NOTE 6. GE CAPITAL FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES



FINANCING RECEIVABLES – NET

December 31 (In millions)	2017			2016

Loans, net of deferred income	$	17,404		$	21,101
Investment in financing leases, net of deferred income	4,614			4,998
	22,018			26,099
Allowance for losses(a)	(51		)	(58		)
Financing receivables – net	$	21,967		$	26,041

(a) Solely represents general reserves.



NET INVESTMENT IN FINANCING LEASES

	Total financing leases						Direct financing leases(a)						Leveraged leases(b)
December 31 (In millions)	2017			2016			2017			2016			2017			2016

Total minimum lease payments receivable	$	4,637		$	5,466		$	2,952		$	3,274		$	1,685		$	2,191
Less principal and interest on third-party non-recourse debt	(638		)	(1,053		)	—			—			(638		)	(1,053		)
Net rentals receivable	3,999			4,412			2,952			3,274			1,047			1,138
Estimated unguaranteed residual value of leased assets	1,590			1,985			743			927			847			1,058
Less deferred income	(975		)	(1,400		)	(614		)	(909		)	(361		)	(491		)
Investment in financing leases, net of deferred income(c)	$	4,614		$	4,998		$	3,081		$	3,292		$	1,533		$	1,706


(a)	Included $22 million and $30 million of initial direct costs on direct financing leases at December 31, 2017 and 2016, respectively.


(b)	Included pre-tax income of $78 million and $74 million and income tax of $30 million and $28 million during 2017 and 2016, respectively. Net investment credits recognized on leveraged leases during 2017 and 2016 were insignificant.


(c)	See Note 13 for deferred tax amounts related to financing leases.



CONTRACTUAL MATURITIES

(In millions)	Total loans		Net rentals receivable

Due in
2018	$	10,366	$	932
2019	2,987		805
2020	1,364		637
2021	1,158		503
2022	570		327
2023 and later	959		795
Total	$	17,404	$	3,999

We expect actual maturities to differ from contractual maturities, primarily as a result of prepayments.

We manage our financing receivables portfolio using delinquency and nonaccrual data as key performance indicators. At December 31, 2017, $550 million (2.5%), $140 million (0.6%) and $252 million (1.1%) of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively. Of the $252 million of nonaccrual financing receivables at December 31, 2017, the vast majority are secured by collateral and $223 million are currently paying in accordance with the contractual terms. At December 31, 2016, $811 million (3.1%), $407 million (1.6%) and $322 million (1.2%) of financing receivables were over 30 days past due, over 90 days past due and on nonaccrual, respectively.

The recorded investment in impaired loans at December 31, 2017 and December 31, 2016 was $286 million and $262 million, respectively. The method used to measure impairment for these loans is primarily based on collateral value. At December 31, 2017, troubled debt restructurings included in impaired loans were $132 million.

The GE Capital financing receivable portfolio includes $890 million and $322 million of loans that are guaranteed by GE, of which $239 million and an insignificant amount of these loans are on nonaccrual at December 31, 2017 and 2016, respectively. These impaired loans are measured based on market and collateral value at a consolidated level, however are not impaired loans at GE Capital because of the GE guarantee. In addition to the allowance for loan losses recorded at GE Capital, additional allowance for loan losses of $161 million and an insignificant amount is recorded at GE and on a consolidated level for guaranteed loans at December 31, 2017 and 2016, respectively.

Due to the strategic shift to make GE Capital smaller and more focused, we classified $2,231 million of Energy Financial Services financing receivables as held for sale at December 31, 2017, as we no longer intend to hold these financing receivables for the foreseeable future. As a result, we recognized a pre-tax provision for losses on financing receivables of $137 million and write-offs of $156 million to reduce the carrying value of the financing receivables to the lower of cost or fair value, less cost to sell.