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Section 1: 10-Q (10-Q)

Document


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
 
þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended March 31, 2017
 
OR
 
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from to
 
Commission file number 001-36129

ONEMAIN HOLDINGS, INC.
(Exact name of registrant as specified in its charter)

Delaware
 
27-3379612
(State of Incorporation)
 
(I.R.S. Employer Identification No.)
 
 
 
601 N.W. Second Street, Evansville, IN
 
47708
(Address of principal executive offices)
 
(Zip Code)

(812) 424-8031
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer þ
 
Accelerated filer o
 
Non-accelerated filer o
 
Smaller reporting company o
Emerging growth company o
 
 
 
 
(Do not check if a smaller reporting company)
 
 
 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

At May 1, 2017, there were 135,297,802 shares of the registrant’s common stock, $0.01 par value, outstanding.
 


Table of Contents


TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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GLOSSARY

Terms and abbreviations used in this report are defined below.
Term or Abbreviation
 
Definition
 
 
 
1999 Indenture
 
Indenture dated as of May 1, 1999 between SFC and Wilmington
2014-A Notes
 
asset-backed notes issued in March 2014 by the Springleaf Funding Trust 2014-A
2016 Annual Report on Form
10-K
 
Annual Report on Form 10-K for the fiscal year ended December 31, 2016
30 - 89 Delinquency ratio
 
net finance receivables 30 - 89 days past due as a percentage of net finance receivables
5.25% SFC Notes
 
$700 million of 5.25% Senior Notes due 2019 issued by SFC and guaranteed by OMH
8.25% SFC Notes
 
$1.0 billion of 8.25% Senior Notes due 2020 issued by SFC and guaranteed by OMH
ABS
 
asset-backed securities
Adjusted pretax income (loss)
 
a non-GAAP financial measure; income (loss) before income tax expense (benefit) on a Segment Accounting Basis and excludes acquisition-related transaction and integration expenses, net gain on sale of SpringCastle interests, SpringCastle transaction costs, and losses resulting from repurchases and repayments of debt
AHL
 
American Health and Life Insurance Company
ASC
 
Accounting Standards Codification
ASU
 
Accounting Standards Update
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
Blackstone
 
collectively, BTO Willow Holdings II, L.P. and Blackstone Family Tactical Opportunities Investment Partnership—NQ—ESC L.P.
CDO
 
collateralized debt obligations
CFPB
 
Consumer Financial Protection Bureau
Citigroup
 
CitiFinancial Credit Company
CMBS
 
commercial mortgage-backed securities
Dodd-Frank Act
 
the Dodd-Frank Wall Street Reform and Consumer Protection Act
Exchange Act
 
Securities Exchange Act of 1934, as amended
FA Loans
 
purchased credit impaired finance receivables related to the Fortress Acquisition
FASB
 
Financial Accounting Standards Board
FHLB
 
Federal Home Loan Bank
FICO score
 
a credit score created by Fair Isaac Corporation
Financial Funding VII LSA
 
loan and security agreement entered into on April 13, 2017 with OneMain Financial Funding VII, LLC and third party lenders whereby it can borrow up to a maximum principal balance of $650 million
Fixed charge ratio
 
earnings less 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
Fortress
 
Fortress Investment Group LLC
Fortress Acquisition
 
FCFI Acquisition LLC, an affiliate of Fortress, acquired an 80% economic interest for a cash purchase price of $119 million, effective November 30, 2010
GAAP
 
generally accepted accounting principles in the United States of America
Gross charge-off ratio
 
annualized gross charge-offs as a percentage of average net receivables
Independence
 
Independence Holdings, LLC
Indiana DOI
 
Indiana Department of Insurance
Initial Stockholder
 
Springleaf Financial Holdings, LLC

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Term or Abbreviation
 
Definition
 
 
 
Junior Subordinated Debenture
 
$350 million aggregate principal amount of 60-year junior subordinated debt issued by SFC under an indenture dated January 22, 2007, by and between SFC and Deutsche Bank Trust Company, as trustee, and guaranteed by OMH
Lendmark Sale
 
the sale of 127 Springleaf branches to Lendmark Financial Service, LLC, effective April 30, 2016
LIBOR
 
London Interbank Offered Rate
Logan Circle
 
Logan Circle Partners, L.P.
Merit
 
Merit Life Insurance Co.
Nationstar
 
Nationstar Mortgage LLC
Net charge-off ratio
 
annualized net charge-offs as a percentage of average net receivables
Net interest income
 
interest income less interest expense
NRZ
 
New Residential Investment Corp.
ODART
 
OneMain Direct Auto Receivables Trust
OM Loans
 
purchased credit impaired personal loans acquired in the OneMain Acquisition
OMFH
 
OneMain Financial Holdings, LLC
OMFH Indenture
 
Indenture entered into on December 11, 2014, as amended or supplemented from time to time, by OMFH and certain of its subsidiaries in connection with the issuance of the OMFH Notes
OMFH Notes
 
collectively, $700 million aggregate principal amount of 6.75% Senior Notes due 2019 and $800 million in aggregate principal amount of 7.25% Senior Notes due 2021
OMFH Supplemental Indenture
 
supplemental indenture dated as of November 8, 2016, to the OMFH Indenture
OMFIT
 
OneMain Financial Issuance Trust
OMH
 
OneMain Holdings, Inc.
OneMain
 
OMFH, collectively with its subsidiaries
OneMain Acquisition
 
Acquisition of OneMain from CitiFinancial Credit Company, effective November 1, 2015
Other SFC Notes
 
