Ally Bank 2012 Annual Report Download - page 165

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20. Earnings per Common Share
The following table presents the calculation of basic and diluted earnings per common share.
Year ended December 31, ($ in millions except per share data)2012 2011 2010
Net income (loss) from continuing operations $ 529 $ (1,002) $ 288
Preferred stock dividends — U.S. Department of Treasury (535) (534) (963)
Preferred stock dividends (267) (260) (282)
Impact of preferred stock conversion or amendment (a) —32 (616)
Net loss from continuing operations attributable to common shareholders (b) (273) (1,764) (1,573)
Income from discontinued operations, net of tax 667 845 741
Net income (loss) attributable to common shareholders $ 394 $ (919) $ (832)
Basic weighted-average common shares outstanding 1,330,970 1,330,970 800,597
Diluted weighted-average common shares outstanding (b) 1,330,970 1,330,970 800,597
Basic earnings per common share
Net loss from continuing operations $ (205) $ (1,326) $ (1,965)
Income from discontinued operations, net of tax 501 635 926
Net income (loss) $ 296 $ (691) $ (1,039)
Diluted earnings per common share (b)
Net loss from continuing operations $ (205) $ (1,326) $ (1,965)
Income from discontinued operations, net of tax 501 635 926
Net income (loss) $ 296 $ (691) $ (1,039)
(a) Refer to Note 18 for further detail.
(b) Due to the antidilutive effect of converting the Fixed Rate Cumulative Mandatorily Convertible Preferred Stock into common shares and the net loss from
continuing operations attributable to common shareholders for 2012, 2011, and 2010, respectively, loss from continuing operations attributable to
common shareholders and basic weighted-average common shares outstanding were used to calculate basic and diluted earnings per share.
The effects of converting the outstanding Fixed Rate Cumulative Mandatorily Convertible Preferred Stock into common shares are not
included in the diluted earnings per share calculation for the years ended December 31, 2012, 2011, and 2010, respectively, as the effects
would be antidilutive for those periods. As such, 574 thousand of potential common shares were excluded from the diluted earnings per share
calculation for the years ended December 31, 2012 and 2011, respectively, and 987 thousand of potential common shares were excluded from
the diluted earnings per share calculation for the year ended December 31, 2010.
21. Regulatory Capital and Other Regulatory Matters
As a bank holding company, we and our wholly owned state-chartered banking subsidiary, Ally Bank, are subject to risk-based capital
and leverage guidelines issued by federal and state banking regulators that require that our capital-to-assets ratios meet certain minimum
standards. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary action by
regulators that, if undertaken, could have a direct material effect on the consolidated financial statements or the results of operations and
financial condition of Ally and Ally Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we
must meet specific capital guidelines that involve quantitative measures of our assets and certain off-balance sheet items. Our capital amounts
and classifications are also subject to qualitative judgments by the regulators about components, risk-weightings, and other factors.
The risk-based capital ratios are determined by allocating assets and specified off-balance sheet financial instruments into several broad
risk categories with higher levels of capital being required for the categories that present greater risk. Under the guidelines, total capital is
divided into two tiers: Tier 1 capital and Tier 2 capital. Tier 1 capital generally consists of common equity, minority interests, qualifying
noncumulative preferred stock, and the fixed rate cumulative preferred stock sold to Treasury under the Troubled Asset Relief Program
(TARP), less goodwill and other adjustments. Tier 2 capital generally consists of perpetual preferred stock not qualifying as Tier 1 capital,
limited amounts of subordinated debt and the allowance for loan losses, and other adjustments. The amount of Tier 2 capital may not exceed
the amount of Tier 1 capital.
Total risk-based capital is the sum of Tier 1 and Tier 2 capital. Under the guidelines, banking organizations are required to maintain a
minimum Total risk-based capital ratio (Total capital to risk-weighted assets) of 8% and a Tier 1 risk-based capital ratio (Tier 1 capital to risk-
weighted assets) of 4%.
The federal banking regulators also have established minimum leverage ratio guidelines. The leverage ratio is defined as Tier 1 capital
divided by adjusted quarterly average total assets (which reflect adjustments for disallowed goodwill and certain intangible assets). The
minimum Tier 1 leverage ratio is 3% or 4% depending on factors specified in the regulations.
Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10-K