0000040729us-gaap:~~InterestRateContractMemberus-gaap:CashFlowHedgingMember2021-01-012021-06-30~~DesignatedAsHedgingInstrumentMemberally:InterestanddividendsoninvestmentsecuritiesandotherearningassetsMemberus-gaap:FederalHomeLoanBankCertificatesAndObligationsFHLBMember2021-01-012021-06-30

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2021,~~2022, or


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 1-3754

Ally Financial Inc.

(Exact name of registrant as specified in its charter)


Delaware						38-0572512
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

Ally Detroit Center

500 Woodward Avenue, Floor 10

Detroit, Michigan 48226

(Address of principal executive offices)

(Zip Code)

(866) 710-4623

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbols

Name of each exchange on which registered

Common Stock, par value $0.01 per share

ALLY

~~NYSE~~

~~8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust I~~

~~ALLY PRA~~

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

At July ~~29, 2021,~~28, 2022, the number of shares outstanding of the Registrant’s common stock was ~~360,541,736~~308,529,835 shares.

Table of Contents

INDEX

Ally Financial Inc. • Form 10-Q


		Page
	Glossary of Abbreviations and Acronyms	3
Part I — Financial Information
Item 1.	Financial Statements	5
	Condensed Consolidated Statement of Comprehensive Income (unaudited) for the Three Months and Six Months Ended June 3 0 ,30, 2022, and 2021 ~~and 2020~~	5
	Condensed Consolidated Balance Sheet (unaudited) at June 30 ~~2021,~~, 2022, and December 31, ~~2020~~2021	7
	Condensed Consolidated Statement of Changes in Equity (unaudited) for the Three Months and Six Months Ended June 30, ~~2021,~~2022, and ~~2020~~2021	9
	Condensed Consolidated Statement of Cash Flows (unaudited) for the Six Months Ended June 30,, 2022, and 2021 ~~and 2020~~	1011
	Notes to Condensed Consolidated Financial Statements (unaudited)	1213
	Note 1. Description of Business, Basis of Presentation, and Changes in Significant Accounting Policies	1213
	Note 2. ~~Revenue from Contracts with Customers~~Acquisitions	1214
	Note 3. ~~Other Income, Net of Losses~~Revenue from Contracts with Customers	14
	Note 4. Other Income, Net of Losses	16
	Note 5. Reserves for Insurance Losses and Loss Adjustment Expenses	1517
	Note 5.6. Other Operating Expenses	15
	~~Note 6. Investment Securities~~	1617
	Note 7. Investment Securities	18
	Note 8. Finance Receivables and Loans, Net	20
	~~Note 8. Leasing~~	2922
	Note 9. ~~Securitizations and Variable Interest Entities~~Leasing	3231
	Note 10. ~~Other Assets~~Securitizations and Variable Interest Entities	34
	Note 11. ~~Deposit Liabilities~~	35
	~~Note 12. Debt~~	35
	~~Note 13. Accrued Expenses and~~ Other ~~Liabilities~~Assets	37
	Note ~~14. Preferred Stock~~12. Deposit Liabilities	3738
	Note 1 5 ~~. Accumulated Other Comprehensive Income~~13. Debt	39
	Note 114. Accrued Expenses and Other Liabilities	640
	~~. Earnings per Common Share~~Note 15. Preferred Stock	40
	Note 16. Accumulated Other Comprehensive Income	42
	Note 117. Earnings per Common Share	745
	.Note 18. Regulatory Capital and Other Regulatory Matters	4245
	Note 1 8 .19. Derivative Instruments and Hedging Activities	4648
	Note 1 9 .20. Income Taxes	5254
	Note 20 .21. Fair Value	5354
	Note 2 1 .22. Offsetting Assets and Liabilities	61
	Note 2 2 .23. Segment Information	6263
	Note 2 3 .24. Contingencies and Other Risks	65
	Note 2 4 .25. Subsequent Events	6665
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6766
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	~~119~~118
Item 4.	Controls and Procedures	~~120~~119
Part II — Other Information		~~121~~120
Item 1.	Legal Proceedings	~~121~~120
Item 1A.	Risk Factors	~~121~~120
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	~~121~~120
Item 3.	Defaults Upon Senior Securities	~~121~~120
Item 4.	Mine Safety Disclosures	~~121~~120
Item 5.	Other Information	~~121~~120
Item 6.	Exhibits	~~122~~121
Signatures		~~123~~122

Table of Contents

Index of Defined Terms

Ally Financial Inc. • Form 10-Q

Glossary of Abbreviations and Acronyms

The following is a list of abbreviations and acronyms that are used in this Quarterly Report on Form 10-Q.


Term						Definition
~~ABS~~						~~Asset-backed securities~~


ALCO						Asset-Liability Committee
ALM						Asset Liability Management
ASC						Accounting Standards Codification
ASU						Accounting Standards Update

BHC						Bank holding company
BHC Act						Bank Holding Company Act of 1956 as amended
~~BHC~~						~~Bank holding company~~
BMC						Better Mortgage Company
Board						Ally Board of Directors
CCAR						Comprehensive Capital Analysis and Review
CD						Certificate of deposit
CECL						Accounting Standards Update 2016-13 (and related Accounting Standards Updates), or current expected credit loss


CFE						Cities for Financial Empowerment
COVID-19						Coronavirus disease 2019
CRA						Community Reinvestment Act of 1977 as amended
CSG						Commercial Services Group
CVA						Credit valuation adjustment

Dodd-Frank Act						Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 as amended


EGRRCP Act						Economic Growth, Regulatory Relief, and Consumer Protection Act as amended
ERMC						Enterprise Risk Management Committee

ESG						Environmental, social, and governance

F&I						Finance and insurance
Fair Square						Fair Square Financial Holdings LLC and its subsidiaries
FASB						Financial Accounting Standards Board

FDIC						Federal Deposit Insurance Corporation
FDICIA						Federal Deposit Insurance Corporation Improvement Act of 1991 as amended
FHC						Financial holding company
FHLB						Federal Home Loan Bank

FRB						Federal Reserve Bank, or Board of Governors of the Federal Reserve System, as the context requires

FTP						Funds-transfer pricing
GAP						Guaranteed asset protection
GDP						Gross domestic product of the United States of America
GLB Act						Gramm-Leach-Bliley Act of 1999 as amended
GM						General Motors Company

IB Finance						IB Finance Holding Company, LLC
IRA						Individual retirement account
LCR						Liquidity coverage ratio
LGD						Loss given default
LIBOR						London Interbank Offered Rate

LMI						Low-to-moderate income
LTV						Loan-to-value

MD&A						Management’s Discussion and Analysis of Financial Condition and Results of Operations


NYSE						New York Stock Exchange
OTC						Over-the-counter
P&C						Property and casualty
~~PCA~~						~~Prompt corrective action~~
RC						~~Risk Committee of the Ally Board of Directors~~
~~ROU~~						~~Right-of-use~~

Table of Contents

Index of Defined Terms

Ally Financial Inc. • Form 10-Q


Term						Definition
PCA						Prompt corrective action
PCD						Purchased credit deteriorated


RC						Risk Committee of the Ally Board of Directors
ROU						Right-of-use

RV						Recreational vehicle
RWA						Risk-weighted asset
SEC						U.S. Securities and Exchange Commission
Series 2 TRUPS						8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust I
SOFR						Secured Overnight Financing Rate
SPE						Special-purpose entity

Stellantis						Stellantis N.V.

TDR						Troubled debt restructuring

UPB						Unpaid principal balance
U.S. Basel III						The rules implementing the 2010 Basel III capital framework in the United States as well as related provisions of the Dodd-Frank Act, as amended from time to time
U.S. GAAP						Accounting Principles Generally Accepted in the United States of America
VIE						Variable interest entity
VMC						Vehicle maintenance contract
VSC						Vehicle service contract
WAC						Weighted-average coupon
wSTWF						Weighted short-term wholesale funding

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

Condensed Consolidated Statement of Comprehensive Income (unaudited)

Ally Financial Inc. • Form 10-Q


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
Financing revenue and other interest income	Financing revenue and other interest income									Financing revenue and other interest income
Interest and fees on finance receivables and loans	Interest and fees on finance receivables and loans	$	1,588	$	1,630	$	3,170	$	3,372	Interest and fees on finance receivables and loans	$	1,842	$	1,588	$	3,556	$	3,170
Interest on loans held-for-sale	Interest on loans held-for-sale	4		4		9		6		Interest on loans held-for-sale	4		4		8		9
Interest and dividends on investment securities and other earning assets	Interest and dividends on investment securities and other earning assets	147		197		278		423		Interest and dividends on investment securities and other earning assets	203		147		391		278
Interest on cash and cash equivalents	Interest on cash and cash equivalents	4		4		8		18		Interest on cash and cash equivalents	5		4		7		8
Operating leases	Operating leases	384		343		754		710		Operating leases	396		384		799		754
Total financing revenue and other interest income	Total financing revenue and other interest income	2,127		2,178		4,219		4,529		Total financing revenue and other interest income	2,450		2,127		4,761		4,219
Interest expense	Interest expense									Interest expense
Interest on deposits	Interest on deposits	268		541		574		1,133		Interest on deposits	263		268		474		574
Interest on short-term borrowings	Interest on short-term borrowings	0		13		1		30		Interest on short-term borrowings	19		—		24		1
Interest on long-term debt	Interest on long-term debt	230		318		480		666		Interest on long-term debt	184		230		369		480
Interest on other										Interest on other	1		—		1		—
Total interest expense	Total interest expense	498		872		1,055		1,829		Total interest expense	467		498		868		1,055
Net depreciation expense on operating lease assets	Net depreciation expense on operating lease assets	82		252		245		500		Net depreciation expense on operating lease assets	219		82		436		245
Net financing revenue and other interest income	Net financing revenue and other interest income	1,547		1,054		2,919		2,200		Net financing revenue and other interest income	1,764		1,547		3,457		2,919
Other revenue	Other revenue									Other revenue
Insurance premiums and service revenue earned	Insurance premiums and service revenue earned	278		263		558		540		Insurance premiums and service revenue earned	280		278		560		558
Gain on mortgage and automotive loans, net	Gain on mortgage and automotive loans, net	19		14		55		2		Gain on mortgage and automotive loans, net	4		19		18		55
Loss on extinguishment of debt	Loss on extinguishment of debt	(73)		(1)		(74)		(1)		Loss on extinguishment of debt	—		(73)		—		(74)
Other gain on investments, net		65		188		188		109
Other (loss) gain on investments, net										Other (loss) gain on investments, net	(124)		65		(119)		188
Other income, net of losses	Other income, net of losses	249		91		376		171		Other income, net of losses	152		249		295		376
Total other revenue	Total other revenue	538		555		1,103		821		Total other revenue	312		538		754		1,103
Total net revenue	Total net revenue	2,085		1,609		4,022		3,021		Total net revenue	2,076		2,085		4,211		4,022
Provision for credit losses	Provision for credit losses	(32)		287		(45)		1,190		Provision for credit losses	304		(32)		471		(45)
Noninterest expense	Noninterest expense									Noninterest expense
Compensation and benefits expense	Compensation and benefits expense	446		334		841		694		Compensation and benefits expense	437		446		930		841
Insurance losses and loss adjustment expenses	Insurance losses and loss adjustment expenses	74		142		137		216		Insurance losses and loss adjustment expenses	89		74		147		137
Goodwill impairment		0		50		0		50

Other operating expenses	Other operating expenses	555		459		1,040		945		Other operating expenses	612		555		1,183		1,040
Total noninterest expense	Total noninterest expense	1,075		985		2,018		1,905		Total noninterest expense	1,138		1,075		2,260		2,018
Income (loss) from continuing operations before income tax expense		1,042		337		2,049		(74)
Income from continuing operations before income tax expense										Income from continuing operations before income tax expense	634		1,042		1,480		2,049
Income tax expense from continuing operations	Income tax expense from continuing operations	143		95		354		3		Income tax expense from continuing operations	152		143		343		354
Net income (loss) from continuing operations		899		242		1,695		(77)
Income (loss) from discontinued operations, net of tax		1		(1)		1		(1)
Net income (loss)		900		241		1,696		(78)
Other comprehensive income (loss), net of tax		189		109		(415)		692
Comprehensive income		$	1,089	$	350	$	1,281	$	614
Net income from continuing operations										Net income from continuing operations	482		899		1,137		1,695
Income from discontinued operations, net of tax										Income from discontinued operations, net of tax	—		1		—		1
Net income										Net income	482		900		1,137		1,696
Other comprehensive (loss) income, net of tax										Other comprehensive (loss) income, net of tax	(1,218)		189		(2,851)		(415)
Comprehensive (loss) income										Comprehensive (loss) income	$	(736)	$	1,089	$	(1,714)	$	1,281

Statement continues on the next page.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

~~Table of Contents~~

Condensed Consolidated Statement of Comprehensive Income (unaudited)

Ally Financial Inc. • Form 10-Q

Three months ended June 30, Six months ended June 30,
(in dollars) (a)
2021 2020 2021 2020
Basic earnings per common share
Net income (loss) from continuing operations $ 2.43 $ 0.65 $ 4.55 $ (0.20)
Net income (loss) $ 2.43 $ 0.64 $ 4.55 $ (0.21)
Diluted earnings per common share (b)
Net income (loss) from continuing operations $ 2.41 $ 0.64 $ 4.52 $ (0.20)
Net income (loss) $ 2.41 $ 0.64 $ 4.52 $ (0.21)
Cash dividends declared per common share $ 0.19 $ 0.19 $ 0.38 $ 0.38


	Three months ended June 30,				Six months ended June 30,
($ in millions, except per share data; shares in thousands) (a)	2022		2021		2022		2021




Net income from continuing operations attributable to common stockholders	$	454	$	899	$	1,081	$	1,695
Income from discontinued operations, net of tax	—		1		—		1
Net income attributable to common stockholders	$	454	$	900	$	1,081	$	1,696
Basic weighted-average common shares outstanding (b)	322,057		370,412		328,830		372,807
Diluted weighted-average common shares outstanding (b)	324,027		373,029		330,882		375,265
Basic earnings per common share
Net income from continuing operations	$	1.41	$	2.43	$	3.29	$	4.55

Net income	$	1.41	$	2.43	$	3.29	$	4.55
Diluted earnings per common share
Net income from continuing operations	$	1.40	$	2.41	$	3.27	$	4.52

Net income	$	1.40	$	2.41	$	3.27	$	4.52
Cash dividends declared per common share	$	0.30	$	0.19	$	0.60	$	0.38

(a)Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.

(b)~~Due~~Includes shares related to the antidilutive effect of the net loss from continuing operations for the six months ended June 30, 2020, basic weighted-average common shares outstanding was used to calculate basic and diluted earnings per share.share-based compensation that vested but were not yet issued.

Refer to Note 1617 for additional earnings per share information. The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

Condensed Consolidated Balance Sheet (unaudited)

Ally Financial Inc. • Form 10-Q


($ in millions, except share data)	($ in millions, except share data)	June 30, 2021		December 31, 2020		($ in millions, except share data)	June 30, 2022		December 31, 2021

Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents					Cash and cash equivalents
Noninterest-bearing	Noninterest-bearing	$	653	$	724	Noninterest-bearing	$	801	$	502
Interest-bearing	Interest-bearing	13,011		14,897		Interest-bearing	3,366		4,560
Total cash and cash equivalents	Total cash and cash equivalents	13,664		15,621		Total cash and cash equivalents	4,167		5,062
Equity securities	Equity securities	1,026		1,071		Equity securities	735		1,102
Available-for-sale securities (amortized cost of $33,781 and $28,936) (a)		34,161		29,830
Held-to-maturity securities (fair value of $1,173 and $1,331)		1,126		1,253
Available-for-sale securities (amortized cost of $35,521 and $33,650) (a)						Available-for-sale securities (amortized cost of $35,521 and $33,650) (a)	31,743		33,587
Held-to-maturity securities (fair value of $998 and $1,204)						Held-to-maturity securities (fair value of $998 and $1,204)	1,112		1,170
Loans held-for-sale, net	Loans held-for-sale, net	409		406		Loans held-for-sale, net	798		549
Finance receivables and loans, net	Finance receivables and loans, net					Finance receivables and loans, net
Finance receivables and loans, net of unearned income	Finance receivables and loans, net of unearned income	112,217		118,534		Finance receivables and loans, net of unearned income	128,457		122,268
Allowance for loan losses	Allowance for loan losses	(3,126)		(3,283)		Allowance for loan losses	(3,450)		(3,267)
Total finance receivables and loans, net	Total finance receivables and loans, net	109,091		115,251		Total finance receivables and loans, net	125,007		119,001
Investment in operating leases, net	Investment in operating leases, net	10,715		9,639		Investment in operating leases, net	10,516		10,862
Premiums receivable and other insurance assets	Premiums receivable and other insurance assets	2,773		2,679		Premiums receivable and other insurance assets	2,743		2,724
Other assets	Other assets	7,505		6,415		Other assets	8,882		8,057
Total assets	Total assets	$	180,470	$	182,165	Total assets	$	185,703	$	182,114
Liabilities	Liabilities					Liabilities
Deposit liabilities	Deposit liabilities					Deposit liabilities
Noninterest-bearing	Noninterest-bearing	$	149	$	128	Noninterest-bearing	$	185	$	150
Interest-bearing	Interest-bearing	138,955		136,908		Interest-bearing	140,216		141,408
Total deposit liabilities	Total deposit liabilities	139,104		137,036		Total deposit liabilities	140,401		141,558
Short-term borrowings	Short-term borrowings	0		2,136		Short-term borrowings	7,775		—
Long-term debt	Long-term debt	16,896		22,006		Long-term debt	16,984		17,029
Interest payable	Interest payable	365		412		Interest payable	270		210
Unearned insurance premiums and service revenue	Unearned insurance premiums and service revenue	3,536		3,438		Unearned insurance premiums and service revenue	3,490		3,514
Accrued expenses and other liabilities	Accrued expenses and other liabilities	3,039		2,434		Accrued expenses and other liabilities	2,799		2,753
Total liabilities	Total liabilities	162,940		167,462		Total liabilities	171,719		165,064
Contingencies (refer to Note 23)		0		0
Contingencies (refer to Note 24)						Contingencies (refer to Note 24)	0		0
Equity	Equity					Equity
Common stock and paid-in capital ($0.01 par value, shares authorized 1,100,000,000; issued 504,118,452 and 501,237,055; and outstanding 362,638,597 and 374,674,415)		21,631		21,544
Common stock and paid-in capital ($0.01 par value, shares authorized 1,100,000,000; issued 506,940,912 and 504,521,535; and outstanding 312,781,366 and 337,940,636)						Common stock and paid-in capital ($0.01 par value, shares authorized 1,100,000,000; issued 506,940,912 and 504,521,535; and outstanding 312,781,366 and 337,940,636)	21,762		21,671
Preferred stock	Preferred stock	2,324		0		Preferred stock	2,324		2,324
Accumulated deficit	Accumulated deficit	(2,726)		(4,278)		Accumulated deficit	(721)		(1,599)
Accumulated other comprehensive income		216		631
Treasury stock, at cost (141,479,855 and 126,562,640 shares)		(3,915)		(3,194)
Accumulated other comprehensive loss						Accumulated other comprehensive loss	(3,009)		(158)
Treasury stock, at cost (194,159,546 and 166,580,899 shares)						Treasury stock, at cost (194,159,546 and 166,580,899 shares)	(6,372)		(5,188)
Total equity	Total equity	17,530		14,703		Total equity	13,984		17,050
Total liabilities and equity	Total liabilities and equity	$	180,470	$	182,165	Total liabilities and equity	$	185,703	$	182,114

(a)Refer to Note 67 for discussion of investment securities pledged as collateral.

Statement continues on the next page.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

Condensed Consolidated Balance Sheet (unaudited)

Ally Financial Inc. • Form 10-Q

The assets of consolidated variable interest entities that can be used only to settle obligations of the consolidated variable interest entities and the liabilities of these entities for which creditors (or beneficial interest holders) do not have recourse to our general credit were as follows.


($ in millions)	($ in millions)	June 30, 2021		December 31, 2020		($ in millions)	June 30, 2022		December 31, 2021
Assets	Assets					Assets
Finance receivables and loans, net	Finance receivables and loans, net					Finance receivables and loans, net
Consumer automotive	Consumer automotive	$	7,232	$	7,630	Consumer automotive	$	7,725	$	6,871
Commercial		2,137		5,868
Consumer other (a)						Consumer other (a)	—		353

Allowance for loan losses	Allowance for loan losses	(252)		(285)		Allowance for loan losses	(264)		(278)
Total finance receivables and loans, net	Total finance receivables and loans, net	9,117		13,213		Total finance receivables and loans, net	7,461		6,946

Other assets	Other assets	761		983		Other assets	546		563
Total assets	Total assets	$	9,878	$	14,196	Total assets	$	8,007	$	7,509
Liabilities	Liabilities					Liabilities
Long-term debt	Long-term debt	$	1,847	$	4,158	Long-term debt	$	1,500	$	1,337
Accrued expenses and other liabilities	Accrued expenses and other liabilities	3		3		Accrued expenses and other liabilities	2		2
Total liabilities	Total liabilities	$	1,850	$	4,161	Total liabilities	$	1,502	$	1,339

(a)Comprised of credit card finance receivables and loans, net.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

Condensed Consolidated Statement of Changes in Equity (unaudited)

Ally Financial Inc. • Form 10-Q

Three months ended June 30,
($ in millions) Common stock and paid-in capital Preferred stock Accumulated deficit Accumulated other comprehensive income Treasury stock Total equity
Balance at April 1, 2020 $ 21,470 $ 0 $ (5,465) $ 706 $ (3,192) $ 13,519
Net income 241 241
Share-based compensation 29 29
Other comprehensive income 109 109
Common stock dividends ($0.19 per share) (72) (72)
Balance at June 30, 2020 $ 21,499 $ 0 $ (5,296) $ 815 $ (3,192) $ 13,826
Balance at April 1, 2021 $ 21,566 $ 0 $ (3,555) $ 27 $ (3,413) $ 14,625
Net income 900 900
Net proceeds from issuance of Series B preferred stock 1,335 1,335
Net proceeds from issuance of Series C preferred stock 989 989
Share-based compensation 65 65
Other comprehensive income 189 189
Common stock repurchases (502) (502)
Common stock dividends ($0.19 per share) (71) (71)
Balance at June 30, 2021 $ 21,631 $ 2,324 $ (2,726) $ 216 $ (3,915) $ 17,530
Six months ended June 30,
($ in millions) Common stock and paid-in capital Preferred stock Accumulated deficit Accumulated other comprehensive income Treasury stock Total equity
Balance at December 31, 2019 $ 21,438 $ 0 $ (4,057) $ 123 $ (3,088) $ 14,416
Cumulative effect of changes in accounting principles, net of tax
Adoption of Accounting Standards Update 2016-13 (1,017) (1,017)
Balance at January 1, 2020 $ 21,438 $ 0 $ (5,074) $ 123 $ (3,088) $ 13,399
Net loss (78) (78)
Share-based compensation 61 61
Other comprehensive income 692 692
Common stock repurchases (104) (104)
Common stock dividends ($0.38 per share) (144) (144)
Balance at June 30, 2020 $ 21,499 $ 0 $ (5,296) $ 815 $ (3,192) $ 13,826
Balance at January 1, 2021 $ 21,544 $ — $ (4,278) $ 631 $ (3,194) $ 14,703
Net income 1,696 1,696
Net proceeds from issuance of Series B preferred stock 1,335 1,335
Net proceeds from issuance of Series C preferred stock 989 989
Share-based compensation 87 87
Other comprehensive loss (415) (415)
Common stock repurchases (721) (721)
Common stock dividends ($0.38 per share) (144) (144)
Balance at June 30, 2021 $ 21,631 $ 2,324 $ (2,726) $ 216 $ (3,915) $ 17,530


	Three months ended June 30,
($ in millions)	Common stock and paid-in capital		Preferred stock		Accumulated deficit		Accumulated other comprehensive income (loss)		Treasury stock		Total equity












Balance at April 1, 2021	$	21,566	$	—	$	(3,555)	$	27	$	(3,413)	$	14,625
Net income					900						900
Net proceeds from issuance of Series B preferred stock			1,335								1,335
Net proceeds from issuance of Series C preferred stock			989								989
Share-based compensation	65										65
Other comprehensive income							189				189
Common stock repurchases									(502)		(502)
Common stock dividends ($0.19 per share)					(71)						(71)
Balance at June 30, 2021	$	21,631	$	2,324	$	(2,726)	$	216	$	(3,915)	$	17,530
Balance at April 1, 2022	$	21,728	$	2,324	$	(1,076)	$	(1,791)	$	(5,772)	$	15,413
Net income					482						482


Preferred stock dividends — Series B					(16)						(16)
Preferred stock dividends — Series C					(12)						(12)
Share-based compensation	34										34
Other comprehensive loss							(1,218)				(1,218)
Common stock repurchases									(600)		(600)
Common stock dividends ($0.30 per share)					(99)						(99)
Balance at June 30, 2022	$	21,762	$	2,324	$	(721)	$	(3,009)	$	(6,372)	$	13,984

Statement continues on the next page.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

Condensed Consolidated Statement of Changes in Equity (unaudited)

Ally Financial Inc. • Form 10-Q


	Six months ended June 30,
($ in millions)	Common stock and paid-in capital		Preferred stock		Accumulated deficit		Accumulated other comprehensive income (loss)		Treasury stock		Total equity












Balance at January 1, 2021	$	21,544	$	—	$	(4,278)	$	631	$	(3,194)	$	14,703
Net income					1,696						1,696
Net proceeds from issuance of Series B preferred stock			1,335								1,335
Net proceeds from issuance of Series C preferred stock			989								989
Share-based compensation	87										87
Other comprehensive loss							(415)				(415)
Common stock repurchases									(721)		(721)
Common stock dividends ($0.38 per share)					(144)						(144)
Balance at June 30, 2021	$	21,631	$	2,324	$	(2,726)	$	216	$	(3,915)	$	17,530
Balance at January 1, 2022	$	21,671	$	2,324	$	(1,599)	$	(158)	$	(5,188)	$	17,050
Net income					1,137						1,137


Preferred stock dividends — Series B					(32)						(32)
Preferred stock dividends — Series C					(24)						(24)
Share-based compensation	91										91
Other comprehensive loss							(2,851)				(2,851)
Common stock repurchases									(1,184)		(1,184)
Common stock dividends ($0.60 per share)					(203)						(203)
Balance at June 30, 2022	$	21,762	$	2,324	$	(721)	$	(3,009)	$	(6,372)	$	13,984

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

Table of Contents

Condensed Consolidated Statement of Cash Flows (unaudited)

Ally Financial Inc. • Form 10-Q


Six months ended June 30, ($ in millions)	Six months ended June 30, ($ in millions)	2021		2020		Six months ended June 30, ($ in millions)	2022		2021
Operating activities	Operating activities					Operating activities
Net income (loss)		$	1,696	$	(78)
Reconciliation of net income (loss) to net cash provided by operating activities
Net income						Net income	$	1,137	$	1,696
Reconciliation of net income to net cash provided by operating activities						Reconciliation of net income to net cash provided by operating activities
Depreciation and amortization	Depreciation and amortization	640		802		Depreciation and amortization	666		640
Goodwill impairment		0		50
Provision for credit losses	Provision for credit losses	(45)		1,190		Provision for credit losses	471		(45)
Gain on mortgage and automotive loans, net	Gain on mortgage and automotive loans, net	(55)		(2)		Gain on mortgage and automotive loans, net	(18)		(55)
Other gain on investments, net		(188)		(109)
Other (loss) gain on investments, net						Other (loss) gain on investments, net	119		(188)
Loss on extinguishment of debt	Loss on extinguishment of debt	74		1		Loss on extinguishment of debt	—		74
Originations and purchases of loans held-for-sale	Originations and purchases of loans held-for-sale	(2,154)		(1,329)		Originations and purchases of loans held-for-sale	(2,484)		(2,154)
Proceeds from sales and repayments of loans held-for-sale	Proceeds from sales and repayments of loans held-for-sale	2,230		1,167		Proceeds from sales and repayments of loans held-for-sale	2,277		2,230

Net change in	Net change in					Net change in

Deferred income taxes	Deferred income taxes	(675)		0		Deferred income taxes	331		(675)
Interest payable	Interest payable	(48)		56		Interest payable	60		(48)
Other assets	Other assets	2		(420)		Other assets	912		2
Other liabilities	Other liabilities	231		(211)		Other liabilities	(19)		231
Other, net	Other, net	(86)		45		Other, net	20		(86)
Net cash provided by operating activities	Net cash provided by operating activities	1,622		1,162		Net cash provided by operating activities	3,472		1,622
Investing activities	Investing activities					Investing activities

Purchases of equity securities	Purchases of equity securities	(724)		(740)		Purchases of equity securities	(499)		(724)
Proceeds from sales of equity securities	Proceeds from sales of equity securities	944		774		Proceeds from sales of equity securities	720		944
Purchases of available-for-sale securities	Purchases of available-for-sale securities	(14,376)		(7,696)		Purchases of available-for-sale securities	(5,495)		(14,376)
Proceeds from sales of available-for-sale securities	Proceeds from sales of available-for-sale securities	2,788		5,544		Proceeds from sales of available-for-sale securities	716		2,788
Proceeds from repayments of available-for-sale securities	Proceeds from repayments of available-for-sale securities	6,539		4,440		Proceeds from repayments of available-for-sale securities	2,675		6,539
Purchases of held-to-maturity securities	Purchases of held-to-maturity securities	(97)		0		Purchases of held-to-maturity securities	(47)		(97)
Proceeds from repayments of held-to-maturity securities	Proceeds from repayments of held-to-maturity securities	223		177		Proceeds from repayments of held-to-maturity securities	105		223
Purchases of finance receivables and loans held-for-investment	Purchases of finance receivables and loans held-for-investment	(3,500)		(3,495)		Purchases of finance receivables and loans held-for-investment	(3,838)		(3,500)
Proceeds from sales of finance receivables and loans initially held-for-investment	Proceeds from sales of finance receivables and loans initially held-for-investment	376		1		Proceeds from sales of finance receivables and loans initially held-for-investment	3		376
Originations and repayments of finance receivables and loans held-for-investment and other, net	Originations and repayments of finance receivables and loans held-for-investment and other, net	9,095		13,135		Originations and repayments of finance receivables and loans held-for-investment and other, net	(3,141)		9,095
Purchases of operating lease assets	Purchases of operating lease assets	(3,026)		(1,949)		Purchases of operating lease assets	(1,799)		(3,026)
Disposals of operating lease assets	Disposals of operating lease assets	1,775		1,179		Disposals of operating lease assets	1,716		1,775

Net change in nonmarketable equity investments	Net change in nonmarketable equity investments	93		148		Net change in nonmarketable equity investments	(246)		93
Other, net	Other, net	(201)		(213)		Other, net	(305)		(201)
Net cash (used in) provided by investing activities		(91)		11,305
Net cash used in investing activities						Net cash used in investing activities	(9,435)		(91)

Statement continues on the next page.	Statement continues on the next page.					Statement continues on the next page.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.	The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.					The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

1011

Table of Contents

Condensed Consolidated Statement of Cash Flows (unaudited)

Ally Financial Inc. • Form 10-Q


Six months ended June 30, ($ in millions)	Six months ended June 30, ($ in millions)	2021		2020		Six months ended June 30, ($ in millions)	2022		2021
Financing activities	Financing activities					Financing activities
Net change in short-term borrowings	Net change in short-term borrowings	(2,136)		(1,842)		Net change in short-term borrowings	7,775		(2,136)
Net increase in deposits		2,060		10,272
Net (decrease) increase in deposits						Net (decrease) increase in deposits	(1,159)		2,060
Proceeds from issuance of long-term debt	Proceeds from issuance of long-term debt	194		2,372		Proceeds from issuance of long-term debt	4,216		194
Repayments of long-term debt	Repayments of long-term debt	(3,800)		(7,434)		Repayments of long-term debt	(4,292)		(3,800)

Purchases of land and buildings in satisfaction of finance lease liabilities						Purchases of land and buildings in satisfaction of finance lease liabilities	(44)		—
Repurchases of common stock	Repurchases of common stock	(721)		(104)		Repurchases of common stock	(1,184)		(721)
Preferred stock issuance	Preferred stock issuance	2,326		0		Preferred stock issuance	—		2,326
Trust preferred securities redemption	Trust preferred securities redemption	(1,442)		0		Trust preferred securities redemption	—		(1,442)
Dividends paid		(144)		(144)
Net cash (used in) provided by financing activities		(3,663)		3,120
Common stock dividends paid						Common stock dividends paid	(203)		(144)
Preferred stock dividends paid						Preferred stock dividends paid	(56)		—
Net cash provided by (used in) financing activities						Net cash provided by (used in) financing activities	5,053		(3,663)
Effect of exchange-rate changes on cash and cash equivalents and restricted cash	Effect of exchange-rate changes on cash and cash equivalents and restricted cash	3		(3)		Effect of exchange-rate changes on cash and cash equivalents and restricted cash	(1)		3
Net (decrease) increase in cash and cash equivalents and restricted cash		(2,129)		15,584
Net decrease in cash and cash equivalents and restricted cash						Net decrease in cash and cash equivalents and restricted cash	(911)		(2,129)
Cash and cash equivalents and restricted cash at beginning of year	Cash and cash equivalents and restricted cash at beginning of year	16,574		4,380		Cash and cash equivalents and restricted cash at beginning of year	5,670		16,574
Cash and cash equivalents and restricted cash at June 30,	Cash and cash equivalents and restricted cash at June 30,	$	14,445	$	19,964	Cash and cash equivalents and restricted cash at June 30,	$	4,759	$	14,445
Supplemental disclosures	Supplemental disclosures					Supplemental disclosures
Cash paid for
Cash paid (received) for						Cash paid (received) for
Interest	Interest	$	1,057	$	1,722	Interest	$	772	$	1,057
Income taxes	Income taxes	1,212		7		Income taxes	(429)		1,212
Noncash items	Noncash items					Noncash items

Loans held-for-sale transferred to finance receivables and loans held-for-investment	Loans held-for-sale transferred to finance receivables and loans held-for-investment	5		70		Loans held-for-sale transferred to finance receivables and loans held-for-investment	25		5
Additions of property and equipment	Additions of property and equipment	46		0		Additions of property and equipment	—		46
Finance receivables and loans held-for-investment transferred to loans held-for-sale	Finance receivables and loans held-for-investment transferred to loans held-for-sale	414		0		Finance receivables and loans held-for-investment transferred to loans held-for-sale	—		414

In-kind distribution from equity-method investee		0		60
Equity consideration received in exchange for restructured loans		0		5

The following table provides a reconciliation of cash and cash equivalents and restricted cash from the Condensed Consolidated Balance Sheet to the Condensed Consolidated Statement of Cash Flows.


June 30, ($ in millions)	June 30, ($ in millions)	2021		2020		June 30, ($ in millions)	2022		2021
Cash and cash equivalents on the Condensed Consolidated Balance Sheet	Cash and cash equivalents on the Condensed Consolidated Balance Sheet	$	13,664	$	19,131	Cash and cash equivalents on the Condensed Consolidated Balance Sheet	$	4,167	$	13,664
Restricted cash included in other assets on the Condensed Consolidated Balance Sheet (a)	Restricted cash included in other assets on the Condensed Consolidated Balance Sheet (a)	781		833		Restricted cash included in other assets on the Condensed Consolidated Balance Sheet (a)	592		781
Total cash and cash equivalents and restricted cash in the Condensed Consolidated Statement of Cash Flows	Total cash and cash equivalents and restricted cash in the Condensed Consolidated Statement of Cash Flows	$	14,445	$	19,964	Total cash and cash equivalents and restricted cash in the Condensed Consolidated Statement of Cash Flows	$	4,759	$	14,445

(a)Restricted cash balances relate primarily to ~~Ally~~our securitization arrangements. Refer to Note 1011 for additional details describing the nature of restricted cash balances.

The Notes to the Condensed Consolidated Financial Statements (unaudited) are an integral part of these statements.

1112

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

1. 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, we, us, or our) is a digital financial-services company committed to its promise to “Do It Right” for its consumer, commercial, and corporate customers. Ally is composed of an industry-leading independent automotive finance and insurance operation, an award-winning digital direct bank (Ally Bank, Member FDIC and Equal Housing Lender, which offers mortgage lending, point-of-sale personal lending, and a variety of deposit and other banking products), a consumer credit card business, a corporate finance business for equity sponsors and middle-market companies, and securities brokerage and investment advisory services. ~~A relentless ally for all things money, Ally helps people save well and earn well, so they can spend for what matters.~~ 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 June 30, ~~2021,~~2022, and for the three months and six months ended June 30, ~~2021,~~2022, and ~~2020,~~2021, 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,~~2021, as filed on February ~~24, 2021,~~25, 2022, 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~~2021 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~~2021 Annual Report on Form 10-K regarding additional significant accounting policies.

Recently ~~Adopted~~Issued Accounting Standards

~~Reference Rate Reform~~Fair Value Hedging—Portfolio Layer Method (ASU ~~2021-01)~~2022-01)

In ~~January 2021,~~March 2022, the FASB issued ASU ~~2021-01,~~2022-01, ~~Reference Rate Reform~~Derivatives and Hedging (Topic ~~848)~~815): Fair Value Hedging—Portfolio Layer Method: ~~Scope, which clarified~~. The purpose of this guidance is to expand the current last-of-layer method to allow multiple hedged layers of a single closed portfolio. This change will allow hedge accounting to be achieved using different types of derivatives and layering techniques, including the use of amortizing swaps with clarification that such a trade would be viewed as being a single layer. Under this expanded scope, ~~of ASU 2020-04,~~ ~~Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting~~,~~indicating that certain optional expedients~~both prepayable and ~~exceptions~~nonprepayable financial assets may be included in ~~ASU 2020-04~~a single closed portfolio hedge. In addition, the guidance provides clarifications to breach requirements and disclosures. As a result of this change, the last-of-layer method has been renamed the portfolio layer method. The amendments 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~~effective on January 1, 2023, with early adoption permitted. The amendments ~~in this ASU immediately upon issuance in January 2021 on~~must be applied using a prospective ~~basis~~approach 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 upon adoption. Management is currently evaluating whether to ~~our~~early adopt the amendments.

Troubled Debt Restructurings and Vintage Disclosures (ASU 2022-02)

In March 2022, the FASB issued ASU 2022-02, Financial Instruments—Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. The purpose of this guidance is twofold. First, the guidance eliminates TDR recognition and measurement guidance that has been deemed no longer necessary under CECL. The guidance also adds a requirement to incorporate current year gross charge-offs by origination year into the vintage tables. With respect to the TDR impacts, under CECL, credit losses for financial ~~statements.~~assets measured at amortized cost are determined based on the total current expected credit losses over the life of the financial asset or group of financial assets. Therefore, credit losses on financial assets that have been modified as TDRs would have largely been incorporated in the allowance upon initial recognition. Under ASU 2022-02, we will be required to evaluate whether loan modifications previously characterized as TDRs represent a new loan or a continuation of an existing loan in accordance with ASC Topic 310, Receivables. The guidance also adds new disclosures that will require an entity to provide information related to loan modifications that are made to borrowers that are deemed to be in financial difficulty. The amendments are effective on January 1, 2023, with early adoption permitted. The amendments must be applied using a prospective approach; however, for the transition away from TDRs, the amendments may be adopted using a modified retrospective approach with a cumulative-effect adjustment through retained earnings as of the beginning of the fiscal year upon adoption. Management is currently evaluating the impact of these amendments.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (ASU 2022-03)

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The purpose of this guidance is to clarify that a contractual restriction on the ability to sell an equity security is not considered part of the unit of account of the equity security, and therefore should not be considered when measuring the equity security’s fair value. Additionally, an entity cannot separately recognize and measure a contractual-sale restriction. This guidance also adds specific disclosures related to equity securities that are subject to contractual-sale restrictions, including (1) the fair value of equity securities subject to contractual sale restrictions reflected in the balance sheet, (2) the nature and remaining duration of the restrictions, and (3) the circumstances that could cause a lapse in the restrictions. The amendments are effective on January 1, 2024, with early adoption permitted. The amendments must be applied using a prospective approach with any adjustments from the adoption of the amendments recognized in earnings and disclosed upon adoption. Management does not expect the impact of these amendments to be material.

2. Acquisitions

On December 1, 2021, we acquired 100% of the equity of Fair Square Financial Holdings LLC and its subsidiaries, including Fair Square Financial LLC (collectively, Fair Square) for $741 million in cash. Fair Square, which we rebranded Ally Credit Card, is a digital-first, nonbank credit-card company that operates in the United States. Fair Square operates as a wholly owned subsidiary of Ally. We applied the acquisition method of accounting to this transaction, which generally requires the initial recognition of assets acquired, including identifiable intangible assets, and liabilities assumed at their respective fair value. Goodwill is recognized as the excess of the acquisition price after the recognition of the net assets, including the identifiable intangible assets. Beginning in December 2021, financial information related to Fair Square is included within Corporate and Other.

The following table summarizes the allocation of cash consideration paid for Fair Square and the amounts of the identifiable assets acquired and liabilities assumed at the acquisition date.


($ in millions)
Purchase price
Cash consideration	$	741
Allocation of purchase price to net assets acquired
Finance receivables and loans (a)	870
Intangible assets (b)	98
Cash and short-term investments	42
Other assets	46
Debt	(765)

Other liabilities	(29)
Goodwill	$	479

(a)Includes $22 million of PCD loans that have experienced a more-than-insignificant deterioration of credit quality since origination. We recognized an initial allowance for loan losses of $12 million on these PCD loans.

(b)The weighted average amortization period on the acquired intangible assets is 7 years. Refer to Note 11 for further information on our intangible assets.

The goodwill of $479 million arising from the acquisition consists largely of expected growth of the business as we leverage the Ally brand and our marketing capabilities to scale the acquired credit card provider and expand the suite of financial products we offer to our existing growing customer base. The goodwill recognized is generally expected to be amortized for income tax purposes over a 15-year period. Refer to Note 11 for the carrying amount of goodwill at the beginning and end of the reporting period.

3. Revenue from Contracts with Customers

Our 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.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following tables present 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~~2021 Annual Report on Form 10-K.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~


Three months ended June 30, ($ in millions)	Three months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated		Three months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated
2022														2022
Revenue from contracts with customers														Revenue from contracts with customers
Noninsurance contracts (a) (b) (c)														Noninsurance contracts (a) (b) (c)	$	—	$	163	$	—	$	—	$	—	$	163
Remarketing fee income														Remarketing fee income	29		—		—		—		—		29
Brokerage commissions and other revenue														Brokerage commissions and other revenue	—		—		—		—		13		13
Banking fees and interchange income (d) (e)														Banking fees and interchange income (d) (e)	—		—		—		—		10		10
Brokered/agent commissions														Brokered/agent commissions	—		4		—		—		—		4
Other														Other	6		—		—		—		1		7
Total revenue from contracts with customers														Total revenue from contracts with customers	35		167		—		—		24		226
All other revenue														All other revenue	37		(9)		4		19		35		86
Total other revenue ~~(e)~~(f)														Total other revenue ~~(e)~~(f)	$	72	$	158	$	4	$	19	$	59	$	312
2021	2021													2021
Revenue from contracts with customers	Revenue from contracts with customers													Revenue from contracts with customers
Noninsurance contracts (a) (b) (c)	Noninsurance contracts (a) (b) (c)	$	0	$	158	$	0	$	0	$	0	$	158	Noninsurance contracts (a) (b) (c)	$	—	$	158	$	—	$	—	$	—	$	158
Remarketing fee income	Remarketing fee income	27		0		0		0		0		27		Remarketing fee income	27		—		—		—		—		27
Brokerage commissions and other revenue	Brokerage commissions and other revenue	0		0		0		0		13		13		Brokerage commissions and other revenue	—		—		—		—		13		13
Deposit account and other banking fees (d)		0		0		0		0		5		5
Banking fees and interchange income (d)														Banking fees and interchange income (d)	—		—		—		—		5		5
Brokered/agent commissions	Brokered/agent commissions	0		4		0		0		0		4		Brokered/agent commissions	—		4		—		—		—		4
Other	Other	6		0		0		0		2		8		Other	6		—		—		—		2		8
Total revenue from contracts with customers	Total revenue from contracts with customers	33		162		0		0		20		215		Total revenue from contracts with customers	33		162		—		—		20		215
All other revenue	All other revenue	28		182		22		33		58		323		All other revenue	28		182		22		33		58		323
Total other revenue ~~(e)~~(f)	Total other revenue ~~(e)~~(f)	$	61	$	344	$	22	$	33	$	78	$	538	Total other revenue ~~(e)~~(f)	$	61	$	344	$	22	$	33	$	78	$	538
2020
Revenue from contracts with customers
Noninsurance contracts (a) (b) (c)		$	0	$	142	$	0	$	0	$	0	$	142
Remarketing fee income		15		0		0		0		0		15
Brokerage commissions and other revenue		0		0		0		0		14		14
Deposit account and other banking fees (d)		0		0		0		0		1		1
Brokered/agent commissions		0		4		0		0		0		4
Other		3		0		0		0		0		3
Total revenue from contracts with customers		18		146		0		0		15		179
All other revenue		22		292		19		6		37		376
Total other revenue ~~(e)~~(f)		$	40	$	438	$	19	$	6	$	52	$	555

(a)We had opening balances of $3.0 billion ~~and $2.9 billion~~ in unearned revenue associated with outstanding contracts at both April 1, 2022, and 2021, and ~~April 1, 2020, respectively,~~$234 million and $228 ~~million and $211~~ 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 June 30, ~~2021,~~2022, and ~~June 30, 2020,~~2021, respectively.

