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Credit Quality of Financing Receivables and the Allowance for Credit Losses | 12 Months Ended
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Mar. 31, 2014
Credit Quality of Financing Receivables and the Allowance for Credit Losses | 8. Credit Quality of Financing Receivables and the Allowance for Credit Losses The Company and its subsidiaries apply ASC 310 (“Receivables”), which requires an entity to provide the following information disaggregated by portfolio segment and class of financing receivable. Allowance for credit losses—by portfolio segment Credit quality of financing receivables—by class
| • |  | Impaired loans
| • |  | Credit quality indicators
| • |  | Non-accrual and past-due financing receivables
Information about troubled debt restructurings—by class A portfolio segment is defined as the level at which an entity develops and documents a systematic methodology to determine its allowance for credit losses. The Company and its subsidiaries classify our portfolio segments by instruments of loans and direct financing leases. Classes of financing receivables are determined based on the initial measurement attribute, risk characteristics of the financing receivables and the method for monitoring and assessing obligors’ credit risk, and are defined as the level of detail necessary for a financial statement user to understand the risks inherent in the financing receivables. Classes of financing receivables generally are a disaggregation of a portfolio segment, and the Company and its subsidiaries disaggregate our portfolio segments into classes by regions, instruments or industries of debtors. The following table provides information about the allowance for credit losses for fiscal 2012, 2013 and 2014:
|  | March 31, 2012 |
|  | Millions of yen |
|  | Loans |  |  |  |  |  |  |
|  | Consumer |  |  | Corporate |  |  | Purchased loans*1 |  |  | Direct financing leases |  |  | Total |
|  | Non-recourse loans |  |  | Other |  |  |  |
Allowance for Credit Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | ¥ | 17,096 |  |  | ¥ | 27,426 |  |  | ¥ | 70,972 |  |  | ¥ | 17,455 |  |  | ¥ | 21,201 |  |  | ¥ | 154,150 |
Provision charged to income |  |  | 947 |  |  |  | 6,509 |  |  |  | 5,974 |  |  |  | 3,188 |  |  |  | 2,568 |  |  |  | 19,186 |
Charge-offs |  |  | (1,943 | ) |  |  | (10,083 | ) |  |  | (18,928 | ) |  |  | (793 | ) |  |  | (6,863 | ) |  |  | (38,610 | )
Recoveries |  |  | 43 |  |  |  | 16 |  |  |  | 2,212 |  |  |  | 0 |  |  |  | 80 |  |  |  | 2,351 |
Other*2 |  |  | (3 | ) |  |  | (363 | ) |  |  | 36 |  |  |  | (25 | ) |  |  | (134 | ) |  |  | (489 | )
Ending balance |  | ¥ | 16,140 |  |  | ¥ | 23,505 |  |  | ¥ | 60,266 |  |  | ¥ | 19,825 |  |  | ¥ | 16,852 |  |  | ¥ | 136,588 |
Individually evaluated for impairment |  |  | 3,002 |  |  |  | 20,657 |  |  |  | 49,853 |  |  |  | 17,895 |  |  |  | 0 |  |  |  | 91,407 |
Not individually evaluated for impairment |  |  | 13,138 |  |  |  | 2,848 |  |  |  | 10,413 |  |  |  | 1,930 |  |  |  | 16,852 |  |  |  | 45,181 |
Financing receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | ¥ | 881,483 |  |  | ¥ | 775,465 |  |  | ¥ | 995,246 |  |  | ¥ | 97,559 |  |  | ¥ | 900,886 |  |  | ¥ | 3,650,639 |
Individually evaluated for impairment |  |  | 9,021 |  |  |  | 82,957 |  |  |  | 166,889 |  |  |  | 34,907 |  |  |  | 0 |  |  |  | 293,774 |
Not individually evaluated for impairment |  |  | 872,462 |  |  |  | 692,508 |  |  |  | 828,357 |  |  |  | 62,652 |  |  |  | 900,886 |  |  |  | 3,356,865 |
|  | March 31, 2013 |
|  | Millions of yen |
|  | Loans |  |  | Direct financing leases |  |  | Total |
|  | Consumer |  |  | Corporate |  |  | Purchased loans*1 |  |  |
|  | Non-recourse Loans |  |  | Other |  |  |  |
Allowance for Credit Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | ¥ | 16,140 |  |  | ¥ | 23,505 |  |  | ¥ | 60,266 |  |  | ¥ | 19,825 |  |  | ¥ | 16,852 |  |  | ¥ | 136,588 |
Provision charged to income |  |  | 809 |  |  |  | (200 | ) |  |  | 2,335 |  |  |  | 4,649 |  |  |  | 2,423 |  |  |  | 10,016 |
Charge-offs |  |  | (3,050 | ) |  |  | (7,384 | ) |  |  | (20,566 | ) |  |  | (9,412 | ) |  |  | (4,409 | ) |  |  | (44,821 | )
Recoveries |  |  | 281 |  |  |  | 1 |  |  |  | 988 |  |  |  | 0 |  |  |  | 363 |  |  |  | 1,633 |
