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NYSE:ALLY

Ally Financial Profile

Ally Financial Inc. (Ally) operates as a financial-services company.

The company comprises the nation’s largest all-digital bank and an industry-leading automotive financing and insurance business. The company serves customers through a full range of online banking services (including deposits, mortgage lending, point-of-sale personal lending and credit-card products) and securities brokerage and investment advisory services. The company also includes a corporate finance business that offers capital for equity sponsors and middle-market companies. On December 31, 2023, the company committed to sell its point-of-sale financing business, Ally Lending.

Ally is registered as a BHC (bank holding company) under the BHC Act (Bank Holding Company Act of 1956, as amended) and an FHC (financial holding company) under the GLB Act (Gramm-Leach-Bliley Act of 1999, as amended).

The company’s primary business lines are Dealer Financial Services, which is composed of the company’s Automotive Finance and Insurance operations, Mortgage Finance, and Corporate Finance. Corporate and Other primarily consists of centralized corporate treasury activities, the management of the company’s legacy mortgage portfolio, the activity related to Ally Invest, Ally Lending, and Ally Credit Card, and reclassifications and eliminations between the reportable operating segments. Ally Bank’s assets and operating results are included within the company’s Automotive Finance, Mortgage Finance, and Corporate Finance segments, as well as Corporate and Other, based on its underlying business activities.

Within the company’s Automotive Finance and Insurance operations, the company is focused on strengthening its network of dealer relationships and pursuing digital distribution channels for the company’s products and services, including through the company’s operation of a direct-lending platform and the company’s work with dealers innovating in digital transactions—all while maintaining an appropriate level of risk appetite. Within the company’s other banking operations, including Mortgage Finance and Corporate Finance, the company seeks to expand its consumer and commercial banking products and services while providing a high level of customer service. The company continues to focus on delivering significant growth and retention in deposit customers and balances while optimizing the company’s cost of funds. At Ally Invest, the company seeks to augment its securities-brokerage and investment-advisory services to more comprehensively assist the company’s customers in managing their savings and growing their wealth. Ally Credit Card is the company’s scalable, digital-first credit card platform that features leading-edge technology, and a proprietary, analytics-based underwriting model. Ally Credit Card enhances the company’s ability to grow and deepen both new and existing customer relationships.

Business

Dealer Financial Services

Dealer Financial Services is composed of the company’s Automotive Finance and Insurance segments. The company’s primary customers are automotive dealers, including OEM-franchised dealers, non-OEM-franchised dealers with a national presence, and automotive retailers, such as Carvana, CarMax, and EchoPark. A dealer may sell or lease a vehicle for cash but, more typically, enters into a retail installment sales contract or operating lease with the customer and then sells the retail installment sales contract or the operating lease and the leased vehicle, as applicable, to Ally or another automotive-finance provider. The purchase by Ally or another provider is commonly described as indirect automotive lending to the customer.

The company’s Dealer Financial Services business is one of the largest full-service automotive finance operations in the country and offers a wide range of financial services and insurance products to automotive dealerships and their customers. The company’s business model encourages dealers to use its broad range of products through incentive programs like the company’s Ally Dealer Rewards program. The company’s automotive finance services include purchasing retail installment sales contracts and operating leases from dealers and automotive retailers, extending automotive loans directly to consumers, offering term loans to dealers, financing dealer floorplans and providing other lines of credit to dealers, supplying warehouse lines to automotive retailers, offering automotive-fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and supplying vehicle-remarketing services. The company also offers retail VSCs and commercial insurance primarily covering dealers’ vehicle inventories. The company is a leading provider of VSCs, GAP, and VMCs. The company’s dealer-centric business model, value-added products and services, full-spectrum financing, and business expertise proven over many credit cycles, make the company a premier automotive finance and insurance company ready to support and strengthen the company’s approximately 22,000 active dealer relationships. A dealer is considered to have an active relationship with the company if the company provided automotive financing, remarketing, or insurance services during the three months ended December 31, 2023.

