UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xþ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2014~~2015

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-06155

SPRINGLEAF FINANCE CORPORATION

(Exact name of registrant as specified in its charter)



Indiana		35-0416090
(State of Incorporation)		(I.R.S. Employer Identification No.)

601 N.W. Second Street, Evansville, IN		47708
(Address of principal executive offices)		(Zip Code)

(812) 424-8031

(Registrant’s telephone number, including area code)

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

At November ~~14, 2014,~~2, 2015, there were 10,160,020 shares of the registrant’s common stock, ~~$.50~~$0.50 par value, outstanding.

Table of Contents

TABLE OF CONTENTS



PART I — FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations	4
	Condensed Consolidated Statements of Comprehensive Income (Loss)	5
	Condensed Consolidated Statements of Shareholder's Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6053
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	9083
Item 4.	Controls and Procedures	9083

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	9184
Item 1A.	Risk Factors	9184
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9184
Item 3.	Defaults Upon Senior Securities	9184
Item 4.	Mine Safety Disclosures	9184
Item 5.	Other Information	9184
Item 6.	Exhibits	9184

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)


(dollars in thousands)	September 30, 2014			December 31, 2013
(dollars in millions except par value amount)							September 30, 2015			December 31, 2014

Assets

Cash and cash equivalents	$	1,919,184		$	374,835		$	2,756		$	749
Investment securities	1,696,870			555,614			1,742			2,922
Net finance receivables:
Personal loans (includes loans of consolidated VIEs of $1.8 billion in 2014 and $1.6 billion in 2013)	3,579,588			3,159,932
SpringCastle Portfolio (includes loans of consolidated VIEs of $2.1 billion in 2014)	2,083,145			—
Real estate loans (includes loans of consolidated VIEs of $0 in 2014 and $5.6 billion in 2013)	655,545			7,885,016
Personal loans (includes loans of consolidated VIEs of $2.1 billion in 2015 and $1.9 billion in 2014)							3,990			3,800
SpringCastle Portfolio (includes loans of consolidated VIEs of $1.7 billion in 2015 and $2.0 billion in 2014)							1,667			1,979
Real estate loans							547			625
Retail sales finance	56,900			98,911			27			48
Net finance receivables	6,375,178			11,143,859			6,231			6,452
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $67.8 million in 2014 and $153.1 million in 2013)	(162,440		)	(332,195		)
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $131 million in 2015 and $72 million in 2014)							(191		)	(174		)
Net finance receivables, less allowance for finance receivable losses	6,212,738			10,811,664			6,040			6,278
Finance receivables held for sale	493,196			—
Finance receivables held for sale (includes finance receivables held for sale of consolidated VIEs of $484 million in 2015)							797			205
Note receivable from parent	167,989			167,989			322			251
Restricted cash (includes restricted cash of consolidated VIEs of $295.7 million in 2014 and $345.9 million in 2013)	311,425			358,759
Restricted cash and cash equivalents (includes restricted cash and cash equivalents of consolidated VIEs of $256 million in 2015 and $210 million in 2014)							270			218
Other assets	533,788			463,176			455			474

Total assets	$	11,335,190		$	12,732,037		$	12,382		$	11,097

Liabilities and Shareholder’s Equity

Long-term debt (includes debt of consolidated VIEs of $3.1 billion in 2014 and $5.2 billion in 2013)	$	7,858,037		$	10,640,728
Long-term debt (includes debt of consolidated VIEs of $4.8 billion in 2015 and $3.6 billion in 2014)							$	9,555		$	8,356
Insurance claims and policyholder liabilities	430,052			394,168			467			446
Deferred and accrued taxes	159,764			145,534			146			159
Other liabilities	329,542			223,466			287			255
Total liabilities	8,777,395			11,403,896			10,455			9,216
Commitments and contingent liabilities (Note 13)
Commitments and contingent liabilities (Note 14)

Shareholder’s equity:
Common stock, par value $.50 per share; 25,000,000 shares authorized, 10,160,020 and 10,160,018 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively	5,080			5,080
Common stock, par value $.50 per share; 25,000,000 shares authorized, 10,160,020 shares issued and outstanding at September 30, 2015 and December 31, 2014							5			5
Additional paid-in capital	740,385			422,015			756			740
Accumulated other comprehensive income	34,267			28,095
Accumulated other comprehensive income (loss)							(11		)	3
Retained earnings	1,369,712			872,951			1,331			1,321
Springleaf Finance Corporation shareholder’s equity	2,149,444			1,328,141			2,081			2,069
Non-controlling interests	408,351			—			(154		)	(188		)
Total shareholder’s equity	2,557,795			1,328,141			1,927			1,881

Total liabilities and shareholder’s equity	$	11,335,190		$	12,732,037		$	12,382		$	11,097

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,					Nine Months Ended September 30,
													2015		2014			2015		2014
				Revised						Revised
Interest income:
Finance charges	$	385,314		$	417,141		$	1,171,994		$	1,233,504		$	419	$	385		$	1,221	$	1,172
Finance receivables held for sale originated as held for investment	46,502			—			53,744			—			4		47			13		54
Total interest income	431,816			417,141			1,225,738			1,233,504			423		432			1,234		1,226

Interest expense	172,492			205,270			526,035			649,861			171		172			500		526

Net interest income	259,324			211,871			699,703			583,643			252		260			734		700

Provision for finance receivable losses	92,114			101,390			273,372			260,005			82		93			247		274

Net interest income after provision for finance receivable losses	167,210			110,481			426,331			323,638			170		167			487		426

Other revenues:
Insurance	44,010			38,277			125,116			107,144			40		44			116		125
Investment	11,206			6,532			31,266			25,858			11		12			43		32
Net loss on repurchases and repayments of debt	—			(33,572		)	(6,615		)	(33,809		)	—		—			—		(7		)
Net gain on fair value adjustments on debt	1,523			—			1,523			—			—		1			—		1
Net gain on sales of real estate loans and related trust assets	616,534			—			706,520			—			—		617			—		707
Other	(10,454		)	5,514			(3,240		)	20,874			4		(11		)	8		(3		)
Total other revenues	662,819			16,751			854,570			120,067			55		663			167		855

Other expenses:
Operating expenses:
Salaries and benefits	85,602			209,625			249,065			363,163			86		85			264		249
Other operating expenses	76,688			52,110			178,694			151,034			79		77			220		179
Insurance losses and loss adjustment expenses	20,141			16,550			57,173			47,650			17		20			53		57
Total other expenses	182,431			278,285			484,932			561,847			182		182			537		485

Income (loss) before provision for (benefit from) income taxes	647,598			(151,053		)	795,969			(118,142		)
Income before provision for income taxes													43		648			117		796

Provision for (benefit from) income taxes	219,092			(57,145		)	275,983			(44,097		)
Provision for income taxes													7		219			14		276

Net income (loss)	428,506			(93,908		)	519,986			(74,045		)
Net income													36		429			103		520

Net income attributable to non-controlling interests	23,225			—			23,225			—			31		23			93		23

Net income (loss) attributable to Springleaf Finance Corporation	$	405,281		$	(93,908	)	$	496,761		$	(74,045	)
Net income attributable to Springleaf Finance Corporation													$	5	$	406		$	10	$	497

See Notes to Condensed Consolidated Financial Statements.

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SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(dollars in thousands) Three Months
Ended
September 30,
2014 Three Months
Ended
September 30,
2013 Nine Months
Ended
September 30,
2014 Nine Months
Ended
September 30,
2013

Revised Revised

Net income (loss) $ 428,506

$ (93,908 )
$ 519,986

$ (74,045 )

Other comprehensive income (loss):

Net unrealized gains (losses) on:

Investment securities on which other-than-temporary impairments were taken (8 ) (17 ) (357 ) (135 )
All other investment securities (3,826 ) (412 ) 15,500
(10,747 )
Foreign currency translation adjustments 761
(2,056 ) 267
38

Income tax effect:

Net unrealized (gains) losses on:

Investment securities on which other-than-temporary impairments were taken 3
6
125
47
All other investment securities 1,340
146
(5,427 ) 3,759
Other comprehensive income (loss), net of tax, before reclassification adjustments (1,730 ) (2,333 ) 10,108
(7,038 )

Reclassification adjustments included in net income (loss):

Net realized (gains) losses on investment securities (2,758 ) 312
(6,055 ) (1,603 )
Cash flow hedges —
—
—
(160 )

Income tax effect:

Net realized gains (losses) on investment securities 965
(109 ) 2,119
561
Cash flow hedges —
—
—
56
Reclassification adjustments included in net income (loss), net of tax (1,793 ) 203
(3,936 ) (1,146 )
Other comprehensive income (loss), net of tax (3,523 ) (2,130 ) 6,172
(8,184 )

Comprehensive income (loss) 424,983
(96,038 ) 526,158
(82,229 )

Comprehensive income attributable to non-controlling interests 23,225
—
23,225
—

Comprehensive income (loss) attributable to Springleaf Finance Corporation $ 401,758
$ (96,038 ) $ 502,933
$ (82,229 )



(dollars in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)	2015			2014			2015			2014

Net income	$	36		$	429		$	103		$	520

Other comprehensive income (loss):
Net unrealized gains (losses) on non-credit impaired investment securities	(3		)	(4		)	(8		)	15
Income tax effect:
Net unrealized (gains) losses on non-credit impaired investment securities	1			2			3			(5		)
Other comprehensive income (loss), net of tax, before reclassification adjustments	(2		)	(2		)	(5		)	10
Reclassification adjustments included in net income:
Net realized gains on investment securities	(4		)	(3		)	(14		)	(6		)
Income tax effect:
Net realized gains on investment securities	2			1			5			2
Reclassification adjustments included in net income, net of tax	(2		)	(2		)	(9		)	(4		)
Other comprehensive income (loss), net of tax	(4		)	(4		)	(14		)	6

Comprehensive income	32			425			89			526

Comprehensive income attributable to non-controlling interests	31			23			93			23

Comprehensive income (loss) attributable to Springleaf Finance Corporation	$	1		$	402		$	(4	)	$	503

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Shareholder’s Equity (Unaudited)


	Springleaf Finance Corporation Shareholder’s Equity																			Springleaf Finance Corporation Shareholder’s Equity
(dollars in thousands)	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
(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, 2015																				$	5	$	740	$	3		$	1,321	$	2,069		$	(188	)	$	1,881
Non-cash incentive compensation from Initial Stockholder																				—		15		—			—		15			—			15
Share-based compensation expense, net of forfeitures																				—		1		—			—		1			—			1
Change in non-controlling interests:
Distributions declared to joint venture partners																				—		—		—			—		—			(59		)	(59		)
Change in net unrealized losses:
Available-for-sale securities																				—		—		(14		)	—		(14		)	—			(14		)
Net income																				—		—		—			10		10			93			103
Balance, September 30, 2015																				$	5	$	756	$	(11	)	$	1,331	$	2,081		$	(154	)	$	1,927

Balance, January 1, 2014	$	5,080	$	422,015	$	28,095		$	872,951		$	1,328,141		$	—		$	1,328,141		$	5	$	422	$	28		$	873	$	1,328		$	—		$	1,328
Capital contributions from parent	—		21,731		—			—			21,731			—			21,731			—		22		—			—		22			—			22
Capital contribution of capital stock of Springleaf Acquisitions Corporation	—		295,691		—			—			295,691			394,593			690,284			—		295		—			—		295			395			690
Share-based compensation expense, net of forfeitures	—		948		—			—			948			—			948			—		1		—			—		1			—			1
Change in non-controlling interests:
Distributions declared to joint venture partners	—		—		—			—			—			(9,467		)	(9,467		)	—		—		—			—		—			(9		)	(9		)
Change in net unrealized gains:
Investment securities	—		—		5,905			—			5,905			—			5,905
Foreign currency translation adjustments	—		—		267			—			267			—			267
Available-for-sale securities																				—		—		6			—		6			—			6
Net income	—		—		—			496,761			496,761			23,225			519,986			—		—		—			497		497			23			520
Balance, September 30, 2014	$	5,080	$	740,385	$	34,267		$	1,369,712		$	2,149,444		$	408,351		$	2,557,795		$	5	$	740	$	34		$	1,370	$	2,149		$	409		$	2,558

Balance, January 1, 2013 - Revised	$	5,080	$	256,015	$	25,896		$	955,591		$	1,242,582		$	—		$	1,242,582
Capital contributions from parent	—		21,000		—			—			21,000			—			21,000
Share-based compensation expense, net of forfeitures	—		131,250		—			—			131,250			—			131,250
Change in net unrealized losses:
Investment securities	—		—		(8,118		)	—			(8,118		)	—			(8,118		)
Cash flow hedges	—		—		(104		)	—			(104		)	—			(104		)
Foreign currency translation adjustments	—		—		38			—			38			—			38
Net loss	—		—		—			(74,045		)	(74,045		)	—			(74,045		)
Balance, September 30, 2013 - Revised	$	5,080	$	408,265	$	17,712		$	881,546		$	1,312,603		$	—		$	1,312,603

See Notes to Condensed Consolidated Financial Statements.

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SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)


(dollars in thousands)
Nine Months Ended September 30,	2014			2013
(dollars in millions)							Nine Months Ended September 30,
							2015			2014
				Revised
Cash flows from operating activities
Net income (loss)	$	519,986		$	(74,045	)
Net income							$	103		$	520
Reconciling adjustments:
Provision for finance receivable losses	273,372			260,005			247			274
Depreciation and amortization	31,580			52,993			64			31
Deferred income tax charge (benefit)	13,985			(109,181		)	(10		)	14
Non-cash incentive compensation from Initial Stockholder							15			—
Net gain on fair value adjustments on debt	(1,523		)	—			—			(1		)
Net gain on sales of real estate loans and related trust assets	(706,520		)	—			—			(707		)
Net charge-offs on finance receivables held for sale	10,713			—			—			11
Net loss on repurchases and repayments of debt	6,615			33,809			—			7
Share-based compensation expense, net of forfeitures	948			131,250			1			1
Other	791			(445		)	(13		)	—
Cash flows due to changes in:
Other assets and other liabilities	76,721			90,572			23			62
Insurance claims and policyholder liabilities	35,884			14,917			22			36
Taxes receivable and payable	(66,318		)	(46,147		)	(29		)	(66		)
Accrued interest and finance charges	(11,248		)	(29,957		)	—			(11		)
Restricted cash not reinvested	(17,460		)	(5,715		)
Restricted cash and cash equivalents not reinvested							—			(3		)
Other, net	840			(824		)	(1		)	—
Net cash provided by operating activities	168,366			317,232			422			168

Cash flows from investing activities
Finance receivables originated or purchased, net of deferred origination costs	(1,841,088		)	(1,631,192		)	(2,377		)	(1,841		)
Principal collections on finance receivables	1,907,520			1,990,405			1,825			1,908
Cash advances on intercompany notes receivables							(147		)	—
Principal collections on intercompany notes receivables							77			—
Sales and principal collections on finance receivables held for sale originated as held for investment	3,427,423			—			88			3,427
Available-for-sale investment securities purchased	(260,905		)	(90,279		)	(382		)	(261		)
Trading investment securities purchased	(1,064,902		)	(6,295		)	(1,457		)	(1,065		)
Available-for-sale investment securities called, sold, and matured	209,125			176,111			408			209
Trading investment securities called, sold, and matured	17,592			7,492			2,563			18
Change in notes receivable from parent and affiliate	—			(30,750		)
Change in restricted cash	5,241			(227,213		)
Change in restricted cash and cash equivalents							(46		)	5
Proceeds from sale of real estate owned	50,791			87,747			12			51
Other, net	4,041			(12		)	1			4
Net cash provided by investing activities	2,454,838			276,014			565			2,455

Cash flows from financing activities
Proceeds from issuance of long-term debt, net of commissions	672,440			3,459,579			1,929			672
Repayment of long-term debt	(1,763,458		)	(4,381,451		)	(850		)	(1,764		)
Distributions to joint venture partners	(9,467		)	—			(59		)	(9		)
Capital contributions from parent	21,731			21,000			—			22
Net cash used for financing activities	(1,078,754		)	(900,872		)
Net cash provided by (used for) financing activities							1,020			(1,079		)


Condensed Consolidated Statements of Cash Flows (Unaudited) (Continued)

(dollars in thousands)
Nine Months Ended September 30,	2014			2013
				Revised

Effect of exchange rate changes	(101		)	(835		)
(dollars in millions)							Nine Months Ended September 30,
(dollars in millions)							2015		2014

Net change in cash and cash equivalents	1,544,349			(308,461		)	2,007		1,544
Cash and cash equivalents at beginning of period	374,835			1,357,212			749		375
Cash and cash equivalents at end of period	$	1,919,184		$	1,048,751		$	2,756	$	1,919

Supplemental non-cash activities
Transfer of finance receivables to real estate owned	$	46,481		$	69,521		$	8	$	46
Transfer of finance receivables held for investment to finance receivables held for sale (prior to deducting allowance for finance receivable losses)	$	6,810,444		$	—		$	608	$	6,810
Springleaf Finance, Inc. contribution of consolidated assets from Springleaf Acquisition Corporation to Springleaf Finance Corporation	$	2,342,442		$	—
Springleaf Finance, Inc. contribution of consolidated liabilities from Springleaf Acquisition Corporation to Springleaf Finance Corporation	$	1,652,158		$	—
Unsettled investment security purchases and sales	$	28,432		$	—
Springleaf Finance, Inc. contribution of consolidated assets from Springleaf Acquisition Corporation’s capital stock to Springleaf Finance Corporation							$	—	$	2,342
Springleaf Finance, Inc. contribution of consolidated liabilities from Springleaf Acquisition Corporation’s capital stock to Springleaf Finance Corporation							$	—	$	1,652
Net unsettled investment security dispositions (purchases)							$	40	$	(28	)

See Notes to Condensed Consolidated Financial Statements.

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SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

September 30, ~~2014~~2015

1. Business and ~~Summary~~Basis of ~~Significant Accounting Policies~~Presentation

Springleaf Finance Corporation (“SFC” or, collectively with its subsidiaries, whether directly or indirectly owned, “Springleaf,” the “Company,” “we,” “us,” or “our”) is a wholly owned subsidiary of Springleaf Finance, Inc. (“SFI”).

~~In connection with the initial public offering of common stock~~ SFI is a wholly owned subsidiary of Springleaf Holdings, Inc. (“SHI”) ~~on October 21, 2013, SFI became a wholly owned subsidiary of SHI. Therefore, all of SFC’s common stock is indirectly owned by SHI.~~ .

At September 30, ~~2014,~~2015, Springleaf Financial Holdings, LLC (the “Initial Stockholder”) owned approximately ~~75%~~58% of SHI’s common stock. The Initial Stockholder is owned primarily by a private equity fund managed by an affiliate of Fortress Investment Group LLC (“Fortress”) and AIG Capital Corporation, a subsidiary of American International Group, Inc. (“AIG”). At September 30, 2015, the economic interests of Fortress and AIG were 55% and 3%, respectively.

SFC is a financial services holding company with subsidiaries engaged in the consumer finance and ~~credit~~ insurance businesses.

BASIS OF PRESENTATION

We prepared our condensed consolidated financial statements using generally accepted accounting principles in the United States of America (“U.S. GAAP”). These statements are unaudited. The year-end condensed balance sheet data was derived from our audited financial statements, but does not include all disclosures required by U.S. GAAP. The statements include the accounts of SFC, its subsidiaries (all of which are wholly owned, except for certain subsidiaries associated with a joint venture in which we own a 47% equity interest), and variable interest entities (“VIEs”) in which we hold a controlling financial interest and for which we are considered to be the primary beneficiary as of the financial statement date.

We eliminated all material intercompany accounts and transactions. We made judgments, estimates, and assumptions that affect amounts reported in our condensed consolidated financial statements and disclosures of contingent assets and liabilities. In management’s opinion, the condensed consolidated financial statements include the normal, recurring adjustments necessary for a fair statement of results. Ultimate results could differ from our estimates. We evaluated the effects of and the need to disclose events that occurred subsequent to the balance sheet date. These statements should be read in conjunction with the consolidated financial statements and related notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2013~~2014 (“~~2013~~2014 Annual Report on Form 10-K”). We follow the same significant accounting policies for our interim reporting.

To conform to the 2015 presentation, we reclassified certain prior period items as a result of our early adoption of accounting standards update (“ASU”) 2015-03, Interest - Imputation of Interest (“ASU 2015-03”). See Note 3 for further information on the adoption of this ASU.

Prior Period Revisions

~~As disclosed in our 2013~~ Annual Report on Form 10-K, we identified certain out-of-period errors in preparing our annual consolidated financial statements for the year ended December 31, 2013. In addition to these errors, we had previously recorded and disclosed out-of-period adjustments in prior reporting periods when the errors were discovered. As a result, we revised all previously reported periods included in our 2013 Annual Report on Form 10-K. Similarly, we have revised all previously reported periods included in this report. We corrected the errors identified in the fourth quarter of 2013 and included these corrections in the appropriate prior periods. In addition, we reversed all out-of period adjustments previously recorded and disclosed, and included the adjustments in the appropriate periods. After evaluating the quantitative and qualitative aspects of these corrections, we have determined that our previous quarterly condensed financial statements and our annual consolidated financial statements were not materially misstated.

~~See Note 17 for further information on the prior period revisions.~~

In addition, during the first quarter of 2014, we identified that the disclosure of the allowance for finance receivable losses related to our securitized finance receivables at December 31, 2013, was previously incorrectly overstated by $26.8 million. The parenthetical disclosure of the allowance of consolidated VIEs as of December 31, 2013 on our condensed consolidated balance sheet and the related VIE disclosures in Notes 3 and 9 have been revised in this report to $153.1 million.

During the ~~second~~fourth quarter of 2014, we discovered that weour personal loans and loans included in the SpringCastle Portfolio deemed to be troubled debt restructured (“TDR”) finance receivables were previously incorrectly ~~disclosed~~excluded in the ~~carrying values at the date~~related disclosures of ~~sale of the real estate loans associated with the 2009-1 securitization~~our finance receivables and ~~certain additional real estate loans sold on March 31, 2014.~~allowance for finance receivable losses. The ~~affected carrying values~~applicable prior period amounts have been corrected in Notes ~~1, 3,~~4 and 45 in this ~~report~~report.

During the fourth quarter of 2014, we discovered that our restricted cash and cash equivalents were overstated and other assets were understated by $15 million in our condensed consolidated balance sheets at September 30, 2014, as ~~follows: (i) the carrying value of~~we incorrectly included escrow advances on our real estate loans ~~associated with~~held for sale in cash and cash equivalents. This error also resulted in our cash flows due to a decrease in restricted cash and cash equivalents not reinvested to be overstated and cash flows due to an increase in other assets and other liabilities to be overstated within the ~~2009-1 securitization~~operating activities section of our condensed consolidated statements of cash flows for the nine months ended September 30, 2014. The affected amounts for the 2014 period have been corrected in our condensed consolidated statements of cash flows in this report. This classification error was not material to any previously issued financial statements.

During the second quarter of 2015, we discovered that ~~were sold on March 31, 2014, was previously reported as $742.0~~we had not charged-off certain bankrupt accounts in our SpringCastle Portfolio and we identified an error in the calculation of the allowance for our TDR personal loans. As a result of these findings, we recorded an out-of-period adjustment in the second quarter of 2015, which increased provision for finance receivable losses by $8 million and decreased provision for income taxes by $3 million.

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~~but has been~~During the second quarter of 2015, we identified incorrect allocations of our total assets disclosure within the segment footnote. We have evaluated the impact of these errors and concluded that they were not material to any previously issued financial statements, however, we have corrected ~~to be $724.9 million~~the previously disclosed periods in Note 16 of this report. We will also correct the prior period segment disclosures presented in our applicable quarterly and ~~(ii) the carrying value of additional real estate loans sold on March 31, 2014, was previously reported~~annual reports as ~~$93.3 million but has been corrected to be $89.9 million.~~follows:



(dollars in millions)	Consumer and Insurance		Real Estate		Other
Assets *
March 31, 2015	$	5,070	$	3,613	$	1,832
December 31, 2014	4,462		3,666		555
September 30, 2014	4,651		3,720		705
June 30, 2014	4,406		6,561		1,058
December 31, 2013	4,200		8,512		611


*	The revised amounts do not reflect the retrospective reclassifications of our debt issuance costs previously recorded in other assets to long-term debt, as a result of our early adoption of ASU 2015-03.

After evaluating the quantitative and qualitative aspects of these corrections (individually and in the aggregate), management has determined that our previously issued interim and annual consolidated financial statements were not materially misstated.

~~Fortress Acquisition~~

Due to the significance of the ownership interest acquired by FCFI Acquisition LLC, an affiliate of Fortress, (the “Fortress Acquisition”), the nature of the transaction, and at the direction of our acquirer, we applied push-down accounting to SFC as an acquired business. We revalued our assets and liabilities based on their fair values at the date of the Fortress Acquisition, November 30, 2010, in accordance with business combination accounting standards (“push-down accounting”).

~~SIGNIFICANT REAL ESTATE LOAN TRANSACTIONS~~

InDuring the third quarter of 2015, we discovered that our cash equivalents in certificates of deposit and commercial paper, which totaled $165 million at December 31, 2014, wewere incorrectly presented as a Level 1 investment, instead of a Level 2 investment in our disclosure of the fair value hierarchy of our financial instruments in our 2014 Annual Report on Form 10-K. The affected fair value amount has been corrected in Note 17 of this report. This presentation error was not material to any previously issued financial statements.

2. Significant Transactions

SHI’S PENDING ACQUISITION OF ONEMAIN FINANCIAL

On March 2, 2015, SHI entered into a ~~series~~Stock Purchase Agreement with CitiFinancial Credit Company to acquire OneMain Financial Holdings, LLC (formerly OneMain Financial Holdings, Inc.) (“OneMain”), for an aggregate purchase price of ~~transactions relating~~$4.25 billion, which we refer to ~~the sales of our beneficial interests~~ in our non-core real estate loans, the related servicing of these loans, and the sales of certain performing and non-performing real estate loans. The Securitization Assets Sale, the MSR Sale, and the September Whole Loan Sales are each defined below and are collectively referred tothis report as the ~~“Asset Sale.” The Asset Sale, along~~“Proposed Acquisition”. There can be no assurance that the Proposed Acquisition will close, or, if it does, when the actual closing will occur. SHI continues to evaluate its plans regarding the integration of OneMain with its remaining businesses including us.

SHI’S EQUITY OFFERING

On May 4, 2015, SHI completed an offering of 27,864,525 shares of its common stock, consisting of 19,417,476 shares of common stock offered by SHI and 8,447,049 shares of common stock offered by the ~~real estate transactions that~~Initial Stockholder. SHI’s net proceeds from this sale were ~~completed in~~approximately $976 million, after deducting the ~~first half~~underwriting discounts and commissions and additional offering-related expenses totaling $24 million. SHI intends to use the net proceeds of ~~2014 (the “Prior Dispositions”) substantially complete~~ the ~~Company’s previously disclosed plan~~offering, together with cash on hand, the proceeds from the sale of investment securities, and other funding options, to ~~liquidate its non-core real estate loans.~~fund the Proposed Acquisition and/or for general corporate purposes, which may include debt repurchases and repayments, capital expenditures and other possible acquisitions.

In ~~conjunction~~connection with ~~these real estate loan transactions,~~SHI’s initial public offering in October 2013, certain executives of Springleaf received a grant of incentive units in the Initial Stockholder. These incentive units are subject to their continued employment with the Company and provide benefits (in the form of distributions) in the event the Initial Stockholder makes distributions to one or more of its members that exceed certain specified amounts. In connection with the sale of SHI’s common stock by the Initial Stockholder, certain of the specified thresholds were satisfied. In accordance with Accounting Standards Codification Topic 710, Compensation-General, we have closed our servicing centers in Dallas, Texas, Rancho Cucamonga, California, and Wesley Chapel, Florida, and have eliminated certain staff positions in our Evansville, Indiana, location. In total, approximately 300 staff positions were eliminated. However, the total reduction in workforce was approximately 170 employees, as 130 employees have been transferred into other positions at Springleaf. We recorded ~~restructuring costs~~non-cash incentive compensation expense of ~~$4.3~~$15 million in the ~~third~~second quarter of ~~2014 due~~2015 related to the ~~workforce reductions and the closings of the servicing facilities.~~incentive units.

Our insurance subsidiaries have written certain insurance policies on properties collateralizing the loans that have been deconsolidated or disposed of as a result of these sales. As part of the disposition, the insurance policies associated with the sold loans have been or will be cancelled.

~~The “Securitization Assets Sale”~~

On August 6, 2014, SFC and Eighth Street Funding, LLC, Eleventh Street Funding, LLC, Twelfth Street Funding, LLC, Fourteenth Street Funding, LLC, Fifteenth Street Funding, LLC, Seventeenth Street Funding, LLC, and Nineteenth Street Funding, LLC (each a wholly owned subsidiary of SFC and collectively, the “Depositors”) entered into an agreement to sell, subject to certain closing conditions, certain notes and trust certificates (collectively, the “Securities”) backed by mortgage loans of the Springleaf Mortgage Loan Trust (“SMLT”) 2011-1, SMLT 2012-1, SMLT 2012-2, SMLT 2012-3, SMLT 2013-1, SMLT 2013-2, and SMLT 2013-3 (each, a “Trust”, and the issuance of the Securities by each Trust, a “Springleaf Transaction”) to Credit Suisse Securities (USA) LLC and its affiliates (“Credit Suisse”). The agreement also included the sale of the rights to receive any funds remaining in the reserve account established for each Springleaf Transaction, and certain related rights, representing substantially all of the Company’s remaining interests in the Trusts, to Credit Suisse.

On August 1, 2014, the real estate loans included in the transaction were transferred from held for investment to held for sale, due to management’s intent to no longer hold these finance receivables for the foreseeable future. The Depositors completed this transaction on August 29, 2014, at which time, the real estate loans included in the transaction had a carrying value of $4.0 billion (after the basis adjustment for the related allowance for finance receivable losses). The purchase price for the Securitization Asset Sale was $1.6 billion. As a result of the sale, we deconsolidated the securitization trusts holding the underlying real estate loans and previously issued securitized interests which were reported in long-term debt, as we no longer were considered the primary beneficiary.

~~The “MSR Sale”~~

Additionally, in a separate transaction on August 6, 2014, SFC and its wholly owned subsidiary, MorEquity, Inc. (“MorEquity”) (collectively, the “Sellers”), entered into a Mortgage Servicing Rights Purchase and Sale Agreement, dated and effective as of August 1, 2014, with Nationstar Mortgage LLC (“Nationstar”), pursuant to which the Sellers agreed to sell to Nationstar all of their rights and responsibilities as servicer, primary servicer, and/or master servicer of the mortgage loans primarily underlying

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the Sellers’ securitizations completed in 2011, 2012 and 2013 (each a “Pool” and collectively, the “Pools”) with an aggregate unpaid principal balance (“UPB”) of approximately $5 billion. Additionally, Nationstar agreed to assume on and after the effective date, all of the Sellers’ rights and responsibilities as servicer, primary servicer and/or master servicer, as applicable, for each Pool arising and to be performed on and after the sale date, which include, among other things, the right to receive the related servicing fee on a monthly basis.

The purchase price for the MSR Sale was $38.8 million. Approximately 50% of the proceeds of the MSR Sale were received on August 29, 2014, the closing date, and 40% of the proceeds of the MSR Sale were received on October 23, 2014. The remaining 10% is subject to a holdback for resolution of missing documentation and other customary conditions, and is expected to be received no later than 120 days after the date of transfer of servicing upon resolution of those conditions. See Note 19 for further information on the subsequent payment received from Nationstar on October 23, 2014. Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar.

The servicing for each Pool was transferred on September 30, 2014. From the closing of the MSR Sale on August 29, 2014, until the servicing transfer on September 30, 2014, the Company continued to service certain loans on behalf of Nationstar under an interim servicing agreement.

~~The “September Whole Loan Sales”~~

On August 6, 2014, SFC and Credit Suisse agreed to the terms of sale of certain performing and non-performing mortgage loans by certain indirect subsidiaries of SHI (referred to herein as the “Probable Whole Loan Sales”). On August 1, 2014, the real estate loans included in the Probable Whole Loan Sales were transferred from held for investment to held for sale, due to management’s intent to no longer hold these finance receivables for the foreseeable future. We completed the sale of a portion of the Probable Whole Loan Sales on September 30, 2014 (the “September Whole Loan Sales”) at which time, the real estate loans included in the September Whole Loan Sales had a carrying value of $768.6 million (after the basis adjustment for the related allowance for finance receivable losses).

The aggregate purchase price of $795.1 million for the September Whole Loan Sales included a holdback provision of $120 million of which $40 million was subject to finalization of the terms and conditions of administering the holdback and the remainder was subject to our ability to cure certain documentation deficiencies within the 60 day period (subject to extension under certain circumstances) subsequent to the closing of the sale. See Note 19 for further information on the subsequent payments received from Credit Suisse on October 16 and November 7, 2014.

~~Prior Dispositions~~

~~The “Prior Dispositions” included the following transactions:~~

~~The “Sixth Street Disposition”.~~ On May 23, 2014, Sixth Street Funding LLC (“Sixth Street”), a wholly owned subsidiary of SFC, agreed to sell and transfer its beneficial interests in the mortgage-backed retained certificates related to a securitization transaction completed in 2010 to Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”) for a purchase price of $263.7 million. On June 1, 2014, the real estate loans included in the transaction were transferred from held for investment to held for sale, due to management’s intent to no longer hold these finance receivables for the foreseeable future. Sixth Street completed this transaction on June 30, 2014, at which time, the real estate loans included in the transaction had a carrying value of $444.4 million (after the basis adjustment for the related allowance for finance receivable losses). As a result of the sale, we deconsolidated the securitization trust holding the underlying real estate loans and previously issued securitized interests which were reported in long-term debt, as we no longer were considered the primary beneficiary.

~~The “Third Street Disposition”.~~ On March 6, 2014, Third Street Funding LLC (“Third Street”), a wholly owned subsidiary of SFC, agreed to sell and transfer its beneficial interests in the mortgage-backed retained certificates related to a securitization transaction completed in 2009 to MLPFS for a purchase price of $737.2 million. On March 1, 2014, the real estate loans included in the transaction were transferred from held for investment to held for sale, due to management’s intent to no longer hold these finance receivables for the foreseeable future. Third Street completed this transaction on March 31, 2014, at which time, the real estate loans included in the transaction had a carrying value of $724.9 million (after the basis adjustment for the related allowance for finance receivable losses). As a result of the sale, we deconsolidated the securitization trust holding the underlying real estate loans and previously issued securitized interests which were reported in long-term debt, as we no longer were considered the primary beneficiary.

~~The “MorEquity Disposition”.~~ On March 7, 2014, MorEquity entered into an agreement to sell, subject to certain closing conditions, certain performing and non-performing real estate loans for a purchase price of $79.0 million. On March 1, 2014,

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these loans were transferred from held for investment to held for sale, due to management’s intent to no longer hold these finance receivables for the foreseeable future. MorEquity completed this sale on March 31, 2014, at which time, the real estate loans included in the transaction had a carrying value of $89.9 million (after the basis adjustment for the related allowance for finance receivable losses).

~~CAPITAL CONTRIBUTION TO SFC~~

On July 31, 2014, SFI made a capital contribution to SFC, consisting of 100 shares of the common stock, par value of $0.01 per share, of its wholly owned subsidiary, Springleaf Acquisitions Corporation (“SAC”) representing all of the issued and outstanding shares of capital stock of SAC (the “SAC Capital Contribution”). SAC consists primarily of a 47% investment in a joint venture formed to acquire consumer loans in 2013. At July 31, 2014, SAC held consolidated total assets of $2.3 billion, total liabilities of $1.7 billion and equity of $691.0 million, including a non-controlling interest of $394.6 million. Consistent with the contribution of assets and liabilities to an entity in a controlled group, SAC’s assets and liabilities were contributed to SFC at their carrying value as of July 31, 2014, with its results of operations reflected prospectively.3. Recent Accounting Pronouncements

ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

~~Income Taxes~~Troubled Debt Restructurings

In ~~July 2013,~~January of 2014, the Financial Accounting Standards Board ~~(“FASB”~~(the “FASB”) issued ~~an accounting standards update (“ASU”),~~ ASU ~~2013-11,~~2014-04, ~~Income Taxes (Topic 740)~~Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure, which clarifies ~~the presentation requirements of unrecognized tax benefits~~when an in substance repossession or foreclosure occurs — that is, when a ~~net operating loss carryforward,~~creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The ASU requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar ~~tax loss, or a tax credit carryforward exists at the reporting date.~~legal agreement. The amendments in this ASU became effective prospectively for the Company for ~~fiscal years,~~annual periods, and interim periods within those ~~years,~~annual periods, beginning after December 15, ~~2013.~~2014. The adoption of this ASU did not have a material effect on our condensed consolidated financial statements.

Debt Issuance Costs

In April of 2015, the FASB issued ASU 2015-03, Interest - Imputation of Interest,which simplifies the presentation of debt issuance costs. Under this standard, debt issuance costs related to a note shall be reported in the balance sheet as a direct reduction from the face amount of that note. The ASU also clarifies that discount, premium or debt issuance costs shall not be classified as a deferred charge or deferred credit. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted for financial statements that have not been previously issued and must be applied retrospectively. We elected to early adopt this ASU as of June 30, 2015 and applied this ASU retrospectively. On June 30, 2015, we reclassified $32 million of debt issuance costs previously recorded in other assets to long-term debt. After retrospectively applying this new ASU, we also reclassified $29 million of debt issuance costs as of December 31, 2014 from other assets to long-term debt in our condensed consolidated balance sheet. We continue to report fees paid to access our conduit facilities in other assets. The adoption of this ASU did not have a material effect on our condensed consolidated financial statements.

In August of 2015, the FASB issued ASU 2015-15, Interest - Imputation of Interest, to clarify that debt issuance costs associated with line-of-credit arrangements are to be deferred and amortized over the term of the arrangement. The amendment also acknowledged absence of authoritative guidance within previously issued ASU 2015-03 for debt issuance costs related to line-of-credit arrangements. The ASU is effective immediately. The adoption of this ASU did not have a material effect on our condensed consolidated financial statements, as we were already in compliance with these amendments.

Push Down Accounting

In May of 2015, the FASB issued ASU 2015-08, Business Combinations-Pushdown Accounting, to remove Securities and Exchange Commission (the “SEC”) staff guidance on pushdown accounting from the Accounting Standards Codification. The SEC staff had previously rescinded its guidance with the issuance of Staff Accounting Bulletin No. 115 when the FASB issued its own pushdown accounting guidance in November 2014. The ASU is effective immediately. The adoption of this ASU did not have a material effect on our condensed consolidated financial statements.

Plan Accounting

In July of 2015, the FASB issued ASU 2015-12, Plan Accounting, to simplify certain aspects of employee benefit plan (“EBP”) accounting while satisfying the needs of users of financial ~~condition, results~~statements, including plan participants. The new guidance simplifies the measurement of ~~operations, or cash flows.~~fully benefit-responsive investment contracts and disclosures about plan investments. It also allows an EBP with a fiscal year end that doesn’t coincide with the end of a calendar month to choose a simpler way of measuring its investments and investment-related accounts. The ASU is effective for fiscal years beginning after December 15, 2015. Early adoption is permitted. We elected to early adopt this ASU as of September 30, 2015. The adoption of this ASU did not have a material effect on our condensed consolidated financial statements, as we were already in compliance with these amendments.

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ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED

~~Troubled Debt Restructurings~~

~~In January 2014, the FASB issued ASU 2014-04,~~ ~~Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure~~, which clarifies when an in substance repossession or foreclosure occurs — that is, when a creditor should be considered to have received physical possession of residential real estate property collateralizing a consumer mortgage loan such that the loan receivable should be derecognized and the real estate property recognized. The ASU requires a creditor to reclassify a collateralized consumer mortgage loan to real estate property upon obtaining legal title to the real estate collateral, or the borrower voluntarily conveying all interest in the real estate property to the lender to satisfy the loan through a deed in lieu of foreclosure or similar legal agreement. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2014. We are currently evaluating whether the adoption of this ASU will have a material effect on our consolidated statements of financial condition, results of operations, or cash flows.

Revenue ~~from Contracts~~Recognition

In May of 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides a consistent revenue accounting model across industries. ~~The~~In August of 2015, the FASB issued ASU is2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, to defer the effective date of the new revenue recognition standard by one year, which would result in the ASU becoming effective for annual periods, and interim periods within those annual periods, beginning after December 15, ~~2016.~~2017. Many of our revenue sources are not within the scope of this new standard, and we are ~~currently~~ evaluating whether the adoption of this ASU for those revenue sources that are in scope will have a material effect on our consolidated ~~statements of~~ financial ~~condition, results of operations, or cash flows.~~statements.

~~Share-based Payments~~Consolidation

In ~~June 2014,~~February of 2015, the FASB issued ASU ~~2014-12,~~2015-02, ~~Accounting for Share-Based Payments When~~Consolidation - Amendments to the ~~Terms of an Award Provide That a Performance Target Could be Achieved after the Requisite Service Period~~Consolidation Analysis, which ~~clarifies~~amends the current consolidation guidance and ends the deferral granted to reporting entities with variable interests in investment companies from applying certain prior amendments to the VIE guidance. This ASU is applicable to entities across all industries, particularly those that ~~performance targets~~use limited partnerships as well as entities in any industry that outsource decision making or have historically applied related party tiebreaker in their consolidation analysis and disclosures. The standard is effective for public business entities for annual periods beginning after December 15, 2015. Early adoption is allowed, including in any interim period. We are currently evaluating whether the adoption of this ASU will have a material effect on our consolidated financial statements.

Cloud Computing Software

In April of 2015, the FASB issued ASU 2015-05, Intangibles-Goodwill and Other Internal-Use Software, to provide guidance on a customer’s accounting for fees paid in a cloud computing arrangement (“CCA”). Under the new standard, customers will apply the same criteria as vendors to determine whether a CCA contains a software license or is solely a service contract. The ASU is effective for annual periods, and interim periods within ~~share-based payment awards~~those annual periods, beginning after December 15, 2015. Early adoption is permitted. We evaluated the potential impact of adopting this ASU and concluded that ~~can~~it will not have a material effect on our consolidated financial statements.

