GE 2009 Annual Report Download - page 81

GE 2009 ANNUAL REPORT 79
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NET INVESTMENT IN FINANCING LEASES
Total financing leases Direct financing leases (a) Leveraged leases (b)
December 31 (In millions) 2009 2008 2009 2008 2009 2008
Total minimum lease payments receivable $64,110 $ 81,115 $50,098 $63,309 $14,012 $ 17,806
Less principal and interest on third-party nonrecourse debt (9,660) (12,720) — — (9,660) (12,720)
Net rentals receivable 54,450 68,395 50,098 63,309 4,352 5,086
Estimated unguaranteed residual value of leased assets 9,603 10,255 6,814 7,425 2,789 2,830
Less deferred income (9,608) (11,072) (7,629) (8,733) (1,979) (2,339)
Investment in financing leases, net of deferred income 54,445 67,578 49,283 62,001 5,162 5,577
Less amounts to arrive at net investment
Allowance for losses (654) (498) (534) (440) (120) (58)
Deferred taxes (6,210) (7,317) (2,485) (3,082) (3,725) (4,235)
Net investment in financing leases $47,581 $ 59,763 $46,264 $58,479 $ 1,317 $ 1,284
(a) Included $615 million and $824 million of initial direct costs on direct financing leases at December 31, 2009 and 2008, respectively.
(b) Included pre-tax income of $164 million and $268 million and income tax of $65 million and $106 million during 2009 and 2008, respectively. Net investment credits recognized
on leveraged leases during 2009 and 2008 were inconsequential.
CONTRACTUAL MATURITIES
(In millions) Total loans
Net rentals
receivable
Due in
2010 $ 85,472 $15,977
2011 40,033 11,065
2012 32,196 7,946
2013 25,381 5,587
2014 22,798 3,221
2015 and later 84,706 10,654
Total $290,586 $54,450
We expect actual maturities to differ from contractual maturities.
Individually impaired loans are defined by GAAP as larger
balance or restructured loans for which it is probable that the
lender will be unable to collect all amounts due according to
original contractual terms of the loan agreement. An analysis of
impaired loans and specific reserves follows. The vast majority of
our consumer and a portion of our CLL nonearning receivables are
excluded from this definition, as they represent smaller balance
homogeneous loans that we evaluate collectively by portfolio for
impairment.
December 31 (In millions) 2009 2008
Loans requiring allowance for losses $ 9,145 $ 2,712
Loans expected to be fully recoverable 3,741 871
Total impaired loans $ 12,886 $ 3,583
Allowance for losses (specific reserves) $ 2,331 $ 635
Average investment during the period 8,493 2,064
Interest income earned while impaired (a) 227 48
(a) Recognized principally on cash basis.
Impaired loans increased by $9,303 million from December 31,
2008, to December 31, 2009 primarily relating to increases at
Real Estate ($5,678 million) and CLL ($2,697 million). We regularly
review our Real Estate loans for impairment using both quantitative
and qualitative factors, such as debt service coverage and loan-
to-value ratios. We classify Real Estate loans as impaired when
the most recent valuation reflects a projected loan-to-value ratio
at maturity in excess of 100%, even if the loan is currently paying
in accordance with contractual terms. The increase in impaired
loans and related specific reserves at Real Estate reflects our
current estimate of collateral values of the underlying properties,
and our estimate of loans which are not past due, but for which
it is probable that we will be unable to collect the full principal
balance at maturity due to a decline in the underlying value of the
collateral. Of our $6,519 million impaired loans at Real Estate at
December 31, 2009, $4,396 million are currently paying in accor-
dance with the contractual terms of the loan. Impaired loans at
CLL primarily represent senior secured lending positions.