Other*3 |  |  | 346 |  |  |  | 795 |  |  |  | (1,148 | ) |  |  | 254 |  |  |  | 601 |  |  |  | 848 |
Ending balance |  | ¥ | 14,526 |  |  | ¥ | 16,717 |  |  | ¥ | 41,875 |  |  | ¥ | 15,316 |  |  | ¥ | 15,830 |  |  | ¥ | 104,264 |
Individually evaluated for impairment |  |  | 3,190 |  |  |  | 14,620 |  |  |  | 34,206 |  |  |  | 13,135 |  |  |  | 0 |  |  |  | 65,151 |
Not individually evaluated for impairment |  |  | 11,336 |  |  |  | 2,097 |  |  |  | 7,669 |  |  |  | 2,181 |  |  |  | 15,830 |  |  |  | 39,113 |
Financing receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | ¥ | 1,171,142 |  |  | ¥ | 568,957 |  |  | ¥ | 862,332 |  |  | ¥ | 70,801 |  |  | ¥ | 989,380 |  |  | ¥ | 3,662,612 |
Individually evaluated for impairment |  |  | 10,861 |  |  |  | 61,050 |  |  |  | 111,722 |  |  |  | 29,107 |  |  |  | 0 |  |  |  | 212,740 |
Not individually evaluated for impairment |  |  | 1,160,281 |  |  |  | 507,907 |  |  |  | 750,610 |  |  |  | 41,694 |  |  |  | 989,380 |  |  |  | 3,449,872 |
|  | March 31, 2014 |
|  | Millions of yen |
|  | Loans |  |  |  |  |  | Total |
|  | Consumer |  |  | Corporate |  |  | Purchased loans*1 |  |  | Direct financing leases |  |
|  | Non-recourse loans |  |  | Other |  |  |  |
Allowance for Credit Losses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Beginning balance |  | ¥ | 14,526 |  |  | ¥ | 16,717 |  |  | ¥ | 41,875 |  |  | ¥ | 15,316 |  |  | ¥ | 15,830 |  |  | ¥ | 104,264 |
Provision charged to income |  |  | 4,437 |  |  |  | 2,381 |  |  |  | 833 |  |  |  | 2,532 |  |  |  | 3,651 |  |  |  | 13,834 |
Charge-offs |  |  | (5,786 | ) |  |  | (3,590 | ) |  |  | (11,803 | ) |  |  | (3,921 | ) |  |  | (4,421 | ) |  |  | (29,521 | )
Recoveries |  |  | 290 |  |  |  | 140 |  |  |  | 798 |  |  |  | 111 |  |  |  | 70 |  |  |  | 1,409 |
Other*4 |  |  | 6 |  |  |  | (6,601 | ) |  |  | 1,041 |  |  |  | 110 |  |  |  | 254 |  |  |  | (5,190 | )
Ending balance |  | ¥ | 13,473 |  |  | ¥ | 9,047 |  |  | ¥ | 32,744 |  |  | ¥ | 14,148 |  |  | ¥ | 15,384 |  |  | ¥ | 84,796 |
Individually evaluated for impairment |  |  | 3,279 |  |  |  | 8,534 |  |  |  | 25,054 |  |  |  | 12,288 |  |  |  | 0 |  |  |  | 49,155 |
Not individually evaluated for impairment |  |  | 10,194 |  |  |  | 513 |  |  |  | 7,690 |  |  |  | 1,860 |  |  |  | 15,384 |  |  |  | 35,641 |
Financing receivables: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ending balance |  | ¥ | 1,236,414 |  |  | ¥ | 174,204 |  |  | ¥ | 837,329 |  |  | ¥ | 53,341 |  |  | ¥ | 1,094,073 |  |  | ¥ | 3,395,361 |
Individually evaluated for impairment |  |  | 11,796 |  |  |  | 24,902 |  |  |  | 76,051 |  |  |  | 23,075 |  |  |  | 0 |  |  |  | 135,824 |
Not individually evaluated for impairment |  |  | 1,224,618 |  |  |  | 149,302 |  |  |  | 761,278 |  |  |  | 30,266 |  |  |  | 1,094,073 |  |  |  | 3,259,537 |
*1 | Purchased loans represent loans with evidence of deterioration of credit quality since origination and for which it is probable at acquisition that collection of all contractually required payments from the debtors is unlikely in accordance with ASC 310-30 (“Receivables—Loans and Debt Securities Acquired with Deteriorated Credit Quality”).
*2 | Other mainly includes foreign currency translation adjustments, amounts reclassified to discontinued operations and decrease in allowance related to sales of a subsidiary.
*3 | Other mainly includes foreign currency translation adjustments and decrease in allowance related to newly consolidated subsidiaries and sales of a subsidiary.
*4 | Other mainly includes foreign currency translation adjustments and decrease in allowance related to newly consolidated subsidiaries. Additionally, Other in Non-recourse loans includes a decrease of ¥6,562 million due to the sale of controlling class interests of a certain VIE, which was formerly consolidated, to a third party and resulting in deconsolidation of that VIE.
In developing the allowance for credit losses, the Company and its subsidiaries consider, among other things, the following factors:
| • |  | business characteristics and financial conditions of obligors;
| • |  | current economic conditions and trends;
| • |  | prior charge-off experience;
| • |  | current delinquencies and delinquency trends; and
| • |  | value of underlying collateral and guarantees.
