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Indiana
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35-0416090
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(State of incorporation)
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(I.R.S. Employer Identification No.)
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601 N.W. Second Street, Evansville, IN
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47708
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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6.90% Medium-Term Notes, Series J, due December 15, 2017
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New York Stock Exchange
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
þ
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Smaller reporting company
o
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(Do not check if a smaller reporting company)
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•
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various uncertainties and risks in connection with the OneMain Acquisition which may result in an adverse impact on us (the “OneMain Acquisition is described in “Business Overview” in Part I - Item 1 of this report);
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various risks relating to the Lendmark Sale, in connection with the Settlement Agreement with the U.S. Department of Justice (the “DOJ”) (the “Lendmark Sale” and the “Settlement Agreement” are described in “Recent Developments and Outlook” in Part II - Item 7 of this report);
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risks relating to continued compliance with the Settlement Agreement;
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changes in general economic conditions, including the interest rate environment in which we conduct business and the financial markets through which we can access capital and also invest cash flows from our Consumer and Insurance segment;
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levels of unemployment and personal bankruptcies;
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natural or accidental events such as earthquakes, hurricanes, tornadoes, fires, or floods affecting our customers, collateral, or branches or other operating facilities;
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war, acts of terrorism, riots, civil disruption, pandemics, disruptions in the operation of our information systems, cyber-attacks or other security breaches, or other events disrupting business or commerce;
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changes in the rate at which we can collect or potentially sell our finance receivables portfolio;
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the effectiveness of our credit risk scoring models in assessing the risk of customer unwillingness or lack of capacity to repay;
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changes in our ability to attract and retain employees or key executives to support our businesses;
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changes in the competitive environment in which we operate, including the demand for our products, customer responsiveness to our distribution channels, our ability to make technological improvements, and the strength and ability of our competitors to operate independently or to enter into business combinations that result in a more attractive range of customer products or provide greater financial resources;
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risks related to the acquisition or sale of assets or businesses or the formation, termination or operation of joint ventures or other strategic alliances or arrangements, including delinquencies, integration or migration issues, increased costs of servicing, incomplete records, and retention of customers;
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risks associated with our insurance operations, including insurance claims that exceed our expectations or insurance losses that exceed our reserves;
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the inability to successfully implement our growth strategy for our consumer lending business as well as successfully acquiring portfolios of consumer loans, pursuing acquisitions, and/or establishing joint ventures;
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declines in collateral values or increases in actual or projected delinquencies or credit losses;
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changes in federal, state or local laws, regulations, or regulatory policies and practices, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) (which, among other things, established the Consumer Financial Protection Bureau (the “CFPB”), which has broad authority to regulate and examine financial institutions, including us), that affect our ability to conduct business or the manner in which we conduct business, such as licensing requirements, pricing limitations or restrictions on the method of offering products, as well as changes that may result from increased regulatory scrutiny of the sub-prime lending industry, our use of third-party vendors and real estate loan servicing, or changes in corporate or individual income tax laws or regulations;
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potential liability relating to real estate and personal loans which we have sold or may sell in the future, or relating to securitized loans, if it is determined that there was a non-curable breach of a representation or warranty made in connection with such transactions;
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the costs and effects of any actual or alleged violations of any federal, state or local laws, rules or regulations, including any litigation associated therewith, any impact to our business operations, reputation, financial position, results of operations or cash flows arising therefrom, any impact to our relationships with lenders, investors or other third parties attributable thereto, and the costs and effects of any breach of any representation, warranty or covenant under any of our contractual arrangements, including indentures or other financing arrangements or contracts, as a result of any such violation;
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the costs and effects of any fines, penalties, judgments, decrees, orders, inquiries, investigations, subpoenas, or enforcement or other proceedings of any governmental or quasi-governmental agency or authority and any litigation associated therewith;
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our continued ability to access the capital markets or the sufficiency of our current sources of funds to satisfy our cash flow requirements;
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our ability to comply with our debt covenants;
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our ability to generate sufficient cash to service all of our indebtedness;
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any material impairment or write-down of the value of our assets;
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the effects of any downgrade of our debt ratings by credit rating agencies, which could have a negative impact on our cost of and/or access to capital;
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our substantial indebtedness, which could prevent us from meeting our obligations under our debt instruments and limit our ability to react to changes in the economy or our industry, or our ability to incur additional borrowings;
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the impacts of our securitizations and borrowings;
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our ability to maintain sufficient capital levels in our regulated and unregulated subsidiaries;
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changes in accounting standards or tax policies and practices and the application of such new standards, policies and practices;
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changes in accounting principles and policies or changes in accounting estimates;
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effects of the pending merger of Fortress Investment Group LLC (“Fortress”) to an affiliate of SoftBank Group Corp. (“SoftBank”);
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any failure or inability to achieve the SpringCastle Portfolio performance requirements set forth in the SpringCastle Interests Sale purchase agreement (“SpringCastle Portfolio” is defined in “Business Overview” in Part I - Item 1 of this report and “SpringCastle Interests Sale” is defined in “Recent Developments and Outlook” in Part II - Item 7 of this report);
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the effect of future sales of our remaining portfolio of real estate loans and the transfer of servicing of these loans, including the environmental liability and costs for damage caused by hazardous waste if a real estate loan goes into default; and
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other risks described in “Risk Factors” in Part I - Item 1A of this report.
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provide responsible personal loan products;
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offer credit and non-credit insurance;
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service loans owned by us and service or subservice loans owned by third-parties;
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pursue strategic acquisitions and dispositions of assets and businesses, including loan portfolios or other financial assets; and
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may establish joint ventures or enter into other strategic alliances or arrangements from time to time.
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Consumer and Insurance;
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Acquisitions and Servicing; and
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Real Estate.
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Credit life insurance
— Insures the life of the borrower in an amount typically equal to the unpaid balance of the finance receivable and provides for payment to the lender of the finance receivable in the event of the borrower’s death.
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Credit disability insurance
— Provides scheduled monthly loan payments to the lender during borrower’s disability due to illness or injury.
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Credit involuntary unemployment insurance
— Provides scheduled monthly loan payments to the lender during borrower’s involuntary unemployment.
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Collateral protection insurance
— Protects the value of property pledged as collateral for the finance receivable.
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mail and telephone solicitations;
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payment processing;
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originating “out of footprint” loans;
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servicing of delinquent real estate loans and certain personal loans;
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bankruptcy process for Chapter 7, 11, 12 and 13 loans;
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litigation requests for wage garnishments and other actions against borrowers;
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collateral protection insurance tracking;
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repossessing and re-marketing of titled collateral; and
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charge-off recovery operations.
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Our operational policies and procedures standardize various aspects of lending and collections.
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Our branch finance receivable systems control amounts, rates, terms, and fees of our customers’ accounts; create loan documents specific to the state in which the branch office operates or to the customer’s location if the loan is made electronically through our centralized operations; and control cash receipts and disbursements.
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Our headquarters accounting personnel reconcile bank accounts, investigate discrepancies, and resolve differences.
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Our credit risk management system reports allow us to track individual branch office performance and to monitor lending and collection activities.
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Our executive information system is available to headquarters and field operations management to review the status of activity through the close of business of the prior day.
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Our branch field operations management structure, Regional Quality Coordinators and Compliance Field Examination team are designed to control a large, decentralized organization with succeeding levels of supervision staffed with more experienced personnel.
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Our field operations compensation plan aligns our operating activities and goals with corporate strategies by basing the incentive portion of field personnel compensation on profitability and credit quality.
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Our compliance department assesses our compliance with federal and state laws and regulations, as well as our compliance with our internal policies and procedures; oversees compliance training to ensure team members have a sufficient level of understanding of the laws and regulations that impact their job responsibilities; and manages our regulatory examination process.
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Our executive office of customer care maintains our consumer complaint resolution and reporting process.
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Our internal audit department audits our business for adherence to operational policy and procedure and compliance with federal and state laws and regulations.
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the Dodd-Frank Act;
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the Equal Credit Opportunity Act (prohibits discrimination against creditworthy applicants) and the CFPB’s Regulation B, which implements this statute;
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the Fair Credit Reporting Act (which, among other things, governs the accuracy and use of credit bureau reports);
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the Truth in Lending Act (which, among other things, governs disclosure of applicable charges and other finance receivable terms) and the CFPB’s Regulation Z, which implements this statute;
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the Fair Debt Collection Practices Act;
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the Gramm-Leach-Bliley Act (which governs the handling of personal financial information) and the CFPB’s Regulation P, which implements this statute;
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the Military Lending Act (which governs certain consumer lending to active-duty servicemembers and covered dependents and limits, among other things, the interest rate that may be charged);
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the Servicemembers Civil Relief Act, which can impose limitations on the servicer’s ability to collect on a loan originated with an obligor who is on active duty status and up to nine months thereafter;
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the Real Estate Settlement Procedures Act and the CFPB’s Regulation X (both of which regulate the making and servicing of closed end residential mortgage loans);
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the Federal Trade Commission’s Consumer Claims and Defenses Rule, also known as the “Holder in Due Course” Rule; and
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the Federal Trade Commission Act.
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Tier 1 Penalty - Minor violation; this is the penalty for any violation of law, rule, or final or order or condition imposed in writing by the CFPB;
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Tier 2 Penalty - Reckless violation; this is the penalty for any person that recklessly engages in a violation of a Federal consumer financial law; or
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Tier 3 Penalty - Knowing violation; this is the penalty for any person that knowingly violates a Federal consumer financial law.
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provide for state licensing and periodic examination of lenders and loan originators, including state laws adopted or amended to comply with licensing requirements of the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (which, in some states, requires licensing of individuals who perform real estate loan modifications);
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require the filing of reports with regulators and compliance with state regulatory capital requirements;
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impose maximum term, amount, interest rate, and other charge limitations;
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regulate whether and under what circumstances we may offer insurance and other ancillary products in connection with a lending transaction; and
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provide for additional consumer protections.
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licensing;
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conduct of business, including marketing and sales practices;
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periodic financial and market conduct examination of the affairs of insurers;
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form and content of required financial reports;
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standards of solvency;
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limitations on the payment of dividends and other affiliate transactions;
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types of products offered;
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approval of policy forms and premium rates;
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formulas used to calculate any unearned premium refund due to an insured customer;
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permissible investments;
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reserve requirements for unearned premiums, losses, and other purposes; and
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claims processing.
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the integration of the assets or business into our information technology platforms and servicing systems;
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the quality of servicing during any interim servicing period after we purchase a portfolio but before we assume servicing obligations from the seller or its agents;
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the disruption to our ongoing businesses and distraction of our management teams from ongoing business concerns;
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incomplete or inaccurate files and records;
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the retention of existing customers;
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the creation of uniform standards, controls, procedures, policies and information systems;
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the occurrence of unanticipated expenses; and
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potential unknown liabilities associated with the transactions, including legal liability related to origination and servicing prior to the acquisition.
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the integration of the personnel with certain of our management teams, strategies, operations, products and services;
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the integration of the physical facilities with our information technology platforms and servicing systems; and
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the disruption to our ongoing businesses and distraction of our management teams from ongoing business concerns.
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our representations and warranties concerning the quality and characteristics of the finance receivable are inaccurate;
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there is borrower fraud; or
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we fail to comply, at the individual finance receivable level or otherwise, with regulatory requirements in connection with the origination and servicing of the finance receivables.
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address the risks associated with our focus on personal loans (including direct auto loans), including, but not limited to consumer demand for finance receivables, and changes in economic conditions and interest rates;
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address the risks associated with the new centralized method of originating and servicing our internet loans through our centralized operations, which represents a departure from our traditional high-touch branch-based servicing function and includes the potential for higher default and delinquency rates;
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integrate, and develop the expertise required to capitalize on, our centralized operations;
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obtain regulatory approval in connection with our internet lending;
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obtain regulatory approval in connection with the acquisition of consumer loan portfolios and/or companies in the business of selling consumer loans or related products;
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comply with regulations in connection with doing business and offering loan products over the Internet, including various state and federal e-signature rules mandating that certain disclosures be made and certain steps be followed in order to obtain and authenticate e-signatures, with which we have limited experience;
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finance future growth; and
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successfully source, underwrite and integrate new acquisitions of loan portfolios and other businesses.
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it may require us to dedicate a significant portion of our cash flow from operations to the payment of the principal of, and interest on, our indebtedness, which reduces the funds available for other purposes, including finance receivable originations;
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it could limit our ability to withstand competitive pressures and reduce our flexibility in responding to changing regulatory, business and economic conditions;
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it may limit our ability to incur additional borrowings or securitizations for working capital, capital expenditures, business development, debt service requirements, acquisitions or general corporate or other purposes, or to refinance our indebtedness;
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it may require us to seek to change the maturity, interest rate and other terms of our existing debt;
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it may place us at a competitive disadvantage to competitors that are proportionately not as highly leveraged;
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it may cause a downgrade of our debt and long-term corporate ratings; and
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it may cause us to be more vulnerable to periods of negative or slow growth in the general economy or in our business.
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our ability to generate sufficient cash to service all of our outstanding debt;
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our continued ability to access debt and securitization markets and other sources of funding on favorable terms;
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our ability to complete on favorable terms, as needed, additional borrowings, securitizations, finance receivable portfolio sales, or other transactions to support liquidity, and the costs associated with these funding sources, including sales at less than carrying value and limits on the types of assets that can be securitized or sold, which would affect profitability;
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•
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the potential for downgrade of our debt by rating agencies, which would have a negative impact on our cost of, and access to, capital;
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•
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our ability to comply with our debt covenants;
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•
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the amount of cash expected to be received from our finance receivable portfolio through collections (including prepayments) and receipt of finance charges, which could be materially different than our estimates;
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the potential for declining financial flexibility and reduced income should we use more of our assets for securitizations and finance receivable portfolio sales; and
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the potential for reduced income due to the possible deterioration of the credit quality of our finance receivable portfolios.
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our inability to grow our personal loan portfolio with adequate profitability to fund operations, loan losses, and other expenses;
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•
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our inability to monetize assets including, but not limited to, our access to debt and securitization markets;
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•
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our inability to obtain the additional necessary funding to finance our operations;
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•
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the effect of federal, state and local laws, regulations, or regulatory policies and practices, including the Dodd-Frank Act (which, among other things, established the CFPB with broad authority to regulate and examine financial institutions), on our ability to conduct business or the manner in which we conduct business, such as licensing requirements, pricing limitations or restrictions on the method of offering products, as well as changes that may result from increased regulatory scrutiny of the sub-prime lending industry;
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•
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potential liability relating to real estate and personal loans which we have sold or may sell in the future, or relating to securitized loans, if it is determined that there was a non-curable breach of a warranty made in connection with the transaction;
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the potential for increasing costs and difficulty in servicing our loan portfolio as a result of heightened nationwide regulatory scrutiny of loan servicing and foreclosure practices in the industry generally, and related costs that could be passed on to us in connection with the subservicing of our real estate loans that were originated or acquired centrally;
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reduced cash receipts as a result of the liquidation of our real estate loan portfolio;
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the potential for additional unforeseen cash demands or accelerations of obligations;
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reduced income due to loan modifications where the borrower’s interest rate is reduced, principal payments are deferred, or other concessions are made;
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the potential for declines or volatility in bond and equity markets; and
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the potential effect on us if the capital levels of our regulated and unregulated subsidiaries prove inadequate to support current business plans.
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(dollars in millions)
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At or for the Years Ended December 31,
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2016
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2015
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2014
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2013
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2012
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Consolidated Statements of Operations Data:
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||||||||||
Interest income
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$
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1,350
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$
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1,657
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|
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$
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1,625
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|
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$
|
1,637
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|
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$
|
1,694
|
|
Interest expense
|
|
556
|
|
|
667
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|
|
683
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|
|
843
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|
|
1,068
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|||||
Provision for finance receivable losses
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|
329
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|
|
339
|
|
|
352
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|
|
371
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|
|
334
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|||||
Other revenues
|
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574
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|
|
243
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|
|
745
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|
|
161
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|
|
114
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|||||
Other expenses
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|
693
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|
|
735
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|
|
657
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|
|
709
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|
|
707
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Income (loss) before provision for (benefit from) income taxes
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346
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|
|
159
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|
678
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(125
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)
|
|
(301
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)
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Net income (loss)
|
|
233
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|
|
141
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|
|
445
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(76
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)
|
|
(215
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)
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Net income attributable to non-controlling interests
|
|
28
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|
|
127
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|
|
48
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|
|
—
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|
|
—
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|||||
Net income (loss) attributable to Springleaf Finance Corporation
|
|
205
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|
|
14
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|
|
397
|
|
|
(76
|
)
|
|
(215
|
)
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|||||
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||||||||||
Consolidated Balance Sheet Data:
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||||||||||
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses
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|
$
|
4,543
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|
|
$
|
6,090
|
|
|
$
|
6,181
|
|
|
$
|
10,730
|
|
|
$
|
11,453
|
|
Total assets
|
|
9,719
|
|
|
12,188
|
|
|
10,998
|
|
|
12,612
|
|
|
14,554
|
|
|||||
Long-term debt
|
|
6,837
|
|
|
9,582
|
|
|
8,356
|
|
|
10,602
|
|
|
12,449
|
|
|||||
Total liabilities
|
|
7,376
|
|
|
10,156
|
|
|
9,021
|
|
|
11,227
|
|
|
13,261
|
|
|||||
Springleaf Finance Corporation shareholder’s equity
|
|
2,343
|
|
|
2,111
|
|
|
2,106
|
|
|
1,385
|
|
|
1,293
|
|
|||||
Non-controlling interests
|
|
—
|
|
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(79
|
)
|
|
(129
|
)
|
|
—
|
|
|
—
|
|
|||||
Total shareholder’s equity
|
|
2,343
|
|
|
2,032
|
|
|
1,977
|
|
|
1,385
|
|
|
1,293
|
|
|||||
|
|
|
|
|
|
|
|
|
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|
||||||||||
Other Operating Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
|
1.61
|
|
|
1.24
|
|
|
1.98
|
|
|
*
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|
|
*
|
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*
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Earnings did not cover total fixed charges by
$125 million
in
2013
and
$301 million
in
2012
.
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•
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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
and are secured by consumer goods, automobiles, or other personal property or are unsecured. At
December 31, 2016
, we had over
928,000
personal loans, representing
$4.8 billion
of net finance receivables, of which
77%
were secured by collateral, compared to 890,000 personal loans totaling $4.3 billion at December 31, 2015, of which
74%
were secured by collateral. Personal loans held for sale totaled $617 million at December 31, 2015.
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•
|
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 membership plans of an unaffiliated company as an ancillary product.
|
•
|
SpringCastle Portfolio —
SFI services the SpringCastle Portfolio that was acquired by an indirect subsidiary of OMH through a joint venture in which SFC previously owned a
47%
equity interest. On March 31, 2016, the SpringCastle Portfolio was sold in connection with the SpringCastle Interests Sale, as discussed in “Recent Developments and Outlook” below. These loans consisted of unsecured loans and loans secured by subordinate residential real estate mortgages and include both closed-end accounts and open-end lines of credit. These loans were in a liquidating status
|
•
|
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. In connection with the August 2016 Real Estate Loan Sale and the December 2016 Real Estate Loan Sale (as discussed and defined in “Recent Developments and Outlook” below), we sold
$308 million
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. Predominantly, our first lien mortgages are serviced by third-party servicers, and we continue to provide servicing for our second lien mortgages (home equity lines of credit). At
December 31, 2016
, we had
$144 million
of real estate loans held for investment, of which
93%
were secured by first mortgages, compared to
$538 million
at
December 31, 2015
, of which
38%
were secured by first mortgages. Real estate loans held for sale totaled
$153 million
and $176 million at
December 31, 2016
and 2015, respectively.
|
•
|
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.
