Edgar Filing: Ally Financial Inc.

Large accelerated filer o

Accelerated filer o

Non-accelerated filer þ

Smaller reporting company o

(Do not check if a smaller reporting company)

GJM 2013.3.31 10Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



þ	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 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 incorporation or organization)		(I.R.S. Employer 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)

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 for the past 90 days.

Yes þ No ¨

Indicate by checkmark whether the registrant has submitted electronically and posted on its corporate Web site, 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 a shorter period that the registrant was required to submit and post such files).

Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a nonaccelerated 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):

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No þ

At April 30, 2013, the number of shares outstanding of the Registrant’s common stock was 1,330,970 shares.

Table of Contents

INDEX

Ally Financial Inc. Ÿ Form 10-Q



		Page
Part I — Financial Information
Item 1.	Financial Statements	3
	Condensed Consolidated Statement of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2013 and 2012	3
	Condensed Consolidated Balance Sheet (unaudited) at March 31, 2013 and December 31, 2012	5
	Condensed Consolidated Statement of Changes in Equity (unaudited) for the Three Months Ended March 31, 2013 and 2012	7
	Condensed Consolidated Statement of Cash Flows (unaudited) for the Three Months Ended March 31, 2013 and 2012	8
	Notes to Condensed Consolidated Financial Statements (unaudited)	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	72
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	114
Item 4.	Controls and Procedures	115
Part II — Other Information		116
Item 1.	Legal Proceedings	116
Item 1A.	Risk Factors	116
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	117
Item 3.	Defaults Upon Senior Securities	117
Item 4.	Mine Safety Disclosures	117
Item 5.	Other Information	117
Item 6.	Exhibits	117
Signatures		118
Index of Exhibits		119



Table of Contents		PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statement of Comprehensive Income (unaudited)

Ally Financial Inc. • Form 10-Q



	Three months ended March 31,
($ in millions)	2013			2012
Financing revenue and other interest income
Interest and fees on finance receivables and loans	$	1,135		$	1,093
Interest on loans held-for-sale	16			31
Interest on trading assets	—			9
Interest and dividends on available-for-sale investment securities	68			74
Interest-bearing cash	3			2
Operating leases	734			507
Total financing revenue and other interest income	1,956			1,716
Interest expense
Interest on deposits	164			163
Interest on short-term borrowings	16			17
Interest on long-term debt	701			880
Total interest expense	881			1,060
Depreciation expense on operating lease assets	435			305
Net financing revenue	640			351
Other revenue
Servicing fees	82			122
Servicing asset valuation and hedge activities, net	(201		)	(106		)
Total servicing income, net	(119		)	16
Insurance premiums and service revenue earned	259			270
Gain on mortgage and automotive loans, net	38			20
Other gain on investments, net	51			89
Other income, net of losses	157			210
Total other revenue	386			605
Total net revenue	1,026			956
Provision for loan losses	131			98
Noninterest expense
Compensation and benefits expense	285			303
Insurance losses and loss adjustment expenses	115			98
Other operating expenses	558			454
Total noninterest expense	958			855
(Loss) income from continuing operations before income tax expense	(63		)	3
Income tax (benefit) expense from continuing operations	(123		)	1
Net income from continuing operations	60			2
Income from discontinued operations, net of tax	1,033			308
Net income	1,093			310
Other comprehensive (loss) income, net of tax	(317		)	187
Comprehensive income	$	776		$	497

Statement continues on the next page.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

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Condensed Consolidated Statement of Comprehensive Income (unaudited)

Ally Financial Inc. • Form 10-Q



	Three months ended March 31,
($ in millions except per share data)	2013			2012
Net income attributable to common shareholders
Net income from continuing operations	$	60		$	2
Preferred stock dividends — U.S. Department of Treasury	(133		)	(134		)
Preferred stock dividends	(67		)	(67		)
Net loss from continuing operations attributable to common shareholders	(140		)	(199		)
Income from discontinued operations, net of tax	1,033			308
Net income attributable to common shareholders	$	893		$	109
Basic weighted-average common shares outstanding	1,330,970			1,330,970
Diluted weighted-average common shares outstanding (a)	1,330,970			1,330,970
Basic earnings per common share
Net loss from continuing operations	$	(105	)	$	(149	)
Income from discontinued operations, net of tax	776			231
Net income	$	671		$	82
Diluted earnings per common share (a)
Net loss from continuing operations	$	(105	)	$	(149	)
Income from discontinued operations, net of tax	776			231
Net income	$	671		$	82

(a)

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 the three months ended March 31, 2013 and 2012, 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 Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

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Condensed Consolidated Balance Sheet (unaudited)

Ally Financial Inc. • Form 10-Q



($ in millions)	March 31, 2013			December 31, 2012
Assets
Cash and cash equivalents
Noninterest-bearing	$	1,043		$	1,073
Interest-bearing	6,394			6,440
Total cash and cash equivalents	7,437			7,513
Investment securities	15,752			14,178
Loans held-for-sale, net ($701 and $2,490 fair value-elected)	718			2,576
Finance receivables and loans, net
Finance receivables and loans, net	99,123			99,055
Allowance for loan losses	(1,197		)	(1,170		)
Total finance receivables and loans, net	97,926			97,885
Investment in operating leases, net	14,828			13,550
Mortgage servicing rights	917			952
Premiums receivable and other insurance assets	1,608			1,609
Other assets	7,950			11,908
Assets of operations held-for-sale	19,063			32,176
Total assets	$	166,199		$	182,347
Liabilities
Deposit liabilities
Noninterest-bearing	$	844		$	1,977
Interest-bearing	49,482			45,938
Total deposit liabilities	50,326			47,915
Short-term borrowings	7,618			7,461
Long-term debt	67,621			74,561
Interest payable	972			932
Unearned insurance premiums and service revenue	2,286			2,296
Accrued expenses and other liabilities	3,669			6,585
Liabilities of operations held-for-sale	13,233			22,699
Total liabilities	145,725			162,449
Equity
Common stock and paid-in capital	19,668			19,668
Mandatorily convertible preferred stock held by U.S. Department of Treasury	5,685			5,685
Preferred stock	1,255			1,255
Accumulated deficit	(6,128		)	(7,021		)
Accumulated other comprehensive (loss) income	(6		)	311
Total equity	20,474			19,898
Total liabilities and equity	$	166,199		$	182,347

