Indiana | 001-06155 | 35-0416090 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
601 N.W. Second Street, Evansville, Indiana 47708 | ||
(Address of principal executive offices)(Zip Code) | ||
(812) 424-8031 | ||
(Registrant’s telephone number, including area code) | ||
Not Applicable | ||
(Former name or former address, if changed since last report) | ||
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 8.01 | Other Events. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit Number | Description | |
12.1 | Computation of Ratio of Earnings to Fixed Charges | |
23.1 | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm | |
99.1 | Revised Selected Financial Data, MD&A, and Financial Statements from Springleaf Finance Corporation’s Annual Report on Form 10-K for the Year Ended December 31, 2015 | |
101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements |
Springleaf Finance Corporation | |||
(Registrant) | |||
Date: | August 26, 2016 | By: | /s/ Micah R. Conrad |
Micah R. Conrad | |||
Senior Vice President and Chief Financial Officer |
Exhibit Number | Description | |
12.1 | Computation of Ratio of Earnings to Fixed Charges | |
23.1 | Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting Firm | |
99.1 | Revised Selected Financial Data, MD&A, and Financial Statements from Springleaf Finance Corporation’s Annual Report on Form 10-K for the Year Ended December 31, 2015 | |
101 | Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements |
(dollars in millions) | ||||||||||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | 2012 | 2011 | |||||||||||||||
Earnings: | ||||||||||||||||||||
Income (loss) before provision for (benefit from) income taxes | $ | 159 | $ | 678 | $ | (125 | ) | $ | (301 | ) | $ | (309 | ) | |||||||
Interest expense | 667 | 683 | 843 | 1,068 | 1,276 | |||||||||||||||
Implicit interest in rents | 9 | 10 | 9 | 12 | 12 | |||||||||||||||
Total earnings | $ | 835 | $ | 1,371 | $ | 727 | $ | 779 | $ | 979 | ||||||||||
Fixed charges: | ||||||||||||||||||||
Interest expense | $ | 667 | $ | 683 | $ | 843 | $ | 1,068 | $ | 1,276 | ||||||||||
Implicit interest in rents | 9 | 10 | 9 | 12 | 12 | |||||||||||||||
Total fixed charges | $ | 676 | $ | 693 | $ | 852 | $ | 1,080 | $ | 1,288 | ||||||||||
Ratio of earnings to fixed charges | 1.24 | 1.98 | * | * | * |
* | Earnings did not cover total fixed charges by $125 million in 2013, $301 million in 2012, and $309 million in 2011. |
(dollars in millions) | At or for the Years Ended December 31, | |||||||||||||||||||
2015 | 2014 | 2013 | 2012 | 2011 | ||||||||||||||||
Consolidated Statements of Operations Data: | ||||||||||||||||||||
Interest income | $ | 1,657 | $ | 1,625 | $ | 1,637 | $ | 1,694 | $ | 1,834 | ||||||||||
Interest expense | 667 | 683 | 843 | 1,068 | 1,276 | |||||||||||||||
Provision for finance receivable losses | 339 | 352 | 371 | 334 | 263 | |||||||||||||||
Other revenues | 243 | 745 | 161 | 114 | 154 | |||||||||||||||
Other expenses | 735 | 657 | 709 | 707 | 758 | |||||||||||||||
Income (loss) before provision for (benefit from) income taxes | 159 | 678 | (125 | ) | (301 | ) | (309 | ) | ||||||||||||
Net income (loss) | 141 | 445 | (76 | ) | (215 | ) | (210 | ) | ||||||||||||
Net income attributable to non-controlling interests | 127 | 48 | — | — | — | |||||||||||||||
Net income (loss) attributable to Springleaf Finance Corporation | 14 | 397 | (76 | ) | (215 | ) | (210 | ) | ||||||||||||
Consolidated Balance Sheet Data: | ||||||||||||||||||||
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses (a) | $ | 6,090 | $ | 6,181 | $ | 10,730 | $ | 11,453 | $ | 12,881 | ||||||||||
Total assets (a) | 12,188 | 10,998 | 12,612 | 14,554 | 15,323 | |||||||||||||||
Long-term debt (a) | 9,582 | 8,356 | 10,602 | 12,449 | 12,883 | |||||||||||||||
Total liabilities (a) | 10,156 | 9,021 | 11,227 | 13,261 | 13,888 | |||||||||||||||
Springleaf Finance Corporation shareholder’s equity | 2,111 | 2,106 | 1,385 | 1,293 | 1,435 | |||||||||||||||
Non-controlling interests | (79 | ) | (129 | ) | — | — | — | |||||||||||||
Total shareholder’s equity | 2,032 | 1,977 | 1,385 | 1,293 | 1,435 | |||||||||||||||
Other Operating Data: | ||||||||||||||||||||
Ratio of earnings to fixed charges | 1.24 | 1.98 | (b) | (b) | (b) |
(a) | Prior year consolidated balance sheet data reflects (i) reclassification of debt issuance costs from other assets to long-term debt as a result of our early adoption of accounting standards update 2015-03, Interest - Imputation of Interest, which totaled $29 million, $39 million, $28 million, $21 million at December 31, 2014, 2013, 2012, and 2011, respectively, and (ii) reclassification of unearned insurance premium and claim reserves related to finance receivables from insurance claims and policyholder liabilities to a contra-asset to net finance receivables in connection with our policy integration with OneMain, which totaled $217 million, $172 million, $138 million, $127 million at December 31, 2014, 2013, 2012, and 2011, respectively. |
(b) | Earnings did not cover total fixed charges by $125 million in 2013, $301 million in 2012, and $309 million in 2011. |
• | Personal Loans — We offer personal loans through our branch network and over the internet through our centralized operations to customers who generally need timely access to cash. Our personal loans are typically non-revolving with a fixed-rate and a fixed, original term of two to five years. At December 31, 2015, we had over 1.0 million personal loans, representing $4.9 billion of net finance receivables (including personal loans held for sale of $617 million). At December 31, 2015, $2.4 billion, or 56%, were secured by collateral consisting of titled personal property (such as automobiles) and $1.9 billion, or 44%, were secured by consumer household goods or other items of personal property or were unsecured, compared to $1.9 billion of personal loans, or 50%, secured by collateral consisting of titled personal property and $1.9 billion, or 50%, secured by consumer household goods or other items of personal property or unsecured at December 31, 2014. |
• | Insurance Products — We offer our customers credit insurance (life insurance, disability insurance, and involuntary unemployment insurance) and non-credit insurance through both our branch network and our centralized operations. Credit insurance and non-credit insurance products are provided by our subsidiaries, Merit and Yosemite. We also offer auto warranty membership plans of an unaffiliated company as an ancillary product. |
• | SpringCastle Portfolio — We service the SpringCastle Portfolio that was acquired by an indirect subsidiary of OMH through a joint venture in which SFC owns a 47% equity interest. These loans include unsecured loans and loans secured by subordinate residential real estate mortgages (which we service as unsecured loans due to the fact that the liens are subordinated to superior ranking security interests). The SpringCastle Portfolio includes both closed-end accounts and open-end lines of credit. These loans are in a liquidating status and vary in substance and form from our originated loans. At December 31, 2015, the SpringCastle Portfolio included over 232,000 of acquired loans, |
• | Real Estate Loans — We ceased real estate lending in January of 2012, and during 2014, we sold $6.4 billion real estate loans held for sale. The remaining real estate loans may be closed-end accounts or open-end home equity lines of credit, generally have a fixed rate and maximum original terms of 360 months, and are secured by first or second mortgages on residential real estate. We continue to service the liquidating real estate loans and support any advances on open-end accounts. At December 31, 2015, we had $538 million of real estate loans held for investment, of which $207 million, or 38%, were secured by first mortgages and $331 million, or 62%, were secured by second mortgages, compared to $230 million of real estate loans, or 36%, secured by first mortgages and $409 million, or 64%, secured by second mortgages at December 31, 2014. Real estate loans held for sale totaled $176 million and $202 million at December 31, 2015 and 2014, respectively, all of which were secured by first mortgages. |
• | Retail Sales Finance — We ceased purchasing retail sales contracts and revolving retail accounts in January of 2013. We continue to service the liquidating retail sales contracts and will provide revolving retail sales financing services on our revolving retail accounts. We refer to retail sales contracts and revolving retail accounts collectively as “retail sales finance.” |
• | Consumer and Insurance; |
• | Acquisitions and Servicing; and |
• | Real Estate. |
• | Net finance receivables — Consumer and Insurance reached $4.9 billion at December 31, 2015, including $617 million personal loans held for sale, compared to $3.8 billion at December 31, 2014. |
• | Origination volume — Consumer and Insurance totaled $4.4 billion in 2015 compared to $3.6 billion in 2014 (including $1.0 billion of direct auto loan originations during 2015 compared to $250 million during 2014). |
• | Pretax core earnings (a non-GAAP measure) was $377 million in 2015 compared to $305 million in 2014. |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Interest income | $ | 1,657 | $ | 1,625 | $ | 1,637 | ||||||
Interest expense | 667 | 683 | 843 | |||||||||
Provision for finance receivable losses | 339 | 352 | 371 | |||||||||
Net interest income after provision for finance receivable losses | 651 | 590 | 423 | |||||||||
Other revenues | 243 | 745 | 161 | |||||||||
Other expenses | 735 | 657 | 709 | |||||||||
Income (loss) before provision for (benefit from) income taxes | 159 | 678 | (125 | ) | ||||||||
Provision for (benefit from) income taxes | 18 | 233 | (49 | ) | ||||||||
Net income (loss) | 141 | 445 | (76 | ) | ||||||||
Net income attributable to non-controlling interests | 127 | 48 | — | |||||||||
Net income (loss) attributable to Springleaf Finance Corporation | $ | 14 | $ | 397 | $ | (76 | ) |
(dollars in millions) | |||
2015 compared to 2014 | |||
Decrease in average net receivables | $ | (350 | ) |
Increase in yield | 383 | ||
Decrease in interest income on finance receivables held for sale | (1 | ) | |
Total | $ | 32 |
• | Average net receivables decreased in 2015 primarily due to (i) our liquidating real estate loan portfolio, including the transfers of real estate loans with a total carrying value of $6.6 billion to finance receivables held for sale and the subsequent sales of nearly all of these real estate loans during 2014, (ii) the transfer of $608 million of our personal loans to finance receivables held for sale on September 30, 2015 as part of OMH’s initiative to close the OneMain Acquisition, and (iii) the liquidating status of the SpringCastle Portfolio. This decrease was partially offset by (i) higher personal loan average net receivables resulting from our continued focus on personal loan originations through our branch network and centralized operations and the launch of our auto loan product in June of 2014 and (ii) higher SpringCastle average net receivables resulting from the SAC Capital Contribution on July 31, 2014. |
• | Yield increased in 2015 primarily due to a higher proportion of personal loans, which have higher yields, as a result of the real estate loan sales during 2014. The increase in yield was partially offset by the launch of our auto loan product in June of 2014, which generally has lower yields. |
• | Interest income on finance receivables held for sale decreased in 2015 primarily due to lower average finance receivables held for sale during 2015. |
(dollars in millions) | |||
2015 compared to 2014 | |||
Decrease in average debt | $ | (3 | ) |
Decrease in weighted average interest rate | (13 | ) | |
Total | $ | (16 | ) |
• | Average debt decreased in 2015 primarily due to debt repurchases and repayments of $2.0 billion during 2015 and the elimination of $3.4 billion of debt associated with our mortgage securitizations as a result of the sales of the Company’s beneficial interests in the mortgage-backed certificates during 2014 and the resulting deconsolidation of the securitization trusts and their outstanding certificates reflected as long-term debt. These decreases were partially offset by net debt issuances pursuant to our consumer securitization transactions completed during 2015 and additional borrowings under our conduit facilities. See Note 13 of the Notes to Consolidated Financial Statements in Item 8 for further information on our consumer loan securitization transactions and borrowings under our conduit facilities. |
• | Weighted average interest rate on our debt decreased in 2015 primarily due to the debt repurchases and repayments discussed above, which resulted in lower accretion of net discount, established at the date Fortress acquired a significant ownership interest in OMH (the “Fortress Acquisition”), applied to long-term debt. This decrease was partially offset by the elimination of debt associated with our mortgage securitizations discussed above, which generally have lower interest rates. |
• | Allowance requirements on our real estate loans decreased in 2015 as a result of the transfers of real estate loans with a total carrying value of $6.6 billion to finance receivables held for sale and the subsequent sales of nearly all of these real estate loans during 2014. |
• | Net charge-offs increased in 2015 primarily due to (i) an additional seven months net charge-offs on the SpringCastle Portfolio during 2015 as a result of the SAC Capital Contribution on July 31, 2014 and (ii) higher net charge-offs on our personal loans primarily due to growth in personal loans during 2015 and a higher personal loan delinquency ratio in 2015. This increase was partially offset by lower net charge-offs on our real estate loans reflecting the 2014 transfer of real estate loans previously discussed. |
• | Salaries and benefits increased $43 million in 2015 primarily due to (i) higher salary accruals due to an increase in the number of employees, (ii) non-cash incentive compensation expense of $15 million recorded in the second quarter of 2015 related to the rights of certain executives to a portion of the cash proceeds from the sale of OMH’s common stock by the Initial Stockholder and (iii) compensation costs of $7 million in connection with the OneMain Acquisition and the Lendmark Sale. See Note 2 of the Notes to Consolidated Financial Statements in Item 8 for further information on OMH’s equity offering. |
• | Other operating expenses increased $38 million in 2015 primarily due to (i) an additional seven months of servicing expenses for the SpringCastle Portfolio during 2015 as a result of the SAC Capital Contribution on July 31, 2014, (ii) higher advertising expenses due to increased direct mailings to pre-approved customers, our increased focus on e-commerce and social media marketing, and our marketing efforts on our auto loan product during 2015, (iii) increased application processing expenses reflecting a higher number of applications for auto loan products, and (iv) higher information technology expenses. The increase in other operating expenses was partially offset by (i) costs of $7 million recorded in 2014 related to the real estate loan sales, (ii) a $6 million reduction in reserves related to estimated Property Protection Insurance (“PPI”) claims, and (iii) lower subservicing fees on our real estate loans as a result of the real estate loan sales during 2014. See Note 20 of the Notes to Consolidated Financial Statements in Item 8 for further information on the loss contingencies related to PPI claims. |
• | Insurance policy benefits and claims decreased $3 million in 2015 primarily due to favorable variances in benefit reserves. |
(dollars in millions) | |||
2014 compared to 2013 | |||
Decrease in average net receivables | $ | (384 | ) |
Increase in yield | 100 | ||
SpringCastle finance charges in 2014 | 211 | ||
Interest income on finance receivables held for sale | 61 | ||
Total | $ | (12 | ) |
• | Average net receivables decreased in 2014 primarily due to our liquidating real estate loan portfolio, including the transfers of real estate loans with a total carrying value of $6.6 billion to finance receivables held for sale and the subsequent sales of nearly all of these real estate loans during 2014. This decrease was partially offset by higher personal loan average net receivables resulting from our continued focus on personal loan originations through our branch network and centralized operations. |
• | Yield increased in 2014 primarily from our personal loans, which have higher yields. This increase also reflected a higher proportion of personal loans as a result of the transfers of real estate loans to finance receivables held for sale during 2014. |
• | SpringCastle finance charges for 2014 included five months of finance charges on the SpringCastle Portfolio as a result of the SAC Capital Contribution on July 31, 2014. |
• | Interest income on finance receivables held for sale in 2014 resulted from the transfers of real estate loans to finance receivables held for sale during 2014. |
(dollars in millions) | |||
2014 compared to 2013 | |||
Decrease in average debt | $ | (219 | ) |
Increase in weighted average interest rate | 29 | ||
SpringCastle net interest expense in 2014 | 30 | ||
Total | $ | (160 | ) |
• | Average debt decreased in 2014 primarily due to debt repurchases and repayments of $4.2 billion during 2014 and the elimination of $3.4 billion of debt associated with our mortgage securitizations as a result of the sales of the Company’s beneficial interests in the mortgage-backed certificates during 2014. These decreases were partially offset by net debt issuances pursuant to our consumer securitization transactions completed during 2014. |
• | Weighted average interest rate on our debt increased in 2014 primarily due to the elimination of debt associated with our mortgage securitizations discussed above, which generally have lower interest rates. This increase was partially offset by the debt repurchases and repayments discussed above, which resulted in lower accretion of net discount applied to long-term debt. |
• | SpringCastle interest expense for 2014 included five months of interest expense on long-term debt associated with the securitization of the SpringCastle Portfolio. |
• | Allowance requirements decreased in 2014 primarily due to a reduction in the allowance requirements on our real estate loans deemed to be purchased credit impaired finance receivables and troubled debt restructured (“TDR”) finance receivables subsequent to the Fortress Acquisition as a result of the transfers of real estate loans with a total carrying value of $6.6 billion to finance receivables held for sale and the subsequent sales of nearly all of these real estate loans during 2014. This decrease was partially offset by additional allowance requirements on our personal loans primarily due to growth in our personal loans during 2014 and a higher personal loan delinquency ratio at December 31, 2014. |
• | Net charge-offs increased in 2014 primarily due to (i) higher net charge-offs on our personal loans primarily due to growth in our personal loans during 2014 and a higher personal loan delinquency ratio at December 31, 2014 and (ii) $37 million of recoveries recorded in June 2013 resulting from a sale of previously charged-off finance receivables in June 2013 (net of a $4 million adjustment for the subsequent buyback of certain finance receivables). |
• | SpringCastle provision for finance receivable losses for 2014 included five months of provision for finance receivable losses associated with the SpringCastle Portfolio totaling $36 million. |
• | Salaries and benefits decreased $126 million in 2014 primarily due to $145 million of share-based compensation expense due to the grant of restricted stock units (“RSUs”) to certain of our executives and employees in the second half of 2013. This decrease was partially offset by (i) higher salary accruals reflecting an increase in number of employees and increased commissions related to originations of personal loans and (ii) employee retention and severance accruals of $3 million recorded in the second half of 2014 due to the workforce reduction of approximately 170 employees in 2014. |
• | Other operating expenses increased $64 million in 2014 primarily due to (i) servicing expenses of $25 million for the SpringCastle Portfolio as a result of the SAC Capital Contribution on July 31, 2014, (ii) higher professional fees primarily due to costs relating to the real estate sales transactions, and (iii) higher advertising and information technology expenses during 2014. |
• | Insurance policy benefits and claims increased $10 million in 2014 primarily due to unfavorable variances in benefit reserves and claim reserves. |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Income (loss) before provision for (benefit from) income taxes - GAAP basis | $ | 159 | $ | 678 | $ | (125 | ) | |||||
Adjustments: | ||||||||||||
Interest income (a) | (11 | ) | (85 | ) | (181 | ) | ||||||
Interest expense (b) | 127 | 133 | 140 | |||||||||
Provision for finance receivable losses (c) | 17 | (19 | ) | (1 | ) | |||||||
Repurchases and repayments of long-term debt (d) | — | 16 | (10 | ) | ||||||||
Fair value adjustments on debt (e) | — | 8 | 57 | |||||||||
Sales of finance receivables held for sale originated as held for investment (f) | — | (434 | ) | — | ||||||||
Amortization of other intangible assets (g) | 4 | 5 | 5 | |||||||||
Other (h) | 13 | 26 | 7 | |||||||||
Income (loss) before provision for (benefit from) income taxes - Segment Accounting Basis | 309 | 328 | (108 | ) | ||||||||
Adjustments: | ||||||||||||
Pretax operating loss - Non-Core Portfolio Operations | 172 | 5 | 181 | |||||||||
Pretax operating loss - Other non-core/non-originating legacy operations | 23 | 2 | 131 | |||||||||
Net loss from accelerated repayment/repurchase of debt - Core Consumer Operations (attributable to SFC) | — | 17 | 5 | |||||||||
Costs associated with debt refinance - Consumer and Insurance | — | 1 | — | |||||||||
Operating income attributable to non-controlling interests | (127 | ) | (48 | ) | — | |||||||
Pretax core earnings (non-GAAP) | $ | 377 | $ | 305 | $ | 209 |
(a) | Interest income adjustments consist of: (i) the net purchase accounting impact of the amortization (accretion) of the net premium (discount) assigned to finance receivables and (ii) the impact of identifying purchased credit impaired finance receivables as compared to the historical values of finance receivables. |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Accretion of net discount applied to non-credit impaired net finance receivables | $ | (12 | ) | $ | (66 | ) | $ | (151 | ) | |||
Purchased credit impaired finance receivables finance charges | (1 | ) | (26 | ) | (46 | ) | ||||||
Elimination of accretion or amortization of historical unearned points and fees, deferred origination costs, premiums, and discounts | 2 | 7 | 16 | |||||||||
Total | $ | (11 | ) | $ | (85 | ) | $ | (181 | ) |
(b) | Interest expense adjustments primarily includes the accretion of the net discount applied to our long term debt as part of purchase accounting. |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Accretion of net discount applied to long-term debt | $ | 131 | $ | 145 | $ | 180 | ||||||
Elimination of accretion or amortization of historical discounts, premiums, commissions, and fees | (4 | ) | (12 | ) | (40 | ) | ||||||
Total | $ | 127 | $ | 133 | $ | 140 |
(c) | Provision for finance receivable losses consists of the adjustment to reflect the difference between our allowance adjustment calculated under our Segment Accounting Basis and our GAAP basis. |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Allowance for finance receivable losses adjustments | $ | 22 | $ | 24 | $ | 101 | ||||||
Net charge-offs | (5 | ) | (43 | ) | (102 | ) | ||||||
Total | $ | 17 | $ | (19 | ) | $ | (1 | ) |
(d) | Repurchases and repayments of long-term debt adjustments reflect the impact on acceleration of the accretion of the net discount or amortization of the net premium applied to long-term debt. |
(e) | Fair value adjustments on debt reflect differences between Segment Accounting Basis and GAAP basis. On a Segment Accounting Basis, certain long-term debt components are marked-to-market on a recurring basis and are no longer marked-to-market on a recurring basis after the application of purchase accounting at the time of the Fortress Acquisition. |
(f) | Fair value adjustments on sales of finance receivables held for sale originated as held for investment reflect the impact of carrying value differences between Segment Accounting Basis and purchase accounting basis when measuring mark to market for loans held for sale. |
(g) | Amortization of other intangible assets reflects the net impact of amortization associated with identified intangibles as part of purchase accounting and deferred costs impacted by purchase accounting. |
(h) | “Other” items reflect differences between Segment Accounting Basis and GAAP basis relating to various items such as the elimination of deferred charges, adjustments to the basis of other real estate assets, fair value adjustments to fixed assets, adjustments to insurance claims and policyholder liabilities, and various other differences all as of the date of the Fortress Acquisition. |
Interest income | Directly correlated with a specific segment. |
Interest expense | Acquisition and Servicing - includes interest expense specifically identified to our SpringCastle portfolio |
Consumer and Insurance, Real Estate and Other - The Company has securitization debt, secured term loan and unsecured debt. The Company first allocates interest expense to its segments based on actual expense for securitizations and secured term debt and using a weighted average for unsecured debt allocated to the segments. Average unsecured debt allocations for the periods presented are as follows: | |
Subsequent to the OneMain Acquisition | |
Total average unsecured debt is allocated as follows: | |
l Consumer and Insurance - receives remainder of unallocated average debt; and | |
l Real Estate and Other - at 100% of asset base. (Asset base represents the average net finance receivables including finance receivables held for sale.) | |
The net effect of the change in debt allocation and asset base methodologies for 2015 had it been in place as of the beginning of the year would be an increase in interest expense of $208 million for Consumer and Insurance and a decrease in interest expense of $157 million and $51 million for Real Estate and Other, respectively. | |
For the period third quarter 2014 to the OneMain Acquisition | |
Total average unsecured debt is allocated to Consumer and Insurance, Real Estate and Other, such that the total debt allocated across each segment equals 83%, up to 100% and 100% of each of its respective asset base. Any excess is allocated to Consumer and Insurance. | |
Average unsecured debt is allocated after average securitized debt to achieve the calculated average segment debt. | |
Asset base represents the following: | |
l Consumer and Insurance - average net finance receivables including average net finance receivables held for sale; | |
l Real Estate - average net finance receivables including average net finance receivables held for sale, cash and cash equivalents, investments including proceeds from Real Estate sales; and | |
l Other - average net finance receivables other than the periods listed below: | |
l May 2015 to the OneMain Acquisition - average net finance receivables and cash and cash equivalents less proceeds from equity issuance in 2015, operating cash reserve and cash included in other segments. | |
l February 2015 to April 2015 - average net finance receivables and cash and cash equivalents less operating cash reserve and cash included in other segments. | |
Prior to third quarter 2014 | |
The ratio of each segment average net finance receivables to total average net finance receivables is calculated. This ratio is applied to average total debt to calculate the average segment debt. Average unsecured debt is allocated after average securitized debt and secured term loan to achieve the calculated average segment debt. | |
Provision for finance receivable losses | Directly correlated with a specific segment, except for allocations to Other, which are based on the remaining delinquent accounts as a percentage of total delinquent accounts. |
Other revenues | Directly correlated with a specific segment, except for: (i) net gain (loss) on repurchases and repayments of debt, which is allocated to the segments based on the interest expense allocation of debt and (ii) gains and losses on foreign currency exchange, which is allocated to the segments based on the interest expense allocation of debt. |
Salaries and benefits | Directly correlated with a specific segment. Other salaries and benefits not directly correlated with a specific segment are allocated to each of the segments based on services provided. |
Other operating expenses | Directly correlated with a specific segment. Other operating expenses not directly correlated with a specific segment are allocated to each of the segments based on services provided. |
Insurance policy benefits and claims | Directly correlated with a specific segment. |
(dollars in millions) | ||||||||||||
At or for the Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Interest income | $ | 1,570 | $ | 1,123 | $ | 721 | ||||||
Interest expense | 277 | 199 | 149 | |||||||||
Provision for finance receivable losses | 323 | 236 | 117 | |||||||||
Net interest income after provision for finance receivable losses | 970 | 688 | 455 | |||||||||
Other revenues | 217 | 200 | 197 | |||||||||
Other expenses | 683 | 553 | 448 | |||||||||
Pretax operating income | 504 | 335 | 204 | |||||||||
Pretax operating income attributable to non-controlling interests | 127 | 48 | — | |||||||||
Pretax operating income attributable to Springleaf Finance Corporation | $ | 377 | $ | 287 | $ | 204 | ||||||
Consumer and Insurance | ||||||||||||
Finance receivables held for investment: | ||||||||||||
Net finance receivables | $ | 4,286 | $ | 3,775 | $ | 3,129 | ||||||
Number of accounts | 887,523 | 908,808 | 826,659 | |||||||||
TDR finance receivables | $ | 29 | $ | 22 | $ | 15 | ||||||
Allowance for finance receivable losses - TDR | $ | 8 | $ | 2 | $ | 1 | ||||||
Finance receivables held for sale: | ||||||||||||
Net finance receivables | $ | 617 | $ | — | $ | — | ||||||
Number of accounts | 145,736 | — | — | |||||||||
Finance receivables held for investment and held for sale: | ||||||||||||
Average net receivables | $ | 4,250 | $ | 3,374 | $ | 2,789 | ||||||
Yield | 26.23 | % | 27.01 | % | 25.85 | % | ||||||
Gross charge-off ratio (a) | 5.92 | % | 5.64 | % | 5.19 | % | ||||||
Recovery ratio (b) | (0.86 | )% | (0.71 | )% | (1.67 | )% | ||||||
Charge-off ratio (a) (b) | 5.06 | % | 4.93 | % | 3.52 | % | ||||||
Delinquency ratio | 3.16 | % | 2.80 | % | 2.59 | % | ||||||
Origination volume | $ | 4,434 | $ | 3,612 | $ | 3,240 | ||||||
Number of accounts originated | 818,758 | 775,581 | 786,805 | |||||||||
Acquisitions and Servicing | ||||||||||||
Net finance receivables | $ | 1,703 | $ | 2,091 | $ | — | ||||||
Number of accounts | 232,383 | 277,533 | — | |||||||||
Average net receivables (c) | $ | 1,887 | $ | 2,174 | $ | — | ||||||
Yield | 24.14 | % | 23.21 | % | — | % | ||||||
Net charge-off ratio | 3.49 | % | 3.70 | % | — | % | ||||||
Delinquency ratio | 4.07 | % | 4.69 | % | — | % |
(a) | The gross charge-off ratio and charge-off ratio in 2013 reflect $15 million of additional charge-offs recorded in March of 2013 (on a Segment Accounting Basis) related to our change in charge-off policy for personal loans effective March 31, 2013. Excluding these additional charge-offs, the gross charge-off ratio would have been 4.66% in 2013. |
(b) | The recovery ratio and charge-off ratio in 2013 reflects $23 million of recoveries on charged-off personal loans resulting from a sale of our charged-off finance receivables in June of 2013, net of a $3 million adjustment for the subsequent buyback of certain personal loans. |
(c) | Acquisitions and Servicing average net receivables for 2014 reflect a five-month average since the SAC Capital Contribution occurred on July 31, 2014. |
• | Interest income — Consumer and Insurance increased $204 million in 2015 primarily due to the net of the following: |
◦ | Average net receivables increased in 2015 primarily due to increased originations on personal loans resulting from our continued focus on personal loans, including the launch of our auto loan product in June of 2014. At December 31, 2015, we had over 85,000 auto loans totaling nearly $1.0 billion compared to 19,000 auto loans totaling $238 million at December 31, 2014. |
◦ | Yield decreased in 2015 primarily due to the higher proportion of our auto loan product, which generally has lower yields. |
◦ | Interest income on finance receivables held for sale of $43 million in 2015 resulted from the transfer of personal loans to finance receivables held for sale on September 30, 2015. |
• | Interest income — Acquisitions and Servicing increased $243 million in 2015 primarily due to an additional seven months of finance charges on the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. The increase was partially offset by the liquidating status of the acquired SpringCastle Portfolio. |
• | Interest expense — Consumer and Insurance increased $27 million in 2015 primarily due to additional funding required to support increased originations of personal loans. This increase was partially offset by a reduction in the utilization of financing from unsecured notes that was replaced by consumer loan securitizations and additional borrowings under our conduit facilities, which generally have lower interest rates. |
• | Interest expense — Acquisitions and Servicing increased $51 million in 2015 primarily due to (i) an additional seven months of interest expense on the long-term debt associated with the securitization of the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014 and (ii) the refinance of the SpringCastle 2013-A Notes in October of 2014, which resulted in an increase in average debt. |
• | Provision for finance receivable losses — Consumer and Insurance increased $55 million in 2015 primarily due to higher net charge-offs on our personal loans during 2015 reflecting (i) growth in our personal loans in 2015 and (ii) a higher personal loan delinquency ratio at December 31, 2015. |
• | Provision for finance receivable losses — Acquisitions and Servicing increased $32 million in 2015 primarily due to an additional seven months of provision for finance receivable losses associated with the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. This increase was partially offset by the improved credit quality of the SpringCastle Portfolio reflecting improvements in servicing of the acquired portfolio and its liquidating status. |
• | Other expenses — Consumer and Insurance increased $99 million in 2015 due to the net of the following: |
◦ | Salaries and benefits increased $57 million in 2015 primarily due to (i) higher variable compensation reflecting increased originations of personal loans, (ii) increased staffing in our centralized operations, (iii) compensation costs of $6 million in connection with the OneMain Acquisition and the Lendmark Sale, and (iv) the redistribution of the allocation of salaries and benefit expenses as a result of the real estate loan sales in 2014. |
◦ | Other operating expenses increased $45 million in 2015 primarily due to (i) higher advertising expenses reflecting our increased focus on e-commerce and social media marketing and our marketing efforts on our auto loan product during 2015, (ii) higher information technology expenses reflecting increased depreciation and software maintenance as a result of software purchases and the capitalization of internally developed software, (iii) higher occupancy costs resulting from increased general maintenance costs of our branches and higher leasehold improvement amortization expense from the servicing facilities added in 2014, (iv) higher professional fees relating to legal and audit services, (v) higher credit and collection related costs reflecting growth in personal loans, including our auto loan product, and (vi) the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014. |
◦ | Insurance policy benefits and claims decreased $3 million in 2015 primarily due to favorable variances in benefit reserves. |
• | Other expenses — Acquisitions and Servicing increased $31 million in 2015 reflecting higher other operating expenses in 2015 primarily due to an additional seven months of other operating expenses during 2015 period as a result of the SAC Capital Contribution on July 31, 2014. |
• | Interest income — Consumer and Insurance increased $190 million in 2014 primarily due to the following: |
◦ | Average net receivables increased in 2014 primarily due to increased originations of personal loans resulting from our continued focus on personal loans. |
◦ | Yield increased in 2014 primarily due to pricing of new personal loans at higher state specific rates with concentrations in states with more favorable returns. |
• | Interest income — Acquisitions and Servicing of $212 million in 2014 reflected five months of finance charges on the SpringCastle Portfolio. |
• | Interest expense — Consumer and Insurance increased $14 million in 2014 primarily due to additional funding required to support increased originations of personal loans. This increase was partially offset by less utilization of financing from unsecured notes that was replaced by consumer loan securitizations, which generally have lower interest rates. |
• | Interest expense — Acquisitions and Servicing of $36 million in 2014 reflected five months of interest expense on long-term debt associated with the securitization of the SpringCastle Portfolio and the refinance of the SpringCastle 2013-A Notes in October of 2014, which resulted in an increase in average debt. |
• | Provision for finance receivable losses — Consumer and Insurance increased $83 million in 2014 primarily due to (i) higher net charge-offs and additional allowance requirements on our personal loans resulting from increased originations of personal loans in 2014 and a higher personal loan delinquency ratio at December 31, 2014 and (ii) $23 |
• | Provision for finance receivable losses — Acquisitions and Servicing of $36 million in 2014 reflected five months of provision for finance receivable losses on the SpringCastle Portfolio. |
• | Other expenses — Consumer and Insurance increased $75 million in 2014 due to the following: |
◦ | Other operating expenses increased $45 million in 2014 primarily due to higher professional fees, advertising, and information technology expenses and the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014. |
◦ | Salaries and benefits increased $20 million in 2014 primarily due to increased originations of personal loans and the redistribution of the allocation of salaries and benefit expenses as a result of the real estate loan sales in 2014. |
◦ | Insurance policy benefits and claims increased $10 million in 2014 primarily due to unfavorable variances in benefit reserves and claim reserves. |
• | Other expenses — Acquisitions and Servicing of $30 million in 2014 reflected five months of operating expenses allocated to Acquisitions and Servicing. |
(dollars in millions) | ||||||||||||
At or for the Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Interest income | $ | 68 | $ | 401 | $ | 690 | ||||||
Interest expense | 213 | 349 | 539 | |||||||||
Provision for finance receivable losses | (2 | ) | 128 | 255 | ||||||||
Net interest loss after provision for finance receivable losses | (143 | ) | (76 | ) | (104 | ) | ||||||
Other revenues (a) | 4 | 162 | 7 | |||||||||
Other expenses | 33 | 91 | 84 | |||||||||
Pretax operating income (loss) | $ | (172 | ) | $ | (5 | ) | $ | (181 | ) | |||
Finance receivables held for investment: | ||||||||||||
Net finance receivables | $ | 565 | $ | 670 | $ | 9,199 | ||||||
Number of accounts | 21,631 | 22,852 | 118,618 | |||||||||
TDR finance receivables | $ | 160 | $ | 160 | $ | 3,241 | ||||||
Allowance for finance receivable losses - TDR | $ | 57 | $ | 56 | $ | 751 | ||||||
Average net receivables | $ | 619 | $ | 5,055 | $ | 9,783 | ||||||
Yield | 8.99 | % | 6.93 | % | 7.06 | % | ||||||
Loss ratio (b) (c) | 3.71 | % | 2.11 | % | 2.22 | % | ||||||
Delinquency ratio | 7.71 | % | 8.07 | % | 8.08 | % | ||||||
Finance receivables held for sale: | ||||||||||||
Net finance receivables | $ | 182 | $ | 200 | $ | — | ||||||
Number of accounts | 3,196 | 3,578 | — | |||||||||
TDR finance receivables | $ | 187 | $ | 194 | $ | — |
(a) | For purposes of our segment reporting presentation in Note 23 of the Notes to Consolidated Financial Statements in Item 8, we have combined the lower of cost or fair value adjustments recorded on the date the real estate loans were transferred to finance receivables held for sale with the final gain (loss) on the sales of these loans. |
(b) | The loss ratio in 2014 reflects $2 million of recoveries on charged-off real estate loans resulting from a sale of previously charged-off real estate loans in March of 2014. Excluding these recoveries, our Real Estate loss ratio would have been 2.16% in 2014. |
(c) | The loss ratio in 2013 reflects $9 million of recoveries on charged-off real estate loans resulting from a sale of our charged-off finance receivables in June of 2013, net of a $1 million adjustment for the subsequent buyback of certain real estate loans. Excluding these recoveries, our Real Estate loss ratio would have been 2.31% in 2013. |
• | Finance charges decreased $295 million in 2015 primarily due to the net of the following: |
◦ | Average net receivables decreased in 2015 primarily due to the continued liquidation of the real estate portfolio, including the transfers of real estate loans with a total carrying value of $7.1 billion to finance receivables held for sale and the subsequent sales of nearly all of these real estate loans during 2014. |
◦ | Yield increased in 2015 primarily due to a higher proportion of our remaining real estate loans that are secured by second mortgages, which generally have higher yields. |
• | Interest income on real estate loans held for sale decreased $38 million in 2015 primarily due to lower average real estate loans held for sale during 2015. |
