ALLY FINANCIAL INC., 10-Q filed on 5/3/2021
Quarterly Report
v3.21.1
Document and Entity Information - shares
3 Months Ended
Mar. 31, 2021
Apr. 29, 2021
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Mar. 31, 2021  
Document Transition Report false  
Entity File Number 1-3754  
Entity Registrant Name Ally Financial Inc.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 38-0572512  
Entity Address, Address Description Ally Detroit Center  
Entity Address, Address Line One 500 Woodward Avenue  
Entity Address, Address Line Two Floor 10  
Entity Address, City or Town Detroit  
Entity Address, State or Province MI  
Entity Address, Postal Zip Code 48226  
City Area Code 866  
Local Phone Number 710-4623  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   370,680,573
Entity Central Index Key 0000040729  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q1  
Amendment Flag false  
Common stock    
Entity Information [Line Items]    
Title of 12(b) Security Common Stock, par value $0.01 per share  
Trading Symbol ALLY  
Security Exchange Name NYSE  
Trust Preferred Securities Subject to Mandatory Redemption    
Entity Information [Line Items]    
Title of 12(b) Security 8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust I  
Trading Symbol ALLY PRA  
Security Exchange Name NYSE  
v3.21.1
Condensed Consolidated Statement of Comprehensive Income - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Financing Revenue and Other Income [Abstract]    
Interest and fees on finance receivables and loans $ 1,582 $ 1,742
Interest on loans held-for-sale 5 2
Interest and dividends on investment securities and other earning assets 131 226
Interest on cash and cash equivalents 4 14
Operating leases 370 367
Total financing revenue and other interest income 2,092 2,351
Interest Expense [Abstract]    
Interest on deposits 306 592
Interest on short-term borrowings 1 17
Interest on long-term debt 250 348
Total interest expense 557 957
Net depreciation expense on operating lease assets 163 248
Net financing revenue and other interest income 1,372 1,146
Other revenue [Abstract]    
Insurance premiums and service revenue earned 280 277
Gain (loss) on mortgage and automotive loans, net 36 (12)
Loss on Extinguishment of Debt (1) 0
Other gain (loss) on investments, net 123 (79)
Other income, net of losses 127 80
Total other revenue 565 266
Total net revenue 1,937 1,412
Provision for credit losses (13) 903
Noninterest Expense [Abstract]    
Compensation and benefits expense 395 360
Insurance losses and loss adjustment expenses 63 74
Other operating expenses 485 486
Total noninterest expense 943 920
Income (loss) from continuing operations before income tax expense 1,007 (411)
Statement [Abstract]    
Income tax (benefit) expense from continuing operations 211 (92)
Net income from continuing operations 796 (319)
Net income 796 (319)
Other comprehensive income, net of tax (604) 583
Comprehensive Income $ 192 $ 264
Earnings Per Share, Basic [Abstract]    
Net income (loss) from continuing operations, basic earnings per common share $ 2.12 $ (0.85)
Net income (loss), basic earnings per common share 2.12 (0.85)
Earnings Per Share, Diluted [Abstract]    
Net income (loss) from continuing operations, diluted earnings per common share 2.11 (0.85)
Net income, diluted earnings per common share 2.11 (0.85)
Cash dividends declared per common share $ 0.19 $ 0.19
v3.21.1
Condensed Consolidated Balance Sheet & Mini Balance Sheet - USD ($)
$ in Millions
Mar. 31, 2021
Dec. 31, 2020
Assets [Abstract]    
Cash and cash equivalents, noninterest-bearing $ 747 $ 724
Cash and cash equivalents, interest-bearing 15,031 14,897
Total cash and cash equivalents 15,778 15,621
Equity securities 1,068 1,071
Available-for-sale securities 33,446 29,830
Held-to-maturity securities 1,197 1,253
Loans held-for-sale, net 630 406
Finance receivables and loans, net [Abstract]    
Finance receivables and loans, net 113,076 118,534
Allowance for loan losses 3,152 3,283
Total finance receivables and loans, net 109,924 115,251
Investment in operating leases, net 9,944 9,639
Premiums receivable and other insurance assets 2,725 2,679