Fair Value Measurement Disclosures

In May of 2015, the FASB issued ASU 2015-07, Fair Value Measurement, to remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The amendments also remove the requirement to make certain disclosures for all investments that are eligible to be ~~met~~measured at fair value using the net asset value per share practical expedient. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. Early adoption is permitted. We have a few investments for which fair value is measured using the ~~requisite service period should be considered performance conditions that affect vesting.~~net asset value per share practical expedient. However, application of this ASU will not have a material effect on our consolidated financial statements.

Short-Duration Insurance Contracts Disclosures

In May of 2015, the FASB issued ASU 2015-09, Disclosures about Short-Duration Contracts, to address enhanced disclosure requirements for insurers relating to short-duration insurance contract claims and unpaid claims liability rollforward for long and short-duration contracts. The disclosures are intended to provide users of financial statements with more transparent information about an insurance entity’s initial claim estimates and subsequent adjustments to those estimates, the methodologies and judgments used to estimate claims, and the timing, frequency, and severity of claims. The ASU is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2015. We ~~have evaluated this~~are currently evaluating the potential impact of adopting the ASU ~~and concluded that it is not applicable to the Company at this time.~~on our consolidated financial statements.

Technical Corrections and Improvements

In June of 2015, the FASB issued ASU 2015-10, Technical Corrections and Improvements, to correct differences between original guidance and the Codification, clarify the guidance, correct references and make minor improvements affecting a variety of topics. While most of the amendments are not expected to have a significant effect on practice, some of them could change practice for some entities. The amendments to transition guidance are effective for fiscal years beginning after

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~~Going Concern~~December 15, 2015; all other changes are effective upon issuance of this ASU. We are currently evaluating the potential impact of this ASU on our consolidated financial statements.

Business Combination Adjustments

In ~~August 2014,~~September of 2015, the FASB issued ASU ~~2014-15,~~2015-16, ~~Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern~~Business Combinations, ~~which~~to eliminate the requirement to restate prior period financial statements for measurement period adjustments. This update requires ~~management~~the cumulative impact of a measurement period adjustment, including the impact on prior periods, to ~~assess a company’s ability to continue as a going concern for each annual and interim~~be recognized in the reporting period ~~and disclose~~ in ~~its financial statements whether there~~which the adjustment is ~~substantial doubt about the company’s ability to continue as a going concern within one year after the date that the financial statements are issued.~~identified. The ~~new standard applies to all companies and~~ASU is effective for ~~the annual period ending~~fiscal years beginning after December 15, ~~2016, and all annual and interim periods thereafter. The new standard can also be early adopted. Upon~~2015. Early adoption ~~we will perform~~is permitted. We are currently evaluating the ~~going concern assessment in accordance with the requirements~~potential impact of ~~the new ASU.~~this ASU on our consolidated financial statements.

~~ACCOUNTING POLICY ELECTIONS~~

We ~~made certain policy elections with regard to the issuance of long-term debt related to~~do not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a ~~consumer loan securitization completed~~material impact on ~~March 26, 2014 (the “2014-A securitization”) and have updated~~ our ~~long-term debt policy previously disclosed in our 2013 Annual Report on Form 10-K to reflect these elections going forward. The updated long-term debt policy is presented below:~~

~~Long-term Debt~~

~~We generally report our long-term debt issuances at the face value of the debt instrument, which we adjust for any unaccreted discount~~consolidated financial statements or unamortized premium associated with the debt. We make policy elections on a security by security basis with regard to the methodology used to accrete discounts and premiums. Other than securitized products, we generally accrete discounts and premiums over the contractual life of the security using contractual payment terms. With respect to securitized products, we have historically elected to use estimated prepayment patterns adjusted for changes in estimate over the estimated life of the debt. However, in certain circumstances, including our policy election for the 2014-A securitization, we elect to amortize deferred items over the contractual life of the security. Under either treatment, such accretion is recorded to interest expense. Additionally, we generally accrete other deferred amounts (e.g. issuance costs) following the same method elected on the associated unaccreted discount or premium.disclosures.

2.4. Finance Receivables

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

Personal loans — are secured by consumer goods, automobiles, or other personal property or are unsecured, ~~generally have maximum~~typically non-revolving with a fixed-rate and a fixed, original ~~terms~~term of ~~four years, and are usually fixed-rate, fixed-term loans.~~two to five years. At September 30, ~~2014, $1.7~~2015, $2.2 billion of personal loans, or ~~48%~~56%, were secured by collateral consisting of titled personal property (such as automobiles)~~, $1.3~~ and $1.8 billion, or ~~37%~~44%, were secured by consumer household goods or other items of personal property ~~and the remainder was~~or were unsecured.

SpringCastle Portfolio — are loans ~~jointly~~ acquired ~~from HSBC Finance Corporation and certain~~by an indirect subsidiary of ~~its affiliates (collectively, “HSBC”) on April 1, 2013~~SHI through a joint venture in which SFC currently owns a 47% equity interest ~~as a result of the SAC Capital Contribution on July 31, 2014, as previously discussed in Note 1.~~(the “SpringCastle Portfolio”). These loans include unsecured loans and loans secured by subordinate residential real estate mortgages (which we service as unsecured loans due to the fact that the liens are subordinated to superior ranking security interests). The SpringCastle Portfolio includes 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.

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. At September 30, ~~2014, $234.1~~2015, $209 million of real estate loans, or ~~36%~~38%, were secured by first mortgages and ~~$421.5~~$338 million, or ~~64%~~62%, were secured by second mortgages. 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 are in a liquidating status.

Retail sales finance — ~~includes~~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

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based on the amount financed calculated after the most recent purchase or outstanding balances. ~~In January 2013, we ceased purchasing~~Our retail sales ~~contracts and revolving retail accounts.~~finance portfolio is also in a liquidating status.

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Components of net finance receivables by type were as follows:


(dollars in thousands)	Personal Loans			SpringCastle Portfolio		Real Estate Loans			Retail Sales Finance			Total
(dollars in millions)															Personal Loans			SpringCastle Portfolio		Real Estate Loans			Retail Sales Finance			Total

September 30, 2014

Gross receivables*	$	4,181,830		$	2,067,719	$	653,101		$	62,342		$	6,964,992
September 30, 2015
Gross receivables *															$	4,694		$	1,635	$	543		$	30		$	6,902
Unearned finance charges and points and fees	(696,225		)	—		(3,260		)	(5,922		)	(705,407		)	(802		)	—		—			(3		)	(805		)
Accrued finance charges	52,294			15,426		5,625			480			73,825			56			32		4			—			92
Deferred origination costs	41,689			—		79			—			41,768			42			—		—			—			42
Total	$	3,579,588		$	2,083,145	$	655,545		$	56,900		$	6,375,178		$	3,990		$	1,667	$	547		$	27		$	6,231

December 31, 2013

Gross receivables*	$	3,632,462		$	—	$	7,843,787		$	108,457		$	11,584,706
December 31, 2014
Gross receivables *															$	4,462		$	1,941	$	621		$	52		$	7,076
Unearned finance charges and points and fees	(559,902		)	—		(1,208		)	(10,444		)	(571,554		)	(764		)	—		(1		)	(5		)	(770		)
Accrued finance charges	48,008			—		42,163			898			91,069			58			38		5			1			102
Deferred origination costs	39,364			—		274			—			39,638			44			—		—			—			44
Total	$	3,159,932		$	—	$	7,885,016		$	98,911		$	11,143,859		$	3,800		$	1,979	$	625		$	48		$	6,452


*	Gross receivables are defined as follows:

finance receivables purchased as a performing receivable — gross finance receivables equal the ~~UPB~~unpaid principal balance (“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 fair value;

finance receivables originated subsequent to the Fortress Acquisition (as defined in the Purchased Credit Impaired Finance Receivables section located in this Note) — gross finance receivables equal the UPB for interest bearing accounts and the gross remaining contractual payments for precompute accounts; and

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.

Included in the table above are personal loans with a carrying value of $1.8 billion at September 30, 2014 and $1.6 billion at December 31, 2013 and SpringCastle Portfolio loans with a carrying value of $2.1 billion at September 30, 2014finance receivables associated with securitizations that remain on our balance sheet. ~~Also included in the table above are real estate loans with a carrying value of $5.6 billion at~~At September 30, 2015 and December 31, ~~2013 associated with mortgage securitizations that have been sold or transferred to~~2014, the carrying values of these finance receivables ~~held for sale during the nine months ended September 30, 2014. See Note 1 for further information on these sales. The carrying value of consolidated long-term debt associated with securitizations~~ totaled ~~$3.1~~$2.1 billion ~~at September 30, 2014~~ and ~~$5.2~~$1.9 billion, at December 31, 2013. See Note 9 for further discussion regarding our securitization transactions. Also included in the table above are finance receivables with a carrying value of $1.0 billion at December 31, 2013, which were pledged as collateralrespectively, for our ~~secured term loan that we fully repaid in March 2014. See Note 8~~personal loans and $1.7 billion and $2.0 billion, respectively, for ~~further discussion of the repayment of~~ our ~~secured term loan.~~SpringCastle Portfolio loans.

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Unused lines of credit extended to customers by the Company were as follows:


(dollars in thousands)	September 30, 2014		December 31, 2013
(dollars in millions)					September 30, 2015		December 31, 2014

Personal loans	$	1,462	$	4,996	$	2	$	1
SpringCastle Portfolio	357,914		—		366		354
Real estate loans	30,437		32,338		31		31
Total	$	389,813	$	37,334	$	399	$	386

Unused lines of credit on our personal loans can be suspended if one of the following occurs: (1) the value of the collateral declines significantly; (2) we believe the borrower will be unable to fulfill the repayment obligations; or (3) any other default by the borrower of any material obligation under the ~~agreement.~~agreement occurs. Unused lines of credit on our real estate loans and the SpringCastle Portfolio secured by subordinate residential real estate mortgages can be suspended if one of the following occurs: (1) the value of the real estate declines significantly below the property’s initial appraised value; (2) we believe the borrower will be unable to fulfill the repayment obligations because of a material change in the borrower’s financial circumstances; or (3) any other default by the borrower of any material obligation under the agreement occurs. Unused lines of credit on home equity lines of credit, including the SpringCastle Portfolio secured by subordinate residential real estate mortgages, can be terminated for delinquency. Unused lines of credit on the unsecured loans of the SpringCastle Portfolio can be terminated at our discretion.

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CREDIT QUALITY INDICATORS

We consider the delinquency status and nonperforming status of the finance receivable as our credit quality indicators.

We accrue finance charges on revolving retail finance receivables up to the date of charge-off at 180 days past due. ~~We had $0.1 million of~~Our revolving retail finance receivables that were more than 90 days past due and still accruing finance charges at September 30, ~~2014, compared to $0.4 million~~2015 and at December 31, ~~2013.~~2014 were immaterial. Our personal loans, SpringCastle Portfolio, and real estate loans do not have finance receivables that were more than 90 days past due and still accruing finance charges.

Delinquent Finance Receivables

We consider the delinquency status of the finance receivable as our primary credit quality indicator. We monitor delinquency trends to manage our exposure to credit risk. We consider finance receivables 60 days or more past due as delinquent and consider the likelihood of collection to decrease at such time.

~~Table of Contents~~

The following is a summary of net finance receivables by type and by days delinquent:


(dollars in thousands)	Personal Loans		SpringCastle Portfolio		Real Estate Loans		Retail Sales Finance		Total
(dollars in millions)											Personal Loans		SpringCastle Portfolio		Real Estate Loans		Retail Sales Finance		Total

September 30, 2014

September 30, 2015
Net finance receivables:
60-89 days past due	$	31,932	$	33,379	$	13,151	$	770	$	79,232	$	47	$	24	$	16	$	1	$	88
90-119 days past due	25,427		20,955		7,842		429		54,653		36		15		4		—		55
120-149 days past due	20,938		15,826		5,629		558		42,951		29		11		3		—		43
150-179 days past due	16,592		13,102		5,557		303		35,554		23		9		2		—		34
180 days or more past due	1,088		4,946		12,098		46		18,178		2		1		12		—		15
Total delinquent finance receivables	95,977		88,208		44,277		2,106		230,568		137		60		37		1		235
Current	3,430,849		1,932,945		588,886		53,522		6,006,202		3,784		1,562		497		25		5,868
30-59 days past due	52,762		61,992		22,382		1,272		138,408		69		45		13		1		128
Total	$	3,579,588	$	2,083,145	$	655,545	$	56,900	$	6,375,178	$	3,990	$	1,667	$	547	$	27	$	6,231

December 31, 2013

December 31, 2014
Net finance receivables:
60-89 days past due	$	28,297	$	—	$	96,778	$	1,290	$	126,365	$	36	$	31	$	12	$	1	$	80
90-119 days past due	22,648		—		67,966		1,017		91,631		30		19		9		—		58
120-149 days past due	18,662		—		54,882		757		74,301		24		16		5		1		46
150-179 days past due	14,618		—		45,040		740		60,398		21		14		4		—		39
180 days or more past due	934		—		353,003		173		354,110		2		2		12		—		16
Total delinquent finance receivables	85,159		—		617,669		3,977		706,805		113		82		42		2		239
Current	3,027,460		—		7,092,107		92,093		10,211,660		3,632		1,839		565		45		6,081
30-59 days past due	47,313		—		175,240		2,841		225,394		55		58		18		1		132
Total	$	3,159,932	$	—	$	7,885,016	$	98,911	$	11,143,859	$	3,800	$	1,979	$	625	$	48	$	6,452

Nonperforming Finance Receivables

We also monitor finance receivable performance trends to evaluate the potential risk of future credit losses. At 90 days or more past due, we consider our finance receivables to be nonperforming. Once the finance receivables are considered as nonperforming, we consider them to be at increased risk for credit loss.

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Our performing and nonperforming net finance receivables by type were as follows:


(dollars in thousands)	Personal Loans		SpringCastle Portfolio		Real Estate Loans		Retail Sales Finance		Total
(dollars in millions)											Personal Loans		SpringCastle Portfolio		Real Estate Loans		Retail Sales Finance		Total

September 30, 2014

September 30, 2015
Performing	$	3,515,543	$	2,028,316	$	624,419	$	55,564	$	6,223,842	$	3,900	$	1,631	$	526	$	27	$	6,084
Nonperforming	64,045		54,829		31,126		1,336		151,336		90		36		21		—		147
Total	$	3,579,588	$	2,083,145	$	655,545	$	56,900	$	6,375,178	$	3,990	$	1,667	$	547	$	27	$	6,231

December 31, 2013

December 31, 2014
Performing	$	3,103,070	$	—	$	7,364,125	$	96,224	$	10,563,419	$	3,723	$	1,928	$	595	$	47	$	6,293
Nonperforming	56,862		—		520,891		2,687		580,440		77		51		30		1		159
Total	$	3,159,932	$	—	$	7,885,016	$	98,911	$	11,143,859	$	3,800	$	1,979	$	625	$	48	$	6,452

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PURCHASED CREDIT IMPAIRED FINANCE RECEIVABLES

~~As a result of the Fortress Acquisition, we applied push-down accounting and adjusted the carrying value of our finance receivables (the “FA Loans”) to their fair value on November 30, 2010.~~

In connection with ~~the SAC Capital Contribution~~SFI’s capital contribution of its wholly owned subsidiary, Springleaf Acquisition Corporation (“SAC”), to SFC on July 31, 2014 (the “SAC Capital Contribution”), SFC owns a 47% equity interest in the SpringCastle Portfolio (the “SCP Loans”), certain of which were determined to be credit impaired when SAC acquired the SCP Loans on April 1, 2013.

As a result of the significance of the 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 business combination standards (“push-down accounting”) and adjusted the carrying value of our finance receivables (the “FA Loans”) to their fair value.

We ~~include~~report the carrying amount of our purchased credit impaired finance receivables in net finance receivables, less allowance for finance receivable ~~losses. Prepayments reduce the outstanding balance, contractual cash flows, and cash flows expected to be collected.~~

~~We report~~losses or in finance receivables held for sale ~~of $493.2 million at~~as discussed below.

At September 30, 2015 and December 31, 2014, ~~which consist of our non-core real estate loans.~~finance receivables held for sale totaled $797 million and $205 million, respectively. See Note 46 for further information on our finance receivables held for ~~sale. At September 30, 2014, finance~~sale, which consist of certain of our personal loans and non-core real estate loans. Finance receivables held for sale include purchased credit impaired ~~real estate loans,~~finance receivables as well as ~~troubled debt restructured (“TDR”) real estate loans.~~TDR finance receivables. Therefore, we are presenting the financial information for ~~the~~our purchased credit impaired finance receivables and ~~the~~ TDR finance receivables bycombined for finance receivables held for investment and finance receivables held for sale in the tables below.

Information regarding ~~these~~our purchased credit impaired finance receivables held for investment and held for sale were as follows:

(dollars in thousands) SCP Loans FA Loans Total

September 30, 2014

Carrying amount, net of allowance (a) $ 370,967
$ 191,714
$ 562,681
Outstanding balance (b) $ 682,389
$ 300,128
$ 982,517
Allowance for purchased credit impaired finance receivable losses $ —
$ 4,513
$ 4,513

December 31, 2013

Carrying amount, net of allowance $ —
$ 1,250,621
$ 1,250,621
Outstanding balance $ —
$ 1,782,271
$ 1,782,271
Allowance for purchased credit impaired finance receivable losses $ —
$ 57,261
$ 57,261



(dollars in millions)	SCP Loans		FA Loans *		Total

September 30, 2015
Carrying amount, net of allowance	$	251	$	86	$	337
Outstanding balance	515		139		654
Allowance for purchased credit impaired finance receivable losses	—		5		5

December 31, 2014
Carrying amount, net of allowance	$	340	$	93	$	433
Outstanding balance	628		151		779
Allowance for purchased credit impaired finance receivable losses	—		5		5

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~~(a)~~*	~~The carrying amount of purchased~~Purchased credit impaired ~~finance receivables at September 30, 2014 includes $165.5 million of purchased credit impaired finance receivables~~FA Loans held for ~~sale.~~sale included in the table above were as follows:


~~(b)~~	~~The outstanding balance of purchased credit impaired finance receivables at September 30, 2014 includes $246.1 million of purchased credit impaired finance receivables held for sale.~~



(dollars in millions)	FA Loans

September 30, 2015
Carrying amount, net of allowance	$	62
Outstanding balance	91

December 31, 2014
Carrying amount, net of allowance	$	68
Outstanding balance	99

The allowance for purchased credit impaired finance receivable losses at September 30, ~~2014~~2015 and December 31, ~~2013,~~2014, reflected the net carrying value of ~~these~~the purchased credit impaired ~~finance receivables~~FA Loans being higher than the present value of the expected cash flows.

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Changes in accretable yield for purchased credit impaired finance receivables held for investment and held for sale were as follows:

(dollars in thousands) SCP Loans FA Loans Total

At or for the Three Months Ended
September 30, 2014

Balance at beginning of period $ —
$ 622,956
$ 622,956
Accretable yield for SpringCastle Portfolio contributed to SFC (a) 259,944
—
259,944
Accretion (b) (10,327 ) (20,617 ) (30,944 )
Transfers due to finance receivables sold —
(559,250 ) (559,250 )
Disposals of finance receivables (c) (3,196 ) (3,638 ) (6,834 )
Balance at end of period $ 246,421
$ 39,451
$ 285,872

At or for the Three Months Ended
September 30, 2013

Balance at beginning of period $ —
$ 844,018
$ 844,018
Accretion —
(32,041 ) (32,041 )
Reclassifications from nonaccretable difference (d) —
2,740
2,740
Disposals of finance receivables (c) —
(8,337 ) (8,337 )
Balance at end of period $ —
$ 806,380
$ 806,380

At or for the Nine Months Ended
September 30, 2014

Balance at beginning of period $ —
$ 766,927
$ 766,927
Accretable yield for SpringCastle Portfolio contributed to SFC (a) 259,944
—
259,944
Accretion (b) (10,327 ) (75,831 ) (86,158 )
Transfers due to finance receivables sold —
(636,888 ) (636,888 )
Disposals of finance receivables (c) (3,196 ) (14,757 ) (17,953 )
Balance at end of period $ 246,421
$ 39,451
$ 285,872

At or for the Nine Months Ended
September 30, 2013

Balance at beginning of period $ —
$ 624,879
$ 624,879
Accretion —
(97,036 ) (97,036 )
Reclassifications from nonaccretable difference (d) —
303,328
303,328
Disposals of finance receivables (c) —
(24,791 ) (24,791 )
Balance at end of period $ —
$ 806,380
$ 806,380



(dollars in millions)	SCP Loans			FA Loans			Total

Three Months Ended September 30, 2015
Balance at beginning of period	$	474		$	13		$	487
Accretion (a)	(20		)	(3		)	(23		)
Disposals of finance receivables (b)	(7		)	—			(7		)
Balance at end of period	$	447		$	10		$	457

Three Months Ended September 30, 2014
Balance at beginning of period	$	—		$	623		$	623
Accretable yield for SpringCastle Portfolio contributed to SFC	260			—			260
Accretion (a)	(11		)	(20		)	(31		)
Transfers due to finance receivables sold	—			(559		)	(559		)
Disposals of finance receivables (b)	(3		)	(4		)	(7		)
Balance at end of period	$	246		$	40		$	286

Nine Months Ended September 30, 2015
Balance at beginning of period	$	541		$	19		$	560
Accretion (a)	(66		)	(8		)	(74		)
Disposals of finance receivables (b)	(28		)	(1		)	(29		)
Balance at end of period	$	447		$	10		$	457

Nine Months Ended September 30, 2014
Balance at beginning of period	$	—		$	767		$	767
Accretable yield for SpringCastle Portfolio contributed to SFC	260			—			260
Accretion (a)	(11		)	(75		)	(86		)
Transfers due to finance receivables sold	—			(637		)	(637		)
Disposals of finance receivables (b)	(3		)	(15		)	(18		)
Balance at end of period	$	246		$	40		$	286

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(a)	~~As a result of the SAC Capital Contribution~~Accretion on ~~July 31, 2014, SFC owns a 47% equity interest~~our purchased credit impaired FA Loans held for sale included in the ~~SpringCastle Portfolio.~~table above were as follows:



(dollars in millions)	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)	2015		2014		2015		2014

Accretion	$	2	$	11	$	5	$	11


(b)	Accretion on our purchased credit impaired finance receivables for the three and nine months ended September 30, 2014 includes $11.1 million and $11.3 million, respectively, of accretion on purchased credit impaired finance receivables held for sale, which is reported as interest income on finance receivables held for sale originated as held for investment.


~~(c)~~	Disposals of finance receivables represent finance charges forfeited due to purchased credit impaired finance receivables ~~charged-off~~charged off during the period.


~~(d)~~	~~Reclassifications from (to) nonaccretable difference represent the increases (decreases) in accretion resulting from higher (lower) estimated undiscounted cash flows.~~

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TROUBLED DEBT RESTRUCTURED FINANCE RECEIVABLES

Information regarding TDR finance receivables held for investment and held for sale were as follows:

(dollars in thousands) Real Estate Loans

September 30, 2014

TDR gross finance receivables (a) (b) $ 334,141
TDR net finance receivables (c) $ 335,512
Allowance for TDR finance receivable losses $ 31,205

December 31, 2013

TDR gross finance receivables (a) $ 1,366,346
TDR net finance receivables $ 1,371,321
Allowance for TDR finance receivable losses $ 177,011



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

September 30, 2015
TDR gross finance receivables (b)	$	30	$	14	$	199	$	243
TDR net finance receivables	29		12		200		241
Allowance for TDR finance receivable losses	7		4		30		41

December 31, 2014
TDR gross finance receivables (b)	$	22	$	11	$	196	$	229
TDR net finance receivables	22		10		196		228
Allowance for TDR finance receivable losses	1		3		32		36


(a)	~~As defined earlier~~TDR finance receivables held for sale included in ~~this Note.~~the table above were as follows:



(dollars in millions)	Personal Loans		Real Estate Loans		Total

September 30, 2015
TDR gross finance receivables	$	2	$	92	$	94
TDR net finance receivables	2		92		94

December 31, 2014
TDR gross finance receivables	$	—	$	91	$	91
TDR net finance receivables	—		91		91


(b)	~~TDR gross finance receivables at September 30, 2014 include $230.7 million of TDR finance receivables held for sale.~~


~~(c)~~	~~TDR net finance receivables at September 30, 2014 includes $231.6 million of TDR finance receivables held for sale.~~As defined earlier in this Note.

We have no commitments to lend additional funds on our TDR finance receivables.

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TDR average net receivables held for investment and held for sale and finance charges recognized on TDR finance receivables held for investment and held for sale were as follows:

(dollars in thousands) Three Months
Ended
September 30,
2014 Three Months
Ended
September 30,
2013 Nine Months
Ended
September 30,
2014 Nine Months
Ended
September 30,
2013
Revised Revised
Real Estate Loans

TDR average net receivables (a) $ 797,418
$ 1,200,178
$ 1,187,138
$ 1,052,653
TDR finance charges recognized (b) $ 10,005
$ 16,841
$ 44,505
$ 45,791



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

Three Months Ended September 30, 2015
TDR average net receivables	$	30	$	12	$	199	$	241
TDR finance charges recognized	—		1		2		3

Three Months Ended September 30, 2014
TDR average net receivables (b)	$	17	$	8	$	797	$	822
TDR finance charges recognized	—		—		10		10

Nine Months Ended September 30, 2015
TDR average net receivables	$	28	$	12	$	197	$	237
TDR finance charges recognized	2		1		8		11

Nine Months Ended September 30, 2014
TDR average net receivables (b)	$	15	$	8	$	1,187	$	1,210
TDR finance charges recognized	1		—		45		46


(a)	TDR finance receivables held for sale included in the table above were as follows:



(dollars in millions)	Real Estate Loans

Three Months Ended September 30, 2015
TDR average net receivables	$	92
TDR finance charges recognized	2

Three Months Ended September 30, 2014
TDR average net receivables	$	413
TDR finance charges recognized	3

Nine Months Ended September 30, 2015
TDR average net receivables	$	91
TDR finance charges recognized	4

Nine Months Ended September 30, 2014
TDR average net receivables	$	413
TDR finance charges recognized	3


(b)	TDR SpringCastle Portfolio loans average net receivables for the three and nine months ended September 30, 2014 ~~include $413.0 million of TDR average net receivables held for sale, which~~ reflect a two-month average since the ~~real estate loans were transferred to finance receivables held for sale~~SAC Capital Contribution occurred on ~~August 1,~~July 31, 2014.


~~(b)~~	~~TDR finance charges recognized for the three and nine months ended September 30, 2014 include $3.1 million of interest income on TDR finance receivables held for sale.~~

The impact of the transfers of finance receivables held for investment to finance receivables held for sale and the subsequent sales of finance receivables held for sale during the first half of 2014 was immaterial since the loans were transferred and sold within the same months.

Table of Contents

Information regarding the new volume of the TDR finance receivables held for investment and held for sale were as follows:

(dollars in thousands) Three Months
Ended
September 30,
2014
Three Months
Ended
September 30,
2013
Nine Months
Ended
September 30,
2014
Nine Months
Ended
September 30,
2013
Revised Revised
Real Estate Loans

Number of TDR accounts (a) 403
1,461
2,290
5,762
Pre-modification TDR net finance receivables (b) $ 28,401
$ 131,969
$ 209,360
$ 450,276
Post-modification TDR net finance receivables (b) $ 29,889
$ 139,830
$ 199,353
$ 472,724



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

Three Months Ended September 30, 2015
Pre-modification TDR net finance receivables	$	8	$	1	$	6	$	15
Post-modification TDR net finance receivables:
Rate reduction	$	3	$	1	$	3	$	7
Other (b)	3		—		2		5
Total post-modification TDR net finance receivables	$	6	$	1	$	5	$	12
Number of TDR accounts	1,545		142		95		1,782

Three Months Ended September 30, 2014
Pre-modification TDR net finance receivables	$	5	$	2	$	28	$	35
Post-modification TDR net finance receivables:
Rate reduction	$	3	$	2	$	26	$	31
Other (b)	2		—		4		6
Total post-modification TDR net finance receivables	$	5	$	2	$	30	$	37
Number of TDR accounts	1,125		246		403		1,774

Nine Months Ended September 30, 2015
Pre-modification TDR net finance receivables	$	24	$	5	$	16	$	45
Post-modification TDR net finance receivables:
Rate reduction	$	11	$	5	$	12	$	28
Other (b)	9		—		4		13
Total post-modification TDR net finance receivables	$	20	$	5	$	16	$	41
Number of TDR accounts	4,860		550		272		5,682

Nine Months Ended September 30, 2014
Pre-modification TDR net finance receivables	$	11	$	2	$	209	$	222
Post-modification TDR net finance receivables:
Rate reduction	$	7	$	2	$	154	$	163
Other (b)	4		—		45		49
Total post-modification TDR net finance receivables	$	11	$	2	$	199	$	212
Number of TDR accounts	2,678		246		2,290		5,214

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(a)	~~Number of new~~ TDR ~~accounts~~finance receivables held for sale included in the table above were as follows:



(dollars in millions)	Personal Loans		Real Estate Loans		Total

Three Months Ended September 30, 2015
Pre-modification TDR net finance receivables *	$	—	$	1	$	1
Post-modification TDR net finance receivables *	$	—	$	2	$	2
Number of TDR accounts	50		33		83

Three Months Ended September 30, 2014
Pre-modification TDR net finance receivables	$	—	$	6	$	6
Post-modification TDR net finance receivables	$	—	$	7	$	7
Number of TDR accounts	—		89		89

Nine Months Ended September 30, 2015
Pre-modification TDR net finance receivables *	$	—	$	4	$	4
Post-modification TDR net finance receivables *	$	—	$	5	$	5
Number of TDR accounts	50		77		127

Nine Months Ended September 30, 2014
Pre-modification TDR net finance receivables	$	—	$	6	$	6
Post-modification TDR net finance receivables	$	—	$	7	$	7
Number of TDR accounts	—		89		89


*	Pre-modification and post-modification TDR personal loans held for sale for the three and nine months ended September 30, ~~2014 includes 89 new TDR accounts that~~2015 were ~~held for sale.~~less than $1 million and, therefore, are not quantified in the table above.


(b)	~~TDR net finance receivables for the three~~“Other” modifications include extension of term and ~~nine months ended September 30, 2014 include $6.0 million~~forgiveness of ~~pre-modification and $6.6 million of post-modification TDR net finance receivables held for sale.~~principal or interest.

Net finance receivables held for investment and held for sale that were modified as TDR finance receivables within the previous 12 months and for which there was a default during the period to cause the TDR finance receivables to be considered nonperforming (90 days or more past due) were as follows:



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

Three Months Ended September 30, 2015
TDR net finance receivables (b) (c)	$	1	$	—	$	1	$	2
Number of TDR accounts	342		26		9		377

Three Months Ended September 30, 2014
TDR net finance receivables (b) (c)	$	—	$	—	$	2	$	2
Number of TDR accounts	42		11		54		107

Nine Months Ended September 30, 2015
TDR net finance receivables (b)	$	3	$	1	$	2	$	6
Number of TDR accounts	855		122		35		1,012

Nine Months Ended September 30, 2014
TDR net finance receivables (b) (c)	$	—	$	—	$	31	$	31
Number of TDR accounts	74		11		488		573

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(a)	~~Number and amount of~~ TDR ~~net~~ finance receivables held for sale included in the table above were as follows:



(dollars in millions)	Real Estate Loans

Three Months Ended September 30, 2015
TDR net finance receivables *	$	—
Number of TDR accounts	1

Three Months Ended September 30, 2014
TDR net finance receivables	$	2
Number of TDR accounts	30

Nine Months Ended September 30, 2015
TDR net finance receivables	$	1
Number of TDR accounts	14

Nine Months Ended September 30, 2014
TDR net finance receivables	$	2
Number of TDR accounts	30


*	TDR real estate loans held for sale for the three ~~and nine~~ months ended September 30, ~~2014~~2015 that defaulted during the previous 12 month period ~~include 30 TDR accounts that~~ were ~~held for sale totaling $1.8 million.~~less than $1 million and, therefore, are not quantified in the combined table above.


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


(c)	TDR personal loans and SpringCastle Portfolio loans for the three and nine months ended September 30, 2014 and TDR SpringCastle Portfolio loans for the three months ended September 30, 2015 that defaulted during the previous 12 month period were less than $1 million and, therefore, are not quantified in the combined table above.

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3.5. Allowance for Finance Receivable Losses

Changes in the allowance for finance receivable losses by finance receivable type were as follows:


(dollars in thousands)	Personal Loans			SpringCastle Portfolio			Real Estate Loans			Retail Sales Finance			Consolidated Total
(dollars in millions)																Personal Loans			SpringCastle Portfolio			Real Estate Loans			Retail Sales Finance			Consolidated Total

Three Months Ended September 30, 2015
Balance at beginning of period																$	139		$	3		$	35		$	1		$	178
Provision for finance receivable losses																60			20			2			—			82
Charge-offs																(57		)	(22		)	(4		)	—			(83		)
Recoveries																10			3			2			—			15
Reduction in the carrying value of personal loans transferred to finance receivables held for sale (a)																(1		)	—			—			—			(1		)
Balance at end of period																$	151		$	4		$	35		$	1		$	191

Three Months Ended September 30, 2014

Balance at beginning of period	$	106,249		$	—		$	258,897		$	1,350		$	366,496		$	106		$	—		$	259		$	1		$	366
Provision for finance receivable losses (a)	57,260			18,073			16,112			669			92,114
Provision for finance receivable losses																58			18			16			1			93
Charge-offs	(47,272		)	(20,300		)	(13,291		)	(1,199		)	(82,062		)	(48		)	(20		)	(13		)	(1		)	(82		)
Recoveries	7,056			1,836			963			374			10,229			7			2			—			—			9
Reduction in the carrying value of real estate loans transferred to finance receivables held for sale (b)	—			—			(225,047		)	—			(225,047		)	—			—			(225		)	—			(225		)
Allowance for SpringCastle Portfolio contributed to SFC (c)	—			710			—			—			710
Allowance for SpringCastle Portfolio contributed to SFC																—			1			—			—			1
Balance at end of period	$	123,293		$	319		$	37,634		$	1,194		$	162,440		$	123		$	1		$	37		$	1		$	162

Three Months Ended September 30, 2013 - Revised

Nine Months Ended September 30, 2015
Balance at beginning of period	$	60,250		$	—		$	180,458		$	920		$	241,628		$	130		$	3		$	40		$	1		$	174
Provision for finance receivable losses (a)	39,685			—			59,862			1,843			101,390
Provision for finance receivable losses																170			70			6			1			247
Charge-offs	(32,527		)	—			(32,989		)	(2,032		)	(67,548		)	(176		)	(78		)	(15		)	(2		)	(271		)
Recoveries	2,135			—			1,324			294			3,753			28			9			4			1			42
Reduction in the carrying value of personal loans transferred to finance receivables held for sale (a)																(1		)	—			—			—			(1		)
Balance at end of period	$	69,543		$	—		$	208,655		$	1,025		$	279,223		$	151		$	4		$	35		$	1		$	191

Nine Months Ended September 30, 2014

Balance at beginning of period	$	94,323		$	—		$	236,032		$	1,840		$	332,195		$	94		$	—		$	236		$	2		$	332
Provision for finance receivable losses (a)	149,904			18,073			102,732			2,663			273,372
Provision for finance receivable losses																150			18			103			3			274
Charge-offs	(138,492		)	(20,300		)	(67,189		)	(4,310		)	(230,291		)	(139		)	(20		)	(67		)	(4		)	(230		)
Recoveries (d)	17,558			1,836			5,785			1,001			26,180
Recoveries (c)																18			2			5			—			25
Reduction in the carrying value of real estate loans transferred to finance receivables held for sale (b)	—			—			(239,726		)	—			(239,726		)	—			—			(240		)	—			(240		)
Allowance for SpringCastle Portfolio contributed to SFC (c)	—			710			—			—			710
Allowance for SpringCastle Portfolio contributed to SFC																—			1			—			—			1
Balance at end of period	$	123,293		$	319		$	37,634		$	1,194		$	162,440		$	123		$	1		$	37		$	1		$	162

Nine Months Ended September 30, 2013 - Revised

Balance at beginning of period	$	66,580		$	—		$	113,861		$	2,260		$	182,701
Provision for finance receivable losses (a)	64,282			—			199,957			(4,234		)	260,005
Charge-offs (e)	(106,161		)	—			(120,751		)	(7,338		)	(234,250		)
Recoveries (f)	44,842			—			15,588			10,337			70,767
Balance at end of period	$	69,543		$	—		$	208,655		$	1,025		$	279,223

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(a)

~~Components~~During the three and nine months ended September 30, 2015, we reduced the carrying value of ~~provision~~certain personal loans to $608 million as a result of the transfer of these finance receivables from finance receivables held for investment to finance ~~receivable losses on our real estate loans were as follows:~~receivables held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future.

(dollars in thousands) Three Months
Ended
September 30,
2014 Three Months
Ended
September 30,
2013 Nine Months
Ended
September 30,
2014 Nine Months
Ended
September 30,
2013
Revised Revised
Real estate loans

Provision for finance receivable losses

Non-credit impaired finance receivables $ 6,376
$ 17,806
$ 32,189
$ 62,781
Purchased credit impaired finance receivables 3,011
21,210
28,594
60,511
TDR finance receivables 6,725
20,846
41,949
76,665
Total $ 16,112
$ 59,862
$ 102,732
$ 199,957

(b)

During the three and nine months ended September 30, 2014, we reduced the carrying value of certain real estate loans to $5.3 billion and $6.6 billion, respectively, as a result of the ~~transfers~~transfer of these loans from finance receivables held for investment to finance receivables held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future.

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(c)	~~As a result of the SAC Capital Contribution on July 31, 2014, SFC owns a 47% equity interest in the SpringCastle Portfolio.~~


~~(d)~~	Recoveries during the nine months ended September 30, 2014 included ~~$2.2~~$2 million of real estate loan recoveries resulting from a sale of previously charged-off real estate loans in March ~~2014, net~~ of ~~a $0.2 million reserve for subsequent buybacks.~~

~~(e)~~

Effective March 31, 2013, we charge off to the allowance for finance receivable losses personal loans that are 180 days past due. Previously, we charged-off to the allowance for finance receivable losses personal loans on which payments received in the prior six months totaled less than 5% of the original loan amount. As a result of this change, we recorded $13.3 million of additional charge-offs in March 2013.

~~(f)~~

Recoveries during the nine months ended September 30, 2013 included $39.6 million ($23.8 million of personal loan recoveries, $9.9 million of real estate loan recoveries, and $5.9 million of retail sales finance recoveries) resulting from a sale of previously charged-off finance receivables in June 2013, net of a $1.6 million adjustment for the subsequent buyback of certain finance receivables.2014.

Included in the allowance for finance receivable losses are allowances associated with securitizations that totaled ~~$67.8~~$131 million at September 30, ~~2014~~2015 and ~~$153.1~~$72 million at December 31, ~~2013.~~2014. See Note 911 for further discussion regarding our securitization transactions.

The carrying value charged-off for purchased credit impaired loans was as follows:


(dollars in thousands)	Three Months Ended September 30, 2014		Three Months Ended September 30, 2013		Nine Months Ended September 30, 2014		Nine Months Ended September 30, 2013
(dollars in millions)									Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)									2015		2014		2015		2014

Charged-off against provision for finance receivable losses:
SCP Loans	$	4,869	$	—	$	4,869	$	—	$	4	$	5	$	17	$	5
FA Loans gross charge-offs*	$	2,019	$	9,873	$	14,951	$	31,501
FA Loans gross charge-offs *									—		2		1		15


*	Represents additional impairment recognized, subsequent to the establishment of the pools of purchased credit impaired loans, related to loans that have been foreclosed and transferred to real estate owned status.

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The allowance for finance receivable losses and net finance receivables by type and by impairment method were as follows:


(dollars in thousands)	Personal Loans		SpringCastle Portfolio		Real Estate Loans		Retail Sales Finance		Total
(dollars in millions)											Personal Loans		SpringCastle Portfolio		Real Estate Loans		Retail Sales Finance		Total

September 30, 2014

September 30, 2015
Allowance for finance receivable losses for finance receivables:
Collectively evaluated for impairment	$	123,293	$	319	$	1,916	$	1,194	$	126,722	$	144	$	—	$	—	$	1	$	145
Acquired with deteriorated credit quality (purchased credit impaired finance receivables)	—		—		4,513		—		4,513		—		—		5		—		5
Individually evaluated for impairment (TDR finance receivables)	—		—		31,205		—		31,205		7		4		30		—		41
Total	$	123,293	$	319	$	37,634	$	1,194	$	162,440	$	151	$	4	$	35	$	1	$	191

Finance receivables:
Collectively evaluated for impairment	$	3,579,588	$	1,712,178	$	520,969	$	56,900	$	5,869,635	$	3,963	$	1,404	$	410	$	27	$	5,804
Purchased credit impaired finance receivables	—		370,967		30,686		—		401,653		—		251		29		—		280
TDR finance receivables	—		—		103,890		—		103,890		27		12		108		—		147
Total	$	3,579,588	$	2,083,145	$	655,545	$	56,900	$	6,375,178	$	3,990	$	1,667	$	547	$	27	$	6,231

December 31, 2013

December 31, 2014
Allowance for finance receivable losses for finance receivables:
Collectively evaluated for impairment	$	94,323	$	—	$	1,760	$	1,840	$	97,923	$	129	$	—	$	3	$	1	$	133
Purchased credit impaired finance receivables	—		—		57,261		—		57,261		—		—		5		—		5
TDR finance receivables	—		—		177,011		—		177,011		1		3		32		—		36
Total	$	94,323	$	—	$	236,032	$	1,840	$	332,195	$	130	$	3	$	40	$	1	$	174

Finance receivables:
Collectively evaluated for impairment	$	3,159,932	$	—	$	5,205,813	$	98,911	$	8,464,656	$	3,778	$	1,629	$	490	$	48	$	5,945
Purchased credit impaired finance receivables	—		—		1,307,882		—		1,307,882		—		340		30		—		370
TDR finance receivables	—		—		1,371,321		—		1,371,321		22		10		105		—		137
Total	$	3,159,932	$	—	$	7,885,016	$	98,911	$	11,143,859	$	3,800	$	1,979	$	625	$	48	$	6,452

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6. Finance Receivables Held for Sale

We report finance receivables held for sale of ~~$493.2~~$797 million at September 30, 2015 and $205 million at December 31, 2014, which are carried at the lower of cost or fair value. At September 30, 2015 and December 31, 2014, the fair value of our finance receivables held for sale exceeded the cost. We used the aggregate basis to determine the lower of cost or fair value of the finance receivables held for ~~sale since the underlying real estate loans were presented to the buyers on a portfolio basis.~~sale. We also separately present the interest income on our finance receivables held for sale as interest income on finance receivables held for sale originated as held for investment on our ~~interim~~condensed consolidated statements of operations, which totaled ~~$46.5~~$4 million and ~~$53.7~~$13 million for the three and nine months ended September 30, 2015, respectively, compared to $47 million and $54 million for the three and nine months ended September 30, 2014, respectively.

