Ally Bank 2014 Annual Report Download - page 45

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K
33
Gain on mortgage and automotive loans decreased 85% for the year ended December 31, 2013, compared to 2012. The decrease was
primarily related to lower consumer mortgage-lending production through our direct lending channel and margins associated with
government-sponsored refinancing programs as a result of our decision to substantially exit mortgage-related activities. Furthermore, while
we continue to evaluate opportunistic use of whole-loan sales as a source of funding in our Automotive Finance operations, we did not
execute any whole-loan sales during 2013 and have primarily focused on securitization and deposit-based funding sources.
Loss on extinguishment of debt decreased $89 million for the year ended December 31, 2013, compared to 2012, primarily due to the
non-recurrence of fees related to the early termination of FHLB debt as a result of replacing our higher-cost long-term debt structure in favor
of a lower-cost short-term FHLB debt structure in 2012. The decrease was partially offset by the accelerated recognition of issuance expenses
related to calls of redeemable debt in 2013.
Other gain on investments, net, was $180 million for the year ended December 31, 2013, compared to $146 million in 2012. The increase
was primarily due to favorable market conditions, resulting in lower recognition of other-than-temporary impairment, and increased gain on
sales of investments.
Other income, net of losses, decreased 48% for the year ended December 31, 2013, compared to 2012. The decrease was primarily due to
lower fee income and net origination revenue related to decreased consumer mortgage-lending production associated with government-
sponsored refinancing programs.
The provision for loan losses was $501 million for the year ended December 31, 2013, compared to $329 million in 2012. The increase
was primarily due to the continued execution of our underwriting strategy to prudently expand our originations of consumer automotive assets
across a broader credit spectrum, which was significantly narrowed during the most recent economic recession, and the growth in our U.S.
consumer automotive portfolio.
Total noninterest expense decreased 6% for the year ended December 31, 2013, compared to 2012, primarily due to lower consumer
mortgage-lending production through our direct lending channel and the broker fee associated with those government-sponsored refinancing
programs, and lower representation and warranty expense. Lower representation and warranty expense was primarily due to the establishment
of our representation and warranty liability during the second quarter of 2012 resulting from the deconsolidation of ResCap. The decrease was
partially offset by the recognition of a $98 million charge in the fourth quarter of 2013 relating to the execution of Consent Orders issued by
the CFPB and the DOJ pertaining to the allegation of disparate impact in the automotive finance business. Refer to Note 30 to the
Consolidated Financial Statements for additional details.
We recognized consolidated income tax benefit from continuing operations of $59 million for the year ended December 31, 2013,
compared to $856 million in 2012. For the year ended December 31, 2012, our results from operations benefited from the release of U.S.
federal and state valuation allowances and related effects on the basis of management's reassessment of the amount of its deferred tax assets
that are more likely than not to be realized. A commensurate benefit was not recognized for the year ended December 31, 2013.