Other assets 7,167 6,415
Total assets 181,879 182,165
Liabilities and Equity [Abstract]    
Deposit liabilities, noninterest-bearing 155 128
Deposit liabilities, interest-bearing 139,430 136,908
Total deposit liabilities 139,585 137,036
Short-term borrowings 0 2,136
Long-term debt 20,503 22,006
Interest payable 453 412
Unearned insurance premiums and service revenue 3,487 3,438
Accrued expenses and other liabilities 3,226 2,434
Total liabilities $ 167,254 $ 167,462
Equity [Abstract]    
Common stock, par value per share $ 0.01 $ 0.01
Common stock, shares authorized 1,100,000,000 1,100,000,000
Total common stock shares issued 503,643,221 501,237,055
Common stock, shares outstanding 371,804,633 374,674,415
Common Stocks, Including Additional Paid in Capital $ 21,566 $ 21,544
Accumulated deficit (3,555) (4,278)
Accumulated other comprehensive income $ 27 $ 631
Treasury stock, shares 131,838,588 126,562,640
Treasury stock, at cost $ (3,413) $ (3,194)
Total equity 14,625 14,703
Total liabilities and equity 181,879 182,165
Available-for-sale debt securities | Available-for-sale securities    
Assets [Abstract]    
Debt securities, available-for-sale, amortized cost 33,336 28,936
Available-for-sale securities 33,446 29,830
Held-to-maturity securities    
Assets [Abstract]    
Held-to-maturity securities, fair value 1,250 1,331
Held-to-maturity securities 1,197 1,253
Held-to-maturity securities | Held-to-maturity securities    
Assets [Abstract]    
Held-to-maturity securities, fair value 1,250 1,331
On-balance sheet variable interest entities    
Finance receivables and loans, net [Abstract]    
Allowance for loan losses 307 285
Total finance receivables and loans, net 12,155 13,213
Other assets 1,266 983
Total assets 13,421 14,196
Liabilities and Equity [Abstract]    
Long-term debt 3,553 4,158
Accrued expenses and other liabilities 4 3
Total liabilities 3,557 4,161
On-balance sheet variable interest entities | Consumer portfolio segment    
Finance receivables and loans, net [Abstract]    
Finance receivables and loans, net 8,551 7,630
On-balance sheet variable interest entities | Commercial portfolio segment    
Finance receivables and loans, net [Abstract]    
Finance receivables and loans, net $ 3,911 $ 5,868
v3.21.1
Condensed Consolidated Statement of Changes in Equity - USD ($)
$ in Millions
Total
Cumulative Effect, Period of Adoption, Adjusted Balance
Revision of Prior Period, Accounting Standards Update, Adjustment
Common stock and paid-in capital
Common stock and paid-in capital
Cumulative Effect, Period of Adoption, Adjusted Balance
Accumulated deficit
Accumulated deficit
Cumulative Effect, Period of Adoption, Adjusted Balance
Accumulated deficit
Revision of Prior Period, Accounting Standards Update, Adjustment
Accumulated other comprehensive income
Accumulated other comprehensive income
Cumulative Effect, Period of Adoption, Adjusted Balance
Treasury stock
Treasury stock
Cumulative Effect, Period of Adoption, Adjusted Balance
Common stock dividends, amount per share $ 0.19                      
Equity at Dec. 31, 2019 $ 14,416 $ 13,399   $ 21,438 $ 21,438 $ (4,057) $ (5,074)   $ 123 $ 123 $ (3,088) $ (3,088)
Equity (Accounting Standards Update 2016-13) at Dec. 31, 2019     $ (1,017)         $ (1,017)        
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Net income (loss) (319)         (319)            
Share-based compensation 32     32                
Other comprehensive income (loss) 583               583      
Common stock repurchases (104)                   (104)  
Common stock dividends (72)         (72)            
Equity at Mar. 31, 2020 $ 13,519     21,470   (5,465)     706   (3,192)  
Common stock dividends, amount per share $ 0.19                      
Equity at Dec. 31, 2020 $ 14,703     21,544   (4,278)     631   (3,194)  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                        
Net income (loss) 796         796            
Share-based compensation 22     22                
Other comprehensive income (loss) (604)               (604)      
Common stock repurchases (219)                   (219)  
