Notes Receivable

12 Months Ended

Dec. 31, 2014

Notes Receivable

8:NOTES RECEIVABLE

Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:

In Millions
December 31	2014			2013
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	97		$	48
EnerBank notes receivable held for sale			41			-
Other			1			15
Non-current
EnerBank notes receivable, net of allowance for loan losses			800			635
Total notes receivable		$	939		$	698
Consumers
Current
Other		$	-		$	14
Total notes receivable		$	-		$	14

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements.  EnerBank records its notes receivable at cost, less allowance for loan losses.  At December 31, 2014, $41 million of notes receivable were reclassified to held for sale; the fair value of notes receivable held for sale exceeded their carrying value.  These notes are expected to be sold in 2015.

The allowance for loan losses is a valuation allowance to reflect estimated credit losses.  The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries.  Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors.  Loan losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

Presented in the following table are the changes in the allowance for loan losses:

In Millions
Years Ended December 31	2014			2013
Balance at beginning of period		$	5		$	5
Charge-offs			(6)			(5)
Recoveries			1			1
Provision for loan losses			8			4
Balance at end of period		$	8		$	5

Loans that are 30 days or more past due are considered delinquent.  The balance of EnerBank’s delinquent consumer loans was $5 million at December 31, 2014 and $4 million at December 31, 2013.

At December 31, 2014 and 2013, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.

Consumers Energy Company [Member]

Notes Receivable

8:NOTES RECEIVABLE

Presented in the following table are details of CMS Energy’s and Consumers’ current and non‑current notes receivable:

In Millions
December 31	2014			2013
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	97		$	48
EnerBank notes receivable held for sale			41			-
Other			1			15
Non-current
EnerBank notes receivable, net of allowance for loan losses			800			635
Total notes receivable		$	939		$	698
Consumers
Current
Other		$	-		$	14
Total notes receivable		$	-		$	14

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements.  EnerBank records its notes receivable at cost, less allowance for loan losses.  At December 31, 2014, $41 million of notes receivable were reclassified to held for sale; the fair value of notes receivable held for sale exceeded their carrying value.  These notes are expected to be sold in 2015.

The allowance for loan losses is a valuation allowance to reflect estimated credit losses.  The allowance is increased by the provision for loan losses and decreased by loan charge-offs net of recoveries.  Management estimates the allowance balance required by taking into consideration historical loan loss experience, the nature and volume of the portfolio, economic conditions, and other factors.  Loan losses are charged against the allowance when the loss is confirmed, but no later than the point at which a loan becomes 120 days past due.

Presented in the following table are the changes in the allowance for loan losses:

In Millions
Years Ended December 31	2014			2013
Balance at beginning of period		$	5		$	5
Charge-offs			(6)			(5)
Recoveries			1			1
Provision for loan losses			8			4
Balance at end of period		$	8		$	5

Loans that are 30 days or more past due are considered delinquent.  The balance of EnerBank’s delinquent consumer loans was $5 million at December 31, 2014 and $4 million at December 31, 2013.

At December 31, 2014 and 2013, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.