Segment Information

12 Months Ended

Dec. 31, 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 LMI mortgage loans originated by third parties. Our direct-to-consumer mortgage offering, referred to as 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, with a focus on businesses owned by private equity sponsors. These loans are typically used for leveraged buyouts, mergers and acquisitions, debt refinancing, restructurings, and working capital. We also provide non-bank wholesale-funded managers with partial funding for their direct-lending activities, which is principally leveraged loans. Additionally, we 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. Financial results related to Ally Invest, our online brokerage operations, are currently included within Corporate and Other. Additionally, beginning in October 2019 with the acquisition of Health Credit Services, financial information related to Ally Lending, our point-of-sale financing business, is 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.



Year ended December 31, ($ 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	$	4,141	$	54	$	171	$	239	$	28		$	4,633
Other revenue	249		1,274		22		45		171			1,761
Total net revenue	4,390		1,328		193		284		199			6,394
Provision for loan losses	962		—		5		36		(5		)	998
Total noninterest expense	1,810		1,013		148		95		363			3,429
Income (loss) from continuing operations before income tax expense	$	1,618	$	315	$	40	$	153	$	(159	)	$	1,967
Total assets	$	113,863	$	8,547	$	16,279	$	5,787	$	36,168		$	180,644
2018
Net financing revenue and other interest income	$	3,769	$	54	$	179	$	204	$	184		$	4,390
Other revenue	269		981		7		38		119			1,414
Total net revenue	4,038		1,035		186		242		303			5,804
Provision for loan losses	920		—		1		12		(15		)	918
Total noninterest expense	1,750		955		140		86		333			3,264
Income (loss) from continuing operations before income tax expense	$	1,368	$	80	$	45	$	144	$	(15	)	$	1,622
Total assets	$	117,304	$	7,734	$	15,211	$	4,670	$	33,950		$	178,869
2017
Net financing revenue and other interest income	$	3,713	$	59	$	132	$	167	$	150		$	4,221
Other revenue	355		1,059		4		45		81			1,544
Total net revenue	4,068		1,118		136		212		231			5,765
Provision for loan losses	1,134		—		8		22		(16		)	1,148
Total noninterest expense	1,714		950		108		76		262			3,110
Income (loss) from continuing operations before income tax expense	$	1,220	$	168	$	20	$	114	$	(15	)	$	1,507
Total assets	$	114,089	$	7,464	$	11,708	$	3,979	$	29,908		$	167,148

(a)

Net financing revenue and other interest income after the provision for loan losses totaled $3.6 billion, $3.5 billion, and $3.1 billion for the years ended December 31, 2019, 2018, and 2017, respectively.