Common stock dividends (73)         (73)            
Equity at Mar. 31, 2021 $ 14,625     $ 21,566   $ (3,555)     $ 27   $ (3,413)  
v3.21.1
Condensed Consolidated Statement of Cash Flows - USD ($)
$ in Millions
3 Months Ended
Mar. 31, 2021
Mar. 31, 2020
Statement of Cash Flows [Abstract]    
Net income (loss) $ 796 $ (319)
Net Cash Provided by Operating Activities [Abstract]    
Depreciation and amortization 373 386
Provision for credit losses (13) 903
(Gain) loss on mortgage and automotive loans, net (36) 12
Other (gain) loss on investments, net (123) 79
Change in Gain (Loss) On Extinguishment Of Debt 1 0
Originations and purchases of loans held-for-sale (1,175) (366)
Proceeds from sales and repayments of loans held-for-sale 1,137 300
Increase (decrease) in deferred income taxes (19) (87)
Increase (decrease) in interest payable 41 69
Increase (decrease) in other assets 78 44
Increase (decrease) in other liabilities 105 (290)
Increase (decrease) in other assets and liabilities, net 5 83
Net Cash Provided by Operating Activities, Total 1,170 814
Net Cash Procided by (Used in) Investing Activities [Abstract]    
Purchases of equity securities (472) (625)
Proceeds from sales of equity securities 589 117
Purchases of available-for-sale securities 10,116 4,565
Proceeds from Sale of Debt Securities, Available-for-sale 2,327 3,817
Proceeds from repayments of available-for-sale securities 3,612 1,623
Purchases of held-to-maturity securities (63) 0
Proceeds from repayments of held-to-maturity securities 118 70
Purchases of finance receivables and loans held-for-investment (930) (925)
Proceeds from sales of finance receivables and loans initially held-for-investment 164 1
Originations and repayments of loans held-for-investment and other 5,783 900
Purchases of operating lease assets (1,269) (1,138)
Disposals of operating lease assets 780 568
Net change in nonmarketable equity investments 29 (92)
Payments for (proceeds from) other, net (100) (76)
Net Cash Provided by (Used in) Investing Activities, Total 452 (325)
Net Cash (Used in) Provided by Financing Activities [Abstract]    
Net change in short-term borrowings 2,136 (3,963)
Net increase in deposits 2,545 1,565
Proceeds from issuance of long-term debt 56 788
Repayments of long-term debt (1,340) (3,939)
Repurchase of common stock (219) (104)
Dividends paid (73) (72)
Net Cash (Used in) Provided by Financing Activities, Total (1,167) 2,201
Effect of Exchange Rate on Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Including Disposal Group and Discontinued Operations 2 (4)
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]    
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect, Total 457 2,686
Cash and cash equivalents and restricted cash [Roll Forward]    
Cash and cash equivalents and restricted cash 16,574 4,380
Cash and cash equivalents and restricted cash 17,031 7,066
Supplemental Cash Flow Information [Abstract]    
Cash paid for interest 492 869
Cash paid for income taxes 4 2
Loans held-for-sale transferred to finance receivables and loans held-for-investment 4 11
Additions of property and equipment 46 0
Finance receivables and loans transferred to loans held-for-sale, noncash 329 0
Restricted Cash [Abstract]    
Cash and cash equivalents as disclosed on the Consolidated Balance Sheet 15,778 6,161
Restricted cash included in other assets on the Consolidated Balance Sheet $ 1,253 $ 905
v3.21.1
Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies
3 Months Ended
Mar. 31, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization, Consolidation, Basis of Presentation, Business Description and Changes in Significant Accounting Policies 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 United States and offer a wide range of financial services and insurance products to automotive dealerships and consumers. Our award-winning digital direct bank (Ally Bank, Member FDIC and Equal Housing Lender) offers mortgage lending, point-of-sale 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 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 BHC Act, and an FHC under the GLB Act.
