FINANCE RECEIVABLES

Finance receivables consist of the following (in thousands):



Consumer	June 30, 2012			December 31, 2011
Pre-acquisition consumer finance receivables - outstanding balance	$	3,100,850		$	4,366,075
Pre-acquisition consumer finance receivables - carrying value	$	2,812,205		$	4,027,361
Post-acquisition consumer finance receivables, net of fees	7,340,242			5,313,899
	10,152,447			9,341,260
Less: allowance for loan losses on post-acquisition consumer finance receivables	(249,350		)	(178,768		)
Total consumer finance receivables, net	9,903,097			9,162,492
Commercial
Commercial finance receivables, net of fees	127,560
Less: allowance for loan losses
Total commercial finance receivables, net	127,560
Total finance receivables, net	$	10,030,657		$	9,162,492

Consumer Finance Receivables

A summary of our consumer finance receivables is as follows (in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Pre-acquisition consumer finance receivables - carrying value, beginning of period	$	3,357,341		$	6,337,075		$	4,027,361		$	7,299,963
Post-acquisition consumer finance receivables, beginning of period	6,326,427			2,004,813			5,313,899			923,713
	9,683,768			8,341,888			9,341,260			8,223,676
Loans purchased	1,489,402			1,349,222			2,885,159			2,487,143
Charge-offs	(52,741		)	(6,738		)	(103,799		)	(8,547		)
Principal collections and other	(931,614		)	(859,565		)	(1,851,479		)	(1,712,185		)
Change in carrying value adjustment on the pre-acquisition finance receivables	(36,368		)	(130,266		)	(118,694		)	(295,546		)
Balance at end of period	$	10,152,447		$	8,694,541		$	10,152,447		$	8,694,541

The accrual of finance charge income has been suspended on $412.0 million and $439.4 million of consumer receivables (based on contractual amount due) as of June 30, 2012 and December 31, 2011, respectively.

Consumer finance contracts are purchased by us from auto dealers without recourse, and accordingly, the dealer has no liability to us if the consumer defaults on the contract. Depending upon the contract structure and consumer credit attributes, we may pay dealers a participation fee or we may charge dealers a non-refundable acquisition fee when purchasing individual finance contracts. We also have manufacturer incentive programs with GM and other new vehicle manufacturers, typically known as subvention programs, under which the manufacturers provide us cash payments in order for us to offer lower interest rates on consumer finance contracts we purchase. We record the amortization of participation fees and subvention and accretion of acquisition fees to finance charge income using the effective interest method.

We review our pre-acquisition portfolio for differences between contractual cash flows and the cash flows expected to be collected from our pre-acquisition portfolio to determine if the difference is attributable, at least in part, to credit quality. During the six months ended June 30, 2012, as a result of improvements in the credit performance of the pre-acquisition portfolio, which resulted in an increase of expected cash flows of $169.6 million, we transferred this excess from the non-accretable discount to accretable yield. This excess will be amortized through finance charge income over the remaining life of the portfolio.

A summary of the accretable yield is as follows (in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Balance at beginning of period	$	768,260		$	999,368		$	737,464		$	1,201,178
Accretion of accretable yield	(143,584		)	(180,618		)	(279,409		)	(382,428		)
Transfer from non-accretable discount	3,013			253,666			169,634			253,666
Balance at end of period	$	627,689		$	1,072,416		$	627,689		$	1,072,416

A summary of the allowance for loan losses is as follows (in thousands):



	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2012			2011			2012			2011
Balance at beginning of period	$	208,092		$	65,415		$	178,768		$	26,352
Provision for loan losses	61,876			44,570			110,430			83,994
Charge-offs	(52,741		)	(6,738		)	(103,799		)	(8,547		)
Recoveries	32,123			4,279			63,951			5,727
Balance at end of period	$	249,350		$	107,526		$	249,350		$	107,526

Credit Risk

A summary of the credit risk profile by FICO score band of the consumer finance receivables, determined at origination, is as follows (in thousands):



	June 30, 2012		December 31, 2011
FICO Score less than 540	$	2,630,877	$	2,133,361
FICO Score 540 to 599	4,632,294		4,166,988
FICO Score 600 to 659	2,582,625		2,623,882
FICO Score greater than 660	595,296		755,743
Balance at end of period^(a)	$	10,441,092	$	9,679,974

_________________

(a) Balance at end of period is the sum of pre-acquisition consumer finance receivables - outstanding balance and post-acquisition consumer finance receivables, net of fees.