• | Other operating expenses decreased $34 million in 2015 primarily due to lower professional services expenses and credit and collection related costs resulting from the sales of real estate loans during 2014. This decrease also reflected the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014. |
• | Salaries and benefits decreased $24 million in 2015 primarily due to the redistribution of the allocation of salaries and benefit expenses as a result of the real estate loan sales in 2014. |
• | Finance charges decreased $340 million in 2014 primarily due to the following: |
◦ | Average net receivables decreased in 2014 primarily due to the continued liquidation of the real estate portfolio, including the transfers of real estate loans with a total carrying value of $7.1 billion to finance receivables held for sale and the subsequent sales of nearly all of these real estate loans during 2014. |
◦ | Yield decreased in 2014 reflecting a higher proportion of TDR finance receivables during the first half of 2014, which generally have lower rates than non-modified real estate loans. The decrease in yield was partially offset by a higher proportion of our remaining real estate loans that are secured by second mortgages, which generally have higher yields. |
• | Interest income on real estate loans held for sale in 2014 resulted from the transfers of real estate loans to held for sale during 2014. |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Interest income | $ | 8 | $ | 16 | $ | 45 | ||||||
Interest expense (a) | 55 | 7 | 15 | |||||||||
Provision for finance receivable losses | 1 | 7 | — | |||||||||
Net interest income (loss) after provision for finance receivable losses | (48 | ) | 2 | 30 | ||||||||
Other revenues (b) | 42 | 6 | 13 | |||||||||
Other expenses (c) (d) | 17 | 10 | 174 | |||||||||
Pretax operating loss | $ | (23 | ) | $ | (2 | ) | $ | (131 | ) |
(a) | Interest expense for 2015 when compared to 2014 reflected higher interest expense on unsecured debt, which was allocated based on a higher cash balance resulting from the proceeds from the real estate sales in 2014. |
(b) | Other revenues for 2015 included (i) 2015 interest income on the Independence Demand Note and (ii) higher interest income on SFC’s note receivable from SFI reflecting additional SFI borrowings during 2015 to fund the operations of its subsidiaries. See Note 11 of the Notes to Consolidated Financial Statements in Item 8 for further information on the Independence Demand Note. |
(c) | Other expenses for 2015 included non-cash incentive compensation expense of $15 million recorded in the second quarter of 2015 related to the rights of certain executives to a portion of the cash proceeds from the sale of OMH’s common stock by the Initial Stockholder. |
(d) | Other expenses for 2013 included $145 million of share-based compensation expense due to the grant of RSUs to certain of our executives and employees in the second half of 2013. |
(dollars in millions) | ||||||||||||
December 31, | 2015 | 2014 | 2013 | |||||||||
Net finance receivables: | ||||||||||||
Personal loans | $ | 17 | $ | 29 | $ | 38 | ||||||
Real estate loans | — | 6 | 8 | |||||||||
Retail sales finance | 24 | 50 | 103 | |||||||||
Total | $ | 41 | $ | 85 | $ | 149 |
(dollars in millions) | Personal Loans | SpringCastle Portfolio | Real Estate Loans | Retail Sales Finance | Total | |||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Net finance receivables: * | ||||||||||||||||||||
60-89 days past due | $ | 49 | $ | 26 | $ | 19 | $ | — | $ | 94 | ||||||||||
90-119 days past due | 41 | 16 | 3 | — | 60 | |||||||||||||||
120-149 days past due | 34 | 12 | 2 | 1 | 49 | |||||||||||||||
150-179 days past due | 31 | 11 | 2 | — | 44 | |||||||||||||||
180 days or more past due | 3 | 1 | 13 | — | 17 | |||||||||||||||
Total delinquent finance receivables | 158 | 66 | 39 | 1 | 264 | |||||||||||||||
Current | 4,077 | 1,588 | 486 | 22 | 6,173 | |||||||||||||||
30-59 days past due | 65 | 49 | 13 | — | 127 | |||||||||||||||
Total | $ | 4,300 | $ | 1,703 | $ | 538 | $ | 23 | $ | 6,564 | ||||||||||
December 31, 2014 | ||||||||||||||||||||
Net finance receivables: * | ||||||||||||||||||||
60-89 days past due | $ | 36 | $ | 34 | $ | 13 | $ | 1 | $ | 84 | ||||||||||
90-119 days past due | 30 | 21 | 9 | — | 60 | |||||||||||||||
120-149 days past due | 24 | 17 | 5 | 1 | 47 | |||||||||||||||
150-179 days past due | 21 | 16 | 4 | — | 41 | |||||||||||||||
180 days or more past due | 2 | 2 | 13 | — | 17 | |||||||||||||||
Total delinquent finance receivables | 113 | 90 | 44 | 2 | 249 | |||||||||||||||
Current | 3,632 | 1,937 | 577 | 45 | 6,191 | |||||||||||||||
30-59 days past due | 55 | 64 | 18 | 1 | 138 | |||||||||||||||
Total | $ | 3,800 | $ | 2,091 | $ | 639 | $ | 48 | $ | 6,578 |
* | Purchased credit impaired finance receivables are accounted for on a pool basis. For purposes of allocating the pool carrying amount to individual finance receivables, the Company applied the ratio of the carrying value to the gross receivable balance of each pool in developing the above table. Finance receivables greater than 180 days delinquent within a PCI pool are not ascribed any carrying value and are not used in deriving the aforementioned ratio. |
(dollars in millions) | Personal Loans * | SpringCastle Portfolio | Real Estate Loans * | Total | ||||||||||||
December 31, 2015 | ||||||||||||||||
TDR net finance receivables | $ | 31 | $ | 13 | $ | 201 | $ | 245 | ||||||||
Allowance for TDR finance receivable losses | $ | 9 | $ | 4 | $ | 34 | $ | 47 | ||||||||
Number of TDR accounts | 10,542 | 1,656 | 3,506 | 15,704 | ||||||||||||
December 31, 2014 | ||||||||||||||||
TDR net finance receivables | $ | 22 | $ | 10 | $ | 196 | $ | 228 | ||||||||
Allowance for TDR finance receivable losses | $ | 1 | $ | 3 | $ | 32 | $ | 36 | ||||||||
Number of TDR accounts | 8,069 | 1,159 | 3,463 | 12,691 |
* | TDR finance receivables held for sale included in the table above were as follows: |
(dollars in millions) | Personal Loans | Real Estate Loans | Total | |||||||||
December 31, 2015 | ||||||||||||
TDR net finance receivables | $ | 2 | $ | 92 | $ | 94 | ||||||
Number of TDR accounts | 738 | 1,322 | 2,060 | |||||||||
December 31, 2014 | ||||||||||||
TDR net finance receivables | $ | — | $ | 91 | $ | 91 | ||||||
Number of TDR accounts | — | 1,284 | 1,284 |
• | On January 15, 2016, we drew $298 million under the variable funding notes issued by the Springleaf Funding Trust 2013-VFN1 (the “Springleaf 2013-VFN1 Trust”) and repaid $300 million on the variable funding notes issued by the Mill River Funding Trust 2015-VFN1 (the “Mill River 2015-VFN1 Trust”). |
• | On January 21, 2016, we amended the note purchase agreement with the Springleaf 2013-VFN1 Trust to (i) increase the maximum principal balance from $350 million to $850 million and (ii) extend the revolving period ending in April 2017 to January 2018, which may be extended to January 2019, subject to satisfaction of customary conditions precedent. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in the 36th month following the end of the revolving period. As of February 24, 2016, $298 million was outstanding under the notes. |
• | On January 21, 2016, we amended the note purchase agreement with the Mill River 2015-VFN1 Trust to decrease the maximum principal balance from $400 million to $100 million. As of February 24, 2016, $100 million was outstanding under the notes. |
• | On February 16, 2016, Sixteenth Street Funding LLC (“Sixteenth Street”), a wholly owned subsidiary of SFC, exercised its right to redeem the asset backed notes issued by the Springleaf Funding Trust 2013-B on June 19, 2013 (the “2013-B Notes”). To redeem the 2013-B Notes, Sixteenth Street paid a redemption price of $371 million, which excluded $30 million for the Class C and Class D Notes owned by Sixteenth Street on the date of the optional redemption. The outstanding principal balance of the 2013-B Notes was $400 million on the date of the optional redemption. |
• | On February 16, 2016, Sumner Brook Funding Trust 2013-VFN1, a wholly owned special purpose vehicle of SFC, repaid the entire $100 million outstanding principal balance of its variable funding notes. |
• | On February 24, 2016, we amended the note purchase agreement with the Midbrook Funding Trust 2013-VFN1 to (i)extend the revolving period ending in June 2016 to February 2018 and (ii) decrease the maximum principal balance from $300 million to $250 million on February 24, 2017. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in the 36th month following the end of the revolving period. As of February 24, 2016, no amounts were outstanding under the notes. |
• | On February 24, 2016, we amended the note purchase agreement with the Whitford Brook Funding Trust 2014-VFN1 to extend the revolving period ending in June 2017 to June 2018. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in the 12th month following the end of the revolving period. As of February 24, 2016, $200 million was outstanding under the notes. |
• | our inability to grow or maintain our personal loan portfolio with adequate profitability; |
• | the effect of federal, state and local laws, regulations, or regulatory policies and practices; |
• | potential liability relating to real estate and personal loans which we have sold or may sell in the future, or relating to securitized loans; and |
• | the potential for disruptions in the debt and equity markets. |
• | maintaining disciplined underwriting standards and pricing for loans we originate or purchase and managing purchases of finance receivables; |
• | pursuing additional debt financings (including new securitizations and new unsecured debt issuances, debt refinancing transactions and standby funding facilities), or a combination of the foregoing; |
• | purchasing portions of our outstanding indebtedness through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration, as we may determine; and |
• | obtaining secured revolving credit facilities to allow us to use excess cash to pay down higher cost debt. |
(dollars in millions) | Initial Note Amounts Issued (a) | Initial Collateral Balance (b) | Current Note Amounts Outstanding | Current Collateral Balance (b) | Current Weighted Average Interest Rate | Collateral Type | Revolving Period | ||||||||||||||||
Consumer Securitizations: | |||||||||||||||||||||||
SLFT 2013-B | $ | 370 | $ | 442 | $ | 370 | $ | 442 | 3.99 | % | Personal loans | 3 years | |||||||||||
SLFT 2014-A | 559 | 644 | 559 | 644 | 2.55 | % | Personal loans | 2 years | |||||||||||||||
SLFT 2015-A | 1,163 | 1,250 | 1,163 | 1,250 | 3.47 | % | Personal loans | 3 years | |||||||||||||||
SLFT 2015-B | 314 | 335 | 314 | 336 | 3.78 | % | Personal loans | 5 years | |||||||||||||||
Total consumer securitizations | 2,406 | 2,671 | 2,406 | 2,672 | |||||||||||||||||||
SpringCastle Securitization: | |||||||||||||||||||||||
SCFT 2014-A | 2,559 | 2,737 | 1,917 | 2,095 | 4.08 | % | Personal and junior mortgage loans | N/A (c) | |||||||||||||||
Total secured structured financings | $ | 4,965 | $ | 5,408 | $ | 4,323 | $ | 4,767 |
(a) | Represents securities sold at time of issuance or at a later date and does not include retained notes. |
(b) | Represents UPB of the collateral supporting the issued and retained notes. |
(c) | Not applicable. |
Years Ended December 31, | 2015 | 2014 | 2013 | ||||||
Weighted average interest rate | 5.42 | % | 5.42 | % | 5.59 | % |
(dollars in millions) | 2016 | 2017-2018 | 2019-2020 | 2021+ | Securitizations | Revolving Conduit Facilities | Total | |||||||||||||||||||||
Principal maturities on long-term debt: | ||||||||||||||||||||||||||||
Securitization debt (a): | ||||||||||||||||||||||||||||
Consumer | $ | — | $ | — | $ | — | $ | — | $ | 2,406 | $ | — | $ | 2,406 | ||||||||||||||
SpringCastle Portfolio | — | — | — | — | 1,917 | — | 1,917 | |||||||||||||||||||||
Revolving conduit facilities (a) | — | — | — | — | — | 1,200 | 1,200 | |||||||||||||||||||||
Medium-term notes | 375 | 1,903 | 1,000 | 950 | — | — | 4,228 | |||||||||||||||||||||
Junior subordinated debt | — | — | — | 350 | — | — | 350 | |||||||||||||||||||||
Total principal maturities | 375 | 1,903 | 1,000 | 1,300 | 4,323 | 1,200 | 10,101 | |||||||||||||||||||||
Interest payments on debt (b) | 303 | 415 | 231 | 505 | 441 | 46 | 1,941 | |||||||||||||||||||||
Operating leases (c) | 27 | 36 | 13 | 1 | — | — | 77 | |||||||||||||||||||||
Total | $ | 705 | $ | 2,354 | $ | 1,244 | $ | 1,806 | $ | 4,764 | $ | 1,246 | $ | 12,119 |
(a) | On-balance sheet securitizations and borrowing under revolving conduit facilities are not included in maturities by period due to their variable monthly payments. |
(b) | Future interest payments on floating-rate debt and revolving conduit facilities are estimated based upon floating rates in effect and revolving balances at December 31, 2015. |
(c) | Operating leases include annual rental commitments for leased office space, automobiles, and information technology and related equipment. |
Average debt | average of debt for each day in the period |
Average net receivables | average of monthly average net finance receivables (net finance receivables at the beginning and end of each month divided by 2) in the period |
Charge-off ratio | annualized net charge-offs as a percentage of the average of net finance receivables at the beginning of each month in the period |
Delinquency ratio | UPB 60 days or more past due (greater than three payments unpaid) as a percentage of UPB |
Gross charge-off ratio | annualized gross charge-offs as a percentage of the average of net finance receivables at the beginning of each month in the period |
Trust Preferred Securities | capital securities classified as debt for accounting purposes but due to their terms are afforded, at least in part, equity capital treatment in the calculation of effective leverage by rating agencies |
Loss ratio | annualized net charge-offs, net writedowns on real estate owned, net gain (loss) on sales of real estate owned, and operating expenses related to real estate owned as a percentage of the average of real estate loans at the beginning of each month in the period |
Net interest income | interest income less interest expense |
Recovery ratio | annualized recoveries on net charge-offs as a percentage of the average of net finance receivables at the beginning of each month in the period |
Tangible equity | total equity less accumulated other comprehensive income or loss |
Weighted average interest rate | annualized interest expense as a percentage of average debt |
Yield | annualized finance charges as a percentage of average net receivables |
Topic | Page | ||
(dollars in millions except par value amount) | ||||||||
December 31, | 2015 | 2014 | ||||||
Assets | ||||||||
Cash and cash equivalents | $ | 321 | $ | 749 | ||||
Investment securities | 604 | 2,922 | ||||||
Net finance receivables: | ||||||||
Personal loans (includes loans of consolidated VIEs of $3.6 billion in 2015 and $1.9 billion in 2014) | 4,300 | 3,800 | ||||||
SpringCastle Portfolio (includes loans of consolidated VIEs of $1.7 billion in 2015 and $2.1 billion in 2014) | 1,703 | 2,091 | ||||||
Real estate loans | 538 | 639 | ||||||
Retail sales finance | 23 | 48 | ||||||
Net finance receivables | 6,564 | 6,578 | ||||||
Unearned insurance premium and claim reserves | (250 | ) | (217 | ) | ||||
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $128 million in 2015 and $72 million in 2014) | (224 | ) | (180 | ) | ||||
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses | 6,090 | 6,181 | ||||||
Finance receivables held for sale (includes finance receivables held for sale of consolidated VIEs of $435 million in 2015) | 793 | 202 | ||||||
Notes receivable from parent and affiliates | 3,804 | 251 | ||||||
Restricted cash and cash equivalents (includes restricted cash and cash equivalents of consolidated VIEs of $282 million in 2015 and $210 million in 2014) | 295 | 218 | ||||||
Other assets | 281 | 475 | ||||||
Total assets | $ | 12,188 | $ | 10,998 | ||||
Liabilities and Shareholder’s Equity | ||||||||
Long-term debt (includes debt of consolidated VIEs of $5.5 billion in 2015 and $3.6 billion in 2014) | $ | 9,582 | $ | 8,356 | ||||
Insurance claims and policyholder liabilities | 230 | 229 | ||||||
Deferred and accrued taxes | 128 | 177 | ||||||
Other liabilities | 216 | 259 | ||||||
Total liabilities | 10,156 | 9,021 | ||||||
Commitments and contingent liabilities (Note 20) | ||||||||
Shareholder’s equity: | ||||||||
Common stock, par value $.50 per share; 25,000,000 shares authorized, 10,160,020 shares issued and outstanding at December 31, 2015 and 2014 | 5 | 5 | ||||||
Additional paid-in capital | 789 | 771 | ||||||
Accumulated other comprehensive income (loss) | (24 | ) | 3 | |||||
Retained earnings | 1,341 | 1,327 | ||||||
Springleaf Finance Corporation shareholder’s equity | 2,111 | 2,106 | ||||||
Non-controlling interests | (79 | ) | (129 | ) | ||||
Total shareholder’s equity | 2,032 | 1,977 | ||||||
Total liabilities and shareholder’s equity | $ | 12,188 | $ | 10,998 |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Interest income: | ||||||||||||
Finance charges | $ | 1,597 | $ | 1,564 | $ | 1,637 | ||||||
Finance receivables held for sale originated as held for investment | 60 | 61 | — | |||||||||
Total interest income | 1,657 | 1,625 | 1,637 | |||||||||
Interest expense | 667 | 683 | 843 | |||||||||
Net interest income | 990 | 942 | 794 | |||||||||
Provision for finance receivable losses | 339 | 352 | 371 | |||||||||
Net interest income after provision for finance receivable losses | 651 | 590 | 423 | |||||||||
Other revenues: | ||||||||||||
Insurance | 158 | 166 | 148 | |||||||||
Investment | 49 | 39 | 34 | |||||||||
Net loss on repurchases and repayments of debt | — | (66 | ) | (42 | ) | |||||||
Net gain on fair value adjustments on debt | — | 1 | — | |||||||||
Net gain on sales of real estate loans and related trust assets | — | 626 | — | |||||||||
Other | 36 | (21 | ) | 21 | ||||||||
Total other revenues | 243 | 745 | 161 | |||||||||
Other expenses: | ||||||||||||
Operating expenses: | ||||||||||||
Salaries and benefits | 364 | 321 | 447 | |||||||||
Other operating expenses | 299 | 261 | 197 | |||||||||
Insurance policy benefits and claims | 72 | 75 | 65 | |||||||||
Total other expenses | 735 | 657 | 709 | |||||||||
Income (loss) before provision for (benefit from) income taxes | 159 | 678 | (125 | ) | ||||||||
Provision for (benefit from) income taxes | 18 | 233 | (49 | ) | ||||||||
Net income (loss) | 141 | 445 | (76 | ) | ||||||||
Net income attributable to non-controlling interests | 127 | 48 | — | |||||||||
Net income (loss) attributable to Springleaf Finance Corporation | $ | 14 | $ | 397 | $ | (76 | ) |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Net income (loss) | $ | 141 | $ | 445 | $ | (76 | ) | |||||
Other comprehensive income (loss): | ||||||||||||
Net unrealized gains (losses) on non-credit impaired available-for-sale securities | (17 | ) | 20 | (12 | ) | |||||||
Retirement plan liabilities adjustments | (9 | ) | (50 | ) | 18 | |||||||
Foreign currency translation adjustments | — | — | (1 | ) | ||||||||
Income tax effect: | ||||||||||||
Net unrealized (gains) losses on non-credit impaired available-for-sale securities | 5 | (7 | ) | 4 | ||||||||
Retirement plan liabilities adjustments | 3 | 17 | (6 | ) | ||||||||
Other comprehensive income (loss), net of tax, before reclassification adjustments | (18 | ) | (20 | ) | 3 | |||||||
Reclassification adjustments included in net income (loss): | ||||||||||||
Net realized gains on available-for-sale securities | (14 | ) | (8 | ) | (2 | ) | ||||||
Income tax effect: | ||||||||||||
Net realized gains on available-for-sale securities | 5 | 3 | 1 | |||||||||
Reclassification adjustments included in net income (loss), net of tax | (9 | ) | (5 | ) | (1 | ) | ||||||
Other comprehensive income (loss), net of tax | (27 | ) | (25 | ) | 2 | |||||||
Comprehensive income (loss) | 114 | 420 | (74 | ) | ||||||||
Comprehensive income attributable to non-controlling interests | 127 | 48 | — | |||||||||
Comprehensive income (loss) attributable to Springleaf Finance Corporation | $ | (13 | ) | $ | 372 | $ | (74 | ) |
Springleaf Finance Corporation Shareholder’s Equity | ||||||||||||||||||||||||||||
(dollars in millions) | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Springleaf Finance Corporation Shareholder’s Equity | Non-controlling Interests | Total Shareholder’s Equity | |||||||||||||||||||||
Balance, January 1, 2015 | $ | 5 | $ | 771 | $ | 3 | $ | 1,327 | $ | 2,106 | $ | (129 | ) | $ | 1,977 | |||||||||||||
Non-cash incentive compensation from Initial Stockholder | — | 15 | — | — | 15 | — | 15 | |||||||||||||||||||||
Share-based compensation expense, net of forfeitures | — | 2 | — | — | 2 | — | 2 | |||||||||||||||||||||
Excess tax benefit from share-based compensation | — | 1 | — | — | 1 | — | 1 | |||||||||||||||||||||
Change in non-controlling interests: | ||||||||||||||||||||||||||||
Distributions declared to joint venture partners | — | — | — | — | — | (77 | ) | (77 | ) | |||||||||||||||||||
Accumulated other comprehensive loss | — | — | (27 | ) | — | (27 | ) | — | (27 | ) | ||||||||||||||||||
Net income | — | — | — | 14 | 14 | 127 | 141 | |||||||||||||||||||||
Balance, December 31, 2015 | $ | 5 | $ | 789 | $ | (24 | ) | $ | 1,341 | $ | 2,111 | $ | (79 | ) | $ | 2,032 | ||||||||||||
Balance, January 1, 2014 | $ | 5 | $ | 422 | $ | 28 | $ | 930 | $ | 1,385 | $ | — | $ | 1,385 | ||||||||||||||
Capital contributions from parent | — | 22 | — | — | 22 | — | 22 | |||||||||||||||||||||
Capital contribution of capital stock of Springleaf Acquisitions Corporation | — | 326 | — | — | 326 | 450 | 776 | |||||||||||||||||||||
Share-based compensation expense, net of forfeitures | — | 1 | — | — | 1 | — | 1 | |||||||||||||||||||||
Change in non-controlling interests: | ||||||||||||||||||||||||||||
Distributions declared to joint venture partners | — | — | — | — | — | (627 | ) | (627 | ) | |||||||||||||||||||
Accumulated other comprehensive loss | — | — | (25 | ) | — | (25 | ) | — | (25 | ) | ||||||||||||||||||
Net income | — | — | — | 397 | 397 | 48 | 445 | |||||||||||||||||||||
Balance, December 31, 2014 | $ | 5 | $ | 771 | $ | 3 | $ | 1,327 | $ | 2,106 | $ | (129 | ) | $ | 1,977 | |||||||||||||
Balance, January 1, 2013 | $ | 5 | $ | 256 | $ | 26 | $ | 1,006 | $ | 1,293 | $ | — | $ | 1,293 | ||||||||||||||
Capital contributions from parent | — | 21 | — | — | 21 | — | 21 | |||||||||||||||||||||
Share-based compensation expense, net of forfeitures | — | 145 | — | — | 145 | — | 145 | |||||||||||||||||||||
Accumulated other comprehensive income | — | — | 2 | — | 2 | — | 2 | |||||||||||||||||||||
Net loss | — | — | — | (76 | ) | (76 | ) | — | (76 | ) | ||||||||||||||||||
Balance, December 31, 2013 | $ | 5 | $ | 422 | $ | 28 | $ | 930 | $ | 1,385 | $ | — | $ | 1,385 |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | 141 | $ | 445 | $ | (76 | ) | |||||
Reconciling adjustments: | ||||||||||||
Provision for finance receivable losses | 339 | 352 | 371 | |||||||||
Depreciation and amortization | 92 | 112 | 82 | |||||||||
Deferred income tax charge (benefit) | (50 | ) | (12 | ) | (114 | ) | ||||||
Non-cash incentive compensation from Initial Stockholder | 15 | — | — | |||||||||
Net gain on fair value adjustments on debt | — | (1 | ) | — | ||||||||
Net gain on sales of real estate loans and related trust assets | — | (626 | ) | — | ||||||||
Net loss on repurchases and repayments of debt | — | 66 | 42 | |||||||||
Share-based compensation expense, net of forfeitures | 2 | 1 | 145 | |||||||||
Other | (3 | ) | 17 | 21 | ||||||||
Cash flows due to changes in: | ||||||||||||
Other assets and other liabilities | (54 | ) | (9 | ) | 2 | |||||||
Insurance claims and policyholder liabilities | 34 | 51 | 29 | |||||||||
Taxes receivable and payable | 111 | (127 | ) | (50 | ) | |||||||
Accrued interest and finance charges | (23 | ) | (39 | ) | (41 | ) | ||||||
Restricted cash and cash equivalents not reinvested | — | 5 | (4 | ) | ||||||||
Other, net | (1 | ) | 1 | (1 | ) | |||||||
Net cash provided by operating activities | 603 | 236 | 406 | |||||||||
Cash flows from investing activities | ||||||||||||
Net principal collections (originations) of finance receivables held for investment and held for sale | (799 | ) | (88 | ) | 379 | |||||||
Proceeds on sales of finance receivables held for sale originated as held for investment | 78 | 3,789 | 15 | |||||||||
Cash advances on intercompany notes receivables | (3,720 | ) | (128 | ) | — | |||||||
Principal collections on intercompany notes receivables | 189 | 44 | — | |||||||||
Available-for-sale securities purchased | (476 | ) | (348 | ) | (196 | ) | ||||||
Trading and other securities purchased | (1,474 | ) | (2,930 | ) | (10 | ) | ||||||
Available-for-sale securities called, sold, and matured | 470 | 269 | 296 | |||||||||
Trading and other securities called, sold, and matured | 3,779 | 646 | 8 | |||||||||
Change in notes receivable from parent and affiliate | — | — | 370 | |||||||||
Change in restricted cash and cash equivalents | (72 | ) | 93 | (241 | ) | |||||||
Proceeds from sale of real estate owned | 14 | 58 | 108 | |||||||||
Other, net | (12 | ) | — | (3 | ) | |||||||
Net cash provided by (used for) investing activities | (2,023 | ) | 1,405 | 726 | ||||||||
Cash flows from financing activities | ||||||||||||
Proceeds from issuance of long-term debt, net of commissions | 3,028 | 3,557 | 3,765 | |||||||||
Repayments of long-term debt | (1,960 | ) | (4,218 | ) | (5,868 | ) | ||||||
Change in notes payable to parent and affiliates | — | — | (31 | ) | ||||||||
Distributions to joint venture partners | (77 | ) | (627 | ) | — | |||||||
Excess tax benefit from restricted stock units | 1 | — | — | |||||||||
Capital contributions from parent | — | 22 | 21 | |||||||||
Net cash provided by (used for) financing activities | 992 | (1,266 | ) | (2,113 | ) |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Effect of exchange rate changes on cash and cash equivalents | — | (1 | ) | (1 | ) | |||||||
Net change in cash and cash equivalents | (428 | ) | 374 | (982 | ) | |||||||
Cash and cash equivalents at beginning of period | 749 | 375 | 1,357 | |||||||||
Cash and cash equivalents at end of period | $ | 321 | $ | 749 | $ | 375 | ||||||
Supplemental cash flow information | ||||||||||||
Interest paid | $ | (511 | ) | $ | (504 | ) | $ | (652 | ) | |||
Income taxes received (paid) | 45 | (369 | ) | (112 | ) | |||||||
Supplemental non-cash activities | ||||||||||||
Transfer of finance receivables to real estate owned | $ | 11 | $ | 49 | $ | 93 | ||||||
Transfer of finance receivables held for investment to finance receivables held for sale (prior to deducting allowance for finance receivable losses) | 617 | 6,986 | 18 | |||||||||
Springleaf Finance, Inc. contribution of consolidated assets from Springleaf Acquisition Corporation’s capital stock to Springleaf Finance Corporation | — | 2,446 | — | |||||||||
Springleaf Finance, Inc. contribution of consolidated liabilities from Springleaf Acquisition Corporation’s capital stock to Springleaf Finance Corporation | — | 1,670 | — | |||||||||
Net unsettled investment security purchases | — | (7 | ) | — |
(dollars in millions) | As Reported | As Adjusted | ||||||
Income (loss) before provision for (benefit from) income taxes | ||||||||
Year ended December 31, 2013 | $ | (136 | ) | $ | (125 | ) | ||
Year ended December 31, 2014 | 755 | 678 | ||||||
Year ended December 31, 2015 | 144 | 159 | ||||||
Net income (loss) attributable to SFC | ||||||||
Year ended December 31, 2013 | $ | (83 | ) | $ | (76 | ) | ||
Year ended December 31, 2014 | 448 | 397 | ||||||
Year ended December 31, 2015 | 9 | 14 | ||||||
Shareholder’s equity attributable to SFC | ||||||||
January 1, 2014 | $ | 1,328 | $ | 1,385 | ||||
January 1, 2015 | 2,069 | 2,106 | ||||||
January 1, 2016 | 2,069 | 2,111 |
December 31, 2015 | December 31, 2014 | |||||||||||||||
(dollars in millions) | As Reported * | As Adjusted | As Reported | As Adjusted | ||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 321 | $ | 321 | $ | 749 | $ | 749 | ||||||||
Investment securities | 604 | 604 | 2,922 | 2,922 | ||||||||||||
Net finance receivables: | ||||||||||||||||
Personal loans | 4,300 | 4,300 | 3,800 | 3,800 | ||||||||||||
SpringCastle Portfolio | 1,576 | 1,703 | 1,979 | 2,091 | ||||||||||||
Real estate loans | 524 | 538 | 625 | 639 | ||||||||||||
Retail sales finance | 23 | 23 | 48 | 48 | ||||||||||||
Net finance receivables | 6,423 | 6,564 | 6,452 | 6,578 | ||||||||||||
Unearned insurance premium and claim reserves | (250 | ) | (250 | ) | (217 | ) | (217 | ) | ||||||||
Allowance for finance receivable losses | (219 | ) | (224 | ) | (174 | ) | (180 | ) | ||||||||
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses | 5,954 | 6,090 | 6,061 | 6,181 | ||||||||||||
Finance receivables held for sale | 796 | 793 | 205 | 202 | ||||||||||||
Notes receivable from parent and affiliates | 3,804 | 3,804 | 251 | 251 | ||||||||||||
Restricted cash and cash equivalents | 295 | 295 | 218 | 218 | ||||||||||||
Other assets | 281 | 281 | 474 | 475 | ||||||||||||
Total assets | $ | 12,055 | $ | 12,188 | $ | 10,880 | $ | 10,998 | ||||||||
Liabilities and Shareholder’s Equity | ||||||||||||||||
Long-term debt | $ | 9,582 | $ | 9,582 | $ | 8,356 | $ | 8,356 | ||||||||
Insurance claims and policyholder liabilities | 230 | 230 | 229 | 229 | ||||||||||||
Deferred and accrued taxes | 103 | 128 | 159 | 177 | ||||||||||||
Other liabilities | 217 | 216 | 255 | 259 | ||||||||||||
Total liabilities | 10,132 | 10,156 | 8,999 | 9,021 | ||||||||||||
Shareholder’s equity: | ||||||||||||||||
Common stock | 5 | 5 | 5 | 5 | ||||||||||||
Additional paid-in capital | 758 | 789 | 740 | 771 | ||||||||||||
Accumulated other comprehensive income (loss) | (24 | ) | (24 | ) | 3 | 3 | ||||||||||
Retained earnings | 1,330 | 1,341 | 1,321 | 1,327 | ||||||||||||
Springleaf Finance Corporation shareholder’s equity | 2,069 | 2,111 | 2,069 | 2,106 | ||||||||||||
Non-controlling interests | (146 | ) | (79 | ) | (188 | ) | (129 | ) | ||||||||
Total shareholder’s equity | 1,923 | 2,032 | 1,881 | 1,977 | ||||||||||||
Total liabilities and shareholder’s equity | $ | 12,055 | $ | 12,188 | $ | 10,880 | $ | 10,998 |
* | As reported in our Annual Report on Form 10-K for the year ended December 31, 2015. The condensed consolidated balance sheet as of December 31, 2015, has been revised in our Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2016. |
(dollars in millions) | Year Ended December 31, 2015 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | |||||||||||||||||||||
As Reported | As Adjusted | As Reported | As Adjusted | As Reported | As Adjusted | |||||||||||||||||||
Interest income: | ||||||||||||||||||||||||
Finance charges | $ | 1,604 | $ | 1,597 | $ | 1,574 | $ | 1,564 | $ | 1,648 | $ | 1,637 | ||||||||||||
Finance receivables held for sale originated as held for investment | 61 | 60 | 60 | 61 | — | — | ||||||||||||||||||
Total interest income | 1,665 | 1,657 | 1,634 | 1,625 | 1,648 | 1,637 | ||||||||||||||||||
Interest expense | 667 | 667 | 683 | 683 | 843 | 843 | ||||||||||||||||||
Net interest income | 998 | 990 | 951 | 942 | 805 | 794 | ||||||||||||||||||
Provision for finance receivable losses | 361 | 339 | 368 | 352 | 394 | 371 | ||||||||||||||||||
Net interest income after provision for finance receivable losses | 637 | 651 | 583 | 590 | 411 | 423 | ||||||||||||||||||
Other revenues: | ||||||||||||||||||||||||
Insurance | 158 | 158 | 166 | 166 | 148 | 148 | ||||||||||||||||||
Investment | 49 | 49 | 39 | 39 | 34 | 34 | ||||||||||||||||||
Net loss on repurchases and repayments of debt | — | — | (66 | ) | (66 | ) | (42 | ) | (42 | ) | ||||||||||||||
Net gain on fair value adjustments on debt | — | — | 1 | 1 | — | — | ||||||||||||||||||
Net gain on sales of real estate loans and related trust assets | — | — | 702 | 626 | — | — | ||||||||||||||||||
Other | 35 | 36 | (13 | ) | (21 | ) | 22 | 21 | ||||||||||||||||
Total other revenues | 242 | 243 | 829 | 745 | 162 | 161 | ||||||||||||||||||
Other expenses: | ||||||||||||||||||||||||
Operating expenses: | ||||||||||||||||||||||||
Salaries and benefits | 364 | 364 | 321 | 321 | 447 | 447 | ||||||||||||||||||
Other operating expenses | 299 | 299 | 261 | 261 | 197 | 197 | ||||||||||||||||||
Insurance policy benefits and claims | 72 | 72 | 75 | 75 | 65 | 65 | ||||||||||||||||||
Total other expenses | 735 | 735 | 657 | 657 | 709 | 709 | ||||||||||||||||||
Income (loss) before provision for (benefit from) income taxes | 144 | 159 | 755 | 678 | (136 | ) | (125 | ) | ||||||||||||||||
Provision for (benefit from) income taxes | 15 | 18 | 263 | 233 | (53 | ) | (49 | ) | ||||||||||||||||
Net income (loss) | 129 | 141 | 492 | 445 | (83 | ) | (76 | ) | ||||||||||||||||
Net income attributable to non-controlling interests | 120 | 127 | 44 | 48 | — | — | ||||||||||||||||||
Net income (loss) attributable to Springleaf Finance Corporation | $ | 9 | $ | 14 | $ | 448 | $ | 397 | $ | (83 | ) | $ | (76 | ) |
(dollars in millions) | Year Ended December 31, 2015 | Year Ended December 31, 2014 | Year Ended December 31, 2013 | |||||||||||||||||||||
As Reported | As Adjusted | As Reported | As Adjusted | As Reported | As Adjusted | |||||||||||||||||||
Cash flows from operating activities | ||||||||||||||||||||||||
Net income (loss) | $ | 129 | $ | 141 | $ | 492 | $ | 445 | $ | (83 | ) | $ | (76 | ) | ||||||||||
Reconciling adjustments: | ||||||||||||||||||||||||
Provision for finance receivable losses | 361 | 339 | 368 | 352 | 394 | 371 | ||||||||||||||||||
Depreciation and amortization | 84 | 92 | 109 | 112 | 72 | 82 | ||||||||||||||||||
Deferred income tax charge (benefit) | (53 | ) | (50 | ) | 18 | (12 | ) | (118 | ) | (114 | ) | |||||||||||||
Non-cash incentive compensation from Initial Stockholder | 15 | 15 | — | — | — | — | ||||||||||||||||||
Net gain on fair value adjustments on debt | — | — | (1 | ) | (1 | ) | — | — | ||||||||||||||||
Net gain on sales of real estate loans and related trust assets | — | — | (702 | ) | (626 | ) | — | — | ||||||||||||||||
Net loss on repurchases and repayments of debt | — | — | 66 | 66 | 42 | 42 | ||||||||||||||||||
Share-based compensation expense, net of forfeitures | 2 | 2 | 1 | 1 | 145 | 145 | ||||||||||||||||||
Other | (1 | ) | (3 | ) | 9 | 17 | 19 | 21 | ||||||||||||||||
Cash flows due to changes in: | ||||||||||||||||||||||||
Other assets and other liabilities | (54 | ) | (54 | ) | (9 | ) | (9 | ) | 2 | 2 | ||||||||||||||
Insurance claims and policyholder liabilities | 34 | 34 | 51 | 51 | 29 | 29 | ||||||||||||||||||
Taxes receivable and payable | 111 | 111 | (127 | ) | (127 | ) | (50 | ) | (50 | ) | ||||||||||||||
Accrued interest and finance charges | (23 | ) | (23 | ) | (39 | ) | (39 | ) | (41 | ) | (41 | ) | ||||||||||||
Restricted cash and cash equivalents not reinvested | — | — | 5 | 5 | (4 | ) | (4 | ) | ||||||||||||||||
Other, net | (1 | ) | (1 | ) | 1 | 1 | (1 | ) | (1 | ) | ||||||||||||||
Net cash provided by operating activities | 604 | 603 | 242 | 236 | 406 | 406 | ||||||||||||||||||
Cash flows from investing activities | ||||||||||||||||||||||||
Net principal collections (originations) of finance receivables held for investment and held for sale | (799 | ) | (799 | ) | (94 | ) | (88 | ) | 379 | 379 | ||||||||||||||
Proceeds on sales of finance receivables held for sale originated as held for investment | 78 | 78 | 3,789 | 3,789 | 15 | 15 | ||||||||||||||||||
Cash advances on intercompany notes receivables | (3,720 | ) | (3,720 | ) | (128 | ) | (128 | ) | — | — | ||||||||||||||
Principal collections on intercompany notes receivables | 189 | 189 | 44 | 44 | — | — | ||||||||||||||||||
Available-for-sale securities purchased | (476 | ) | (476 | ) | (348 | ) | (348 | ) | (196 | ) | (196 | ) | ||||||||||||
Trading and other securities purchased | (1,474 | ) | (1,474 | ) | (2,930 | ) | (2,930 | ) | (10 | ) | (10 | ) | ||||||||||||
Available-for-sale securities called, sold, and matured | 470 | 470 | 269 | 269 | 296 | 296 | ||||||||||||||||||
Trading and other securities called, sold, and matured | 3,779 | 3,779 | 646 | 646 | 8 | 8 | ||||||||||||||||||
Change in notes receivable from parent and affiliate | — | — | — | — | 370 | 370 | ||||||||||||||||||
Change in restricted cash and cash equivalents | (72 | ) | (72 | ) | 93 | 93 | (241 | ) | (241 | ) | ||||||||||||||
Proceeds from sale of real estate owned | 14 | 14 | 58 | 58 | 108 | 108 | ||||||||||||||||||
Other, net | (12 | ) | (12 | ) | — | — | (3 | ) | (3 | ) | ||||||||||||||
Net cash provided by (used for) investing activities | (2,023 | ) | (2,023 | ) | 1,399 | 1,405 | 726 | 726 | ||||||||||||||||
Cash flows from financing activities | ||||||||||||||||||||||||
Proceeds from issuance of long-term debt, net of commissions | 3,028 | 3,028 | 3,557 | 3,557 | 3,765 | 3,765 | ||||||||||||||||||
Repayments of long-term debt | (1,960 | ) | (1,960 | ) | (4,218 | ) | (4,218 | ) | (5,868 | ) | (5,868 | ) | ||||||||||||
Change in notes payable to parent and affiliates | — | — | — | — | (31 | ) | (31 | ) | ||||||||||||||||
Distributions to joint venture partners | (78 | ) | (77 | ) | (627 | ) | (627 | ) | — | — | ||||||||||||||
Excess tax benefit from share-based compensation | 1 | 1 | — | — | — | — | ||||||||||||||||||
Capital contribution from parent | — | — | 22 | 22 | 21 | 21 | ||||||||||||||||||
Net cash provided by (used for) financing activities | 991 | 992 | (1,266 | ) | (1,266 | ) | (2,113 | ) | (2,113 | ) |
Effect of exchange rate changes on cash and cash equivalents | — | — | (1 | ) | (1 | ) | (1 | ) | (1 | ) | ||||||||||||||
Net change in cash and cash equivalents | (428 | ) | (428 | ) | 374 | 374 | (982 | ) | (982 | ) | ||||||||||||||
Cash and cash equivalents at beginning of period | 749 | 749 | 375 | 375 | 1,357 | 1,357 | ||||||||||||||||||
Cash and cash equivalents at end of period | $ | 321 | $ | 321 | $ | 749 | $ | 749 | $ | 375 | $ | 375 |
• | Consumer and Insurance; |
• | Acquisitions and Servicing; and |
• | Real Estate. |
• | prior finance receivable loss and delinquency experience; |
• | the composition of our finance receivable portfolio; and |
• | current economic conditions, including the levels of unemployment and personal bankruptcies. |
• | we intend to sell the security; |
• | it is more likely than not that we will be required to sell the security before recovery of its amortized cost basis; or |
• | we do not expect to recover the security’s entire amortized cost basis (even if we do not intend to sell the security). |
• | the nature, frequency, and severity of current and cumulative financial reporting losses; |
• | the timing of the reversal of our gross taxable temporary differences in an amount sufficient to provide benefit for our gross deductible temporary differences; |
• | the carryforward periods for the net operating and capital loss carryforwards; |
• | the sources and timing of future taxable income; and |
• | tax planning strategies that would be implemented, if necessary, to accelerate taxable amounts. |
(dollars in millions) | Consumer and Insurance | Real Estate | Other | |||||||||
Assets * | ||||||||||||
March 31, 2015 | $ | 5,070 | $ | 3,613 | $ | 1,832 | ||||||
December 31, 2014 | 4,462 | 3,666 | 555 | |||||||||
September 30, 2014 | 4,651 | 3,720 | 705 | |||||||||
June 30, 2014 | 4,406 | 6,561 | 1,058 | |||||||||
December 31, 2013 | 4,200 | 8,512 | 611 |
* | The revised amounts do not reflect the retrospective reclassifications of our debt issuance costs previously recorded in other assets to long-term debt, as a result of our early adoption of ASU 2015-03. |
• | Personal loans — are secured by consumer goods, automobiles, or other personal property or are unsecured, typically non-revolving with a fixed-rate and a fixed, original term of two to five years. At December 31, 2015, $2.4 billion of personal loans, or 56%, were secured by collateral consisting of titled personal property (such as automobiles) and $1.9 billion, or 44%, were secured by consumer household goods or other items of personal property or were unsecured, compared to $1.9 billion of personal loans, or 50%, secured by collateral consisting of titled personal property and $1.9 billion, or 50%, secured by consumer household goods or other items of personal property or unsecured at December 31, 2014. |
• | SpringCastle Portfolio — includes unsecured loans and loans secured by subordinate residential real estate mortgages (which we service as unsecured loans due to the fact that the liens are subordinated to superior ranking security interests). The SpringCastle Portfolio includes both closed-end accounts and open-end lines of credit. These loans are in a liquidating status and vary in substance and form from our originated loans. |
• | Real estate loans — are secured by first or second mortgages on residential real estate, generally have maximum original terms of 360 months, and are considered non-conforming. At December 31, 2015, $207 million of real estate loans, or 38%, were secured by first mortgages and $331 million, or 62%, were secured by second mortgages, compared to $230 million of real estate loans, or 36%, secured by first mortgages and $409 million, or 64%, secured by second mortgages at December 31, 2014. Real estate loans may be closed-end accounts or open-end home equity lines of credit and are primarily fixed-rate products. Since we ceased real estate lending in January of 2012, our real estate loans are in a liquidating status. |
• | Retail sales finance — include retail sales contracts and revolving retail accounts. Retail sales contracts are closed-end accounts that represent a single purchase transaction. Revolving retail accounts are open-end accounts that can be used for financing repeated purchases from the same merchant. Retail sales contracts are secured by the personal property designated in the contract and generally have maximum original terms of 60 months. Revolving retail accounts are secured by the goods purchased and generally require minimum monthly payments based on the amount financed calculated after the most recent purchase or outstanding balances. Our retail sales finance portfolio is also in a liquidating status. |
(dollars in millions) | Personal Loans | SpringCastle Portfolio | Real Estate Loans | Retail Sales Finance | Total | |||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Gross receivables * | $ | 5,028 | $ | 1,672 | $ | 534 | $ | 25 | $ | 7,259 | ||||||||||
Unearned finance charges and points and fees | (833 | ) | — | — | (2 | ) | (835 | ) | ||||||||||||
Accrued finance charges | 60 | 31 | 4 | — | 95 | |||||||||||||||
Deferred origination costs | 45 | — | — | — | 45 | |||||||||||||||
Total | $ | 4,300 | $ | 1,703 | $ | 538 | $ | 23 | $ | 6,564 | ||||||||||
December 31, 2014 | ||||||||||||||||||||
