QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | Smaller reporting company | |||||
Emerging growth company | ||||||||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ |
Page | ||
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
Term | Definition | |
ABS | Asset-backed securities | |
ALCO | Asset-Liability Committee | |
ALM | Asset Liability Management | |
ASC | Accounting Standards Codification | |
ASU | Accounting Standards Update | |
BHC | Bank holding company | |
Board | Ally Board of Directors | |
CARES Act | Coronavirus Aid, Relief, and Economic Security Act | |
CCAR | Comprehensive Capital Analysis and Review | |
CD | Certificate of deposit | |
CECL | Accounting Standards Update 2016-13 (and related Accounting Standards Updates), or Current expected credit loss | |
Chrysler | Fiat Chrysler Automobiles US LLC | |
COVID-19 | Coronavirus disease 2019 | |
CRA | Community Reinvestment Act | |
CSG | Commercial Services Group | |
CVA | Credit valuation adjustment | |
DTA | Deferred tax asset | |
EAD | Exposure at default | |
EGRRCP Act | Economic Growth, Regulatory Relief, and Consumer Protection Act | |
ERMC | Enterprise Risk Management Committee | |
F&I | Finance and insurance | |
FASB | Financial Accounting Standards Board | |
FDIC | Federal Deposit Insurance Corporation | |
FHC | Financial holding company | |
FHLB | Federal Home Loan Bank | |
FRB | Federal Reserve Bank, or Board of Governors of the Federal Reserve System, as the context requires | |
FTP | Funds-transfer pricing | |
GAP | Guaranteed asset protection | |
GM | General Motors Company | |
IB Finance | IB Finance Holding Company, LLC | |
IRA | Individual retirement account | |
LGD | Loss given default | |
LIBOR | London Interbank Offered Rate | |
LIHTC | Low-income housing tax credit | |
LMI | Low-to-moderate income | |
LTV | Loan-to-value | |
MBS | Mortgage-backed securities | |
MD&A | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
MSA | Mortgage servicing asset | |
OTC | Over-the-counter | |
P&C | Property and casualty | |
PD | Probability of default | |
PPP | Paycheck Protection Program | |
RC | Risk Committee of the Ally Board of Directors |
Term | Definition | |
ROU | Right-of-use | |
RV | Recreational vehicle | |
RWA | Risk-weighted asset | |
SBA | Small Business Administration | |
SEC | U.S. Securities and Exchange Commission | |
Series 2 TRUPS | 8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust | |
SPE | Special-purpose entity | |
TDR | Troubled debt restructuring | |
UPB | Unpaid principal balance | |
U.S. Basel III | The rules implementing the 2010 Basel III capital framework in the United States | |
U.S. GAAP | Accounting Principles Generally Accepted in the United States of America | |
VIE | Variable interest entity | |
VMC | Vehicle maintenance contract | |
VSC | Vehicle service contract | |
WAC | Weighted-average coupon |
PART I — FINANCIAL INFORMATION |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Financing revenue and other interest income | ||||||||||||||||
Interest and fees on finance receivables and loans | $ | $ | $ | $ | ||||||||||||
Interest on loans held-for-sale | ||||||||||||||||
Interest and dividends on investment securities and other earning assets | ||||||||||||||||
Interest on cash and cash equivalents | ||||||||||||||||
Operating leases | ||||||||||||||||
Total financing revenue and other interest income | ||||||||||||||||
Interest expense | ||||||||||||||||
Interest on deposits | ||||||||||||||||
Interest on short-term borrowings | ||||||||||||||||
Interest on long-term debt | ||||||||||||||||
Total interest expense | ||||||||||||||||
Net depreciation expense on operating lease assets | ||||||||||||||||
Net financing revenue and other interest income | ||||||||||||||||
Other revenue | ||||||||||||||||
Insurance premiums and service revenue earned | ||||||||||||||||
Gain on mortgage and automotive loans, net | ||||||||||||||||
Other gain on investments, net | ||||||||||||||||
Other income, net of losses | ||||||||||||||||
Total other revenue | ||||||||||||||||
Total net revenue | ||||||||||||||||
Provision for credit losses | ||||||||||||||||
Noninterest expense | ||||||||||||||||
Compensation and benefits expense | ||||||||||||||||
Insurance losses and loss adjustment expenses | ||||||||||||||||
Goodwill impairment | ||||||||||||||||
Other operating expenses | ||||||||||||||||
Total noninterest expense | ||||||||||||||||
Income (loss) from continuing operations before income tax expense (benefit) | ( | ) | ||||||||||||||
Income tax expense (benefit) from continuing operations | ( | ) | ||||||||||||||
Net income (loss) from continuing operations | ( | ) | ||||||||||||||
Loss from discontinued operations, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net income (loss) | ( | ) | ||||||||||||||
Other comprehensive income, net of tax | ||||||||||||||||
Comprehensive income | $ | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
(in dollars) (a) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Basic earnings per common share | ||||||||||||||||
Net income (loss) from continuing operations | $ | $ | $ | ( | ) | $ | ||||||||||
Loss from discontinued operations, net of tax | ( | ) | ||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
Diluted earnings per common share (b) | ||||||||||||||||
Net income (loss) from continuing operations | $ | $ | $ | ( | ) | $ | ||||||||||
Loss from discontinued operations, net of tax | ( | ) | ||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ | ||||||||||
Cash dividends declared per common share | $ | $ | $ | $ |
(a) | Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers. |
(b) | Due to the antidilutive effect of the net loss from continuing operations for the six months ended June 30, 2020, basic weighted-average common shares outstanding was used to calculate basic and diluted earnings per share. |
($ in millions, except share data) | June 30, 2020 | December 31, 2019 | ||||||
Assets | ||||||||
Cash and cash equivalents | ||||||||
Noninterest-bearing | $ | $ | ||||||
Interest-bearing | ||||||||
Total cash and cash equivalents | ||||||||
Equity securities | ||||||||
Available-for-sale securities (refer to Note 7 for discussion of investment securities pledged as collateral) | ||||||||
Held-to-maturity securities (fair value of $1,476 and $1,600) | ||||||||
Loans held-for-sale, net | ||||||||
Finance receivables and loans, net | ||||||||
Finance receivables and loans, net of unearned income | ||||||||
Allowance for loan losses | ( | ) | ( | ) | ||||
Total finance receivables and loans, net | ||||||||
Investment in operating leases, net | ||||||||
Premiums receivable and other insurance assets | ||||||||
Other assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities | ||||||||
Deposit liabilities | ||||||||
Noninterest-bearing | $ | $ | ||||||
Interest-bearing | ||||||||
Total deposit liabilities | ||||||||
Short-term borrowings | ||||||||
Long-term debt | ||||||||
Interest payable | ||||||||
Unearned insurance premiums and service revenue | ||||||||
Accrued expenses and other liabilities | ||||||||
Total liabilities | ||||||||
Contingencies (refer to Note 23) | ||||||||
Equity | ||||||||
Common stock and paid-in capital ($0.01 par value, shares authorized 1,100,000,000; issued 500,353,339 and 496,957,805; and outstanding 373,837,123 and 374,331,998) | ||||||||
Accumulated deficit | ( | ) | ( | ) | ||||
Accumulated other comprehensive income | ||||||||
Treasury stock, at cost (126,516,216 and 122,625,807 shares) | ( | ) | ( | ) | ||||
Total equity | ||||||||
Total liabilities and equity | $ | $ |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Assets | ||||||||
Finance receivables and loans, net | ||||||||
Finance receivables and loans, net of unearned income | $ | $ | ||||||
Allowance for loan losses | ( | ) | ( | ) | ||||
Total finance receivables and loans, net | ||||||||
Other assets | ||||||||
Total assets | $ | $ | ||||||
Liabilities | ||||||||
Long-term debt | $ | $ | ||||||
Accrued expenses and other liabilities | ||||||||
Total liabilities | $ | $ |
Three months ended June 30, | ||||||||||||||||||||
($ in millions) | Common stock and paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Treasury stock | Total equity | |||||||||||||||
Balance at April 1, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||
Net income | ||||||||||||||||||||
Share-based compensation | ||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||
Common stock repurchases | ( | ) | ( | ) | ||||||||||||||||
Common stock dividends ($0.17 per share) | ( | ) | ( | ) | ||||||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||
Balance at April 1, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||
Net income | ||||||||||||||||||||
Share-based compensation | ||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||
Common stock dividends ($0.19 per share) | ( | ) | ( | ) | ||||||||||||||||
Balance at June 30, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ |
Six months ended June 30, | ||||||||||||||||||||
($ in millions) | Common stock and paid-in capital | Accumulated deficit | Accumulated other comprehensive (loss) income | Treasury stock | Total equity | |||||||||||||||
Balance at December 31, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | |||||||||
Cumulative effect of changes in accounting principles, net of tax | ||||||||||||||||||||
Adoption of Accounting Standards Update 2017-08 | ( | ) | ( | ) | ||||||||||||||||
Balance at January 1, 2019 | ( | ) | ( | ) | ( | ) | ||||||||||||||
Net income | ||||||||||||||||||||
Share-based compensation | ||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||
Common stock repurchases | ( | ) | ( | ) | ||||||||||||||||
Common stock dividends ($0.34 per share) | ( | ) | ( | ) | ||||||||||||||||
Balance at June 30, 2019 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||
Balance at December 31, 2019 | $ | $ | ( | ) | $ | $ | ( | ) | $ | |||||||||||
Cumulative effect of changes in accounting principles, net of tax (a) | ||||||||||||||||||||
Adoption of Accounting Standards Update 2016-13 | ( | ) | ( | ) | ||||||||||||||||
Balance at January 1, 2020 | ( | ) | ( | ) | ||||||||||||||||
Net loss | ( | ) | ( | ) | ||||||||||||||||
Share-based compensation | ||||||||||||||||||||
Other comprehensive income | ||||||||||||||||||||
Common stock repurchases | ( | ) | ( | ) | ||||||||||||||||
Common stock dividends ($0.38 per share) | ( | ) | ( | ) | ||||||||||||||||
Balance at June 30, 2020 | $ | $ | ( | ) | $ | $ | ( | ) | $ |
(a) | Refer to the section titled Recently Adopted Accounting Standards in Note 1 for additional information. |
Six months ended June 30, ($ in millions) | 2020 | 2019 | |||||
Operating activities | |||||||
Net (loss) income | $ | ( | ) | $ | |||
Reconciliation of net (loss) income to net cash provided by operating activities | |||||||
Depreciation and amortization | |||||||
Goodwill impairment | |||||||
Provision for credit losses | |||||||
Gain on mortgage and automotive loans, net | ( | ) | ( | ) | |||
Other gain on investments, net | ( | ) | ( | ) | |||
Originations and purchases of loans held-for-sale | ( | ) | ( | ) | |||
Proceeds from sales and repayments of loans held-for-sale | |||||||
Net change in | |||||||
Deferred income taxes | |||||||
Interest payable | |||||||
Other assets | ( | ) | ( | ) | |||
Other liabilities | ( | ) | ( | ) | |||
Other, net | ( | ) | |||||
Net cash provided by operating activities | |||||||
Investing activities | |||||||
Purchases of equity securities | ( | ) | ( | ) | |||
Proceeds from sales of equity securities | |||||||
Purchases of available-for-sale securities | ( | ) | ( | ) | |||
Proceeds from sales of available-for-sale securities | |||||||
Proceeds from repayments of available-for-sale securities | |||||||
Purchases of held-to-maturity securities | ( | ) | |||||
Proceeds from repayments of held-to-maturity securities | |||||||
Purchases of finance receivables and loans held-for-investment | ( | ) | ( | ) | |||
Proceeds from sales of finance receivables and loans initially held-for-investment | |||||||
Originations and repayments of finance receivables and loans held-for-investment and other, net | |||||||
Purchases of operating lease assets | ( | ) | ( | ) | |||
Disposals of operating lease assets | |||||||
Net change in nonmarketable equity investments | |||||||
Other, net | ( | ) | ( | ) | |||
Net cash provided by (used in) investing activities | ( | ) |
Six months ended June 30, ($ in millions) | 2020 | 2019 | ||||||
Financing activities | ||||||||
Net change in short-term borrowings | ( | ) | ( | ) | ||||
Net increase in deposits | ||||||||
Proceeds from issuance of long-term debt | ||||||||
Repayments of long-term debt | ( | ) | ( | ) | ||||
Repurchase of common stock | ( | ) | ( | ) | ||||
Dividends paid | ( | ) | ( | ) | ||||
Net cash provided by (used in) financing activities | ( | ) | ||||||
Effect of exchange-rate changes on cash and cash equivalents and restricted cash | ( | ) | ||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | ( | ) | ||||||
Cash and cash equivalents and restricted cash at beginning of year | ||||||||
Cash and cash equivalents and restricted cash at June 30, | $ | $ | ||||||
Supplemental disclosures | ||||||||
Cash paid for | ||||||||
Interest | $ | $ | ||||||
Income taxes | ||||||||
Noncash items | ||||||||
Loans held-for-sale transferred to finance receivables and loans held-for-investment | ||||||||
Finance receivables and loans held-for-investment transferred to loans held-for-sale | ||||||||
In-kind distribution from equity-method investee | ||||||||
Equity consideration received in exchange for restructured loans |
June 30, ($ in millions) | 2020 | 2019 | ||||||
Cash and cash equivalents on the Condensed Consolidated Balance Sheet | $ | $ | ||||||
Restricted cash included in other assets on the Condensed Consolidated Balance Sheet (a) | ||||||||
Total cash and cash equivalents and restricted cash in the Condensed Consolidated Statement of Cash Flows | $ | $ |
(a) | Restricted cash balances relate primarily to Ally securitization arrangements. Refer to Note 11 for additional details describing the nature of restricted cash balances. |
• | Consumer automotive — Consists of retail automotive financing for new and used vehicles. |
• | Consumer mortgage — Consists of the following classes of finance receivables. |
• | Mortgage Finance — Consists of consumer first-lien mortgages from our ongoing mortgage operations including bulk acquisitions, direct-to-consumer originations, and refinancing of high-quality jumbo mortgages and LMI mortgages. |
• | Mortgage — Legacy — Consists of consumer mortgage assets originated prior to January 1, 2009, including first-lien mortgages, subordinate-lien mortgages, and home equity mortgages. |
• | Consumer other — Consists of unsecured consumer lending from point-of-sale financing. |
• | Commercial — Consists of the following classes of finance receivables. |
• | Commercial and Industrial |
• | Automotive — Consists of financing operations to fund dealer purchases of new and used vehicles through wholesale floorplan financing. Additional commercial offerings include automotive dealer term loans, revolving lines, and dealer fleet financing. |
• | Other — Consists primarily of senior secured leveraged cash flow and asset-based loans related to our Corporate-Finance business. |
• | Commercial Real Estate — Consists of term loans primarily secured by dealership land and buildings, and other commercial lending secured by real estate. |
Three months ended June 30, ($ in millions) | Automotive Finance operations | Insurance operations | Mortgage Finance operations | Corporate Finance operations | Corporate and Other | Consolidated | ||||||||||||||||||
2020 | ||||||||||||||||||||||||
Revenue from contracts with customers | ||||||||||||||||||||||||
Noninsurance contracts (a) (b) (c) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Remarketing fee income | ||||||||||||||||||||||||
Brokerage commissions and other revenue | ||||||||||||||||||||||||
Brokered/agent commissions | ||||||||||||||||||||||||
Deposit account and other banking fees | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Total revenue from contracts with customers | ||||||||||||||||||||||||
All other revenue | ||||||||||||||||||||||||
Total other revenue (d) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
2019 | ||||||||||||||||||||||||
Revenue from contracts with customers | ||||||||||||||||||||||||
Noninsurance contracts (a) (b) (c) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Remarketing fee income | ||||||||||||||||||||||||
Brokerage commissions and other revenue | ||||||||||||||||||||||||
Brokered/agent commissions | ||||||||||||||||||||||||
Deposit account and other banking fees | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Total revenue from contracts with customers | ||||||||||||||||||||||||
All other revenue | ||||||||||||||||||||||||
Total other revenue (d) | $ | $ | $ | $ | $ | $ |
(a) | We had opening balances of $ |
(b) | At June 30, 2020, we had unearned revenue of $ |
(c) | We had deferred insurance assets of $ |
(d) | Represents a component of total net revenue. Refer to Note 22 for further information on our reportable operating segments. |
Six months ended June 30, ($ in millions) | Automotive Finance operations | Insurance operations | Mortgage Finance operations | Corporate Finance operations | Corporate and Other | Consolidated | ||||||||||||||||||
2020 | ||||||||||||||||||||||||
Revenue from contracts with customers | ||||||||||||||||||||||||
Noninsurance contracts (a) (b) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Remarketing fee income | ||||||||||||||||||||||||
Brokerage commissions and other revenue | ||||||||||||||||||||||||
Brokered/agent commissions | ||||||||||||||||||||||||
Deposit account and other banking fees | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Total revenue from contracts with customers | ||||||||||||||||||||||||
All other revenue | ||||||||||||||||||||||||
Total other revenue (c) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
2019 | ||||||||||||||||||||||||
Revenue from contracts with customers | ||||||||||||||||||||||||
Noninsurance contracts (a) (b) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Remarketing fee income | ||||||||||||||||||||||||
Brokerage commissions and other revenue | ||||||||||||||||||||||||
Brokered/agent commissions | ||||||||||||||||||||||||
Deposit account and other banking fees | ||||||||||||||||||||||||
Other | ||||||||||||||||||||||||
Total revenue from contracts with customers | ||||||||||||||||||||||||
All other revenue | ||||||||||||||||||||||||
Total other revenue (c) | $ | $ | $ | $ | $ | $ |
(a) | We had opening balances of $ |
(b) | We had deferred insurance assets of $ |
(c) | Represents a component of total net revenue. Refer to Note 22 for further information on our reportable operating segments. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Income from equity-method investments | $ | $ | $ | $ | ||||||||||||
Late charges and other administrative fees | ||||||||||||||||
Remarketing fees | ||||||||||||||||
Servicing fees | ||||||||||||||||
Other, net | ||||||||||||||||
Total other income, net of losses | $ | $ | $ | $ |
($ in millions) | 2020 | 2019 | ||||||
Total gross reserves for insurance losses and loss adjustment expenses at January 1, | $ | $ | ||||||
Less: Reinsurance recoverable | ||||||||
Net reserves for insurance losses and loss adjustment expenses at January 1, | ||||||||
Net insurance losses and loss adjustment expenses incurred related to: | ||||||||
Current year | ||||||||
Prior years (a) | ||||||||
Total net insurance losses and loss adjustment expenses incurred | ||||||||
Net insurance losses and loss adjustment expenses paid or payable related to: | ||||||||
Current year | ( | ) | ( | ) | ||||
Prior years | ( | ) | ( | ) | ||||
Total net insurance losses and loss adjustment expenses paid or payable | ( | ) | ( | ) | ||||
Net reserves for insurance losses and loss adjustment expenses at June 30, | ||||||||
Plus: Reinsurance recoverable | ||||||||
Total gross reserves for insurance losses and loss adjustment expenses at June 30, | $ | $ |
(a) | There have been no material adverse changes to the reserve for prior years. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Insurance commissions | $ | $ | $ | $ | |||||||||||
Technology and communications | |||||||||||||||
Lease and loan administration | |||||||||||||||
Advertising and marketing | |||||||||||||||
Property and equipment depreciation | |||||||||||||||
Professional services | |||||||||||||||
Regulatory and licensing fees | |||||||||||||||
Vehicle remarketing and repossession | |||||||||||||||
Occupancy | |||||||||||||||
Non-income taxes | |||||||||||||||
Amortization of intangible assets | |||||||||||||||
Other | |||||||||||||||
Total other operating expenses | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||
Amortized cost | Gross unrealized | Fair value | Amortized cost | Gross unrealized | Fair value | |||||||||||||||||||||||||||
($ in millions) | gains | losses | gains | losses | ||||||||||||||||||||||||||||
Available-for-sale securities | ||||||||||||||||||||||||||||||||
Debt securities | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
U.S. States and political subdivisions | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Foreign government | ( | ) | ||||||||||||||||||||||||||||||
Agency mortgage-backed residential | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Mortgage-backed residential | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Agency mortgage-backed commercial | ( | ) | ||||||||||||||||||||||||||||||
Mortgage-backed commercial | ( | ) | ||||||||||||||||||||||||||||||
Asset-backed | ||||||||||||||||||||||||||||||||
Corporate debt | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Total available-for-sale securities (a) (b) (c) (d) (e) | $ | $ | $ | ( | ) | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||
Held-to-maturity securities | ||||||||||||||||||||||||||||||||
Debt securities | ||||||||||||||||||||||||||||||||
Agency mortgage-backed residential | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||||||||
Asset-backed retained notes | ||||||||||||||||||||||||||||||||
Total held-to-maturity securities (e) (f) (g) | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ |
(a) | Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $ |
(b) | Certain available-for-sale securities are included in fair value hedging relationships. Refer to Note 18 for additional information. |
(c) | Available-for-sale securities with a fair value of $ |
(d) | Totals do not include accrued interest receivable, which was $ |
(e) | There was no allowance for credit losses recorded at June 30, 2020, as management determined that credit losses did not exist for our portfolio of available-for-sale and held-to-maturity securities. |
(f) | Held-to-maturity securities with a fair value of $ |
(g) |
Total | Due in one year or less | Due after one year through five years | Due after five years through ten years | Due after ten years | |||||||||||||||||||||||||||||||
($ in millions) | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | |||||||||||||||||||||||||
June 30, 2020 | |||||||||||||||||||||||||||||||||||
Fair value of available-for-sale securities (a) | |||||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | % | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||
U.S. States and political subdivisions | |||||||||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||||||||
Agency mortgage-backed residential | |||||||||||||||||||||||||||||||||||
Mortgage-backed residential | |||||||||||||||||||||||||||||||||||
Agency mortgage-backed commercial | |||||||||||||||||||||||||||||||||||
Mortgage-backed commercial | |||||||||||||||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||||||||||||||
Corporate debt | |||||||||||||||||||||||||||||||||||
Total available-for-sale securities | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Amortized cost of available-for-sale securities | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Amortized cost of held-to-maturity securities | |||||||||||||||||||||||||||||||||||
Agency mortgage-backed residential | $ | % | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||
Asset-backed retained notes | |||||||||||||||||||||||||||||||||||
Total held-to-maturity securities | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
December 31, 2019 | |||||||||||||||||||||||||||||||||||
Fair value of available-for-sale securities (a) | |||||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | % | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||
U.S. States and political subdivisions | |||||||||||||||||||||||||||||||||||
Foreign government | |||||||||||||||||||||||||||||||||||
Agency mortgage-backed residential | |||||||||||||||||||||||||||||||||||
Mortgage-backed residential | |||||||||||||||||||||||||||||||||||
Agency mortgage-backed commercial | |||||||||||||||||||||||||||||||||||
Mortgage-backed commercial | |||||||||||||||||||||||||||||||||||
Asset-backed | |||||||||||||||||||||||||||||||||||
Corporate debt | |||||||||||||||||||||||||||||||||||
Total available-for-sale securities | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Amortized cost of available-for-sale securities | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||
Amortized cost of held-to-maturity securities | |||||||||||||||||||||||||||||||||||
Agency mortgage-backed residential | $ | % | $ | % | $ | % | $ | % | $ | % | |||||||||||||||||||||||||
Asset-backed retained notes | |||||||||||||||||||||||||||||||||||
Total held-to-maturity securities | $ | $ | $ | $ | $ |
(a) | Yield is calculated using the effective yield of each security at the end of the period, weighted based on the market value. The effective yield considers the contractual coupon and amortized cost, and excludes expected capital gains and losses. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Taxable interest | $ | $ | $ | $ | |||||||||||
Taxable dividends | |||||||||||||||
Interest and dividends exempt from U.S. federal income tax | |||||||||||||||
Interest and dividends on investment securities | $ | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Available-for-sale securities | |||||||||||||||
Gross realized gains | $ | $ | $ | $ | |||||||||||
Gross realized losses (a) | ( | ) | |||||||||||||
Net realized gains on available-for-sale securities | |||||||||||||||
Net realized gain on equity securities | |||||||||||||||
Net unrealized gain (loss) on equity securities | ( | ) | |||||||||||||
Other gain on investments, net | $ | $ | $ | $ |
(a) | Certain available-for-sale securities were sold at a loss during the six months ended June 30, 2019, as a result of identifiable market or credit events, or a loss was realized based on corporate actions outside of our control (such as a call by the issuer). Any such sales were made in accordance with our risk-management policies and practices. |
June 30, 2020 | ||||||||||||
($ in millions) | AAA | AA | Total (a) | |||||||||
Debt securities | ||||||||||||
Agency mortgage-backed residential | $ | $ | $ | |||||||||
Asset-backed retained notes | ||||||||||||
Total held-to-maturity securities | $ | $ | $ |
(a) | Rating agencies indicate that they base their ratings on many quantitative and qualitative factors, which may include capital adequacy, liquidity, asset quality, business mix, level and quality of earnings, and the current operating, legislative, and regulatory environment. A credit rating is not a recommendation to buy, sell, or hold securities, and the ratings are subject to revision or withdrawal at any time by the assigning rating agency. |
December 31, 2019 | ||||||||||||||||
Less than 12 months | 12 months or longer | |||||||||||||||
($ in millions) | Fair value | Unrealized loss | Fair value | Unrealized loss | ||||||||||||
Held-to-maturity securities | ||||||||||||||||
Debt securities | ||||||||||||||||
Agency mortgage-backed residential | $ | $ | ( | ) | $ | $ | ||||||||||
Asset-backed retained notes | ||||||||||||||||
Total held-to-maturity debt securities | $ | $ | ( | ) | $ | $ |
June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||||||||||
Less than 12 months | 12 months or longer | Less than 12 months | 12 months or longer | |||||||||||||||||||||||||||||
($ in millions) | Fair value | Unrealized loss | Fair value | Unrealized loss | Fair value | Unrealized loss | Fair value | Unrealized loss | ||||||||||||||||||||||||
Available-for-sale securities | ||||||||||||||||||||||||||||||||
Debt securities | ||||||||||||||||||||||||||||||||
U.S. Treasury and federal agencies | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||||||
U.S. States and political subdivisions | ( | ) | ( | ) | ||||||||||||||||||||||||||||
Foreign government | ( | ) | ||||||||||||||||||||||||||||||
Agency mortgage-backed residential | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Mortgage-backed residential | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Agency mortgage-backed commercial | ( | ) | ||||||||||||||||||||||||||||||
Mortgage-backed commercial | ( | ) | ||||||||||||||||||||||||||||||
Asset-backed | ||||||||||||||||||||||||||||||||
Corporate debt | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||
Total available-for-sale securities | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | ( | ) |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Consumer automotive (a) | $ | $ | ||||||
Consumer mortgage | ||||||||
Mortgage Finance (b) | ||||||||
Mortgage — Legacy (c) | ||||||||
Total consumer mortgage | ||||||||
Consumer other (d) | ||||||||
Total consumer | ||||||||
Commercial | ||||||||
Commercial and industrial | ||||||||
Automotive | ||||||||
Other | ||||||||
Commercial real estate | ||||||||
Total commercial | ||||||||
Total finance receivables and loans (e) (f) | $ | $ |
(a) | Certain finance receivables and loans are included in fair value hedging relationships. Refer to Note 18 for additional information. |
(b) | Includes loans originated as interest-only mortgage loans of $ |
(c) | Includes loans originated as interest-only mortgage loans of $ |
(d) | Includes $ |
(e) | Totals include net unearned income, unamortized premiums and discounts, and deferred fees and costs of $ |
(f) | Totals do not include accrued interest receivable, which was $ |
Three months ended June 30, 2020 ($ in millions) | Consumer automotive | Consumer mortgage | Consumer other (a) | Commercial | Total | |||||||||||||||
Allowance at April 1, 2020 | $ | $ | $ | $ | $ | |||||||||||||||
Charge-offs (b) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Recoveries | ||||||||||||||||||||
Net charge-offs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Provision for credit losses | ||||||||||||||||||||
Other | ( | ) | ||||||||||||||||||
Allowance at June 30, 2020 | $ | $ | $ | $ | $ |
(a) | Excludes $ |
(b) | Represents the amount of the amortized cost basis directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the amortized cost basis of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 for more information regarding our charge-off policies. |
Six months ended June 30, 2020 ($ in millions) | Consumer automotive | Consumer mortgage | Consumer other (a) | Commercial | Total | |||||||||||||||
Allowance at December 31, 2019 | $ | $ | $ | $ | $ | |||||||||||||||
Cumulative effect of the adoption of Accounting Standards Update 2016-13 | ( | ) | ||||||||||||||||||
Allowance at January 1, 2020 | ||||||||||||||||||||
Charge-offs (b) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||
Recoveries | ||||||||||||||||||||
Net charge-offs | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Provision for credit losses | ( | ) | ||||||||||||||||||
Other | ( | ) | ( | ) | ( | ) | ||||||||||||||
Allowance at June 30, 2020 | $ | $ | $ | $ | $ |
(a) | Excludes $ |
(b) | Represents the amount of the amortized cost basis directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the amortized cost basis of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 for more information regarding our charge-off policies. |
Three months ended June 30, 2019 ($ in millions) | Consumer automotive | Consumer mortgage | Commercial | Total | ||||||||||||
Allowance at April 1, 2019 | $ | $ | $ | $ | ||||||||||||
Charge-offs (a) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Recoveries | ||||||||||||||||
Net charge-offs | ( | ) | ( | ) | ( | ) | ||||||||||
Provision for loan losses | ( | ) | ||||||||||||||
Other | ( | ) | ( | ) | ||||||||||||
Allowance at June 30, 2019 | $ | $ | $ | $ |
(a) | Represents the amount of the amortized cost basis directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the amortized cost basis of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for more information regarding our charge-off policies. |
Six months ended June 30, 2019 ($ in millions) | Consumer automotive | Consumer mortgage | Commercial | Total | ||||||||||||
Allowance at January 1, 2019 | $ | $ | $ | $ | ||||||||||||
Charge-offs (a) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Recoveries | ||||||||||||||||
Net charge-offs | ( | ) | ( | ) | ( | ) | ||||||||||
Provision for credit losses | ( | ) | ||||||||||||||
Other | ( | ) | ||||||||||||||
Allowance at June 30, 2019 | $ | $ | $ | $ | ||||||||||||
Allowance for loan losses at June 30, 2019 | ||||||||||||||||
Individually evaluated for impairment | $ | $ | $ | $ | ||||||||||||
Collectively evaluated for impairment | ||||||||||||||||
Finance receivables and loans at gross carrying value | ||||||||||||||||
Ending balance | $ | $ | $ | $ | ||||||||||||
Individually evaluated for impairment | ||||||||||||||||
Collectively evaluated for impairment |
(a) | Represents the amount of the amortized cost basis directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the amortized cost basis of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for more information regarding our charge-off policies. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Consumer automotive | $ | $ | $ | $ | ||||||||||||
Total sales and transfers (a) | $ | $ | $ | $ |
(a) | During the six months ended June 30, 2019, we also sold $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Consumer automotive | $ | $ | $ | $ | ||||||||||||
Consumer mortgage | ||||||||||||||||
Commercial | ||||||||||||||||
Total purchases of finance receivables and loans | $ | $ | $ | $ |
June 30, 2020 | ||||||||||||||||
($ in millions) | Nonaccrual status at Jan. 1, 2020 | Nonaccrual status at April 1, 2020 | Nonaccrual status | Nonaccrual with no allowance (a) | ||||||||||||
Consumer automotive | $ | $ | $ | $ | ||||||||||||
Consumer mortgage | ||||||||||||||||
Mortgage Finance | ||||||||||||||||
Mortgage — Legacy | ||||||||||||||||
Total consumer mortgage | ||||||||||||||||
Consumer other | ||||||||||||||||
Total consumer | ||||||||||||||||
Commercial | ||||||||||||||||
Commercial and industrial | ||||||||||||||||
Automotive | ||||||||||||||||
Other | ||||||||||||||||
Commercial real estate | ||||||||||||||||
Total commercial | ||||||||||||||||
Total consumer and commercial finance receivables and loans | $ | $ | $ | $ |
(a) | Represents a component of nonaccrual status at end of period. |
December 31, 2019 ($ in millions) | Unpaid principal balance (a) | Gross carrying value | Impaired with no allowance | Impaired with an allowance | Allowance for impaired loans | |||||||||||||||
Consumer automotive | $ | $ | $ | $ | $ | |||||||||||||||
Consumer mortgage | ||||||||||||||||||||
Mortgage Finance | ||||||||||||||||||||
Mortgage — Legacy | ||||||||||||||||||||
Total consumer mortgage | ||||||||||||||||||||
Total consumer | ||||||||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||
Automotive | ||||||||||||||||||||
Other | ||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||
Total commercial | ||||||||||||||||||||
Total consumer and commercial finance receivables and loans | $ | $ | $ | $ | $ |
(a) | Adjusted for charge-offs. |
Three months ended June 30, 2019 | Six months ended June 30, 2019 | |||||||||||||||
($ in millions) | Average balance | Interest income | Average balance | Interest income | ||||||||||||
Consumer automotive | $ | $ | $ | $ | ||||||||||||
Consumer mortgage | ||||||||||||||||
Mortgage Finance | ||||||||||||||||
Mortgage — Legacy | ||||||||||||||||
Total consumer mortgage | ||||||||||||||||
Total consumer | ||||||||||||||||
Commercial | ||||||||||||||||
Commercial and industrial | ||||||||||||||||
Automotive | ||||||||||||||||
Other | ||||||||||||||||
Commercial real estate | ||||||||||||||||
Total commercial | ||||||||||||||||
Total consumer and commercial finance receivables and loans | $ | $ | $ | $ |
Origination year | Revolving loans converted to term | ||||||||||||||||||||||||||
June 30, 2020 ($ in millions) | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 and prior | Revolving loans | Total | |||||||||||||||||||
Consumer automotive | |||||||||||||||||||||||||||
Current | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
30–59 days past due | |||||||||||||||||||||||||||
60–89 days past due | |||||||||||||||||||||||||||
90 or more days past due | |||||||||||||||||||||||||||
Total consumer automotive | |||||||||||||||||||||||||||
Consumer mortgage | |||||||||||||||||||||||||||
Mortgage Finance | |||||||||||||||||||||||||||
Current | |||||||||||||||||||||||||||
30–59 days past due | |||||||||||||||||||||||||||
60–89 days past due | |||||||||||||||||||||||||||
90 or more days past due | |||||||||||||||||||||||||||
Total Mortgage Finance | |||||||||||||||||||||||||||
Mortgage — Legacy | |||||||||||||||||||||||||||
Current | |||||||||||||||||||||||||||
30–59 days past due | |||||||||||||||||||||||||||
60–89 days past due | |||||||||||||||||||||||||||
90 or more days past due | |||||||||||||||||||||||||||
Total Mortgage — Legacy | |||||||||||||||||||||||||||
Total consumer mortgage | |||||||||||||||||||||||||||
Consumer other | |||||||||||||||||||||||||||
Current | |||||||||||||||||||||||||||
30–59 days past due | |||||||||||||||||||||||||||
60–89 days past due | |||||||||||||||||||||||||||
90 or more days past due | |||||||||||||||||||||||||||
Total consumer other (a) | |||||||||||||||||||||||||||
Total consumer | $ | $ | $ | $ | $ | $ | $ | $ | $ |
(a) | Excludes $ |
($ in millions) | 30–59 days past due | 60–89 days past due | 90 days or more past due | Total past due | Current | Total finance receivables and loans | ||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||
Consumer automotive | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Consumer mortgage | ||||||||||||||||||||||||
Mortgage Finance | ||||||||||||||||||||||||
Mortgage — Legacy | ||||||||||||||||||||||||
Total consumer mortgage | ||||||||||||||||||||||||
Consumer other (a) | ||||||||||||||||||||||||
Total consumer | $ | $ | $ | $ | $ | $ |
(a) | Excludes $ |
Special mention | Loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date. |
Substandard | Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. These loans have a well-defined weakness or weakness that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected. |
Doubtful | Loans that have all the weaknesses inherent in those classified as substandard, with the additional characteristic that the weaknesses make collection or liquidation in full, based on the basis of currently existing facts, conditions, and values, highly questionable and improbable. |
Origination year | Revolving loans converted to term | ||||||||||||||||||||||||||
June 30, 2020 ($ in millions) | 2020 | 2019 | 2018 | 2017 | 2016 | 2015 and prior | Revolving loans | Total | |||||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||||||
Automotive | |||||||||||||||||||||||||||
Pass | $ | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Special mention | |||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||
Doubtful | |||||||||||||||||||||||||||
Total automotive | |||||||||||||||||||||||||||
Other | |||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||
Special mention | |||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||
Doubtful | |||||||||||||||||||||||||||
Total other | |||||||||||||||||||||||||||
Commercial real estate | |||||||||||||||||||||||||||
Pass | |||||||||||||||||||||||||||
Special mention | |||||||||||||||||||||||||||
Substandard | |||||||||||||||||||||||||||
Doubtful | |||||||||||||||||||||||||||
Total commercial real estate | |||||||||||||||||||||||||||
Total commercial | $ | $ | $ | $ | $ | $ | $ | $ | $ |
December 31, 2019 | ||||||||||||
($ in millions) | Pass | Criticized (a) | Total | |||||||||
Commercial and industrial | ||||||||||||
Automotive | $ | $ | $ | |||||||||
Other | ||||||||||||
Commercial real estate | ||||||||||||
Total commercial | $ | $ | $ |
(a) | Includes loans classified as special mention, substandard, or doubtful. These classifications are based on regulatory definitions and generally represent loans within our portfolio that have a higher default risk or have already defaulted. |
($ in millions) | 30–59 days past due | 60–89 days past due | 90 days or more past due | Total past due | Current | Total finance receivables and loans | ||||||||||||||||||
June 30, 2020 | ||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Automotive | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Total commercial | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||
Commercial | ||||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||
Automotive | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other | ||||||||||||||||||||||||
Commercial real estate | ||||||||||||||||||||||||
Total commercial | $ | $ | $ | $ | $ | $ |
2020 | 2019 | |||||||||||||||||||||
Three months ended June 30, ($ in millions) | Number of loans | Pre-modification amortized cost basis | Post-modification amortized cost basis | Number of loans | Pre-modification amortized cost basis | Post-modification amortized cost basis | ||||||||||||||||
Consumer automotive (a) | $ | $ | $ | $ | ||||||||||||||||||
Consumer mortgage | ||||||||||||||||||||||
Mortgage Finance (b) | ||||||||||||||||||||||
Mortgage — Legacy (c) | ||||||||||||||||||||||
Total consumer mortgage | ||||||||||||||||||||||
Total consumer | ||||||||||||||||||||||
Commercial | ||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||
Automotive | ||||||||||||||||||||||
Other | ||||||||||||||||||||||
Total commercial | ||||||||||||||||||||||
Total consumer and commercial finance receivables and loans | $ | $ | $ | $ |
(a) | Includes |
(b) | Includes |
(c) | Includes |
2020 | 2019 | |||||||||||||||||||||
Six months ended June 30, ($ in millions) | Number of loans | Pre-modification amortized cost basis | Post-modification amortized cost basis | Number of loans | Pre-modification amortized cost basis | Post-modification amortized cost basis | ||||||||||||||||
Consumer automotive (a) | $ | $ | $ | $ | ||||||||||||||||||
Consumer mortgage | ||||||||||||||||||||||
Mortgage Finance (b) | ||||||||||||||||||||||
Mortgage — Legacy (c) | ||||||||||||||||||||||
Total consumer mortgage | ||||||||||||||||||||||
Total consumer | ||||||||||||||||||||||
Commercial | ||||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||
Automotive | ||||||||||||||||||||||
Other | ||||||||||||||||||||||
Total commercial | ||||||||||||||||||||||
Total consumer and commercial finance receivables and loans | $ | $ | $ | $ |
(a) | Includes |
(b) | Includes |
(c) | Includes |
2020 | 2019 | |||||||||||||||||||||
Three months ended June 30, ($ in millions) | Number of loans | Amortized cost | Charge-off amount | Number of loans | Amortized cost | Charge-off amount | ||||||||||||||||
Consumer automotive | $ | $ | $ | $ | ||||||||||||||||||
Total consumer finance receivables and loans | $ | $ | $ | $ |
2020 | 2019 | |||||||||||||||||||||
Six months ended June 30, ($ in millions) | Number of loans | Amortized cost | Charge-off amount | Number of loans | Amortized cost | Charge-off amount | ||||||||||||||||
Consumer automotive | $ | $ | $ | $ | ||||||||||||||||||
Total consumer finance receivables and loans | $ | $ | $ | $ |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Assets | ||||||||
Operating lease right-of-use assets (a) | $ | $ | ||||||
Liabilities | ||||||||
Operating lease liabilities (b) | $ | $ |
(a) | Included in other assets on our Condensed Consolidated Balance Sheet. |
(b) | Included in accrued expenses and other liabilities on our Condensed Consolidated Balance Sheet. |
($ in millions) | ||||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
2025 and thereafter | ||||
Total undiscounted cash flows | ||||
Difference between undiscounted cash flows and discounted cash flows | ( | ) | ||
Total lease liability | $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Operating lease expense | $ | $ | $ | $ | ||||||||||||
Variable lease expense | ||||||||||||||||
Total lease expense, net (a) | $ | $ | $ | $ |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Vehicles | $ | $ | ||||||
Accumulated depreciation | ( | ) | ( | ) | ||||
Investment in operating leases, net | $ | $ |
($ in millions) | ||||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
2025 and thereafter | ||||
Total lease payments from operating leases | $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Depreciation expense on operating lease assets (excluding remarketing losses and gains) (a) | $ | $ | $ | $ | ||||||||||||
Remarketing losses (gains), net | ( | ) | ( | ) | ||||||||||||
Net depreciation expense on operating lease assets | $ | $ | $ | $ |
($ in millions) | ||||
2020 | $ | |||
2021 | ||||
2022 | ||||
2023 | ||||
2024 | ||||
2025 and thereafter | ||||
Total undiscounted cash flows | ||||
Difference between undiscounted cash flows and discounted cash flows | ( | ) | ||
Present value of lease payments recorded as lease receivable | $ |
($ in millions) | Carrying value of total assets | Carrying value of total liabilities | Assets sold to nonconsolidated VIEs (a) | Maximum exposure to loss in nonconsolidated VIEs | |||||||||||||
June 30, 2020 | |||||||||||||||||
On-balance sheet variable interest entities | |||||||||||||||||
Consumer automotive | $ | (b) | $ | (c) | |||||||||||||
Commercial automotive | |||||||||||||||||
Off-balance-sheet variable interest entities | |||||||||||||||||
Consumer automotive | (d) | $ | $ | (e) | |||||||||||||
Commercial other | (f) | (g) | (h) | ||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||
December 31, 2019 | |||||||||||||||||
On-balance sheet variable interest entities | |||||||||||||||||
Consumer automotive | $ | (b) | $ | (c) | |||||||||||||
Commercial automotive | |||||||||||||||||
Off-balance-sheet variable interest entities | |||||||||||||||||
Consumer automotive (i) | (d) | $ | $ | (e) | |||||||||||||
Commercial other | (f) | (g) | (h) | ||||||||||||||
Total | $ | $ | $ | $ |
(a) | Asset values represent the current unpaid principal balance of outstanding consumer finance receivables and loans within the VIEs. |
(b) | Includes $ |
(c) | Includes $ |
(d) | Represents retained notes and certificated residual interests, of which $ |
(e) | Maximum exposure to loss represents the current unpaid principal balance of outstanding loans, retained notes, certificated residual interests, as well as certain noncertificated interests retained from the sale of automotive finance receivables. This measure is based on the very unlikely event that all of our sold loans have defects that would trigger a representation, warranty, and covenant provision and the underlying collateral supporting the loans becomes worthless. This required disclosure is not an indication of our expected loss. |
(f) | Amounts are classified as other assets. |
(g) | Amounts are classified as accrued expenses and other liabilities. |
(h) | For certain nonconsolidated affordable housing entities, maximum exposure to loss represents the yield we guaranteed investors through long-term guarantee contracts. The amount disclosed is based on the unlikely event that the yield delivered to investors in the form of low-income tax housing credits is recaptured. For nonconsolidated equity investments, maximum exposure to loss represents our outstanding investment, additional committed capital, and low-income housing tax credits subject to recapture. The amount disclosed is based on the unlikely event that our committed capital is funded, our investments become worthless, and the tax credits previously delivered to us are recaptured. This required disclosure is not an indication of our expected loss. |