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
1,350
|
|
|
$
|
1,657
|
|
|
$
|
1,625
|
|
Interest expense
|
|
556
|
|
|
667
|
|
|
683
|
|
|||
Provision for finance receivable losses
|
|
329
|
|
|
339
|
|
|
352
|
|
|||
Net interest income after provision for finance receivable losses
|
|
465
|
|
|
651
|
|
|
590
|
|
|||
Net gain on sale of SpringCastle interests
|
|
167
|
|
|
—
|
|
|
—
|
|
|||
Other revenues
|
|
407
|
|
|
243
|
|
|
745
|
|
|||
Other expenses
|
|
693
|
|
|
735
|
|
|
657
|
|
|||
Income before provision for income taxes
|
|
346
|
|
|
159
|
|
|
678
|
|
|||
Provision for income taxes
|
|
113
|
|
|
18
|
|
|
233
|
|
|||
Net income
|
|
233
|
|
|
141
|
|
|
445
|
|
|||
Net income attributable to non-controlling interests
|
|
28
|
|
|
127
|
|
|
48
|
|
|||
Net income attributable to SFC
|
|
$
|
205
|
|
|
$
|
14
|
|
|
$
|
397
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Statistics
|
|
|
|
|
|
|
||||||
Finance receivables held for investment:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
4,959
|
|
|
$
|
6,564
|
|
|
$
|
6,578
|
|
Number of accounts
|
|
934,618
|
|
|
1,151,289
|
|
|
1,229,481
|
|
|||
Finance receivables held for sale:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
153
|
|
|
$
|
793
|
|
|
$
|
202
|
|
Number of accounts
|
|
2,800
|
|
|
148,932
|
|
|
3,578
|
|
|||
Finance receivables held for investment and held for sale: (a)
|
|
|
|
|
|
|
||||||
Average net receivables (b)
|
|
$
|
5,587
|
|
|
$
|
6,776
|
|
|
$
|
8,887
|
|
Yield (b)
|
|
23.83
|
%
|
|
24.20
|
%
|
|
17.60
|
%
|
|||
Gross charge-off ratio (b)
|
|
6.61
|
%
|
|
5.18
|
%
|
|
3.31
|
%
|
|||
Recovery ratio (b)
|
|
(0.97
|
)%
|
|
(0.82
|
)%
|
|
(0.41
|
)%
|
|||
Net charge-off ratio (b)
|
|
5.64
|
%
|
|
4.36
|
%
|
|
2.90
|
%
|
|||
30-89 Delinquency ratio (b)
|
|
2.47
|
%
|
|
3.24
|
%
|
|
3.38
|
%
|
|||
Origination volume
|
|
$
|
3,813
|
|
|
$
|
4,522
|
|
|
$
|
3,675
|
|
Number of accounts originated
|
|
627,561
|
|
|
818,758
|
|
|
775,611
|
|
(a)
|
Includes personal loans held for sale, but excludes real estate loans held for sale in order to be comparable with our segment statistics disclosed in “Segment Results.”
|
(b)
|
See “Key Financial Definitions” at the end of our management's discussion and analysis for formulas and definitions of key performance ratios.
|
(dollars in millions)
|
|
||
|
|
||
2016 compared to 2015
|
|
||
Decrease in average net receivables (a)
|
$
|
(301
|
)
|
Decrease in yield (b)
|
(23
|
)
|
|
Increase in number of days in 2016
|
3
|
|
|
Increase in interest income on finance receivables held for sale (c)
|
14
|
|
|
Total
|
$
|
(307
|
)
|
(a)
|
Average net receivables
decreased
primarily due to (i) the SpringCastle Interests Sale, (ii) the transfer of $608 million of our personal loans to finance receivables held for sale on September 30, 2015, and (iii) our liquidating real estate loan portfolio, including the transfers of $257 million and $50 million of real estate loans to finance receivables held for sale on June 30, 2016 and November 30, 2016, respectively. This
decrease
was partially offset by the continued growth of our loan portfolio (primarily of our secured personal loans).
|
(b)
|
Yield
decreased
primarily due to the continued growth of secured personal loans, which generally have lower yields relative to our unsecured personal loans.
|
(c)
|
Interest income on finance receivables held for sale
increased
primarily due to (i) the transfer of $608 million of our personal loans to held for sale on September 30, 2015, which were sold in the Lendmark Sale on May 2, 2016, and (ii) the transfers of
$307 million
of real estate loans to finance receivables held for sale during 2016, which were sold in the August 2016 Real Estate Loan Sale and December 2016 Real Estate Loan Sale.
|
(a)
|
Average debt
decreased
primarily due to (i) the elimination of the debt associated with the SpringCastle Interests Sale and (ii) net debt repurchases and repayments during the past 12 months relating to our consumer securitization transactions and conduit facilities. This
decrease
was partially offset by net unsecured debt issued during the past 12 months. See Notes
12
and
13
of the Notes to Consolidated Financial Statements in Part II - Item 8 of this report for further information on our long-term debt, consumer loan securitization transactions, and our conduit facilities.
|
(b)
|
Weighted average interest rate on our debt
increased
primarily due to (i) SFC’s offering of the 8.25% SFC Notes in April of 2016, as defined in “Liquidity and Capital Resources” in Part II - Item 7 of this report and (ii) the elimination of debt associated with the SpringCastle Interests Sale, which generally had a lower interest rate relative to our other indebtedness. The
increase
was partially offset by the repurchase of $600 million unsecured notes, which had a higher interest rate relative to our other indebtedness, in connection with SFC’s offering of the 8.25% SFC Notes.
|
(c)
|
Interest expense on note payable to affiliate
resulted from a revolving demand note agreement between SFC and OMFH, entered into on December 1, 2015. See Note
11
of the Notes to Consolidated Financial Statements in Part II - Item 8 of this report for further information on this note.
|
•
|
Salaries and benefits
decreased
$17 million
primarily due to (i) non-cash incentive compensation expense of $15 million recorded in 2015 relating to the rights of certain executives to receive a portion of the cash proceeds from the sale of OMH’s common stock by the Initial Stockholder and (ii) a decrease in average staffing during 2016.
|
•
|
Other operating expenses
decreased
$8 million
primarily due to the net of (i) nine additional months of servicing expenses for the SpringCastle Portfolio totaling $38 million during 2015, (ii) a decrease in deferred origination costs of $12 million during 2016, (iii) an increase in information technology expenses of $9 million during 2016, and (iv) an increase in professional fees of $8 million during 2016 primarily reflecting debt refinance costs.
|
•
|
Insurance policy benefits and claims
decreased
$17 million
primarily due to favorable variances in benefit reserves during 2016, which partially resulted from a $9 million write-down of benefit reserves recorded during 2016.
|
(dollars in millions)
|
|
||
|
|
||
2015 compared to 2014
|
|
||
Decrease in average net receivables (a)
|
$
|
(350
|
)
|
Increase in yield (b)
|
383
|
|
|
Decrease in interest income on finance receivables held for sale
|
(1
|
)
|
|
Total
|
$
|
32
|
|
(a)
|
Average net receivables
decreased 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, and (iii) the liquidating status of the SpringCastle Portfolio. This decrease was partially offset by (i) our continued focus on personal loan originations through our branch network and centralized operations and the launch of our direct auto loans in June of 2014 and (ii) the SAC Capital Contribution on July 31, 2014.
|
(b)
|
Yield
increased 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 direct auto loans in June of 2014, which generally has lower yields.
|
(a)
|
Average debt
decreased 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. 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 Part II - Item 8 of this report for further information on our consumer loan securitization transactions and borrowings under our conduit facilities.
|
(b)
|
Weighted average interest rate on our debt
decreased 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, 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.
|
•
|
Salaries and benefits
increased $43 million primarily due to (i) an increase in average staffing during 2015, (ii) non-cash incentive compensation expense of $15 million recorded in 2015 relating to the rights of certain executives to receive 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.
|
•
|
Other operating expenses
increased $38 million primarily due to (i) an additional seven months of servicing expenses for the SpringCastle Portfolio of $32 million during 2015 as a result of the SAC Capital Contribution on July 31, 2014, (ii) an increase in advertising expenses of $19 million, (iii) an increase in application processing expenses of $10 million reflecting a higher number of applications for direct auto loans, and (iv) an increase in information technology expenses of $7 million. 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 and (ii) a $6 million reduction in reserves related to estimated Property Protection Insurance claims.
|
•
|
Insurance policy benefits and claims
decreased $3 million primarily due to favorable variances in benefit reserves.
|
(a)
|
See Note
22
of the Notes to Consolidated Financial Statements in Part II - Item 8 of this report for further information on the components of our GAAP to Segment Accounting Basis adjustments.
|
(b)
|
Purchase accounting was not elected at the segment level.
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
At or for the Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
1,192
|
|
|
$
|
1,115
|
|
|
$
|
911
|
|
Interest expense
|
|
402
|
|
|
190
|
|
|
163
|
|
|||
Provision for finance receivable losses
|
|
305
|
|
|
255
|
|
|
200
|
|
|||
Net interest income after provision for finance receivable losses
|
|
485
|
|
|
670
|
|
|
548
|
|
|||
Other revenues
|
|
205
|
|
|
212
|
|
|
222
|
|
|||
Other expenses
|
|
644
|
|
|
622
|
|
|
522
|
|
|||
Adjusted pretax earnings (non-GAAP)
|
|
$
|
46
|
|
|
$
|
260
|
|
|
$
|
248
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Statistics
|
|
|
|
|
|
|
||||||
Finance receivables held for investment:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
4,794
|
|
|
$
|
4,286
|
|
|
$
|
3,775
|
|
Number of accounts
|
|
926,308
|
|
|
887,523
|
|
|
908,808
|
|
|||
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 *
|
|
$
|
4,790
|
|
|
$
|
4,250
|
|
|
$
|
3,374
|
|
Yield *
|
|
24.91
|
%
|
|
26.23
|
%
|
|
27.01
|
%
|
|||
Gross charge-off ratio *
|
|
7.07
|
%
|
|
5.92
|
%
|
|
5.64
|
%
|
|||
Recovery ratio *
|
|
(0.95
|
)%
|
|
(0.86
|
)%
|
|
(0.71
|
)%
|
|||
Net charge-off ratio *
|
|
6.12
|
%
|
|
5.06
|
%
|
|
4.93
|
%
|
|||
30-89 Delinquency ratio *
|
|
2.26
|
%
|
|
2.53
|
%
|
|
2.40
|
%
|
|||
Origination volume
|
|
$
|
3,793
|
|
|
$
|
4,434
|
|
|
$
|
3,612
|
|
Number of accounts originated
|
|
627,561
|
|
|
818,758
|
|
|
775,581
|
|
*
|
See “Key Financial Definitions” at the end of our management's discussion and analysis for formulas and definitions of key performance ratios.
|
•
|
Finance charges
increased
$64 million
primarily due to the net of the following:
|
•
|
Average net receivables
increased primarily due to the continued growth of our loan portfolio (primarily of our secured personal loans). This increase was partially offset by the transfer of $608 million of our personal loans to finance receivables held for sale on September 30, 2015.
|
•
|
Yield
decreased primarily due to the continued growth of secured personal loans, which generally have lower yields relative to our unsecured personal loans.
|
•
|
Interest income on finance receivables held for sale
of
$56 million
and
$43 million
in
2016
and
2015
, respectively, resulted from the transfer of personal loans to finance receivables held for sale on September 30, 2015 and sold in the Lendmark Sale on May 2, 2016.
|
•
|
Other operating expenses
increased
$39 million
primarily due to (i) an increase in credit and collection related costs of $13 million during 2016 reflecting growth in our loan portfolio, (ii) a decrease in deferred origination costs of $12 million during 2016, and (iii) an increase in information technology expenses of $10 million during 2016.
|
•
|
Insurance policy benefits and claims
decreased
$17 million
primarily due to favorable variances in benefit reserves, which partially resulted from a $9 million write-down of benefit reserves recorded during 2016.
|
•
|
Finance charges
increased
$161 million
primarily due to the net of the following:
|
•
|
Average net receivables
increased primarily due to our continued focus on personal loans, including the launch of our direct auto loans in June of 2014.
|
•
|
Yield
decreased primarily due to the higher proportion of our direct auto loans, 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.
|
•
|
Salaries and benefits
increased
$57 million
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
$46 million
primarily due to (i) an increase in advertising expenses of $19 million, (ii) an increase in credit and collection related costs of $14 million reflecting growth in personal loans, including our direct auto loans, (iii) an increase in information technology expenses of $5 million reflecting increased depreciation and software maintenance as a result of software purchases and the capitalization of internally developed software, (iv) an increase in occupancy costs of $5 million resulting from increased general maintenance costs of our branches and higher leasehold improvement amortization expense from the servicing facilities added in 2014, (v) an increase in professional fees of $2 million relating to legal and audit services, 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
primarily due to favorable variances in benefit reserves.
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
At or for the Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
102
|
|
|
$
|
455
|
|
|
$
|
212
|
|
Interest expense
|
|
20
|
|
|
87
|
|
|
36
|
|
|||
Provision for finance receivable losses
|
|
14
|
|
|
68
|
|
|
36
|
|
|||
Net interest income after provision for finance receivable losses
|
|
68
|
|
|
300
|
|
|
140
|
|
|||
Other revenues
|
|
—
|
|
|
5
|
|
|
(5
|
)
|
|||
Other expenses
|
|
15
|
|
|
61
|
|
|
30
|
|
|||
Adjusted pretax earnings (non-GAAP)
|
|
53
|
|
|
244
|
|
|
105
|
|
|||
Pretax earnings attributable to non-controlling interests
|
|
28
|
|
|
127
|
|
|
48
|
|
|||
Adjusted pretax earnings attributable to SFC (non-GAAP)
|
|
$
|
25
|
|
|
$
|
117
|
|
|
$
|
57
|
|
|
|
|
|
|
|
|
||||||
Selected Financial Statistics
|
|
|
|
|
|
|
||||||
Finance receivables held for investment:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
—
|
|
|
$
|
1,703
|
|
|
$
|
2,091
|
|
Number of accounts
|
|
—
|
|
|
232,383
|
|
|
277,533
|
|
|||
Average net receivables (a) (b)
|
|
$
|
414
|
|
|
$
|
1,887
|
|
|
$
|
2,174
|
|
Yield (b)
|
|
24.19
|
%
|
|
24.14
|
%
|
|
23.21
|
%
|
|||
Net charge-off ratio (b)
|
|
3.48
|
%
|
|
3.49
|
%
|
|
3.70
|
%
|
|||
30-89 Delinquency ratio (b)
|
|
—
|
%
|
|
4.40
|
%
|
|
4.67
|
%
|
(a)
|
Acquisitions and Servicing average net receivables for 2014 reflect a five-month average since the SAC Capital Contribution occurred on July 31, 2014.
|
(b)
|
See “Key Financial Definitions” at the end of our management's discussion and analysis for formulas and definitions of key performance ratios.
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
At or for the Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Interest income
|
|
$
|
47
|
|
|
$
|
68
|
|
|
$
|
401
|
|
Interest expense
|
|
43
|
|
|
213
|
|
|
349
|
|
|||
Provision for finance receivable losses
|
|
6
|
|
|
(2
|
)
|
|
128
|
|
|||
Net interest loss after provision for finance receivable losses
|
|
(2
|
)
|
|
(143
|
)
|
|
(76
|
)
|
|||
Other revenues (a)
|
|
(16
|
)
|
|
4
|
|
|
(16
|
)
|
|||
Other expenses
|
|
27
|
|
|
33
|
|
|
77
|
|
|||
Adjusted pretax loss (non-GAAP)
|
|
$
|
(45
|
)
|
|
$
|
(172
|
)
|
|
$
|
(169
|
)
|
|
|
|
|
|
|
|
||||||
Selected Financial Statistics
|
|
|
|
|
|
|
||||||
Finance receivables held for investment:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
153
|
|
|
$
|
565
|
|
|
$
|
670
|
|
Number of accounts
|
|
3,015
|
|
|
21,631
|
|
|
22,852
|
|
|||
Average net receivables (b)
|
|
$
|
373
|
|
|
$
|
619
|
|
|
$
|
5,055
|
|
Yield (b)
|
|
8.38
|
%
|
|
8.99
|
%
|
|
6.93
|
%
|
|||
Loss ratio (b) (c)
|
|
3.92
|
%
|
|
3.71
|
%
|
|
2.11
|
%
|
|||
30-89 Delinquency ratio (b) (d)
|
|
8.87
|
%
|
|
5.90
|
%
|
|
4.84
|
%
|
|||
Finance receivables held for sale:
|
|
|
|
|
|
|
||||||
Net finance receivables
|
|
$
|
155
|
|
|
$
|
182
|
|
|
$
|
200
|
|
Number of accounts
|
|
2,800
|
|
|
3,196
|
|
|
3,578
|
|
(a)
|
For purposes of our segment reporting presentation in Note
22
of the Notes to Consolidated Financial Statements in Part II - Item 8 of this report, 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)
|
See “Key Financial Definitions” at the end of our management's discussion and analysis for formulas and definitions of key performance ratios.
|
(c)
|
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.
|
(d)
|
Delinquency ratio at
December 31, 2016
reflected the retained real estate loan portfolio that was not eligible for sale.
|
•
|
Finance charges
decreased
$24 million
primarily due to the following:
|
◦
|
Average net receivables
decreased primarily due to our liquidating real estate loan portfolio, including the transfers of $266 million and $49 million of real estate loans to finance receivables held for sale on June 30, 2016 and November 30, 2016, respectively.
|
◦
|
Yield
decreased primarily due to the August 2016 Real Estate Loan Sale and December 2016 Real Estate Loan Sale of second lien mortgage loans, which generally had higher yields relative to our remaining real estate loans.
|
•
|
Interest income on real estate loans held for sale
increased
$3 million
primarily due to the transfers of $315 million of real estate loans to finance receivables held for sale during 2016, which were sold in August and December of 2016.
|
•
|
Finance charges
decreased
$295 million
primarily due to the net of the following:
|
◦
|
Average net receivables
decreased primarily due to the continued liquidation of the real estate loan 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 primarily due to a higher proportion of our remaining real estate loans during 2015 that were secured by second mortgages, which generally have higher yields.
|
•
|
Interest income on real estate loans held for sale
decreased
$38 million
primarily due to lower average real estate loans held for sale during 2015.
|
•
|
Other operating expenses
decreased
$23 million
primarily resulting from the sales of real estate loans during 2014 and the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014.
|
•
|
Salaries and benefits
decreased
$21 million
primarily due to the redistribution of the allocation of salaries and benefit expenses as a result of the real estate loan sales in 2014.
|
(a)
|
Interest expense
for 2016 when compared to 2015 reflected a change in the methodology of allocating interest expense, as described in the allocation methodologies table in Note
22
of the Notes to Consolidated Financial Statements in Part II - Item 8 of this report.
|
(b)
|
Other revenues
for 2016 primarily included interest income on the Cash Services Note and (ii) interest income on SFC’s note receivable from SFI reflecting additional SFI borrowings during the 2016 period to fund the operations of its subsidiaries.
|
(c)
|
Other expenses
for 2015 reflected non-cash incentive compensation relating to the rights of certain executives to receive a portion of the cash proceeds received by the Initial Stockholder.