Gross receivables * | $ | 4,462 | $ | 2,053 | $ | 635 | $ | 52 | $ | 7,202 | ||||||||||
Unearned finance charges and points and fees | (764 | ) | — | (1 | ) | (5 | ) | (770 | ) | |||||||||||
Accrued finance charges | 58 | 38 | 5 | 1 | 102 | |||||||||||||||
Deferred origination costs | 44 | — | — | — | 44 | |||||||||||||||
Total | $ | 3,800 | $ | 2,091 | $ | 639 | $ | 48 | $ | 6,578 |
* | Gross receivables are defined as follows: |
• | Finance receivables purchased as a performing receivable — gross finance receivables equal the UPB for interest bearing accounts and the gross remaining contractual payments for precompute accounts; additionally, the remaining unearned discount, net of premium established at the time of purchase, is included in both interest bearing and precompute accounts to reflect the finance receivable balance at its fair value; |
• | Finance receivables originated subsequent to the Fortress Acquisition — gross finance receivables equal the UPB for interest bearing accounts and the gross remaining contractual payments for precompute accounts; and |
• | Purchased credit impaired finance receivables — gross finance receivables equal the remaining estimated cash flows less the current balance of accretable yield on the purchased credit impaired accounts. |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Personal loans | $ | 2 | $ | 1 | ||||
SpringCastle Portfolio | 365 | 354 | ||||||
Real estate loans | 30 | 31 | ||||||
Total | $ | 397 | $ | 386 |
December 31, | 2015 | 2014 * | ||||||||||||
(dollars in millions) | Amount | Percent | Amount | Percent | ||||||||||
North Carolina | $ | 593 | 9 | % | $ | 645 | 10 | % | ||||||
Illinois | 468 | 7 | 414 | 6 | ||||||||||
California | 429 | 7 | 540 | 8 | ||||||||||
Indiana | 403 | 6 | 349 | 5 | ||||||||||
Pennsylvania | 375 | 6 | 393 | 6 | ||||||||||
Ohio | 371 | 6 | 394 | 6 | ||||||||||
Florida | 345 | 5 | 328 | 5 | ||||||||||
Virginia | 334 | 5 | 351 | 5 | ||||||||||
Other | 3,246 | 49 | 3,164 | 49 | ||||||||||
Total | $ | 6,564 | 100 | % | $ | 6,578 | 100 | % |
* | December 31, 2014 concentrations of net finance receivables are presented in the order of December 31, 2015 state concentrations. |
(dollars in millions) | Personal Loans | SpringCastle Portfolio | Real Estate Loans | Retail Sales Finance | Total | |||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Net finance receivables: * | ||||||||||||||||||||
60-89 days past due | $ | 49 | $ | 26 | $ | 19 | $ | — | $ | 94 | ||||||||||
90-119 days past due | 41 | 16 | 3 | — | 60 | |||||||||||||||
120-149 days past due | 34 | 12 | 2 | 1 | 49 | |||||||||||||||
150-179 days past due | 31 | 11 | 2 | — | 44 | |||||||||||||||
180 days or more past due | 3 | 1 | 13 | — | 17 | |||||||||||||||
Total delinquent finance receivables | 158 | 66 | 39 | 1 | 264 | |||||||||||||||
Current | 4,077 | 1,588 | 486 | 22 | 6,173 | |||||||||||||||
30-59 days past due | 65 | 49 | 13 | — | 127 | |||||||||||||||
Total | $ | 4,300 | $ | 1,703 | $ | 538 | $ | 23 | $ | 6,564 | ||||||||||
December 31, 2014 | ||||||||||||||||||||
Net finance receivables: * | ||||||||||||||||||||
60-89 days past due | $ | 36 | $ | 34 | $ | 13 | $ | 1 | $ | 84 | ||||||||||
90-119 days past due | 30 | 21 | 9 | — | 60 | |||||||||||||||
120-149 days past due | 24 | 17 | 5 | 1 | 47 | |||||||||||||||
150-179 days past due | 21 | 16 | 4 | — | 41 | |||||||||||||||
180 days or more past due | 2 | 2 | 13 | — | 17 | |||||||||||||||
Total delinquent finance receivables | 113 | 90 | 44 | 2 | 249 | |||||||||||||||
Current | 3,632 | 1,937 | 577 | 45 | 6,191 | |||||||||||||||
30-59 days past due | 55 | 64 | 18 | 1 | 138 | |||||||||||||||
Total | $ | 3,800 | $ | 2,091 | $ | 639 | $ | 48 | $ | 6,578 |
* | Purchased credit impaired finance receivables are accounted for on a pool basis. For purposes of allocating the pool carrying amount to individual finance receivables, the Company applied the ratio of the carrying value to the gross receivable balance of each pool in developing the above table. Finance receivables greater than 180 days delinquent within a PCI pool are not ascribed any carrying value and are not used in deriving the aforementioned ratio. |
(dollars in millions) | Personal Loans | SpringCastle Portfolio | Real Estate Loans | Retail Sales Finance | Total | |||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Performing | $ | 4,191 | $ | 1,663 | $ | 518 | $ | 22 | $ | 6,394 | ||||||||||
Nonperforming | 109 | 40 | 20 | 1 | 170 | |||||||||||||||
Total | $ | 4,300 | $ | 1,703 | $ | 538 | $ | 23 | $ | 6,564 | ||||||||||
December 31, 2014 | ||||||||||||||||||||
Performing | $ | 3,723 | $ | 2,035 | $ | 608 | $ | 47 | $ | 6,413 | ||||||||||
Nonperforming | 77 | 56 | 31 | 1 | 165 | |||||||||||||||
Total | $ | 3,800 | $ | 2,091 | $ | 639 | $ | 48 | $ | 6,578 |
• | SFI’s capital contribution of its wholly owned subsidiary, Springleaf Acquisition Corporation (“SAC”), to SFC — on July 31, 2014 (the “SAC Capital Contribution”), SFC acquired a 47% equity interest in the SpringCastle Portfolio (the “SCP Loans”), certain of which were determined to be credit impaired when SAC acquired the SCP Loans on April 1, 2013. |
• | Fortress Acquisition — we revalued our assets and liabilities based on their fair value at the date of the Fortress Acquisition, November 30, 2010, in accordance with purchase accounting and adjusted the carrying value of our finance receivables (the “FA Loans”) to their fair value. |
(dollars in millions) | SCP Loans | FA Loans * | Total | |||||||||
December 31, 2015 | ||||||||||||
Carrying amount, net of allowance | $ | 350 | $ | 89 | $ | 439 | ||||||
Outstanding balance | 482 | 136 | 618 | |||||||||
Allowance for purchased credit impaired finance receivable losses | — | 12 | 12 | |||||||||
December 31, 2014 | ||||||||||||
Carrying amount, net of allowance | $ | 452 | $ | 105 | $ | 557 | ||||||
Outstanding balance | 628 | 151 | 779 | |||||||||
Allowance for purchased credit impaired finance receivable losses | — | 11 | 11 |
* | Purchased credit impaired FA Loans held for sale included in the table above were as follows: |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Carrying amount | $ | 59 | $ | 72 | ||||
Outstanding balance | 89 | 99 |
(dollars in millions) | SCP Loans | FA Loans | Total | |||||||||
Year Ended December 31, 2015 | ||||||||||||
Balance at beginning of period | $ | 452 | $ | 54 | $ | 506 | ||||||
Accretion (a) | (77 | ) | (8 | ) | (85 | ) | ||||||
Reclassifications from nonaccretable difference (b) | — | 20 | 20 | |||||||||
Balance at end of period | $ | 375 | $ | 66 | $ | 441 | ||||||
Year Ended December 31, 2014 | ||||||||||||
Balance at beginning of period | $ | — | $ | 768 | $ | 768 | ||||||
Accretable yield for SpringCastle Portfolio contributed to SFC | 366 | — | 366 | |||||||||
Accretion (a) | (37 | ) | (75 | ) | (112 | ) | ||||||
Reclassifications from nonaccretable difference (b) | 123 | 19 | 142 | |||||||||
Transfers due to finance receivables sold | — | (658 | ) | (658 | ) | |||||||
Balance at end of period | $ | 452 | $ | 54 | $ | 506 | ||||||
Year Ended December 31, 2013 | ||||||||||||
Balance at beginning of period | $ | — | $ | 624 | $ | 624 | ||||||
Accretion | — | (117 | ) | (117 | ) | |||||||
Reclassifications from nonaccretable difference (b) | — | 261 | 261 | |||||||||
Balance at end of period | $ | — | $ | 768 | $ | 768 |
(a) | Accretion on our purchased credit impaired FA Loans held for sale included in the table above were as follows: |
(dollars in millions) | ||||||||
Years Ended December 31, | 2015 | 2014 | ||||||
Accretion | $ | 6 | $ | 13 |
(b) | Reclassifications from nonaccretable difference represents the increases in accretion resulting from higher estimated undiscounted cash flows. |
(dollars in millions) | Personal Loans (a) | SpringCastle Portfolio | Real Estate Loans (a) | Total | ||||||||||||
December 31, 2015 | ||||||||||||||||
TDR gross finance receivables (b) | $ | 32 | $ | 14 | $ | 200 | $ | 246 | ||||||||
TDR net finance receivables | 31 | 13 | 201 | 245 | ||||||||||||
Allowance for TDR finance receivable losses | 9 | 4 | 34 | 47 | ||||||||||||
December 31, 2014 | ||||||||||||||||
TDR gross finance receivables (b) | $ | 22 | $ | 11 | $ | 196 | $ | 229 | ||||||||
TDR net finance receivables | 22 | 10 | 196 | 228 | ||||||||||||
Allowance for TDR finance receivable losses | 1 | 3 | 32 | 36 |
(a) | TDR finance receivables held for sale included in the table above were as follows: |
(dollars in millions) | Personal Loans | Real Estate Loans | Total | |||||||||
December 31, 2015 | ||||||||||||
TDR gross finance receivables | $ | 2 | $ | 92 | $ | 94 | ||||||
TDR net finance receivables | 2 | 92 | 94 | |||||||||
December 31, 2014 | ||||||||||||
TDR gross finance receivables | $ | — | $ | 91 | $ | 91 | ||||||
TDR net finance receivables | — | 91 | 91 |
(b) | As defined earlier in this Note. |
(dollars in millions) | Personal Loans (a) | SpringCastle Portfolio | Real Estate Loans (a) | Total | ||||||||||||
Year Ended December 31, 2015 | ||||||||||||||||
TDR average net receivables | $ | 29 | $ | 12 | $ | 198 | $ | 239 | ||||||||
TDR finance charges recognized | 3 | 1 | 11 | 15 | ||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||
TDR average net receivables (b) | $ | 17 | $ | 5 | $ | 951 | $ | 973 | ||||||||
TDR finance charges recognized | 2 | 1 | 47 | 50 | ||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||
TDR average net receivables | $ | 15 | $ | — | $ | 1,116 | $ | 1,131 | ||||||||
TDR finance charges recognized | 1 | — | 63 | 64 |
(a) | TDR finance receivables held for sale included in the table above were as follows: |
(dollars in millions) | Personal Loans | Real Estate Loans | Total | |||||||||
Year Ended December 31, 2015 | ||||||||||||
TDR average net receivables * | $ | 2 | $ | 91 | $ | 93 | ||||||
TDR finance charges recognized | — | 5 | 5 | |||||||||
Year Ended December 31, 2014 | ||||||||||||
TDR average net receivables ** | $ | — | $ | 248 | $ | 248 | ||||||
TDR finance charges recognized | — | 4 | 4 |
* | TDR personal loan average net receivables held for sale for 2015 reflect a three-month average since the personal loans were transferred to finance receivables held for sale on September 30, 2015. |
** | TDR real estate loan average net receivables held for sale for 2014 reflect a five-month average since the real estate loans were transferred to finance receivables held for sale on August 1, 2014. |
(b) | TDR SpringCastle Portfolio loans average net receivables for the year ended December 31, 2014 reflect a five-month average since the SAC Capital Contribution occurred on July 31, 2014. |
(dollars in millions) | Personal Loans (a) | SpringCastle Portfolio | Real Estate Loans (a) | Total | ||||||||||||
Year Ended December 31, 2015 | ||||||||||||||||
Pre-modification TDR net finance receivables | $ | 33 | $ | 7 | $ | 21 | $ | 61 | ||||||||
Post-modification TDR net finance receivables: | ||||||||||||||||
Rate reduction | $ | 15 | $ | 6 | $ | 17 | $ | 38 | ||||||||
Other (b) | 12 | — | 5 | 17 | ||||||||||||
Total post-modification TDR net finance receivables | $ | 27 | $ | 6 | $ | 22 | $ | 55 | ||||||||
Number of TDR accounts | 6,515 | 721 | 385 | 7,621 | ||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||
Pre-modification TDR net finance receivables | $ | 18 | $ | 4 | $ | 213 | $ | 235 | ||||||||
Post-modification TDR net finance receivables: | ||||||||||||||||
Rate reduction | $ | 10 | $ | 4 | $ | 157 | $ | 171 | ||||||||
Other (b) | 6 | — | 46 | 52 | ||||||||||||
Total post-modification TDR net finance receivables | $ | 16 | $ | 4 | $ | 203 | $ | 223 | ||||||||
Number of TDR accounts | 4,206 | 468 | 2,374 | 7,048 | ||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||
Pre-modification TDR net finance receivables | $ | 15 | $ | — | $ | 573 | $ | 588 | ||||||||
Post-modification TDR net finance receivables: | ||||||||||||||||
Rate reduction | $ | 8 | $ | — | $ | 543 | $ | 551 | ||||||||
Other (b) | 4 | — | 50 | 54 | ||||||||||||
Total post-modification TDR net finance receivables | $ | 12 | $ | — | $ | 593 | $ | 605 | ||||||||
Number of TDR accounts | 3,240 | — | 7,085 | 10,325 |
(a) | TDR finance receivables held for sale included in the table above were as follows: |
(dollars in millions) | Personal Loans | Real Estate Loans | Total | |||||||||
Year Ended December 31, 2015 | ||||||||||||
Pre-modification TDR net finance receivables | $ | 1 | $ | 6 | $ | 7 | ||||||
Post-modification TDR net finance receivables | $ | 1 | $ | 7 | $ | 8 | ||||||
Number of TDR accounts | 162 | 113 | 275 | |||||||||
Year Ended December 31, 2014 | ||||||||||||
Pre-modification TDR net finance receivables | $ | — | $ | 6 | $ | 6 | ||||||
Post-modification TDR net finance receivables | $ | — | $ | 7 | $ | 7 | ||||||
Number of TDR accounts | — | 94 | 94 |
(b) | “Other” modifications include extension of term and forgiveness of principal or interest. |
(dollars in millions) | Personal Loans | SpringCastle Portfolio | Real Estate Loans (a) | Total | ||||||||||||
Year Ended December 31, 2015 | ||||||||||||||||
TDR net finance receivables (b) | $ | 5 | $ | 2 | $ | 3 | $ | 10 | ||||||||
Number of TDR accounts | 1,221 | 147 | 46 | 1,414 | ||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||
TDR net finance receivables (b) | $ | 1 | $ | 1 | $ | 33 | $ | 35 | ||||||||
Number of TDR accounts | 141 | 53 | 524 | 718 | ||||||||||||
Year Ended December 31, 2013 | ||||||||||||||||
TDR net finance receivables (b) | $ | 1 | $ | — | $ | 69 | $ | 70 | ||||||||
Number of TDR accounts | 355 | — | 928 | 1,283 |
(a) | TDR finance receivables held for sale included in the table above were as follows: |
(dollars in millions) | Real Estate Loans | |||
Year Ended December 31, 2015 | ||||
TDR net finance receivables | $ | 1 | ||
Number of TDR accounts | 17 | |||
Year Ended December 31, 2014 | ||||
TDR net finance receivables | $ | 3 | ||
Number of TDR accounts | 49 |
(b) | Represents the corresponding balance of TDR net finance receivables at the end of the month in which they defaulted. |
(dollars in millions) | Personal Loans | SpringCastle Portfolio | Real Estate Loans | Retail Sales Finance | Consolidated Total | |||||||||||||||
Year Ended December 31, 2015 | ||||||||||||||||||||
Balance at beginning of period | $ | 130 | $ | 3 | $ | 46 | $ | 1 | $ | 180 | ||||||||||
Provision for finance receivable losses | 257 | 67 | 13 | 2 | 339 | |||||||||||||||
Charge-offs | (250 | ) | (78 | ) | (18 | ) | (3 | ) | (349 | ) | ||||||||||
Recoveries | 37 | 12 | 5 | 1 | 55 | |||||||||||||||
Reduction in the carrying value of personal loans transferred to finance receivables held for sale (a) | (1 | ) | — | — | — | (1 | ) | |||||||||||||
Balance at end of period | $ | 173 | $ | 4 | $ | 46 | $ | 1 | $ | 224 | ||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||
Balance at beginning of period | $ | 94 | $ | — | $ | 330 | $ | 2 | $ | 426 | ||||||||||
Provision for finance receivable losses | 203 | 36 | 110 | 3 | 352 | |||||||||||||||
Charge-offs (b) | (192 | ) | (39 | ) | (61 | ) | (5 | ) | (297 | ) | ||||||||||
Recoveries (c) | 25 | 5 | 6 | 1 | 37 | |||||||||||||||
Reduction in the carrying value of real estate loans transferred to finance receivables held for sale (d) | — | — | (339 | ) | — | (339 | ) | |||||||||||||
Allowance for SpringCastle Portfolio contributed to SFC | — | 1 | — | — | 1 | |||||||||||||||
Balance at end of period | $ | 130 | $ | 3 | $ | 46 | $ | 1 | $ | 180 | ||||||||||
Year Ended December 31, 2013 | ||||||||||||||||||||
Balance at beginning of period | $ | 67 | $ | — | $ | 190 | $ | 2 | $ | 259 | ||||||||||
Provision for finance receivable losses | 130 | — | 242 | (1 | ) | 371 | ||||||||||||||
Charge-offs (e) | (149 | ) | — | (117 | ) | (9 | ) | (275 | ) | |||||||||||
Recoveries (f) | 47 | — | 15 | 10 | 72 | |||||||||||||||
Transfers to finance receivables held for sale (g) | (1 | ) | — | — | — | (1 | ) | |||||||||||||
Balance at end of period | $ | 94 | $ | — | $ | 330 | $ | 2 | $ | 426 |
(a) | During 2015, we reduced the carrying value of certain personal loans to $608 million as a result of the transfer of these finance receivables from finance receivables held for investment to finance receivables held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. |
(b) | Charge-offs during 2014 included a $4 million reduction related to a change in recognizing charge-offs of unsecured loans of customers in bankruptcy status effective mid-November 2014. |
(c) | Recoveries during 2014 included $2 million of real estate loan recoveries resulting from a sale of previously charged-off real estate loans in March 2014. |
(d) | During 2014, we reduced the carrying value of certain real estate loans to $6.6 billion as a result of the transfer of these loans from finance receivables held for investment to finance receivables held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. |
(e) | Effective March 31, 2013, we charge off to the allowance for finance receivable losses personal loans that are 180 days past due. Previously, we charged-off to the allowance for finance receivable losses personal loans on which payments received in the prior six months totaled less than 5% of the original loan amount. As a result of this change, we recorded $13 million of additional charge-offs in March 2013. |
(f) | Recoveries in 2013 included $37 million ($23 million of personal loan recoveries, $9 million of real estate loan recoveries, and $5 million of retail sales finance recoveries) resulting from a sale of previously charged-off finance receivables in June 2013, net of a $4 million adjustment for the subsequent buyback of certain finance receivables. |
(g) | During the fourth quarter of 2013, we decreased the allowance for finance receivable losses as a result of the transfer of $18 million of personal loans of our lending operations in Puerto Rico from finance receivables held for investment to finance receivables held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. |
(dollars in millions) | Personal Loans | SpringCastle Portfolio | Real Estate Loans | Retail Sales Finance | Total | |||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Allowance for finance receivable losses for finance receivables: | ||||||||||||||||||||
Collectively evaluated for impairment | $ | 164 | $ | — | $ | — | $ | 1 | $ | 165 | ||||||||||
Acquired with deteriorated credit quality (purchased credit impaired finance receivables) | — | — | 12 | — | 12 | |||||||||||||||
Individually evaluated for impairment (TDR finance receivables) | 9 | 4 | 34 | — | 47 | |||||||||||||||
Total | $ | 173 | $ | 4 | $ | 46 | $ | 1 | $ | 224 | ||||||||||
Finance receivables: | ||||||||||||||||||||
Collectively evaluated for impairment | $ | 4,271 | $ | 1,340 | $ | 387 | $ | 23 | $ | 6,021 | ||||||||||
Purchased credit impaired finance receivables | — | 350 | 42 | — | 392 | |||||||||||||||
TDR finance receivables | 29 | 13 | 109 | — | 151 | |||||||||||||||
Total | $ | 4,300 | $ | 1,703 | $ | 538 | $ | 23 | $ | 6,564 | ||||||||||
Allowance for finance receivable losses as a percentage of finance receivables | 4.01 | % | 0.25 | % | 8.72 | % | 3.46 | % | 3.42 | % | ||||||||||
December 31, 2014 | ||||||||||||||||||||
Allowance for finance receivable losses for finance receivables: | ||||||||||||||||||||
Collectively evaluated for impairment | $ | 129 | $ | — | $ | 3 | $ | 1 | $ | 133 | ||||||||||
Purchased credit impaired finance receivables | — | — | 11 | — | 11 | |||||||||||||||
TDR finance receivables | 1 | 3 | 32 | — | 36 | |||||||||||||||
Total | $ | 130 | $ | 3 | $ | 46 | $ | 1 | $ | 180 | ||||||||||
Finance receivables: | ||||||||||||||||||||
Collectively evaluated for impairment | $ | 3,778 | $ | 1,629 | $ | 490 | $ | 48 | $ | 5,945 | ||||||||||
Purchased credit impaired finance receivables | — | 452 | 44 | — | 496 | |||||||||||||||
TDR finance receivables | 22 | 10 | 105 | — | 137 | |||||||||||||||
Total | $ | 3,800 | $ | 2,091 | $ | 639 | $ | 48 | $ | 6,578 | ||||||||||
Allowance for finance receivable losses as a percentage of finance receivables | 3.44 | % | 0.13 | % | 7.27 | % | 1.56 | % | 2.74 | % |
(dollars in millions) | Cost/ Amortized Cost | Unrealized Gains | Unrealized Losses | Fair Value | ||||||||||||
December 31, 2015 | ||||||||||||||||
Fixed maturity available-for-sale securities: | ||||||||||||||||
Bonds: | ||||||||||||||||
U.S. government and government sponsored entities | $ | 83 | $ | — | $ | (1 | ) | $ | 82 | |||||||
Obligations of states, municipalities, and political subdivisions | 88 | 1 | — | 89 | ||||||||||||
Corporate debt | 278 | 2 | (13 | ) | 267 | |||||||||||
Mortgage-backed, asset-backed, and collateralized: | ||||||||||||||||
Residential mortgage-backed securities (“RMBS”) | 74 | — | — | 74 | ||||||||||||
Commercial mortgage-backed securities (“CMBS”) | 44 | — | — | 44 | ||||||||||||
Collateralized debt obligations (“CDO”)/Asset-backed securities (“ABS”) | 30 | — | (1 | ) | 29 | |||||||||||
Total bonds | 597 | 3 | (15 | ) | 585 | |||||||||||
Preferred stock | 6 | — | (1 | ) | 5 | |||||||||||
Other long-term investments | 1 | — | — | 1 | ||||||||||||
Total (a) | $ | 604 | $ | 3 | $ | (16 | ) | $ | 591 | |||||||
December 31, 2014 | ||||||||||||||||
Fixed maturity available-for-sale securities: | ||||||||||||||||
Bonds: | ||||||||||||||||
U.S. government and government sponsored entities | $ | 61 | $ | 3 | $ | — | $ | 64 | ||||||||
Obligations of states, municipalities, and political subdivisions | 99 | 3 | — | 102 | ||||||||||||
Certificates of deposit and commercial paper (b) | 1 | — | — | 1 | ||||||||||||
Corporate debt | 256 | 12 | (1 | ) | 267 | |||||||||||
Mortgage-backed, asset-backed, and collateralized: | ||||||||||||||||
RMBS | 71 | 2 | — | 73 | ||||||||||||
CMBS | 25 | — | (1 | ) | 24 | |||||||||||
CDO/ABS | 61 | — | — | 61 | ||||||||||||
Total bonds | 574 | 20 | (2 | ) | 592 | |||||||||||
Preferred stock | 7 | — | — | 7 | ||||||||||||
Other long-term investments | 1 | — | — | 1 | ||||||||||||
Total (a) | $ | 582 | $ | 20 | $ | (2 | ) | $ | 600 |
(a) | Excludes an immaterial interest in a limited partnership that we account for using the equity method and Federal Home Loan Bank common stock of $1 million at December 31, 2015 and 2014, which is classified as a restricted investment and carried at cost. |
(b) | Includes certificates of deposit pledged as collateral, totaling $1 million at December 31, 2014, primarily to support bank lines of credit. |
Less Than 12 Months | 12 Months or Longer | Total | ||||||||||||||||||||||
(dollars in millions) | Fair Value | Unrealized Losses * | Fair Value | Unrealized Losses * | Fair Value | Unrealized Losses | ||||||||||||||||||
December 31, 2015 | ||||||||||||||||||||||||
Bonds: | ||||||||||||||||||||||||
U.S. government and government sponsored entities | $ | 76 | $ | (1 | ) | $ | — | $ | — | $ | 76 | $ | (1 | ) | ||||||||||
Obligations of states, municipalities, and political subdivisions | 36 | — | 2 | — | 38 | — | ||||||||||||||||||
Corporate debt | 189 | (13 | ) | 7 | — | 196 | (13 | ) | ||||||||||||||||
RMBS | 68 | — | — | — | 68 | — | ||||||||||||||||||
CMBS | 36 | — | 5 | — | 41 | — | ||||||||||||||||||
CDO/ABS | 29 | (1 | ) | — | — | 29 | (1 | ) | ||||||||||||||||
Total bonds | 434 | (15 | ) | 14 | — | 448 | (15 | ) | ||||||||||||||||
Preferred stock | — | — | 6 | (1 | ) | 6 | (1 | ) | ||||||||||||||||
Other long-term investments | 1 | — | — | — | 1 | — | ||||||||||||||||||
Total | $ | 435 | $ | (15 | ) | $ | 20 | $ | (1 | ) | $ | 455 | $ | (16 | ) | |||||||||
December 31, 2014 | ||||||||||||||||||||||||
Bonds: | ||||||||||||||||||||||||
U.S. government and government sponsored entities | $ | — | $ | — | $ | 1 | $ | — | $ | 1 | $ | — | ||||||||||||
Obligations of states, municipalities, and political subdivisions | 27 | — | 1 | — | 28 | — | ||||||||||||||||||
Corporate debt | 36 | (1 | ) | 6 | — | 42 | (1 | ) | ||||||||||||||||
RMBS | 9 | — | — | — | 9 | — | ||||||||||||||||||
CMBS | 16 | (1 | ) | 2 | — | 18 | (1 | ) | ||||||||||||||||
CDO/ABS | 46 | — | — | — | 46 | — | ||||||||||||||||||
Total bonds | 134 | (2 | ) | 10 | — | 144 | (2 | ) | ||||||||||||||||
Preferred stock | 6 | — | — | — | 6 | — | ||||||||||||||||||
Total | $ | 140 | $ | (2 | ) | $ | 10 | $ | — | $ | 150 | $ | (2 | ) |
* | Unrealized losses on certain available-for-sale securities were less than $1 million and, therefore, are not quantified in the table above. |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Proceeds from sales and redemptions | $ | 416 | $ | 260 | $ | 254 | ||||||
Realized gains | $ | 15 | $ | 9 | $ | 4 | ||||||
Realized losses | (1 | ) | (1 | ) | (2 | ) | ||||||
Net realized gains | $ | 14 | $ | 8 | $ | 2 |
(dollars in millions) | Fair Value | Amortized Cost | ||||||
Fixed maturities, excluding mortgage-backed, asset-backed, and collateralized securities: | ||||||||
Due in 1 year or less | $ | 96 | $ | 96 | ||||
Due after 1 year through 5 years | 165 | 166 | ||||||
Due after 5 years through 10 years | 54 | 55 | ||||||
Due after 10 years | 123 | 132 | ||||||
Mortgage-backed, asset-backed, and collateralized securities | 147 | 148 | ||||||
Total | $ | 585 | $ | 597 |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Fixed maturity trading and other securities: | ||||||||
Bonds: | ||||||||
U.S. government and government sponsored entities | $ | — | $ | 302 | ||||
Obligations of states, municipalities, and political subdivisions | — | 14 | ||||||
Certificates of deposit and commercial paper | — | 238 | ||||||
Non-U.S. government and government sponsored entities | — | 20 | ||||||
Corporate debt | 10 | 1,056 | ||||||
Mortgage-backed, asset-backed, and collateralized: | ||||||||
RMBS | — | 35 | ||||||
CMBS | 2 | 149 | ||||||
CDO/ABS | — | 507 | ||||||
Total * | $ | 12 | $ | 2,321 |
* | The fair value of other securities totaled $2 million at December 31, 2015 and $5 million at December 31, 2014. |
(dollars in millions) | ||||||||
Years Ended December 31, | 2015 | 2014 | ||||||
Net unrealized gains (losses) on trading and other securities held at year end * | $ | 4 | $ | (9 | ) | |||
Net realized gains (losses) on trading and other securities sold or redeemed during the year * | (3 | ) | 5 | |||||
Total | $ | 1 | $ | (4 | ) |
* | The net unrealized and realized gains (losses) on our other securities for the year ended December 31, 2013 were less than $1 million and, therefore, are not quantified in the table above. |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Fixed assets, net (a) | $ | 83 | $ | 73 | ||||
Other investments (b) | 67 | 104 | ||||||
Prepaid expenses and deferred charges (c) | 35 | 23 | ||||||
Ceded insurance reserves | 22 | 22 | ||||||
Other intangible assets | 16 | 20 | ||||||
Escrow advance receivable | 11 | 8 | ||||||
Cost basis investments | 10 | — | ||||||
Receivables from parent and affiliates | 9 | 11 | ||||||
Current tax receivable (d) | 8 | 105 | ||||||
Real estate owned | 8 | 13 | ||||||
Receivables related to sales of real estate loans and related trust assets (e) | 5 | 79 | ||||||
Other | 7 | 17 | ||||||
Total | $ | 281 | $ | 475 |
(a) | Fixed assets were net of accumulated depreciation of $173 million at December 31, 2015 and $167 million at December 31, 2014. |
(b) | Other investments primarily include commercial mortgage loans, receivables related to investments, and accrued investment income. |
(c) | As a result of our early adoption of ASU 2015-03, we reclassified $29 million of debt issuance costs from other assets to long-term debt as of December 31, 2014. |
(d) | Current tax receivable includes current federal and state tax assets. |
(e) | Receivables related to sales of real estate loans and related trust assets includes $5 million and $64 million, respectively, of holdback provisions as of December 31, 2015 and 2014. |
(dollars in millions) | Gross Carrying Amount | Accumulated Amortization | Net Other Intangible Assets | |||||||||
December 31, 2015 | ||||||||||||
Value of business acquired (“VOBA”) | $ | 36 | $ | (32 | ) | $ | 4 | |||||
Customer relationships | 18 | (18 | ) | — | ||||||||
Licenses | 12 | — | 12 | |||||||||
Customer lists | 9 | (9 | ) | — | ||||||||
Total | $ | 75 | $ | (59 | ) | $ | 16 | |||||
December 31, 2014 | ||||||||||||
VOBA | $ | 36 | $ | (32 | ) | $ | 4 | |||||
Customer relationships | 18 | (15 | ) | 3 | ||||||||
Licenses | 12 | — | 12 | |||||||||
Customer lists | 9 | (8 | ) | 1 | ||||||||
Total | $ | 75 | $ | (55 | ) | $ | 20 |
(dollars in millions) | Estimated Aggregate Amortization Expense | |||
2016 | $ | 1 | ||
2017 * | — | |||
2018 * | — | |||
2019 * | — | |||
2020 * | — |
* | Amortization expense is less than $1 million for each year subsequent to 2016 and, therefore, is not quantified in the table above. |
December 31, 2015 | December 31, 2014 | |||||||||||||||
(dollars in millions) | Carrying Value | Fair Value | Carrying Value * | Fair Value | ||||||||||||
Senior debt | $ | 9,410 | $ | 9,753 | $ | 8,184 | $ | 8,920 | ||||||||
Junior subordinated debt | 172 | 245 | 172 | 262 | ||||||||||||
Total | $ | 9,582 | $ | 9,998 | $ | 8,356 | $ | 9,182 |
* | As a result of our early adoption of ASU 2015-03, we reclassified $29 million of debt issuance costs from other assets to long-term debt - senior debt as of December 31, 2014. |
Years Ended December 31, | At December 31, | ||||||||||||||
2015 | 2014 | 2013 | 2015 | 2014 | |||||||||||
Senior debt | 6.96 | % | 7.10 | % | 7.06 | % | 6.66 | % | 7.16 | % | |||||
Junior subordinated debt | 12.26 | 12.26 | 12.26 | 12.26 | 12.26 | ||||||||||
Total | 7.05 | 7.19 | 7.14 | 6.76 | 7.26 |
Senior Debt | ||||||||||||||||||||
(dollars in millions) | Securitizations | Revolving Conduit Facilities | Medium Term Notes | Junior Subordinated Debt | Total | |||||||||||||||
Interest rates (a) | 2.41% - 6.82% | 1.65% - 3.65% | 5.25% - 8.25% | 6.00% | ||||||||||||||||
First quarter 2016 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Second quarter 2016 | — | — | — | — | — | |||||||||||||||
Third quarter 2016 | — | — | 375 | — | 375 | |||||||||||||||
Fourth quarter 2016 | — | — | — | — | — | |||||||||||||||
2016 | — | — | 375 | — | 375 | |||||||||||||||
2017 | — | — | 1,903 | — | 1,903 | |||||||||||||||
2018 | — | — | — | — | — | |||||||||||||||
2019 | — | — | 700 | — | 700 | |||||||||||||||
2020 | — | — | 300 | — | 300 | |||||||||||||||
2021-2067 | — | — | 950 | 350 | 1,300 | |||||||||||||||
Securitizations (b) | 4,323 | — | — | — | 4,323 | |||||||||||||||
Revolving conduit facilities (b) | — | 1,200 | — | — | 1,200 | |||||||||||||||
Total principal maturities | $ | 4,323 | $ | 1,200 | $ | 4,228 | $ | 350 | $ | 10,101 | ||||||||||
Total carrying amount (c) | $ | 4,313 | $ | 1,200 | $ | 3,897 | $ | 172 | $ | 9,582 | ||||||||||
Debt issuance costs (d) | $ | (15 | ) | $ | — | $ | (14 | ) | $ | — | $ | (29 | ) |
(a) | The interest rates shown are the range of contractual rates in effect at December 31, 2015. |
(b) | Securitizations and borrowing under revolving conduit facilities are not included in above maturities by period due to their variable monthly repayments. See Note 13 for further information on our long-term debt associated with securitizations and revolving conduit facilities. |
(c) | The net carrying amount of our long-term debt associated with certain securitizations that were either (i) issued at a premium or discount or (ii) revalued at a premium or discount based on its fair value at the time of the Fortress Acquisition or (iii) recorded at fair value on a recurring basis in circumstances when the embedded derivative within the securitization structure cannot be separately accounted for at fair value. |
(d) | As a result of our early adoption of ASU 2015-03 in June of 2015, we report debt issuance costs as a direct deduction from long-term debt, with the exception of debt issuance costs associated with our revolving conduit facilities, which we continue to report in other assets. |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Assets | ||||||||
Cash and cash equivalents (a) | $ | 7 | $ | 52 | ||||
Finance receivables: | ||||||||
Personal loans | 3,621 | 1,853 | ||||||
SpringCastle Portfolio | 1,703 | 2,091 | ||||||
Allowance for finance receivable losses | 128 | 72 | ||||||
Finance receivables held for sale | 435 | — | ||||||
Restricted cash and cash equivalents | 282 | 210 | ||||||
Other assets (a) | 48 | 23 | ||||||
Liabilities | ||||||||
Long-term debt (b) | $ | 5,513 | $ | 3,630 | ||||
Other liabilities (a) | 9 | 8 |
(a) | In connection with OMH’s disclosure integration with OneMain, we have expanded our presentation to include cash and cash equivalents, other assets and other liabilities associated with our securitization trusts. |
(b) | As a result of our early adoption of ASU 2015-03 in June of 2015, we reclassified $14 million of debt issuance costs related to our long-term debt associated with our securitizations as of December 31, 2014, from other assets to long-term debt. |
(dollars in millions) | Principal Amount of Previously Retained Notes Issued | Carrying Amount of Additional Debt Recorded | ||||||
Mortgage Securitizations | ||||||||
SLFMT 2012-2 | $ | 20 | $ | 21 | ||||
SLFMT 2012-3 | 8 | 8 | ||||||
SLFMT 2013-2 | 158 | 149 | ||||||
SLFMT 2013-3 | 23 | 23 |
(dollars in millions) | ||||
At or for the Year Ended December 31, | 2013 | |||
Balance at beginning of period | $ | 417 | ||
Discontinued and terminated contracts | (417 | ) | ||
Balance at end of period | $ | — |
(dollars in millions) | ||||
Year Ended December 31, | 2013 | |||
Net interest income | $ | 9 | ||
Mark to market losses | (8 | ) | ||
Total | $ | 1 |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Finance receivable related: | ||||||||
Payable to SFC: | ||||||||
Unearned premium reserves | $ | 222 | $ | 194 | ||||
Claim reserves | 28 | 23 | ||||||
Subtotal (a) | 250 | 217 | ||||||
Payable to third-party beneficiaries: | ||||||||
Benefit reserves | 113 | 107 | ||||||
Claim reserves | 4 | 5 | ||||||
Subtotal (b) | 117 | 112 | ||||||
Non-finance receivable related: | ||||||||
Benefit reserves | 72 | 75 | ||||||
Claim reserves | 41 | 42 | ||||||
Subtotal (b) | 113 | 117 | ||||||
Total | $ | 480 | $ | 446 |
(a) | Reported as a contra-asset to net finance receivables in connection with the OneMain policy integration. |
(b) | Reported in insurance claims and policyholder liabilities. |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Non-affiliated insurance companies | $ | 58 | $ | 15 | ||||
AIG affiliated insurance companies* | — | 43 | ||||||
Total | $ | 58 | $ | 58 |
* | As a result of the offering of OMH’s common stock in May of 2015, the economic interests of AIG is no longer material; therefore, the reinsurance agreements with insurers that are subsidiaries of AIG as of December 31, 2015 have not been segregated. |
(dollars in millions) | ||||||||||||
At or for the Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Balance at beginning of period | $ | 48 | $ | 46 | $ | 51 | ||||||
Additions for losses and loss adjustment expenses incurred to: | ||||||||||||
Current year | 64 | 65 | 59 | |||||||||
Prior years * | — | (3 | ) | (6 | ) | |||||||
Total | 64 | 62 | 53 | |||||||||
Reductions for losses and loss adjustment expenses paid related to: | ||||||||||||
Current year | (40 | ) | (39 | ) | (35 | ) | ||||||
Prior years | (21 | ) | (21 | ) | (23 | ) | ||||||
Total | (61 | ) | (60 | ) | (58 | ) | ||||||
Balance at end of period | $ | 51 | $ | 48 | $ | 46 |
* | Reflects a redundancy in the prior years’ net reserves of $3 million at December 31, 2014 and $6 million at December 31, 2013 primarily resulting from the settlement of claims incurred in prior years for amounts that were less than expected. |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Property and casualty | $ | 15 | $ | 16 | $ | 41 | ||||||
Life and disability | (1 | ) | (2 | ) | 3 |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Property and casualty | $ | 76 | $ | 108 | ||||
Life and disability | 123 | 171 |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Retirement plans | $ | 55 | $ | 50 | ||||
Accrued interest on debt | 55 | 57 | ||||||
Payables to parent and affiliates * | 24 | 48 | ||||||
Other accrued expenses and accounts payable | 17 | 30 | ||||||
Loan principal warranty reserve | 15 | 24 | ||||||
Salary and benefit liabilities | 14 | 11 | ||||||
Bank overdrafts | 14 | 5 | ||||||
Other insurance liabilities | 5 | 4 | ||||||
Other | 17 | 30 | ||||||
Total | $ | 216 | $ | 259 |
* | See Note 11 for further information on payables to parent and affiliates. |
Special Stock | Common Stock | |||||||
Par value | $ | — | $ | 0.50 | ||||
Shares authorized | 25,000,000 | 25,000,000 |
Special Stock | Common Stock | |||||||||||
December 31, | 2015 | 2014 | 2015 | 2014 | ||||||||
Shares issued and outstanding | — | — | 10,160,020 | 10,160,020 |
(dollars in millions) | Unrealized Gains (Losses) Available-for-Sale Securities | Retirement Plan Liabilities Adjustments | Foreign Currency Translation Adjustments | Total Accumulated Other Comprehensive Income (Loss) | ||||||||||||
Year Ended December 31, 2015 | ||||||||||||||||
Balance at beginning of period | $ | 12 | $ | (13 | ) | $ | 4 | $ | 3 | |||||||
Other comprehensive loss before reclassifications | (12 | ) | (6 | ) | — | (18 | ) | |||||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | (9 | ) | — | — | (9 | ) | ||||||||||
Balance at end of period | $ | (9 | ) | $ | (19 | ) | $ | 4 | $ | (24 | ) | |||||
Year Ended December 31, 2014 | ||||||||||||||||
Balance at beginning of period | $ | 4 | $ | 20 | $ | 4 | $ | 28 | ||||||||
Other comprehensive income (loss) before reclassifications | 13 | (33 | ) | — | (20 | ) | ||||||||||
Reclassification adjustments from accumulated other comprehensive income | (5 | ) | — | — | (5 | ) | ||||||||||
Balance at end of period | $ | 12 | $ | (13 | ) | $ | 4 | $ | 3 | |||||||
Year Ended December 31, 2013 | ||||||||||||||||
Balance at beginning of period | $ | 13 | $ | 8 | $ | 5 | $ | 26 | ||||||||
Other comprehensive income (loss) before reclassifications | (8 | ) | 12 | (1 | ) | 3 | ||||||||||
Reclassification adjustments from accumulated other comprehensive income | (1 | ) | — | — | (1 | ) | ||||||||||
Balance at end of period | $ | 4 | $ | 20 | $ | 4 | $ | 28 |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Unrealized gains on available-for-sale securities: | ||||||||||||
Reclassification from accumulated other comprehensive income (loss) to investment revenues, before taxes | $ | 14 | $ | 8 | $ | 2 | ||||||
Income tax effect | (5 | ) | (3 | ) | (1 | ) | ||||||
Reclassification from accumulated other comprehensive income (loss) to investment revenues, net of taxes | $ | 9 | $ | 5 | $ | 1 |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Income (loss) before provision for (benefit from) income taxes - U.S. operations | $ | 152 | $ | 676 | $ | (121 | ) | |||||
Income (loss) before provision for (benefit from) income taxes - foreign operations | 7 | 2 | (4 | ) | ||||||||
Total | $ | 159 | $ | 678 | $ | (125 | ) |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Current: | ||||||||||||
Federal | $ | 63 | $ | 228 | $ | 62 | ||||||
Foreign | — | — | 1 | |||||||||
State | 5 | 17 | 2 | |||||||||
Total current | 68 | 245 | 65 | |||||||||
Deferred: | ||||||||||||
Federal | (46 | ) | (10 | ) | (103 | ) | ||||||
Foreign | — | — | 1 | |||||||||
State | (4 | ) | (2 | ) | (12 | ) | ||||||
Total deferred | (50 | ) | (12 | ) | (114 | ) | ||||||
Total | $ | 18 | $ | 233 | $ | (49 | ) |
Years Ended December 31, | 2015 | 2014 | 2013 | ||||||
Statutory federal income tax rate | 35.00 | % | 35.00 | % | 35.00 | % | |||
Non-controlling interests | (27.91 | ) | (2.51 | ) | — | ||||
Nondeductible compensation | 3.39 | — | (2.16 | ) | |||||
Nontaxable investment income | (0.29 | ) | (0.14 | ) | 1.20 | ||||
State income taxes, net of federal | 0.23 | 1.50 | 4.60 | ||||||
Foreign operations | 0.12 | 0.51 | (2.91 | ) | |||||
Interest and penalties on prior year tax returns | — | (0.14 | ) | (4.75 | ) | ||||
Change in tax status | — | — | 9.07 | ||||||
Other, net | 0.58 | 0.15 | (0.66 | ) | |||||
Effective income tax rate | 11.12 | % | 34.37 | % | 39.39 | % |
(dollars in millions) | ||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Balance at beginning of year | $ | 4 | $ | 2 | $ | 2 | ||||||
Increases in tax positions for prior years | 4 | 3 | — | |||||||||
Decreases in tax positions for prior years | (2 | ) | — | — | ||||||||
Increases in tax positions for current years | 4 | — | — | |||||||||
Lapse in statute of limitations | — | (1 | ) | — | ||||||||
Settlements with tax authorities | (1 | ) | — | — | ||||||||
Balance at end of year | $ | 9 | $ | 4 | $ | 2 |
(dollars in millions) | ||||||||
December 31, | 2015 | 2014 | ||||||
Deferred tax assets: | ||||||||
Allowance for loan losses | $ | 95 | $ | 81 | ||||
Capital loss carryforward | 27 | — | ||||||
Pension/employee benefits | 26 | 20 | ||||||
State taxes, net of federal | 19 | 20 | ||||||
Net operating losses and tax attributes | 16 | 19 | ||||||
Joint venture | 8 | — | ||||||
Legal and warranty reserve | 6 | 9 | ||||||
Deferred insurance commissions | 5 | 3 | ||||||
Payment protection insurance liability | 2 | 5 | ||||||
Other | 8 | 5 | ||||||
Total | 212 | 162 | ||||||
Deferred tax liabilities: | ||||||||
Debt writedown | 150 | 194 | ||||||
Impact of tax accounting method change | 76 | — | ||||||
Mark-to-market | 21 | 51 | ||||||
Discount - debt exchange | 20 | 23 | ||||||
Insurance reserves | 15 | 10 | ||||||
Other intangible assets | 5 | 7 | ||||||
Joint venture | — | 5 | ||||||
Other | — | 5 | ||||||
Total | 287 | 295 | ||||||
Net deferred tax liabilities before valuation allowance | (75 | ) | (133 | ) | ||||
Valuation allowance | (38 | ) | (44 | ) | ||||
Net deferred tax liabilities | $ | (113 | ) | $ | (177 | ) |
(dollars in millions) | Lease Commitments | |||
First quarter 2016 | $ | 7 | ||
Second quarter 2016 | 7 | |||
Third quarter 2016 | 7 | |||
Fourth quarter 2016 | 6 | |||
2016 | 27 | |||
2017 | 21 | |||
2018 | 15 | |||
2019 | 9 | |||
2020 | 4 | |||
2021+ | 1 | |||
Total | $ | 77 |
(dollars in millions) | ||||||||||||
At or for the Years Ended December 31, | 2015 | 2014 | 2013 | |||||||||
Balance at beginning of period | $ | 24 | $ | 5 | $ | 5 | ||||||
Recourse losses | (2 | ) | — | — | ||||||||
Provision for recourse obligations, net of recoveries * | (7 | ) | 19 | — | ||||||||
Balance at end of period | $ | 15 | $ | 24 | $ | 5 |
* | Reflects the elimination of the reserve associated with other prior sales of finance receivables. |
(dollars in millions) | Pension (a) | Postretirement (b) | ||||||||||||||||||
At or for the Years Ended December 31, | 2015 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||
Projected benefit obligation, beginning of period | $ | 409 | $ | 323 | $ | 368 | $ | 2 | $ | 7 | ||||||||||
Interest cost | 15 | 15 | 14 | — | — | |||||||||||||||
Actuarial loss (gain) (c) | (24 | ) | 83 | (47 | ) | — | (5 | ) | ||||||||||||
