Ally Bank 2011 Annual Report Download - page 40

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10−K
Consolidated Results of Operations
The following table summarizes our consolidated operating results excluding discontinued operations for the periods shown. Refer to the operating
segment sections of the MD&A that follows for a more complete discussion of operating results by line of business.
Year ended December 31, ($ in millions) 2011 2010 2009
Favorable/
(unfavorable)
2011−2010
% change
Favorable/
(unfavorable)
2010−2009
% change
Net financing revenue
Total financing revenue and other interest income $ 9,736 $ 11,183 $ 12,772 (13) (12)
Interest expense 6,223 6,666 7,091 7 6
Depreciation expense on operating lease assets 1,038 1,903 3,519 45 46
Net financing revenue 2,475 2,614 2,162 (5) 21
Other revenue
Net servicing income 569 1,099 363 (48) n/m
Insurance premiums and service revenue earned 1,573 1,750 1,861 (10) (6)
Gain on mortgage and automotive loans, net 470 1,261 799 (63) 58
(Loss) gain on extinguishment of debt (64) (123) 665 48 (118)
Other gain on investments, net 294 504 162 (42) n/m
Other income, net of losses 754 537 190 40 183
Total other revenue 3,596 5,028 4,040 (28) 24
Total net revenue 6,071 7,642 6,202 (21) 23
Provision for loan losses 219 442 5,603 50 92
Noninterest expense
Compensation and benefits expense 1,574 1,576 1,517 — (4)
Insurance losses and loss adjustment expenses 713 820 992 13 17
Other operating expenses 3,498 3,665 4,999 5 27
Total noninterest expense 5,785 6,061 7,508 5 19
Income (loss) from continuing operations before income tax
expense 67 1,139 (6,909) (94) 116
Income tax expense from continuing operations 179 153 74 (17) (107)
Net (loss) income from continuing operations $ (112) $ 986 $ (6,983) (111) 114
n/m = not meaningful
2011 Compared to 2010
We incurred a net loss from continuing operations of $112 million for the year ended December 31, 2011, compared to net income from continuing
operations of $986 million for the year ended December 31, 2010. Continuing operations for the year ended December 31, 2011, was unfavorably impacted
by a decrease in net servicing income due to a drop in interest rates and increased market volatility, lower gains on the sale of loans, and a $230 million
expense related to penalties imposed by certain regulators and other governmental agencies in connection with mortgage foreclosure−related matters.
Partially offsetting the decrease was lower representation and warranty expense and a lower provision for loan losses.
Total financing revenue and other interest income decreased by 13% for the year ended December 31, 2011, compared to 2010. Operating lease
revenue and the related depreciation expense at our Automotive Finance operations declined due to a lower average operating lease portfolio balance as a
result of our decision in late 2008 to significantly curtail leasing. Depreciation expense was also impacted by lower lease remarketing gains resulting from
lower lease termination volumes. The decrease in our Mortgage Legacy Portfolio and Other operations resulted from a decline in average asset levels due to
loan sales, the deconsolidation of previously on−balance sheet securitizations, and portfolio runoff. Partially offsetting the decrease was an increase in
consumer financing revenue at our North American Automotive operations driven primarily by an increase in consumer asset levels related to strong loan
origination volume during 2010 and 2011 resulting primarily from higher automotive industry sales, increased used vehicle financing volume, and higher
on−balance sheet retention.
Interest expense decreased 7% for the year ended December 31, 2011, compared to 2010, primarily as a result of a change in our funding mix with an
increased amount of funding coming from deposit liabilities as well as favorable trends in the securitization markets.
Net servicing income was $569 million for the year ended December 31, 2011, compared to $1.1 billion in 2010. The decrease was
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