The Company and its subsidiaries individually develop the allowance for credit losses for impaired loans. For non-impaired loans, including loans that are not individually evaluated for impairment, and direct financing leases, the Company and its subsidiaries evaluate prior charge-off experience as segmented by debtor’s industry and the purpose of the loans and develop the allowance for credit losses based on such prior charge-off experience as well as current economic conditions. In common with all portfolio segments, a deterioration of debtors’ condition may increase the risk of delay in payments of principal and interest. For loans to consumer borrowers, the amount of the allowance for credit losses is changed by the variation of individual debtors’ creditworthiness and value of underlying collateral and guarantees, and the prior charge-off experience. For loans to corporate other borrowers and direct financing leases, the amount of the allowance for credit losses is changed by current economic conditions and trends, the value of underlying collateral and guarantees, and the prior charge-off experience in addition to the debtors’ creditworthiness. The decline of the value of underlying collateral and guarantees may increase the risk of inability to collect from the loans and direct financing leases. Particularly for non-recourse loans for which cash flow from real estate is the source of repayment, their collection depends on the real estate collateral value, which may decline as a result of decrease in liquidity of the real estate market, rise in vacancy rate of rental properties, fall in rents and other factors. These risks may change the amount of the allowance for credit losses. For purchased loans, their collection may decrease due to a decline in the real estate collateral value and debtors’ creditworthiness. Thus, these risks may change the amount of the allowance for credit losses. In common with all portfolio segments, the Company and its subsidiaries charge off doubtful receivables when the likelihood of any future collection is believed to be minimal, mainly based upon an evaluation of the relevant debtors’ creditworthiness and the liquidation status of collateral. The following table provides information about the impaired loans as of March 31, 2013 and 2014:
|  | March 31, 2013 |
|  |  |  | Millions of Yen |
Portfolio segment |  | Class |  | Loans Individually Evaluated for Impairment |  |  | Unpaid Principal Balance |  |  | Related Allowance |
With no related allowance recorded*1: |  |  |  | ¥ | 52,798 |  |  | ¥ | 52,768 |  |  | ¥ | 0 |
Consumer borrowers |  |  |  |  | 1,003 |  |  |  | 989 |  |  |  | 0 |
|  | Housing loans |  |  | 1,003 |  |  |  | 989 |  |  |  | 0 |
|  | Card loans |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
|  | Other |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Corporate borrowers |  |  |  |  | 51,795 |  |  |  | 51,779 |  |  |  | 0 |
Non-recourse loans |  | Japan |  |  | 21,409 |  |  |  | 21,407 |  |  |  | 0 |
|  | U.S. |  |  | 5,825 |  |  |  | 5,825 |  |  |  | 0 |
Other |  | Real estate companies |  |  | 7,063 |  |  |  | 7,060 |  |  |  | 0 |
|  | Entertainment companies |  |  | 6,148 |  |  |  | 6,147 |  |  |  | 0 |
|  | Other |  |  | 11,350 |  |  |  | 11,340 |  |  |  | 0 |
Purchased loans |  |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
With an allowance recorded*2: |  |  |  |  | 159,942 |  |  |  | 158,798 |  |  |  | 65,151 |
Consumer borrowers |  |  |  |  | 9,858 |  |  |  | 9,828 |  |  |  | 3,190 |
|  | Housing loans |  |  | 7,496 |  |  |  | 7,471 |  |  |  | 2,565 |
|  | Card loans |  |  | 1,858 |  |  |  | 1,854 |  |  |  | 547 |
|  | Other |  |  | 504 |  |  |  | 503 |  |  |  | 78 |
Corporate borrowers |  |  |  |  | 120,977 |  |  |  | 119,863 |  |  |  | 48,826 |
Non-recourse loans |  | Japan |  |  | 2,006 |  |  |  | 2,004 |  |  |  | 1,021 |
|  | U.S. |  |  | 31,810 |  |  |  | 31,706 |  |  |  | 13,599 |
Other |  | Real estate companies |  |  | 40,063 |  |  |  | 39,896 |  |  |  | 15,862 |
|  | Entertainment companies |  |  | 5,889 |  |  |  | 5,843 |  |  |  | 2,118 |
|  | Other |  |  | 41,209 |  |  |  | 40,414 |  |  |  | 16,226 |
Purchased loans |  |  |  |  | 29,107 |  |  |  | 29,107 |  |  |  | 13,135 |
Total: |  |  |  | ¥ | 212,740 |  |  | ¥ | 211,566 |  |  | ¥ | 65,151 |
Consumer borrowers |  |  |  |  | 10,861 |  |  |  | 10,817 |  |  |  | 3,190 |
|  | Housing loans |  |  | 8,499 |  |  |  | 8,460 |  |  |  | 2,565 |
|  | Card loans |  |  | 1,858 |  |  |  | 1,854 |  |  |  | 547 |
|  | Other |  |  | 504 |  |  |  | 503 |  |  |  | 78 |
Corporate borrowers |  |  |  |  | 172,772 |  |  |  | 171,642 |  |  |  | 48,826 |
Non-recourse loans |  | Japan |  |  | 23,415 |  |  |  | 23,411 |  |  |  | 1,021 |
|  | U.S. |  |  | 37,635 |  |  |  | 37,531 |  |  |  | 13,599 |
Other |  | Real estate companies |  |  | 47,126 |  |  |  | 46,956 |  |  |  | 15,862 |