Benefits paid: | ||||||||||||||||||||
Plan assets | (12 | ) | (12 | ) | (12 | ) | — | — | ||||||||||||
Curtailment | — | — | — | (2 | ) | — | ||||||||||||||
Projected benefit obligation, end of period | 388 | 409 | 323 | — | 2 | |||||||||||||||
Fair value of plan assets, beginning of period | 359 | 317 | 347 | — | — | |||||||||||||||
Actual return on plan assets, net of expenses | (15 | ) | 54 | (18 | ) | — | — | |||||||||||||
Company contributions | 1 | — | — | — | — | |||||||||||||||
Benefits paid: | ||||||||||||||||||||
Plan assets | (12 | ) | (12 | ) | (12 | ) | — | — | ||||||||||||
Fair value of plan assets, end of period | 333 | 359 | 317 | — | — | |||||||||||||||
Funded status, end of period | $ | (55 | ) | $ | (50 | ) | $ | (6 | ) | $ | — | $ | (2 | ) | ||||||
Net amounts recognized in the consolidated balance sheet: | ||||||||||||||||||||
Other assets | $ | — | $ | — | $ | 7 | $ | — | $ | — | ||||||||||
Other liabilities | (55 | ) | (50 | ) | (13 | ) | — | (2 | ) | |||||||||||
Total amounts recognized | $ | (55 | ) | $ | (50 | ) | $ | (6 | ) | $ | — | $ | (2 | ) | ||||||
Pretax net gain (loss) recognized in accumulated other comprehensive income or loss | $ | 29 | $ | (19 | ) | $ | 26 | $ | — | $ | 4 |
(a) | Includes non-qualified unfunded plans, for which the aggregate projected benefit obligation was $10 million at December 31, 2015 and 2014. |
(b) | We do not currently fund postretirement benefits. |
(c) | We adopted new mortality tables in 2014, which increased the plan liabilities during 2014. |
(dollars in millions) | PBO and ABO Exceeds Fair Value of Plan Assets | |||||||
December 31, | 2015 | 2014 | ||||||
Projected benefit obligation | $ | 388 | $ | 409 | ||||
Accumulated benefit obligation | 388 | 409 | ||||||
Fair value of plan assets | 333 | 359 |
(dollars in millions) | Pension | Postretirement | ||||||||||||||||||
Years Ended December 31, | 2015 | 2014 | 2013 | 2014 | 2013 | |||||||||||||||
Components of net periodic benefit cost: | ||||||||||||||||||||
Service cost | $ | — | $ | — | $ | — | $ | — | $ | 1 | ||||||||||
Interest cost | 15 | 15 | 14 | — | — | |||||||||||||||
Expected return on assets | (19 | ) | (16 | ) | (15 | ) | — | — | ||||||||||||
Curtailment gain | — | — | — | (2 | ) | — | ||||||||||||||
Settlement gain | — | — | — | (4 | ) | — | ||||||||||||||
Net periodic benefit cost | (4 | ) | (1 | ) | (1 | ) | (6 | ) | 1 | |||||||||||
Other changes in plan assets and projected benefit obligation recognized in other comprehensive income or loss: | ||||||||||||||||||||
Net actuarial loss (gain) | 9 | 46 | (13 | ) | — | (5 | ) | |||||||||||||
Net settlement gain | — | — | — | 4 | — | |||||||||||||||
Total recognized in other comprehensive income or loss | 9 | 46 | (13 | ) | 4 | (5 | ) | |||||||||||||
Total recognized in net periodic benefit cost and other comprehensive income or loss | $ | 5 | $ | 45 | $ | (14 | ) | $ | (2 | ) | $ | (4 | ) |
• | the estimated net loss that will be amortized from accumulated other comprehensive income or loss into net periodic benefit cost over the next fiscal year will be less than $1 million for our combined defined benefit pension plans; |
• | the estimated prior service credit that will be amortized from accumulated other comprehensive income or loss into net periodic benefit cost over the next fiscal year will be zero for our combined defined benefit pension plans; and |
• | the estimated amortization from accumulated other comprehensive income or loss for net loss and prior service credit that will be amortized into net periodic benefit cost over the next fiscal year will be zero for our defined benefit postretirement plans. |
Pension | Postretirement | |||||||||||
December 31, | 2015 | 2014 | 2015 | 2014 | ||||||||
Projected benefit obligation: | ||||||||||||
Discount rate | 4.26 | % | 3.89 | % | 3.45 | % | 3.80 | % | ||||
Rate of compensation increase | — | — | N/A * | N/A * | ||||||||
Net periodic benefit costs: | ||||||||||||
Discount rate | 3.89 | % | 4.83 | % | 3.80 | % | 3.80 | % | ||||
Expected long-term rate of return on plan assets | 5.27 | % | 5.29 | % | N/A * | N/A * | ||||||
Rate of compensation increase (average) | — | — | N/A * | N/A * |
* | Not applicable |
(dollars in millions) | Pension | |||
2016 | $ | 15 | ||
2017 | 15 | |||
2018 | 15 | |||
2019 | 15 | |||
2020 | 16 | |||
2021-2025 | 89 |
(dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
December 31, 2015 | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 3 | $ | — | $ | — | $ | 3 | ||||||||
Equity securities: | ||||||||||||||||
U.S. (a) | — | 16 | — | 16 | ||||||||||||
International (b) | — | 15 | — | 15 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. investment grade (c) | — | 291 | — | 291 | ||||||||||||
U.S. high yield (d) | — | 8 | — | 8 | ||||||||||||
Total | $ | 3 | $ | 330 | $ | — | $ | 333 | ||||||||
December 31, 2014 | ||||||||||||||||
Assets: | ||||||||||||||||
Cash and cash equivalents | $ | 2 | $ | — | $ | — | $ | 2 | ||||||||
Equity securities: | ||||||||||||||||
U.S. (a) | — | 19 | — | 19 | ||||||||||||
International (b) | — | 1 | — | 1 | ||||||||||||
Fixed income securities: | ||||||||||||||||
U.S. investment grade (c) | — | 335 | — | 335 | ||||||||||||
U.S. high yield (d) | — | 2 | — | 2 | ||||||||||||
Total | $ | 2 | $ | 357 | $ | — | $ | 359 |
(a) | Includes index mutual funds that primarily track several indices including S&P 500 and S&P 600 in addition to other actively managed accounts, comprised of investments in large cap companies. |
(b) | Includes investment mutual funds in companies in emerging and developed markets. |
(c) | Includes investment mutual funds in U.S. and non-U.S. government issued bonds, U.S. government agency or sponsored agency bonds, and investment grade corporate bonds. |
(d) | Includes investment mutual funds in securities or debt obligations that have a rating below investment grade. |
Number of Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Term (in Years) | |||||||
Unvested as of January 1, 2015 | 1,352,865 | $ | 17.91 | ||||||
Granted | 1,115,662 | 47.44 | |||||||
Vested | (384,902 | ) | 18.45 | ||||||
Forfeited | (74,201 | ) | 24.65 | ||||||
Unvested at December 31, 2015 | 2,009,424 | 33.95 | 2.91 |
Number of Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Term (in Years) | |||||||
Unvested as of January 1, 2015 | 583,459 | $ | 25.84 | ||||||
Granted | 16,091 | 34.45 | |||||||
Forfeited | (18,437 | ) | 35.05 | ||||||
Unvested at December 31, 2015 | 581,113 | 25.79 | 2.59 |
• | Consumer and Insurance; |
• | Acquisitions and Servicing; and |
• | Real Estate. |
• | Consumer and Insurance — We originate and service personal loans (secured and unsecured) through two business divisions: branch operations and centralized operations and offer credit insurance (life insurance, disability insurance, and involuntary unemployment insurance), non-credit insurance, and ancillary products, such as warranty protection. Branch operations primarily conduct business in 27 states, which are our core operating states. Our centralized operations underwrite and process certain loan applications that we receive from our branch operations or through an internet portal. If the applicant is located near an existing branch (“in footprint”), our centralized operations make the credit decision regarding the application and then request, but do not require, the customer to visit a nearby branch for closing, funding and servicing. If the applicant is not located near a branch (“out of footprint”), our centralized operations originate the loan. |
• | Acquisitions and Servicing — We service the SpringCastle Portfolio that was acquired by an indirect subsidiary of OMH through a joint venture in which SFC owns a 47% equity interest. The SpringCastle Portfolio consists of unsecured loans and loans secured by subordinate residential real estate mortgages (which we service as unsecured loans due to the fact that the liens are subordinated to superior ranking security interests) and includes both closed-end accounts and open-end lines of credit. These loans vary in form and substance from our typical branch serviced loans and are in a liquidating status. |
• | Real Estate — We service and hold real estate loans secured by first or second mortgages on residential real estate. Real estate loans previously originated through our branch offices or previously acquired or originated through centralized distribution channels are serviced by: (i) MorEquity and subserviced by Nationstar; (ii) Select Portfolio Servicing, Inc.; or (iii) our centralized operations. Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar. Prior to the OneMain Acquisition, this segment also included proceeds from the sale of our real estate loans in 2014. OMH used these proceeds to acquire OneMain. |
Interest income | Directly correlated with a specific segment. |
Interest expense | Acquisition and Servicing - includes interest expense specifically identified to our SpringCastle portfolio |
Consumer and Insurance, Real Estate and Other - The Company has securitization debt, secured term loan and unsecured debt. The Company first allocates interest expense to its segments based on actual expense for securitizations and secured term debt and using a weighted average for unsecured debt allocated to the segments. Average unsecured debt allocations for the periods presented are as follows: | |
Subsequent to the OneMain Acquisition | |
Total average unsecured debt is allocated as follows: | |
l Consumer and Insurance - receives remainder of unallocated average debt; and | |
l Real Estate and Other - at 100% of asset base. (Asset base represents the average net finance receivables including finance receivables held for sale.) | |
The net effect of the change in debt allocation and asset base methodologies for 2015 had it been in place as of the beginning of the year would be an increase in interest expense of $208 million for Consumer and Insurance and a decrease in interest expense of $157 million and $51 million for Real Estate and Other, respectively. | |
For the period third quarter 2014 to the OneMain Acquisition | |
Total average unsecured debt is allocated to Consumer and Insurance, Real Estate and Other, such that the total debt allocated across each segment equals 83%, up to 100% and 100% of each of its respective asset base. Any excess is allocated to Consumer and Insurance. | |
Average unsecured debt is allocated after average securitized debt to achieve the calculated average segment debt. | |
Asset base represents the following: | |
l Consumer and Insurance - average net finance receivables including average net finance receivables held for sale; | |
l Real Estate - average net finance receivables including average net finance receivables held for sale, cash and cash equivalents, investments including proceeds from Real Estate sales; and | |
l Other - average net finance receivables other than the periods listed below: | |
l May 2015 to the OneMain Acquisition - average net finance receivables and cash and cash equivalents less proceeds from equity issuance in 2015, operating cash reserve and cash included in other segments. | |
l February 2015 to April 2015 - average net finance receivables and cash and cash equivalents less operating cash reserve and cash included in other segments. | |
Prior to third quarter 2014 | |
The ratio of each segment average net finance receivables to total average net finance receivables is calculated. This ratio is applied to average total debt to calculate the average segment debt. Average unsecured debt is allocated after average securitized debt and secured term loan to achieve the calculated average segment debt. |
Provision for finance receivable losses | Directly correlated with a specific segment, except for allocations to Other, which are based on the remaining delinquent accounts as a percentage of total delinquent accounts. |
Other revenues | Directly correlated with a specific segment, except for: (i) net gain (loss) on repurchases and repayments of debt, which is allocated to the segments based on the interest expense allocation of debt and (ii) gains and losses on foreign currency exchange, which is allocated to the segments based on the interest expense allocation of debt. |
Salaries and benefits | Directly correlated with a specific segment. Other salaries and benefits not directly correlated with a specific segment are allocated to each of the segments based on services provided. |
Other operating expenses | Directly correlated with a specific segment. Other operating expenses not directly correlated with a specific segment are allocated to each of the segments based on services provided. |
Insurance policy benefits and claims | Directly correlated with a specific segment. |
• | interest income - the net purchase accounting impact of the amortization (accretion) of the net premium (discount) assigned to finance receivables and the impact of identifying purchased credit impaired finance receivables as compared to the historical values of finance receivables; |
• | interest expense - primarily includes the accretion of the net discount applied to our long term debt as part of purchase accounting; |
• | provision for finance receivable losses - the adjustment to reflect the difference between our allowance adjustment calculated under our Segment Accounting Basis and our GAAP basis; |
• | other revenues - the impact of carrying value differences between Segment Accounting Basis and purchase accounting basis when measuring mark to market for loans held for sale and realized gains/losses associated with our investment portfolio; and |
• | other expenses - the net impact of amortization associated with identified intangibles as part of purchase accounting and deferred costs impacted by purchase accounting. |
(dollars in millions) | Consumer and Insurance | Acquisitions and Servicing | Real Estate | Other | Eliminations | Segment to GAAP Adjustment | Consolidated Total | |||||||||||||||||||||
At or for the Year Ended December 31, 2015 | ||||||||||||||||||||||||||||
Interest income | $ | 1,115 | $ | 455 | $ | 68 | $ | 8 | $ | — | $ | 11 | $ | 1,657 | ||||||||||||||
Interest expense | 190 | 87 | 213 | 55 | (5 | ) | 127 | 667 | ||||||||||||||||||||
Provision for finance receivable losses | 255 | 68 | (2 | ) | 1 | — | 17 | 339 | ||||||||||||||||||||
Net interest income (loss) after provision for finance receivable losses | 670 | 300 | (143 | ) | (48 | ) | 5 | (133 | ) | 651 | ||||||||||||||||||
Other revenues | 212 | 5 | 4 | 42 | (5 | ) | (15 | ) | 243 | |||||||||||||||||||
Other expenses | 622 | 61 | 33 | 17 | — | 2 | 735 | |||||||||||||||||||||
Income (loss) before provision for (benefit from) income taxes | 260 | 244 | (172 | ) | (23 | ) | — | (150 | ) | 159 | ||||||||||||||||||
Income before provision for income taxes attributable to non-controlling interests | — | 127 | — | — | — | — | 127 | |||||||||||||||||||||
Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation | $ | 260 | $ | 117 | $ | (172 | ) | $ | (23 | ) | $ | — | $ | (150 | ) | $ | 32 | |||||||||||
Assets | $ | 5,632 | $ | 1,784 | $ | 711 | $ | 4,119 | $ | — | $ | (58 | ) | $ | 12,188 |
(dollars in millions) | Consumer and Insurance | Acquisitions and Servicing | Real Estate | Other | Eliminations | Segment to GAAP Adjustment | Consolidated Total | |||||||||||||||||||||
At or for the Year Ended December 31, 2014 | ||||||||||||||||||||||||||||
Interest income | $ | 911 | $ | 212 | $ | 401 | $ | 16 | $ | — | $ | 85 | $ | 1,625 | ||||||||||||||
Interest expense | 163 | 36 | 349 | 7 | (5 | ) | 133 | 683 | ||||||||||||||||||||
Provision for finance receivable losses | 200 | 36 | 128 | 7 | — | (19 | ) | 352 | ||||||||||||||||||||
Net interest income (loss) after provision for finance receivable losses | 548 | 140 | (76 | ) | 2 | 5 | (29 | ) | 590 | |||||||||||||||||||
Other revenues | 215 | (15 | ) | 162 | 6 | (5 | ) | 382 | 745 | |||||||||||||||||||
Other expenses | 523 | 30 | 91 | 10 | — | 3 | 657 | |||||||||||||||||||||
Income (loss) before provision for (benefit from) income taxes | 240 | 95 | (5 | ) | (2 | ) | — | 350 | 678 | |||||||||||||||||||
Income before provision for income taxes attributable to non-controlling interests | — | 48 | — | — | — | — | 48 | |||||||||||||||||||||
Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation | $ | 240 | $ | 47 | $ | (5 | ) | $ | (2 | ) | $ | — | $ | 350 | $ | 630 | ||||||||||||
Assets * | $ | 4,218 | 2,536 | $ | 3,665 | $ | 555 | $ | — | $ | 24 | $ | 10,998 | |||||||||||||||
At or for the Year Ended December 31, 2013 | ||||||||||||||||||||||||||||
Interest income | $ | 721 | $ | — | $ | 690 | $ | 45 | $ | — | $ | 181 | $ | 1,637 | ||||||||||||||
Interest expense | 149 | — | 539 | 15 | — | 140 | 843 | |||||||||||||||||||||
Provision for finance receivable losses | 117 | — | 255 | — | — | (1 | ) | 371 | ||||||||||||||||||||
Net interest income after provision for finance receivable losses | 455 | — | (104 | ) | 30 | — | 42 | 423 | ||||||||||||||||||||
Other revenues | 197 | — | 7 | 13 | — | (56 | ) | 161 | ||||||||||||||||||||
Other expenses | 448 | — | 84 | 174 | — | 3 | 709 | |||||||||||||||||||||
Income (loss) before provision for (benefit from) income taxes | $ | 204 | $ | — | $ | (181 | ) | $ | (131 | ) | $ | — | $ | (17 | ) | $ | (125 | ) | ||||||||||
Assets * | $ | 3,999 | $ | — | $ | 8,487 | $ | 611 | $ | — | $ | (485 | ) | $ | 12,612 |
* | Assets reflect the following: |
• | As a result of our early adoption of ASU 2015-03, we reclassified debt issuance costs of $29 million and $39 million as of December 31, 2014 and 2013, respectively, from other assets to long-term debt. |
• | In connection with our policy integration with OneMain, we report unearned insurance premium and claim reserves related to finance receivables (previously reported in insurance claims and policyholder liabilities) as a contra-asset to net finance receivables, which totaled $217 million and $172 million at December 31, 2014 and 2013, respectively. |
• | See Note 3 for further information on the correction of the total asset segment disclosure error. |
Fair Value Measurements Using | Total Fair Value | Total Carrying Value | ||||||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | |||||||||||||||||
December 31, 2015 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 321 | $ | — | $ | — | $ | 321 | $ | 321 | ||||||||||
Investment securities | — | 602 | 2 | 604 | 604 | |||||||||||||||
Net finance receivables, less allowance for finance receivable losses | — | — | 6,897 | 6,897 | 6,340 | |||||||||||||||
Finance receivables held for sale | — | — | 819 | 819 | 793 | |||||||||||||||
Notes receivable from parent and affiliates | — | 3,804 | — | 3,804 | 3,804 | |||||||||||||||
Restricted cash and cash equivalents | 295 | — | — | 295 | 295 | |||||||||||||||
Other assets: | ||||||||||||||||||||
Commercial mortgage loans | — | — | 62 | 62 | 62 | |||||||||||||||
Escrow advance receivable | — | — | 11 | 11 | 11 | |||||||||||||||
Receivables from parent and affiliates | — | 9 | — | 9 | 9 | |||||||||||||||
Receivables related to sales of real estate loans and related trust assets | — | 1 | — | 1 | 5 | |||||||||||||||
Liabilities | ||||||||||||||||||||
Long-term debt | $ | — | $ | 9,998 | $ | — | $ | 9,998 | $ | 9,582 | ||||||||||
Payables to parent and affiliates | — | 24 | — | 24 | 24 | |||||||||||||||
December 31, 2014 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and cash equivalents | $ | 584 | $ | 165 | $ | — | $ | 749 | $ | 749 | ||||||||||
Investment securities | — | 2,913 | 9 | 2,922 | 2,922 | |||||||||||||||
Net finance receivables, less allowance for finance receivable losses | — | — | 6,949 | 6,949 | 6,398 | |||||||||||||||
Finance receivables held for sale | — | — | 209 | 209 | 202 | |||||||||||||||
Note receivable from parent | — | 251 | — | 251 | 251 | |||||||||||||||
Restricted cash and cash equivalents | 218 | — | — | 218 | 218 | |||||||||||||||
Other assets: | ||||||||||||||||||||
Commercial mortgage loans | — | — | 78 | 78 | 85 | |||||||||||||||
Escrow advance receivable | — | — | 8 | 8 | 8 | |||||||||||||||
Receivables from parent and affiliates | — | 11 | — | 11 | 11 | |||||||||||||||
Receivables related to sales of real estate loans and related trust assets | — | 67 | — | 67 | 79 | |||||||||||||||
Liabilities | ||||||||||||||||||||
Long-term debt | $ | — | $ | 9,182 | $ | — | $ | 9,182 | $ | 8,356 | ||||||||||
Payables to parent and affiliates | — | 48 | — | 48 | 48 |
Fair Value Measurements Using | Total Carried At Fair Value | |||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | |||||||||||||
December 31, 2015 | ||||||||||||||||
Assets | ||||||||||||||||
Cash equivalents in mutual funds | $ | 224 | $ | — | $ | — | $ | 224 | ||||||||
Investment securities: | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||
Bonds: | ||||||||||||||||
U.S. government and government sponsored entities | — | 82 | — | 82 | ||||||||||||
Obligations of states, municipalities, and political subdivisions | — | 89 | — | 89 | ||||||||||||
Corporate debt | — | 267 | — | 267 | ||||||||||||
RMBS | — | 74 | — | 74 | ||||||||||||
CMBS | — | 44 | — | 44 | ||||||||||||
CDO/ABS | — | 29 | — | 29 | ||||||||||||
Total bonds | — | 585 | — | 585 | ||||||||||||
Preferred stock | — | 5 | — | 5 | ||||||||||||
Other long-term investments | — | — | 1 | 1 | ||||||||||||
Total available-for-sale securities (a) | — | 590 | 1 | 591 | ||||||||||||
Trading and other securities: | ||||||||||||||||
Bonds: | ||||||||||||||||
Corporate debt | — | 10 | — | 10 | ||||||||||||
CMBS | — | 2 | — | 2 | ||||||||||||
Total trading and other securities (b) | — | 12 | — | 12 | ||||||||||||
Total investment securities | — | 602 | 1 | 603 | ||||||||||||
Restricted cash in mutual funds | 276 | — | — | 276 | ||||||||||||
Total | $ | 500 | $ | 602 | $ | 1 | $ | 1,103 |
(a) | Excludes an immaterial interest in a limited partnership that we account for using the equity method and Federal Home Loan Bank common stock of $1 million at December 31, 2015, which is carried at cost. |
(b) | The fair value of other securities totaled $2 million at December 31, 2015. |
Fair Value Measurements Using | Total Carried At Fair Value | |||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | |||||||||||||
December 31, 2014 | ||||||||||||||||
Assets | ||||||||||||||||
Cash equivalents in mutual funds | $ | 236 | $ | — | $ | — | $ | 236 | ||||||||
Cash equivalents in certificates of deposit and commercial paper | — | 165 | — | 165 | ||||||||||||
Investment securities: | ||||||||||||||||
Available-for-sale securities: | ||||||||||||||||
Bonds: | ||||||||||||||||
U.S. government and government sponsored entities | — | 64 | — | 64 | ||||||||||||
Obligations of states, municipalities, and political subdivisions | — | 102 | — | 102 | ||||||||||||
Certificates of deposit and commercial paper | — | 1 | — | 1 | ||||||||||||
Corporate debt | — | 263 | 4 | 267 | ||||||||||||
RMBS | — | 73 | — | 73 | ||||||||||||
CMBS | — | 21 | 3 | 24 | ||||||||||||
CDO/ABS | — | 61 | — | 61 | ||||||||||||
Total bonds | — | 585 | 7 | 592 | ||||||||||||
Preferred stock | — | 7 | — | 7 | ||||||||||||
Other long-term investments | — | — | 1 | 1 | ||||||||||||
Total available-for-sale securities (a) | — | 592 | 8 | 600 | ||||||||||||
Trading and other securities: | ||||||||||||||||
Bonds: | ||||||||||||||||
U.S. government and government sponsored entities | — | 302 | — | 302 | ||||||||||||
Obligations of states, municipalities, and political subdivisions | — | 14 | — | 14 | ||||||||||||
Certificates of deposit and commercial paper | — | 238 | — | 238 | ||||||||||||
Non-U.S. government and government sponsored entities | — | 20 | — | 20 | ||||||||||||
Corporate debt | — | 1,056 | — | 1,056 | ||||||||||||
RMBS | — | 35 | — | 35 | ||||||||||||
CMBS | — | 149 | — | 149 | ||||||||||||
CDO/ABS | — | 507 | — | 507 | ||||||||||||
Total trading and other securities (b) | — | 2,321 | — | 2,321 | ||||||||||||
Total investment securities | — | 2,913 | 8 | 2,921 | ||||||||||||
Restricted cash in mutual funds | 207 | — | — | 207 | ||||||||||||
Total | $ | 443 | $ | 3,078 | $ | 8 | $ | 3,529 |
(a) | Excludes an immaterial interest in a limited partnership that we account for using the equity method and Federal Home Loan Bank common stock of $1 million at December 31, 2014, which is carried at cost. |
(b) | The fair value of other securities totaled $5 million at December 31, 2014. |
Net gains (losses) included in: | Purchases, sales, issues, settlements (a) | Transfers into Level 3 | Transfers out of Level 3 (b) | Balance at end of period | ||||||||||||||||||||||||
(dollars in millions) | Balance at beginning of period | Other revenues | Other comprehensive income (loss) | |||||||||||||||||||||||||
Year Ended December 31, 2015 | ||||||||||||||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||||||||||
Bonds: | ||||||||||||||||||||||||||||
Corporate debt | $ | 4 | $ | — | $ | — | $ | (4 | ) | $ | — | $ | — | $ | — | |||||||||||||
CMBS | 3 | — | — | — | — | (3 | ) | — | ||||||||||||||||||||
Total bonds | 7 | — | — | (4 | ) | — | (3 | ) | — | |||||||||||||||||||
Other long-term investments | 1 | — | — | — | — | — | 1 | |||||||||||||||||||||
Total | $ | 8 | $ | — | $ | — | $ | (4 | ) | $ | — | $ | (3 | ) | $ | 1 |
(a) | “Purchases, sales, issues, and settlements” column consisted only of settlements. |
(b) | During 2015, we transferred $3 million of CMBS out of Level 3 primarily related to the greater observability of pricing inputs. |
Net gains (losses) included in: | Purchases, sales, issues, settlements (a) | Transfers into Level 3 (b) | Transfers out of Level 3 (c) | Balance at end of period | ||||||||||||||||||||||||
(dollars in millions) | Balance at beginning of period | Other revenues | Other comprehensive income (loss) | |||||||||||||||||||||||||
Year Ended December 31, 2014 | ||||||||||||||||||||||||||||
Investment securities: | ||||||||||||||||||||||||||||
Available-for-sale securities: | ||||||||||||||||||||||||||||
Bonds: | ||||||||||||||||||||||||||||
Corporate debt | $ | 13 | $ | — | $ | — | $ | (9 | ) | $ | — | $ | — | $ | 4 | |||||||||||||
CMBS | — | — | — | — | 3 | — | 3 | |||||||||||||||||||||
CDO/ABS | 1 | — | — | — | — | (1 | ) | — | ||||||||||||||||||||
Total bonds | 14 | — | — | (9 | ) | 3 | (1 | ) | 7 | |||||||||||||||||||
Other long-term investments | 1 | — | — | — | — | — | 1 | |||||||||||||||||||||
Total available-for-sale securities | 15 | — | — | (9 | ) | 3 | (1 | ) | 8 | |||||||||||||||||||
Trading and other securities: | ||||||||||||||||||||||||||||
Bonds: | ||||||||||||||||||||||||||||
RMBS | — | — | — | — | 1 | (1 | ) | — | ||||||||||||||||||||
CDO/ABS | 7 | — | — | (6 | ) | — | (1 | ) | — | |||||||||||||||||||
Total trading and other securities | 7 | — | — | (6 | ) | 1 | (2 | ) | — | |||||||||||||||||||
Total | $ | 22 | $ | — | $ | — | $ | (15 | ) | $ | 4 | $ | (3 | ) | $ | 8 |
(a) | “Purchases, sales, issues, and settlements” column consisted only of settlements. |
(b) | During 2014, we transferred $3 million of CMBS available-for-sale securities and $1 million of RMBS other securities into Level 3 primarily related to the reduced observability of pricing inputs. |
(c) | During 2014, we transferred $1 million of CDO/ABS available-for-sale securities, $1 million of RMBS other securities, and $1 million of CDO/ABS trading and other securities out of Level 3 primarily related to the greater observability of pricing inputs. |
Range (Weighted Average) | ||||
Valuation Technique(s) | Unobservable Input | December 31, 2015 | December 31, 2014 | |
Corporate debt | Discounted cash flows | Yield | — | 1.05% (a) |
RMBS | Discounted cash flows | Spread | 665 bps (a) | 736 bps (a) (b) |
CMBS | Discounted cash flows | Spread | — | 139 bps (a) (b) |
Other long-term investments | Discounted cash flows and indicative valuations | Historical costs Nature of investment Local market conditions Comparables Operating performance Recent financing activity | N/A (c) | N/A (c) |
(a) | At December 31, 2015 and 2014, RMBS consisted of one bond, which was less than $1 million. At December 31, 2014, corporate debt and CMBS also consisted of one bond. |
(b) | During the first quarter of 2015, we identified that we incorrectly disclosed the weighted average ranges of our RMBS bond and CMBS bond as of December 31, 2014. The weighted average ranges of these bonds at December 31, 2014 have been corrected in the table above. |
(c) | Not applicable. |
Fair Value Measurements Using * | Impairment Charges | |||||||||||||||||||
(dollars in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
At or for the Year Ended December 31, 2015 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Real estate owned | $ | — | $ | — | $ | 11 | $ | 11 | $ | 3 | ||||||||||
Commercial mortgage loans | — | — | 8 | 8 | (2 | ) | ||||||||||||||
Total | $ | — | $ | — | $ | 19 | $ | 19 | $ | 1 | ||||||||||
At or for the Year Ended December 31, 2014 | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Finance receivables held for sale | $ | — | $ | — | $ | 202 | $ | 202 | $ | 7 | ||||||||||
Real estate owned | — | — | 19 | 19 | 15 | |||||||||||||||
Commercial mortgage loans | — | — | 11 | 11 | (2 | ) | ||||||||||||||
Total | $ | — | $ | — | $ | 232 | $ | 232 | $ | 20 |
* | The fair value information presented in the table is as of the date the fair value adjustment was recorded. |
Range (Weighted Average) | ||||
Valuation Technique(s) | Unobservable Input | December 31, 2015 | December 31, 2014 | |
Finance receivables held for sale | Income approach | National market conditions Operating performance | — | N/A * |
Real estate owned | Market approach | Third-party valuation | N/A * | N/A * |
Commercial mortgage loans | Market approach Income approach Cost approach | Local market conditions Nature of investment Comparable property sales Operating performance | N/A * | N/A * |
* | Not applicable. |
(dollars in millions) | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
Interest income | $ | 430 | $ | 422 | $ | 406 | $ | 399 | ||||||||
Interest expense | 167 | 171 | 171 | 158 | ||||||||||||
Provision for finance receivable losses | 109 | 78 | 73 | 79 | ||||||||||||
Other revenues | 81 | 49 | 59 | 54 | ||||||||||||
Other expenses | 198 | 182 | 186 | 169 | ||||||||||||
Income before provision for (benefit from) income taxes | 37 | 40 | 35 | 47 | ||||||||||||
Provision for (benefit from) income taxes | 4 | 5 | — | 9 | ||||||||||||
Net income | 33 | 35 | 35 | 38 | ||||||||||||
Net income attributable to non-controlling interests | 29 | 32 | 33 | 33 | ||||||||||||
Net income attributable to Springleaf Finance Corporation | $ | 4 | $ | 3 | $ | 2 | $ | 5 |
(dollars in millions) | Fourth Quarter | Third Quarter | Second Quarter | First Quarter | ||||||||||||
Interest income | $ | 403 | $ | 431 | $ | 389 | $ | 402 | ||||||||
Interest expense | 157 | 172 | 172 | 182 | ||||||||||||
Provision for finance receivable losses | 87 | 85 | 80 | 100 | ||||||||||||
Other revenues | (38 | ) | 602 | 90 | 91 | |||||||||||
Other expenses | 172 | 182 | 152 | 151 | ||||||||||||
Income (loss) before provision for (benefit from) income taxes | (51 | ) | 594 | 75 | 60 | |||||||||||
Provision for (benefit from) income taxes | (17 | ) | 198 | 29 | 23 | |||||||||||
Net income (loss) | (34 | ) | 396 | 46 | 37 | |||||||||||
Net income attributable to non-controlling interests | 22 | 26 | — | — | ||||||||||||
Net income (loss) attributable to Springleaf Finance Corporation | $ | (56 | ) | $ | 370 | $ | 46 | $ | 37 |
Document and Entity Information |
12 Months Ended |
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Dec. 31, 2015 | |
Document and Entity Information | |
Entity Registrant Name | SPRINGLEAF FINANCE CORP |
Entity Central Index Key | 0000025598 |
Document Type | 8-K |
Document Period End Date | Dec. 31, 2015 |
Amendment Flag | false |
Consolidated Statements of Operations - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Income Statement [Abstract] | |||||||||||
Finance charges | $ 1,597 | $ 1,564 | $ 1,637 | ||||||||
Finance receivables held for sale originated as held for investment | 60 | 61 | 0 | ||||||||
Total interest income | $ 430 | $ 422 | $ 406 | $ 399 | $ 403 | $ 431 | $ 389 | $ 402 | 1,657 | 1,625 | 1,637 |
Interest expense | 167 | 171 | 171 | 158 | 157 | 172 | 172 | 182 | 667 | 683 | 843 |
Net interest income | 990 | 942 | 794 | ||||||||
Provision for finance receivable losses | 109 | 78 | 73 | 79 | 87 | 85 | 80 | 100 | 339 | 352 | 371 |
Net interest income after provision for finance receivable losses | 651 | 590 | 423 | ||||||||
Other revenues: | |||||||||||
Insurance | 158 | 166 | 148 | ||||||||
Investment | 49 | 39 | 34 | ||||||||
Net loss on repurchases and repayments of debt | 0 | (66) | (42) | ||||||||
Net gain on fair value adjustments on debt | 0 | 1 | 0 | ||||||||
Net gain on sales of real estate loans and related trust assets | 0 | 626 | 0 | ||||||||
Other | 36 | (21) | 21 | ||||||||
Total other revenues | 81 | 49 | 59 | 54 | (38) | 602 | 90 | 91 | 243 | 745 | 161 |
Operating expenses: | |||||||||||
Salaries and benefits | 364 | 321 | 447 | ||||||||
Other operating expenses | 299 | 261 | 197 | ||||||||
Insurance policy benefits and claims | 72 | 75 | 65 | ||||||||
Total other expenses | 198 | 182 | 186 | 169 | 172 | 182 | 152 | 151 | 735 | 657 | 709 |
Income (loss) before provision for (benefit from) income taxes | 37 | 40 | 35 | 47 | (51) | 594 | 75 | 60 | 159 | 678 | (125) |
Provision for (benefit from) income taxes | 4 | 5 | 0 | 9 | (17) | 198 | 29 | 23 | 18 | 233 | (49) |
Net income (loss) | 33 | 35 | 35 | 38 | (34) | 396 | 46 | 37 | 141 | 445 | (76) |
Net income attributable to non-controlling interests | 29 | 32 | 33 | 33 | 22 | 26 | 0 | 0 | 127 | 48 | 0 |
Net income attributable to Springleaf Finance Corporation | $ 4 | $ 3 | $ 2 | $ 5 | $ (56) | $ 370 | $ 46 | $ 37 | $ 14 | $ 397 | $ (76) |
Nature of Operations |
12 Months Ended |
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Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Operations | Nature of Operations Springleaf Finance Corporation (“SFC” or, collectively with its subsidiaries, whether directly or indirectly owned, “Springleaf,” the “Company,” “we,” “us,” or “our”) is a wholly owned subsidiary of Springleaf Finance, Inc. (“SFI”). SFI is a wholly owned subsidiary of OneMain Holdings, Inc. (“OMH”), formally Springleaf Holdings, Inc. At December 31, 2015, Springleaf Financial Holdings, LLC (the “Initial Stockholder”) owned approximately 58% of OMH’s common stock. The Initial Stockholder is owned primarily by a private equity fund managed by an affiliate of Fortress Investment Group LLC (“Fortress”). SFC is a financial services holding company with subsidiaries engaged in the consumer finance and insurance businesses. At December 31, 2015, we had $6.6 billion of net finance receivables due from approximately 1.2 million customer accounts. Our network of over 800 branch offices in 27 states, as of December 31, 2015, is complemented by our centralized operations, which provides support to our branch operations. At December 31, 2015, we had approximately 3,500 employees. |
Significant Transactions |
12 Months Ended |
---|---|
Dec. 31, 2015 | |
Significant Transactions [Abstract] | |
Significant Transactions | Significant Transactions OMH’S ACQUISITION OF ONEMAIN FINANCIAL HOLDING, LLC On November 15, 2015, OMH, through its wholly owned subsidiary, Independence Holdings, LLC (“Independence”), completed its acquisition of OneMain Financial Holdings, LLC (“OMFH”) from CitiFinancial Credit Company (“Citigroup”) for $4.5 billion in cash (the “OneMain Acquisition”). In connection with the OneMain Acquisition, Springleaf Holdings, Inc. changed its name to OneMain Holdings, Inc. (previously defined in Note 1 as “OMH”). As a result of the OneMain Acquisition, OMFH became a wholly owned, indirect subsidiary of OMH. OMFH is not a subsidiary of SFC and SFC is not a subsidiary of OMFH. On November 12, 2015, in connection with the closing of the OneMain Acquisition, SFC’s wholly owned subsidiary, Springleaf Financial Cash Services, Inc. (“CSI”), entered into a revolving demand note (the “Independence Demand Note”) with Independence, whereby CSI provided Independence with $3.4 billion cash pursuant to the terms of the Independence Demand Note. See Note 11 for further information regarding the Independence Demand Note and other related party agreements with OMFH. In connection with the closing of the OneMain Acquisition, on November 13, 2015, OMH and certain subsidiaries of SFC (collectively, the “Branch Sellers”) entered into an Asset Preservation Stipulation and Order and agreed to a Proposed Final Judgment (collectively, the “Settlement Agreement”) with the U.S. Department of Justice (the “DOJ”), as well as the state attorneys general for Colorado, Idaho, Pennsylvania, Texas, Virginia, Washington and West Virginia. The Settlement Agreement resolved the inquiries of the DOJ and such attorneys general with respect to the OneMain Acquisition and allowed OMH to proceed with the closing. Pursuant to the Settlement Agreement, OMH agreed to divest 127 branches of SFC subsidiaries across eleven states as a condition for approval of the OneMain Acquisition. The Settlement Agreement requires the Branch Sellers to operate these 127 branches as an ongoing, economically viable and competitive business until sold to the divestiture purchaser. In connection with the Settlement Agreement, the U.S. District of Court for the District of Columbia appointed a third-party monitor to oversee management of the divestiture branches and ensure the Company’s compliance with the terms of the Settlement Agreement. LENDMARK SALE On November 12, 2015, the Branch Sellers entered into an agreement with Lendmark Financial Services, LLC (“Lendmark”), to sell 127 branches to Lendmark (the “Lendmark Sale”) for a purchase price equal to the sum of (i) the aggregate unpaid balance as of closing of the purchased loans multiplied by 103%, plus (ii) for each interest-bearing purchased loan, an amount equal to all unpaid interest that has accrued on the unpaid balance at the applicable note rate from the most recent interest payment date through the closing, plus (iii) the sum of all prepaid charges and fees and security deposits of the Branch Sellers to the extent arising under the purchased contracts as reflected on the books and records of the Branch Sellers as of closing, subject to certain limitations if the purchase price would exceed $695 million and Lendmark is unable to obtain financing on certain specified terms. In anticipation of the sale of these branches, we transferred $608 million of personal loans from held for investment to held for sale on September 30, 2015. At December 31, 2015, the personal loans held for sale totaled approximately $617 million, primarily due to originations, net of charge-offs of personal loans in these branches during the fourth quarter of 2015. These branches represent 15% of the branches and approximately 13% of the personal loans held for investment and held for sale of the Company as of December 31, 2015. The closing of the Lendmark Sale is subject to various conditions. There can be no assurance that the Lendmark Sale will close, or if it does, when the closing will occur. In the event that the Branch Sellers have not completed the sale of these branches within 120 days after November 13, 2015, as such time period may be extended pursuant to the Settlement Agreement, the court may appoint a divestiture trustee to conduct the sale of such assets. In this case, the divestiture trustee would have the power to accomplish the divestiture of such assets to an acquirer or acquirers acceptable to the DOJ, and the Branch Sellers would have no right to object to a sale by the divestiture trustee on any ground other than the divestiture trustee’s malfeasance. Accordingly, the asset divesture could occur on terms less favorable to the Branch Sellers than the Lendmark Sale. |
Summary of Significant Accounting Policies |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies BASIS OF PRESENTATION We prepared our consolidated financial statements using generally accepted accounting principles in the United States of America (“U.S. GAAP”). The statements include the accounts of SFC, its subsidiaries (all of which are wholly owned, except for certain subsidiaries associated with a joint venture in which we own a 47% equity interest), and variable interest entities (“VIEs”) in which we hold a controlling financial interest and for which we are considered to be the primary beneficiary as of the financial statement date. We eliminated all material intercompany accounts and transactions. We made judgments, estimates, and assumptions that affect amounts reported in our consolidated financial statements and disclosures of contingent assets and liabilities. In management’s opinion, the consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of results. Ultimate results could differ from our estimates. We evaluated the effects of and the need to disclose events that occurred subsequent to the balance sheet date. To conform to the 2015 presentation, we reclassified certain items in prior periods, including certain items in prior periods of our consolidated balance sheet and consolidated cash flow statement. To conform to the 2015 presentation, we reclassified certain prior period items as a result of our early adoption of accounting standards update (“ASU”) 2015-03, Interest - Imputation of Interest (“ASU 2015-03”). See Note 4 for further information on the adoption of this ASU. CHANGE IN ACCOUNTING POLICY Effective April 1, 2016, we changed our accounting policy for the derecognition of loans within a purchased credit impaired (“PCI”) pool. Historically, we removed loans from a PCI pool upon charge-off of the loan, based on the Company’s charge-off accounting policy at their allocated carrying value. Under our new accounting policy, loans will be removed from a PCI pool when the loan is written-off, at which time further collections efforts would not be pursued, or sold or repaid. While both methods are acceptable under GAAP, we believe the new method for derecognition of PCI loans is preferable as it enhances consistency with our industry peers. See “Accounting Policies - Purchased Credit Impaired Finance Receivables” for our policy for derecognition of PCI loans following the change described above. We have retrospectively applied this change in accounting policy. The effect of this change in accounting policy on income (loss) before provision for (benefit from) income taxes and net income (loss) attributable to SFC, and the cumulative effect of this change in accounting policy on shareholder’s equity attributable to SFC for the following prior periods are included in the table below.
