NEW YORK, Aug. 1, 2012 ?
- Strong performance in auto finance and direct banking franchises drives core pre-tax income of $533 million, excluding ResCap-related items
- Second quarter 2012 net loss of $898 million and core pre-tax loss of $753 million, including impact of previously announced ResCap-related items
- ResCap bankruptcy case continues to move forward
- Exploring strategic alternatives for all international businesses
Ally Financial Inc. (Ally) today reported a net loss of $898 million for the second quarter of 2012, compared to net income of $310 million in the prior quarter and net income of $113 million for the second quarter of 2011. The company reported a core pre-tax loss of $753 million for the second quarter of 2012, compared to core pre-tax income of $474 million in the prior quarter and $465 million in the comparable prior year period. Core pre-tax income/loss reflects income from continuing operations before taxes and original issue discount (OID) amortization expense primarily from bond exchanges.
Results for the quarter were adversely affected by a $1.2 billion charge resulting from Residential Capital, LLC, and certain of its subsidiaries (ResCap) filing for Chapter 11 bankruptcy protection on May 14 and a proposed settlement between ResCap and Ally, as previously announced. Also, as a result of the bankruptcy, ResCap was deconsolidated from Ally?s financial statements.
Excluding the ResCap-related charge and a ResCap pre-tax loss for the partial quarter prior to May 14, Ally earned $533 million of core pre-tax income for the quarter, driven by growth in the company?s core automotive services and U.S. direct banking platforms.
?The second quarter of 2012 marked a seminal moment for Ally. Strategic actions were announced in May that aim to permanently address the legacy mortgage risks and put Ally on an accelerated path to repay the remaining U.S. Treasury investment,? said Ally Chief Executive Officer Michael A. Carpenter. ?The ResCap Chapter 11 case continues to move forward, and plans to pursue alternatives for Ally?s international operations are underway. Successful completion of these activities will enhance Ally?s capital position and further clarify our mission to be the leading value-added auto finance provider to U.S. dealers, supported by a growing direct bank with a distinctive, customer-friendly approach.?
Carpenter continued, ?The core business fundamentals remained strong during the quarter. Ally?s auto finance franchise continued to lead the industry, despite intense competition, and posted the second highest quarter of consumer originations since 2007. We continue to broaden and diversify this franchise, which is centered on powering thousands of dealers across the country as the top auto finance provider.
?The second quarter also marked the third anniversary of the Ally Bank brand, and this unique franchise exceeded $30 billion of retail deposits. Ally Bank continues to be a key part of our operations with about 60 percent of U.S. assets now being funded at the bank.?
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Added: 2012/08/02
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