|
(dollars in millions)
|
|
Consumer
and
Insurance
|
|
Acquisitions
and
Servicing
|
|
Real
Estate
|
|
Other
|
|
Segment to
GAAP
Adjustment
|
|
Consolidated
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Personal loans
|
|
$
|
4,794
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
(1
|
)
|
|
$
|
4,804
|
|
Real estate loans
|
|
—
|
|
|
—
|
|
|
153
|
|
|
—
|
|
|
(9
|
)
|
|
144
|
|
||||||
Retail sales finance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
(1
|
)
|
|
11
|
|
||||||
Total
|
|
$
|
4,794
|
|
|
$
|
—
|
|
|
$
|
153
|
|
|
$
|
23
|
|
|
$
|
(11
|
)
|
|
$
|
4,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Personal loans
|
|
$
|
4,286
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
17
|
|
|
$
|
(3
|
)
|
|
$
|
4,300
|
|
SpringCastle Portfolio
|
|
—
|
|
|
1,703
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,703
|
|
||||||
Real estate loans
|
|
—
|
|
|
—
|
|
|
565
|
|
|
—
|
|
|
(27
|
)
|
|
538
|
|
||||||
Retail sales finance
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
(1
|
)
|
|
23
|
|
||||||
Total
|
|
$
|
4,286
|
|
|
$
|
1,703
|
|
|
$
|
565
|
|
|
$
|
41
|
|
|
$
|
(31
|
)
|
|
$
|
6,564
|
|
•
|
Prime: FICO score of 660 or higher
|
•
|
Non-prime: FICO score of 620-659
|
•
|
Sub-prime: FICO score of 619 or below
|
(dollars in millions)
|
|
Personal
Loans
|
|
SpringCastle
Portfolio
|
|
Real Estate
Loans
|
|
Retail Sales Finance
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
FICO scores
|
|
|
|
|
|
|
|
|
|
|
||||||||||
660 or higher
|
|
$
|
888
|
|
|
$
|
—
|
|
|
$
|
41
|
|
|
$
|
5
|
|
|
$
|
934
|
|
620-659
|
|
1,079
|
|
|
—
|
|
|
23
|
|
|
2
|
|
|
1,104
|
|
|||||
619 or below
|
|
2,814
|
|
|
—
|
|
|
77
|
|
|
4
|
|
|
2,895
|
|
|||||
Unavailable
|
|
23
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
26
|
|
|||||
Total
|
|
$
|
4,804
|
|
|
$
|
—
|
|
|
$
|
144
|
|
|
$
|
11
|
|
|
$
|
4,959
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
FICO scores
|
|
|
|
|
|
|
|
|
|
|
||||||||||
660 or higher
|
|
$
|
777
|
|
|
$
|
794
|
|
|
$
|
199
|
|
|
$
|
9
|
|
|
$
|
1,779
|
|
620-659
|
|
977
|
|
|
371
|
|
|
107
|
|
|
4
|
|
|
1,459
|
|
|||||
619 or below
|
|
2,523
|
|
|
529
|
|
|
229
|
|
|
10
|
|
|
3,291
|
|
|||||
Unavailable
|
|
23
|
|
|
9
|
|
|
3
|
|
|
—
|
|
|
35
|
|
|||||
Total
|
|
$
|
4,300
|
|
|
$
|
1,703
|
|
|
$
|
538
|
|
|
$
|
23
|
|
|
$
|
6,564
|
|
(dollars in millions)
|
|
Consumer
and
Insurance
|
|
Acquisitions
and
Servicing
|
|
Real
Estate
|
|
Other
|
|
Segment to
GAAP
Adjustment
|
|
Consolidated
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current
|
|
$
|
4,570
|
|
|
$
|
—
|
|
|
$
|
110
|
|
|
$
|
21
|
|
|
$
|
(9
|
)
|
|
$
|
4,692
|
|
30-59 days past due
|
|
64
|
|
|
—
|
|
|
9
|
|
|
1
|
|
|
(1
|
)
|
|
73
|
|
||||||
Delinquent (60-89 days past due)
|
|
45
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
—
|
|
|
49
|
|
||||||
Performing
|
|
4,679
|
|
|
—
|
|
|
123
|
|
|
22
|
|
|
(10
|
)
|
|
4,814
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Nonperforming (90+ days past due)
|
|
115
|
|
|
—
|
|
|
30
|
|
|
1
|
|
|
(1
|
)
|
|
145
|
|
||||||
Total net finance receivables
|
|
$
|
4,794
|
|
|
$
|
—
|
|
|
$
|
153
|
|
|
$
|
23
|
|
|
$
|
(11
|
)
|
|
$
|
4,959
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Delinquency ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
30-89 days past due
|
|
2.26
|
%
|
|
—
|
%
|
|
8.87
|
%
|
|
4.63
|
%
|
|
*
|
|
|
2.47
|
%
|
||||||
30+ days past due
|
|
4.67
|
%
|
|
—
|
%
|
|
28.55
|
%
|
|
8.18
|
%
|
|
*
|
|
|
5.38
|
%
|
||||||
60+ days past due
|
|
3.33
|
%
|
|
—
|
%
|
|
22.49
|
%
|
|
4.75
|
%
|
|
*
|
|
|
3.90
|
%
|
||||||
90+ days past due
|
|
2.40
|
%
|
|
—
|
%
|
|
19.68
|
%
|
|
3.55
|
%
|
|
*
|
|
|
2.91
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current
|
|
$
|
4,064
|
|
|
$
|
1,588
|
|
|
$
|
510
|
|
|
$
|
38
|
|
|
$
|
(27
|
)
|
|
$
|
6,173
|
|
30-59 days past due
|
|
64
|
|
|
49
|
|
|
14
|
|
|
1
|
|
|
(1
|
)
|
|
127
|
|
||||||
Delinquent (60-89 days past due)
|
|
49
|
|
|
26
|
|
|
19
|
|
|
1
|
|
|
(1
|
)
|
|
94
|
|
||||||
Performing
|
|
4,177
|
|
|
1,663
|
|
|
543
|
|
|
40
|
|
|
(29
|
)
|
|
6,394
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Nonperforming (90+ days past due)
|
|
109
|
|
|
40
|
|
|
22
|
|
|
1
|
|
|
(2
|
)
|
|
170
|
|
||||||
Total net finance receivables
|
|
$
|
4,286
|
|
|
$
|
1,703
|
|
|
$
|
565
|
|
|
$
|
41
|
|
|
$
|
(31
|
)
|
|
$
|
6,564
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Delinquency ratio
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
30-89 days past due
|
|
2.64
|
%
|
|
4.40
|
%
|
|
5.90
|
%
|
|
4.31
|
%
|
|
*
|
|
|
3.38
|
%
|
||||||
30+ days past due
|
|
5.18
|
%
|
|
6.75
|
%
|
|
9.76
|
%
|
|
7.81
|
%
|
|
*
|
|
|
5.97
|
%
|
||||||
60+ days past due
|
|
3.66
|
%
|
|
3.85
|
%
|
|
7.29
|
%
|
|
5.41
|
%
|
|
*
|
|
|
4.02
|
%
|
||||||
90+ days past due
|
|
2.54
|
%
|
|
2.35
|
%
|
|
3.86
|
%
|
|
3.50
|
%
|
|
*
|
|
|
2.60
|
%
|
*
|
Not applicable.
|
(dollars in millions)
|
|
Consumer
and
Insurance
|
|
Acquisitions
and
Servicing
|
|
Real
Estate
|
|
Other
|
|
Segment to
GAAP
Adjustment
|
|
Consolidated
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of period
|
|
$
|
174
|
|
|
$
|
4
|
|
|
$
|
67
|
|
|
$
|
3
|
|
|
$
|
(24
|
)
|
|
$
|
224
|
|
Provision for finance receivable losses
|
|
305
|
|
|
14
|
|
|
6
|
|
|
—
|
|
|
4
|
|
|
329
|
|
||||||
Charge-offs
|
|
(338
|
)
|
|
(17
|
)
|
|
(15
|
)
|
|
(3
|
)
|
|
4
|
|
|
(369
|
)
|
||||||
Recoveries
|
|
44
|
|
|
3
|
|
|
6
|
|
|
2
|
|
|
(1
|
)
|
|
54
|
|
||||||
Other (a)
|
|
—
|
|
|
(4
|
)
|
|
(35
|
)
|
|
—
|
|
|
5
|
|
|
(34
|
)
|
||||||
Balance at end of period
|
|
$
|
185
|
|
|
$
|
—
|
|
|
$
|
29
|
|
|
$
|
2
|
|
|
$
|
(12
|
)
|
|
$
|
204
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance ratio
|
|
3.87
|
%
|
|
—
|
%
|
|
19.05
|
%
|
|
7.28
|
%
|
|
(b)
|
|
|
4.12
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of period
|
|
$
|
132
|
|
|
$
|
3
|
|
|
$
|
86
|
|
|
$
|
5
|
|
|
$
|
(46
|
)
|
|
$
|
180
|
|
Provision for finance receivable losses
|
|
255
|
|
|
68
|
|
|
(2
|
)
|
|
1
|
|
|
17
|
|
|
339
|
|
||||||
Charge-offs
|
|
(248
|
)
|
|
(79
|
)
|
|
(23
|
)
|
|
(5
|
)
|
|
6
|
|
|
(349
|
)
|
||||||
Recoveries
|
|
36
|
|
|
12
|
|
|
6
|
|
|
2
|
|
|
(1
|
)
|
|
55
|
|
||||||
Other (c)
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
||||||
Balance at end of period
|
|
$
|
174
|
|
|
$
|
4
|
|
|
$
|
67
|
|
|
$
|
3
|
|
|
$
|
(24
|
)
|
|
$
|
224
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance ratio
|
|
4.05
|
%
|
|
0.25
|
%
|
|
11.90
|
%
|
|
7.10
|
%
|
|
(b)
|
|
|
3.42
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Year Ended December 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Balance at beginning of period
|
|
$
|
97
|
|
|
$
|
—
|
|
|
$
|
963
|
|
|
$
|
5
|
|
|
$
|
(639
|
)
|
|
$
|
426
|
|
Provision for finance receivable losses
|
|
200
|
|
|
36
|
|
|
128
|
|
|
7
|
|
|
(19
|
)
|
|
352
|
|
||||||
Charge-offs
|
|
(189
|
)
|
|
(39
|
)
|
|
(103
|
)
|
|
(10
|
)
|
|
44
|
|
|
(297
|
)
|
||||||
Recoveries
|
|
24
|
|
|
5
|
|
|
6
|
|
|
3
|
|
|
(1
|
)
|
|
37
|
|
||||||
Other (d)
|
|
—
|
|
|
—
|
|
|
(908
|
)
|
|
—
|
|
|
569
|
|
|
(339
|
)
|
||||||
Allowance for SpringCastle Portfolio contributed to SFC
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||||
Balance at end of period
|
|
$
|
132
|
|
|
$
|
3
|
|
|
$
|
86
|
|
|
$
|
5
|
|
|
$
|
(46
|
)
|
|
$
|
180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Allowance ratio
|
|
3.51
|
%
|
|
0.13
|
%
|
|
12.88
|
%
|
|
5.71
|
%
|
|
(b)
|
|
|
2.74
|
%
|
(a)
|
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 sale of our equity interest in the SpringCastle Joint Venture. See Note 2 of the Notes to Consolidated Financial Statements in Part II - Item 8 of this report for further information on this sale; and
|
•
|
the elimination of allowance for finance receivable losses due to the transfers of real estate loans held for investment to finance receivable held for sale during 2016.
|
(b)
|
Not applicable.
|
(c)
|
Other consists of the elimination of allowance for finance receivable losses due to the transfer of personal loans held for investment to finance receivable held for sale during 2015.
|
(d)
|
Other consists of the elimination of allowance for finance receivable losses due to the transfer of real estate loans held for investment to finance receivable held for sale during 2014.
|
(dollars in millions)
|
|
Consumer
and Insurance |
|
Acquisitions
and Servicing |
|
Real
Estate |
|
Other
|
|
Segment to
GAAP Adjustment |
|
Consolidated
Total |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
TDR net finance receivables
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
71
|
|
|
$
|
—
|
|
|
$
|
(27
|
)
|
|
$
|
91
|
|
Allowance for TDR finance receivable losses
|
|
20
|
|
|
—
|
|
|
23
|
|
|
—
|
|
|
(12
|
)
|
|
31
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
TDR net finance receivables
|
|
$
|
29
|
|
|
$
|
13
|
|
|
$
|
160
|
|
|
$
|
—
|
|
|
$
|
(51
|
)
|
|
$
|
151
|
|
Allowance for TDR finance receivable losses
|
|
9
|
|
|
4
|
|
|
57
|
|
|
—
|
|
|
(23
|
)
|
|
47
|
|
•
|
On February 1, 2017, we completed a private securitization transaction in which OneMain Direct Auto Receivables Trust 2017-1, a wholly owned special purpose vehicle of SFC, issued $300 million principal amount of notes backed by direct auto loans with an aggregate unpaid principal balance (“UPB”) of $300 million as of December 31, 2016. See Note
24
of the Notes to Consolidated Financial Statements in Part II - Item 8 of this report for further information on this subsequent transaction.
|
•
|
On February 15, 2017, we exercised our right to redeem asset-backed notes issued in March 2014 by Springleaf Funding Trust 2014-A for a redemption price of $188 million. The outstanding principal balance of the asset-backed notes was $221 million on the date of the optional redemption. See Note
24
of the Notes to Consolidated Financial Statements in Part II - Item 8 of this report for further information on this subsequent transaction.
|
•
|
SpringCastle Interests Sale;
|
•
|
Lendmark Sale;
|
•
|
August 2016 Real Estate Loan Sale; and
|
•
|
December 2016 Real Estate Loan Sale.
|
•
|
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 new and extending existing secured revolving facilities to provide committed liquidity in case of prolonged market fluctuations.
|
(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 (a)
|
|
Collateral
Type
|
|
Original
Revolving
Period
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Consumer Securitizations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
SLFT 2014-A
|
|
$
|
559
|
|
|
$
|
644
|
|
|
$
|
217
|
|
|
$
|
273
|
|
|
2.78
|
%
|
|
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
|
||||
SLFT 2016-A
|
|
500
|
|
|
560
|
|
|
500
|
|
|
559
|
|
|
3.10
|
%
|
|
Personal loans
|
|
2 years
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total consumer securitizations
|
|
2,536
|
|
|
2,789
|
|
|
2,194
|
|
|
2,418
|
|
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Auto Securitization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
ODART 2016-1
|
|
700
|
|
|
754
|
|
|
493
|
|
|
547
|
|
|
2.37
|
%
|
|
Direct auto loans
|
|
(c)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total secured structured financings
|
|
$
|
3,236
|
|
|
$
|
3,543
|
|
|
$
|
2,687
|
|
|
$
|
2,965
|
|
|
|
|
|
|
|
(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.
|
(dollars in millions)
|
|
2017
|
|
2018-2019
|
|
2020-2021
|
|
2022+
|
|
Securitizations
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Principal maturities on long-term debt:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Consumer securitization debt (a)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,687
|
|
|
$
|
2,687
|
|
Medium-term notes
|
|
1,287
|
|
|
700
|
|
|
1,950
|
|
|
300
|
|
|
—
|
|
|
4,237
|
|
||||||
Junior subordinated debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
350
|
|
|
—
|
|
|
350
|
|
||||||
Total principal maturities
|
|
1,287
|
|
|
700
|
|
|
1,950
|
|
|
650
|
|
|
2,687
|
|
|
7,274
|
|
||||||
Interest payments on debt (b)
|
|
318
|
|
|
444
|
|
|
261
|
|
|
482
|
|
|
178
|
|
|
1,683
|
|
||||||
Operating leases (c)
|
|
20
|
|
|
26
|
|
|
8
|
|
|
1
|
|
|
—
|
|
|
55
|
|
||||||
Total
|
|
$
|
1,625
|
|
|
$
|
1,170
|
|
|
$
|
2,219
|
|
|
$
|
1,133
|
|
|
$
|
2,865
|
|
|
$
|
9,012
|
|
(a)
|
On-balance sheet securitizations and borrowings under revolving conduit facilities are not included in maturities by period due to their variable monthly payments. At December 31, 2016, there were no amounts drawn under our revolving conduit facilities.
|
(b)
|
Future interest payments on floating-rate debt are estimated based upon floating rates in effect at
December 31, 2016
.