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

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Condensed Consolidated Balance Sheet (unaudited)

Ally Financial Inc. • Form 10-Q

The assets of consolidated variable interest entities, presented based upon the legal transfer of the underlying assets in order to reflect legal ownership, that can be used only to settle obligations of the consolidated variable interest entities and the liabilities of these entities for which creditors (or beneficial interest holders) do not have recourse to our general credit were as follows.



($ in millions)	March 31, 2013			December 31, 2012
Assets
Finance receivables and loans, net
Finance receivables and loans, net	$	30,181		$	31,510
Allowance for loan losses	(152		)	(144		)
Total finance receivables and loans, net	30,029			31,366
Investment in operating leases, net	5,276			6,060
Other assets	2,211			2,868
Assets of operations held-for-sale	7,835			12,139
Total assets	$	45,351		$	52,433
Liabilities
Short-term borrowings	$	400		$	400
Long-term debt	25,757			26,461
Interest payable	—			1
Accrued expenses and other liabilities	21			16
Liabilities of operations held-for-sale	5,762			9,686
Total liabilities	$	31,940		$	36,564

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

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Condensed Consolidated Statement of Changes in Equity (unaudited)

Ally Financial Inc. • Form 10-Q



($ in millions)	Common stock and paid-in capital		Mandatorily convertible preferred stock held by U.S. Department of Treasury		Preferred stock		Accumulated deficit			Accumulated other comprehensive income (loss)			Total equity
Balance at January 1, 2012	$	19,668	$	5,685	$	1,255	$	(7,415	)	$	87		$	19,280
Net income							310						310
Preferred stock dividends — U.S. Department of Treasury							(134		)				(134		)
Preferred stock dividends							(67		)				(67		)
Other comprehensive income										187			187
Balance at March, 2012	$	19,668	$	5,685	$	1,255	$	(7,306	)	$	274		$	19,576
Balance at January 1, 2013	$	19,668	$	5,685	$	1,255	$	(7,021	)	$	311		$	19,898
Net income							1,093						1,093
Preferred stock dividends — U.S. Department of Treasury							(133		)				(133		)
Preferred stock dividends							(67		)				(67		)
Other comprehensive loss										(317		)	(317		)
Balance at March 31, 2013	$	19,668	$	5,685	$	1,255	$	(6,128	)	$	(6	)	$	20,474

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

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Condensed Consolidated Statement of Cash Flows (unaudited)

Ally Financial Inc. • Form 10-Q



Three months ended March 31, ($ in millions)	2013			2012
Operating activities
Net income	$	1,093		$	310
Reconciliation of net income to net cash provided by operating activities
Depreciation and amortization	657			568
Changes in fair value of mortgage servicing rights	90			(1		)
Provision for loan losses	158			140
Gain on sale of loans, net	(38		)	(131		)
Net gain on investment securities	(53		)	(96		)
Originations and purchases of loans held-for-sale	(5,759		)	(9,626		)
Proceeds from sales and repayments of loans held-for-sale	7,481			11,111
Gain on sale of subsidiaries, net	(888		)	—
Net change in
Trading assets	—			(268		)
Deferred income taxes	(116		)	(31		)
Interest payable	44			86
Other assets	1,329			755
Other liabilities	(1,259		)	(865		)
Other, net	(485		)	190
Net cash provided by operating activities	2,254			2,142
Investing activities
Purchases of available-for-sale securities	(4,626		)	(3,172		)
Proceeds from sales of available-for-sale securities	1,543			2,940
Proceeds from maturities and repayment of available-for-sale securities	1,604			1,222
Net increase in finance receivables and loans	(42		)	(4,409		)
Purchases of operating lease assets	(2,352		)	(1,468		)
Disposals of operating lease assets	641			465
Proceeds from sale of business units, net (a)	2,829			29
Net change in restricted cash	1,067			280
Other, net	41			43
Net cash provided by (used in) investing activities	705			(4,070		)

Statement continues on the next page.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

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Condensed Consolidated Statement of Cash Flows (unaudited)

Ally Financial Inc. • Form 10-Q



Three months ended March 31, ($ in millions)	2013			2012
Financing activities
Net change in short-term borrowings	518			(546		)
Net increase in deposits	2,360			2,089
Proceeds from issuance of long-term debt	4,253			10,749
Repayments of long-term debt	(11,445		)	(10,024		)
Dividends paid	(200		)	(200		)
Net cash (used in) provided by financing activities	(4,514		)	2,068
Effect of exchange-rate changes on cash and cash equivalents	67			(141		)
Net decrease in cash and cash equivalents	(1,488		)	(1		)
Adjustment for change in cash and cash equivalents of operations held-for-sale (a) (b)	1,412			45
Cash and cash equivalents at beginning of year	7,513			13,035
Cash and cash equivalents at March 31,	$	7,437		$	13,079
Supplemental disclosures
Cash paid for
Interest	$	1,026		$	1,218
Income taxes	37			178
Other disclosures
Proceeds from sales and repayments of mortgage loans held-for-investment originally designated as held-for-sale	10			63


(a)	The amounts are net of cash and cash equivalents of $905 million at March 31, 2013 and $64 million at March 31, 2012 of business units at the time of disposition.


