivables portfolio consists of the following (in millions):



	June 30, 2015									December 31, 2014
	North America			International			Total			North America			International			Total
Consumer
Consumer finance receivables, collectively evaluated for impairment, net of fees^(a)	$	14,091		$	11,840		$	25,931		$	12,127		$	12,262		$	24,389
Consumer finance receivables, individually evaluated for impairment, net of fees	1,399			—			1,399			1,234			—			1,234
Total consumer finance receivables^(b)	15,490			11,840			27,330			13,361			12,262			25,623
Less: allowance for loan losses - collective	(424		)	(94		)	(518		)	(405		)	(78		)	(483		)
Less: allowance for loan losses - specific	(203		)	—			(203		)	(172		)	—			(172		)
Total consumer finance receivables, net	14,863			11,746			26,609			12,784			12,184			24,968
Commercial
Commercial finance receivables, collectively evaluated for impairment, net of fees	3,515			4,243			7,758			3,180			4,803			7,983
Commercial finance receivables, individually evaluated for impairment, net of fees	—			57			57			—			89			89
Total commercial finance receivables	3,515			4,300			7,815			3,180			4,892			8,072
Less: allowance for loan losses - collective	(22		)	(12		)	(34		)	(21		)	(14		)	(35		)
Less: allowance for loan losses - specific	—			(5		)	(5		)	—			(5		)	(5		)
Total commercial finance receivables, net	3,493			4,283			7,776			3,159			4,873			8,032
Total finance receivables, net	$	18,356		$	16,029		$	34,385		$	15,943		$	17,057		$	33,000

________________

(a) Amounts reported for International include $1.1 billion and $1.0 billion of direct-financing leases at June 30, 2015 and December 31, 2014.

(b) Net of unamortized premiums and discounts, and deferred fees and costs of $164 million and $245 million at June 30, 2015 and December 31, 2014.

Finance Receivables Summary

Following is a summary of activity in our consumer finance receivables portfolio (in millions):



	Six Months Ended June 30,
	2015									2014
	North America			International			Total			North America			International			Total
Consumer finance receivables, net of fees - beginning of period	$	13,361		$	12,262		$	25,623		$	11,388		$	11,742		$	23,130
Loans purchased	4,915			3,451			8,366			2,917			4,128			7,045
Principal collections and other	(2,393		)	(2,901		)	(5,294		)	(2,052		)	(2,987		)	(5,039		)
Charge-offs	(388		)	(66		)	(454		)	(349		)	(66		)	(415		)
Foreign currency translation	(5		)	(906		)	(911		)	—			325			325
Balance at end of period	$	15,490		$	11,840		$	27,330		$	11,904		$	13,142		$	25,046

Allowance for Credit Losses on Financing Receivables

A summary of the activity in the allowance for consumer loan losses is as follows (in millions):



	Three Months Ended June 30,
	2015									2014
	North America			International			Total			North America			International			Total
Balance at beginning of period	$	605		$	87		$	692		$	491		$	46		$	537
Provision for loan losses	110			29			139			89			33			122
Charge-offs	(188		)	(32		)	(220		)	(157		)	(34		)	(191		)
Recoveries	100			11			111			92			15			107
Foreign currency translation	—			(1		)	(1		)	—			—			—
Balance at end of period	$	627		$	94		$	721		$	515		$	60		$	575



	Six Months Ended June 30,
	2015									2014
	North America			International			Total			North America			International			Total
Balance at beginning of period	$	577		$	78		$	655		$	468		$	29		$	497
Provision for loan losses	228			68			296			193			66			259
Charge-offs	(388		)	(66		)	(454		)	(349		)	(66		)	(415		)
Recoveries	210			23			233			203			31			234
Foreign currency translation	—			(9		)	(9		)	—			—			—
Balance at end of period	$	627		$	94		$	721		$	515		$	60		$	575

