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Financing Receivables and Allowance For Losses On Financing Receivables
 12 Months Ended
Dec. 31, 2011
Financing Receivables And Allowance For Losses On Financing Receivables [Abstract]  
Financing Receivables And Allowance For Losses On Financing Receivables

NOTE 4. FINANCING RECEIVABLES AND ALLOWANCE FOR LOSSES ON FINANCING RECEIVABLES

 At
 December 31, December 31,
(In millions)2011 2010
      
Loans, net of deferred income(a)$256,895 $275,135
Investment in financing leases, net of deferred income 38,142  44,390
  295,037  319,525
Less allowance for losses (6,190)  (7,919)
Financing receivables – net(b)$288,847 $311,606
      
      

  • Deferred income was $2,329 million and $2,360 million at December 31, 2011 and December 31, 2010, respectively.
  • Financing receivables at December 31, 2011 and December 31, 2010 included $1,062 million and $1,503 million, respectively, relating to loans that had been acquired in a transfer but have been subject to credit deterioration since origination per ASC 310, Receivables.

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, commercial real estate and 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)2011 2010 2011 2010 2011 2010
                  
Total minimum lease payments receivable$44,157 $52,180 $33,667 $40,037 $10,490 $12,143
 Less principal and interest on third-party                 
    non-recourse debt (6,812)  (8,110)  0  0  (6,812)  (8,110)
Net rentals receivables 37,345  44,070  33,667  40,037  3,678  4,033
Estimated unguaranteed residual value of                 
    leased assets 7,592  8,495  5,140  5,991  2,452  2,504
Less deferred income (6,795)  (8,175)  (5,219)  (6,438)  (1,576)  (1,737)
Investment in financing leases, net of                 
    deferred income 38,142  44,390  33,588  39,590  4,554  4,800
Less amounts to arrive at net investment                 
      Allowance for losses (294)  (396)  (281)  (378)  (13)  (18)
      Deferred taxes (6,718)  (6,168)  (2,938)  (2,266)  (3,780)  (3,902)
Net investment in financing leases$31,130 $37,826 $30,369 $36,946 $761 $880
                  
                  

(a)       Included $413 million and $452 million of initial direct costs on direct financing leases at December 31, 2011 and 2010, respectively.

(b)       Included pre-tax income of $116 million and $133 million and income tax of $35 million and $51 million during 2011 and 2010, respectively. Net investment credits recognized on leveraged leases during 2011 and 2010 were insignificant.

Contractual Maturities

 Total Net rentals
(In millions)loans receivable
      
Due in     
    2012$64,548 $10,353
    2013 22,689  7,434
    2014 22,829  5,500
    2015 16,133  4,081
    2016 16,869  2,402
    2017 and later 59,816  7,575
  202,884  37,345
    Consumer revolving loans 54,011  0
Total$256,895 $37,345
      

We expect actual maturities to differ from contractual maturities.

 

The following tables provide additional information about our financing receivables and related activity in the allowance for losses for our Commercial, Real Estate and Consumer portfolios.

 

Financing Receivables – net

The following table displays our financing receivables balances.

 At
 December 31, December 31,
(In millions)2011 2010
      
Commercial     
CLL     
Americas(a)$80,505 $88,558
Europe 36,899  37,498
Asia 11,635  11,943
Other(a) 436  664
Total CLL 129,475  138,663
      
Energy Financial Services 5,912  7,011
      
GECAS 11,901  12,615
      
Other 1,282  1,788
Total Commercial financing receivables 148,570  160,077
      
Real Estate     
Debt 24,501  30,249
Business Properties 8,248  9,962
Total Real Estate financing receivables 32,749  40,211
      
Consumer     
Non-U.S. residential mortgages 35,550  39,269
Non-U.S. installment and revolving credit 18,544  20,132
U.S. installment and revolving credit 46,689  43,974
Non-U.S. auto 5,691  7,558
Other 7,244  8,304
Total Consumer financing receivables 113,718  119,237
      
Total financing receivables 295,037  319,525
      
Less allowance for losses (6,190)  (7,919)
Total financing receivables – net$288,847 $311,606
      
      

  • During 2011, we transferred our Railcar lending and leasing portfolio from CLL Other to CLL Americas. Prior-period amounts were reclassified to conform to the current-period presentation.

 

Allowance for Losses on Financing Receivables

The following tables provide a roll-forward of our allowance for losses on financing receivables.