(b)At June 30, ~~2021,~~2022, we had unearned revenue of ~~$3.1~~$3.0 billion associated with outstanding contracts, and with respect to this balance we expect to recognize revenue of ~~$423~~$443 million during the remainder of ~~2021, $789 million in~~ 2022, ~~$700~~$825 million in 2023, ~~$531~~$681 million in 2024, $488 million in 2025, and ~~$628~~$580 million thereafter. At June 30, ~~2020,~~2021, we had unearned revenue of ~~$2.9~~$3.1 billion associated with outstanding contracts.

(c)We had deferred insurance assets of $1.8 billion at both April 1, 2022, and June 30, 2022, and recognized $140 million of expense during the three months ended June 30, 2022. We had deferred insurance assets of $1.8 billion and $1.9 billion at April 1, 2021, and June 30, 2021, respectively, and recognized $133 million of expense during the three months ended June 30, 2021. We had deferred insurance assets of $1.7 billion and $1.8 billion at April 1, 2020, and June 30, 2020, respectively, and recognized $121 million of expense during the three months ended June 30, 2020.

(d)~~Reflects various services fees we charge depositors.~~ Effective May 25, 2021, we eliminated all overdraft fees for Ally Bank deposit accounts.

(e)Interchange income is reported net of customer rewards. Customer rewards expense was $3 million for the three months ended June 30, 2022.

(f)Represents a component of total net revenue. Refer to Note 2223 for further information on our reportable operating segments.

1315

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


Six months ended June 30, ($ in millions)	Six months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated		Six months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated
2022														2022
Revenue from contracts with customers														Revenue from contracts with customers
Noninsurance contracts (a) (b)														Noninsurance contracts (a) (b)	$	—	$	325	$	—	$	—	$	—	$	325
Remarketing fee income														Remarketing fee income	56		—		—		—		—		56
Brokerage commissions and other revenue														Brokerage commissions and other revenue	—		—		—		—		24		24
Banking fees and interchange income (c) (d)														Banking fees and interchange income (c) (d)	—		—		—		—		21		21
Brokered/agent commissions														Brokered/agent commissions	—		8		—		—		—		8
Other														Other	11		—		—		—		2		13
Total revenue from contracts with customers														Total revenue from contracts with customers	67		333		—		—		47		447
All other revenue														All other revenue	73		95		18		43		78		307
Total other revenue ~~(d)~~(e)														Total other revenue ~~(d)~~(e)	$	140	$	428	$	18	$	43	$	125	$	754
2021	2021													2021
Revenue from contracts with customers	Revenue from contracts with customers													Revenue from contracts with customers
Noninsurance contracts (a) (b)	Noninsurance contracts (a) (b)	$	0	$	313	$	0	$	0	$	0	$	313	Noninsurance contracts (a) (b)	$	—	$	313	$	—	$	—	$	—	$	313
Remarketing fee income	Remarketing fee income	54		0		0		0		0		54		Remarketing fee income	54		—		—		—		—		54
Brokerage commissions and other revenue	Brokerage commissions and other revenue	0		0		0		0		33		33		Brokerage commissions and other revenue	—		—		—		—		33		33
Deposit account and other banking fees (c)		0		0		0		0		11		11
Banking fees and interchange income (c)														Banking fees and interchange income (c)	—		—		—		—		11		11
Brokered/agent commissions	Brokered/agent commissions	0		8		0		0		0		8		Brokered/agent commissions	—		8		—		—		—		8
Other	Other	12		0		0		0		2		14		Other	12		—		—		—		2		14
Total revenue from contracts with customers	Total revenue from contracts with customers	66		321		0		0		46		433		Total revenue from contracts with customers	66		321		—		—		46		433
All other revenue	All other revenue	57		402		62		59		90		670		All other revenue	57		402		62		59		90		670
Total other revenue ~~(d)~~(e)	Total other revenue ~~(d)~~(e)	$	123	$	723	$	62	$	59	$	136	$	1,103	Total other revenue ~~(d)~~(e)	$	123	$	723	$	62	$	59	$	136	$	1,103
2020
Revenue from contracts with customers
Noninsurance contracts (a) (b)		$	0	$	285	$	0	$	0	$	0	$	285
Remarketing fee income		32		0		0		0		0		32
Brokerage commissions and other revenue		0		0		0		0		27		27
Deposit account and other banking fees (c)		0		0		0		0		5		5
Brokered/agent commissions		0		8		0		0		0		8
Other		8		0		0		0		0		8
Total revenue from contracts with customers		40		293		0		0		32		365
All other revenue		47		282		29		19		79		456
Total other revenue ~~(d)~~(e)		$	87	$	575	$	29	$	19	$	111	$	821

(a)We had opening balances of ~~$3.0~~$3.1 billion and ~~$2.9~~$3.0 billion in unearned revenue associated with outstanding contracts at January 1, ~~2021,~~2022, and ~~January 1, 2020,~~2021, respectively, and ~~$453~~$465 million and ~~$425~~$453 million of these balances were recognized as insurance premiums and service revenue earned in our Condensed Consolidated Statement of Comprehensive Income during the six months ended June 30, 2022, and 2021, respectively.

(b)We had deferred insurance assets of $1.9 billion and $1.8 billion at January 1, 2022, and June 30, ~~2020.~~

~~(b)~~2022, respectively, and recognized $277 million of expense during the six months ended June 30, 2022. We had deferred insurance assets of $1.8 billion and $1.9 billion at January 1, 2021, and June 30, 2021, respectively, and recognized $265 million of expense during the six months ended June 30, 2021. We had deferred insurance assets of $1.7 billion and $1.8 billion at January 1, 2020, and June 30, 2020, respectively, and recognized $246 million of expense during the six months ended June 30, 2020.

(c)~~Reflects various services fees we charge depositors.~~ Effective May 25, 2021, we eliminated all overdraft fees for Ally Bank deposit accounts.

(d)Interchange income is reported net of customer rewards. Customer rewards expense was $6 million for the six months ended June 30, 2022.

(e)Represents a component of total net revenue. Refer to Note 2223 for further information on our reportable operating segments.

In addition to the components of other revenue presented above, as part of our Automotive Finance operations, we recognized net remarketing gains of ~~$128~~$50 million and ~~$192~~$100 million for the three months and six months ended June 30, ~~2021,~~2022, respectively, ~~and net remarketing losses of $11~~compared to $128 million and $9$192 million for the ~~three months and six months ended June 30, 2020, respectively,~~same periods in 2021, on the sale of off-lease vehicles. These gains ~~and losses~~ are included in depreciation expense on operating lease assets in our Condensed Consolidated Statement of Comprehensive Income.

3.4. Other Income, Net of Losses

Details of other income, net of losses, were as follows.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
Gain (loss) on nonmarketable equity investments, net		$	99	$	(4)	$	103	$	(4)
Late charges and other administrative fees	Late charges and other administrative fees	29		16		60		37		Late charges and other administrative fees	$	38	$	29	$	75	$	60
Remarketing fees	Remarketing fees	27		15		54		32		Remarketing fees	29		27		56		54
Income from equity-method investments	Income from equity-method investments	31		53		45		52		Income from equity-method investments	25		31		45		45
Gain on nonmarketable equity investments, net										Gain on nonmarketable equity investments, net	3		99		2		103

Other, net	Other, net	63		11		114		54		Other, net	57		63		117		114
Total other income, net of losses	Total other income, net of losses	$	249	$	91	$	376	$	171	Total other income, net of losses	$	152	$	249	$	295	$	376

1416

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

4.5. 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)	($ in millions)	2021		2020		($ in millions)	2022		2021
Total gross reserves for insurance losses and loss adjustment expenses at January 1,	Total gross reserves for insurance losses and loss adjustment expenses at January 1,	$	129	$	122	Total gross reserves for insurance losses and loss adjustment expenses at January 1,	$	122	$	129
Less: Reinsurance recoverable	Less: Reinsurance recoverable	90		88		Less: Reinsurance recoverable	81		90
Net reserves for insurance losses and loss adjustment expenses at January 1,	Net reserves for insurance losses and loss adjustment expenses at January 1,	39		34		Net reserves for insurance losses and loss adjustment expenses at January 1,	41		39
Net insurance losses and loss adjustment expenses incurred related to:	Net insurance losses and loss adjustment expenses incurred related to:					Net insurance losses and loss adjustment expenses incurred related to:
Current year	Current year	136		215		Current year	151		136
Prior years (a)	Prior years (a)	1		1		Prior years (a)	(4)		1
Total net insurance losses and loss adjustment expenses incurred	Total net insurance losses and loss adjustment expenses incurred	137		216		Total net insurance losses and loss adjustment expenses incurred	147		137
Net insurance losses and loss adjustment expenses paid or payable related to:	Net insurance losses and loss adjustment expenses paid or payable related to:					Net insurance losses and loss adjustment expenses paid or payable related to:
Current year	Current year	(108)		(178)		Current year	(114)		(108)
Prior years	Prior years	(27)		(26)		Prior years	(24)		(27)
Total net insurance losses and loss adjustment expenses paid or payable	Total net insurance losses and loss adjustment expenses paid or payable	(135)		(204)		Total net insurance losses and loss adjustment expenses paid or payable	(138)		(135)

Net reserves for insurance losses and loss adjustment expenses at June 30,	Net reserves for insurance losses and loss adjustment expenses at June 30,	41		46		Net reserves for insurance losses and loss adjustment expenses at June 30,	50		41
Plus: Reinsurance recoverable	Plus: Reinsurance recoverable	85		86		Plus: Reinsurance recoverable	81		85
Total gross reserves for insurance losses and loss adjustment expenses at June 30,	Total gross reserves for insurance losses and loss adjustment expenses at June 30,	$	126	$	132	Total gross reserves for insurance losses and loss adjustment expenses at June 30,	$	131	$	126

(a)There have been no material adverse changes to the reserve for prior years.

5.6. Other Operating Expenses

Details of other operating expenses were as follows.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
Insurance commissions	Insurance commissions	$	138	$	127	$	274	$	253	Insurance commissions	$	151	$	138	$	300	$	274
Technology and communications	Technology and communications	81		80		159		159		Technology and communications	100		81		197		159
Advertising and marketing										Advertising and marketing	77		45		149		86
Lease and loan administration	Lease and loan administration	57		46		112		84		Lease and loan administration	54		57		105		112
Advertising and marketing		45		32		86		76
Professional services										Professional services	47		28		90		61
Property and equipment depreciation	Property and equipment depreciation	38		34		74		68		Property and equipment depreciation	41		38		80		74
Professional services		28		28		61		59
Charitable contributions		54		3		55		4
Regulatory and licensing fees										Regulatory and licensing fees	22		17		48		35
Vehicle remarketing and repossession	Vehicle remarketing and repossession	17		11		38		34		Vehicle remarketing and repossession	22		17		42		38
Regulatory and licensing fees		17		29		35		58
Occupancy		18		13		33		29
Non-income taxes		9		7		15		14
Amortization of intangible assets		4		5		9		10
Amortization of intangible assets (a)										Amortization of intangible assets (a)	8		4		16		9
Charitable contributions (b)										Charitable contributions (b)	6		54		7		55

Other	Other	49		44		89		97		Other	84		76		149		137
Total other operating expenses	Total other operating expenses	$	555	$	459	$	1,040	$	945	Total other operating expenses	$	612	$	555	$	1,183	$	1,040

(a)Refer to Note 11 for further information on our intangible assets.

(b)Includes contributions made to the Ally Charitable Foundation, a nonconsolidated entity.

1517

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

6.7. 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.


		June 30, 2021								December 31, 2020									June 30, 2022								December 31, 2021
		Amortized cost		Gross unrealized				Fair value		Amortized cost		Gross unrealized				Fair value			Amortized cost		Gross unrealized				Fair value		Amortized cost		Gross unrealized				Fair value
($ in millions)	($ in millions)			gains		losses						gains		losses				($ in millions)			gains		losses						gains		losses
Available-for-sale securities	Available-for-sale securities																	Available-for-sale securities
Debt securities	Debt securities																	Debt securities
U.S. Treasury and federal agencies	U.S. Treasury and federal agencies	$	2,153	$	12	$	(17)	$	2,148	$	783	$	20	$	0	$	803	U.S. Treasury and federal agencies	$	2,561	$	—	$	(187)	$	2,374	$	2,173	$	2	$	(20)	$	2,155
U.S. States and political subdivisions	U.S. States and political subdivisions	989		37		(2)		1,024		1,046		50		(1)		1,095		U.S. States and political subdivisions	859		1		(72)		788		841		27		(4)		864
Foreign government	Foreign government	181		4		(1)		184		167		9		0		176		Foreign government	161		—		(12)		149		157		2		(2)		157
Agency mortgage-backed residential	Agency mortgage-backed residential	20,615		343		(123)		20,835		18,053		538		(3)		18,588		Agency mortgage-backed residential	19,956		1		(2,098)		17,859		19,044		219		(224)		19,039
Mortgage-backed residential	Mortgage-backed residential	2,890		25		(5)		2,910		2,595		49		(4)		2,640		Mortgage-backed residential	5,249		—		(595)		4,654		4,448		11		(34)		4,425
Agency mortgage-backed commercial	Agency mortgage-backed commercial	4,355		109		(59)		4,405		4,063		139		(13)		4,189		Agency mortgage-backed commercial	4,343		3		(616)		3,730		4,573		66		(113)		4,526

Asset-backed	Asset-backed	552		3		0		555		420		5		0		425		Asset-backed	496		—		(21)		475		536		1		(3)		534
Corporate debt	Corporate debt	2,046		63		(9)		2,100		1,809		105		0		1,914		Corporate debt	1,896		—		(182)		1,714		1,878		30		(21)		1,887
Total available-for-sale securities (a) (b) (c) (d) (e)	Total available-for-sale securities (a) (b) (c) (d) (e)	$	33,781	$	596	$	(216)	$	34,161	$	28,936	$	915	$	(21)	$	29,830	Total available-for-sale securities (a) (b) (c) (d) (e)	$	35,521	$	5	$	(3,783)	$	31,743	$	33,650	$	358	$	(421)	$	33,587

Held-to-maturity securities	Held-to-maturity securities																	Held-to-maturity securities
Debt securities	Debt securities																	Debt securities
Agency mortgage-backed residential	Agency mortgage-backed residential	$	1,126	$	57	$	(10)	$	1,173	$	1,253	$	79	$	(1)	$	1,331	Agency mortgage-backed residential	$	1,112	$	—	$	(114)	$	998	$	1,170	$	48	$	(14)	$	1,204

Total held-to-maturity securities (e) (f)	Total held-to-maturity securities (e) (f)	$	1,126	$	57	$	(10)	$	1,173	$	1,253	$	79	$	(1)	$	1,331	Total held-to-maturity securities (e) (f)	$	1,112	$	—	$	(114)	$	998	$	1,170	$	48	$	(14)	$	1,204

(a)Certain entities related to our Insurance operations are required to deposit securities with state regulatory authorities. These deposited securities totaled $12 million and $13 million at ~~both~~ June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021, respectively.

(b)Certain available-for-sale securities are included in fair value hedging relationships. Refer to Note 1819 for additional information.

(c)Available-for-sale securities with a fair value of ~~$151 million~~$3.7 billion and ~~$145~~$203 million at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively, were pledged to secure advances from the FHLB for short-term borrowings and for other purposes as required by contractual obligation or law. Under these agreements, we granted the counterparty the right to sell or pledge $304 million and $203 million of the underlying ~~investment securities.~~available-for-sale securities at June 30, 2022, and December 31, 2021, respectively.

(d)Totals do not include accrued interest receivable, which was $90 million and $84 million at ~~both~~ June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021, 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 both June 30, ~~2021,~~2022, or December 31, ~~2020,~~2021, 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 June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet.

1618

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

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.


		Total				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years					Total				Due in one year or less				Due after one year through five years				Due after five years through ten years				Due after ten years
($ in millions)	($ in millions)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		($ in millions)	Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield		Amount		Yield
June 30, 2021
June 30, 2022																						June 30, 2022
Fair value of available-for-sale securities (a)	Fair value of available-for-sale securities (a)																					Fair value of available-for-sale securities (a)
U.S. Treasury and federal agencies	U.S. Treasury and federal agencies	$	2,148	1.1	%	$	12	1.6	%	$	510	0.9	%	$	1,626	1.2	%	$	0	0	%	U.S. Treasury and federal agencies	$	2,374	1.4	%	$	275	1.0	%	$	602	1.1	%	$	1,497	1.6	%	$	—	—	%
U.S. States and political subdivisions	U.S. States and political subdivisions	1,024		3.0		51		2.5		102		2.4		212		2.7		659		3.2		U.S. States and political subdivisions	788		3.1		32		2.7		72		2.8		113		3.3		571		3.1
Foreign government	Foreign government	184		1.9		13		2.1		106		2.0		65		1.8		0		0		Foreign government	149		1.6		2		0.1		85		1.5		62		1.8		—		—
Agency mortgage-backed residential	Agency mortgage-backed residential	20,835		2.6		0		0		0		0		31		2.0		20,804		2.6		Agency mortgage-backed residential	17,859		2.5		—		—		—		—		21		2.0		17,838		2.5
Mortgage-backed residential	Mortgage-backed residential	2,910		2.8		0		0		0		0		28		2.9		2,882		2.8		Mortgage-backed residential	4,654		2.7		—		—		—		—		31		3.3		4,623		2.7
Agency mortgage-backed commercial	Agency mortgage-backed commercial	4,405		1.9		0		0		0		0		1,753		2.3		2,652		1.7		Agency mortgage-backed commercial	3,730		2.1		—		—		24		3.1		1,031		2.3		2,675		2.0

Asset-backed	Asset-backed	555		2.1		0		0		350		2.5		194		1.4		11		3.2		Asset-backed	475		1.8		—		—		407		1.8		61		1.4		7		3.4
Corporate debt	Corporate debt	2,100		2.4		103		2.7		849		2.4		1,147		2.4		1		1.7		Corporate debt	1,714		2.3		67		2.4		878		2.2		760		2.3		9		3.1
Total available-for-sale securities	Total available-for-sale securities	$	34,161	2.4		$	179	2.5		$	1,917	2.0		$	5,056	1.9		$	27,009	2.5		Total available-for-sale securities	$	31,743	2.4		$	376	1.4		$	2,068	1.8		$	3,576	2.0		$	25,723	2.5
Amortized cost of available-for-sale securities	Amortized cost of available-for-sale securities	$	33,781			$	178			$	1,874			$	4,945			$	26,784			Amortized cost of available-for-sale securities	$	35,521			$	377			$	2,183			$	3,961			$	29,000
Amortized cost of held-to-maturity securities	Amortized cost of held-to-maturity securities																					Amortized cost of held-to-maturity securities
Agency mortgage-backed residential	Agency mortgage-backed residential	$	1,126	2.9	%	$	0	0	%	$	0	0	%	$	0	0	%	$	1,126	2.9	%	Agency mortgage-backed residential	$	1,112	2.8	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,112	2.8	%

Total held-to-maturity securities	Total held-to-maturity securities	$	1,126	2.9		$	0	0		$	0	0		$	0	0		$	1,126	2.9		Total held-to-maturity securities	$	1,112	2.8		$	—	—		$	—	—		$	—	—		$	1,112	2.8
December 31, 2020
December 31, 2021																						December 31, 2021
Fair value of available-for-sale securities (a)	Fair value of available-for-sale securities (a)																					Fair value of available-for-sale securities (a)
U.S. Treasury and federal agencies	U.S. Treasury and federal agencies	$	803	1.2	%	$	13	0.1	%	$	708	1.1	%	$	82	1.7	%	$	0	0	%	U.S. Treasury and federal agencies	$	2,155	1.1	%	$	288	1.0	%	$	525	0.9	%	$	1,342	1.2	%	$	—	—	%
U.S. States and political subdivisions	U.S. States and political subdivisions	1,095		3.0		49		1.4		103		2.3		228		2.7		715		3.3		U.S. States and political subdivisions	864		3.0		26		1.6		77		2.8		128		3.3		633		3.0
Foreign government	Foreign government	176		2.1		9		1.7		86		2.3		81		1.9		0		0		Foreign government	157		1.9		2		2.1		97		2.0		58		1.8		—		—
Agency mortgage-backed residential	Agency mortgage-backed residential	18,588		3.1		0		0		0		0		37		2.0		18,551		3.1		Agency mortgage-backed residential	19,039		2.5		—		—		—		—		26		2.0		19,013		2.5
Mortgage-backed residential	Mortgage-backed residential	2,640		3.1		0		0		0		0		36		2.9		2,604		3.1		Mortgage-backed residential	4,425		2.6		—		—		—		—		23		2.9		4,402		2.6
Agency mortgage-backed commercial	Agency mortgage-backed commercial	4,189		1.9		0		0		0		0		1,628		2.3		2,561		1.7		Agency mortgage-backed commercial	4,526		1.9		—		—		26		2.4		1,578		2.4		2,922		1.7

Asset-backed	Asset-backed	425		2.9		0		0		349		3.0		49		1.8		27		3.1		Asset-backed	534		1.9		—		—		350		2.0		175		1.5		9		3.4
Corporate debt	Corporate debt	1,914		2.7		155		2.7		625		2.9		1,077		2.6		57		2.1		Corporate debt	1,887		2.3		54		2.9		830		2.3		994		2.3		9		2.5
Total available-for-sale securities	Total available-for-sale securities	$	29,830	2.8		$	226	2.3		$	1,871	2.2		$	3,218	2.4		$	24,515	3.0		Total available-for-sale securities	$	33,587	2.3		$	370	1.3		$	1,905	1.9		$	4,324	2.0		$	26,988	2.4
Amortized cost of available-for-sale securities	Amortized cost of available-for-sale securities	$	28,936			$	224			$	1,808			$	3,022			$	23,882			Amortized cost of available-for-sale securities	$	33,650			$	368			$	1,893			$	4,291			$	27,098
Amortized cost of held-to-maturity securities	Amortized cost of held-to-maturity securities																					Amortized cost of held-to-maturity securities
Agency mortgage-backed residential	Agency mortgage-backed residential	$	1,253	3.0	%	$	0	0	%	$	0	0	%	$	0	0	%	$	1,253	3.0	%	Agency mortgage-backed residential	$	1,170	2.8	%	$	—	—	%	$	—	—	%	$	—	—	%	$	1,170	2.8	%

Total held-to-maturity securities	Total held-to-maturity securities	$	1,253	3.0		$	0	0		$	0	0		$	0	0		$	1,253	3.0		Total held-to-maturity securities	$	1,170	2.8		$	—	—		$	—	—		$	—	—		$	1,170	2.8

(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 ~~$42~~$60 million and ~~$25~~$40 million at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively, and were composed primarily of money-market funds and short-term securities, including U.S. Treasury bills.

1719

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents interest and dividends on investment securities.


		Three months ended June 30,				Six months ended June 30,				Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020			($ in millions)	2022		2021		2022		2021
Taxable interest	Taxable interest	$	131	$	177	$	245	$	382		Taxable interest	$	186	$	131	$	360	$	245
Taxable dividends	Taxable dividends	7		5		12		10			Taxable dividends	4		7		8		12
Interest and dividends exempt from U.S. federal income tax	Interest and dividends exempt from U.S. federal income tax	5		5		10		8			Interest and dividends exempt from U.S. federal income tax	5		5		10		10
Interest and dividends on investment securities	Interest and dividends on investment securities	$	143	$	187	$	267	$	400		Interest and dividends on investment securities	$	195	$	143	$	378	$	267

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 June 30,				Six months ended June 30,				Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020			($ in millions)	2022		2021		2022		2021
Available-for-sale securities	Available-for-sale securities										Available-for-sale securities
Gross realized gains	Gross realized gains	$	6	$	19	$	38	$	124		Gross realized gains	$	3	$	6	$	21	$	38

Net realized gains on available-for-sale securities		6		19		38		124
Net realized gain on available-for-sale securities											Net realized gain on available-for-sale securities	3		6		21		38
Net realized gain on equity securities	Net realized gain on equity securities	40		80		114		81			Net realized gain on equity securities	10		40		62		114
Net unrealized gain (loss) on equity securities		19		89		36		(96)
Other gain on investments, net		$	65	$	188	$	188	$	109
Net unrealized (loss) gain on equity securities											Net unrealized (loss) gain on equity securities	(137)		19		(202)		36
Other (loss) gain on investments, net											Other (loss) gain on investments, net	$	(124)	$	65	$	(119)	$	188

The following table presents the credit quality of our held-to-maturity securities, based on the latest available information as of June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021. The credit ratings are sourced from nationally recognized statistical rating organizations, which include S&P, Moody’s, and Fitch. ~~They represent~~The ratings presented are a composite of the ratings sourced from the agencies or, ~~where credit~~if the ratings cannot be sourced from the agencies, are ~~presented~~ based on the asset ~~type.~~type of the security. All of our held-to-maturity securities were current in their payment of principal and interest as of June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021. We have not recorded any interest income reversals on our held-to-maturity securities during the six months ended June 30, ~~2021,~~2022, or ~~2020.~~2021.


		June 30, 2021		December 31, 2020						June 30, 2022				December 31, 2021
($ in millions)	($ in millions)	AA		Total (a)		AA		Total (a)			($ in millions)	AA			Total (a)		AA		Total (a)
Debt securities	Debt securities										Debt securities
Agency mortgage-backed residential	Agency mortgage-backed residential	$	1,126	$	1,126	$	1,253	$	1,253		Agency mortgage-backed residential	$	1,112		$	1,112	$	1,170	$	1,170

Total held-to-maturity securities	Total held-to-maturity securities	$	1,126	$	1,126	$	1,253	$	1,253		Total held-to-maturity securities	$	1,112		$	1,112	$	1,170	$	1,170

(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.

1820

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

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~~2021 Annual Report on Form 10-K. As of June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, 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 June 30, 2021, or December 31, 2020.~~ We have not recorded any interest income reversals on our available-for-sale securities during the six months ended June 30, ~~2021,~~2022, or ~~2020.~~2021.


		June 30, 2021								December 31, 2020									June 30, 2022								December 31, 2021

		Less than 12 months				12 months or longer				Less than 12 months				12 months or longer					Less than 12 months				12 months or longer				Less than 12 months				12 months or longer
($ in millions)	($ in millions)	Fair value		Unrealized loss		Fair value		Unrealized loss		Fair value		Unrealized loss		Fair value		Unrealized loss		($ in millions)	Fair value		Unrealized loss		Fair value		Unrealized loss		Fair value		Unrealized loss		Fair value		Unrealized loss
Available-for-sale securities	Available-for-sale securities																	Available-for-sale securities
Debt securities	Debt securities																	Debt securities
U.S. Treasury and federal agencies	U.S. Treasury and federal agencies	$	871	$	(17)	$	0	$	0	$	3	$	0	$	0	$	0	U.S. Treasury and federal agencies	$	1,965	$	(137)	$	409	$	(50)	$	1,682	$	(20)	$	—	$	—
U.S. States and political subdivisions	U.S. States and political subdivisions	121		(2)		0		0		83		(1)		0		0		U.S. States and political subdivisions	604		(68)		41		(4)		160		(3)		31		(1)
Foreign government	Foreign government	57		(1)		0		0		7		0		0		0		Foreign government	121		(8)		25		(4)		76		(2)		7		—
Agency mortgage-backed residential	Agency mortgage-backed residential	8,530		(123)		0		0		1,225		(3)		0		0		Agency mortgage-backed residential	13,719		(1,361)		4,044		(737)		12,244		(223)		38		(1)
Mortgage-backed residential	Mortgage-backed residential	1,109		(5)		4		0		316		(4)		0		0		Mortgage-backed residential	4,319		(552)		267		(43)		3,243		(34)		22		—
Agency mortgage-backed commercial	Agency mortgage-backed commercial	2,764		(59)		0		0		926		(13)		0		0		Agency mortgage-backed commercial	2,753		(419)		812		(197)		2,553		(70)		749		(43)

Asset-backed	Asset-backed	103		0		0		0		11		0		0		0		Asset-backed	425		(21)		14		—		360		(3)		—		—
Corporate debt	Corporate debt	586		(9)		1		0		59		0		5		0		Corporate debt	1,416		(134)		249		(48)		970		(18)		49		(3)
Total available-for-sale securities	Total available-for-sale securities	$	14,141	$	(216)	$	5	$	0	$	2,630	$	(21)	$	5	$	0	Total available-for-sale securities	$	25,322	$	(2,700)	$	5,861	$	(1,083)	$	21,288	$	(373)	$	896	$	(48)

During the ~~three months and~~ six months ended June 30, ~~2021,~~2022, and ~~2020,~~2021, 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. As a result of this evaluation, management determined that no credit reserves were required at June 30, 2022, or December 31, 2021.

1921

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

7.8. Finance Receivables and Loans, Net

The composition of finance receivables and loans reported at amortized cost basis was as follows.


($ in millions)	($ in millions)	June 30, 2021		December 31, 2020		($ in millions)	June 30, 2022		December 31, 2021

Consumer automotive (a)	Consumer automotive (a)	$	75,951	$	73,668	Consumer automotive (a)	$	81,691	$	78,252
Consumer mortgage	Consumer mortgage					Consumer mortgage
Mortgage Finance (b)	Mortgage Finance (b)	13,629		14,632		Mortgage Finance (b)	18,923		17,644
Mortgage — Legacy (c)	Mortgage — Legacy (c)	429		495		Mortgage — Legacy (c)	322		368
Total consumer mortgage	Total consumer mortgage	14,058		15,127		Total consumer mortgage	19,245		18,012
Consumer other ~~(d)~~	Consumer other ~~(d)~~	640		407		Consumer other ~~(d)~~
Personal Lending (d)						Personal Lending (d)	1,523		1,009
Credit Card (e)						Credit Card (e)	1,224		953
Total consumer other						Total consumer other	2,747		1,962
Total consumer	Total consumer	90,649		89,202		Total consumer	103,683		98,226
Commercial	Commercial					Commercial
Commercial and industrial	Commercial and industrial					Commercial and industrial
Automotive	Automotive	11,303		19,082		Automotive	12,174		12,229
Other	Other	5,442		5,242		Other	7,486		6,874
Commercial real estate	Commercial real estate	4,823		5,008		Commercial real estate	5,114		4,939
Total commercial	Total commercial	21,568		29,332		Total commercial	24,774		24,042
Total finance receivables and loans (e) (f)		$	112,217	$	118,534
Total finance receivables and loans (f) (g)						Total finance receivables and loans (f) (g)	$	128,457	$	122,268

(a)Certain finance receivables and loans are included in fair value hedging relationships. Refer to Note 1819 for additional information.

(b)Includes loans originated as interest-only mortgage loans of $6$4 million and $8$5 million at June 30, ~~2021,~~2022, and December 31, ~~2020, respectively. All~~2021, respectively, of ~~these loans~~which all have exited the interest-only period.

(c)Includes loans originated as interest-only mortgage loans of ~~$25~~$18 million and ~~$30~~$21 million at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively, of which ~~99%~~all have exited the interest-only period.

(d)Includes $8$7 million of finance receivables at both June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, for which we have elected the fair value option.

(e)Refer to Note 2 for information regarding our acquisition of Ally Credit Card.

(f)Totals include net unearned income, unamortized premiums and discounts, and deferred fees and costs of ~~$2.2~~$2.4 billion and ~~$2.0~~$2.3 billion at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively.

~~(f)~~(g)Totals do not include accrued interest receivable, which was ~~$475~~$564 million and ~~$587~~$514 million at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively. Accrued interest receivable is included in other assets on our Condensed Consolidated Balance Sheet. Billed interest on our credit card loans is included within finance receivables and loans, net.

The following tables present an analysis of the activity in the allowance for loan losses on finance receivables and loans for the three months and six months ended June 30, ~~2021.~~2022, and 2021, respectively.


Three months ended June 30, 2021 ($ in millions)		Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
Allowance at April 1, 2021		$	2,809	$	26	$	69	$	248	$	3,152
Three months ended June 30, 2022 ($ in millions)												Three months ended June 30, 2022 ($ in millions)	Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
Allowance at April 1, 2022												Allowance at April 1, 2022	$	2,763	$	26	$	258	$	254	$	3,301
Charge-offs (b)	Charge-offs (b)	(183)		(2)		(5)		(7)		(197)		Charge-offs (b)	(277)		(1)		(27)		(26)		(331)
Recoveries	Recoveries	188		3		1		11		203		Recoveries	169		5		3		1		178
Net charge-offs	Net charge-offs	5		1		(4)		4		6		Net charge-offs	(108)		4		(24)		(25)		(153)
Provision for credit losses(c)	Provision for credit losses(c)	(12)		(4)		8		(24)		(32)		Provision for credit losses(c)	230		(3)		70		5		302

Other	Other	0		1		(1)		0		0		Other	—		(1)		(1)		2		—
Allowance at June 30, 2021		$	2,802	$	24	$	72	$	228	$	3,126
Allowance at June 30, 2022												Allowance at June 30, 2022	$	2,885	$	26	$	303	$	236	$	3,450

(a)Excludes $8$7 million of finance receivables and loans at both April 1, ~~2021,~~2022, and June 30, ~~2021,~~2022, for which we have elected the fair value ~~option.~~option and incorporate no allowance for loan losses.

(b)Refer to Note 1 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for information regarding our charge-off policies.

(c)Excludes $2 million of provision for credit losses related to our reserve for unfunded commitments. The liability related to the reserve for unfunded commitments is included in accrued expenses and other liabilities on our Condensed Consolidated Balance Sheet.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


Six months ended June 30, 2021 ($ in millions)		Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
Allowance at January 1, 2021		$	2,902	$	33	$	73	$	275	$	3,283
Six months ended June 30, 2022 ($ in millions)												Six months ended June 30, 2022 ($ in millions)	Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total
Allowance at January 1, 2022												Allowance at January 1, 2022	$	2,769	$	27	$	221	$	250	$	3,267
Charge-offs (b)	Charge-offs (b)	(467)		(4)		(13)		(21)		(505)		Charge-offs (b)	(553)		(2)		(51)		(26)		(632)
Recoveries	Recoveries	375		6		1		11		393		Recoveries	332		8		4		2		346
Net charge-offs	Net charge-offs	(92)		2		(12)		(10)		(112)		Net charge-offs	(221)		6		(47)		(24)		(286)
Provision for credit losses(c)	Provision for credit losses(c)	(8)		(11)		11		(37)		(45)		Provision for credit losses(c)	337		(6)		129		9		469

Other	Other	0		0		0		0		0		Other	—		(1)		—		1		—
Allowance at June 30, 2021		$	2,802	$	24	$	72	$	228	$	3,126
Allowance at June 30, 2022												Allowance at June 30, 2022	$	2,885	$	26	$	303	$	236	$	3,450

(a)Excludes $8$7 million of finance receivables and loans at both January 1, 2022, and June 30, ~~2021, and December 31, 2020,~~2022, for which we have elected the fair value ~~option.~~option and incorporate no allowance for loan losses.

(b)Refer to Note 1 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for information regarding our charge-off policies.

Three months ended June 30, 2020 ($ in millions)
Consumer automotive Consumer mortgage Consumer other (a) Commercial Total
Allowance at April 1, 2020 $ 2,833 $ 39 $ 45 $ 328 $ 3,245
Charge-offs (b) (245) (2) (4) (40) (291)
Recoveries 108 4 0 1 113
Net charge-offs (137) 2 (4) (39) (178)
Provision for credit losses 269 1 6 11 287
Other (2) 0 2 0 0
Allowance at June 30, 2020 $ 2,963 $ 42 $ 49 $ 300 $ 3,354
(c)Excludes $2 million of provision for credit losses related to our reserve for unfunded commitments. The liability related to the reserve for unfunded commitments is included in accrued expenses and other liabilities on our Condensed Consolidated Balance Sheet.


Three months ended June 30, 2021 ($ in millions)	Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total


Allowance at April 1, 2021	$	2,809	$	26	$	69	$	248	$	3,152
Charge-offs (b)	(183)		(2)		(5)		(7)		(197)
Recoveries	188		3		1		11		203
Net charge-offs	5		1		(4)		4		6
Provision for credit losses	(12)		(4)		8		(24)		(32)
Other	—		1		(1)		—		—
Allowance at June 30, 2021	$	2,802	$	24	$	72	$	228	$	3,126

(a)Excludes ~~$10 million and~~ $8 million of finance receivables and loans at both April 1, ~~2020,~~2021, and June 30, ~~2020, respectively,~~2021, for which we have elected the fair value ~~option.~~option and incorporate no allowance for loan losses.

(b)Refer to Note 1 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for information regarding our charge-off policies.

Six months ended June 30, 2020 ($ in millions)
Consumer automotive Consumer mortgage Consumer other (a) Commercial Total
Allowance at December 31, 2019 $ 1,075 $ 46 $ 9 $ 133 $ 1,263
Cumulative effect of the adoption of Accounting Standards Update 2016-13 1,334 (6) 16 2 1,346
Allowance at January 1, 2020 2,409 40 25 135 2,609
Charge-offs (b) (618) (5) (9) (43) (675)
Recoveries 219 9 1 2 231
Net charge-offs (399) 4 (8) (41) (444)
Provision for credit losses 954 (2) 31 207 1,190
Other (1) 0 1 (1) (1)
Allowance at June 30, 2020 $ 2,963 $ 42 $ 49 $ 300 $ 3,354


Six months ended June 30, 2021 ($ in millions)	Consumer automotive		Consumer mortgage		Consumer other (a)		Commercial		Total


Allowance at January 1, 2021	$	2,902	$	33	$	73	$	275	$	3,283
Charge-offs (b)	(467)		(4)		(13)		(21)		(505)
Recoveries	375		6		1		11		393
Net charge-offs	(92)		2		(12)		(10)		(112)
Provision for credit losses	(8)		(11)		11		(37)		(45)

Allowance at June 30, 2021	$	2,802	$	24	$	72	$	228	$	3,126

(a)Excludes $8 million ~~and $11 million~~ of finance receivables and loans at both January 1, 2021, and June 30, ~~2020, and December 31, 2019, respectively,~~2021, for which we have elected the fair value ~~option.~~option and incorporate no allowance for loan losses.

(b)Refer to Note 1 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for information regarding our charge-off policies.

The following table presents information about ~~significant~~ sales of finance receivables and loans and transfers of finance receivables and loans from ~~held for investment~~held-for-investment to ~~held for sale~~held-for-sale based on net carrying value.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021

Consumer mortgage	Consumer mortgage	$	84	0		$	413	$	0	Consumer mortgage	$	2	$	84	$	2	$	413

Total sales and transfers	Total sales and transfers	$	84	$	0	$	413	$	0	Total sales and transfers	$	2	$	84	$	2	$	413

2123

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents information about ~~significant~~ purchases of finance receivables and loans based on unpaid principal balance at the time of purchase.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
Consumer automotive	Consumer automotive	$	727	$	635	$	1,304	$	995	Consumer automotive	$	1,558	$	727	$	2,051	$	1,304
Consumer mortgage	Consumer mortgage	1,744		1,870		1,932		2,354		Consumer mortgage	808		1,744		1,633		1,932

Commercial	Commercial	0		1		0		1		Commercial	1		—		1		—
Total purchases of finance receivables and loans	Total purchases of finance receivables and loans	$	2,471	$	2,506	$	3,236	$	3,350	Total purchases of finance receivables and loans	$	2,367	$	2,471	$	3,685	$	3,236

Nonaccrual Loans

The following tables present the amortized cost of our finance receivables and loans on nonaccrual status. All consumer or commercial finance receivables and loans that were 90 days or more past due were on nonaccrual status as of June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021.


						June 30, 2021									June 30, 2022
($ in millions)	($ in millions)	Nonaccrual status at Jan. 1, 2021		Nonaccrual status at Apr. 1, 2021		Nonaccrual status		Nonaccrual with no allowance (a)		($ in millions)	Nonaccrual status at Jan. 1, 2022		Nonaccrual status at Apr. 1, 2022		Nonaccrual status		Nonaccrual with no allowance (a)
Consumer automotive	Consumer automotive	$	1,256	$	1,173	$	1,033	$	472	Consumer automotive	$	1,078	$	1,072	$	1,073	$	421
Consumer mortgage	Consumer mortgage									Consumer mortgage
Mortgage Finance	Mortgage Finance	67		63		49		26		Mortgage Finance	59		51		42		33
Mortgage — Legacy	Mortgage — Legacy	35		32		27		25		Mortgage — Legacy	26		24		22		21
Total consumer mortgage	Total consumer mortgage	102		95		76		51		Total consumer mortgage	85		75		64		54
Consumer other	Consumer other	3		2		2		0		Consumer other
Personal Lending										Personal Lending	5		6		5		—
Credit Card										Credit Card	11		14		18		—
Total consumer other										Total consumer other	16		20		23		—
Total consumer	Total consumer	1,361		1,270		1,111		523		Total consumer	1,179		1,167		1,160		475
Commercial	Commercial									Commercial
Commercial and industrial	Commercial and industrial									Commercial and industrial
Automotive	Automotive	40		17		33		4		Automotive	33		3		4		4
Other	Other	116		150		133		51		Other	221		217		214		79
Commercial real estate	Commercial real estate	5		2		6		6		Commercial real estate	3		1		1		1
Total commercial	Total commercial	161		169		172		61		Total commercial	257		221		219		84
Total finance receivables and loans	Total finance receivables and loans	$	1,522	$	1,439	$	1,283	$	584	Total finance receivables and loans	$	1,436	$	1,388	$	1,379	$	559

(a)Represents a component of nonaccrual status at end of period.

