Ally Bank 2014 Annual Report Download - page 68

Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K
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Total automotive-originated loans increased $2.9 billion for the year ended December 31, 2014, compared to 2013. The increase was
primarily due to increased used, new Non-GM/Chrysler, and new GM vehicle originations. Total mortgage-originated loans decreased $6.8
billion for the year ended December 31, 2014, as a result of our strategic exit from the direct lending channel and our decision in 2013 to exit
the correspondent lending channel and cease production of any new jumbo mortgage loans at that time.
Consumer loan originations retained on-balance sheet as held-for-investment were $29.6 billion at December 31, 2014, compared to
$27.5 billion at December 31, 2013. The increase was primarily due to increased used, new Non-GM/Chrysler, and new GM vehicle
originations.
The following table shows the percentage of total consumer finance receivables and loans recorded at historical cost reported at carrying
value before allowance for loan losses by state concentration. Total automotive loans were $56.6 billion and $56.4 billion at December 31,
2014, and December 31, 2013, respectively. Total mortgage and home equity loans were $7.5 billion and $8.4 billion at December 31, 2014,
and December 31, 2013, respectively.
2014 (a) 2013
December 31, Automotive Mortgage Automotive Mortgage
Texas 13.6% 6.0% 13.2% 5.8%
California 6.2 30.8 5.8 29.5
Florida 7.3 3.7 7.0 3.6
Pennsylvania 5.3 1.6 5.3 1.7
Illinois 4.4 4.2 4.4 4.4
Georgia 4.2 2.1 4.0 2.1
Michigan 3.8 3.1 4.4 3.9
New York 4.0 1.9 4.3 1.9
Ohio 3.9 0.6 4.0 0.7
North Carolina 3.5 1.9 3.4 1.9
Other United States 43.8 44.1 44.2 44.5
Total consumer loans 100.0% 100.0% 100.0% 100.0%
(a) Presentation is in descending order as a percentage of total consumer finance receivables and loans at December 31, 2014.
We monitor our consumer loan portfolio for concentration risk across the geographies in which we lend. The highest concentrations of
loans in the United States are in Texas and California, which represented an aggregate of 21.8% and 21.1% of our total outstanding consumer
finance receivables and loans at December 31, 2014, and December 31, 2013, respectively.
Concentrations in our mortgage portfolio are closely monitored given the volatility of the housing markets, with special attention given
to states with greater declines in real estate values.
Repossessed and Foreclosed Assets
We classify an asset as repossessed or foreclosed (included in Other Assets on the Consolidated Balance Sheet) when physical possession
of the collateral is taken. We dispose of the acquired collateral in a timely fashion in accordance with regulatory requirements. For more
information on repossessed and foreclosed assets, refer to Note 1 to the Consolidated Financial Statements.
Repossessed assets in our Automotive Finance operations at December 31, 2014, decreased $11 million to $90 million from
December 31, 2013. Foreclosed mortgage assets at December 31, 2014, remained flat at $10 million from December 31, 2013.
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. Wholesale floorplan loans are secured by the vehicles financed (and all other
vehicle inventory), which provide strong collateral protection in the event of dealership default. Additional collateral (e.g., blanket lien over
all dealership assets) and/or other credit enhancements (e.g., personal guarantees from dealership owners) are oftentimes obtained to further
manage credit risk. Furthermore, we benefit from automotive manufacturer repurchase arrangements, which serve as an additional layer of
protection in the event of repossession of dealership inventory and/or dealership franchise termination.
Within our commercial portfolio, 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, including 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.