Automotive Finance

The company’s Automotive Finance operations provide the U.S.-based automotive financing services to consumers, automotive dealers and retailers, other businesses, and municipalities. The company’s business model, value-added products and services, full-spectrum financing, and business expertise proven over many credit cycles make the company a premier automotive finance company. For consumers, the company provides financing for new and used vehicles. In addition, the company’s CSG provides automotive financing for small businesses and municipalities.

Through the company’s commercial automotive financing operations, the company funds purchases of new and used vehicles through wholesale floorplan financing. The company manages commercial account servicing on approximately 2,700 dealers that utilize the company’s floorplan inventory lending or other commercial loans. The extensive infrastructure, technology, and analytics of the company’s servicing operations, as well as the experience of the company’s servicing personnel, enhance its ability to manage the company’s loan losses and enable the company to deliver a favorable customer experience to both the company’s dealers and retail customers.

The company’s success as an automotive finance provider is driven by the consistent and broad range of products and services the company offers to dealers and automotive retailers. The company continues to identify and cultivate relationships with automotive retailers, including those with leading e-commerce platforms. The company also operates an online direct-lending platform for consumers seeking direct financing. These actions will enable the company to respond to the growing trends for a more streamlined and digital automotive financing process to serve both dealers and consumers. Furthermore, the company’s strong and expansive dealer relationships, comprehensive suite of products and services, full-spectrum financing, and depth of experience position the company to evolve with future shifts in automobile technologies, including electrification. The company has provided and continues to provide automobile financing for battery-electric and plug-in hybrid vehicles, including brands, such as Jeep, Tesla, Ford, and BMW. This positions the company to remain a leader in automotive financing as the majority of these vehicles will be sold through dealerships and automotive retailers with whom the company has an established relationship. Additionally, the company continues to partner and build relationships with automotive manufacturers who use a direct-to-consumer model.

The company has focused on developing dealer relationships beyond those relationships that primarily were developed through the company’s previous role as a captive finance company for GM and Stellantis. The company has established relationships with thousands of automotive dealers through the company’s customer-centric approach and specialized incentive programs designed to drive loyalty amongst dealers to the company’s products and services. Outside of GM and Stellantis, the company’s other OEM-franchised dealers include brands, such as Ford, Toyota, Hyundai, Kia, Nissan, Honda, and others, while the company’s non-OEM-franchised dealers and automotive retailers include used-vehicle-only retailers with a national presence, as well as online-only automotive retailers, such as Carvana, CarMax, and EchoPark.

The company continues to focus on the consumer used-vehicle segment, primarily through franchised dealers and automotive retailers. This has positioned the company as an industry leader in used-vehicle financing.

During 2023, the company continued its focus on meeting the needs of both dealers and consumer customers through the expansion of the company’s pass through programs. The pass through program creates financing opportunities for customers in the retail automotive channel, whereby the company is able to acquire retail installment sales contracts through an originate-to-sell platform and execute whole-loan sales with third-party investors.

For consumers, the company provides automotive loan financing and leasing for approximately 4.1 million new and used vehicle contracts. Retail financing for the purchase of vehicles by individual consumers generally takes the form of installment sales financing.

The company’s consumer automotive financing operations generate revenue primarily through finance charges on retail installment sales contracts and rental payments on operating lease contracts. For operating leases, when the contract is originated, the company estimates the residual value of the leased vehicle at lease termination.

The company’s commercial automotive financing operations primarily fund inventory purchases of new and used vehicles by dealers, commonly referred to as wholesale floorplan financing. This represents the largest portion of the company’s commercial automotive financing business. Wholesale floorplan loans are secured by vehicles financed (and all other vehicle inventory), which provide strong collateral protection in the event of dealership default. Other commercial automotive lending products consist of automotive dealer revolving lines of credit, term loans, including those to finance dealership land and buildings, and dealer fleet financing. The company also provides comprehensive automotive remarketing services, including the use of SmartAuction, the company’s online auction platform, which efficiently supports dealer-to-dealer and other commercial wholesale vehicle transactions. SmartAuction provides diversified fee-based revenue and serves as a means of deepening relationships with the company’s dealership customers. In 2023, Ally and other parties, including dealers, fleet rental companies, and financial institutions, utilized SmartAuction to sell approximately 505,000 vehicles to dealers and other commercial customers. SmartAuction served as the remarketing channel for 18% of the company’s off-lease vehicles.

