Cat Financial provides loans and finance leases to end-user customers primarily for the purpose of financing new and used Caterpillar machinery, engines and equipment for commercial use. Cat Financial also provides financing for power generation facilities that, in most cases, incorporate Caterpillar products. The average original term of Cat Financial's customer finance receivable portfolio was approximately 51 months with an average remaining term of approximately 27 months as of September 30, 2023.

Cat Financial typically maintains a security interest in financed equipment and requires physical damage insurance coverage on the financed equipment, both of which provide Cat Financial with certain rights and protections. If Cat Financial's collection efforts fail to bring a defaulted account current, Cat Financial generally can repossess the financed equipment, after satisfying local legal requirements, and sell it within the Caterpillar dealer network or through third-party auctions.

Cat Financial estimates the allowance for credit losses related to its customer finance receivables based on loss forecast models utilizing probabilities of default and the estimated loss given default based on past loss experience adjusted for current conditions and reasonable and supportable forecasts capturing country and industry-specific economic factors.

During the three and nine months ended September 30, 2023, Cat Financial's forecasts reflected a continuation of the trend of relatively low unemployment rates and delinquencies within their portfolio. However, industry delinquencies show an increasing trend as persistently high inflation rates and consequent central bank actions are weakening global economic growth. The company believes the economic forecasts employed represent reasonable and supportable forecasts, followed by a reversion to long-term trends.

Cat Financial provides financing to Caterpillar dealers in the form of wholesale financing plans. Cat Financial's wholesale financing plans provide assistance to dealers by financing their mostly new Caterpillar equipment inventory and rental fleets on a secured and unsecured basis. In addition, Cat Financial provides a variety of secured and unsecured loans to Caterpillar dealers.

In general, Cat Financial's Dealer portfolio segment has not historically experienced large increases or decreases in credit losses based on changes in economic conditions due to its close working relationships with the dealers and their financial strength. Therefore, Cat Financial made no adjustments to historical loss rates during the three and nine months ended September 30, 2023.

Cat Financial further evaluates portfolio segments by the class of finance receivables, which is defined as a level of information (below a portfolio segment) in which the finance receivables have the same initial measurement attribute and a similar method for assessing and monitoring credit risk. Cat Financial's classes, which align with management reporting for credit losses, are as follows:

Receivable balances, including accrued interest, are written off against the allowance for credit losses when, in the judgment of management, they are considered uncollectible (generally upon repossession of the collateral). The amount of the write-off is determined by comparing the fair value of the collateral, less cost to sell, to the amortized cost. Subsequent recoveries, if any, are credited to the allowance for credit losses when received.



(Millions of dollars)	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	Customer		Dealer		Total		Customer		Dealer		Total
Beginning balance	$	265	$	50	$	315	$	290	$	82	$	372
Write-offs	(22)		—		(22)		(30)		—		(30)
Recoveries	13		—		13		17		—		17
Provision for credit losses 1	31		1		32		(2)		(17)		(19)
Other	(3)		—		(3)		(5)		—		(5)
Ending balance	$	284	$	51	$	335	$	270	$	65	$	335

	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Customer		Dealer		Total		Customer		Dealer		Total
Beginning balance	$	277	$	65	$	342	$	251	$	82	$	333

Write-offs	(63)		—		(63)		(68)		—		(68)
Recoveries	36		—		36		47		—		47
Provision for credit losses 1	35		(14)		21		46		(17)		29
Other	(1)		—		(1)		(6)		—		(6)
Ending balance	$	284	$	51	$	335	$	270	$	65	$	335

Finance Receivables	$	19,768	$	2,060	$	21,828	$	19,363	$	1,737	$	21,100


1 Excludes provision for credit losses on unfunded commitments and other miscellaneous receivables.



(Millions of dollars)	Three Months Ended September 30, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total
North America	$	1	$	2	$	2	$	1	$	1	$	—	$	2	$	9
EAME	—		1		1		1		—		—		—		3
Asia/Pacific	—		2		3		1		—		—		—		6