|
(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
|
30 - 89 Delinquency ratio
|
net finance receivables 30 - 89 days past due as a percentage of net finance receivables
|
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
|
Gross charge-off ratio
|
annualized gross charge-offs as a percentage of average net receivables
|
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 average real estate loans
|
Net charge-off ratio
|
annualized net charge-offs as a percentage of average net receivables
|
Net interest income
|
interest income less interest expense
|
Recovery ratio
|
annualized recoveries on net charge-offs as a percentage of average net receivables
|
Tangible equity
|
total equity less accumulated other comprehensive income or loss
|
Tangible managed assets
|
total assets less goodwill and other intangible assets
|
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
|
Weighted average interest rate
|
annualized interest expense as a percentage of average debt
|
Yield
|
annualized finance charges as a percentage of average net receivables
|
December 31,
|
|
2016
|
|
2015
|
||||||||||||
(dollars in millions)
|
|
+100 bp
|
|
-100 bp
|
|
+100 bp
|
|
-100 bp
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Net finance receivables, less allowance for finance receivable losses
|
|
$
|
(70
|
)
|
|
$
|
72
|
|
|
$
|
(131
|
)
|
|
$
|
146
|
|
Finance receivables held for sale
|
|
(11
|
)
|
|
13
|
|
|
(19
|
)
|
|
20
|
|
||||
Fixed-maturity investment securities
|
|
(30
|
)
|
|
30
|
|
|
(26
|
)
|
|
26
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Long-term debt
|
|
$
|
(166
|
)
|
|
$
|
150
|
|
|
$
|
(228
|
)
|
|
$
|
239
|
|
Topic
|
|
Page
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|
||
|
|
|
|
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
|||
|
(dollars in millions, except par value amount)
|
|
|
|
|
||||
December 31,
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Assets
|
|
|
|
|
||||
Cash and cash equivalents
|
|
$
|
240
|
|
|
$
|
321
|
|
Investment securities
|
|
582
|
|
|
604
|
|
||
Net finance receivables:
|
|
|
|
|
||||
Personal loans (includes loans of consolidated variable interest entities (“VIEs”) of $2.9 billion in 2016 and $3.6 billion in 2015)
|
|
4,804
|
|
|
4,300
|
|
||
SpringCastle Portfolio (includes loans of consolidated VIEs of $1.7 billion in 2015)
|
|
—
|
|
|
1,703
|
|
||
Real estate loans
|
|
144
|
|
|
538
|
|
||
Retail sales finance
|
|
11
|
|
|
23
|
|
||
Net finance receivables
|
|
4,959
|
|
|
6,564
|
|
||
Unearned insurance premium and claim reserves
|
|
(212
|
)
|
|
(250
|
)
|
||
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $94 million in 2016 and $128 million in 2015)
|
|
(204
|
)
|
|
(224
|
)
|
||
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses
|
|
4,543
|
|
|
6,090
|
|
||
Finance receivables held for sale (includes finance receivables held for sale of consolidated VIEs of $435 million in 2015)
|
|
153
|
|
|
793
|
|
||
Notes receivable from parent and affiliates
|
|
3,723
|
|
|
3,804
|
|
||
Restricted cash and cash equivalents (includes restricted cash and cash equivalents of consolidated VIEs of $211 million in 2016 and $282 million in 2015)
|
|
227
|
|
|
295
|
|
||
Other assets
|
|
251
|
|
|
281
|
|
||
|
|
|
|
|
||||
Total assets
|
|
$
|
9,719
|
|
|
$
|
12,188
|
|
|
|
|
|
|
||||
Liabilities and Shareholder’s Equity
|
|
|
|
|
||||
Long-term debt (includes debt of consolidated VIEs of $2.7 billion in 2016 and $5.5 billion in 2015)
|
|
$
|
6,837
|
|
|
$
|
9,582
|
|
Insurance claims and policyholder liabilities
|
|
248
|
|
|
230
|
|
||
Deferred and accrued taxes
|
|
106
|
|
|
128
|
|
||
Other liabilities (includes other liabilities of consolidated VIEs of $5 million in 2016 and $7 million in 2015)
|
|
185
|
|
|
216
|
|
||
Total liabilities
|
|
7,376
|
|
|
10,156
|
|
||
Commitments and contingent liabilities (Note 19)
|
|
|
|
|
|
|
||
|
|
|
|
|
||||
Shareholder’s equity:
|
|
|
|
|
||||
Common stock, par value $.50 per share; 25,000,000 shares authorized, 10,160,021 and 10,160,020 shares issued and outstanding at December 31, 2016 and 2015, respectively
|
|
5
|
|
|
5
|
|
||
Additional paid-in capital
|
|
799
|
|
|
789
|
|
||
Accumulated other comprehensive loss
|
|
(7
|
)
|
|
(24
|
)
|
||
Retained earnings
|
|
1,546
|
|
|
1,341
|
|
||
Springleaf Finance Corporation shareholder’s equity
|
|
2,343
|
|
|
2,111
|
|
||
Non-controlling interests
|
|
—
|
|
|
(79
|
)
|
||
Total shareholder’s equity
|
|
2,343
|
|
|
2,032
|
|
||
|
|
|
|
|
||||
Total liabilities and shareholder’s equity
|
|
$
|
9,719
|
|
|
$
|
12,188
|
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Interest income:
|
|
|
|
|
|
|
||||||
Finance charges
|
|
$
|
1,276
|
|
|
$
|
1,597
|
|
|
$
|
1,564
|
|
Finance receivables held for sale originated as held for investment
|
|
74
|
|
|
60
|
|
|
61
|
|
|||
Total interest income
|
|
1,350
|
|
|
1,657
|
|
|
1,625
|
|
|||
|
|
|
|
|
|
|
||||||
Interest expense
|
|
556
|
|
|
667
|
|
|
683
|
|
|||
|
|
|
|
|
|
|
||||||
Net interest income
|
|
794
|
|
|
990
|
|
|
942
|
|
|||
|
|
|
|
|
|
|
||||||
Provision for finance receivable losses
|
|
329
|
|
|
339
|
|
|
352
|
|
|||
|
|
|
|
|
|
|
||||||
Net interest income after provision for finance receivable losses
|
|
465
|
|
|
651
|
|
|
590
|
|
|||
|
|
|
|
|
|
|
||||||
Other revenues:
|
|
|
|
|
|
|
||||||
Insurance
|
|
160
|
|
|
158
|
|
|
166
|
|
|||
Investment
|
|
31
|
|
|
49
|
|
|
39
|
|
|||
Interest income on notes receivable from parent and affiliates
|
|
214
|
|
|
42
|
|
|
5
|
|
|||
Net loss on repurchases and repayments of debt
|
|
(17
|
)
|
|
—
|
|
|
(66
|
)
|
|||
Net gain on sale of SpringCastle interests
|
|
167
|
|
|
—
|
|
|
—
|
|
|||
Net gain on sales of personal and real estate loans and related trust assets
|
|
18
|
|
|
—
|
|
|
626
|
|
|||
Other
|
|
1
|
|
|
(6
|
)
|
|
(25
|
)
|
|||
Total other revenues
|
|
574
|
|
|
243
|
|
|
745
|
|
|||
|
|
|
|
|
|
|
||||||
Other expenses:
|
|
|
|
|
|
|
||||||
Operating expenses:
|
|
|
|
|
|
|
||||||
Salaries and benefits
|
|
347
|
|
|
364
|
|
|
321
|
|
|||
Other operating expenses
|
|
291
|
|
|
299
|
|
|
261
|
|
|||
Insurance policy benefits and claims
|
|
55
|
|
|
72
|
|
|
75
|
|
|||
Total other expenses
|
|
693
|
|
|
735
|
|
|
657
|
|
|||
|
|
|
|
|
|
|
||||||
Income before provision for income taxes
|
|
346
|
|
|
159
|
|
|
678
|
|
|||
|
|
|
|
|
|
|
||||||
Provision for income taxes
|
|
113
|
|
|
18
|
|
|
233
|
|
|||
|
|
|
|
|
|
|
||||||
Net income
|
|
233
|
|
|
141
|
|
|
445
|
|
|||
|
|
|
|
|
|
|
||||||
Net income attributable to non-controlling interests
|
|
28
|
|
|
127
|
|
|
48
|
|
|||
|
|
|
|
|
|
|
||||||
Net income attributable to Springleaf Finance Corporation
|
|
$
|
205
|
|
|
$
|
14
|
|
|
$
|
397
|
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
233
|
|
|
$
|
141
|
|
|
$
|
445
|
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss):
|
|
|
|
|
|
|
||||||
Net change in unrealized gains (losses) on non-credit impaired available-for-sale securities
|
|
17
|
|
|
(17
|
)
|
|
20
|
|
|||
Retirement plan liabilities adjustments
|
|
22
|
|
|
(9
|
)
|
|
(50
|
)
|
|||
Income tax effect:
|
|
|
|
|
|
|
||||||
Net unrealized (gains) losses on non-credit impaired available-for-sale securities
|
|
(6
|
)
|
|
5
|
|
|
(7
|
)
|
|||
Retirement plan liabilities adjustments
|
|
(7
|
)
|
|
3
|
|
|
17
|
|
|||
Other comprehensive income (loss), net of tax, before reclassification adjustments
|
|
26
|
|
|
(18
|
)
|
|
(20
|
)
|
|||
Reclassification adjustments included in net income:
|
|
|
|
|
|
|
||||||
Net realized gains on available-for-sale securities
|
|
(8
|
)
|
|
(14
|
)
|
|
(8
|
)
|
|||
Net realized gain on foreign currency translation adjustments
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|||
Income tax effect:
|
|
|
|
|
|
|
||||||
Net realized gains on available-for-sale securities
|
|
3
|
|
|
5
|
|
|
3
|
|
|||
Reclassification adjustments included in net income, net of tax
|
|
(9
|
)
|
|
(9
|
)
|
|
(5
|
)
|
|||
Other comprehensive income (loss), net of tax
|
|
17
|
|
|
(27
|
)
|
|
(25
|
)
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income
|
|
250
|
|
|
114
|
|
|
420
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income attributable to non-controlling interests
|
|
28
|
|
|
127
|
|
|
48
|
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive income (loss) attributable to Springleaf Finance Corporation
|
|
$
|
222
|
|
|
$
|
(13
|
)
|
|
$
|
372
|
|
|
|
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, 2016
|
|
$
|
5
|
|
|
$
|
789
|
|
|
$
|
(24
|
)
|
|
$
|
1,341
|
|
|
$
|
2,111
|
|
|
$
|
(79
|
)
|
|
$
|
2,032
|
|
Capital contributions from parent
|
|
—
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
|||||||
Share-based compensation expense, net of forfeitures
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||||
Withholding tax on vested restricted stock units (“RSUs”) and performance-based RSUs (“PRSUs”)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||||
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
|
|
—
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
205
|
|
|
205
|
|
|
28
|
|
|
233
|
|
|||||||
Balance, December 31, 2016
|
|
$
|
5
|
|
|
$
|
799
|
|
|
$
|
(7
|
)
|
|
$
|
1,546
|
|
|
$
|
2,343
|
|
|
$
|
—
|
|
|
$
|
2,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
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
|
)
|
|||||||
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
|
)
|
|||||||
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
|
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
||||||
Net income
|
|
$
|
233
|
|
|
$
|
141
|
|
|
$
|
445
|
|
Reconciling adjustments:
|
|
|
|
|
|
|
||||||
Provision for finance receivable losses
|
|
329
|
|
|
339
|
|
|
352
|
|
|||
Depreciation and amortization
|
|
144
|
|
|
92
|
|
|
112
|
|
|||
Deferred income tax benefit
|
|
(83
|
)
|
|
(50
|
)
|
|
(12
|
)
|
|||
Non-cash incentive compensation from Initial Stockholder
|
|
—
|
|
|
15
|
|
|
—
|
|
|||
Net gain on liquidation of United Kingdom subsidiary
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|||
Net gain on sales of personal and real estate loans and related trust assets
|
|
(18
|
)
|
|
—
|
|
|
(626
|
)
|
|||
Net loss on repurchases and repayments of debt
|
|
17
|
|
|
—
|
|
|
66
|
|
|||
Share-based compensation expense, net of forfeitures
|
|
1
|
|
|
2
|
|
|
1
|
|
|||
Net gain on sale of SpringCastle interests
|
|
(167
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
|
6
|
|
|
(3
|
)
|
|
16
|
|
|||
Cash flows due to changes in:
|
|
|
|
|
|
|
||||||
Other assets and other liabilities
|
|
(37
|
)
|
|
(54
|
)
|
|
(9
|
)
|
|||
Insurance claims and policyholder liabilities
|
|
(19
|
)
|
|
34
|
|
|
51
|
|
|||
Taxes receivable and payable
|
|
56
|
|
|
111
|
|
|
(127
|
)
|
|||
Accrued interest and finance charges
|
|
14
|
|
|
(23
|
)
|
|
(39
|
)
|
|||
Restricted cash and cash equivalents not reinvested
|
|
4
|
|
|
—
|
|
|
5
|
|
|||
Other, net
|
|
2
|
|
|
(1
|
)
|
|
1
|
|
|||
Net cash provided by operating activities
|
|
478
|
|
|
603
|
|
|
236
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from investing activities
|
|
|
|
|
|
|
||||||
Net principal collections (originations) of finance receivables held for investment and
held for sale |
|
(557
|
)
|
|
(799
|
)
|
|
(88
|
)
|
|||
Proceeds on sales of finance receivables held for sale originated as held for investment
|
|
930
|
|
|
78
|
|
|
3,789
|
|
|||
Proceeds from sale of SpringCastle interests
|
|
101
|
|
|
—
|
|
|
—
|
|
|||
Cash advances on intercompany notes receivable
|
|
(1,042
|
)
|
|
(3,720
|
)
|
|
(128
|
)
|
|||
Proceeds from repayments of principal and assignment of intercompany notes receivable
|
|
1,023
|
|
|
189
|
|
|
44
|
|
|||
Available-for-sale securities purchased
|
|
(353
|
)
|
|
(476
|
)
|
|
(348
|
)
|
|||
Trading and other securities purchased
|
|
(10
|
)
|
|
(1,474
|
)
|
|
(2,930
|
)
|
|||
Available-for-sale securities called, sold, and matured
|
|
380
|
|
|
470
|
|
|
269
|
|
|||
Trading and other securities called, sold, and matured
|
|
20
|
|
|
3,779
|
|
|
646
|
|
|||
Change in restricted cash and cash equivalents
|
|
(10
|
)
|
|
(72
|
)
|
|
93
|
|
|||
Proceeds from sale of real estate owned
|
|
8
|
|
|
14
|
|
|
58
|
|
|||
Other, net
|
|
26
|
|
|
(12
|
)
|
|
—
|
|
|||
Net cash provided by (used for) investing activities
|
|
516
|
|
|
(2,023
|
)
|
|
1,405
|
|
|||
|
|
|
|
|
|
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
|
||||||
Proceeds from issuance of long-term debt, net of commissions
|
|
3,854
|
|
|
3,028
|
|
|
3,557
|
|
|||
Proceeds from intercompany note payable
|
|
670
|
|
|
—
|
|
|
—
|
|
|||
Repayments of long-term debt
|
|
(4,920
|
)
|
|
(1,960
|
)
|
|
(4,218
|
)
|
|||
Distributions to joint venture partners
|
|
(18
|
)
|
|
(77
|
)
|
|
(627
|
)
|
|||
Payments on note payable to affiliate
|
|
(670
|
)
|
|
—
|
|
|
—
|
|
|||
Excess tax benefit from share-based compensation
|
|
—
|
|
|
1
|
|
|
—
|
|
|||
Withholding tax on vested RSUs and PRSUs
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|||
Capital contributions from parent
|
|
10
|
|
|
—
|
|
|
22
|
|
|||
Net cash provided by (used for) financing activities
|
|
(1,075
|
)
|
|
992
|
|
|
(1,266
|
)
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||
|
|
|
|
|
|
|
||||||
Net change in cash and cash equivalents
|
|
(81
|
)
|
|
(428
|
)
|
|
374
|
|
|||
Cash and cash equivalents at beginning of period
|
|
321
|
|
|
749
|
|
|
375
|
|
|||
Cash and cash equivalents at end of period
|
|
$
|
240
|
|
|
$
|
321
|
|
|
$
|
749
|
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information
|
|
|
|
|
|
|
||||||
Interest paid
|
|
$
|
(451
|
)
|
|
$
|
(511
|
)
|
|
$
|
(504
|
)
|
Income taxes received (paid)
|
|
(140
|
)
|
|
45
|
|
|
(369
|
)
|
|||
|
|
|
|
|
|
|
||||||
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)
|
|
$
|
1,945
|
|
|
$
|
617
|
|
|
$
|
6,986
|
|
Increase in finance receivables held for investment financed with intercompany payable
|
|
89
|
|
|
—
|
|
|
—
|
|
|||
Transfer of finance receivables to real estate owned
|
|
8
|
|
|
11
|
|
|
49
|
|
|||
Net unsettled investment security purchases
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|||
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
|
|
•
|
decreased income before provision for income taxes by
$55 million
;
|
•
|
decreased net income by
$34 million
; and
|
•
|
decreased net income attributable to SFC by
$36 million
.
|
•
|
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.
|
•
|
We adopted the amendment requiring recognition of tax benefits related to exercised or vested awards through the income statement rather than additional paid-in capital on a prospective basis as of January 1, 2016. Further, as of January 1, 2016, there was no impact to additional paid-in capital as a result of our adoption of this ASU under the modified retrospective method.
|
•
|
We did not adopt the amendment allowing for the use of the actual number of shares vested each period, rather than estimating the number of awards that are expected to vest. We continue to use an estimate as it relates to the number of awards that are expected to vest.
|
•
|
We adopted the amendment for the threshold to qualify for equity classification permits withholding up to the maximum statutory tax rates, under the modified retrospective basis as of January 1, 2016. This amendment did not have a material impact on our consolidated financial statements.
|
•
|
We adopted the amendment requiring the classification of employee taxes paid on the statement of cash flows when an employer withholds shares for tax-withholding purposes to be presented in the financing activities instead of the operating activities, under the retrospective method as of January 1, 2014. This amendment did not have a material impact on our consolidated financial statements.
|
•
|
We adopted the amendment requiring the classification of excess tax benefits on the statement of cash flows to be presented in the operating activities instead of the financing activities, under the prospective method as of September 30, 2016. This amendment did not have a material impact on our consolidated financial statements.
|
•
|
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, 2016
, we had over
928,000
personal loans representing
$4.8 billion
of net finance receivables, compared to
890,000
personal loans totaling
$4.3 billion
at
December 31, 2015
.
|
•
|
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 real estate lending 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.
|
•
|
SpringCastle Portfolio —
included unsecured loans and loans secured by subordinate residential real estate mortgages that were sold on March 31, 2016, in connection with the SpringCastle Interests Sale. The SpringCastle Portfolio included both closed-end accounts and open-end lines of credit. These loans were in a liquidating status and varied in substance and form from our originated loans. Unless SFI is terminated, SFI will continue to provide the servicing for these loans pursuant to a servicing agreement, which SFI services as unsecured loans because the liens are subordinated to superior ranking security interests.
|
(dollars in millions)
|
|
Personal
Loans
|
|
SpringCastle
Portfolio
|
|
Real Estate
Loans
|
|
Retail
Sales Finance
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Gross receivables *
|
|
$
|
5,449
|
|
|
$
|
—
|
|
|
$
|
142
|
|
|
$
|
12
|
|
|
$
|
5,603
|
|
Unearned finance charges and points and fees
|
|
(754
|
)
|
|
—
|
|
|
1
|
|
|
(1
|
)
|
|
(754
|
)
|
|||||
Accrued finance charges
|
|
63
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
64
|
|
|||||
Deferred origination costs
|
|
46
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
46
|
|
|||||
Total
|
|
$
|
4,804
|
|
|
$
|
—
|
|
|
$
|
144
|
|
|
$
|
11
|
|
|
$
|
4,959
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
*
|
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 Fortress Acquisition (as defined below)
— 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.
|
December 31,
|
|
2016
|
|
2015 *
|
||||||||||
(dollars in millions)
|
|
Amount
|
|
Percent
|
|
Amount
|
|
Percent
|
||||||
|
|
|
|
|
|
|
|
|
||||||
Illinois
|
|
$
|
400
|
|
|
8
|
%
|
|
$
|
468
|
|
|
7
|
%
|
North Carolina
|
|
398
|
|
|
8
|
|
|
593
|
|
|
9
|
|
||
Indiana
|
|
360
|
|
|
7
|
|
|
403
|
|
|
6
|
|
||
California
|
|
298
|
|
|
6
|
|
|
429
|
|
|
7
|
|
||
Texas
|
|
288
|
|
|
6
|
|
|
292
|
|
|
4
|
|
||
Georgia
|
|
276
|
|
|
6
|
|
|
323
|
|
|
5
|
|
||
Virginia
|
|
266
|
|
|
5
|
|
|
334
|
|
|
5
|
|
||
Ohio
|
|
266
|
|
|
5
|
|
|
371
|
|
|
6
|
|
||
Pennsylvania
|
|
255
|
|
|
5
|
|
|
375
|
|
|
6
|
|
||
Florida
|
|
254
|
|
|
5
|
|
|
345
|
|
|
5
|
|
||
South Carolina
|
|
254
|
|
|
5
|
|
|
291
|
|
|
4
|
|
||
Other
|
|
1,644
|
|
|
34
|
|
|
2,340
|
|
|
36
|
|
||
Total
|
|
$
|
4,959
|
|
|
100
|
%
|
|
$
|
6,564
|
|
|
100
|
%
|
*
|
December 31, 2015
concentrations of net finance receivables are presented in the order of
December 31, 2016
state concentrations.
|
(dollars in millions)
|
|
Personal
Loans
|
|
SpringCastle
Portfolio
|
|
Real Estate
Loans
|
|
Retail
Sales Finance
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net finance receivables:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Performing
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
|
$
|
4,579
|
|
|
$
|
—
|
|
|
$
|
102
|
|
|
$
|
11
|
|
|
$
|
4,692
|
|
30-59 days past due
|
|
64
|
|
|
—
|
|
|
9
|
|
|
—
|
|
|
73
|
|
|||||
60-89 days past due
|
|
45
|
|
|
—
|
|
|
4
|
|
|
—
|
|
|
49
|
|
|||||
Total performing
|
|
4,688
|
|
|
—
|
|
|
115
|
|
|
11
|
|
|
4,814
|
|
|||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|
||||||||||
90-179 days past due
|
|
112
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
120
|
|
|||||
180 days or more past due
|
|
4
|
|
|
—
|
|
|
21
|
|
|
—
|
|
|
25
|
|
|||||
Total nonperforming
|
|
116
|
|
|
—
|
|
|
29
|
|
|
—
|
|
|
145
|
|
|||||
Total
|
|
$
|
4,804
|
|
|
$
|
—
|
|
|
$
|
144
|
|
|
$
|
11
|
|
|
$
|
4,959
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net finance receivables:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Performing
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Current
|
|
$
|
4,077
|
|
|
$
|
1,588
|
|
|
$
|
486
|
|
|
$
|
22
|
|
|
$
|
6,173
|
|
30-59 days past due
|
|
65
|
|
|
49
|
|
|
13
|
|
|
—
|
|
|
127
|
|
|||||
60-89 days past due
|
|
49
|
|
|
26
|
|
|
19
|
|
|
—
|
|
|
94
|
|
|||||
Total performing
|
|
4,191
|
|
|
1,663
|
|
|
518
|
|
|
22
|
|
|
6,394
|
|
|||||
Nonperforming
|
|
|
|
|
|
|
|
|
|
|
||||||||||
90-179 days past due
|
|
106
|
|
|
39
|
|
|
7
|
|
|
1
|
|
|
153
|
|
|||||
180 days or more past due
|
|
3
|
|
|
1
|
|
|
13
|
|
|
—
|
|
|
17
|
|
|||||
Total nonperforming
|
|
109
|
|
|
40
|
|
|
20
|
|
|
1
|
|
|
170
|
|
|||||
Total
|
|
$
|
4,300
|
|
|
$
|
1,703
|
|
|
$
|
538
|
|
|
$
|
23
|
|
|
$
|
6,564
|
|
•
|
Ownership interest acquired by FCFI Acquisition LLC, an affiliate of Fortress (the “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.
|
•
|
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”), some of which were determined to be credit impaired when SAC acquired the SCP Loans on April 1, 2013. On March 31, 2016, we sold the SpringCastle Portfolio in connection with the SpringCastle Interests Sale described in Note
2
.
