Ally Bank 2012 Annual Report Download - page 24

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investments, which do not have an established market value or are not publicly traded. We also use estimates and assumptions in determining
the residual values of leased vehicles. In addition, we use estimates and assumptions in determining our reserves for legal matters, insurance
losses and loss adjustment expenses which represent the accumulation of estimates for both reported losses and those incurred, but not
reported, including claims adjustment expenses relating to direct insurance and assumed reinsurance agreements. For further discussion
related to estimates and assumptions, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations —
Critical Accounting Estimates.” Our actual experience may differ materially from these estimates and assumptions. A material difference
between our estimates and assumptions and our actual experience may adversely affect our cash flow, profitability, financial condition, and
business prospects.
Fluctuations in valuation of investment securities or significant fluctuations in investment market prices could negatively affect revenues.
Investment market prices in general are subject to fluctuation. Consequently, the amount realized in the subsequent sale of an investment
may significantly differ from the reported market value and could negatively affect our revenues. Additionally, negative fluctuations in the
value of available-for-sale investment securities could result in unrealized losses recorded in equity. Fluctuation in the market price of a
security may result from perceived changes in the underlying economic characteristics of the investee, the relative price of alternative
investments, national and international events, and general market conditions.
Changes in accounting standards issued by the Financial Accounting Standards Board (FASB) could adversely affect our reported
revenues, profitability, and financial condition.
Our financial statements are subject to the application of GAAP, which are periodically revised and/or expanded. The application of
accounting principles is also subject to varying interpretations over time. Accordingly, we are required to adopt new or revised accounting
standards or comply with revised interpretations that are issued from time to time by various parties, including accounting standard setters and
those who interpret the standards, such as the FASB and the SEC, banking regulators, and our independent registered public accounting firm.
Those changes could adversely affect our reported revenues, profitability, or financial condition.
Recently, the FASB has proposed new financial accounting standards, and has many active projects underway, that could materially
affect our reported revenues, profitability, or financial condition. These proposed standards or projects include the potential for significant
changes in the accounting for financial instruments (including loans, deposits, allowance for loan losses, and debt) and the accounting for
leases, among others. It is possible that any changes, if enacted, could adversely affect our reported revenues, profitability, or financial
condition.
The soundness of other financial institutions could adversely affect us.
Financial services institutions are interrelated as a result of trading, clearing, counterparty, or other relationships. We have exposure to
different counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and
dealers, commercial banks, investment banks, and other institutions. Many of these transactions expose us to credit risk in the event of default
of our counterparty.
Our inability to maintain relationships with dealers could have an adverse effect on our business, results of operations, and financial
condition.
Our business depends on the continuation of our relationships with our customers, particularly the automotive dealers with whom we do
business. If we are not able to maintain existing relationships with key automotive dealers or if we are not able to develop new relationships
for any reason, including if we are not able to provide services on a timely basis or offer products that meet the needs of the dealers, our
business, results of operations, and financial condition could be adversely affected.
Adverse economic conditions or changes in laws in states in which we have customer concentrations may negatively affect our operating
results and financial condition.
We are exposed to consumer loan portfolio concentration in certain states, including California, Texas, and Florida. Factors adversely
affecting the economies and applicable laws in these and other states could have an adverse effect on our business, results of operations and
financial position.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
Our principal corporate offices are located in Detroit, Michigan; New York, New York; and Charlotte, North Carolina. In Detroit, we
lease approximately 247,000 square feet from GM pursuant to a lease agreement expiring in November 2016. In New York, we lease
approximately 35,000 square feet of office space under a lease that expires in July 2015. In Charlotte, we lease approximately 133,000 square
feet of office space under a lease expiring in December 2015.
The primary offices for Dealer Financial Services operations are located in Detroit, Michigan, and Southfield, Michigan. The primary
office for our Automotive Finance operations is located in Detroit, Michigan, and is included in the totals referenced above. The primary
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Ally Financial Inc. • Form 10-K