Revised Condensed Consolidated Balance Sheet
Revised Condensed Consolidated Statements of Operations
Revised Condensed Consolidated Statement of Cash Flows
We have also adjusted the applicable prior period amounts in the Notes to the Condensed Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 herein to reflect the impact of this change in accounting policy. ACCOUNTING POLICIES Operating Segments Our segments coincide with how our businesses are managed. At December 31, 2015, our three segments include:
Management considers Consumer and Insurance, and Acquisitions and Servicing as our “Core Consumer Operations” and Real Estate as our “Non-Core Portfolio.” The remaining components (which we refer to as “Other”) consist of our other non-core, non-originating legacy operations, which are isolated by geographic market and/or distribution channel from our Core Consumer Operations and our Non-Core Portfolio. These operations include: (i) our legacy operations in 14 states where we had also ceased branch-based personal lending; (ii) our liquidating retail sales finance portfolio (including retail sales finance accounts from its legacy auto finance operation); (iii) our lending operations in Puerto Rico and the U.S. Virgin Islands; and (iv) the operations of our United Kingdom subsidiary. Finance Receivables Generally, we classify finance receivables as held for investment based on management’s intent at the time of origination. We determine classification on a loan-by-loan basis. We classify finance receivables as held for investment due to our ability and intent to hold them until their contractual maturities. We carry finance receivables at amortized cost which includes accrued finance charges on interest bearing finance receivables, net unamortized deferred origination costs and unamortized points and fees, unamortized net premiums and discounts on purchased finance receivables, and unamortized finance charges on precomputed receivables. We include the cash flows from finance receivables held for investment in the consolidated statements of cash flows as investing activities. We may finance certain insurance products offered to our customers as part of finance receivables. In such cases, the insurance premium is included as an operating cash inflow and the financing of the insurance premium is included as part of the finance receivable as an investing cash flow in the consolidated statements of cash flows. Insurance claims and policyholder liabilities relate to the underwriting activities of our Consumer and Insurance segment. A significant portion of insurance claims and policyholder liabilities originate from the finance receivables. Historically, our policy has been to report them as liabilities and not net them against finance receivables; however, during the fourth quarter of 2015, we changed our presentation of unearned premiums and certain unpaid claim liabilities in the consolidated balance sheets as a reduction to net finance receivables. We believe this presentation is preferable as it aligns more closely with the presentation of these balances with our peers. We retrospectively applied this change in presentation in our consolidated balance sheets as of December 31, 2014 to ensure comparability across reporting periods. Similarly we will change comparable prior periods in our Forms 10-Q which we plan to file in 2016. As this is a change in balance sheet presentation only, there is no effect on net income (loss) or net income (loss) attributable to SFC. Finance Receivable Revenue Recognition We recognize finance charges as revenue on the accrual basis using the interest method, which we report in interest income. We amortize premiums or accrete discounts on finance receivables as an adjustment to finance charge income using the interest method and contractual cash flows. We defer the costs to originate certain finance receivables and the revenue from nonrefundable points and fees on loans and amortize them as an adjustment to finance charge income using the interest method. We stop accruing finance charges when the fourth contractual payment becomes past due for personal loans, the loans acquired through a joint venture in which we own a 47% equity interest (the “SpringCastle Portfolio”), and retail sales contracts and when the sixth contractual payment becomes past due for revolving retail accounts. For finance receivables serviced externally, including real estate loans, we stop accruing finance charges when the third or fourth contractual payment becomes past due depending on the type of receivable and respective third party servicer. We reverse finance charge amounts previously accrued upon suspension of accrual of finance charges. For certain finance receivables that had a carrying value that included a purchase premium or discount, we stop accreting the premium or discount at the time we stop accruing finance charges. We do not reverse accretion of premium or discount that was previously recognized. We recognize the contractual interest portion of payments received on nonaccrual finance receivables as finance charges at the time of receipt. We resume the accrual of interest on a nonaccrual finance receivable when the past due status on the individual finance receivable improves to the point that the finance receivable no longer meets our policy for nonaccrual. At that time we also resume accretion of any unamortized premium or discount resulting from a previous purchase premium or discount. We accrete the amount required to adjust the initial fair value of our finance receivables to their contractual amounts over the life of the related finance receivable for non-credit impaired finance receivables and over the life of a pool of finance receivables for purchased credit impaired finance receivables as described in our policy for purchase credit impaired finance receivables. Purchased Credit Impaired Finance Receivables Effective April 1, 2016, we changed our accounting policy for the derecognition of loans within a purchased credit impaired (“PCI”) pool. Historically, we removed loans from a PCI pool upon charge-off of the loan, based on the Company’s charge-off accounting policy at their allocated carrying value. Under our new accounting policy, loans will be removed from a PCI pool when the loan is written-off, at which time further collections efforts would not be pursued, or sold or repaid. While both methods are acceptable under GAAP, we believe the new method for derecognition of PCI loans is preferable as it enhances consistency with our industry peers. Our policy for derecognition of PCI loans following the change described above is presented below: As part of each of our acquisitions, we identify a population of finance receivables for which it is determined that it is probable that we will be unable to collect all contractually required payments. The population of accounts identified generally consists of those finance receivables that are (i) 60 days or more past due at acquisition, (ii) which had been classified as troubled debt restructured (“TDR”) finance receivables as of the acquisition date, (iii) may have been previously modified, or (iv) had other indications of credit deterioration as of the acquisition date. We accrete the excess of the cash flows expected to be collected on the purchased credit impaired finance receivables over the discounted cash flows (the “accretable yield”) into interest income at a level rate of return over the expected lives of the underlying pools of the purchased credit impaired finance receivables. The underlying pools are based on finance receivables with common risk characteristics. We have established policies and procedures to periodically (at least once a quarter) update the amount of cash flows we expect to collect, incorporating assumptions regarding default rates, loss severities, the amounts and timing of prepayments and other factors that are reflective of then current market conditions. Probable decreases in expected finance receivable cash flows result in the recognition of impairment, which is recognized through the provision for finance receivable losses. Probable significant increases in expected cash flows to be collected would first reverse any previously recorded allowance for finance receivable losses; any remaining increases are recognized prospectively as adjustments to the respective pool’s yield. Our purchased credit impaired finance receivables remain in our purchased credit impaired pools until liquidation or write-off. We do not reclassify modified purchased credit impaired finance receivables as TDR finance receivables. We have additionally established policies and procedures related to maintaining the integrity of these pools. A finance receivable will not be removed from a pool unless we sell, foreclose, or otherwise receive assets in satisfaction of a particular finance receivable or a finance receivable is written-off. If a finance receivable is renewed and additional funds are lent and terms are adjusted to current market conditions, we consider this a new finance receivable and the previous finance receivable is removed from the pool. If the facts and circumstances indicate that a finance receivable should be removed from a pool, that finance receivable will be removed at its allocated carrying amount. Removal of the finance receivable from a pool does not affect the yield used to recognize accretable yield of the pool. Troubled Debt Restructured Finance Receivables We make modifications to our personal loans and loans in our SpringCastle Portfolio to assist borrowers who are experiencing financial difficulty, are in bankruptcy or are participating in a consumer credit counseling arrangement. We make modifications to our real estate loans to assist borrowers in avoiding foreclosure. When we modify a loan’s contractual terms for economic or other reasons related to the borrower’s financial difficulties and grant a concession that we would not otherwise consider, we classify that loan as a TDR finance receivable. We restructure finance receivables only if we believe the customer has the ability to pay under the restructured terms for the foreseeable future. We establish reserves on our TDR finance receivables by discounting the estimated cash flows associated with the respective receivables at the interest rate prior to the modification to the account and record any difference between the discounted cash flows and the carrying value as an allowance adjustment. We may modify the terms of existing accounts in certain circumstances, such as certain bankruptcy or other catastrophic situations or for economic or other reasons related to a borrower’s financial difficulties that justify modification. When we modify an account, we primarily use a combination of the following to reduce the borrower’s monthly payment: reduce interest rate, extend the term, capitalize or forgive past due interest and, to a lesser extent, forgive principal. If the account is delinquent at the time of modification, the account is brought current for delinquency reporting. Account modifications that are deemed to be a TDR finance receivable are measured for impairment. Account modifications that are not classified as a TDR finance receivable are measured for impairment in accordance with our policy for allowance for finance receivable losses. Finance charges for TDR finance receivables require the application of judgment. We recognize the contractual interest portion of payments received on nonaccrual finance receivables as finance charges at the time of receipt. TDR finance receivables that are placed on nonaccrual status remain on nonaccrual status until the past due status on the individual finance receivable improves to the point that the finance receivable no longer meets our policy for nonaccrual. Allowance for Finance Receivable Losses We establish the allowance for finance receivable losses through the provision for finance receivable losses. We evaluate our finance receivable portfolio by finance receivable type. Our finance receivable types (personal loans, SpringCastle Portfolio, real estate loans, and retail sales finance) consist of a large number of relatively small, homogeneous accounts. We evaluate our finance receivable types for impairment as pools. None of our accounts are large enough to warrant individual evaluation for impairment. Management considers numerous internal and external factors in estimating probable incurred losses in our finance receivable portfolio, including the following:
We base the allowance for finance receivable losses primarily on historical loss experience using a roll rate-based model applied to our finance receivable portfolios. In our roll rate-based model, our finance receivable types are stratified by delinquency stages (i.e., current, 1-29 days past due, 30-59 days past due, etc.) and projected forward in one-month increments using historical roll rates. In each month of the simulation, losses on our finance receivable types are captured, and the ending delinquency stratification serves as the beginning point of the next iteration. No new volume is assumed. This process is repeated until the number of iterations equals the loss emergence period (the interval of time between the event which causes a borrower to default on a finance receivable and our recording of the charge-off) for our finance receivable types. As delinquency is a primary input into our roll rate-based model, we inherently consider nonaccrual loans in our estimate of the allowance for finance receivable losses. Management exercises its judgment, based on quantitative analyses, qualitative factors, such as recent delinquency and other credit trends, and experience in the consumer finance industry, when determining the amount of the allowance for finance receivable losses. We adjust the amounts determined by the roll rate-based model for management’s estimate of the effects of model imprecision, any changes to underwriting criteria, portfolio seasoning, and current economic conditions, including levels of unemployment and personal bankruptcies. We charge or credit this adjustment to expense through the provision for finance receivable losses. We generally charge off to the allowance for finance receivable losses personal loans that are beyond 180 days past due. To avoid unnecessary real estate loan foreclosures, we may refer borrowers to counseling services, as well as consider a cure agreement, loan modification, voluntary sale (including a short sale), or deed in lieu of foreclosure. When two payments are past due on a collateral dependent real estate loan and it appears that foreclosure may be necessary, we inspect the property as part of assessing the costs, risks, and benefits associated with foreclosure. Generally, we start foreclosure proceedings on real estate loans when four monthly installments are past due. When foreclosure is completed and we have obtained title to the property, we obtain a third-party’s valuation of the property, which is either a full appraisal or a real estate broker’s or appraiser’s estimate of the property sale value without the benefit of a full interior and exterior appraisal and lacking sales comparisons. Such appraisals or real estate brokers’ or appraisers’ estimate of value are one factor considered in establishing an appropriate valuation; however, we are ultimately responsible for the valuation established. We reduce finance receivables by the amount of the real estate loan, establish a real estate owned asset, and charge off any loan amount in excess of that value to the allowance for finance receivable losses. We infrequently extend the charge-off period for individual accounts when, in our opinion, such treatment is warranted and consistent with our credit risk policies. We increase the allowance for finance receivable losses for recoveries on accounts previously charged-off. We may renew a delinquent account if the customer meets current underwriting criteria and it does not appear that the cause of past delinquency will affect the customer’s ability to repay the new loan. We subject all renewals, whether the customer’s account is current or delinquent, to the same credit risk underwriting process as we would a new application for credit. For our personal loans and retail sales finance receivables, we may offer those customers whose accounts are in good standing the opportunity of a deferment, which extends the term of an account. We may extend this offer to customers when they are experiencing higher than normal personal expenses. Generally, this offer is not extended to customers who are delinquent. However, we may offer a deferment to a delinquent customer who is experiencing a temporary financial problem. The account is considered current upon granting the deferment. To evaluate whether a borrower’s financial difficulties are temporary or other than temporary we review the terms of each deferment to ensure that the borrower has the financial ability to repay the outstanding principal and associated interest in full following the deferment and after the customer is brought current. If, following this analysis, we believe a borrower’s financial difficulties are other than temporary, we will not grant deferment, and the loans may continue to age until they are charged off. We generally limit a customer to two deferments in a rolling twelve month period unless we determine that an exception is warranted and is consistent with our credit risk policies. For our real estate loans, we may offer a deferment to a delinquent customer who is experiencing a temporary financial problem, which extends the term of an account. Prior to granting the deferment, we require a partial payment. We forebear the remaining past due interest when the deferment is granted for real estate loans that were originated or acquired centrally. The account is considered current upon granting the deferment. We generally limit a customer to two deferments in a rolling twelve month period for real estate loans that were originated at our branch offices (one deferment for real estate loans that were originated or acquired centrally) unless we determine that an exception is warranted and is consistent with our credit risk policies. Accounts that are granted a deferment are not classified as troubled debt restructurings. We do not consider deferments granted as a troubled debt restructuring because the customer is not experiencing an other than temporary financial difficulty, and we are not granting a concession to the customer or the concession granted is immaterial to the contractual cash flows. We pool accounts that have been granted a deferment together with accounts that have not been granted a deferment for measuring impairment in accordance with the authoritative guidance for the accounting for contingencies. The allowance for finance receivable losses related to our purchased credit impaired finance receivables is calculated using updated cash flows expected to be collected, incorporating assumptions regarding default rates, loss severities, the amounts and timing of prepayments and other factors that are reflective of current market conditions. Probable decreases in expected finance receivable cash flows result in the recognition of impairment. Probable and significant increases in expected cash flows to be collected would first reverse any previously recorded allowance for finance receivable losses. We also establish reserves for TDR finance receivables, which are included in our allowance for finance receivable losses. The allowance for finance receivable losses related to our TDR finance receivables represents loan-specific reserves based on an analysis of the present value of expected future cash flows. We establish our allowance for finance receivable losses related to our TDR finance receivables by calculating the present value (discounted at the loan’s effective interest rate prior to modification) of all expected cash flows less the recorded investment in the aggregated pool. We use certain assumptions to estimate the expected cash flows from our TDR finance receivables. The primary assumptions for our model are prepayment speeds, default rates, and severity rates. Finance Receivables Held for Sale Depending on market conditions or certain of management’s capital sourcing strategies, which may impact our ability and/or intent to hold our finance receivables until maturity or for the foreseeable future, we may decide to sell finance receivables originally intended for investment. Our ability to hold finance receivables for the foreseeable future is subject to a number of factors, including economic and liquidity conditions, and therefore may change. As of each reporting period, management determines our ability to hold finance receivables for the foreseeable future based on assumptions for liquidity requirements or other strategic goals. When it is probable that management’s intent or ability is to no longer hold finance receivables for the foreseeable future and we subsequently decide to sell specifically identified finance receivables that were originally classified as held for investment, the net finance receivables, less allowance for finance receivable losses are reclassified as finance receivables held for sale and are carried at the lower of cost or fair value. Any amount by which cost exceeds fair value is accounted for as a valuation allowance and is recognized in other revenues in the Consolidated Statements of Operations. We base the fair value estimates on negotiations with prospective purchasers (if any) or by using a discounted cash flows approach. We base cash flows on contractual payment terms adjusted for estimates of prepayments and credit related losses. Cash flows resulting from the sale of the finance receivables that were originally classified as held for investment are recorded as an investing activity in the consolidated statements of cash flows since U.S. GAAP requires the statement of cash flow presentation to be based on the original classification of the finance receivable. When sold, we record the sales price we receive less our carrying value of these finance receivables held for sale in other revenues. When it is determined that management no longer intends to sell finance receivables which had previously been classified as finance receivables held for sale and we have the ability to hold the finance receivables for the foreseeable future, we reclassify the finance receivables to finance receivables held for investment at the lower of cost or fair value and we accrete any fair value adjustment over the remaining life of the related finance receivables. Real Estate Owned We acquire real estate owned through foreclosure on real estate loans and we initially record real estate owned in other assets at the estimated fair value less the estimated cost to sell. The estimated fair value used as a basis to determine the carrying value of real estate owned is defined as the price that would be received in selling the property in an orderly transaction between market participants as of the measurement date. We assess the balances of real estate owned for impairment on a periodic basis. If the required impairment testing suggests real estate owned is impaired, we reduce the carrying amount to estimated fair value less the estimated costs to sell. We charge these impairments to other revenues. We record the difference between the sale price we receive for a property and the carrying value and any amounts refunded to the customer as a recovery or loss in other revenues. We do not profit from foreclosures in accordance with the American Financial Services Association’s Voluntary Standards for Consumer Mortgage Lending. We only attempt to recover our investment in the property, including expenses incurred. Reserve for Sales Recourse Obligations When we sell finance receivables, we establish a reserve for sales recourse in other liabilities, which represents our estimate of losses to be: (a) incurred by us on the repurchase of certain finance receivables that we previously sold; and (b) incurred by us for the indemnification of losses incurred by purchasers. Certain sale contracts include provisions requiring us to repurchase a finance receivable or indemnify the purchaser for losses it sustains with respect to a finance receivable if a borrower fails to make initial loan payments to the purchaser or if the accompanying mortgage loan breaches certain customary representations and warranties. These representations and warranties are made to the purchaser with respect to various characteristics of the finance receivable, such as the manner of origination, the nature and extent of underwriting standards applied, the types of documentation being provided, and, in limited instances, reaching certain defined delinquency limits. Although the representations and warranties are typically in place for the life of the finance receivable, we believe that most repurchase requests occur within the first five years of the sale of a finance receivable. In addition, an investor may request that we refund a portion of the premium paid on the sale of mortgage loans if a loan is prepaid within a certain amount of time from the date of sale. At the time of the sale of each finance receivable (exclusive of finance receivables included in our on-balance sheet securitizations), we record a provision for recourse obligations for estimated repurchases, loss indemnification and premium recapture on finance receivables sold, which is charged to other revenues. Any subsequent adjustments resulting from changes in estimated recourse exposure are recorded in other revenues. Other Intangible Assets At the time we initially recognize intangible assets, a determination is made with regard to each asset as it relates to its useful life. We have determined that each of our intangible assets has a finite useful life with the exception of the insurance licenses and certain domain names, which we determined to have indefinite lives. For those net intangible assets with a finite useful life, we review such intangibles for impairment at least annually and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Impairment is indicated if the sum of undiscounted estimated future cash flows is less than the carrying value of the respective asset. Impairment is permanently recognized by writing down the asset to the extent that the carrying value exceeds the estimated fair value. For indefinite lived intangible assets, we first complete a qualitative assessment to determine whether it is necessary to perform a quantitative impairment test annually. If the qualitative assessment indicates that the assets are more likely than not to have been impaired, we proceed with the fair value calculation of the assets. The fair value is determined in accordance with our fair value measurement policy. If the fair value is less than the carrying value, an impairment loss will be recognized in an amount equal to the difference and the indefinite life classification will be evaluated to determine whether such classification remains appropriate. Insurance Premiums We recognize revenue for short-duration contracts over the related contract period. Short-duration contracts primarily include credit life, credit disability, credit involuntary unemployment insurance, and collateral protection policies. We defer single premium credit insurance premiums in unearned premium reserves which we include as a reduction to net finance receivables. We recognize unearned premiums on credit life, credit disability, credit involuntary unemployment insurance and collateral protection insurance as revenue using the sum-of-the-digits, straight-line or other appropriate methods over the terms of the policies. Premiums from reinsurance assumed are earned over the related contract period. We recognize revenue on long-duration contracts when due from policyholders. Long-duration contracts include term life, accidental death, and disability income protection. For single premium long-duration contracts a liability is accrued, that represents the present value of estimated future policy benefits to be paid to or on behalf of policyholders and related expenses, when premium revenue is recognized. The effects of changes in such estimated future policy benefit reserves are classified in insurance policy benefits and claims in the consolidated statements of operations. We recognize commissions on ancillary products as other revenue when earned. We may finance certain insurance products offered to our customers as part of finance receivables. In such cases, unearned premiums and certain unpaid claim liabilities related to our borrowers are netted and classified as contra-assets in the net finance receivables in the consolidated balance sheets, and the insurance premium is included as an operating cash inflow and the financing of the insurance premium is included as part of the finance receivable as an investing cash flow in the consolidated statements of cash flows. Policy and Claim Reserves Policy reserves for credit life, credit disability, credit-related property and casualty, and credit involuntary unemployment insurance equal related unearned premiums. Reserves for losses and loss adjustment expenses are based on claims experience, actual claims reported, and estimates of claims incurred but not reported. Assumptions utilized in determining appropriate reserves are based on historical experience, adjusted to provide for possible adverse deviation. These estimates are periodically reviewed and compared with actual experience and industry standards, and revised if it is determined that future experience will differ substantially from that previously assumed. Since reserves are based on estimates, the ultimate liability may be more or less than such reserves. The effects of changes in such estimated reserves are classified in insurance policy benefits and claims in the consolidated statements of operations in the period in which the estimates are changed. We accrue liabilities for future life insurance policy benefits associated with non-credit life contracts and base the amounts on assumptions as to investment yields, mortality, and surrenders. We base annuity reserves on assumptions as to investment yields and mortality. Ceded insurance reserves are included in other assets and include estimates of the amounts expected to be recovered from reinsurers on insurance claims and policyholder liabilities. Acquisition Costs We defer insurance policy acquisition costs (primarily commissions, reinsurance fees, and premium taxes). We include deferred policy acquisition costs in other assets and amortize these costs over the terms of the related policies, whether directly written or reinsured. Investment Securities We generally classify our investment securities as available-for-sale or trading and other, depending on management’s intent. Our investment securities classified as available-for-sale are recorded at fair value. We adjust related balance sheet accounts to reflect the current fair value of investment securities and record the adjustment, net of tax, in accumulated other comprehensive income or loss in shareholders’ equity. We record interest receivable on investment securities in other assets. Under the fair value option, we may elect to measure at fair value, financial assets that are not otherwise required to be carried at fair value. We elect the fair value option for available-for-sale securities that are deemed to incorporate an embedded derivative and for which it is impracticable for us to isolate and/or value the derivative. We recognize any changes in fair value in investment revenues. We classify our investment securities in the fair value hierarchy framework based on the observability of inputs. Inputs to the valuation techniques are described as being either observable (level 1 or 2) or unobservable (level 3) assumptions that market participants would use in pricing an asset or liability. Impairments on Investment Securities Available-for-sale. We evaluate our available-for-sale securities on an individual basis to identify any instances where the fair value of the investment security is below its amortized cost. For these securities, we then evaluate whether an other-than-temporary impairment exists if any of the following conditions are present:
If we intend to sell an impaired investment security or we will likely be required to sell the security before recovery of its amortized cost basis less any current period credit loss, we recognize an other-than-temporary impairment in investment revenues equal to the difference between the investment security’s amortized cost and its fair value at the balance sheet date. In determining whether a credit loss exists, we compare our best estimate of the present value of the cash flows expected to be collected from the security to the amortized cost basis of the security. Any shortfall in this comparison represents a credit loss. The cash flows expected to be collected are determined by assessing all available information, including length and severity of unrealized loss, issuer default rate, ratings changes and adverse conditions related to the industry sector, financial condition of issuer, credit enhancements, collateral default rates, and other relevant criteria. Management considers factors such as our investment strategy, liquidity requirements, overall business plans, and recovery periods for securities in previous periods of broad market declines. If a credit loss exists with respect to an investment in a security (i.e., we do not expect to recover the entire amortized cost basis of the security), we would be unable to assert that we will recover our amortized cost basis even if we do not intend to sell the security. Therefore, in these situations, an other-than-temporary impairment is considered to have occurred. If a credit loss exists, but we do not intend to sell the security and we will likely not be required to sell the security before recovery of its amortized cost basis less any current period credit loss, the impairment is classified as: (i) the estimated amount relating to credit loss; and (ii) the amount relating to all other factors. We recognize the estimated credit loss in investment revenues, and the non-credit loss amount in accumulated other comprehensive income or loss. Once a credit loss is recognized, we adjust the investment security to a new amortized cost basis equal to the previous amortized cost basis less the credit losses recognized in investment revenues. For investment securities for which other-than-temporary impairments were recognized in investment revenues, the difference between the new amortized cost basis and the cash flows expected to be collected is accreted to investment income. We recognize subsequent increases and decreases in the fair value of our available-for-sale securities in accumulated other comprehensive income or loss, unless the decrease is considered other than temporary. Investment Revenue Recognition We recognize interest on interest bearing fixed-maturity investment securities as revenue on the accrual basis. We amortize any premiums or accrete any discounts as a revenue adjustment using the interest method. We stop accruing interest revenue when the collection of interest becomes uncertain. We record dividends on equity securities as revenue on ex-dividend dates. We recognize income on mortgage-backed and asset-backed securities as revenue using an effective yield based on estimated prepayments of the underlying collateral. If actual prepayments differ from estimated prepayments, we calculate a new effective yield and adjust the net investment in the security accordingly. We record the adjustment, along with all investment securities revenue, in investment revenues. We specifically identify realized gains and losses on investment securities and include them in investment revenues. Variable Interest Entities An entity is a VIE if the entity does not have sufficient equity at risk for the entity to finance its activities without additional financial support or has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated into the financial statements of its primary beneficiary. When we have a variable interest in a VIE, we qualitatively assess whether we have a controlling financial interest in the entity and, if so, whether we are the primary beneficiary. In applying the qualitative assessment to identify the primary beneficiary of a VIE, we are determined to have a controlling financial interest if we have (i) the power to direct the activities that most significantly impact the economic performance of the VIE, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We consider the VIE’s purpose and design, including the risks that the entity was designed to create and pass through to its variable interest holders. We continually reassess the VIE’s primary beneficiary and whether we have acquired or divested the power to direct the activities of the VIE through changes in governing documents or other circumstances. Other Invested Assets Commercial mortgage loans and insurance policy loans are part of our investment portfolio and we include them in other assets at amortized cost. We recognize interest on commercial mortgage loans and insurance policy loans as revenue on the accrual basis using the interest method. We stop accruing revenue when collection of interest becomes uncertain. We include other invested asset revenue in investment revenues. We record accrued other invested asset revenue receivable in other assets. Cash and Cash Equivalents We consider unrestricted cash on hand and short-term investments having maturity dates within three months of their date of acquisition to be cash and cash equivalents. We typically maintain cash in financial institutions in excess of the Federal Deposit Insurance Corporation’s insurance limits. We evaluate the creditworthiness of these financial institutions in determining the risk associated with these cash balances. We do not believe that the Company is exposed to any significant credit risk on these accounts and have not experienced any losses in such accounts. Restricted Cash and Cash Equivalents We include funds to be used for future debt payments relating to our securitization transactions and escrow deposits in restricted cash and cash equivalents. Long-term Debt We generally report our long-term debt issuances at the face value of the debt instrument, which we adjust for any unaccreted discount, unamortized premium, or unamortized debt issuance costs associated with the debt. Other than securitized products, we generally accrete discounts, premiums, and debt issuance costs over the contractual life of the security using contractual payment terms. With respect to securitized products, we have elected to amortize deferred costs over the contractual life of the security. Accretion of discounts and premiums are recorded to interest expense. Income Taxes We recognize income taxes using the asset and liability method. We establish deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of assets and liabilities, using the tax rates expected to be in effect when the temporary differences reverse. We are included in the consolidated U.S. federal and state income tax returns of OneMain Holdings, Inc., our ultimate parent company, where applicable. The tax provision and current and deferred tax balances have been presented on a separate return methodology as if we were a separate filer, with modification. ASC Topic 740 requires the method of accounting to be systematic, rational, and consistent within the broad principles of ASC Topic 740. We have modified our method of accounting such that our net operating losses and capital losses, if applicable, are considered realized when those net operating losses and/or capital losses are utilized by our parent company or other members of the consolidated group. Realization of our gross deferred tax asset depends on our ability to generate sufficient taxable income of the appropriate character within the carryforward periods of the jurisdictions in which the net operating and capital losses, deductible temporary differences and credits were generated. When we assess our ability to realize deferred tax assets, we consider all available evidence, including:
We provide a valuation allowance for deferred tax assets if it is more likely than not that we will not realize the deferred tax asset in whole or in part. We include an increase or decrease in a valuation allowance resulting from a change in the realizability of the related deferred tax asset. We recognize income tax benefits associated with uncertain tax positions, when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we initially and subsequently measure the tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority. Derivative Financial Instruments Our derivatives were governed by International Swap and Derivatives Association, Inc. (“ISDA”) standard Master Agreements, whereby the parties agreed to net the amounts payable and receivable under all contracts governed by the ISDA Master Agreement in the event of a contract default by either one of the parties. If the net exposure was from the counterparty to us, we recorded the derivative asset in other assets on our consolidated balance sheet. If the net exposure was from us to the counterparty, we recorded the derivative liability in other liabilities on our consolidated balance sheet. We recorded net unrealized gains and losses on derivative transactions as adjustments to cash flows from operating activities on our consolidated statements of cash flows. We recognized the derivatives on our consolidated balance sheets at their fair value. We estimated the fair value of our derivatives using industry standard valuation models. In compliance with the authoritative guidance for fair value measurements, our valuation methodology for derivatives incorporated the effect of our non-performance risk and the non-performance risk of our counterparties. Benefit Plans We have funded and unfunded noncontributory defined pension plans. We recognize the net pension asset or liability, also referred to herein as the funded status of the benefit plans, in other assets or other liabilities, depending on the funded status at the end of each reporting period. We recognize the net actuarial gains or losses and prior service cost or credit that arise during the period in other comprehensive income or loss. Many of our employees are participants in our 401(k) plan. Our contributions to the plan are charged to salaries and benefits within operating expenses. Share-based Compensation Plans We measure compensation cost for service-based and performance-based awards at estimated fair value and recognize compensation expense over the requisite service period for awards expected to vest. The estimation of awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from current estimates, such amounts will be recorded as a cumulative adjustment to salaries and benefits in the period estimates are revised. For service-based awards subject to graded vesting, expense is recognized under the straight-line method. Expense for performance-based awards with graded vesting is recognized under the accelerated method, whereby each vesting is treated as a separate award with expense for each vesting recognized ratably over the requisite service period. Fair Value Measurements Management is responsible for the determination of the fair value of our financial assets and financial liabilities and the supporting methodologies and assumptions. We employ widely accepted internal valuation models or utilize third-party valuation service providers to gather, analyze, and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments or pools of finance receivables. When our valuation service providers are unable to obtain sufficient market observable information upon which to estimate the fair value for a particular security, we determine fair value either by requesting brokers who are knowledgeable about these securities to provide a quote, which is generally non-binding, or by employing widely accepted internal valuation models. Our valuation process typically requires obtaining data about market transactions and other key valuation model inputs from internal or external sources and, through the use of widely accepted valuation models, provides a single fair value measurement for individual securities or pools of finance receivables. The inputs used in this process include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, bid-ask spreads, currency rates, and other market-observable information as of the measurement date as well as the specific attributes of the security being valued, including its term, interest rate, credit rating, industry sector, and other issue or issuer-specific information. When market transactions or other market observable data is limited, the extent to which judgment is applied in determining fair value is greatly increased. We assess the reasonableness of individual security values received from our valuation service providers through various analytical techniques. As part of our internal price reviews, assets that fall outside a price change tolerance are sent to our third-party investment manager for further review. In addition, we may validate the reasonableness of fair values by comparing information obtained from our valuation service providers to other third-party valuation sources for selected securities. We measure and classify assets and liabilities in the consolidated balance sheets in a hierarchy for disclosure purposes consisting of three “Levels” based on the observability of inputs available in the market place used to measure the fair values. In general, we determine the fair value measurements classified as Level 1 based on inputs utilizing quoted prices in active markets for identical assets or liabilities that we have the ability to access. We generally obtain market price data from exchange or dealer markets. We do not adjust the quoted price for such instruments. We determine the fair value measurements classified as Level 2 based on inputs utilizing other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The use of observable and unobservable inputs is further discussed in Note 24. In certain cases, the inputs we use to measure the fair value of an asset may fall into different levels of the fair value hierarchy. In such cases, we determine the level in the fair value hierarchy within which the fair value measurement in its entirety falls based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. We recognize transfers into and out of each level of the fair value hierarchy as of the end of the reporting period. Our fair value processes include controls that are designed to ensure that fair values are appropriate. Such controls include model validation, review of key model inputs, analysis of period-over-period fluctuations, and reviews by senior management. PRIOR PERIOD REVISIONS During the second quarter of 2015, we discovered that we had not charged-off certain bankrupt accounts in our SpringCastle Portfolio and we identified an error in the calculation of the allowance for our TDR personal loans. As a result of these findings, we recorded an out-of-period adjustment in the second quarter of 2015, which increased provision for finance receivable losses by $8 million and decreased provision for income taxes by $3 million. The adjustment was not material to our results of operations for 2015. During the second quarter of 2015, we identified incorrect allocations of our total assets disclosure within the segment footnote. We evaluated the impact of these errors and concluded that they were not material to any previously issued financial statements. However, we corrected the previously disclosed periods in our subsequent quarterly reports and in Note 23 of this report and will also correct the prior period segment disclosure presented in our next quarterly report as follows:
During the third quarter of 2015, we discovered that our cash equivalents in certificates of deposit and commercial paper, which totaled $165 million at December 31, 2014, were incorrectly presented as a Level 1 investment, instead of a Level 2 investment in our disclosure of the fair value hierarchy of our financial instruments in our 2014 Annual Report on Form 10-K. The affected fair value amount has been corrected in Note 24 of this report. This presentation error was not material to any previously issued financial statements. After evaluating the quantitative and qualitative aspects of these corrections (individually and in the aggregate), management has determined that our previously issued interim and annual consolidated financial statements were not materially misstated. |
Recent Accounting Pronouncements |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED Troubled Debt Restructurings In January of 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-04, Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure, which clarifies when an in substance repossession or foreclosure occurs — that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The ASU requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments in this ASU became effective prospectively for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of this ASU did not have a material effect on our consolidated financial statements. Debt Issuance Costs In April of 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, which simplifies the presentation of debt issuance costs. Under this standard, debt issuance costs related to a note shall be reported in the balance sheet as a direct reduction from the face amount of that note. The ASU also clarifies that discount, premium or debt issuance costs shall not be classified as a deferred charge or deferred credit. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued and must be applied retrospectively. We elected to early adopt this ASU as of June 30, 2015 and applied this ASU retrospectively. On June 30, 2015, we reclassified $32 million of debt issuance costs previously recorded in other assets to long-term debt. After retrospectively applying this new ASU, we also reclassified $29 million of debt issuance costs as of December 31, 2014 from other assets to long-term debt in our condensed consolidated balance sheet. We continue to report fees paid to access our conduit facilities in other assets. The adoption of this ASU did not have a material effect on our consolidated financial statements. In August of 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest, to clarify that debt issuance costs associated with line-of-credit arrangements are to be deferred and amortized over the term of the arrangement. The amendment also acknowledged absence of authoritative guidance within previously issued ASU 2015-03 for debt issuance costs related to line-of-credit arrangements. The ASU became effective immediately. The adoption of this ASU did not have a material effect on our consolidated financial statements. Push-down Accounting In May of 2015, the FASB issued ASU 2015-08, Business Combinations-Pushdown Accounting, to remove Securities and Exchange Commission (the “SEC”) staff guidance on push-down accounting from the Accounting Standards Codification (“ASC”). The SEC staff had previously rescinded its guidance with the issuance of Staff Accounting Bulletin No. 115 when the FASB issued its own push-down accounting guidance in November 2014. The ASU became effective immediately. The adoption of this ASU did not have a material effect on our consolidated financial statements. Plan Accounting In July of 2015, the FASB issued ASU 2015-12, Plan Accounting, to simplify certain aspects of employee benefit plan (“EBP”) accounting while satisfying the needs of users of financial statements, including plan participants. The new guidance simplifies the measurement of fully benefit-responsive investment contracts and disclosures about plan investments. It also allows an EBP with a fiscal year end that doesn’t coincide with the end of a calendar month to choose a simpler way of measuring its investments and investment-related accounts. The ASU is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We elected to early adopt this ASU as of September 30, 2015. The adoption of this ASU did not have a material effect on our consolidated financial statements. Business Combination Adjustments In September of 2015, the FASB issued ASU 2015-16, Business Combinations, to eliminate the requirement to restate prior period financial statements for measurement period adjustments. This update requires the cumulative impact of a measurement period adjustment, including the impact on prior periods, to be recognized in the reporting period in which the adjustment is identified. The ASU is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We elected to early adopt this ASU as of December 31, 2015. The adoption of this ASU did not have a material effect on our consolidated financial statements. ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED Revenue Recognition In May of 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides a consistent revenue accounting model across industries. In August of 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, to defer the effective date of the new revenue recognition standard by one year, which would result in the ASU becoming effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Many of our revenue sources are not within the scope of this new standard, and we are evaluating whether the adoption of this ASU for those revenue sources that are in scope will have a material effect on our consolidated financial statements. Consolidation In February of 2015, the FASB issued ASU 2015-02, Consolidation - Amendments to the Consolidation Analysis, which amends the current consolidation guidance and ends the deferral granted to reporting entities with variable interests in investment companies from applying certain prior amendments to the VIE guidance. This ASU is applicable to entities across all industries, particularly those that use limited partnerships as well as entities in any industry that outsource decision making or have historically applied related party tiebreaker in their consolidation analysis and disclosures. The standard is effective for public business entities for annual periods beginning after December 15, 2015. Early adoption is allowed, including in any interim period. We evaluated the potential impact of the adoption of this ASU and concluded that it will not have a material effect on our consolidated financial statements. Short-Duration Insurance Contracts Disclosures In May of 2015, the FASB issued ASU 2015-09, Disclosures about Short-Duration Contracts, to address enhanced disclosure requirements for insurers relating to short-duration insurance contract claims and unpaid claims liability rollforward for long and short-duration contracts. The disclosures are intended to provide users of financial statements with more transparent information about an insurance entity’s initial claim estimates and subsequent adjustments to those estimates, the methodologies and judgments used to estimate claims, and the timing, frequency, and severity of claims. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. We are currently evaluating the potential impact of the adoption the ASU on our consolidated financial statements. Technical Corrections and Improvements In June of 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements, to correct differences between original guidance and the Codification, clarify the guidance, correct references and make minor improvements affecting a variety of topics. While most of the amendments are not expected to have a significant effect on practice, some of them could change practice for some entities. The amendments to transition guidance are effective for fiscal years beginning after December 15, 2015; all other changes are effective upon issuance of this ASU. We are currently evaluating the potential impact of the adoption of this ASU on our consolidated financial statements. Balance Sheet Classification of Deferred Taxes In November of 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which simplifies the presentation and requires all deferred tax assets (“DTAs”) and liabilities (“DTLs”), along with related valuation allowances, to be classified as noncurrent. In essence, each jurisdiction will have only one net noncurrent DTA/DTL. The ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning December 15, 2016. Early adoption is permitted and may be applied either prospectively or retrospectively. We evaluated the potential impact of the adoption of this ASU and concluded that it will not have a material effect on our consolidated financial statements. We do not believe that any other accounting pronouncement issued during 2015, but not yet effective, would have a material impact on our consolidated financial statements or disclosures, if adopted. |
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Finance Receivables | Finance Receivables Our finance receivable types include personal loans, the SpringCastle Portfolio, real estate loans, and retail sales finance as defined below:
Components of net finance receivables by type were as follows:
Included in the table above are finance receivables associated with securitizations that remain on our balance sheet. At December 31, 2015 and December 31, 2014, the carrying values of these finance receivables totaled $3.6 billion and $1.9 billion, respectively, for our personal loans and $1.7 billion and $2.1 billion, respectively, for our SpringCastle Portfolio loans. Unused lines of credit extended to customers by the Company were as follows:
Unused lines of credit on our personal loans can be suspended if one of the following occurs: (i) the value of the collateral declines significantly; (ii) we believe the borrower will be unable to fulfill the repayment obligations; or (iii) any other default by the borrower of any material obligation under the agreement occurs. Unused lines of credit on our real estate loans and the SpringCastle Portfolio secured by subordinate residential real estate mortgages can be suspended if one of the following occurs: (i) the value of the real estate declines significantly below the property’s initial appraised value; (ii) we believe the borrower will be unable to fulfill the repayment obligations because of a material change in the borrower’s financial circumstances; or (iii) any other default by the borrower of any material obligation under the agreement occurs. Unused lines of credit on home equity lines of credit, including the SpringCastle Portfolio secured by subordinate residential real estate mortgages, can be terminated for delinquency. Unused lines of credit on the unsecured loans of the SpringCastle Portfolio can be terminated at our discretion. Accordingly, no reserve has been recorded for the unused lines of credit. GEOGRAPHIC DIVERSIFICATION Geographic diversification of finance receivables reduces the concentration of credit risk associated with economic stresses in any one region. However, the unemployment and housing market stresses in the U.S. have been national in scope and not limited to a particular region. The largest concentrations of net finance receivables were as follows:
CREDIT QUALITY INDICATORS We consider the delinquency status and nonperforming status of the finance receivable as our credit quality indicators. We accrue finance charges on revolving retail finance receivables up to the date of charge-off at 180 days past due. Our revolving retail finance receivables that were more than 90 days past due and still accruing finance charges at December 31, 2015 and at December 31, 2014 were immaterial. Our personal loans, SpringCastle Portfolio, and real estate loans do not have finance receivables that were more than 90 days past due and still accruing finance charges. Delinquent Finance Receivables We consider the delinquency status of the finance receivable as our primary credit quality indicator. We monitor delinquency trends to manage our exposure to credit risk. We consider finance receivables 60 days or more past due as delinquent and consider the likelihood of collection to decrease at such time. The following is a summary of net finance receivables by type and by days delinquent:
Nonperforming Finance Receivables We also monitor finance receivable performance trends to evaluate the potential risk of future credit losses. At 90 days or more past due, we consider our finance receivables to be nonperforming. Once the finance receivables are considered as nonperforming, we consider them to be at increased risk for credit loss. Our performing and nonperforming net finance receivables by type were as follows:
PURCHASED CREDIT IMPAIRED FINANCE RECEIVABLES Our purchased credit impaired finance receivables consist of receivables purchased as part of the following transactions:
We report the carrying amount of our purchased credit impaired finance receivables in net finance receivables, less allowance for finance receivable losses or in finance receivables held for sale as discussed below. At December 31, 2015 and December 31, 2014, finance receivables held for sale totaled $793 million and $202 million, respectively. See Note 7 for further information on our finance receivables held for sale, which consist of certain of our personal loans and non-core real estate loans. Finance receivables held for sale include purchased credit impaired finance receivables, as well as TDR finance receivables. Therefore, we are presenting the financial information for our purchased credit impaired finance receivables and TDR finance receivables combined for finance receivables held for investment and finance receivables held for sale in the tables below. Information regarding our purchased credit impaired finance receivables held for investment and held for sale were as follows:
The allowance for purchased credit impaired finance receivable losses at December 31, 2015 and 2014, reflected the net carrying value of the purchased credit impaired FA Loans being higher than the present value of the expected cash flows. Changes in accretable yield for purchased credit impaired finance receivables held for investment and held for sale were as follows:
TROUBLED DEBT RESTRUCTURED FINANCE RECEIVABLES Information regarding TDR finance receivables held for investment and held for sale were as follows:
We have no commitments to lend additional funds on our TDR finance receivables. TDR average net receivables held for investment and held for sale and finance charges recognized on TDR finance receivables held for investment and held for sale were as follows:
The impact of the transfers of finance receivables held for investment to finance receivables held for sale and the subsequent sales of finance receivables held for sale during the first half of 2014 was immaterial since the loans were transferred and sold within the same months. Information regarding the new volume of the TDR finance receivables held for investment and held for sale were as follows:
Net finance receivables held for investment and held for sale that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period to cause the TDR finance receivables to be considered nonperforming (90 days or more past due) were as follows:
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Allowance for Finance Receivable Losses |
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases Receivable, Allowance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Allowance for Finance Receivable Losses | Allowance for Finance Receivable Losses Changes in the allowance for finance receivable losses by finance receivable type were as follows:
Included in the allowance for finance receivable losses are allowances associated with securitizations that totaled $128 million at December 31, 2015 and $72 million at December 31, 2014. See Note 13 for further discussion regarding our securitization transactions. The allowance for finance receivable losses and net finance receivables by type and by impairment method were as follows:
See Note 3 for additional information on the determination of the allowance for finance receivable losses. |
Finance Receivables Held for Sale |
12 Months Ended |
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Dec. 31, 2015 | |
Receivables Held-for-sale [Abstract] | |
Finance Receivables Held for Sale | Finance Receivables Held for Sale We report finance receivables held for sale of $793 million at December 31, 2015 and $202 million at December 31, 2014, which are carried at the lower of cost or fair value. At December 31, 2015, the fair value of our finance receivables held for sale exceeded the cost. At December 31, 2014, we marked our real estate loans held for sale to fair value and recorded impairments of $7 million. We used the aggregate basis to determine the lower of cost or fair value of finance receivables held for sale. We also separately present the interest income on our finance receivables held for sale as interest income on finance receivables held for sale originated as held for investment on our consolidated statements of operations, which totaled $60 million in 2015 and $61 million in 2014. On September 30, 2015, we transferred $608 million of personal loans (after deducting allowance for finance receivable losses) from held for investment to held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. See Note 2 for further information on this transfer. During 2014, we transferred $6.6 billion of real estate loans (after deducting allowance for finance receivable losses) from held for investment to held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. In 2014, we sold finance receivables held for sale totaling $6.4 billion and recorded a net gain of $626 million. At December 31, 2015 and 2014, the remaining holdback provision relating to these real estate sales totaled $5 million and $64 million, respectively. During 2013, we transferred $18 million of finance receivables (after deducting allowance for finance receivable losses) from held for investment to held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. In 2013, we sold finance receivables held for sale totaling $18 million and recorded a loss in other revenues at the time of sale of $2 million. We did not have any transfer activity from finance receivables held for sale to finance receivables held for investment during 2015, 2014 or 2013. |
Investment Securities |
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Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment Securities | Investment Securities AVAILABLE-FOR-SALE SECURITIES Cost/amortized cost, unrealized gains and losses, and fair value of available-for-sale securities by type were as follows:
As of December 31, 2015 and 2014, we had no available-for-sale securities with other-than-temporary impairments recognized in accumulated other comprehensive income or loss. Fair value and unrealized losses on available-for-sale securities by type and length of time in a continuous unrealized loss position were as follows:
We do not consider the above unrealized losses to be credit-related, as these unrealized losses primarily relate to changes in interest rates and market spreads subsequent to purchase. Additionally, at December 31, 2015, we have no plans to sell any investment securities with unrealized losses, and we believe it is more likely than not that we would not be required to sell such investment securities before recovery of their amortized cost. We continue to monitor unrealized loss positions for potential impairments. During 2015, 2014 and 2013, we did not recognize any other-than-temporary credit loss write-downs to investment revenues. During 2015, 2014, and 2013, there were no additions or reductions in the cumulative amount of credit losses (recognized in earnings) on other-than-temporarily impaired available-for-sale securities. The proceeds of available-for-sale securities sold or redeemed and the resulting realized gains, realized losses, and net realized gains were as follows:
Contractual maturities of fixed-maturity available-for-sale securities at December 31, 2015 were as follows:
Actual maturities may differ from contractual maturities since borrowers may have the right to call or prepay obligations. We may sell investment securities before maturity to achieve corporate requirements and investment strategies. The fair value of bonds on deposit with insurance regulatory authorities totaled $11 million at December 31, 2015 and $12 million at December 31, 2014. TRADING AND OTHER SECURITIES The fair value of trading and other securities by type was as follows:
The net unrealized and realized gains (losses) on our trading and other securities, which we report in investment revenues, were as follows:
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Other Assets |
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Other Assets [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets | Other Assets Components of other assets were as follows:
OTHER INTANGIBLE ASSETS The gross carrying amount and accumulated amortization, in total and by major intangible asset class were as follows:
Amortization expense totaled $4 million in 2015 and 2014, and $5 million in 2013. The estimated aggregate amortization of other intangible assets for each of the next five years is reflected in the table below.
