Ally(US:ALLY)2025-08-04 20:08Part I — Financial Information Financial Statements Ally Financial's Q2 2025 net income rose to $352 million, while six-month net income fell to $127 million due to a $495 million pre-tax loss on securities and a $305 million goodwill impairment Condensed Consolidated Statement of Comprehensive Income | ($ in millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Total net revenue | $2,082 | $2,022 | $3,623 | $4,020 | | Provision for credit losses | $384 | $457 | $575 | $964 | | Total noninterest expense | $1,262 | $1,286 | $2,896 | $2,594 | | Net income | $352 | $219 | $127 | $362 | | Diluted earnings per common share | $1.04 | $0.62 | $0.23 | $0.99 | Condensed Consolidated Balance Sheet Highlights | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total cash and cash equivalents | $10,592 | $10,292 | | Finance receivables and loans, net | $129,813 | $132,316 | | Total assets | $189,473 | $191,836 | | Total deposit liabilities | $147,866 | $151,574 | | Total long-term debt | $15,876 | $17,495 | | Total liabilities | $174,926 | $177,933 | | Total equity | $14,547 | $13,903 | Condensed Consolidated Statement of Cash Flows Highlights | Six months ended June 30, ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,887 | $2,720 | | Net cash provided by investing activities | $1,568 | $2,590 | | Net cash used in financing activities | ($3,337) | ($4,620) | | Net increase in cash and cash equivalents | $128 | $685 | - On April 1, 2025, the company completed the sale of its credit card operations, Ally Credit Card, resulting in a goodwill impairment charge of $305 million and a net pretax loss of $8 million during the first six months of 20253840 - In the first quarter of 2025, Ally executed a balance sheet repositioning by selling lower-yielding available-for-sale securities with an amortized cost of approximately $4.6 billion for proceeds of $4.1 billion, resulting in a pre-tax loss of $495 million6674 Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 2025 net income growth to lower credit provisions and investment gains, while six-month decline was due to securities sale losses and goodwill impairment, with strong auto originations and robust capital ratios Consolidated Results of Operations Q2 2025 net income increased to $352 million due to lower credit provisions and investment gains, while six-month net income decreased to $127 million due to a $460 million investment loss and $305 million goodwill impairment - The increase in net income for Q2 2025 was primarily driven by lower provision for credit losses, a gain on investments (versus a loss in Q2 2024), and lower total noninterest expense387 - The decrease in net income for the first six months of 2025 was mainly due to a significant loss on investments from the AFS portfolio repositioning and a goodwill impairment charge related to the sale of Ally Credit Card387392395 - Provision for credit losses decreased by $389 million for the six months ended June 30, 2025, primarily driven by a provision benefit associated with the sale of Ally Credit Card and lower net charge-offs in the consumer automotive portfolio394 Segment Analysis Q2 2025 saw Automotive Finance pre-tax income decline to $472 million, Insurance swing to a $28 million profit, Corporate Finance decrease to $96 million, and Corporate and Other reduce its loss to $160 million Pre-tax Income by Segment (Three Months Ended June 30) | ($ in millions) | 2025 | 2024 | | :--- | :--- | :--- | | Automotive Finance | $472 | $584 | | Insurance | $28 | ($40) | | Corporate Finance | $96 | $109 | | Corporate and Other | ($160) | ($374) | | Total | $436 | $279 | - Automotive Finance consumer loan originations increased to $11.0 billion in Q2 2025 from $9.8 billion in Q2 2024, driven by strong new vehicle sales and momentum in electric vehicle leases424428 - Insurance operations' combined ratio improved slightly to 117.1% in Q2 2025 from 117.6% in Q2 2024, as higher earned premiums were partially offset by increased weather-related losses, which rose to $91 million from $78 million441447448 Risk Management Ally's risk management shows total loan exposure of $144.3 billion, with nonperforming loans at 1.2% and allowance for