collectively, approximately $5.2 billion aggregate principal amount of senior notes, on a senior unsecured basis, and the Junior Subordinated Debenture, on a junior subordinated basis, issued by SFC and guaranteed by OMH
Recovery ratio
 
annualized recoveries on net charge-offs as a percentage of average net receivables
retail sales finance
 
collectively, retail sales contracts and revolving retail accounts
RMBS
 
residential mortgage-backed securities
RSAs
 
restricted stock awards
RSUs
 
restricted stock units
SCP Loans
 
purchased credit impaired loans acquired through the SpringCastle Joint Venture
Segment Accounting Basis
 
a basis used to report the operating results of our segments, which reflects our allocation methodologies for certain costs and excludes the impact of applying purchase accounting
Settlement Agreement
 
a Settlement Agreement with the U.S. Department of Justice entered into by OMH and certain of its subsidiaries on November 13, 2015, in connection with the OneMain Acquisition
SFC
 
Springleaf Finance Corporation
SFC Base Indenture
 
Indenture dated as of December 3, 2014
SFC First Supplemental Indenture
 
supplemental indenture dated as of December 3, 2014, to the SFC Base Indenture
SFC Guaranty Agreements
 
agreements entered into on December 30, 2013 by OMH whereby it agreed to fully and unconditionally guarantee the payments of principal, premium (if any) and interest on the Other SFC Notes
SFC Second Supplemental Indenture
 
supplemental indenture dated as of April 11, 2016, to the SFC Base Indenture
SFC Trust Guaranty Agreement
 
agreement entered into on December 30, 2013 by OMH whereby it agreed to fully and unconditionally guarantee the related payment obligations under the trust preferred securities in connection with the Junior Subordinated Debenture

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Term or Abbreviation
 
Definition
 
 
 
SFI
 
Springleaf Finance, Inc.
SLFT
 
Springleaf Funding Trust
SpringCastle Interests Sale
 
the March 31, 2016 sale by SpringCastle Holdings, LLC and Springleaf Acquisition Corporation of the equity interest in the SpringCastle Joint Venture
SpringCastle Joint Venture
 
joint venture among SpringCastle America, LLC, SpringCastle Credit, LLC, SpringCastle Finance, LLC and SpringCastle Acquisition LLC in which SpringCastle Holdings, LLC previously owned a 47% equity interest in each of SpringCastle America, LLC, SpringCastle Credit, LLC and SpringCastle Finance, LLC and Springleaf Acquisition Corporation previously owned a 47% equity interest in SpringCastle Acquisition LLC
SpringCastle Portfolio
 
loans acquired through the SpringCastle Joint Venture
Springleaf
 
OMH and its subsidiaries (other than OneMain)
Tangible equity
 
total equity less accumulated other comprehensive income or loss
Tangible managed assets
 
total assets less goodwill and other intangible assets
TDR finance receivables
 
troubled debt restructured finance receivables
Texas DOI
 
Texas Department of Insurance
Triton
 
Triton Insurance Company
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
UK
 
United Kingdom
UPB
 
unpaid principal balance
VFN
 
variable funding notes
VIEs
 
variable interest entities
Weighted average interest rate
 
annualized interest expense as a percentage of average debt
Wilmington
 
Wilmington Trust, National Association
Yield
 
annualized finance charges as a percentage of average net receivables
Yosemite
 
Yosemite Insurance Company


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PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.    

ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)

(dollars in millions, except par value amount)
 
March 31,
2017
 
December 31,
2016
 
 
 
 
 
Assets
 
 

 
 

Cash and cash equivalents
 
$
787

 
$
579

Investment securities
 
1,755

 
1,764

Net finance receivables:
 
 

 
 

Personal loans (includes loans of consolidated VIEs of $9.1 billion in 2017 and $9.5 billion in 2016)
 
13,240

 
13,577

Real estate loans
 
139

 
144

Retail sales finance
 
9

 
11

Net finance receivables
 
13,388

 
13,732

Unearned insurance premium and claim reserves
 
(558
)
 
(586
)
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $471 million in 2017 and $501 million in 2016)
 
(666
)
 
(689
)
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses
 
12,164

 
12,457

Finance receivables held for sale
 
148

 
153

Restricted cash and restricted cash equivalents (includes restricted cash and restricted cash equivalents of consolidated VIEs of $526 million in 2017 and $552 million in 2016)
 
558

 
568

Goodwill
 
1,422

 
1,422

Other intangible assets
 
477

 
492

Other assets
 
662

 
688

 
 
 
 
 
Total assets
 
$
17,973

 
$
18,123

 
 
 
 
 
Liabilities and Shareholders’ Equity
 
 

 
 

Long-term debt (includes debt of consolidated VIEs of $7.9 billion in 2017 and $8.2 billion in 2016)
 
$
13,679

 
$
13,959

Insurance claims and policyholder liabilities
 
749

 
757

Deferred and accrued taxes
 
8

 
9

Other liabilities (includes other liabilities of consolidated VIEs of $12 million in 2017 and 2016)
 
432

 
332

Total liabilities
 
14,868

 
15,057

Commitments and contingent liabilities (Note 14)
 


 

 
 
 
 
 
Shareholders’ equity:
 
 

 
 

Common stock, par value $.01 per share; 2,000,000,000 shares authorized, 135,301,202 and 134,867,868 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively
 
1

 
1

Additional paid-in capital
 
1,550

 
1,548

Accumulated other comprehensive loss
 
(2
)
 
(6
)
Retained earnings
 
1,556

 
1,523

Total shareholders’ equity
 
3,105

 
3,066

 
 
 
 
 
Total liabilities and shareholders’ equity
 
$
17,973

 
$
18,123


See Notes to Condensed Consolidated Financial Statements.

