Tab NavigationGMAC Financial Services Reports Preliminary Second Quarter 2009 Financial Results
- Second quarter after-tax net loss of $3.9 billion NEW YORK (Aug. 4, 2009) -- GMAC Financial Services today reported a second quarter 2009 after-tax net loss of $3.9 billion, compared to a net loss of $2.5 billion in the second quarter of 2008. Results in the quarter were adversely affected by strategic actions taken by the company which resulted in several charges in the second quarter, including:
Excluding these charges, GMAC's loss in the second quarter of 2009 was approximately $400 million. Also affecting results in the quarter was an increased loss provision at the mortgage operation related to continued credit deterioration and an original issue discount amortization expense related to GMAC's fourth quarter 2008 debt exchange. This was partially offset by improved results in the automotive finance business related to a strengthened used vehicle market in North America. Losses in the quarter related to the mortgage operation are consistent with the analysis completed as part of the Supervisory Capital Assessment Program (S-CAP). Second Quarter Net Income/Loss ($ in millions)
(1) Includes Commercial Finance, equity investments and other corporate activities "GMAC's results in the quarter were dramatically affected by a series of strategic actions that produced a short-term negative impact to financial performance but are expected to lead to longer-term benefits," said GMAC Chief Executive Officer Alvaro G. de Molina. "This is about gaining funding and operational flexibility, expanding on our strengths, and shedding legacy and non-strategic assets, allowing us to focus on the core automotive and mortgage origination and servicing businesses." GMAC Incorporation Liquidity and Capital Ally Bank's total assets were $42.5 billion at quarter-end, which included $11.9 billion of assets at the auto division and $30.6 billion of assets at the mortgage division. This compares to $36.4 billion of assets at March 31, 2009. Deposits increased in the second quarter to $25.4 billion as of June 30, 2009, which included $14.5 billion of retail deposits, $8.7 billion of brokered deposits, and $2.2 billion of other deposits. This compares to $22.5 billion of deposits at March 31, 2009, comprised of $11.0 billion of retail, $9.5 billion of brokered, and $2.0 billion of other deposits. GMAC's total equity at June 30, 2009 was $26.0 billion, up from $22.0 billion at March 31, 2009. In May 2009, GMAC received a $7.5 billion investment from the U.S. Treasury related to both the agreement to provide automotive financing for Chrysler dealers and customers and to the S-CAP results. This investment contributed to strengthening GMAC's capital position. GMAC's preliminary second quarter Tier 1 capital ratio was 13.7 percent, and the Tier 1 common ratio was 6.1 percent. During the second quarter, GMAC issued $4.5 billion of guaranteed debt as part of the Federal Deposit Insurance Corporation's (FDIC) Temporary Liquidity Guarantee Program (TLGP). The offering further improved the company's liquidity profile. Global Automotive Finance Total new vehicle consumer financing originations were $5.6 billion during the second quarter of 2009, down significantly from $12.5 billion in the second quarter of 2008. In comparison to recent quarters, however, origination levels increased in the second quarter of 2009 from extremely low levels in the first quarter of 2009 of $3.4 billion and fourth quarter of 2008 of $2.7 billion. New vehicle originations are lower mainly related to a decrease in U.S. vehicle sales, the significant reduction of leasing and the effects of a weaker economy. GMAC remains committed to providing appropriate levels of credit to support the U.S. auto industry and is now providing financing to Chrysler dealers and consumers. GMAC has financed approximately $320 million of new Chrysler consumer originations through July 20, 2009. GMAC has also extended approximately $1 billion in interim wholesale financing to approximately 1,600 U.S. and Canadian dealers. The formal credit review process of the interim-financed dealers has begun and is expected to be completed by mid-November. GMAC did not experience significant credit losses related to the GM bankruptcy filing. General Motors Company, the new post-bankruptcy entity, holds the equity stake in GMAC and has also assumed the operating agreements between the companies. Credit losses increased in the second quarter of 2009 to 2.24 percent of managed retail contracts, versus 1.40 percent in the second quarter of 2008. The increase is due to higher loss frequency in Europe and North America driven by economic weakness, the seasoning of the portfolio and a smaller asset base. Credit losses have declined, however, from the first quarter of 2009 level of 2.41 percent. Severity of losses has continued to improve from its peak in the fourth quarter of 