2224

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


						December 31, 2020									December 31, 2021
($ in millions)	($ in millions)	Nonaccrual status at Jan. 1, 2020		Nonaccrual status at Apr. 1, 2020		Nonaccrual status		Nonaccrual with no allowance (a)		($ in millions)	Nonaccrual status at Jan. 1, 2021		Nonaccrual status at Apr. 1, 2021		Nonaccrual status		Nonaccrual with no allowance (a)
Consumer automotive	Consumer automotive	$	762	$	1,077	$	1,256	$	604	Consumer automotive	$	1,256	$	1,173	$	1,078	$	423
Consumer mortgage	Consumer mortgage									Consumer mortgage
Mortgage Finance	Mortgage Finance	17		22		67		18		Mortgage Finance	67		63		59		39
Mortgage — Legacy	Mortgage — Legacy	40		40		35		28		Mortgage — Legacy	35		32		26		23
Total consumer mortgage	Total consumer mortgage	57		62		102		46		Total consumer mortgage	102		95		85		62
Consumer other	Consumer other	2		1		3		0		Consumer other
Personal Lending										Personal Lending	3		2		5		—
Credit Card										Credit Card	—		—		11		—
Total consumer other										Total consumer other	3		2		16		—
Total consumer	Total consumer	821		1,140		1,361		650		Total consumer	1,361		1,270		1,179		485
Commercial	Commercial									Commercial
Commercial and industrial	Commercial and industrial									Commercial and industrial
Automotive	Automotive	73		86		40		10		Automotive	40		17		33		32
Other	Other	138		162		116		41		Other	116		150		221		48
Commercial real estate	Commercial real estate	4		8		5		5		Commercial real estate	5		2		3		3
Total commercial	Total commercial	215		256		161		56		Total commercial	161		169		257		83
Total finance receivables and loans	Total finance receivables and loans	$	1,036	$	1,396	$	1,522	$	706	Total finance receivables and loans	$	1,522	$	1,439	$	1,436	$	568

(a)Represents a component of nonaccrual status at end of period.

We recorded interest income from cash payments associated with finance receivables and loans in nonaccrual status of $3 million and $6 million for the three months and six months ended June 30, 2022, respectively, compared to $3 million and $5 million for the three months and six months ended June 30, 2021, ~~respectively, compared~~respectively.

Table of Contents

Notes to ~~$4 million and $6 million for the three months and six months ended June 30, 2020, respectively.~~Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Credit Quality Indicators

We evaluate the credit quality of our consumer loan portfolio based on the aging status of the loan and by payment activity. Loan delinquency reporting is generally based upon borrower payment activity, relative to the contractual terms of the loan. In accordance with regulatory guidance, if borrowers are less than 30 days past due on their loans and enter into loan modifications offered as a result of COVID-19, their loans generally continue to be considered performing loans and continue to accrue interest during the period of the loan modification. For borrowers who are 30 days or more past due when entering into loan modifications offered as a result of COVID-19, we evaluate the loan modifications under our existing troubled debt restructuring framework, and where such a loan modification would result in a concession to a borrower experiencing financial difficulty, the loan is accounted for as a TDR and generally will not accrue interest.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

The following tables present the amortized cost basis of our consumer finance receivables and loans by credit quality indicator based on delinquency status and origination year.


		Origination year														Revolving loans converted to term					Origination year														Revolving loans converted to term
June 30, 2021 ($ in millions)		2021		2020		2019		2018		2017		2016 and prior		Revolving loans				Total
June 30, 2022 ($ in millions)																				June 30, 2022 ($ in millions)	2022		2021		2020		2019		2018		2017 and prior		Revolving loans				Revolving loans converted to term		Total
Consumer automotive	Consumer automotive																			Consumer automotive
Current	Current	$	19,187	$	22,144	$	15,212	$	9,239	$	5,073	$	3,344	$	0	$	0	$	74,199	Current	$	21,265	$	27,856	$	13,276	$	8,651	$	4,735	$	3,225	$	—	$	—	$	79,008
30–59 days past due	30–59 days past due	69		280		332		244		157		139		0		0		1,221		30–59 days past due	168		701		355		297		188		166		—		—		1,875
60–89 days past due	60–89 days past due	14		71		94		66		40		33		0		0		318		60–89 days past due	36		215		123		95		59		49		—		—		577
90 or more days past due	90 or more days past due	4		35		58		45		33		38		0		0		213		90 or more days past due	10		76		43		40		28		34		—		—		231
Total consumer automotive	Total consumer automotive	19,274		22,530		15,696		9,594		5,303		3,554		0		0		75,951		Total consumer automotive	21,479		28,848		13,797		9,083		5,010		3,474		—		—		81,691
Consumer mortgage	Consumer mortgage																			Consumer mortgage
Mortgage Finance	Mortgage Finance																			Mortgage Finance
Current	Current	3,754		2,862		1,430		1,059		1,420		3,002		0		0		13,527		Current	1,565		10,777		2,017		854		617		2,965		—		—		18,795
30–59 days past due	30–59 days past due	22		8		5		3		5		17		0		0		60		30–59 days past due	10		49		4		5		3		20		—		—		91
60–89 days past due	60–89 days past due	0		0		0		2		0		3		0		0		5		60–89 days past due	—		1		—		—		2		3		—		—		6
90 or more days past due	90 or more days past due	0		1		3		9		4		20		0		0		37		90 or more days past due	1		2		—		5		8		15		—		—		31
Total Mortgage Finance	Total Mortgage Finance	3,776		2,871		1,438		1,073		1,429		3,042		0		0		13,629		Total Mortgage Finance	1,576		10,829		2,021		864		630		3,003		—		—		18,923
Mortgage — Legacy	Mortgage — Legacy																			Mortgage — Legacy
Current	Current	0		0		0		0		0		98		274		30		402		Current	—		—		—		—		—		68		212		19		299
30–59 days past due	30–59 days past due	0		0		0		0		0		2		2		0		4		30–59 days past due	—		—		—		—		—		3		1		—		4
60–89 days past due	60–89 days past due	0		0		0		0		0		2		0		0		2		60–89 days past due	—		—		—		—		—		1		—		—		1
90 or more days past due	90 or more days past due	0		0		0		0		0		16		4		1		21		90 or more days past due	—		—		—		—		—		12		4		2		18
Total Mortgage — Legacy	Total Mortgage — Legacy	0		0		0		0		0		118		280		31		429		Total Mortgage — Legacy	—		—		—		—		—		84		217		21		322
Total consumer mortgage	Total consumer mortgage	3,776		2,871		1,438		1,073		1,429		3,160		280		31		14,058		Total consumer mortgage	1,576		10,829		2,021		864		630		3,087		217		21		19,245
Consumer other	Consumer other																			Consumer other
Personal Lending																				Personal Lending
Current	Current	376		205		31		8		2		0		0		0		622		Current	830		568		79		9		2		1		—		—		1,489
30–59 days past due	30–59 days past due	2		2		1		0		0		0		0		0		5		30–59 days past due	5		7		1		—		—		—		—		—		13
60–89 days past due	60–89 days past due	1		2		0		0		0		0		0		0		3		60–89 days past due	3		5		1		—		—		—		—		—		9
90 or more days past due	90 or more days past due	1		1		0		0		0		0		0		0		2		90 or more days past due	2		3		—		—		—		—		—		—		5
Total consumer other (a)		380		210		32		8		2		0		0		0		632
Total Personal Lending (a)																				Total Personal Lending (a)	840		583		81		9		2		1		—		—		1,516
Credit Card																				Credit Card
Current																				Current	—		—		—		—		—		—		1,189		—		1,189
30–59 days past due																				30–59 days past due	—		—		—		—		—		—		11		—		11
60–89 days past due																				60–89 days past due	—		—		—		—		—		—		8		—		8
90 or more days past due																				90 or more days past due	—		—		—		—		—		—		16		—		16
Total Credit Card																				Total Credit Card	—		—		—		—		—		—		1,224		—		1,224
Total consumer other																				Total consumer other	840		583		81		9		2		1		1,224		—		2,740
Total consumer	Total consumer	$	23,430	$	25,611	$	17,166	$	10,675	$	6,734	$	6,714	$	280	$	31	$	90,641	Total consumer	$	23,895	$	40,260	$	15,899	$	9,956	$	5,642	$	6,562	$	1,441	$	21	$	103,676

(a)Excludes $8$7 million of finance receivables at June 30, ~~2021,~~2022, for which we have elected the fair value option.

2426

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


		Origination year														Revolving loans converted to term					Origination year														Revolving loans converted to term
December 31, 2020 ($ in millions)		2020		2019		2018		2017		2016		2015 and prior		Revolving loans				Total
December 31, 2021 ($ in millions)																				December 31, 2021 ($ in millions)	2021		2020		2019		2018		2017		2016 and prior		Revolving loans				Revolving loans converted to term		Total
Consumer automotive	Consumer automotive																			Consumer automotive
Current	Current	$	27,255	$	19,204	$	12,129	$	7,060	$	3,678	$	1,766	$	0	$	0	$	71,092	Current	$	35,222	$	17,218	$	11,512	$	6,692	$	3,403	$	1,911	$	—	$	—	$	75,958
30–59 days past due	30–59 days past due	281		466		376		264		174		97		0		0		1,658		30–59 days past due	424		353		334		226		139		101		—		—		1,577
60–89 days past due	60–89 days past due	66		165		129		88		55		32		0		0		535		60–89 days past due	115		114		108		70		41		28		—		—		476
90 or more days past due	90 or more days past due	32		108		96		71		46		30		0		0		383		90 or more days past due	41		51		56		40		27		26		—		—		241
Total consumer automotive	Total consumer automotive	27,634		19,943		12,730		7,483		3,953		1,925		0		0		73,668		Total consumer automotive	35,802		17,736		12,010		7,028		3,610		2,066		—		—		78,252
Consumer mortgage	Consumer mortgage																			Consumer mortgage
Mortgage Finance	Mortgage Finance																			Mortgage Finance
Current	Current	3,432		2,410		1,744		2,254		1,177		3,492		0		0		14,509		Current	10,169		2,212		977		744		1,041		2,363		—		—		17,506
30–59 days past due	30–59 days past due	10		9		10		11		7		16		0		0		63		30–59 days past due	50		3		3		7		2		12		—		—		77
60–89 days past due	60–89 days past due	1		1		3		2		1		3		0		0		11		60–89 days past due	8		—		1		—		—		5		—		—		14
90 or more days past due	90 or more days past due	1		5		8		10		4		21		0		0		49		90 or more days past due	—		—		5		16		7		19		—		—		47
Total Mortgage Finance	Total Mortgage Finance	3,444		2,425		1,765		2,277		1,189		3,532		0		0		14,632		Total Mortgage Finance	10,227		2,215		986		767		1,050		2,399		—		—		17,644
Mortgage — Legacy	Mortgage — Legacy																			Mortgage — Legacy
Current	Current	0		0		0		0		0		121		303		36		460		Current	—		—		—		—		—		79		238		23		340
30–59 days past due	30–59 days past due	0		0		0		0		0		4		2		0		6		30–59 days past due	—		—		—		—		—		2		1		—		3
60–89 days past due	60–89 days past due	0		0		0		0		0		2		0		0		2		60–89 days past due	—		—		—		—		—		1		—		1		2
90 or more days past due	90 or more days past due	0		0		0		0		0		20		5		2		27		90 or more days past due	—		—		—		—		—		15		5		3		23
Total Mortgage — Legacy	Total Mortgage — Legacy	0		0		0		0		0		147		310		38		495		Total Mortgage — Legacy	—		—		—		—		—		97		244		27		368
Total consumer mortgage	Total consumer mortgage	3,444		2,425		1,765		2,277		1,189		3,679		310		38		15,127		Total consumer mortgage	10,227		2,215		986		767		1,050		2,496		244		27		18,012
Consumer other	Consumer other																			Consumer other
Personal Lending																				Personal Lending
Current	Current	306		53		13		4		1		0		0		0		377		Current	821		133		18		5		1		—		—		—		978
30–59 days past due	30–59 days past due	9		3		1		0		0		0		0		0		13		30–59 days past due	9		2		—		—		—		—		—		—		11
60–89 days past due	60–89 days past due	4		1		0		1		0		0		0		0		6		60–89 days past due	6		1		1		—		—		—		—		—		8
90 or more days past due	90 or more days past due	2		1		0		0		0		0		0		0		3		90 or more days past due	4		1		—		—		—		—		—		—		5
Total consumer other (a)		321		58		14		5		1		0		0		0		399
Total Personal Lending (a)																				Total Personal Lending (a)	840		137		19		5		1		—		—		—		1,002
Credit Card																				Credit Card
Current																				Current	—		—		—		—		—		—		932		—		932
30–59 days past due																				30–59 days past due	—		—		—		—		—		—		6		—		6
60–89 days past due																				60–89 days past due	—		—		—		—		—		—		5		—		5
90 or more days past due																				90 or more days past due	—		—		—		—		—		—		10		—		10
Total Credit Card																				Total Credit Card	—		—		—		—		—		—		953		—		953
Total consumer other																				Total consumer other	840		137		19		5		1		—		953		—		1,955
Total consumer	Total consumer	$	31,399	$	22,426	$	14,509	$	9,765	$	5,143	$	5,604	$	310	$	38	$	89,194	Total consumer	$	46,869	$	20,088	$	13,015	$	7,800	$	4,661	$	4,562	$	1,197	$	27	$	98,219

(a)Excludes $8$7 million of finance receivables at December 31, ~~2020,~~2021, for which we have elected the fair value option.

We evaluate the credit quality of our commercial loan portfolio using regulatory risk ratings, which are based on relevant information about the borrower’s financial condition, including current financial information, historical payment experience, credit documentation, and current economic trends, among other factors. We use the following definitions for risk ~~rankings.~~rankings below Pass.

•Special mention — Loans that have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or the institution’s credit position at some future date.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

•Substandard — Loans that are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. These loans have a well-defined weakness or weakness that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

•Doubtful — Loans that have all the weaknesses inherent in those classified as substandard, with the additional characteristic that the weaknesses make collection or liquidation in full, based on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

The regulatory risk classification utilized is influenced by internal credit risk ratings, which are based on a variety of factors. A borrower’s internal credit risk rating is updated at least annually, and more frequently when a borrower’s credit profile changes, including when we become aware of potential credit deterioration. The following tables present the amortized cost basis of our commercial finance receivables and loans by credit quality indicator based on risk rating and origination year.


		Origination year														Revolving loans converted to term					Origination year														Revolving loans converted to term
June 30, 2021 ($ in millions)		2021		2020		2019		2018		2017		2016 and prior		Revolving loans				Total
June 30, 2022 ($ in millions)																				June 30, 2022 ($ in millions)	2022		2021		2020		2019		2018		2017 and prior		Revolving loans				Revolving loans converted to term		Total
Commercial																				Commercial
Commercial and industrial	Commercial and industrial																			Commercial and industrial
Automotive	Automotive																			Automotive
Pass	Pass	$	218	$	353	$	201	$	45	$	52	$	73	$	9,261	$	0	$	10,203	Pass	$	191	$	291	$	151	$	88	$	42	$	60	$	10,771	$	—	$	11,594
Special mention	Special mention	12		9		23		41		38		37		887		0		1,047		Special mention	—		—		—		4		12		25		464		—		505
Substandard	Substandard	0		1		0		1		0		2		49		0		53		Substandard	—		—		1		1		—		—		73		—		75
Doubtful		0		0		0		0		0		0		0		0		0

Total automotive	Total automotive	230		363		224		87		90		112		10,197		0		11,303		Total automotive	191		291		152		93		54		85		11,308		—		12,174
Other	Other																			Other
Pass	Pass	297		457		556		194		90		218		2,675		86		4,573		Pass	410		603		430		268		65		185		4,338		85		6,384
Special mention	Special mention	0		75		139		27		86		99		71		17		514		Special mention	—		37		178		66		44		80		243		28		676
Substandard	Substandard	0		32		25		0		138		90		17		25		327		Substandard	—		—		18		116		—		156		55		15		360
Doubtful	Doubtful	0		0		0		0		0		27		0		0		27		Doubtful	—		—		—		—		—		56		8		2		66
Loss		0		0		0		0		1		0		0		0		1

Total other	Total other	297		564		720		221		315		434		2,763		128		5,442		Total other	410		640		626		450		109		477		4,644		130		7,486
Commercial real estate	Commercial real estate																			Commercial real estate
Pass	Pass	452		1,111		867		731		457		869		3		4		4,494		Pass	606		1,299		1,005		720		510		826		9		9		4,984
Special mention	Special mention	0		58		131		45		31		49		0		0		314		Special mention	—		76		2		26		—		23		—		—		127
Substandard	Substandard	0		0		0		0		0		13		0		0		13		Substandard	—		—		—		—		—		3		—		—		3
Doubtful		0		0		0		0		0		2		0		0		2

Total commercial real estate	Total commercial real estate	452		1,169		998		776		488		933		3		4		4,823		Total commercial real estate	606		1,375		1,007		746		510		852		9		9		5,114
Total commercial	Total commercial	$	979	$	2,096	$	1,942	$	1,084	$	893	$	1,479	$	12,963	$	132	$	21,568	Total commercial	$	1,207	$	2,306	$	1,785	$	1,289	$	673	$	1,414	$	15,961	$	139	$	24,774

2628

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


		Origination year														Revolving loans converted to term					Origination year														Revolving loans converted to term
December 31, 2020 ($ in millions)		2020		2019		2018		2017		2016		2015 and prior		Revolving loans				Total
December 31, 2021 ($ in millions)																				December 31, 2021 ($ in millions)	2021		2020		2019		2018		2017		2016 and prior		Revolving loans				Revolving loans converted to term		Total
Commercial																				Commercial
Commercial and industrial	Commercial and industrial																			Commercial and industrial
Automotive	Automotive																			Automotive
Pass	Pass	$	869	$	220	$	58	$	91	$	76	$	34	$	15,433	$	0	$	16,781	Pass	$	347	$	190	$	112	$	49	$	23	$	56	$	10,741	$	—	$	11,518
Special mention	Special mention	48		23		59		52		9		18		2,013		0		2,222		Special mention	7		1		7		15		31		18		589		—		668
Substandard	Substandard	3		2		0		0		1		0		72		0		78		Substandard	—		1		—		1		—		—		41		—		43
Doubtful		0		0		0		0		0		0		1		0		1

Total automotive	Total automotive	920		245		117		143		86		52		17,519		0		19,082		Total automotive	354		192		119		65		54		74		11,371		—		12,229
Other	Other																			Other
Pass	Pass	536		622		244		210		81		69		2,142		76		3,980		Pass	739		448		374		86		99		68		4,032		83		5,929
Special mention	Special mention	76		169		123		190		102		115		123		43		941		Special mention	15		169		96		21		10		122		93		17		543
Substandard	Substandard	33		26		0		108		0		77		21		20		285		Substandard	—		22		95		—		140		83		13		23		376
Doubtful	Doubtful	0		0		0		6		0		27		2		1		36		Doubtful	—		—		—		—		—		26		—		—		26
Total other	Total other	645		817		367		514		183		288		2,288		140		5,242		Total other	754		639		565		107		249		299		4,138		123		6,874
Commercial real estate	Commercial real estate																			Commercial real estate
Pass	Pass	1,108		928		799		580		651		512		0		2		4,580		Pass	1,298		1,060		873		604		342		653		3		8		4,841
Special mention	Special mention	38		132		116		32		49		43		0		0		410		Special mention	13		5		29		7		18		19		—		—		91
Substandard	Substandard	0		0		0		3		6		7		0		0		16		Substandard	—		—		—		—		—		7		—		—		7
Doubtful		0		0		0		0		2		0		0		0		2

Total commercial real estate	Total commercial real estate	1,146		1,060		915		615		708		562		0		2		5,008		Total commercial real estate	1,311		1,065		902		611		360		679		3		8		4,939
Total commercial	Total commercial	$	2,711	$	2,122	$	1,399	$	1,272	$	977	$	902	$	19,807	$	142	$	29,332	Total commercial	$	2,419	$	1,896	$	1,586	$	783	$	663	$	1,052	$	15,512	$	131	$	24,042

The following table presents an analysis of our past-due commercial finance receivables and loans recorded at amortized cost basis.


($ in millions)	($ in millions)	30–59 days past due		60–89 days past due		90 days or more past due		Total past due		Current		Total finance receivables and loans		($ in millions)	30–59 days past due		60–89 days past due		90 days or more past due		Total past due		Current		Total finance receivables and loans

June 30, 2021
June 30, 2022														June 30, 2022

Commercial	Commercial													Commercial
Commercial and industrial	Commercial and industrial													Commercial and industrial
Automotive	Automotive	$	0	$	0	$	0	$	0	$	11,303	$	11,303	Automotive	$	—	$	—	$	—	$	—	$	12,174	$	12,174
Other	Other	0		0		0		0		5,442		5,442		Other	—		—		2		2		7,484		7,486
Commercial real estate	Commercial real estate	0		0		2		2		4,821		4,823		Commercial real estate	—		—		—		—		5,114		5,114
Total commercial	Total commercial	$	0	$	0	$	2	$	2	$	21,566	$	21,568	Total commercial	$	—	$	—	$	2	$	2	$	24,772	$	24,774

December 31, 2020
December 31, 2021														December 31, 2021

Commercial	Commercial													Commercial
Commercial and industrial	Commercial and industrial													Commercial and industrial
Automotive	Automotive	$	0	$	0	$	0	$	0	$	19,082	$	19,082	Automotive	$	—	$	—	$	—	$	—	$	12,229	$	12,229
Other	Other	0		0		0		0		5,242		5,242		Other	—		—		1		1		6,873		6,874
Commercial real estate	Commercial real estate	0		0		2		2		5,006		5,008		Commercial real estate	—		—		—		—		4,939		4,939
Total commercial	Total commercial	$	0	$	0	$	2	$	2	$	29,330	$	29,332	Total commercial	$	—	$	—	$	1	$	1	$	24,041	$	24,042

Troubled Debt Restructurings

TDRs are loan modifications where concessions were granted to borrowers experiencing financial difficulties. For consumer automotive loans, we may offer several types of assistance to aid our customers, including payment extensions and rewrites of the loan terms. Additionally, for mortgage loans, as part of certain programs, we offer mortgage loan modifications to qualified borrowers. These programs are in place to provide support to our mortgage customers in financial distress, including principal forgiveness, maturity extensions, delinquent interest capitalization, and changes to contractual interest rates. Total TDRs recorded at amortized cost were ~~$2.4~~$2.6 billion and ~~$2.2~~$2.4 billion at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively.

2729

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Our consumer automotive portfolio accounts for the majority of the year-over-year increase in TDR balances. TDRs in our consumer automotive portfolio increased as a result of the COVID-19 loan modification program offered to customers. Additionally, following the expiration of that program, we have continued to support impacted borrowers pursuant to our established risk management policies and practices.

Total commitments to lend additional funds to borrowers whose terms had been modified in a TDR were ~~$21~~$43 million and ~~$14~~$18 million at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively. Refer to Note 1 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for additional information.

The following tables present information related to finance receivables and loans recorded at amortized cost modified in connection with a TDR during the period.


	2022					2021
Three months ended June 30, ($ in millions)	Number of loans	Pre-modification amortized cost basis		Post-modification amortized cost basis		Number of loans	Pre-modification amortized cost basis		Post-modification amortized cost basis

Consumer automotive	12,928	$	213	$	206	14,670	$	271	$	267
Consumer mortgage
Mortgage Finance	3	2		2		10	4		5
Mortgage — Legacy	3	—		—		3	1		1
Total consumer mortgage	6	2		2		13	5		6
Consumer other

Credit Card	743	1		1		—	—		—
Total consumer other	743	1		1		—	—		—
Total consumer	13,677	216		209		14,683	276		273

Commercial
Commercial and industrial
Automotive	—	—		—		1	1		1
Other	3	377		377		—	—		—
Commercial real estate	—	—		—		1	3		3
Total commercial	3	377		377		2	4		4
Total finance receivables and loans	13,680	$	593	$	586	14,685	$	280	$	277


		2021					2020						2022					2021
Three months ended June 30, ($ in millions)		Number of loans	Pre-modification amortized cost basis		Post-modification amortized cost basis		Number of loans	Pre-modification amortized cost basis		Post-modification amortized cost basis
Six months ended June 30, ($ in millions)												Six months ended June 30, ($ in millions)	Number of loans	Pre-modification amortized cost basis		Post-modification amortized cost basis		Number of loans	Pre-modification amortized cost basis		Post-modification amortized cost basis

Consumer automotive	Consumer automotive	14,670	$	271	$	267	21,293	$	323	$	297	Consumer automotive	26,379	$	444	$	433	40,260	$	743	$	733
Consumer mortgage	Consumer mortgage											Consumer mortgage
Mortgage Finance	Mortgage Finance	10	4		5		19	11		11		Mortgage Finance	9	7		7		15	8		9
Mortgage — Legacy	Mortgage — Legacy	3	1		1		23	3		3		Mortgage — Legacy	7	1		1		4	1		1
Total consumer mortgage	Total consumer mortgage	13	5		6		42	14		14		Total consumer mortgage	16	8		8		19	9		10
Consumer other												Consumer other

Credit Card												Credit Card	1,094	2		2		—	—		—
Total consumer other												Total consumer other	1,094	2		2		—	—		—
Total consumer	Total consumer	14,683	276		273		21,335	337		311		Total consumer	27,489	454		443		40,279	752		743

Commercial												Commercial
Commercial and industrial	Commercial and industrial											Commercial and industrial
Automotive	Automotive	1	1		1		2	31		26		Automotive	—	—		—		1	1		1
Other	Other	0	0		0		1	23		7		Other	4	411		411		1	33		33
Commercial real estate	Commercial real estate	1	3		3		0	0		0		Commercial real estate	—	—		—		1	3		3
Total commercial	Total commercial	2	4		4		3	54		33		Total commercial	4	411		411		3	37		37
Total finance receivables and loans	Total finance receivables and loans	14,685	$	280	$	277	21,338	$	391	$	344	Total finance receivables and loans	27,493	$	865	$	854	40,282	$	789	$	780

2830

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

2021 2020
Six months ended June 30, ($ in millions)
Number of loans Pre-modification amortized cost basis Post-modification amortized cost basis Number of loans Pre-modification amortized cost basis Post-modification amortized cost basis
Consumer automotive 40,260 $ 743 $ 733 44,093 $ 663 $ 615
Consumer mortgage
Mortgage Finance 15 8 9 29 15 15
Mortgage — Legacy 4 1 1 55 7 7
Total consumer mortgage 19 9 10 84 22 22
Total consumer 40,279 752 743 44,177 685 637
Commercial and industrial
Automotive 1 1 1 3 38 33
Other 1 33 33 1 23 7
Commercial real estate 1 3 3 0 0 0
Total commercial 3 37 37 4 61 40
Total finance receivables and loans 40,282 $ 789 $ 780 44,181 $ 746 $ 677

The following ~~tables present~~table presents information about finance receivables and loans recorded at amortized cost that have redefaulted during the reporting period and were within 12 months or less of being modified as a TDR. Redefault is when finance receivables and loans meet the requirements for evaluation under our charge-off policy (refer to Note 1 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for additional information) except for commercial finance receivables and loans, where redefault is defined as 90 days past due.


		2021					2020						2022					2021
Three months ended June 30, ($ in millions)	Three months ended June 30, ($ in millions)	Number of loans	Amortized cost		Charge-off amount		Number of loans	Amortized cost		Charge-off amount		Three months ended June 30, ($ in millions)	Number of loans	Amortized cost		Charge-off amount		Number of loans	Amortized cost		Charge-off amount

Consumer automotive	Consumer automotive	1,751	$	22	$	11	1,119	$	11	$	8	Consumer automotive	2,138	$	35	$	14	1,751	$	22	$	11
Consumer mortgage	Consumer mortgage											Consumer mortgage
Mortgage Finance	Mortgage Finance	1	0		0		0	0		0		Mortgage Finance	1	—		—		1	—		—
Mortgage — Legacy	Mortgage — Legacy	2	0		0		0	0		0		Mortgage — Legacy	—	—		—		2	—		—
Total consumer mortgage												Total consumer mortgage	1	—		—		3	—		—
Consumer other												Consumer other

Credit Card												Credit Card	79	—		—		—	—		—
Total consumer other												Total consumer other	79	—		—		—	—		—
Total consumer finance receivables and loans	Total consumer finance receivables and loans	1,754	$	22	$	11	1,119	$	11	$	8	Total consumer finance receivables and loans	2,218	$	35	$	14	1,754	$	22	$	11


		2021					2020						2022					2021
Six months ended June 30, ($ in millions)	Six months ended June 30, ($ in millions)	Number of loans	Amortized cost		Charge-off amount		Number of loans	Amortized cost		Charge-off amount		Six months ended June 30, ($ in millions)	Number of loans	Amortized cost		Charge-off amount		Number of loans	Amortized cost		Charge-off amount

Consumer automotive	Consumer automotive	4,565	$	55	$	31	2,283	$	24	$	17	Consumer automotive	4,249	$	66	$	27	4,565	$	55	$	31
Consumer mortgage	Consumer mortgage											Consumer mortgage
Mortgage Finance	Mortgage Finance	1	0		0		0	0		0		Mortgage Finance	3	2		—		1	—		—
Mortgage — Legacy	Mortgage — Legacy	4	0		0		0	0		0		Mortgage — Legacy	—	—		—		4	—		—
Total consumer mortgage												Total consumer mortgage	3	2		—		5	—		—
Consumer other												Consumer other

Credit Card												Credit Card	79	—		—		—	—		—
Total consumer other												Total consumer other	79	—		—		—	—		—
Total consumer finance receivables and loans	Total consumer finance receivables and loans	4,570	$	55	$	31	2,283	$	24	$	17	Total consumer finance receivables and loans	4,331	$	68	$	27	4,570	$	55	$	31

8.9. Leasing

Ally as the Lessee

We have operating leases for certain of our corporate facilities, which have remaining lease terms of ~~3 months~~1 month to 117 years. Most of the property leases have fixed payment terms with annual fixed-escalation clauses and include options to extend the leases for periods that range from 1 ~~year~~ to 15 years. Some of those lease agreements also include options to terminate the leases in periods that range from approximately 5 ~~years~~ to 6 years after the commencement of the leases. We have not included any of these term extensions or termination provisions in our estimates of the lease term, as we do not consider it reasonably certain that the options will be exercised.

We also have operating leases for a fleet of vehicles that is used by our sales force for business purposes, with noncancelable lease terms of 367 days. Thereafter, the leases are month-to-month, up to a maximum of 48 months from inception.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

During the three months and six months ended June 30, ~~2021,~~2022, we paid ~~$16~~$9 million and ~~$29~~$19 million, respectively, in cash for amounts included in the measurement of lease liabilities at June 30, ~~2021,~~2022, compared to ~~$12~~$16 million and ~~$25~~$29 million for the three months and six months ended June 30, ~~2020,~~2021, in cash for amounts included in the measurement of lease liabilities at June 30, ~~2020.~~2021. These amounts are included in net cash provided by operating activities in the Condensed Consolidated Statement of Cash Flows. During the six months ended June 30, ~~2021,~~2022, and June 30, ~~2020,~~2021, we obtained ~~$333~~$21 million and ~~$43~~$333 million, respectively, of ROU assets in exchange for new lease liabilities. As of June 30, ~~2021,~~2022, the weighted-average remaining lease term of our operating lease portfolio was 75 years, and the weighted-average discount rate was ~~2.15%~~2.24%, compared to 76 years and ~~2.21%~~1.96% as of December 31, ~~2020.~~2021.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents future minimum rental payments we are required to make under operating leases that have commenced as of June 30, ~~2021,~~2022, and that have noncancelable lease terms expiring after June 30, ~~2021.~~2022.


($ in millions)	($ in millions)			($ in millions)
2021		$	20
2022	2022	35		2022	$	20
2023	2023	27		2023	31
2024	2024	20		2024	26
2025	2025	18		2025	21
2026 and thereafter		58
2026				2026	18
2027 and thereafter				2027 and thereafter	29
Total undiscounted cash flows	Total undiscounted cash flows	178		Total undiscounted cash flows	145
Difference between undiscounted cash flows and discounted cash flows	Difference between undiscounted cash flows and discounted cash flows	(11)		Difference between undiscounted cash flows and discounted cash flows	(9)
Total lease liability	Total lease liability	$	167	Total lease liability	$	136

In March 2021, we commenced the lease for a new corporate facility in Charlotte, North Carolina, which ~~includes~~included an underlying purchase option that is reasonably expected to be executed. As a result, this lease facility is presented as a financing lease at June 30, 2021. The finance lease liability of $326 million includes payments inherent in the purchase obligation. The expense associated with this lease was not material.option. We provided notice of our intent to exercise the purchase option in April 2021, and executed on the purchase agreement in July 2021. Additionally, we agreed to ~~sublease~~lease a portion of this corporate facility in exchange for $13 million in future lease payments over a ten year lease term.

In June 2022, we purchased an operations center in Lewisville, Texas, which consisted of a previously leased facility.Upon closing the transaction, the lease ROU asset and liability were derecognized and new fixed assets totaling approximately $44 million were recognized as property and equipment at cost within other assets of the Condensed Consolidated Balance Sheet.

The following table details the components of total net operating lease expense.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
Operating lease expense	Operating lease expense	$	14	$	11	$	26	$	24	Operating lease expense	$	9	$	14	$	17	$	26

Variable lease expense	Variable lease expense	2		2		4		4		Variable lease expense	1		2		2		4

Total lease expense, net (a)	Total lease expense, net (a)	$	16	$	13	$	30	$	28	Total lease expense, net (a)	$	10	$	16	$	19	$	30

(a)Included in other operating expenses in our Condensed Consolidated Statement of Comprehensive Income.

Ally as the Lessor

Investment in Operating Leases

We purchase consumer operating lease contracts and the associated vehicles from dealerships after those contracts are executed by the dealers and the consumers. The amount we pay a dealer for an operating lease contract is based on the negotiated price for the vehicle less vehicle trade-in, down payment from the consumer, and available automotive manufacturer incentives. Under the operating lease, the consumer is obligated to make payments in amounts equal to the amount by which the negotiated purchase price of the vehicle (less any trade-in value, down payment, or available manufacturer incentives) exceeds the contract residual value (including residual support) of the vehicle at lease termination, plus operating lease rental charges. The customer can terminate the lease at any point after commencement, subject to additional charges and fees. Both the consumer and the dealership have the option to purchase the vehicle at the end of the lease term, which can range from 24 to 60 months, at the residual value of the vehicle, however it is not reasonably certain this option will be exercised and accordingly our consumer leases are classified as operating leases. In addition to the charges described above, the consumer is generally responsible for certain charges related to excess mileage or excessive wear and tear on the vehicle. These charges are deemed variable lease payments and, as these payments are not based on a rate or index, they are recognized as net depreciation expense on operating lease assets in our Condensed Consolidated Statement of Comprehensive Income as incurred.

When we acquire a consumer operating lease, we assume ownership of the vehicle from the dealer. We require that property damage, bodily injury, collision, and comprehensive insurance be obtained by the lessee on all consumer operating leases. Neither the consumer nor the dealer is responsible for the value of the vehicle at the time of lease termination. When vehicles are not purchased by customers or the receiving dealer at scheduled lease termination, the vehicle is returned to us for remarketing. We generally bear the risk of loss to the extent

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

the value of a leased vehicle upon remarketing is below the expected residual value. At termination, our actual sales proceeds from remarketing the vehicle may be higher or lower than the estimated residual value resulting in a gain or loss on remarketing, which is included in net depreciation expense on operating lease assets in our Condensed Consolidated Statement of Comprehensive Income. Excessive mileage or excessive wear and tear on the vehicle during the lease may impact the sales proceeds received upon remarketing. As of June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, consumer operating leases with a carrying value, net of accumulated depreciation, of ~~$264~~$88 million and ~~$352~~$165 million, respectively, were covered by a residual value guarantee of 15% of the manufacturer’s suggested retail price.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table details our investment in operating leases.


($ in millions)	($ in millions)	June 30, 2021		December 31, 2020		($ in millions)	June 30, 2022		December 31, 2021

Vehicles	Vehicles	$	12,170	$	11,182	Vehicles	$	12,173	$	12,384
Accumulated depreciation	Accumulated depreciation	(1,455)		(1,543)		Accumulated depreciation	(1,657)		(1,522)
Investment in operating leases, net	Investment in operating leases, net	$	10,715	$	9,639	Investment in operating leases, net	$	10,516	$	10,862

The following table presents future minimum rental payments we have the right to receive under operating leases with noncancelable lease terms expiring after June 30, ~~2021.~~2022.


($ in millions)	($ in millions)			($ in millions)
2021		$	818
2022	2022	1,326		2022	$	824
2023	2023	877		2023	1,345
2024	2024	274		2024	732
2025	2025	36		2025	246
2026 and thereafter		2
2026				2026	33
2027 and thereafter				2027 and thereafter	2
Total lease payments from operating leases	Total lease payments from operating leases	$	3,333	Total lease payments from operating leases	$	3,182

We recognized operating lease revenue of $396 million and $799 million for the three months and six months ended June 30, 2022, respectively, and $384 million and $754 million for the three months and six months ended June 30, ~~2021, respectively, and $343 million and $710 million for the three months and six months ended June 30, 2020.~~2021. Depreciation expense on operating lease assets includes net remarketing gains ~~and losses~~ recognized on the sale of operating lease assets. The following table summarizes the components of depreciation expense on operating lease assets.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
Depreciation expense on operating lease assets (excluding remarketing gains and losses) (a)		$	210	$	241	$	437	$	491
Remarketing (gains) losses, net		(128)		11		(192)		9
Depreciation expense on operating lease assets (excluding remarketing gains) (a)										Depreciation expense on operating lease assets (excluding remarketing gains) (a)	$	269	$	210	$	536	$	437
Remarketing gains, net										Remarketing gains, net	(50)		(128)		(100)		(192)
Net depreciation expense on operating lease assets	Net depreciation expense on operating lease assets	$	82	$	252	$	245	$	500	Net depreciation expense on operating lease assets	$	219	$	82	$	436	$	245

(a)Includes variable lease payments related to excess mileage and excessive wear and tear on vehicles of $2 million and $4 million during the three months and six months ended June 30, 2022, respectively, and $5 million and $10 million during the three months and six months ended June 30, ~~2021, respectively, and $5 million and $12 million during the three months and six months ended June 30, 2020.~~2021.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

Finance Leases

In our Automotive Finance operations, we also hold automotive leases that require finance lease treatment as prescribed by ASC Topic 842, Leases. Our total gross investment in finance leases, which is included in finance receivables and loans, net, on our Condensed Consolidated Balance Sheet was ~~$496~~$463 million and ~~$450~~$470 million as of June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively. This includes lease payment receivables of ~~$483~~$450 million and ~~$437~~$457 million at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively, and unguaranteed residual assets of $13 million at both June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021, respectively. Interest income on finance lease receivables was $7 million and $14 million for the three months and six months ended June 30, 2022, respectively, and $7 million and $13 million for the three months and six months ended June 30, 2021, ~~respectively, and $5 million and $11 million for the three months and six months ended June 30, 2020,~~ and is included in interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents future minimum rental payments we have the right to receive under finance leases with noncancelable lease terms expiring after June 30, ~~2021.~~2022.


($ in millions)	($ in millions)			($ in millions)
2021		$	90
2022	2022	152		2022	$	86
2023	2023	124		2023	146
2024	2024	97		2024	123
2025	2025	44		2025	77
2026 and thereafter		29
2026				2026	44
2027 and thereafter				2027 and thereafter	23
Total undiscounted cash flows	Total undiscounted cash flows	536		Total undiscounted cash flows	499
Difference between undiscounted cash flows and discounted cash flows	Difference between undiscounted cash flows and discounted cash flows	(53)		Difference between undiscounted cash flows and discounted cash flows	(49)
Present value of lease payments recorded as lease receivable	Present value of lease payments recorded as lease receivable	$	483	Present value of lease payments recorded as lease receivable	$	450

9.10. Securitizations and Variable Interest Entities

We securitize, transfer, and service consumer and commercial automotive loans. We often securitize these loans (also referred to as financial assets) using SPEs. An SPE is a legal entity that is designed to fulfill a specified limited need of the sponsor. Our principal use of

SPEs is to obtain liquidity by securitizing certain of our financial assets. SPEs are often VIEs and may or may not be included on our Condensed Consolidated Balance Sheet.

VIEs are legal entities that either have an insufficient amount of equity at risk for the entity to finance its activities without additional subordinated financial support or, as a group, the holders of the equity investment at risk lack the ability to control the entity’s activities that most significantly impact economic performance through voting or similar rights, or do not have the obligation to absorb the expected losses or the right to receive expected residual returns of the entity.

The VIEs included on the Condensed Consolidated Balance Sheet represent SPEs where we are deemed to be the primary beneficiary, primarily due to our servicing activities and our beneficial interests in the VIE that could be potentially significant.

The nature, purpose, and activities of nonconsolidated SPEs are similar to those of our consolidated SPEs with the primary difference being the nature and extent of our continuing involvement. For nonconsolidated SPEs, the transferred financial assets are removed from our balance sheet provided the conditions for sale accounting are met. The financial assets obtained from the securitization are primarily reported as cash or retained interests (if applicable). Liabilities incurred as part of these securitizations, are recorded at fair value at the time of sale and are reported as accrued expenses and other liabilities on our Condensed Consolidated Balance Sheet. Upon the sale of the loans, we recognize a gain or loss on sale for the difference between the assets recognized, the assets derecognized, and the liabilities recognized as part of the transaction. With respect to our ongoing right to service the assets we sell, the servicing fee we receive represents adequate compensation, and consequently, we do not recognize a servicing asset or liability.

~~There were 0~~We had no pretax gain on sales of financial assets into nonconsolidated VIEs for both the three months and six months ended June 30, ~~2021,~~2022, and June 30, ~~2020.~~2021.

We provide long-term guarantee contracts to investors in certain nonconsolidated affordable housing entities and have extended a line of credit to provide liquidity. Since we do not have control over the entities or the power to make decisions, we do not consolidate the entities and our involvement is limited to the guarantee and the line of credit.

We are involved with various other nonconsolidated equity investments, including affordable housing entities and venture capital funds and loan funds. We do not consolidate these entities and our involvement is limited to our outstanding investment, additional capital committed to these funds plus any previously recognized low-income housing tax credits that are subject to recapture.

Refer to Note 1 and Note 11 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for further description of our securitization activities and our involvement with VIEs.

3234

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents our involvement in consolidated and nonconsolidated VIEs in which we hold variable interests. We have excluded certain transactions with nonconsolidated entities from the balances presented in the table below, where our only continuing involvement relates to financial interests obtained through the ordinary course of business, primarily from lending and investing arrangements. For additional detail related to the assets and liabilities of consolidated variable interest entities refer to the Condensed Consolidated Balance Sheet.


($ in millions)	($ in millions)	Carrying value of total assets			Carrying value of total liabilities			Assets sold to nonconsolidated VIEs (a)		Maximum exposure to loss in nonconsolidated VIEs			($ in millions)	Carrying value of total assets			Carrying value of total liabilities			Assets sold to nonconsolidated VIEs (a)		Maximum exposure to loss in nonconsolidated VIEs
June 30, 2021
June 30, 2022													June 30, 2022
On-balance sheet variable interest entities	On-balance sheet variable interest entities												On-balance sheet variable interest entities
Consumer automotive	Consumer automotive	$	18,448	(b)	$	1,964	(c)						Consumer automotive	$	18,613	(b)	$	1,622	(c)	$	—	$	—
Commercial automotive		2,306			1

Off-balance sheet variable interest entities													Off-balance sheet variable interest entities
Consumer automotive													Consumer automotive	—			—			2		2		(d)
Consumer other (e)													Consumer other (e)	—			—			40		40
Commercial other													Commercial other	2,055		(f)	840		(g)	—		2,577		(h)
Total													Total	$	20,668		$	2,462		$	42	$	2,619
December 31, 2021													December 31, 2021
On-balance sheet variable interest entities													On-balance sheet variable interest entities
Consumer automotive													Consumer automotive	$	18,158	(b)	$	1,162	(c)	$	—	$	—
Consumer other (e)													Consumer other (e)	318			300			—		—

Off-balance sheet variable interest entities	Off-balance sheet variable interest entities												Off-balance sheet variable interest entities

Commercial other	Commercial other	1,563		(d)	666		(e)	0		2,040		(f)	Commercial other	1,814		(f)	726		(g)	—		2,416		(h)
Total	Total	$	22,317		$	2,631		$	0	$	2,040		Total	$	20,290		$	2,188		$	—	$	2,416
December 31, 2020
On-balance sheet variable interest entities
Consumer automotive		$	17,833	(b)	$	3,103	(c)
Commercial automotive		6,276			1,152
Off-balance sheet variable interest entities

Commercial other		1,295		(d)	529		(e)	0		1,754		(f)
Total		$	25,404		$	4,784		$	0	$	1,754

(a)Asset values represent the current unpaid principal balance of outstanding ~~consumer~~credit card finance receivables and loans within the VIEs.

