Ally Financial Inc. ( GOM ) 10−K Annual report pursuant to section 13 and 15(d) Filed on 2/28/2012 Filed Period 12/31/2011 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10−K þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2011 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 10.00% Deferred Interest Debentures due December 1, 2012 7.25% Notes due February 7, 2033 10.30% Deferred Interest Debentures due June 15, 2015 7.375% Notes due December 16, 2044 7.30% Public Income Notes (PINES) due March 9, 2031 Fixed Rate/Floating Rate Perpetual Preferred Stock, Series A 7.35% Notes due August 8, 2032 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 þ No o 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 o No þ 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 þ No o 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 þ No o 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. þ 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 o Accelerated filer o Non−accelerated filer þ Smaller reporting company o (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 o No þ 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, 2012, the number of shares outstanding of the Registrant's common stock was 1,330,970 shares. Documents incorporated by reference. None. Table of Contents INDEX Ally Financial Inc. Form 10−K Page Part I Item 1. Business 1 Item 1A. Risk Factors 11 Item 1B. Unresolved Staff Comments 26 Item 2. Properties 26 Item 3. Legal Proceedings 26 Item 4. Mine Safety Disclosures 26 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6. Selected Financial Data 28 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures about Market Risk 115 Item 8. Financial Statements and Supplementary Data 116 Management's Report on Internal Control over Financial Reporting 116 Reports of Independent Registered Public Accounting Firm 117 Consolidated Statement of Income 119 Consolidated Statement of Comprehensive Income 121 Consolidated Balance Sheet 122 Consolidated Statement of Changes in Equity 124 Consolidated Statement of Cash Flows 126 Notes to Consolidated Financial Statements 128 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 234 Item 9A. Controls and Procedures 234 Item 9B. Other Information 234 Part III Item 10. Directors, Executive Officers, and Corporate Governance 235 Item 11. Executive Compensation 239 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 253 Item 13. Certain Relationships and Related Transactions, and Director Independence 253 Item 14. Principal Accountant Fees and Services 255 Part IV Item 15. Exhibits, Financial Statement Schedules 256 Index of Exhibits 256 Signatures 261 Table of Contents Part I Ally Financial Inc. • Form 10−K Item 1. Business General Ally Financial Inc. (formerly GMAC Inc.) is a leading, independent, globally diversified, financial services firm with $184 billion in assets and operations in 32 countries. Founded in 1919, we are a leading automotive financial services company with over 90 years of experience providing a broad array of financial products and services to automotive dealers and their customers. We are also one of the largest residential mortgage companies in the United States. We became a bank holding company on December 24, 2008, under the Bank Holding Company Act of 1956, as amended (the BHC Act). Our banking subsidiary, Ally Bank, is an indirect wholly owned subsidiary of Ally Financial Inc. and a leading franchise in the growing direct (online and telephonic) banking market, with $39.6 billion of deposits at December 31, 2011. The terms “Ally,” “the Company,” “we,” “our,” and “us” refer to Ally Financial Inc. and its subsidiaries as a consolidated entity, except where it is clear that the terms means only Ally Financial Inc. Our Business Global Automotive Services and Mortgage are our primary lines of business. Our Global Automotive Services business is centered around our strong and longstanding relationships with automotive dealers and supports our automotive manufacturing partners and their marketing programs. Our Global Automotive Services business serves over 21,000 dealers globally with a wide range of financial services and insurance products. We believe our dealer−focused business model makes us the preferred automotive finance company for thousands of our automotive dealer customers. We have specialized incentive programs that are designed to encourage dealers to direct more of their business to us. In addition, we believe our longstanding relationship with General Motors Company (GM) and our recent relationship with Chrysler Group LLC (Chrysler) has resulted in particularly strong relationships between us and thousands of dealers and extensive operating experience relative to other automotive finance companies. Our mortgage business is a leading originator and servicer of residential mortgage loans in the United States. Ally Bank, our direct banking platform, provides our automotive finance and mortgage loan operations with a stable and low−cost funding source and facilitates prudent asset growth. Our focus is on building a stable deposit base driven by our compelling brand and strong value proposition. Ally Bank raises deposits directly from customers through a direct banking channel over the internet and by telephone. Ally Bank offers a full spectrum of deposit product offerings including certificates of deposit, savings accounts, money market accounts, IRA (individual retirement account) deposit products, as well as an online checking product. We continue to expand the product offerings in our banking platform in order to meet customer needs. Ally Bank's assets and operating results are divided between our North American Automotive Finance operations and Mortgage operations based on its underlying business activities. The following table reflects the primary products and services offered by the continuing operations of each of our lines of business. Ally Financial Inc. Global Automotive Services Mortgage Corporate and Other Operates as three reportable segments: Operates as two reportable segments: Commercial Finance North American Automotive Finance Origination and Servicing Other Corporate United States Canada Legacy Portfolio and Other International Automotive Finance Europe Latin America Asia (joint venture in China) Insurance Primary business activities: Primary business activities: Primary business activities: Consumer automotive finance Residential mortgage loan origination and Senior secured commercial lending Commercial automotive finance purchases Automotive loan servicing Mortgage loan servicing Vehicle remarketing services Warehouse lending Vehicle service contracts Correspondent lending (a) Dealer inventory insurance (a) On November 2, 2011, we announced that in order to proactively address changes in the mortgage industry as a whole, we will be taking immediate action to reduce the focus on the correspondent mortgage−lending channel. 1 Table of Contents Ally Financial Inc. • Form 10−K Global Automotive Services Global Automotive Services includes our North American Automotive Finance operations, International Automotive Finance operations, and Insurance operations. Our Global Automotive Services business had $120.5 billion of assets at December 31, 2011, and generated $6.4 billion of total net revenue in 2011. Our primary customers are automotive dealers, which are independently owned businesses. As part of the process of selling a vehicle, automotive dealers typically originate loans and leases to their retail customers.