Ally Bank 2012 Annual Report Download - page 65

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63
The following table includes our five largest state concentrations based on our higher-risk mortgage finance receivables and loans
recorded at historical cost and reported at carrying value before allowance for loan losses.
December 31, ($ in millions)Interest-only
mortgage loans
Below-market
rate (teaser)
mortgages
Total
higher-risk
mortgage loans
2012
California $ 500 $ 60 $ 560
Virginia 216 9 225
Maryland 166 5 171
Illinois 107 6 113
Michigan 106 5 111
Other United States 968 107 1,075
Total higher-risk mortgage loans $ 2,063 $ 192 $ 2,255
2011
California $ 748 $ 78 $ 826
Virginia 274 10 284
Maryland 217 6 223
Illinois 153 8 161
Michigan 199 9 208
Other United States 1,356 137 1,493
Total higher-risk mortgage loans $ 2,947 $ 248 $ 3,195
Commercial Credit Portfolio
Our commercial portfolio consists primarily of automotive loans (wholesale floorplan, dealer term loans including real estate loans, and
automotive fleet financing), and some commercial finance loans. In general, the credit risk of our commercial portfolio is impacted by overall
economic conditions in the countries in which we operate and the financial health of the automotive manufacturers that provide the inventory
we floorplan. As part of our floorplan financing arrangements, we typically require repurchase agreements with the automotive manufacturer
to repurchase new vehicle inventory under certain circumstances.
Our credit risk on the commercial portfolio is markedly different from that of our consumer portfolio. Whereas the consumer portfolio
represents smaller-balance homogeneous loans that exhibit fairly predictable and stable loss patterns, the commercial portfolio exposures can
be less predictable. We utilize an internal credit risk rating system that is fundamental to managing credit risk exposure consistently across
various types of commercial borrowers and captures critical risk factors for each borrower. The ratings are used for many areas of credit risk
management, such as loan origination, portfolio risk monitoring, management reporting, and loan loss reserves analyses. Therefore, the rating
system is critical to an effective and consistent credit risk management framework.
During the year ended December 31, 2012, the credit performance of the commercial portfolio remained strong as nonperforming
finance receivables and loans and net charge-offs declined. For information on our commercial credit risk practices and policies regarding
delinquencies, nonperforming status, and charge-offs, refer to Note 1 to the Consolidated Financial Statements.
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K