(b)Includes ~~$10.9~~$10.6 billion and ~~$9.9~~$11.0 billion of assets that were not encumbered by VIE beneficial interests held by third parties at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively. Ally or consolidated affiliates hold the interests in these assets.

(c)Includes ~~$114~~$120 million and ~~$94~~$124 million of liabilities that were not obligations to third-party beneficial interest holders at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively.

(d)Maximum exposure to loss represents the current unpaid principal balance of outstanding loans based on our customary representation and warranty provisions. This measure is based on the unlikely event that all of the loans have underwriting defects or other defects that trigger a representation and warranty provision and the collateral supporting the loans are worthless. This required disclosure is not an indication of our expected loss.

(e)Represents balances from our credit card business.

(f)Amounts are classified as other ~~assets.~~assets except for $1 million and $8 million classified as equity securities at June 30, 2022, and December 31, 2021, respectively.

~~(e)~~(g)Amounts are classified as accrued expenses and other liabilities.

~~(f)~~(h)For certain nonconsolidated affordable housing entities, maximum exposure to loss represents the yield we guaranteed investors through long-term guarantee contracts. The amount disclosed is based on the unlikely event that the yield delivered to investors in the form of low-income tax housing credits is recaptured. For nonconsolidated equity investments, maximum exposure to loss represents our outstanding investment, additional committed capital, and low-income housing tax credits subject to recapture. The amount disclosed is based on the unlikely event that our committed capital is funded, our investments become worthless, and the tax credits previously delivered to us are recaptured. This required disclosure is not an indication of our expected loss.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Cash Flows with ~~Off-Balance Sheet Securitization~~Nonconsolidated Special-Purpose Entities

The following table summarizes cash flows received and paid related to SPEs and asset-backed financings where the transfer is accounted for as a sale and we have a continuing involvement with the transferred consumer automotive and credit card assets (for example, servicing) that were outstanding during the six months ended June 30, ~~2021,~~2022, and ~~2020.~~2021. Additionally, this table contains information regarding cash flows received from and paid to nonconsolidated SPEs that existed during each period.


		Six months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020			($ in millions)	2022		2021
Consumer automotive							Consumer automotive
Cash proceeds from transfers completed during the period							Cash proceeds from transfers completed during the period	$	2	$	—

Consumer automotive
Cash flows received on retained interests in securitization entities		$	0	$	8

Consumer other (a)							Consumer other (a)
Cash proceeds from transfers completed during the period							Cash proceeds from transfers completed during the period	45		—
Servicing fees	Servicing fees	0		2			Servicing fees	4		—
Cash disbursements for repurchases during the period		0		(2)
Total	Total	$	0	$	8		Total	$	51	$	—

(a)Represents activity from our credit card business.

Delinquencies and Net Credit Losses

~~We did not have any off-balance sheet securitizations or whole-loan sales where we had continuing involvement at June 30, 2021, or December 31, 2020.~~ During both the three months and six months ended June 30, ~~2020,~~2022, and 2021, we ~~recognized $1 million of~~did not recognize any net credit losses from off-balance sheet securitizations where we have continuing involvement.

The following table presents quantitative information about delinquencies and net credit losses for off-balance sheet whole-loan sales where we have continuing involvement.


	Total amount				Amount 60 days or more past due
($ in millions)	June 30, 2022		December 31, 2021		June 30, 2022		December 31, 2021
Whole-loan sales (a)
Consumer automotive	$	2	$	—	$	—	$	—
Consumer other	40		4		1		—
Total	$	42	$	4	$	1	$	—

(a)Whole-loan sales are not part of a securitization transaction, but represent consumer automotive and credit card pools of loans sold to third-party investors.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

~~10.~~11. Other Assets

The components of other assets were as follows.


($ in millions)	($ in millions)	June 30, 2021		December 31, 2020		($ in millions)	June 30, 2022		December 31, 2021
Property and equipment at cost	Property and equipment at cost	$	1,668	$	1,541	Property and equipment at cost	$	2,278	$	2,139
Accumulated depreciation	Accumulated depreciation	(877)		(815)		Accumulated depreciation	(1,021)		(955)
Net property and equipment	Net property and equipment	791		726		Net property and equipment	1,257		1,184
Investment in qualified affordable housing projects	Investment in qualified affordable housing projects	1,261		1,095		Investment in qualified affordable housing projects	1,519		1,378
Nonmarketable equity investments (a) (b)		939		915
Nonmarketable equity investments						Nonmarketable equity investments	1,251		998
Net deferred tax assets	Net deferred tax assets	889		94		Net deferred tax assets	908		254
Restricted cash held for securitization trusts (c)		702		875
Goodwill						Goodwill	822		822
Accrued interest, fees, and rent receivables	Accrued interest, fees, and rent receivables	572		704		Accrued interest, fees, and rent receivables	646		600
Equity-method investments ~~(d)~~(a)	Equity-method investments ~~(d)~~(a)	382		320		Equity-method investments ~~(d)~~(a)	583		472
Goodwill		343		343
Finance lease right-of-use assets (e)		327		0
Restricted cash held for securitization trusts (b)						Restricted cash held for securitization trusts (b)	497		516

Other accounts receivable						Other accounts receivable	144		127
Net intangible assets						Net intangible assets	112		129
Operating lease right-of-use assets	Operating lease right-of-use assets	142		162		Operating lease right-of-use assets	112		148
Other accounts receivable		128		166
Restricted cash and cash equivalents (f)		79		78
Net intangible assets (g)		41		50
Fair value of derivative contracts in receivable position (h)		16		17
Restricted cash and cash equivalents (c)						Restricted cash and cash equivalents (c)	95		92

Other assets	Other assets	893		870		Other assets	936		1,337
Total other assets	Total other assets	$	7,505	$	6,415	Total other assets	$	8,882	$	8,057

(a)~~Includes~~Primarily relates to investments made in FHLB stock of $239 million and $276 million at June 30, 2021, and December 31, 2020, respectively; FRB stock of $449 million at both June 30, 2021, and December 31, 2020; and equity securities without a readily determinable fair value of $251 million and $189 million at June 30, 2021, and December 31, 2020, respectively, measured at costconnection with ~~adjustments for impairment and observable changes in price.~~our CRA program.

(b)During both the three months and six months ended June 30, 2021, we recorded $81 million of upward adjustments related to equity securities without a readily determinable fair value still held at June 30, 2021, driven primarily by an investment in one entity for which there was a subsequent funding round at a higher valuation during the period, resulting in an observable price change. During both the three months and six months ended June 30, 2021, we recorded $1 million of impairments and downward adjustments related to equity securities without a readily determinable fair value still held at June 30, 2021. Securities held in our portfolio of equity securities without a readily determinable fair value as of June 30, 2021, include cumulative upward adjustments of $176 million and impairments and downward adjustments of $13 million through June 30, 2021.

~~(c)~~Includes restricted cash collected from customer payments on securitized receivables, which are distributed by us to investors as payments on the related secured debt, and cash reserve deposits utilized as a form of credit enhancement for various securitization transactions.

~~(d)Primarily relates to investments made in connection with our CRA program.~~

~~(e)For additional information on finance lease right-of-use assets, refer to Note 8.~~

~~(f)~~(c)Primarily represents a number of arrangements with third parties where certain restrictions are placed on balances we hold due to collateral agreements associated with operational processes with a third-party bank, or letter of credit arrangements and corresponding collateral requirements.

~~(g)Includes gross intangible assets~~The total carrying value of ~~$109 million~~the nonmarketable equity investments held at ~~both~~June 30, 2022, and December 31, 2021, including cumulative unrealized gains and losses was as follows.


($ in millions)	June 30, 2022		December 31, 2021
FHLB stock	$	548	$	289
FRB stock	449		449
Equity securities without a readily determinable fair value
Cost basis at acquisition	84		89
Adjustments
Upward adjustments	177		183
Downward adjustments (including impairment)	(7)		(12)
Carrying amount, equity securities without a readily determinable fair value	254		260
Nonmarketable equity investments	$	1,251	$	998

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

During the three months and six months ended June 30, 2022, and June 30, 2021, respectively, unrealized gains and ~~December 31, 2020,~~losses included in the carrying value of the nonmarketable equity investments still held as of June 30, 2022, and ~~accumulated amortization of $68 million and $59 million at~~ June 30, 2021, were as follows.


	Three months ended June 30,				Six months ended June 30,
($ in millions)	2022		2021		2022		2021
Upward adjustments	$	—	$	81	$	1	$	81
Downward adjustments (including impairment) (a)	$	—	$	(1)	$	(3)	$	(1)

(a)No impairment on FHLB and ~~December 31, 2020, respectively.~~FRB stock was recognized during both the three months and six months ended June 30, 2022, and 2021.

~~(h)For additional information~~Total gain on ~~derivative instruments~~nonmarketable equity investments, net, which includes both realized and ~~hedging activities, refer~~unrealized gains and losses were gains of $3 million and $2 million for the three months and six months ended June 30, 2022, respectively, compared to ~~Note 18.~~gains of $99 million and $103 million for the three months and six months ended June 30, 2021.

The carrying balance of goodwill by reportable operating segment was as follows.


($ in millions)	($ in millions)	Automotive Finance operations		Insurance operations		Corporate and Other (a)		Total		($ in millions)	Automotive Finance operations		Insurance operations		Corporate and Other (a)		Total
Goodwill at December 31, 2020										Goodwill at December 31, 2020	$	20	$	27	$	296	$	343
Goodwill acquired										Goodwill acquired	—		—		479		479

Goodwill at December 31, 2021										Goodwill at December 31, 2021	$	20	$	27	$	775	$	822
Goodwill acquired										Goodwill acquired	—		—		—		—

Goodwill at December 31, 2020		$	20	$	27	$	296	$	343

Impairment losses		0		0		0		0

Goodwill at June 30, 2021		$	20	$	27	$	296	$	343
Goodwill at June 30, 2022										Goodwill at June 30, 2022	$	20	$	27	$	775	$	822

(a)Includes $479 million of goodwill associated with Ally Credit Card at both June 30, 2022, and December 31, 2021, and $153 million of goodwill associated with Ally Lending at both June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, and $143 million of goodwill associated with Ally Invest at both June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021.

The net carrying value of intangible assets by class was as follows.


	June 30, 2022 (a)						December 31, 2021
($ in millions)	Gross intangible assets		Accumulated amortization		Net carrying value		Gross intangible assets		Accumulated amortization		Net carrying value
Technology	$	122	$	(45)	$	77	$	122	$	(36)	$	86
Customer lists	58		(47)		11		58		(42)		16
Purchased credit card relationships	25		(2)		23		25		—		25

Trademarks	2		(1)		1		2		—		2

Total intangible assets	$	207	$	(95)	$	112	$	207	$	(78)	$	129

(a)We expect to recognize amortization expense of $15 million during the remainder of 2022, $25 million in 2023, $18 million in 2024, $14 million in 2025, and $14 million in 2026.

12. Deposit Liabilities

Deposit liabilities consisted of the following.



($ in millions)	June 30, 2022		December 31, 2021
Noninterest-bearing deposits	$	185	$	150
Interest-bearing deposits
Savings, money market, and checking accounts	103,587		102,455
Certificates of deposit	36,629		38,953

Total deposit liabilities	$	140,401	$	141,558

At June 30, 2022, and December 31, 2021, certificates of deposit included $6.1 billion and $7.2 billion, respectively, of those in denominations in excess of $250 thousand federal insurance limits.

3438

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

~~11. Deposit Liabilities~~

~~Deposit liabilities consisted of the following.~~

($ in millions) June 30, 2021 December 31, 2020
Noninterest-bearing deposits $ 149 $ 128
Interest-bearing deposits
Savings, money market, and checking accounts 93,702 83,698
Certificates of deposit 45,253 53,210
Total deposit liabilities $ 139,104 $ 137,036

At June 30, 2021, and December 31, 2020, certificates of deposit included $22.8 billion and $25.8 billion, respectively, of those in denominations of $100 thousand or more. At June 30, 2021, and December 31, 2020, certificates of deposit included $7.7 billion and $8.6 billion, respectively, of those in denominations in excess of $250 thousand federal insurance limits.

~~12.~~13. Debt

Short-Term Borrowings

The following table presents the composition of our short-term borrowings portfolio.


		June 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
($ in millions)	($ in millions)	Unsecured		Secured (a)		Total		Unsecured		Secured (a)		Total		($ in millions)	Unsecured		Secured (a)		Total		Unsecured		Secured (a)		Total
Demand notes (b)		$	0	$	0	$	0	$	2,136	$	0	$	2,136

Federal Home Loan Bank														Federal Home Loan Bank	$	—	$	6,775	$	6,775	$	—	$	—	$	—
Other (b)														Other (b)	—		1,000		1,000		—		—		—

Total short-term borrowings	Total short-term borrowings	$	0	$	0	$	0	$	2,136	$	0	$	2,136	Total short-term borrowings	$	—	$	7,775	$	7,775	$	—	$	—	$	—

(a)Refer to the section below titled Long-Term Debt for further details on assets restricted as collateral for payment of the related debt.

(b)~~On March 1, 2021, we terminated~~Represents a loan participation agreement that did not meet the ~~offering of our demand notes program,~~requirements for derecognition and ~~redeemed in full all outstanding demand notes.~~was therefore accounted for as a secured borrowing.

Long-Term Debt

The following ~~table presents~~tables present the composition of our long-term debt portfolio.


		June 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
($ in millions)	($ in millions)	Unsecured		Secured		Total		Unsecured		Secured		Total		($ in millions)	Unsecured		Secured		Total		Unsecured		Secured		Total
Long-term debt (a)	Long-term debt (a)													Long-term debt (a)
Due within one year	Due within one year	$	966	$	6,181	$	7,147	$	647	$	4,438	$	5,085	Due within one year	$	798	$	2,776	$	3,574	$	1,028	$	4,841	$	5,869
Due after one year	Due after one year	8,924		825		9,749		11,367		5,554		16,921		Due after one year	8,377		5,033		13,410		8,382		2,778		11,160
Total long-term debt (b) (c)		$	9,890	$	7,006	$	16,896	$	12,014	$	9,992	$	22,006
Total long-term debt (b)														Total long-term debt (b)	$	9,175	$	7,809	$	16,984	$	9,410	$	7,619	$	17,029

(a)Includes basis adjustments related to the application of hedge accounting. Refer to Note 1819 for additional information.

(b)~~Includes $1.2 billion and $2.6 billion of trust preferred securities at June 30, 2021, and December 31, 2020, respectively.~~

~~(c)~~Includes advances, net of hedge basis adjustments, from the FHLB of Pittsburgh of ~~$5.0 billion and $5.8~~$6.3 billion at both June 30, ~~2021,~~2022, and December 31, ~~2020, respectively.~~2021.

The following table presents the scheduled remaining maturity of long-term debt at June 30, ~~2021,~~2022, assuming no early redemptions will occur. The amounts below include adjustments to the carrying value resulting from the application of hedge accounting. The actual payment of secured debt may vary based on the payment activity of the related pledged assets.


($ in millions)	($ in millions)	2021		2022		2023		2024		2025		2026 and thereafter		Total		($ in millions)	2022		2023		2024		2025		2026		2027 and thereafter		Total
Unsecured	Unsecured															Unsecured
Long-term debt	Long-term debt	$	1,074	$	1,103	$	2,108	$	1,473	$	2,360	$	2,755	$	10,873	Long-term debt	$	31	$	2,082	$	1,479	$	2,391	$	25	$	4,068	$	10,076
Original issue discount	Original issue discount	(66)		(51)		(57)		(64)		(69)		(676)		(983)		Original issue discount	(27)		(59)		(66)		(72)		(80)		(597)		(901)
Total unsecured	Total unsecured	1,008		1,052		2,051		1,409		2,291		2,079		9,890		Total unsecured	4		2,023		1,413		2,319		(55)		3,471		9,175
Secured	Secured															Secured
Long-term debt	Long-term debt	1,459		4,867		617		41		12		10		7,006		Long-term debt	2,067		2,002		2,423		892		340		85		7,809
Total long-term debt	Total long-term debt	$	2,467	$	5,919	$	2,668	$	1,450	$	2,303	$	2,089	$	16,896	Total long-term debt	$	2,071	$	4,025	$	3,836	$	3,211	$	285	$	3,556	$	16,984

3539

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following summarizes assets restricted as collateral for the payment of the related debt ~~obligation, primarily arising from securitization transactions accounted for as secured borrowings.~~obligation.


		June 30, 2021				December 31, 2020					June 30, 2022				December 31, 2021
($ in millions)	($ in millions)	Total (a)		Ally Bank		Total (a)		Ally Bank		($ in millions)	Total (a)		Ally Bank		Total (a)		Ally Bank

Consumer mortgage finance receivables	Consumer mortgage finance receivables	$	13,968	$	13,968	$	14,979	$	14,979	Consumer mortgage finance receivables	$	19,210	$	19,210	$	17,941	$	17,941
Consumer automotive finance receivables	Consumer automotive finance receivables	9,660		9,244		9,953		9,510		Consumer automotive finance receivables	9,960		9,960		9,122		9,122
Commercial finance receivables(b)	Commercial finance receivables(b)	2,147		2,147		10,866		10,866		Commercial finance receivables(b)	5,000		5,000		10		10
Investment securities										Investment securities	3,386		3,386		—		—
Credit card receivables										Credit card receivables	—		—		347		347

Total assets restricted as collateral (b) (c)		$	25,775	$	25,359	$	35,798	$	35,355
Secured debt		$	7,006	$	6,700	$	9,992	$	9,634
Total assets restricted as collateral (c) (d)										Total assets restricted as collateral (c) (d)	$	37,556	$	37,556	$	27,420	$	27,420
Secured debt (e)										Secured debt (e)	$	15,584	$	15,584	$	7,619	$	7,619

(a)Ally Bank is a component of the total column.

(b)Includes pledged commercial finance receivables related to a participation agreement at June 30, 2022.

(c)Ally Bank has an advance agreement with the FHLB, and had assets pledged to secure borrowings that were restricted as collateral to the FHLB totaling ~~$14.0~~$26.6 billion and ~~$20.0~~$18.0 billion at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively. These assets were composed primarily of consumer mortgage finance receivables and ~~loans and investment securities.~~loans. Ally Bank has access to the FRB Discount Window and had assets pledged and restricted as collateral to the FRB totaling $2.4 billion at both June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021. These assets were composed of consumer automotive finance receivables and loans. Availability under these programs is only for the operations of Ally Bank and cannot be used to fund the operations or liabilities of Ally or its other subsidiaries.

~~(c)~~(d)Excludes restricted cash and cash reserves for securitization trusts recorded within other assets on the Condensed Consolidated Balance Sheet. Refer to Note 1011 for additional information.

~~Trust Preferred Securities~~

~~We had approximately $1.2~~(e)Includes $7.8 billion ~~and $2.6 billion in aggregate liquidation preference~~ of ~~Series 2 TRUPS outstanding~~short-term borrowings at June 30, 2021, and December 31, 2020, respectively. Each Series 2 TRUPS security has a liquidation amount of $25. Distributions are cumulative and are payable until redemption at the applicable coupon rate. Distributions are payable at an annual rate equal to three-month LIBOR plus 5.785% payable quarterly in arrears. Ally has the right to defer payments of interest for a period not exceeding 20 consecutive quarters. The Series 2 TRUPS have no stated maturity date, but must be redeemed upon the redemption or maturity of the related debentures (Debentures), which mature on February 15, 2040. Ally at any time may redeem, in part or in whole, the Series 2 TRUPS at a redemption price equal to 100% of the principal amount being redeemed, plus accrued and unpaid interest through the date of redemption. The Series 2 TRUPS are generally nonvoting, other than with respect to certain limited matters. During any period in which any Series 2 TRUPS remain outstanding but in which distributions on the Series 2 TRUPS have not been fully paid, none of Ally or its subsidiaries will be permitted to (i) declare or pay dividends on, make any distributions with respect to, or redeem, purchase, acquire or otherwise make a liquidation payment with respect to, any of Ally’s capital stock or make any guarantee payment with respect thereto; or (ii) make any payments of principal, interest, or premium on, or repay, repurchase or redeem, any debt securities or guarantees that rank on a parity with or junior in interest to the Debentures with certain specified exceptions in each case. The Series 2 TRUPS were issued prior to October 4, 2010, under the Emergency Economic Stabilization Act of 2008 and are not subject to phase-out from additional Tier 1 capital into Tier 2 capital.

On April 22, 2021, we issued $1.35 billion of preferred stock, Series B, and used the proceeds to redeem $1.4 billion, or 56,000,000 shares of the Series 2 TRUPS outstanding. The redemption was effectuated on May 24, 2021. Additionally, on June 2, 2021, we issued $1.0 billion of preferred stock, Series C, and announced our intent to use the proceeds to redeem a portion of the Series 2 TRUPS outstanding. On July 2, 2021, we effectuated the redemption of an additional $1.04 billion, or 41,600,000 shares of the Series 2 TRUPS outstanding.

The amount of Series 2 TRUPS included in Ally’s Tier 1 capital was $181 million at June 30, 2021. The amount represents the carrying amount of the Series 2 TRUPS, net of the carrying amount of Series 2 TRUPS for which we issued a notice of redemption on June 2, 2021, less our common stock investment in the trust.

~~Funding Facilities~~

We utilize both committed secured credit facilities and other collateralized funding vehicles. The debt outstanding under our various funding facilities is included on our Condensed Consolidated Balance Sheet.

The total capacity in our credit facilities is provided by banks through private transactions. The facilities can be revolving in nature, generally having an original tenor ranging from 364 days to two years, and allow for additional funding during the commitment period, or they can be amortizing and not allow for any further funding after the commitment period. At June 30, 2021, all of our $300 million of capacity was revolving and of this balance, $125 million was from facilities with a remaining tenor greater than 364 days.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

~~Committed Secured Credit Facilities~~

Outstanding Unused capacity (a) Total capacity
($ in millions) June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020 June 30, 2021 December 31, 2020
Parent funding
Secured $ 132 $ 0 $ 168 $ 560 $ 300 $ 560
Total committed secured credit facilities $ 132 $ 0 $ 168 $ 560 $ 300 $ 560

~~(a)~~Funding from committed secured credit facilities is available on request in the event excess collateral resides in certain facilities or the extent incremental collateral is available and contributed to the facilities.2022.

~~13.~~14. Accrued Expenses and Other Liabilities

The components of accrued expenses and other liabilities were as follows.

($ in millions) June 30, 2021 December 31, 2020
Accounts payable $ 663 $ 602
Unfunded commitments for investment in qualified affordable housing projects 662 525
Employee compensation and benefits 348 316
Finance lease liabilities 326 0
Operating lease liabilities 167 187
Deferred revenue 146 104
Reserves for insurance losses and loss adjustment expenses 126 129
Fair value of derivative contracts in payable position (a) 47 33
Net deferred tax liabilities 17 92
Cash collateral received from counterparties 4 6
Other liabilities 533 440
Total accrued expenses and other liabilities $ 3,039 $ 2,434

~~(a)For additional information on derivative instruments and hedging activities, refer to Note 18.~~


($ in millions)	June 30, 2022		December 31, 2021
Unfunded commitments for investment in qualified affordable housing projects	$	836	$	724
Accounts payable	534		584
Employee compensation and benefits	341		512
Deferred revenue	174		176
Operating lease liabilities	136		175
Reserves for insurance losses and loss adjustment expenses	131		122




Other liabilities	647		460
Total accrued expenses and other liabilities	$	2,799	$	2,753

~~14.~~15. Preferred Stock

Series B Preferred Stock

In April 2021, we issued 1,350,000 shares of 4.700% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series B, with $0.01 par value and liquidation preference of $1,000 per share. Proceeds from the offering were used to redeem a portion of our 8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust I. Dividends on shares of the Series B Preferred Stock are discretionary and are not cumulative. Holders of the Series B Preferred Stock will be entitled to receive, if, when and as declared by our Board, or a duly authorized committee of the Board, out of legally available assets, non-cumulative cash dividends quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on August 15, 2021. Dividends will accrue (i) from the date of original issue to, but excluding, May 15, 2026, at a fixed rate of 4.700% per annum and (ii) from, and including, May 15, 2026, during each five-year reset period, at a rate per annum equal to the five-year treasury rate as of the most recent reset dividend determination date plus 3.868% on the liquidation preference amount of $1,000 per share. So long as any share of Series B Preferred Stock remains outstanding, unless the dividends for the most recently completed dividend period have been paid in full, or set aside for payment, on all outstanding shares of Series B Preferred Stock, we will be prohibited, subject to certain specified exceptions, from (i) declaring or paying any dividends or making any distributions with respect to any stock that ranks on a parity basis with, or junior in interest to, the Series B Preferred Stock or (ii) repurchasing, redeeming, or otherwise acquiring for consideration, directly or indirectly, any stock that ranks on a parity basis with, or junior in interest to, the Series B Preferred Stock.

The holders of the Series B Preferred Stock do not have voting rights other than those set forth in the certificate of designations for the Series B Preferred Stock included in Ally’s Certificate of Incorporation. The Series B Preferred Stock does not have a stated maturity date, and will be perpetual unless redeemed at Ally’s option. Ally is not required to redeem the Series B Preferred Stock and holders of the Series B Preferred Stock have no right to require Ally to redeem their shares. Ally may, at its option, redeem the shares of Series B Preferred stock (i)

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

in whole or in part, on any dividend payment date on or after May 15, 2026, or (ii) in whole, but not in part, at any time within 90 days following a regulatory capital treatment event. In the event of any liquidation, dissolution or winding up of the affairs of Ally, holders of the Series B Preferred Stock will be entitled to receive the liquidation amount per share of Series B Preferred Stock and an amount equal to all declared, but unpaid dividends declared prior to the date of payment out of assets available for distribution, before any distribution is made for holders of stock that ranks junior in interest to the Series B Preferred Stock, subject to the rights of Ally’s creditors.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

Series C Preferred Stock

In June 2021, we issued 1,000,000 shares of 4.700% Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series C, with $0.01 par value and liquidation preference of $1,000 per share. Proceeds from the offering were used to redeem a portion of our 8.125% Fixed Rate/Floating Rate Trust Preferred Securities, Series 2 of GMAC Capital Trust I. Dividends on shares of the Series C Preferred Stock are discretionary and are not cumulative. Holders of the Series C Preferred Stock will be entitled to receive, if, when and as declared by our Board, or a duly authorized committee of the Board, out of legally available assets, non-cumulative cash dividends quarterly in arrears on February 15, May 15, August 15 and November 15 of each year, beginning on August 15, 2021. Dividends will accrue (i) from the date of original issue to, but excluding, May 15, 2028, at a fixed rate of 4.700% per annum and (ii) from, and including, May 15, 2028, during each seven-year reset period, at a rate per annum equal to the seven-year treasury rate as of the most recent reset dividend determination date plus 3.481% on the liquidation preference amount of $1,000 per share. So long as any share of Series C Preferred Stock remains outstanding, unless the dividends for the most recently completed dividend period have been paid in full, or set aside for payment, on all outstanding shares of Series C Preferred Stock, we will be prohibited, subject to certain specified exceptions, from (i) declaring or paying any dividends or making any distributions with respect to any stock that ranks on a parity basis with, or junior in interest to, the Series C Preferred Stock or (ii) repurchasing, redeeming, or otherwise acquiring for consideration, directly or indirectly, any stock that ranks on a parity basis with, or junior in interest to, the Series C Preferred Stock.

The holders of the Series C Preferred Stock do not have voting rights other than those set forth in the certificate of designations for the Series C Preferred Stock included in Ally’s Certificate of Incorporation. The Series C Preferred Stock does not have a stated maturity date, and will be perpetual unless redeemed at Ally’s option. Ally is not required to redeem the Series C Preferred Stock and holders of the Series C Preferred Stock have no right to require Ally to redeem their shares. Ally may, at its option, redeem the shares of Series C Preferred stock (i) in whole or in part, on any dividend payment date on or after May 15, 2028, or (ii) in whole, but not in part, at any time within 90 days following a regulatory capital treatment event. In the event of any liquidation, dissolution or winding up of the affairs of Ally, holders of the Series C Preferred Stock will be entitled to receive the liquidation amount per share of Series C Preferred Stock and an amount equal to all declared, but unpaid dividends declared prior to the date of payment out of assets available for distribution, before any distribution is made for holders of stock that ranks junior in interest to the Series C Preferred Stock, subject to the rights of Ally’s creditors.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table summarizes information about our preferred stock.


		June 30, 2021			June 30, 2022
Series B preferred stock (a)	Series B preferred stock (a)			Series B preferred stock (a)
Issuance date	Issuance date	April 22, 2021		Issuance date	April 22, 2021
Carrying value ($ in millions)	Carrying value ($ in millions)	$	1,335	Carrying value ($ in millions)	$	1,335
Par value (per share)	Par value (per share)	$	0.01	Par value (per share)	$	0.01
Liquidation preference (per share)	Liquidation preference (per share)	$	1,000	Liquidation preference (per share)	$	1,000
Number of shares authorized	Number of shares authorized	1,350,000		Number of shares authorized	1,350,000
Number of shares issued and outstanding	Number of shares issued and outstanding	1,350,000		Number of shares issued and outstanding	1,350,000
Dividend/coupon	Dividend/coupon			Dividend/coupon
Prior to May 15, 2026	Prior to May 15, 2026	4.700%		Prior to May 15, 2026	4.700%
On and after May 15, 2026	On and after May 15, 2026	Five Year Treasury + 3.868%		On and after May 15, 2026	Five Year Treasury + 3.868%
Series C preferred stock (a)	Series C preferred stock (a)			Series C preferred stock (a)
Issuance date	Issuance date	June 2, 2021		Issuance date	June 2, 2021
Carrying value ($ in millions)	Carrying value ($ in millions)	$	989	Carrying value ($ in millions)	$	989
Par value (per share)	Par value (per share)	$	0.01	Par value (per share)	$	0.01
Liquidation preference (per share)	Liquidation preference (per share)	$	1,000	Liquidation preference (per share)	$	1,000
Number of shares authorized	Number of shares authorized	1,000,000		Number of shares authorized	1,000,000
Number of shares issued and outstanding	Number of shares issued and outstanding	1,000,000		Number of shares issued and outstanding	1,000,000
Dividend/coupon	Dividend/coupon			Dividend/coupon
Prior to May 15, 2028	Prior to May 15, 2028	4.700%		Prior to May 15, 2028	4.700%
On and after May 15, 2028	On and after May 15, 2028	Seven Year Treasury + 3.481%		On and after May 15, 2028	Seven Year Treasury + 3.481%

(a)We may, at our option, redeem the Series B and Series C shares on any dividend payment date on or after May 15, 2026, or May 15, 2028, respectively, or at any time within 90 days following a regulatory event that precludes the instruments from being included in additional Tier 1 capital.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

~~15.~~16. Accumulated Other Comprehensive ~~Income~~Loss

The following tables present changes, net of tax, in each component of accumulated other comprehensive ~~income.~~loss.


		Three months ended June 30,											Three months ended June 30,
($ in millions)	($ in millions)	Unrealized gains on investment securities (a)		Translation adjustments and net investment hedges (b)		Cash flow hedges (b)		Defined benefit pension plans		Accumulated other comprehensive income		($ in millions)	Unrealized gains (losses) on investment securities (a)		Translation adjustments and net investment hedges (b)		Cash flow hedges (b)		Defined benefit pension plans		Accumulated other comprehensive income (loss)

Balance at April 1, 2020		$	661	$	18	$	130	$	(103)	$	706
Net change		122		1		(14)		0		109
Balance at June 30, 2020		$	783	$	19	$	116	$	(103)	$	815
Balance at April 1, 2021	Balance at April 1, 2021	$	53	$	20	$	65	$	(111)	$	27	Balance at April 1, 2021	$	53	$	20	$	65	$	(111)	$	27
Net change	Net change	206		0		(17)		0		189		Net change	206		—		(17)		—		189
Balance at June 30, 2021	Balance at June 30, 2021	$	259	$	20	$	48	$	(111)	$	216	Balance at June 30, 2021	$	259	$	20	$	48	$	(111)	$	216
Balance at April 1, 2022												Balance at April 1, 2022	$	(1,726)	$	20	$	30	$	(115)	$	(1,791)
Net change												Net change	(1,214)		(1)		(3)		—		(1,218)
Balance at June 30, 2022 (c)												Balance at June 30, 2022 (c)	$	(2,940)	$	19	$	27	$	(115)	$	(3,009)

(a)Represents the after-tax difference between the fair value and amortized cost of our available-for-sale securities portfolio.

(b)For additional information on derivative instruments and hedging activities, refer to Note ~~18.~~19.

Six months ended June 30,
($ in millions) Unrealized gains on investment securities (a) Translation adjustments and net investment hedges (b) Cash flow hedges (b) Defined benefit pension plans Accumulated other comprehensive income
Balance at December 31, 2019 $ 208 $ 19 $ 2 $ (106) $ 123
Net change 575 0 114 3 692
Balance at June 30, 2020 $ 783 $ 19 $ 116 $ (103) $ 815
Balance at December 31, 2020 $ 640 $ 19 $ 82 $ (110) $ 631
Net change (381) 1 (34) (1) (415)
Balance at June 30, 2021 $ 259 $ 20 $ 48 $ (111) $ 216
(c)The valuation of our defined benefit plan reflects our current intention to terminate our qualified defined benefit plan in the future. Upon termination and settlement, the unrealized loss and associated tax effects related to our qualified defined benefit pension plan recorded in accumulated other comprehensive income would be recognized in net income from continuing operations of our Condensed Consolidated Statement of Comprehensive Income.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


	Six months ended June 30,
($ in millions)	Unrealized gains (losses) on investment securities (a)		Translation adjustments and net investment hedges (b)		Cash flow hedges (b)		Defined benefit pension plans		Accumulated other comprehensive income (loss)






Balance at January 1, 2021	$	640	$	19	$	82	$	(110)	$	631
Net change	(381)		1		(34)		(1)		(415)
Balance at June 30, 2021	$	259	$	20	$	48	$	(111)	$	216
Balance at January 1, 2022	$	(95)	$	19	$	35	$	(117)	$	(158)
Net change	(2,845)		—		(8)		2		(2,851)
Balance at June 30, 2022 (c)	$	(2,940)	$	19	$	27	$	(115)	$	(3,009)

(a)Represents the after-tax difference between the fair value and amortized cost of our available-for-sale securities portfolio.

(b)For additional information on derivative instruments and hedging activities, refer to Note ~~18.~~19.

~~Table~~(c)The valuation of ~~Contents~~

~~Notes~~our defined benefit plan reflects our current intention to terminate our qualified defined benefit plan in the future. Upon termination and settlement, the unrealized loss and associated tax effects related to our qualified defined benefit pension plan recorded in accumulated other comprehensive income would be recognized in net income from continuing operations of our Condensed Consolidated ~~Financial Statements (unaudited)~~Statement of Comprehensive Income.

~~Ally Financial Inc. • Form 10-Q~~

The following tables present the before- and after-tax changes in each component of accumulated other comprehensive (loss) income.

Three months ended June 30, 2021 ($ in millions)
Before tax Tax effect After tax
Investment securities
Net unrealized gains arising during the period $ 276 $ (65) $ 211
Less: Net realized gains reclassified to income from continuing operations 6 (a) (1) (b) 5
Net change 270 (64) 206
Translation adjustments
Net unrealized gains arising during the period 2 0 2
Net investment hedges (c)
Net unrealized losses arising during the period (3) 1 (2)
Cash flow hedges (c)
Less: Net realized gains reclassified to income from continuing operations 22 (d) (5) (b) 17
Other comprehensive income $ 247 $ (58) $ 189


Three months ended June 30, 2022 ($ in millions)	Before tax			Tax effect			After tax
Investment securities
Net unrealized losses arising during the period	$	(1,588)		$	376		$	(1,212)
Less: Net realized gains reclassified to income from continuing operations	3		(a)	(1)		(b)	2

Net change	(1,591)			377			(1,214)
Translation adjustments
Net unrealized losses arising during the period	(5)			1			(4)



Net investment hedges (c)
Net unrealized gains arising during the period	4			(1)			3



Cash flow hedges (c)

Less: Net realized gains reclassified to income from continuing operations	5		(d)	(2)		(b)	3







Other comprehensive loss	$	(1,597)		$	379		$	(1,218)

(a)Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income.

(b)Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income.

(c)For additional information on derivative instruments and hedging activities, refer to Note ~~18.~~19.

(d)Includes gains reclassified to interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income.


Three months ended June 30, 2020 ($ in millions)		Before tax			Tax effect			After tax
Three months ended June 30, 2021 ($ in millions)										Three months ended June 30, 2021 ($ in millions)	Before tax			Tax effect			After tax
Investment securities	Investment securities									Investment securities
Net unrealized gains arising during the period	Net unrealized gains arising during the period	$	175		$	(38)		$	137	Net unrealized gains arising during the period	$	276		$	(65)		$	211
Less: Net realized gains reclassified to income from continuing operations	Less: Net realized gains reclassified to income from continuing operations	19		(a)	(4)		(b)	15		Less: Net realized gains reclassified to income from continuing operations	6		(a)	(1)		(b)	5
Net change	Net change	156			(34)			122		Net change	270			(64)			206
Translation adjustments	Translation adjustments									Translation adjustments
Net unrealized gains arising during the period	Net unrealized gains arising during the period	6			(1)			5		Net unrealized gains arising during the period	2			—			2
Net investment hedges (c)	Net investment hedges (c)									Net investment hedges (c)
Net unrealized losses arising during the period	Net unrealized losses arising during the period	(5)			1			(4)		Net unrealized losses arising during the period	(3)			1			(2)
Cash flow hedges (c)	Cash flow hedges (c)									Cash flow hedges (c)

Less: Net realized gains reclassified to income from continuing operations	Less: Net realized gains reclassified to income from continuing operations	19			(5)			14		Less: Net realized gains reclassified to income from continuing operations	22		(d)	(5)		(b)	17

Other comprehensive income	Other comprehensive income	$	138		$	(29)		$	109	Other comprehensive income	$	247		$	(58)		$	189

(a)Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income.

(b)Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income.

(c)For additional information on derivative instruments and hedging activities, refer to Note ~~18.~~19.

(d)Includes gains reclassified to interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income.

4043

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


Six months ended June 30, 2022 ($ in millions)	Before tax			Tax effect			After tax
Investment securities
Net unrealized losses arising during the period	$	(3,708)		$	879		$	(2,829)
Less: Net realized gains reclassified to income from continuing operations	21		(a)	(5)		(b)	16

Net change	(3,729)			884			(2,845)
Translation adjustments
Net unrealized losses arising during the period	(2)			1			(1)



Net investment hedges (c)
Net unrealized gains arising during the period	1			—			1



Cash flow hedges (c)

Less: Net realized gains reclassified to income from continuing operations	11		(d)	(3)		(b)	8


Defined benefit pension plans
Net unrealized gains arising during the period	2			—			2



Other comprehensive loss	$	(3,739)		$	888		$	(2,851)

(a)Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income.

(b)Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income.

(c)For additional information on derivative instruments and hedging activities, refer to Note 19.

(d)Includes gains reclassified to interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income.


Six months ended June 30, 2021 ($ in millions)	Before tax			Tax effect			After tax
Investment securities
Net unrealized losses arising during the period	$	(460)		$	109		$	(351)
Less: Net realized gains reclassified to income from continuing operations	38		(a)	(8)		(b)	30
Net change	(498)			117			(381)
Translation adjustments
Net unrealized gains arising during the period	5			(1)			4
Net investment hedges (c)
Net unrealized losses arising during the period	(5)			2			(3)
Cash flow hedges (c)

Less: Net realized gains reclassified to income from continuing operations	43		(d)	(9)		(b)	34

Defined benefit pension plans
Net unrealized losses arising during the period	(2)			1			(1)
Other comprehensive loss	$	(543)		$	128		$	(415)

(a)Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income.

(b)Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income.

(c)For additional information on derivative instruments and hedging activities, refer to Note ~~18.~~19.

(d)Includes gains reclassified to interest and fees on finance receivables and loans in our Condensed Consolidated Statement of Comprehensive Income.

Six months ended June 30, 2020 ($ in millions)
Before tax Tax effect After tax
Investment securities
Net unrealized gains arising during the period $ 877 $ (206) $ 671
Less: Net realized gains reclassified to income from continuing operations 124 (a) (28) (b) 96
Net change 753 (178) 575
Translation adjustments
Net unrealized losses arising during the period (7) 2 (5)
Net investment hedges (c)
Net unrealized gains arising during the period 7 (2) 5
Cash flow hedges (c)
Net unrealized gains arising during the period 169 (41) 128
Less: Net realized gains reclassified to income from continuing operations 19 (5) 14
Net change 150 (36) 114
Defined benefit pension plans
Net unrealized gains arising during the period 4 (1) 3
Other comprehensive income $ 907 $ (215) $ 692

~~(a)Includes gains reclassified to other gain on investments, net in our Condensed Consolidated Statement of Comprehensive Income.~~

~~(b)Includes amounts reclassified to income tax expense from continuing operations in our Condensed Consolidated Statement of Comprehensive Income.~~

~~(c)For additional information on derivative instruments and hedging activities, refer to Note 18.~~

4144

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

~~16.~~17. Earnings per Common Share

The following table presents the calculation of basic and diluted earnings per common share.

Three months ended June 30, Six months ended June 30,
($ in millions, except per share data; shares in thousands) (a)
2021 2020 2021 2020
Net income (loss) from continuing operations $ 899 $ 242 $ 1,695 $ (77)
Income (loss) from discontinued operations, net of tax 1 (1) 1 (1)
Net income (loss) attributable to common stockholders $ 900 $ 241 $ 1,696 $ (78)
Basic weighted-average common shares outstanding (b) 370,412 375,051 372,807 375,387
Diluted weighted-average common shares outstanding (b) (c) 373,029 375,762 375,265 375,387
Basic earnings per common share
Net income (loss) from continuing operations $ 2.43 $ 0.65 $ 4.55 $ (0.20)
Net income (loss) $ 2.43 $ 0.64 $ 4.55 $ (0.21)
Diluted earnings per common share
Net income (loss) from continuing operations $ 2.41 $ 0.64 $ 4.52 $ (0.20)
Net income (loss) $ 2.41 $ 0.64 $ 4.52 $ (0.21)


	Three months ended June 30,				Six months ended June 30,
($ in millions, except per share data; shares in thousands) (a)	2022		2021		2022		2021
Net income from continuing operations	$	482	$	899	$	1,137	$	1,695
Preferred stock dividends — Series B	(16)		—		(32)		—
Preferred stock dividends — Series C	(12)		—		(24)		—
Net income from continuing operations attributable to common stockholders	$	454	$	899	$	1,081	$	1,695
Income from discontinued operations, net of tax	—		1		—		1
Net income attributable to common stockholders	$	454	$	900	$	1,081	$	1,696
Basic weighted-average common shares outstanding (b)	322,057		370,412		328,830		372,807
Diluted weighted-average common shares outstanding (b)	324,027		373,029		330,882		375,265
Basic earnings per common share
Net income from continuing operations	$	1.41	$	2.43	$	3.29	$	4.55

Net income	$	1.41	$	2.43	$	3.29	$	4.55
Diluted earnings per common share
Net income from continuing operations	$	1.40	$	2.41	$	3.27	$	4.52

Net income	$	1.40	$	2.41	$	3.27	$	4.52

(a)Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.

(b)Includes shares related to share-based compensation that vested but were not yet issued.

~~(c)~~Due to the antidilutive effect of the net loss from continuing operations for the six months ended June 30, 2020, basic weighted-average common shares outstanding was used to calculate basic and diluted earnings per share. During the three months and six months ended June 30, 2020, there were 2.3 million and 2.4 million, respectively, in shares underlying share-based awards excluded because their inclusion would have been antidilutive. There were 0 antidilutive shares during the three months and six months ended June 30, 2021.