Financing Receivable Credit Quality Indicators

A summary of the credit risk profile by FICO score band, determined at origination, of the consumer finance receivables in the North America Segment is as follows (dollars in millions):



	June 30, 2015				December 31, 2014
	Amount		Percent		Amount		Percent
Prime - FICO Score 680 and greater	$	1,915	12.4	%	$	596	4.4	%
Near Prime - FICO Score 620 to 679	2,555		16.5		1,691		12.7
Sub-prime - FICO Score less than 620	11,020		71.1		11,074		82.9
Balance at end of period	$	15,490	100.0	%	$	13,361	100.0	%

Past Due Financing Receivables

The following is a summary of the contractual amounts of delinquent consumer finance receivables, which is not significantly different than recorded investment, that are (i) more than 30 days delinquent, but not yet in repossession and (ii) in repossession, but not yet charged off (dollars in millions):



	June 30, 2015								June 30, 2014
	North America		International		Total		Percent of Contractual Amount Due		North America		International		Total		Percent of Contractual Amount Due
31 - 60 days	$	917	$	145	$	1,062	3.6	%	$	756	$	130	$	886	3.5	%
Greater than 60 days	318		134		452		1.6		255		133		388		1.6
	1,235		279		1,514		5.2		1,011		263		1,274		5.1
In repossession	39		7		46		0.2		35		5		40		0.1
	$	1,274	$	286	$	1,560	5.4	%	$	1,046	$	268	$	1,314	5.2	%

Troubled Debt Restructurings on Financing Receivables

At June 30, 2015 and December 31, 2014, the outstanding balance of consumer finance receivables in the International Segment determined to be TDRs was insignificant; therefore, the following information is presented with regard to the TDRs in the North America Segment only (in millions):



	June 30, 2015			December 31, 2014
Outstanding recorded investment	$	1,399		$	1,234
Less: allowance for loan losses	(203		)	(172		)
Outstanding recorded investment, net of allowance	$	1,196		$	1,062
Unpaid principal balance	$	1,426		$	1,255

Additional information about loans classified as TDRs is presented below (in millions, except for number of loans):



	Three Months Ended June 30,				Six Months Ended June 30,
	2015		2014		2015		2014
Average recorded investment	$	1,347	$	928	$	1,309	$	875
Finance charge income recognized	$	41	$	30	$	81	$	59
Number of loans classified as TDRs during the period	14,397		12,135		26,124		22,247
Recorded investment of loans classified as TDRs during the period	$	245	$	213	$	446	$	388

Finance Receivables Summary - Post-acquisition - Commercial

Following is a summary of activity in our commercial finance receivables portfolio (in millions):



	Six Months Ended June 30,
	2015									2014
	North America			International			Total			North America		International			Total
Commercial finance receivables, net of fees - beginning of period	$	3,180		$	4,892		$	8,072		$	1,975	$	4,725		$	6,700
Net funding (collections) of commercial finance receivables	360			(331		)	29			397		(56		)	341
Charge-offs	—			—			—			—		—			—
Foreign currency translation	(25		)	(261		)	(286		)	1		72			73
Balance at end of period	$	3,515		$	4,300		$	7,815		$	2,373	$	4,741		$	7,114

Financing Receivable Credit Quality Indicators for Commercial Lending

A summary of the credit risk profile by dealer grouping of the commercial finance receivables is as follows (in millions):



			June 30, 2015		December 31, 2014
Group I	-	Dealers with superior financial metrics	$	1,068	$	1,062
Group II	-	Dealers with strong financial metrics	2,415		2,090
Group III	-	Dealers with fair financial metrics	2,617		2,856
Group IV	-	Dealers with weak financial metrics	1,071		1,250
Group V	-	Dealers warranting special mention due to potential weaknesses	443		559
Group VI	-	Dealers with loans classified as substandard, doubtful or impaired	201		255
Balance at end of period			$	7,815	$	8,072