|  | Entertainment companies |  |  | 12,037 |  |  |  | 11,990 |  |  |  | 2,118 |
|  | Other |  |  | 52,559 |  |  |  | 51,754 |  |  |  | 16,226 |
Purchased loans |  |  |  |  | 29,107 |  |  |  | 29,107 |  |  |  | 13,135 |
|  | March 31, 2014 |
|  |  |  | Millions of Yen |
Portfolio segment |  | Class |  | Loans Individually Evaluated for Impairment |  |  | Unpaid Principal Balance |  |  | Related Allowance |
With no related allowance recorded*1: |  |  |  | ¥ | 25,049 |  |  | ¥ | 25,025 |  |  | ¥ | 0 |
Consumer borrowers |  |  |  |  | 725 |  |  |  | 711 |  |  |  | 0 |
|  | Housing loans |  |  | 725 |  |  |  | 711 |  |  |  | 0 |
|  | Card loans |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
|  | Other |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Corporate borrowers |  |  |  |  | 24,324 |  |  |  | 24,314 |  |  |  | 0 |
Non-recourse loans |  | Japan |  |  | 6,505 |  |  |  | 6,505 |  |  |  | 0 |
|  | U.S. |  |  | 2,259 |  |  |  | 2,259 |  |  |  | 0 |
Other |  | Real estate companies |  |  | 3,770 |  |  |  | 3,767 |  |  |  | 0 |
|  | Entertainment companies |  |  | 2,614 |  |  |  | 2,613 |  |  |  | 0 |
|  | Other |  |  | 9,176 |  |  |  | 9,170 |  |  |  | 0 |
Purchased loans |  |  |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
With an allowance recorded*2: |  |  |  |  | 110,775 |  |  |  | 110,064 |  |  |  | 49,155 |
Consumer borrowers |  |  |  |  | 11,071 |  |  |  | 11,010 |  |  |  | 3,279 |
|  | Housing loans |  |  | 6,592 |  |  |  | 6,543 |  |  |  | 2,432 |
|  | Card loans |  |  | 2,950 |  |  |  | 2,942 |  |  |  | 629 |
|  | Other |  |  | 1,529 |  |  |  | 1,525 |  |  |  | 218 |
Corporate borrowers |  |  |  |  | 76,629 |  |  |  | 75,979 |  |  |  | 33,588 |
Non-recourse loans |  | Japan |  |  | 1,363 |  |  |  | 1,299 |  |  |  | 1,020 |
|  | U.S. |  |  | 14,775 |  |  |  | 14,746 |  |  |  | 7,514 |
Other |  | Real estate companies |  |  | 25,099 |  |  |  | 25,046 |  |  |  | 8,911 |
|  | Entertainment companies |  |  | 5,213 |  |  |  | 5,172 |  |  |  | 1,801 |
|  | Other |  |  | 30,179 |  |  |  | 29,716 |  |  |  | 14,342 |
Purchased loans |  |  |  |  | 23,075 |  |  |  | 23,075 |  |  |  | 12,288 |
Total: |  |  |  | ¥ | 135,824 |  |  | ¥ | 135,089 |  |  | ¥ | 49,155 |
Consumer borrowers |  |  |  |  | 11,796 |  |  |  | 11,721 |  |  |  | 3,279 |
|  | Housing loans |  |  | 7,317 |  |  |  | 7,254 |  |  |  | 2,432 |
|  | Card loans |  |  | 2,950 |  |  |  | 2,942 |  |  |  | 629 |
|  | Other |  |  | 1,529 |  |  |  | 1,525 |  |  |  | 218 |
Corporate borrowers |  |  |  |  | 100,953 |  |  |  | 100,293 |  |  |  | 33,588 |
Non-recourse loans |  | Japan |  |  | 7,868 |  |  |  | 7,804 |  |  |  | 1,020 |
|  | U.S. |  |  | 17,034 |  |  |  | 17,005 |  |  |  | 7,514 |
Other |  | Real estate companies |  |  | 28,869 |  |  |  | 28,813 |  |  |  | 8,911 |
|  | Entertainment companies |  |  | 7,827 |  |  |  | 7,785 |  |  |  | 1,801 |
|  | Other |  |  | 39,355 |  |  |  | 38,886 |  |  |  | 14,342 |
Purchased loans |  |  |  |  | 23,075 |  |  |  | 23,075 |  |  |  | 12,288 |
*1 | “With no related allowance recorded” represents impaired loans with no allowance for credit losses as all amounts are considered to be collectible.
*2 | “With an allowance recorded” represents impaired loans with the allowance for credit losses as all or a part of the amounts are not considered to be collectible.
The Company and its subsidiaries recognize installment loans other than purchased loans and loans to consumer borrowers as impaired loans when principal or interest is past-due 90 days or more, or it is probable that the Company and its subsidiaries will be unable to collect all amounts due according to the contractual terms of the loan agreements due to various debtor conditions, including insolvency filings, suspension of bank transactions, dishonored bills and deterioration of businesses. For non-recourse loans, in addition to these conditions, the Company and its subsidiaries perform an impairment review using financial covenants, acceleration clauses, loan-to-value ratios, and other relevant available information. For purchased loans, the Company and its subsidiaries recognize them as impaired loans when it is probable that the Company and its subsidiaries will be unable to collect book values of the remaining investment due to factors such as a decline in the real estate collateral value and debtors’ creditworthiness since the acquisition of these loans. The Company and its subsidiaries consider that loans to consumer borrowers, including housing loans, card loans and other, are impaired when terms of these loans are modified as troubled debt restructurings. Interest payments received on impaired loans other than purchased loans are recorded as interest income unless the collection of the remaining investment is doubtful at which time payments received are recorded as reductions of principal. For