GMAC Reports First Profit Since 2008, Rebrands as Ally Financial
GMAC Financial Services reported a $162m net income for Q110 after a $4.9bn loss in Q409 as the company announced it will rebrand the GMAC Inc. name to Ally Financial Inc. on May 10, 2010. In Q109, GMAC reported a $675m loss. Since then, GMAC took action to reduce exposure from the legacy mortgage operation. Residential Capital (ResCap), the mortgage subsidiary of GMAC, sold its European mortgage assets and businesses to the asset manager Fortress Investment Group (FIG), moving 10% of ResCap’s total assets as of the end of 2009. GMAC also sold whole loan pools of $373m of unpaid principal balance in the US and the U.K. GMAC denied a New York Post report in April saying it was struggling to sell the ResCap branch all together. A report from the Congressional Oversight Panel (COP) even said in a report in March that GMAC could have been placed into bankruptcy and its subsidiaries wound-down. GMAC held $14.7bn in cash and cash equivalents at the end of Q110, close to $14.8bn held at the end of 2009. Its total equity dropped in Q110 to $20.5bn from $20.8bn in Q409 as GMAC made preferred dividend payments. Its Tier 1 capital ratio reached 14.9%, up from 14.1% in Q409. The companies mortgage operations, including ResCap and the mortgage activities of Ally Bank and ResMor Trust, reported a $175m income in Q110 after a $995m loss in Q409. Its mortgage loan production in Q109 dropped to $13.3bn in Q110 from $18.1bn in Q409. GMAC pointed to lower mortgage market volumes and seasonal patterns as reasons for the downturn. "The first quarter marks a key milestone in GMAC's transformation, as the company made significant strides toward achieving our strategic objectives," said GMAC CEO Michael Carpenter. Write to Jon Prior.