(i) | During the year ended December 31, 2019, we indicated our intent to exercise a clean-up call option related to a nonconsolidated securitization-related VIE. The option enables us to repurchase the remaining transferred financial assets at our discretion once the asset pool declines to a predefined level and redeem the related outstanding debt. As a result of this event, we became the primary beneficiary of the VIE, which included $ |
Six months ended June 30, ($ in millions) | Consumer automotive | |||
2020 | ||||
Cash flows received on retained interests in securitization entities | $ | |||
Servicing fees | ||||
Cash disbursements for repurchases during the period | ( | ) | ||
2019 | ||||
Cash flows received on retained interests in securitization entities | $ | |||
Servicing fees | ||||
Cash disbursements for repurchases during the period | ( | ) |
Total amount | Amount 60 days or more past due | ||||||||||||||
($ in millions) | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | |||||||||||
Off-balance-sheet securitization entities | |||||||||||||||
Consumer automotive | $ | $ | $ | $ | |||||||||||
Whole-loan sales (a) | |||||||||||||||
Consumer automotive | |||||||||||||||
Total | $ | $ | $ | $ |
(a) | Whole-loan sales are not part of a securitization transaction, but represent consumer automotive pools of loans sold to third-party investors. |
Net credit losses | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Off-balance-sheet securitization entities | ||||||||||||||||
Consumer automotive | $ | $ | $ | $ | ||||||||||||
Whole-loan sales (a) | ||||||||||||||||
Consumer automotive | ||||||||||||||||
Total | $ | $ | $ | $ |
(a) | Whole-loan sales are not part of a securitization transaction, but represent consumer automotive pools of loans sold to third-party investors. |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Property and equipment at cost | $ | $ | ||||||
Accumulated depreciation | ( | ) | ( | ) | ||||
Net property and equipment | ||||||||
Accrued interest, fees, and rent receivables | ||||||||
Nonmarketable equity investments (a) | ||||||||
Investment in qualified affordable housing projects (b) | ||||||||
Restricted cash held for securitization trusts (c) | ||||||||
Equity-method investments (d) | ||||||||
Goodwill | ||||||||
Net deferred tax assets | ||||||||
Other accounts receivable (e) | ||||||||
Restricted cash and cash equivalents (f) | ||||||||
Net intangible assets (g) | ||||||||
Fair value of derivative contracts in receivable position (h) | ||||||||
Other assets | ||||||||
Total other assets | $ | $ |
(a) | Includes investments in FHLB stock of $ |
(b) | Investment in qualified affordable housing projects are accounted for using the proportional amortization method of accounting and include $ |
(c) | Includes restricted cash collected from customer payments on securitized receivables, which are distributed by us to investors as payments on the related secured debt, and cash reserve deposits utilized as a form of credit enhancement for various securitization transactions. |
(d) | Primarily relates to investments made in connection with our CRA program. |
(e) | Primarily represents the proceeds from the sale of investment securities that have not settled as of the balance sheet date. |
(f) | Primarily represents a number of arrangements with third parties where certain restrictions are placed on balances we hold due to collateral agreements associated with operational processes with a third-party bank, or letter of credit arrangements and corresponding collateral requirements. |
(g) | Includes gross intangible assets of $ |
(h) | For additional information on derivative instruments and hedging activities, refer to Note 18. |
($ in millions) | Automotive Finance operations | Insurance operations | Corporate and Other (a) | Total | ||||||||||||
Goodwill at December 31, 2019 | $ | $ | $ | $ | ||||||||||||
Impairment losses | ( | ) | ( | ) | ||||||||||||
Goodwill at June 30, 2020 | $ | $ | $ | $ |
(a) | Includes $ |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Noninterest-bearing deposits | $ | $ | ||||||
Interest-bearing deposits | ||||||||
Savings and money-market checking accounts | ||||||||
Certificates of deposit | ||||||||
Other deposits | ||||||||
Total deposit liabilities | $ | $ |
June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||
($ in millions) | Unsecured | Secured (a) | Total | Unsecured | Secured (a) | Total | ||||||||||||||||||
Demand notes | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Federal Home Loan Bank | ||||||||||||||||||||||||
Securities sold under agreements to repurchase | ||||||||||||||||||||||||
Total short-term borrowings | $ | $ | $ | $ | $ | $ |
(a) | Refer to the section below titled Long-Term Debt for further details on assets restricted as collateral for payment of the related debt. |
June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||
($ in millions) | Unsecured | Secured | Total | Unsecured | Secured | Total | ||||||||||||||||||
Long-term debt (a) | ||||||||||||||||||||||||
Due within one year | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Due after one year | ||||||||||||||||||||||||
Total long-term debt (b) (c) | $ | $ | $ | $ | $ | $ |
(a) | Includes basis adjustments related to the application of hedge accounting. |
(b) | Includes $ |
(c) | Includes advances net of hedge basis adjustment from the FHLB of Pittsburgh of $ |
($ in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 and thereafter | Total | |||||||||||||||||||||
Unsecured | ||||||||||||||||||||||||||||
Long-term debt | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||
Original issue discount | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||
Total unsecured | ||||||||||||||||||||||||||||
Secured | ||||||||||||||||||||||||||||
Long-term debt | ||||||||||||||||||||||||||||
Total long-term debt | $ | $ | $ | $ | $ | $ | $ |
June 30, 2020 | December 31, 2019 | |||||||||||||||
($ in millions) | Total (a) | Ally Bank | Total (a) | Ally Bank | ||||||||||||
Investment securities (b) | $ | $ | $ | $ | ||||||||||||
Mortgage assets held-for-investment and lending receivables | ||||||||||||||||
Consumer automotive finance receivables | ||||||||||||||||
Commercial automotive finance receivables | ||||||||||||||||
Total assets restricted as collateral (c) (d) | $ | $ | $ | $ | ||||||||||||
Secured debt | $ | (e) | $ | $ | (e) | $ |
(a) | Ally Bank is a component of the total column. |
(b) | A portion of the restricted investment securities at June 30, 2020, was restricted under repurchase agreements. Refer to the section above titled Short-Term Borrowings for information on the repurchase agreements. |
(c) | Ally Bank has an advance agreement with the FHLB, and had assets pledged to secure borrowings that were restricted as collateral to the FHLB totaling $ |
(d) | Excludes restricted cash and cash reserves for securitization trusts recorded within other assets on the Condensed Consolidated Balance Sheet. Refer to Note 11 for additional information. |
(e) | Includes $ |
Outstanding | Unused capacity (a) | Total capacity | ||||||||||||||||||||||
($ in millions) | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | ||||||||||||||||||
Parent funding | ||||||||||||||||||||||||
Secured | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Total committed secured credit facilities | $ | $ | $ | $ | $ | $ |
(a) | Funding from committed secured credit facilities is available on request in the event excess collateral resides in certain facilities or the extent incremental collateral is available and contributed to the facilities. |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Accounts payable | $ | $ | ||||||
Unfunded commitments for investment in qualified affordable housing projects | ||||||||
Employee compensation and benefits | ||||||||
Reserves for insurance losses and loss adjustment expenses | ||||||||
Deferred revenue | ||||||||
Net deferred tax liabilities | ||||||||
Cash collateral received from counterparties | ||||||||
Fair value of derivative contracts in payable position (a) | ||||||||
Other liabilities | ||||||||
Total accrued expenses and other liabilities | $ | $ |
(a) | For additional information on derivative instruments and hedging activities, refer to Note 18. |
Three months ended June 30, | |||||||||||||||||||
($ in millions) | Unrealized (losses) gains on investment securities (a) | Translation adjustments and net investment hedges (b) | Cash flow hedges (b) | Defined benefit pension plans | Accumulated other comprehensive income (loss) | ||||||||||||||
Balance at April 1, 2019 | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
Net change | |||||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Balance at April 1, 2020 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Net change | ( | ) | |||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | $ | ( | ) | $ |
(a) | Represents the after-tax difference between the fair value and amortized cost of our available-for-sale securities portfolio. |
(b) | For additional information on derivative instruments and hedging activities, refer to Note 18. |
Six months ended June 30, | |||||||||||||||||||
($ in millions) | Unrealized (losses) gains on investment securities (a) | Translation adjustments and net investment hedges (b) | Cash flow hedges (b) | Defined benefit pension plans | Accumulated other comprehensive income (loss) | ||||||||||||||
Balance at December 31, 2018 | $ | ( | ) | $ | $ | $ | ( | ) | $ | ( | ) | ||||||||
Cumulative effect of changes in accounting principles, net of tax | |||||||||||||||||||
Adoption of Accounting Standards Update 2017-08 (c) | |||||||||||||||||||
Balance at January 1, 2019 | ( | ) | ( | ) | ( | ) | |||||||||||||
Net change | ( | ) | |||||||||||||||||
Balance at June 30, 2019 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Balance at December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ||||||||||||
Net change | |||||||||||||||||||
Balance at June 30, 2020 | $ | $ | $ | $ | ( | ) | $ |
(a) | Represents the after-tax difference between the fair value and amortized cost of our available-for-sale securities portfolio. |
(b) | For additional information on derivative instruments and hedging activities, refer to Note 18. |
(c) | Refer to the section titled Recently Adopted Accounting Standards in Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for additional information. |
Three months ended June 30, 2020 ($ in millions) | Before tax | Tax effect | After tax | ||||||||
Investment securities | |||||||||||
Net unrealized gains arising during the period | $ | $ | ( | ) | $ | ||||||
Less: Net realized gains reclassified to income from continuing operations | (a) | ( | ) | (b) | |||||||
Net change | ( | ) | |||||||||
Translation adjustments | |||||||||||
Net unrealized gains arising during the period | ( | ) | |||||||||
Net investment hedges (c) | |||||||||||
Net unrealized losses arising during the period | ( | ) | ( | ) | |||||||
Cash flow hedges (c) | |||||||||||
Less: Net realized gains reclassified to income from continuing operations | ( | ) | |||||||||
Other comprehensive income | $ | $ | ( | ) | $ |
(a) | Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income. |
(b) | Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income. |
(c) | For additional information on derivative instruments and hedging activities, refer to Note 18. |
Three months ended June 30, 2019 ($ in millions) | Before tax | Tax effect | After tax | ||||||||
Investment securities | |||||||||||
Net unrealized gains arising during the period | $ | $ | ( | ) | $ | ||||||
Less: Net realized gains reclassified to income from continuing operations | (a) | ( | ) | (b) | |||||||
Net change | ( | ) | |||||||||
Translation adjustments | |||||||||||
Net unrealized gains arising during the period | ( | ) | |||||||||
Net investment hedges (c) | |||||||||||
Net unrealized losses arising during the period | ( | ) | ( | ) | |||||||
Cash flow hedges (c) | |||||||||||
Net unrealized gains arising during the period | ( | ) | |||||||||
Less: Net realized gains reclassified to income from continuing operations | ( | ) | |||||||||
Net change | ( | ) | |||||||||
Other comprehensive income | $ | $ | ( | ) | $ |
(a) | Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income. |
(b) | Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income. |
(c) | For additional information on derivative instruments and hedging activities, refer to Note 18. |
Six months ended June 30, 2020 ($ in millions) | Before tax | Tax effect | After tax | ||||||||
Investment securities | |||||||||||
Net unrealized gains arising during the period | $ | $ | ( | ) | $ | ||||||
Less: Net realized gains reclassified to income from continuing operations | (a) | ( | ) | (b) | |||||||
Net change | ( | ) | |||||||||
Translation adjustments | |||||||||||
Net unrealized losses arising during the period | ( | ) | ( | ) | |||||||
Net investment hedges (c) | |||||||||||
Net unrealized gains arising during the period | ( | ) | |||||||||
Cash flow hedges (c) | |||||||||||
Net unrealized gains arising during the period | ( | ) | |||||||||
Less: Net realized gains reclassified to income from continuing operations | ( | ) | |||||||||
Net change | ( | ) | |||||||||
Defined benefit pension plans | |||||||||||
Net unrealized gains arising during the period | ( | ) | |||||||||
Other comprehensive income | $ | $ | ( | ) | $ |
(a) | Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income. |
(b) | Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income. |
(c) | For additional information on derivative instruments and hedging activities, refer to Note 18. |
Six months ended June 30, 2019 ($ in millions) | Before tax | Tax effect | After tax | ||||||||
Investment securities | |||||||||||
Net unrealized gains arising during the period | $ | $ | ( | ) | $ | ||||||
Less: Net realized gains reclassified to income from continuing operations | (a) | ( | ) | (b) | |||||||
Net change | ( | ) | |||||||||
Translation adjustments | |||||||||||
Net unrealized gains arising during the period | ( | ) | |||||||||
Net investment hedges (c) | |||||||||||
Net unrealized losses arising during the period | ( | ) | ( | ) | |||||||
Cash flow hedges (c) | |||||||||||
Net unrealized losses arising during the period | ( | ) | |||||||||
Less: Net realized gains reclassified to income from continuing operations | ( | ) | |||||||||
Net change | ( | ) | |||||||||
Defined benefit pension plans | |||||||||||
Net unrealized losses arising during the period | ( | ) | ( | ) | |||||||
Other comprehensive income | $ | $ | ( | ) | $ |
(a) | Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income. |
(b) | Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income. |
(c) | For additional information on derivative instruments and hedging activities, refer to Note 18. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions, except per share data; shares in thousands) (a) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net income (loss) from continuing operations | $ | $ | $ | ( | ) | $ | ||||||||||
Loss from discontinued operations, net of tax | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Net income (loss) attributable to common stockholders | $ | $ | $ | ( | ) | $ | ||||||||||
Basic weighted-average common shares outstanding (b) | ||||||||||||||||
Diluted weighted-average common shares outstanding (b) (c) | ||||||||||||||||
Basic earnings per common share | ||||||||||||||||
Net income (loss) from continuing operations | $ | $ | $ | ( | ) | $ | ||||||||||
Loss from discontinued operations, net of tax | ( | ) | ||||||||||||||
Net income (loss) | $ | $ | ( | ) | ||||||||||||
Diluted earnings per common share | ||||||||||||||||
Net income (loss) from continuing operations | $ | $ | ( | ) | ||||||||||||
Loss from discontinued operations, net of tax | ( | ) | ||||||||||||||
Net income (loss) | $ | $ | $ | ( | ) | $ |
(a) | Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers. |
(b) | Includes shares related to share-based compensation that vested but were not yet issued. |
(c) | Due to the antidilutive effect of the net loss from continuing operations for the six months ended June 30, 2020, basic weighted-average common shares outstanding was used to calculate basic and diluted earnings per share. During the three months and six months ended June 30, 2020, there were |
June 30, 2020 | December 31, 2019 | Required minimum (a) | Well-capitalized minimum | |||||||||||||||||
($ in millions) | Amount | Ratio | Amount | Ratio | ||||||||||||||||
Capital ratios | ||||||||||||||||||||
Common Equity Tier 1 (to risk-weighted assets) | ||||||||||||||||||||
Ally Financial Inc. | $ | % | $ | % | % | (b) | ||||||||||||||
Ally Bank | % | |||||||||||||||||||
Tier 1 (to risk-weighted assets) | ||||||||||||||||||||
Ally Financial Inc. | $ | % | $ | % | % | % | ||||||||||||||
Ally Bank | ||||||||||||||||||||
Total (to risk-weighted assets) | ||||||||||||||||||||
Ally Financial Inc. | $ | % | $ | % | % | % | ||||||||||||||
Ally Bank | ||||||||||||||||||||
Tier 1 leverage (to adjusted quarterly average assets) (c) | ||||||||||||||||||||
Ally Financial Inc. | $ | % | $ | % | % | (b) | ||||||||||||||
Ally Bank | % |
(a) | In addition to the minimum risk-based capital requirements for the Common Equity Tier 1 capital, Tier 1 capital, and total capital ratios, Ally and Ally Bank were required to maintain a minimum capital conservation buffer of |
(b) | Currently, there is no ratio component for determining whether a BHC is “well-capitalized.” |
(c) | Federal regulatory reporting guidelines require the calculation of adjusted quarterly average assets using a daily average methodology. |
Common stock repurchased during period (a) (b) | Number of common shares outstanding | Cash dividends declared per common share (c) | |||||||||||||||
($ in millions, except per share data; shares in thousands) | Approximate dollar value | Number of shares | Beginning of period | End of period | |||||||||||||
2019 | |||||||||||||||||
First quarter | $ | $ | |||||||||||||||
Second quarter | |||||||||||||||||
Third quarter | |||||||||||||||||
Fourth quarter | |||||||||||||||||
2020 | |||||||||||||||||
First quarter | $ | $ | |||||||||||||||
Second quarter |
(a) | Includes shares of common stock withheld to cover income taxes owed by participants in our share-based incentive plans. |
(b) | On March 17, 2020, we announced the voluntary suspension of our stock-repurchase program through its termination on June 30, 2020. We do not currently plan to implement a new stock-repurchase program or repurchase shares of our common stock, except in connection with compensation plans, for the remainder of 2020. Refer to the discussion below for further details about this action. |
(c) | On |
June 30, 2020 | December 31, 2019 | |||||||||||||||||||||||
Derivative contracts in a | Notional amount | Derivative contracts in a | Notional amount | |||||||||||||||||||||
($ in millions) | receivable position | payable position | receivable position | payable position | ||||||||||||||||||||
Derivatives designated as accounting hedges | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Swaps | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Purchased options | ||||||||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||||||
Forwards | ||||||||||||||||||||||||
Total derivatives designated as accounting hedges | ||||||||||||||||||||||||
Derivatives not designated as accounting hedges | ||||||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||||||
Futures and forwards | ||||||||||||||||||||||||
Written options | ||||||||||||||||||||||||
Purchased options | ||||||||||||||||||||||||
Total interest rate risk | ||||||||||||||||||||||||
Foreign exchange contracts | ||||||||||||||||||||||||
Futures and forwards | ||||||||||||||||||||||||
Total foreign exchange risk | ||||||||||||||||||||||||
Equity contracts | ||||||||||||||||||||||||
Written options | ||||||||||||||||||||||||
Purchased options | ||||||||||||||||||||||||
Total equity risk | ||||||||||||||||||||||||
Total derivatives not designated as accounting hedges | ||||||||||||||||||||||||
Total derivatives | $ | $ | $ | $ | $ | $ |
($ in millions) | Carrying amount of the hedged items | Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items | ||||||||||||||||||||||
Total | Discontinued (a) | |||||||||||||||||||||||
June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Available-for-sale securities (b) (c) | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Finance receivables and loans, net (d) | ||||||||||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Long-term debt | $ | $ | $ | $ | $ | $ |
(a) | Represents the fair value hedging adjustment on qualifying hedges for which the hedging relationship was discontinued. This represents a subset of the amounts reported in the total hedging adjustment. |
(b) | The carrying amount of hedged available-for-sale securities is presented above using amortized cost and includes $ |
(c) | The amount that is identified as the last of layer in the open hedge relationship was $ |
(d) | The hedged item represents the carrying value of the hedged portfolio of assets. The amount identified as the last of layer in the open hedge relationship was $ |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
(Loss) gain recognized in earnings | ||||||||||||||||
Interest rate contracts | ||||||||||||||||
Gain on mortgage and automotive loans, net | $ | $ | $ | ( | ) | $ | ||||||||||
Other income, net of losses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Total interest rate contracts | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
Foreign exchange contracts | ||||||||||||||||
Other income, net of losses | ( | ) | ( | ) | ( | ) | ||||||||||
Total foreign exchange contracts | ( | ) | ( | ) | ( | ) | ||||||||||
Total loss recognized in earnings | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) |
Interest and fees on finance receivables and loans | Interest and dividends on investment securities and other earning assets | Interest on deposits | Interest on long-term debt | ||||||||||||||||||||||||
Three months ended June 30, ($ in millions) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
(Loss) gain on fair value hedging relationships | |||||||||||||||||||||||||||
Interest rate contracts | |||||||||||||||||||||||||||
Hedged fixed-rate unsecured debt | $ | $ | $ | $ | $ | $ | $ | $ | ( | ) | |||||||||||||||||
Derivatives designated as hedging instruments on fixed-rate unsecured debt | |||||||||||||||||||||||||||
Hedged available-for-sale securities | |||||||||||||||||||||||||||
Derivatives designated as hedging instruments on available-for-sale securities | ( | ) | ( | ) | |||||||||||||||||||||||
Hedged fixed-rate consumer automotive loans | ( | ) | |||||||||||||||||||||||||
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans | ( | ) | |||||||||||||||||||||||||
Total gain on fair value hedging relationships | |||||||||||||||||||||||||||
Gain (loss) on cash flow hedging relationships | |||||||||||||||||||||||||||
Interest rate contracts | |||||||||||||||||||||||||||
Hedged variable-rate commercial loans | |||||||||||||||||||||||||||
Reclassified from accumulated other comprehensive income into income | |||||||||||||||||||||||||||
Hedged deposit liabilities | |||||||||||||||||||||||||||
Reclassified from accumulated other comprehensive income into income | ( | ) | |||||||||||||||||||||||||
Hedged variable-rate borrowings | |||||||||||||||||||||||||||
Reclassified from accumulated other comprehensive income into income | |||||||||||||||||||||||||||
Total gain (loss) on cash flow hedging relationships | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income | $ | $ | $ | $ | $ | $ | $ | $ |
Interest and fees on finance receivables and loans | Interest and dividends on investment securities and other earning assets | Interest on deposits | Interest on long-term debt | ||||||||||||||||||||||||
Six months ended June 30, ($ in millions) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||
(Loss) gain on fair value hedging relationships | |||||||||||||||||||||||||||
Interest rate contracts | |||||||||||||||||||||||||||
Hedged fixed-rate unsecured debt | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | |||||||||||||||
Derivatives designated as hedging instruments on fixed-rate unsecured debt | |||||||||||||||||||||||||||
Hedged available-for-sale securities | |||||||||||||||||||||||||||
Derivatives designated as hedging instruments on available-for-sale securities | ( | ) | ( | ) | |||||||||||||||||||||||
Hedged fixed-rate consumer automotive loans | |||||||||||||||||||||||||||
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans | ( | ) | ( | ) | |||||||||||||||||||||||
Total gain on fair value hedging relationships | |||||||||||||||||||||||||||
Gain (loss) on cash flow hedging relationships | |||||||||||||||||||||||||||
Interest rate contracts | |||||||||||||||||||||||||||
Hedged variable rate commercial loans | |||||||||||||||||||||||||||
Reclassified from accumulated other comprehensive income into income | |||||||||||||||||||||||||||
Hedged deposit liabilities | |||||||||||||||||||||||||||
Reclassified from accumulated other comprehensive income into income | ( | ) | |||||||||||||||||||||||||
Hedged variable-rate borrowings | |||||||||||||||||||||||||||
Reclassified from accumulated other comprehensive income into income | |||||||||||||||||||||||||||
Total gain (loss) on cash flow hedging relationships | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | |||||||||||||||||
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income | $ | $ | $ | $ | $ | $ | $ | $ |
Interest and fees on finance receivables and loans | Interest and dividends on investment securities and other earning assets | Interest on long-term debt | ||||||||||||||||||
Three months ended June 30, ($ in millions) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
Gain (loss) on fair value hedging relationships | ||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||
Amortization of deferred unsecured debt basis adjustments | $ | $ | $ | $ | $ | $ | ||||||||||||||
Amortization of deferred secured debt basis adjustments (FHLB advances) | ( | ) | ( | ) | ||||||||||||||||
Amortization of deferred basis adjustments of available-for-sale securities | ( | ) | ( | ) | ||||||||||||||||
Interest for qualifying accounting hedges of available-for-sale securities | ( | ) | ||||||||||||||||||
Amortization of deferred loan basis adjustments | ( | ) | ( | ) | ||||||||||||||||
Interest for qualifying accounting hedges of consumer automotive loans held-for-investment | ( | ) | ||||||||||||||||||
Total (loss) gain on fair value hedging relationships | ( | ) | ( | ) | ( | ) | ( | ) |
Interest and fees on finance receivables and loans | Interest and dividends on investment securities and other earning assets | Interest on long-term debt | ||||||||||||||||||
Six months ended June 30, ($ in millions) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
Gain (loss) on fair value hedging relationships | ||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||
Amortization of deferred unsecured debt basis adjustments | $ | $ | $ | $ | $ | $ | ||||||||||||||
Amortization of deferred secured debt basis adjustments (FHLB advances) | ( | ) | ( | ) | ||||||||||||||||
Amortization of deferred basis adjustments of available-for-sale securities | ( | ) | ( | ) | ||||||||||||||||
Interest for qualifying accounting hedges of available-for-sale securities | ( | ) | ||||||||||||||||||
Amortization of deferred loan basis adjustments | ( | ) | ( | ) | ||||||||||||||||
Interest for qualifying accounting hedges of consumer automotive loans held-for-investment | ( | ) | ||||||||||||||||||
Total (loss) gain on fair value hedging relationships | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||
Gain on cash flow hedging relationships | ||||||||||||||||||||
Interest rate contracts | ||||||||||||||||||||
Interest for qualifying accounting hedges of variable-rate commercial loans | ||||||||||||||||||||
Total gain on cash flow hedging relationships | $ | $ | $ | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Interest rate contracts | |||||||||||||||
(Loss) gain recognized in other comprehensive income | $ | ( | ) | $ | $ | $ |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | |||||||||||
Foreign exchange contracts (a) (b) | |||||||||||||||
(Loss) gain recognized in other comprehensive income | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) |
(a) | There were |
(b) | Gains and losses reclassified from accumulated other comprehensive income are reported as other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income. There were |
Level 1 | Inputs are quoted prices in active markets for identical assets or liabilities at the measurement date. Additionally, the entity must have the ability to access the active market, and the quoted prices cannot be adjusted by the entity. |
Level 2 | Inputs are other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices in active markets for similar assets or liabilities; quoted prices in inactive markets for identical or similar assets or liabilities; or inputs that are observable or can be corroborated by observable market data by correlation or other means for substantially the full term of the assets or liabilities. |
Level 3 | Unobservable inputs are supported by little or no market activity. The unobservable inputs represent management’s best assumptions of how market participants would price the assets or liabilities. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation. |
• | Equity Securities — We hold various marketable equity securities measured at fair value with changes in fair value recognized in net income. Measurements based on observable market prices are classified as Level 1. |
• | Available-for-sale securities — We carry our available-for-sale securities at fair value based on external pricing sources. We classify our securities as Level 1 when fair value is determined using quoted prices available for the same instruments trading in active markets. We classify our securities as Level 2 when fair value is determined using prices for similar instruments trading in active markets. We perform pricing validation procedures for our available-for-sale securities. |
• | Interests retained in financial asset sales — We retain certain noncertificated interests retained from the sale of automotive finance receivables. Due to inactivity in the market, valuations are based on internally developed discounted cash flow models (an income approach) that use a market-based discount rate; therefore, we classified these assets as Level 3. The valuation considers recent market transactions, experience with similar assets, current business conditions, and analysis of the underlying collateral, as available. To estimate cash flows, we utilize various significant assumptions, including market observable inputs (for example, forward interest rates) and internally developed inputs (for example, prepayment speeds, delinquency levels, and credit losses). |
• | Derivative instruments — We enter into a variety of derivative financial instruments as part of our risk-management strategies. Certain of these derivatives are exchange traded, such as equity options. To determine the fair value of these instruments, we utilize the quoted market prices for those particular derivative contracts; therefore, we classified these contracts as Level 1. |
Recurring fair value measurements | ||||||||||||||||
June 30, 2020 ($ in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | ||||||||||||||||
Investment securities | ||||||||||||||||
Equity securities (a) | $ | $ | $ | $ | ||||||||||||
Available-for-sale securities | ||||||||||||||||
Debt securities | ||||||||||||||||
U.S. Treasury and federal agencies | ||||||||||||||||
U.S. States and political subdivisions | ||||||||||||||||
Foreign government | ||||||||||||||||
Agency mortgage-backed residential | ||||||||||||||||
Mortgage-backed residential | ||||||||||||||||
Agency mortgage-backed commercial | ||||||||||||||||
Mortgage-backed commercial | ||||||||||||||||
Asset-backed | ||||||||||||||||
Corporate debt | ||||||||||||||||
Total available-for-sale securities | ||||||||||||||||
Mortgage loans held-for-sale (b) | ||||||||||||||||
Finance receivables and loans, net | ||||||||||||||||
Consumer other (b) | ||||||||||||||||
Interests retained in financial asset sales | ||||||||||||||||
Derivative contracts in a receivable position | ||||||||||||||||
Interest rate | ||||||||||||||||
Other | ||||||||||||||||
Total derivative contracts in a receivable position | ||||||||||||||||
Total assets | $ | $ | $ | $ | ||||||||||||
Liabilities | ||||||||||||||||
Accrued expenses and other liabilities | ||||||||||||||||
Derivative contracts in a payable position | ||||||||||||||||
Other | $ | $ | ||||||||||||||
Total derivative contracts in a payable position | ||||||||||||||||
Total liabilities | $ | $ | $ | $ |
(a) | Our direct investment in any one industry did not exceed |
(b) | Carried at fair value due to fair value option elections. |
Recurring fair value measurements | ||||||||||||||||
December 31, 2019 ($ in millions) | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
Assets | ||||||||||||||||
Investment securities | ||||||||||||||||
Equity securities (a) | $ | $ | $ | $ | ||||||||||||
Available-for-sale securities | ||||||||||||||||
Debt securities | ||||||||||||||||
U.S. Treasury and federal agencies | ||||||||||||||||
U.S. States and political subdivisions | ||||||||||||||||
Foreign government | ||||||||||||||||
Agency mortgage-backed residential | ||||||||||||||||
Mortgage-backed residential | ||||||||||||||||
Agency mortgage-backed commercial | ||||||||||||||||
Mortgage-backed commercial | ||||||||||||||||
Asset-backed | ||||||||||||||||
Corporate debt | ||||||||||||||||
Total available-for-sale securities | ||||||||||||||||
Mortgage loans held-for-sale (b) | ||||||||||||||||
Finance receivables and loans, net | ||||||||||||||||
Consumer other (b) | ||||||||||||||||
Interests retained in financial asset sales | ||||||||||||||||
Derivative contracts in a receivable position | ||||||||||||||||
Interest rate | ||||||||||||||||
Total derivative contracts in a receivable position | ||||||||||||||||
Total assets | $ | $ | $ | $ | ||||||||||||
Liabilities | ||||||||||||||||
Accrued expenses and other liabilities | ||||||||||||||||
Derivative contracts in a payable position | ||||||||||||||||
Foreign currency | $ | $ | $ | $ | ||||||||||||
Total derivative contracts in a payable position | ||||||||||||||||
Total liabilities | $ | $ | $ | $ |
(a) | Our investment in any one industry did not exceed |
(b) | Carried at fair value due to fair value option elections. |
Level 3 recurring fair value measurements | |||||||||||||||||||||||||||||||
Net realized/unrealized gains | Fair value at June 30, 2020 | Net unrealized gains still held at June 30, 2020 | |||||||||||||||||||||||||||||
($ in millions) | Fair value at April 1, 2020 | included in earnings | included in OCI | Purchases | Sales | Issuances | Settlements | included in earnings | included in OCI | ||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Investment securities | |||||||||||||||||||||||||||||||
Equity securities | $ | $ | (a) | $ | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||
Available-for-sale securities | |||||||||||||||||||||||||||||||
Mortgage loans held-for-sale (b) | (c) | ( | ) | ||||||||||||||||||||||||||||
Finance receivables and loans, net (b) | (d) | ( | ) | ||||||||||||||||||||||||||||
Other assets | |||||||||||||||||||||||||||||||
Interests retained in financial asset sales | |||||||||||||||||||||||||||||||
Derivative assets | (c) | ||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ |
(a) | Reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income. |
(b) | Carried at fair value due to fair value option elections. |
(c) | Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income. |
(d) | Reported as interest and fees on finance receivables and loans and other income, net of losses in the Condensed Consolidated Statement of Comprehensive Income. |
Level 3 recurring fair value measurements | |||||||||||||||||||||||||||||||
Net realized/unrealized gains | Fair value at June 30, 2019 | Net unrealized gains still held at June 30, 2019 | |||||||||||||||||||||||||||||
($ in millions) | Fair value at April 1, 2019 | included in earnings | included in OCI | Purchases | Sales | Issuances | Settlements | included in earnings | included in OCI | ||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Equity securities | $ | $ | (a) | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||
Mortgage loans held-for-sale (b) | (c) | ( | ) | ||||||||||||||||||||||||||||
Other assets | |||||||||||||||||||||||||||||||
Interests retained in financial asset sales | ( | ) | |||||||||||||||||||||||||||||
Derivative assets | |||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ |
(a) | Reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income. |
(b) | Carried at fair value due to fair value option elections. |
(c) | Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income. |
Level 3 recurring fair value measurements | |||||||||||||||||||||||||||||||
Net realized/unrealized (losses) gains | Fair value at June 30, 2020 | Net unrealized (losses) gains still held at June 30, 2020 | |||||||||||||||||||||||||||||
($ in millions) | Fair value at Jan. 1, 2020 | included in earnings | included in OCI | Purchases | Sales | Issuances | Settlements | included in earnings | included in OCI | ||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Investment securities | |||||||||||||||||||||||||||||||
Equity securities | $ | $ | ( | ) | (a) | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Available-for-sale securities | |||||||||||||||||||||||||||||||
Mortgage loans held-for-sale (b) | (c) | ( | ) | ||||||||||||||||||||||||||||
Finance receivables and loans, net (b) | ( | ) | |||||||||||||||||||||||||||||
Other assets | |||||||||||||||||||||||||||||||
Interests retained in financial asset sales | ( | ) | |||||||||||||||||||||||||||||
Derivative assets | (c) | ||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ |
(a) | Reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income. |
(b) | Carried at fair value due to fair value option elections. |
(c) | Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income. |
Level 3 recurring fair value measurements | |||||||||||||||||||||||||||||||
Net realized/unrealized gains | Fair value at June 30, 2019 | Net unrealized gains still held at June 30, 2019 | |||||||||||||||||||||||||||||
($ in millions) | Fair value at Jan. 1, 2019 | included in earnings | included in OCI | Purchases | Sales | Issuances | Settlements | included in earnings | included in OCI | ||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||
Equity securities | $ | $ | (a) | $ | $ | $ | $ | $ | ( | ) | $ | $ | $ | ||||||||||||||||||
Mortgage loans held-for-sale (b) | (c) | ( | ) | ||||||||||||||||||||||||||||
Other assets | |||||||||||||||||||||||||||||||
Interests retained in financial asset sales | ( | ) | |||||||||||||||||||||||||||||
Derivative assets | (c) | ||||||||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | $ | $ |
(a) | Reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income. |
(b) | Carried at fair value due to fair value option elections. |
(c) | Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income. |
Nonrecurring fair value measurements | Lower-of-cost or fair value reserve, valuation reserve, or cumulative adjustments | Total gain (loss) included in earnings | |||||||||||||||||||||
June 30, 2020 ($ in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Loans held-for-sale, net | $ | $ | $ | $ | $ | n/m | (a) | ||||||||||||||||
Commercial finance receivables and loans, net (b) | |||||||||||||||||||||||
Automotive | ( | ) | n/m | (a) | |||||||||||||||||||
Other | ( | ) | n/m | (a) | |||||||||||||||||||
Total commercial finance receivables and loans, net | ( | ) | n/m | (a) | |||||||||||||||||||
Other assets | |||||||||||||||||||||||
Nonmarketable equity investments | ( | ) | n/m | (a) | |||||||||||||||||||
Goodwill (c) | ( | ) | n/m | (a) | |||||||||||||||||||
Repossessed and foreclosed assets (d) | n/m | (a) | |||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | n/m |
(a) | We consider the applicable valuation allowance, loan loss allowance, or cumulative impairment to be the most relevant indicator of the impact on earnings caused by the fair value measurement. Accordingly, the table above excludes total gains and losses included in earnings for these items. The carrying values are inclusive of the respective valuation allowance, loan loss allowance, or cumulative impairment. |
(b) | Represents the portion of the portfolio specifically impaired during 2020. The related valuation allowance represents the cumulative adjustment to fair value of those specific receivables. |
(c) | On April 30, 2020, we recognized a $ |
(d) | The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value. |
Nonrecurring fair value measurements | Lower-of-cost or fair value reserve, valuation reserve, or cumulative adjustments | Total gain (loss) included in earnings | |||||||||||||||||||||
December 31, 2019 ($ in millions) | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||
Assets | |||||||||||||||||||||||
Loans held-for-sale, net | $ | $ | $ | $ | $ | n/m | (a) | ||||||||||||||||
Commercial finance receivables and loans, net (b) | |||||||||||||||||||||||
Automotive | ( | ) | n/m | (a) | |||||||||||||||||||
Other | ( | ) | n/m | (a) | |||||||||||||||||||
Total commercial finance receivables and loans, net | ( | ) | n/m | (a) | |||||||||||||||||||
Other assets | |||||||||||||||||||||||
Nonmarketable equity investments | n/m | (a) | |||||||||||||||||||||
Equity-method investments | ( | ) | n/m | (a) | |||||||||||||||||||
Repossessed and foreclosed assets (c) | ( | ) | n/m | (a) | |||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | n/m |
(a) | We consider the applicable valuation allowance, loan loss allowance, or cumulative impairment to be the most relevant indicator of the impact on earnings caused by the fair value measurement. Accordingly, the table above excludes total gains and losses included in earnings for these items. The carrying values are inclusive of the respective valuation allowance, loan loss allowance, or cumulative impairment. |
(b) | Represents the portion of the portfolio specifically impaired during 2019. The related valuation allowance represents the cumulative adjustment to fair value of those specific receivables. |
(c) | The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value. |
Estimated fair value | |||||||||||||||||||
($ in millions) | Carrying value | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
June 30, 2020 | |||||||||||||||||||
Financial assets | |||||||||||||||||||
Held-to-maturity securities | $ | $ | $ | $ | $ | ||||||||||||||
Loans held-for-sale, net | |||||||||||||||||||
Finance receivables and loans, net | |||||||||||||||||||
FHLB/FRB stock (a) | |||||||||||||||||||
Financial liabilities | |||||||||||||||||||
Deposit liabilities | $ | $ | $ | $ | $ | ||||||||||||||
Short-term borrowings | |||||||||||||||||||
Long-term debt | |||||||||||||||||||
December 31, 2019 | |||||||||||||||||||
Financial assets | |||||||||||||||||||
Held-to-maturity securities | $ | $ | $ | $ | $ | ||||||||||||||
Loans held-for-sale, net | |||||||||||||||||||
Finance receivables and loans, net | |||||||||||||||||||
FHLB/FRB stock (a) | |||||||||||||||||||
Financial liabilities | |||||||||||||||||||
Deposit liabilities | $ | $ | $ | $ | $ | ||||||||||||||
Short-term borrowings | |||||||||||||||||||
Long-term debt |
(a) | Included in other assets on our Condensed Consolidated Balance Sheet. |
Gross amounts of recognized assets/liabilities | Gross amounts offset on the Condensed Consolidated Balance Sheet | Net amounts of assets/liabilities presented on the Condensed Consolidated Balance Sheet | Gross amounts not offset on the Condensed Consolidated Balance Sheet | |||||||||||||||||||||
($ in millions) | Financial instruments | Collateral (a) (b) (c) | Net amount | |||||||||||||||||||||
June 30, 2020 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Derivative assets in net asset positions | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Derivative assets with no offsetting arrangements | ||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Derivative liabilities in net asset positions | $ | $ | $ | $ | ( | ) | $ | $ | ||||||||||||||||
Securities sold under agreements to repurchase (d) | ( | ) | ||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||
December 31, 2019 | ||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||
Derivative assets in net asset positions | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Derivative assets with no offsetting arrangements | ||||||||||||||||||||||||
Total assets | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Liabilities | ||||||||||||||||||||||||
Derivative liabilities in net liability positions | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Total liabilities | $ | $ | $ | $ | $ | ( | ) | $ |
(a) | Financial collateral received/pledged shown as a balance based on the sum of all net asset and liability positions between Ally and each individual derivative counterparty. |
(b) | Amounts disclosed are limited to the financial asset or liability balance and, accordingly, exclude excess collateral received or pledged and noncash collateral received. There was $ |
(c) | Certain agreements grant us the right to sell or pledge the noncash assets we receive as collateral. Noncash collateral pledged to us where the agreement grants us the right to sell or pledge the underlying assets had a fair value of $ |
(d) | For additional information on securities sold under agreements to repurchase, refer to Note 13. |
Three months ended June 30, ($ in millions) | Automotive Finance operations | Insurance operations | Mortgage Finance operations | Corporate Finance operations | Corporate and Other | Consolidated (a) | ||||||||||||||||||
2020 | ||||||||||||||||||||||||
Net financing revenue and other interest income | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Other revenue | ||||||||||||||||||||||||
Total net revenue | ( | ) | ||||||||||||||||||||||
Provision for credit losses | ||||||||||||||||||||||||
Total noninterest expense | ||||||||||||||||||||||||
Income (loss) from continuing operations before income tax expense | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
2019 | ||||||||||||||||||||||||
Net financing revenue and other interest income | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other revenue | ||||||||||||||||||||||||
Total net revenue | ||||||||||||||||||||||||
Provision for credit losses | ( | ) | ||||||||||||||||||||||
Total noninterest expense | ||||||||||||||||||||||||
Income (loss) from continuing operations before income tax expense | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ |
(a) | Net financing revenue and other interest income after the provision for credit losses totaled $ |
Six months ended June 30, ($ in millions) | Automotive Finance operations | Insurance operations | Mortgage Finance operations | Corporate Finance operations | Corporate and Other | Consolidated (a) | ||||||||||||||||||
2020 | ||||||||||||||||||||||||
Net financing revenue and other interest income | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Other revenue | ||||||||||||||||||||||||
Total net revenue | ||||||||||||||||||||||||
Provision for credit losses | ||||||||||||||||||||||||
Total noninterest expense | ||||||||||||||||||||||||
Income (loss) from continuing operations before income tax expense | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||
Total assets | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
2019 | ||||||||||||||||||||||||
Net financing revenue and other interest income | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other revenue | ||||||||||||||||||||||||
Total net revenue | ||||||||||||||||||||||||
Provision for credit losses | ( | ) | ||||||||||||||||||||||
Total noninterest expense | ||||||||||||||||||||||||
Income (loss) from continuing operations before income tax expense | $ | $ | $ | $ | $ | ( | ) | $ | ||||||||||||||||
