Ally Bank 2012 Annual Report Download - page 38

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Dealer Financial Services
Results for Dealer Financial Services are presented by reportable segment, which includes our Automotive Finance and Insurance
operations.
Automotive Finance Operations
Results of Operations
The following table summarizes the operating results of our Automotive Finance operations excluding discontinued operations for the
periods shown. Automotive Finance operations include the automotive activities of Ally Bank. The amounts presented are before the
elimination of balances and transactions with our other reportable segments.
Year ended December 31, ($ in millions) 2012 2011 2010
Favorable/
(unfavorable)
2012-2011
% change
Favorable/
(unfavorable)
2011-2010
% change
Net financing revenue
Consumer $ 2,827 $ 2,411 $ 1,953 17 23
Commercial 1,152 1,134 1,210 2(6)
Loans held-for-sale 15 5 112 n/m (96)
Operating leases 2,379 1,929 2,579 23 (25)
Other interest income 52 92 109 (43) (16)
Total financing revenue and other interest income 6,425 5,571 5,963 15 (7)
Interest expense 2,199 2,100 2,011 (5) (4)
Depreciation expense on operating lease assets 1,399 941 1,255 (49) 25
Net financing revenue 2,827 2,530 2,697 12 (6)
Other revenue
Servicing fees 109 161 227 (32) (29)
Gain on automotive loans, net 41 48 248 (15) (81)
Other income 172 213 249 (19) (14)
Total other revenue 322 422 724 (24) (42)
Total net revenue 3,149 2,952 3,421 7(14)
Provision for loan losses 253 89 260 (184) 66
Noninterest expense
Compensation and benefits expense 416 395 352 (5) (12)
Other operating expenses 1,091 1,135 1,052 4(8)
Total noninterest expense 1,507 1,530 1,404 2(9)
Income before income tax expense $ 1,389 $ 1,333 $ 1,757 4(24)
Total assets $ 128,411 $ 112,591 $ 97,961 14 15
n/m = not meaningful
2012 compared to 2011
Our Automotive Finance operations earned income before income tax expense of $1.4 billion for the year ended December 31, 2012,
compared to $1.3 billion for the year ended December 31, 2011. Results for the year ended December 31, 2012 were favorably impacted by
higher consumer and operating lease revenues driven by growth in the retail loan and operating lease portfolios. These items were partially
offset by higher provision for loan losses, lower operating lease remarketing gains due primarily to lower remarketing volume, lower
servicing fees, and lower income generated from lease remarketing.
Consumer financing revenue increased 17% for the year ended December 31, 2012, compared to 2011, due to an increase in consumer
asset levels driven by limited use of whole-loan sales as a funding source in recent periods, increased volumes of used vehicle automotive
financing, and higher automotive industry sales; however, our GM and Chrysler penetration levels for new retail automotive loans were lower
than those in 2011. Additionally, we continue to prudently expand our nonprime origination volume. The increase in consumer revenue from
volume was partially offset by lower yields as a result of the competitive market environment for automotive financing.
Commercial financing revenue increased $18 million for the year ended December 31, 2012, compared to 2011. The increase was
primarily driven by higher commercial loan balances due to growth in our wholesale dealer floorplan lending and dealer loan portfolio,
partially offset by lower yields as a result of competitive markets for automotive commercial financing.
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K