Ally Bank 2011 Annual Report Download - page 213

Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10−K
28. Segment and Geographic Information
Operating segments are defined as components of an enterprise that engage in business activity from which revenues are earned and expenses incurred
for which discrete financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources
and in assessing performance.
We report our results of operations on a line−of−business basis through five operating segments − North American Automotive Finance operations,
International Automotive Finance operations, Insurance operations, Mortgage − Origination and Servicing operations, and Mortgage − Legacy Portfolio and
Other operations, with the remaining activity reported in Corporate and Other. The operating segments are determined based on the products and services
offered and geographic considerations, and reflect the manner in which financial information is currently evaluated by management. The following is a
description of each of our reportable operating segments.
North American Automotive Finance operations — Provides automotive financing services to consumers and automotive dealers in the United
States and Canada and includes the automotive activities of Ally Bank and ResMor Trust. For consumers, we offer retail automotive financing
and leasing for new and used vehicles, and through our commercial automotive financing operations, we fund dealer purchases of new and used
vehicles through wholesale or floorplan financing.
International Automotive Finance operations — Provides automotive financing and full−service leasing to consumers and dealers outside of the
United States and Canada. Our International Automotive Finance operations will focus the majority of new originations in five core international
markets: Germany, the United Kingdom, Brazil, Mexico, and China through our joint venture.
Insurance operations — Offers consumer and commercial insurance products sold primarily through the dealer channel including vehicle service
contracts, commercial insurance coverage in the United States (primarily covering dealers' wholesale vehicle inventory), and personal
automobile insurance in certain countries outside the United States.
Mortgage — Origination and Servicing operations —The principal activities include originating, purchasing, selling, and securitizing conforming
and government−insured residential mortgage loans in the United States; servicing residential mortgage loans for ourselves and others; and
providing collateralized lines of credit to other mortgage originators, which we refer to as warehouse lending. We also originate high−quality
prime jumbo mortgage loans in the United States. We finance our mortgage loan originations primarily in Ally Bank in the United States.
Mortgage — Legacy Portfolio and Other operations — Primarily consists of loans originated prior to January 1, 2009, and includes noncore
business activities including discontinued operations, portfolios in runoff, our mortgage reinsurance business, and cash held in the ResCap legal
entity. These activities, all of which we have discontinued, included, among other things: lending to real estate developers and homebuilders in
the United States and United Kingdom; and purchasing, selling, and securitizing nonconforming residential mortgage loans (with the exception
of U.S. prime jumbo mortgage loans originated subsequent to January 1, 2009, which are included in our Origination and Servicing operations)
in both the United States and internationally.
Corporate and Other primarily consists of our centralized corporate treasury and deposit gathering activities, such as management of the cash and
corporate investment securities portfolios, short− and long−term debt, retail and brokered deposit liabilities, derivative instruments, the amortization of the
discount associated with new debt issuances and bond exchanges, most notably from the December 2008 bond exchange, and the residual impacts of our
corporate funds−transfer pricing (FTP) and treasury asset liability management (ALM) activities. Corporate and Other also includes our Commercial
Finance Group, certain equity investments, and reclassifications and eliminations between the reportable operating segments.
We utilize an FTP methodology for the majority of our business operations. The FTP methodology assigns charge rates and credit rates to classes of
assets and liabilities based on expected duration and the LIBOR swap curve plus an assumed credit spread. Matching duration allocates interest income and
interest expense to these reportable segments so their respective results are insulated from interest rate risk. This methodology is consistent with our ALM
practices, which includes managing interest rate risk centrally at a corporate level. The net residual impact of the FTP methodology is included within the
results of Corporate and Other.
The information presented in our reportable operating segments and geographic areas tables that follow are based in part on internal allocations, which
involve management judgment.
Change in Reportable Segment Information
Beginning in the fourth quarter of 2011, we began presenting our Canadian mortgage operations of ResMor Trust with Legacy Portfolio and Other
operations. Previously these operations were included with Originations and Servicing operations. The change was made because the mortgage operations
of ResMor Trust were classified as discontinued and held−for−sale.
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