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National Press Release
 | GMAC Financial Services Reports Preliminary First Quarter 2009 Financial ResultsPublished 2009-05-05 07:58By GMAC Financial Services |
- First quarter net loss of
- Weak economic conditions and legacy credit costs adversely affected results
- Increased levels of consumer credit extended in the quarter:
- Tier 1 capital ratio of 10.6 percent; Tier 1 common ratio of 7.3 percent
- GMAC Mortgage begins participating in Home Affordable Modification Program
- GMAC becomes preferred provider of automotive financing for Chrysler dealers and customers
First Quarter Net Income/Loss
($ in millions)
Q109 Q108 Change
Global Automotive Finance $225 $258 ($33)
Insurance 50 132 (82)
Mortgage Operations (125) (859) 734
Corporate and Other(1) (825) (120) (705)
Net Loss ($675) ($589) ($86)
(1) Includes Commercial Finance operating segment and other corporate
activities
"The effects of a soft economy and weaker credit performance on legacy assets continued to put pressure on GMAC's financial performance in the quarter. We continue to manage through this economic cycle and focus on strengthening operations for the long-term," said GMAC Chief Executive Officer
"In addition, last week we announced another milestone in the company's history -- that GMAC will be the preferred provider of auto finance products and services for Chrysler dealers and customers," said de Molina. "This agreement leverages GMAC's strengths, diversifies our auto finance business and provides new revenue opportunities for the company."
Liquidity and Capital
GMAC's consolidated cash and cash equivalents were
GMAC Bank total assets were
GMAC's total equity at
Global Automotive Finance
GMAC's global automotive finance business reported net income of
New vehicle consumer financing originations during the first quarter of 2009 significantly decreased to
The company announced further actions on
Credit losses increased in the first quarter of 2009 to 2.41 percent of managed retail assets, versus 1.34 percent in the first quarter of 2008. The significant increase is related to higher frequency of losses in
Delinquencies, which are contracts more than 30-days past due, also increased to 3.08 percent in the first quarter of 2009, compared to 2.42 percent in the first quarter of 2008. Driving the increase is weaker economic conditions in certain international markets, such as
GMAC recently announced an agreement with Chrysler LLC to provide automotive financing products and services to Chrysler dealers and customers. GMAC will be the preferred provider of new wholesale financing for Chrysler dealer inventory and has a four-year agreement for incentivized retail financing with limited exclusivity. In conjunction with this announcement, the U.S. government has indicated that it intends to support GMAC in promoting the availability of credit for dealers and customers.
Insurance
GMAC's insurance business recorded net income of
The carrying value of the insurance investment portfolio was
On
Mortgage Operations
GMAC's mortgage operations, which include the ResCap legal entity, the GMAC Bank mortgage operation, and the ResMor Trust Canadian mortgage operation, reported a net loss of
U.S. mortgage loan origination volume has begun to show signs of improvement. Loan production in the first quarter of 2009 was
GMAC's international mortgage business continues to see increased delinquency rates and declining home prices in the
As part of its loss mitigation efforts, GMAC has formalized its participation in the Home Affordable Modification Program, which was created to assist struggling homeowners. The company has currently distributed approximately 100,000 financial packages to homeowners who are potentially eligible for modifications under the program.
Corporate and Other
GMAC's corporate and other segment reported a net loss of
Outlook
GMAC is fully engaged in extending credit to consumers and businesses. The company continues to lend to auto dealers, has expanded credit to automotive retail customers, and recently re-entered the prime jumbo mortgage market. GMAC has leveraged its position as a bank holding company and receipt of the Troubled Asset Relief Program (TARP) investment to continue lending activities.
GMAC's commitment to the U.S. auto industry, in particular, has been reinforced by the agreement to provide automotive financing products and services to Chrysler dealers and customers. This new business is expected to begin as soon as practicable and no later than mid-May.