2008. Delinquencies, defined as contracts more than 30-days past due, also increased to 3.44 percent in the second quarter of 2009, compared to 2.39 percent in the second quarter of 2008. Delinquency trends have been negatively affected by higher unemployment and a smaller asset portfolio in North America and Europe. Insurance The carrying value of the insurance investment portfolio was $4.7 billion at June 30, 2009, compared to $7.1 billion at June 30, 2008, with the decrease being primarily attributable to the sales of the reinsurance business and MEEMIC. The U.S. consumer property and casualty insurance business is under strategic review and GMAC is exploring alternatives for that unit, including a potential sale. This review does not include GMAC's dealer-related insurance operations, which offer extended service contracts, as that remains core to the overall business. Mortgage Operations For the second consecutive quarter, mortgage loan origination volume in the U.S. market has shown signs of improvement. U.S. mortgage loan production in the second quarter of 2009 was $18.5 billion, compared to $13.2 billion in the first quarter of 2009 and $17.0 billion in the second quarter of 2008. The improvement was driven by higher government production and increased refinancing activity. As part of its effort to streamline its international business and focus primarily on its U.S. lending and servicing businesses, ResCap sold its mortgage operations in Australia and Spain. Corporate and Other Outlook GMAC has recently launched an initiative to reduce costs and optimize its returns. The initiative targets decreasing expenses by approximately $1 billion on a run-rate basis by 2010. The plan to achieve this target includes streamlining the cost structure commensurate with business expectations, integrating operations, and rationalizing non-core and non-strategic activities. The profit optimization initiative represents a continuing step in GMAC's plan to transform the company and return to profitability. GMAC also continues to execute its five core strategies:
"The second quarter, like many prior quarters, produced a series of transformational actions, including creating a more flexible capital structure by incorporating GMAC, launching Ally Bank, restructuring the ownership of the company, and expanding our base of auto financing customers through the Chrysler agreement," said de Molina. "Our work is not over, but the foundation is being laid." About GMAC Financial Services Forward-Looking Statements Investors are cautioned not to place undue reliance on forward-looking statements. GMAC undertakes no obligation to update publicly or otherwise revise any forward-looking statements, whether as a result of new information, future events or other such factors that affect the subject of these statements, except where expressly required by law. Contacts: Christopher McNamee
GMAC Financial Services Preliminary Unaudited Second Quarter 2009
Financial Highlights
($ in millions)
2Q 2Q YTD YTD
Summary Statement of Income Note 2009 2008 2009 2008
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Revenue
Consumer $1,270 $1,764 $2,599 $3,585
Commercial 455 611 896 1,259
Loans held-for-sale 148 312 280 672
Operating leases 1,631 2,135 3,356 4,238
Interest and dividends on
investment securities 102 166 198 375
Other interest income 33 393 121 667
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Total financing revenue and
other interest income 3,639 5,381 7,450 10,796
Interest Expense
Deposits 110 80 202 174
Short-term borrowings 168 624 358 1,204
Long-term debt 1,754 2,174 3,590 4,523
Other 56 (9) 119 147
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Total interest expense 2,088 2,869 4,269 6,048
Depreciation expense on operating
lease assets 1,256 1,401 2,409 2,797
Impairment of investment in
operating leases 0 716 0 716
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Net financing revenue 295 395 772 1,235
Other revenue
Servicing fees 399 465 807 936
Servicing asset valuation and
hedge activities, net (240) (185) (600) 225
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Net loan servicing income 159 280 207 1,161
Insurance premiums and service
revenue earned 818 1,123 1,682 2,232
Loss on mortgage and automotive
loans, net (362) (1,099) (66) (1,698)
Gain on extinguishment of debt 14 616 657 1,104
Other gain (loss) on investments,
net 98 (49) 81 (444)
Other income, net of losses 4 49 (108) 134
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Total other revenue 731 920 2,453 2,489
Total net revenue 1,026 1,315 3,225 3,724
Provision for loan losses 1,161 771 2,004 1,244
Noninterest expense
Compensation and benefits
expense 441 591 860 1,204
Insurance losses and loss
adjustment expenses 481 714 1,034 1,344
Other operating expenses 1,126 1,548 2,308 2,811
Impairment of goodwill 607 0 607 0
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Total noninterest expense 2,655 2,853 4,809 5,359
