Ally Bank 2013 Annual Report Download

Download and view the complete annual report

Please find the complete 2013 Ally Bank annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 206

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168
  • 169
  • 170
  • 171
  • 172
  • 173
  • 174
  • 175
  • 176
  • 177
  • 178
  • 179
  • 180
  • 181
  • 182
  • 183
  • 184
  • 185
  • 186
  • 187
  • 188
  • 189
  • 190
  • 191
  • 192
  • 193
  • 194
  • 195
  • 196
  • 197
  • 198
  • 199
  • 200
  • 201
  • 202
  • 203
  • 204
  • 205
  • 206

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2013 or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the transition period from to
Commission file number: 1-3754
ALLY FINANCIAL INC.
(Exact name of registrant as specified in its charter)
Delaware 38-0572512
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 Renaissance Center
P.O. Box 200 Detroit, Michigan
48265-2000
(Address of principal executive offices)
(Zip Code)
(866) 710-4623
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act (all listed on the New York Stock Exchange):
Title of each class
10.30% Deferred Interest Debentures due June 15, 2015 Fixed Rate/Floating Rate Perpetual Preferred Stock, Series A
7.375% Notes due December 16, 2044 8.125% Fixed Rate/Floating Rate Trust Preferred Securities,
Series 2 of GMAC Capital Trust I
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulations S-K (§ 229.405 of this chapter) is not contained
herein and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act. (Check one):
Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company
(Do not check if a smaller reporting)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No
Aggregate market value of voting and nonvoting common equity held by nonaffiliates: Ally Financial Inc. common equity is not registered
with the Securities and Exchange Commission and there is no ascertainable market value for such common equity.
At February 28, 2014, the number of shares outstanding of the Registrant’s common stock was 1,547,637 shares.
Documents incorporated by reference. None.
Table of Contents

Table of contents

  • Page 1
    ... Notes due December 16, 2044 Fixed Rate/Floating Rate Perpetual Preferred Stock, Series A 8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust I Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well...

  • Page 2
    ... Statements Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Controls and Procedures Other Information Directors, Executive Officers, and Corporate Governance Executive Compensation Security Ownership of Certain Beneficial Owners and Management and Related...

  • Page 3
    ...applications. Ally Bank offers a full spectrum of deposit product offerings including savings and money market accounts, certificates of deposit, interest-bearing checking accounts, trust accounts, and individual retirement accounts. We continue to expand the deposit product offerings in our banking...

  • Page 4
    ...new and used vehicle inventory financing, inventory insurance, term loans including real estate and working capital loans, and vehicle remarketing services to conduct their respective businesses as well as service contracts and guaranteed automobile protection (GAP) products to offer their customers...

  • Page 5
    .... Our Commercial Finance Group provides senior secured commercial-lending products to primarily U.S.-based middle market companies. Ally Bank Ally Bank raises deposits directly from customers through direct banking via the internet, telephone, mobile, and mail channels. Ally Bank has established...

  • Page 6
    ... business. Bank Holding Company and Financial Holding Company Status Ally Financial Inc. (Ally) and IB Finance Holding Company, LLC (IB Finance) are currently both bank holding companies under the BHC Act. IB Finance is the direct holding company for Ally's FDIC-insured depository institution, Ally...

  • Page 7
    ... Inc. • Form 10-K insurance, and merchant banking activities. Ally's status as a financial holding company allows us to continue all existing insurance activities, as well as our SmartAuction vehicle remarketing services for third parties. Under the BHC Act, Ally generally may not, directly or...

  • Page 8
    ...Refer to Note 20 to the Consolidated Financial Statements for additional information. See also "Basel Capital Accord" below. Capital Planning and Stress Tests - In December 2011, the FRB adopted a capital plan rule for large bank holding companies. The capital planning regime requires Ally to submit...

  • Page 9
    ... of Strength - Pursuant to the Federal Deposit Insurance Act, as amended by the Dodd-Frank Act, FRB policy and regulations and the Parent Company Agreement and the Capital and Liquidity Maintenance Agreement described in Note 20 to the Consolidated Financial Statements, Ally is required to act as...

  • Page 10
    ... billion at December 31, 2013 and 2012, respectively. As a commercial nonmember bank chartered by the State of Utah, Ally Bank is subject to various regulatory capital adequacy requirements administered by state and federal banking agencies. The Federal Deposit Insurance Corporation Improvement Act...

  • Page 11
    ... to applicable state laws generally governing insurance companies, as well as laws and regulations for products that are not regulated as insurance, such as vehicle service contracts and guaranteed asset protection waivers. Investments in Ally Because Ally Bank is an FDIC-insured bank and Ally and...

  • Page 12
    ... these reports) are available on our internet website, free of charge, as soon as reasonably practicable after the reports are electronically filed with or furnished to the SEC. These reports are available at www.ally.com. Choose Investor Relations, Financial Information, and then SEC Filings (under...

  • Page 13
    ..., among others: board and senior management oversight, risk management, regulatory reporting, internal audit planning, capital adequacy process, stress testing, Bank Secrecy Act / anti-money laundering compliance, compliance management and training, compliance monitoring, and consumer complaint...

  • Page 14
    ...levels; subject Ally to new and/or higher fees paid to various regulatory entities, including but not limited to deposit insurance fees and any other similar assessments paid by Ally Bank to the FDIC; potentially impact a number of Ally's business and risk management strategies; potentially restrict...

  • Page 15
    ... as a financial holding company, Ally and its bank subsidiary, Ally Bank, must remain "well-capitalized" and "well-managed", as defined under applicable law. Commencing with the current capital planning and stress testing cycle that began in October 2013, the Dodd-Frank company-run stress tests and...

  • Page 16
    ... and other information in connection with its investigations of potential fraud and other potential legal violations related to mortgage-backed securities, as well as the origination and/or underwriting of mortgage loans. Further, in December 2013, Ally Financial Inc. and Ally Bank entered into...

  • Page 17
    ... held relatively flat during 2013, the number of dealers that we have wholesale relationships with has decreased approximately 10% as compared to December 31, 2012. Further, our share of GM commercial wholesale financing decreased from 78% in 2011 to 67% in 2013, and our share of Chrysler commercial...

  • Page 18
    ... Financial, which could enhance Chrysler Financial's ability to expand its product offerings and may result in increased competition. Ally Bank faces significant competition from commercial banks, savings institutions, mortgage companies, and other financial institutions. Our insurance business...

  • Page 19
    ... and earnings are sensitive to general business and economic conditions in the United States. A downturn in economic conditions resulting in increased short- and long-term interest rates, inflation, fluctuations in the debt capital markets, unemployment rates, housing prices, consumer and commercial...

  • Page 20
    ... on our business, financial condition, and results of operations. Our borrowing costs and access to the unsecured debt capital markets depend significantly on our credit ratings. The cost and availability of unsecured financing are materially affected by our short- and long-term credit ratings. Each...

  • Page 21
    ... customers to pay cash for, as opposed to financing, vehicle purchases or not to buy new vehicles; may negatively impact our ability to remarket off-lease vehicles; and will generally reduce the value of automotive financing loans and contracts and retained interests and fixed income securities held...