Total assets | $ | $ | $ | $ | $ | $ |
(a) | Net financing revenue and other interest income after the provision for credit losses totaled $ |
• | evolving local, regional, national, or international business, economic, or political conditions; |
• | changes in laws or the regulatory or supervisory environment, including as a result of recent financial services legislation, regulation, or policies or changes in government officials or other personnel; |
• | changes in monetary, fiscal, or trade laws or policies, including as a result of actions by government agencies, central banks, or supranational authorities; |
• | changes in accounting standards or policies, including ASU 2016-13, Financial Instruments—Credit Losses; |
• | changes in the automotive industry or the markets for new or used vehicles, including the rise of vehicle sharing and ride hailing, the development of autonomous and alternative-energy vehicles, and the impact of demographic shifts on attitudes and behaviors toward vehicle ownership and use; |
• | disruptions or shifts in investor sentiment or behavior in the securities, capital, or other financial markets, including financial or systemic shocks and volatility or changes in market liquidity, interest or currency rates, or valuations; |
• | uncertainty about the future of LIBOR and any negative impacts that could result; |
• | changes in business or consumer sentiment, preferences, or behavior, including spending, borrowing, or saving by businesses or households; |
• | changes in our corporate or business strategies, the composition of our assets, or the way in which we fund those assets; |
• | our ability to execute our business strategy for Ally Bank, including its digital focus; |
• | our ability to optimize our automotive finance and insurance businesses and to continue diversifying into and growing other consumer and commercial business lines, including mortgage lending, personal lending, corporate finance, brokerage, and wealth management; |
• | our ability to develop capital plans that will be approved by the FRB and our ability to implement them, including any payment of dividends or share repurchases; |
• | our ability to effectively manage capital or liquidity consistent with evolving business or operational needs, risk-management standards, and regulatory or supervisory requirements; |
• | our ability to cost-effectively fund our business and operations, including through deposits and the capital markets; |
• | changes in any credit rating assigned to Ally, including Ally Bank; |
• | adverse publicity or other reputational harm to us or our senior officers; |
• | our ability to develop, maintain, or market our products or services or to absorb unanticipated costs or liabilities associated with those products or services; |
• | our ability to innovate, to anticipate the needs of current or future customers, to successfully compete, to increase or hold market share in changing competitive environments, or to deal with pricing or other competitive pressures; |
• | the continuing profitability and viability of our dealer-centric automotive finance and insurance businesses, especially in the face of competition from captive finance companies and their automotive manufacturing sponsors and challenges to the dealer’s role as intermediary between manufacturers and purchasers; |
• | our ability to appropriately underwrite loans that we originate or purchase and to otherwise manage credit risk; |
• | changes in the credit, liquidity, or other financial condition of our customers, counterparties, service providers, or competitors; |
• | our ability to effectively deal with economic, business, or market slowdowns or disruptions; |
• | judicial, regulatory, or administrative investigations, proceedings, disputes, or rulings that create uncertainty for, or are adverse to, us or the financial services industry; |
• | our ability to address stricter or heightened regulatory or supervisory requirements and expectations; |
• | the performance and availability of third-party service providers on whom we rely in delivering products and services to our customers and otherwise conducting our business and operations; |
• | our ability to maintain secure and functional financial, accounting, technology, data processing, or other operating systems or infrastructure, including our capacity to withstand cyberattacks; |
• | the adequacy of our corporate governance, risk-management framework, compliance programs, or internal controls over financial reporting, including our ability to control lapses or deficiencies in financial reporting or to effectively mitigate or manage operational risk; |
• | the efficacy of our methods or models in assessing business strategies or opportunities or in valuing, measuring, estimating, monitoring, or managing positions or risk; |
• | our ability to keep pace with changes in technology that affect us or our customers, counterparties, service providers, or competitors; |
• | our ability to successfully make and integrate acquisitions; |
• | the adequacy of our succession planning for key executives or other personnel and our ability to attract or retain qualified employees; |
• | natural or man-made disasters, calamities, or conflicts, including terrorist events and pandemics (such as adverse effects of the COVID-19 pandemic on us and our customers, counterparties, employees, and third-party service providers); or |
• | other assumptions, risks, or uncertainties described in the Risk Factors (Part II, Item 1A herein), Management’s Discussion and Analysis of Financial Condition and Results of Operations (Part I, Item 2 herein), or the Notes to the Condensed Consolidated Financial Statements (Part I, Item 1 herein) in this Quarterly Report on Form 10-Q or described in any of the Company’s annual, quarterly or current reports. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions, except per share data; shares in thousands) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Total financing revenue and other interest income | $ | 2,178 | $ | 2,491 | $ | 4,529 | $ | 4,924 | ||||||||
Total interest expense | 872 | 1,095 | 1,829 | 2,150 | ||||||||||||
Net depreciation expense on operating lease assets | 252 | 239 | 500 | 485 | ||||||||||||
Net financing revenue and other interest income | 1,054 | 1,157 | 2,200 | 2,289 | ||||||||||||
Total other revenue | 555 | 395 | 821 | 861 | ||||||||||||
Total net revenue | 1,609 | 1,552 | 3,021 | 3,150 | ||||||||||||
Provision for credit losses | 287 | 177 | 1,190 | 459 | ||||||||||||
Total noninterest expense | 985 | 881 | 1,905 | 1,711 | ||||||||||||
Income (loss) from continuing operations before income tax expense (benefit) | 337 | 494 | (74 | ) | 980 | |||||||||||
Income tax expense (benefit) from continuing operations | 95 | (90 | ) | 3 | 21 | |||||||||||
Net income (loss) from continuing operations | 242 | 584 | (77 | ) | 959 | |||||||||||
Loss from discontinued operations, net of tax | (1 | ) | (2 | ) | (1 | ) | (3 | ) | ||||||||
Net income (loss) | $ | 241 | $ | 582 | $ | (78 | ) | $ | 956 | |||||||
Basic earnings per common share (a): | ||||||||||||||||
Net income (loss) from continuing operations | $ | 0.65 | $ | 1.47 | $ | (0.20 | ) | $ | 2.39 | |||||||
Net income (loss) | 0.64 | 1.46 | (0.21 | ) | 2.39 | |||||||||||
Weighted-average common shares outstanding | 375,051 | 398,100 | 375,387 | 401,098 | ||||||||||||
Diluted earnings per common share (a)(b): | ||||||||||||||||
Net income (loss) from continuing operations | $ | 0.64 | $ | 1.46 | $ | (0.20 | ) | $ | 2.38 | |||||||
Net income (loss) | 0.64 | 1.46 | (0.21 | ) | 2.37 | |||||||||||
Weighted-average common shares outstanding | 375,762 | 399,916 | 375,387 | 402,921 | ||||||||||||
Common share information: | ||||||||||||||||
Cash dividends declared per common share | $ | 0.19 | $ | 0.17 | $ | 0.38 | $ | 0.34 | ||||||||
Period-end common shares outstanding | 373,837 | 392,775 | 373,837 | 392,775 |
(a) | Includes shares related to share-based compensation that vested but were not yet issued. |
(b) | Due to the antidilutive effect of the net loss from continuing operations for the six months ended June 30, 2020, basic weighted-average common shares outstanding was used to calculate basic and diluted earnings per share. Refer to Note 16 to the Condensed Consolidated Financial Statements for further information. |
June 30, ($ in millions) | 2020 | 2019 | ||||||
Selected period-end balance sheet data: | ||||||||
Total assets | $ | 184,061 | $ | 180,448 | ||||
Total deposit liabilities | $ | 131,036 | $ | 116,325 | ||||
Long-term debt | $ | 29,176 | $ | 37,466 | ||||
Total equity | $ | 13,826 | $ | 14,316 |
Three months ended June 30, | Six months ended June 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
Financial ratios: | ||||||||||||
Return on average assets (a) | 0.53 | % | 1.29 | % | (0.09 | )% | 1.08 | % | ||||
Return on average equity (a) | 6.75 | % | 16.92 | % | (1.11 | )% | 14.20 | % | ||||
Equity to assets (a) | 7.89 | % | 7.64 | % | 7.81 | % | 7.58 | % | ||||
Common dividend payout ratio (b) | 29.69 | % | 11.64 | % | n/m | 14.23 | % | |||||
Net interest spread (a) (c) | 2.23 | % | 2.43 | % | 2.34 | % | 2.44 | % | ||||
Net yield on interest-earning assets (a) (d) | 2.40 | % | 2.66 | % | 2.53 | % | 2.66 | % |
(a) | The ratios were based on average assets and average equity using a combination of monthly and daily average methodologies. |
(b) | The common dividend payout ratio was calculated using basic earnings per common share. During the six months ended June 30, 2020, we paid dividends of $0.38 per share and incurred a loss of $0.21 per share. Due to the relationship of this calculation and the net loss incurred, this ratio is not meaningful for the six months ended June 30, 2020. |
(c) | Net interest spread represents the difference between the rate on total interest-earning assets and the rate on total interest-bearing liabilities, excluding discontinued operations for the periods shown. |
(d) | Net yield on interest-earning assets represents annualized net financing revenue and other interest income as a percentage of total interest-earning assets. |
June 30, | ||||||||
($ in millions) | 2020 | 2019 | ||||||
Common Equity Tier 1 capital ratio | 10.09 | % | 9.52 | % | ||||
Tier 1 capital ratio | 11.85 | % | 11.19 | % | ||||
Total capital ratio | 13.79 | % | 12.73 | % | ||||
Tier 1 leverage ratio (to adjusted quarterly average assets) (a) | 8.93 | % | 9.05 | % | ||||
Total equity | $ | 13,826 | $ | 14,316 | ||||
CECL phase-in adjustment (b) | 1,206 | — | ||||||
Goodwill and certain other intangibles | (392 | ) | (281 | ) | ||||
Deferred tax assets arising from net operating loss and tax credit carryforwards (c) | (18 | ) | (84 | ) | ||||
Other adjustments | (796 | ) | (64 | ) | ||||
Common Equity Tier 1 capital | 13,826 | 13,887 | ||||||
Trust preferred securities | 2,497 | 2,494 | ||||||
Other adjustments | (88 | ) | (62 | ) | ||||
Tier 1 capital | 16,235 | 16,319 | ||||||
Qualifying subordinated debt and other instruments qualifying as Tier 2 | 1,034 | 1,032 | ||||||
Qualifying allowance for credit losses and other adjustments | 1,626 | 1,221 | ||||||
Total capital | $ | 18,895 | $ | 18,572 | ||||
Risk-weighted assets (d) | $ | 136,973 | $ | 145,874 |
(a) | Tier 1 leverage ratio equals Tier 1 capital divided by adjusted quarterly average total assets, which both reflect adjustments for disallowed goodwill, certain intangible assets, and disallowed deferred tax assets. |
(b) | We have elected to delay recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us extends through December 31, 2021. Beginning on January 1, 2022, we will be required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025. Refer to Note 17 to the Condensed Consolidated Financial Statements for further information. |
(c) | Contains deferred tax assets required to be deducted from capital under U.S. Basel III. |
(d) | Risk-weighted assets are defined by regulation and are generally determined by allocating assets and specified off-balance-sheet exposures to various risk categories. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
($ in millions) | 2020 | 2019 | Favorable/(unfavorable) % change | 2020 | 2019 | Favorable/(unfavorable) % change | ||||||||||||||
Total net revenue | ||||||||||||||||||||
Dealer Financial Services | ||||||||||||||||||||
Automotive Finance | $ | 1,029 | $ | 1,083 | (5) | $ | 2,116 | $ | 2,131 | (1) | ||||||||||
Insurance | 450 | 301 | 50 | 601 | 673 | (11) | ||||||||||||||
Mortgage Finance | 49 | 50 | (2) | 97 | 102 | (5) | ||||||||||||||
Corporate Finance | 83 | 71 | 17 | 164 | 136 | 21 | ||||||||||||||
Corporate and Other | (2 | ) | 47 | (104) | 43 | 108 | (60) | |||||||||||||
Total | $ | 1,609 | $ | 1,552 | 4 | $ | 3,021 | $ | 3,150 | (4) | ||||||||||
Income from continuing operations before income tax expense (benefit) | ||||||||||||||||||||
Dealer Financial Services | ||||||||||||||||||||
Automotive Finance | $ | 329 | $ | 459 | (28) | $ | 156 | $ | 788 | (80) | ||||||||||
Insurance | 128 | — | n/m | 23 | 145 | (84) | ||||||||||||||
Mortgage Finance | 8 | 14 | (43) | 20 | 27 | (26) | ||||||||||||||
Corporate Finance | 32 | 46 | (30) | (36 | ) | 59 | (161) | |||||||||||||
Corporate and Other | (160 | ) | (25 | ) | n/m | (237 | ) | (39 | ) | n/m | ||||||||||
Total | $ | 337 | $ | 494 | (32) | $ | (74 | ) | $ | 980 | (108) |
• | Our 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. Dealer Financial Services comprises our Automotive Finance and Insurance segments. |
• | Our Mortgage Finance operations consist of the management of held-for-investment and held-for-sale consumer mortgage loan portfolios. Our held-for-investment portfolio includes bulk purchases of high-quality jumbo and LMI mortgage loans originated by third parties, and our direct-to-consumer Ally Home mortgage offering. |
• | Our Corporate Finance operations primarily provides senior secured leveraged cash flow and asset-based loans to mostly U.S.-based middle-market companies owned by private equity sponsors, and loans to asset managers that primarily provide leveraged loans. We believe our growing deposit-based funding model coupled with our expanded product offerings and deep industry relationships provide an advantage over our competition, which includes other banks as well as publicly and privately held finance companies. Our corporate finance lending portfolio is generally composed of first-lien, first-out loans. Our primary focus is on businesses owned by private equity sponsors with loans typically used for leveraged buyouts, mergers and acquisitions, debt refinancing, expansions, restructurings, and working capital. Additionally, our Lender Finance business provides asset managers with partial funding for their direct-lending activities. The portfolio is well diversified across multiple industries including manufacturing, distribution, services, and other specialty sectors. These specialty sectors include our Technology Finance and Healthcare verticals. Our Technology Finance vertical provides financing solutions to venture capital-backed, technology-based companies. The Healthcare vertical provides financing across the healthcare spectrum including services, pharmaceuticals, manufacturing, and medical devices and supplies. We also provide a commercial real estate product focused on lending to skilled nursing facilities, senior housing, medical office buildings, and hospitals. |
• | 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, |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
($ in millions) | 2020 | 2019 | Favorable/(unfavorable) % change | 2020 | 2019 | Favorable/(unfavorable) % change | ||||||||||||||
Net financing revenue and other interest income | ||||||||||||||||||||
Total financing revenue and other interest income | $ | 2,178 | $ | 2,491 | (13) | $ | 4,529 | $ | 4,924 | (8) | ||||||||||
Total interest expense | 872 | 1,095 | 20 | 1,829 | 2,150 | 15 | ||||||||||||||
Net depreciation expense on operating lease assets | 252 | 239 | (5) | 500 | 485 | (3) | ||||||||||||||
Net financing revenue and other interest income | 1,054 | 1,157 | (9) | 2,200 | 2,289 | (4) | ||||||||||||||
Other revenue | ||||||||||||||||||||
Insurance premiums and service revenue earned | 263 | 261 | 1 | 540 | 522 | 3 | ||||||||||||||
Gain on mortgage and automotive loans, net | 14 | 2 | n/m | 2 | 12 | (83) | ||||||||||||||
Other gain on investments, net | 188 | 39 | n/m | 109 | 147 | (26) | ||||||||||||||
Other income, net of losses | 90 | 93 | (3) | 170 | 180 | (6) | ||||||||||||||
Total other revenue | 555 | 395 | 41 | 821 | 861 | (5) | ||||||||||||||
Total net revenue | 1,609 | 1,552 | 4 | 3,021 | 3,150 | (4) | ||||||||||||||
Provision for credit losses | 287 | 177 | (62) | 1,190 | 459 | (159) | ||||||||||||||
Noninterest expense | ||||||||||||||||||||
Compensation and benefits expense | 334 | 296 | (13) | 694 | 614 | (13) | ||||||||||||||
Insurance losses and loss adjustment expenses | 142 | 127 | (12) | 216 | 186 | (16) | ||||||||||||||
Goodwill impairment | 50 | — | n/m | 50 | — | n/m | ||||||||||||||
Other operating expenses | 459 | 458 | — | 945 | 911 | (4) | ||||||||||||||
Total noninterest expense | 985 | 881 | (12) | 1,905 | 1,711 | (11) | ||||||||||||||
Income (loss) from continuing operations before income tax expense (benefit) | 337 | 494 | (32) | (74 | ) | 980 | (108) | |||||||||||||
Income tax expense (benefit) from continuing operations | 95 | (90 | ) | n/m | 3 | 21 | 86 | |||||||||||||
Net income (loss) from continuing operations | $ | 242 | $ | 584 | (59) | $ | (77 | ) | $ | 959 | (108) |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
($ in millions) | 2020 | 2019 | Favorable/(unfavorable) % change | 2020 | 2019 | Favorable/(unfavorable) % change | ||||||||||||||
Net financing revenue and other interest income | ||||||||||||||||||||
Consumer | $ | 1,215 | $ | 1,184 | 3 | $ | 2,417 | $ | 2,314 | 4 | ||||||||||
Commercial | 210 | 412 | (49) | 517 | 834 | (38) | ||||||||||||||
Loans held-for-sale | — | — | — | — | 1 | (100) | ||||||||||||||
Operating leases | 343 | 363 | (6) | 710 | 724 | (2) | ||||||||||||||
Other interest income | 2 | 3 | (33) | 3 | 4 | (25) | ||||||||||||||
Total financing revenue and other interest income | 1,770 | 1,962 | (10) | 3,647 | 3,877 | (6) | ||||||||||||||
Interest expense | 529 | 701 | 25 | 1,118 | 1,390 | 20 | ||||||||||||||
Net depreciation expense on operating lease assets (a) | 252 | 239 | (5) | 500 | 485 | (3) | ||||||||||||||
Net financing revenue and other interest income | 989 | 1,022 | (3) | 2,029 | 2,002 | 1 | ||||||||||||||
Other revenue | ||||||||||||||||||||
Gain on automotive loans, net | — | — | — | — | 8 | (100) | ||||||||||||||
Other income | 40 | 61 | (34) | 87 | 121 | (28) | ||||||||||||||
Total other revenue | 40 | 61 | (34) | 87 | 129 | (33) | ||||||||||||||
Total net revenue | 1,029 | 1,083 | (5) | 2,116 | 2,131 | (1) | ||||||||||||||
Provision for credit losses | 256 | 180 | (42) | 1,022 | 442 | (131) | ||||||||||||||
Noninterest expense | ||||||||||||||||||||
Compensation and benefits expense | 133 | 127 | (5) | 281 | 263 | (7) | ||||||||||||||
Other operating expenses | 311 | 317 | 2 | 657 | 638 | (3) | ||||||||||||||
Total noninterest expense | 444 | 444 | — | 938 | 901 | (4) | ||||||||||||||
Income from continuing operations before income tax expense | $ | 329 | $ | 459 | (28) | $ | 156 | $ | 788 | (80) | ||||||||||
Total assets | $ | 102,016 | $ | 114,955 | (11) | $ | 102,016 | $ | 114,955 | (11) |
(a) | Includes net remarketing losses of $11 million and $9 million for the three months and six months ended June 30, 2020, respectively, compared to remarketing gains of $23 million and $38 million for the three months and six months ended June 30, 2019. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||
($ in millions) | Average balance (a) | Yield | Average balance (a) | Yield | Average balance (a) | Yield | Average balance (a) | Yield | ||||||||||||||||
Finance receivables and loans, net (b) | ||||||||||||||||||||||||
Consumer automotive (c) | $ | 72,262 | 6.48 | % | $ | 72,274 | 6.58 | % | $ | 72,406 | 6.51 | % | $ | 71,631 | 6.53 | % | ||||||||
Commercial | ||||||||||||||||||||||||
Wholesale floorplan (c) | 20,215 | 3.37 | 29,031 | 4.77 | 22,673 | 3.73 | 29,508 | 4.80 | ||||||||||||||||
Other commercial automotive (d) | 5,891 | 4.19 | 5,719 | 4.70 | 5,616 | 4.35 | 5,643 | 4.72 | ||||||||||||||||
Investment in operating leases, net (e) | 9,068 | 4.10 | 8,370 | 5.94 | 9,073 | 4.66 | 8,379 | 5.75 |
(a) | Average balances are calculated using a combination of monthly and daily average methodologies. |
(b) | Nonperforming finance receivables and loans are included in the average balances. For information on our accounting policies regarding nonperforming status, refer to Note 1 to the Condensed Consolidated Financial Statements. |
(c) | Includes the effects of derivative financial instruments designated as hedges, which is included within Corporate and Other. |
(d) | Consists primarily of automotive dealer term loans, including those to finance dealership land and buildings, and dealer fleet financing. |
(e) | Yield includes losses on the sale of off-lease vehicles of $11 million and $9 million for the three months and six months ended June 30, 2020, respectively, compared to gains on the sale of off-lease vehicles of $23 million and $38 million for the three months and six months ended June 30, 2019. Excluding these gains on sale, the annualized yield was 4.60% and 4.86% for the three months and six months ended June 30, 2020, respectively, compared to 4.84% for both the three months and six months ended June 30, 2019. |
Used retail | New retail | ||||||||||||||||||
Credit Tier (a) | Volume ($ in billions) | % Share of volume | Average FICO® | Volume ($ in billions) | % Share of volume | Average FICO® | |||||||||||||
Three months ended June 30, 2020 | |||||||||||||||||||
S | $ | 1.1 | 25 | 734 | $ | 0.9 | 45 | 731 | |||||||||||
A | 2.1 | 49 | 681 | 0.9 | 45 | 677 | |||||||||||||
B | 0.8 | 19 | 643 | 0.2 | 10 | 645 | |||||||||||||
C | 0.2 | 5 | 604 | — | — | 607 | |||||||||||||
D | 0.1 | 2 | 556 | — | — | 586 | |||||||||||||
Total retail originations | $ | 4.3 | 100 | 680 | $ | 2.0 | 100 | 697 | |||||||||||
Three months ended June 30, 2019 | |||||||||||||||||||
S | $ | 1.3 | 25 | 738 | $ | 1.5 | 44 | 743 | |||||||||||
A | 2.2 | 42 | 678 | 1.4 | 41 | 676 | |||||||||||||
B | 1.2 | 23 | 645 | 0.4 | 12 | 644 | |||||||||||||
C | 0.4 | 8 | 607 | 0.1 | 3 | 613 | |||||||||||||
D | 0.1 | 2 | 519 | — | — | 579 | |||||||||||||
Total retail originations | $ | 5.2 | 100 | 678 | $ | 3.4 | 100 | 698 | |||||||||||
Six months ended June 30, 2020 | |||||||||||||||||||
S | $ | 2.2 | 24 | 736 | $ | 2.2 | 45 | 735 | |||||||||||
A | 4.3 | 46 | 680 | 2.0 | 41 | 675 | |||||||||||||
B | 2.0 | 22 | 645 | 0.6 | 12 | 644 | |||||||||||||
C | 0.6 | 7 | 612 | 0.1 | 2 | 613 | |||||||||||||
D | 0.1 | 1 | 563 | — | — | 577 | |||||||||||||
Total retail originations | $ | 9.2 | 100 | 680 | $ | 4.9 | 100 | 696 | |||||||||||
Six months ended June 30, 2019 | |||||||||||||||||||
S | $ | 2.7 | 26 | 738 | $ | 3.0 | 46 | 744 | |||||||||||
A | 4.3 | 41 | 677 | 2.5 | 38 | 676 | |||||||||||||
B | 2.5 | 24 | 644 | 0.8 | 13 | 643 | |||||||||||||
C | 0.8 | 8 | 608 | 0.2 | 3 | 612 | |||||||||||||
D | 0.1 | 1 | 537 | — | — | 571 | |||||||||||||
Total retail originations | $ | 10.4 | 100 | 680 | $ | 6.5 | 100 | 699 |
(a) | Represents Ally’s internal credit score, incorporating numerous borrower and structure attributes including: severity and aging of delinquency; number of credit inquiries; LTV ratio; and payment-to-income ratio. We periodically update our underwriting scorecard, which can have an impact on our credit tier scoring. |
Three months ended June 30, | Six months ended June 30, | |||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||
0–71 | 18 | % | 19 | % | 19 | % | 20 | % | ||||
72–75 | 63 | 66 | 65 | 66 | ||||||||
76 + | 19 | 15 | 16 | 14 | ||||||||
Total retail originations (a) | 100 | % | 100 | % | 100 | % | 100 | % |
(a) | Excludes RV loans. |
June 30, | 2020 | 2019 | ||||
Pre-2016 | 4 | % | 10 | % | ||
2016 | 8 | 14 | ||||
2017 | 14 | 22 | ||||
2018 | 22 | 32 | ||||
2019 | 33 | 22 | ||||
2020 | 19 | — | ||||
Total | 100 | % | 100 | % |
Consumer automotive financing originations | % Share of Ally originations | |||||||||||
Three months ended June 30, ($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||
Used retail | $ | 4,287 | $ | 5,259 | 60 | 54 | ||||||
New retail standard | 2,023 | 3,368 | 28 | 34 | ||||||||
Lease | 860 | 1,060 | 12 | 11 | ||||||||
New retail subvented | 20 | 56 | — | 1 | ||||||||
Total consumer automotive financing originations (a) | $ | 7,190 | $ | 9,743 | 100 | 100 |
(a) | Includes CSG originations of $704 million and $1.0 billion for the three months ended June 30, 2020, and 2019, respectively. |
Consumer automotive financing originations | % Share of Ally originations | |||||||||||
Six months ended June 30, ($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||
Used retail | $ | 9,240 | $ | 10,411 | 57 | 55 | ||||||
New retail standard | 4,883 | 6,417 | 30 | 34 | ||||||||
Lease | 2,078 | 1,943 | 13 | 10 | ||||||||
New retail subvented | 56 | 123 | — | 1 | ||||||||
Total consumer automotive financing originations (a) | $ | 16,257 | $ | 18,894 | 100 | 100 |
(a) | Includes CSG originations of $1.7 billion and $2.0 billion for the six months ended June 30, 2020, and 2019, respectively. |
Consumer automotive financing originations | % Share of Ally originations | |||||||||||
Three months ended June 30, ($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||
Growth channel | $ | 3,612 | $ | 4,862 | 50 | 50 | ||||||
Chrysler dealers | 1,986 | 2,450 | 28 | 25 | ||||||||
GM dealers | 1,592 | 2,431 | 22 | 25 | ||||||||
Total consumer automotive financing originations | $ | 7,190 | $ | 9,743 | 100 | 100 |
Consumer automotive financing originations | % Share of Ally originations | |||||||||||
Six months ended June 30, ($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||
Growth channel | $ | 8,161 | $ | 9,353 | 50 | 50 | ||||||
Chrysler dealers | 4,304 | 4,736 | 27 | 25 | ||||||||
GM dealers | 3,792 | 4,805 | 23 | 25 | ||||||||
Total consumer automotive financing originations | $ | 16,257 | $ | 18,894 | 100 | 100 |
Used retail | New retail | Lease | ||||||||||||||||
Three months ended June 30, | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
740 + | 18 | % | 17 | % | 20 | % | 23 | % | 47 | % | 50 | % | ||||||
660–739 | 40 | 39 | 41 | 35 | 38 | 34 | ||||||||||||
620–659 | 24 | 25 | 21 | 20 | 11 | 10 | ||||||||||||
540–619 | 12 | 13 | 5 | 7 | 3 | 4 | ||||||||||||
< 540 | 3 | 2 | — | 1 | — | — | ||||||||||||
Unscored (a) | 3 | 4 | 13 | 14 | 1 | 2 | ||||||||||||
Total consumer automotive financing originations | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(a) | Unscored are primarily CSG contracts with business entities that have no FICO® Score. |
Used retail | New retail | Lease | ||||||||||||||||
Six months ended June 30, | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||
740 + | 18 | % | 18 | % | 21 | % | 24 | % | 47 | % | 48 | % | ||||||
660–739 | 39 | 39 | 37 | 34 | 37 | 34 | ||||||||||||
620–659 | 25 | 25 | 20 | 20 | 11 | 11 | ||||||||||||
540–619 | 13 | 12 | 7 | 6 | 4 | 5 | ||||||||||||
< 540 | 2 | 2 | — | 1 | — | — | ||||||||||||
Unscored (a) | 3 | 4 | 15 | 15 | 1 | 2 | ||||||||||||
Total consumer automotive financing originations | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % |
(a) | Unscored are primarily CSG contracts with business entities that have no FICO® Score. |
Average balance | ||||||||||||||||
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
GM new vehicles | 34 | % | 41 | % | 34 | % | 40 | % | ||||||||
Chrysler new vehicles | 33 | 33 | 34 | 33 | ||||||||||||
Growth new vehicles | 17 | 14 | 16 | 14 | ||||||||||||
Used vehicles | 16 | 12 | 16 | 13 | ||||||||||||
Total | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
Total commercial wholesale finance receivables | $ | 20,215 | $ | 29,031 | $ | 22,673 | $ | 29,508 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
($ in millions) | 2020 | 2019 | Favorable/(unfavorable) % change | 2020 | 2019 | Favorable/(unfavorable) % change | ||||||||||||||
Insurance premiums and other income | ||||||||||||||||||||
Insurance premiums and service revenue earned | $ | 263 | $ | 261 | 1 | $ | 540 | $ | 522 | 3 | ||||||||||
Interest and dividends on investment securities and cash and cash equivalents, net (a) | 12 | 15 | (20) | 26 | 27 | (4) | ||||||||||||||
Other gain on investments, net (b) | 172 | 23 | n/m | 30 | 118 | (75) | ||||||||||||||
Other income | 3 | 2 | 50 | 5 | 6 | (17) | ||||||||||||||
Total insurance premiums and other income | 450 | 301 | 50 | 601 | 673 | (11) | ||||||||||||||
Expense | ||||||||||||||||||||
Insurance losses and loss adjustment expenses | 142 | 127 | (12) | 216 | 186 | (16) | ||||||||||||||
Acquisition and underwriting expense | ||||||||||||||||||||
Compensation and benefits expense | 20 | 20 | — | 41 | 41 | — | ||||||||||||||
Insurance commissions expense | 127 | 117 | (9) | 253 | 231 | (10) | ||||||||||||||
Other expenses | 33 | 37 | 11 | 68 | 70 | 3 | ||||||||||||||
Total acquisition and underwriting expense | 180 | 174 | (3) | 362 | 342 | (6) | ||||||||||||||
Total expense | 322 | 301 | (7) | 578 | 528 | (9) | ||||||||||||||
Income from continuing operations before income tax expense (benefit) | $ | 128 | $ | — | n/m | $ | 23 | $ | 145 | (84) | ||||||||||
Total assets | $ | 8,740 | $ | 8,241 | 6 | $ | 8,740 | $ | 8,241 | 6 | ||||||||||
Insurance premiums and service revenue written | $ | 267 | $ | 314 | (15) | $ | 584 | $ | 619 | (6) | ||||||||||
Combined ratio (c) | 120.9 | % | 114.4 | % | 105.9 | % | 100.0 | % |
(a) | Includes interest expense of $19 million and $39 million for the three months and six months ended June 30, 2020, respectively, and $19 million and $38 million for the three months and six months ended June 30, 2019. |
(b) | Includes net unrealized gains on equity securities of $89 million for the three months ended June 30, 2020, and net unrealized losses of $93 million for the six months ended June 30, 2020, compared to net unrealized gains of $4 million and $69 million for the three months and six months ended June 30, 2019, respectively. |
(c) | Management uses a combined ratio as a primary measure of underwriting profitability. Underwriting profitability is indicated by a combined ratio under 100% and is calculated as the sum of all incurred losses and expenses (excluding interest and income tax expense) divided by the total of premiums and service revenues earned and other income. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Finance and insurance products | ||||||||||||||||
Vehicle service contracts | $ | 203 | $ | 239 | $ | 410 | $ | 442 | ||||||||
Guaranteed asset protection and other finance and insurance products (a) | 33 | 31 | 66 | 57 | ||||||||||||
Total finance and insurance products | 236 | 270 | 476 | 499 | ||||||||||||
Property and casualty insurance (b) | 31 | 44 | 108 | 120 | ||||||||||||
Total | $ | 267 | $ | 314 | $ | 584 | $ | 619 |
(a) | Other products include VMCs, ClearGuard, and other ancillary products. |
(b) | P&C insurance include vehicle inventory insurance and dealer ancillary products. |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Cash | ||||||||
Noninterest-bearing cash | $ | 102 | $ | 95 | ||||
Interest-bearing cash | 1,488 | 1,230 | ||||||
Total cash | 1,590 | 1,325 | ||||||
Equity securities | 608 | 608 | ||||||
Available-for-sale securities | ||||||||
Debt securities | ||||||||
U.S. Treasury and federal agencies | 55 | 528 | ||||||
U.S. States and political subdivisions | 580 | 530 | ||||||
Foreign government | 162 | 186 | ||||||
Agency mortgage-backed residential | 1,011 | 1,132 | ||||||
Mortgage-backed residential | 60 | 70 | ||||||
Corporate debt | 1,854 | 1,363 | ||||||
Total available-for-sale securities | 3,722 | 3,809 | ||||||
Total cash and securities | $ | 5,920 | $ | 5,742 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
($ in millions) | 2020 | 2019 | Favorable/(unfavorable) % change | 2020 | 2019 | Favorable/(unfavorable) % change | ||||||||||||||
Net financing revenue and other interest income | ||||||||||||||||||||
Total financing revenue and other interest income | $ | 127 | $ | 150 | (15) | $ | 265 | $ | 296 | (10) | ||||||||||
Interest expense | 97 | 104 | 7 | 197 | 200 | 2 | ||||||||||||||
Net financing revenue and other interest income | 30 | 46 | (35) | 68 | 96 | (29) | ||||||||||||||
Gain on mortgage loans, net | 17 | 2 | n/m | 26 | 4 | n/m | ||||||||||||||
Other income, net of losses | 2 | 2 | — | 3 | 2 | 50 | ||||||||||||||
Total other revenue | 19 | 4 | n/m | 29 | 6 | n/m | ||||||||||||||
Total net revenue | 49 | 50 | (2) | 97 | 102 | (5) | ||||||||||||||
Provision for credit losses | 3 | — | n/m | 4 | 2 | (100) | ||||||||||||||
Noninterest expense | ||||||||||||||||||||
Compensation and benefits expense | 5 | 9 | 44 | 11 | 17 | 35 | ||||||||||||||
Other operating expenses | 33 | 27 | (22) | 62 | 56 | (11) | ||||||||||||||
Total noninterest expense | 38 | 36 | (6) | 73 | 73 | — | ||||||||||||||
Income from continuing operations before income tax expense (benefit) | $ | 8 | $ | 14 | (43) | $ | 20 | $ | 27 | (26) | ||||||||||
Total assets | $ | 16,669 | $ | 16,584 | 1 | $ | 16,669 | $ | 16,584 | 1 |
FICO® Score | Volume ($ in millions) | % Share of volume | ||||
Three months ended June 30, 2020 | ||||||
740 + | $ | 2,045 | 84 | |||
720–739 | 232 | 10 | ||||
700–719 | 137 | 6 | ||||
680–699 | 10 | — | ||||
Total consumer mortgage financing volume | $ | 2,424 | 100 | |||
Three months ended June 30, 2019 | ||||||
740 + | $ | 852 | 79 | |||
720–739 | 119 | 11 | ||||
700–719 | 92 | 9 | ||||
680–699 | 11 | 1 | ||||
Total consumer mortgage financing volume | $ | 1,074 | 100 | |||
Six months ended June 30, 2020 | ||||||
740 + | $ | 2,840 | 85 | |||
720–739 | 304 | 9 | ||||
700–719 | 183 | 6 | ||||
680–699 | 11 | — | ||||
Total consumer mortgage financing volume | $ | 3,338 | 100 | |||
Six months ended June 30, 2019 | ||||||
740 + | $ | 2,050 | 80 | |||
720–739 | 282 | 11 | ||||
700–719 | 222 | 8 | ||||
680–699 | 17 | 1 | ||||
Total consumer mortgage financing volume | $ | 2,571 | 100 |
Product | Net UPB (a) ($ in millions) | % of total net UPB | WAC | Net premium ($ in millions) | Average refreshed LTV (b) | Average refreshed FICO® (c) | |||||||||||||
June 30, 2020 | |||||||||||||||||||
Adjustable-rate | $ | 1,356 | 8 | 3.43 | % | $ | 16 | 50.77 | % | 773 | |||||||||
Fixed-rate | 14,845 | 92 | 3.94 | 212 | 61.29 | 774 | |||||||||||||
Total | $ | 16,201 | 100 | 3.90 | $ | 228 | 60.41 | 774 | |||||||||||
December 31, 2019 | |||||||||||||||||||
Adjustable-rate | $ | 1,715 | 11 | 3.46 | % | $ | 22 | 51.59 | % | 774 | |||||||||
Fixed-rate | 14,200 | 89 | 4.07 | 244 | 61.39 | 774 | |||||||||||||
Total | $ | 15,915 | 100 | 4.01 | $ | 266 | 60.33 | 774 |
(a) | Represents UPB, net of charge-offs. |
(b) | Updated home values were derived using a combination of appraisals, broker price opinions, automated valuation models, and metropolitan statistical area level house price indices. |
(c) | Updated to reflect changes in credit score since loan origination. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
($ in millions) | 2020 | 2019 | Favorable/(unfavorable) % change | 2020 | 2019 | Favorable/(unfavorable) % change | ||||||||||||||
Net financing revenue and other interest income | ||||||||||||||||||||
Interest and fees on finance receivables and loans | $ | 89 | $ | 95 | (6) | $ | 182 | $ | 184 | (1) | ||||||||||
Interest on loans held-for-sale | 3 | 2 | 50 | 5 | 3 | 67 | ||||||||||||||
Interest expense | 15 | 36 | 58 | 42 | 72 | 42 | ||||||||||||||
Net financing revenue and other interest income | 77 | 61 | 26 | 145 | 115 | 26 | ||||||||||||||
Total other revenue | 6 | 10 | (40) | 19 | 21 | (10) | ||||||||||||||
Total net revenue | 83 | 71 | 17 | 164 | 136 | 21 | ||||||||||||||
Provision for credit losses | 25 | 3 | n/m | 139 | 26 | n/m | ||||||||||||||
Noninterest expense | ||||||||||||||||||||
Compensation and benefits expense | 14 | 13 | (8) | 35 | 32 | (9) | ||||||||||||||
Other operating expenses | 12 | 9 | (33) | 26 | 19 | (37) | ||||||||||||||
Total noninterest expense | 26 | 22 | (18) | 61 | 51 | (20) | ||||||||||||||
Income (loss) from continuing operations before income tax expense (benefit) | $ | 32 | $ | 46 | (30) | $ | (36 | ) | $ | 59 | (161) | |||||||||
Total assets | $ | 6,206 | $ | 4,980 | 25 | $ | 6,206 | $ | 4,980 | 25 |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Loans held-for-sale, net | $ | 265 | $ | 100 | ||||
Finance receivables and loans | $ | 6,031 | $ | 5,688 | ||||
Unfunded lending commitments (a) | $ | 3,537 | $ | 2,682 | ||||
Total serviced loans | $ | 7,346 | $ | 6,380 |
(a) | Includes unused revolving credit line commitments for loans held-for-sale and finance receivables and loans, signed commitment letters, and standby letter of credit facilities, which are issued on behalf of clients and may contingently require us to make payments to a third-party beneficiary in the event of a draw by the beneficiary thereunder. As many of these commitments are subject to borrowing base agreements and other restrictive covenants or may expire without being fully drawn, the stated amounts of these unfunded commitments are not necessarily indicative of future cash requirements. |
June 30, 2020 | December 31, 2019 | |||||
Industry | ||||||
Health services | 22.4 | % | 25.8 | % | ||
Services | 20.2 | 19.8 | ||||
Financial services | 17.1 | 13.0 | ||||
Automotive and transportation | 11.9 | 11.4 | ||||
Machinery, equipment, and electronics | 6.6 | 7.0 | ||||
Chemicals and metals | 4.6 | 5.9 | ||||
Food and beverages | 3.4 | 3.9 | ||||
Other manufactured products | 3.2 | 3.1 | ||||
Wholesale | 2.9 | 3.4 | ||||
Lumber and wood | 2.3 | 1.1 | ||||
Retail trade | 1.4 | 1.3 | ||||
Paper, printing, and publishing | 1.4 | 1.7 | ||||
Other | 2.6 | 2.6 | ||||
Total finance receivables and loans | 100.0 | % | 100.0 | % |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||
($ in millions) | 2020 | 2019 | Favorable/(unfavorable) % change | 2020 | 2019 | Favorable/(unfavorable) % change | ||||||||||||||
Net financing revenue and other interest income | ||||||||||||||||||||
Interest and fees on finance receivables and loans (a) | $ | (10 | ) | $ | 20 | (150) | $ | (7 | ) | $ | 41 | (117) | ||||||||
Interest on loans held-for-sale | — | 1 | (100) | — | 1 | (100) | ||||||||||||||
Interest and dividends on investment securities and other earning assets | 170 | 215 | (21) | 367 | 428 | (14) | ||||||||||||||
Interest on cash and cash equivalents | — | 16 | (100) | 9 | 35 | (74) | ||||||||||||||
Other, net | (2 | ) | (4 | ) | 50 | (4 | ) | (6 | ) | 33 | ||||||||||
Total financing revenue and other interest income | 158 | 248 | (36) | 365 | 499 | (27) | ||||||||||||||
Interest expense | ||||||||||||||||||||
Original issue discount amortization (b) | 11 | 10 | (10) | 22 | 20 | (10) | ||||||||||||||
Other interest expense (c) | 201 | 225 | 11 | 411 | 430 | 4 | ||||||||||||||
Total interest expense | 212 | 235 | 10 | 433 | 450 | 4 | ||||||||||||||
Net financing revenue and other interest income | (54 | ) | 13 | n/m | (68 | ) | 49 | n/m | ||||||||||||
Other revenue | ||||||||||||||||||||
Loss on mortgage and automotive loans, net | (3 | ) | — | n/m | (24 | ) | — | n/m | ||||||||||||
Other gain on investments, net | 15 | 14 | 7 | 82 | 23 | n/m | ||||||||||||||
Other income, net of losses | 40 | 20 | 100 | 53 | 36 | 47 | ||||||||||||||
Total other revenue | 52 | 34 | 53 | 111 | 59 | 88 | ||||||||||||||
Total net revenue | (2 | ) | 47 | (104) | 43 | 108 | (60) | |||||||||||||
Provision for credit losses | 3 | (6 | ) | (150) | 25 | (11 | ) | n/m | ||||||||||||
Total noninterest expense (d) | 155 | 78 | (99) | 255 | 158 | (61) | ||||||||||||||
Loss from continuing operations before income tax expense | $ | (160 | ) | $ | (25 | ) | n/m | $ | (237 | ) | $ | (39 | ) | n/m | ||||||
Total assets | $ | 50,430 | $ | 35,688 | 41 | $ | 50,430 | $ | 35,688 | 41 |
(a) | Primarily related to impacts associated with hedging activities within our consumer automotive loan portfolio, financing revenue from our legacy mortgage portfolio, and consumer unsecured lending activity. |
(b) | Amortization is included as interest on long-term debt in the Condensed Consolidated Statement of Comprehensive Income. |
(c) | Includes the residual impacts of our FTP methodology and impacts of hedging activities of certain debt obligations. |
(d) | Includes reductions of $242 million and $498 million for the three months and six months ended June 30, 2020, respectively, and $219 million and $448 million for the three months and six months ended June 30, 2019, related to the allocation of corporate overhead expenses to other segments. The receiving segments record their allocation of corporate overhead expense within other operating expense. |
Year ended December 31, ($ in millions) | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 and thereafter | Total | |||||||||||||||||||||
Original issue discount | ||||||||||||||||||||||||||||
Outstanding balance at year end | $ | 1,067 | $ | 1,014 | $ | 957 | $ | 894 | $ | 825 | $ | — | ||||||||||||||||
Total amortization (b) | 25 | 53 | 57 | 63 | 69 | 825 | $ | 1,092 |
(a) | The maximum annual scheduled amortization for any individual year is $143 million in 2030. |
(b) | The amortization is included as interest on long-term debt in the Condensed Consolidated Statement of Comprehensive Income. |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Cash | ||||||||
Noninterest-bearing cash | $ | 484 | $ | 501 | ||||
Interest-bearing cash | 17,034 | 1,706 | ||||||
Total cash | 17,518 | 2,207 | ||||||
Available-for-sale securities | ||||||||
Debt securities | ||||||||
U.S. Treasury and federal agencies | 752 | 1,520 | ||||||
U.S. States and political subdivisions | 333 | 111 | ||||||
Agency mortgage-backed residential | 18,873 | 20,272 | ||||||
Mortgage-backed residential | 3,365 | 2,780 | ||||||
Agency mortgage-backed commercial | 1,786 | 1,382 | ||||||
Mortgage-backed commercial | 38 | 42 | ||||||
Asset-backed | 356 | 368 | ||||||
Total available-for-sale securities | 25,503 | 26,475 | ||||||
Held-to-maturity securities | ||||||||
Debt securities | ||||||||
Agency mortgage-backed residential | 1,462 | 1,579 | ||||||
Asset-backed retained notes | 14 | 21 | ||||||
Total held-to-maturity securities | 1,476 | 1,600 | ||||||
Total cash and securities | $ | 44,497 | $ | 30,282 |
2nd quarter 2020 | 1st quarter 2020 | 4th quarter 2019 | 3rd quarter 2019 | 2nd quarter 2019 | |||||||||||||||
Trading days (a) | 63.0 | 62.0 | 63.0 | 63.5 | 63.0 | ||||||||||||||
Average customer trades per day (in thousands) | 60.7 | 43.9 | 21.2 | 17.7 | 18.3 | ||||||||||||||
Funded accounts (b) (in thousands) | 388 | 373 | 347 | 346 | 337 | ||||||||||||||
Total net customer assets ($ in millions) | $ | 9,603 | $ | 7,489 | $ | 7,850 | $ | 7,151 | $ | 7,149 | |||||||||
Total customer cash balances ($ in millions) | $ | 1,891 | $ | 1,856 | $ | 1,376 | $ | 1,272 | $ | 1,229 |
(a) | Represents the number of days the New York Stock Exchange and other U.S. stock exchange markets are open for trading. A half day represents a day when the U.S. markets close early. |
(b) | Represents open and funded brokerage accounts. |
• | Business lines — Responsible for owning and managing all of the risks that emanate from their risk-taking activities, including business units and support functions. |
• | Independent risk management — Operates independent of the business lines and is responsible for establishing and maintaining our risk-management framework and promulgating it enterprise-wide. Independent risk management also provides an objective, critical assessment of risks and—through oversight, effective challenge, and other means—evaluates whether Ally remains aligned with its risk appetite. |
• | Internal audit — Provides its own independent assessments of the effectiveness of our risk management, internal controls, and governance; and independent assessments regarding the quality of our loan portfolios. Internal audit includes Audit Services and the Loan Review Group. |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Finance receivables and loans | ||||||||
Automotive Finance | $ | 94,420 | $ | 104,880 | ||||
Mortgage Finance | 16,429 | 16,181 | ||||||
Corporate Finance | 6,031 | 5,688 | ||||||
Corporate and Other (a) | 1,354 | 1,482 | ||||||
Total finance receivables and loans | 118,234 | 128,231 | ||||||
Loans held-for-sale | ||||||||
Mortgage Finance (b) | 91 | 28 | ||||||
Corporate Finance | 265 | 100 | ||||||
Corporate and Other | 48 | 30 | ||||||
Total loans held-for-sale | 404 | 158 | ||||||
Total on-balance-sheet loans | 118,638 | 128,389 | ||||||
Off-balance-sheet securitized loans | ||||||||
Automotive Finance (c) | 276 | 417 | ||||||
Whole-loan sales | ||||||||
Automotive Finance (c) | 103 | 207 | ||||||
Total off-balance-sheet loans | 379 | 624 | ||||||
Operating lease assets | ||||||||
Automotive Finance | 9,088 | 8,864 | ||||||
Total loan and operating lease exposure | $ | 128,105 | $ | 137,877 |
(a) | Includes $984 million and $1.1 billion of consumer mortgage loans in our legacy mortgage portfolio at June 30, 2020, and December 31, 2019, respectively. |
(b) | Represents the current balance of conforming mortgages originated directly to the held-for-sale portfolio. |
(c) | Represents the current unpaid principal balance of outstanding loans, which are subject to our customary representation, warranty, and covenant provisions. |
Outstanding | Nonperforming (a) | Accruing past due 90 days or more (b) | ||||||||||||||||||||||
($ in millions) | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | ||||||||||||||||||
Consumer automotive (c) (d) | $ | 72,712 | $ | 72,390 | $ | 1,250 | $ | 762 | $ | — | $ | — | ||||||||||||
Consumer mortgage | ||||||||||||||||||||||||
Mortgage Finance | 16,429 | 16,181 | 27 | 17 | — | — | ||||||||||||||||||
Mortgage — Legacy | 984 | 1,141 | 36 | 40 | — | — | ||||||||||||||||||
Total consumer mortgage | 17,413 | 17,322 | 63 | 57 | — | — | ||||||||||||||||||
Consumer other (e) | 232 | 201 | 1 | 2 | — | — | ||||||||||||||||||
Total consumer finance receivables and loans | $ | 90,357 | $ | 89,913 | $ | 1,314 | $ | 821 | $ | — | $ | — |
(a) | Includes nonaccrual TDR loans of $677 million and $252 million at June 30, 2020, and December 31, 2019, respectively. |
(b) | Loans are generally in nonaccrual status when principal or interest has been delinquent for 90 days or more, or when full collection is not expected. Refer to Note 1 to the Condensed Consolidated Financial Statements for a description of our accounting policies for finance receivables and loans. |
(c) | Certain finance receivables and loans are included in fair value hedging relationships. Refer to Note 18 to the Condensed Consolidated Financial Statements for additional information. |
(d) | Includes outstanding CSG loans of $8.1 billion and $8.2 billion at June 30, 2020, and December 31, 2019, respectively, and RV loans of $1.2 billion and $1.3 billion at June 30, 2020, and December 31, 2019. |
(e) | Excludes $8 million of finance receivables at June 30, 2020, and $11 million at December 31, 2019, for which we have elected the fair value option. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||
Net charge-offs (recoveries) | Net charge-off ratios (a) | Net charge-offs (recoveries) | Net charge-off ratios (a) | |||||||||||||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Consumer automotive | $ | 137 | $ | 172 | 0.8 | % | 1.0 | % | $ | 399 | $ | 406 | 1.1 | % | 1.1 | % | ||||||||||||
Consumer mortgage | ||||||||||||||||||||||||||||
Mortgage Finance | — | — | — | — | — | — | — | — | ||||||||||||||||||||
Mortgage — Legacy | (2 | ) | (2 | ) | (0.9 | ) | (0.6 | ) | (4 | ) | (4 | ) | (0.7 | ) | (0.6 | ) | ||||||||||||
Total consumer mortgage | (2 | ) | (2 | ) | — | — | (4 | ) | (4 | ) | — | — | ||||||||||||||||
Consumer other | 4 | — | 6.8 | — | 8 | — | 7.1 | — | ||||||||||||||||||||
Total consumer finance receivables and loans | $ | 139 | $ | 170 | 0.6 | 0.8 | $ | 403 | $ | 402 | 0.9 | 0.9 |
(a) | Net charge-off ratios are calculated as net charge-offs divided by average outstanding finance receivables and loans excluding loans measured at fair value and loans held-for-sale during the period for each loan category. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Consumer automotive | $ | 6,330 | $ | 8,683 | $ | 14,179 | $ | 16,951 | ||||||||
