Ally Bank 2011 Annual Report Download - page 83

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10−K
($ in millions) Consumer automobile Consumer mortgage Total consumer Commercial Total
Allowance at January 1, 2010 $ 1,024 $ 640 $ 1,664 $ 781 $ 2,445
Cumulative effect of change in accounting principles
(a) 222 — 222 — 222
Charge−offs
Domestic (776) (239) (1,015) (282) (1,297)
Foreign (194) (4) (198) (151) (349)
Total charge−offs (970) (243) (1,213) (433) (1,646)
Recoveries
Domestic 319 26 345 18 363
Foreign 71 1 72 13 85
Total recoveries 390 27 417 31 448
Net charge−offs (580) (216) (796) (402) (1,198)
Provision for loan losses 304 164 468 (26) 442
Discontinued operations — — — (4) (4)
Other — (8) (8) (26) (34)
Allowance at December 31, 2010 $ 970 $ 580 $ 1,550 $ 323 $ 1,873
Allowance for loan losses to finance receivables and
loans outstanding at December 31, 2010 (b) 1.9% 5.4% 2.5% 0.8% 1.8%
Net charge−offs to average finance receivables and
loans outstanding at December 31, 2010 (b) 1.4% 2.0% 1.5% 1.1% 1.3%
Allowance for loan losses to total nonperforming
finance receivables and loans at
December 31, 2010 (b) 469.2% 103.4% 202.0% 43.7% 124.3%
Ratio of allowance for loans losses to net charge−offs
at December 31, 2010 1.7 2.7 1.9 0.8 1.6
(a) Includes adjustment to the allowance due to adoption of ASU 2009−17, Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities.
(b) Coverage percentages are based on the allowance for loan losses related to finance receivables and loans excluding those loans held at fair value as a percentage of the unpaid
principal balance, net of premiums and discounts.
The allowance for consumer loan losses was $1.3 billion at December 31, 2011, compared to $1.6 billion at December 31, 2010. The decline reflected
overall improved credit quality of newer vintages reflecting tightened underwriting standards which was partially offset by an increase in loans outstanding.
The allowance for commercial loan losses was $221 million at December 31, 2011, compared to $323 million at December 31, 2010. The decline was
primarily related to improvement in dealer performance and continued wind−down of non−core commercial assets.
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