With its strategy to plug up its leaking mortgage unit taking hold, GMAC Financial Services swung to its first profitable quarter since the fourth quarter of 2008. The company also announced its intention to change its name on May 10, with company officials saying the focus going forward will center on the lender’s auto franchise.

The auto loan company – majority owned by the U.S. government – earned $162 million in the first quarter, up $800 million from the first quarter last year and slightly more than $5 million from the fourth quarter 2009. Leading the way was its auto finance unit, which recorded its fifth consecutive profitable quarter with a pre-tax profit of $846 million.

On a pre-tax basis, GMAC earned $564 million, a turnaround from the $482 million it lost in the year-ago quarter. Officials attributed the results to several developments: the strategy it implemented last December, improving credit trends and an aggressive expense reduction effort targeting $600 million in cost cuts.

“The first quarter marked a key milestone in GMAC’s transformation, as the company made significant strides toward achieving our strategic objectives,” said GMAC’s Michael Carpenter. “We achieved profitability, our premier auto finance unit continued to expand, the capital markets reopened to GMAC debt, we have reduced expenses, and we took several additional steps to contain and reduce risk in the mortgage business.”

Carpenter rang in the milestone by announcing that the company will assume the Ally Financial Inc. brand name on May 10 – almost a year after the Ally brand was introduced. Carpenter said the move will precede the expiration of a licensing agreement for the GMAC trademark, which is set to expire next year.

The company’s chief executive said the transition to the new name will be limited to the corporate entity, and added that there are no plans as of yet to change the branding of the company’s operating units. “We need to move on from the name and so today we are,” Carpenter said.

Carpenter added that the company’s auto franchise will be the focus of the lender’s future, touting a recent deal with Saab to become its preferred wholesale and retail financing source, and the company’s expanded reach through DealerTrack’s credit application network. Carpenter also noted a deal with Thor Industries to become the recreational vehicle maker’s preferred retail lender.

Consumer financing originations in North America (including Canada) totaled $6.7 billion for the quarter, $6 billion of which was used to originate vehicle loans in the U.S. retail market. The result was almost double the amount of originations in the year-ago quarter.

Total consumer financing originations for the quarter came in at $8.2 billion, which included $6.2 billion of new originations, $1.2 billion of used originations and approximately $800 million in new leases.

The company also continued to increase penetrations at both at GM and Chrysler. Wholesale penetration for GM dealer stock came in at 87.7 percent, compared to 80.1 percent in the year-ago quarter. Retail penetration for GM was 33.5 percent, compared to 18.6 percent in the year-ago period.

Wholesale penetration for Chrysler dealer stock came in at 76.4 percent, down slightly from 77.3 percent in the December quarter. Retail penetration for Chrysler improved to 42.1 percent from 25.5 percent in December quarter.

Thirty-day delinquencies decreased from 3.48 percent in the fourth quarter 2009 to 2.87 percent in the recent quarter. Credit losses also declined during the quarter, dropping from 3.57 percent in the prior quarter to 2.04 percent in the March quarter.

Interim CFO Jim Mackey attributed GMAC’s performance to older vintages reaching their peak delinquency period, and more stringent underwriting on recent vintages. He also attributed the better performance to a new collection system the company implement last year, as well as new collector incentives. Mackey, who said the company also began employing enhanced behavior analytics, also attributed performance to a stabilizing unemployment picture and other economic factors.

“Beginning in 2008, we implemented a more stringent layered risk approach to underwriting where we focus more heavily on limiting advance rates by credit tier or FICO score, and the improved performance of recent vintages are a direct result of those steps,” said Mackey during yesterday’s investor call. “While we are still cautious about declaring victory given overall economic conditions, we are encouraged by recent performance trends.”

Carpenter added that GMAC continues to divest non-core operations, noting the company’s sale of its U.S. property and casualty company, North American Factoring, and its Australian auto business. Carpenter added that the company continues to contain losses of its Residential Capital mortgage unit, which made a net profit of $110 million during the quarter.

“We are very focused on ring fencing our mortgage issues that have dogged the company historically,” he said, adding that GMAC continues to explore a possible sale of the business unit. “ResCap has not required any additional capital liquidity support in the first quarter and our objective is to keep it that way through the rest of the year.”

Also fueling Carpenter’s positive outlook was the amount of activity in the capital markets during the quarter. GMAC issued more than $5 billion of unsecured debt. It also did $6 billion of asset-backed auto finance, and completed a $7 billion secured credit facility with Ally Bank. Net bank deposits, Carpenter added, grew by almost $900 million.

“Our North American segment is the foundation of our auto franchise, but we also had positive contributions from both our international and insurance segments,” said Mackey. “This business will be our main focus going forward as we expand by leveraging our core competencies.”