|
(dollars in millions)
|
|
SCP Loans
|
|
FA Loans (a)
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
|
|
|
|
|
||||||
Carrying amount, net of allowance
|
|
$
|
—
|
|
|
$
|
70
|
|
|
$
|
70
|
|
Outstanding balance (b)
|
|
—
|
|
|
107
|
|
|
107
|
|
|||
Allowance for purchased credit impaired finance receivable losses
|
|
—
|
|
|
8
|
|
|
8
|
|
|||
|
|
|
|
|
|
|
||||||
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
|
|
(a)
|
Purchased credit impaired FA Loans held for sale included in the table above were as follows:
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Carrying amount
|
|
$
|
54
|
|
|
$
|
59
|
|
Outstanding balance
|
|
83
|
|
|
89
|
|
(b)
|
Outstanding balance is defined as UPB of the loans with a net carrying amount.
|
(dollars in millions)
|
|
SCP Loans
|
|
FA Loans
|
|
Total
|
||||||
|
|
|
|
|
|
|
||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
375
|
|
|
$
|
66
|
|
|
$
|
441
|
|
Accretion (a)
|
|
(16
|
)
|
|
(7
|
)
|
|
(23
|
)
|
|||
Reclassifications from nonaccretable difference (b)
|
|
—
|
|
|
12
|
|
|
12
|
|
|||
Transfers due to finance receivables sold
|
|
(359
|
)
|
|
(11
|
)
|
|
(370
|
)
|
|||
Balance at end of period
|
|
$
|
—
|
|
|
$
|
60
|
|
|
$
|
60
|
|
|
|
|
|
|
|
|
||||||
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
|
|
(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,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Accretion
|
|
$
|
5
|
|
|
$
|
6
|
|
|
$
|
13
|
|
(b)
|
Reclassifications from nonaccretable difference represents the increases in accretable yield resulting from higher estimated undiscounted cash flows.
|
(dollars in millions)
|
|
Personal
Loans (a)
|
|
SpringCastle
Portfolio |
|
Real Estate
Loans (a) |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
TDR gross finance receivables (b)
|
|
$
|
47
|
|
|
$
|
—
|
|
|
$
|
133
|
|
|
$
|
180
|
|
TDR net finance receivables
|
|
47
|
|
|
—
|
|
|
134
|
|
|
181
|
|
||||
Allowance for TDR finance receivable losses
|
|
20
|
|
|
—
|
|
|
11
|
|
|
31
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(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, 2016
|
|
|
|
|
|
|
||||||
TDR gross finance receivables
|
|
$
|
—
|
|
|
$
|
89
|
|
|
$
|
89
|
|
TDR net finance receivables
|
|
—
|
|
|
90
|
|
|
90
|
|
|||
|
|
|
|
|
|
|
||||||
December 31, 2015
|
|
|
|
|
|
|
||||||
TDR gross finance receivables
|
|
$
|
2
|
|
|
$
|
92
|
|
|
$
|
94
|
|
TDR net finance receivables
|
|
2
|
|
|
92
|
|
|
94
|
|
(b)
|
As defined earlier in this Note.
|
(dollars in millions)
|
|
Personal
Loans (a)
|
|
SpringCastle
Portfolio
|
|
Real Estate
Loans (a) |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
TDR average net receivables
|
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
175
|
|
|
$
|
211
|
|
TDR finance charges recognized
|
|
3
|
|
|
—
|
|
|
11
|
|
|
14
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(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, 2016
|
|
|
|
|
|
|
|
|||||
TDR average net receivables
|
|
$
|
1
|
|
|
$
|
102
|
|
|
$
|
103
|
|
TDR finance charges recognized
|
|
—
|
|
|
6
|
|
|
6
|
|
|||
|
|
|
|
|
|
|
||||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
||||||
TDR average net receivables (a)
|
|
$
|
2
|
|
|
$
|
91
|
|
|
$
|
93
|
|
TDR finance charges recognized
|
|
—
|
|
|
5
|
|
|
5
|
|
|||
|
|
|
|
|
|
|
||||||
Year Ended December 31, 2014
|
|
|
|
|
|
|
||||||
TDR average net receivables (b)
|
|
$
|
—
|
|
|
$
|
248
|
|
|
$
|
248
|
|
TDR finance charges recognized
|
|
—
|
|
|
4
|
|
|
4
|
|
(a)
|
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.
|
(b)
|
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, 2016
|
|
|
|
|
|
|
|
|
||||||||
Pre-modification TDR net finance receivables
|
|
$
|
49
|
|
|
$
|
1
|
|
|
$
|
16
|
|
|
$
|
66
|
|
Post-modification TDR net finance receivables:
|
|
|
|
|
|
|
|
|
||||||||
Rate reduction
|
|
$
|
31
|
|
|
$
|
1
|
|
|
$
|
16
|
|
|
$
|
48
|
|
Other (b)
|
|
12
|
|
|
—
|
|
|
1
|
|
|
13
|
|
||||
Total post-modification TDR net finance receivables
|
|
$
|
43
|
|
|
$
|
1
|
|
|
$
|
17
|
|
|
$
|
61
|
|
Number of TDR accounts
|
|
9,517
|
|
|
157
|
|
|
364
|
|
|
10,038
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(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, 2016
|
|
|
|
|
|
|
||||||
Pre-modification TDR net finance receivables
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
5
|
|
Post-modification TDR net finance receivables
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
5
|
|
Number of TDR accounts
|
|
174
|
|
|
122
|
|
|
296
|
|
|||
|
|
|
|
|
|
|
||||||
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 primarily include forgiveness of principal or interest.
|
(dollars in millions)
|
|
Personal
Loans
|
|
SpringCastle
Portfolio
|
|
Real Estate
Loans (a) |
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
TDR net finance receivables (b) (c)
|
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
9
|
|
Number of TDR accounts
|
|
1,409
|
|
|
19
|
|
|
61
|
|
|
1,489
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(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, 2016
|
|
|
||
TDR net finance receivables
|
|
$
|
2
|
|
Number of TDR accounts
|
|
30
|
|
|
|
|
|
||
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.
|
(c)
|
TDR SpringCastle Portfolio loans for the year ended
December 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.
|
(dollars in millions)
|
|
Personal
Loans
|
|
SpringCastle
Portfolio
|
|
Real Estate
Loans
|
|
Retail
Sales Finance
|
|
Consolidated
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance at beginning of period
|
|
$
|
173
|
|
|
$
|
4
|
|
|
$
|
46
|
|
|
$
|
1
|
|
|
$
|
224
|
|
Provision for finance receivable losses
|
|
306
|
|
|
14
|
|
|
9
|
|
|
—
|
|
|
329
|
|
|||||
Charge-offs
|
|
(340
|
)
|
|
(17
|
)
|
|
(11
|
)
|
|
(1
|
)
|
|
(369
|
)
|
|||||
Recoveries
|
|
45
|
|
|
3
|
|
|
5
|
|
|
1
|
|
|
54
|
|
|||||
Other (a)
|
|
—
|
|
|
(4
|
)
|
|
(30
|
)
|
|
—
|
|
|
(34
|
)
|
|||||
Balance at end of period
|
|
$
|
184
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
204
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
|||||
Other (b)
|
|
(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 (c)
|
|
(192
|
)
|
|
(39
|
)
|
|
(61
|
)
|
|
(5
|
)
|
|
(297
|
)
|
|||||
Recoveries (d)
|
|
25
|
|
|
5
|
|
|
6
|
|
|
1
|
|
|
37
|
|
|||||
Other (e)
|
|
—
|
|
|
—
|
|
|
(339
|
)
|
|
—
|
|
|
(339
|
)
|
|||||
Allowance for SpringCastle Portfolio contributed to SFC
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
|||||
Balance at end of period
|
|
$
|
130
|
|
|
$
|
3
|
|
|
$
|
46
|
|
|
$
|
1
|
|
|
$
|
180
|
|
(a)
|
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 sale of our equity interest in the SpringCastle Joint Venture. See Note 2 for further information on this sale; and
|
•
|
the elimination of allowance for finance receivable losses due to the transfers of real estate loans held for investment to finance receivable held for sale during 2016.
|
(b)
|
Other consists of the elimination of allowance for finance receivable losses due to the transfer of personal loans held for investment to finance receivable held for sale during 2015.
|
(c)
|
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.
|
(d)
|
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.
|
(e)
|
Other consists of the elimination of allowance for finance receivable losses due to the transfer of real estate loans held for investment to finance receivable held for sale during 2014.
|
(dollars in millions)
|
|
Personal
Loans
|
|
SpringCastle
Portfolio
|
|
Real Estate
Loans
|
|
Retail
Sales Finance
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for finance receivable losses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Collectively evaluated for impairment
|
|
$
|
164
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
165
|
|
Purchased credit impaired finance receivables
|
|
—
|
|
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
|||||
TDR finance receivables
|
|
20
|
|
|
—
|
|
|
11
|
|
|
—
|
|
|
31
|
|
|||||
Total
|
|
$
|
184
|
|
|
$
|
—
|
|
|
$
|
19
|
|
|
$
|
1
|
|
|
$
|
204
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Finance receivables:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Collectively evaluated for impairment
|
|
$
|
4,757
|
|
|
$
|
—
|
|
|
$
|
76
|
|
|
$
|
11
|
|
|
$
|
4,844
|
|
Purchased credit impaired finance receivables
|
|
—
|
|
|
—
|
|
|
24
|
|
|
—
|
|
|
24
|
|
|||||
TDR finance receivables
|
|
47
|
|
|
—
|
|
|
44
|
|
|
—
|
|
|
91
|
|
|||||
Total
|
|
$
|
4,804
|
|
|
$
|
—
|
|
|
$
|
144
|
|
|
$
|
11
|
|
|
$
|
4,959
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for finance receivable losses as a percentage of finance receivables
|
|
3.84
|
%
|
|
—
|
%
|
|
13.31
|
%
|
|
4.42
|
%
|
|
4.12
|
%
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Allowance for finance receivable losses:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Collectively evaluated for impairment
|
|
$
|
164
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1
|
|
|
$
|
165
|
|
Purchased credit impaired finance receivables
|
|
—
|
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
|||||
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
|
%
|
(dollars in millions)
|
|
Cost/
Amortized Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair
Value
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Fixed maturity available-for-sale securities:
|
|
|
|
|
|
|
|
|
||||||||
Bonds
|
|
|
|
|
|
|
|
|
||||||||
U.S. government and government sponsored entities
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13
|
|
Obligations of states, municipalities, and political subdivisions
|
|
83
|
|
|
—
|
|
|
(1
|
)
|
|
82
|
|
||||
Non-U.S. government and government sponsored entities
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
||||
Corporate debt
|
|
356
|
|
|
2
|
|
|
(5
|
)
|
|
353
|
|
||||
Mortgage-backed, asset-backed, and collateralized:
|
|
|
|
|
|
|
|
|
||||||||
Residential mortgage-backed securities (“RMBS”)
|
|
39
|
|
|
—
|
|
|
—
|
|
|
39
|
|
||||
Commercial mortgage-backed securities (“CMBS”)
|
|
33
|
|
|
—
|
|
|
—
|
|
|
33
|
|
||||
Collateralized debt obligations (“CDO”)/Asset-backed securities (“ABS”)
|
|
46
|
|
|
—
|
|
|
—
|
|
|
46
|
|
||||
Total bonds
|
|
575
|
|
|
2
|
|
|
(6
|
)
|
|
571
|
|
||||
Preferred stock (a)
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
||||
Other long-term investments
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Total (b)
|
|
$
|
582
|
|
|
$
|
2
|
|
|
$
|
(6
|
)
|
|
$
|
578
|
|
|
|
|
|
|
|
|
|
|
||||||||
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:
|
|
|
|
|
|
|
|
|
||||||||
RMBS
|
|
74
|
|
|
—
|
|
|
—
|
|
|
74
|
|
||||
CMBS
|
|
44
|
|
|
—
|
|
|
—
|
|
|
44
|
|
||||
CDO/ABS
|
|
30
|
|
|
—
|
|
|
(1
|
)
|
|
29
|
|
||||
Total bonds
|
|
597
|
|
|
3
|
|
|
(15
|
)
|
|
585
|
|
||||
Preferred stock (a)
|
|
6
|
|
|
—
|
|
|
(1
|
)
|
|
5
|
|
||||
Other long-term investments
|
|
1
|
|
|
—
|
|
|
—
|
|
|
1
|
|
||||
Total (b)
|
|
$
|
604
|
|
|
$
|
3
|
|
|
$
|
(16
|
)
|
|
$
|
591
|
|
(a)
|
The Company employs an income equity strategy targeting investments in stocks with strong current dividend yields. Stocks included have a history of stable or increasing dividend payments.
|
(b)
|
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, 2016
and
2015
, which is classified as a restricted investment and carried at cost.
|
|
|
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, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. government and government sponsored entities
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
—
|
|
Obligations of states, municipalities, and political subdivisions
|
|
57
|
|
|
(1
|
)
|
|
2
|
|
|
—
|
|
|
59
|
|
|
(1
|
)
|
||||||
Non-U.S. government and government sponsored entities
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
||||||
Corporate debt
|
|
171
|
|
|
(5
|
)
|
|
5
|
|
|
—
|
|
|
176
|
|
|
(5
|
)
|
||||||
RMBS
|
|
33
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
||||||
CMBS
|
|
22
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22
|
|
|
—
|
|
||||||
CDO/ABS
|
|
25
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25
|
|
|
—
|
|
||||||
Total bonds
|
|
320
|
|
|
(6
|
)
|
|
7
|
|
|
—
|
|
|
327
|
|
|
(6
|
)
|
||||||
Preferred stock
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||||
Total
|
|
$
|
320
|
|
|
$
|
(6
|
)
|
|
$
|
13
|
|
|
$
|
—
|
|
|
$
|
333
|
|
|
$
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
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
|
)
|
*
|
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)
|
|
|
||
At or for the Year Ended December 31,
|
|
2016
|
||
|
|
|
||
Balance at beginning of period
|
|
$
|
1
|
|
Reductions:
|
|
|
||
Realized due to dispositions with no prior intention to sell
|
|
1
|
|
|
Balance at end of period
|
|
$
|
—
|
|
(dollars in millions)
|
|
Fair
Value
|
|
Amortized
Cost
|
||||
|
|
|
|
|
||||
Fixed maturities, excluding mortgage-backed, asset-backed, and collateralized securities:
|
|
|
|
|
||||
Due in 1 year or less
|
|
$
|
37
|
|
|
$
|
38
|
|
Due after 1 year through 5 years
|
|
231
|
|
|
232
|
|
||
Due after 5 years through 10 years
|
|
39
|
|
|
39
|
|
||
Due after 10 years
|
|
146
|
|
|
148
|
|
||
Mortgage-backed, asset-backed, and collateralized securities
|
|
118
|
|
|
118
|
|
||
Total
|
|
$
|
571
|
|
|
$
|
575
|
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Fixed maturity trading and other securities:
|
|
|
|
|
||||
Bonds
|
|
|
|
|
||||
Corporate debt
|
|
$
|
2
|
|
|
$
|
10
|
|
Mortgage-backed, asset-backed, and collateralized:
|
|
|
|
|
||||
CMBS
|
|
1
|
|
|
2
|
|
||
Total *
|
|
$
|
3
|
|
|
$
|
12
|
|
*
|
The fair value of other securities, which we have elected the fair value option, totaled
$3 million
at
December 31, 2016
and
$2 million
at
December 31, 2015
.
|
(a)
|
Fixed assets were net of accumulated depreciation of
$180 million
at
December 31, 2016
and
$173 million
at
December 31, 2015
.
|
(b)
|
Other investments primarily include commercial mortgage loans, receivables related to investments, and accrued investment income.
|
(c)
|
Current tax receivable includes current federal and state tax assets.
|
(d)
|
Receivables related to sales of real estate loans and related trust assets reflect the remaining balances of holdback provisions as of
December 31, 2016
and
2015
.
|
(dollars in millions)
|
|
Gross Carrying Amount
|
|
Accumulated Amortization
|
|
Net Other Intangible Assets
|
||||||
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
|
|
|
|
|
||||||
Value of business acquired (“VOBA”)
|
|
$
|
36
|
|
|
$
|
(33
|
)
|
|
$
|
3
|
|
Customer relationships
|
|
18
|
|
|
(18
|
)
|
|
—
|
|
|||
Licenses
|
|
12
|
|
|
—
|
|
|
12
|
|
|||
Customer lists
|
|
9
|
|
|
(9
|
)
|
|
—
|
|
|||
Total
|
|
$
|
75
|
|
|
$
|
(60
|
)
|
|
$
|
15
|
|
|
|
|
|
|
|
|
||||||
December 31, 2015
|
|
|
|
|
|
|
||||||
VOBA
|
|
$
|
36
|
|
|
$
|
(32
|
)
|
|
$
|
4
|
|
Customer relationships
|
|
18
|
|
|
(18
|
)
|
|
—
|
|
|||
Licenses
|
|
12
|
|
|
—
|
|
|
12
|
|
|||
Customer lists
|
|
9
|
|
|
(9
|
)
|
|
—
|
|
|||
Total
|
|
$
|
75
|
|
|
$
|
(59
|
)
|
|
$
|
16
|
|
|
|
December 31, 2016
|
|
December 31, 2015
|
||||||||||||
(dollars in millions)
|
|
Carrying
Value
|
|
Fair
Value
|
|
Carrying
Value
|
|
Fair
Value
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Senior debt
|
|
$
|
6,665
|
|
|
$
|
7,150
|
|
|
$
|
9,410
|
|
|
$
|
9,753
|
|
Junior subordinated debt
|
|
172
|
|
|
158
|
|
|
172
|
|
|
245
|
|
||||
Total
|
|
$
|
6,837
|
|
|
$
|
7,308
|
|
|
$
|
9,582
|
|
|
$
|
9,998
|
|
|
|
Years Ended December 31,
|
|
At December 31,
|
|||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
2016
|
|
2015
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|||||
Senior debt
|
|
7.18
|
%
|
|
6.96
|
%
|
|
7.10
|
%
|
|
7.46
|
%
|
|
6.66
|
%
|
Junior subordinated debt
|
|
12.26
|
|
|
12.26
|
|
|
12.26
|
|
|
12.26
|
|
|
12.26
|
|
Total
|
|
7.30
|
|
|
7.05
|
|
|
7.19
|
|
|
7.59
|
|
|
6.76
|
|
|
|
Senior Debt
|
|
|
|
|
||||||||||
(dollars in millions)
|
|
Securitizations
|
|
Medium
Term
Notes
|
|
Junior
Subordinated
Debt
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest rates (a)
|
|
2.04% - 6.50%
|
|
|
5.25% - 8.25%
|
|
|
6.00%
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
||||||||
First quarter 2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Second quarter 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Third quarter 2017
|
|
—
|
|
|
257
|
|
|
—
|
|
|
257
|
|
||||
Fourth quarter 2017
|
|
—
|
|
|
1,030
|
|
|
—
|
|
|
1,030
|
|
||||
2017
|
|
—
|
|
|
1,287
|
|
|
—
|
|
|
1,287
|
|
||||
2018
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2019
|
|
—
|
|
|
700
|
|
|
—
|
|
|
700
|
|
||||
2020
|
|
—
|
|
|
1,300
|
|
|
—
|
|
|
1,300
|
|
||||
2021
|
|
—
|
|
|
650
|
|
|
—
|
|
|
650
|
|
||||
2022-2067
|
|
—
|
|
|
300
|
|
|
350
|
|
|
650
|
|
||||
Securitizations (b)
|
|
2,687
|
|
|
—
|
|
|
—
|
|
|
2,687
|
|
||||
Total principal maturities
|
|
$
|
2,687
|
|
|
$
|
4,237
|
|
|
$
|
350
|
|
|
$
|
7,274
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total carrying amount
|
|
$
|
2,675
|
|
|
$
|
3,990
|
|
|
$
|
172
|
|
|
$
|
6,837
|
|
Debt issuance costs (c)
|
|
$
|
(12
|
)
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
(27
|
)
|
(a)
|
The interest rates shown are the range of contractual rates in effect at
December 31, 2016
.
|
(b)
|
Securitizations and borrowings under revolving conduit facilities are not included in above maturities by period due to their variable monthly repayments. At
December 31, 2016
, there were no amounts drawn under our revolving conduit facilities. See Note
13
for further information on our long-term debt associated with securitizations and revolving conduit facilities.
|
(c)
|
Debt issuance costs are reported as a direct deduction from long-term debt, with the exception of debt issuance costs associated with our revolving conduit facilities, which totaled
$9 million
at
December 31, 2016
and are reported in other assets.
|
(dollars in millions)
|
|
Current
Note Amounts Outstanding |
|
Current
Weighted Average
Interest Rate
|
|
Original
Revolving
Period
|
|||
|
|
|
|
|
|
|
|||
Consumer Securitizations:
|
|
|
|
|
|
|
|||
SLFT 2014-A (a)
|
|
$
|
217
|
|
|
2.78
|
%
|
|
2 years
|
SLFT 2015-A (b)
|
|
1,163
|
|
|
3.47
|
%
|
|
3 years
|
|
SLFT 2015-B (c)
|
|
314
|
|
|
3.78
|
%
|
|
5 years
|
|
SLFT 2016-A (d)
|
|
500
|
|
|
3.10
|
%
|
|
2 years
|
|
|
|
|
|
|
|
|
|||
Total consumer securitizations
|
|
2,194
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|||
Auto Securitization:
|
|
|
|
|
|
|
|||
ODART 2016-1 (e)
|
|
493
|
|
|
2.37
|
%
|
|
not applicable
|
|
|
|
|
|
|
|
|
|||
Total secured structured financings (f) (g)
|
|
$
|
2,687
|
|
|
|
|
|
(a)
|
SLFT 2014-A Securitization.
