Ally Financial reported its fourth consecutive quarterly profit Tuesday and its chief executive said the auto and mortgage lender is hyperfocused on repaying its $17.2 billion bailout as the company prepares for an initial public offering.
"Management has a great motivation to get Treasury out ASAP," Ally CEO Michael Carpenter said on a conference call. (He would not give a timetable for the widely expected IPO.)
Ally, formerly known as GMAC, reported a $79 million profit for the fourth quarter, compared with a $4.95 billion loss in the year-ago quarter. The improvement was driven primarily by strength in the North American auto business and strong mortgage volume.
The company paid $462 million to resolve buyback claims with Fannie Mae for soured mortgages from Ally's Residential Capital unit. The settlement includes all future repurchase claims.
In December, Treasury's stake in Ally increased to 74% from 56% after the government converted $5.5 billion of its $11.4 billion in preferred securities to common stock. Ally said the move was a critical step toward repaying the government in full.
Looking forward, Carpenter said Ally's biggest strategic issue is to lower its cost of funds.
"Our capital ratios are still at levels reflective of a distressed company," he said. "We need to get our cost of funds down and that's our game over the next year or so."
Ally's mortgage division earned $123 million in the fourth quarter, compared with $3.3 billion a year earlier while its automotive unit posted a fourth-quarter profit of $589 million, a 72% jump from the year-ago profit of $343 million.
The core business originated $9.3 billion in new auto loans in the fourth quarter, up $1 billion from the third quarter and the highest origination quarter since early 2008.