Ally Financial Inc. [ALLY] Filings

10-Q 1 ally-20220331.htm 10-Q ally-20220331

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


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

For the quarterly period ended March 31, 2022, 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.)

Ally Detroit Center

500 Woodward Avenue, Floor 10

Detroit, Michigan 48226

(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:

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ALLY

NYSE

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 (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

Yes ☐ No ☑

At April 28, 2022, the number of shares outstanding of the Registrant’s common stock was 323,046,067 shares.

Table of Contents

INDEX

Ally Financial Inc. • Form 10-Q


		Page
	Glossary of Abbreviations and Acronyms	3
Part I — Financial Information
Item 1.	Financial Statements	5
	Condensed Consolidated Statement of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2022, and 2021	5
	Condensed Consolidated Balance Sheet (unaudited) at March 31, 2022, and December 31, 2021	7
	Condensed Consolidated Statement of Changes in Equity (unaudited) for the Three Months Ended March 31, 2022, and 2021	9
	Condensed Consolidated Statement of Cash Flows (unaudited) for the Three Months Ended March 31, 2022, and 2021	10
	Notes to Condensed Consolidated Financial Statements (unaudited)	12
	Note 1. Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies	12
	Note 2. Acquisitions	13
	Note 3. Revenue from Contracts with Customers	13
	Note 4. Other Income, Net of Losses	15
	Note 5. Reserves for Insurance Losses and Loss Adjustment Expenses	15
	Note 6. Other Operating Expenses	16
	Note 7. Investment Securities	17
	Note 8. Finance Receivables and Loans, Net	21
	Note 9. Leasing	29
	Note 10. Securitizations and Variable Interest Entities	32
	Note 11. Other Assets	35
	Note 12. Deposit Liabilities	36
	Note 13. Debt	37
	Note 14. Accrued Expenses and Other Liabilities	38
	Note 15. Preferred Stock	38
	Note 16. Accumulated Other Comprehensive Income	40
	Note 17. Earnings per Common Share	42
	Note 18. Regulatory Capital and Other Regulatory Matters	42
	Note 19. Derivative Instruments and Hedging Activities	45
	Note 20. Income Taxes	51
	Note 21. Fair Value	51
	Note 22. Offsetting Assets and Liabilities	57
	Note 23. Segment Information	59
	Note 24. Contingencies and Other Risks	60
	Note 25. Subsequent Events	61
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	62
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	107
Item 4.	Controls and Procedures	108
Part II — Other Information		109
Item 1.	Legal Proceedings	109
Item 1A.	Risk Factors	109
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	109
Item 3.	Defaults Upon Senior Securities	109
Item 4.	Mine Safety Disclosures	109
Item 5.	Other Information	109
Item 6.	Exhibits	110
Signatures		111

Table of Contents

Index of Defined Terms

Ally Financial Inc. • Form 10-Q

Glossary of Abbreviations and Acronyms

The following is a list of abbreviations and acronyms that are used in this Quarterly Report on Form 10-Q.


Term						Definition



ALCO						Asset-Liability Committee
ALM						Asset Liability Management
ASC						Accounting Standards Codification
ASU						Accounting Standards Update

BHC						Bank holding company
BHC Act						Bank Holding Company Act of 1956 as amended
BMC						Better Mortgage Company
Board						Ally Board of Directors
CCAR						Comprehensive Capital Analysis and Review
CD						Certificate of deposit
CECL						Accounting Standards Update 2016-13 (and related Accounting Standards Updates), or current expected credit loss


CFE						Cities for Financial Empowerment
COVID-19						Coronavirus disease 2019
CRA						Community Reinvestment Act of 1977 as amended
CSG						Commercial Services Group
CVA						Credit valuation adjustment

Dodd-Frank Act						Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 as amended


EGRRCP Act						Economic Growth, Regulatory Relief, and Consumer Protection Act as amended
ERMC						Enterprise Risk Management Committee

ESG						Environmental, social, and governance

F&I						Finance and insurance
Fair Square						Fair Square Financial Holdings LLC and its subsidiaries
FASB						Financial Accounting Standards Board

FDIC						Federal Deposit Insurance Corporation
FDICIA						Federal Deposit Insurance Corporation Improvement Act of 1991 as amended
FHC						Financial holding company
FHLB						Federal Home Loan Bank

FRB						Federal Reserve Bank, or Board of Governors of the Federal Reserve System, as the context requires

FTP						Funds-transfer pricing
GAP						Guaranteed asset protection
GDP						Gross domestic product of the United States of America

GM						General Motors Company

IB Finance						IB Finance Holding Company, LLC
IRA						Individual retirement account
LCR						Liquidity coverage ratio

