UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~June 30, 2015~~March 31, 2016

¨ 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 þ No o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 þ

At ~~August 3, 2015,~~May 2, 2016, there were ~~10,160,020~~10,160,021 shares of the registrant’s common stock, $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	4846
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	7767
Item 4.	Controls and Procedures	7767

PART II — OTHER INFORMATION

Item 1.	Legal Proceedings	7868
Item 1A.	Risk Factors	7868
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7868
Item 3.	Defaults Upon Senior Securities	7868
Item 4.	Mine Safety Disclosures	7868
Item 5.	Other Information	7868
Item 6.	Exhibits	7868

SIGNATURE		69

~~Table of Contents~~

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)


(dollars in millions)	June 30, 2015			December 31, 2014
(dollars in millions except par value amount)							March 31, 2016			December 31, 2015

Assets

Cash and cash equivalents	$	2,477		$	749		$	365		$	321
Investment securities	2,271			2,922			621			604
Net finance receivables:
Personal loans (includes loans of consolidated VIEs of $3.1 billion in 2015 and $1.9 billion in 2014)	4,252			3,800
SpringCastle Portfolio (includes loans of consolidated VIEs of $1.8 billion in 2015 and $2.0 billion in 2014)	1,764			1,979
Personal loans (includes loans of consolidated VIEs of $3.6 billion in 2016 and 2015)							4,378			4,300
SpringCastle Portfolio (includes loans of consolidated VIEs of $1.6 billion in 2015)							—			1,576
Real estate loans	573			625			503			524
Retail sales finance	33			48			19			23
Net finance receivables	6,622			6,452			4,900			6,423
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $120 million in 2015 and $72 million in 2014)	(178		)	(174		)
Net finance receivables, less allowance for finance receivable losses	6,444			6,278
Finance receivables held for sale	193			205
Note receivable from parent	302			251
Restricted cash and cash equivalents (includes restricted cash and cash equivalents of consolidated VIEs of $320 million in 2015 and $210 million in 2014)	333			218
Unearned insurance premium and claim reserves							(245		)	(250		)
Allowance for finance receivable losses (includes allowance of consolidated VIEs of $113 million in 2016 and $128 million in 2015)							(211		)	(219		)
Net finance receivables, less unearned insurance premium and claim reserves and allowance for finance receivable losses							4,444			5,954
Finance receivables held for sale (includes finance receivables held for sale of consolidated VIEs of $435 million in 2015)							776			796
Notes receivable from parent and affiliates							3,775			3,804
Restricted cash and cash equivalents (includes restricted cash and cash equivalents of consolidated VIEs of $212 million in 2016 and $282 million in 2015)							225			295
Other assets	390			474			286			281

Total assets	$	12,410		$	11,097		$	10,492		$	12,055

Liabilities and Shareholder’s Equity

Long-term debt (includes debt of consolidated VIEs of $4.9 billion in 2015 and $3.6 billion in 2014)	$	9,676		$	8,356
Long-term debt (includes debt of consolidated VIEs of $3.1 billion in 2016 and $5.5 billion in 2015)							$	7,187		$	9,582
Note payable to affiliate							374			—
Insurance claims and policyholder liabilities	458			446			228			230
Deferred and accrued taxes	115			159			178			103
Other liabilities	246			255			266			217
Total liabilities	10,495			9,216			8,233			10,132
Commitments and contingent liabilities (Note 14)

Shareholder’s equity:
Common stock, par value $.50 per share; 25,000,000 shares authorized, 10,160,020 shares issued and outstanding at June 30, 2015 and December 31, 2014	5			5
Common stock, par value $.50 per share; 25,000,000 shares authorized, 10,160,021 and 10,160,020 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively							5			5
Additional paid-in capital	756			740			769			758
Accumulated other comprehensive income (loss)	(7		)	3
Accumulated other comprehensive loss							(17		)	(24		)
Retained earnings	1,326			1,321			1,502			1,330
Springleaf Finance Corporation shareholder’s equity	2,080			2,069			2,259			2,069
Non-controlling interests	(165		)	(188		)	—			(146		)
Total shareholder’s equity	1,915			1,881			2,259			1,923

Total liabilities and shareholder’s equity	$	12,410		$	11,097		$	10,492		$	12,055

See Notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~

SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)


(dollars in millions)	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
	2015			2014		2015		2014			2016		2015

Interest income:
Finance charges	$	404		$	389	$	802	$	787		$	384	$	398
Finance receivables held for sale originated as held for investment	5			3		9		7			47		4
Total interest income	409			392		811		794			431		402

Interest expense	171			172		329		354			156		158

Net interest income	238			220		482		440			275		244

Provision for finance receivable losses	79			74		165		181			94		86

Net interest income after provision for finance receivable losses	159			146		317		259			181		158

Other revenues:
Insurance	40			43		76		81			39		36
Investment	15			10		32		20			6		17
Net loss on repurchases and repayments of debt	—			—		—		(7		)
Net gain on sales of real estate loans and related trust assets	—			35		—		90
Net gain on sale of SpringCastle interests											229		—
Other	4			4		4		8			40		—
Total other revenues	59			92		112		192			314		53

Other expenses:
Operating expenses:
Salaries and benefits	98			82		178		164			97		80
Other operating expenses	68			51		141		102			77		73
Insurance losses and loss adjustment expenses	20			19		36		37
Insurance policy benefits and claims											17		16
Total other expenses	186			152		355		303			191		169

Income before provision for (benefit from) income taxes	32			86		74		148
Income before provision for income taxes											304		42

Provision for (benefit from) income taxes	(1		)	33		7		57
Provision for income taxes											106		8

Net income	33			53		67		91			198		34

Net income attributable to non-controlling interests	31			—		62		—			26		31

Net income attributable to Springleaf Finance Corporation	$	2		$	53	$	5	$	91		$	172	$	3

See Notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~

SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


(dollars in millions)	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2015			2014			2015			2014			2016			2015

Net income	$	33		$	53		$	67		$	91		$	198		$	34

Other comprehensive income (loss):
Net unrealized gains (losses) on non-credit impaired investment securities	(10		)	9			(5		)	19
Other comprehensive income:
Net unrealized gains on non-credit impaired available-for-sale securities													12			5
Foreign currency translation adjustments	(1		)	—			—			—			—			1

Income tax effect:
Net unrealized (gains) losses on non-credit impaired investment securities	4			(3		)	2			(7		)
Other comprehensive income (loss), net of tax, before reclassification adjustments	(7		)	6			(3		)	12

Net unrealized gains on non-credit impaired available-for-sale securities													(4		)	(2		)
Other comprehensive income, net of tax, before reclassification adjustments													8			4
Reclassification adjustments included in net income:
Net realized gains on investment securities	(4		)	(1		)	(10		)	(3		)

Net realized gains on available-for-sale securities													(1		)	(6		)
Income tax effect:
Net realized gains on investment securities	1			—			3			1
Net realized gains on available-for-sale securities													—			2
Reclassification adjustments included in net income, net of tax	(3		)	(1		)	(7		)	(2		)	(1		)	(4		)
Other comprehensive income (loss), net of tax	(10		)	5			(10		)	10
Other comprehensive income, net of tax													7			—

Comprehensive income	23			58			57			101			205			34

Comprehensive income attributable to non-controlling interests	31			—			62			—			26			31

Comprehensive income (loss) attributable to Springleaf Finance Corporation	$	(8	)	$	58		$	(5	)	$	101
Comprehensive income attributable to Springleaf Finance Corporation													$	179		$	3

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
(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 —
—
—
—
—
(39 ) (39 )
Change in net unrealized losses:

Investment securities —
—
(10 ) —
(10 ) —
(10 )
Net income —
—
—
5
5
62
67
Balance, June 30, 2015 $ 5
$ 756
$ (7 ) $ 1,326
$ 2,080
$ (165 ) $ 1,915

Balance, January 1, 2014 $ 5
$ 422
$ 28
$ 873
$ 1,328
$ —
$ 1,328
Capital contributions from parent —
11
—
—
11
—
11
Change in net unrealized gains:

Investment securities —
—
10
—
10
—
10
Net income —
—
—
91
91
—
91
Balance, June 30, 2014 $ 5
$ 433
$ 38
$ 964
$ 1,440
$ —
$ 1,440



	Springleaf Finance Corporation Shareholder’s Equity
(dollars in millions)	Common Stock		Additional Paid-in Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings		Springleaf Finance Corporation Shareholder’s Equity			Non-controlling Interests			Total Shareholder’s Equity

Balance, January 1, 2016	$	5	$	758		$	(24	)	$	1,330	$	2,069		$	(146	)	$	1,923
Capital contribution from parent	—		10			—			—		10			—			10
Share-based compensation expense, net of forfeitures	—		1			—			—		1			—			1
Excess tax benefit from share-based compensation	—		1			—			—		1			—			1
Withholding tax on vested RSUs	—		(1		)	—			—		(1		)	—			(1		)
Change in non-controlling interests:
Distributions declared to joint venture partners	—		—			—			—		—			(18		)	(18		)
Sale of equity interests in SpringCastle joint venture	—		—			—			—		—			138			138
Other comprehensive income	—		—			7			—		7			—			7
Net income	—		—			—			172		172			26			198
Balance, March 31, 2016	$	5	$	769		$	(17	)	$	1,502	$	2,259		$	—		$	2,259

Balance, January 1, 2015	$	5	$	740		$	3		$	1,321	$	2,069		$	(188	)	$	1,881
Change in non-controlling interests:
Distributions declared to joint venture partners	—		—			—			—		—			(18		)	(18		)
Net income	—		—			—			3		3			31			34
Balance, March 31, 2015	$	5	$	740		$	3		$	1,324	$	2,072		$	(175	)	$	1,897

See Notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~

SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)


(dollars in millions)	Six Months Ended June 30,						Three Months Ended March 31,
	2015			2014			2016			2015

Cash flows from operating activities
Net income	$	67		$	91		$	198		$	34
Reconciling adjustments:
Provision for finance receivable losses	165			181			94			86
Depreciation and amortization	39			56			20			17
Deferred income tax benefit	(38		)	(144		)
Non-cash incentive compensation from Initial Stockholder	15			—
Net gain on sales of real estate loans and related trust assets	—			(90		)
Net loss on repurchases and repayments of debt	—			7
Deferred income tax charge (benefit)							29			(14		)
Share-based compensation expense, net of forfeitures	1			1			1			—
Net gain on sale of SpringCastle interests							(229		)	—
Other	(12		)	(2		)	9			(7		)
Cash flows due to changes in:
Other assets and other liabilities	(10		)	17			36			72
Insurance claims and policyholder liabilities	13			18			(7		)	(2		)
Taxes receivable and payable	(5		)	104			47			18
Accrued interest and finance charges	3			(11		)	20			7
Restricted cash and cash equivalents not reinvested	—			(5		)	1			—
Other, net							1			—
Net cash provided by operating activities	238			223			220			211

Cash flows from investing activities
Finance receivables originated or purchased, net of deferred origination costs	(1,503		)	(1,171		)
Principal collections on finance receivables	1,216			1,216
Net principal collections (originations) of finance receivables held for investment and held for sale							(30		)	—
Proceeds on sales of finance receivables held for sale originated as held for investment							—			52
Proceeds from sale of SpringCastle interests							101			—
Cash advances on intercompany notes receivables	(77		)	—			(112		)	(28		)
Principal collections on intercompany notes receivables	26			—			127			16
Sales and principal collections on finance receivables held for sale originated as held for investment	74			1,080
Available-for-sale investment securities purchased	(209		)	(148		)
Trading investment securities purchased	(1,309		)	(15		)
Available-for-sale investment securities called, sold, and matured	219			106
Trading investment securities called, sold, and matured	1,945			1
Available-for-sale securities purchased							(92		)	(95		)
Trading and other securities purchased							(1		)	(945		)
Available-for-sale securities called, sold, and matured							78			56
Trading and other securities called, sold, and matured							10			1,193
Change in restricted cash and cash equivalents	(109		)	(6		)	(5		)	(120		)
Proceeds from sale of real estate owned	10			41			2			5
Other, net	8			3			4			10
Net cash provided by investing activities	291			1,107			82			144

Cash flows from financing activities
Proceeds from issuance of long-term debt, net of commissions	1,829			673			295			1,523
Repayment of long-term debt	(591		)	(1,548		)
Proceeds from intercompany note payable							370			—
Repayments of long-term debt							(916		)	(315		)
Distributions to joint venture partners	(39		)	—			(18		)	(18		)
Capital contributions from parent	—			11
Excess tax benefit from share-based compensation							1			—
Capital contribution from parent							10			—
Net cash provided by (used for) financing activities	1,199			(864		)	(258		)	1,190


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

(dollars in millions)	Six Months Ended June 30,				Three Months Ended March 31,
(dollars in millions)	2015		2014		2016		2015

Net change in cash and cash equivalents	1,728		466		44		1,545
Cash and cash equivalents at beginning of period	749		375		321		749
Cash and cash equivalents at end of period	$	2,477	$	841	$	365	$	2,294

Supplemental non-cash activities
Transfer of finance receivables held for investment to finance receivables held for sale (prior to deducting allowance for finance receivable losses)					$	1,478	$	—
Transfer of finance receivables to real estate owned	$	5	$	33	$	2	$	2
Transfer of finance receivables held for investment to finance receivables held for sale (prior to deducting allowance for finance receivable losses)	$	—	$	1,291
Unsettled investment security purchases and sales	$	14	$	—
Net unsettled investment security dispositions					$	—	$	19

See Notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~

SPRINGLEAF FINANCE CORPORATION AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

~~June 30, 2015~~March 31, 2016

1. Business and Basis of 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”). SFI is a wholly owned subsidiary of ~~Springleaf~~OneMain Holdings, Inc. (“~~SHI”~~OMH”).

At ~~June 30, 2015,~~March 31, 2016, Springleaf Financial Holdings, LLC (the “Initial Stockholder”) owned approximately 58% of ~~SHI’s~~OMH’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”)~~. As a result of SHI’s offering of its common stock in May of 2015, the economic interests of Fortress and AIG have been reduced to approximately 55% and 3%, respectively, at June 30, 2015. See Note 2 for further information on this offering.

SFC is a financial services holding company with subsidiaries engaged in the consumer finance and 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~~owned a 47% equity ~~interest)~~interest prior to March 31, 2016), 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. To conform to the 2016 presentation, we have reclassified certain items in prior periods, including certain items in prior periods of our condensed consolidated statements of cash flows. 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, ~~2014~~2015 (“~~2014~~2015 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~~

During the fourth quarter of 2014, we discovered that our personal loans deemed to be troubled debt restructured (“TDR”) finance receivables were previously incorrectly excluded in the related disclosures of our finance receivables and allowance for finance receivable losses. The applicable prior period amounts have been corrected in Notes 4 and 5 in this report.

~~Table of Contents~~

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 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 annual reports as 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.

During the second quarter of 2015, we discovered that 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.

2. Significant Transactions

~~SHI’S PENDING ACQUISITION OF ONEMAIN FINANCIAL~~SPRINGCASTLE INTERESTS SALE

On March ~~2, 2015, SHI~~31, 2016, SFI, SpringCastle Holdings, LLC (“SpringCastle Holdings”) and Springleaf Acquisition Corporation (“Springleaf Acquisition” and, together with SpringCastle Holdings, the “SpringCastle Sellers”), wholly owned subsidiaries of OMH, entered into a ~~Stock Purchase Agreement~~purchase agreement with ~~CitiFinancial~~certain subsidiaries of New Residential Investment Corp. (“NRZ” and such subsidiaries, the “NRZ Buyers”) and BTO Willow Holdings II, L.P. and Blackstone Family Tactical Opportunities Investment Partnership—NQ—ESC L.P. (collectively, the “Blackstone Buyers” and together with the NRZ Buyers, the “SpringCastle Buyers”). Pursuant to the purchase agreement, SpringCastle Holdings sold its 47% limited liability company interest in each of SpringCastle America, LLC, SpringCastle Credit, ~~Company~~LLC and SpringCastle Finance, LLC, and Springleaf Acquisition sold its 47% limited liability company interest in SpringCastle Acquisition LLC, to ~~acquire OneMain Financial Holdings, LLC (formerly OneMain Financial Holdings, Inc.) (“OneMain”),~~the SpringCastle Buyers for an aggregate purchase price of ~~$4.25 billion, which we refer~~approximately $112 million (the “SpringCastle Interests Sale”). SpringCastle America, LLC, SpringCastle Credit, LLC, SpringCastle Finance, LLC and SpringCastle Acquisition LLC are collectively referred to ~~in this report~~herein as the “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.“SpringCastle Joint Venture.”

~~SHI’S EQUITY OFFERING~~

~~On May 4,~~The SpringCastle Joint Venture primarily holds subordinate ownership interests in a securitized loan portfolio (the “SpringCastle Portfolio”), which consists of unsecured loans and loans secured by subordinate residential real estate mortgages and includes both closed-end accounts and open-end lines of credit. These loans are in a liquidating status and vary in form and substance from the Company’s originated loans. At December 31, 2015, ~~SHI completed an offering~~the SpringCastle Portfolio included over 232,000 of ~~27,864,525 shares~~acquired loans, representing $1.6 billion in net finance receivables. For the three months ended March 31, 2016 and 2015, income before provision for income taxes of ~~its common stock, consisting of 19,417,476 shares of common stock offered by SHI~~our Acquisitions and 8,447,049 shares of common stock offered by the Initial Stockholder. SHI’s net proceeds from this sale were approximately $976 million, after deducting the underwriting discounts and commissions and additional offering-related expenses totaling $24 million. SHI intends to use the net proceedsServicing segment (which consists of the ~~offering, together with cash on hand, the proceeds from the sale of investment securities,~~SpringCastle Sellers) totaled $279 million ($253 million attributable to SFC) and ~~other funding options,~~$64 million ($33 million attributable to ~~fund the Proposed Acquisition and/or for general corporate purposes, which may include debt repurchases and repayments, capital expenditures and other possible acquisitions.~~SFC), respectively.

In connection with ~~SHI’s initial public offering~~the SpringCastle Interests Sale, the SpringCastle Buyers paid $101 million of the aggregate purchase price to the SpringCastle Sellers on March 31, 2016, with the remaining $11 million to be paid into an escrow account within 120 days following March 31, 2016. Such escrowed funds are expected to be held in ~~October 2013, certain executives~~escrow for a period of ~~Springleaf received a grant of incentive units in the Initial Stockholder. These incentive units are~~up to five years following March 31, 2016, and, subject to ~~their continued employment with~~ the ~~Company~~terms of the purchase agreement and ~~provide benefits (in~~assuming certain portfolio performance requirements are satisfied, paid to the ~~form~~SpringCastle Sellers at the end of ~~distributions) in the event the Initial Stockholder makes distributions to one or more of its members that exceed certain specified amounts.~~such five year period. In connection with the SpringCastle Interests Sale, we recorded a net gain in other revenues at the time of sale of ~~SHI’s~~$229 million.

As a result of this sale, SpringCastle Acquisition and SpringCastle Holdings no longer hold any ownership interests of the SpringCastle Joint Venture. However, unless terminated, SFI will remain as servicer of the SpringCastle Portfolio, under the existing servicing agreement for the SpringCastle Funding Trust. In addition, we deconsolidated the underlying loans of the SpringCastle Portfolio and previously issued securitized interests, which were reported in long-term debt, as we no longer were considered the primary beneficiary.

Prior to the SpringCastle Interests Sale, affiliates of the NRZ Buyers owned a 30% limited liability company interest in the SpringCastle Joint Venture, and affiliates of the Blackstone Buyers owned a 23% limited liability company interest in the SpringCastle Joint Venture (together, the “Other Members”). The Other Members are parties to the purchase agreement for certain limited indemnification obligations and post-closing expense reimbursement obligations of the SpringCastle Joint Venture to the SpringCastle Sellers.

The NRZ Buyers are subsidiaries of NRZ, which is externally managed by an affiliate of Fortress. The Initial Stockholder, which owned approximately 58% of OMH’s common stock as of March 31, 2016, is owned primarily by ~~the Initial Stockholder, certain~~a private equity fund managed by an affiliate of Fortress. Mr. Edens, Chairman of the board of directors of OMH, also serves as Chairman of the board of directors of NRZ. Mr. Edens is also a principal of Fortress and serves as Co-Chairman of the board of directors of Fortress. Mr. Jacobs, a member of the board of directors of OMH, also serves as a member of NRZ’s board of directors and Fortress’ board of directors.

The purchase agreement included customary representations, warranties, covenants and indemnities. We did not record a sales recourse obligation related to this sale.

OMH’S ACQUISITION OF ONEMAIN FINANCIAL HOLDING, LLC

On November 15, 2015, OMH, through its wholly owned subsidiary, Independence Holdings, LLC (“Independence”), completed its acquisition of OneMain Financial Holdings, LLC (“OMFH”) from CitiFinancial Credit Company (“Citigroup”) for approximately $4.5 billion in cash (the “OneMain Acquisition”). As a result of the OneMain Acquisition, OMFH became a wholly owned, indirect subsidiary of OMH. OMFH is not a subsidiary of SFC and SFC is not a subsidiary of OMFH.

In connection with the closing of the OneMain Acquisition, on November 13, 2015, OMH and certain subsidiaries of SFC entered into an Asset Preservation Stipulation and Order and agreed to a Proposed Final Judgment (collectively, the “Settlement Agreement”) with the U.S. Department of Justice (the “DOJ”), as well as the state attorneys general for Colorado, Idaho, Pennsylvania, Texas, Virginia, Washington and West Virginia. The Settlement Agreement resolved the inquiries of the DOJ and such attorneys general with respect to the OneMain Acquisition and allowed OMH to proceed with the closing. Pursuant to the Settlement Agreement, OMH agreed to divest 127 branches of SFC subsidiaries across 11 states as a condition for approval of the OneMain Acquisition. The Settlement Agreement requires the Branch Sellers to operate these 127 branches as an ongoing, economically viable and competitive business until sold to the divestiture purchaser. The court overseeing the settlement appointed a third-party monitor to oversee management of the divestiture branches and ensure the Company’s compliance with the terms of the Settlement Agreement.

LENDMARK SALE

On November 12, 2015, OMH and certain subsidiaries of SFC (the “Branch Sellers”) entered into an agreement with Lendmark Financial Services, LLC (“Lendmark”) to sell 127 branches to Lendmark (the “Lendmark Sale”) for a purchase price equal to the sum of (i) the aggregate unpaid balance as of closing of the purchased loans multiplied by 103%, plus (ii) for each interest-bearing purchased loan, an amount equal to all unpaid interest that has accrued on the unpaid balance at the applicable note rate from the most recent interest payment date through the closing, plus (iii) the sum of all prepaid charges and fees and security deposits of the Branch Sellers to the extent arising under the purchased contracts as reflected on the books and records of the Branch Sellers as of closing, subject to certain limitations if the purchase price would exceed $695 million and Lendmark is unable to obtain financing on certain specified ~~thresholds~~terms. In anticipation of the sale of these branches, we transferred $608 million of personal loans from held for investment to held for sale on September 30, 2015. At March 31, 2016, the personal loans held for sale totaled approximately $606 million, primarily due to originations, net of charge-offs of personal loans in these branches

during the past six months. The branches to be sold represent 15% of the branches and 12% of the personal loans held for investment and held for sale of the Company as of March 31, 2016.

Pursuant to the Settlement Agreement, we were ~~satisfied. In accordance~~required to dispose of the branches to be sold in connection with ~~Accounting Standards Codification Topic 710, Compensation-General,~~the Lendmark Sale within 120 days following November 13, 2015, subject to such extensions as the DOJ may approve. As we ~~recorded non-cash incentive compensation expense~~did not believe we would be able to consummate the Lendmark Sale prior to April 1, 2016, we requested two extensions of ~~$15 million~~the closing deadline set forth in the ~~second quarter of 2015 related to the incentive units.~~Settlement Agreement. The DOJ granted our requests through May 13, 2016.

On May 2, 2016, we completed the Lendmark Sale. See Note 18 for further information on the subsequent closing.

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3. Recent Accounting Pronouncements

ACCOUNTING PRONOUNCEMENTS RECENTLY ADOPTED

~~Troubled Debt Restructurings~~

~~In January of 2014, the Financial Accounting Standards Board (“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 amendments in this ASU became effective prospectively for the Company for annual periods, and interim periods within those annual periods, beginning after December 15, 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 have 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 will 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.

~~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.

~~ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED~~

~~Revenue from Contracts~~

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

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Consolidation

In February of 2015, the ~~FASB~~Financial Accounting Standards Board (the “FASB”) issued ~~ASU~~Accounting Standards Update (“ASU”) 2015-02, Consolidation - Amendments to the Consolidation Analysis, which 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 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 isbecame 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~~evaluated the potential impact of the adoption of this ASU and concluded that it will not have a material effect on our consolidated financial statements.

~~Cloud Computing Software~~Technical Corrections and Improvements

In ~~April~~June of 2015, the FASB issued ASU ~~2015-05,~~2015-10, ~~Intangibles-Goodwill~~Technical Corrections and ~~Other Internal-Use Software~~Improvements, to ~~provide~~correct differences between original guidance and the Codification, clarify the guidance, correct references and make minor improvements affecting a variety of topics. The amendments to this transition guidance became effective for fiscal years beginning after December 15, 2015. We evaluated the potential impact of the adoption of this ASU and concluded that it will not have a material effect on our consolidated financial statements.

ACCOUNTING PRONOUNCEMENTS TO BE ADOPTED

Revenue Recognition

In May of 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides a ~~customer’s~~consistent revenue accounting ~~for fees paid in a cloud computing arrangement (“CCA”). Under~~model across industries. In August of 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date, to defer the effective date of the new revenue recognition standard ~~customers will apply~~by one year, which would result in the ~~same criteria as vendors to determine whether a CCA contains a software license or is solely a service contract. The~~ ASU isbecoming effective for annual periods, and interim periods within those annual periods, beginning after December 15, ~~2015. Early adoption is permitted. We~~2017. Many of our revenue sources are ~~currently evaluating the potential impact of adopting this ASU 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~~not within the ~~fair value hierarchy all investments for which fair value is measured using~~scope of this new standard, and we are evaluating whether 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 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 net asset value per share practical expedient. However, application~~ of this ASU for those revenue sources that are in scope 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 amendments in this ASU isbecome effective for annual periods beginning after December 15, 2015, and interim periods within annual periods beginning after December 15, 2016. We are currently evaluating the potential impact of the adoption of the ASU on our consolidated financial statements.

