Note 6 – Allowance for Credit Losses

The following table provides information related to our allowance for credit losses on finance receivables and investments in operating leases:

	Three Months Ended
	June 30,
	2017			2016
Allowance for credit losses at beginning of period	$	622		$	535
Provision for credit losses		85			52
Charge-offs, net of recoveries		(96	)		(98	)
Allowance for credit losses at end of period	$	611		$	489

Charge-offs are shown net of recoveries of $23 million and $20 million for the three months ended June 30, 2017 and 2016, respectively.

Allowance for Credit Losses and Finance Receivables by Portfolio Segment

The following tables provide information related to our allowance for credit losses for finance receivables and finance receivables by portfolio segment:


	Three Months Ended June 30, 2017
	Retail Loan			Dealer Products		Total
Beginning balance, April 1, 2017	$	344		$	123	$	467
Charge-offs		(79	)		-		(79	)
Recoveries		13			-		13
Provisions		44			8		52
Ending balance, June 30, 2017	$	322		$	131	$	453

Allowance for Credit Losses:
Ending balance: Individually evaluated for impairment	$	-		$	47	$	47
Ending balance: Collectively evaluated for impairment	$	322		$	84	$	406

Finance Receivables:
Ending balance, June 30, 2017	$	51,375		$	18,275	$	69,650
Ending balance: Individually evaluated for impairment	$	-		$	494	$	494
Ending balance: Collectively evaluated for impairment	$	51,375		$	17,781	$	69,156

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $225 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired. These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of June 30, 2017, as they are deemed to be insignificant for individual evaluation, and we have determined that the allowance for credit losses is not significant and would not be materially different if the amounts had been individually evaluated for impairment. The ending balance of finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of June 30, 2017 includes $1,056 million in finance receivables that are guaranteed by Toyota Motor Sales, U.S.A., Inc. (“TMS”), and $173 million in finance receivables that are guaranteed by third party private Toyota distributors. These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMS and third party private Toyota distributors.

Note 6 – Allowance for Credit Losses (Continued)


	Three Months Ended June 30, 2016
	Retail Loan			Dealer Products			Total
Beginning balance, April 1, 2016	$	289		$	132		$	421
Charge-offs		(82	)		-			(82	)
Recoveries		13			-			13
Provisions		58			(44	)		14
Ending balance, June 30, 2016	$	278		$	88		$	366

Allowance for Credit Losses:
Ending balance: Individually evaluated for impairment	$	-		$	30		$	30
Ending balance: Collectively evaluated for impairment	$	278		$	58		$	336

Finance Receivables:
Ending balance, June 30, 2016	$	50,148		$	15,940		$	66,088
Ending balance: Individually evaluated for impairment	$	-		$	467		$	467
Ending balance: Collectively evaluated for impairment	$	50,148		$	15,473		$	65,621

The ending balance of finance receivables collectively evaluated for impairment in the above table includes approximately $225 million of finance receivables within the retail loan portfolio segment that are specifically identified as impaired. These amounts are aggregated within their respective portfolio segment when determining the allowance for credit losses as of June 30, 2016, as they are deemed to be insignificant for individual evaluation and we have determined that the allowance for credit losses is not significant and would not be materially different if the amounts had been individually evaluated for impairment. The ending balance of finance receivables for the dealer products portfolio segment collectively evaluated for impairment as of June 30, 2016 includes $1,025 million in finance receivables that are guaranteed by TMS, and $142 million in finance receivables that are guaranteed by third party private Toyota distributors. These finance receivables are related to certain Toyota and Lexus dealers and other third parties to whom we provided financing at the request of TMS and third party private Toyota distributors.

Note 6 – Allowance for Credit Losses (Continued)

Past Due Finance Receivables and Investments in Operating Leases

The following table shows aggregate balances of finance receivables and investments in operating leases 60 or more days past due:

	June 30,		March 31,
	2017		2017
Aggregate balances 60 or more days past due
Finance receivables	$	229	$	192
Investments in operating leases		104		95
Total	$	333	$	287

Substantially all finance receivables and investments in operating leases do not involve recourse to the dealer in the event of customer default. Finance receivables and investments in operating leases 60 or more days past due include contracts in bankruptcy and contracts greater than 120 days past due, which are recorded at the fair value of collateral less estimated costs to sell. Contracts for which vehicles have been repossessed are excluded.

Past Due Finance Receivables by Class

The following tables summarize the aging of finance receivables by class:

	June 30, 2017
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Finance Receivables		90 Days or Greater Past Due and Accruing
Retail loan	$	632	$	171	$	58	$	861	$	50,514	$	51,375	$	42
Wholesale		-		-		-		-		11,221		11,221		-
Real estate		-		-		-		-		4,762		4,762		-
Working capital		-		-		-		-		2,292		2,292		-
Total	$	632	$	171	$	58	$	861	$	68,789	$	69,650	$	42

	March 31, 2017
	30 - 59 Days Past Due		60 - 89 Days Past Due		90 Days or Greater Past Due		Total Past Due		Current		Total Finance Receivables		90 Days or Greater Past Due and Accruing
Retail loan	$	586	$	129	$	63	$	778	$	50,631	$	51,409	$	41
Wholesale		-		-		-		-		10,951		10,951		-
Real estate		-		-		-		-		4,713		4,713		-
Working capital		3		-		-		3		2,232		2,235		-
Total	$	589	$	129	$	63	$	781	$	68,527	$	69,308	$	41