purchased loans, although the acquired assets may remain loans in legal form, collections on these loans often do not reflect the normal historical experience of collecting delinquent accounts, and the need to tailor individual collateral-realization strategies often makes it difficult to reliably estimate the amount, timing, or nature of collections. Accordingly, the Company and its subsidiaries use the cost recovery method of income recognition for such purchased loans regardless of whether impairment is recognized or not. In common with all classes, impaired loans are individually evaluated for a valuation allowance based on the present value of expected future cash flows, the loan’s observable market price or the fair value of the collateral securing the loans if the loans are collateral-dependent. For non-recourse loans, in principle, the estimated collectible amount is determined based on the fair value of the collateral securing the loans as they are collateral-dependent. Further for certain non-recourse loans, the estimated collectible amount is determined based on the present value of expected future cash flows. The fair value of the real estate collateral securing the loans is determined using appraisals prepared by independent third-party appraisers or our own staff of qualified appraisers based on recent transactions involving sales of similar assets or other valuation techniques such as discounted cash flows methodologies using future cash flows estimated to be generated from operation of the existing assets or completion of development projects, as appropriate. We generally obtain a new appraisal once a fiscal year. In addition, we periodically monitor circumstances of the real estate collateral and then obtain a new appraisal in situations involving a significant change in economic and/or physical conditions which may materially affect its fair value. For impaired purchased loans, the Company and its subsidiaries develop the allowance for credit losses based on the difference between the book value and the estimated collectible amount of such loans. The following table provides information about the average recorded investments in impaired loans and interest income on impaired loans for fiscal 2012, 2013 and 2014:
|  | March 31, 2012 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Average Recorded Investments in Impaired Loans*1 |  |  | Interest Income on Impaired Loans |  |  | Interest on Impaired Loans Collected in Cash |
Consumer borrowers |  |  |  | ¥ | 8,933 |  |  | ¥ | 226 |  |  | ¥ | 204 |
|  | Housing loans |  |  | 8,933 |  |  |  | 226 |  |  |  | 204 |
|  | Other |  |  | 0 |  |  |  | 0 |  |  |  | 0 |
Corporate borrowers |  |  |  |  | 252,683 |  |  |  | 4,506 |  |  |  | 3,976 |
Non-recourse loans |  | Japan |  |  | 30,021 |  |  |  | 367 |  |  |  | 311 |
|  | U.S. |  |  | 41,399 |  |  |  | 794 |  |  |  | 695 |
Other |  | Real estate companies |  |  | 84,121 |  |  |  | 1,243 |  |  |  | 1,102 |
|  | Entertainment companies |  |  | 25,796 |  |  |  | 724 |  |  |  | 711 |
|  | Other |  |  | 71,346 |  |  |  | 1,378 |  |  |  | 1,157 |
Purchased loans |  |  |  |  | 34,063 |  |  |  | 0 |  |  |  | 0 |
Total |  |  |  | ¥ | 295,679 |  |  | ¥ | 4,732 |  |  | ¥ | 4,180 |
|  | March 31, 2013 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Average Recorded Investments in Impaired Loans*1 |  |  | Interest Income on Impaired Loans |  |  | Interest on Impaired Loans Collected in Cash |
Consumer borrowers |  |  |  | ¥ | 9,586 |  |  | ¥ | 209 |  |  | ¥ | 168 |
|  | Housing loans |  |  | 8,635 |  |  |  | 188 |  |  |  | 152 |
|  | Card loans |  |  | 771 |  |  |  | 16 |  |  |  | 12 |
|  | Other |  |  | 180 |  |  |  | 5 |  |  |  | 4 |
Corporate borrowers |  |  |  |  | 221,136 |  |  |  | 4,259 |  |  |  | 3,968 |
Non-recourse loans |  | Japan |  |  | 37,282 |  |  |  | 216 |  |  |  | 211 |
|  | U.S. |  |  | 41,903 |  |  |  | 1,726 |  |  |  | 1,726 |
Other |  | Real estate companies |  |  | 62,265 |  |  |  | 889 |  |  |  | 804 |
|  | Entertainment companies |  |  | 16,443 |  |  |  | 364 |  |  |  | 322 |
|  | Other |  |  | 63,243 |  |  |  | 1,064 |  |  |  | 905 |
Purchased loans |  |  |  |  | 29,217 |  |  |  | 0 |  |  |  | 0 |
Total |  |  |  | ¥ | 259,939 |  |  | ¥ | 4,468 |  |  | ¥ | 4,136 |
|  | March 31, 2014 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Average Recorded Investments in Impaired Loans*1 |  |  | Interest Income on Impaired Loans |  |  | Interest on Impaired Loans Collected in Cash |
Consumer borrowers |  |  |  | ¥ | 11,445 |  |  | ¥ | 295 |  |  | ¥ | 230 |
|  | Housing loans |  |  | 8,004 |  |  |  | 231 |  |  |  | 178 |
|  | Card loans |  |  | 2,453 |  |  |  | 38 |  |  |  | 31 |
|  | Other |  |  | 988 |  |  |  | 26 |  |  |  | 21 |
Corporate borrowers |  |  |  |  | 134,927 |  |  |  | 4,146 |  |  |  | 3,449 |
Non-recourse loans |  | Japan |  |  | 15,897 |  |  |  | 234 |  |  |  | 219 |
