Notes Receivable

12 Months Ended

Dec. 31, 2016

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	2016			2015
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	151		$	128
EnerBank notes receivable held for sale			39			16
State of Michigan tax settlement			29			-
Non-current
EnerBank notes receivable			1,088			1,017
State of Michigan tax settlement			19			-
Total notes receivable		$	1,326		$	1,161
Consumers
Current
State of Michigan tax settlement		$	29		$	-
Non-current
State of Michigan tax settlement			16			-
Total notes receivable		$	45		$	-

EnerBank notes receivable are unsecured consumer installment loans for financing home improvements. EnerBank records its notes receivable at cost, less an allowance for loan losses. At December 31, 2016, $39 million of notes receivable were classified as held for sale; the fair value of notes receivable held for sale exceeded their carrying value. These notes are expected to be sold in 2017.

Unearned income associated with loan fees was $84 million at December 31, 2016 and $82 million at December 31, 2015. Unearned income associated with loan fees for notes receivable held for sale was $8 million at December 31, 2016 and $3 million at December 31, 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	2016			2015
Balance at beginning of period		$	9		$	8
Charge-offs			(14)			(8)
Recoveries			2			1
Provision for loan losses			19			8
Balance at end of period		$	16		$	9

Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $11 million at December 31, 2016 and $8 million at December 31, 2015.

At December 31, 2016 and 2015, $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	2016			2015
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	151		$	128
EnerBank notes receivable held for sale			39			16
State of Michigan tax settlement			29			-
Non-current
EnerBank notes receivable			1,088			1,017
State of Michigan tax settlement			19			-
Total notes receivable		$	1,326		$	1,161
Consumers
Current
State of Michigan tax settlement		$	29		$	-
Non-current
State of Michigan tax settlement			16			-
Total notes receivable		$	45		$	-

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



In Millions
Years Ended December 31	2016			2015
Balance at beginning of period		$	9		$	8
Charge-offs			(14)			(8)
Recoveries			2			1
Provision for loan losses			19			8
Balance at end of period		$	16		$	9

Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $11 million at December 31, 2016 and $8 million at December 31, 2015.

At December 31, 2016 and 2015, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.