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FINANCING RECEIVABLES

3 Months Ended

Jan. 30, 2022

(9) Financing Receivables

The Company monitors the credit quality of financing receivables based on delinquency status. Past due balances of financing receivables still accruing finance income represent the total balance held (principal plus accrued interest) with any payment amounts 30 days or more past the contractual payment due date. Non-performing financing receivables represent receivables for which the Company has ceased accruing finance income. The Company ceases accruing finance income when these receivables are generally 90 days delinquent. Generally, when receivables are 120 days delinquent the estimated uncollectible amount from the customer is written off to the allowance for credit losses. Finance income for non-performing receivables is recognized on a cash basis. Accrual of finance income is generally resumed when the receivable becomes contractually current and collections are reasonably assured.

The credit quality analysis of retail notes, financing leases, and revolving charge accounts (collectively, retail customer receivables) by year of origination was as follows in millions of dollars:


	January 30, 2022
	2022		2021		2020		2019		2018		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	2,492	$	11,580	$	5,988	$	3,038	$	1,440	$	761	$	2,634	$	27,933
30-59 days past due		5		82		52		30		15		6		25		215
60-89 days past due		1		23		18		10		5		3		5		65
90+ days past due				1												1
Non-performing		1		33		58		52		31		36		6		217
Construction and forestry
Current		764		2,795		1,376		615		204		49		81		5,884
30-59 days past due		8		68		35		21		6		2		3		143
60-89 days past due				30		17		7		3		1		1		59
90+ days past due				2		3		3		1		8				17
Non-performing				33		48		37		14		7		1		140
Total retail customer receivables	$	3,271	$	14,647	$	7,595	$	3,813	$	1,719	$	873	$	2,756	$	34,674


	October 31, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	12,877	$	6,676	$	3,463	$	1,738	$	728	$	211	$	3,704	$	29,397
30-59 days past due		43		53		29		16		7		3		14		165
60-89 days past due		16		23		12		6		3		1		4		65
90+ days past due				1												1
Non-performing		23		57		53		32		17		23		7		212
Construction and forestry
Current		3,122		1,575		754		273		57		7		92		5,880
30-59 days past due		50		40		27		7		4		1		3		132
60-89 days past due		15		11		9		6		1				1		43
90+ days past due		1		2		3		3		4		2				15
Non-performing		26		56		39		17		7		3				148
Total retail customer receivables	$	16,173	$	8,494	$	4,389	$	2,098	$	828	$	251	$	3,825	$	36,058


	January 31, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving Charge Accounts		Total
Retail customer receivables:
Agriculture and turf
Current	$	2,531	$	9,427	$	5,129	$	2,817	$	1,400	$	686	$	2,564	$	24,554
30-59 days past due		4		65		49		30		13		7		27		195
60-89 days past due				20		17		11		5		3		5		61
90+ days past due						1										1
Non-performing				40		78		57		36		46		7		264
Construction and forestry
Current		737		2,251		1,276		573		164		39		77		5,117
30-59 days past due		5		53		32		17		6		1		3		117
60-89 days past due		1		15		16		7		3		1		1		44
90+ days past due				9		13		5		4		2				33
Non-performing				26		34		26		14		8		1		109
Total retail customer receivables	$	3,278	$	11,906	$	6,645	$	3,543	$	1,645	$	793	$	2,685	$	30,495

The credit quality analysis of wholesale receivables by year of origination was as follows in millions of dollars:


	January 30, 2022
	2022		2021		2020		2019		2018		Prior Years		Revolving		Total
Wholesale receivables:
Agriculture and turf
Current	$	101	$	244	$	56	$	11	$	7	$	2	$	1,426	$	1,847
30+ days past due
Non-performing								7								7
Construction and forestry
Current		5		38		4		3				1		285		336
30+ days past due												1				1
Non-performing
Total wholesale receivables	$	106	$	282	$	60	$	21	$	7	$	4	$	1,711	$	2,191


	October 31, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving		Total
Wholesale receivables:
Agriculture and turf
Current	$	346	$	80	$	22	$	9	$	3			$	1,696	$	2,156
30+ days past due
Non-performing						12										12
Construction and forestry
Current		41		7		7				1	$	1		340		397
30+ days past due												1				1
Non-performing
Total wholesale receivables	$	387	$	87	$	41	$	9	$	4	$	2	$	2,036	$	2,566


	January 31, 2021
	2021		2020		2019		2018		2017		Prior Years		Revolving		Total
Wholesale receivables:
Agriculture and turf
Current	$	78	$	226	$	67	$	18	$	8	$	1	$	2,297	$	2,695
30+ days past due
Non-performing						35										35
Construction and forestry
Current		3		11		20		2		1		2		315		354
30+ days past due												1				1
Non-performing
Total wholesale receivables	$	81	$	237	$	122	$	20	$	9	$	4	$	2,612	$	3,085

An analysis of the allowance for credit losses and investment in financing receivables in millions of dollars during the periods follows:


	Three Months Ended January 30, 2022
	Retail Notes		Revolving
	& Financing		Charge		Wholesale
	Leases		Accounts		Receivables		Total
Allowance:
Beginning of period balance	$	138	$	21	$	7	$	166
Provision (credit)		13		(9)		(2)		2
Write-offs		(17)		(5)				(22)
Recoveries		4		8				12
End of period balance	$	138	$	15	$	5	$	158

Financing receivables:
End of period balance	$	31,918	$	2,756	$	2,191	$	36,865


	Three Months Ended January 31, 2021
	Retail Notes		Revolving
	& Financing		Charge		Wholesale
	Leases		Accounts		Receivables		Total
Allowance:
Beginning of period balance	$	133	$	43	$	8	$	184
ASU No. 2016-13 adoption		44		(13)				31
Provision (credit)		5		(10)		(1)		(6)
Write-offs		(8)		(5)				(13)
Recoveries		5		9				14
Translation adjustments		1						1
End of period balance	$	180	$	24	$	7	$	211

Financing receivables:
End of period balance	$	27,810	$	2,685	$	3,085	$	33,580

The allowance for credit losses on financing receivables decreased in the first quarter of 2022 led by a decrease in the revolving charge accounts. This portfolio is benefiting from favorable agricultural market conditions driven by higher commodity prices and net farm income, which is contributing to stronger payment performance.

A troubled debt restructuring is the modification of debt in which a creditor grants a concession it would not otherwise consider to a debtor that is experiencing financial difficulties. These modifications may include a reduction of the stated interest rate, an extension of the maturity dates, a reduction of the face amount or maturity amount of the debt, or a reduction of accrued interest. During the first three months of 2022, the Company identified 108 receivable contracts, primarily retail notes, as troubled debt restructurings with aggregate balances of $5 million pre-modification and $4 million post-modification. During the first three months of 2021, there were 98 receivable contracts, primarily retail notes, identified as troubled debt restructurings with aggregate balances of $5 million pre-modification and post-modification. During these same periods, there were no significant troubled debt restructurings that subsequently defaulted and were written off. At January 30, 2022, the Company had no commitments to lend to borrowers whose accounts were modified in troubled debt restructurings.