~~17.~~18. Regulatory Capital and Other Regulatory Matters

Ally is currently subject to enhanced prudential standards that were established by the FRB under the Dodd-Frank Act. Targeted amendments to the Dodd-Frank Act and other financial-services laws were enacted through the EGRRCP Act, including amendments that affect whether and, if so, how the FRB applies enhanced prudential standards to BHCs like us with $100 billion or more but less than $250 billion in total consolidated assets. Through final rules implementing these amendments—which are commonly known as the tailoring framework—the FRB and other U.S. banking agencies established four risk-based categories of prudential standards and capital and liquidity requirements for banking organizations with $100 billion or more in total consolidated assets. The most stringent standards and requirements apply to U.S. global systemically important BHCs, which are assigned to Category I. The assignment of other banking organizations to the remaining three categories is based on measures of size and four other risk-based indicators: cross-jurisdictional activity, wSTWF, nonbank assets, and off-balance-sheet exposure.

Under the tailoring framework, Ally is a Category IV firm and, as such, is (1) subject to supervisory stress testing on a two-year cycle, (2) required to submit an annual capital plan to the FRB, (3) ~~exempted from company-run capital stress testing requirements, (4)~~ required to maintain a buffer of unencumbered highly liquid assets to meet projected net stressed cash outflows over a 30-day planning horizon, (4) exempted from company-run capital stress testing requirements, (5) exempted from the requirements of the LCR and the net stable funding ratio provided that our average wSTWF continues to remain under $50 billion, and (6) exempted from the requirements of the supplementary leverage ratio, the countercyclical capital buffer, and single-counterparty credit limits. Refer to Note 20 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for additional details on the tailoring framework and other applicable capital and liquidity requirements.

We continue to be subject to rules enabling the FRB to conduct supervisory stress testing on a more or less frequent basis based on our financial condition, size, complexity, risk profile, scope of operations, or activities, or risks to the U.S. economy. Further, we remain subject to rules requiring the resubmission of our capital plan if we determine that there has been or will be a material change in our risk profile, financial condition, or corporate structure since we last submitted the capital plan or if the FRB determines that (a) our capital plan is incomplete or our capital plan or internal capital adequacy process contains material weaknesses, (b) there has been, or will likely be, a material change in our risk profile (including a material change in our business strategy or any risk exposure), financial condition, or corporate structure, or (c) the BHC stress scenario(s) are not appropriate for our business model and portfolios, or changes in the financial markets or the macroeconomic outlook that could have a material impact on our risk profile and financial condition require the use of updated scenarios.

In January 2021 the FDIC announced that, given the passage of time since the last submission of resolution plans and the uncertain economic outlook, the FDIC will resume requiring resolution plan submissions for insured depository institutions with $100 billion or more in assets, including Ally Bank. In June 2021 the FDIC outlined a modified approach to implementing its rule requiring these insured depository institutions to submit resolution plans. The modified approach extends the submission frequency to a three-year cycle, streamlines content requirements, and places enhanced emphasis on engagement with firms. Under the modified approach, resolution plans will be submitted in two groups, with the first group consisting of Ally Bank and other insured depository institutions whose top-tier parent company is not a U.S.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

global systemically important bank or a Category II firm and the second group consisting of all other insured depository institutions with $100 billion or more in total assets. The FDIC indicated that firms will receive at least 12 months advance notice prior to the due date of their resolution plan submission.

~~Refer to Note 20 to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K for further discussion about regulatory developments.~~

Basel Capital Framework

The FRB and other U.S. banking agencies have adopted risk-based and leverage capital standards that establish minimum capital-to-asset ratios for BHCs, like Ally, and depository institutions, like Ally Bank. The risk-based capital ratios are based on a banking organization’s RWAs, which are generally determined under the standardized approach applicable to Ally and Ally Bank by (1) assigning on-balance-sheet exposures to broad risk-weight categories according to the counterparty or, if relevant, the guarantor or collateral (with higher risk weights

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

assigned to categories of exposures perceived as representing greater risk), and (2) multiplying off-balance-sheet exposures by specified credit conversion factors to calculate credit equivalent amounts and assigning those credit equivalent amounts to the relevant risk-weight categories. The leverage ratio, in contrast, is based on an institution’s average unweighted on-balance-sheet exposures.

Under U.S. Basel III, Ally and Ally Bank must maintain a minimum Common Equity Tier 1 risk-based capital ratio of 4.5%, a minimum Tier 1 risk-based capital ratio of 6%, and a minimum total risk-based capital ratio of 8%. In addition to these minimum risk-based capital ratios, Ally and Ally Bank are subject to a capital conservation buffer requirement, which for Ally was 3.5% and for Ally Bank was 2.5% as of June 30, ~~2021,~~2022, as further described in the next paragraph. Failure to maintain more than the full amount of the capital conservation buffer requirement would result in automatic restrictions on the ability of Ally and Ally Bank to make capital distributions, including dividend payments and stock repurchases and redemptions, and to pay discretionary bonuses to executive officers. U.S. Basel III also subjects Ally and Ally Bank to a minimum Tier 1 leverage ratio of 4%.

Prompted by the enactment of the EGRRCP Act, the FRB and other U.S. banking agencies tailored the capital and liquidity requirements that apply to large U.S. banking organizations. In March 2020, the FRB issued a final rule to more closely align forward-looking stress testing results with the FRB’s non-stress regulatory capital requirements for BHCs with $100 billion or more in total consolidated assets and other specified companies. The final rule introduced a stress capital buffer requirement based on firm-specific stress test performance and planned dividends, which for Ally replaced the fixed 2.5% component of the capital conservation buffer requirement. ~~Refer to Note 20 to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K for details about~~The final rule also made several changes to the CCAR process ~~effected by~~effective May 2020, such as eliminating the ~~final rule.~~CCAR quantitative objection, narrowing the set of planned capital actions assumed to occur in the stress scenario, assuming that a firm maintains a constant level of assets over the planning horizon, eliminating the 30% dividend payout ratio as a criterion for heightened scrutiny of a firm’s capital plan, and allowing a firm to make capital distributions in excess of those included in its capital plan if the firm is otherwise in compliance with the automatic distribution limits of the capital framework. Under the final rule, Ally’s stress capital buffer requirement is the greater of 2.5% and the result of the following calculation: (1) the difference between Ally’s starting and minimum projected Common Equity Tier 1 capital ratios under the severely adverse scenario in the supervisory stress test, plus (2) the sum of the dollar amount of Ally’s planned common stock dividends for each of the fourth through seventh quarters of its nine-quarter capital planning horizon, as a percentage of ~~risk-weighted assets.~~RWAs. For a Category IV firm like Ally, the capital conservation buffer requirement comprises the stress capital buffer requirement. The capital conservation buffer requirement applicable to Ally’s depository-institution subsidiary, Ally Bank, continues to be a fixed 2.5%. Ally received its first preliminary stress capital buffer requirement from the FRB in June 2020, which was determined under this new methodology to be 3.5%, was finalized in August 2020, and became effective in October 2020. In June 2020, the FRB also announced its determination that changes in financial markets or the macroeconomic outlook could have a material effect on the risk profiles and financial conditions of firms subject to the capital-plan rule and that, as a result, the firms (including Ally) would be required to resubmit capital plans to the FRB within 45 days after receivingAlly received an updated stress scenarios from the FRB. In September 2020, the FRB released two updated scenarios—severely adverse and alternative severe. We updated our capital plan in light of firm-specific baseline and stress scenarios, as required, and submitted our updated plan to the FRB in November 2020. In December 2020, the FRB publicly disclosed summary results of this second round of supervisory stress testing and extended its deadline for notifying firms about whether their stress capital buffer requirements will be recalculated to March 31, 2021. On March 25, 2021, the FRB further extended this deadline to June 30, 2021. On June 24, 2021, we received notification from the FRB that ourpreliminary stress capital buffer requirement ~~would not~~from the FRB in June 2022, which was determined to be ~~recalculated in connection with the second round of 2020 supervisory stress testing. Refer~~2.5% and is scheduled to ~~the later section titled~~ ~~Capital Planning and Stress Tests~~ ~~for more information.~~become effective on October 1, 2022.

Under ~~the~~applicable capital ~~conservation buffer requirement,~~rules, the maximum amount of capital distributions and discretionary bonus payments that can be made by a banking organization, such as Ally or Ally Bank, is a function of its eligible retained income. During the COVID-19 pandemic, the FRB and other U.S. banking agencies expressed a concern that the definition of eligible retained income would not limit distributions in the gradual manner intended but instead could do so in a sudden and severe manner even if a banking organization were to experience only a modest reduction in its capital ratios. As a result, to better allow a banking organization to use its capital buffer as intended and continue lending in adverse conditions, the U.S. banking agencies issued an interim final rule that became effective in March 2020, and revised the definition of eligible retained income to the greater of (1) a banking organization’s net income for the four preceding calendar quarters, net of any distributions and associated tax effects not already reflected in net income, and (2) the average of a banking organization’s net income over the preceding four quarters. This interim final rule was adopted as final with no changes effective January 1, 2021.

Ally and Ally Bank are subject to the U.S. Basel III standardized approach for counterparty credit risk but not to the U.S. Basel III advanced approaches for credit risk or operational risk. Ally is also not subject to the U.S. market-risk capital rule, which applies only to banking organizations with significant trading assets and liabilities.

The risk-based capital ratios and the Tier 1 leverage ratio play a central role in PCA, which is an enforcement framework used by the U.S. banking agencies to constrain the activities of depository institutions based on their levels of regulatory capital. Five categories have been established using thresholds for the Common Equity Tier 1 risk-based capital ratio, the Tier 1 risk-based capital ratio, the total risk-based

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

capital ratio, and the Tier 1 leverage ratio: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized. FDICIA generally prohibits a depository institution from making any capital distribution, including any payment of a cash dividend or a management fee to its BHC, if the depository institution would become undercapitalized after the distribution. An undercapitalized institution is also subject to growth limitations and must submit and fulfill a capital restoration plan. While BHCs are not subject to the PCA framework, the FRB is empowered to compel a BHC to take measures—such as the execution of financial or performance guarantees—when PCA is required in connection with one of its depository-institution subsidiaries. ~~In addition,~~At both June 30, 2022, and December 31, 2021, Ally Bank was well capitalized under the PCA framework.

Under FDICIA ~~only well-capitalized~~ and the PCA framework, insured depository institutions such as Ally Bank must be well capitalized or, with a waiver from the FDIC, adequately capitalized ~~institutions may~~in order to accept brokered deposits, and even adequately capitalized institutions are subject to some restrictions on the rates they may offer for brokered deposits. AtBrokered deposits totaled $7.0 billion at June 30, ~~2021,~~2022, which represented 5.0% of Ally ~~Bank was well capitalized under the PCA framework.~~Bank’s total deposits.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table summarizes our capital ratios under U.S. Basel III.


		June 30, 2021				December 31, 2020				Required minimum (a)		Well-capitalized minimum			June 30, 2022				December 31, 2021				Required minimum (a)		Well-capitalized minimum
($ in millions)	($ in millions)	Amount		Ratio		Amount		Ratio						($ in millions)	Amount		Ratio		Amount		Ratio
Capital ratios	Capital ratios													Capital ratios
Common Equity Tier 1 (to risk-weighted assets)	Common Equity Tier 1 (to risk-weighted assets)													Common Equity Tier 1 (to risk-weighted assets)
Ally Financial Inc.	Ally Financial Inc.	$	15,709	11.32	%	$	14,878	10.64	%	4.50	%	(b)		Ally Financial Inc.	$	14,650	9.62	%	$	15,143	10.34	%	4.50	%	(b)
Ally Bank	Ally Bank	18,113		13.92		17,567		13.38		4.50		6.50	%	Ally Bank	17,349		11.98		17,253		12.39		4.50		6.50	%
Tier 1 (to risk-weighted assets)	Tier 1 (to risk-weighted assets)													Tier 1 (to risk-weighted assets)
Ally Financial Inc.	Ally Financial Inc.	$	18,150	13.08	%	$	17,289	12.37	%	6.00	%	6.00	%	Ally Financial Inc.	$	16,925	11.11	%	$	17,403	11.89	%	6.00	%	6.00	%
Ally Bank	Ally Bank	18,113		13.92		17,567		13.38		6.00		8.00		Ally Bank	17,349		11.98		17,253		12.39		6.00		8.00
Total (to risk-weighted assets)	Total (to risk-weighted assets)													Total (to risk-weighted assets)
Ally Financial Inc.	Ally Financial Inc.	$	20,575	14.83	%	$	19,778	14.15	%	8.00	%	10.00	%	Ally Financial Inc.	$	19,409	12.75	%	$	19,724	13.47	%	8.00	%	10.00	%
Ally Bank	Ally Bank	19,740		15.17		19,210		14.63		8.00		10.00		Ally Bank	19,166		13.24		18,995		13.64		8.00		10.00
Tier 1 leverage (to adjusted quarterly average assets) (c)	Tier 1 leverage (to adjusted quarterly average assets) (c)													Tier 1 leverage (to adjusted quarterly average assets) (c)
Ally Financial Inc.	Ally Financial Inc.	$	18,150	10.00	%	$	17,289	9.41	%	4.00	%	(b)		Ally Financial Inc.	$	16,925	9.10	%	$	17,403	9.67	%	4.00	%	(b)
Ally Bank	Ally Bank	18,113		10.58		17,567		10.12		4.00		5.00	%	Ally Bank	17,349		9.83		17,253		10.12		4.00		5.00	%

(a)In addition to the minimum risk-based capital requirements for the Common Equity Tier 1 capital, Tier 1 capital, and total capital ratios, Ally was required to maintain a minimum capital conservation buffer of 3.5% at both June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, and Ally Bank was required to maintain a minimum capital conservation buffer of 2.5% at both June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021. Beginning October 1, 2022, Ally’s updated preliminary stress capital buffer requirement of 2.5% is scheduled to compose its capital conservation buffer requirement.

(b)Currently, there is no ratio component for determining whether a BHC is “well-capitalized.”

(c)Federal regulatory reporting guidelines require the calculation of adjusted quarterly average assets using a daily average methodology.

On January 1, 2020, we adopted CECL, which is further described in Note 1 to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K. In December 2018, the FRB and other U.S. banking agencies approved a final rule to address the impact of CECL on regulatory capital by allowing BHCs and banks, including Ally, the option to phase in the day-one impact of CECL over a three-year period. In March 2020, the FRB and other U.S. banking agencies issued an interim final rule that became effective for the first quarter of 2020 and that ~~provides~~provided BHCs and banks with an alternative option to temporarily delay an estimate of the impact of CECL, relative to the incurred loss methodology for estimating the allowance for loan losses, on regulatory capital. The interim final rule was clarified and adjusted in a final rule that became effective in September 2020. We ~~have~~ elected this alternative option instead of the one described in the December 2018 rule. As a result, under the final rule, we ~~will delay~~delayed recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us ~~extends~~extended through December 31, 2021. Beginning on January 1, 2022, we ~~will be~~were required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025. The estimated impact of CECL on regulatory capital that we ~~will defer~~deferred and ~~later phase~~began phasing in on January 1, 2022, is generally calculated as the entire day-one impact at adoption plus 25% of the subsequent change in allowance during the two-year deferral period. As of June 30, ~~2021,~~2022, the total deferred impact on Common Equity Tier 1 capital related to our adoption of CECL was ~~$1.1 billion.~~$887 million.

At both June 30, 2021, and December 31, 2020, Ally and Ally Bank were “well-capitalized.” Compliance with capital requirements is a strategic priority for Ally. We expect to be in compliance with all applicable requirements within the established timeframes.

Capital Planning and Stress Tests

Under the tailoring framework described earlier in the section titled Basel Capital Framework, we are generally subject to supervisory stress testing on a two-year cycle and exempted from mandated company-run capital stress testing requirements. We are also required to submit an annual capital plan to the FRB. Our annual capital plan must include an assessment of our expected uses and sources of capital and a description of all planned capital actions over a nine-quarter planning horizon, including any issuance of a debt or equity capital instrument, any dividend or other capital distribution, and any similar action that the FRB determines could have an impact on our capital. The plan must also include a detailed description of our process for assessing capital adequacy, including a discussion of how we, under expected and stressful conditions, will maintain capital commensurate with our risks and above the minimum regulatory capital ratios, will serve as a

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

source of strength to Ally Bank, and will maintain sufficient capital to continue our operations by maintaining ready access to funding, meeting our obligations to creditors and other counterparties, and continuing to serve as a credit intermediary.

We submitted our 2020 capital plan in April 2020, which included planned capital distributions to common stockholders through share repurchases and cash dividends over the nine-quarter planning horizon. In June 2020, the FRB provided us with the results of the supervisory stress test, additional industry-wide sensitivity analyses conducted in light of the COVID-19 pandemic, and our preliminary stress capital buffer requirement. As described earlier in the section titled ~~Basel Capital Framework~~, we updated our capital plan in light of revised stress scenarios from the FRB and submitted our updated plan to the FRB in November 2020. In December 2020, the FRB publicly disclosed summary results of its second round of supervisory stress testing and extended its deadline for notifying firms about whether their stress capital buffer requirements will be recalculated to March 31, 2021. On March 25, 2021, the FRB further extended this deadline to June 30, 2021. On June 24, 2021, we received notification from the FRB that our stress capital buffer requirement would not be recalculated in connection with the second round of 2020 supervisory stress testing.

~~In June 2020, the FRB announced several actions~~

Table of Contents

Notes to ~~ensure that large firms, such as~~ Condensed Consolidated Financial Statements (unaudited)

Ally would remain resilient despite the economic uncertainty from the COVID-19 pandemic, including for the third quarter of 2020 (1) the suspension of repurchases by any firm of its common stock, except repurchases relating to issuances of common stock related to employee stock ownership plans, and (2) the disallowance of any increase by a firm in the amount of its common-stock dividends and the imposition of a common-stock dividend limit equal to the average of the firm’s net income for the four preceding calendar quarters. These restrictions were extended by the FRB for the fourth quarter of 2020. In December 2020, the FRB extended and modified these restrictions for the first quarter of 2021 to limit aggregate common-stock dividends and share repurchases to an amount equal to the average of the firm’s net income for the four preceding calendar quarters subject to specified exceptions. On March 25, 2021, the FRB extended these modified restrictions for the second quarter of 2021 and announced that, for a firm such as Ally that is not subject to the 2021 supervisory stress test and on a two-year cycle, the additional restrictions will end after June 30, 2021, and the firm’s stress capital buffer requirement based on the June 2020 supervisory stress test results will remain in place. On January 11, 2021, our Board authorized a stock-repurchase program, permitting us to repurchase up to $1.6 billion of our common stock from time to time from the first quarter of 2021 through the fourth quarter of 2021 subject to restrictions imposed by the FRB. On July 12, 2021, our Board authorized an increase in the maximum amount of this stock-repurchase program, from $1.6 billion to $2.0 billion, and an increase in our cash dividend on common stock, from $0.19 per share for the second quarter of 2021 to $0.25 per share for the third quarter of 2021.Financial Inc. • Form 10-Q

In January 2021, the FRB issued a final rule effective April 5, 2021, to align its capital planning and stress capital buffer requirements with the tailoring framework. Under the final rule, unless otherwise directed by the FRB in specified circumstances, Ally and other Category IV firms are generally no longer required to calculate forward-looking projections of revenues, losses, reserves, and pro forma capital levels under scenarios provided by the FRB. Each firm continues to be required, however, to provide a forward-looking analysis of income and capital levels under expected and stressful conditions that are designed by the firm. In addition, for Category IV firms, the final rule updated the frequency of calculating the portion of the stress capital buffer derived from the supervisory stress test to every other year. These firms have the ability to elect to participate in the supervisory stress test—and receive a correspondingly updated stress capital buffer requirement—in a year in which they would not generally be subject to the supervisory stress test. During a year in which a Category IV firm does not undergo a supervisory stress test, the firm would receive an updated stress capital buffer requirement that reflects its updated planned common-stock dividends. The final rule also includes reporting and other changes consistent with the tailoring framework. ~~The deadline for electing to~~Ally did not opt into the 2021 supervisory stress test but was ~~April 5, 2021, and Ally did not make such an election.~~subject to the 2022 supervisory stress test.

We submitted our 2021 capital plan on April 5, 2021, which ~~includes~~included planned capital distributions to common stockholders through share repurchases and cash dividends and other capital actions over the nine-quarter planning ~~horizon and other capital actions.~~horizon. On January 11, 2021, our Board authorized a stock-repurchase program, permitting us to repurchase up to $1.6 billion of our common stock from time to time from the first quarter of 2021 through the fourth quarter of 2021 subject to restrictions imposed by the FRB. On July 12, 2021, our Board authorized an increase in the maximum amount of this stock-repurchase program, from $1.6 billion to $2.0 billion. During the second quarter of 2021, we issued $1.35 billion of Series B Preferred Stock and $1.0 billion of Series C Preferred Stock, both of which qualify as additional Tier 1 capital under U.S. Basel III. The proceeds from these issuances were used to redeem a portion of the Series 2 TRUPS then outstanding. Refer to Note ~~12 and Note 14~~15 for additional details about these instruments and capital actions. OnIn June ~~28,~~ 2021, we submitted an updated capital plan to the FRB reflecting these capital actions and ~~the~~ increases in our stock-repurchase program and common-stock ~~dividend described above. We expect~~dividend. This updated capital plan was used by the FRB to ~~receive our~~recalculate Ally’s final stress capital buffer requirement, bywhich was announced in August ~~31,~~ 2021 and remained unchanged at 3.5%. We submitted our 2022 capital plan to the FRB on April 5, 2022. Ally received an updated preliminary stress capital buffer requirement from the FRB in June 2022, which ~~will~~was determined to be 2.5% and is scheduled to become effective on October 1, ~~2021.~~2022.

On January 10, 2022, our Board authorized a stock-repurchase program, permitting us to repurchase up to $2.0 billion of our common stock from time to time from the first quarter of 2022 through the fourth quarter of 2022 subject to restrictions imposed by the FRB, and an increase in our cash dividend on common stock from $0.25 per share for the fourth quarter of 2021 to $0.30 per share for the first quarter of 2022. Our ability to make capital distributions, including our ability to pay dividends or repurchase shares of our common stock, will continue to be subject to the FRB’s review and our internal governance requirements, including approval by our Board. The amount and size of any future dividends and share repurchases also will be subject to various factors, including Ally’s capital and liquidity positions, accounting and regulatory considerations (including any restrictions that may be imposed by the FRB), impacts related to the COVID-19 pandemic, financial and operational performance, alternative uses of capital, common-stock price, and general market conditions, and may be extended, modified, or discontinued at any time.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

The following table presents information related to our common stock and distributions to our common ~~stockholders over the last five quarters.~~stockholders.


		Common stock repurchased during period (a) (b)			Number of common shares outstanding		Cash dividends declared per common share (c)			Common stock repurchased during period (a) (b)			Number of common shares outstanding		Cash dividends declared per common share (c)
($ in millions, except per share data; shares in thousands)	($ in millions, except per share data; shares in thousands)	Approximate dollar value		Number of shares	Beginning of period	End of period			($ in millions, except per share data; shares in thousands)	Approximate dollar value		Number of shares	Beginning of period	End of period
2020
2021									2021
First quarter	First quarter	$	104	3,838	374,332	373,155	$	0.19	First quarter	$	219	5,276	374,674	371,805	$	0.19
Second quarter	Second quarter	0		53	373,155	373,837	0.19		Second quarter	502		9,641	371,805	362,639	0.19
Third quarter	Third quarter	1		9	373,837	373,857	0.19		Third quarter	679		13,055	362,639	349,599	0.25
Fourth quarter	Fourth quarter	1		37	373,857	374,674	0.19		Fourth quarter	594		12,046	349,599	337,941	0.25
2021
2022									2022
First quarter	First quarter	219		5,276	374,674	371,805	0.19		First quarter	$	584	12,548	337,941	327,306	$	0.30
Second quarter	Second quarter	$	502	9,641	371,805	362,639	$	0.19	Second quarter	600		15,031	327,306	312,781	0.30

(a)Includes shares of common stock withheld to cover income taxes owed by participants in our share-based incentive plans.

(b)~~On March 17, 2020, we announced~~Our aggregate common-stock dividends and share repurchases in the ~~voluntary suspension~~first and second quarters of ~~our stock-repurchase program through its termination on June 30, 2020. Consistent with~~2021 were limited by actions taken by the FRB’s restrictions on common-stock repurchases for large firms such as Ally, described above, we did not implement a new stock-repurchase program or repurchase shares of our common stock, except in connection with compensation plans, forFRB to address the ~~remainder of 2020.~~economic uncertainty from the COVID-19 pandemic. Refer to Note 20 to the ~~discussion above~~Consolidated Financial Statements in our 2021 Annual Report on Form 10-K for further details about ~~this action.~~these actions.

(c)On July ~~12, 2021,~~14, 2022, our Board declared a quarterly cash dividend of ~~$0.25~~$0.30 per share on all common stock, payable on August ~~16, 2021,~~15, 2022, to stockholders of record at the close of business on August ~~2, 2021.~~1, 2022. Refer to Note 2425 for further information regarding this ~~common stock~~common-stock dividend.

~~18.~~19. Derivative Instruments and Hedging Activities

We enter into derivative instruments, which may include interest rate swaps, foreign-currency forwards, equity options, and interest rate options in connection with our risk-management activities. Our primary objective for utilizing derivative financial instruments is to manage interest rate risk associated with our fixed-rate and variable-rate assets and liabilities, foreign exchange risks related to our net investments in foreign subsidiaries as well as foreign-currency denominated assets and liabilities, and other market risks related to our investment portfolio.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Interest Rate Risk

We monitor our mix of fixed-rate and variable-rate assets and liabilities and may enter into interest rate swaps, forwards, and options to achieve our desired mix of fixed-rate and variable-rate assets and liabilities. We execute these trades to modify our exposure to interest rate risk by converting certain fixed-rate instruments to a variable-rate and certain variable-rate instruments to a fixed-rate. We use a mix of both derivatives that qualify for hedge accounting treatment and economic hedges ~~(which~~that do not qualify for hedge accounting ~~treatment).~~treatment.

Derivatives qualifying for hedge accounting treatment can include receive-fixed swaps designated as fair value hedges of specific fixed-rate unsecured debt obligations, receive-fixed swaps designated as fair value hedges of specific fixed-rate FHLB advances, pay-fixed swaps designated as fair value hedges of securities within our available-for-sale portfolio, and pay-fixed swaps designated as fair value hedges of ~~closed portfolios of~~ fixed-rate held-for-investment consumer automotive loan ~~assets in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship.~~assets. Other derivatives qualifying for hedge accounting consist of pay-fixed swaps designated as cash flow hedges of the expected future cash flows in the form of interest payments on certain variable-rate borrowings and deposit liabilities, ~~receive-fixed swaps designated as cash flow hedges of the expected future cash flows in the form of interest receipts on certain securities within our available-for-sale portfolio,~~ as well as interest rate floor contracts designated as cash flow hedges of the expected future cash flows in the form of interest receipts on a portion of our dealer floorplan commercial loans.

We execute economic hedges, which may consist of interest rate swaps, interest rate caps, forwards, and options to mitigate interest rate risk.

We also enter into interest rate lock commitments and forward commitments that are executed as part of our mortgage business that meet the accounting definition of a derivative.

Foreign Exchange Risk

We enter into derivative financial instrument contracts to mitigate the risk associated with variability in cash flows related to our various foreign-currency exposures.

We enter into foreign-currency forwards with external counterparties as net investment hedges of foreign exchange exposure on our investment in foreign subsidiaries. Our equity is impacted by the cumulative translation adjustments resulting from the translation of foreign subsidiary results; this impact is reflected in our accumulated other comprehensive income. We also periodically enter into foreign-currency forwards to economically hedge any foreign-denominated debt, centralized lending, and foreign-denominated third-party loans. These foreign-currency forwards that are used as economic hedges are recorded at fair value with changes recorded as income or expense offsetting the gains and losses on the associated foreign-currency transactions.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

Investment Risk

We enter into equity options to mitigate the risk associated with our exposure to the equity markets.

Credit Risk

We enter into various retail automotive-loan purchase agreements with certain counterparties. As part of those agreements, ~~Ally~~we may withhold a portion of the purchase price from the counterparty and be required to pay the counterparty all or part of the amount withheld at agreed upon measurement dates and determinable amounts if actual credit performance of the acquired loans on the measurement date is better than or equal to what was estimated at the time of acquisition. Based upon these terms, these contracts meet the accounting definition of a derivative.

Counterparty Credit Risk

Derivative financial instruments contain an element of credit risk if counterparties are unable to meet the terms of the agreements. Credit risk associated with derivative financial instruments is measured as the net replacement cost should the counterparties that owe us under the contract completely fail to perform under the terms of those contracts, assuming no recoveries of underlying collateral as measured by the market value of the derivative financial instrument.

We manage our risk to financial counterparties through internal credit analysis, limits, and monitoring. Additionally, derivatives and repurchase agreements are entered into with approved counterparties using industry standard agreements.

We execute certain OTC derivatives, such as interest rate caps and floors, using bilateral agreements with financial counterparties. Bilateral agreements generally require both parties to post collateral in the event the fair values of the derivative financial instruments meet posting thresholds established under the agreements. ~~In the event that~~If either party defaults on the obligation, the secured party may seize the collateral. Payments related to the exchange of collateral for OTC derivatives are recognized as collateral.

We also execute certain derivatives, such as interest rate swaps, with clearinghouses, which requires us to post and receive collateral. For these clearinghouse derivatives, these payments are recognized as settlements rather than collateral.

Certain derivative instruments contain provisions that require us to either post additional collateral or immediately settle any outstanding liability balances upon the occurrence of a specified credit-risk-related event. No such specified credit-risk-related events occurred during the six months ended June 30, ~~2021,~~2022, or ~~2020.~~2021.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

We placed cash and noncash collateral totaling $3 million and ~~$151~~$304 million, respectively, supporting our derivative positions at June 30, ~~2021,~~2022, compared to $4$2 million and ~~$145~~$203 million of cash and noncash collateral at December 31, ~~2020,~~2021, in accounts maintained by counterparties. These amounts include collateral placed at clearinghouses and exclude cash and noncash collateral pledged under repurchase agreements. The receivables for cash collateral placed are included on our Condensed Consolidated Balance Sheet in other assets. We granted our counterparties the right to sell or pledge the noncash collateral.

We received cash collateral from counterparties totaling $56 million and $4 million in accounts maintained by counterparties at June 30, ~~2021.~~2022, and December 31, 2021, respectively. This amount includes collateral received from clearinghouses and ~~exclude~~excludes cash and noncash collateral pledged under repurchase agreements. The payables for cash collateral received are included on our Condensed Consolidated Balance Sheet in accrued expenses and other liabilities. Included in these amounts is noncash collateral where we have been granted the right to sell or pledge the underlying assets. We have not sold or pledged any of the noncash collateral received under these agreements.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

Balance Sheet Presentation

The following table summarizes the amounts of derivative instruments reported on our Condensed Consolidated Balance Sheet. The amounts are presented on a gross basis, are segregated by derivatives that are designated and qualifying as hedging instruments or those that are not, and are further segregated by type of contract within those two categories.

Derivative contracts in a receivable and payable position exclude open trade equity on derivatives cleared through central clearing counterparties. Any associated margin exchanged with our central clearing counterparties are treated as settlements of the derivative exposure, rather than collateral. Such payments are recognized as settlements of the derivatives contracts in a receivable and payable position on our Condensed Consolidated Balance Sheet.

Notional amounts are reference amounts from which contractual obligations are derived and are not recorded on the balance sheet. In our view, derivative notional is not an accurate measure of our derivative exposure when viewed in isolation from other factors, such as market rate fluctuations and counterparty credit risk.


		June 30, 2021						December 31, 2020							June 30, 2022						December 31, 2021
		Derivative contracts in a				Notional amount		Derivative contracts in a				Notional amount			Derivative contracts in a				Notional amount		Derivative contracts in a				Notional amount
($ in millions)	($ in millions)	receivable position		payable position				receivable position		payable position				($ in millions)	receivable position		payable position				receivable position		payable position
Derivatives designated as accounting hedges	Derivatives designated as accounting hedges													Derivatives designated as accounting hedges
Interest rate contracts	Interest rate contracts													Interest rate contracts
Swaps	Swaps	$	0	$	0	$	18,620	$	0	$	0	$	12,385	Swaps	$	—	$	—	$	24,780	$	—	$	—	$	17,039

Foreign exchange contracts	Foreign exchange contracts													Foreign exchange contracts
Forwards	Forwards	3		0		170		1		0		164		Forwards	—		1		151		—		2		171
Total derivatives designated as accounting hedges	Total derivatives designated as accounting hedges	3		0		18,790		1		0		12,549		Total derivatives designated as accounting hedges	—		1		24,931		—		2		17,210
Derivatives not designated as accounting hedges	Derivatives not designated as accounting hedges													Derivatives not designated as accounting hedges
Interest rate contracts	Interest rate contracts													Interest rate contracts

Futures and forwards	Futures and forwards	2		0		314		1		0		391		Futures and forwards	1		—		168		1		—		223
Written options	Written options	7		0		592		15		0		587		Written options	2		4		273		5		2		580
Purchased options		0		0		132		0		0		0

Total interest rate risk	Total interest rate risk	9		0		1,038		16		0		978		Total interest rate risk	3		4		441		6		2		803
Foreign exchange contracts	Foreign exchange contracts													Foreign exchange contracts

Futures and forwards	Futures and forwards	1		0		162		0		1		159		Futures and forwards	—		2		156		—		1		154

Total foreign exchange risk	Total foreign exchange risk	1		0		162		0		1		159		Total foreign exchange risk	—		2		156		—		1		154
Credit contracts (a)	Credit contracts (a)													Credit contracts (a)
Other credit derivatives	Other credit derivatives	0		46		n/a		0		28		n/a		Other credit derivatives	—		48		n/a		—		56		n/a
Total credit risk	Total credit risk	0		46		n/a		0		28		n/a		Total credit risk	—		48		n/a		—		56		n/a
Equity contracts	Equity contracts													Equity contracts

Written options	Written options	0		1		1		0		4		2		Written options	—		—		—		—		1		2
Purchased options	Purchased options	3		0		1		0		0		0		Purchased options	1		—		—		1		—		—
Total equity risk	Total equity risk	3		1		2		0		4		2		Total equity risk	1		—		—		1		1		2
Total derivatives not designated as accounting hedges	Total derivatives not designated as accounting hedges	13		47		1,202		16		33		1,139		Total derivatives not designated as accounting hedges	4		54		597		7		60		959
Total derivatives	Total derivatives	$	16	$	47	$	19,992	$	17	$	33	$	13,688	Total derivatives	$	4	$	55	$	25,528	$	7	$	62	$	18,169

n/a = not applicable

(a)The maximum potential amount of undiscounted future payments that could be required under these credit derivatives was ~~$84~~$102 million and ~~$56~~$119 million as of June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively.

4850

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following table presents amounts recorded on our Condensed Consolidated Balance Sheet related to cumulative basis adjustments for fair value hedges.


($ in millions)	($ in millions)	Carrying amount of the hedged items						Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items											($ in millions)			Carrying amount of the hedged items					Cumulative amount of fair value hedging adjustment included in the carrying amount of the hedged items
							Total						Discontinued (a)								Total						Discontinued (a)
				June 30, 2021			December 31, 2020			June 30, 2021			December 31, 2020			June 30, 2021				December 31, 2020						June 30, 2022			December 31, 2021			June 30, 2022			December 31, 2021			June 30, 2022	December 31, 2021
Assets	Assets																			Assets
Available-for-sale securities (b) (c)		$	5,380		$	1,259		$	9		$	39		$	15		$	28
Available-for-sale securities (b)																			Available-for-sale securities (b)			$	5,499	$	5,119		$	(98)		$	(14)		$	(127)		$	(30)
Finance receivables and loans, net ~~(d)~~(c)	Finance receivables and loans, net ~~(d)~~(c)	36,462			28,393			124			225			61			72		Finance receivables and loans, net ~~(d)~~(c)			46,152		44,098			(501)			(37)			(83)			46
Liabilities	Liabilities																		Liabilities

Long-term debt	Long-term debt	$	7,189		$	8,656		$	102		$	169		$	127		$	203	Long-term debt			$	6,672	$	7,213		$	106		$	110		$	110		$	110

(a)Represents the fair value hedging adjustment on qualifying hedges for which the hedging relationship was discontinued. This represents a subset of the amounts reported in the total hedging adjustment.

(b)~~The carrying amount of hedged available-for-sale securities is presented above using~~These amounts include the amortized cost ~~and includes $3.5 billion and $592 million at June 30, 2021, and December 31, 2020, respectively, related to~~basis of closed portfolios of available-for-sale securities used to designate hedging relationships in which the hedged item is the last layer expected to be remaining at the end of the hedging relationship. ~~Refer to Note 6 for a reconciliation of~~At June 30, 2022, and December 31, 2021, the amortized cost basis of the closed portfolios used in these hedging relationships was $3.8 billion and ~~fair value of available-for-sale securities.~~

~~(c)The amount that is identified as the last of layer in the open hedge relationship was $2.9~~$3.9 billion, ~~as of~~respectively. At June 30, ~~2021. The~~2022, and December 31, 2021, the total cumulative basis ~~adjustment~~adjustments associated with ~~the open last of layer relationship~~these hedging relationships was a $5$80 million liability asand a $6 million liability, respectively, of which the portion related to discontinued hedging relationships was a $101 million liability and a $20 million liability, respectively. At June 30, 2022, and December 31, 2021, ~~which would be allocated across~~ the ~~entire remaining pool upon termination or maturity~~notional amounts of the ~~hedge relationship. The amount that has been identified as the last of layer in the discontinued hedge relationship was $1.7~~designated hedged items were $2.7 billion and $1.2 billion, asrespectively, with cumulative basis adjustments of ~~June 30, 2021, and December 31, 2020, respectively. The basis adjustment associated with the discontinued last of layer relationship was~~ a ~~$15~~$21 million asset ~~as of June 30, 2021,~~ and a ~~$20~~$14 million asset, ~~as of December 31, 2020, which was allocated across the entire remaining pool upon termination of the hedge relationship.~~

~~(d)~~The hedged item represents the carrying value of the hedged portfolio of assets. The amount identified as the last of layer in the open hedge relationship was $12.7 billion and $9.4 billion at June 30, 2021, and December 31, 2020, respectively. The basis adjustment associated with the open last-of-layer relationship was a $63 million asset as of June 30, 2021, and a $153 million asset as of December 31, 2020,respectively, which would be allocated across the entire remaining closed pool upon termination or maturity of the hedge relationship. ~~The amount that~~Refer to Note 7 for a reconciliation of the amortized cost and fair value of available-for-sale securities.

(c)These amounts include the amortized cost basis of closed portfolios of loan receivables used to designate hedging relationships in which the hedged item is ~~identified as~~ the last layer expected to be remaining at the end of ~~layer in~~ the ~~discontinued hedge relationship was $20.1 billion at~~hedging relationship. At June 30, 2021, and $18.5 billion at December 31, 2020. The basis adjustment associated with the discontinued last-of-layer hedge relationship was a $61 million asset and a $72 million asset as of June 30, 2021,2022, and December 31, ~~2020,~~2021, the amortized cost basis of the closed portfolios used in these hedging relationships was $46.2 billion and $44.1 billion, respectively. At June 30, 2022, and December 31, 2021, the total cumulative basis adjustments associated with these hedging relationships was a $501 million liability and a $37 million liability, respectively, of which the portion related to discontinued hedging relationships was a $83 million liability and a $46 million asset, respectively. At June 30, 2022, and December 31, 2021, the notional amounts of the designated hedged items were $20.3 billion and $15.6 billion, respectively, with cumulative basis adjustments of a $419 million liability and an $82 million liability, respectively, which ~~was~~would be allocated across the entire remaining closed pool upon termination or maturity of the hedge relationship.

Statement of ~~Comprehensive~~ Income Presentation

The following table summarizes the location and amounts of gains and losses on derivative instruments not designated as accounting hedges reported in our Condensed Consolidated Statement of Comprehensive Income.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
(Loss) gain recognized in earnings
Gain (loss) recognized in earnings										Gain (loss) recognized in earnings
Interest rate contracts	Interest rate contracts									Interest rate contracts
Loss on mortgage and automotive loans, net		$	(1)	$	0	$	(8)	$	(15)
Gain (loss) on mortgage and automotive loans, net										Gain (loss) on mortgage and automotive loans, net	$	3	$	(1)	$	1	$	(8)
Other income, net of losses	Other income, net of losses	2		(23)		2		(23)		Other income, net of losses	3		2		6		2
Total interest rate contracts	Total interest rate contracts	1		(23)		(6)		(38)		Total interest rate contracts	6		1		7		(6)
Foreign exchange contracts	Foreign exchange contracts									Foreign exchange contracts

Other income, net of losses		0		(5)		0		3

Other operating expenses	Other operating expenses	(2)		0		(4)		0		Other operating expenses	5		(2)		2		(4)
Total foreign exchange contracts	Total foreign exchange contracts	(2)		(5)		(4)		3		Total foreign exchange contracts	5		(2)		2		(4)
Credit contracts	Credit contracts									Credit contracts

Other income, net of losses	Other income, net of losses	(7)		0		(15)		0		Other income, net of losses	(1)		(7)		(2)		(15)
Total credit contracts	Total credit contracts	(7)		0		(15)		0		Total credit contracts	(1)		(7)		(2)		(15)
Total loss recognized in earnings		$	(8)	$	(28)	$	(25)	$	(35)
Total gain (loss) recognized in earnings										Total gain (loss) recognized in earnings	$	10	$	(8)	$	7	$	(25)

4951

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following tables summarize the location and amounts of gains and losses on derivative instruments designated as qualifying fair value and cash flow hedges reported in our Condensed Consolidated Statement of Comprehensive Income.