LIBOR						London Interbank Offered Rate

LMI						Low-to-moderate income
LTV						Loan-to-value

MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations


NYSE						New York Stock Exchange
OTC						Over-the-counter
P&C						Property and casualty
PCA						Prompt corrective action
PCD						Purchased credit deteriorated

Table of Contents

Index of Defined Terms

Ally Financial Inc. • Form 10-Q


Term						Definition
RC						Risk Committee of the Ally Board of Directors
ROU						Right-of-use

RV						Recreational vehicle
RWA						Risk-weighted asset
SEC						U.S. Securities and Exchange Commission
Series 2 TRUPS						8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust I
SOFR						Secured Overnight Financing Rate
SPE						Special-purpose entity

Stellantis						Stellantis N.V.

TDR						Troubled debt restructuring

UPB						Unpaid principal balance
U.S. Basel III						The rules implementing the 2010 Basel III capital framework in the United States as well as related provisions of the Dodd-Frank Act, as amended from time to time
U.S. GAAP						Accounting Principles Generally Accepted in the United States of America
VIE						Variable interest entity
VMC						Vehicle maintenance contract
VSC						Vehicle service contract
WAC						Weighted-average coupon
wSTWF						Weighted short-term wholesale funding

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)		2022		2021
Financing revenue and other interest income
Interest and fees on finance receivables and loans		$	1,714	$	1,582
Interest on loans held-for-sale		4		5
Interest and dividends on investment securities and other earning assets		188		131
Interest on cash and cash equivalents		2		4
Operating leases		403		370
Total financing revenue and other interest income		2,311		2,092
Interest expense
Interest on deposits		211		306
Interest on short-term borrowings		5		1
Interest on long-term debt		185		250

Total interest expense		401		557
Net depreciation expense on operating lease assets		217		163
Net financing revenue and other interest income		1,693		1,372
Other revenue
Insurance premiums and service revenue earned		280		280
Gain on mortgage and automotive loans, net		14		36
Loss on extinguishment of debt		—		(1)
Other gain on investments, net		5		123
Other income, net of losses		143		127
Total other revenue		442		565
Total net revenue		2,135		1,937
Provision for credit losses		167		(13)
Noninterest expense
Compensation and benefits expense		493		395
Insurance losses and loss adjustment expenses		58		63

Other operating expenses		571		485
Total noninterest expense		1,122		943
Income from continuing operations before income tax expense		846		1,007
Income tax expense from continuing operations		191		211
Net income from continuing operations		655		796

Net income		655		796
Other comprehensive loss, net of tax		(1,633)		(604)
Comprehensive (loss) income		$	(978)	$	192

Statement continues on the next page.

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

Condensed Consolidated Statement of Comprehensive Income (unaudited)

Ally Financial Inc. • Form 10-Q


	Three months ended March 31,
($ in millions, except per share data; shares in thousands) (a)		2022		2021




Net income from continuing operations attributable to common stockholders		$	627	$	796

Net income attributable to common stockholders		$	627	$	796
Basic weighted-average common shares outstanding (b)		335,678		375,229
Diluted weighted-average common shares outstanding (b)		337,812		377,529
Basic earnings per common share
Net income from continuing operations		$	1.87	$	2.12

Net income		$	1.87	$	2.12
Diluted earnings per common share
Net income from continuing operations		$	1.86	$	2.11

Net income		$	1.86	$	2.11
Cash dividends declared per common share		$	0.30	$	0.19

(a)Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.

(b)Includes shares related to share-based compensation that vested but were not yet issued.

Refer to Note 17 for additional earnings per share information. The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

Condensed Consolidated Balance Sheet (unaudited)