(b)	Cash flows of discontinued operations are reflected within operating, investing, and financing activities in the Condensed Consolidated Statement of Cash Flows. The cash balance of these operations is reported as assets of operations held-for-sale on the Condensed Consolidated Balance Sheet.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

1. Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies

Ally Financial Inc. (formerly GMAC Inc. and referred to herein as Ally, we, our, or us) is a leading, independent, diversified, financial services firm. Founded in 1919, we are a leading automotive financial services company with over 90 years experience providing a broad array of financial products and services to automotive dealers and their customers. We became a bank holding company on December 24, 2008, under the Bank Holding Company Act of 1956, as amended. 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 accounting and reporting policies conform to accounting principles generally accepted in the United States of America (GAAP). Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and that affect income and expenses during the reporting period. In developing the estimates and assumptions, management uses all available evidence; however, actual results could differ because of uncertainties associated with estimating the amounts, timing, and likelihood of possible outcomes.

The Condensed Consolidated Financial Statements at March 31, 2013, and for the three months ended March 31, 2013, and 2012, are unaudited but reflect all adjustments that are, in management’s opinion, necessary for the fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements (and the related notes) included in our Annual Report on Form 10-K for the year ended December 31, 2012, as filed on March 1, 2013, with the U.S. Securities and Exchange Commission (SEC).

Residential Capital, LLC

On May 14, 2012 (the Petition Date), Residential Capital, LLC (ResCap) and certain of its wholly owned direct and indirect subsidiaries (collectively, the Debtors) filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the Bankruptcy Court). In connection with the filings, Ally Financial Inc. and its direct and indirect subsidiaries and affiliates (excluding the Debtors) (collectively, AFI) had reached an agreement with the Debtors and certain creditor constituencies on a prearranged Chapter 11 plan (the Plan). The Plan included a proposed settlement (the Settlement) between AFI and the Debtors, which included, among other things, an obligation of AFI to make a $750 million cash contribution to the Debtor's estate, and a release of all existing or potential causes of action between AFI and the Debtors, as well as a release of all existing or potential ResCap-related causes of action against AFI held by third parties.

The Settlement contemplated certain milestone requirements that the Debtors failed to satisfy, including the Bankruptcy Court's confirmation of the Plan on or before October 31, 2012. While the failure to meet this October 31 milestone would have resulted in the Settlement's automatic termination, AFI and the Debtors agreed to monthly temporary waivers of this automatic termination through February 28, 2013. This waiver was not extended beyond this date, and therefore the Settlement has terminated.

On November 21, 2012, the Bankruptcy Court entered orders approving the sale of the Debtors' (i) mortgage servicing platform (the Platform Sale) to Ocwen Loan Servicing, LLC and Walter Investment Management Corp. and (ii) “whole-loan” portfolio (the Whole-Loan Sale) to Berkshire Hathaway Inc. under section 363 of the Bankruptcy Code, and not as part of the Plan as originally contemplated. The Whole-Loan Sale closed on February 5, 2013, and the Platform Sale closed on February 15, 2013.

As of the Petition Date, two separate groups of institutional investors in residential mortgage-backed securities (RMBS Investors) issued by ResCap's affiliates and holding more than 25 percent of at least one class in each of 290 securitizations agreed to settle alleged representation and warranty claims against the Debtors' estates in exchange for a total $8.7 billion allowed claim in the Debtors' bankruptcy cases, subject to the applicable securitization trustees' acceptance of the terms of the settlements (the RMBS Settlements). The RMBS Investors also signed separate plan support agreements (PSAs) with the Debtors and AFI in support of the Plan at the time of entering into the RMBS Settlements. To date, RMBS Investors holding more than 25 percent of at least one class in each of 336 securitizations have agreed to the RMBS Settlements. These 336 securitizations have an aggregate original principal balance of approximately $189 billion (out of a total of 392 outstanding securitizations with an original principal balance of $221 billion). The RMBS Settlements are subject to Bankruptcy Court approval, and the Bankruptcy Court has scheduled a hearing to consider such approval beginning on May 28, 2013. The PSAs are not part of this scheduled Bankruptcy Court hearing. A number of creditors have raised objections to the RMBS Settlements, but the trustees representing the 336 securitization trusts and AFI have filed statements in support of the Debtors' motion to approve the RMBS Settlements. Separately, the Debtors have failed to meet several Plan milestones in their bankruptcy cases, each of which has given the RMBS Investors the right to terminate the PSAs upon three business days advance written notice to the Debtors and AFI. On April 18, 2013, one of the two groups of RMBS Investors represented by Talcott Franklin P.C. sent the Debtors and AFI a notice of termination of its PSA. The other group of RMBS Investors represented by Gibbs and Bruns LLP has not given the Debtors and AFI such a notice to date, but have the right to do so at any time. If the RMBS Settlements were not approved or the RMBS Investors were to decide not to support any proposed plan, it could adversely impact the likelihood that any plan is approved by the Bankruptcy Court. AFI continues to support the RMBS Settlements at this time.