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Transactions with Affiliates of Fortress or AIG |
12 Months Ended |
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Dec. 31, 2015 | |
Investments in and Advances to Affiliates, Schedule of Investments [Abstract] | |
Transactions with Affiliates of Fortress or AIG | Transactions with Affiliates of Fortress or AIG FORTRESS AFFILIATED TRANSACTIONS Subservicing Agreement Nationstar Mortgage LLC (“Nationstar”) subservices the real estate loans of certain direct and indirect subsidiaries (collectively, the “Owners”). Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar. The Owners paid Nationstar subservicing fees of $2 million in 2015, $5 million in 2014, and $9 million in 2013. As a result of the sales of our real estate loans during 2014 (some of which were serviced by Nationstar) and the sale of certain mortgage servicing rights in 2014, our exposure to these affiliated services is reduced. Investment Management Agreement Logan Circle Partners, L.P. (“Logan Circle”) provides investment management services for our investments. Logan Circle is a wholly owned subsidiary of Fortress. Costs and fees incurred for these investment management services totaled $1 million in 2015, 2014, and 2013. Joint Venture Certain subsidiaries of New Residential Investment Corp. (“NRZ”), own a 30% equity interest in the joint venture that acquired the SpringCastle Portfolio, in which we own a 47% equity interest. NRZ is managed by an affiliate of Fortress. Third Street Disposition On March 6, 2014, we entered into an agreement to sell, subject to certain closing conditions, all of our interest in the mortgage-backed retained certificates related to a securitization transaction completed in 2009 to Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”). Concurrently, NRZ and MLPFS entered into an agreement pursuant to which NRZ agreed to purchase approximately 75% of these retained certificates. NRZ is managed by an affiliate of Fortress. MSR Sale SFC and MorEquity, Inc. (“MorEquity”), a wholly owned subsidiary, entered into an agreement, dated and effective August 1, 2014, to sell the servicing rights of the mortgage loans primarily underlying the mortgage securitizations completed during 2011 through 2013 to Nationstar for a purchase price of $39 million (the “MSR Sale”). From the closing of the MSR Sale on August 29, 2014, until the servicing transfer on September 30, 2014, we continued to service certain loans on behalf of Nationstar under an interim servicing agreement. At December 31, 2014, the receivable from Nationstar for our interim servicing fees totaled $1 million. In May of 2015, Nationstar paid off the remaining balance of $1 million of this receivable. Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar. AIG AFFILIATED TRANSACTIONS As a result of the offering of OMH’s common stock in May of 2015, the economic interests of American International Group, Inc. (“AIG”) is no longer material; therefore, the discussion of AIG affiliated transactions below only relates to 2014 and 2013. Reinsurance Agreements Merit Life Insurance Co. (“Merit”), our wholly owned insurance subsidiary, enters into reinsurance agreements with subsidiaries of AIG, for reinsurance of various group annuity, credit life, and credit disability insurance where Merit reinsures the risk of loss. The reserves for this business fluctuate over time and, in some instances, are subject to recapture by the insurer. Reserves recorded by Merit for reinsurance agreements with subsidiaries of AIG totaled $44 million at December 31, 2014. Insurance Coverage We hold various insurance policies with AIG subsidiaries covering liabilities of directors and officers, errors and omissions, lawyers, employment practices, fiduciary, and fidelity bond. Premium expenses on these policies totaled $1 million in 2014 and 2013. Derivatives On August 5, 2013, we terminated our remaining cross currency interest rate swap agreement with AIG Financial Products Corp. (“AIGFP”) and recorded a loss of $2 million in other revenues — other. The notional amount of this swap agreement totaled $417 million at August 5, 2013. Immediately following this termination, we had no derivative financial instruments. As a result of this termination, AIGFP returned the remaining cash collateral of $40 million to SFI that SFI had posted as security for SFC’s swap agreement with AIGFP. |
Related Party Transactions |
12 Months Ended |
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Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions AFFILIATE LENDING Notes Receivable from Parent and Affiliates Note Receivable from SFI. SFC’s note receivable from SFI is payable in full on May 31, 2022, and SFC may demand payment at any time prior to May 31, 2022; however, SFC does not anticipate the need for additional liquidity during 2016 and does not expect to demand payment from SFI in 2016. The note receivable from parent totaled $389 million at December 31, 2015 and $251 million at December 31, 2014. Interest receivable on this note totaled $1 million at December 31, 2015 and was less than $1 million at December 31, 2014. The interest rate for the UPB is the lender’s cost of funds rate. Interest revenue on the note receivable from SFI totaled $15 million during 2015, $5 million during 2014, and $15 million during 2013. Independence Demand Note. On November 12, 2015, in connection with the closing of the OneMain Acquisition, CSI, SFC’s wholly owned subsidiary, entered into a revolving demand note with Independence, whereby CSI agreed to make advances to Independence from time to time, with an aggregate amount outstanding not to exceed $3.55 billion. Under the Independence Demand Note, Independence is required to use the proceeds of any advance either (i) to fund a portion of the purchase price for the OneMain Acquisition or (ii) for general corporate purposes. The note is payable in full on December 31, 2019, and CSI may demand payment at any time prior to December 31, 2019. Independence may repay the note in whole or in part at any time without premium or penalty. The interest rate for the UPB is the lender’s cost of funds rate, which was 5.82% at December 31, 2015. On November 12, Independence borrowed $3.4 billion under the Independence Demand Note. At December 31, 2015, the note receivable from Independence totaled $3.4 billion, which included interest due to CSI totaling $16 million. Interest revenue on the note receivable from Independence totaled $27 million during 2015, which we report in other revenues. OneMain Demand Note. On November 15, 2015, in connection with the closing of the OneMain Acquisition, SFC entered into a revolving demand note (the “OneMain Demand Note”) with OMFH, whereby SFC agreed to make advances to OMFH from time to time, with an aggregate amount outstanding not to exceed $500 million. Under the OneMain Demand Note, OMFH is required to use the proceeds of any advance either (i) exclusively to finance the purchase, origination, pooling, funding or carrying of receivables by OMFH or any of its Restricted Subsidiaries, relating to OMFH’s 6.75% Senior Notes due 2019 and its 7.25% Senior Notes due 2021) or (ii) for general corporate purposes. The note is payable in full on December 31, 2024, and SFC may demand payment on 5 days prior notice. OMFH may repay the note in whole or in part at any time without premium or penalty. The interest rate for the UPB is the lender’s cost of funds rate. At December 31, 2015, no amounts were drawn under the note. Receivables from Parent and Affiliates At December 31, 2015 and 2014, receivables from parent and affiliates totaled $9 million and $11 million, respectively. Receivables from parent and affiliates also included (i) interest receivable on SFC’s note receivable from SFI previously discussed in this Note, (ii) taxes paid by SFC for all entities under the tax sharing agreement, and (iii) expenses paid by a subsidiary of SFC for the benefit of parent and affiliates. Receivables from parent and affiliates at December 31, 2015 and 2014 are presented net of a payable to SFI of $12 million and $43 million, respectively. Excluding this payable, receivables from parent and affiliates totaled $21 million and $54 million at December 31, 2015 and 2014, respectively. Note Payable to Affiliate On December 1, 2015, in connection with the closing of the OneMain Acquisition, OMFH entered into a revolving demand note with SFC, whereby OMFH agreed to make advances to SFC from time to time, with an aggregate amount outstanding not to exceed $500 million. Under the note, SFC is required to use the proceeds of any advance for general corporate purposes. The note is payable in full on December 31, 2024, and OMFH may demand payment on 5 days prior notice. SFC may repay the note in whole or in part at any time without premium or penalty. The interest rate for the UPB is the lender’s cost of funds rate. At December 31, 2015, no amounts were drawn under the note. Subsequently, we drew $370 million under the note on January 22, 2016. The lender’s cost of funds rate at this date was 5.39%. Payables to Parent and Affiliates At December 31, 2015 and 2014, payables to parent and affiliates totaled $24 million and $48 million, respectively. SFC’s payable to parent totaled $17 million at December 31, 2014 primarily due to payments made by SFI for the benefit of SFC. At December 31, 2015 and 2014, Springleaf Finance Management Corporation (“SFMC”), a subsidiary of SFC, had net payables of $19 million to Springleaf General Services Corporation (“SGSC”), a subsidiary of SFI, related to the intercompany agreements further discussed below in this Note. At December 31, 2015 and 2014, SFMC also had a payable of $1 million to Springleaf Consumer Loan, Inc. for internet lending referral fees charged to the branch network. SFI provided funding for SAC’s operations through an intercompany demand note, not to exceed $3 million. The note was payable in full on December 31, 2022, and was prepayable in whole or in part at any time without premium or penalty. The annual interest rate for the principal balance was lender’s cost plus 25 basis points. At December 31, 2014, the note payable to SFI totaled $1 million and was reported in other liabilities. On September 1, 2015, SAC repaid the note in full plus accrued interest. Interest expense on the note payable to SFI for the year ended December 31, 2015 and 2014 was immaterial. SFI provides servicing of the SpringCastle Portfolio through a master servicing agreement with SpringCastle Holdings, LLC. At December 31, 2015 and 2014, SpringCastle Holdings LLC’s payable to SFI totaled $4 million and $10 million, respectively. CAPITAL CONTRIBUTIONS On July 31, 2014, SFI made a capital contribution to SFC, consisting of 100 shares of the common stock, par value of $0.01 per share, of SAC representing all of the issued and outstanding shares of capital stock of SAC. During January and July of 2014, SFC received capital contributions from SFI of $11 million to satisfy interest payments required by SFC’s debenture due in January and July of 2014, respectively. INTERCOMPANY AGREEMENTS On December 24, 2012, SGSC, a subsidiary of SFI, entered into the following intercompany agreements with SFMC, a subsidiary of SFC, and with certain other subsidiaries of SFI (collectively, the “Recipients”). SFMC’s net payable to SGSC relating to these agreements totaled $19 million at December 31, 2015 and 2014. Services Agreement SGSC provides the following services to the Recipients: management and administrative services; financial, accounting, treasury, tax, and audit services; facilities support services; capital funding services; legal services; human resources services (including payroll); centralized collections and lending support services; insurance, risk management, and marketing services; and information technology services. The fees payable by each Recipient to SGSC is equal to 100% of the allocated cost of providing the services to such Recipient. SGSC allocates its cost of providing these services among the Recipients and any of the companies to which it provides similar services based on an allocation method defined in the agreement. During 2015 and 2014, SFMC recorded $224 million and $213 million, respectively, of service fee expenses, which are included in other operating expenses. License Agreement The license agreement provides for use by SGSC of SFMC’s information technology systems and software and other related equipment. The monthly license fee payable by SGSC for its use of the information technology systems and software is 100% of the actual costs incurred by SFMC plus a 7.00% margin. The fee payable by SGSC for its use of the related equipment is 100% of the actual costs incurred by SFMC. During 2015 and 2014, SFMC recorded $6 million and $5 million, respectively, of license fees, which are included as a contra expense to other operating expenses. Building Lease The building lease agreement provides that SFMC will lease six of its buildings to SGSC for an annual rental amount of $4 million, plus additional rental amounts to cover other sums and charges, including real estate taxes, water charges, and sewer rents. During 2015, and 2014, SFMC recorded $4 million of rent charged to SGSC, which are included as a contra expense to other operating expenses. |
Long-term Debt |
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term Debt | Long-term Debt Carrying value and fair value of long-term debt by type were as follows:
Weighted average effective interest rates on long-term debt by type were as follows:
Principal maturities of long-term debt (excluding projected repayments on securitizations and revolving conduit facilities by period) by type of debt at December 31, 2015 were as follows:
GUARANTY AGREEMENTS 5.25% SFC Notes On December 3, 2014, OMH entered into an Indenture and First Supplemental Indenture pursuant to which it agreed to fully and unconditionally guarantee, on a senior basis, the payments of principal, premium (if any) and interest on $700 million of 5.25% Senior Notes due 2019 issued by SFC (the “5.25% SFC Notes”). As of December 31, 2015, approximately $700 million aggregate principal amount of the 5.25% SFC Notes were outstanding. SFC Notes On December 30, 2013, OMH entered into Guaranty Agreements whereby it agreed to fully and unconditionally guarantee the payments of principal, premium (if any), and interest on approximately $5.2 billion aggregate principal amount of senior notes on a senior basis and $350 million aggregate principal amount of a junior subordinated debenture on a junior subordinated basis issued by SFC (collectively, the “SFC Notes”). The SFC Notes consisted of the following: 8.25% Senior Notes due 2023; 7.75% Senior Notes due 2021; 6.00% Senior Notes due 2020; a 60-year junior subordinated debenture; and all senior notes outstanding on December 30, 2013, issued pursuant to the Indenture dated as of May 1, 1999 (the “1999 Indenture”), between SFC and Wilmington Trust, National Association (the successor trustee to Citibank N.A.). The 60-year junior subordinated debenture underlies the trust preferred securities sold by a trust sponsored by SFC. On December 30, 2013, OMH entered into a Trust Guaranty Agreement whereby it agreed to fully and unconditionally guarantee the related payment obligations under the trust preferred securities. As of December 31, 2015, approximately $4.2 billion aggregate principal amount of the SFC Notes, including $2.3 billion aggregate principal amount of senior notes under the 1999 Indenture, and $350 million aggregate principal amount of a junior subordinated debenture were outstanding. The OMH guarantees of SFC’s long-term debt discussed above are subject to customary release provisions. DEBT COVENANTS The debt agreements to which SFC and its subsidiaries are a party include customary terms and conditions, including covenants and representations and warranties. Some or all of these agreements also contain certain restrictions, including (i) restrictions on the ability to create senior liens on property and assets in connection with any new debt financings and (ii) SFC’s ability to sell or convey all or substantially all of its assets, unless the transferee assumes SFC’s obligations under the applicable debt agreement. With the exception of SFC’s junior subordinated debenture, none of SFC’s debt agreements require SFC or any of its subsidiaries to meet or maintain any specific financial targets or ratios. However, certain events, including non-payment of principal or interest, bankruptcy or insolvency, or a breach of a covenant or a representation or warranty may constitute an event of default and trigger an acceleration of payments. In some cases, an event of default or acceleration of payments under one debt agreement may constitute a cross-default under other debt agreements resulting in an acceleration of payments under the other agreements. As of December 31, 2015, we were in compliance with all of the covenants under our debt agreements. Junior Subordinated Debenture In January 2007, SFC issued $350 million aggregate principal amount of 60-year junior subordinated debenture (the “debenture”) under an indenture dated January 22, 2007 (the “Junior Subordinated Indenture”), by and between SFC and Deutsche Bank Trust Company, as trustee. The debenture underlies the trust preferred securities sold by a trust sponsored by SFC. SFC can redeem the debenture at par beginning in January 2017. Pursuant to the terms of the debenture, SFC, upon the occurrence of a mandatory trigger event, is required to defer interest payments to the holders of the debenture (and not make dividend payments to SFI) unless SFC obtains non-debt capital funding in an amount equal to all accrued and unpaid interest on the debenture otherwise payable on the next interest payment date and pays such amount to the holders of the debenture. A mandatory trigger event occurs if SFC’s (i) tangible equity to tangible managed assets is less than 5.5% or (ii) average fixed charge ratio is not more than 1.10x for the trailing four quarters (where the fixed charge ratio equals earnings excluding income taxes, interest expense, extraordinary items, goodwill impairment, and any amounts related to discontinued operations, divided by the sum of interest expense and any preferred dividends). Based upon SFC’s financial results for the twelve months ended September 30, 2015, a mandatory trigger event occurred with respect to the interest payment due in January of 2016 as the average fixed charge ratio was 0.94x. On January 11, 2016, SFC issued one share of SFC common stock to SFI for $11 million to satisfy the January 2016 interest payments required by SFC’s debenture. REPURCHASE OR REPAYMENT OF DEBT In connection with our liability management efforts, we or our affiliates from time to time have purchased, or may in the future purchase, portions of our outstanding indebtedness. Any such purchases may be made through open market or privately negotiated transactions with third parties or pursuant to one or more tender or exchange offers or otherwise, upon such terms and at such prices, as well as with such consideration as we or any such affiliates may determine. Our plans are dynamic and we may adjust our plans in response to changes in our expectations and changes in market conditions. Medium Term Notes In December 2014, we used the proceeds from our offering of $700 million aggregate principal amount of the 5.25% SFC Notes to repurchase $9 million and $361 million aggregate principal amount of 6.50% and 6.90%, respectively, medium term notes due 2017 from certain beneficial owners of the notes. We recorded a net loss of $20 million related to the partial extinguishment on this debt repurchase and capitalized $57 million related to a partial modification on this debt repurchase. Additionally, in December 2014, we repurchased $23 million and $66 million aggregate principal amount of 6.50% and 6.90%, respectively, medium term notes due 2017. We recorded a net loss of $17 million related to these additional debt repurchases in December 2014. SpringCastle 2013-A Notes On October 3, 2014, certain indirect subsidiaries of SFC associated with a joint venture in which we own a 47% equity interest (the “Co-Issuers”) used the proceeds from the SpringCastle Funding Asset-backed Notes 2014-A (the “SpringCastle 2014-A Notes”) to repay in full the SpringCastle Funding Asset-backed Notes 2013-A (the “SpringCastle 2013-A Notes”), which were issued by the Co-Issuers on April 1, 2013. See Note 13 for further information on the refinance of SpringCastle 2013-A Notes. We recorded a net loss of $21 million related to this refinancing transaction. Secured Term Loan On March 31, 2014, Springleaf Financial Funding Company (“SFFC”) prepaid, without penalty or premium, the entire $750 million outstanding principal balance of the secured term loan, plus accrued and unpaid interest. Effective upon the prepayment, all obligations of SFFC, SFC, and the applicable consumer finance operating subsidiaries of SFC under the secured term loan (other than contingent reimbursement obligations and indemnity obligations) were terminated and all guarantees and security interests were released. |
Variable Interest Entities |
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Variable Interest Entities | Variable Interest Entities As part of our overall funding strategy and as part of our efforts to support our liquidity from sources other than our traditional capital market sources, we have transferred certain finance receivables to VIEs for securitization transactions. Since these transactions involve securitization trusts required to be consolidated, the securitized assets and related liabilities are included in our consolidated financial statements and are accounted for as secured borrowings. CONSOLIDATED VIES We evaluated the securitization trusts and determined that these entities are VIEs of which we are the primary beneficiary, and, therefore, we consolidated such entities. We are deemed to be the primary beneficiary of each of these VIEs because we have the ability to direct the activities of each VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses and the right to receive benefits that are potentially significant to the VIE. Such ability stems from SFC’s and/or its affiliates’ contractual right to service the securitized finance receivables. Our retained subordinated notes and residual interest trust certificates expose us to potentially significant losses and potentially significant returns. The asset-backed securities issued by the securitization trusts are supported by the expected cash flows from the underlying securitized finance receivables. Cash inflows from these finance receivables are distributed to investors and service providers in accordance with each transaction’s contractual priority of payments (“waterfall”) and, as such, most of these inflows must be directed first to service and repay each trust’s senior notes or certificates held principally by third-party investors. The holders of the asset-backed securities have no recourse to the Company if the cash flows from the underlying qualified securitized assets are not sufficient to pay all principal and interest on the asset-backed securities. After these senior obligations are extinguished, substantially all cash inflows will be directed to the subordinated notes until fully repaid and, thereafter, to the residual interest that we own in each securitization trust. We retain interests in these securitization transactions, including residual interests in each securitization trust and, in some cases, subordinated securities issued by the VIEs. We retain credit risk in the securitizations through our ownership of the residual interest in each securitization trust, and, in some cases, ownership of the most subordinated class of asset-backed securities, which are the first to absorb credit losses on the securitized assets. We expect that any credit losses in the pools of securitized assets will likely be limited to our subordinated and residual retained interests. We have no obligation to repurchase or replace qualified securitized assets that subsequently become delinquent or are otherwise in default. We parenthetically disclose on our consolidated balance sheets the VIE’s assets that can only be used to settle the VIE’s obligations and the VIE liabilities if the VIE’s creditors have no recourse against the primary beneficiary’s general credit. The carrying amounts of consolidated VIE assets and liabilities associated with our securitization trusts were as follows:
SECURITIZATION TRANSACTIONS Consumer Loan Securitizations 2013-A Securitization. On February 19, 2013, we completed a private securitization transaction in which Tenth Street Funding LLC (“Tenth Street”), a wholly owned special purpose vehicle, sold $568 million of notes backed by personal loans held by Springleaf Funding Trust 2013-A (the “2013-A Trust”), at a 2.83% weighted average yield. The notes were scheduled to mature in September 2021. We sold the asset-backed notes for $568 million, after the price discount but before expenses and a $7 million interest reserve requirement. We initially retained $36 million of the 2013-A Trust’s subordinate asset-backed notes. On December 15, 2015, Tenth Street exercised its right to redeem the asset-backed notes issued by the 2013-A Trust on February 19, 2013 (the “2013-A Notes”). To redeem the 2013-A Notes, Tenth Street paid a redemption price of $189 million, which excluded $37 million for the Class D 2013-A Notes owned by Tenth Street on the date of the optional redemption. The outstanding principal balance of the 2013-A Notes was $225 million on the date of the optional redemption. 2013-B Securitization. On June 19, 2013, we completed a private securitization transaction in which a wholly owned special purpose vehicle sold $256 million of notes backed by personal loans held by Springleaf Funding Trust 2013-B (the “2013-B Trust”), at a 4.11% weighted average yield. The notes mature in June 2023 and have a thirty-five month revolving period during which no principal payments are required to be made on the notes. We sold the asset-backed notes for $255 million, after the price discount but before expenses and a $4 million interest reserve requirement. We initially retained $114 million of the 2013-B Trust’s senior asset-backed notes (which we subsequently sold in 2013 and recorded $112 million of additional debt) and $30 million of the 2013-B Trust’s subordinate asset-backed notes. The indenture governing the notes contains early amortization events and events of default, which, if triggered, may result in the acceleration of the obligation to pay principal and interest on the notes. 2013-BAC Securitization. On September 25, 2013, we completed a private securitization transaction in which the Springleaf Funding Trust 2013-BAC (the “2013-BAC Trust”), a wholly owned special purpose vehicle, issued $500 million of notes backed by an amortizing pool of personal loans acquired from subsidiaries of SFC. We sold the personal loan-backed notes for gross proceeds of $500 million. On March 27, 2014, we repaid the entire $231 million outstanding principal balance of the notes, plus accrued and unpaid interest of the 2013-BAC Trust. 2014-A Securitization. On March 26, 2014, we completed a private securitization transaction in which a wholly owned special purpose vehicle sold $559 million of notes backed by personal loans held by Springleaf Funding Trust 2014-A (the “2014-A Trust”), at a 2.62% weighted average yield. The notes mature in December 2022 and have a twenty-three month revolving period during which no principal payments are required to be made on the notes. We sold the asset-backed notes for $559 million, after the price discount but before expenses and a $6 million interest reserve requirement. We initially retained $33 million of the 2014-A Trust’s subordinate asset-backed notes. The indenture governing the notes contains early amortization events and events of default, which, if triggered, may result in the acceleration of the obligation to pay principal and interest on the notes. 2015-A Securitization. On February 26, 2015, we completed a private term securitization transaction in which a wholly owned special purpose vehicle sold $1.2 billion of notes backed by personal loans held by Springleaf Funding Trust 2015-A at a 3.58% weighted average yield. The notes mature in November 2024 and have a thirty-five month revolving period during which no principal payments are required to be made on the notes. We sold the asset-backed notes for $1.2 billion, after the price discount but before expenses and a $12 million interest reserve requirement. The indenture governing the notes contains early amortization events and events of default, which, if triggered, may result in the acceleration of the obligation to pay principal and interest on the notes. 2015-B Securitization. On April 7, 2015, we completed a private term securitization transaction in which a wholly owned special purpose vehicle sold $314 million of notes backed by personal loans held by Springleaf Funding Trust 2015-B at a 3.84% weighted average yield. The notes mature in May 2028 and have a fifty-nine month revolving period during which no principal payments are required to be made on the notes. We sold the asset-backed notes for $314 million, after the price discount but before expenses and a $3 million interest reserve requirement. The indenture governing the notes contains early amortization events and events of default, which, if triggered, may result in the acceleration of the obligation to pay principal and interest on the notes. SpringCastle Securitizations SpringCastle 2014-A Securitization. On October 3, 2014, the Co-Issuers issued $2.6 billion of the SpringCastle 2014-A Notes at a 4.68% weighted average yield in a private placement transaction. The SpringCastle 2014-A Notes are collateralized by the SpringCastle Portfolio in which SFC owns a 47% equity interest as a result of the SAC Capital Contribution on July 31, 2014. The Co-Issuers sold the SpringCastle 2014-A Notes for approximately $2.6 billion after the price discount but before expenses. The Co-Issuers used the proceeds from the SpringCastle 2014-A Notes to repay in full on October 3, 2014 the SpringCastle 2013-A Notes. At September 30, 2014, the UPB of the SpringCastle 2013-A Notes was $1.5 billion. On October 3, 2014, SAC purchased $363 million initial principal amount of the SpringCastle 2014-A Notes. The Co-Issuers retained $62 million of the SpringCastle 2014-A Notes. Certain subsidiaries of NRZ own a 30% equity interest in the Co-Issuers. NRZ is managed by an affiliate of Fortress. On March 9, 2015, SAC agreed to sell $232 million and $131 million principal amount of the previously retained Class C and Class D SpringCastle 2014-A Notes, respectively, to an unaffiliated third party at a premium to the principal balance. The sale was completed on March 16, 2015. Mortgage Securitizations 2013-1 Securitization. On April 10, 2013, we completed a private securitization transaction in which a wholly owned special purpose vehicle sold $783 million of notes backed by real estate loans held by Springleaf Mortgage Loan Trust 2013-1 (the “2013-1 Trust”), at a 2.85% weighted average yield. We sold the mortgage-backed notes for $782 million, after the price discount but before expenses. We initially retained $237 million of the 2013-1 Trust’s subordinate mortgage-backed notes. 2013-2 Securitization. On July 9, 2013, we completed a private securitization transaction in which a wholly owned special purpose vehicle sold $599 million of notes backed by real estate loans held by Springleaf Mortgage Loan Trust 2013-2 (the “2013-2 Trust”), at a 2.88% weighted average yield. We sold the mortgage-backed notes for $591 million, after the price discount but before expenses. We initially retained $535 million of the 2013-2 Trust’s subordinate mortgage-backed notes. 2013-3 Securitization. On October 9, 2013, we completed a private securitization transaction in which a wholly owned special purpose vehicle sold $271 million of notes backed by real estate loans held by Springleaf Mortgage Loan Trust 2013-3 (the “2013-3 Trust”), at a 3.40% weighted average yield. We sold the mortgage-backed notes for $269 million, after the price discount but before expenses. We initially retained $229 million of the 2013-3 Trust’s subordinate mortgage-backed notes. Sales of Previously Retained Mortgage-backed Notes During 2013, we sold the following previously retained mortgage-backed notes:
During 2014, our remaining beneficial interests in the mortgage-backed retained certificates related to its previous mortgage securitization transactions were sold in a series of separate transactions. As a result of these sales, we deconsolidated the securitization trusts holding the underlying real estate loans and previously issued securitized interests which were reported in long-term debt, as we no longer were considered the primary beneficiary. REVOLVING CONDUIT FACILITIES Conduit Facilities Midbrook 2013-VFN1 Securitization. On September 26, 2013, we established a private securitization facility in which the Midbrook Funding Trust 2013-VFN1 (the “Midbrook 2013-VFN1 Trust”), a wholly owned special purpose vehicle, could issue variable funding notes with a maximum principal balance of $300 million to be backed by personal loans acquired from subsidiaries of SFC from time to time. No amounts were funded at closing, but could be funded from time to time over a one-year period, subject to the satisfaction of customary conditions precedent. During this period, the notes could also be paid down in whole or in part and then redrawn. Following the one-year funding period, the principal amount of the notes, if any, would amortize and would be due and payable in full in October 2017. On June 13, 2014, we amended the note purchase agreement with the Midbrook 2013-VFN1 Trust to extend the one-year funding period to a two-year funding period. Following the two-year funding period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in July 2019. The maximum principal balance of variable funding notes that can be issued remained at $300 million. At December 31, 2015, no amounts had been funded. The note purchase agreement with the Midbrook 2013-VFN1 Trust was amended on February 24, 2016. See Note 25 for information on this subsequent amendment. Springleaf 2013-VFN1 Securitization. On September 27, 2013, we established a private securitization facility in which the Springleaf Funding Trust 2013-VFN1 (the “Springleaf 2013-VFN1 Trust”), a wholly owned special purpose vehicle, may issue variable funding notes with a maximum principal balance of $350 million to be backed by personal loans acquired from subsidiaries of SFC from time to time. No amounts were funded at closing, but may be funded from time to time over a two-year period, which may be extended for one year, subject to the satisfaction of customary conditions precedent. During this period, the notes can also be paid down in whole or in part and then redrawn. Following the two- or three-year funding period, as the case may be, the principal amount of the notes, if any, will amortize and will be due and payable in full in October 2019. On May 20, 2015, we amended the note purchase agreement with the Springleaf 2013-VFN1 Trust to, among other things, extend the original two-year revolving period ending October of 2015 to a two-year revolving period ending April of 2017, which may be extended for up to one additional year, subject to satisfaction of customary conditions precedent. During the revolving period, the notes can be paid down in whole or in part and then redrawn. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in May of 2020. At December 31, 2015, the maximum amount that could be drawn under the notes remained at $350 million. No amounts were drawn under the notes as of December 31, 2015. The note purchase agreement with the Springleaf 2013-VFN1 Trust was amended on January 21, 2016. See Note 25 for information on this subsequent amendment. Sumner Brook 2013-VFN1 Securitization. On December 20, 2013, we established a private securitization facility in which the Sumner Brook Funding Trust 2013-VFN1 (the “Sumner Brook 2013-VFN1 Trust”), a wholly owned special purpose vehicle, may issue variable funding notes with a maximum principal balance of $350 million to be backed by personal loans acquired from subsidiaries of SFC from time to time. No amounts were funded at closing, but may be funded from time to time over a two-year period. During this period, the notes can also be paid down in whole or in part and then redrawn. Following the two-year funding period, the principal amount of the notes, if any, will amortize and will be due and payable in full in August 2022. On January 16, 2015, we amended the note purchase agreement with the Sumner Brook 2013-VFN1 Trust to extend the two-year revolving period ending December of 2015 to a three-year revolving period ending January of 2018. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in August of 2024. The maximum principal balance of variable funding notes that can be issued remained at $350 million. On December 21, 2015, we drew $100 million under the notes, which remained outstanding as of December 31, 2015. Whitford Brook 2014-VFN1 Securitization. On June 26, 2014, we established a private securitization facility in which the Whitford Brook Funding Trust 2014-VFN1 (the “Whitford Brook 2014-VFN1 Trust”), a wholly owned special purpose vehicle, may issue variable funding notes with a maximum principal balance of $300 million to be backed by personal loans acquired from subsidiaries of SFC. The notes will be funded over a three-year period, subject to the satisfaction of customary conditions precedent. During this period, the notes can also be paid down to the required minimum balance of $100 million and then redrawn. Following the three-year funding period, the principal amount of the notes will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in July 2018, unless an option to prepay is elected between July 2017 and July 2018. On March 24, 2015, we amended the sale and servicing agreement relating to the Whitford Brook 2014-VFN1 Trust to remove the requirement for a $100 million minimum balance drawn under the variable funding notes, which are to be backed by personal loans acquired from subsidiaries of SFC from time to time. On March 25, 2015, we paid down the note balance of $100 million. On June 3, 2015, we amended the note purchase agreement relating to the Whitford Brook 2014-VFN1 Trust to reduce the $300 million maximum principal balance to $250 million. On each of July 15, 2015 and December 3, 2015, we drew $100 million under the notes. As of December 31, 2015, $200 million remained outstanding under the notes. The note purchase agreement with the Whitford Brook 2015-VFN1 Trust was amended on February 24, 2016. See Note 25 for information on this subsequent amendment. Mill River 2015-VFN1 Securitization. On May 27, 2015, we established a private securitization facility in which Mill River Funding Trust 2015-VFN1 (the “Mill River 2015-VFN1 Trust”), a wholly owned special purpose vehicle, issued variable funding notes with a maximum principal balance of $400 million to be backed by personal loans acquired from subsidiaries of SFC from time to time. No amounts were funded at closing, but may be funded from time to time over a three-year revolving period, subject to the satisfaction of customary conditions precedent. During the revolving period, the notes can be paid down in whole or in part and then redrawn. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in June of 2021. On each of November 23, 2015 and December 10, 2015, we drew $200 million under the notes. As of December 31, 2015, $400 million remained outstanding under the notes. The note purchase agreement with the Mill River 2015-VFN1 Trust was amended on January 21, 2016. See Note 25 for information on this subsequent amendment. Second Avenue Funding LLC Securitization. On June 3, 2015, we established a private securitization facility in which Second Avenue Funding LLC, a wholly owned special purpose vehicle, issued variable funding notes with a maximum principal balance of $250 million to be backed by auto loans acquired from subsidiaries of SFC. No amounts were funded at closing, but may be funded from time to time over a three-year revolving period, subject to the satisfaction of customary conditions precedent. During the revolving period, the notes can be paid down in whole or in part and then redrawn. Following the three-year revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying auto loans and will be due and payable in full in June of 2019. On November 23, 2015, we drew $250 million under the notes, which remained outstanding as of December 31, 2015. First Avenue Funding LLC Securitization. On June 10, 2015, we established a private securitization facility in which First Avenue Funding LLC (“First Avenue”), a wholly owned special purpose vehicle, issued variable funding notes with a maximum principal balance of $250 million to be backed by auto loans acquired from subsidiaries of SFC. No amounts were funded at closing, but may be funded from time to time over a two-year revolving period, subject to the satisfaction of customary conditions precedent. During the revolving period, the notes can be paid down in whole or in part and then redrawn. Following the two-year revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying auto loans and will be due and payable in full twelve months following the maturity of the last auto loan held by First Avenue. On November 23, 2015, we drew $250 million under the notes, which remained outstanding as of December 31, 2015. On December 11, 2015, we amended the facility to extend the scheduled maturity date until December 10, 2017. VIE INTEREST EXPENSE Other than our retained subordinate and residual interests in the remaining consolidated securitization trusts, we are under no obligation, either contractually or implicitly, to provide financial support to these entities. Consolidated interest expense related to our VIEs totaled $184 million in 2015, $163 million in 2014, and $147 million in 2013. DECONSOLIDATED VIES As a result of the sales of the mortgage-backed retained certificates during 2014, we deconsolidated the securitization trusts holding the underlying real estate loans and previously issued securitized interests which were reported in long-term debt. The total carrying value of these real estate loans as of the sale dates was $5.1 billion. During 2014, we established a reserve for sales recourse obligations of $6 million related to these sales. At December 31, 2015, this reserve totaled $6 million. We had no repurchase activity associated with these sales as of December 31, 2015. See Note 20 for further information on the total reserve for sales recourse obligations relating to the real estate loan sales, including the sales of the mortgage-backed retained certificates. |
Derivative Financial Instruments |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments | Derivative Financial Instruments During 2015 and 2014, we did not have any derivative activity. In 2013, SFC terminated its remaining cross currency interest rate swap agreement with AIG Financial Products, a subsidiary of AIG, and recorded a loss of $2 million in other revenues — other. Immediately following this termination, we had no derivative financial instruments. Changes in the notional amounts of our cross currency interest rate swap agreements were as follows:
During 2013, we recognized a net loss of $3 million on SFC’s non-designated hedging instruments in other revenues — other. Derivative adjustments included in other revenues — other consisted of the following:
SFC was exposed to credit risk if counterparties to its swap agreement did not perform. SFC regularly monitored counterparty credit ratings throughout the term of the agreement. SFC’s exposure to market risk was limited to changes in the value of its swap agreement offset by changes in the value of the hedged debt. While SFC’s cross currency interest rate swap agreement mitigated economic exposure of related debt, it did not qualify as a cash flow or fair value hedge under U.S. GAAP. |
Insurance |
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Insurance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance | Insurance Components of unearned insurance premium reserves, claim reserves and benefit reserves were as follows:
Our insurance subsidiaries enter into reinsurance agreements with other insurers. Reserves related to unearned premiums, claims and benefits included the following amounts assumed from other insurers:
At December 31, 2015 and 2014, reserves related to unearned premiums, claims and benefits ceded to non-affiliated insurance companies totaled $22 million. Changes in the reserve for unpaid claims and loss adjustment expenses, net of reinsurance recoverable:
Our insurance subsidiaries file financial statements prepared using statutory accounting practices prescribed or permitted by the Indiana Department of Insurance (the “Indiana DOI”), which is a comprehensive basis of accounting other than U.S. GAAP. The primary differences between statutory accounting practices and U.S. GAAP are that under statutory accounting, policy acquisition costs are expensed as incurred, policyholder liabilities are generally valued using prescribed actuarial assumptions, and certain investment securities are reported at amortized cost. We are not required and did not apply purchase accounting to the insurance subsidiaries on a statutory basis. Statutory net income (loss) for our insurance companies by type of insurance was as follows:
Statutory capital and surplus for our insurance companies by type of insurance were as follows:
Our insurance companies are also subject to risk-based capital requirements adopted by the Indiana DOI. Minimum statutory capital and surplus is the risk-based capital level that would trigger regulatory action. At December 31, 2015 and 2014, our insurance subsidiaries’ statutory capital and surplus exceeded the risk-based capital minimum required levels. State law restricts the amounts our insurance subsidiaries, Yosemite Insurance Company (“Yosemite”) and Merit, may pay as dividends without prior notice to the Indiana DOI. The maximum amount of dividends (referred to as “ordinary dividends”) for an Indiana domiciled life insurance company that can be paid without prior approval in a 12 month period (measured retrospectively from the date of payment) is the greater of: (i) 10% of policyholders’ surplus as of the prior year-end; or (ii) the statutory net gain from operations as of the prior year-end. Any amount greater must be approved by the Indiana DOI prior to its payment. The maximum ordinary dividends for an Indiana domiciled property and casualty insurance company that can be paid without prior approval in a 12 month period (measured retrospectively from the date of payment) is the greater of: (i) 10% of policyholders’ surplus as of the prior year-end; or (ii) the statutory net income. Any amount greater must be approved by the Indiana DOI prior to its payment. These approved dividends are called “extraordinary dividends”. Our insurance subsidiaries paid extraordinary dividends to SFC totaling $100 million, $57 million, and $150 million during 2015, 2014, and 2013, respectively, and ordinary dividends of $18 million to SFC during 2014. In addition, Yosemite paid, as an extraordinary dividend to SFC, 100% of the common stock of its wholly owned subsidiary, CommoLoCo, Inc., in the amount of $58 million in July of 2013. |
Other Liabilities |
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Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities | Other Liabilities Components of other liabilities were as follows:
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Capital Stock |
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Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Capital Stock | Capital Stock SFC has two classes of authorized capital stock: special stock and common stock. SFC may issue special stock in series. The board of directors determines the dividend, liquidation, redemption, conversion, voting and other rights prior to issuance. Par value and shares authorized at December 31, 2015 were as follows:
Shares issued and outstanding were as follows:
During January and July of 2014 and 2013, SFC received capital contributions from SFI of $11 million to satisfy interest payments required by SFC’s debenture due in January and July of 2014 and 2013, respectively. On July 31, 2014, SFI made a capital contribution to SFC, consisting of 100 shares of the common stock, par value of $0.01 per share, of SAC representing all of the issued and outstanding shares of capital stock of SAC. |
Accumulated Other Comprehensive Income (Loss) |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) Changes, net of tax, in accumulated other comprehensive income (loss) were as follows:
Reclassification adjustments from accumulated other comprehensive income (loss) to the applicable line item on our consolidated statements of operations were as follows:
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Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income Taxes OMH and all of its eligible domestic U.S. subsidiaries, including SFC, file a consolidated life/non-life federal tax return with the Internal Revenue Service (“IRS”). Previously, Merit was not an eligible company, and it filed a separate federal life insurance tax return. For our 2015 consolidated federal tax return, Merit is eligible as an includible insurance company under Internal Revenue Code (“IRC”) Section 1504. Income taxes from the consolidated federal and state tax returns are allocated to the eligible subsidiaries under a tax sharing agreement with OMH. Our foreign subsidiaries file tax returns in Puerto Rico, the U.S. Virgin Islands, and the United Kingdom. The Company recognizes a deferred tax liability for the undistributed earnings of its foreign operations, if any, as we do not consider the amounts to be permanently reinvested. As of December 31, 2015, the Company had no undistributed foreign earnings. Components of income (loss) before provision for (benefit from) income taxes were as follows:
Components of provision for (benefit from) income taxes were as follows:
Expense from foreign income taxes includes our foreign subsidiaries that operate in Puerto Rico, the U.S. Virgin Islands, and the United Kingdom. We recorded a current state income tax provision in 2015, 2014, and 2013 attributable to profitable operations in certain states in which we engage in business activity that could not be offset against losses incurred. We recorded a valuation allowance against the majority of our gross state deferred tax assets related to net operating losses. Reconciliations of the statutory federal income tax rate to the effective tax rate were as follows:
The effective tax rate for 2015 and 2014 differed from the federal statutory rate primarily due to the effects of the non-controlling interest in the SpringCastle Portfolio and state income taxes. The effective tax rate is based on income (loss) before taxes, which includes income (loss) attributable to non-controlling interests. The income (loss) attributable to the non-controlling interest is not included in the taxable income in SFC, resulting in variances from the federal statutory rate of (27.91)% and (2.51)% in 2015 and 2014, respectively. The difference in the impact on the effective tax rate due to non-controlling interest in 2015 as compared to 2014 is due to the fact that the net income attributable to non-controlling interest was a greater percentage of the total income (loss) before taxes in 2015 as compared to 2014. The effective tax rate for 2013 differed from the federal statutory rate primarily due to the effects of state income taxes and a change in tax status, partially offset by the effect of interest and penalties on prior year tax returns. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax obligation (all of which would affect the effective tax rate if recognized) is as follows:
Our gross unrecognized tax obligation includes interest and penalties. We recognize interest and penalties related to gross unrecognized tax obligations in income tax expense. We accrued $3 million in 2015, $1 million in 2014, and less than $1 million in 2013 for the payment of respective tax obligation, interest and penalty, net of any federal benefit. The amount of any change in the balance of uncertain tax liabilities over the next twelve months is not expected to be material to our consolidated financial statements. We are currently under examination of our U.S. federal tax return for the year 2013 by the IRS. Management believes it has adequately provided for taxes for such year. No specific examination issue or adjustment has been identified to date. During 2015, the Company amended their 2011 and 2012 federal and state returns. Therefore, the Company could be subject to examination for the respective years. The amended returns resulted in a net receivable that is recorded in the current tax receivable account. Components of deferred tax assets and liabilities were as follows:
We had a net deferred tax liability of $113 million and $177 million at December 31, 2015 and 2014, respectively. The deferred tax liability reflected on the impact of tax accounting method change relates to the valuation of certain assets. The gross deferred tax liabilities are expected to reverse in time, and amounts are sufficient to create positive taxable income, which will allow for the realization of all of our gross federal deferred tax assets. Included in our gross deferred tax assets are foreign deferred tax assets that are primarily attributable to foreign net operating loss carryforwards. The benefit of the foreign net operating loss carryforwards is $13 million and $15 million from our United Kingdom operations at December 31, 2015 and 2014, respectively, and $2 million from our Puerto Rico operations at December 31, 2015 and 2014. The United Kingdom net operating loss does not have a statute of limitations and the Puerto Rico net operating loss expires in 2024. We had a valuation allowance against our United Kingdom and Puerto Rico operations of $16 million and $18 million at December 31, 2015 and 2014, respectively. In addition, at December 31, 2015, we had a federal capital loss carryforward of $78 million. The federal capital loss carryforward expires in 2020. At December 31, 2015, we had state net operating loss carryforwards of $548 million, compared to $500 million at December 31, 2014. The state net operating loss carryforwards expire between 2017 and 2036. We had a valuation allowance on our gross state deferred tax assets, net of deferred federal tax benefit of $22 million and $26 million at December 31, 2015 and 2014, respectively. The total valuation allowance was established based on management’s determination that the deferred tax assets are more-likely-than-not to not be realized. At December 31, 2015, we had $14 million of net current federal and foreign income tax payable, compared to $100 million receivable at December 31, 2014. At December 31, 2015, we had $8 million of current state tax receivable, compared to $5 million at December 31, 2014. |
Lease Commitments, Rent Expense, and Contingent Liabilities |
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Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease Commitments, Rent Expense, and Contingent Liabilities | Lease Commitments, Rent Expense, and Contingent Liabilities LEASE COMMITMENTS AND RENT EXPENSE Annual rental commitments for leased office space, automobiles and information technology equipment accounted for as operating leases, excluding leases on a month-to-month basis, were as follows:
In addition to rent, we pay taxes, insurance, and maintenance expenses under certain leases. In the normal course of business, we will renew leases that expire or replace them with leases on other properties. Rental expense totaled $28 million in 2015, $29 million in 2014, and $30 million in 2013. LEGAL CONTINGENCIES In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation arising in connection with its activities. Some of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. While we will continue to identify certain legal actions where we believe a material loss to be reasonably possible and reasonably estimable, there can be no assurance that material losses will not be incurred from claims that we have not yet been notified of or are not yet determined to be probable or reasonably possible and reasonably estimable. We contest liability and/or the amount of damages, as appropriate, in each pending matter. Where available information indicates that it is probable that a liability had been incurred at the date of the consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to income. In many actions, however, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the amount of any loss. In addition, even where loss is reasonably possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is not always possible to reasonably estimate the size of the possible loss or range of loss. For certain legal actions, we cannot reasonably estimate such losses, particularly for actions that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved, including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the actions in question, before a loss or additional loss or range of loss or additional loss can be reasonably estimated for any given action. For certain other legal actions, we can estimate reasonably possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued, but do not believe, based on current knowledge and after consultation with counsel, that such losses will have a material adverse effect on our consolidated financial statements as a whole. SALES RECOURSE OBLIGATIONS During 2014, we established a reserve for sales recourse obligations of $22 million related to the real estate loan sales. At December 31, 2015, our reserve for sales recourse obligations totaled $15 million, which primarily related to the real estate loan sales in 2014. We repurchased 13 loans totaling $1 million during 2015 associated with the real estate loan sales in 2014. There was no repurchase activity associated with the 2014 sales of real estate loans during 2014. We repurchased 9 loans totaling $1 million during 2014 and 20 loans totaling $3 million during 2013 associated with other prior sales of finance receivables because these loans were reaching the defined delinquency limits or had breached the contractual representations and warranties under the loan sale agreements. At December 31, 2015, there were no material recourse requests with loss exposure that management believes will not be covered by the reserve. The activity in our reserve for sales recourse obligations associated with the real estate loan sales during 2014 and other prior sales of finance receivables was as follows:
It is inherently difficult to determine whether any recourse losses are probable or even reasonably possible or to estimate the amounts of any losses. In addition, even where recourse losses are reasonably possible or exposure to such losses exists in excess of the liability already accrued, it is not always possible to reasonably estimate the size of the possible recourse losses or range of losses. PAYMENT PROTECTION INSURANCE Our United Kingdom subsidiary provides payments of compensation to its customers who have made claims concerning Payment Protection Insurance (“PPI”) policies sold in the normal course of business by insurance intermediaries. On April 20, 2011, the High Court in the United Kingdom handed down judgment supporting the Financial Services Authority (now known as the Financial Conduct Authority) (“FCA”) guidelines on the treatment of PPI complaints. In addition, the FCA issued a guidance consultation paper in March of 2012 on the PPI customer contact letters. As a result, we have concluded that there are certain circumstances where customer contact and/or redress is appropriate; therefore, this activity is ongoing. The total reserves related to the estimated PPI claims were $6 million at December 31, 2015 and $14 million at December 31, 2014. We do not believe that any additional losses related to PPI claims in excess of the amounts accrued will have a material adverse effect on our consolidated financial statements as a whole. |
Benefit Plans |
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Compensation and Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Benefit Plans | Benefit Plans PENSION PLANS Retirement Plan The Springleaf Financial Services Retirement Plan (the ”Retirement Plan”) is a noncontributory defined benefit plan which is subject to the provisions of the Employee Retirement Income Security Act of 1974 (“ERISA”). Effective December 31, 2012, the Retirement Plan was frozen. U.S. salaried employees who were employed by a participating company, had attained age 21, and completed twelve months of continuous service were eligible to participate in the plan. Employees generally vested after 5 years of service. Prior to January 1, 2013, unreduced benefits were paid to retirees at normal retirement (age 65) and were based upon a percentage of final average compensation multiplied by years of credited service, up to 44 years. Our current and former employees will not lose any vested benefits in the Retirement Plan that accrued prior to January 1, 2013. CommoLoCo Retirement Plan The CommoLoCo Retirement Plan is a noncontributory defined benefit plan which is subject to the provisions of the Puerto Rico tax code. Effective December 31, 2012, the CommoLoCo Retirement Plan was frozen. Puerto Rican residents employed by CommoLoCo, Inc., our Puerto Rican subsidiary, who had attained age 21 and completed one year of service were eligible to participate in the plan. Our current and former employees in Puerto Rico will not lose any vested benefits in the CommoLoCo Retirement Plan that accrued prior to January 1, 2013. Unfunded Defined Benefit Plans We sponsor unfunded defined benefit plans for certain employees, including key executives, designed to supplement pension benefits provided by our other retirement plans. These include: (i) Springleaf Financial Services Excess Retirement Income Plan (the “Excess Retirement Income Plan”), which provides a benefit equal to the reduction in benefits payable to certain employees under our qualified retirement plan as a result of federal tax limitations on compensation and benefits payable; and (ii) the Supplemental Executive Retirement Plan (“SERP”), which provides additional retirement benefits to designated executives. Benefits under the Excess Retirement Income Plan were frozen as of December 31, 2012, and benefits under the SERP were frozen at the end of August 2004. POSTRETIREMENT PLANS Springleaf Retiree Medical and Life Insurance Plan We provided postretirement medical care and life insurance benefits. Eligibility was based upon completion of 10 years of credited service and attainment of age 55. Life and dental benefits were closed to new participants. Postretirement medical and life insurance benefits were based upon the employee electing immediate retirement and having a minimum of 10 years of service. Medical benefits were contributory, while the life insurance benefits were non-contributory. Retiree medical contributions were based on the actual premium payments reduced by Company-provided credits. These retiree contributions were subject to adjustment annually. Other cost sharing features of the medical plan included deductibles, coinsurance, and Medicare coordination. On December 31, 2014, we terminated the Springleaf Retiree Medical and Life Insurance Plan, and we recorded a settlement gain and a curtailment gain of $4 million and $2 million, respectively, as a credit to salaries and benefit expenses. CommoLoCo Retiree Life Insurance Plan We provided postretirement life insurance benefits to eligible participants of CommoLoCo, Inc. Eligibility was based upon completion of 10 years of credited service and attainment of age 55. Postretirement life insurance benefits were based upon the employee electing immediate retirement and having a minimum of 10 years of service. Life insurance benefits were non-contributory. On February 28, 2015, the Retiree Group Life Insurance program was terminated. 401(K) PLANS We sponsor voluntary savings plans for our U.S. employees and for our employees of CommoLoCo, Inc. Springleaf Financial Services 401(k) Plan The Springleaf Financial Services 401(k) Plan (the “401(k) Plan”) for 2015, 2014, and 2013 provided for a 100% Company matching on the first 4% of the salary reduction contributions of the employees. We do not anticipate any changes to the Company’s matching contributions for 2016. Effective January 1, 2013, the Company may make a discretionary profit sharing contribution to the 401(k) Plan. The Company has full discretion to determine whether to make such a contribution, and the amount of such contribution. In no event, however, will the discretionary profit sharing contribution exceed 4% of annual pay. In order to share in the retirement contribution, employees must have satisfied the 401(k) Plan’s eligibility requirements and be employed on the last day of the year. The employees are not required to contribute any money to the 401(k) Plan in order to qualify for the Company profit sharing contribution. The discretionary profit sharing contribution will be divided among participants eligible to share in the contribution for the year in the same proportion that the participant’s pay bears to the total pay of all participants. This means the amount allocated to each eligible participant’s account will, as a percentage of pay, be the same. The salaries and benefit expense associated with this plan was $5 million in 2015, $4 million in 2014, and $4 million in 2013. CommoLoCo Thrift Plan The CommoLoCo Thrift Plan provides for salary reduction contributions by employees and 100% matching contributions by the Company of up to 3% of annual salary and 50% matching contributions by the Company of the next 3% of annual salary depending on the respective employee’s years of service. The salaries and benefit expense associated with this plan for 2015, 2014, and 2013 was immaterial. We do not anticipate any changes to the Company’s matching contributions for 2016. OBLIGATIONS AND FUNDED STATUS The following table presents the funded status of the defined benefit pension plans and other postretirement benefit plans. The funded status of the plans is measured as the difference between the plan assets at fair value and the projected benefit obligation. We have recognized the aggregate of all overfunded plans in other assets and the aggregate of all underfunded plans in other liabilities.