  • Page 22
    ... states could have an adverse effect on our business, results of operations and financial position. Item 1B. Unresolved Staff Comments None. Item 2. Properties Our principal corporate offices are located in Detroit, Michigan; New York, New York; and Charlotte, North Carolina. In Detroit, we lease...

  • Page 23
    ... of Contents Ally Financial Inc. • Form 10-K primary office for our Insurance operations is located in Southfield, Michigan, where we lease approximately 71,000 square feet of office space under leases expiring in April 2016. The primary offices for our Mortgage operations are located in Fort...

  • Page 24
    .... Information relating to compensation plans under which our equity securities are authorized for issuance is presented in Part III, Item 12 of this Form 10-K. Preferred Stock For a discussion of preferred stock currently outstanding, refer to Note 17 to the Consolidated Financial Statements...

  • Page 25
    ... U.S. federal, state, and local taxes. Our conversion to a corporation resulted in a change in tax status and a net deferred tax liability of $1.2 billion was established through income tax expense. Core pretax income (loss) is not a financial measure defined by accounting principles generally...

  • Page 26
    ... Ally Financial Inc. • Form 10-K The following table presents selected balance sheet and ratio data. Year ended December 31, ($ in millions) Selected period-end balance sheet data: Total assets Long-term debt Preferred stock Total equity Financial ratios Return on assets (a) Net income (loss...

  • Page 27
    ..., 2013. Our banking subsidiary, Ally Bank, is an indirect wholly owned subsidiary of Ally Financial Inc. and a leading franchise in the growing direct (internet, telephone, mobile, and mail) banking market. Our Business Dealer Financial Services Our Dealer Financial Services operations offer a wide...

  • Page 28
    ...to develop long-term customer relationships and capitalize on the shift in consumer preference for direct banking. Ally Bank offers a full spectrum of deposit product offerings, such as checking, savings, and certificates of deposit (CDs), as well as 48month raise your rate CDs, IRA deposit products...

  • Page 29
    .... Funding sources at the parent company generally consist of longer-term unsecured debt, asset-backed securitizations, and private committed credit facilities. In 2013, we issued over $3.1 billion of unsecured debt through several issuances and raised $4.1 billion through four public securitization...

  • Page 30
    ...existing holder of 4.99 percent or more of Ally common stock from acquiring additional shares of Ally common stock, subject to certain exceptions. For further details related to the Plan, refer to Exhibit 10.30 to this Form 10-K. Discontinued Operations During 2013 and 2012, certain disposal groups...

  • Page 31
    ...the lines of business are more fully described in the MD&A sections that follow. Favorable/ (unfavorable) 2013-2012 % change Favorable/ (unfavorable) 2012-2011 % change Year ended December 31, ($ in millions) Total net revenue (loss) Dealer Financial Services Automotive Finance operations Insurance...

  • Page 32
    ... on operating lease assets Net financing revenue Other revenue Net servicing (loss) income Insurance premiums and service revenue earned Gain on mortgage and automotive loans, net Loss on extinguishment of debt Other gain on investments, net Other income, net of losses Total other revenue Total net...

  • Page 33
    ..., 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 nonrecurrence of fees related to the...

  • Page 34
    ...expense resulting from the transfer of liability relating to Ally Bank's sold and serviced loans that had previously been recorded at ResCap, and higher compensation and benefits expense due to an increase in functional services provided by ResCap through the shared services agreement. We recognized...

  • Page 35
    ... financing revenue increased 6% for the year ended December 31, 2013, compared to 2012, due to an increase in consumer asset levels primarily related to continued strong loan origination volumes relative to the pay-down of the existing portfolio despite lower penetration levels for new GM and...

  • Page 36
    ... 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 29 to the Consolidated Financial Statements for additional details. 2012 Compared...

  • Page 37
    Table of Contents Management's Discussion and Analysis Ally Financial Inc. • Form 10-K The provision for loan losses was $253 million for the year ended December 31, 2012, compared to $89 million in 2011. The increase was primarily due to continued growth in the consumer portfolio and our ...

  • Page 38
    ..., $2.8 billion, and $2.4 billion during the years ended December 31, 2013, 2012, and 2011, respectively. Consumer Automotive Financing Volume The following table summarizes our new and used vehicle consumer financing volume, including lease, and our share of consumer sales in the United States...

  • Page 39
    ...$ 9,009 6,734 5,075 20,818 17 12 23 16 15 15 23 17 13 2013 2012 2011 % Share of Ally originations 2013 2012 2011 During the year ended December 31, 2013, total GM new vehicle originations increased compared to 2012, primarily due to stronger lease volume. This increase was partially offset by lower...

  • Page 40
    ... $67.3 billion at December 31, 2013 and 2012, respectively. Refer to Note 10 to the Consolidated Financial Statements for further information regarding servicing activities. Remarketing and Sales of Leased Vehicles When we acquire a consumer lease, we assume ownership of the vehicle from the dealer...

  • Page 41
    ...of the dealership business. These loans are typically secured by real estate and/or other dealership assets, and are typically personally guaranteed by the individual owners of the dealership. Automotive fleet financing credit lines may be obtained by dealers, their affiliates, and other independent...

  • Page 42
    ... Ally Financial Inc. • Form 10-K Dealers are assigned a risk rating based on various factors, including capital sufficiency, operating performance, and credit and payment history. The risk rating affects the amount of the line of credit and the ongoing risk management of the account. We monitor...

  • Page 43
    ...by a combined ratio under 100% and is calculated as the sum of all incurred losses and expenses (excluding interest and income tax expense) divided by the total of premiums and service revenues earned and other fee income. 2013 Compared to 2012 Our Insurance operations earned income from continuing...

  • Page 44
    ... Contents Management's Discussion and Analysis Ally Financial Inc. • Form 10-K Insurance premiums and service revenue earned was $1.1 billion for the year ended December 31, 2012, compared to $1.2 billion in 2011. The decrease was primarily due to declining U.S. vehicle service contracts written...

  • Page 45
    ...-bearing cash Total cash Available-for-sale securities Debt securities U.S. Treasury and federal agencies U.S. States and political subdivisions Foreign government Mortgage-backed Asset-backed Corporate debt Total debt securities Equity securities Total available-for-sale securities Total cash and...

  • Page 46
    ... lower funding costs. We incurred a net servicing loss of $145 million for the year ended December 31, 2013, compared to net servicing income of $296 million in 2012. The decrease was primarily due to the completed sales of our agency MSRs portfolio to Ocwen and Quicken in the second quarter of 2013...

  • Page 47
    ...as higher-rate Ally Bank mortgage loans continued to run off. Partially offsetting the decrease was lower interest expense related to lower funding costs. We earned net servicing income of $296 million for the year ended December 31, 2012, compared to a net servicing loss of $69 million in 2011. The...

  • Page 48
    ...the reportable operating segments. Our Commercial Finance Group provides senior secured commercial-lending products to primarily U.S.-based middle market companies. Favorable/ (unfavorable) 2013-2012 % change 90 25 43 38 55 60 (96) n/m 135 59 (40) 12 (55) 3 44 (14) Favorable/ (unfavorable) 2012-2011...