Financial Instruments

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

Leases

In February of 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The ASU will require lessees to recognize assets and liabilities on leases with terms greater than 12 months and to disclose information related to the amount, timing and uncertainty of cash flows arising from leases, including various qualitative and quantitative requirements. The amendments of this ASU become effective for annual periods, and interim periods within those annual periods, beginning after December 15, ~~2015.~~2018. We will evaluate whether the adoption of this ASU will have a material effect on our consolidated financial statements.

Debt Instruments

In March of 2016, the FASB issued ASU 2016-06, Contingent Puts and Call Options in Debt Instruments, which clarifies the requirements for assessing whether contingent call (put) options that can accelerate the payment of principal on debt instruments are ~~currently evaluating~~clearly and closely related to their debt host. The ASU requires assessing the ~~potential impact~~embedded call (put) options solely in accordance with the four-step decision sequence. The amendment of ~~adopting~~this ASU becomes effective on a modified retrospective basis for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. We will evaluate whether the adoption of this ASU will have a material effect on our consolidated financial statements.

Investments

In March of 2016, the FASB issued ASU 2016-07, Simplifying the Transition to the Equity Method of Accounting, which eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as if the equity method had been in effect during all previous periods that the investment had been held. The ASU requires that an entity that has available-for-sale securities recognize, through earnings, the unrealized holding gain or loss in accumulated other comprehensive income at the date the investment becomes qualified for use of the equity method. The amendment in this ASU becomes effective prospectively for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. We will evaluate whether the adoption of this ASU will have a material effect on our consolidated financial statements.

Technical Corrections and Improvements

In ~~June 2015,~~March of 2016, the FASB issued ASU ~~2015-10,~~2016-08, ~~Technical Corrections and Improvements~~Principal versus Agent Considerations,~~, to correct differences between original guidance and~~ which clarifies the ~~Codification, clarify~~implementation of the guidance ~~correct references and make minor improvements affecting a variety of topics. While most~~on principal versus agent considerations from ASU 2014-09, Revenue from Contracts with Customers. ASU 2016-08 does not change the core principle of the ~~amendments~~guidance in ASU 2014-09, but rather clarifies the distinction between principal versus agent considerations when implementing ASU 2014-09. As these are technical corrections and improvements only, the company does not ~~expected to~~believe that this ASU will have a ~~significant~~material effect on practice, some of them could change practice for some entities. The amendments to transition guidance are effective for fiscal years beginning after 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.

Stock Compensation

In March of 2016, the FASB issued ASU 2016-09, Improvements to Employee Share - Based Payment Accounting, which simplifies the accounting for share-based payment transactions, income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendment in this ASU becomes effective on a modified retrospective transition for accounting in tax benefits recognized, retrospectively for accounting related to the presentation of employee taxes paid, prospective for accounting related to recognition of excess tax benefits, and either a prospective or retrospective method for accounting related to presentation of excess employee tax benefits for annual periods,

and interim periods within those annual periods, beginning after December 15, 2016. We will evaluate whether the adoption of this ASU will have a material effect on our consolidated financial statements.

We do not believe that any other ~~recently~~accounting pronouncements issued during the first quarter of 2016, but not yet effective, ~~accounting pronouncements, if adopted,~~ would have a material impact on our consolidated financial statements or ~~disclosures.~~disclosures, if adopted.

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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, typically non-revolving with a fixed-rate and a fixed, original term of two to five years. At ~~June 30, 2015, $2.3~~March 31, 2016, $2.5 billion of personal loans, or ~~53%~~58%, were secured by collateral consisting of titled personal property (such as automobiles) and ~~$2.0~~$1.9 billion, or ~~47%~~42%, were secured by consumer household goods or other items of personal property or were ~~unsecured.~~

~~SpringCastle Portfolio —~~ ~~are~~unsecured, compared to $2.4 billion of personal loans, ~~acquired by an indirect subsidiary of SHI through a joint venture in which SFC currently owns a 47% equity interest (the “SpringCastle Portfolio”). These loans include unsecured loans and loans~~or 56%, secured by ~~subordinate residential real estate mortgages (which we service as~~collateral consisting of titled personal property and $1.9 billion, or 44%, secured by consumer household goods or other items of personal property or 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.at December 31, 2015.

Real estate loans — are secured by first or second mortgages on residential real estate, generally have maximum original terms of 360 months, and are considered non-conforming. At ~~June 30, 2015, $215~~March 31, 2016, $197 million of real estate loans, or ~~38%~~39%, were secured by first mortgages and ~~$358~~$306 million, or ~~62%~~61%, were secured by second ~~mortgages.~~mortgages, compared to $202 million of real estate loans, or 39%, secured by first mortgages and $322 million, or 61%, secured by second mortgages at December 31, 2015. 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 — include retail sales contracts and revolving retail accounts. Retail sales contracts are closed-end accounts that represent a single purchase transaction. Revolving retail accounts are open-end accounts that can be used for financing repeated purchases from the same merchant. Retail sales contracts are secured by the personal property designated in the contract and generally have maximum original terms of 60 months. Revolving retail accounts are secured by the goods purchased and generally require minimum monthly payments based on the amount financed calculated after the most recent purchase or outstanding balances. Our retail sales finance portfolio is also in a liquidating status.

Our finance receivable types also included the SpringCastle Portfolio at December 31, 2015, as defined below:

SpringCastle Portfolio — included unsecured loans and loans secured by subordinate residential real estate mortgages that were sold on March 31, 2016, in connection with the SpringCastle Interests Sale. The SpringCastle Portfolio included both closed-end accounts and open-end lines of credit. These loans were in a liquidating status and varied in substance and form from our originated loans. Unless terminated, SFI will continue to provide the servicing for these loans, which we service as unsecured loans because the liens are subordinated to superior ranking security interests.

Components of net finance receivables held for investment by type were as follows:


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

June 30, 2015

March 31, 2016
Gross receivables *	$	4,986		$	1,730	$	569		$	36		$	7,321		$	5,075		$	—	$	499	$	21		$	5,595
Unearned finance charges and points and fees	(840		)	—		—			(3		)	(843		)	(798		)	—		—		(2		)	(800		)
Accrued finance charges	60			34		4			—			98			57			—		4		—			61
Deferred origination costs	46			—		—			—			46			44			—		—		—			44
Total	$	4,252		$	1,764	$	573		$	33		$	6,622		$	4,378		$	—	$	503	$	19		$	4,900

December 31, 2014

December 31, 2015
Gross receivables *	$	4,462		$	1,941	$	621		$	52		$	7,076		$	5,028		$	1,545	$	520	$	25		$	7,118
Unearned finance charges and points and fees	(764		)	—		(1		)	(5		)	(770		)	(833		)	—		—		(2		)	(835		)
Accrued finance charges	58			38		5			1			102			60			31		4		—			95
Deferred origination costs	44			—		—			—			44			45			—		—		—			45
Total	$	3,800		$	1,979	$	625		$	48		$	6,452		$	4,300		$	1,576	$	524	$	23		$	6,423

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*	Gross receivables are defined as follows:

~~finance~~Finance receivables purchased as a performing receivable — gross finance receivables equal the 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 initial fair value;

~~finance~~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~~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 $3.1 billion at June 30, 2015 and $1.9 billion at December 31, 2014 and SpringCastle Portfolio loans with a carrying value of $1.8 billion at June 30, 2015 and $2.0 billion at December 31, 2014finance receivables associated with securitizations that remain on our balance sheet. The carrying value of our personal loans totaled $3.6 billion at March 31, 2016 and December 31, 2015 and the carrying value of the SpringCastle Portfolio totaled $1.6 billion at December 31, 2015.

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


(dollars in millions)	June 30, 2015		December 31, 2014		March 31, 2016		December 31, 2015

Personal loans	$	2	$	1	$	1	$	2
SpringCastle Portfolio	365		354		—		365
Real estate loans	31		31		20		30
Total	$	398	$	386	$	21	$	397

Unused lines of credit on our personal loans can be suspended if one of the following occurs: ~~(1)~~(i) the value of the collateral declines significantly; ~~(2)~~(ii) we believe the borrower will be unable to fulfill the repayment obligations; or ~~(3)~~(iii) any other default by the borrower of any material obligation under the 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)~~(i) the value of the real estate declines significantly below the property’s initial appraised value; ~~(2)~~(ii) 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)~~(iii) 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~~Accordingly, no reserve has been recorded for the unused lines of ~~credit on the unsecured loans of the SpringCastle Portfolio can be terminated at our discretion.~~credit.

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. Our revolving retail finance receivables that were more than 90 days past due and still accruing finance charges at ~~June 30, 2015~~March 31, 2016 and at December 31, ~~2014~~2015 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 held for investment by type and by days delinquent:


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

June 30, 2015

March 31, 2016
Net finance receivables:
60-89 days past due	$	37	$	22	$	9	$	1	$	69	$	39	$	—	$	6	$	—	$	45
90-119 days past due	27		14		4		—		45		33		—		5		—		38
120-149 days past due	21		10		3		—		34		33		—		3		—		36
150-179 days past due	19		11		3		—		33		32		—		3		—		35
180 days or more past due	2		1		12		—		15		3		—		22		—		25
Total delinquent finance receivables	106		58		31		1		196		140		—		39		—		179
Current	4,080		1,662		528		31		6,301		4,186		—		447		19		4,652
30-59 days past due	66		44		14		1		125		52		—		17		—		69
Total	$	4,252	$	1,764	$	573	$	33	$	6,622	$	4,378	$	—	$	503	$	19	$	4,900

December 31, 2014

December 31, 2015
Net finance receivables:
60-89 days past due	$	36	$	31	$	12	$	1	$	80	$	49	$	22	$	18	$	—	$	89
90-119 days past due	30		19		9		—		58		41		14		3		—		58
120-149 days past due	24		16		5		1		46		34		11		2		1		48
150-179 days past due	21		14		4		—		39		31		10		2		—		43
180 days or more past due	2		2		12		—		16		3		1		12		—		16
Total delinquent finance receivables	113		82		42		2		239		158		58		37		1		254
Current	3,632		1,839		565		45		6,081		4,077		1,475		474		22		6,048
30-59 days past due	55		58		18		1		132		65		43		13		—		121
Total	$	3,800	$	1,979	$	625	$	48	$	6,452	$	4,300	$	1,576	$	524	$	23	$	6,423

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.

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


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

June 30, 2015

March 31, 2016
Performing	$	4,183	$	1,728	$	551	$	33	$	6,495	$	4,277	$	—	$	470	$	19	$	4,766
Nonperforming	69		36		22		—		127		101		—		33		—		134
Total	$	4,252	$	1,764	$	573	$	33	$	6,622	$	4,378	$	—	$	503	$	19	$	4,900

December 31, 2014

December 31, 2015
Performing	$	3,723	$	1,928	$	595	$	47	$	6,293	$	4,191	$	1,540	$	505	$	22	$	6,258
Nonperforming	77		51		30		1		159		109		36		19		1		165
Total	$	3,800	$	1,979	$	625	$	48	$	6,452	$	4,300	$	1,576	$	524	$	23	$	6,423

~~Table of Contents~~

PURCHASED CREDIT IMPAIRED FINANCE RECEIVABLES

In connection with 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 beOur purchased credit impaired ~~when SAC acquired~~finance receivables consist of receivables purchased as part of the ~~SCP Loans on April 1, 2013.~~following transaction:

~~As a result of the significance of the ownership~~

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”)~~purchase accounting and adjusted the carrying value of our finance receivables (the “FA Loans”) to their fair value.

At December 31, 2015, our purchased credit impaired finance receivables also included the SpringCastle Portfolio, which was purchased as part of the following transaction:

SFI’s capital contribution of its wholly owned subsidiary, Springleaf Acquisition Corporation (“SAC”), to SFC - on July 31, 2014 (the “SAC Capital Contribution”), SFC acquired a 47% equity interest in the SpringCastle Portfolio (the “SCP Loans”), some of which were determined to be credit impaired when SAC acquired the SCP Loans on April 1, 2013. On March 31, 2016, we sold the SpringCastle Portfolio in connection with the sale of our equity interest in the SpringCastle Joint Venture.

We report the carrying amount (which initially was the fair value) of our purchased credit impaired finance receivables in net finance receivables, less allowance for finance receivable losses or in finance receivables held for sale as discussed below.

At ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, finance receivables held for sale totaled ~~$193~~$776 million and ~~$205~~$796 million, respectively. See Note 6 for further information on our finance receivables held for 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 TDR ~~real estate loans.~~finance receivables. Therefore, we are presenting the financial information for our purchased credit impaired finance receivables and TDR finance receivables combined for finance receivables held for investment and finance receivables held for sale in the tables below. The financial data for the three and six months ended June 30, 2014 related to finance receivables held for sale in the following tables were immaterial since the loans were transferred and sold within the same months.

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

(dollars in millions) SCP Loans FA Loans Total

June 30, 2015

Carrying amount, net of allowance (a) $ 279
$ 88
$ 367
Outstanding balance (b) 549
143
692
Allowance for purchased credit impaired finance receivable losses —
5
5

December 31, 2014

Carrying amount, net of allowance (a) $ 340
$ 93
$ 433
Outstanding balance (b) 628
151
779
Allowance for purchased credit impaired finance receivable losses —
5
5



(dollars in millions)	SCP Loans		FA Loans *		Total

March 31, 2016
Carrying amount, net of allowance	$	—	$	71	$	71
Outstanding balance	—		132		132
Allowance for purchased credit impaired finance receivable losses	—		8		8

December 31, 2015
Carrying amount, net of allowance	$	223	$	76	$	299
Outstanding balance	482		136		618
Allowance for purchased credit impaired finance receivable losses	—		7		7


~~(a)~~*	~~The carrying amount of purchased~~Purchased credit impaired FA Loans ~~at June 30, 2015 and December 31, 2014 includes $64 million and $68 million, respectively, of purchased credit impaired finance receivables~~ held for ~~sale.~~sale included in the table above were as follows:


~~(b)~~	The outstanding balance of purchased credit impaired FA Loans at June 30, 2015 and December 31, 2014 includes $94 million and $99 million, respectively, of purchased credit impaired finance receivables held for sale.



(dollars in millions)	FA Loans

March 31, 2016
Carrying amount	$	52
Outstanding balance	87

December 31, 2015
Carrying amount	$	55
Outstanding balance	89

The allowance for purchased credit impaired finance receivable losses at ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, reflected the net carrying value of the purchased credit impaired FA Loans being higher than the present value of the expected cash flows.

~~Table of Contents~~

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


(dollars in millions)	SCP Loans			FA Loans			Total			SCP Loans			FA Loans			Total

Three Months Ended June 30, 2015
Three Months Ended March 31, 2016
Balance at beginning of period										$	422		$	39		$	461
Accretion (a)										(16		)	(2		)	(18		)
Transfer due to finance receivables sold										(399		)	—			(399		)
Disposals of finance receivables (b)										(7		)	(1		)	(8		)
Balance at end of period										$	—		$	36		$	36

Three Months Ended March 31, 2015
Balance at beginning of period	$	505		$	16		$	521		$	541		$	19		$	560
Accretion (a)	(22		)	(2		)	(24		)	(24		)	(3		)	(27		)
Disposals of finance receivables (b)	(9		)	(1		)	(10		)	(12		)	—			(12		)
Balance at end of period	$	474		$	13		$	487		$	505		$	16		$	521

Three Months Ended June 30, 2014

Balance at beginning of period	$	—		$	676		$	676
Accretion	—			(26		)	(26		)
Transfers due to finance receivables sold	—			(21		)	(21		)
Disposals of finance receivables (b)	—			(6		)	(6		)
Balance at end of period	$	—		$	623		$	623

Six Months Ended June 30, 2015

Balance at beginning of period	$	541		$	19		$	560
Accretion (a)	(46		)	(5		)	(51		)
Disposals of finance receivables (b)	(21		)	(1		)	(22		)
Balance at end of period	$	474		$	13		$	487

Six Months Ended June 30, 2014

Balance at beginning of period	$	—		$	767		$	767
Accretion	—			(55		)	(55		)
Transfers due to finance receivables sold	—			(78		)	(78		)
Disposals of finance receivables (b)	—			(11		)	(11		)
Balance at end of period	$	—		$	623		$	623


(a)	Accretion on our purchased credit impaired FA Loans ~~for the three and six months ended June 30, 2015 includes $1 million and $3 million, respectively, of accretion on purchased credit impaired finance receivables~~ held for sale ~~which is reported~~included in the table above were as ~~interest income on finance receivables held for sale originated as held for investment.~~follows:



(dollars in millions)	Three Months Ended March 31,
(dollars in millions)	2016		2015

Accretion	$	1	$	2


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

~~Table of Contents~~

TROUBLED DEBT RESTRUCTURED FINANCE RECEIVABLES

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

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

June 30, 2015

TDR gross finance receivables (a) (b) $ 28
$ 14
$ 197
$ 239
TDR net finance receivables (c) 27
12
198
237
Allowance for TDR finance receivable losses 7
3
31
41

December 31, 2014

TDR gross finance receivables (a) (b) $ 22
$ 11
$ 196
$ 229
TDR net finance receivables (c) 22
10
196
228
Allowance for TDR finance receivable losses 1
3
32
36



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

March 31, 2016
TDR gross finance receivables (b)	$	33	$	—	$	199	$	232
TDR net finance receivables	33		—		201		234
Allowance for TDR finance receivable losses	11		—		35		46

December 31, 2015
TDR gross finance receivables (b)	$	32	$	14	$	200	$	246
TDR net finance receivables	31		13		201		245
Allowance for TDR finance receivable losses	9		4		34		47


(a)	~~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

March 31, 2016
TDR gross finance receivables	$	2	$	91	$	93
TDR net finance receivables	2		91		93

December 31, 2015
TDR gross finance receivables	$	2	$	92	$	94
TDR net finance receivables	2		92		94


(b)	~~TDR real estate loan gross finance receivables at June 30, 2015 and December 31, 2014 include $91 million of TDR finance receivables held for sale.~~


~~(c)~~	~~TDR real estate loan net finance receivables at June 30, 2015 and December 31, 2014 include $91 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.

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

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

Three Months Ended June 30, 2015

TDR average net receivables (a) $ 28
$ 12
$ 198
$ 238
TDR finance charges recognized (b) 1
—
3
4

Three Months Ended June 30, 2014

TDR average net receivables $ 15
$ —
$ 1,378
$ 1,393
TDR finance charges recognized 1
—
17
18

Six Months Ended June 30, 2015

TDR average net receivables (a) $ 27
$ 11
$ 196
$ 234
TDR finance charges recognized (b) 2
—
6
8

Six Months Ended June 30, 2014

TDR average net receivables $ 14
$ —
$ 1,396
$ 1,410
TDR finance charges recognized 1
—
35
36



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

Three Months Ended March 31, 2016
TDR average net receivables	$	32	$	11	$	201	$	244
TDR finance charges recognized	1		—		3		4

Three Months Ended March 31, 2015
TDR average net receivables	$	25	$	11	$	195	$	231
TDR finance charges recognized	1		—		3		4

~~Table of Contents~~


~~(a)~~*	~~TDR real estate loan average net receivables for the three and six months ended June 30, 2015 include $91 million of TDR average net receivables held for sale.~~


~~(b)~~	~~TDR real estate loan finance charges recognized for the three and six months ended June 30, 2015 include $1 million~~ ~~and~~ ~~$2 million, respectively, of interest income on~~ TDR finance receivables held for ~~sale.~~ sale included in the table above were as follows:



(dollars in millions)	Personal Loans		Real Estate Loans		Total

Three Months Ended March 31, 2016
TDR average net receivables	$	2	$	92	$	94
TDR finance charges recognized	—		1		1

Three Months Ended March 31, 2015
TDR average net receivables	$	—	$	90	$	90
TDR finance charges recognized	—		1		1

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

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

Three Months Ended June 30, 2015

Pre-modification TDR net finance receivables (a) $ 7
$ 2
$ 6
$ 15
Post-modification TDR net finance receivables (b) $ 6
$ 2
$ 7
$ 15
Number of TDR accounts (c) 1,461
213
99
1,773

Three Months Ended June 30, 2014

Pre-modification TDR net finance receivables $ 3
$ —
$ 79
$ 82
Post-modification TDR net finance receivables $ 4
$ —
$ 76
$ 80
Number of TDR accounts 891
—
899
1,790

Six Months Ended June 30, 2015

Pre-modification TDR net finance receivables (a) $ 16
$ 4
$ 10
$ 30
Post-modification TDR net finance receivables (b) $ 14
$ 4
$ 11
$ 29
Number of TDR accounts (c) 3,315
408
177
3,900

Six Months Ended June 30, 2014

Pre-modification TDR net finance receivables $ 6
$ —
$ 181
$ 187
Post-modification TDR net finance receivables $ 6
$ —
$ 169
$ 175
Number of TDR accounts 1,553
—
1,887
3,440



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

Three Months Ended March 31, 2016
Pre-modification TDR net finance receivables	$	9	$	1	$	4	$	14
Post-modification TDR net finance receivables:
Rate reduction	$	5	$	1	$	3	$	9
Other (b)	3		—		1		4
Total post-modification TDR net finance receivables	$	8	$	1	$	4	$	13
Number of TDR accounts	1,782		157		89		2,028

Three Months Ended March 31, 2015
Pre-modification TDR net finance receivables	$	9	$	2	$	4	$	15
Post-modification TDR net finance receivables:
Rate reduction	$	5	$	2	$	4	$	11
Other (b)	3		—		—		3
Total post-modification TDR net finance receivables	$	8	$	2	$	4	$	14
Number of TDR accounts	1,854		195		78		2,127


(a)	TDR ~~real estate loan net finance receivables for the three and six months ended June 30, 2015 include $2 million and $3 million, respectively, of pre-modification TDR net~~ finance receivables held for ~~sale.~~sale included in the table above were as follows:



(dollars in millions)	Personal Loans		Real Estate Loans		Total

Three Months Ended March 31, 2016
Pre-modification TDR net finance receivables *	$	—	$	1	$	1
Post-modification TDR net finance receivables *	$	—	$	1	$	1
Number of TDR accounts	128		19		147

Three Months Ended March 31, 2015
Pre-modification TDR net finance receivables **	$	—	$	—	$	—
Post-modification TDR net finance receivables **	$	—	$	—	$	—
Number of TDR accounts	—		9		9


*	Pre- and post-modification TDR personal loans held for sale for the three months ended March 31, 2016 were less than $1 million and, therefore, are not quantified in the table above.


**	Pre- and post-modification TDR real estate loans held for sale for the three months ended March 31, 2015 were less than $1 million and, therefore, are not quantified in the table above.


(b)	~~TDR real estate loan net finance receivables for the three and six months ended June 30, 2015~~“Other” modifications primarily include ~~$2 million and $3 million, respectively,~~forgiveness of ~~post-modification TDR net finance receivables held for sale.~~principal or interest.


~~(c)~~	~~Number of new TDR real estate loan accounts for the three and six months ended June 30, 2015 includes 35 and 44, respectively, of new TDR accounts that were held for sale.~~

~~Table of Contents~~

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

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

Three Months Ended June 30, 2015

TDR net finance receivables (a) (b) (c) $ 2
$ 1
$ —
$ 3
Number of TDR accounts (b) 456
86
8
550

Three Months Ended June 30, 2014

TDR net finance receivables (a) (c) $ —
$ —
$ 13
$ 13
Number of TDR accounts 17
—
205
222

Six Months Ended June 30, 2015

TDR net finance receivables (a) (b) $ 2
$ 1
$ 1
$ 4
Number of TDR accounts (b) 513
96
26
635

Six Months Ended June 30, 2014

TDR net finance receivables (a) (c) $ —
$ —
$ 29
$ 29
Number of TDR accounts 32
—
434
466



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

Three Months Ended March 31, 2016
TDR net finance receivables (b) (c)	$	1	$	—	$	1	$	2
Number of TDR accounts	355		19		20		394

Three Months Ended March 31, 2015
TDR net finance receivables (b) (d)	$	—	$	—	$	1	$	1
Number of TDR accounts	57		10		18		85


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



(dollars in millions)	Real Estate Loans

Three Months Ended March 31, 2016
TDR net finance receivables	$	1
Number of TDR accounts	9

Three Months Ended March 31, 2015
TDR net finance receivables *	$	—
Number of TDR accounts	9


*	TDR real estate loans held for sale for the three months ended March 31, 2015 that defaulted during the previous 12-month period were less than $1 million and, therefore, are not quantified in the table above.


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


~~(b)~~	Includes 4 TDR real estate loan accounts totaling less than $1 million that were held for sale for the three months ended June 30, 2015 and 13 TDR real estate loan accounts totaling $1 million that were held for sale for the six months ended June 30, 2015.


(c)	TDR ~~personal loans for the three and six months ended June 30, 2014 and TDR real estate~~SpringCastle Portfolio loans for the three months ended ~~June 30, 2015~~March 31, 2016 that defaulted during the previous ~~12 month~~12-month period were less than $1 million and, therefore, are not quantified in the combined table above.


(d)	TDR personal loans and SpringCastle Portfolio loans for the three months ended March 31, 2015 that defaulted during the previous 12-month period were less than $1 million and, therefore, are not quantified in the combined table above.