Consumer mortgage (a) | 1,226 | 552 | 1,955 | 903 | ||||||||||||
Consumer other (b) | 75 | — | 145 | — | ||||||||||||
Total consumer loan originations | $ | 7,631 | $ | 9,235 | $ | 16,279 | $ | 17,854 |
(a) | Excludes bulk loan purchases associated with our Mortgage Finance operations, and includes $671 million and $971 million of loans originated as held-for-sale for the three months and six months ended June 30, 2020, respectively, and $155 million and $244 million for the three months and six months ended June 30, 2019. |
(b) | Amounts relate to originations from our Ally Lending business, following the acquisition of Health Credit Services during the fourth quarter of 2019. |
June 30, 2020 (a) | December 31, 2019 | |||||||||||
Consumer automotive | Consumer mortgage | Consumer automotive | Consumer mortgage | |||||||||
California | 8.5 | % | 35.0 | % | 8.5 | % | 35.1 | % | ||||
Texas | 12.5 | 6.7 | 12.4 | 6.5 | ||||||||
Florida | 8.8 | 5.1 | 8.8 | 5.1 | ||||||||
Pennsylvania | 4.5 | 1.9 | 4.6 | 1.9 | ||||||||
Illinois | 4.0 | 2.6 | 4.1 | 2.6 | ||||||||
North Carolina | 4.0 | 2.2 | 4.0 | 2.0 | ||||||||
Georgia | 3.9 | 2.8 | 3.9 | 2.8 | ||||||||
New York | 3.1 | 3.4 | 3.1 | 3.0 | ||||||||
Ohio | 3.6 | 0.5 | 3.6 | 0.5 | ||||||||
New Jersey | 2.8 | 2.3 | 2.8 | 2.3 | ||||||||
Other United States | 44.3 | 37.5 | 44.2 | 38.2 | ||||||||
Total consumer loans | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
(a) | Presentation is in descending order as a percentage of total consumer finance receivables and loans at June 30, 2020. |
Outstanding | Nonperforming (a) | Accruing past due 90 days or more (b) | |||||||||||||||||||||
($ in millions) | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | June 30, 2020 | December 31, 2019 | |||||||||||||||||
Commercial and industrial | |||||||||||||||||||||||
Automotive | $ | 17,755 | $ | 28,332 | $ | 80 | $ | 73 | $ | — | $ | — | |||||||||||
Other (c) | 5,315 | 5,014 | 132 | 138 | — | — | |||||||||||||||||
Commercial real estate | 4,799 | 4,961 | 6 | 4 | — | — | |||||||||||||||||
Total commercial finance receivables and loans | $ | 27,869 | $ | 38,307 | $ | 218 | $ | 215 | $ | — | $ | — |
(a) | Includes nonaccrual TDR loans of $157 million and $114 million at June 30, 2020, and December 31, 2019, respectively. |
(b) | Loans are generally in nonaccrual status when principal or interest has been delinquent for 90 days or more, or when full collection is not expected. Refer to Note 1 to the Condensed Consolidated Financial Statements for a description of our accounting policies for finance receivables and loans. |
(c) | Other commercial and industrial primarily includes senior secured commercial lending largely associated with our Corporate Finance operations. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||||||||||||
Net charge-offs | Net charge-off ratios (a) | Net charge-offs | Net charge-off ratios (a) | |||||||||||||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||||||||||
Automotive | $ | 1 | $ | 1 | — | % | — | % | $ | 3 | $ | 1 | — | % | — | % | ||||||||||||
Other | 38 | 11 | 2.7 | 1.0 | 38 | 16 | 1.4 | 0.7 | ||||||||||||||||||||
Total commercial finance receivables and loans | $ | 39 | $ | 12 | 0.5 | 0.1 | $ | 41 | $ | 17 | 0.2 | 0.1 |
(a) | Net charge-off ratios are calculated as net charge-offs divided by average outstanding finance receivables and loans excluding loans measured at fair value and loans held-for-sale during the period for each loan category. |
June 30, 2020 | December 31, 2019 | |||||
Texas | 13.2 | % | 15.0 | % | ||
Florida | 12.6 | 11.6 | ||||
Michigan | 8.1 | 8.2 | ||||
California | 7.7 | 7.2 | ||||
New York | 5.9 | 5.9 | ||||
North Carolina | 5.3 | 4.6 | ||||
Georgia | 3.8 | 3.5 | ||||
South Carolina | 2.6 | 2.8 | ||||
Illinois | 2.5 | 2.4 | ||||
Utah | 2.3 | 2.3 | ||||
Other United States | 36.0 | 36.5 | ||||
Total commercial real estate finance receivables and loans | 100.0 | % | 100.0 | % |
June 30, 2020 | December 31, 2019 | |||||
Industry | ||||||
Automotive | 68.1 | % | 81.7 | % | ||
Services | 11.0 | 5.4 | ||||
Health/Medical | 5.5 | 2.9 | ||||
Other | 15.4 | 10.0 | ||||
Total commercial criticized finance receivables and loans | 100.0 | % | 100.0 | % |
• | a single forecast scenario for macroeconomic factors incorporated into the modeling process; |
• | a 12-month reasonable and supportable forecast period for macroeconomic factors with a reversion to the historical mean on a straight-line basis over a 24-month period; and |
• | data from the historical mean will be calculated from January 2008 through the most current period which includes data points from the most recent recessionary period. |
Three months ended June 30, 2020 ($ in millions) | Consumer automotive | Consumer mortgage | Consumer other | Total consumer | Commercial | Total | ||||||||||||||||||
Allowance at April 1, 2020 | $ | 2,833 | $ | 39 | $ | 45 | $ | 2,917 | $ | 328 | $ | 3,245 | ||||||||||||
Charge-offs (a) | (245 | ) | (2 | ) | (4 | ) | (251 | ) | (40 | ) | (291 | ) | ||||||||||||
Recoveries | 108 | 4 | — | 112 | 1 | 113 | ||||||||||||||||||
Net charge-offs | (137 | ) | 2 | (4 | ) | (139 | ) | (39 | ) | (178 | ) | |||||||||||||
Provision due to change in portfolio size | (3 | ) | 1 | 3 | 1 | (20 | ) | (19 | ) | |||||||||||||||
Provision due to incremental charge-offs | 137 | (2 | ) | 4 | 139 | 39 | 178 | |||||||||||||||||
Provision due to all other factors (b) | 135 | 2 | (1 | ) | 136 | (8 | ) | 128 | ||||||||||||||||
Total provision for credit losses (c) | 269 | 1 | 6 | 276 | 11 | 287 | ||||||||||||||||||
Other | (2 | ) | — | 2 | — | — | — | |||||||||||||||||
Allowance at June 30, 2020 | $ | 2,963 | $ | 42 | $ | 49 | $ | 3,054 | $ | 300 | $ | 3,354 | ||||||||||||
Net charge-offs to average finance receivables and loans outstanding for the three months ended June 30, 2020 | 0.8 | % | (0.1 | )% | 6.8 | % | 0.6 | % | 0.5 | % | 0.6 | % | ||||||||||||
Ratio of allowance for loan losses to annualized net charge-offs at June 30, 2020 | 5.4 | (4.6 | ) | 3.3 | 5.5 | 1.9 | 4.7 |
(a) | Represents the amount of the amortized cost directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the amortized cost of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Condensed Consolidated Financial Statements for more information regarding our charge-off policies. |
(b) | Amounts include provision expense associated with the impacts of COVID-19, as further described in the section above. |
(c) | Consumer mortgage provision expense includes $3 million related to Mortgage Finance and a provision benefit of $2 million related to our legacy mortgage portfolio. Commercial provision expense includes a provision benefit of $16 million related to commercial automotive and provision expense of $24 million related to commercial other within the commercial and industrial portfolio class, and provision expense of $3 million related to commercial real estate. |
Six months ended June 30, 2020 ($ in millions) | Consumer automotive | Consumer mortgage | Consumer other | Total consumer | Commercial | Total | ||||||||||||||||||
Allowance at December 31, 2019 | $ | 1,075 | $ | 46 | $ | 9 | $ | 1,130 | $ | 133 | $ | 1,263 | ||||||||||||
Cumulative effect of the adoption of Accounting Standards Update 2016-13 | 1,334 | (6 | ) | 16 | 1,344 | 2 | 1,346 | |||||||||||||||||
Allowance at January 1, 2020 | $ | 2,409 | $ | 40 | $ | 25 | $ | 2,474 | $ | 135 | $ | 2,609 | ||||||||||||
Charge-offs (a) | (618 | ) | (5 | ) | (9 | ) | (632 | ) | (43 | ) | (675 | ) | ||||||||||||
Recoveries | 219 | 9 | 1 | 229 | 2 | 231 | ||||||||||||||||||
Net charge-offs | (399 | ) | 4 | (8 | ) | (403 | ) | (41 | ) | (444 | ) | |||||||||||||
Provision due to change in portfolio size | 4 | — | 4 | 8 | (14 | ) | (6 | ) | ||||||||||||||||
Provision due to incremental charge-offs | 399 | (4 | ) | 8 | 403 | 41 | 444 | |||||||||||||||||
Provision due to all other factors (b) | 551 | 2 | 19 | 572 | 180 | 752 | ||||||||||||||||||
Total provision for credit losses (c) | 954 | (2 | ) | 31 | 983 | 207 | 1,190 | |||||||||||||||||
Other | (1 | ) | — | 1 | — | (1 | ) | (1 | ) | |||||||||||||||
Allowance at June 30, 2020 | $ | 2,963 | $ | 42 | $ | 49 | $ | 3,054 | $ | 300 | $ | 3,354 | ||||||||||||
Net charge-offs to average finance receivables and loans outstanding for the six months ended June 30, 2020 | 1.1 | % | — | % | 7.1 | % | 0.9 | % | 0.2 | % | 0.7 | % | ||||||||||||
Ratio of allowance for loan losses to annualized net charge-offs at June 30, 2020 | 3.7 | (5.4 | ) | 3.2 | 3.8 | 3.6 | 3.8 |
(a) | Represents the amount of the amortized cost directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the amortized cost of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Condensed Consolidated Financial Statements for more information regarding our charge-off policies. |
(b) | Amounts include provision expense associated with the impacts of COVID-19, as further described in the section above. |
(c) | Consumer mortgage provision expense includes $4 million related to Mortgage Finance and a provision benefit of $6 million related to our legacy mortgage portfolio. Commercial provision expense includes $40 million related to commercial automotive and $139 million related to commercial other within the commercial and industrial portfolio class, and $28 million related to commercial real estate. |
Three months ended June 30, 2019 ($ in millions) | Consumer automotive | Consumer mortgage | Total consumer | Commercial | Total | |||||||||||||||
Allowance at April 1, 2019 | $ | 1,070 | $ | 52 | $ | 1,122 | $ | 166 | $ | 1,288 | ||||||||||
Charge-offs (a) | (301 | ) | (5 | ) | (306 | ) | (12 | ) | (318 | ) | ||||||||||
Recoveries | 129 | 7 | 136 | — | 136 | |||||||||||||||
Net charge-offs | (172 | ) | 2 | (170 | ) | (12 | ) | (182 | ) | |||||||||||
Provision for loan losses (b) | 180 | (5 | ) | 175 | 2 | 177 | ||||||||||||||
Other | — | — | — | (1 | ) | (1 | ) | |||||||||||||
Allowance at June 30, 2019 | $ | 1,078 | $ | 49 | $ | 1,127 | $ | 155 | $ | 1,282 | ||||||||||
Net charge-offs to average finance receivables and loans outstanding for the three months ended June 30, 2019 | 1.0 | % | — | % | 0.8 | % | 0.1 | % | 0.6 | % | ||||||||||
Ratio of allowance for loan losses to annualized net charge-offs at June 30, 2019 | 1.6 | (6.0 | ) | 1.7 | 3.3 | 1.8 |
(a) | Represents the amount of the gross carrying value directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the gross carrying value of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for more information regarding our charge-off policies. |
(b) | Consumer mortgage provision expense includes a provision benefit of $5 million related to our legacy mortgage portfolio. Commercial provision expense includes $2 million related to commercial other within the commercial and industrial portfolio class. |
Six months ended June 30, 2019 ($ in millions) | Consumer automotive | Consumer mortgage | Total consumer | Commercial | Total | |||||||||||||||
Allowance at January 1, 2019 | $ | 1,048 | $ | 53 | $ | 1,101 | $ | 141 | $ | 1,242 | ||||||||||
Charge-offs (a) | (653 | ) | (8 | ) | (661 | ) | (17 | ) | (678 | ) | ||||||||||
Recoveries | 247 | 12 | 259 | — | 259 | |||||||||||||||
Net charge-offs | (406 | ) | 4 | (402 | ) | (17 | ) | (419 | ) | |||||||||||
Provision for credit losses (b) | 437 | (8 | ) | 429 | 30 | 459 | ||||||||||||||
Other | (1 | ) | — | (1 | ) | 1 | — | |||||||||||||
Allowance at June 30, 2019 | $ | 1,078 | $ | 49 | $ | 1,127 | $ | 155 | $ | 1,282 | ||||||||||
Net charge-offs to average finance receivables and loans outstanding for the six months ended June 30, 2019 | 1.1 | % | — | % | 0.9 | % | 0.1 | % | 0.6 | % | ||||||||||
Ratio of allowance for loan losses to annualized net charge-offs at June 30, 2019 | 1.3 | (5.6 | ) | 1.4 | 4.7 | 1.5 |
(a) | Represents the amount of the amortized cost directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the amortized cost of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for more information regarding our charge-off policies. |
(b) | Consumer mortgage provision expense includes $2 million related to Mortgage Finance and a provision benefit of $10 million related to our legacy mortgage portfolio. Commercial provision expense includes $6 million related to commercial automotive and $25 million related to commercial other within the commercial and industrial portfolio class, and $1 million in provision benefit related to commercial real estate. |
($ in millions) | Consumer automotive | Consumer mortgage | Consumer other | Total consumer | Commercial | Total | ||||||||||||
June 30, 2020 | ||||||||||||||||||
Allowance for loan losses to finance receivables and loans outstanding (a) | 4.1 | % | 0.2 | % | 21.1 | % | 3.4 | % | 1.1 | % | 2.8 | % | ||||||
Allowance for loan losses to total nonperforming finance receivables and loans (a) | 237.1 | % | 66.4 | % | n/m | 232.4 | % | 137.5 | % | 218.9 | % | |||||||
June 30, 2019 | ||||||||||||||||||
Allowance for loan losses to finance receivables and loans outstanding (a) | 1.5 | % | 0.3 | % | — | % | 1.2 | % | 0.4 | % | 1.0 | % | ||||||
Allowance for loan losses to total nonperforming finance receivables and loans (a) | 168.0 | % | 75.1 | % | — | % | 159.5 | % | 79.3 | % | 142.1 | % |
(a) | Coverage percentages are based on the allowance for loan losses related to finance receivables and loans excluding those loans held at fair value as a percentage of the gross carrying value. |
2020 | 2019 | |||||||||||||||||||
June 30, ($ in millions) | Allowance for credit losses | Allowance as a % of loans outstanding | Allowance as a % of total allowance for credit losses | Allowance for loan losses | Allowance as a % of loans outstanding | Allowance as a % of total allowance for loan losses | ||||||||||||||
Consumer | ||||||||||||||||||||
Consumer automotive | $ | 2,963 | 4.1 | % | 88.4 | % | $ | 1,078 | 1.5 | % | 84.1 | % | ||||||||
Consumer mortgage | ||||||||||||||||||||
Mortgage Finance | 21 | 0.1 | 0.6 | 18 | 0.1 | 1.4 | ||||||||||||||
Mortgage — Legacy | 21 | 2.1 | 0.6 | 31 | 2.3 | 2.4 | ||||||||||||||
Total consumer mortgage | 42 | 0.2 | 1.2 | 49 | 0.3 | 3.8 | ||||||||||||||
Consumer other | 49 | 21.1 | 1.5 | — | — | — | ||||||||||||||
Total consumer loans | 3,054 | 3.4 | 91.1 | 1,127 | 1.2 | 87.9 | ||||||||||||||
Commercial | ||||||||||||||||||||
Commercial and industrial | ||||||||||||||||||||
Automotive | 64 | 0.4 | 1.9 | 42 | 0.1 | 3.3 | ||||||||||||||
Other | 179 | 3.4 | 5.3 | 87 | 2.0 | 6.8 | ||||||||||||||
Commercial real estate | 57 | 1.2 | 1.7 | 26 | 0.6 | 2.0 | ||||||||||||||
Total commercial loans | 300 | 1.1 | 8.9 | 155 | 0.4 | 12.1 | ||||||||||||||
Total allowance for loan losses | $ | 3,354 | 2.8 | 100.0 | % | $ | 1,282 | 1.0 | 100.0 | % |
June 30, 2020 | December 31, 2019 | |||||||||||||||
($ in millions) | Gradual (a) | Instantaneous | Gradual (a) | Instantaneous | ||||||||||||
Change in interest rates | ||||||||||||||||
-100 basis points (b) | $ | (26 | ) | $ | (52 | ) | $ | 17 | $ | 67 | ||||||
+100 basis points | 66 | 98 | (1 | ) | 7 | |||||||||||
+200 basis points | 109 | 101 | 2 | (136 | ) |
(a) | Gradual changes in interest rates are recognized over 12 months. |
(b) | The impact of the downward rate shocks is impacted by the current low interest rate environment. |
Three months ended June 30, | Six months ended June 30, 2020 | |||||||||||||||
2020 | 2019 | 2020 | 2019 | |||||||||||||
Off-lease vehicles terminated (in units) | 26,785 | 29,267 | 47,204 | 55,297 | ||||||||||||
Average (loss) gain per vehicle ($ per unit) | $ | (421 | ) | $ | 776 | $ | (187 | ) | $ | 680 | ||||||
Method of vehicle sales | ||||||||||||||||
Auction | ||||||||||||||||
Internet | 60 | % | 53 | % | 60 | % | 52 | % | ||||||||
Physical | 10 | 15 | 11 | 15 | ||||||||||||
Sale to dealer, lessee, and other | 30 | 32 | 29 | 33 |
June 30, | 2020 | 2019 | ||||
Sport utility vehicle | 57 | % | 58 | % | ||
Truck | 34 | 31 | ||||
Car | 9 | 11 |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Unencumbered highly liquid U.S. federal government and U.S. agency securities | $ | 23,405 | $ | 24,713 | ||||
Liquid cash and equivalents | 18,567 | 3,136 | ||||||
Committed secured credit facilities | ||||||||
Total capacity | 1,550 | 2,500 | ||||||
Outstanding | — | 450 | ||||||
Unused capacity (a) | 1,550 | 2,050 | ||||||
Total available liquidity | $ | 43,522 | $ | 29,899 |
(a) | Funding from committed secured credit facilities is available on request in the event excess collateral resides in certain facilities or the extent incremental collateral is available and contributed to the facilities. |
• | In April 2020 and June 2020, we accessed the unsecured debt capital markets and raised $750 million and $800 million, respectively, through the issuance of senior notes, which provided additional liquidity at Ally. |
• | Our total capacity in committed secured credit facilities was reduced by $950 million during the six months ended June 30, 2020, as we continue to shift our overall funding toward a greater mix of cost-effective deposit funding. |
June 30, 2020 | December 31, 2019 | ||||||||||
($ in millions) | On-balance sheet funding | % Share of funding | On-balance sheet funding | % Share of funding | |||||||
Deposits | $ | 131,036 | 80 | 120,752 | 75 | ||||||
Debt | |||||||||||
Secured financings | 19,146 | 12 | 25,773 | 16 | |||||||
Institutional term debt | 10,927 | 6 | 10,933 | 7 | |||||||
Retail debt programs (a) | 2,792 | 2 | 2,852 | 2 | |||||||
Total debt (b) | 32,865 | 20 | 39,558 | 25 | |||||||
Total on-balance-sheet funding | $ | 163,901 | 100 | 160,310 | 100 |
(a) | Includes $282 million and $271 million of retail term notes at June 30, 2020, and December 31, 2019, respectively. |
(b) | Includes hedge basis adjustment as described in Note 18 to the Condensed Consolidated Financial Statements. |
2nd quarter 2020 | 1st quarter 2020 | 4th quarter 2019 | 3rd quarter 2019 | 2nd quarter 2019 | |||||||||||
Number of retail bank accounts (in thousands) | 4,335 | 4,185 | 4,006 | 3,908 | 3,712 | ||||||||||
Deposits ($ in millions) | |||||||||||||||
Retail | $ | 115,813 | $ | 106,068 | $ | 103,734 | $ | 101,295 | $ | 98,600 | |||||
Brokered (a) | 15,088 | 16,116 | 16,898 | 17,778 | 17,562 | ||||||||||
Other (b) | 135 | 140 | 120 | 157 | 163 | ||||||||||
Total deposits | $ | 131,036 | $ | 122,324 | $ | 120,752 | $ | 119,230 | $ | 116,325 |
(a) | Brokered deposit balances include a deposit related to Ally Invest customer cash balances deposited at Ally Bank by a third party of $1.8 billion as of June 30, 2020, $1.5 billion as of March 31, 2020, $1.3 billion as of December 31, 2019, and $1.1 billion as of both September 30, 2019, and June 30, 2019. |
(b) | Other deposits include mortgage escrow and other deposits. |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||
($ in millions) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Net financing loss and other interest income | $ | (258 | ) | $ | (283 | ) | $ | (532 | ) | $ | (564 | ) | ||||
Dividends from bank subsidiaries | — | 500 | 400 | 900 | ||||||||||||
Dividends from nonbank subsidiaries | 23 | 94 | 41 | 136 | ||||||||||||
Total other revenue | 62 | 90 | 133 | 197 | ||||||||||||
Total net (loss) revenue | (173 | ) | 401 | 42 | 669 | |||||||||||
Provision for credit losses | (3 | ) | 5 | (28 | ) | 32 | ||||||||||
Total noninterest expense | 150 | 168 | 311 | 335 | ||||||||||||
(Loss) income from continuing operations before income tax expense | (320 | ) | 228 | (241 | ) | 302 | ||||||||||
Income tax benefit from continuing operations | (76 | ) | (289 | ) | (149 | ) | (350 | ) | ||||||||
Net (loss) income from continuing operations | (244 | ) | 517 | (92 | ) | 652 | ||||||||||
Loss from discontinued operations, net of tax | (1 | ) | (2 | ) | (1 | ) | (3 | ) | ||||||||
Net (loss) income (a) | $ | (245 | ) | $ | 515 | $ | (93 | ) | $ | 649 |
(a) | Excludes the Parent’s and Guarantors’ share of income of all nonguarantor subsidiaries. |
($ in millions) | June 30, 2020 | December 31, 2019 | ||||||
Total assets (a) | $ | 6,873 | $ | 6,749 | ||||
Total liabilities | $ | 15,685 | $ | 15,822 |
(a) | Excludes investments in all nonguarantor subsidiaries. |
Rating agency | Short-term | Senior unsecured debt | Outlook | Date of last action | ||||
Fitch | F3 | BBB- | Negative Watch | April 29, 2020 (a) | ||||
Moody’s | Not Prime | Ba1 | Stable | May 12, 2020 (b) | ||||
S&P | A-3 | BBB- | Negative | May 4, 2020 (c) | ||||
DBRS | R-3 | BBB (Low) | Negative | April 21, 2020 (d) |
(a) | Fitch placed our senior unsecured debt rating of BBB- and short-term rating of F3 on Negative Watch on April 29, 2020. |
(b) | Moody's affirmed our senior unsecured debt rating of Ba1, affirmed our short-term rating of Not Prime, and maintained a Stable outlook on May 12, 2020. Effective December 1, 2014, we determined to not renew our contractual arrangement with Moody's related to their providing of our issuer, senior unsecured debt, and short-term ratings. Notwithstanding this, Moody's has determined to continue to provide these ratings on a discretionary basis. However, Moody's has no obligation to continue to provide these ratings, and could cease doing so at any time. |
(c) | Standard & Poor's affirmed our senior unsecured debt rating of BBB-, affirmed our short-term rating of A-3, and changed the outlook to Negative from Stable on May 4, 2020. |
(d) | DBRS affirmed our senior unsecured debt rating of BBB (Low), affirmed our short-term rating of R-3, and changed the outlook to Negative from Positive on April 21, 2020. |
• | Allowance for loan losses |
• | Valuation of automotive lease assets and residuals |
• | Fair value of financial instruments |
• | Determination of provision for income taxes |
2020 | 2019 | Increase (decrease) due to | ||||||||||||||||||||||||||||||||
Three months ended June 30, ($ in millions) | Average balance (a) | Interest income/interest expense | Yield/rate | Average balance (a) | Interest income/interest expense | Yield/rate | Volume | Yield/rate | Total | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Interest-bearing cash and cash equivalents | $ | 12,496 | $ | 4 | 0.12 | % | $ | 3,713 | $ | 21 | 2.27 | % | $ | 50 | $ | (67 | ) | $ | (17 | ) | ||||||||||||||
Investment securities (b) | 31,139 | 187 | 2.41 | 31,244 | 227 | 2.91 | (1 | ) | (39 | ) | (40 | ) | ||||||||||||||||||||||
Loans held-for-sale, net | 337 | 4 | 4.24 | 191 | 3 | 6.30 | 2 | (1 | ) | 1 | ||||||||||||||||||||||||
Finance receivables and loans, net (b) (c) | 122,428 | 1,630 | 5.36 | 129,950 | 1,860 | 5.74 | (108 | ) | (122 | ) | (230 | ) | ||||||||||||||||||||||
Investment in operating leases, net (d) | 9,068 | 91 | 4.10 | 8,370 | 124 | 5.94 | 10 | (43 | ) | (33 | ) | |||||||||||||||||||||||
Other earning assets | 1,062 | 10 | 4.04 | 1,202 | 17 | 5.67 | (2 | ) | (5 | ) | (7 | ) | ||||||||||||||||||||||
Total interest-earning assets | 176,530 | 1,926 | 4.39 | 174,670 | 2,252 | 5.17 | (326 | ) | ||||||||||||||||||||||||||
Noninterest-bearing cash and cash equivalents | 432 | 544 | ||||||||||||||||||||||||||||||||
Other assets | 8,250 | 6,722 | ||||||||||||||||||||||||||||||||
Allowance for loan losses | (3,227 | ) | (1,284 | ) | ||||||||||||||||||||||||||||||
Total assets | $ | 181,985 | $ | 180,652 | ||||||||||||||||||||||||||||||
Liabilities and equity | ||||||||||||||||||||||||||||||||||
Interest-bearing deposit liabilities (b) | $ | 126,878 | $ | 541 | 1.72 | % | $ | 114,257 | $ | 651 | 2.29 | % | $ | 72 | $ | (182 | ) | $ | (110 | ) | ||||||||||||||
Short-term borrowings | 4,712 | 13 | 1.12 | 5,887 | 37 | 2.52 | (7 | ) | (17 | ) | (24 | ) | ||||||||||||||||||||||
Long-term debt | 30,554 | 318 | 4.19 | 40,222 | 407 | 4.06 | (98 | ) | 9 | (89 | ) | |||||||||||||||||||||||
Total interest-bearing liabilities | 162,144 | 872 | 2.16 | 160,366 | 1,095 | 2.74 | (223 | ) | ||||||||||||||||||||||||||
Noninterest-bearing deposit liabilities | 136 | 135 | ||||||||||||||||||||||||||||||||
Total funding sources | 162,280 | 872 | 2.16 | 160,501 | 1,095 | 2.74 | ||||||||||||||||||||||||||||
Other liabilities | 5,343 | 6,357 | ||||||||||||||||||||||||||||||||
Total liabilities | 167,623 | 166,858 | ||||||||||||||||||||||||||||||||
Total equity | 14,362 | 13,794 | ||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 181,985 | $ | 180,652 | ||||||||||||||||||||||||||||||
Net financing revenue and other interest income | $ | 1,054 | $ | 1,157 | $ | (103 | ) | |||||||||||||||||||||||||||
Net interest spread (e) | 2.23 | % | 2.43 | % | ||||||||||||||||||||||||||||||
Net yield on interest-earning assets (f) | 2.40 | % | 2.66 | % |
(a) | Average balances are calculated using a combination of monthly and daily average methodologies. |
(b) | Includes the effects of derivative financial instruments designated as hedges. Refer to Note 18 to the Condensed Consolidated Financial Statements for further information about the effects of our hedging activities. |
(c) | Nonperforming finance receivables and loans are included in the average balances. For information on our accounting policies regarding nonperforming status, refer to Note 1 to the Condensed Consolidated Financial Statements. |
(d) | Yield includes losses on the sale of off-lease vehicles of $11 million for the three months ended June 30, 2020, and gains on the sale of off-lease vehicles of $23 million for the three months ended June 30, 2019. Excluding these losses and gains on sale, the annualized yield was 4.60% and 4.84% for the three months ended June 30, 2020, and 2019, respectively. |
(e) | Net interest spread represents the difference between the rate on total interest-earning assets and the rate on total interest-bearing liabilities. |
(f) | Net yield on interest-earning assets represents annualized net financing revenue and other interest income as a percentage of total interest-earning assets. |
2020 | 2019 | Increase (decrease) due to | ||||||||||||||||||||||||||||||||
Six months ended June 30, ($ in millions) | Average balance (a) | Interest income/interest expense | Yield/rate | Average balance (a) | Interest income/interest expense | Yield/rate | Volume | Yield/rate | Total | |||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||
Interest-bearing cash and cash equivalents | $ | 8,675 | $ | 18 | 0.41 | % | $ | 3,961 | $ | 44 | 2.24 | % | $ | 52 | $ | (78 | ) | $ | (26 | ) | ||||||||||||||
Investment securities (b) | 31,376 | 400 | 2.56 | 30,291 | 449 | 2.99 | 16 | (65 | ) | (49 | ) | |||||||||||||||||||||||
Loans held-for-sale, net | 243 | 6 | 4.84 | 190 | 5 | 5.31 | 1 | — | 1 | |||||||||||||||||||||||||
Finance receivables and loans, net (b) (c) | 124,537 | 3,372 | 5.44 | 129,310 | 3,667 | 5.72 | (135 | ) | (160 | ) | (295 | ) | ||||||||||||||||||||||
Investment in operating leases, net (d) | 9,073 | 210 | 4.66 | 8,379 | 239 | 5.75 | 20 | (49 | ) | (29 | ) | |||||||||||||||||||||||
Other earning assets | 1,072 | 23 | 4.51 | 1,215 | 35 | 5.81 | (4 | ) | (8 | ) | (12 | ) | ||||||||||||||||||||||
Total interest-earning assets | 174,976 | 4,029 | 4.63 | 173,346 | 4,439 | 5.16 | (410 | ) | ||||||||||||||||||||||||||
Noninterest-bearing cash and cash equivalents | 425 | 494 | ||||||||||||||||||||||||||||||||
Other assets | 7,917 | 6,641 | ||||||||||||||||||||||||||||||||
Allowance for loan losses | (2,928 | ) | (1,266 | ) | ||||||||||||||||||||||||||||||
Total assets | $ | 180,390 | $ | 179,215 | ||||||||||||||||||||||||||||||
Liabilities and equity | ||||||||||||||||||||||||||||||||||
Interest-bearing deposit liabilities (b) | $ | 123,977 | $ | 1,133 | 1.84 | % | $ | 111,729 | $ | 1,243 | 2.24 | % | $ | 136 | $ | (246 | ) | $ | (110 | ) | ||||||||||||||
Short-term borrowings | 4,604 | 30 | 1.30 | 6,467 | 81 | 2.53 | (23 | ) | (28 | ) | (51 | ) | ||||||||||||||||||||||
Long-term debt | 31,838 | 666 | 4.21 | 41,303 | 826 | 4.03 | (189 | ) | 29 | (160 | ) | |||||||||||||||||||||||
Total interest-bearing liabilities | 160,419 | 1,829 | 2.29 | 159,499 | 2,150 | 2.72 | (321 | ) | ||||||||||||||||||||||||||
Noninterest-bearing deposit liabilities | 138 | 136 | ||||||||||||||||||||||||||||||||
Total funding sources | 160,557 | 1,829 | 2.29 | 159,635 | 2,150 | 2.72 | ||||||||||||||||||||||||||||
Other liabilities | 5,740 | 6,002 | ||||||||||||||||||||||||||||||||
Total liabilities | 166,297 | 165,637 | ||||||||||||||||||||||||||||||||
Total equity | 14,093 | 13,578 | ||||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 180,390 | $ | 179,215 | ||||||||||||||||||||||||||||||
Net financing revenue and other interest income | $ | 2,200 | $ | 2,289 | $ | (89 | ) | |||||||||||||||||||||||||||
Net interest spread (e) | 2.34 | % | 2.44 | % | ||||||||||||||||||||||||||||||
Net yield on interest-earning assets (f) | 2.53 | % | 2.66 | % |
(a) | Average balances are calculated using a combination of monthly and daily average methodologies. |
(b) | Includes the effects of derivative financial instruments designated as hedges. Refer to Note 18 to the Condensed Consolidated Financial Statements for further information about the effects of our hedging activities. |
(c) | Nonperforming finance receivables and loans are included in the average balances. For information on our accounting policies regarding nonperforming status, refer to Note 1 to the Condensed Consolidated Financial Statements. |
(d) | Yield includes losses on the sale of off-lease vehicles of $9 million for the six months ended June 30, 2020, and gains on the sale of off-lease vehicles of $38 million for the six months ended June 30, 2019. Excluding these losses and gains on sale, the annualized yield was 4.86% and 4.84% for the six months ended June 30, 2020, and 2019, respectively. |
(e) | Net interest spread represents the difference between the rate on total interest-earning assets and the rate on total interest-bearing liabilities. |
(f) | Net yield on interest-earning assets represents annualized net financing revenue and other interest income as a percentage of total interest-earning assets. |
• | The duration, extent, and severity of the pandemic. COVID-19 has not yet been contained and could continue to affect significantly more households and businesses. The duration and severity of the pandemic remain impossible to predict, as the initial slowing of the number of cases nationally has recently reversed and the potential exists for further resurgences to occur. |
• | The response of governmental and nongovernmental authorities. Many of their actions have been directed toward curtailing household and business activity to contain COVID-19 while simultaneously deploying fiscal- and monetary-policy measures to partially mitigate the adverse effects on individual households and businesses. These actions have not always been coordinated or consistent across jurisdictions and have varied in scope and intensity over time. |
• | The effect on our customers, counterparties, employees, and third-party service providers. COVID-19 and its associated consequences and uncertainties are affecting individuals, households, and businesses differently and unevenly. Many, however, have changed their behavior in response to governmental mandates and advisories to restrain or alter commercial and social interactions. As a result, in the near term, our credit, operational, and other risks have generally increased and, for the foreseeable future, are expected to remain elevated or increase further. |
• | The effect on economies and markets. While the actions of governmental and nongovernmental authorities initially slowed the rate of spread of COVID-19 and supported economic stability, it is not clear whether the salutary effects will persist, especially if resurgences worsen or increase. National, regional, and local economies and markets could suffer further disruptions that are lasting. |
Three months ended June 30, 2020 | Total number of shares repurchased (a) (in thousands) | Weighted-average price paid per share (a) (b) (in dollars) | Total number of shares repurchased as part of publicly announced program (a) (c) (d) (in thousands) | Maximum approximate dollar value of shares that may yet be repurchased under the program (a) (b) (c) (d) ($ in millions) | ||||||||||
April 2020 | 28 | $ | 13.05 | 28 | $ | 547 | ||||||||
May 2020 | 11 | 15.25 | 11 | 547 | ||||||||||
June 2020 | 14 | 20.95 | 14 | 547 | ||||||||||
Total | 53 | 15.60 | 53 |
(a) | Includes shares of common stock withheld to cover income taxes owed by participants in our share-based incentive plans. |
(b) | Excludes brokerage commissions. |
(c) | On April 1, 2019, we announced a common stock-repurchase program of up to $1.25 billion. The program commenced in the third quarter of 2019 and expired on June 30, 2020. Refer to Note 17 to the Condensed Consolidated Financial Statements for further details. |
(d) | On March 17, 2020, we announced the voluntary suspension of our stock-repurchase program through its termination on June 30, 2020. We do not currently plan to implement a new stock-repurchase program or repurchase shares of our common stock, except in connection with compensation plans, for the remainder of 2020. Refer to Note 17 to the Condensed Consolidated Financial Statements for further details. |
Exhibit | Description | Method of Filing |
10.1 | Mutual Termination Agreement, dated as of June 24, 2020 | Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K, dated as of June 24, 2020, (File No. 1-3754), incorporated herein by reference. |
Form of Award Agreement related to the issuance of Incentive Compensation Awards | Filed herewith. | |
Form of Award Agreement related to the issuance of Performance Stock Units | Filed herewith. | |
22.1 | Subsidiary Guarantors | Filed as Exhibit 22 to the Company’s Quarterly Report for the period ended March 31, 2020, on Form 10-Q (File No. 1-3754), incorporated herein by reference. |
Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) | Filed herewith. | |
Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) | Filed herewith. | |
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 | Filed herewith. | |
101 | The following information from our Form 10-Q for the quarter ended June 30, 2020, formatted in Inline XBRL: (i) Condensed Consolidated Statement of Comprehensive Income (unaudited), (ii) Condensed Consolidated Balance Sheet (unaudited), (iii) Condensed Consolidated Statement of Changes in Equity (unaudited), (iv) Condensed Consolidated Statement of Cash Flows (unaudited), and (v) the Notes to the Condensed Consolidated Financial Statements (unaudited) | Filed herewith. |
104 | The cover page of our Form 10-Q for the quarter ended June 30, 2020, (formatted in Inline XBRL and contained in Exhibit 101) | Filed herewith. |
Ally Financial Inc. (Registrant) | |
/S/ JENNIFER A. LACLAIR | |
Jennifer A. LaClair Chief Financial Officer |
/S/ DAVID J. DEBRUNNER | |
David J. DeBrunner Vice President, Chief Accounting Officer, and Corporate Controller |
1. | You have been granted an Award under the Ally Financial Inc. Incentive Compensation Plan (the “Plan”). A copy of the Plan is included on the Shareworks website. Capitalized terms not defined in this Award Agreement will have the meaning set forth in the Plan. |
2. | Your Award is granted to you as a matter of separate inducement and is not in lieu of salary or other compensation for your services. By accepting this Award, you consent to any and all Plan amendments, vesting restrictions, and revisions to any other term or condition of this Award Agreement that may be required to comply with federal law or regulation governing compensation, whether such amendments, restrictions, or revisions are applied prospectively or retroactively to this or prior Awards. By accepting this Award, you also acknowledge and agree that it is subject to all of the requirements set forth in the Enterprise Compensation Policy and that you are subject to all of the restrictive covenants set forth in Section 13 of the Plan (i.e., non-solicit, confidentiality, non-disparagement). |
3. | Your Award is being made in the form of Restricted Stock Units. Your Award is comprised of the following: |
4. | This Award Agreement will become effective after you have electronically accepted it via the Shareworks website. If you do not accept this Award Agreement within 45 days of notification, you will be deemed to have rejected the Award and this Award Agreement will be null and void and without any further force or effect. |
5. | Subject to requirements of any federal laws or regulations and Ally policy that govern compensation, see paragraph 2 above, your Award will vest and be settled as soon as practical after the date(s) noted above. If and when a change to the vesting date(s) noted above is required, you will be notified in writing. |
6. | If on the Grant Date you are considered a material risk taker (“MRT”), in connection with regulatory guidance and in support of its corporate governance principles, to the extent that any portion of the Award remains unpaid, Ally reserves the right to adjust downward the amount of this Award without your consent to reflect adverse outcomes attributable to inappropriate, excessive, or imprudent risk taking in which you participated and which was the basis for this Award. Your Award is also subject to cancellation, recovery, forfeiture, or repayment consistent with Ally’s recoupment policy contained in the Enterprise Compensation Policy. |
7. | [If your employment is terminated by the Company without Cause, then any unvested tranches of your Award will Vest and be Paid as determined by the schedule above. Otherwise,] Section 11 of the Plan governs the effect of a Termination of Service on your Award. |
8. | If the Company pays a dividend on Shares prior to the Vesting Date, you will be entitled to a dividend equivalent payment in the same amount as the dividend you would have received if you held the number of Shares, if any, as earned and vested as of the Vesting Date. These dividends will vest and be paid to you on the Settlement Date (or such other vesting and settlement date applicable under this Award), subject to the vesting of your Award. No dividends or dividend equivalents will be paid to you with respect to any portion of your Award that is canceled or forfeited. The Company will decide on the form of payment and may pay dividends or dividend equivalents in Shares, in cash or in a combination thereof, subject to applicable law. |
9. | The restrictions in Section 13(a) of the Plan on your ability to solicit any Ally client, customer, or employee for 24 months following your Termination of Service is grounded in Ally’s significant investment of time, effort, and expense in establishing client, customer, and employee relationships across Ally’s lines of business. As this applies to you, the scope of the restriction on your ability to solicit Ally clients or customers will run commensurate with the scope of your responsibilities while employed by Ally. That is, the terms “client or customer” as used in Section 13(a) (i.e., “(i) solicit any client or customer of the Company or any Affiliate with respect to a Competitive Activity”) mean those clients or customers (whether current or prospective): (i) with whom you had direct or indirect personal contact within the last 12 months of your employment with Ally; or (ii) about whom you learned confidential or proprietary information (including trade secrets) by virtue of your employment with Ally during the last 12 months of your employment with Ally. The term “solicit” also will include any communication or other interaction between you and a client or customer (whether current or prospective) that takes place to make sales to, perform services for, or otherwise further the business relationship with that client or customer (whether current or prospective). Notwithstanding Section 21 of the Plan, Section 13(a) is governed by Michigan law without regard to its conflict of laws provision. An action to enforce or seek damages for breach of Section 13(a) may only be brought in a federal or state court of competent jurisdiction in Michigan. |
10. | You may designate a beneficiary using the Shareworks website. If no beneficiary is designated, or if the Ally determines that the beneficiary designation is unclear, or that the designated beneficiary cannot be located, any settlement as a result of your death will be made to your estate. The Shareworks website may also be used for any subsequent change in your beneficiary designation. |
11. | By accepting this Award, you understand and acknowledge that your Award is subject to the rules under Internal Revenue Code Section 409A and Section 19 of the Plan, and agree and accept all risks (including increased taxes and penalties) resulting from Internal Revenue Code Section 409A. |
12. | Except as prohibited by any federal law or regulation that governs compensation, see paragraph 2 above, your Award is subject to and governed by the terms and conditions of this Award Agreement and the Plan. |
13. | By accepting this Award, as evidenced by your signature below, you agree to abide by the terms and conditions of this Award Agreement and the Plan. |
Participant Signature (Required) | Date (Required) | |||
Last Four Digits of SSN or National ID (Required) |
1. | You have been granted an Award under the Ally Financial Inc. Incentive Compensation Plan (the “Plan”). A copy of the Plan is included on the Shareworks website. Capitalized terms not defined in this Award Agreement will have the meaning set forth in the Plan. |
2. | Your Award is granted to you as a matter of separate inducement and is not in lieu of salary or other compensation for your services. By accepting this Award, you consent to any and all Plan amendments, vesting restrictions, and revisions to any other term or condition of this Award Agreement that may be required to comply with federal law or regulation governing compensation, whether such amendments, restrictions, or revisions are applied prospectively or retroactively to this or prior Awards. By accepting this Award, you also acknowledge and agree that it is subject to all of the requirements set forth in the Enterprise Compensation Policy and that you are subject to all of the restrictive covenants set forth in Section 13 of the Plan (i.e., non-solicit, confidentiality, non-disparagement). |
3. | Your Award is initially being made in the form of Performance Stock Units (“PSUs”). Your Award will vest on the following vesting schedule: [INSERT] ([each, a] [the] “Vesting Date”), subject to your continued employment with the Company or one of its Affiliates through the [applicable] Vesting Date (or as otherwise set forth herein or in the Plan); provided, that the actual number of PSUs vesting and converting to Shares [(such number of PSUs to be within a range of % to % of the number of the Target PSUs (as defined below))] (the “Adjusted PSUs”) will be determined based on the achievement of the Performance Metrics (as defined in Exhibit A attached hereto) during the Performance Period (as defined below). For purposes of this Award Agreement, the “Performance Period” means the period commencing on [DATE(s)] and ending on [DATE(s)]. Immediately following the end of the Performance Period, your Adjusted PSUs may, at the discretion of the Company, convert into a number of Shares of Restricted Stock equal to the number of Adjusted PSUs. Your Adjusted PSUs or Shares of Restricted Stock (as the case may be) will remain subject to your continued employment with the Company and its Affiliates through the [applicable] Vesting Date and will be forfeited and cancelled if you do not remain employed with the Company and its Affiliates through the [applicable] Vesting Date, except as otherwise explicitly provided below. |
4. | This Award Agreement will become effective after you have electronically accepted it via the Shareworks website. If you do not accept this Award Agreement within 45 days of notification, you will be deemed to have rejected the Award and this Award Agreement will be null and void and without any further force or effect. |
5. | Subject to requirements of any federal laws or regulations and Ally policy that govern compensation (see paragraph 2 above), and subject to the terms of the Plan and this Agreement, the Company will deliver the |
6. | If on the Grant Date you are considered a material risk taker (“MRT”), in connection with regulatory guidance and in support of its corporate governance principles, to the extent that any portion of the Award remains unpaid, Ally reserves the right to adjust downward the amount of this Award without your consent to reflect adverse outcomes attributable to inappropriate, excessive, or imprudent risk taking in which you participated and which was the basis for this Award. Your Award is also subject to cancellation, recovery, forfeiture, or repayment consistent with Ally’s recoupment policy contained in the Enterprise Compensation Policy. |
7. | Sections 11 and 12 of the Plan provide for the treatment of Awards in the event of a Termination of Service or Change in Control; provided, however: |
8. | If the Company pays a dividend on Shares prior to the Vesting Date, you will be entitled to a dividend equivalent payment in the same amount as the dividend you would have received if you held the number of Shares, if any, as earned and vested as of the Vesting Date. These dividends will vest and be paid to you on the Settlement Date (or such other vesting and settlement date applicable under paragraph 7 (above), subject to the vesting of your Award. No dividends or dividend equivalents will be paid to you with respect to any portion of your Award that is canceled or forfeited. The Company will decide on the form of payment and may pay dividends or dividend equivalents in Shares, in cash or in a combination thereof, subject to applicable law. |
9. | You will have no voting rights with respect to the Shares underlying your Award unless and until you become the record owner of the Shares underlying your Award. |
10. | You may designate a beneficiary using the Shareworks website. If no beneficiary is designated, or if the Ally determines that the beneficiary designation is unclear or that the designated beneficiary cannot be located, any settlement as a result of your death will be made to your estate. The Shareworks website may also be used for any subsequent change in your beneficiary designation. |
11. | The restrictions in Section 13(a) of the Plan on your ability to solicit any Ally client, customer, or employee for 24 months following your Termination of Service is grounded in Ally’s significant investment of time, effort, and expense in establishing client, customer, and employee relationships across Ally’s lines of business. As this applies to you, the scope of the restriction on your ability to solicit Ally clients or customers will run commensurate with the scope of your responsibilities while employed by Ally. That is, the terms “client or customer” as used in Section 13(a) (i.e., “(i) solicit any client or customer of the Company or any Affiliate with |
12. | By accepting this Award, you understand and acknowledge that your Award is subject to the rules under Internal Revenue Code Section 409A and Section 19 of the Plan, and agree and accept all risks (including increased taxes and penalties) resulting from Internal Revenue Code Section 409A. |
13. | Except as prohibited by any federal law or regulation that governs compensation, see paragraph 2 above, your Award is subject to and governed by the terms and conditions of this Award Agreement and the Plan. |
14. | By accepting this Award, as evidenced by your signature below, you agree to abide by the terms and conditions of this Award Agreement and the Plan. |
Participant Signature (Required) | Date (Required) | |||
Last Four Digits of SSN or National ID (Required) |
1. | I have reviewed this report on Form 10-Q of Ally Financial Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ JEFFREY J. BROWN | |
Jeffrey J. Brown Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Ally Financial Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function): |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize, and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/S/ JENNIFER A. LACLAIR | |
Jennifer A. LaClair Chief Financial Officer |
1. | The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/S/ JEFFREY J. BROWN | |
Jeffrey J. Brown | |