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. Certain reclassifications may have been made to the prior periods’ financial statements and notes to conform to the current period’s presentation, which did not have a material impact on our Condensed Consolidated Financial Statements. 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 March 31, 2021, and for the three months ended March 31, 2021, and 2020, 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, 2020, as filed on February 24, 2021, with the SEC.
Significant Accounting Policies
Income Taxes
In calculating the provision for interim income taxes, in accordance with ASC 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 2020 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 2020 Annual Report on Form 10-K regarding additional significant accounting policies.
Recently Adopted Accounting Standards
Reference Rate Reform (ASU 2021-01)
In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope, which clarified the scope of ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting, indicating that certain optional expedients and exceptions included in ASU 2020-04 are applicable to derivative instruments affected by the market-wide change in interest rates used for discounting, margining, or contract price alignment. We adopted the amendments in this ASU immediately upon issuance in January 2021 on a prospective basis and will apply this guidance, along with the guidance from ASU 2020-04, as contracts are modified through December 2022. The adoption did not have an immediate direct impact on our financial statements. We do not expect there to be a material impact to our financial statements.
v3.21.1
Revenue from Contracts with Customers
3 Months Ended
Mar. 31, 2021
Revenue from Contract with Customer [Abstract]  
Revenue from Contracts with Customers Disclosure Revenue from Contracts with CustomersOur 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 table presents a disaggregated view of our 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 2020 Annual Report on Form 10-K.
Three months ended March 31, ($ in millions)
Automotive Finance operationsInsurance operationsMortgage Finance operationsCorporate Finance operationsCorporate and OtherConsolidated
2021
Revenue from contracts with customers
Noninsurance contracts (a) (b) (c)$ $155 $ $ $ $155 
Remarketing fee income27     27 
Brokerage commissions and other revenue    20 20 
Deposit account and other banking fees    6 6 
Brokered/agent commissions 4    4 
Other6     6 
Total revenue from contracts with customers
33 159   26 218 
All other revenue
29 220 40 26 32 347 
Total other revenue (d)$62 $379 $40 $26 $58 $565 
2020
Revenue from contracts with customers
Noninsurance contracts (a) (b) (c)$— $143 $— $— $— $143 
Remarketing fee income17 — — — — 17 
Brokerage commissions and other revenue— — — — 13 13 
Deposit account and other banking fees— — — — 
Brokered/agent commissions— — — — 
Other— — — — 
Total revenue from contracts with customers
22 147 — — 17 186 
All other revenue (e)25 (10)10 13 42 80 
Total other revenue (d)$47 $137 $10 $13 $59 $266 
(a)We had opening balances of $3.0 billion and $2.9 billion in unearned revenue associated with outstanding contracts at December 31, 2020, and December 31, 2019, respectively, and $225 million and $214 million of these balances were recognized as insurance premiums and service revenue earned in our Condensed Consolidated Statement of Comprehensive Income during the three months ended March 31, 2021, and March 31, 2020, respectively.
(b)At March 31, 2021, we had unearned revenue of $3.0 billion associated with outstanding contracts, and with respect to this balance we expect to recognize revenue of $620 million in 2021, $757 million in 2022, $659 million in 2023, $483 million in 2024, and $513 million thereafter. At March 31, 2020, we had unearned revenue of $2.9 billion associated with outstanding contracts.
