Notes Receivable

12 Months Ended

Dec. 31, 2017

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	2017			2016
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	178		$	151
EnerBank notes receivable held for sale			2			39
Michigan tax settlement			20			29
Non-current
EnerBank notes receivable			1,171			1,088
Michigan tax settlement			-			19
Total notes receivable		$	1,371		$	1,326
Consumers
Current
Michigan tax settlement		$	17		$	29
Non-current
Michigan tax settlement			-			16
Total notes receivable		$	17		$	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. During 2017, EnerBank completed sales of notes receivable, receiving proceeds of $52 million and recording immaterial gains.

Unearned income associated with loan fees was $84 million at December 31, 2017 and 2016. Unearned income associated with loan fees for notes receivable held for sale was $8 million at December 31, 2016.

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	2017			2016
Balance at beginning of period		$	16		$	9
Charge-offs			(19)			(14)
Recoveries			3			2
Provision for loan losses			20			19
Balance at end of period		$	20		$	16

Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $14 million at December 31, 2017 and $11 million at December 31, 2016.

At December 31, 2017 and 2016, $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	2017			2016
CMS Energy, including Consumers
Current
EnerBank notes receivable, net of allowance for loan losses		$	178		$	151
EnerBank notes receivable held for sale			2			39
Michigan tax settlement			20			29
Non-current
EnerBank notes receivable			1,171			1,088
Michigan tax settlement			-			19
Total notes receivable		$	1,371		$	1,326
Consumers
Current
Michigan tax settlement		$	17		$	29
Non-current
Michigan tax settlement			-			16
Total notes receivable		$	17		$	45

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



In Millions
Years Ended December 31	2017			2016
Balance at beginning of period		$	16		$	9
Charge-offs			(19)			(14)
Recoveries			3			2
Provision for loan losses			20			19
Balance at end of period		$	20		$	16

Loans that are 30 days or more past due are considered delinquent. The balance of EnerBank’s delinquent consumer loans was $14 million at December 31, 2017 and $11 million at December 31, 2016.

At December 31, 2017 and 2016, $1 million of EnerBank’s loans had been modified as troubled debt restructurings.