  • Page 49
    .../ cost of funds mismatch (c) Unassigned equity costs (d) Total net impact of the funds transfer pricing methodology Other (including Commercial Finance Group net financing revenue) Total net financing losses for Corporate and Other Outstanding original issue discount balance (a) (b) (c) 2013 $ (241...

  • Page 50
    ...held at fair value by Corporate and Other. December 31, ($ in millions) Cash Noninterest-bearing cash Interest-bearing cash Total cash Available-for-sale securities Debt securities U.S. Treasury and federal agencies Mortgage-backed Asset-backed Total debt securities Equity securities Total available...

  • Page 51
    ..., executive leadership team, and our associates identify and monitor potential risks and manage those risks to be within our risk appetite. Ally's primary risks include credit, lease residual, market, operational, insurance/ underwriting, and liquidity. • Credit risk - The risk of loss...

  • Page 52
    ...billion at December 31, 2013 and December 31, 2012, respectively. The risks inherent in our loan and lease exposures are largely driven by changes in the overall economy, used vehicle and housing price levels, unemployment levels, and their impact to our borrowers. The potential financial statement...

  • Page 53
    ... that affect the collectability of the portfolios, segments of the portfolios that are potential problem areas, loans and leases with potential credit weaknesses, as well as stress testing and the assessment of the adequacy of internal credit risk policies and procedures to monitor compliance with...

  • Page 54
    ... Ally Financial Inc. • Form 10-K balances (e.g., due from depository institutions, restricted accounts, and cash equivalents), and investment in debt securities. For more information on Derivative Counterparty Credit Risk, refer to Note 21 to the Consolidated Financial Statements. During 2013...

  • Page 55
    ... in 2012 that did not repeat in 2013. Loans held-for-sale are accounted for at the lower-of-cost or fair value and, therefore, we do not record charge-offs. The Consumer Credit Portfolio and Commercial Credit Portfolio discussions that follow relate to consumer and commercial finance receivables...

  • Page 56
    ... to Note 21 to the Consolidated Financial Statements for additional information. Total consumer outstanding finance receivables and loans increased $1.3 billion at December 31, 2013, compared with December 31, 2012. This increase was related to our U.S. automobile consumer loan originations which...

  • Page 57
    ... automotive finance business to discontinued operations at the end of 2012 as well as lower new vehicle originations as a result of more competition within the automotive finance market. Total mortgage-originated loans decreased $25.7 billion for the year ended December 31, 2013. The decline in loan...

  • Page 58
    ...Management's Discussion and Analysis Ally Financial Inc. • Form 10-K 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...

  • Page 59
    ... Analysis Ally Financial Inc. • Form 10-K Commercial Real Estate The commercial real estate portfolio consists of finance receivables and loans issued primarily to automotive dealers. Commercial real estate finance receivables and loans were $2.9 billion and $2.6 billion at December 31, 2013, and...

  • Page 60
    ... the stated terms of the commercial loan agreements. This portfolio is reported at carrying value before allowance for loan losses. December 31, 2013 ($ in millions) Commercial and industrial Commercial real estate Total commercial finance receivables and loans Loans at fixed interest rates Loans at...

  • Page 61
    ... Management's Discussion and Analysis Ally Financial Inc. • Form 10-K ($ in millions) Allowance at January 1, 2012 Charge-offs Recoveries Net charge-offs Provision for loan losses Other (a) Allowance at December 31, 2012 Allowance for loan losses to finance receivables and loans outstanding...

  • Page 62
    ... loans Commercial Commercial and industrial Automobile Mortgage Other Commercial real estate - Automobile Total commercial loans Total provision for loan losses $ 11 - (6) (7) (2) 501 $ (3) (1) (10) - (14) 329 $ (3) (3) (51) (10) (67) 161 $ 490 13 503 $ 257 86 343 $ 102 126 228 2013 2012 2011...

  • Page 63
    ... For information on our Investment in Operating Leases, refer to Note 8 to the Consolidated Financial Statements. Market Risk Our automotive financing, mortgage, and insurance activities give rise to market risk representing the potential loss in the fair value of assets or liabilities and earnings...

  • Page 64
    ... twelve months. A number of alternative rate scenarios are tested including immediate parallel shocks to the forward yield curve, nonparallel shocks to the forward yield curve, and stresses to certain term points on the yield curve in isolation to capture and monitor a number of risk types. Our...

  • Page 65
    ... to maintain risk governance, risk and control assessment and testing, risk monitoring, and transparency through risk reporting mechanisms. The goal is to maintain operational risk at appropriate levels based on our financial strength, the characteristics of the businesses and the markets in which...

  • Page 66
    ...Ally Bank, and consolidated levels. The parent company and Ally Bank prepare periodic forecasts depicting anticipated funding needs and sources of funds with oversight and monitoring by the Liquidity Risk group within Corporate Treasury. Corporate Treasury executes our funding strategies and manages...

  • Page 67
    ... funding and, in some instances, the execution of interest rate hedges. To optimize cash and secured facility capacity between entities, the parent company lends cash to Ally Bank on occasion under an intercompany loan agreement. Amounts outstanding on this loan are repayable to the parent company...

  • Page 68
    ..., the parent company lends cash to Ally Bank on occasion under an intercompany loan agreement. Amounts outstanding on this loan are repayable to the parent company upon demand, subject to five days notice. The parent company had total available liquidity of $13.3 billion at December 31, 2013, which...

  • Page 69
    ...Financial Statements for additional information about our outstanding short-term borrowings and long-term unsecured debt, respectively. Secured funding continues to be a significant source of financing at the parent company. The total capacity in our committed funding facilities is provided by banks...

  • Page 70
    ... Group. Funding was generally available for assets originated by Ally Bank or the parent company, Ally Financial Inc. Total shared facilities included committed funding for our discontinued international automobile financing business of $0.1 billion as of December 31, 2012, with outstanding debt...

  • Page 71
    ...ended December 31, 2013, compared to 2012. Financing activities for the year ended December 31, 2013, also reflect a $1.3 billion cash inflow from the issuance of common stock in a private placement transaction. Capital Planning and Stress Tests As a bank holding company with $50 billion or more of...

  • Page 72
    ... 31, 2013 and 2012, $72.0 billion and $68.0 billion of our total assets, respectively, were related to secured financings. Refer to Note 15 to the Consolidated Financial Statements for further discussion. As part of our securitization activities, we typically agree to service the transferred assets...

  • Page 73
    ... follows. Loan Repurchases and Obligations Related to Loan Sales ResCap Bankruptcy Filing As described in Note 1 and Note 29 to the Consolidated Financial Statements, on May 14, 2012, Residential Capital, LLC and certain of its wholly owned direct and indirect subsidiaries filed voluntary petitions...

  • Page 74
    ... Long-term debt Total (a) Scheduled interest payments for fixed-rate long-term debt Estimated interest payments for variable-rate long-term debt (b) Estimated net payments under interest rate swap agreements (b) Lease commitments Purchase obligations Bank certificates of deposit Total contractually...

  • Page 75
    ... monitors the adequacy of the allowance and makes adjustments as the assumptions in the underlying analyses change to reflect an estimate of incurred loan losses at the reporting date, based on the best information available at that time. In addition, the allowance related to the commercial...