Ally Financial Inc. • Form 10-Q


($ in millions, except share data)	March 31, 2022		December 31, 2021

Assets
Cash and cash equivalents
Noninterest-bearing	$	470	$	502
Interest-bearing	3,462		4,560
Total cash and cash equivalents (a)	3,932		5,062
Equity securities	869		1,102
Available-for-sale securities (amortized cost of $35,592 and $33,650) (a)	33,385		33,587
Held-to-maturity securities (fair value of $1,106 and $1,204)	1,159		1,170
Loans held-for-sale, net	471		549
Finance receivables and loans, net
Finance receivables and loans, net of unearned income	125,365		122,268
Allowance for loan losses	(3,301)		(3,267)
Total finance receivables and loans, net	122,064		119,001
Investment in operating leases, net	10,730		10,862
Premiums receivable and other insurance assets	2,730		2,724
Other assets	8,957		8,057
Total assets	$	184,297	$	182,114
Liabilities
Deposit liabilities
Noninterest-bearing	$	175	$	150
Interest-bearing	142,300		141,408
Total deposit liabilities	142,475		141,558
Short-term borrowings	3,950		—
Long-term debt	15,885		17,029
Interest payable	302		210
Unearned insurance premiums and service revenue	3,500		3,514
Accrued expenses and other liabilities	2,772		2,753
Total liabilities	168,884		165,064
Contingencies (refer to Note 24)
Equity
Common stock and paid-in capital ($0.01 par value, shares authorized 1,100,000,000; issued 506,435,119 and 504,521,535; and outstanding 327,306,298 and 337,940,636)	21,728		21,671
Preferred stock	2,324		2,324
Accumulated deficit	(1,076)		(1,599)
Accumulated other comprehensive loss	(1,791)		(158)
Treasury stock, at cost (179,128,821 and 166,580,899 shares)	(5,772)		(5,188)
Total equity	15,413		17,050
Total liabilities and equity	$	184,297	$	182,114

(a)Refer to Note 7 for discussion of cash and cash equivalents and investment securities pledged as collateral.

Statement continues on the next page.

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

Table of Contents

Condensed Consolidated Balance Sheet (unaudited)

Ally Financial Inc. • Form 10-Q

The assets of consolidated variable interest entities 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, 2022		December 31, 2021
Assets
Finance receivables and loans, net
Consumer automotive	$	7,818	$	6,871
Consumer other (a)	—		353

Allowance for loan losses	(263)		(278)
Total finance receivables and loans, net	7,555		6,946

Other assets	633		563
Total assets	$	8,188	$	7,509
Liabilities
Long-term debt	$	797	$	1,337
Accrued expenses and other liabilities	2		2
Total liabilities	$	799	$	1,339

(a)Composed of credit card finance receivables and loans, net.

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

Table of Content

Condensed Consolidated Statement of Changes in Equity (unaudited)

Ally Financial Inc. • Form 10-Q



($ in millions)	Common stock and paid-in capital		Preferred stock		Accumulated deficit		Accumulated other comprehensive income (loss)		Treasury stock		Total equity












Balance at January 1, 2021	$	21,544	$	—	$	(4,278)	$	631	$	(3,194)	$	14,703
Net income					796						796
Share-based compensation	22										22
Other comprehensive loss							(604)				(604)
Common stock repurchases									(219)		(219)
Common stock dividends ($0.19 per share)					(73)						(73)
Balance at March 31, 2021	$	21,566	$	—	$	(3,555)	$	27	$	(3,413)	$	14,625
Balance at January 1, 2022	$	21,671	$	2,324	$	(1,599)	$	(158)	$	(5,188)	$	17,050
Net income					655						655


Preferred stock dividends — Series B					(16)						(16)
Preferred stock dividends — Series C					(12)						(12)
Share-based compensation	57										57
Other comprehensive loss							(1,633)				(1,633)
Common stock repurchases									(584)		(584)
Common stock dividends ($0.30 per share)					(104)						(104)
Balance at March 31, 2022	$	21,728	$	2,324	$	(1,076)	$	(1,791)	$	(5,772)	$	15,413

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

Table of Contents

Condensed Consolidated Statement of Cash Flows (unaudited)

Ally Financial Inc. • Form 10-Q

Three months ended March 31, ($ in millions)

Ally Financial Inc. [ALLY] Filings
10-Q	[2022-05-02]
10-K	[2022-02-25]
10-Q	[2021-11-02]
10-Q	[2021-08-02]
10-Q	[2021-05-03]
10-K	[2021-02-24]
10-Q	[2020-11-03]
10-Q	[2020-07-30]
10-Q	[2020-04-28]
10-K	[2020-02-25]
10-Q	[2019-11-05]
10-Q	[2019-08-01]
10-Q	[2019-05-06]
10-K	[2019-02-20]
10-Q	[2018-11-01]
10-Q	[2018-08-01]
10-Q	[2018-05-07]
10-K	[2018-02-21]
10-Q	[2017-10-31]
10-Q	[2017-07-31]
10-Q	[2017-05-04]
10-K	[2017-02-27]
10-Q	[2016-11-02]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-24]
10-Q	[2015-10-29]
10-Q	[2015-07-30]
10-Q	[2015-05-01]
10-K	[2015-02-27]
10-Q	[2014-10-31]
10-Q	[2014-08-01]
10-Q	[2014-05-01]
10-K	[2014-03-03]
10-Q	[2013-11-05]
10-Q	[2013-08-02]
10-Q	[2013-05-01]
10-K	[2013-03-01]
10-Q	[2012-11-02]
10-Q	[2012-08-03]
10-Q	[2012-04-27]
10-K	[2012-02-28]