The accumulated benefit obligation for U.S. pension benefit plans was $388 million at December 31, 2015 and $409 million at December 31, 2014. Defined benefit pension plan obligations in which the projected benefit obligation (“PBO”) was in excess of the related plan assets and the accumulated benefit obligation (“ABO”) was in excess of the related plan assets were as follows:
The following table presents the components of net periodic benefit cost recognized in income and other amounts recognized in accumulated other comprehensive income or loss with respect to the defined benefit pension plans and other postretirement benefit plans:
We have made the following estimates relating to our combined defined benefit pension plans and our defined benefit postretirement plans:
Assumptions The following table summarizes the weighted average assumptions used to determine the projected benefit obligations and the net periodic benefit costs:
Discount Rate Methodology The projected benefit cash flows were discounted using the spot rates derived from the unadjusted Citigroup Pension Discount Curve at December 31, 2015 and an equivalent weighted average discount rate was derived that resulted in the same liability. This single discount rate for each plan was used. Investment Strategy The investment strategy with respect to assets relating to our pension plans is designed to achieve investment returns that will (i) provide for the benefit obligations of the plans over the long term; (ii) limit the risk of short-term funding shortfalls; and (iii) maintain liquidity sufficient to address cash needs. Accordingly, the asset allocation strategy is designed to maximize the investment rate of return while managing various risk factors, including but not limited to, volatility relative to the benefit obligations, diversification and concentration, and the risk and rewards profile indigenous to each asset class. Allocation of Plan Assets The long-term strategic asset allocation is reviewed and revised annually. The plans’ assets are monitored by our Retirement Plans Committee and the investment managers, which can entail allocating the plans assets among approved asset classes within pre-approved ranges permitted by the strategic allocation. At December 31, 2015, the actual asset allocation for the primary asset classes was 90% in fixed income securities, 9% in equity securities, and 1% in cash and cash equivalents. The 2016 target asset allocation for the primary asset classes is 88% in fixed income securities and 12% in equity securities. The actual allocation may differ from the target allocation at any particular point in time. The expected long-term rate of return for the plans was 5.3% for the Retirement Plan and 5.7% for the CommoLoCo Retirement Plan for 2015. The expected rate of return is an aggregation of expected returns within each asset class category. The expected asset return and any contributions made by the Company together are expected to maintain the plans’ ability to meet all required benefit obligations. The expected asset return with respect to each asset class was developed based on a building block approach that considers historical returns, current market conditions, asset volatility and the expectations for future market returns. While the assessment of the expected rate of return is long-term and thus not expected to change annually, significant changes in investment strategy or economic conditions may warrant such a change. Expected Cash Flows Funding for the U.S. pension plan ranges from the minimum amount required by ERISA to the maximum amount that would be deductible for U.S. tax purposes. This range is generally not determined until the fourth quarter. Contributed amounts in excess of the minimum amounts are deemed voluntary. Amounts in excess of the maximum amount would be subject to an excise tax and may not be deductible under the IRC. Supplemental and excess plans’ payments and postretirement plan payments are deductible when paid. The expected future benefit payments, net of participants’ contributions, of our defined benefit pension plans at December 31, 2015 are as follows:
FAIR VALUE MEASUREMENTS — PLAN ASSETS The inputs and methodology used in determining the fair value of the plan assets are consistent with those used to measure our assets. The following table presents information about our plan assets measured at fair value and indicates the fair value hierarchy based on the levels of inputs we utilized to determine such fair value:
The inputs or methodologies used for valuing securities are not necessarily an indication of the risk associated with investing in these securities. Based on our investment strategy, we have no significant concentrations of risks. |
Share-Based Compensation |
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Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-Based Compensation OMNIBUS INCENTIVE PLAN In 2013, OMH adopted the 2013 Omnibus Incentive Plan (the “Omnibus Plan”) under which equity-based awards are granted to selected management employees, non-employee directors, independent contractors, and consultants. Under this plan, as of December 31, 2015, 11,105,064 shares of authorized common stock are reserved for issuance pursuant to grants approved by OMH’s Board of Directors. The amount of shares reserved is adjusted annually at the beginning of the year by a number of shares equal to the excess of 10% of the number of outstanding shares on the last day of the previous fiscal year over the number of shares reserved and available for issuance as of the last day of the previous fiscal year. The Omnibus Plan allows for issuance of stock options, restricted stock units (“RSUs”) and restricted stock awards (“RSAs”), stock appreciation rights (“SARs”), and other stock-based awards and cash awards. SFC participates in stock awards of OMH. Unless specifically noted, the following disclosures are based on all award activity of OMH. Service-based Awards In connection with the initial public offering on October 16, 2013 and subsequent to the offering, OMH has granted service-based RSUs and RSAs to certain of our executives and employees. The RSUs are subject to a graded vesting period of 4.2 years or less and do not provide the holders with any rights as shareholders, including the right to earn dividends during the vesting period. The RSAs are subject to a graded vesting period of three years or less and provide the holders the right to vote and to earn dividends during the vesting period that are subject to forfeiture if the shares do not vest. The fair value for restricted units and awards is generally the closing market price of OMH’s common stock on the date of the award. For awards granted in connection with the initial public offering, the fair value is the offering price. Expense is amortized on a straight line basis over the vesting period, based on the number of awards that are ultimately expected to vest. The weighted-average grant date fair value of service-based awards issued in 2015, 2014, and 2013 was $47.44, $25.65, and $17.00, respectively. The total fair value of service-based awards that vested during 2015 and 2014 was $7 million and $1 million, respectively. No service-based awards vested in 2013. The following table summarizes the service-based stock activity and related information for the Omnibus Plan for 2015:
Performance-based Awards During 2015 and 2014, OMH awarded performance-based RSUs (“PRSUs”) that may be earned based on the financial performance of OMH. Certain PRSUs are subject to the achievement of performance goals during the period between the grant date and December 31, 2016. These awards are also subject to a graded vesting period of two years after the attainment of the performance goal or December 31, 2016, whichever occurs earlier. The remaining PRSUs are subject to separate and independent performance goals for 2016, 2017 and 2018; therefore, a separate requisite service period exists for each year that begins on January 1 of the respective performance year. Vesting for these awards will occur on the Form 10-K filing date that occurs after the performance year or the date the actual performance outcome is determined, whichever is later. All of the PRSUs allow for partial vesting if a minimum level of performance is attained. The PRSUs do not provide the holders with any rights as shareholders, including the right to earn dividends during the vesting period. The fair value for PRSUs is based on the closing market price of our stock on the date of the award. Expense for performance-based shares is recognized over the requisite service period when it is probable that the performance goals will be achieved and is based on the total number of units expected to vest. Expense for awards with graded vesting is recognized under the accelerated method, whereby each vesting is treated as a separate award with expense for each vesting recognized ratably over the requisite service period. If minimum targets are not achieved by the end of the respective performance periods, all unvested shares related to those targets will be forfeited and cancelled, and all expense recognized to that date is reversed. The weighted average grant date fair value of performance-based awards issued in 2015 and 2014 was $34.45 and $25.78, respectively. No performance-based awards vested in 2015 or 2014. The following table summarizes the performance-based stock activity and related information for the Omnibus Plan for 2015:
In addition, two of our executives were granted 8.203125 RSUs on September 30, 2013, for which we recorded share-based compensation expense of $131 million. This grant was subsequently amended on October 8, 2013 to reduce the number of RSUs granted to the executives by 0.859375 RSUs and to grant these units to a certain management employee. No other terms of the grant were modified. As a result of the additional grant, we recognized $14 million in additional compensation expense in the fourth quarter of 2013. There was no additional compensation expense recorded for the modification of the grant to the executives, as the fair value of the modified award was less than the fair value of the original award immediately before the terms were modified. Therefore, total compensation expense recognized for the 8.203125 units was $145 million. These RSUs were converted into the right to receive 8.203125% of the outstanding shares of OMH common stock and were also subject to an equitable adjustment for the stock split that occurred on October 9, 2013. The adjusted number of shares of OMH common stock underlying these RSUs (8,203,125 shares) were delivered to the holders in October 2013 after the conversion. The weighted average grant date fair value of these units (after conversion and subsequent stock split) was $16.00 based on an equity valuation. The shares are fully vested; however, they generally cannot be sold or otherwise transferred for five years following the date of delivery, except to the extent necessary to satisfy certain tax obligations. Total share-based compensation expense, net of forfeitures, for all stock-based awards totaled $2 million, $1 million, and $145 million, respectively, during 2015, 2014, and 2013. The total income tax benefit recognized for stock-based compensation was $1 million in 2015, less than $1 million in 2014, and $51 million in 2013. As of December 31, 2015, there was total unrecognized compensation expense of $4 million related to nonvested restricted stock that is expected to be recognized over a weighted average period of 2.9 years. OMH Incentive Units On October 9, 2013, certain executives of the Company received a grant of incentive units in the Initial Stockholder. In the fourth quarter of 2015, such executives surrendered a portion of their incentive units and certain additional executives of the Company received a grant of incentive units in the Initial Stockholder. These incentive units are intended to encourage the executives to create sustainable, long-term value for the Company by providing them with interests that are subject to their continued employment with the Company and that only provide benefits (in the form of distributions) if the Initial Stockholder makes distributions to one or more of its common members that exceed specified amounts. The incentive units are entitled to vote together with the holders of common units in the Initial Stockholder as a single class on all matters. The incentive units may not be sold or otherwise transferred and the executives are entitled to receive these distributions only while they are employed with the Company, unless the executive’s termination of employment results from the executive’s death, in which case the executive’s beneficiaries will be entitled to receive any future distributions. Because the incentive units only provide economic benefits in the form of distributions while the holders are employed, and the holder generally does not have the ability to monetize the incentive units due to the transfer restrictions, the substance of the arrangement is that of a profit sharing agreement. These incentive units are subject to their continued employment with the Company and, in the case of the incentive units issued in 2015, the continued employment of both Jay Levine and John Anderson. These incentive units provide benefits (in the form of distributions) in the event the Initial Stockholder makes distributions to one or more of its members that exceed certain specified amounts. In connection with the sale of our common stock by the Initial Stockholder, certain of the specified thresholds were satisfied. In accordance with ASC Topic 710, Compensation-General, we recorded non-cash incentive compensation expense of $15 million in the second quarter of 2015 related to the incentive units. No expense was recognized for these awards during 2014 or 2013. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information Our segments coincide with how our businesses are managed. At December 31, 2015, our three segments include:
Management considers Consumer and Insurance, and Acquisitions and Servicing as our “Core Consumer Operations” and Real Estate as our “Non-Core Portfolio.” Our segments are managed as follows: Core Consumer Operations
Non-Core Portfolio
The remaining components (which we refer to as “Other”) consist of our other non-core, non-originating legacy operations, which are isolated by geographic market and/or distribution channel from our Core Consumer Operations and our Non-Core Portfolio. These operations include: (i) our legacy operations in 14 states where we had also ceased branch-based personal lending; (ii) our liquidating retail sales finance portfolio (including retail sales finance accounts from its legacy auto finance operation); (iii) our lending operations in Puerto Rico and the U.S. Virgin Islands; and (iv) the operations of our United Kingdom subsidiary. We evaluate the performance of the segments based on pretax operating earnings. The accounting policies of the segments are the same as those disclosed in Note 3, except as described below. Due to the nature of the Fortress Acquisition, we have applied purchase accounting. However, we report the operating results of our Core Consumer Operations, Non-Core Portfolio, and Other using “Segment Accounting Basis” (referred to as “historical accounting basis” in previous SEC filings), which (i) reflects our allocation methodologies for certain costs, primarily interest expense, loan loss reserves and acquisition costs to reflect the manner in which we assess our business results and (ii) excludes the impact of applying purchase accounting. These allocations and adjustments have a material effect on our reported segment basis income as compared to GAAP. We believe a Segment Accounting Basis (a basis other than U.S. GAAP) provides investors the basis for which management evaluates segment performance. We allocate revenues and expenses (on a Segment Accounting Basis) to each segment using the following methodologies:
The “Segment to GAAP Adjustment” column in the following tables primarily consists of:
The following tables present information about the Company’s segments, as well as reconciliations to the consolidated financial statement amounts.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements The fair value of a financial instrument is the amount that would be expected to be received if an asset were to be sold or the amount that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The degree of judgment used in measuring the fair value of financial instruments generally correlates with the level of pricing observability. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is used in measuring fair value. Conversely, financial instruments traded in other-than-active markets or that do not have quoted prices have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment. An other-than-active market is one in which there are few transactions, the prices are not current, price quotations vary substantially either over time or among market makers, or little information is released publicly for the asset or liability being valued. Pricing observability is affected by a number of factors, including the type of financial instrument, whether the financial instrument is listed on an exchange or traded over-the-counter or is new to the market and not yet established, the characteristics specific to the transaction, and general market conditions. See Note 3 for a discussion of the accounting policies related to fair value measurements, which includes the valuation process and the inputs used to develop our fair value measurements. The following table summarizes the fair values and carrying values of our financial instruments and indicates the fair value hierarchy based on the level of inputs we utilized to determine such fair values:
FAIR VALUE MEASUREMENTS — RECURRING BASIS The following tables present information about our assets measured at fair value on a recurring basis and indicates the fair value hierarchy based on the levels of inputs we utilized to determine such fair value:
We had no transfers between Level 1 and Level 2 during December 31, 2015 and 2014. The following table presents changes during 2015 in Level 3 assets measured at fair value on a recurring basis:
The following table presents changes during 2014 in Level 3 assets measured at fair value on a recurring basis:
We used observable and/or unobservable inputs to determine the fair value of positions that we have classified within the Level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the Level 3 category presented in the Level 3 tables above may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs. The unobservable inputs and quantitative data used in our Level 3 valuations for our investment securities were developed and used in models created by our third-party valuation service providers, which values were used by us for fair value disclosure purposes without adjustment. We applied the third-party exception which allows us to omit certain quantitative disclosures about unobservable inputs for other long-term investments. As a result, the weighted average ranges of the inputs for these investment securities are not applicable in the following table. Quantitative information about Level 3 inputs for our assets measured at fair value on a recurring basis for which information about the unobservable inputs is reasonably available to us at December 31, 2015 and 2014 is as follows:
The fair values of the assets using significant unobservable inputs are sensitive and can be impacted by significant increases or decreases in any of those inputs. Level 3 broker-priced instruments, including RMBS (except for the one bond previously noted), CMBS (except for the one bond previously noted), and CDO/ABS, are excluded from the table above because the unobservable inputs are not reasonably available to us. Our RMBS, CMBS, and CDO/ABS securities have unobservable inputs that are reliant on and sensitive to the quality of their underlying collateral. The inputs, although not identical, have similar characteristics and interrelationships. Generally a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment speeds. An improvement in the workout criteria related to the restructured debt and/or debt covenants of the underlying collateral may lead to an improvement in the cash flows and have an inverse impact on other inputs, specifically a reduction in the amount of discount applied for marketability and liquidity, making the structured bonds more attractive to market participants. FAIR VALUE MEASUREMENTS — NON-RECURRING BASIS We measure the fair value of certain assets on a non-recurring basis when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Assets measured at fair value on a non-recurring basis on which we recorded impairment charges were as follows:
In accordance with the authoritative guidance for the accounting for the impairment of long-lived assets, we wrote down certain real estate owned reported in our Real Estate segment to their fair value less cost to sell during 2015 and 2014 and recorded the writedowns in other revenues — other. The fair values of real estate owned disclosed in the table above are unadjusted for transaction costs as required by the authoritative guidance for fair value measurements. The amounts of real estate owned recorded in other assets are net of transaction costs as required by the authoritative guidance for accounting for the impairment of long-lived assets. In accordance with the authoritative guidance for the accounting for the impairment of commercial mortgage loans, we recorded allowance adjustments on certain impaired commercial mortgage loans reported in our Consumer and Insurance segment to record their fair value during 2015 and 2014 and recorded the net impairments in investment revenues. In accordance with the authoritative guidance for the accounting for the impairment of finance receivables held for sale, we wrote down certain finance receivables held for sale reported in our Real Estate segment to their fair value during 2014 and recorded the writedowns in other revenues. The inputs and quantitative data used in our Level 3 valuations for our real estate owned and commercial mortgage loans are unobservable primarily due to the unique nature of specific real estate assets. Therefore, we used independent third-party providers, familiar with local markets, to determine the values used for fair value disclosures without adjustment. We applied the third-party exception which allows us to omit certain quantitative disclosures about unobservable inputs. As a result, the weighted average ranges of the inputs are not applicable in the following table. Quantitative information about Level 3 inputs for our assets measured at fair value on a non-recurring basis at December 31, 2015 and 2014 is as follows:
FAIR VALUE MEASUREMENTS — VALUATION METHODOLOGIES AND ASSUMPTIONS We use the following methods and assumptions to estimate fair value. Cash and Cash Equivalents The carrying amount of cash and cash equivalents, including cash and cash equivalents in certificates of deposit and commercial paper, approximates fair value. Mutual Funds The fair value of mutual funds is based on quoted market prices of the underlying shares held in the mutual funds. Investment Securities We utilize third-party valuation service providers to measure the fair value of our investment securities, which are classified as available-for-sale or as trading and other and consist primarily of bonds. Whenever available, we obtain quoted prices in active markets for identical assets at the balance sheet date to measure investment securities at fair value. We generally obtain market price data from exchange or dealer markets. We estimate the fair value of fixed maturity investment securities not traded in active markets by referring to traded securities with similar attributes, using dealer quotations and a matrix pricing methodology, or discounted cash flow analyses. This methodology considers such factors as the issuer’s industry, the security’s rating and tenor, its coupon rate, its position in the capital structure of the issuer, yield curves, credit curves, composite ratings, bid-ask spreads, prepayment rates and other relevant factors. For fixed maturity investment securities that are not traded in active markets or that are subject to transfer restrictions, we adjust the valuations to reflect illiquidity and/or non-transferability. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used. We elect the fair value option for investment securities that are deemed to incorporate an embedded derivative and for which it is impracticable for us to isolate and/or value the derivative. The fair value of certain investment securities is based on the amortized cost, which is assumed to approximate fair value. Finance Receivables The fair value of net finance receivables, less allowance for finance receivable losses, both non-impaired and purchased credit impaired, are determined using discounted cash flow methodologies. The application of these methodologies requires us to make certain judgments and estimates based on our perception of market participant views related to the economic and competitive environment, the characteristics of our finance receivables, and other similar factors. The most significant judgments and estimates made relate to prepayment speeds, default rates, loss severity, and discount rates. The degree of judgment and estimation applied is significant in light of the current capital markets and, more broadly, economic environments. Therefore, the fair value of our finance receivables could not be determined with precision and may not be realized in an actual sale. Additionally, there may be inherent limitations in the valuation methodologies we employed, and changes in the underlying assumptions used could significantly affect the results of current or future values. Finance Receivables Held for Sale We determined the fair value of finance receivables held for sale that were originated as held for investment based on negotiations with prospective purchasers (if any) or by using projected cash flows discounted at the weighted-average interest rates offered by us in the market for similar finance receivables. We based cash flows on contractual payment terms adjusted for estimates of prepayments and credit related losses. Restricted Cash and Cash Equivalents The carrying amount of restricted cash and cash equivalents approximates fair value. Note Receivable from Parent The carrying amount of the note receivable from parent approximates the fair value because the note is payable on a demand basis prior to its due date on May 31, 2022 and the interest rate on this note adjusts with changing market interest rates. Commercial Mortgage Loans Given the short remaining average life of the portfolio, the carrying amount of commercial mortgage loans approximates fair value. The carrying amount includes an estimate for credit related losses which is based on independent third-party valuations. Real Estate Owned We initially based our estimate of the fair value on independent third-party valuations at the time we took title to real estate owned. Subsequent changes in fair value are based upon independent third-party valuations obtained periodically to estimate a price that would be received in a then current transaction to sell the asset. Escrow Advance Receivable The carrying amount of escrow advance receivable approximates fair value. Receivables from Parent and Affiliates The carrying amount of receivables from parent and affiliates approximates fair value. Receivables Related to Sales of Real Estate Loans and Related Trust Assets The carrying amount of receivables related to sales of real estate loans and related trust assets less estimated forfeitures, which are reflected in other liabilities, approximates fair value. Long-term Debt We either receive fair value measurements of our long-term debt from market participants and pricing services or we estimate the fair values of long-term debt using projected cash flows discounted at each balance sheet date’s market-observable implicit-credit spread rates for our long-term debt. We record at fair value long-term debt issuances that are deemed to incorporate an embedded derivative and for which it is impracticable for us to isolate and/or value the derivative. At December 31, 2015, we had no debt carried at fair value under the fair value option. We estimate the fair values associated with variable rate revolving lines of credit to be equal to par. Payables to Parent and Affiliates The fair value of payable to parent and affiliates approximates the carrying value due to its short-term nature. |
Subsequent Events |
12 Months Ended |
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Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events AMENDMENTS TO CONDUIT FACILITIES On January 21, 2016, we amended the note purchase agreement with the Springleaf 2013-VFN1 Trust to (i) increase the maximum principal balance from $350 million to $850 million and (ii) extend the revolving period ending in April 2017 to January 2018, which may be extended to January 2019, subject to satisfaction of customary conditions precedent. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in the 36th month following the end of the revolving period. As of February 24, 2016, $298 million was outstanding under the notes. On January 21, 2016, we amended the note purchase agreement with the Mill River 2015-VFN1 Trust to decrease the maximum principal balance from $400 million to $100 million. As of February 24, 2016, $100 million was outstanding under the notes. On February 24, 2016, we amended the note purchase agreement with the Midbrook 2013-VFN1 Trust to (i) extend the revolving period ending in June 2016 to February 2018 and (ii) decrease the maximum principal balance from $300 million to $250 million on February 24, 2017. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in the 36th month following the end of the revolving period. As of February 24, 2016, no amounts were outstanding under the notes. On February 24, 2016, we amended the note purchase agreement with the Whitford Brook 2014-VFN1 Trust to extend the revolving period ending in June 2017 to June 2018. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in the 12th month following the end of the revolving period. As of February 24, 2016, $200 million was outstanding under the notes. CALL OF 2013-B NOTES On February 16, 2016, Sixteenth Street Funding LLC (“Sixteenth Street”), a wholly owned subsidiary of SFC, exercised its right to redeem the asset backed notes issued by the Springleaf Funding Trust 2013-B on June 19, 2013 (the “2013-B Notes”). To redeem the 2013-B Notes, Sixteenth Street paid a redemption price of $371 million, which excluded $30 million for the Class C and Class D Notes owned by Sixteenth Street on the date of the optional redemption. The outstanding principal balance of the 2013-B Notes was $400 million on the date of the optional redemption. |
Selected Quarterly Financial Data (Unaudited) |
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Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Quarterly Financial Data (Unaudited) | Selected Quarterly Financial Data (Unaudited) Our selected quarterly financial data for 2015 was as follows:
Our selected quarterly financial data for 2014 was as follows:
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | BASIS OF PRESENTATION We prepared our consolidated financial statements using generally accepted accounting principles in the United States of America (“U.S. GAAP”). The statements include the accounts of SFC, its subsidiaries (all of which are wholly owned, except for certain subsidiaries associated with a joint venture in which we own a 47% equity interest), and variable interest entities (“VIEs”) in which we hold a controlling financial interest and for which we are considered to be the primary beneficiary as of the financial statement date. We eliminated all material intercompany accounts and transactions. We made judgments, estimates, and assumptions that affect amounts reported in our consolidated financial statements and disclosures of contingent assets and liabilities. In management’s opinion, the consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of results. Ultimate results could differ from our estimates. We evaluated the effects of and the need to disclose events that occurred subsequent to the balance sheet date. To conform to the 2015 presentation, we reclassified certain items in prior periods, including certain items in prior periods of our consolidated balance sheet and consolidated cash flow statement. To conform to the 2015 presentation, we reclassified certain prior period items as a result of our early adoption of accounting standards update (“ASU”) 2015-03, Interest - Imputation of Interest (“ASU 2015-03”). See Note 4 for further information on the adoption of this ASU. |
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Operating Segment Reporting | Operating Segments Our segments coincide with how our businesses are managed. At December 31, 2015, our three segments include:
Management considers Consumer and Insurance, and Acquisitions and Servicing as our “Core Consumer Operations” and Real Estate as our “Non-Core Portfolio.” The remaining components (which we refer to as “Other”) consist of our other non-core, non-originating legacy operations, which are isolated by geographic market and/or distribution channel from our Core Consumer Operations and our Non-Core Portfolio. These operations include: (i) our legacy operations in 14 states where we had also ceased branch-based personal lending; (ii) our liquidating retail sales finance portfolio (including retail sales finance accounts from its legacy auto finance operation); (iii) our lending operations in Puerto Rico and the U.S. Virgin Islands; and (iv) the operations of our United Kingdom subsidiary. We allocate revenues and expenses (on a Segment Accounting Basis) to each segment using the following methodologies:
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Finance Receivables | Finance Receivables Generally, we classify finance receivables as held for investment based on management’s intent at the time of origination. We determine classification on a loan-by-loan basis. We classify finance receivables as held for investment due to our ability and intent to hold them until their contractual maturities. We carry finance receivables at amortized cost which includes accrued finance charges on interest bearing finance receivables, net unamortized deferred origination costs and unamortized points and fees, unamortized net premiums and discounts on purchased finance receivables, and unamortized finance charges on precomputed receivables. We include the cash flows from finance receivables held for investment in the consolidated statements of cash flows as investing activities. We may finance certain insurance products offered to our customers as part of finance receivables. In such cases, the insurance premium is included as an operating cash inflow and the financing of the insurance premium is included as part of the finance receivable as an investing cash flow in the consolidated statements of cash flows. Insurance claims and policyholder liabilities relate to the underwriting activities of our Consumer and Insurance segment. A significant portion of insurance claims and policyholder liabilities originate from the finance receivables. Historically, our policy has been to report them as liabilities and not net them against finance receivables; however, during the fourth quarter of 2015, we changed our presentation of unearned premiums and certain unpaid claim liabilities in the consolidated balance sheets as a reduction to net finance receivables. We believe this presentation is preferable as it aligns more closely with the presentation of these balances with our peers. We retrospectively applied this change in presentation in our consolidated balance sheets as of December 31, 2014 to ensure comparability across reporting periods. Similarly we will change comparable prior periods in our Forms 10-Q which we plan to file in 2016. As this is a change in balance sheet presentation only, there is no effect on net income (loss) or net income (loss) attributable to SFC. |
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Finance Receivable Revenue Recognition | Finance Receivable Revenue Recognition We recognize finance charges as revenue on the accrual basis using the interest method, which we report in interest income. We amortize premiums or accrete discounts on finance receivables as an adjustment to finance charge income using the interest method and contractual cash flows. We defer the costs to originate certain finance receivables and the revenue from nonrefundable points and fees on loans and amortize them as an adjustment to finance charge income using the interest method. We stop accruing finance charges when the fourth contractual payment becomes past due for personal loans, the loans acquired through a joint venture in which we own a 47% equity interest (the “SpringCastle Portfolio”), and retail sales contracts and when the sixth contractual payment becomes past due for revolving retail accounts. For finance receivables serviced externally, including real estate loans, we stop accruing finance charges when the third or fourth contractual payment becomes past due depending on the type of receivable and respective third party servicer. We reverse finance charge amounts previously accrued upon suspension of accrual of finance charges. For certain finance receivables that had a carrying value that included a purchase premium or discount, we stop accreting the premium or discount at the time we stop accruing finance charges. We do not reverse accretion of premium or discount that was previously recognized. We recognize the contractual interest portion of payments received on nonaccrual finance receivables as finance charges at the time of receipt. We resume the accrual of interest on a nonaccrual finance receivable when the past due status on the individual finance receivable improves to the point that the finance receivable no longer meets our policy for nonaccrual. At that time we also resume accretion of any unamortized premium or discount resulting from a previous purchase premium or discount. We accrete the amount required to adjust the initial fair value of our finance receivables to their contractual amounts over the life of the related finance receivable for non-credit impaired finance receivables and over the life of a pool of finance receivables for purchased credit impaired finance receivables as described in our policy for purchase credit impaired finance receivables. |
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Purchased Credit Impaired Finance Receivables | Purchased Credit Impaired Finance Receivables Effective April 1, 2016, we changed our accounting policy for the derecognition of loans within a purchased credit impaired (“PCI”) pool. Historically, we removed loans from a PCI pool upon charge-off of the loan, based on the Company’s charge-off accounting policy at their allocated carrying value. Under our new accounting policy, loans will be removed from a PCI pool when the loan is written-off, at which time further collections efforts would not be pursued, or sold or repaid. While both methods are acceptable under GAAP, we believe the new method for derecognition of PCI loans is preferable as it enhances consistency with our industry peers. Our policy for derecognition of PCI loans following the change described above is presented below: As part of each of our acquisitions, we identify a population of finance receivables for which it is determined that it is probable that we will be unable to collect all contractually required payments. The population of accounts identified generally consists of those finance receivables that are (i) 60 days |
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Troubled Debt Restructured Finance Receivables | Troubled Debt Restructured Finance Receivables We make modifications to our personal loans and loans in our SpringCastle Portfolio to assist borrowers who are experiencing financial difficulty, are in bankruptcy or are participating in a consumer credit counseling arrangement. We make modifications to our real estate loans to assist borrowers in avoiding foreclosure. When we modify a loan’s contractual terms for economic or other reasons related to the borrower’s financial difficulties and grant a concession that we would not otherwise consider, we classify that loan as a TDR finance receivable. We restructure finance receivables only if we believe the customer has the ability to pay under the restructured terms for the foreseeable future. We establish reserves on our TDR finance receivables by discounting the estimated cash flows associated with the respective receivables at the interest rate prior to the modification to the account and record any difference between the discounted cash flows and the carrying value as an allowance adjustment. We may modify the terms of existing accounts in certain circumstances, such as certain bankruptcy or other catastrophic situations or for economic or other reasons related to a borrower’s financial difficulties that justify modification. When we modify an account, we primarily use a combination of the following to reduce the borrower’s monthly payment: reduce interest rate, extend the term, capitalize or forgive past due interest and, to a lesser extent, forgive principal. If the account is delinquent at the time of modification, the account is brought current for delinquency reporting. Account modifications that are deemed to be a TDR finance receivable are measured for impairment. Account modifications that are not classified as a TDR finance receivable are measured for impairment in accordance with our policy for allowance for finance receivable losses. Finance charges for TDR finance receivables require the application of judgment. We recognize the contractual interest portion of payments received on nonaccrual finance receivables as finance charges at the time of receipt. TDR finance receivables that are placed on nonaccrual status remain on nonaccrual status until the past due status on the individual finance receivable improves to the point that the finance receivable no longer meets our policy for nonaccrual. |
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Allowance for Finance Receivable Losses | Allowance for Finance Receivable Losses We establish the allowance for finance receivable losses through the provision for finance receivable losses. We evaluate our finance receivable portfolio by finance receivable type. Our finance receivable types (personal loans, SpringCastle Portfolio, real estate loans, and retail sales finance) consist of a large number of relatively small, homogeneous accounts. We evaluate our finance receivable types for impairment as pools. None of our accounts are large enough to warrant individual evaluation for impairment. Management considers numerous internal and external factors in estimating probable incurred losses in our finance receivable portfolio, including the following:
We base the allowance for finance receivable losses primarily on historical loss experience using a roll rate-based model applied to our finance receivable portfolios. In our roll rate-based model, our finance receivable types are stratified by delinquency stages (i.e., current, 1-29 days past due, 30-59 days past due, etc.) and projected forward in one-month increments using historical roll rates. In each month of the simulation, losses on our finance receivable types are captured, and the ending delinquency stratification serves as the beginning point of the next iteration. No new volume is assumed. This process is repeated until the number of iterations equals the loss emergence period (the interval of time between the event which causes a borrower to default on a finance receivable and our recording of the charge-off) for our finance receivable types. As delinquency is a primary input into our roll rate-based model, we inherently consider nonaccrual loans in our estimate of the allowance for finance receivable losses. Management exercises its judgment, based on quantitative analyses, qualitative factors, such as recent delinquency and other credit trends, and experience in the consumer finance industry, when determining the amount of the allowance for finance receivable losses. We adjust the amounts determined by the roll rate-based model for management’s estimate of the effects of model imprecision, any changes to underwriting criteria, portfolio seasoning, and current economic conditions, including levels of unemployment and personal bankruptcies. We charge or credit this adjustment to expense through the provision for finance receivable losses. We generally charge off to the allowance for finance receivable losses personal loans that are beyond 180 days past due. To avoid unnecessary real estate loan foreclosures, we may refer borrowers to counseling services, as well as consider a cure agreement, loan modification, voluntary sale (including a short sale), or deed in lieu of foreclosure. When two payments are past due on a collateral dependent real estate loan and it appears that foreclosure may be necessary, we inspect the property as part of assessing the costs, risks, and benefits associated with foreclosure. Generally, we start foreclosure proceedings on real estate loans when four monthly installments are past due. When foreclosure is completed and we have obtained title to the property, we obtain a third-party’s valuation of the property, which is either a full appraisal or a real estate broker’s or appraiser’s estimate of the property sale value without the benefit of a full interior and exterior appraisal and lacking sales comparisons. Such appraisals or real estate brokers’ or appraisers’ estimate of value are one factor considered in establishing an appropriate valuation; however, we are ultimately responsible for the valuation established. We reduce finance receivables by the amount of the real estate loan, establish a real estate owned asset, and charge off any loan amount in excess of that value to the allowance for finance receivable losses. We infrequently extend the charge-off period for individual accounts when, in our opinion, such treatment is warranted and consistent with our credit risk policies. We increase the allowance for finance receivable losses for recoveries on accounts previously charged-off. We may renew a delinquent account if the customer meets current underwriting criteria and it does not appear that the cause of past delinquency will affect the customer’s ability to repay the new loan. We subject all renewals, whether the customer’s account is current or delinquent, to the same credit risk underwriting process as we would a new application for credit. For our personal loans and retail sales finance receivables, we may offer those customers whose accounts are in good standing the opportunity of a deferment, which extends the term of an account. We may extend this offer to customers when they are experiencing higher than normal personal expenses. Generally, this offer is not extended to customers who are delinquent. However, we may offer a deferment to a delinquent customer who is experiencing a temporary financial problem. The account is considered current upon granting the deferment. To evaluate whether a borrower’s financial difficulties are temporary or other than temporary we review the terms of each deferment to ensure that the borrower has the financial ability to repay the outstanding principal and associated interest in full following the deferment and after the customer is brought current. If, following this analysis, we believe a borrower’s financial difficulties are other than temporary, we will not grant deferment, and the loans may continue to age until they are charged off. We generally limit a customer to two deferments in a rolling twelve month period unless we determine that an exception is warranted and is consistent with our credit risk policies. For our real estate loans, we may offer a deferment to a delinquent customer who is experiencing a temporary financial problem, which extends the term of an account. Prior to granting the deferment, we require a partial payment. We forebear the remaining past due interest when the deferment is granted for real estate loans that were originated or acquired centrally. The account is considered current upon granting the deferment. We generally limit a customer to two deferments in a rolling twelve month period for real estate loans that were originated at our branch offices (one deferment for real estate loans that were originated or acquired centrally) unless we determine that an exception is warranted and is consistent with our credit risk policies. Accounts that are granted a deferment are not classified as troubled debt restructurings. We do not consider deferments granted as a troubled debt restructuring because the customer is not experiencing an other than temporary financial difficulty, and we are not granting a concession to the customer or the concession granted is immaterial to the contractual cash flows. We pool accounts that have been granted a deferment together with accounts that have not been granted a deferment for measuring impairment in accordance with the authoritative guidance for the accounting for contingencies. The allowance for finance receivable losses related to our purchased credit impaired finance receivables is calculated using updated cash flows expected to be collected, incorporating assumptions regarding default rates, loss severities, the amounts and timing of prepayments and other factors that are reflective of current market conditions. Probable decreases in expected finance receivable cash flows result in the recognition of impairment. Probable and significant increases in expected cash flows to be collected would first reverse any previously recorded allowance for finance receivable losses. We also establish reserves for TDR finance receivables, which are included in our allowance for finance receivable losses. The allowance for finance receivable losses related to our TDR finance receivables represents loan-specific reserves based on an analysis of the present value of expected future cash flows. We establish our allowance for finance receivable losses related to our TDR finance receivables by calculating the present value (discounted at the loan’s effective interest rate prior to modification) of all expected cash flows less the recorded investment in the aggregated pool. We use certain assumptions to estimate the expected cash flows from our TDR finance receivables. The primary assumptions for our model are prepayment speeds, default rates, and severity rates. |
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Finance Receivables Held for Sale | Finance Receivables Held for Sale Depending on market conditions or certain of management’s capital sourcing strategies, which may impact our ability and/or intent to hold our finance receivables until maturity or for the foreseeable future, we may decide to sell finance receivables originally intended for investment. Our ability to hold finance receivables for the foreseeable future is subject to a number of factors, including economic and liquidity conditions, and therefore may change. As of each reporting period, management determines our ability to hold finance receivables for the foreseeable future based on assumptions for liquidity requirements or other strategic goals. When it is probable that management’s intent or ability is to no longer hold finance receivables for the foreseeable future and we subsequently decide to sell specifically identified finance receivables that were originally classified as held for investment, the net finance receivables, less allowance for finance receivable losses are reclassified as finance receivables held for sale and are carried at the lower of cost or fair value. Any amount by which cost exceeds fair value is accounted for as a valuation allowance and is recognized in other revenues in the Consolidated Statements of Operations. We base the fair value estimates on negotiations with prospective purchasers (if any) or by using a discounted cash flows approach. We base cash flows on contractual payment terms adjusted for estimates of prepayments and credit related losses. Cash flows resulting from the sale of the finance receivables that were originally classified as held for investment are recorded as an investing activity in the consolidated statements of cash flows since U.S. GAAP requires the statement of cash flow presentation to be based on the original classification of the finance receivable. When sold, we record the sales price we receive less our carrying value of these finance receivables held for sale in other revenues. When it is determined that management no longer intends to sell finance receivables which had previously been classified as finance receivables held for sale and we have the ability to hold the finance receivables for the foreseeable future, we reclassify the finance receivables to finance receivables held for investment at the lower of cost or fair value and we accrete any fair value adjustment over the remaining life of the related finance receivables. |
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Real Estate Owned | Real Estate Owned We acquire real estate owned through foreclosure on real estate loans and we initially record real estate owned in other assets at the estimated fair value less the estimated cost to sell. The estimated fair value used as a basis to determine the carrying value of real estate owned is defined as the price that would be received in selling the property in an orderly transaction between market participants as of the measurement date. We assess the balances of real estate owned for impairment on a periodic basis. If the required impairment testing suggests real estate owned is impaired, we reduce the carrying amount to estimated fair value less the estimated costs to sell. We charge these impairments to other revenues. We record the difference between the sale price we receive for a property and the carrying value and any amounts refunded to the customer as a recovery or loss in other revenues. We do not profit from foreclosures in accordance with the American Financial Services Association’s Voluntary Standards for Consumer Mortgage Lending. We only attempt to recover our investment in the property, including expenses incurred. |
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Reserve for Sales Recourse Obligations | Reserve for Sales Recourse Obligations When we sell finance receivables, we establish a reserve for sales recourse in other liabilities, which represents our estimate of losses to be: (a) incurred by us on the repurchase of certain finance receivables that we previously sold; and (b) incurred by us for the indemnification of losses incurred by purchasers. Certain sale contracts include provisions requiring us to repurchase a finance receivable or indemnify the purchaser for losses it sustains with respect to a finance receivable if a borrower fails to make initial loan payments to the purchaser or if the accompanying mortgage loan breaches certain customary representations and warranties. These representations and warranties are made to the purchaser with respect to various characteristics of the finance receivable, such as the manner of origination, the nature and extent of underwriting standards applied, the types of documentation being provided, and, in limited instances, reaching certain defined delinquency limits. Although the representations and warranties are typically in place for the life of the finance receivable, we believe that most repurchase requests occur within the first five years of the sale of a finance receivable. In addition, an investor may request that we refund a portion of the premium paid on the sale of mortgage loans if a loan is prepaid within a certain amount of time from the date of sale. At the time of the sale of each finance receivable (exclusive of finance receivables included in our on-balance sheet securitizations), we record a provision for recourse obligations for estimated repurchases, loss indemnification and premium recapture on finance receivables sold, which is charged to other revenues. Any subsequent adjustments resulting from changes in estimated recourse exposure are recorded in other revenues. |
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Net Other Intangible Assets | Other Intangible Assets At the time we initially recognize intangible assets, a determination is made with regard to each asset as it relates to its useful life. We have determined that each of our intangible assets has a finite useful life with the exception of the insurance licenses and certain domain names, which we determined to have indefinite lives. For those net intangible assets with a finite useful life, we review such intangibles for impairment at least annually and whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Impairment is indicated if the sum of undiscounted estimated future cash flows is less than the carrying value of the respective asset. Impairment is permanently recognized by writing down the asset to the extent that the carrying value exceeds the estimated fair value. For indefinite lived intangible assets, we first complete a qualitative assessment to determine whether it is necessary to perform a quantitative impairment test annually. If the qualitative assessment indicates that the assets are more likely than not to have been impaired, we proceed with the fair value calculation of the assets. The fair value is determined in accordance with our fair value measurement policy. If the fair value is less than the carrying value, an impairment loss will be recognized in an amount equal to the difference and the indefinite life classification will be evaluated to determine whether such classification remains appropriate. |
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Insurance Premiums | Insurance Premiums We recognize revenue for short-duration contracts over the related contract period. Short-duration contracts primarily include credit life, credit disability, credit involuntary unemployment insurance, and collateral protection policies. We defer single premium credit insurance premiums in unearned premium reserves which we include as a reduction to net finance receivables. We recognize unearned premiums on credit life, credit disability, credit involuntary unemployment insurance and collateral protection insurance as revenue using the sum-of-the-digits, straight-line or other appropriate methods over the terms of the policies. Premiums from reinsurance assumed are earned over the related contract period. We recognize revenue on long-duration contracts when due from policyholders. Long-duration contracts include term life, accidental death, and disability income protection. For single premium long-duration contracts a liability is accrued, that represents the present value of estimated future policy benefits to be paid to or on behalf of policyholders and related expenses, when premium revenue is recognized. The effects of changes in such estimated future policy benefit reserves are classified in insurance policy benefits and claims in the consolidated statements of operations. We recognize commissions on ancillary products as other revenue when earned. We may finance certain insurance products offered to our customers as part of finance receivables. In such cases, unearned premiums and certain unpaid claim liabilities related to our borrowers are netted and classified as contra-assets in the net finance receivables in the consolidated balance sheets, and the insurance premium is included as an operating cash inflow and the financing of the insurance premium is included as part of the finance receivable as an investing cash flow in the consolidated statements of cash flows. |
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Policy and Claim Reserves | Policy and Claim Reserves Policy reserves for credit life, credit disability, credit-related property and casualty, and credit involuntary unemployment insurance equal related unearned premiums. Reserves for losses and loss adjustment expenses are based on claims experience, actual claims reported, and estimates of claims incurred but not reported. Assumptions utilized in determining appropriate reserves are based on historical experience, adjusted to provide for possible adverse deviation. These estimates are periodically reviewed and compared with actual experience and industry standards, and revised if it is determined that future experience will differ substantially from that previously assumed. Since reserves are based on estimates, the ultimate liability may be more or less than such reserves. The effects of changes in such estimated reserves are classified in insurance policy benefits and claims in the consolidated statements of operations in the period in which the estimates are changed. We accrue liabilities for future life insurance policy benefits associated with non-credit life contracts and base the amounts on assumptions as to investment yields, mortality, and surrenders. We base annuity reserves on assumptions as to investment yields and mortality. Ceded insurance reserves are included in other assets and include estimates of the amounts expected to be recovered from reinsurers on insurance claims and policyholder liabilities. |
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Acquisition Costs | Acquisition Costs We defer insurance policy acquisition costs (primarily commissions, reinsurance fees, and premium taxes). We include deferred policy acquisition costs in other assets and amortize these costs over the terms of the related policies, whether directly written or reinsured. |
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Investment Securities | Investment Securities We generally classify our investment securities as available-for-sale or trading and other, depending on management’s intent. Our investment securities classified as available-for-sale are recorded at fair value. We adjust related balance sheet accounts to reflect the current fair value of investment securities and record the adjustment, net of tax, in accumulated other comprehensive income or loss in shareholders’ equity. We record interest receivable on investment securities in other assets. Under the fair value option, we may elect to measure at fair value, financial assets that are not otherwise required to be carried at fair value. We elect the fair value option for available-for-sale securities that are deemed to incorporate an embedded derivative and for which it is impracticable for us to isolate and/or value the derivative. We recognize any changes in fair value in investment revenues. We classify our investment securities in the fair value hierarchy framework based on the observability of inputs. Inputs to the valuation techniques are described as being either observable (level 1 or 2) or unobservable (level 3) assumptions that market participants would use in pricing an asset or liability. |
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Impairments on Investment Securities | Impairments on Investment Securities Available-for-sale. We evaluate our available-for-sale securities on an individual basis to identify any instances where the fair value of the investment security is below its amortized cost. For these securities, we then evaluate whether an other-than-temporary impairment exists if any of the following conditions are present:
If we intend to sell an impaired investment security or we will likely be required to sell the security before recovery of its amortized cost basis less any current period credit loss, we recognize an other-than-temporary impairment in investment revenues equal to the difference between the investment security’s amortized cost and its fair value at the balance sheet date. In determining whether a credit loss exists, we compare our best estimate of the present value of the cash flows expected to be collected from the security to the amortized cost basis of the security. Any shortfall in this comparison represents a credit loss. The cash flows expected to be collected are determined by assessing all available information, including length and severity of unrealized loss, issuer default rate, ratings changes and adverse conditions related to the industry sector, financial condition of issuer, credit enhancements, collateral default rates, and other relevant criteria. Management considers factors such as our investment strategy, liquidity requirements, overall business plans, and recovery periods for securities in previous periods of broad market declines. If a credit loss exists with respect to an investment in a security (i.e., we do not expect to recover the entire amortized cost basis of the security), we would be unable to assert that we will recover our amortized cost basis even if we do not intend to sell the security. Therefore, in these situations, an other-than-temporary impairment is considered to have occurred. If a credit loss exists, but we do not intend to sell the security and we will likely not be required to sell the security before recovery of its amortized cost basis less any current period credit loss, the impairment is classified as: (i) the estimated amount relating to credit loss; and (ii) the amount relating to all other factors. We recognize the estimated credit loss in investment revenues, and the non-credit loss amount in accumulated other comprehensive income or loss. Once a credit loss is recognized, we adjust the investment security to a new amortized cost basis equal to the previous amortized cost basis less the credit losses recognized in investment revenues. For investment securities for which other-than-temporary impairments were recognized in investment revenues, the difference between the new amortized cost basis and the cash flows expected to be collected is accreted to investment income. We recognize subsequent increases and decreases in the fair value of our available-for-sale securities in accumulated other comprehensive income or loss, unless the decrease is considered other than temporary. |
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Investment Revenue Recognition | Investment Revenue Recognition We recognize interest on interest bearing fixed-maturity investment securities as revenue on the accrual basis. We amortize any premiums or accrete any discounts as a revenue adjustment using the interest method. We stop accruing interest revenue when the collection of interest becomes uncertain. We record dividends on equity securities as revenue on ex-dividend dates. We recognize income on mortgage-backed and asset-backed securities as revenue using an effective yield based on estimated prepayments of the underlying collateral. If actual prepayments differ from estimated prepayments, we calculate a new effective yield and adjust the net investment in the security accordingly. We record the adjustment, along with all investment securities revenue, in investment revenues. We specifically identify realized gains and losses on investment securities and include them in investment revenues. |
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Variable Interest Entities | Variable Interest Entities An entity is a VIE if the entity does not have sufficient equity at risk for the entity to finance its activities without additional financial support or has equity investors who lack the characteristics of a controlling financial interest. A VIE is consolidated into the financial statements of its primary beneficiary. When we have a variable interest in a VIE, we qualitatively assess whether we have a controlling financial interest in the entity and, if so, whether we are the primary beneficiary. In applying the qualitative assessment to identify the primary beneficiary of a VIE, we are determined to have a controlling financial interest if we have (i) the power to direct the activities that most significantly impact the economic performance of the VIE, and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. We consider the VIE’s purpose and design, including the risks that the entity was designed to create and pass through to its variable interest holders. We continually reassess the VIE’s primary beneficiary and whether we have acquired or divested the power to direct the activities of the VIE through changes in governing documents or other circumstances. |
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Other Invested Assets | Other Invested Assets Commercial mortgage loans and insurance policy loans are part of our investment portfolio and we include them in other assets at amortized cost. We recognize interest on commercial mortgage loans and insurance policy loans as revenue on the accrual basis using the interest method. We stop accruing revenue when collection of interest becomes uncertain. We include other invested asset revenue in investment revenues. We record accrued other invested asset revenue receivable in other assets. |
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Cash and Cash Equivalents | Cash and Cash Equivalents We consider unrestricted cash on hand and short-term investments having maturity dates within three months of their date of acquisition to be cash and cash equivalents. We typically maintain cash in financial institutions in excess of the Federal Deposit Insurance Corporation’s insurance limits. We evaluate the creditworthiness of these financial institutions in determining the risk associated with these cash balances. We do not believe that the Company is exposed to any significant credit risk on these accounts and have not experienced any losses in such accounts. |
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Restricted Cash and Cash Equivalents | Restricted Cash and Cash Equivalents We include funds to be used for future debt payments relating to our securitization transactions and escrow deposits in restricted cash and cash equivalents. |
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Long-term Debt | Long-term Debt We generally report our long-term debt issuances at the face value of the debt instrument, which we adjust for any unaccreted discount, unamortized premium, or unamortized debt issuance costs associated with the debt. Other than securitized products, we generally accrete discounts, premiums, and debt issuance costs over the contractual life of the security using contractual payment terms. With respect to securitized products, we have elected to amortize deferred costs over the contractual life of the security. Accretion of discounts and premiums are recorded to interest expense. |
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Income Taxes | Income Taxes We recognize income taxes using the asset and liability method. We establish deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of assets and liabilities, using the tax rates expected to be in effect when the temporary differences reverse. We are included in the consolidated U.S. federal and state income tax returns of OneMain Holdings, Inc., our ultimate parent company, where applicable. The tax provision and current and deferred tax balances have been presented on a separate return methodology as if we were a separate filer, with modification. ASC Topic 740 requires the method of accounting to be systematic, rational, and consistent within the broad principles of ASC Topic 740. We have modified our method of accounting such that our net operating losses and capital losses, if applicable, are considered realized when those net operating losses and/or capital losses are utilized by our parent company or other members of the consolidated group. Realization of our gross deferred tax asset depends on our ability to generate sufficient taxable income of the appropriate character within the carryforward periods of the jurisdictions in which the net operating and capital losses, deductible temporary differences and credits were generated. When we assess our ability to realize deferred tax assets, we consider all available evidence, including:
We provide a valuation allowance for deferred tax assets if it is more likely than not that we will not realize the deferred tax asset in whole or in part. We include an increase or decrease in a valuation allowance resulting from a change in the realizability of the related deferred tax asset. We recognize income tax benefits associated with uncertain tax positions, when, in our judgment, it is more likely than not that the position will be sustained upon examination by a taxing authority. For a tax position that meets the more-likely-than-not recognition threshold, we initially and subsequently measure the tax benefit as the largest amount that we judge to have a greater than 50% likelihood of being realized upon ultimate settlement with the taxing authority. |
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Derivative Financial Instruments | Derivative Financial Instruments Our derivatives were governed by International Swap and Derivatives Association, Inc. (“ISDA”) standard Master Agreements, whereby the parties agreed to net the amounts payable and receivable under all contracts governed by the ISDA Master Agreement in the event of a contract default by either one of the parties. If the net exposure was from the counterparty to us, we recorded the derivative asset in other assets on our consolidated balance sheet. If the net exposure was from us to the counterparty, we recorded the derivative liability in other liabilities on our consolidated balance sheet. We recorded net unrealized gains and losses on derivative transactions as adjustments to cash flows from operating activities on our consolidated statements of cash flows. We recognized the derivatives on our consolidated balance sheets at their fair value. We estimated the fair value of our derivatives using industry standard valuation models. In compliance with the authoritative guidance for fair value measurements, our valuation methodology for derivatives incorporated the effect of our non-performance risk and the non-performance risk of our counterparties. |
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Benefit Plans | Benefit Plans We have funded and unfunded noncontributory defined pension plans. We recognize the net pension asset or liability, also referred to herein as the funded status of the benefit plans, in other assets or other liabilities, depending on the funded status at the end of each reporting period. We recognize the net actuarial gains or losses and prior service cost or credit that arise during the period in other comprehensive income or loss. Many of our employees are participants in our 401(k) plan. Our contributions to the plan are charged to salaries and benefits within operating expenses. |
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Share-based Compensation Plans | Share-based Compensation Plans We measure compensation cost for service-based and performance-based awards at estimated fair value and recognize compensation expense over the requisite service period for awards expected to vest. The estimation of awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from current estimates, such amounts will be recorded as a cumulative adjustment to salaries and benefits in the period estimates are revised. For service-based awards subject to graded vesting, expense is recognized under the straight-line method. Expense for performance-based awards with graded vesting is recognized under the accelerated method, whereby each vesting is treated as a separate award with expense for each vesting recognized ratably over the requisite service period. |
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Fair Value Measurements | Fair Value Measurements Management is responsible for the determination of the fair value of our financial assets and financial liabilities and the supporting methodologies and assumptions. We employ widely accepted internal valuation models or utilize third-party valuation service providers to gather, analyze, and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments or pools of finance receivables. When our valuation service providers are unable to obtain sufficient market observable information upon which to estimate the fair value for a particular security, we determine fair value either by requesting brokers who are knowledgeable about these securities to provide a quote, which is generally non-binding, or by employing widely accepted internal valuation models. Our valuation process typically requires obtaining data about market transactions and other key valuation model inputs from internal or external sources and, through the use of widely accepted valuation models, provides a single fair value measurement for individual securities or pools of finance receivables. The inputs used in this process include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, bid-ask spreads, currency rates, and other market-observable information as of the measurement date as well as the specific attributes of the security being valued, including its term, interest rate, credit rating, industry sector, and other issue or issuer-specific information. When market transactions or other market observable data is limited, the extent to which judgment is applied in determining fair value is greatly increased. We assess the reasonableness of individual security values received from our valuation service providers through various analytical techniques. As part of our internal price reviews, assets that fall outside a price change tolerance are sent to our third-party investment manager for further review. In addition, we may validate the reasonableness of fair values by comparing information obtained from our valuation service providers to other third-party valuation sources for selected securities. We measure and classify assets and liabilities in the consolidated balance sheets in a hierarchy for disclosure purposes consisting of three “Levels” based on the observability of inputs available in the market place used to measure the fair values. In general, we determine the fair value measurements classified as Level 1 based on inputs utilizing quoted prices in active markets for identical assets or liabilities that we have the ability to access. We generally obtain market price data from exchange or dealer markets. We do not adjust the quoted price for such instruments. We determine the fair value measurements classified as Level 2 based on inputs utilizing other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The use of observable and unobservable inputs is further discussed in Note 24. In certain cases, the inputs we use to measure the fair value of an asset may fall into different levels of the fair value hierarchy. In such cases, we determine the level in the fair value hierarchy within which the fair value measurement in its entirety falls based on the lowest level input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. We recognize transfers into and out of each level of the fair value hierarchy as of the end of the reporting period. Our fair value processes include controls that are designed to ensure that fair values are appropriate. Such controls include model validation, review of key model inputs, analysis of period-over-period fluctuations, and reviews by senior management. |
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Prior Period Revisions | PRIOR PERIOD REVISIONS During the second quarter of 2015, we discovered that we had not charged-off certain bankrupt accounts in our SpringCastle Portfolio and we identified an error in the calculation of the allowance for our TDR personal loans. As a result of these findings, we recorded an out-of-period adjustment in the second quarter of 2015, which increased provision for finance receivable losses by $8 million and decreased provision for income taxes by $3 million. The adjustment was not material to our results of operations for 2015. During the second quarter of 2015, we identified incorrect allocations of our total assets disclosure within the segment footnote. We evaluated the impact of these errors and concluded that they were not material to any previously issued financial statements. However, we corrected the previously disclosed periods in our subsequent quarterly reports and in Note 23 of this report and will also correct the prior period segment disclosure presented in our next quarterly report as follows:
During the third quarter of 2015, we discovered that our cash equivalents in certificates of deposit and commercial paper, which totaled $165 million at December 31, 2014, were incorrectly presented as a Level 1 investment, instead of a Level 2 investment in our disclosure of the fair value hierarchy of our financial instruments in our 2014 Annual Report on Form 10-K. The affected fair value amount has been corrected in Note 24 of this report. This presentation error was not material to any previously issued financial statements. After evaluating the quantitative and qualitative aspects of these corrections (individually and in the aggregate), management has determined that our previously issued interim and annual consolidated financial statements were not materially misstated. |
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New Accounting Pronouncements | ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED Troubled Debt Restructurings In January of 2014, the Financial Accounting Standards Board (the “FASB”) issued ASU 2014-04, Receivables - Troubled Debt Restructurings by Creditors (Subtopic 310-40): Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure, which clarifies when an in substance repossession or foreclosure occurs — that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The ASU requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The amendments in this ASU became effective prospectively for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. The adoption of this ASU did not have a material effect on our consolidated financial statements. Debt Issuance Costs In April of 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest, which simplifies the presentation of debt issuance costs. Under this standard, debt issuance costs related to a note shall be reported in the balance sheet as a direct reduction from the face amount of that note. The ASU also clarifies that discount, premium or debt issuance costs shall not be classified as a deferred charge or deferred credit. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued and must be applied retrospectively. We elected to early adopt this ASU as of June 30, 2015 and applied this ASU retrospectively. On June 30, 2015, we reclassified $32 million of debt issuance costs previously recorded in other assets to long-term debt. After retrospectively applying this new ASU, we also reclassified $29 million of debt issuance costs as of December 31, 2014 from other assets to long-term debt in our condensed consolidated balance sheet. We continue to report fees paid to access our conduit facilities in other assets. The adoption of this ASU did not have a material effect on our consolidated financial statements. In August of 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest, to clarify that debt issuance costs associated with line-of-credit arrangements are to be deferred and amortized over the term of the arrangement. The amendment also acknowledged absence of authoritative guidance within previously issued ASU 2015-03 for debt issuance costs related to line-of-credit arrangements. The ASU became effective immediately. The adoption of this ASU did not have a material effect on our consolidated financial statements. Push-down Accounting In May of 2015, the FASB issued ASU 2015-08, Business Combinations-Pushdown Accounting, to remove Securities and Exchange Commission (the “SEC”) staff guidance on push-down accounting from the Accounting Standards Codification (“ASC”). The SEC staff had previously rescinded its guidance with the issuance of Staff Accounting Bulletin No. 115 when the FASB issued its own push-down accounting guidance in November 2014. The ASU became effective immediately. The adoption of this ASU did not have a material effect on our consolidated financial statements. Plan Accounting In July of 2015, the FASB issued ASU 2015-12, Plan Accounting, to simplify certain aspects of employee benefit plan (“EBP”) accounting while satisfying the needs of users of financial statements, including plan participants. The new guidance simplifies the measurement of fully benefit-responsive investment contracts and disclosures about plan investments. It also allows an EBP with a fiscal year end that doesn’t coincide with the end of a calendar month to choose a simpler way of measuring its investments and investment-related accounts. The ASU is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We elected to early adopt this ASU as of September 30, 2015. The adoption of this ASU did not have a material effect on our consolidated financial statements. Business Combination Adjustments In September of 2015, the FASB issued ASU 2015-16, Business Combinations, to eliminate the requirement to restate prior period financial statements for measurement period adjustments. This update requires the cumulative impact of a measurement period adjustment, including the impact on prior periods, to be recognized in the reporting period in which the adjustment is identified. The ASU is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We elected to early adopt this ASU as of December 31, 2015. The adoption of this ASU did not have a material effect on our consolidated financial statements. ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED Revenue Recognition In May of 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides a consistent revenue accounting model across industries. In August of 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, to defer the effective date of the new revenue recognition standard by one year, which would result in the ASU becoming effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Many of our revenue sources are not within the scope of this new standard, and we are evaluating whether the adoption of this ASU for those revenue sources that are in scope will have a material effect on our consolidated financial statements. Consolidation In February of 2015, the FASB issued ASU 2015-02, Consolidation - Amendments to the Consolidation Analysis, which amends the current consolidation guidance and ends the deferral granted to reporting entities with variable interests in investment companies from applying certain prior amendments to the VIE guidance. This ASU is applicable to entities across all industries, particularly those that use limited partnerships as well as entities in any industry that outsource decision making or have historically applied related party tiebreaker in their consolidation analysis and disclosures. The standard is effective for public business entities for annual periods beginning after December 15, 2015. Early adoption is allowed, including in any interim period. We evaluated the potential impact of the adoption of this ASU and concluded that it will not have a material effect on our consolidated financial statements. Short-Duration Insurance Contracts Disclosures In May of 2015, the FASB issued ASU 2015-09, Disclosures about Short-Duration Contracts, to address enhanced disclosure requirements for insurers relating to short-duration insurance contract claims and unpaid claims liability rollforward for long and short-duration contracts. The disclosures are intended to provide users of financial statements with more transparent information about an insurance entity’s initial claim estimates and subsequent adjustments to those estimates, the methodologies and judgments used to estimate claims, and the timing, frequency, and severity of claims. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. We are currently evaluating the potential impact of the adoption the ASU on our consolidated financial statements. Technical Corrections and Improvements In June of 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements, to correct differences between original guidance and the Codification, clarify the guidance, correct references and make minor improvements affecting a variety of topics. While most of the amendments are not expected to have a significant effect on practice, some of them could change practice for some entities. The amendments to transition guidance are effective for fiscal years beginning after December 15, 2015; all other changes are effective upon issuance of this ASU. We are currently evaluating the potential impact of the adoption of this ASU on our consolidated financial statements. Balance Sheet Classification of Deferred Taxes In November of 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes, which simplifies the presentation and requires all deferred tax assets (“DTAs”) and liabilities (“DTLs”), along with related valuation allowances, to be classified as noncurrent. In essence, each jurisdiction will have only one net noncurrent DTA/DTL. The ASU is effective for public business entities for annual periods, and interim periods within those annual periods, beginning December 15, 2016. Early adoption is permitted and may be applied either prospectively or retrospectively. We evaluated the potential impact of the adoption of this ASU and concluded that it will not have a material effect on our consolidated financial statements. |
Summary of Significant Accounting Policies Change in Accounting Policy (Tables) - USD ($) $ in Millions |
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Dec. 31, 2015 |
Dec. 31, 2014 |
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Change in Accounting Policy [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cumulative effect of change in accounting policy [Table Text Block] | The effect of this change in accounting policy on income (loss) before provision for (benefit from) income taxes and net income (loss) attributable to SFC, and the cumulative effect of this change in accounting policy on shareholder’s equity attributable to SFC for the following prior periods are included in the table below.