  • Page 76
    ...obligated to make payments during the term of the lease for the difference between the purchase price and the contract residual value plus a finance charge. However, since the customer is not obligated to purchase the vehicle at the end of the contract, we are exposed to a risk of loss to the extent...

  • Page 77
    ... which a loss event is deemed remote. For details regarding the nature of all material contingencies, refer to Note 29 to the Consolidated Financial Statements. Loan Repurchase and Obligations Related to Loan Sales The liability for representation and warranty obligations reflects management's best...

  • Page 78
    ...2012, and 2011, respectively. Yields on available-for-sale debt securities are based on fair value as opposed to historical cost. Nonperforming finance receivables and loans are included in the average balances. For information on our accounting policies regarding nonperforming status, refer to Note...

  • Page 79
    ... Trading assets Investment securities Loans held-for-sale, net Finance receivables and loans, net Investment in operating leases, net Total interest-earning assets Liabilities Interest-bearing deposit liabilities Short-term borrowings Long-term debt Total interest-bearing liabilities Net financing...

  • Page 80
    ... Automobile Mortgage Other Commercial real estate Automobile Mortgage Total commercial Total accruing finance receivables and loans past due 90 days or more Loans held-for-sale $ $ - - - 1 1 4 73 $ $ - - - 6 25 $ $ - - 3 10 33 3 $ - 1 1 $ - 1 1 $ 3 1 4 $ 5 1 6 $ 5 2 7 2013 2012 2011 2010...

  • Page 81
    ... effect of change in accounting principles (a) Charge-offs Write-downs related to transfers to held-for-sale Total charge-offs Recoveries Net charge-offs Provision for loan losses Other (b) Balance at December 31, (a) (b) 2013 $ 1,170 - (737) - (737) 265 (472) 501 9 $ 1,208 $ $ 2012 1,503 - (776...

  • Page 82
    ...) Domestic deposits Noninterest-bearing deposits Interest-bearing deposits Savings and money market checking accounts Certificates of deposit Dealer deposits Total domestic deposit liabilities (a) 2012 Average balance (a) 2,262 10,953 29,972 1,515 44,702 Average deposit rate 2011 Average balance...

  • Page 83
    Table of Contents Quantitative and Qualitative Disclosures about Market Risk Ally Financial Inc. • Form 10-k Item 7A. Quantitative and Qualitative Disclosures about Market Risk Refer to the Market Risk Management section of Item 7, Management's Discussion and Analysis. 81

  • Page 84
    ... Company's Chief Executive Officer and Senior Executive Vice President of Finance and Corporate Planning to provide reasonable assurance regarding the reliability of financial reporting and the preparation of published financial statements in accordance with generally accepted accounting principles...

  • Page 85
    ...Board of Directors and Shareholders of Ally Financial Inc.: We have audited the accompanying Consolidated Balance Sheet of Ally Financial Inc. and subsidiaries (the "Company") as of December 31, 2013 and 2012, and the related Consolidated Statements of Income, Comprehensive Income, Changes in Equity...

  • Page 86
    ... executive and principal financial officers, or persons performing similar functions, and effected by the company's board of directors, management, and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements...

  • Page 87
    ... on long-term debt Total interest expense Depreciation expense on operating lease assets Net financing revenue Other revenue Servicing fees Servicing asset valuation and hedge activities, net Total servicing (loss) income, net Insurance premiums and service revenue earned Gain on mortgage and...

  • Page 88
    ... 47 (691) (738) 47 (691) Refer to Note 17 to the Consolidated Financial Statements for further detail. 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...

  • Page 89
    ... during the period Less: Net losses reclassified to net income Net change Other comprehensive (loss) income, net of tax Comprehensive (loss) income The Notes to the Consolidated Financial Statements are an integral part of these statements. $ $ 2013 361 $ 2012 1,196 $ 2011 (157) (159) 186 (345...

  • Page 90
    ... Interest-bearing Total deposit liabilities Short-term borrowings Long-term debt Interest payable Unearned insurance premiums and service revenue Accrued expenses and other liabilities Liabilities of operations held-for-sale Total liabilities Equity Common stock and paid-in capital Mandatorily...

  • Page 91
    ...operating leases, net Other assets Assets of operations held-for-sale Total assets Liabilities Short-term borrowings Long-term debt Interest payable Accrued expenses and other liabilities Liabilities of operations held-for-sale Total liabilities The Notes to the Consolidated Financial Statements are...

  • Page 92
    ... Statement of Changes in Equity Ally Financial Inc. • Form 10-K ($ in millions) Balance at January 1, 2011 Net loss Preferred stock dividends - U.S. Department of Treasury Preferred stock dividends Series A preferred stock amendment Other comprehensive loss Other (a) Balance at December 31, 2011...

  • Page 93
    ... loans, net Net gain on investment securities Loss on extinguishment of debt Originations and purchases of loans held-for-sale Proceeds from sales and repayments of loans held-for-sale Impairment and accruals related to Residential Capital, LLC Gain on sale of subsidiaries, net Net change in Trading...

  • Page 94
    ... Statement of Cash Flows Ally Financial Inc. • Form 10-K Year ended December 31, ($ in millions) Financing activities Net change in short-term borrowings Net increase in deposits Proceeds from issuance of long-term debt Repayments of long-term debt Proceeds from issuance of common stock...

  • Page 95
    ... claims against Ally Bank as a former mortgage seller and servicer, as well as the Department of Justice and state attorneys general with respect to certain types of claims. Further, AFI has agreed to settlements with each of the FHFA and the Federal Deposit Insurance Corporation (FDIC), as receiver...

  • Page 96
    ...Consists of financing operations to fund dealer purchases of new and used vehicles through wholesale or floorplan financing. Additional commercial offerings include automotive dealer term loans, revolving lines of credit, and dealer fleet financing. Mortgage - Consists primarily of warehouse lending...

  • Page 97
    ... of Contents Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K • • Other - Consists of senior secured commercial lending. Commercial Real Estate - Automobile - Consists of term loans to finance dealership land and buildings. Nonaccrual Loans Revenue recognition...

  • Page 98
    ... loan. Charge-offs As a general rule, consumer automobile loans are written down to estimated collateral value, less costs to sell, once a loan becomes 120 days past due. In our consumer mortgage segment, first-lien mortgages and a subset of our home equity portfolio that are secured by real estate...

  • Page 99
    ... not change during 2013. Consumer Mortgage Portfolio Segment The allowance for loan losses within the consumer mortgage portfolio segment is calculated by using proprietary statistical models based on pools of loans with similar risk characteristics, including credit score, loan-to-value, loan age...

  • Page 100
    ... as well as any purchased securities, are generally included in available-for-sale investment securities, trading investment securities, or other assets. Designation as available-for-sale or trading depends on management's intent. Securities that are noncertificated and cash reserve accounts related...

  • Page 101
    ... to Consolidated Financial Statements Ally Financial Inc. • Form 10-K We measured all mortgage servicing assets and liabilities at fair value. We defined our servicing rights based on both the availability of market inputs and the manner in which we managed the risks of our servicing assets and...

  • Page 102
    ... we do not consider them valid. In cases where we repurchase loans, we bear the credit loss on the loans. Repurchased loans are classified as held-for-sale and initially recorded at fair value and subsequently at the lower of cost or market. We seek to manage the risk of repurchase and associated...

