FINANCIAL SERVICES SECTOR FINANCE RECEIVABLES

Our Financial Services sector, primarily Ford Credit, segments finance receivables into “consumer” and “non-consumer” portfolios. The receivables are generally secured by the vehicles, inventory, or other property being financed.

Finance receivables, net were as follows (in millions):



	September 30, 2015			December 31, 2014
Consumer
Retail financing, gross	$	61,241		$	55,856
Unearned interest supplements	(2,117		)	(1,760		)
Consumer finance receivables	59,124			54,096
Non-Consumer
Dealer financing	32,151			31,340
Other financing	1,049			1,026
Non-Consumer finance receivables	33,200			32,366
Total recorded investment	$	92,324		$	86,462

Recorded investment in finance receivables	$	92,324		$	86,462
Allowance for credit losses	(356		)	(321		)
Finance receivables, net (a)	$	91,968		$	86,141

Net finance receivables subject to fair value (b)	$	90,163		$	84,468
Fair value	91,848			85,941

__________


(a)	On the consolidated balance sheet at September 30, 2015 and December 31, 2014, $6.8 billion and $5 billion, respectively, are reclassified to Other receivables, net, resulting in Finance receivables, net of $85.2 billion and $81.1 billion, respectively.


(b)	At September 30, 2015 and December 31, 2014, excludes $1.8 billion and $1.7 billion, respectively, of certain receivables (primarily direct financing leases) that are not subject to fair value disclosure requirements.

Excluded from finance receivables at September 30, 2015 and December 31, 2014, was $184 million and $191 million, respectively, of accrued uncollected interest, which we report in Other assets on the balance sheet.

Included in the recorded investment in finance receivables at September 30, 2015 and December 31, 2014 were consumer receivables of $27.7 billion and $24.4 billion, respectively, and non-consumer receivables of $23.1 billion and $21.8 billion, respectively, that have been sold for legal purposes in securitization transactions but continue to be reported in our consolidated financial statements. The receivables are available only for payment of the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions; they are not available to pay the other obligations or the claims of Ford Credit’s other creditors. Ford Credit holds the right to receive the excess cash flows not needed to pay the debt issued by, and other obligations of, the securitization entities that are parties to those securitization transactions (see Note 11 for additional information).

NOTE 4. FINANCIAL SERVICES SECTOR FINANCE RECEIVABLES (Continued)

Aging

For all finance receivables, we define “past due” as any payment, including principal and interest, that is at least 31 days past the contractual due date. The recorded investment of consumer receivables greater than 90 days past due and still accruing interest was $15 million and $17 million at September 30, 2015 and December 31, 2014, respectively. The recorded investment of non-consumer receivables greater than 90 days past due and still accruing interest was $3 million at September 30, 2015 and December 31, 2014.

The aging analysis of our finance receivables balances were as follows (in millions):



	September 30, 2015		December 31, 2014
Consumer
31-60 days past due	$	597	$	718
61-90 days past due	94		97
91-120 days past due	25		29
Greater than 120 days past due	39		52
Total past due	755		896
Current	58,369		53,200
Consumer finance receivables	59,124		54,096

Non-Consumer
Total past due	127		117
Current	33,073		32,249
Non-Consumer finance receivables	33,200		32,366
Total recorded investment	$	92,324	$	86,462

Credit Quality

Consumer Portfolio. Credit quality ratings for consumer receivables are based on aging. Refer to the aging table above.

Consumer receivables credit quality ratings are as follows:


•	Pass – current to 60 days past due


•	Special Mention – 61 to 120 days past due and in intensified collection status


•	Substandard – greater than 120 days past due and for which the uncollectible portion of the receivables has already been charged off, as measured using the fair value of collateral

Non-Consumer Portfolio. Dealers are assigned to one of four groups according to risk ratings as follows:


•	Group I – strong to superior financial metrics


•	Group II – fair to favorable financial metrics


•	Group III – marginal to weak financial metrics


•	Group IV – poor financial metrics, including dealers classified as uncollectible

NOTE 4. FINANCIAL SERVICES SECTOR FINANCE RECEIVABLES (Continued)

The credit quality analysis of our dealer financing receivables was as follows (in millions):



	September 30, 2015		December 31, 2014
Dealer Financing
Group I	$	24,206	$	23,125
Group II	6,379		6,350
Group III	1,458		1,783
Group IV	108		82
Total recorded investment	$	32,151	$	31,340

Impaired Receivables

Impaired consumer receivables include accounts that have been rewritten or modified in reorganization proceedings pursuant to the U.S. Bankruptcy Code that are considered to be troubled debt restructurings (“TDRs”), as well as all accounts greater than 120 days past due. Impaired non-consumer receivables represent accounts with dealers that have weak or poor financial metrics or dealer financing that has been modified in TDRs. The recorded investment of consumer receivables that were impaired at September 30, 2015 and December 31, 2014 was $375 million, or 0.6% of consumer receivables, and $415 million, or 0.8% of consumer receivables, respectively. The recorded investment of non-consumer receivables that were impaired at September 30, 2015 and December 31, 2014 was $129 million, or 0.4% of non-consumer receivables, and $105 million, or 0.3% of non-consumer receivables, respectively. Impaired finance receivables are evaluated both collectively and specifically.