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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations (Unaudited)

(dollars in millions, except per share amounts)
 
Three Months Ended March 31,
 
2017
 
2016
 
 
 
 

Interest income:
 
 
 
 
Finance charges
 
$
756

 
$
785

Finance receivables held for sale originated as held for investment
 
3

 
46

Total interest income
 
759

 
831

 
 
 
 
 
Interest expense
 
202

 
226

 
 
 
 
 
Net interest income
 
557

 
605

 
 
 
 
 
Provision for finance receivable losses
 
245

 
197

 
 
 
 
 
Net interest income after provision for finance receivable losses
 
312

 
408

 
 
 
 
 
Other revenues:
 
 

 
 

Insurance
 
103

 
114

Investment
 
19

 
20

Net gain on sale of SpringCastle interests
 

 
167

Other
 
19

 
2

Total other revenues
 
141

 
303

 
 
 
 
 
Other expenses:
 
 

 
 

Operating expenses:
 
 

 
 

Salaries and benefits
 
186

 
214

Acquisition-related transaction and integration expenses
 
23

 
33

Other operating expenses
 
142

 
167

Insurance policy benefits and claims
 
45

 
45

Total other expenses
 
396

 
459

 
 
 
 
 
Income before income taxes
 
57

 
252

 
 
 
 
 
Income taxes
 
24

 
87

 
 
 
 
 
Net income
 
33

 
165

 
 
 
 
 
Net income attributable to non-controlling interests
 

 
28

 
 
 
 
 
Net income attributable to OneMain Holdings, Inc.
 
$
33

 
$
137

 
 
 
 
 
Share Data:
 
 

 
 

Weighted average number of shares outstanding:
 
 

 
 

Basic
 
135,218,586

 
134,694,759

Diluted
 
135,573,167

 
134,907,748

Earnings per share:
 
 

 
 

Basic
 
$
0.25

 
$
1.02

Diluted
 
$
0.25

 
$
1.01


See Notes to Condensed Consolidated Financial Statements.


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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Comprehensive Income (Unaudited)

(dollars in millions)
 
Three Months Ended March 31,
 
2017
 
2016
 
 
 
 
 
Net income
 
$
33

 
$
165

 
 
 
 
 
Other comprehensive income:
 
 

 
 

Net change in unrealized gains on non-credit impaired available-for-sale securities
 
10

 
27

Foreign currency translation adjustments
 

 
6

Income tax effect:
 
 

 
 

Net unrealized gains on non-credit impaired available-for-sale securities
 
(3
)
 
(10
)
Foreign currency translation adjustments
 

 
(2
)
Other comprehensive income, net of tax, before reclassification adjustments
 
7

 
21

Reclassification adjustments included in net income:
 
 

 
 

Net realized gains on available-for-sale securities
 
(4
)
 
(2
)
Income tax effect:
 
 

 
 

Net realized gains on available-for-sale securities
 
1

 
1

Reclassification adjustments included in net income, net of tax
 
(3
)
 
(1
)
Other comprehensive income, net of tax
 
4

 
20

 
 
 
 
 
Comprehensive income
 
37

 
185

 
 
 
 
 
Comprehensive income attributable to non-controlling interests
 

 
28

 
 
 
 
 
Comprehensive income attributable to OneMain Holdings, Inc.
 
$
37

 
$
157


See Notes to Condensed Consolidated Financial Statements.


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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

 
 
OneMain Holdings, Inc. Shareholders’ Equity
 
 
 
 
(dollars in millions)
 
Common
Stock
 
Additional
Paid-in
Capital
 
Accumulated
Other
Comprehensive
Income (Loss)
 
Retained
Earnings
 
OneMain
Holdings, Inc.
Shareholders’
Equity
 
Non-controlling Interests
 
Total
Shareholders’
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2017
 
$
1

 
$
1,548

 
$
(6
)
 
$
1,523

 
$
3,066

 
$

 
$
3,066

Share-based compensation expense, net of forfeitures
 

 
7

 

 

 
7

 

 
7

Withholding tax on share-based compensation
 

 
(5
)
 

 

 
(5
)
 

 
(5
)
Other comprehensive income
 

 

 
4

 

 
4

 

 
4

Net income
 

 

 

 
33

 
33

 

 
33

Balance, March 31, 2017
 
$
1

 
$
1,550

 
$
(2
)
 
$
1,556

 
$
3,105

 
$

 
$
3,105

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance, January 1, 2016
 
$
1

 
$
1,533

 
$
(33
)
 
$
1,308

 
$
2,809

 
$
(79
)
 
$
2,730

Share-based compensation expense, net of forfeitures
 

 
7

 

 

 
7

 

 
7

Excess tax benefit from share-based compensation
 

 
2

 

 

 
2

 

 
2

Withholding tax on share-based compensation
 

 
(5
)
 

 

 
(5
)
 

 
(5
)
Change in non-controlling interests:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributions declared to joint venture partners
 

 

 

 

 

 
(18
)
 
(18
)
Sale of equity interests in SpringCastle joint venture
 

 

 

 

 

 
69

 
69

Other comprehensive income
 

 

 
20

 

 
20

 

 
20

Net income
 

 

 

 
137

 
137

 
28

 
165

Balance, March 31, 2016
 
$
1

 
$
1,537

 
$
(13
)
 
$
1,445

 
$
2,970

 
$

 
$
2,970


See Notes to Condensed Consolidated Financial Statements.