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Schedule of Revised Condensed Balance Sheet [Table Text Block] | Revised Condensed Consolidated Balance Sheet
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Schedule of Revised Condensed Income Statement [Table Text Block] | Revised Condensed Consolidated Statements of Operations
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Joint venture | $ 8 | $ 0 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revised Condensed Cash Flow Statement [Table Text Block] | Revised Condensed Consolidated Statement of Cash Flows
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Summary of Significant Accounting Policies Prior Period Revisions (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Error Corrections and Prior Period Adjustments | However, we corrected the previously disclosed periods in our subsequent quarterly reports and in Note 23 of this report and will also correct the prior period segment disclosure presented in our next quarterly report as follows:
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Finance Receivables (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of net finance receivables by type | Components of net finance receivables by type were as follows:
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Schedule of unused credit lines extended to customers by the Company | Unused lines of credit extended to customers by the Company were as follows:
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Schedule of largest concentrations of net finance receivables | The largest concentrations of net finance receivables were as follows:
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Summary of net finance receivables by type by days delinquent | The following is a summary of net finance receivables by type and by days delinquent:
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Schedule of performing and nonperforming net finance receivables by type | Our performing and nonperforming net finance receivables by type were as follows:
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Schedule of information regarding purchased credit impaired finance receivables | Information regarding our purchased credit impaired finance receivables held for investment and held for sale were as follows:
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Schedule of Purchased credit impaired FA Loans held for sale [Table Text Block] | Purchased credit impaired FA Loans held for sale included in the table above were as follows:
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Schedule of changes in accretable yield for purchased credit impaired finance receivables | Changes in accretable yield for purchased credit impaired finance receivables held for investment and held for sale were as follows:
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Schedule of Accretion on our purchased credit impaired FA Loans held for sale [Table Text Block] | Accretion on our purchased credit impaired FA Loans held for sale included in the table above were as follows:
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Schedule of Troubled Debt Restructurings,Held for Investments and Held for Sale [Table Text Block] | Information regarding TDR finance receivables held for investment and held for sale were as follows:
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Schedule of TDR finance receivables held for sale (gross, net and allowance) [Table Text Block] | TDR finance receivables held for sale included in the table above were as follows:
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Schedule of TDR average net receivables and finance charges recognized on TDR finance receivables | TDR average net receivables held for investment and held for sale and finance charges recognized on TDR finance receivables held for investment and held for sale were as follows:
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Schedule of trouble debt restructuring average held for sale [Table Text Block] | TDR finance receivables held for sale included in the table above were as follows:
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Schedule of information regarding new volume of the TDR finance receivables | Information regarding the new volume of the TDR finance receivables held for investment and held for sale were as follows:
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Schedule of Information regarding new volume of TDR finance receivables held for sale [Table Text Block] | TDR finance receivables held for sale included in the table above were as follows:
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Schedule of net finance receivables that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period to cause TDR finance receivables to be considered nonperforming | Net finance receivables held for investment and held for sale that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period to cause the TDR finance receivables to be considered nonperforming (90 days or more past due) were as follows:
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Schedule of net finance receivables that were modified TDRs that were held for sale [Table Text Block] | TDR finance receivables held for sale included in the table above were as follows:
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Allowance for Finance Receivable Losses (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases Receivable, Allowance [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the allowance for finance receivable losses by finance receivable type | Changes in the allowance for finance receivable losses by finance receivable type were as follows:
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Schedule of carrying amount charged-off for purchased credit impaired loans | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allowance for finance receivable losses and net finance receivables by type and by impairment method | The allowance for finance receivable losses and net finance receivables by type and by impairment method were as follows:
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Investment Securities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Available-for-sale Securities Reconciliation | Cost/amortized cost, unrealized gains and losses, and fair value of available-for-sale securities by type were as follows:
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Schedule of fair value and unrealized losses on available-for-sale securities by type and length of time in a continuous unrealized loss position | Fair value and unrealized losses on available-for-sale securities by type and length of time in a continuous unrealized loss position were as follows:
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Schedule of contractual maturities of fixed-maturity available-for-sale securities | Contractual maturities of fixed-maturity available-for-sale securities at December 31, 2015 were as follows:
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Schedule of fair value of trading securities by type | The fair value of trading and other securities by type was as follows:
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Available-for-sale securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of realized gains, realized losses, and net realized gains (losses) due to sale or redemption of fair values of available-for-sale securities | The proceeds of available-for-sale securities sold or redeemed and the resulting realized gains, realized losses, and net realized gains were as follows:
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Trading securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment securities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of net unrealized and realized gains (losses) on trading securities | The net unrealized and realized gains (losses) on our trading and other securities, which we report in investment revenues, were as follows:
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Other Assets (Tables) |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of other assets | Components of other assets were as follows:
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Schedule of gross carrying amount and accumulated amortization, in total and by major intangible asset class | The gross carrying amount and accumulated amortization, in total and by major intangible asset class were as follows:
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Schedule of estimated aggregate amortization of other intangible assets | The estimated aggregate amortization of other intangible assets for each of the next five years is reflected in the table below.
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Long-term Debt (Tables) |
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of carrying value and fair value of long-term debt by type | Carrying value and fair value of long-term debt by type were as follows:
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Schedule of weighted average interest rates on long-term debt by type | Weighted average effective interest rates on long-term debt by type were as follows:
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Schedule of principal maturities of long-term debt by type of debt | Principal maturities of long-term debt (excluding projected repayments on securitizations and revolving conduit facilities by period) by type of debt at December 31, 2015 were as follows:
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Variable Interest Entities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entities | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of carrying amounts of consolidated VIE assets and liabilities associated with securitization trusts | The carrying amounts of consolidated VIE assets and liabilities associated with our securitization trusts were as follows:
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Schedule of Variable Interest Entities Sale of Previously Retained Mortgage Backed Securities and Asset Backed Securities [Table Text Block] | During 2013, we sold the following previously retained mortgage-backed notes:
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Derivative Financial Instruments (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of changes in the notional amounts of cross currency interest rate swap agreements and foreign currency forward agreement | Changes in the notional amounts of our cross currency interest rate swap agreements were as follows:
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Schedule of derivative adjustments included in other revenues - other | Derivative adjustments included in other revenues — other consisted of the following:
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Insurance (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Insurance [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of insurance claims and policyholder liabilities | Components of unearned insurance premium reserves, claim reserves and benefit reserves were as follows:
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Schedule of insurance claims and policyholder liabilities assumed from other insurers | Our insurance subsidiaries enter into reinsurance agreements with other insurers. Reserves related to unearned premiums, claims and benefits included the following amounts assumed from other insurers:
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Schedule of changes in the liability for unpaid claims and loss adjustment expenses, net of reinsurance recoverable | Changes in the reserve for unpaid claims and loss adjustment expenses, net of reinsurance recoverable:
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Schedule of statutory net income for insurance companies by type of insurance | Statutory net income (loss) for our insurance companies by type of insurance was as follows:
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Schedule of statutory capital and surplus for insurance companies by type of insurance | Statutory capital and surplus for our insurance companies by type of insurance were as follows:
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Other Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Liabilities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of other liabilities | Components of other liabilities were as follows:
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Capital Stock (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of par value and shares authorized | Par value and shares authorized at December 31, 2015 were as follows:
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Schedule of shares issued and outstanding | Shares issued and outstanding were as follows:
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Accumulated Other Comprehensive Income (Loss) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of changes in accumulated other comprehensive income (loss) | Changes, net of tax, in accumulated other comprehensive income (loss) were as follows:
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Schedule of reclassification adjustments from accumulated other comprehensive income (loss) | Reclassification adjustments from accumulated other comprehensive income (loss) to the applicable line item on our consolidated statements of operations were as follows:
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Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income before Income Tax, Domestic and Foreign [Table Text Block] | Components of income (loss) before provision for (benefit from) income taxes were as follows:
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Schedule of components of benefit from income taxes | Components of provision for (benefit from) income taxes were as follows:
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Schedule of reconciliations of statutory federal income tax rate to effective tax rate | Reconciliations of the statutory federal income tax rate to the effective tax rate were as follows:
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Schedule of reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax obligation | A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax obligation (all of which would affect the effective tax rate if recognized) is as follows:
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Schedule of components of deferred tax assets and liabilities | Components of deferred tax assets and liabilities were as follows:
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Lease Commitments, Rent Expense, and Contingent Liabilities (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of annual rental commitments for leased office space, automobiles and information technology equipment accounted for as operating leases, excluding leases on a month-to-month basis and the amortization of the lease intangibles recorded as a result of the Fortress Acquisition | Annual rental commitments for leased office space, automobiles and information technology equipment accounted for as operating leases, excluding leases on a month-to-month basis, were as follows:
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Schedule of Finance Receivables Activity in Reserve for Sales Recourse Obligations | The activity in our reserve for sales recourse obligations associated with the real estate loan sales during 2014 and other prior sales of finance receivables was as follows:
|
Benefit Plans (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of funded status of the defined benefit pension plans and other postretirement benefit plans | We have recognized the aggregate of all overfunded plans in other assets and the aggregate of all underfunded plans in other liabilities.
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Schedule of defined benefit pension plan obligations in which the projected benefit obligation was in excess of the related plan assets and the accumulated benefit obligation was in excess of the related plan assets | Defined benefit pension plan obligations in which the projected benefit obligation (“PBO”) was in excess of the related plan assets and the accumulated benefit obligation (“ABO”) was in excess of the related plan assets were as follows:
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Schedule of components of net periodic benefit cost in income and other amounts recognized in accumulated other comprehensive income or loss | The following table presents the components of net periodic benefit cost recognized in income and other amounts recognized in accumulated other comprehensive income or loss with respect to the defined benefit pension plans and other postretirement benefit plans:
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Summary of weighted average assumptions used to determine projected benefit obligations and net periodic benefit costs | The following table summarizes the weighted average assumptions used to determine the projected benefit obligations and the net periodic benefit costs:
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Schedule of expected future benefit payments, net of participants' contributions, of defined benefit pension plans and other postretirement benefit plans | The expected future benefit payments, net of participants’ contributions, of our defined benefit pension plans at December 31, 2015 are as follows:
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Schedule of plan assets measured at fair value and indicates the fair value hierarchy based on the levels of inputs utilized to determine fair value | The following table presents information about our plan assets measured at fair value and indicates the fair value hierarchy based on the levels of inputs we utilized to determine such fair value:
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Share-Based Compensation (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of restricted stock activity | The following table summarizes the service-based stock activity and related information for the Omnibus Plan for 2015:
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Summary of performance activity | The following table summarizes the performance-based stock activity and related information for the Omnibus Plan for 2015:
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Segment Information (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of information about the Company's segments as well as reconciliations to consolidated financial statement amounts | The following tables present information about the Company’s segments, as well as reconciliations to the consolidated financial statement amounts.
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Fair Value Measurements (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of fair values and carrying values of financial instruments and fair value hierarchy based on the level of inputs utilized to determine such fair value | The following table summarizes the fair values and carrying values of our financial instruments and indicates the fair value hierarchy based on the level of inputs we utilized to determine such fair values:
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Schedule of information about assets and liabilities measured at fair value on a recurring basis and the fair value hierarchy based on the levels of inputs utilized to determine such fair value | The following tables present information about our assets measured at fair value on a recurring basis and indicates the fair value hierarchy based on the levels of inputs we utilized to determine such fair value:
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Schedule of changes in Level 3 assets and liabilities measured at fair value on a recurring basis | The following table presents changes during 2015 in Level 3 assets measured at fair value on a recurring basis:
The following table presents changes during 2014 in Level 3 assets measured at fair value on a recurring basis:
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Quantitative information about Level 3 inputs for assets measured on a recurring basis | Quantitative information about Level 3 inputs for our assets measured at fair value on a recurring basis for which information about the unobservable inputs is reasonably available to us at December 31, 2015 and 2014 is as follows:
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Schedule of assets measured at fair value on a non-recurring basis on which impairment charges were recorded | Assets measured at fair value on a non-recurring basis on which we recorded impairment charges were as follows:
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Quantitative information about Level 3 inputs for assets measured on a nonrecurring basis | Quantitative information about Level 3 inputs for our assets measured at fair value on a non-recurring basis at December 31, 2015 and 2014 is as follows:
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Selected Quarterly Financial Data (Unaudited) (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2015 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Quarterly Financial Information Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of selected quarterly financial data | Our selected quarterly financial data for 2015 was as follows:
Our selected quarterly financial data for 2014 was as follows:
|
Nature of Operations - paragraph 2 (Details) |
Dec. 31, 2015 |
---|---|
Springleaf Financial Holdings, LLC | |
Schedule of Equity Method Investments [Line Items] | |
Ownership percentage - SpringCastle | 58.00% |
Nature of Operations - paragraph 3 (Details) account in Millions, $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2015
USD ($)
employee
account
state
branch
|
Dec. 31, 2014
USD ($)
|
|
Related Party Transaction [Line Items] | ||
Net finance receivables | $ | $ 6,564 | $ 6,578 |
Number of states in which entity operates | state | 27 | |
Minimum [Member] | ||
Related Party Transaction [Line Items] | ||
Number of Customer Accounts from which Finance Receivable Due | account | 1.2 | |
Number of branch offices, more than | branch | 800 | |
Entity Number of Employees | employee | 3,500 |
Significant Transactions OMH Acquisition of OneMain Financial Holding, LLC (Details) $ in Billions |
Nov. 15, 2015
USD ($)
|
Nov. 13, 2015
branch
|
Nov. 12, 2015
USD ($)
|
---|---|---|---|
Independence Holding, Inc. | Springfield Financial Cash Services, Inc | Subsidiaries | |||
Business Acquisition [Line Items] | |||
Cash proceeds for revolving demand note | $ 3.4 | ||
OneMain | |||
Business Acquisition [Line Items] | |||
Cash consideration | $ 4.5 | ||
Number of branches divested | branch | 127 |
Significant Transactions Lendmark Sale (Details) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Nov. 13, 2015 |
Nov. 12, 2015
USD ($)
branch
|
Dec. 31, 2015
USD ($)
|
Sep. 30, 2015
USD ($)
|
|
Sale of Branches to Lendmark | ||||
Business Acquisition [Line Items] | ||||
Branches divested, as a percent of total branches | 15.00% | |||
Number of days to close sale of branches | 120 days | |||
Sale of Branches to Lendmark | Personal Loans | ||||
Business Acquisition [Line Items] | ||||
Loans receivable held for sale | $ 617 | $ 608 | ||
Percentage of net finance receivables held for sale | 13.00% | |||
Sale of Branches to Lendmark | Maximum [Member] | ||||
Business Acquisition [Line Items] | ||||
Consideration from disposal of branches | $ 695 | |||
Lendmark Sale | ||||
Business Acquisition [Line Items] | ||||
Number of branch offices | branch | 127 | |||
Loans purchased multiplier as of Lendmark Sale closing date | 103.00% |
Summary of Significant Accounting Policies Basis of Presentation (Details) |
Dec. 31, 2015 |
Jul. 31, 2014 |
---|---|---|
Corporate Joint Venture | ||
Entity Information [Line Items] | ||
Ownership percentage - SpringCastle | 47.00% | 47.00% |
Recent Accounting Pronouncements (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Jun. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Debt issuance cost | $ 32 | $ 29 | |
New Accounting Pronouncement, Early Adoption, Effect | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Debt issuance cost | $ 29 |
Finance Receivables - Unused Lines Of Credit Extended To Customers (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unused credit lines | $ 397 | $ 386 |
Personal Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unused credit lines | 2 | 1 |
Real Estate Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unused credit lines | 30 | 31 |
SpringCastle Portfolio | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Unused credit lines | $ 365 | $ 354 |
Finance Receivables - Purchased Credit Impaired Held For Investment And Held For Sale (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying amount, net of allowance | $ 439 | $ 557 |
Outstanding balance | 618 | 779 |
Allowance for purchased credit impaired finance receivable losses | 12 | 11 |
SpringCastle Portfolio | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying amount, net of allowance | 350 | 452 |
Outstanding balance | 482 | 628 |
Allowance for purchased credit impaired finance receivable losses | 0 | 0 |
FA Loans | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Carrying amount, net of allowance | 89 | 105 |
Outstanding balance | 136 | 151 |
Allowance for purchased credit impaired finance receivable losses | 12 | 11 |
Carrying amount of finance receivables held for sale | 59 | 72 |
Outstanding balance of finance receivables held for sale | $ 89 | $ 99 |
Investment Securities - Proceeds of AFS Securities Sold or Redeemed (Details 3) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Available-for-sale securities sold or redeemed | |||
Fair value | $ 416 | $ 260 | $ 254 |
Realized gains | 15 | 9 | 4 |
Realized losses | (1) | (1) | (2) |
Net realized gains (losses) | $ 14 | $ 8 | $ 2 |
Investment Securities - Contractual Maturities of Fixed Maturity AFS Securities (Details 4) $ in Millions |
Dec. 31, 2015
USD ($)
|
---|---|
Fair Value | |
Due in 1 year or less | $ 96 |
Due after 1 year through 5 years | 165 |
Due after 5 years through 10 years | 54 |
Due after 10 years | 123 |
Mortgage-backed, asset-backed, and collateralized securities | 147 |
Fair Value | 585 |
Amortized Cost | |
Due in 1 year or less | 96 |
Due after 1 year through 5 years | 166 |
Due after 5 years through 10 years | 55 |
Due after 10 years | 132 |
Mortgage-backed, asset-backed, and collateralized securities | 148 |
Amortized Cost | $ 597 |
Investment Securities (Narrative) (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Schedule of Available-for-sale Securities [Line Items] | |||
Net impairment losses recognized in net income (loss) | $ 0 | $ 0 | $ 0 |
Available-for-sale securities with other-than-temporary impairments recognized in accumulated other comprehensive income or loss | 0 | 0 | |
Available-for-sale securities | 591,000,000 | 600,000,000 | |
Insurance Regulatory Authorities Bonds on Deposit | |||
Schedule of Available-for-sale Securities [Line Items] | |||
Available-for-sale securities | $ 11,000,000 | $ 12,000,000 |
Other Assets Components of Other Assets Table (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Components of Other Assets Table [Abstract] | ||
Fixed assets, net | $ 83 | $ 73 |
Other investments | 67 | 104 |
Prepaid expenses and deferred charges | 35 | 23 |
Ceded insurance reserves | 22 | 22 |
Other intangible assets | 16 | 20 |
Escrow advance receivable | 11 | 8 |
Cost basis investments | 10 | 0 |
Receivables from parent and affiliates | 9 | 11 |
Current tax receivable | 8 | 105 |
Real estate owned | 8 | 13 |
Receivables related to sales of real estate loans and related trust assets | 5 | 79 |
Other | 7 | 17 |
Other Assets | $ 281 | $ 475 |
Other Assets (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Other Assets [Abstract] | ||||
Accumulated depreciation on fixed assets | $ 173 | $ 167 | ||
Debt issuance cost | $ 32 | 29 | ||
New Accounting Pronouncement, Early Adoption [Line Items] | ||||
Long-term debt | 9,582 | 8,356 | ||
Holdback provision receivable on loans sold | $ 5 | 64 | ||
Adjustments for New Accounting Principle, Early Adoption | ||||
Other Assets [Abstract] | ||||
Debt issuance cost | $ 29 | $ 39 |
Other Assets - Other Intangible Assets (Details 2) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Intangible asset | |||
Gross Carrying Amount | $ 75 | $ 75 | |
Accumulated Amortization | (59) | (55) | |
Net Other Intangible Assets | 16 | 20 | |
Amortization expense | $ 4 | 4 | $ 5 |
amortization expense of intangibles periods in table | 5 years | ||
Estimated Aggregate Amortization Expense | |||
2016 | $ 1 | ||
2017 | 0 | ||
2018 | 0 | ||
2019 | 0 | ||
2020 | 0 | ||
Value of business acquired (“VOBA”) | |||
Intangible asset | |||
Gross Carrying Amount | 36 | 36 | |
Accumulated Amortization | (32) | (32) | |
Net Other Intangible Assets | 4 | 4 | |
Customer relationships | |||
Intangible asset | |||
Gross Carrying Amount | 18 | 18 | |
Accumulated Amortization | (18) | (15) | |
Net Other Intangible Assets | 0 | 3 | |
Licenses | |||
Intangible asset | |||
Gross Carrying Amount | 12 | 12 | |
Accumulated Amortization | 0 | 0 | |
Net Other Intangible Assets | 12 | 12 | |
Customer lists | |||
Intangible asset | |||
Gross Carrying Amount | 9 | 9 | |
Accumulated Amortization | (9) | (8) | |
Net Other Intangible Assets | $ 0 | $ 1 |
Long-term Debt - Carrying Value and Fair Value (Details) - USD ($) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Jun. 30, 2015 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Debt Instrument [Line Items] | ||||
Debt issuance cost | $ 32 | $ 29 | ||
Long-term debt | 9,582 | $ 8,356 | ||
Fair Value | 9,998 | 9,182 | ||
Adjustments for New Accounting Principle, Early Adoption | ||||
Debt Instrument [Line Items] | ||||
Debt issuance cost | 29 | $ 39 | ||
Senior debt | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 9,410 | 8,184 | ||
Fair Value | 9,753 | 8,920 | ||
Junior Subordinated Debt | ||||
Debt Instrument [Line Items] | ||||
Long-term debt | 172 | 172 | ||
Fair Value | $ 245 | $ 262 |
Long-term Debt - Weighted Average Interest Rates (Details) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Debt Instrument [Line Items] | |||
Weighted average interest rates during period | 7.05% | 7.19% | 7.14% |
Weighted average interest rates | 6.76% | 7.26% | |
Senior debt | |||
Debt Instrument [Line Items] | |||
Weighted average interest rates during period | 6.96% | 7.10% | 7.06% |
Weighted average interest rates | 6.66% | 7.16% | |
Junior Subordinated Debt | |||
Debt Instrument [Line Items] | |||
Weighted average interest rates during period | 12.26% | 12.26% | 12.26% |
Weighted average interest rates | 12.26% | 12.26% |
Variable Interest Entities SpringCastle 2014-A Securitization (Details) - USD ($) $ in Millions |
Oct. 03, 2014 |
Dec. 31, 2015 |
Mar. 09, 2015 |
Sep. 30, 2014 |
---|---|---|---|---|
Debt Instrument [Line Items] | ||||
Long-term debt, gross | $ 10,101 | |||
Springleaf Acquisition Corporation | SpringCastle 2014-A Notes, Class C | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, gross | $ 232 | |||
Springleaf Acquisition Corporation | SpringCastle 2014-A Notes, Class D | ||||
Debt Instrument [Line Items] | ||||
Long-term debt, gross | $ 131 | |||
Spring Castle Credit Funding LLC | Asset-backed securities | ||||
Debt Instrument [Line Items] | ||||
Debt instrument, face amount | $ 2,600 | |||
Weighted Average Yield of Notes | 4.68% | |||
Proceeds from issuance of debt, net | $ 2,600 | |||
Long-term debt, unpaid balance | $ 1,500 | |||
Notes purchased from SAC | 363 | |||
Debt instrument, retained by co-issuer | $ 62 | |||
Noncontrolling interest, ownership percentage | 30.00% |
Derivative Financial Instruments (Details) $ in Millions |
12 Months Ended | |||
---|---|---|---|---|
Aug. 05, 2013
USD ($)
instrument
|
Dec. 31, 2013
USD ($)
instrument
|
Dec. 31, 2015
instrument
|
Dec. 31, 2014
instrument
|
|
Fair value of derivative instruments | ||||
Derivative, Notional Amount | 0 | 0 | ||
Other Noninterest Income | ||||
Fair value of derivative instruments | ||||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ | $ 3 | |||
Cross currency interest rate | ||||
Fair value of derivative instruments | ||||
Derivative, Notional Amount | 0 | |||
AIGFP | Affiliated companies | Cross currency interest rate | ||||
Fair value of derivative instruments | ||||
Derivative, Notional Amount | 0 | |||
AIGFP | Affiliated companies | Cross currency interest rate | Other Noninterest Income | ||||
Fair value of derivative instruments | ||||
Loss recorded in other revenues - other on termination | $ | $ 2 | $ 2 |
Derivative Financial Instruments - Cross Currency Interest Rate Swaps (Details 2) - Cross currency interest rate $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2013
USD ($)
| |
Fair value of derivative instruments | |
Balance at beginning of period | $ 417 |
Discontinued and terminated contracts | (417) |
Balance at end of period | $ 0 |
Derivative Financial Instruments - Derivative Adjustments (Details 3) $ in Millions |
12 Months Ended |
---|---|
Dec. 31, 2013
USD ($)
| |
Other Noninterest Income | |
Derivative [Line Items] | |
Gain (Loss) on Hedging Activity | $ 9 |
Gain Loss on Derivative Instruments Mark to Market | (8) |
Other Noninterest Income | |
Derivative [Line Items] | |
Unrealized Gain (Loss) on Derivatives | $ 1 |
Insurance - Change in Reserve for Unpaid Claims and Loss Adjustment (Details 2) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Changes in the liability for unpaid claims and loss adjustment expenses, net of reinsurance recoverable | |||
Balance at beginning of period | $ 48 | $ 46 | $ 51 |
Additions for losses and loss adjustment expense incurred to: | |||
Current year | 64 | 65 | 59 |
Prior years | 0 | (3) | (6) |
Total | 64 | 62 | 53 |
Reductions for losses and loss adjustment expenses paid related to: | |||
Current year | (40) | (39) | (35) |
Prior years | (21) | (21) | (23) |
Total | (61) | (60) | (58) |
Balance at end of period | $ 51 | $ 48 | $ 46 |
Insurance - Statutory Net Income (Loss) (Details 3) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Property and casualty | |||
Statutory net income and statutory capital and surplus | |||
Statutory net income | $ 15 | $ 16 | $ 41 |
Statutory capital and surplus | 76 | 108 | |
Life and accident and health | |||
Statutory net income and statutory capital and surplus | |||
Statutory net income | (1) | (2) | $ 3 |
Statutory capital and surplus | $ 123 | $ 171 |
Other Liabilities (Details) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Other Liabilities Disclosure [Abstract] | ||
Retirement plans | $ 55 | $ 50 |
Accrued interest on debt | 55 | 57 |
Payables to parent and affiliates | 24 | 48 |
Other accrued expenses and accounts payable | 17 | 30 |
Loan principal warranty reserve | 15 | 24 |
Salary and benefit liabilities | 14 | 11 |
Bank overdrafts | 14 | 5 |
Other insurance liabilities | 5 | 4 |
Other | 17 | 30 |
Total | $ 216 | $ 259 |
Accumulated Other Comprehensive Income (Loss) - Reclassification Adjustments (Details 2) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Reclassification adjustments from accumulated other comprehensive income (loss) | |||||||||||
Reclassification from accumulated other comprehensive income (loss) to investment revenues, before taxes | $ (49) | $ (39) | $ (34) | ||||||||
Income tax effect | $ (4) | $ (5) | $ 0 | $ (9) | $ 17 | $ (198) | $ (29) | $ (23) | (18) | (233) | 49 |
Unrealized gains (losses) on investment securities | Reclassification adjustments | |||||||||||
Reclassification adjustments from accumulated other comprehensive income (loss) | |||||||||||
Reclassification from accumulated other comprehensive income (loss) to investment revenues, before taxes | 14 | 8 | 2 | ||||||||
Income tax effect | 5 | 3 | 1 | ||||||||
Reclassification from accumulated other comprehensive income (loss) to investment revenues, net of taxes | $ 9 | $ 5 | $ 1 |
Income Taxes - Components of Deferred Tax Assets and Liabilities (Details 2) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
---|---|---|
Deferred tax assets: | ||
Allowance for loan losses | $ 95 | $ 81 |
Capital loss carryforward | 27 | 0 |
Pension/employee benefits | 26 | 20 |
State taxes, net of federal | 19 | 20 |
Net operating losses and tax attributes | 16 | 19 |
Joint venture | 8 | 0 |
Legal and warranty reserve | 6 | 9 |
Deferred insurance commissions | 5 | 3 |
Payment protection insurance liability | 2 | 5 |
Other | 8 | 5 |
Total | 212 | 162 |
Deferred tax liabilities: | ||
Debt writedown | 150 | 194 |
Impact of tax accounting method change | 76 | 0 |
Discount - debt exchange | 20 | 23 |
Deferred Tax Liabilities, Mark to Market | 21 | 51 |
Insurance reserves | 15 | 10 |
Other intangible assets | 5 | 7 |
Other | 0 | 5 |
Total | 287 | 295 |
Deferred Tax Assets, Liabilities Gross | (75) | (133) |
Valuation allowance | (38) | (44) |
Net deferred tax liabilities | $ (113) | $ (177) |
Income Taxes - Narrative (Details 3) - USD ($) $ in Millions |
Dec. 31, 2015 |
Dec. 31, 2014 |
Jul. 31, 2014 |
---|---|---|---|
Income taxes | |||
Net deferred tax liabilities | $ 113 | $ 177 | |
Valuation allowance | 38 | 44 | |
Capital loss carryforward | 78 | ||
State operating loss carryforward | 548 | 500 | |
State | |||
Income taxes | |||
Valuation allowance | 22 | 26 | |
Income taxes receivable, current | 8 | 5 | |
United Kingdom operations | |||
Income taxes | |||
Foreign net operating loss carryforward from United Kingdom operations | 13 | 15 | |
Federal and foreign tax authorities | |||
Income taxes | |||
Taxes payable, current | 14 | ||
Income taxes receivable, current | 100 | ||
Puerto Rico Jurisdiction | |||
Income taxes | |||
Foreign net operating loss carryforward from United Kingdom operations | 2 | 2 | |
Puerto Rico Jurisdiction | United Kingdom operations | |||
Income taxes | |||
Valuation allowance | $ 16 | $ 18 | |
Corporate Joint Venture | |||
Income taxes | |||
Ownership percentage - SpringCastle | 47.00% | 47.00% |
Lease Commitments, Rent Expense, and Contingent Liabilities (Details) $ in Millions |
Dec. 31, 2015
USD ($)
|
---|---|
Annual rental commitments for leased office space, automobiles and information technology equipment accounted for as operating leases | |
First quarter 2016 | $ 7 |
Second quarter 2016 | 7 |
Third quarter 2016 | 7 |
Fourth quarter 2016 | 6 |
2015 | 27 |
2017 | 21 |
2018 | 15 |
2019 | 9 |
2020 | 4 |
2021 and thereafter | 1 |
Total | $ 77 |
Lease Commitments, Rent Expense, and Contingent Liabilities Sales Recourse Obligations (Details) request in Millions, $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015
USD ($)
loan
request
|
Dec. 31, 2014
USD ($)
loan
|
Dec. 31, 2013
USD ($)
loan
|
|
Loss Contingencies [Line Items] | |||
Number of loans repurchased under recourse agreement | loan | 13 | 9 | 20 |
Payments to repurchase financing receivables | $ 1 | $ 1 | $ 3 |
Material recourse requests with loss exposure not expected to be covered by reserve | request | 0 | ||
Balance at beginning of period | $ 24 | 5 | 5 |
Recourse losses | (2) | 0 | 0 |
Provision for recourse obligations, net of recoveries | (7) | 19 | 0 |
Balance at end of period | $ 15 | 24 | $ 5 |
Real Estate Loan | |||
Loss Contingencies [Line Items] | |||
Reserve for sale recourse obligations related to finance receivables sold | $ 22 |
Lease Commitments, Rent Expense, and Contingent Liabilities Narrative (Details) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Commitments and Contingencies Disclosure [Abstract] | |||
Rental expense | $ 28 | $ 29 | $ 30 |
Estimated PPI claims reserve | $ 6 | $ 14 |
Benefit Plans - 401(k) Plans (Details 2) - USD ($) $ in Millions |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Springleaf Financial Services 401(k) Plan | |||
401(K) PLANS | |||
Maximum employer matching contribution (as a percent) | 100.00% | 100.00% | 100.00% |
Percentage of employee salary eligible for employer matching contribution | 4.00% | 4.00% | 4.00% |
Maximum employer discretionary profit sharing contribution as percentage of annual pay | 4.00% | ||
Salaries and benefit expense related to plan | $ 5 | $ 4 | $ 4 |
CommoLoCo Thrift Plan | |||
401(K) PLANS | |||
Maximum employer matching contribution (as a percent) | 100.00% | ||
Percentage of employee salary eligible for employer matching contribution | 3.00% | ||
Employer's match of employees' contributions of the next 3% of eligible compensation (as a percent) | 50.00% | ||
Percentage of eligible compensation, matched 50% by employer | 3.00% |
Share-Based Compensation - Service-based Activity (Details) - Restricted Stock Units |
12 Months Ended |
---|---|
Dec. 31, 2015
$ / shares
shares
| |
Number of Shares | |
Unvested shares at beginning of period | shares | 1,352,865 |
Granted | shares | 1,115,662 |
Vested | shares | (384,902) |
Forfeited | shares | (74,201) |
Unvested shares at end of period | shares | 2,009,424 |
Weighted Average Grant Date Fair Value | |
Weighted average grant date fair value, beginning of period (in USD per share) | $ / shares | $ 17.91 |
Weighted average grant date fair value (in USD per share) | $ / shares | 47.44 |
Vested (in USD per share) | $ / shares | 18.45 |
Forfeited (in USD per share) | $ / shares | 24.65 |
Weighted average grant date fair value, end of period (in USD per share) | $ / shares | $ 33.95 |
Weighted Average Remaining Term (in Years) | 2 years 10 months 28 days |
Share-Based Compensation - Performance Based Activity (Details) - Performance Shares - $ / shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2015 |
Dec. 31, 2014 |
|
Number of Shares | ||
Unvested shares at beginning of period | 583,459 | |
Granted | 16,091 | |
Forfeited | (18,437) | |
Unvested shares at end of period | 581,113 | 583,459 |
Weighted Average Grant Date Fair Value | ||
Weighted average grant date fair value, beginning of period (in USD per share) | $ 25.84 | |
Weighted average grant date fair value (in USD per share) | 34.45 | $ 25.78 |
Forfeited (in USD per share) | 35.05 | |
Weighted average grant date fair value, end of period (in USD per share) | $ 25.79 | $ 25.84 |
Weighted Average Remaining Term (in Years) | 2 years 7 months 2 days |
Fair Value Measurements - Quantitative Information About Level 3 (Details 4) - Level 3 - Recurring - Discounted cash flows $ in Millions |
12 Months Ended | |
---|---|---|
Dec. 31, 2015
USD ($)
bond
|
Dec. 31, 2014
USD ($)
bond
|
|
Corporate debt | ||
Unobservable Input | ||
Yield (as a percent) | 0.00% | 1.05% |
Number of bonds | 1 | |
RMBS | ||
Unobservable Input | ||
Spread (as a percent) | 6.65% | 7.36% |
Number of bonds | 1 | 1 |
Minimum disclosure amount of debt instrument, fair value disclosure. | $ | $ 1 | $ 1 |
CMBS | ||
Unobservable Input | ||
Number of bonds | 1 | |
Collateralized Mortgage Backed Securities | ||
Unobservable Input | ||
Spread (as a percent) | 0.00% | 1.39% |
Number of bonds | 1 |
Fair Value Measurements - Narrative (Details) |
Dec. 31, 2015
USD ($)
|
---|---|
Fair Value Measurements [Abstract] | |
Debt carried at fair value | $ 0 |
Subsequent Events - Call of 2013-B Notes (Details) - Consolidated VIEs - Asset-backed securities - Springleaf FundingTrust 2013 B - USD ($) $ in Millions |
Feb. 16, 2016 |
Jun. 19, 2013 |
---|---|---|
Subsequent events | ||
Amount of notes sold under private securitization transaction | $ 256 | |
Subsequent Event [Member] | ||
Subsequent events | ||
Debt instrument, redemption price | $ 371 | |
Amount excluded from the redemption price | 30 | |
Amount of notes sold under private securitization transaction | $ 400 |
Selected Quarterly Financial Data (Unaudited) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2015 |
Sep. 30, 2015 |
Jun. 30, 2015 |
Mar. 31, 2015 |
Dec. 31, 2014 |
Sep. 30, 2014 |
Jun. 30, 2014 |
Mar. 31, 2014 |
Dec. 31, 2015 |
Dec. 31, 2014 |
Dec. 31, 2013 |
|
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Interest income | $ 430 | $ 422 | $ 406 | $ 399 | $ 403 | $ 431 | $ 389 | $ 402 | $ 1,657 | $ 1,625 | $ 1,637 |
Interest expense | 167 | 171 | 171 | 158 | 157 | 172 | 172 | 182 | 667 | 683 | 843 |
Provision for finance receivable losses | 109 | 78 | 73 | 79 | 87 | 85 | 80 | 100 | 339 | 352 | 371 |
Total other revenues | 81 | 49 | 59 | 54 | (38) | 602 | 90 | 91 | 243 | 745 | 161 |
Total other expenses | 198 | 182 | 186 | 169 | 172 | 182 | 152 | 151 | 735 | 657 | 709 |
Income (loss) before provision for (benefit from) income taxes | 37 | 40 | 35 | 47 | (51) | 594 | 75 | 60 | 159 | 678 | (125) |
Provision for (benefit from) income taxes | 4 | 5 | 0 | 9 | (17) | 198 | 29 | 23 | 18 | 233 | (49) |
Net income (loss) | 33 | 35 | 35 | 38 | (34) | 396 | 46 | 37 | 141 | 445 | (76) |
Net income attributable to non-controlling interests | 29 | 32 | 33 | 33 | 22 | 26 | 0 | 0 | 127 | 48 | 0 |
Net income attributable to Springleaf Finance Corporation | $ 4 | $ 3 | $ 2 | $ 5 | $ (56) | $ 370 | $ 46 | $ 37 | $ 14 | $ 397 | $ (76) |
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