Ally Bank 2012 Annual Report Download - page 59

57
During 2012, the U.S. economy continued to expand and the labor market recovered further. Within the U.S. automotive portfolio,
encouraging trends include higher automotive industry sales when compared to the previous year. Additionally, the housing market continued
to recover with strong home price appreciation in late 2012 and existing home sales registered their highest annual level since 2007. We
continue to be cautious with the outlook due to weak manufacturing activity, slow global economic growth and pending budgets cuts to the
U.S. federal government.
On-balance Sheet Portfolio
Our on-balance sheet portfolio includes both finance receivables and loans and held-for-sale loans. At December 31, 2012, this primarily
included $86.5 billion of automobile finance receivables and loans and $12.3 billion of mortgage finance receivables and loans. Within our
on-balance sheet portfolio, we had historically elected to account for certain mortgage loans of ResCap at fair value. The valuation allowance
recorded on fair value-elected loans is separate from the allowance for loan losses. Changes in the fair value of loans are classified as gain on
mortgage and automotive loans, net, in the Consolidated Statement of Comprehensive Income.
During 2012, we further executed on our strategy of discontinuing and selling or liquidating nonstrategic operations. Refer to Note 2 to
the Consolidated Financial Statements for additional information.
The following table presents our total on-balance sheet consumer and commercial finance receivables and loans reported at carrying
value before allowance for loan losses.
Outstanding Nonperforming (a) Accruing past due 90 days or more (b)
December 31, ($ in millions) 2012 2011 2012 2011 2012 2011
Consumer
Finance receivables and loans
Loans at historical cost $ 63,536 $ 73,452 $ 642 $ 567 $ 1 $ 4
Loans at fair value —835 —210 ——
Total finance receivables and loans 63,536 74,287 642 777 14
Loans held-for-sale 2,490 8,537 25 2,820 —73
Total consumer loans 66,026 82,824 667 3,597 177
Commercial
Finance receivables and loans
Loans at historical cost 35,519 40,468 216 339 ——
Loans at fair value ——————
Total finance receivables and loans 35,519 40,468 216 339 ——
Loans held-for-sale 86 20 ————
Total commercial loans 35,605 40,488 216 339 ——
Total on-balance sheet loans $ 101,631 $ 123,312 $ 883 $ 3,936 $ 1 $ 77
(a) Includes nonaccrual troubled debt restructured loans of $419 million and $934 million at December 31, 2012, and December 31, 2011, respectively.
(b) Generally, loans that are 90 days past due and still accruing represent loans with government guarantees. This includes no troubled debt restructured loans
classified as 90 days past due and still accruing at December 31, 2012, and $42 million at December 31, 2011.
Total on-balance sheet loans outstanding at December 31, 2012, decreased $21.7 billion to $101.6 billion from December 31, 2011
reflecting a decrease of $16.8 billion in the consumer portfolio and a decrease of $4.9 billion in the commercial portfolio. The decrease in
total on-balance sheet loans outstanding was primarily driven by the reclassification of foreign Automotive Finance operations to
discontinued operations and the deconsolidation of ResCap, partially offset by domestic automobile originations which outpaced portfolio
runoff. Refer to Note 1 and Note 2 to the Consolidated Financial Statements for additional information related to ResCap and discontinued
operations, respectively.
The total TDRs outstanding at December 31, 2012, decreased $744 million to $1.2 billion from December 31, 2011, due to the
deconsolidation of ResCap.
During the third quarter of 2012, the Office of the Comptroller of the Currency (OCC) advised the banks for which they serve as the
primary bank regulatory agency that certain loans that are current, have been discharged in a Chapter 7 Bankruptcy and have not been
reaffirmed by the borrower should be accounted for as TDRs and written down to collateral value regardless of their current payment history
and expected continued performance. The OCC is not our primary regulator, and our primary regulator has not provided definitive guidance.
It is expected that all of the banking regulators will be evaluating this issue in the first quarter of 2013; however, due to industry practice, we
have determined that these loans should be accounted for as TDRs on a prospective basis. The write down based on the discounted expected
cash flows of these assets has already been considered in our allowance for loan and lease losses recorded at December 31, 2012. The impact
of any change will not be material.
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K