  • Page 103
    ... value of the derivative instrument will be recorded into earnings. Changes in the fair value of derivative financial instruments held for risk management purposes that are not designated for hedge accounting under GAAP are reported in current period earnings. Income Taxes Our income tax expense...

  • Page 104
    ...clarified the scope of ASU 2011-11. The new disclosures will give financial statement users information about both gross and net exposures. ASU 2011-11 and ASU 2013-01 were required to be applied retrospectively. Since the guidance relates only to disclosure of information, the adoption did not have...

  • Page 105
    ... of 2012, we sold the Canadian mortgage operations of ResMor Trust. Select Insurance Operations During the second quarter of 2013, we sold our Mexican insurance business, ABA Seguros. During the first quarter of 2013, we completed the sale of our U.K.-based operations that provided vehicle service...

  • Page 106
    ... to Consolidated Financial Statements Ally Financial Inc. • Form 10-K Select Automotive Finance Operations During the fourth quarter of 2012, we committed to sell our automotive finance operations in Europe and Latin America to General Motors Financial Company, Inc. (GM Financial). On the same...

  • Page 107
    ... Financial Statements Ally Financial Inc. • Form 10-K Held-for-sale Operations The assets and liabilities of operations held-for-sale are summarized below. Select Insurance operations (a) Select Automotive Finance operations (b) Total held-for-sale operations December 31, ($ in millions) 2013...

  • Page 108
    Table of Contents Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K 3. Insurance Premiums and Service Revenue Earned The following table is a summary of insurance premiums and service revenue written and earned. 2013 2012 Earned $ 305 58 363 (120) 243 769 $ 1,012 $ $ ...

  • Page 109
    ... Debt securities U.S. Treasury and federal agencies U.S. States and political subdivisions Foreign government Mortgage-backed residential (a) Mortgage-backed commercial Asset-backed Corporate debt Total debt securities Equity securities Total available-for-sale securities (b) (a) (b) 2012 losses...

  • Page 110
    ... 31, 2013 Fair value of available-for-sale debt securities (b) U.S. Treasury and federal agencies U.S. States and political subdivisions Foreign government Mortgage-backed residential Mortgage-backed commercial Asset-backed Corporate debt Total available-for-sale debt securities Amortized cost...

  • Page 111
    ...for-sale securities Debt securities U.S. Treasury and federal agencies U.S. States and political subdivisions Foreign government Mortgage-backed Asset-backed Corporate debt Total temporarily impaired debt securities Temporarily impaired equity securities Total temporarily impaired available-for-sale...

  • Page 112
    Table of Contents Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K 7. Finance Receivables and Loans, Net The composition of finance receivables and loans, net, reported at carrying value before allowance for loan losses was as follows. 2013 $ 56,417 8,444 $ 2012 53,715...

  • Page 113
    ... information about significant sales of finance receivables and loans recorded at historical cost and transfers of finance receivables and loans from held-for-investment to held-for-sale. December 31, ($ in millions) Consumer automobile Consumer mortgage Commercial Total sales and transfers $ $ 2013...

  • Page 114
    ... consumer and commercial finance receivables and loans $ 116 - 74 14 204 725 $ 146 - 33 37 216 858 $ 2013 329 192 $ 2012 260 382 Management performs a quarterly analysis of the consumer automobile, consumer mortgage, and commercial portfolios using a range of credit quality indicators to assess the...

  • Page 115
    ... our commercial finance receivables and loans recorded at historical cost reported at carrying value before allowance for loan losses. 2013 December 31, ($ in millions) Commercial Commercial and industrial Automobile Mortgage Other Commercial real estate - Automobile Total commercial (a) 2012 Total...

  • Page 116
    .... Numerous initiatives are in place to provide support to our mortgage customers in financial distress, including principal forgiveness, maturity extensions, delinquent interest capitalization, and changes to contractual interest rates. Additionally for automobile loans, we may offer several types...

  • Page 117
    ... Contents Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K reported at carrying value before allowance for loan losses were $1.3 billion at December 31, 2013, reflecting an increase of $112 million from December 31, 2012. Refer to Note 1 for additional information. The...

  • Page 118
    ... Financial Statements Ally Financial Inc. • Form 10-K 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 geographic region. 2013 (a) 1st Mortgage and home equity...

  • Page 119
    ... Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K Commercial Criticized Exposure Finance receivables and loans classified as special mention, substandard, or doubtful are deemed as criticized. These classifications are based on regulatory definitions and generally...

  • Page 120
    ...entity holds and the beneficial interests it issues. Servicing functions include, but are not limited to, general collection activity on current and noncurrent accounts, loss mitigation efforts including repossession and sale of collateral, as well as advancing principal and interest payments before...

  • Page 121
    ... do not hold potentially significant variable interests or do not provide servicing or asset management functions for the financial assets held by the securitization entity. Additionally, to qualify for off-balance sheet treatment, transfers of financial assets must meet appropriate sale accounting...

  • Page 122
    ... Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K Our involvement with consolidated and nonconsolidated VIEs in which we hold variable interests is presented below. Consolidated involvement with VIEs (a) Assets of nonconsolidated VIEs (a) Maximum exposure to loss...

  • Page 123
    ...) Assets Finance receivables and loans, net Consumer Commercial Allowance for loan losses Total finance receivables and loans, net Investment in operating leases, net Other assets Assets of operations held-for-sale Total assets Liabilities Short-term borrowings Long-term debt Interest payable...

  • Page 124
    ...-backed financings, or other similar transfers of financial assets where the transfer is accounted for as a sale and we have a continuing involvement with the transferred assets (e.g., servicing) that were outstanding in 2013, 2012, and 2011. Additionally, this table contains information regarding...

  • Page 125
    ... Statements Ally Financial Inc. • Form 10-K 10. Servicing Activities Mortgage Servicing Rights The following table summarizes past activity related to mortgage servicing rights (MSRs), which were carried at fair value. Management estimated fair value using our transaction data and other market...

  • Page 126
    ...Operations held-for-sale Other Off-balance sheet automobile finance loans Loans sold to third-party investors Securitizations Whole-loan Total serviced automobile finance loans and leases $ 887 2,748 111,589 $ 1,474 6,541 134,122 $ 56,417 33,803 17,680 - 54 $ 53,715 32,822 13,550 25,979 41 2013 2012...

  • Page 127
    ... deposits Savings and money market checking accounts Certificates of deposit Dealer deposits Total deposit liabilities Historically, noninterest-bearing deposits primarily represented third-party escrows associated with our mortgage loan-servicing portfolio. See Note 10 for further detail relating...

  • Page 128
    .... The financial instruments sold under agreement to repurchase typically consist of U.S. government and agency securities. Other relates to secured borrowings at our Commercial Finance Group. Based on the debt outstanding and the interest rate at December 31 of each year. 15. Long-term Debt The...

  • Page 129
    ...the payment of the related debt obligation primarily arising from securitization transactions accounted for as secured borrowings and repurchase agreements. 2013 December 31, ($ in millions) Investment securities Mortgage assets held-for-investment and lending receivables Consumer automobile finance...