Delinquency

A consumer account is considered delinquent if a substantial portion of a scheduled payment has not been received by the date such payment was contractually due. The following is a summary of the contractual amounts of consumer finance receivables, which is not materially different than recorded investment, that are (i) more than 30 days delinquent, but not yet in repossession, and (ii) in repossession, but not yet charged-off (dollars in thousands):



	June 30, 2012				June 30, 2011
	Amount		Percent of Contractual Amount Due		Amount		Percent of Contractual Amount Due
Delinquent contracts:
31 to 60 days	$	427,672	4.1	%	$	397,792	4.4	%
Greater than 60 days	158,065		1.5		157,845		1.7
	585,737		5.6		555,637		6.1
In repossession	25,726		0.3		23,387		0.3
	$	611,463	5.9	%	$	579,024	6.4	%

Impaired Finance Receivables - Troubled Debt Restructurings

Consumer receivables in the post-acquisition portfolio that become classified as TDRs are separately assessed for impairment. A specific allowance is estimated based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. At June 30, 2012, the financial effects of the accounts in the post-acquisition portfolio that became classified as TDRs resulted in an impairment charge recorded as part of the provision for loan losses. Accounts that become classified as TDRs because of a payment deferral still accrue interest at the contractual rate and an additional fee is collected at each time of deferral and recorded as a reduction of accrued interest. No interest or fees are forgiven on a payment deferral to a customer and therefore, there are no additional financial effects of deferred loans becoming classified as TDRs. Accounts in Chapter 13 bankruptcy would have already been placed on non-accrual, therefore there are no additional financial effects of these loans becoming classified as TDRs.

The outstanding recorded investment for consumer finance receivables that are considered to be TDRs and the related allowance as of June 30, 2012 is shown below (in thousands):



	June 30, 2012
Outstanding recorded investment	$	55,291
Less: allowance for loan losses	(15,272		)
Outstanding recorded investment, net of allowance	$	40,019
Unpaid principal balance	$	57,469

All accounts noted above had a related allowance for loan losses. At December 31, 2011, the amount of consumer finance receivables in the post-acquisition portfolio that would be considered TDRs was insignificant.

Interest income from loans accounted for as TDRs is accounted for in the same manner as other accruing loans. Cash collections on these loans are allocated according to the same payment hierarchy methodology applied to loans that are not classified as TDRs. Additional information about loans classified as TDRs is shown below (in thousands):



	Three Months Ended		Six Months Ended
	June 30, 2012
Average recorded investment	$	52,830	$	50,640
Interest income recognized	1,043		1,178

The following table provides information on loans that became classified as TDRs during the three and six months ended June 30, 2012 (in thousands):



	Three Months Ended		Six Months Ended
	June 30, 2012
Outstanding principal balance	$	38,132	$	51,091

The following table presents the carrying value of loans that were charged-off during the three and six months ended June 30, 2012 that had been classified as a TDR during the preceding twelve months (in thousands):



	Three Months Ended		Six Months Ended
	June 30, 2012
Carrying value charged-off on TDRs that subsequently defaulted	$	385	$	605

Commercial Finance Receivables

A summary of our commercial finance receivables is as follows (in thousands):



	Three Months Ended
	June 30, 2012
Balance at beginning of period	$
Loans funded	173,796
Principal collections and other	(46,236		)
Balance at end of period	$	127,560

There were no commercial receivables on non-accrual as of June 30, 2012.

Credit Risk

Our commercial finance receivables consist of dealer floorplan financings and dealer loans. A proprietary model is used to assign a risk rating to each dealer. A credit review of each dealer is performed at least annually and, if necessary, the dealer's risk rating is adjusted on the basis of the review.

Delinquency

At June 30, 2012, all commercial receivables were current with respect to payment status.

Impaired Finance Receivables - Troubled Debt Restructurings

Commercial receivables classified as TDRs are assessed for impairment and included in our allowance for credit losses based on the present value of the expected future cash flows of the receivable discounted at the loan's original effective interest rate. For receivables where foreclosure is probable, the fair value of the collateral is used to estimate the specific impairment. At June 30, 2012, there were no outstanding commercial receivables classified as TDRs.