Insurance

The company’s Insurance operations offer both consumer finance protection and insurance products sold primarily through the automotive dealer channel, and commercial insurance products sold directly to dealers. The company serves approximately 2.5 million consumers nationwide across F&I and P&C products. In addition, the company offers F&I products in Canada, where the company serves more than 400 thousand consumers and are the preferred VSC and other protection plan provider for GM Canada and VSC provider for Subaru Canada. Additionally, during the third quarter of 2022, the company entered into a long-term commitment to continue as the preferred VSC and other protection plan provider for GM Canada.

As part of the company’s focus on offering dealers a broad range of consumer F&I products, the company offers VSCs, VMCs, and GAP products. Ally Premier Protection is the company’s flagship VSC offering, which provides coverage for new and used vehicles of virtually all makes and models. The company also underwrites ClearGuard on the SmartAuction platform, which is a protection product designed to minimize the risk to dealers from arbitration claims for eligible vehicles sold at auction. Additionally, the company underwrites selected commercial insurance coverages, which primarily insure dealers’ wholesale vehicle inventory, and offer additional products to protect a dealer’s business, including property and liability coverage that is underwritten by a third-party carrier with a portion of the insurance risk assumed through a quota share agreement. On a smaller scale, the company also periodically assumes other insurance risks through quota share arrangements and perform services as an underwriting carrier for an insurance program managed by a third-party where the company cedes the majority of such business to external reinsurance markets.

From a dealer perspective, Ally provides significant value and expertise, which creates high retention rates and strong relationships. In addition to the company’s product offerings, the company provides consultative services and training to assist dealers in optimizing F&I results while achieving high levels of customer satisfaction and regulatory compliance. The company also advises dealers regarding necessary liability and physical damage coverages.

The company’s F&I products are primarily distributed indirectly through the automotive dealer network. The company has established approximately 1,700 F&I dealer relationships nationwide and 600 dealer relationships in Canada, with a focus on growing dealer relationships in the future. The company’s VSCs for retail customers offer owners and lessees mechanical repair protection and roadside assistance for new and used vehicles beyond the manufacturer’s new vehicle warranty. The company also offers GAP products, which cover certain amounts owed by a customer beyond their covered vehicle’s value in the event the vehicle is damaged or stolen and declared a total loss. The company continues to evolve its product suite and digital capabilities to position the company’s business for future opportunities through growing third-party relationships and sales through the company’s online direct-lending platform.

The company has approximately 3,100 dealer relationships within its P&C business to whom the company offers a variety of commercial products and levels of coverage. Vehicle inventory insurance for dealers provides physical damage protection for dealers’ floorplan vehicles. Dealers who receive wholesale financing from the company is eligible for insurance incentives, such as automatic eligibility for the company’s preferred insurance programs.

Mortgage Finance

The company’s Mortgage Finance operations consist of the management of held-for-investment and held-for-sale consumer mortgage loan portfolios. The company’s held-for-investment portfolio includes the company’s direct-to-consumer Ally Home mortgage offering, and bulk purchases of high-quality jumbo and LMI mortgage loans originated by third parties.