  • Page 130
    ...Financial Statements Ally Financial Inc. • Form 10-K On March 1, 2011, the Declaration of Trust and certain other documents related to the TRUPS were amended and all the outstanding TRUPS held by Treasury were designated 8.125% Fixed Rate / Floating Rate Trust Preferred Securities, Series (Series...

  • Page 131
    ... Group. Funding was generally available for assets originated by Ally Bank or the parent company, Ally Financial Inc. Total shared facilities included committed funding for our discontinued international automobile financing business of $0.1 billion as of December 31, 2012, with outstanding debt...

  • Page 132
    ... the Securities and Exchange Commission, and there is no established public trading market for the shares. Treasury held 63.4% of Ally common stock as of December 31, 2013. The following table presents changes in the number of shares issued and outstanding. (in shares) Common stock January 1, New...

  • Page 133
    ... in right of payment with each of our outstanding series of preferred stock in accordance with the terms thereof. The Series G Preferred Stock accrues dividends at a rate of 7% per annum. Dividends are payable quarterly, in arrears, only if and when declared by Ally's Board of Directors. Subject to...

  • Page 134
    ... Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K The following table summarizes information about our Series F-2, Series A, and Series G preferred stock. December 31, Mandatorily convertible preferred stock held by U.S. Department of Treasury Series F-2 preferred stock...

  • Page 135
    ... Financial Statements Ally Financial Inc. • Form 10-K The following table presents the before- and after-tax changes in each component of accumulated other comprehensive income (loss). Before Tax Tax Effect After Tax December 31, ($ in millions) 2013 Unrealized losses on investment securities...

  • Page 136
    ... earnings per share calculation for the years ended December 31, 2013, 2012, and 2011, respectively. 20. 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 and leverage capital...

  • Page 137
    ... services companies. Also, bank holding companies with total consolidated assets of $50 billion or more, such as Ally, must develop and maintain a capital plan annually, and among other elements, the capital plan must include a discussion of how we will maintain a pro forma Tier 1 common risk...

  • Page 138
    ... the FDIC and the Utah Department of Financial Institutions. Ally Bank's deposits are insured by the FDIC, and Ally Bank is required to file periodic reports with the FDIC concerning its financial condition. Total assets of Ally Bank were $98.7 billion and $94.8 billion at December 31, 2013 and 2012...

  • Page 139
    ...portfolios of fixed-rate held-for-investment retail automotive loan assets, and pay-fixed swaps designated as cash flow hedges of the expected future cash flows in the form of interest payments on certain outstanding variable-rate borrowings associated with our secured debt. We also execute economic...

  • Page 140
    ...-related event. If a credit risk-related event had been triggered, the amount of additional collateral required to be posted by us would have been insignificant. We placed cash and securities collateral totaling $328 million and $1.3 billion at December 31, 2013 and 2012, respectively, in accounts...

  • Page 141
    ...$0 in a payable position, and of an $8.5 billion and $7.2 billion notional amount at December 31, 2013 and December 31, 2012, respectively. Other fair value hedges include pay-fixed swaps on portfolios of held-for-investment automotive loan assets with $9 million in a receivable position, $5 million...

  • Page 142
    ... reported in our Consolidated Statement of Income. Year ended December 31, ($ in millions) Derivatives qualifying for hedge accounting Gain (loss) recognized in earnings on derivatives Interest rate contracts Interest and fees on finance receivables and loans (a) Interest on long-term debt...

  • Page 143
    ...to Consolidated Financial Statements Ally Financial Inc. • Form 10-K The following table summarizes derivative instruments used in cash flow and net investment hedge accounting relationships. Year ended December 31, ($ in millions) Cash flow hedges Interest rate contracts (Loss) gain reclassified...

  • Page 144
    Table of Contents Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K A reconciliation of income tax (benefit) expense from continuing operations with the amounts at the statutory U.S. federal income tax rate is shown in the following table. Year ended December 31, ($ in ...

  • Page 145
    ... and related valuation allowances at December 31, 2013. ($ in millions) Tax credit carryforwards Foreign tax credits General business credits Total tax credit carryforwards Tax loss carryforwards Net operating losses - federal Capital losses - federal Total tax loss carryforwards State and local...

  • Page 146
    ... Financial Statements Ally Financial Inc. • Form 10-K equity investment in ResCap, gain recognition on the relief of nonrecourse debt, and an increase to our tax loss carryforwards. No material change to our total net deferred position resulted from the ResCap liquidation. As of December 31, 2013...

  • Page 147
    ... the Special Master. We also grant Restricted Stock Units (RSUs) to executives under the Long-Term Equity Compensation Incentive Plan (LTIP). Each of our approved compensation plans and awards were designed to provide our executives with an opportunity to share in the future growth in value of Ally...

  • Page 148
    ...various significant assumptions including market observable inputs (e.g., forward interest rates) and internally developed inputs (including prepayment speeds, delinquency levels, and credit losses). Mortgage loans held-for-sale, net - Our mortgage loans held-for-sale are accounted for at fair value...

  • Page 149
    ... including market observable inputs (e.g., forward interest rates) and internally developed inputs (e.g., prepayment speeds, delinquency levels, and credit losses). Derivative instruments - We enter into a variety of derivative financial instruments as part of our risk management strategies. Certain...

  • Page 150
    ... U.S. Treasury and federal agencies U.S. State and political subdivisions Foreign government Mortgage-backed residential Mortgage-backed commercial Asset-backed Corporate debt securities Total debt securities Equity securities (a) Total available-for-sale securities Mortgage loans held-for-sale, net...

  • Page 151
    ... and federal agencies Foreign government Mortgage-backed residential Asset-backed Corporate debt securities Total debt securities Equity securities (a) Total available-for-sale securities Mortgage loans held-for-sale, net (b) Mortgage servicing rights Other assets Interests retained in financial...

  • Page 152
    ... gains Net unrealized gains included in earnings still held at December 31, 2013 ($ in millions) Assets Mortgage servicing rights Other assets Interests retained in financial asset sales Derivative contracts, net (c) Interest rate Foreign currency Total derivative contracts in a receivable position...

  • Page 153
    ... Available-for-sale debt securities Asset-backed Mortgage loans held-for-sale, net (c) Consumer mortgage finance receivables and loans, net (c) Mortgage servicing rights Other assets Interests retained in financial asset sales Derivative contracts, net (g) Interest rate Foreign currency Total...

  • Page 154
    Table of Contents Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K The following tables display the ..., 2013 ($ in millions) Assets Loans held-for-sale Commercial finance receivables and loans, net (b) Automotive Other Total commercial finance receivables and loans, ...

  • Page 155
    ...-elected item. Changes included in the Consolidated Statement of Income Interest on loans held-for-sale (a) Loss on mortgage loans, net Total included in earnings Year ended December 31, ($ in millions) 2013 Assets Mortgage loans held-for-sale, net 2012 Assets Mortgage loans held-for-sale, net...

  • Page 156
    ... information available at December 31, 2013 and 2012. Estimated fair value December 31, ($ in millions) 2013 Financial assets Loans held-for-sale, net (a) Finance receivables and loans, net (a) Nonmarketable equity investments Financial liabilities Deposit liabilities Short-term borrowings Long-term...

  • Page 157
    Table of Contents Notes to Consolidated Financial Statements Ally Financial Inc. • Form 10-K markets and certain automotive and other receivables for which interest rates reset on a short-term basis with applicable market indices are assumed to approximate fair value either because of the short-...

