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Ally Sees 72 Percent Increase in Originations in 2010

February 01, 2011

NEW YORK — Ally Financial Inc. (Ally) today reported its fourth consecutive quarter of profitability with net income of $79 million for the fourth quarter of 2010, compared to a net loss of $5 billion for the year-ago period.

Core pre-tax income totaled $533 million in the fourth quarter of 2010, compared to a core pre-tax loss of $3.5 billion in the year-ago period. For all of 2010, Ally reported a net income of $1.1 billion, a turnaround form the $10.3 billion net loss the company experienced in 2009. Core pre-tax income in 2010 totaled $2.5 billion, which also represented a turnaround from the $5.8 billion loss experienced in 2009.

The losses reported for the 2009 fourth quarter and full year were largely affected by losses related to legacy assets in the mortgage operations, company officials said. 

"[Last year] 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," commented Ally CEO Michael A. Carpenter. "Our automotive finance business remained a leading provider of auto loans with U.S. consumer originations increasing 72 percent over last year.

“We substantially reduced risk in the mortgage business and are focused on our conforming mortgage origination and servicing platform; and Ally Bank has demonstrated the strength of its customer value proposition with strong deposit growth and high retention rates,” added Carpenter. “These steps, along with our improved cost and capital structures and access to the capital markets, have significantly strengthened the company and will enable repayment of the U.S. Treasury's investment over time.”

Ally also increased its global consumer auto financing originations by 68 percent in 2010 compared to 2009. Global used consumer auto financing also shot up 92 percent last year compared to 2009.

The finance company was ranked by Experian Automotive as the No. 1 provider of new-vehicle retail financing in the U.S. during 2010. The company’s U.S. consumer penetration of GM also increased to 38.2 percent last year from 28.2 percent in 2009. U.S. consumer penetration of Chrysler during 2010 was 45.4 percent compared to 8.9 percent in 2009. In addition, Ally was selected as the provider of F&I products and services for Saab dealerships, as well as the preferred financing source for Fiat vehicles in the U.S.

Ally also reported that it struck an agreement with the U.S. Treasury on Dec. 30, 2010 to convert $5.5 billion of the $11.4 billion of mandatorily convertible preferred (MCP) securities issued by Ally and owned by the U.S. Treasury into common equity.

Ally said it has strengthened access to capital markets with nearly $36 billion of new funding transactions completed in 2010, compared to approximately $12 billion in 2009. Ally also said its deposits grew by $7.3 billion last year, which was supported by strong CD retention rates. 

The finance company also touted its successful cost-reduction efforts last year, citing the sale of 15 non-core operations and achieving more than $680 million in savings. The company also reduced its mortgage risk in 2010, selling legacy mortgage assets totaling approximately $2.5 billion of unpaid principal balance at a gain.

In addition, Ally has reduced representation and warranty exposure through several settlements, including Fannie Mae and Freddie Mac.

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