On June 4, 2012, Berkshire Hathaway Inc. filed a motion in the Bankruptcy Court for the appointment of an independent examiner to investigate, among other things, certain of the Debtors' transactions with AFI occurring prior to the Petition Date, any claims the Debtors may hold against AFI's officers and directors, and any claims the Debtors proposed to release under the Plan. On June 20, 2012, the Bankruptcy Court approved the appointment of an examiner and, subsequently, the United States Trustee for the Southern District of New York appointed

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

former bankruptcy judge Arthur J. Gonzalez, Esq. as the examiner (the Examiner). On July 27, 2012, the Bankruptcy Court entered an order approving the scope of the Examiner's investigation. The investigation includes, among other things: (a) all material pre-petition transactions between or among the Debtors and AFI, Cerberus Capital Management, L.P. and its subsidiaries and affiliates, and/or Ally Bank; (b) certain post-petition negotiations and transactions with the Debtors, including with respect to plan sponsor, plan support, and settlement agreements, the debtor-in-possession financing with AFI, the stalking horse asset purchase agreement with AFI, and the servicing agreement with Ally Bank; (c) all state and federal law claims or causes of action the Debtors proposed to release as part of the Plan; and (d) the release of all existing or potential ResCap-related causes of action against AFI held by third parties. In the Examiner's original work plan, the Examiner estimated that his investigation and related report would be completed six months from approximately August 6, 2012. However, on February 7, 2013 the Examiner informed the Bankruptcy Court in the third supplement to the work plan that the investigation and related report will not be completed until early May 2013.

On December 26, 2012, the Bankruptcy Court, in an effort to facilitate plan negotiations, entered an order appointing bankruptcy judge James M. Peck, Esq. as mediator (the Mediator) through and until February 28, 2013, to assist the parties in resolving certain issues relating to the formulation and confirmation of the Plan. On March 5, 2013, the Bankruptcy Court entered an order extending the Mediator's term to and including May 31, 2013, unless the Mediator declares in a written order on an earlier date that the mediation is at an impasse and should be terminated. AFI, the Debtors, the official committee of unsecured creditors appointed in the Debtors' bankruptcy cases (the Creditors' Committee) and certain other creditor constituencies are engaging in ongoing mediation sessions under a Bankruptcy Court order of confidentiality. Given the inherent uncertainty of the bankruptcy process, it is reasonably possible that a settlement could be reached that results in a payment substantially higher than the current $750 million estimate, or that no settlement is reached at all. The ultimate outcome of these settlement discussions will be affected by various factors, including, among others, the highly complex nature of the bankruptcy process, competing interests of various parties, disparate creditor priorities, the uncertainty of obtaining certain non-financial terms being sought, competing jurisdictional claims, uncertain residual estate property value, and the timing and unknown conclusions of the independent examiner's investigation.

On February 26, 2013, the Debtors and the Creditors' Committee entered into an agreement, the terms of which provided that, among other things, the Creditors' Committee would support extending the Debtors' exclusive period to file a Chapter 11 plan through and until April 30, 2013, the Debtors would consent to any motion filed by the Creditors' Committee after April 30, 2013 seeking standing to bring estate causes of action against AFI and the Debtors would allow the Settlement to automatically expire on February 28, 2013.

Thereafter, on March 5, 2013, the Bankruptcy Court entered an order extending the Debtors' exclusive period to file a Chapter 11 plan through and until April 30, 2013. On April 15, 2013, the Bankruptcy court entered an order further extending the Debtors' exclusive period to file a Chapter 11 plan through and until May 7, 2013.

On April 11, 2013, the Creditors' Committee filed a motion seeking standing to assert claims against AFI on behalf of the Debtors' estates. In its motion, the Creditors' Committee alleged, among other things, that AFI stripped the Debtors of valuable assets and exercised domination, control and abuse of the Debtors. The Creditors' Committee's claims against AFI include veil-piercing, fraudulent conveyance, indemnification, preferential transfer, and equitable subordination. The Creditors' Committee asserted that AFI may be liable for billions of dollars on account of these claims. AFI believes that these claims have no merit and is fully prepared to litigate these claims to final resolution. The Bankruptcy Court has scheduled a hearing for May 7, 2013 to consider the Creditors' Committee's motion for standing.

On February 27, 2013, the Debtors filed a motion with the Bankruptcy Court seeking, for purposes of any proposed Chapter 11 plan, that GMAC Mortgage's obligation to conduct and pay for independent file review regarding certain residential foreclosure actions and foreclosure sales prosecuted by GMAC Mortgage and its subsidiaries, as required under the Consent Order, be classified as a general unsecured claim in an amount to be determined, and that the automatic stay under the Bankruptcy Code be applied to prevent the FRB, the FDIC, and other governmental entities from taking any action to enforce the obligation against the Debtors (the Foreclosure Review Motion). The Bankruptcy Court is expected to issue a written opinion on the relief sought in the Foreclosure Review Motion in the near future. If the Bankruptcy Court approves the Foreclosure Review Motion, such governmental entities are likely to seek to enforce the obligation against AFI, and any such obligations ultimately borne by AFI could be material.

We are currently named as defendants in various lawsuits relating to ResCap mortgage-backed securities and certain other mortgage-related matters (the Mortgage Cases), which are described in more detail in Note 26. We had previously disclosed that several of the Mortgage Cases were subject to orders entered by the Bankruptcy Court staying the matters through April 30, 2013 in connection with the Debtors bankruptcy. On May 1, 2013, all stay orders applicable to the Ally non-Debtor defendants with respect to the Mortgage Cases expired. As a result, all of the Mortgage Cases are proceeding against us.

