GE 2013 Annual Report Download - page 99

GE 2013 ANNUAL REPORT 97
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December 31 (In millions) 2013 2012
COMMERCIAL
Non-impaired financing receivables $ 125,377 $ 132,741
General reserves 677 554
Impaired loans 3,892 5,069
Specific reserves 328 487
REAL ESTATE
Non-impaired financing receivables 16,039 15,253
General reserves 118 132
Impaired loans 3,860 5,693
Specific reserves 74 188
CONSUMER
Non-impaired financing receivables 106,051 111,141
General reserves 3,414 2,910
Impaired loans 2,988 3,208
Specific reserves 567 673
Total
Non-impaired financing receivables 247,467 259,135
General reserves 4,209 3,596
Impaired loans 10,740 13,970
Specific reserves 969 1,348
Impaired loans classifi ed as TDRs in our CLL business were
$2,961 million and $3,872 million at December 31, 2013 and 2012,
respectively, and were primarily attributable to CLL Americas
($1,770 million and $2,577 million, respectively). For the year ended
December 31, 2013, we modifi ed $1,509 million of loans classifi ed
as TDRs, primarily in CLL Americas ($737 million). Changes to
these loans primarily included extensions, interest-only pay-
ment periods, debt to equity exchange and forbearance or other
actions, which are in addition to, or sometimes in lieu of, fees and
rate increases. Of our $1,509 million and $2,936 million of modi-
fi cations classifi ed as TDRs during 2013 and 2012, respectively,
$71 million and $217 million have subsequently experienced a
payment default in 2013 and 2012, respectively.
Real Estate TDRs decreased from $5,146 million at December
31, 2012 to $3,625 million at December 31, 2013, primarily driven
by resolution of TDRs through paydowns, partially offset by
extensions of loans scheduled to mature during 2013, some of
which were classifi ed as TDRs upon modifi cation. We deem loan
modifi cations to be TDRs when we have granted a concession to
a borrower experiencing fi nancial diffi culty and we do not receive
adequate compensation in the form of an effective interest rate
that is at current market rates of interest given the risk charac-
teristics of the loan or other consideration that compensates us
for the value of the concession. The limited liquidity and higher
return requirements in the real estate market for loans with
higher loan-to-value (LTV) ratios have typically resulted in the
conclusion that the modifi ed terms are not at current market rates
of interest, even if the modifi ed loans are expected to be fully
recoverable. For the year ended December 31, 2013, we modi-
fi ed $1,595 million of loans classifi ed as TDRs. Changes to these
loans primarily included maturity extensions, principal payment
acceleration, changes to collateral or covenant terms and cash
sweeps, which are in addition to, or sometimes in lieu of, fees and
rate increases. Of our $1,595 million and $4,351 million of modi-
fi cations classifi ed as TDRs during 2013 and 2012, respectively,
$197 million and $210 million have subsequently experienced a
payment default in 2013 and 2012, respectively.
The vast majority of our Consumer nonaccrual fi nancing
receivables are smaller-balance homogeneous loans evaluated
collectively, by portfolio, for impairment and therefore are out-
side the scope of the disclosure requirement for impaired loans.
Accordingly, impaired loans in our Consumer business represent
restructured smaller-balance homogeneous loans meeting the
defi nition of a TDR, and are therefore subject to the disclosure
requirement for impaired loans, and commercial loans in our
Consumer—Other portfolio. The recorded investment of these
impaired loans totaled $2,988 million (with an unpaid principal
balance of $3,101 million) and comprised $109 million with no
specifi c allowance, primarily all in our Consumer—Other portfolio,
and $2,879 million with a specifi c allowance of $567 million at
December 31, 2013. The impaired loans with a specifi c allowance
included $261 million with a specifi c allowance of $35 million in
our Consumer—Other portfolio and $2,618 million with a spe-
cifi c allowance of $532 million across the remaining Consumer
business and had an unpaid principal balance and average
investment of $2,948 million and $3,058 million, respectively, at
December 31, 2013.
Impaired loans classifi ed as TDRs in our Consumer business
were $2,874 million and $3,041 million at December 31, 2013 and
2012, respectively. We utilize certain loan modifi cation programs
for borrowers experiencing fi nancial diffi culties in our Consumer
loan portfolio. These loan modifi cation programs primarily
include interest rate reductions and payment deferrals in excess
of three months, which were not part of the terms of the original
contract, and are primarily concentrated in our non-U.S. residen-
tial mortgage and U.S. credit card portfolios. For the year ended
December 31, 2013, we modifi ed $1,441 million of consumer
loans for borrowers experiencing fi nancial diffi culties, which are
classifi ed as TDRs, and included $879 million of non-U.S. con-
sumer loans, primarily residential mortgages, credit cards and
personal loans and $562 million of U.S. consumer loans, primarily
credit cards. We expect borrowers whose loans have been modi-
fi ed under these programs to continue to be able to meet their
contractual obligations upon the conclusion of the modifi cation.
Of our $1,441 million and $1,751 million of modifi cations classi-
fi ed as TDRs during 2013 and 2012, respectively, $266 million and
$334 million have subsequently experienced a payment default in
2013 and 2012, respectively.