Ally Bank 2012 Annual Report Download - page 35

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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) 2012 2011 2010
Favorable/
(unfavorable)
2012-2011
% change
Favorable/
(unfavorable)
2011-2010
% change
Net financing revenue
Total financing revenue and other interest income $ 7,468 $ 7,061 $ 8,017 6(12)
Interest expense 4,200 5,039 5,460 17 8
Depreciation expense on operating lease assets 1,399 941 1,251 (49) 25
Net financing revenue 1,869 1,081 1,306 73 (17)
Other revenue
Net servicing income 693 569 1,094 22 (48)
Insurance premiums and service revenue earned 1,059 1,170 1,371 (9) (15)
Gain on mortgage and automotive loans, net 532 470 1,239 13 (62)
Loss on extinguishment of debt (148) (64) (124) (131) 48
Other gain on investments, net 146 259 502 (44) (48)
Other income, net of losses 747 493 334 52 48
Total other revenue 3,029 2,897 4,416 5(34)
Total net revenue 4,898 3,978 5,722 23 (30)
Provision for loan losses 329 188 357 (75) 47
Noninterest expense
Compensation and benefits expense 1,365 1,322 1,348 (3) 2
Insurance losses and loss adjustment expenses 461 483 547 512
Other operating expenses 3,498 2,936 3,078 (19) 5
Total noninterest expense 5,324 4,741 4,973 (12) 5
(Loss) income from continuing operations before income tax
(benefit) expense (755) (951) 392 21 n/m
Income tax (benefit) expense from continuing operations (1,284) 51 104 n/m 51
Net income (loss) from continuing operations $ 529 $ (1,002) $ 288 153 n/m
n/m = not meaningful
2012 Compared to 2011
We earned net income from continuing operations of $529 million for the year ended December 31, 2012, compared to a net loss from
continuing operations of $1.0 billion for the year ended December 31, 2011. Net income from continuing operations for the year ended
December 31, 2012, was favorably impacted by our Automotive Finance operations, primarily due to an increase in consumer automotive
financing revenue related to growth in the retail loan and operating lease portfolios. Additional favorability for the year ended December 31,
2012 was primarily the result of a more favorable servicing asset valuation, net of hedge, compared to the same period in 2011, higher fee
income and net origination revenue related to increased consumer mortgage-lending production associated with government-sponsored
refinancing programs, higher net gains on the sale of mortgage loans, and lower original issue discount (OID) amortization expense related to
bond maturities and normal monthly amortization. The increase was partially offset by a $1.2 billion charge related to the Debtors' Chapter 11
filing, higher provision for loan losses, and lower investment income due to impairment related to certain investment securities that we do not
plan on holding to recovery.
Total financing revenue and other interest income increased $407 million for the year ended December 31, 2012, compared to 2011. The
increase resulted primarily from an increase in operating lease revenue and consumer financing revenue at our Automotive Finance operations
driven primarily by an increase in consumer asset levels as a result of increased used vehicle automotive financing and higher automotive
industry sales, as well as limited use of whole-loan sales as a funding source in recent periods. Additionally, we continue to prudently expand
our nonprime origination volume. The increase was partially offset by the deconsolidation of ResCap effective May 14, 2012, which primarily
impacted our Mortgage operations, as well as a lower average yield mix as higher rate Ally Bank mortgage loans run off.
Interest expense decreased 17% for the year ended December 31, 2012, compared to 2011. OID amortization expense decreased $576
million for the year ended December 31, 2012, compared to 2011, due to bond maturities and normal monthly amortization. Additionally,
interest expense decreased at our Mortgage operations due to the deconsolidation of ResCap and lower funding costs.
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K