Loss before income tax expense (2,790) (2,309) (3,588) (2,879)
Income tax expense 1,113 173 990 192
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Net loss ($3,903) ($2,482) ($4,578) ($3,071)
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June 30, Dec. 31, June 30,
Select Balance Sheet Data 2009 2008 2008
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Cash and cash equivalents $18,655 $15,151 $14,325
Loans held-for-sale 11,440 7,919 12,942
Finance receivables and loans,
net 1
Consumer 57,983 63,963 76,707
Commercial 32,838 36,110 43,183
Investments in operating
leases, net 2 21,597 26,390 32,810
Total assets 181,248 189,476 227,692
Total debt 3 105,175 126,321 173,489
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Second Quarter Six Months
-------------- --------------
Operating Statistics 2009 2008 2009 2008
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GMAC's Worldwide Cost of
Borrowing 4 6.27% 5.92% 6.24% 6.19%
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(1) Finance receivables and loans are net of unearned income
(2) Net of accumulated depreciation
(3) Represents both secured and unsecured on-balance sheet debt such as
commercial paper, medium-term notes and long-term debt
(4) Calculated by dividing total interest expense (excluding marked-to-
market adjustments and intercompany interest) by total borrowings
GMAC Financial Services Preliminary Unaudited Second Quarter 2009
Financial Highlights
(Continued)
($ in millions)
Note Second Quarter Six Months
GMAC Automotive Finance -----------------------------------
Operations 2009 2008 2009 2008
-----------------------------------
Net (loss) Income
North American
Operations (NAO) ($622) ($854) ($363) ($700)
International
Operations (IO) (105) 137 (139) 241
------ ------ ------ ------
Net (loss) Income ($727) ($717) ($502) ($459)
====== ====== ====== ======
Consumer Portfolio
Statistics
NAO Number of contracts
originated
(# thousands) 164 443 252 877
Dollar amount of
contracts originated $4,624 $11,597 $7,031 $23,447
Dollar amount of
contracts outstanding
at end of period 5 $43,746 $60,798
Share of new GM retail
sales 28% 43% 23% 45%
Mix of retail & lease
contract originations
(% based on # of
units):
New 82% 73% 80% 75%
Used 18% 27% 20% 25%
GM subvented (% based
on # of units) 55% 67% 60% 70%
Average original term
in months
(US retail only) 64 62 64 61
Off-lease remarketing
(US only)
Sales proceeds on
scheduled lease
terminations
(36-month) per
vehicle - Serviced 6,7 $15,220 $13,283 $14,867 $14,155
Off-lease vehicles
terminated -
Serviced (# units) 7 100,807 120,378 198,455 220,375
Sales proceeds on
scheduled lease
terminations
(36-month) per
vehicle - On-
balance sheet 6 $15,403 $13,252 $15,123 $14,336
Off-lease vehicles
terminated - On-
balance sheet
(# units) 8 62,622 59,619 126,356 102,758
IO Number of contracts
originated (#
thousands) 98 187 197 380
Dollar amount of
contracts
originated $1,462 $3,393 $2,804 $6,547
Dollar amount of
contracts
outstanding at end
of period 9 $13,951 $19,890
Mix of retail & lease
contract originations
(% based on # of
units):
New 94% 86% 94% 84%
Used 6% 14% 6% 16%
GM subvented (% based
on # of units) 55% 41% 59% 41%
Asset Quality Statistics
NAO Annualized net retail
charge-offs as a % of
managed assets 10 2.60% 1.68% 2.76% 1.63%
Managed retail
contracts over 30
days delinquent 10,11 3.74% 2.31%
Serviced retail
contracts over 30
days delinquent 11,12 3.57% 2.31%
IO Annualized net
charge-offs as a %
of managed assets 10 1.31% 0.72% 1.19% 0.73%
Managed retail
contracts over 30
days delinquent 10,11 3.00% 2.53%
Operating Statistics
NAO Allowance as a %
of related on-
balance sheet
consumer
receivables at
end of period 4.48% 3.76%
Repossessions as
a % of average
number of managed
retail contracts
outstanding 10 3.42% 2.34% 3.53% 2.54%
Severity of loss
per unit
serviced - Retail 12
New $10,398 $11,062 $10,843 $10,532
Used $8,660 $8,822 $8,997 $8,441
IO Allowance as a % of
related on-balance
sheet consumer
receivables at end
of period 2.00% 1.56%
Repossessions as a %
of average number
of contracts
outstanding 0.91% 0.72% 0.88% 0.69%
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(5) Represents on-balance sheet assets, which includes $4.5 billion of
retail loans held for sale in 2009
(6) Prior period amounts based on current vehicle mix, in order to be
comparable
(7) Serviced assets represent operating leases where GMAC continues to
service the underlying asset
(8) GMAC-owned portfolio reflects lease assets on GMAC's books after
distribution to GM of automotive leases in connection with the sale
transaction which occurred in November 2006
(9) Represents on-balance sheet assets including retail leases
(10) Managed assets represent on and off-balance sheet finance receivables
and loans where GMAC continues to be exposed to credit and/or
interest rate risk
(11) Represents percentage of average number of contracts outstanding.