As a result of the termination of the Settlement, AFI is no longer obligated to make the $750 million cash contribution and neither party is bound by the Settlement. Further, AFI is not entitled to receive any releases from either the Debtors or any third party claimants, as was contemplated under the Plan and Settlement. However, AFI has not withdrawn its offer to provide a $750 million cash contribution to the Debtors' estate if an acceptable settlement can be reached. As a result of the termination of the Settlement, substantial claims could be brought against us, which could have a material adverse impact on our results of operations, financial position or cash flows. We would have strong legal and factual defenses with respect to any such claims, and would vigorously defend them.

As a result of the bankruptcy filing, effective May 14, 2012, we deconsolidated ResCap from our financial statements. During the first quarter of 2013, we discontinued performing certain mortgage activities, which were required as part of the bankruptcy process until the sale

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

of certain assets occurred. As a result of us discontinuing these certain mortgage activities, the operations of ResCap were classified as discontinued.

Based on our assessment of the effect of the deconsolidation of ResCap, obligations under the Plan, and other impacts related to the Chapter 11 filing, we recorded a charge of $1.2 billion during 2012, within our (loss) income from discontinued operations, net of tax. This charge primarily consists of the impairment of Ally's $442 million equity investment in ResCap and the $750 million cash contribution to be made by us to the Debtors' estate described above. As of March 31, 2013, we have $1.1 billion of financing due from ResCap, which is classified as Finance Receivables and Loans, net on our Condensed Consolidated Balance Sheet. We maintain no allowance or impairment against these receivables because management considers them to be fully collectible. At March 31, 2013, our hedging arrangements with ResCap were fully collateralized. Because of the uncertain nature of the bankruptcy proceedings, we cannot predict the ultimate financial impact to Ally. Refer to Note 26 for additional information regarding these bankruptcy proceedings.

Significant Accounting Policies

Income Taxes

In calculating the provision for interim income taxes, in accordance with Accounting Standards Codification 740, Income Taxes, we apply an estimated annual effective tax rate to year-to-date ordinary income. At the end of each interim period, we estimate the effective tax rate expected to be applicable for the full fiscal year. We exclude and record discretely the tax effect of unusual or infrequently occurring items, including, for example, changes in judgment about valuation allowances and effects of changes in tax law or rates. The provision for income taxes in tax jurisdictions with a projected full year or year-to-date loss for which a tax benefit cannot be realized is estimated using tax rates specific to that jurisdiction.

Refer to Note 1 to the Consolidated Financial Statements in our 2012 Annual Report on Form 10-K regarding additional significant accounting policies.

Recently Adopted Accounting Standards

Balance Sheet - Disclosures about Offsetting Assets and Liabilities (ASU 2011-11 and ASU 2013-01)

As of January 1, 2013, we adopted Accounting Standards Update (ASU) 2011-11, which amends ASC 210, Balance Sheet. This ASU contains new disclosure requirements regarding the nature of an entity's rights of offset and related arrangements associated with its financial instruments and derivative instruments. In addition, we adopted ASU 2013-01, which simply 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 an impact to our consolidated financial condition or results of operations.

Comprehensive Income - Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02)

As of January 1, 2013, we adopted ASU 2013-02, which amends ASC 220, Comprehensive Income. The ASU contains new requirements related to the presentation and disclosure of items that are reclassified out of accumulated other comprehensive income. The new requirements provide financial statement users a more comprehensive view of items that are reclassified out of accumulated other comprehensive income. ASU 2013-02 was required to be applied prospectively. Since the guidance relates only to presentation and disclosure of information, the adoption did not have an impact to our consolidated financial condition or results of operations.

Recently Issued Accounting Standards

Liabilities - Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date (ASU 2013-04)

In February 2013, the Financial Accounting Standards Board issued ASU 2013-04. This ASU requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this guidance is fixed at the reporting date, as the sum of the following: (a) The amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and (b) any additional amount the reporting entity expects to pay on behalf of its co-obligors. It further requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. ASU 2013-04 will be effective for us on January 1, 2014, with retrospective application required. The adoption of this guidance is not expected to have a material effect on our consolidated financial condition or results of operations.

Foreign Currency Matters - Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (ASU 2013-05)

In March 2013, the Financial Accounting Standards Board issued ASU 2013-05. This ASU requires a reporting entity that ceases to have a controlling financial interest, in a subsidiary or group of assets or a business, within a foreign entity to release any related Cumulative Translation Adjustment (CTA) into net income. The CTA should be released into net income only if the sale or transfer results in the complete or substantially complete liquidation of the foreign entity. For an equity method investment that is a foreign entity, a pro rata portion of the CTA should be released into net income upon a partial sale of such an investment. This ASU clarifies that the sale of an investment in a foreign entity includes both events that result in the loss of a controlling financial interest in a foreign entity, irrespective of any retained investment, and events that result in step acquisition under which an acquirer obtains control of an acquiree in which it held an equity interest

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

immediately before the acquisition date. Under these circumstances, the CTA should be released into net income upon their occurrence. ASU 2013-04 will be effective for us prospectively on January 1, 2014. Management is currently assessing the potential impact of the application of this guidance. However, since the guidance is prospective and we are in the process of exiting most of our international operations, it is not expected to have a material effect on our consolidated financial condition or results of operations.

2. Discontinued and Held-for-sale Operations

Discontinued Operations

We classify operations as discontinued when operations and cash flows will be eliminated from our ongoing operations and we do not expect to retain any significant continuing involvement in their operations after the respective sale transactions. For all periods presented, all of the operating results for these discontinued operations have been removed from continuing operations and presented separately as discontinued operations, net of tax, in the Condensed Consolidated Statement of Comprehensive Income. The Notes to the Condensed Consolidated Financial Statements have been adjusted to exclude discontinued operations unless otherwise noted.