Chief Executive Officer | |
July 30, 2020 | |
/S/ JENNIFER A. LACLAIR | |
Jennifer A. LaClair | |
Chief Financial Officer | |
July 30, 2020 |
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Condensed Consolidated Balance Sheet & Mini Balance Sheet (Paranthetical) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value per share | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 1,100,000,000 | 1,100,000,000 |
Common stock, shares issued | 500,353,339 | 496,957,805 |
Common stock, shares outstanding | 373,837,123 | 374,331,998 |
Treasury stock, shares | 126,516,216 | 122,625,807 |
Held-to-maturity securities, fair value | $ 1,476 | $ 1,600 |
Condensed Consolidated Statement of Changes in Equity - USD ($) $ in Millions |
Total |
Common stock and paid-in capital |
Accumulated Deficit |
Accumulated other comprehensive (loss) income |
Treasury stock |
---|---|---|---|---|---|
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Equity | $ 13,268 | $ 21,345 | $ (5,489) | $ (539) | $ (2,049) |
Common stock dividends, amount per share | $ 0.34 | ||||
Net income (loss) | $ 956 | 956 | |||
Share-based compensation | 58 | 58 | |||
Other comprehensive income | (615) | (615) | |||
Common stock repurchases | (440) | (440) | |||
Common stock dividends | (139) | (139) | |||
Equity | $ 13,699 | 21,379 | (5,195) | (225) | (2,260) |
Common stock dividends, amount per share | $ 0.17 | ||||
Net income (loss) | $ 582 | 582 | |||
Share-based compensation | 24 | 24 | |||
Other comprehensive income | (309) | (309) | |||
Common stock repurchases | (229) | (229) | |||
Common stock dividends | (69) | (69) | |||
Equity | 14,316 | 21,403 | (4,682) | 84 | (2,489) |
Equity | $ 14,416 | 21,438 | (4,057) | 123 | (3,088) |
Common stock dividends, amount per share | $ 0.38 | ||||
Net income (loss) | $ (78) | (78) | |||
Share-based compensation | 61 | 61 | |||
Other comprehensive income | (692) | (692) | |||
Common stock repurchases | (104) | (104) | |||
Common stock dividends | (144) | (144) | |||
Equity | $ 13,519 | 21,470 | (5,465) | 706 | (3,192) |
Common stock dividends, amount per share | $ 0.19 | ||||
Net income (loss) | $ 241 | 241 | |||
Share-based compensation | 29 | 29 | |||
Other comprehensive income | (109) | (109) | |||
Common stock dividends | (72) | (72) | |||
Equity | $ 13,826 | $ 21,499 | $ (5,296) | $ 815 | $ (3,192) |
Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies [Text Block] | Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies Ally Financial Inc. (together with its consolidated subsidiaries unless the context otherwise requires, Ally, the Company, or we, us, or our) is a leading digital financial-services company. As a customer-centric company with passionate customer service and innovative financial solutions, we are relentlessly focused on “Doing It Right” and being a trusted financial-services provider to our consumer, commercial, and corporate customers. We are one of the largest full-service automotive finance operations in the country and offer a wide range of financial services and insurance products to automotive dealerships and consumers. Our award-winning online bank (Ally Bank, Member FDIC and Equal Housing Lender) offers mortgage lending, personal lending, and a variety of deposit and other banking products, including savings, money-market, and checking accounts, CDs, and IRAs. Additionally, we offer securities-brokerage and investment-advisory services through Ally Invest. Our robust corporate-finance business offers capital for equity sponsors and middle-market companies. We are a Delaware corporation and are registered as a BHC under the Bank Holding Company Act of 1956, as amended, and an FHC under the Gramm-Leach-Bliley Act of 1999, as amended. Our accounting and reporting policies conform to U.S. GAAP. Additionally, where applicable, the policies conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and that affect income and expenses during the reporting period and related disclosures. In developing the estimates and assumptions, management uses all available evidence; however, actual results could differ because of uncertainties associated with estimating the amounts, timing, and likelihood of possible outcomes. Our most significant estimates pertain to the allowance for loan losses, valuations of automotive lease assets and residuals, fair value of financial instruments, and the determination of the provision for income taxes. The Condensed Consolidated Financial Statements at June 30, 2020, and for the three months and six months ended June 30, 2020, and 2019, are unaudited but reflect all adjustments that are, in management’s opinion, necessary for the fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements (and the related Notes) included in our Annual Report on Form 10-K for the year ended December 31, 2019, as filed on February 25, 2020, with the SEC. Significant Accounting Policies On January 1, 2020, we adopted ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments, using the modified retrospective approach, as further described in the section below titled Recently Adopted Accounting Standards. Adoption of the standard resulted in changes to our Investments, Finance Receivables and Loans, and Allowance for Loan Losses policies, as presented below. Refer to Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K regarding additional significant accounting policies, including accounting policies in effect prior to the adoption of the CECL standard. Investments Our investment portfolio includes various debt and equity securities. Our debt securities include government securities, corporate bonds, ABS, and MBS. Debt securities are classified based on management’s intent to sell or hold the security. We classify debt securities as held-to-maturity only when we have both the intent and ability to hold the securities to maturity. We classify debt securities as trading when the securities are acquired for the purpose of selling or holding them for a short period of time. Debt securities not classified as either held-to-maturity or trading are classified as available-for-sale. Our portfolio includes debt securities classified as available-for-sale and held-to-maturity. Our available-for-sale securities are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income, while our held-to-maturity securities are carried at amortized cost. We establish an allowance for credit losses for lifetime expected credit losses on our held-to-maturity securities. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Accrued interest receivable on held-to-maturity securities is excluded from the estimate of credit losses. Our held-to-maturity securities portfolio is mostly comprised of residential mortgage-backed debt securities that are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major ratings agencies, and have a long history of zero credit losses. We regularly assess our available-for-sale securities for impairment. When the cost of an available-for-sale security exceeds its fair value, the security is impaired. If we determine that we intend to sell, or it is more likely than not we will be required to sell the security before recovery of the amortized cost basis, any allowance for credit losses, if previously recorded, is written off and the security’s amortized cost basis is written down to fair value at the reporting date, with any incremental impairment recorded through earnings. Alternatively, if we do not intend to sell, or it is not more likely than not that we will be required to sell the security before anticipated recovery of the amortized cost basis, we evaluate, among other factors, the magnitude of the decline in fair value, the financial health of and business outlook for the issuer, and the performance of the underlying assets for interests in securitized assets to determine if a credit loss has occurred. The present value of expected future cash flows are compared to the security’s amortized cost basis to measure the credit loss component of the impairment after determining a credit loss has occurred. If the present value of expected cash flows is less than the amortized cost basis, we record an allowance for credit losses for that difference. The amount of credit loss is limited to the difference between the security’s amortized cost basis and its fair value. Any remaining impairment is considered a noncredit loss and is recorded in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for, or reversal of, provision for credit losses. Accrued interest receivable on available-for-sale securities is excluded from the estimate of credit losses. Premiums and discounts on debt securities are generally amortized over the stated maturity of the security as an adjustment to investment yield. Premiums on debt securities that have non-contingent call features that are callable at fixed prices on preset dates are amortized to the earliest call date as an adjustment to investment yield. A debt security is placed on nonaccrual status at the time any principal or interest payments become 90 days past due. The receivable for interest income that is accrued but not collected is reversed against interest income when the debt security is placed on nonaccrual status. Our investments in equity securities include securities that are recognized at fair value with changes in the fair value recorded in earnings, and equity securities that are recognized using other measurement principles. Equity securities that have a readily determinable fair value are recorded at fair value with changes in fair value recorded in earnings and reported in other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income. These investments, which are primarily attributable to the investment portfolio of our Insurance operations, are included in equity securities on our Condensed Consolidated Balance Sheet. We also hold certain equity investments that do not have a readily determinable fair value and are not eligible to be recognized using other measurement principles, that are held at fair value. Refer to Note 20 for further information on these equity securities that have a readily determinable market value. Our equity securities recognized using other measurement principles include investments in FHLB and FRB stock held to meet regulatory requirements, equity investments related to LIHTCs and the CRA, which do not have a readily determinable fair value, and other equity investments that do not have a readily determinable fair value. Our LIHTC investments are accounted for using the proportional amortization method of accounting for qualified affordable housing investments. Our obligations related to unfunded commitments for our LIHTC investments are included in other liabilities. The majority of our other CRA investments are accounted for using the equity method of accounting. Our investments in LIHTCs and other CRA investments are included in investments in qualified affordable housing projects and equity-method investments, respectively, in other assets on our Condensed Consolidated Balance Sheet. Our investments in FHLB and FRB stock are carried at cost, less impairment. Our remaining investments in equity securities are recorded at cost, less impairment and adjusted for observable price changes under the measurement alternative provided under GAAP. These investments, along with our investments in FHLB and FRB stock, are included in nonmarketable equity investments in other assets on our Condensed Consolidated Balance Sheet. Investments recorded under the measurement alternative are also reviewed at each reporting period to determine if any adjustments are required for observable price changes in identical or similar securities of the same issuer. As conditions warrant, we review these investments for impairment and adjust the carrying value of the investment if it is deemed to be impaired. Realized gains and losses on the sale of securities are determined using the specific identification method and are reported in other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income. Finance Receivables and Loans We initially classify finance receivables and loans as either loans held-for-sale or loans held-for-investment based on management’s assessment of our intent and ability to hold the loans for the foreseeable future or until maturity. Management’s view of the foreseeable future is based on the longest reasonably reliable net income, liquidity, and capital forecast period. Management’s intent and ability with respect to certain loans may change from time to time depending on a number of factors, for example economic, liquidity, and capital conditions. In order to reclassify loans to held-for-sale, management must have the intent to sell the loans and reasonably identify the specific loans to be sold. Loans classified as held-for-sale are presented as loans held-for-sale, net on our Condensed Consolidated Balance Sheet and are carried at the lower of their net carrying value or fair value, unless the fair value option was elected, in which case those loans are carried at fair value. Loan origination fees and costs are included in the initial carrying value of loans originated as held-for-sale for which we have not elected the fair value option. Loan origination fees and costs are recognized in earnings when earned or incurred, respectively, for loans classified as held-for-sale for which we have elected the fair value option. We have elected the fair value option for conforming mortgage direct-to-consumer originations for which we have a commitment to sell. The interest rate lock commitment that we enter into for a mortgage loan originated as held-for-sale and certain forward commitments are considered derivatives, which are carried at fair value on our Condensed Consolidated Balance Sheet. We have elected the fair value option to measure our nonderivative forward commitments. Changes in the fair value of our interest rate lock commitments, derivative forward commitments, and nonderivative forward commitments related to mortgage loans originated as held-for-sale, as well as changes in the carrying value of loans classified as held-for-sale, are reported through gain on mortgage and automotive loans, net in our Condensed Consolidated Statement of Comprehensive Income. Interest income on our loans classified as held-for-sale is recognized based upon the contractual rate of interest on the loan and the unpaid principal balance. We report accrued interest receivable on our loans classified as held-for-sale in other assets on our Condensed Consolidated Balance Sheet. We have also elected the fair value option for certain loans acquired within our consumer other portfolio segment. Changes in fair value related to these loans are reported through other income, net of losses in our Condensed Consolidated Statement of Comprehensive Income. Loans classified as held-for-investment are presented as finance receivables and loans, net on our Condensed Consolidated Balance Sheet. Finance receivables and loans are reported at their amortized cost basis, which includes the principal amount outstanding, net of unamortized deferred fees and costs on originated loans, unamortized premiums and discounts on purchased loans, unamortized basis adjustments arising from the designation of finance receivables and loans as the hedged item in qualifying fair value hedge relationships, and cumulative principal charge-offs. We refer to the amortized cost basis less the allowance for loan loss as the net carrying value in finance receivables and loans. Unearned rate support received from an automotive manufacturer on certain automotive loans, deferred origination fees and costs, and premiums and discounts on purchased loans, are amortized over the contractual life of the related finance receivable or loan using the effective interest method. We make various incentive payments for consumer automotive loan originations to automotive dealers and account for these payments as direct loan origination costs. Additionally, we make incentive payments to certain commercial automobile wholesale borrowers and account for these payments as a reduction to interest income in the period they are earned. Interest income on our finance receivables and loans is recognized based on the contractual rate of interest plus the amortization of deferred amounts using the effective interest method. We report accrued interest receivable on our finance receivables and loans in other assets on our Condensed Consolidated Balance Sheet. Loan commitment fees are generally deferred and amortized over the commitment period. For information on finance receivables and loans, refer to Note 8. We have elected to exclude accrued interest receivable from the measurement of our allowance for credit losses for each class of financing receivables. We have also elected to write-off accrued interest receivable by reversing interest income when loans are placed on nonaccrual status for each class of financing receivable. Our portfolio segments are based on the level at which we develop and document our methodology for determining the allowance for loan losses. Additionally, the classes of finance receivables are based on several factors including the method for monitoring and assessing credit risk, the method of measuring carrying value, and the risk characteristics of the finance receivable. Based on an evaluation of our process for developing the allowance for loan losses including the nature and extent of exposure to credit risk arising from finance receivables, we have determined our portfolio segments to be consumer automotive, consumer mortgage, consumer other, and commercial.
Nonaccrual Loans Generally, we recognize loans of all classes as past due when they are 30 days delinquent on making a contractually required payment, and loans are placed on nonaccrual status when principal or interest has been delinquent for at least 90 days, or when full collection is not expected. Interest income recognition is suspended when finance receivables and loans are placed on nonaccrual status. Additionally, amortization of premiums and discounts and deferred fees and costs ceases when finance receivables and loans are placed on nonaccrual. Exceptions include commercial real estate loans that are placed on nonaccrual status when delinquent for 60 days or when full collection is not probable, if sooner. Additionally, our policy is to generally place all loans that have been modified in a TDR on nonaccrual status until the loan has been brought fully current, the collection of contractual principal and interest is reasonably assured, and six consecutive months of repayment performance is achieved. In certain cases, if a borrower has been current up to the time of the modification and repayment of the debt subsequent to the modification is reasonably assured, we may choose to continue to accrue interest on the loan. Nonperforming loans on nonaccrual status are reported in Note 8. The receivable for interest income that is accrued, but not collected, at the date finance receivables and loans are placed on nonaccrual status is reversed against interest income and subsequently recognized only to the extent it is received in cash or until it qualifies for return to accrual status. However, where there is doubt regarding the ultimate collectability of loan principal, all cash received is applied to reduce the carrying value of such loans. Generally, finance receivables and loans are restored to accrual status only when contractually current and the collection of future payments is reasonably assured. Troubled Debt Restructurings When the terms of finance receivables or loans are modified, consideration must be given as to whether or not the modification results in a TDR. A modification is considered to be a TDR when both the borrower is experiencing financial difficulty and we grant a concession to the borrower. These considerations require significant judgment and vary by portfolio segment. In all cases, the cumulative impacts of all modifications are considered at the time of the most recent modification. For consumer loans of all classes, various qualitative factors are utilized for assessing the financial difficulty of the borrower. These include, but are not limited to, the borrower’s default status on any of its debts, bankruptcy, and recent changes in financial circumstances (for instance, loss of job). A concession has been granted when as a result of the modification we do not expect to collect all amounts due under the original loan terms, including interest accrued at the original contract rate. Types of modifications that may be considered concessions include, but are not limited to, extensions of terms at a rate that does not constitute a market rate, a reduction, deferral or forgiveness of principal or interest owed and loans that have been discharged in a Chapter 7 Bankruptcy and have not been reaffirmed by the borrower. In addition to the modifications noted above, in our consumer automotive portfolio segment of loans we also provide extensions or deferrals of payments to borrowers whom we deem to be experiencing only temporary financial difficulty. In these cases, there are limits within our operational policies to minimize the number of times a loan can be extended, as well as limits to the length of each extension, including a cumulative cap over the life of the loan. If these limits are breached, the modification is considered a TDR as noted in the following paragraph. Before offering an extension or deferral, we evaluate the capacity of the customer to make the scheduled payments after the deferral period. During the deferral period, we continue to accrue interest on the loan as part of the deferral agreement. We grant these extensions or deferrals when we expect to collect all amounts due including interest accrued at the original contract rate. However, in response to the COVID-19 pandemic, we offered broad-based deferral programs to all of our customers who requested assistance with their loans. A restructuring that results in only a delay in payment that is deemed to be insignificant is not a concession and the modification is not considered to be a TDR. In order to assess whether a restructuring that results in a delay in payment is insignificant, we consider the amount of the restructured payments subject to delay in conjunction with the unpaid principal balance or the collateral value of the loan, whether or not the delay is significant with respect to the frequency of payments under the original contract, or the loan’s original expected duration. In the cases where payment extensions on our automotive loan portfolio cumulatively extend beyond 90 days and are more than 10% of the original contractual term or where the cumulative payment extension is beyond 180 days, we deem the delay in payment to be more than insignificant, and as such, classify these types of modifications as TDRs. Otherwise, we believe that the modifications do not represent a concessionary modification and accordingly, they are not classified as TDRs. Additionally, based on guidance issued by federal and state regulatory agencies, loan modifications made in response to the COVID-19 pandemic are not considered TDRs if accounts were considered current at the date the modification program was implemented. Refer to Note 8 for additional information. For commercial loans of all classes, similar qualitative factors are considered when assessing the financial difficulty of the borrower. In addition to the factors noted above, consideration is also given to the borrower’s forecasted ability to service the debt in accordance with the contractual terms, possible regulatory actions, and other potential business disruptions (for example, the loss of a significant customer or other revenue stream). Consideration of a concession is also similar for commercial loans. In addition to the factors noted above, consideration is also given to whether additional guarantees or collateral have been provided. For all loans, TDR classification typically results from our loss mitigation activities. For loans held-for-investment that are not carried at fair value and are TDRs, impairment is typically measured based on the difference between the amortized cost basis of the loan and the present value of the expected future cash flows of the loan. The present value is calculated using the loan’s original interest rate, as opposed to the interest rate specified within the restructuring. The loan may also be measured for impairment based on the fair value of the underlying collateral less costs to sell for loans that are collateral dependent. We recognize impairment by either establishing a valuation allowance or recording a charge-off. The financial impacts of modifications that meet the definition of a TDR are reported in the period in which they are identified as TDRs. Additionally, if a loan that is classified as a TDR redefaults within 12 months of the modification, we are required to disclose the instances of redefault. For the purpose of this disclosure, we have determined that a loan is considered to have redefaulted when the loan meets the requirements for evaluation under our charge-off policy except for commercial loans where redefault is defined as 90 days past due. Nonaccrual loans may return to accrual status as discussed in the preceding nonaccrual loan section at which time, the normal accrual of interest income resumes. Net Charge-offs We disclose the measurement of net charge-offs as the amount of gross charge-offs recognized less recoveries received. Gross charge-offs reflect the amount of the amortized cost basis directly written-off. Generally, we recognize recoveries when they are received and record them as an increase to the allowance for loan losses. As a general rule, consumer automotive loans are written down to estimated collateral value, less costs to sell, if repossession is assured and in process once a loan becomes 120 days past due. In our consumer mortgage portfolio segment, first-lien mortgages and a subset of our home equity portfolio that are secured by real estate in a first-lien position are written down to the estimated fair value of the collateral, less costs to sell, once a mortgage loan becomes 180 days past due. Consumer mortgage loans that represent second-lien positions are charged off at 180 days past due. Loans in our consumer other segment are charged off at 120 days past due. Within 60 days of receipt of notification of filing from the bankruptcy court, or within the time frames noted above, consumer automotive and first-lien consumer mortgage loans in bankruptcy are written down to their expected future cash flows, which is generally fair value of the collateral, less costs to sell, and second-lien consumer mortgage loans and consumer other loans are fully charged-off, unless it can be clearly demonstrated that repayment is likely to occur. Regardless of other timelines noted within this policy, loans are considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to only be through sale or operation of the collateral. Collateral dependent loans are charged-off to the estimated fair value of the underlying collateral, less costs to sell when foreclosure or repossession proceedings begin. Commercial loans are individually evaluated and are written down to the estimated fair value of the collateral less costs to sell when collectability of the recorded balance is in doubt. Generally, all commercial loans are charged-off when it becomes unlikely that the borrower is willing or able to repay the remaining balance of the loan and any underlying collateral is not sufficient to recover the outstanding principal. Collateral dependent loans are charged-off to the fair market value of collateral less costs to sell when appropriate. Noncollateral dependent loans are fully written-off. Allowance for Loan Losses The allowance for loan losses (the allowance) is deducted from, or added to, the loan’s amortized cost basis to present the net amount expected to be collected from our lending portfolios. We estimate the allowance using relevant available information, which includes both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Additions to the allowance are charged to current period earnings through the provision for loan losses; amounts determined to be uncollectible are charged directly against the allowance, net of amounts recovered on previously charged-off accounts. Expected recoveries do not exceed the total of amounts previously charged-off and amounts expected to be charged-off. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions or renewals, unless the extension or renewal option is included in the original or modified contract at the reporting date and we are not able to unconditionally cancel the option. Expected loan modifications are also not included in the contractual term, unless we have a reasonable expectation at period end that a TDR will be executed with a borrower. For the purpose of calculating portfolio-level reserves, we have grouped our loans into four portfolio segments: consumer automotive, consumer mortgage, consumer other, and commercial. The allowance for loan losses is measured on a collective basis using statistical models when loans have similar risk characteristics. These statistical models are designed to correlate certain macroeconomic variables to expected future credit losses. The macroeconomic data used in the models are based on forecasted rates for the next 12-months. These forecasted variables are derived from both internal and external sources. Beyond this forecast period, we revert to a historical average rate. This reversion to the mean is performed on a straight-line basis over 24 months. The historical average is calculated using historical data beginning in January 2008 through the current period. Loans that do not share similar risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. The allowance calculation is also supplemented with qualitative reserves that take into consideration current portfolio and asset-level factors, such as the impacts of changes in underwriting standards, collections and account management effectiveness, geographic concentrations, and economic events that have occurred but are not yet reflected in the quantitative model component. Qualitative adjustments are documented, reviewed, and approved through our established risk governance processes and follow regulatory guidance. Management also considers the need for a reserve on unfunded nonderivative loan commitments across our portfolio segments, including lines of credit and standby letters of credit. We estimate expected credit losses over the contractual period in which we are exposed to credit risk, unless we have the option to unconditionally cancel the obligation. Expected credit losses include consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over the estimated life. The reserve for unfunded loan commitments is recorded within other liabilities on our Condensed Consolidated Balance Sheet. Refer to Note 28 within our 2019 Annual Report on Form 10-K for information on our unfunded loan commitments. Consumer Automotive The allowance for loan losses within the consumer automotive portfolio segment is calculated using proprietary statistical models and other risk indicators applied to pools of loans with similar risk characteristics, including credit bureau score and LTV ratios. The model generates projections of default rates, prepayment rates, loss severity rates, and recovery rates using macroeconomic and historical loan data. These projections are used to develop transition scenarios to predict the portfolio’s migration from the current past-due status to various future states over the life of the loan. While the macroeconomic data that is used to calculate expected credit losses includes interest rate indices and national and state-level home price indices, national and state-level unemployment rates are the most impactful macroeconomic factors in calculating expected lifetime credit losses. The loss severity within the consumer automotive portfolio segment is impacted by the market values of vehicles that are repossessed. Vehicle market values are affected by numerous factors including vehicle supply, the condition of the vehicle upon repossession, the overall price and volatility of gasoline or diesel fuel, consumer preference related to specific vehicle segments, and other factors. The model output is then aggregated to calculate expected lifetime credit losses. Consumer Mortgage The allowance for loan losses within the consumer mortgage portfolio segment is calculated by using statistical models based on pools of loans with similar risk characteristics, including credit score, LTV, loan age, documentation type, product type, and loan purpose. Expected losses are statistically derived based on a suite of behavioral based transition models. This transition framework predicts various stages of delinquency, default, and voluntary prepayment over the course of the life of the loan. The transition probability is a function of certain loan and borrower characteristics, including factors such as loan balance and term, the borrower’s credit score, and loan-to-value ratios, and economic variables, as well as consideration of historical factors such as loss frequency and severity. When a default event is predicted, a severity model is applied to estimate future loan losses. Loss severity within the consumer mortgage portfolio segment is impacted by the market values of foreclosed properties, which is affected by numerous factors, including geographic considerations and the condition of the foreclosed property. Macroeconomic data that is used to calculate expected credit losses includes certain interest rates and home price indices. The model output is then aggregated to calculate expected lifetime credit losses. Consumer Other The allowance for loan losses within the consumer other portfolio segment is calculated by using a vintage analysis that analyzes historical performance for groups of loans with similar risk characteristics, including vintage level historical balance paydown rates and delinquency and roll rate behaviors by risk tier and product type, to arrive at an estimate of expected lifetime credit losses. The risk tier segmentation is based upon borrower risk characteristics, including credit score and past performance history, as well as certain loan specific characteristics, such as loan type and origination year. Commercial Loans The allowance for loan losses within the commercial loan portfolio segment is calculated using risk rating models that use historical loss experience, concentrations, macroeconomic factors, and performance trends. The determination of the allowance is influenced by numerous assumptions and factors that may materially affect estimates of loss, including changes to the PD, LGD, and EAD. PD factors are determined based on our historical performance data, which considers on-going reviews of the financial performance of the specific borrower, including cash flow, debt-service coverage ratio, and an assessment of the borrower’s industry and future prospects. The determination of PD also incorporates historical loss performance and, when necessary, macroeconomic information obtained from external sources. LGD factors consider the type of collateral, relative loan-to-value ratios, and historical loss information. In addition, LGD factors may be influenced by situations in which automotive manufacturers repurchase vehicles used as collateral to secure the loans in default situations. EAD factors are derived from outstanding balance levels, including estimated prepayment assumptions based on historical performance. Refer to Note 8 for information on the allowance for loan losses. Goodwill and Other Intangibles On January 1, 2020, we adopted ASU 2017-04, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, on a prospective basis, resulting in an update to our accounting policy. Goodwill and intangible assets, net of accumulated amortization, are reported in other assets in our Condensed Consolidated Balance Sheet. Our intangible assets primarily consist of acquired customer relationships and developed technology, and are amortized using a straight-line methodology over their estimated useful lives. We review intangible assets for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If it is determined the carrying amount of the asset is not recoverable, an impairment charge is recorded. Goodwill represents the excess of the cost of an acquisition over the fair value of net assets acquired, including identifiable intangibles. We allocate goodwill to applicable reporting units based on the relative fair value of the other net assets allocated to those reporting units at the time of the acquisition. In the event we restructure our business, we may reallocate goodwill. We test goodwill for impairment annually, or more frequently if events and changes in circumstances indicate that it is more likely than not that impairment exists. Our annual goodwill impairment test is performed as of August 31 of each year. In certain situations, we may perform a qualitative assessment to test goodwill for impairment. We may also decide to bypass the qualitative assessment and perform a quantitative assessment. If we perform the qualitative assessment to test goodwill for impairment and conclude that it is more likely than not that the reporting unit’s fair value is greater than its carrying value, then the quantitative assessment is not required. However, if we perform the qualitative assessment and determine that it is more likely than not that a reporting unit’s fair value is less than its carrying value, then we must perform the quantitative assessment. The quantitative assessment requires us to compare the fair value of each of the reporting units to their respective carrying value. The fair value of the reporting units in our quantitative assessment is determined based on various analyses including discounted cash flow projections using assumptions a market participant would use. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered impaired. If the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment loss is recorded for the excess of the carrying value of the reporting unit over its fair value. Income Taxes In calculating the provision for interim income taxes, in accordance with ASC Topic 740, Income Taxes, we apply an estimated annual effective tax rate to year-to-date ordinary income. At the end of each interim period, we estimate the effective tax rate expected to be applicable for the full fiscal year. This method differs from that described in Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K, which describes our annual significant income tax accounting policy and related methodology. Refer to Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K regarding additional significant accounting policies. Recently Adopted Accounting Standards Financial Instruments—Credit Losses (ASU 2016-13) In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this update introduce a new accounting model to measure credit losses for financial assets measured at amortized cost. The FASB has also issued additional ASUs to clarify the scope and provide additional guidance for ASU 2016-13. Credit losses for financial assets measured at amortized cost should be determined based on the total current expected credit losses over the life of the financial asset or group of financial assets. In effect, the financial asset or group of financial assets should be presented at the net amount expected to be collected. Credit losses will no longer be recorded under the current incurred loss model for financial assets measured at amortized cost. The amendments also modify the accounting for available-for-sale securities whereby credit losses will be recorded through an allowance for credit losses rather than a write-down to the security’s cost basis, which allows for reversals of credit losses when estimated credit losses decline. Credit losses for available-for-sale securities should be measured in a manner similar to current GAAP. On January 1, 2020, we adopted ASU 2016-13 and all subsequent ASUs that modified ASU 2016-13 (collectively, the amendments to the credit loss standard), which have been codified under ASC 326, Financial Instruments - Credit Losses. We adopted this guidance using the modified retrospective approach, as required, and have not adjusted prior period comparative information and will continue to disclose prior period financial information in accordance with the previous accounting guidance. While the standard modifies the measurement of the allowance for credit losses, it does not alter the credit risk of our finance receivables and loan portfolio. The adoption of the amendments resulted in a reduction to our opening retained earnings of approximately $1.0 billion, net of income taxes, resulting from a pretax increase to our allowance for credit losses of approximately $1.3 billion, primarily driven by our consumer automotive loan portfolio. The increase is primarily related to the difference between loss emergence periods previously utilized, as compared to estimating lifetime credit losses as required by the CECL standard. We did not experience a material impact to the allowance for loan losses from any of our other lending portfolios. Additionally, the adoption of CECL did not result in a material impact to our held-to-maturity securities portfolio, which is primarily composed of agency-backed mortgage securities, or our available-for-sale securities portfolio. We have elected to phase the estimated impact of CECL into regulatory capital in accordance with the interim final rule of the FRB and other U.S. banking agencies that became effective on March 31, 2020. As a result, we will delay recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us extends through December 31, 2021. Beginning on January 1, 2022, we will be required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025. Under the interim final rule, the estimated impact of CECL on regulatory capital that we will defer and later phase in is calculated as the entire day-one impact at adoption plus 25% of the subsequent change in allowance during the two-year deferral period. Refer to Note 17 for further details about the impact of CECL on regulatory capital. Our quantitative allowance for loan loss estimates under CECL is impacted by certain forecasted economic factors. In order to estimate the quantitative portion of our allowance for loan losses under CECL, our modeling processes rely on a single forecast scenario for each macroeconomic factor incorporated. To derive macroeconomic assumptions in this single scenario, we have elected to forecast these macroeconomic factors over a 12-month period, which we have determined to be reasonable and supportable. After the 12-month reasonable and supportable forecast period, we have elected to revert on a straight-line basis over a 24-month period to a historical mean for each macroeconomic factor. The mean is calculated from historical data spanning from January 2008 through the most current period, and as a result, includes data points from the last recessionary period. In addition to our quantitative allowance for loan losses, we also incorporate qualitative adjustments that may relate to idiosyncratic risks, changes in current economic conditions that may not be reflected in quantitatively derived results, or other relevant factors to further inform our estimate of the allowance for credit losses. Additionally, due to the expansion of the time horizon over which we are required to estimate future credit losses, we may experience increased volatility in our future provisions for credit losses. Factors that could contribute to such volatility include, but are not limited to, changes in the composition and credit quality of our financing receivables and loan portfolio and investment securities portfolios, economic conditions and forecasts, the allowance for credit loss models that are used, the data that is included in the models, the associated qualitative allowance framework, and our estimation techniques. Reference Rate Reform (ASU 2020-04) In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide temporary, optional guidance to ease the potential burden in accounting for reference rate reform. The amendments provide optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. The amendments primarily include relief related to contract modifications and hedging relationships, as well as providing a one-time election for the sale or transfer of debt securities classified as held-to-maturity. The relief provided by this ASU does not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. However, hedging relationships that apply certain optional expedients prior to December 31, 2022, will be retained through the end of the hedging relationship, including for periods after December 31, 2022. We adopted the amendments in ASU 2020-04 as of the March 12, 2020 issuance date, on a prospective basis. The adoption did not have an immediate direct impact to our financial statements. As contracts are modified through December 2022, we will assess the impact based on this guidance. We do not expect there will be a material impact to our financial statements. |
Acquisitions (Notes) |
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Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | Acquisitions On October 1, 2019, we acquired 100% of the equity of Credit Services Corporation, LLC, including its wholly owned subsidiary, Health Credit Services LLC (collectively Health Credit Services), a digital point-of-sale payment provider that offers financing to consumers for various healthcare procedures or services, for $177 million in cash. Health Credit Services operates as a wholly owned subsidiary of Ally. Beginning in October 2019, financial information related to Health Credit Services, which we renamed Ally Lending, is included within Corporate and Other. For further information on our acquisition of Health Credit Services, refer to Note 2 in our 2019 Annual Report on Form 10-K. Additionally, in February 2020, we entered into a merger agreement to acquire Cardholder Management Services, Inc. and its subsidiaries, including CardWorks, Inc. and Merrick Bank Corporation (collectively, CardWorks). CardWorks is a nonprime credit-card and consumer-finance provider in the United States with servicing and merchant-service capabilities across the credit spectrum. On June 24, 2020, the parties to the merger agreement (other than the stockholders’ representative) mutually agreed to terminate it. We will not incur any termination or breakup fees as a result of the execution of the mutual termination agreement. |
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Revenue from Contracts with Customers | Revenue from Contracts with Customers Our primary revenue sources, which include financing revenue and other interest income, are addressed by other GAAP and are not in the scope of ASC Topic 606, Revenue from Contracts with Customers. As part of our Insurance operations, we recognize revenue from insurance contracts, which are addressed by other GAAP and are not included in the scope of this standard. Certain noninsurance contracts within our Insurance operations, including VSCs, GAP contracts, and VMCs, are included in the scope of this standard. All revenue associated with noninsurance contracts is recognized over the contract term on a basis proportionate to the anticipated cost emergence. Further, commissions and sales expense incurred to obtain these contracts are amortized over the terms of the related policies and service contracts on the same basis as premiums and service revenue are earned, and all advertising costs are recognized as expense when incurred. The following tables present a disaggregated view of our revenue from contracts with customers included in other revenue that falls within the scope of the revenue recognition principles of ASC Topic 606, Revenue from Contracts with Customers. For further information regarding our revenue recognition policies and details about the nature of our respective revenue streams, refer to Note 1 and Note 3 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.