Latin America	—		1		1		1		—		1		—		4

Total	$	1	$	6	$	7	$	4	$	1	$	1	$	2	$	22

	Nine Months Ended September 30, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total
North America	$	1	$	7	$	7	$	2	$	2	$	1	$	9	$	29
EAME	—		2		3		3		—		1		—		9
Asia/Pacific	—		3		6		4		1		—		—		14

Latin America	—		3		3		3		1		1		—		11

Total	$	1	$	15	$	19	$	12	$	4	$	3	$	9	$	63

At origination, Cat Financial evaluates credit risk based on a variety of credit quality factors including prior payment experience, customer financial information, credit ratings, loan-to-value ratios, probabilities of default, industry trends, macroeconomic factors and other internal metrics. On an ongoing basis, Cat Financial monitors credit quality based on past-due status as there is a meaningful correlation between the past-due status of customers and the risk of loss. In determining past-due status, Cat Financial considers the entire finance receivable past due when any installment is over 30 days past due.



(Millions of dollars)	September 30, 2023
	2023		2022		2021		2020		2019		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	3,134	$	2,940	$	2,310	$	919	$	310	$	65	$	304	$	9,982
31-60 days past due	18		31		23		15		6		2		3		98
61-90 days past due	6		10		7		4		1		—		2		30
91+ days past due	5		19		18		10		5		3		2		62

EAME
Current	914		962		649		297		144		124		—		3,090
31-60 days past due	11		8		11		3		1		—		—		34
61-90 days past due	3		6		3		3		2		—		—		17
91+ days past due	4		16		18		9		3		1		—		51

Asia/Pacific
Current	722		660		361		103		21		6		—		1,873
31-60 days past due	2		12		10		4		1		—		—		29
61-90 days past due	1		3		3		4		1		—		—		12
91+ days past due	—		4		5		3		—		—		—		12

Mining
Current	807		730		420		143		92		49		49		2,290
31-60 days past due	—		—		—		—		—		—		—		—
61-90 days past due	—		—		1		—		—		2		—		3
91+ days past due	—		2		2		—		—		1		—		5

Latin America
Current	552		571		255		74		29		8		—		1,489
31-60 days past due	6		13		7		4		3		1		—		34
61-90 days past due	1		5		2		1		—		—		—		9
91+ days past due	1		15		9		8		8		20		—		61

Power
Current	46		68		69		86		30		122		162		583
31-60 days past due	—		—		—		—		—		1		—		1
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		3		—		3


Totals by Aging Category
Current	$	6,175	$	5,931	$	4,064	$	1,622	$	626	$	374	$	515	$	19,307
31-60 days past due	37		64		51		26		11		4		3		196
61-90 days past due	11		24		16		12		4		2		2		71
91+ days past due	10		56		52		30		16		28		2		194
Total Customer	$	6,233	$	6,075	$	4,183	$	1,690	$	657	$	408	$	522	$	19,768



(Millions of dollars)	December 31, 2022
	2022		2021		2020		2019		2018		Prior		Revolving Finance Receivables		Total Finance Receivables
North America
Current	$	3,915	$	3,276	$	1,525	$	653	$	206	$	34	$	240	$	9,849
31-60 days past due	25		26		18		12		4		1		4		90
61-90 days past due	9		15		7		3		1		—		3		38
91+ days past due	11		16		12		6		4		3		4		56

EAME
Current	1,270		953		477		280		155		68		—		3,203
31-60 days past due	10		12		7		1		1		—		—		31
61-90 days past due	8		4		3		1		—		—		—		16
91+ days past due	6		25		16		4		1		1		—		53

Asia/Pacific
Current	1,033		684		313		69		18		2		—		2,119
31-60 days past due	10		12		8		1		1		—		—		32
61-90 days past due	2		5		4		2		—		—		—		13
91+ days past due	2		6		6		4		—		—		—		18

Mining
Current	863		575		220		171		93		108		80		2,110
31-60 days past due	—		1		—		—		—		—		—		1
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		1		—		1

Latin America
Current	770		400		150		69		26		20		—		1,435
31-60 days past due	7		8		4		2		—		1		—		22
61-90 days past due	2		5		1		1		—		—		—		9
91+ days past due	2		13		11		2		1		—		—		29