~~Table of Contents~~

5. Allowance for Finance Receivable Losses

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


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

Three Months Ended June 30, 2015
Three Months Ended March 31, 2016
Balance at beginning of period																$	173		$	4		$	41		$	1		$	219
Provision for finance receivable losses																73			18			3			—			94
Charge-offs																(89		)	(21		)	(2		)	(1		)	(113		)
Recoveries																11			3			1			—			15
Other *																—			(4		)	—			—			(4		)
Balance at end of period																$	168		$	—		$	43		$	—		$	211

Three Months Ended March 31, 2015
Balance at beginning of period	$	132		$	3		$	39		$	1		$	175		$	130		$	3		$	40		$	1		$	174
Provision for finance receivable losses	55			23			—			1			79			55			27			4			—			86
Charge-offs	(58		)	(26		)	(5		)	(1		)	(90		)	(61		)	(30		)	(6		)	(1		)	(98		)
Recoveries	10			3			1			—			14			8			3			1			1			13
Balance at end of period	$	139		$	3		$	35		$	1		$	178		$	132		$	3		$	39		$	1		$	175

Three Months Ended June 30, 2014

Balance at beginning of period	$	101		$	—		$	260		$	3		$	364
Provision for finance receivable losses	45			—			29			—			74
Charge-offs	(47		)	—			(26		)	(2		)	(75		)
Recoveries	7			—			1			—			8
Reduction in the carrying value of real estate loans transferred to finance receivables held for sale (a)	—			—			(5		)	—			(5		)
Balance at end of period	$	106		$	—		$	259		$	1		$	366

Six Months Ended June 30, 2015

Balance at beginning of period	$	130		$	3		$	40		$	1		$	174
Provision for finance receivable losses	110			50			4			1			165
Charge-offs	(119		)	(56		)	(11		)	(2		)	(188		)
Recoveries	18			6			2			1			27
Balance at end of period	$	139		$	3		$	35		$	1		$	178

Six Months Ended June 30, 2014

Balance at beginning of period	$	94		$	—		$	236		$	2		$	332
Provision for finance receivable losses	92			—			87			2			181
Charge-offs	(91		)	—			(54		)	(3		)	(148		)
Recoveries (b)	11			—			5			—			16
Reduction in the carrying value of real estate loans transferred to finance receivables held for sale (a)	—			—			(15		)	—			(15		)
Balance at end of period	$	106		$	—		$	259		$	1		$	366

~~(a)~~*

~~During the three and six months ended June 30, 2014, we reduced the carrying value of certain real estate loans to $451 million and $1.3 billion, respectively, as a result~~Consists of the ~~transfer~~elimination of ~~these loans from~~allowance for finance ~~receivables held for investment to finance receivables held for sale~~receivable losses due to ~~management’s intent to no longer hold these finance receivables for~~ the ~~foreseeable future.~~


~~(b)~~	~~Recoveries during the six months ended June 30, 2014 included $2 million of real estate loan recoveries resulting from a~~ sale of ~~previously charged-off real estate loans~~the SpringCastle Portfolio on March 31, 2016, in ~~March~~connection with the sale of ~~2014.~~our equity interest in the SpringCastle Joint Venture. See Note 2 for further information on this sale.

Included in the allowance for finance receivable losses are allowances associated with securitizations that totaled ~~$120~~$113 million at ~~June 30, 2015~~March 31, 2016 and ~~$72~~$128 million at December 31, ~~2014.~~2015. See Note 11 for further discussion regarding our securitization transactions.

~~Table of Contents~~

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


(dollars in millions)	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2015		2014		2015		2014		2016		2015

Charged-off against provision for finance receivable losses:
SCP Loans	$	6	$	—	$	13	$	—	$	4	$	7
FA Loans gross charge-offs *	1		7		1		13


*	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.

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


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

June 30, 2015

Allowance for finance receivable losses for finance receivables:
Collectively evaluated for impairment	$	132	$	—	$	—	$	1	$	133
Acquired with deteriorated credit quality (purchased credit impaired finance receivables)	—		—		4		—		4
Individually evaluated for impairment (TDR finance receivables)	7		3		31		—		41
Total	$	139	$	3	$	35	$	1	$	178

Finance receivables:
Collectively evaluated for impairment	$	4,225	$	1,473	$	346	$	33	$	6,077
Purchased credit impaired finance receivables	—		279		29		—		308
TDR finance receivables	27		12		198		—		237
Total	$	4,252	$	1,764	$	573	$	33	$	6,622

December 31, 2014

March 31, 2016
Allowance for finance receivable losses for finance receivables:
Collectively evaluated for impairment	$	129	$	—	$	3	$	1	$	133	$	157		$	—		$	—		$	—		$	157
Purchased credit impaired finance receivables	—		—		5		—		5		—			—			8			—			8
TDR finance receivables	1		3		32		—		36		11			—			35			—			46
Total	$	130	$	3	$	40	$	1	$	174	$	168		$	—		$	43		$	—		$	211

Finance receivables:
Collectively evaluated for impairment	$	3,778	$	1,629	$	490	$	48	$	5,945	$	4,347		$	—		$	366		$	19		$	4,732
Purchased credit impaired finance receivables	—		340		30		—		370		—			—			27			—			27
TDR finance receivables	22		10		105		—		137		31			—			110			—			141
Total	$	3,800	$	1,979	$	625	$	48	$	6,452	$	4,378		$	—		$	503		$	19		$	4,900

Allowance for finance receivable losses as a percentage of finance receivables											3.83		%	—		%	8.52		%	2.91		%	4.31		%

December 31, 2015
Allowance for finance receivable losses for finance receivables:
Collectively evaluated for impairment											$	165		$	—		$	—		$	1		$	166
Purchased credit impaired finance receivables											—			—			7			—			7
TDR finance receivables											8			4			34			—			46
Total											$	173		$	4		$	41		$	1		$	219

Finance receivables:
Collectively evaluated for impairment											$	4,271		$	1,340		$	387		$	23		$	6,021
Purchased credit impaired finance receivables											—			223			28			—			251
TDR finance receivables											29			13			109			—			151
Total											$	4,300		$	1,576		$	524		$	23		$	6,423

Allowance for finance receivable losses as a percentage of finance receivables											4.01		%	0.27		%	7.93		%	3.45		%	3.41		%

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6. Finance Receivables Held for Sale

We report finance receivables held for sale of ~~$193~~$776 million at ~~June 30, 2015~~March 31, 2016 and ~~$205~~$796 million at December 31, ~~2014,~~2015, which are carried at the lower of cost or fair ~~value and secured by first mortgages.~~value. At ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, finance receivables held for sale consisted of personal loans of $606 million and $617 million, respectively, and real estate loans of $170 million and $179 million, respectively. On March 31, 2016, we marked our real estate loans held for sale to fair value and recorded impairments of $2 million in other revenues. See Note 17 for further information on the impairments of our real estate loans held for sale. At December 31, 2015, 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 condensed consolidated statements of operations, which totaled $5$47 million and $9$4 million for the three ~~and six~~ months ended ~~June 30,~~March 31, 2016 and 2015, ~~respectively, compared to $3 million and $7 million for the three and six months ended June 30, 2014,~~ respectively.

~~We did not have any transfer activity to or from finance receivables held for sale during the six months ended June 30, 2015.~~

During ~~the three and six months ended June 30, 2014,~~March of 2016, we transferred ~~real estate~~$1.5 billion of loans ~~totaling $451 million and $1.3 billion, respectively,~~of the SpringCastle Portfolio (after deducting allowance for finance receivable losses) from held for investment to held for sale due to management’s intent to no longer hold these finance

receivables for the foreseeable future. ~~During the three and six months ended June 30, 2014, we~~We simultaneously sold ~~the~~our interests of these finance receivables held for sale ~~totaling $444 million and $1.3 billion, respectively,~~on March 31, 2016 and recorded a net ~~gains~~gain in other revenues at the time of ~~$35 million and $90 million, respectively.~~sale of $229 million.

We did not have any other material transfer activity to or from finance receivables held for sale during each of the three months ended March 31, 2016 and 2015.

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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 millions)	Cost/ Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value		Cost/ Amortized Cost		Unrealized Gains		Unrealized Losses			Fair Value

June 30, 2015

March 31, 2016
Fixed maturity available-for-sale securities:
Bonds:
U.S. government and government sponsored entities	$	49	$	1	$	—		$	50	$	76	$	1	$	—		$	77
Obligations of states, municipalities, and political subdivisions	87		—		—			87		91		1		—			92
Certificates of deposit and commercial paper (a)	1		—		—			1
Corporate debt	261		5		(3		)	263		310		4		(7		)	307
Mortgage-backed, asset-backed, and collateralized:
Residential mortgage-backed securities (“RMBS”)	86		1		(1		)	86		70		—		—			70
Commercial mortgage-backed securities (“CMBS”)	43		—		—			43		47		—		—			47
Collateralized debt obligations (“CDO”)/Asset-backed securities (“ABS”)	48		—		—			48		18		—		—			18
Total	575		7		(4		)	578
Total bonds										612		6		(7		)	611
Preferred stock	7		—		—			7		6		—		(1		)	5
Other long-term investments	1		—		—			1		1		—		—			1
Total (b)	$	583	$	7	$	(4	)	$	586
Total *										$	619	$	6	$	(8	)	$	617

December 31, 2014

December 31, 2015
Fixed maturity available-for-sale securities:
Bonds:
U.S. government and government sponsored entities	$	61	$	3	$	—		$	64	$	83	$	—	$	(1	)	$	82
Obligations of states, municipalities, and political subdivisions	99		3		—			102		88		1		—			89
Certificates of deposit and commercial paper (a)	1		—		—			1
Corporate debt	256		12		(1		)	267		278		2		(13		)	267
Mortgage-backed, asset-backed, and collateralized:
RMBS	71		2		—			73		74		—		—			74
CMBS	25		—		(1		)	24		44		—		—			44
CDO/ABS	61		—		—			61		30		—		(1		)	29
Total	574		20		(2		)	592
Total bonds										597		3		(15		)	585
Preferred stock	7		—		—			7		6		—		(1		)	5
Other long-term investments	1		—		—			1		1		—		—			1
Total (b)	$	582	$	20	$	(2	)	$	600
Total *										$	604	$	3	$	(16	)	$	591


~~(a)~~	~~Includes certificates of deposit totaling $1 million pledged as collateral, primarily to support bank lines of credit at June 30, 2015 and December 31, 2014.~~


~~(b)~~*	Excludes an immaterial interest in a limited partnership that we account for using the equity method and Federal Home Loan Bank common stock of $1 million at ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, which is classified as a restricted investment and carried at cost.

As of ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, we ~~had no~~did not recognize any other-than-temporary impairment non-credit losses on 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 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 millions)	Fair Value		Unrealized Losses *			Fair Value		Unrealized Losses *		Fair Value		Unrealized Losses			Fair Value		Unrealized Losses *			Fair Value		Unrealized Losses *			Fair Value		Unrealized Losses

June 30, 2015

March 31, 2016
Bonds:
U.S. government and government sponsored entities	$	11	$	—		$	1	$	—	$	12	$	—		$	30	$	—		$	—	$	—		$	30	$	—
Obligations of states, municipalities, and political subdivisions	27		—			6		—		33		—			19		—			3		—			22		—
Corporate debt	91		(3		)	—		—		91		(3		)	85		(7		)	6		—			91		(7		)
RMBS	42		(1		)	—		—		42		(1		)	16		—			—		—			16		—
CMBS	21		—			3		—		24		—			25		—			5		—			30		—
CDO/ABS	22		—			—		—		22		—			7		—			—		—			7		—
Total	214		(4		)	10		—		224		(4		)
Total bonds															182		(7		)	14		—			196		(7		)
Preferred stock	7		—			—		—		7		—			—		—			6		(1		)	6		(1		)
Other long-term investments	1		—			—		—		1		—			1		—			—		—			1		—
Total	$	222	$	(4	)	$	10	$	—	$	232	$	(4	)	$	183	$	(7	)	$	20	$	(1	)	$	203	$	(8	)

December 31, 2014

December 31, 2015
Bonds:
U.S. government and government sponsored entities	$	—	$	—		$	1	$	—	$	1	$	—		$	76	$	(1	)	$	—	$	—		$	76	$	(1	)
Obligations of states, municipalities, and political subdivisions	27		—			1		—		28		—			36		—			2		—			38		—
Corporate debt	36		(1		)	6		—		42		(1		)	189		(13		)	7		—			196		(13		)
RMBS	9		—			—		—		9		—			68		—			—		—			68		—
CMBS	16		(1		)	2		—		18		(1		)	36		—			5		—			41		—
CDO/ABS	46		—			—		—		46		—			29		(1		)	—		—			29		(1		)
Total bonds															434		(15		)	14		—			448		(15		)
Preferred stock															—		—			6		(1		)	6		(1		)
Other long-term investments															1		—			—		—			1		—
Total	134		(2		)	10		—		144		(2		)	$	435	$	(15	)	$	20	$	(1	)	$	455	$	(16	)
Preferred stock	6		—			—		—		6		—
Total	$	140	$	(2	)	$	10	$	—	$	150	$	(2	)


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

We do not consider the above unrealized losses to be credit-related, as these unrealized losses primarily relate to changes in interest rates and market spreads subsequent to purchase. Additionally, at March 31, 2016, we have no plans to sell any investment securities with unrealized losses, and we believe it is more likely than not that we would not be required to sell such investment securities before recovery of their amortized cost.

We continue to monitor unrealized loss positions for potential impairments. During the ~~six~~three months ended ~~June 30,~~March 31, 2016 and 2015, ~~and 2014,~~ we did not recognize any other-than-temporary impairment credit ~~loss write-downs to~~losses on available-for-sale securities in investment revenues.

During the three ~~and six~~ months ended ~~June 30,~~March 31, 2016 and 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.

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


(dollars in millions)	Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
(dollars in millions)	2015		2014		2015			2014		2016		2015

Fair value	$	130	$	47	$	204		$	98
Proceeds from sales and redemptions										$	70	$	74

Realized gains	$	4	$	—	$	11		$	2	$	1	$	7
Realized losses	—		—		(1		)	—		—		(1		)
Net realized gains	$	4	$	—	$	10		$	2	$	1	$	6

Contractual maturities of fixed-maturity available-for-sale securities at ~~June 30, 2015~~March 31, 2016 were as follows:


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

Fixed maturities, excluding mortgage-backed, asset-backed, and collateralized securities:
Due in 1 year or less	$	45	$	45	$	83	$	83
Due after 1 year through 5 years	146		145		214		213
Due after 5 years through 10 years	86		85		61		60
Due after 10 years	124		123		118		121
Mortgage-backed, asset-backed, and collateralized securities	177		177		135		135
Total	$	578	$	575	$	611	$	612

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.

The fair value of bonds on deposit with insurance regulatory authorities totaled $11 million ~~and $12 million~~ at ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014, respectively.~~2015.

TRADING AND OTHER SECURITIES

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

(dollars in millions) June 30,
2015 December 31,
2014

Fixed maturity trading securities:

Bonds:

U.S. government and government sponsored entities $ 841
$ 302
Obligations of states, municipalities, and political subdivisions 3
14
Certificates of deposit and commercial paper —
238
Non-U.S. government and government sponsored entities —
20
Corporate debt 484
1,056
Mortgage-backed, asset-backed, and collateralized:

RMBS 13
35
CMBS 118
149
CDO/ABS 225
507
Total $ 1,684
$ 2,321



(dollars in millions)	March 31, 2016		December 31, 2015

Fixed maturity trading and other securities:
Bonds:
Corporate debt	$	1	$	10
Mortgage-backed, asset-backed, and collateralized:
CMBS	2		2
Total *	$	3	$	12


*	The fair value of other securities totaled $3 million at March 31, 2016 and $2 million at December 31, 2015.

~~Table of Contents~~

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


(dollars in millions)	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
(dollars in millions)	2015			2014		2015			2014		2016 *		2015

Net unrealized gains on trading securities held at period end	$	1		$	1	$	4		$	1
Net realized gains on trading securities sold or redeemed	(1		)	—		(1		)	—
Net unrealized gains (losses) on trading and other securities held at period end											$	—	$	3
Net realized gains (losses) on trading and other securities sold or redeemed											—		—
Total	$	—		$	1	$	3		$	1	$	—	$	3


*	Net unrealized and realized gains (losses) on trading and other securities were less than $1 million for the three months ended March 31, 2016 and, therefore, are not quantified in the table above.

8. Transactions with Affiliates of Fortress ~~or AIG~~

SUBSERVICING 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 the three months ended ~~June 30, 2015,~~March 31, 2016 and ~~$1 million for the six months ended June 30, 2015, compared to $2 million and $4 million for the three and six months ended June 30, 2014, respectively.~~

As a result of the sales of our real estate loans during 2014 (some of which were serviced by Nationstar) and the sale of certain mortgage servicing rights in 2014, our exposure to these affiliated services is reduced.2015.

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 were under $1 million for the three months ended ~~June 30, 2015~~March 31, 2016 and ~~2014 and $1 million for the six months ended June 30, 2015 and 2014.~~2015.

~~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 $44 million at June 30, 2015 and December 31, 2014.

~~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 June 30, 2015 and 2014 and $1 million for the six months ended June 30, 2015 and 2014.

SALE OF EQUITY INTEREST IN SPRINGCASTLE JOINT VENTURE

~~Certain subsidiaries of New Residential Investment Corp. (“NRZ”), own a 30%~~On March 31, 2016, we sold our 47% equity interest in the ~~joint venture that acquired~~SpringCastle Joint Venture, which owns the SpringCastle Portfolio, ~~in which we own a 47% equity interest.~~to certain subsidiaries of NRZ and Blackstone. See Note 2 for further information on this sale. NRZ is managed by an affiliate of Fortress.

~~THIRD STREET DISPOSITION~~

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 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.

~~MSR SALE~~

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

~~Table of Contents~~

2011 through 2013 to Nationstar for a purchase price of $39 million (the “MSR Sale”). From the closing of the MSR Sale on August 29, 2014, until the servicing transfer on 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 our interim servicing fees totaled $1 million. In May of 2015, Nationstar paid off the remaining balance of $1 million of this receivable. Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar.

9. Related Party Transactions

AFFILIATE LENDING

Notes Receivable from Parent and Affiliates

Note Receivable from ~~Parent~~

SFI. SFC’s note receivable from ~~parent~~SFI 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 ~~2015~~2016 and does not expect to demand payment from SFI in ~~2015.~~2016. The note receivable from ~~parent~~SFI totaled ~~$302~~$391 million at ~~June 30, 2015~~March 31, 2016 and ~~$251~~$389 million at December 31, ~~2014.~~2015. Interest receivable on this note totaled $2 million at March 31, 2016 and $1 million at ~~June 30, 2015 and was immaterial at~~ December 31, ~~2014.~~2015. The interest rate for the ~~unpaid principal balance~~UPB is the ~~prime rate.~~lender’s cost of funds rate, which was 5.39% at March 31, 2016. Interest revenue on the note receivable from SFI totaled $4$5 million and $6$2 million, for the three ~~and six~~ months ended ~~June 30,~~March 31, 2016 and 2015, respectively, ~~compared~~which we report in other revenues.

Independence Demand Note. On November 12, 2015, in connection with the closing of the OneMain Acquisition, Springleaf Financial Cash Services, Inc. (“CSI”), SFC’s wholly owned subsidiary, entered into a revolving demand note with Independence (the “Independence Demand Note”), whereby CSI agreed to ~~$2 million and $3 million~~make advances to Independence from time to time, with an aggregate amount outstanding not to exceed $3.55 billion. Under the Independence Demand Note, Independence is required to use the proceeds of any advance either (i) to fund a portion of the purchase price for the ~~three~~OneMain Acquisition or (ii) for general corporate purposes. The note is payable in full on December 31, 2019, and ~~six~~CSI may demand payment at any time prior to December 31, 2019. Independence may repay the note in whole or in part at any time without premium or penalty. The interest rate for the UPB is the lender’s cost of funds rate, which was 5.39% at March 31, 2016. On November 12, 2015, Independence borrowed $3.4 billion under the Independence Demand Note.

At March 31, 2016, the note receivable from Independence totaled $3.4 billion, which included $15 million of interest due to CSI. Interest revenue on the note receivable from Independence totaled $46 million during the three months ended ~~June 30, 2014, respectively.~~March 31, 2016, which we report in other revenues.

OneMain Demand Note. On November 15, 2015, in connection with the closing of the OneMain Acquisition, SFC entered into a revolving demand note (the “OneMain Demand Note”) with OMFH, whereby SFC agreed to make advances to OMFH from time to time, with an aggregate amount outstanding not to exceed $500 million. Under the OneMain Demand Note, OMFH is required to use the proceeds of any advance either (i) exclusively to finance the purchase, origination, pooling, funding or carrying of receivables by OMFH or any of its restricted subsidiaries or (ii) for general corporate purposes. The note is payable in full on December 31, 2024, and SFC may demand payment with five days prior notice. OMFH may repay the note in whole or in part at any time without premium or penalty. The interest rate for the UPB is the lender’s cost of funds rate. At March 31, 2016, no amounts were drawn under the note.

Receivables from Parent and Affiliates

At ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, receivables from parent and affiliates totaled ~~$13~~$28 million and ~~$12~~$9 million, 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 totaled $4 million at June 30, 2015 and at December 31, 2014. Receivables from parent and affiliates also included (i) interest receivable on SFC’s note receivable from SFI previously discussed in this ~~Note.~~Note, (ii) taxes paid by SFC for all entities under the tax sharing agreement, and (iii) expenses paid by a subsidiary of SFC for the benefit of parent and affiliates. Receivables from parent and affiliates at ~~June 30, 2015 and~~ December 31, ~~2014~~2015 are presented net of a payable to SFI of ~~$18 million~~ ~~and $43 million, respectively.~~$12 million. Excluding this payable, receivables from parent and affiliates totaled ~~$30 million~~ ~~at June 30, 2015 and $54~~$21 million at December 31, ~~2014.~~2015.

Note Payable to Affiliate

On December 1, 2015, in connection with the closing of the OneMain Acquisition, OMFH entered into a revolving demand note with SFC, whereby OMFH agreed to make advances to SFC from time to time, with an aggregate amount outstanding not to exceed $500 million. Under the note, SFC is required to use the proceeds of any advance for general corporate purposes. The note is payable in full on December 31, 2024, and OMFH may demand payment with five days prior notice. SFC may repay the note in whole or in part at any time without premium or penalty. The interest rate for the UPB is the lender’s cost of funds rate, which was 5.39% at March 31, 2016. On January 22, 2016, SFC drew $370 million under the note.

At March 31, 2016, the note payable to OMFH totaled $374 million, which included interest of $2 million due to OMFH. Interest expense on the note payable to OMFH totaled $4 million for the three months ended March 31, 2016. Subsequently, we repaid the note in full on May 2, 2016.

Payables to Parent and Affiliates

At ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, payables to parent and affiliates totaled ~~$38~~$34 million and ~~$48~~$24 million, respectively. ~~SFC’s payable to parent totaled $27 million and $17 million at June 30, 2015~~At March 31, 2016 and December 31, ~~2014, respectively, primarily due to payments made by SFI for the benefit of SFC. At June 30,~~ 2015, ~~and December 31, 2014,~~ Springleaf Finance Management Corporation (“SFMC”), a subsidiary of SFC, had net payables of $9$33 million and $19 million, respectively, to Springleaf General Services Corporation (“SGSC”), a subsidiary of SFI, related to the intercompany agreements further discussed below in this Note. At ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, SFMC also had a payable of $1 million to Springleaf Consumer Loan, Inc. for internet lending referral fees charged to the branch network.

Prior to the SpringCastle Interests Sale, SFI provides funding for SAC’s operations through an intercompany demand note, 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 June 30, 2015 and December 31, 2014, the note payable to SFI totaled $1 million and was reported in other liabilities. Interest expense on the note payable to SFI for the three and six months ended June 30, 2015 was immaterial.

~~SFI provides~~provided servicing of the SpringCastle Portfolio through a master servicing agreement with SpringCastle Holdings, ~~LLC.~~LLC, a subsidiary of SFC. At ~~June 30, 2015 and~~ December 31, ~~2014,~~2015, SpringCastle Holdings LLC’s payable to SFI totaled $4 ~~million and $10 million, respectively.~~

~~CAPITAL CONTRIBUTIONS~~

~~During January~~million. Subsequent to the SpringCastle Interests Sale, SFI continues to act as the servicer of ~~2014, SFC received a capital contribution from SFI of $11 million to satisfy an interest payment required by SFC’s debenture due in January of 2014.~~the SpringCastle Portfolio for the SpringCastle Funding Trust.

INTERCOMPANY AGREEMENTS

On December 24, 2012, 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

~~Table of Contents~~

relating to these agreements totaled $933 million at ~~June 30, 2015~~March 31, 2016 and $19 million at December 31, ~~2014.~~2015.

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~~

(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 six~~ months ended ~~June 30,~~March 31, 2016 and 2015, SFMC recorded ~~$47~~$67 million and ~~$101~~$54 million, respectively, of service fee expenses, which are included in other operating ~~expenses, compared to $50 million and $95 million for the three and six months ended June 30, 2014.~~expenses.

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 six~~ months ended ~~June 30,~~March 31, 2016 and 2015, SFMC recorded $2$1 million ~~and $3 million, respectively,~~ of license fees, which are included as a contra expense to other operating ~~expenses, compared to $2 million and $3 million for the three and six months ended June 30, 2014.~~expenses.

Building Lease

The building lease agreement provides that SFMC will lease six of its buildings to SGSC for an annual rental amount of $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 six~~ months ended ~~June 30,~~March 31, 2016 and 2015, SFMC recorded $1 million ~~and $2 million, respectively,~~ of rent charged to SGSC, which are included as a contra expense to other operating ~~expenses, compared to $1 million and $2 million for the three and six months ended June 30, 2014.~~expenses.

10. Long-term Debt

Principal maturities of long-term debt (excluding projected ~~securitization~~ repayments on securitizations and revolving conduit facilities by period) by type of debt at ~~June 30, 2015~~March 31, 2016 were as follows:


															Senior Debt
(dollars in millions)	Retail Notes		Medium Term Notes			Securitizations			Junior Subordinated Debt			Total			Securitizations			Revolving Conduit Facilities		Medium Term Notes			Junior Subordinated Debt			Total

Interest rates (a)	7.00%-7.50%		5.25%-8.25%			2.41%-6.82%			6.00		%				2.41% - 6.50%			1.92% - 2.77%		5.25% - 8.25%			6.00		%

Third quarter 2015	$	24	$	—		$	—		$	—		$	24
Fourth quarter 2015	—		750			—			—			750
First quarter 2016	—		—			—			—			—
Second quarter 2016	—		—			—			—			—			$	—		$	—	$	—		$	—		$	—
Remainder of 2016	—		375			—			—			375
2017	—		1,902			—			—			1,902
Third quarter 2016															—			—		375			—			375
Fourth quarter 2016															—			—		—			—			—
First quarter 2017															—			—		—			—			—
Remainder of 2017															—			—		1,889			—			1,889
2018	—		—			—			—			—			—			—		—			—			—
2019	—		700			—			—			700			—			—		700			—			700
2020-2067	—		1,250			—			350			1,600
2020															—			—		300			—			300
2021-2067															—			—		950			350			1,300
Securitizations (b)	—		—			4,919			—			4,919			2,012			—		—			—			2,012
Revolving conduit facilities (b)															—			1,098		—			—			1,098
Total principal maturities	$	24	$	4,977		$	4,919		$	350		$	10,270		$	2,012		$	1,098	$	4,214		$	350		$	7,674

Total carrying amount (c)	$	23	$	4,577		$	4,904		$	172		$	9,676		$	2,003		$	1,098	$	3,914		$	172		$	7,187
Debt issuance costs (d)	$	—	$	(13	)	$	(19	)	$	—		$	(32	)	$	(9	)	$	—	$	(12	)	$	—		$	(21	)

~~Table of Contents~~


(a)	The interest rates shown are the range of contractual rates in effect at ~~June 30, 2015.~~March 31, 2016.