On ~~August 1, 2014,~~September 30, 2015, we transferred ~~real estate~~$608 million of personal loans ~~with a carrying value of $5.3 billion~~ (after ~~the basis adjustment for the related~~deducting allowance for finance receivable losses) from ~~finance receivables~~ held for investment to held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. On August 29, 2014, we sold finance receivables held for sale with a carrying value of $4.0 billion and related trust assets and recorded a net gain at the time of sale of $604.9 million primarily resulting from the reversal of the remaining unaccreted push-down accounting basis for these finance receivables, less allowance for finance receivable losses that we established at the date of the Fortress Acquisition. The net gain on this sale included proceeds of $38.8 million from the related MSR Sale. On September 30, 2014,

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we sold finance receivables held for sale with a carrying value of $768.6 million and recorded a net gain at the time of sale of $11.7 million primarily resulting from the reversal of the remaining unaccreted push-down accounting basis for these finance receivables, less allowance for finance receivable losses that we established at the date of the Fortress Acquisition.

~~On June 1,~~During the three and nine months ended September 30, 2014, we transferred real estate loans ~~with a carrying value of $451.2 million~~totaling $5.3 billion and $6.6 billion, respectively, (after ~~the basis adjustment for the related~~deducting allowance for finance receivable losses) from ~~finance receivables~~ held for investment to held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. ~~On June~~During the three and nine months ended September 30, 2014, we sold the finance receivables held for sale ~~with a carrying value~~totaling $4.7 billion and $6.0 billion, respectively, and recorded net gains of ~~$444.4~~$617 million and ~~related trust assets and recorded a net gain at the time of sale of $34.8~~$707 million, ~~primarily resulting from the reversal of the remaining unaccreted push-down accounting basis for~~respectively. At September 30, 2015, these ~~finance receivables, less allowance for finance receivable losses that we established at the date of the Fortress Acquisition.~~

~~On March 1, 2014, we transferred~~ real estate loans ~~with a carrying value of $825.2 million (after the basis adjustment for the related allowance for finance receivable losses) from finance receivables held for investment to~~ held for sale due to management’s intent to no longer hold these finance receivables for the foreseeable future. On March 31, 2014, we sold finance receivables held for sale with a carrying value of $814.8 million and related trust assets and recorded a net gain at the time of sale of $55.2 million primarily resulting from the reversal of the remaining unaccreted push-down accounting basis for these finance receivables, less allowance for finance receivable losses that we established at the date of the Fortress Acquisition.

See Note 1 for further information on these sales. We did not have any transfer activity between finance receivables held for investment to finance receivables held for sale during the first nine months of 2013.

~~LOAN REPURCHASES~~

We repurchased four loans for $0.6 million during the three months ended September 30, 2014 and nine loans for $1.5 million during the nine months ended September 30, 2014. We repurchased two loans for $0.3 million during the three months ended September 30, 2013 and 19 loans for $2.8 million during the nine months ended September 30, 2013. In each period, we repurchased the loans that were previously sold to HSBC because these loans were reaching the defined delinquency limits or had breached the contractual representations and warranties under the loan sale agreements. At September 30, 2014, there were no unresolved recourse requests.

During the third quarter of 2014, we established a reserve for sales recourse obligations of $9.9 million related to the sales of real estate loans with a total carrying value of $6.0 billion during the first nine months of 2014. As of September 30, 2014, we had no repurchase activity or recourse losses associated with these sales. However, we will continue to monitor any repurchase activity in the future and will adjust the reserve accordingly.

The activity in our reserve for sales recourse obligations associated with the real estate loan sales during the first nine months of 2014 and the loans that were previously sold to HSBC were as follows:

(dollars in thousands) At or for the Three Months
Ended
September 30,
2014
At or for the Three Months
Ended
September 30,
2013
At or for the Nine Months
Ended
September 30,
2014
At or for the Nine Months
Ended
September 30,
2013

Balance at beginning of period $ 4,724
$ 4,766
$ 4,702
$ 4,863
Provision for recourse obligations 8,543
—
8,706
322
Recourse losses (70 ) (42 ) (211 ) (461 )
Balance at end of period $ 13,197
$ 4,724
$ 13,197
$ 4,724
totaled $189 million.

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5.7. Investment Securities

AVAILABLE-FOR-SALE SECURITIES

Cost/amortized cost, unrealized gains and losses, and fair value of available-for-sale securities by type were as follows:


(dollars in thousands)	Cost/ Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value
(dollars in millions)										Cost/ Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value

September 30, 2014

September 30, 2015
Fixed maturity available-for-sale securities:
Bonds:
U.S. government and government sponsored entities	$	55,427	$	930	$	(159	)	$	56,198	$	69	$	—	$	(1	)	$	68
Obligations of states, municipalities, and political subdivisions	115,916		2,618		(82		)	118,452		83		1		—			84
Corporate debt	252,498		11,452		(1,200		)	262,750		248		3		(6		)	245
Mortgage-backed, asset-backed, and collateralized:
Residential mortgage-backed securities (“RMBS”)	77,098		2,362		(42		)	79,418		79		—		—			79
Commercial mortgage-backed securities (“CMBS”)	22,167		80		(149		)	22,098		39		—		—			39
Collateralized debt obligations (“CDO”)/Asset-backed securities (“ABS”)	18,589		30		(50		)	18,569		32		—		—			32
Total	541,695		17,472		(1,682		)	557,485
Total bonds										550		4		(7		)	547
Preferred stock	7,163		84		(204		)	7,043		16		—		—			16
Other long-term investments*	1,306		131		(7		)	1,430
Common stocks	850		—		—			850
Total	$	551,014	$	17,687	$	(1,893	)	$	566,808
Other long-term investments										1		—		—			1
Total (a)										$	567	$	4	$	(7	)	$	564

December 31, 2013

December 31, 2014
Fixed maturity available-for-sale securities:
Bonds:
U.S. government and government sponsored entities	$	58,748	$	565	$	(680	)	$	58,633	$	61	$	3	$	—		$	64
Obligations of states, municipalities, and political subdivisions	101,118		1,703		(76		)	102,745		99		3		—			102
Certificates of deposit and commercial paper (b)										1		—		—			1
Corporate debt	233,977		6,126		(2,187		)	237,916		256		12		(1		)	267
Mortgage-backed, asset-backed, and collateralized:
RMBS	81,259		1,923		(559		)	82,623		71		2		—			73
CMBS	7,487		76		(16		)	7,547		25		—		(1		)	24
CDO/ABS	3,981		19		(24		)	3,976		61		—		—			61
Total	486,570		10,412		(3,542		)	493,440
Total bonds										574		20		(2		)	592
Preferred stock	7,844		—		(39		)	7,805		7		—		—			7
Other long-term investments*	1,394		—		(125		)	1,269
Common stocks	850		—		—			850
Total	$	496,658	$	10,412	$	(3,706	)	$	503,364
Other long-term investments										1		—		—			1
Total (a)										$	582	$	20	$	(2	)	$	600


*(a)	Excludes an immaterial interest in a limited partnership that we account for using the equity method ~~($0.5~~and Federal Home Loan Bank common stock of $1 million at September 30, 2015 and December 31, 2014, which is classified as a restricted investment and ~~$0.6~~carried at cost.


(b)	Includes certificates of deposit pledged as collateral, totaling $2 million at December 31, ~~2013).~~2014, primarily to support bank lines of credit.

~~Table of Contents~~

As of September 30, ~~2014~~2015 and December 31, ~~2013,~~2014, we had no available-for-sale securities with other-than-temporary impairments recognized in accumulated other comprehensive income or loss.

Table of Contents

Fair value and unrealized losses on ~~investment~~available-for-sale securities by type and length of time in a continuous unrealized loss position were as follows:


	Less Than 12 Months					12 Months or Longer					Total					Less Than 12 Months					12 Months or Longer				Total
(dollars in thousands)	Fair Value		Unrealized Losses			Fair Value		Unrealized Losses			Fair Value		Unrealized Losses
(dollars in millions)																Fair Value		Unrealized Losses *			Fair Value		Unrealized Losses *		Fair Value		Unrealized Losses

September 30, 2014

September 30, 2015
Bonds:
U.S. government and government sponsored entities	$	17,827	$	(53	)	$	13,468	$	(106	)	$	31,295	$	(159	)	$	51	$	(1	)	$	—	$	—	$	51	$	(1	)
Obligations of states, municipalities, and political subdivisions	17,917		(54		)	1,053		(28		)	18,970		(82		)	15		—			11		—		26		—
Corporate debt	34,004		(358		)	15,356		(842		)	49,360		(1,200		)	107		(6		)	14		—		121		(6		)
RMBS	12,310		(19		)	2,635		(23		)	14,945		(42		)	8		—			—		—		8		—
CMBS	18,605		(149		)	—		—			18,605		(149		)	19		—			7		—		26		—
CDO/ABS	6,874		(50		)	—		—			6,874		(50		)	16		—			—		—		16		—
Total	107,537		(683		)	32,512		(999		)	140,049		(1,682		)
Total bonds																216		(7		)	32		—		248		(7		)
Preferred stock	6,019		(204		)	—		—			6,019		(204		)	6		—			—		—		6		—
Other long-term investments	—		—			104		(7		)	104		(7		)	1		—			—		—		1		—
Total	$	113,556	$	(887	)	$	32,616	$	(1,006	)	$	146,172	$	(1,893	)	$	223	$	(7	)	$	32	$	—	$	255	$	(7	)

December 31, 2013

December 31, 2014
Bonds:
U.S. government and government sponsored entities	$	44,314	$	(680	)	$	—	$	—		$	44,314	$	(680	)	$	—	$	—		$	1	$	—	$	1	$	—
Obligations of states, municipalities, and political subdivisions	14,220		(76		)	—		—			14,220		(76		)	27		—			1		—		28		—
Corporate debt	65,809		(1,535		)	11,772		(652		)	77,581		(2,187		)	36		(1		)	6		—		42		(1		)
RMBS	18,288		(559		)	—		—			18,288		(559		)	9		—			—		—		9		—
CMBS	2,993		(16		)	—		—			2,993		(16		)	16		(1		)	2		—		18		(1		)
CDO/ABS	2,658		(24		)	—		—			2,658		(24		)	46		—			—		—		46		—
Total bonds																134		(2		)	10		—		144		(2		)
Preferred stock																6		—			—		—		6		—
Total	148,282		(2,890		)	11,772		(652		)	160,054		(3,542		)	$	140	$	(2	)	$	10	$	—	$	150	$	(2	)
Preferred stock	7,805		(39		)	—		—			7,805		(39		)
Other long-term investments	1,269		(125		)	—		—			1,269		(125		)
Total	$	157,356	$	(3,054	)	$	11,772	$	(652	)	$	169,128	$	(3,706	)


*	Unrealized losses on certain available-for-sale securities were less than $1 million and, therefore, are not quantified in the table above.

We continue to monitor unrealized loss positions for potential impairments. During the three and nine months ended September 30, 2015 and 2014, we did not recognize any other-than-temporary impairment credit loss write-downs to investment revenues.

During the three and nine months ended September 30, ~~2013, we recognized other-than-temporary impairment credit loss write-downs to investment revenues on RMBS totaling $26 thousand.~~

~~Table of Contents~~

~~Changes~~2015 and 2014, there were no additions or reductions in the cumulative amount of credit losses (recognized in earnings) on other-than-temporarily impaired available-for-sale ~~securities were as follows:~~

(dollars in thousands) At or for the Three Months
Ended
September 30,
2014
At or for the Three Months
Ended
September 30,
2013
At or for the Nine Months
Ended
September 30,
2014
At or for the Nine Months
Ended
September 30,
2013

Balance at beginning of period $ 1,318
$ 1,523
$ 1,523
$ 1,650
Additions:

Due to other-than-temporary impairments:

Impairment previously recognized —
—
—
26
Reductions:

Realized due to dispositions with no prior intention to sell —
—
(205 ) (153 )
Balance at end of period $ 1,318
$ 1,523
$ 1,318
$ 1,523
securities.

Table of Contents

The fair values of available-for-sale securities sold or redeemed and the resulting realized gains, realized losses, and net realized gains ~~(losses)~~ were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
				Revised						Revised
(dollars in millions)													Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)													2015		2014		2015			2014

Fair value	$	104,960		$	36,170		$	203,384		$	135,202		$	168	$	105	$	372		$	203

Realized gains	$	4,614		$	166		$	7,205		$	2,278		$	4	$	5	$	15		$	7
Realized losses	(67		)	(219		)	(309		)	(390		)	—		—		(1		)	—
Net realized gains (losses)	$	4,547		$	(53	)	$	6,896		$	1,888
Net realized gains													$	4	$	5	$	14		$	7

Contractual maturities of fixed-maturity available-for-sale securities at September 30, ~~2014~~2015 were as follows:


	Fair		Amortized
(dollars in thousands)	Value		Cost
(dollars in millions)					Fair Value		Amortized Cost

Fixed maturities, excluding mortgage-backed, asset-backed, and collateralized securities:
Due in 1 year or less	$	28,104	$	27,511	$	72	$	72
Due after 1 year through 5 years	178,708		174,715		150		150
Due after 5 years through 10 years	94,638		93,428		57		57
Due after 10 years	135,950		128,187		118		121
Mortgage-backed, asset-backed, and collateralized securities	120,085		117,854		150		150
Total	$	557,485	$	541,695	$	547	$	550

Actual maturities may differ from contractual maturities since borrowers may have the right to call or prepay obligations. We may sell investment securities before maturity to achieve corporate requirements and investment strategies.

~~Table~~The fair value of ~~Contents~~bonds on deposit with insurance regulatory authorities totaled $11 million and $12 million at September 30, 2015 and December 31, 2014, respectively.

TRADING SECURITIES

The fair value of trading securities by type was as follows:


(dollars in thousands)	September 30, 2014		December 31, 2013
(dollars in millions)					September 30, 2015		December 31, 2014

Fixed maturity trading securities:
Bonds:
U.S. government and government sponsored entities	$	134,381	$	—	$	783	$	302
Obligations of states, municipalities, and political subdivisions	87,340		—		—		14
Certificates of deposit and commercial paper					—		238
Non-U.S. government and government sponsored entities					—		20
Corporate debt	443,884		1,837		196		1,056
Mortgage-backed, asset-backed, and collateralized:
RMBS	64,527		10,671		2		35
CMBS	106,115		29,897		45		149
CDO/ABS	293,331		9,249		151		507
Total	$	1,129,578	$	51,654	$	1,177	$	2,321

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The net unrealized and realized gains (losses) on our trading securities, which we report in investment revenues, were as follows:

(dollars in thousands) Three Months
Ended
September 30,
2014
Three Months
Ended
September 30,
2013
Nine Months
Ended
September 30,
2014
Nine Months
Ended
September 30,
2013
Revised Revised

Net unrealized losses on trading securities held at period end $ (2,038 ) $ (224 ) $ (1,120 ) $ (433 )
Net realized gains on trading securities sold or redeemed 249
63
279
174
Total $ (1,789 ) $ (161 ) $ (841 ) $ (259 )



(dollars in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)	2015			2014			2015			2014

Net unrealized gains (losses) on trading securities held at period end	$	(1	)	$	(2	)	$	3		$	(1	)
Net realized losses on trading securities sold or redeemed	(1		)	—			(2		)	—
Total	$	(2	)	$	(2	)	$	1		$	(1	)

6.8. Transactions with Affiliates of Fortress or AIG

SUBSERVICING ~~AND REFINANCE AGREEMENTS~~AGREEMENT

Nationstar Mortgage LLC (“Nationstar”) subservices the real estate loans of certain direct and indirect subsidiaries (collectively, the “Owners”). Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar.

The Owners paid Nationstar subservicing fees of less than $1 million for ~~its subservicing~~the three months ended September 30, 2015, and $1 million for the nine months ended September 30, 2015, compared to ~~facilitate~~$1 million and $5 million for the ~~repayment of our real estate loans through refinancings with other lenders as follows:~~

(dollars in thousands) Three Months
Ended
September 30,
2014
Three Months
Ended
September 30,
2013
Nine Months
Ended
September 30,
2014
Nine Months
Ended
September 30,
2013

Subservicing fees $ 1,221
$ 2,132
$ 4,922
$ 6,556
Refinancing concessions $ —
$ —
$ —
$ 265
three and nine months ended September 30, 2014, respectively.

As a result of the ~~recent~~ sales of our real estate loans ~~some~~during 2014 (some of which were serviced by ~~Nationstar,~~Nationstar) and the ~~MSR Sale~~sale of certain mortgage servicing rights in 2014, our exposure to these affiliated services is reduced.

INVESTMENT MANAGEMENT AGREEMENT

Logan Circle Partners, L.P. (“Logan Circle”) provides investment management services for our investments. Logan Circle is a wholly owned subsidiary of Fortress. Costs and fees incurred for these investment management services ~~totaled $0.3 million and $0.8~~were under $1 million for the three months ended September 30, 2015 and 2014, and $1 million for the nine months ended September 30, ~~2014, respectively, compared to $0.2 million~~2015 and ~~$0.8 million for the three and nine months ended September 30, 2013, respectively.~~2014.

~~Table of Contents~~

REINSURANCE AGREEMENTS

Merit Life Insurance Co. (“Merit”), our wholly owned subsidiary, enters into reinsurance agreements with subsidiaries of AIG, for reinsurance of various group annuity, credit life, and credit accident and health insurance where Merit reinsures the risk of loss. The reserves for this business fluctuate over time and, in some instances, are subject to recapture by the insurer. Reserves recorded by Merit for reinsurance agreements with subsidiaries of AIG totaled ~~$43.9~~$43 million and $44 million at September 30, 2015 and December 31, 2014, respectively.

INSURANCE COVERAGE

We hold various insurance policies with AIG subsidiaries covering liabilities of directors and officers, errors and omissions, lawyers, employment practices, fiduciary, and fidelity bond. Premium expenses on these policies were under $1 million for the three months ended September 30, 2015 and 2014 and ~~$45.6~~$1 million ~~at December 31, 2013.~~for the nine months ended September 30, 2015 and 2014.

JOINT VENTURE

Certain subsidiaries of New Residential Investment Corp. (“NRZ”), own a 30% equity interest in the joint venture ~~established in conjunction with the purchase of~~that acquired the SpringCastle Portfolio, ~~on April 1, 2013.~~in which we own a 47% equity interest. NRZ is managed by an affiliate of Fortress.

THIRD STREET DISPOSITION

~~As discussed in Note 1, on~~On March 6, 2014, we entered into an agreement to sell, subject to certain closing conditions, all of our interest in the mortgage-backed retained certificates related to a securitization transaction completed in 2009 to ~~MLPFS for a price of $737.2 million.~~Merrill Lynch, Pierce, Fenner & Smith Incorporated (“MLPFS”). Concurrently, NRZ and MLPFS entered into an agreement pursuant to which NRZ agreed to purchase approximately 75% of these retained certificates. NRZ is managed by an affiliate of Fortress. ~~See Note 1 for further information on this sale.~~

Table of Contents

MSR SALE

~~As discussed in Note 1, on August 6, 2014,~~ SFC and MorEquity, Inc. (“MorEquity”), a wholly owned subsidiary, entered into an agreement, dated and effective August 1, 2014, to sell the servicing rights of the mortgage loans primarily underlying the mortgage securitizations completed during 2011 through 2013 to Nationstar for a purchase price of ~~$38.8 million. Approximately 50% of~~$39 million (the “MSR Sale”). From the ~~proceeds~~closing of the MSR Sale ~~were received~~ on August 29, 2014, until the ~~closing date, and 40% were received~~servicing transfer on ~~October 23, 2014. See Note 1 and Note 19~~September 30, 2014, we continued to service certain loans on behalf of Nationstar under an interim servicing agreement. At December 31, 2014, the receivable from Nationstar for ~~further information on~~our interim servicing fees totaled $1 million. In May of 2015, Nationstar paid off the ~~MSR Sale.~~remaining balance of $1 million of this receivable. Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar.

7.9. Related Party Transactions

AFFILIATE LENDING

Note Receivable from Parent

SFC’s note receivable from parent is payable in full on May 31, 2022, and SFC may demand payment at any time prior to May 31, 2022; however, SFC does not anticipate the need for additional liquidity during ~~2014~~2015 and does not expect to demand payment from SFI in ~~2014.~~2015. The note receivable from parent totaled ~~$168.0~~$322 million at September 30, ~~2014~~2015 and $251 million at December 31, ~~2013.~~2014. Interest receivable on this note totaled ~~$0.4 million and $0.5~~$2 million at September 30, ~~2014~~2015 and was less than $1 million at December 31, ~~2013, respectively.~~2014. The interest rate for the unpaid principal balance is the ~~prime~~lender’s cost of funds rate. Interest revenue on the note receivable from SFI totaled ~~$1.4~~$5 million and ~~$4.1~~$11 million, for the three and nine months ended September 30, 2015, respectively, compared to $1 million and $4 million for the three and nine months ended September 30, 2014, ~~respectively, compared to $4.4 million and $14.4 million for the three and nine months ended September 30, 2013,~~ respectively.

Receivables from Parent and Affiliates

At September 30, ~~2014~~2015 and December 31, ~~2013,~~2014, receivables from ~~our~~ parent and affiliates totaled ~~$20.1~~$7 million and ~~$39.4~~$12 million, ~~respectively, primarily due to~~respectively. SFC had a receivable from Second Street Funding Corporation, a subsidiary of SFI, for income taxes payable under current and prior tax sharing agreements, which ~~were paid by SFC. In addition, Cash Services, Inc. (“CSI”), a subsidiary of SFC, had a receivable related to cash payments due from SpringCastle Holdings, LLC, a subsidiary of SAC, of $16.4~~totaled $4 million at September 30, 2015 and $4 million at December 31, ~~2013. As a result of the SAC Capital Contribution on July 31, 2014, SpringCastle Holdings, LLC is an indirect subsidiary of SFC. The receivables~~2014. Receivables from ~~our~~ parent and affiliates also ~~include~~included interest receivable on SFC’s note receivable from SFI previously discussed ~~above. At~~in this Note. Receivables from parent and affiliates at September 30, 2015 and December 31, ~~2013,~~2014 are presented net of a payable to SFI of $9 million and $43 million, respectively. Excluding this payable, receivables from parent and affiliates totaled $16 million at September 30, 2015 and $54 million at December 31, 2014.

Payables to Parent and Affiliates

At September 30, 2015 and December 31, 2014, payables to parent and affiliates totaled $19 million and $48 million, respectively. SFC’s payable to parent totaled $2 million and $17 million at September 30, 2015 and December 31, 2014, respectively, primarily due to payments made by SFI for the benefit of SFC. At September 30, 2015 and December 31, 2014, Springleaf Finance Management Corporation (“SFMC”), a subsidiary of SFC, had net payables of $15 million and $19 million, respectively, to Springleaf General Services Corporation (“SGSC”), a ~~receivable~~subsidiary of ~~$1.0~~SFI, related to the intercompany agreements further discussed below in this Note. At September 30, 2015 and December 31, 2014, SFMC also had a payable of $1 million ~~from~~to Springleaf Consumer Loan, Inc. ~~(“SCL”), an indirect subsidiary of SFI, due to an overpayment of~~for internet lending referral fees charged to the branch network.

~~Table of Contents~~

~~Intercompany Demand Notes~~

~~Pursuant to~~SFI provided funding for SAC’s operations through an intercompany demand note, ~~dated July 26, 2013 between SFC and SFI, SFI may borrow up~~not to ~~$50.0 million from SFC.~~exceed $2.5 million. The note iswas payable in full on December ~~14, 2014,~~31, 2022, and iswas prepayable in whole or in part at any time without premium or penalty. The annual interest rate for the principal balance ~~is 7.00%. SFI expects to use advances under~~was the ~~note, if any, for general corporate purposes.~~lender’s cost plus 25 basis points. At ~~September 30, 2014 and~~ December 31, ~~2013, SFI had not drawn any funds under this note.~~

SFI provides funding for SAC’s operations through an amended and restated intercompany demand note dated June 7, 2013, not to exceed $2.5 million. The note is payable in full on December 31, 2022, and is prepayable in whole or in part at any time without premium or penalty. The annual interest rate for the principal balance is 8.00%. At September 30, 2014, the note payable to SFI totaled ~~$1.1~~$1 million and was reported in other liabilities. On September 1, 2015, SAC repaid the note in full plus accrued interest. Interest expense on the note payable to SFI ~~totaled $15 thousand~~ for the three and nine months ended September 30, ~~2014.~~2015 and 2014 was immaterial.

~~Payables to Parent and Affiliates~~

SFI provides servicing of the SpringCastle Portfolio through a master servicing agreement with SpringCastle Holdings, LLC. At September 30, ~~2014~~2015 and December 31, ~~2013, SFC’s~~2014, SpringCastle Holdings LLC’s payable to ~~parent~~SFI totaled ~~$18.8~~$4 million and ~~$22.0~~$10 million, respectively, primarily due to payments made by SFI for the benefit of SFC. At September 30, 2014, SFMC had a payable of $2.6 million to SCL for internet lending referral fees charged to the branch network.

~~CASH COLLATERAL~~

In February 2013, SFI paid $3.1 million, on behalf of Financial Services of South Carolina, Inc. (“SFSSC”), a subsidiary of SFC, towards the payment of unclaimed funds to South Carolina charities in connection with a judgment entered against SFSSC in 2012. In late March 2013, SFSSC fully repaid SFI for the cash collateral, including $27.8 million cash collateral posted by SFI on behalf of SFSSC in 2012. In addition, SFSSC paid SFI $0.6 million of fees under a related fee agreement during the first quarter of 2013.respectively.

CAPITAL CONTRIBUTIONS

On July 31, 2014, SFI made a capital contribution to SFC, consisting of 100 shares of the common stock, par value of $0.01 per share, of SAC representing all of the issued and outstanding shares of capital stock of SAC. ~~See Note 1 for further information.~~

~~On each~~

Table of Contents

During January ~~11, 2013, July 10, 2013, January 10, 2014~~ and July ~~10,~~of 2014, SFC received capital contributions from SFI of ~~$10.5~~$11 million to satisfy interest payments required by SFC’s debenture due in January ~~2013, July 2013, January 2014,~~ and July of 2014, respectively.

~~DERIVATIVES~~

During the three and nine months ended September 30, 2013, SFC paid SFI $0.7 million and $2.7 million, respectively, of collateral and guarantee fees relating to $60.0 million cash collateral posted by SFI as security for SFC’s remaining Euro swap position with AIGFP. On August 5, 2013, we terminated our remaining cross currency interest rate swap agreement and AIGFP returned the cash collateral of $40.0 million to SFI.

INTERCOMPANY AGREEMENTS

On December 24, 2012, ~~Springleaf General Services Corporation (“SGSC”),~~SGSC, a subsidiary of SFI, entered into the following intercompany agreements with SFMC, a subsidiary of SFC, and with certain other subsidiaries of SFI (collectively, the “Recipients”):. SFMC’s net payable to SGSC relating to these agreements totaled $15 million at September 30, 2015 and $19 million at December 31, 2014.

Services Agreement

SGSC provides the following services to the Recipients: management and administrative services; financial, accounting, treasury, tax, and audit services; facilities support services; capital funding services; legal services; human resources services (including payroll); centralized collections and lending support services; insurance, risk management, and marketing services; and information technology services. The fees payable by each Recipient to SGSC is equal to 100% of the allocated cost of providing the services to such Recipient. SGSC allocates its cost of providing these services among the Recipients and any of the companies to which it provides similar services based on an allocation method defined in the agreement. During the three and nine months ended September 30, ~~2014,~~2015, SFMC recorded ~~$64.4~~$55 million and ~~$159.8~~$156 million, respectively, of service fee expenses, which are included in other operating expenses, compared to ~~$34.8~~$65 million and ~~$101.7~~$160 million for the three and nine

~~Table of Contents~~

months ended September 30, ~~2013, respectively. Services fees payable to SGSC totaled $14.1 million at September 30, 2014 and $9.4 million at December 31, 2013.~~2014.

License Agreement

The license agreement provides for use by SGSC of SFMC’s information technology systems and software and other related equipment. The monthly license fee payable by SGSC for its use of the information technology systems and software is 100% of the actual costs incurred by SFMC plus a 7.00% margin. The fee payable by SGSC for its use of the related equipment is 100% of the actual costs incurred by SFMC. During the three and nine months ended September 30, ~~2014,~~2015, SFMC recorded ~~$1.3~~$1 million and ~~$4.0~~$4 million, respectively, of license fees, which are included as a contra expense to other operating expenses, compared to ~~$1.6~~$1 million and ~~$4.6~~$4 million for the three and nine months ended September 30, ~~2013, respectively.~~2014.

Building Lease

The building lease agreement provides that SFMC will lease six of its buildings to SGSC for an annual rental amount of ~~$3.7~~$4 million, plus additional rental amounts to cover other sums and charges, including real estate taxes, water charges, and sewer rents. During the three and nine months ended September 30, ~~2014,~~2015, SFMC recorded ~~$0.9~~$1 million and ~~$2.8~~$3 million, respectively, of rent charged to SGSC, which isare included as a contra expense to other operating expenses, compared to ~~$0.9~~$1 million and ~~$2.8~~$3 million for the three and nine months ended September 30, ~~2013, respectively.~~2014.

Table of Contents

10. Long-term Debt

Principal maturities of long-term debt (excluding projected securitization repayments by period) by type of debt at September 30, ~~2014~~2015 were as follows:

(dollars in thousands)
Retail
Notes

Medium
Term
Notes
Securitizations
Junior
Subordinated
Debt
Total

Interest rates (a) 6.00%-7.50%
5.40%-8.25%
1.76%-5.00%
6.00 %

Fourth quarter 2014 $ 335,486
$ —
$ —
$ —
$ 335,486
First quarter 2015 16,575
—
—
—
16,575
Second quarter 2015 7,092
—
—
—
7,092
Third quarter 2015 23,544
—
—
—
23,544
Remainder of 2015 —
750,000
—
—
750,000
2016 —
375,000
—
—
375,000
2017 —
2,360,837
—
—
2,360,837
2018 —
—
—
—
—
2019-2067 —
1,250,000
—
350,000
1,600,000
Securitizations (b) —
—
3,055,588
—
3,055,588
Total principal maturities $ 382,697
$ 4,735,837
$ 3,055,588
$ 350,000
$ 8,524,122

Total carrying amount (c) $ 379,585
$ 4,253,867
$ 3,052,972
$ 171,613
$ 7,858,037



(dollars in millions)	Medium Term Notes			Securitizations			Junior Subordinated Debt			Total

Interest rates (a)	5.25%-8.25%			1.87%-6.82%			6.00		%

Fourth quarter 2015	$	750		$	—		$	—		$	750
First quarter 2016	—			—			—			—
Second quarter 2016	—			—			—			—
Third quarter 2016	375			—			—			375
Remainder of 2016	—			—			—			—
2017	1,902			—			—			1,902
2018	—			—			—			—
2019	700			—			—			700
2020-2067	1,250			—			350			1,600
Securitizations (b)	—			4,784			—			4,784
Total principal maturities	$	4,977		$	4,784		$	350		$	10,111

Total carrying amount (c)	$	4,613		$	4,771		$	171		$	9,555
Debt issuance costs (d)	$	(13	)	$	(17	)	$	—		$	(30	)


(a)	The interest rates shown are the range of contractual rates in effect at September 30, ~~2014.~~2015.


(b)	Securitizations are not included in above maturities by period due to their variable monthly repayments. See Note 911 for further information on our long-term debt associated with securitizations.

(c)

The net carrying amount of our long-term debt associated with certain securitizations that were either 1)(1) issued at a premium or discount or 2)(2) revalued at a premium or discount based on its fair value at the time of the Fortress Acquisition or 3)(3) recorded at fair value on a recurring basis in circumstances when the embedded derivative within the securitization structure cannot be separately accounted for at fair value.


(d)	As a result of our early adoption of ASU 2015-03 in June of 2015, we report debt issuance costs as a direct deduction from long-term debt.

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GUARANTY AGREEMENTS

On December 3, 2014, SHI entered into an Indenture and First Supplemental Indenture pursuant to which it agreed to fully and unconditionally guarantee the payments of principal, premium (if any) and interest on $700 million of 5.25% of Senior Notes due 2019. As of September 30, 2015, approximately $700 million aggregate principal amount of senior notes were outstanding.

On December 30, 2013, SHI entered into Guaranty Agreements whereby it agreed to fully and unconditionally guarantee the payments of principal, premium (if any), and interest on approximately $5.2 billion aggregate principal amount of senior notes on a senior basis and ~~$350.0~~$350 million aggregate principal amount of a junior subordinated debenture (collectively, the “notes”) on a junior subordinated basis issued by SFC. The notes consist of the following: ~~8.250%~~8.25% Senior Notes due 2023; ~~7.750%~~7.75% Senior Notes due 2021; 6.00% Senior Notes due 2020; a 60-year junior subordinated debenture; and all senior notes outstanding on December 30, 2013, issued pursuant to the Indenture dated as of May 1, 1999 (the “1999 Indenture”), between SFC and Wilmington Trust, National Association (the successor trustee to Citibank N.A.). ~~As of December 30, 2013, approximately $3.9 billion aggregate principal amount of senior notes were outstanding under the 1999 Indenture.~~ The 60-year junior subordinated debenture underlies the trust preferred securities sold by a trust sponsored by SFC. On December 30, 2013, SHI entered into a Trust Guaranty Agreement whereby it agreed to fully and unconditionally guarantee the related payment obligations under the trust preferred securities. As of September 30, ~~2014,~~2015, approximately ~~$5.1~~$5.0 billion aggregate principal amount of senior notes, including ~~$3.9~~$3.0 billion aggregate principal amount of senior notes under the 1999 Indenture, and ~~$350.0~~$350 million aggregate principal amount of a junior subordinated debenture were outstanding.

~~REPURCHASE OR REPAYMENT OF DEBT~~

~~In connection with our liability management efforts, we or our affiliates from time to time have purchased, or may in the future purchase, portions~~Table of our outstanding indebtedness. Any such purchases may be made 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 or any such affiliates may determine. Our plans are dynamic and we may adjust our plans in response to changes in our expectations and changes in market conditions.Contents

On March 31, 2014, Springleaf Financial Funding Company (“SFFC”) prepaid, without penalty or premium, the entire $750.0 million outstanding principal balance of the secured term loan, plus accrued and unpaid interest. Effective upon the prepayment, all obligations of SFFC, SFC, and most of the consumer finance operating subsidiaries of SFC under the secured term loan (other than contingent reimbursement obligations and indemnity obligations) were terminated and all guarantees and security interests were released.

9.11. Variable Interest Entities

As part of our overall funding strategy and as part of our efforts to support our liquidity from sources other than our traditional capital market sources, we have transferred certain finance receivables to VIEs for securitization transactions. Since these transactions involve securitization trusts required to be consolidated, the securitized assets and related liabilities are included in our condensed consolidated financial statements and are accounted for as secured borrowings. As a result of the 2014 sales of the Company’s beneficial interests in the mortgage-backed retained certificates related to its previous mortgage securitization transactions, we deconsolidated the underlying real estate loans and previously issued securitized interests which were reported in long-term debt.

CONSOLIDATED VIES

We evaluated the securitization trusts and determined that these entities are VIEs of which we are the primary ~~beneficiary;~~beneficiary, and, therefore, we ~~consolidate~~consolidated such entities. We are deemed to be the primary beneficiaries of these VIEs because we have the ability to direct the activities of each VIE that most significantly impact the entity’s economic performance and the obligation to absorb losses and the right to receive benefits that are potentially significant to the VIE. Such ability stems from SFC’s and/or its affiliates’ contractual right to service the securitized finance receivables. Our retained subordinated notes and residual interest trust certificates expose us to potentially significant losses and potentially significant returns.

The ~~remaining~~ asset-backed securities issued by the securitization trusts are supported by the expected cash flows from the underlying securitized finance receivables. Cash inflows from these finance receivables are distributed to investors and service providers in accordance with each transaction’s contractual priority of payments (“waterfall”) and, as such, most of these inflows must be directed first to service and repay each trust’s senior notes or certificates held principally by third-party investors. The holders of the asset-backed securities have no recourse to the Company if the cash flows from the underlying qualified securitized assets are not sufficient to pay all principal and interest on the asset-backed securities. After these senior obligations are extinguished, substantially all cash inflows will be directed to the subordinated notes until fully repaid and, thereafter, to the residual interest that we own in each securitization trust. We retain interests in these securitization transactions, including ~~senior~~residual interests in each securitization trust and, in some cases, subordinated securities issued by the ~~VIEs and residual interests.~~VIEs. We retain credit risk in the securitizations ~~because~~through our ~~retained interests include~~ownership of the residual interest in each securitization trust, and, in some cases, ownership of the most subordinated ~~interest in the securitized assets,~~class of asset-backed securities, which are the first to absorb credit losses on the securitized assets. We expect that any credit losses in the pools of securitized

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assets will likely be limited to our subordinated and residual retained interests. We have no obligation to repurchase or replace qualified securitized assets that subsequently become delinquent or are otherwise in default.

The carrying amounts of consolidated VIE assets and liabilities associated with our securitization trusts were as follows:


(dollars in thousands)	September 30, 2014		December 31, 2013
(dollars in millions)					September 30, 2015		December 31, 2014

Assets
Finance receivables:
Personal loans	$	1,841,139	$	1,572,070	$	2,096	$	1,853
SpringCastle Portfolio *	$	2,083,145	$	—
Real estate loans	$	—	$	5,595,150
SpringCastle Portfolio					1,667		1,979
Allowance for finance receivable losses	$	67,800	$	153,084	131		72
Restricted cash	$	295,693	$	345,906
Finance receivables held for sale					484		—
Restricted cash and cash equivalents					256		210

Liabilities
Long-term debt *	$	3,052,972	$	5,160,227	$	4,771	$	3,630

As a result of ~~the SAC Capital Contribution on July 31, 2014, SFC owns a 47% equity interest~~our early adoption of ASU 2015-03 in ~~the SpringCastle Portfolio and the~~June of 2015, we reclassified $14 million of debt issuance costs related to our long-term debt associated with ~~the securitization~~our securitizations as of ~~the SpringCastle Portfolio.~~December 31, 2014, from other assets to long-term debt.

~~2014 Consumer Loan Securitizations~~

~~Whitford Brook 2014-VFN1 Securitization.~~ On June 26, 2014, we established a private securitization facility in which Whitford Brook Funding Trust 2014-VFN1 (the “Whitford Brook 2014-VFN1 Trust”), a wholly owned special purpose vehicle, may issue variable funding notes with a maximum principal balance of $300 million to be backed by personal loans acquired from subsidiaries of SFC. The notes will be funded over a three-year period, subject to the satisfaction of customary conditions precedent. During this period, the notes can also be paid down to the required minimum balance of $100 million and then redrawn. Following the three-year funding period, the principal amount of the notes will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in July 2018, unless an option to prepay is elected between July 2017 and July 2018. At September 30, 2014, the required minimum balance of $100 million was drawn under the notes.

~~2014-A Securitization.~~ On March 26, 2014, we completed a private securitization transaction in which a wholly owned special purpose vehicle sold $559.3 million of notes backed by personal loans held by Springleaf Funding Trust 2014-A (the “2014-A Trust”), at a 2.62% weighted average yield. We sold the asset-backed notes for $559.2 million, after the price discount but before expenses and a $6.4 million interest reserve requirement. We initially retained $32.9 million of the 2014-A Trust’s subordinate asset-backed notes.

~~Sales of Previously Retained Notes~~

As discussed in Note 1, the Company’s remaining beneficial interests in the mortgage-backed retained certificates related to its previous mortgage securitization transactions were sold in three separate transactions on March 31, June 30, and August 29. As a result of these sales, we deconsolidated the securitization trusts holding the underlying real estate loans and previously issued securitized interests which were reported in long-term debt, as we no longer were considered the primary beneficiary.

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~~During the nine months ended September 30, 2013, we sold the following previously retained mortgage-backed and asset-backed notes:~~

(dollars in thousands)
Principal Amount of
Previously Retained Notes Issued

Carrying Amount of
Additional Debt Recorded

Mortgage Securitizations

SLFMT 2012-2 $ 20,000
$ 20,675
SLFMT 2012-3 $ 7,500
$ 7,753
SLFMT 2013-2 $ 157,517
$ 148,559

Consumer Securitizations
SLFMT 2013-B $ 114,000
$ 111,578

~~Renewal of Midbrook~~Amendment to Sumner Brook 2013-VFN1 Securitization

On September 26, 2013, we established a private securitization facility in which Midbrook Funding Trust 2013-VFN1 (the “Midbrook 2013-VFN1 Trust”), a wholly owned special purpose vehicle, could issue variable funding notes with a maximum principal balance of $300 million to be backed by personal loans acquired from subsidiaries of SFC from time to time. No amounts were funded at closing, but could be funded from time to time over a one-year period, subject to the satisfaction of customary conditions precedent. During this period, the notes could also be paid down in whole or in part and then redrawn. Following the one-year funding period, the principal amount of the notes, if any, would amortize and would be due and payable in full in October 2017.

~~On June 13, 2014,~~January 16, 2015, we amended the note purchase agreement with ~~Midbrook~~Sumner Brook Funding Trust 2013-VFN1 ~~Trust~~ to extend the ~~one-year funding~~two-year revolving period ending December of 2015 to a ~~two-year funding period.~~three-year revolving period ending January of 2018. Following the ~~two-year funding~~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 full in ~~July 2019.~~August of 2024. The maximum principal balance of variable funding notes that can be issued remained at ~~$300~~$350 million. NoAt September 30, 2015, no amounts ~~have been funded.~~were drawn under the notes.