In addition to the components of other revenue presented above, as part of our Automotive Finance operations, we recognized net remarketing losses of $11 million and $9 million for the three months and six months ended June 30, 2020, respectively, and net remarketing gains of $23 million and $38 million for the three months and six months ended June 30, 2019, on the sale of off-lease vehicles. These losses and gains are included in depreciation expense on operating lease assets in our Condensed Consolidated Statement of Comprehensive Income. |
Other Income, Net of Losses |
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Other Income and Other Expense Disclosure | Other Income, Net of Losses Details of other income, net of losses, were as follows.
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Reserves for Insurance Losses and Loss Adjustment Expenses |
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Reserves for Insurance Losses and Loss Adjustment Expenses | Reserves for Insurance Losses and Loss Adjustment Expenses The following table shows a rollforward of our reserves for insurance losses and loss adjustment expenses.
(a) There have been no material adverse changes to the reserve for prior years. |
Other Operating Expenses |
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Operating Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Operating Income and Expense | Other Operating Expenses Details of other operating expenses were as follows.
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Investment Securities |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure | Investment Securities Our investment portfolio includes various debt and equity securities. Our debt securities, which are classified as available-for-sale or held-to-maturity, include government securities, corporate bonds, asset-backed securities, and mortgage-backed securities. The cost, fair value, and gross unrealized gains and losses on available-for-sale and held-to-maturity securities were as follows.
The maturity distribution of debt securities outstanding is summarized in the following tables based upon contractual maturities. Call or prepayment options may cause actual maturities to differ from contractual maturities.
The balances of cash equivalents were $3.2 billion and $73 million at June 30, 2020, and December 31, 2019, respectively, and were composed primarily of money-market funds and short-term securities, including U.S. Treasury bills. The following table presents interest and dividends on investment securities.
The following table presents gross gains and losses realized upon the sales of available-for-sale securities, and net gains or losses on equity securities held during the period.
The following table presents the credit quality of our held-to-maturity securities, based on the latest available information as of June 30, 2020. The credit ratings are sourced from nationally recognized statistical rating organizations, which include S&P, Moody’s, and Fitch, and represent a composite of the ratings or, where credit ratings cannot be sourced from the agencies, are presented based on the asset type. All our held-to-maturity securities were current in their payment of principal and interest as of June 30, 2020. We have not recorded any interest income reversals on our held-to-maturity securities during the six months ended June 30, 2020.
The following table summarizes held-to-maturity securities in an unrealized loss position at December 31, 2019, prior to the date of adoption of the amendments to the credit loss standard, and as defined by the previous accounting guidance in effect at that time.
The table below summarizes available-for-sale securities in an unrealized loss position, which we evaluated to determine if a credit loss exists requiring the recognition of an allowance for credit losses. For additional information on our methodology, refer to Note 1. As of June 30, 2020, we did not have the intent to sell the available-for-sale securities with an unrealized loss position and we do not believe it is more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. As a result of this evaluation, management determined that no credit reserves were required at June 30, 2020. We have not recorded any interest income reversals on our available-for-sale securities during the six months ended June 30, 2020.
We adopted ASU 2016-13 on January 1, 2020, on a modified retrospective basis, as further described in Note 1. Under the new guidance, once it is determined that a credit loss has occurred, an allowance for credit losses is established on our available-for-sale and held-to-maturity securities. Prior to adoption of this standard, when a decline in fair value of a debt security was determined to be other than temporary, an impairment charge for the credit component was recorded, and a new cost basis in the investment was established. During the six months ended June 30, 2020, management determined that credit losses did not exist for securities in an unrealized loss position. This analysis considered a variety of factors including, but not limited to, performance indicators of the issuer, default rates, industry analyst reports, credit ratings, and other relevant information, which indicated that contractual cash flows are expected to occur. |
Finance Receivables and Loans, Net (Notes) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases Receivable, Net Amount [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans, Notes, Trade and Other Receivables Disclosure | Finance Receivables and Loans, Net The composition of finance receivables and loans reported at amortized cost basis was as follows.
The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans for the three and six months ended June 30, 2020, and includes the cumulative effect of adopting ASU 2016-13.
The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans for the three and six months ended June 30, 2019, prior to the adoption of ASU 2016-13, as defined by the previous accounting guidance in effect at that time.
During the second half of March 2020, the broader economy experienced a significant deterioration driven by the COVID-19 pandemic, which impacted our allowance for loan losses. During the three months ended March 31, 2020, we recorded an additional $602 million of provision expense for credit losses associated with the deterioration in the macroeconomic outlook from COVID-19. During the second quarter of 2020, we incurred total provision expense of $287 million, which included $128 million attributable to the macroeconomic environment and other factors aside from changes in portfolio size and incremental charge-offs. The following table presents information about significant sales of finance receivables and loans and transfers of finance receivables and loans from held-for-investment to held-for-sale based on net carrying value.
The following table presents information about significant purchases of finance receivables and loans based on unpaid principal balance at the time of purchase.
Nonaccrual and Impaired Loans Following the adoption of CECL as of January 1, 2020, the definitions of impairment and related impaired loan disclosures were removed. Under CECL, we present the amortized cost of our finance receivables and loans on nonaccrual status including such loans with no allowance. The following table presents the amortized cost of our finance receivables and loans on nonaccrual status as of the beginning or end of the three months and six months ended June 30, 2020. All consumer or commercial finance receivables and loans that were 90 days or more past due were on nonaccrual status as of June 30, 2020, and December 31, 2019.
During the three months and six months ended June 30, 2020, we recorded interest income from cash payments of $4 million and $6 million associated with finance receivables and loans in nonaccrual status. The following table presents information about our impaired finance receivables and loans at December 31, 2019, prior to the date of adoption of the amendments to the credit loss standard and as defined by the previous accounting guidance in effect at that time.
The following table presents average balance and interest income for our impaired finance receivables and loans for the three months and six months ended June 30, 2019, prior to the date of adoption of the amendments to the credit loss standard and as defined by the previous accounting guidance in effect at that time.
Credit Quality Indicators We evaluate the credit quality of our consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is based upon borrower payment activity, relative to the contractual terms of the loan. Beginning March 2020, in response to the COVID-19 pandemic, we began to offer several programs to help support our customers and manage credit risk. In our automotive finance business, existing customers had the option to elect to defer their loan and lease payments for up to 120 days without late fees being incurred but, for consumer automotive loans, with finance charges continuing to accrue. This program was made available to consumer automotive loan and lease customers from March 18, 2020, through June 21, 2020. Approximately 1.3 million consumer automotive loan and lease customers enrolled in the program, and of the 1.2 million consumer automotive loan customers enrolled in the program, 64% were granted a 120-day deferral at the time of enrollment. As of June 30, 2020, approximately 840,000 or 21% of our consumer automotive loan customers were enrolled in the program. Of these enrolled customers, approximately 97% were current on their loans at the time of enrollment, and approximately 16% chose to make at least one payment while in the deferral program. The vast majority of our loan deferrals for customers in the program are scheduled to expire by the end of August 2020. In our mortgage-lending business, existing customers experiencing financial hardship due to an interruption of income related to the COVID-19 pandemic have been afforded the opportunity to defer their loan payments for up to 120 days, with an option for an additional 60 days, without late fees being incurred but with interest continuing to accrue. This program was made available to mortgage-lending customers beginning March 18, 2020, and we plan to make the program available through July 31, 2020. As of June 30, 2020, approximately 1,900 or 5% of our mortgage-lending customers were enrolled in the program. Approximately 92% of these enrolled customers were current on their loans at the time of enrollment. We expect that the initial forbearance period for the majority of these customers will end by September 30, 2020. As of June 30, 2020, approximately 44% of enrolled customers made a payment in the month of June. In our personal-lending business, existing customers experiencing financial hardship due to the COVID-19 pandemic had the opportunity to elect to defer their loan payments for up to 120 days without late fees being incurred or finance charges continuing to accrue. In addition to this program, we temporarily suspended late fees for all customers with current accounts. The loan-deferral program was made available to personal-lending customers from March 23, 2020, through June 30, 2020. As of June 30, 2020, approximately 6,300 or 7% of our personal-lending customers were enrolled in the program. Approximately 84% of these enrolled customers were current on their loans at the time of enrollment. We expect that the majority of these customers will exit the program during the third quarter of 2020. As of June 30, 2020, approximately 20% of enrolled customers chose to make at least one payment during the deferral period. In accordance with regulatory guidance, if borrowers are less than 30 days past due on their loans and enter into loan modifications offered as a result of COVID-19, their loans generally continue to be considered performing loans and continue to accrue interest during the period of the loan modification. For borrowers who are 30 days or more past due when entering into loan modifications offered as a result of COVID-19, we evaluate the loan modifications under our existing troubled debt restructuring framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest. For all borrowers who enroll in these loan modification programs offered as a result of COVID-19, the delinquency status of the borrowers is frozen as of the date immediately preceding the commencement of the program, resulting in a static delinquency metric during the deferral period. Upon exiting the deferral program, the measurement of loan delinquency will resume where it had left off upon entry into the program. The following table presents the amortized cost basis of our consumer finance receivables and loans by credit quality indicator based on delinquency status at June 30, 2020, and origination year.
The following table presents an analysis of our past-due finance receivables and loans recorded at amortized cost basis at December 31, 2019.
We evaluate the credit quality of our commercial loan portfolio using regulatory risk ratings, which are based on relevant information about the borrower’s financial condition, including current financial information, historical payment experience, credit documentation, and current economic trends, among other factors. We use the following definitions for risk rankings.
The regulatory risk classification utilized is influenced by internal credit risk ratings, which are based on a variety of factors. A borrower’s internal credit risk rating is updated at least annually, and more frequently when a borrower’s credit profile changes, including when we become aware of potential credit deterioration. The following table presents the amortized cost basis of our commercial finance receivables and loans by credit quality indicator based on risk rating at June 30, 2020, and origination year.
The following table presents historical credit quality indicators for our commercial finance receivables and loans at December 31, 2019, prior to the date of adoption of the amendments to the credit loss standard and as defined by the previous accounting guidance in effect at that time.
As a result of the COVID-19 pandemic, we announced a series of actions to support our automotive-dealer customers and manage credit risk within our lending portfolios. For dealers with current accounts, we have offered for up to four months a waiver of curtailments on wholesale floorplan loans, an increase in used vehicle floorplan advance rates, a deferral of interest and insurance charges on wholesale borrowings, and a deferral of term loan payments. As of June 30, 2020, approximately 2,290 or 73% of eligible dealers had requested at least one form of this assistance. Approximately 39% of eligible wholesale dealers deferred wholesale interest and insurance payments during the second quarter of 2020, which represented a decline from the first quarter of approximately 20 percentage points. Dealers that elected to defer wholesale interest and insurance payments have the option to repay such balances over a 4- or 12-month period without additional interest charges or fees. The accounts enrolled in the program continue to accrue interest on principal balances in accordance with recently issued guidance from regulators. Additionally, if the borrower was no more than 30 days past due as of the date the modification program was implemented, the modification was not considered a TDR. The following table presents an analysis of our past-due commercial finance receivables and loans recorded at amortized cost basis.
Troubled Debt Restructurings TDRs are loan modifications where concessions were granted to borrowers experiencing financial difficulties. For consumer automotive loans, we may offer several types of assistance to aid our customers, including payment extensions and rewrites of the loan terms. Additionally, for mortgage loans, as part of certain programs, we offer mortgage loan modifications to qualified borrowers. These programs are in place to provide support to our mortgage customers in financial distress, including principal forgiveness, maturity extensions, delinquent interest capitalization, and changes to contractual interest rates. Total TDRs recorded at amortized cost were $1.3 billion and $867 million at June 30, 2020, and December 31, 2019, respectively. In March 2020, a joint statement was issued by federal and state regulatory agencies, after consultation with the FASB, to clarify that short-term loan modifications are not TDRs if made on a good-faith basis in response to COVID-19 to borrowers who were current prior to any relief. Under this guidance, six months is provided as an example of short-term, and current is defined as less than 30 days past due at the time the modification program is implemented. The guidance also provides that these modified loans generally will not be classified as nonaccrual during the term of the modification. For borrowers who are 30 days or more past due when enrolling in a loan modification program related to the COVID-19 pandemic, we evaluate the loan modifications under our existing TDR framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan will be accounted for as a TDR and will generally not accrue interest. Total commitments to lend additional funds to borrowers whose terms had been modified in a TDR were $16 million and $17 million at June 30, 2020, and December 31, 2019, respectively. Refer to Note 1 for additional information. The following tables present information related to finance receivables and loans recorded at amortized cost modified in connection with a TDR during the period.
The following tables present information about finance receivables and loans recorded at amortized cost that have redefaulted during the reporting period and were within 12 months or less of being modified as a TDR. Redefault is when finance receivables and loans meet the requirements for evaluation under our charge-off policy (refer to Note 1 for additional information) except for commercial finance receivables and loans, where redefault is defined as 90 days past due.
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Leasing |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | Leasing Ally as the Lessee We have operating leases for our corporate facilities, which have remaining lease terms of 2 months to 9 years. Most of the property leases have fixed payment terms with annual fixed-escalation clauses and include options to extend the leases for periods that range from 3 months to 15 years. Some of those lease agreements also include options to terminate the leases in periods that range from 2 to 6 years after the commencement of the leases. We have not included any of these term extensions or termination provisions in our estimates of the lease term, as we do not consider it reasonably certain that the options will be exercised. We also have operating leases for a fleet of vehicles that is used by our sales force for business purposes, with noncancelable lease terms of 367 days. Thereafter, the leases are month-to-month, up to a maximum of 48 months from inception. The following table details our total investment in operating leases.
During the three months and six months ended June 30, 2020, we paid $12 million and $25 million, respectively, in cash for amounts included in the measurement of lease liabilities at June 30, 2020, compared to $13 million and $25 million for the three months and six months ended June 30, 2019, in cash for amounts included in the measurement of lease liabilities at June 30, 2019. These amounts are included in net cash provided by operating activities in the Condensed Consolidated Statement of Cash Flows. During the six months ended June 30, 2020, and June 30, 2019, we obtained $43 million and $34 million of ROU assets in exchange for new lease liabilities, respectively. As of June 30, 2020, the weighted-average remaining lease term of our operating lease portfolio was 6 years, and the weighted-average discount rate was 2.64%, compared to 7 years and 2.97% as of June 30, 2019. The following table presents future minimum rental payments we are required to make under operating leases that have commenced as of June 30, 2020, and that have noncancelable lease terms expiring after June 30, 2020.
In May 2020, we purchased an operations center in Jacksonville, Florida, which consists of two facilities previously leased by us. Commensurate with the closing of the transaction, the lease ROU asset and liability was derecognized and new fixed assets totaling approximately $48 million were recognized. In addition to the above, we entered into a forward-starting lease agreement in September 2017, for a new corporate facility in Charlotte, North Carolina, where we plan to consolidate several existing facilities into that location. The lessor and their agents are currently constructing the facilities at this location, with the lease scheduled to commence in April 2021 after construction is completed. The lease agreement will have a total of $290 million in undiscounted future lease payments over the 15-year term of the lease. We also have an option to purchase this facility after construction is completed, subject to certain terms and conditions. The following table details the components of total net operating lease expense.
(a) Included in other operating expenses in our Condensed Consolidated Statement of Comprehensive Income. Ally as the Lessor Investment in Operating Leases We purchase consumer operating lease contracts and the associated vehicles from dealerships after those contracts are executed by the dealers and the consumers. The amount we pay a dealer for an operating lease contract is based on the negotiated price for the vehicle less vehicle trade-in, down payment from the consumer, and available automotive manufacturer incentives. Under the operating lease, the consumer is obligated to make payments in amounts equal to the amount by which the negotiated purchase price of the vehicle (less any trade-in value, down payment, or available manufacturer incentives) exceeds the contract residual value (including residual support) of the vehicle at lease termination, plus operating lease rental charges. The customer can terminate the lease at any point after commencement, subject to additional charges and fees. Both the consumer and the dealership have the option to purchase the vehicle at the end of the lease term, which can range from 24 to 60 months, at the residual value of the vehicle, however it is not reasonably certain this option will be exercised and accordingly our consumer leases are classified as operating leases. In addition to the charges described above, the consumer is generally responsible for certain charges related to excess mileage or excessive wear and tear on the vehicle. These charges are deemed variable lease payments and, as these payments are not based on a rate or index, they are recognized as net depreciation expense on operating lease assets in our Condensed Consolidated Statement of Comprehensive Income as incurred. Additionally, lease modifications made related to the COVID-19 pandemic are not considered a new lease contract, and the remaining lease payments will be recorded on a straight-line basis over the modified lease term. To support our customers and help mitigate lease residual risk, we have deferred lease payments without fees for up to 120 days for any consumer requesting assistance related to the COVID-19 pandemic. Approximately 55,000 of our lease customers have enrolled in this lease modification program, and approximately 60% were granted a 120-day deferral at the time of enrollment. As of June 30, 2020, approximately 38,000 or 11% of our lease customers were enrolled in the lease modification program. We have also provided a program for and, in some cases, incentivized customers nearing their scheduled lease-end dates to extend their leases for up to an additional 180 days. Eligible customers who opted into this program during the early part of the second quarter were not charged for the first month of the extension, and the following months of the extended lease were offered under the terms of the existing lease contract. As of June 30, 2020, approximately 6,900 customers had opted into an extension requiring additional payments. When we acquire a consumer operating lease, we assume ownership of the vehicle from the dealer. We require that property damage, bodily injury, collision, and comprehensive insurance be obtained by the lessee on all consumer operating leases. Neither the consumer nor the dealer is responsible for the value of the vehicle at the time of lease termination. When vehicles are not purchased by customers or the receiving dealer at scheduled lease termination, the vehicle is returned to us for remarketing. We generally bear the risk of loss to the extent the value of a leased vehicle upon remarketing is below the expected residual value. At termination, our actual sales proceeds from remarketing the vehicle may be higher or lower than the estimated residual value resulting in a gain or loss on remarketing, which is included in net depreciation expense on operating lease assets in our Condensed Consolidated Statement of Comprehensive Income. Excessive mileage or excessive wear and tear on the vehicle during the lease may impact the sales proceeds received upon remarketing. As of June 30, 2020, and December 31, 2019, consumer operating leases with a carrying value, net of accumulated depreciation, of $411 million and $352 million, respectively, were covered by a residual value guarantee of 15% of the manufacturer’s suggested retail price. The following table details our investment in operating leases.
The following table presents future minimum rental payments we have the right to receive under operating leases with noncancelable lease terms expiring after June 30, 2020.
We recognized operating lease revenue of $343 million and $710 million, and $363 million and $724 million for the three months and six months ended June 30, 2020, and June 30, 2019, respectively. Depreciation expense on operating lease assets includes remarketing gains and losses recognized on the sale of operating lease assets. The following table summarizes the components of depreciation expense on operating lease assets.
(a) Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $5 million and $12 million during the three months and six months ended June 30, 2020, respectively, and $5 million and $9 million during the three months and six months ended June 30, 2019. Finance Leases Our total gross investment in finance leases, which is included in finance receivables and loans, net, on our Condensed Consolidated Balance Sheet was $455 million and $472 million as of June 30, 2020, and December 31, 2019, respectively. This includes lease payment receivables of $442 million and $459 million at June 30, 2020, and December 31, 2019, respectively, and unguaranteed residual assets of $13 million at both June 30, 2020, and December 31, 2019. Interest income on finance lease receivables was $5 million and $11 million for the three and six months ended June 30, 2020, respectively, and $6 million and $12 million for the three and six months ended June 30, 2019, and is included in interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income. The following table presents future minimum rental payments we have the right to receive under finance leases with noncancelable lease terms expiring after June 30, 2020.
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Securitizations and Variable Interest Entities |
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Securitizations And Variable Interest Entities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity Disclosure | Securitizations and Variable Interest Entities We securitize, transfer, and service consumer and commercial automotive loans, and operating leases. We often securitize these loans and notes secured by operating leases (collectively referred to as financial assets) using SPEs. An SPE is a legal entity that is designed to fulfill a specified limited need of the sponsor. Our principal use of SPEs is to obtain liquidity by securitizing certain of our financial assets. SPEs are often VIEs and may or may not be included on our Condensed Consolidated Balance Sheet. VIEs are legal entities that either have an insufficient amount of equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack the ability to control the entity’s activities that most significantly impact economic performance through voting or similar rights, or do not have the obligation to absorb the expected losses or the right to receive expected residual returns of the entity. The VIEs included on the Condensed Consolidated Balance Sheet represent SPEs where we are deemed to be the primary beneficiary, primarily due to our servicing activities and our beneficial interests in the VIE that could be potentially significant. The nature, purpose, and activities of nonconsolidated SPEs are similar to those of our consolidated SPEs with the primary difference being the nature and extent of our continuing involvement. For nonconsolidated SPEs, the transferred financial assets are removed from our balance sheet provided the conditions for sale accounting are met. The financial assets obtained from the securitization are primarily reported as cash or retained interests (if applicable). Liabilities incurred as part of these securitizations, are recorded at fair value at the time of sale and are reported as accrued expenses and other liabilities on our Condensed Consolidated Balance Sheet. Upon the sale of the loans, we recognize a gain or loss on sale for the difference between the assets recognized, the assets derecognized, and the liabilities recognized as part of the transaction. With respect to our ongoing right to service the assets we sell, the servicing fee we receive represents adequate compensation, and consequently, we do not recognize a servicing asset or liability. There were no sales of financial assets into nonconsolidated VIEs for both the three months and six months ended June 30, 2020, and June 30, 2019. We provide long-term guarantee contracts to investors in certain nonconsolidated affordable housing entities and have extended a line of credit to provide liquidity. Since we do not have control over the entities or the power to make decisions, we do not consolidate the entities and our involvement is limited to the guarantee and the line of credit. We are involved with various other nonconsolidated equity investments, including affordable housing entities and venture capital funds and loan funds. We do not consolidate these entities and our involvement is limited to our outstanding investment, additional capital committed to these funds plus any previously recognized low-income housing tax credits that are subject to recapture. Refer to Note 1 and Note 11 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for further description of our securitization activities and our involvement with VIEs. The following table presents our involvement in consolidated and nonconsolidated VIEs in which we hold variable interests. For additional detail related to the assets and liabilities of consolidated variable interest entities refer to the Condensed Consolidated Balance Sheet.
Cash Flows with Off-Balance-Sheet Securitization Entities The following table summarizes cash flows received and paid related to SPEs and asset-backed financings where the transfer is accounted for as a sale and we have a continuing involvement with the transferred consumer automotive assets (for example, servicing) that were outstanding during the six months ended June 30, 2020, and 2019. Additionally, this table contains information regarding cash flows received from and paid to nonconsolidated SPEs that existed during each period.
Delinquencies and Net Credit Losses The following tables present quantitative information about delinquencies and net credit losses for off-balance-sheet securitizations and whole-loan sales where we have continuing involvement.
(a) Whole-loan sales are not part of a securitization transaction, but represent consumer automotive pools of loans sold to third-party investors. |
Other Assets |
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Other Assets Disclosure | Other Assets The components of other assets were as follows.
June 30, 2020, and December 31, 2019, respectively, measured at cost with adjustments for impairment and observable changes in price. During the three and six months ended June 30, 2020, we recorded $4 million and $5 million of impairments and downward adjustments related to equity securities without a readily determinable fair value, respectively. Through June 30, 2020, we recorded $10 million of cumulative upward adjustments and $11 million of cumulative impairments and downward adjustments related to equity securities without a readily determinable fair value held at June 30, 2020.
The carrying balance of goodwill by reportable operating segment was as follows.
During the three months ended June 30, 2020, we recognized a $50 million impairment of goodwill at Ally Invest. The recognition of this impairment was the result of certain business developments that impacted the expected growth and timing of revenue at Ally Invest, which constituted a triggering event for goodwill testing purposes. We used a combination of valuation methodologies, including discounted cash flow and comparable transaction analyses, to determine the fair market value of Ally Invest as of the April 30, 2020 valuation date and determined that the carrying value exceeded fair market value, resulting in the impairment charge. |
Deposit Liabilities |
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposit Liabilities Disclosures | Deposit Liabilities Deposit liabilities consisted of the following.
At June 30, 2020, and December 31, 2019, certificates of deposit included $27.0 billion and $25.6 billion, respectively, of those in denominations of $100 thousand or more. At June 30, 2020, and December 31, 2019, certificates of deposit included $8.7 billion and $8.2 billion, respectively, of those in denominations in excess of $250 thousand federal insurance limits. |
Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure | Debt Short-Term Borrowings The following table presents the composition of our short-term borrowings portfolio.
We periodically enter into term repurchase agreements—short-term borrowing agreements in which we sell securities to one or more investors while simultaneously committing to repurchase them at a specified future date, at the stated price plus accrued interest. As of June 30, 2020, the securities sold under agreements to repurchase consisted of $79 million of agency mortgage-backed residential debt securities set to mature within 30 days. Refer to Note 7 and Note 21 for further details. The primary risk associated with these repurchase agreements is that the counterparty will be unable to perform under the terms of the contract. As the borrower, we are exposed to the excess market value of the securities pledged over the amount borrowed. Daily mark-to-market collateral management is designed to limit this risk to the initial margin. However, should a counterparty declare bankruptcy or become insolvent, we may incur additional delays and costs. In some instances, we may place or receive cash collateral with counterparties under collateral arrangements associated with our repurchase agreements. At June 30, 2020, we placed cash collateral of $11 million, and we did not receive any collateral. At December 31, 2019, we did not place or receive any collateral. Long-Term Debt The following table presents the composition of our long-term debt portfolio.
The following table presents the scheduled remaining maturity of long-term debt at June 30, 2020, assuming no early redemptions will occur. The amounts below include adjustments to the carrying value resulting from the application of hedge accounting. The actual payment of secured debt may vary based on the payment activity of the related pledged assets.
The following summarizes assets restricted as collateral for the payment of the related debt obligation, primarily arising from securitization transactions accounted for as secured borrowings and repurchase agreements.
Trust Preferred Securities At both June 30, 2020, and December 31, 2019, we had issued and outstanding approximately $2.6 billion in aggregate liquidation preference of Series 2 TRUPS. Each Series 2 TRUPS security has a liquidation amount of $25. Distributions are cumulative and are payable until redemption at the applicable coupon rate. Distributions are payable at an annual rate equal to three-month London interbank offered rate plus 5.785% payable quarterly in arrears. Ally has the right to defer payments of interest for a period not exceeding 20 consecutive quarters. The Series 2 TRUPS have no stated maturity date, but must be redeemed upon the redemption or maturity of the related debentures (Debentures), which mature on February 15, 2040. Ally at any time may redeem the Series 2 TRUPS at a redemption price equal to 100% of the principal amount being redeemed, plus accrued and unpaid interest through the date of redemption. The Series 2 TRUPS are generally nonvoting, other than with respect to certain limited matters. During any period in which any Series 2 TRUPS remain outstanding but in which distributions on the Series 2 TRUPS have not been fully paid, none of Ally or its subsidiaries will be permitted to (i) declare or pay dividends on, make any distributions with respect to, or redeem, purchase, acquire or otherwise make a liquidation payment with respect to, any of Ally’s capital stock or make any guarantee payment with respect thereto; or (ii) make any payments of principal, interest, or premium on, or repay, repurchase or redeem, any debt securities or guarantees that rank on a parity with or junior in interest to the Debentures with certain specified exceptions in each case. The Series 2 TRUPS were issued prior to October 4, 2010, under the Emergency Economic Stabilization Act of 2008 and are not subject to phase-out from additional Tier 1 capital into Tier 2 capital. The amount of Series 2 TRUPS included in Ally’s Tier 1 capital was $2.5 billion at June 30, 2020. The amount represents the carrying amount of the Series 2 TRUPS less our common stock investment in the trust. Funding Facilities We utilize both committed secured credit facilities and other collateralized funding vehicles. The debt outstanding under our various funding facilities is included on our Condensed Consolidated Balance Sheet. The total capacity in our credit facilities is provided by banks through private transactions. The facilities can be revolving in nature, generally having an original tenor ranging from 364 days to two years, and allow for additional funding during the commitment period, or they can be amortizing and not allow for any further funding after the commitment period. At June 30, 2020, all of our $1.6 billion of capacity was revolving and of this balance, $550 million was from facilities with a remaining tenor greater than 364 days. Committed Secured Credit Facilities
(a) Funding from committed secured credit facilities is available on request in the event excess collateral resides in certain facilities or the extent incremental collateral is available and contributed to the facilities. |
Accrued Expenses and Other Liabilities |
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Accounts Payable and Accrued Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities Disclosure | Accrued Expenses and Other Liabilities The components of accrued expenses and other liabilities were as follows.
(a) For additional information on derivative instruments and hedging activities, refer to Note 18. |
Accumulated Other Comprehensive (Loss) Income |
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Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Comprehensive Income (Loss) Note | Accumulated Other Comprehensive Income (Loss) The following tables present changes, net of tax, in each component of accumulated other comprehensive income (loss).
The following tables present the before- and after-tax changes in each component of accumulated other comprehensive income (loss).
(c) For additional information on derivative instruments and hedging activities, refer to Note 18. |
Earnings per Common Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings per Common Share The following table presents the calculation of basic and diluted earnings per common share.
(c) Due to the antidilutive effect of the net loss from continuing operations for the six months ended June 30, 2020, basic weighted-average common shares outstanding was used to calculate basic and diluted earnings per share. During the three months and six months ended June 30, 2020, there were 2.3 million and 2.4 million, respectively, in shares underlying share-based awards excluded because their inclusion would have been antidilutive. There were no antidilutive shares during the three months and six months ended June 30, 2019. |
Regulatory Capital and Other Regulatory Matters |
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Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Regulatory Capital Requirements under Banking Regulations | Regulatory Capital and Other Regulatory Matters Basel Capital Framework The FRB and other U.S. banking agencies have adopted risk-based and leverage capital standards that establish minimum capital-to-asset ratios for BHCs, like Ally, and depository institutions, like Ally Bank. Ally and Ally Bank are subject to capital requirements issued by U.S. banking regulators that require us to maintain risk-based and leverage capital ratios above minimum levels. The risk-based capital ratios are based on a banking organization’s RWAs, which are generally determined under the standardized approach applicable to Ally and Ally Bank by (1) assigning on-balance-sheet exposures to broad risk-weight categories according to the counterparty or, if relevant, the guarantor or collateral (with higher risk weights assigned to categories of exposures perceived as representing greater risk), and (2) multiplying off-balance-sheet exposures by specified credit conversion factors to calculate credit equivalent amounts and assigning those credit equivalent amounts to the relevant risk-weight categories. The leverage ratio, in contrast, is based on an institution’s average unweighted on-balance-sheet exposures. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary action by regulators that, if undertaken, could have a direct material effect on the Condensed Consolidated Financial Statements or the results of operations and financial condition of Ally and Ally Bank. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Ally and Ally Bank must meet specific capital guidelines that involve quantitative measures of capital, assets, and certain off-balance-sheet items. These measures and related classifications, which are used in the calculation of our risk-based and leverage capital ratios and those of Ally Bank, are also subject to qualitative judgments by the regulators about the components of capital, the risk weightings of assets and other exposures, and other factors. The FRB also uses these ratios and guidelines as part of the capital planning and stress testing processes. In addition, in order for Ally to maintain its status as an FHC, Ally and its bank subsidiary, Ally Bank, must remain well capitalized and well managed, as defined under applicable laws. The well capitalized standard for insured depository institutions, such as Ally Bank, reflects the capital requirements under U.S. Basel III. In October 2019, the FRB and other U.S. banking agencies issued final rules implementing targeted amendments to the Dodd-Frank Act and other financial-services laws that had been enacted in May 2018 through the EGRRCP Act. The final rules were effective on December 31, 2019, and established four risk-based categories of prudential standards and capital and liquidity requirements for banking organizations with $100 billion or more in total consolidated assets. Under the final rules, Ally was designated as a Category IV firm and, as such, is subject to supervisory stress testing on a two-year cycle, allowed to continue excluding accumulated other comprehensive income from regulatory capital, exempted from company-run capital stress testing, and allowed to remain exempted from the supplementary leverage ratio and the countercyclical capital buffer. Refer to Note 20 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for additional details on our prudential standards tailoring framework and other capital and liquidity requirements we are subject to. Under U.S. Basel III, Ally and Ally Bank must maintain a minimum Common Equity Tier 1 risk-based capital ratio of 4.5%, a minimum Tier 1 risk-based capital ratio of 6%, and a minimum total risk-based capital ratio of 8%. In addition to these minimum risk-based capital ratios, Ally and Ally Bank are subject to a capital conservation buffer requirement that is currently fixed at 2.5%. Failure to maintain more than the full amount of the capital conservation buffer requirement would result in restrictions on the ability of Ally and Ally Bank to make capital distributions, including dividend payments and stock repurchases and redemptions, and to pay discretionary bonuses to executive officers. U.S. Basel III also subjects Ally and Ally Bank to a minimum Tier 1 leverage ratio of 4%. In March 2020, the FRB issued a final rule to more closely align forward-looking stress testing results with the FRB’s non-stress regulatory capital requirements for BHCs with $100 billion or more in total consolidated assets and other specified companies. The final rule introduces a stress capital buffer requirement based on firm-specific stress test performance and planned dividends, which will replace the fixed 2.5% component of the capital conservation buffer requirement. The final rule also makes several changes to the CCAR process, such as eliminating the CCAR quantitative objection, narrowing the set of planned capital actions assumed to occur in the stress scenario, assuming that a firm maintains a constant level of assets over the planning horizon, eliminating the 30% dividend payout ratio as a criterion for heightened scrutiny of a firm’s capital plan, and allowing a firm to make capital distributions in excess of those included in its capital plan if the firm is otherwise in compliance with the automatic distribution limits of the capital framework. The final rule became effective on May 18, 2020, and therefore applied to the 2020 CCAR process. For a Category IV firm like Ally, the stress capital buffer requirement will comprise its capital conservation buffer requirement. Ally’s stress capital buffer requirement will be the greater of 2.5% and the result of the following calculation: (1) the difference between Ally’s starting and minimum projected Common Equity Tier 1 capital ratios under the severely adverse scenario in the supervisory stress test, plus (2) the sum of the dollar amount of Ally’s planned common stock dividends for each of the fourth through seventh quarters of its nine-quarter capital planning horizon, as a percentage of risk-weighted assets. Ally received its first preliminary stress capital buffer requirement from the FRB on June 25, 2020, which was determined under this new methodology to be 3.5% and is scheduled to become effective on October 1, 2020. At the same time, the FRB announced its determination that changes in financial markets or the macroeconomic outlook could have a material effect on the risk profiles and financial conditions of firms subject to the capital-plan rule and that, as a result, the firms (including Ally) would be required to resubmit capital plans to the FRB within 45 days after receiving updated stress scenarios from the FRB. It is possible that this resubmission process may result in a change in Ally’s stress capital buffer requirement. Ally Bank’s capital conservation buffer requirement will continue to be a fixed 2.5%. Under the capital conservation buffer requirement, the maximum amount of capital distributions and discretionary bonus payments that can be made by a banking organization, such as Ally or Ally Bank, is a function of its eligible retained income. During the COVID-19 pandemic, the FRB and other U.S. banking agencies expressed a concern that the definition of eligible retained income would not limit distributions in the gradual manner intended but instead could do so in a sudden and severe manner even if a banking organization were to experience only a modest reduction in its capital ratios. As a result, to better allow a banking organization to use its capital buffer as intended and continue lending in adverse conditions, the U.S. banking agencies issued an interim final rule that became effective on March 20, 2020, and revised the definition of eligible retained income to the greater of (1) a banking organization’s net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, and (2) the average of a banking organization’s net income over the preceding four quarters. Ally and Ally Bank are subject to the U.S. Basel III standardized approach for counterparty credit risk, but not to the U.S. Basel III advanced approaches for credit risk or operational risk. Ally is also not subject to the U.S. market-risk capital rule, which applies only to banking organizations with significant trading assets and liabilities. The following table summarizes our capital ratios under the U.S. Basel III capital framework.
In December 2018, the FRB and other U.S. banking agencies approved a final rule to address the impact of CECL on regulatory capital by allowing BHCs and banks, including Ally, the option to phase in the day-one impact of CECL over a three-year period. In March 2020, the FRB and other U.S. banking agencies issued an interim final rule that became effective on March 31, 2020, and that provides BHCs and banks with an alternative option to temporarily delay an estimate of the impact of CECL, relative to the incurred loss methodology for estimating the allowance for loan losses, on regulatory capital. We have elected this alternative option instead of the one described in the December 2018 rule. As a result, under the interim final rule, we will delay recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us extends through December 31, 2021. Beginning on January 1, 2022, we will be required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025. Under the interim final rule, the estimated impact of CECL on regulatory capital that we will defer and later phase in is calculated as the entire day-one impact at adoption plus 25% of the subsequent change in allowance during the two-year deferral period. As of June 30, 2020, the total deferred impact on Common Equity Tier 1 capital related to our adoption of CECL was $1.2 billion. At June 30, 2020, and December 31, 2019, Ally and Ally Bank were “well-capitalized” and met all applicable capital requirements to which each was subject. Compliance with capital requirements is a strategic priority for Ally. We expect to be in compliance with all applicable requirements within the established timeframes. Other Regulatory Developments In July 2019, the FRB and other U.S. banking agencies issued a final rule to simplify the capital treatment for MSAs, certain DTAs, and investments in the capital instruments of unconsolidated financial institutions (collectively, threshold items). Prior to the final rule taking effect, banking organizations deducted from capital amounts of threshold items that individually exceed 10% of Common Equity Tier 1 capital. The aggregate amount of threshold items not deducted under the 10% threshold deduction but that nonetheless exceeded 15% of Common Equity Tier 1 capital minus certain deductions from and adjustments to Common Equity Tier 1 capital were also deducted. Any amount of these MSAs and certain DTAs not deducted from Common Equity Tier 1 capital were risk weighted at 100%. The final rule removed the individual and aggregate deduction thresholds for threshold items and adopted a single 25% Common Equity Tier 1 capital deduction threshold for each item individually, and required that any of the threshold items not deducted be risk weighted at 250%. The final rule also simplified the calculation methodology for minority interests. These provisions took effect for us on April 1, 2020, and did not have a material impact on our capital position. In December 2017, the Basel Committee on Banking Supervision approved revisions to the global Basel III capital framework (commonly known as Basel IV), many of which—if adopted in the United States—could heighten regulatory capital standards. In March 2020, to better allow banking organizations to focus their resources on navigating the COVID-19 pandemic, the implementation date of these revisions was delayed by the Basel Committee from January 1, 2022, to January 1, 2023. At this time, how the revisions will be harmonized and finalized in the United States is not clear or predictable, and we continue to evaluate the impacts that these revisions may have on us. Refer to in Note 20 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for further discussion about other regulatory developments. Capital Planning and Stress Tests As a Category IV firm, we are subject to supervisory stress testing on a two-year cycle and are exempted from company-run capital stress testing. We are also required to submit an annual capital plan to the FRB. Our annual capital plan must include an assessment of our expected uses and sources of capital and a description of all planned capital actions over a nine-quarter planning horizon, including any issuance of a debt or equity capital instrument, any dividend or other capital distribution, and any similar action that the FRB determines could have an impact on our capital. The plan must also include a discussion of how we, under expected and stressful conditions, will maintain capital commensurate with our risks and above the minimum regulatory capital ratios, and will serve as a source of strength to Ally Bank. The FRB’s final rule introducing the stress capital buffer requirement, which is described above in the section titled Basel Capital Framework, makes several changes to the CCAR process that applied beginning with the 2020 cycle. The following table presents information related to our common stock and distributions to our common stockholders over the last six quarters.