Select Mortgage Operations

During the first quarter of 2013, the operations of ResCap were classified as discontinued. During the second quarter of 2012, we sold the Canadian mortgage operations of ResMor Trust.

Select Insurance Operations

During the fourth quarter of 2012, we committed to sell our Mexican insurance business, ABA Seguros, to the ACE Group. We expect to complete the ABA Seguros sale during the second quarter of 2013. During the first quarter of 2013, we sold our U.K.-based operations to a wholly owned subsidiary of AmTrust Financial Services, Inc.

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 date, we entered into an agreement with GM Financial to acquire our 40% interest in a motor vehicle finance joint venture in China. On April 1, 2013, we completed the sale of the majority of our operations in Europe and Latin America to GM Financial. The transaction included European operations in Germany, the United Kingdom, Italy, Sweden, Switzerland, Austria, Belgium and the Netherlands, and Latin American operations in Mexico, Chile and Colombia. Refer to Note 27 for further detail. We expect to complete the sale of the remaining operations during 2013 and possibly 2014.

During the first quarter of 2013, we sold our Canadian automotive finance operations, Ally Credit Canada Limited, and ResMor Trust to Royal Bank of Canada. During the first quarter of 2012, we completed the sale of our Venezuela operations.

Select Corporate and Other Operations

During the fourth quarter of 2012, we ceased operations at our Commercial Finance Group's European division and classified it as discontinued.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Select Financial Information

Select financial information of discontinued operations is summarized below. The pretax income or loss, including direct costs to transact a sale, includes any impairment recognized to present the operations at the lower-of-cost or fair value. Fair value was based on the estimated sales price, which could differ from the ultimate sales price due to price volatility, changing interest rates, changing foreign-currency rates, and future economic conditions.



	Three months ended March 31,
($ in millions)	2013				2012
Select Mortgage operations
Total net revenue	$	—			$	403
Pretax (loss) income including direct costs to transact a sale (a)	(20		)		133
Tax expense (b)	16				16
Select Insurance operations
Total net revenue	$	148			$	156
Pretax income including direct costs to transact a sale	28				38
Tax expense	1				9
Select Automotive Finance operations
Total net revenue	$	286			$	387
Pretax income including direct costs to transact a sale (a)	1,042			(c)	196
Tax (benefit) expense (b)	(1		)		39
Select Corporate and Other operations
Total net revenue	$	—			$	2
Pretax (loss) income	(1		)		6
Tax expense	—				1


(a)	Includes certain treasury and other corporate activity recognized by Corporate and Other.


(b)	Includes certain income tax activity recognized by Corporate and Other.


(c)	Includes recognized pretax gain of $888 million in connection with the sale of our Canadian automotive finance operations, Ally Credit Canada Limited, and ResMor Trust.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Held-for-sale Operations

The assets and liabilities of operations held-for-sale are summarized below.



March 31, 2013 ($ in millions)	Select Insurance operations (a)		Select Automotive Finance operations (b)			Total held-for-sale operations
Assets
Cash and cash equivalents
Noninterest-bearing	$	4	$	150		$	154
Interest-bearing	66		514			580
Total cash and cash equivalents	70		664			734
Investment securities	418		3			421
Finance receivables and loans, net
Finance receivables and loans, net	—		15,175			15,175
Allowance for loan losses	—		(177		)	(177		)
Total finance receivables and loans, net	—		14,998			14,998
Investment in operating leases, net	—		128			128
Premiums receivable and other insurance assets	257		—			257
Other assets	70		2,455			2,525
Total assets	$	815	$	18,248		$	19,063
Liabilities
Interest-bearing deposit liabilities	$	—	$	17		$	17
Short-term borrowings	—		3,059			3,059
Long-term debt	—		8,092			8,092
Interest payable	—		155			155
Unearned insurance premiums and service revenue	417		—			417
Accrued expenses and other liabilities	221		1,272			1,493
Total liabilities	$	638	$	12,595		$	13,233


(a)	Includes ABA Seguros.


(b)	Includes our international entities being sold to GM Financial.

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q



December 31, 2012 ($ in millions)	Select Insurance operations (a)			Select Automotive Finance operations (b)			Total held-for-sale operations
Assets
Cash and cash equivalents
Noninterest-bearing	$	8		$	100		$	108
Interest-bearing	119			1,918			2,037
Total cash and cash equivalents	127			2,018			2,145
Investment securities	576			424			1,000
Finance receivables and loans, net
Finance receivables and loans, net	—			25,835			25,835
Allowance for loan losses	—			(208		)	(208		)
Total finance receivables and loans, net	—			25,627			25,627
Investment in operating leases, net	—			144			144
Premiums receivable and other insurance assets	277			—			277
Other assets	94			2,942			3,036
Impairment on assets of held-for-sale operations	(53		)	—			(53		)
Total assets	$	1,021		$	31,155		$	32,176
Liabilities
Interest-bearing deposit liabilities	$	—		$	3,907		$	3,907
Short-term borrowings	—			2,800			2,800
Long-term debt	—			13,514			13,514
Interest payable	—			177			177
Unearned insurance premiums and service revenue	506			—			506
Accrued expenses and other liabilities	297			1,498			1,795
Total liabilities	$	803		$	21,896		$	22,699


(a)	Includes our U.K.-based operations and ABA Seguros.


(b)	Includes our Canadian operations sold to Royal Bank of Canada and international entities being sold to GM Financial.