~~Repayment~~2015-A Securitization

On February 26, 2015, we completed a private term securitization transaction in which a wholly owned special purpose vehicle sold $1.2 billion of ~~2013-BAC~~notes issued by Springleaf Funding Trust 2015-A at a 3.58% weighted average yield. The notes are backed by personal loans acquired from subsidiaries of SFC. We sold the asset-backed notes for $1.2 billion, after the price discount but before expenses and a $12 million interest reserve requirement.

Sale of SpringCastle 2014-A Notes

On March 9, 2015, SAC agreed to sell $232 million and $131 million principal amount of the previously retained Class C and Class D SpringCastle 2014-A Notes, respectively, to an unaffiliated third party at a premium to the principal balance. The sale was completed on March 16, 2015.

Amendments to Whitford Brook 2014-VFN1 Securitization

On March 24, 2015, we amended the sale and servicing agreement relating to the Whitford Brook Funding Trust 2014-VFN1 (the “Whitford Brook 2014-VFN1 Trust”) to remove the requirement for a $100 million minimum balance drawn under the variable funding notes, which are to be backed by personal loans acquired from subsidiaries of SFC from time to time. On March 25, 2015, we paid down the note balance of $100 million.

On June 3, 2015, we amended the note purchase agreement relating to the Whitford Brook 2014-VFN1 Trust to reduce the $300 million maximum principal balance to $250 million. On July 15, 2015, we drew $100 million under the notes, which remained drawn as of September ~~25, 2013,~~30, 2015.

2015-B Securitization

On April 7, 2015, we completed a private term securitization transaction in which a wholly owned special purpose vehicle sold $314 million of notes issued by Springleaf Funding Trust ~~2013-BAC,~~2015-B at a 3.84% weighted average yield. The notes are backed by personal loans acquired from subsidiaries of SFC. We sold the asset-backed notes for $314 million, after the price discount but before expenses and a $3 million interest reserve requirement.

Amendment to Springleaf 2013-VFN1 Securitization

On May 20, 2015, we amended the note purchase agreement with Springleaf Funding Trust 2013-VFN1 to, among other things, extend the original two-year revolving period ending October of 2015 to a two-year revolving period ending April of 2017, which may be extended for up to one additional year, subject to satisfaction of customary conditions precedent. During the revolving period, the notes can be paid down in whole or in part and then redrawn. 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 full in May of 2020. The maximum amount that can be drawn under the notes remained at $350 million. At September 30, 2015, no amounts were drawn under the notes.

Mill River 2015-VFN1 Securitization

On May 27, 2015, we established a private securitization facility in which Mill River Funding Trust 2015-VFN1, a wholly owned special purpose vehicle, issued ~~$500~~variable funding notes with a maximum principal balance of $400 million ~~of notes~~to be backed by ~~an amortizing pool of~~ personal loans acquired from subsidiaries of ~~SFC.~~ SFC from time to time. No amounts were funded at closing, but may be funded from time to time over a three-year revolving period, subject to the satisfaction of customary conditions precedent. During the revolving period, the notes can be paid down in whole or in part and then redrawn. 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 full in June of 2021. At September 30, 2015, no amounts were drawn under the notes.

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Second Avenue Funding LLC Securitization

On ~~March 27, 2014,~~June 3, 2015, we ~~repaid the entire $231.3 million outstanding~~established a private securitization facility in which Second Avenue Funding LLC, a wholly owned special purpose vehicle, issued variable funding notes with a maximum principal balance of $250 million to be backed by auto loans acquired from subsidiaries of SFC. No amounts were funded at closing, but may be funded from time to time over a three-year revolving period, subject to the satisfaction of customary conditions precedent. During the revolving period, the notes ~~plus accrued~~can be paid down in whole or in part and ~~unpaid interest.~~then redrawn. Following the three-year revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying auto loans and will be due and payable in full in June of 2019. At September 30, 2015, no amounts were drawn under the notes.

First Avenue Funding LLC Securitization

On June 10, 2015, we established a private securitization facility in which First Avenue Funding LLC (“First Avenue”), a wholly owned special purpose vehicle, issued variable funding notes with a maximum principal balance of $250 million to be backed by auto loans acquired from subsidiaries of SFC. No amounts were funded at closing, but may be funded from time to time over a two-year revolving period, subject to the satisfaction of customary conditions precedent. On September 9, 2015, First Avenue amended the facility to extend the revolving period until September 10, 2017. During the revolving period, the notes can be paid down in whole or in part and then redrawn. Following the two-year revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying auto loans and will be due and payable in full twelve months following the maturity of the last auto loan held by First Avenue. At September 30, 2015, no amounts were drawn under the notes.

VIE Interest Expense

Other than our retained subordinate and residual interests in the remaining consolidated securitization trusts, we are under no obligation, either contractually or implicitly, to provide financial support to these entities. Consolidated interest expense related to our VIEs for the three and nine months ended September 30, ~~2014~~2015 totaled ~~$43.2~~$49 million and ~~$129.5~~$136 million, respectively, compared to ~~$39.9~~$43 million and ~~$101.8~~$130 million for the three and nine months ended September 30, ~~2013,~~2014, respectively.

DECONSOLIDATED VIES

As a result of the sales of the mortgage-backed retained certificates during ~~the first nine months of~~ 2014, we deconsolidated the securitization trusts holding the underlying real estate loans and previously issued securitized interests which were reported in long-term debt. The total carrying value of these real estate loans as of the sale dates was $5.1 billion. ~~We have certain representations and warranties associated with these sales that may expose us to future losses.~~ During ~~the third quarter of~~ 2014, we established a reserve for sales recourse obligations of ~~$6.7~~$6 million related to these sales. ~~As of~~At September 30, ~~2014, we~~2015, this reserve totaled $6 million. We had no repurchase activity associated with these ~~sales. However, we will continue to monitor any repurchase activity in the future and will adjust the reserve accordingly.~~

~~Table~~sales as of ~~Contents~~

~~10. Derivative Financial Instruments~~

~~During the three and nine months ended~~ September 30, ~~2014, SFC did not have any derivative activity.~~

~~In January 2013, we reclassified $0.2 million of deferred net gain from accumulated other comprehensive income or loss~~2015. See Note 14 for further information on the total reserve for sales recourse obligations relating to interest expense related to SFC’s election to discontinue and terminate one of its cash flow hedges in 2012. On August 5, 2013, SFC terminated its remaining cross currency interest rate swap agreement with AIG Financial Products Corp., a subsidiary of AIG, and recorded a loss of $1.9 million in other revenues — other. Immediately following this termination, we had no derivative financial instruments.

~~For~~ the three and nine months ended September 30, 2013, we recognized $1.0 million of net gains and $3.4 million of net losses, respectively, on SFC’s non-designated hedging instruments in other revenues — other.

~~Derivative adjustments included in other revenues — other consisted~~real estate loan sales, including the sales of the ~~following:~~

(dollars in thousands) Three Months
Ended
September 30,
2013 Nine Months
Ended
September 30,
2013

Mark to market gains (losses) $ 6,260
$ (8,244 )
Net interest income 1,701
9,161
Credit valuation adjustment gains 11
50
Other (292 ) (292 )
Total $ 7,680
$ 675

SFC was exposed to credit risk if counterparties to its swap agreement did not perform. SFC regularly monitored counterparty credit ratings throughout the term of the agreement. SFC’s exposure to market risk was limited to changes in the value of its swap agreement offset by changes in the value of the hedged debt. While SFC’s cross currency interest rate swap agreement mitigated economic exposure of related debt, it did not qualify as a cash flow or fair value hedge under U.S. GAAP.

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~~11. Accumulated Other Comprehensive Income~~

~~Changes in accumulated other comprehensive income were as follows:~~

(dollars in thousands)
Unrealized
Gains (Losses)
Investment
Securities

Unrealized
Gains (Losses)
Cash Flow
Hedges

Retirement
Plan
Liabilities
Adjustments

Foreign
Currency
Translation
Adjustments

Total
Accumulated
Other
Comprehensive
Income
(Loss)

Three Months Ended
September 30, 2014

Balance at beginning of period $ 14,551
$ —
$ 20,153
$ 3,086
$ 37,790
Other comprehensive income (loss) before reclassifications (2,491 ) —
—
761
(1,730 )
Reclassification adjustments from accumulated other comprehensive income (1,793 ) —
—
—
(1,793 )
Balance at end of period $ 10,267
$ —
$ 20,153
$ 3,847
$ 34,267

Three Months Ended
September 30, 2013 - Revised

Balance at beginning of period $ 5,501
$ —
$ 8,120
$ 6,221
$ 19,842
Other comprehensive loss before reclassifications (277 ) —
—
(2,056 ) (2,333 )
Reclassification adjustments from accumulated other comprehensive income 203
—
—
—
203
Balance at end of period $ 5,427
$ —
$ 8,120
$ 4,165
$ 17,712

Nine Months Ended
September 30, 2014

Balance at beginning of period $ 4,362
$ —
$ 20,153
$ 3,580
$ 28,095
Other comprehensive income before reclassifications 9,841
—
—
267
10,108
Reclassification adjustments from accumulated other comprehensive income (3,936 ) —
—
—
(3,936 )
Balance at end of period $ 10,267
$ —
$ 20,153
$ 3,847
$ 34,267

Nine Months Ended
September 30, 2013 - Revised

Balance at beginning of period $ 13,545
$ 104
$ 8,120
$ 4,127
$ 25,896
Other comprehensive income (loss) before reclassifications (7,076 ) —
—
38
(7,038 )
Reclassification adjustments from accumulated other comprehensive income (1,042 ) (104 ) —
—
(1,146 )
Balance at end of period $ 5,427
$ —
$ 8,120
$ 4,165
$ 17,712
mortgage-backed retained certificates.

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12. Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) were as follows:



(dollars in millions)	Unrealized Gains Investment Securities			Retirement Plan Liabilities Adjustments			Foreign Currency Translation Adjustments		Total Accumulated Other Comprehensive Income (Loss)

Three Months Ended September 30, 2015
Balance at beginning of period	$	2		$	(13	)	$	4	$	(7	)
Other comprehensive loss before reclassifications	(2		)	—			—		(2		)
Reclassification adjustments from accumulated other comprehensive income (loss)	(2		)	—			—		(2		)
Balance at end of period	$	(2	)	$	(13	)	$	4	$	(11	)

Three Months Ended September 30, 2014
Balance at beginning of period	$	14		$	20		$	4	$	38
Other comprehensive loss before reclassifications	(2		)	—			—		(2		)
Reclassification adjustments from accumulated other comprehensive income	(2		)	—			—		(2		)
Balance at end of period	$	10		$	20		$	4	$	34

Nine Months Ended September 30, 2015
Balance at beginning of period	$	12		$	(13	)	$	4	$	3
Other comprehensive loss before reclassifications	(5		)	—			—		(5		)
Reclassification adjustments from accumulated other comprehensive income (loss)	(9		)	—			—		(9		)
Balance at end of period	$	(2	)	$	(13	)	$	4	$	(11	)

Nine Months Ended September 30, 2014
Balance at beginning of period	$	4		$	20		$	4	$	28
Other comprehensive income before reclassifications	10			—			—		10
Reclassification adjustments from accumulated other comprehensive income	(4		)	—			—		(4		)
Balance at end of period	$	10		$	20		$	4	$	34

Reclassification adjustments from accumulated other comprehensive income (loss) to the applicable line item on our condensed consolidated statements of operations were as follows:

(dollars in thousands) Three Months
Ended
September 30,
2014
Three Months
Ended
September 30,
2013
Nine Months
Ended
September 30,
2014
Nine Months
Ended
September 30,
2013
Revised Revised
Unrealized gains (losses) on investment securities:

Reclassification from accumulated other comprehensive income to investment revenues, before taxes $ 2,758
$ (312 ) $ 6,055
$ 1,603
Income tax effect (965 ) 109
(2,119 ) (561 )
Reclassification from accumulated other comprehensive income to investment revenues, net of taxes 1,793
(203 ) 3,936
1,042

Unrealized gains on cash flow hedges:

Reclassification from accumulated other comprehensive income to interest expense, before taxes —
—
—
160
Income tax effect —
—
—
(56 )
Reclassification from accumulated other comprehensive income to interest expense, net of taxes —
—
—
104
Total $ 1,793
$ (203 ) $ 3,936
$ 1,146



(dollars in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)	2015			2014			2015			2014

Unrealized gains on investment securities:
Reclassification from accumulated other comprehensive income (loss) to investment revenues, before taxes	$	4		$	3		$	14		$	6
Income tax effect	(2		)	(1		)	(5		)	(2		)
Reclassification from accumulated other comprehensive income (loss) to investment revenues, net of taxes	$	2		$	2		$	9		$	4

~~12.~~

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13. Income Taxes

At September 30, ~~2014,~~2015, we had a net deferred tax liability of ~~$151.3~~$138 million, compared to ~~$141.9~~$156 million at December 31, ~~2013.~~2014. The ~~increase~~decrease in the net deferred tax liability was primarily due to purchase accounting for debt writedown. This decrease was partially offset by a change in our tax accounting method for the ~~sales~~valuation of certain assets, which was approved by the ~~mortgage securitizations during the first nine months~~Internal Revenue Service (the “IRS”) in August of 2014. We have a valuation allowance on our gross state deferred tax assets, net of a deferred federal tax benefit of $24.9 million, at September 30, 2014 compared to $23.8 million at December 31, 2013. We also had a valuation allowance against our United Kingdom and Puerto Rico operations of $22.2 million at September 30, 2014 and $21.4 million at December 31, 2013.2015. The impact to our uncertain tax positions was immaterial.

The effective tax rate for the nine months ended September 30, ~~2014~~2015 was ~~34.7%~~12.1% compared to ~~37.3%~~34.7% for the same period in ~~2013.~~2014. The effective tax ~~rate~~rates for the nine months ended September 30, 2015 and 2014 differed from the federal statutory ~~rate~~rates primarily due to the effect of the non-controlling interest in our joint ~~venture, which decreased~~venture.

We are currently under examination of our U.S. Federal tax return for the ~~effective tax rate by 1.8%, partially offset~~year 2013 by the ~~effect of our state income~~IRS. Management believes it has adequately provided for taxes ~~which increased the effective tax rate by 1.5%. The effective tax rate~~ for ~~the nine months ended September 30, 2013 differed from the federal statutory rate primarily due to the effect of the state income taxes.~~such year.

~~13.~~14. Contingencies

LEGAL CONTINGENCIES

In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation arising in connection with its activities. Some of the actual or threatened legal actions include claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages. While we will continue to identify certain legal actions where we believe a material loss to be reasonably possible and reasonably estimable, there can be no assurance that material losses will not be incurred from claims that we have not yet been notified of or are not yet determined to be probable or reasonably possible and reasonably estimable.

We contest liability and/or the amount of damages, as appropriate, in each pending matter. Where available information indicates that it is probable that a liability had been incurred at the date of the condensed consolidated financial statements and we can reasonably estimate the amount of that loss, we accrue the estimated loss by a charge to income. In many actions, however, it is inherently difficult to determine whether any loss is probable or even reasonably possible or to estimate the amount of any loss. In addition, even where loss is reasonably possible or an exposure to loss exists in excess of the liability already accrued with respect to a previously recognized loss contingency, it is not always possible to reasonably estimate the size of the possible loss or range of loss.

For certain legal actions, we cannot reasonably estimate such losses, particularly for actions that are in their early stages of development or where plaintiffs seek substantial or indeterminate damages. Numerous issues may need to be resolved,

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including through potentially lengthy discovery and determination of important factual matters, and by addressing novel or unsettled legal questions relevant to the actions in question, before a loss or additional loss or range of loss or additional loss can be reasonably estimated for any given action.

For certain other legal actions, we can estimate reasonably possible losses, additional losses, ranges of loss or ranges of additional loss in excess of amounts accrued, but do not believe, based on current knowledge and after consultation with counsel, that such losses will have a material adverse effect on our condensed consolidated financial statements as a whole.

SALES RECOURSE OBLIGATIONS

During 2014, we established a reserve for sales recourse obligations of $22 million related to the real estate loan sales. At September 30, 2015, our reserve for sales recourse obligations totaled $18 million, of which $18 million related to the real estate loan sales in 2014. We had no repurchase activity during the three months ended September 30, 2015. We repurchased 13 loans totaling $1 million for the nine months ended September 30, 2015 associated with the real estate loan sales in 2014. There was no repurchase activity associated with the real estate loan sales in 2014 during the three and nine months ended September 30, 2014. We repurchased 4 loans totaling $1 million during the three months ended September 30, 2014 and 9 loans totaling $2 million during the nine months ended September 30, 2014 associated with other prior sales of finance receivables because these loans were reaching the defined delinquency limits or had breached the contractual representations and warranties under the loan sale agreements. At September 30, 2015, there were no material recourse requests that management believes will not be covered by the reserve.

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The activity in our reserve for sales recourse obligations associated with the real estate loan sales during 2014 and other prior sales of finance receivables was as follows:



	Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in millions)	2015		2014		2015			2014

Balance at beginning of period	$	18	$	5	$	24		$	5
Recourse losses	—		—		(5		)	—
Provision for recourse obligations, net of recoveries *	—		8		(1		)	8
Balance at end of period	$	18	$	13	$	18		$	13


*	Reflects the elimination of the reserve associated with other prior sales of finance receivables.

It is inherently difficult to determine whether any recourse losses are probable or even reasonably possible or to estimate the amounts of any losses. In addition, even where recourse losses are reasonably possible or exposure to such losses exists in excess of the liability already accrued, it is not always possible to reasonably estimate the size of the possible recourse losses or range of losses.

PAYMENT PROTECTION INSURANCE

Our United Kingdom subsidiary provides payments of compensation to its customers who have made claims concerning Payment Protection Insurance (“PPI”) policies sold in the normal course of business by insurance intermediaries. On April 20, 2011, the High Court in the United Kingdom handed down judgment supporting the Financial Services Authority (now known as the Financial Conduct Authority) (“FCA”) guidelines on the treatment of PPI complaints. In addition, the FCA issued a guidance consultation paper in March of 2012 on the PPI customer contact letters. As a result, we have concluded that there are certain circumstances where customer contact and/or redress is appropriate; therefore, this activity is ongoing. The total reserves related to the estimated PPI claims were ~~$22.1~~$8 million at September 30, ~~2014~~2015 and ~~$33.5~~$14 million at December 31, ~~2013.~~2014. We do not believe that any additional losses related to PPI claims in excess of the amounts accrued will have a material adverse effect on our condensed consolidated financial statements as a whole.

~~14.~~15. Benefit Plans

~~PENSION AND POSTRETIREMENT PLANS~~

Effective December 31, 2012, the Springleaf Financial Services Retirement Plan (the “Retirement Plan”) and the CommoLoCo Retirement Plan (a defined benefit pension plan for our employees in Puerto Rico) were frozen. Our current and former employees will not lose any vested benefits in the Retirement Plan or the CommoLoCo Retirement Plan that accrued prior to January 1, 2013.

The following table presents the components of net periodic benefit cost with respect to our defined benefit pension ~~plans and other postretirement benefit~~ plans:

(dollars in thousands) Three Months
Ended
September 30,
2014
Three Months
Ended
September 30,
2013
Nine Months
Ended
September 30,
2014
Nine Months
Ended
September 30,
2013

Pension

Components of net periodic benefit cost:

Interest cost $ 3,805
$ 3,589
$ 11,441
$ 10,769
Expected return on assets (4,107 ) (3,874 ) (12,326 ) (11,622 )
Amortization of net loss 2
12
4
35
Net periodic benefit cost $ (300 ) $ (273 ) $ (881 ) $ (818 )

Postretirement

Components of net periodic benefit cost:

Service cost $ 20
$ 81
$ 64
$ 242
Interest cost 21
64
73
193
Amortization of net gain (81 ) —
(215 ) —
Net periodic benefit cost $ (40 ) $ 145
$ (78 ) $ 435

~~15. Share-Based Compensation~~



(dollars in millions)	Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)	2015			2014			2015			2014

Pension
Components of net periodic benefit cost:
Interest cost	$	4		$	3		$	12		$	11
Expected return on assets	(5		)	(4		)	(14		)	(12		)
Net periodic benefit cost	$	(1	)	$	(1	)	$	(2	)	$	(1	)

~~Total share-based compensation expense,~~The components of net ~~of forfeitures,~~periodic benefit cost with respect to our post retirement plan were less than $1 million for ~~all stock-based awards and amounts allocated under our intercompany service agreements during~~ the three and nine months ended September 30, 2015 and 2014 ~~was $0.4 million~~ and, ~~$3.5 million, respectively, compared to $131.3 million during~~therefore, were not included in the ~~three and nine months ended September 30, 2013.~~table above.

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16. Segment Information

Our segments coincide with how our businesses are managed. At September 30, ~~2014,~~2015, our ~~four~~three segments include:

Consumer ~~Insurance,~~ and Insurance;

Acquisitions and ~~Servicing,~~Servicing; and

Real Estate.

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When we initially defined our operating segments in early 2013, we presented Consumer and Insurance as two distinct reporting segments. However, over the course of 2013 and into 2014, management has shifted its strategy for the Insurance segment toward organic growth primarily as an ancillary product complementing our consumer lending activities and has been increasingly viewing and managing the Insurance segment together with Consumer. As a result of the changes in strategy and the way that management views the insurance business of the Company, we began presenting them as one segment, effective December 31, 2014. To conform to the new segment alignment, we have revised our prior period segment disclosures. The Acquisitions and Servicing segment was added effective July 31, 2014, as a result of the SAC Capital Contribution on July 31, ~~2014, as previously discussed in Note 1.~~2014.

Management considers Consumer and Insurance, and Acquisitions and Servicing as our “Core Consumer Operations” and Real Estate as our “Non-Core Portfolio.”

Our segments are managed as follows:

Core Consumer Operations

Consumer and Insurance— We originate and service personal loans (secured and unsecured) ~~in 26 states, which are our core operating states.~~

~~Insurance~~ ~~— We~~through two business divisions: branch operations and centralized operations and offer credit insurance (life insurance, accident and health insurance, and involuntary unemployment insurance), non-credit insurance, and ancillary products, such as warranty protection. Branch operations primarily conduct business in 27 states, which are our core operating 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 — O~~n April 1, 2013,~~We service the SpringCastle Portfolio that was acquired by an indirect subsidiary of SHI ~~acquired the SpringCastle Portfolio~~ through a joint venture in which SFC currently owns a 47% equity ~~interest as a result of the SAC Capital Contribution on July 31, 2014.~~interest. The SpringCastle Portfolio consists of unsecured loans and loans secured by subordinate residential real estate mortgages (which we service as unsecured loans due to the fact that the liens are subordinated to superior ranking security interests). and includes both closed-end accounts and open-end lines of credit. These loans vary in form and substance from our typical branch serviced loans and are in a liquidating ~~status with no anticipation of significant renewal activity. Future strategic portfolio or business acquisitions will also be a part of this segment.~~status.

Non-Core Portfolio

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 ~~either~~ serviced by: (i) MorEquity ~~a wholly owned subsidiary, all of which are~~and subserviced by ~~Nationstar~~Nationstar; (ii) Select Portfolio Servicing, Inc.; or ~~(ii)~~(iii) our centralized ~~servicing operation.~~operations. Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar.

The remaining components (which we refer to as “Other”) consist of our other non-core, non-originating legacy operations, which are isolated by geographic market and/or distribution channel from our Core Consumer Operations and our Non-Core Portfolio. These operations ~~include~~include: (i) our legacy operations in 14 states where we have also ceased branch-based personal ~~lending,~~lending; (ii) our liquidating retail sales finance portfolio (including our retail sales finance accounts from our dedicated auto finance operation),; (iii) our lending operations in Puerto Rico and the U.S. Virgin ~~Islands,~~Islands; and (iv) the operations of our United Kingdom subsidiary. Effective June 1, 2014, we also report (on a prospective basis) certain real estate loans with equity capacity in Other. These short equity loans, which have liquidated down to an immaterial level, were previously included in our Core Consumer Operations. At June 1, 2014, the transfer date, the carrying value of these loans totaled $16.3 million.

Due to the nature of the Fortress Acquisition, we applied push-down accounting. However, we report the operating results of our Core Consumer Operations, Non-Core Portfolio, and Other using the same accounting basis that we employed prior to the Fortress Acquisition, which we refer to as “historical accounting basis,” to provide a consistent basis for both management and other interested third parties to better understand the operating results of these segments. The historical accounting basis (which is a basis of accounting other than U.S. GAAP) also provides better comparability of the operating results of these segments to our competitors and other companies in the financial services industry. The historical accounting basis is not applicable to the Acquisitions and Servicing segment since this segment resulted from the SAC Capital Contribution ~~on July 31, 2014 and therefore, was not affected by~~subsequent to the Fortress Acquisition.

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The “Push-down Accounting Adjustments” column in the following tables primarily consists of:

the accretion or amortization of the valuation adjustments on the applicable revalued assets and liabilities;

the difference in finance charges on our purchased credit impaired finance receivables compared to the finance charges on these finance receivables on a historical accounting basis;

the elimination of accretion or amortization of historical based discounts, premiums, and other deferred costs on our finance receivables and long-term debt;

~~Table of Contents~~

the difference in provision for finance receivable losses required based upon the differences in historical accounting basis and push-down accounting basis of the finance receivables;

the acceleration of the accretion of the net discount or amortization of the net premium applied to long-term debt that we repurchase or repay;

the reversal of the remaining unaccreted push-down accounting basis for net finance receivables, less allowance for finance receivable losses established at the date of the Fortress Acquisition on finance receivables held for sale that we sold; and

the difference in the fair value of long-term debt based upon the differences between historical accounting basis where certain long-term debt components are marked-to-market on a recurring basis, and push-down accounting basis where long-term debt is no longer marked-to-market on a recurring basis.

~~Table of Contents~~

The following tables present information about the Company’s segments as well as reconciliations to the condensed consolidated financial statement amounts.

(dollars in thousands) Consumer Insurance Acquisitions and Servicing Real Estate Other
Push-down
Accounting
Adjustments

Consolidated
Total

Three Months Ended
September 30, 2014

Interest income:
Finance charges $ 234,659
$ —
$ 83,732
$ 52,994
$ 3,852
$ 10,077
$ 385,314
Finance receivables held for sale originated as held for investment —
—
—
40,327
—
6,175
46,502
Total interest income 234,659
—
83,732
93,321
3,852
16,252
431,816
Interest expense 40,234
—
11,593
82,465
1,846
36,354
172,492
Net interest income 194,425
—
72,139
10,856
2,006
(20,102 ) 259,324
Provision for finance receivable losses 55,357
—
18,072
37,239
1,291
(19,845 ) 92,114
Net interest income (loss) after provision for finance receivable losses 139,068
—
54,067
(26,383 ) 715
(257 ) 167,210
Other revenues:

Insurance —
43,984
—
—
27
(1 ) 44,010
Investment —
13,722
—
(953 ) —
(1,563 ) 11,206
Intersegment - insurance commissions 19,489
(19,708 ) —
219
—
—
—
Net gain on fair value adjustments on debt —
—
1,523
—
—
—
1,523
Net gain on sales of real estate loans and related trust assets * —
—
—
286,357
—
330,177
616,534
Other 609
2,428
—
(2,163 ) 1,372
(12,700 ) (10,454 )
Total other revenues 20,098
40,426
1,523
283,460
1,399
315,913
662,819
Other expenses:

Operating expenses:

Salaries and benefits 61,751
4,790
2
17,185
1,916
(42 ) 85,602
Other operating expenses 41,500
3,456
11,787
17,890
1,092
963
76,688
Insurance losses and loss adjustment expenses —
20,451
—
—
—
(310 ) 20,141
Total other expenses 103,251
28,697
11,789
35,075
3,008
611
182,431

Income (loss) before provision for (benefit from) income taxes 55,915
11,729
43,801
222,002
(894 ) 315,045
647,598

Income before provision for income taxes attributable to non-controlling interests —
—
23,225
—
—
—
23,225

Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation $ 55,915
$ 11,729
$ 20,576
$ 222,002
$ (894 ) $ 315,045
$ 624,373



(dollars in millions)	Consumer and Insurance		Acquisitions and Servicing		Real Estate			Other			Push-down Accounting Adjustments			Consolidated Total

Three Months Ended September 30, 2015
Interest income	$	289	$	113	$	17		$	1		$	3		$	423
Interest expense	43		22		58			16			32			171
Provision for finance receivable losses	62		19		(4		)	—			5			82
Net interest income (loss) after provision for finance receivable losses	184		72		(37		)	(15		)	(34		)	170
Other revenues	55		—		(2		)	4			(2		)	55
Other expenses	157		14		8			2			1			182
Income (loss) before provision for (benefit from) income taxes	82		58		(47		)	(13		)	(37		)	43
Income before provision for income taxes attributable to non-controlling interests	—		31		—			—			—			31
Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation	$	82	$	27	$	(47	)	$	(13	)	$	(37	)	$	12


*	For purposes of our segment reporting presentation, 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 sale of these loans.



(dollars in millions)	Consumer and Insurance		Acquisitions and Servicing		Real Estate			Other			Push-down Accounting Adjustments			Consolidated Total

Three Months Ended September 30, 2014
Interest income	$	234	$	84	$	94		$	4		$	16		$	432
Interest expense	39		12		83			2			36			172
Provision for finance receivable losses	55		18		37			2			(19		)	93
Net interest income (loss) after provision for finance receivable losses	140		54		(26		)	—			(1		)	167
Other revenues	60		1		284			1			317			663
Other expenses	131		12		36			3			—			182
Income (loss) before provision for (benefit from) income taxes	69		43		222			(2		)	316			648
Income before provision for income taxes attributable to non-controlling interests	—		23		—			—			—			23
Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation	$	69	$	20	$	222		$	(2	)	$	316		$	625

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(dollars in thousands) Consumer Insurance Real Estate Other
Push-down
Accounting
Adjustments

Consolidated
Total

Three Months Ended
September 30, 2013 - Revised

Interest income $ 188,294
$ —
$ 168,873
$ 10,000
$ 49,974
$ 417,141
Interest expense 38,254
—
129,776
3,329
33,911
205,270
Net interest income 150,040
—
39,097
6,671
16,063
211,871
Provision for finance receivable losses 38,111
—
52,547
2,364
8,368
101,390
Net interest income (loss) after provision for finance receivable losses 111,929
—
(13,450 ) 4,307
7,695
110,481
Other revenues:

Insurance —
38,266
—
18
(7 ) 38,277
Investment —
8,313
—
—
(1,781 ) 6,532
Intersegment - insurance commissions 15,086
(15,097 ) 42
(31 ) —
—
Net loss on repurchases and repayments of debt (2,891 ) —
(15,817 ) (706 ) (14,158 ) (33,572 )
Net gain (loss) on fair value adjustments on debt —
��
12,216
—
(12,216 ) —
Other 492
2,426
(1,842 ) 4,404
34
5,514
Total other revenues 12,687
33,908
(5,401 ) 3,685
(28,128 ) 16,751
Other expenses:

Operating expenses:

Salaries and benefits 61,398
4,480
7,551
136,249
(53 ) 209,625
Other operating expenses 30,867
3,288
14,789
2,063
1,103
52,110
Insurance losses and loss adjustment expenses —
16,849
—
—
(299 ) 16,550
Total other expenses 92,265
24,617
22,340
138,312
751
278,285
Income (loss) before provision for (benefit from) income taxes $ 32,351
$ 9,291
$ (41,191 ) $ (130,320 ) $ (21,184 ) $ (151,053 )



(dollars in millions)	Consumer and Insurance		Acquisitions and Servicing		Real Estate			Other			Eliminations			Push-down Accounting Adjustments			Consolidated Total

At or for the Nine Months Ended September 30, 2015
Interest income	$	810	$	356	$	52		$	6		$	—		$	10		$	1,234
Interest expense	119		67		177			48			(5		)	94			500
Provision for finance receivable losses	170		69		(7		)	1			—			14			247
Net interest income (loss) after provision for finance receivable losses	521		220		(118		)	(43		)	5			(98		)	487
Other revenues	161		5		4			10			(5		)	(8		)	167
Other expenses	448		45		24			17			—			3			537
Income (loss) before provision for (benefit from) income taxes	234		180		(138		)	(50		)	—			(109		)	117
Income before provision for income taxes attributable to non-controlling interests	—		93		—			—			—			—			93
Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation	$	234	$	87	$	(138	)	$	(50	)	$	—		$	(109	)	$	24

Assets	$	5,628	$	1,751	$	3,551		$	1,471		$	—		$	(19	)	$	12,382



(dollars in millions)	Consumer and Insurance		Acquisitions and Servicing		Real Estate			Other			Push-down Accounting Adjustments			Consolidated Total

At or for the Nine Months Ended September 30, 2014
Interest income	$	663	$	84	$	382		$	13		$	84		$	1,226
Interest expense	121		12		287			6			100			526
Provision for finance receivable losses	148		18		119			7			(18		)	274
Net interest income (loss) after provision for finance receivable losses	394		54		(24		)	—			2			426
Other revenues	167		1		196			5			486			855
Other expenses	380		12		77			14			2			485
Income (loss) before provision for (benefit from) income taxes	181		43		95			(9		)	486			796
Income before provision for income taxes attributable to non-controlling interests	—		23		—			—			—			23
Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation	$	181	$	20	$	95		$	(9	)	$	486		$	773

Assets (a) (b)	$	4,626	$	2,239	$	3,720		$	705		$	16		$	11,306


(a)	As a result of our early adoption of ASU 2015-03, we reclassified $29 million of debt issuance costs from other assets to long-term debt as of September 30, 2014.


(b)	See Note 1 for further information on the correction of this prior period disclosure.

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(dollars in thousands) Consumer Insurance
Acquisitions
and
Servicing
Real Estate Other
Push-down
Accounting
Adjustments

Consolidated
Total

At or for the Nine Months Ended
September 30, 2014

Interest income:
Finance charges $ 662,979
$ —
$ 83,732
$ 334,070
$ 13,268
$ 77,945
$ 1,171,994
Finance receivables held for sale originated as held for investment —
—
—
47,457
—
6,287
53,744
Total interest income 662,979
—
83,732
381,527
13,268
84,232
1,225,738
Interest expense 121,428
—
11,593
286,955
5,821
100,238
526,035
Net interest income 541,551
—
72,139
94,572
7,447
(16,006 ) 699,703
Provision for finance receivable losses 147,697
—
18,072
119,228
6,557
(18,182 ) 273,372
Net interest income (loss) after provision for finance receivable losses 393,854
—
54,067
(24,656 ) 890
2,176
426,331
Other revenues:

Insurance —
125,023
—
—
98
(5 ) 125,116
Investment —
35,652
—
(953 ) —
(3,433 ) 31,266
Intersegment - insurance commissions 51,390
(51,822 ) —
442
(10 ) —
—
Net gain (loss) on repurchases and repayments of debt (1,426 ) —
—
(10,025 ) (48 ) 4,884
(6,615 )
Net gain (loss) on fair value adjustments on debt —
—
1,523
8,298
—
(8,298 ) 1,523
Net gain on sales of real estate loans and related trust assets * —
—
—
201,362
—
505,158
706,520
Other 1,731
6,103
—
(3,070 ) 4,696
(12,700 ) (3,240 )
Total other revenues 51,695
114,956
1,523
196,054
4,736
485,606
854,570
Other expenses:

Operating expenses:

Salaries and benefits 190,951
14,500
2
34,558
9,183
(129 ) 249,065
Other operating expenses 106,780
10,291
11,787
42,088
4,839
2,909
178,694
Insurance losses and loss adjustment expenses —
57,923
—
—
—
(750 ) 57,173
Total other expenses 297,731
82,714
11,789
76,646
14,022
2,030
484,932

Income (loss) before provision for (benefit from) income taxes 147,818
32,242
43,801
94,752
(8,396 ) 485,752
795,969

Income before provision for income taxes attributable to non-controlling interests —
—
23,225
—
—
—
23,225

Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation $ 147,818
$ 32,242
$ 20,576
$ 94,752
$ (8,396 ) $ 485,752
$ 772,744

Assets $ 3,668,399
$ 1,060,074
$ 2,249,621
$ 3,633,492
$ 714,987
$ 8,617
$ 11,335,190


*	For purposes of our segment reporting presentation, we have combined the lower of cost or fair value adjustments recorded on the dates the real estate loans were transferred to finance receivables held for sale with the final gain (loss) on the sales of these loans.

~~Table of Contents~~

(dollars in thousands) Consumer Insurance Real Estate Other
Push-down
Accounting
Adjustments

Consolidated
Total

At or for the Nine Months Ended
September 30, 2013 - Revised

Interest income $ 519,315
$ —
$ 529,447
$ 37,630
$ 147,112
$ 1,233,504
Interest expense 111,393
—
421,989
12,198
104,281
649,861
Net interest income 407,922
—
107,458
25,432
42,831
583,643
Provision for finance receivable losses 52,126
—
189,600
(3,384 ) 21,663
260,005
Net interest income (loss) after provision for finance receivable losses 355,796
—
(82,142 ) 28,816
21,168
323,638
Other revenues:

Insurance —
107,114
—
58
(28 ) 107,144
Investment —
31,792
—
—
(5,934 ) 25,858
Intersegment - insurance commissions 43,296
(43,302 ) 100
(94 ) —
—
Net gain (loss) on repurchases and repayments of debt (4,391 ) —
(35,417 ) (977 ) 6,976
(33,809 )
Net gain (loss) on fair value adjustments on debt —
—
45,427
—
(45,427 ) —
Other 1,256
6,797
(1,372 ) 14,328
(135 ) 20,874
Total other revenues 40,161
102,401
8,738
13,315
(44,548 ) 120,067
Other expenses:

Operating expenses:

Salaries and benefits 182,051
11,402
20,541
149,329
(160 ) 363,163
Other operating expenses 89,642
8,369
43,431
6,174
3,418
151,034
Insurance losses and loss adjustment expenses —
48,373
—
—
(723 ) 47,650
Total other expenses 271,693
68,144
63,972
155,503
2,535
561,847
Income (loss) before provision for (benefit from) income taxes $ 124,264
$ 34,257
$ (137,376 ) $ (113,372 ) $ (25,915 ) $ (118,142 )

Assets $ 3,065,463
$ 913,440
$ 8,761,219
$ 1,801,248
$ (639,502 ) $ 13,901,868

17. ~~Prior Period Revisions~~

As disclosed in our 2013 Annual Report on Form 10-K, we identified certain out-of-period errors in preparing our annual consolidated financial statements for the year ended December 31, 2013. In addition to these errors, we had previously recorded and disclosed out-of-period adjustments in prior reporting periods when the errors were discovered. As a result, we revised all previously reported periods included in our 2013 Annual Report on Form 10-K. Similarly, we have revised all previously reported periods included in this report. We corrected the errors identified in the fourth quarter of 2013 and included these corrections in the appropriate prior periods. In addition, we reversed all out-of period adjustments previously recorded and disclosed, and included the adjustments in the appropriate periods. After evaluating the quantitative and qualitative aspects of these corrections, we have determined that our previous quarterly condensed financial statements and our annual consolidated financial statements were not materially misstated.

The errors identified in the fourth quarter of 2013 related to the following: (1) the accretion of net discount applied to long-term debt that was revalued based on its fair value at the time of the Fortress Acquisition; (2) the accretion of original issue net discount on our long-term debt issued subsequent to the Fortress Acquisition; (3) the classification of certain investment securities found to contain embedded derivatives and the accounting treatment of the related change in fair value; and (4) the continued accretion of discounts on loans in non-accrual status.

~~Table of Contents~~

In addition, we made other corrections during the fourth quarter of 2013, which were isolated to intra-periods in 2013, and revised the appropriate periods of 2013 in our 2013 Annual Report on Form 10-K and in this report. These revisions related to charge-offs on certain qualified real estate loans that had not been granted principal forgiveness.

~~We also recorded the previously disclosed out-of-period adjustments in the appropriate periods. These adjustments primarily related to the following:~~

~~capitalized interest on purchased credit impaired finance receivables serviced by a third party;~~

~~the difference between the hypothetical derivative interest expense and the contractual derivative interest expense;~~

~~the identification of certain bankrupt real estate loan accounts for consideration as TDR finance receivables;~~

~~to correct certain inputs in our model supporting the TDR allowance for finance receivable losses;~~

~~distributions of limited partnerships;~~

~~the calculations of the carrying value for our real estate owned and the net loss on sales of our real estate owned that are externally serviced;~~

~~the calculation of real estate owned expenses;~~

~~payable to former parent related to any refund of (or credit for) taxes, including any interest received;~~

~~benefit reserves related to a closed block of annuities;~~

~~change in estimate for the taxable income related to mortgage securitizations; and~~

~~the correction of current and deferred tax expense.~~

In addition to the revisions previously discussed, during the fourth quarter of 2013 we identified presentation errors in the classification of certain line items within our consolidated statement of cash flows and revised the appropriate line items in our 2013 Annual Report on Form 10-K and in this report. These errors related to the following:

the income tax effect on the changes in accumulated other comprehensive income related to net unrealized gains and losses on investment securities and cash flow hedges were incorrectly included in “Change in other assets and other liabilities” instead of “Change in taxes receivable and payable” within the same operating activities section;

certain debt issue costs were incorrectly included in “Change in other assets and other liabilities” within the operating activities section instead of “Proceeds from issuance of long-term debt, net of commissions” within the financing activities section;

the deferred costs on the repurchased debt incurred after the Fortress Acquisition were incorrectly included in “Change in other assets and other liabilities” instead of “Net loss on repurchases and repayments of debt” within the same operating activities section;

accrued interest and finance charges on real estate loan modifications were incorrectly included in “Principal collections on finance receivables” within the investing activities section instead of “Change in accrued interest and finance charges” within the operating activities section; and

~~“Deferral of finance receivable origination costs” was incorrectly included within the operating activities section instead of the investing activities section.~~

~~Table of Contents~~

~~Revised Condensed Consolidated Statement of Operations (Unaudited)~~

The following table reconciles the amounts previously reported in our condensed consolidated statement of operations to the corresponding revised amounts. The “Out-of-Period” column reflects the previously disclosed out-of period adjustments that are now being corrected in the appropriate periods. The “Adjustments” column reflects the corrections of the errors discovered during the fourth quarter of 2013.