Looking ahead, the economic environment remains challenged -- market-based funding remains scarce, economic conditions are soft and credit quality continues to deteriorate. GMAC remains committed to working through these challenges by implementing its five core strategies:
-- Transition to and meet all bank holding company requirements
-- Strengthen liquidity and capital position
-- Build a world-class organization
-- Expand and diversify customer-focused revenue opportunities, with
available funding driving originations
-- Drive returns by repositioning risk profile and maximizing efficiencies
About GMAC Financial Services
GMAC is a bank holding company with operations in
Forward-Looking Statements
In this earnings release and related comments by GMAC LLC ("GMAC") management, the use of the words "expect," "anticipate," "estimate," "forecast," "initiative," "objective," "plan," "goal," "project," "outlook," "priorities," "target," "intend," "evaluate," "pursue," "seek," "may," "would," "could," "should," "believe," "potential," "continue," or the negative of any of those words or similar expressions is intended to identify forward-looking statements. All statements herein and in related charts and management comments, other than statements of historical fact, including without limitation, statements about future events and financial performance, are forward-looking statements that involve certain risks and uncertainties. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results, and GMAC's and Residential Capital, LLC's ("ResCap") actual results may differ materially due to numerous important factors that are described in the most recent reports on SEC Forms 10-K and 10-Q for GMAC and ResCap, each of which may be revised or supplemented in subsequent reports on SEC Forms 10-Q and 8-K. Such factors include, among others, the following: the inability or unwillingness of the U.S. government to provide the additional liquidity and capital necessary for us to finance Chrysler LLC ("Chrysler") dealers and customers, and uncertainty around the ultimate form, amount and terms of such capital; our inability to successfully accommodate the additional risk exposure relating to providing wholesale and retail financing to Chrysler dealers and customers and the resulting impact to our financial stability; uncertainty related to Chrysler's bankruptcy process and its proposed industrial alliance with Fiat SpA; the success or lack thereof of Chrysler's bankruptcy process and its proposed industrial alliance with Fiat SpA; our ability to recover any payments or obligations owed to us by Chrysler during Chrysler's bankruptcy process; uncertainty related to the new financing arrangement between GMAC and Chrysler; securing low cost funding for GMAC and ResCap and maintaining the mutually beneficial relationship between GMAC, General Motors Corporation ("GM") and Chrysler; our ability to maintain an appropriate level of debt; the profitability and financial condition of GM and Chrysler; our ability to realize the anticipated benefits associated with our recent conversion to a bank holding company, and the increased regulation and restrictions that we will be subject to; uncertainty concerning our ability to access additional federal liquidity programs; continued challenges in the residential mortgage and capital markets; continued deterioration in the residual value of off-lease vehicles; the continuing negative impact on ResCap of the decline in the U.S. housing market; changes in U.S. government-sponsored mortgage programs or disruptions in the markets in which our mortgage subsidiaries operate; disruptions in the market in which we fund GMAC's and ResCap's operations, with resulting negative impact on our liquidity; changes in our accounting assumptions that may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; changes in the credit ratings of ResCap, GMAC, GM or Chrysler; changes in economic conditions, currency exchange rates or political stability in the markets in which we operate; and changes in the existing or the adoption of new laws, regulations, policies or other activities of governments, agencies and similar organizations.
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:
Gina Proia
917-369-2364
914-714-9166 mobile
gina.proia@gmacfs.com
Beth Coggins
313-656-6964
313-410-0284 mobile
beth.coggins@gmacfs.com
GMAC Financial Services
Preliminary Unaudited First Quarter 2009 Financial Highlights
($ in millions)
Note 1Q 1Q
Summary Statement of Income 2009 2008
--------------------------- ---- ----
Revenue
Total financing revenue and other
interest income $3,812 $5,404
Interest expense 2,181 3,179
Depreciation expense on operating
lease assets 1,153 1,397
------------- ----- -----
Net financing revenue 478 828
Other revenue
Net loan servicing income 48 880
Insurance premiums and service
revenue earned 864 1,109
Gain (loss) on mortgage and
automotive loans, net 296 (600)
Gain on extinguishment of debt 644 488
Other loss on investments, net (19) (445)
Other income, net of losses (112) 150
--------------------------- ---- ---
Total other revenue 1,721 1,582
Total net revenue 2,199 2,410
Provision for loan losses 843 474
Noninterest expense
Insurance losses and loss
adjustment expenses 553 630
Other operating expenses 1,601 1,877
------------------------ ----- -----
Total noninterest expense 2,154 2,507
Loss before income tax (benefit)
expense (798) (571)
Income tax (benefit) expense (123) 18
---------------------------- ---- --
Net loss ($675) ($589)
-------- ----- -----
Mar 31, Dec 31, Mar 31,
Select Balance Sheet Data 2009 2008 2008
------------------------- ---- ---- ----
Cash and cash equivalents $13,333 $15,151 $14,836
Loans held-for-sale 10,357 7,919 21,446
Finance receivables and loans, net 1
Consumer 60,062 63,963 80,493
Commercial 35,940 36,110 41,232
Investments in operating leases, net 2 23,527 26,390 33,122
Total assets 179,552 189,476 243,354