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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)

(dollars in millions)
 
Three Months Ended March 31,
 
2017
 
2016
 
 
 
 
 
Cash flows from operating activities
 
 

 
 

Net income
 
$
33

 
$
165

Reconciling adjustments:
 
 

 
 

Provision for finance receivable losses
 
245

 
197

Depreciation and amortization
 
98

 
151

Deferred income tax charge (benefit)
 
25

 
(43
)
Share-based compensation expense, net of forfeitures
 
7

 
7

Net gain on sale of SpringCastle interests
 

 
(167
)
Other
 
(2
)
 
(1
)
Cash flows due to changes in:
 
 

 
 

Other assets and other liabilities
 
75

 
51

Insurance claims and policyholder liabilities
 
(38
)
 
(24
)
Taxes receivable and payable
 
(3
)
 
67

Accrued interest and finance charges
 
4

 
12

Other, net
 

 
1

Net cash provided by operating activities
 
444

 
416

 
 
 
 
 
Cash flows from investing activities
 
 

 
 

Net principal collections (originations) of finance receivables held for investment and held for sale
 
30

 
(125
)
Proceeds from sale of SpringCastle interests, net of restricted cash released
 

 
26

Cash received from CitiFinancial Credit Company
 

 
23

Available-for-sale securities purchased
 
(132
)
 
(154
)
Trading and other securities purchased
 

 
(1
)
Available-for-sale securities called, sold, and matured
 
162

 
175

Trading and other securities called, sold, and matured
 
2

 
13

Other, net
 
(3
)
 
(2
)
Net cash provided by (used for) investing activities
 
59

 
(45
)
 
 
 
 
 
Cash flows from financing activities
 
 

 
 

Proceeds from issuance of long-term debt, net of commissions
 
366

 
1,673

Repayments of long-term debt
 
(666
)
 
(2,335
)
Distributions to joint venture partners
 

 
(18
)
Excess tax benefit from share-based compensation
 

 
2

Withholding tax on share-based compensation
 
(5
)
 
(5
)
Net cash used for financing activities
 
(305
)
 
(683
)
 
Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)
 
 
 
 
 
 
 
 
 
(dollars in millions)
 
At or for the
Three Months Ended March 31,
 
2017
 
2016
 
 
 
 
 
Effect of exchange rate changes on cash and cash equivalents
 

 
1

 
 
 
 
 
Net change in cash and cash equivalents and restricted cash and restricted cash equivalents
 
198

 
(311
)
Cash and cash equivalents and restricted cash and restricted cash equivalents at beginning of period
 
1,147

 
1,615

Cash and cash equivalents and restricted cash and restricted cash equivalents at end of period
 
$
1,345

 
$
1,304

 
 
 
 
 
Supplemental cash flow information
 
 
 
 
Cash and cash equivalents
 
$
787

 
$
716

Restricted cash and restricted cash equivalents
 
558

 
588

Total cash and cash equivalents and restricted cash and restricted cash equivalents
 
$
1,345

 
$
1,304

 
 
 
 
 
Supplemental non-cash activities
 
 
 
 
Transfer of finance receivables held for investment to finance receivables held for sale (prior to deducting allowance for finance receivable losses)
 
$

 
$
1,608

Transfer of finance receivables to real estate owned
 
2

 
2

Net unsettled investment security purchases
 
(19
)
 


Restricted cash and restricted cash equivalents represent funds required to be set aside by local state authorities for the payment of state specific insurance licenses, as well as funds to be used for future debt payments relating to our securitization transactions and escrow deposits.

See Notes to Condensed Consolidated Financial Statements.


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ONEMAIN HOLDINGS, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements (Unaudited)
March 31, 2017

1. Business and Basis of Presentation    

OneMain Holdings, Inc. is referred to in this report as “OMH” or, collectively with its subsidiaries, whether directly or indirectly owned, the “Company,” “we,” “us,” or “our.” OMH is a Delaware corporation. At March 31, 2017, the Initial Stockholder owned approximately 57% of OMH’s common stock. The Initial Stockholder is owned primarily by a private equity fund managed by an affiliate of Fortress.

OMH is a financial services holding company whose principal subsidiaries are SFI and Independence. SFI’s principal subsidiary is SFC, and Independence’s principal subsidiary is OMFH. SFC and OMFH are financial services holding companies with subsidiaries engaged in the consumer finance and insurance businesses.

BASIS OF PRESENTATION

We prepared our condensed consolidated financial statements using GAAP. These statements are unaudited. The year-end condensed balance sheet data was derived from our audited financial statements, but does not include all disclosures required by GAAP. The statements include the accounts of OMH, its subsidiaries (all of which are wholly owned, except for certain indirect subsidiaries associated with the SpringCastle Joint Venture, in which we owned a 47% equity interest prior to March 31, 2016), and 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 condensed consolidated financial statements and disclosures of contingent assets and liabilities. In management’s opinion, the condensed 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 2017 presentation, we have reclassified certain items in prior periods of our condensed consolidated financial statements. Also, to conform to the new alignment of our segments, as further discussed in Note 16, we have revised our prior period segment disclosures.

The condensed consolidated financial statements in this report should be read in conjunction with the consolidated financial statements and related notes included in our 2016 Annual Report on Form 10-K. We follow the same significant accounting policies for our interim reporting.