		Interest and fees on finance receivables and loans				Interest and dividends on investment securities and other earning assets					Interest on deposits			Interest on long-term debt		Interest and fees on finance receivables and loans					Interest and dividends on investment securities and other earning assets						Interest on deposits			Interest on long-term debt
Three months ended June 30, ($ in millions)	Three months ended June 30, ($ in millions)	2021		2020			2021		2020			2021		2020			2021		2020			Three months ended June 30, ($ in millions)	2022		2021			2022		2021		2022		2021		2022		2021
(Loss) gain on fair value hedging relationships
Gain (loss) on fair value hedging relationships																						Gain (loss) on fair value hedging relationships
Interest rate contracts	Interest rate contracts																					Interest rate contracts
Hedged fixed-rate unsecured debt	Hedged fixed-rate unsecured debt	$	0	$	0		$	0	$	0		$	0	$	0		$	(66)	$	0		Hedged fixed-rate unsecured debt	$	—	$	—		$	—	$	—	$	—	$	—	$	6	$	(66)
Derivatives designated as hedging instruments on fixed-rate unsecured debt	Derivatives designated as hedging instruments on fixed-rate unsecured debt	0		0			0		0			0		0			66		0			Derivatives designated as hedging instruments on fixed-rate unsecured debt	—		—			—		—		—		—		(6)		66

Hedged available-for-sale securities	Hedged available-for-sale securities	0		0			(4)		4			0		0			0		0			Hedged available-for-sale securities	—		—			(47)		(4)		—		—		—		—
Derivatives designated as hedging instruments on available-for-sale securities	Derivatives designated as hedging instruments on available-for-sale securities	0		0			4		(4)			0		0			0		0			Derivatives designated as hedging instruments on available-for-sale securities	—		—			47		4		—		—		—		—
Hedged fixed-rate consumer automotive loans	Hedged fixed-rate consumer automotive loans	(38)		(23)			0		0			0		0			0		0			Hedged fixed-rate consumer automotive loans	(149)		(38)			—		—		—		—		—		—
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	38		23			0		0			0		0			0		0			Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	149		38			—		—		—		—		—		—
Total gain on fair value hedging relationships	Total gain on fair value hedging relationships	0		0			0		0			0		0			0		0			Total gain on fair value hedging relationships	—		—			—		—		—		—		—		—
(Loss) gain on cash flow hedging relationships
Gain on cash flow hedging relationships																						Gain on cash flow hedging relationships
Interest rate contracts	Interest rate contracts																					Interest rate contracts

Hedged deposit liabilities
Reclassified from accumulated other comprehensive income into income		0		0			0		0			0		(2)			0		0

Hedged variable-rate commercial loans	Hedged variable-rate commercial loans																					Hedged variable-rate commercial loans
Reclassified from accumulated other comprehensive income into income	Reclassified from accumulated other comprehensive income into income	18		22			0		0			0		0			0		0			Reclassified from accumulated other comprehensive income into income	5		18			—		—		—		—		—		—
Reclassified from accumulated other comprehensive income into income as a result of a forecasted transaction being probable not to occur	Reclassified from accumulated other comprehensive income into income as a result of a forecasted transaction being probable not to occur	4		0			0		0			0		0			0		0			Reclassified from accumulated other comprehensive income into income as a result of a forecasted transaction being probable not to occur	—		4			—		—		—		—		—		—

Total gain (loss) on cash flow hedging relationships		$	22	$	22		$	0	$	0		$	0	$	(2)		$	0	$	0
Total gain on cash flow hedging relationships																						Total gain on cash flow hedging relationships	$	5	$	22		$	—	$	—	$	—	$	—	$	—	$	—
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	1,588	$	1,630		$	147	$	197		$	268	$	541		$	230	$	318		Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	1,842	$	1,588		$	203	$	147	$	263	$	268	$	184	$	230

5052

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


		Interest and fees on finance receivables and loans				Interest and dividends on investment securities and other earning assets					Interest on deposits			Interest on long-term debt		Interest and fees on finance receivables and loans					Interest and dividends on investment securities and other earning assets						Interest on deposits			Interest on long-term debt
Six months ended June 30, ($ in millions)	Six months ended June 30, ($ in millions)	2021		2020			2021		2020			2021		2020			2021		2020			Six months ended June 30, ($ in millions)	2022		2021			2022		2021		2022		2021		2022		2021
Gain (loss) on fair value hedging relationships	Gain (loss) on fair value hedging relationships																					Gain (loss) on fair value hedging relationships
Interest rate contracts	Interest rate contracts																					Interest rate contracts
Hedged fixed-rate unsecured debt	Hedged fixed-rate unsecured debt	$	0	$	0		$	0	$	0		$	0	$	0		$	73	$	(170)		Hedged fixed-rate unsecured debt	$	—	$	—		$	—	$	—	$	—	$	—	$	4	$	73
Derivatives designated as hedging instruments on fixed-rate unsecured debt	Derivatives designated as hedging instruments on fixed-rate unsecured debt	0		0			0		0			0		0			(73)		170			Derivatives designated as hedging instruments on fixed-rate unsecured debt	—		—			—		—		—		—		(4)		(73)

Hedged available-for-sale securities	Hedged available-for-sale securities	0		0			(17)		45			0		0			0		0			Hedged available-for-sale securities	—		—			(89)		(17)		—		—		—		—
Derivatives designated as hedging instruments on available-for-sale securities	Derivatives designated as hedging instruments on available-for-sale securities	0		0			17		(45)			0		0			0		0			Derivatives designated as hedging instruments on available-for-sale securities	—		—			89		17		—		—		—		—
Hedged fixed-rate consumer automotive loans	Hedged fixed-rate consumer automotive loans	(77)		225			0		0			0		0			0		0			Hedged fixed-rate consumer automotive loans	(453)		(77)			—		—		—		—		—		—
Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	77		(225)			0		0			0		0			0		0			Derivatives designated as hedging instruments on fixed-rate consumer automotive loans	453		77			—		—		—		—		—		—
Total gain on fair value hedging relationships	Total gain on fair value hedging relationships	0		0			0		0			0		0			0		0			Total gain on fair value hedging relationships	—		—			—		—		—		—		—		—
(Loss) gain on cash flow hedging relationships	(Loss) gain on cash flow hedging relationships																					(Loss) gain on cash flow hedging relationships
Interest rate contracts	Interest rate contracts																					Interest rate contracts

Hedged deposit liabilities	Hedged deposit liabilities																					Hedged deposit liabilities
Reclassified from accumulated other comprehensive income into income	Reclassified from accumulated other comprehensive income into income	0		0			0		0			(1)		(5)			0		0			Reclassified from accumulated other comprehensive income into income	—		—			—		—		—		(1)		—		—

Hedged variable-rate commercial loans	Hedged variable-rate commercial loans																					Hedged variable-rate commercial loans
Reclassified from accumulated other comprehensive income into income	Reclassified from accumulated other comprehensive income into income	40		25			0		0			0		0			0		0			Reclassified from accumulated other comprehensive income into income	11		40			—		—		—		—		—		—
Reclassified from accumulated other comprehensive income into income as a result of a forecasted transaction being probable not to occur	Reclassified from accumulated other comprehensive income into income as a result of a forecasted transaction being probable not to occur	4		0			0		0			0		0			0		0			Reclassified from accumulated other comprehensive income into income as a result of a forecasted transaction being probable not to occur	—		4			—		—		—		—		—		—

Total gain (loss) on cash flow hedging relationships	Total gain (loss) on cash flow hedging relationships	$	44	$	25		$	0	$	0		$	(1)	$	(5)		$	0	$	0		Total gain (loss) on cash flow hedging relationships	$	11	$	44		$	—	$	—	$	—	$	(1)	$	—	$	—
Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	3,170	$	3,372		$	278	$	423		$	574	$	1,133		$	480	$	666		Total amounts presented in the Condensed Consolidated Statement of Comprehensive Income	$	3,556	$	3,170		$	391	$	278	$	474	$	574	$	369	$	480

During the next 12 months, we estimate ~~$29~~$20 million of gains will be reclassified into pretax earnings from derivatives designated as cash flow hedges.

The following tables summarize the location and amounts of gains and losses related to interest and amortization on derivative instruments designated as qualifying fair value and cash flow hedges reported in our Condensed Consolidated Statement of Comprehensive Income.


		Interest and fees on finance receivables and loans				Interest and dividends on investment securities and other earning assets					Interest on long-term debt	Interest and fees on finance receivables and loans					Interest and dividends on investment securities and other earning assets						Interest on long-term debt
Three months ended June 30, ($ in millions)	Three months ended June 30, ($ in millions)	2021		2020			2021		2020				2021		2020			Three months ended June 30, ($ in millions)	2022		2021			2022		2021		2022		2021
Gain (loss) on fair value hedging relationships	Gain (loss) on fair value hedging relationships																	Gain (loss) on fair value hedging relationships
Interest rate contracts	Interest rate contracts																	Interest rate contracts
Amortization of deferred unsecured debt basis adjustments	Amortization of deferred unsecured debt basis adjustments	$	0	$	0		$	0	$	0			$	1	$	2		Amortization of deferred unsecured debt basis adjustments	$	—	$	—		$	—	$	—	$	1	$	1
Interest for qualifying accounting hedges of unsecured debt	Interest for qualifying accounting hedges of unsecured debt	0		0			0		0				2		0			Interest for qualifying accounting hedges of unsecured debt	—		—			—		—		1		2
Amortization of deferred secured debt basis adjustments (FHLB advances)	Amortization of deferred secured debt basis adjustments (FHLB advances)	0		0			0		0				(3)		(6)			Amortization of deferred secured debt basis adjustments (FHLB advances)	—		—			—		—		(1)		(3)

Amortization of deferred basis adjustments of available-for-sale securities	Amortization of deferred basis adjustments of available-for-sale securities	0		0			(1)		(2)				0		0			Amortization of deferred basis adjustments of available-for-sale securities	—		—			4		(1)		—		—
Interest for qualifying accounting hedges of available-for-sale securities	Interest for qualifying accounting hedges of available-for-sale securities	0		0			(3)		(2)				0		0			Interest for qualifying accounting hedges of available-for-sale securities	—		—			—		(3)		—		—
Amortization of deferred loan basis adjustments	Amortization of deferred loan basis adjustments	(11)		(13)			0		0				0		0			Amortization of deferred loan basis adjustments	(2)		(11)			—		—		—		—
Interest for qualifying accounting hedges of consumer automotive loans held-for-investment		(32)		(38)			0		0				0		0

Total loss on fair value hedging relationships		(43)		(51)			(4)		(4)				0		(4)
Interest for qualifying accounting hedges of consumer automotive loans held for investment																		Interest for qualifying accounting hedges of consumer automotive loans held for investment	(5)		(32)			—		—		—		—
Total (loss) gain on fair value hedging relationships																		Total (loss) gain on fair value hedging relationships	$	(7)	$	(43)		$	4	$	(4)	$	1	$	—

5153

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


		Interest and fees on finance receivables and loans				Interest and dividends on investment securities and other earning assets					Interest on long-term debt	Interest and fees on finance receivables and loans					Interest and dividends on investment securities and other earning assets						Interest on long-term debt
Six months ended June 30, ($ in millions)	Six months ended June 30, ($ in millions)	2021		2020			2021		2020				2021		2020			Six months ended June 30, ($ in millions)	2022		2021			2022		2021		2022		2021
Gain (loss) on fair value hedging relationships	Gain (loss) on fair value hedging relationships																	Gain (loss) on fair value hedging relationships
Interest rate contracts	Interest rate contracts																	Interest rate contracts
Amortization of deferred unsecured debt basis adjustments	Amortization of deferred unsecured debt basis adjustments	$	0	$	0		$	0	$	0			$	2	$	8		Amortization of deferred unsecured debt basis adjustments	$	—	$	—		$	—	$	—	$	2	$	2
Interest for qualifying accounting hedges of unsecured debt	Interest for qualifying accounting hedges of unsecured debt	0		0			0		0				3		0			Interest for qualifying accounting hedges of unsecured debt	—		—			—		—		1		3
Amortization of deferred secured debt basis adjustments (FHLB advances)	Amortization of deferred secured debt basis adjustments (FHLB advances)	0		0			0		0				(8)		(12)			Amortization of deferred secured debt basis adjustments (FHLB advances)	—		—			—		—		(2)		(8)

Amortization of deferred basis adjustments of available-for-sale securities	Amortization of deferred basis adjustments of available-for-sale securities	0		0			(3)		(3)				0		0			Amortization of deferred basis adjustments of available-for-sale securities	—		—			5		(3)		—		—
Interest for qualifying accounting hedges of available-for-sale securities	Interest for qualifying accounting hedges of available-for-sale securities	0		0			(4)		(2)				0		0			Interest for qualifying accounting hedges of available-for-sale securities	—		—			(1)		(4)		—		—
Amortization of deferred loan basis adjustments	Amortization of deferred loan basis adjustments	(24)		(26)			0		0				0		0			Amortization of deferred loan basis adjustments	(11)		(24)			—		—		—		—
Interest for qualifying accounting hedges of consumer automotive loans held-for-investment		(62)		(47)			0		0				0		0
Interest for qualifying accounting hedges of consumer automotive loans held for investment																		Interest for qualifying accounting hedges of consumer automotive loans held for investment	(23)		(62)			—		—		—		—

Total loss on fair value hedging relationships		(86)		(73)			(7)		(5)				(3)		(4)
Gain on cash flow hedging relationships
Interest rate contracts
Total (loss) gain on fair value hedging relationships																		Total (loss) gain on fair value hedging relationships	$	(34)	$	(86)		$	4	$	(7)	$	1	$	(3)

Interest for qualifying accounting hedges of variable-rate commercial loans		0		1			0		0				0		0
Total gain on cash flow hedging relationships		$	0	$	1		$	0	$	0			$	0	$	0

The following table summarizes the effect of cash flow hedges on accumulated other comprehensive ~~income.~~loss.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
Interest rate contracts	Interest rate contracts									Interest rate contracts
(Loss) gain recognized in other comprehensive income		$	(22)	$	(19)	$	(43)	$	150
Loss recognized in other comprehensive loss										Loss recognized in other comprehensive loss	$	(5)	$	(22)	$	(11)	$	(43)

The following table summarizes the effect of net investment hedges on accumulated other comprehensive ~~income~~loss and the Condensed Consolidated Statement of Comprehensive Income.


		Three months ended June 30,				Six months ended June 30,					Three months ended June 30,				Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021
Foreign exchange contracts (a) (b)	Foreign exchange contracts (a) (b)									Foreign exchange contracts (a) (b)
(Loss) gain recognized in other comprehensive income		$	(3)	$	(6)	$	(5)	$	6
Gain (loss) recognized in other comprehensive loss										Gain (loss) recognized in other comprehensive loss	$	4	$	(3)	$	1	$	(5)

(a)There were 0no amounts excluded from effectiveness testing for the three months and six months ended June 30, ~~2021,~~2022, or ~~2020.~~2021.

(b)Gains and losses reclassified from accumulated other comprehensive ~~income~~loss are reported as other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income. There were 0no amounts reclassified for the three months and six months ended June 30, ~~2021,~~2022, or ~~2020.~~2021.

~~19.~~20. Income Taxes

We recognized total income tax expense from continuing operations of ~~$143~~$152 million and ~~$354~~$343 million for the three months and six months ended June 30, ~~2021,~~2022, respectively, compared to income tax expense of ~~$95~~$143 million and $3$354 million for the same periods in ~~2020.~~

2021. The ~~increases~~increase in income tax expense for the three months ~~and six months~~ ended June 30, ~~2021,~~2022, compared to the same ~~periods~~period in ~~2020, were~~2021, was primarily due to adjustments to the ~~tax effects of an increase in pretax earnings, partially offset by a nonrecurring tax benefit from the release of~~ valuation allowance on foreign tax credit carryforwards, ~~during~~partially offset by the ~~second quarter~~tax effects of ~~2021, and~~ a ~~nondeductible goodwill impairment~~decrease in ~~the second quarter of 2020.~~pretax earnings. The ~~valuation allowance release during the three months ended June 30, 2021, was primarily driven by our current capacity to engage~~decrease in certain securitization transactions and the market demand from investors related to these transactions, coupled with the anticipated timing of the forecasted expiration of foreign tax credit carryforwards. This release of valuation allowance in continuing operations of approximately $78 million resulted in a significant variation in the customary relationship between pretax income and income tax expense for the six months ended June 30, ~~2021. The nondeductible goodwill impairment resulted~~2022, compared to the same period in 2021, was primarily due to the tax effects of a ~~significant variation~~decrease in pretax earnings, partially offset by adjustments to the ~~customary relationship between pretax income and income tax expense for the six months ended June 30, 2020.~~

Additionally, we recognized total income tax benefit from discontinued operations of $2 million during the second quarter of 2021. This amount includes a $78 million income tax benefit related to our tax election change from deducting foreign taxes paid to claiming thevaluation allowance on foreign tax credit ~~carryforwards on a prior tax return substantially offset by income tax expense of $76 million related to the establishment of a partial valuation allowance against these tax credit~~ carryforwards.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

As of each reporting date, we consider existing evidence, both positive and negative, that could impact our view with regard to future realization of deferred tax assets. ~~Following the changes to the aforementioned valuation allowance, we~~We continue to believe it is more likely than not that the benefit for certain foreign tax credit carryforwards and state net operating loss carryforwards will not be realized. In recognition of this risk, we continue to provide a partial valuation allowance on the deferred tax assets relating to these carryforwards and it is reasonably possible that the valuation allowance may change in the next 12 months.

~~20.~~21. Fair Value

Fair Value Measurements

For purposes of this disclosure, fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability (exit price) in the principal or most advantageous market in an orderly transaction between market participants at the measurement date under current market conditions. Fair value is based on the assumptions we believe market participants would use when pricing an asset or liability. Additionally, entities are required to consider all aspects of nonperformance risk, including the entity’s own credit standing, when measuring the fair value of a liability.

~~Judgment is used in estimating inputs~~

Table of Contents

Notes to our internal valuation models used to estimate our Level 3 fair value measurements. Level 3 inputs such as interest rate movements, prepayment speeds, credit losses, and discount rates are inherently difficult to estimate. Changes to these inputs can have a significant effect on fair value measurements and amounts that could be realized.Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

GAAP specifies a three-level hierarchy that is used when measuring and disclosing fair value. The fair value hierarchy gives the highest priority to quoted prices available in active markets (i.e., observable inputs) and the lowest priority to data lacking transparency (i.e., unobservable inputs). An instrument’s categorization within the fair value hierarchy is based on the lowest level of significant input to its valuation. The following is a description of the three hierarchy levels.

Level 1 Inputs are quoted prices in active markets for identical assets or liabilities at the measurement date. Additionally, the entity must have the ability to access the active market, and the quoted prices cannot be adjusted by the entity.

Level 2 Inputs are other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices in active markets for similar assets or liabilities; quoted prices in inactive markets for identical or similar assets or liabilities; or inputs that are observable or can be corroborated by observable market data by correlation or other means for substantially the full term of the assets or liabilities.

Level 3 Unobservable inputs are supported by little or no market activity. The unobservable inputs represent management’s best assumptions of how market participants would price the assets or liabilities. Generally, Level 3 assets and liabilities are valued using pricing models, discounted cash flow methodologies, or similar techniques that require significant judgment or estimation.

Judgment is used in estimating inputs to our internal valuation models used to estimate our Level 3 fair value measurements. Level 3 inputs such as interest rate movements, prepayment speeds, credit losses, and discount rates are inherently difficult to estimate. Changes to these inputs can have a significant effect on fair value measurements and amounts that could be realized.

The following are descriptions of the valuation methodologies used to measure material assets and liabilities at fair value and details of the valuation models, key inputs to those models, and significant assumptions utilized.

•Equity securities — We hold various marketable equity securities measured at fair value with changes in fair value recognized in net income. Measurements based on observable market prices are classified as Level 1.

•Available-for-sale securities — We carry our available-for-sale securities at fair value based on external pricing sources. We classify our securities as Level 1 when fair value is determined using quoted prices available for the same instruments trading in active markets. We classify our securities as Level 2 when fair value is determined using prices for similar instruments trading in active markets. We perform pricing validation procedures for our available-for-sale securities.

•~~Interests retained in financial asset sales~~ — We retain certain noncertificated interests retained from the sale of automotive finance receivables. Due to inactivity in the market, valuations are based on internally developed discounted cash flow models (an income approach) that use a market-based discount rate; therefore, we classified these assets as Level 3. The valuation considers recent market transactions, experience with similar assets, current business conditions, and analysis of the underlying collateral, as available. To estimate cash flows, we utilize various significant assumptions, including market observable inputs (for example, forward interest rates) and internally developed inputs (for example, prepayment speeds, delinquency levels, and credit losses).

•Derivative instruments — We enter into a variety of derivative financial instruments as part of our risk-management strategies. Certain of these derivatives are exchange traded, such as equity options. To determine the fair value of these instruments, we utilize the quoted market prices for those particular derivative contracts; therefore, we classified these contracts as Level 1.

We also execute OTC and centrally cleared derivative contracts, such as interest rate swaps, foreign-currency denominated forward contracts, caps, floors, and agency to-be-announced securities. We utilize third-party-developed valuation models that are widely accepted in the market to value these derivative contracts. The specific terms of the contract and market observable inputs (such as interest rate forward curves, interpolated volatility assumptions, or equity pricing) are used in the model. We classified these derivative contracts as Level 2 because all significant inputs into these models were market observable.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

We also enter into interest rate lock ~~commitments and forward-sale~~ commitments that are executed as part of our mortgage business, certain of which meet the accounting definition of a derivative and therefore are recorded as derivatives on our Condensed Consolidated Balance Sheet. ~~Because these derivatives~~Interest rate lock commitments are valued using internal pricing models with unobservable inputs, so they are classified as Level 3.

We purchase automotive finance receivables and loans from third parties as part of forward flow arrangements and, from time-to-time, execute opportunistic ad-hoc bulk purchases. As part of those agreements, ~~Ally~~we may withhold a portion of the purchase price from the counterparty and be required to pay the counterparty all or part of the amount withheld at agreed upon measurement dates and determinable amounts if actual credit performance of the acquired loans on the measurement date is better than or equal to what was estimated at the time of acquisition. Because these contracts meet the accounting definition of a derivative, we recognize a liability at fair value for these deferred purchase price payments. The fair value of these liabilities is determined using a discounted cash flow method. To estimate cash flows, we utilize various significant assumptions, including market observable inputs (for example, forward interest rates) and internally developed inputs (for example, prepayment speeds, delinquency levels, and expected credit losses). These liabilities are valued using internal loss models with unobservable inputs, and are classified as Level 3.

We are required to consider all aspects of nonperformance risk, including our own credit standing, when measuring fair value of a liability. We reduce credit risk on the majority of our derivatives by entering into legally enforceable agreements that enable the posting and receiving of collateral associated with the fair value of our derivative positions on an ongoing basis. In the event that we do not enter into legally enforceable agreements that enable the posting and receiving of collateral, we will consider our credit risk and the credit risk of our counterparties in the valuation of derivative instruments through a CVA, if warranted. The CVA calculation would utilize the credit default swap spreads of the counterparty.

5455

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Recurring Fair Value

The following tables display the assets and liabilities measured at fair value on a recurring basis including financial instruments elected for the fair value option. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The tables below display the hedges separately from the hedged items; therefore, they do not directly display the impact of our risk-management activities.


		Recurring fair value measurements									Recurring fair value measurements
June 30, 2021 ($ in millions)		Level 1		Level 2		Level 3		Total
June 30, 2022 ($ in millions)										June 30, 2022 ($ in millions)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Investment securities	Investment securities									Investment securities
Equity securities (a)	Equity securities (a)	$	1,017	$	0	$	9	$	1,026	Equity securities (a)	$	733	$	—	$	2	$	735
Available-for-sale securities	Available-for-sale securities									Available-for-sale securities
Debt securities	Debt securities									Debt securities
U.S. Treasury and federal agencies	U.S. Treasury and federal agencies	2,148		0		0		2,148		U.S. Treasury and federal agencies	2,374		—		—		2,374
U.S. States and political subdivisions	U.S. States and political subdivisions	0		1,017		7		1,024		U.S. States and political subdivisions	—		776		12		788
Foreign government	Foreign government	17		167		0		184		Foreign government	38		111		—		149
Agency mortgage-backed residential	Agency mortgage-backed residential	0		20,835		0		20,835		Agency mortgage-backed residential	—		17,859		—		17,859
Mortgage-backed residential	Mortgage-backed residential	0		2,910		0		2,910		Mortgage-backed residential	—		4,654		—		4,654
Agency mortgage-backed commercial	Agency mortgage-backed commercial	0		4,405		0		4,405		Agency mortgage-backed commercial	—		3,730		—		3,730

Asset-backed	Asset-backed	0		555		0		555		Asset-backed	—		475		—		475
Corporate debt	Corporate debt	0		2,100		0		2,100		Corporate debt	—		1,714		—		1,714
Total available-for-sale securities	Total available-for-sale securities	2,165		31,989		7		34,161		Total available-for-sale securities	2,412		29,319		12		31,743
Mortgage loans held-for-sale (b)	Mortgage loans held-for-sale (b)	0		0		97		97		Mortgage loans held-for-sale (b)	—		81		—		81

Finance receivables and loans, net	Finance receivables and loans, net									Finance receivables and loans, net
Consumer other (b)	Consumer other (b)	0		0		8		8		Consumer other (b)	—		—		7		7

Other assets										Other assets
Derivative contracts in a receivable position	Derivative contracts in a receivable position									Derivative contracts in a receivable position
Interest rate	Interest rate	0		0		9		9		Interest rate	—		1		2		3
Foreign currency		0		4		0		4

Equity contracts	Equity contracts	3		0		0		3		Equity contracts	1		—		—		1
Total derivative contracts in a receivable position	Total derivative contracts in a receivable position	3		4		9		16		Total derivative contracts in a receivable position	1		1		2		4

Total assets	Total assets	$	3,185	$	31,993	$	130	$	35,308	Total assets	$	3,146	$	29,401	$	23	$	32,570
Liabilities	Liabilities									Liabilities
Accrued expenses and other liabilities	Accrued expenses and other liabilities									Accrued expenses and other liabilities
Derivative contracts in a payable position	Derivative contracts in a payable position									Derivative contracts in a payable position
Interest rate										Interest rate	$	—	$	—	$	4	$	4
Foreign currency										Foreign currency	—		3		—		3
Credit contracts										Credit contracts	—		—		48		48

Credit contracts		$	0	$	0	$	46	$	46
Equity contracts		1		0		0		1
Total derivative contracts in a payable position	Total derivative contracts in a payable position	1		0		46		47		Total derivative contracts in a payable position	—		3		52		55

Total liabilities	Total liabilities	$	1	$	0	$	46	$	47	Total liabilities	$	—	$	3	$	52	$	55

(a)Our direct investment in any one industry did not exceed ~~11%~~14%.

(b)Carried at fair value due to fair value option elections.

5556

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


		Recurring fair value measurements									Recurring fair value measurements
December 31, 2020 ($ in millions)		Level 1		Level 2		Level 3		Total
December 31, 2021 ($ in millions)										December 31, 2021 ($ in millions)	Level 1		Level 2		Level 3		Total
Assets	Assets									Assets
Investment securities	Investment securities									Investment securities
Equity securities (a)	Equity securities (a)	$	1,064	$	0	$	7	$	1,071	Equity securities (a)	$	1,093	$	—	$	9	$	1,102
Available-for-sale securities	Available-for-sale securities									Available-for-sale securities
Debt securities	Debt securities									Debt securities
U.S. Treasury and federal agencies	U.S. Treasury and federal agencies	803		0		0		803		U.S. Treasury and federal agencies	2,155		—		—		2,155
U.S. States and political subdivisions	U.S. States and political subdivisions	0		1,088		7		1,095		U.S. States and political subdivisions	—		855		9		864
Foreign government	Foreign government	17		159		0		176		Foreign government	19		138		—		157
Agency mortgage-backed residential	Agency mortgage-backed residential	0		18,588		0		18,588		Agency mortgage-backed residential	—		19,039		—		19,039
Mortgage-backed residential	Mortgage-backed residential	0		2,640		0		2,640		Mortgage-backed residential	—		4,425		—		4,425
Agency mortgage-backed commercial	Agency mortgage-backed commercial	0		4,189		0		4,189		Agency mortgage-backed commercial	—		4,526		—		4,526

Asset-backed	Asset-backed	0		425		0		425		Asset-backed	—		534		—		534
Corporate debt	Corporate debt	0		1,914		0		1,914		Corporate debt	—		1,887		—		1,887
Total available-for-sale securities	Total available-for-sale securities	820		29,003		7		29,830		Total available-for-sale securities	2,174		31,404		9		33,587
Mortgage loans held-for-sale (b)	Mortgage loans held-for-sale (b)	0		0		91		91		Mortgage loans held-for-sale (b)	—		80		—		80

Finance receivables and loans, net	Finance receivables and loans, net									Finance receivables and loans, net
Consumer other (b)	Consumer other (b)	0		0		8		8		Consumer other (b)	—		—		7		7

Other assets										Other assets
Derivative contracts in a receivable position	Derivative contracts in a receivable position									Derivative contracts in a receivable position
Interest rate	Interest rate	0		0		16		16		Interest rate	—		1		5		6
Foreign currency		0		1		0		1

Equity contracts										Equity contracts	1		—		—		1
Total derivative contracts in a receivable position	Total derivative contracts in a receivable position	0		1		16		17		Total derivative contracts in a receivable position	1		1		5		7

Total assets	Total assets	$	1,884	$	29,004	$	129	$	31,017	Total assets	$	3,268	$	31,485	$	30	$	34,783
Liabilities	Liabilities									Liabilities
Accrued expenses and other liabilities	Accrued expenses and other liabilities									Accrued expenses and other liabilities
Derivative contracts in a payable position	Derivative contracts in a payable position									Derivative contracts in a payable position

Interest rate										Interest rate	$	—	$	—	$	2	$	2
Foreign currency	Foreign currency	$	0	$	1	$	0	$	1	Foreign currency	—		3		—		3
Credit contracts	Credit contracts	0		0		28		28		Credit contracts	—		—		56		56
Equity contracts	Equity contracts	4		0		0		4		Equity contracts	1		—		—		1
Total derivative contracts in a payable position	Total derivative contracts in a payable position	4		1		28		33		Total derivative contracts in a payable position	1		3		58		62

Total liabilities	Total liabilities	$	4	$	1	$	28	$	33	Total liabilities	$	1	$	3	$	58	$	62

(a)Our direct investment in any one industry did not exceed ~~11%~~8%.

(b)Carried at fair value due to fair value option elections.

5657

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

The following tables present the reconciliation for all Level 3 assets and liabilities measured at fair value on a recurring basis. We often economically hedge the fair value change of our assets or liabilities with derivatives and other financial instruments. The Level 3 items presented below may be hedged by derivatives and other financial instruments that are classified as Level 1 or Level 2. Thus, the following tables do not fully reflect the impact of our risk-management activities.


		Equity securities (a)				Available-for-sale securities				Mortgage loans held-for-sale (b) (c)				Finance receivables and loans, net (b) (d)				Interests retained in financial asset sales					Equity securities (a)				Available-for-sale securities				Mortgage loans held-for-sale (b) (c)				Finance receivables and loans, net (b)
($ in millions)	($ in millions)	2021		2020		2021		2020		2021		2020		2021		2020		2021		2020		($ in millions)	2022		2021		2022		2021		2022		2021		2022		2021
Assets	Assets																					Assets
Fair value at April 1,	Fair value at April 1,	$	11	$	4	$	7	$	3	$	146	$	68	$	8	$	10	$	0	$	1	Fair value at April 1,	$	1	$	11	$	11	$	7	$	—	$	146	$	7	$	8
Net realized/unrealized gains	Net realized/unrealized gains																					Net realized/unrealized gains
Included in earnings	Included in earnings	0		1		0		0		21		8		0		1		0		0		Included in earnings	1		—		—		—		—		21		—		—
Included in OCI	Included in OCI	0		0		0		0		0		0		0		0		0		0		Included in OCI	—		—		—		—		—		—		—		—
Purchases	Purchases	0		0		0		2		812		676		5		3		0		0		Purchases	—		—		1		—		—		812		4		5
Sales	Sales	(2)		0		0		0		(882)		(661)		0		0		0		0		Sales	—		(2)		—		—		—		(882)		—		—
Issuances	Issuances	0		0		0		0		0		0		0		0		0		0		Issuances	—		—		—		—		—		—		—		—
Settlements	Settlements	0		0		0		0		0		0		(5)		(6)		0		0		Settlements	—		—		—		—		—		—		(4)		(5)
Transfers into (out of) Level 3		0		0		0		0		0		0		0		0		0		0
Fair value at June 30,		$	9	$	5	$	7	$	5	$	97	$	91	$	8	$	8	$	0	$	1
Transfers into Level 3																						Transfers into Level 3	—		—		—		—		—		—		—		—
Transfers out of Level 3																						Transfers out of Level 3	—		—		—		—		—		—		—		—
Fair value at June 30																						Fair value at June 30	$	2	$	9	$	12	$	7	$	—	$	97	$	7	$	8
Net unrealized gains still held at June 30,	Net unrealized gains still held at June 30,																					Net unrealized gains still held at June 30,
Included in earnings	Included in earnings	$	0	$	1	$	0	$	0	$	1	$	1	$	0	$	0	$	0	$	0	Included in earnings	$	—	$	—	$	—	$	—	$	—	$	1	$	—	$	—
Included in OCI	Included in OCI	0		0		0		0		0		0		0		0		0		0		Included in OCI	—		—		—		—		—		—		—		—

(a)Net realized/unrealized gains are reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income.

(b)Carried at fair value due to fair value option elections.

(c)Net realized/unrealized gains (losses) are reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.


	Derivative liabilities, net of derivative assets (a)
($ in millions)	2022		2021
Liabilities
Fair value at April 1,	$	61	$	28
Net realized/unrealized (gains) losses
Included in earnings	(1)		7
Included in OCI	—		—
Purchases	—		—
Sales	—		—
Issuances	—		2
Settlements	(10)		—
Transfers into Level 3	—		—
Transfers out of Level 3	—		—
Fair value at June 30,	$	50	$	37
Net unrealized (gains) losses still held at June 30,
Included in earnings	$	(1)	$	10
Included in OCI	—		—

(a)Net realized/unrealized (gains) losses are reported as gain on mortgage and automotive loans, net, and other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q


	Equity securities (a)				Available-for-sale securities				Mortgage loans held-for-sale (b) (c)				Finance receivables and loans, net (b) (d)
($ in millions)	2022		2021		2022		2021		2022		2021		2022		2021
Assets
Fair value at January 1,	$	9	$	7	$	9	$	7	$	—	$	91	$	7	$	8
Net realized/unrealized gains (losses)
Included in earnings	2		4		—		—		—		49		(1)		1
Included in OCI	—		—		—		—		—		—		—		—
Purchases	—		—		3		—		—		1,851		8		8
Sales	(9)		(2)		—		—		—		(1,894)		—		—
Issuances	—		—		—		—		—		—		—		—
Settlements	—		—		—		—		—		—		(7)		(9)
Transfers into Level 3	—		—		—		—		—		—		—		—
Transfers out of Level 3	—		—		—		—		—		—		—		—
Fair value at June 30,	$	2	$	9	$	12	$	7	$	—	$	97	$	7	$	8
Net unrealized gains (losses) still held at June 30,
Included in earnings	$	—	$	4	$	—	$	—	$	—	$	1	$	(1)	$	—
Included in OCI	—		—		—		—		—		—		—		—

(a)Net realized/unrealized gains are reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income.

(b)Carried at fair value due to fair value option elections.

(c)Net realized/unrealized gains are reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.

(d)Net realized/unrealized (losses) gains are reported as other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income.


		Derivative liabilities, net of derivative assets					Derivative liabilities, net of derivative assets (a)
($ in millions)	($ in millions)	2021 (a)		2020 (b)		($ in millions)	2022		2021
Liabilities	Liabilities					Liabilities
Fair value at April 1,		$	28	$	(8)
Net realized/unrealized losses (gains)
Fair value at January 1,						Fair value at January 1,	$	53	$	12
Net realized/unrealized losses						Net realized/unrealized losses
Included in earnings	Included in earnings	7		(4)		Included in earnings	7		22
Included in OCI	Included in OCI	0		0		Included in OCI	—		—
Purchases	Purchases	0		0		Purchases	—		—
Sales	Sales	0		0		Sales	—		—
Issuances	Issuances	2		0		Issuances	—		3
Settlements	Settlements	0		0		Settlements	(10)		—
Transfers into (out of) Level 3		0		0
Transfers into Level 3						Transfers into Level 3	—		—
Transfers out of Level 3						Transfers out of Level 3	—		—
Fair value at June 30,	Fair value at June 30,	$	37	$	(12)	Fair value at June 30,	$	50	$	37
Net unrealized losses (gains) still held at June 30,
Net unrealized (gains) losses still held at June 30,						Net unrealized (gains) losses still held at June 30,
Included in earnings	Included in earnings	$	10	$	(4)	Included in earnings	$	(4)	$	25
Included in OCI	Included in OCI	0		0		Included in OCI	—		—

(a)Net realized/unrealized losses (gains) are reported as gain on mortgage and automotive loans, net, and other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income.

~~(b)Net realized/unrealized losses (gains) are reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.~~

5759

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Equity securities (a) Available-for-sale securities Mortgage loans held-for-sale (b) (c) Finance receivables and loans, net (b) (d) Interests retained in financial asset sales
($ in millions) 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
Assets
Fair value at January 1, $ 7 $ 8 $ 7 $ 2 $ 91 $ 30 $ 8 $ 11 $ 0 $ 2
Net realized/unrealized gains (losses)
Included in earnings 4 (3) 0 0 49 13 1 0 0 0
Included in OCI 0 0 0 0 0 0 0 0 0 0
Purchases 0 0 0 3 1,851 978 8 9 0 0
Sales (2) 0 0 0 (1,894) (930) 0 0 0 0
Issuances 0 0 0 0 0 0 0 0 0 0
Settlements 0 0 0 0 0 0 (9) (12) 0 (1)
Transfers into (out of) Level 3 0 0 0 0 0 0 0 0 0 0
Fair value at June 30, $ 9 $ 5 $ 7 $ 5 $ 97 $ 91 $ 8 $ 8 $ 0 $ 1
Net unrealized gains (losses) still held at June 30,
Included in earnings $ 4 $ (3) $ 0 $ 0 $ 1 $ 2 $ 0 $ 0 $ 0 $ 0
Included in OCI 0 0 0 0 0 0 0 0 0 0

~~(a)Net realized/unrealized gains (losses) are reported as other gain on investments, net, in the Condensed Consolidated Statement of Comprehensive Income.~~

~~(b)Carried at fair value due to fair value option elections.~~

~~(c)Net realized/unrealized gains are reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.~~

~~(d)Net realized/unrealized gains are reported as other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income.~~

Derivative liabilities, net of derivative assets
($ in millions) 2021 (a) 2020 (b)
Liabilities
Fair value at January 1, $ 12 $ (2)
Net realized/unrealized losses (gains)
Included in earnings 22 (10)
Included in OCI 0 0
Purchases 0 0
Sales 0 0
Issuances 3 0
Settlements 0 0
Transfers into (out of) Level 3 0 0
Fair value at June 30, $ 37 $ (12)
Net unrealized losses (gains) still held at June 30,
Included in earnings $ 25 $ (10)
Included in OCI 0 0

~~(a)Net realized/unrealized losses (gains) are reported as gain on mortgage and automotive loans, net, and other income, net of losses, in the Condensed Consolidated Statement of Comprehensive Income.~~

~~(b)Net realized/unrealized losses (gains) are reported as gain on mortgage and automotive loans, net, in the Condensed Consolidated Statement of Comprehensive Income.~~

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

Nonrecurring Fair Value

We may be required to measure certain assets and liabilities at fair value from time to time. These periodic fair value measures typically result from the application of lower-of-cost or fair value accounting or certain impairment measures. These items would constitute nonrecurring fair value measures.

The following tables display assets and liabilities measured at fair value on a nonrecurring basis and still held at June 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, respectively. The amounts are generally as of the end of each period presented, which approximate the fair value measurements that occurred during each period.


		Nonrecurring fair value measurements								Lower-of-cost-or-fair-value reserve, valuation reserve, or cumulative adjustments		Total gain (loss) included in earnings			Nonrecurring fair value measurements								Lower-of-cost-or-fair-value reserve, valuation reserve, or cumulative adjustments		Total gain (loss) included in earnings
June 30, 2021 ($ in millions)		Level 1		Level 2		Level 3		Total
June 30, 2022 ($ in millions)														June 30, 2022 ($ in millions)	Level 1		Level 2		Level 3		Total		Lower-of-cost-or-fair-value reserve, valuation reserve, or cumulative adjustments		Total gain (loss) included in earnings
Assets	Assets													Assets

Loans held-for-sale, net	Loans held-for-sale, net	$	0	$	0	$	312	$	312	$	0	n/m	(a)	Loans held-for-sale, net	$	—	$	—	$	717	$	717	$	—	n/m	(a)

Commercial finance receivables and loans, net (b)	Commercial finance receivables and loans, net (b)													Commercial finance receivables and loans, net (b)
Automotive	Automotive	0		0		27		27		(2)		n/m	(a)	Automotive	—		—		5		5		—		n/m	(a)
Other	Other	0		0		59		59		(24)		n/m	(a)	Other	—		—		60		60		(77)		n/m	(a)
Total commercial finance receivables and loans, net	Total commercial finance receivables and loans, net	0		0		86		86		(26)		n/m	(a)	Total commercial finance receivables and loans, net	—		—		65		65		(77)		n/m	(a)
Other assets	Other assets													Other assets
Nonmarketable equity investments ~~(c)~~	Nonmarketable equity investments ~~(c)~~	0		171		33		204		170		n/m	(a)	Nonmarketable equity investments ~~(c)~~	—		—		12		12		—		n/m	(a)

Repossessed and foreclosed assets ~~(d)~~(c)	Repossessed and foreclosed assets ~~(d)~~(c)	0		0		3		3		0		n/m	(a)	Repossessed and foreclosed assets ~~(d)~~(c)	—		—		5		5		—		n/m	(a)

Total assets	Total assets	$	0	$	171	$	434	$	605	$	144	n/m		Total assets	$	—	$	—	$	799	$	799	$	(77)	n/m

n/m = not meaningful

(a)We consider the applicable valuation allowance, allowance for loan ~~loss allowance,~~losses, or cumulative impairment to be the most relevant indicator of the impact on earnings caused by the fair value measurement. Accordingly, the table above excludes total gains and losses included in earnings for these items. The carrying values are inclusive of the respective valuation reserve, loan loss allowance, or cumulative adjustment.

(b)Represents collateral-dependent loans held for investment for which a nonrecurring measurement was made. The related allowance for loan losses represents the cumulative fair value adjustments for those specific receivables.

(c)Primarily relates to an investment in one entity for which there was a subsequent funding round resulting in an observable price change in the value of our investment in the entity. Refer to Note 10 for further discussion.

~~(d)~~The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~


		Nonrecurring fair value measurements								Lower-of-cost-or-fair-value reserve, valuation reserve, or cumulative adjustments		Total gain (loss) included in earnings			Nonrecurring fair value measurements								Lower-of-cost-or-fair-value reserve, valuation reserve, or cumulative adjustments		Total gain (loss) included in earnings
December 31, 2020 ($ in millions)		Level 1		Level 2		Level 3		Total
December 31, 2021 ($ in millions)														December 31, 2021 ($ in millions)	Level 1		Level 2		Level 3		Total		Lower-of-cost-or-fair-value reserve, valuation reserve, or cumulative adjustments		Total gain (loss) included in earnings
Assets	Assets													Assets

Loans held-for-sale, net	Loans held-for-sale, net	$	0	$	0	$	315	$	315	$	0	n/m	(a)	Loans held-for-sale, net	$	—	$	—	$	468	$	468	$	—	n/m	(a)

Commercial finance receivables and loans, net (b)	Commercial finance receivables and loans, net (b)													Commercial finance receivables and loans, net (b)
Automotive	Automotive	0		0		27		27		(5)		n/m	(a)	Automotive	—		—		4		4		—		n/m	(a)
Other	Other	0		0		54		54		(20)		n/m	(a)	Other	—		—		112		112		(65)		n/m	(a)
Total commercial finance receivables and loans, net	Total commercial finance receivables and loans, net	0		0		81		81		(25)		n/m	(a)	Total commercial finance receivables and loans, net	—		—		116		116		(65)		n/m	(a)
Other assets	Other assets													Other assets
Nonmarketable equity investments ~~(c)~~	Nonmarketable equity investments ~~(c)~~	0		7		118		125		88		n/m	(a)	Nonmarketable equity investments ~~(c)~~	—		—		7		7		(5)		n/m	(a)

Repossessed and foreclosed assets ~~(d)~~(c)	Repossessed and foreclosed assets ~~(d)~~(c)	0		0		9		9		(1)		n/m	(a)	Repossessed and foreclosed assets ~~(d)~~(c)	—		—		4		4		—		n/m	(a)

Total assets	Total assets	$	0	$	7	$	523	$	530	$	62	n/m		Total assets	$	—	$	—	$	595	$	595	$	(70)	n/m

n/m = not meaningful

(c)Primarily relates to an investment in one entity for which there was a subsequent funding round. This subsequent funding round resulted in an observable price change in the value of our investment in the entity. Refer to Note 13 to the Consolidated Financial Statements in our 2020 Annual Report on Form 10-K for further discussion.

~~(d)~~The allowance provided for repossessed and foreclosed assets represents any cumulative valuation adjustment recognized to adjust the assets to fair value.