On March 26, 2014, we issued $
592 million
of notes backed by personal loans. The notes mature in December 2022. We initially retained $
33 million
of the asset-backed notes.
|
(b)
|
SLFT 2015-A Securitization.
On February 26, 2015, we issued $
1.2 billion
of notes backed by personal loans. The notes mature in November 2024.
|
(c)
|
SLFT 2015-B Securitization.
On April 7, 2015, we issued $
314 million
of notes backed by personal loans. The notes mature in May 2028.
|
(d)
|
SLFT 2016-A Securitization.
On December 14, 2016, we issued $
532 million
of notes backed by personal loans. The notes mature in November 2029. We initially retained $
32 million
of the asset-backed notes.
|
(e)
|
ODART 2016-1 Securitization.
On July 19, 2016, we issued $
754 million
of notes backed by direct auto loans. The maturity dates of the notes occur in January 2021 for the Class A notes, May 2021 for the Class B notes, September 2021 for the Class C notes and February 2023 for the Class D notes. We initially retained $
54 million
of the Class D notes.
|
(f)
|
Call of 2013-B Notes.
On February 16, 2016, we exercised our right to redeem the asset-backed notes issued in June 2013 by the Springleaf Funding Trust 2013-B (the “2013-B Notes”) for a redemption price of
$371 million
. The outstanding principal balance of the asset-backed notes was
$400 million
on the date of the optional redemption.
|
(g)
|
Deconsolidation of SCFT 2014-A Notes.
As a result of the SpringCastle Interests Sale, we deconsolidated the previously issued securitized interests of the SpringCastle Funding asset-backed notes (the “SCFT 2014-A Notes”) on March 31, 2016.
|
(dollar in millions)
|
|
Note Maximum
Balance |
|
Amount
Drawn
|
|
Revolving
Period End
|
||||
|
|
|
|
|
|
|
||||
First Avenue Funding LLC (a)
|
|
$
|
250
|
|
|
$
|
—
|
|
|
June 2018
|
Midbrook 2013-VFN1 Trust (b)
|
|
100
|
|
|
—
|
|
|
February 2018
|
||
Second Avenue Funding LLC
|
|
250
|
|
|
—
|
|
|
June 2018
|
||
Springleaf 2013-VFN1 Trust (c)
|
|
850
|
|
|
—
|
|
|
January 2018
|
||
Sumner Brook 2013-VFN1 Trust
|
|
350
|
|
|
—
|
|
|
January 2018
|
||
Whitford Brook 2014-VFN1 Trust (d)
|
|
250
|
|
|
—
|
|
|
June 2018
|
||
Seine River Funding, LLC (e)
|
|
500
|
|
|
—
|
|
|
December 2019
|
||
Total (f)
|
|
$
|
2,550
|
|
|
$
|
—
|
|
|
|
(a)
|
First Avenue Funding LLC.
On June 30, 2016, we amended the note purchase agreement with the First Avenue Funding LLC (“First Avenue”) to extend the revolving period ending in March 2018 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 direct auto loans and will be due and payable in full
12
months following the maturity of the last direct auto loan held by First Avenue.
|
(b)
|
Midbrook 2013-VFN1 Trust.
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. On December 20, 2016, we voluntarily reduced the maximum principal balance available under the variable funding notes from
$300 million
to
$100 million
. On February 24, 2017, the maximum principal balance will automatically decrease from
$100 million
to
$50 million
. 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
36
th
month following the end of the revolving period.
|
(c)
|
Springleaf 2013-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 the 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
36
th
month following the end of the revolving period.
|
(d)
|
Whitford Brook 2014-VFN1 Trust.
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
12
th
month following the end of the revolving period.
|
(e)
|
Seine River Funding, LLC.
On December 22, 2016, we entered into a loan and security agreement (the “Seine River LSA”) with third party lenders pursuant to which we may borrow up to a maximum principal balance of $
500 million
. Any amounts borrowed under the Seine River LSA will be backed by personal loans acquired from subsidiaries of SFC from time to time. Following the revolving period, the principal balance of any outstanding loans, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in December 2022.
|
(f)
|
Termination of Mill River 2015-VFN1 Trust.
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
. On December 20, 2016, we voluntarily terminated the note purchase agreement with the Mill River 2015-VFN1 Trust.
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Finance receivable related:
|
|
|
|
|
||||
Payable to SFC:
|
|
|
|
|
||||
Unearned premium reserves
|
|
$
|
189
|
|
|
$
|
222
|
|
Claim reserves
|
|
23
|
|
|
28
|
|
||
Subtotal (a)
|
|
212
|
|
|
250
|
|
||
|
|
|
|
|
||||
Payable to OMH:
|
|
|
|
|
||||
Unearned premium reserves (b)
|
|
6
|
|
|
—
|
|
||
|
|
|
|
|
||||
Payable to third-party beneficiaries:
|
|
|
|
|
||||
Unearned premium reserves
|
|
25
|
|
|
—
|
|
||
Benefit reserves
|
|
105
|
|
|
113
|
|
||
Claim reserves
|
|
6
|
|
|
4
|
|
||
Subtotal (b)
|
|
136
|
|
|
117
|
|
||
|
|
|
|
|
||||
Non-finance receivable related:
|
|
|
|
|
||||
Benefit reserves
|
|
65
|
|
|
72
|
|
||
Claim reserves
|
|
41
|
|
|
41
|
|
||
Subtotal (b)
|
|
106
|
|
|
113
|
|
||
|
|
|
|
|
||||
Total
|
|
$
|
460
|
|
|
$
|
480
|
|
(a)
|
Reported as a contra-asset to net finance receivables.
|
(b)
|
Reported in insurance claims and policyholder liabilities.
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
At or for the Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Balance at beginning of period
|
|
$
|
73
|
|
|
$
|
70
|
|
|
$
|
68
|
|
Less reinsurance recoverables
|
|
(22
|
)
|
|
(22
|
)
|
|
(22
|
)
|
|||
Net balance at beginning of period
|
|
51
|
|
|
48
|
|
|
46
|
|
|||
Additions for losses and loss adjustment expenses incurred to:
|
|
|
|
|
|
|
||||||
Current year
|
|
65
|
|
|
64
|
|
|
65
|
|
|||
Prior years *
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|||
Total
|
|
65
|
|
|
64
|
|
|
62
|
|
|||
Reductions for losses and loss adjustment expenses paid related to:
|
|
|
|
|
|
|
||||||
Current year
|
|
(44
|
)
|
|
(40
|
)
|
|
(39
|
)
|
|||
Prior years
|
|
(24
|
)
|
|
(21
|
)
|
|
(21
|
)
|
|||
Total
|
|
(68
|
)
|
|
(61
|
)
|
|
(60
|
)
|
|||
Net balance at end of period
|
|
48
|
|
|
51
|
|
|
48
|
|
|||
Plus reinsurance recoverables
|
|
22
|
|
|
22
|
|
|
22
|
|
|||
Balance at end of period
|
|
$
|
70
|
|
|
$
|
73
|
|
|
$
|
70
|
|
*
|
Reflects a redundancy in the prior years’ net reserves of
$3 million
at
December 31, 2014
primarily resulting from the settlement of claims incurred in prior years for amounts that were less than expected.
|
|
|
Years Ended December 31,
|
|
At December 31, 2016
|
|
|
||||||||||||||||||||||||
(dollars in millions)
|
|
2012 (a)
|
|
2013 (a)
|
|
2014 (a)
|
|
2015 (a)
|
|
2016
|
|
Incurred-but-
not-reported Liabilities (b)
|
|
Cumulative Number of Reported Claims
|
|
Cumulative
Frequency (c)
|
||||||||||||||
Credit Insurance
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accident Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
2012
|
|
$
|
39
|
|
|
$
|
33
|
|
|
$
|
32
|
|
|
$
|
32
|
|
|
$
|
33
|
|
|
$
|
—
|
|
|
19,981
|
|
|
2.8
|
%
|
2013
|
|
—
|
|
|
42
|
|
|
38
|
|
|
38
|
|
|
38
|
|
|
—
|
|
|
22,067
|
|
|
2.8
|
%
|
||||||
2014
|
|
—
|
|
|
—
|
|
|
50
|
|
|
46
|
|
|
46
|
|
|
1
|
|
|
24,931
|
|
|
2.8
|
%
|
||||||
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
54
|
|
|
50
|
|
|
5
|
|
|
26,180
|
|
|
2.8
|
%
|
||||||
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
55
|
|
|
20
|
|
|
24,235
|
|
|
2.6
|
%
|
||||||
Total
|
|
|
|
|
|
|
|
|
|
$
|
222
|
|
|
|
|
|
|
|
(a)
|
Unaudited.
|
(b)
|
Includes expected development on reported claims.
|
(c)
|
Frequency for each accident year is calculated as the ratio of all reported claims incurred to the total exposures in force.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(dollars in millions)
|
|
2012 *
|
|
2013 *
|
|
2014 *
|
|
2015 *
|
|
2016
|
||||||||||
Credit Insurance
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accident Year
|
|
|
|
|
|
|
|
|
|
|
||||||||||
2012
|
|
$
|
20
|
|
|
$
|
30
|
|
|
$
|
32
|
|
|
$
|
32
|
|
|
$
|
32
|
|
2013
|
|
—
|
|
|
23
|
|
|
34
|
|
|
37
|
|
|
38
|
|
|||||
2014
|
|
—
|
|
|
—
|
|
|
28
|
|
|
41
|
|
|
45
|
|
|||||
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31
|
|
|
45
|
|
|||||
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||
Total
|
|
|
|
|
|
|
|
|
|
$
|
196
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
All outstanding liabilities before 2012, net of reinsurance
|
|
—
|
|
|||||||||||||||||
Liabilities for claims and claim adjustment expenses, net of reinsurance
|
|
$
|
26
|
|
*
|
Unaudited.
|
*
|
Unaudited.
|
Years
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|||||
Credit insurance
|
|
62.2
|
%
|
|
28.3
|
%
|
|
7.8
|
%
|
|
1.9
|
%
|
|
0.2
|
%
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Property and casualty
|
|
$
|
11
|
|
|
$
|
15
|
|
|
$
|
16
|
|
Life and health
|
|
20
|
|
|
(1
|
)
|
|
(2
|
)
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Accrued interest on debt
|
|
$
|
48
|
|
|
$
|
55
|
|
Other accrued expenses and accounts payable
|
|
39
|
|
|
31
|
|
||
Retirement plans
|
|
31
|
|
|
55
|
|
||
Payables to parent and affiliates *
|
|
13
|
|
|
24
|
|
||
Loan principal warranty reserve
|
|
13
|
|
|
15
|
|
||
Salary and benefit liabilities
|
|
11
|
|
|
14
|
|
||
Other insurance liabilities
|
|
6
|
|
|
5
|
|
||
Other
|
|
24
|
|
|
17
|
|
||
Total
|
|
$
|
185
|
|
|
$
|
216
|
|
*
|
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,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
|
|
|
|
||||
Shares issued and outstanding
|
|
—
|
|
|
—
|
|
|
10,160,021
|
|
|
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, 2016
|
|
|
|
|
|
|
|
|
||||||||
Balance at beginning of period
|
|
$
|
(9
|
)
|
|
$
|
(19
|
)
|
|
$
|
4
|
|
|
$
|
(24
|
)
|
Other comprehensive income before reclassifications
|
|
11
|
|
|
15
|
|
|
—
|
|
|
26
|
|
||||
Reclassification adjustments from accumulated other comprehensive income (loss)
|
|
(5
|
)
|
|
—
|
|
|
(4
|
)
|
|
(9
|
)
|
||||
Balance at end of period
|
|
$
|
(3
|
)
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(dollars in millions)
|
|
|
|
|
|
|
||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
|
|
|
|
||||||
Income before provision for income taxes - U.S. operations
|
|
$
|
347
|
|
|
$
|
152
|
|
|
$
|
676
|
|
Income (loss) before provision for income taxes - foreign operations
|
|
(1
|
)
|
|
7
|
|
|
2
|
|
|||
Total
|
|
$
|
346
|
|
|
$
|
159
|
|
|
$
|
678
|
|
*
|
Provision for foreign income taxes was less than
$1 million
and, therefore, is not quantified in the table above.
|
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
|||
|
|
|
|
|
|
|
|||
Statutory federal income tax rate
|
|
35.00
|
%
|
|
35.00
|
%
|
|
35.00
|
%
|
|
|
|
|
|
|
|
|||
Non-controlling interests
|
|
(2.86
|
)
|
|
(27.91
|
)
|
|
(2.51
|
)
|
State income taxes, net of federal
|
|
1.66
|
|
|
0.23
|
|
|
1.50
|
|
Tax impact of United Kingdom subsidiary liquidation
|
|
(0.62
|
)
|
|
—
|
|
|
—
|
|
Excess tax benefit on share-based compensation
|
|
(0.20
|
)
|
|
—
|
|
|
—
|
|
Nontaxable investment income
|
|
(0.12
|
)
|
|
(0.29
|
)
|
|
(0.14
|
)
|
Nondeductible compensation
|
|
—
|
|
|
3.39
|
|
|
—
|
|
Other, net
|
|
(0.10
|
)
|
|
0.70
|
|
|
0.52
|
|
Effective income tax rate
|
|
32.76
|
%
|
|
11.12
|
%
|
|
34.37
|
%
|
(dollars in millions)
|
|
|
|
|
||||
December 31,
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Allowance for loan losses
|
|
$
|
77
|
|
|
$
|
95
|
|
Mark-to-market
|
|
55
|
|
|
—
|
|
||
State taxes, net of federal
|
|
27
|
|
|
19
|
|
||
Pension/employee benefits
|
|
13
|
|
|
26
|
|
||
Legal and warranty reserve
|
|
6
|
|
|
6
|
|
||
Federal and foreign net operating losses and tax attributes
|
|
3
|
|
|
16
|
|
||
Capital loss carryforward
|
|
—
|
|
|
27
|
|
||
Joint venture
|
|
—
|
|
|
8
|
|
||
Deferred insurance commissions
|
|
—
|
|
|
5
|
|
||
Payment protection insurance liability
|
|
—
|
|
|
2
|
|
||
Other
|
|
2
|
|
|
8
|
|
||
Total
|
|
183
|
|
|
212
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Debt fair value adjustment
|
|
118
|
|
|
150
|
|
||
Impact of tax accounting method change
|
|
38
|
|
|
76
|
|
||
Discount - debt exchange
|
|
16
|
|
|
20
|
|
||
Insurance reserves
|
|
14
|
|
|
15
|
|
||
Other intangible assets
|
|
5
|
|
|
5
|
|
||
Mark-to-market
|
|
—
|
|
|
21
|
|
||
Other
|
|
5
|
|
|
—
|
|
||
Total
|
|
196
|
|
|
287
|
|
||
|
|
|
|
|
||||
Net deferred tax liabilities before valuation allowance
|
|
(13
|
)
|
|
(75
|
)
|
||
Valuation allowance
|
|
(29
|
)
|
|
(38
|
)
|
||
Net deferred tax liabilities
|
|
$
|
(42
|
)
|
|
$
|
(113
|
)
|
(dollars in millions)
|
|
Lease Commitments
|
||
|
|
|
||
First quarter 2017
|
|
$
|
5
|
|
Second quarter 2017
|
|
5
|
|
|
Third quarter 2017
|
|
5
|
|
|
Fourth quarter 2017
|
|
5
|
|
|
2017
|
|
20
|
|
|
2018
|
|
16
|
|
|
2019
|
|
10
|
|
|
2020
|
|
6
|
|
|
2021
|
|
2
|
|
|
2022+
|
|
1
|
|
|
Total
|
|
$
|
55
|
|
*
|
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,
|
|
2016
|
|
2015
|
|
2014
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Projected benefit obligation, beginning of period
|
|
$
|
388
|
|
|
$
|
409
|
|
|
$
|
323
|
|
|
$
|
2
|
|
Interest cost
|
|
16
|
|
|
15
|
|
|
15
|
|
|
—
|
|
||||
Actuarial loss (gain)
|
|
(6
|
)
|
|
(24
|
)
|
|
83
|
|
|
—
|
|
||||
Benefits paid:
|
|
|
|
|
|
|
|
|
||||||||
Plan assets
|
|
(13
|
)
|
|
(12
|
)
|
|
(12
|
)
|
|
—
|
|
||||
Curtailment
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Projected benefit obligation, end of period
|
|
385
|
|
|
388
|
|
|
409
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Fair value of plan assets, beginning of period
|
|
333
|
|
|
359
|
|
|
317
|
|
|
—
|
|
||||
Actual return on plan assets, net of expenses
|
|
33
|
|
|
(15
|
)
|
|
54
|
|
|
—
|
|
||||
Company contributions
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Benefits paid:
|
|
|
|
|
|
|
|
|
||||||||
Plan assets
|
|
(13
|
)
|
|
(12
|
)
|
|
(12
|
)
|
|
—
|
|
||||
Fair value of plan assets, end of period
|
|
354
|
|
|
333
|
|
|
359
|
|
|
—
|
|
||||
Funded status, end of period
|
|
$
|
(31
|
)
|
|
$
|
(55
|
)
|
|
$
|
(50
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Other liabilities recognized in the consolidated balance sheet
|
|
$
|
(31
|
)
|
|
$
|
(55
|
)
|
|
$
|
(50
|
)
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
||||||||
Pretax net loss recognized in accumulated other comprehensive income or loss
|
|
$
|
(7
|
)
|
|
$
|
29
|
|
|
$
|
(19
|
)
|
|
$
|
—
|
|
(a)
|
Includes non-qualified unfunded plans, for which the aggregate projected benefit obligation was
$10 million
at
December 31, 2016
,
2015
, and 2014.
|
(b)
|
We do not currently fund postretirement benefits.
