FORD CREDIT FINANCE RECEIVABLES

Ford Credit manages finance receivables as “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):



	December 31, 2017			September 30, 2018
Consumer
Retail financing, gross	$	78,331		$	80,136
Unearned interest supplements	(3,280		)	(3,442		)
Consumer finance receivables	75,051			76,694
Non-Consumer
Dealer financing	33,938			31,753
Non-Consumer finance receivables	33,938			31,753
Total recorded investment	$	108,989		$	108,447

Recorded investment in finance receivables	$	108,989		$	108,447
Allowance for credit losses	(597		)	(586		)
Finance receivables, net	$	108,392		$	107,861

Current portion	$	52,210		$	50,818
Non-current portion	56,182			57,043
Finance receivables, net	$	108,392		$	107,861

Net finance receivables subject to fair value (a)	$	105,106		$	104,184
Fair value	104,521			103,408

__________


(a)	At December 31, 2017 and September 30, 2018, Finance receivables, net includes $3.3 billion and $3.7 billion, respectively, of direct financing leases that are not subject to fair value disclosure requirements. The fair value of finance receivables is categorized within Level 3 of the fair value hierarchy.

Excluded from finance receivables at both December 31, 2017 and September 30, 2018, was $240 million of accrued uncollected interest, which is reported as Other assets in the current assets section of our consolidated balance sheet.

Included in the recorded investment in finance receivables at December 31, 2017 and September 30, 2018, were consumer receivables of $38.9 billion and $38.8 billion, respectively, and non-consumer receivables of $24.5 billion and $23.3 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.

NOTE 8. FORD CREDIT 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 $24 million and $21 million at December 31, 2017 and September 30, 2018, respectively. The recorded investment of non-consumer receivables greater than 90 days past due and still accruing interest was $1 million and de minimis at December 31, 2017 and September 30, 2018, respectively.

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



	December 31, 2017		September 30, 2018
Consumer
31-60 days past due	$	748	$	691
61-90 days past due	113		109
91-120 days past due	36		42
Greater than 120 days past due	37		40
Total past due	934		882
Current	74,117		75,812
Consumer finance receivables	75,051		76,694

Non-Consumer
Total past due	122		77
Current	33,816		31,676
Non-Consumer finance receivables	33,938		31,753
Total recorded investment	$	108,989	$	108,447

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; and


•	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 less costs to sell.

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; and


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

NOTE 8. FORD CREDIT FINANCE RECEIVABLES (Continued)

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



	December 31, 2017		September 30, 2018
Dealer Financing
Group I	$	26,252	$	24,444
Group II	5,908		5,528
Group III	1,640		1,616
Group IV	138		165
Total recorded investment	$	33,938	$	31,753

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 December 31, 2017 and September 30, 2018 was $386 million and $379 million, or 0.5% and 0.5% of consumer receivables, respectively. The recorded investment of non-consumer receivables that were impaired at December 31, 2017 and September 30, 2018 was $138 million and $165 million, or 0.4% and 0.5% of non-consumer receivables, respectively. Impaired finance receivables are evaluated both collectively and specifically.