2. Recent Accounting Pronouncements    

ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

Investments

In March of 2016, the FASB issued ASU 2016-07, Simplifying the Transition to the Equity Method of Accounting, which eliminates the requirement that, when an investment qualifies for use of the equity method of accounting as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method of accounting had been in effect during all previous periods that the investment had been held. The ASU requires that an entity that has available-for-sale securities recognize, through earnings, the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method of accounting. The amendment in this ASU became effective prospectively for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. We have adopted this ASU as of January 1, 2017 and concluded that it does not have an impact on our consolidated financial statements.

Statement of Cash Flows

In November of 2016, the FASB issued ASU 2016-18, Statement of Cash Flows, which simplifies the presentation of restricted cash on the statement of cash flows by requiring entities to include restricted cash and restricted cash equivalents in the reconciliation of cash and cash equivalents. The amendments in this ASU become effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We have elected to early adopt this ASU as of January 1,

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2017 and presented this change on a retrospective basis for all periods presented. We have concluded that this ASU does not have a material impact on our consolidated financial statements.

Technical Corrections and Improvements

In January of 2017, the FASB issued ASU 2017-03, Accounting Changes and Error Corrections, to enhance the footnote disclosure guidelines for ASUs 2014-09, 2016-02, and 2016-13. The amendments to this transition guidance became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. We have adopted this ASU as of January 1, 2017 on a prospective basis. We have concluded that this ASU does not have a material impact 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. In March of 2016, the FASB issued ASU 2016-08, Principal versus Agent Considerations, which clarifies the implementation of the guidance on principal versus agent considerations from ASU 2014-09. ASU 2016-08 does not change the core principle of the guidance in ASU 2014-09, but rather clarifies the distinction between principal versus agent considerations when implementing ASU 2014-09. In April of 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, to clarify the implementation guidance of ASU 2014-09 relating to performance obligations and licensing. In May of 2016, the FASB issued ASU 2016-12, Narrow-Scope Improvements and Practical Expedients, to clarify guidance in ASU 2014-09 related to assessing collectability, presentation of sales taxes, noncash consideration, and completed contracts/contract modifications. In December of 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606, which improves the guidance specific to the amendments in ASU 2014-09. We believe that the adoption of this ASU will not have a material effect on our consolidated financial statements, and we are in the process of quantifying the expected impact.

Financial Instruments

In January of 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which simplifies the impairment assessment of equity investments. The update requires equity investments to be measured at fair value with changes recognized in net income. This ASU eliminates the requirement to disclose the methods and assumptions to estimate fair value for financial instruments, requires the use of the exit price for disclosure purposes, requires the change in liability due to a change in credit risk to be presented in other comprehensive income, requires separate presentation of financial assets and liabilities by measurement category and form of asset (securities and loans), and clarifies the need for a valuation allowance on a deferred tax asset related to available-for-sale securities. The amendments in this ASU become effective prospectively for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. We are evaluating whether the adoption of this ASU will have a material effect on our consolidated financial statements.

In March of 2017, the FASB issued ASU 2017-08, Receivables - Nonrefundable Fees and Other Costs, which amends the amortization period for certain purchased callable debt securities held at a premium. This ASU shortens the amortization period for the premium from the adjustment of yield over the contractual life of the instrument to the earliest call date. The amendments in this ASU become effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. We are evaluating whether the adoption of this ASU will have a material effect on our consolidated financial statements.

Leases

In February of 2016, the FASB issued ASU 2016-02, Leases. The ASU requires lessees to recognize a right-to-use asset and a liability for the obligation to make payments on leases with terms greater than 12 months and to disclose information related to the amount, timing and uncertainty of cash flows arising from leases, including various qualitative and quantitative requirements. The amendments in this ASU become effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2018. We believe that the adoption of this ASU will have a material effect on our consolidated financial statements, and we are in the process of quantifying the expected impact.

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Revenue Recognition and Derivatives and Hedging

In May of 2016, the FASB issued ASU 2016-11, Revenue Recognition and Derivatives and Hedging, to rescind certain SEC guidance in Topic 605 and Topic 815 as ASU 2014-09 becomes effective. Our adoption of ASU 2014-09 will bring us into alignment with this ASU. We believe that the adoption of this ASU will not have a material effect on our consolidated financial statements.

Allowance for Finance Receivables Losses

In June of 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses: Measurement of Credit Losses on Financial Instruments. The ASU significantly changes the way that entities will be required to measure credit losses. The new standard requires that the estimated credit loss be based upon an “expected credit loss” approach rather than the “incurred loss” approach currently required. The new approach will require entities to measure all expected credit losses for financial assets based on historical experience, current conditions, and reasonable forecasts of collectability. It is anticipated that the expected credit loss model will require earlier recognition of credit losses than the incurred loss approach.

The ASU requires that credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination that are measured at amortized cost basis be determined in a similar manner to other financial assets measured at amortized cost basis; however, the initial allowance for credit losses is added to the purchase price of the financial asset rather than being reported as a credit loss expense. Subsequent changes in the allowance for credit losses are recorded in earnings. Interest income should be recognized based on the effective rate, excluding the discount embedded in the purchase price attributable to expected credit losses at acquisition.

The ASU also requires companies to record allowances for held-to-maturity and available-for-sale debt securities rather than write-downs of such assets.

In addition, the ASU requires qualitative and quantitative disclosures that provide information about the allowance and the significant factors that influenced management’s estimate of the allowance.

The ASU will become effective for the Company for fiscal years beginning January 1, 2020. Early adoption is permitted for fiscal years beginning January 1, 2019. We believe the adoption of this ASU will have a material effect on our consolidated financial statements and we are in the process of quantifying the expected impacts.

