GM Financial Receivables and Transactions

6 Months Ended

Jun. 30, 2019

GM Financial Receivables and Transactions



	June 30, 2019									December 31, 2018
	Retail			Commercial(a)			Total			Retail			Commercial(a)			Total
Finance receivables, collectively evaluated for impairment, net of fees	$	40,237		$	12,506		$	52,743		$	38,220		$	12,235		$	50,455
Finance receivables, individually evaluated for impairment, net of fees(b)	2,354			49			2,403			2,348			41			2,389
GM Financial receivables	42,591			12,555			55,146			40,568			12,276			52,844
Less: allowance for loan losses(b)	(881		)	(76		)	(957		)	(844		)	(67		)	(911		)
GM Financial receivables, net	$	41,710		$	12,479		$	54,189		$	39,724		$	12,209		$	51,933

Fair value of GM Financial receivables utilizing Level 2 inputs							$	12,479								$	12,209
Fair value of GM Financial receivables utilizing Level 3 inputs							$	42,050								$	39,430

__________


(a)	Net of dealer cash management balances of $1.1 billion and $922 million at June 30, 2019 and December 31, 2018. Under the cash management program, subject to certain conditions, a dealer may choose to reduce the amount of interest on its floorplan line by making principal payments to GM Financial in advance.


(b)	Retail finance receivables individually evaluated for impairment, net of fees are classified as troubled debt restructurings. The allowance for loan losses included $341 million and $321 million of specific allowances on these receivables at June 30, 2019 and December 31, 2018.



	Three Months Ended						Six Months Ended
	June 30, 2019			June 30, 2018			June 30, 2019			June 30, 2018
Allowance for loan losses at beginning of period	$	924		$	912		$	911		$	942
Provision for loan losses	179			128			354			264
Charge-offs	(279		)	(298		)	(588		)	(593		)
Recoveries	132			145			277			268
Effect of foreign currency	1			(14		)	3			(8		)
Allowance for loan losses at end of period	$	957		$	873		$	957		$	873

The allowance for loan losses on retail and commercial finance receivables included a collective allowance of $605 million and $586 million and a specific allowance of $352 million and $325 million at June 30, 2019 and December 31, 2018.

Retail Finance Receivables We use proprietary scoring systems in the underwriting process that measure the credit quality of retail finance receivables using several factors, such as credit bureau information, consumer credit risk scores (e.g., FICO score or its equivalent) and contract characteristics. We also consider other factors such as employment history, financial stability and capacity to pay. Subsequent to origination we review the credit quality of retail finance receivables based on customer payment activity. At June 30, 2019 and December 31, 2018, 23% and 25% of retail finance receivables were from consumers with sub-prime credit scores, which are defined as a FICO score or its equivalent of less than 620 at the time of loan origination.

An account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date the payment was contractually due. The accrual of finance charge income had been suspended on delinquent retail finance receivables with contractual amounts due of $838 million and $888 million at June 30, 2019 and December 31, 2018. The following table summarizes the contractual amount of delinquent retail finance receivables, which is not significantly different than the recorded investment of the retail finance receivables:



	June 30, 2019				June 30, 2018
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
31-to-60 days delinquent	$	1,083	2.5	%	$	1,178	3.3	%
Greater-than-60 days delinquent	498		1.2	%	462		1.3	%
Total finance receivables more than 30 days delinquent	1,581		3.7	%	1,640		4.6	%
In repossession	48		0.1	%	57		0.2	%
Total finance receivables more than 30 days delinquent or in repossession	$	1,629	3.8	%	$	1,697	4.8	%

Commercial Finance Receivables Our commercial finance receivables consist of dealer financings, primarily for inventory purchases. Proprietary models are used to assign a risk rating to each dealer. We perform periodic credit reviews of each dealership and adjust the dealership's risk rating, if necessary. Dealers in Group VI are subject to additional restrictions on funding, including suspension of lines of credit and liquidation of assets. The commercial finance receivables on non-accrual status were insignificant at June 30, 2019 and December 31, 2018. The following table summarizes the credit risk profile by dealer risk rating of the commercial finance receivables:



		June 30, 2019		December 31, 2018
Group I	– Dealers with superior financial metrics	$	1,922	$	2,192
Group II	– Dealers with strong financial metrics	5,102		4,399
Group III	– Dealers with fair financial metrics	3,861		4,064
Group IV	– Dealers with weak financial metrics	1,141		1,116
Group V	– Dealers warranting special mention due to elevated risks	419		422
Group VI	– Dealers with loans classified as substandard, doubtful or impaired	110		83
		$	12,555	$	12,276

Transactions with GM Financial The following table shows transactions between our Automotive segments and GM Financial. These amounts are presented in GM Financial's condensed consolidated balance sheets and statements of income.



	June 30, 2019		December 31, 2018
Condensed Consolidated Balance Sheets(a)
Commercial finance receivables, net due from GM consolidated dealers	$	491	$	445
Finance receivables from GM subsidiaries	$	108	$	134
Subvention receivable(b)	$	705	$	727
Commercial loan funding payable	$	66	$	61



	Three Months Ended				Six Months Ended
	June 30, 2019		June 30, 2018		June 30, 2019		June 30, 2018
Condensed Consolidated Statements of Income
Interest subvention earned on finance receivables	$	147	$	137	$	295	$	267
Leased vehicle subvention earned	$	818	$	813	$	1,653	$	1,611

__________


(a)	All balance sheet amounts are eliminated upon consolidation.

(b)

Cash paid by Automotive segments to GM Financial for subvention was $959 million and $1.1 billion for the three months ended June 30, 2019 and 2018 and $2.0 billion and $1.7 billion for the six months ended June 30, 2019 and 2018.