|
(dollars in millions)
|
|
PBO and ABO Exceeds
Fair Value of Plan Assets |
||||||
December 31,
|
|
2016
|
|
2015
|
||||
|
|
|
|
|
||||
Projected benefit obligation
|
|
$
|
385
|
|
|
$
|
388
|
|
Accumulated benefit obligation
|
|
385
|
|
|
388
|
|
||
Fair value of plan assets
|
|
354
|
|
|
333
|
|
(dollars in millions)
|
|
Pension
|
|
Postretirement
|
||||||||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
|
2014
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
|
$
|
16
|
|
|
$
|
15
|
|
|
$
|
15
|
|
|
$
|
—
|
|
Expected return on assets
|
|
(17
|
)
|
|
(19
|
)
|
|
(16
|
)
|
|
—
|
|
||||
Curtailment gain
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||
Settlement gain
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
||||
Net periodic benefit cost
|
|
(1
|
)
|
|
(4
|
)
|
|
(1
|
)
|
|
(6
|
)
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Other changes in plan assets and projected benefit obligation recognized in other comprehensive income or loss:
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial loss (gain)
|
|
(22
|
)
|
|
9
|
|
|
46
|
|
|
—
|
|
||||
Net settlement gain
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Total recognized in other comprehensive income or loss
|
|
(22
|
)
|
|
9
|
|
|
46
|
|
|
4
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Total recognized in net periodic benefit cost and other comprehensive income or loss
|
|
$
|
(23
|
)
|
|
$
|
5
|
|
|
$
|
45
|
|
|
$
|
(2
|
)
|
•
|
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,
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||
|
|
|
|
|
|
|
|
|
|||
Projected benefit obligation:
|
|
|
|
|
|
|
|
|
|||
Discount rate
|
|
4.04
|
%
|
|
4.26
|
%
|
|
*
|
|
3.45
|
%
|
Rate of compensation increase
|
|
—
|
|
|
—
|
|
|
*
|
|
*
|
|
|
|
|
|
|
|
|
|
|
|||
Net periodic benefit costs:
|
|
|
|
|
|
|
|
|
|||
Discount rate
|
|
4.26
|
%
|
|
3.89
|
%
|
|
*
|
|
3.80
|
%
|
Expected long-term rate of return on plan assets
|
|
5.27
|
%
|
|
5.27
|
%
|
|
*
|
|
*
|
|
Rate of compensation increase (average)
|
|
—
|
|
|
—
|
|
|
*
|
|
*
|
|
*
|
Not applicable
|
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3
|
|
Equity securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. (a)
|
|
—
|
|
|
17
|
|
|
—
|
|
|
17
|
|
||||
International (b)
|
|
—
|
|
|
15
|
|
|
—
|
|
|
15
|
|
||||
Fixed income securities:
|
|
|
|
|
|
|
|
|
||||||||
U.S. investment grade (c)
|
|
—
|
|
|
310
|
|
|
—
|
|
|
310
|
|
||||
U.S. high yield (d)
|
|
—
|
|
|
9
|
|
|
—
|
|
|
9
|
|
||||
Total
|
|
$
|
3
|
|
|
$
|
351
|
|
|
$
|
—
|
|
|
$
|
354
|
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
(a)
|
Includes index mutual funds that primarily track several indices including Standard and Poor’s Rating Services (“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, 2016
|
|
2,007,927
|
|
|
$
|
33.94
|
|
|
|
Granted
|
|
59,315
|
|
|
26.14
|
|
|
|
|
Vested
|
|
(441,944
|
)
|
|
22.77
|
|
|
|
|
Forfeited
|
|
(242,378
|
)
|
|
41.49
|
|
|
|
|
Unvested at December 31, 2016
|
|
1,382,920
|
|
|
35.86
|
|
|
2.13
|
|
|
Number of
Shares
|
|
Weighted
Average
Grant Date Fair Value
|
|
Weighted
Average
Remaining
Term (in Years)
|
|||
|
|
|
|
|
|
|
|||
Unvested as of January 1, 2016
|
|
581,113
|
|
|
$
|
25.79
|
|
|
|
Vested
|
|
(164,673
|
)
|
|
25.10
|
|
|
|
|
Forfeited
|
|
(8,492
|
)
|
|
31.62
|
|
|
|
|
Unvested at December 31, 2016
|
|
407,948
|
|
|
25.94
|
|
|
1.71
|
•
|
Consumer and Insurance
— We originate and service personal loans (secured and unsecured) through
two
business divisions: branch operations and centralized operations. We also offer credit insurance (life insurance, disability insurance, and involuntary unemployment insurance), non-credit insurance, and ancillary products, such as auto membership plans. Branch operations primarily conduct business in
28
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
— SFI services the SpringCastle Portfolio that was acquired by an indirect subsidiary of OMH through a joint venture in which SFC previously owned a
47%
equity interest. On March 31, 2016, the SpringCastle Portfolio was sold in connection with the sale of our equity interest in the SpringCastle Joint Venture. These loans consist of unsecured loans and loans secured by subordinate residential real estate mortgages and include 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. Unless SFI is terminated, SFI will continue to provide the servicing for these loans pursuant to a servicing agreement, which SFI services as unsecured loans because the liens are subordinated to superior ranking security interests.
|
•
|
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
|
Acquisitions and Servicing
- This segment includes interest expense specifically identified to the SpringCastle Portfolio.
|
Consumer and Insurance, Real Estate and Other
- The Company has securitization debt 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 was allocated to Consumer and Insurance, Real Estate and Other, such that the total debt allocated across each segment equaled 83%, up to 100% and 100% of each of its respective asset base. Any excess was allocated to Consumer and Insurance.
|
|
Average unsecured debt was allocated after average securitized debt to achieve the calculated average segment debt.
|
|
Asset base represented 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 was applied to average total debt to calculate the average segment debt. Average unsecured debt was 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 are allocated to the segments based on the interest expense allocation of debt.
|
Other expenses
|
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
- reverses the impact of premiums/discounts on purchased finance receivables and the interest income recognition under guidance in ASC 310-20,
Nonrefundable Fees and Other Costs
, and ASC 310-30,
Loans and Debt Securities Acquired with Deteriorated Credit Quality
, and reestablishes interest income recognition on a historical cost basis;
|
•
|
Interest expense
- reverses the impact of premiums/discounts on acquired long-term debt and reestablishes interest expense recognition on a historical cost basis;
|
•
|
Provision for finance receivable losses
- reverses the impact of providing an allowance for finance receivable losses upon acquisition and reestablishes the allowance on a historical cost basis and reverses the impact of recognition of net charge-offs on purchased credit impaired finance receivables and reestablishes the net charge-offs on a historical cost basis;
|
•
|
Other revenues
- reestablishes the historical cost basis of mark-to-market adjustments on finance receivables held for sale and on realized gains/losses associated with our investment portfolio;
|
•
|
Other expenses
- reestablishes expenses on a historical cost basis by reversing the impact of amortization from acquired intangible assets and including amortization of other historical deferred costs; and
|
•
|
Assets
- revalues assets based on their fair values at the effective date of the Fortress Acquisition.
|
(dollars in millions)
|
|
Consumer
and
Insurance
|
|
Acquisitions
and
Servicing
|
|
Real
Estate
|
|
Other
|
|
Segment to
GAAP Adjustment |
|
Consolidated
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
At or for the Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest income
|
|
$
|
1,192
|
|
|
$
|
102
|
|
|
$
|
47
|
|
|
$
|
4
|
|
|
$
|
5
|
|
|
$
|
1,350
|
|
Interest expense
|
|
402
|
|
|
20
|
|
|
43
|
|
|
9
|
|
|
82
|
|
|
556
|
|
||||||
Provision for finance receivable losses
|
|
305
|
|
|
14
|
|
|
6
|
|
|
—
|
|
|
4
|
|
|
329
|
|
||||||
Net interest income (loss) after provision for finance receivable losses
|
|
485
|
|
|
68
|
|
|
(2
|
)
|
|
(5
|
)
|
|
(81
|
)
|
|
465
|
|
||||||
Net gain on sale of SpringCastle interests
|
|
—
|
|
|
167
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
167
|
|
||||||
Other revenues *
|
|
219
|
|
|
—
|
|
|
(29
|
)
|
|
208
|
|
|
9
|
|
|
407
|
|
||||||
Other expenses
|
|
648
|
|
|
16
|
|
|
28
|
|
|
1
|
|
|
—
|
|
|
693
|
|
||||||
Income (loss) before provision for (benefit from) income taxes
|
|
56
|
|
|
219
|
|
|
(59
|
)
|
|
202
|
|
|
(72
|
)
|
|
346
|
|
||||||
Income before provision for income taxes attributable to non-controlling interests
|
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||||
Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation
|
|
$
|
56
|
|
|
$
|
191
|
|
|
$
|
(59
|
)
|
|
$
|
202
|
|
|
$
|
(72
|
)
|
|
$
|
318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Assets
|
|
$
|
5,494
|
|
|
$
|
—
|
|
|
$
|
361
|
|
|
$
|
3,932
|
|
|
$
|
(68
|
)
|
|
$
|
9,719
|
|
(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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
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
|
|
*
|
Other revenues reported in “Other” primarily includes interest income on the Cash Services Note (previously referred to as the “Independence Demand Note”) and on SFC’s note receivable from SFI. See Note
11
for further information on the notes receivable from parent and affiliates.
|
|
|
Fair Value Measurements Using
|
|
Total
Fair
Value
|
|
Total
Carrying
Value
|
||||||||||||||
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
198
|
|
|
$
|
42
|
|
|
$
|
—
|
|
|
$
|
240
|
|
|
$
|
240
|
|
Investment securities
|
|
—
|
|
|
580
|
|
|
2
|
|
|
582
|
|
|
582
|
|
|||||
Net finance receivables, less allowance for finance receivable losses
|
|
—
|
|
|
—
|
|
|
5,122
|
|
|
5,122
|
|
|
4,755
|
|
|||||
Finance receivables held for sale
|
|
—
|
|
|
—
|
|
|
159
|
|
|
159
|
|
|
153
|
|
|||||
Notes receivable from parent and affiliates
|
|
—
|
|
|
3,723
|
|
|
—
|
|
|
3,723
|
|
|
3,723
|
|
|||||
Restricted cash and cash equivalents
|
|
227
|
|
|
—
|
|
|
—
|
|
|
227
|
|
|
227
|
|
|||||
Other assets:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Commercial mortgage loans
|
|
—
|
|
|
—
|
|
|
24
|
|
|
24
|
|
|
24
|
|
|||||
Escrow advance receivable
|
|
—
|
|
|
—
|
|
|
10
|
|
|
10
|
|
|
10
|
|
|||||
Receivables from parent and affiliates
|
|
—
|
|
|
40
|
|
|
—
|
|
|
40
|
|
|
40
|
|
|||||
Receivables related to sales of real estate loans and related trust assets
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Long-term debt
|
|
$
|
—
|
|
|
$
|
7,308
|
|
|
$
|
—
|
|
|
$
|
7,308
|
|
|
$
|
6,837
|
|
Payables to parent and affiliates
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
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
|
|
|
|
Fair Value Measurements Using
|
|
Total Carried At Fair Value
|
||||||||||||
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3 (a)
|
|
|||||||||
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cash equivalents in mutual funds
|
|
$
|
119
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
119
|
|
Cash equivalents securities
|
|
—
|
|
|
42
|
|
|
—
|
|
|
42
|
|
||||
Investment securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Available-for-sale securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
U.S. government and government sponsored entities
|
|
—
|
|
|
13
|
|
|
—
|
|
|
13
|
|
||||
Obligations of states, municipalities, and political subdivisions
|
|
—
|
|
|
82
|
|
|
—
|
|
|
82
|
|
||||
Non-U.S. government and government sponsored entities
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
Corporate debt
|
|
—
|
|
|
353
|
|
|
—
|
|
|
353
|
|
||||
RMBS
|
|
—
|
|
|
39
|
|
|
—
|
|
|
39
|
|
||||
CMBS
|
|
—
|
|
|
33
|
|
|
—
|
|
|
33
|
|
||||
CDO/ABS
|
|
—
|
|
|
46
|
|
|
—
|
|
|
46
|
|
||||
Total bonds
|
|
—
|
|
|
571
|
|
|
—
|
|
|
571
|
|
||||
Preferred stock
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||
Other long-term investments
|
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Total available-for-sale securities (b)
|
|
—
|
|
|
577
|
|
|
1
|
|
|
578
|
|
||||
Other securities
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
CMBS
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Total other securities
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||
Total investment securities
|
|
—
|
|
|
580
|
|
|
1
|
|
|
581
|
|
||||
Restricted cash in mutual funds
|
|
212
|
|
|
—
|
|
|
—
|
|
|
212
|
|
||||
Total
|
|
$
|
331
|
|
|
$
|
622
|
|
|
$
|
1
|
|
|
$
|
954
|
|
(a)
|
Due to the insignificant activity within the Level 3 assets during
2016
, we have omitted the additional disclosures relating to the changes in Level 3 assets measured at fair value on a recurring basis and the quantitative information about Level 3 unobservable inputs.
|
(b)
|
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, 2016
, which is carried at cost.
|
|
|
Fair Value Measurements Using
|
|
Total Carried At Fair Value
|
||||||||||||
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3 (a)
|
|
|||||||||
|
|
|
|
|
|
|
|
|
||||||||
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 (b)
|
|
—
|
|
|
590
|
|
|
1
|
|
|
591
|
|
||||
Trading and other securities
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Bonds:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate debt
|
|
—
|
|
|
10
|
|
|
—
|
|
|
10
|
|
||||
CMBS
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Total trading and other securities (c)
|
|
—
|
|
|
12
|
|
|
—
|
|
|
12
|
|
||||
Total investment securities
|
|
—
|
|
|
602
|
|
|
1
|
|
|
603
|
|
||||
Restricted cash in mutual funds
|
|
276
|
|
|
—
|
|
|
—
|
|
|
276
|
|
||||
Total
|
|
$
|
500
|
|
|
$
|
602
|
|
|
$
|
1
|
|
|
$
|
1,103
|
|
(a)
|
Due to the insignificant activity within the Level 3 assets during
2015
, we have omitted the additional disclosures relating to the changes in Level 3 assets measured at fair value on a recurring basis and the quantitative information about Level 3 unobservable inputs.
|
(b)
|
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.
|
(c)
|
The fair value of other securities totaled
$2 million
at
December 31, 2015
.
|
|
|
Fair Value Measurements Using *
|
|
|
|
Impairment Charges
|
||||||||||||||
(dollars in millions)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At or for the Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Finance receivables held for sale
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
159
|
|
|
$
|
159
|
|
|
$
|
4
|
|
Real estate owned
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|
2
|
|
|||||
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
164
|
|
|
$
|
164
|
|
|
$
|
6
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
At or for the Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Real estate owned
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
3
|
|
Total
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
3
|
|
*
|
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, 2016
|
December 31, 2015
|
Finance receivables held for sale
|
Income approach
|
Market value for similar type loan transactions to obtain a price point
|
*
|
—
|
Real estate owned
|
Market approach
|
Third-party valuation
|
*
|
*
|
*
|
We applied the third-party exception which allows us to omit certain quantitative disclosures about unobservable inputs for the assets measured at fair value on a non-recurring basis included in the table above. As a result, the weighted average ranges of the inputs for these assets are not applicable.
|
(dollars in millions)
|
|
Fourth
Quarter
|
|
Third
Quarter
|
|
Second
Quarter
|
|
First
Quarter
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||
Interest income
|
|
$
|
303
|
|
|
$
|
303
|
|
|
$
|
313
|
|
|
$
|
431
|
|
Interest expense
|
|
127
|
|
|
135
|
|
|
138
|
|
|
156
|
|
||||
Provision for finance receivable losses
|
|
66
|
|
|
87
|
|
|
85
|
|
|
91
|
|
||||
Other revenues
|
|
105
|
|
|
107
|
|
|
106
|
|
|
256
|
|
||||
Other expenses
|
|
170
|
|
|
155
|
|
|
177
|
|
|
191
|
|
||||
Income before provision for income taxes
|
|
45
|
|
|
33
|
|
|
19
|
|
|
249
|
|
||||
Provision for income taxes
|
|
12
|
|
|
10
|
|
|
6
|
|
|
85
|
|
||||
Net income
|
|
33
|
|
|
23
|
|
|
13
|
|
|
164
|
|
||||
Net income attributable to non-controlling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28
|
|
||||
Net income attributable to Springleaf Finance Corporation
|
|
$
|
33
|
|
|
$
|
23
|
|
|
$
|
13
|
|
|
$
|
136
|
|
(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 income taxes
|
|
37
|
|
|
40
|
|
|
35
|
|
|
47
|
|
||||
Provision for 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
|
|
(a)
|
(1) The following consolidated financial statements of Springleaf Finance Corporation and its subsidiaries are included in Part II - Item 8:
|
Exhibits are listed in the Exhibit Index beginning on page 144 herein.
|
(b
)
|
Exhibits
|
|
SPRINGLEAF FINANCE CORPORATION
|
||
|
|
||
|
By:
|
/s/
|
Micah R. Conrad
|
|
|
|
Micah R. Conrad
|
|
(Senior Vice President and Chief Financial Officer)
|
/s/
|
Jay N. Levine
|
|
|
|
Jay N. Levine
|
|
|
(President, Chief Executive Officer, and Director — Principal Executive Officer)
|
|
|
|
|
|
|
|
/s/
|
Micah R. Conrad
|
|
|
|
Micah R. Conrad
|
|
|
(Senior Vice President and Chief Financial Officer — Principal Financial Officer)
|
|
|
|
|
|
|
|
/s/
|
Michael A. Hedlund
|
|
|
|
Michael A. Hedlund
|
|
|
(Vice President and Senior Managing Director — Principal Accounting Officer)
|
|
|
|
|
|
|
|
/s/
|
John C. Anderson
|
|
|
|
John C. Anderson
|
|
|
(Executive Vice President and Director)
|
|
|
|
|
|
|
|
/s/
|
Scott T. Parker
|
|
|
|
Scott T. Parker
|
|
|
(Director)
|
|
|
Exhibit
|
|
|
|
|
|
10.1.1 **
|
|
OneMain Holdings, Inc. Amended and Restated Annual Leadership Incentive Plan, effective retroactively to January 1, 2016. Incorporated by reference to Exhibit 10.16 to our Annual Report on Form 10-K for the year ended December 31, 2015, filed on February 29, 2016.
|
|
|
|
10.1.2 **
|
|
Form of Restricted Stock Award Agreement under the OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) 2013 Omnibus Incentive Plan (Employees). Incorporated by reference as Exhibit 10.1 to our Quarterly Report on Form 10-Q for the period ended March 31, 2016, filed on May 6, 2016.
|
|
|
|
10.1.3 **
|
|
Form of Restricted Stock Award Agreement under the OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) 2013 Omnibus Incentive Plan (Non-Employee Directors). Incorporated by reference to Exhibit 10.10 to Amendment No. 2 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 333-190653) Form S-1 filed on October 1, 2013.
|
|
|
|
10.1.4 **
|
|
Form of Restricted Stock Unit Award Agreement under the OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) 2013 Omnibus Incentive Plan. Incorporated by reference to Exhibit 10.16 to Amendment No. 4 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 333-190653) Form S-1 filed on October 11, 2013.
|
|
|
|
10.2 **
|
|
Springleaf Finance, Inc. Excess Retirement Income Plan, dated as of January 1, 2011. Incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed on December 30, 2010.
|
|
|
|
10.2.1 **
|
|
Amendment to Springleaf Finance, Inc. Excess Retirement Income Plan, effective as of December 19, 2012. Incorporated by reference to Exhibit 10.5 to our Annual Report on Form 10-K for the year ended December 31, 2012, filed on March 19, 2013.
|
|
|
|
10.3 **
|
|
OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) Executive Severance Plan, effective as of March 16, 2015, and form of Severance Agreement and General Release. Incorporated by reference to Exhibit 10.17 to our Annual Report on Form 10-K for the year ended December 31, 2014, filed on March 16, 2015.
|
|
|
|
10.11
|
|
Stockholders Agreement, dated as of October 15, 2013, between OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) and Springleaf Financial Holdings, LLC. Incorporated by reference to Exhibit 10.5 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 1-36129) Quarterly Report on Form 10-Q for the period ended September 30, 2013, filed on November 12, 2013.
|
|
|
|
10.12
|
|
Guaranty, dated as of December 30, 2013, by OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) in respect of Springleaf Finance Corporation’s 8.250% Senior Notes due 2023. Incorporated by reference to Exhibit 10.1 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 1-36129) Current Report on Form 8-K filed on January 3, 2014.
|
|
|
|
10.13
|
|
Guaranty, dated as of December 30, 2013, by OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) in respect of Springleaf Finance Corporation’s 7.750% Senior Notes due 2021. Incorporated by reference to Exhibit 10.2 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 1-36129) Current Report on Form 8-K filed on January 3, 2014.