Statement of Cash Flows

In August of 2016, the FASB issued ASU 2016-15, Statement of Cash Flows, which clarifies how certain cash receipts and cash payments are presented and classified in the statement of cash flows. The amendments in this ASU will become effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. We are evaluating whether the adoption of this ASU will have a material effect on our consolidated financial statements.

Income Taxes

In October of 2016, the FASB issued ASU 2016-16, Income Taxes, which requires entities to recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. The amendments in this ASU will become effective for annual reporting periods beginning after December 15, 2017, including interim periods within those annual reporting periods. We are evaluating whether the adoption of this ASU will have a material effect on our consolidated financial statements.

Business Combinations

In January of 2017, the FASB issued ASU 2017-01, Business Combinations, to clarify the definition of a business, which establishes a process to determine when an integrated set of assets and activities can be deemed a business combination. The amendments in this ASU become effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. We are evaluating whether the adoption of this ASU will have a material effect on our consolidated financial statements.


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Goodwill Impairment

In January of 2017, the FASB issued ASU 2017-04, Intangibles-Goodwill and Other, which simplifies the test for goodwill impairment by eliminating Step 2 in the impairment process. The amendments in this ASU will become effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. We believe that the adoption of this ASU will not have a material impact on our consolidated financial statements.

Compensation and Benefits

In March of 2017, the FASB issued ASU 2017-07, Compensation-Retirement Benefits, to improve the presentation of the net periodic pension cost and net periodic postretirement benefit costs. It requires that a company present separately the service cost component on the income statement. The amendments in this ASU become effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. We are evaluating whether the adoption of this ASU will have a material effect on our consolidated financial statements.

We do not believe that any other accounting pronouncements issued during the three months ended March 31, 2017, but not yet effective, would have a material impact on our consolidated financial statements or disclosures, if adopted.

3. Finance Receivables    

Our finance receivable types include personal loans, real estate loans, and retail sales finance as defined below:

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 three to six years. At March 31, 2017, we had over 2.1 million personal loans representing $13.2 billion of net finance receivables, compared to 2.2 million personal loans totaling $13.6 billion at December 31, 2016.

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. 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 originating real estate loans in January of 2012, our real estate loans have been 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 in a liquidating status.


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Components of net finance receivables held for investment by type were as follows:
(dollars in millions)
 
Personal
Loans
 
Real Estate
Loans
 
Retail
Sales Finance
 
Total
 
 
 
 
 
 
 
 
 
March 31, 2017
 
 

 
 

 
 

 
 

Gross receivables *
 
$
14,856

 
$
137

 
$
10

 
$
15,003

Unearned finance charges and points and fees
 
(1,843
)
 
1

 
(1
)
 
(1,843
)
Accrued finance charges
 
144

 
1

 

 
145

Deferred origination costs
 
83

 

 

 
83

Total
 
$
13,240

 
$
139

 
$
9

 
$
13,388

 
 
 
 
 
 
 
 
 
December 31, 2016
 
 

 
 

 
 

 
 

Gross receivables *
 
$
15,405

 
$
142

 
$
12

 
$
15,559

Unearned finance charges and points and fees
 
(2,062
)
 
1

 
(1
)
 
(2,062
)
Accrued finance charges
 
151

 
1

 

 
152

Deferred origination costs
 
83

 

 

 
83

Total
 
$
13,577

 
$
144

 
$
11

 
$
13,732

                                      
*
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 initial fair value;

Finance receivables originated subsequent to the OneMain Acquisition and the Fortress Acquisition — gross finance receivables equal the UPB for interest bearing accounts and the gross remaining contractual payments for precompute accounts;

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; and

TDR finance receivables — 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 previously purchased as a performing receivable.

At March 31, 2017 and December 31, 2016, unused lines of credit extended to customers by the Company were immaterial.

CREDIT QUALITY INDICATOR

We consider the delinquency status of our finance receivables as our primary credit quality indicator. We monitor delinquency trends to manage our exposure to credit risk. When finance receivables are 60 days past due, we consider them delinquent and transfer collections management of these accounts to our centralized operations, as these accounts are considered to be at increased risk for loss. At 90 days or more past due, we consider our finance receivables to be nonperforming.


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The following is a summary of net finance receivables held for investment by type and by number of days delinquent:
(dollars in millions)
 
Personal
Loans
 
Real Estate
Loans
 
Retail
Sales Finance
 
Total
 
 
 
 
 
 
 
 
 
March 31, 2017
 
 

 
 

 
 

 
 

Net finance receivables:
 
 

 
 

 
 

 
 

Performing
 
 
 
 
 
 
 
 
Current
 
$
12,652

 
$
102

 
$
9

 
$
12,763

30-59 days past due
 
164

 
8

 

 
172

60-89 days past due
 
120

 
4

 

 
124

Total performing
 
12,936

 
114

 
9

 
13,059

Nonperforming
 
 
 
 
 
 
 
 
90-179 days past due
 
296

 
5

 

 
301

180 days or more past due
 
8

 
20

 

 
28

Total nonperforming
 
304

 
25

 

 
329

Total
 
$
13,240

 
$
139

 
$
9

 
$
13,388

 
 
 
 
 
 
 
 
 
December 31, 2016
 
 

 
 

 
 

 
 

Net finance receivables:
 
 

 
 

 
 

 
 

Performing
 
 
 
 
 
 
 
 
Current
 
$
12,920

 
$
102

 
$
11

 
$
13,033

30-59 days past due
 
174

 
9

 

 
183

60-89 days past due
 
130

 
4

 

 
134

Total performing
 
13,224

 
115

 
11

 
13,350

Nonperforming
 
 
 
 
 
 
 
 
90-179 days past due
 
349

 
8

 

 
357

180 days or more past due
 
4

 
21

 

 
25

Total nonperforming
 
353

 
29

 

 
382

Total
 
$
13,577

 
$
144

 
$
11

 
$
13,732


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 March 31, 2017 and at December 31, 2016 were immaterial. Our personal loans and real estate loans do not have finance receivables that were more than 90 days past due and still accruing finance charges.