~~Additionally, on April 30, 2020, we recognized a $50 million impairment~~

Table of ~~goodwill at Ally Invest. At the time of impairment, the fair value of goodwill at Ally Invest was classified as Level 3 under the fair value hierarchy. Refer~~Contents

Notes to ~~Note 13 to the~~Condensed Consolidated Financial Statements ~~in our 2020 Annual Report on~~(unaudited)

Ally Financial Inc. • Form ~~10-K for further discussion.~~10-Q

Fair Value Option for Financial Assets

We elected the fair value option for an insignificant amount of conforming mortgage loans ~~held for sale~~held-for-sale and certain acquired ~~unsecured consumer~~personal lending finance receivables. We elected the fair value option for conforming mortgage loans ~~held for sale~~held-for-sale to mitigate earnings volatility by better matching the accounting for the assets with the related derivatives. We elected the fair value option for certain acquired ~~unsecured consumer~~personal lending finance receivables to mitigate the complexities of recording these loans at amortized cost. Our intent in electing fair value measurement was to mitigate a divergence between accounting gains or losses and economic exposure for certain assets and liabilities.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

Fair Value of Financial Instruments

The following table presents the carrying and estimated fair value of financial instruments, except for those recorded at fair value on a recurring basis presented in the previous section of this note titled Recurring Fair Value. When possible, we use quoted market prices to determine fair value. Where quoted market prices are not available, the fair value is internally derived based on appropriate valuation methodologies with respect to the amount and timing of future cash flows and estimated discount rates. However, considerable judgment is required in interpreting current market data to develop the market assumptions and inputs necessary to estimate fair value. As such, the actual amount received to sell an asset or the amount paid to settle a liability could differ from our estimates. Fair value information presented herein was based on information available at June 30, ~~2021,~~2022, and December 31, ~~2020.~~2021.


				Estimated fair value											Estimated fair value
($ in millions)	($ in millions)	Carrying value		Level 1		Level 2		Level 3		Total		($ in millions)	Carrying value		Level 1		Level 2		Level 3		Total
June 30, 2021
June 30, 2022												June 30, 2022
Financial assets												Financial assets
Held-to-maturity securities												Held-to-maturity securities	$	1,112	$	—	$	998	$	—	$	998
Loans held-for-sale, net												Loans held-for-sale, net	717		—		—		717		717
Finance receivables and loans, net												Finance receivables and loans, net	125,000		—		—		128,544		128,544
FHLB/FRB stock (a)												FHLB/FRB stock (a)	997		—		997		—		997
Financial liabilities												Financial liabilities
Deposit liabilities												Deposit liabilities	$	38,629	$	—	$	—	$	38,312	$	38,312
Short-term borrowings												Short-term borrowings	7,775		—		—		7,779		7,779
Long-term debt												Long-term debt	16,984		—		11,447		6,379		17,826
December 31, 2021												December 31, 2021
Financial assets	Financial assets											Financial assets
Held-to-maturity securities	Held-to-maturity securities	$	1,126	$	0	$	1,173	$	0	$	1,173	Held-to-maturity securities	$	1,170	$	—	$	1,204	$	—	$	1,204
Loans held-for-sale, net	Loans held-for-sale, net	312		0		0		312		312		Loans held-for-sale, net	469		—		—		469		469
Finance receivables and loans, net	Finance receivables and loans, net	109,083		0		0		116,169		116,169		Finance receivables and loans, net	118,994		—		—		126,044		126,044
FHLB/FRB stock (a)	FHLB/FRB stock (a)	688		0		688		0		688		FHLB/FRB stock (a)	738		—		738		—		738
Financial liabilities	Financial liabilities											Financial liabilities
Deposit liabilities	Deposit liabilities	$	47,253	$	0	$	0	$	47,675	$	47,675	Deposit liabilities	$	40,953	$	—	$	—	$	41,164	$	41,164

Long-term debt	Long-term debt	16,896		0		14,250		5,484		19,734		Long-term debt	17,029		—		12,637		6,892		19,529
December 31, 2020
Financial assets
Held-to-maturity securities		$	1,253	$	0	$	1,331	$	0	$	1,331
Loans held-for-sale, net		315		0		0		315		315
Finance receivables and loans, net		115,243		0		0		122,156		122,156
FHLB/FRB stock (a)		725		0		725		0		725
Financial liabilities
Deposit liabilities		$	55,210	$	0	$	0	$	55,932	$	55,932
Short-term borrowings		2,136		0		0		2,136		2,136
Long-term debt		22,006		0		19,161		6,310		25,471

(a)Included in other assets on our Condensed Consolidated Balance Sheet.

In addition to the financial instruments presented in the above table, we have various financial instruments for which the carrying value approximates the fair value due to their short-term nature and limited credit risk. These instruments include cash and cash equivalents, restricted cash, cash collateral, accrued interest receivable, accrued interest payable, trade receivables and payables, and other short-term receivables and payables. Included in cash and cash equivalents are highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value due to interest rate, quoted price, or penalty on withdrawal. Classified as Level 1 under the fair value hierarchy, cash and cash equivalents generally expose us to limited credit risk and are so near maturity that they present insignificant risk of changes in value because of changes in interest rates.

~~21.~~22. Offsetting Assets and Liabilities

Our derivative contracts and repurchase/reverse repurchase transactions are supported by qualifying master netting and master repurchase agreements. These agreements are legally enforceable bilateral agreements that (i) create a single legal obligation for all individual transactions covered by the agreement to the nondefaulting entity upon an event of default of the counterparty, including bankruptcy, insolvency, or similar proceeding, and (ii) provide the nondefaulting entity the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set off collateral promptly upon an event of default of the counterparty.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

To further mitigate the risk of counterparty default related to derivative instruments, we maintain collateral agreements with certain counterparties. The agreements require both parties to maintain collateral in the event the fair values of the derivative financial instruments meet established thresholds. In the event that either party defaults on the obligation, the secured party may seize the collateral. Generally, our collateral arrangements are bilateral such that we and the counterparty post collateral for the obligation. Contractual terms provide for standard and customary exchange of collateral based on changes in the market value of the outstanding derivatives. A party posts additional collateral when their obligation rises or removes collateral when it falls, such that the net replacement cost of the nondefaulting party is covered in the event of counterparty default.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

In certain instances, as it relates to our derivative instruments, we have the option to report derivative assets and liabilities as well as assets and liabilities associated with cash collateral received or delivered that is governed by a master netting agreement on a net basis as long as certain qualifying criteria are met. Similarly, for our repurchase/reverse repurchase transactions, we have the option to report recognized assets and liabilities subject to a master netting agreement on a net basis if certain qualifying criteria are met. At June 30, ~~2021,~~2022, these instruments are reported as gross assets and gross liabilities on the Condensed Consolidated Balance Sheet. For additional information on derivative instruments and hedging activities, refer to Note ~~18.~~19.

The composition of offsetting derivative instruments, financial assets, and financial liabilities was as follows.


		Gross amounts of recognized assets/liabilities				Gross amounts offset on the Condensed Consolidated Balance Sheet			Net amounts of assets/liabilities presented on the Condensed Consolidated Balance Sheet		Gross amounts not offset on the Condensed Consolidated Balance Sheet										Gross amounts of recognized assets/liabilities				Gross amounts offset on the Condensed Consolidated Balance Sheet				Net amounts of assets/liabilities presented on the Condensed Consolidated Balance Sheet				Gross amounts not offset on the Condensed Consolidated Balance Sheet
($ in millions)	($ in millions)							Financial instruments			Collateral (a) (b) (c)		Net amount		($ in millions)								Financial instruments								Collateral (a) (b) (c)				Net amount
June 30, 2021
June 30, 2022																		June 30, 2022
Assets	Assets																	Assets

Derivative assets in net asset positions	Derivative assets in net asset positions			$	7				$	0	$	7	$	(1)		$	(4)		$	2				Derivative assets in net asset positions			$	1			$	—			$	1			$	—			$	—	$	1

Derivative assets with no offsetting arrangements	Derivative assets with no offsetting arrangements	9				—			9		—		—			9		Derivative assets with no offsetting arrangements			3				—				3				—				—				3
Total assets		$	16			$	0		$	16	$	(1)	$	(4)		$	11

Total assets																		Total assets			$	4			$	—			$	4			$	—			$	—			$	4
Liabilities	Liabilities																	Liabilities
Derivative liabilities in net liability positions																		Derivative liabilities in net liability positions			$	3			$	—			$	3			$	—			$	(3)			$	—

Derivative liabilities in net asset positions		$	1			$	0		$	1	$	(1)	$	0		$	0
Derivative liabilities with no offsetting arrangements	Derivative liabilities with no offsetting arrangements	46				—			46		—		—			46		Derivative liabilities with no offsetting arrangements			52				—				52				—				—				52

Total liabilities	Total liabilities	$	47			$	0		$	47	$	(1)	$	0		$	46	Total liabilities			$	55			$	—			$	55			$	—			$	(3)			$	52
December 31, 2020
December 31, 2021																		December 31, 2021
Assets	Assets																	Assets
Derivative assets in net liability positions		$	1			$	0		$	1	$	(1)	$	0		$	0
Derivative assets in net asset positions																		Derivative assets in net asset positions			$	1			$	—			$	1			$	(1)			$	—			$	—
Derivative assets with no offsetting arrangements	Derivative assets with no offsetting arrangements	16				—			16		—		—			16		Derivative assets with no offsetting arrangements			6				—				6				—				—				6
Total assets	Total assets	$	17			$	0		$	17	$	(1)	$	0		$	16	Total assets			$	7			$	—			$	7			$	(1)			$	—			$	6
Liabilities	Liabilities																	Liabilities
Derivative liabilities in net liability positions	Derivative liabilities in net liability positions	$	5			$	0		$	5	$	(1)	$	(1)		$	3	Derivative liabilities in net liability positions			$	3			$	—			$	3			$	—			$	(2)			$	1
Derivative liabilities in net asset positions																		Derivative liabilities in net asset positions			1				—				1				(1)				—				—
Derivative liabilities with no offsetting arrangements	Derivative liabilities with no offsetting arrangements	28				—			28		—		—			28		Derivative liabilities with no offsetting arrangements			58				—				58				—				—				58
Total liabilities	Total liabilities	$	33			$	0		$	33	$	(1)	$	(1)		$	31	Total liabilities			$	62			$	—			$	62			$	(1)			$	(2)			$	59

(a)Financial collateral received/pledged shown as a balance based on the sum of all net asset and liability positions between Ally and each individual derivative counterparty.

(b)Amounts disclosed are limited to the financial asset or liability balance and, accordingly, exclude excess collateral received or pledged and noncash collateral received. We do not record such collateral received on our Condensed Consolidated Balance Sheet unless certain conditions are met.

(c)Certain agreements grant us the right to sell or pledge the noncash assets we receive as collateral. We have not sold or pledged any of the noncash collateral received under these agreements.

~~22.~~

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

23. Segment Information

Operating segments are defined as components of an enterprise that engage in business activity from which revenues are earned and expenses incurred for which discrete financial information is available that is evaluated regularly by our chief operating decision maker in deciding how to allocate resources and in assessing performance.

We report our results of operations on a business-line basis through 4 operating segments: Automotive Finance operations, Insurance operations, Mortgage Finance operations, and Corporate Finance operations, with the remaining activity reported in Corporate and Other. The operating segments are determined based on the products and services offered, and reflect the manner in which financial information is currently evaluated by management. The following is a description of each of our reportable operating segments.

Dealer Financial Services

Dealer Financial Services comprises our Automotive Finance and Insurance segments.

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

include providing retail installment sales contracts, loans and operating leases, offering term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services.

•Insurance operations — A complementary automotive-focused business offering both consumer finance protection and insurance products sold primarily through the automotive dealer channel, and commercial insurance products sold directly to dealers. As part of our focus on offering dealers a broad range of consumer financial and insurance products, we provide VSCs, VMCs, and GAP products. We also underwrite select commercial insurance coverages, which primarily insure dealers’ vehicle inventory.

Mortgage Finance operations —

Our held-for-investment portfolio includes our direct-to-consumer Ally Home mortgage offering and bulk purchases of high-quality jumbo and LMI mortgage loans originated by third parties. Through our direct-to-consumer channel, we offer a variety of competitively priced jumbo and conforming fixed- and adjustable-rate mortgage products through a third-party fulfillment provider. Through the bulk loan channel, we purchase loans from several qualified sellers on a servicing-released basis, allowing us to directly oversee servicing activities and manage refinancing through our direct-to-consumer channel.

Corporate Finance operations —

Primarily provides senior secured leveraged cash flow and asset-based loans to mostly U.S.-based middle-market companies, with a focus on businesses owned by private equity sponsors. These loans are typically used for leveraged buyouts, refinancing and recapitalizations, mergers and acquisitions, ~~debt refinancing, restructurings,~~growth, turnarounds, and ~~working capital.~~debtor-in-possession financings. We also provide, through our Lender Finance business, nonbank wholesale-funded managers with partial funding for their direct-lending activities, which is principally leveraged loans. Additionally, we offer a commercial real estate product to serve companies in the healthcare industry.

Corporate and Other

Corporate and Other primarily consists of centralized corporate treasury activities, such as management of the cash and corporate investment securities and loan portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, original issue discount, and the residual impacts of our corporate FTP and treasury ALM activities. Corporate and Other also includes certain equity investments, which primarily consist of FHLB and FRB ~~stock,~~stock—as well as other strategic investments—and the management of our legacy mortgage portfolio, which primarily consists of loans originated prior to January 1, 2009, and reclassifications and eliminations between the reportable operating segments. Financial results related to Ally Invest, our ~~online~~digital brokerage ~~operations,~~ and wealth management offering, Ally Lending, our point-of-sale financing business, Ally Credit Card, and CRA loans and related investments are also included within Corporate and Other.

The information presented in our reportable operating segments is based in part on internal allocations, which involve management judgment.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Financial information for our reportable operating segments is summarized as follows.


Three months ended June 30, ($ in millions)	Three months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)		Three months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)
2021
2022														2022
Net financing revenue and other interest income	Net financing revenue and other interest income	$	1,333	$	15	$	23	$	77	$	99	$	1,547	Net financing revenue and other interest income	$	1,301	$	20	$	56	$	77	$	310	$	1,764
Other revenue	Other revenue	61		344		22		33		78		538		Other revenue	72		158		4		19		59		312
Total net revenue	Total net revenue	1,394		359		45		110		177		2,085		Total net revenue	1,373		178		60		96		369		2,076
Provision for credit losses	Provision for credit losses	(23)		0		0		(13)		4		(32)		Provision for credit losses	228		—		—		8		68		304
Total noninterest expense	Total noninterest expense	500		272		45		28		230		1,075		Total noninterest expense	545		300		54		28		211		1,138
Income (loss) from continuing operations before income tax expense	Income (loss) from continuing operations before income tax expense	$	917	$	87	$	0	$	95	$	(57)	$	1,042	Income (loss) from continuing operations before income tax expense	$	600	$	(122)	$	6	$	60	$	90	$	634
Total assets	Total assets	$	100,162	$	9,394	$	13,865	$	6,246	$	50,803	$	180,470	Total assets	$	107,178	$	8,819	$	19,126	$	8,890	$	41,690	$	185,703
2020
2021														2021
Net financing revenue and other interest income	Net financing revenue and other interest income	$	989	$	12	$	30	$	77	$	(54)	$	1,054	Net financing revenue and other interest income	$	1,333	$	15	$	23	$	77	$	99	$	1,547
Other revenue	Other revenue	40		438		19		6		52		555		Other revenue	61		344		22		33		78		538
Total net revenue	Total net revenue	1,029		450		49		83		(2)		1,609		Total net revenue	1,394		359		45		110		177		2,085
Provision for credit losses	Provision for credit losses	256		0		3		25		3		287		Provision for credit losses	(23)		—		—		(13)		4		(32)
Total noninterest expense	Total noninterest expense	444		322		38		26		155		985		Total noninterest expense	500		272		45		28		230		1,075
Income (loss) from continuing operations before income tax expense	Income (loss) from continuing operations before income tax expense	$	329	$	128	$	8	$	32	$	(160)	$	337	Income (loss) from continuing operations before income tax expense	$	917	$	87	$	—	$	95	$	(57)	$	1,042
Total assets	Total assets	$	102,016	$	8,740	$	16,669	$	6,206	$	50,430	$	184,061	Total assets	$	100,162	$	9,394	$	13,865	$	6,246	$	50,803	$	180,470

(a)Net financing revenue and other interest income after the provision for credit losses totaled ~~$1.6~~$1.5 billion and ~~$767 million~~$1.6 billion for the three months ended June 30, ~~2021,~~2022, and June 30, ~~2020,~~2021, respectively.


Six months ended June 30, ($ in millions)	Six months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)		Six months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)
2021
2022														2022
Net financing revenue and other interest income	Net financing revenue and other interest income	$	2,539	$	30	$	46	$	148	$	156	$	2,919	Net financing revenue and other interest income	$	2,596	$	37	$	109	$	160	$	555	$	3,457
Other revenue	Other revenue	123		723		62		59		136		1,103		Other revenue	140		428		18		43		125		754
Total net revenue	Total net revenue	2,662		753		108		207		292		4,022		Total net revenue	2,736		465		127		203		680		4,211
Provision for credit losses	Provision for credit losses	(45)		0		(4)		0		4		(45)		Provision for credit losses	332		—		—		14		125		471
Total noninterest expense	Total noninterest expense	987		525		89		59		358		2,018		Total noninterest expense	1,079		574		110		65		432		2,260
Income (loss) from continuing operations before income tax expense	Income (loss) from continuing operations before income tax expense	$	1,720	$	228	$	23	$	148	$	(70)	$	2,049	Income (loss) from continuing operations before income tax expense	$	1,325	$	(109)	$	17	$	124	$	123	$	1,480
Total assets	Total assets	$	100,162	$	9,394	$	13,865	$	6,246	$	50,803	$	180,470	Total assets	$	107,178	$	8,819	$	19,126	$	8,890	$	41,690	$	185,703
2020
2021														2021
Net financing revenue and other interest income	Net financing revenue and other interest income	$	2,029	$	26	$	68	$	145	$	(68)	$	2,200	Net financing revenue and other interest income	$	2,539	$	30	$	46	$	148	$	156	$	2,919
Other revenue	Other revenue	87		575		29		19		111		821		Other revenue	123		723		62		59		136		1,103
Total net revenue	Total net revenue	2,116		601		97		164		43		3,021		Total net revenue	2,662		753		108		207		292		4,022
Provision for credit losses	Provision for credit losses	1,022		0		4		139		25		1,190		Provision for credit losses	(45)		—		(4)		—		4		(45)
Total noninterest expense	Total noninterest expense	938		578		73		61		255		1,905		Total noninterest expense	987		525		89		59		358		2,018
Income (loss) from continuing operations before income tax expense	Income (loss) from continuing operations before income tax expense	$	156	$	23	$	20	$	(36)	$	(237)	$	(74)	Income (loss) from continuing operations before income tax expense	$	1,720	$	228	$	23	$	148	$	(70)	$	2,049
Total assets	Total assets	$	102,016	$	8,740	$	16,669	$	6,206	$	50,430	$	184,061	Total assets	$	100,162	$	9,394	$	13,865	$	6,246	$	50,803	$	180,470

(a)Net financing revenue and other interest income after the provision for credit losses totaled $3.0 billion ~~and $1.0 billion~~ for both the six months ended June 30, ~~2021,~~2022, and June 30, ~~2020, respectively.~~2021.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

~~23.~~24. Contingencies and Other Risks

As a financial-services company, we are regularly involved in pending or threatened legal proceedings and other matters and are or may be subject to potential liability in connection with them. These legal matters may be formal or informal and include litigation and arbitration with one or more identified claimants, certified or purported class actions with yet-to-be-identified claimants, and regulatory or other governmental information-gathering requests, examinations, investigations, and enforcement proceedings. Our legal matters exist in varying stages of adjudication, arbitration, negotiation, or investigation and span our business lines and operations. Claims may be based in law or equity—such as those arising under contracts or in tort and those involving banking, consumer-protection, securities, tax, employment, and other laws—and some can present novel legal theories and allege substantial or indeterminate damages.

Ally and its subsidiaries, including Ally Bank, also are or may be subject to potential liability under other contingent exposures, including indemnification, tax, self-insurance, and other miscellaneous contingencies.

We accrue for a legal matter or other contingent exposure when a loss becomes probable and the amount of loss can be reasonably estimated. Accruals are evaluated each quarter and may be adjusted, upward or downward, based on our best judgment after consultation with counsel. No assurance exists that our accruals will not need to be adjusted in the future. When a probable or reasonably possible loss on a legal matter or other contingent exposure could be material to our consolidated financial condition, results of operations, or cash flows, we provide disclosure in this note as prescribed by ASC Topic 450, Contingencies. Refer to Note 1 to the Consolidated Financial Statements in our ~~2020~~2021 Annual Report on Form 10-K for additional information related to our policy for establishing accruals.

The course and outcome of legal matters are inherently unpredictable. This is especially so when a matter is still in its early stages, the damages sought are indeterminate or unsupported, significant facts are unclear or disputed, novel questions of law or other meaningful legal uncertainties exist, a request to certify a proceeding as a class action is outstanding or granted, multiple parties are named, or regulatory or other governmental entities are involved. Other contingent exposures and their ultimate resolution are similarly unpredictable for reasons that can vary based on the circumstances.

As a result, we often are unable to determine how or when threatened or pending legal matters and other contingent exposures will be resolved and what losses may be incrementally and ultimately incurred. Actual losses may be higher or lower than any amounts accrued or estimated for those matters and other exposures, possibly to a significant degree.

Subject to the foregoing, based on our current knowledge and after consultation with counsel, we do not believe that the ultimate outcomes of currently threatened or pending legal matters and other contingent exposures are likely to be material to our consolidated financial condition after taking into account existing accruals. In light of the uncertainties inherent in these matters and other exposures, however, one or more of them could be material to our results of operations or cash flows during a particular reporting period, depending on factors such as the amount of the loss or liability and the level of our income for that period.

Descriptions of certain of our legal matters follow. We do not believe, however, that an estimate of reasonably possible losses or a range of reasonably possible losses—whether in excess of any related accrual or where no accrual exists—can be made for any of these matters for some or all of the reasons identified in the preceding paragraphs.

~~Purported and Certified Class Actions~~

~~In March 2016, Ally filed an action against two buyers of a motor vehicle—Ally Financial Inc. v. Alberta Haskins and David Duncan~~, Case No. 16JE-AC01713-01, in the Circuit Court of Jefferson County, Missouri—for the purpose of collecting the deficiency that remained due under the retail installment sales contract after the buyers had defaulted and the vehicle had been repossessed and disposed of. In March 2017, the buyers filed a second amended answer and counterclaim on behalf of nationwide and Missouri classes, arguing that Ally’s pre- and post-disposition notices had violated Article 9 of the Uniform Commercial Code as adopted in each State and other applicable jurisdiction. The request for relief included an indeterminate amount of actual, statutory, and punitive damages as well as fees, costs, interest, and other remedies. In May 2018, the circuit court certified the nationwide and Missouri classes and denied Ally’s motion for partial summary judgment. In September 2018, the case was reassigned to a different circuit-court judge, and in February 2019, Ally filed a motion to decertify the nationwide and Missouri classes. In November 2019, the circuit court denied Ally’s motion to decertify. In December 2019, Ally filed a petition with the Missouri Court of Appeals and then with the Missouri Supreme Court for a writ prohibiting the circuit court from taking further action other than vacating the order denying decertification, but each of those petitions was denied. In June 2020, the buyers on behalf of the certified nationwide and Missouri classes filed a motion for partial summary judgment on liability and damages, including statutory damages, the waiver of amounts due, and prejudgment interest. These damages, if awarded by the court, could be significant. In August 2020, Ally filed a petition for a writ of certiorari with the United States Supreme Court—~~Ally Financial Inc. v. Alberta Haskins et al.~~, No. 20-177—requesting review of the Missouri Supreme Court’s order denying Ally’s petition for a writ of prohibition. In December 2020, Ally—while maintaining its denial of any liability or wrongdoing and its other positions in the case—entered into a binding memorandum of understanding with the buyers, on behalf of the nationwide and Missouri classes, to fully settle the case. In January 2021, the United States Supreme Court granted a joint motion to defer consideration of Ally’s petition for a writ of certiorari. In March 2021, the parties executed and filed with the circuit court a class-action settlement agreement and release that includes provisions for a cash payment of $87.5 million by Ally, a waiver of $700 million in charged-off deficiency balances by Ally, a request by Ally that identified consumer reporting agencies delete specified trade lines, and a release by the nationwide and Missouri classes of related claims against Ally. The class-action settlement agreement and release was preliminarily approved by the circuit court in March 2021, and specified notices have been delivered to class

~~Table of Contents~~

~~Notes to Condensed Consolidated Financial Statements (unaudited)~~

~~Ally Financial Inc. • Form 10-Q~~

members. The class-action settlement agreement and release remains subject to final approval by the circuit court and related conditions. During the year ended December 31, 2020, Ally established an accrual of $87.5 million related to this matter.

~~In February 2021, a purported class action—Cheng et al. v. Ally Financial Inc. et al.~~—was filed in the U.S. District Court for the Northern District of California (Case No. 3:21-cv-00781). The complaint alleges that Ally and other defendants conspired to prevent or restrict retail investors from purchasing or otherwise acquiring long positions in specified equity securities and to force them instead to sell their positions in those securities at artificially lower prices. The claims include alleged violations of antitrust and unfair-competition laws, misleading public statements, breach of fiduciary duty and the implied covenant of good faith and fair dealing, negligence, and constructive fraud. The request for relief includes an indeterminate amount of damages, fees, costs, and interest, injunctive relief, and other remedies. Also in February 2021, three other purported class actions were filed—~~Clapp et al. v. Ally Financial Inc. et al.~~ ~~in the U.S. District Court for the Northern District of California (Case No. 3:21-cv-00896),~~ ~~Dechirico et al. v. Ally Financial Inc. et al.~~ ~~in the U.S. District Court for the Eastern District of New York (Case No. 1:21-cv-00677), and~~ ~~Ross et al. v. Ally Financial Inc. et al.~~ ~~in the U.S. District Court for the Southern District of Texas (Case No. 4:21-cv-00292). In March 2021, a fifth purported class action—Fox et al. v. Ally Financial Inc. et al.~~—was filed in the U.S. District Court for the District of Minnesota (Case No. 0:21-cv-00689). In April 2021, the U.S. Judicial Panel on Multidistrict Litigation consolidated all five of these cases into a multidistrict litigation proceeding in the U.S. District Court for the Southern District of Florida with the caption ~~In re: January 2021 Short Squeeze Trading Litigation~~ ~~(Case No. 1:21-md-02989). Also in April 2021, a sixth purported class action—D’Agostino et al. v. Ally Financial Inc. et al~~.— was filed in the U.S. District Court for the Southern District of Florida (Case No. 1:21-cv-21458), and in July 2021, this case was consolidated into the multidistrict litigation proceeding as well. The allegations and requested relief in the ~~Clapp, Dechirico, Ross, Fox,~~ ~~and~~ ~~D’Agostino~~ ~~complaints are substantially similar to those included in the~~ ~~Cheng~~ ~~complaint. We intend to vigorously defend against these actions.~~

~~24.~~25. Subsequent Events

Declaration of Common Dividend ~~and Share Repurchase Authorization~~

On July ~~12, 2021,~~14, 2022, our Board declared a quarterly cash dividend of ~~$0.25~~$0.30 per share on all common stock. The dividend is payable on August ~~16, 2021,~~15, 2022, to stockholders of record at the close of business on August 2, 2021. At the same time, our Board authorized a stock-repurchase program, permitting us to repurchase up to $2.0 billion of common stock for 2021. This stock-repurchase program replaces the $1.6 billion program previously authorized on January 11, 2021.

~~Partial Redemption of Trust Preferred Securities~~

On July 2, 2021, we effectuated the redemption of $1.04 billion, or 41,600,000 shares of the Series 2 TRUPS then outstanding, following the issuance of $1.0 billion of preferred stock, Series C, on June 2, 2021. Refer to Note 12 for further information regarding this partial redemption of our Trust Preferred Securities.1, 2022.

6665

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Notice about Forward-Looking Statements and Other Terms

From time to time we have made, and in the future will make, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “believe,” “expect,” “anticipate,” “intend,” “pursue,” “seek,” “continue,” “estimate,” “project,” “outlook,” “forecast,” “potential,” “target,” “objective,” “trend,” “plan,” “goal,” “initiative,” “priorities,” or other words of comparable meaning or future-tense or conditional verbs such as “may,” “will,” “should,” “would,” or “could.” Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, or results.

This report, including any information incorporated by reference in this report, contains forward-looking statements. We also may make forward-looking statements in other documents that are filed or furnished with the SEC. In addition, we may make forward-looking statements orally or in writing to investors, analysts, members of the media, or others.

All forward-looking statements, by their nature, are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Actual future objectives, strategies, plans, prospects, performance, conditions, or results may differ materially from those set forth in any forward-looking statement. While no list of assumptions, risks, or uncertainties could be complete, some of the factors that may cause actual results or other future events or circumstances to differ from those in forward-looking statements include:

•evolving local, regional, national, or international business, economic, or political conditions;

•changes in laws or the regulatory or supervisory environment, including as a result of ~~recent financial services~~financial-services legislation, regulation, or policies or changes in government officials or other personnel;

•changes in monetary, fiscal, or trade laws or policies, including as a result of actions by governmental agencies, central banks, or supranational authorities;

•changes in accounting standards or policies;

•changes in the automotive industry or the markets for new or used vehicles, including the rise of vehicle sharing and ride hailing, the development of autonomous and alternative-energy vehicles, and the impact of demographic shifts on attitudes and behaviors toward vehicle type, ownership, and use;

•any instability or breakdown in the financial system, including as a result of the failure of a financial institution or other participant in it;

•disruptions or shifts in investor sentiment or behavior in the securities, capital, or other financial markets, including financial or systemic shocks and volatility or changes in market liquidity, interest or currency rates, or valuations;

•~~uncertainty about~~ the ~~future~~discontinuation of LIBOR and any negative impacts that could result;

•changes in business or consumer sentiment, preferences, or behavior, including spending, borrowing, or saving by businesses or households;

•changes in our corporate or business strategies, the composition of our assets, or the way in which we fund those assets;

•our ability to execute our business strategy for Ally Bank, including its digital focus;

•our ability to optimize our automotive finance and insurance businesses and to continue diversifying into and growing other consumer and commercial business lines, including mortgage lending, point-of-sale personal lending, credit cards, corporate finance, brokerage, and wealth management;

•our ability to develop capital plans ~~that will receive non-objection from~~acceptable to the FRB and our ability to implement them, including any payment of dividends or share repurchases;

•our ability to conduct appropriate stress tests and effectively plan for and manage capital or liquidity consistent with evolving business or operational needs, risk-management standards, and regulatory or supervisory ~~requirements;~~requirements or expectations;

•our ability to cost-effectively fund our business and operations, including through deposits and the capital markets;

•changes in any credit rating assigned to Ally, including Ally Bank;

•adverse publicity or other reputational harm to us, our service providers, or our senior officers;

•our ability to develop, maintain, or market our products or services or to absorb unanticipated costs or liabilities associated with those products or services;

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

•our ability to innovate, to anticipate the needs of current or future customers, to successfully compete, to increase or hold market share in changing competitive environments, or to deal with pricing or other competitive pressures;

~~Table of Contents~~

~~Management’s Discussion and Analysis~~

~~Ally Financial Inc. • Form 10-Q~~

•the continuing profitability and viability of our dealer-centric automotive finance and insurance businesses, especially in the face of competition from captive finance companies and their automotive manufacturing sponsors and challenges to the dealer’s role as intermediary between manufacturers and purchasers;

•our ability to appropriately underwrite loans that we originate or purchase and to otherwise manage credit risk;

•changes in the credit, liquidity, or other financial condition of our customers, counterparties, service providers, or competitors;

•our ability to effectively deal with economic, business, or market slowdowns or disruptions;

•our ability to address heightened scrutiny and expectations from supervisory or other governmental authorities and to timely and credibly remediate related concerns or deficiencies;

•judicial, regulatory, or administrative inquiries, examinations, investigations, proceedings, disputes, or rulings that create uncertainty for, or are adverse to, us or the financial services industry;

•the potential outcomes of ~~legal and~~judicial, regulatory, ~~proceedings and governmental and regulatory~~or administrative inquiries, examinations, investigations, ~~and other inquiries~~proceedings, or disputes to which we are or may be subject, ~~at any given time,~~ and our ability to ~~remediate regulatory deficiencies on a timely basis and to otherwise~~ absorb and address ~~the heightened scrutiny~~any damages or other remedies that are sought or awarded, and ~~expectations generally from supervisory and other governmental authorities, the severity of remedies sought, such as enforcement proceeds, and the potential~~any collateral ~~consequences arising from those outcomes;~~consequences;

•the performance and availability of third-party service providers on whom we rely in delivering products and services to our customers and otherwise conducting our business and operations;

•our ability to manage and mitigate security risks, including our capacity to withstand cyberattacks;

•our ability to maintain secure and functional financial, accounting, technology, data processing, or other operating systems or ~~infrastructure, including our capacity to withstand cyberattacks;~~infrastructure;

•the adequacy of our corporate governance, risk-management framework, compliance programs, or internal controls over financial reporting, including our ability to control lapses or deficiencies in financial reporting or to effectively mitigate or manage operational risk;

•the efficacy of our methods or models in assessing business strategies or opportunities or in valuing, measuring, estimating, monitoring, or managing positions or risk;

•our ability to keep pace with changes in technology that affect us or our customers, counterparties, service providers, or ~~competitors;~~competitors or to maintain rights or interests in associated intellectual property;

•our ability to successfully make and integrate acquisitions;

•the adequacy of our succession planning for key executives or other personnel and our ability to attract or retain qualified employees;

•natural or man-made disasters, calamities, or conflicts, including terrorist events, cyber-warfare, and pandemics (such as adverse effects of the COVID-19 pandemic on us and our customers, counterparties, employees, and ~~third-party~~ service providers);

•our ability to maintain appropriate ESG practices, oversight, and disclosures;

•policies and other actions of governments to manage and mitigate climate and related environmental risks, ~~as well as associated changes in~~and the ~~behavior~~effects of climate change or the transition to a lower-carbon economy on our business, operations, and ~~preferences of businesses and consumers;~~reputation; or

•other assumptions, risks, or uncertainties described in the Risk Factors (Part II, Item 1A herein), Management’s Discussion and Analysis of Financial Condition and Results of Operations (Part I, Item 2 herein), or the Notes to the Condensed Consolidated Financial Statements (Part I, Item 1 herein) in this Quarterly Report on Form 10-Q or described in any of the Company’s annual, quarterly or current reports.

Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent Annual Report on Form 10-K, Quarterly Report on Form 10-Q, or Current Report on Form 8-K.

Unless the context otherwise requires, the following definitions apply. The term “loans” means the following consumer and commercial products associated with our direct and indirect financing activities: loans, retail installment sales contracts, lines of credit, and other financing products excluding operating leases. The term “operating leases” means consumer- and commercial-vehicle lease agreements where Ally is the lessor and the lessee is generally not obligated to acquire ownership of the vehicle at lease-end or compensate Ally for the

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

vehicle’s residual value. The terms “lend,” “finance,” and “originate” mean our direct extension or origination of loans, our purchase or acquisition of loans, or our purchase of operating leases as applicable. The term “consumer” means all consumer products associated with our loan and operating-lease activities and all commercial retail installment sales contracts. The term “commercial” means all commercial products associated with our loan activities, other than commercial retail installment sales contracts. The term “partnerships” means business arrangements rather than partnerships as defined by law.

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

~~Selected Financial Data~~

The selected historical financial information set forth below should be read in conjunction with the MD&A, and our Condensed Consolidated Financial Statements and the notes thereto. The historical financial information presented may not be indicative of our future performance.

~~The following table presents selected Condensed Consolidated Statement of Comprehensive Income and earnings per common share data.~~

Three months ended June 30, Six months ended June 30,
($ in millions, except per share data; shares in thousands) 2021 2020 2021 2020
Total financing revenue and other interest income $ 2,127 $ 2,178 $ 4,219 $ 4,529
Total interest expense 498 872 1,055 1,829
Net depreciation expense on operating lease assets 82 252 245 500
Net financing revenue and other interest income 1,547 1,054 2,919 2,200
Total other revenue 538 555 1,103 821
Total net revenue 2,085 1,609 4,022 3,021
Provision for credit losses (32) 287 (45) 1,190
Total noninterest expense 1,075 985 2,018 1,905
Income (loss) from continuing operations before income tax expense

1,042 337 2,049 (74)
Income tax expense from continuing operations 143 95 354 3
Net income (loss) from continuing operations 899 242 1,695 (77)
Income (loss) from discontinued operations, net of tax 1 (1) 1 (1)
Net income (loss) $ 900 $ 241 $ 1,696 $ (78)
Basic earnings per common share (a):
Net income (loss) from continuing operations $ 2.43 $ 0.65 $ 4.55 $ (0.20)
Net income (loss) 2.43 0.64 4.55 (0.21)
Weighted-average common shares outstanding 370,412 375,051 372,807 375,387
Diluted earnings per common share (a)(b):
Net income (loss) from continuing operations $ 2.41 $ 0.64 $ 4.52 $ (0.20)
Net income (loss) 2.41 0.64 4.52 (0.21)
Weighted-average common shares outstanding 373,029 375,762 375,265 375,387
Common share information:
Cash dividends declared per common share $ 0.19 $ 0.19 $ 0.38 $ 0.38
Period-end common shares outstanding 362,639 373,837 362,639 373,837

~~(a)~~Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers. Includes shares related to share-based compensation that vested but were not yet issued.

~~(b)~~Due to the antidilutive effect of the net loss from continuing operations for the six months ended June 30, 2020, basic weighted-average common shares outstanding was used to calculate basic and diluted earnings per share. Refer to Note 16 to the Condensed Consolidated Financial Statements for further information.

~~The following tables present selected Condensed Consolidated Balance Sheet and ratio data.~~

June 30, ($ in millions)
2021 2020
Selected period-end balance sheet data:
Total assets $ 180,470 $ 184,061
Total deposit liabilities $ 139,104 $ 131,036
Long-term debt $ 16,896 $ 29,176
Preferred stock $ 2,324 $ —
Total equity $ 17,530 $ 13,826

~~Table of Contents~~

~~Management’s Discussion and Analysis~~

~~Ally Financial Inc. • Form 10-Q~~

Three months ended June 30, Six months ended June 30,
2021 2020 2021 2020
Financial ratios:
Return on average assets (a) 1.99 % 0.53 % 1.88 % (0.09) %
Return on average equity (a) 21.88 % 6.75 % 21.61 % (1.11) %
Equity to assets (a) 9.11 % 7.89 % 8.72 % 7.81 %
Common dividend payout ratio (b) 7.82 % 29.69 % 8.35 % n/m
Net interest spread (a) (c) 3.42 % 2.23 % 3.23 % 2.34 %
Net yield on interest-earning assets (a) (d) 3.55 % 2.40 % 3.36 % 2.53 %

~~n/m = not meaningful~~

~~(a)The ratios were based on average assets and average total equity using an average daily balance methodology.~~

~~(b)~~The common dividend payout ratio was calculated using basic earnings per common share. During the six months ended June 30, 2020, we paid dividends of $0.38 per share and incurred a loss of $0.21 per share. Due to the relationship of this calculation and the net loss incurred, this ratio is not meaningful for the six months ended June 30, 2020.

~~(c)Net interest spread represents the difference between the rate on total interest-earning assets and the rate on total interest-bearing liabilities.~~

~~(d)Net yield on interest-earning assets represents annualized net financing revenue and other interest income as a percentage of total interest-earning assets.~~

~~Table of Contents~~

~~Management’s Discussion and Analysis~~

~~Ally Financial Inc. • Form 10-Q~~

We became subject to U.S. Basel III on January 1, 2015, although a number of its provisions—including capital buffers and certain regulatory capital deductions—were subject to a phase-in periods. For further information on U.S. Basel III, refer to Note 17 to the Condensed Consolidated Financial Statements. The following table presents selected regulatory capital data under U.S Basel III as subject to its transitional provisions.

June 30,
($ in millions) 2021 2020
Common Equity Tier 1 capital ratio 11.32 % 10.09 %
Tier 1 capital ratio 13.08 % 11.85 %
Total capital ratio 14.83 % 13.79 %
Tier 1 leverage ratio (to adjusted quarterly average assets) (a) 10.00 % 8.93 %
Total equity $ 17,530 $ 13,826
CECL phase-in adjustment (b) 1,148 1,206
Preferred stock (c) (2,324) —
Goodwill and certain other intangibles (374) (392)
Deferred tax assets arising from net operating loss and tax credit carryforwards (d) (75) (18)
Other adjustments (e) (196) (796)
Common Equity Tier 1 capital 15,709 13,826
Preferred stock (c) 2,324 —
Trust preferred securities (c) 181 2,497
Other adjustments (64) (88)
Tier 1 capital 18,150 16,235
Qualifying subordinated debt and other instruments qualifying as Tier 2 830 1,034
Qualifying allowance for loan losses and other adjustments 1,595 1,626
Total capital $ 20,575 $ 18,895
Risk-weighted assets (f) $ 138,773 $ 136,973

~~(a)~~Tier 1 leverage ratio equals Tier 1 capital divided by adjusted quarterly average total assets, which both reflect adjustments for disallowed goodwill, certain intangible assets, and disallowed deferred tax assets.

~~(b)~~We have elected to delay recognizing the estimated impact of CECL on regulatory capital until after a two-year deferral period, which for us extends through December 31, 2021. Beginning on January 1, 2022, we will be required to phase in 25% of the previously deferred estimated capital impact of CECL, with an additional 25% to be phased in at the beginning of each subsequent year until fully phased in by the first quarter of 2025. Refer to Note 17 to the Condensed Consolidated Financial Statements for further information.

~~(c)~~In connection with our issuances of non-cumulative perpetual preferred stock in the second quarter of 2021, we redeemed a portion of the Series 2 TRUPS outstanding. Refer to Note 12 to the Condensed Consolidated Financial Statements for additional details about our partial redemptions of Series 2 TRUPS, and Note 14 to the Condensed Consolidated Financial Statements for additional details about our issuances of non-cumulative perpetual preferred stock.

~~(d)Contains deferred tax assets required to be deducted from capital under U.S. Basel III.~~

~~(e)~~Primarily comprises adjustments related to our accumulated other comprehensive income opt-out election, which allows us to exclude most elements of accumulated other comprehensive income from regulatory capital.

~~(f)Risk-weighted assets are defined by regulation and are generally determined by allocating assets and specified off-balance sheet exposures to various risk categories.~~

~~Table of Contents~~

~~Management’s Discussion and Analysis~~

~~Ally Financial Inc. • Form 10-Q~~

Overview

Primary Business Lines

Dealer Financial Services, which includes our Automotive Finance and Insurance operations, Mortgage Finance, and Corporate Finance are our primary business lines. The remaining activity is reported in Corporate and Other, which primarily consists of centralized treasury activities as well as Ally Invest, our digital brokerage and wealth management offering, Ally Lending, our point-of-sale financing business, Ally Credit Card, and CRA loans and related investments. The following table summarizes the operating results excluding discontinued operations of each business line. Operating results for each of the business lines are more fully described in the MD&A sections that follow.