We received a non-objection to our 2018 capital plan in June 2018. We were not required to submit an annual capital plan to the FRB, participate in the supervisory stress test or CCAR, or conduct company-run capital stress tests during the 2019 cycle. Instead, our capital actions during the 2019 cycle were largely based on the results from our 2018 supervisory stress test. On April 1, 2019, our Board authorized an increase in our stock-repurchase program, permitting us to repurchase up to $1.25 billion of our common stock from time to time from the third quarter of 2019 through the second quarter of 2020. On March 17, 2020, in order to support the FRB's effort to mitigate the impact of the COVID-19 pandemic on the U.S. economy and the financial system, we announced the voluntary suspension of our stock-repurchase program through its termination on June 30, 2020. We do not currently plan to implement a new stock-repurchase program or repurchase shares of our common stock, except in connection with compensation plans, for the remainder of 2020. We retain the discretion, however, to implement such a program and repurchase common stock, subject to the FRB’s restrictions as summarized below. On July 14, 2020, our Board declared a quarterly cash dividend of $0.19 per share of our common stock. Refer to Note 24 for further information on the most recent dividend. We submitted our 2020 capital plan on April 3, 2020, which included planned capital distributions to common stockholders through share repurchases and cash dividends over the nine-quarter planning horizon. On June 25, 2020, the FRB provided us with the results of the supervisory stress test, additional industry-wide sensitivity analyses conducted in light of the COVID-19 pandemic, and our preliminary stress capital buffer requirement. At the same time, the FRB announced its determination that changes in financial markets or the macroeconomic outlook could have a material effect on the risk profiles and financial conditions of firms subject to the capital-plan rule and that, as a result, the firms (including Ally) would be required to resubmit capital plans to the FRB within 45 days after receiving updated stress scenarios from the FRB. The FRB also announced several actions to ensure that large firms such as Ally remain resilient despite the economic uncertainty from the COVID-19 pandemic, including for the third quarter of 2020 (1) the suspension of repurchases by any firm of its common stock, except repurchases relating to issuances of common stock related to employee stock ownership plans, and (2) the disallowance of any increase by a firm in the amount of its common-stock dividends and the imposition of a common-stock dividend limit equal to the average of the firm’s net income for the four preceding calendar quarters. These restrictions for the third quarter of 2020 may be extended by the FRB on a quarter-by-quarter basis. Our ability to make capital distributions, including our ability to pay dividends or repurchase shares of our common stock, will continue to be subject to the FRB’s review and internal governance requirements, including approval by our Board. The amount and size of any future dividends and share repurchases also will be subject to various factors, including Ally’s capital and liquidity positions, regulatory considerations, impacts related to the COVID-19 pandemic, any accounting standards that affect capital or liquidity (including CECL), financial and operational performance, alternative uses of capital, common-stock price, and general market conditions, and may be suspended or resumed at any time. |
Derivative Instruments and Hedging Activities |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure | Derivative Instruments and Hedging Activities We enter into derivative instruments, which may include interest rate swaps, foreign-currency forwards, equity options, futures, and interest rate options in connection with our risk-management activities. Our primary objective for utilizing derivative financial instruments is to manage interest rate risk associated with our fixed- and variable-rate assets and liabilities, foreign exchange risks related to our foreign-currency denominated assets and liabilities, and other market risks related to our investment portfolio. Interest Rate Risk We monitor our mix of fixed- and variable-rate assets and liabilities and may enter into interest rate swaps, forwards, futures, options, and swaptions to achieve our desired mix of fixed- and variable-rate assets and liabilities. We execute these trades to modify our exposure to interest rate risk by converting certain fixed-rate instruments to a variable-rate and certain variable-rate instruments to a fixed-rate. We use a mix of both derivatives that qualify for hedge accounting treatment and economic hedges (which do not qualify for hedge accounting treatment). Derivatives qualifying for hedge accounting treatment can include receive-fixed swaps designated as fair value hedges of specific fixed-rate unsecured debt obligations, receive-fixed swaps designated as fair value hedges of specific fixed-rate FHLB advances, pay-fixed swaps designated as fair value hedges of securities within our available-for-sale portfolio, and pay-fixed swaps designated as fair value hedges of closed portfolios of fixed-rate held-for-investment consumer automotive loan assets in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. Other derivatives qualifying for hedge accounting consist of pay-fixed swaps designated as cash flow hedges of the expected future cash flows in the form of interest payments on certain variable-rate borrowings and deposit liabilities, receive-fixed swaps designated as cash flow hedges of the expected future cash flows in the form of interest receipts on certain securities within our available-for-sale portfolio, as well as interest rate floor contracts designated as cash flow hedges of the expected future cash flows in the form of interest receipts on a portion of our dealer floorplan commercial loans. We execute economic hedges, which may consist of interest rate swaps, interest rate caps, forwards, futures, options, and swaptions to mitigate interest rate risk. We also enter into interest rate lock commitments and forward commitments that are executed as part of our mortgage business that meet the accounting definition of a derivative. Foreign Exchange Risk We enter into derivative financial instrument contracts to mitigate the risk associated with variability in cash flows related to our various foreign-currency exposures. We enter into foreign-currency forwards with external counterparties as net investment hedges of foreign exchange exposure on our investment in foreign subsidiaries. Our equity is impacted by the cumulative translation adjustments resulting from the translation of foreign subsidiary results; this impact is reflected in our accumulated other comprehensive income. We also periodically enter into foreign-currency forwards to economically hedge any foreign-denominated debt, centralized lending, and foreign-denominated third-party loans. These foreign-currency forwards that are used as economic hedges are recorded at fair value with changes recorded as income or expense offsetting the gains and losses on the associated foreign-currency transactions. Investment Risk We enter into equity options to mitigate the risk associated with our exposure to the equity markets. Counterparty Credit Risk Derivative financial instruments contain an element of credit risk if counterparties are unable to meet the terms of the agreements. Credit risk associated with derivative financial instruments is measured as the net replacement cost should the counterparties that owe us under the contract completely fail to perform under the terms of those contracts, assuming no recoveries of underlying collateral as measured by the market value of the derivative financial instrument. We manage our risk to financial counterparties through internal credit analysis, limits, and monitoring. Additionally, derivatives and repurchase agreements are entered into with approved counterparties using industry standard agreements. We execute certain OTC derivatives such as interest rate caps and floors using bilateral agreements with financial counterparties. Bilateral agreements generally require both parties to post collateral in the event the fair values of the derivative financial instruments meet posting thresholds established under the agreements. In the event that either party defaults on the obligation, the secured party may seize the collateral. Payments related to the exchange of collateral for OTC derivatives are recognized as collateral. We also execute certain derivatives such as interest rate swaps with clearinghouses, which requires us to post and receive collateral. For these clearinghouse derivatives, these payments are recognized as settlements rather than collateral. Certain derivative instruments contain provisions that require us to either post additional collateral or immediately settle any outstanding liability balances upon the occurrence of a specified credit-risk-related event. No such specified credit-risk-related events occurred during the six months ended June 30, 2020, or 2019. We placed cash and noncash collateral totaling $2 million and $143 million, respectively, supporting our derivative positions at June 30, 2020, compared to $118 million of noncash collateral at December 31, 2019, in accounts maintained by counterparties. These amounts include collateral placed at clearinghouses and exclude cash and noncash collateral pledged under repurchase agreements. Refer to Note 13 for details on the repurchase agreements. The receivables for cash collateral placed are included on our Condensed Consolidated Balance Sheet in other assets. We received cash collateral from counterparties totaling $2 million in accounts maintained by counterparties at June 30, 2020, compared to $40 million and $29 million of cash and noncash collateral at December 31, 2019. These amounts include collateral received from clearinghouses and exclude cash and noncash collateral pledged under repurchase agreements. Refer to Note 13 for details on repurchase agreements. The payables for cash collateral received are included on our Condensed Consolidated Balance Sheet in accrued expenses and other liabilities. Included in these amounts is noncash collateral where we have been granted the right to sell or pledge the underlying assets. We have not sold or pledged any of the noncash collateral received under these agreements. Balance Sheet Presentation The following table summarizes the amounts of derivative instruments reported on our Condensed Consolidated Balance Sheet. The amounts are presented on a gross basis, are segregated by derivatives that are designated and qualifying as hedging instruments or those that are not, and are further segregated by type of contract within those two categories. Derivative contracts in a receivable and payable position exclude open trade equity on derivatives cleared through central clearing counterparties. Any associated collateral exchanged with our central clearing counterparties are treated as settlements of the derivative exposure, rather than collateral. Such payments are recognized as settlements of the derivatives contracts in a receivable and payable position on our Condensed Consolidated Balance Sheet. Notional amounts are reference amounts from which contractual obligations are derived and are not recorded on the balance sheet. In our view, derivative notional is not an accurate measure of our derivative exposure when viewed in isolation from other factors, such as market rate fluctuations and counterparty credit risk.
The following table presents amounts recorded on our Condensed Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges.
Statement of Comprehensive Income Presentation The following table summarizes the location and amounts of gains and losses on derivative instruments not designated as accounting hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
The following tables summarize the location and amounts of gains and losses on derivative instruments designated as fair value and cash flow hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
During the next 12 months, we estimate $87 million of gains will be reclassified into pretax earnings from derivatives designated as cash flow hedges. The following tables summarize the location and amounts of gains and losses related to interest and amortization on derivative instruments designated as fair value and cash flow hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
The following table summarizes the effect of cash flow hedges on accumulated other comprehensive income.
The following table summarizes the effect of net investment hedges on accumulated other comprehensive income and the Condensed Consolidated Statement of Comprehensive Income.
(b) Gains and losses reclassified from accumulated other comprehensive income are reported as other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income. There were no amounts reclassified for the three months and six months ended June 30, 2020, or 2019. |
Income Taxes (Notes) |
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Income Tax Disclosure [Abstract] | |
Income Tax Disclosure | Income Taxes We recognized total income tax expense from continuing operations of $95 million and $3 million for the three months and six months ended June 30, 2020, respectively, compared to an income tax benefit of $90 million and income tax expense of $21 million for the same periods in 2019. The increase in income tax expense for the three months ended June 30, 2020, compared to the same period in 2019, was primarily driven by a nonrecurring tax benefit of approximately $200 million from the release of valuation allowance on foreign tax credit carryforwards during the second quarter of 2019, and a nondeductible goodwill impairment during the second quarter of 2020. The valuation allowance release resulted in a significant variation in the customary relationship between pretax income and income tax expense for the three months ended June 30, 2019. Additionally, the increase in income tax expense for the three months ended June 30, 2020, compared to the same period in 2019, was partially offset by the tax effects of a decrease in pretax earnings. The decrease in income tax expense for the six months ended June 30, 2020, compared to the same period in 2019, was primarily due to the tax effects of a decrease in pretax earnings, partially offset by a nonrecurring tax benefit from the release of valuation allowance on foreign tax credit carryforwards during the second quarter of 2019, and a nondeductible goodwill impairment during the second quarter of 2020. The nondeductible goodwill impairment resulted in a significant variation in the customary relationship between pretax income and income tax expense for the six months ended June 30, 2020. As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view with regard to future realization of deferred tax assets. We continue to believe it is more likely than not that the benefit for certain foreign tax credit carryforwards and state net operating loss carryforwards will not be realized. In recognition of this risk, we continue to provide a partial valuation allowance on the deferred tax assets relating to these carryforwards and it is reasonably possible that the valuation allowance may change in the next 12 months. |
Fair Value |
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Fair Value Disclosures | Fair Value Fair Value Measurements For purposes of this disclosure, fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date under current market conditions. Fair value is based on the assumptions we believe market participants would use when pricing an asset or liability. Additionally, entities are required to consider all aspects of nonperformance risk, including the entity’s own credit standing, when measuring the fair value of a liability. Judgment is used in estimating inputs to our internal valuation models used to estimate our Level 3 fair value measurements. Level 3 inputs such as interest rate movements, prepayment speeds, credit losses, and discount rates are inherently difficult to estimate. Changes to these inputs can have a significant effect on fair value measurements and amounts that could be realized. GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels.
The following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models, and significant assumptions utilized.
We also execute OTC and centrally cleared derivative contracts, such as interest rate swaps, swaptions, foreign-currency denominated forward contracts, caps, floors, and agency to-be-announced securities. We utilize third-party-developed valuation models that are widely accepted in the market to value these derivative contracts. The specific terms of the contract and market observable inputs (such as interest rate forward curves, interpolated volatility assumptions, or equity pricing) are used in the model. We classified these derivative contracts as Level 2 because all significant inputs into these models were market observable. We also enter into interest rate lock commitments and forward-sale commitments that are executed as part of our mortgage business, certain of which meet the accounting definition of a derivative and therefore are recorded as derivatives on our Condensed Consolidated Balance Sheet. Because these derivatives are valued using internal pricing models with unobservable inputs, they are classified as Level 3. We are required to consider all aspects of nonperformance risk, including our own credit standing, when measuring fair value of a liability. We reduce credit risk on the majority of our derivatives by entering into legally enforceable agreements that enable the posting and receiving of collateral associated with the fair value of our derivative positions on an ongoing basis. In the event that we do not enter into legally enforceable agreements that enable the posting and receiving of collateral, we will consider our credit risk and the credit risk of our counterparties in the valuation of derivative instruments through a CVA, if warranted. The CVA calculation would utilize the credit default swap spreads of the counterparty. Recurring Fair Value The following tables display the assets and liabilities measured at fair value on a recurring basis including financial instruments elected for the fair value option. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The tables below display the hedges separately from the hedged items; therefore, they do not directly display the impact of our risk-management activities.
The following tables present the reconciliation for all Level 3 assets and liabilities measured at fair value on a recurring basis. There were no transfers into or out of Level 3 in the periods presented. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The Level 3 items presented below may be hedged by derivatives and other financial instruments that are classified as Level 1 or Level 2. Thus, the following tables do not fully reflect the impact of our risk-management activities.
Nonrecurring Fair Value We may be required to measure certain assets and liabilities at fair value from time to time. These periodic fair value measures typically result from the application of lower-of-cost or fair value accounting or certain impairment measures. These items would constitute nonrecurring fair value measures. The following tables display assets and liabilities measured at fair value on a nonrecurring basis and still held at June 30, 2020, and December 31, 2019, respectively. The amounts are generally as of the end of each period presented, which approximate the fair value measurements that occurred during each period.
n/m = not meaningful
n/m = not meaningful
Fair Value Option for Financial Assets We elected the fair value option for an insignificant amount of conforming mortgage loans held-for-sale and certain acquired unsecured consumer finance receivables. We elected the fair value option for conforming mortgage loans held-for-sale to mitigate earnings volatility by better matching the accounting for the assets with the related derivatives. We elected the fair value option for certain acquired unsecured consumer finance receivables to mitigate the complexities of recording these loans at amortized cost. Our intent in electing fair value measurement was to mitigate a divergence between accounting gains or losses and economic exposure for certain assets and liabilities. Fair Value of Financial Instruments The following table presents the carrying and estimated fair value of financial instruments, except for those recorded at fair value on a recurring basis presented in the previous section of this note titled Recurring Fair Value. When possible, we use quoted market prices to determine fair value. Where quoted market prices are not available, the fair value is internally derived based on appropriate valuation methodologies with respect to the amount and timing of future cash flows and estimated discount rates. However, considerable judgment is required in interpreting current market data to develop the market assumptions and inputs necessary to estimate fair value. As such, the actual amount received to sell an asset or the amount paid to settle a liability could differ from our estimates. Fair value information presented herein was based on information available at June 30, 2020, and December 31, 2019.
(a) Included in other assets on our Condensed Consolidated Balance Sheet. |
Offsetting Assets and Liabilities |
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Offsetting Assets and Liabilities | Offsetting Assets and Liabilities Our derivative contracts and repurchase/reverse repurchase transactions are supported by qualifying master netting and master repurchase agreements. These agreements are legally enforceable bilateral agreements that (i) create a single legal obligation for all individual transactions covered by the agreement to the nondefaulting entity upon an event of default of the counterparty, including bankruptcy, insolvency, or similar proceeding, and (ii) provide the nondefaulting entity the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set off collateral promptly upon an event of default of the counterparty. To further mitigate the risk of counterparty default related to derivative instruments, we maintain collateral agreements with certain counterparties. The agreements require both parties to maintain collateral in the event the fair values of the derivative financial instruments meet established thresholds. In the event that either party defaults on the obligation, the secured party may seize the collateral. Generally, our collateral arrangements are bilateral such that we and the counterparty post collateral for the obligation. Contractual terms provide for standard and customary exchange of collateral based on changes in the market value of the outstanding derivatives. A party posts additional collateral when their obligation rises or removes collateral when it falls, such that the net replacement cost of the nondefaulting party is covered in the event of counterparty default. In certain instances, as it relates to our derivative instruments, we have the option to report derivative assets and liabilities as well as assets and liabilities associated with cash collateral received or delivered that is governed by a master netting agreement on a net basis as long as certain qualifying criteria are met. Similarly, for our repurchase/reverse repurchase transactions, we have the option to report recognized assets and liabilities subject to a master netting agreement on a net basis if certain qualifying criteria are met. At June 30, 2020, these instruments are reported as gross assets and gross liabilities on the Condensed Consolidated Balance Sheet. For additional information on derivative instruments and hedging activities, refer to Note 18. The composition of offsetting derivative instruments, financial assets, and financial liabilities was as follows.
(d) For additional information on securities sold under agreements to repurchase, refer to Note 13. |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting Disclosure | 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 nonbank 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 FTP and treasury 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.
(a) Net financing revenue and other interest income after the provision for credit losses totaled $1.0 billion and $1.8 billion for the six months ended June 30, 2020, and June 30, 2019, respectively. |
Contingencies and Other Risks |
6 Months Ended |
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Jun. 30, 2020 | |
Loss Contingency [Abstract] | |
Contingencies Disclosure | Contingencies and Other Risks Ally and its subsidiaries, including Ally Bank, are or may be subject to potential liability in connection with pending or threatened legal proceedings and other matters. These legal matters may be formal or informal and include litigation and arbitration with one or more identified claimants, certified or purported class actions with yet-to-be-identified claimants, and regulatory or other governmental information-gathering requests, examinations, investigations, and enforcement proceedings. Our legal matters exist in varying stages of adjudication, arbitration, negotiation, or investigation and span our business lines and operations. Claims may be based in law or equity—such as those arising under contracts or in tort and those involving banking, consumer-protection, securities, tax, employment, and other laws—and some can present novel legal theories and allege substantial or indeterminate damages. Ally and its subsidiaries, including Ally Bank, also are or may be subject to potential liability under other contingent exposures, including indemnification, tax, self-insurance, and other miscellaneous contingencies. We accrue for a legal matter or other contingent exposure when a loss becomes probable and the amount of loss can be reasonably estimated. Accruals are evaluated each quarter and may be adjusted, upward or downward, based on our best judgment after consultation with counsel. No assurance exists that our accruals will not need to be adjusted in the future. When a probable or reasonably possible loss on a legal matter or other contingent exposure could be material to our consolidated financial condition, results of operations, or cash flows, we provide disclosure in this note as prescribed by ASC Topic 450, Contingencies. Refer to Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for additional information related to our policy for establishing accruals. The course and outcome of legal matters are inherently unpredictable. This is especially so when a matter is still in its early stages, the damages sought are indeterminate or unsupported, significant facts are unclear or disputed, novel questions of law or other meaningful legal uncertainties exist, a request to certify a proceeding as a class action is outstanding or granted, multiple parties are named, or regulatory or other governmental entities are involved. Other contingent exposures and their ultimate resolution are similarly unpredictable for reasons that can vary based on the circumstances. As a result, we often are unable to determine how or when threatened or pending legal matters and other contingent exposures will be resolved and what losses may be incrementally and ultimately incurred. Actual losses may be higher or lower than any amounts accrued or estimated for those matters and other exposures, possibly to a significant degree. Subject to the foregoing, based on our current knowledge and after consultation with counsel, we do not believe that the ultimate outcomes of currently threatened or pending legal matters and other contingent exposures are likely to be material to our consolidated financial condition after taking into account existing accruals. In light of the uncertainties inherent in these matters and other exposures, however, one or more of them could be material to our results of operations or cash flows during a particular reporting period, depending on factors such as the amount of the loss or liability and the level of our income for that period. Descriptions of certain of our legal matters follow. We do not believe, however, that an estimate of reasonably possible losses or a range of reasonably possible losses—whether in excess of any related accrual or where no accrual exists—can be made for any of these matters for some or all of the reasons identified in the preceding paragraphs. Purported and Certified Class Actions In March 2016, Ally filed an action against two buyers of a motor vehicle—Ally Financial Inc. v. Alberta Haskins and David Duncan, Case No. 16JE-AC01713-01, in the Circuit Court of Jefferson County, Missouri—for the purpose of collecting the deficiency that remained due under the retail installment sales contract after the buyers had defaulted and the vehicle had been repossessed and disposed of. In March 2017, the buyers filed a second amended answer and counterclaim on behalf of nationwide and Missouri classes, arguing that Ally’s pre- and post-disposition notices had violated Article 9 of the Uniform Commercial Code as adopted in each State and other applicable jurisdiction. The request for relief included an indeterminate amount of actual, statutory, and punitive damages as well as fees, costs, interest, and other remedies. In May 2018, the circuit court certified the nationwide and Missouri classes and denied Ally’s motion for partial summary judgment. In September 2018, the case was reassigned to a different circuit-court judge, and in February 2019, Ally filed a motion to decertify the nationwide and Missouri classes. In November 2019, the circuit court denied Ally’s motion to decertify. In December 2019, Ally filed a petition with the Missouri Court of Appeals and then with the Missouri Supreme Court for a writ prohibiting the circuit court from taking further action other than vacating the order denying decertification, but each of those petitions was denied. In January 2020, the case was reassigned to a different circuit-court judge. In June 2020, the buyers on behalf of the certified nationwide and Missouri classes filed a motion for partial summary judgment on liability and damages, including statutory damages, the waiver of amounts due, and prejudgment interest. These damages, if awarded by the court, could be significant. We intend to vigorously defend against the claims made by the buyers, including their measure of alleged damages, and the circuit court’s certification of nationwide and Missouri classes. |
Subsequent Events |
6 Months Ended |
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Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Declaration of Quarterly Dividend On July 14, 2020, our Board declared a quarterly cash dividend of $0.19 per share on all common stock. The dividend is payable on August 14, 2020, to stockholders of record at the close of business on July 31, 2020. |
Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies (Policies) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||||||||||||||||||||||||||||||||
Basis of Accounting | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and that affect income and expenses during the reporting period and related disclosures. In developing the estimates and assumptions, management uses all available evidence; however, actual results could differ because of uncertainties associated with estimating the amounts, timing, and likelihood of possible outcomes. Our most significant estimates pertain to the allowance for loan losses, valuations of automotive lease assets and residuals, fair value of financial instruments, and the determination of the provision for income taxes. | ||||||||||||||||||||||||||||||||||||||||
Investments | Our investment portfolio includes various debt and equity securities. Our debt securities include government securities, corporate bonds, ABS, and MBS. Debt securities are classified based on management’s intent to sell or hold the security. We classify debt securities as held-to-maturity only when we have both the intent and ability to hold the securities to maturity. We classify debt securities as trading when the securities are acquired for the purpose of selling or holding them for a short period of time. Debt securities not classified as either held-to-maturity or trading are classified as available-for-sale. Our portfolio includes debt securities classified as available-for-sale and held-to-maturity. Our available-for-sale securities are carried at fair value with unrealized gains and losses included in accumulated other comprehensive income, while our held-to-maturity securities are carried at amortized cost. We establish an allowance for credit losses for lifetime expected credit losses on our held-to-maturity securities. The estimate of expected credit losses considers historical credit loss information that is adjusted for current conditions and reasonable and supportable forecasts. Accrued interest receivable on held-to-maturity securities is excluded from the estimate of credit losses. Our held-to-maturity securities portfolio is mostly comprised of residential mortgage-backed debt securities that are issued by U.S. government entities and agencies. These securities are either explicitly or implicitly guaranteed by the U.S. government, are highly rated by major ratings agencies, and have a long history of zero credit losses. We regularly assess our available-for-sale securities for impairment. When the cost of an available-for-sale security exceeds its fair value, the security is impaired. If we determine that we intend to sell, or it is more likely than not we will be required to sell the security before recovery of the amortized cost basis, any allowance for credit losses, if previously recorded, is written off and the security’s amortized cost basis is written down to fair value at the reporting date, with any incremental impairment recorded through earnings. Alternatively, if we do not intend to sell, or it is not more likely than not that we will be required to sell the security before anticipated recovery of the amortized cost basis, we evaluate, among other factors, the magnitude of the decline in fair value, the financial health of and business outlook for the issuer, and the performance of the underlying assets for interests in securitized assets to determine if a credit loss has occurred. The present value of expected future cash flows are compared to the security’s amortized cost basis to measure the credit loss component of the impairment after determining a credit loss has occurred. If the present value of expected cash flows is less than the amortized cost basis, we record an allowance for credit losses for that difference. The amount of credit loss is limited to the difference between the security’s amortized cost basis and its fair value. Any remaining impairment is considered a noncredit loss and is recorded in other comprehensive income. Changes in the allowance for credit losses are recorded as provision for, or reversal of, provision for credit losses. Accrued interest receivable on available-for-sale securities is excluded from the estimate of credit losses. Premiums and discounts on debt securities are generally amortized over the stated maturity of the security as an adjustment to investment yield. Premiums on debt securities that have non-contingent call features that are callable at fixed prices on preset dates are amortized to the earliest call date as an adjustment to investment yield. A debt security is placed on nonaccrual status at the time any principal or interest payments become 90 days past due. The receivable for interest income that is accrued but not collected is reversed against interest income when the debt security is placed on nonaccrual status. Our investments in equity securities include securities that are recognized at fair value with changes in the fair value recorded in earnings, and equity securities that are recognized using other measurement principles. Equity securities that have a readily determinable fair value are recorded at fair value with changes in fair value recorded in earnings and reported in other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income. These investments, which are primarily attributable to the investment portfolio of our Insurance operations, are included in equity securities on our Condensed Consolidated Balance Sheet. We also hold certain equity investments that do not have a readily determinable fair value and are not eligible to be recognized using other measurement principles, that are held at fair value. Refer to Note 20 for further information on these equity securities that have a readily determinable market value. Our equity securities recognized using other measurement principles include investments in FHLB and FRB stock held to meet regulatory requirements, equity investments related to LIHTCs and the CRA, which do not have a readily determinable fair value, and other equity investments that do not have a readily determinable fair value. Our LIHTC investments are accounted for using the proportional amortization method of accounting for qualified affordable housing investments. Our obligations related to unfunded commitments for our LIHTC investments are included in other liabilities. The majority of our other CRA investments are accounted for using the equity method of accounting. Our investments in LIHTCs and other CRA investments are included in investments in qualified affordable housing projects and equity-method investments, respectively, in other assets on our Condensed Consolidated Balance Sheet. Our investments in FHLB and FRB stock are carried at cost, less impairment. Our remaining investments in equity securities are recorded at cost, less impairment and adjusted for observable price changes under the measurement alternative provided under GAAP. These investments, along with our investments in FHLB and FRB stock, are included in nonmarketable equity investments in other assets on our Condensed Consolidated Balance Sheet. Investments recorded under the measurement alternative are also reviewed at each reporting period to determine if any adjustments are required for observable price changes in identical or similar securities of the same issuer. As conditions warrant, we review these investments for impairment and adjust the carrying value of the investment if it is deemed to be impaired. Realized gains and losses on the sale of securities are determined using the specific identification method and are reported in other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income. |
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Finance Receivables and Loans | We initially classify finance receivables and loans as either loans held-for-sale or loans held-for-investment based on management’s assessment of our intent and ability to hold the loans for the foreseeable future or until maturity. Management’s view of the foreseeable future is based on the longest reasonably reliable net income, liquidity, and capital forecast period. Management’s intent and ability with respect to certain loans may change from time to time depending on a number of factors, for example economic, liquidity, and capital conditions. In order to reclassify loans to held-for-sale, management must have the intent to sell the loans and reasonably identify the specific loans to be sold. Loans classified as held-for-sale are presented as loans held-for-sale, net on our Condensed Consolidated Balance Sheet and are carried at the lower of their net carrying value or fair value, unless the fair value option was elected, in which case those loans are carried at fair value. Loan origination fees and costs are included in the initial carrying value of loans originated as held-for-sale for which we have not elected the fair value option. Loan origination fees and costs are recognized in earnings when earned or incurred, respectively, for loans classified as held-for-sale for which we have elected the fair value option. We have elected the fair value option for conforming mortgage direct-to-consumer originations for which we have a commitment to sell. The interest rate lock commitment that we enter into for a mortgage loan originated as held-for-sale and certain forward commitments are considered derivatives, which are carried at fair value on our Condensed Consolidated Balance Sheet. We have elected the fair value option to measure our nonderivative forward commitments. Changes in the fair value of our interest rate lock commitments, derivative forward commitments, and nonderivative forward commitments related to mortgage loans originated as held-for-sale, as well as changes in the carrying value of loans classified as held-for-sale, are reported through gain on mortgage and automotive loans, net in our Condensed Consolidated Statement of Comprehensive Income. Interest income on our loans classified as held-for-sale is recognized based upon the contractual rate of interest on the loan and the unpaid principal balance. We report accrued interest receivable on our loans classified as held-for-sale in other assets on our Condensed Consolidated Balance Sheet. We have also elected the fair value option for certain loans acquired within our consumer other portfolio segment. Changes in fair value related to these loans are reported through other income, net of losses in our Condensed Consolidated Statement of Comprehensive Income. Loans classified as held-for-investment are presented as finance receivables and loans, net on our Condensed Consolidated Balance Sheet. Finance receivables and loans are reported at their amortized cost basis, which includes the principal amount outstanding, net of unamortized deferred fees and costs on originated loans, unamortized premiums and discounts on purchased loans, unamortized basis adjustments arising from the designation of finance receivables and loans as the hedged item in qualifying fair value hedge relationships, and cumulative principal charge-offs. We refer to the amortized cost basis less the allowance for loan loss as the net carrying value in finance receivables and loans. Unearned rate support received from an automotive manufacturer on certain automotive loans, deferred origination fees and costs, and premiums and discounts on purchased loans, are amortized over the contractual life of the related finance receivable or loan using the effective interest method. We make various incentive payments for consumer automotive loan originations to automotive dealers and account for these payments as direct loan origination costs. Additionally, we make incentive payments to certain commercial automobile wholesale borrowers and account for these payments as a reduction to interest income in the period they are earned. Interest income on our finance receivables and loans is recognized based on the contractual rate of interest plus the amortization of deferred amounts using the effective interest method. We report accrued interest receivable on our finance receivables and loans in other assets on our Condensed Consolidated Balance Sheet. Loan commitment fees are generally deferred and amortized over the commitment period. For information on finance receivables and loans, refer to Note 8. We have elected to exclude accrued interest receivable from the measurement of our allowance for credit losses for each class of financing receivables. We have also elected to write-off accrued interest receivable by reversing interest income when loans are placed on nonaccrual status for each class of financing receivable. Our portfolio segments are based on the level at which we develop and document our methodology for determining the allowance for loan losses. Additionally, the classes of finance receivables are based on several factors including the method for monitoring and assessing credit risk, the method of measuring carrying value, and the risk characteristics of the finance receivable. Based on an evaluation of our process for developing the allowance for loan losses including the nature and extent of exposure to credit risk arising from finance receivables, we have determined our portfolio segments to be consumer automotive, consumer mortgage, consumer other, and commercial.
Nonaccrual Loans Generally, we recognize loans of all classes as past due when they are 30 days delinquent on making a contractually required payment, and loans are placed on nonaccrual status when principal or interest has been delinquent for at least 90 days, or when full collection is not expected. Interest income recognition is suspended when finance receivables and loans are placed on nonaccrual status. Additionally, amortization of premiums and discounts and deferred fees and costs ceases when finance receivables and loans are placed on nonaccrual. Exceptions include commercial real estate loans that are placed on nonaccrual status when delinquent for 60 days or when full collection is not probable, if sooner. Additionally, our policy is to generally place all loans that have been modified in a TDR on nonaccrual status until the loan has been brought fully current, the collection of contractual principal and interest is reasonably assured, and six consecutive months of repayment performance is achieved. In certain cases, if a borrower has been current up to the time of the modification and repayment of the debt subsequent to the modification is reasonably assured, we may choose to continue to accrue interest on the loan. Nonperforming loans on nonaccrual status are reported in Note 8. The receivable for interest income that is accrued, but not collected, at the date finance receivables and loans are placed on nonaccrual status is reversed against interest income and subsequently recognized only to the extent it is received in cash or until it qualifies for return to accrual status. However, where there is doubt regarding the ultimate collectability of loan principal, all cash received is applied to reduce the carrying value of such loans. Generally, finance receivables and loans are restored to accrual status only when contractually current and the collection of future payments is reasonably assured. Troubled Debt Restructurings When the terms of finance receivables or loans are modified, consideration must be given as to whether or not the modification results in a TDR. A modification is considered to be a TDR when both the borrower is experiencing financial difficulty and we grant a concession to the borrower. These considerations require significant judgment and vary by portfolio segment. In all cases, the cumulative impacts of all modifications are considered at the time of the most recent modification. For consumer loans of all classes, various qualitative factors are utilized for assessing the financial difficulty of the borrower. These include, but are not limited to, the borrower’s default status on any of its debts, bankruptcy, and recent changes in financial circumstances (for instance, loss of job). A concession has been granted when as a result of the modification we do not expect to collect all amounts due under the original loan terms, including interest accrued at the original contract rate. Types of modifications that may be considered concessions include, but are not limited to, extensions of terms at a rate that does not constitute a market rate, a reduction, deferral or forgiveness of principal or interest owed and loans that have been discharged in a Chapter 7 Bankruptcy and have not been reaffirmed by the borrower. In addition to the modifications noted above, in our consumer automotive portfolio segment of loans we also provide extensions or deferrals of payments to borrowers whom we deem to be experiencing only temporary financial difficulty. In these cases, there are limits within our operational policies to minimize the number of times a loan can be extended, as well as limits to the length of each extension, including a cumulative cap over the life of the loan. If these limits are breached, the modification is considered a TDR as noted in the following paragraph. Before offering an extension or deferral, we evaluate the capacity of the customer to make the scheduled payments after the deferral period. During the deferral period, we continue to accrue interest on the loan as part of the deferral agreement. We grant these extensions or deferrals when we expect to collect all amounts due including interest accrued at the original contract rate. However, in response to the COVID-19 pandemic, we offered broad-based deferral programs to all of our customers who requested assistance with their loans. A restructuring that results in only a delay in payment that is deemed to be insignificant is not a concession and the modification is not considered to be a TDR. In order to assess whether a restructuring that results in a delay in payment is insignificant, we consider the amount of the restructured payments subject to delay in conjunction with the unpaid principal balance or the collateral value of the loan, whether or not the delay is significant with respect to the frequency of payments under the original contract, or the loan’s original expected duration. In the cases where payment extensions on our automotive loan portfolio cumulatively extend beyond 90 days and are more than 10% of the original contractual term or where the cumulative payment extension is beyond 180 days, we deem the delay in payment to be more than insignificant, and as such, classify these types of modifications as TDRs. Otherwise, we believe that the modifications do not represent a concessionary modification and accordingly, they are not classified as TDRs. Additionally, based on guidance issued by federal and state regulatory agencies, loan modifications made in response to the COVID-19 pandemic are not considered TDRs if accounts were considered current at the date the modification program was implemented. Refer to Note 8 for additional information. For commercial loans of all classes, similar qualitative factors are considered when assessing the financial difficulty of the borrower. In addition to the factors noted above, consideration is also given to the borrower’s forecasted ability to service the debt in accordance with the contractual terms, possible regulatory actions, and other potential business disruptions (for example, the loss of a significant customer or other revenue stream). Consideration of a concession is also similar for commercial loans. In addition to the factors noted above, consideration is also given to whether additional guarantees or collateral have been provided. For all loans, TDR classification typically results from our loss mitigation activities. For loans held-for-investment that are not carried at fair value and are TDRs, impairment is typically measured based on the difference between the amortized cost basis of the loan and the present value of the expected future cash flows of the loan. The present value is calculated using the loan’s original interest rate, as opposed to the interest rate specified within the restructuring. The loan may also be measured for impairment based on the fair value of the underlying collateral less costs to sell for loans that are collateral dependent. We recognize impairment by either establishing a valuation allowance or recording a charge-off. The financial impacts of modifications that meet the definition of a TDR are reported in the period in which they are identified as TDRs. Additionally, if a loan that is classified as a TDR redefaults within 12 months of the modification, we are required to disclose the instances of redefault. For the purpose of this disclosure, we have determined that a loan is considered to have redefaulted when the loan meets the requirements for evaluation under our charge-off policy except for commercial loans where redefault is defined as 90 days past due. Nonaccrual loans may return to accrual status as discussed in the preceding nonaccrual loan section at which time, the normal accrual of interest income resumes. Net Charge-offs We disclose the measurement of net charge-offs as the amount of gross charge-offs recognized less recoveries received. Gross charge-offs reflect the amount of the amortized cost basis directly written-off. Generally, we recognize recoveries when they are received and record them as an increase to the allowance for loan losses. As a general rule, consumer automotive loans are written down to estimated collateral value, less costs to sell, if repossession is assured and in process once a loan becomes 120 days past due. In our consumer mortgage portfolio segment, first-lien mortgages and a subset of our home equity portfolio that are secured by real estate in a first-lien position are written down to the estimated fair value of the collateral, less costs to sell, once a mortgage loan becomes 180 days past due. Consumer mortgage loans that represent second-lien positions are charged off at 180 days past due. Loans in our consumer other segment are charged off at 120 days past due. Within 60 days of receipt of notification of filing from the bankruptcy court, or within the time frames noted above, consumer automotive and first-lien consumer mortgage loans in bankruptcy are written down to their expected future cash flows, which is generally fair value of the collateral, less costs to sell, and second-lien consumer mortgage loans and consumer other loans are fully charged-off, unless it can be clearly demonstrated that repayment is likely to occur. Regardless of other timelines noted within this policy, loans are considered collateral dependent when the borrower is experiencing financial difficulty and repayment of the loan is expected to only be through sale or operation of the collateral. Collateral dependent loans are charged-off to the estimated fair value of the underlying collateral, less costs to sell when foreclosure or repossession proceedings begin. Commercial loans are individually evaluated and are written down to the estimated fair value of the collateral less costs to sell when collectability of the recorded balance is in doubt. Generally, all commercial loans are charged-off when it becomes unlikely that the borrower is willing or able to repay the remaining balance of the loan and any underlying collateral is not sufficient to recover the outstanding principal. Collateral dependent loans are charged-off to the fair market value of collateral less costs to sell when appropriate. Noncollateral dependent loans are fully written-off. |
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Allowance for Loan Losses | The allowance for loan losses (the allowance) is deducted from, or added to, the loan’s amortized cost basis to present the net amount expected to be collected from our lending portfolios. We estimate the allowance using relevant available information, which includes both internal and external sources, relating to past events, current conditions, and reasonable and supportable forecasts. Additions to the allowance are charged to current period earnings through the provision for loan losses; amounts determined to be uncollectible are charged directly against the allowance, net of amounts recovered on previously charged-off accounts. Expected recoveries do not exceed the total of amounts previously charged-off and amounts expected to be charged-off. Expected credit losses are estimated over the contractual term of the loans, adjusted for expected prepayments when appropriate. The contractual term excludes expected extensions or renewals, unless the extension or renewal option is included in the original or modified contract at the reporting date and we are not able to unconditionally cancel the option. Expected loan modifications are also not included in the contractual term, unless we have a reasonable expectation at period end that a TDR will be executed with a borrower. For the purpose of calculating portfolio-level reserves, we have grouped our loans into four portfolio segments: consumer automotive, consumer mortgage, consumer other, and commercial. The allowance for loan losses is measured on a collective basis using statistical models when loans have similar risk characteristics. These statistical models are designed to correlate certain macroeconomic variables to expected future credit losses. The macroeconomic data used in the models are based on forecasted rates for the next 12-months. These forecasted variables are derived from both internal and external sources. Beyond this forecast period, we revert to a historical average rate. This reversion to the mean is performed on a straight-line basis over 24 months. The historical average is calculated using historical data beginning in January 2008 through the current period. Loans that do not share similar risk characteristics are evaluated on an individual basis. Loans evaluated individually are not also included in the collective evaluation. The allowance calculation is also supplemented with qualitative reserves that take into consideration current portfolio and asset-level factors, such as the impacts of changes in underwriting standards, collections and account management effectiveness, geographic concentrations, and economic events that have occurred but are not yet reflected in the quantitative model component. Qualitative adjustments are documented, reviewed, and approved through our established risk governance processes and follow regulatory guidance. Management also considers the need for a reserve on unfunded nonderivative loan commitments across our portfolio segments, including lines of credit and standby letters of credit. We estimate expected credit losses over the contractual period in which we are exposed to credit risk, unless we have the option to unconditionally cancel the obligation. Expected credit losses include consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over the estimated life. The reserve for unfunded loan commitments is recorded within other liabilities on our Condensed Consolidated Balance Sheet. Refer to Note 28 within our 2019 Annual Report on Form 10-K for information on our unfunded loan commitments. Consumer Automotive The allowance for loan losses within the consumer automotive portfolio segment is calculated using proprietary statistical models and other risk indicators applied to pools of loans with similar risk characteristics, including credit bureau score and LTV ratios. The model generates projections of default rates, prepayment rates, loss severity rates, and recovery rates using macroeconomic and historical loan data. These projections are used to develop transition scenarios to predict the portfolio’s migration from the current past-due status to various future states over the life of the loan. While the macroeconomic data that is used to calculate expected credit losses includes interest rate indices and national and state-level home price indices, national and state-level unemployment rates are the most impactful macroeconomic factors in calculating expected lifetime credit losses. The loss severity within the consumer automotive portfolio segment is impacted by the market values of vehicles that are repossessed. Vehicle market values are affected by numerous factors including vehicle supply, the condition of the vehicle upon repossession, the overall price and volatility of gasoline or diesel fuel, consumer preference related to specific vehicle segments, and other factors. The model output is then aggregated to calculate expected lifetime credit losses. Consumer Mortgage The allowance for loan losses within the consumer mortgage portfolio segment is calculated by using statistical models based on pools of loans with similar risk characteristics, including credit score, LTV, loan age, documentation type, product type, and loan purpose. Expected losses are statistically derived based on a suite of behavioral based transition models. This transition framework predicts various stages of delinquency, default, and voluntary prepayment over the course of the life of the loan. The transition probability is a function of certain loan and borrower characteristics, including factors such as loan balance and term, the borrower’s credit score, and loan-to-value ratios, and economic variables, as well as consideration of historical factors such as loss frequency and severity. When a default event is predicted, a severity model is applied to estimate future loan losses. Loss severity within the consumer mortgage portfolio segment is impacted by the market values of foreclosed properties, which is affected by numerous factors, including geographic considerations and the condition of the foreclosed property. Macroeconomic data that is used to calculate expected credit losses includes certain interest rates and home price indices. The model output is then aggregated to calculate expected lifetime credit losses. Consumer Other The allowance for loan losses within the consumer other portfolio segment is calculated by using a vintage analysis that analyzes historical performance for groups of loans with similar risk characteristics, including vintage level historical balance paydown rates and delinquency and roll rate behaviors by risk tier and product type, to arrive at an estimate of expected lifetime credit losses. The risk tier segmentation is based upon borrower risk characteristics, including credit score and past performance history, as well as certain loan specific characteristics, such as loan type and origination year. Commercial Loans The allowance for loan losses within the commercial loan portfolio segment is calculated using risk rating models that use historical loss experience, concentrations, macroeconomic factors, and performance trends. The determination of the allowance is influenced by numerous assumptions and factors that may materially affect estimates of loss, including changes to the PD, LGD, and EAD. PD factors are determined based on our historical performance data, which considers on-going reviews of the financial performance of the specific borrower, including cash flow, debt-service coverage ratio, and an assessment of the borrower’s industry and future prospects. The determination of PD also incorporates historical loss performance and, when necessary, macroeconomic information obtained from external sources. LGD factors consider the type of collateral, relative loan-to-value ratios, and historical loss information. In addition, LGD factors may be influenced by situations in which automotive manufacturers repurchase vehicles used as collateral to secure the loans in default situations. EAD factors are derived from outstanding balance levels, including estimated prepayment assumptions based on historical performance. Refer to Note 8 for information on the allowance for loan losses. |
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Goodwill and Other Intangibles | On January 1, 2020, we adopted ASU 2017-04, Intangibles—Goodwill and Other: Simplifying the Test for Goodwill Impairment, on a prospective basis, resulting in an update to our accounting policy. Goodwill and intangible assets, net of accumulated amortization, are reported in other assets in our Condensed Consolidated Balance Sheet. Our intangible assets primarily consist of acquired customer relationships and developed technology, and are amortized using a straight-line methodology over their estimated useful lives. We review intangible assets for impairment at least annually, or whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If it is determined the carrying amount of the asset is not recoverable, an impairment charge is recorded. Goodwill represents the excess of the cost of an acquisition over the fair value of net assets acquired, including identifiable intangibles. We allocate goodwill to applicable reporting units based on the relative fair value of the other net assets allocated to those reporting units at the time of the acquisition. In the event we restructure our business, we may reallocate goodwill. We test goodwill for impairment annually, or more frequently if events and changes in circumstances indicate that it is more likely than not that impairment exists. Our annual goodwill impairment test is performed as of August 31 of each year. In certain situations, we may perform a qualitative assessment to test goodwill for impairment. We may also decide to bypass the qualitative assessment and perform a quantitative assessment. If we perform the qualitative assessment to test goodwill for impairment and conclude that it is more likely than not that the reporting unit’s fair value is greater than its carrying value, then the quantitative assessment is not required. However, if we perform the qualitative assessment and determine that it is more likely than not that a reporting unit’s fair value is less than its carrying value, then we must perform the quantitative assessment. The quantitative assessment requires us to compare the fair value of each of the reporting units to their respective carrying value. The fair value of the reporting units in our quantitative assessment is determined based on various analyses including discounted cash flow projections using assumptions a market participant would use. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not considered impaired. If the carrying amount of a reporting unit exceeds its fair value, a goodwill impairment loss is recorded for the excess of the carrying value of the reporting unit over its fair value. |
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Income Taxes | In calculating the provision for interim income taxes, in accordance with ASC Topic 740, Income Taxes, we apply an estimated annual effective tax rate to year-to-date ordinary income. At the end of each interim period, we estimate the effective tax rate expected to be applicable for the full fiscal year. This method differs from that described in Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K, which describes our annual significant income tax accounting policy and related methodology.