(b)	Securitizations and borrowings under revolving conduit facilities are not included in above maturities by period due to their variable monthly repayments. See Note 11 for further information on our long-term debt associated with ~~securitizations.~~securitizations and revolving conduit facilities.

(c)

The ~~net~~ carrying amount of our long-term debt associated with certain securitizations that were either ~~(1)~~(i) issued at a premium or discount or ~~(2)~~(ii) revalued at a premium or discount based on its fair value at the time of the Fortress Acquisition or ~~(3)~~(iii) 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)	AsDebt issuance costs are reported as a ~~result of our early adoption of ASU 2015-03, we reclassified $32 million~~direct deduction from long-term debt, with the exception of debt issuance costs ~~from~~associated with our revolving conduit facilities, which are reported in other assets ~~to long-term debt.~~and are excluded from the table above.

GUARANTY AGREEMENTS

5.25% SFC Notes

On December 3, 2014, ~~SHI~~OMH entered into an Indenture and First Supplemental Indenture pursuant to which it agreed to fully and unconditionally guarantee, on a senior basis, the payments of principal, premium (if any) and interest on $700 million of 5.25% of Senior Notes due ~~2019.~~2019 issued by SFC (the “5.25% SFC Notes”). As of ~~June 30, 2015, approximately~~March 31, 2016, $700 million aggregate principal amount of ~~senior notes~~the 5.25% SFC Notes were outstanding.

SFC Notes

On December 30, 2013, ~~SHI~~OMH 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 million aggregate principal amount of a junior subordinated debenture ~~(collectively, the “notes”)~~ on a junior subordinated basis issued by ~~SFC.~~SFC (collectively, the “SFC Notes”). The ~~notes consist~~SFC Notes consisted of the following: 8.25% Senior Notes due 2023; 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.). The 60-year junior subordinated debenture underlies the trust preferred securities sold by a trust sponsored by SFC. On December 30, 2013, ~~SHI~~OMH 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 ~~June 30, 2015,~~March 31, 2016, approximately ~~$5.0~~$4.2 billion aggregate principal amount of ~~senior notes,~~the SFC Notes, including ~~$3.1~~$2.3 billion aggregate principal amount of senior notes under the 1999 Indenture, and $350 million aggregate principal amount of a junior subordinated debenture were outstanding.

The OMH guarantees of SFC’s long-term debt discussed above are subject to customary release provisions.

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 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~~note 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 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

~~Table~~ ownership of ~~Contents~~

~~retained interests include~~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 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.

We parenthetically disclose on our consolidated balance sheets the VIE’s assets that can only be used to settle the VIE’s obligations and liabilities if its creditors have no recourse against the primary beneficiary’s general credit. The carrying amounts of consolidated VIE assets and liabilities associated with our securitization trusts were as follows:

(dollars in millions) June 30,
2015 December 31,
2014

Assets

Finance receivables:

Personal loans $ 3,059
$ 1,853
SpringCastle Portfolio 1,764
1,979
Allowance for finance receivable losses 120
72
Restricted cash and cash equivalents 320
210

Liabilities

Long-term debt * $ 4,904
$ 3,630


*	As a result of our early adoption of ASU 2015-03, we reclassified $19 million and $14 million of debt issuance costs related to our long-term debt associated with our securitizations as of June 30, 2015 and December 31, 2014, respectively, from other assets to long-term debt.

~~Amendment to Sumner Brook 2013-VFN1 Securitization~~



(dollars in millions)	March 31, 2016		December 31, 2015

Assets
Cash and cash equivalents	$	1	$	7
Finance receivables:
Personal loans	3,592		3,621
SpringCastle Portfolio	—		1,576
Allowance for finance receivable losses	113		128
Finance receivables held for sale	—		435
Restricted cash and cash equivalents	212		282
Other assets	75		48

Liabilities
Long-term debt	$	3,101	$	5,513
Other liabilities	6		9

Consumer Loan Securitizations

Call of 2013-B Notes. On February 16, 2016, Sixteenth Street Funding LLC (“Sixteenth Street”), a wholly owned subsidiary of SFC, exercised its right to redeem the asset backed notes issued by the Springleaf Funding Trust 2013-B on June 19, 2013 (the “2013-B Notes”). To redeem the 2013-B Notes, Sixteenth Street paid a redemption price of $371 million, which excluded $30 million for the Class C and Class D Notes owned by Sixteenth Street on February 16, 2016, the date of the optional redemption. The outstanding principal balance of the 2013-B Notes was $400 million on the date of the optional redemption.

Conduit Facilities

Springleaf 2013-VFN1 Trust. On January ~~16, 2015,~~15, 2016, we drew $298 million under the variable funding notes issued by the Springleaf Funding Trust 2013-VFN1 (the “Springleaf 2013-VFN1 Trust”).

On January 21, 2016, we amended the note purchase agreement with the Springleaf 2013-VFN1 Trust to (i) increase the maximum principal balance from $350 million to $850 million and (ii) extend the revolving period ending in April 2017 to January 2018, which may be extended to January 2019, subject to satisfaction of customary conditions precedent. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in the 36^thmonth following the end of the revolving period. As of March 31, 2016, $298 million was outstanding under the notes.

Mill River 2015-VFN1 Trust. On January 15, 2016, we repaid $300 million on the variable funding notes issued by the Mill River Funding Trust 2015-VFN1 (the “Mill River 2015-VFN1 Trust”).

On January 21, 2016, we amended the note purchase agreement with the Mill River 2015-VFN1 Trust to decrease the maximum principal balance from $400 million to $100 million. As of March 31, 2016, $100 million was outstanding under the notes.

Sumner Brook Trust 2013-VFN1. On February 16, 2016, Sumner Brook Funding Trust 2013-VFN1 (the “Sumner Brook 2013-VFN1 Trust”), a wholly owned special purpose vehicle of SFC, repaid the entire $100 million outstanding principal balance of its variable funding notes. As of March 31, 2016, no amounts were outstanding under the notes.

Midbrook 2013-VFN1 Trust. On February 24, 2016, we amended the note purchase agreement with the Midbrook Funding Trust 2013-VFN1 to (i) extend the revolving period ending in June 2016 to February 2018 and (ii) decrease the maximum principal balance from $300 million to $250 million on February 24, 2017. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in the 36^thmonth following the end of the revolving period. As of March 31, 2016, no amounts were outstanding under the notes.

Whitford Brook 2014-VFN1 Trust. On February 24, 2016, we amended the note purchase agreement with the Whitford Brook Funding Trust 2014-VFN1 to extend the ~~two-year~~ revolving period ending ~~December of 2015~~in June 2017 to ~~a three-year revolving period ending January of~~June 2018. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in ~~full in August~~the 12^thmonth following the end of ~~2024. The maximum principal balance~~the revolving period. As of ~~variable funding notes that can be issued remained at $350 million. At June 30, 2015, no amounts were drawn~~March 31, 2016, $200 million was outstanding under the notes.

~~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 notes issued by Springleaf~~First Avenue 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~~

LLC. 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. At June 30, 2015, no amounts were drawn under the notes.

~~Table of Contents~~

~~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 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,~~28, 2016, we amended the note purchase agreement with ~~Springleaf~~the First Avenue Funding ~~Trust 2013-VFN1~~LLC (“First Avenue”) to ~~among other things,~~ extend the ~~original two-year~~ revolving period ending ~~October of 2015~~in December 2017 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.March 2018. Following the revolving period, the principal amount of the notes, if any, will be reduced as cash payments are received on the underlying personal loans and will be due and payable in full in May of 2020. The maximum amount that can be drawn under the notes remained at $350 million. At June 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 variable funding notes with a maximum principal balance of $400 million to be backed by personal loans acquired from subsidiaries of 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 June 30, 2015, no amounts were drawn under the notes.

~~Second Avenue Funding LLC Securitization~~

On June 3, 2015, we 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 can paid down in whole or in part and 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 June 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. During the revolving period, the notes can 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 twelve12 months following the maturity of the last auto loan held by First Avenue. ~~At June 30, 2015, no amounts were drawn~~As of March 31, 2016, $250 million was outstanding under the notes.

VIE ~~Interest Expense~~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 six~~ months ended ~~June 30, 2015~~March 31, 2016 totaled ~~$49~~$48 million, ~~and $87 million, respectively,~~ compared to ~~$43 million and $86~~$38 million for the three ~~and six~~ months ended ~~June 30, 2014, respectively.~~March 31, 2015.

DECONSOLIDATED VIES

As a result of the SpringCastle Interests Sale on March 31, 2016, we deconsolidated the securitization trust holding the underlying loans of the SpringCastle Portfolio and previously issued securitized interests, which were reported in long-term debt.

As a result of the sales of the mortgage-backed retained certificates during 2014, we (i) deconsolidated the securitization trusts holding the underlying real estate loans and previously issued securitized interests which were reported in long-term ~~debt. The~~

~~Table of Contents~~

~~total carrying value of these real estate loans as of the sale dates was $5.1 billion. During 2014, we~~debt and (ii) established a reserve for sales recourse obligations of $6 million related to these sales. At ~~June 30, 2015,~~March 31, 2016, this reserve totaled $6 million. We had no repurchase activity associated with these sales as of ~~June 30, 2015. However, we will continue~~March 31, 2016. See Note 14 for further information on the total reserve for sales recourse obligations relating to ~~monitor any repurchase activity in~~ the ~~future and will adjust~~real estate loan sales, including the ~~reserve accordingly.~~sales of the mortgage-backed retained certificates.

12. Accumulated Other Comprehensive Income (Loss)

Changes, net of tax, 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)			Unrealized Gains (Losses) Available-for-Sale Securities			Retirement Plan Liabilities Adjustments			Foreign Currency Translation Adjustments		Total Accumulated Other Comprehensive Income (Loss)

Three Months Ended June 30, 2015

Three Months Ended March 31, 2016
Balance at beginning of period	$	11		$	(13	)	$	5		$	3		$	(9	)	$	(19	)	$	4	$	(24	)
Other comprehensive loss before reclassifications	(6		)	—			(1		)	(7		)
Other comprehensive income before reclassifications													8			—			—		8
Reclassification adjustments from accumulated other comprehensive income (loss)	(3		)	—			—			(3		)	(1		)	—			—		(1		)
Balance at end of period	$	2		$	(13	)	$	4		$	(7	)	$	(2	)	$	(19	)	$	4	$	(17	)

Three Months Ended June 30, 2014

Three Months Ended March 31, 2015
Balance at beginning of period	$	9		$	20		$	4		$	33		$	12		$	(13	)	$	4	$	3
Other comprehensive income before reclassifications	6			—			—			6			3			—			1		4
Reclassification adjustments from accumulated other comprehensive income	(1		)	—			—			(1		)
Balance at end of period	$	14		$	20		$	4		$	38

Six Months Ended June 30, 2015

Balance at beginning of period	$	12		$	(13	)	$	4		$	3
Other comprehensive loss before reclassifications	(3		)	—			—			(3		)
Reclassification adjustments from accumulated other comprehensive income (loss)	(7		)	—			—			(7		)	(4		)	—			—		(4		)
Balance at end of period	$	2		$	(13	)	$	4		$	(7	)	$	11		$	(13	)	$	5	$	3

Six Months Ended June 30, 2014

Balance at beginning of period	$	4		$	20		$	4		$	28
Other comprehensive income before reclassifications	12			—			—			12
Reclassification adjustments from accumulated other comprehensive income	(2		)	—			—			(2		)
Balance at end of period	$	14		$	20		$	4		$	38

~~Table of Contents~~

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 millions)	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended March 31,
(dollars in millions)	2015			2014		2015			2014			2016		2015

Unrealized gains on investment securities:
Reclassification from accumulated other comprehensive income (loss) to investment revenues, before taxes	$	4		$	1	$	10		$	3		$	1	$	6
Income tax effect	(1		)	—		(3		)	(1		)	—		(2		)
Reclassification from accumulated other comprehensive income (loss) to investment revenues, net of taxes	$	3		$	1	$	7		$	2		$	1	$	4

13. Income Taxes

At ~~June 30, 2015,~~March 31, 2016, we had a net deferred tax liability of ~~$112~~$122 million, compared to ~~$156~~$89 million at December 31, ~~2014.~~2015. The ~~decrease~~increase in ~~the~~ net deferred tax liability of $33 million was primarily due to ~~purchase accounting for debt writedown. The~~the impact toof the SpringCastle Interests Sale, partially offset by changes in the fair value of our ~~uncertain tax positions was immaterial.~~finance receivables.

The effective tax rate for the ~~six~~three months ended ~~June 30, 2015~~March 31, 2016 was ~~9.8%~~34.9% compared to ~~38.3%~~19.3% for the same period in ~~2014.~~2015. The effective tax ~~rate~~rates for the ~~six~~three months ended ~~June 30,~~March 31, 2016 and 2015 differed from the federal statutory ~~rate~~rates primarily due to the ~~effect~~effects of the non-controlling interest in ~~our joint venture. The effective tax rate for~~ the ~~six months ended June 30, 2014 differed from~~previously owned SpringCastle Portfolio. As discussed in Note 2, on March 31, 2016, the ~~federal statutory rate primarily due to~~Company sold its equity interest in the ~~effect of our state income taxes.~~SpringCastle Portfolio.

We are currently under examination of our U.S. ~~Federal~~federal tax return for the ~~year~~years 2011 to 2013 by the Internal Revenue Service. Management believes it has adequately provided for taxes for such ~~year.~~years.

The Company’s unrecognized tax positions including interest and penalties totaled $9 million at March 31, 2016 and December 31, 2015, all of which would affect the effective tax rate if recognized. The amount of any change in the balance of uncertain tax positions over the next 12 months is not expected to be material to our consolidated financial statements.

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, 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.

~~Table of Contents~~

SALES RECOURSE OBLIGATIONS

~~During 2014, we established a reserve for sales recourse obligations of $22 million related to the real estate loan sales.~~ At ~~June 30, 2015,~~March 31, 2016, our reserve for sales recourse obligations totaled ~~$18~~$15 million, of which ~~$17 million~~primarily related to the real estate loan sales in 2014. During the ~~second quarter of~~three months ended March 31, 2016 and 2015, we ~~repurchased 13 loans, totaling $1 million, associated with the real estate loan sales in 2014. There was~~had no repurchase activity ~~associated with the real estate loan~~and no material activity related to our reserve for sales ~~in 2014 or other prior sales of finance receivables during the three and six months ended June 30, 2014.~~recourse obligations. At ~~June 30, 2015,~~March 31, 2016, there were no material recourse requests with loss exposure that management believes will not be covered by the reserve. 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 2014 and other prior sales of finance receivables was as follows:~~

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

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


*	~~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 $9 million at June 30, 2015 and $14 million at December 31, 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.

15. Benefit Plans

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


(dollars in millions)	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(dollars in millions)	2015			2014			2015			2014			2016			2015

Pension

Components of net periodic benefit cost:
Components of net periodic benefit cost - pension plans:
Interest cost	$	4		$	4		$	8		$	8		$	4		$	4
Expected return on assets	(4		)	(4		)	(9		)	(8		)	(4		)	(5		)
Net periodic benefit cost	$	—		$	—		$	(1	)	$	—		$	—		$	(1	)

~~The components of net periodic benefit cost with respect to our~~We do not currently fund post retirement ~~plan were less than $1 million for the three and six months ended June 30, 2015 and 2014 and, therefore, were not included in the table above.~~benefits.

~~Table of Contents~~

16. Segment Information

Our segments coincide with how our businesses are managed. At ~~June 30, 2015,~~March 31, 2016, our three segments include:

Consumer and Insurance;

Acquisitions and Servicing; and

Real Estate.

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.

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) through two business divisions: branch operations and centralized operations and offer credit insurance (life insurance, ~~accident and health~~disability 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 — ~~We service~~SFI services the SpringCastle Portfolio that was acquired by an indirect subsidiary of ~~SHI~~OMH through a joint venture in which SFC ~~currently owns~~owned a 47% equity interest. ~~The~~On March 31, 2016, the SpringCastle Portfolio ~~consists~~was sold in connection with the sale of our equity interest in the SpringCastle Joint Venture. These loans consist of unsecured loans and loans secured by subordinate residential real estate mortgages ~~(which we service as unsecured loans due to the fact that the liens are subordinated to superior ranking security interests)~~ and ~~includes~~include 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.~~status and vary in substance and form from our originated loans. Unless terminated, SFI will continue to provide the servicing for these loans, which we service as unsecured loans because the liens are subordinated to superior ranking security interests.

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 serviced by: (i) MorEquity and subserviced by Nationstar; (ii) Select Portfolio Servicing, Inc.; or (iii) our centralized operations. Investment funds managed by affiliates of Fortress indirectly own a majority interest in Nationstar. Prior to the OneMain Acquisition, this segment also included proceeds from the sale of our real estate loans in 2014. OMH used these proceeds to acquire OneMain.

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~~had also ceased branch-based personal ~~lending,~~lending; (ii) our liquidating retail sales finance portfolio (including ~~our~~ retail sales finance accounts from ~~our dedicated~~its legacy 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.

We evaluate the performance of the segments based on pretax operating earnings. The accounting policies of the segments are the same as those disclosed in Note 3 of our 2015 Annual Report on Form 10-K, except as described below.

Due to the nature of the Fortress Acquisition, we applied ~~push-down~~purchase accounting. However, we report the operating results of our Core Consumer Operations, Non-Core Portfolio, and Other using “Segment Accounting Basis,” which (i) reflects our allocation methodologies for certain costs, primarily interest expense, loan loss reserves and acquisition costs to reflect the ~~same accounting basis that we employed prior to the Fortress Acquisition,~~manner in which we ~~refer~~assess our business results and (ii) excludes the impact of applying purchase accounting. These allocations and adjustments have a material effect on our reported segment basis income as compared to ~~as “historical accounting~~GAAP. We believe a Segment Accounting Basis (a basis~~” to provide a consistent basis for both management and~~

~~Table of Contents~~

~~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~~investors the ~~operating results of these segments~~basis for which management evaluates segment performance.

We allocate revenues and expenses (on a Segment Accounting Basis) to ~~our competitors and other companies in~~each segment using 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 subsequent to the Fortress Acquisition.following methodologies:



Interest income	Directly correlated with a specific segment.
Interest expense	Acquisition and Servicing - This segment includes interest expense specifically identified to the SpringCastle Portfolio.
	Consumer and Insurance, Real Estate and Other - The Company has securitization debt and unsecured debt. The Company first allocates interest expense to its segments based on actual expense for securitizations and secured term debt and using a weighted average for unsecured debt allocated to the segments. Average unsecured debt allocations for the periods presented are as follows:
	Subsequent to the OneMain Acquisition
	Total average unsecured debt is allocated as follows:
	l Consumer and Insurance - receives remainder of unallocated average debt; and
	l Real Estate and Other - at 100% of asset base. (Asset base represents the average net finance receivables including finance receivables held for sale.)
	The net effect of the change in debt allocation and asset base methodologies for the three months ended March 31, 2015 had it been in place as of the beginning of the year would be an increase in interest expense of $54 million for Consumer and Insurance and a decrease in interest expense of $45 million and $9 million for Real Estate and Other, respectively.
	For the period third quarter 2014 to the OneMain Acquisition
	Total average unsecured debt is allocated to Consumer and Insurance, Real Estate and Other, such that the total debt allocated across each segment equals 83%, up to 100% and 100% of each of its respective asset base. Any excess is allocated to Consumer and Insurance.
	Average unsecured debt is allocated after average securitized debt to achieve the calculated average segment debt.
	Asset base represents the following:
	l Consumer and Insurance - average net finance receivables including average net finance receivables held for sale;
	l Real Estate - average net finance receivables including average net finance receivables held for sale, cash and cash equivalents, investments including proceeds from Real Estate sales; and
	l Other - average net finance receivables other than the periods listed below:
	l May 2015 to the OneMain Acquisition - average net finance receivables and cash and cash equivalents less proceeds from equity issuance in 2015, operating cash reserve and cash included in other segments.
	l February 2015 to April 2015 - average net finance receivables and cash and cash equivalents less operating cash reserve and cash included in other segments.
Provision for finance receivable losses	Directly correlated with a specific segment, except for allocations to Other, which are based on the remaining delinquent accounts as a percentage of total delinquent accounts.
Other revenues	Directly correlated with a specific segment, except for: (i) net gain (loss) on repurchases and repayments of debt, which is allocated to the segments based on the interest expense allocation of debt and (ii) gains and losses on foreign currency exchange, which is 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 policy benefits and claims	Directly correlated with a specific segment.

The ~~“Push-down Accounting Adjustments”~~“Segment to GAAP Adjustment” column in the following tables primarily consists of:

Interest income - the ~~accretion or amortization~~net purchase accounting impact of the ~~valuation adjustments on~~amortization (accretion) of the ~~applicable revalued assets~~net premium (discount) assigned to finance receivables and ~~liabilities;~~

the ~~difference in finance charges on our~~impact of identifying purchased credit impaired finance receivables as compared to the ~~finance charges on these finance receivables on a~~ historical ~~accounting basis;~~

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

~~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~~

Interest expense - primarily includes the accretion of the net discount ~~or amortization of the net premium~~ applied to ~~long-term~~our long term debt ~~that we repurchase or repay;~~as part of purchase accounting;

~~the reversal of the remaining unaccreted push-down accounting basis for net finance receivables, less allowance~~

Provision for finance receivable losses ~~established at~~ - the ~~date~~adjustment to reflect the difference between our allowance adjustment calculated under our Segment Accounting Basis and our GAAP basis;

Other revenues - the impact of ~~the Fortress Acquisition on finance receivables~~carrying value differences between Segment Accounting Basis and purchase accounting basis when measuring mark to market for loans held for sale ~~that we sold;~~ and realized gains/losses associated with our investment portfolio; and

Other expenses - the ~~difference in the fair value~~net impact of ~~long-term debt based upon the differences between historical~~amortization associated with identified intangibles as part of purchase 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.~~deferred costs impacted by purchase accounting.

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

(dollars in millions)
Consumer
and
Insurance

Acquisitions
and
Servicing
Real
Estate Other Eliminations Push-down
Accounting
Adjustments Consolidated
Total

Three Months Ended
June 30, 2015

Interest income $ 267
$ 118
$ 17
$ 3
$ —
$ 4
$ 409
Interest expense 36
22
59
22
—
32
171
Provision for finance receivable losses 53
23
(5 ) 1
—
7
79
Net interest income (loss) after provision for finance receivable losses 178
73
(37 ) (20 ) —
(35 ) 159
Other revenues 55
—
3

4
—
(3 ) 59
Other expenses 151
15
9
10
—
1
186
Income (loss) before provision for (benefit from) income taxes 82
58
(43 ) (26 ) —
(39 ) 32
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
$ (43 ) $ (26 ) $ —
$ (39 ) $ 1

~~Table of Contents~~

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

Three Months Ended
June 30, 2014

Interest income $ 220
$ 136
$ 4
$ 32
$ 392
Interest expense 41
94
2
35
172
Provision for finance receivable losses 48
21
4
1
74
Net interest income (loss) after provision for finance receivable losses 131
21
(2 ) (4 ) 146
Other revenues 58
(24 ) 2
56
92
Other expenses 126
19
6
1
152
Income (loss) before provision for (benefit from) income taxes $ 63
$ (22 ) $ (6 ) $ 51
$ 86


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

At or for the Six Months Ended June 30, 2015

At or for the Three Months Ended March 31, 2016
Interest income	$	521	$	243	$	35		$	5		$	—		$	7		$	811	$	311	$	101	$	15		$	1		$	3		$	431
Interest expense	76		45		119			32			(5		)	62			329		95		20		13			4			24			156
Provision for finance receivable losses	108		50		(3		)	1			—			9			165		73		17		2			—			2			94
Net interest income (loss) after provision for finance receivable losses	337		148		(81		)	(28		)	5			(64		)	317		143		64		—			(3		)	(23		)	181
Other revenues	106		5		6			6			(5		)	(6		)	112
Net gain on sale of SpringCastle interests																			—		229		—			—			—			229
Other revenues *																			45		—		(11		)	50			1			85
Other expenses	291		31		16			15			—			2			355		174		14		7			(4		)	—			191
Income (loss) before provision for (benefit from) income taxes	152		122		(91		)	(37		)	—			(72		)	74		14		279		(18		)	51			(22		)	304
Income before provision for income taxes attributable to non-controlling interests	—		62		—			—			—			—			62		—		26		—			—			—			26
Income (loss) before provision for (benefit from) income taxes attributable to Springleaf Finance Corporation	$	152	$	60	$	(91	)	$	(37	)	$	—		$	(72	)	$	12	$	14	$	253	$	(18	)	$	51		$	(22	)	$	278

Assets *	$	5,244	$	1,843	$	3,540		$	1,729		$	—		$	54		$	12,410
Assets																			$	5,704	$	101	$	667		$	4,042		$	(22	)	$	10,492


*	~~As a result of our early adoption of ASU 2015-03, we reclassified $32 million of debt issuance costs~~Other revenues reported in “Other” includes interest income on the Independence Demand Note and on SFC’s note receivable from ~~other assets to long-term debt as of June 30, 2015.~~SFI. See Note 9 for further information on the notes receivable from parent and affiliates.

