Segment Information

9 Months Ended

Sep. 30, 2019

Segment Information

Operating segments are defined as components of an enterprise that engage in business activity from which revenues are earned and expenses incurred for which discrete financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance.

We report our results of operations on a business-line basis through four operating segments: Automotive Finance operations, Insurance operations, Mortgage Finance operations, and Corporate Finance operations, with the remaining activity reported in Corporate and Other. The operating segments are determined based on the products and services offered, and reflect the manner in which financial information is currently evaluated by management. The following is a description of each of our reportable operating segments.

Automotive Finance operations — One of the largest full service automotive finance operations in the United States providing automotive financing services to consumers, automotive dealers, companies, and municipalities. Our automotive finance services include providing retail installment sales contracts, loans and operating leases, offering term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services.

Insurance operations — A complementary automotive-focused business offering both consumer finance protection and insurance products sold primarily through the automotive dealer channel, and commercial insurance products sold directly to dealers. As part of our focus on offering dealers a broad range of consumer financial and insurance products, we provide VSCs, VMCs, and GAP products. We also underwrite select commercial insurance coverages, which primarily insure dealers’ vehicle inventory.

Mortgage Finance operations — Consists of the management of held-for-investment and held-for sale consumer mortgage loan portfolios. Our held-for-investment loan portfolio includes bulk purchases of high-quality jumbo and low-to-moderate income (LMI) mortgage loans originated by third parties. Our direct-to-consumer mortgage offering, named Ally Home, consists of a variety of jumbo and conforming fixed- and adjustable-rate mortgage products with the assistance of a third-party fulfillment provider. Jumbo mortgage loans are generally held on our balance sheet and are accounted for as held-for-investment. Conforming mortgage loans are generally originated as held-for-sale and then sold to the fulfillment provider, and we retain no mortgage servicing rights associated with those loans that are sold.

Corporate Finance operations — Primarily provides senior secured leveraged cash flow and asset-based loans to mostly U.S.-based middle-market companies. Our primary focus is on businesses owned by private equity sponsors with loans typically used for leveraged buyouts, mergers and acquisitions, debt refinancing, restructurings, and working capital. We also offer a commercial real estate product to serve companies in the healthcare industry.

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 our corporate funds-transfer pricing (FTP) and treasury asset liability management (ALM) activities. Corporate and Other also includes certain equity investments, which primarily consist of FHLB and FRB stock, the management of our legacy mortgage portfolio, which primarily consists of loans originated prior to January 1, 2009, and reclassifications and eliminations between the reportable operating segments. Additionally, financial results related to Ally Invest are currently included within Corporate and Other.

We utilize an FTP methodology for the majority of our business operations. The FTP methodology assigns charge rates and credit rates to classes of assets and liabilities based on expected duration and the benchmark rate curve plus an assumed credit spread. Matching duration allocates interest income and interest expense to these reportable segments so their respective results are insulated from interest rate risk. This methodology is consistent with our ALM practices, which includes managing interest rate risk centrally at a corporate level. The net residual impact of the FTP methodology is included within the results of Corporate and Other.

The information presented in our reportable operating segments is based in part on internal allocations, which involve management judgment.

Financial information for our reportable operating segments is summarized as follows.



Three months ended September 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other			Consolidated (a)
2019
Net financing revenue (loss) and other interest income	$	1,078	$	14	$	39	$	60	$	(3	)	$	1,188
Other revenue	59		289		10		9		46			413
Total net revenue	1,137		303		49		69		43			1,601
Provision for loan losses	265		—		—		3		(5		)	263
Total noninterest expense	443		247		38		22		88			838
Income (loss) from continuing operations before income tax expense	$	429	$	56	$	11	$	44	$	(40	)	$	500
Total assets	$	115,096	$	8,478	$	16,583	$	5,275	$	36,053		$	181,485
2018
Net financing revenue and other interest income	$	956	$	14	$	44	$	50	$	43		$	1,107
Other revenue	80		282		2		14		20			398
Total net revenue	1,036		296		46		64		63			1,505
Provision for loan losses	229		—		2		8		(6		)	233
Total noninterest expense	424		241		36		20		86			807
Income (loss) from continuing operations before income tax expense	$	383	$	55	$	8	$	36	$	(17	)	$	465
Total assets	$	114,675	$	7,776	$	14,896	$	4,459	$	31,295		$	173,101


(a)	Net financing revenue and other interest income after the provision for loan losses totaled $925 million and $874 million for the three months ended September 30, 2019, and 2018, respectively.



Nine months ended September 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other			Consolidated (a)
2019
Net financing revenue and other interest income	$	3,080	$	41	$	135	$	175	$	46		$	3,477
Other revenue	188		935		16		30		105			1,274
Total net revenue	3,268		976		151		205		151			4,751
Provision for loan losses	707		—		2		29		(16		)	722
Total noninterest expense	1,344		775		111		73		246			2,549
Income (loss) from continuing operations before income tax expense	$	1,217	$	201	$	38	$	103	$	(79	)	$	1,480
Total assets	$	115,096	$	8,478	$	16,583	$	5,275	$	36,053		$	181,485
2018
Net financing revenue and other interest income	$	2,790	$	39	$	131	$	153	$	137		$	3,250
Other revenue	209		794		5		36		72			1,116
Total net revenue	2,999		833		136		189		209			4,366
Provision for loan losses	658		—		4		2		(12		)	652
Total noninterest expense	1,308		740		102		64		246			2,460
Income (loss) from continuing operations before income tax expense	$	1,033	$	93	$	30	$	123	$	(25	)	$	1,254
Total assets	$	114,675	$	7,776	$	14,896	$	4,459	$	31,295		$	173,101

(a)

Net financing revenue and other interest income after the provision for loan losses totaled $2.8 billion and $2.6 billion for the nine months ended September 30, 2019, and 2018, respectively.