 

 Balance at Provision       Balance at
 January 1, charged to    Gross   December 31,
(In millions)2011 operations(a)Other(b)write-offs(c)Recoveries(c)2011
                  
Commercial                 
CLL                 
Americas$1,288 $281 $(96) $(700) $116 $889
Europe 429  195  (5)  (286)  67  400
Asia 222  105  13  (214)  31  157
Other 6  3  (3)  (2)  –   4
Total CLL 1,945  584  (91)  (1,202)  214  1,450
                  
                  
Energy Financial Services 22  –   (1)  (4)  9  26
                  
GECAS 20  –   –   (3)  –   17
                  
Other 58  23  –   (47)  3  37
Total Commercial 2,045  607  (92)  (1,256)  226  1,530
                  
Real Estate                 
Debt 1,292  242  2  (603)  16  949
Business Properties 196  82  –   (144)  6  140
Total Real Estate 1,488  324  2  (747)  22  1,089
                  
Consumer                 
Non-U.S. residential                 
   mortgages 689  117  (13)  (296)  49  546
Non-U.S. installment                 
   and revolving credit 937  490  (30)  (1,257)  577  717
U.S. installment and                 
   revolving credit 2,333  2,241  1  (3,095)  528  2,008
Non-U.S. auto 168  30  (4)  (216)  123  101
Other 259  142  (20)  (272)  90  199
Total Consumer 4,386  3,020  (66)  (5,136)  1,367  3,571
Total$7,919 $3,951 $(156) $(7,139) $1,615 $6,190
                  
                  

  • Included a provision of $77 million at Consumer related to the July 1, 2011 adoption of ASU 2011-02. See Note 16.
  • Other primarily included transfers to held for sale and the effects of currency exchange.
  • Net write-offs (write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as our revolving credit portfolios turn over more than once per year or, in all portfolios, can reflect 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.

 

 Balance at Adoption of Balance at Provision       Balance at
 December 31, ASU 2009 January 1, charged to    Gross   December 31,
(In millions)2009 16 & 17(a) 2010 operations Other(b) write-offs(c) Recoveries(c) 2010
                        
Commercial                       
CLL                       
Americas$1,180 $66 $1,246 $1,059 $(11) $(1,136) $130 $1,288
Europe 575  –   575  269  (37)  (440)  62  429
Asia 244  (10)  234  153  (6)  (181)  22  222
Other 10  –   10  (2)  (1)  (1)  –   6
Total CLL 2,009  56  2,065  1,479  (55)  (1,758)  214  1,945
                        
                        
Energy Financial Services 28  –   28  65  –   (72)  1  22
                        
GECAS 104  –   104  12  –   (96)  –   20
                        
Other 34  –   34  33  –   (9)  –   58
Total Commercial 2,175  56  2,231  1,589  (55)  (1,935)  215  2,045
                        
Real Estate                       
Debt 1,358  (3)  1,355  764  10  (838)  1  1,292
Business Properties 136  45  181  146  (8)  (126)  3  196
Total Real Estate 1,494  42  1,536  910  2  (964)  4  1,488
                        
Consumer                       
Non-U.S. residential                       
   mortgages 825  –   825  165  (38)  (338)  75  689
Non-U.S. installment                       
   and revolving credit 1,106  –   1,106  1,047  (68)  (1,733)  585  937
U.S. installment and                       
   revolving credit 1,551  1,602  3,153  3,018  (6)  (4,300)  468  2,333
Non-U.S. auto 292  –   292  91  (61)  (313)  159  168
Other 292  –   292  265  5  (394)  91  259
Total Consumer 4,066  1,602  5,668  4,586  (168)  (7,078)  1,378  4,386
Total$7,735 $1,700 $9,435 $7,085 $(221) $(9,977) $1,597 $7,919
                        
                        

  • Reflects the effects of our adoption of ASU 2009-16 & 17 on January 1, 2010.
  • Other primarily included the effects of currency exchange.
  • Net write-offs (write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as our revolving credit portfolios turn over more than once per year or, in all portfolios, can reflect 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.

 Balance at Provision       Balance at
 January 1, charged to   Gross   December 31,
(In millions)2009 operations Other(a)write-offs(b)Recoveries(b)2009
                  
Commercial                 
CLL                 
Americas$846 $1,400 $(42) $(1,117) $93 $1,180
Europe 311  625  (14)  (431)  84  575
Asia 163  257  3  (203)  24  244
Other 1  8  5  (4)  0  10
Total CLL 1,321  2,290  (48)  (1,755)  201  2,009
                  
Energy Financial                  
   Services 58  33  4  (67)  0  28
                  
GECAS 58  65  (3)  (16)  0  104
                  
Other 28  29  0  (24)  1  34
Total Commercial 1,465  2,417  (47)  (1,862)  202  2,175
                  
Real Estate                 
Debt 282  1,295  13  (232)  0  1,358
Business Properties 19  147  0  (32)  2  136
Total Real Estate 301  1,442  13  (264)  2  1,494
                  
Consumer                 
Non-U.S. residential                 
   mortgages 322  795  69  (442)  81  825
Non-U.S. installment                 
   and revolving credit 1,000  1,741  39  (2,235)  561  1,106
U.S. installment and                 
   revolving credit 1,616  3,367  (975)  (2,612)  155  1,551
Non-U.S. auto 187  389  30  (510)  196  292
Other 225  346  45  (389)  65  292
Total Consumer 3,350  6,638  (792)  (6,188)  1,058  4,066
Total$5,116 $10,497 $(826) $(8,314) $1,262 $7,735
                  
                  

  • Other primarily included the effects of securitization activity and currency exchange.
  • Net write-offs (write-offs less recoveries) in certain portfolios may exceed the beginning allowance for losses as our revolving credit portfolios turn over more than once per year or, in all portfolios, can reflect 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.

 

See Note 16 for supplemental information about the credit quality of financing receivables and allowance for losses on financing receivables.