GECC Financing Receivables and Allowance for Losses on Financing Receivables

12 Months Ended

Dec. 31, 2014

Loans and Leases Receivable Disclosure [Abstract]

GECC Financing Receivables, Allowance For Losses On Financing Receivables

NOTE 6. GECC FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES

FINANCING RECEIVABLES, NET

December 31 (In millions)	2014		2013

Loans, net of deferred income	$	197,949	$	211,622
Investment in financing leases, net of deferred income		24,347		26,686
		222,296		238,308
Allowance for losses		(4,914)		(4,986)
Financing receivables – net(a)	$	217,382	$	233,322

(a) Financing receivables at December 31, 2014 and 2013 included $209 million and $429 million, respectively, relating to loans that had been acquired in a transfer but have been subject to credit deterioration since origination.

GECC financing receivables include both loans and financing leases. Loans represent transactions in a variety of forms, including revolving charge and credit, mortgages, installment loans, intermediate-term loans and revolving loans secured by business assets. The portfolio includes loans carried at the principal amount on which finance charges are billed periodically, and loans carried at gross book value, which includes finance charges.

Investment in financing leases consists of direct financing and leveraged leases of aircraft, railroad rolling stock, autos, other transportation equipment, data processing equipment, medical equipment, other manufacturing, power generation, and commercial equipment and facilities.

For federal income tax purposes, the leveraged leases and the majority of the direct financing leases are leases in which GECC depreciates the leased assets and is taxed upon the accrual of rental income. Certain direct financing leases are loans for federal income tax purposes. For these transactions, GECC is taxed only on the portion of each payment that constitutes interest, unless the interest is tax-exempt (e.g., certain obligations of state governments).

Investment in direct financing and leveraged leases represents net unpaid rentals and estimated unguaranteed residual values of leased equipment, less related deferred income. GECC has no general obligation for principal and interest on notes and other instruments representing third-party participation related to leveraged leases; such notes and other instruments have not been included in liabilities but have been offset against the related rentals receivable. The GECC share of rentals receivable on leveraged leases is subordinate to the share of other participants who also have security interests in the leased equipment. For federal income tax purposes, GECC is entitled to deduct the interest expense accruing on non-recourse financing related to leveraged leases.

NET INVESTMENT IN FINANCING LEASES

	Total financing leases				Direct financing leases(a)				Leveraged leases(b)
December 31 (In millions)	2014		2013		2014		2013		2014		2013

Total minimum lease payments receivable	$	26,629	$	29,864	$	22,085	$	24,492	$	4,544	$	5,372
Less principal and interest on third-party
non-recourse debt		(2,791)		(3,457)		-		-		(2,791)		(3,457)
Net rentals receivables		23,838		26,407		22,085		24,492		1,753		1,915
Estimated unguaranteed residual value
of leased assets		4,168		4,875		2,445		2,885		1,723		1,990
Less deferred income		(3,659)		(4,596)		(2,749)		(3,542)		(910)		(1,054)
Investment in financing leases, net of
deferred income		24,347		26,686		21,781		23,835		2,566		2,851
Less amounts to arrive at net investment
Allowance for losses		(180)		(202)		(165)		(192)		(15)		(10)
Deferred taxes		(4,044)		(4,078)		(2,250)		(1,788)		(1,794)		(2,290)
Net investment in financing leases	$	20,123	$	22,406	$	19,366	$	21,855	$	757	$	551

Included $284 million and $317 million of initial direct costs on direct financing leases at December 31, 2014 and 2013, respectively.
Included pre-tax income of $111 million and $30 million and income tax of $43 million and $11 million during 2014 and 2013, respectively. Net investment credits recognized on leveraged leases during 2014 and 2013 were insignificant.

CONTRACTUAL MATURITIES

	Total		Net rentals
(In millions)	loans		receivable

Due in
2015	$	49,317	$	8,013
2016		13,669		5,437
2017		14,041		3,739
2018		11,148		2,561
2019		10,926		1,483
2020 and later		33,984		2,605
		133,085		23,838
Consumer revolving loans		64,864		-
Total	$	197,949	$	23,838

We expect actual maturities to differ from contractual maturities.

Financing Receivables by Portfolio and Allowance for Losses

During the first quarter of 2014, we combined our CLL Europe and CLL Asia portfolios into CLL International and we transferred our CLL Other portfolio to the CLL Americas portfolio. During the fourth quarter of 2014, we combined our Consumer Non-U.S. auto portfolio into our Consumer Non-U.S. installment and revolving credit portfolio. Prior-period amounts were reclassified to conform to the current-period presentation.