Three Months Ended
September 30, 2013 (Unaudited) Nine Months Ended
September 30, 2013 (Unaudited)
(dollars in thousands) As Reported Out-of-Period Adjustments As Revised As Reported Out-of-Period Adjustments As Revised

Interest income $ 417,627
$ —
$ (486 ) $ 417,141
$ 1,235,483
$ —
$ (1,979 ) $ 1,233,504
Interest expense 205,036
—
234
205,270
646,932
—
2,929
649,861
Net interest income 212,591
—
(720 ) 211,871
588,551
—
(4,908 ) 583,643
Provision for finance receivable losses 97,414
4,389
(413 ) 101,390
262,142
(860 ) (1,277 ) 260,005
Net interest income after provision for finance receivable losses 115,177
(4,389 ) (307 ) 110,481
326,409
860
(3,631 ) 323,638
Other revenues:

Insurance 38,277
—
—
38,277
107,144
—
—
107,144
Investment 6,756
—
(224 ) 6,532
26,291
—
(433 ) 25,858
Net loss on repurchases and repayments of debt (34,503 ) —
931
(33,572 ) (34,558 ) —
749
(33,809 )
Other 5,514
—
—
5,514
20,874
—
—
20,874
Total other revenues 16,044
—
707
16,751
119,751
—
316
120,067
Other expenses:

Operating expenses:

Salaries and benefits 209,625
—
—
209,625
363,163
—
—
363,163
Other operating expenses 52,110
—
—
52,110
151,034
—
—
151,034
Insurance losses and loss adjustment expenses 16,550
—
—
16,550
47,650
—
—
47,650
Total other expenses 278,285
—
—
278,285
561,847
—
—
561,847
Loss before benefit from income taxes (147,064 ) (4,389 ) 400
(151,053 ) (115,687 ) 860
(3,315 ) (118,142 )
Benefit from income taxes (55,669 ) (1,624 ) 148
(57,145 ) (42,001 ) (869 ) (1,227 ) (44,097 )
Net loss $ (91,395 ) $ (2,765 ) $ 252
$ (93,908 ) $ (73,686 ) $ 1,729
$ (2,088 ) $ (74,045 )

~~Table of Contents~~

~~Revised Condensed Consolidated Statement of Comprehensive Loss (Unaudited)~~

~~The following table presents the amounts previously reported in our condensed consolidated statement of comprehensive income and the corresponding revised amounts.~~

Three Months Ended
September 30, 2013 (Unaudited) Nine Months Ended
September 30, 2013 (Unaudited)
(dollars in thousands) As Reported As Revised As Reported As Revised

Net loss $ (91,395 ) $ (93,908 ) $ (73,686 ) $ (74,045 )
Other comprehensive loss:

Net unrealized losses on:

Investment securities on which other-than-temporary impairments were taken (17 ) (17 ) (135 ) (135 )
All other investment securities (314 ) (412 ) (10,747 ) (10,747 )
Foreign currency translation adjustments (2,056 ) (2,056 ) 38
38
Income tax effect:

Net unrealized losses on:

Investment securities on which other-than-temporary impairments were taken 6
6
47
47
All other investment securities 110
146
3,761
3,759
Other comprehensive loss, net of tax, before reclassification adjustments (2,271 ) (2,333 ) (7,036 ) (7,038 )
Reclassification adjustments included in net loss:

Net realized (gains) losses on investment securities (10 ) 312
(2,036 ) (1,603 )
Cash flow hedges —
—
(160 ) (160 )
Income tax effect:

Net realized gains (losses) on investment securities 4
(109 ) 713
561
Cash flow hedges —
—
56
56
Reclassification adjustments included in net loss, net of tax (6 ) 203
(1,427 ) (1,146 )
Other comprehensive loss, net of tax (2,277 ) (2,130 ) (8,463 ) (8,184 )
Comprehensive loss $ (93,672 ) $ (96,038 ) $ (82,149 ) $ (82,229 )

~~Table of Contents~~

~~Revised Condensed Consolidated Statement of Cash Flows (Unaudited)~~

The following table presents the amounts previously reported in our condensed consolidated statement of cash flows and the corresponding revised amounts and includes additional corrections to the classification of certain line items within our condensed consolidated statement of cash flows.

Nine Months Ended
September 30, 2013 (Unaudited)
(dollars in thousands) As Reported As Revised

Cash flows from operating activities

Net loss $ (73,686 ) $ (74,045 )
Reconciling adjustments:

Provision for finance receivable losses 262,142
260,005
Depreciation and amortization 48,085
52,993
Deferral of finance receivable origination costs (42,141 ) —
Deferred income tax benefit (126,924 ) (109,181 )
Net loss on repurchases and repayments of debt 17,075
33,809
Share-based compensation expense, net of forfeitures 131,250
131,250
Other (445 ) (445 )
Cash flows due to changes in:

Other assets and other liabilities 59,549
90,572
Insurance claims and policyholder liabilities 14,917
14,917
Taxes receivable and payable (30,731 ) (46,147 )
Accrued interest and finance charges 2,491
(29,957 )
Restricted cash not reinvested (5,716 ) (5,715 )
Other, net (823 ) (824 )
Net cash provided by operating activities 255,043
317,232

Cash flows from investing activities

Finance receivables originated or purchased, net of deferred origination costs (1,589,051 ) (1,631,192 )
Principal collections on finance receivables 1,957,957
1,990,405
Available-for-sale investment securities purchased (96,574 ) (90,279 )
Trading investment securities purchased —
(6,295 )
Available-for-sale investment securities called, sold, and matured 183,603
176,111
Trading investment securities called, sold, and matured —
7,492
Change in notes receivable from parent and affiliate (30,750 ) (30,750 )
Change in restricted cash (227,213 ) (227,213 )
Proceeds from sale of real estate owned 87,747
87,747
Other, net (12 ) (12 )
Net cash provided by investing activities 285,707
276,014

Cash flows from financing activities

Proceeds from issuance of long-term debt, net of commissions 3,477,534
3,459,579
Repayment of long-term debt (4,346,910 ) (4,381,451 )
Capital contributions from parent 21,000
21,000
Net cash used for financing activities (848,376 ) (900,872 )

Effect of exchange rate changes (835 ) (835 )

Net change in cash and cash equivalents (308,461 ) (308,461 )
Cash and cash equivalents at beginning of period 1,357,212
1,357,212
Cash and cash equivalents at end of period $ 1,048,751
$ 1,048,751

~~Table of Contents~~

~~18.~~ Fair Value Measurements

The fair value of a financial instrument is the amount that would be expected to be received if an asset were to be sold or the amount that would be paid to transfer a liability in an orderly transaction between market participants at the measurement date. The degree of judgment used in measuring the fair value of financial instruments generally correlates with the level of pricing observability. Financial instruments with quoted prices in active markets generally have more pricing observability and less judgment is used in measuring fair value. Conversely, financial instruments traded in other-than-active markets or that do not have quoted prices have less observability and are measured at fair value using valuation models or other pricing techniques that require more judgment. An other-than-active market is one in which there are few transactions, the prices are not current, price quotations vary substantially either over time or among market makers, or little information is released publicly for the asset or liability being valued. Pricing observability is affected by a number of factors, including the type of financial instrument, whether the financial instrument is listed on an exchange or traded over-the-counter or is new to the market and not yet established, the characteristics specific to the transaction, and general market conditions.

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The following table summarizes the fair values and carrying values of our financial instruments and indicates the fair value hierarchy based on the level of inputs we utilized to determine such fair values:


	Fair Value Measurements Using						Total Fair Value		Total Carrying Value		Fair Value Measurements Using						Total Fair Value		Total Carrying Value
(dollars in thousands)	Level 1		Level 2		Level 3
(dollars in millions)											Level 1		Level 2		Level 3		Total Fair Value		Total Carrying Value

September 30, 2014

September 30, 2015
Assets
Cash and cash equivalents	$	1,919,184	$	—	$	—	$	1,919,184	$	1,919,184	$	2,461	$	295	$	—	$	2,756	$	2,756
Investment securities	—		1,683,120		13,750		1,696,870		1,696,870		—		1,730		12		1,742		1,742
Net finance receivables, less allowance for finance receivable losses	—		—		6,731,196		6,731,196		6,212,738		—		—		6,667		6,667		6,040
Finance receivables held for sale	—		—		498,872		498,872		493,196		—		—		802		802		797
Note receivable from parent	—		167,989		—		167,989		167,989		—		322		—		322		322
Restricted cash	311,425		—		—		311,425		311,425
Restricted cash and cash equivalents											270		—		—		270		270
Other assets:
Commercial mortgage loans	—		—		80,991		80,991		87,553		—		—		71		71		71
Escrow advance receivable	—		—		7,728		7,728		7,728		—		—		10		10		10
Receivables from parent and affiliates	—		20,069		—		20,069		20,069		—		7		—		7		7
Receivables related to sales of real estate loans and related trust assets											—		3		—		3		9

Liabilities
Long-term debt	$	—	$	8,812,305	$	—	$	8,812,305	$	7,858,037	$	—	$	10,212	$	—	$	10,212	$	9,555
Payables to parent and affiliates	—		40,561		—		40,561		40,561		—		19		—		19		19

December 31, 2013

December 31, 2014
Assets
Cash and cash equivalents	$	374,835	$	—	$	—	$	374,835	$	374,835	$	584	$	165	$	—	$	749	$	749
Investment securities	—		531,997		23,617		555,614		555,614		—		2,913		9		2,922		2,922
Net finance receivables, less allowance for finance receivable losses	—		—		11,113,980		11,113,980		10,811,664		—		—		6,949		6,949		6,278
Finance receivables held for sale											—		—		209		209		205
Note receivable from parent	—		167,989		—		167,989		167,989		—		251		—		251		251
Restricted cash	358,759		—		—		358,759		358,759
Restricted cash and cash equivalents											218		—		—		218		218
Other assets:
Commercial mortgage loans	—		—		94,681		94,681		102,200		—		—		78		78		85
Escrow advance receivable	—		—		23,527		23,527		23,527		—		—		8		8		8
Receivables from parent and affiliates	—		39,364		—		39,364		39,364		—		12		—		12		12
Receivables related to sales of real estate loans and related trust assets											—		67		—		67		79

Liabilities
Long-term debt	$	—	$	11,776,576	$	—	$	11,776,576	$	10,640,728	$	—	$	9,182	$	—	$	9,182	$	8,356
Payables to parent and affiliates	—		38,463		—		38,463		38,463		—		48		—		48		48

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FAIR VALUE MEASUREMENTS — RECURRING BASIS

The following ~~table presents~~tables present information about our assets ~~and liabilities~~ measured at fair value on a recurring basis and indicates the fair value hierarchy based on the levels of inputs we utilized to determine such fair value:


	Fair Value Measurements Using						Total Carried At Fair Value		Fair Value Measurements Using						Total Carried At Fair Value
(dollars in thousands)	Level 1		Level 2		Level 3
(dollars in millions)									Level 1		Level 2		Level 3		Total Carried At Fair Value

September 30, 2014

September 30, 2015
Assets
Cash equivalents in mutual funds	$	596,127	$	—	$	—	$	596,127	$	750	$	—	$	—	$	750
Cash equivalents in certificates of deposit and commercial paper									—		295		—		295
Investment securities:
Available-for-sale securities:
Bonds:
U.S. government and government sponsored entities	—		56,198		—		56,198		—		68		—		68
Obligations of states, municipalities, and political subdivisions	—		118,452		—		118,452		—		84		—		84
Corporate debt	—		258,625		4,125		262,750		—		245		—		245
RMBS	—		79,363		55		79,418		—		79		—		79
CMBS	—		22,083		15		22,098		—		39		—		39
CDO/ABS	—		18,569		—		18,569		—		32		—		32
Total	—		553,290		4,195		557,485
Total bonds									—		547		—		547
Preferred stock	—		7,043		—		7,043		—		6		10		16
Other long-term investments (a)	—		—		1,430		1,430		—		—		1		1
Total available-for-sale securities (b)	—		560,333		5,625		565,958		—		553		11		564
Trading securities:
Bonds:
U.S. government and government sponsored entities	—		134,381		—		134,381		—		783		—		783
Obligations of states, municipalities, and political subdivisions	—		87,340		—		87,340
Corporate debt	—		443,884		—		443,884		—		196		—		196
RMBS	—		64,166		361		64,527		—		2		—		2
CMBS	—		106,115		—		106,115		—		45		—		45
CDO/ABS	—		286,901		6,430		293,331		—		151		—		151
Total trading securities	—		1,122,787		6,791		1,129,578		—		1,177		—		1,177
Total investment securities	—		1,683,120		12,416		1,695,536		—		1,730		11		1,741
Restricted cash in mutual funds	290,495		—		—		290,495		252		—		—		252
Total	$	886,622	$	1,683,120	$	12,416	$	2,582,158	$	1,002	$	2,025	$	11	$	3,038

Liabilities
Long-term debt	$	—	$	317,266	$	—	$	317,266

December 31, 2013

Assets
Cash equivalents in mutual funds	$	185,829	$	—	$	—	$	185,829
Investment securities:
Available-for-sale securities:
Bonds:
U.S. government and government sponsored entities	—		58,633		—		58,633
Obligations of states, municipalities, and political subdivisions	—		102,745		—		102,745
Corporate debt	—		225,312		12,604		237,916
RMBS	—		82,510		113		82,623
CMBS	—		7,545		2		7,547
CDO/ABS	—		3,176		800		3,976
Total	—		479,921		13,519		493,440
Preferred stock	—		7,805		—		7,805
Other long-term investments (a)	—		—		1,269		1,269
Total available-for-sale securities (b)	—		487,726		14,788		502,514
Trading securities:
Bonds:
Corporate debt	—		1,837		—		1,837
RMBS	—		10,671		—		10,671
CMBS	—		29,897		—		29,897
CDO/ABS	—		1,866		7,383		9,249
Total trading securities	—		44,271		7,383		51,654
Total investment securities	—		531,997		22,171		554,168
Restricted cash in mutual funds	321,617		—		—		321,617
Total	$	507,446	$	531,997	$	22,171	$	1,061,614

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		Fair Value Measurements Using						Total Carried At Fair Value
(dollars in millions)		Level 1		Level 2		Level 3		Total Carried At Fair Value

December 31, 2014
Assets
Cash equivalents in mutual funds		$	236	$	—	$	—	$	236
Cash equivalents in certificates of deposit and commercial paper		—		165		—		165
Investment securities:
Available-for-sale securities:
Bonds:
U.S. government and government sponsored entities		—		64		—		64
Obligations of states, municipalities, and political subdivisions		—		102		—		102
Certificates of deposit and commercial paper	��	—		1		—		1
Corporate debt		—		263		4		267
RMBS		—		73		—		73
CMBS		—		21		3		24
CDO/ABS		—		61		—		61
Total bonds		—		585		7		592
Preferred stock		—		7		—		7
Other long-term investments (a)		—		—		1		1
Total available-for-sale securities (b)		—		592		8		600
Trading securities:
Bonds:
U.S. government and government sponsored entities		—		302		—		302
Obligations of states, municipalities, and political subdivisions		—		14		—		14
Certificates of deposit and commercial paper		—		238		—		238
Non-U.S. government and government sponsored entities		—		20		—		20
Corporate debt		—		1,056		—		1,056
RMBS		—		35		—		35
CMBS		—		149		—		149
CDO/ABS		—		507		—		507
Total trading securities		—		2,321		—		2,321
Total investment securities		—		2,913		8		2,921
Restricted cash in mutual funds		207		—		—		207
Total		$	443	$	3,078	$	8	$	3,529


(a)	Other long-term investments excludes ~~our~~an immaterial interest in a limited partnership ~~of $0.5 million at September 30, 2014 and $0.6 million at December 31, 2013~~ that we account for using the equity method.


(b)	Common stocks not carried at fair value totaled ~~$0.9~~$1 million at September 30, ~~2014~~2015 and December 31, ~~2013~~2014 and, therefore, have been excluded from the table above.

We had no transfers between Level 1 and Level 2 during the three and nine months ended September 30, ~~2014.~~2015.

~~The following table presents changes for the three months ended September 30, 2014 in Level 3 assets and liabilities measured at fair value on a recurring basis:~~

Net gains (losses) included in: Purchases, sales, issues, settlements(a) Transfers into
Level 3 (b) Transfers
out of
Level 3 Balance
at end of
period

Balance at beginning
of period
Other revenues
Other comprehensive
income (loss)

(dollars in thousands)

Three Months Ended
September 30, 2014

Investment securities:

Available-for-sale securities:

Bonds:

Corporate debt $ 4,160
$ (27 ) $ (8 ) $ —
$ —
$ —
$ 4,125
RMBS 65
(4 ) (6 ) —
—
—
55
CMBS 20
—
(5 ) —
—
—
15
Total 4,245
(31 ) (19 ) —
—
—
4,195
Other long-term investments 1,254
—
176
—
—
—
1,430
Total available-for-sale securities 5,499
(31 ) 157
—
—
—
5,625
Trading securities:

Bonds:

RMBS —
—
—
—
361
—
361
CDO/ABS 6,477
(24 ) —
(23 ) —
—
6,430
Total trading securities 6,477
(24 ) —
(23 ) 361
—
6,791
Total $ 11,976
$ (55 ) $ 157
$ (23 ) $ 361
$ —
$ 12,416


~~(a)~~	~~“Purchases, sales, issues, and settlements” column consists only of settlements. There were no purchases, sales, or issues of investment securities for the three months ended September 30, 2014.~~


~~(b)~~	~~During the three months ended September 30, 2014, we transferred $0.4 million of RMBS securities into Level 3 primarily related to the re-evaluated observability of pricing inputs.~~

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The following table presents changes ~~for the three months ended September 30, 2013~~ in Level 3 assets ~~and liabilities measured at fair value on a recurring basis:~~

Net gains (losses) included in: Purchases,
sales,
issues,
settlements* Transfers into
Level 3 Transfers
out of
Level 3 Balance
at end of
period

Balance at
beginning
of period

(dollars in thousands) Other
revenues Other
comprehensive
income (loss)

Three Months Ended
September 30, 2013 - Revised

Investment securities:

Available-for-sale securities:

Bonds:

Corporate debt $ 13,114
$ (58 ) $ 18
$ 2,016
$ —
$ —
$ 15,090
RMBS 218
—
(133 ) —
—
—
85
CMBS 2
—
—
—
—
—
2
CDO/ABS 800
—
—
—
—
—
800
Total 14,134
(58 ) (115 ) 2,016
—
—
15,977
Other long-term investments 1,478
—
(103 ) —
—
—
1,375
Total available-for-sale securities 15,612
(58 ) (218 ) 2,016
—
—
17,352
Trading securities:

Bonds:

CDO/ABS 7,663
49
(4 ) (75 ) —
—
7,633
Total $ 23,275
$ (9 ) $ (222 ) $ 1,941
$ —
$ —
$ 24,985


*	~~The detail of purchases, sales, issues, and settlements for the three months ended September 30, 2013 is presented in the table below.~~

~~The following table presents the detail of purchases, sales, issuances, and settlements of Level 3 assets and liabilities~~ measured at fair value on a recurring basis for the three months ended September 30, ~~2013:~~2015:

(dollars in thousands) Purchases Sales Issues Settlements Total

Three Months Ended
September 30, 2013 - Revised

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt $ 2,016
$ —
$ —
$ —
$ 2,016
Trading securities:
Bonds:
CDO/ABS —
—
—
(75 ) (75 )
Total $ 2,016
$ —
$ —
$ (75 ) $ 1,941



			Net gains (losses) included in:				Purchases, sales, issues, settlements *		Transfers into Level 3		Transfers out of Level 3		Balance at end of period
	Balance at beginning of period		Other revenues		Other comprehensive income (loss)
(dollars in millions)	Balance at beginning of period		Other revenues		Other comprehensive income (loss)

Three Months Ended September 30, 2015
Investment securities:
Available-for-sale securities:
Preferred stock	$	—	$	—	$	—	$	10	$	—	$	—	$	10
Other long-term investments	1		—		—		—		—		—		1
Total	$	1	$	—	$	—	$	10	$	—	$	—	$	11


*	“Purchases, sales, issues, and settlements” column consisted only of purchases.

The following table presents changes in Level 3 assets measured at fair value on a recurring basis for the three months ended September 30, 2014:



			Net gains (losses) included in:				Purchases, sales, issues, settlements		Transfers into Level 3		Transfers out of Level 3		Balance at end of period
	Balance at beginning of period		Other revenues		Other comprehensive income (loss)
(dollars in millions)	Balance at beginning of period		Other revenues		Other comprehensive income (loss)

Three Months Ended September 30, 2014
Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	5	$	—	$	—	$	—	$	—	$	—	$	5
Other long-term investments	1		—		—		—		—		—		1
Total available-for-sale securities	6		—		—		—		—		—		6
Trading securities:
Bonds:
CDO/ABS	6		—		—		—		—		—		6
Total	$	12	$	—	$	—	$	—	$	—	$	—	$	12

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The following table presents changes in Level 3 assets measured at fair value on a recurring basis for the nine months ended September 30, ~~2014~~2015:



			Net gains (losses) included in:				Purchases, sales, issues, settlements (a)			Transfers into Level 3		Transfers out of Level 3 (b)			Balance at end of period
	Balance at beginning of period		Other revenues		Other comprehensive income (loss)
(dollars in millions)	Balance at beginning of period		Other revenues		Other comprehensive income (loss)

Nine Months Ended September 30, 2015
Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	4	$	—	$	—	$	(4	)	$	—	$	—		$	—
CMBS	3		—		—		—			—		(3		)	—
Total bonds	7		—		—		(4		)	—		(3		)	—
Preferred stock	—		—		—		10			—		—			10
Other long-term investments	1		—		—		—			—		—			1
Total	$	8	$	—	$	—	$	6		$	—	$	(3	)	$	11


(a)	The detail of purchases and settlements is presented in the table below:



(dollars in millions)	Purchases		Settlements			Total

Nine Months Ended September 30, 2015
Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	—	$	(4	)	$	(4	)
Preferred stock	10		—			10
Total	$	10	$	(4	)	$	6


(b)	During the nine months ended September 30, 2015, we transferred CMBS securities totaling $3 million out of Level 3 primarily related to the greater observability of pricing inputs.

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The following table presents changes in Level 3 assets ~~and liabilities~~ measured at fair value on a recurring ~~basis:~~basis for the nine months ended September 30, 2014:


			Net gains (losses) included in:						Purchases, sales, issues, settlements(a)			Transfers into Level 3 (b)			Transfers out of Level 3 (c)			Balance at end of period						Net gains (losses) included in:				Purchases, sales, issues, settlements (a)				Transfers into Level 3 (b)			Transfers out of Level 3 (c)			Balance at end of period
														Balance at beginning of period						Other revenues			Other comprehensive income (loss)
(dollars in thousands)	Balance at beginning of period		Other revenues			Other comprehensive income (loss)
(dollars in millions)																					Balance at beginning of period			Other revenues		Other comprehensive income (loss)					Purchases, sales, issues, settlements (a)			Transfers into Level 3 (b)		Transfers out of Level 3 (c)		Balance at end of period

Nine Months Ended September 30, 2014

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	12,604	$	177		$	(263	)	$	(8,393	)	$	—		$	—		$	4,125		$	13		$	—	$	—	$	(8	)		$	—		$	—		$	5
RMBS	113		(14		)	(44		)	—			—			—			55
CMBS	2		—			13			—			—			—			15
CDO/ABS	800		—			3			—			—			(803		)	—			1			—		—		—				—			(1		)	—
Total	13,519		163			(291		)	(8,393		)	—			(803		)	4,195
Total bonds																					14			—		—		(8		)		—			(1		)	5
Other long-term investments	1,269		—			251			(90		)	—			—			1,430			1			—		—		—				—			—			1
Total available-for-sale securities	14,788		163			(40		)	(8,483		)	—			(803		)	5,625			15			—		—		(8		)		—			(1		)	6
Trading securities:
Bonds:
RMBS	—		4			—			(88		)	1,602			(1,157		)	361			—			—		—		—				1			(1		)	—
CDO/ABS	7,383		5			—			(155		)	—			(803		)	6,430			7			—		—		—				—			(1		)	6
Total trading securities	7,383		9			—			(243		)	1,602			(1,960		)	6,791			7			—		—		—				1			(2		)	6
Total	$	22,171	$	172		$	(40	)	$	(8,726	)	$	1,602		$	(2,763	)	$	12,416		$	22		$	—	$	—	$	(8	)		$	1		$	(3	)	$	12


(a)	“Purchases, sales, issues, and settlements” column consisted only ~~consist~~ of settlements. ~~There were no purchases, sales, or issues of investment securities for the nine months ended September 30, 2014.~~


(b)	During the nine months ended September 30, 2014, we transferred ~~$1.6~~$1 million of RMBS securities into Level 3 primarily related to the re-evaluated observability of pricing inputs.


(c)	During the nine months ended September 30, 2014, we transferred RMBS and CDO/ABS securities totaling ~~$2.8~~$3 million out of Level 3 primarily related to the re-evaluated observability of pricing inputs.

~~Table of Contents~~

~~The following table presents changes for the nine months ended September 30, 2013 in Level 3 assets and liabilities measured at fair value on a recurring basis:~~

Net gains (losses) included in:
Purchases,
sales,
issues,
settlements *

Transfers into
Level 3

Transfers
out of
Level 3

Balance
at end of
period

(dollars in thousands)
Balance at
beginning
of period

Other
revenues

Other
comprehensive
income (loss)

Nine Months Ended
September 30, 2013 - Revised

Investment securities:

Available-for-sale securities:

Bonds:

Corporate debt $ 13,417
$ (166 ) $ 304
$ 1,535
$ —
�� $ —
$ 15,090
RMBS 74
(35 ) 46
—
—
—
85
CMBS 153
(8 ) 6
(149 ) —
—
2
CDO/ABS 1,200
—
—
(400 ) —
—
800
Total 14,844
(209 ) 356
986
—
—
15,977
Other long-term investments 1,380
2
4
(11 ) —
—
1,375
Total available-for-sale securities 16,224
(207 ) 360
975
—
—
17,352
Trading securities:

Bonds:

CDO/ABS 12,192
562
(426 ) (4,695 ) —
—
7,633
Total $ 28,416
$ 355
$ (66 ) $ (3,720 ) $ —
$ —
$ 24,985


*	~~The detail of purchases, sales, issues, and settlements for the nine months ended September 30, 2013 is presented in the table below.~~

The following table presents the detail of purchases, sales, issuances, and settlements of Level 3 assets and liabilities measured at fair value on a recurring basis for the nine months ended September 30, 2013:

(dollars in thousands) Purchases Sales Issues Settlements Total

Nine Months Ended
September 30, 2013 - Revised

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt $ 2,016
$ —
$ —
$ (481 ) $ 1,535
CMBS —
—
—
(149 ) (149 )
CDO/ABS —
—
—
(400 ) (400 )
Total 2,016
—
—
(1,030 ) 986
Other long-term investments —
—
—
(11 ) (11 )
Total available-for-sale securities 2,016
—
—
(1,041 ) 975
Trading securities:
Bonds:
CDO/ABS —
—
—
(4,695 ) (4,695 )
Total $ 2,016
$ —
$ —
$ (5,736 ) $ (3,720 )

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We used observable and/or unobservable inputs to determine the fair value of positions that we have classified within the Level 3 category. As a result, the unrealized gains and losses for assets and liabilities within the Level 3 category presented in the Level 3 tables above may include changes in fair value that were attributable to both observable (e.g., changes in market interest rates) and unobservable (e.g., changes in unobservable long-dated volatilities) inputs.

The unobservable inputs and quantitative data used in our Level 3 valuations for our investment securities were developed and used in models created by our third-party valuation service providers, which values were used by us for fair value disclosure purposes without adjustment. We applied the third-party exception which allows us to omit certain quantitative disclosures about unobservable inputs for other long-term investments. As a result, the weighted average ranges of the inputs for these investment securities are not applicable in the following table.

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Quantitative information about Level 3 inputs for our assets measured at fair value on a recurring basis for which information about the unobservable inputs is reasonably available to us at September 30, ~~2014~~2015 and December 31, ~~2013~~2014 is as follows:



			Range (Weighted Average)
	Valuation Technique(s)	Unobservable Input	September 30, ~~2014~~2015	December 31, ~~2013~~2014
Corporate debt	Discounted cash flows	Yield	~~0.89%~~—	1.05% (a)	~~2.68% – 8.48% (4.67%)~~
RMBS	Discounted cash flows	Spread	~~6.94%~~743 bps (a)	736 bps (a) (b)
CMBS	Discounted cash flows	Spread	—	139 bps (a) (b)
Other long-term investments	Discounted cash flows and indicative valuations	Historical costs Nature of investment Local market conditions Comparables Operating performance Recent financing activity	N/A (c)	N/A (c)
Preferred stock	Market approach	Historical cost Operating performance	N/A (c)	N/A (c)


(a)	At September 30, 2015 and December 31, 2014, RMBS consisted of one bond, which was less than $1 million. At December 31, 2014, corporate debt and CMBS also consisted of one bond.


(b)	~~At September 30,~~During the first quarter of 2015, we identified that we incorrectly disclosed the weighted average ranges of our RMBS bond and CMBS bond as of December 31, 2014. The weighted average ranges of these bonds at December 31, 2014 ~~RMBS consisted of one bond.~~have been corrected in the table above.


(c)	Not applicable.

The fair values of the assets using significant unobservable inputs are sensitive and can be impacted by significant increases or decreases in any of those inputs. Level 3 broker-priced instruments, including RMBS (except for the one bond previously noted), CMBS (except for the one bond previously noted), and CDO/ABS, are excluded from the table above because the unobservable inputs are not reasonably available to us.

Our RMBS, CMBS, and CDO/ABS securities have unobservable inputs that are reliant on and sensitive to the quality of their underlying collateral. The inputs, although not identical, have similar characteristics and interrelationships. Generally a change in the assumption used for the probability of default is accompanied by a directionally similar change in the assumption used for the loss severity and a directionally opposite change in the assumption used for prepayment speeds. An improvement in the workout criteria related to the restructured debt and/or debt covenants of the underlying collateral may lead to an improvement in the cash flows and have an inverse impact on other inputs, specifically a reduction in the amount of discount applied for marketability and liquidity, making the structured bonds more attractive to market participants.

~~Table of Contents~~

FAIR VALUE MEASUREMENTS — NON-RECURRING BASIS

We measure the fair value of certain assets on a non-recurring basis when events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

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Assets measured at fair value on a non-recurring basis on which we recorded impairment charges were as follows:


	Fair Value Measurements Using								Fair Value Measurements Using *
(dollars in thousands)	Level 1		Level 2		Level 3		Total
(dollars in millions)									Level 1		Level 2		Level 3		Total

September 30, 2014

September 30, 2015
Assets
Real estate owned	$	—	$	—	$	32,220	$	32,220	$	—	$	—	$	12	$	12
Commercial mortgage loans	—		—		10,792		10,792		—		—		8		8
Total	$	—	$	—	$	43,012	$	43,012	$	—	$	—	$	20	$	20

December 31, 2013

December 31, 2014
Assets
Real estate owned	$	—	$	—	$	71,469	$	71,469	$	—	$	—	$	19	$	19
Commercial mortgage loans	—		—		11,935		11,935		—		—		11		11
Total	$	—	$	—	$	83,404	$	83,404	$	—	$	—	$	30	$	30


*	The fair value information presented in the table above is as of the date the fair value adjustment was recorded.

Net impairment charges recorded on assets measured at fair value on a non-recurring basis were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in millions)													2015		2014			2015			2014

Assets
Real estate owned	$	3,159		$	5,668		$	12,877		$	19,270		$	1	$	3		$	3		$	13
Commercial mortgage loans	(717		)	(61		)	(1,773		)	(1,774		)	—		(1		)	(2		)	(2		)
Total	$	2,442		$	5,607		$	11,104		$	17,496		$	1	$	2		$	1		$	11

In accordance with the authoritative guidance for the accounting for the impairment of long-lived assets, we wrote down certain real estate owned reported in our Real Estate segment to their fair value less cost to sell for the three and nine months ended September 30, ~~2014~~2015 and ~~2013~~2014 and recorded the writedowns in other revenues — other. The fair values of real estate owned disclosed in the table above are unadjusted for transaction costs as required by the authoritative guidance for fair value measurements. The amounts of real estate owned recorded in other assets are net of transaction costs as required by the authoritative guidance for accounting for the impairment of long-lived assets.

In accordance with the authoritative guidance for the accounting for the impairment of commercial mortgage loans, we recorded allowance adjustments on certain impaired commercial mortgage loans reported in our Consumer and Insurance segment to record their fair value for the three and nine months ended September 30, ~~2014~~2015 and ~~2013~~2014 and recorded the net impairments in investment revenues.

The ~~unobservable~~ inputs and quantitative data used in our Level 3 valuations for our real estate owned and commercial mortgage loans ~~were developed and~~are unobservable primarily due to the unique nature of specific real estate assets. Therefore, we used ~~in models created by our~~independent third-party ~~valuation service~~ providers, ~~or valuations provided by external parties, which~~familiar with local markets, to determine the values ~~were~~ used ~~by us~~ for fair value ~~disclosure purposes~~disclosures without adjustment. We applied the third-party exception which allows us to omit certain quantitative disclosures about unobservable inputs. As a result, the weighted average ranges of the inputs are not applicable in the following table.

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Quantitative information about Level 3 inputs for our assets measured at fair value on a non-recurring basis at September 30, ~~2014~~2015 and December 31, ~~2013~~2014 is as follows:



			Range (Weighted Average)
	Valuation Technique(s)	Unobservable Input	September 30, ~~2014~~2015	December 31, ~~2013~~2014
Real estate owned	Market approach	Third-party valuation	N/A*	N/A*
Commercial mortgage loans	Market approach Income approach Cost approach	Local market conditions Nature of investment Comparable property sales Operating performance	N/A*	N/A*


*	Not applicable.

FAIR VALUE MEASUREMENTS — VALUATION METHODOLOGIES AND ASSUMPTIONS

We use the following methods and assumptions to estimate fair value.

Cash and Cash Equivalents

The carrying amount of cash and cash equivalents, including cash and cash equivalents in certificates of deposit and commercial paper, approximates fair value.

Mutual Funds

The fair value of mutual funds is based on quoted market prices of the underlying shares held in the mutual funds.

Investment Securities

We utilize third-party valuation service providers to measure the fair value of our investment securities, which are classified as available-for-sale or as trading and consist primarily of bonds. Whenever available, we obtain quoted prices in active markets for identical assets at the balance sheet date to measure investment securities at fair value. We generally obtain market price data from exchange or dealer markets.

We estimate the fair value of fixed maturity investment securities not traded in active markets by referring to traded securities with similar attributes, using dealer quotations and a matrix pricing methodology, or discounted cash flow analyses. This methodology considers such factors as the issuer’s industry, the security’s rating and tenor, its coupon rate, its position in the capital structure of the issuer, yield curves, credit curves, composite ratings, bid-ask spreads prepayment rates and other relevant factors. For fixed maturity investment securities that are not traded in active markets or that are subject to transfer restrictions, we adjust the valuations to reflect illiquidity and/or non-transferability. Such adjustments are generally based on available market evidence. In the absence of such evidence, management’s best estimate is used.

We classify investment securities that are deemed to incorporate an embedded derivative and for which it is impracticable for us to isolate and/or value as trading securities at fair value.

The fair value of certificates of deposit and commercial paper having maturity dates greater than three months is based on the amortized cost, which is assumed to approximate fair value.

Finance Receivables

The fair value of net finance receivables, less allowance for finance receivable losses, both non-impaired and purchased credit impaired, are determined using discounted cash flow methodologies. The application of these methodologies requires us to make certain judgments and estimates based on our perception of market participant views related to the economic and competitive environment, the characteristics of our finance receivables, and other similar factors. The most significant judgments and estimates made relate to prepayment speeds, default rates, loss severity, and discount rates. The degree of judgment and estimation applied is significant in light of the current capital markets and, more broadly, economic environments. Therefore, the fair value of our finance receivables could not be determined with precision and may not be realized in an actual sale. Additionally, there may be inherent weaknesses in the valuation methodologies we employed, and changes in the underlying assumptions used could significantly affect the results of current or future values.

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Finance Receivables Held for Sale

We determined the fair value of finance receivables held for sale that were originated as held for investment based on negotiations with prospective purchasers (if any) or by using projected cash flows discounted at the weighted-average interest

~~Table of Contents~~

rates offered by us in the market for similar finance receivables. We based cash flows on contractual payment terms adjusted for estimates of prepayments and credit related losses.

Restricted Cash and Cash Equivalents

The carrying amount of restricted cash and cash equivalents approximates fair value.

Note Receivable from Parent

The carrying amount of the note receivable from parent approximates the fair value because the note is payable on a demand basis prior to its due date on May 31, 2022 and the interest rate on this note adjusts with changing market interest rates.

Commercial Mortgage Loans

~~We utilize third-party valuation service providers to estimate~~Given the ~~fair value~~short remaining average life of the portfolio, the carrying amount of commercial mortgage loans ~~using projected cash flows discounted at~~approximates fair value. The carrying amount includes an ~~appropriate rate~~estimate for credit related losses which is based ~~upon market conditions.~~on independent third-party valuations.

Real Estate Owned

We initially based our estimate of the fair value on independent third-party valuations at the time we took title to real estate owned. Subsequent changes in fair value are based upon independent third-party valuations obtained periodically to estimate a price that would be received in a then current transaction to sell the asset.

Escrow Advance Receivable

The carrying amount ~~reported in our condensed consolidated balance sheets~~of escrow advance receivable approximates fair value.

Receivables from Parent and Affiliates

The carrying amount ~~reported~~of receivables from parent and affiliates approximates fair value.

Receivables Related to Sales of Real Estate Loans and Related Trust Assets

The carrying amount of receivables related to sales of real estate loans and related trust assets less estimated forfeitures, which are reflected in ~~our consolidated balance sheets~~other liabilities, approximates fair value.

Long-term Debt

We either receive fair value measurements of our long-term debt from market participants and pricing services or we estimate the fair values of long-term debt using projected cash flows discounted at each balance sheet date’s market-observable implicit-credit spread rates for our long-term ~~debt and adjusted for foreign currency translations.~~debt.

We record at fair value long-term debt issuances ~~at fair value~~ that are deemed to incorporate an embedded derivative and for which it is impracticable for us to isolate and/or value the derivative. At September 30, ~~2014, there was~~2015, we had no ~~significant difference between the~~debt carried at fair value ~~and the principal amount of the long-term debt for which we have elected~~under the fair value option.

Payables to Parent and Affiliates

The fair value of payable to parent and affiliates approximates the carrying value due to its short-term nature.

~~19. Subsequent Events~~

~~SPRINGCASTLE 2014-A NOTES~~

On October 3, 2014, certain indirect subsidiaries of SFC associated with a joint venture in which we own a 47% equity interest (the “Co-Issuers”) issued $2.62 billion of the SpringCastle Funding Asset-backed Notes 2014-A (the “SpringCastle 2014-A Notes”) at a 4.68% weighted average yield in a private placement transaction. The SpringCastle 2014-A Notes are collateralized by the SpringCastle Portfolio in which SFC owns a 47% equity interest as a result of the SAC Capital Contribution on July 31, 2014.

The Co-Issuers sold the SpringCastle 2014-A Notes for approximately $2.55 billion after the price discount but before expenses. The Co-Issuers used the proceeds from the SpringCastle 2014-A Notes to repay in full on October 3, 2014 the SpringCastle Funding Asset-backed Notes 2013-A (the “SpringCastle 2013-A Notes”), which were issued by the Co-Issuers on April 1, 2013. At September 30, 2014, the unpaid principal balance of the SpringCastle 2013-A Notes was $1.46 billion.

~~Table of Contents~~

On October 3, 2014, SAC purchased $362.5 million initial principal amount of the SpringCastle 2014-A Notes. The Co-Issuers retained $61.6 million of the SpringCastle 2014-A Notes. Certain subsidiaries of NRZ own a 30% equity interest in the Co-Issuers. NRZ is managed by an affiliate of Fortress.

~~NON-CORE REAL ESTATE LOAN TRANSACTIONS~~

~~Proceeds from September Whole Loan Sales~~

The aggregate purchase price of $795.1 million for the September Whole Loan Sales included a holdback provision of $120 million of which $40 million was subject to finalization of the terms and conditions of administering the holdback and the remainder was subject to our ability to cure certain documentation deficiencies within the 60 day period (subject to extension under certain circumstances) subsequent to the closing of the sale. On October 16 and November 7, 2014, we received $20 million and $21.8 million, respectively, of the holdback provision from Credit Suisse.

~~Proceeds from MSR Sale~~

On October 23, 2014, we received $15.7 million from Nationstar, which reflected 40% of the proceeds due from the MSR Sale (50% of the proceeds were received on August 29, 2014). The remaining 10% is subject to a holdback for resolution of missing documentation and other customary conditions, and is expected to be received no later than 120 days after the date of transfer of servicing upon resolution of these conditions. Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar.

~~The “November Whole Loan Sales”~~

As discussed in Note 1, on August 6, 2014, SFC and Credit Suisse agreed to the terms of the Probable Whole Loan Sales. We completed the second sale of certain performing and non-performing mortgage loans on November 7, 2014. The real estate loans included in the November Whole Loan Sales had a carrying value of $251.0 million (after the basis adjustment for the related allowance for finance receivable losses) as of September 30, 2014.

