Ally Financial (GJM) earned $79 million in the fourth quarter of 2010, up from a $4.9 billion loss one year ago. It’s all also the fourth straight quarter of profits. For all of 2010, Ally earned $1.1 billion, a turnaround from the $10.3 billion loss suffered in 2009. Revenues at the bank reached $1.9 billion in the fourth quarter, up 26% from a year ago. At the end of the fourth quarter, Ally struck a settlement with Fannie Mae. Through it, ResCap and other subsidiaries resolved risk and warranty exposures with the government-sponsored enterprise for roughly $462 million. It releases its liability with the firm for mortgages totaling $292 billion in unpaid principal balance. Ally ranks as the fifth largest mortgage originator in the U.S. Its mortgage operation turned $123 million in net income during the fourth quarter, up from a $3.4 billion loss one year ago, but it has split its operation into two. Ally named one as its origination and servicing business, and the second is its legacy portfolio. Ally split off all loans originated before Jan. 1, 2009 into its legacy portfolio segment. The other segment originated $23.8 billion in new mortgages during the fourth quarter, up 31% from one year ago. The legacy portfolio segment cost the bank $49 million in losses as it sold off old mortgage assets. However, it is an improvement from the $3.2 billion the segment lost one year before. Ally said the reduction in losses came from more gains on the sale of those loans, lower loan loss provisions and lower representation and warranty expense than a year ago. “2010 was a transformational year for Ally as we successfully achieved our strategic objectives and restored financial performance with $2.5 billion of core pre-tax income for the year,” Ally CEO Michael Carpenter said. “We substantially reduced risk in the mortgage business and are focused on our conforming mortgage origination and servicing platform.” Write to Jon Prior. Follow him on Twitter: @JonAPrior