PURCHASED CREDIT IMPAIRED FINANCE RECEIVABLES

Our purchased credit impaired finance receivables consist of receivables purchased in connection with the OneMain Acquisition and the Fortress Acquisition.

Prior to March 31, 2016, our purchased credit impaired finance receivables also included the SpringCastle Portfolio, which was purchased in connection with the joint venture acquisition of the SpringCastle Portfolio. On March 31, 2016, we sold the SpringCastle Portfolio in connection with the SpringCastle Interests Sale.

We report the carrying amount (which initially was the fair value) 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 March 31, 2017 and December 31, 2016, finance receivables held for sale totaled $148 million and $153 million, respectively, which 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. See Note 5 for further information on our finance receivables held for sale.


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Information regarding our purchased credit impaired finance receivables held for investment and held for sale were as follows:
(dollars in millions)
 
OM Loans
 
FA Loans (a)
 
Total
 
 
 
 
 
 
 
March 31, 2017
 
 
 
 

 
 

Carrying amount, net of allowance
 
$
273

 
$
68

 
$
341

Outstanding balance (b)
 
379

 
105

 
484

Allowance for purchased credit impaired finance receivable losses
 
29

 
8

 
37

 
 
 
 
 
 
 
December 31, 2016
 
 
 
 

 
 

Carrying amount, net of allowance
 
$
324

 
$
70

 
$
394

Outstanding balance (b)
 
444

 
107

 
551

Allowance for purchased credit impaired finance receivable losses
 
29

 
8

 
37

                                      
(a)
Purchased credit impaired FA Loans held for sale included in the table above were as follows:
(dollars in millions)
 
March 31,
2017
 
December 31, 2016
 
 
 
 
 
Carrying amount
 
$
53

 
$
54

Outstanding balance
 
81

 
83


(b)
Outstanding balance is defined as UPB of the loans with a net carrying amount.

The allowance for purchased credit impaired finance receivable losses at March 31, 2017 and December 31, 2016, reflected the 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:
(dollars in millions)
 
OM Loans
 
SCP Loans
 
FA Loans
 
Total
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 

 
 

 
 

Balance at beginning of period
 
$
59

 
$

 
$
60

 
$
119

Accretion (a)
 
(11
)
 

 
(1
)
 
(12
)
Balance at end of period
 
$
48

 
$

 
$
59

 
$
107

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 

 
 

 
 

Balance at beginning of period
 
$
151

 
$
375

 
$
66

 
$
592

Accretion (a)
 
(24
)
 
(16
)
 
(2
)
 
(42
)
Reclassifications from nonaccretable difference (b)
 

 

 
10

 
10

Transfer due to finance receivables sold
 

 
(359
)
 

 
(359
)
Other (c)
 
(23
)
 

 

 
(23
)
Balance at end of period
 
$
104

 
$

 
$
74

 
$
178

                                      
(a)
Accretion on our purchased credit impaired FA Loans held for sale included in the table above were immaterial.

(b)
Reclassifications from nonaccretable difference represents the increases in accretable yield resulting from higher estimated undiscounted cash flows.

(c)
Other reflects a measurement period adjustment in the first quarter of 2016 based on a change in the expected cash flows in the purchase credit impaired portfolio related to the OneMain Acquisition. The measurement period adjustment created a decrease of $23 million to the beginning balance of the OM Loans accretable yield.


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TDR FINANCE RECEIVABLES

Information regarding TDR finance receivables held for investment and held for sale were as follows:
(dollars in millions)
 
Personal
Loans
 
Real Estate
Loans *
 
Total
 
 
 
 
 

 
 
March 31, 2017
 
 
 
 

 
 
TDR gross finance receivables
 
$
163

 
$
133

 
$
296

TDR net finance receivables
 
164

 
134

 
298

Allowance for TDR finance receivable losses
 
73

 
11

 
84

 
 
 
 
 

 
 
December 31, 2016
 
 
 
 

 
 
TDR gross finance receivables
 
$
151

 
$
133

 
$
284

TDR net finance receivables
 
152

 
134

 
286

Allowance for TDR finance receivable losses
 
69

 
11

 
80

                                      
*
TDR real estate loans held for sale included in the table above were as follows:
(dollars in millions)
 
March 31,
2017
 
December 31, 2016
 
 
 
 
 

TDR gross finance receivables
 
$
88

 
$
89

TDR net finance receivables
 
88

 
90


As of March 31, 2017, we had 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:
(dollars in millions)
 
Personal
Loans *
 
SpringCastle
Portfolio
 
Real Estate
Loans *
 
Total
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
TDR average net receivables
 
$
153

 
$

 
$
134

 
$
287

TDR finance charges recognized
 
6

 

 
2

 
8

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
TDR average net receivables
 
$
63

 
$
11

 
$
201

 
$
275

TDR finance charges recognized
 
1

 

 
3

 
4

                                      
*
TDR finance receivables held for sale included in the table above were as follows:
(dollars in millions)
 