Through the company’s direct-to-consumer channel, the company offers a variety of competitively priced jumbo and conforming fixed- and adjustable-rate mortgage products through a third-party. Under the company’s arrangement, its direct-to-consumer conforming mortgages are originated as held-for-sale and sold, while jumbo and LMI mortgages are originated as held-for-investment and subserviced by a third party. Loans originated in the direct-to-consumer channel are sourced by existing Ally customer marketing, prospect marketing on third-party websites, and email or direct mail campaigns. In April 2019, the company announced a strategic partnership with BMC, which delivers an enhanced end-to-end digital mortgage experience for the company’s customers through its direct-to-consumer channel. Through this partnership, BMC conducts the sales, processing, underwriting, and closing for Ally’s digital mortgage offerings. During 2018, the company made a strategic equity investment in the parent of BMC (BMC Holdco) that was subsequently increased in 2019 and 2020.

Through the bulk loan channel, the company purchases loans from several qualified sellers, including direct originators and large aggregators who have the financial capacity to support strong representations and warranties, and the industry knowledge and experience to originate high-quality assets. Bulk purchases are made on a servicing-released basis, allowing the company to directly oversee servicing activities and manage refinancing through the company’s direct-to-consumer channel. The company’s mortgage loan purchases are held-for-investment.

The combination of the company’s direct-to-consumer strategy and bulk portfolio purchase program provides the capacity to expand revenue sources and further grow and diversify the company’s finance receivable portfolio with an attractive asset class while also deepening relationships with existing Ally customers.

Corporate Finance

The company’s Corporate Finance operations primarily offer senior-secured loans to private equity sponsor-owned U.S.-based middle-market companies and to facilities managed by well-established asset managers that mostly provide leveraged loans.

The company’s Sponsor Finance business focuses on companies owned by private-equity sponsors with loans typically used for leveraged buyouts, refinancing and recapitalizations, mergers and acquisitions, growth, turnarounds, and debtor-in-possession financings. Additionally, the company’s Lender Finance business provides asset managers with facilities to partially fund their direct-lending activities. The company also provides a commercial real estate product, focused on lending to skilled nursing facilities, senior housing, and medical office buildings. Sponsor Finance loan facilities typically include both a revolver and term loan component. The company also selectively arranges larger transactions that the company may retain on-balance sheet or syndicate to other lenders. By syndicating loans to other lenders, the company is able to provide financing commitments in excess of the company’s target hold levels to itscustomers and generate loan syndication fee income while reducing the company’s risk exposure to individual borrowers. All the company’s loans are floating-rate facilities with maturities typically ranging from two to seven years. In certain instances, the company may be offered the opportunity to make small equity investments in the company’s borrowers, which provides an additional revenue opportunity for the company’s business. The portfolio is well diversified across multiple industries, including financials, services, manufacturing distribution, and other specialty sectors. These specialty sectors include technology/venture finance, and defense and aerospace.

Corporate and Other

Corporate and Other primarily consists of centralized corporate treasury activities, such as management of the cash and corporate investment securities and loan portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, original issue discount, and the residual impacts of the company’s corporate FTP and treasury ALM activities. Corporate and Other also includes activity related to certain equity investments, which primarily consist of FHLB and FRB stock, as well as other equity investments through Ally Ventures, the company’s strategic investment business. Additionally, Corporate and Other includes the management of the company’s legacy mortgage portfolio, which primarily consists of loans originated prior to January 1, 2009, CRA loans and investments, and reclassifications and eliminations between the reportable operating segments.

Ally Invest

Corporate and Other includes the results of Ally Invest, the company’s digital brokerage and advisory offering, which enables the company to complement its competitive deposit products with low-cost investing. The digital advisory business aligns with the company’s strategy to create a premier digital financial services company and provides additional sources of fee income through asset management and certain other fees, with minimal balance sheet utilization. This business also provides an additional source of low-cost deposits through arrangements with Ally Invest’s clearing broker.

Ally Invest offers a broad array of products through a fully integrated digital consumer platform centered around self-directed products and advisory services. Ally Invest’s suite of commission-free and low-cost investing options serve both active and passive investors with diverse and evolving financial objectives through a transparent online process. The company’s digital platform and broad product offerings are enhanced by outstanding client-focused and user-friendly customer service that is generally accessible twenty-four hours a day, seven days a week, via the phone, web or email—consistent with the Ally brand.