The aggregate purchase price of $270.1 million for the November Whole Loan Sales included a holdback provision of $34.3 million, which is subject to our ability to cure certain documentation deficiencies within a 60 day period (subject to extension under certain circumstances) subsequent to the closing of the sale. On November 7, 2014, we received $235.8 million of the proceeds from Credit Suisse.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

An index to our management’s discussion and analysis follows:

Forward-Looking Statements

This report may contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “target,” “projects,” “contemplates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this report are based upon our historical performance and on our current plans, estimates and expectations in light of information currently available to us. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business, prospects, growth strategy and liquidity. Accordingly, there are or will be important factors that could cause our actual results to differ materially from those indicated in these statements. We believe that these factors include, but are not limited to:

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;

levels of unemployment and personal bankruptcies;

natural or accidental events such as earthquakes, hurricanes, tornadoes, fires, or floods affecting our customers, collateral, or branches or other operating facilities;

war, acts of terrorism, riots, civil disruption, pandemics, or other events disrupting business or commerce;

~~the effect of future sales of our remaining portfolio of real estate loans and the transfer of servicing for these loans;~~

changes in the rate at which we can collect or potentially sell our finance receivables portfolio;

the effectiveness of our credit risk scoring models in assessing the risk of customer unwillingness or lack of capacity to repay;

changes in our ability to attract and retain employees or key executives to support our businesses;

changes in the competitive environment in which we operate, including the demand for our products, customer responsiveness to our distribution channels, 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;

shifts in collateral values, delinquencies, or credit losses;

changes in federal, state and local laws, regulations, or regulatory policies and practices, including the Dodd-Frank Wall Street Reform and Consumer Protection Act (which, among other things, established the Consumer Financial Protection Bureau, which has broad authority to regulate and examine financial institutions), 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;

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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 such transactions;

the effect of future sales of our remaining portfolio of real estate loans and the transfer of servicing of these loans;

the costs and effects of any litigation or governmental inquiries or investigations involving us, particularly those that are determined adversely to us;

our continued ability to access the capital markets or the sufficiency of our current sources of funds to satisfy our cash flow requirements;

our ability to comply with our debt covenants;

our ability to generate sufficient cash to service all of our indebtedness;

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;

the potential for downgrade of our debt by rating agencies, which would have a negative impact on our cost of, and access to, capital;

the impacts of our securitizations and borrowings;

our ability to maintain sufficient capital levels in our regulated and unregulated subsidiaries;

~~the material weakness that we have identified in our internal control over financial reporting; and~~

changes in accounting standards or tax policies and practices and the application of such new policies and practices to the manner in which we conduct ~~business.~~business; and

the material weakness that we have identified in our internal control over financial reporting.

~~Table of Contents~~

We also direct readers to other risks and uncertainties discussed in other documents we file with the ~~Securities and Exchange Commission (the “SEC”).~~SEC. The forward-looking statements made in this report relate only to events as of the date on which the statements are made. We do not undertake any obligation to publicly update or review any forward-looking statement except as required by law, whether as a result of new information, future developments or otherwise.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from what we may have expressed or implied by these forward-looking statements. We caution that you should not place undue reliance on any of our forward-looking statements. You should specifically consider the factors identified in this report that could cause actual results to differ before making an investment decision to purchase our common stock. Furthermore, new risks and uncertainties arise from time to time, and it is impossible for us to predict those events or how they may affect us.

Overview

Springleaf is a leading consumer finance company providing responsible loan products primarily to non-prime customers. We originate consumer loans through our network of ~~nearly 830~~823 branch offices in ~~26 states.~~27 states and on a centralized basis as part of our centralized operations. We also pursue strategic acquisitions of loan portfolios. Through two insurance subsidiaries, we write credit and non-credit insurance policies covering our customers and the property pledged as collateral for our loans. We also pursue strategic acquisitions of loan portfolios. As part of this strategy, in April 2013 SFI acquired from HSBC a $3.9 billion UPB consumer loan portfolio through a joint venture in which SFC owns a 47% equity interest as a result of the SAC Capital Contribution on July 31, 2014. See Note 1 of the Notes to Condensed Consolidated Financial Statements for further information.customers.

At September 30, 2014, we had four business segments: Consumer, Insurance, Acquisitions and Servicing, and Real Estate. See Note 16 of the Notes to Condensed Consolidated Financial Statements for a description of our segments.

OUR PRODUCTS

Our core product offerings include:

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 ~~four~~five years. At September 30, ~~2014,~~2015, we had over ~~893,000~~855,000 personal loans, representing ~~$3.6~~$4.0 billion of net finance receivables, of which ~~$1.7~~$2.2 billion, or ~~48%~~56%, were secured by collateral consisting of titled personal property (such as automobiles)~~, $1.3~~ and $1.8 billion, or ~~37%~~44%, were secured by consumer household goods or other items of personal property ~~and the remainder~~or were unsecured. Personal loans held for sale totaled $608 million at September 30, 2015.

Insurance Products — We offer our customers credit insurance (life insurance, accident and health insurance, and involuntary unemployment insurance), and non-credit insurance ~~and ancillary products, such as warranty protection,~~ through both our branch network and our centralized operations. Credit insurance and non-credit insurance products are provided by our subsidiaries, Merit and Yosemite Insurance Company (“Yosemite”). ~~The ancillary products are home security and~~We also offer auto security membership plans ~~and home appliance service contracts~~ of an unaffiliated ~~companies.~~company as an ancillary product.

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SpringCastle Portfolio — ~~On April 1, 2013,~~We service the SpringCastle Portfolio that was acquired by an indirect subsidiary of SHI ~~acquired the SpringCastle Portfolio~~ through a joint venture in which SFC currently owns a 47% equity ~~interest as a result of the SAC Capital Contribution on July 31, 2014.~~interest. These loans ~~included~~include unsecured loans and loans secured by subordinate residential real estate mortgages (which we service as unsecured loans due to the fact that the liens are subordinated to superior ranking security interests). The SpringCastle Portfolio includes 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. ~~SFI assumed the direct servicing obligations for these loans in September 2013.~~ At September 30, ~~2014,~~2015, the SpringCastle Portfolio included over ~~291,000~~242,000 of acquired loans, representing ~~$2.1~~$1.7 billion in net finance receivables.

Our non-core and non-originating legacy products include:

Real Estate Loans — We ceased real estate lending in January ~~2012. These~~of 2012, and during 2014, we sold $6.3 billion 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. ~~At September 30, 2014, $234.1 million of real estate loans, or 36%, were secured by first mortgages and $421.5 million, or 64%, were secured by second~~

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~~mortgages.~~ We continue to service the liquidating real estate loans and support any advances on open-end accounts. At September 30, 2015, we had $547 million of real estate loans held for investment, of which $209 million, or 38%, were secured by first mortgages and $338 million, or 62%, were secured by second mortgages. Real estate loans held for sale totaled $189 million at September 30, 2015, all of which were secured by first mortgages.

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.”

~~Recent Developments~~ OUR SEGMENTS

~~NON-CORE REAL ESTATE LOAN TRANSACTIONS~~

During the first nine months of 2014, we entered into a series of transactions relating to the sales of our beneficial interests in our non-core real estate loans, the related servicing of these loans, and the sales of certain performing and non-performing real estate loans. During the first nine months of 2014, we sold finance receivables held for sale with a carrying value of ~~$6.0 billion~~ ~~and recorded net gains totaling~~ ~~$706.5 million~~. As a result of these transactions, we established a reserve for sales recourse obligations of $9.9 million during the third quarter of 2014. On November 7, 2014, we sold finance receivables held for sale with a carrying value of ~~$251.0 million~~ as of September 30, 2014. These transactions substantially complete the Company’s previously disclosed plan to liquidate its non-core real estate loans. See Note 1 and Note 19 of the Notes to Condensed Consolidated Financial Statements for further information on these sales.

In conjunction with these real estate loan transactions, we have closed our operational locations in Dallas, Texas, Rancho Cucamonga, California, and Wesley Chapel, Florida, and have eliminated certain staff positions in our Evansville, Indiana, location. In total, approximately 300 staff positions were eliminated. However, the total reduction in workforce was approximately 170 employees, as 130 employees have been transferred into other positions at Springleaf. We recorded restructuring costs of $4.3 million in the third quarter of 2014 due to the workforce reductions and the closings of the servicing facilities.

~~CAPITAL CONTRIBUTION TO SFC~~

~~CREDIT RATINGS~~

Moody’s Investors Service (“Moody’s”), Standard & Poor’s Ratings Services (“S&P”), and Fitch, Inc. (“Fitch”) upgraded SFC’s long-term corporate debt rating as follows: (i) from B3 to B2 with a stable outlook by Moody’s on October 8, 2014; (ii) from B- to B with a stable outlook by S&P on August 8, 2014; and (iii) from B- to B with a stable outlook by Fitch on August 7, 2014.

~~SECURITIZATIONS~~

~~Whitford Brook 2014-VFN1 Securitization~~

On June 26, 2014, we established a private securitization facility in which Whitford Brook 2014-VFN1 Trust, a wholly owned special purpose vehicle, may issue variable funding notes with a maximum principal balance of $300 million to be backed by personal loans acquired from subsidiaries of SFC. The notes will be funded over a three-year period, subject to the satisfaction of customary conditions precedent. During this period, the notes can also be paid down to the required minimum balance of $100 million and then redrawn. Following the three-year funding period, the principal amount of the notes will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in July 2018, unless an option to prepay is elected between July 2017 and July 2018. At September 30, ~~2014, the required minimum balance of $100 million~~2015, we had three business segments: Consumer and Insurance, Acquisitions and Servicing, and Real Estate. The Acquisitions and Servicing segment was ~~drawn under the notes.~~

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~~2014-A Securitization~~

~~On March 26,~~added effective July 31, 2014, we completed a private securitization transaction in which a wholly owned special purpose vehicle sold $559.3 million of notes backed by personal loans held by the 2014-A Trust, at a 2.62% weighted average yield. We sold the asset-backed notes for $559.2 million, after the price discount but before expenses and a $6.4 million interest reserve requirement. We initially retained $32.9 million of the 2014-A Trust’s subordinate asset-backed notes.

~~Renewal of Midbrook 2013-VFN1 Securitization~~

On June 13, 2014, we amended the note purchase agreement with Midbrook 2013-VFN1 Trust, a wholly owned special purpose vehicle, to extend the one-year funding period to a two-year funding period. Following the two-year funding 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 full in July 2019. The maximum principal balance of variable funding notes that can be issued remained at $300 million. No amounts have been funded.

~~Repayment of 2013-BAC Trust Notes~~

On September 25, 2013, we completed a private securitization transaction in which Springleaf Funding Trust 2013-BAC, a wholly owned special purpose vehicle, issued $500 million of notes backed by an amortizing pool of personal loans acquired from subsidiaries of SFC. On March 27, 2014, we repaid the entire $231.3 million outstanding principal balance of the notes, plus accrued and unpaid interest.

~~SpringCastle 2014-A Notes~~

On October 3, 2014, the Co-Issuers issued $2.62 billion of the SpringCastle 2014-A Notes at a weighted average yield of 4.68% in a private placement transaction. The SpringCastle 2014-A Notes are collateralized by the SpringCastle Portfolio in which SFC owns a 47% equity interest as a result of the SAC Capital Contribution on July 31, 2014.

~~The Co-Issuers sold~~When we initially defined our operating segments in early 2013, we presented Consumer and Insurance as two distinct reporting segments. However, over the ~~SpringCastle 2014-A~~course of 2013 and into 2014, management has shifted its strategy for the Insurance segment toward organic growth primarily as an ancillary product complementing our consumer lending activities and has been increasingly viewing and managing the Insurance segment together with Consumer. As a result of the changes in strategy and the way that management views the insurance business of the Company, we began presenting them as one segment, effective December 31, 2014. To conform to the new segment alignment, we have revised our prior period segment disclosures in “Segment Results”.

See Note 16 of the Notes to Condensed Consolidated Financial Statements for a description of our segments.

Third Quarter Segment Highlights

Net finance receivables — Consumer and Insurance reached $4.6 billion at September 30, 2015, including $608 million personal loans held for sale, compared to $3.6 billion at September 30, 2014.

Origination volume — Consumer and Insurance totaled $1.1 billion for the third quarter of 2015 compared to $914 million for the third quarter of 2014 (including $273 million of direct auto loan originations during the third quarter of 2015 compared to $84 million during the third quarter of 2014).

Pretax core earnings (a non-GAAP measure) was $109 million for the third quarter of 2015 compared to $88 million for the third quarter of 2014.

Our segments are reported on a historical accounting basis, which is a basis of accounting other than U.S. GAAP. See “Results of Operations” for a reconciliation of our pretax earnings on a push-down accounting basis to a historical accounting basis and “Segment Results” for a reconciliation of our pretax earnings on a historical accounting basis to pretax core earnings.

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Recent Developments and Outlook

SHI’S PENDING ACQUISITION OF ONEMAIN FINANCIAL

We and SHI regularly consider strategic acquisitions and have been involved in transactions of various magnitudes involving a variety of forms of consideration and financing. On March 2, 2015, SHI entered into a Stock Purchase Agreement with CitiFinancial Credit Company to acquire OneMain for an aggregate purchase price of $4.25 billion. There can be no assurance that the Proposed Acquisition will close, or, if it does, when the actual closing will occur. SHI continues to evaluate its plans regarding the integration of OneMain with its remaining businesses including us.

SHI’S EQUITY OFFERING

On May 4, 2015, SHI completed an offering of 27,864,525 shares of its common stock, consisting of 19,417,476 shares of common stock offered by SHI and 8,447,049 shares of common stock offered by the Initial Stockholder. Upon completion of this offering, the Initial Stockholder owned approximately ~~$2.55 billion~~58% of SHI common stock, and the economic interests of Fortress and AIG were reduced to approximately 55% and 3%, respectively.

SHI’s net proceeds from this sale were approximately $976 million, after deducting the ~~price discount but before expenses. The Co-Issuers used~~underwriting discounts and commissions and additional offering-related expenses totaling $24 million. SHI intends to use the net proceeds of the offering, together with cash on hand, the proceeds from the sale of investment securities, and other funding options, to fund the Proposed Acquisition and/or for general corporate purposes, which may include debt repurchases and repayments, capital expenditures and other possible acquisitions.

See Note 2 of the Notes to Condensed Consolidated Financial Statements for further information on the equity offering.

SECURITIZATIONS

During the first nine months of 2015, we completed five securitizations, including two consumer loan securitizations, two auto loan conduit securitizations, and one personal loan conduit securitization. We also sold certain SpringCastle 2014-A Notes that were previously retained, extended the revolving periods on three existing conduits, amended an existing conduit to ~~repay in full on October 3, 2014~~remove the ~~SpringCastle 2013-A Notes, which were issued by~~minimum balance requirement and reduce the ~~Co-Issuers on April 1, 2013. At September 30, 2014, the unpaid~~maximum principal balance, and drew $100 million under the notes of an existing conduit. See Note 11 of the ~~SpringCastle 2013-A~~ Notes ~~was $1.46 billion.~~to Condensed Consolidated Financial Statements for further information on these securitizations.

~~On October 3, 2014, SAC purchased $362.5 million initial principal amount of the SpringCastle 2014-A Notes. The Co-Issuers retained $61.6 million of the SpringCastle 2014-A Notes.~~CUSTOMER REWARDS PROGRAM

~~PREPAYMENT OF SECURED TERM LOAN~~During the second quarter of 2015, Springleaf launched Springleaf Rewards, a unique digital loyalty program that is designed to encourage credit education, positive customer behavior and brand engagement. The program rewards customers for a range of activities, such as consistently paying their bills on-time, interacting with Springleaf on social media and more. Unlike traditional rewards programs, Springleaf Rewards allows members to accrue points for doing things that help them establish and build their credit, such as viewing personal financial education videos and budgeting tutorials on line, monitoring their credit score, and paying on time. Customers also earn points for enrolling in conveniences like paperless statements and automatic payments. Since its launch in mid-June, more than 47,000 customers have signed up to start earning rewards. Springleaf Rewards members can choose how and when to redeem their points. Points can be exchanged for a variety of gift cards for nationwide retailers, restaurants and other merchants.

On March 31, 2014, SFFC prepaid, without penalty or premium, the entire $750.0 million outstanding principal balance of the secured term loan, plus accrued and unpaid interest. Effective upon the prepayment, all obligations of SFFC, SFC, and most of the consumer finance operating subsidiaries of SFC under the secured term loan (other than contingent reimbursement obligations and indemnity obligations) were terminated and all guarantees and security interests were released.

OUTLOOK

Assuming the U.S. economy continues to experience slow to moderate growth, we expect to continue our long history of strong credit performance. We believe the strong credit quality of our personal loan portfolio is the result of our disciplined underwriting practices and ongoing collection efforts. We also continue to see growth in the volume of personal loan originations driven by the following factors:

Declining competition from thrifts and banks (although banks continue to serve non-prime customers in other ways) as these institutions have retreated from the non-prime market in the face of regulatory scrutiny and in the aftermath of the housing crisis. As a result of the reduced lending of these competitors, access to credit has fallen substantially for the non-prime segment of customers, which, in turn, has increased our potential customer base.

Slow but sustained economic growth.

Migration of customer activity from traditional channels such as direct mail to online channels (served by our centralized operations) where we believe we are well suited to capture volume due to our scale, technology, and deployment of advanced analytics.

~~Our renewed focus on our personal loan business as we have discontinued real estate and other product originations in our branches.~~

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In addition, with an experienced management team, a strong balance sheet, proven access to the capital markets, and strong demand for consumer credit, we believe we are well positioned for future personal loan growth.

We regularly consider strategic acquisitions and have been involved in transactions of various magnitudes involving a variety of forms of consideration and financing. Currently, we are evaluating a number of strategic acquisition opportunities, including one opportunity which, if consummated, would be the most significant acquisition transaction ever undertaken by the Company. The purchase price for possible acquisitions could be financed through the issuance of equity (which could significantly increase the number of shares of SHI’s common stock outstanding) or debt securities, bank borrowings, securitizations or a combination thereof. We cannot predict if any such acquisitions will be consummated or, if consummated, will result in a financial or other benefit to the Company. See the discussion under the heading “Risk Factors - There are risks associated with the acquisition of large loan portfolios, such as the SpringCastle Portfolio, including the possibility of increased delinquencies and losses, difficulties with integrating the loans into our servicing platform and disruption to our ongoing business, which could have a material adverse effect on our results of operations, financial condition and liquidity” in our Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC for additional information.

~~Prior Period Revisions~~

As disclosed in our 2013 Annual Report on Form 10-K, we identified certain out-of-period errors in preparing our annual consolidated financial statements for the year ended December 31, 2013. In addition to these errors, we had previously recorded and disclosed out-of-period adjustments in prior reporting periods when the errors were discovered. As a result, we revised all previously reported periods included in our 2013 Annual Report on Form 10-K. Similarly, we have revised all previously reported periods included in this report. We corrected the errors identified in the fourth quarter of 2013 and included these corrections in the appropriate prior periods. In addition, we reversed all out-of period adjustments previously recorded and disclosed, and included the adjustments in the appropriate periods. After evaluating the quantitative and qualitative aspects of these corrections, we have determined that our previous quarterly and annual consolidated financial statements were not materially misstated.

See Note 17 of the Notes to Condensed Consolidated Financial Statements for further information on the prior period revisions. All prior period data presented in the discussion and analysis of our financial condition and results of operations reflects the revised balances.

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Results of Operations

CONSOLIDATED RESULTS

See table below for our consolidated operating results. A further discussion of our operating results for each of our business segments is provided under ~~“—Segment~~“Segment Results.”


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,					Nine Months Ended September 30,
													2015		2014			2015		2014

Interest income:
Finance charges	$	385,314		$	417,141		$	1,171,994		$	1,233,504		$	419	$	385		$	1,221	$	1,172
Finance receivables held for sale originated as held for investment	46,502			—			53,744			—			4		47			13		54
Total interest income	431,816			417,141			1,225,738			1,233,504			423		432			1,234		1,226

Interest expense	172,492			205,270			526,035			649,861			171		172			500		526

Net interest income	259,324			211,871			699,703			583,643			252		260			734		700

Provision for finance receivable losses	92,114			101,390			273,372			260,005			82		93			247		274

Net interest income after provision for finance receivable losses	167,210			110,481			426,331			323,638			170		167			487		426

Other revenues:
Insurance	44,010			38,277			125,116			107,144			40		44			116		125
Investment	11,206			6,532			31,266			25,858			11		12			43		32
Net loss on repurchases and repayments of debt	—			(33,572		)	(6,615		)	(33,809		)	—		—			—		(7		)
Net gain on fair value adjustments on debt	1,523			—			1,523			—			—		1			—		1
Net gain on sales of real estate loans and related trust assets	616,534			—			706,520			—			—		617			—		707
Other	(10,454		)	5,514			(3,240		)	20,874			4		(11		)	8		(3		)
Total other revenues	662,819			16,751			854,570			120,067			55		663			167		855

Other expenses:
Operating expenses:
Salaries and benefits	85,602			209,625			249,065			363,163			86		85			264		249
Other operating expenses	76,688			52,110			178,694			151,034			79		77			220		179
Insurance losses and loss adjustment expenses	20,141			16,550			57,173			47,650			17		20			53		57
Total other expenses	182,431			278,285			484,932			561,847			182		182			537		485

Income (loss) before provision for (benefit from) income taxes	647,598			(151,053		)	795,969			(118,142		)
Income before provision for income taxes													43		648			117		796

Provision for (benefit from) income taxes	219,092			(57,145		)	275,983			(44,097		)
Provision for income taxes													7		219			14		276

Net income (loss)	428,506			(93,908		)	519,986			(74,045		)
Net income													36		429			103		520

Net income attributable to non-controlling interests	23,225			—			23,225			—			31		23			93		23

Net income (loss) attributable to Springleaf	$	405,281		$	(93,908	)	$	496,761		$	(74,045	)
Net income attributable to Springleaf Finance Corporation													$	5	$	406		$	10	$	497

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Comparison of Consolidated Results for Three Months Ended September 30, ~~2014~~2015 and ~~2013~~2014

Finance charges ~~decreased~~increased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 due to the net of the following:


(dollars in thousands)
(dollars in millions)

2014 compared to 2013 - Three Months Ended September 30

2015 compared to 2014 - Three Months Ended September 30,
Decrease in average net receivables	$	(131,792	)	$	(66	)
Increase in yield	16,233			100
SpringCastle finance charges in 2014	83,732
Total	$	(31,827	)	$	34

Average net receivables decreased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to 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. This decrease also reflected the ~~first nine months~~liquidating status of ~~2014.~~the acquired SpringCastle Portfolio. This decrease was partially offset by (i) higher personal loan average net ~~receivables.~~receivables resulting from our continued focus on personal loan originations though our branch network and centralized operations and growth in our auto loan product and (ii) higher SpringCastle average net receivables resulting from the SAC Capital Contribution on July 31, 2014.

Yield increased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily ~~from our personal loans, which have higher yields. This increase also reflected~~due to a higher proportion of personal loans, which have higher yields, as a result of the ~~transfers of~~ real estate ~~loans to~~loan sales during 2014. The increase in yield was partially offset by the launch of our auto loan product in June of 2014, which generally has lower yields.

Interest income on finance receivables held for sale ~~on August 1, 2014.~~decreased $43 million for the three months ended September 30, 2015 when compared to the same period in 2014 primarily due to lower average finance receivables held for sale during the 2015 period.

Interest expense decreased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 due to the net of the following:

(dollars in thousands)

2014 compared to 2013 - Three Months Ended September 30

Decrease in average debt $ (59,433 )
Increase in weighted average interest rate 15,047
SpringCastle interest expense in 2014 11,608
Total $ (32,778 )



(dollars in millions)

2015 compared to 2014 - Three Months Ended September 30,
Increase in average debt	$	13
Decrease in weighted average interest rate	(14		)
Total	$	(1	)

Average debt ~~decreased~~increased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to debt issuances pursuant to our consumer securitization transactions completed during the past twelve months. These increases were partially offset by debt repurchases and repayments of ~~$3.2~~$3.3 billion during the past twelve months and the elimination of $3.4 billion of debt associated with our mortgage securitizations as a result of the sales of the Company’s beneficial interests in the mortgage-backed certificates during 2014 and the ~~first nine months~~resulting deconsolidation of ~~2014. These decreases were partially offset by debt issuances pursuant to three consumer~~the securitization ~~transactions completed during the past twelve months.~~trusts and their outstanding certificates reflected as long-term debt.

The weighted average interest rate on our debt ~~increased~~decreased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to the debt repurchases and repayments discussed above, which resulted in lower accretion of net discount, established at the date of the Fortress Acquisition, 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. ~~This increase was partially offset by the debt repurchases and repayments discussed above, which resulted in lower accretion of net discount applied to long-term debt.~~

Provision for finance receivable losses decreased ~~$9.3~~$11 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014. This decrease was primarily due to ~~a reduction~~reductions in net charge-offs and the allowance requirements on our real estate loans ~~deemed to be purchased credit impaired finance receivables and TDR finance receivables subsequent to the Fortress Acquisition~~ as a result of 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 ~~the first nine months of~~ 2014. This decrease was partially offset by (i) one additional ~~allowance requirements~~month of net charge-offs on the SpringCastle Portfolio during the 2015 period as a result of

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the SAC Capital Contribution on July 31, 2014 and (ii) higher net charge-offs on our personal loans primarily due to growth in our personal loans during the ~~2014 period~~past twelve months and a higher personal loan delinquency ratio at September 30, ~~2014.~~2015.

~~Net loss on repurchases and repayments of debt of $33.6~~Insurance revenues decreased $4 million for the three months ended September 30, ~~2013~~2015 when compared to the same period in 2014 primarily due to decreases in credit and non-credit earned premiums. The decrease in credit earned premiums reflected ~~acceleration~~the cancellations of ~~amortization~~dwelling policies as a result of ~~deferred costs and repurchases of debt at net amounts greater than carrying value.~~the real estate loan sales during 2014. The decrease in non-credit earned premiums reflected fewer non-credit policies written.

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Net gain on sales of real estate loans and related trust assets of ~~$616.5~~$617 million for the three months ended September 30, 2014 reflected the reversal of the remaining ~~unaccreted~~ push-down accounting ~~basis~~adjustment for the real estate loans, less allowance for finance receivable losses that we established at the date of the Fortress Acquisition. ~~See Note 1 of the Notes to Condensed Financial Statements for further information on these sales.~~

Other revenues ~~decreased $16.0~~— other increased $15 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to (i) lower net charge-offs on our finance receivables held for sale and provision adjustments for liquidated held for sale accounts during the ~~2014~~2015 period and ~~lower~~(ii) higher interest ~~revenue~~income on ~~notes receivables~~SFC’s note receivable from ~~SFI.~~SFI reflecting additional SFI borrowings during the 2015 period to fund the operations of its subsidiaries. This ~~decrease~~increase was partially offset by servicing fee revenues during the 2014 period for the servicing of the real estate loans included in the MSR Sale. We continued to service these loans on behalf of Nationstar until the servicing transfer on September 30, 2014, under an interim servicing agreement.

~~Salaries~~Insurance losses and ~~benefits~~loss adjustment expenses decreased ~~$124.0~~$3 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~$131.3 million of share-based compensation expense due to the grant of restricted stock units (“RSUs”) to certain of our executives~~favorable variances in the third quarter of 2013. This decrease was partially offset by: (i) employee retention and severance accruals of $3.8 million recorded in the third quarter of 2014 due to the recent workforce reduction of approximately 170 employees and (ii) higher salary and bonus accruals reflecting an increase in number of employees and increased originations of personal loans.benefit reserves.

~~Other operating expenses increased $24.6~~Provision for income taxes totaled $7 million for the three months ended September 30, ~~2014 when~~2015 compared to $219 million for the same period in ~~2013 primarily due to servicing expenses for the SpringCastle Portfolio as a result of the SAC Capital Contribution on July 31,~~ 2014. This increase also reflected higher professional fees of $19.1 million primarily due to one-time costs and restructuring costs relating to the real estate sales transactions and higher advertising and information technology expenses during the 2014 period.

~~Provision for income taxes totaled $219.1 million for the three months ended September 30, 2014 compared to benefit from income taxes of $57.1 million for the three months ended September 30, 2013.~~ The effective tax rate for the three months ended September 30, ~~2014~~2015 was ~~33.8%~~16.1% compared to ~~37.8%~~33.8% for the same period in ~~2013.~~2014. The effective tax ~~rate~~rates for the three months ended September 30, 2015 and 2014 differed from the federal statutory ~~rate~~rates primarily due to the effect of the non-controlling interest in our joint venture, partially offset by the effect of our state income taxes. The effective tax rate for the three months ended September 30, 2013 differed from the federal statutory rate primarily due to the effect of our state income taxes.venture.

Comparison of Consolidated Results for Nine Months Ended September 30, ~~2014~~2015 and ~~2013~~2014

Finance charges ~~decreased~~increased for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 due to the net of the following:


(dollars in thousands)
(dollars in millions)

2014 compared to 2013 - Nine Months Ended September 30

2015 compared to 2014 - Nine Months Ended September 30,
Decrease in average net receivables	$	(177,850	)	$	(313	)
Increase in yield	32,608			362
SpringCastle finance charges in 2014	83,732
Total	$	(61,510	)	$	49

Average net receivables decreased for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to 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. This decrease also reflected the ~~first nine months~~liquidating status of ~~2014.~~the acquired SpringCastle Portfolio. This decrease was partially offset by (i) higher personal loan average net ~~receivables.~~receivables resulting from our continued focus on personal loan originations through our branch network and centralized operations and the launch of our auto loan product in June of 2014 and (ii) higher SpringCastle average net receivables resulting from the SAC Capital Contribution on July 31, 2014.

Yield increased for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily ~~from our personal loans, which have higher yields. This increase also reflected~~due to a higher proportion of personal loans, which have higher yields, as a result of the ~~transfers of~~ real estate ~~loans~~loan sales during 2014. The increase in yield was partially offset by the launch of our auto loan product in June of 2014, which generally has lower yields.

Interest income on finance receivables held for sale decreased $41 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to lower average finance receivables held for sale during the ~~first nine months of 2014.~~2015 period.

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Interest expense decreased for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 due to the net of the following:


(dollars in thousands)
(dollars in millions)

2014 compared to 2013 - Nine Months Ended September 30

2015 compared to 2014 - Nine Months Ended September 30,
Decrease in average debt	$	(132,448	)	$	(16	)
Decrease in weighted average interest rate	(2,986		)	(10		)
SpringCastle interest expense in 2014	11,608
Total	$	(123,826	)	$	(26	)

Average debt decreased for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to debt repurchases and repayments of ~~$3.2~~$3.3 billionduring the past twelve months and the elimination of $3.4 billion of debt associated with our mortgage securitizations as a result of the sales of the Company’s beneficial interests in the mortgage-backed certificates during 2014 and the ~~first nine months~~resulting deconsolidation of ~~2014.~~the securitization trusts and their outstanding certificates reflected as long-term debt. These decreases were partially offset by net debt issuances pursuant to ~~three~~our consumer securitization transactions completed during the past twelve months.

The weighted average interest rate on our debt decreased for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to the debt repurchases and repayments discussed above, which resulted in lower accretion of net discount, established at the date of the Fortress Acquisition, 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.

Provision for finance receivable losses ~~increased $13.4~~decreased $27 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014. This decrease was primarily due to $39.6 million of recoveries recorded in June 2013 resulting from a sale of previously charged-off finance receivables in June 2013 (net of a $1.6 million adjustment for the subsequent buyback of certain finance receivables). This increase also reflected additional allowance requirements primarily due to growth in our personal loans during the 2014 period and higher personal loan delinquency ratio at September 30, 2014. This increase was partially offset by a reductionreductions in the allowance requirements and net charge-offs on our real estate loans ~~deemed to be purchased credit impaired finance receivables and TDR finance receivables subsequent to the Fortress Acquisition~~ as a result of 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. This decrease was partially offset by (i) an additional seven months of net charge-offs on the ~~first~~SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014 and (ii) higher net charge-offs on our personal loans primarily due to growth in our personal loans during the past twelve months and a higher personal loan delinquency ratio at September 30, 2015.

Insurance revenues decreased $9 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to decreases in credit and non-credit earned premiums. The decrease in credit earned premiums reflected the cancellations of dwelling policies as a result of the real estate loan sales during 2014. The decrease in non-credit earned premiums reflected fewer non-credit policies written.

Investment revenues increased $11 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to investment income generated from investing the proceeds of the real estate loan sales in 2014.

Net loss on repurchases and repayments of debt of ~~$6.6 million and $33.8~~$7 million for the nine months ended September 30, 2014 ~~and 2013, respectively,~~ reflected repurchases of debt at net amounts greater than carrying value.

Net gain on sales of real estate loans and related trust assets of ~~$706.5~~$707 million for the nine months ended September 30, 2014 reflected the reversal of the remaining ~~unaccreted~~ push-down accounting ~~basis~~adjustment for the real estate loans, less allowance for finance receivable losses that we established at the date of the Fortress Acquisition. ~~See Note 1 of the Notes to Condensed Financial Statements for further information on these sales.~~

Other revenues ~~decreased $24.1~~— other increased $11 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to (i) lower net charge-offs recognized on our finance receivables held for sale and provision adjustments for liquidated held for sale accounts during the ~~2014~~2015 period and ~~lower~~(ii) higher interest ~~revenue~~income on ~~notes receivables~~SFC’s note receivable from ~~SFI.~~SFI reflecting additional SFI borrowings during the 2015 period to fund the operations of its subsidiaries. This ~~decrease~~increase was partially offset by servicing fee revenues during the 2014 period for the servicing of the real estate loans included in the MSR Sale. We continued to service these loans on behalf of Nationstar until the servicing transfer on September 30, 2014, under an interim servicing agreement.

Salaries and benefits ~~decreased $114.1~~increased $15 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~$131.3 million of share-based~~non-cash incentive compensation expense ~~due to the grant~~ of ~~RSUs to certain of our executives in the third quarter of 2013. This decrease was partially offset by (i) employee retention and severance accruals of $3.8~~$15 million recorded in the ~~third~~second quarter of ~~2014 due~~2015 related to the ~~recent workforce reduction~~rights of ~~approximately 170 employees and (ii) higher salary accruals reflecting an increase in number~~certain executives to a portion of ~~employees and increased originations~~the cash proceeds from the sale of ~~personal loans.~~SHI’s common stock by the Initial

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Stockholder. See Note 2 of the Notes to Condensed Consolidated Financial Statements for further information on the equity offering.

Other operating expenses increased ~~$27.7~~$41 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to an additional seven months of servicing expenses for the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. This increase also reflected higher ~~professional fees primarily due~~advertising and information technology expenses. The increase in advertising expenses reflected an increase in direct mailings to pre-approved customers, our increased focus on e-commerce and social media marketing, and our marketing efforts on our auto loan product during 2015. The increase in other operating expenses was partially offset by (i) one-time costs ~~relating~~of $7 million recorded in the 2014 period related to the real estate ~~sales transactions and higher advertising and information technology expenses~~loan sales; (ii) a $5 million reduction in reserves related to estimated PPI claims during the ~~2014 period.~~

~~Table~~second quarter of ~~Contents~~

~~Provision~~2015; and (iii) lower subservicing fees on our real estate loans as a result of the real estate loan sales during 2014. See Note 14 of the Notes to Condensed Consolidated Financial Statements for ~~income taxes totaled $276.0~~further information on the loss contingencies related to PPI claims.

Insurance losses and loss adjustment expenses decreased $4 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in 2014 primarily due to favorable variances in claim reserves and benefit ~~from~~reserves.

Provision for income taxes ~~of $44.1~~totaled $14 million for the nine months ended September 30, ~~2013.~~2015 compared to $276 million for the same period in 2014. The effective tax rate for the nine months ended September 30, ~~2014~~2015 was ~~34.7%~~12.1% compared to ~~37.3%~~34.7% for the same period in ~~2013.~~2014. The effective tax ~~rate~~rates for the nine months ended September 30, 2015 and 2014 differed from the federal statutory ~~rate~~rates primarily due to the effect of the non-controlling interest in our joint venture, partially offset by the effect of our state income taxes. The effective tax rate for the nine months ended September 30, 2013 differed from the federal statutory rates primarily due to the effect of our state income taxes.venture.

Reconciliation of Income ~~(Loss)~~ before Provision for ~~(Benefit from)~~ Income Taxes on Push-Down Accounting Basis to Historical Accounting Basis

Due to the nature of the Fortress Acquisition, we revalued our assets and liabilities based on their fair values at November 30, 2010, the date of the Fortress Acquisition, in accordance with business combination accounting standards, or push-down accounting. Push-down accounting affected and continues to affect, among other things, the carrying amount of our finance receivables and long-term debt, our finance charges on our finance receivables and related yields, our interest expense, our allowance for finance receivable losses, and our net charge-offs and charge-off ratio. In general, on a quarterly basis, we accrete or amortize the valuation adjustments recorded in connection with the Fortress Acquisition, or record adjustments based on current expected cash flows as compared to expected cash flows at the time of the Fortress Acquisition, in each case, as described in more detail in the footnotes to the table below. In addition, push-down accounting resulted in the elimination of accretion or amortization of discounts, premiums, and other deferred costs on our finance receivables and long-term debt prior to the Fortress Acquisition. The reconciliations of income ~~(loss)~~ before provision for ~~(benefit from)~~ income taxes on a push-down accounting basis to income ~~(loss)~~ before provision for ~~(benefit from)~~ income taxes on a historical accounting basis (which is a basis of accounting other than U.S. GAAP that we believe provides a consistent basis for both management and other interested third parties to better understand our operating results) were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)													2015			2014			2015			2014

Income (loss) before provision for (benefit from) income taxes - push-down accounting basis	$	647,598		$	(151,053	)	$	795,969		$	(118,142	)
Income before provision for income taxes - push-down accounting basis													$	43		$	648		$	117		$	796
Interest income adjustments (a)	(16,252		)	(49,974		)	(84,232		)	(147,112		)	(3		)	(16		)	(10		)	(84		)
Interest expense adjustments (b)	36,354			33,911			100,238			104,281			32			36			94			100
Provision for finance receivable losses adjustments (c)	(19,845		)	8,368			(18,182		)	21,663			5			(19		)	14			(18		)
Repurchases and repayments of long-term debt adjustments (d)	—			14,158			(4,884		)	(6,976		)	—			—			—			(4		)
Fair value adjustments on debt (e)	—			12,216			8,298			45,427			—			—			—			8
Sales of finance receivables held for sale originated as held for investment adjustments (f)	(330,177		)	—			(505,158		)	—			—			(330		)	—			(505		)
Amortization of other intangible assets (g)	1,073			1,228			3,294			3,946			2			—			4			3
Other (h)	13,802			1,277			14,874			4,686			1			13			7			14
Income (loss) before provision for (benefit from) income taxes -historical accounting basis	$	332,553		$	(129,869	)	$	310,217		$	(92,227	)
Income before provision for income taxes - historical accounting basis													$	80		$	332		$	226		$	310

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(a)

Interest income adjustments consist of: (1) the accretion of the net discount applied to non-credit impaired net finance receivables to revalue the non-credit impaired net finance receivables to their fair value at the date of the Fortress Acquisition using the interest method over the remaining life of the related net finance receivables; (2) the difference in finance charges earned on our pools of purchased credit impaired net finance receivables under a level rate of return over the expected lives of the underlying pools of purchased credit impaired finance receivables, net of the finance charges earned on these finance receivables under historical accounting basis; and (3) the elimination of the accretion or amortization of historical unearned points and fees, deferred origination costs, premiums, and discounts.

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Components of interest income adjustments consisted of:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)													2015			2014			2015			2014

Accretion of net discount applied to non-credit impaired net finance receivables	$	(12,358	)	$	(39,178	)	$	(61,880	)	$	(116,686	)	$	(3	)	$	(12	)	$	(9	)	$	(62	)
Purchased credit impaired finance receivables finance charges	(4,618		)	(14,567		)	(28,938		)	(42,864		)	(1		)	(5		)	(2		)	(29		)
Elimination of accretion or amortization of historical unearned points and fees, deferred origination costs, premiums, and discounts	724			3,771			6,586			12,438			1			1			1			7
Total	$	(16,252	)	$	(49,974	)	$	(84,232	)	$	(147,112	)	$	(3	)	$	(16	)	$	(10	)	$	(84	)


(b)	Interest expense adjustments consist of: (1) the accretion of the net discount applied to long-term debt to revalue the debt securities to their fair value at the date of the Fortress Acquisition using the interest method over the remaining life of the related debt securities; and (2) the elimination of the accretion or amortization of historical discounts, premiums, commissions, and fees.

Components of interest expense adjustments were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)													2015			2014			2015			2014

Accretion of net discount applied to long-term debt	$	37,639		$	43,505		$	111,334		$	139,702		$	33		$	37		$	97		$	111
Elimination of accretion or amortization of historical discounts, premiums, commissions, and fees	(1,285		)	(9,594		)	(11,096		)	(35,421		)	(1		)	(1		)	(3		)	(11		)
Total	$	36,354		$	33,911		$	100,238		$	104,281		$	32		$	36		$	94		$	100

(c)

Provision for finance receivable losses consists of the allowance for finance receivable losses adjustments and net charge-offs quantified in the table below. Allowance for finance receivable losses adjustments reflect the net difference between our allowance adjustment requirements calculated under our historical accounting basis net of adjustments required under push-down accounting basis. Net charge-offs reflect the net charge-off of loans at a higher carrying value under historical accounting basis versus the discounted basis to their fair value at date of the Fortress Acquisition under push-down accounting basis.

Components of provision for finance receivable losses adjustments were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)													2015			2014			2015			2014

Allowance for finance receivable losses adjustments	$	(13,677	)	$	22,347		$	8,422		$	70,613		$	7		$	(13	)	$	18		$	9
Net charge-offs	(6,168		)	(13,979		)	(26,604		)	(48,950		)	(2		)	(6		)	(4		)	(27		)
Total	$	(19,845	)	$	8,368		$	(18,182	)	$	21,663		$	5		$	(19	)	$	14		$	(18	)


(d)	Repurchases and repayments of long-term debt adjustments reflect the impact on acceleration of the accretion of the net discount or amortization of the net premium applied to long-term debt.


(e)	Fair value adjustments on debt reflect differences between historical accounting basis and push-down accounting basis. On a historical accounting basis, certain long-term debt components are marked-to-market on a recurring basis and are no longer marked-to-market on a recurring basis after the application of push-down accounting at the time of the Fortress Acquisition.

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(f)	~~Fair value adjustments on sales~~Sales of finance receivables held for sale originated as held for investment reflect the reversal of the remaining unaccreted push-down accounting basis for net finance receivables, less allowance for finance receivable losses established at the date of the Fortress Acquisition that were sold in the 2014 period.


