Ally Bank 2012 Annual Report Download - page 78

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results in a more cost-effective funding strategy over the long term. We evaluate funding markets on an ongoing basis to achieve an
appropriate balance of unsecured and secured funding sources and the maturity profiles of both. In addition, we further distinguish our
funding strategy between Ally Bank funding and parent company or nonbank funding.
We diversify Ally Bank's overall funding in order to reduce reliance on any one source of funding and to achieve a well-balanced
funding portfolio across a spectrum of risk, duration, and cost of funds characteristics. Over the past few years, we have been focused on
diversifying our funding sources, in particular at Ally Bank by growing retail deposits, expanding public and private securitization programs,
maintaining the maturity profile of our brokered deposit portfolio while not exceeding a $10.0 billion portfolio, establishing repurchase
agreements, and continuing to access funds from the Federal Home Loan Banks.
Since 2009, we have been directing new bank-eligible assets in the United States to Ally Bank in order to reduce and minimize our
nonbanking exposures and funding requirements and utilize our growing consumer deposit-taking capabilities. This has allowed us to use
bank funding for a wider array of our automotive finance assets and to provide a sustainable long-term funding channel for the business,
while also improving the cost of funds for the enterprise.
Ally Bank
Ally Bank raises deposits directly from customers through the direct banking channel via the internet and over the telephone. These
deposits provide our Automotive Finance and Mortgage operations with a stable and low-cost funding source. At December 31, 2012, Ally
Bank had $46.9 billion of total external deposits, including $35.0 billion of retail deposits.
At December 31, 2012, Ally Bank maintained cash liquidity of $2.7 billion and unencumbered highly liquid U.S. federal government and
U.S. agency securities of $5.9 billion. In addition, at December 31, 2012, Ally Bank had unused capacity in committed secured funding
facilities of $6.2 billion, including an equal allocation of shared unused capacity of $3.0 billion from a facility also available to the parent
company. Our ability to access this unused capacity depends on having eligible assets to collateralize the incremental funding and, in some
instances, the execution of interest rate hedges. To optimize use of cash and secured facility capacity between entities, Ally Financial lends
cash to Ally Bank from time to time under an intercompany agreement. Amounts outstanding on this loan are repayable to Ally Financial at
any time. Ally Bank has total available liquidity of $13.2 billion at December 31, 2012, which excludes the intercompany loan of $1.6 billion.
Maximizing bank funding continues to be a key part of our long-term liquidity strategy. We have made significant progress in migrating
assets to Ally Bank and growing our retail deposit base since becoming a bank holding company in December 2008. Retail deposit growth is
key to further reducing our cost of funds and decreasing our reliance on the capital markets. We believe deposits provide a stable, low-cost
source of funds that are less sensitive to interest rate changes, market volatility, or changes in our credit ratings when compared to other
funding sources. We have continued to expand our deposit gathering efforts through our direct and indirect marketing channels. Current retail
product offerings consist of a variety of products including certificates of deposits (CDs), savings accounts, money market accounts, IRA
deposit products, as well as an interest checking product. In addition, we utilize brokered deposits, which are obtained through third-party
intermediaries. During 2012, the deposit base at Ally Bank grew $7.3 billion, ending the year at $46.9 billion from $39.6 billion at
December 31, 2011. The growth in deposits has been primarily attributable to our retail deposit portfolio, particularly within our savings and
money market checking accounts, and our CDs. Strong retention rates continue to materially contribute to our growth in retail deposits. In the
fourth quarter of 2012 we retained 93% of maturing CD balances up for renewal in the same period. In addition to retail and brokered
deposits, Ally Bank had access to funding through a variety of other sources including FHLB advances, public securitizations, private secured
funding arrangements, and the Federal Reserve's Discount Window. At December 31, 2012, debt outstanding from the FHLB totaled $4.8
billion with no debt outstanding from the Federal Reserve. Also, as part of our liquidity and funding plans, Ally Bank utilizes certain
securities as collateral to access funding from repurchase agreements with third parties. Repurchase agreements are generally short-term. At
December 31, 2012, Ally Bank had no debt outstanding under repurchase agreements. Refer to Note 14 to the Consolidated Financial
Statements for a summary of deposit funding by type.
The following table shows Ally Bank's number of accounts and deposit balances by type as of the end of each quarter since 2011.
($ in millions) 4th Quarter 2012 3rd Quarter
2012 2nd Quarter 2012 1st Quarter 2012 4th Quarter 2011 3rd Quarter 2011 2nd Quarter 2011 1st Quarter 2011
Number of retail accounts 1,219,791 1,142,837 1,082,753 1,036,468 976,877 919,670 851,991 798,622
Deposits
Retail $ 35,041 $ 32,139 $ 30,403 $ 29,323 $ 27,685 $ 26,254 $ 24,562 $ 23,469
Brokered 9,914 9,882 9,905 9,884 9,890 9,911 9,903 9,836
Other (a) 1,977 2,487 2,411 2,314 2,029 2,704 2,405 2,064
Total deposits $ 46,932 $ 44,508 $ 42,719 $ 41,521 $ 39,604 $ 38,869 $ 36,870 $ 35,369
(a) Other deposits include mortgage escrow and other deposits (excluding intercompany deposits).
In addition to building a larger deposit base, we continue to remain active in the securitization markets to finance our Ally Bank
automotive loan portfolios. During 2012, Ally Bank completed eleven term securitization transactions backed by retail and dealer floorplan
automotive loans and lease notes raising $11.8 billion. Securitization has proven to be a reliable and cost-effective funding source.
Additionally, for retail automotive loans and lease notes, the term structure of the transaction locks in funding for a specified pool of loans
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K