Personal
Loans
 
Real Estate
Loans
 
Total
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
 
TDR average net receivables
 
$

 
$
89

 
$
89

TDR finance charges recognized
 

 
1

 
1

 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 
 
 
TDR average net receivables
 
$
2

 
$
92

 
$
94

TDR finance charges recognized
 

 
1

 
1



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Information regarding the new volume of the TDR finance receivables held for investment and held for sale were as follows:
(dollars in millions)
 
Personal
Loans (a)
 
SpringCastle
Portfolio
 
Real Estate
Loans (a)
 
Total
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
Pre-modification TDR net finance receivables
 
$
44

 
$

 
$
3

 
$
47

Post-modification TDR net finance receivables:
 
 
 
 
 
 
 
 
Rate reduction
 
$
39

 
$

 
$
3

 
$
42

Other (b)
 
4

 

 

 
4

Total post-modification TDR net finance receivables
 
$
43

 
$

 
$
3

 
$
46

Number of TDR accounts
 
6,438

 

 
64

 
6,502

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
Pre-modification TDR net finance receivables
 
$
50

 
$
1

 
$
4

 
$
55

Post-modification TDR net finance receivables:
 
 
 
 
 
 
 


Rate reduction
 
$
46

 
$
1

 
$
3

 
$
50

Other (b)
 
3

 

 
1

 
4

Total post-modification TDR net finance receivables
 
$
49

 
$
1

 
$
4

 
$
54

Number of TDR accounts
 
6,916

 
157

 
89

 
7,162

                                      
(a)
TDR finance receivables held for sale included in the table above were immaterial.

(b)
“Other” modifications primarily include forgiveness of principal or interest.

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:
(dollars in millions)
 
Personal
Loans
 
SpringCastle
Portfolio
 
Real Estate
Loans (a)
 
Total
 
 
 

 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 
 
 
 
 
 
 
TDR net finance receivables (b)
 
$
12

 
$

 
$
1

 
$
13

Number of TDR accounts
 
1,793

 

 
6

 
1,799

 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 
 
 
 
 
 
 
TDR net finance receivables (b) (c)
 
$
2

 
$

 
$
1

 
$
3

Number of TDR accounts
 
400

 
19

 
20

 
439

                                      
(a)
TDR real estate loans held for sale included in the table above that defaulted during the previous 12-month period were less than $1 million for the three months ended March 31, 2017 and $1 million for the three months ended March 31, 2016.

(b)
Represents the corresponding balance of TDR net finance receivables at the end of the month in which they defaulted.

(c)
TDR SpringCastle Portfolio loans for the three months ended March 31, 2016 that defaulted during the previous 12-month period were less than $1 million and, therefore, are not quantified in the combined table above.


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4. Allowance for Finance Receivable Losses    

Changes in the allowance for finance receivable losses by finance receivable type were as follows:
(dollars in millions)
 
Personal
Loans
 
SpringCastle
Portfolio
 
Real Estate
Loans
 
Retail
Sales Finance
 
Consolidated Total
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2017
 
 

 
 

 
 

 
 

 
 

Balance at beginning of period
 
$
669

 
$

 
$
19

 
$
1

 
$
689

Provision for finance receivable losses
 
244

 

 
1

 

 
245

Charge-offs
 
(296
)
 

 
(1
)
 

 
(297
)
Recoveries
 
29

 

 

 

 
29

Balance at end of period
 
$
646

 
$

 
$
19

 
$
1

 
$
666

 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2016
 
 

 
 

 
 

 
 

 
 

Balance at beginning of period
 
$
541

 
$
4

 
$
46

 
$
1

 
$
592

Provision for finance receivable losses
 
179

 
14

 
4

 

 
197

Charge-offs
 
(145
)
 
(17
)
 
(2
)
 
(1
)
 
(165
)
Recoveries
 
12

 
3

 
1

 

 
16

Other *
 

 
(4
)
 

 

 
(4
)
Balance at end of period
 
$
587

 
$

 
$
49

 
$

 
$
636

                                      
*
Other consists of the elimination of allowance for finance receivable losses due to the sale of the SpringCastle Portfolio on March 31, 2016, in connection with the SpringCastle Interests Sale.


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The allowance for finance receivable losses and net finance receivables by type and by impairment method were as follows:
(dollars in millions)
 
Personal
Loans
 
Real Estate
Loans
 
Retail
Sales Finance
 
Total
 
 
 
 
 
 
 
 
 
March 31, 2017
 
 

 
 

 
 

 
 

Allowance for finance receivable losses:
 
 

 
 

 
 

 
 

Collectively evaluated for impairment
 
$
544

 
$

 
$
1

 
$
545

Purchased credit impaired finance receivables
 
29

 
8

 

 
37

TDR finance receivables
 
73

 
11

 

 
84

Total
 
$
646

 
$
19

 
$
1

 
$
666

 
 
 
 
 
 
 
 
 
Finance receivables:
 
 

 
 

 
 

 
 

Collectively evaluated for impairment
 
$
12,774

 
$
70

 
$
9

 
$
12,853

Purchased credit impaired finance receivables
 
302

 
23

 

 
325

TDR finance receivables
 
164

 
46

 

 
210

Total
 
$
13,240

 
$
139

 
$
9

 
$
13,388

 
 
 
 
 
 
 
 
 
Allowance for finance receivable losses as a percentage of finance receivables
 
4.88
%
 
13.70
%
 
4.72
%
 
4.97
%
 
 
 
 
 
 
 
 
 
December 31, 2016
 
 

 
 

 
 

 
 

Allowance for finance receivable losses:
 
 

 
 

 
 

 
 

Collectively evaluated for impairment
 
$
571

 
$

 
$
1

 
$
572

Purchased credit impaired finance receivables
 
29

 
8