GE 2014 Annual Report Download - page 239

GE 2014 FORM 10-K 219
FINANCIAL STATEMENTS FINANCING RECEIVABLES – SUPPLEMENTAL INFORMATION
The credit quality of the owner occupied/credit tenant portfolio is primarily influenced by the strength of the borrower’s general
credit quality, which is reflected in our internal risk rating process, consistent with the process we use for our Commercial
portfolio. As of December 31, 2014, the balances of our owner occupied/credit tenant portfolio with an internal risk rating of A,
B and C approximated $589 million, $70 million and $90 million, respectively, as compared to the December 31, 2013,
balances of $571 million, $179 million and $162 million, respectively.
The financing receivables within our Debt portfolio are primarily concentrated in our North American and European Lending
platforms and are secured by various property types. A substantial majority of our Debt financing receivables with loan-to-
value ratios greater than 95% are paying in accordance with contractual terms. Substantially all of these loans and the majority
of our owner occupied/credit tenant financing receivables included in Category C are impaired loans that are subject to the
specific reserve evaluation process. The ultimate recoverability of impaired loans is driven by collection strategies that do not
necessarily depend on the sale of the underlying collateral and include full or partial repayments through third-party refinancing
and restructurings.
CONSUMER
At December 31, 2014, our U.S. consumer financing receivables included private-label credit card and sales financing for
approximately 64 million customers across the U.S. with no metropolitan area accounting for more than 6% of the portfolio. Of
the total U.S. consumer financing receivables, approximately 67% relate to credit card loans that are often subject to profit and
loss sharing arrangements with the retailer (which are recorded in revenues), and the remaining 33% are sales finance
receivables that provide financing to customers in areas such as electronics, recreation, medical and home improvement.
Our Consumer financing receivables portfolio comprises both secured and unsecured lending. Secured financing receivables
comprise residential loans and lending to small and medium-sized enterprises predominantly secured by auto and equipment,
inventory finance, and cash flow loans. Unsecured financing receivables include private-label credit card financing. A
substantial majority of these cards are not for general use and are limited to the products and services sold by the retailer. The
private-label portfolio is diverse with no metropolitan area accounting for more than 5% of the related portfolio.
Non-U.S. residential mortgages
For our secured non-U.S. residential mortgage book, we assess the overall credit quality of the portfolio through loan-to-value
ratios (the ratio of the outstanding debt on a property to the value of that property at origination). In the event of default and
repossession of the underlying collateral, we have the ability to remarket and sell the properties to eliminate or mitigate the
potential risk of loss.
Loan-to-value ratio
2014 2013
80% or Greater than Greater than 80% or Greater than Greater than
December 31 (In millions) less 80% to 90% 90% less 80% to 90% 90%
Non-U.S. residential mort
g
a
g
es $ 13,964 $ 4,187 $ 6,742 $ 17,224 $ 5,130 $ 8,147
The majority of these financing receivables are in our U.K. and France portfolios and have re-indexed loan-to-value ratios of
70% and 55%, respectively. Re-indexed loan-to-value ratios may not reflect actual realizable values of future repossessions.
We have third-party mortgage insurance for about 21% of the balance of Consumer non-U.S. residential mortgage loans with
loan-to-value ratios greater than 90% at December 31, 2014. Such loans were primarily originated in France and the U.K.