Ally Financial 4Q profit reverses year-ago loss
NEW YORK — Ally Financial Inc. on Tuesday reported a fourth-quarter profit, reversing a big year-ago loss, largely on the turnaround of its mortgage operations.
The consumer lender and online bank, formerly known as GMAC Inc., said net income for the three months ended Dec. 31 was $79 million, compared with a $5 billion loss in the 2009 fourth quarter.
There were no per-share results because Ally, which is 74 percent owned by the U.S. Treasury, is not yet publicly traded. It said in August it plans a public offering this year.
During a conference call to discuss the results, Ally CEO Michael A. Carpenter said he could not discuss an IPO. But, he said, the company "accomplished the business objectives that we set out to accomplish in 2010, and that sets the stage for us to begin being very focused on how do we repay Treasury."
The company, which is based in Detroit, is separate from General Motors Co., which had a successful IPO in November. Ally is the main lender for both General Motors Co. and Chrysler.
Ally's automotive finance unit posted income from continuing operations of $765 million, nearly triple the $283 million earned last year. Loans to consumers rose 56 percent during the quarter, to $12.7 billion, reflecting higher auto sales, particularly at GM.
The company's online retail bank, Ally Bank, reported pre-tax income from operation of $317 million, compared with a loss of $1.5 billion in the prior year period. Deposits grew to $39 billion, including retail deposits of $21.9 billion. In the prior year, deposits stood at $31.1 billion, with $16.9 billion representing retail deposits.
Its mortgage operations, which include the former Residential Capital LLC, or ResCap, posted pre-tax income from continuing operations of $123 million for the quarter, versus a pre-tax loss from continuing operations of $3.4 billion in the 2009 period. Mortgage loan production rose to $23.8 billion, from $18.1 billion in the year-ago period. About 84 percent of new loans were refinancings, Ally said.
Ally said it wrote off $240 million in loans it could not collect during the quarter, compared with $3.87 billion in the fourth-quarter 2009. Non-performing loans, or those that are considered past due and in danger of default, fell to $1.51 billion, from $2.7 billion a year earlier. The bank set aside $71 million to cover souring loans during the quarter, compared with $3.06 billion last year.
For full-year 2010, Ally reported net income of $1.1 billion, compared to a net loss of $10.3 billion in 2009. It wrote 68 percent more consumer auto loans in 2010 than in 2009.
Carpenter said 2010 was a "transformational year for Ally." The automotive finance business remained strong while the bank "substantially reduced risk in the mortgage business."