(c)We had deferred insurance assets of $1.8 billion at both December 31, 2020, and March 31, 2021, and recognized $132 million of expense during the three months ended March 31, 2021. We had deferred insurance assets of $1.7 billion at both December 31, 2019, and March 31, 2020, and recognized $125 million of expense during the three months ended March 31, 2020.
(d)Represents a component of total net revenue. Refer to Note 21 for further information on our reportable operating segments.
(e)Insurance operations for the three months ended March 31, 2020, include $132 million of insurance premiums and service revenue earned and $142 million of net losses on investment securities.
In addition to the components of other revenue presented above, as part of our Automotive Finance operations, we recognized net remarketing gains of $64 million for the three months ended March 31, 2021, and $2 million for the three months ended March 31, 2020, on the sale of off-lease vehicles. These gains are included in depreciation expense on operating lease assets in our Condensed Consolidated Statement of Comprehensive Income.
v3.21.1
Other Income, Net of Losses
3 Months Ended
Mar. 31, 2021
Other Nonoperating Income (Expense) [Abstract]  
Other Income and Other Expense Disclosure Other Income, Net of Losses
Details of other income, net of losses, were as follows.
Three months ended March 31,
($ in millions)20212020
Late charges and other administrative fees$31 $21 
Remarketing fees27 17 
Income (loss) from equity-method investments14 (1)
Gain on nonmarketable equity investments, net4 — 
Other, net51 43 
Total other income, net of losses$127 $80 
v3.21.1
Reserves for Insurance Losses and Loss Adjustment Expenses
3 Months Ended
Mar. 31, 2021
Short-duration Insurance Contracts, Liability for Unpaid Claims and Allocated Claim Adjustment Expense, Net [Abstract]  
Reserves for Insurance Losses and Loss Adjustment Expenses Disclosure Reserves for Insurance Losses and Loss Adjustment Expenses
The following table shows a rollforward of our reserves for insurance losses and loss adjustment expenses.
($ in millions)20212020
Total gross reserves for insurance losses and loss adjustment expenses at January 1,$129 $122 
Less: Reinsurance recoverable90 88 
Net reserves for insurance losses and loss adjustment expenses at January 1,39 34 
Net insurance losses and loss adjustment expenses incurred related to:
Current year64 72 
Prior years (a)(1)
Total net insurance losses and loss adjustment expenses incurred63 74 
Net insurance losses and loss adjustment expenses paid or payable related to:
Current year(36)(46)
Prior years(23)(24)
Total net insurance losses and loss adjustment expenses paid or payable(59)(70)
Net reserves for insurance losses and loss adjustment expenses at March 31,43 38 
Plus: Reinsurance recoverable89 104 
Total gross reserves for insurance losses and loss adjustment expenses at March 31,$132 $142 
(a)There have been no material adverse changes to the reserve for prior years.
v3.21.1
Other Operating Expenses
3 Months Ended
Mar. 31, 2021
Operating Expenses [Abstract]  
Other Operating Income and Expense Disclosure Other Operating Expenses
Details of other operating expenses were as follows.
Three months ended March 31,
($ in millions)20212020
Insurance commissions$136 $126 
Technology and communications78 79 
Lease and loan administration55 38 
Advertising and marketing41 44 
Property and equipment depreciation36 34 
Professional services33 31 
Vehicle remarketing and repossession21 23 
Regulatory and licensing fees18 29 
Occupancy15 16 
Non-income taxes6 
Amortization of intangible assets5 
Other41 54 
Total other operating expenses$485 $486 
v3.21.1
Investment Securities
3 Months Ended
Mar. 31, 2021
Investments, Debt and Equity Securities [Abstract]  
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure Investment Securities
Our investment portfolio includes various debt and equity securities. Our debt securities, which are classified as available-for-sale or held-to-maturity, include government securities, corporate bonds, asset-backed securities, and mortgage-backed securities. The cost, fair value, and gross unrealized gains and losses on available-for-sale and held-to-maturity securities were as follows.