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Recurring Fair Value

The following table displays the assets and liabilities of our held-for-sale operations measured at fair value on a recurring basis. Refer to Note 22 for descriptions of valuation methodologies used to measure material assets at fair value and details of the valuation models, key inputs to these models, and significant assumptions used.



	Recurring fair value measurements
($ in millions)	Level 1		Level 2		Level 3		Total
March 31, 2013
Assets
Investment securities
Available-for-sale securities
Debt securities
Foreign government	$	328	$	—	$	—	$	328
Corporate debt	—		93		—		93
Other assets
Derivative assets:
Interest rate contracts	—		—		7		7
Foreign currency contracts	—		17		—		17
Total assets	$	328	$	110	$	7	$	445
Liabilities
Accrued expenses and other liabilities:
Derivative liabilities
Interest rate contracts	$	—	$	11	$	8	$	19
Total liabilities	$	—	$	11	$	8	$	19
December 31, 2012
Assets
Investment securities
Available-for-sale securities
Debt securities
Foreign government	$	555	$	42	$	—	$	597
Corporate debt	—		76		—		76
Other	—		327		—		327
Other assets
Derivative assets:
Interest rate contracts	—		22		9		31
Total assets	$	555	$	467	$	9	$	1,031
Liabilities
Accrued expenses and other liabilities:
Derivative liabilities
Interest rate contracts	$	—	$	24	$	11	$	35
Foreign currency contracts	—		1		18		19
Total liabilities	$	—	$	25	$	29	$	54

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

3. Other Income, Net of Losses

Details of other income, net of losses, were as follows.



	Three months ended March 31,
($ in millions)	2013		2012
Mortgage processing fees and other mortgage income	$	79	$	122
Late charges and other administrative fees	23		21
Remarketing fees	20		17
Fair value adjustment on derivatives (a)	—		12
Other, net	35		38
Total other income, net of losses	$	157	$	210


(a)	Refer to Note 20 for a description of derivative instruments and hedging activities.

4. Other Operating Expenses

Details of other operating expenses were as follows.



	Three months ended March 31,
($ in millions)	2013		2012
Insurance commissions	$	92	$	99
Mortgage representation and warranty obligation, net (a)	83		—
Lease and loan administration	81		54
Technology and communications	71		89
Professional services	48		38
Advertising and marketing	35		35
Regulatory and licensing fees	33		33
Premises and equipment depreciation	20		17
Vehicle remarketing and repossession	14		16
Occupancy	11		14
State and local non-income taxes	10		9
Other	60		50
Total other operating expenses	$	558	$	454


(a)	Refer to Note 26 for further details on representation and warranty obligation.

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

5. Investment Securities

Our portfolio of securities includes bonds, equity securities, asset- and mortgage-backed securities, interests in securitization trusts, and other investments. The cost, fair value, and gross unrealized gains and losses on available-for-sale securities were as follows.



	March 31, 2013									December 31, 2012
	Amortized cost		Gross unrealized					Fair value		Amortized cost		Gross unrealized					Fair value
($ in millions)	Amortized cost		gains		losses			Fair value		Amortized cost		gains		losses			Fair value
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies	$	2,097	$	3	$	(1	)	$	2,099	$	2,212	$	3	$	(1	)	$	2,214
Foreign government	297		9		—			306		295		8		—			303
Mortgage-backed residential (a)	8,722		111		(18		)	8,815		6,779		130		(3		)	6,906
Asset-backed	2,191		31		(1		)	2,221		2,309		32		(1		)	2,340
Corporate debt	1,272		56		(2		)	1,326		1,209		57		(3		)	1,263
Total debt securities	14,579		210		(22		)	14,767		12,804		230		(8		)	13,026
Equity securities	986		48		(49		)	985		1,193		32		(73		)	1,152
Total available-for-sale securities (b)	$	15,565	$	258	$	(71	)	$	15,752	$	13,997	$	262	$	(81	)	$	14,178


(a)	Residential mortgage-backed securities include agency-backed bonds totaling $6,217 million and $4,983 million at March 31, 2013, and December 31, 2012, respectively.


(b)	Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $15 million and $15 million at March 31, 2013, and December 31, 2012, respectively.

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Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The maturity distribution of available-for-sale debt securities outstanding is summarized in the following tables. Prepayments may cause actual maturities to differ from scheduled maturities.



	Total				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years (a)
($ in millions)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
March 31, 2013
Fair value of available-for-sale debt securities (b)
U.S. Treasury and federal agencies	$	2,099	0.9	%	$	584	0.1	%	$	538	1.0	%	$	977	1.4	%	$	—	—	%
Foreign government	306		3.2		3		4.3		139		3.0		164		3.3		—		—
Mortgage-backed residential	8,815		2.4		—		—		—		—		140		2.3		8,675		2.4
Asset-backed	2,221		2.0		7		2.0		1,595		2.0		511		1.8		108		2.6
Corporate debt	1,326		5.1		4		5.8		627		4.1		604		6.0		91		6.0
Total available-for-sale debt securities	$	14,767	2.4		$	598	0.1		$	2,899	2.2		$	2,396	2.6		$	8,874	2.5
Amortized cost of available-for-sale debt securities	$	14,579			$	598			$	2,852			$	2,352			$	8,777
December 31, 2012
Fair value of available-for-sale debt securities (b)
U.S. Treasury and federal agencies	$	2,214	0.9	%	$	422	—	%	$	682	0.7	%	$	1,110	1.4	%	$	—	—	%
Foreign government	303		2.5		1		2.2		136		1.8		166		3.0		—		—
Mortgage-backed residential	6,906		2.7		—		—		—		—		35		4.3		6,871		2.7
Asset-backed	2,340		2.1		—		—		1,543		2.0		510		1.7		287		3.3
Corporate debt	1,263		5.1		9		3.2		560		4.0		596		6.0		98		5.8
Total available-for-sale debt securities	$	13,026	2.4		$	432	0.1		$	2,921	2.0		$	2,417	2.6		$	7,256	2.6
Amortized cost of available-for-sale debt securities	$	12,804			$	431			$	2,880			$	2,369			$	7,124


(a)	Investments with no stated maturities are included as contractual maturities of greater than 10 years. Actual maturities may differ due to call or prepayment options.