|  | U.S. |  |  | 23,119 |  |  |  | 667 |  |  |  | 667 |
Other |  | Real estate companies |  |  | 38,733 |  |  |  | 1,154 |  |  |  | 990 |
|  | Entertainment companies |  |  | 10,277 |  |  |  | 509 |  |  |  | 343 |
|  | Other |  |  | 46,901 |  |  |  | 1,582 |  |  |  | 1,230 |
Purchased loans |  |  |  |  | 25,588 |  |  |  | 0 |  |  |  | 0 |
Total |  |  |  | ¥ | 171,960 |  |  | ¥ | 4,441 |  |  | ¥ | 3,679 |
*1 | Average balances are calculated on the basis of fiscal beginning and quarter-end balances.
The following table provides information about the credit quality indicators as of March 31, 2013 and 2014:
|  | March 31, 2013 |
|  |  |  | Millions of yen |
|  |  |  |  |  |  | Non-performing |  |  |  |
Portfolio segment |  | Class |  | Performing |  |  | Loans individually evaluated for impairment |  |  | 90+ days past-due loans not individually evaluated for impairment |  |  | Subtotal |  |  | Total |
Consumer borrowers |  |  |  | ¥ | 1,152,536 |  |  | ¥ | 10,861 |  |  | ¥ | 7,745 |  |  | ¥ | 18,606 |  |  | ¥ | 1,171,142 |
|  | Housing loans |  |  | 901,895 |  |  |  | 8,499 |  |  |  | 6,397 |  |  |  | 14,896 |  |  |  | 916,791 |
|  | Card loans |  |  | 223,130 |  |  |  | 1,858 |  |  |  | 719 |  |  |  | 2,577 |  |  |  | 225,707 |
|  | Other |  |  | 27,511 |  |  |  | 504 |  |  |  | 629 |  |  |  | 1,133 |  |  |  | 28,644 |
Corporate borrowers |  |  |  |  | 1,258,517 |  |  |  | 172,772 |  |  |  | 0 |  |  |  | 172,772 |  |  |  | 1,431,289 |
Non-recourse loans |  | Japan |  |  | 111,025 |  |  |  | 23,415 |  |  |  | 0 |  |  |  | 23,415 |  |  |  | 134,440 |
|  | U.S. |  |  | 396,882 |  |  |  | 37,635 |  |  |  | 0 |  |  |  | 37,635 |  |  |  | 434,517 |
Other |  | Real estate companies |  |  | 229,555 |  |  |  | 47,126 |  |  |  | 0 |  |  |  | 47,126 |  |  |  | 276,681 |
|  | Entertainment companies |  |  | 109,222 |  |  |  | 12,037 |  |  |  | 0 |  |  |  | 12,037 |  |  |  | 121,259 |
|  | Other |  |  | 411,833 |  |  |  | 52,559 |  |  |  | 0 |  |  |  | 52,559 |  |  |  | 464,392 |
Purchased loans |  |  |  |  | 41,694 |  |  |  | 29,107 |  |  |  | 0 |  |  |  | 29,107 |  |  |  | 70,801 |
Direct financing leases |  |  |  |  | 973,574 |  |  |  | 0 |  |  |  | 15,806 |  |  |  | 15,806 |  |  |  | 989,380 |
|  | Japan |  |  | 680,351 |  |  |  | 0 |  |  |  | 12,234 |  |  |  | 12,234 |  |  |  | 692,585 |
|  | Overseas |  |  | 293,223 |  |  |  | 0 |  |  |  | 3,572 |  |  |  | 3,572 |  |  |  | 296,795 |
Total |  |  |  | ¥ | 3,426,321 |  |  | ¥ | 212,740 |  |  | ¥ | 23,551 |  |  | ¥ | 236,291 |  |  | ¥ | 3,662,612 |
|  | March 31, 2014 |
|  |  |  | Millions of yen |
|  |  |  |  |  |  | Non-performing |  |  |  |
Portfolio segment |  | Class |  | Performing |  |  | Loans individually evaluated for impairment |  |  | 90+ days past-due loans not individually evaluated for impairment |  |  | Subtotal |  |  | Total |
Consumer borrowers |  |  |  | ¥ | 1,218,469 |  |  | ¥ | 11,796 |  |  | ¥ | 6,149 |  |  | ¥ | 17,945 |  |  | ¥ | 1,236,414 |
|  | Housing loans |  |  | 968,269 |  |  |  | 7,317 |  |  |  | 4,211 |  |  |  | 11,528 |  |  |  | 979,797 |
|  | Card loans |  |  | 225,198 |  |  |  | 2,950 |  |  |  | 720 |  |  |  | 3,670 |  |  |  | 228,868 |
|  | Other |  |  | 25,002 |  |  |  | 1,529 |  |  |  | 1,218 |  |  |  | 2,747 |  |  |  | 27,749 |
Corporate borrowers |  |  |  |  | 910,580 |  |  |  | 100,953 |  |  |  | 0 |  |  |  | 100,953 |  |  |  | 1,011,533 |
Non-recourse loans |  | Japan |  |  | 64,757 |  |  |  | 7,868 |  |  |  | 0 |  |  |  | 7,868 |  |  |  | 72,625 |
|  | U.S. |  |  | 84,545 |  |  |  | 17,034 |  |  |  | 0 |  |  |  | 17,034 |  |  |  | 101,579 |
Other |  | Real estate companies |  |  | 217,096 |  |  |  | 28,869 |  |  |  | 0 |  |  |  | 28,869 |  |  |  | 245,965 |
|  | Entertainment companies |  |  | 99,057 |  |  |  | 7,827 |  |  |  | 0 |  |  |  | 7,827 |  |  |  | 106,884 |
|  | Other |  |  | 445,125 |  |  |  | 39,355 |  |  |  | 0 |  |  |  | 39,355 |  |  |  | 484,480 |
Purchased loans |  |  |  |  | 30,266 |  |  |  | 23,075 |  |  |  | 0 |  |  |  | 23,075 |  |  |  | 53,341 |
Direct financing leases |  |  |  |  | 1,080,186 |  |  |  | 0 |  |  |  | 13,887 |  |  |  | 13,887 |  |  |  | 1,094,073 |
|  | Japan |  |  | 751,877 |  |  |  | 0 |  |  |  | 9,560 |  |  |  | 9,560 |  |  |  | 761,437 |
|  | Overseas |  |  | 328,309 |  |  |  | 0 |  |  |  | 4,327 |  |  |  | 4,327 |  |  |  | 332,636 |
Total |  |  |  | ¥ | 3,239,501 |  |  | ¥ | 135,824 |  |  | ¥ | 20,036 |  |  | ¥ | 155,860 |  |  | ¥ | 3,395,361 |
Note: | Loans held for sale are not included in the table above.