~~Table of Contents~~


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

At or for the Six Months Ended June 30, 2014

At or for the Three Months Ended March 31, 2015
Interest income	$	429	$	288		$	9		$	68		$	794	$	254	$	125	$	18		$	2		$	—		$	3		$	402
Interest expense	82		204			4			64			354		40		23		60			10			(5		)	30			158
Provision for finance receivable losses	93		82			5			1			181		55		27		2			—			—			2			86
Net interest income after provision for finance receivable losses	254		2			—			3			259
Net interest income (loss) after provision for finance receivable losses														159		75		(44		)	(8		)	5			(29		)	158
Other revenues	107		(88		)	4			169			192		51		5		3			2			(5		)	(3		)	53
Other expenses	249		41			11			2			303		140		16		7			5			—			1			169
Income (loss) before provision for (benefit from) income taxes	$	112	$	(127	)	$	(7	)	$	170		$	148	70		64		(48		)	(11		)	—			(33		)	42
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														$	70	$	33	$	(48	)	$	(11	)	$	—		$	(33	)	$	11

Assets (a) (b)	$	4,375	$	6,558		$	1,052		$	(338	)	$	11,647
Assets *														$	4,821	$	1,958	$	3,613		$	1,832		$	—		$	17		$	12,241


~~(a)~~*	~~As a result of our early adoption of ASU 2015-03, we reclassified $32 million of debt issuance costs from other assets to long-term debt as of June 30, 2014.~~Assets reflect the following:


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

As a result of our early adoption of ASU 2015-03, we reclassified $32 million of debt issuance costs from other assets to long-term debt as of March 31, 2015.

In connection with our policy integration with OneMain, we report unearned insurance premium and claim reserves related to finance receivables (previously reported in insurance claims and policyholder liabilities) as a contra-asset to net finance receivables, which totaled $216 million at March 31, 2015.

During the second quarter of 2015, we identified incorrect allocations of our total assets disclosure within our segment footnote and have corrected the previously disclosed total assets at March 31, 2015 in the table above.

17. 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.

~~Table of Contents~~

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 millions)	Level 1		Level 2		Level 3						Level 1			Level 2			Level 3

June 30, 2015

March 31, 2016
Assets
Cash and cash equivalents	$	2,477	$	—	$	—	$	2,477	$	2,477		$	358		$	7		$	—	$	365	$	365
Investment securities	—		2,269		2		2,271		2,271			—			619			2		621		621
Net finance receivables, less allowance for finance receivable losses	—		—		7,086		7,086		6,444			—			—			4,912		4,912		4,689
Finance receivables held for sale	—		—		197		197		193			—			—			804		804		776
Note receivable from parent	—		302		—		302		302
Notes receivable from parent and affiliates												—			3,775			—		3,775		3,775
Restricted cash and cash equivalents												225			—			—		225		225
Other assets:
Commercial mortgage loans												—			—			53		53		53
Escrow advance receivable												—			—			11		11		11
Receivables from parent and affiliates												—			28			—		28		28
Receivables related to sales of real estate loans and related trust assets												—			1			—		1		5

Liabilities
Long-term debt												$	—		$	7,470		$	—	$	7,470	$	7,187
Note payable to affiliate												—			374			—		374		374
Payables to parent and affiliates												—			34			—		34		34

December 31, 2015
Assets
Cash and cash equivalents												$	321		$	—		$	—	$	321	$	321
Investment securities												—			602			2		604		604
Net finance receivables, less allowance for finance receivable losses												—			—			6,897		6,897		6,204
Finance receivables held for sale												—			—			819		819		796
Notes receivable from parent and affiliates												—			3,804			—		3,804		3,804
Restricted cash and cash equivalents	333		—		—		333		333			295			—			—		295		295
Other assets:
Commercial mortgage loans	—		—		71		71		71			—			—			62		62		62
Escrow advance receivable	—		—		9		9		9			—			—			11		11		11
Receivables from parent and affiliates	—		13		—		13		13			—			9			—		9		9
Receivables related to sales of real estate loans and related trust assets	—		9		—		9		18			—			1			—		1		5

Liabilities
Long-term debt	$	—	$	10,431	$	—	$	10,431	$	9,676		$	—		$	9,998		$	—	$	9,998	$	9,582
Payables to parent and affiliates	—		38		—		38		38			—			24			—		24		24

December 31, 2014

Assets
Cash and cash equivalents	$	749	$	—	$	—	$	749	$	749
Investment securities	—		2,913		9		2,922		2,922
Net finance receivables, less allowance for finance receivable losses	—		—		6,949		6,949		6,278
Finance receivables held for sale	—		—		209		209		205
Note receivable from parent	—		251		—		251		251
Restricted cash and cash equivalents	218		—		—		218		218
Other assets:
Commercial mortgage loans	—		—		78		78		85
Escrow advance receivable	—		—		8		8		8
Receivables from parent and affiliates	—		12		—		12		12
Receivables related to sales of real estate loans and related trust assets	—		67		—		67		79

Liabilities
Long-term debt	$	—	$	9,182	$	—	$	9,182	$	8,356
Payables to parent and affiliates	—		48		—		48		48

~~Table of Contents~~

FAIR VALUE MEASUREMENTS — RECURRING BASIS

The following tables present information about our assets 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
(dollars in millions) Level 1 Level 2 Level 3

June 30, 2015

Assets

Cash equivalents in mutual funds $ 680
$ —
$ —
$ 680
Investment securities:

Available-for-sale securities:

Bonds:
U.S. government and government sponsored entities —
50
—
50
Obligations of states, municipalities, and political subdivisions —
87
—
87
Certificates of deposit and commercial paper —
1
—
1
Corporate debt —
263
—
263
RMBS —
86
—
86
CMBS —
43
—
43
CDO/ABS —
48
—
48
Total —
578
—
578
Preferred stock —
7
—
7
Other long-term investments (a) —
—
1
1
Total available-for-sale securities (b) —
585
1
586
Trading securities:
Bonds:
U.S. government and government sponsored entities —
841
—
841
Obligations of states, municipalities, and political subdivisions —
3
—
3
Corporate debt —
484
—
484
RMBS —
13
—
13
CMBS —
118
—
118
CDO/ABS —
225
—
225
Total trading securities —
1,684
—
1,684
Total investment securities —
2,269
1
2,270
Restricted cash in mutual funds 312
—
—
312
Total $ 992
$ 2,269
$ 1

$ 3,262

~~Table of Contents~~


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

December 31, 2014

March 31, 2016
Assets
Cash equivalents in mutual funds	$	236	$	—	$	—	$	236	$	129	$	—	$	—	$	129
Cash equivalents in certificates of deposit and commercial paper	—		165		—		165		—		7		—		7
Investment securities:
Available-for-sale securities:
Bonds:
U.S. government and government sponsored entities	—		64		—		64		—		77		—		77
Obligations of states, municipalities, and political subdivisions	—		102		—		102		—		92		—		92
Certificates of deposit and commercial paper	—		1		—		1
Corporate debt	—		263		4		267		—		307		—		307
RMBS	—		73		—		73		—		70		—		70
CMBS	—		21		3		24		—		47		—		47
CDO/ABS	—		61		—		61		—		18		—		18
Total	—		585		7		592
Total bonds									—		611		—		611
Preferred stock	—		7		—		7		—		5		—		5
Other long-term investments (a)	—		—		1		1
Total available-for-sale securities (b)	—		592		8		600
Trading securities:
Other long-term investments									—		—		1		1
Total available-for-sale securities *									—		616		1		617
Other 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		—		1		—		1
RMBS	—		35		—		35
CMBS	—		149		—		149		—		2		—		2
CDO/ABS	—		507		—		507
Total trading securities	—		2,321		—		2,321
Total other securities									—		3		—		3
Total investment securities	—		2,913		8		2,921		—		619		1		620
Restricted cash in mutual funds	207		—		—		207		210		—		—		210
Total	$	443	$	3,078	$	8	$	3,529	$	339	$	626	$	1	$	966


~~(a)~~*	~~Other long-term investments excludes~~Excludes an immaterial interest in a limited partnership that we account for using the equity ~~method.~~method and Federal Home Loan Bank common stock of $1 million at March 31, 2016, which is carried at cost.



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

December 31, 2015
Assets
Cash equivalents in mutual funds	$	224	$	—	$	—	$	224
Investment securities:
Available-for-sale securities:
Bonds:
U.S. government and government sponsored entities	—		82		—		82
Obligations of states, municipalities, and political subdivisions	—		89		—		89
Corporate debt	—		267		—		267
RMBS	—		74		—		74
CMBS	—		44		—		44
CDO/ABS	—		29		—		29
Total bonds	—		585		—		585
Preferred stock	—		5		—		5
Other long-term investments	—		—		1		1
Total available-for-sale securities (a)	—		590		1		591
Trading and other securities:
Bonds:
Corporate debt	—		10		—		10
CMBS	—		2		—		2
Total trading and other securities (b)	—		12		—		12
Total investment securities	—		602		1		603
Restricted cash in mutual funds	276		—		—		276
Total	$	500	$	602	$	1	$	1,103


(a)	Excludes an immaterial interest in a limited partnership that we account for using the equity method and Federal Home Loan Bank common stock of $1 million at December 31, 2015, which is carried at cost.


(b)	~~Common stocks not carried at~~The fair value of other securities totaled $1$2 million at ~~June 30, 2015 and~~ December 31, ~~2014 and, therefore, have been excluded from the table above.~~2015.

We had no transfers between Level 1 and Level 2 during the three ~~and six~~ months ended ~~June 30, 2015.~~

~~Table of Contents~~

~~The following table presents changes in Level 3 assets measured at fair value on a recurring basis for the three months ended June 30, 2015:~~March 31, 2016.

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)

Three Months Ended
June 30, 2015

Investment securities:

Available-for-sale securities:

Bonds:

Corporate debt $ 4
$ —
$ —
$ (4 ) $ —
$ —
$ —
Other long-term investments 1
—
—
—
—
—
1
Total $ 5
$ —
$ —
$ (4 ) $ —
$ —
$ 1


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

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


				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							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)								Balance at beginning of period							Other revenues				Other comprehensive income (loss)
(dollars in millions)			Purchases, sales, issues, settlements (a)	Other revenues		Transfers into Level 3	Other comprehensive income (loss)		Transfers out of Level 3 (b)						Balance at beginning of period				Purchases, sales, issues, settlements			Other revenues			Transfers into Level 3	Other comprehensive income (loss)			Transfers out of Level 3 *
	Balance at beginning of period
Three Months Ended June 30, 2014
Three Months Ended March 31, 2016
Investment securities:
Available-for-sale securities:
Other long-term investments																							$	1			$	—			$	—		$	—		$	—		$	—		$	1
Total																							$	1			$	—		$	—		$	—		$	—		$	—		$	1

Three Months Ended March 31, 2015
Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	9		$	—		$	—		$	(4	)	$	—		$	—			$	5		$	4			$	—		$	—		$	—		$	—		$	—		$	4
CDO/ABS	1			—			—			—			—			(1		)		—
CMBS																							3				—			—			—			—			(3		)	—
Total bonds																							7				—			—			—			—			(3		)	4
Other long-term investments																							1				—			—			—			—			—			1
Total	10			—			—			(4		)	—			(1		)		5			$	8			$	—		$	—		$	—		$	—		$	(3	)	$	5
Other long-term investments	1			—			—			—			—			—				1
Total available-for-sale securities	11			—			—			(4		)	—			(1		)		6
Trading securities:
Bonds:
RMBS	1			—			—			—			—			(1		)		—
CDO/ABS	7			—			—			—			—			(1		)		6
Total trading securities	8			—			—			—			—			(2		)		6
Total	$	19		$	—		$	—		$	(4	)	$	—		$	(3	)		$	12


~~(a)~~	~~“Purchases, sales, issues, and settlements” column consisted only of settlements.~~


~~(b)~~*	During the three months ended ~~June 30, 2014, we transferred RMBS and CDO/ABS securities totaling $3 million out of Level 3 primarily due to greater pricing transparency.~~

~~Table of Contents~~

~~The following table presents changes in Level 3 assets measured at fair value on a recurring basis for the six months ended June 30, 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)

Six Months Ended
June 30, 2015

Investment securities:

Available-for-sale securities:

Bonds:

Corporate debt $ 4
$ —
$ —
$ (4 ) $ —
$ —
$ —
CMBS 3
—
—
—
—
(3 ) —
Total 7
—
—
(4 ) —
(3 ) —
Other long-term investments 1
—
—
—
—
—
1
Total $ 8
$ —
$ —
$ (4 ) $ —
$ (3 ) $ 1


~~(a)~~	~~“Purchases, sales, issues, and settlements” column consisted only of settlements.~~


~~(b)~~	~~During the six months ended June 30,~~March 31, 2015, we transferred CMBS securities totaling $3 million out of Level 3 primarily related to the greater observability of pricing inputs.

~~The following table presents changes in Level 3 assets measured at fair value on a recurring basis for the six months ended June 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

Balance at
beginning
of period

Other
revenues

Other
comprehensive
income (loss)

(dollars in millions)

Six Months Ended
June 30, 2014

Investment securities:

Available-for-sale securities:

Bonds:

Corporate debt $ 13
$ —
$ —
$ (8 ) $ —
$ —
$ 5
CDO/ABS 1
—
—
—
—
(1 ) —
Total 14
—
—
(8 ) —
(1 ) 5
Other long-term investments 1
—
—
—
—
—
1
Total available-for-sale securities 15
—
—
(8 ) —
(1 ) 6
Trading securities:

Bonds:

RMBS —
—
—
—
1
(1 ) —
CDO/ABS 7
—
—
—
—
(1 ) 6
Total trading securities 7
—
—
—
1
(2 ) 6
Total $ 22
$ —
$ —
$ (8 ) $ 1
$ (3 ) $ 12


~~(a)~~	~~“Purchases, sales, issues, and settlements” column consisted only of settlements.~~

~~Table of Contents~~


~~(b)~~	~~During the six months ended June 30, 2014, we transferred $1 million of RMBS securities into Level 3 primarily due to lesser pricing transparency.~~


~~(c)~~	~~During the six months ended June 30, 2014, we transferred RMBS and CDO/ABS securities totaling $3 million out of Level 3 primarily due to greater pricing transparency.~~

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.

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 ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 is as follows:



			Range (Weighted Average)
	Valuation Technique(s)	Unobservable Input	~~June 30, 2015~~March 31, 2016	December 31, ~~2014~~
~~Corporate debt~~	~~Discounted cash flows~~	~~Yield~~	—	~~1.05% (a)~~2015
RMBS	Discounted cash flows	Spread	~~730~~693 bps (a)	~~736~~665 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)~~(b)	N/A ~~(c)~~(b)


(a)	At ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014,~~2015, RMBS consisted of one ~~bond. At December 31, 2014, corporate debt and CMBS also consisted of one bond.~~bond, which was less than $1 million.


(b)	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 have been corrected in the table above.Not applicable.


~~(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.

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 millions)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total

June 30, 2015
March 31, 2016
Assets
Finance receivables held for sale									$	—	$	—	$	170	$	170
Real estate owned									—		—		10		10
Commercial mortgage loans									—		—		8		8
Total									$	—	$	—	$	188	$	188

December 31, 2015
Assets
Real estate owned	$	—	$	—	$	12	$	12	$	—	$	—	$	11	$	11
Commercial mortgage loans	—		—		8		8		—		—		8		8
Total	$	—	$	—	$	20	$	20	$	—	$	—	$	19	$	19

December 31, 2014

Assets
Real estate owned	$	—	$	—	$	19	$	19
Commercial mortgage loans	—		—		11		11
Total	$	—	$	—	$	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 millions)	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(dollars in millions)	2015			2014			2015			2014			2016		2015

Assets
Finance receivables held for sale													$	2	$	—
Real estate owned	$	1		$	4		$	2		$	10		1		1
Commercial mortgage loans	(2		)	(1		)	(2		)	(1		)
Commercial mortgage loans *													1		—
Total	$	(1	)	$	3		$	—		$	9		$	4	$	1


*	Net impairment charges recorded on commercial mortgage loans for the three months ended March 31, 2015 was less than $1 million and, therefore, is not quantified in the table above.

In accordance with the authoritative guidance for the accounting for the impairment of finance receivables held for sale, we wrote down certain finance receivables held for sale reported in our Real Estate segment to their fair value during the first quarter of 2016 and recorded the writedowns in other revenues.

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 six~~ months ended ~~June 30,~~March 31, 2016 and 2015 ~~and 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 six~~ months ended ~~June 30,~~March 31, 2016 and 2015 ~~and 2014~~ and recorded the net impairments in investment revenues.

The inputs and quantitative data used in our Level 3 valuations for our real estate owned and commercial mortgage loans are unobservable primarily due to the unique nature of specific real estate assets. Therefore, we used independent third-party providers, familiar with local markets, to determine the values used for fair value 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.

~~Table of Contents~~

Quantitative information about Level 3 inputs for our assets measured at fair value on a non-recurring basis at ~~June 30, 2015~~March 31, 2016 and December 31, ~~2014~~2015 is as follows:



			Range (Weighted Average)
	Valuation Technique(s)	Unobservable Input	~~June 30, 2015~~March 31, 2016	December 31, ~~2014~~2015
Finance receivables held for sale	Income approach	National market conditions Operating performance	N/A*	—
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~~Our unit of ~~mutual funds~~account is ~~based on quoted market prices of the underlying shares held in~~ the mutual ~~funds.~~fund, which is measured at net asset value.

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 other 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~~elect the fair value option for 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 derivative.

The fair value of ~~certificates of deposit and commercial paper having maturity dates greater than three months~~certain investment securities 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~~limitations in the valuation methodologies we employed, and changes in the underlying assumptions used could significantly affect the results of current or future values.

~~Table of Contents~~

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 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

Given the short remaining average life of the portfolio, the carrying amount of commercial mortgage loans approximates fair value. The carrying amount includes an estimate for credit related losses which is based on independent third-party valuations.

Real Estate Owned

We initially ~~based~~base our estimate of the fair value on independent third-party valuations at the time we ~~took~~take 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 of escrow advance receivable approximates fair value.

Receivables from Parent and Affiliates

The carrying amount 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 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.

We record at fair value long-term debt issuances that are deemed to incorporate an embedded derivative and for which it is impracticable for us to isolate and/or value the derivative. At ~~June 30, 2015,~~March 31, 2016, we had no debt carried at fair value under the fair value option.

We estimate the fair values associated with variable rate revolving lines of credit to be equal to par.

Payables to Parent and Affiliates

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

18. Subsequent Events

~~Table~~

SFC’S OFFERING OF SENIOR NOTES

On April 11, 2016, SFC issued $1.0 billion aggregate principal amount of ~~Contents~~8.25% Senior Notes due 2020 under an Indenture dated as of December 3, 2014 (the “Base Indenture”), as supplemented by a Second Supplemental Indenture, dated as of April 11, 2016 (the “Supplemental Indenture” and, together with the Base Indenture, the “Indenture”), pursuant to which OMH provided a guarantee of the notes on an unsecured basis.

SFC used a portion of the proceeds from the offering to repurchase approximately $600 million aggregate principal amount of its existing senior notes that mature in 2017, at a premium to principal amount from certain beneficial owners, and certain of those beneficial owners purchased notes in the offering. SFC intends to use the remaining net proceeds for general corporate purposes, which may include further debt repurchases and repayments.

The notes will mature on December 15, 2020 and bear interest at a rate of 8.25% per annum, payable semiannually in arrears on June 15 and December 15 of each year, beginning on December 15, 2016. The notes are SFC’s senior unsecured obligations and rank equally in right of payment to all of SFC’s other existing and future unsubordinated indebtedness from time to time outstanding. The notes are guaranteed by OMH and will not be guaranteed by any of SFC’s subsidiaries or any other party. The notes are effectively subordinated to all of SFC’s secured obligations to the extent of the value of the assets securing such obligations and structurally subordinated to any existing and future obligations of SFC’s subsidiaries with respect to claims against the assets of such subsidiaries.

The notes may be redeemed at any time and from time to time, at the option of SFC, in whole or in part at a “make-whole” redemption price specified in the Indenture. The notes will not have the benefit of any sinking fund.

The Indenture contains covenants that, among other things (i) limit SFC’s ability to create liens on assets and (ii) restrict SFC’s ability to consolidate, merge or sell its assets. The Indenture also provides for events of default which, if any of them occur, would permit or require the principal of and accrued interest on the notes to become, or to be declared, due and payable.

LENDMARK SALE

On May 2, 2016, pursuant to the Purchase and Sale Agreement, dated as of November 12, 2015, by and between OneMain Holdings, Inc., certain of our subsidiaries and Lendmark and as required by our previously disclosed DOJ Settlement Agreement, we completed the sale of 127 Springleaf branches and, subject to certain exclusions, the associated personal loans issued to customers of such branches, fixed non-information technology assets and certain other tangible personal property located in such branches to Lendmark for an aggregate cash purchase price of $624 million. Such sale was effective as of April 30, 2016, and included the sale to Lendmark of personal loans with an unpaid principal balance as of March 31, 2016, of $600 million. OMH has entered into a Transition Services Agreement with Lendmark, and OMH’s and our activities will remain subject to the oversight of the Monitoring Trustee appointed by the Court pursuant to the DOJ Settlement Agreement until the expiration of the Transition Services Agreement. Although we and OMH continue to take such steps as we believe are necessary to comply with the terms of the DOJ Settlement Agreement, no assurance can be given that we will not incur fines or penalties associated with OMH’s or our activities pursuant to the Transition Services Agreement or OMH’s or our efforts to comply with the terms of the DOJ Settlement Agreement.

On May 2, 2016, SFC used a portion of the proceeds from the Lendmark Sale to repay, in full, its revolving demand note with OMFH, which totaled $376 million (including interest payable of $6 million).

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~~contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of ~~1995 that reflect our~~1995. Forward-looking statements are not statements of historical fact but instead represent only management’s current ~~views with respect to, among other things,~~beliefs regarding future ~~events and financial performance. You can identify these~~events. By their nature, 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 variousinvolve inherent 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~~other important factors that ~~could~~may cause ~~our~~ actual results, performance or achievements to differ materially from those ~~indicated~~expressed in ~~these~~or implied by such forward-looking statements. We ~~believe~~caution you not to place undue reliance on these forward-looking statements that speak only as of the date they were made. We do not undertake any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date of this presentation or to reflect the occurrence of unanticipated events or the non-occurrence of anticipated events. Forward-looking statements include, without limitation, statements concerning future plans, objectives, goals, projections, strategies, events or performance, and underlying assumptions and other statements related thereto. Statements preceded by, followed by or that otherwise include the words “anticipates,” “appears,” “are likely,” “believes,” “estimates,” “expects,” “foresees,” “intends,” “plans,” “projects” and similar expressions or future or conditional verbs such as “would,” “should,” “could,” “may,” or “will,” are intended to identify forward-looking statements. Important factors that could cause actual results, performance or achievements to differ materially from those expressed in or implied by forward-looking statements include, ~~but are not limited to:~~without limitation, the following:

various risks relating to the sale of branches to Lendmark Financial Services, LLC (the “Lendmark Sale”) in connection with the previously disclosed settlement with the U.S. Department of Justice (the “DOJ”);

various uncertainties and risks in connection with the OneMain Acquisition which may result in an adverse impact on us;

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, cyber security breaches, or other events disrupting business or commerce;

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~~or 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)~~institutions, including us), that affect our ability to conduct business or the manner in which we conduct business, such as licensing requirements, pricing limitations or restrictions on the method of offering products, as well as changes that may result from increased regulatory scrutiny of the sub-prime lending industry;

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potential liability relating to real estate and personal loans which we have sold or may sell in the future, or relating to securitized loans, if it is determined that there was a non-curable breach of a representation or warranty made in connection with such transactions;

~~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 actual or alleged violations of any federal, state or local laws, rules or regulations, including any litigation associated therewith, any impact to our business operations, reputation, financial position, results of operations or cash flows arising therefrom, any impact to our relationships with lenders, investors or other third parties attributable thereto, and the costs and effects of any breach of any representation, warranty or covenant under any of our contractual arrangements, including indentures or other financing arrangements or contracts, as a result of any such violation;

the costs and effects of any fines, penalties, judgments, decrees, orders, inquiries, investigations, subpoenas, or enforcement or other proceedings of any governmental ~~inquiries~~ or ~~investigations involving us, particularly those that are determined adversely to us;~~quasi-governmental agency or authority and any litigation associated therewith;

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;

the effects of any downgrade of our debt ratings by credit rating agencies, which could have a negative impact on our cost of and/or access to capital;

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;

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;

any failure or inability to achieve the SpringCastle Portfolio performance requirements set forth in the SpringCastle Interests Sale purchase agreement; and

the ~~material weakness that we have identified in~~effect of future sales of our ~~internal control over financial reporting.~~remaining portfolio of real estate loans and the transfer of servicing of these loans.

We also direct readers to other risks and uncertainties discussed in other documents we file with the 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~~branch-based consumer finance company providing ~~responsible loan products~~personal loans primarily to non-prime ~~customers. We originate consumer loans~~customers through ~~our~~its network of ~~824~~over 800 branch offices in 27 states as of March 31, 2016 and on a centralized basis as part of its centralized operations and our ~~centralized operations.~~iLoan platform. We also ~~pursue strategic acquisitions of loan portfolios. Through two insurance subsidiaries, we~~ write credit and non-credit insurance policies covering our ~~customers.~~customers and the property pledged as collateral for our personal loans.

~~OUR SEGMENTS~~

At June 30, 2015, we had three business segments: Consumer and Insurance, Acquisitions and Servicing, and Real Estate. The Acquisitions and Servicing segment was added effective July 31, 2014, as a result of the SAC Capital Contribution on July 31, 2014.

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

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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 five years. At ~~June 30, 2015,~~March 31, 2016, we had over ~~948,000~~1.0 million personal loans, representing ~~$4.3~~$5.0 billion of net finance receivables (including personal loans held for sale of ~~which $2.3~~$606 million). At March 31, 2016, $2.5 billion, or ~~53%~~58%, were secured by collateral consisting of titled personal property (such as automobiles) and ~~$2.0~~$1.9 billion, or ~~47%~~42%, were secured by consumer household goods or other items of personal property or were ~~unsecured.~~unsecured, compared to $2.4 billion of personal loans, or 56%, secured by collateral consisting of titled personal property and $1.9 billion, or 44%, secured by consumer household goods or other items of personal property or unsecured at December 31, 2015.