March 31, 2021December 31, 2020
Amortized costGross unrealized
Fair value
Amortized costGross unrealized
Fair value
($ in millions)gainslossesgainslosses
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies$1,743 $7 $(44)$1,706 $783 $20 $— $803 
U.S. States and political subdivisions1,031 36 (3)1,064 1,046 50 (1)1,095 
Foreign government169 5 (2)172 167 — 176 
Agency mortgage-backed residential
21,346 395 (223)21,518 18,053 538 (3)18,588 
Mortgage-backed residential2,284 30 (2)2,312 2,595 49 (4)2,640 
Agency mortgage-backed commercial4,272 74 (194)4,152 4,063 139 (13)4,189 
Asset-backed470 4  474 420 — 425 
Corporate debt2,021 53 (26)2,048 1,809 105 — 1,914 
Total available-for-sale securities (a) (b) (c) (d) (e)
$33,336 $604 $(494)$33,446 $28,936 $915 $(21)$29,830 
Held-to-maturity securities
Debt securities
Agency mortgage-backed residential$1,197 $66 $(13)$1,250 $1,253 $79 $(1)$1,331 
Total held-to-maturity securities (e) (f)$1,197 $66 $(13)$1,250 $1,253 $79 $(1)$1,331 
(a)Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $13 million at both March 31, 2021, and December 31, 2020.
(b)Certain available-for-sale securities are included in fair value hedging relationships. Refer to Note 17 for additional information.
(c)Available-for-sale securities with a fair value of $163 million and $145 million at March 31, 2021, and December 31, 2020, respectively, were pledged for purposes as required by contractual obligation or law. Under these agreements, we granted the counterparty the right to sell or pledge the underlying investment securities.
(d)Totals do not include accrued interest receivable, which was $92 million and $90 million at March 31, 2021, and December 31, 2020, respectively. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet.
(e)There was no allowance for credit losses recorded at March 31, 2021, or December 31, 2020, as management determined that there were no expected credit losses in our portfolio of available-for-sale and held-to-maturity securities.
(f)Totals do not include accrued interest receivable, which was $3 million at both March 31, 2021, and December 31, 2020. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet.
The maturity distribution of debt securities outstanding is summarized in the following tables based upon contractual maturities. Call or prepayment options may cause actual maturities to differ from contractual maturities.
TotalDue in one year or lessDue after one year through five yearsDue after five years through ten yearsDue after ten years
($ in millions)AmountYieldAmountYieldAmountYieldAmountYieldAmountYield
March 31, 2021
Fair value of available-for-sale securities (a)
U.S. Treasury and federal agencies$1,706 1.1 %$12 0.1 %$495 1.0 %$1,199 1.1 %$  %
U.S. States and political subdivisions1,064 3.0 44 1.5 106 2.5 227 2.6 687 3.2 
Foreign government172 1.9 14 1.8 94 1.9 64 1.9   
Agency mortgage-backed residential21,518 2.7     33 2.0 21,485 2.7 
Mortgage-backed residential2,312 3.0     32 2.9 2,280 3.0 
Agency mortgage-backed commercial4,152 1.9     1,675 2.3 2,477 1.7 
Asset-backed474 2.5   338 2.8 111 1.3 25 3.2 
Corporate debt2,048 2.4 127 2.8 804 2.5 1,097 2.4 20 2.3 
Total available-for-sale securities$33,446 2.5 $197 2.3 $1,837 2.1 $4,438 2.0 $26,974 2.6 
Amortized cost of available-for-sale securities
$33,336 $195 $1,797 $4,423 $26,921 
Amortized cost of held-to-maturity securities
Agency mortgage-backed residential$1,197 3.0 %$  %$  %$  %$1,197 3.0 %
Total held-to-maturity securities
$1,197 3.0 $  $  $  $1,197 3.0 
December 31, 2020
Fair value of available-for-sale securities (a)
U.S. Treasury and federal agencies$803 1.2 %$13 0.1 %$708 1.1 %$82 1.7 %$— — %
U.S. States and political subdivisions1,095 3.0 49 1.4 103 2.3 228 2.7 715 3.3 
Foreign government176 2.1 1.7 86 2.3 81 1.9 — — 
Agency mortgage-backed residential18,588 3.1 — — — — 37 2.0 18,551 3.1 
Mortgage-backed residential2,640 3.1 — — — — 36 2.9 2,604 3.1 