|
|
|
|
10.14
|
|
Guaranty, dated as of December 30, 2013, by OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) in respect of Springleaf Finance Corporation’s 6.00% Senior Notes due 2020. Incorporated by reference to Exhibit 10.3 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 1-36129) Current Report on Form 8-K filed on January 3, 2014.
|
|
|
|
10.15
|
|
Guaranty, dated as of December 30, 2013, by OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) in respect of Springleaf Finance Corporation’s Senior Notes issued and outstanding on December 30, 2013 under the Indenture dated as of May 1, 1999, between SFC and Wilmington Trust, National Association (the successor trustee to Citibank N.A.). Incorporated by reference to Exhibit 10.4 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 1-36129) Current Report on Form 8-K filed on January 3, 2014.
|
|
|
|
10.16
|
|
Guaranty, dated as of December 30, 2013, by OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) in respect of Springleaf Finance Corporation’s 60-year junior subordinated debentures. Incorporated by reference to Exhibit 10.5 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 1-36129) Current Report on Form 8-K filed on January 3, 2014.
|
|
|
|
10.17
|
|
Trust Guaranty, dated as of December 30, 2013, by OneMain Holdings, Inc. (formerly Springleaf Holdings, Inc.) in respect of Springleaf Finance Corporation’s trust preferred securities. Incorporated by reference to Exhibit 10.6 to OneMain Holdings, Inc.’s (formerly Springleaf Holdings, Inc.) (File No. 1-36129) Current Report on Form 8-K filed on January 3, 2014.
|
|
|
|
12.1
|
|
Computation of ratio of earnings to fixed charges
|
|
|
|
23.1
|
|
Consent of PricewaterhouseCoopers LLP
|
|
|
|
Exhibit
|
|
|
|
|
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) Certifications of the President and Chief Executive Officer of Springleaf Finance Corporation
|
|
|
|
31.2
|
|
Rule 13a-14(a)/15d-14(a) Certifications of the Executive Vice President and Chief Financial Officer of Springleaf Finance Corporation
|
|
|
|
32.1
|
|
Section 1350 Certifications
|
|
|
|
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 Shareholder’s Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.
|
*
|
Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted exhibit or schedule to the SEC upon request.
|
**
|
Management contract or compensatory plan or arrangement.
|
|
|
TRUST
|
|
INDENTURE
|
|
|
|
|
ACT
|
|
|
SECTION
|
|
|
INDENTURE SECTION
|
|
|
|
|
|
|
|
310
|
|
|
(a)(1) ....................................................................................
|
6.09
|
||
|
|
(a)(2) ....................................................................................
|
6.09
|
|||
|
|
(a)(3) ....................................................................................
|
Not Applicable
|
|||
|
|
(a)(4) ....................................................................................
|
Not Applicable
|
|||
|
|
(a)(5) ....................................................................................
|
6.09
|
|||
|
|
(b)
.........................................................................................
|
6.08
|
|||
|
|
..............................................................................................
|
6.10
|
|||
311
|
|
|
(a)
.........................................................................................
|
6.13(a), 6.13(c)
|
||
|
|
(b)
.........................................................................................
|
6.13(b)
|
|||
|
|
(b)(2) ....................................................................................
|
7.03(a)(ii)
|
|||
|
|
..............................................................................................
|
7.03(b)
|
|||
312
|
|
|
(a)
.........................................................................................
|
7.01
|
||
|
|
..............................................................................................
|
7.02(a)
|
|||
|
|
(b)
.........................................................................................
|
7.02(b)
|
|||
|
|
(c)
.........................................................................................
|
7.02(c)
|
|||
313
|
|
|
(a)
.........................................................................................
|
7.03(a)
|
||
|
|
(b)
.........................................................................................
|
7.03(b)
|
|||
|
|
(c)
.........................................................................................
|
7.03(a), 7.03(b)
|
|||
|
|
(d)
.........................................................................................
|
7.03(c)
|
|||
314
|
|
|
(a)
.........................................................................................
|
7.04
|
||
|
|
(b)
.........................................................................................
|
Not Applicable
|
|||
|
|
(c)(1) ....................................................................................
|
1.02
|
|||
|
|
(c)(2) ....................................................................................
|
1.02
|
|||
|
|
(c)(3) ....................................................................................
|
Not Applicable
|
|||
|
|
(d)
.........................................................................................
|
Not Applicable
|
|||
|
|
(e)
.........................................................................................
|
1.02
|
|||
315
|
|
|
(a)
.........................................................................................
|
6.01(a)
|
||
|
|
(b)
.........................................................................................
|
6.02
|
|||
|
|
..............................................................................................
|
7.03(a)(vi)
|
|||
|
|
(c)
.........................................................................................
|
6.01(b)
|
|||
|
|
(d)
.........................................................................................
|
6.01(c)
|
|||
|
|
(d)(1) ....................................................................................
|
6.01(a)(i)
|
|||
|
|
(d)(2) ....................................................................................
|
6.01(c)(ii)
|
|||
|
|
(d)(3) ....................................................................................
|
6.01(c)(iii)
|
|||
|
|
(e)
.........................................................................................
|
5.13
|
|||
316
|
|
|
(a)
.........................................................................................
|
1.01
|
||
|
|
(a)(1)(A) ..............................................................................
|
5.02
|
|||
|
|
..............................................................................................
|
5.11
|
|||
|
|
|
|
TRUST
|
|
INDENTURE
|
|
|
|
|
ACT
|
|
|
SECTION
|
|
|
INDENTURE SECTION
|
|
|
|
|
|
|
|
|
|
(a)(1)(B) ...............................................................................
|
5.12
|
|||
|
|
(a)(2) ....................................................................................
|
Not Applicable
|
|||
|
|
(b)
.........................................................................................
|
14.04
|
|||
|
|
(c)
.........................................................................................
|
Not Applicable
|
|||
317
|
|
|
(a)(1) ....................................................................................
|
5.03
|
||
|
|
(a)(2) ....................................................................................
|
5.04
|
|||
|
|
(b)
.........................................................................................
|
10.03
|
|||
318
|
|
|
(a)
.........................................................................................
|
1.07
|
|
|
PAGE
|
||
|
|
|
|
|
|
|
ARTICLE 1
|
|
|
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
|
Section
|
1.01.
|
Definitions..................................................................................................
|
1
|
||
Section
|
1.02.
|
Compliance Certificates and Opinions......................................................
|
8
|
||
Section
|
1.03.
|
Form Of Documents Delivered To Trustee
................................................
|
9
|
||
Section
|
1.04.
|
Acts Of Holders .........................................................................................
|
10
|
||
Section
|
1.05.
|
Notices, Etc., To Trustee And Company
.
....................................................
|
10
|
||
Section
|
1.06.
|
Notice To Holders; Waiver
........................................................................
|
11
|
||
Section
|
1.07.
|
Conflict With Trust Indenture Act
..............................................................
|
11
|
||
Section
|
1.08.
|
Effect Of Headings And Table Of Contents
...............................................
|
11
|
||
Section
|
1.09.
|
Successors And Assigns
.............................................................................
|
11
|
||
Section
|
1.10.
|
Separability and Saving Clauses
...............................................................
|
12
|
||
Section
|
1.11.
|
Benefits Of Indenture
.................................................................................
|
12
|
||
Section
|
1.12.
|
Governing Law
..........................................................................................
|
12
|
||
Section
|
1.13.
|
Legal Holidays
.
.........................................................................................
|
12
|
||
Section
|
1.14.
|
USA Patriot Act
.........................................................................................
|
12
|
|
|
ARTICLE 2
|
|
|
SECURITY FORMS
|
Section
|
2.01.
|
Forms Generally
.......................................................................................
|
13
|
||
Section
|
2.02.
|
Form Of Trustee's Certificate Of Authentication......................................
|
13
|
||
Section
|
2.03.
|
Provisions Of Global Security
..................................................................
|
14
|
|
|
ARTICLE 3
|
|
|
THE SECURITIES
|
Section
|
3.01.
|
Amount Unlimited; Issuable In Series ......................................................
|
15
|
||
Section
|
3.02.
|
Denominations...........................................................................................
|
18
|
||
Section
|
3.03.
|
Execution, Authentication, Delivery And Dating
......................................
|
18
|
||
Section
|
3.04.
|
Temporary Securities.................................................................................
|
20
|
||
Section
|
3.05.
|
Registration, Registration Of Transfer And Exchange
.............................
|
20
|
||
Section
|
3.06.
|
Mutilated, Destroyed, Lost And Stolen Securities.....................................
|
22
|
||
Section
|
3.07.
|
Payment Of Interest; Interest Rights Preserved .......................................
|
23
|
||
Section
|
3.08.
|
Persons Deemed Owners
..........................................................................
|
25
|
||
Section
|
3.09.
|
Cancellation
..............................................................................................
|
25
|
||
Section
|
3.10.
|
Computation of Interest.............................................................................
|
26
|
|
|
ARTICLE 4
|
|
|
SATISFACTION AND DISCHARGE
|
Section
|
4.01.
|
Satisfaction And Discharge Of Indenture .................................................
|
26
|
||
Section
|
4.02.
|
Application Of Trust Money .....................................................................
|
27
|
|
|
ARTICLE 5
|
|
|
REMEDIES
|
Section
|
5.01.
|
Events Of Default .....................................................................................
|
27
|
||
Section
|
5.02.
|
Acceleration Of Maturity; Rescission and Annulment
.............................
|
28
|
||
Section
|
5.03.
|
Collection Of Indebtedness And Suits For Enforcement By
|
|
||
|
|
Trustee ..............................................................................................
|
30
|
||
Section
|
5.04.
|
Trustee May File Proofs Of Claim
............................................................
|
32
|
||
Section
|
5.05.
|
Trustee May Enforce Claims Without Possession Of Securities
...............
|
32
|
||
Section
|
5.06.
|
Application Of Money Collected ..............................................................
|
32
|
||
Section
|
5.07.
|
Limitation On Suits
...................................................................................
|
33
|
||
Section
|
5.08.
|
Restoration Of Rights And Remedies .......................................................
|
34
|
||
Section
|
5.09.
|
Rights And Remedies Cumulative ............................................................
|
34
|
||
Section
|
5.10.
|
Delay Or Omission Not Waiver
................................................................
|
34
|
||
Section
|
5.11.
|
Control By Holders...................................................................................
|
34
|
||
Section
|
5.12.
|
Waiver Of Past Defaults............................................................................
|
35
|
||
Section
|
5.13.
|
Undertaking For Costs
.............................................................................
|
36
|
||
Section
|
5.14.
|
Waiver Of Stay Or Extension Laws...........................................................
|
36
|
||
Section
|
5.15.
|
Covenant Default
......................................................................................
|
36
|
|
|
ARTICLE 6
|
|
|
THE TRUSTEE
|
Section
|
6.01.
|
Certain Duties And Responsibilities
.........................................................
|
37
|
||
Section
|
6.02.
|
Notice Of Defaults.....................................................................................
|
38
|
||
Section
|
6.03.
|
Certain Rights Of Trustee
.........................................................................
|
38
|
||
Section
|
6.04.
|
Not Responsible For Recitals Or Issuance Of Securities
.........................
|
39
|
||
Section
|
6.05.
|
May Hold Securities..................................................................................
|
39
|
||
Section
|
6.06.
|
Money Held In Trust
.................................................................................
|
40
|
||
Section
|
6.07.
|
Compensation And Reimbursement .........................................................
|
40
|
||
Section
|
6.08.
|
Disqualification; Conflicting Interests
.....................................................
|
40
|
||
Section
|
6.09.
|
Corporate Trustee Required; Eligibility
...................................................
|
40
|
||
Section
|
6.10.
|
Resignation And Removal; Appointment Of Successor
............................
|
41
|
||
Section
|
6.11.
|
Acceptance Of Appointment By Successor
...............................................
|
42
|
||
Section
|
6.12.
|
Merger, Conversion, Consolidation Or Succession To
|
|
||
|
|
Business
............................................................................................
|
44
|
||
Section
|
6.13.
|
Preferential Collection Of Claims Against Company ..............................
|
44
|
||
Section
|
6.14.
|
Appointment Of Authenticating Agent
......................................................
|
48
|
||
Section
|
6.15.
|
Roles Of Trustee .......................................................................................
|
50
|
|
|
ARTICLE 7
|
|
|
HOLDERS’ LISTS AND REPORTS BY TRUSTEE AND COMPANY
|
Section
|
7.01.
|
Company To Furnish Trustee Names And Addresses Of
|
|
||
|
|
Holders .............................................................................................
|
50
|
||
Section
|
7.02.
|
Preservation Of Information; Communications To Holders ....................
|
50
|
||
Section
|
7.03.
|
Reports By Trustee....................................................................................
|
52
|
||
Section
|
7.04.
|
Reports By Company
................................................................................
|
53
|
|
|
ARTICLE 8
|
|
|
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
|
Section
|
8.01.
|
Consolidations and Mergers of Company and Sales and
|
|
||
|
|
Conveyances Permitted Subject to Certain Conditions ..................
|
53
|
||
Section
|
8.02.
|
Rights and Duties of Successor Entity ....................................................
|
54
|
||
Section
|
8.03.
|
Officers’ Certificate and Opinion of Counsel
..........................................
|
54
|
|
|
ARTICLE 9
|
|
|
SUPPLEMENTAL INDENTURE
|
Section
|
9.01.
|
Supplemental Indentures Without Consent Of Holders
...........................
|
55
|
||
Section
|
9.02.
|
Supplemental Indentures With Consent Of Holders
................................
|
56
|
||
Section
|
9.03.
|
Execution Of Supplemental Indentures ...................................................
|
58
|
||
Section
|
9.04.
|
Effect Of Supplemental Indentures
..........................................................
|
58
|
||
Section
|
9.05.
|
Conformity With Trust Indenture Act ......................................................
|
58
|
||
Section
|
9.06.
|
Reference In Securities To Supplemental Indentures...............................
|
58
|
||
Section
|
9.07.
|
Subordination Unimpaired
......................................................................
|
58
|
||
Section
|
9.08.
|
Reservation Of Rights Of Trustee
............................................................
|
58
|
|
|
ARTICLE 10
|
|
|
COVENANTS
|
Section
|
10.01.
|
Payment Of Principal, Premium And Interest ........................................
|
59
|
||
Section
|
10.02.
|
Maintenance Of Office Or Agency .........................................................
|
59
|
||
Section
|
10.03.
|
Money For Securities Payments To Be Held In Trust ............................
|
59
|
||
Section
|
10.04.
|
Corporate Existence...............................................................................
|
61
|
||
Section
|
10.05.
|
Statement By Officers As To Default .....................................................
|
61
|
||
Section
|
10.06.
|
Waiver Of Certain Covenants ...............................................................
|
61
|
|
|
ARTICLE 11
|
|
|
REDEMPTION OF SECURITIES
|
Section
|
11.01.
|
Applicability Of Article
..........................................................................
|
62
|
||
Section
|
11.02.
|
Election To Redeem; Notice To Trustee
.................................................
|
62
|
||
Section
|
11.03.
|
Selection By Trustee Of Securities To Be Redeemed .............................
|
62
|
||
Section
|
11.04.
|
Notice Of Redemption
............................................................................
|
63
|
||
Section
|
11.05.
|
Deposit Of Redemption Price
................................................................
|
64
|
Section
|
11.06.
|
Securities Payable On Redemption Date
.................................................
|
64
|
||
Section
|
11.07.
|
Securities Redeemed In Part
............
........................................................
|
64
|
|
|
ARTICLE 12
|
|
|
SINKING FUNDS
|
Section
|
12.01.
|
Applicability Of Article
..........................................................................
|
65
|
||
Section
|
12.02.
|
Satisfaction Of Sinking Fund Payments With Securities
.......................
|
65
|
||
Section
|
12.03.
|
Redemption Of Securities For Sinking Fund
.........................................
|
65
|
|
|
ARTICLE 13
|
|
|
DEFEASANCE AND COVENANT DEFEASANCE
|
Section
|
13.01.
|
Applicability Of Article; Company's Option To Effect
|
|
||
|
|
Defeasance Or Covenant Defeasance
.............................................
|
66
|
||
Section
|
13.02.
|
Defeasance And Discharge ...................................................................
|
66
|
||
Section
|
13.03.
|
Covenant Defeasance ............................................................................
|
66
|
||
Section
|
13.04.
|
Conditions To Defeasance Or Covenant Defeasance
............................
|
67
|
||
Section
|
13.05.
|
Deposited Money And U.S. Government Obligations To Be
|
|
||
|
|
Held In Trust; Other Miscellaneous Provisions ..............................
|
69
|
|
|
ARTICLE 14
|
|
|
SUBORDINATION
|
Section
|
14.01.
|
Securities Subordinated to Senior Indebtedness
.....................................
|
70
|
||
Section
|
14.02.
|
Disputes with Holders of Certain Senior Indebtedness
..........................
|
72
|
||
Section
|
14.03.
|
Subrogation ............................................................................................
|
72
|
||
Section
|
14.04.
|
Obligation of Company Unconditional...................................................
|
73
|
||
Section
|
14.05.
|
Payments on Securities Permitted
..........................................................
|
73
|
||
Section
|
14.06.
|
Effectuation of Subordination by Trustee
...............................................
|
74
|
||
Section
|
14.07.
|
Knowledge of Trustee
.............................................................................
|
74
|
||
Section
|
14.08.
|
Trustee May Hold Senior Indebtedness
..................................................
|
74
|
||
Section
|
14.09.
|
Rights of Holders of Senior Indebtedness Not Impaired
........................
|
74
|
||
Section
|
14.10.
|
Article Applicable to Paying Agents.......................................................
|
75
|
||
Section
|
14.11.
|
Trustee; Compensation Not Prejudiced..................................................
|
75
|
(dollars in millions)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Years Ended December 31,
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before provision for (benefit from) income taxes
|
|
$
|
346
|
|
|
$
|
159
|
|
|
$
|
678
|
|
|
$
|
(125
|
)
|
|
$
|
(301
|
)
|
Interest expense
|
|
556
|
|
|
667
|
|
|
683
|
|
|
843
|
|
|
1,068
|
|
|||||
Implicit interest in rents
|
|
10
|
|
|
9
|
|
|
10
|
|
|
9
|
|
|
12
|
|
|||||
Total earnings
|
|
$
|
912
|
|
|
$
|
835
|
|
|
$
|
1,371
|
|
|
$
|
727
|
|
|
$
|
779
|
|
Fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
$
|
556
|
|
|
$
|
667
|
|
|
$
|
683
|
|
|
$
|
843
|
|
|
$
|
1,068
|
|
Implicit interest in rents
|
|
10
|
|
|
9
|
|
|
10
|
|
|
9
|
|
|
12
|
|
|||||
Total fixed charges
|
|
$
|
566
|
|
|
$
|
676
|
|
|
$
|
693
|
|
|
$
|
852
|
|
|
$
|
1,080
|
|
Ratio of earnings to fixed charges
|
|
1.61
|
|
|
1.24
|
|
|
1.98
|
|
|
*
|
|
|
*
|
|
*
|
Earnings did not cover total fixed charges by
$125 million
in
2013
and
$301 million
in
2012
.
|
1.
|
I have reviewed this Annual Report on Form 10-K of Springleaf Finance Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 21, 2017
|
|
|
|
|
|
|
|
|
|
|
|
/s/
|
Jay N. Levine
|
|
|
|
|
Jay N. Levine
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Annual Report on Form 10-K of Springleaf Finance Corporation (the “registrant”);
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
Date:
|
February 21, 2017
|
|
|
|
|
|
|
|
|
|
|
|
/s/
|
Micah R. Conrad
|
|
|
|
|
Micah R. Conrad
|
|
|
|
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
|
|
/s/
|
Jay N. Levine
|
|
|
|
|
Jay N. Levine
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
/s/
|
Micah R. Conrad
|
|
|
|
|
Micah R. Conrad
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
|
Date:
|
February 21, 2017
|
|
|
|