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

Our core products also included the SpringCastle Portfolio at December 31, 2015, as described below:

SpringCastle Portfolio — ~~We service~~SFI services the SpringCastle Portfolio that was acquired by an indirect subsidiary of ~~SHI~~OMH through a joint venture in which SFC ~~currently owns~~owned a 47% equity interest. On March 31, 2016, the SpringCastle Portfolio was sold in connection with the SpringCastle Interests Sale. These loans ~~include~~consisted of unsecured loans and loans secured by subordinate residential real estate mortgages ~~(which~~and include both closed-end accounts and open-end lines of credit. These loans were in a liquidating status and varied in substance and form from our originated loans. Unless terminated, SFI will continue to provide the servicing for these loans, 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. At June 30, 2015, the SpringCastle Portfolio included over 253,000 of acquired loans, representing $1.8 billion in net finance receivables.interests.

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

Real Estate Loans — We ceased real estate lending in January 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. WeOur first lien mortgages are serviced by third-party servicers, and we continue to ~~service the liquidating real estate loans and support any advances on open-end accounts.~~provide servicing for our second lien mortgages (home equity lines of credit). At ~~June 30, 2015,~~March 31, 2016, we had ~~$573~~$503 million of real estate loans held for investment, of which ~~$215~~$197 million, or ~~38%~~39%, were secured by first mortgages and ~~$358~~$306 million, or ~~62%~~61%, were secured by second ~~mortgages.~~mortgages, compared to $202 million of real estate loans, or 39%, secured by first mortgages and $322 million, or 61%, secured by second mortgages at December 31, 2015. Real estate

loans held for sale totaled ~~$193~~$170 million and $179 million at ~~June 30,~~March 31, 2016 and December 31, 2015, respectively, 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.”

~~SECOND QUARTER HIGHLIGHTS~~OUR SEGMENTS

~~Net finance receivables~~ — ~~Consumer and Insurance reached $4.2 billion at June 30, 2015 compared to $3.4 billion at June 30, 2014.~~

At March 31, 2016, we had three operating segments:

~~Origination volume~~ —Consumer and ~~Insurance totaled $1.2 billion for the second quarter of 2015 (including $272 million of direct auto loan originations) compared to $939 million for the second quarter of 2014.~~Insurance;

Acquisitions and Servicing; and

Real Estate.

~~Pretax core earnings (a non-GAAP measure) was $109 million~~See Note 16 of the Notes to Condensed Consolidated Financial Statements for ~~the second quarter of 2015 compared to $63 million for the second quarter of 2014.~~more information about our segments.

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~~SPRINGCASTLE INTERESTS SALE

~~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~~31, 2016, the SpringCastle Sellers, wholly owned subsidiaries of OMH, entered into a ~~Stock Purchase Agreement~~purchase agreement with ~~CitiFinancial~~the SpringCastle Buyers. Pursuant to the purchase agreement, SpringCastle Holdings sold its 47% limited liability company interests in each of SpringCastle America, LLC, SpringCastle Credit, ~~Company~~LLC and SpringCastle Finance, LLC, and Springleaf Acquisition sold its 47% limited liability company interest in SpringCastle Acquisition LLC, to ~~acquire OneMain~~the SpringCastle Buyers 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. As a result of the completion of this offering, the Initial Stockholder owned approximately ~~58% of SHI common stock at June 30, 2015, and the economic interests of Fortress and AIG reduced to approximately 55% and 3%, respectively.~~

~~SHI’s net proceeds from this sale were approximately $976 million, after deducting the underwriting discounts and commissions and additional offering-related expenses totaling $24~~$112 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.~~SpringCastle Interests Sale.

~~SECURITIZATIONS~~ONEMAIN ACQUISITION

~~During~~On November 15, 2015, OMH completed its acquisition of OMFH for approximately $4.5 billion in cash. As a result of the ~~first half~~OneMain Acquisition, OMFH became a wholly owned, indirect subsidiary of OMH.

On November 12, 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, extendedin connection with the ~~revolving periods on two existing conduits, and amended an existing conduit~~closing of the OneMain Acquisition, SFC’s wholly owned subsidiary, CSI, entered into the Independence Demand Note with Independence, whereby CSI provided Independence with $3.4 billion cash pursuant to ~~remove~~ the ~~minimum balance requirement and reduce~~terms of the ~~maximum principal balance.~~Independence Demand Note. See Note 119 of the Notes to Condensed Consolidated Financial Statements for further information regarding the Independence Demand Note and other related party agreements with OMFH.

Although management intends for Springleaf and OneMain to become an integrated operation, the two operations will initially be separately maintained under the Springleaf and OneMain brands, with the expectation of migrating to the OneMain brand.

LENDMARK SALE

On November 12, 2015, the Branch Sellers entered into the Lendmark Sale. The Springleaf branches to be sold represent 15% of our branches and approximately $606 million, or 12%, of our personal loans held for investment and held for sale as of March 31, 2016.

On May 2, 2016, the Branch Sellers sold the Springleaf branches to Lendmark for an aggregate cash purchase price of $624 million. On this date, SFC used a portion of the proceeds from the Lendmark Sale to repay, in full, its revolving demand note with OMFH, which totaled $376 million (including interest payable of $6 million) on May 2, 2016. See Note 2 and Note 18 of the Notes to Condensed Consolidated Financial Statements for further information on ~~these securitizations.~~

~~Subsequently, on July 15, 2015, we drew $100 million under~~ the ~~variable funding notes issued by Whitford Brook 2014-VFN1 Trust, an existing conduit.~~

~~CUSTOMER REWARDS PROGRAM~~

During the second quarter of 2015, Springleaf launched Springleaf Rewards, a unique digital loyalty program that rewards customers for a range of activities, such as consistently paying their bills on-time, interacting with the brand 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, for example taking credit education tutorials on line, monitoring their credit score, and paying on time. 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.Lendmark Sale.

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:~~

~~Slow but sustained economic growth.~~

~~Migration~~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.

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.

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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~~operating segments is provided under “Segment Results.”

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

Interest income:
Finance charges $ 404
$ 389
$ 802
$ 787
Finance receivables held for sale originated as held for investment 5
3
9
7
Total interest income 409
392
811
794

Interest expense 171
172
329
354

Net interest income 238
220
482
440

Provision for finance receivable losses 79
74
165
181

Net interest income after provision for finance receivable losses 159
146
317
259

Other revenues:

Insurance 40
43
76
81
Investment 15
10
32
20
Net loss on repurchases and repayments of debt —
—
—
(7 )
Net gain on sales of real estate loans and related trust assets —
35
—
90
Other 4
4
4
8
Total other revenues 59
92
112
192

Other expenses:

Operating expenses:

Salaries and benefits 98
82
178
164
Other operating expenses 68
51
141
102
Insurance losses and loss adjustment expenses 20
19
36
37
Total other expenses 186
152
355
303

Income before provision for (benefit from) income taxes 32
86
74
148

Provision for (benefit from) income taxes (1 ) 33
7
57

Net income 33
53
67
91

Net income attributable to non-controlling interests 31
—
62
—

Net income attributable to Springleaf Finance Corporation $ 2
$ 53
$ 5
$ 91



(dollars in millions)	Three Months Ended March 31,
(dollars in millions)	2016		2015

Interest income	$	431	$	402
Interest expense	156		158
Provision for finance receivable losses	94		86
Net interest income after provision for finance receivable losses	181		158
Net gain on sale of SpringCastle interests	229		—
Other revenues	85		53
Other expenses	191		169
Income before provision for income taxes	304		42
Provision for income taxes	106		8
Net income	198		34
Net income attributable to non-controlling interests	26		31
Net income attributable to Springleaf Finance Corporation	$	172	$	3

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Comparison of Consolidated Results for Three Months Ended ~~June 30,~~March 31, 2016 and 2015 ~~and 2014~~

~~Finance charges~~Interest income increased for the three months ended ~~June 30, 2015~~March 31, 2016 when compared to the same period in ~~2014~~2015 due to the net of the following:


(dollars in millions)

2015 compared to 2014 - Three Months Ended June 30

Three Months Ended March 31, 2016 compared to 2015
Decrease in average net receivables	$	(174	)	$	(1	)
Increase in yield	71
SpringCastle finance charges in 2015	118
Decrease in yield				(16		)
Increase in number of days in 2016				3
Increase in interest income on finance receivables held for sale				43
Total	$	15		$	29

Average net receivables decreased for the three months ended ~~June 30, 2015 when compared to the same period in 2014~~March 31, 2016 primarily due to (i) the liquidating status of the previously owned SpringCastle Portfolio, (ii) the transfer of $608 million of our ~~liquidating real estate loan portfolio, including the transfers of real estate~~personal loans ~~with a total carrying value of $6.6 billion~~ to finance receivables held for sale on September 30, 2015 as part of OMH’s initiative to close the OneMain Acquisition, and ~~the subsequent sales of nearly all of these~~(iii) our liquidating real estate ~~loans during 2014.~~loan portfolio. This decrease was partially offset by higher personal loan average net receivables resulting from (i) our continued focus on personal loan originations ~~though~~through our branch network and centralized operations and (ii) the ~~launch~~continued growth of our auto loan product.

Yield decreased for the three months ended March 31, 2016 primarily due to (i) the continued growth of our auto loan product, which generally has lower yields and (ii) a decrease in ~~June~~yield on our liquidating real estate loan portfolio due to a higher proportion of ~~2014.~~TDR real estate loans.

~~Yield~~

Interest income on finance receivables held for sale increased for the three months ended ~~June 30, 2015 when compared to the same period in 2014~~March 31, 2016 primarily due to a higher ~~proportion~~average finance receivables held for sale during the 2016 period resulting from the transfer of $608 million of our personal loans ~~which have higher yields, as a result of the real estate loan sales during 2014.~~

~~SpringCastle finance charges~~to held for ~~the three months ended June~~sale on September 30, ~~2015 resulted from the SAC Capital Contribution on July 31, 2014.~~2015.

Interest expense decreased for the three months ended ~~June 30, 2015~~March 31, 2016 when compared to the same period in ~~2014~~2015 due to the net of the following:

(dollars in millions)

2015 compared to 2014 - Three Months Ended June 30

Decrease in average debt $ (38 )
Increase in weighted average interest rate 10
SpringCastle interest expense in 2015 27
Total $ (1 )



(dollars in millions)

Three Months Ended March 31, 2016 compared to 2015
Increase in average debt	$	9
Decrease in weighted average interest rate	(15		)
Interest expense on note payable to affiliate	4
Total	$	(2	)

Average debt increased for the three months ended March 31, 2016 primarily due to additional borrowings under our conduit facilities and higher average debt pursuant to our consumer securitization transactions during the 2016 period. See Note 11 of the Notes to Condensed Consolidated Financial Statements for further information on our consumer loan securitization transactions and borrowings under our conduit facilities.

Weighted average interest rate on our debt decreased for the three months ended ~~June 30, 2015 when compared to the same period in 2014~~March 31, 2016 primarily due to ~~debt repurchases and repayments of $3.3 billion during the past twelve months and the elimination of $3.4 billion of debt associated with~~additional borrowings under our mortgage securitizations as a result of the sales of the Company’s beneficial interests in the mortgage-backed certificates during 2014 and the resulting deconsolidation of the securitization trusts and their outstanding certificates reflected as long-term debt. These decreases were partially offset by debt issuances pursuant to our consumer securitization transactions completed during the past twelve months.

The weighted average interest rate on our debt increased for the three months ended June 30, 2015 when compared to the same period in 2014 primarily due to the elimination of debt associated with our mortgage securitizations discussed above,conduit facilities, 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.~~

~~SpringCastle interest expense for the three months ended June 30, 2015 reflected the interest~~

Interest expense on ~~long-term debt associated with the securitization~~note payable to affiliate resulted from a revolving demand note agreement between SFC and OMFH, entered into on December 1, 2015. See Note 9 of the ~~SpringCastle Portfolio.~~Notes to Condensed Consolidated Financial Statements for further information on this note.

Provision for finance receivable losses increased $5$8 million for the three months ended ~~June 30, 2015~~March 31, 2016 when compared to the same period in ~~2014. This increase was~~2015 primarily due to the net ~~charge-offs on the SpringCastle Portfolio during the 2015~~

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~~period as a result~~ of the ~~SAC Capital Contribution on July~~following:

Net charge-offs increased for the three months ended March 31, ~~2014 and~~2016 primarily due to higher net charge-offs on our personal loans ~~primarily due to~~reflecting (i) growth in ~~our~~these personal loans during the past ~~twelve~~12 months and (ii) a higher personal loan delinquency ratio at ~~June 30, 2015.~~March 31, 2016. This increase was partially offset by ~~reductions in~~(i) lower net charge-offs on the previously owned SpringCastle Portfolio reflecting the improved central servicing performance as the acquired portfolio matured under our ownership and ~~the allowance requirements~~(ii) lower net charge-offs on our real estate loans ~~as a result~~reflecting the liquidating status 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.~~loan portfolio.

~~Insurance revenues~~

Allowance requirements on our auto loan product decreased $3for the three months ended March 31, 2016, as we now have a full year of historical data reflected in the allowance model, in addition to using delinquency roll rates from a proxy hard-secured portfolio.

Net gain on sale of SpringCastle interests of $229 million for the three months ended ~~June 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~~March 31, 2016 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 $5 million for the three months ended June 30, 2015 when compared to the same period in 2014 primarily due to realized gains on available-for-sale securities resulting from the sales of certain investment securities during the second quarter of 2015.

~~Net~~net gain on sales of real estate loans and related trust assets of $35 million for the three months ended June 30, 2014 reflected the reversal of the remaining unaccreted push-down accounting basis for the real estate loans, less allowance for finance receivable losses that we established at the date of the Fortress Acquisition.

Salaries and benefits increased $16 million for the three months ended June 30, 2015 when compared to the same period in 2014 primarily due to non-cash incentive compensation expense of $15 million recorded in the second quarter of 2015 relating to the rights of certain executives to a portion of the cash proceeds fromassociated with the sale of ~~SHI’s common stock by~~our equity interest in the ~~Initial Stockholder.~~SpringCastle Joint Venture. See Note 2 of the Notes to Condensed Consolidated Financial Statements for further information on the ~~equity offering.~~sale.

Other ~~operating expenses~~revenues increased ~~$17~~$32 million for the three months ended ~~June 30, 2015~~March 31, 2016 when compared to the same period in ~~2014~~2015 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 advertising expenses primarily due to 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 a $5 million reduction in reserves related to estimated PPI claims. See Note 14 of the Notes to Condensed Consolidated Financial Statements for further information on the loss contingencies related to PPI claims.

Benefit from income taxes totaled $1 million for the three months ended June 30, 2015 compared to provision for income taxes of $33 million for the same period in 2014. The effective tax rate for the three months ended June 30, 2015 was (3.0)% compared to 38.1% for the same period in 2014. The effective tax rate for the three months ended June 30, 2015 differed from the federal statutory rate primarily due to the effect of the non-controlling interest in our joint venture. The effective tax rate for the three months ended June 30, 2014 differed from the federal statutory rate primarily due to the effect of our state income taxes.

~~Comparison of Consolidated Results for Six Months Ended June 30, 2015 and 2014~~

~~Finance charges increased for the six months ended June 30, 2015 when compared to the same period in 2014~~ due to the net of the following:

(dollars in millions)

2015 compared to 2014 - Six Months Ended June 30

Decrease in average net receivables $ (174 )
Increase in yield 71
SpringCastle finance charges in 2015 118
Total $ 15

~~Average net receivables decreased for~~ (i) increase in interest income on notes receivable from parent and affiliates of $49 million reflecting interest income on the six months ended June 30, 2015 when compared to the same period in 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

~~Table of Contents~~

decrease was partially offset by higher personal loan average net 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.

Yield increased for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to a higher proportion of personal loans, which have higher yields, as a result of the real estate loan sales during 2014.

~~SpringCastle finance charges for the six months ended June 30, 2015 resulted from the SAC Capital Contribution on July 31, 2014.~~

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

(dollars in millions)

2015 compared to 2014 - Six Months Ended June 30

Decrease in average debt $ (103 )
Increase in weighted average interest rate 33
SpringCastle interest expense in 2015 45
Total $ (25 )

~~Average debt decreased for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to debt repurchases and repayments of $3.3 billion~~Independence Demand Note during the ~~past twelve months~~2016 period 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 resulting deconsolidation of the securitization trusts and their outstanding certificates reflected as long-term debt. These decreases were partially offset by net debt issuances pursuant to our consumer securitization transactions completed during the past twelve months.

The weighted average interest rate on our debt increased for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to 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.

~~SpringCastle interest expense for the six months ended June 30, 2015 reflected the interest expense on long-term debt associated with the securitization of the SpringCastle Portfolio.~~

Provision for finance receivable losses decreased $16 million for the six months ended June 30, 2015 when compared to the same period in 2014. This decrease was primarily due to reductions in the allowance requirements and net charge-offs on our real estate loans 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 the net charge-offs on the SpringCastle Portfolio during the 2015 period as a result of the SAC Capital Contribution on July 31, 2014 and 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 June 30, 2015.

Insurance revenues decreased $5 million for the six months ended June 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 $12 million for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to realized gains on available-for-sale securities resulting from the sales of certain investment securities during the first half of 2015.

~~Net loss on repurchases and repayments of debt of $7 million for the six months ended June 30, 2014, reflected repurchases of debt at net amounts greater than carrying value.~~

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Net gain on sales of real estate loans and related trust assets of $90 million for the six months ended June 30, 2014, reflected the reversal of the remaining unaccreted push-down accounting basis for the real estate loans, less allowance for finance receivable losses that we established at the date of the Fortress Acquisition.

Other revenues — other decreased $4 million for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to net charge-offs recognized on our finance receivables held for sale and provision adjustments for liquidated held for sale accounts during the first half of 2015. This decrease was partially offset by higher interest income on SFC’s note receivable from SFI reflecting additional SFI borrowings during the ~~first half of 2015~~2016 period to fund the operations of its ~~subsidiaries.~~subsidiaries and (ii) decrease in investment revenues of $11 million primarily due to lower realized gains on the sale of investment securities and a decrease in invested assets.

~~Salaries and benefits~~Other expenses increased ~~$14~~$22 million for the ~~six~~three months ended ~~June 30, 2015~~March 31, 2016 when compared to the same period in ~~2014~~2015 primarily due to ~~non-cash incentive compensation expense of $15 million recorded in~~ the second quarter of 2015 relating 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 on the equity offering.following:

~~Other operating expenses~~

Salaries and benefits increased ~~$39~~$17 million for the ~~six~~three months ended ~~June 30, 2015 when compared to the same period in 2014~~March 31, 2016 primarily due to ~~servicing~~higher salary accruals resulting from an increase in the number of employees.

Other operating expenses increased $4 million for the ~~SpringCastle Portfolio as a result of the SAC Capital Contribution on July~~three months ended March 31, ~~2014. This increase also reflected~~2016 primarily due to (i) higher advertising expenses ~~primarily~~ due to ~~an increase in~~increased focus on e-commerce and increased 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.~~(ii) higher information technology expenses. The increase in other operating expenses was partially offset by a $5$6 million reduction in reserves related to estimated ~~PPI~~Property Protection Insurance claims, which we believe will have minimal loss contingencies.

Provision for income taxes totaled $106 million for the three months ended March 31, 2016 compared to $8 million for the same period in 2015. The effective tax rate for the three months ended March 31, 2016 was 34.9% compared to 19.3% for the same period in 2015. The effective tax rates for the three months ended March 31, 2016 and ~~lower subservicing fees~~2015 differed from the federal statutory rates primarily due to the effects of the non-controlling interest in the previously owned SpringCastle Portfolio. As discussed in Note 2 of the Notes to Condensed Consolidated Financial Statements, on March 31, 2016, the Company sold its equity interest in the SpringCastle Portfolio.

Non-GAAP Financial Measures

We report the operating results of our Core Consumer Operations, Non-Core Portfolio, and Other using the Segment Accounting Basis, which (i) reflects our allocation methodologies for certain costs, primarily interest expense, loan loss reserves and acquisition costs to reflect the manner in which we assess our business results and (ii) excludes the impact of applying purchase accounting. These allocations and adjustments have a material effect on our ~~real estate loans~~reported segment basis income as ~~a result of the real estate loan sales during 2014.~~compared to GAAP. See Note 1416 of the Notes to Condensed Consolidated Financial Statements for ~~further information on~~a complete discussion of our segment accounting. We believe the ~~loss contingencies related to PPI claims.~~Segment Accounting Basis (a basis other than U.S. GAAP) provides investors the basis for which management evaluates segment performance.

~~Provision for income taxes decreased $50 million for~~In addition, management uses pretax core earnings, a non-GAAP financial measure, as a key performance measure in evaluating the six months ended June 30, 2015 when compared to the same period in 2014 reflecting lower pretax income in the 2015 period primarily due to the net gain on sales of real estate loans recorded in the first half of 2014 and a decrease in our effective tax rate for the 2015 period. The effective tax rate for the six months ended June 30, 2015 was 9.8% compared to 38.3% for the same period in 2014. The effective tax rate for the six months ended June 30, 2015 differed from the federal statutory rate primarily due to the effect of the non-controlling interest in our joint venture. The effective tax rate for the six months ended June 30, 2014 differed from the federal statutory rate primarily due to the effectperformance of our ~~state income taxes.~~

~~Table of Contents~~

~~Reconciliation of Income before Provision for Income Taxes on Push-Down Accounting Basis to Historical Accounting Basis~~

~~Due to the nature of the Fortress Acquisition, we revalued~~Core Consumer Operations. Pretax core earnings represents 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 before provision for income taxes on a ~~push-down accounting basis~~Segment Accounting Basis and excludes results of operations from our Non-Core Portfolio (Real Estate segment) and other non-core, non-originating legacy operations, net gain on sale of SpringCastle interests related to Core Consumer Operations, losses resulting from accelerated long-term repayment and repurchases of long-term debt related to Core Consumer Operations, SpringCastle transaction costs, and results of operations attributable to non-controlling interests. Pretax core earnings provides us with a key measure of our Core Consumer Operations’ performance and assists us in comparing its performance on an alternative 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, ~~(loss)~~net income, operating cash flow, and other measures of financial performance prepared in accordance with U.S. GAAP.

The reconciliations of (i) income before provision for ~~(benefit from)~~income taxes on GAAP basis (purchase accounting) to the same amount under a Segment Accounting Basis and (ii) income before provision for 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~~Segment Accounting Basis to ~~better understand our operating results)~~pretax core earnings were as follows:

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

Income before provision for income taxes - push-down accounting basis $ 32
$ 86
$ 74
$ 148
Interest income adjustments (a) (4 ) (32 ) (7 ) (68 )
Interest expense adjustments (b) 32
35
62
64
Provision for finance receivable losses adjustments (c) 7
1
9
1
Repurchases and repayments of long-term debt adjustments (d) —
—
—
(4 )
Fair value adjustments on debt (e) —
—
—
8
Sales of finance receivables held for sale originated as held for investment adjustments (f) —
(58 ) —
(175 )
Amortization of other intangible assets (g) 1
2
2
3
Other (h) 3
1
6
1
Income (loss) before provision for (benefit from) income taxes - historical accounting basis $ 71
$ 35
$ 146
$ (22 )



(dollars in millions)	Three Months Ended March 31,
(dollars in millions)	2016			2015

Income before provision for income taxes - GAAP basis	$	304		$	42
Adjustments:
Interest income (a)	(3		)	(3		)
Interest expense (b)	24			30
Provision for finance receivable losses (c)	2			2
Repurchases and repayments of long-term debt (d)	1			—
Amortization of other intangible assets (e)	—			1
Other (f)	(2		)	3
Income before provision for income taxes - Segment Accounting Basis	326			75
Adjustments:
Pretax operating loss - Non-Core Portfolio Operations	18			48
Pretax operating (income) loss - Other non-core/non-originating legacy operations	(51		)	11
Net gain on sale of SpringCastle interests	(229		)	—
Net loss from accelerated repayment/repurchase of debt - Core Consumer Operations	2			—
SpringCastle transaction costs	1			—
Operating income attributable to non-controlling interests	(26		)	(31		)
Pretax core earnings (non-GAAP)	$	41		$	103

(a)

Interest income adjustments consist of: ~~(1)~~(i) the ~~accretion~~net purchase accounting impact of the amortization (accretion) of the net ~~discount applied~~premium (discount) assigned to ~~non-credit impaired net~~ finance receivables ~~to revalue~~and (ii) the ~~non-credit impaired net finance receivables to their fair value at the date~~impact 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 ofidentifying purchased credit impaired finance receivables ~~net~~as compared to the historical values 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.receivables.

Components of interest income adjustments consisted of:

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

Accretion of net discount applied to non-credit impaired net finance receivables $ (3 ) $ (24 ) $ (6 ) $ (50 )
Purchased credit impaired finance receivables finance charges (1 ) (11 ) (1 ) (24 )
Elimination of accretion or amortization of historical unearned points and fees, deferred origination costs, premiums, and discounts —
3
—
6
Total $ (4 ) $ (32 ) $ (7 ) $ (68 )



(dollars in millions)	Three Months Ended March 31,
(dollars in millions)	2016			2015

Accretion of net discount applied to non-credit impaired net finance receivables	$	(3	)	$	(3	)

~~Table of Contents~~

(b)

Interest expense adjustments ~~consist of: (1)~~primarily include the accretion of the net discount applied to ~~long-term~~our long term debt ~~to revalue the debt securities to their fair value at the date~~as part 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.purchase accounting.

Components of interest expense adjustments were as follows:


(dollars in millions)	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
(dollars in millions)	2015			2014			2015			2014			2016			2015

Accretion of net discount applied to long-term debt	$	34		$	37		$	64		$	74		$	25		$	30
Elimination of accretion or amortization of historical discounts, premiums, commissions, and fees	(2		)	(2		)	(2		)	(10		)	(1		)	—
Total	$	32		$	35		$	62		$	64		$	24		$	30

(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~~adjustment to 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 accountingSegment Accounting Basis and our GAAP basis.