In common with all classes, the Company and its subsidiaries monitor the credit quality indicators as performing and non-performing assets. The category of non-performing assets includes financing receivables for debtors who have filed for insolvency proceedings, whose bank transactions are suspended, whose bills are dishonored, whose repayment is past-due 90 days or more, financing receivables modified as troubled debt restructurings, and performing assets include all other financing receivables. Regarding purchased loans, they are classified as non-performing assets when considered impaired, while all the other loans are included in the category of performing assets. Out of non-performing assets, the Company and its subsidiaries consider smaller balance homogeneous loans, including housing loans and card loans which are not restructured and direct financing leases, as 90 days or more past-due financing receivables not individually evaluated for impairment, and consider the others as loans individually evaluated for impairment. After the Company and its subsidiaries have set aside provision for those non-performing assets, the Company and its subsidiaries continue to monitor at least on a quarterly basis the quality of any underlying collateral, the status of management of the debtors and other important factors in order to report to management and develop additional provision as necessary. The following table provides information about the non-accrual and past-due financing receivables as of March 31, 2013 and 2014:
|  | March 31, 2013 |
|  |  |  | Millions of yen |
|  |  |  | Past-Due Financing Receivables |  |  |  |  |  |  |
Portfolio segment |  | Class |  | 30-89 Days Past-Due |  |  | 90 Days or More Past-Due |  |  | Total Past-Due |  |  | Total Financing Receivables |  |  | Non-Accrual |
Consumer borrowers |  |  |  | ¥ | 4,699 |  |  | ¥ | 12,170 |  |  | ¥ | 16,869 |  |  | ¥ | 1,171,142 |  |  | ¥ | 12,170 |
|  | Housing loans |  |  | 3,650 |  |  |  | 10,422 |  |  |  | 14,072 |  |  |  | 916,791 |  |  |  | 10,422 |
|  | Card loans |  |  | 738 |  |  |  | 1,078 |  |  |  | 1,816 |  |  |  | 225,707 |  |  |  | 1,078 |
|  | Other |  |  | 311 |  |  |  | 670 |  |  |  | 981 |  |  |  | 28,644 |  |  |  | 670 |
Corporate borrowers |  |  |  |  | 64,539 |  |  |  | 73,876 |  |  |  | 138,415 |  |  |  | 1,431,289 |  |  |  | 73,876 |
Non-recourse loans |  | Japan |  |  | 0 |  |  |  | 15,211 |  |  |  | 15,211 |  |  |  | 134,440 |  |  |  | 15,211 |
|  | U.S. |  |  | 59,532 |  |  |  | 7,516 |  |  |  | 67,048 |  |  |  | 434,517 |  |  |  | 7,516 |
Other |  | Real estate companies |  |  | 1,324 |  |  |  | 23,921 |  |  |  | 25,245 |  |  |  | 276,681 |  |  |  | 23,921 |
|  | Entertainment companies |  |  | 437 |  |  |  | 1,542 |  |  |  | 1,979 |  |  |  | 121,259 |  |  |  | 1,542 |
|  | Other |  |  | 3,246 |  |  |  | 25,686 |  |  |  | 28,932 |  |  |  | 464,392 |  |  |  | 25,686 |
Direct financing leases |  |  |  |  | 5,480 |  |  |  | 15,806 |  |  |  | 21,286 |  |  |  | 989,380 |  |  |  | 15,806 |
|  | Japan |  |  | 1,467 |  |  |  | 12,234 |  |  |  | 13,701 |  |  |  | 692,585 |  |  |  | 12,234 |
|  | Overseas |  |  | 4,013 |  |  |  | 3,572 |  |  |  | 7,585 |  |  |  | 296,795 |  |  |  | 3,572 |
Total |  |  |  | ¥ | 74,718 |  |  | ¥ | 101,852 |  |  | ¥ | 176,570 |  |  | ¥ | 3,591,811 |  |  | ¥ | 101,852 |
|  | March 31, 2014 |
|  |  |  | Millions of yen |
|  |  |  | Past-Due Financing Receivables |  |  |  |  |  |  |
Portfolio segment |  | Class |  | 30- 89 Days Past-Due |  |  | 90 Days or More Past-Due |  |  | Total Past-Due |  |  | Total Financing Receivables |  |  | Non-Accrual |
Consumer borrowers |  |  |  | ¥ | 4,477 |  |  | ¥ | 10,542 |  |  | ¥ | 15,019 |  |  | ¥ | 1,236,414 |  |  | ¥ | 10,542 |
|  | Housing loans |  |  | 3,157 |  |  |  | 8,009 |  |  |  | 11,166 |  |  |  | 979,797 |  |  |  | 8,009 |
|  | Card loans |  |  | 731 |  |  |  | 1,204 |  |  |  | 1,935 |  |  |  | 228,868 |  |  |  | 1,204 |
|  | Other |  |  | 589 |  |  |  | 1,329 |  |  |  | 1,918 |  |  |  | 27,749 |  |  |  | 1,329 |
Corporate borrowers |  |  |  |  | 20,977 |  |  |  | 45,372 |  |  |  | 66,349 |  |  |  | 1,011,533 |  |  |  | 58,298 |
Non-recourse loans |  | Japan |  |  | 1,364 |  |  |  | 5,418 |  |  |  | 6,782 |  |  |  | 72,625 |  |  |  | 5,418 |
|  | U.S. |  |  | 17,470 |  |  |  | 3,687 |  |  |  | 21,157 |  |  |  | 101,579 |  |  |  | 14,432 |
Other |  | Real estate companies |  |  | 149 |  |  |  | 13,005 |  |  |  | 13,154 |  |  |  | 245,965 |  |  |  | 13,005 |
|  | Entertainment companies |  |  | 1,195 |  |  |  | 1,297 |  |  |  | 2,492 |  |  |  | 106,884 |  |  |  | 1,297 |
|  | Other |  |  | 799 |  |  |  | 21,965 |  |  |  | 22,764 |  |  |  | 484,480 |  |  |  | 24,146 |
Direct financing leases |  |  |  |  | 6,365 |  |  |  | 13,887 |  |  |  | 20,252 |  |  |  | 1,094,073 |  |  |  | 13,887 |
|  | Japan |  |  | 1,563 |  |  |  | 9,560 |  |  |  | 11,123 |  |  |  | 761,437 |  |  |  | 9,560 |
|  | Overseas |  |  | 4,802 |  |  |  | 4,327 |  |  |  | 9,129 |  |  |  | 332,636 |  |  |  | 4,327 |
Total |  |  |  | ¥ | 31,819 |  |  | ¥ | 69,801 |  |  | ¥ | 101,620 |  |  | ¥ | 3,342,020 |  |  | ¥ | 82,727 |
Note: | Loans held for sale and purchases loans are not included in the table above.