Excludes accounts in bankruptcy.
(12) Serviced assets represent on and off-balance sheet finance
receivables and loans where GMAC continues to service the underlying
asset
GMAC Financial Services Preliminary Unaudited Second Quarter 2009
Financial Highlights
(Continued)
($ in millions)
Note Second Quarter Six Months
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Mortgage Operations 2009 2008 2009 2008
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Net loss ($1,836) ($1,890) ($2,856) ($2,749)
Gain (loss) on mortgage
loans, net
Domestic $166 ($180) $352 ($245)
International (568) (882) (561) (1,564)
---- ---- ---- ------
Total loss on mortgage
loans, net ($402) ($1,062) ($208) ($1,810)
Portfolio Statistics
Mortgage loan production
Prime conforming $10,507 $12,187 $19,013 $27,625
Prime non-conforming 325 740 343 1,588
Government 7,648 3,760 12,320 5,735
Nonprime 0 0 0 3
Prime second-lien 0 343 0 786
- --- - ---
Total Domestic 18,480 17,029 31,676 35,737
International 325 1,049 527 3,240
--- ----- --- -----
Total Mortgage
production $18,805 $18,078 $32,202 $38,977
Mortgage loan servicing
rights at end of period $3,509 $5,417
Loan servicing at end of
period
Domestic $353,852 $397,842
International 27,458 39,020
------ ------
Total Loan servicing $381,310 $436,862
Asset Quality Statistics
Provision for credit
losses by product
Mortgage loans held for
investment $685 $343 $1,190 $624
Lending receivables 231 120 376 138
--- --- --- ---
Total Provision for
credit losses $916 $463 $1,566 $762
Allowance by product at
end of period
Mortgage loans held for
investment $1,133 $638
Lending receivables 536 483
--- ---
Total Allowance by
product $1,669 $1,121
Allowance as a % of
related receivables
at end of period
Mortgage loans held
for investment 13 5.08% 2.26%
Lending receivables 15.71% 7.94%
Total Allowance as
a % of related
receivables 13 6.49% 3.27%
Nonaccrual loans at
end of period 13 $4,939 $4,514
Nonaccrual loans as a
% of related
receivables at end of
period 13 19.20% 13.14%
Total
nonperforming
assets 14 $8,253 $7,349
Second Quarter Six Months
GMAC Insurance Operations --------------------------------------
2009 2008 2009 2008
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Net (loss) Income ($515) $135 ($465) $267
Premiums and service
revenue written $663 $1,067 $1,385 $2,200
Premiums and service
revenue earned $806 $1,111 $1,658 $2,208
Combined ratio 15 96.2% 97.8% 96.1% 95.8%
Investment portfolio fair
value at end of period $4,651 $7,068
Memo: After-tax at end of
period
Unrealized gains $107 $129
Unrealized losses (101) (92)
---- ---
Net unrealized gains $6 $37
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(13) Excludes SFAS 159 assets
(14) Includes SFAS 159 assets
(15) Combined ratio represents 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. For 2008,
sale of GMAC RE and goodwill impairment have also been excluded.
Numbers may not foot due to rounding
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