loan losses at $3.4 billion, while operating lease remarketing gains significantly deteriorated - Total consumer nonperforming loans decreased to $1.2 billion (1.2% of portfolio) at June 30, 2025, from $1.4 billion (1.3% of portfolio) at year-end 2024516521 Consumer Net Charge-off Ratios (Annualized) | Three months ended June 30, | 2025 | 2024 | | :--- | :--- | :--- | | Consumer automotive | 1.7% | 1.8% | | Consumer other (Credit Card) | — | 12.6% | | Total consumer | 1.5% | 1.7% | - The allowance for loan losses was $3.4 billion at June 30, 2025, representing 2.6% of total finance receivables, with the forecast assuming a peak unemployment rate of approximately 4.7% in Q4 2025556558 - Operating lease remarketing performance deteriorated significantly, with the average gain per terminated vehicle falling to $14 in Q2 2025 from $1,420 in Q2 2024, primarily due to lower auction prices for specific models599600 Liquidity Management, Funding, and Regulatory Capital Ally maintains strong liquidity of $66.8 billion and robust capital ratios, with CET1 at 9.89%, despite a $3.7 billion decrease in total deposits to $147.9 billion Total Available Liquidity | ($ in millions) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Liquid cash and equivalents | $10,032 | $9,561 | | FHLB unused pledged borrowing capacity | $10,700 | $12,211 | | Unencumbered highly liquid securities | $19,167 | $19,950 | | FRB Discount Window pledged capacity | $26,896 | $26,734 | | Total available liquidity | $66,795 | $68,456 | - Total deposits decreased by $3.7 billion during the first six months of 2025 to $147.9 billion, driven by a $3.5 billion reduction in brokered deposits and a $272 million decrease in retail deposits628 Regulatory Capital Ratios (Ally Financial Inc.) | Ratio | June 30, 2025 | Required Minimum (incl. buffer) | | :--- | :--- | :--- | | Common Equity Tier 1 (CET1) | 9.89% | 7.10% (4.5% + 2.6% SCB) | | Tier 1 Capital | 11.38% | 8.60% | | Total Capital | 13.25% | 10.60% | | Tier 1 Leverage | 9.06% | 4.00% | - The company's stress capital buffer (SCB) requirement was updated to 2.6%, effective October 2024, and is scheduled to remain at 2.6% effective October 1, 2025653 Quantitative and Qualitative Disclosures About Market Risk This section refers to the Market Risk discussion within Item 2 for quantitative and qualitative disclosures about market risk - The report directs readers to the Market Risk section within the MD&A for all quantitative and qualitative disclosures regarding market risk693 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report695 - No changes occurred during the quarter ended June 30, 2025, that have materially affected, or were reasonably likely to materially affect, the company's internal control over financial reporting696 Part II — Other Information Legal Proceedings The company refers to Note 24 for legal proceedings, with management not expecting material impact on financial condition, though potential materiality to results of operations for a particular period - For information on legal proceedings, the report refers to Note 24 of the financial statements698 - Management does not currently believe that the ultimate outcomes of pending legal matters will be material to the company's consolidated financial condition, after accounting for existing accruals352 Risk Factors No material changes to the risk factors previously described in the company's 2024 Annual Report on Form 10-K - The company states that there have been no material changes to the risk factors previously disclosed in its 2024 Annual Report on Form 10-K699 Unregistered Sales of Equity Securities and Use of Proceeds Ally had no unregistered equity sales in Q2 2025, repurchasing 27,000 shares for approximately $1 million, primarily for tax withholding on share-based incentive plans Issuer Purchases of Equity Securities (Q2 2025) | Month | Total Shares Repurchased (in thousands) | Weighted-Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 17 | $30.09 | | May 2025 | 6 | $35.75 | | June 2025 | 4 | $35.97 | | Total | 27 | $32.20 | - All repurchased shares consisted of common stock withheld to cover income taxes owed by participants in the company's share-based incentive plans702