In common with all classes, the Company and its subsidiaries consider financing receivables as past-due financing receivables when principal or interest is past-due 30 days or more. Loans whose terms have been modified are not classified as past-due financing receivables if the principals and interests are not past-due 30 days or more in accordance with the modified terms. The Company and its subsidiaries suspend accruing revenues on past-due installment loans and direct financing leases when principal or interest is past-due 90 days or more, or earlier, if management determines that their collections are doubtful based on factors such as the individual debtor’s creditworthiness, historical loss experience, current delinquencies and delinquency trends. Cash repayments received on non-accrual loans are applied first against past due interest and then any surpluses are applied to principal in view of the conditions of the contract and obligors. The Company and its subsidiaries return to accrual status non-accrual loans and lease receivables when it becomes probable that the Company and its subsidiaries will be able to collect all amounts due according to the contractual terms of these loans and lease receivables, as evidenced by continual payments from the debtors. The period of such continual payments before returning to accrual status varies depending on factors that we consider are relevant in assessing the debtor’s creditworthiness, such as the debtor’s business characteristics and financial conditions as well as relevant economic conditions and trends. The following table provides information about troubled debt restructurings of financing receivables that occurred during fiscal 2012, 2013 and 2014:
|  | March 31, 2012 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Pre-modification Outstanding Recorded Investment |  |  | Post-modification Outstanding Recorded Investment |
Consumer borrowers |  |  |  | ¥ | 1,867 |  |  | ¥ | 1,690 |
|  | Housing loans |  |  | 1,867 |  |  |  | 1,690 |
Corporate borrowers |  |  |  |  | 27,471 |  |  |  | 26,112 |
Non-recourse loans |  | Japan |  |  | 943 |  |  |  | 943 |
|  | U.S. |  |  | 7,783 |  |  |  | 7,518 |
Other |  | Real estate companies |  |  | 6,436 |  |  |  | 5,636 |
|  | Other |  |  | 12,309 |  |  |  | 12,015 |
Total |  |  |  | ¥ | 29,338 |  |  | ¥ | 27,802 |
|  | March 31, 2013 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Pre-modification Outstanding Recorded Investment |  |  | Post-modification Outstanding Recorded Investment |
Consumer borrowers |  |  |  | ¥ | 3,580 |  |  | ¥ | 2,396 |
|  | Housing loans |  |  | 1,290 |  |  |  | 894 |
|  | Card loans |  |  | 1,649 |  |  |  | 1,081 |
|  | Other |  |  | 641 |  |  |  | 421 |
Corporate borrowers |  |  |  |  | 17,970 |  |  |  | 17,544 |
Non-recourse loans |  | Japan |  |  | 5,180 |  |  |  | 5,180 |
|  | U.S. |  |  | 10,036 |  |  |  | 10,036 |
Other |  | Real estate companies |  |  | 967 |  |  |  | 861 |
|  | Other |  |  | 1,787 |  |  |  | 1,467 |
Total |  |  |  | ¥ | 21,550 |  |  | ¥ | 19,940 |
|  | March 31, 2014 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Pre-modification Outstanding Recorded Investment |  |  | Post-modification Outstanding Recorded Investment |
Consumer borrowers |  |  |  | ¥ | 3,899 |  |  | ¥ | 2,586 |
|  | Housing loans |  |  | 724 |  |  |  | 334 |
|  | Card loans |  |  | 1,898 |  |  |  | 1,391 |
|  | Other |  |  | 1,277 |  |  |  | 861 |
Corporate borrowers |  |  |  |  | 14,135 |  |  |  | 11,097 |
Non-recourse loans |  | Japan |  |  | 4,745 |  |  |  | 2,608 |
|  | U.S. |  |  | 4,809 |  |  |  | 4,723 |
Other |  | Real estate companies |  |  | 328 |  |  |  | 276 |
|  | Entertainment companies |  |  | 779 |  |  |  | 509 |
|  | Other |  |  | 3,474 |  |  |  | 2,981 |
Total |  |  |  | ¥ | 18,034 |  |  | ¥ | 13,683 |
A troubled debt restructuring is defined as a restructuring of a financing receivable in which the creditor grants a concession to the debtor for economic or other reasons related to the debtor’s financial difficulties. The Company and its subsidiaries offer various types of concessions to our debtors to protect as much of our investment as possible in troubled debt restructurings. For the debtors of non-recourse loans, the Company and its subsidiaries offer concessions including an extension of the maturity date at an interest rate lower than the current market rate for a debt with similar risk characteristics. For the debtors of all financing receivables other than non-recourse loans, the Company and its subsidiaries offer concessions such as a reduction of the loan principal, a temporary reduction in the interest payments, or an extension of the maturity date at an interest rate lower than the current market rate for a debt with similar risk characteristics. In addition, the Company and its subsidiaries may acquire collateral assets from the debtors in troubled debt restructurings to satisfy fully or partially the loan principal or past due interest. In common with all portfolio segments, financing receivables modified as troubled debt restructurings are recognized as impaired and are individually evaluated for a valuation allowance. In most cases, these financing receivables have already been considered impaired and individually evaluated for allowance for credit losses prior to the restructurings. However, as a result of the restructuring, the Company and its subsidiaries may recognize additional provision for the restructured receivables. The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2012 and for which there was a payment default during fiscal 2012:
|  | March 31, 2012 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Recorded Investment |
Consumer borrowers |  |  |  | ¥ | 392 |
|  | Housing loans |  |  | 392 |
Corporate borrowers |  |  |  |  | 2,331 |
Non-recourse loans |  | U.S. |  |  | 409 |
Other |  | Other |  |  | 1,922 |
Total |  |  |  | ¥ | 2,723 |
The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2013 and for which there was a payment default during fiscal 2013:
|  | March 31, 2013 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Recorded Investment |
Consumer borrowers |  |  |  | ¥ | 383 |
|  | Housing loans |  |  | 369 |
|  | Card loans |  |  | 12 |
|  | Other |  |  | 2 |
Corporate borrowers |  |  |  |  | 92 |
Other |  | Other |  |  | 92 |
Total |  |  |  | ¥ | 475 |
The following table provides information about financing receivables modified as troubled debt restructurings within the previous 12 months from March 31, 2014 and for which there was a payment default during fiscal 2014:
|  | March 31, 2014 |
|  |  |  | Millions of yen |
Portfolio segment |  | Class |  | Recorded Investment |
Consumer borrowers |  |  |  | ¥ | 57 |
|  | Housing loans |  |  | 18 |
|  | Card loans |  |  | 31 |
|  | Other |  |  | 8 |
Corporate borrowers |  |  |  |  | 565 |
Non-recourse loans |  | U.S. |  |  | 497 |
Other |  | Real estate companies |  |  | 42 |
|  | Other |  |  | 26 |
Total |  |  |  | ¥ | 622 |
The Company and its subsidiaries consider financing receivables whose terms have been modified in a restructuring as defaulted receivables when principal or interest is past-due 90 days or more in accordance with the modified terms. In common with all portfolio segments, the Company and its subsidiaries suspend accruing revenues and may recognize additional provision as necessary for the defaulted financing receivables.

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