FINANCING RECEIVABLES

(In millions)	2014		2013

Commercial
CLL
Americas	$	67,096	$	69,036
International		43,407		47,431
Total CLL		110,503		116,467
Energy Financial Services		2,580		3,107
GE Capital Aviation Services (GECAS)		8,263		9,377
Other		130		318
Total Commercial		121,476		129,269

Consumer
Non-U.S. residential mortgages		24,893		30,501
Non-U.S. installment and revolving credit		10,400		15,731
U.S. installment and revolving credit		59,863		55,854
Other		5,664		6,953
Total Consumer		100,820		109,039
Total financing receivables		222,296		238,308
Allowance for losses		(4,914)		(4,986)
Total financing receivables – net	$	217,382	$	233,322

ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES

			Provision
	Balance at		charged to					Gross						Balance at
(In millions)	January 1		operations		Other		(a)	write-offs		(b)	Recoveries		(b)	December 31

2014
Commercial
CLL
Americas	$	473	$	307	$	(3)		$	(422)		$	100		$	455
International		505		159		(37)			(351)			100			376
Total CLL		978		466		(40)			(773)			200			831
Energy Financial Services		8		30		(1)			(17)			6			26
GECAS		17		39		-			(10)			-			46
Other		2		-		(2)			-			-			-
Total Commercial		1,005		535		(43)			(800)			206			903

Consumer
Non-U.S. residential mortgages		358		256		(151)			(207)			69			325
Non-U.S. installment and revolving credit		650		338		(260)			(787)			458			399
U.S. installment and revolving credit		2,823		2,875		19			(3,138)			607			3,186
Other		150		75		(33)			(151)			60			101
Total Consumer		3,981		3,544		(425)			(4,283)			1,194			4,011
Total	$	4,986	$	4,079	$	(468)		$	(5,083)		$	1,400		$	4,914

2013
Commercial
CLL
Americas	$	496	$	289	$	(1)	$	(425)	$	114	$	473
International		525		445		1		(556)		90		505
Total CLL		1,021		734		-		(981)		204		978
Energy Financial Services		9		(1)		-		-		-		8
GECAS		8		9		-		-		-		17
Other		3		(1)		-		(2)		2		2
Total Commercial		1,041		741		-		(983)		206		1,005

Consumer
Non-U.S. residential mortgages		480		269		10		(458)		57		358
Non-U.S. installment and revolving credit		649		647		(106)		(1,093)		553		650
U.S. installment and revolving credit		2,282		3,006		(51)		(2,954)		540		2,823
Other		172		127		11		(236)		76		150
Total Consumer		3,583		4,049		(136)		(4,741)		1,226		3,981
Total	$	4,624	$	4,790	$	(136)	$	(5,724)	$	1,432	$	4,986

Other primarily included the 2014 reclassifications of Budapest Bank and GEMB-Nordic to held for sale, dispositions and the effects of currency exchange. GEMB-Nordic was subsequently sold in the fourth quarter of 2014.
Net write-offs (gross write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as a result of losses that are incurred subsequent to the beginning of the fiscal year due to information becoming available during the current year, which may identify further deterioration on existing financing receivables.

ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES


			Provision
	Balance at		charged to					Gross						Balance at
(In millions)	January 1		operations		Other		(a)	write-offs		(b)	Recoveries		(b)	December 31

2012
Commercial
CLL
Americas	$	893	$	122	$	(52)		$	(578)		$	111		$	496
International		557		411		(6)			(524)			87			525
Total CLL		1,450		533		(58)			(1,102)			198			1,021
Energy Financial Services		26		4		-			(24)			3			9
GECAS		17		4		-			(13)			-			8
Other		37		1		(20)			(17)			2			3
Total Commercial		1,530		542		(78)			(1,156)			203			1,041

Consumer
Non-U.S. residential mortgages		545		112		8			(261)			76			480
Non-U.S. installment and revolving credit		791		308		20			(1,120)			650			649
U.S. installment and revolving credit		2,008		2,666		(24)			(2,906)			538			2,282
Other		199		132		18			(257)			80			172
Total Consumer		3,543		3,218		22			(4,544)			1,344			3,583
Total	$	5,073	$	3,760	$	(56)		$	(5,700)		$	1,547		$	4,624

Other primarily included transfers to held for sale and the effects of currency exchange.
Net write-offs (gross write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as a result of losses that are incurred subsequent to the beginning of the fiscal year due to information becoming available during the current year, which may identify further deterioration on existing financing receivables.