Agency mortgage-backed commercial4,189 1.9 — — — — 1,628 2.3 2,561 1.7 
Asset-backed425 2.9 — — 349 3.0 49 1.8 27 3.1 
Corporate debt1,914 2.7 155 2.7 625 2.9 1,077 2.6 57 2.1 
Total available-for-sale securities$29,830 2.8 $226 2.3 $1,871 2.2 $3,218 2.4 $24,515 3.0 
Amortized cost of available-for-sale securities
$28,936 $224 $1,808 $3,022 $23,882 
Amortized cost of held-to-maturity securities
Agency mortgage-backed residential
$1,253 3.0 %$— — %$— — %$— — %$1,253 3.0 %
Total held-to-maturity securities
$1,253 3.0 $— — $— — $— — $1,253 3.0 
(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.
The balances of cash equivalents were $20 million and $25 million at March 31, 2021, and December 31, 2020, respectively, and were composed primarily of money-market funds and short-term securities, including U.S. Treasury bills.
The following table presents interest and dividends on investment securities.
Three months ended March 31,
($ in millions)20212020
Taxable interest$114 $205 
Taxable dividends5 
Interest and dividends exempt from U.S. federal income tax5 
Interest and dividends on investment securities$124 $213 
The following table presents gross gains and losses realized upon the sales of available-for-sale securities, and net gains or losses on equity securities held during the period.
Three months ended March 31,
($ in millions)
20212020
Available-for-sale securities
Gross realized gains$32 $105 
Net realized gains on available-for-sale securities32 105 
Net realized gain on equity securities74 
Net unrealized gain (loss) on equity securities17 (185)
Other gain (loss) on investments, net$123 $(79)
The following table presents the credit quality of our held-to-maturity securities, based on the latest available information as of March 31, 2021, and December 31, 2020. The credit ratings are sourced from nationally recognized statistical rating organizations, which include S&P, Moody’s, and Fitch. They represent a composite of the ratings or, where credit ratings cannot be sourced from the agencies, are presented based on the asset type. All of our held-to-maturity securities were current in their payment of principal and interest as of March 31, 2021, and December 31, 2020. We have not recorded any interest income reversals on our held-to-maturity securities during the three months ended March 31, 2021, or 2020.
March 31, 2021December 31, 2020
($ in millions)AATotal (a)AATotal (a)
Debt securities
Agency mortgage-backed residential$1,197 $1,197 $1,253 $1,253 
Total held-to-maturity securities$1,197 $1,197 $1,253 $1,253 
(a)Rating agencies indicate that they base their ratings on many quantitative and qualitative factors, which may include capital adequacy, liquidity, asset quality, business mix, level and quality of earnings, and the current operating, legislative, and regulatory environment. A credit rating is not a recommendation to buy, sell, or hold securities, and the ratings are subject to revision or withdrawal at any time by the assigning rating agency.
The following table summarizes available-for-sale securities in an unrealized loss position, which we evaluated to determine if a credit loss exists requiring the recognition of an allowance for credit losses. For additional information on our methodology, refer to Note 1 to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K. As of March 31, 2021, and December 31, 2020, we did not have the intent to sell the available-for-sale securities with an unrealized loss position and we do not believe it is more likely than not that we will be required to sell these securities before recovery of their amortized cost basis. As a result of this evaluation, management determined that no credit reserves were required at March 31, 2021, or December 31, 2020. We have not recorded any interest income reversals on our available-for-sale securities during the three months ended March 31, 2021, or 2020.