(g)	Amortization of other intangible assets reflects the amortization over the remaining estimated life of intangible assets established at the date of the Fortress Acquisition as a result of the application of push-down accounting.

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(h)

“Other” items reflect differences between historical accounting basis and push-down accounting basis relating to various items such as the elimination of deferred charges, adjustments to the basis of other real estate assets, fair value adjustments to fixed assets, adjustments to insurance claims and policyholder liabilities, and various other differences all as of the date of the Fortress Acquisition.

At September 30, 2015 and December 31, 2014, the remaining unaccreted push-down accounting basis totaled ~~$5.1~~$14 million and $5 million, respectively, for net finance receivables, less allowance for finance receivable losses, and ~~$616.1~~$461 million and $561 million, respectively, for long-term debt.

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Segment Results

See Note 16 of the Notes to Condensed Consolidated Financial Statements for a description of our segments. Management considers Consumer and Insurance and Acquisitions and Servicing as our Core Consumer Operations and Real Estate as our Non-Core Portfolio. Due to the nature of the Fortress Acquisition, we applied push-down accounting. However, we report the operating results of our Core Consumer Operations, Non-Core Portfolio, and Other using the same accounting basis that we employed prior to the Fortress Acquisition, which we refer to as “historical accounting basis,” to provide a consistent basis for both management and other interested third parties to better understand the operating results of these segments. The historical accounting basis (which is a basis of accounting other than U.S. GAAP) also provides better comparability of the operating results of these segments to our competitors and other companies in the financial services industry. The historical accounting basis is not applicable to the Acquisitions and Servicing segment since this segment resulted from the SAC Capital Contribution on July 31, 2014 and therefore, was not affected by the Fortress Acquisition. See Note 16 of the Notes to Condensed Consolidated Financial Statements for reconciliations of segment totals to condensed consolidated financial statement amounts.

We allocate revenues and expenses (on a historical accounting basis) to each segment using the following methodologies:



Interest income	Directly correlated with a specific segment.
Interest expense	Disaggregated into three categories based on the underlying debt that the expense pertains to:
	l securitizations — allocated to the segments whose finance receivables serve as the collateral securing each of the respective debt instruments;
	l unsecured debt — allocated to the segments based on expected leverage for that segment or the balance of unencumbered assets and cash proceeds from sale of receivables in that segment; and
	l secured term loan — allocated to the segments whose finance receivables served as the collateral securing each of the respective debt instruments.
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.
Insurance revenues	Directly correlated with a specific segment.
Investment revenues	Directly correlated with a specific segment.
Net gain (loss) on repurchases and repayments of debt	Allocated to the segments based on the interest expense allocation of debt.
Net gain (loss) on fair value adjustments on debt	Directly correlated with a specific segment.
Other revenues — other	Directly correlated with a specific segment except for gains and losses on foreign currency exchange and derivatives. These items are allocated to the segments based on the interest expense allocation of debt.
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 losses and loss adjustment expenses	Directly correlated with a specific segment.

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We evaluate the performance of each of our segments based on its pretax operating earnings.

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CORE CONSUMER OPERATIONS

Pretax operating results for Consumer and Insurance (which are reported on a historical accounting basis), and Acquisitions and Servicing are presented in the table below on an aggregate basis:


(dollars in thousands)	Three Months Ended September 30, 2014		Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)												Three Months Ended September 30,				Nine Months Ended September 30,
												2015		2014		2015		2014

Interest income	$	318,391	$	188,294		$	746,711		$	519,315		$	402	$	318	$	1,166	$	747

Interest expense	51,827		38,254			133,021			111,393			65		51		186		133

Net interest income	266,564		150,040			613,690			407,922			337		267		980		614

Provision for finance receivable losses	73,429		38,111			165,769			52,126			81		73		239		166

Net interest income after provision for finance receivable losses	193,135		111,929			447,921			355,796			256		194		741		448

Other revenues:
Insurance	43,984		38,266			125,023			107,114			40		44		116		125
Investment	13,722		8,313			35,652			31,792			12		13		43		35
Net loss on repurchases and repayments of debt	—		(2,891		)	(1,426		)	(4,391		)	—		—		—		(1		)
Net gain on fair value adjustments on debt	1,523		—			1,523			—			—		1		—		1
Other	2,818		2,907			7,402			8,047			3		3		7		8
Total other revenues	62,047		46,595			168,174			142,562			55		61		166		168

Other expenses:
Operating expenses:
Salaries and benefits	66,543		65,878			205,453			193,453			82		65		236		205
Other operating expenses	56,743		34,155			128,858			98,011			72		57		204		129
Insurance loss and loss adjustment expenses	20,451		16,849			57,923			48,373
Insurance losses and loss adjustment expenses												17		21		53		58
Total other expenses	143,737		116,882			392,234			339,837			171		143		493		392

Pretax operating income	111,445		41,642			223,861			158,521			140		112		414		224

Pretax operating income attributable to non-controlling interests	23,225		—			23,225			—			31		23		93		23

Pretax operating income attributable to Springleaf	$	88,220	$	41,642		$	200,636		$	158,521
Pretax operating income attributable to Springleaf Finance Corporation												$	109	$	89	$	321	$	201

7265

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Selected financial statistics for Consumer and Insurance (which are reported on a historical accounting basis) and Acquisitions and Servicing were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			At or for the Nine Months Ended September 30, 2014			At or for the Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						At or for the Nine Months Ended September 30,
													2015			2014			2015			2014

Consumer

Consumer and Insurance
Finance receivables held for investment:
Net finance receivables							$	3,550,398		$	2,960,763								$	3,973		$	3,550
Number of accounts							885,646			795,053									852,457			885,646

TDR finance receivables																			$	27		$	18
Allowance for finance receivable losses - TDR																			$	7		$	1
Provision for finance receivable losses - TDR													$	4		$	1		$	14		$	1

Average net receivables	$	3,455,875		$	2,892,174		$	3,276,801		$	2,703,300		$	4,417		$	3,456		$	4,086		$	3,277

Yield	27.04		%	25.93		%	27.02		%	25.65		%	26.00		%	27.04		%	26.46		%	27.02		%

Gross charge-off ratio (a)	5.46		%	4.30		%	5.59		%	5.07		%
Recovery ratio (b)	(0.79		)%	(0.26		)%	(0.67		)%	(2.16		)%
Charge-off ratio (a) (b)	4.67		%	4.04		%	4.92		%	2.91		%

Gross charge-off ratio													5.18		%	5.46		%	5.77		%	5.59		%
Recovery ratio													(0.90		)%	(0.79		)%	(0.89		)%	(0.67		)%
Charge-off ratio													4.28		%	4.67		%	4.88		%	4.92		%
Delinquency ratio							2.54		%	2.32		%							3.31		%	2.54		%

Origination volume	$	914,688		$	762,426		$	2,570,369		$	2,319,518		$	1,137		$	914		$	3,168		$	2,570
Number of accounts	190,593			190,712			559,218			561,188
Number of accounts originated													212,707			190,593			586,973			559,218

Acquisitions and Servicing

Finance receivables held for sale:
Net finance receivables							$	2,083,145		$	—								$	608		$	—
Number of accounts							291,153			—									144,392			—

Average net receivables (c)	$	2,121,856		$	—		$	2,121,856		$	—
TDR finance receivables																			$	2		$	—

Acquisitions and Servicing
Net finance receivables																			$	1,667		$	2,083
Number of accounts																			242,660			291,153

TDR finance receivables																			$	12		$	8
Allowance for finance receivable losses - TDR																			$	4		$	2
Provision for finance receivable losses - TDR													$	1		$	2		$	2		$	2

Average net receivables *													$	1,714		$	2,122		$	1,818		$	2,122
Yield	23.61		%	—		%	23.61		%	—		%	26.04		%	23.61		%	26.17		%	23.61		%

Net charge-off ratio	5.17		%	—		%	5.17		%	—		%	4.39		%	5.17		%	4.98		%	5.17		%

Delinquency ratio							5.11		%	—		%							4.06		%	5.11		%

~~(a)~~*

The gross charge-off ratio and charge-off ratio for the nine months ended September 30, 2013 reflect $14.5 million of additional charge-offs recorded in March 2013 (on a historical accounting basis) related to our change in charge-off policy for personal loans effective March 31, 2013. Excluding these additional charge-offs, our Consumer gross charge-off ratio would have been 4.35% for the nine months ended September 30, 2013.

~~(b)~~

The recovery ratio and charge-off ratio for the three and nine months ended September 30, 2013 reflect $23.8 million of recoveries on charged-off core personal loans resulting from a sale of previously charged-off finance receivables in June 2013, net of a $1.6 million adjustment recorded in September 2013 for the subsequent buyback of certain personal loans. Excluding these recoveries, our Consumer charge-off ratio would have been 3.81% and 4.09%, respectively, for the three and nine months ended September 30, 2013. Excluding the impacts of the $14.5 million of additional charge-offs and the $23.8 million of recoveries on charged-off core personal loans, our Consumer charge-off ratio would have been 3.37% for the nine months ended September 30, 2013.


~~(c)~~	Acquisitions and Servicing average net receivables for the three and nine months ended September 30, 2014 reflect a two-month average since the SAC Capital Contribution occurred on July 31, 2014.

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Comparison of Pretax Operating Results for Three Months Ended September 30, ~~2014~~2015 and ~~2013~~2014


(dollars in thousands)
Three Months Ended September 30,	2014		2013
					Three Months Ended September 30,
(dollars in millions)					2015		2014

Interest income:
Finance charges - Consumer	$	234,659	$	188,294
Finance charges - Consumer and Insurance					$	289	$	234
Finance charges - Acquisitions and Servicing	83,732		—		113		84
Total	$	318,391	$	188,294	$	402	$	318

Finance charges — Consumer and Insurance increased ~~$46.4~~$55 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to increases in average net receivables, ~~and~~partially offset by a decrease in yield. Average net receivables increased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to increased originations on personal loans resulting from our continued focus on personal ~~loans.~~loans, and growth in our auto loan product. At September 30, 2015, we had over 69,000 auto loans totaling $818 million compared to 6,800 auto loans totaling $89 million at September 30, 2014. Yield ~~increased~~decreased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~pricing~~the higher proportion of ~~new personal loans at higher state specific rates with concentrations in states with more favorable returns.~~our auto loan product, which generally has lower yields.

Finance charges — Acquisitions and Servicing ~~reflected two~~increased $29 million for the three months ended September 30, 2015 when compared to the same period in 2014 primarily due to one additional month of finance charges on the SpringCastle Portfolio ~~which SFC owns a 47% equity interest~~during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. This increase was partially offset by the liquidating status of the acquired portfolio.

(dollars in thousands)
Three Months Ended September 30, 2014 2013

Interest expense - Consumer
$ 40,234
$ 38,254
Interest expense - Acquisitions and Servicing
11,593

—
Total
$ 51,827

$ 38,254



(dollars in millions)	Three Months Ended September 30,
(dollars in millions)	2015		2014

Interest expense - Consumer and Insurance	$	43	$	39
Interest expense - Acquisitions and Servicing	22		12
Total	$	65	$	51

Interest expense — Consumer and Insurance increased ~~$2.0~~$4 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to additional funding required to support increased originations of personal loans. This increase was partially offset by ~~less~~a reduction in the utilization of financing from unsecured notes that was replaced by consumer loan securitizations, which generally have lower interest rates.

Interest expense — Acquisitions and Servicing increased $10 million for the three months ended September 30, 2015 when compared to the same period in 2014 primarily due to the refinance of the SpringCastle 2013-A Notes in October 2014, which resulted in an increase in average debt. This increase also reflected ~~two months~~one additional month of interest expense on the long-term debt associated with the securitization of the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014.

(dollars in thousands)
Three Months Ended September 30, 2014 2013

Provision for finance receivable losses - Consumer
$ 55,357
$ 38,111
Provision for finance receivable losses - Acquisitions and Servicing
18,072

—
Total
$ 73,429

$ 38,111



(dollars in millions)	Three Months Ended September 30,
(dollars in millions)	2015		2014

Provision for finance receivable losses - Consumer and Insurance	$	62	$	55
Provision for finance receivable losses - Acquisitions and Servicing	19		18
Total	$	81	$	73

Provision for finance receivable losses — Consumer and Insurance increased ~~$17.2~~$7 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~additional allowance requirements reflecting increased originations of~~higher net charge-offs on our personal loans during the 2015 period primarily due to growth in our personal loans during the ~~2014 period~~past twelve months and a higher personal loan delinquency ratio at September 30, ~~2014.~~2015.

Table of Contents

~~Insurance revenues~~Provision for finance receivable losses — Acquisitions and Servicing increased ~~$5.7~~$1 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~increases~~one additional month of provision for finance receivable losses associated with the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. This increase was partially offset by the improved credit quality of the SpringCastle Portfolio reflecting improvements in ~~credit~~servicing of the acquired portfolio and ~~non-credit earned premiums reflecting higher originations of personal loans in the 2014 period. The increase in credit premiums also reflects the origination of personal loans with longer terms.~~its liquidating status.

~~Net gain on fair value adjustments on debt — Acquisitions and Servicing of $1.5~~Insurance revenues decreased $4 million for the three months ended September 30, 2015 when compared to the same period in 2014 ~~resulted from~~primarily due to decreases in credit and non-credit earned premiums. The decrease in credit earned premiums reflected the ~~unrealized gain on fair value adjustments~~cancellations of dwelling policies as a result of the ~~long-term debt associated with the securitization of the SpringCastle Portfolio that is accounted for at fair value through earnings.~~

~~Table of Contents~~

(dollars in thousands)
Three Months Ended September 30, 2014 2013

Salaries and benefits - Consumer $ 61,751
$ 61,398
Salaries and benefits - Insurance 4,790
4,480
Salaries and benefits - Acquisitions and Servicing 2
—
Total $ 66,543
$ 65,878
real estate loan sales during 2014. The decrease in non-credit earned premiums reflected fewer non-credit policies written.

(dollars in thousands)
Three Months Ended September 30, 2014 2013

Other operating expenses - Consumer $ 41,500
$ 30,867
Other operating expenses - Insurance 3,456
3,288
Other operating expenses - Acquisitions and Servicing 11,787
—
Total $ 56,743
$ 34,155



(dollars in millions)	Three Months Ended September 30,
(dollars in millions)	2015		2014

Salaries and benefits - Consumer and Insurance	$	82	$	65
Salaries and benefits - Acquisitions and Servicing	—		—
Total	$	82	$	65

~~Other operating expenses for~~Salaries and benefits — Consumer and Insurance increased ~~$10.8~~$17 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to higher variable compensation reflecting increased originations of personal loans and increased staffing in our centralized operations. This increase also reflected the redistribution of the allocation of salaries and benefit expenses from our Real Estate segment as a result of the real estate loan sales in 2014.



(dollars in millions)	Three Months Ended September 30,
(dollars in millions)	2015		2014

Other operating expenses - Consumer and Insurance	$	58	$	45
Other operating expenses - Acquisitions and Servicing	14		12
Total	$	72	$	57

Other operating expenses — Consumer and Insurance increased $13 million for the three months ended September 30, 2015 when compared to the same period in 2014 primarily due to: (i) higher advertising ~~professional fees,~~expenses reflecting our increased focus on e-commerce and social media marketing and our marketing efforts on our auto loan product during 2015; (ii) higher occupancy costs resulting from increased general maintenance costs of our branches; and (iii) higher information technology ~~expenses.~~expenses reflecting increased depreciation and software maintenance as a result of software purchases and the capitalization of internally developed software. This increase also reflected the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014.

Other operating expenses — Acquisitions and Servicing increased $2 million for the three months ended September 30, 2015 when compared to the same period in 2014 primarily due to one additional month of other operating expenses during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. This increase was partially offset by the improved credit quality and the liquidation status of the acquired portfolio.

Insurance losses and loss adjustment expenses ~~increased $3.6~~decreased $4 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~an unfavorable variance~~favorable variances in ~~claim~~benefit reserves.

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Comparison of Pretax Operating Results for Nine Months Ended September 30, ~~2014~~2015 and ~~2013~~2014


(dollars in thousands)
Nine Months Ended September 30,	2014		2013
(dollars in millions)					Nine Months Ended September 30,
					2015		2014

Interest income:
Finance charges - Consumer	$	662,979	$	519,315
Finance charges - Consumer and Insurance					$	810	$	663
Finance charges - Acquisitions and Servicing	83,732		—		356		84
Total	$	746,711	$	519,315	$	1,166	$	747

Finance charges — Consumer and Insurance increased ~~$143.7~~$147 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to increases in average net receivables, ~~and~~partially offset by a decrease in yield. Average net receivables increased for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to increased originations on personal loans resulting from our continued focus on personal ~~loans.~~loans, including the launch of our auto loan product in June of 2014. At September 30, 2015, we had over 69,000 auto loans totaling $818 million compared to 6,800 auto loans totaling $89 million at September 30, 2014. Yield ~~increased~~decreased for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~pricing~~the higher proportion of ~~new personal loans at higher state specific rates with concentrations in states with more favorable returns.~~our auto loan product, which generally has lower yields.

Finance charges — Acquisitions and Servicing ~~reflected two months of finance charges on the SpringCastle Portfolio.~~

(dollars in thousands)
Nine Months Ended September 30, 2014 2013

Interest expense - Consumer $ 121,428
$ 111,393
Interest expense - Acquisitions and Servicing 11,593

—
Total $ 133,021

$ 111,393

~~Interest expense — Consumer~~ increased ~~$10.0~~$272 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to an additional ~~funding required to support increased originations~~seven months of ~~personal loans. This~~finance charges on the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. The increase was partially offset by ~~less~~the liquidating status of the acquired portfolio.



(dollars in millions)	Nine Months Ended September 30,
(dollars in millions)	2015		2014

Interest expense - Consumer and Insurance	$	119	$	121
Interest expense - Acquisitions and Servicing	67		12
Total	$	186	$	133

Interest expense — Consumer and Insurance decreased $2 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to a reduction in the utilization of financing from unsecured notes that was replaced by consumer loan securitizations, which generally have lower interest rates. This decrease was partially offset by additional funding required to support increased originations of personal loans.

~~Table of Contents~~

Interest expense — Acquisitions and Servicing ~~reflected two months of interest expense on long-term debt associated with the securitization of the SpringCastle Portfolio.~~

(dollars in thousands)
Nine Months Ended September 30, 2014 2013

Provision for finance receivable losses - Consumer $ 147,697
$ 52,126
Provision for finance receivable losses - Acquisitions and Servicing 18,072

—
Total $ 165,769

$ 52,126

~~Provision for finance receivable losses — Consumer~~ increased ~~$95.6~~$55 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~$23.8 million~~an additional seven months of ~~recoveries recorded in June 2013~~interest expense on previously charged-off personal loans resulting from a sale of these loans in June 2013. This increase also reflected additional allowance requirements resulting from increased originations of personal loans in the 2014 period and higher personal loan delinquency ratio at September 30, 2014.

Insurance revenues increased $17.9 million for the nine months ended September 30, 2014 when compared to the same period in 2013 primarily due to increases in credit and non-credit earned premiums reflecting higher originations of personal loans in the 2014 period. The increase in credit premiums also reflects the origination of personal loans with longer terms.

Net loss on repurchases and repayments of debt — Consumer of $1.4 million and $4.4 million for the nine months ended September 30, 2014 and 2013, respectively, reflected repurchases of debt at net amounts greater than carrying value.

~~Net gain on fair value adjustments on debt — Acquisitions and Servicing of $1.5 million for the nine months ended September 30, 2014 resulted from the unrealized gain on fair value adjustments of~~ the long-term debt associated with the securitization of the SpringCastle Portfolio ~~that is accounted for at fair value through earnings.~~during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. This increase also reflected the refinance of the SpringCastle 2013-A Notes in October 2014, which resulted in an increase in average debt.

(dollars in thousands)
Nine Months Ended September 30, 2014 2013

Salaries and benefits - Consumer $ 190,951
$ 182,051
Salaries and benefits - Insurance 14,500
11,402
Salaries and benefits - Acquisitions and Servicing 2
—
Total $ 205,453
$ 193,453

(dollars in thousands)
Nine Months Ended September 30, 2014 2013

Other operating expenses - Consumer $ 106,780
$ 89,642
Other operating expenses - Insurance 10,291
8,369
Other operating expenses - Acquisitions and Servicing 11,787
—
Total $ 128,858
$ 98,011



(dollars in millions)	Nine Months Ended September 30,
(dollars in millions)	2015		2014

Provision for finance receivable losses - Consumer and Insurance	$	170	$	148
Provision for finance receivable losses - Acquisitions and Servicing	69		18
Total	$	239	$	166

~~Other operating expenses~~Provision for finance receivable losses — Consumer and Insurance increased ~~$19.1~~$22 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to higher net charge-offs on our personal loans during the 2015 period primarily due to growth in our personal loans during the past twelve months and a higher personal loan delinquency ratio at September 30, 2015.

Table of Contents

Provision for finance receivable losses — Acquisitions and Servicing increased $51 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to an additional seven months of provision for finance receivable losses associated with the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. This increase was partially offset by the improved credit quality of the SpringCastle Portfolio reflecting improvements in servicing of the acquired portfolio and its liquidating status.

Investment revenues increased $8 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to investment income generated from an investment in SpringCastle debt, which is eliminated in our consolidating operating results.



(dollars in millions)	Nine Months Ended September 30,
(dollars in millions)	2015		2014

Salaries and benefits - Consumer and Insurance	$	236	$	205
Salaries and benefits - Acquisitions and Servicing	—		—
Total	$	236	$	205

Salaries and benefits — Consumer and Insurance increased $31 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to higher variable compensation reflecting increased originations of personal loans and increased staffing in our centralized operations. This increase also reflected the redistribution of the allocation of salaries and benefit expenses from our Real Estate segment as a result of the real estate loan sales in 2014.



(dollars in millions)	Nine Months Ended September 30,
(dollars in millions)	2015		2014

Other operating expenses - Consumer and Insurance	$	159	$	117
Other operating expenses - Acquisitions and Servicing	45		12
Total	$	204	$	129

Other operating expenses — Consumer and Insurance increased $42 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to: (i) higher advertising expenses reflecting our increased focus on e-commerce and social media marketing and our marketing efforts on our auto loan product during 2015; (ii) higher professional fees relating to legal and audit services; (iii) higher credit, collection and losses reflecting growth in personal loans, including our auto loan product: (iv) higher occupancy costs resulting from increased general maintenance costs of our branches and higher leasehold improvement amortization expense from the servicing facilities added in 2014; and (v) higher information technology ~~expenses.~~expenses reflecting increased depreciation and software maintenance as a result of software purchases and the capitalization of internally developed software. This increase also reflected the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014.

Other operating expenses — Acquisitions and Servicing increased $33 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to an additional seven months of other operating expenses during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014. This increase was partially offset by the improved credit quality and the liquidation status of the acquired portfolio.

Insurance losses and loss adjustment expenses ~~increased $9.6~~decreased $5 million for the nine months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to ~~unfavorable~~favorable variances in ~~benefit~~claim reserves and ~~claim~~benefit reserves.

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Reconciliation of Income ~~(Loss)~~ before Provision for ~~(Benefit from)~~ Income Taxes on Historical Accounting Basis to Pretax Core Earnings

Pretax core earnings is a key performance measure used by management in evaluating the performance of our Core Consumer Operations. Pretax core earnings represents our income ~~(loss)~~ before provision for ~~(benefit from)~~ income taxes on a historical accounting basis and excludes results of operations from our non-core portfolio (Real Estate) and other non-originating legacy operations, gains (losses) resulting from accelerated long-term debt repayment and repurchases of long-term debt related to Core Consumer Operations (attributable to SFC), gains (losses) on fair value adjustments on debt related to Core Consumer Operations (attributable to SFC), and results of operations attributable to non-controlling interests. Pretax core earnings provides us with a key measure of our Core Consumer Operations’ performance as it assists us in comparing its performance on a consistent basis. Management believes pretax core earnings is useful in assessing the profitability of our core business and uses pretax core earnings in evaluating our operating performance. Pretax core earnings is a non-GAAP measure and should be considered in addition to, but not as a substitute for or superior to, operating income, net income, operating cash flow, and other measures of financial performance prepared in accordance with U.S. GAAP.

The following is a reconciliation of income ~~(loss)~~ before provision for ~~(benefit from)~~ income taxes on a historical accounting basis to pretax core earnings:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						Nine Months Ended September 30,
(dollars in millions)													2015			2014			2015			2014

Income (loss) before provision for (benefit from) income taxes - historical accounting basis *	$	332,553		$	(129,869	)	$	310,217		$	(92,227	)
Income before provision for income taxes - historical accounting basis *													$	80		$	332		$	226		$	310
Adjustments:
Pretax operating (income) loss - Non-Core Portfolio Operations	(222,002		)	41,191			(94,752		)	137,376			47			(222		)	138			(95		)
Pretax operating loss - Other/non-originating legacy operations	894			130,320			8,396			113,372			13			2			50			9
Net loss from accelerated repayment/repurchase of debt - Consumer	—			2,891			1,426			4,391
Net loss from accelerated repayment/repurchase of debt - Core Consumer Operations (attributable to SFC)													—			—			—			1
Net gain on fair value adjustments on debt - Core Consumer Operations (attributable to SFC)	(716		)	—			(716		)	—			—			(1		)	—			(1		)
Pretax operating income attributable to non-controlling interests	(23,225		)	—			(23,225		)	—			(31		)	(23		)	(93		)	(23		)
Pretax core earnings	$	87,504		$	44,533		$	201,346		$	162,912		$	109		$	88		$	321		$	201


*	See reconciliation of income ~~(loss)~~ before provision for ~~(benefit from)~~ income taxes on a push-down accounting basis to a historical accounting basis, which is presented prior to “Segment Results”.

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NON-CORE PORTFOLIO

Pretax operating results for Real Estate (which are reported on a historical accounting basis) were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						Nine Months Ended September 30,
													2015			2014			2015			2014

Interest income:
Finance charges	$	52,994		$	168,873		$	334,070		$	529,447		$	14		$	53		$	43		$	334
Finance receivables held for sale originated as held for investment	40,327			—			47,457			—			3			41			9			48
Total interest income	93,321			168,873			381,527			529,447			17			94			52			382

Interest expense	82,465			129,776			286,955			421,989			58			83			177			287

Net interest income	10,856			39,097			94,572			107,458
Net interest income (loss)													(41		)	11			(125		)	95

Provision for finance receivable losses	37,239			52,547			119,228			189,600			(4		)	37			(7		)	119

Net interest loss after provision for finance receivable losses	(26,383		)	(13,450		)	(24,656		)	(82,142		)	(37		)	(26		)	(118		)	(24		)

Other revenues:
Investment	(953		)	—			(953		)	—			—			(1		)	8			(1		)
Net loss on repurchases and repayments of debt	—			(15,817		)	(10,025		)	(35,417		)	—			—			—			(10		)
Net gain on fair value adjustments on debt	—			12,216			8,298			45,427			—			—			—			8
Net gain on sales of real estate loans and related trust assets *	286,357			—			201,362			—			—			287			—			202
Other	(1,944		)	(1,800		)	(2,628		)	(1,272		)	(2		)	(2		)	(4		)	(3		)
Total other revenues	283,460			(5,401		)	196,054			8,738			(2		)	284			4			196

Other expenses:
Operating expenses:
Salaries and benefits	17,185			7,551			34,558			20,541			3			18			9			35
Other operating expenses	17,890			14,789			42,088			43,431			5			18			15			42
Total other expenses	35,075			22,340			76,646			63,972			8			36			24			77

Pretax operating income (loss)	$	222,002		$	(41,191	)	$	94,752		$	(137,376	)	$	(47	)	$	222		$	(138	)	$	95


*	~~Consistent with~~For purposes of our segment reporting presentation, ~~in Note 16 of the Notes to Condensed Consolidated Financial Statements,~~ we have combined the lower of cost or fair value adjustments recorded on the ~~dates~~date the real estate loans were transferred to finance receivables held for sale with the final gain (loss) on the sales of these loans.

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Selected financial statistics for Real Estate (which are reported on a historical accounting basis) were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			At or for the Nine Months Ended September 30, 2014			At or for the Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						At or for the Nine Months Ended September 30,
													2015			2014			2015			2014

Real estate

Real Estate
Finance receivables held for investment:

Net finance receivables							$	702,430		$	9,475,525								$	591		$	702
Number of accounts							99,866			122,262									19,001			25,362

TDR finance receivables							$	160,288		$	3,154,643								$	159		$	160
Allowance for finance receivables losses - TDR							$	56,073		$	726,819
Allowance for finance receivable losses - TDR																			$	53		$	56
Provision for finance receivable losses - TDR	$	8,514		$	37,564		$	74,255		$	139,171		$	1		$	8		$	3		$	74

Average net receivables	$	2,866,688		$	9,622,708		$	6,511,620		$	9,933,718		$	605		$	2,867		$	633		$	6,512

Yield	7.33		%	6.96		%	6.86		%	7.13		%	9.15		%	7.33		%	9.11		%	6.86		%

Loss ratio (a) (b)	3.03		%	2.09		%	1.97		%	2.15		%

Loss ratio *													3.28		%	3.03		%	3.93		%	1.97		%
Delinquency ratio							7.31		%	7.74		%							7.25		%	7.31		%

Finance receivables held for sale:

Net finance receivables							$	493,880		$	—								$	186		$	494
Number of accounts							7,427			—									3,283			7,427

TDR finance receivables							$	486,100		$	—								$	189		$	486

~~(a)~~*

The loss ratio for the nine months ended September 30, 2014 reflects ~~$2.2~~$2 million of recoveries on charged-off real estate loans resulting from a sale of previously charged-off real estate loans in March ~~2014, net~~ of ~~a $0.2 million reserve for subsequent buybacks.~~2014. Excluding these recoveries, our Real Estate loss ratio would have been 2.02% for the nine months ended September ~~2014.~~


~~(b)~~	~~The loss ratio for the nine months ended September~~ 30, 2013 reflects $9.9 million of recoveries on charged-off real estate loans resulting from a sale of previously charged-off finance receivables in June 2013. Excluding these recoveries, our Real Estate loss ratio would have been 2.28% for the nine months ended September 30, 2013.2014.

Comparison of Pretax Operating Results for Three Months Ended September 30, ~~2014~~2015 and ~~2013~~2014

Finance charges decreased ~~$115.9~~$39 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to decreases in average net receivables, ~~and~~partially offset by an increase in yield. Average net receivables decreased for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to the continued liquidation of the real estate 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 ~~the first nine months of~~ 2014. The increase in yield for the three months ended September 30, ~~2014~~2015 reflected a higher proportion of our remaining real estate loans that are secured by second mortgages, which generally have higher yields.

Interest ~~expense~~income on real estate loans held for sale decreased ~~$47.3~~$38 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013~~2014 primarily due to lower ~~securitization interest~~average real estate loans held for sale during the 2015 period.

Interest expense ~~as a result of~~decreased $25 million for the three months ended September 30, 2015 when compared to the same period in 2014 primarily due to the sales of the Company’s beneficial interests in the mortgage-backed retained certificates ~~related to its previous mortgage~~during 2014 and the resulting deconsolidation of the securitization ~~transactions. This decrease also~~trusts and their outstanding certificates reflected ~~lower unsecured debt interest expense allocated to Real Estate.~~as long-term debt.

~~Table of Contents~~

Provision for finance receivable losses decreased ~~$15.3~~$41 million for the three months ended September 30, ~~2014~~2015 when compared to the same period in ~~2013.~~2014. The decrease in provision for finance receivable losses reflected ~~a reduction~~reductions in net charge-offs and the allowance requirements on our real estate loans recorded for the three months ended September 30, ~~2014~~2015, as a result of 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 ~~the first nine months of~~ 2014. This decrease also reflected a lower real estate loan delinquency ratio at September 30, ~~2014.~~2015.

~~Net loss on repurchases and repayments~~

Table of ~~debt of $15.8 million for the three months ended September 30, 2013 reflected acceleration of amortization of deferred costs and repurchases of debt at net amounts greater than carrying value.~~Contents

Net gain on fair value adjustments on debt of $12.2 million for the three months ended September 30, 2013 reflected differences between historical accounting basis and push-down accounting basis. On a historical accounting basis, certain long-term debt components are marked-to-market on a recurring basis and are no longer marked-to-market on a recurring basis after the application of push-down accounting at the time of the Fortress Acquisition.

Net gain on sales of real estate loans and related trust assets of ~~$286.4~~$287 million for the three months ended September 30, 2014 primarily reflected ~~cash bids~~consideration of amounts greater than the ~~equity basis~~historical carrying value of the real estate loans at the date of sale. The net gain also included proceeds of ~~$38.8~~$39 million from the related MSR ~~Sale.~~

~~Comparison of Pretax Operating Results for Nine Months Ended September 30, 2014 and 2013~~

Finance charges decreased $195.4 million for the nine months ended September 30, 2014 when compared to the same period in 2013 primarily due to decreases in average net receivables and yield. Average net receivables decreased for the nine months ended September 30, 2014 when compared to the same period in 2013 primarily due to the continued liquidation of the real estate 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 the first nine months of 2014. The decrease in yield for the nine months ended September 30, 2014 reflected a higher proportion of TDR finance receivables, which generally have lower rates than non-modified real estate loans. The higher proportion of TDR finance receivables resulted from the transfers of a substantial portion of performing real estate loans to finance receivables held for sale during the first nine months of 2014.

Interest expense decreased $135.0 million for the nine months ended September 30, 2014 when compared to the same period in 2013 primarily due to lower secured term loan interest expense allocated to Real Estate and lower securitization interest expense as a result of the sales of the Company’s beneficial interests in the mortgage-backed retained certificates related to its previous mortgage securitization transactions.

Provision for finance receivable losses decreased $70.4 million for the nine months ended September 30, 2014 when compared to the same period in 2013. The decrease in provision for finance receivable losses reflected a reduction in the allowance requirements recorded for the nine months ended September 30, 2014 as a result of 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 the first nine months of 2014. This decrease also reflected lower real estate loan delinquency ratio at September 30, 2014 and was partially offset by $9.9 million of recoveries recorded in June 2013 on previously charged-off real estate loans resulting from a sale of these loans in June 2013.

Net loss on repurchases and repayments of debt of $10.0 million and $35.4 million for the nine months ended September 30, 2014 and 2013, respectively, reflected acceleration of amortization of deferred costs and repurchases of debt at net amounts greater than carrying value.

Net gain on fair value adjustments on debt of $8.3 million and $45.4 million for the nine months ended September 30, 2014 and 2013, respectively, reflected differences between historical accounting basis and push-down accounting basis. On a historical accounting basis, certain long-term debt components are marked-to-market on a recurring basis and are no longer marked-to-market on a recurring basis after the application of push-down accounting at the time of the Fortress Acquisition.

Net gain on sales of real estate loans and related trust assets of $201.4 million for the nine months ended September 30, 2014 primarily reflected cash bids of amounts greater than the equity basis of the real estate loans at the date of sale. ~~The net gain also included proceeds of $38.8 million from the related MSR Sale.~~ The net gain was partially offset by the lower of cost or fair value adjustments recorded on the dates the real estate loans were transferred to finance receivables held for sale. Consistent with our segment reporting presentation, we have combined the lower of cost or fair value adjustments with the final gain (loss) on the sales of these loans.

Salaries and benefits decreased $15 million for the three months ended September 30, 2015 when compared to the same period in 2014 primarily due to the redistribution of the allocation of salaries and benefit expenses from our Real Estate segment as a result of the real estate loan sales in 2014.

Other operating expenses decreased $13 million for the three months ended September 30, 2015 when compared to the same period in 2014 primarily due to lower professional services expenses and credit, collection and losses resulting from the sales of real estate loans during 2014. This decrease also reflected the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014.

Comparison of Pretax Operating Results for Nine Months Ended September 30, 2015 and 2014

Finance charges decreased $291 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to decreases in average net receivables, partially offset by an increase in yield. Average net receivables decreased for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to the continued liquidation of the real estate 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. The increase in yield for the nine months ended September 30, 2015 reflected a higher proportion of our remaining real estate loans that are secured by second mortgages, which generally have higher yields.

Interest income on real estate loans held for sale decreased $39 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to lower average real estate loans held for sale during the 2015 period.

Interest expense decreased $110 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to the sales of the Company’s beneficial interests in the mortgage-backed retained certificates during 2014 and the resulting deconsolidation of the securitization trusts and their outstanding certificates reflected as long-term debt.

Provision for finance receivable losses decreased $126 million for the nine months ended September 30, 2015 when compared to the same period in 2014. The decrease in provision for finance receivable losses reflected reductions in net charge-offs and the allowance requirements on our real estate loans recorded for the nine months ended September 30, 2015, as a result of 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. This decrease also reflected a lower real estate loan delinquency ratio at September 30, 2015.

Investment revenues of $8 million for the nine months ended September 30, 2015 reflected investment income generated from investing the proceeds of the real estate loan sales during 2014.

Net loss on repurchases and repayments of debt of $10 million for the nine months ended September 30, 2014, reflected acceleration of amortization of deferred costs and repurchases of debt at net amounts greater than carrying value.

Net gain on fair value adjustments on debt of $8 million for the nine months ended September 30, 2014, reflected differences between historical accounting basis and push-down accounting basis. On a historical accounting basis, certain long-term debt components were marked-to-market on a recurring basis and were no longer marked-to-market on a recurring basis after the application of push-down accounting at the time of the Fortress Acquisition.

Net gain on sales of real estate loans and related trust assets of $202 million for the nine months ended September 30, 2014, primarily reflected consideration of amounts greater than the historical carrying value of the real estate loans at the date of sale. The net gain also included proceeds of $39 million from the related MSR sale. The net gain was partially offset by the lower of cost or fair value adjustments recorded on the dates the real estate loans were transferred to finance receivables held for sale. Consistent with our segment reporting presentation, we have combined the lower of cost or fair value adjustments with the final gain (loss) on the sales of these loans.

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Salaries and benefits decreased $26 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to the redistribution of the allocation of salaries and benefit expenses from our Real Estate segment as a result of the real estate loan sales in 2014.

Other operating expenses decreased $27 million for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to lower professional services expenses and credit, collection and losses resulting from the sales of real estate loans during 2014. This decrease also reflected the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014.

OTHER

“Other” consists of our other non-originating legacy operations, which are isolated by geographic market and/or distribution channel from our prospective Core Consumer Operations and our Non-Core Portfolio. These operations include our legacy operations in 14 states where we have also ceased branch-based personal lending as a result of our restructuring activities during the first half of 2012, our liquidating retail sales finance portfolio (including our retail sales finance accounts from our dedicated auto finance operation), our lending operations in Puerto Rico and the U.S. Virgin Islands, and the operations of our United Kingdom subsidiary. Effective June 1, 2014, we also report (on a prospective basis) certain real estate loans with equity capacity in Other. These short equity loans, which have liquidated down to an immaterial level, were previously included in our Core Consumer Operations. At June 1, 2014, the transfer date, the carrying value of these loans totaled $16.3 million.

Pretax operating results of the Other components (which are reported on a historical accounting basis) were as follows:


(dollars in thousands)	Three Months Ended September 30, 2014			Three Months Ended September 30, 2013			Nine Months Ended September 30, 2014			Nine Months Ended September 30, 2013
(dollars in millions)													Three Months Ended September 30,						Nine Months Ended September 30,
													2015			2014			2015			2014

Interest income	$	3,852		$	10,000		$	13,268		$	37,630		$	1		$	4		$	6		$	13

Interest expense	1,846			3,329			5,821			12,198			16			2			48			6

Net interest income	2,006			6,671			7,447			25,432
Net interest income (loss)													(15		)	2			(42		)	7

Provision for finance receivable losses	1,291			2,364			6,557			(3,384		)	—			2			1			7

Net interest income after provision for finance receivable losses	715			4,307			890			28,816
Net interest loss after provision for finance receivable losses													(15		)	—			(43		)	—

Other revenues:
Insurance	27			18			98			58
Net loss on repurchases and repayments of debt	—			(706		)	(48		)	(977		)
Other	1,372			4,373			4,686			14,234			4			1			10			5
Total other revenues	1,399			3,685			4,736			13,315			4			1			10			5

Other expenses:
Operating expenses:
Salaries and benefits	1,916			136,249			9,183			149,329			1			2			19			9
Other operating expenses	1,092			2,063			4,839			6,174			1			1			(2		)	5
Total other expenses	3,008			138,312			14,022			155,503			2			3			17			14

Pretax operating loss	$	(894	)	$	(130,320	)	$	(8,396	)	$	(113,372	)	$	(13	)	$	(2	)	$	(50	)	$	(9	)

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Net finance receivables of the Other components (which are reported on a historical accounting basis) were as follows:


(dollars in thousands)
September 30,	2014		2013
(dollars in millions)					September 30,
(dollars in millions)					2015		2014

Net finance receivables:
Personal loans	$	34,152	$	67,616	$	19	$	34
Real estate loans	6,672		7,748		—		7
Retail sales finance	59,478		122,797		29		59
Total	$	100,302	$	198,161	$	48	$	100

Comparison of Pretax Operating Results for Three and/or Nine Months Ended September 30, 2015 and 2014

Interest expense for the three and nine months ended September 30, 2015 when compared to the same periods in 2014 reflected higher interest expense on unsecured debt, which was allocated based on a higher cash balance resulting from the proceeds from the real estate sales in 2014.

Salaries and benefits for the nine months ended September 30, 2015 included non-cash incentive compensation expense of $15 million recorded in the second quarter of 2015 related to the rights of certain executives to a portion of the cash proceeds from the sale of SHI’s common stock by the Initial Stockholder. See Note 2 of the Notes to Condensed Consolidated Financial Statements for further information regarding SHI’s equity offering.

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Credit Quality

Our customers encompass a wide range of borrowers. In the consumer finance industry, they are described as prime or near-prime at one extreme and non-prime or sub-prime (less creditworthy) at the other. Our customers’ incomes are generally near the national median but our customers may vary from national norms as to their debt-to-income ratios, employment and residency stability, and/or credit repayment histories. In general, our customers have lower credit quality and require significant levels of servicing.

~~As a result of the Fortress Acquisition, we applied push-down accounting and adjusted the carrying value of our finance receivables (the “FA Loans”) to their fair value on November 30, 2010.~~

In connection with the SAC Capital Contribution on July 31, 2014, SFC owns a 47% equity interest in the SpringCastle Portfolio (“SCP Loans”), which were determined to be credit impaired when SAC acquired the SCP Loans on April 1, 2013.