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New Accounting Pronouncements, Policy | In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments. The amendments in this update introduce a new accounting model to measure credit losses for financial assets measured at amortized cost. The FASB has also issued additional ASUs to clarify the scope and provide additional guidance for ASU 2016-13. Credit losses for financial assets measured at amortized cost should be determined based on the total current expected credit losses over the life of the financial asset or group of financial assets. In effect, the financial asset or group of financial assets should be presented at the net amount expected to be collected. Credit losses will no longer be recorded under the current incurred loss model for financial assets measured at amortized cost. The amendments also modify the accounting for available-for-sale securities whereby credit losses will be recorded through an allowance for credit losses rather than a write-down to the security’s cost basis, which allows for reversals of credit losses when estimated credit losses decline. Credit losses for available-for-sale securities should be measured in a manner similar to current GAAP. On January 1, 2020, we adopted ASU 2016-13 and all subsequent ASUs that modified ASU 2016-13 (collectively, the amendments to the credit loss standard), which have been codified under ASC 326, Financial Instruments - Credit Losses. We adopted this guidance using the modified retrospective approach, as required, and have not adjusted prior period comparative information and will continue to disclose prior period financial information in accordance with the previous accounting guidance. While the standard modifies the measurement of the allowance for credit losses, it does not alter the credit risk of our finance receivables and loan portfolio. The adoption of the amendments resulted in a reduction to our opening retained earnings of approximately $1.0 billion, net of income taxes, resulting from a pretax increase to our allowance for credit losses of approximately $1.3 billion, primarily driven by our consumer automotive loan portfolio. The increase is primarily related to the difference between loss emergence periods previously utilized, as compared to estimating lifetime credit losses as required by the CECL standard. We did not experience a material impact to the allowance for loan losses from any of our other lending portfolios. Additionally, the adoption of CECL did not result in a material impact to our held-to-maturity securities portfolio, which is primarily composed of agency-backed mortgage securities, or our available-for-sale securities portfolio. We have elected to phase the estimated impact of CECL into regulatory capital in accordance with the interim final rule of the FRB and other U.S. banking agencies that became effective on March 31, 2020. As a result, we will delay recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us extends through December 31, 2021. Beginning on January 1, 2022, we will be required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025. Under the interim final rule, the estimated impact of CECL on regulatory capital that we will defer and later phase in is calculated as the entire day-one impact at adoption plus 25% of the subsequent change in allowance during the two-year deferral period. Refer to Note 17 for further details about the impact of CECL on regulatory capital. Our quantitative allowance for loan loss estimates under CECL is impacted by certain forecasted economic factors. In order to estimate the quantitative portion of our allowance for loan losses under CECL, our modeling processes rely on a single forecast scenario for each macroeconomic factor incorporated. To derive macroeconomic assumptions in this single scenario, we have elected to forecast these macroeconomic factors over a 12-month period, which we have determined to be reasonable and supportable. After the 12-month reasonable and supportable forecast period, we have elected to revert on a straight-line basis over a 24-month period to a historical mean for each macroeconomic factor. The mean is calculated from historical data spanning from January 2008 through the most current period, and as a result, includes data points from the last recessionary period. In addition to our quantitative allowance for loan losses, we also incorporate qualitative adjustments that may relate to idiosyncratic risks, changes in current economic conditions that may not be reflected in quantitatively derived results, or other relevant factors to further inform our estimate of the allowance for credit losses. Additionally, due to the expansion of the time horizon over which we are required to estimate future credit losses, we may experience increased volatility in our future provisions for credit losses. Factors that could contribute to such volatility include, but are not limited to, changes in the composition and credit quality of our financing receivables and loan portfolio and investment securities portfolios, economic conditions and forecasts, the allowance for credit loss models that are used, the data that is included in the models, the associated qualitative allowance framework, and our estimation techniques. |
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Accounting Standards Update 2020-04 | |||||||||||||||||||||||||||||||||||||||||
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New Accounting Pronouncements, Policy | In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide temporary, optional guidance to ease the potential burden in accounting for reference rate reform. The amendments provide optional expedients and exceptions for applying GAAP to transactions affected by reference rate reform if certain criteria are met. The amendments primarily include relief related to contract modifications and hedging relationships, as well as providing a one-time election for the sale or transfer of debt securities classified as held-to-maturity. The relief provided by this ASU does not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022. However, hedging relationships that apply certain optional expedients prior to December 31, 2022, will be retained through the end of the hedging relationship, including for periods after December 31, 2022. We adopted the amendments in ASU 2020-04 as of the March 12, 2020 issuance date, on a prospective basis. The adoption did not have an immediate direct impact to our financial statements. As contracts are modified through December 2022, we will assess the impact based on this guidance. We do not expect there will be a material impact to our financial statements. |
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Fair Value Disclosures [Abstract] | |||||||||
Fair Value Measurement, Policy | GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels.
Level 3 Unobservable inputs are supported by little or no market activity. The unobservable inputs represent management’s best assumptions of how market participants would price the assets or liabilities. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation. |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following tables present a disaggregated view of our revenue from contracts with customers included in other revenue that falls within the scope of the revenue recognition principles of ASC Topic 606, Revenue from Contracts with Customers. For further information regarding our revenue recognition policies and details about the nature of our respective revenue streams, refer to Note 1 and Note 3 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K.
(c) Represents a component of total net revenue. Refer to Note 22 for further information on our reportable operating segments. |
Other Income, Net of Losses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Nonoperating Income (Expense) [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Nonoperating Income, by Component | Details of other income, net of losses, were as follows.
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Reserves for Insurance Losses and Loss Adjustment Expenses (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration Insurance Contracts, Liability for Unpaid Claims and Allocated Claim Adjustment Expense, Net [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Short-duration insurance and deposit contracts | The following table shows a rollforward of our reserves for insurance losses and loss adjustment expenses.
(a) There have been no material adverse changes to the reserve for prior years. |
Other Operating Expenses (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Operating Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Operating Cost and Expense, by Component | Details of other operating expenses were as follows.
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Investment Securities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Marketable Securities | Our investment portfolio includes various debt and equity securities. Our debt securities, which are classified as available-for-sale or held-to-maturity, include government securities, corporate bonds, asset-backed securities, and mortgage-backed securities. The cost, fair value, and gross unrealized gains and losses on available-for-sale and held-to-maturity securities were as follows.
(g) Totals do not include accrued interest receivable, which was $3 million at both June 30, 2020, and December 31, 2019. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet |
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Investments Classified by Contractual Maturity Date | The maturity distribution of debt securities outstanding is summarized in the following tables based upon contractual maturities. Call or prepayment options may cause actual maturities to differ from contractual maturities.
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Investment Income | The following table presents interest and dividends on investment securities.
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Schedule of Realized Gain (Loss) | The following table presents gross gains and losses realized upon the sales of available-for-sale securities, and net gains or losses on equity securities held during the period.
(a) Certain available-for-sale securities were sold at a loss during the six months ended June 30, 2019, as a result of identifiable market or credit events, or a loss was realized based on corporate actions outside of our control (such as a call by the issuer). Any such sales were made in accordance with our risk-management policies and practices. |
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Held to Maturity Debt Securities by Credit Quality | The following table presents the credit quality of our held-to-maturity securities, based on the latest available information as of June 30, 2020. The credit ratings are sourced from nationally recognized statistical rating organizations, which include S&P, Moody’s, and Fitch, and represent a composite of the ratings or, where credit ratings cannot be sourced from the agencies, are presented based on the asset type. All our held-to-maturity securities were current in their payment of principal and interest as of June 30, 2020. We have not recorded any interest income reversals on our held-to-maturity securities during the six months ended June 30, 2020.
(a) Rating agencies indicate that they base their ratings on many quantitative and qualitative factors, which may include capital adequacy, liquidity, asset quality, business mix, level and quality of earnings, and the current operating, legislative, and regulatory environment. A credit rating is not a recommendation to buy, sell, or hold securities, and the ratings are subject to revision or withdrawal at any time by the assigning rating agency. |
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Schedule of Unrealized Loss on Investments | The following table summarizes held-to-maturity securities in an unrealized loss position at December 31, 2019, prior to the date of adoption of the amendments to the credit loss standard, and as defined by the previous accounting guidance in effect at that time.
The table below summarizes available-for-sale securities in an unrealized loss position, which we evaluated to determine if a credit loss exists requiring the recognition of an allowance for credit losses. For additional information on our methodology, refer to Note 1. As of June 30, 2020, we did not have the intent to sell the available-for-sale securities with an unrealized loss position and we do not believe it is more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. As a result of this evaluation, management determined that no credit reserves were required at June 30, 2020. We have not recorded any interest income reversals on our available-for-sale securities during the six months ended June 30, 2020.
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Finance Receivables and Loans, Net (Tables) |
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Schedule of Accounts, Notes, Loans and Financing Receivable | The composition of finance receivables and loans reported at amortized cost basis was as follows.
(f) Totals do not include accrued interest receivable, which was $995 million and $488 million at June 30, 2020, and December 31, 2019, respectively. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet. |
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Allowance for Credit Losses on Financing Receivables | The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans for the three and six months ended June 30, 2020, and includes the cumulative effect of adopting ASU 2016-13.
The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans for the three and six months ended June 30, 2019, prior to the adoption of ASU 2016-13, as defined by the previous accounting guidance in effect at that time.
(a) Represents the amount of the amortized cost basis directly written off. For consumer and commercial loans, the loss from a charge-off is measured as the difference between the amortized cost basis of a loan and the fair value of the collateral, less costs to sell. Refer to Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for more information regarding our charge-off policies. |
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Schedule Of Sales Of Financing Receivables And Loans | The following table presents information about significant sales of finance receivables and loans and transfers of finance receivables and loans from held-for-investment to held-for-sale based on net carrying value.
(a) During the six months ended June 30, 2019, we also sold $131 million of loans held-for-sale that were initially classified as finance receivables and loans held-for-investment and were transferred to held-for-sale during 2018, and transferred $79 million of finance receivables from held-for-sale to held-for-investment, both relating to equipment finance receivables from our commercial automotive business. |
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Schedule of Purchases of Financing Receivables and Loans | The following table presents information about significant purchases of finance receivables and loans based on unpaid principal balance at the time of purchase.
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Schedule of Financing Receivables, Non Accrual Status | The following table presents the amortized cost of our finance receivables and loans on nonaccrual status as of the beginning or end of the three months and six months ended June 30, 2020. All consumer or commercial finance receivables and loans that were 90 days or more past due were on nonaccrual status as of June 30, 2020, and December 31, 2019.
(a) Represents a component of nonaccrual status at end of period. |
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Impaired Financing Receivables | The following table presents information about our impaired finance receivables and loans at December 31, 2019, prior to the date of adoption of the amendments to the credit loss standard and as defined by the previous accounting guidance in effect at that time.
(a) Adjusted for charge-offs. |
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Schedule of Average Balance And Interest Income Of Impaired Finance Receivables | The following table presents average balance and interest income for our impaired finance receivables and loans for the three months and six months ended June 30, 2019, prior to the date of adoption of the amendments to the credit loss standard and as defined by the previous accounting guidance in effect at that time.
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Schedule Of Pass And Criticized Credit Quality Indicators Of Finance Receivables | The following table presents historical credit quality indicators for our commercial finance receivables and loans at December 31, 2019, prior to the date of adoption of the amendments to the credit loss standard and as defined by the previous accounting guidance in effect at that time.
(a) Includes loans classified as special mention, substandard, or doubtful. These classifications are based on regulatory definitions and generally represent loans within our portfolio that have a higher default risk or have already defaulted. |
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Troubled Debt Restructurings on Financing Receivables | The following tables present information related to finance receivables and loans recorded at amortized cost modified in connection with a TDR during the period.
(c) Includes 35 loans modified as a result of COVID-19 with both a pre-modification and post-modification amount of $4 million at June 30, 2020. |
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Finance receivables and loans redefaulted during the period | loans modified as a result of COVID-19 with both a pre-modification and post-modification amount of $429 million at June 30, 2020.
The following tables present information about finance receivables and loans recorded at amortized cost that have redefaulted during the reporting period and were within 12 months or less of being modified as a TDR. Redefault is when finance receivables and loans meet the requirements for evaluation under our charge-off policy (refer to Note 1 for additional information) except for commercial finance receivables and loans, where redefault is defined as 90 days past due.
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Consumer portfolio segment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivable, Credit Quality Indicator [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivable Credit Quality Indicators | The following table presents the amortized cost basis of our consumer finance receivables and loans by credit quality indicator based on delinquency status at June 30, 2020, and origination year.
(a) Excludes $8 million of finance receivables at June 30, 2020, for which we have elected the fair value option. |
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Past Due Financing Receivables | The following table presents an analysis of our past-due finance receivables and loans recorded at amortized cost basis at December 31, 2019.
(a) Excludes $11 million of finance receivables at December 31, 2019, for which we have elected the fair value option. |
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Commercial portfolio segment | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivable, Credit Quality Indicator [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financing Receivable Credit Quality Indicators | The following table presents the amortized cost basis of our commercial finance receivables and loans by credit quality indicator based on risk rating at June 30, 2020, and origination year.
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Past Due Financing Receivables | The following table presents an analysis of our past-due commercial finance receivables and loans recorded at amortized cost basis.
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Leasing (Tables) |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Investment in Operating Leases | The following table details our total investment in operating leases.
(b) Included in accrued expenses and other liabilities on our Condensed Consolidated Balance Sheet. |
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Lessee, Operating Lease, Liability, Maturity | The following table presents future minimum rental payments we are required to make under operating leases that have commenced as of June 30, 2020, and that have noncancelable lease terms expiring after June 30, 2020.
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Lease, Cost | The following table details the components of total net operating lease expense.
(a) Included in other operating expenses in our Condensed Consolidated Statement of Comprehensive Income. |
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Schedule of Property Subject to or Available for Operating Lease | The following table details our investment in operating leases.
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Lessor, Operating Lease, Payments to be Received, Maturity | The following table presents future minimum rental payments we have the right to receive under operating leases with noncancelable lease terms expiring after June 30, 2020.
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Depreciation Expense on Operating Lease Assets | We recognized operating lease revenue of $343 million and $710 million, and $363 million and $724 million for the three months and six months ended June 30, 2020, and June 30, 2019, respectively. Depreciation expense on operating lease assets includes remarketing gains and losses recognized on the sale of operating lease assets. The following table summarizes the components of depreciation expense on operating lease assets.
(a) Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $5 million and $12 million during the three months and six months ended June 30, 2020, respectively, and $5 million and $9 million during the three months and six months ended June 30, 2019. |
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Finance Lease, Liability, Maturity | The following table presents future minimum rental payments we have the right to receive under finance leases with noncancelable lease terms expiring after June 30, 2020.
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Securitizations and Variable Interest Entities (Tables) |
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Securitizations And Variable Interest Entities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Variable Interest Entities | The following table presents our involvement in consolidated and nonconsolidated VIEs in which we hold variable interests. For additional detail related to the assets and liabilities of consolidated variable interest entities refer to the Condensed Consolidated Balance Sheet.
(i) During the year ended December 31, 2019, we indicated our intent to exercise a clean-up call option related to a nonconsolidated securitization-related VIE. The option enables us to repurchase the remaining transferred financial assets at our discretion once the asset pool declines to a predefined level and redeem the related outstanding debt. As a result of this event, we became the primary beneficiary of the VIE, which included $48 million of consumer automotive loans and $45 million of related debt, and the VIE was consolidated on our Condensed Consolidated Balance Sheet. The related amounts were removed from assets sold to nonconsolidated VIEs and maximum exposure to loss in nonconsolidated VIEs. |
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Schedule Of Cash Flow Received And Paid To Nonconsolidated Securitization Entities | The following table summarizes cash flows received and paid related to SPEs and asset-backed financings where the transfer is accounted for as a sale and we have a continuing involvement with the transferred consumer automotive assets (for example, servicing) that were outstanding during the six months ended June 30, 2020, and 2019. Additionally, this table contains information regarding cash flows received from and paid to nonconsolidated SPEs that existed during each period.
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Schedule of Quantitative Information and Net Credit Losses about Securitized and Other Financial Assets Managed Together | The following tables present quantitative information about delinquencies and net credit losses for off-balance-sheet securitizations and whole-loan sales where we have continuing involvement.
(a) Whole-loan sales are not part of a securitization transaction, but represent consumer automotive pools of loans sold to third-party investors. |
Other Assets (Tables) |
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Assets [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Assets | The components of other assets were as follows.
June 30, 2020, and December 31, 2019, respectively, measured at cost with adjustments for impairment and observable changes in price. During the three and six months ended June 30, 2020, we recorded $4 million and $5 million of impairments and downward adjustments related to equity securities without a readily determinable fair value, respectively. Through June 30, 2020, we recorded $10 million of cumulative upward adjustments and $11 million of cumulative impairments and downward adjustments related to equity securities without a readily determinable fair value held at June 30, 2020.
(h) For additional information on derivative instruments and hedging activities, refer to Note 18. |
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Schedule of Goodwill | The carrying balance of goodwill by reportable operating segment was as follows.
(a) Includes $153 million of goodwill arising from the acquisition of Health Credit Services at both June 30, 2020, and December 31, 2019, and $143 million and $193 million of goodwill associated with Ally Invest at June 30, 2020, and December 31, 2019, respectively. For additional information on the acquisition of Health Credit Services, refer to Note 2. |
Deposit Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deposit Liabilities, Type | Deposit liabilities consisted of the following.
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Debt (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Short-term Debt | The following table presents the composition of our short-term borrowings portfolio.
(a) Refer to the section below titled Long-Term Debt for further details on assets restricted as collateral for payment of the related debt. |
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Long-term Debt | The following table presents the composition of our long-term debt portfolio.
(c) Includes advances net of hedge basis adjustment from the FHLB of Pittsburgh of $11.5 billion and $13.3 billion at June 30, 2020, and December 31, 2019, respectively. |
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Schedule of Maturities of Long-term Debt | The following table presents the scheduled remaining maturity of long-term debt at June 30, 2020, assuming no early redemptions will occur. The amounts below include adjustments to the carrying value resulting from the application of hedge accounting. The actual payment of secured debt may vary based on the payment activity of the related pledged assets.
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Pledged assets for the payment of the related secured borrowings and repurchase agreements | The following summarizes assets restricted as collateral for the payment of the related debt obligation, primarily arising from securitization transactions accounted for as secured borrowings and repurchase agreements.
(e) Includes $1.2 billion and $3.0 billion of short-term borrowings at June 30, 2020, and December 31, 2019, respectively. |
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Schedule Of Committed Funding Facilities | Committed Secured Credit Facilities
(a) Funding from committed secured credit facilities is available on request in the event excess collateral resides in certain facilities or the extent incremental collateral is available and contributed to the facilities. |
Accrued Expenses and Other Liabilities (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounts Payable and Accrued Liabilities [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accrued Liabilities | The components of accrued expenses and other liabilities were as follows.
(a) For additional information on derivative instruments and hedging activities, refer to Note 18. |
Accumulated Other Comprehensive (Loss) Income (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss), Net of Tax [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Loss | The following tables present changes, net of tax, in each component of accumulated other comprehensive income (loss).
(c) Refer to the section titled Recently Adopted Accounting Standards in Note 1 to the Consolidated Financial Statements in our 2019 Annual Report on Form 10-K for additional information. |
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Reclassification out of Accumulated Other Comprehensive Income | The following tables present the before- and after-tax changes in each component of accumulated other comprehensive income (loss).
(c) For additional information on derivative instruments and hedging activities, refer to Note 18. |
Earnings per Common Share (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted | The following table presents the calculation of basic and diluted earnings per common share.
(c) Due to the antidilutive effect of the net loss from continuing operations for the six months ended June 30, 2020, basic weighted-average common shares outstanding was used to calculate basic and diluted earnings per share. During the three months and six months ended June 30, 2020, there were 2.3 million and 2.4 million, respectively, in shares underlying share-based awards excluded because their inclusion would have been antidilutive. There were no antidilutive shares during the three months and six months ended June 30, 2019. |
Regulatory Capital and Other Regulatory Matters (Tables) |
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Compliance with Regulatory Capital Requirements under Banking Regulations | The following table summarizes our capital ratios under the U.S. Basel III capital framework.
(c) Federal regulatory reporting guidelines require the calculation of adjusted quarterly average assets using a daily average methodology. |
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Schedule of Common Share Repurchase Activity | The following table presents information related to our common stock and distributions to our common stockholders over the last six quarters.
(c) On July 14, 2020, our Board declared a quarterly cash dividend of $0.19 per share on all common stock, payable on August 14, 2020, to stockholders of record at the close of business on July 31, 2020. Refer to Note 24 for further information regarding this common stock dividend. |
Derivative Instruments and Hedging Activities (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Instruments in Statement of Financial Position | The following table summarizes the amounts of derivative instruments reported on our Condensed Consolidated Balance Sheet. The amounts are presented on a gross basis, are segregated by derivatives that are designated and qualifying as hedging instruments or those that are not, and are further segregated by type of contract within those two categories. Derivative contracts in a receivable and payable position exclude open trade equity on derivatives cleared through central clearing counterparties. Any associated collateral exchanged with our central clearing counterparties are treated as settlements of the derivative exposure, rather than collateral. Such payments are recognized as settlements of the derivatives contracts in a receivable and payable position on our Condensed Consolidated Balance Sheet. Notional amounts are reference amounts from which contractual obligations are derived and are not recorded on the balance sheet. In our view, derivative notional is not an accurate measure of our derivative exposure when viewed in isolation from other factors, such as market rate fluctuations and counterparty credit risk.
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Schedule of Fair Value Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The following table presents amounts recorded on our Condensed Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges.
(d) The hedged item represents the carrying value of the hedged portfolio of assets. The amount identified as the last of layer in the open hedge relationship was $10.2 billion at both June 30, 2020, and December 31, 2019. The basis adjustment associated with the open last-of-layer relationship was a $255 million asset as of June 30, 2020, and a $91 million asset as of December 31, 2019, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedge relationship. The amount that is identified as the last of layer in the discontinued hedge relationship was $17.5 billion at June 30, 2020, and $12.8 billion at December 31, 2019. The basis adjustment associated with the discontinued last-of-layer relationship was a $79 million asset and $43 million asset as of June 30, 2020, and December 31, 2019, respectively, which was allocated across the entire remaining pool upon termination of the hedge relationship. |
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Schedule of Derivative Instruments Not Designated as Accounting Hedge | The following table summarizes the location and amounts of gains and losses on derivative instruments not designated as accounting hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
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Schedule of Location and Amounts of Gains and Losses on Derivative Instruments | The following tables summarize the location and amounts of gains and losses on derivative instruments designated as fair value and cash flow hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
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Schedule of Derivative Instruments | The following tables summarize the location and amounts of gains and losses related to interest and amortization on derivative instruments designated as fair value and cash flow hedges reported in our Condensed Consolidated Statement of Comprehensive Income.
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Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss) | The following table summarizes the effect of cash flow hedges on accumulated other comprehensive income.
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Schedule of Net Investment Hedges in Accumulated Other Comprehensive Income (Loss) | The following table summarizes the effect of net investment hedges on accumulated other comprehensive income and the Condensed Consolidated Statement of Comprehensive Income.
(b) Gains and losses reclassified from accumulated other comprehensive income are reported as other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income. There were no amounts reclassified for the three months and six months ended June 30, 2020, or 2019. |
Fair Value (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on a Recurring Basis | The following tables display the assets and liabilities measured at fair value on a recurring basis including financial instruments elected for the fair value option. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The tables below display the hedges separately from the hedged items; therefore, they do not directly display the impact of our risk-management activities.
(b) Carried at fair value due to fair value option elections. |
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Fair Value, Assets Measured on a Recurring Basis, Unobservable Input Reconciliation | The following tables present the reconciliation for all Level 3 assets and liabilities measured at fair value on a recurring basis. There were no transfers into or out of Level 3 in the periods presented. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The Level 3 items presented below may be hedged by derivatives and other financial instruments that are classified as Level 1 or Level 2. Thus, the following tables do not fully reflect the impact of our risk-management activities.
(c) Reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income. |
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Fair Value Measurements - Nonrecurring Basis | The following tables display assets and liabilities measured at fair value on a nonrecurring basis and still held at June 30, 2020, and December 31, 2019, respectively. The amounts are generally as of the end of each period presented, which approximate the fair value measurements that occurred during each period.
n/m = not meaningful
n/m = not meaningful
(c) The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value. |
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Financial Instruments Disclosure | The following table presents the carrying and estimated fair value of financial instruments, except for those recorded at fair value on a recurring basis presented in the previous section of this note titled Recurring Fair Value. When possible, we use quoted market prices to determine fair value. Where quoted market prices are not available, the fair value is internally derived based on appropriate valuation methodologies with respect to the amount and timing of future cash flows and estimated discount rates. However, considerable judgment is required in interpreting current market data to develop the market assumptions and inputs necessary to estimate fair value. As such, the actual amount received to sell an asset or the amount paid to settle a liability could differ from our estimates. Fair value information presented herein was based on information available at June 30, 2020, and December 31, 2019.
(a) Included in other assets on our Condensed Consolidated Balance Sheet. |
Offsetting Assets and Liabilities (Tables) |
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Offsetting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Offsetting Assets | The composition of offsetting derivative instruments, financial assets, and financial liabilities was as follows.
(d) For additional information on securities sold under agreements to repurchase, refer to Note 13. |
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Offsetting Liabilities | The composition of offsetting derivative instruments, financial assets, and financial liabilities was as follows.
(d) For additional information on securities sold under agreements to repurchase, refer to Note 13. |
Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Financial information for our reportable operating segments is summarized as follows.
(a) Net financing revenue and other interest income after the provision for credit losses totaled $1.0 billion and $1.8 billion for the six months ended June 30, 2020, and June 30, 2019, respectively. |
Acquistions (Details) $ in Millions |
3 Months Ended |
---|---|
Dec. 31, 2019
USD ($)
| |
Business Combinations [Abstract] | |
Cash consideration | $ 177 |
Other Income, Net of Losses (Schedule of Other Income, Net of Losses) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Other Nonoperating Income (Expense) [Abstract] | ||||
Income from equity-method investments | $ 53 | $ 8 | $ 52 | $ 12 |
Late charges and other administrative fees | 16 | 28 | 37 | 57 |
Remarketing fees | 15 | 19 | 32 | 37 |
Servicing fees | 2 | 4 | 5 | 10 |
Other, net | 4 | 34 | 44 | 64 |
Total other income, net of losses | $ 90 | $ 93 | $ 170 | $ 180 |
Other Operating Expenses (Schedule Of Other Operating Expenses) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Operating Expenses [Abstract] | ||||
Insurance commissions | $ 127 | $ 117 | $ 253 | $ 231 |
Technology and communications | 80 | 73 | 159 | 150 |
Lease and loan administration | 46 | 43 | 84 | 82 |
Advertising and marketing | 32 | 35 | 76 | 83 |
Property and equipment depreciation | 34 | 25 | 68 | 47 |
Professional services | 28 | 30 | 59 | 59 |
Regulatory and licensing fees | 29 | 28 | 58 | 56 |
Vehicle remarketing and repossession | 11 | 25 | 34 | 52 |
Occupancy | 13 | 16 | 29 | 29 |
Non-income taxes | 7 | 11 | 14 | 20 |
Amortization of intangible assets | 5 | 3 | 10 | 6 |
Other | 47 | 52 | 101 | 96 |
Total other operating expenses | $ 459 | $ 458 | $ 945 | $ 911 |
Investment Securities (Investment Income) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Taxable interest | $ 177 | $ 220 | $ 382 | $ 434 |
Taxable dividends | 5 | 3 | 10 | 6 |
Interest and dividends exempt from U.S. federal income tax | 5 | 4 | 8 | 9 |
Interest and dividends on investment securities and other earning assets | 197 | 244 | 423 | 484 |
Excludes other earning assets | ||||
Interest and dividends on investment securities and other earning assets | $ 187 | $ 227 | $ 400 | $ 449 |
Investment Securities (Schedule Of Realized Gain (Loss)) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Investments, Debt and Equity Securities [Abstract] | ||||
Available-for-sale securities, gross realized gains | $ 19 | $ 24 | $ 124 | $ 34 |
Available-for-sale securities, gross realized losses | 0 | 0 | 0 | (1) |
Net realized gains on available-for-sale securities | 19 | 24 | 124 | 33 |
Net realized gain on equity securities | 80 | 10 | 81 | 39 |
Net unrealized gain (loss) on equity securities | 89 | 5 | (96) | 75 |
Other gain on investments, net | $ 188 | $ 39 | $ 109 | $ 147 |
Finance Receivables and Loans, Net (Schedule of Sales of Financing Receivables and Loans) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Financing Receivable, Sale | $ 0 | $ 0 | $ 0 | $ 20 |
Financing receivable, sales and transfers | 131 | |||
Loans held-for-sale transferred to finance receivables and loans held-for-investment | 79 | |||
Consumer portfolio segment | Automotive loan | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Financing Receivable, Sale | $ 0 | $ 0 | $ 0 | $ 20 |
Finance Receivables and Loans, Net (Schedule of Purchases of Financing Receivables and Loans) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Financing receivables and loans, significant purchases | $ 2,506 | $ 899 | $ 3,350 | $ 2,233 |
Consumer portfolio segment | Automotive loan | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Financing receivables and loans, significant purchases | 635 | 218 | 995 | 317 |
Consumer portfolio segment | Real estate-backed loan | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Financing receivables and loans, significant purchases | 1,870 | 678 | 2,354 | 1,913 |
Commercial portfolio segment | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Financing receivables and loans, significant purchases | $ 1 | $ 3 | $ 1 | $ 3 |
Finance Receivables and Loans, Net (Finance receivables and loans redefaulted during the period) (Details) - Consumer portfolio segment $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020
USD ($)
|
Jun. 30, 2019
USD ($)
|
Jun. 30, 2020
USD ($)
|
Jun. 30, 2019
USD ($)
|
|
Accounts, Notes, Loans and Financing Receivable | ||||
Financing receivable, modifications, subsequent default, number of loans | 1,119 | 1,752 | 2,283 | 3,961 |
Financing receivable, modifications, subsequent default, gross carrying value | $ 11 | $ 20 | $ 24 | $ 46 |
Financing receivables, impaired, troubled debt restructuring, charge-off amount | $ 8 | $ 12 | $ 17 | $ 28 |
Automotive loan | ||||
Accounts, Notes, Loans and Financing Receivable | ||||
Financing receivable, modifications, subsequent default, number of loans | 1,119 | 1,752 | 2,283 | 3,961 |
Financing receivable, modifications, subsequent default, gross carrying value | $ 11 | $ 20 | $ 24 | $ 46 |
Financing receivables, impaired, troubled debt restructuring, charge-off amount | $ 8 | $ 12 | $ 17 | $ 28 |
Leasing (Lessee, Operating Lease, Liability, Maturity) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Dec. 31, 2019 |
|
Leases [Abstract] | ||
2020 | $ 25 | |
2021 | 43 | |
2022 | 30 | |
2023 | 20 | |
2024 | 13 | |
2025 and thereafter | 46 | |
Total undiscounted cash flows | 177 | |
Difference between undiscounted cash flows and discounted cash flows | (14) | |
Operating lease, liabilities | 163 | $ 196 |
Purchases Of Operating Lease Assets | 48 | |
Lessee, Operating Lease, Lease Not yet Commenced, Undiscounted Future Lease Payments | $ 290 | |
Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract | 15 years |
Leasing (Lease, Cost) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||||
Operating lease expense | $ 11 | $ 12 | $ 24 | $ 23 |
Variable lease expense | 2 | 2 | 4 | 4 |
Total lease expense, net | $ 13 | $ 14 | $ 28 | $ 27 |
Leasing (Lessor, Operating Lease, Payments to be Received, Maturity) (Details) $ in Millions |
Jun. 30, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
2020 | $ 722 |
2021 | 1,114 |
2022 | 635 |
2023 | 228 |
2024 | 26 |
2025 and thereafter | 1 |
Total lease payments from operating leases | $ 2,726 |
Leasing (Depreciation Expense on Operating Lease Assets) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Leases, Operating [Abstract] | ||||
Operating Lease, Lease Income | $ 343 | $ 363 | $ 710 | $ 724 |
Depreciation expense on operating lease assets | 241 | 262 | 491 | 523 |
Remarketing losses (gains), net | 11 | (23) | 9 | (38) |
Net depreciation expense on operating lease assets | 252 | 239 | 500 | 485 |
Variable lease payments, excessive wear and tear | $ 5 | $ 5 | $ 12 | $ 9 |
Leasing (Sales-type and Direct Financing Leases, Lease Receivable, Maturity) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Dec. 31, 2019 |
|
Leases [Abstract] | |||||
Direct financing lease, net investment in lease | $ 455 | $ 455 | $ 472 | ||
Direct financing lease, present value of lease payments recorded as lease receivable | 442 | 442 | 459 | ||
Direct financing lease, unguaranteed residual asset | 13 | 13 | $ 13 | ||
Direct financing lease, interest income | 5 | $ 6 | 11 | $ 12 | |
2020 | 75 | 75 | |||
2021 | 149 | 149 | |||
2022 | 112 | 112 | |||
2023 | 78 | 78 | |||
2024 | 46 | 46 | |||
2025 and thereafter | 31 | 31 | |||
Total undiscounted cash flows | 491 | 491 | |||
Direct financing leases, lease receivable, difference between undiscounted cash flows and discounted cash flows | $ (49) | $ (49) |
Securitizations and Variable Interest Entities (Schedule of Cash Flow Received from and Paid to Nonconsolidated Securitization Entities) (Details) - Off-balance sheet variable interest entities - Consumer Automotive Industry Sector - USD ($) $ in Millions |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Cash Flow Received and Paid to Nonconsolidated Securitization Entities [Line Items] | ||
Cash flows received on retained interests in securitization entities | $ 8 | $ 13 |
Cash flows between transferor and transferee, servicing fees | 2 | 6 |
Cash flows between transferor and transferee, disbursement for repurchases during the period | $ (2) | $ (1) |
Other Assets (Schedule of Goodwill) (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Goodwill [Roll Forward] | ||||
Goodwill | $ 393 | |||
Goodwill impairment | $ (50) | $ 0 | (50) | $ 0 |
Goodwill | 343 | 343 | ||
Operating Segments | Automotive Finance operations | ||||
Goodwill [Roll Forward] | ||||
Goodwill | 20 | |||
Goodwill impairment | 0 | |||
Goodwill | 20 | 20 | ||
Operating Segments | Insurance operations | ||||
Goodwill [Roll Forward] | ||||
Goodwill | 27 | |||
Goodwill impairment | 0 | |||
Goodwill | 27 | 27 | ||
Corporate and Other | ||||
Goodwill [Roll Forward] | ||||
Goodwill | 346 | |||
Goodwill impairment | (50) | |||
Goodwill | 296 | 296 | ||
Ally Lending | Corporate and Other | ||||
Goodwill [Roll Forward] | ||||
Goodwill | 153 | |||
Goodwill | 153 | 153 | ||
Ally Invest | Corporate and Other | ||||
Goodwill [Roll Forward] | ||||
Goodwill | 193 | |||
Goodwill | $ 143 | $ 143 |
Deposit Liabilities (Schedule of Deposit Liabilities) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Deposits [Abstract] | ||
Noninterest-bearing deposits | $ 134 | $ 119 |
Interest-bearing Deposit Liabilities, by Component [Abstract] | ||
Interest-bearing deposits, savings and money-market checking accounts | 72,561 | 62,486 |
Interest-bearing deposits, certificates of deposit | 58,340 | 58,146 |
Interest-bearing deposits, other deposits | 1 | 1 |
Total deposit liabilities | 131,036 | 120,752 |
Certificates of deposit, $100,000 or more | 27,000 | 25,600 |
Certificates of deposit, in excess of $250,000 federal insurance limits | $ 8,700 | $ 8,200 |
Debt (Long-term Debt) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Debt Instrument [Line Items] | ||
Long-term debt, due within one year | $ 8,705 | $ 9,219 |
Long-term debt, due after one year | 20,471 | 24,808 |
Total long-term debt | 29,176 | 34,027 |
Trust preferred securities | 2,600 | 2,600 |
Secured Debt | 19,146 | 25,773 |
Unsecured debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, due within one year | 1,063 | 2,214 |
Long-term debt, due after one year | 10,146 | 8,990 |
Total long-term debt | 11,209 | 11,204 |
Secured debt | ||
Debt Instrument [Line Items] | ||
Long-term debt, due within one year | 7,642 | 7,005 |
Long-term debt, due after one year | 10,325 | 15,818 |
Total long-term debt | 17,967 | 22,823 |
Federal Home Loan Bank advances | ||
Debt Instrument [Line Items] | ||
Secured Debt | $ 11,500 | $ 13,300 |
Debt (Narrative - Trust Preferred Securities) (Details) - USD ($) $ / shares in Units, $ in Billions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Narrative - Trust Preferred Securities [Line Items] | ||
Trust preferred securities | $ 2.6 | $ 2.6 |
Preferred stock, liquidation amount per share | $ 25 | |
Distribution payable in addition to annual rate equal to three-month London interbank offer rate, percentage | 5.785% | |
Period of consecutive quarters for which Ally has right to defer interest payments, maximum | 20 | |
Redemption price, percentage of principal debt, plus accrued and unpaid interest | 100.00% | |
Variable Income Interest Rate [Member] | ||
Narrative - Trust Preferred Securities [Line Items] | ||
Trust preferred securities | $ 2.6 | $ 2.6 |
Trust Preferred Securities Subject to Mandatory Redemption | ||
Narrative - Trust Preferred Securities [Line Items] | ||
Series 2 TRUPS included in Tier 1 capital | $ 2.5 |
Accrued Expenses and Other Liabilities (Schedule of Accrued Expenses and Other Liabilities) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
Jun. 30, 2019 |
Dec. 31, 2018 |
---|---|---|---|---|
Accounts Payable and Accrued Liabilities [Abstract] | ||||
Accounts payable | $ 904 | $ 535 | ||
Unfunded commitments for investment in qualified affordable housing projects | 397 | 372 | ||
Employee compensation and benefits | 229 | 296 | ||
Reserves for insurance losses and loss adjustment expenses | 132 | 122 | $ 153 | $ 134 |
Deferred revenue | 76 | 36 | ||
Net deferred tax liabilities | 24 | 67 | ||
Cash collateral received from counterparties | 12 | 48 | ||
Fair value of derivative contracts in payable position | 2 | 5 | ||
Other liabilities | 523 | 491 | ||
Total accrued expenses and other liabilities | $ 2,299 | $ 1,972 |
Regulatory Capital and Other Regulatory Matters (Common Share Repurchases) (Details) - USD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 6 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Jul. 14, 2020 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Mar. 31, 2020 |
Dec. 31, 2019 |
Sep. 30, 2019 |
Mar. 31, 2019 |
Dec. 31, 2018 |
|
Accelerated Share Repurchases [Line Items] | ||||||||||
Treasury stock, common, amount | $ 0 | $ 229 | $ 0 | $ 229 | $ 104 | $ 299 | $ 300 | $ 211 | ||
Treasury stock, common, shares | 53,000 | 7,775,000 | 53,000 | 7,775,000 | 3,838,000 | 9,554,000 | 9,287,000 | 8,113,000 | ||
Common stock, shares outstanding | 373,837,123 | 392,775,000 | 373,837,123 | 392,775,000 | 373,155,000 | 374,331,998 | 383,523,000 | 399,761,000 | 404,900,000 | |
Dividends declared, amount per common share | $ 0.19 | $ 0.17 | $ 0.19 | $ 0.17 | $ 0.19 | $ 0.17 | $ 0.17 | $ 0.17 | ||
Cash dividends declared per common share | $ 0.19 | $ 0.17 | $ 0.38 | $ 0.34 | ||||||
Stock repurchase program, authorized amount | $ 1,250 | $ 1,250 | ||||||||
Common stock | Subsequent event | ||||||||||
Accelerated Share Repurchases [Line Items] | ||||||||||
Dividends Payable, Date Declared | Jul. 14, 2020 | |||||||||
Cash dividends declared per common share | $ 0.19 | |||||||||
Dividends Payable, Date to be Paid | Aug. 14, 2020 | |||||||||
Dividends Payable, Date of Record | Jul. 31, 2020 |
Derivative Instruments and Hedging Activities (Narrative) (Details) - USD ($) $ in Millions |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Cash and securities collateral placed with counterparties | $ 2 | |
Noncash collateral placed with counterparties | 143 | $ 118 |
Cash collateral received from counterparties | $ 2 | 40 |
Noncash collateral received from counterparties | $ 29 |
Income Taxes (Details) - USD ($) $ in Millions |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Income Tax Disclosure [Abstract] | ||||
Income tax expense (benefit) from continuing operations | $ 95 | $ (90) | $ 3 | $ 21 |
Valuation Allowance, Deferred Tax Asset, Increase (Decrease), Amount | $ (200) |
Subsequent Events (Details) - $ / shares |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jul. 14, 2020 |
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Subsequent Event [Line Items] | |||||
Cash dividends declared per common share | $ 0.19 | $ 0.17 | $ 0.38 | $ 0.34 | |
Subsequent event | Common stock | |||||
Subsequent Event [Line Items] | |||||
Dividends Payable, Date Declared | Jul. 14, 2020 | ||||
Cash dividends declared per common share | $ 0.19 | ||||
Dividends Payable, Date to be Paid | Aug. 14, 2020 | ||||
Dividends Payable, Date of Record | Jul. 31, 2020 |
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