Total debt 3 113,424 126,321 185,294
----------- ------- ------- -------
1Q 1Q
Operating Statistics 2009 2008
--------------------------- ---- ----
Worldwide Cost of Borrowing 4 6.21% 6.44%
-------------------------------------------------------------------------
(1) Finance receivables and loans are net of unearned income
(2) Net of accumulated depreciation
(3) Represents both secured and unsecured on-balance sheet debt
(4) Calculated by dividing total interest expense (excluding
mark-to-market adjustments and intercompany interest) by total
borrowings
GMAC Financial Services Preliminary Unaudited First Quarter 2009
Financial Highlights (Continued)
($ in millions)
Note 1Q 1Q
----------------------------------
GMAC Automotive Finance Operations 2009 2008
---------------------------------- ---- ----
Net (loss) income
North American Operations (NAO) $259 $154
International Operations (IO) (34) 104
--- ---
Net (loss) income $225 $258
---- ----
Consumer Portfolio Statistics
NAO Number of contracts originated
(# thousands) 88 433
Dollar amount of contracts originated $2,407 $11,850
Dollar amount of contracts outstanding
at end of period 5 $46,241 $65,999
Share of new GM retail sales 17% 49%
Mix of retail & lease contract
originations (% based on # of units):
New 77% 77%
Used 23% 23%
GM subvented (% based on # of units) 77% 82%
Average original term in months
(US retail only) 63 60
Off-lease remarketing (US only)
Sales proceeds on scheduled lease
terminations (36-month) per vehicle
- Serviced 6,7 $13,996 $14,541
Off-lease vehicles terminated
- Serviced (# units) 7 97,648 99,997
Sales proceeds on scheduled lease
terminations (36-month) per vehicle
- On-balance sheet 6 $14,274 $14,690
Off-lease vehicles terminated -
On-balance sheet (# units) 8 63,734 43,139
Number of contracts originated (# thousands) 99 193
IO Dollar amount of contracts originated 9 $1,342 $3,355
Dollar amount of contracts outstanding at
end of period 9 $13,728 $19,514
Mix of retail & lease contract originations
(% based on # of units):
New 93% 83%
Used 7% 17%
GM subvented (% based on # of units) 35% 42%
Asset Quality Statistics
NAO Annualized net retail charge-offs as a %
of managed assets 10 2.91% 1.57%
Managed retail contracts over 30 days
delinquent 10,11 3.28% 2.45%
Serviced retail contracts over 30 days
delinquent 11,12 3.17% 2.46%
IO Annualized net charge-offs as a % of
managed assets 10 1.08% 0.74%
Managed retail contracts over 30 days
delinquent 10,11 2.77% 2.37%
Operating Statistics
NAO Allowance as a % of related on-balance
sheet consumer receivables at end of period 4.99% 3.72%
Repossessions as a % of average number of
managed retail contracts outstanding 10 3.62% 2.73%
Severity of loss per unit serviced - Retail 12
New $11,246 $10,087
Used $9,284 $8,156
IO Allowance as a % of related on-balance sheet
consumer receivables at end of period 1.86% 1.49%
Repossessions as a % of average number of
contracts outstanding 0.86% 0.66%
-------------------------------------------------------------------------
(5) Represents on-balance sheet assets, which includes $4.2 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.
Previously reported 2008 Q1 consumer $ origination data contained
estimated data for March 2008. Q1 2008 data has been revised to
replace estimates with actuals where warranted.
(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, as well as retail balloon contracts that are
exposed to residual 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 First Quarter 2009
Financial Highlights (Continued)
($ in millions)
Note 1Q 1Q
------------------------
GMAC Mortgage Operations 2009 2008
------------------------ ---- ----
Net loss ($125) ($859)
Gain (loss) on sale of mortgage
loans, net
Domestic $186 ($65)
International 7 ($683)
- -----
Total (loss) gain on sale of
mortgage loans $193 ($748)
Portfolio Statistics
Mortgage loan production
Prime conforming $8,506 $15,437
Prime non-conforming 17 849
Government 4,672 1,976
Nonprime - 3
Prime second-lien - 443
- ---
Total Domestic 13,196 18,708
International 202 2,191
--- -----
Total Mortgage production $13,397 $20,899
Mortgage loan servicing rights
at end of period $2,587 $4,278
Loan servicing at end of period
Domestic $359,257 $416,202
International 26,594 43,675
------ ------
Total Loan servicing $385,851 $459,877
Asset Quality Statistics
- Mortgage Operations
Provision for credit losses
by product
Mortgage loans held for investment $505 $281
Lending receivables 145 18
--- --
Total Provision for credit losses $650 $300
Allowance by product at end
of period
Mortgage loans held for investment $1,462 $485
Lending receivables 587 404
--- ---
Total Allowance by product $2,049 $889
Allowance as a % of related receivables
at end of period
Mortgage loans held for investment,
excluding SFAS 159 assets 6.16% 1.59%
Lending receivables 14.48% 5.76%
Total Allowance as a % of related
receivables 13 7.37% 2.36%
Nonaccrual loans at end of period,
excluding SFAS 159 MLHFI assets $5,778 $4,408
Nonaccrual loans as a % of related
receivables at end of period 20.79% 11.73%
Total nonperforming assets $8,716 $7,407
-------------------------
GMAC Insurance Operations
-------------------------
Net Income $50 $132
Premiums and service revenue written $722 $1,133
Premiums and service revenue earned $852 $1,097
Combined ratio 14 95.9% 93.8%
Investment portfolio fair value at
end of period $4,992 $7,212
Memo: After-tax at end of period
Unrealized gains $115 $177
Unrealized losses (188) (57)
---- ---
Net unrealized capital (losses)
gains ($73) $120
-------------------------------------------------------------------------
(13) SFAS 159 mortgage loans held for investment are carried at fair
value, so there is no allowance for these loans. As such these
loans are excluded from allowance and nonaccrual calculations above.
(14) 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.
Numbers may not foot due to rounding
SOURCE GMAC Financial Services