Carrying value of finance receivables includes accrued finance charges, unamortized deferred origination costs and unamortized net premiums and discounts on purchased finance receivables. We record an allowance for loan losses to cover expected losses on our finance receivables.

For both the FA Loans and SCP Loans, we segregate between those considered to be performing (“FA Performing Loans” and “SCP Performing Loans,” respectively) and those for which it was determined it was probable that we would be unable to collect all contractually required payments (“FA Credit Impaired Loans” and “SCP Credit Impaired Loans,” respectively). For the FA Performing Loans and the SCP Performing Loans, we accrete the purchase discount to contractual cash flows over the remaining life of the loan to finance charges. For the FA Credit Impaired Loans and SCP Credit Impaired Loans, we record the expected credit loss at purchase and recognize finance charges on the expected effective yield.

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~~FINANCE RECEIVABLES~~

~~Net finance receivables by originated before and after the Fortress Acquisition and the related allowance for finance receivable losses were as follows:~~

(dollars in thousands) September 30,
2014 December 31,
2013

Personal Loans

FA Performing Loans at Fortress Acquisition $ 119,389
$ 168,386
Originated after Fortress Acquisition 3,460,199

2,991,546
Allowance for finance receivable losses (123,293 ) (94,323 )
Personal loans, less allowance for finance receivable losses 3,456,295
3,065,609

SpringCastle Portfolio
SCP Performing Loans 1,712,178

—
SCP Credit Impaired Loans 370,967
—
Allowance for finance receivable losses (319 ) —
SpringCastle Portfolio, less allowance for finance receivable losses 2,082,826
—

Real Estate Loans

FA Performing Loans at Fortress Acquisition 612,318
6,504,781
FA Credit Impaired Loans 30,686
1,307,882
Originated after Fortress Acquisition* 12,541

72,353
Allowance for finance receivable losses (37,634 ) (236,032 )
Real estate loans, less allowance for finance receivable losses 617,911
7,648,984

Retail Sales Finance
FA Performing Loans at Fortress Acquisition 37,489
63,158
Originated after Fortress Acquisition 19,411

35,753
Allowance for finance receivable losses (1,194 ) (1,840 )
Retail sales finance, less allowance for finance receivable losses 55,706
97,071

Total net finance receivables, less allowance $ 6,212,738
$ 10,811,664

Allowance for finance receivable losses as a percentage of finance receivables

Personal loans 3.44 % 2.98 %
SpringCastle Portfolio 0.02 % -
Real estate loans 5.74 % 2.99 %
Retail sales finance 2.10 % 1.86 %


*	~~Real estate loan originations in 2014 and 2013 were from advances on home equity lines of credit.~~

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The following is a summary of net finance receivables by type and by days delinquent:


(dollars in thousands)	Personal Loans		SpringCastle Portfolio		Real Estate Loans		Retail Sales Finance		Total
(dollars in millions)											Personal Loans		SpringCastle Portfolio		Real Estate Loans		Retail Sales Finance		Total

September 30, 2014

September 30, 2015
Net finance receivables:
60-89 days past due	$	31,932	$	33,379	$	13,151	$	770	$	79,232	$	47	$	24	$	16	$	1	$	88
90-119 days past due	25,427		20,955		7,842		429		54,653		36		15		4		—		55
120-149 days past due	20,938		15,826		5,629		558		42,951		29		11		3		—		43
150-179 days past due	16,592		13,102		5,557		303		35,554		23		9		2		—		34
180 days or more past due	1,088		4,946		12,098		46		18,178		2		1		12		—		15
Total delinquent finance receivables	95,977		88,208		44,277		2,106		230,568		137		60		37		1		235
Current	3,430,849		1,932,945		588,886		53,522		6,006,202		3,784		1,562		497		25		5,868
30-59 days past due	52,762		61,992		22,382		1,272		138,408		69		45		13		1		128
Total	$	3,579,588	$	2,083,145	$	655,545	$	56,900	$	6,375,178	$	3,990	$	1,667	$	547	$	27	$	6,231

December 31, 2013

December 31, 2014
Net finance receivables:
60-89 days past due	$	28,297	$	—	$	96,778	$	1,290	$	126,365	$	36	$	31	$	12	$	1	$	80
90-119 days past due	22,648		—		67,966		1,017		91,631		30		19		9		—		58
120-149 days past due	18,662		—		54,882		757		74,301		24		16		5		1		46
150-179 days past due	14,618		—		45,040		740		60,398		21		14		4		—		39
180 days or more past due	934		—		353,003		173		354,110		2		2		12		—		16
Total delinquent finance receivables	85,159		—		617,669		3,977		706,805		113		82		42		2		239
Current	3,027,460		—		7,092,107		92,093		10,211,660		3,632		1,839		565		45		6,081
30-59 days past due	47,313		—		175,240		2,841		225,394		55		58		18		1		132
Total	$	3,159,932	$	—	$	7,885,016	$	98,911	$	11,143,859	$	3,800	$	1,979	$	625	$	48	$	6,452

TROUBLED DEBT RESTRUCTURING

We make modifications to our ~~real estate loans~~finance receivables to assist borrowers ~~in avoiding foreclosure.~~during times of financial difficulties. When we modify a ~~real estate~~ loan’s contractual terms for economic or other reasons related to the borrower’s financial difficulties and grant a concession that we would not otherwise consider, we classify that loan as a TDR finance receivable.

Information regarding TDR finance receivables held for investment and held for sale were as follows:

(dollars in thousands) September 30, 2014 December 31, 2013

TDR net finance receivables (a) $ 335,512
$ 1,371,321
Allowance for TDR finance receivable losses $ 31,205
$ 177,011
Allowance as a percentage of TDR net finance receivables (b) 30.04 % 12.91 %
Number of TDR accounts 5,077
14,538


~~(a)~~	~~TDR net finance receivables at September 30, 2014 includes $231.6 million of TDR finance receivables held for sale.~~


~~(b)~~	~~Allowance ratio at September 30, 2014 reflects the higher proportion of real estate loans secured by second mortgages as a result of the real estate loan sales during the first nine months of 2014.~~



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

September 30, 2015
TDR net finance receivables	$	29	$	12	$	200	$	241
Allowance for TDR finance receivable losses	$	7	$	4	$	30	$	41
Number of TDR accounts	10,098		1,557		3,478		15,133

December 31, 2014
TDR net finance receivables	$	22	$	10	$	196	$	228
Allowance for TDR finance receivable losses	$	1	$	3	$	32	$	36
Number of TDR accounts	8,069		1,159		3,463		12,691

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(dollars in thousands) Three Months
Ended
September 30,
2014 Three Months
Ended
September 30,
2013 Nine Months
Ended
September 30,
2014 Nine Months
Ended
September 30,
2013

Real Estate Loans

Number of TDR accounts (a) 54
369
488
796
TDR net finance receivables (a) (b) $ 2,788
$ 25,758
$ 31,465
$ 59,719


~~(a)~~*	~~Number and amount of~~ TDR ~~net~~ finance receivables ~~for the three and nine months ended September 30, 2014 that defaulted during the previous 12 month period include 30 TDR accounts that were~~ held for sale ~~totaling $1.8 million.~~included in the table above were as follows:


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

We may make modifications to loans in our newly acquired SpringCastle Portfolio to assist borrowers in avoiding default and to mitigate the risk of loss. When we modify a loan’s contractual terms for economic or other reasons related to the borrower’s financial difficulties and grant a concession that we would not otherwise consider, we classify that loan as a TDR finance receivable. We restructure finance receivables only if we believe the customer has the ability to pay under the restructured terms for the foreseeable future. There were no SpringCastle Portfolio TDR accounts as of the April 1, 2013 acquisition date as any account deemed as a TDR under our policy was categorized as a purchased credit impaired finance receivables. The amount of SpringCastle Portfolio loans that has been classified as a TDR finance receivable subsequent to the acquisition date is $0.2 million and has not yet reached a significant level for detailed disclosure.



(dollars in millions)	Personal Loans		Real Estate Loans		Total

September 30, 2015
TDR net finance receivables	$	2	$	92	$	94
Number of TDR accounts	746		1,313		2,059

December 31, 2014
TDR net finance receivables	$	—	$	91	$	91
Number of TDR accounts	—		1,284		1,284

Liquidity and Capital Resources

We ~~have historically financed~~finance the majority of our operating liquidity and capital needs through a combination of cash flows from operations, securitization debt, and unsecured ~~debt, and borrowings under our secured term loan.~~debt. In the future, we plan to finance our operating liquidity and capital needs through a combination of cash flows from operations, securitization debt, unsecured debt, and other corporate debt ~~facilities, and equity.~~facilities.

As a holding company, all of the funds generated from our operations are earned by our operating subsidiaries. Our operating subsidiaries’ primary cash needs relate to funding our lending activities, our debt service obligations, our operating expenses and, to a lesser extent, expenditures relating to upgrading and monitoring our technology platform, risk systems, and branch locations.

Our insurance subsidiaries maintain reserves as liabilities on the balance sheet to cover future claims for certain insurance products. Claims reserves totaled ~~$71.0~~$71 million as of September 30, ~~2014.~~2015.

At September 30, ~~2014,~~2015, we had ~~$1.9~~$2.8 billion of cash and cash equivalents, and during the nine months ended September 30, ~~2014, we~~2015, SFC generated net income of ~~$496.8~~$10 million. Our net cash inflow from operating and investing activities totaled ~~$2.6 billion~~ $987 millionfor the nine months ended September 30, ~~2014.~~2015. At September 30, ~~2014,~~2015, our ~~remaining~~ scheduled principal and interest payments ~~for 2014~~ on our existing debt (excluding securitizations) totaled ~~$483.8 million.~~$892 million for the remainder of 2015 and $678 million for 2016. As of September 30, ~~2014,~~2015, we had ~~$1.9~~$1.5 billion UPB of unencumbered personal loans (including $115 million held for sale) and ~~$713.2~~$838 million UPB of unencumbered real estate ~~loans.~~loans (including $247 million held for sale).

Based on our estimates and taking into account the risks and uncertainties of our plans, we believe that we will have adequate liquidity to finance and operate our businesses and repay our obligations as they become due for at least the next twelve months.

To reduce the risk associated with unfavorable changes in interest rates on our debt not offset by favorable changes in yield of our finance receivables, we monitor the anticipated cash flows of our assets and liabilities, principally our finance receivables and debt. We have funded finance receivables with a combination of fixed-rate and floating-rate debt and equity and have based the mix of fixed-rate and floating-rate debt issuances, in part, on the nature of the finance receivables being supported. On a historical accounting basis, our floating-rate debt represented 1% of our borrowings at September 30, 2014 and 10% at December 31, 2013.

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LIQUIDITY

Operating Activities

~~Cash from~~Net cash provided by operations ~~decreased $148.9~~of $422 million for the nine months ended September 30, 2015 reflected net income of $103 million, the impact of non-cash items, and a favorable change in working capital of $15 million. Net cash provided by operations of $168 million for the nine months ended September 30, 2014 ~~when compared to~~reflected net income of $520 million, the ~~same period~~impact of non-cash items, and a favorable change in ~~2013 primarily due to one-time costs relating to the real estate sales transactions, partially offset by higher net interest income.~~working capital of $18 million.

Investing Activities

Net cash provided by investing activities ~~increased $2.2~~decreased $1.9 billion for the nine months ended September 30, 2015 when compared to the same period in 2014 primarily due to the sales of real estate loans held for sale originated as held for investment during 2014. This decrease was partially offset by the sale of investment securities during 2015.

Financing Activities

Net cash provided by financing activities of $1.0 billion for the nine months ended September 30, 2015 reflected the debt issuances associated with the 2015-A and 2015-B securitizations. Net cash used by financing activities of $1.1 billion for the nine months ended September 30, 2014 ~~when compared to the same period in 2013 primarily due to the sales of finance receivables held for sale originated as held for investment during the first nine months of 2014.~~

~~Financing Activities~~

~~Net cash used for financing activities increased $177.9 million for the nine months ended September 30, 2014 when compared to the same period in 2013~~was primarily due to the repayments of the secured term loan and the 2013-BAC trust notes in late March of 2014.

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Liquidity Risks and Strategies

SFC’s credit ratings are non-investment grade, which have a significant impact on our cost of, and access to, capital. This, in turn, can negatively affect our ability to manage our liquidity and our ability or cost to refinance our indebtedness.

There are numerous risks to our financial results, liquidity, capital raising, and debt refinancing plans, some of which may not be quantified in our current liquidity forecasts. These risks include, but are not limited, to the following:

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;

~~the liquidation and related losses within our remaining real estate portfolio could result in reduced cash receipts;~~

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.

The principal factors that could decrease our liquidity are customer delinquencies and defaults, a decline in customer prepayments, and a prolonged inability to adequately access capital market funding. We intend to support our liquidity position by utilizing the following strategies:

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 or our affiliates may determine; and

obtaining secured revolving credit facilities to allow us to use excess cash to pay down higher cost debt.

However, it is possible that the actual outcome of one or more of our plans could be materially different than expected or that one or more of our significant judgments or estimates could prove to be materially incorrect.

OUR INSURANCE SUBSIDIARIES

State law restricts the amounts our insurance subsidiaries, Merit and Yosemite, may annually pay as dividends without prior notice to ~~or in some cases approval from,~~ the Indiana Department of ~~Insurance.~~Insurance (the “DOI”). The maximum amount of dividends (referred to as “ordinary dividends”) that can be paid without prior DOI approval in aany 12 month period ~~measured~~(measured retrospectively from the date of ~~payment,~~last payment) is the greater ofof: (1) 10% of policyholders’ surplus as of the prior ~~year-end,~~year-end; or (2) the net gain from operations as of the prior year-end. ~~On October 20, 2014,~~Any greater amount must be approved by the DOI prior to its payment. These approved dividends are called “extraordinary dividends”. Merit ~~paid an ordinary dividend of $18.0 million to SFC that did not require prior approval,~~ and Yosemite each paid ~~an extraordinary dividend of $57.0 million to SFC upon receiving prior approval. During the third quarter of 2013, our insurance subsidiaries~~

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~~paid $150.0~~$50 million of extraordinary dividends to SFC ~~upon receiving prior approvals. In addition, effective July 31, 2013, Yosemite paid, as an extraordinary dividend to SFC, 100%~~during the second quarter of ~~the common stock of its wholly owned subsidiary, CommoLoCo, Inc., in the amount of $57.8 million, upon receiving prior approval.~~2015.

OUR DEBT AGREEMENTS

On December 30, 2013, SHI entered into Guaranty Agreements whereby it agreed to fully and unconditionally guarantee the payments of principal, premium (if any), and interest on approximately $5.2 billion aggregate principal amount of senior notes on a senior basis and $350.0 million aggregate principal amount of a junior subordinated debenture (collectively, the “notes”) on a junior subordinated basis issued by SFC. The notes consist of the following: 8.250% Senior Notes due 2023; 7.750% Senior Notes due 2021; 6.00% Senior Notes due 2020; a 60-year junior subordinated debenture; and all senior notes outstanding on December 30, 2013, issued pursuant to the Indenture dated as of May 1, 1999 (the “1999 Indenture”), between SFC and Wilmington Trust, National Association (the successor trustee to Citibank N.A.). As of December 30, 2013, approximately $3.9 billion aggregate principal amount of senior notes were outstanding under the 1999 Indenture. The 60-year junior subordinated debenture underlies the trust preferred securities sold by a trust sponsored by SFC. On December 30, 2013, SHI entered into a Trust Guaranty Agreement whereby it agreed to fully and unconditionally guarantee the related payment obligations under the trust preferred securities. As of September 30, 2014, approximately $5.1 billion aggregate principal amount of senior notes, including $3.9 billion aggregate principal amount of senior notes under the 1999 Indenture, and $350.0 million aggregate principal amount of a junior subordinated debenture were outstanding.

The debt agreements to which SFC and its subsidiaries are a party include customary terms and conditions, including covenants and representations and warranties. Some or all of these agreements also contain certain restrictions, including restrictions on the ability to create senior liens on property and assets in connection with any new debt financings and SFC’s ability to sell or convey all or substantially all of its assets, unless the transferee assumes SFC’s obligations under the applicable debt agreement.

With the exception of SFC’s junior subordinated debenture, ~~and one consumer loan securitization,~~ none of our debt agreements require SFC or any of its subsidiaries to meet or maintain any specific financial targets or ratios.

Under our debt agreements, certain events, including non-payment of principal or interest, bankruptcy or insolvency, or a breach of a covenant or a representation or warranty may constitute an event of default and trigger an acceleration of payments. In some cases, an event of default or acceleration of payments under one debt agreement may constitute a cross-default under other debt agreements resulting in an acceleration of payments under the other agreements.

As of September 30, ~~2014,~~2015, we were in compliance with all of the covenants under our debt agreements. Additionally, SHI guarantees the payments of principal, premium (if any) and interest on certain senior notes and the junior subordinated debt of SFC. See Note 10 of the Notes to Condensed Financial Statements for further information on these guaranty agreements.

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Junior Subordinated Debenture

In January of 2007, SFC issued ~~$350.0~~$350 million aggregate principal amount of 60-year junior subordinated debenture (the “debenture”) under an indenture dated January 22, 2007 (the “Junior Subordinated Indenture”), by and between SFC and Deutsche Bank Trust Company, as trustee. The debenture underlies the trust preferred securities sold by a trust sponsored by SFC. SFC can redeem the debenture at par beginning in January of 2017.

Pursuant to the terms of the debenture, SFC, upon the occurrence of a mandatory trigger event, is required to defer interest payments to the holders of the debenture (and not make dividend payments to SFI) unless SFC obtains non-debt capital funding in an amount equal to all accrued and unpaid interest on the debenture otherwise payable on the next interest payment date and pays such amount to the holders of the debenture. A mandatory trigger event occurs if SFC’s (1) tangible equity to tangible managed assets is less than 5.5% or (2) average fixed charge ratio is not more than 1.10x for the trailing four quarters (where the fixed charge ratio equals earnings excluding 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).

Based upon SFC’s financial results for the twelve months ended September 30, ~~2014,~~2015, a mandatory trigger event ~~did not occur~~occurred with respect to the payment due in January ~~2015~~of 2016 as ~~the tangible equity to tangible managed assets was 22.4% and~~ the average fixed charge ratio was ~~1.11x.~~0.94x. As of September 30, 2015, SFC had not received from SFI the non-debt capital funding necessary to satisfy the January 2016 interest payments required by SFC’s debenture. SFC intends to issue one share of SFC common stock to SFI for $10.5 million in January of 2016 to satisfy the non-debt capital funding requirement.

~~Consumer Loan Securitization~~

In connection with the Sumner Brook 2013-VFN1 securitization, SFC is required to maintain an available cash covenant and a consolidated tangible net worth covenant. At September 30, 2014, SFC is in compliance with these covenants.

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Structured Financings

We execute private securitizations under Rule 144A of the Securities ~~Act.~~Act of 1933. As of September 30, ~~2014,~~2015, our structured financings consisted of the following:


(dollars in thousands)	Initial Note Amounts Issued (a)		Initial Collateral Balance (b)		Current Note Amounts Outstanding		Current Collateral Balance (b)		Current Weighted Average Interest Rate		Collateral Type	Revolving Period
(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		Collateral Type	Revolving Period

Consumer Securitizations
SLFMT 2013-A	$	567,880	$	662,247	$	567,880	$	662,261	2.75	%	Personal loans	2 years	$	568	$	663	$	249	$	342	2.98	%	Personal loans	2 years
SLFMT 2013-B	370,170		441,989		370,170		442,003		3.99	%	Personal loans	3 years	370		442		370		442		3.99	%	Personal loans	3 years
SLFMT 2014-A	559,260		644,331		559,260		644,344		2.55	%	Personal loans	2 years	559		644		559		644		2.55	%	Personal loans	2 years
SLFMT 2015-A													1,163		1,250		1,162		1,250		3.47	%	Personal loans	3 years
SLFMT 2015-B													314		335		314		336		3.78	%	Personal loans	5 years

Total consumer securitizations	1,497,310		1,748,567		1,497,310		1,748,608						2,974		3,334		2,654		3,014

SpringCastle Securitization
SCFT 2013-A	2,572,000		3,934,955		1,458,278		2,875,348		3.80	%	Personal and junior mortgage loans	N/A
SCFT 2014-A													2,559		2,737		2,030		2,207		3.98	%	Personal and junior mortgage loans	N/A (c)

Total secured structured financings	$	4,069,310	$	5,683,522	$	2,955,588	$	4,623,956					$	5,533	$	6,071	$	4,684	$	5,221


(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.

In addition to the structured financings included in the table above, we ~~completed one~~have access to seven conduit ~~securitization~~facilities with a total borrowing capacity of $2.2 billion, as discussed in 2014 and three conduit securitizations in 2013. At September 30, 2014, we had drawn $100 million under these facilities. Also, on October 3, 2014, the Co-Issuers repaid the SpringCastle 2013-A Notes using the proceeds from the sale of the SpringCastle 2014-A Notes. See Note 1911 of the Notes to Condensed Consolidated Financial ~~Statements for further information on this subsequent event.~~Statements. At September 30, 2015, $100 million was drawn under these facilities.

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Our ~~2013 and 2014~~ securitizations have served to partially replace secured and unsecured debt in our capital structure with more favorable non-recourse funding. Our overall funding costs are positively impacted by our increased usage of securitizations as we typically execute these transactions at interest rates significantly below those of our maturing secured and unsecured debt.

The weighted average interest rates on our debt on a historical accounting basis were as follows:

Three Months
Ended
September 30,
2014 Three Months
Ended
September 30,
2013 Nine Months
Ended
September 30,
2014 Nine Months
Ended
September 30,
2013

Weighted average interest rate 5.45 % 5.45 % 5.39 % 5.68 %



	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014

Weighted average interest rate	5.47	%	5.45	%	5.45	%	5.39	%

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements as defined by SEC rules. We had no off-balance sheet exposure to losses associated with unconsolidated VIEs at September 30, ~~2014~~2015 or December 31, ~~2013,~~2014, other than certain representations and warranties associated with the sales of the mortgage-backed retained certificates during ~~the first nine months of~~ 2014. As of September 30, ~~2014,~~2015, we had no repurchase activity related to these sales.

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Critical Accounting Policies and Estimates

We describe our significant accounting policies used in the preparation of our consolidated financial statements in Note 2 of the Notes to Consolidated Financial Statements in Part II, Item 8 of our ~~2013~~2014 Annual Report on Form 10-K. We consider the following policies to be our most critical accounting policies because they involve critical accounting estimates and a significant degree of management judgment:

allowance for finance receivable losses;

purchased credit impaired finance receivables;

TDR finance receivables;

~~push-down accounting;~~ and

fair value measurements.

We believe the amount of the allowance for finance receivable losses is the most significant estimate we make. See “—Critical Accounting Policies and Estimates — Allowance for Finance Receivable Losses” in Part II, Item 7 of our ~~2013~~2014 Annual Report on Form 10-K for further discussion of the models and assumptions used to assess the adequacy of the allowance for finance receivable losses and Note 5 of the Notes to Condensed Consolidated Financial Statements for period-to-period changes in the components of our allowance for finance receivable losses.

There have been no significant changes to our critical accounting policies or to our methodologies for deriving critical accounting estimates during the nine months ended September 30, ~~2014.~~2015.

Recent Accounting Pronouncements

See Note 13 of the Notes to Condensed Consolidated Financial Statements for discussion of recently issued accounting pronouncements.

Seasonality

Our personal loan volume is generally highest during the second and fourth quarters of the year, primarily due to marketing efforts, seasonality of demand, and increased traffic in branches after the winter months. Demand for our personal loans is usually lower in January and February after the holiday season and as a result of tax refunds. Delinquencies on our personal loans are generally lowest in the first quarter and tend to ~~peak~~rise throughout the remainder of the year. The seasonal trends in ~~the second~~personal loan volume and ~~third quarters and higher net charge-offs on these loans usually occur at year end. These seasonal trends~~delinquencies contribute to fluctuations in our operating results and cash needs throughout the year.

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Glossary of Terms



Average debt	average of debt for each day in the period
Average net receivables	average of net finance receivables at the beginning and end of each month in the period
Charge-off ratio	annualized net charge-offs as a percentage of the average of net finance receivables at the beginning of each month in the period
Delinquency ratio	UPB 60 days or more past due (greater than three payments unpaid) as a percentage of UPB
Gross charge-off ratio	annualized gross charge-offs as a percentage of the average of net finance receivables at the beginning of each month in the period
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
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 the average of real estate loans at the beginning of each month in the period
Net interest income	interest income less interest expense
Recovery ratio	annualized recoveries on net charge-offs as a percentage of the average of net finance receivables at the beginning of each month in the period
Tangible equity	total equity less accumulated other comprehensive income or loss
Weighted average interest rate	annualized interest expense as a percentage of average debt
Yield	annualized finance charges as a percentage of average net receivables

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Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no significant changes to our market risk previously disclosed in Part II, Item 7A of our ~~2013~~2014 Annual Report on Form 10-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

~~Disclosure~~We are committed to maintaining disclosure controls and procedures ~~are~~ designed to ~~provide reasonable assurance~~ensure that information required to be disclosed ~~by us~~ in our periodic reports filed ~~or submitted~~ under the Securities Exchange Act of 1934, as amended (the ~~Exchange Act)~~“Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms. Our disclosure controls~~forms, and ~~procedures include controls and procedures designed to provide reasonable assurance~~ that such information ~~required to be disclosed~~ is accumulated and communicated to our management, including our Chief Executive Officer and ~~our~~ Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

~~Our~~Under the supervision and with the participation of our management, including our Chief Executive Officer and ~~our~~ Chief Financial Officer, ~~evaluated the effectiveness~~we conducted an evaluation of our disclosure controls and procedures, ~~(as~~as such term is defined inunder Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange ~~Act) as of the end of the period.~~Act. Based on ~~their~~this evaluation, and in light of the previously identified material weakness in our internal control over financial reporting as of December 31, ~~2013,~~2014, described ~~within the 2013~~in our 2014 Annual Report on Form 10-K, our Chief Executive Officer and our Chief Financial Officer ~~have~~ concluded that ~~the~~our disclosure controls and procedures were not effective as of September 30, ~~2014.~~2015.

We have ~~developed a remediation plan for this~~taken and continue to take steps to remediate the underlying cause of the material ~~weakness, including enhancing~~weakness. These steps include strengthening our ~~complement~~procedures and controls around validating the functionality of ~~resources with~~certain spreadsheets and reports used in the preparation and analysis of accounting and ~~internal control knowledge through~~financial information, including developing specific guidelines for appropriate review procedures, such as validating inputs, assumptions and formulas, and providing additional ~~hiring and/or~~ training to ~~implement~~our current accounting and ~~perform additional controls over~~finance personnel.

These actions are subject to ongoing review by our senior management, as well as oversight by the ~~initial and subsequent accounting for certain complex non-routine transactions.~~audit committee of our board of directors. We are ~~currently implementing this plan.~~placing a high priority on the remediation process and are committed to allocating the necessary resources to the remediation effort. To reduce the potential severity of the deficiency as soon as possible, we have focused our initial efforts on those spreadsheets and reports that present a higher risk of a misstatement. When fully implemented and operating effectively, ~~such enhancements~~our efforts are expected to remediate the material ~~weakness described above.~~weakness. However, we cannot provide any assurance that these ~~remediation~~ efforts will be successful or that they will cause our disclosure controls and procedures or internal control over financial reporting ~~will~~to be ~~effective as a result of these efforts.~~effective.

Changes in Internal Control over Financial Reporting

There ~~has been~~were no ~~change~~changes in our internal control over financial reporting that occurred during the ~~last fiscal~~ quarter ended September 30, 2015, that ~~has~~have materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting.

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PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 1314 of the Notes to Condensed Consolidated Financial Statements in Part I of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors.

There have been no material changes to our risk factors previously disclosed in Part I, Item 1A of our ~~2013~~2014 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

~~Exhibits are listed in the Exhibit Index beginning on page 94~~



Exhibits are listed in the Exhibit Index beginning on page	86	herein.

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Signature

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		SPRINGLEAF FINANCE CORPORATION
		(Registrant)

Date:	November ~~14, 2014~~9, 2015	By	/s/ Minchung (Macrina) Kgil
			Minchung (Macrina) Kgil
			Executive Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

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Exhibit Index



Exhibit

~~3.1~~2.1		Stock Purchase Agreement, dated as of March 2, 2015, by and between Springleaf Holdings, Inc. and CitiFinancial Credit Company (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 3, 2015).

3 a.		Amended and Restated Articles of Incorporation of Springleaf Finance Corporation (the “Company”) (formerly American General Finance Corporation), as amended to date. Incorporated by reference to Exhibit (3a.) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

~~3.2~~ b.		Amended and Restated By-laws of the Company, as amended to date. Incorporated by reference to Exhibit (3b.) to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2010.

~~4.1~~		Indenture, dated as of October 3, 2014, among SpringCastle America Funding, LLC, SpringCastle Credit Funding, LLC, SpringCastle Finance Funding, LLC, Wilmington Trust, National Association, Springleaf Finance, Inc., Wells Fargo Bank, National Association, and U.S. Bank National Association. Incorporated by reference from Spring Holdings, Inc. Current Report on Form 8-K, dated October 6, 2014 (SEC Accession No. 0001104659-14-070339).

~~10.1 (a)~~		Commitment Letter, dated August 6, 2014, by and among Eighth Street Funding LLC, Eleventh Street Funding LLC, Twelfth Street Funding LLC, Fourteenth Street Funding LLC, Fifteenth Street Funding LLC, Seventeenth Street Funding LLC, Nineteenth Street Funding LLC, Springleaf Finance Corporation, and Credit Suisse (USA) Securities LLC.

~~10.2 (a)~~		Amended and Restated Commitment Letter, dated August 26, 2014, by and among Eighth Street Funding LLC, Eleventh Street Funding LLC, Twelfth Street Funding LLC, Fourteenth Street Funding LLC, Fifteenth Street Funding LLC, Seventeenth Street Funding LLC, Nineteenth Street Funding LLC, Springleaf Finance Corporation, and Credit Suisse (USA) Securities LLC.

~~10.3~~		Amendment No. 1 To Commitment Letter, dated September 30, 2014, by and among Eighth Street Funding LLC, Eleventh Street Funding LLC, Twelfth Street Funding LLC, Fourteenth Street Funding LLC, Fifteenth Street Funding LLC, Seventeenth Street Funding LLC, Nineteenth Street Funding LLC, Springleaf Finance Corporation, and Credit Suisse (USA) Securities LLC.

~~10.4 (a)~~		~~Mortgage Servicing Rights Purchase and Sale Agreement, dated August 1, 2014, by and among Springleaf Finance Corporation, MorEquity, Inc., and Nationstar Mortgage LLC.~~

~~10.5~~		~~Amendment No. 1 to Mortgage Servicing Rights Purchase and Sale Agreement, dated August 29, 2014, by and among Springleaf Finance Corporation, MorEquity, Inc., and Nationstar Mortgage LLC.~~

31.1		Rule 13a-14(a)/15d-14(a) Certifications of the President and Chief Executive Officer of Springleaf Finance ~~Corporation~~Corporation.

31.2		Rule 13a-14(a)/15d-14(a) Certifications of the Executive Vice President and Chief Financial Officer of Springleaf Finance ~~Corporation~~Corporation.

3232.1		Section 1350 Certifications

101 ~~(b)~~*		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) ~~Condensed~~ Consolidated Balance ~~Sheets;~~Sheets, (ii) ~~Condensed~~ Consolidated Statements of ~~Operations;~~Operations, (iii) ~~Condensed~~ Consolidated Statements of Comprehensive Income (Loss);, (iv) ~~Condensed~~ Consolidated Statements of ~~Shareholder’s Equity;~~Shareholders’ Equity, (v) ~~Condensed~~ Consolidated Statements of Cash ~~Flows;~~Flows, and (vi) Notes to ~~Condensed~~ Consolidated Financial Statements.


~~(a)~~	The Company has requested confidential treatment with respect to portions of this exhibit. Those portions have been omitted from the exhibit and filed separately with the U.S. Securities and Exchange Commission.


~~(b)~~*	As provided in Rule 406T of Regulation S-T, this information is furnished and not filed for purposes of Section 11 and 12 of the Securities and Exchange Act of 1933 and Section 18 of the Securities and Exchange Act of 1934.

9386



(dollars in thousands)	At or for the Three Months Ended September 30, 2014			At or for the Three Months Ended September 30, 2013			At or for the Nine Months Ended September 30, 2014			At or for the Nine Months Ended September 30, 2013

Balance at beginning of period	$	4,724		$	4,766		$	4,702		$	4,863
Provision for recourse obligations	8,543			—			8,706			322
Recourse losses	(70		)	(42		)	(211		)	(461		)
Balance at end of period	$	13,197		$	4,724		$	13,197		$	4,724



(dollars in thousands)	Retail Notes		Medium Term Notes		Securitizations		Junior Subordinated Debt			Total

Interest rates (a)	6.00%-7.50%		5.40%-8.25%		1.76%-5.00%		6.00		%

Fourth quarter 2014	$	335,486	$	—	$	—	$	—		$	335,486
First quarter 2015	16,575		—		—		—			16,575
Second quarter 2015	7,092		—		—		—			7,092
Third quarter 2015	23,544		—		—		—			23,544
Remainder of 2015	—		750,000		—		—			750,000
2016	—		375,000		—		—			375,000
2017	—		2,360,837		—		—			2,360,837
2018	—		—		—		—			—
2019-2067	—		1,250,000		—		350,000			1,600,000
Securitizations (b)	—		—		3,055,588		—			3,055,588
Total principal maturities	$	382,697	$	4,735,837	$	3,055,588	$	350,000		$	8,524,122

Total carrying amount (c)	$	379,585	$	4,253,867	$	3,052,972	$	171,613		$	7,858,037



(dollars in thousands)	Principal Amount of Previously Retained Notes Issued		Carrying Amount of Additional Debt Recorded

Mortgage Securitizations
SLFMT 2012-2	$	20,000	$	20,675
SLFMT 2012-3	$	7,500	$	7,753
SLFMT 2013-2	$	157,517	$	148,559

Consumer Securitizations
SLFMT 2013-B	$	114,000	$	111,578



(dollars in thousands)	Unrealized Gains (Losses) Investment Securities			Unrealized Gains (Losses) Cash Flow Hedges			Retirement Plan Liabilities Adjustments		Foreign Currency Translation Adjustments			Total Accumulated Other Comprehensive Income (Loss)

Three Months Ended September 30, 2014

Balance at beginning of period	$	14,551		$	—		$	20,153	$	3,086		$	37,790
Other comprehensive income (loss) before reclassifications	(2,491		)	—			—		761			(1,730		)
Reclassification adjustments from accumulated other comprehensive income	(1,793		)	—			—		—			(1,793		)
Balance at end of period	$	10,267		$	—		$	20,153	$	3,847		$	34,267

Three Months Ended September 30, 2013 - Revised

Balance at beginning of period	$	5,501		$	—		$	8,120	$	6,221		$	19,842
Other comprehensive loss before reclassifications	(277		)	—			—		(2,056		)	(2,333		)
Reclassification adjustments from accumulated other comprehensive income	203			—			—		—			203
Balance at end of period	$	5,427		$	—		$	8,120	$	4,165		$	17,712

Nine Months Ended September 30, 2014

Balance at beginning of period	$	4,362		$	—		$	20,153	$	3,580		$	28,095
Other comprehensive income before reclassifications	9,841			—			—		267			10,108
Reclassification adjustments from accumulated other comprehensive income	(3,936		)	—			—		—			(3,936		)
Balance at end of period	$	10,267		$	—		$	20,153	$	3,847		$	34,267

Nine Months Ended September 30, 2013 - Revised

Balance at beginning of period	$	13,545		$	104		$	8,120	$	4,127		$	25,896
Other comprehensive income (loss) before reclassifications	(7,076		)	—			—		38			(7,038		)
Reclassification adjustments from accumulated other comprehensive income	(1,042		)	(104		)	—		—			(1,146		)
Balance at end of period	$	5,427		$	—		$	8,120	$	4,165		$	17,712



	Nine Months Ended September 30, 2013 (Unaudited)
(dollars in thousands)	As Reported			As Revised

Cash flows from operating activities
Net loss	$	(73,686	)	$	(74,045	)
Reconciling adjustments:
Provision for finance receivable losses	262,142			260,005
Depreciation and amortization	48,085			52,993
Deferral of finance receivable origination costs	(42,141		)	—
Deferred income tax benefit	(126,924		)	(109,181		)
Net loss on repurchases and repayments of debt	17,075			33,809
Share-based compensation expense, net of forfeitures	131,250			131,250
Other	(445		)	(445		)
Cash flows due to changes in:
Other assets and other liabilities	59,549			90,572
Insurance claims and policyholder liabilities	14,917			14,917
Taxes receivable and payable	(30,731		)	(46,147		)
Accrued interest and finance charges	2,491			(29,957		)
Restricted cash not reinvested	(5,716		)	(5,715		)
Other, net	(823		)	(824		)
Net cash provided by operating activities	255,043			317,232

Cash flows from investing activities
Finance receivables originated or purchased, net of deferred origination costs	(1,589,051		)	(1,631,192		)
Principal collections on finance receivables	1,957,957			1,990,405
Available-for-sale investment securities purchased	(96,574		)	(90,279		)
Trading investment securities purchased	—			(6,295		)
Available-for-sale investment securities called, sold, and matured	183,603			176,111
Trading investment securities called, sold, and matured	—			7,492
Change in notes receivable from parent and affiliate	(30,750		)	(30,750		)
Change in restricted cash	(227,213		)	(227,213		)
Proceeds from sale of real estate owned	87,747			87,747
Other, net	(12		)	(12		)
Net cash provided by investing activities	285,707			276,014

Cash flows from financing activities
Proceeds from issuance of long-term debt, net of commissions	3,477,534			3,459,579
Repayment of long-term debt	(4,346,910		)	(4,381,451		)
Capital contributions from parent	21,000			21,000
Net cash used for financing activities	(848,376		)	(900,872		)

Effect of exchange rate changes	(835		)	(835		)

Net change in cash and cash equivalents	(308,461		)	(308,461		)
Cash and cash equivalents at beginning of period	1,357,212			1,357,212
Cash and cash equivalents at end of period	$	1,048,751		$	1,048,751



			Net gains (losses) included in:						Purchases, sales, issues, settlements(a)			Transfers into Level 3 (b)		Transfers out of Level 3		Balance at end of period
	Balance at beginning of period		Other revenues			Other comprehensive income (loss)
(dollars in thousands)	Balance at beginning of period		Other revenues			Other comprehensive income (loss)

Three Months Ended September 30, 2014

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	4,160	$	(27	)	$	(8	)	$	—		$	—	$	—	$	4,125
RMBS	65		(4		)	(6		)	—			—		—		55
CMBS	20		—			(5		)	—			—		—		15
Total	4,245		(31		)	(19		)	—			—		—		4,195
Other long-term investments	1,254		—			176			—			—		—		1,430
Total available-for-sale securities	5,499		(31		)	157			—			—		—		5,625
Trading securities:
Bonds:
RMBS	—		—			—			—			361		—		361
CDO/ABS	6,477		(24		)	—			(23		)	—		—		6,430
Total trading securities	6,477		(24		)	—			(23		)	361		—		6,791
Total	$	11,976	$	(55	)	$	157		$	(23	)	$	361	$	—	$	12,416



			Net gains (losses) included in:						Purchases, sales, issues, settlements*			Transfers into Level 3		Transfers out of Level 3		Balance at end of period
	Balance at beginning of period
(dollars in thousands)	Balance at beginning of period		Other revenues			Other comprehensive income (loss)

Three Months Ended September 30, 2013 - Revised

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	13,114	$	(58	)	$	18		$	2,016		$	—	$	—	$	15,090
RMBS	218		—			(133		)	—			—		—		85
CMBS	2		—			—			—			—		—		2
CDO/ABS	800		—			—			—			—		—		800
Total	14,134		(58		)	(115		)	2,016			—		—		15,977
Other long-term investments	1,478		—			(103		)	—			—		—		1,375
Total available-for-sale securities	15,612		(58		)	(218		)	2,016			—		—		17,352
Trading securities:
Bonds:
CDO/ABS	7,663		49			(4		)	(75		)	—		—		7,633
Total	$	23,275	$	(9	)	$	(222	)	$	1,941		$	—	$	—	$	24,985



(dollars in thousands)	Purchases		Sales		Issues		Settlements			Total

Three Months Ended September 30, 2013 - Revised

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	2,016	$	—	$	—	$	—		$	2,016
Trading securities:
Bonds:
CDO/ABS	—		—		—		(75		)	(75		)
Total	$	2,016	$	—	$	—	$	(75	)	$	1,941



			Net gains (losses) included in:						Purchases, sales, issues, settlements *			Transfers into Level 3			Transfers out of Level 3		Balance at end of period

(dollars in thousands)	Balance at beginning of period		Other revenues			Other comprehensive income (loss)

Nine Months Ended September 30, 2013 - Revised

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	13,417	$	(166	)	$	304		$	1,535		$	—	��	$	—	$	15,090
RMBS	74		(35		)	46			—			—			—		85
CMBS	153		(8		)	6			(149		)	—			—		2
CDO/ABS	1,200		—			—			(400		)	—			—		800
Total	14,844		(209		)	356			986			—			—		15,977
Other long-term investments	1,380		2			4			(11		)	—			—		1,375
Total available-for-sale securities	16,224		(207		)	360			975			—			—		17,352
Trading securities:
Bonds:
CDO/ABS	12,192		562			(426		)	(4,695		)	—			—		7,633
Total	$	28,416	$	355		$	(66	)	$	(3,720	)	$	—		$	—	$	24,985



Topic		Page

Forward-Looking Statements		53
Overview		54
Recent Developments and Outlook		56
Results of Operations		57
Segments Results		64
Credit Quality		76
Liquidity and Capital Resources		78
Off Balance Sheet Arrangements		81
Critical Accounting Policies and Estimates		81
Recent Accounting Pronouncements		81
Seasonality		81
Glossary of Terms		82

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