  • Page 158
    ... commercial insurance coverages, which primarily insure dealers' vehicle inventory in the United States. Mortgage operations - Our ongoing Mortgage operations include the management of our held-for-investment mortgage portfolio. Corporate and Other primarily consists of our Commercial Finance Group...

  • Page 159
    ... Consolidated Financial Statements Ally Financial Inc. • Form 10-K Financial information for our reportable operating segments is summarized as follows. Year ended December 31, ($ in millions) 2013 Net financing revenue (loss) Other revenue Total net revenue (loss) Provision for loan losses Total...

  • Page 160
    ... operations. 27. Parent and Guarantor Consolidating Financial Statements Certain of our senior notes are guaranteed by 100% directly owned subsidiaries of Ally (the Guarantors). As of December 31, 2013, the Guarantors include Ally US LLC and IB Finance Holding Company, LLC (IB Finance), each of...

  • Page 161
    ... Nonbank subsidiaries Other revenue Servicing fees Servicing asset valuation and hedge activities, net Total servicing income (loss), net Insurance premiums and service revenue earned Gain on mortgage and automotive loans, net (Loss) gain on extinguishment of debt Other gain on investments...

  • Page 162
    ... Financial Statements Ally Financial Inc. • Form 10-K Year ended December 31, 2012 ($ in millions) Financing revenue and other interest income Interest and fees on finance receivables and loans Interest and fees on finance receivables and loans - intercompany Interest on loans held-for-sale...

  • Page 163
    ... on loans held-for-sale Interest on trading assets Interest and dividends on available-for-sale investment securities Interest-bearing cash Operating leases Total financing revenue and other interest income Interest expense Interest on deposits Interest on short-term borrowings Interest on long-term...

  • Page 164
    ... Ally Financial Inc. • Form 10-K Condensed Consolidating Balance Sheet December 31, 2013 ($ in millions) Assets Cash and cash equivalents Noninterest-bearing Interest-bearing Interest-bearing - intercompany Total cash and cash equivalents Investment securities Loans held-for-sale, net Finance...

  • Page 165
    ... Financial Statements Ally Financial Inc. • Form 10-K December 31, 2012 ($ in millions) Assets Cash and cash equivalents Noninterest-bearing Noninterest-bearing - intercompany Interest-bearing Interest-bearing - intercompany Total cash and cash equivalents Investment securities Loans held-for-sale...

  • Page 166
    ... in deposits Proceeds from issuance of long-term debt - third party Repayments of long-term debt - third party Net change in debt - intercompany Proceeds from issuance of common stock Repurchase of mandatorily convertible preferred stock held by U.S. Department of Treasury and elimination of share...

  • Page 167
    ...) increase in deposits Proceeds from issuance of long-term debt - third party Repayments of long-term debt - third party Net change in debt - intercompany Dividends paid - third party Dividends paid and returns of contributed capital - intercompany Capital contributions from parent Net cash (used in...

  • Page 168
    ... increase in deposits Proceeds from issuance of long-term debt - third party Repayments of long-term debt - third party Net change in debt - intercompany Dividends paid - third party Dividends paid and returns of contributed capital - intercompany Capital contributions from parent Net cash (used in...

  • Page 169
    ...-lending commitments (d) Home equity lines of credit (e) Unused revolving credit line commitments (f) (a) (b) (c) (d) (e) (f) 2013 $ - - 63 - 187 388 1,062 $ 2012 6,282 4,249 86 425 100 411 668 We have exited the mortgage origination and servicing business. We are committed to contribute capital...

  • Page 170
    ... claims against Ally Bank as a former mortgage seller and servicer, as well as the Department of Justice and state attorneys general with respect to certain types of claims. Further, AFI has agreed to settlements with each of the FHFA and the Federal Deposit Insurance Corporation (FDIC), as receiver...

  • Page 171
    ... and other information in connection with its investigations of potential fraud and other potential legal violations related to mortgage-backed securities, as well as the origination and/or underwriting of mortgage loans. Further, in December 2013, Ally Financial Inc. and Ally Bank entered into...

  • Page 172
    ...Events U.S. Department of the Treasury Sale of Ally Common Stock On January 23, 2014, Treasury sold 410,000 shares of Ally Financial Inc. common stock in a private offering. Treasury obtained gross proceeds of $3.0 billion from the common stock offering. At the conclusion of this sale, Treasury held...

  • Page 173
    ... of Quarterly Dividend Payments On January 2, 2014, the Ally Board of Directors declared quarterly dividend payments on certain outstanding preferred stock. This included a cash dividend of $18.08 per share, or a total of $47 million, on Fixed Rate Cumulative Perpetual Preferred Stock, Series G; and...

  • Page 174
    ... to management, including our Chief Executive Officer (Principal Executive Officer) and Senior Executive Vice President of Finance and Corporate Planning (Principal Financial Officer), to allow timely decisions regarding required disclosure. As of the end of the period covered by this report, our...

  • Page 175
    ... Senior Executive Vice President of Finance and Corporate Planning Chief Financial Officer Chief Executive Officer and President of Ally Bank President Group Vice President and General Counsel Vice President, Chief Accounting Officer, and Corporate Controller Chief Risk Officer Directors, Executive...

  • Page 176
    ... been chief financial officer for the company's commercial business unit, corporate vice president and treasurer and chairman of Dell Financial Services, the financing arm of Dell. He also previously worked for General Motors Corporation where he held a variety of positions in financial management...

  • Page 177
    ..., and the New York City Investment Fund. Carpenter has been a board member of the New York Stock Exchange, General Signal, Loews Cineplex, and various other private and public companies. Jeffrey J. Brown - Appointed Senior Executive Vice President of Finance and Corporate Planning in June 2011. In...

  • Page 178
    ...the company's financial returns. Gunn joined Ally in 2008 as chief risk officer for the Global Automotive Services business where he was responsible for overseeing disciplined risk processes, governance and analytics in support of Ally's efforts to diversify and grow its automotive product lines. In...

  • Page 179
    ... Ally Financial Inc. • Form 10-K Item 11. Executive Compensation Corporate Governance and Related Disclosures The Compensation, Nominating and Governance Committee The Ally Compensation, Nominating and Governance Committee (the Committee) is a committee of the Ally Board of Directors (Board...

  • Page 180
    ... detriment of long-term value creation; and (3) Ally's compensation programs do not encourage the manipulation of reported earnings. The Committee, with the assistance of the Company's senior risk officers, will continue to assess the risks associated with Ally's compensation plans every six months...

  • Page 181
    ... long-term incentive restricted stock units (IRSUs) at year-end. Assessing Ally Compensation Competitiveness We compare our total direct compensation against a peer group of other comparably sized financial services companies with whom we compete for business and senior executive talent. We use...

  • Page 182
    ... total compensation previously in the form of long-term IRSUs would be payable as equity based salary in the form of deferred stock units (DSUs) under a modified compensation structure more appropriate for the strategic business issues resulting from the 2012 bankruptcy filing of our former mortgage...