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


(dollars in millions)	Three Months Ended June 30,					Six Months Ended June 30,						Three Months Ended March 31,
(dollars in millions)	2015		2014			2015			2014			2016			2015

Allowance for finance receivable losses adjustments	$	7	$	13		$	11		$	22		$	3		$	4
Net charge-offs	—		(12		)	(2		)	(21		)	(1		)	(2		)
Total	$	7	$	1		$	9		$	1		$	2		$	2


(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~~Amortization of other intangible assets reflects the net impact of amortization associated with identified intangibles as part of purchase 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.deferred costs impacted by purchase accounting.


(f)	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.

~~(h)~~

“Other” items reflect differences between ~~historical accounting basis~~Segment Accounting Basis and ~~push-down accounting~~GAAP 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 June 30, 2015, the remaining unaccreted push-down accounting basis totaled $10 million for net finance receivables, less allowance for finance receivable losses, and $493 million for long-term debt.

~~Table of Contents~~

Segment Results

See Note 16 of the Notes to Condensed Consolidated Financial Statements for a description of our segments. Management considers the Consumer and Insurance segment and Acquisitions and Servicing segment as our Core Consumer Operations and the Real Estate segment as our Non-Core Portfolio. ~~Due to the nature~~As a result of the Fortress Acquisition, we have applied ~~push-down~~purchase 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~~Segment Accounting Basis, which (i) reflects our allocation methodologies for certain costs, primarily interest expense, loan loss reserves and acquisition costs to reflect the ~~Fortress Acquisition,~~manner in which we ~~refer~~assess our business results and (ii) excludes the impact of applying purchase accounting. These allocations and adjustments have a material effect on our reported segment basis income as compared to ~~as “historical accounting~~GAAP. We believe a Segment Accounting Basis (a 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~~investors 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~~for which management evaluates segment ~~since this segment resulted from the SAC Capital Contribution on July 31, 2014 and therefore, was not affected by the Fortress Acquisition.~~performance. See Note 16 of the Notes to Condensed Consolidated Financial Statements for reconciliations of segment totals to condensed consolidated financial statement ~~amounts.~~amounts and for further discussion of the differences in our Segment Accounting Basis and GAAP.

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



Interest income	Directly correlated with a specific segment.
Interest expense	~~Disaggregated into three categories~~ Acquisition and Servicing - This segment includes interest expense specifically identified to the SpringCastle Portfolio.
	Consumer and Insurance, Real Estate and Other - The Company has securitization debt and unsecured debt. The Company first allocates interest expense to its segments based on actual expense for securitizations and secured term debt and using a weighted average for unsecured debt allocated to the ~~underlying~~segments. Average unsecured debt ~~that~~allocations for the ~~expense pertains to:~~periods presented are as follows:
	Subsequent to the OneMain Acquisition
	Total average unsecured debt is allocated as follows:
	l ~~securitizations~~ Consumer and Insurance ~~— allocated to the segments whose finance receivables serve as the collateral securing each~~- receives remainder of ~~the respective debt instruments;~~unallocated average debt; and
	l Real Estate and Other - at 100% of asset base. (Asset base represents the average net finance receivables including finance receivables held for sale.)
	The net effect of the change in debt allocation and asset base methodologies for the three months ended March 31, 2015 had it been in place as of the beginning of the year would be an increase in interest expense of $54 million for Consumer and Insurance and a decrease in interest expense of $45 million and $9 million for Real Estate and Other, respectively.
	For the period third quarter 2014 to the OneMain Acquisition
	Total average unsecured debt — is allocated to Consumer and Insurance, Real Estate and Other, such that the ~~segments based on expected leverage~~total debt allocated across each segment equals 83%, up to 100% and 100% of each of its respective asset base. Any excess is allocated to Consumer and Insurance.
	Average unsecured debt is allocated after average securitized debt to achieve the calculated average segment debt.
	Asset base represents the following:
	l Consumer and Insurance - average net finance receivables including average net finance receivables held for ~~that segment or the balance of unencumbered assets~~sale;
	l Real Estate - average net finance receivables including average net finance receivables held for sale, cash and cash equivalents, investments including proceeds from ~~sale of receivables in that segment;~~Real Estate sales; and
	l ~~secured term loan~~Other ~~— allocated to the segments whose~~- average net finance receivables ~~served as~~other than the ~~collateral securing each of the respective debt instruments.~~period listed below:
	l February 2015 to April 2015 - average net finance receivables and cash and cash equivalents less operating cash reserve and cash included in other segments.
Provision for finance receivable losses	Directly correlated with a specific segment, except for allocations to ~~“other,”~~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~~which 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~~policy benefits and ~~loss adjustment expenses~~claims	Directly correlated with a specific segment.

~~Table of Contents~~

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

CORE CONSUMER OPERATIONS

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

(dollars in millions) Three Months Ended June 30, Six Months Ended June 30,

2015 2014
2015 2014

Interest income
$ 385

$ 220

$ 764

$ 429

Interest expense
58

41

121

82

Net interest income
327

179

643

347

Provision for finance receivable losses
76

48

158

93

Net interest income after provision for finance receivable losses
251

131

485

254

Other revenues:

Insurance
40

43

76

81
Investment
13

12

31

22
Net loss on repurchases and repayments of debt
—

—

—

(1 )
Other
2

3

4

5
Total other revenues
55

58

111

107

Other expenses:

Operating expenses:

Salaries and benefits
78

70

154

140
Other operating expenses
68

37

132

72
Insurance loss and loss adjustment expenses
20

19

36

37
Total other expenses
166

126

322

249

Pretax operating income
140

63

274

112

Pretax operating income attributable to non-controlling interests
31

—

62

—

Pretax operating income attributable to Springleaf Finance Corporation
$ 109

$ 63

$ 212

$ 112



(dollars in millions)	At or for the Three Months Ended March 31,
(dollars in millions)	2016			2015

Interest income	$	412		$	379
Interest expense	115			63
Provision for finance receivable losses	90			82
Net interest income after provision for finance receivable losses	207			234
Net gain on sale of SpringCastle interests	229			—
Other revenues	45			56
Other expenses	188			156
Pretax operating income	293			134
Pretax operating income attributable to non-controlling interests	26			31
Pretax operating income attributable to Springleaf Finance Corporation	$	267		$	103

Consumer and Insurance
Finance receivables held for investment:
Net finance receivables	$	4,365		$	3,861
Number of accounts	880,116			898,617
TDR finance receivables	$	31		$	26
Allowance for finance receivable losses - TDR	$	10		$	3
Finance receivables held for sale:
Net finance receivables	$	606		$	—
Number of accounts	143,254			—
Finance receivables held for investment and held for sale:
Average net receivables	$	4,926		$	3,799
Yield	25.47		%	26.90		%
Gross charge-off ratio	7.20		%	6.40		%
Recovery ratio	(0.85		)%	(0.78		)%
Charge-off ratio	6.35		%	5.62		%
Delinquency ratio	2.76		%	2.51		%
Origination volume	$	943		$	860
Number of accounts originated	154,759			155,523

Acquisitions and Servicing
Finance receivables held for investment:
Net finance receivables	$	—		$	1,868
Number of accounts	—			264,830
Average net receivables	1,529			1,923
Yield	26.17		%	26.34		%
Net charge-off ratio	4.65		%	5.43		%
Delinquency ratio	—		%	4.22		%

~~Table of Contents~~

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

(dollars in millions) Three Months Ended June 30, At or for the
Six months ended June 30,
2015 2014
2015 2014

Consumer and Insurance

Net finance receivables

$ 4,234
$ 3,352
Number of accounts
944,792
857,884

TDR finance receivables $ 27
$ 16
Allowance for finance receivable losses - TDR $ 7
$ 1
Provision for finance receivable losses - TDR $ 6
$ —
$ 10
$ —

Average net receivables $ 4,043
$ 3,249
$ 3,921
$ 3,187
Yield 26.52 % 27.04 % 26.71 % 27.00 %

Gross charge-off ratio 5.81 % 5.78 % 6.10 % 5.67 %
Recovery ratio (0.98 )% (0.68 )% (0.88 )% (0.62 )%
Charge-off ratio 4.83 % 5.10 % 5.22 % 5.05 %
Delinquency ratio 2.38 % 2.28 %

Origination volume $ 1,171
$ 939
$ 2,031
$ 1,656
Number of accounts 218,743
208,791
374,266
368,625

Acquisitions and Servicing

Net finance receivables $ 1,764
$ —
Number of accounts 253,351
—

TDR finance receivables $ 12
$ —
Allowance for finance receivable losses - TDR $ 3
$ —
Provision for finance receivable losses - TDR $ —
$ —
$ 1
$ —

Average net receivables $ 1,816
$ —
$ 1,870
$ —
Yield 26.13 % — % 26.23 % — %

Net charge-off ratio 5.07 % — % 5.25 % — %
Delinquency ratio
3.75 % — %

Comparison of Pretax Operating Results for Three Months Ended ~~June 30,~~March 31, 2016 and 2015 ~~and 2014~~

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

Interest income:
Finance charges - Consumer and Insurance $ 267
$ 220
Finance charges - Acquisitions and Servicing 118
—
Total $ 385
$ 220

~~Table of Contents~~

~~Finance charges — Consumer and Insurance~~Interest income increased ~~$47~~$33 million for the three months ended ~~June 30, 2015~~March 31, 2016 when compared to the same period in ~~2014 primarily~~2015 due to ~~increases in average~~the net ~~receivables, partially offset by a decrease in yield. Average net receivables~~of the following:

Interest income — Consumer and Insurance increased $57 million for the three months ended ~~June 30, 2015~~March 31, 2016 due to the following:


◦	Finance chargesincreased$15 million for the three months ended March 31, 2016 primarily due to the net of the following:


▪	Average net receivables increased for the three months ended March 31, 2016 primarily due to increased originations on our personal loans resulting from our continued focus on personal loans, including our auto loan product. At March 31, 2016, we had nearly 89,000 auto loans totaling $1.0 billion compared to nearly 34,000 auto loans totaling $415 million at March 31, 2015.


▪	Yield decreased for the three months ended March 31, 2016 primarily due to the higher proportion of auto loan product, which generally has lower yields.


◦	Interest income on finance receivables held for sale of $42 million for the three months ended March 31, 2016 resulted from the transfer of personal loans to finance receivables held for sale on September 30, 2015.

Interest income — Acquisitions and Servicing decreased $24 million for the three months ended March 31, 2016 primarily due to lower average net receivables reflecting the liquidating status of the previously owned SpringCastle Portfolio.

Interest expense increased $52 million for the three months ended March 31, 2016 when compared to the same period in ~~2014 primarily~~2015 due to the net of the following:

Interest expense — Consumer and Insuranceincreased originations on personal loans resulting from our continued focus on personal loans, including the launch of our auto loan product in June of 2014. At June 30, 2015, we had over 52,000 auto loans totaling $630 million. Yield decreased$55 million for the three months ended ~~June 30, 2015~~March 31, 2016 primarily due to a change in the methodology of allocating interest expense, as previously described in the allocation methodologies table.

Interest expense — Acquisitions and Servicing decreased $3 million for the three months ended March 31, 2016 primarily due to the liquidating status of the previously owned SpringCastle Portfolio.

Provision for finance receivable losses increased $8 million for the three months ended March 31, 2016 when compared to the same period in ~~2014 primarily~~2015 due to the ~~launch~~net of ~~our auto loan product in June of 2014, which generally has lower yields.~~the following:

~~Finance charges — Acquisitions and Servicing for the three months of June 30, 2015 reflected finance charges on the SpringCastle Portfolio.~~

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

Interest expense - Consumer and Insurance $ 36
$ 41
Interest expense - Acquisitions and Servicing 22
—
Total $ 58
$ 41

Interest expense — Consumer and Insurance decreased $5 million for the three months ended June 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.

~~Interest expense — Acquisitions and Servicing for the three months ended June 30, 2015 reflected interest expense on long-term debt associated with the securitization of the SpringCastle Portfolio.~~

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

Provision for finance receivable losses - Consumer and Insurance $ 53
$ 48
Provision for finance receivable losses - Acquisitions and Servicing 23
—
Total $ 76
$ 48

Provision for finance receivable losses — Consumer and Insurance increased $5$18 million for the three months ended ~~June 30, 2015 when compared to the same period in 2014~~March 31, 2016 primarily due to higher net charge-offs on our personal loans during the ~~2015~~2016 period ~~primarily due to~~reflecting (i) growth in our personal loans during the past ~~twelve~~12 months and (ii) a higher personal loan delinquency ratio at ~~June 30, 2015.~~March 31, 2016. This increase was partially offset by a decrease in allowance requirements on our auto loan product, as we now have a full year of historical data reflected in the allowance model, in addition to using delinquency roll rates from a proxy hard-secured portfolio.

~~Insurance revenues~~

Provision for finance receivable losses — Acquisitions and Servicing decreased $3$10 million for the three months ended ~~June 30, 2015~~March 31, 2016 primarily due to lower net charge-offs on the previously owned SpringCastle Portfolio reflecting improvements in servicing of the acquired portfolio and its liquidating status.

Net gain on sale of SpringCastle interests of $229 million for the three months ended March 31, 2016 reflected the net gain associated with the sale of our equity interest in the SpringCastle Joint Venture. See Note 2 of the Notes to Condensed Consolidated Financial Statements for further information on the sale.

Other revenues decreased $11 million for the three months ended March 31, 2016 when compared to the same period in ~~2014~~2015 primarily due to ~~decreases in credit and non-credit earned premiums. The~~a decrease in ~~credit earned premiums reflected~~investment revenues of $12 million resulting from lower realized gains on the ~~cancellations~~sale of ~~dwelling policies as a result of the real estate loan sales during 2014. The decrease~~investment securities and lower investment income generated from an investment in ~~non-credit earned premiums reflected fewer non-credit policies written.~~

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

Salaries and benefits - Consumer and Insurance $ 78
$ 70
Salaries and benefits - Acquisitions and Servicing —
—
Total $ 78
$ 70
SpringCastle debt, which is eliminated in our consolidating operating results.

~~Salaries and benefits — Consumer and Insurance~~

Other expenses increased $8$32 million for the three months ended ~~June 30, 2015~~March 31, 2016 when compared to the same period in ~~2014 primarily~~2015 due to ~~increased originations of personal loans and increased staffing in our centralized operations. This increase also reflected~~ the ~~redistribution~~net of the ~~allocation of salaries and benefit expenses from our Real Estate segment as a result of the real estate loan sales in 2014.~~

~~Table of Contents~~

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

Other operating expenses - Consumer and Insurance $ 53
$ 37
Other operating expenses - Acquisitions and Servicing 15
—
Total $ 68
$ 37
following:

Other ~~operating~~ expenses — Consumer and Insurance increased ~~$16~~$34 million for the three months ended June 30, 2015 when compared to the same period in 2014 primarily due to higher advertising expenses, professional fees, occupancy costs, information technology expenses, and credit, collection and losses. This increase 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 Six Months Ended June 30, 2015 and 2014~~

(dollars in millions) Six Months Ended June 30,
2015 2014

Interest income:
Finance charges - Consumer and Insurance $ 521
$ 429
Finance charges - Acquisitions and Servicing 243

—
Total $ 764

$ 429

Finance charges — Consumer and Insurance increased $92 million for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to increases in average net receivables, partially offset by a decrease in yield. Average net receivables increased for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to increased originations on personal loans resulting from our continued focus on personal loans, including the launch of our auto loan product in June of 2014. At June 30, 2015, we had over 52,000 auto loans totaling $630 million. Yield decreased for the six months ended June 30, 2015 when compared to the same period in 2014March 31, 2016 primarily due to the ~~launch of our auto loan product in June of 2014, which generally has lower yields.~~following:

~~Finance charges — Acquisitions and Servicing for the six months ended June 30, 2015 reflected finance charges on the SpringCastle Portfolio.~~

(dollars in millions) Six Months Ended June 30,
2015 2014

Interest expense - Consumer and Insurance $ 76
$ 82
Interest expense - Acquisitions and Servicing 45

—
Total $ 121

$ 82

Interest expense — Consumer and Insurance decreased $6 million for the six months ended June 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.

~~Interest expense — Acquisitions and Servicing for the six months ended June 30, 2015 reflected interest expense on long-term debt associated with the securitization of the SpringCastle Portfolio.~~

(dollars in millions) Six Months Ended June 30,
2015 2014

Provision for finance receivable losses - Consumer and Insurance $ 108
$ 93
Provision for finance receivable losses - Acquisitions and Servicing 50

—
Total $ 158

$ 93

~~Table of Contents~~

Provision for finance receivable losses — Consumer and Insurance increased $15 million for the six months ended June 30, 2015 when compared to the same period in 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 June 30, 2015.

Investment revenues increased $9 million for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to realized gains on available-for-sale securities resulting from the sales of certain investment securities during the first half of 2015.

(dollars in millions) Six Months Ended June 30,
2015 2014

Salaries and benefits - Consumer and Insurance $ 154
$ 140
Salaries and benefits - Acquisitions and Servicing —
—
Total $ 154
$ 140

Salaries and benefits — Consumer and Insurance increased $14 million for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to 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) Six Months Ended June 30,
2015 2014

Other operating expenses - Consumer and Insurance $ 101
$ 72
Other operating expenses - Acquisitions and Servicing 31
—
Total $ 132
$ 72

Other operating expenses — Consumer and Insurance increased $29 million for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to higher advertising expenses, professional fees, credit, collection and losses, occupancy costs, and information technology expenses. This increase also reflected the redistribution of the allocation of other operating expenses as a result of the real estate loan sales in 2014.

~~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), 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.

~~Table of Contents~~

~~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 millions) Three Months Ended June 30, Six Months Ended June 30,
2015 2014
2015 2014

Income (loss) before provision for (benefit from) income taxes - historical accounting basis * $ 71
$ 35
$ 146
$ (22 )
Adjustments:

Pretax operating loss - Non-Core Portfolio Operations 43
22
91
127
Pretax operating loss - Other/non-originating legacy operations 26
6
37
7
Net loss from accelerated repayment/repurchase of debt - Core Consumer Operations (attributable to SFC) —
—
—
1
Pretax operating income attributable to non-controlling interests (31 ) —
(62 ) —
Pretax core earnings $ 109
$ 63
$ 212
$ 113


*◦	~~See reconciliation~~ Salaries and benefits increased $15 million for the three months ended March 31, 2016 primarily due to higher variable compensation reflecting increased originations of ~~income before provision for income taxes on a push-down accounting basis to a historical accounting basis, which is presented prior to “Segment Results”.~~personal loans and increased staffing.

◦

Other operating expenses increased $18 million for the three months ended March 31, 2016 primarily due to (i) higher advertising expenses reflecting our increased focus on e-commerce, (ii) higher information technology expenses, (iv) higher occupancy costs resulting from increased rent expense on our administrative offices and servicing facilities, and (v) higher credit and collection related costs reflecting growth in personal loans, including our auto loan product.

65Other expenses — Acquisitions and Servicing decreased $2 million for the three months ended March 31, 2016 primarily due to decreased credit and collection related costs reflecting lower portfolio servicing costs due to the liquidating status of the previously owned SpringCastle Portfolio.

~~Table of Contents~~

NON-CORE PORTFOLIO

Pretax operating results ~~for Real Estate (which are reported on a historical accounting basis) were as follows:~~

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

Interest income:

Finance charges
$ 14

$ 133
$ 29

$ 281
Finance receivables held for sale originated as held for investment
3

3
6

7
Total interest income
17

136
35

288

Interest expense
59

94
119

204

Net interest income (loss)
(42 )
42
(84 )
84

Provision for finance receivable losses
(5 )
21
(3 )
82

Net interest income (loss) after provision for finance receivable losses
(37 )
21
(81 )
2

Other revenues:

Investment 3
—
8
—
Net loss on repurchases and repayments of debt
—

—
—

(10 )
Net gain on fair value adjustments on debt
—

—
—

8
Net loss on sales of real estate loans and related trust assets *
—

(23 ) —

(85 )
Other
—

(1 ) (2 )
(1 )
Total other revenues
3

(24 )
6

(88 )

Other expenses:

Operating expenses:

Salaries and benefits
3

8
6

17
Other operating expenses
6

11
10

24
Total other expenses
9

19
16

41

Pretax operating loss
$ (43 )
$ (22 ) $ (91 )
$ (127 )


*	We have combined the lower of cost or fair value adjustments recorded on the date the real estate loans were transferred to finance receivables held for sale with the final gain (loss) on the sales of these loans.

~~Table of Contents~~

~~Selected~~and selected financial statistics for Real Estate (which are reported on a ~~historical accounting basis)~~Segment Accounting Basis) were as follows:


(dollars in millions)	Three Months Ended June 30,						At or for the Six Months Ended June 30,						At or for the Three Months Ended March 31,
(dollars in millions)	2015			2014			2015			2014			2016			2015

Real estate
Interest income													$	15		$	18
Interest expense (a)													13			60
Provision for finance receivable losses													2			2
Net interest loss after provision for finance receivable losses													—			(44		)
Other revenues (b)													(11		)	3
Other expenses													7			7
Pretax operating loss													$	(18	)	$	(48	)

Finance receivables held for investment:
Net finance receivables							$	619		$	7,196		$	542		$	646
Number of accounts							20,121			103,595			17,550			21,257

TDR finance receivables							$	160		$	2,949		$	159		$	159
Allowance for finance receivable losses - TDR							$	53		$	704		$	57		$	55
Provision for finance receivable losses - TDR	$	1		$	21		$	2		$	66

Average net receivables	$	632		$	7,753		$	646		$	8,334		$	554		$	660
Yield	8.96		%	6.85		%	9.10		%	6.80		%	8.73		%	9.24		%

Loss ratio *	3.79		%	1.96		%	4.23		%	1.79		%
Loss ratio													3.00		%	4.66		%
Delinquency ratio							6.34		%	8.88		%	7.82		%	7.21		%

Finance receivables held for sale:
Net finance receivables							$	191		$	—		$	170		$	194
Number of accounts							3,368			—			3,048			3,472

TDR finance receivables							$	190		$	—		$	185		$	191


*(a)	~~The loss ratio~~Interest expense decreased $47 million for the ~~six~~three months ended ~~June 30, 2014 reflects $2~~March 31, 2016 when compared to the same period in 2015 primarily due to a change in the methodology of allocating interest expense, as previously described in the allocation methodologies table.

(b)

Other revenues decreased $14 million for the three months ended March 31, 2016 when compared to the same period in 2015 primarily due to the following: (i) impairments of ~~recoveries~~$7 million recognized on ~~charged-off~~our real estate loans ~~resulting from a~~held for sale ~~of previously charged-off real estate loans in March of 2014. Excluding these recoveries, our Real Estate loss ratio would have been 1.85% for~~during the ~~six months ended June 30, 2014.~~2016 period and (ii)

~~Comparison~~decrease in investment revenues of ~~Pretax Operating Results for Three Months Ended June 30, 2015 and 2014~~

~~Finance charges decreased $119~~$5 million, ~~for~~as the ~~three months ended June 30, 2015 when compared to~~prior period reflected higher investment income generated from investing 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 three months ended June 30, 2015 when compared to the same period in 2014 primarily due to the continued liquidationproceeds 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 three months ended June 30, 2015 reflected a higher proportion of our remaining real estate loans that are secured by second mortgages, which generally have higher yields. The increase in yield also reflected a higher proportion of non-modified real estate loans during the 2015 period, which generally have higher rates than TDR finance receivables.

~~Interest expense decreased $35 million for the three months ended June 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. The decrease in interest expense was partially offset by 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.

Provision for finance receivable losses decreased $26 million for the three months ended June 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 three months ended June 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 June 30, 2015.~~

~~Table of Contents~~

Net loss on sales of real estate loans and related trust assets of $23 million for the three months ended June 30, 2014 primarily reflected 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 $5 million for the three months ended June 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 $5 million for the three months ended June 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 Six Months Ended June 30, 2015 and 2014~~

Finance charges decreased $252 million for the six months ended June 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 six months ended June 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 six months ended June 30, 2015 reflected a higher proportion of our remaining real estate loans that are secured by second mortgages, which generally have higher yields. The increase in yield also reflected a higher proportion of non-modified real estate loans during the 2015 period, which generally have higher rates than TDR finance receivables.

Interest expense decreased $85 million for the six months ended June 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. The decrease in interest expense was partially offset by 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.

Provision for finance receivable losses decreased $85 million for the six months ended June 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 six months ended June 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 June 30, 2015.

Investment revenues of $8 million for the six months ended June 30, 2015 reflected realized gains on available-for-sale securities resulting from the sales of certain investment securities during the first half of 2015.

Net loss on repurchases and repayments of debt of $10 million for the six months ended June 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 six months ended June 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 loss on sales of real estate loans and related trust assets of $85 million for the six months ended June 30, 2014, primarily reflected 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 $11 million for the six months ended June 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.

~~Table of Contents~~

Other operating expenses decreased $14 million for the six months ended June 30, 2015 when compared to the same period in 2014 primarily due to lower credit, collection and losses and professional services expenses 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.sales.

OTHER

“Other” consists of our other non-core, 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~~include: (i) our legacy operations in 14 states where we ~~have~~had also ceased branch-based personal ~~lending as a result of our restructuring activities during the first half of 2012,~~lending; (ii) our liquidating retail sales finance portfolio (including ~~our~~ retail sales finance accounts from ~~our dedicated~~its legacy 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.

Pretax operating results of the Other components (which are reported on a ~~historical accounting basis)~~Segment Accounting Basis) were as follows:

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

Interest income $ 3
$ 4
$ 5
$ 9

Interest expense 22
2
32
4

Net interest income (loss) (19 ) 2
(27 ) 5

Provision for finance receivable losses 1
4
1
5

Net interest loss after provision for finance receivable losses (20 ) (2 ) (28 ) —

Other revenues:

Other 4
2
6
4
Total other revenues 4
2
6
4

Other expenses:

Operating expenses:

Salaries and benefits 17
4
18
7
Other operating expenses (7 ) 2
(3 ) 4
Total other expenses 10
6
15
11

Pretax operating loss $ (26 ) $ (6 ) $ (37 ) $ (7 )



(dollars in millions)	Three Months Ended March 31,
(dollars in millions)	2016			2015

Interest income	$	1		$	2
Interest expense (a)	4			10
Net interest loss after provision for finance receivable losses	(3		)	(8		)
Other revenues (b)	50			2
Other expenses	(4		)	5
Pretax operating income (loss)	$	51		$	(11	)


(a)	Interest expense for the three months ended March 31, 2016 when compared to the same period in 2015 reflected a change in the methodology of allocating interest expense, as previously described in the allocation methodologies table.