March 31, 2021December 31, 2020
Less than 12 months12 months or longerLess than 12 months12 months or longer
($ in millions)
Fair value
Unrealized loss
Fair value
Unrealized loss
Fair valueUnrealized lossFair valueUnrealized loss
Available-for-sale securities
Debt securities
U.S. Treasury and federal agencies$1,297 $(44)$ $ $$— $— $— 
U.S. States and political subdivisions186 (3)  83 (1)— — 
Foreign government46 (2)  — — — 
Agency mortgage-backed residential9,289 (223)  1,225 (3)— — 
Mortgage-backed residential361 (2)5  316 (4)— — 
Agency mortgage-backed commercial2,731 (194)  926 (13)— — 
Asset-backed68    11 — — — 
Corporate debt785 (26)4  59 — — 
Total available-for-sale securities
$14,763 $(494)$9 $ $2,630 $(21)$$— 
During the three months ended March 31, 2021, and 2020, management determined that there were no expected credit losses 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.
v3.21.1
Finance Receivables and Loans, Net
3 Months Ended
Mar. 31, 2021
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.
($ in millions)March 31, 2021December 31, 2020
Consumer automotive (a)$73,998 $73,668 
Consumer mortgage
Mortgage Finance (b)12,445 14,632 
Mortgage — Legacy (c)458 495 
Total consumer mortgage12,903 15,127 
Consumer other (d)490 407 
Total consumer87,391 89,202 
Commercial
Commercial and industrial
Automotive15,132 19,082 
Other5,541 5,242 
Commercial real estate5,012 5,008 
Total commercial25,685 29,332 
Total finance receivables and loans (e) (f)$113,076 $118,534 
(a)Certain finance receivables and loans are included in fair value hedging relationships. Refer to Note 17 for additional information.
(b)Includes loans originated as interest-only mortgage loans of $7 million and $8 million at March 31, 2021, and December 31, 2020, respectively. All of these loans have exited the interest-only period.
(c)Includes loans originated as interest-only mortgage loans of $27 million and $30 million at March 31, 2021, and December 31, 2020, respectively, of which 99% have exited the interest-only period.
(d)Includes $8 million of finance receivables at both March 31, 2021, and December 31, 2020, for which we have elected the fair value option.
(e)Totals include net unearned income, unamortized premiums and discounts, and deferred fees and costs of $2.1 billion and $2.0 billion at March 31, 2021, and December 31, 2020, respectively.
(f)Totals do not include accrued interest receivable, which was $506 million and $587 million at March 31, 2021, and December 31, 2020, respectively. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet.
The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans for the three months ended March 31, 2021, and March 31, 2020, respectively.
Three months ended March 31, 2021 ($ in millions)
Consumer automotiveConsumer mortgageConsumer other (a)CommercialTotal
Allowance at December 31, 2020$2,902 $33 $73 $275 $3,283 
Charge-offs (b)(284)(2)(8)(14)(308)
Recoveries187 3   190 
Net charge-offs(97)1 (8)(14)(118)
Provision for credit losses4 (7)3 (13)(13)
Other (1)1   
Allowance at March 31, 2021$2,809 $26 $69 $248 $3,152 
(a)Excludes $8 million of finance receivables at both March 31, 2021, and December 31, 2020, for which we have elected the fair value option.
(b)Refer to Note 1 to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K for information regarding our charge-off policies.
Three months ended March 31, 2020 ($ in millions)
Consumer automotiveConsumer mortgageConsumer other (a)CommercialTotal
Allowance at December 31, 2019$1,075 $46 $$133 $1,263 
Cumulative effect of the adoption of Accounting Standards
Update 2016-13
1,334 (6)16 1,346 
Allowance at January 1, 20202,409 40 25 135 2,609 
Charge-offs (b)(373)(3)(5)