(b)	Yields on tax-exempt obligations are computed on a tax-equivalent basis.

The balances of cash equivalents were $2.7 billion and $3.4 billion at March 31, 2013, and December 31, 2012, respectively, and were composed primarily of money market accounts and short-term securities, including U.S. Treasury bills.

The following table presents gross gains and losses realized upon the sales of available-for-sale securities and other-than-temporary impairment.



	Three months ended March 31,
($ in millions)	2013			2012
Gross realized gains	$	70		$	97
Gross realized losses	(11		)	(8		)
Other-than-temporary impairment	(8		)	—
Net realized gains	$	51		$	89

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents interest and dividends on available-for-sale securities.



	Three months ended March 31,
($ in millions)	2013		2012
Taxable interest	$	63	$	69
Taxable dividends	5		5
Interest and dividends on available-for-sale securities	$	68	$	74

Certain available-for-sale securities were sold at a loss in 2013 as a result of market conditions within these respective periods. The table below summarizes available-for-sale securities in an unrealized loss position in accumulated other comprehensive income. Based on the methodology described below that was applied to these securities, we believe that the unrealized losses relate to factors other than credit losses in the current market environment. As of March 31, 2013, we did not have the intent to sell the debt securities with an unrealized loss position in accumulated other comprehensive income, and it is not more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. As of March 31, 2013, we had the ability and intent to hold equity securities with an unrealized loss position in accumulated other comprehensive income. As a result, we believe that the securities with an unrealized loss position in accumulated other comprehensive income are not considered to be other-than-temporarily impaired at March 31, 2013. Refer to Note 1 to the Consolidated Financial Statements in our 2012 Annual Report on Form 10-K for additional information related to investment securities and our methodology for evaluating potential other-than-temporary impairments.



	March 31, 2013										December 31, 2012
	Less than 12 months					12 months or longer					Less than 12 months					12 months or longer
($ in millions)	Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss			Fair value		Unrealized loss
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies	$	724	$	(1	)	$	—	$	—		$	244	$	(1	)	$	—	$	—
Foreign government	—		—			—		—			11		—			—		—
Mortgage-backed residential	2,360		(18		)	11		—			493		(2		)	23		(1		)
Asset-backed	163		(1		)	1		—			143		(1		)	1		—
Corporate debt	110		(2		)	6		—			120		(2		)	15		(1		)
Total temporarily impaired debt securities	3,357		(22		)	18		—			1,011		(6		)	39		(2		)
Temporarily impaired equity securities	217		(27		)	156		(22		)	380		(39		)	218		(34		)
Total temporarily impaired available-for-sale securities	$	3,574	$	(49	)	$	174	$	(22	)	$	1,391	$	(45	)	$	257	$	(36	)

6. Loans Held-for-Sale, Net

The composition of loans held-for-sale, net, was as follows.



($ in millions)	March 31, 2013		December 31, 2012
Consumer mortgage
1st Mortgage	$	701	$	2,490
Total consumer mortgage (a)	701		2,490
Commercial and industrial
Other	17		86
Total loans held-for-sale (b)	$	718	$	2,576


(a)	Fair value option-elected domestic consumer mortgages were $701 million and $2.5 billion at March 31, 2013, and December 31, 2012, respectively. Refer to Note 22 for additional information.


(b)	Totals are net of unamortized premiums and discounts and deferred fees and costs. Included in the totals are net unamortized discounts of $34 million at March 31, 2013, and net unamortized premiums of $26 million at December 31, 2012.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table summarizes held-for-sale mortgage loans reported at carrying value by higher-risk loan type.



($ in millions)	March 31, 2013		December 31, 2012
High original loan-to-value (greater than 100%) mortgage loans	$	74	$	378
Interest-only mortgage loans	3		10
Total higher-risk mortgage loans held-for-sale	$	77	$	388

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.



($ in millions)	March 31, 2013		December 31, 2012
Consumer automobile	$	55,014	$	53,715
Consumer mortgage
1st Mortgage	7,095		7,173
Home equity	2,577		2,648
Total consumer mortgage	9,672		9,821
Commercial
Commercial and industrial
Automobile	29,255		30,270
Mortgage	—		—
Other	2,562		2,697
Commercial real estate
Automobile	2,620		2,552
Mortgage	—		—
Total commercial	34,437		35,519
Total finance receivables and loans (a) (b)	$	99,123	$	99,055


(a)	Totals are net of unearned income, unamortized premiums and discounts, and deferred fees and costs of $842 million and $895 million at March 31, 2013, and December 31, 2012, respectively.


(b)	Includes $1 million and $2 million of foreign consumer automobile loans, and $15 million and $18 million of foreign commercial other loans at March 31, 2013, and December 31, 2012, respectively.

The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans.

Three months ended March 31, 2013 ($ in millions)

Consumer
automobile

Consumer
mortgage

Commercial

Total

Allowance at January 1, 2013

575