		Three months ended June 30,					Six months ended June 30,					Three months ended June 30,						Six months ended June 30,
($ in millions)	($ in millions)	2021		2020		Favorable/(unfavorable) % change	2021		2020		Favorable/(unfavorable) % change		($ in millions)	2022		2021		Favorable/(unfavorable) % change	2022		2021		Favorable/(unfavorable) % change
Total net revenue	Total net revenue												Total net revenue
Dealer Financial Services	Dealer Financial Services												Dealer Financial Services
Automotive Finance	Automotive Finance	$	1,394	$	1,029	35	$	2,662	$	2,116	26		Automotive Finance	$	1,373	$	1,394	(2)	$	2,736	$	2,662	3
Insurance	Insurance	359		450		(20)	753		601		25		Insurance	178		359		(50)	465		753		(38)
Mortgage Finance	Mortgage Finance	45		49		(8)	108		97		11		Mortgage Finance	60		45		33	127		108		18
Corporate Finance	Corporate Finance	110		83		33	207		164		26		Corporate Finance	96		110		(13)	203		207		(2)
Corporate and Other	Corporate and Other	177		(2)		n/m	292		43		n/m		Corporate and Other	369		177		108	680		292		133
Total	Total	$	2,085	$	1,609	30	$	4,022	$	3,021	33		Total	$	2,076	$	2,085	—	$	4,211	$	4,022	5
Income (loss) from continuing operations before income tax expense	Income (loss) from continuing operations before income tax expense												Income (loss) from continuing operations before income tax expense
Dealer Financial Services	Dealer Financial Services												Dealer Financial Services
Automotive Finance	Automotive Finance	$	917	$	329	179	$	1,720	$	156	n/m		Automotive Finance	$	600	$	917	(35)	$	1,325	$	1,720	(23)
Insurance	Insurance	87		128		(32)	228		23		n/m		Insurance	(122)		87		n/m	(109)		228		(148)
Mortgage Finance	Mortgage Finance	—		8		(100)	23		20		15		Mortgage Finance	6		—		n/m	17		23		(26)
Corporate Finance	Corporate Finance	95		32		197	148		(36)		n/m		Corporate Finance	60		95		(37)	124		148		(16)
Corporate and Other	Corporate and Other	(57)		(160)		64	(70)		(237)		70		Corporate and Other	90		(57)		n/m	123		(70)		n/m
Total	Total	$	1,042	$	337	n/m	$	2,049	$	(74)	n/m		Total	$	634	$	1,042	(39)	$	1,480	$	2,049	(28)

n/m = not meaningful

•Our Dealer Financial Services business is one of the largest full-service automotive finance operations in the country and offers a wide range of financial services and insurance products to automotive dealerships and their customers. Dealer Financial Services comprises our Automotive Finance and Insurance segments.

Our Automotive Finance operations include purchasing retail installment sales contracts and operating leases from dealers and automotive retailers, extending automotive loans directly to consumers, offering term loans to dealers, financing dealer floorplans and providing other lines of credit to dealers, supplying warehouse lines to automotive retailers, offering automotive-fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and supplying vehicle-remarketing services. Our dealer-centric business model, value-added products and services, full-spectrum financing, and business expertise proven over many credit cycles make us a premier automotive finance company. Our success as an automotive finance provider is driven by the consistent and broad range of products and services we offer to dealers. The automotive marketplace is dynamic and evolving, including substantial investments in electrification by automobile manufacturers and suppliers. ~~Ally remains~~We remain focused on meeting the needs of both our dealer and consumer customers and continuing to strengthen and expand upon our ~~approximate 19,700~~approximately 22,400 dealer relationships. We continue to identify and cultivate relationships with automotive retailers including those with leading eCommerce platforms. We also operate Clearlane, our online direct-lending platform, which provides a digital platform for consumers seeking direct financing. We believe these actions will enable us to respond to the growing trends for a more streamlined and digital automotive financing process to serve both dealers and consumers. ~~Our~~Additionally, we provide comprehensive automotive remarketing services, including the use of SmartAuction, our online auction platform, which efficiently supports dealer-to-dealer

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

and other commercial wholesale vehicle transactions. SmartAuction provides diversified fee-based revenue and serves as a means of deepening relationships with our dealership customers. Furthermore, our strong and expansive dealer relationships, comprehensive suite of products and services, full-spectrum financing, and depth of experience position us to evolve with future shifts in automobile technologies, including electrification. ~~Ally provides~~We have and continue to provide automobile financing for hybrid and battery-electric vehicles

~~Table of Contents~~

~~Management’s Discussion and Analysis~~

~~Ally Financial Inc. • Form 10-Q~~

today, and isare well positioned to remain a leader in automotive financing as we believe the ~~vast~~ majority of these vehicles will be sold through dealerships with whom we have an established relationship.

The Growth channel was established to focus on developing dealer relationships beyond those relationships that primarily were developed through our previous role as a captive finance company for GM and Stellantis. The Growth channel was expanded to include direct-to-consumer financing through Clearlane and other channels and our arrangements with online automotive retailers. We have established relationships with thousands of Growth channel dealers through our customer-centric approach and specialized incentive programs designed to drive loyalty amongst dealers to our products and services. The success of the Growth channel has been a key enabler in evolving our business model from a focused captive finance company to a leading market competitor. In this channel, we currently have ~~over 13,300~~approximately 16,000 dealer relationships, of which approximately ~~80%~~70% are franchised dealers (including brands such as Ford, ~~Honda,~~Nissan, Kia, Hyundai, ~~Kia, Nissan,~~ Toyota, Honda, and others), or used vehicle only retailers with a national presence.

Our Insurance operations offer both consumer finance protection and insurance products sold primarily through the automotive dealer channel, and commercial insurance products sold directly to dealers. We serve approximately 2.5 million consumers nationwide across F&I and P&C products. In addition, we offer F&I products in Canada, where we serve more than ~~440~~400 thousand consumers and are the VSC and other protection plan provider for GM Canada and VSC provider for Subaru Canada.

As ~~a leading provider with a~~part of our focus on offering dealers a broad range of consumer F&I products, we offer VSCs, VMCs, and GAP products. We also underwrite selected commercial insurance coverages, which primarily insure dealers’ wholesale vehicle ~~inventory.~~inventory and offer additional products to protect a dealer’s business including property and liability coverage that is underwritten by a third-party carrier. Ally Premier Protection is our flagship VSC offering, which provides coverage for new and used vehicles of virtually all makes and models. We also offer ClearGuard on the SmartAuction platform, which is a protection product designed to minimize the risk to dealers from arbitration claims for eligible vehicles sold at auction.

•Our Mortgage Finance operations consist of the management of held-for-investment and held-for-sale consumer mortgage loan portfolios. Our held-for-investment portfolio includes our direct-to-consumer Ally Home mortgage offering, and bulk purchases of high-quality jumbo and LMI mortgage loans originated by third parties.

Through our direct-to-consumer channel, ~~which was introduced late in 2016,~~ we offer a variety of competitively priced jumbo and conforming fixed- and adjustable-rate mortgage products through a third-party fulfillment provider. Under our current arrangement, our direct-to-consumer conforming mortgages are originated as ~~held for sale~~held-for-sale and sold, while jumbo and LMI mortgages are originated as ~~held for investment.~~held-for-investment. Loans originated in the direct-to-consumer channel are sourced by existing Ally customer marketing, prospect marketing on third-party websites, and email or direct mail campaigns. In April 2019, we announced a strategic partnership with BMC, which delivers an enhanced end-to-end digital mortgage experience for our customers through our direct-to-consumer channel. Through this partnership, BMC conducts the sales, processing, underwriting, and closing for Ally’s digital mortgage offerings in a highly innovative, scalable, and cost-efficient manner, while Ally retains control of all the marketing and advertising strategies and loan pricing. This partnership with BMC limits operational volatility as the mortgage industry continues to evolve in the current interest rate environment. During the six months ended June 30, ~~2021,~~2022, we originated ~~$4.0~~$2.6 billion of mortgage loans through our direct-to-consumer channel. During 2018, we made a strategic equity investment in the parent of BMC (BMC Holdco) that was subsequently increased in 2019 and 2020. This investment is recognized as a nonmarketable equity investment within other assets of our Condensed Consolidated Balance Sheet and is included in Corporate and Other. Refer to the Market Risk section of this MD&A for more information.

Through the bulk loan channel, we purchase loans from several qualified sellers including direct originators and large aggregators who have the financial capacity to support strong representations and warranties and the industry knowledge and experience to originate high-quality assets. Bulk purchases are made on a servicing-released basis, allowing us to directly oversee servicing activities and manage refinancing through our direct-to-consumer channel. During the six months ended June 30, ~~2021,~~2022, we purchased ~~$1.9~~$1.6 billion of mortgage loans that were originated by third parties. Our mortgage loan purchases are ~~held for investment.~~held-for-investment.

The combination of our direct-to-consumer strategy and bulk portfolio purchase program provides the capacity to expand revenue sources and further grow and diversify our finance receivable portfolio with an attractive asset class while also deepening relationships with existing Ally customers.

•Our Corporate Finance operations primarily provide senior secured leveraged cash flow and asset-based loans to mostly U.S.-based middle-market companies owned by private equity sponsors, and loans to asset managers that primarily provide leveraged loans. We believe our growing deposit-based funding model coupled with our expanded product offerings and deep industry relationships provide an advantage over our competition, which includes other banks as well as publicly and privately held finance companies. While there continues to be a significant level of liquidity and competition in the middle-market lending space, we have continued

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

to prudently grow our lending portfolio with a focus on a disciplined ~~focus on~~and selective approach to credit quality, including a greater focus on asset-based ~~loans.~~loans and priority, first-out revolving lines of credit. We seek markets and opportunities where our clients require customized, highly structured, and time-sensitive financing solutions. Our corporate-finance lending portfolio is generally composed of first-lien, first-out loans. Our focus is on businesses owned by ~~private equity~~private-equity sponsors with loans typically used for leveraged buyouts, refinancing and recapitalizations, mergers and acquisitions, ~~debt refinancing, expansions, restructurings,~~growth, turnarounds, and ~~working capital.~~debtor-in-possession financings. Additionally, our Lender Finance business provides asset managers with ~~partial funding for~~facilities to partially fund their direct-lending activities. The portfolio is well diversified across multiple industries including financials, services, manufacturing, ~~financials,~~ distribution, ~~services,~~ and other specialty sectors. These specialty sectors include ~~our Healthcare~~healthcare, technology/venture finance, defense and ~~Technology Finance verticals. The Healthcare vertical provides financing across the healthcare spectrum including services, pharmaceuticals, manufacturing,~~aerospace, and ~~medical devices~~transportation and ~~supplies. Our Technology Finance vertical provides financing solutions to~~

~~Table of Contents~~

~~Management’s Discussion and Analysis~~

~~Ally Financial Inc. • Form 10-Q~~

~~venture capital-backed, technology-based companies.~~logistics. We also provide a healthcare-based commercial real estate product focused on lending to skilled nursing facilities, senior housing, medical office buildings, and hospitals. Other smaller complementary product offerings that help strengthen our reputation as a full-spectrum provider of financing solutions for borrowers include selectively offering second-out loans on certain transactions and issuing letters of credit through Ally Bank.

•Corporate and Other primarily consists of centralized corporate treasury activities such as management of the cash and corporate investment securities and loan portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, original issue discount, and the residual impacts of our corporate FTP and treasury ALM activities. Corporate and Other also includes activity related to certain equity investments, which primarily consist of FHLB and FRB stock as well as other strategic investments, the management of our legacy mortgage portfolio, which primarily consists of loans originated prior to January 1, 2009, CRA loans and related investments, and reclassifications and eliminations between the reportable operating segments.

Corporate and Other includes the results of Ally Invest, our digital brokerage and wealth management offering, which enables us to complement our competitive deposit products with low-cost investing. The digital wealth management business aligns with our strategy to create a premier digital financial services company and provides additional sources of fee income through asset management and certain other fees, with minimal balance sheet utilization. This business also provides an additional source of low-cost deposits through arrangements with Ally Invest’s clearing broker.

Information related to our point-of-sale financing business, Ally Lending, is also included within Corporate and ~~Other also includes the results of Ally Lending.~~Other. Ally Lending currently serves medical ~~retail,~~ and home improvement service providers by enabling promotional and fixed rate installment-loan products through a digital application process at point-of-sale. The home improvement segment, which was launched in the second quarter of 2020, had originations of $343 million during the second quarter of 2022 and now represents ~~nearly 32%~~approximately 58% of new originations, and is expected to grow. ~~We believe the market outlook for point-of-sale lending provides attractive opportunities for future diversification, including in the automotive servicing and vehicle upfit space.~~ Point-of-sale lending broadens our capabilities, and expands our product offering into consumer unsecured lending, all while helping to further meet the financial needs of our customers.

Additionally, beginning in December 2021 with the acquisition of Fair Square, which we rebranded as Ally Credit Card, financial information related to our credit card business is included within Corporate and Other. The acquisition provides us with a scalable, digital-first credit card platform, and advances our evolution as a leading digital consumer bank. Ally Credit Card features leading-edge technology, and a proprietary, analytics-based underwriting model. We believe the addition of credit card to our suite of products enhances our ability to grow and deepen both new and existing customer relationships.

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

~~Consolidated Results of Operations~~Dealer Financial Services

The following table summarizes our consolidated operating results for the periods shown. Refer to the operating segment sections of the MD&A that follows for a more complete discussion of operating results by business line.

Three months ended June 30, Six months ended June 30,
($ in millions) 2021 2020 Favorable/(unfavorable) % change 2021 2020 Favorable/(unfavorable) % change
Net financing revenue and other interest income
Total financing revenue and other interest income $ 2,127 $ 2,178 (2) $ 4,219 $ 4,529 (7)
Total interest expense 498 872 43 1,055 1,829 42
Net depreciation expense on operating lease assets 82 252 67 245 500 51
Net financing revenue and other interest income 1,547 1,054 47 2,919 2,200 33
Other revenue
Insurance premiums and service revenue earned 278 263 6 558 540 3
Gain on mortgage and automotive loans, net 19 14 36 55 2 n/m
Loss on extinguishment of debt (73) (1) n/m (74) (1) n/m
Other gain on investments, net 65 188 (65) 188 109 72
Other income, net of losses 249 91 174 376 171 120
Total other revenue 538 555 (3) 1,103 821 34
Total net revenue 2,085 1,609 30 4,022 3,021 33
Provision for credit losses (32) 287 111 (45) 1,190 104
Noninterest expense
Compensation and benefits expense 446 334 (34) 841 694 (21)
Insurance losses and loss adjustment expenses 74 142 48 137 216 37
Goodwill impairment — 50 100 — 50 100
Other operating expenses 555 459 (21) 1,040 945 (10)
Total noninterest expense 1,075 985 (9) 2,018 1,905 (6)
Income (loss) from continuing operations before income tax expense 1,042 337 n/m 2,049 (74) n/m
Income tax expense from continuing operations 143 95 (51) 354 3 n/m
Net income (loss) from continuing operations $ 899 $ 242 n/m $ 1,695 $ (77) n/m

~~n/m = not meaningful~~

We earned net income from continuing operations of $899 million and $1.7 billion for the three months and six months ended June 30, 2021, respectively, compared to net income of $242 million and a net loss incurred of $77 million for the three months and six months ended June 30, 2020. During the three months and six months ended June 30, 2021, results were favorably impacted by lower provision for credit losses associated with improved macroeconomic conditions and higher net financing revenue driven by lower interest expense and lower net depreciation expense on operating lease assets. These items were partially offset by higher noninterest expense for the three months and six months ended June 30, 2021.

Net financing revenue and other interest income increased $493 million and $719 million for the three months and six months ended June 30, 2021, respectively, as compared to the three months and six months ended June 30, 2020. WithinDealer Financial Services comprises our Automotive Finance and Insurance segments.

•Automotive Finance operations— One of the largest full-service automotive finance operations ~~net~~in the United States providing automotive financing services to consumers, automotive dealers and retailers, companies, and municipalities. Our automotive finance services include providing retail installment sales contracts, loans and operating ~~lease revenue increased $211 million~~leases, offering term loans to dealers, financing dealer floorplans and ~~$299 million~~other lines of credit to dealers, warehouse lines to automotive retailers, fleet financing, providing financing to companies and municipalities for the ~~three months~~purchase or lease of vehicles, and ~~six months ended June 30, 2021, respectively, compared~~vehicle-remarketing services.

Mortgage Finance operations

Our held-for-investment portfolio includes our direct-to-consumer Ally Home mortgage offering and bulk purchases of high-quality jumbo and LMI mortgage loans originated by third parties. Through our direct-to-consumer channel, we offer a variety of competitively priced jumbo and conforming fixed- and adjustable-rate mortgage products through a third-party fulfillment provider. Through the ~~same periods~~bulk loan channel, we purchase loans from several qualified sellers on a servicing-released basis, allowing us to directly oversee servicing activities and manage refinancing through our direct-to-consumer channel.

Corporate Finance operations

Primarily provides senior secured leveraged cash flow and asset-based loans to mostly U.S.-based middle-market companies, with a focus on businesses owned by private equity sponsors. These loans are typically used for leveraged buyouts, refinancing and recapitalizations, mergers and acquisitions, growth, turnarounds, and debtor-in-possession financings. We also provide, through our Lender Finance business, nonbank wholesale-funded managers with partial funding for their direct-lending activities, which is principally leveraged loans. Additionally, we offer a commercial real estate product to serve companies in ~~2020,~~the healthcare industry.

Corporate and Other

Corporate and Other primarily ~~due to strong remarketing gains~~consists of centralized corporate treasury activities, such as ~~a result~~management of ~~continued new vehicle supply constraints~~the cash and ~~an increase in demand for used vehicles,~~ corporate investment securities and loan portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, original issue discount, and the residual impacts of our corporate FTP and treasury ALM activities. Corporate and Other also includes certain equity investments, which primarily consist of FHLB and FRB stock—as well as other strategic investments—and the management of our legacy mortgage portfolio, which primarily consists of loans originated prior to January 1, 2009, and reclassifications and eliminations between the reportable operating segments. Financial results related to Ally Invest, our digital brokerage and wealth management offering, Ally Lending, our point-of-sale financing business, Ally Credit Card, and CRA loans and related investments are also included within Corporate and Other.

We utilize an FTP methodology for the majority of our business operations. The FTP methodology assigns charge rates and credit rates to classes of assets and liabilities based on expected duration and the benchmark rate curve plus an assumed credit spread. Matching duration allocates interest income and interest expense to these reportable segments so their respective results are insulated from interest rate risk. This methodology is consistent with our ALM practices, which includes managing interest rate risk centrally at a ~~decrease in depreciation expense resulting from a downward adjustment~~corporate level. The net residual impact of the ~~rate~~FTP methodology is included within the results of ~~depreciation as we expect positive remarketing trends to continue. We experienced higher consumer automotive financing revenue, driven by higher average consumer assets~~Corporate and higher portfolio yields, as well as our continued focus on the used-vehicle portfolio primarily through franchised dealers and growth in application volume from our dealer network. We also experienced lower interest expense for the three months and six months ended June 30, 2021, respectively, as compared to the same periods in 2020, driven by market and industry dynamics that drove a decreaseOther.

The information presented in our deposit rates and other funding costs, and our continued shift to more cost-efficient deposit funding. These items were partially offset by lower commercial automotive revenue within our Automotive Finance operations, driven by lower outstanding floorplan assets as a result of declining new vehicle inventories due to continued strengthreportable operating segments is based in ~~new vehicle sales and ongoing production constraints from a global semiconductor chip shortage, as well as lower net financing revenue and other interest income from our~~part on internal allocations, which involve management judgment.

7563

Table of Contents

~~Management’s Discussion and Analysis~~Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

~~Mortgage Finance operations, primarily due to higher prepayment activity, driven by a lower~~Financial information for our reportable operating segments is summarized as follows.


Three months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)
2022
Net financing revenue and other interest income	$	1,301	$	20	$	56	$	77	$	310	$	1,764
Other revenue	72		158		4		19		59		312
Total net revenue	1,373		178		60		96		369		2,076
Provision for credit losses	228		—		—		8		68		304
Total noninterest expense	545		300		54		28		211		1,138
Income (loss) from continuing operations before income tax expense	$	600	$	(122)	$	6	$	60	$	90	$	634
Total assets	$	107,178	$	8,819	$	19,126	$	8,890	$	41,690	$	185,703
2021
Net financing revenue and other interest income	$	1,333	$	15	$	23	$	77	$	99	$	1,547
Other revenue	61		344		22		33		78		538
Total net revenue	1,394		359		45		110		177		2,085
Provision for credit losses	(23)		—		—		(13)		4		(32)
Total noninterest expense	500		272		45		28		230		1,075
Income (loss) from continuing operations before income tax expense	$	917	$	87	$	—	$	95	$	(57)	$	1,042
Total assets	$	100,162	$	9,394	$	13,865	$	6,246	$	50,803	$	180,470

(a)Net financing revenue and other interest ~~rate environment which resulted in portfolio depletion~~income after the provision for credit losses totaled $1.5 billion and ~~accelerated premium amortization.~~

~~Other gain on investments was $65 million and $188 million~~$1.6 billion for the three months ~~and six months~~ ended June 30, ~~2021, respectively, compared to $188 million~~2022, and ~~$109 million for the three months and six months ended~~ June 30, ~~2020. The increase~~2021, respectively.


Six months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)
2022
Net financing revenue and other interest income	$	2,596	$	37	$	109	$	160	$	555	$	3,457
Other revenue	140		428		18		43		125		754
Total net revenue	2,736		465		127		203		680		4,211
Provision for credit losses	332		—		—		14		125		471
Total noninterest expense	1,079		574		110		65		432		2,260
Income (loss) from continuing operations before income tax expense	$	1,325	$	(109)	$	17	$	124	$	123	$	1,480
Total assets	$	107,178	$	8,819	$	19,126	$	8,890	$	41,690	$	185,703
2021
Net financing revenue and other interest income	$	2,539	$	30	$	46	$	148	$	156	$	2,919
Other revenue	123		723		62		59		136		1,103
Total net revenue	2,662		753		108		207		292		4,022
Provision for credit losses	(45)		—		(4)		—		4		(45)
Total noninterest expense	987		525		89		59		358		2,018
Income (loss) from continuing operations before income tax expense	$	1,720	$	228	$	23	$	148	$	(70)	$	2,049
Total assets	$	100,162	$	9,394	$	13,865	$	6,246	$	50,803	$	180,470

(a)Net financing revenue and other interest income after the provision for credit losses totaled $3.0 billion for both the six months ended June 30, ~~2021, was primarily attributable to favorable performance within our equity securities portfolio, as compared to results from the six months ended~~2022, and June 30, ~~2020, driven by unfavorable market conditions from the COVID-19 pandemic in the first quarter~~2021.

Table of 2020. While we recognized a gain on investments for the three months and six months ended June 30, 2021, the decline from the prior year quarter was driven by significant appreciation in the equity markets during the second quarter of 2020 following a market recovery from the unfavorable impacts of the COVID-19 pandemic in the first quarter of 2020.Contents

~~Other income, net of losses increased $158 million and $205 million for the three months and six months ended June 30, 2021, respectively, as compared~~Notes to the three months and six months ended June 30, 2020. The increases for the three months and six months ended June 30, 2021, respectively, compared to the same periods in 2020, were primarily due to $81 million in upward adjustments related to equity securities without a readily determinable fair value, driven primarily by an investment in one entity for which there was a subsequent funding round at a higher valuation during the period, resulting in an observable price change. Refer to Note 10 to the Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

24. Contingencies and Other Risks

We accrue for ~~further information.~~a legal matter or other contingent exposure when a loss becomes probable and the amount of loss can be reasonably estimated. Accruals are evaluated each quarter and may be adjusted, upward or downward, based on our best judgment after consultation with counsel. No assurance exists that our accruals will not need to be adjusted in the future. When a probable or reasonably possible loss on a legal matter or other contingent exposure could be material to our consolidated financial condition, results of operations, or cash flows, we provide disclosure in this note as prescribed by ASC Topic 450, Contingencies. Refer to Note 1 to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K for additional information related to our policy for establishing accruals.

The ~~provision~~course and outcome of legal matters are inherently unpredictable. This is especially so when a matter is still in its early stages, the damages sought are indeterminate or unsupported, significant facts are unclear or disputed, novel questions of law or other meaningful legal uncertainties exist, a request to certify a proceeding as a class action is outstanding or granted, multiple parties are named, or regulatory or other governmental entities are involved. Other contingent exposures and their ultimate resolution are similarly unpredictable for ~~credit~~reasons that can vary based on the circumstances.

As a result, we often are unable to determine how or when threatened or pending legal matters and other contingent exposures will be resolved and what losses ~~decreased $319 million~~may be incrementally and ~~$1.2 billion~~ultimately incurred. Actual losses may be higher or lower than any amounts accrued or estimated for ~~the three months~~those matters and ~~six months ended June 30, 2021, respectively, compared~~other exposures, possibly to a significant degree.

Subject to the ~~three months~~foregoing, based on our current knowledge and ~~six months ended June 30, 2020. For~~after consultation with counsel, we do not believe that the ~~three months~~ultimate outcomes of currently threatened or pending legal matters and ~~six months ended June 30, 2021,~~other contingent exposures are likely to be material to our consolidated financial condition after taking into account existing accruals. In light of the ~~decreases~~uncertainties inherent in ~~provision for credit losses were primarily driven by reserve increases~~these matters and other exposures, however, one or more of them could be material to our results of operations or cash flows during same periods in 2020, associated with deterioration in the macroeconomic environment resulting from the COVID-19 pandemic, compared to reserve declines during the three months and six months ended June 30, 2021,a particular reporting period, depending on factors such as the ~~macroeconomic environment continued to recover. Additionally, provision decreases during~~amount of the ~~three months~~loss or liability and six months ended June 30, 2021, were driven by lower net charge-offs in our consumer automotive portfolio as we continue to experience strong credit performance driven by favorable economic and operating conditions. Refer to the ~~Risk Management section of this MD&A for further discussion on our provision for credit losses.~~

Noninterest expense was $1.1 billion and $2.0 billion for the three months and six months ended June 30, 2021, respectively, compared to $985 million and $1.9 billion for the three months and six months ended June 30, 2020. The increases for the three months and six months ended June 30, 2021, were driven by higher compensation and benefits expense attributable to an update to our retirement eligibility benefits, and increased expenses to support the growthlevel of our ~~consumer product suite and expand~~income for that period.

25. Subsequent Events

Declaration of Common Dividend

On July 14, 2022, our ~~digital capabilities and portfolio~~Board declared a quarterly cash dividend of ~~products, as well as a $50 million contribution~~$0.30 per share on all common stock. The dividend is payable on August 15, 2022, to stockholders of record at the Ally Charitable Foundation during the three months ended June 30, 2021. The increases in noninterest expense were partially offset by lower insurance losses for the three months and six months ended June 30, 2021, as compared to the same periods in 2020, and a goodwill impairment chargeclose of ~~$50 million related to Ally Invest for the three months and six months ended June 30, 2020.~~

We recognized total income tax expense from continuing operations of $143 million and $354 million for the three months and six months ended June 30, 2021, respectively, compared to income tax expense of $95 million and $3 million for the same periods in 2020.
The increases in income tax expense for the three months and six months ended June 30, 2021, compared to the same periods in 2020, were primarily due to the tax effects of an increase in pretax earnings, partially offset by a nonrecurring tax benefit from the release of valuation allowancebusiness on foreign tax credit carryforwards during the second quarter of 2021, and a nondeductible goodwill impairment in the second quarter of 2020. The valuation allowance release during the three months ended June 30, 2021, was primarily driven by our current capacity to engage in certain securitization transactions and the market demand from investors related to these transactions, coupled with the anticipated timing of the forecasted expiration of foreign tax credit carryforwards. This release of valuation allowance in continuing operations of approximately $78 million resulted in a significant variation in the customary relationship between pretax income and income tax expense for the six months ended June 30, 2021. The nondeductible goodwill impairment resulted in a significant variation in the customary relationship between pretax income and income tax expense for the six months ended June 30, 2020.August 1, 2022.

7665

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Notice about Forward-Looking Statements and Other Terms

•evolving local, regional, national, or international business, economic, or political conditions;

•changes in laws or the regulatory or supervisory environment, including as a result of financial-services legislation, regulation, or policies or changes in government officials or other personnel;

•changes in monetary, fiscal, or trade laws or policies, including as a result of actions by governmental agencies, central banks, or supranational authorities;

•changes in accounting standards or policies;

•any instability or breakdown in the financial system, including as a result of the failure of a financial institution or other participant in it;

•the discontinuation of LIBOR and any negative impacts that could result;

•changes in business or consumer sentiment, preferences, or behavior, including spending, borrowing, or saving by businesses or households;

•changes in our corporate or business strategies, the composition of our assets, or the way in which we fund those assets;

•our ability to execute our business strategy for Ally Bank, including its digital focus;

•our ability to develop capital plans acceptable to the FRB and our ability to implement them, including any payment of dividends or share repurchases;

•our ability to cost-effectively fund our business and operations, including through deposits and the capital markets;

•changes in any credit rating assigned to Ally, including Ally Bank;

•adverse publicity or other reputational harm to us, our service providers, or our senior officers;

•our ability to develop, maintain, or market our products or services or to absorb unanticipated costs or liabilities associated with those products or services;

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

•our ability to appropriately underwrite loans that we originate or purchase and to otherwise manage credit risk;

•changes in the credit, liquidity, or other financial condition of our customers, counterparties, service providers, or competitors;

•our ability to effectively deal with economic, business, or market slowdowns or disruptions;

•our ability to address heightened scrutiny and expectations from supervisory or other governmental authorities and to timely and credibly remediate related concerns or deficiencies;

•the potential outcomes of judicial, regulatory, or administrative inquiries, examinations, investigations, proceedings, or disputes to which we are or may be subject, and our ability to absorb and address any damages or other remedies that are sought or awarded, and any collateral consequences;

•the performance and availability of third-party service providers on whom we rely in delivering products and services to our customers and otherwise conducting our business and operations;

•our ability to manage and mitigate security risks, including our capacity to withstand cyberattacks;

•our ability to maintain secure and functional financial, accounting, technology, data processing, or other operating systems or infrastructure;

•the efficacy of our methods or models in assessing business strategies or opportunities or in valuing, measuring, estimating, monitoring, or managing positions or risk;

•our ability to keep pace with changes in technology that affect us or our customers, counterparties, service providers, or competitors or to maintain rights or interests in associated intellectual property;

•our ability to successfully make and integrate acquisitions;

•the adequacy of our succession planning for key executives or other personnel and our ability to attract or retain qualified employees;

•our ability to maintain appropriate ESG practices, oversight, and disclosures;

•policies and other actions of governments to manage and mitigate climate and related environmental risks, and the effects of climate change or the transition to a lower-carbon economy on our business, operations, and reputation; or

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

Overview

Ally Financial Inc. (together with its consolidated subsidiaries unless the context otherwise requires, Ally, the Company, we, us, or our) is a digital financial-services company committed to its promise to “Do It Right” for its consumer, commercial, and corporate customers. Ally is composed of an industry-leading independent automotive finance and insurance operation, an award-winning digital direct bank (Ally Bank, Member FDIC and Equal Housing Lender, which offers mortgage lending, point-of-sale personal lending, and a variety of deposit and other banking products), a consumer credit card business, a corporate finance business for equity sponsors and middle-market companies, and securities brokerage and investment advisory services. We are a Delaware corporation and are registered as a BHC under the BHC Act, and an FHC under the GLB Act.

Primary Business Lines


	Three months ended June 30,					Six months ended June 30,
($ in millions)	2022		2021		Favorable/(unfavorable) % change	2022		2021		Favorable/(unfavorable) % change
Total net revenue
Dealer Financial Services
Automotive Finance	$	1,373	$	1,394	(2)	$	2,736	$	2,662	3
Insurance	178		359		(50)	465		753		(38)
Mortgage Finance	60		45		33	127		108		18
Corporate Finance	96		110		(13)	203		207		(2)
Corporate and Other	369		177		108	680		292		133
Total	$	2,076	$	2,085	—	$	4,211	$	4,022	5
Income (loss) from continuing operations before income tax expense
Dealer Financial Services
Automotive Finance	$	600	$	917	(35)	$	1,325	$	1,720	(23)
Insurance	(122)		87		n/m	(109)		228		(148)
Mortgage Finance	6		—		n/m	17		23		(26)
Corporate Finance	60		95		(37)	124		148		(16)
Corporate and Other	90		(57)		n/m	123		(70)		n/m
Total	$	634	$	1,042	(39)	$	1,480	$	2,049	(28)

n/m = not meaningful

Our Automotive Finance operations include purchasing retail installment sales contracts and operating leases from dealers and automotive retailers, extending automotive loans directly to consumers, offering term loans to dealers, financing dealer floorplans and providing other lines of credit to dealers, supplying warehouse lines to automotive retailers, offering automotive-fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and supplying vehicle-remarketing services. Our dealer-centric business model, value-added products and services, full-spectrum financing, and business expertise proven over many credit cycles make us a premier automotive finance company. Our success as an automotive finance provider is driven by the consistent and broad range of products and services we offer to dealers. The automotive marketplace is dynamic and evolving, including substantial investments in electrification by automobile manufacturers and suppliers. We remain focused on meeting the needs of both our dealer and consumer customers and continuing to strengthen and expand upon our approximately 22,400 dealer relationships. We continue to identify and cultivate relationships with automotive retailers including those with leading eCommerce platforms. We also operate Clearlane, our online direct-lending platform, which provides a digital platform for consumers seeking direct financing. We believe these actions will enable us to respond to the growing trends for a more streamlined and digital automotive financing process to serve both dealers and consumers. Additionally, we provide comprehensive automotive remarketing services, including the use of SmartAuction, our online auction platform, which efficiently supports dealer-to-dealer

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

and other commercial wholesale vehicle transactions. SmartAuction provides diversified fee-based revenue and serves as a means of deepening relationships with our dealership customers. Furthermore, our strong and expansive dealer relationships, comprehensive suite of products and services, full-spectrum financing, and depth of experience position us to evolve with future shifts in automobile technologies, including electrification. We have and continue to provide automobile financing for hybrid and battery-electric vehicles today, and are well positioned to remain a leader in automotive financing as we believe the majority of these vehicles will be sold through dealerships with whom we have an established relationship.

The Growth channel was established to focus on developing dealer relationships beyond those relationships that primarily were developed through our previous role as a captive finance company for GM and Stellantis. The Growth channel was expanded to include direct-to-consumer financing through Clearlane and other channels and our arrangements with online automotive retailers. We have established relationships with thousands of Growth channel dealers through our customer-centric approach and specialized incentive programs designed to drive loyalty amongst dealers to our products and services. The success of the Growth channel has been a key enabler in evolving our business model from a focused captive finance company to a leading market competitor. In this channel, we currently have approximately 16,000 dealer relationships, of which approximately 70% are franchised dealers (including brands such as Ford, Nissan, Kia, Hyundai, Toyota, Honda, and others), or used vehicle only retailers with a national presence.

Our Insurance operations offer both consumer finance protection and insurance products sold primarily through the automotive dealer channel, and commercial insurance products sold directly to dealers. We serve approximately 2.5 million consumers nationwide across F&I and P&C products. In addition, we offer F&I products in Canada, where we serve more than 400 thousand consumers and are the VSC and other protection plan provider for GM Canada and VSC provider for Subaru Canada.

As part of our focus on offering dealers a broad range of consumer F&I products, we offer VSCs, VMCs, and GAP products. We also underwrite selected commercial insurance coverages, which primarily insure dealers’ wholesale vehicle inventory and offer additional products to protect a dealer’s business including property and liability coverage that is underwritten by a third-party carrier. Ally Premier Protection is our flagship VSC offering, which provides coverage for new and used vehicles of virtually all makes and models. We also offer ClearGuard on the SmartAuction platform, which is a protection product designed to minimize the risk to dealers from arbitration claims for eligible vehicles sold at auction.

Through our direct-to-consumer channel, we offer a variety of competitively priced jumbo and conforming fixed- and adjustable-rate mortgage products through a third-party fulfillment provider. Under our current arrangement, our direct-to-consumer conforming mortgages are originated as held-for-sale and sold, while jumbo and LMI mortgages are originated as held-for-investment. Loans originated in the direct-to-consumer channel are sourced by existing Ally customer marketing, prospect marketing on third-party websites, and email or direct mail campaigns. In April 2019, we announced a strategic partnership with BMC, which delivers an enhanced end-to-end digital mortgage experience for our customers through our direct-to-consumer channel. Through this partnership, BMC conducts the sales, processing, underwriting, and closing for Ally’s digital mortgage offerings in a highly innovative, scalable, and cost-efficient manner, while Ally retains control of all the marketing and advertising strategies and loan pricing. This partnership with BMC limits operational volatility as the mortgage industry continues to evolve in the current interest rate environment. During the six months ended June 30, 2022, we originated $2.6 billion of mortgage loans through our direct-to-consumer channel. During 2018, we made a strategic equity investment in the parent of BMC (BMC Holdco) that was subsequently increased in 2019 and 2020. This investment is recognized as a nonmarketable equity investment within other assets of our Condensed Consolidated Balance Sheet and is included in Corporate and Other. Refer to the Market Risk section of this MD&A for more information.

Through the bulk loan channel, we purchase loans from several qualified sellers including direct originators and large aggregators who have the financial capacity to support strong representations and warranties and the industry knowledge and experience to originate high-quality assets. Bulk purchases are made on a servicing-released basis, allowing us to directly oversee servicing activities and manage refinancing through our direct-to-consumer channel. During the six months ended June 30, 2022, we purchased $1.6 billion of mortgage loans that were originated by third parties. Our mortgage loan purchases are held-for-investment.

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

to prudently grow our lending portfolio with a focus on a disciplined and selective approach to credit quality, including a greater focus on asset-based loans and priority, first-out revolving lines of credit. We seek markets and opportunities where our clients require customized, highly structured, and time-sensitive financing solutions. Our corporate-finance lending portfolio is generally composed of first-lien, first-out loans. Our focus is on businesses owned by private-equity sponsors with loans typically used for leveraged buyouts, refinancing and recapitalizations, mergers and acquisitions, growth, turnarounds, and debtor-in-possession financings. Additionally, our Lender Finance business provides asset managers with facilities to partially fund their direct-lending activities. The portfolio is well diversified across multiple industries including financials, services, manufacturing, distribution, and other specialty sectors. These specialty sectors include healthcare, technology/venture finance, defense and aerospace, and transportation and logistics. We also provide a healthcare-based commercial real estate product focused on lending to skilled nursing facilities, senior housing, medical office buildings, and hospitals. Other smaller complementary product offerings that help strengthen our reputation as a full-spectrum provider of financing solutions for borrowers include selectively offering second-out loans on certain transactions and issuing letters of credit through Ally Bank.

Information related to our point-of-sale financing business, Ally Lending, is also included within Corporate and Other. Ally Lending currently serves medical and home improvement service providers by enabling promotional and fixed rate installment-loan products through a digital application process at point-of-sale. The home improvement segment, which was launched in the second quarter of 2020, had originations of $343 million during the second quarter of 2022 and now represents approximately 58% of new originations, and is expected to grow. Point-of-sale lending broadens our capabilities, and expands our product offering into consumer unsecured lending, all while helping to further meet the financial needs of our customers.

Table of Contents

Management’s Discussion and Analysis

Ally Financial Inc. • Form 10-Q

Dealer Financial Services

Dealer Financial Services comprises our Automotive Finance and Insurance segments.

•Automotive Finance operations— One of the largest full-service automotive finance operations in the United States providing automotive financing services to consumers, automotive dealers and retailers, companies, and municipalities. Our automotive finance services include providing retail installment sales contracts, loans and operating leases, offering term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, fleet financing, providing financing to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services.

Mortgage Finance operations

Corporate Finance operations

Primarily provides senior secured leveraged cash flow and asset-based loans to mostly U.S.-based middle-market companies, with a focus on businesses owned by private equity sponsors. These loans are typically used for leveraged buyouts, refinancing and recapitalizations, mergers and acquisitions, growth, turnarounds, and debtor-in-possession financings. We also provide, through our Lender Finance business, nonbank wholesale-funded managers with partial funding for their direct-lending activities, which is principally leveraged loans. Additionally, we offer a commercial real estate product to serve companies in the healthcare industry.

Corporate and Other

Corporate and Other primarily consists of centralized corporate treasury activities, such as management of the cash and corporate investment securities and loan portfolios, short- and long-term debt, retail and brokered deposit liabilities, derivative instruments, original issue discount, and the residual impacts of our corporate FTP and treasury ALM activities. Corporate and Other also includes certain equity investments, which primarily consist of FHLB and FRB stock—as well as other strategic investments—and the management of our legacy mortgage portfolio, which primarily consists of loans originated prior to January 1, 2009, and reclassifications and eliminations between the reportable operating segments. Financial results related to Ally Invest, our digital brokerage and wealth management offering, Ally Lending, our point-of-sale financing business, Ally Credit Card, and CRA loans and related investments are also included within Corporate and Other.

The information presented in our reportable operating segments is based in part on internal allocations, which involve management judgment.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

Financial information for our reportable operating segments is summarized as follows.


Three months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)
2022
Net financing revenue and other interest income	$	1,301	$	20	$	56	$	77	$	310	$	1,764
Other revenue	72		158		4		19		59		312
Total net revenue	1,373		178		60		96		369		2,076
Provision for credit losses	228		—		—		8		68		304
Total noninterest expense	545		300		54		28		211		1,138
Income (loss) from continuing operations before income tax expense	$	600	$	(122)	$	6	$	60	$	90	$	634
Total assets	$	107,178	$	8,819	$	19,126	$	8,890	$	41,690	$	185,703
2021
Net financing revenue and other interest income	$	1,333	$	15	$	23	$	77	$	99	$	1,547
Other revenue	61		344		22		33		78		538
Total net revenue	1,394		359		45		110		177		2,085
Provision for credit losses	(23)		—		—		(13)		4		(32)
Total noninterest expense	500		272		45		28		230		1,075
Income (loss) from continuing operations before income tax expense	$	917	$	87	$	—	$	95	$	(57)	$	1,042
Total assets	$	100,162	$	9,394	$	13,865	$	6,246	$	50,803	$	180,470

(a)Net financing revenue and other interest income after the provision for credit losses totaled $1.5 billion and $1.6 billion for the three months ended June 30, 2022, and June 30, 2021, respectively.


Six months ended June 30, ($ in millions)	Automotive Finance operations		Insurance operations		Mortgage Finance operations		Corporate Finance operations		Corporate and Other		Consolidated (a)
2022
Net financing revenue and other interest income	$	2,596	$	37	$	109	$	160	$	555	$	3,457
Other revenue	140		428		18		43		125		754
Total net revenue	2,736		465		127		203		680		4,211
Provision for credit losses	332		—		—		14		125		471
Total noninterest expense	1,079		574		110		65		432		2,260
Income (loss) from continuing operations before income tax expense	$	1,325	$	(109)	$	17	$	124	$	123	$	1,480
Total assets	$	107,178	$	8,819	$	19,126	$	8,890	$	41,690	$	185,703
2021
Net financing revenue and other interest income	$	2,539	$	30	$	46	$	148	$	156	$	2,919
Other revenue	123		723		62		59		136		1,103
Total net revenue	2,662		753		108		207		292		4,022
Provision for credit losses	(45)		—		(4)		—		4		(45)
Total noninterest expense	987		525		89		59		358		2,018
Income (loss) from continuing operations before income tax expense	$	1,720	$	228	$	23	$	148	$	(70)	$	2,049
Total assets	$	100,162	$	9,394	$	13,865	$	6,246	$	50,803	$	180,470

(a)Net financing revenue and other interest income after the provision for credit losses totaled $3.0 billion for both the six months ended June 30, 2022, and June 30, 2021.

Table of Contents

Notes to Condensed Consolidated Financial Statements (unaudited)

Ally Financial Inc. • Form 10-Q

24. Contingencies and Other Risks

We accrue for a legal matter or other contingent exposure when a loss becomes probable and the amount of loss can be reasonably estimated. Accruals are evaluated each quarter and may be adjusted, upward or downward, based on our best judgment after consultation with counsel. No assurance exists that our accruals will not need to be adjusted in the future. When a probable or reasonably possible loss on a legal matter or other contingent exposure could be material to our consolidated financial condition, results of operations, or cash flows, we provide disclosure in this note as prescribed by ASC Topic 450, Contingencies. Refer to Note 1 to the Consolidated Financial Statements in our 2021 Annual Report on Form 10-K for additional information related to our policy for establishing accruals.

25. Subsequent Events

Declaration of Common Dividend

On July 14, 2022, our Board declared a quarterly cash dividend of $0.30 per share on all common stock. The dividend is payable on August 15, 2022, to stockholders of record at the close of business on August 1, 2022.