Ally Bank 2012 Annual Report Download - page 72
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70
Provision for Loan Losses
The following table summarizes the provision for loan losses by product type.
Year ended December 31, ($ in millions)2012 2011 2010
Consumer
Domestic
Consumer automobile $ 257 $ 102 $ 228
Consumer mortgage
1st Mortgage 52 68 72
Home equity 34 55 90
Total domestic 343 225 390
Foreign
Consumer automobile —— (2)
Consumer mortgage
1st Mortgage —6 2
Home equity —— —
Total foreign —6 —
Total consumer loans 343 231 390
Commercial
Domestic
Commercial and industrial
Automobile (3) (3) 2
Mortgage (1) (3) (13)
Other (10) (51) (47)
Commercial real estate
Automobile —(10) 34
Mortgage —(1) (10)
Total domestic (14) (68) (34)
Foreign
Commercial and industrial
Automobile —— (2)
Mortgage —5 (5)
Other —— —
Commercial real estate
Automobile —— —
Mortgage —20 8
Total foreign —25 1
Total commercial loans (14) (43) (33)
Total provision for loan losses $ 329 $ 188 $ 357
Lease Residual Risk Management
We are exposed to residual risk on vehicles in the consumer lease portfolio. This lease residual risk represents the possibility that the
actual proceeds realized upon the sale of returned vehicles will be lower than the projection of these values used in establishing the pricing at
lease inception. The following factors most significantly influence lease residual risk. For additional information on our valuation of
automobile lease assets and residuals, refer to the Critical Accounting Estimates — Valuation of Automobile Lease Assets and Residuals
section within this MD&A.
• Used vehicle market — We have exposure to changes in used vehicle prices. General economic conditions, used vehicle supply and
demand, and new vehicle market prices heavily influence used vehicle prices.
• Residual value projections — We establish risk adjusted residual values at lease inception by consulting independently published
guides and proprietary statistical models. The residual values are consistently monitored during the lease term. These values are
Table of Contents
Management's Discussion and Analysis
Ally Financial Inc. • Form 10-K