  • Page 183
    ... financial performance of Ally for 2013. CEO Compensation Michael A. Carpenter - Chief Executive Officer of Ally since November 2009 and a member of the Ally Board of Directors since May 2009. Mr. Carpenter oversees all Ally strategy and operations to focus on strengthening the core businesses...

  • Page 184
    ... led to the repayment of $5.9 billion Continued reduction of cost of funds through enhanced balance sheet management Lead substantial repayment of TARP Drive improved funding and operational costs Barbara Yastine - Chief Executive Officer and President of Ally Bank since May 2012. Ms. Yastine also...

  • Page 185
    ... Financial Inc. • Form 10-K William Muir - President of Ally Financial Inc. since 2004. Mr. Muir oversees the Company's automotive finance, insurance, vehicle remarketing, and service operations. Mr. Muir is also a member of the Ally Bank board of directors. In making the incentive compensation...

  • Page 186
    ... In connection with the risk assessment Ally conducted in 2013, the Company has reviewed all of its incentive compensation programs to ensure they include language allowing the Company to recoup incentive payments made to recipients in the event those payments were based on financial statements that...

  • Page 187
    ... Vice President of Finance and Corporate Planning Barbara Yastine Chief Executive Officer and President, Ally Bank William Muir President William Solomon General Counsel James G. Mackey Chief Financial Officer (a) (b) Year 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013 2012 2011 2013 2013 2012...

  • Page 188
    ... a company-wide wellness program and a $94 award. Grants of Plan-based Awards in 2013 - Estimated Future Payments under Equity Incentive Plan Awards The following table represents Ally DSU and IRSU awards, which are stated in phantom shares. All other stock awards: number of shares or unit of stock...

  • Page 189
    ... granted to named executives that have not vested. Each award represents one phantom share of Ally. The fair market value for the phantom shares is determined by the Board at least annually, as required by the Ally Financial Long-Term Equity Compensation Incentive Plan. The fair market value for...

  • Page 190
    Table of Contents Ally Financial Inc. • Form 10-K Options Exercised and Shares Vested in 2013 During 2013, no stock options were held by the named executive officers. The following table reflects the Ally IRSU awards that vested in 2013. One-fourth of the value cannot be paid until Ally pays the ...

  • Page 191
    ...until Ally repays its TARP obligations to Treasury. Ally Financial Inc. 2014 Incentive Compensation Plan In anticipation of our initial public offering, we plan to adopt the Ally Financial Inc. 2014 Incentive Compensation Plan (the "2014 Incentive Plan"), which allows us to grant an array of equity...

  • Page 192
    ..., EBITDA (earnings before interest, taxes, depreciation and amortization), net capital employed, return on assets, stockholder return, reserve replacement, return on equity, return on capital employed, production, assets, unit volume, sales, market share, or strategic business criteria consisting...

  • Page 193
    ... Company is no longer subject to TARP, and the number of restricted stock units awarded will be determined by reference to the fair market value of our common shares on the date of the grant. Ally Financial Inc. 2014 Executive Performance Plan In anticipation of our initial public offering, we plan...

  • Page 194
    Table of Contents Ally Financial Inc. • Form 10-K Ally Financial Inc. Employee Stock Purchase Plan In anticipation of our initial public offering, we plan to adopt the Ally Financial Inc. Employee Stock Purchase Plan (the "ESPP"), the purpose of which is to provide our employees with an ...

  • Page 195
    ... for $110,000 of the annual retainer as part of planning for a potential initial public offering. By their terms, those DSUs settle upon the director's departure from the Board. Beginning with the second quarter of 2012, payment of the annual retainer returned to all cash. An additional retainer...

  • Page 196
    ... share of Ally. Name Robert T. Blakely Mayree C. Clark Kim S. Fennebresque Franklin W. Hobbs Marjorie Magner Number of DSUs (#) 15.0 15.0 15.0 32.1 15.0 Ally Financial Inc. 2014 Non-Employee Directors Equity Compensation Plan In anticipation of our initial public offering, we plan to adopt the Ally...

  • Page 197
    ... Contents Ally Financial Inc. • Form 10-K Plan Term. The 2014 Directors Plan expires after ten years, unless prior to that date the maximum number of our common shares available for issuance under the 2014 Directors Plan has been issued or our Board of Directors terminates the 2014 Directors Plan...

  • Page 198
    ...of class 37.0% Name and address of beneficial owner U.S. Department of Treasury 1500 Pennsylvania Avenue, NW Washington, D.C. 20220 Third Point Loan LLC 390 Park Avenue, 18th Floor New York, NY 10022 Persons affiliated with Cerberus Capital Management, L.P. c/o Cerberus Capital Management, L.P. 875...

  • Page 199
    ... Ally Board of Directors and certain other corporate governance matters, refer to Certain Corporate Governance Matters in Item 10. Item 14. Principal Accountant Fees and Services We retained Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates...

  • Page 200
    ...-related fees (b) Tax fees (c) Total principal accountant fees (a) 2013 $ 14 $ 6 - $ 20 $ 2012 20 5 - 25 (b) (c) Audit fees include fees for the integrated audit of our annual Consolidated Financial Statements, reviews of interim financial statements included in our Quarterly Reports on Form...

  • Page 201
    ... of November 20, 2013 Amendment to Bylaws of Ally Financial Inc., dated as of January 10, 2014 Form of Indenture dated as of July 1, 1982, between the Company and Bank of New York (Successor Trustee to Morgan Guaranty Trust Company of New York), relating to Debt Securities Form of First Supplemental...

  • Page 202
    ... Transition LLC and the United States Department of the Treasury Amended and Restated United States Consumer Financing Services Agreement, dated May 22, 2009, between GMAC Inc. and General Motors Corporation* 4.11 4.12 4.13 Filed as Exhibit 4.3 to the Company's Current Report on Form 8-K dated...

  • Page 203
    ..., between Ally Financial Inc., IB Finance Holding Company, LLC, Ally Bank and the Federal Deposit Insurance Corporation Settlement agreement, dated December 23, 2010, by and between GMAC Mortgage, LLC, Residential Capital, LLC, Residential Funding Securities, LLC, Residential Asset Mortgage Products...

  • Page 204
    ... 22, 2013 Share Transfer Agreement, by and between Ally Financial Inc. and General Motors Financial Company, Inc., dated November 21, 2012 Consent Judgment, dated March 12, 2012 Method of Filing Filed as Exhibit 10.21 to the Company's Annual Report for the period ended December 31, 2012, on Form 10...

  • Page 205
    ... 3rd day of March, 2014. /S/ MICHAEL A. CARPENTER Michael A. Carpenter Chief Executive Officer /S/ JEFFREY J. BROWN Jeffrey J. Brown Senior Executive Vice President of Finance and Corporate Planning /S/ DAVID J. DEBRUNNER David J. DeBrunner Vice President, Chief Accounting Officer, and Corporate...

  • Page 206
    ... Contents Signatures Ally Financial Inc. • Form 10-K /S/ FRANKLIN W. HOBBS Franklin W. Hobbs Ally Chairman /S/ ROBERT T. BLAKELY Robert T. Blakely Director /S/ MICHAEL A. CARPENTER Michael A. Carpenter Chief Executive Officer and Director /S/ MAYREE C. CLARK Mayree C. Clark Director /S/ STEPHEN...