(b)

Other revenues for the three months ended March 31, 2016 included (i) interest income on the Independence Demand Note and (ii) higher interest income on SFC’s note receivable from SFI reflecting additional SFI borrowings during the 2016 period to fund the operations of its subsidiaries. See Note 9 of the Notes to Condensed Consolidated Financial Statements for further information on the Independence Demand Note.

Net finance receivables of the Other components (which are reported on a ~~historical accounting basis)~~Segment Accounting Basis) were as follows:

(dollars in millions) June 30,
2015 2014

Net finance receivables:

Personal loans $ 22
$ 40
Real estate loans —
7
Retail sales finance 34
71
Total $ 56
$ 118

~~Table of Contents~~

~~Comparison of Pretax Operating Results for Three and Six Months Ended June 30, 2015 and 2014~~



(dollars in millions)	March 31,
(dollars in millions)	2016		2015

Net finance receivables:
Personal loans	$	15	$	25
Retail sales finance	20		41
Total	$	35	$	66

Interest expense increased $20 million and $28 million, respectively, for the three and six months ended June 30, 2015 when compared to the same periods in 2014 primarily due to 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 increased $13 million and $11 million, respectively, for the three and six months ended June 30, 2015 when compared to the same periods in 2014. In connection with the sale of our common stock by the Initial Stockholder, we recorded non-cash incentive compensation expense of $15 million in the second quarter of 2015 relating to the rights of certain executives to a portion of the cash proceeds received by the Initial Stockholder. See Note 2 of the Notes to Condensed Consolidated Financial Statements for further information regarding SHI’s equity offering.

Other operating expenses for the three and six months ended June 30, 2015 reflected a $5 million reduction in reserves related to estimated PPI claims. See Note 14 of the Notes to Condensed Consolidated Financial Statements for further information on the loss contingencies related to PPI claims.

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.

~~Carrying value~~We may offer borrowers the opportunity to defer their personal loan by extending the date on which any payment is due. We may require a partial payment prior to granting such a deferral. Deferments must bring the account contractually current or due for the current month’s payment. Borrowers are generally limited to two deferments in a rolling 12-month period unless it is determined that an exception is warranted.

In addition to deferrals, we may also offer borrowers the opportunity to cure delinquent accounts when a customer demonstrates that he or she has rehabilitated from a temporary event that caused the delinquency. An account may be brought to current status after the cause for delinquency has been identified and remediated and the customer has made two consecutive

qualified payments; however, no principal or interest amounts are forgiven or credited. Independent risk management approval is required for all cures.

When a loan is 60 days past due, we transfer the loan to one of ~~finance receivables~~our centralized service centers for account servicing and collection processing. This process includes ~~accrued finance charges, unamortized deferred origination costs~~assessing previous collection efforts, contacting the customer to determine whether the customer’s financial problems are temporary, reviewing the collateral securing the loan and ~~unamortized net premiums~~developing a plan to maintain contact with the customer to increase the likelihood of future payments. Certain non-routine collection activities may include litigation, repossession of collateral, or filing involuntary bankruptcy petitions.

We may renew a delinquent personal loan if the related borrower meets current underwriting criteria and ~~discounts on purchased finance receivables.~~we determine that it does not appear that the cause of past delinquency will affect the customer’s ability to repay the new personal loan. We ~~record~~employ the same credit risk underwriting process that we would use for an ~~allowance for~~application from a new customer to determine whether to grant a renewal of a personal loan, ~~losses to cover expected losses on our finance receivables.~~regardless of whether the borrower’s account is current or delinquent.

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. WeAlthough we engage in collection activities well before an account is 60 days past due, we consider finance receivables 60 days or more past due as delinquent and consider the likelihood of collection to decrease at such time. We record an allowance for loan losses to cover expected losses on our finance receivables.

~~Table of Contents~~

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


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

June 30, 2015

March 31, 2016
Net finance receivables:
60-89 days past due	$	37	$	22	$	9	$	1	$	69	$	39	$	—	$	6	$	—	$	45
90-119 days past due	27		14		4		—		45		33		—		5		—		38
120-149 days past due	21		10		3		—		34		33		—		3		—		36
150-179 days past due	19		11		3		—		33		32		—		3		—		35
180 days or more past due	2		1		12		—		15		3		—		22		—		25
Total delinquent finance receivables	106		58		31		1		196		140		—		39		—		179
Current	4,080		1,662		528		31		6,301		4,186		—		447		19		4,652
30-59 days past due	66		44		14		1		125		52		—		17		—		69
Total	$	4,252	$	1,764	$	573	$	33	$	6,622	$	4,378	$	—	$	503	$	19	$	4,900

December 31, 2014

December 31, 2015
Net finance receivables:
60-89 days past due	$	36	$	31	$	12	$	1	$	80	$	49	$	22	$	18	$	—	$	89
90-119 days past due	30		19		9		—		58		41		14		3		—		58
120-149 days past due	24		16		5		1		46		34		11		2		1		48
150-179 days past due	21		14		4		—		39		31		10		2		—		43
180 days or more past due	2		2		12		—		16		3		1		12		—		16
Total delinquent finance receivables	113		82		42		2		239		158		58		37		1		254
Current	3,632		1,839		565		45		6,081		4,077		1,475		474		22		6,048
30-59 days past due	55		58		18		1		132		65		43		13		—		121
Total	$	3,800	$	1,979	$	625	$	48	$	6,452	$	4,300	$	1,576	$	524	$	23	$	6,423

TROUBLED DEBT RESTRUCTURING

We make modifications to our finance receivables to assist borrowers during times of financial difficulties. 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.

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

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

June 30, 2015

TDR net finance receivables * $ 27
$ 12
$ 198
$ 237
Allowance for TDR finance receivable losses $ 7
$ 3
$ 31
$ 41
Number of TDR accounts * 9,630
1,473
3,453
14,556

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



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

March 31, 2016
TDR net finance receivables	$	33	$	—	$	201	$	234
Allowance for TDR finance receivable losses	$	11	$	—	$	35	$	46
Number of TDR accounts	10,949		—		3,490		14,439

December 31, 2015
TDR net finance receivables	$	31	$	13	$	201	$	245
Allowance for TDR finance receivable losses	$	9	$	4	$	34	$	47
Number of TDR accounts	10,542		1,656		3,506		15,704

~~Table of Contents~~


*	~~Includes 1,284~~ TDR ~~real estate loan accounts totaling $91 million that were~~finance receivables held for sale ~~at June 30, 2015 and December 31, 2014.~~included in the table above were as follows:



(dollars in millions)	Personal Loans		Real Estate Loans		Total

March 31, 2016
TDR net finance receivables	$	2	$	91	$	93
Number of TDR accounts	746		1,294		2,040

December 31, 2015
TDR net finance receivables	$	2	$	92	$	94
Number of TDR accounts	738		1,322		2,060

Liquidity and Capital Resources

SOURCES OF FUNDS

We finance the majority of our operating liquidity and capital needs through a combination of cash flows from operations, securitization debt, ~~and unsecured debt. In the future, we plan to finance our operating liquidity and capital needs through a combination of cash flows~~borrowings from ~~operations, securitization debt,~~conduit facilities, unsecured debt and equity, and may also utilize other corporate debt ~~facilities.~~

facilities in the future. As a holding company, all of the funds generated from our operations are earned by our operating subsidiaries.

SFC’s Offering of Senior Notes

On April 11, 2016, SFC issued $1.0 billion aggregate principal amount of 8.25% Senior Notes due 2020 under the Indenture, pursuant to which OMH provided a guarantee of the notes on an unsecured basis. SFC used a portion of the proceeds from the offering to repurchase approximately $600 million aggregate principal amount of its existing senior notes that mature in 2017. See Note 18 of the Notes to Condensed Consolidated Financial Statements for further information on this offering.

Securitizations and Borrowings from Revolving Conduit Facilities

During the three months ended March 31, 2016, we (i) exercised our right to redeem the asset backed notes issued by the Springleaf Funding Trust 2013-B and (ii) deconsolidated the previously issued securitized interests of the SpringCastle Funding Asset-backed Notes 2014-A. See “Structured Financings” for further information on each of our securitization transactions.

During the three months ended March 31, 2016, we (i) extended the revolving periods on four existing conduits and (ii) amended three existing conduits to change the maximum principal balances. Net repayments under the notes of our existing conduits totaled $103 million for the three months ended March 31, 2016.

See Note 11 of the Notes to Condensed Consolidated Financial Statements for further information on our personal loan securitizations and conduit facilities.

Subsequent to March 31, 2016, we completed the following transactions:

On April 1, 2016, we drew $100 million under the variable funding notes issued by the Springleaf 2013-VFN1 Trust.

On April 12, 2016, we repaid the entire $100 million outstanding principal balance of the variable funding notes issued by the Mill River 2015-VFN1 Trust.

On April 14, 2016, we repaid $248 million of the outstanding principal balance of the variable funding notes issued by the Springleaf 2013-VFN1 Trust.

On May 3, 2016, we repaid the entire $150 million outstanding principal balance of the variable funding notes issued by the Springleaf 2013-VFN1 Trust.

USES OF FUNDS

Our operating subsidiaries’ primary cash needs relate to funding our lending activities, our debt service obligations, our operating expenses, payment of insurance claims 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 $72 million as of June 30, 2015.~~

At ~~June 30, 2015,~~March 31, 2016, we had ~~$2.5 billion~~$365 million of cash and cash equivalents, and during the ~~six~~three months ended ~~June 30, 2015,~~March 31, 2016, SFC generated net income of $5$172 million. Our net cash inflow from operating and investing activities totaled ~~$529~~$302 millionfor the ~~six~~three months ended ~~June 30, 2015.~~March 31, 2016. At ~~June 30, 2015,~~March 31, 2016, our remaining scheduled principal and interest payments for ~~2015~~2016 on our existing debt (excluding ~~securitizations)~~securitizations and borrowings under revolving conduit facilities) totaled ~~$0.9 billion.~~$647 million. As of ~~June 30, 2015,~~March 31, 2016, we had ~~$1.2~~$1.4 billion UPB of unencumbered personal loans (including $604 million held for sale) and ~~$619~~$775 million UPB of unencumbered real estate ~~loans.~~loans (including $232 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~~12 months.

We have previously purchased portions of our unsecured indebtedness, and we may elect to purchase additional portions of our unsecured indebtedness in the future. Future purchases may be made through the open market, privately negotiated transactions with third parties, or pursuant to one or more tender or exchange offers, all of which are subject to terms, prices, and consideration we may determine.

LIQUIDITY

Operating Activities

Net cash provided by operations ~~increased $15~~of $220 million for the ~~six~~three months ended ~~June 30,~~March 31, 2016 reflected net income of $198 million, the impact of non-cash items, and a favorable change in working capital of $98 million. Net cash provided by operations of $211 million for the three months ended March 31, 2015 ~~when compared to~~reflected net income of $34 million, the ~~same period~~impact of non-cash items, and a favorable change in ~~2014 primarily due to higher net interest income.~~working capital of $95 million.

Investing Activities

Net cash provided by investing activities ~~decreased $816~~of $82 million for the ~~six~~three months ended ~~June 30, 2015 when compared to the same period in 2014~~March 31, 2016 was primarily due to the SpringCastle Interests Sale. Net cash provided by investing activities of $144 million for the three months ended March 31, 2015 reflected net sales of ~~finance receivables held for sale originated as held for~~ investment securities during ~~2014.~~2015.

Financing Activities

Net cash used for financing activities of $258 million for the three months ended March 31, 2016 was primarily due to net repayments of long-term debt. Net cash provided by financing activities of $1.2 billion for the ~~six~~three months ended ~~June 30,~~March 31, 2015 reflected the debt ~~issuances~~issuance associated with the 2015-A and 2015-B securitizations. Net cash used by finance activities of $864 million for the six months ended June 30, 2014 was primarily due to the repayments of the secured term loan and the 2013-BAC trust notes in late March of 2014.securitization.

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.

~~Table of Contents~~

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;

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 the Indiana Department of Insurance (the ~~“DOI”~~“Indiana DOI”). The maximum amount of dividends (referred to as “ordinary dividends”) for an Indiana domiciled life insurance company that can be paid without prior ~~DOI~~ approval in ~~any 12 month~~a 12-month period (measured retrospectively from the date of ~~last~~ payment) is the greater of: ~~(1)~~(i) 10% of policyholders’ surplus as of the prior year-end; or ~~(2)~~(ii) the statutory net gain from operations as of the prior year-end. Any amount greater ~~amount~~ must be approved by the Indiana DOI prior to its payment. The maximum ordinary dividends for an Indiana domiciled property and casualty insurance company that can be paid without prior approval in a 12-month period (measured retrospectively from the date of payment) is the greater of: (i) 10% of policyholders’ surplus as of the prior year-end; or (ii) the statutory net income. Any amount greater must be approved by the Indiana DOI prior to its payment. These approved dividends are called “extraordinary ~~dividends”.~~dividends.” Merit and Yosemite ~~each paid $50 million of extraordinary~~did not pay any dividends ~~to SFC~~ during the ~~second~~first quarter of ~~2015.~~2016.

OUR DEBT AGREEMENTS

8.25% SFC Notes. On April 11, 2016, OMH entered into an Indenture and Second Supplemental Indenture, pursuant to which it agreed to fully and unconditionally guarantee the payments of principal, premium (if any) and interest on $1.0 billion of 8.25% Senior Notes due 2020 issued by SFC. See Note 18 of the Notes to Condensed Consolidated Financial Statements for further information.

5.25% SFC Notes. On December 3, 2014, OMH 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% Senior Notes due 2019 issued by SFC (the “5.25% SFC Notes”). As of March 31, 2016, $700 million aggregate principal amount of the 5.25% SFC Notes were outstanding.

SFC Notes. On December 30, 2013, OMH 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 million aggregate principal amount of a junior subordinated debenture on a junior subordinated basis issued by SFC (collectively, the “SFC Notes”). The SFC Notes consisted of the following: 8.25% Senior

Notes due 2023; 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.). The 60-year junior subordinated debenture underlies the trust preferred securities sold by a trust sponsored by SFC. On December 30, 2013, OMH 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 March 31, 2016, approximately $4.2 billion aggregate principal amount of the SFC Notes, including $2.3 billion aggregate principal amount of senior notes under the 1999 Indenture, and $350 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 (i) restrictions on the ability to create senior liens on property and assets in connection with any new debt financings and (ii) 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. In addition, the OMH guarantees of SFC’s long-term debt discussed above are subject to customary release provisions.

With the exception of SFC’s junior subordinated debenture, 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,~~ However, 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 ~~June 30, 2015,~~March 31, 2016, 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.

~~Table of Contents~~

~~Junior Subordinated Debenture~~

Junior Subordinated Debenture.In January of 2007, SFC issued $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)~~(i) tangible equity to tangible managed assets is less than 5.5% or ~~(2)~~(ii) 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~~12 months ended March 31, ~~2015,~~2016, a mandatory trigger event did not occur with respect to the interest payment due in July of ~~2015~~2016, as we were in compliance with both required ratios discussed above.

Structured Financings

We execute private securitizations under Rule 144A of the Securities Act of 1933. As of ~~June 30, 2015,~~March 31, 2016, our structured financings consisted of the following:

(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 $ 568
$ 663
$ 362
$ 455
2.85 % Personal loans 2 years
SLFMT 2013-B 370
442
370
442
3.99 % Personal loans 3 years
SLFMT 2014-A 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 2,974

3,334

2,767
3,127

SpringCastle Securitization
SCFT 2014-A 2,559
2,737
2,152
2,330
3.91 % Personal and junior mortgage loans N/A (c)

Total secured structured financings $ 5,533
$ 6,071
$ 4,919
$ 5,457



(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:
SLFT 2014-A	$	559	$	644	$	535	$	620	2.56	%	Personal loans	2 years
SLFT 2015-A	1,163		1,250		1,163		1,250		3.47	%	Personal loans	3 years
SLFT 2015-B	314		335		314		336		3.78	%	Personal loans	5 years

Total consumer securitizations	$	2,036	$	2,229	$	2,012	$	2,206


(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 ~~have~~had access to seven conduit facilities with a total borrowing capacity of ~~$2.2~~$2.4 billion as of March 31, 2016, as discussed in Note 11 of the Notes to Condensed Consolidated Financial Statements. At ~~June 30, 2015, no amounts were~~March 31, 2016, $1.1 billion was drawn under these facilities. ~~Subsequently, on July 15, 2015, we drew $100 million under the variable funding notes issued by Whitford Brook 2014-VFN1 Trust, an existing conduit.~~

~~Table~~See “Liquidity and Capital Resources - Sources of ~~Contents~~Funds - Securitizations and Borrowings from Revolving Conduit Facilities” for securitization and conduit transactions completed subsequent to March 31, 2016.

Our 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~~Segment Accounting Basis were as follows:

Three Months Ended June 30, Six Months Ended June 30,
2015 2014 2015 2014

Weighted average interest rate 5.41 % 5.25 % 5.44 % 5.37 %

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 ~~June 30, 2015~~March 31, 2016 or December 31, ~~2014,~~2015, other than certain representations and warranties associated with the sales of the mortgage-backed retained certificates during 2014. As of ~~June 30, 2015,~~March 31, 2016, we had no repurchase activity related to these sales.

Critical Accounting Policies and Estimates

We describe our significant accounting policies used in the preparation of our consolidated financial statements in Note 23 of the Notes to Consolidated Financial Statements in Part II, Item 8 of our ~~2014~~2015 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; 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 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~~material changes to our critical accounting policies or to our methodologies for deriving critical accounting estimates during the ~~six~~three months ended ~~June 30, 2015.~~March 31, 2016.

Recent Accounting Pronouncements

See Note 3 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 rise throughout the remainder of the year. ~~The~~These seasonal trends ~~in personal loan volume and delinquencies~~ contribute to fluctuations in our operating results and cash needs throughout the year.

~~Table of Contents~~

Glossary of Terms



Average debt	average of debt for each day in the period
Average net receivables	average of monthly average net finance receivables (net finance receivables at the beginning and end of each month divided by 2) in the period
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

~~Table of Contents~~

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

There have been no ~~significant~~material changes to our market risk previously disclosed in Part II, Item 7A of our ~~2014~~2015 Annual Report on Form 10-K.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

~~We are committed to maintaining disclosure~~Disclosure controls and procedures are designed to ~~ensure~~provide reasonable assurance that information we are required to ~~be disclosed~~disclose in ~~our periodic~~ reports ~~filed~~that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow ~~for~~ timely decisions regarding required disclosure.

~~Under~~As of December 31, 2015, we carried out an evaluation of the effectiveness of our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. This evaluation was conducted under the supervision of, and with the participation of our management, including our Chief Executive Officer and our Chief Financial ~~Officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act.~~Officer. Based on ~~this~~our evaluation, ~~and in light of the previously identified material weakness in our internal control over financial reporting as of December 31, 2014, described in our 2014 Annual Report on Form 10-K,~~ our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were ~~not~~ effective as of ~~June 30, 2015.~~

~~We have taken and continue~~December 31, 2015 to ~~take steps to remediate~~provide the underlying cause of the material weakness. These steps include strengthening our procedures and controls around validating the functionality of certain spreadsheets and reports used in the preparation and analysis of accounting and financial information, including developing specific guidelines for appropriate review procedures, such as validating inputs, assumptions and formulas, and providing additional training to our current accounting and finance personnel.

These actions are subject to ongoing review by our senior management, as well as oversight by the audit committee of our board of directors. We are 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 are focusing our initial efforts on those spreadsheets and reports that present a higher risk of a misstatement. When fully implemented and operating effectively, our efforts are expected to remediate the material weakness. However, we cannot provide anyreasonable assurance ~~that these efforts will be successful or that they will cause our disclosure controls and procedures or internal control over financial reporting to be effective.~~described above.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting ~~that occurred~~ during the first quarter ~~ended June 30, 2015,~~of 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

~~Table of Contents~~

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 14 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 ~~2014~~2015 Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

~~None.~~On January 11, 2016, in order to satisfy a non-debt capital funding requirement with respect to SFC’s debenture, SFC issued one share of SFC common stock to SFI for $10 million. The share of SFC common stock was issued in reliance on the exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. See “Liquidity and Capital Resources - Our Debt Agreements” in Part I, Item 2 of this Quarterly Report on Form 10-Q for further information on SFC’s debentures.

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	8070 herein.	~~herein.~~

~~Table of Contents~~

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:	~~August~~May 6, ~~2015~~2016	By	/s/ ~~Minchung (Macrina) Kgil~~Micah R. Conrad
			~~Minchung (Macrina) Kgil~~Micah R. Conrad
			~~Executive~~Senior Vice President and Chief Financial Officer
			(Duly Authorized Officer and Principal Financial Officer)

~~Table of Contents~~

Exhibit Index



Exhibit

~~2.1~~2.1*		~~Stock~~ Purchase Agreement, dated as of March ~~2, 2015,~~31, 3016, by and ~~between~~among SpringCastle Holdings, LLC, Springleaf Acquisition Corporation, Springleaf Finance, Inc., NRZ Consumer LLC, NRZ SC America LLC, NRZ SC Credit Limited, NRZ SC Finance I LLC, NRZ SC Finance II LLC, NRZ SC Finance III LLC, NRZ SC Finance IV LLC, NRZ SC Finance V LLC, BTO Willow Holdings ~~Inc.~~II, L.P. and ~~CitiFinancial~~Blackstone Family Tactical Opportunities Investment Partnership - NQ - ESC L.P., and solely with respect to Section 11(a) and Section 11(g), NRZ SC America Trust 2015-1, NRZ SC Credit ~~Company (incorporated~~Trust 2015-1, NRZ SC Finance Trust 2015-1, and BTO Willow Holdings, L.P. Incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on ~~March 3, 2015).~~April 1, 2016.

~~3 a.~~4.1		~~Amended~~Second Supplemental Indenture relating to Springleaf Finance Corporation’s 8.250% Senior Notes due 2020, dated as of April 11, 2016, by and ~~Restated Articles of Incorporation of~~among Springleaf Finance Corporation, ~~(the “Company”) (formerly American General Finance Corporation),~~OneMain Holdings, Inc. and Wilmington Trust, National Association, as ~~amended to date.~~trustee. Incorporated by reference to Exhibit ~~(3a.)~~4.1 to the Company’s Current Report on Form 8-K filed on April 11, 2016.

10.1		Form of Restricted Stock Award Agreement under the Springleaf Holdings, Inc. 2013 Omnibus Incentive Plan (Employees), filed herewith as Exhibit 10.1.

10.2		OneMain Holdings, Inc. Amended and Restated Annual Leadership Incentive Plan, effective January 1, 2016. Incorporated by reference to Exhibit 10.16 to the Company’s Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, ~~2010.~~

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.~~2015.

31.1		Rule 13a-14(a)/15d-14(a) Certifications of the President and Chief Executive Officer of Springleaf Finance Corporation.

31.2		Rule 13a-14(a)/15d-14(a) Certifications of the Executive Vice President and Chief Financial Officer of Springleaf Finance Corporation.

32.1		Section 1350 ~~Certifications~~Certifications.

101 *		Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations, (iii) Consolidated Statements of Comprehensive Income (Loss), (iv) Consolidated Statements of Shareholders’ Equity, (v) Consolidated Statements of Cash Flows, and (vi) Notes to Consolidated Financial Statements.


*	~~As provided in Rule 406T~~Schedules and exhibits have been omitted pursuant to Item 601(b)(2) 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.~~S-K.

8070



			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 June 30, 2015

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	4	$	—	$	—	$	(4	)	$	—	$	—	$	—
Other long-term investments	1		—		—		—			—		—		1
Total	$	5	$	—	$	—	$	(4	)	$	—	$	—	$	1



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

Six Months Ended June 30, 2014

Investment securities:
Available-for-sale securities:
Bonds:
Corporate debt	$	13	$	—	$	—	$	(8	)	$	—	$	—		$	5
CDO/ABS	1		—		—		—			—		(1		)	—
Total	14		—		—		(8		)	—		(1		)	5
Other long-term investments	1		—		—		—			—		—			1
Total available-for-sale securities	15		—		—		(8		)	—		(1		)	6
Trading securities:
Bonds:
RMBS	—		—		—		—			1		(1		)	—
CDO/ABS	7		—		—		—			—		(1		)	6
Total trading securities	7		—		—		—			1		(2		)	6
Total	$	22	$	—	$	—	$	(8	)	$	1	$	(3	)	$	12



Topic		Page

Forward-Looking Statements		4846
Overview		4948
Recent Developments and Outlook		5149
Results of Operations		5250
~~Segments~~Segment Results		5954
Credit Quality		7059
Liquidity and Capital Resources		7261
~~Off Balance~~Off-Balance Sheet Arrangements		7565
Critical Accounting Policies and Estimates		7565
Recent Accounting Pronouncements		7565
Seasonality		7565
Glossary of Terms		7666



(dollars in millions)

2015 compared to 2014 - Three Months Ended June 30

Decrease in average debt	$	(38	)
Increase in weighted average interest rate	10
SpringCastle interest expense in 2015	27
Total	$	(1	)



(dollars in millions)

2015 compared to 2014 - Six Months Ended June 30

Decrease in average net receivables	$	(174	)
Increase in yield	71
SpringCastle finance charges in 2015	118
Total	$	15



(dollars in millions)	June 30,
(dollars in millions)	2015		2014

Net finance receivables:
Personal loans	$	22	$	40
Real estate loans	—		7
Retail sales finance	34		71
Total	$	56	$	118



(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	$	568	$	663	$	362	$	455	2.85	%	Personal loans	2 years
SLFMT 2013-B	370		442		370		442		3.99	%	Personal loans	3 years
SLFMT 2014-A	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	2,974		3,334		2,767		3,127

SpringCastle Securitization
SCFT 2014-A	2,559		2,737		2,152		2,330		3.91	%	Personal and junior mortgage loans	N/A (c)

Total secured structured financings	$	5,533	$	6,071	$	4,919	$	5,457

Large accelerated filer o

Accelerated filer o

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Smaller reporting company o

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