Power
Current	78		85		142		33		18		161		125		642
31-60 days past due	—		—		—		—		—		—		—		—
61-90 days past due	—		—		—		—		—		—		—		—
91+ days past due	—		—		—		—		—		5		—		5


Totals by Aging Category
Current	$	7,929	$	5,973	$	2,827	$	1,275	$	516	$	393	$	445	$	19,358
31-60 days past due	52		59		37		16		6		2		4		176
61-90 days past due	21		29		15		7		1		—		3		76
91+ days past due	21		60		45		16		6		10		4		162
Total Customer	$	8,023	$	6,121	$	2,924	$	1,314	$	529	$	405	$	456	$	19,772

Finance receivables in the Customer portfolio segment are substantially secured by collateral, primarily in the form of Caterpillar and other equipment. For those contracts where the borrower is experiencing financial difficulty, repayment of the outstanding amounts is generally expected to be provided through the operation or repossession and sale of the equipment.

As of September 30, 2023 and December 31, 2022, Cat Financial's total amortized cost of finance receivables within the Dealer portfolio segment was current, with the exception of $44 million and $58 million, respectively, that were 91+ days past due in Latin America, all of which were originated in 2017.

Recognition of income is suspended and the finance receivable is placed on non-accrual status when management determines that collection of future income is not probable. Contracts on non-accrual status are generally more than 120 days past due. Recognition is resumed and previously suspended income is recognized when collection is considered probable. Payments received while the finance receivable is on non-accrual status are applied to interest and principal in accordance with the contractual terms. Interest earned but uncollected prior to the receivable being placed on non-accrual status is written off through Provision for credit losses when, in the judgment of management, it is considered uncollectible.



(Millions of dollars)	September 30, 2023						December 31, 2022
	Amortized Cost						Amortized Cost
	Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing		Non-accrual With an Allowance		Non-accrual Without an Allowance		91+ Still Accruing

North America	$	54	$	—	$	12	$	52	$	4	$	11
EAME	44		—		9		43		—		10
Asia/Pacific	8		—		5		11		—		7
Mining	4		—		1		—		1		—
Latin America	69		—		—		45		—		—
Power	9		—		—		5		11		—
Total	$	188	$	—	$	27	$	156	$	16	$	28

Cat Financial periodically modifies the terms of their finance receivable agreements in response to borrowers’ financial difficulty. Typically, the types of modifications granted are payment deferrals, interest-only payment periods and/or term extensions. Many modifications Cat Financial grants are for commercial reasons or for borrowers experiencing some form of short-term financial stress and may result in insignificant payment delays. Cat Financial does not consider these borrowers to be experiencing financial difficulty. Modifications for borrowers Cat Financial does consider to be experiencing financial difficulty typically result in payment deferrals and/or reduced payments for a period of four months or longer, term extension of six months or longer or a combination of both.

During the three and nine months ended September 30, 2023, there were no finance receivable modifications granted to borrowers experiencing financial difficulty in Cat Financial's Dealer portfolio segment. The amortized cost basis of finance receivables modified for borrowers experiencing financial difficulty in the Customer portfolio segment during the three and nine months ended September 30, 2023, was $13 million and $38 million, respectively. Total modifications with borrowers experiencing financial difficulty represented 0.06 percent and 0.17 percent of Cat Financial's finance receivable portfolio for the same periods, respectively.

For the three and nine months ended September 30, 2023, the financial effects of term extensions for borrowers experiencing financial difficulty added a weighted average of 8 and 17 months, respectively, to the terms of modified contracts. For the three and nine months ended September 30, 2023, the financial effects of payment delays for

After Cat Financial modifies a finance receivable, they continue to track its performance under its most recent modified terms. As of September 30, 2023, all of the finance receivables modified with borrowers experiencing financial difficulty are current except for $3 million in EAME that was 31-60 days past due.

The effect of most modifications made to finance receivables for borrowers experiencing financial difficulty is already included in the allowance for credit losses based on the methodologies used to estimate the allowance; therefore, a change to the allowance for credit losses is generally not recorded upon modification. On rare occasions when principal forgiveness is provided, the amount forgiven is written off against the allowance for credit losses.