Ally Invest provides clients with self-directed trading services for a variety of securities, including stocks, options, ETFs, mutual funds, and fixed-income products through Ally Invest Securities. Ally Invest Securities also offers margin lending, which allows customers to borrow money by using securities and cash held in their accounts as collateral.

Ally Invest also provides advisory services to clients through web-based solutions, informational resources, and virtual interaction through Ally Invest Advisors, an SEC-registered investment advisor. Ally Invest Advisors provides clients the opportunity to obtain professional portfolio management services in return for a fee based upon the client’s assets under management. In addition to customized advice from personal advisors, the company offers cash enhanced portfolios that incur no management fee, and a number of core robo portfolios, which hold ETFs diversified across asset class, industry sector, and geography and which are customized for clients based on risk tolerance, investment time horizon, and wealth ratio.

Ally Lending

Ally Lending is also included within Corporate and Other and primarily serves home improvement and medical service providers by enabling promotional and fixed rate installment-loan products through a digital application process at point-of-sale. On December 31, 2023, the company committed to sell its point-of-sale financing business, Ally Lending.

Ally Credit Card

Financial information related to the company’s credit card business, Ally Credit Card, is included within Corporate and Other. Ally Credit Card is the company’s scalable, digital-first credit card platform that features leading-edge technology, and a proprietary, analytics-based underwriting model. The company believe Ally Credit Card enhances the company’s ability to grow and deepen both new and existing customer relationships. As of December 31, 2023, the company’s credit card business had approximately 1.2 million customers.

Deposits

The company is focused on growing and retaining a stable deposit base and deepening relationships with the company’s 3.0 million primary deposit customers by leveraging the company’s compelling brand and strong value proposition. Ally Bank is a digital direct bank with no branch network that obtains retail deposits directly from customers. Ally Bank is the largest online only bank as measured by retail deposit balances.

The company’s deposit products and services are designed to develop long-term customer relationships and capitalize on the shift in consumer preference for direct banking. The company’s deposits franchise is key to growing and building momentum across the company’s suite of digital offerings at Ally Home, Ally Invest, and Ally Credit Card, consistent with the company’s strategic objective to grow multi-product customers. These products and services appeal to a broad group of customers, many of whom appreciate a streamlined digital experience coupled with the company’s strong value proposition. Ally Bank offers a full spectrum of retail deposit products, including savings accounts, money-market demand accounts, CDs, interest-bearing spending accounts, trust accounts, and IRAs. The company’s deposit services include Zelle person-to-person payment services, eCheck remote deposit capture, and mobile banking. The company’s Smart Savings Tools further demonstrates the ability to deliver innovative digital tools on top of traditional financial products to add incremental value to customers, while also driving increased engagement and loyalty. Nearly 800,000 customers have adopted the company’s Smart Savings Tools.

The company is well-positioned to continue to benefit from the consumer-driven shift from branch banking to direct banking as demonstrated by the growth the company has experienced since 2010. The company had 3.0 million deposit customers and 6.0 million retail bank accounts as of December 31, 2023. The company’s customer base spans across diverse demographic segmentations and socioeconomic bands. The company’s direct bank business model resonates particularly well with the millennial generation, which consistently makes up the largest percentage of the company’s new customers.

The company is focused on growing, deepening, and further leveraging the customer relationships and brand loyalty that exist with Ally Bank as a catalyst for future loan and deposit growth, as well as revenue opportunities that arise from introducing Ally Bank deposit customers to the company’s other suite of product offerings, including Ally Invest.

Strategy

The company’s strategy and approach to extending credit, as well as its management of credit risk, are critical elements of the company’s business.

Investment Securities

As of December 31, 2023, the company’s investment portfolio included debt securities, such as the U.S. treasury and federal agencies; the U.S. states and political subdivisions; foreign government securities; agency mortgage-backed residential securities; mortgage-backed residential securities; agency mortgage-backed commercial securities; asset-backed securities; and corporate debt securities.

Regulation and Supervision

The company is subject to direct supervision and periodic examinations by various governmental agencies and industry SROs that are charged with overseeing the kinds of business activities in which the company engages, including the FRB, the UDFI, the FDIC, the CFPB, the SEC, FINRA, and a number of state regulatory and licensing authorities, such as the NYDFS.

Ally and IB Finance, a Delaware limited liability company, are BHCs under the BHC Act, and Ally has elected to be an FHC under the GLB Act. IB Finance is a direct subsidiary of Ally and the direct parent of Ally Bank, which is a commercial bank that is organized under the laws of the state of Utah and whose deposits are insured by the FDIC under the FDI Act. As BHCs, Ally and IB Finance are subject to regulation, supervision, and examination by the FRB. Ally Bank is a member of the Federal Reserve System and is subject to regulation, supervision, and examination by the FRB, the UDFI, the FDIC, and the CFPB.

Ally is subject to enhanced prudential standards that have been established by the FRB under the Dodd-Frank Act, as amended by the EGRRCP Act and as applied to Category IV firms under rules of the U.S. banking agencies that tailor how the enhanced prudential standards apply across large banking organizations (the Tailoring Rules).

Sections 23A and 23B of the Federal Reserve Act and the FRB’s Regulation W prevent Ally and its nonbank subsidiaries from taking undue advantage of the benefits afforded to Ally Bank as a depository institution, including its access to federal deposit insurance and the FRB’s discount window.

The UDFI and the FDIC have similarly expansive authorities and powers over Ally Bank and its subsidiaries.

Ally Bank’s deposits are insured by the FDIC in the standard insurance amounts per depositor for each account ownership category as prescribed by the FDI Act.

Ally Invest Securities LLC (Ally Invest Securities) is registered as a securities broker-dealer with the SEC and in all 50 states, the District of Columbia, and Puerto Rico, is registered with the Municipal Securities Rulemaking Board as a municipal securities broker-dealer, and is a member of FINRA and SIPC. As a result, Ally Invest Securities and its personnel are subject to extensive requirements under the Exchange Act, SEC regulations, SRO rules, and state laws, which collectively cover all aspects of the firm’s securities activities—including sales and trading practices, capital adequacy, recordkeeping, privacy, anti-money laundering, financial and other reporting, supervision, misuse of material nonpublic information, conduct of its business in accordance with just and equitable principles of trade, and personnel qualifications.

Ally Invest Advisors Inc. (Ally Invest Advisors) is registered as an investment adviser with the SEC. As a result, the firm is subject to a host of requirements governing investment advisers and their personnel under the Investment Advisers Act of 1940, as amended, and related rules and regulations, including certain fiduciary and other obligations with respect to its relationships with its investment advisory clients.

Some of the other more significant laws to which the company is subject include the GLB Act and related regulations; the CFPB; Section 13 of the BHC Act and its implementing regulations (commonly referred to as the Volcker Rule); the Equal Credit Opportunity Act, the Fair Housing Act, and similar fair-lending laws (collectively, Fair Lending Laws); the Fair Credit Reporting Act; the Truth in Lending Act (TILA) and Regulation Z, which implements TILA; the Bank Secrecy Act, as amended by the USA PATRIOT Act; the CRA; and the Adjustable Interest Rate Act (the LIBOR Act).

History

Ally Financial Inc. was founded in 1919. The company was incorporated in 1997.

Country
Industry:
Finance lessors
Founded:
1919
IPO Date:
01/28/2014
ISIN Number:
I_US02005N1000

Contact Details

Address:
Ally Detroit Center, Floor 10, 500 Woodward Avenue, Detroit, Michigan, 48226, United States
Phone Number
866 710 4623

Key Executives

CEO:
Timmerman, Douglas
CFO
Hutchinson, Russell E
COO:
Data Unavailable